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Brazil (07/02)


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For the most current version of this Note, see Background Notes A-Z.

PROFILE

OFFICIAL NAME:
Federative Republic of Brazil

Geography
Area: 8,511,965 sq. km. (3,290,000 sq. mi.); slightly smaller than the U.S.
Cities: Capital--Brasilia (pop. 2.0 million). Other cities--Sao Paulo (10.4 million), Rio de Janeiro (5.8 million), Belo Horizonte (2.2 million), Salvador (2.4 million), Fortaleza (2.1 million), Recife (1.4 million), Porto Alegre (1.4 million), Curitiba (1.6 million).
Terrain: Dense forests in northern regions including Amazon Basin; semiarid along norrtheast coast; mountains, hills, and rolling plains in the southwest, including Mato Grosso; and coastal lowland.
Climate: Mostly tropical or semitropical with temperate zone in the south.

People
Nationality: Brazilian(s).
Population (2000): 170 million.
Annual growth rate: 1.6%.
Ethnic groups: Portuguese, Italian, German, Japanese, African, indigenous people.
Religion: Roman Catholic (80%).
Language: Portuguese.
Education: Literacy--81% of adult population.
Health: Infant mortality rate--44/1,000. Life expectancy--67 yrs.
Work force: (79 million): Services--53%; agriculture--23%; industry--24%.

Government
Type: Federative republic.
Independence: September 7, 1822.
Constitution: Promulgated October 5, 1988.
Branches: Executive--President (chief of state and head of government popularly elected to no more than two 4-year terms).
Legislative--Senate (81 members popularly elected to 8-year terms), Chamber of Deputies (513 members popularly elected to 4-year terms). Judicial--Supreme Federal Tribunal.
Political parties: Brazilian Democratic Movement Party (PMDB), Brazilian Social Democratic Party (PSDB), Liberal Front Party (PFL), Social Democratic Party (PSD), Democratic Workers Party (PDT), Workers Party (PT), Brazilian Labor Party (PTB), Liberal Party (PL), Brazilian Socialist Party (PSB), Communist Party of Brazil (PC do B), Brazilian Progressive Party (PPB), Popular Socialist Party (PPS), Green Party (PV), the Social Liberal Party (PSL), the National Mobilization Party (PMN), National Workers Party (PTN), Humanistic Solidarity Party (PHS).

Flag: flag of Brazil

Economy (2001)
GDP (est.): $500 billion.
Annual real growth rate: 1.8%.
Per capita GDP: $3,000.
Natural resources: Iron ore, manganese, bauxite, nickel, uranium, gemstones, oil, wood, and aluminum. Brazil has 12% of the world's fresh water.
Agriculture (9% of GDP): Products--coffee, soybeans, sugarcane, cocoa, rice, beef, corn, oranges, cotton, wheat, and tobacco. Industry (29% of GDP): Types--steel, commercial aircraft, chemicals, petrochemicals, footware, machinery, motors, vehicles, and autoparts, consumer durables, cement, lumber.
Trade: Exports--$58.2 billion. Major markets--United States 24%, Argentina 9%, Netherlands 5%, Germany 4%, Japan 3%, China 3%, Belgium 3%, Mexico 3%. Imports--$56 billion. Major suppliers--United States 23%, Argentina 11%, Germany 9%, Japan 5%, Italy 4%.

PEOPLE AND HISTORY  Boy with parrot in Satarem in the Amazon region of Brazil, UN/DPI Photo
With an estimated 170 million inhabitants, Brazil has the largest population in Latin America and ranks sixth in the world. The majority live in the south-central area, which includes the industrial cities of Sao Paulo, Rio de Janeiro, and Belo Horizonte. Urban growth has been rapid; by 2000, 81% of the total population were living in urban areas. Rapid growth has aided economic development but also has created serious social, environmental, and political problems for major cities.

Four major groups make up the Brazilian population: the Portuguese, who colonized Brazil in the 16th century; Africans brought to Brazil as slaves; various other European, Middle Eastern, and Asian immigrant groups who have settled in Brazil since the mid-19th century; and indigenous people of Tupi and Guarani language stock. Intermarriage between the Portuguese and indigenous people or slaves was common. Although the major European ethnic stock of Brazil was once Portuguese, subsequent waves of immigration have contributed to a diverse ethnic and cultural heritage.

From 1875 until 1960, about 5 million Europeans emigrated to Brazil, settling mainly in the four southern states of Sao Paulo, Parana, Santa Catarina, and Rio Grande do Sul. Immigrants have come mainly from Italy, Germany, Spain, Japan, Poland, and the Middle East. The largest Japanese community outside Japan is in Sao Paulo. Despite class distinctions, national identity is strong, and racial friction is a relatively new phenomenon. Indigenous full-blooded Indians, located mainly in the northern and western border regions and in the upper Amazon Basin, constitute less than 1% of the population. Their numbers are declining as contact with the outside world and commercial expansion into the interior increase. Brazilian Government programs to establish reservations and to provide other forms of assistance have existed for years but are controversial and often ineffective.

Brazil is the only Portuguese-speaking nation in the Americas. About 80% of all Brazilians belong to the Roman Catholic Church; most others are Protestant or follow practices derived from African religions.

Brazil was claimed for Portugal in 1500 by Pedro Alvares Cabral. It was ruled from Lisbon as a colony until 1808, when the royal family, having fled from Napoleon's army, established the seat of Portuguese Government in Rio de Janeiro. Brazil became a kingdom under Dom Joao VI, who returned to Portugal in 1821. His son declared Brazil's independence on September 7, 1822, and became emperor with the title of Dom Pedro I. His son, Dom Pedro II, ruled from 1831 to 1889, when a federal republic was established in a coup by Deodoro da Fonseca, Marshal of the army. Slavery had been abolished a year earlier by the Regent Princess Isabel while Dom Pedro II was in Europe.

From 1889 to 1930, the government was a constitutional democracy, with the presidency alternating between the dominant states of Sao Paulo and Minas Gerais. This period ended with a military coup that placed Getulio Vargas, a civilian, in the presidency; Vargas remained as dictator until 1945. From 1945 to 1961, Eurico Dutra, Vargas, Juscelino Kubitschek, and Janio Quadros were elected presidents. When Quadros resigned in 1961, he was succeeded by Vice President Joao Goulart.

Goulart's years in office were marked by high inflation, economic stagnation, and the increasing influence of radical political elements. The armed forces, alarmed by these developments, staged a coup on March 31, 1964. The coup leaders chose as president Humberto Castello Branco, followed by Arthur da Costa e Silva (1967-69), Emilio Garrastazu Medici (1968-74), and Ernesto Geisel (1974-79) all of whom were senior army officers. Geisel began a democratic opening that was continued by his successor, Gen. Joao Baptista de Oliveira Figueiredo (1979-85). Figueiredo not only permitted the return of politicians exiled or banned from political activity during the 1960s and 1970s, but also allowed them to run for state and federal offices in 1982.

At the same time, an electoral college consisting of all members of congress and six delegates chosen from each state continued to choose the president. In January 1985, the electoral college voted Tancredo Neves from the opposition Brazilian Democratic Movement Party (PMDB) into office as President. However, Neves became ill in March and died a month later. His Vice President, former Senator Jose Sarney, became President upon Neves' death. Brazil completed its transition to a popularly elected government in 1989, when Fernando Collor de Mello won 53% of the vote in the first direct presidential election in 29 years. In 1992, a major corruption scandal led to the impeachment and ultimate resignation of President Collor. Vice President Itamar Franco took his place and governed for the remainder of Collor's term culminating in the October 3, 1994 presidential elections, when Fernando Henrique Cardoso was elected President with 54% of the vote. He took office January 1, 1995 and was re-elected in October 1998 for a second 4-year term. Presidential elections will next be held in October 2002.

President Cardoso has sought to establish the basis for long-term stability and growth and to reduce Brazil's extreme socioeconomic imbalances. His proposals to Congress include constitutional amendments to open the Brazilian economy to greater foreign participation and to implement sweeping reforms--including social security, government administration, and taxation--to reduce excessive public sector spending and improve government efficiency.

GOVERNMENT AND POLITICAL CONDITIONS  
Brazil is a federal republic with 26 states and a federal district. The 1988 constitution grants broad powers to the federal government, made up of executive, legislative, and judicial branches. The president holds office for 4 years, with the right to re-election for an additional 4-year term, and appoints his own cabinet. There are 81 senators, three for each state and the Federal District, and 513 deputies. Senate terms are for 8 years, with election staggered so that two-thirds of the upper house is up for election at one time and one-third 4 years later. Chamber terms are for 4 years, with elections based on a complex system of proportional representation by states. Each state is eligible for a minimum of 8 seats; the largest state delegation (Sao Paulo's) is capped at 70 seats. The result is a system weighted in favor of geographically large but sparsely populated states.

Fifteen political parties are represented in Congress. Since it is common for politicians to switch parties, the proportion of congressional seats held by particular parties changes regularly. The following are the major political parties: Liberal Front Party (right); Brazilian Democratic Movement Party (center); Brazilian Social Democratic Party (center-left); Brazilian Progressive Party (right); Workers Party (left); Democratic Labor Party (left); Brazilian Labor Party (center-right); Brazilian Socialist Party (left); Communist Party of Brazil (left); Liberal Party (center-right).

President Cardoso was elected with the support of a heterodox alliance of his own center-left Social Democratic Party, the PSDB, two center-right parties, the Liberal Front Party (PFL), and the Brazilian Labor Party (PTB). Brazil's largest party, the centrist Brazilian Democratic Movement Party (PMDB), joined Cardoso's governing coalition after the election, as did the center-right PPB, the Brazilian Progressive Party, in 1996. Party loyalty is weak, and deputies and senators who belong to the parties comprising the government coalition do not always vote with the government. As a result, President Cardoso has had difficulty, at times, gaining sufficient support for some of his legislative priorities, despite the fact that his coalition parties hold an overwhelming majority of congressional seats. Nevertheless, the Cardoso administration has accomplished many of its legislative and reform objectives.

States are organized like the federal government, with three government branches. Because of the mandatory revenue allocation to states and municipalities provided for in the 1988 constitution, Brazilian governors and mayors have exercised considerable power since 1989. Presidential, congressional, and gubernatorial elections last took place in October 1998. Fernando Henrique Cardoso won the presidential election with approximately 53% of the vote, while his closest challenger, Luiz Inacio Lula da Silva (PT), had about 32%. The next national elections will be held in October 2002.

Principal Government Officials
President--Fernando Henrique Cardoso
Vice President--Marco Maciel
Minister of Foreign Affairs--Celso Lafer
Ambassador to the United States--Rubens Barbosa
Ambassador to the United Nations--Gelson Fonseca, Jr.
Ambassador to the Organization of American States--Valter Pecly Moreira

Brazil maintains an embassy in the United States at 3006 Massachusetts Avenue NW, Washington, DC 20008 (tel. 202-238-2700). Brazil maintains consulates general in New York, Chicago, and Los Angeles; and consulates in Miami, Houston, Boston, San Francisco, and Orlando.

ECONOMY
Brazil's GDP in 2001 was estimated at $500 billion, down from $595 billion in 2000 because of the sharp depreciation of the real. It is a highly diversified economy with wide variations in levels of development. Most large industry is concentrated in the south and southeast. The northeast is traditionally the poorest part of Brazil, but it is beginning to attract new investment. Brazil embarked on a successful economic stabilization program, the Plano Real (named for the new currency, the real; plural: reais) in July 1994. Inflation, which had reached an annual level of nearly 5,000% at the end of 1993, fell sharply, reaching a low of 2.5% in 1998; it was 7.7% in 2001. Brazil successfully shifted from an essentially fixed exchange rate regime to a floating regime in January 1999. Following the float in 1999, the real fell approximately 50%. It was relatively stable in 2000, but depreciated almost 20% in 2001 due to a number of shocks, including a domestic energy crisis and an economic crisis in Argentina.

Starting in 1994, the Cardoso administration introduced to Congress a series of constitutional reform proposals to replace a state-dominated economy with a market-oriented one and to restructure all levels of government on a sound fiscal basis. Congress approved several amendments to open the economy to greater private sector participation, including foreign investors. Passage of the Fiscal Responsibility Law in May 2000 improved fiscal discipline at all three levels--federal, state, and municipal--and all three branches of government. Some measures have been adopted to address large deficits in Brazil's pension programs, but more remains to be done. Tax reform and simplification has been under debate for over 6 years, but there has not been sufficient agreement for final legislative action. Despite fiscal austerity, the administration has increased expenditure in education and health to redress social inequity.

Market opening and economic stabilization have significantly enhanced Brazil's growth prospects. Brazil's trade has doubled since 1990. The stock of U.S. direct foreign investment has increased from less than $19 billion in 1994 to an estimated $35 billion through 2000. The United States is the largest foreign investor in Brazil.

Brazil is endowed with vast agricultural resources. It has basically two distinct agricultural areas. The first, comprised of the southern one-half to two-thirds of the country, has a semi-temperate climate and higher rainfall, the better soils, higher technology and input use, adequate infrastructure, and more experienced farmers. It produces most of Brazil's grains and oilseeds and export crops. The other, located in the drought-ridden northeast region and in the Amazon basin, lacks well-distributed rainfall, good soil, adequate infrastructure, and sufficient development capital. Although producing mostly for self-sufficiency, the latter regions are increasingly important as exporters of forest products, cocoa, and tropical fruits. Central Brazil contains substantial areas of grassland with only scattered trees. The Brazilian grasslands are less fertile than those of North America and are generally more suited for grazing.

Brazilian agriculture is well diversified, and the country is largely self-sufficient in food. Agriculture accounts for 9% of the country's GDP and employs about one-quarter of the labor force in more than 6 million agricultural enterprises. Agribusiness, taken as a whole, accounts for approximately one-third of Brazil's GDP. Brazil is the world's largest producer of sugarcane and coffee and a net exporter of cocoa, soybeans, orange juice, tobacco, forest products, and other tropical fruits and nuts. Livestock production is important in many sections of the country, with rapid growth in the poultry, pork, and milk industries reflecting changes in consumers tastes. On a value basis, production is 60% field crop and 40% livestock. Brazil is a net exporter of agricultural and food products, which account for about 35% of the country's exports.

Half of Brazil is covered by forests, with the largest rain forest in the world located in the Amazon Basin. Recent migrations into the Amazon and largescale burning of forest areas have placed the international spotlight on Brazil. The government has reduced incentives for such activity and is implementing an ambitious environmental plan that includes an Environmental Crimes Law that requires serious penalties for infractions.

Brazil has one of the most advanced industrial sectors in Latin America. Accounting for one-third of GDP, Brazil's diverse industries range from automobiles, steel, and petrochemicals, to computers, aircraft, and consumer durables. With the increased economic stability provided by the Plano Real, Brazilian firms and multinationals have invested heavily in new equipment and technology, a large share of which has been purchased from U.S. firms.

Brazil has a diverse and sophisticated services industry as well. During the 1990s, Brazil's financial services industry underwent a major overhaul and is relatively sound. The sector provides local firms a wide range of financial products. The largest financial firms are Brazilian (and the two largest banks are government-owned), but U.S. and other foreign firms have an important share of the market.

In 2001, Brazil experienced a serious electricity crisis, due to inadequate rainfall for its hydroelectric system and insufficient new investment in the sector. Mandatory rationing and price hikes were sufficient to prevent blackouts. The rationing system officially ended on March 1, 2002. The government is seeking to increase investment, both by government-owned companies and by reducing obstacles to private sector investment. The Brazilian Government has undertaken an ambitious program to reduce dependence on imported oil. Imports previously accounted for more than 70% of the country's oil and derivatives needs but now account for about 25%. Brazil is one of the world's leading producers of hydroelectric power, with a current capacity of about 58,000 megawatts. Existing hydroelectric power provides 92% of the nation's electricity.

Proven mineral resources are extensive. Large iron and manganese reserves are important sources of industrial raw materials and export earnings. Deposits of nickel, tin, chromite, bauxite, beryllium, copper, lead, tungsten, zinc, gold, and other minerals are exploited. High-quality coking-grade coal required in the steel industry is in short supply.

FOREIGN RELATIONS
Traditionally, Brazil has been a leader in the inter-American community and has played an important role in collective security efforts, as well as in economic cooperation in the Western Hemisphere. Brazil supported the Allies in both World Wars. During World War II, its expeditionary force in Italy played a key role in the Allied victory at Monte Castello. It is a party to the Inter-American Treaty of Reciprocal Assistance (Rio Treaty) and a member of the Organization of American States (OAS). Recently, Brazil has given high priority to expanding relations with its South American neighbors and is a founding member of the Amazon Pact, the Latin American Integration Association (ALADI), and Mercosul (Mercosur in Spanish), an imperfect customs union including Argentina, Uruguay, Paraguay, and Brazil. Along with Argentina, Chile, and the United States, Brazil is one of the guarantors of the Peru-Ecuador peace process. Brazil is a charter member of the United Nations and participates in many of its specialized agencies. It has contributed troops to UN peacekeeping efforts in the Middle East, the former Belgian Congo, Cyprus, Mozambique, Angola, and most recently East Timor. Brazil has been a member of the UN Security Council four times, most recently 1998-2000.

As Brazil's domestic economy has grown and diversified, the country has become increasingly involved in international politics and economics. The United States, western Europe, and Japan are primary markets for Brazilian exports and sources of foreign lending and investment. Brazil also has bolstered its commitment to nonproliferation through ratification of the nuclear Non-Proliferation Treaty (NPT), signing a fullscale nuclear safeguard agreement with the International Atomic Energy Agency (IAEA), acceeding to the Treaty of Tlatelolco, and becoming a member of the Missile Technology Control Regime (MTCR) and the Nuclear Suppliers Group.

U.S.-BRAZILIAN RELATIONS
The United States was the first country to recognize Brazil's independence in 1822. The two countries have traditionally enjoyed friendly, active relations encompassing a broad political and economic agenda.

With the inauguration of Brazil's internationally oriented, reformist President Fernando Henrique Cardoso on January 1, 1995, U.S.-Brazil engagement and cooperation have intensified. This is reflected in the unprecedented number of high-level contacts between the two governments, including President Cardoso's state visit to Washington in April 1995, visits to Brazil by former President Bill Clinton and First Lady Hillary Rodham Clinton, former Secretaries of State Madeleine Albright and Warren Christopher, former Secretaries of Commerce Ronald Brown and William Daley, former Secretary of Defense William S. Cohen, and many other exchanges between U.S. and Brazilian cabinet and subcabinet officials. Important topics of discussion and cooperation have included trade and finance; hemispheric economic integration; UN reform and peacekeeping efforts; nonproliferation and arms control; follow-up to the 1994 Miami Summit of the Americas; common efforts to help resolve the Peru-Ecuador border conflict; and support for Paraguay's democratic development, human rights, counter-narcotics, and environmental issues.

During former President Clinton's October 1997 visit to Brazil, several agreements were signed, including an Education Partnership Agreement, which enhances and expands cooperative initiatives in such areas as standards-based education reform, use of technology, and professional development of teachers; a Mutual Legal Assistance treaty--ratified in 2001; and agreements on cooperation in energy, the international space station, national parks, and government reform. In April 2000 the United States and Brazil signed a Technical Safeguards Agreement to permit U.S. commercial firms to participate in the development of the Alcantara spaceport. During a visit of then-Under Secretary of State Timothy Wirth to Brazil in October 1995, the two countries signed a Common Agenda on the Environment, laying the foundation for cooperative efforts in environmental protection. Brazil is a key player in hemispheric efforts to negotiate an FTAA by 2005, and hosted the May 1997 FTAA Trade Ministerial in Belo Horizonte.

President Cardoso has been willing to discuss race relations frankly. He instituted an Inter-Ministerial Task Force on Race in 1995 and strengthened the mandate of the government-funded Palmares Foundation, dedicated to the promotion of Afro-Brazilian heritage. U.S. embassy public diplomacy programs seek to support these efforts, which mirror former President Clinton's National Dialogue on Race.

Relations are advancing well in various aspects of scientific and technical work. During his 1996 visit, former Secretary of State Christopher signed a Space Cooperation agreement and initialed an agreement on Peaceful Uses of Nuclear Energy.

In addition to working closely with Brazilian Government officials to strengthen the bilateral relationship, the U.S. embassy and consulates in Brazil provide a wide range of services to U.S. citizens and business. Political, economic, and science officers deal directly with the Brazilian Government in advancing U.S. interests but also are available to brief U.S. citizens on general conditions in the country. Attaches from the U.S. Commercial Service and Foreign Agriculture Service work closely with hundreds of U.S. companies that maintain offices in Brazil. These officers provide information on Brazilian trade and industry regulations and administer several programs to aid U.S. companies starting or maintaining business ventures in Brazil. The number of trade events and U.S. companies traveling to Brazil to participate in U.S. Commercial Service and Foreign Agriculture Service programs over the last 3 years has tripled.

The consular section of the embassy provides vital services to the estimated 50,000 U.S. citizens residing in Brazil. Among other services, the consular section assists Americans who wish to participate in U.S. elections while abroad and provides U.S. tax information. Besides the U.S. residents living in Brazil, some 150,000 U.S. citizens visit annually. The consular section offers passport and emergency services to U.S. tourists as needed during their stay in Brazil.

Principal U.S. Embassy Official
Charge d'Affaires--Cristobal Orozco
Defense Attache--Col. Richard Shaw, U.S. Army
Economic Counselor--Roman Wasilewski
Commercial Counselor--Richard Lenehan (resident in Sao Paulo)
Political Counselor--William R. Barr
Science Counselor--Darrell Jenks
Public Affairs Counselor--Mary Kruger
Consul General in Sao Paulo--Carmen Martinez
Consul General in Rio de Janeiro--Mark Boulware
Consul in Recife--Francisco Fernandez

The U.S. Embassy in Brasilia is located at SES Avenida das Nacoes, quadra 801, lote 3, Brasilia, DF, CEP: 70.403-900 (tel. 55-61-312-7000), (fax 55-61-225-9136). Internet: http://www.embaixada-americana.org.br/

There are U.S. consulates general in Rio de Janeiro and Sao Paulo, and a consulate in Recife. Consular agents are located in Manaus, Belem, Salvador, Fortaleza, and Porto Alegre. Branch offices of the U.S. Information Service (USIS) are located in Brasilia, Rio de Janeiro, and Sao Paulo. Branch offices of the U.S. Foreign Commercial Services are located in Brasilia, Sao Paulo, Rio de Janeiro, and Belo Horizonte.

Other Business Contacts
U.S. Department of Commerce
Office of Latin America and the Caribbean
International Trade Administration
14th and Constitution Avenue, NW
Washington, DC 20230
Tel: 202-482-0428
1-800-U.S.A-TRADE
Fax: 202-482-4157
Automated fax service for trade-related info: 202-482-4464 Internet:

American Chamber of Commerce of Sao Paulo
Rua da Paz, No. 1431
04713-001 - Chacara Santo Antonio
Sao Paulo - SP, Brazil
Tel: 55-11-51-803-804
Fax: 55-11-51-803-777
E-mail: amhost@amcham.com.br
Internet:

American Chamber of Commerce of Rio de Janeiro (a branch also is in Salvador)
Praca Pio X-15, 5th Floor
Caixa Postal 916
20040 Rio de Janeiro--RJ-Brazil
Tel: 55-21-2203-2477
Fax: 55-21-2263-4477
E-mail:amchambr@unisys.com.br Internet:



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