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: Workers Party (PT), Brazilian Democratic Movement Party (PMDB), Brazilian Social Democratic Party (PSDB), Liberal Front Party (PFL), Social Democratic Party (PSD), Democratic Workers Party (PDT), Brazilian Labor Party (PTB), Liberal Party (PL), Brazilian Socialist Party (PSB), Communist Party of Brazil (PC do B), Brazilian Progressive Party (PPB) [Note: In early 2003, this party changed its name to the Progressive Party (PP).], 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: $498.4 billion
Annual real growth: -0.2%.
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 2003--$24.8 billion surplus. Exports--$73.1 billion. Major markets--European Union 24.8%, United States 23%, China 6.2%, Argentina 6.24%, and Mexico 3.75%. Imports--$48.3 billion. Major suppliers--European Union 26.29%, United States 19.82%, Argentina 9.68%, Japan 5.22%, and China 4.45%.
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 per month, and stressed his "Zero Hunger" initiative, designed to give each Brazilian three meals a day. By the end of 2003, key legislation to reform the nation's public sector pension system and to overhaul its tax system had passed Congress, though follow-on legislation still needs to be passed in 2004.
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:
President Lula was elected with the support of an alliance composed of his own leftist Workers' Party (PT), the center right Liberal Party (PL), the leftist National Mobilization Party (PMN), which currently only has two Deputies in the Chamber, the leftist Popular Socialist Party (PPS, formerly the PCB), and the leftist Communist Party of Brazil (PCdoB). The large PMDB party has since joined the PT-led governing coalition, giving the coalition a large, though fractious, majority in both houses of Congress. Party loyalty is weak, and deputies and senators who belong to the parties comprising the government coalition do not always vote with the government.
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. Municipal elections occurred in October 2004.
Chief of State and Cabinet Members
President--Luiz Inacio Lula da Silva
Vice President--Jose Alencar Gomes da Silva
Minister-Chief Casa Civil (Chief of Staff)--Jose Dirceu
Secretary of Political Coordination--Aldo Rebelo
Secretary General--Luiz Dulci
Communications Secretary--Luiz Gushiken
Secretary for Economic and Social Development--Jaques Wagner
Institutional Security--Gen. Jorge Armando Felix
Inspector General--Waldir Pires
Secretary for Fishing--Jose Fritsch
Secretary for Human Rights--Nilmario Miranda
Secretary for Racial Equality--Matilde Ribeiro
Secretary for Women's Affairs--Nilceia Freire
Solicitor General--Alvaro Ribeiro Costa
Minister of Agrarian Development--Miguel Rossetto
Minister of Agriculture--Roberto Rodrigues
Minister of Cities--Olivio Dutra
Minister of Communication--Eunicio Oliveira
Minister of Culture--Gilberto Gil
Minister of Defense--Jose Alencar Gomes da Silva
Minister of Development, Industry, & Trade--Luiz Fernando Furlan
Minister of Education--Tarso Genro
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--Ricardo Berzoini
Minister of Mines and Energy--Dilma Rousseff
Minister of National Integration--Ciro Gomes
Minister of Planning and Budget--Nelson Machado (acting)
Minister of Science and Technology--Eduardo Campos
Minister of Social Development--Patrus Ananias
Minister of Social Security--Amir Lando
Minister of Sports--Agnelo Queiroz
Minister of Tourism--Walfrido Mares Guia
Minister of Transportation-- Alfredo Nascimento
Central Bank President--Henrique Meirelles
Ambassador to the United States--Roberto Abdenur
Ambassador to the United Nations--Ronaldo Sardenberg
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 GDP for 2003 was $498.4 billion (-0.2% negative growth), 2002 was $499.4 billion (1.5% growth), 2001 was $503.9 billion (1.7% growth), and 2000 was $594.2 billion (4.5% growth). (The growth rates above reflect real growth in local currency; fluctuations in nominal GDP also reflect volatility in the exchange rate.) For perspective, the Brazilian real weakened from a year-end exchange rate of 1.95 real/dollar in 2000 to 2.32 real/dollar in 2001, 3.53 real/dollar in 2002, and 2.89 real/dollar in 2003. 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 follow Argentina by defaulting on public debt. 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, consistently meeting and sometimes exceeding the requirements of the IMF agreement.
The Government of Brazil has given other positive signals to the international financial community, in particular, upholding impeccably strong fiscal and monetary policies and achieving passage by Congress of his tax and pension reforms bills, albeit in considerably watered-down form, by the end of his first year in office. The exchange rate recovered and stabilized dramatically, while the Central Bank benchmark interest rate was lowered from 26.5% to 16.5% between June and December 2003.
A giant step forward under the previous government had been the passage of Brazil's Fiscal Responsibility Law in May 2000. This law improved fiscal discipline at all levels--federal, state, and municipal--and in all branches of government. As part of his remaining plan for tax reform, President Lula proposes to unify the ICMS tax on goods and services into a standardized national VAT with five different rates. Currently, dozens of different rates are levied in the 27 states, all of which have their own tax code.
Market opening and economic stabilization have enhanced Brazil's growth prospects. Brazil's exports have nearly doubled in the last decade, and imports have more than doubled. In WTO and FTAA negotiations, the U.S. and Brazil share common goals such as global elimination of export subsidies and reduction in domestic agricultural support. 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 and cotton. 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 2003.
Forests cover half of Brazil, with the largest rain forest in the world located in the Amazon Basin. Recent migrations into the Amazon and large-scale 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 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. Most major automobile producers have established production facilities in Brazil.
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 billion. 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 and especially the sharp depreciation 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. Lula's new Energy Minister unveiled an energy plan in July 2003, which has left much vital detail undefined and most investors dissatisfied.
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 well under 20%. 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 megawatts (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 Latin American Integration Association (ALADI) and Mercosul (Mercosur in Spanish), an imperfect customs union including Argentina, Uruguay, Paraguay, and Brazil, with Chile, Bolivia and Peru as associate members.
Along with Argentina, Chile, and the U.S., 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, East Timor, and most recently Haiti. In January 2004, Brazil began a two-year term as a non-permanent member of the UN Security Council. Prior to this, it had been a member of the UN Security Council four times. Brazil is lobbying for a permanent position on the UN Security Council. Brazil currently chairs the "Group of Friends" countries committed to supporting long-term democracy in Venezuela, of which the U.S. also is a member. Brazil is currently leading the UN peacekeeping force in Haiti.
As Brazil's domestic economy has grown and diversified, the country has become increasingly involved in international economic and trade policy discussions. The U.S., 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 U.S. strengthened with the inauguration of Brazil's internationally oriented, reformist President Fernando Henrique Cardoso in 1995. President Bush invited then President-elect Lula to Washington for a meeting in December 2002, at which time they 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 the White House and State Department Web sites. Deepening U.S.-Brazil engagement and cooperation are reflected in the numerous high-level contacts between the two governments, including visits to Brazil by Secretary of State Colin Powell, U.S. Trade Representative Robert Zoellick, Treasury Secretary John Snow and Energy Secretary Spencer Abraham, as well as to the U.S. by Brazilian Foreign Minister Amorim, and many other members of President Lula's cabinet.
Ongoing topics of discussion and cooperation include trade and finance; hemispheric economic integration; FTAA; nonproliferation and arms control; human rights; international crime, including financial support to terrorist groups; 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.
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--Philip Chicola
Defense Attach�--Col. Samuel K. Stouffer, U.S. Army
Consul General—Simon Henshaw
Economic Counselor--Bruce Williamson
Commercial Counselor--John Harris
Political Counselor--Dennis Hearne
Science Counselor--Patricia Norman
Public Affairs Counselor--Patrick Linehan
Consul General in Sao Paulo--Patrick Duddy
Consul General in Rio de Janeiro--Edmund Atkins
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/.
U.S. consulates general are in Rio de Janeiro and Sao Paulo, and a consulate is 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 Rio de Janeiro
Praca Pio X-15, 5th Floor
Caixa Postal 916
20040 Rio de Janeiro--RJ-Brazil
For the most current version of this Note, see Background Notes A-Z.