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.
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