Federalism has increasingly shaped Brazilian politics in the 1990s. Because the military regime of 1964 to 1985 heavily centralized government in Brasilia, civilian political forces since 1985, in reaction, have expanded decentralization in the name of representation and participation. Institutional reforms, free-market (neoliberal) policies, and privatizations since 1990 have moved the country away from the legacy of statist authoritarian rule. The executive has lost power to the legislative and judicial branches, the union to states and municipalities, and the state to society, private enterprise, and market forces. The Constitution of 1988 recognized the local government units called municipios (loosely, municipalities) as component parts of the federation and shifted considerable political power and tax resources from the federal government to the states and municipalities (Selcher 1989). By the mid-1990s, however, defects and deadlocks in the functioning of the federal system, including its regional aspects, raised issues of representativeness, accountability, governance, distribution of resources, and fiscal soundness that began to stifle progress toward modernization, greater democratization, and solution of social problems. Brazil has become a federal state that is increasingly difficult to manage. A fragmentation of localized interests characterizes its political process, seriously hindering the building of broader coalitions necessary for a national perspective or sense of national interest in the political class and for a truly national politics. The purpose of this article is to identify and analyze some of these problematical features, tendencies, and issues in Brazilian federalism today, and to trace the essence of the national debate on its future. Brazil is a very large and complex country that, in the 1990s, has been dealing simultaneously with several powerful centrifugal forces of change. Brusque and rapid trade liberalization, free-market reforms, economic