Only a year ago, Brazilians were full of confidence that their country was poised to surge into the 21st century, that perhaps it was finally on the road to becoming the great power many had long imagined it would be. In 1994, Finance Minister Fernando Henrique Cardoso, a former Marxist professor of sociology turned neoliberal reformer, had masterminded a sweeping currency reform--the Real Plan--which joined other liberalizing measures and thrust Brazil, with the world's eighth largest economy, into the forefront of the global trend toward open markets and free trade. Not only were Brazilians prospering but their decade-old democracy had found solid footing. Later in 1994, Cardoso was rewarded for his efforts as finance minister with the presidency, becoming Brazil's second directly elected civilian chief executive since the military surrendered power in 1985.

Then came the global economic crisis, beginning with the currency collapses in Southeast Asia in 1997, escalating with the Russian defaults last August, and landing with a crash on Brazil shortly after. Having failed, despite its many other successes, to get its fiscal house in order, Brazil found itself dangerously dependent on infusions of foreign capital to finance its trade and government deficits, struggling to stay afloat even as nervous investors fled with their dollars.

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