A diplomat’s reflections on Brazil

Melvyn Levitsky spent much of his career as a U.S. diplomat observing the spectacular rise of Brazil, which recently overtook the U.K. as the world’s sixth largest economy.

He began as a consul in the northeastern city of Belem in the late 1960s when the country was ruled by the military. He returned in 1994 to serve as the U.S. Ambassador during the Clinton administration when Brazil was undergoing sweeping economic reforms.

As President Mary Sue Coleman prepared to lead a University of Michigan delegation to Brazil, Global Michigan sat down with the retired ambassador for a briefing about the country.

Here are excerpts from the discussion with Levitsky, who has been a professor of international policy and practice at U-M’s Ford School of Public Policy since 2006:

Global Michigan: During your two postings to Brazil as a diplomat, did you enjoy the country? Was it a good assignment for you?

Levitsky: I loved Brazil. I loved the culture and the people. They’re great people – fun loving but also industrious. It’s a country of tremendous diversity. Southern Brazil is highly industrialized. The city of Sao Paulo has as many people and as large an economy as Chile. The state of Sao Paulo has as many people and as large an economy as Argentina. The northern part of the country in the Amazon, particularly in the northeast, which has always been the poorest part of the country, is still trying to pull itself up. Overall, it’s an interesting, vibrant country on the move, with creative, artistic and hard working people, and of course, terrific music. There’s nothing like Carnival. Think of Mardi Gras in New Orleans. That’s kind of like a drip in the faucet compared to Carnival.

Global Michigan: What were some of your initial impressions about the country?

Levitsky: The old cliché was that “Brazil is the country of the future and always will be.”  People thought Brazil would never be able to cross the mark and never get to the take-off stage with its economy and politics. Brazil had a military government for 25 years. When I was there the first time in the 1960s, the military had just taken over and they ruled with a pretty tight hand, although there were some trappings of democracy and a free press. It wasn’t as oppressive as you would have found in Argentina or Uruguay or Chile. It was clamped down but they did fairly well economically. However, the country was never able to get into the big boy’s group.

Global Michigan: You were ambassador to Brazil during a period of great change in the country. What were some of the most significant changes you witnessed?

Levitsky:  I was lucky to serve at a time (1994-98) when President Fernando Henrique Cardoso and his team came in. Several things happened. One, they were willing to abandon what were essentially reserved sectors, like informatics, where they would exclude imports from other countries. Cardoso opened up the country to exports because he wanted to have more of a competitive economy that would force Brazil’s industry to modernize and compete more effectively. His administration also created a new currency and brought inflation down. When I arrived, there was galloping inflation of about 40 percent a month. They brought down inflation to 17 percent for the year, which was a huge difference. Inflation hit the wage-earning poor and middle classes directly and strongly. After the new currency was introduced, our exports to Brazil doubled during the first year. Brazilian tourists flocked to the US, particularly to Florida. Industry began to pick up. You started to see more cars on the road. Life changed for the people.

Global Michigan: How did these reforms affect the mood of the country?

Levitsky:There began to be a sense of hope that things would work out. People had a much more positive attitude, which has a good deal to do with how an economy improves; consumer sales and investment increased significantly. The economy became more global and began competing internationally, particularly in agribusiness. For example, with processed  commodities like

frozen concentrated orange juice, they had a much more efficient industry than we did, and we actually excluded their frozen concentrated orange juice because the Florida orange growers were concerned that the Brazilians could out compete us. Brazilians began investing in the United States and bought up some of the factories and modernized them. Otherwise, their orange juice couldn’t come in economically.

Tourism increased to the United States because people with an overvalued currency could afford to go to the U.S. Disney World became filled with Brazilians. It started hiring interpreters for the Brazilian tourists. A kid of 16 felt that to become an adult, he had to go to Disney World. All kinds of things began to happen.

Global Michigan: In what areas did Cardoso fall short?

Levitsky: What was really needed was a change to the political system. There were – and are – too many parties in the Parliament, and it still is too easy to switch parties. You can do it overnight. A system like that bred a good deal of corruption. Politicians could say I’ll switch to your party if you give me these positions. President Cardoso also unsuccessfully tried to reform the pension system, which was really ridiculous in the public sector. Women could retire at 45 and the men at 50 or so. Public expenditures were too great. But politically, Cardoso couldn’t fix that with the party system they had.

So my sense at the time was that here is a country that, despite obstacles has a viable governmental system. It doesn’t have the best system in the world, but it’s a democratic system. It looked like they were going to overcome the “It’s the country of the future and always will be” prediction. They began to get close to the take-off stage. They probably were already in the take-off stage.

Global Michigan: Cardoso was followed by Lula de Silva, who served from 2003 to 2010. The country really seemed to take off under Lula. What’s your assessment of his presidency?

Levitsky: Lula was a man who had a high school education and was a machine tool worker, a rough cut kind of guy but a person with a lot of charisma and good intentions. He had been the head of a major labor union and was on the left wing of the political spectrum. But he made a wise decision to change things gradually. He needed to have a social program that would focus on the poor. But he also made a wise decision to hire some economists that maintained some of the same macro-economic policies that Cardoso had instituted, particularly in the banking sector and in privatization. So Brazil’s economy actually improved significantly. Lula established the Bolsa Familia social program, which rewarded poor families that kept their kids in school, for which they received a subsidy. His policies were left of center but moderate. So the country prospered, and we’ve seen what has happened in eight years under Lula. Brazil has done quite well. Those who feared he would move leftward significantly were surprised to see that he stayed closer to the middle. Interestingly enough, he made up for this with a bit of rhetoric on the international side. He embraced Chavez in Venezuela and Ortega in Nicaragua. He had a leftward lean in foreign policy but did nothing that was terribly damaging to the quite productive relationship with the United States that Cardoso had pursued.

Global Michigan: Brazil’s economy isn’t booming as much now and has been flirting with recession this year. What’s the economic outlook?

Levitsky: There’s a bit of a downturn now because the world economy has affected Brazil’s economy. Brazil is very much dependent on exports, particularly commodities, which have been hit hard on the world market. It is the biggest soy bean producer in the world now. It’s also big in ethanol and biofuels. It’s also significant that the country once identified so closely with coffee, now has significant exports in rolled steel, auto parts and aircraft. Brazil has suffered less from the global downturn than many developed countries. I would expect this will continue. The new president, Dilma Rouseff (who was accused of being a guerilla and was imprisoned and tortures during the military regime), has acted sensibly and has in many ways been more moderate than Lula.

Global Michigan: Would you advise students who are interested in global business or diplomacy to consider studying Portuguese and develop an expertise in Brazil? 

Levitsky: Portuguese is certainly very valuable and provides a good entre. Although many educated Brazilians speak English, there are many areas of the country where English is rarely used. Many government officials and private businessmen don’t speak English. So I think taking Portuguese or a Spanish-to-Portuguese conversion course would be a good idea. In the Foreign Service, if you speak Spanish and you’re assigned to Brazil, you get a conversion course. If you speak and read Spanish, you can read a Brazilian newspaper fairly easily.

Latin America in general is a place we should be paying more attention to. The current thinking seems to be that we look toward the Pacific, toward China and Asia, which is important, but Latin America is close by and changing and modernizing. We have difficult relations with some of our neighbors, but that’s not going to last forever. There are many natural trade ties and tourism ties, places to visit, cultural interests and parallel political interests. Brazil is more than half the population of South America. Its economy is a huge engine of growth on the continent, and the Brazilians themselves have expanded their ties with their neighbors and internationally. They have a big middle-management class all around South America and in the United States as well. Brazil, during these tough times, has done relatively well, more people have taken them seriously as having staying power and no longer just a blip on the world scene. It seems to me that it has become a country of both the future and the present.

Global Michigan: Now that London has finished hosting the Olympics, the Summer Games will move to Rio in 2016. What kind of party do you think the Brazilians will throw?

Levitsky: The security situation in Rio will be challenging, and the Brazilians know this. If you’ve been in Rio, you’ll see that it has this gorgeous harbor surrounded by high hills. Up in the hills are favelas, basically slums. Some of them are quite developed. But they’re been badly infected with drug trafficking and crime. The Brazilians have developed some very interesting new approaches to community policing in the favelas. They are trying to get the police not just to enforce the law but also to have productive relations with the local communities. They’ve sent the army up a couple times when things got bad. They don’t like to do that. So they’ve developed some new procedures with police. I think despite the fact that there are criminals and drug traffickers in the favelas, they are going to take pride in Brazil looking good. And, in four years I think government policies will mitigate some of the problems. Brazil will host the World Soccer Cup in two years it they should have a bank of experience by the time of the next summer Olympics. There may be some rough spots, but I’m confident they will be able to do the job well. The two world events will have the effect of giving a significant boost to the country in terms of image, and to attention to what they’re doing in the political, economic, social and cultural sectors .

There are going to be logistical problems, but the Brazilians have an expression called “jeito,” — this it doesn’t translate very well. It means finding out how to do something when it looks impossible. For example, in 1965 when I was transferring from Belem to Brasilia, the government had recently built the Belem-Brasilia highway, cut through the rain forest to connect the north with central Brazil. It was all dirt road with lots of pot holes. It took four days to make this trip. At one point, we hit a bump and it punctured the gas tank in the middle of nowhere. Along came the highway patrol and they said, “We’ll fix that up.” They took the gas tank off and soldered it up in a patchwork way and put it back on and off we went. They had handymen who could fix anything; if they didn’t have the part they would make the part. They would find a way to do it in a typically Brazilian way. So my sense is that things are going to come out OK, quite well in fact. And anyone who has witnessed Brazilian Carnival knows that the opening ceremony will be spectacular.