Just when the political fortunes of Brazilian President Jose Sarney seemed at their lowest and his coalition government was on the verge of unraveling, he sprang an economic shock plan that has infused his administration with new life.
The decision in late February to try to snuff out high inflation by freezing prices, dampening wage hikes and replacing the cruzeiro with a new currency, the cruzado, has ended the first year since the return to democratic rule on a note of public approval.
With patriotic fervor, Brazilians have rallied to their president's call to serve as price "inspectors," ensuring compliance with official price lists. Opposition politicians and union leaders, whose attacks on the government before the cruzado plan kept the legitimacy of Sarney's presidency in question, are groping for an alternative strategy.
Boasting of the plan's success, Sarney, 56, said in a nationally televised speech last month: "It has achieved its objective. Brazil has changed . . . . The notion is over that we are a country that only attracts the curiosity of the world for the picturesque character of our soccer and carnival, for the suffering of the Indians and for the death squads."
But beneath such outbursts of economic enthusiasm -- rare these days in debt-ridden Latin America -- festers a range of social ills barely addressed. Despite the "new republic" slogan attached to the government, it retains the conservative bent of an administration still peopled with civilian holdovers from the previous 21 years of military rule.
Sarney's bold economic stroke has gained him a fresh start in moving the world's eighth largest economy toward a sound footing based on long-term investments and away from speculation in a fevered inflationary climate. This has led to a political edge over such opponents as Leonel Brizola, the charismatic governor of Rio de Janeiro state who had been calling for early presidential elections.
The cost of living in March actually fell slightly, compared to a pre-freeze rate that was approaching a rise of 500 percent for the year. In April, however, the Sao Paulo State University found an increase of 2.31 percent, while the government contended the increase -- attributed mainly to clothing costs -- was only about 1 percent.
Either way, the rate reduction is dramatic compared with the recent past. It has placed the government on political high ground as campaigning begins for a crucial November vote to elect a congress that will draft a new constitution. The assembly also is to decide on the length of Sarney's presidential term.
In a single action, Sarney has thus recovered an aura of presidential authority and been able to assert personal control over the turbulent political coalition he leads. According to recent polls, the president -- who spent most of the past year trying to overcome his image as a vacillating, diffident leader -- now enjoys the confidence of 85 percent of the public.
Sarney was not supposed to be president but rather vice president under the popular Tancredo Neves, who chose the poet-politician as a compromise running mate in the contest decided by an electoral college. Neves was hospitalized for surgery in March 1985, on the eve of his inauguration, and died five weeks later.
Leaders of Neves' Brazilian Democratic Movement distrusted Sarney for having headed the Democratic Social Party, the political arm of Brazil's military regime. By February, the Democratic Movement was in open revolt following Cabinet changes that placed several of Sarney's conservative friends in such ministerial posts as foreign affairs, transportation, education, justice and irrigation.
Some analysts suspect that Sarney's decision to launch the cruzado plan when he did was dictated more by the need for dramatic action to save his government than by economic considerations. Although inflation was accelerating past the 200 percent range of the last three years, it had not yet got wild enough to demand shock therapy, say some economists.
The government's economic successes so far have tended to show up most in the macro figures: the inflation rate, last year's growth rate of 8 percent and last year's trade surplus of nearly $13 billion. The picture for the millions of Brazil's poor is largely unchanged.
It was Neves who said in November 1984, "We are going to create a new republic," raising hopes that the democratic alliance Neves was forging would do something about Brazil's gross social inequalities. Some strides have been made.
Illiterates were enfranchised. The constitution was amended to provide for future direct elections. New political parties were created -- now numbering 30 on paper, of which about a fourth really count. The Communist Party was legalized.
In general, a climate of free speech and action has been restored. In February, however, Sarney banned public showings of the French film "Je Vous Salue, Marie." The movie, which tells the story of the Virgin Mary transplanted to the present-day lives of a working girl and her taxi-driver boyfriend, incurred the condemnation of Brazil's Roman Catholic bishops. They termed the film obscene and heretical. Hundreds of students, artists and intellectuals protested the ban.
But these changes largely have been institutional in nature, with little impact on the social balance. "One of the questions that the new republic raised hasn't been touched, and that is income distribution," said Eduardo Suplicy, the Workers' Party candidate for governor in Sao Paulo state. "We still have one of the worst situations in the world."
According to government figures, Brazil's richest 10 percent hold 47 percent of the national income and the poorest 50 percent hold only 14 percent, numbers that have improved only slightly since the development boom of the early 1970s. The minimum wage is about $58 per month, far below the $234 that union researchers say a family of four now needs to survive.
"This is not a new republic for the poor and disenfranchised," said political scientist Alexandre de Barros. "It's still an elite game. Democracy has not meant egalitarianism."
A report submitted to Sarney concluded that about 60 percent of the country lives in extreme poverty. It urged the government to boost social spending and to step up the distribution of milk, food and medicines to deal with malnutrition. "There is a privileged class on one side and another India on the other," said Helio Jaguaribe, the report's author and a sociologist, in a TV interview.
A pledge to redistribute millions of acres of arable land to unemployed farm workers topped the government's social agenda at the start. But the land reform law passed by Congress was watered down considerably. The legislation decreed the government's intention to distribute 100 million acres of land to 1.4 million families by 1989. But it said only idle land would be expropriated, not cultivated farms -- a concession to powerful landholders.
Officials contend that income distribution can be tackled once inflation is controlled. Sarney's critics hope the president's new-found populism will result in new efforts for social change.
Despite the cruzado plan's initial success at holding the line on prices, not all of the root causes of inflation have been weeded out. The major change was to end automatic readjustment of wages to accommodate inflation. This has broken inflation's inertia. But unless deficit spending can be reduced, economists say, inflation could easily return.
The government has raised taxes on businesses and upper-income groups and closed an open account that had entitled the Bank of Brazil to get advances from the Central Bank -- causing uncontrolled increases in Brazil's money supply. But spending by state and municipal governments and by state-owned enterprises remain serious problem areas.
Government officials are most worried about the labor front, fearing demonstrations against unemployment and slow-rising wages. Union leaders say the cruzado plan has eroded wages 17.5 percent. Apparently hoping to head off some labor unrest, Sarney has maintained a form of partial wage indexing.