POLITICS : Brazil a Test Arena for Free-Market Policies of New Latin Presidents : Collor’s support fades as the economy fails to improve with tough measures.

RIO DE JANEIRO â€”  President Fernando Collor de Mello’s arduous battle against inflation has produced disappointing results so far and is sapping his political strength.

In runoff elections for governors last Sunday, candidates who support Collor failed to win any major state. Some key votes in the national Congress also have gone against the president. And the latest public opinion surveys have shown majorities unhappy with Collor’s economic policies.

As Latin America’s biggest country, Brazil is an important testing ground for the kind of free-market policies that have spread through the region with a new wave of elected presidents. In many countries, including Brazil, the policies include government austerity to control inflation.

Tough measures imposed by Collor after he took office in March sharply cut inflation from that month’s rate of 84% but have not brought further reductions since May. Meanwhile, the economy is stagnant and economists are fearful of a deep recession.

This week, the official Brazilian Institute of Geography and Statistics reported November inflation at 15.6%. That was almost two percentage points higher than the October rate and far from the Collor plan’s goal of single-digit monthly rates for the second half of the year.

Despite the economic problems, voters in October elected a center-right congressional majority that was regarded as potentially open to cooperation with Collor. Fifteen of 27 gubernatorial contests, including those in some of the most important states, were left undecided pending Sunday’s runoff elections.

Voting results this week made it clear that the president will face potentially uncooperative new governors in Brazil’s economically strongest states: Sao Paulo, Rio de Janeiro, Minas Gerais, Rio Grande do Sul and Parana. In Sao Paulo, by far the richest and most populous state, Collor supporter Paulo Maluf lost to Luiz Antonio Fleury.

“It was the result of popular dissatisfaction with the economic program, which has brought recession (and) unemployment and has not contained inflation,� Fleury said. His victory strengthens the hand of his mentor, Orestes Quercia, Sao Paulo’s current governor and one of Collor’s most powerful political rivals.

Another Collor rival, left-leaning populist Leonel Brizola, won the governorship of Rio de Janeiro state by a landslide in October. Brizola’s ally Alceu Collares won the runoff Sunday in southern Rio Grande do Sul.

Collor allies lost in Parana and Minas Gerais. Supporters of the president won in several smaller states, but Collor’s National Reconstruction Party did not win anywhere.

Collor generally enjoyed majority support in the current Congress until mid-November, when he was stung by important votes against his policies in the Chamber of Deputies. In one vote, the chamber rejected a presidential veto of social security legislation by a count of 264 to 41.

Gastone Righi, leader of a centrist party that previously supported the president, said future support will be conditional.

“Now we are going to demand results from the government,� Righi said. “The president hasn’t offered alternatives, and the inflation has exploded.�

In a mid-November poll published by the newspaper Folha de Sao Paulo, 60% of those interviewed said Collor’s economic policy hurt them more than it benefited them.

If Collor fails to control inflation by the time the new Congress opens in February or the new state governors take office in March, his political support is certain to decline further.

But if Collor can claim victory against inflation, many governors and the majority of Congress will probably find it politically expedient to associate themselves with success, backing the Collor plan. e