100 days with the President

    Inflation has never been this low in recent times, in Brazil. The
    country is enjoying record exports ($3.8 billion in March alone), the harvest (78 million
    tons ) has never been so abundant, and in March the Revenue Service collected $7.2 billion
    in taxes, the biggest in the last ten years. The Brazilian economy will increase the
    equivalent to a Chile this year. Crime is being dealt with, with the use of the Federal
    Police, the President is personally engaged in a fight for better education and people
    have been spending money like crazy. Why in the hell then is everybody still complaining?

    “What’s happening to our Fernando Henrique?” The question was recently put to
    a friend by ex-vice-president Aureliano Chaves, a politician known for his circumspection
    and economy of words. Chaves was wondering aloud about the changes Fernando Henrique
    Cardoso has undergone since being inaugurated president January 1. The 100-day trial
    period has just passed and the rest of the country seems to be asking the same question,
    as though everyone felt personally betrayed by the President.


    His old friends from the left remembering that Fernando Henrique Cardoso had to live in
    exile due to his views accuse him of abandoning his socialist ideals. Former allies such
    as ex-presidential candidate Lula, ex-Rio Governor Leonel Brizola and Pernambuco Governor
    Miguel Arraes have even created a united front to fight his Social Security reforms and
    favor maintaining the state monopoly in several areas. His more recent friends on the
    right have been castigating him for reneging on his promises of opening the economy and
    privatizing most of the state monopolies.


    Despite all these complaints the Brazilian President has ended his first 100 days in
    better shape than his predecessors. His biggest accomplishment has been to maintain the
    inflation rate at less than 2% a month, in a country where a 40% a month inflation rate
    had become the rule. He has been praised by political analysts for humbleness, something
    seemingly incompatible with his famous vanity. Having won in the election’s first round,
    with 34 million votes in a field of six other presidential contestants, Cardoso and his
    closest aides seemed convinced that the President had so overwhelming a mandate that he
    would be able to reform instantly the constitution with an assured majority in Congress.


    This didn’t prevent the President from suffering at least three important defeats in
    Congress. One, when the Senate approved a new law limiting annual interest rates to 12%.
    The measure was classified as an “atomic bomb” by José Serra, the Planning
    Minister. The other lost battle was the heavy opposition to the Security reform that
    forced the President to retreat and restudy his position. More recently, Congress voted
    for the abolition of the Referential Fee (TR) a fee used for correcting agricultural
    loans. With this reversal the federal government, through Banco do Brasil, might lose $3


    The biggest change in Cardoso’s behavior since he assumed the presidency has been his
    abandonment of precaution when making promises. He has been announcing the construction of
    infrastructure projects with parallels only to the economic miracle times of the 70’s,
    with the difference that he has no money in the bank and no forthcoming foreign loans to
    help him. To Nícias Ribeiro (Pará’s PMDB — Party of the Brazilian Democratic
    Movement), for example, he promised to pave not only the 400 km. of Transamazônica
    roadway as requested by the congressman but also the remainder 2.400 km of the road.


    In confidences to friends Fernando Henrique has said that he has been shot three times
    since taking office. He was referring to the Mexican economic crisis, to a Central Bank
    resolution that depleted the treasury, and to his inability to build bridges with the
    Congress. Except for the Mexican fiasco, which has forced an overhaul of the exchange
    policy, the other shots referred to by the President were caused by his own doing. And,
    maybe as a courtesy to his predecessor Itamar Franco, he didn’t mention another very
    dangerous bullet: the import feast promoted by Itamar and his Finance Minister Ciro Gomes
    which while giving an ephemerous first world air to Brazil, significantly helped to
    consume in a few months one third of the Brazilian reserves. In February, Brazil’s
    commercial foreign balance closed with a record $1,095 billion deficit.


    In addition to imports former Finance Minister Delfim Netto, who called the measure an
    “elephantine mistake” nobody seems to have raised their voice against the
    administration when the president decided to raise to 70% the import tariff on 109 durable
    goods, mainly on auto’s and appliances. The main target of the bitter pill was foreign
    cars which in February were imported in record numbers, contributing $655 million to the
    deficit. But there were also motorcycles, bicycles, toasters and even orange juicers on
    the list of undesirables.


    Mário Henrique Simonsen, another ex Finance Minister, justified Cardoso’s action.
    “The alternatives,” he said, “would be a heavy devaluation of the real,
    which would send inflation through the roof or we would enter into a very serious
    recession.” A real devaluation would make every Brazilian a little poorer overnight
    and would also serve to increase inflation . There’s fear now that inflation will soar
    anyway since the imported products were being used to spur competition and keep down
    domestic products’ prices.


    In announcing the tariff , Malan had insisted, ” The decision does not represent
    — I want to underline the ‘not’ — in any way — an abandonment of Brazil’s
    opening policy towards the rest of the world.” According to Simonsen it is pure
    semantics and a waste of time to debate whether the administration’s measure should be
    called a retreat or a detour. For him, all the difficulties Cardoso’s policies have
    endured have to do with unrealistic expectations.


    The Real, the new currency created by Cardoso when he was Finance Minister of the
    previous administration, has been the biggest vote-getter for the President. But,
    according to polls ordered by the government itself, people grew accustomed to the new
    money and don’t feel any special emotion towards the currency anymore. That led Fernando
    Henrique to declare to a group of Ministers, “We need to regain the emotion towards


    The President, who has participated in protests against the government beside the
    steelworkers of Săo Paulo’s ABC during the 60’s, feels uncomfortable on the other side of
    the fence. Since March 17 when Cardoso had to face a protest against his government in his
    native Rio, where 500 protesters calling the President a safado (rogue) and other
    epithets confronted an Army battalion causing light injuries to four civilians, he has
    been the target of discontented chants, boos and an arsenal of tomatoes and eggs.
    Protesters were again in the streets of Săo Joăo do Jaguaribe in Ceará where he had
    gone to give land titles to new farmers. The President called the 30 or so hecklers
    present as belonging to the “false left and to the old putrefied right”.


    On March 22 with the help of Brasília’s governor, ( who lent buses and brought food to
    public workers ), 10,000 people protested at the Federal Capital’s Esplanada dos
    Ministérios,( where the Ministries buildings are located), to condemn the Constitutional
    reforms. At the end of March, the President canceled a trip to Conceiçăo do Araguaia,
    state of Pará, after the Federal Police found out that 3,000 people were planning to boo
    and pelt him with a battery of rotten eggs and tomatoes. On April 7, in Pernambuco, in a
    protest organized by CUT (Unified Workers Federation) the protesters armed with eggs,
    sticks and stones were repelled by police.


    Every morning, the President has been stretching and reserving at least half an hour
    for swimming. These activities are less to keep Cardoso in shape and more to help relieve
    his back pains. However, these problems have not slowed the President, who also has made
    three trips abroad. He went to Uruguay for the inauguration of President Júlio Maria
    Sanguinetti. He called on Chile in a nostalgic journey and it was there that he first took
    refuge when forced to leave Brazil after the 1964 military takeover. In April he came to
    the US where he met President Bill Clinton on April 20.


    After 100 days and beyond it’s clear that the most powerful man in the cabinet after
    the President is the Planning Minister, José Serra, whose last name means saw. He made
    good on his fame by expanding his control and won the nickname of Moto-Serra (Chain-saw),
    a nickname he seems to relish. His power can be shown by the number of cellular phone he
    pilots: four, and the number of visits to the President cabinet: at least one a day.
    Choosing him as the interlocutor for the tributary reforms that the administration wants
    implemented by Congress, Fernando Henrique has snubbed Finance Minister Pedro Malan, who
    would normally be the presidential spokesman in this area. It was Serra who also convinced
    Cardoso in the administration’s first week to announce a $4-billion budget cut.


    Another mighty aide is Communications Secretary Sérgio Motta, called Serjăo by
    friends. For more than three decades he has been a partner, friend, and adviser to the
    President. He has been holding down a heavy workload that starts at 9 in the morning and
    often extends until midnight. According to another aide, “It’s Serjăo who says the
    things that the President would like to say but might put him in a bad light.



    Right on


    ˇ Inflation is low and the IPEA (Institute for Applied Economic Research) forecasts
    that the index will not go over 2% a month until the end of June. To accomplish this the
    government has not used any type of price freeze or savings confiscation as in past


    ˇ The Palácio do Planalto had its structure overhauled. Chief of Staff Clóvis
    Carvalho went back to his managerial function after a fruitless stint as political


    ˇ Public expenditures have been reined in. Finance and Planning Ministries as well as
    the National Treasury have been strictly keeping their accounting books.


    ˇ Tax collection has been at record highs. It’s estimated that the federal government
    will get $63.5 billion in 1995, 11.5% more than in the last year.




    ˇ The House of Representatives, in a symbolic vote, approves the $120 a month minimum
    wage. The President gets mad and says the measure would break the government.


    ˇ Government has lost its first battles on constitutional reform for lack of an
    effective dialogue with


    ˇ Congress. The same shortcoming is delaying the discussion of the Social Security


    ˇ Cardoso until now has also been unable to communicate to the public his thoughts and
    policies. A telling example was the change the administration made in its exchange policy.
    The confusing communiqué from the Central Bank provoked more confusion and a run on the
    stock market.



    The fingers


    Fernando Henrique Cardoso used
    the fingers of his hand to announce his
    five-priority electoral platform.
    How are they surviving the

    reality onslaught?


    Agriculture 1. Record crop announced: 81.6 tons of grain 2. 1 million hectares
    of rural land expropriated. 3. More than 16 thousand rural families settled.


    Education 1. Campaign “Wake up Brazil, it’s time for school”. 2.
    Proposal to end vestibular, the exam which now is the sole determinant for
    admission to college.


    Health – 1. Tighter monitoring of 150 pharmaceutical industries. 2. Debt payment
    of the Universal Health System (SUS)


    Jobs – Reissue of presidential decree on employee’s profit participation.


    Security – 1. A bigger contingent of Federal Police to participate in Operaçăo
    Rio, an operation against crime and drugs. 2. A pact between the US and Brazil to fight



    On reverse


    Opening of the economy – Import fees for autos and other durable goods have
    reverted to levels from the military government.


    Political council – The idea to dialogue with all parties has shrunk to contacts
    only with Cardoso’s own PSDB (Party of the Brazilian Social Democracy), in addition to the
    PFL (Party of the Liberal Front) and the PMDB (Party of the Brazilian Democratic


    Privatization – There is no talk anymore about privatizing two huge state
    monopolies: the oil and the communications sectors.


    Social Security – Fearing being defeated in Congress, Cardoso has slowed
    considerably his push to change the system.


    Tributary reform – Government is resigned to keeping things the way they are
    right now.



    He said


    “Let’s not talk about the first one hundred days, about bombastic announcements,
    but about four years of continuous advancements towards reforms.” (December. Two
    weeks before being inaugurated.)


    “This year will be better. And the next even better.” “Brazil is in a
    hurry.” (January. Inauguration speech.)


    “When the Republic’s powers fight, it’s Brazil that ends up losing.”


    “While it’s not possible to pay at least $100 (as the minimum wage), the ministers
    will do without the recently created job gratification, which represents about 25% of
    their salaries, and so the President and the vice-president will do with their
    salaries.” (February)


    “There are the professional pessimists — some because of temperament, others
    because of naďveté and still some out of bad faith who continue to preach
    ‘failuremania.’ They try to scare the country with the ghost of the Mexican crisis. Our
    reserves continue high: around $38 billion. Our exports have reacted: we had another
    surplus in January.” (February)


    “We are living in a time of tests. The financial market has tested our economic
    policy by attacking the Real, Congress is testing the reforms and, meanwhile, people test
    our ability to find solutions.” (March. During a meeting with aides.)


    “Only those with any sense of responsibility will not retreat. When one sees a
    mistake one retreats. In battles whoever does not retreat, will lose.” ( March – In a
    press conference)


    “Or democracy puts an end to injustice or the injustice — I’m not even going
    to utter the rest, but it is true.” (March. Same press conference)


    “The same as you. This is a demagogical question. What would you do? The
    individual gets desperate. And we cannot let millions fall in despair. So we have to do
    the reform, so we have to be serious and not little jokers.” (March. Same press
    conference, answering to William França from Folha de Săo Paulo who asked,
    “What citizen Fernando Henrique Cardoso would do if he earned the minimum wage of


    “These are not complaints, they are interests. I have to take care of the national
    interest. Then they take care of their own.” (March – Answering a question why
    businessmen were complaining about the non-privatization of Telebrás and Petrobrás
    — state monopolies for communications and oil, respectively.)


    “They have lost the elections. They have the germ of backwardness in their heads
    and they want to win by shouting. They have despaired and have lost their minds too.”
    (End of March. Commenting on street protests against him in Rio.)


    “We have changed the course of the economy because the world has changed. We are
    not going to repeat what was done during the cruzado (a currency created in place of then
    current cruzeiro) time when President José Sarney didn’t have the courage to take
    unpopular measures. We will take every required measure be they popular or not.”
    (March. Talking to Ireland’s President Mary Robinson.)


    “We are living an extraordinary moment, but everybody seems to be


    “Brazil cannot have the luxury of not having a surplus in its commercial balance.
    And luxury is a good word for this. We were importing billions and billions in luxury



    Day by day


    January 1 – Fernando Henrique Cardoso is inaugurated.


    January 1 – Communications Minister Sérgio Motta provokes the fist argument accusing
    PFL’s (Party of the Liberal Front) senator Antônio Carlos Magalhăes., an ally of the
    President of “using politically” that ministry in the 80’s.


    January 4 – Administration suffers its first defeat in Congress. For lack of a quorum
    Pérsio Arida is not sworn in as the Central Bank Chief. That will happen on January 10,
    after some concessions by the government.


    January 11 – Finance Minister Pedro Malan announces that the foreign deficit has
    reached $884 million, a record.


    January 18 – House symbolically votes in favor of raising the minimum wage from $80 to
    $120. Cardoso announces veto and loses prestige.


    January 19 – The foreign balance deficit for December is $884 million reveals Malan,
    after previous announcement that the amount was only $47 million.


    February 3 – The President goes on TV for the first time and talks about the need to
    veto the minimum wage increase.


    February 10 – Cardoso pummels the table while defending reforms before Paulista (from
    Săo Paulo) businessmen.


    February 14 – President says to unionist he is not a neo-liberal. This talk about him
    being one, he says, is nothing more than nhenhenhém. The little used word from
    Tupi-Guarani origin which means idle talk becomes a star in the media.


    February 18 – Vox Populi poll shows 75% of Brazilians against the promised veto against
    the minimum.


    March 6 – Reacting to Mexico’s economic crisis, real is devalued and government
    institutes the system of exchange bands. The dollar starts to fluctuate between 0.86 and
    0.90 reais.


    March 9 – Central bank spends about $5 billion trying to stop the dollar’s fall on the
    black market.


    March 17 – Cardoso faces in Rio the first organized protest against his administration.


    March 24 – New protest. Now in Ceará.


    March 27 – Former Rio governor Brizola and ex- presidential candidate Lula get together
    in Rio and launch the front against government reforms.


    March 28 – Government retreats from the Social Security reform after noisy protests
    from the public and Congress.


    March 29 – The import tariff on 109 products is raised to 70%.


    March 30 – National secretary for Social Communication, Roberto Muylaert, presents his
    letter of resignation and accuses Cardoso of asking from him what he was not supposed to


    April 5 – Congress ends the use of the TR (Referential Fee) to index agricultural
    loans. CUT (Unified Workers Federation) promotes a nationwide day of protests against the


    April 7 – New protests in Recife.


    April 10 – Day 100 for the president.

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