Afflicted by economic trouble and a sudden crisis of political authority, Brazil's new civilian government will be severely tested in its first month as its austerity plans clash with the demands of a population weary of years of sacrifice, government and political leaders here say.
President-elect Tancredo Neves, known as a master of political orchestration, had hoped to begin his administration with an aggressive campaign to stabilize the inflation-buffeted economy. Neves' strong popular mandate, his ministers hoped, would preserve political equilibrium until pent-up demands for jobs, higher wages and social improvements could be met.
Now, however, the 75-year-old president-elect lies gravely ill in a Sao Paulo hospital, unable to take control since he was rushed for the first of three intestinal operations on the eve of his government's March 15 inauguration. His acting successor, Jose Sarney, readily agrees that he lacks the prestige and political authority Neves had methodically assembled before his Jan. 15 election by a special electoral college.
Sarney had hoped that he could serve only as a constitutional stand-in during a short absence by Neves. But Neves is reported to remain in precarious condition, threatened by infections in a lung and his intestine, following a six-hour operation last Tuesday.
Official reports said that the infections were slowly being controlled and Neves was recovering. Government officials, however, said they expect Sarney to be faced with guiding a new administration for at least a month and perhaps indefinitely, even though he could be opposed by many sectors of Neves' broad popular base.
The political uncertainty has been accompanied by the interruption of positive economic trends with signals of a new crisis. Brazil's economic agreements with both the International Monetary Fund and banks holding the bulk of its $100 billion foreign debt have been suspended in the last month and key plans for trade appear to be unraveling.
The result is that the optimism that accompanied Neves' election has turned to anxious calculations in Brasilia on how much flexibility can be coaxed from both Brazil's creditors and its restless unions and businessmen. "It is difficult to talk to bankers about these social problems. They don't like it," said Sarney in an interview last week. "But we must make them understand our situation -- our destiny depends on it."
The new government's situation closely parallels those of other new democratic governments in South America. In Argentina, the crunch of external and internal demands led new President Raul Alfonsin into a major confrontation with the IMF last year. In Peru, President Fernando Belaunde Terry's government has foundered politically in its efforts to impose austerity.
Brazil's civilian leadership has interpreted its neighbors' troubles as a warning of what could befall the suddenly delicate political transition in this largest Latin American nation. If an economic balance cannot be struck, Sarney said, "we will have social problems. And social problems will spill over into serious political problems."
Neves' Democratic Alliance coalition hoped that Brazil could be the exception to the regional pattern. After three years of painful recession, the country managed last year to return to modest growth as its exports increased to an unprecedented level.
As the new year began, economic planners predicted that Brazil's trade earnings would allow it to meet its foreign payment obligations this year without fresh bank loans, for the first time since the debt crisis began in 1982. Neves, meanwhile, planned a lightning assault on the country's 220 percent inflation that would still permit economic recovery to continue.
The plan began to crumble even before the new government took office. Led by what economists here say was a burst of spending by the outgoing military, inflation surged to a monthly rate of 12.7 percent in January. Weeks later, the IMF suspended its economic agreement with Brazil, for failing to meet inflation-related targets, and banks froze negotiations on the rescheduling of about $50 billion in debt.
At the same time, clear signs began to appear that this year Brazil would not be able to match the $13 billion trade surplus it accumulated in 1984. The rate of trade earnings fell by 10 percent in January and February compared to last year as exporters were weakened by the withdrawal of government subsidies and increase of the relative prices of Brazilian goods in European markets.
Laerte Setubal, the president of the Brazilian Exporters Association, predicted in an interview that Brazil's trade earnings could fall as low as $6 billion this year, forcing the government to retract its pledge not to ask banks for fresh funds. Brazilian industry, he added, would thus see its export-led growth of the last year grind to a halt.
The worsening economic indicators have already obliged authorities to recalculate their strategy. Finance Minister Francisco Dornelles implemented a 10 percent cut in spending and a freeze on hiring on his first working day in office, and Central Bank President Antonio Carlos Lemegruber has admitted there is a possibility that Brazil may need new bank loans.
"If inflation does not respond" to new measures, he said, "the hardships will be very significant."
Such warnings have only increased the worries of government political leaders uncertain of Sarney's ability to lead the country. The former president of the military-backed Social Democratic Party, Sarney, 54, defected to Neves' Brazilian Democratic Movement Party only last July and is said to have gained little support since then among Brazil's 130 million people.
Several government leaders said that if Neves were unable to take office, Sarney would come under strong pressure from leftist movements and even sectors of his own coalition to shorten Neves' planned presidential term of four years or even resign or call a presidential election.
"This is like a soccer team taking the field without its coach," said Rio de Janeiro's socialist governor, Leonel Brizola, a likely leader of opposition to a Sarney presidency. "Direct elections will be essential to the reconstruction of this country."
Even if Sarney survives politically, many observers doubt that he will be able to negotiate the "social pact" Neves planned to pursue in the coming weeks among government, business and labor to share the costs of austerity. Industrial labor unions are pressing salary demands and a first major strike -- of 280,000 Sao Paulo metal workers -- has been tentatively called for this week.