(7 of 9)
The vision of greatness, coupled with the frustration of failing to realize greatness, has somehow fortified the Brazilians' nationalistic reluctance to let foreign investors and experts share freely in the development of their natural resources. No. 1 horrible example of nationalism defeating national interest is the legislation excluding foreign capital from oil exploitation. Geologists have estimated that oil-bearing formations underlie more than 750,000 sq. mi. of Brazilian territory, but the government-controlled oil monopoly, Petrobras, lacks the capital and technical skills to undertake large-scale exploration. So far, Brazilians have found two small fields, which between them produce 4,000 bbls. a day—about 2% of consumption. Result: last year Brazil had to spend $220 million of her hard-earned foreign exchange for imported oil products. At present, in the midst of a desperate dollar shortage, oil imports drain away $20 million a month—more than all other dollar imports put together.
One Wobbly Leg. President Café Filho is well aware that all his problems did not originate with the Vargas regime. Even before Vargas, Brazil had embarked on the slow, painful transition from an agricultural economy based on production for export to a diversified economy based on production for domestic use. The pattern of Brazil's economic past is a series of wonderful one-product export booms, invariably followed by abysmal busts. First came a 16th century boom in a red dyewood called pau-braza (literally, ember wood), which gave Brazil its name. In the 17th century Brazil became for a time the world's greatest exporter of sugar. Then came the gold rush; while it lasted, Brazil produced more than 40% of all the gold mined in the 18th century. The advent of the automotive age gave Brazil a great rubber boom, but Brazil now imports rubber from Malaya.
Before the rubber boom had run its course, Brazil became the world's No. 1 exporter of coffee. Coffee is still the mainstay of the economy, accounting for two-thirds of export income. "Brazil walks on one leg," said a Vargas Finance Minister, "and the leg is coffee." Dependence on a single product makes Brazil vulnerable to exchange crises every time the price slides. Not only is the one leg wobbly: it might some day wither altogether and go the way of dyewood, sugar, gold and rubber. Competition from the other coffee countries and from cheap-labor plantations in Africa is increasing. World overproduction is a constant threat. And there is always the nightmarish possibility that some diabolically clever chemist may wreck the market altogether by discovering a cheap, palatable synthetic substitute for instant coffee.