Brazilian director Hector Babenco was being touted as the heir apparent to the Italian Neo-Realists after "Pixote," his 1980 film about the grim adventures of a 10-year-old street thief and his homeless friends.

So Babenco's choice for his next film -- and his first in English -- came as something of a surprise. Based on Manuel Puig's 1976 novel, "Kiss of the Spider Woman" owes more to B-movie romances than it does to Neo-Realism. Making it took four years of obsessed activity -- "looking for the impossible," as Babenco puts it, "trying to materialize what didn't exist."

The 39-year-old director, smoking a cigar over lunch, wearing a lemon-yellow shirt, was feeling passionate and proud about this turn in his career. Babenco is passionate about many things (and doesn't let his erratic English slow him down -- when in doubt, he gestures or throws in a "Gimme a break!" and moves on). But it is harder to imagine him prouder of anything than his latest movie, which opens Friday in Washington.

Already, "Kiss of the Spider Woman" has the beginnings of a pedigree: a special award at the Tokyo Festival for Young Film Makers, and a Cannes citation as best actor for the film's star, William Hurt. The movie takes place in a Latin American prison cell whose residents, Hurt and Raul Julia, have opposing perspectives on life. Valentin, (Julia's character) has devoted himself to revolutionary struggle, and bears the scars of torture to prove it. Molina (played by Hurt) is a homosexual window dresser who recites movie plots in exquisite detail, blocking out grim reality.

They are prisoners not only of their cell but of their fixed views of the world. The relationship that grows between this dialectical pair forms the body of the "realistic" movie. But nearly a third of the film is devoted to Molina's recited movies, which comment allusively on love and betrayal -- with Sonia Braga, who has been called the "South American Marilyn Monroe," playing the female characters.

Leonard Schrader, who wrote the screenplay, refers to Babenco as a poet of poverty and of outcasts, and Babenco too speaks of the ties between his movies and the world of political reality. Of "Pixote," he says, "It came from my heart. There were three million abandoned children in Brazil. I couldn't resist the presence of such an incredible amount of pain."

In "Spider Woman," it would be easy to peg director Babenco as the political character and author Puig as the romantic dreamer.

"Both characters are part of me," Babenco says. "I can feel them in me, growing in counterpoint."

Babenco and Puig come from Argentine childhoods spent in movie theaters.

For Puig, who grew up in the remote pampas of Argentina, Hollywood glamor was his tie to civilization. In Puig's words, "Most Argentinian movies sounded too much like reality." Babenco, the son of poor Russian and Polish Jewish immigrants in the fashionable summer resort of Mar del Plata, says, "The city was too small and my family was too narrow. The movies fed me. Doris Day, Godard, 'Rocco and His Brothers,' I just took it all in. It was my lifeline."

Puig is a Latin American writer of international stature. In his seven novels (such as "Betrayed by Rita Hayworth," and "Heartbreak Tango"), movies abound. He has upholstered his world with the melodrama and grace of cinema and his Rio de Janeiro apartment is walled with more than 700 videotaped films -- a network of friends around the world faithfully add to his collection.

Babenco says, "Puig loves diamonds and pearls; MGM musicals are his favorites."

The stylization of Puig's narrative form offered Babenco the chance to work in a more lyrical mode -- filming Molina's recitals as movies within the movie. "Using movies as an element," says Babenco, "lets you do two things. Show how movies manipulate and have colonized the world. And using exaggerated expression is allowed, so it can be stylized and still be true."

The fact that "Kiss of the Spider Woman" was produced at all depended on Babenco's quixotic obsession. Not the least of his hurdles was getting permission from Puig, who had already turned down requests from Rainer Werner Fassbinder and Liliana Cavani. Puig, says Babenco, "was afraid to let his boy fly." By the first part of 1981, Babenco started raising money while he was in Los Angeles and New York. That was the beginning of an 18-month assault on the movie industry.

Raul Julia was Babenco's first choice for Valentin, the revolutionary, and Julia accepted immediately, although he made no secret that he would love to play Molina. But Molina was already cast in Babenco's mind: Burt Lancaster. Babenco kept running into the actor when they were sharing the dais at various 1981 awards ceremonies (the year of Lancaster's performance in "Atlantic City"). Lancaster, he says, was intrigued by the role, and ready to sign.

Babenco's limited English didn't help his campaign in Hollywood -- "I felt like Tarzan on the telephone," he says. Nor did it help that he had doubts about directing in a language not his own. After the umpteenth unreturned phone call, Babenco recalls saying, "I would be willing to give one of my fingers in order to do this movie. After all I don't play the piano. I don't play the guitar. Who needs 10 fingers?"

By 1983, even the luster of "Pixote" was dimming. "There is a saying in Brazil," remarks Babenco, "You have to kill a lion every day." That roughly translates from Brazilian to Hollywoodian as, "Yeah, but what have you done lately?" On top of this, Burt Lancaster suffered a heart attack and was forced to withdraw.

Babenco called Julia and told him he was throwing in the towel -- it was time to return to Sa o Paulo and resume his life with his wife, the director of Brazil's leading contemporary art gallery. A few weeks later he received a telephone call from William Hurt. On Raul Julia's suggestion, Hurt read the script and shyly asked Babenco to invite him to play Molina. Shifting from Burt Lancaster to William Hurt -- picturing the vulnerable Molina in the body of a soccer player -- required a leap of the imagination. Babenco needed to see it in the flesh. They met in Julia's apartment with Leonard Schrader's script.

"I had such an experience," recalls Babenco, "listening to him read Molina. It was for me the first time I was listening and hearing poetry in English. Before the end of the first page -- not the second, the first -- I knew I wanted him. He had the quality of a hunted bird. But who has not died." Babenco recalls that he wept.

What Babenco had not been able to do after two years in Hollywood -- raise a $1 million budget -- he and producer David Weisman were able to accomplish in five weeks. The minimal budget was possible only because stars, director and writer were content to work for expenses. Julia lost 30 pounds to look more like a revolutionary; Hurt hennaed his hair. The filming of "Kiss of the Spider Woman" began in Sa o Paulo last Oct. 13. Four months later, it was completed.

Struggle has been part of Babenco's adult life. At 17 he forged his father's signature to get a passport, and for the next six years he traveled over Western Europe and North Africa, eking out a living as a waiter and movie extra. In Spain he worked in low-budget spaghetti westerns with titles like "Ringo No Pardone" ("Ringo Doesn't Forgive").

He spent four years raising $250,000 for his first film, "King of the Night," in 1975, and his second movie, "Lucio Flavio," was explosively received in Brazil. The film was based on a real incident depicting the collusion of Brazilian police and a professional thief. Its release was greeted by spray of machine-gun fire, leaving holes in the iron gate of Babenco's home. The terrorist action was, among other things, publicity that couldn't be bought. "Lucio Flavio" outdrew "Superman" at the Brazilian box office that season and remains the country's third-highest grossing film.

With "Pixote," Babenco's reputation was no longer confined to Brazil. When the movie received its first enthusiastic reviews in New York, the Brazilian box office started taking in three times as much as it had before. "If you come from a colonized country," remarked Babenco, "when you have arrived in the land of the colonizers, suddenly they think you are twice as good back home."

"Kiss of the Spider Woman" is a Brazilian production, but it has little to do with the social or geographical landscape of Brazil. "In this prison cell," says Babenco, "you feel the depression, and the political oppression, although Puig shows you none of this." Discussing his own identity, Babenco continues, "I am a no-land man. And it's a very big burden. For a moment you are free like a bird. But the freedom has his price."

Babenco's words come the fastest when he talks about the universal issues of the film. "Let me put it this way. I made half the movie for Puig, half for myself. I took advantage of the two fantastic icons Puig created -- the gay and the revolutionary, both parts of the contemporary dramaturgy. I took advantage to have these well-shaped icons and then destroy them. To melt their mask to the real man who is carrying it.

"I am trying to prove exactly that there is no way to prove nothing in life. Unless it's possible in art. The gesture must be floating without roots." His hand soars. "This is really what it is all about in art."