A Latin American `Sleeping Giant' Rubs Its Eyes at New Chief

BRAZILIANS have heard it many times before: A new president is about to awaken Latin America's sleeping giant and lead the nation - bigger than the continental United States - to its rightful destiny as a regional leader.

But no newly elected executive in recent memory has made more Brazilians believe it than Fernando Henrique Cardoso, who takes office on New Year's Day.

``Cardoso is Brazil's best chance for significant change in recorded history,'' says political scientist Alexandre Barros.

Those conditions include overwhelming public support, the largest congressional majority since World War II, and an experienced Cabinet that includes soccer hero Edson Arantes do Nascimento (known universally as ``Pele'') as secretary of sports.

And Brazil's elite - who have fought for generations to maintain the status quo - may even be ready to support Mr. Cardoso's proposed antipoverty programs. ``The Brazilian elite has changed, but it's not out of generosity. It's self-defense,'' political consultant Walder de Goes says. ``Each year, there is more crime, and they live behind more bars with more bodyguards. They are afraid.''

Most important, Cardoso has already done much to guard against unrealistic expectations. During his campaign, Cardoso refrained from promising overnight change, convincing much of the electorate that only long-term solutions could solve the nation's problems.

A former sociology professor who taught at prestigious universities such as Cambridge University in England, Cardoso won 54 percent of the vote in October on the strength of an inflation plan he designed while serving as finance minister, which stabilized the economy and slashed galloping inflation from 50 percent a month to 2 percent in December.

As a result, foreign capital is pouring in. During 1994, Brazil is expected to receive $2 billion in foreign investment and economists expect that to rise to $5 billion by 1996. A recent survey conducted by the US-based Bloomberg news service showed Brazil's stock market to be the world's fastest-growing in 1994.

The South American nation already has the world's 10th-largest economy with an annual gross domestic product (GDP) of $470 billion. And on Jan. 1, it will join Argentina, Uruguay, and Paraguay to form the second-largest hemispheric trading bloc, the South American Common Market or Mercosur.

``By the year 2000, we can be an industrial power with a GDP of a trillion dollars,'' says Mr. De Goes.

And the feeling that Brazil is on its way up is not limited to the economic sphere. While lower inflation renewed popular faith in government, a world soccer cup title in July stirred pride in the country.

President Itamar Franco leaves office with an 87 percent popularity rating, the highest ever recorded by an outgoing president. A recent poll by DataFohla, a respected Sao Paulo polling firm, shows that 78 percent believe their lives will improve in 1995.

To turn those expectations of improvement into reality, Cardoso plans to break up long-standing state monopolies, promote privatization, lift restrictions on foreign investment, reform social security, and reduce the federal government's obligation to give more than 70 percent of its revenue to states and municipalitites.

But, he says Brazil can become the economic leader of Latin America only after Congress loosens the strictures of its 1988 Constitution, which guarantees the state a large economic role but restricts its ability to control spending.

Cardoso has gubernatorial allies in Brazil's five most populous states, an important factor since governors traditionally exert much influence over congressional members from their states.

Without these reforms, most economists agree, chronic inflation will return and Cardoso's economic plan, which introduced a new currency in July, will become the latest of a long line of short-term failures.

In the past four years, there have been eight finance ministers, three currencies, and two economic-shock plans.

To achieve these revisions, the former leftist turned free-marketeer must have the consent of 60 percent of Congress, a fractious assembly of 19 political parties.

But his chances of winning are better than ever, since his center-right coalition has the support of 360 of 513 federal deputies and 60 of 81 senators, according to Veja, the nation's leading newsmagazine.

Political experts say Cardoso will not be seriously challenged during the first six months to a year, and that is when he must push through his reforms.

Some observers think the road will be rockier than that. ``There is nothing to support the reigning optimism that this Congress is somehow different from previous ones,'' says Richard Foster, editor of the Brasilia-based business newsletter Brazil Watch, referring to the legislature's record of showing more loyalty to regional bosses than to national interest.

The legislature is not Cardoso's only problem. Consider these factors:

* Organized labor is angry that the government won't allow raises to compensate for inflation and has already staged several strikes and walkouts.

* Education and health systems are in shambles after years of spending cuts and inflation.

* State politicians and state enterprises long used to pork-barrel projects will be difficult to control.

* Brazilians evade paying $83 billion annually in taxes, almost as much as the $85.3 billion collected.

* Poverty is increasing and currently affects 41 percent of the population's 155 million inhabitants.

Aside from economic reforms, Cardoso's toughest challenge will be to narrow the nation's skewed income gap. According to the World Bank, the richest 10 percent of Brazilians control more than half the nation's wealth.

Cardoso says he will spend $4 billion a year on the poor through a new program copied from Mexico called ``Community Solidarity,'' in which the government would provide poor communities with the materials for homes, schools, electricity, and health clinics while its residents provide the labor. The program will also provide jobs and loans to small farmers.

Meanwhile, the capital, Brasilia, anxiously awaits the Jan. 1 inauguration, which will be witnessed by 2,800 guests, including 102 foreign delegations, nine heads of state, and a national television audience of millions.

While the optimism that Brazil will reach its political and economic potential has never been higher, some experts remain leery.

``In Brazil, something always occurs that nobody can control,'' De Goes says. ``It's our Greek tragedy component.''

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