Retired general Ernesto Geisel (1974–79) was
elected to the presidency with Médici's approval in 1974, a year after the
oil crisis. Geisel was a well-connected army general and former president of
Petrobras. There had been intense behind-the-scenes maneuvering by the hard-liners against him, but also by the more moderate supporters of Castelo Branco in his support. Geisel's older brother Orlando Geisel was the Minister of Army, and his close ally General João Batista Figueiredo was chief of Médici's military staff. Once in power, Geisel adopted a more moderate stance with regard to political opposition than Médici's.
Decompression policy Although not immediately understood by civilians, Geisel's accession signaled a move toward a less oppressive rule. He replaced several regional commanders with trusted officers and labeled his political programmes "'
" (opening) and ' (decompression), meaning a gradual relaxation of authoritarian rule. It would be, in his words, "the maximum of development possible with the minimum of indispensable security". Together with his
Chief of Staff,
Golbery do Couto e Silva, Geisel devised a plan of gradual, slow democratization that succeeded despite threats and opposition from the hard-liners. But the torture of the regime's left-wing and Communist opponents by
DOI-CODI was still ongoing, as demonstrated by the murder of
Vladimir Herzog. Geisel allowed the opposition Brazilian Democratic Movement (MDB) to run an almost free election campaign before the
November 1974 elections, and the MDB won more votes than ever. When the MDB won more seats in the 1976 Congress elections, Geisel used the powers granted to him by AI-5 to dismiss Congress in April 1977, and introduced a new set of laws (April Package) that made gubernatorial elections indirect and created an electoral college for electing the next president, thus safeguarding ARENA positions. In 1977 and 1978 the presidential succession issue caused further political confrontation with the hard-liners. In October 1977 Geisel suddenly dismissed the far-right Minister of the Army, General
Sylvio Frota, who had tried to become a candidate for the next presidency. In May 1978 Geisel faced the
first labour strikes since 1964. Over 500,000 workers led by the future president
Lula da Silva demanded and won a 11% wage increase. By the end of his presidency Geisel had allowed exiled citizens to return, restored habeas corpus, repealed the extraordinary powers, ended the Fifth Institutional Act in December 1978, and instated General João Figueiredo as his successor in March 1979.
Economy was the first prototype engineered with an ethanol-only engine. Exhibit at the
Memorial Aeroespacial Brasileiro,
CTA,
São José dos Campos. Geisel sought to maintain the high economic growth rates of the Brazilian Miracle which were tied to maintaining the prestige of the regime, even while seeking to deal with the effects of the 1973 oil crisis. Geisel removed the long-time Minister of Finance
Antônio Delfim Netto. He maintained massive state investments in infrastructure—motorways, telecommunications, hydroelectric dams, mineral extraction, factories, and nuclear energy. All this required more international borrowing and increased state debt. Fending off nationalist objections, he opened Brazil to oil prospecting by foreign firms for the first time since the early 1950s. Geisel also tried to reduce Brazil's reliance on oil by signing a US$10 billion agreement with West Germany to build eight nuclear reactors in Brazil. During this time, an
ethanol production initiative was promoted as an alternative to gasoline and the first ethanol fueled cars were produced in the country. Brazil suffered drastic reductions in its terms of trade as a result of the oil crisis. In the early 1970s, the performance of the export sector was undermined by an overvalued currency. With the trade balance under pressure, the oil shock led to a sharply higher import bill. Thus, the Geisel government borrowed billions of dollars to see Brazil through the oil crisis. This strategy was effective in promoting growth, but it also raised Brazil's import requirements markedly, increasing the already large current-account deficit. The current account was financed by running up the foreign debt. The expectation was that the combined effects of
import substitution industrialization and export expansion eventually would bring about growing trade surpluses, allowing the service and repayment of the foreign debt. addresses the
Brazilian Congress, 30 March 1978. Brazil shifted its foreign policy to meet its economic needs. "Responsible pragmatism" replaced strict alignment with the United States and a worldview based on ideological frontiers and blocs of nations. Because Brazil was 80% dependent on imported oil, Geisel shifted the country from uncritical support of
Israel to a more neutral stance on Middle Eastern affairs. His government also recognized the People's Republic of China and the new socialist governments of
Angola and
Mozambique, both former Portuguese colonies. The government moved closer to Latin America, Europe, and Japan. Brazil's intention to build nuclear reactors with West Germany's help created tensions with the U.S. which did not want to see a nuclear Brazil. After the election of Jimmy Carter as president, a greater emphasis was put on human rights. The new
Harkin Amendment limited American military assistance to countries with human rights violations. Brazilian right-wingers and military viewed this as an incursion on Brazilian sovereignty and Geisel renounced any future military aid from the United States in April 1977. ==Transition to democracy, Figueiredo==