WorldCity Business Magazine

Brazil's radical makeover

by Joachim Bamrud

When Donna Hrinak returned to Brazil as U.S. ambassador in 2002, after serving there 15 years earlier as a junior officer, it was like arriving in a completely different country. Today, says Hrinak, “Brazil is more politically mature, more economically responsible and more confident than ever before.” And that, says Hrinak, who served as ambassador until 2004 and is now the co-chair of the International Trade, Competition and Government Practice at the Miami law firm of Steel Hector & Davis, means “Brazil is finally assuming a foreign policy leadership that it deserves.”

Hrinak delivered her comments at World- City’s most recent DHL Connections breakfast seminar. Joining her on the our panel were world-renowned Brazil scholar Dr. Riordan Roett, director of the Western Hemisphere Program at the School of Advanced International Studies at Johns Hopkins University in Washington, D.C., and Marco Stefanini, founder and CEO of Stefanini IT Solutions, a Sao Paulo-based company that is one of a growing contingent of Brazilian businesses with truly global aspirations.

The panelists were asked if Brazil had finally turned the corner and was now on the road to sustainable growth. More importantly, they were asked to address whether Brazil’s recent string of positive economic and political successes meant that it was shedding its reputation as the eternal “country of the future” and was finally living up to its potential.

On the foreign policy front, Hrinak argued the case that, by becoming involved in mediating disputes in the Andean region, by heading up the peacekeeping mission in Haiti and other similar actions, Brazil was indeed “taking on a leadership role in the region and earning the respect of its neigh- bors.” But, noted Hrinak, Brazilian President Luiz Inacio “Lula” da Silva “didn’t change Brazilian foreign policy; he just put it on steroids.”

Analyzing Brazil’s current macroeconomic and internal political situation, Roett heaped praise on the Lula administration for a series of recent accomplishments lower inflation, stronger currency, robust capital inflows, soaring exports, record low spreads on government bonds and concluded that, in the 2006 presidential elections, “the odds are that Lula will win a second four-year term.”

But even if Lula does succeed, noted Roett, his two leading opponents from opposition parties Sao Paulo Gov. Gerald Alkmin and Rio de Janeiro Mayor Cesar Maia are both competent and attractive alternatives. Brazilian democracy, concluded Roett, is in fine shape. And the importance of that fact, he emphasized, goes well beyond Brazil.

“The relative stability of the Brazilian political system,” said Roett, “is the fulcrum of democratic politics in South America.” As goes Brazil, so goes the region.

Roett provided a perfect segue-way for the final speaker, businessman Marco Stefanini, by answering his own question “Is lower inflation and a steady course good for business?” Roett’s answer: “It seems to me that it is.”

Stefanini agreed with that conclusion, but noted that Brazilian companies still face some tough challenges. One he emphasized was lack of access to competitively-priced bank credit.

“In Brazil, financial costs are prohibitive. It is almost impossible for a company to grow with banks loans.” Instead, companies like Stefanini IT Solutions have no alternative to rely on their own capital to expand.

Still, that doesn’t seem to have stunted Stefanini’s growth or limited its ambitions. Launched in 1987, Stefanini opend his first foreign subsidiary nine years ago and today has foreign subsidiaries in nine other countries Chile, Peru, Colombia, Venezuela, Mexico, the United States, Portugal, Spain and Italy. With more than 3,000 employees in over 30 offices, Stefanini is one of Brazil’s shining success stories.

And, while Brazil faces a tough challenge of creating commercial brands on a regional and global scale, Stefanini is confident that other success stories will emerge. “Brazil has changed incredibly in the last five years,” he said. “The country is finally opening to the world.”