Colorful president who helped stabilize Brazil dies

Itamar Franco, flamboyant former Brazilian president who helped put an end to hyperinflation in the early 1990s passes away at age 81.

July 2, 2011 21:08
2 minute read.
Former Brazilian President Itamar Franco

Itamar Franco 311 R. (photo credit: REUTERS)

SAO PAULO - Itamar Franco, a flamboyant former Brazilian president who helped put an end to hyperinflation in the early 1990s and pave the way for his country's current economic boom, died on Saturday of complications from leukemia. He was 81.

Franco, who was also known internationally for a scandal involving a half-naked model at Carnival that nearly cost him the presidency, governed Brazil from 1992 to 1994.

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He oversaw the implementation of the Real Plan -- a bold economic overhaul that introduced a new currency, slashed government spending and, in so doing, helped put an end to two decades of financial stagnation and chaos.

While most of the public credit for the Real Plan went to Franco's finance minister and successor as president, Fernando Henrique Cardoso, leaders eulogized Franco for stabilizing Brazil at a time when its young democracy was still at risk and today's relative prosperity seemed like a pipe dream.

"His contribution was fundamental for the construction of a democratic, fairer country," Luiz Inacio Lula da Silva, who was president until last year, said in a statement.

Brazil's current president, Dilma Rousseff, declared a seven-day period of official mourning.

Franco, then vice president, was thrust into the top job when his predecessor was impeached on corruption charges in 1992. He cast the orderly democratic transition as a triumph -- "The nation can be proud," he said in his first TV address -- and resisted calls from some in the military, which had just ceded power seven years previously, to shut down Congress.

Franco's other challenge was runaway prices. By one measure, Brazil endured accumulated inflation of an almost incomprehensible 1,825,059,944,843 percent from 1968 to 1993 -- halting investments and keeping millions mired in poverty.

After pushing several failed economic plans and burning through three finance ministers in seven months, he named Cardoso to the job in 1993 with a mandate to stabilize prices.

The Real Plan was nearly derailed during the Carnival of 1994, when Franco, a divorcee with a wild white pompadour, attended the annual festival in Rio de Janeiro.

Newspapers around the world published graphic photographs of Franco cavorting with a twenty-something model with no underwear on, prompting Brazil's influential Catholic Church to condemn his behavior. Cardoso later said he was approached by military leaders who were interested in impeaching Franco.

Franco survived the scandal, and within two years of the Real Plan's launch, annual inflation fell to 4 percent.

Franco later served as a governor and senator in his home state of Minas Gerais. He helped trigger a national financial crisis and devaluation of the real in 1999 when he turned against then-President Cardoso, declared a moratorium on state debts and surrounded the governor's palace with masked police to fend off a federal invasion which never came.

Franco was still a senator at the time of his death, which was confirmed in a statement issued by the Albert Einstein Hospital in Sao Paulo, where he had been in intensive care.

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