Brazil's Franco To Run For PMDB Head,Eyes '02 Presidency
July 10, 2001
SAO PAULO -- Minas Gerais governor and fierce government critic Itamar Franco is planning to run for the leadership of one of Brazil's biggest political parties with a view to becoming a front-running candidate for president at next year's election.
According to a spokeswoman for Franco Tuesday, the governor will run for president of the Brazilian Democratic Movement Party, or PMDB. The PMDB, which is part of the ruling coalition, is Brazil's largest party in the Senate and the third biggest in the lower house of deputies.
If Franco wins at a Sept. 9 party convention, he will be able to put his name forward as a presidential candidate. The party is currently being run by Sen. Maguito Vilela, an interim president of the party.
Ultimately, this could spell broader trouble for a fragile five-party coalition grappling with stalled reform measures and an unpopular energy-rationing program. Also, Franco's possible victory would weaken the position of archrival Jader Barbalho - the Senate's president who is mired in corruption allegations.
But the widely expected ascendancy of archrival and pro-opposition player Franco within the party would also likely lead to the PMDB's exit of the five-party coalition.
Investors have already been fretting that political turmoil will put the brakes on key reforms before market-friendly President Fernando Henrique Cardoso steps down next year, all of which has helped push Brazil's currency, stocks, and bonds lower in recent months.
Key market reforms on the agenda include a corporate governance law aimed at improving shareholder rights, a mini-tax-reforms package geared to boosting exports, and the renewal of a controversial financial transactions tax.
Political scientists believe that Franco's likely arrival would do much to hurt this process with the possible exit of the PMDB within the coalition, which could continue to maintain control of Congress but find it much harder to get key laws passed.
PMDB Seen Supporting Barbalho For Now, But May Wane
On the Barbalho front, the PMDB is expected to continue to support the Senate head for now, but the party could change its colors in support of Franco and improving its chances of winning at next year's presidential elections, say political scientists.
Barbalho is being questioned Tuesday by the Federal Police over allegations that he was involved in a scheme to sell rural debt securities illegally issued by his home state of Para. Barbalho has denied any wrongdoing.
The same scientists believe the president of the Senate has three to six months of office left before he decides to step down or is pushed.
If forced to step down, Barbalho's removal would paralyze the Senate for about two weeks, experts say, as sides would be consumed with seeing their candidate win.
Other accusations hurting Barbalho's image include the misappropriation of funds from the state bank of Para and a now extinct government-run regional aid program to the Amazon, known as Sudam. Also, his wife Marcia Cristina Zaluth Centeno has allegedly received some BRR9.6 million ($1=BRR2.4525) from the Sudam program to build a frog farm in the state of Para. Reports have put estimates for the original cost of the project at BRR800,000. She has denied any wrongdoing.
-By Anthony Dovkants, Dow Jones Newswires;55-11-3145-1478; anthony.dovkants@dowjones.com |
