What's Brazil Without Collor? Maybe Not Much Different

Brazil's hottest TV soap is titled God Help Us. In the opening credits, the rich and powerful dance at a party, unaware of a tide of mud rising around them. Mud, that metaphor for corruption, has also engulfed President Fernando Collor de Mello as mounting evidence reveals a vast influence-peddling scheme allegedly set up by his former campaign manager. By early October, Brazil's Chamber of Deputies is expected to recommend that the Senate start impeachment proceedings against the 43-year-old President.

While most observers have been clucking over the discovery of yet another Latin American leader's abuse of office, they're missing an important point. If Brazil's Congress deposes Collor by constitutional means, it will set an important example for the rest of Latin America, long afflicted by arbitrary misrule and military coups. "It's refreshing to see that our democratic institutions seem to be working," says Robert Max Mangels, president of specialty steelmaker Mangels Industrial in Sao Paulo. Just as remarkable is how sturdily Brazil's $400 billion economy is holding up. The stock market, which plunged when the political furor erupted, has regained 30% of its losses.

Collor's ouster, of course, would raise some major imponderables. His constitutional successor--as interim President during an impeachment trial, or as permanent replacement--is Vice-President Itamar Franco, 61, who doesn't share Collor's enthusiasm for free-market reform. His nationalism and distrust of privatization reflect the protectionist, statist outlook of industrial constituents in his home state of Minas Gerais.

Nevertheless, Brazil's business community, which generally supported Collor's policies, is now rallying around Franco. The reason: The sooner Collor steps down, the sooner they can get back to business. They worry that continued political uncertainty is holding back business decisions and could aggravate inflation. They also know that Congress will be unwilling to act on emergency fiscal reforms--to comply with Brazil's recent foreign debt accord--until Collor is out of the picture.

Modernization must continue, insists Carlos Moreira Ferreira, president-elect of the powerful Sao Paulo Federation of Industries (FIESP), even though members have felt its pain. "If Collor is impeached, the market-opening process will slow down, but we won't jump off the track," he says. Many industries have been slashing payrolls and tightening operations to get into competitive trim. "Now, we are well-positioned to benefit from further opening," says Mangels.

VOX POPULI. Officials in charge of privatization also plan to keep up the momentum by putting the National Steel Corp., Latin America's biggest, up for sale ahead of schedule in December, for more than $1 billion. "Many people who objected to privatizations a year ago have changed their tune," says an official, "and we'd like to believe the Vice-President has, too."

If Franco becomes President, he will be faced with growing national support for modernization as well as a commitment to democracy. Franco "will have to listen to Congress and to society," says FIESP's Moreira Ferreira. Collor may be out soon, but reform, it seems, has taken on a life of its own.

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