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Brazil's democratic shift tests economic and political systems

By Julia MichaelsSpecial to The Christian Science Monitor / December 23, 1987

Sao Paulo, Brazil

The motto on the Brazilian flag is ``Order and progress,'' but lately there's been very little of either here. Brazil is in the midst of a difficult democratic transition period begun in 1985 after 20 years of military dictatorship. Added to the political confusion are severe economic problems which no government - civilian or military - would find easy to solve.

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Last week, Luiz Carlos Bresser Pereira, Brazil's third finance minister so far this year, resigned, and there are few volunteers to take his place. Mr. Bresser Pereira left office because he disagreed with President Jos'e Sarney over how to increase tax revenues.

Dissatisfaction with the government is at a record high. Brazilians blame most of their troubles on the ever-weakening Sarney government.

When Mr. Sarney announced the revolutionary ``cruzado plan'' in February 1986 to fight Brazil's persistent inflation, political cartoonists depicted him as a brave and handsome lion tamer. Now, he is portrayed as helpless.

Brazilians blame Sarney for the failure of the cruzado plan, and the subsequent attempts to control inflation. Despite a second wage and price freeze last June, year-to-date inflation topped 300 percent at the end of November, with inflation for that month alone totaling 12.84 percent.

Many economists predict hyperinflation for next year. Some say the government will try a third round of price controls, though few people expect this will have a lasting effect.

Companies, including multinationals from the United States, are openly defying government price controls - which the companies say are unfair. With real purchasing power down, public- and private-sector workers have staged strikes for wage increases, while even military personnel have also staged wage protests. At the same time no one is happy with news of an individual income tax increase that is considered necessary to finance the Brazilian government deficit - which is one of the prime causes of inflation.

State governors have also criticized the government. Until recently, the governors did not play an important role in national politics. ``The government ... has timidly faced the economic and social questions, which are worsening, to the point of setting up a crisis that could jeopardize the final phase of the political transition,'' says Miguel Arraes, governor of the poor northeastern state of Pernambuco. Mr. Arraes notes that even though the government party won big at the polls in 1986, Sarney did not take advantage of such support to make policy changes.

There is international pressure, too. The US government recently announced it would impose trade sanctions on Brazilian exports if Brazil didn't loosen restrictions on US computer software imports.

Discontent with Sarney has brought to a head discussion on the length of his term. Sarney, an appointed vice-president, came to the presidency in 1985 when president-elect Tancredo Neves died. The Constitution calls for a six-year term and a presidential system similar to that in the US.