The Reformer.

Fernando Henrique Cardoso, the former two-term president of Brazil and the last to hold office before the current president, Luiz Inacio Lula da Silva, is today the most influential voice in Brazil's opposition. As the implementer of the Real Plan, which finally tamed Brazil's famously runaway inflation, Cardoso has plenty negative to say about Lula's current plans to speed up what has been lackluster growth. Only reforms and public spending cuts, he says, along with a strengthening of regulatory efforts, will move the country forward. As he prepared to leave Brazil to begin the academic year at Brown University, Cardoso spoke with LATIN TRADE Brazil Correspondent Margarida Pfeifer.

Do you believe that the "accelerated growth plan" put forth by the government will get the economy moving?

I honestly don't believe so, although I wish it were possible. Brazil needs new investments, and the government plan brings very little new investment. Most of the investment projected by the program are existing, programmed investments by state-owned companies, particularly by Petrobras and Eletrobras. What does the plan do with private investment, which is 97% of the investment going on in the country? Very little. Other than some sectoral efforts, which could have some impact, the growth plan doesn't attack the fundamental obstacles to private investment, which are high taxes and uncertainty about the rules of the game. The government's actions do not face up to these problems. Worse, they aggravate matters. Spending has not stopped increasing. The accelerated growth plan is more political marketing by the government than a growth plan that is consistent with Brazil's development.

Your party, the PSDB, has assumed the role of the political opposition. Can your party work with the left-wing PT government on making a growth plan work?

The PSDB could eventually improve upon one or another part of this plan. But I should make it clear that we have a different vision of how best to concretely speed up Brazil's development. The way forward is different: More reforms, beginning with the welfare system, with the full weight of the government behind it; making a formal commitment to reduce public spending; strengthening of regulatory frameworks and of the agencies responsible for infrastructure. Lower interest rates and the possibility of lower taxes, along with an improved legal system, would inject energy and confidence into the private sector and trigger a wave of investments the size that Brazil really needs, if the idea is to grow in a sustained fashion at his target rate of 5% a year.

You have said that Brazil isn't growing because it failed to complete an institutional overhaul and that this should be the biggest worry for whomever took the reins of government. What needs to be done?

Brazil needs a state that takes less resources out of society and is more efficient in the way it provides services, and it needs a clearer set of rules when it comes to infrastructure, taxes, etc. That is not to say we need less government but a better government. My administration worked in this way. We were able to achieve that to some degree, and we fell short to some degree. In a democracy, change takes place over several governments and when they are done things stay changed because the changes have a legitimacy. That's how it is when countries are developing. Look, for instance, at Spain or Chile.

Lula is not worried about these things?

The current administration, although it has kept up with the basic things in terms of macroeconomic policy, did not really get moving hard enough on institutional reforms. In many cases, just the opposite; instead of moving forward, they took steps backward. On the one hand, this is because it has a statist view of society and the economy. On the other, because of the political alliances of the ruling party. One thing or another, it adds up, which brought back the apparatus of the state and left the reform agenda behind.

Since the beginning of your time in office you talked about the need for reforms. Why are they still not done?

Reform is not easy. We were able to get some done, but we need to continue. Resistance is immediate and the benefits are not seen until the medium or long term. That's why it's important to have conviction and to be ready to spend political capital in a way that favors the future development of the country. The current administration has neither of these traits. It lacks conviction regarding reforms and the willingness to spend that capital. It's a conservative government, one that focuses on immediate results. What hurts me is that Brazil is allowing an exceptional opportunity get by, an international economy such as we have not seen in more than 30 years. We are falling behind in relation to countries against whom we should be competing.