Brazil’s Leader Comes Bearing Message of Stability : Latin America: Cardoso’s meetings with Clinton and others will allow him to contrast his country with Mexico.

President Fernando Henrique Cardoso is in Washington and New York this week for meetings with President Clinton and to assure U.S. business leaders that Brazil’s recently emerged economic stability is not likely to vanish in a Mexico-like crisis.

Cardoso says it will be a much different Brazil represented this time as leaders of the two most populous nations in the hemisphere confer.

“For the first time in nearly 30 years, we will meet without any contention between Brazil and the United States,” Cardoso said in an interview in Brasilia. “This time, we won’t be on the defensive.”

He was referring to a series of political and economic problems over the last three decades. Since the mid-1960s, one U.S. diplomat said, Brazil has been the Latin American version “of the bad kid who always has to end up sitting in the corner with the dunce cap on his head.”

In the 1960s and ‘70s, the United States’ dispute with Brazil was over human rights violations as the South American country labored under an often brutal military dictatorship. In the 1980s, Brazil was a huge debtor after it piled up tens of billions of dollars in foreign loans and then defaulted.

In the early 1990s, Brazil was seen as an economic pariah that refused to initiate the kinds of fiscal reform undertaken in Chile, Argentina and Mexico.

But that has changed, Cardoso says. The dictatorship is gone. Inflation, running at 1.5% a month, is at the lowest rate in decades. The country posted a record $3.8 billion in exports last month, and retail sales this year are up 34% compared with the same period last year. Its federal budget is balanced, the country has $30 billion in reserves, and it is paying off its foreign debt on time.

“So now, in my talks with President Clinton, we will rephrase the dialogue with the United States,” said Cardoso, who was an exiled leftist under the military dictatorship. “We don’t have to talk about Brazil because we know what’s happening in Brazil. Now we are much more interested in global politics: how to protect developing and developed economies; how to handle international monetary speculation; what role can we play in the United Nations peacekeeping program.”

Cardoso, a former sociology professor, has been both cause and beneficiary of the new Brazil. As finance minister last year, he devised an economic plan that halted decades of runaway inflation. The plan’s success catapulted him into the presidency and elevated him to near-hero status. A newspaper poll shows his approval rating now is slightly higher than before he took office in January.

But Cardoso, known to U.S. intellectuals for his books on Latin America and as a guest lecturer at UC Berkeley and Princeton, knows that all of that is about to change. His presidential honeymoon appears to be nearly over.

Last month, for example, he angered consumers and business people banking on imports when his administration imposed tariffs of as much as 70% on automobiles and about 100 household appliances to counter three months of trade deficits.

Meanwhile, Cardoso’s proposals for economic and social reform, the thrust of his presidential campaign, have spawned nationwide protests by tens of thousands of students, union workers, government employees and retirees. About 3,000 protesters stoned and threw eggs at the presidential bus during a recent visit to the beach city of Recife.

Congress recently dealt his administration its first sharp political setback. Over Cardoso’s objection, it voted to allow 1,200 wealthy landowners to skirt $2.8 billion in interest owed to the national bank, adding to taxpayers’ burden and threatening Cardoso’s anti-inflation program.

And Cardoso must wrestle with the fractured and often self-serving Congress over constitutional reforms to narrow the great disparity between rich and poor and to keep Brazil from drifting back into an inflation rate of 50% a month.

“This is just the beginning of the battle,” Cardoso said. “What you have seen so far is nothing.”

Cardoso’s administration appears to have stumbled slightly, his friends and foes say, because the former teacher has not clearly communicated to Congress or the public exactly what he is doing and why.

“If you’re the one who wants something, you have to be the one to communicate it,” said Sen. Esperidiao Amin, who ran against Cardoso for president but now supports his reforms. “He needs to be more forceful, more direct.”

Cardoso acknowledges that he has not always clarified his positions.

“The question is, at what point do I personally participate in the debate?” he said. “I have sent my ministers forward. They have explained what we are trying to do. They have talked to the members of Congress. But I have to look at the appropriate moment when I will expose myself to the debate. It’s early. The battle is just starting.”

Walder de Goes, one of Brazil’s leading political analysts, says Cardoso’s strategy is risky.

“Cardoso is carefully trying to open spaces and build consensus,” De Goes said, “but in the process, someone else could seize center stage. Then he may not be able to get the things that he wants.”

What Cardoso wants, and economists say Brazil needs, are constitutional amendments allowing privatization of many federally owned companies such as the telephone system, oil company, petrochemical company, railroad company and public works and mining industries.

Unsold companies could be open to private investments or to partnerships between government and private businesses.

Government revenue from these sales or investments could reduce Brazil’s $135-billion foreign debt, Cardoso says, while money no longer needed for operating those companies could be invested in public health, education, land reform and housing.

Cardoso is also pushing reform of Brazil’s tax code, which allows multimillion-dollar corporations to pay as little as $400 a year. And he has stirred controversy with his proposal to revamp a pension system that allows some Brazilians, particularly federal and state employees, to retire as early as age 45 and collect more in pensions than they earned while working.

Congressional opponents, supporters and political analysts say that while Cardoso has lost some of his initial momentum, he still has a chance for progress on reforms in a nation often driven by the narrow self-interests of elites.

“He has lost time, but not the opportunity,” Amin said.

Cardoso still has the upper hand with Congress, observers say, helped by the perceived mandate of his landslide presidential victory.

“You have a new president, a strong president who won the election without a runoff against seven other candidates,” said Sen. Sergio Machado, Senate leader of Cardoso’s Brazilian Social Democratic Party, or PSDB. “He received 35 million votes; that’s 10 million more votes than all of the members of Congress received combined. So, he’s strong.”

Cardoso’s biggest strength comes from the nine months of relative normalcy under his economic plan. For the first time in years, Brazilians can actually recall prices from day to day. Access to credit has given many people purchasing power unknown during the days of high inflation.

“The economic plan actually creates its own sort of political mobilization,” De Goes said, “because people realize that without constitutional reform, it could dissipate. So there is a lot of pressure from the business elites, from working people, from corporations for some kind of reform. Nobody wants to go back to the old days.”

Cardoso is counting on that sentiment to help him push through at least his economic reforms.

“The congressmen can feel it,” he said. “They are feeling pressure to push this through.”