Time for
Reform

With the election of Fernando Henrique Cardoso as the first modern chief executive of Brazil in late 1994, there was widespread expectation that his presidency would herald a significant turning point in the modernization of the Brazilian economy. Compared to its neighbors in the hemisphere—Argentina, Chile, and Peru— Brazil was perceived to be lagging in its efforts to introduce a market economy, undertake the privatization of state-owned assets, address fiscal imbalances, and provide the incentives needed for a competitive economy in the twenty-first century.

Following the inauguration on January 1, 1995, the new government appeared to hesitate but finally sent a series of constitutional amendments to the Congress for action. To the surprise of most observers, the government's program moved quickly through the legislature. It was then assumed that 1996 would see a repeat of the successes of the previous year as the Congress turned to the details of actually interpreting and implementing the broad-brush amendments in the economic area and then move on to a second set of priorities. But that expectation has not been realized, and Brazilian politics midway through Cardoso's four-year term of office remains unpredictable and highly contentious—which is why the heralded progress in addressing significant economic policy issues has not occurred.

In large part, the belief that Cardoso would be able to overcome the personalism and populism that have characterized Brazilian politics for decades was based on the stunning success of his Real Plan. Announced in March 1994, the plan has actually succeeded in driving levels of inflation down to historic levels. The attack on inflation was accompanied by a modicum of policy reforms during the presidential term of Itamar Franco (1992-1995), who, as vice president, had succeeded Fernando Collor de Mello (1990-1992) in December 1992, following the latter's resignation in the face of imminent impeachment. Franco had selected Cardoso, then a federal senator from São Paulo, as foreign minister and then as finance minister. As finance minister, Cardoso assembled a technocratic team that quickly drew up the bold Real Plan. As Cardoso emerged as the favorite precandidate for the 1994 presidential elections, thanks to the initial success of the anti-inflation program, reformers read into his growing popularity the possibility of serious institutional realignment. His victory over Luis Inácio `Lula', da Silva in the October 1994 election (Cardoso won with 34.3 million votes, or 54.4 percent of the valid votes seemed to confirm that Brazil was ready for change. A defeat for the second time of the spokesman for the left, or public sector-oriented interests in Brazil, could only mean that public opinion, influenced by the economic success of the Real Plan, was ready for real economic and political change.

While the Real Plan has continued to function, its future is unpredictable because of politics as usual in Brazil, particularly in the Congress. Unless the Cardoso administration is able to convince the Congress of the need for significant fiscal reform, the Real Plan may face a bleak future. Key elements in a fiscal package would include a restructuring of the social security system, an updating of the tax collection system, and a significant reduction in the size of the public sector. But the probability of significant fiscal changes is limited by the nature of the Brazilian political system.

To show why politics hinders economic progress in Brazil, this essay examines the nature of the political party system, the state and local bases of political power in Brazil, the interests that represent the status quo in Brazil, and the prospects for additional reform in the Cardoso administration. The first three factors provide insight into the highly fluid, nonideological and nonprogrammatic nature of the political process. Moreover, they offer a realistic perspective of how difficult it is—and will be—to move the economic and social agenda forward without political reform.

It is important to point out that words such as immobilism and stalemate are inappropriate in describing Brazilian politics today. The political process is, as mentioned, highly fluid—new coalitions and alliances are born every day in the Congress. While political commentators may see an immobilized system (by non-Brazilian standards), what functions day to day in Brazil is a system that moves quickly to react to—and to protect—the local and state interests of the incumbent political and economic elites. While it is a dysfunctional system from the perspective of political theory, it is highly functional—and successful—for those interested in maintaining the current balances of power in Brazil. It does not mean that those driving the system are opposed to change; they want change that favors or strengthens their position and their constituencies. From one perspective, this is a rational and functional approach to elections, the process of reform, and the distribution of power. While it precludes major systemic reform, it achieves a precarious consensus among regional elites, who remain the backbone of national politics in Brazil.

THE BRAZILIAN
POLITICAL
PARTY SYSTEM

Brazilian political parties are best understood as shifting groups of self-interested individuals who find it convenient to come together under a bland banner that usually includes words such as progressive, social, or democratic. In reality, the form and substance of the particular entity will probably demonstrate little progressiveness in program orientation, a very modest commitment to social reform or change, and manifest impatience with acting democratically.

Brazil did not have a political party system until 1945. The Empire (1822-1889) saw its elites bifurcated into conservative and liberal factions (or parties) that rotated in power and represented postindependence economic and social elite interests. Those interests, given the economic formation of Brazil during the colonial and imperial epochs, were heavily rural and agricultural. Slavery was not abolished until 1888; Brazil's export profile was composed primarily of agricultural crops well into the twentieth century.

With the peaceful overthrow of the Empire in 1889, the Old Republic (1889-1930) witnessed a convergence of local and provincial factional interests. One national conservative party— the only significant political organization in this period—served as an umbrella organization for elite control. It was driven by the economic interests of the two most powerful states in the federation, São Paulo and Minas Gerais. Decentralization in Brazil was profound: state governors were titled presidents, and the states were able to impose taxes and raise their own armies. Getúlio Vargas's seizure of power in 1930 resulted in a confusing period in which a number of local and state political organizations appeared. A product of the regional political elite in the southern state of Rio Grande do Sul, Vargas had lost the 1930 presidential election, which was marred by widespread fraud. With the support of disaffected military officers, his own state's political leadership, many of the poor northeastern states, and the important state of Minas Gerais (which had been denied the presidential nomination by the São Paulo oligarchy), he launched an offensive against the Old Republic in late 1930. The incumbent president, Washington Luis, resigned, and Vargas arrived in Rio de Janeiro in October to become provisional president. The 1930-1945 period was one of confusion, and a superficial political pluralism ended with the establishment of the protofascist New State in 1937. After Vargas was deposed by the armed forces in 1945, political elites subdivided into pro- and anti-Vargas forces. The principal parties or groups that dominated the 1946 Republic (1946-1964) generally supported a national-populist set of development policies, characterized by import substitution industrialization, the nationalization of the oil industry, and the growth of the urban labor movement. But the system was dominated by the office and the personality of the president. By 1964, the party system of 1946 consisted of thirteen loosely structured organizations, many of which were splinters of three larger political groupings that had been formed in 1945.

By the early 1960s, the Brazilian political system began to polarize. The post-1945 import-substitution-industrialization model had resulted in economic inefficiencies, a lack of competitiveness, and steadily rising inflation. Direct foreign investment was flat. Social tensions, resulting from the rapid urbanization of Brazil after 1945, and increasing pressure from rural groups for land reform created a climate of violence and suspicion. The military, which saw themselves as the guardians of the Brazilian state, were concerned that groups on the left were exploiting the rising tide of frustration and might actually resort to force to accomplish their reform agenda. To preclude such a situation, the military moved in late March 1964—with the support of the business community, much of the middle class, and the traditional elites—to close the system.

The military intervention of 1964 resulted in a purge of the existing political system, with many of the old leaders losing their political rights for a decade. After a halfhearted effort to work within the old party framework, the military leadership abolished the pre-1964 system and created two parties, with ARENA (National Renovating Alliance) representing pro-regime tendencies and the MDB (Brazilian Democratic Movement) representing what remained of the left and the antimilitary political actors. ARENA, with strong support from the military presidents, commanded an absolute majority in Congress until 1979. But throughout the military period, ARENA was riven with regional and factional disputes. The MDB, on the other hand, fragmented into a variety of ideological subgroups defined by their willingness or not to play by the military-established rules of the game.

By the late 1970s, there was widespread discontent with the false dichotomy of the two-party system. In 1979, the Congress approved a government plan to abolish ARENA and the MDB and to permit renewed party pluralism. The MDB became the PMDB (Brazilian Democratic Movement Party); ARENA changed its name to the Social Democratic Party (PDS) but fared badly at the polls and, in 1993, joined with the small Christian Democratic Party (PDC) to establish the Progressive Reform Party (PPR). A Popular Party (PP) was organized for a short period of time by MDB centrists and ARENA progressives but soon merged with the PMDB; the Liberal Front Party (PFL), with its electoral base primarily in the conservative northeast, was formed in 1984. The PFL joined the PMDB in 1984-1985 to guarantee the indirect election in January 1985 (in an electoral college) of Tancredo Neves; smaller, more traditional parties also appeared in the mid-1980s.

Perhaps the most significant development after 1979 was the establishment of the class-based Workers Party (PT), a new militant organization based originally on the emerging power of the new unionism that reflected Brazil's impressive industrial growth after 1964. The new unionism was an effort by a younger generation of industrial workers to gain independence from the traditional control of the Labor Ministry and the complex bureaucracy of labor courts created in the early 1940s. The rapid expansion of the Brazilian economy after 1964 created a large, better educated, and more aggressive working class—concentrated in São Paulo but with strong support throughout the states of the southeast— that used confrontation with the military regime as one mechanism for achieving their goals.

The new unionists became a critical element in the widespread mobilization of civil society in the early 1980s, which attempted to convince the military regime to hold direct elections for president in 1985. While that undertaking failed to win congressional approval because of pressure from the military regime, the nationwide campaign gave the PT—and Lula—legitimacy, which was used to further the goals of the new unionism in the succeeding decade. While Lula has lost the last two presidential races—to Fernando Collor de Mello and Fernando Henrique Cardoso—the party has continued to expand its electoral base. It performed well in the October 1996 municipal elections and is expected to do so again in the next congressional and gubernatorial elections in 1998.

Legislation in 1985, after the restoration of civilian government, liberalized the requirements for creating new parties. In 1985, there were eleven parties with national registration and representation in Congress, nineteen in 1991, and eighteen in 1995-1996. The most important parties in the Chamber and the Senate continue to be the PMDB, PFL, PSDB, and PPR, all of which represent traditional sources of local and state power in the Brazilian federation. Each of the parties is either headed by or heavily influenced by relatively traditional political leaders. For example, Paulo Maluf, the former mayor of São Paulo, leads the PPR (he is also a former governor and mayor, and former—and possible future—presidential candidate); the PMDB is headed by the former president of the federal Senate, former president José Sarney, who pretends to a second term of office in 1999; and Senator Antônio Carlos Magalhães of Bahia, whose son, Luis Eduardo, served as speaker of the house in the Chamber of Deputies from 1994 to early 1997, is a titan in the PFL.

The first government to follow the twenty-one years of authoritarian rule was dominated by the PMDB, the successor to the principal opposition party during the military period. A lone source of dissent during the military years in national politics, the party carried the banner for a restoration of civilian government when the military regime decided on a policy of gradual opening. That policy decision resulted from a desire to curb the intelligence and security apparatus, which had grown rapidly since 1964. It was driven by an increasingly autonomous labor union movement that demanded a greater share of the pie than had been given to it during the height of the authoritarian government. And civil society—lawyers, professors and students, professional groups, and many in the private sector—lobbied for a termination of military rule and a return to a democratic state. After a period of uncertainty as to whether the armed forces would accept an opposition president in 1985, the PMDB and the PFL put together a ticket for the indirect vote in the electoral college that was acceptable and not seen as a threat by the military. In early 1985, the college met and the candidate of the regime was defeated.

A weak president, José Sarney, succeeded Tancredo Neves after his untimely death in early 1985. A leading figure of the military regime until the very end, when he deserted to join the opposition coalition as its vice-presidential candidate, Sarney reigned as a figurehead chief executive until 1990. The new constitution of 1988, a regressive, populist document, created a time bomb in national politics by transferring a significant share of national income to the states and municipalities, while leaving responsibility for major social programs with the federal government, which now had vastly reduced revenues. The thinking of the populist-dominated Constituent Assembly was that this measure would rebalance power within the federation after two decades of progressive centralization in the hands of the federal government in Brasilia. What it actually did was to open the floodgates for local corruption and mismanagement as local and state authorities enjoyed a financial bonanza without any programmatic responsibilities in critical areas of social investment.

The 1988 document confirmed a process that had escalated over the years. Since the mid-1970s, the states and municipalities had increased their share of tax revenues; in 1975, they received 5 percent each of income tax revenues and the tax on manufactured goods. By 1980, these shares had increased to 14 percent and 17 percent, respectively. The new constitution made it a requirement for the federal government to transfer 21.5 percent of the income tax and manufactured goods tax by 1993.

The failure of the Cruzado Plan, the Sarney government's 1986 heterodox shock program (which included a general price freeze, a wage freeze, a wage escalation system, and the creation of a new currency), destroyed the credibility of the administration—and by extension that of the PMDB-dominated Congress and the PMDB governors who had been elected at the end of 1986, running on the earlier, euphoric popularity of the Cruzado Plan. The remainder of Sarney's administration was marked by desperate and unsuccessful efforts to control inflation and prices. A relative unknown, Fernando Collor de Mello, the scion of a disreputable state-based oligarchy in the northeastern state of Alagoas, capitalized on national discontent with the traditional parties and organized the Party of National Reconstruction (PRN).

Collor defeated Lula of the Workers Party in the 1989 presidential election, but his party fared poorly. Even after the congressional elections of October 1990, following Collor's inauguration earlier in the year, the party held only twenty seats in the Chamber of Deputies and two Senate seats. In spite of uncertain political support, Collor proceeded with a set of audacious and controversial economic and financial reforms. Among the most successful were the liberalization of trade and the beginnings of the privatization of state assets. As the government appeared to be regrouping in mid-1992, a major crisis erupted, with the president and his chief fund-raiser accused of massive fraud and extortion. Reform efforts ended as the embattled president attempted to avoid impeachment proceedings in the Congress. Public opinion, aroused by the corruption charges and the president's seeming indifference, took to the streets in a wave of peaceful demonstrations calling for him to step down. After a long congressional investigation, impeachment proceedings were initiated, and Collor resigned in December 1992 just before the final vote, which carried by a wide margin.

As part of the constant reshuffling of party allegiances, the PMDB split in 1988 and a center-left splinter group organized the Brazilian Social Democracy Party (PSDB). Among its prominent founders were two São Paulo federal senators, Fernando Henrique Cardoso and Mario Covas (now the PSDB governor of the state). With the resignation of Collor de Mello, the new president, Itamar Franco, restructured the governing coalition and offered three ministries to the PSDB, including the post of foreign relations head to Senator Cardoso. In May 1993, Cardoso moved to the Finance Ministry from which he launched the Real Plan in March 1994. With the plan's success—its principal achievement was the dramatic drop in inflation rates—Cardoso was nominated for president; he chose as his vice president Senator Marco Maciel of the PFL. The Cardoso-Maciel ticket easily defeated the PT ticket in late 1994, with Lula again the party's nominee. Cardoso's margin of victory was sufficiently large (54.4 percent of the valid vote) to avoid a second round of voting in November. Fernando Henrique Cardoso had a well-established reputation as both an intellectual and a politician when he won the presidency. He had been a professor at the University of São Paulo, and after the military coup of 1964, he left Brazil for Chile, where he co-authored the once influential theory of dependency—the underdeveloped countries are manipulated by the wealthier industrial states—before moving to Paris, where he taught at the University of Paris. Returning to São Paulo in 1968, he conducted research and wrote extensively on development issues. Cardoso ran for the Senate in 1978 on the MDB ticket and served as the alternate to Franco Montoro. When the latter was elected São Paulo state governor in 1982, Cardoso took his place in the federal Senate. He was reelected in 1986 (after a narrow defeat in a race for mayor of São Paulo) and served as government leader in Congress during the Sarney administration. He quickly assumed the role of a superminister in the government of Itamar Franco in 1992-1993, from which he launched his successful drive for the presidency.

The Cardoso government took office in January 1995 and quickly won the support of a number of other political parties as the new regime began its effort to amend the 1988 constitution and to further liberalize the national economy by opening areas such as petroleum, mining, and telecommunications to private investment. The principal goal was to reduce the role of the state in the economy and increase the competitiveness and efficiency of domestic industry. The government succeeded in winning relatively rapid approval of constitutional amendments in key areas of the economy in 1995, but since then, progress has been disappointing in achieving either further constitutional reform or the ordinary legislation required to implement and activate the constitutional changes of 1995. It is one of the ironies of the Cardoso government that the PSDB, the president's party, has been reluctant to support many of his initiatives because they will impact negatively on the natural constituencies of the party. Another irony is the strong support given to the Cardoso program by the PFL, a northeast-based party of regional notables, which supports economic liberalization and market reforms while remaining highly skeptical of political institutional changes. The economic philosophy of the party favors the modernization of the national economy, competitiveness, and increased foreign investment; but the leadership does not appear to see any linkage between a more efficient and productive economy and the probable need for more democratic and representative institutions in Brazil. In many countries experiencing rapid economic change, there is a concomitant desire for greater political participation as individual citizens' stake in the economy—and society—expands.

In the current Brazilian political system, it does not seem incongruous for President Cardoso to be supported by a heterogeneous coalition that is programmatically dominated by the PFL. The Cardoso program offers the PFL what it wants and what works for it and its constituents. The party that purports to be progressive, Cardoso's own PSDB, is equivocal about its enthusiasm for market reforms and remains vaguely wedded to a social democratic concept of a mixed economy in which the government continues to play a strategic role. It is also true that key PSDB legislators are beholden to the rust belt industries of São Paulo state, which fear economic liberalization and the competition that will inevitably impact on their capacity to perform. The other parties in the current governing coalition, the PMDB, Brazilian Progressive Party (PPB), PTB, and PL, represent a broad spectrum of personal and party positions that are determined by state and local interests. These are best understood in terms of the rewards or perks they can extract from the federal government in exchange for their votes in Congress issue by issue.

Thus, a reform-minded president—Cardoso—is only intermittently supported by his own party, which advertises itself as a social democratic alternative for Brazil but lacks the conscience to vote for far-reaching reforms to modernize Brazilian society; the most powerful conservative group, the PFL, representing the most traditional social interests in the country, is the principal advocate of market-oriented reforms. And the remaining members of the more-or-less majority coalition calculate their support for reform in terms of the patronage forthcoming from the embattled central government. This state of affairs stems in large part from the nature of the electoral system and the local and state emphases in Brazilian politics that have dominated since independence in 1822.

BRAZIL'S
ELECTORAL SYSTEM
AND LOCAL POWER

The political party system since 1985 has been plagued with frequent changes of party affiliation, overtly opportunistic and often short-term party alliances, and a lack of credible national leadership. In addition to the problems created by state and local loyalties, there are certain characteristics of the electoral system in Brazil that help determine the nature of today's party dynamics. Brazil's federal deputies (and municipal council members) are elected by a system of open-list proportional representations Each state in the federation serves as a single, at-large, multimember voting district. The number of seats per state ranges from eight to seventy, with small states deliberately overrepresented and the large states, such as São Paulo and Minas Gerais, deliberately underrepresented. Successive governments have opted to favor overrepresentation for the smaller, more marginal states as a way of compensating for the economic power and influence of the larger members of the federation. On election day, the voters cast their single ballots either for the party label—in which case their vote merely is added to the party's total vote at the end of the day—or for individual candidates. But the names of party candidates are not listed on the ballots; instead, the voter must write in the candidate's name or registration number. After the balloting has ended, officials determine how many votes each party has received and then determine which party members, based on their total vote, will receive one of the proportionally distributed seats in the legislature.

Increasingly, party coalitions have become critical components in the electoral process. In the 1994 elections, close to half of federal deputies were elected by coalitions. In Brazil, coalition partners lose their party identity and compete in a single basket of votes, which further weakens the political party system. Thus voters have little idea of, or interest in, the party affiliation of candidates. And since campaigns are so individualized (many candidates never mention their party label in their propaganda), the party vote is very small—with the exception of the PT.

A good example in the 1996 municipal election was that of Recife, the capital city of Pernambuco in the Brazilian northeast. A Popular Front alliance composed of seven parties supported the candidacy of federal deputy Humberto Costa. The ideological spectrum of the alliance ran from the two communist parties of Brazil to the region's most conservative, but ideology was not the issue. Costa's voter appeal and the rewards for the parties from his election were sufficient to bring the parties, momentarily, together. Voters vote for the alliance, not the parties. And the leaders of the parties will be available in three years to reconnoiter and position themselves for the next round of congressional, gubernatorial, and presidential voting with little regard to the position they took in 1996—nor would anyone in Brazilian politics expect them to act differently.

Because everyone is elected at large—Brazil does not have local constituencies—a candidate needs to campaign across his state. This system means that candidates aligned with a particular party are running against each other in the lead-up to the election to be sure that they receive a sufficiently large number of votes to qualify for a seat when the positions are proportionally distributed. This defeats any effort at party coherence or program stability. Candidates prefer weak parties that will give them leeway in establishing bases of political support in the state or city. And while some candidates may have special electoral areas in which they seek most of their votes, many others seek votes across the state. This limits, or eliminates, constituent accountability after the elections. In the absence of districts, it is impossible for a citizen to claim one deputy or council member as his or her representative. In turn, the system liberates the newly elected representative from having to maintain the fiction of representation. He or she represents not the voters but the groups and party structures that turned out the vote to guarantee his or her seat at the end of the day.

The situation is aggravated by the ease with which a group can legally organize a party. After 1985, provisional organization of new entities required only that 101 prospective members sign a petition with bylaws, statutes, and program, which are then registered with the Superior Electoral Tribunal (TSE). Permanent registration is somewhat more complicated. Within a twelve-month period, the new party must organize state directorates in nine states and in one-third of the municipalities in each of these states. In 1989, twenty-two parties were able to register candidates for the presidential voting, but in 1994 only nine were registered.

Efforts to revise the 1988 constitution in 1993-1994 contained important proposals to establish a rigid German-style threshold of 3-5 percent of the national vote in order to elect representatives to Congress. These proposals, and many others, were either rejected or tabled by the Congress, whose members had little interest in restricting the expansion of parties in the political process. Other pending changes to the party system languish in the Congress, and the expectation that they will move to the floor is very limited.

Thus, parties begin at the base as weak organizations, vehicles for intermittent electoral purposes. There is little thought to continuity in either program or leadership. Local and state rivalries will drive prominent personalities from one party to another. Peculiar alliances will emerge that represent personalist and local interests. For example, in the October 1996 municipal elections, the PSDB and the PFL (national coalition partners) ran separate mayoral candidates in twenty-one of the twenty-six state capitals and opposed each other in about 90 percent of all municipal posts to be elected in the key states of the south. The PMDB, a nominal member of the Cardoso coalition, ran its own mayoral candidates in twenty state capitals. And the PPB opposed the PSDB in twenty-one cities and the PFL in eighteen. But in the city of São Paulo, a critical arena for the government, the PSDB had its own candidate, and its partner, the PFL, endorsed the PPB candidate.

The localism of politics is further illustrated by the proliferation of mayoralties—there were 4,300 in 1988, 4,974 in 1992, and 5,100 in 1996. New municipal districts are established by the Congress in Brasilia. Since many members of Congress consider local office to be far more important than national office, the tendency to support an expansion of the number of municipal positions available every four years is overwhelming (correspondingly, the number of town council positions has increased from 65,000 in 1992 to 70,000 in 1996).

Service in the national Congress is not viewed by most politicians as a permanent career. It is a place in which you spend a four-year term of office to facilitate the transfer of resources back to the state or municipal power structure that sent you to Brasilia. To illustrate the point, approximately 116 federal deputies, nearly one-fourth of the Chamber, ran for local office in October 1996. And because individual deputies view national office as transitory, national parties have little meaning. This discourages any sort of party coherence in Brasilia. And, in fact, Brazil's political parties tend to be regionally concentrated. The PSDB is highly concentrated in São Paulo and Ceará states; the PT and PPR in São Paulo; the PFL in the northeast; and the Democratic Workers Party (PDT) in Rio de Janeiro and Rio Grande do Sul. These concentrations reflect personalities, local political culture, and historical alliances among local elites.

The long historical development of the party process in Brazil leads to one conclusion: the base of power in Brazil is local. Since local leaders exercise tremendous influence over voter preferences, particularly in the rural areas where illiteracy remains high, a local base of support yields a high degree of influence over those who are elected to the Chamber every four years. The system produces negative effects for the legislative process in Brasília. High turnover rates, especially in the south and southeast, produce deputies with little experience and less interest in getting to know the game. They have private sector or professional options and are often frustrated by a process in Brasília that is usually dominated by the conservative northern and northeastern elites (note, again, that the two leaders of the houses of Congress in 1995-1996 were from the north [Sarney] and the northeast [Magalhães]). It also reduces the interest of the deputies in investing in legislative expertise or in strengthening the institutional procedures of the Congress. Committees are insignificant; hearings are superficial. Members of Congress have one principal job: to funnel as much patronage—or pork—back home as they can in four years in Brasília. This fact of life means that lobbying the executive branch for handouts is more important than legislating, although final congressional approval will be needed for the omnibus bills administered by the federal bureaucracy. A highly prized designation in Brasília is that of minister; federal deputies and senators are allowed to take a leave of absence from the Congress to serve in the executive branch, which facilitates the flow of largesse between Brasília and the states and municipalities. The realities of power in Brasília have been enhanced dramatically since 1988, with the revenue transfers to the states and cities mandated in the constitution.

A 1996 public opinion poll produced by the respected JB-Vox Populi organization confirmed that the National Congress received only a 17 percent approval rating—second lowest of the thirteen institutions rated in the poll. The ratings for the municipal councils in the eight capital cities surveyed were correspondingly low. The three highest institutions in ratings were the national press, the Catholic church, and the armed forces. But this trend is not new. Nor does it appear to have any apparent impact on voter preference at the polls; by a vast majority, traditional political party candidates were voted into, or returned to, office in October. Brazilians apparently believe that they have little control either over the political system as a whole or over individual politicians. It may be that they accept politics as it is or that the constant changes of government have created cynicism about the impact on politics of the individual voter.

POLITICS AND
SOCIETY
IN CARDOSO'S
BRAZIL

The political process does not function in a vacuum in any society. As Brazil enters the twenty-first century, politics needs to be put in the context of Brazilian society and Brazil's social problems. The political class in Brazil represents a highly heterogeneous population of some 170 million people. While the Brazilian economy has changed dramatically in the last twenty-five years, most observers agree that there has been a lag in social development. Twenty percent of Brazilians still live in rural areas, in contrast to 12 percent in Argentina and Chile. Illiteracy stands at 19 percent of the population compared with 13 percent in Colombia and 5 percent in Argentina. Life expectancy at birth is 66.6 years in Brazil; it is 71.9 in Venezuela and 72.3 in Argentina. The infant mortality rate (per 1,000 live births) is high—57.0; it is 36.4 in Colombia and 35.4 in Mexico.

Education, critical to social mobility and professional success, is poor in Brazil, particularly at the primary level where there is a high incidence of repeating class years by those students unable to meet minimum standards. Secondary schools tend to favor pre-university training in a society where the few who attend university are generally from the middle and upper-middle classes. Fernando Henrique Cardoso has stated that he would like to make educational improvement a key goal of his presidency, but he is hampered by budgetary considerations and a backlog of unresolved problems, ranging from inadequate physical infrastructure to poorly paid teachers and high degrees of absenteeism and dropouts by students in the early school years.

Brazil is also very heterogeneous in racial composition. Some 69.6 million people were classified as being of African background in the 1991 national census. That people of color tend to be poorer and less educated in Brazil is a social issue that has long been ignored by the educated population. The country's indigenous population probably stands at about a quarter million and has become the source of international concern as development patterns have impinged on their lands in the northern and northwestern states. Immigrants have always been welcome in Brazil, and there are large communities of descendants of Japanese, Lebanese, Italian, German, and Polish settlers. While the Roman Catholic Church is accepted as the church of preference of the vast majority of Brazilians, Afro-Brazilian religions, popular Catholicism, Protestantism, and evangelical groups have made a strong impact across the country.

The World Bank and other institutions monitoring economic growth patterns have stated that Brazil's income distribution is highly uneven and ranks among the worst in the world. A small percentage of the population takes home a large share of national income, and the majority receives a very small percentage. This is aggravated by many years of inflation, which impacts most harshly on the poor. Poor economic performance in Brazil for a number of years has punished the working class; the economy in some years produced few new jobs. And the restructuring of Brazilian industry in recent years has led to a reduction in jobs and wage levels in many businesses. Successive governments have failed to find adequate policies to bring about a more equitable distribution of income. This is linked to the widespread poverty in the large cities and the countryside, to the misapplication of public resources for needed social services, and to the attitude among many in the political class that social marginalization and poverty are inevitable in developing countries like Brazil and that there is little government or public policy can do to alleviate the plight of the marginal in society.

These factors need to be considered in analyzing the workings of the Brazilian political system and the need for reform. The agenda of economic reform that has stalled in the Congress should result in an increase in taxes and government revenues from privatization, for example, to generate revenues that would be available for social investment. A reform of the social security system—perhaps along the lines of Chile and Argentina, where the programs have been privatized—would generate internal savings and give individuals a broad stake in the economy. But a political decision will need to be made regarding the distribution of responsibility for social investment in education, health, and housing, given the current distribution of revenues mandated by the 1988 constitution. That is a public policy challenge the Brazilian government hopes to begin to address by the end of the century. The role of politics should be to maximize the individual's freedom to pursue his or her personal and professional interests with the adequate tools to do so. Education, health, and housing are among those tools that are lacking for a large number of Brazilians. The long-range goal of the Cardoso administration is to restructure the economy to make it more efficient and more competitive. That should then provide the means to attack the long-neglected social problems in Brazil. But until the political parties in Congress take that challenge seriously, appropriate responses to societal needs will inevitably be postponed.

THE FUTURE OF
THE REFORM
PROCESS IN THE
CARDOSO GOVERNMENT

In 1997, at the midpoint of his four-year term of office, President Cardoso finds his government in a position similar to that of all of his democratic predecessors after 1946: how to convince the national Congress of the need to support a reasonable program of reforms? Cardoso's coalition consists of six parties. The conduct of those parties in the Chamber of Deputies is most important in considering the fate of reform proposals. The Senate tends to be more supportive of the administration. The breakdown by seats of the coalition is as follows:

.....Chamber (total = 531) Senate (total = 81)

PMDB ...................102 ...................24

PFL......................... 97 ...................22

PSDB ......................76................... 14

PPB......................... 88 ....................5

PTB .........................28 ....................4

PL .............................9.................... 0

The government coalition holds a slim voting margin in the Chamber. But time and again the president's program has been watered down, overlooked, or defeated. Part of the problem is the cumbersome procedure for reform established in the 1988 constitution. Amendments to the document require two votes by majorities of 60 percent in both houses of Congress. The process originates in the House and continues in the Senate. The final committee recommendation on a constitutional issue needs to be voted by the full membership of each house in two sessions separated by an interval of five sessions.

When Cardoso took office in January 1995, he inherited a lame-duck Congress; the new legislature, elected at the end of 1994, did not take office until February 1995. The government had little hope of passing any new legislation before that date. But even with the swearing-in of the new Congress, in which the government allegedly held a majority, no progress was made. Following the president's successful visit to the United States in April 1995, he returned to Brasilia determined to use the traditional tools of his office—appointments and disbursements—to move his agenda. By June, he had cajoled the Congress into passing five important constitutional amendments, which open the state monopolies on petroleum, telecommunications, electricity, and natural gas distribution to foreign investors and grant equal treatment to foreign firms doing business in Brazil. But passing implementing legislation has moved far more slowly through the Congress. While the constitutional amendments authorized a general liberalization of key sectors of the economy, the specifics of how and when to do so require additional action by the Congress. Following the "Big 5" amendments, the government has proposed a series of phase two reforms, which began in early 1996 with a special session of Congress. The principal areas for legislative action were social security, state (administrative) reform, and tax reform. The Congress, unwilling to take unpopular decisions before the municipal elections in October 1996, made little progress in 1996 in supporting the Cardoso administration's reform agenda.

The results of those elections were inconclusive in predicting future political support for the government. To many observers, Brazilian voters appeared to pick candidates who were committed to "good government," and they often elected officials endorsed by outgoing and successful mayors. In São Paulo, the government candidate, Senator José Serra, lost to a little-known member of the administration of Mayor Paulo Maluf. The mayor's party, the PPB, did well nationwide, winning 20 percent of the total vote. After a strong showing in the first round of elections in October, the PT placed poorly in the second round in November but placed second in total votes, with 18 percent of the votes cast. The core government coalition parties, PFL and PSDB, generally held their own in the balloting. The PMDB suffered some unexpected defeats but remains the largest party in the Chamber of Deputies.

In May 1996, the Cardoso government encountered a dramatic example of the inability of the party system to respond to presidential leadership. Deeply concerned about the fiscal imbalance in the national accounts, the administration hoped to move a major reform of social security through Congress by mid-1996. After careful consultation and debate, the government leadership in Congress brought a comprehensive draft bill to the floor only to see it roundly defeated. The press reaction was sharp and negative. The Jornal do Brasil's lead editorial the morning after the vote was entitled "Adeus às Ilusões" (farewell to illusions). The editorial stated that the defeat in the Chamber should force the government to reexamine its relationship with the parties that constituted its parliamentary base. The editorial said that the government, referring to the parties in the putative government alliance, cannot count on them in the decisive hours. The promise of support extends only to the interest of each deputy. The lack of conviction begins with the relationship to the party: the deputies understand that nothing matters because the parties are nothing more than electoral lists.... Members of parliament take care, exclusively, of their reelection, which is their reason to exist. The corporatist blocs now active in the Congress vote only in favor of the corporatist interests that they represent.

The editorial went on to lament the absence of party loyalty and of a more authentic voting system than that of the proportional one now in place, the large number of parties, and the tyranny of the minorities in the Congress that impede legislative progress on major policy initiatives.

And as Isto É magazine pointed out, the vote "was an alliance between the corporatist [public sector oriented] left, candidates for mayor [in the October 1996 election] and parliamentarians disposed to force personal favors from the government." And the following week, the Jornal do Brasil reported that the administration, prior to the social security vote, had given in to almost all of the major lobbies in granting concessions—and still lost the vote! And, as the journal indicated, the vast majority of these lobbies are actually included within the government's alleged coalition in the Congress. The rural bloc (Ruralista), made up of 179 deputies, belongs to the PFL, PPB, and PTB; grammar school teachers, represented by 200 members of Congress, mostly belong to the PMDB and the PFL; the business community, represented by 250 members of Congress, is primarily drawn from the PSDB.

This illustrates the dilemma of the government. Prior to the October 1996 local elections, there was little legislative time to consider the priority agenda items. Many members had left Brasília to campaign; others would not make tough decisions that would impact negatively on the electoral base of their party or of their colleagues. Without party loyalty, the leadership has little voice in controlling party votes. The difficulty in moving draft legislation through the Congress was illustrated again in late July 1996, when it was reported that discussions between the government and the Congress had broken down over the critical issue of job stability (or permanency) for public employees. Efforts at compromise failed when members of Congress made it clear that they were unwilling to vote against public employee perks in an election year.

The administration in early 1997 again attempted to introduce civil service reform and again met defeat. After passing a civil service reform bill as a whole on April 16, the Chamber of Deputies began to vote on changes to the bill, all of which were aimed at weakening the civil service cutbacks proposed by the Cardoso administration. Defections from the pro-government coalition were part of the problem. But the principal reason for the measure's defeat was the populist appeal of the Workers Party-sponsored provision that called for the maintenance of generous job stability provisions for low-income government workers. Had the measure been defeated, the government would have been in a position to fire non-specialized workers such as elevator operators and messengers. Now these low-income employees have automatic job stability guarantees and can quite literally maintain their jobs and benefits forever, regardless of change in the labor demands of government departments.

On the day the government lost the vote, President Cardoso was on a visit to Canada. Some argued that the president should have remained in Brasilia to lobby for his legislation. Others said that the Chamber president, responsible for conducting the vote, failed to realize that many pro-government deputies were absent from the floor. Either or both explanations may be true, but the overwhelming reason for the success of the measure was its wide political appeal and the unwillingness of the legislators to understand the long-term fiscal implications of the measure. It is expected that the government will be able to achieve some modification of the costly job stability guarantees, but it will be later than the government wanted and the fiscal impact will be far slighter than planned.

While attempting to gain approval for its legislative agenda in 1997, the key policy issue to emerge was that of the reelection of the president. The 1988 Constitution stipulates that the chief executive is allowed one four-year term with no reelection; the same rule applies to state governors and mayors. The Cardoso team in early 1997 proposed an amendment to the constitution to allow for reelection for president and vice president as well as governors and mayors. The proposal moved through a series of required votes during the first quarter of 1997 and is expected to receive final approval by the summer. The amendment appears destined to succeed because of the continuing popularity of the Real Plan, the president's popularity in the public opinion polls, and the lack of a credible alternative candidate either within his own coalition or among the opposition. While it is unwise to predict the final judgments of the Brazilian legislature, there appeared to be sufficient momentum in favor of the amendment in mid-1997 to project victory when the final voting takes place. Reelection will allow the president to contemplate a six-year period in which to build coalitions for his reform agenda and to slowly but surely move Brazil in the direction of much needed structural change.

CONCLUSION

Fernando Henrique Cardoso's election in 1994 appeared to herald a new era in Brazil. Cardoso had a popular mandate. He was the author of the most successful economic adjustment program in this century. His cabinet was recognized as talented and task oriented. And the president apparently had put together a loose but majority coalition of party support in the Congress. After a slow start early in 1995, the administration had an important string of victories in mid-1995 with the approval of a set of constitutional amendments to liberalize and modernize the economy.

But since that time, the pace of legislative change has been slow and tortuous. And in mid-1996, the first of a set of phase two reforms was defeated by the very legislative caucuses that were pledged to back the president and his program. What happened? Cardoso overlooked or forgot the traditional basis of Brazilian political life: state and local power brokers who work through putative national political parties to achieve limited benefits and perks for their bases of support. There is little advantage to them to vote in favor of the national interest, since their interest is local and regional. And the president is forced to negotiate and bargain issue by issue, with federal handouts, in a precarious game aimed at winning enough votes to move the reform process forward. But the built-in forces across Brazil that oppose some reform, or some aspects of the reform of some sector, are usually sufficient to stymie specific change. Therefore, it is relatively easy for a deputy to vote for a generic constitutional amendment that has little meaning. But when it comes to implementing legislation that will scale back benefits, reduce the public workforce, cancel subsidies or programs for key constituents, and the like, it is far more difficult to muster a majority—as the social security vote demonstrated in 1996.

But, again, this is not stalemate in the traditional sense. Things do move through the Brazilian Congress but at a pace determined by the interests of the country's principal power brokers. There is always room for compromise, patronage, deals, and bargaining. But the fiscal costs of such a process are high—and ultimately may undo much of the earlier work to restructure the economy. It is understood by the old hands in Brasilia and in the states and municipalities that ideology, romanticism, or First World standards are irrelevant. Until there are significant reforms to the electoral system (to probably include some form of district voting), a readjustment of the rules by which parties are organized and registered, and a greater willingness of the Brazilian electorate to hold its elected representatives accountable for their votes, the process of reform will be slow and as much influenced by local considerations as it is—or will be—by the well-intentioned national agenda of reform articulated by the Cardoso government.

Excerpted from Brazil Under Cardoso edited by Susan Kaufman Purcell and Riordan Roett, Lynne Rienner Publishers, Boulder, Colorado, 1997, 120 pp.

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