I: Brazil: Cardoso Looks Low for Support - Stratfor

["Nello Margiotta" <animarg@tin.it>]

Subject: Brazil: Cardoso Looks Low for Support - Stratfor


 >Stratfor.com's Global Intelligence Update - 31 October 2000
 >
 >Brazil: Cardoso Looks Low for Support
 >
 >Summary
 >
 >Brazil's leftist Workers Party (PT) scored the biggest electoral
 >win in its 21-year history in the municipal runoff elections Oct.
 >29. The PT's growing electoral appeal challenges President Fernando
 >Henrique Cardoso's efforts to anoint his successor and guarantee
 >the continuity of his free-market policies. Cardoso will try to
 >undermine the PT's growing national appeal by seeking regional
 >alliances with local leaders like Sao Paulo's new mayor. While this
 >may appear contradictory, local and regional party leaders
 >frequently are more powerful and influential than national leaders.
 >
 >Analysis
 >
 >The leftist Workers Party (PT) scored an impressive victory in
 >Sunday's municipal runoff elections in 31 cities in Brazil. The PT
 >won 13 of the 16 municipalities in which it ran candidates for
 >mayor, including Sao Paulo, the country's industrial and financial
 >capital. The PT now controls 17 of the 56 most important cities in
 >Brazil. In addition, the PT's share of the vote nearly doubled,
 >from 6.94 percent in 1996 to 14.12 percent, making it the fourth-
 >largest political party in Brazil. The win did not signal a
 >dramatic lurch to the left in Brazilian politics since the party
 >controls only 174 of 5,624 municipalities. The election results,
 >however, consolidated the PT's status as the leading national
 >opposition party for the first time since its creation in 1979.
 >
 >PT leader Luis Inacio "Lula" Da Silva will seek to leverage the
 >party's victory to build political alliances with regional
 >independent groups, including business leaders, in advance of the
 >2002 national elections. Lula will make a fourth bid for the
 >presidency of Brazil. President Cardoso, however, wants to assure
 >the election of his own chosen successor and will seek to undermine
 >the PT leader by striking his own alliances with regional PT stars
 >such as Marta Suplicy, the new mayor of Sao Paulo.
 >
 >Suplicy, a psychologist-turned-leftist-politician, won 58.5 percent
 >of the vote to defeat two-time Sao Paulo mayor and state governor
 >Paulo Salim Maluf. The PT's reputation for honesty undoubtedly
 >attracted some voters in Sao Paulo. However, Suplicy also enjoyed
 >widespread crossover voter support from members of Cardoso's
 >Brazilian Social Democratic Party (PSDB).
 >
 >Both Cardoso and Suplicy favor cooperation over confrontation.
 >Cardoso also will seek alliances with PT mayors in key cities. The
 >president's goals are to assure the continuity of his economic
 >policies and, in doing so, ensure his political legacy and control
 >of the PSDB. Suplicy, as the first woman mayor of the largest and
 >wealthiest city in Latin America, will have a promising future in
 >Brazilian politics if she can reduce widespread corruption in Sao
 >Paulo's city government and pay down its $9 billion debt.
 >
 >Suplicy and other PT mayors are likely to accept Cardoso's attempts
 >to build cooperative relationships, because cooperation will do
 >more to advance their political careers than confrontation.
 >Historically, Brazilian politics are not about competing
 >ideologies, but about individual personalities battling each other
 >for power and control. In addition, local and regional politicians
 >in Brazil frequently have more influence and power than national
 >leaders due to their control of political patronage and the purse
 >strings of city and state governments. By working cooperatively
 >with Cardoso's government, Suplicy and other PT mayors can do more
 >to advance their individual careers than they could by supporting
 >the more confrontational Lula.
 >
 >At the same time, by working with Suplicy instead of ignoring Sao
 >Paulo's new mayor, Cardoso can focus on assuring his political
 >succession while undermining the political prospects of PT leader
 >Lula. To the extent Suplicy and other regional PT mayors succeed,
 >Lula will face increased competition within the PT from emerging
 >leaders inside his own party; these will challenge his leadership
 >as they pursue their own political ambitions.
 >
 >Ultimately, the real threat to Cardoso's political legacy and
 >Brazil's economic stability is not internal, but external. After
 >two consecutive years of recession in 1998 and 1999, the economy
 >grew 3.9 percent in the second quarter of this year. Unemployment
 >and inflation have declined, and exports are up thanks to improved
 >world commodity prices. However, Wall Street fears Brazil is
 >vulnerable to an external shock, such as a debt crisis or
 >devaluation in Argentina. If that were to happen, the Brazilian
 >economy would plunge back into recession, giving Lula's
 >presidential ambitions a boost and defusing Cardoso's efforts to
 >neutralize the PT leader.