Inside Brazil A new future

14.03.08 | the Guardian | a special report produced in association with Think Link Introduction Kim Howells MP This month I made my second visit to Brazil as minister for South America, to participate in the 200th anniversary celebrations for two of the most important events in Brazil’s history: the arrival of the Portuguese royal family and the decree opening Brazilian ports to friendly trading nations. For many, these events marked the beginnings of Brazilian nationhood. I like to think so; there was a considerable British role in both events, and 1808 marked the start of a century of very close British engagement with Brazil. Now, at the advent of the 21st Century and the emergence of Brazil as a key global player, the relationship between Britain and Brazil is again making dramatic advances. This relationship, based on common values and interests, and focused on practical outcomes, was given a massive boost by the state visit in March 2006 of President Lula to the UK. We now have broader co-operation on a wider range of issues than ever before, including climate change, sustainable development, the promotion of human rights, technology, science, health and education. Both our countries are committed to an ambitious outcome from the WTO trade talks to help lift millions of people out of poverty. Since Brazil plays a vital role in a rapidly globalising world, we are working together to improve global governance and make multilateral institutions more representative and effective. The UK supports Brazil’s bid for a permanent seat on a reformed UN Security Council as part of wider reforms to make the UN fit to meet the challenges ahead. Brazil is also a key regional player, in Mercosul and the Community of South American Nations, enhancing its role as a beacon of stability in South America. Brazil promotes a vision for the region which stresses a progressive approach to social change within the democratic system. Kim Howells is minister of state at the Foreign and Commonwealth Office

carlos cazalis carlos Contents

02 Economic growth, markets Facts and figures behind Brazil’s boom

04 ProfilePresident Lula

Land of contrasts 05 Sector reports A health check of the public and private sectors vital to success

08 São Paulo Powerhouse of Brazil

Brazil is enjoying high employment, low inflation and steady economic growth. But that comes 10 Faces of the new Brazil Photo special with vast social and environmental problems. Rory Carroll reports 12 Environment Home of the Amazon and a pioneer of sustainable fuels icture Brazilian exuber- “Brazil is in a very positive moment, less vulnerable than in the past.” Brazil’s for its commodities continues unabated, ance and odds are you though we still have many things to do,” expected investment-grade rating later while sugarcane-based ethanol produc- 13 Tourism The buzz is chic and are not thinking eco- says Fernando Henrique Cardoso, the this year will be a symbolic benchmark, tion is leaping off the charts. boutique rather than chain hotel nomics. This, after all, former president widely credited with he says. There is a dark side to this growth. Envi- is the land of carnival. turning things around. If the country Analysts agree that strong domestic ronmentalists voice alarm that soy and 14 Key players The people shaping the But picture this: a stays on track Cardoso thinks it could demand, financial stability and exports cane crops are pushing cattle north into the new Brazil country where invest- emulate Spain’s belated, impressive that are well spread internationally offer Amazon and accelerating deforestation. ment inflows are run- development. some protection from the US slowdown. Workers’ conditions on some cane planta- 16 Design From fashion to architecture ning at record levels, where exports of eve- The figures range from good to spec- When the developed world gets flu, Brazil tions have been compared to slavery. rythingP from soy to biofuels are surging and tacular: 1.4m jobs created each year; over no longer gets pneumonia. Growth has also created horrendous 18 Music Brazil’s music is symbolic of how where the incomes of rich and poor alike $100bn in foreign exchange reserves As well as footballers and samba it is infrastructure bottlenecks. Sao Paulo’s the country constantly reinvents itself are rising and driving a consumer boom. (which exceed the external debt and exporting cars and planes, notably the traffic jams worsen every month, ports Not quite as attention-grabbing as a make Brazil an international creditor); executive jets and passenger liners of cannot keep pace with tanker volumes and 19 Graphic: Brazil in numbers beauty queen wearing just a smile and a 4.7% inflation, which is tame by Brazilian Embraer. Indian and Chinese demand air travel regularly descends into chaos. feather, granted, but it adds up to a strik- standards; 4% economic growth, a slight The teething pains, say policymakers, of Editor Simon Rogers Subediting/design Dave ing conclusion. Brazil, best known for soc- closing of the gap with China. Oh, and last a maturing country. Difficult adjustments Hall Designer Dean Reynolds Picture editor cer, samba and sensuality, has become a year the stock market zoomed up 60%. ‘There is good reason for launched in the mid-1990s have been con- Charlotte Maguire Production Steve Coady. serious economic player. “The exuberance we are experiencing optimism. This is balanced solidated under President Luiz Inácio Lula Produced for Guardian Plus, a commercial After decades of ruinous boom and is rational in the sense that the fundamen- da Silva, giving the government leeway to division of Guardian News and Media, to a brief bust, South America’s giant appears to tals are solid,” says Henrique de Campos growth. Brazil today is expand ambitious anti-poverty drives. A agreed with Think Link. Paid for by Think Link. have entered a new phase of sustainable Meirelles, president of the central bank. much less vulnerable £3.2bn scheme unveiled last month fol- Contact: Darren Sutton-Warren at Guardian Plus expansion that could finally unlock the “There is good reason for optimism. This lowed the much-lauded Family on 020-713 4039. All editorial content country’s vast potential. is balanced growth. Brazil today is much than in the past’ Allowance initiative, which pays ≥ commissioned by the Guardian. 2 Economy A rhythm the world listens to

In just the last year, Brazil’s economic indicators have been glowing — 5.2% growth, inflation below 5%, low interest rates and an investment-grade rating round the corner. But will its chaotic infrastructure hold it back?

espite the latest in a the worst of a world slowdown, although which helps 40 million of the poorest Bra- series of corruption growth is expected to fall to around 4.5% zilians and is conditional on school attend- scandals — this time this year. ance and vaccinations for children. It costs over officials running There have been worrying signs — in some 9bn reais ($5.3bn) a year, but the gap up huge personal January Brazil ran up a current account between rich and poor in Brazil remains bills on government deficit of $4.23bn, giving the country vast. Many millions live in favela or shanty credit cards — presi- its first 12-month deficit in five years, towns, with a housing deficit estimated at dent Lula da Silva at $1.17bn. Economists expect its trade 10m homes. remains Brazil’s most popular leader in surplus to narrow from $40bn in 2007 to For Roger Agnelli, president of mining Dliving memory. around $33bn as imports rise rapidly to giant Vale, Lula’s government has been a And why wouldn’t he? From the boom- feed domestic demand. pleasant surprise. But the country’s inad- bust days of triple-digit hyperinflation Growth in its exports to China, up from equate infrastructure urgently needs in the late 1980s and early 1990s, Latin 2% two years ago to 10% now, will help attention, along with the fiscal system. America’s biggest economy is enjoying a cushion Brazil should America move into “We have to think about railways, har- new period of stability and growth. recession but it is domestic demand that bours and energy.” It was six years ago that Goldman remains buoyant. The boom in commodities and overall Sachs economist Jim O’Neill formulated The spending has been fuelled by a global growth has largely been behind the concept of Brics — the giant emerg- slashing of interest rates from the 45% Brazil’s increased prosperity, says Flávio ing economies of Brazil, Russia, India and peak they reached in 1999 to 11.25%. Maluf, president of the wood and metal China — which he believed would grow so Credit, a new concept to most Brazilians, products group Eucatex. But reform is rapidly they would overtake most of the is becoming more widely available and urgently needed: “Perhaps we will have developed world’s economies by 2050. the pent-up demand for consumer goods two or three years of prosperity, but Bra- Until last year Brazil, the world’s 10th is kicking in. zil has to go through a dramatic structural biggest economy, hadn’t looked much change in order to keep growing.” like fulfilling that promise. But in 2007 Need for reform That view is echoed throughout Brazil. its stock market was among the best- Despite the new mood of confidence in Most accept that total reform would be performing in the world and the country the country, Brazil has lagged behind a political impossibility, but changes to climbed rapidly up the global league table the other Bric countries, hampered by pensions and the tax system are “impera- for foreign direct investment, attracting the urgent need for radical reform of its tive” if the country is to continue to attract $34.6bn — almost double its 2006 total. bloated public sector and its complex overseas investment, says Sergio Thomp- Growth, which had averaged just 2.5% tax system, which stifles enterprise and son-Flores of Infinity Bio Energy. a year over the two decades before Lula imposes a crippling burden on business. “Brazil today is like a marathon runner swept to power in 2003, reached 5.2% last A recent survey by PWC and the World carrying an anchor round his neck … the year. Inflation has been kept under control Bank calculated that it takes a typical Bra- anchor is our taxation system, which is a and within government targets of 4.5% and zilian company an astonishing 2,600 hours burden worsened by our labour laws and interest rates have been falling steadily. a year to comply with tax legislation. That benefits.” It is a wonder Brazil manages to The country remains on track to gain an compares with an average of 322 hours for run the race at all, he says. investment-grade credit rating later this the 178 countries in the survey and less Marcos de Moraes, a former dotcom year, despite jitters from the global finan- than an hour in the Maldives. entrepreneur who now heads the fast- cial crisis. This would allow the govern- Lula has been widely applauded for his expanding Sagatiba drinks business, has a ment to borrow at lower rates and would Bolsa Familia financial aid programme, more sanguine view on the lack of reform: also widen the country’s appeal to over- “The economy and the government can go seas investors. the same way or not,” he says. “Fortunately Investment-grade status will be “very ‘Perhaps we’ll have two or the economy is depending less and less on positive,” says Jose Carlos Grubisich, who three years of prosperity, the government as it’s becoming stronger. heads petrochemicals group Braskem. “Not “We are survivors here, never forget that. only will we have lower funding costs but but Brazil has to go through We endured a period of hyperinflation, a also access to a larger base of investors.” a dramatic structural military government … we’ve survived The government appears confident the many difficult situations here in Brazil.” economy is in good shape to withstand change to keep growing’ Busy is an understatement: São Paulo station — at 5.30 am Fiona Walsh

≤Land of contrasts

monthly stipends to more than 11 million Reid in a recent book, Forgotten Conti- labour laws or bureaucracy. We’re filling poor families with young children. nent: the Battle for Latin America’s soul. our stomachs but not our heads.” Hike up into the favelas, the notoriously Reid’s upbeat assessment comes with In the same vein some western diplo- lawless hillside slums, and you find hair- a warning about the need for bolder pro- mats credit Lula with raising Brazil’s pres- dressers, stationers and electrical goods market reforms of byzantine taxes, red tige but not its influence, partly because shops reporting booming sales. tape and outdated labour laws. he lets Venezuela’s Hugo Chavez shout as There are still, of course, the more tra- Some critics go further and argue that regional spokesman. A permanent seat on ditional booms courtesy of drug-dealers Brazil is glitzy but hollow, just like a carni- the UN security council is still a dream. in combat fatigues who sit on pavements val float, because it is coasting on benign The president’s vow to end the corrupt making little piles of gunpowder. “A bomb global conditions and a domestic credit ways of the old elite has also faded in a for the police,” explained one young boom while shirking the hard graft of slew of financial scandals tainting senior bomb-maker in Rocinha, a Rio favela, after building a competitive economy. members of his ruling Workers’ Party. a shoot-out that killed an 11-year-old girl. “Everybody is making a lot of money,” Dilma Rousseff, the president’s chief of Gang warfare and police brutality remain says Alan Goldlust, the head of Comexport, staff, disagrees. Lula was enthusiastically embedded here, as does extreme inequal- a big trading company. “I’m making more voted back into power last year, she points ity. Some shantytowns, with their legions money than I’ve ever made. But nothing out, and the government is sticking with of street children and shacks of wood and is being done to improve our schools or its commitment to low inflation and finan- plastic, could pass for the more impover- cial stability. “We have shown we are not ished parts of sub-Saharan Africa. Except afraid of taking tough decisions.” that overhead there are helicopters ferry- ‘Everybody is making a It used to be said that Brazil was a coun- ing the super-rich to shopping appoint- lot of money. But nothing try with a great future condemned to its ments with Gucci and Jimmy Choo. eternal contemplation. That future has Economic and social indicators do sug- is being done to improve not arrived, not quite yet, but it is closer gest the gap is closing, albeit slowly. “What now than it has been in generations. has been achieved looks more solid than in our schools, or labour Rory Carroll is the Guardian’s Latin some other countries,” concludes Michael laws or bureaucracy’ Embraer airplane factory near São Paolo. Fully built aeroplanes are now a major export America correspondent Markets 3 Open for business

Despite a flabby public sector, Brazil’s markets are booming. All the indicators are right: robust retail sales, strong industrial production, lower interest rates and strong credit growth. Investment-grade rating is round the corner.

n the past month, the Brazilian firms joining the market, from retailers tors. The exigencies of the capital markets mining group Vale, the world’s to biofuels, many riding the growth of the have also forced many companies to drasti- biggest producer of iron ore, domestic Brazilian consumer as well as cally improve corporate governance, trans- has been stalking its Anglo- export market. parency and productivity. Private equity Swiss rival Xstrata. Vale raised “The Brazilian market has outperformed has also been taking an increasing interest eyebrows in the industry when the US stock market in the year to date,” in Brazil, partly because of the health of the it bought the Canadian nickel says Katy Dobson, Latin America fund IPO market, which has provided a steady miner Inco last year for $18bn, manager at the asset management firm option for exit. but a deal with Xstrata, likely to be worth Threadneedle. Brazil is booming.” There have been some concerns that a Iaround $90bn, would put that acquisition There were 64 IPOs on the Bovespa dur- bubble might be building in Brazil. Ques- in the shade. ing 2007, between them raising $42.8bn. tions have been asked about the quality of The audacious bid is emblematic of a Much of the investment is coming from some of the companies on Bovespa. And new swagger among Brazilian corpora- outside Brazil. During 2007, there was a analysts also point out that the key index tions. Confidence has been fuelled by a net inflow of foreign investment on the on the Bovespa remains heavily weighted period of economic stability, the commodi- exchange of $23.5bn. The value of daily toward just two companies; Vale and the ties boom, a growing domestic middle trades on the exchange more than dou- oil giant Petrobras, which together account class, the opening up of the debt markets bled, from an average of $1.2bn in 2006 to for roughly 30% of daily trades. According and a booming stock market — the Bovespa, an average of $2.6bn in 2007. The total mar- to the Financial Times, the Bovespa still which has been delivering some of the best ket capitalisation of the companies on the ranks 21st in the value of trades, despite returns of any market worldwide over the exchange rose from $723bn at the end of its rapid growth, way behind New York, past few years. Since 2002, the Bovespa has 2006 to $1.4 trillion at the end of 2007. The Nasdaq and London. risen by 1,250 percentage points. market rose around 75% during the year. More broadly, critics also point to the Until recently Brazil was seen as the The biggest IPO of the year was Bovespa unwieldy public sector, heavy tax burdens, laggard of the emerging Bric (Brazil, Rus- itself, which raised $3.7bn, the fifth larg- onerous labour laws and relatively poor sia, India and China) economies, but as est IPO in the world last year, according infrastructure. There is little appetite for economic and political conditions have to Thomson Financial. Some 80% of the further economic reform. The currency, improved, investment has been pouring investor interest came from overseas, the real, has also been strengthening, in. Growth, while not matching China’s, is including NYSE Euronext, owner of the which some industry bosses and export- expected to have been 5% last year. New York Stock Exchange, which paid ers fear will erode Brazil’s competitiveness. President Lula “has been a pleasant sur- $90m for a 1% stake. On its first day trad- The biggest threat would come from a col- prise,” says Vale president Roger Agnelli. ing, shares in Bovespa rose 52%. lapse in commodity prices. Sergio Antonio Garcia Amoroso, of the At around the same time, the Chicago Still, the markets look to be ready for the paper company Orsa, agrees. “Investors Mercantile Exchange agreed to take a next step. The three leading rating agencies are feeling secure, so much so that foreign 10% stake in Brazil’s Mercantile & Futures all have Brazil just one notch below the all- investment has increased substantially”. Exchange, Latin America’s largest deriva- important investment grade, something it Brazil was the world’s fifth biggest mar- tives market, for $742m. In November it is expected to win later this year. If it does, ket for initial public offerings last year, and raised $3.4bn in an IPO. it would open Brazilian assets to large insti- accounted for some 85% of equity being There has also been a growing amount tutional investors, including the big Euro- issued in Latin America. The boom was of M&A activity within Brazil, eased by the pean and American pension funds, and a driven initially by natural resources com- fact that once family-owned companies are new chapter would begin. panies, but the past year has seen other The Brazil Mercantile and Futures Exchange in São Paolo: Latin America’s biggest increasingly dominated by outside inves- David Teather 4 Profile The accidental hero? He’s the shoeshine boy who became a man of the people, a market-friendly socialist who has earned international acclaim. But is president Lula the architect of Brazil’s boom, or simply a symbol of its success? no Ca i va R . AP/Victor AP/Victor

the age of seven, Luiz office. Inflation and extreme poverty have the presidency had changed that by the Rio slum, Rocinha, inadvertently echoes Even some supporters complain that Inácio Lula da Silva’s fallen, investment and exports have risen time he won on his fourth attempt. the stock exchange’s praise. “What Lula power has been centralised without mother packed him and there is giddy talk of a new Brazil. No In contrast to the revolutionary rheto- has done in six years the republic did not coherent leadership. “There is no strategic and his siblings and wonder the president is popular at home ric of Venezuela’s Hugo Chavez he struck a do in 100.” nucleus that really thinks collectively or in their meagre posses- and feted abroad. cautious, reformist tone. “Each day, even From his studio overlooking Ipanema the medium or long term,” says Joao Pedro sions into the back The question is whether he is the archi- if we advance a centimetre, we are going beach, Brazil’s most famous communist, Stedile, a leader of the landless movement. of a truck for a long tect or merely the figurehead of these forward — without any miracles, without Oscar Niemeyer, 100 years old and still “Because of his electoral prestige and cha- journey in search of changes. Some say Brazil is virtually breaking away from our international sharp as a tack, nods in agreement. Better risma he ends up muffling his aides, who a better future. ungovernable, that all a president can do commitments, simply doing what needs known as the architect and high priest of behave much more like suck-ups than as AA roll of the dice, but there was little to is ride the waves and hope for the best. to be done.” modernism who designed much of Bra- the driving unit of a government.” lose. Dirt poor, one of the millions of illiter- So has the former shoeshine boy Lucia Hippolito, a prominent political silia, Niemeyer finds the enrichment of Stedile believes his friend is better at ate peasant families in Brazil’s north-east, dragged the country up along with him, analyst, said it was an error to describe capitalist fat cats galling but acceptable, as empathising than governing. “He is still they rode for 13 days to join his father in or is it a coincidence of timing? Has Lula, him as a man of the left. “He is a conserv- ordinary people are also better off. “Lula is very sensitive to the problems of the peo- the south. Lula, as he was called, became a in other words, just been lucky? ative with social concerns,” he says. Far smarter than everyone thought,” he says. ple. He is easily moved and always acts shoeshine boy, buffing and polishing until He inherited a relatively healthy coun- from being a socialist hero, Lula contin- more because of his heart than of reason. the leather gleamed. try. After the grim dictatorship of the 1980s ued the orthodox policies of Cardoso’s Political skill His best performances are when he is with Fast forward half a century and the and hyperinflation of the 1990s Brazil had government. Traditional PT supporters Politically there is no doubting that. Sen- the people or with popular leaderships.” former peasant migrant can still see his found its footing by the late 1990s. A new who expected aggressive social policies ior aides have been mired in financial scan- Lula’s international image remains reflection while at work but the image is currency, the real, stabilised the economy to tackle massive inequality were disap- dals that have tarnished the PT, but not the golden. The compelling life-story, the bear- sharper: it comes from the reflecting pool and there were modest improvements in pointed, at least initially. Lula’s team bent president; somehow the muck slides off hugs, the charisma: he is viewed as a cuddly at the Palácio do Planalto, the presidential living standards. over backwards to appease investors. his teflon persona. Just as impressive, he yet pragmatic social progressive at the helm office in Brasilia. Lula, as in President Lula, Lula’s election victory in 2002 fright- “They didn’t understand anything has forged useful friendships with Hugo of a nation finally realising its potential. has found his better future. ened Wall Street investors, who saw in about the markets — zero — and that was Chavez and George Bush, a tribute to his A politician at the peak of his powers, The view from his office is of a mod- him a socialist radical. Worse, a bearded an advantage because we could explain pragmatism and schmoozing skills. Aides you would think he is aloof to opinion. ernist utopia. The floating gardens and socialist radical. He would ruin the fragile things to them,” recalls Gilberto Mifano, say Lula is quick to master a brief and tailor You would be wrong, says political analyst towering arches of the foreign ministry, recovery with populist splurges and mass the chief executive of Bovespa, the main his spiel for the audience. Lúcia Hippolito. “He deals very badly with the swooping dishes and twin towers nationalisations. stock exchange. “This left-wing party sup- Economically, however, it is unclear if criticism. Like all governors he likes to be of the national congress, the geometric They were wrong. After working in a fac- ported us like no other government had he has been more lucky than smart. Global praised. He has an almost childish neces- lawns and monuments and museums, all tory (where he lost a finger) Lula had risen in 170 years.” conditions have favoured Brazil, not least sity to always compare himself to others. beneath huge, clear skies. up through the trade union movement That endorsement may make left- the export boom driven by Chinese and It is a kind of inferiority complex.” Behind It has been a remarkable journey. From and stood for the Workers’ Party, known wingers cringe but five years later Lula can Indian appetites for soy, iron and other the public face of affability Lula is a loner, the humblest of origins Lula has hop- by its Portuguese initials PT, promising claim vindication. Fiscal prudence and commodities. Decades of investment in she says. “He listens very little to his aides. scotched his way to the very top of Latin left-wing policies. But three failed bids for market-friendly policies have delivered biofuels and Petrobras, the state energy He is very isolated.” America’s powerhouse, a vast, populous economic stability and solid, if unspec- company, are now bearing fruit. That is possible. But that does not landmass which is more a continent than tacular, growth. The rich are richer, but Critics say the president is drifting, that change the fact that Lula is adored by many a country. Has the former shoeshine more importantly the poor are less poor. he is ducking painful but necessary tax, ordinary Brazilians. They have found, or “Our president has had an extraordinary boy dragged the country Real incomes are rising across the board pension and labour market reforms. “Lula expect to find, the better future he embod- life story. It is very emblematic of the his- and the Bolsa Familia, a monthly stipend has demonstrated that he will not do this, ies. To what extent he is responsible for tory of our people,” says Dilma Rousseff, up along with him, or is it to 11m families, a quarter of the popula- he prefers to enjoy the good times without that progress is an abstraction. Let the his chief of staff and cabinet enforcer. a coincidence of timing? tion, is being imitated around the world. risking himself,” says Cardoso, the former historians argue over luck. What matters It is a seductive notion given the eco- That is why the likes of Fernando president. “I think he is more of a symbol is that the country is shining. nomic and social progress since he took Has Lula just been lucky? Ermiro, a young community activist in a than a leader.” Rory Carroll Sector reports 5 Signs of life On the following pages we report on the major economic and social sectors in Brazil, beginning with energy. With major new oil finds and the rise of ethanol, this sector, more than any other, is fuelling the Brazilian boom

s God Brazilian? President Lula sand, rock and a giant layer of salt. certainly thought it a distinct As well as traditional energy sources, possibility when, in a radio Brazil has been a pioneer of alternative interview late last year, he fuels since the 1970s, and is now the waxed lyrical about a “higher world’s leading producer of ethanol, pro- power” having taken a shine ducing more than 4bn gallons a year. to Brazil. Some 45% of all the energy Brazil The source of his rapture consumes now comes from renewable was a massive oil discovery by the state- sources against a world average of only ownedI Petróleo Brasileiro (Petrobras); a 13%. Domestic demand for ethanol has find that will not only transform the for- rocketed in recent years and 90% of the tunes of the Brazilian energy company but nation’s new cars are “flex-fuel” cars, also the country’s economy. which can run on ethanol or petrol (which Lying in deep water some 200 miles off is already 25% ethanol-based), or a com- the southern coast of Rio de Janeiro state, bination of the two. the Tupi discovery is the biggest oil find Brazil’s ethanol, made from sugar cane, since the giant 12bn barrel Kazakh field in is more efficient than the corn-based eth- Kazakhstan in 2000 and, potentially, one anol produced in the US and, although the biggest oil discoveries ever. domestic demand takes its full supply It is not only the size of the discovery now, Brazil is keen to become a major that has electrified the global energy exporter in the future, transforming itself industry, but also its quality. Brazil’s cur- into a “green Saudi Arabia”. Before it does, rent oil output is largely heavy oil, while however, it will have to overcome heavy the new find is believed to contain higher trading barriers, such as the 54 cent-a-gal- quality light oil. lon import tariff imposed by the US. Petrobras is not the only company that Sergio Thompson-Flores, of Infinity will benefit from Tupi. Britain’s BG Group Bio-Energy, which floated on London’s has a 25% share in the field and Portugal’s Aim market in 2006, says ethanol will Galp Energia holds a 10% stake. really take off once other countries intro- But Brazil, which briefly became self- duce flex-fuel vehicles. “This will change sufficient in oil in 2006, intends to make everything because consumers will be the most of its good fortune: shortly after able to choose an alternative fuel.” news of the discovery, the government Higher petrol prices have helped increase withdrew a large number of blocks close to ethanol’s attractions, he says. “This is a Tupi that had been scheduled for auction. very competitive product even with all the Reserves of the new field were initially import barriers in Europe and the US.” estimated by Petrobras at between five Judging the eventual size of the mar- and eight billion barrels, which is equal ket is impossible at this stage, he says: to the all the remaining oil in the North “Nearly everything that we can make out Sea and not far short of the entire reserves of petrol we can also make out of biofuel, of Norway. But earlier this month (Febru- and this is only the tip of the iceberg.” ary) BG chief executive Frank Chapman Despite all this, Brazilians are still revealed that latest estimates put the find facing power shortages this year. The at “between 12 and 30 or more billion bar- country’s booming economy has raised rels of oil equivalent.” demand for energy at a time when there The riches lying beneath the Atlantic have been delays in new generating Ocean offshore Rio have been further capacity and a shortfall in the supply of underlined by the discovery in January of natural gas from Bolivia, from which Bra- an equally large natural gas reserve, again zil gets around half its supplies. In addi- by Petrobras, which has an 80% stake in tion, below-average rainfall has depleted the new field. Called Jupiter, it lies some 23 reservoirs at Brazil’s hydroelectric power miles west of Tupi and has the potential to plants, which provide more than 80% of make Brazil self-sufficient in natural gas. the country’s electricity. But first the discoveries must be recov- Power shortages are something the ered, a huge task even for Petrobras, which government is desperate to avoid — it was has unrivalled experience of working in the electricity rationing imposed six years deep water. At Tupi, the oil lies more than ago that stalled the economy and led to four miles beneath the surface and, to the previous regime being voted out. doming a s R euters/bruno reach it, the company must drill through Fiona Walsh Black gold: a rig at the giant Tupi oilfield off Rio de Janeiro state

Banking A stable economy and greater banking transparency have fuelled a credit boom in this traditionally debt-wary nation

Just a few years ago, the average Brazilian looked at debt as something over which would never have dreamt of borrowing we have no control. from a bank. “Now this is changing. Regardless of Loan rates were sky-high and what the interest rate, because there is more mortgage money there was available was predictability, credit has started to enter offered to customers on unmanageably the life of Brazilians.” short terms of just a few years. São Paulo state savings bank Nossa Caixa, But a prolonged period of interest rate one of the largest financial institutions in cuts have taken the country’s bench- Brazil, plans to increase loans to individu- mark Selic lending rate down to 11.25% als by more than a third this year and to up and sparked a surge in demand for con- its lending to businesses by 50%. sumer credit. Nossa Caixa is controlled by the govern- With inflation running at more than ment but its shares are now quoted on the 4%, real interest rates in Brazil are still stock market, which chief executive Mil- the highest in Latin America. And con- ton Luiz de Melo Santos believes is vital to sumers can only dream of obtaining cash its continued development. at 11.25%; in reality, banks charge custom- The visibility and accountability ers anything from 35% a year to 100%-plus brought by the bank’s share float has made on unsecured loans. it more competitive and also helps it resist Canny consumers have found one political interference from “congressmen, way round that, however. One of the Bamco do Brasil: today Latin America: mayors and government officials gener- biggest growth areas is car loans, which tomorrow, the world? Alamy ally,” he says. The bank is accountable to accounted for around a third of personal its shareholders, which gives it more con- lending in Brazil last year. Rates on auto There is a cultural change too, believes trol: “I have more arguments to say ‘no’,” loans are far more competitive, at under Carlos Jeireissati, chief executive of the he says. 20% a year, and manufacturers offer long real estate developer Iguatemi, which Despite the recent boom in lending, terms and low down-payments. Thus it is specialises in shopping centres. bank loans in Brazil still equate to little not uncommon for Brazilians to sell their He recalls a meeting with some Spanish more than a third of the country’s gross cars to raise cash to fund other purchases businessmen: “All of them had either one domestic product, well behind levels in and then simply take advantage of a cheap or two mortgages. Among the Brazilians developed countries. Mortgage lending loan to buy a new car. present, none of us had credit. This hap- equates to just 2% of the country’s GDP, In Brazil’s boom-bust years, banks pened six months ago.” leaving plenty of room for growth. would simply not risk lending to con- Brazilians have historically had an aver- At Banco do Brasil, vice-president Jose sumers. But recent legal changes have sion to debt, he says. “We have always Maria Rabelo is keenly aware that the been fuelling the demand for credit, and banking sector has a long way to go before have helped create a new market in loans it can compete effectively with the rest of deducted direct from payrolls. This has ‘We have always looked the world. opened up the credit market to the poor, The main challenge, he says, is scale: with the bulk of payroll loans taken out by at debt as something over “We are the biggest bank in Brazil and in low-earners. Other changes have brought which we have no control. Latin America, but when compared with in faster bankruptcy proceedings and the biggest banks, the leaders in the world, asset recovery process. Now this is changing’ we are small.” 6 Profile

Real estate and construction Newly available mortgages and the rise of the middle class are fuelling a construction boom but, as ever, wealth is failing to reach the favelas

Nowhere is the gap between rich and poor effect on employment in an industry that in Brazil more graphically illustrated than traditionally employs large numbers of in the favelas of Rio de Janeiro or São Paulo. unskilled workers. Many construction Rural Brazilians in search of employment companies are starting to introduce train- have flooded into the major cities over the ing programmes for their workers. past few decades, only to end up living in In commercial property, emerging mar- squalor. The shortfall in housing is now kets will continue to attract “healthy lev- estimated at up to 10million homes. els” of investment, according to the recent Yet Brazil’s construction industry is Rics global property survey. booming. In São Paulo, it is impossible to “The emerging giants of Brazil, India, find cranes to rent, complains Sérgio New- China and Russia now account for more lands Freire, who heads the estate agency than 50% of the world’s GDP, and have group Brasil Brokers. started to devour ever-increasing propor- Brasil Brokers is one of a number of real tions of global property transaction activ- estate companies that have joined the IPO ity,” the report says. rush over the past year or so. Around a Investors eager to gain exposure to these quarter of the record Brazilian stock offer- booming markets have been “unfazed” by ings in 2006 came from the real estate sec- the volatility and economic weakness of tor, including house builders Gafisa and financial systems, which so far have largely Cyrela, bringing much-needed foreign been confined to the developed world. investment into the industry. Indeed, emerging economies such as Bra- The growth of a new middle class, zil are in better shape, according to Rics, as along with the introduction of long- buffers of reserves have been built up on the term mortgages, previously unavailable, back of rising oil prices and trade gains. is expected to fuel a boom in housing As well as attracting overseas interest, construction. That will have a knock-on the new economic stability in Brazil has encouraged longer term investments. But the real estate industry still has a long way ‘It’s a country in which to go, says Jose Auriemo Neto, president of there’s still a lot to be property development group JHSF. “It’s a country in which there’s still a lot done. It’s important Brazil to be done,” he says. “It’s important that is able to gain the long- Brazil has a positive outlook and is able to gain the long-term trust of investors.” term trust of investors’ Fiona Walsh Agribusiness Climate, vast tracts of available land and a hi-tech approach make Brazil a leader in agricultural commodities

Don’t mention the word farmer to Lau- exporter of soy in 2006 and is also the land ripe for cultivation. Such advantages rence Beltrão Gomes. As CFO and inves- world’s leading producer of coffee, sugar, help to offset the Brazil’s extremely poor tor relations director of SLC Agrícola, one beef, poultry, pork and ethanol. In cotton, transportation and logistics system, which of the biggest players in Brazil’s boom- it is now in fifth place in the world produc- requires substantial investment. ing agricultural industry, but it is not a tion league, having overtaken Turkey and Demand for sugar cane and soy has description he appreciates. He heard the Uzbekistan in recent years. exploded in recent years — sugar cane word frequently at investor roadshows Brazil has a number of natural advan- for the production of ethanol and soy for last year ahead of the initial public offering tages — a favourable climate with regular human and animal feed as well as a grow- (IPO) that made SLC Agrícola the world’s rainfall, which produces high-yield crops. ing number of industrial applications, first publicly quoted agribusiness. Where soil is of lesser quality, it can be used including biodiesel. “We are not farmers,” he would tell for sugar cane, which does not require rich Brazil uses sugar cane to produce etha- potential shareholders. “We are a large soil to thrive. nol, while in the US corn is used. Sourc- company that uses state-of-the-art tech- Labour is cheap so production costs are ing from sugar cane is less costly, however, nology to produce high-quality soybean. low and the country still has vast areas of and also requires less energy to produce. The same way you have shoemakers and There have been fears over the environ- computer manufacturers, we produce mental impact of giving vast tracts of land agricultural commodities.” Land ownership in Brazil is over to sugar cane production, as it could It is this hi-tech approach to its business concentrated among just force producers of other crops and livestock that has turned Agrícola into Brazil’s lead- to move into the precious rainforests. ing producer of cotton and one of its biggest 3% of the population who But Antonio Lafelice, president of the producers of soybean, corn and coffee. control as much as two agri-group Agrenco, dismisses those con- An agricultural powerhouse, Brazil cerns: “Sugar cane is not taking away pro- overtook the US as the world’s largest thirds of all arable land ductive areas in more than 90% of cases, but pasture instead,” he says. Having cattle roam vast areas of land is no longer profitable in Brazil, or elsewhere in the world, and it is this land that is being used, he says. There are many thousands of hectares of abandoned or ill-managed pastures that were cleared many years ago so “there is no need to cut trees,” he says. Land ownership in Brazil is concen- trated among a small group of wealthy families, with just 3% of the population estimated to control as much as two thirds of all arable land. This led to the establishment of the Landless Rural Workers movement (MST) which has long demanded a fairer redis- a nos tribution and uses direct action such as land occupation to further their cause. The MST is the largest social movement Ra smussen/P in Latin America, with 1.5m members s p en

E throughout Brazil. Just don’t call it farming: Soy (top) and sugar cane (above) are big business in Brazil Fiona Walsh Construction of the Octavio Frias de Oliveira bridge in São Paolo Reuters Sector reports 7

Health Poverty, malnutrition, disease and poor sanitation remain the main problems for Brazil’s health sector, while the lack of public finance seems ever-present. But the country’s Aids programme has won international praise

The Brazilian health sector struggles in the generic versions of their drugs. As overseas money pours into the coun- face of insufficient funding and the need “We were able to break the patent on try, the health sector is also poised to reap to care for a population heading rapidly drugs used to treat Aids, we were able to the benefit of the growing foreign invest- towards 200 million. produce part of the drugs in our public ment, according to Sergio Lopez Bento, With millions forced to live in favela health laboratories, and we were able to who heads the Hospital Samaritano in or shantytowns, the needs of the poor distribute these medicines to 170,000 Bra- Sao Paulo. are particularly pressing. It is estimated zilians with Aids,” says Dr Gonzalo Vecina, As a non-profit organisation, Samari- that the US spends some nine times more director of philanthropy at São Paulo’s tano cannot receive direct investments per capita on health than Brazil, while in Hospital Sirio-Libanes. but it is attracting funds in other ways, Europe the figure is up to six times more. But the government has failed to repeat such as “health tourism” and the hospital Life expectancy in Brazil is 69 for men and this success in other areas of health. is now offering its services worldwide. 76 for women, according to World Health This “model of efficiency” cannot be Brazil has already become known as a Organisation figures for 2006, compared replicated in the area of hypertension, says centre for cosmetic surgery, particularly with 76 and 81 respectively in the US. Vecina, and it is the leading cause of mor- among Americans, and offers procedures Brazil’s Aids programme has, how- tality among the population, accounting such as gluteoplasty — otherwise known ever, become a model for others. In 1996 for 25% of deaths. “We do a diagnosis, we as the “Brazilian butt lift.” it became the first developing country tell the patient he has hypertension, but we The concept of globalisation in health committed to providing free access to cannot afford to pay for his treatment.” is different from other sectors, due to the Aids drugs and has since succeeded in As well as lack of finance, efficiency specific demands of each regional mar- stabilising rates of infection. needs to be improved, he says. The aver- ket, says Bento. “But one thing is evident Brazil created an international stir when age stay in public hospitals is seven or worldwide: there is not sufficient money it forced drug companies to reduce their eight days compared with just four days to cover rising health costs.” prices by threatening to produce cheaper in private hospitals. Fiona Walsh

Right: the campaign against Aids in Brazil has won international praise. Left: a patient is taken to hospital by helicopter, avoiding the crowded streets of São Paolo

‘We were able to break the patent on drugs used to treat Aids, and we were able to distribute these Press/bilderberg Ca mer a medicines to 170,000’ domingos R euters/bruno 8 Sao Paolo

City of the future No Brazilian city is enjoying the current economic boom more than Sao Paolo, where executives buzz above the skyscrapers in helicopters wearing $10,000 suits. But away from its opulent centre lies another world...

he pilot flicks the igni- This morning’s journey — to inaugurate Rich and poor: the Sao Paulo cityscape in a different world, as if we had swapped not least law and order, are reaching the tion and the blades a new school on the periphery — yields an (above) is now so congested that helicopters Canary Wharf for Kampala. Broken and periphery where most Paulistas live. scythe the air, slowly aerial snapshot of Brazil’s commercial and (below) are the preferred option for wealthy potholed roads, uncollected rubbish After painful adjustments in the 1990s, at first, then a blur, financial capital. It is an instructive ride. Paulistas. Meanwhile, the inhabitants of the abuzz with flies, legions of children with- Brazil’s economy is purring. A credit boom until the helicopter Avenida Paulista, the city’s main drag, favelas (top right) can only dream of the out proper schooling or health care. is helping to drive record car sales, bank judders and begins to could pass for Manhattan. The headquar- opulence of exclusive designer outlet Daslu “Our inequality is one of the greatest in profits and stock exchange gains. For- lift. It surges forward, ters of banks and corporate giants form (bottom right) the world,” says Kassab. “But it’s narrow- eign direct investment is flooding in and past the edge of the concrete canyons and the fast-moving ing. Things are getting better.” The school, real incomes are rising. Growth last year helipad, and in a blink the ground beneath specks on the pavements show an army a sturdy two-storey building with decent reached 5%. Tus drops more than 300 feet. of worker ants in a hurry. plumbing, is part of a wider effort to bridge As ever it is Sao Paulo, whose 11m We have just flown off the roof of Banco The helicopter banks west over the Pin- the gap between rich and poor, he says. inhabitants are considered workaholics by Safra, a 26-storey Sao Paulo skyscraper heiros river, and through a haze of pollu- After decades of neglect, state services, the rest of Brazil, that is setting the pace. about the height of Big Ben, and in this tion it skims over apartment blocks and The city dominates financial services, bubble of glass and steel it is a stomach- six-lane motorways jammed with traffic. prompting the cliché that Rio does carni- tightening experience. The skyscrapers disappear and there is val, Brasilia does politics and Sampa, as it Well, for a first-timer it is. For Gilberto a swathe of green, the jockey club, then is widely known, does money. The state Kassab, the city’s mayor, it is a banality. He mansions with gardens and swimming of Sao Paulo, long a magnet for migrants does this almost daily, a routine so well- pools. Morumbi, the swankiest district. from the north-east, has 40 million inhab- established he does not flinch as the heli- The glimpse of privilege swiftly gives itants and hosts booming industries such copter, a municipal-owned aircraft named way to a lower-middle class area where as car and plane manufacturing. Eagle 3, swoops down Avenida Paulista. houses contract and cluster together. As The question is to what extent this shiny, A picture of tranquillity, Kassab gazes we approach the periphery, it turns into a successful Sao Paulo is connecting with over the skyline. The city stretches into slum. An endless vista of packed, jumbled the squalid shantytowns. To answer that the horizon, a concentration of humanity brick dwellings sheeted with tin roofs. requires another trip from the centre to the so vast, so chaotic, that he travels by air The helicopter touches down in Guaia- periphery, but this time at ground level. to do his rounds. “It’s big,” he says with nases, a shantytown. The 15-mile journey An obvious starting point is the main some understatement. “Really big.” lasted just 10 minutes but we have landed stock exchange, Bovespa. It soared 73% Sao Paolo 9

last year, making it a market darling and how best to coordinate a £2,800 Balen- In the absence of state services, the symbol of Brazil’s bid to become a Latin ciaga handbag with £1,000 Tod’s shoes First Capital Command, a powerful, quasi- tiger. Values have tumbled since January, and a £4,200 Dolce & Gabbana dress. military criminal gang based in prisons, partly because of global conditions, but a Given that the monthly minimum has funded schooling and health care for proposed merger with the BM&F, Brazil’s wage is just over £100 and that the city’s some families, says another community main futures exchange, has rekindled bull- 8,000-plus homeless people rummage in activist, Silveiro de Jesus. Gangsters in ishness. “For the first time people have the bins for food, you don’t need to be Karl charge of certain areas are called pilots confidence to plan ahead, to invest in the Marx to deplore the blatant materialism because they know their way around. long term, to buy,” says Gilberto Mifano, of those at the top. It seems to add up to a tale wearily Bovespa’s chief executive. familiar across Latin America: an eco- Surging production of ethanol, the bio- Inequality nomic boom ushers in salad days for the fuel derived from sugar cane, has height- London, Paris and New York have their rich and leaves those at the bottom scram- ened the giddy atmosphere. The revival of own shameful juxtapositions of rich and bling for crumbs. cane as an economic force brings Sao Paulo poor, true, but Sao Paulo’s is in a league of Brazil’s recovery is too recent to give full circle since it was founded originally its own. The melting pot image of a city that a definitive verdict but there is reason to as a series of sugar plantations before giv- blends all colours into one belies the reality think that this time the outcome will be ing way to coffee in the 19th century and that the blacker you are the likelier you are better, notwithstanding the troubles in industry in the 20th. to be poor, uneducated and jobless. Paraisopolis. Now the crop is again making people Paraisopolis, one of the biggest slums, The decades-long stream of rural rich. And merry. Visit the Skybar, or any is a vast warren of shabbily built brick migrants to Sao Paulo has slowed to a rela- number of designer watering holes around homes clinging precariously to a hillside. tive trickle, giving much-needed breath- the leafy Jardins area, and you see people In the rainy season they have a habit of ing space, and better policing has helped knocking back caipirinhas and other sugar being swept away in mudslides, burying cut the state’s murder rate by 70% since cane-derived cocktails like there was no families alive. 1999. Parts of Rio de Janeiro, in contrast, tomorrow. Conspicuous consumption is The higher up the hill the worse homes still resemble war zones. visible in the restaurants, packed every become. Wooden walls, plastic sheeting Generous government social spend- night, as well as the sports cars and 4x4s, roofs, no electricity or running water. ing has pumped money into the slums, which accounted for many of the 2.5m vehi- Gang-fuelled crime, especially cocaine including £73m last year in Paraisopolis. cles sold last year, a 28% rise from 2006. trafficking, is rife. A steep fall in inflation has allowed real That boom has compounded horren- The sense of frustration and alienation incomes to rise and low interest rates have dous traffic jams, which make commuting is palpable. “Helicopters, ha! It’s absurd,” extended credit to the poor. torture. For the rich, as ever, there is a way José Batista, a wiry 34-year-old commu- A telling illustration is the breakneck out: helicopters. Sao Paulo has 462 private nity leader, says indignantly. “The gov- growth of Casas Bahias, a chain of furni- helicopters, second only to New York, and ernment should be investing in public ture and electric goods stores, which sells for a few thousand dollars an hour they can transport to help us get into town and to the poor by letting them pay in monthly zip you across the city. Air traffic has grown find work.” instalments. so fast that the city recently regulated it. Government-funded houses are being In the past five years its outlets have Helicopters are a genuine work tool built on the site of cleared shacks but resi- almost doubled to 560 and annual revenue for executives — or so they insist — but dents suspect it is a plot to create space for a has soared to £3.6bn. Even more striking they are also a status symbol. None more middle class development, not an irrational — and arguably this is a bellwether — the so than the one that hangs in the atrium fear given the experience of some other chain is signing up 2.5m new customers of Daslu, the city’s plushest shopping slums. Government schemes such as Bolsa every year, the vast majority from slums. emporium. A shrine to luxury, Daslu has Familia, a stipend for the poorest, has filled “We now have 29m customers. The poor a helipad for clients, of course, but it uses bellies but done nothing to integrate shan- are becoming less poor and many are going its own helicopter as a sort of mannequin. tytowns into the economy, says Batista. on to become middle class,” says Michael Draped in cashmere for the launch of the “Food is good but it’s not enough.” Klein, the chain’s executive director. store’s winter collection, its next, er, outfit That does not mean the chasm is a closely guarded secret. between rich and poor will be bridged “Business just gets better and better. It’s wearily familiar: an any time soon. It is too wide for that. It Brazil is going up and we’re going up with economic boom ushers in does mean that this vast concentration it,” exults Daniella Lunardelli, a spokes- of humanity, a Latin version of Gotham woman. Staff are dressed in black and salad days for the rich and famous for extremes, may be on its way to white livery to resemble servants and leaves those at the bottom becoming, against all the odds, a kinder, there is a champagne bar to get clients in gentler place. the mood before a consultant advises on scrambling for crumbs Rory Carroll 10 In pictures

Faces of the new Brazil

When Portuguese explorer Pedro Alvares Cabral “discovered” Brazil in 1500, it was an accident — he was blown off course by a storm. Now, the inter- national business community actively seeks out the country’s rocketing economy — and Cabral is depicted on the country’s one cent coin. Modern Brazil, on the face of it, sometimes seems at odds with the images we all know of samba, carnival, beaches, favellas. So, we sent acclaimed Mexican photogra- pher Carlos Cazalis, who lives in São Paolo, to show us the modern Brazil. The result, shown here and throughout this supplement, is a country and a people of extraordinary contrasts.

This page (top) tattoos adorn the back of a resident of Rocinha, a Rio favela. Above, nightclubbing in São Paolo; left: children take a nap on an Amazon riverboat; below: a gay parade in São Paolo; right: Oscar Niemeyer, legendary Brazilian architect. Opposite page (top left) women from Salvador observing Candomblé, an Afro- Brazilian religion; top right: Alex Atala, chef of top restaurant D.O.M in São Paolo, now a major gastronomic centre; middle left: partying in São Paolo; right: an immigrant of Sao Paolo from the north-east of the country; bottom: playing football on Ipanema beach :

Panos/jeremy horner Panos/jeremy All photos Carlos Cazalis except where indicated In pictures 11 atlow Panos/Dermot T Panos/Dermot 12 Environment The ethics of ethanol Brazil has long been in the driving seat in the use of ‘sustainable’ fuel, uses 80% hydro power, and is the most environmentally and socially sensitive country in South America. But it must now deal with a new set of problems

t has been hailed as the green market has strict rules to evaluate these Saudi Arabia. practices. Ethical behaviour is better not Brazil began investing in eth- only for the social environment but for anol, a biofuel based on sugar business as well.” cane, in the wake of the oil Sergio Antonio Garcia Amoroso of the shock of the 1970s when prices paper company Orsa says that corpora- skyrocketed. The then govern- tions often step in where there is a lack ment encouraged car makers to of government aid. The company in 2000 move away from petrol and develop vehi- acquired a firm called Jari Cellulose, which Icles that could run on ethanol instead. The owned 1.6m hectares of native forest in shift had a lasting impact. the Amazon, on which there are 14,000 Today, around 90% of all new cars sold people living in 98 communities. A further in Brazil are flex-fuel vehicles, a Brazilian 125,000 live in four cities. “The company invention that can run on either petrol or needs to take care of all these. There is a ethanol. Because of a government sub- definite lack of help from the public sector sidy, the innovative cars cost no more than and there isn’t any control whatsoever. We conventional vehicles. Ethanol already invite these communities to go into busi- accounts for about 40% of the fuel used ness with us, to work on projects. At the in cars in Brazil, putting it way ahead of same time we help with social structure any other nation, and it is expected to projects.” overtake gasoline in Brazil by 2020. The firm has developed a programme “When it comes to biofuels and related of micro-credit for women and helped one products, Brazil is the leader, Andrew community to set up a jewellery business. Liveris, chief executive of Dow Chemicals The average household pay in the Ama- said last month. “The US is thinking about zon is 90 reals a month; the women are it. Brazil is doing it.” making 1,000 a month — about $600. The A recent report by Germany’s Allianz Orsa Foundation also trains young people Insurance ranked Brazil third in an index in the region and set up The Orsa Florestal, of “sustainability of fiscal and ecological a company that aims to employ the young development”, in large part because of graduates and makes diversified use of its support for biofuels. In addition, four- the native forest to generate sustainable fifths of Brazil’s electricity comes from economic activity in the Amazon. It is the hydroelectric dams. world’s largest Forest Stewardship Coun- Brazil is now starting to export the fuel cil-certified sustainable forest manage- alternative in bigger measures. The coun- ment project in native tropical forests. try presently produces around 18bn litres The mining giant Vale says it plants of ethanol a year, of which 4bn litres is more than 20m saplings of native species exported. A key customer will be the US, per year to offset its carbon emissions. A following an ambitious, albeit belated, separate programme, the Vale Florestar, statement by the president George Bush seeks to recover 3,000 square km in the that he wants to cut petrol consumption Amazon region by planting 165m trees. by a fifth. He has signed an agreement The biodiesel group Agrenco has been with Brazil to ramp up production. running a foundation that builds schools Europe also has strenuous targets to for poorer children in Brazil for decades, meet. By 2020, biofuels are supposed to providing them not only with free school- account for 10% of transport fuels across companies like the US private equity firm Soy source: environmentalists argue that the in 2005, a stock index funded by the World ing but healthcare as well. Jodie Thorpe at the 27-member EU. Infinity Capital and Cargill, the American production of ethanol, made from climate- Bank that acts as a benchmark for socially SustainAbility says there is a tendency for Brazilian producers complain that the agribusiness group. The number of mills sensitive sugar cane, is pushing production responsible investments. It is the first of the private sector in Brazil “to take a pater- main obstacle to growth is not availability in operation is expected to grow from 335 of more the more adaptable soy crops into its kind in Latin America. In addition, ABN nalistic view of its role in society”. of land or other environmental issues but to 425 with four years. virgin rainforest areas Carlos Cazalis Amro Real of Brazil was recently named But there are pressures on the environ- tariffs and subsidies in developed mar- “Investment of foreign capital is already the emerging markets sustainable bank of ment, with concerns particularly about kets, to protect their own industries. The a reality and has been very positive for the There are many communities in Brazil the year by the Financial Times. growing demand for ethanol. Support- US has a 54 cents a gallon tariff to protect sector,” says Rui Lacerda Ferraz, president that work with natural fibres, that produce “Until now, firms concerned about ers say that only 1% of Brazilian land is American farmers. of Crystalsev, which trades over 1bn litres fish leather, vegetable leather, banana leaf maintaining sustainable development currently given over to sugar cane pro- In recent years, concerns have been of ethanol a year. “As Brazil reaches invest- fibre, bamboo fibre and so on.” policies have been multinationals,” says duction and that, because of climate, it raised about the efficacy of biofuels in ment grade (expected this year) the inter- The sustainability culture is further Gian Enrico Mantegazza, chief executive cannot be grown in the Amazon region. combating climate change. There are est will increase and foreign investors will advanced in Brazil than any other Latin of pharmaceuticals group Mantecorp. “But Critics argue that ethanol production is doubts about their carbon savings, and come with more confidence. The availa- American nation. The British consultancy domestic companies are advancing. The pushing other more adaptable crops like also worries about space taken to grow bility of finance and credit will also allow firm SustainAbility says Brazil is the “une- environment is increasingly on the agenda soybeans into forests. the fuel and its the impact on food sup- for investment in land and production, quivocal leader” in the region. of national politics.” The UK and Brazil There is added pressure on Brazil plies. But the ethanol produced in Brazil is which means an increase in productivity “Social responsibility is now ingrained signed an alliance on sustainable devel- because much of the land that was given regarded as the greenest option, the sugar and profitability.” in almost all the big companies in Brazil,” opment and established a joint working over to soya in the US is being converted to cane taking relatively little energy to grow Management consultancy McKinsey says Jose Maria Rabelo, vice-president of group to combat climate change in 2006. corn for ethanol production. McDonald’s and convert to fuel. The US makes etha- recently suggested that if the area being Banco Do Brasil. “Awareness of the require- Brazil is also home to what is recog- last year said it would stop using soya from nol from maize, which is more expensive farmed for sugar cane doubled, fertiliser ments, not only of the regulators, but all nised as one of the world’s greenest cit- newly deforested land in the Amazon. and estimated by scientists to burn about used and the farming were mechanised the stakeholders, the customers, inves- ies — Curitiba, the self-styled ecological Destruction of the Amazon had slowed seven times more fossil fuel per unit of then Brazil’s ethanol output could increase tors, society, suppliers, government, is capital of Brazil, has a world-beating mass but is increasing again. In a sign of a energy produced. from 18bn litres to 160bn litres by 2020. increasingly present in every company.” transit system and was one of the first to renewed urgency, Brazil’s leadership met The Joint Research Centre, the European It is not just in ethanol that Brazil, blessed Around 900 companies in Brazil are take recycling seriously. in emergency session in January to discuss Commission’s in-house scientific institute with good weather, an abundance of land members of an organisation called Insti- Ferraz at Crystalsev says the increas- how to deal with an abrupt surge in defor- said in a report last month that only sugar- and good quality soil, has the potential to tuto Ethos, a network of firms committed ingly rigorous demands of customers estation after a three-year slowdown. An based ethanol from Brazil was sufficiently help the global environment. For instance to operating in a socially responsible way. worldwide can only lift environmental area the size of France has been lost in the green to pass muster. A separate report a pine tree growing in Scandinavia will take Bovespa, the Sao Paulo stock exchange, standards. “Every company has to react space of a single generation. from the International Monetary Fund 50 years before it is ready to be cut down, launched a corporate sustainability index quickly to changes in the macro and The Amazon, which has been called underscored the advantages of Brazilian pulped and turned into paper. By contrast micro environment to remain competi- the lungs of the world, is vital for offset- ethanol, noting that it was the only form a Brazilian eucalyptus tree takes just seven tive. Social-environmental concern is a ting greenhouse emissions. In addition, of ethanol generally cheaper to produce years to reach maturity. ‘Social responsibility is requirement of the world market. Crys- the burning and rotting of wood in the than gasoline. The report said it was 15% Paulo Borges, organiser of the Sao Paulo now ingrained in almost talsev compiles studies to discern the Amazon, releases carbon dioxide into the cheaper, while US-produced ethanol is Fashion Week, which last year planted benefits of building production units to a air. The current rate of destruction is esti- 18% more expensive and European sugar- more than 4,000 trees to offset its event, all the big companies region, the preservation and restoration mated to produce 400m tonnes of carbon beet based ethanol twice as expensive. points to other potential products in the in Brazil. Awareness is of the environment, tracks agricultural dioxide a year, an astonishing 80% of Bra- The industry is beginning to attract huge fashion industry. “We can actually be the activities and provides social assistance to zil’s current greenhouse gas emissions. investment from outside Brazil, including biggest producer of sustainable fashion. increasingly present’ employees and communities. The world David Teather Tourism 13 Boutique boudoirs More discerning tourists are turning their backs on traditional high-rise hotels in older, run-down districts like Copacabana and opting for the smaller, chic boutique hotels that are in the vanguard of Brazil’s new tourism

the cobalt blue Atlan- tic Ocean glistening behind them, half a dozen sweaty build- ers busy themselves around a construction site in the west of Rio de Janeiro. When their work is finished, Francois- TXavier Dussol, a stylish Rio-based Parisian entrepreneur believes his hotel’s second swimming pool will have one of the most stunning vistas in this South American city. And he is not exaggerating. Perched slap-bang on one of the world’s most renowned shorelines, the hotel boasts a panoramic, 180-degree view over Rio’s beaches, with the city’s colossal rock formations surging up dramatically from behind them. Welcome to La Suite, currently one of Brazil’s hippest hotels and one that is leading the way in a new trend of boutique hotels that is sweeping the country. Rio de Janeiro is ground zero for Brazil’s burgeoning boutique movement. From the southern beach districts to the cob- bled streets of the hilltop district of Santa Teresa, foreign tourists are turning their backs on more traditional hotels and mak- ing instead for smaller, uniquely designed guesthouses that boast personalised iPods in each room, foreign chefs and, in the case of La Suite, even a small rabbit adopted from the set of a recent Gisele Bundchen photo-shoot. Since 2005, dozens of such places, many foreign owned, have sprung up around the city — each with a view more spectacular than the next. Rio’s boutique hotels often contain only half a dozen rooms, but what they lack in size they more than make up for in personality, security and, perhaps most of all, luxury. Take La Suite. Located in Joa, slightly away from the more traditional tourist areas but easily reachable by taxi, the hotel is a breath of fresh air from the growing squalor of Rio’s run-down beach districts such as Copacabana. Located inside a mini gated community, with its own security guards monitoring the entrance, there is not a pick-pocket to be seen here. The pousada is built from sweeping curves of white concrete and boasts a jaw-dropping view across the cityscape

tains, where guests can lounge around in the sun listening to the tweet of birds in the hotel’s miniature bird zoo. For those who tire of the luxury, a well- known and deeply unconventional tour- ist guide called Peanut from the nearby favela, Rocinha, offers day trips into the slightly less glamorous setting of Rio’s largest slum. Last but by no means least there is the Maze. The Maze is not a boutique hotel in the strict sense of the word, but then its rooms don’t come with the same price tag either. Designed to mimic the city’s undulat- ing hilltops, the pousada is built from sweeping curves of white concrete and boasts a jaw-dropping view across the cityscape below and over the gigantic Sugar Loaf Mountain. The most extraordinary thing about the Maze, however, is its location — slap Above: La Suite, a designer hotel in Rio, is a son, a hotel located in the leafy southern bang in the middle of Tavares Bastos, a Rio comfortable mixture of antique and modern. neighbourhood of Gavea, is the move- shanty town hanging high over the crum- Below, Ipanema beach in Rio Carlos Cazalis ment’s grandfather. bling colonial streets of Catete. Reputedly Rio’s first boutique hotel, Built by Bob Nadkarni, an eccentric La Suite is spread across three floors La Maison is set in a spacious remodelled former war correspondent from Britain, and has seven colour-coded rooms filled mansion that looks directly out at the the Maze has fast become one of the trend- with a mixture of antique furniture and Christ the Redeemer statue and across iest tourist hangouts in Rio, a place where modern art. The bathrooms are crafted Rio’s forest-covered mountains. gringos and well-healed Brazilians mingle from imported marble, chosen to match Gavea is not a traditional tourist around overflowing glasses of caipirinha the room’s colour. hangout, historically being the home and plates stacked high with succulent Upstairs there is a designer swimming of bankers, politicians and super-rich Brazilian beef from the barbecue. pool, a luxurious dining room with a black artists and intellectuals. But in recent The hotel is still a little rough at the crystal Philipe Starck chandelier (the only years a number of stylist guesthouses, edges and there’s certainly no helipad to one in Latin America, says owner and hotels and bars have opened here. Just be seen. But the sheer bizarreness of it all designer Dussol), a large balcony dangling down the road from La Maison is the has proved a winning ticket. over the cliff edge and even a helipad on Praça Santos Dumont, by day a peace- It is enough to make anyone grin ear the roof for those who really want to arrive ful Brazilian piazza, after dark one of to ear, which is what the hotel’s owner in style. the trendiest meeting points for Rio’s spends rather a lot of his time doing as “When Roger Moore came to Brazil young, rich and beautiful. he stares out from the pousada’s enor- to film Moonraker he stayed next door,” La Maisons’ bright pink corridors are mous rooftop balcony overlooking his enthuses Dussol, pointing to a neighbour- filled with a mish-mash of designer fur- adoptive city. ing mansion. It is easy to see why. niture, pop art and antiques. At the foot “The only thing I miss about England is If La Suite is currently the pacesetter of the property there is a large swimming the Indian food,” he says. of the Brazilian boutique market, La Mai- pool with a stunning view of Rio’s moun- Tom Phillips 14 Leading figures Meet the new breed

Meet the business leaders and bright sparks making waves in Brazil and beyond

oger Agnelli is one of If Agnelli pulls it off, the $90bn deal a new breed of ambi- would be the largest ever foreign acquisi- tious Brazilian busi- tion by a Brazilian company and one of the nessmen determined biggest moves in corporate history. to take their place on Vale has been positioning itself for such the world stage. a global move for some time. Last year it As head of the launched a $50 million corporate branding former state-owned campaign, adopting the country’s green mining group Vale, Agnelli is already a and gold national colours for a new heart- Rpowerful player. Vale is the largest min- shaped logo and shortening its name to Vale ing company in Brazil, the world’s leading for ease of pronunciation outside Brazil. producer of iron ore and its second-largest Mining companies around the world miner overall, after BHP Billiton. have been boosted by soaring commod- But if the 48-year-old former invest- ity prices on the back of a huge increase ment banker pulls off his latest move — a in demand from countries such as China. $90bn bid for Anglo-Swiss rival Xstrata, They are also coming under growing scru- Vale would be catapulted right to the top tiny on social and environmental issues. of the world league. Agnelli is proud of the company’s Agnelli’s move on Xstrata has divided record in the Amazon and uses Vale’s opinion in Brazil. While many are delighted mines there to showcase the company’s to see a Brazilian company making such environmental credentials. When Vale waves in the global M&A market, others fear took on a nickel project in New Caledonia, that such a massive move overseas would concerned locals were stalling the project, divert Vale’s resources away from Brazil. so he flew them to see Vale’s Amazon oper- The company needs to be sensitive ations. The project got back on schedule: to opinion back home — under terms of “We represent a new mentality; we under- its privatisation just over 10 years ago, stood the needs of that community and the Brazilian government retains pow- we proposed a solution.” ers to veto any deals it deems against the national interest. Those opposed to a takeover of Xstrata Agnelli is proud of the complain that it would bring nothing back company’s record in the to Brazil, no new jobs or investment in the country, but would instead see a massive Amazon and uses Vale’s outflow of capital. Debts taken on to fund mines there to showcase its the deal could also damage Vale’s financial health, they argue.

environmental credentials AP

Leading lights

Roberto Setúbal, chief executive Once so poorly thought of in Brazil and investment in infrastructure, and an Banco Itaú the rest of the world that it was referred end to corruption and bureaucracy. Roberto Setúbal (right) is known as to as “Petrosaurus”, Petrobras is now “Without doubt, the government needs Brazil’s most successful banker. The Itau widely acknowledged to have become to make a lot of decisions. And it’s dynasty began when Alfredo Egydio de a model for other government-owned necessary to have courage to put these Souza Aranha, Roberto Setubal’s great corporations in the developing world. decisions into action.” uncle, founded an insurance company in A former academic, politician and, briefly, But he is optimistic: “If Brazil is good the 1920s. The bank is part of the Itausa a journalist, Gabrielli had few fans when without these reforms, just imagine conglomerate, run by Roberto’s father he took on the role of chief financial what it will be like if they are actually Olavo, a former foreign minister. officer at the oil group in 2003, after the implemented.” Unlike many other Brazilian family election victory of President Lula. concerns, the business has successfully For the last three years he has headed Paulo Hartung, Governor State of made the transition from family-run the company, which doubled its success Espirito Santo company into top-class player. rate at drilling new wells between 2002 In 2003 Espirito Santo was in a state of Its workforce was drastically cut back and 2005. On 21 April 2006 President severe crisis resulting from “years and and technically advanced banking Lula declared Brazil self-sufficient in oil years of abuse,” says governor Paulo

systems introduced. The bank was keni a H ern ndes reuters; right: Left: on board a Petrobras oil rig. Hartung. “The public machine was active in the wave of consolidation shattered.” The southern state has that has swept the banking sector and Paulo Skaf, President of the been working hard to bring in badly Setúbal is said to have ambitions for Federation of Industry, Sao needed infrastructure, and between more and bigger deals in the future. Paulo (FIESP) 2002 and 2006 had the fastest rise in Formed in 1931, FIESP promotes the employment in the federation, with an José Sergio Gabrielli de Azevedo, country’s business interests and increase of 28.5% against the national Petrobras represents more than 100 companies average of 20.5%. “Like buying a winning lottery ticket” based in the State of São Paulo. The Its GDP per capita is $6,300 against is how José Sergio Gabrielli de Azevedo organisation is also active in public a national average of $5,700 and (right), chief executive of Petroleo health, training and education and had state industrial growth was more Brasileiro (Petrobras) described his more than 1m people enrolled in its than double the national average last company’s huge oil discovery last year. schools last year. It also has leisure and year, making it among the top three A little good fortune never goes amiss sports facilities. states in Brazil. in the oil exploration game, but it is “Our vision is not the industry,” says For the future, the main objectives, says Gabrelli rather than luck that has helped Skaf (left). “Our vision is our country.” Hartung, are: “social inclusion, reduction transform the state-owned energy giant Like many Brazilian business people, of poverty, equal access to opportunities

in recent years. ap right: G etty; Left: he is impatient for reform, for and economic dynamism.” Leading figures 15

Agnelli is also keen to play his part in protecting the workforce. “In the poorest regions you have to factor in things like basic sanitation, education, security and health services, so in some way or another CVRD is involved almost in a governmen- tal level in the places we are present. “You cannot play the government,” he says. “We are a private company aiming for results and to build value for our share- holders. But we cannot close our eyes to the social reality of where we are working. We are trying to keep a delicate equilibrium.” Agnelli has yet to make a formal offer for Xstrata, which has already rejected an informal approach, and it is by no means certain that any deal would succeed. Known by some as the Iron Man, Agnelli will need all his negotiating skills, not just to secure control of Xstrata, but also to convince his critics back home that the deal is not just good news for Vale, but for Brazil too.

Viviane Senna, instituto ayrton senna Brazil lost Ayrton Senna on the race track at Imola at 1994, but the triple world champion left a remarkable legacy that has changed the lives of millions of Bra- zilian children. Just a few weeks before his fatal accident in the San Marino Grand Prix, Senna told his sister Viviane he was thinking about what he could do to help his country. “Despite his wealth, he knew something had to be done to close this gap between rich and poor,” she explained in a recent interview with Motor Sport magazine. “He asked me to plan some organisa- tion that would help children have a better future. This was two months before Imola. I began to work on a structure, but we did not have the opportunity to talk again.” Viviane carried out her brother’s wishes and, just months after his death, founded the Instituto Ayrton Senna, a non-profit- making organisation dedicated to helping the dispossessed children of Brazil. In a country where the gap between rich and poor remains vast, millions of children live in appalling conditions, uneducated and excluded from society with little hope for the future. Based in São Paulo, the institute is funded by royalties from the licensing of the Ayrton brand and image, and from the Senninha children’s TV and comic character, as well as corporate and other donors. It makes strategic alliances with Viviane Senna founded Instituto Ayrton companies, with federal, state and city Senna, dedicated to helping the poor and For fashion governments, and also with private foun- excluded children of Brazil Corbis see page 17 dations. It has links with scores of major companies, from Vale to Bradesco Capi- Sport, Education through Art and Youth talizações, Microsoft, IBM and Nokia. SuperAction; its Accelerate Brazil pro- The figures are extraordinary: last year gramme deals with learning acceleration the institute helped educate 1.35 million while Connect Yourself fights illiteracy. children and young people via partner- Since it was first set up, it has spent £45 ships with almost 11,000 schools, NGOs million in total. and universities. Since its foundation, the But the benefits are far greater than institute has helped almost eight million simply financial — by involving busi- youngsters. nesses and government organisations, It runs a wide range of programmes, it has helped reinforce the message that all aimed at educating Brazil’s children in ensuring a fairer society cannot be left to pursuit of its aim to “build a fairer country charities and philanthropic organisations for all.” They include Education through but is the responsibility of everyone. 16 Design and fashion Artistry in the blood Brazilian design, from fashion to architecture, is usually recognised simply for its flamboyance, but it is only recently that its unusual mix of influences is being embraced for its inventiveness, originality and sheer diversity

hink Brazilian design believes her country’s unmistakable Julia Bolliger, head of journalism at and the first things national identity is a defining factor in Brazil’s leading design and “experimental that spring to mind her work’s success. “I’m of the philosophy art” magazine Zupi, plays down the idea may well be plastic that the more you look inside yourself the of “Brazilian-ness”. “A global exchange flip-flops and minis- better your output is. And that when you of influences” means Brazilian designers cule beachwear. just look outside you get confused.” find their inspiration as much abroad as at But there is more Gold cites Maria Bonita as one of the home, she believes. to Brazilian style than Brazilian labels that most excites her. “There is no such thing as typically Carmen Miranda’s fruit basket headgear, The label’s collections draw heavily on Brazilian or typically London design,” she Tand a new generation of Brazilian design- traditional northeastern Brazilian styles, says, pointing out that there are “Ameri- ers, mostly based in Rio de Janeiro and São giving the country’s rural backlands an cans doing excellent oriental art, Brazilians Paulo, are pushing the boundaries of South urban twist. making European design [and] Argentines American fashion, art and architecture. “It’s completely different to our work… who are completely influenced by German Inspired by themes as diverse as urban but it is still linked to the Brazilian roots,” fashion illustrations.” disorder, impoverished sugar cane cut- says Gold, whose clothes are now sold in She does, however, admit that Brazil’s ters, the Amazon rainforest and even the London, New York and Tokyo. complex colonial past and rich history of gothic movement, Brazil’s young design- “All of our collections start with the European, Japanese and Middle Eastern ers are charting new territory and winning print. Because Brazil is a hot, tropical place immigration make the country rich pick- accolades the world over. these prints work well. I think [the over- ings for designers. Bolliger argues that this Last year the Brazilian clothing industry seas buyers] like the artisan-type Brazilian “vast array of cultures” provides the Bra- made $34.6bn, making it the world’s sixth style, it enchants them,” she adds. zilian designer with a “wealth of graphic largest textile producer and responsible For decades Brazil’s tropical chic has icons, clothes, colours and identities.” for 3.5% of Brazil’s GDP. Some $2.4bn of enchanted the outside world in a variety “Because of all this historical and cul- that revenue came from exports. of forms; from the white concrete sweeps tural baggage we certainly have something Brazil’s fashionistas are also gaining of Oscar Niemeyer’s architecture, inspired original in these parts,” she says. influence. Alexandre Herchcovitch, cur- by Rio’s undulating mountains, to the rub- The artistic backgrounds of many Bra- rently the country’s best-known fashion ber Havaiana flip-flops that have become zilian designers also gives them an advan- designer, was listed as one of Brazil’s 100 one of the country’s best known exports tage over others, Bolliger says. most influential people in a recent survey and worn by Brazilian street sweepers and “Even the biggest designers here have by a respected Brazilian news magazine. super models alike. had an extremely strong artistic back- Carolina Gold, a London-born Anglo- But not everybody in the industry ground before they moved into design, Brazilian designer based in Sao Paolo, accepts the notion that there is a typically which really adds a huge wealth to their runs Amapo, one of the country’s most Brazilian style of design. work,” she says. celebrated fashion labels, with her busi- “The interesting thing about Brazilian ness partner Pitty Talian. Gold says the designers — and this is something that explanation for Brazil’s growing success Professions here are more should be a maxim for designers across abroad is its diversity. “A little bit of every- based on creativity and the world — is that they concentrate less thing exists within Brazilian fashion,” says on technique and focus more on artis- Gold. “Our work always carries a tropical the natural intensity of tic freedom. I think that all professions perfume,” says Gold. “The colours we use our people and less on here are more based on creativity and the are strong; it’s very tropical.” natural intensity of our people and less Getty Like many Brazilian designers Gold studies and rules on studies and rules.” Winter collection from Amapo at São Paolo fashion week

To make the future is to value people and the place where they live.

Banco do Brasil is celebrating it´s 200th anniversary in 2008. Throughout all these years, we were always aware that taking care of the planet´s environment is the first step for making a better future. No wonder Banco do Brasil was the first Brazilian company to publish it´s own Business Agenda 21. Banco do Brasil. 200 years making the future.

www.bb.com.br Design and fashion 17 ht: g etty ri g ht: os Caza l is; far ht, Car l Corbis; ri g ht, Left: Clockwise from top: the unmistakable Carmen Miranda; the ubiquitous ‘dental floss’ bikini; Oscar Niemeyer’s congress building in Brasilia; the favela chair designed by the Campana brothers

FIVE BRAZILIAN DESIGN CLASSICS Examples of this artistic freedom can Twins, have also taken the world by storm 1. THE FAVELA CHAIR be found around virtually every corner with their distinctive street art, which can Despite its name — the “shantytown in Brazil, on billboards and buses, in shop today be found in art galleries across the chair” — the Campana brothers’ windows and showrooms and of course on world fetching five-figure sums. Favela Chair became a defining piece television. It can also be found in the work With more and more finance being of Brazilian design with a price tag to of the Campana brothers, two Sao Paulo pumped into the industry and new design- match when it was launched in 2003. furniture designers who have become ers springing up on a seemingly daily basis, Reputedly made out of the same world-renowned for their so-called spon- the Brazilian design boom and its impact wood used to construct shacks in the taneous architecture projects. on everyday life looks set to continue. ramshackle city districts, this design The Campanas are best known for their For fashion designers such as Rodolfo classic sells for just under $4,000. eccentric furniture designs, which employ Murilo, one of the youngest members of everyday materials used in the country’s this new troupe, it is an exciting time to 2. THE HAVAIANA FLIP FLOP slums to produce luxurious sofas and be starting out in fashion. Aged just 22, he Invented in 1962 the Havaiana, chairs, like the Favela Chair, made from a is currently the chief designer for Carlota a rubber flip-flop, spent nearly mesh of plywood. Joakina, a label owned by Gloria Coelho, 40 years as an unremarkable but “Translating the Brazilian identity into one of Brazil’s most respected designers commonplace component of the design is the most important challenge for who has showrooms in New York, Paris Brazilian wardrobe. Suddenly us,” Humberto says in a recent interview. and London. at the end of the 1990s the “The challenge is to make a portrait of our “I think Brazilian fashion is now mov- Havaiana took off as an poor, beautiful and culturally rich country.” ing into a new phase,” he says. “There international fashion Campana traces this new creative free- are lots of young Brazilian designers accessory worn by top dom back to the end of Brazil’s military now dreaming about having their own models across the dictatorship in 1985 when a host of exiled labels. Brazil is in fashion. Universities globe such as Naomi artists and intellectuals began flocking are opening new fashion courses all the Campbell. Havaiana’s back to their home country. time. We are feeling that the labels are international sales The Campanas are not the only broth- being watched all the time by the entire are said to be ers making a name for themselves. Graffiti fashion world. The eyes are on us. You feel doubling each artists Gustavo and Otávio Pandolfo, bet- observed. It’s great.”

year. In Rio R ex features ter known by the title “Os Gemeos” or The Tom Phillips the lowly Havaiana costs around R$10 (£2). In Europe they have been known to fetch around £100.

3. OSCAR NIEMEYER’S CONGRESS BUILDING Erected at the end of the 1950s, Brazilian architect Oscar Niemeyer’s Congresso Nacional, the Congress Building in Brazil’s capital Brasilia, remains his most celebrated work, often compared to two white flying saucers. Mixing the sweeping convex and concave lines for which he became famous, the building is one of the most recognisable symbols of Brazilian architecture.

4. THE DENTAL FLOSS BIKINI Known in South America as fio dental or “dental floss”, the Brazilian bikini is also begrudgingly held up as a design classic, widely embraced on the country’s beaches. The dental floss bikini was not always a unanimity, however. In 1961 president Janio Quadros outlawed the tiny fashion item from Rio’s beaches. He lasted just seven months in power.

5. THE TUTTI FRUTTI HAT Carmen Miranda, Brazil’s most famous singing export, is to this day one of the defining fashion icons to emerge from Brazil. Born in Portugal, “the lady in the tutti-frutti hat”, as she became known, moved to the US in 1939 where her colourful, fruit- laden costumes became a seminal creation, referenced to this day by Brazilian designers. 18 Music Beyond the bossa nova Think Brazilian music and you’ll probably be thinking of the samba. But like its art, design and fashion, Brazil never stops reinventing its irresistable rhythms, and its music draws widely on influences from far and wide

witch on the radio in Rio can country, is reinventing the Brazilian zilian classical conductor Edino Krieger, de Janeiro and it won’t sound in an equally irresistible fashion. Edu’s music is, in his own words, a mix of be long before you hear Their influences come from far and “the Beatles, with video games with [leg- the catchphrase of the wide: ranging from reggae to jazz, rock, endary Brazilian musicians] Luiz Gonzaga local Brazilian music eastern European folk music and the and Pixinguinha”. channel. “Nobody can Beatles — all filtered through traditional His first album, released at the end of resist our music!” Brazilian melodies and rhythm. 2007, has received critical acclaim draw- Since the bossa nova Closer to home they mix a range of Bra- ing comparisons with legendary Brazil- of Tom Jobim and Vinicius de Moraes took zilian beats such as forro, frevo and choro ian composers such as Caetano Veloso theS world by storm in the late 1950s, the with better known styles such as samba, and Chico Buarque. The last two albums word Brazil has been synonymous with as well as Argentine-influenced music of Brazilian singer Maria Rita also feature music; the melancholic samba from Rio de from Brazil’s deep south. some of Krieger’s tracks. Janeiro’s hilltop shantytowns, the frenetic “I listened to lots of things when I was “There was a time in my life when forro rhythms from Brazil’s arid northeast growing up; Guns and Roses, Reggae, all I listened to was the Beatles ... I was and more recently the bass-heavy funk Jazz,” says Henry Lentino, a mandolin- totally enchanted. The other influence from Rio’s crime-ridden slums. playing sensation from the critically you can’t deny is that of the video game. I Today a new generation of Brazilian acclaimed Rio-based instrumental group was brought up during the first generation musicians, based in Rio de Janeiro but Tira Poeira. “Things transform naturally. of video games — that electronic sound hailing from across this vast South Ameri- To do something new you need to respect fascinates me.” what came before but also draw on what “Then later when I was nearly 20 I dis- is from our generation,” says Lentino, covered samba,” says Krieger, who went whose breathtaking virtuoso perform- on to teach himself the seven-string gui- ances have earned him the nickname of tar on which he now composes. the Brazilian Jimi Hendrix since he moved Lentino and Krieger are both veterans to Rio from the southern city of Porto Ale- of the musical scene in Lapa, a rundown gre eight years ago. bohemian district in central Rio where True to form, Tira Poeira’s next album scantily clad transvestites, poets and — Feijoada Completa — will feature vocals musicians have rubbed shoulders since from the Brazilian stars Maria Bethania the beginning of last century. In recent and Lenine as well as a funk remix of O years their numbers have been bolstered Morro Nao Tem Vez, a Tom Jobim bossa by musicians from Brasilia, Recife and nova standard, produced by MC Pitbull, a even the Amazon city of Belem. well-known exponent of Rio funk. “Rio is attracting lots of people from the The album’s title — an allusion to the new generation. It is still a big shop window pork stew made out of thrown away food for the rest of Brazil,” says Krieger. by Brazil’s slaves — is a nod to the wide And what do they have in common? range of influences that Brazil’s young “Today Brazil’s young musicians play with musicians are drawing on. more attitude, with more rock’n’roll,” Edu Krieger, a 32-year-old composer believes Lentino. and singer from Rio, is one of the local Not forgetting, of course, the influence musicians on the front line of this new of the Atari. Singer Maria Rita Retna scene in Rio. The son of well-known Bra- Tom Phillips Legendary musician Chico Buarque Wire Image Facts and figures 19 Brazil in numbers It is a land of contrasts: of the suddenly very rich and of the devastatingly poor. This is your visual guide to the new Brazil

Basic indicators GDP Total Official exchange rate, 2007 population $1.269 trillion 190.01m Boa Vista Population by state Purchasing power parity, 2007 0.59m

0.39m AMAPA ATLANTIC $1.838 trillion RORAIMA Macapa OCEAN

Per capita, 2006 Belem US$9,700 São Luis Manaus RIO GRANDE 7.07m Foortaleza DO NORTE PARA 6.12m 8.18m 3.17m MARANHAO Teresina CEARA 3.01m Natal Rank in world trade AMAZONAS Joao 2006 3.64m Pessoa 3.03m PARAÍBA Exports 32 PIAUI 8.49m Commercial services PERNAMBUCO Imports 27 Porto Velho 0.65m 3.01m Commercial services 19 BRAZIL Palmas ALAGOAS excl. intra-EU ACRE trade 16 Rio Branco 1.45m 1.94m SERGIPE 1.25m 14.1m 24 RONDONIA 2.85m Merchandise TOCANTINS BAHIA 28 Salvador MATO FEDERAL Merchandise 16 GROSSO DISTRICT excl. intra-EU trade 19 Unemployment rate By metropolitan region, year on year Cuiabá BRASILIA change, Jan 2008, % 5.64m 2.46m 19.3m Economic growth 2.12 Goiania Actual and estimated, % GOIAS MINAS e o GERAIS Sa ecife erag 8 Paulo R MATO GROSSO Salvador Av ESPIRITO -4.4 Alegre to 3.35m

Peru DO SUL

Argentina SANTO 6 -7.09 Por Rio de Janeiro de Rio Campo Vitoria

Belo Horizonte Belo 39.8m 2.27m Grande 15.4m

Colombia -9.98 -9.65 4 -10.91 SÃO PAULO RIO DE

Mexico JANEIRO Chile

Brazil Health 2 RiRioo -17.71 Health spending 10.3m dede Janeiro ATLANTIC % of GDP OCEAN

2006 2007 2008 2006 2007 2008 8.8 0 Pov erty PARANA CuritibaCurCuC The Growth Acceleration Programme Population below $1 (PPP) per day, % 200 MILES announced earlier this year includes US$280 % billion of public and private sector infra- 5.87m structure investment between 2007 and 2010 Latin America SANTA & Caribbean Florianópolis Brazil Doctors CATARINA 7.5 8.7 Per 1,000 population 10.6m Drugs Industrial production Education RIO GRANDE Porto Alegre Cocaine seizures Index, 1992 = 100, year on year change, Pupils completing primary education, % DO SUL % of world total, 2005 seasonally adjusted, Jan 2008 1.2 South America 51 8.58 Latin America Hospital beds Brazil & Caribbean Per 1,000 population Colombia 29

5.75 o Colour TVs 80.5 98.5 Per 100 households 8 Venezuela

theast region theast 2.7

Nor 6 Ecuador Rio de Janeir de Rio 2.17 1.72 Improved-water source access Literacy rate 87.9 Sao Paulo Sao Gerais Minas Per 1,000 population 3 Peru 5-24 year olds, % Telephone lines 2 Bolivia Brazil Latin America 90 Per 100 population & Caribbean 2 Brazil Education Society Education spending 4.1 96.8 96 21.4 Cocaine use % of GDP Number of households % Life-time prevalence among high-school Mobile subscribers students age 15–16, %, 2004–2006 50.0m Per 100 population Infant mortality rate Argentina 4.63 0-1 year, per 1,000 live births People per household Chile Literacy Average 4.27 Latin America 46.3 1995 83.2 & Caribbean Uruguay 2.95 % Brazil 3.6 Computers Per 100 population Ecuador 2.70 31 26 Marriages Per 1,000 population 16.1 Colombia 2.0 Literacy CO2 emissions BrazilBrazil 1.94 Now Per capita (tonnes) 86.6 4.2 Internet hosts Peru 1.91 % Divorces Per 1,000 population Latin America Per 1,000 population Brazil & Caribbean Bolivia 1.87 1.8 2.6 39.8 0.8 Paraguay 1.09 SOURCES: UN, ECONOMIST, WTO, WORLD DRUG REPORT, CIA WORLD FACTBOOK