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Brazil unrest threatens economic decline: Cardoso

Jul 8, 2013

Former Brazilian president Fernando Henrique Cardoso has lashed out at the government’s response to a wave of social unrest sweeping the nation, warning that a mishandling of the crisis could exact a heavy toll on an economy already suffering from weak growth.

Former Brazilian president Fernando Henrique Cardoso has lashed out at the government's response to a wave of social unrest sweeping the nation, warning that a mishandling of the crisis could exact a heavy toll on an economy already suffering from weak growth.

In an exclusive interview with LatinFinance, Cardoso said: "There is a lack of a clear vision to deal with the crisis. I think it will have [a negative impact], because it just increases the level of doubt among decision makers: What is going to happen? Where is this going to lead?"

His comments - his sharpest yet on the issue - follow moves by president Dilma Rousseff to head off the crisis, including last week proposing a referendum on political reform as a way to address growing public calls for an end to corruption.

Cardoso said: "The reaction of the government has been quite strange because it only sees this from a political angle."

The former president said the commodity-fueled growth bonanza may have run its course and that living standards have failed to keep up with the government's rhetoric on Brazil's growth miracle.

He added that the protest movement reflects a deeper malaise plaguing Brazilian society, 10 years after the rise to power of Rousseff's predecessor, former leftwing Workers' Party leader Luiz Inácio Lula da Silva.

Brazilian authorities are now facing "a reality shock", he added. "There is a dual reality: what the government and the official media say - everything is marvelous, Brazil is the world's seventh largest economy. This is true in a way, but you cannot forget that the society has not improved as fast as the economy - there is a lot of insecurity, violence, the quality of employment is not that great, the day to day life is harder than the general picture would lead people to believe. It's a process of cognitive dissonance, as psychologists would say."

Protests erupted early June following a 6% increase in public transport fares in São Paulo, which Cardoso said proved to be a "short circuit, which later sparked a fire". Although the price hikes were later rescinded, unrest spread to major cities across the nation, with mass protests expressing outrage at the contrast between the roughly $12 billion price tag for the 2014 football World Cup and the poor quality of public services, including health and education.

Rousseff's pledge to boost investment in public transport by 50 billion reais ($22 billion) and to plough oil royalties into education, following her claim to have "heard the voice of the people", failed to quell protests. Her popularity ratings have plummeted, according to recent opinion polls.

A growing number of analysts suggest the BBB-rated sovereign is on course for a downgrade next year.

The full interview with Cardoso will appear in LatinFinance's 25th Anniversary edition, published next month. See www.latinfinance.com/quartercentury for details. LF



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Comments
  • Carlos Brasil Aug 20, 2013

    I completely agree! The populist government lead by PT, is eroding gradually every step that Cardoso took in the right direction. But unfortunately the vote is mandatory in Brazil and populist governments tend to have the simpathy of the masses is exchange for entitlements. What a shame !!

  • George Stoll Aug 19, 2013

    Having lived in Brazil when President Cardoso was in office, his administration was and is highly under appreciated. He implemented many solid reforms some which may not have been popular but were the right thing to do. Brazil needs to find another president of his quality and integrity. Enough of the populist making a mess of a country with possibly the greatest potential to become a world economic power of any country in the world.

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