ECONOMIC ANALYSIS DANGER 5

SURVEY OF BRAZIL PART 5 TO BE CONTINUED

V-FEDERATION – WEAKENING THE NATION

A)  THE FACTS

Brazil is composed of 26 States and of the federal district of Brasilia whose population of the latter is near 4 million with an area of around 6000 km2.

In fact 3 States out of 26, have the lion’s share with 40% of the population on 10% of the Nation’s area : Rio de Janeiro, Sao Paulo and Minas Gerais

History is still stubborn since it was influenced by the interests of Sao Paolo and Minas Gerais. The influence of the former “Coffee with milk” Republic is resilient, but the coffee with milk might become difficult to digest with the oil of Rio de Janeiro (see my report dated 4 January 2010).

In adding Bahia and Rio Grande do Sul 5 States represent  the MAJORITY of Nation ‘s population on 20% of Brazil’s area.

12 States out of 26 and federal district gather 92% of the Brazilian population on 50% of the country’s area.

Thus 14 States and the federal district i.e. 56% of administrative entities (State and federal district) represent a very negligible part of population. The current Federation is thus a totally unbalanced National organization

11 States (circled in red on the map)  form geographically a “homogenous area or country” on southern coast of Atlantic ocean or close of it,  with most of the population and richness: from North to south: Pernambouc, Alagoas, Sergipe, Bahia, Espirito Santo, Minas Gerais, Rio de Janeiro, Sao Paulo, Parana, Santa Catarina and Rio Grande do Sul. These 11 States represent 142 million of people i.e. 72% of the Brazilian population on 26% of Brazil (2 212 000 km2). 28% of the population are thus disseminated on 6 300 km2--almost ¾ of the territory.

“In fact, Brazil is more a country of 142 Million people living on 2 212 000 km2, with additional territories of 6 300 000 km2 barely inhabited” than a country of 200 Million inhabitants with an area of 8 500 000 km2.

This does not question the legitimacy of Brazil on all its territories but the useless and expensive federal organization taking into account the development imperatives of the Nation.

The federal organization is clearly damaging Brazilian situation by slowing down development, creating numerous administrative duplications resulting in heavy  losses, and maintaining iniquity between States. It aims historically to protect the interest of few powerful States and is a real problem for other states development.

B)  THE SYSTEM

The nation lives under the domination of few states and the governing system amplify this discrepancy.

At the executive level, the President chooses the Ministers, may propose laws and may oppose his veto against application of laws. The Federal administration is limited to foreign Affairs, Money, Credits and Defense; meanwhile the States have huge prerogatives.

At the legislative level, the laws are voted by the Congress with a majority of 3/5 (60%) applicable to each of the two legislative bodies.

The congress includes a Senate and a House of Representatives.

Senate represents a shield against strong States with equality of Senators by State: 3 Senators are elected by each State and 3 Senators are elected by the federal district. The total number of Senator is 81.

House of Representatives includes 513 members, 6.3 times the size of Senate. Representatives are proportionally elected and represent thus the strength of States in proportion of their population.

The Senate may appear to have the power of limiting power of the States in proportions of the population, but this security is useless since the States have already huge prerogative by Constitution.

 Senate may not counter balance the discrepancy between States since 3/5 of House of representative will be always needed to approve any new law.

States organization increases substantially the cost of the Nation Management since all governing instances are duplicated as e.g. 26 House of Representatives and related Organizations.

This expensive system involves a slowdown for a Population with urgent needs in particular in the poor States and questions the principle of solidarity between entities of one single Nation. In a recent past foreign Nations were obliged to rescue Nordeste from starvation.

This system weakens the federal Government in his effort to organize and harmonize the development of the Nation as a whole. Federal Government seems deprived of control tools to guarantee the optimal applications of resources.

 This system does not serve the Nation and its population. Federal organization might be ideal for rich Nations as USA, Germany, Switzerland or Canada and might be detrimental for poor Countries especially if they include unbalanced entities. Central system may permit more efficiency in such context.