From Poverty to Power How Good Governance Made Brazil a Model Nation

In the first of four installments of a series on good governance, SPIEGEL explores how Brazil has become one of globalization's success stories. A rigorous battle against corruption and poverty has ushered in new freedoms, growth and increasing equality, winning the country respect around the world.

By Erich Follath and Jens Gluesing

Western democracies consider themselves to be efficient, farsighted and just -- in other words, prime examples of "good governance." But in recent years, the euro and debt crises, along with wars in Iraq and Afghanistan, have shattered faith in the reliability of Western institutions. Disconcerted Europeans are casting a worried eye at newly industrialized nations like China and Brazil. Can the West learn something from countries that for so long sought its advice? In the first of a four-part series, SPIEGEL takes a look at how Brazil is governed today.

Bus driver Luiz Bezerra used to have just one thought on mind as he climbed the crumbling steps to Cantagalo every evening. It was this one thought that drove him on far more than the oppressive humidity or the sweat beading on his forehead: "How will my wife, our two daughters and I survive the night?" Cantagalo, a slum clinging to a slope above the beaches of Rio de Janeiro, could only be considered picturesque if viewed from the safe distance of a tourist helicopter. It is poetic only in its name, which means "the crowing of the rooster."

On every street corner of this favela, a Brazilian term for "slum," men stood around dealing drugs and settling their differences with automatic weapons. Gangsters raped young women, mugged the elderly, controlled the neighborhood and stifled any form of public order with their violent excesses.

These days, though, Bezerra has different concerns, ones that can be summed up neatly in two key phrases: "garbage collection" and "zip codes." Now his life revolves around small daydreams instead of nightmares.

"I'm sure all this isn't very exciting for you," says this man with graying hair. He's sitting in his workroom, where a dollhouse-sized model apartment with a miniature couch and built-in kitchen speaks to his ascent to the middle class. "It's not that exciting for me either, actually. But, believe me, for the first time in a long time, we ordinary people are taking part in Brazil's boom and, for the first time, we're experiencing hope."

The New Cantagalo

Bezerra, 67, now retired from his bus-driving job, was elected by the favela's residents to serve as head of the local citizens' association. Together with the city government and police, he is responsible for Cantagalo's approximately 20,000 inhabitants. He sees to it that they collect their garbage, no longer simply burning it. He helps them to register their homes, most of which were constructed illegally, and provides them with house numbers that direct the letter carriers who now come by regularly. He warns his neighbors not to tap electricity illegally from the power lines but, rather, to pay for the regular municipal services, and he hears their complaints when something is stolen. Violent crime is now rare in Cantagalo.

The "Unidade de Polícia Pacificadora," or "Police Pacification Unit," patrols here. This special unit used force to conquer Cantagalo, pushing out the powerful drug dealers and rounding up rifles and pistols. Now the unit's 24-hour presence in the favela provides for a tense sort of calm.

There's still a sense of mistrust here among the narrow alleys, with their graffiti-covered walls. Many people disappear inside their doorways when they see the hulking men in uniform approaching, and only a few women offer a cautious greeting. These peacekeepers are respected, but not necessarily liked, and there's a sense that they're still on probation here. Too often in the past, corrupt government employees made deals with the gangsters. "The police looked away when the gangs massacred each other up here, and killed many of us, too, in the 'microwave.' That's what they call it when they burn their victims alive," says one Cantagalo resident, who asks to remain anonymous. The police, who work under Captain Renato Senna, are aware of this and try to defuse conflicts with as much restraint as possible.

Cantagalo is barely recognizable as its old self. New bars and stores have sprung up, offering everything from laundry detergent to condoms. People here also have more money to spend since the countrywide "Bolsa Família" program came into effect. Under this scheme, poor mothers receive a monthly benefit equivalent to between €10 and €60 ($12 and $74), depending on their income and number of children, and on carefully monitored conditions -- mothers must send their children to school and have them vaccinated regularly.

Achieving the Rare Trifecta

Can it be that Rio, the chaotic, samba-dancing city that was almost hopelessly crime-ridden and run-down a decade ago, a place tourists were warned to avoid, is now on its way to becoming a model for other cities? That the city's famed lasciviousness is giving way to an almost German-style sense of order -- here of all places, in the thongs-and-high-heels capital of the Brazilian Carnival?

These impressive changes are not just taking place in Rio de Janeiro, although they're being sped along by two major upcoming events, the 2014 World Cup for soccer and the 2016 Summer Olympics. Brazil was long considered a country with great potential -- but doomed forever to languish in that sense of possibility because the country's chaotic governments could never seem to get their act together. Now the entire country is on the rise, though. South America's largest nation is one of the so-called "BRIC" countries -- Brazil, Russia, India and China -- which are grouped together because they are considered growth regions with particular economic potential. And many believe Brazil is already on its way to becoming a global power.

The country has a nearly balanced budget, little debt and almost full employment. It is in the process of overtaking France and the United Kingdom, and is poised to become one of the world's five largest economies. Despite being a newly industrialized country itself, Brazil gives development aid, and its dollar reserves of over $350 billion (€290 billion) make it one of the countries with the potential to help save the European Union.

Globalization expert Nicholas Lemann sums up the Brazilian miracle in The New Yorker: "Among the world's major economic powers, Brazil has achieved a rare trifecta: high growth, political freedom, and falling inequality." That first factor stands in stark contrast to the United States and Europe, the second factor to China and the third to almost anywhere on the map.

Lemann's high praise for Brazil makes it seem that global leaders searching for the secret to good governance should make a pilgrimage to the Amazon. International organizations such as the World Bank, and politicians from US President Barack Obama to Chinese Prime Minister Wen Jiabao, are full of admiration as well.

Becoming a Global Power

How exactly did the administration accomplish this? How did it turn Brazil into one of the world's best-governed newly industrialized countries?

Brazil is 22 times the size of Germany, and with 192 million people, it also has more than twice Germany's population. The country also carries weighty historical burdens. Brazilian society is far from homogeneous, the economy isn't well developed and the country doesn't have a tradition of democracy.

In fact, for much of its history, Brazil has been treated as a pawn by foreign powers. The Portuguese conquerors were brutal in their treatment of the region's indigenous people. They also dragged millions of slaves over from Africa and generally exploited Brazil however they saw fit from the 16th to late 19th century. In the 20th century, the country lurched from coup to coup, and for two decades, starting in 1964, it was ruled by a military dictatorship that Washington sometimes tolerated and sometimes actively supported.

By the early 1990s, Brazil's economy had hit rock bottom. Violent crime in the major cities had reached nightmarish levels, lumber-cutting mafias oversaw the ruthless exploitation of the rainforests, and while a few people grew outrageously rich, babies in the slums died of malnutrition. The government didn't provide even the most rudimentary services, and hyperinflation gobbled up more than pay raises could match.

Such circumstances could have provided fertile ground for radicals, easily giving rise to a revolution. Yet the individual who stepped in to turn things around was a moderate social democrat, Fernando Henrique Cardoso, now 81. In 1993, then-Finance Minister Cardoso brought together the country's brightest minds. He created a new currency, the modern real, restructured foreign credit and lifted tariff barriers. Some protected industries didn't survive these drastic changes, but the new approach brought a return in confidence, and consumption began to rise.

Cardoso's approach to government applied tools that could have come straight from a handbook on good governance -- and in fact, the World Bank began publishing such a handbook in 1996, in the form of its "Worldwide Governance Indicators." Cardoso appointed technocrats rather than his own political followers. He opened up the country, creating international economic connections, and was rewarded for his efforts when Brazil elected him president in 1994 and again four years later.


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