The Ripple Effect of Collor's Problems

Impeachment proceedings against Brazil's president could derail plans for regional economic integration

IN a recent cartoon published by an Argentine daily, President Carlos Menem is seen answering a phone call from his Brazilian colleague President Fernando Collor de Mello, who desperately seeks advice from his Argentine friend. To Mr. Collor's cries that "They want me to resign, they accuse me of corruption," Mr. Menem suggests he keep quiet and "everything will be all right." When Collor says "They want to jail my wife!," Menem replies: "See? Things are getting better."

Behind the joke's machismo lies the subtext of both presidents' surprisingly parallel personal situations.

Menem has filed for divorce from his estranged wife, Zulema Yoma, whom he forcibly ejected from the presidential residence. Some of her relatives have been indicted in the so-called "Yomagate," a drug-trafficking scandal involving some of Menem's closest aides.

Collor's wife, Rosane, with whom he had some highly publicized rifts, has been accused of illegally taking government monies from a charity fund and spending it lavishly on private parties.

Unlike Menem, who has managed - so far, at least - to avoid being splashed by corruption accusations against many of his current and former colleagues, Collor has been unable to stop congressional initiatives for his impeachment.

Accusations against him were compiled in a scathing report issued by a legislative committee on Aug. 24, which linked him to widespread corruption within his inner circle. Some of those cases date from the very beginning of his presidential term.

According to news reports, 343 deputies would vote for the president's impeachment, which is seven more than the necessary two-thirds of the chamber. If impeached, Collor would be the first South American president in this century to be expelled from office by constitutional means.

The effects of either a resignation - an idea Collor has flatly rejected - or his legal ouster from office will extend beyond domestic Brazilian politics. Most likely, they will ripple all over Latin America's southern cone, where Brazil is a leading force in a new drive for regional economic integration.

Argentina, Brazil, Uruguay, and Paraguay formed the Southern Cone Common Market (MERCOSUR) in March 1991, when they signed an overly optimistic accord on economic integration in Asuncion, Paraguay's capital. The treaty calls for total elimination of tariffs and customs barriers throughout the area, with a free-trade zone to be established by December 1994.

THE initiative already had been facing major obstacles, mostly because of Brazil's chronic instability. Economists in Argentina had for months expressed fears that continued economic troubles in Brazil may delay implementation of the main treaty provisions, especially the 1994 free-trade zone. Collor's imminent impeachment is a realization of their worst nightmares.

They have pointed out, as did economists in Chile who opposed joining MERCOSUR, that asymmetries in the economies of the four member nations may be exacerbated by Brazil's interest groups, which are bent on maintaining longstanding protectionist trade measures.

Argentine sugar industrialists, for example, have bitterly complained about unfair competition from highly subsidized Brazilian sugar exports, while they have to cope with government deregulation and lack of financing because of Menem's "hand's off" economic policies.

A presidential impeachment or a resignation would certainly create political chaos in Brazil, although the Constitution calls for replacing the president with the vice president as soon as the chief executive goes on trial.

In anticipation, Brazilian Vice President Itamar Franco has been conducting discreet consultations to create a transitional government with support from all political quarters.

MERCOSUR, however, would probably feel the brunt of an instable political situation in Brazil.

Embracing an area larger than the continental United States, with 44 percent of Latin America's population (some 200 million people) and a combined gross domestic product of approximately $451 billion, the Southern Cone Common Market is the most ambitious integration project ever in Latin America. But MERCOSUR is largely dependent on Brazil and Argentina, which promoted it and carried along the less-developed economies of Uruguay and Paraguay, and it may lose an essential leg if Collor exits.

Even if the political crisis facing Brazil's leadership is temporary, decisions on substantial issues concerning regional economic integration are likely to be delayed or postponed in the midst of a turbulent impeachment process or presidential resignation.

Menem's fictitious advice in the Argentine cartoon may be only partially true. Things will get better, but only after Collor is long gone. Meanwhile, nobody in the region knows for sure how much worse they will get before they get better.

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