By PAULO NOGUEIRA BATISTA JR.*
Considerations about the general's merits and some comparisons with Lula.
In my long experience as a columnist, I have learned that it is not advisable to publish articles in sequence. Between one article and another, a thousand things happen, a torrent of other articles and news comes, and the reader of the initial text no longer remembers it or has lost interest in the topic. Even so, that is exactly what I am going to do today – revisit an aspect of the article I recently published in honor of the 70th anniversary of Vargas' suicide.
The reason is that one point in this article caused surprise, if not repulsion: the reference to General Ernesto Geisel as one of the four great presidents of the Republic in our history, along with Getúlio Vargas, Lula and Juscelino Kubitschek. I promised to explain in more detail the inclusion of Ernesto Geisel in this short list, because I knew it would be controversial. I am here to fulfill that promise.
The topic is vast and the reader's time is short. I will address only three aspects of his government – the economy, domestic politics and international relations. The merits of his presidency, which lasted from March 1974 to March 1979, are many and seem undeniable to me, but I will not fail to point out errors and weaknesses. I will combine readings and studies with personal memories of that period. I will make comparisons with the Lula government and other governments after Ernesto Geisel. But it will be a tight summary, as the lawyers say. In any case, “long text alert”, as the kids say.
National developmentalism in the Geisel government
Ernesto Geisel was a developmentalist and nationalist president, more so than any other president during the military dictatorship. And more so than any other president of the Republic who came after him – with the exception of Lula and Dilma Rousseff. Ernesto Geisel thus resumed the tradition of Getúlio and JK – not only in economics, but also in Brazil's international relations.
On economic policy and many other aspects of Ernesto Geisel's work, I strongly recommend that the reader consult the book Ernesto Geisel, published by the Research and Documentation Center (CPDOC) of the Getúlio Vargas Foundation – an excellent work, based on a long statement by the former president, taken in 1993 and 1994, and carefully revised by him. In this revision, Ernesto Geisel added, in particular, a long passage in defense of state intervention in the economy.
During his term in office, the II National Development Plan stands out, based on the expansion and diversification of the Brazilian industrial park, especially the capital goods sector. My first job, I mention and passant, it was as an intern at the II PND and I give my modest testimony of the dynamism of the Ministry of Planning at the time, under the command of João Paulo dos Reis Velloso.
It was a Brazil that was confident in itself and its potential for development. There were many unresolved problems that were not even really addressed – especially the poor distribution of income and wealth – but the economy was growing rapidly and generating jobs. GDP grew by an average of 7% per year, a result not equaled by subsequent governments. The II PND was based on the so-called tripod – the State, the national private sector and the foreign private sector.
A mixed economy, therefore, with a strong presence of state-owned companies, but open to foreign capital. It also included support for the national private industry, through the BNDE and other instruments. My second job, in fact, was as an intern at the BNDE and I was able to see how the bank enthusiastically fulfilled its mission of supporting the development of strategic sectors of the national private economy. And I emphasize: the support was for national private companies.
The engineers, economists and lawyers under whose supervision I worked fiercely resisted any attempt by foreign companies to disguise themselves as national companies in order to obtain long-term financing at favorable rates from the BNDE. The argument at that time was that branches and subsidiaries of foreign companies could draw on capital from their parent companies and had easier access to the international credit market. Therefore, they should not and did not need to seek support from Brazilian public banks.
At this point in the text, it is clear why national-developmentalist economists have plenty of reasons to appreciate what was done during the Geisel period. Just compare it with what happened in subsequent governments in terms of commitment to development, with the last government of the military dictatorship, the Figueiredo government, and with the Sarney government (with the exception of the brief interregnum of Finance Minister Dilson Funaro, in which I also participated, now as an economist).
I don't even ask for a comparison with the anti-national governments of Fernando Collor de Mello and Fernando Henrique Cardoso. Under Lula II and Dilma I, the national-developmentalist tradition was revived. And Lula III is now making a new attempt, after the failure of the immediately preceding governments.
The gestation of the foreign debt crisis
In all fairness, however, it is important to emphasize that the enormous difficulties faced by the governments of João Figueiredo and José Sarney were partly the result of strategic errors committed by the government of Ernesto Geisel. Faced with the first oil crisis in 1973, a period in which Brazil was highly dependent on imports of this product, Mario Henrique Simonsen, the Minister of Finance, the aforementioned João Paulo dos Reis Velloso, and Paulo Lira, the president of the Central Bank, decided to allow the loss of terms of trade to be reflected in dangerous imbalances in the balance of payments in the current account and a sharp increase in the country's net external debt. All three were highly regarded economists, which did not prevent them from realizing these problems in time.
Then came the famous “petrodollar recycling” carried out by private commercial banks in the United States, Europe and Japan. This led to the foreign debt crisis of the 1980s, which was aggravated by the way Delfim Neto, during the Figueiredo government, responded to the second oil price shock in 1979 and the interest rate shock promoted by the United States Federal Reserve from 1980 onwards.
An essential issue: the Ernesto Geisel government failed to recognize the importance of accumulating a larger volume of international reserves as a means of self-protection. When the second oil crisis and the rise in international interest rates occurred, there was an unexpected increase in the Brazilian economy's need for external financing. International liquidity, especially the supply of private bank credit, which many assumed to be infinitely elastic, dried up abruptly. And Brazil had to resort to the IMF, losing its sovereignty and decision-making autonomy.
I must point out that it was not so easy to fully perceive these risks at the time. I still remember attending an interesting lecture in Rio de Janeiro, around 1979, by the economist John Williamson, who became famous as the father of the “Washington Consensus”. During the presentation and in the written work that served as a basis for it, John Williamson argued that Brazil’s international reserves (around US$ 13 billion) were too high…
In fact, the economic team of the Ernesto Geisel government was seduced by this kind of nonsense. Almost immediately after the lessons taught by John Williamson, Brazil's reserves proved dramatically insufficient. The result was the collapse of the economy – the “interrupted construction” to which Celso Furtado would refer.
My meeting with Ernesto Geisel and some comparisons with Lula
Even so, the merits of the Ernesto Geisel government in the economic area seem undeniable to me. The president had a certain wisdom in conducting economic policy. I had the privilege of meeting him around 1979/80. Ernesto Geisel, already a former president, came to have lunch at my father's house, where the three of us chatted. I, at 24 or 25 years old, barely said a word, limiting myself to asking a few questions. Two important things remained in my memory from the conversation.
First: referring to the way of dealing with the Finance Minister, Ernesto Geisel stressed that, in every government, all the ministers want to spend, and only one, the Finance Minister, wants to save. And it is up to the President, he said, to honor this one – under penalty of putting the government at risk. This is what President Lula does, who always supports Minister Fernando Haddad.
The second aspect of the conversation with Ernesto Geisel, which is not present in the current government: it is essential, he emphasized, that the President has access to more than one opinion on economic matters within the government. He regretted that his successor, General João Figueiredo, was left in the hands of a single superminister of the economy, Delfim Neto.
Ernesto Geisel recalled, by contrast, that he had three influential and independent voices: the aforementioned Simonsen in the Finance Ministry, Velloso in Planning, and Severo Gomes, the Minister of Industry and Commerce. When there was an important economic issue, he would summon these ministers, open a debate, listen to their arguments, their agreements and disagreements – and then make the decisions himself.
On this point, Lula follows a different approach. He only has Fernando Haddad as an influential and trusted minister for economic issues. Perhaps he should create, as suggested by former Finance Minister Guido Mantega, a special advisory office for the Presidency, in the Planalto Palace, similar to the one Council of Economic Advisors of the Presidency of the United States.
It could function along the lines of the special advisory office for international affairs, headed by former minister Celso Amorim, who has the support of a team of diplomats and other advisors.
The internal political dimension
I return to Ernesto Geisel. He was a dictator, one of the five presidents of the regime established by the military coup of 1964. And yet, it is also important to note that he was the one responsible for the “slow, safe and gradual easing of tension,” in his own words. This “easing of tension” would lead to the end of the dictatorship. Ernesto Geisel even faced fierce resistance to political openness from the “hardliners” in the Armed Forces, as I recapitulated in the previous article on Getúlio Vargas.
Please note, reader, a point that seems crucial to me, although controversial: the “easing of tension” came, in my view, essentially from the top down, at the initiative of President Geisel, who realized that the military dictatorship should not and could not continue forever. It did not come from the bottom up, under pressure from sectors of civil society. I myself, as an economics student and student leader, participated in this bottom-up pressure, spearheaded by the anti-dictatorship agitation at some universities.
In 1977, this student movement, dormant since 1968, resurfaced with some force, especially at USP and PUC in Rio de Janeiro, where I studied and was part of the group of political leaders at the university. I remember well the astonishingly detailed spying carried out by the SNI during our board meetings, the summons of some of us to testify at DOI-CODI (a repressive agency), the military helicopters threateningly flying over the PUC campus, while a large mass of students shouted in unison, in response to one of us who shouted into a megaphone: “Journalist Vladimir Herzog” – “Present!”; “Worker Manoel Fiel Filho” – “Present!” – in a reference that still moves me to this day to two “subversives,” as the military called them, who had been murdered on the premises of the Second Army.
Because of these murders and other problems, in fact, Ernesto Geisel dismissed General Ednardo D'Ávila, the commander of the Second Army, in 1976, as I recalled in the previous article.
But I am not fooled. Pressure from students and other sectors would not have been nearly enough to lead to democratization. The main merit goes to Ernesto Geisel. And I would add that it does not seem fair to attribute to him the full responsibility for all the political violence that occurred during his government. Wouldn't that be the same, I ask, as attributing to Lula the responsibility for all the corruption scandals that occurred at Petrobras and other areas during his governments?
Ernesto Geisel's wisdom also seems evident in the political arena. In his testimony to the CPDOC, without being asked about it, he referred to a future President of the Republic in the following terms: “What military personnel are there in Congress at the moment? Let's not count on Jair Bolsonaro, because Jair Bolsonaro is a completely unusual case, including a bad military man.” He also highlighted that Jair Bolsonaro, at the time a federal deputy, was one of the foolish people who wanted to return to the military dictatorship.
Nationalism and international relations
In the international arena, the Geisel government also stood out positively, under the aegis of what he called “responsible pragmatism”. Under Ernesto Geisel, independent foreign policy returned, a return to the tradition of Getúlio and an anticipation of the policy that Lula would implement from 2003 onwards.
Some examples, listed quickly so as not to make an already long article any longer.
Although anti-communist, Ernesto Geisel recognized Mao Zedong’s China and abandoned relations with Taiwan in 1974 – years before the United States did – a “first sign that Brazil would have an independent foreign policy,” as Celso Amorim noted in a recent interview. Ernesto Geisel also recognized independence and established relations with the Marxist regimes of Angola and Mozambique in 1975.
And he abandoned a military agreement with the United States in 1977, because the Carter administration had begun to condition funding on the supervision of human rights in Brazil. Another crucial point: Ernesto Geisel did not adhere to the Nuclear Non-Proliferation Treaty, which was heavily sponsored by the United States and the Soviet Union. Adhesion would only occur during the sellout government of Fernando Henrique Cardoso.
Even more important, also in the nuclear area: the Brazil/West Germany agreement, made during the Ernesto Geisel government, which resulted in the Brazilian nuclear program and the creation of a state-owned company to execute it, Nuclebrás. My father was the main negotiator of this agreement and the first president of Nuclebrás.
This nuclear program was, as expected, met with strong opposition from the United States and its Brazilian allies, on the one hand, and from the Soviet Union and its Brazilian allies, on the other. The Ernesto Geisel government resisted these pressures and moved forward with the nuclear program. It was only halted during the João Figueiredo government as a consequence of the loss of sovereignty associated with the foreign debt crisis.
The issue is controversial, I recognize, but I conclude with a question: wouldn't all these economic, domestic political and international relations considerations be enough to include Ernesto Geisel in the list of the greatest presidents of the Republic in our history?
*Paulo Nogueira Batista Jr. is an economist. He was vice-president of the New Development Bank, established by the BRICS. Author, among other books, of Brazil doesn't fit in anyone's backyard(LeYa)[https://amzn.to/44KpUfp]
Extended version of article published in the journal Capital letter, on the 20th of September 2024.
the earth is round there is thanks to our readers and supporters.
Help us keep this idea going.
CONTRIBUTE
