foreign creditors to ease the payments on Brazil’s
huge debt. A preliminary agreement was reached
in 1991. Mello’s determination to stop the despo-
liation of the Amazon and to protect the few
Indian peoples still left won world approval. It
only slowed and did not halt the advancing
destruction. Brazil was also chosen for the Earth
Summit, a conference intended to protect the
environment but which achieved little.
Brazil dominates the economy of southern
Latin America: Mercosur, the regional economic
free trade area, was founded in 1990 by Brazil,
Argentina, Paraguay and Uruguay; in 1996 Chile
became an associate member. Trade between them
has risen fivefold. A decade after the end of military
rule much had been achieved in Brazil. It has
opened its trade to the world: in the mid-1990s its
Gross Domestic Product was three-quarters that of
China, whose population is seven and a half times
larger. But the functioning of democratic govern-
ment has been far from smooth. In December
1992 President Fernando de Mello was forced
from office surrounded by scandal. His successor
Itamar Franco inherited an economy whose cur-
rency had collapsed, with hyperinflation exceeding
1,000 per cent. Fernando Henrique Cardoso,
appointed minister of finance, began the task of
economic reform. In 1995 he was elected presi-
dent following his success in opening the market
and subduing inflation. But Brazil’s problems of
protecting the rainforests, saving the indigenous
peoples, and providing for the teeming millions of
poor crowded into shacks lacking sanitation,
remained as urgent as ever at the end of the 1990s.
The low educational standards of the children
of the poor hinder progress throughout Latin
America. In Brazil more than 2.5 million children
receive no schooling and those who do average less
than six school years. The disparity between the
north and the south of the Western hemisphere
remained extreme despite progress as the twentieth
century came to a close.
During the course of Cardoso’s two presiden-
tial administrations not surprisingly Brazil’s ills
were not all mastered, especially the high crime
and murder rate, but as the longest serving demo-
cratically elected president he achieved some
progress, the most important through his secur-
ing a ‘fiscal responsibility law’ which imposed dis-
cipline on local state and central spending and so
curbed inflation. In social reforms the housing
and education took pride of place; nearly all the
children gaining access to primary schools. A pro-
gramme of land reform settled on the 600,000
landless peasant families. Yet, underemployment
and unemployment remained high in 2003, not
far off one in five. Brazil’s finances remain parlous
though saved from default in August 2002 by a
$30 billion loan from the International Monetary
Fund, the Brazilian administration promising to
abide by its fiscal conditions. Public sector debt
had risen from 30 per cent in 1994 to 56 per cent
of the GDP in 2002 and foreign debt absorbed
90 per cent of Brazil’s export earnings. Reforms
of pensions and taxations, and the rooting out of
corruption remained essential if the extreme dis-
parity between wealth and poverty was to be
tackled. Cordoso could not offer himself again
and his chosen successor was defeated by the
charismatic Lula da Silva and his Worker’s Party.
This was Luiz Inácio Lula da Silva’s fourth elec-
tion campaign. He was born in the poorest section
of society and rose from shoeshine boy to fiery
union leader and presidential candidate. Once a
socialist radical, by 2003 he presented a more prag-
matic moderate image, no longer the nightmare of
foreign investors whose support is indispensible for
Brazil’s economy. Lula da Silva set out to show
that contemporary ‘liberal socialism’ can work with
the market and capitalism for the benefit of all the
people, while promoting public services. In place
of class conflict he promised a ‘social pact’, the
working together of all sides of industry. The big
new idea was to bring together politicians, unions,
business and non-government organisations in a
Council of Economic and Social Development to
discuss reforms before they were submitted to
Congress. Hailed by Brazil’s 50 million poor as a
saviour, Lula da Silva promised a new spurt of
growth and widespread reforms, all amid a contin-
uing world economic slowdown in 2003.
What will he be able to achieve? The gap
between promise and reality may prove too wide.
His mission, the eradication of poverty and
improving on the gross disparity of wealth, was
expressed in his inaugural speech on 1 January