Brazil Awaits Election Outcome
Thursday, 22 October 1998
S A O P A U L O , B R A Z I L (AP)
PRESIDENT FERNANDO Henrique Cardoso's efforts to repair the largest
economy in Latin America may depend on the outcome of this weekend's
gubernatorial elections.
Cardoso wants to impose tough measures that would slash government
spending and impose new taxes to try to halt the slide in Brazil's economy
and restore investor confidence.
But his plan, expected to be unveiled next week, must be approved by
Congress, and state governors have enormous sway over local
delegations.
"The influence governors have on their congressional blocs is
overwhelming," said University of Sao Paulo political scientist Eduardo
Kugelmas.
Brazil has been caught up in the financial turmoil that began more than a
year ago in Southeast Asia. As wary investors have fled its financial
markets, Brazil's foreign reserves have fallen below $50 billion from $70
billion at the end of July.
On Sunday, voters return to the polls for runoff elections in 12 states and in
the Federal District of Brasilia.
The outcome will likely determine how successful Cardoso is in getting
Congress to approve his economic program, which is aimed at trimming
the budget deficit. New income, fuel and bank transaction taxes are
expected to be proposed.
Kugelmas said opponents of the president stand a good chance of winning
in four large states - Sao Paulo, Minas Gerais, Rio de Janeiro and Rio
Grande do Sul.
"If they win, the president will face a tough uphill battle," he said.
Cardoso needs the governors' support not only in influencing the
congressional delegations, but also in holding down their own spending.
"The problem is that none of the candidates in Sunday's elections ... wants
to be identified with unpopular austerity measures," said Kugelmas. "So
they promise to spend more money on schools, hospitals and public work
projects."
Sao Paulo, Brazil's industrial and financial powerhouse, is perhaps the state
most critical to the success of Cardoso's austerity plans.
With more than 34 million inhabitants, nearly equal to the entire population
of neighboring Argentina, it alone accounts for more than one-third of
Brazil's economic output and 70 of the 513 congressional seats.
While incumbent governor Mario Covas, a Cardoso ally who is seeking
re-election, has committed himself to the austerity plan, Covas opponent
Paulo Maluf is a question mark.
"If Maluf wins, he will use his victory as a launching pad to the presidency
in 2003," Kugelmas predicted. "And that means he will try to stay as far
away as possible from any austerity measure." |
