Samba beat and bullhorns herald key Brazilian vote. Election seen as crucial to shaping future of fledgling democracy

It's election time in Brazil. And the cacophony of democracy echoes from just about every corner of this continent-size nation.

Volkswagen microbuses cruise the dusty city streets blaring campaign slogans to a throbbing samba beat. Sweat-drenched candidates clamber in the noonday heat up to Rio de Janeiro's hilly shantytowns, trumpeting promises through scratchy bullhorns. In the lazy backwaters of villages in the Amazon region, vote-hungry politicians roar up and down the rivers in speedboats.

To the tourist here, the high-decibel tumult might be offputting. But to most Brazilians, this is joyous noise. This is the most important election in the country's transition to democracy after 21 years of military rule. The winners of Saturday's vote will write a new constitution - one that will do away with the underpinnings of its authoritarian past and shape new democratic institutions. Brazil is the world's third-largest democracy (measured by registered voters).

The country got a civilian President last year when Jos'e Sarney was sworn in after the death of President-elect Tancredo Neves (the Neves-Sarney ticket was chosen by an electoral college, not popular vote). President Sarney is making good on the promise to complete the country's transition from dictatorship to full-dress democracy.

Eleven months ago, the country held the first mayoral elections in the state capitals in two decades. Now, on Saturday, 69 million Brazilians - including millions of illiterates, previously barred from voting - will cast ballots for some 15,000 candidates for national congress, state governor, and local office.

Beyond the din of democracy and the often flamboyant personalities of the campaign, there are serious issues at stake. Most important is the rewriting of Brazil's Constitution. The entire legislature (559 senators and deputies) will constitute the Constitutional Assembly, which is to begin work in February.

The constitutional reformers will debate, among other issues, whether a presidential or parliamentary system should be adopted and whether the heavy state presence in the economy should be rolled back. But the first order of business is likely to be setting a date for direct elections for president, and determining whether Sarney will have the right to reelection at the end of his term.

This week's elections serve as a test of Sarney's policies, and they will affect how the government deals with some troubling clouds on the horizon.

Sarney's incredibly popular eight-month-old economic reform, the Cruzado Plan - which froze prices, knocked inflation down from 250 percent a year to under two digits, and increased the purchasing power of the poor - is beginning to show signs of strain.

A giddy boom in consumer spending has emptied shelves of goods, and many stores are charging scalper's prices on government-controlled items. Some businesses have begun to hold off on investment decisions. Bras'ilia has tried to still the creeping discontent by promising ``adjustments'' in the economy. New actions are expected after the elections.

One of the most troubling political issues for the government is land reform. Its vow to redistribute millions of acres of large, unproductive fazendas, or estates, to 11 million landless peasants has been beset by administrative blunders, stiff political resistance, and bloody conflicts. A year after reform plans were approved, only a fraction of a targeted 150,000 peasant families have gotten land. But the Land Pastoral Commission, linked to the Roman Catholic Church, estimates that range wars between landowners and peasants have claimed almost 180 lives, including church and labor leaders working with the landless.

The escalating conflict has become an election issue. The Rural Democratic Union - a new lobby started by wealthy ranchers - is bankrolling congressional campaigns with huge cattle auctions. The activist Brazilian Bishops Congress has launched a massive effort to educate voters on the issue. Advocates of both sides are likely to gain seats and raise the temperature of the agrarian reform debate.

The biggest cloud hovering over the government is Brazil's $103 billion foreign debt, the largest in the developing world. Efforts to reschedule the debt have been stalled since January 1985, when the International Monetary Fund broke off a standby agreement for repeatedly missed economic targets.

Such problems would seem good grist for the mills of the political opposition. But the fragile state of the country's political parties and the tendency in this high-pitched campaign to focus on regional and local issues and personalities work to the President's advantage. Polls suggest that the elections will give him added political muscle.

Some two dozen political parties are involved, but only five carry real clout. Just two, the Brazilian Democratic Movement Party (PMDB) and the Liberal Front Party (PFL) - which make up Sarney's governing coalition - are expected to win two-thirds of congressional seats and virtually all 23 state governorships.

But the two parties don't always see eye to eye. The PMDB is a center-left party that opposed the previous military regime, whereas the PFL is a conservative newcomer made up of dissidents from the former military party. Sarney will have to work hard to keep his alliance together. And a few key races are still up for grabs.

In Sao Paulo State, which has half the country's wealth and almost a quarter of its electorate, three candidates are in a tight gubernatorial race that could have implications for the country's next presidential election. Recent polls give an edge to Orestes Qu'ercia, the PMDB contender, over Ant^onio Erm'irio de Moraes, a liberal businessman. Fast on their heels is Paulo Maluf, a glad-handing conservative businessman; he was the military party's presidential candidate against the Neves-Sarney ticket last year.

In Rio, the PMDB candidate's lead has been slipping as Darcy Ribeiro, the contender backed by Leonel Brizola, the Brazilian Labor Party's populist governor, has waded into the crowds in the city's vast slums and shantytowns.

Both Mr. Brizola and Mr. Maluf could become strong presidential contenders, or at least thorns in Sarney's side as he struggles to deal with Brazil's problems. A return of the military to politics is discounted by almost everyone here, but a resurgent Maluf could rally the old guard and possibly narrow Sarney's margin of maneuver, particularly in regard to the economy. An emboldened Brizola would strengthen labor and the leftist cry for an immediate presidential election.

Meanwhile, there is growing sentiment in and out of government that far-reaching adjustments must be made - to ease the debt burden, defuse the land reform issue, and bring goods to store shelves and confidence to the strained economy.

Amid all the doubts, one thing is clear: To confront the hard times ahead, Sarney will need all the political allies the polls appear to promise.

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