The FHC era

Image: Francesco Paggiaro
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By MARCO AURÉLIO GARCIA*

A balance, made in the heat of the moment, of the PSDB's two terms in the Presidency of the Republic

When the presidential sash passes to his successor, Professor Fernando Henrique Cardoso will have been the president who spent the longest time in the government of the Republic, with the exception of Getúlio Vargas. Ten years younger than Getúlio may not have been enough for FHC to put an end to the “Vargas era” and build an alternative project for the country.

The months leading up to the end of a presidential term are marked not only by the reheated coffee served to the president – ​​according to legend – but also by the temptation to make advance assessments of the outgoing administration. The task is not easy. The analyzes err on the side of being too close to the events and passions that presidential successions arouse, especially when the outgoing president has his own candidate, as is the current case.

Despite having recovered part of his prestige in relation to previous opinion polls, Fernando Henrique will hardly reach the end of his term with high levels of popular acceptance. Even if his candidate wins, this would not represent his consecration, as José Serra has differentiated himself from the current administration, especially in matters of economic policy. The motto “continuity without continuity” illustrates the ambiguous relationship he maintains with the government.

In 1960, the celebrated Juscelino Kubitschek did not choose his successor, perhaps because he was too concerned about being re-elected in 1965. But JK left an inheritance. Not only – not so much – the construction of Brasilia but, above all, the opening of a new cycle of industrialization that caused significant economic growth and changes in society. At the time, Brazil experienced a relatively peaceful period from a political point of view and was the scene of a unique cultural effervescence.

It is true that, at the end of his mandate, premonitory signs of what would become the crisis of the 1960s and 1964s began to grow, which led to the military coup. Contradictions of the prevailing development model were laid bare and new or renewed social movements were revealed that proposed burning questions to rethink the future of the country.

Fernando Henrique will not be able to exhibit tangible work like that of JK. Perhaps for this reason, he celebrated an ongoing “silent revolution”, whose axis would be the price stabilization program initiated in 1994. But, regardless of the moods that the presidential succession provokes in the markets, this heritage is questioned. The external vulnerability of the economy will remain, or will get worse, until fundamental changes are made to the current model.

“The man who ended inflation will end unemployment”, promised FHC's electoral propaganda in 1998. Unemployment increased. The combat methods adopted to achieve stability determined the formation of massive public debt, plunging the country into uncertainty. In order to reach its “inflation targets”, invariably not met, the government cut expenses, restricted investments, raised taxes and maintained extremely high interest rates.

These measures no longer even have the capacity to attract speculative foreign capital to plug holes in the balance of payments, nor to reassure international financial circles. With that, our external vulnerability was aggravated.

The recession, or the meager growth resulting from this policy, increased unemployment. The share of wages in national income declined. The social crisis deepened and, in its wake, society's insecurity grew. The “silent revolution” risks becoming inaudible, imperceptible to Brazilian society. FHC is perhaps confident that the future will reserve a favorable judgment for him in the country and that at the international level he will be able to have more immediate recognition, as a result of his performances in the exercise of “presidential diplomacy”.

what can you call sensu latu The term “Vargas era” covers a vast historical period that goes from the 1930s to its crisis in the 1980s, when Brazil exhibited exceptional growth rates, benefiting from the linking of three international conjunctures that were well taken advantage of. Getúlio arrived at the Presidency in 1930 invested with broad powers. The country and the world were experiencing the effects of the 1929 crisis. Brazil, unlike some of its neighbors, took advantage of the global crisis. It turned inwards and created institutional and material conditions for the start of import-substituting industrialization.

The Second World War and the period after the conflict – the “thirty glorious years” – favored, with minor interruptions, the continuity and expansion of the growth cycle, as seen above all in the JK period.

In Brazil, after the brief interval of the first years following the 1964 coup, the trend of economic expansion continued, driven internationally by the availability of capital, following the oil crises of the 1970s, despite the constraints that that same crisis had created for the world economy. The political impasses of the military government, which coincided with the exhaustion of its economic model, were framed by the beginning of the end of the post-war expansive cycle in the world, the crisis of welfare state and the first neoliberal adjustments based on Margaret Thatcher's experience in England. Added to all this was the collapse of state socialism in the USSR and in the countries of Eastern Europe, which produced changes in the political culture of the late XNUMXth century.

Compared to other Latin American countries, the neoliberal-inspired adjustment arrived late in Brazil. It did not fully legitimize itself during the brief period of Collor de Mello, it floundered during the interregnum Itamar Franco and, finally, it was achieved during the dual Presidency of Fernando Henrique. Popular resistance and the reluctance of the business community in the 1980s contributed greatly to this delay.

It is worth noting, however, that when FHC became president, belatedly applying the ideas of the Washington Consensus, the first fissures in the neoliberal proposal already appeared in the world. It is enough to remember the outbreak, days before the beginning of the FHC government, of the Mexican crisis whose consequences (the “tequila effect”) would be strongly felt here.

FHC's option for economic conservatism, already contained in his government program, cannot be explained only as an expression of realism in the face of international and/or national constraints. It seems to reflect a deeper thought.

The world is experiencing a “new Renaissance”, proclaimed the president. Brazil, FHC believed, as Collor had believed before, even with less strategic vision, could take advantage of the international context to guarantee a competitive insertion in the globalized economy. He would just have to “do his homework”, especially the one codified by the IMF. The adjustment would restore its credibility, helping to attract productive and speculative capital, allowing its model to work.

The Brazilian “homework”, like the Argentine before it, was not able to take the country out of the vulnerability zone. On the contrary, its instability and external dependence increased. Having arrived, after so many years of sacrifices to achieve stability, in a situation of economic vulnerability such as the current one explains to a great extent the frustration that society is experiencing today and the growth of opposition.

Collor frustrated the millions who had been seduced by his proposals to “take Brazil to the first world” and demoralized many others who, out of conservatism, voted for him to prevent Lula's election.

In the 1994 succession, Fernando Henrique was able to benefit not only from the successes of the Plano Real, but also from his own biography. When Jorge Amado – an FHC voter – stated that it was a privilege to be able to choose between two candidates like Fernando Henrique and Lula, he was expressing a sentiment on the part of the educated middle classes. This feeling reflected not only the misunderstanding that FHC had become the great alternative of the Brazilian and international right. He also expressed the illusion that the impeached ex-teacher, even allied with the clientelistic right, barley in the dictatorship that persecuted him, would be able to carry out the dreamed (and imprecise) modernization that the end of the military regime had placed on the agenda.

The conversion of broad sectors of the middle and even popular classes to liberal theses did not just result from well-crafted propaganda, reinforced by the collapse of socialism abroad. It also reflected the depletion of national developmentalism here. The crisis of the “lost decade” had accentuated the distortions of the Brazilian State and highlighted social inequalities.

Fernando Henrique, in his attack on statism and nationalism, did criticize the Vargas era from the right, however. He minimized the fact that the State's presence in the economy in Brazil did not result from a pact, as in Europe, but served to preserve the interests of the economic and political elites that would end up electing it. Nor did he say that nationalism served fundamentally to hide the exclusive nature of Brazilian development and to fight the resulting social conflicts.

Social exclusion appears in his speech as a mere anomaly. “Brazil is not an underdeveloped country, but it is unfair”, sentences the president. Now it is exactly the type of growth that the country had (the “underdevelopment”) that gave rise to inequality, to injustice. Therefore, it is unfair because of this (under)development.

Unlike Europe, in Brazil there was no crisis of welfare state. We had never experienced it. In Europe, the crisis of the Welfare State – the great work of social democracy – provoked a political-ideological earthquake in Europe that inclined a large part of its leaders towards a liberal-conservative option. In Brazil there was no social democracy. The PSDB only met the social-democratic ideology on the day of its agony.

The only guideline that the government ended up following without hesitation was to achieve stability at any price, in the hope that the market would take charge of laying the foundations for a new cycle (and type) of development. The first four years of the government, dominated by the exchange rate overvaluation, provoked an illusory feeling of social well-being and, with that, guaranteed the approval of the amendment that authorized the re-election and, later, the second term.

To prevent the speculative attack against the real, in August/September 1998, from overthrowing FHC's candidacy, the government did not hesitate to spend 40 billion dollars in exchange reserves. The devaluation was postponed and the president was re-elected.

Late, the devaluation of January 1999 did not produce the effects that it could have had if it had been adopted earlier. The productive system had been hit hard by trade liberalization, high interest rates and an overvalued exchange rate. Regaining lost positions in world trade is an arduous task. With the deterioration of external accounts, the trade balance became a critical issue. The growth of the public debt ended up demanding high primary surpluses, inhibiting investments, especially social ones, and putting the country on the brink of recession.

Malan, FHC's dream candidate for his succession, was inflexible, contributing to accentuate the vicious cycle of the economy. There begins the decline of government. In the first four years, buoyed by the success of exchange rate populism, the government was able to disqualify its critics with relative ease, as they appeared as isolated voices, supposedly fighting with the facts. When the model's charm wore off, however, the government's power to respond was restricted.

Even before this conjuncture, sectors of the PSDB itself warned of the consequences that unrestricted acceptance of the liberal mortgage would have for FHC's biography. When, from his deathbed, Sérgio Motta asks FHC not to “get attached”, he is warning that the fundamentalism of economic policy threatens the project of 20 years in power that the former minister himself had announced.

The government then appears as it always has been, but which circumstances (and the hopes placed in it) prevent us from seeing it. A one-shot government – ​​and itself problematic, as it did not avoid external fragility –, incapable of facing the problem of growth and of providing the necessary answers to the crucial inequalities resulting from the concentration of income.

A ruler so dependent on the “economic rationality” imposed by the markets is a political contradiction. For which president, if there are no alternatives in terms of economic policy? The head of government becomes a kind of master of ceremonies of power, who only vocalizes a script produced elsewhere. Even this function he does not fulfill well, except in the international sphere. The president does not mobilize society, perhaps because he is no longer able to convincingly explain where the country is going.

The government lost the battle of ideas, which aggravated the deficit of hegemony that the absence of a cultural policy and the abandonment of the university for eight years had already revealed.

Without growth, after 20 years of economic stagnation, it becomes impossible to face the serious social challenge, except for compensatory measures or topical policies that do not modify the crucial problem of income concentration. Without structural reforms and faced with the mishaps of the economic model, the tendency of the government's support base was to crumble, as illustrated by the crises with the PFL and part of the PMDB, not to mention the difficulties that the Serra candidacy initially encountered in the PSDB .

The conservative historical commitment established by FHC, under the pretext that a strong dose of realism was needed to lead the country – far from extremism – to a new level, turned into a vulgar political retail negotiation.

The inability to implement tax, social security and political reforms are emblematic of this downgrading of the national agenda. These are issues of a strategic dimension and which could only be considered with a broad vision, even if the government theoretically had the votes to implement them.

The tax reform involves a broad rebalancing of social and regional interests to face distributive conflicts and readjustment of the federative pact. Nothing was made. The immediate demands of the Treasury to “build cash” spoke louder to allow an unfeasible model imposed from the outside to work (until when?).

Social security reform, central to the neoliberal agenda, was delegitimized from the start. Despite the distortions of the current system, the main problems of the Social Security are located in the mediocre performances of the economy that condemn the system to the current anemia. A reform like this presupposes wide-ranging social negotiation, difficult to be carried out by a government that had little to offer the subaltern classes.

Finally, political reform collided with the forces that had led FHC to the Presidency – members of the conservative historic compromise – and who were not willing to lose positions.

Some Tucano intellectuals tried to present the resignations of Antonio Carlos Magalhães or Jader Barbalho or the defenestration of Roseana Sarney's candidacy as signs of a “crisis of the oligarchies” and indications of a process of political “modernization” in the country. False. They are just minor episodes, infighting within the government's support bloc. When the not very modern interests of these people were threatened, as for example in the CPI requests to investigate corruption, the bloc remained united.

Uncertainties about the direction of the world economy and about the extent and depth of the crisis of capitalism, allied to the inflection that Bush's election provoked in US politics, especially after September 11, undo FHC's illusions about the new Renaissance in worldwide scale.

The Brazil that Fernando Henrique Cardoso's successor will find has imprecise and uncertain contours. It will be a difficult country to govern due to the fragility of its economy, above all due to its external vulnerability. The social contention and expectations that elections usually provoke will create an avalanche of dammed-up demands that the state the country is in will make it difficult to meet, at least in the short and medium term.

The wisdom of the new rulers, especially if Lula wins, will be in signaling the new direction the country will take, clearly showing the existing difficulties and particularly defining the instruments, actors and methods that will preside over the transition to a new Brazil .

The realism that will be imposed on the new rulers cannot frustrate hope, much less lead to paralysis and sameness.

If Lula succeeds FHC, politics will be restored in all its integrity. The objective constraints, especially those inherited from the previous government, will not be ignored or disregarded, but the continued exercise of political mobilization and negotiation will replace the will as a factor of historical change.

* Marco Aurelio Garcia (1941-2017) he was a professor at the Department of History at Unicamp and special advisor to the Presidency of the Republic for international affairs during the Lula and Dilma governments. Author, among other books, of Building tomorrow: reflections on the left (1983-2017) (Perseu Abramo Foundation).

Originally published in the magazine Theory and Debate no. 51, Jun/July/Aug. from 2002.

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