Federative Republic of Brazil
Area: 8,511,965 sq. km. (3,290,000 sq. mi.); slightly smaller than the U.S.
Cities: Capital--Brasilia (pop. 2.1 million). Other cities--Sao Paulo (17.9 million), Rio de Janeiro (10.7 million), Belo Horizonte (2.6 million), Salvador (2.6 million), Fortaleza (2.1 million), Recife (2.9 million), Porto Alegre (3 million), Curitiba (1.6 million). Terrain: Dense forests in northern regions including Amazon Basin; semiarid along northeast 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.
Population (2003 est.): 177 million.
Annual growth rate: 1.6%.
Ethnic groups: Portuguese, Italian, German, Spanish, Japanese, Arab, African, and indigenous people.
Religion: Roman Catholic (80%).
Education: Literacy--81% of adult population.
Health: Infant mortality rate--36/1,000. Life expectancy--63.5 yrs.
Work force: 79 million.
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 (11 lifetime positions appointed by the president).
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), and the Party of the Reedification of the National Order (PRONA).
GDP: $499.4 billion.
Annual real growth rate: 1.5%.
Per capita GDP: $2,820.
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, livestock, corn, oranges, cotton, wheat, and tobacco.
Industry (32% of GDP): Types--steel, commercial aircraft, chemicals, petrochemicals, footwear, machinery, motors, vehicles, auto parts, consumer durables, cement, and lumber.
Services (59% of GDP): Types--mail, telecommunications, banking, energy, commerce, and computing.
Trade: Trade balance 2002--$13.1 billion surplus. Exports--$60.3 billion. Major markets--United States 25.4%, European Union 24.9%, China 4.2%, Argentina, Mexico, and Japan, all 3.9%. Imports--$47.2 billion. Major suppliers--European Union 27.6%, United States 26%, Argentina 10%, Japan 5%, and China 3.3%.
PEOPLE AND HISTORY
With its estimated 177 million inhabitants, Brazil has the largest population in Latin America and ranks fifth in the world. The majority of people 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, 78% of the total population were living in urban areas. This growth has aided economic development but also has created serious social, security, environmental, and political problems for major cities.
Six 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 peoples 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 originally Portuguese, subsequent waves of immigration have contributed to a diverse ethnic and cultural heritage.
From 1875 until 1960, about 5 million Europeans immigrated 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.
Pedro Alvares Cabral claimed Brazil for Portugal in 1500. The colony was ruled from Lisbon until 1808, when Dom Joao VI and the rest of the Portuguese royal family fled from Napoleon's army, and established its seat of government in Rio de Janeiro. Dom Joao VI 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 led 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. Between 1945 and 1961, Jose Linhares, Gaspar Dutra, Vargas himself, Caf� Filho, Carlos Luz, Nereu Ramos, Juscelino Kubitschek, and Janio Quadros were elected presidents. When Quadros resigned in 1961, Vice President Joao Goulart succeeded him.
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 his impeachment and ultimate resignation. 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. Cardoso took office January 1, 1995 and was re-elected in October 1998 for a second 4-year term. Luiz Inacio Lula da Silva, commonly known as Lula, was elected president in 2002, after his fourth campaign for the office.
President Lula, a former union leader, is Brazil's first working-class president. He pledged social change and promised to eradicate hunger. Investors remembered his radical rhetoric of the past, and feared his election. As it became more apparent he would win, the Brazilian currency weakened, and Brazil's country-risk rating skyrocketed. In the months after his election, however, he took a conservative fiscal path, warning that social reforms would take years and that Brazil had no alternative but to extend fiscal austerity policies. The Real recovered dramatically. At the same time, Lula raised the minimum wage from 200 to 240 Reals a month, and stressed his "Zero Hunger" initiative, designed to give each Brazilian three meals a day. As of April 2003, two bills for crucial reforms of the pension system and tax code are still being debated in committee. The reforms are critical to Brazil's long-term financial stability.
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 8 years, 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 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. This system is 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 major political parties are:
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 2002. President Lula won the election with 61% of the vote. His challenger in the run-off was Jose Serra of the PDSB, former President Fernando Henrique Cardoso's party. The next presidential elections will be held in October 2006.
Chief of State and Cabinet Members
President--Luiz Inacio Lula da Silva
Vice President--Jose Alencar Gomes da Silva
Chief of the Cabinet for Institutional Security--Jorge Armando Felix
Chief of the Civilian Household--Jose Dirceu
Chief of Food Security & Fight Against Hunger--Jose Graziano da Silva
Minister of Agrarian Development--Miguel Rossetto
Minister of Agriculture--Roberto Rodrigues
Minister of Cities--Olivio Dutra
Minister of Communication--Miro Teixeira
Minister of Culture--Gilberto Gil
Minister of Defense--Jose Viegas Filho
Minister of Development, Industry, & Trade--Luiz Fernando Furlan
Minister of Education--Cristovam Buarque
Minister of Environment--Marina Silva
Minister of Finance--Antonio Palocci
Minister of Foreign Affairs--Celso Amorim
Minister of Health--Humberto Costa
Minister of Justice--Marcio Tomaz Bastos
Minister of Labor and Employment--Jaques Wagner
Minister of Mines and Energy--Dilma Rousseff
Minister of National Integration--Ciro Gomes
Minister of Planning and Budget--Guido Mantega
Minister of Science and Technology--Roberto Amaral
Minister of Social Assistance & Promotion--Benedita Da Silva
Minister of Social Security--Ricardo Berzoini
Minister of Sports--Agnelo Queiroz
Minister of Tourism--Walfrido Mares Guia
Minister of Transportation--Anderson Adauto
Chief Minister of General Comptroller--Waldir Pires
Central Bank President--Henrique Meirelles
Ambassador to the United States--Rubens Barbosa
Ambassador to the United Nations--Gelson Fonseca, Jr.
Ambassador to the OAS--Valter Moreira
Brazil maintains an embassy in the United States at 3006 Massachusetts Avenue NW, Washington, DC 20008 (tel. 202-238-2700). Brazil has consulates general in New York, Chicago, and Los Angeles; and consulates in Miami, Houston, Boston, and San Francisco.
Brazil's projected GDP for 2003 is $508.4 (2.3% growth), 2002 was estimated at $499.4 (1.5% growth), 2001 was $503.9 billion (1.7% growth), and 2000 was $594.2 billion (4.5% growth). (Above growth is measured in year-end U.S.$ equivalency.) For perspective, the Brazilian real weakened from an average exchange of $1.83 real/dollar in 2000 to $2.92 real/dollar in 2002. Brazil's economy is highly diversified with wide variations in levels of development. Most large industry is concentrated in the south and southeast. The northeast is the poorest part of Brazil, but it is beginning to attract new investment.
The economy was under critical stress in 2002 with election uncertainties, the 35% depreciation of the real, less foreign direct investment (dropping to $16.6 billion, 6 billion less than the previous year's total), and speculation that Brazil might go the way of Argentina. Public debt briefly rose to 63% of GDP, 11% above the 2001 year-end level. Brazil was helped by the IMF, which stepped in with a record $30 billion program. Lula's incoming government further slashed spending and increased its primary budget surplus target from 3.75% to 4.25% of GDP, going beyond the letter of the IMF agreement.
The Government of Brazil has given other positive signals to the international financial community. In early April 2003, a bill to pave the way for operational autonomy of the Central Bank passed in Congress by a margin of 442 to 13. Later that month, President Lula met with the 27 state governors and gained a consensus on tax and pension reforms bills. His next challenge is to convince Congress.
Passage of Brazil's Fiscal Responsibility Law in May 2000 improved fiscal discipline at all levels--federal, state, and municipal--and in all branches of government. The government's latest proposals for addressing the huge budget deficits incurred by Brazil's pension system include a sharply lower ceiling on public-sector pensions. Currently, the public sector employees receive a pension equal to their top lifetime salary. Thus, in 2002, three million public-sector pensioners accounted for 75% of the system's total deficit of 4.2% of GDP. Tax reform has been a carryover from the prior administration. Among tax reform proposals, President Lula proposes to unify the ICMS tax on goods and services into a standardized national VAT with five different rates. Currently, there are dozens of different rates levied in the 27 states, all of which have their own tax code. Success for both pension and tax reform will require a constitutional amendment, which in turn needs approval by 60% of each chamber of the legislature in two successive votes.
Market opening and economic stabilization have significantly enhanced Brazil's growth prospects. Brazil's exports have nearly doubled in the last decade, and imports have more than doubled. Once opposed to the FTAA, Lula and the PT have moderated their stance. As co-chairs of the FTAA talks since November 2002, the United States and Brazil have worked constructively together. Common goals such as global elimination of export subsidies and reduction in domestic agricultural support can enhance this partnership. Brazil has much to gain through free trade in terms of economic growth and realizing its trade potential.
Brazil has vast agricultural resources, with two distinct agricultural environments. The first, comprised of the southern one-half to two-thirds of the country, has a semi-temperate climate and higher rainfall, 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 to exporters of forest products, cocoa, and tropical fruits. The Central-West contains substantial areas of savannah grassland with only scattered trees, and the area is experiencing rapid and extensive agricultural expansion.
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 20% of the labor force. Agribusiness, taken as a whole, accounts for about one-third of Brazil's GDP. Brazil is the world's largest producer of sugarcane, coffee, frozen concentrated orange juice, tropical fruits, and has the world's largest commercial cattle inventory. It is a major producer and exporter of cocoa, soybeans, tobacco, wood products, poultry, pork, corn, cotton, and tobacco. 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. Agriculture accounts for about 41% of the country's exports, and Brazil enjoyed a positive balance of trade of more than U.S. $20 billion in agriculture in 2002.
Forests cover half of Brazil, 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 brought international attention. The government has reduced incentives for such activity and is implementing an ambitious environmental plan that includes an Environmental Crimes Law with serious penalties for infractions.
Brazil has one of the most advanced industrial sectors in Latin America. Accounting for nearly one-third of GDP, Brazil's diverse industries range from automobiles and parts, other machinery and equipment, steel, textiles, shoes, cement, lumber, iron ore, tin, and petrochemicals, to computers, aircraft, and consumer durables. General Motors, Ford, and Fiat have established small-car production facilities in Brazil. Automakers look to test new production methods in Brazil, since the industry is more flexible than the more mature industries in Europe.
Brazil has a diverse and sophisticated services industry as well. Mail and telecommunications are the largest, followed by banking, energy, commerce, and computing. During the 1990s, Brazil's financial services industry underwent a major overhaul and is relatively sound. The financial 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.
Privatization triggered a flood of investors after 1996. The yearly investment average in the telecom sector the 4 years prior to the start of privatization was R$5.8 billion, and the annual average for the 4 years post privatization was R$16.3 billion, nearly tripling. Investment in the electrical power sector increased from R$5.3 billion annually in the pre-privatization era to R$7.2. U.S. companies provided a great deal of this influx of cash. After 2000, many of these investors suffered huge losses in the face of adverse regulatory decisions, the plunge of the real. The energy sector was especially hard hit.
In 2001, Brazil experienced an 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 Energy Minister will unveil an energy plan in July 2003, which will be critical in determining future investor interest.
The Government of Brazil has undertaken an ambitious program to reduce dependence on imported oil. In the mid-1980s, imports accounted for more than 70% of Brazil's oil and derivatives needs; the figure is now 19%. Brazil is one of the world's leading producers of hydroelectric power. Of its total installed electricity-generation capacity of 90,000 megawatts, hydropower accounts for 66,000, i.e., 74%.
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.
Brazil has traditionally been a leader in the inter-American community and 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 member of the Organization of American States (OAS) and a party to the Inter-American Treaty of Reciprocal Assistance (Rio Treaty). 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, with Chile and Bolivia as associate members. 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 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. Brazil is lobbying for a permanent position on the UN Security Council, a bid that was supported by Russia. Brazil currently chairs the "Group of Friends" countries committed to supporting long-term democracy in Venezuela, of which the United States also is a member.
As Brazil's domestic economy has grown and diversified, the country has become increasingly involved in international economic and trade policy discussions. 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 full-scale nuclear safeguard agreement with the International Atomic Energy Agency (IAEA), acceding to the Treaty of Tlatelolco, and joining the Missile Technology Control Regime (MTCR) and the Nuclear Suppliers Group.
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.
The relationship between Brazil and the United States strengthened with the inauguration of Brazil's internationally oriented, reformist President Fernando Henrique Cardoso in 1995. He and former President Clinton had several meetings, and President Bush met with President Cardoso within 3 months of his inauguration. President Bush invited then President-elect Lula to Washington for a meeting in December 2002, at which the two committed to a presidential summit in 2003. President Lula again visited Washington for a summit on June 20, 2003. Documents covering the results of the summit can be found on on the White House and State Department websites. Deepening U.S.-Brazil engagement and cooperation were reflected in the numerous high-level contacts between the two governments in the first months of Lula's presidency, including visit to Brazil by U.S. Trade Representative Robert Zoellick, then-Treasury Secretary Paul O'Neill, and current Treasury Secretary John Snow, as well as to Washington by Brazilian Finance Minister Palocci and Central Bank President Meirelles.
Ongoing topics of discussion and cooperation have included trade and finance; hemispheric economic integration; FTAA; nonproliferation and arms control; human rights; international crime, including financial support to terrorist groups, along the Tri-border area (Brazil, Argentina, Paraguay); counter-narcotics; and environmental issues. Bilateral agreements in effect include 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, national parks, and government reform. In April 2000, the United States and Brazil signed a Technical Safeguards Agreement to permit U.S. firms to participate in the development of the Alcantara spaceport. This agreement is currently blocked in the Brazilian Congress.
U.S. Embassy and Consulate Functions
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 has tripled over the last 3 years.
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 Officials
Deputy Chief of Mission--Richard Virden
Defense Attach�--Col. Samuel K. Stouffer, U.S. Army
Consul General--Peter Kaestner
Economic Counselor--Roman Wasilewski
Commercial Counselor--John Harris
Political Counselor--Dennis Hearne
Science Counselor--Daniel Rubinstein
Public Affairs Counselor--Patrick Linehan
Consul General in Sao Paulo--Patrick Duddy
Consul General in Rio de Janeiro--Mark Boulware
Consul in Recife--Peter Swavely
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. 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
Automated fax service for trade-related info: 202-482-4464
American Chamber of Commerce of Sao Paulo
Rua da Paz, No. 1431
04713-001 - Chacara Santo Antonio
Sao Paulo - SP, Brazil
American Chamber of Commerce of Rio de Janeiro
Praca Pio X-15, 5th Floor
Caixa Postal 916
20040 Rio de Janeiro--RJ-Brazil