Emperor Henrique I

Emperor Henrique I

If everything works as planned in Brasília,
Brazilians won’t have to worry about a new president until 2002. That’s
when President Fernando Henrique Cardoso would end his mandate, after being
reelected in a shoo-in dispute late next year. Though still disorganized,
the opposition promises to make life tough for the popular and apparently
undefeatable President, or King, as some would prefer to call him.

By Émerson Luís

The next presidential election in Brazil will not happen until October
4, 1998, but the new President has already been chosen. Unless something
very dramatic happens, Brazilians seem to have already settled on their
next President: Fernando Henrique Cardoso, the incumbent, who was elected
with 34.3 million votes (54.3% of all valid ballots) to end Brazilian endemic
inflation, which he did. That’s odd because, under the Brazilian constitution,
the President cannot be reelected. Nobody doubts, however, that the charter
will be amended in time to re-conduct Cardoso in the Palácio do
Planalto, the Brazilian White House.

The administration has been virtually paralyzed in the last few months
while the President and his ministers worked diligently to twist arms and
persuade unbelievers that the reelection of Cardoso is essential to keep
Brazil on the right track. It seemed a Herculean task, since the amendment
has to be approved twice by the members of the upper and lower houses of
Congress. But nobody doubted the President’s power of persuasion _ and
his deep pockets _ after the results of the first vote in the Câmara
dos Deputados (House of Representatives) on January 28: of the 513 deputados,
336 (or 65.5%) sided with Fernando Henrique, 28 more than the minimum required
to win. Cardoso celebrated the victory as an Emperor. He spent the weekend
at Palácio Rio Negro, in Petrópolis (Rio), a summer residence
of the imperial family. "He already was the prince of sociologists,"
commented jokingly political scientist Bolívar Lamounier. "Now,
he might very well become the monarch of politicians."

It’s disturbing to some observers that Cardoso is more popular than
ever among the population and in Congress since being inaugurated on January
1995. It was thought that legislators would be wary of a President who
has not been too attentive to Congress and who has been governing through
the extensive use of exceptional though legal provisional measures. Barely
a week goes by without one of these decrees being signed by the President.
By the end of January, 99 ordinances had been issued or reissued. Eighty
percent of the laws introduced in Brazil in the last two years came from
Cardoso’s mighty pen.

The government, with the backing of Cardoso’s own PSDB (Partido da Social
Democracia Brasileira — Brazilian Social Democracy Party), PFL (Partido
da Frente Liberal — Liberal Front Party), and PTB (Partido Trabalhista
Brasileiro — Brazilian Labor Party) seems poised to conduct the political
discourse from now on, unencumbered by a ragtag opposition. Political analysts
hope that the President will seize the momentum to tackle urgently needed
reforms in taxation, the government machine and social services. Cardoso
would still need a push from such large parties as PPB (Partido Progressista
Brasileiro _ Brazilian Progressive Party) and PMDB (Partido do Movimento
Democrático Brasileiro _ Brazilian Democratic Movement Party). Half
of these parties’ members backed the President on the reelection issue,
disregarding their leaders’ directive.

For the government, it was a string of victories as if a steamroller
had been loosed in Brasília. After winning the first round on the
reelection issue, the administration succeeded in making both congressional
leaders. Baiano (from Bahia) senator Antônio Carlos Magalhães
(PFL) won the presidency of the senate by an overwhelming majority (52
to 28). The next day, Cardoso enjoyed still another win when PMDB’s Michel
Temer received the necessary minimum (257 votes) in the House to become
the Speaker of the Chamber of Deputies. "We have done beard, mustache
and hair," commented an exhilarated PFL’s Luís Eduardo Magalhães,
the exiting house leader.

"No party was left unscathed," commented derisively congressman
and former Planning Minister Antônio Delfim Netto from the PPB after
being himself beaten. Main opposition leader and twice defeated candidate
to the presidency Luiz Inácio Lula da Silva from the PT (Partido
dos Trabalhadores — Workers’ Party) has called for an offensive to challenge
government expenses. "We run the risk of being left without a discourse,"
he explained.

The government’s victory should also alter the composition of the parties.
The victorious one should be getting new members consolidating this way
Cardoso’s newfound power. The PSBD should get the most benefits, collecting
up up to 120 deputados. The President himself has discouraged his
allies from trying to get people from the PMDB, still the party with the
most members. He seems to be an adept practitioner of Machiaveli’s precept:
"divide to conquer". Cardoso prefers to have an opposition that
votes with him than allies exercising too much influence over his government.

The explanation for Cardoso’s popularity with politicians lies beyond
his own amiable personality and charisma. In a time of belt-tightening
and scarce resources state and municipal governments are having a tough
time just to pay their bureaucracy and there is no money left for new projects.
According to daily O Estado de S. Paulo, 80% of the Brazilian states
and 90% of the municipalities are bankrupt. On the other hand, the federal
government has more than $8 billion available to be parceled out in the
next two years to hungry and needy politicians via the ministries of planning,
environment and water resources, and transportation.

On January 31, just three days after reelection was approved in the
first round, Fernando Henrique was in Rio announcing the release of the
first $10 million of a total of $850 million that will be used to modernize
the Port of Sepetiba. By the end of the year, the San Francisco river and
the Madeira (a tributary of the

Amazon rivers will be open to navigation and the fifth generator in
the Alagoas’ Xingó hydroelectric plant should come on stream. The
government has also pledged to start later this year construction of the
Brazil-Bolivia 2,000-mile long pipeline that will bring natural gas from
Santa Cruz de La Sierra to the Brazilian southern tier.

Two thirds of this gas is for use in a four-state area concentrating
more than 50 percent of the Brazilian electorate: São Paulo, Rio
de Janeiro, Minas Gerais and Rio Grande do Sul. This money will be used
in sanitation and construction of popular housing. The Transportation Ministry
has a $4.6 billion budget and a blueprint called Plano Brasil em Ação
(Plan Brazil in Action) calling for the building and repair of highways,
railroads, ports and waterways, in all but the northeastern region. In
the Nordeste, which casts 1/3 of the nation’s votes, the money is
to be used mainly for basic sanitation projects and the building of two
dozen dams.

The plans are grandiose and the budget generous. The only problem is
that the government doesn’t have this kind of money. To be able to fund
all these feverish construction work, FHC will have to dispose of public
property. That’s where the privatization efforts come in. Brasília
hopes to raise at least $10 billion by year’s end through the sale of Companhia
Vale do Rio Doce, a mining corporation, and the privatization of the communications
sector. Brazil is confident that 1997 will witness an infusion of $12 billion
in foreign capital, with $4 billion going into the privatization program.
No small feat there. In six years of privatization, the government has
raised a mere $13.4 billion with the sale of public property. Last year,
this effort yielded only $3.8 billion. However, big construction will not
suffice. Cardoso himself seems disappointed that his administration has
done so little in the social area.

Brazil has also a serious trade deficit. Brazilians imported much more
than exported in 1996 creating a record deficit of $5.5 billion. The country
spent $53.2 billion in imports while taking in only $47.7 billions from
exports. From this amount, 18.3% was consumer goods such as toys, TV sets
and automobiles. Raw materials represented 46.2% of the total; oil purchases
took another 11.7% and 23.8% was invested in upgrading industries. It is
estimated that this deficit will increase to $8 billion by year’s end.
On the positive side, the Central Bank believes it will close the current
year with $70 billion in foreign reserves. The flow of foreign capital
is increasing every year. It was $2.3 billion in 1994, $4.7 in 1995, and
$9 billion last year.

An even graver problem is the domestic deficit. On November 1995, the
federal, state and municipal governments were $27 billion in the red without
relief in sight. The biggest chunk of the revenue goes to pay its work
force and in some smaller cities there is no money left over. That’s why
the priority of the administration now is to have approved the administrative
reform that will among other things establish a ceiling on salaries. Nobody
in public administration would be allowed to make more than $10.8, the
salary of a Supreme Court Judge. The reform would also allow for public
servants to be fired for negligence or unsatisfactory performance.

The biggest ally of Cardoso still is the low inflation — less than 10%
for the whole year of 1996 and estimated at 7% for this year — in a country
where a 3000% yearly inflation rate was becoming the norm. Brazil hasn’t
enjoyed such monetary stability in the last 50 years. Furthermore, workers
have had a 25% increase in their real purchasing power. The President’s
worst enemy is the high interest rates triggered by the budget deficit
and the government’s borrowing from the financial market. This has made
very hard for companies to finance their expansion and has contributed
to the rising unemployment in the country. After giving high priority to
Congress, the President will from now on pay more attention to what he
calls the "raucous voices of the streets".

Even the poorest people are not complaining though. Despite a still
high unemployment rate, lower middle class and poor Brazilians are eating
better and having an easier time buying home appliances. For more than
one year the cheap price of chicken made the product a symbol of the Real
(the new currency) success. Now it is the yogurt that is invading the humblest
tables. The consumption of the product increased by 90% in one year, while
prices fell up to 26%. Yogurt sales jumped from 118.6 thousand tons in
1994 to 242,2 thousand tons last year. The previously scarce product is
presented on supermarket shelves under dozens of packagings and flavors
and can be bought for as little as 60 cents a package.

They Won

Fernando Henrique Cardoso — He had the most to lose and he become
the one who won the most. Even though another three ballots in Congress
are still needed to assure passage of the Constitutional amendment that
will allow Cardoso’s reelection, the President has been strengthened to
pursue reforms in several areas and seems to be an unbeatable candidate
for president in the next election.

Sérgio Motta — The Communications Minister, after a series
of blunders resulting from his big mouth working overtime, seems to have
put brakes on his rhetoric. Through a backstage work of talking to politicians
he was able to deliver the victory to his boss and, in the process, regain
his own prestige.

Luís Eduardo Magalhães — The Speaker of the House
was able to display leadership just before passing the post to an ally.
He also guaranteed that his father, Senator Antônio Carlos Magalhães,
be chosen president of the Senate. Magalhães, from the PFL, is already
a serious name for the 2002 presidential election.

Michel Temer — The PMDB congressman has shown great leadership,
being able to deliver 67 of the 98 PMDB votes in the House to the FHC camp.
Thanks to that, and as a reward, government allies gave him the necessary
votes to get the house speakership.

Francisco Dornelles — Opposing the leadership of his own party,
the PPB, the Industry and Commerce minister together with the three governors
of the PPB led half of the party deputies to vote for reelection.

Miguel Arraes — The governor of Pernambuco, from the PSB (Partido
Socialista Brasileiro — Brazilian Socialist Party), was the only victorious
among left-wing politicians. He talked the majority of his party’s legislators
into siding with the President.

They Lost

Paulo Salim Maluf — The former mayor of São Paulo and
greedy wannabe presidential candidate was probably the worst loser of all
after managing to make his own successor in São Paulo. He refused
to deal with the President and ended up having his party (the PPB) split
in half. His chances as a viable presidential candidate have diminished
considerably. Just a few hours before the House vote, Maluf announced:
"I will play Russian roulette with six chambers loaded if reelection
is approved."

José Sarney — Former President and presidential hopeful,
the up-to-January president of the Senate, showed once again the consummate
politician he is. This time, however, in his eagerness to please everybody,
he ended by displeasing all. He publicly sided with the opposition, while
privately encouraging PMDB congressmen to vote for Cardoso.

Itamar Franco — Another ex-president dreaming of a second chance
as nation chief. His plans to head a center-left coalition to recapture
the presidency are not been taken too seriously by other politicians. Itamar
has no party and his double talk — one day backing the administration and
the next opposing it — has alienated possible allies.

Luiz Inácio Lula da Silva — The two-times presidential
candidate and PT’s leader was able to keep his party united against the
President. But his alliance with Paulo Maluf, his traditional enemy, just
to defeat Cardoso’s bid, was a serious blunder.

Paes de Andrade — The PMDB president at least is consistent.
Despite all defections in his party he pledges to vote again against reelection
when the bill goes back to the House. He has become a solitary voice within
his party.

What Now?

Fernando Henrique Cardoso is now committed to push through the legislature
his campaign package that has been dragging around. With his new show of
strength, the President should be able to see most of his wishes fulfilled.

Cost Brazil — Some people can’t believe how expensive products
and services are in Brazil. The so-called Cost Brazil (it includes a slew
of taxes, bureaucracy, and lame understructure) not only makes life difficult
for consumers as it also curtails Brazilian capacity to export at competitive
prices in the world market. The government has already lowered the ICMS
for exporting products. There is, however, much more to be done, including
serious efforts to debureaucratize and make employees cheaper to the employer.
Nowadays, employers pay in taxes and fees the same amount they pay employees.

Taxes — A more ample fiscal reform will have to wait because
of serious opposition from states and municipalities afraid of losing money
with the radical changes the administration is proposing. The federal government
still wants to combine the federal IPI (Imposto sobre Produtos Industrializados
— Tax on Industrialized Products) and the state ICMS (Imposto sobre Circulação
de Mercadorias e Serviços — Tax on Circulation of Products and Services).
The country collects $100 billion a year in taxes, half of what it should
get if it weren’t for widespread tax evasion and fraud.

Privatization — The privatization process continues to generate
a lot of heat. For those opposing it, the sale of state companies is going
too fast, while those defending privatizaton accuse the government of giving
treasures away with too much haste. The Post Office, Telebrás, Petrobrás
and Eletrobrás, are all in the red or lack money for badly needed
investments. This year, the process of privatizing Telebrás, the
communications monopoly, is due to begin in earnest. The government also
promises that state-owned Companhia Vale do Rio Doce, which explores minerals,
will be auctioned by April.

Welfare — Administration wants people retiring later and intends
to put an end to the so-called special retirement wages. There are 15.7
million retired people receiving government pensions today, twice as much
as 15 years ago. For each person receiving retirement benefits there are
only two people contributing to the system.

Health — Corruption in the SUS (Sistema Único de Saúde
— Unified Health System) arrangement adopted in the country is still rampant.
There are plans to channel the money directly to the hospitals involved
in the system to avoid abuses resulting from the present system, in which
a hospital is paid for each procedure it carries out. However, the situation
is not expected to begin improving before 1999.

Education — Besides handing down the elementary education completely
to the municipalities, the government intends to continue the reforms already
started by Education Minister Paulo Renato. Among his plans are the abolition
of the infamous "vestibular" (entrance exam) to
get in colleges, a reassessment of private and public colleges and the
establishment of a $300 monthly minimum wage for teachers.

Reelection Blues

Brazilians have seen seven constitutions come and go since the Republic
was proclaimed in 1889 (the first one, inspired by the US charter, dates
from February 1891), but none allowed for the reelection of the President.
As it is happening now, the president in charge always muddled the debate
about reelection. The 1946 Constitution, for example, didn’t allow reelection
to bar President Getúlio Vargas from trying for reelection. In 1937,
just a few months before a scheduled presidential election, in which he
couldn’t run, Vargas staged a coup d’état that kept him in power
until 1945. However, this didn’t stop him from running again and winning
in 1950.

Since the beginning, legislators feared that reelection would serve
to perpetuate presidents using their positions to morph themselves in virtual
emperors, as the ones Brazil had in the years before the Republic. According
to historian José Murilo de Carvalho from the IUPERJ (Instituto
Universitário de Pesquisa do Rio de Janeiro — Rio de Janeiro’s College
Research Institute), the model adopted was the one preferred by the military
and São Paulo Republicans who insisted on centralized power. "The
democracy issue was never even raised. Their interest was to guarantee
an alternation of power between the elite sectors, a mechanism that was
assured by the Moderating Power."

The 1967 Constitution preserved the reelection prohibition to prevent
any military man from perpetuating himself in power. According to political
scientist Bolívar Lamounier, the 1988 constituent assembly was more
worried about choosing between presidentialism and parliamentarism than
in discussing reelection.

The Best

Who has been Brazil’s best president since 1930? And who was the worst?
Biweekly economy magazine Exame posed the question to a panel of
20 experts including economists, historians, political scientists and a
brazilianist. Juscelino Kubitschek came on the top of the best list with
a 4.22 average score of a possible 5. Fernando Henrique Cardoso weighed
in with 3.94 points, and this in only two years of his term that might
last another 6 years. "Fernando Henrique is still a bet," said
historian Bóris Fausto. "But the practical results — the victory
against inflation, the reduction in the corruption levels and the change
in the administrative patterns — are enough to guarantee him a 4."
General Costa e Silva was the worst, getting a 1.41 average.

The panelists, who gave marks from 1 (awful) to 5 (excellent), were
ambassador Rubens Ricúpero; political scientists Bolívar
Lamounier, Maria Tereza Sadek, Amaury de Souza, Fábio Wanderley
Reis, Leôncio Martins Rodrigues, Antônio Octávio Cintra,
and Sérgio Abranches; historians Bóris Fausto, José
Murillo Carvalho, and Francisco Iglésias; economists Dionísio
Carneiro, Francisco de Araújo Santos, Marcílio Marques Moreira,
and Paulo Guedes; sociologists Hélio Jaguaribe, Aspásia Camargo,
and Celina Vargas; journalist Oliveiros S. Ferreira, and Brazilianist Thomas

The results:

President ……………………………….Period ………..Average

Juscelino Kubitschek ……………..Jan. 56/Jan. 61 ……4.22

Fernando Henrique Cardoso …..Jan. 95/ ……………..3,94

Getúlio Dornelles Vargas ……….Nov. 30/Oct. 45 ….3.47

………………………………………….Jan. 51/Aug. 54

Gen. Humberto Castello

Branco ……………………………….Apr. 64/Mar. 67……3.38

Gen. Ernesto Geisel ………………Mar. 74/Mar. 79 ….3.32

Gen. Eurico Gaspar Dutra ………Jan. 46/Jan. 51 …….2.61

Itamar Augusto

Cautiero Franco ……………………Oct. 92/Dec. 94…..2.38

José Sarney …………………………Mar. 85/Mar. 90 ….2.16

Gen. João Baptista de

Oliveira Figueiredo ……………….Mar. 79/Mar. 85 …..1.76

Fernando Collor de Mello ………Mar. 90/Dec. 92 …..1.71

João Belchior

Marques Goulart …………………..Sep. 61/Mar. 64 ……1.63

Gen. Emílio Garrastazu Médici ..Nov. 69/Mar. 74 ……1.62

Jânio da Silva Quadros …………..Feb. 61/Aug. 61……..1.42

Gen. Arthur da Costa e Silva ……Mar. 67/Aug. 69 ……1.41

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