Prosperity, Not Politics

Jul 1, 2002

Uncertainty over Brazil's presidential elections are buffeting the international financial markets and threatening the long-term viability of key reforms made under President Cardoso. Murillo de Aragao argues that if the current front-runner, Luiz Inacio Lula da Silva, wins in October he must resist the temptation of adopting unorthodox policies or risk plunging the country in to serious crisis. Interventionist economic measures would threaten foreign investment, economic stability and fiscal performance.

October's presidential elections have huge implications for Brazil. Above all, they mark the end of the Cardoso era, a decade in which Brazilian politics and the economy were heavily influenced by one of the most important politicians in Brazil's history. Fernando Henrique Cardoso began his period of glory in 1993 as finance minister under President Itamar Franco. He managed to control a temperamental and unpredictable president and launch the Real Plan in 1994. He became president that year and built a strong Congressional majority out of a motley collection of parties and special interest groups. Cardoso won approval for important reforms, was reelected in 1998 and reaches the end of his term with public approval ratings of more than 40%. As well as signaling the end of the Cardoso era, the elections are important because of Brazil's exposure to the international financial markets and uncertainty that advances made...

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