This was my first trip to Brazil in two years, an uncharacteristically long time for me, having made fifteen previous trips from June 1995 to February 2006, but it afforded me the ability to see changes that I might not otherwise have noticed.
I spent my time in and around Belo Horizonte, a city of some 3 million and the capital of the state of Minas Gerais. There is plenty of good news to be found here. Construction in the region is booming. Housing developments are springing up outside of the city in significant numbers. While this is a mixed blessing as it accelerates sprawl and could make Belo Horizonte's difficult traffic downright unbearable, it is an encouraging sign of an expanding middle class and, considering that some of the best and brightest of Minas Gerais left the country in the 1980's and 1990's for better opportunities, all things considered, I find this thrilling.
There is a sense of optimism in the air that has been noticeably lacking in my previous visits. All of my nieces and nephews who have graduated college are gainfully employed in their respective fields. Others are planning to enter college with a reasonable expectation that they will also be able to find work upon graduation.
The nation is energy independent, and within a few years could become an oil exporter. Even Brazil's largest neighbor sees wisdom in emulating its success.
What has happened? A number of factors have contributed to this, but the key to the start of this improvement was bringing inflation under control. Credit for this must be given to Fernando Henrique Cardoso, who introduced the Plano Real (Real Plan) when he was Finance Minister and brought inflation under control from some 31% per month to 4.18% for all of 2006. Cardoso made some missteps along the way, chiefly in 1998 when he expended huge amounts of dollar reserves in order to prop up the real which was overvalued to begin with, but bringing inflation under control provided the solid base for improving Brazil's economy.
While some on the left may criticize Cardoso's privatizations, clearly the privatization of the truly wretched Telebras, the state-owned telephone company and Companhia Vale do Rio Doce (now known simply as Vale), the world's largest miner of iron ore were important steps. A friend of mine lived in Brazil for twelve years and never had a phone as the process had to be restarted whenever he moved. Vale now employs more people as a private company than it did as a government run entity, is valued at US $155 billion and will be supplying steel plants in the state of Maranhao in the Northeast due to its proximity to the Panama Canal.
Why is closeness to the Panama Canal important? That leads to where I believe Lula deserves a great deal of credit. Where prior presidents have looked to the north for trade - and to be sure, Brazil still does - Lula has also looked aggressively to the East and West for trade opportunities and China and India have become significant markets for Brazil. As of the end of last year, Brazil was exporting more to Europe than to the US.
When I visited Brazil the first time in 1995, most homeowners scrimped and saved to pay cash for their homes - those who were fortunate enough to own them. Another benefit of long-term control of inflation has been the gradual decline in interest rates, enabling the middle class to obtain mortgages.
Yes, my view was a snapshot. Yes, there remains much to be done, especially for the poorest of the poor. In my conversations with people, however, there was for the first time the sense that they needn't hold their breath and that the day for Brazil to be the country of the future is near. That may be the best news of all.
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