Court Deals Blow to Brazil's Economic Plan

PRESIDENT Fernando Collor de Mello's economic policy for Brazil took its first serious blow this week. The Supreme Court suspended a measure to keep down wage increases in order to consider its constitutionality. The decision means that widespread pay raises could create dangerous pressure on prices, which are already on the rise again. Inflation dropped from over 80 percent a month before the Collor plan, to about 3 percent in April. But last month prices rose by close to 10 percent.

``It creates a serious problem for the economic program,'' says Roberto Campos, an economist and senator for the Liberal Front Party. ``The government will have to find a solution, like a bill for urgent congressional consideration.''

Economy Minister Zelia Cardoso de Mello says the government will not issue new measures in response to the decision, although it damages the anti-inflation plan. ``We intend to convince society that [a loss in purchasing power] did not happen, that there was in fact a gain,'' Ms. Cardoso de Mello said in a TV interview.

Making clear the government's commitment to democracy, Justice Minister Bernardo Cabral told a press conference that the Supreme Court decisions ``are not to be commented on, discussed, or analyzed. They are simply put into effect.''

Brazilians may begin to contest the constitutionality of other aspects of Mr. Collor's economic policy, such as the partial freeze on savings accounts. A group in Sao Paulo has begun organizing savers to take their grievance to court.

Many legal experts have considered the March 16 freeze and other measures unconstitutional. But few savers took legal action, because the measures so far contested have mostly been upheld.

Wednesday's decision strengthened Collor's political opponents. ``It shows the sovereignty of democracy,'' says Jos'e Genoino Neto, a Workers Party federal deputy, in an plenary session of Congress. He and others have criticized Collor for being too authoritarian.

Legal experts interviewed on national news broadcasts said the decision gives new importance to the judiciary and legislative branches of government. Both were kept weak under the military dictatorship that ruled Brazil from 1964 to 1985.

The turn of events may build support for a general strike June 12 called for by a major labor conferation.