Bailing out Brazil - Recession peril key topic among expatriates here
By Dean Calbreath
STAFF WRITER
October 3, 1998
At the Anna Brazil swimsuit shop in Pacific Beach, where the talk usually
centers on the width of the latest string bikini, there's been another topic of
conversation these days: the economic challenges facing Brazil.
The shop, owned by Brazilian expatriate Anna Budd and specializing in
beachwear from Brazil, is an informal hangout for many of the 3,000 or so
Brazilians who live in San Diego -- part of an estimated 15,000 to 30,000
Brazilians in Southern California.
On the eve of the Brazilian election, with their home economy on the brink of
recession, some of the customers are worrying that if the economy dips too
low, the government could be forced to devalue the currency and their
pleasant stay in the United States could come to an end.
"For sure, if there's a devaluation, there's going to be a lot of people heading
home," said Ilana Queiroz, visiting the shop for a chat. "A lot of Brazilians
here are students, depending on their parents for money. If there's a
devaluation, it will become too expensive to stay here."
Queiroz, who studies computer sciences at Platt College in San Diego, says
she lives a "credit-card life." She charges her living expenses here and her
journalist mother pays the bills in Brazil. Most of her Brazilian student friends
live the same way, she says.
Although Queiroz thinks a devaluation is unlikely, she concedes that if it does
happen -- as some U.S. economists predict -- she might have to pack her
bags.
"It would be as if my mom would be paying $1,500 for every $1,000 I charge
up here, and that just wouldn't work," she said.
Budd offers a bit of reassurance. "I was just on the phone yesterday with
Brazil, and people say that things aren't so bad," she says. "Inflation is now
near zero. And if you really have a good attitude, you can still make a lot of
money down there."
Budd, who left her home in Rio de Janeiro nine years ago to come to San
Diego with her Wisconsin-born husband, pins her hopes on President
Fernando Henrique Cardoso, who is running for re-election tomorrow.
"He did a very good job of taming inflation, which used to be about 500
percent per month," she says. "Hopefully, he'll be able to do the same for the
rest of the problems facing the country."
Throughout the local Brazilian community similar conversations are taking
place. College students and entrepreneurs alike hope that the International
Monetary Fund or another financial savior will step in to provide aid to their
homeland before it goes into an economic nosedive.
At the computer sciences laboratory at the University of California San Diego,
doctoral candidates Marcio Faerman and Walfredo Cirne are most
concerned about the growing gap between the rich and the poor in their
homeland.
Because both are in the United States on educational grants, paid in U.S.
dollars by the Brazilian government, they would suffer no direct effect from a
devaluation. But they fear that as the government embarks on
IMF-recommended cost-cutting measures, social programs will be cut back
and poverty will grow, laying the groundwork for political unrest.
"In general, everyone's worried about the situation," Faerman says. "This is a
worldwide problem, knocking one economy down after the other."
Cirne, who plans to return to Brazil after completing his education in two
years, says he is very worried about the future of his country. He believes that
the current government has done a good job in taming inflation.
But he adds that pulling the reins in on inflation is only half the work. "Brazil
has very serious problems in terms of poverty and the lack of education for
the poor, and the current government doesn't seem to be doing anything to
solve that," he says.
Ricardo Tavares, a Brazilian expatriate studying for a doctorate in
international relations at UCSD, says that because there is so much trade
between the United States and Latin America, the United States should be
more concerned about the deteriorating situation in Brazil.
Brazil does about $1.5 billion in trade with California each year. And it ranks
as San Diego's 11th-biggest export market.
In 1996, the last year for which comprehensive figures are available, Brazil
bought $10.3 million in goods from San Diego. Since then that figure has risen
considerably, thanks to recent contracts with Qualcomm and other
telecommunications providers.
More important, because Brazil is Latin America's most powerful economy, a
downturn there could have a ripple effect leading straight to the U.S. borders.
"If Brazil goes down, all of Latin America will follow, including Mexico,"
Tavares says. "From San Diego to Chicago to the East Coast, manufacturers
will feel the impact of that kind of collapse."
Tavares says that unless the IMF or another agency steps in to help within the
next few weeks, "the attacks on the currency will continue and the country
could collapse by the end of next year."
Copyright 1998 Union-Tribune Publishing Co. |
