After elections, Brazil's Cardoso must mend fences
Reuters, Monday, October 26, 1998 at 16:17
By Joelle Diderich
BRASILIA, Oct 26 (Reuters) - Brazilian President Fernando
Henrique Cardoso will have to nurse battered egos and nourish
old friendships after state elections called into question his
power to push through measures to save the troubled economy.
Cardoso saw an ally elected governor in Sao Paulo, Brazil's
wealthiest and most populous state. But supporters were
defeated elsewhere in Sunday's elections and analysts said on
Monday that this would complicate his already daunting
challenge of preventing a currency collapse.
The president needs broad congressional support for a
three-year fiscal plan -- expected to be announced on Tuesday
or on Wednesday -- aimed at saving or raising at least $20
billion and clearing the way for an international financial aid
package.
While the regional elections results held few surprises,
they have raised some doubts about how quickly Cardoso can get
the plan through Congress to qualify Brazil for an expected $30
billion credit line led by the International Monetary Fund.
"The president is in a difficult situation, but I don't
consider it impossible," said Ricardo Pedreira, political
analyst at consultancy Santa Fe Ideias. "The government now has
to play hardball with all the big guns at its disposal."
Brazil's state governors enjoy wide spending and taxing
powers and influence the way their states' delegations vote in
Congress.
Long-time Cardoso ally and friend Mario Covas, who has won
praise for his fiscal restraint and cost-cutting measures, was
re-elected governor of economic powerhouse Sao Paulo state.
But the victory of opposition candidates in Brazil's three
other big states -- Rio de Janeiro, Minas Gerais and Rio Grande
do Sul -- might complicate the president's attempts to include
local governments in Brazil's fiscal drive.
As a result, the president may postpone by a week a vote on
three remaining amendments to long-delayed social security
reform, initially scheduled for Nov. 3, giving him time to
garner support in the Chamber of Deputies, analysts said.
This would push back voting in Congress on a new, reduced
version of the 1999 federal budget and measures contained in
the fiscal plan, raising the prospect of lawmakers holding an
extraordinary session in January to complete voting.
It was unclear whether the IMF would delay announcing a
loan for Brazil until all the fiscal reform steps have been
voted on by Congress, or whether it would be enough for
Congress to express support for the austerity drive, economists
said.
Even so, some thought political spats were a minor obstacle
compared to the challenge that faces the government now --
actually implementing fiscal reforms in local governments.
"This is an initial emotional reaction but I don't think it
will be a big obstacle," said Marcelo Allain, economist at BMC
Bank in Sao Paulo. "Another question which is just as important
is the execution over the next four years."
One of Cardoso's main challenges now will be to mend fences
with candidates defeated on Sunday, some of whom are bitter the
president failed to support them despite their loyalty in the
past, analysts said.
"The big problem will be the discontent and the open wounds
which were left over from the electoral dispute," said
Pedreira.
Paulo Maluf, the leader of the Brazilian Progressive Party
(PPB) who has helped push through reforms in Congress, was said
to be upset after Cardoso taped television advertisements for
Covas in the Sao Paulo state campaign.
Supporters of former President Itamar Franco, who won Minas
Gerais state, were also irritated that the government threw all
its support behind incumbent Gov. Eduardo Azeredo, who belongs
to Cardoso's Brazilian Social Democratic Party (PSDB).
Franco, of the government-allied Brazilian Democratic
Movement Party (PMDB), has been an increasingly vocal critic of
the pro-market policies of Cardoso, who was formerly his
finance minister.
Copyright 1998, Reuters News Service |
