Brazil in the 2000’s

On the eve of the year 2000, Brazil, heavily conditioned by serious financial problems, was unable to respond to the serious social questions that had always undermined his internal stability: the agrarian reform, whose failure to implement caused the massive urbanization of peasants without land, and the fight against organized crime. The austerity and privatization policy implemented, in accordance with the guidelines of the International Monetary Fund, by FH Cardoso, reconfirmed as President of the Republic in the 1998 elections, had produced a slowdown in the growth of inflation and public debt, but had not succeeded in triggering a real change in trend or in relaunching development in a lasting way. The unemployment rate remained high and kept the standard of living of the lower and middle classes critical, the most affected by the phenomenon and the most penalized by the cuts made in public spending; cuts that had also led to the setting aside of the hypothesis of redistribution of uncultivated lands, proposed at the beginning of Cardoso’s mandate but against which the owners’ lobby had lined up. During 1999 and 2000discontent with the government’s social policy became more and more widespread, and resulted in strikes and unrest that brought thousands of people to the streets. The most impressive demonstrations were those organized by the movement of landless peasants, the Movimento dos Sem-Terra (MST), which between May and September 2000 occupied squares, streets and public offices in the country, finally pushing the executive to go down to negotiations. Cardoso’s loss of popularity resulted in the defeat of the parties that supported him (the Partido da Social Democracia Brasileira, PSDB, the Partido da Frente Liberal, PFL, and the Partido do Movimento Democrático Brasileiro, PMDB), in the administrative elections held in October, in which the main opposition party, the Partido dos Trabalhadores (PT), led by LI da Silva, known as Lula, achieved significant success. In the following two years the country experienced a worsening of the economic situation, and the government was hit by a series of scandals that led to the expulsion of many of its exponents and helped to bring out friction and differences. The EPFL’s decision to present its own candidate, Mrs R. Sarney, in the presidential elections scheduled for October 2002, as opposed to J. Serra, candidate of the PSDB, precipitated the situation and, in March 2002, the EPFL decided to leave the government. The electoral climate was made incandescent by Sarney’s involvement in a corruption scandal and by the accusations it made against government circles of having artfully built it to force her to withdraw, which actually happened. The contrasts that arose in the center-right alignment contributed to the success of Lula, who, presenting himself with a program to relaunch employment, tax reforms and fight poverty (“Zero Hunger” project), managed to channel the widespread discontent not only of the poorest strata of the population but also of the middle classes, and secured 61.3 % votes in the second round, obtaining a victory that he had expected for 13 years (he had already run in 1989,1994 and 1998). The PT also won the majority of seats in the legislative elections held at the same time as the presidential elections. Despite the strong emphasis placed in the election campaign on the policy of social equity and income redistribution, and the entry into the executive of various left-wing parties (the Partido Socialista Brasileiro, the Partido Democratico Trabalhista, the Partido Popular Socialista, the Partido Communista do Brasil, the Partido Verde), the new administration, which took office in January 2003, continued on the path marked by Cardoso, launching a substantially moderate program, centered on the issues of financial recovery and containing inflation. The social security reform was implemented, aiming at greater rationalization and a substantial reduction in public spending, the tax system was improved, heavily burdened by an articulated and complex structure that involved a significant dispersion of resources, and incentives were launched to encourage the development of small and medium-sized enterprises. The administration also approved a public works program aimed at promoting, in addition to employment, the integration and development of the country as a whole through the widespread diffusion of infrastructures; it also allocated resources for the distribution of land to peasants and to improve the health and education system, especially in the poorest centers. The line chosen by the new president, in compliance with the indications dictated by the IMF, also found consensus among the ranks of the center and center-left parties (the Partido Liberal, the PMDB, the Partido Trabalhista Brasileiro), who supported it in Parliament, and above all thwarted the fears of foreign investors and restored confidence in the financial markets, once again showing strong dynamism. The consequence was a revival of the country’s economy, which in 2004, it recorded significant growth, accompanied by an improvement in public finances and a containment of inflation. Monetary stability had, however, been achieved through an accentuation of the austerity policy and a consequent downsizing of social programs, which had ended up assuming a purely marginal character: the interventions implemented, although in some cases also have an important significance of a symbolic, such as the return of about 2 million hectares of Amazon rainforest to the Indians who lived there (April 2004), had mostly remained localized to a few particularly depressed realities, and had not substantially affected the existing equilibrium. The gap between rich and poor had not decreased, nor had the employment rate increased significantly. The non-implementation of the commitments undertaken during the election campaign fueled growing discontent both in the trade union and in the coalition parties, first of all the PT itself, and gave new impetus to the protest of the MST, which faced the delays in the implementation of the agrarian reform program, while continuing to declare his willingness to dialogue, he had resumed the occupation of the lands. In January 2004, in an attempt to strengthen the government structure, Lula had called some members of the PMDB to join the executive, but the crisis, which remained latent, intensified during the year when the Partido Liberal decided to leave the coalition (April), denouncing the poor economic results obtained. The erosion of Lula’s popularity was also highlighted by the results of the administrative consultations held in October 2004: despite a general increase in the percentage of votes, the PT lost support in large urban centers – such as San Paolo and Porto Alegre – where the party’s social base was concentrated. Backlash of the electoral results was the exit from the ruling coalition, in December, of Partido Popular Socialista and the PMDB, also critical of the executive’s economic choices. To overcome the growing isolation and meet the demands of the grassroots, the Lula administration announced, in early 2005, the start of a new economic policy direction, characterized by an increase in welfare and greater allocations for works and infrastructures, but in May he had to face a new demonstration of the MST, which peacefully invaded the streets of the capital, mobilizing thousands of poor peasants. In the summer of 2005 the government’s popularity suffered a severe blow following the financial scandals that swept the PT, undermining its moral credibility with the public, which had always considered it the main protagonist in the fight against corruption. The leadership of the party was forced to resign (July) and some collaborators of the president were also removed, involved in the scandal that expanded in the following months. For Brazil 2000, please check

In foreign policy, the Lula administration distinguished itself from the beginning for an intense diplomatic activity aimed at increasing the regional role of the country, which aspired to assume the undisputed leadership of the area. The most significant debut was the position taken during the WTO (World Trade Organization) conference held in Cancún in September 2003: on that occasion the Brazil led the protest of the emerging countries against the protectionist agricultural policies supported by the members of the European Union and the United States, considered unfair and highly penalizing towards the weaker economies. In the following months the government worked to promote the integration of South American countries under the leadership of the Brazil, so as to create an economic-commercial bloc capable of counterbalancing the policies of the large US companies. Hence the relaunch of the activity of the Mercado Común del Sur, MERCOSUR (commercial agreement signed in 1995by Brazil, Argentina, Uruguay and Paraguay, which guaranteed the free circulation of goods and services between the contracting countries) and Brazil’s resistance to the creation of the Free Trade Area designed and supported by the United States, with the consequent accentuation of the friction between the two countries. Despite the differences, the negotiations for the realization of the project continued, with ups and downs, during 2004 and 2005.

Brazil in the 2000's

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