Kimberly Dudeck

Comprehensive Chapter Review

Chapter 7: From Disorder to Progress Under Cardoso
The newfound democracy, also referred to as the New Republic, initially
confronted three main issues the country was currently faced with. Their plan of attack
was to dismantle the remains of the dictatorship, conquer inflation and secure a return to
economic growth, and address the countrys deep rooted social problems (118).
Although the New Republic had good intentions, they only triggered disappointment
among the citizens of Brazil. Before Cardoso came along, a man by the name of Jos
Sarney was sworn in as president. Sarney was not a household name, and in an attempt to
gain popularity he introduced anti-inflationary plans. He also proposed two constitutional
amendments to Congress. One would permit illiterates to vote, and the other legalized all
political parties. The amendments were approved in the 1988 constitution, and for the
first time in Brazils history, elections for Congress and governors were based on
universal suffrage (119).
The state of Alagoas did not have the best reputation in the 1980s. The state was
very well known for its political violence, it was experiencing social neglect from the rest
of the country, and it was recently devastated by a deteriorating sugar industry. In 1986
42 percent of Alagoans were unemployed, 65 percent were illiterate, and the infant
mortality rate was roughly double the national average (121). As you can see, Alagoas
was not a pleasant state to live in. The government continued to disregard this region and
the quality of life was far from improving. In 1989, the citizens of Brazil finally had the
opportunity to select the next president. Fernando Collor de Mello, the current governor

of Alagoas, saw an opportunity and decided to run for election as a third party candidate.
Collor gained popularity and the support of the country, which aided in his victory over
Lula. In the first direct presidential election in forty years, Brazilians had thus rejected
the politicians who had fought to restore democracy, and all of the main parties that had
dominated political life for the previous decade. Instead, the citizens of Brazil entrusted a
quintessential conservative populist who promised to modernize the country (123).
Collor and his government focused mainly on improving the economy. They decided to
open the ports to accept foreign trade, and attempted to amend the financial shortages in
Brazil. Collors presidency was going well until a government scandal was uncovered.
On December 29, 1992, he resigned from his position in office.
In 1994, Fernando Henrique Cardoso came up with a plan in an attempt to tame
the rate of inflation. This proposal involved a new currency, the real, as well as a virtual
currency called the Unidade Real de Valor (URV). The real was launched on July 1st, and
in a few short months, it was evident that Cardosos brilliant idea succeeded in the
conquest of inflation. In June of 1994 inflation was around 5,000 percent, by September,
the monthly rate was 1.4 percent (128). Cardosos recent popularity gave him an
advantage in the upcoming presidential election, which he won without any question.
Many Brazilians were relieved that at last their country was represented by someone of
whom they could feel proud of (129).
While in office, Cardoso made it a point to make Brazil a more reasonable
country. His first order of business in doing so was to eradicate the state monopolies in all
aspects. As weve learned in previous chapters, hope is always followed by
disappointment in Brazil. In 1998, there was a crash in the world financial markets, and

the value of the real had dramatically decreased as a result. This devaluation was a
political defeat for Cardoso: he never regained the popularity of his first term (136). In
one last attempt to try and save the country, Cardoso turned to the International Monetary
Fund (IMF) for assistance. Naively, they approved of his offer and were able to regulate
inflation in a timely matter. In order to keep track of the inflation target, the Central Bank
was permitted full control over monetary policies. The new policy tripod of a floating
currency, inflation targeting, and a primary fiscal surplus allowed Brazil to achieve the
elusive combination of economic stability, and, eventually, economic growth (136).
Although Cordosos two terms did not go as smoothly as he would have hoped, he
succeeded in lowering inflation rates, as well as making Brazil a fairer, more democratic
country (137). According to the citizens of Brazil, he had given the country rumo,
meaning a sense of direction. Thanks to Cardosos success in office, the country was
finally able to move on to bigger and better things.