Profile : Deftly Balancing the Books in Brazil : The challenge for the country’s controversial economy minister, is to keep inflation under control. Despite some gains, her ultimate success is far from assured.

Economics Minister Zelia Cardoso de Mello is a “zebra”--Brazilian parlance for something rare and improbable.

In a country with a macho tradition in government power, she is a female super-minister. In a job previously thought to require maturity and experience, she is 36 years old and relatively unseasoned. And in command of a market-oriented economic policy, she is a former Communist.

In three months on the job, Cardoso has worked hard and achieved much. When she took over as economy minister March 15, Brazilian inflation was the highest in the world, soaring at a rarefied rate somewhere over 80% a month. Cardoso’s job was to stop it.

She did--at least temporarily. Now the challenge is to keep inflation under control while at the same time preventing Latin America’s largest economy from sinking into a deep recession. It’s a difficult balancing act, and as inflationary pressures build and Brazil’s economy sags, her ultimate success is far from assured.

Whatever happens, she has already proven controversial. Some analysts say Cardoso’s lack of administrative skill is seriously impairing the ministry’s performance; others counter that she has grown surprisingly in the job, showing toughness and tenacity that may make up for other shortcomings.

What no one denies is that she is close to President Fernando Collor de Mello.

The middle-class daughter of a Sao Paulo police inspector who died when she was 23, Cardoso met Brazil’s future president while working in the National Treasury in the mid-1980s. Her job was to negotiate with Brazilian state and municipal governments on their debts to the treasury. Collor was the governor of tiny Alagoas state, and, as an economist himself, a man who dealt personally with its debt problems.

At the time, both she and Collor belonged to the centrist Brazilian Democratic Movement Party, which had come to power after the armed forces ended 21 years of military dictatorship in 1985.

(Cardoso had joined the Communist Party while a student, but her association with the party was short. “It lasted for as short a time as she dated the professor of general history in the course, who encouraged her Communist ideas,” according to the newspaper O Estado de Sao Paulo.)

Cardoso left the treasury in 1987 and created an economic consulting firm that helped Collor start his campaign for the presidency. Later, she joined Collor’s new National Reconstruction Party and became his chief economic adviser.

Some of her leftist friends criticized Cardoso for joining Collor, 40, whose political background is conservative. “I lost some friends,” she admitted, but the team of advisers she formed included economists of both the right and left.

Near the end of the campaign, when Collor blasted his leftist opponent with a barrage of anti-Communist rhetoric, Cardoso threatened to quit, according to press reports.

But she stayed, and after his election last December, she was put in charge of the new “super-ministry” of the economy that Collor created by combining Brazil’s old Planning and Finance ministries. That made Cardoso, by all accounts, the most powerful woman official in Brazilian history.

She is said to be one of the few people around the president who calls him Fernando. The close relationship gives her political clout that someone hired only for technical expertise would not enjoy.

“Her strong point is that she is a political finance minister,” said Richard Foster, editor of a political and economic intelligence service called Brazil Watch.

Foster said the economy minister needs political support because parts of the anti-inflation program have been opposed by powerful sectors. Business people have been hurt by price freezes and a drastic cutback in money circulation; middle-class consumers have been squeezed by a freeze on savings accounts and deposits in financial markets; banks have lost big profits previously derived from inflated interest rates, and labor unions have been frustrated by the government’s refusal to order new cost-of-living raises.

Cardoso certainly has her critics.

“She is not an effective communicator with the public at large,” said a foreign bank executive in Brazil, who described the minister as “distant, removed, impatient.”

As long ago as the early 1980s, during her tenure as an assistant professor at the University of Sao Paulo’s School of Economics, she was known as “cold and formal with those she didn’t know well, but sweet and cheerful with her friends,” according to O Estado de Sao Paulo.

Gustavo Franco, an economics professor at Rio’s Catholic University, was among Brazilians surprised by Cardoso’s ministerial appointment.

“Most economists were sort of expecting that the minister of economy would be handled by a first-rate economist,” Franco recalled. “Zelia certainly was not regarded as one of the major economists in the country. Far from it.”

She chose a competent second echelon of economists to work with her, Franco said, but the problem is that Cardoso and a small circle of her closest collaborators make major decisions “in a bunker style,” without consulting outside experts or lower levels within the ministry.

As a result, some of the ministry’s measures have contained legal and technical flaws that have threatened to undermine the credibility of the whole anti-inflation program. For example, two measures that set prison terms for “economic crimes” were unconstitutional; they had to be withdrawn and rewritten.

Several similar errors led O Estado de Sao Paulo to conclude that the government had completed “two months of juridical bumbling.” Such criticism fed widespread fears that the stabilization program was in danger of falling apart.

Cardoso’s style also has created morale problems within the ministry, according to economist Franco. Many skilled employees who are not called upon for contributions worry that they will lose their jobs.

“The impression one gets from visiting the ministry is that 50 people are working all night long and the rest, 1,500, are doing nothing, just trying to figure out how not to get fired,” Franco said. “Something is missing in the capacity to organize this big machine.”

Carlos Langoni, another non-government economist, agreed.

“One problem of this group is that they are a very small group and very closed in terms of debating future measures,” Langoni said. But he said Cardoso recently has begun consulting more with experts outside the closed circle.

“It’s slowly beginning to open up,” he said.

Brazil Watch editor Foster said Cardoso may have been outmaneuvered by Sao Paulo industrialists who quickly criticized her austerity methods as threatening mass layoffs. “Zelia got frightened” and allowed a substantial increase in the money supply, possibly adding to inflationary pressures, Foster said.

“I think the business community exaggerated to try and get Zelia nervous and get her to do what she did, to loosen up a bit,” he said. “She was outsmarted because she didn’t have enough experience.”

As inflation has crept back up to monthly rates of 3% in April and at least 5% in May, Cardoso has taken a tougher line. Early in June she warned that inflation would be controlled even at the cost of a recession.

“Our concern is called inflation. That is concern No. 1, 2, 3, 4, 5 of the government,” she said recently.

She also has talked tough with private banks that hold most of Brazil’s $115 billion foreign debt, the largest in the Third World. Meeting with major bankers in New York in late May, she emphasized that Brazil has no intention of making payments on $5.5 billion in overdue interest until the debt is renegotiated.

Before taking her current job, Cardoso, who has never been married, would sometimes cook dinner for a small circle of friends in her one-bedroom Sao Paulo apartment. She enjoyed tennis. She reportedly spent much of her income on elegant dresses and suits from fashionable boutiques and meals in good restaurants.

But since moving to a government flat in Brasilia and to her super-ministry, there has been little time for social life. “I leave here at midnight, every night,” she told a recent visitor to her office.

In a television interview last month she said she was in love, but “it is a platonic love. I don’t have time for dating because of my work.”

The signs of strain and fatigue can often be seen on her face. What keeps her going? “I believe we are building a new country,” she told a Brazilian newspaper.

A Formula for Brazil’s Recovery

Key measures of Economy Minister Zelia Cardoso de Mello’s anti-inflation package:

* Freeze most deposits in individual savings and checking accounts for 18 months.

* Freeze all but 20% of individual assets in financial market for 18 months.

* Prohibit price increases without authorization of Economy Ministry.

* Suspend requirement for salary increases based on monthly inflation index.

* Create tax on financial operations and increase some other taxes.

Goals of Zelia’s anti-inflation package:

* Reduce inflation to 10% a month in 100 days and 3% a month in 18 months.

* Turn public deficit of about 8% of domestic economic production into a surplus of about 2%.

* Cut federal payroll by 360,000 jobs.

* Privatize government-owned enterprises at a rate of one a month.

* Sell off 10,700 government-owned apartment buildings and 42 “mansions” previously occupied by public servants.

* Double tax revenues.

Biography

Name: Zelia Cardoso de Mello

Position: Brazilian economy minister; former economics professor.

Age: 36

Personal: Born to a middle-class family in Sao Paulo, the daughter of a police inspector. Never married.

Quote: “I fight for ideas, and in that I am a fierce competitor.”