BRASILIA, NOV. 30 -- With inflation on the rise and public confidence on the wane, President Fernando Collor de Mello's ambitious plan to create a "new Brazil" is suddenly in danger of stalling.
After more than six months of relatively smooth sailing, Collor struggled through a disastrous October. First his justice minister was forced to resign amid revelations of his extramarital romance with another member of the cabinet, Economy Minister Zelia Cardoso de Mello, the president's most important aide.
Then one of Collor's closest political associates was accused of influence peddling. Finally, the government reported that prices rose nearly 16 percent during the month, the highest inflation rate since Collor's financial plan took hold.
The string of bad news put Collor on the defensive for the first time. "I will not allow anything to put at risk the grand project of reconstruction upon which we have embarked," he said recently in a televised speech to the nation designed to rally support and shore up his energetic, can-do image.
Collor publicly warned his aides to toe the line, reminding them that "no one is untouchable" and that "anyone who belongs to my team is there because he wants to be and, above all, because I want him to be."
But some of the magic has faded. In local elections in October and November, voters elected opponents of Collor to the governorships in Sao Paulo and Rio de Janeiro states, perhaps the two most important elective posts after the presidency.
And diminishing confidence in the economic plan has led business and labor leaders to begin efforts to negotiate an "understanding" that would partly control wages and prices. Consistently opposed to such controls, Collor could end up having to accept some.
Declining confidence in the plan has resulted from fears that inflation will shoot even higher in December when consumers go on their traditional Christmas buying spree, and that an already traumatic recession will deepen in January when the spree is over.
President Bush's scheduled arrival in Brasilia Monday for a two-day visit is seen as a potential boost that could help show that Collor is still in charge.
Speculation is intense on whether Collor will stick by his economy minister or decide she has become a liability. Cardoso de Mello (no relation to the president), 37, the first woman ever to lead Brazil's complex and problem-plagued economy, was viewed as an inexperienced unknown when she took her post after Collor's inauguration in March, but she surprised her critics with her toughness and persistence.
On Sept. 19, at her gala birthday party, the secret emerged of her romance with Justice Minister Bernardo Cabral, 58 and married. Cabral bragged that he had asked her to change her hair style, and he called her "sweetie." Then the two took to the dance floor, swaying to the languid Cuban love song "Besame Mucho" (Kiss Me a Lot).
In October, Cabral resigned and Collor expressed his full confidence in Cardoso de Mello. The scandal flared anew at a ceremony several weeks ago honoring the economy minister when the military band leader, instead of striking up a march, ordered his musicians to play "Besame Mucho." He was tossed in the brig for insubordination.
More threatening for Cardoso de Mello and her economic team is the recent spurt in inflation, the causes of which are not immediately apparent. The economic plan has succeeded in cutting Brazil's inflation-boosting fiscal deficit. The month before Collor took office, inflation was 73 percent and the government's deficit was as high as 9 percent of gross national product. Now revenues are balancing expenditures almost exactly, and soon the government could turn a surplus.
Some observers suggest that firms and investors, long accustomed to making large profits through short-term speculation, are moving money into and out of the credit markets so quickly that in effect they are increasing the money supply. The government has declined to release figures that take the broadest measure of the money supply and might point to possible reasons for the jump in inflation.
Collor now faces criticism from opponents who were reluctant to speak out when he was riding high. He also has had to deal with the defection of a key congressional ally and allegations that have weakened the image of his administration as a clean break from the corrupt ways of the past.
He ordered an investigation after the treasurer of his campaign, Paulo Cesar Farias, was accused last month of having lobbied the state oil company Petrobras to give a $20 million credit to a businessman who is also a friend of the president.