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Brazil Franco's Presidency, 1992-94
Sources: The Library of Congress Country Studies; CIA World Factbook
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    Collor created extremely high expectations that he could solve Brazil's economic problems and that he could insert Brazil into the international economic arena. With one "silver bullet," he promised to rid Brazil of inflation, rampant corruption, and all marajás (literally maharajahs, or do-nothing, corrupt high government officials who draw huge salaries), while modernizing Brazil's economy and society.

    Collor's ambitious program began by confiscating some US$50 billion in financial and bank assets from depositors and investors, thereby plunging the country into recession. He set about "taking the state apart," announcing that he would reduce the number of federal civilian employees from nearly 1 million to 300,000. Further, he would auction off government cars and housing in Brasília, sell all state enterprises, and begin a program to consolidate or eliminate the myriad of federal agencies. Collor's style of presidency was similar to that of developed countries and included well-orchestrated public relations campaigns and lavish entertaining.

    Although he commanded a small minority bloc in Congress, Collor's high ratings in the polls and excellent television communication skills dissuaded many politicians from opposing his unusual proposals in an election year. Unlike the Cruzado Plan, which had helped Collor's election as governor of Alagoas in 1986, his 1990 stabilization plan did not produce positive economic results before the November 15 elections. Most of his allied gubernatorial candidates were defeated, and his coalition remained a minority in Congress. As inflation increased in 1991, the government began to flounder, and the opposition was able to thwart many of his proposals. Many of his initiatives in the international arena came to naught.

    In late 1991, Collor counterattacked in a media blitz, blaming constitutional impediments for obstructing his modernization plan and boldly proposing a broad constitutional reform package of sixteen amendments. However, in March 1992, as new accusations of corruption mounted daily, Collor fired almost his entire cabinet (except for the military ministers and the ministers of health and education, who were not politicians) and brought in older, more experienced politicians who generally were considered "clean."

    A month later, the president's younger brother, Pedro Collor, unleashed his bombastic accusations regarding the modus operandi of the corruption system, and on June 1, 1992, Congress installed the impeachment CPI. President Collor, together with his adviser, Paulo César Farias, and other cronies from Alagoas, had taken office with a "dynasty" strategy in mind. As described by Pedro Collor and other CPI witnesses, the Collor-Farias administration centralized all corruption, demanding 40 percent kickbacks for all government contracts and special policy decisions. With a war chest accumulating at nearly US$2 billion a year, they apparently expected to bribe their way into power for the next twenty years. As the 1993-94 Budgetgate CPI revealed, this conspiracy had numerous collaborators in Congress and the executive branch. Because the 1992 impeachment CPI threatened to widen its inquiry, the politicians decided to sacrifice Collor quickly to obscure their own involvement.

    Franco's Presidency, 1992-94

    Senator Itamar Franco (Liberal Party-Minas Gerais) had been chosen as Collor's running mate for three reasons: Minas Gerais had the second largest electorate; Franco had led the impeachment CPI against Sarney's alleged corruption; and Franco was the ideal anti-impeachment "insurance" because of his idiosyncratic nature. During the 1989 campaign, Franco had threatened to resign several times and later voiced outspoken opposition to some Collor policies, especially concerning privatization. As president, Franco immediately installed a politically balanced cabinet and sought broad support in Congress.

    Franco's presidential style was the opposite to that of Collor. A man of more simple habits and tastes, Franco refused the imperial, ceremonious presidential role. However, he proved to be quite temperamental, and many of his appointments were ill-conceived and short-lived. His most serious difficulty was defining an optimum economic strategy and selecting a minister of finance. He slowed Collor's privatization program to a near standstill and reverted to a developmentalist, nationalist model that was based on a national plan to guide the country through a series of stages of development, eventually culminating in modernization. After successively appointing two politicians and an academic economist to head the Ministry of Finance, Franco moved Senator Fernando Henrique Cardoso (PSDB-São Paulo) from the Ministry of Foreign Affairs to Finance in May 1993.

    In October 1993, Congress installed a CPI to investigate its own members involved in a far-reaching scandal within the joint budget committee. The scandal had begun during the Sarney period and extended into Franco's government. In addition to investigating possible involvement of some fifty members of Congress and identifying the "corruptors" in the private sector, the investigations unmasked a conspiracy ring within the executive branch that involved several middle-level bureaucrats. Distraught by the scandal reaching the executive branch, President Franco contemplated resigning. However, cooler heads persuaded him not to, and instead the president appointed several distinguished citizens to a Special Investigating Commission (Comissão Especial de Investigação--CEI) headed by the SAF (Federal Administration Secretariat) chief. Some of those involved in corruption were fired. Franco also appointed several military officers to civilian positions in the Ministry of Transport, Federal Police, and Office of the Federal Budget Director, which had difficult problems.

    With Cardoso's PSDB (Brazilian Social Democracy Party) team installed at Finance, the Franco government became less erratic, and the kitchen cabinet's influence somewhat diminished. However, inflation had increased from 25 percent to 45 percent by April 1994, when Cardoso resigned to run for president, a month after his new stabilization plan went into effect.

    The economic stabilization plan took into account all the errors of the Cruzado Plan of 1986, and both Cardoso and his team were aware of its potential effect on the 1994 elections. Because of the great success of the Real Plan, President Franco's approval rating soared to nearly 80 percent at the end of his term. The Franco-Cardoso transition was the most tranquil in Brazilian political history.

    Data as of April 1997

    NOTE: The information regarding Brazil on this page is re-published from The Library of Congress Country Studies and the CIA World Factbook. No claims are made regarding the accuracy of Brazil Franco's Presidency, 1992-94 information contained here. All suggestions for corrections of any errors about Brazil Franco's Presidency, 1992-94 should be addressed to the Library of Congress and the CIA.

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Revised 10-Nov-04
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