By DIANA JEAN SCHEMO
RIO DE JANEIRO,
Brazil -- Rivals of President Fernando Henrique Cardoso won important
victories in
gubernatorial races Sunday, handing the recently re-elected president a
complex
landscape for
pushing through long-delayed government and economic reforms.
In Sao Paulo,
however, Brazil's most populous and wealthiest state, Mario Covas appeared
likely to
win re-election
as governor, defeating former Sao Paulo mayor Paulo Maluf.
Although Maluf's
party forms part of the president's governing coalition, Cardoso had endorsed
Covas. Maluf
is known as a big spender with presidential ambitions of his own. His victory
could
have complicated
Cardoso's efforts to control state spending and win congressional approval
for
reforms.
Despite considerable
foreign pressure on Brazil to demonstrate how it will restructure government
to
reduce deficits,
Cardoso has put off publicly announcing his plans, fearing they could damage
the
chances of his
allies in the elections. The delay costs Brazil heavily; each day, the
country loses
hundreds of
billions of dollars in foreign reserves, and the longer the country maintains
interest rates
over 40 percent,
the deeper its recession and debt.
With Brazil's
solvency seen as crucial to maintaining economic stability of Latin America
and
protecting the
United States from recession, the United States and the International Monetary
Fund
are preparing
to chip in toward an aid package of at least $30 billion to shore up Brazil.
Cardoso won re-election
on the first round of national voting earlier this month, but partial results
showed left-of-center
candidates leading in some of the most developed states of Brazil.
Sen. Pedro Piva,
of the president's Brazilian Social Democracy Party, called Sunday's elections
"a
warning sign
for the government," adding, "I think we're going to have difficulties
ahead to approve
this package."
The governors
are important both because they control a considerable share of the national
budget
and act as natural
leaders of their parties in Congress. States will be called upon to cut
their budgets
by as much as
20 to 30 percent, which will mean laying off civil servants. Current laws
allow the
states to fire
workers if the payroll exceeds 60 percent of the state budget; under a
new law the
administration
is proposing, layoffs would become mandatory once that ceiling was reached.
In Rio de Janeiro,
Anthony Garotinho, a former mayor of the city of Campos who belongs to
the
leftist Democratic
Workers Party, was leading over Cesar Maia, a former Rio mayor belonging
to a
conservative
grouping.
In Rio Grande
do Sul in the south, Olivio Dutra of the Workers' Party was also leading
over the
incumbent, Antonio
Britto, a Cardoso ally.
In Minas Gerais,
former President Itamar Franco was leading by a wide margin over the incumbent
Eduardo Azeredo,
also of Cardoso's centrist Brazilian Social Democracy Party. Franco's party
belongs to the
governing coalition, but Franco has been critical of Cardoso's economic
policies and
personally stung
by the president's re-election.
In 1993, during
Franco's presidency, he named Cardoso finance minister and launched the
economic
plan that would
make Cardoso a national hero to a people weary of hyperinflation. But Franco
was
deeply humiliated
at his party's convention earlier this year, when he sought to run for
president
against Cardoso.
He was not only turned down, but laughed at.
Sunday night,
Sen. Maguito Vilela, of Franco's Brazilian Democratic Movement Party, said
backing
for Cardoso's
reforms would not be automatic. The party would not support tax increases,
he said,
noting that
one tax slated for increase, on financial transfers, was initially approved
as a temporary
measure to finance
hospitals, but ended up going to offset the deficit. "It just burdened
people and
didn't do anything
to improve health care," he said.
Asked on Brazilian
television precisely which measures his party would endorse, Vilela said,
"If it
means more sacrifice
for the people," his party "will not support it."
Copyright 1998 The New York Times Company