Brazil The First Republic (1889–1930), whose Constitution was closely modelled on that of the USA, was destabilized by the disparity of its federal states. Most notably, São Paulo had gained virtual autonomy as the most dynamic state: its population trebled in 1890–1920, it contracted a foreign debt larger than that of the national government, and it produced more than a third of Brazil's total output. As a result, the President usually came from São Paulo or the next most important state, Minas Gerais. The franchise was restricted to the literate population, which amounted to around 3 per cent of the population before 1930. As a result, power remained in the hands of elites whose composition varied depending on the social and economic structure of each state. Finally, effective government was made difficult through the lack of national communications, which in turn encouraged the power of the state elites.
After World War I, the Republic came under increasing criticism from educated groups, who saw widespread corruption as proof that it had become too liberal too soon, and from Democrats largely centred in São Paulo, who demanded more liberal constitutionalism to counter the influence of the agrarian elites in most other states. The military reacted to the government's inability to respond to the Great
Depression with a coup supported largely by dissatisfied sections of various state elites, thus ending the First Republic and installing
Vargas as President of a provisional government in 1930.
Initially, Vargas was concerned with securing his own power base, which was particularly challenged by a revolt of the Democrats in the state of São Paulo. The government forces were successful in crushing the rebellion, but Vargas compromised by calling a Constituent Assembly in 1933. The new Constitution of 1934 was very similar to that of the First Republic, albeit with reduced state powers. Vargas was elected President in the same year. The political crisis of the early 1930s and the new Constitution lessened the political power of the traditional landed elites (especially coffee growers) whose earnings from agriculture, the source of most of Brazil's exports, were hit at the same time by the Great Depression. The middle and lower middle classes in the cities responded to the political and economic crisis by mass organization, so that by 1935 around 25 per cent of the electorate was organized in political movements. Of the two central political movements that emerged, the Communist-led
Popular Front (Aliança Libertadora Nacional, ALN) was suppressed in 1935 by Vargas, who thus endeared himself to the elites by responding to their fear of
Communism. Instead of cooperating with the neo-Fascist Integralists, however, in 1937 he responded to their growing claims for participation in government with a further coup.
With it, Vargas established the
Estado Nôvo (New State). Unlike the Fascist regimes of
Hitler and
Mussolini, however, he never developed an ideology backed by a mass movement, but instead ruled with a number of technocrats who modernized the country. To maintain its power, the regime resorted to torture and imprisonments, but here, too, it did not engage in the excesses of
Nazism or Italian
Fascism. In recognition that participation in World War II on the side of the democratic USA would inevitably lead to demands for a return to democracy, he called for new elections in 1945. Although he emerged victorious, the army deposed him and called new elections in December 1945.
The Constitution of the Second Republic, passed in 1946, was very similar to the Constitution of 1934, and marked a return to liberal guarantees of individual liberties. President
Dutra reversed Vargas's policy of industrialization, preferring to promote agricultural exports, especially of coffee. Back in power in 1951, Vargas became unable to cope with the economic problems of mounting debts, a worsening balance of trade, and inflation. As a popularly elected leader, he was torn between the opposing demands of different sections of society, and in the end satisfied nobody. He committed suicide in 1954, and after a number of caretaker administrations he was followed by
Kubitschek, who stabilized his power by keeping the military content with large arms purchases, and generating general enthusiasm through an ambitious programme of economic growth. This was achieved, however, with high external borrowing, while corruption became ever more widespread. His populist successor,
Goulart (his immediate successor, Jânio Quadros, resigned after six months in office), was too weak and indecisive to carry out the necessary economic squeeze imposed by the
IMF. Instead, he increasingly tried to appeal to an anti-establishment alliance of peasants and workers.
In response, another coup in 1964 ensured military rule which was to last until 1985. An initial period of economic liberalization (the creation of a central bank, etc.) under Castello Branco (1964–7) produced moderate results and ultimately did not lead to economic recovery. The high social costs of these reforms led to general unrest under Artur Costa e Silva (1967–9), which was brutally suppressed. The economy did improve from 1968, however, and in the following years grew by an average of 10 per cent. A potent sign of economic maturity was the fact that manufactured goods replaced coffee as the country's main export earner. Nevertheless, unrest did not subside fully, and continued in the form of guerrilla warfare against the government, which the latter only managed to suppress in 1974. Under
Geisel, preparations were made for an eventual return to civilian rule, but the introduction of full democracy was hampered by the impossibility of a military-backed candidate to win any free election. Geisel's problems were compounded by the onset of another recession triggered by the
oil price shock of 1973 which not only depressed export earnings, but kept interest rates at a record high. By 1982 Brazil was the world's largest debtor, with total obligations of up to $100 billion. President
Figueiredo reintroduced democratic government, first through the direct elections of state governors in 1982, and then by the democratic election of a new President in 1985.
The renewed period of democratic rule began with the death of the President elect, Tancredo Neves, who was succeeded by Vice-President elect
Sarney. Despite short-term economic growth, he failed in his social reforms, as the annual inflation rate 1987–93 oscillated between 366 and 2,567 per cent. On the other hand, he concluded the process of democratization through the proclamation of a new Constitution on 5 October 1988. Unfortunately, his successor, Fernando Collor de Mello (b. 1949), was not much more successful in introducing any of the badly needed social or economic reforms, such as land reform to reduce the inequality of landownership, and an effective mechanism for wage bargaining (
trade unions) in order to replace the semi-corporatist structures established by Vargas.
Since 1992, domestic policy has been overshadowed by various corruption scandals, the most prominent of which forced Collor de Mello to retire on 29 December 1992, to be succeeded by Itamar
Franco. Franco did manage to restore some economic stability, and was succeeded by his Minister of Finance, Fernando Henrique Cardoso in 1995, under whom the economy continued to improve. Cardoso pursued a policy of rigid austerity, which kept the inflation rate low and enabled Brazil to overcome its previously growing reliance on foreign debt. The policies of rigorous reduced federal spending, however, aggravated social inequality, in a country already characterized by one of the most unequal income distributions in the world, with 66 per cent of the population malnourished. Politically, Brazil continued to be riven by large-scale corruption scandals involving its elites at federal and state levels, while continuous police brutality undermined public confidence in the state still further. Meanwhile, the state's fragile economic growth was endangered by the economic collapse of its second largest trading partner, Argentina, in 2001. The prospect of the more popular left-wing candidate, Luiz Inácio da Silva (‘Lula’), winning the 2002 presidential elections over Cardoso's nominee shook the confidence of investors, who were afraid that Brazil would default on its $260 bn debt. It prompted a huge capital outflow, but the country was saved from bankruptcy by a $30 bn. loan from the
IMF.
