Outgoing Brazilian president leaves mixed legacy

RIO DE JANEIRO, Brazil -- When outgoing President Fernando Henrique Cardoso steps down next week, he leaves a mixed legacy as a leader who tamed superinflation and raised health standards, but struggled unsuccessfully to improve the economy.

The former Stanford University sociology professor made impressive strides in combatting infant mortality and illiteracy among the nation's 175 million people. Brazil's program to fight AIDS has been hailed by the United Nations as a model for developing countries.

But Cardoso, who has received a U.N. prize for improving the quality of life of Brazilians, is also bequeathing stagnant growth, high unemployment and foreign debt of $100 billion to his successor, Luiz Inacio Lula da Silva. Silva will be inaugurated on Wednesday.

Latin America's largest country has the world's fourth widest gap between rich and poor -- ahead only of Sierra Leone, Swaziland and the Central African Republic. About 50 million people in Brazil live on less than a dollar a day.

Cardoso defends his record, saying he did "the possible" in his two four-year terms.

In his first term, he used a new currency -- the real, loosely linked to the U.S. dollar -- and high interest rates to decrease quadruple digit inflation to single digits in matter of months.

In 1997 when fallout from the Asian economic crisis struck the overvalued real to send the Brazilian economy skidding, he floated the currency, effectively devaluing it by almost 50 percent and drastically reducing Brazilians' purchasing power.

"He stabilized Brazil and created the idea investment can come to Brazil without any problem," said Jose Luis Guerrero Cusumano, a Georgetown University professor and expert on Latin American economics. "The downside was that as time elapsed the internal debt doubled. Even though the country looked stable from an international point of view, there was something terribly wrong."

Without the euphoria that marked his first term, Cardoso was unable to ensure the election of his hand-picked successor, Health Minister Jose Serra.

Yearning for change, Brazilians opted for Silva, a former union leader from the left-wing Workers' Party, who promised jobs, economic growth and a war on hunger.

During the campaign, the differences between Cardoso and Silva couldn't have seemed wider.

An intellectual with refined tastes, Cardoso is the son of a former Brazilian army general. He speaks English and French fluently, has taught at French universities and plans to spend three months in Paris after Silva takes office.

Silva, the son of a poor farmer, dropped out of the fifth grade to sell peanuts and shine shoes. He became a radical union activist and was jailed as a subversive during Brazil's dictatorship. He speaks only Portuguese, with a working class accent.

But there are signs their administrations may eventually share more similarities than differences.

Cardoso, who spent time in exile during the 1964-85 military dictatorship, began his political career on the left and only slowly moved toward the center. And like Silva, he has a long history of promoting social welfare.

Silva, who once espoused socialism, has repeatedly reassured investors he won't abandon Cardoso's free market policies he used to criticize. He soothed financial markets by appointing fiscal moderates to key cabinet posts, and warned voters that he can't change Brazil overnight.

"Ironically, if you look at what Lula is saying it is very difficult to differentiate between the two positions," said Albert Fishlow, the head of Columbia University's center for Brazilian studies. Silva is widely known as Lula, his nickname.