Interview with Fernando Henrique Cardoso, ex-President of Brazil

by Dave / Columnists / Lunch with the FT – Lunch with the FT:

Fernando Henrique Cardoso, the former Marxist intellectual colloquially known as FHC, who went on to slay hyperinflation and then twice became president of Brazil, from 1995 to 2002. Few people can claim to have been a philosopher king, let alone to have put the “B” in Bric – the now commonplace acronym, coined in 2001 by Goldman Sachs’ chief economist, that groups Brazil, Russia, India and China. And, although both the world and Brazil have fallen in love with FHC’s successor, President Luiz Inácio Lula da Silva, Cardoso is the man widely credited, at least abroad, with laying the foundations for a boom that has caught many off guard both by its speed and where it has come from.

We discuss why Brazil should have developed an image in the eyes of
the world as an exotic, lazy, tropical paradise, associated with
football, carnival, samba – and not much else. “Because of slavery and
because it was once a European monarchy in a tropical country, it was
much easier for outsiders to stick to preconceived ideas than to do any
,” he says. But, by the 19th century, abetted by waves of
immigration, Brazil already had a strong export sector. And by the
1940s, it had really taken off.

The big change came with the
second world war when, after flirting with Nazi Germany, Brazil joined
forces with the Allies. “Intellectually, Brazil had previously looked to
France; economically, to Great Britain
,” says Cardoso. “Now the focus
moved to the United States.” Along with the US investment Brazil
secured in return for its support – CSN, the Brazilian steelmaker built
with US money, is still going strong – the war delivered an automatic
defence from imported goods. Brazil became a closed economy
, withdrawing
into itself in the same way that other big countries with huge land
masses such as Russia and China have done. The country’s postwar boom and industrialisation were led by powerful,
centralised governments, at first civilian and democratic, and then,
from the mid-1960s to mid-1980s, under military rule, until democracy
was re-established in 1988.
But the transition to democracy, he says, was chaotic, and culminated in
a world-class bout of hyperinflation in 1990, which “only strengthened
outsiders’ preconceived ideas: as well as being exotic, Brazil was not a
serious country”.

now that Brazil has found self-belief, what next, I ask.

big thing is quality,” he begins. “We’ve spent all our lives worrying
about quantity – whether GDP grows or not. Now the question is quality.
What kind of education is this? The main reason children skip school is
no longer economic. It’s because they’ve lost interest. There’s no
point. The quality of teaching is awful.

“We need a new wave of
reforms,” Cardoso continues. “How will we increase productivity to
compete? That means fiscal reform, lower taxes, investment in human
capital and infrastructure.”
To many, this is known as “the Brazil
cost” – the challenge of getting things done in a country where the
state is so inefficient that Brazil ranks only 129th out of 183
countries in the World Bank’s annual “Doing Business” survey. I ask why
there appears to be no popular appeal for reforms that might change
this. “During my time there was popular appeal. There was a lot of
discussion,” he replies.

There was indeed. Flexibilisation was
the word in the late 1990s, when monopolies were broken, large sectors
of the economy privatised, the banking sector was recapitalised and
other reforms begun, such as of state pensions.

“The discussion
stopped,” FHC continues. “In a way, Lula has anaesthetised Brazil. We
have forgotten that Brazil needs to keep advancing. What I managed to do
moved the country forward. But then it stopped. Just stopped.”

Cardoso starts to talk about the election on October 3. I suggest we already know who will win the election, still three and a half weeks away at our lunch. “Yes,” he admits – Dilma Rousseff,
Lula’s anointed candidate from his Workers Party. (Lula himself is
outlawed from running for a third consecutive term, otherwise he would
walk it.) What will that mean for Brazil? “It will prevent us from
developing more quickly. But it won’t take Brazil backwards. Society is
too strong for that.”

If so, I ask, why do Brazilians complain so
little, given rising crime, high violence, and persistent inequality?
Cardoso thinks this is changing.

He describes field trips as a
sociologist he once made into favelas and factories, when the poor would
step aside out of respect for the men in suits and ties. “Not today,”
he says. “People used to be afraid even to talk to you. Not now. There’s
a bad side, of course, in the violence, but there’s a good side too.
They’re thinking, what is this guy doing here, who doesn’t belong?
They’re not submissive any more.”

As we prepare to leave, I
ask Cardoso what he thinks history will make of Lula? “I think he will
be remembered for growth and continuity, and for putting more emphasis
on social spending
. He’s a Lech Walesa who worked out.”And of his own importance? “I did the reforms. Lula surfed the wave.”

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