LIBERATION theology has lost ground in Brazil during Pope John Paul II's papacy, but many Roman Catholics still live by its principles, advocating social change based on biblical teaching."There is a lack of hope, of perspectives for the future," says the Rev. Fernando Altemeyer, a young Catholic priest who works with the jobless on the outskirts of Sao Paulo. "That is my central theological problem." Fr. Altemeyer's 100,000-person parish, Sao Mateus, encompasses 15 ecclesiastical base communities, or CEBs - neighborhoods organized around leftist political beliefs. Such neighborhoods mushroomed during the 1970s and today are estimated to number somewhere between 40,000 to 120,000, according to the National Bishops Conference statistics center. "The CEBs are not concerned with the Vatican's situation," says Altemeyer. "It's very distant. We're more worried about violence, unemployment, daily life. It may seem that the church is just the clergy and theology, but the people are an important force." His most pressing concern, adds the priest, is 10- and 12-year-old children addicted to crack. Many clerics who have devoted their lives to social change fear the Vatican and are distressed by its conservatism. A recent papal encyclical "made a critical analysis of real socialism and brought back idealistic capitalism," says one theologian who asked for anonymity. "We in Latin America, our experience is catastrophic as far as real capitalism, and we have aspirations for real socialism. So there is a bit of a gap," he says. Liberation theologians also say the Vatican should be more tolerant. "They ask for fidelity to Rome, while we think fidelity should be to the gospel," says the theologian. "There should be space for divergence. If not, it's sterile. There's no space for creativity." Despite differences and desertions, the figure of the Pope evokes a heartfelt warmth for many Brazilians. In Sao Mateus, last Saturday, 50 men and women met to talk about joblessness. The group analyzed the situation, thought up action plans, and staged a videotaped comical debate pitting an exploited worker against a dishonest businessman. But the group also took a few moments to pray for the Pope and his visit.