Sotero: From big to great, Brazil is on the rise

Rachael Le Goubin | Staff Photographer
Paulo Sotero, director of the Wilson Center’s Brazil Institute, discusses the uniqueness of Brazil’s history in comparison to other Latin American countries at the morning lecture Friday in the Amphitheater.

Paulo Sotero, director of the Brazil Institute of the Woodrow Wilson International Center for Scholars, is 64 years old. His generation grew up under Brazil’s military dictatorship. But over the last three decades, Sotero’s generation has seen its country build what he called a “vibrant democracy,” a history that he outlined in his morning lecture, “Will Brazil Rise?” at 10:45 a.m. Friday in the Amphitheater.

Sotero was 14 in 1964 — at the height of the Cold War — when the military took power with the support of the United States. When Sotero was starting college and his career as a journalist in 1968, the military imposed a “state of emergency” and censored the press for 10 years.

The U.S. government’s support for the Brazilian dictatorship, involvement in the Vietnam War, and its history of intervention in Latin America, which culminated in the 1973 Chilean coup against President Salvador Allende, informed Sotero’s generation’s negative perceptions of America, he said.

At the same time, Sotero’s generation grew up admiring the U.S. for its capacity for democracy and defense of human rights. He and his peers watched the civil rights movement, anti-war demonstrations in the 1960s and 1970s, the process that led to President Richard Nixon’s resignation, and President Jimmy Carter’s defense of human rights and civil liberties in Latin America. These democratic ideals, Sotero said, “made quite an impression on us.”

That impression has colored Brazil’s development and relationship with the U.S.

“Brazil is a country that has quite a history,” he said.

Paraphrasing Luigi R. Einaudi, a former U.S. ambassador to the Organization of American States, Sotero continued, “Americans tend to miss Brazil because they tend to read Brazil in the Latin American key. And when you do that, you start not understanding Brazil.”

Brazil is part of Latin America, he said, but Latin America does not define Brazil, which is the only former colony of a European empire that once was the center of that empire.

Projecting a translation of part of Brazil’s national anthem, Sotero emphasized Brazil’s longstanding identification with its impressive size as he read the lines, “Strong, an intrepid colossus, a giant by nature, you are beautiful. And your future will match this grandeur.”

On Nov. 15, 1889, Brazil became the largest republic on Earth — territorially speaking, Sotero said. He flipped to an image of the country’s first flag, whose 13 horizontal stripes and white stars in a field of blue were inspired by the U.S. flag.

“We were looking somewhere in the world for inspiration, right?” Sotero said.

Four days later, Brazil adopted a new flag, more closely resembling its flag today.

In 1908, Brazil’s first full ambassador to the U.S., Joaquim Nabuco, wrote, “Brazil has always been conscious of its size and has been governed by a prophetic sentiment with regard to its future.”

At that time, Brazil had only been independent for less than a century.

“You have to be really a visionary to write this in 1908, because Brazil was then a big farm,” Sotero said.

Indeed, Brazil did not begin to industrialize until 1930, “about 200 years late,” Sotero said. That year, there was one paved highway in Brazil, and only one more would be built by 1940. The University of São Paulo did not become Brazil’s first university until 1932.

Eighty percent of the population in 1930 lived in rural areas, Sotero said, a figure that had flipped by 1980 to favor urban centers.

“Imagine the transformation,” he said.

Under the military dictatorship of Getúlio Dornelles Vargas from 1930 to 1945, Brazil sided with the Allied Forces in World War II in order to gain credence with the U.S. that, Vargas hoped, would later help Brazil industrialize.

After the war, Brazil found it “impossible” to keep a dictatorship after fighting for freedom in Europe, Sotero said.

“This contact with democracy was very good for Brazil, and left some important roots,” Sotero said.

After a brutal 21-year dictatorship following a post-war military coup, Brazil became a democracy complete with a series of presidents who, Sotero said, “entered politics for reasons of principle.” During this period, Brazil has been a very active member of the United Nations, he went on, citing Brazil’s role as a founding member of every UN agency.

Today’s Brazilian economy, in which the state plays an important role, has reached a “point of exhaustion” as a result of an economic model built on consumption by a growing middle class in Brazil as well as other BRICS countries such as China and India. Sotero said that Brazil “forgot” to continue structural reforms, and it is now stuck. The economy is projected to grow at just 1 percent this year, with inflation at 7 percent, higher than the country’s targeted 4.5 percent.

This “7 to 1” figure has been adopted by President Dilma Rousseff’s opposition as a reference to Brazil’s 2014 FIFA World Cup loss to Germany, Sotero said.

“I hope that, before we win the World Cup of soccer for the sixth time, we get a couple of Nobel prizes on something,” he said. “Or we can put, maybe, five of our universities among the 200 best in the world. I think … it’s time for us to choose other metrics, you know, to measure our progress.”

Despite the fact that Brazil is the seventh-largest economy in the world, it is only the 25th-largest exporting nation.

“That’s not good,” Sotero said.

Brazil only accounts for 1.5 percent of global trade, and would benefit from more trade agreements, he added. The country is ranked No. 56 out of 148 in the World Economic Forum’s Global Competitiveness Report.

Brazil’s relationships to other countries have room for improvement as well.

Some Brazilian diplomats, Sotero said, have branded Brazil’s relationship with China a “new colonial relationship” because Brazil exports primary products to China and imports its finished products.

After making strides in forging a better relationship with the U.S. in recent years, Rousseff canceled her October 2013 state visit in light of the revelation that the National Security Agency had tapped her phone and spied on Brazilian companies. For the same reason, Brazil canceled its $4.5 billion jet fighter purchase from Boeing, and instead purchased them from Sweden. Brazil’s government also canceled its $2 billion Internet service with Microsoft.

But Brazil’s relationship to the U.S. may still improve, Sotero said.

Vice President Joe Biden visited Brazil in June, and more than 25 percent of Brazilian university students in a foreign education program, launched by Rousseff, study in the U.S.

Stressing Brazil’s need to continue learning from other world powers, Sotero expressed hope in the face of the country’s challenges in growing its economy.

“I think we have a complex of bigness in Brazil,” he said. “But the challenge in Brazil is to become great. From big to great.”


Q: In the Daily today, there is a quotation: “Brazil is a video full of motion; it is not a static picture.” You also told us, “Brazil does what you least expect.” How did those notions factor into international relations and that fundamental misunderstanding of Brazil as a static picture?

 A: I’m glad that I wrote that. That was part of an interview last week with John. I’m glad that he used that, because I’ve heard that, in one of the first presentations, that it was based on photos. It was photos of Brazilian kids sniffing glue in the 1980s. Yes, kids in Brazil in the 1980s sniffed a lot of glue, and kids in 2014 sniff a lot of glue. But the problem with those kinds of presentations, those that involve pictures, they fix an image that has evolved. The problem is still there, but the situation is better now because there have been interventions.

The situation around deforestation continues to be a challenge, but Brazil managed to double its production in agriculture. That’s something we are excellent about; at the same time, we reduced deforestation. Brazil was not expected to reduce deforestation, and I am not happy with the fact that we only reduced deforestation — we have to end it and reverse and start reforesting. That’s the right way to go.

The fact is that there is a certain stereotyping, and it’s done in the United States. “Brazil, they’re all soccer, if they lose, elections are lost, etc.” We are a complex society, a society in motion. One of the signs during the protests said, “We apologize for the inconvenience while we improve the country.” That’s what I am referring to. I think we are capable of doing the unexpected in that sense.

Q: Do you believe that Brazil’s suffering education system is related in any way to the state of its economy?

A: No. I think we could have done much better than we have done. I think actually my state of Sao Paulo, which is about 30 percent of the GDP — we have been governed by the same party for about 25 years — an opposition party — has achieved some progress at the university level. At the primary and secondary level, we are still struggling. It is very easy to say that, “If we had more money…” when we need to have better policies. Talk, sit down and confront the issues. I know because I live in Washington, D.C., that it’s a third-world country in itself, but the way you confront that is being creative, being engaging. The good policies are there in other [Brazilian] states, and they achieve better results than my state governed by the same party. The cause of bad education in Brazil is bad education policy in Brazil. We work with the World Bank. We work with MIT. We work in collaboration with them because not only Brazil has those problems, others do. In our case, I think the solutions are more urgently needed than in other places.

Q: We’ve received a few questions about the presidential candidates. What are the significant differences in the economic approaches of the candidates?

A: I would say, as I mentioned to you, I think if you were to bring the three presidential candidates into a room and say, “Guys, you have half-an-hour to come up with three or four things that you would like to do,” they would come out with an answer in 15 minutes. That is, to better invest public funds in Brazil. To better enact policies to ensure better use of public funds. Taxation in Brazil is very regressive. The poorer you are, the more taxes you pay. We have to allow businesses in Brazil to work more efficiently. It is a nightmare to do business in Brazil. It takes about 100 days to open a company in Brazil, and an eternity to close it. In the United States today, you need two or three days. Pension systems, we are relying too heavily on those. Our population is starting to age, and we have the challenge in many developing countries to get rich before we get old as a society. I think it is those problems — it is a political situation dominated by a very fragmented political system. We have something like 29 political parties in Brazil. Two or three that identify something going here or there. It’s our fault that we have that, because our electoral law allows for this multiplication of political parties — they allow the vehicles that different groups in society use to get into power and have access to public budgets. It is a major problem we have, and I think the three candidates really understand this.

The problem is that it is a struggle for power. The Worker’s Party has been in power for 12 years and doesn’t want to give it up. They will do everything and, a little bit more, not to lose the election. The other guys are also going to do their bit to, in a second round of elections — we vote by machine, by the way, it’s wonderful. It’s American technology that we’ve been using. Obviously, you cannot use that because the technology system here is completely fragmented, but we use it all over Brazil. Four hours after the end of the election in the Western state of Amazon, we announce the results of the election and the margin of error is zero. People in Brazil trust our electoral system absolutely. I believe all the candidates are all near centrists; the problem is who will be capable of forming the political causes to support those issues.

Q: Two related questions: What are the major sources of resistance to this “sharing the pie” approach in Brazil, and what advice do you have to the U.S. on how to share the pie as it grows in the future?

A: I am going to give advice to the United States now, get ready. Even though my sense is that if you would read Paul Krugman and all those boys, it’s like in Brazil. We know what we have, the people who have fought those things through, and even in the United States, you have the solutions all over the universities. What you need to do is to start reversing this income inequality trend. There is no reason why the United States cannot do it, because you actually invented the formula on building a prosperous society on the basis of a middle class. You created this thing; we are just following. The problem is that you lost the formula. You have to find it again.

I think the other thing is that immigration law has to be addressed. It has to be addressed in the country that remains the most open country to immigrants in the world. As you probably know, the U.S. accepts more legal immigrants every year and turns more into citizens — when you combine the two, I think the count is still 1.5 million per year. This is still more than all other countries in the world, combined. Now, you need more. You need more because there are certain factions of the economy that will stop working if you don’t allow them to come here, and there are certain areas of the high-tech world that will suffer from that policy. My opinion is that there is a basic question of fairness and justice involved in this. You cannot allow people to be on the fringes of society because they have legal or illegal status while people exploit their labor. It’s just not fair. If I may say so now, it is not American. I am totally confident that after much trouble, the United States will be able to tackle that successfully.

There is no resistance to sharing the pie — in order to do that, you have to review our tax laws. You have to change our very bureaucratic system of how people do business. You can only do that in a context where the economy is growing. You cannot suddenly, which is technically what we need to do, whomever is elected…you have to get the economy growing back so you can have room to start addressing those fundamental issues. Creating more support for the changing tax policies isn’t easier to do in Brazil than it is to do here. In the United States, there is also some regressiveness in the tax structure, in Brazil it’s a little more. Resistance also comes from the fact the economy has been on a downward trend. If you take it to December of this year, this four-year period will be the third year of the slowest growth in Brazilian history.

Even though we are still providing employment, inflation is getting out of hand. We are controlling certain prices that need to be freed. Resistance comes from the sense we aren’t doing well economically. 

Q: Brazil and Europe would seem to be natural partners economically and politically. What should be done to deepen that partnership?

A: Yeah, we have very good relationships individually with countries in Europe. Because of a number of factors, what we have to do is again, we are going to go back to this: what we have to do is find a way to open up the Brazilian economy. The difficulty of Europe is, like the United States, is they tend to be closed in the area in which we are most competitive, which is agriculture. Brazil is the most productive agricultural nation on Earth. Why? Because we have lots of land, lots of water, lots of sun and 40 years of research in agriculture. Part of it was developed in collaboration with French and American scientists. When we fix the other problem of the infrastructure, most of that goes by roads and rail in Brazil. Eighty percent of the tracks in Brazil were laid nearly a century ago.

When Brazil addresses its infrastructure, we are going to be feeding the people in the world. Brazil is expected, according to a UN projection, to respond to up to 40 percent of the added demand for food in the next 35 years resulting from growing population. It’s a big responsibility. This is an illustration of the challenges that Brazil has. They are challenges that result from progress and that most countries would love to have. We have to resolve certain things in order to do good things for ourselves and others. Europe is very much a part of that — Europe has to open up to agricultural imports. I think this situation is creating pressure for Brazil to do exactly that.

Q: This question is about offshore oil — has Brazil’s terms and conditions discouraged international development?

A: Well, Brazil, we found a gazoo of oil way out deep. It costs a lot to take it out. We changed our regulatory framework in order to concentrate investment on a Brazil company which is the state company. Here’s why I don’t like what we did: we decided to first ask PetroBras to do this; by the way we are going to do industrial policy, we’re going to buy the infrastructure and build them here; but you are not going to be able to increase your price of gasoline. If you do that, inflation is going to go up. We’re going to go take away your revenue while giving you more responsibilities.

It kind of doesn’t work like that. Not only that, by doing that we are killing our biofuel industry that depends on a competitive price of gasoline. We can produce a ton of ethanol without touching the Amazon. Since Brazilians are smart, they go to the pump and see the price, and now we’re increasing our emissions and using more fossil fuels. It’s the exact wrong policy. In addition, we created disincentives to come to Brazil and invest. I don’t think it’s good, but at the same time I’m always hopeful that scientists will find other fuels in time for us to not need to develop that completely. I don’t think that oil can be something that contributes to world sustainability. Maybe it’s not that bad we’re having a problem with that, and maybe we should take our time to develop it.

—Transcribed by Will Rubin

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