Everything has gone wrong for Serra and Cardoso's government
in its last months of office. The Real has collapsed and
the stock exchange has fallen sharply.

John Fitzpatrick

It was not quite the World Cup final but the television debate on the Bandeirantes channel between the four main presidential contestants held on Sunday, August 4, was almost as eagerly awaited by the chattering classes. As for the rest of the population, one can be sure it was watching the usual Sunday mix of Sílvio Santos and football on the other channels. The talking heads were José Serra (PSDB), former health minister and the government-backed candidate; Luiz Inácio Lula da Silva (PT), 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.

The candidate with most to gain was Serra whose campaign so far has been a disaster. Several months ago, as President Fernando Henrique Cardoso's hand-picked successor, he was being seen as an out-and-out winner, the man who would continue with the reforms of the Cardoso administration and keep out Lula whose stale policies and lack of ideas would mean he would be a losing candidate for the fourth time running.

Since then, everything has gone wrong for Serra and Cardoso's government in its last months of office after almost eight successful years. The Real has collapsed against the dollar, losing 23 percent this year, and is now trading at over R$3.00. The São Paulo stock exchange has fallen by 51.6 percent in the first seven months of this year, meaning that all the gains obtained during the Real Plan have been wiped out.

Serra may appeal to Cardoso, but it has become clear he does not appeal to many other people. Voters have ignored his impressive record as health minister and turned not only to Lula but to Gomes whose soaring position in the opinion polls has been incredible. Never in his wildest dreams could Gomes have seen himself rising so high that, according to the latest poll, he is technically in the lead along with Lula. A poll pitting him against Lula in the second round even gave him the lead.

On the economy Gomes has spoken of extending debt repayments, thereby frightening potential investors, and loosening inflation targets, thereby endangering one of Cardoso's main achievements, the ending of hyperinflation. Serra made a strong attack on him last week, saying that every time Gomes opens his month the dollar rises against the Real and a factory closes. Gomes' small leftist PPS party has formed a so-called Workers Front with two other smaller parties and his vice presidential choice is the leader of a moderate train union federation. Yet Gomes is not particularly left-wing and has the support of some sections of business. At times his views seem almost undemocratic, such as his recent comment that the elections should be brought forward because the country was in a crisis.

As for Garotinho, he is struggling and may drop out. However, he is reckoned to have a bedrock support of around 10 percent and he could be influential in recommending who his supporters vote for. Most observers think Gomes rather than Serra would pick up Garotinho's supporters' vote.

So how did the much-vaunted debate go? It was pretty tame stuff as all four were trying to be on their best behavior, knowing that any slip could have fatal consequences. No awkward questions were raised on ethical issues as each candidate knows that people who live in greenhouses should not throw stones. Lula was calm and rather distant, only needing a pipe and slippers to complete his image as Brazil's kindly, favorite uncle. He sat back and watched the others fight it out. The other candidates missed a golden opportunity to attack Lula for his lack of administrative experience.

They all boasted about their own records but omitted to take on Lula in their area where they could have worried him, perhaps saving this weapon for the second debate between the two finalists. In fact, it was Lula himself who briefly raised the issue in his closing statement when he could not be challenged by the others. Serra attacked Gomes on his brief record as finance minister and Garotinho for his record as Rio governor but, in both cases, in a nit-picking, confusing way which did nothing to boost his chances. An aggrieved Gomes responded angrily when he should have let it go, leaving this viewer to wonder whether "he doth protest too much". Garotinho gave his usual simplistic view of life but in difficult times many voters seek simple solutions.

It is too early to say whether this debate will change the current position but it is unlikely that Serra's ratings will rise because of it. This correspondent's view is that Lula and Gomes came out the "winners" well ahead of Garotinho and Serra in that order. When the official television propaganda starts, in late August, thanks to his support from the PMDB, Brazil's biggest party, Serra will have twice as much free time on TV as the others. He had better exploit this medium to the maximum—otherwise Lula or Gomes will be donning the presidential sash next January.

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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