The Gap-toothed Power Broker Known as ‘Bad Tony’:

Profile of Antonio Carlos Magalhães [1]

 

April 19, 1999

 

 

Introduction

This is the story of a shrewd politician who has, for 45 years, managed to adeptly maneuver between the complexity of Brazilian politics to emerge as the most powerful politician in Brazil, a very wealthy man, and very possibly the next president of Brazil. Quentin Peel’s characterization of Antonio Carlos Magalhães and his political party in an article published in the Financial Times, 17 May 1995, is typical of descriptions throughout all available media reports in English: “[the Partido da Frente Liberal, PFL] is a conservative group dominated by old-style political bosses, and effectively controlled by Antonio Carlos Magalhães, regional baron from the state of Bahia.” Yet Magalhães in particular, and the PFL more generally, constitute the critical backbone of Fernando Henrique Cardoso’s political support.

 

What follows is an attempt to trace the political trajectory of Antonio Carlos Magalhães, known to be guarded about his life, despite his gregariousness as a political campaigner, and about whom not much is written. (A Bahian doctoral candidate at the Instituto Universitário de Pesquisa do Rio de Janeiro, Paulo Augusto Lopes, is at present working on a dissertation on him).[2] This essay is not just a profile of a powerful politician, however; it is a case study of the perennial contradictions of Brazilian politics.

 

Entry into Politics

Antonio Carlos Peixoto de Magalhães was born in 1927 in Salvador, Bahia, into an urban middle class family—unlike the traditional Northeast landed elite, but nevertheless destined to end up representing its interests. ACM, as he is popularly known, got involved in state politics from 1954, and was elected governor of Bahia in 1970. Described as a “mainstay” of the 1964-1985 military regime, during which, between the end of his first governship in 1975, and the beginning of his second in 1978, he ran the giant Eletrobras power utility company.

 

Magalhães’ power has been described as based on “a genius for politics, ruthlessness, and deft timing in negotiating Brazil’s swings between civilian and military government.”[3]

Under President João Figueiredo, ACM was a part of the group, along with José Sarney, that at the last minute broke away from the military faction, the Partido Democratico Social (PDS) in 1984, to form the Partido da Frente Liberal (PFL). The PDS was the 1979 reincarnation of the ARENA party that had provided the partisan support for the military regime (Mainwaring 1997, 67-8). By this time, Magalhães was no longer governor of Bahia, but was President of the Bahian Foundation for Economic and Social Studies. The PFL’s support, allied with the Partido Movimento Democratico Brasileiro (PMDB), was critical for the victory in the indirect election of Tancredo Neves, the “opposition” candidate to Pedro Maluf, the “official” candidate, to the presidency in 1985.

 

Magalhães the Entrepreneur

Part of the ‘reward’ for his support of Neves was the post of Minister of Communications in the civilian government of José Sarney, who made good on Neves’ political debts. Neves had also enjoyed strong support from Roberto Marinho, the owner of the Globo television network during the campaign, which was crucial in a country where television is the primary means of mass communication, particularly because of the high rate of functional illiteracy (Page 1995, 169). Magalhães is very close friends with Marinho. Magalhães became the strongest member of Sarney’s cabinet and one of his chief advisers (Chaffee 1998, 154). Globo’s support for Sarney continued after he assumed the presidency upon Neves’ untimely death; Marinho went on to make some profitable business deals with the government (Page 1995, 172).

 

As Minister of Communications, Magalhães made the shrewd business deal of acquiring  Bahia’s five main broadcasting concessions, upon which Marinho switched the Globo broadcasting franchise in the Northeast to Magalhães. The Globo network, aside from its impressive political connections, enjoys total dominance of the highly profitable telenovela market (Page 1995, 172; 460). The timing of ACM’s move was critical, because under the military regime, telenovelas were highly censored, so that from 1985 on, viewership was expanding exponentially throughout Brazil (in doubt with a good measure of action on the part of the Communications Ministry). Globo in short order began the profitable venture of exporting its massively popular telenovelas to 128 countries. Marinho today is worth one billion dollars. (Ibid, 445-6). 

 

Today, the Magalhães family controls the largest communications group in North and Northeast Brazil, comprising some 14 companies—including a Bahian newspaper, Correio da Bahia, which does not hesitate to praise ACM in the editorial pages—with 1997 revenues of (the equivalent of) R$132m, and net profits of R$10m. The president of the controlling company is ACM’s son, Antonio Carlos Magalhães Jr.[4]

 

The Emperor of Bahia

Magalhães’ power base is Bahia, where he was born and based until his election to the federal senate in 1994. (He is president of the Senate.) The most populous state in the devastatingly poor Northeast of Brazil, the contrast with southern Brazil has been described with this telling analogy: “Applying the United Nations’ human-development criteria, southern Brazil approximates the poorer countries of Europe; the north-east is more like those of Africa.”[5]

 

Though he is no longer in the state government, his third and so far last stint of governor being 1990-4, after which he was elected as senator, popular wisdom has it that he handpicked his successor, Paulo Souto. Angus Foster in a 1996 survey of Bahia in the Financial Times, claims that Magalhães retains “an iron grip on the state,” a charge repeated by The Economist, who described ACM as “an ageing, portly but forceful former governor of [Bahia], and now one of its national senators… he runs Bahia as his private fief.”[6]  Even if these aspersions are not completely justified, his hold on Bahian politics is such that political divisions in the state are referred to as Carlista and anti-Carlista (drawing on his second name Carlos).[7] Foster also reports that Magalhães’ “opponents often claim he is partly responsible for Bahia’s underdevelopment.”

 

But Bahia cannot fairly be described as a total disaster in terms of its economy. Huge state investments in the 1970s, when ACM was first elected governor, were channelled into a petro-chemical complex near Salvador, installed by the military government; it is Brazil’s largest.  Since 1980, Bahia’s industrial output, aided by big private investment ventures in chemicals, pulp and paper, is up 64%. An ambitious tourism plan that was started in 1991 to capitalize on Bahia’s cultural riches has met with great success. More recently, the first planned resort in Brazil, to be located on the Bahian coast, with an initial US$215m price tag, was launched.[8] There has certainly been growth in the tourism industry, judging from the increase in international flights coming into Salvador, from one per week in 1991 to 23 per week in 1998.[9]

 

In 1998, Bahia stood out as the Brazilian state to gain the most competitiveness at the national level, making it the seventh most competitive state, an achievement attributed to development trends in tourism, industry and public services.[10] A 1998 Ernst & Young report claimed that Bahia has the fastest-growing per capita income in Latin America.[11] Education is the stated “top priority” for Bahia’s state government, with plans to lift enrolment rates in primary schools from 80% to 98% by 2002, and in secondary schools from 22% to 40%.[12]

 

According to Magalhães himself, “if Bahia is changing as they say, it’s thanks to me”[13]

 

The Conservative and the Dependentista: Magalhães and Cardoso

It is widely acknowledged that Fernando Henrique Cardoso won the presidency of Brazil in 1994 based on the success of his Real Plan (Roett 1997, 20). The Real Plan, as intelligently designed as it was, however, would never have been allowed to be implemented, were it not for the support of the political parties of the centre-right, especially the PFL (Resende-Santos 1997, 186). Their legislative support was key to the passing of the drastic reform measures in Congress. Indeed, Resende-Santos argues that the PFL may actually have pressured Cardoso “to go much faster and further than he may have wanted or anticipated,” given his own (Cardoso’s) “socially necessary” concerns (Ibid, 186). This was in marked contrast to Magalhães’s open opposition to President Itamar Franco’s economic reform proposals (Chaffee 1998, 22).

 

Cardoso’s candidacy for the presidency could well have been futile were it not for the PFL, who delivered millions of votes for him from Bahia, where Cardoso was unknown.[14] Cardoso repaid the PFL’s support by choosing as his vice president PFL Senator Marco Maciel. At the time of the elections, observers thought the ideological differences between the two men would augur a break once Cardoso won the presidency. However, this view was rejected by Magalhães’ political opponents in Bahia, some of whom were once his allies; it is reported that one such former ally cautioned that ACM is a dangerous man to betray, stating, “Some of us still don’t sleep well, even years later.”[15]

 

Nevertheless, Cardoso has continued to seek and receive support from Magalhães and the PFL, at the same time as, ironically, he faces a great deal of opposition from his own party. Cardoso’s reliance on Magalhães’ support could even be suggested as dependency. Support for this argument can be inferred from an interesting situation which arose in 1995. When a private Bahian bank, Banco Economico, went bust, Cardoso, confronted and threatened by Magalhães, was about to give in to ACM’s demands that the bank be bailed out by the Central Bank but handed over to the state government to control. The entire board of the Central Bank threatened to resign in response, and Cardoso personally was caught between the two, desperately trying to find a solution to please them both.[16] (The crisis was eventually resolved by a deal where a São Paulo bank, in partnership with a Swiss bank, took control, with capital from the Central Bank.)[17]

 

At face value, Cardoso and Magalhães would appear to be irreconcilably different. Their political ideologies and trajectories are diametrically opposed—especially when one considers that Cardoso went into exile under the rule of the military government, of which Magalhães was a mainstay. They even differ in their political style: on his first day as interim president of Brazil, Magalhães gave an informal press conference in the president’s chambers, in which Cardoso himself never grants press conferences.[18] Yet it remains that “the most powerful conservative group, the PFL, representing the most traditional social interests in the country, is the principal advocate of market-oriented reforms” (Roett 1997, 28).

 

Despite this apparently happy tale of opposites working together, this ideological diversity has posed problems for Cardoso: Cardoso’s hopes of accelerating land reform are opposed by the largely landowning leaders of the PFL.[19] Similarly, the PFL is not pro-reform in the area of political institutional changes. Nevertheless, the PFL continues to strongly support economic liberalization and market reforms (Roett 1997, 27). As Riordan Roett puts it:

The economic philosophy of the party [the PFL] favors the modernization of the national economy, competitiveness, and increased foreign investment; but the leadership does not appear to see any linkage between a more efficient and productive economy and the probable need for more democratic and representative institutions in Brazil. (Ibid, 28)

 

Conclusion: President of Brazil, Antonio Carlos Magalhães?

Magalhães appears to be interested in presenting himself as a viable alternative for the succession of President Cardoso in 2002. Luis Eduardo, his son, who was widely seen as the natural inheritor of ACM’s political maquina, was already planning his campaign for the presidency in 2002, when he died suddenly in April 1998.[20]

 

Antonio Carlos Magalhães is perhaps the ultimate personification of the complexities and paradoxes of the Brazilian political system. He broke from one political party to form another at just the right time, so that he carried his power and influence over from the military to the civilian regime. That timely support for Neves and Sarney won him a strategic ministry that provided access to an extremely profitable business venture, and the power to make the conditions for the expansion of that sector opportune. The state under his heavy-handed control, Bahia, is apparently on the verge of real economic and social progress. He backed Cardoso, his ideological opposite, and in so doing brought to power perhaps the most progressive president in Brazilian history. He continues to throw his support behind Cardoso’s decidedly anti-populist reforms, despite having built his political base on traditional, conservative politics. In an extremely fragmented and incoherent political system—which has served ACM’s interests well—his party, the PFL, is one of only two coherent parties in Brazil (the other is the PT, Partido dos Trabalhadores).

 

The phenomenon of an Antonio Carlos Magalhães is more about the Brazilian political system than about ACM himself, however. As Angus Foster astutely observes, the Brazilian political system, organized as it is around individuals instead of ideology, “by allowing Mr. Magalhães’ preeminence, has stunted the development of effective opposition and interest groups to represent the many excluded sectors of society. But most opposition politicians, on the occasions they have held power, have employed the same populist initiatives Mr. Magalhães has perfected.”[21]


References

 

Chaffee, Wilber Albert. 1998. Desenvolvimento: Politics and Economy in Brazil. Boulder, Colorado: Lynne Rienner Publishers.

 

Mainwaring, Scott. 1997. “Multipartism, Robust Federalism, and Presidentialism in Brazil.” In Presidentialism and Democracy in Latin America, edited by Scott Mainwaring and Matthew Shugart, 55-109. Cambridge: Cambridge University Press.

 

Page, Joseph. 1995. The Brazilians. Reading, Massachusetts: Addison-Wesley Publishing Company.

 

Resende-Santos, João. 1997. “Fernando Henrique Cardoso: Social and Institutional Rebuilding in Brazil.” In Technopols: Freeing Politics and Markets in Latin America in the 1990s, edited by Jorge Dominguez, 145-194. University Park, Pennsylvania: The Pennsylvania State University Press.

 

Roett, Riordan. 1997. “Brazilian Politics at Century’s End.” In Brazil Under Cardoso, edited by Riordan Roett and Susan Kaufman Purcell, 19-41. Boulder, Colorado: Lynne Rienner Publishers.



[1] Ian Simpson, “Brazil’s ‘Bad Tony’ heavyweight in reform brawl,” Reuters North American Wire, 10 February 1995.

[2] Abreu, Alice Rangel de Paiva. Letter to author, 13 April 1999.

[3] Ian Simpson, Ibid.

[4]Magalhães led group integrates partners,” Gazeta Mercantil Online, 24 June 1998.

[5] The Americas: Brazil. The Economist, 29 August 1998, 5.

[6] International: Brazil. The Economist, 26 August 1995, 8.

[7] Angus Foster, “Survey – Brazil and the state of Bahia: Mirror to the motherland,” Financial Times, 6 June 1996, 6.

[8] The Americas: Brazil. The Economist, 29 August 1998, 5.

[9] Marcia Guena, “Salvador receives new airline companies,” Gazeta Mercantil Online, 2 July 1998.

[10]Bahia State gains most in competitiveness,” Gazeta Mercantil Online, 4 September 1998.

[11] Rosalind Mclymont, “Brazil’s Bahia touts itself as center for manufacturing and distribution,” Journal of Commerce, 27 May 1998, 13C.

[12] The Americas: Brazil. The Economist, 29 August 1998, 38.

[13] Angus Foster, “Survey – Brazil and the state of Bahia: Senator with staying power,” Financial Times, 6 June 1996, 7.

[14] Angus Foster, “Cardoso looks to help of ‘sovereign ruler’: ACM, the Brazilian politician who can deliver millions of votes for the president,” Financial Times, 1 October 1994, 2.

[15] Ibid.

[16] International: Brazil. The Economist, 26 August 1995, 8.

[17] Angus Foster, “Survey – Brazil and the state of Bahia: A victim of stability,” Financial Times, 6 June 1996, 8.

[18] Luis Eduardo Leal, “Magalhães assumes presidency and criticizes MST,” Gazeta Mercantil Online, 19 May 1998.

[19] Angus Foster, “Survey – Brazil and the state of Bahia: An increasingly tangled web,” Financial Times, 6 June 1996, 3.

[20] “Obituary of Luis Eduardo Magalhães, politician who held together the broad coalition which has boosted Brazil’s economy,” Daily Telegraph, 30 April 1998, 35.

[21] Angus Foster, “Survey – Brazil and the state of Bahia: Mirror to the motherland,” Financial Times, 6 June 1996, 6.