Residents of Pukanu, a Mebengokre Indian village in Brazil, faced
numerous hazards before logging on the Internet. Chief Pykati-re made several trips by
single-engine Cessna across 240 miles of rainforest to plug his community’s Macintosh
PowerBook into a phone line. Pykati-re effort has become a paradigm of how the Internet
can be utilized by even the smallest players in the global economy. Whatever the future
role of the Internet in solving the problems of the rural poor, the Pykany Trading Company
is a proof that a small enterprise can do business in the global marketplace and a
practical example for other indigenous and peasant communities. With their use of the
Internet the inhabitants of Pukanu village are responding to their critics and showing the
world that they can be responsible players in the global marketplace, while at the same
time preserving their traditions.
By Brazzil Magazine
Brazil, a country until recently mostly identifiable with Rio’s spectacular Carnaval
and Brasília’s other not-so-spectacular Carnaval of corruption and 3,000% annual
hyperinflation, had managed in the second part of our decade to gain its financial
footing. In 1994, then Finance Minister Fernando Henrique Cardoso introduced the
Real Plan, and within months, both inflation and unemployment decreased as if by miracle.
Although not perfect by any means, the Brazilian economy had been managing since 1994.
Inflation and unemployment were down and for the first time the less fortunate could
buy home appliances and other "luxuries" on credit. Taking advantage of its
locus on the American continent, its recent stellar financial performance, its abundant
natural resources, the political will of President Cardoso and the serendipity of its
circumstances, Brazil was able to secure a $42 billion line from the International
Monetary Fund (IMF).
As of early this year, the only painful remnant of the old days was a consistently high
level of current account deficit as a percentage of Gross Domestic Product (GDP). It
was such a high deficit that made Brazil a suspect by association when Russia defaulted on
its debt. It was obvious then that the infamous Asia contagion rather than be
contained in one part of the world, it was getting closer to Wall Street. Currency
speculators assumed that Brazil would be the next pawn to topple in the domino effect of
the world equity markets. As a result, $20 billion hemorrhaged out of Brazil’s
foreign currency coffers.
Brazil has come a long way from a dictatorship to a developing country. Especially
during this decade, the Cardoso government had made as much progress as financially
feasible. However, from a certain point on, political and financial progress has to
be accompanied by social betterment. Brazil, a country where 1% of the population holds
45% of all land and 2% of the population makes more than 50% of the GDP, is desperately in
need for social fairness.
So far, President Cardoso has been miserably unsuccessful at attacking
"organized" interests of certain interest groups. In an attempt to
maintain social peace, he has masterfully kept his balance on a political tightrope. However,
now that Brazil is under the mandates of the IMF, President Cardoso has a perfect alibi to
re-allocate political resources (a fancy name for "pork").
Cardoso should fully exploit the serendipity of present circumstances to pass an agenda
that goes beyond the financial requirements of the Real Plan and IMF guidelines. He
should use the opportunity to drive the knife as deep as needed and lay the foundations of
Brazil as a modern country. Instead of tiptoeing on previously arranged political
menageries, he could build a legacy as the founder of the new country by modernizing the
public sector, allocating land to peasants and privatizing most of the public sector.
Brazilian civil servants retire at the tender age of 40 and live happily thereafter on
social security checks. At an age when most employees have just climbed the
learning curve of their profession and are ready for maximum productivity, Brazilian
servants are heading for the exits. In the past, serious efforts to curtail such
benefits for public servants and especially to increase the retirement age have been met
with strong opposition, to say the least.
Most recently, the Lower House of the Congress (Chamber of Deputies) proposed a 59%
increase in their salaries. Although their salaries are fair by American standards
(around $120,000 per annum), Brazil sports an emaciated $4,000 per capita GDP (US’ GDP is
$26,000). The current turmoil could give an excellent excuse for President Cardoso
to severely oppose this piece of legislation when it comes to due in February.
Present circumstances offer an opportunity for a more equal distribution of land. This
is a fair piece of legislation for landless peasants who slave away in plantations. The
Landless Party has strongly come with this agenda. Ownership of land will motivate
poor farmers the same way that has motivated similarly in Mao’s China when productivity
reached abysmally low levels. More than 50% of the land is concentrated in the
hands of 2% of the population.
Brazil should also grasp the opportunity, and other creditor countries should strongly
encourage this policy, to utilize "nature-for-debt" swap. In the past,
creditors have partially forgiven Brazil’s debts every time the latter implemented
environmentally friendlier legislation for one of the richest ecosystems of our planet,
the Amazonian jungle. Now Brazil can use an increased initiative to go ahead with
even friendlier policies of the Amazon that would show up in the balance sheet. Vice
President Gore definitely could be a supporter of such an approach in partial exchange for
the $5 billion IMF package that was paid directly from the US.
The latest economic data from Brazil show a significant deterioration of its financial
house. The foreign reserves are in the lowest level since 1994, the economy is
shrinking for the first time in many years and the trade deficits keep increasing while
the debt has ballooned to more than $240 billion. However, Brazil has probably the
last opportunity to be given the benefit of the doubt and come up with political and
social reforms that had to be done some time ago and most importantly will place the
country on the right track for sustainable long-term growth.
Basil M. Karatzas is graduating in May 1999 with an MBA degree in
international Business from Rice University, in Houston, TX. Basil also serves as
President for Platinum Holdings International, an international management and capital
consulting firm, and can be reached at karatzas@rice.edu
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