First and Third worlds coexist uneasily as Brazil lurches toward global prominence
RIO DE JANEIRO, Brazil -- If the Girl from Ipanema kept walking -- beyond the Ipanema beachfront with its bronzed people, mosaic sidewalks and tony shops -- as she worked her way up a nearby slope through a sprawling neighborhood known as Rocinha, each one she passes would probably say, "Go home, girl."
Rocinha is where the beautiful people give way to the poor people. Where the artsy sidewalks give way to rutted mud paths. Where the upscale boutiques give way to hole-in-the-wall storefronts. Where the luxury accommodations give way to concrete blockhouses low on the hill and tin-topped wooden shacks up above.
The First World meets the Third World at Rocinha, and Brazil has plenty of each.
Brazil has First World industries -- steel, electronics, automobiles, aerospace -- along with First World financial institutions, universities and cultural attractions. Brazil also has Third World poverty, corruption, crime and disease.
These side-by-side worlds are reflected in one of the widest gaps between rich and poor among nations. The richest 1 percent possess 14 percent of the wealth -- more than the poorest half of the population.
Which world is winning?
It's hard to say.
But Brazil seems ready to propel itself forward -- like a swimmer bound in chains -- to true First World status in 20 or 30 years. As it does, it will become one of the most influential nations on Earth.
Yet to many Americans, Brazil suggests ... what?
Rio. Samba. Carnival. Coffee. Beaches. The Girl from Ipanema.
High-tech hopes
Of continental size, Brazil is the fifth largest country in the world -- bigger than the United States, excluding Alaska. It is the fifth most populous country, with 170 million people, and produces more goods and services per person than each of the top five except the United States -- more than China, India or Russia.
Brazil is a huge exporter of agricultural products and raw materials, like many developing countries. Like perhaps no other, Brazil's single biggest exporter is a high-tech industrial company -- Embraer, the fourth-largest aircraft maker in the world. Embraer is challenging Canada's Bombardier for No. 3, behind Boeing and Airbus.
Embraer headquarters, on the edge of Brazil's financial capital, Sao Paulo, resembles a college campus, complete with well-populated bike racks. In place of pillared academic halls stand big boxy hangars.
Designers and engineers, most of them native Brazilians, huddle over computers in carpeted cubicles putting together plans for Embraer's next generation of regional and corporate jets. Assembly workers wheel around windshields, flaps and engines, then glue, wire or bolt them into place. Fuselages read like a directory of major airlines -- US Airways, American, Continental.
If there is an epicenter of Brazil's hope for a First World future, it is Embraer.
Embraer is high-tech: A theater-sized "virtual reality" room allows dozens of engineers to electronically mesh their blueprints, reducing design time and avoiding potentially disastrous mistakes, such as routing electrical conduit through a hydraulic line.
Embraer is global: It is at once Brazil's biggest exporter and among its biggest importers, requiring many specialized products such as aerospace alloys from Alcoa.
Embraer is progressive: Its 11,000 employees enjoy health insurance, life insurance and profit-sharing, which helps spread prosperity and build Brazil's professional middle class.
Horacio Aragones Forjaz, an executive vice president, identifies two reasons for Embraer's success: long-term planning and timely government support.
At the end of World War II, Europe and Asia were devastated, and the war had highlighted the strategic importance of military aircraft. Brazil and neighboring Argentina snapped up well-trained German engineers and began to develop their own aerospace industries.
Argentina put its engineers to work and started building planes. As the engineers grew old, so did their planes. The Argentine aircraft industry withered -- as did the rest of the Argentine economy, once the envy of South America.
Brazil put its engineers in classrooms to train new engineers. It set up research institutes to absorb the graduates and waited 20 years to start an aircraft industry -- after the educational infrastructure was in place to support its long-term development.
During the Cold War, Brazilian aerospace was seen as a strategic asset and was controlled by the government, as in Europe. With the end of the Cold War, defense contracts dried up. Embraer needed to respond nimbly to private markets and build new planes for commercial use, but it felt encrusted in government red tape. After years of debate, with unions and leftist political parties in vocal opposition, the government finally sealed Embraer's transition to the private sector in 1994.
Majority-owned by a Brazilian investment group and two big pension funds, Embraer has been building market share ever since in military, corporate and commercial aviation, most notably with its highly successful 30- to 50-seat regional jets.
Last month, Embraer rolled out the first of a larger class of regional jets that can seat 70 to 110 passengers. This month, it bought a Nashville company, Celsius Aerotech Inc., to maintain the scores of Embraer jets now flying for U.S. carriers and opened a parts distribution center in Beijing.
Feudal 'favelas'
If Embraer represents the First World future to which Brazil aspires, the Third World present through which it must slog its way forward is epitomized by its vast shantytowns, known as "favelas" (fa-VALE-us).
Rocinha, not far from carefree Ipanema, is the largest and most renowned favela, with a population of some 150,000 -- roughly half the size of Pittsburgh. Rocinha is so famous, in fact, you can take a tour bus through it, as long as the resident drug lord isn't in a bad mood or warring against rivals.
"Lord" is the right word for the ruler of Rocinha because he oversees a feudal society financed by drug sales, protected by violence and operated by patronage. The lord giveth and the lord taketh away. The lord settles landlord-tenant disputes, domestic quarrels, business disagreements. The police, most of them paid off or uncaring, keep their distance.
From the wider society's standpoint, Rocinha has always been lawless. Parts of Rocinha have been settled for a long while, but its population exploded in the 1960s as thousands of landless farmers in search of work simply invaded unoccupied highlands near the city.
Some found jobs; most didn't. Some moved into Rio proper; most didn't. And more kept coming, filling out the valley between two granite peaks known as Dois Irmaos (the two brothers).
The poor in Rio have little, but since the rich have claimed the beachfronts, they do enjoy spectacular views from the hillsides.
Looking out is recommended. Looking around can be depressing.
Garbage lines the mud-packed streets. Kids in dirty flip-flops play beside open sewers, the stench rising as the day's heat builds. Young men with guns, it is said, lurk just off the main road, ready to question intruders and enforce the lord's rules.
Carlos Costa, 38, grew up in Rocinha and edits Rocinha Noticias, the community newspaper. Two topics are taboo, Costa says: drugs and death. But Noticias manages to cover sensitive subjects, anyway, by using code words. If the gossip column reports a young man as "gone missing," for instance, no one expects him to get found.
Luke Dowdney, a muscular young Australian with an anthropology degree, runs a boxing program for Viva Rio, a nongovernment organization that provides services in Rocinha and other favelas. Dowdney cites this statistic: "59 percent of youth deaths [in Rocinha] are due to gunshots." His program aims to bring down the death toll by teaching boys how to merely beat each other up.
The despair and pathologies in Rocinha, like the favelas themselves, are spread throughout Brazil. Murder, kidnapping, robbery, drugs and AIDS are epidemic. Violent crime is so rampant in Sao Paulo, a megacity of 20 million, that the rich hire armored vehicles or helicopters to get to work. Everybody else runs red lights at night for fear of getting robbed if they stop.
On the other hand, progress and prosperity infiltrate the favelas, too. In lower Rocinha, near Rio proper, shops and vendors do a bustling trade, while schoolchildren and commuters stream in and out from the city. Some new brick buildings are rising, with shops downstairs, apartments up top.
There is even a tiny storefront McDonald's that sells only ice cream, no burgers -- evidence that even in Rocinha, the global consumer economy is gaining a toehold.
No longer 'lost'
Entrenched interests and corruption plague the entire Brazilian political system. It is far from certain the system can reform itself and find the right balance between market forces and government regulation so as to keep the economy expanding while lifting the poor.
For the past seven years, a center-right coalition under President Fernando Henrique Cardoso has, by most accounts, juggled these balls reasonably well. Cardoso has won two terms, no small accomplishment in Brazil's notoriously fickle political system, where 18 parties are represented in Congress and where politicians can change parties almost as easily as they change shirts.
A former leftist academic, Cardoso won his first term on the strength of a very un-leftist accomplishment: As finance minister he pegged a new currency to the dollar and introduced monetary discipline, pulling Brazil out of the "lost decade" of the 1980s when Latin economies labored under the weight of massive external debt and hyperinflation. The inflation rate plunged from more than 2,000 percent and has hovered since then at First World levels in the single digits.
As president, Cardoso has restrained government spending -- except for education and health care -- and resuscitated the economy, although the left complains that he has kowtowed to international financiers and done little to help the poor or combat corruption.
Cardoso is perhaps most vulnerable to the charge that he did little to battle corruption -- in order to hold his four-party governing coalition together.
Although he is not considered personally corrupt, many of his partners have proved to be. An affiliated Senate president resigned in September, a first. Accused of stealing millions meant for land development in the Amazon, his downfall began with a report in the newsmagazine Veja. Brazil's vibrant free press is probably its single most potent check on corruption.
Nevertheless, corruption crosses party lines and slows political progress. When former radio sexologist Marta Suplicy, the Dr. Ruth of Brazil, took over as mayor of Sao Paulo last year, she found that her Progressive Party predecessor had devoted $1 billion of the $7 billion annual budget to payoffs or patronage.
Wielding power
The Cardoso era is coming to an end, in any case -- the president can't run again in the October election.
Cardoso supports his health minister, Jose Serra. Other leading contenders include the perennial candidate of the left, "Lula" da Silva, and rightist Maranhao state Gov. Roseana Sarney -- although Sarney might get swamped in a mushrooming Amazon-land scandal of her own.
Lula has been the bete noir of Brazil's managerial class, who fear he might soak the rich and spend the country back into hyperinflation. But even Lula has moderated his views, and members of his Worker's Party, like Mayor Suplicy, are running some 190 cities, meeting budgets and talking with business leaders about how to create jobs.
Business leaders have taken note. Asked about the prospect of a Lula administration, Joao Fernando Sobral, a leader of Sao Paulo's Federation of Industries, said, "No party in Brazil can raise its flag without supporting stabilization. This belongs to Brazil's culture now."
At the moment, Brazil's maturing political and economic system certainly seems a model of stability compared with those of its neighbors. Colombia is engaged in civil war against narco-leftist rebels. Argentina, once the richest nation in South America, has de-developed and collapsed. Venezuela, having elected a populist strongman, is now trying to get rid of him.
Brazil is also beginning to wield global influence, despite its myriad problems.
It is offering assistance to ailing Argentina, leading the region in talks aimed at creating a hemisphere-wide Free Trade Agreement of the Americas, working with India to force down prices for AIDS drugs in the developing world, questioning U.S. strategy in its war on terror, and lobbying for a permanent seat on the U.N. Security Council.
The U.S. Council on Foreign Relations has called Brazil "the fulcrum of any successful U.S. policy initiatives in South America." The seventh largest steel producer, Brazil was U.S. Trade Representative Robert Zoellick's first stop this month after the Bush administration decided to apply temporary tariffs on steel imports. Not the European Union, which will get hurt worse and is screaming louder.
Postscript
Rio de Janeiro's enormous statue of Christ the Redeemer overlooks both affluent Ipanema and impoverished Rocinha. It seems much larger in real life than it does in picture postcards. At night, the illuminated Christ figure atop the darkened hilltop seems to rise above the city with arms outstretched, embracing all its citizens.
So, too, does Brazil seem much larger and all-embracing than it does in the snapshot views carried around in the heads of many North Americans. Brazil is so much more than coffee and carnival, beaches and bossa nova.
So, too, does Brazil seem to be rising.
Here are a few of Pittsburgh's connections to Brazil:
- The University of Pittsburgh houses one of the few Brazilian studies programs in the United States, featuring 15 faculty members and collaborative relationships with 12 Brazilian universities and research institutions. Its library includes more than 32,500 volumes and 950 periodical titles in Portugese, most of them focused on Brazil.
- Pitt and Carnegie Mellon University are conducting joint research with three Brazilian universities on "sustainable urban environments," which includes how to clean rivers, redevelop defunct industrial sites and design environmentally friendly buildings and infrastructure.
- Brazil is the seventh largest steel producer; it both competes against and supplies U.S. steelmakers, and it has purchased several U.S. firms. * Alcoa's two Brazilian smelters account for more than 10 percent of the company's worldwide capacity. Alcoa Foundation funds a number of community-service and development programs in Brazil. Alcoa Chairman and Chief Executive Officer Alain J. Belda is a citizen of Brazil.
- Summa Technologies Inc., a Pittsburgh-based software consulting firm with a number of Brazilian employees, opened an office in Sao Paulo last year to serve such clients as Bank of Boston SA, Caixa Economica SA and Sun Microsystems.
- Mellon Financial Corp. is part-owner of Banco Brascan, a Rio de Janeiro-based investment bank that provides brokerage, corporate finance, asset management and other financial services in Brazil.
- USAirways Express flies 70 regional jets, 64 of which are 50-seaters made in Brazil by Embraer. The company is negotiating with its unions in hopes of greatly expanding the number of regional jets in its fleet.