Brazil's leader shaken by economic and political crises

Brazilian President Jos'e Sarney is facing his most trying times since coming to office a little over two years ago. The economy is once again speeding toward hyperinflation. Although all the numbers have not been analyzed, the government admitted this week that inflation for April alone reached at least 20 percent, and economists predicted it could reach 800 percent this year.

At the same time, the Brazilian leader is becoming increasingly weakened and politically isolated as disputes smolder among political leaders. Businessmen, workers, and public opinion have turned against him.

Key leaders of the majority Brazilian Democratic Movement Party have reached a consensus to support under the new constitution a four-year term for President Sarney (which would bring an election in 1988) and a switch that would reduce the power of the presidency and incorporate a parliamentary form of government.

Mr. Sarney is still hoping for a longer term, but in the current predatory political climate, those ambitions are likely to fail.

The Brazilian government and the nation's top business leaders have opened up a cross fire of accusations as inflation has soared to the highest level since the government began recording figures 40 years ago.

The President issued a warning Monday that ``speculative inflation is at an insupportable, intolerable level.'' Citing a flurry of 100 to 200 percent markups in supermarkets in recent days, Sarney lashed out at the business community: ``Some sectors of Brazilian business leadership are not civilized enough to live in a free-price system.''

The government has threatened to punish merchants who practice price markups considered excessive with either a fine or up to two years in jail. Such acts are possible under a 1951 law outlining offenses against ``the popular economy.''

The response from businessmen was immediate. Noting recent government-ordered 30-percent hikes in fuel rates, the president of the influential Sao Paulo Federation of Private Industries responded: ``When the government raises its prices, what else can businessmen do?'' Other businessmen blame the large government budget deficit as the prime source of inflation.

At the same time, worker's wages have eroded steadily, and strikes and acts of civil disobedience are on the increase. In response to fuel price rises, for example, taxi drivers last week blocked streets in downtown Rio, snarling traffic for hours. And farmers have blocked roads in protest against soaring interest rates on bank loans.

Meanwhile, a recent opinion poll published by the Folha de Sao Paulo showed that 72 percent of respondents want to call presidential elections by November 1988, a full two years ahead of schedule. A startling 44 percent want elections immediately. Sarney's poor showing ``is fruit of a whole sequence of indecisions, errors, and disasters in his administration,'' said an unsparing Folha editorial.

This time last year, Sarney seemed to be unstoppable. The President rode the crest of an all-but-magical economic reform, the Cruzado Plan, to the top of the polls. There were Sarney posters and Sarney dolls, even Sarney carnival masks. There were bumper stickers that trilled ``I believe!'' The President became a national hero.

A year later, the Cruzado Plan - the program of price and wage freezes that sharply slashed inflation - is a shambles, a casualty of populist politics, palace infighting, and bald mismanagement.

The bullish economy, which expanded by 8 percent last year is teetering on the edge of recession. The once-robust, billion-dollar-a-month trade surplus is now - even after two months of a moratorium on debt payments - barely out of the red, and nowhere near healthy enough to allow a resumption of debt payments.

The beleaguered finance minister, Dilson Funaro, finally resigned late last month, but Sarney's handling of the subsequent appointments only fueled the flames of discontent.

Sarney surprised everyone by choosing a young northeastern businessman and longtime family friend to replace Mr. Funaro. In response, the president of the PMDB, Ulysses Guimaraes, quickly mobilized the party leadership to veto the choice, who was a novice in the party.

Not only did Sarney suffer the public embarrassment of losing his first choice as minister, but was practically forced to rubber stamp Mr. Guimaraes's candidate, Sao Paulo economist and veteran PMDB affiliate, Luiz Carlos Bresser Pereira.

Subsequent Cabinet appointments - attempts to appease various political factions - only sparked a revolt within his own party, leading at least one state governor to publicly break with the President.

Yet, in the volatile ups and downs of Brazilian politics, some political leaders have begun to lower their voices. The President and his party are attempting a rapprochement. The formal call for new elections is not likely to occur until after the Constituent Assembly finishes writing the new constitution, probably by the end of the year. But Sarney is far from out of the woods.

A week ago, a group of 100 mayors in Bahia State, embittered by unfilled promises of federal largesse, voted to remove the President's visage from Bahia city halls.

Bumper stickers now read: ``Sarney won't do, elections now!''

In a recent television address, the President appealed for a truce and the building of ``national understanding'' to halt the ``endless race of high inflation rates.''

But Brazilians seem in no mood to sit down together much less to live through another Cruzado Plan. If Sarney cannot act forcefully to contain the economic and political crisis, an early election may still short circuit the term of Brazil's first civilian President in some 20 years.