Crisis manager faces sharp test in Brazil

By Peter Burghardt

MUNICH (DPA): In Brazil, even important politicians are referred to by their first names. People generally call President Cardoso "Fernando Henrique." In his case, it has been possible up till now to interpret this familiarity as a sign of sympathy.

When he assumed office in 1994, the 67-year-old social scientist, who had taught at the Sorbonne, in Cambridge and Stanford, California had not exactly conjured up hopes of eternal Carnival. But he was regarded as a man who could be relied on. As one who despite approaching storms wanted to protect something valuable on behalf of Brazilians and foreign investors -- their money.

The currency of the world's eighth largest economy, a successful one till just recently, was his work. As a result, last autumn he was re-elected by an absolute majority, the first time a Brazilian president had been allowed to stand for a second term.

Cardoso, once a leftist, stubbornly defended the Plano Real, which put a stop to hyperinflation and gave people the security to plan -- even though interest rates sky-rocketed and the collapse of the real could hardly be prevented.

Since the floating exchange rate has shown that Brazil can no longer afford to follow the U.S. dollar, since recession has threatened and unemployment increased, anxiety has been growing that even the savior Cardoso might get bogged down.

For it is not just the tidal waves from Asia and Russia that have flooded the Copacabana. The economic crisis is also a political one.

Brazil is a continent in its own right, 24 times as large as Germany, and it unites the problems of Latin America -- social injustice, the flight from the countryside, violence, corruption, environmental pollution.

Sao Paulo is much closer to New York than to Recife. The parched north-east is more reminiscent of the African Sahel, and interests are correspondingly disparate. It is easy for a head of state to get tangled up in the undergrowth of this enormous territory, and with political control, the economic overview also gets lost.

Was it not just a short time ago that people were talking of the "golden nineties" following the "lost decade" of the eighties? But political culture did not keep pace with the neoliberal transformation which has rather split society in two.

The system may be reminiscent of the U.S. model, but the protagonists seldom are. The Brazilian states south of the Rio Grande are still treated by their elites as self-service stores.

One reason the public expenditure that feeds the budgetary deficit and debt mountain is so hard to control in Brazil is that so many hands are unashamedly dipped into it.

It was considered an advance when the last-but-one president, Collor de Mello, was impeached and chased out of Brasilia. But even the intellectual Cardoso has to buy many a deal. The magic word in Brazilian Portuguese is jeito, meaning trick.

Tinkering with the constitution to save your job is a favorite practice in Latin America, see for example Alberto Fujimori in Peru or Carlos Menem in Argentina. But the battle for the forbidden extended term of office takes strength, strength which is then not available for urgent projects.

It also costs money, for helpers want to see something in return.

Nepotism and cronyism are the enemy of the lean state. Awkward provincial potentates, in particular, take advantage of their power. Governor Franco of Minas Gerais state showed the way: the former head of state stopped debt repayments for 90 days, and investors ran away. In Brazil, it is every state for itself.

And political parties? Many do not even deserve the name. In Chile, the classical party spectrum of left, right and center may have survived the Pinochet dictatorship. But in large areas of the continent the parties which took over from the military are more like election clubs than homogeneous ideological groups.

In Brazil, where the two-party system was introduced by decree in 1966, the neoliberal Social Democrat Cardoso relies on his PSDB (Social Democratic Party) alliance, but in bad times it cannot always be relied upon.

He has no choice but to risk the tough battle against structural weaknesses and reform logjams, which also preoccupies less complex nations. Cardoso has zealously pursued privatization and, despite considerable resistance, is sounding the attack on pensions and taxes so as to fill the coffers and in turn gain international confidence.

Of course the economy measures hardly affect the six percent of the population of Brazil that shares half of the wealth. The Sim Terra movement of landless people is fighting for land that the big landowners say is their property. There has been no land reform.

The generals are hardly likely to keep on playing rescuer. With the exception of Chile they returned to the barracks because they lost control of the accounts.

A few dictators are even under house arrest, unleashing a debate about the violent past, which had quickly been suppressed in many places. Caudillos and political clowns are still popular.

At the end of the millennium, Latin America is still making heavy weather of grassroots democracy. Parliamentarism has never been able to assert itself against rigid presidentialism.

Henrique Fernando Cardoso was supposed to be a new kind of Latin American politician. Now he too must prove himself above all a man of action. He must use his strong position to force reforms on his country if need be.