By Constantinos Skinitis
President Obama’s latest visit to Brazil has provided an ideal opportunity to demonstrate the virtues of democracy and economic liberalisation to the people of North Africa and the Middle East. Brazil is a success story. Its recent history, like that of the Arab World, has been mired by repressive governance and authoritarian rule. It has, however, managed to transform itself from a failing dictatorship into an established multiparty democracy; from a protracted state-controlled economy to a dynamic hub of international trade; from a deprived and acutely unequal resource-rich nation to a country with an emergent welfare state, fast growing middle class and promising economic prospects. Its development has not been easy and still has a long way to go. Nonetheless, its progress should not be understated and the basis of its success should not be misunderstood. Brazil is a fine example of how the political and economic freedoms attained from democratisation can provide the opportunities to enhance a nation’s fortune. This is as true for the countries of North Africa and the Middle East as it has been for Brazil.
Brazil has historically been plagued by economic instability and dictatorial rule. From 1964 to 1985 it was governed by an austere military dictatorship renowned for imprisoning, torturing and murdering thousands of political opponents. The regime imposed unconditional state censorship and its perpetual human rights violations turned it into something of a pariah state, isolated from international forums and in dispute with its neighbours. Though the leadership saw substantial economic growth in the early years, largely brought about by neoliberal reforms, the Brazilian economy soon faced severe long-term stagnation. The suppressive nature of governance, endemic corruption and the oil crisis of 1973 brought chronic financial uncertainty, leading to a series of national economic emergencies, most notably hyperinflation and massive debt burdens. The 1980s became known as the ‘lost decade’ with spiralling inflation, declining productivity and mounting foreign debt.
By 1984 the worsening socio-economic conditions compelled millions of people to take to the streets and demand change. Like the Arab people, Brazilians were fed up with the growing disparity between rich and poor, the lack of government accountability, the systemic corruption that continued to go unchecked, restrictions on the media and the lack of political rights and freedoms. Nationwide strikes and demonstrations spread from one city to another calling for the end of military rule and the imposition of an open democratic system. It quickly became clear that the dictatorship could no longer function and that the people’s demands could not be ignored. The regime also came under pressure from the IMF who demanded sweeping reforms in exchange for an austerity package to reduce the nation’s staggering inflation.
Similar to Hosni Mubarak in Egypt and Ben Ali in Tunisia, in 1985, Joao Figueiredo, the last military president, was forced to cede to public pressure and sign a general amnesty into law, leaving a civilian leader, Tancredo Neves, to assume office. A new constitution was subsequently drafted that restored civil and public rights, gave wider powers to the legislature, empowered local and state bodies and allowed Brazilians to vote directly for their president for the first time in 29 years.
However, whilst the transition to democracy was underway, immediate economic challenges remained. The ensuing years saw a number of economic initiatives fail and the economy continue to suffer from low growth and high inflation. Social unrest and deep frustrations remained. It was not until the stabilisation programme ‘Plano Real’ was introduced in 1994 that the Brazilian economy was once again able to achieve stability and attain growth. The programme essentially did three things: it imposed a legally-binding balanced budget clause to reduce Brazil’s huge debt, liberalised its national trade to increase market competition and introduced a new currency, the Brazilian Real, which was pegged to the US dollar. It further opened Brazil’s economy, internationalised its financial system and ultimately replaced the military’s previous foreign policy approach of “autonomy through distance” to one of “autonomy through participation”.
These political and economic reforms had a huge impact. The new multiparty parliamentary system ensured that communities from all parts of the country were represented and, in turn, brought greater levels of income distribution. The newly elected Congress implemented progressive welfare measures that advanced social security, protected pension provision and created income transfer programmes like ‘Bolsa Familia’ (family allowance programme), finally addressing issues that the previous ruling dictatorship had neglected. The progress was evident: from 1978 to 2008 the national rate of extreme poverty fell from 42.9% to 9.4%; rural poverty declined from 72.5% to 22.9%; urban poverty fell from 18.4% to 5.5% in big cities and from 38.1% to 7.8% in smaller towns.
A period of economic stability and democratic transparency revived consumer and investor confidence and returned strong rates of economic growth. Over 10 million jobs were created between 2003 and 2010, accompanied by a significant increase in real income and minimum wage. It also gave its leaders greater credibility abroad. Brazil once again began to engage with the international community and resumed a more active role in shaping the norms, rules and organisations that governed the global economy. It contributed to several peacekeeping missions under UN mandate and led the formation of regional groupings like Mercosul (Common Market of the South) as a way of increasing its bargaining power in international economic negotiations.
Brazil slowly consolidated its place as one of the most influential democracies in regional and global affairs. There is no doubt that its economic transition has been difficult and its democratic reforms have taken time to fully materialise. They still have a long way to go. However, its benefits are equally evident. Brazil is now one of the 10 largest economies in the world, with a thriving welfare state, fast growing middle class and promising economic prospects. Rio de Janeiro was recently selected to host both the World Cup in 2014 and the Olympic Games in 2016. The processes of democratisation and economic liberalisation have turned the country from one of repression and unrest to a model of freedom and achievement.
This model can be applied to the countries of North Africa and the Middle East. Although there are significant historic, cultural and institutional differences, there are also a number of broad similarities. Both have endured long periods of autocratic rule in which basic political rights and universal freedoms have been revoked and interminable financial uncertainty and economic degeneration left behind. More than that though, the macro-economic principles and socio-political benefits of democracy and economic liberalisation are universal. They can be applied in any country with the result of facilitating stronger governance, greater trust and more durable economic growth. As a political model it is not perfect. Democracy has not solved all of Brazil’s problems and it will certainly not solve all of the Arab World’s. However, the establishment of a more accountable and transparent political system that involves direct elections, alongside the formation of a more open and liberal economy that operates in the international free-market, have shaped a bright and prosperous future for Brazil. The same can be true for the countries of North Africa and the Middle East.