COLUMN LEFT / ALEXANDER COCKBURN : The Bankers’ Brazilian Myth Turns to Ashes : Collor’s ‘Mr. Clean’ image was a media product, encouraged by his adoring Western sponsors.

The overwhelming vote by Brazil’s lower house of Congress to impeach President Fernando Collor de Mello launches the final, sour chapter of a free-market fable in which the U.S. press happily collaborated.

In 1990, it was rare to find a discordant note in the volleys of praise for the first democratically elected leader of Brazil in 30 years. Collor was Mr. Clean, sweeping into office on an anti-corruption platform, pledged to purge the old “maharajas” who clogged Brazil’s statist economy with their corrupt bureaucratic inertia.

In fact, there was plenty of evidence that Collor was a crook long before he ran for the presidency. During the campaign in 1989, the Brazilian press reported how Collor, as governor of the poor northern state of Alagoas, had handed out state contracts to political allies, looted the state treasury to buy presents for his friends and pay for advertisements boosting his governorship in media outlets owned by him and his family.

But such unpleasing facts had no place in the myth-making about Collor, particularly as his opponent was Inacio Lula da Silva, leader of the socialist Workers Party. The race between Lula and Collor was touted as the showdown between an antique ideology and the neo-liberal privatization strategy then being urged by Latin American business elites and their allies in the International Monetary Fund and North American banks.

Boasting of his “credibility” in the United States (President Bush esteemed him and once compared him to Indiana Jones), Collor was hardly in office before he launched into corrupt practices on a scale previously unknown in Brazil.

As later discovered in the computer files maintained by Paulo Cesar Farias, Collor’s friend and former campaign treasurer, the new president ran an influence-peddling racket in which businesses winning state contracts had to pay kickbacks of up to 40% on multi-million-dollar deals. Farias would then bank the money for the president and his family. The amounts thus stolen were so enormous that some had to be washed through the narcotrafficantes.

This criminality was symbiotic with Collor’s privatizing “free-trade, free-market” crusade that was winning compliments from bankers and business writers in the United States. For one thing, Collor’s attack on the state included the dismantling of much of the regulatory apparatus that would have impeded his corrupt rampages. Privatization had one very definite beneficiary, Collor himself. Indeed, the Brazilian Congress now believes that the first “unneeded” state company sold off into private hands, VASP Airlines, was in fact bought by Collor and Farias, using a businessman as a front.

The second “unneeded company” passing from the state to private hands was Usiminas, a highly profitable steel firm, among the most modern and efficient in all of Latin America. In other words, as is habitual in these privatizing binges, valuable public assets are sold on the cheap to private interests, who then loot them.

But even amid Collor’s downfall, myth-making continues about the economic strategy with which his regime has been associated.

Since the recent debt renegotiation between Brazil and major private banks in the North has not yet been ratified by the Brazilian senate, bankers in the United States and Europe are naturally nervous that an arrangement so advantageous to them could collapse. They hopefully told the press that former Vice President Itamar Franco, now the acting president, would continue Collor’s “growth-oriented policies” and reappoint former finance minster Marcilio Marques Moreira, a man popularly disliked but considered “reliable” by the IMF. When Franco appointed two little-known men to share Marques’ old job, Brazil’s stock market nose-dived.

Brazil’s great privatization experiment has been a disaster, with millions of Brazilians experiencing levels of privation unknown in that country in half a century. Inflation is heading toward 25% a month. Many Brazilians live on the minimum wage, about $50 a month, and since this is adjusted for inflation at four-month intervals, they spend the last two months of each quarter below subsistence levels. Acting president Itamar, who broke with Collor last year on the corruption issue, has already vowed to slow the pace of “reform,” hence the nervousness of the Northern bankers.

Collor’s presidency was intended by its sponsors to be a parable of Third World development according to neo-liberal prescription. Its denouement should at least remind the First World press that such chevaliers of the free market merit closer scrutiny than the public-relations handouts with which Collor was favored during his glory days in the Western press.