Interactive map An oil-rich country that focuses on BRAZIL renewable resources FINANCIAL TIMES SPECIAL REPORT | Tuesday July 7 2009 FT.com/brazil-map www.ft.com/brazil-2009 A chance to celebrate amid the global gloom: Carnaval is renowned throughout the world but in north­east Brazil the annual Festival de São João is far more significant AP Dancing through the economic crisis Is the Latin rancisco Alves and the local streets selling pened over the past three times,” Mr Alves says At Caruaru, about 1.5m Inbev Ð the world’s biggest manager, describes as his wife Fernanda Nestlé products Ð yoghurts, years, we plan to spend In fact his saleswomen people will visit the festival brewer, largely created and “spectacular”. American giant have just invested biscuits, coffee Ð door to another R$70,000 next have just had their best two between May 30 and July led by Brazilians Ð are keen This is one corner of Bra- finally living up to R$70,000 ($35,860), door. year,” Mr Alves says. days ever. 10, up to 80,000 of them to get their products in zil’s huge domestic market Fsaved up over the past They used to distribute a And the global crisis? A couple of hours inland packing a square most days front of what has become of 190m people, a market its promise? three years, to install new competitor’s products but Of course, they say, there at Caruaru, the annual Fes- at the top of the town for 27 one of Brazil’s fastest grow- capable of supporting not Jonathan cold-rooms and other equip- switched to Nestlé because has been some cooling in tival de São João Ð a tradi- shows of pulsating, feel- ing markets. only distinct brands but ment at their “micro-dis- of the marketing and sup- the market. But this crisis tional winter party featur- good country music. AB Inbev recently also entire industries. Wheatley tributor” in Recife, north- port they were offered and is different from the many ing peasant costumes and This year, sponsors launched Brahma Fresh, a Take the “flex-fuel” car. investigates eastern Brazil. because their customers others that have shaken forró music Ð is in full funded the party to the milder-tasting but still More than 90 per cent of For two days their 15 could increasingly afford Brazil over the past couple swing. In much of the tune of R$6m, a 30 per cent potent brew, for distribu- new cars sold in Brazil have saleswomen, earning 30 per what is seen as an aspira- of decades. north-east, the globally increase on last year, tion only in the north-east Ð “flex” engines, capable of cent commission, have been tional brand. “Margins haven’t disap- renowned Carnaval is insig- according to the organisers. a region that Ricardo pushing hand carts around “Based on what’s hap- peared as they did the other nificant by comparison. Companies such as AB Neves, regional marketing Continued on Page 3 Voters want transparency and respect from leaders POLITICS zil’s biggest steelmakers, Pernambuco, Alagoas and governor, the ones running and of the Movimento Sergipe in the less devel- for re-election who got the Old-fashioned Brasil Competitivo, a pri- oped north-east hired INDG highest votes were those greed and graft are vate sector organisation and are recognised as exam- who had demonstrated the dedicated to reducing Bra- ples of more modern, effi- best management skills.” under pressure, zil’s enormous tax burden- cient government. The con- As he points out, such writes Jonathan through efficiency in public sultancy also works for approval did not follow spending. “But there is also some of Brazil’s biggest party lines, with candidates Wheatley increasing public demand municipal governments and from government and oppo- for transparency and with the federal govern- sition parties doing equally respect for the electorate.” ment’s planning ministry. well. At the next presiden- Reading the political pages There is plenty of evi- Welerson Cavalieri, a con- tial election in October 2010, of Brazil’s newspapers it is dence to support this view. sultant at INDG, says his Mr Cavalieri says manage- easy to form the view that Mr Gerdau says his initia- company takes manage- ment ability will be among nothing has changed since tive got off the ground in ment systems that have the deciding factors. the bad old days of the the 1990s, when a group of been tried and tested in the It may well have been an early 1990s, when the coun- businesses from his home private sector and applies issue in the 2006 poll, when try teetered on the brink of state of Rio Grande do Sul them to public administra- President Luiz Inácio Lula collapse, with runaway in southern Brazil devel- tion. State budgets, he says, da Silva Ð the most popular inflation and a president oped a management quality president in Brazil’s his- soon to be defenestrated by programme that expanded tory, who was seeking re- impeachment proceedings into the public and “third” `There is a election Ð was forced into a for corruption. sectors. One example is a historical, cultural second round by Geraldo Then, as now, the papers charitable hospital where Alckmin, the former gover- were full of extraordinary the programme increased problem of nor of São Paulo state who revelations concerning the the usage of operating thea- backwardness seemed to epitomise mod- questionable behaviour of tres from 50 per cent of ern managerial efficiency Brazil’s political leaders. capacity to 80 per cent. which is very hard during his campaign. Then, as now, most of those Since 2003, INDG, a man- Unfortunately for Mr politicians were able, with a agement consultancy that to overcome' Alckmin, personality also good dose of chutzpah, to works with the MBC, has still counts and his short- ride out the storm. been selling management are little more than state- age of social skills cost him The current head of the advice to state govern- ments of intent to which dearly in the final stages. Senate, a former president, ments. The first was Minas politicians have little com- Unless Mr Lula da Silva regards well-documented Gerais in south-eastern Bra- mitment. “Our work is to surprises everyone by try- revelations of nepotism as zil, where INDG helped set real budgets with effi- ing to run for a third term Ð “a lack of respect” for his 50 clear the state’s debts of cient systems of control, so which would demand a years of public service. His R$1.7bn in two years from that monthly targets are set change to the constitution predecessor saw nothing 2003. Its success in putting and evaluated at all levels,” and could cause severe wrong in an employee of a the state’s finances in order he says. damage to his democratic construction company helped secure the re-elec- Why should politicians credentials Ð his enormous delivering cash payments to tion of Governor Aécio bother? “Voters are paying personality will no longer his former lover. Congress- Neves in 2006. more attention to the qual- be a factor. men formerly regarded as INDG insists it is entirely ity of services provided by The two most likely lead- above suspicion have been non-political. Eight more the people they elect,” says ing contenders are José caught handing out airline states have become clients, Mr Cavalieri. “For politi- Serra, governor of São tickets paid for by the tax- led by government and cians today, management Paulo and a leader of the payer to friends and rela- opposition governors, and ability is synonymous with centrist opposition PSDB, tions and done little more not only in the more devel- votes. If you look at the last and Dilma Rousseff, Mr than apologise, if that. Even oped south and south-east. round of elections for state Lula da Silva’s most power- former president Fernando ful minister and a member Collor de Mello, who of his leftwing PT. resigned in disgrace in 1992, Inside this issue Both will make much of is back in the Senate as a their management ability. Exchanges Even in the (pictured) Brazil's finance powerful government fixer. global panic, Jonathan minister Page 3 Mr Serra earned a name as It is hard to reconcile Wheatley says trading has a potent manager as health such old-fashioned greed remained unshaken Page 2 World stage Jonathan minister under Mr Lula da and graft with the modern Wheatley explores the Silva’s predecessor and has Brazil emerging on the History Paulo Sotero country's growing status as strengthened that reputa- world stage as an example peers into recent a global force Page 4 tion in São Paulo. Ms Rous- of successful government. historical events to seff is the president’s right- Yet these two Brazils do co- reflect on how the `Black is culture' hand woman and in charge exist. And while the old country is developing The north-east's of running the govern- ways will not disappear Page 2 slave heritage is ment’s flagship infrastruc- soon, new ways are growing a source of pride ture investment. up beside them. Interview and a millstone Given that neither has “There is a historical, cul- Jonathan around its much charisma and both tural problem of a certain Wheatley neck, writes are regarded as prickly, backwardness which is very talks to Oliver each will hope voters pay hard to overcome,” says Guido Balch more attention to their Mantega, Page 4 Jorge Gerdau, chairman of achievements than the Grupo Gerdau, one of Bra- warmth of their smiles.