Here is some more about The Jerk (we have The Creep):
January 13, 1999
Americas
Latin American Markets Exasperated
With Itamar Franco's Debt Moratorium
By PETER FRITSCH
Staff Reporter of THE WALL STREET JOURNAL
SAO PAULO, Brazil -- A Brazilian state governor has become a serious
irritant to emerging markets since declaring a moratorium on debt
payments owed the central government.
The decision by Minas Gerais Gov. Itamar Franco is particularly
nettlesome at a time when investors are unwilling to cede Brazil, a
bellwether market for the region, even the slimmest margin for error.
Since Mr. Franco last week said he would
stop payment for 90 days on his state's $15
billion in federal debt, Latin American
emerging markets have fallen sharply, doing so again Tuesday.
But as markets react to his decision and the Brazilian government retaliates
by slashing disbursements to his state, Mr. Franco's rhetoric is becoming
only shriller. He compares the beleaguered government of President
Fernando Henrique Cardoso to a "loan shark," extracting usurious interest
rates from distressed borrowers.
The protagonist of this drama is seen by the vast majority of political
commentators here as a bitter man who squandered his only other
appearance on the national stage. Mr. Franco, 68 years old, had enjoyed a
long and undistinguished career as a senator from Minas Gerais when
former President Fernando Collor made him his vice president in 1991.
When Mr. Collor was forced to resign amid corruption allegations in
mid-1992, Mr. Franco became the reluctant head of state, announcing his
desire to leave office within a year.
Supreme Indecision
Inheriting a political crisis on top of a burgeoning economic crisis, Mr.
Franco reacted with supreme indecision. No fewer than 43 cabinet
ministers came and went in the course of his two-year administration. He
ran through four finance ministers and three central bank presidents in his
first year in office, with a passel of other ministers quitting in a huff. Public
Administration Minister Luiza Erundina stepped down in 1993, declaring
she had never met "a stupider person than Itamar." (His rejoinder: "That
stupidity became clear when I named her.")
Mr. Franco possesses a hair-trigger temper,
known for lashing out at photographers like an
unreformed Sean Penn. As president, he axed
dissenting ambassadors at the drop of a hat and
wasn't above firing off news releases to decry the
scribblings of political cartoonists. The press tarred
him a hapless clown during carnival celebrations
when photographers caught him dancing with a
model who was wearing no underwear.
At the same time, Mr. Franco was an adherent to
the free-market reforms begun by Mr. Collor, even
if he wasn't their most stalwart champion. He
threatened to derail the budding privatization program early in his term by
meddling in the role of the state development bank and insisting on final say
regarding minimum bid prices for state companies. But while Mr. Franco
may have been in over his head in many respects, he left one important
legacy: the appointment of Mr. Cardoso as finance minister.
From that post, Mr. Cardoso conceived the so-called Real Plan, which
stabilized the currency and licked Brazil's bruising inflation. The plan and its
creator quickly overshadowed the drift associated with Mr. Franco,
vaulting Mr. Cardoso to the presidency in 1994. Mr. Franco, unable by
law to seek re-election, quietly accepted the ambassador's post in
Portugal, later becoming ambassador to the Organization of American
States in 1996.
Deep Resentment
Mr. Franco's friends say he harbors a deep resentment toward Mr.
Cardoso for having received so little credit for his hand in bringing stability
-- albeit a still fragile stability -- to Brazil. Mr. Franco himself hinted at the
hurt in a recent interview with newspaper O Estado de Sao Paulo. "If we
were to break it down to a mathematical equation, [Mr. Cardoso] owes
me a lot more than I owe him... . I made him the presidential candidate."
Former President Tancredo Neves once said Mr. Franco has an uncanny
ability to "preserve his hates in the freezer."
As Mr. Cardoso's reform effort picked up speed, Mr. Franco suddenly
became a strident government critic, blasting the government from his
ambassadorial posts for major privatizations and the adoption of high
interest rates in defense of the currency. He bristled especially at Mr.
Cardoso's ability to pass a law allowing him to seek re-election. By 1998,
Mr. Franco had decided to seek the presidency he was once so eager to
leave behind. But his Democratic Movement Party unceremoniously
ignored him at its national convention, choosing instead to support Mr.
Cardoso of the Social Democratic Party. Rebuffed and embittered, Mr.
Franco ran for governor of Minas Gerais, defeating Social Democratic
incumbent Eduardo Azeredo in a runoff.
Sworn in earlier this month, Mr. Franco wasted little time working his way
back into the media's starting lineup, declaring the debt moratorium in his
first week in office. Though Mr. Franco claims he took the action (which
violates a contract signed last year by Mr. Azeredo and approved by the
state legislature) because of a lack of money to pay, cynics see an ulterior
motive. "He appears to be looking to the presidency in 2002 with little
consideration for the damage he is doing to Brazil in the meantime," said
former Finance Minister Marcilio Marques Moreira. Added Antonio
Carlos Magalhaes, the powerful Senate president: "Itamar is trying to take
the lead of the opposition, but he's being stupid. He'll end up isolated." |
