The Serra camp is pinning its hopes on the television propaganda
 campaign which started in August. However, Serra has little
charisma and his performance in a recent TV debate with
the other candidates made little difference.

John Fitzpatrick

It is no exaggeration to say that the presidential election to be held on October 6 will be the most important since Brazil returned to democracy in 1985, after 21 years of military rule. The eight years of President Fernando Henrique Cardoso's social democratic administration have strengthened democracy and started a reform process, which has opened the economy, bringing benefits to all sectors of society.

However, the country is still a long way from resolving pressing domestic problems of poverty, corruption, crime and poor infrastructure, and coping with external problems such as the effects of globalization and expanding international trade. This election is also taking place in the middle of an economic crisis, which is threatening to wipe out the gains made in the Cardoso era. The Real has lost over 30 percent of its value this year, partly because foreign investors are worried that if the opposition wins, the clock will be turned back and they will lose out.

Thanks to a change in the constitution, Cardoso was able to stand for re-election and won easily in the first round, four years ago. This brought Brazil unusual political continuity. At the same time, Cardoso has maintained the same Finance Minister, Pedro Malan, an impressive technocrat who is respected in international financial circles. For almost four years the Central Bank has been led by another respected non-political figure, Arminio Fraga, who used to work for investor George Soros.

Cardoso's success was not due to personal factors, as he is a rather remote academic figure, but to his success in crushing inflation through the Real Plan. The Real Plan was a great success, but ultimately collapsed when the Real was devalued by around 40 percent in January 1999. However, Brazil recovered surprisingly quickly, with help from the International Monetary Fund, but things have gone badly again due to a combination of factors. These include the slowdown in the world economy, the crisis in Argentina and Brazil's high public debt. The IMF recently stepped in again with a US$30 billion loan aimed at avoiding a collapse, which would have had serious regional consequences.

This time Cardoso cannot stand and so voters will be putting their trust in a new president. For the sake of Brazil, voters will be hoping the new man will have the same steady set of hands that Cardoso had. If not, then the country could go back to the boom and bust years, which saw the "economic miracle" of the early 70s become the "lost decade" of the 80s. Brazil's path to its present position has been tough and it would be tragic if the gains of the last eight years were thrown away.

The main issues are not grand themes like globalization or the IMF, but bread-and-butter issues like unemployment and crime. The official unemployment rate is 7.5 percent, but this is a meaningless statistic as hundreds of thousands, if not millions, of workers are not registered and earn their living from the black market, which makes up an estimated 35 percent of the official economy.

A visit to the old center of São Paulo, where tens of thousands of people sell items in the street, confirms the importance of this unofficial market, which makes no contribution to the economy in terms of taxes or added value. The opposite, in fact, as most of the merchandise is smuggled from Paraguay or is counterfeit. As wages in Brazil ate pitifully low _ the official minimum monthly wage is R$180 _ about US$60 _ it is often easier to make money hanging around a street corner and selling counterfeits CD at a fraction of the retail price than work.

The other way out of poverty is to turn to crime. Every candidate stresses his solutions to these inter-linked problems. Poverty and unemployment inexorably lead to crime, often violent crime involving drugs, as the underprivileged see no other way of improving their lots. Crime in Brazil is very different from Europe. Violence is endemic and human life of little value. The criminals are violent as are the police, but crime detection rates are abysmal and the criminal justice system inefficient. Drug dealers govern the favelas (shantytowns) where millions live, and turn them into no-go areas for the security forces. The favela dwellers are too terrified to testify against them and, in many cases, the gangsters are in league with the police.

There are four main candidates: José Serra (PSDB), former health minister, and the government-backed candidate; Luiz Inácio Lula da Silva (PT)—known simply as Lula—the main opposition candidate; Ciro Gomes (PPS), a former finance minister who broke from the PSDB several years ago; and Anthony Garotinho (PSB), the former state governor of Rio de Janeiro.

It is interesting to note that they are all from the center-left as a right-wing candidate offering free-market policies would not be to the Brazilian electorate's taste at this moment. This does not mean there are no right-wing parties, but the sheer size of Brazil makes it impossible for a single party to win a majority, either in presidential or congressional elections. The result is that parties are forced to join forces, often forming regional alliances, and voters end up with strange, even contradictory, ideological combinations.

For example, Serra's main ally is the PMDB, which has the biggest representation in Congress. Yet the PMDB is an alliance of disparate groups pursuing their own interests rather than a political party with an ideology. Serra's own PMDB vice presidential running mate, Rita Camargo, has voted against Cardoso's most important reforms. Lula represents the Workers Party; yet his main ally is the PL, a small party with close links to the evangelical religious movement. Lula's running mate is a millionaire businessman who owns a big textile company. Hardly the kind of ally one would expect a former trade union firebrand like Lula to have.

The other main opposition candidate, Ciro Gomes, represents the PPS and two other small leftist parties under the so-called Workers Front. His running mate is the leader of one of the main trade unions yet, at the same time, Gomes enjoys the support of the pro-business PFL party.

So far Serra has been unable to raise his ratings in opinion polls and is languishing far behind the leader, Lula, and the runner up, Gomes. The Serra camp is pinning its hopes on the television propaganda campaign which started in August. However, Serra has little charisma and his performance in a recent TV debate with the other candidates made little difference.

At the time of this writing it looks as though Lula will come first in the first round, but without an overall majority, and will face Gomes in the second round. However, Brazilians are not radically-minded and, although they may want a change, they do not want to lose the benefits of the Cardoso era, especially low inflation. This means that it is far too early to write off Serra, especially as Lula and Gomes have many question marks over their ability to run a country like Brazil. One cannot stress this too much.

This will be Lula's fourth attempt to become president and if he fails this time his career will be over. Unlike the experienced Serra and Gomes, he has never held any high administrative or political office. Lula has toned down much of his old-style rhetoric. For example, he says he will honor Brazil's foreign debt. As a result we are starting to see less fear within Brazil as a Lula victory becomes more possible. Brazilians, unlike fearful foreigners, know that, like Cardoso, "President" Lula will have to negotiate with Congress as the PT is not strong enough to govern on its own.

Just as Cardoso has failed to get through some of his reforms, particularly on tax, after almost eight years then Lula will have to accept that there is no way he will ram through his reforms without compromising with the other parties. Doubts remain though. Lula's heroes tend to be people like the Cuban dictator, Fidel Castro, and Venezuela's erratic president Chavez. Many Brazilians do not believe Lula has shed his clenched fist and red flag and will not vote for him in any circumstances.

If Serra flops, these people will turn to Gomes. To this writer Gomes' rise is mystifying. He is fresh-faced, young and articulate, but his policies are opaque and vague and it is impossible to know exactly what he stands for. Gomes has also made anti-democratic suggestions such as anticipating elections due to the crisis. On the economy he has spoken of extending debt repayments, thereby frightening potential investors, and loosening inflation targets.

Despite Gomes' growing popularity, there is enormous hostility to him, particularly in financial and media circles. One of Brazil's top bankers, Olavo Setúbal, was quoted recently as telling Gomes that he did not fear Lula. "If elected, Lula will do nothing. I am scared of you," the Estado de S. Paulo reported him as saying.

The press is also angry at what it sees as Gomes' arrogance and refusal to answer questions it regards as relevant to the campaign. Journalists have been digging up Gomes' past as a scion of a well-entrenched dynasty in Ceará state, who entered politics through a small party, which supported the military dictatorship during the two decades it ruled Brazil. He has been compared to disgraced former President Fernando Collor, who resigned on the eve of impeachment 10 years ago following allegations of corruption.

We are not devoting much space to Garotinho as he is struggling to rise above his bedrock support of 10 percent and there are signs that he may even pull out of the race. Suffice to say that he is a skilled populist with simple solutions which appeal to simple people. His supporters are more likely to support Gomes and Lula than Serra if he does withdraw.

In conclusion, on October 6 Brazil will be at a crossroads. The choice is to go with Serra and continue with the reforms, go with Lula in the hope that this particular leopard has changed its spots or, worse of all, go with Gomes (or Garotinho) into the unknown.

John Fitzpatrick is a Scottish journalist who first visited Brazil in 1987 and has lived in São Paulo since 1995. He writes on politics and finance and runs his own company, Celtic Comunicações - www.celt.com.br, which specializes in editorial and translation services for Brazilian and foreign clients. You can reach him at jf@celt.com.br

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