SAO PAULO, Brazil (Reuters) --Like the country they hope to lead, Brazil's
presidential candidates are hurting for cash.

With just seven weeks to go before the first round of voting, the talk at most
nominees' camps is austerity, and political experts say this year's presidential
campaigns are shaping up to be some of the most frugal in years.

"Political parties here have never been as cash-strapped as they are right now," said
Emanuel Publio Dias, a professor of political marketing at the Sao Paulo School of
Advertising and Marketing.

But the political cash-crunch is more than a reflection of Brazil's deepening
economic crisis that has left companies fighting for credit abroad and upset financial
markets.

In what is shaping up to be the country's most contested presidential race since
1989, campaign donations are lagging as voters shy away from investing in a
candidate who might lose.

"Without money, the parties struggle to get the campaign going because they can't
mobilize voters," said Dias. "People are reluctant to finance a campaign until they
have a better idea who might win."

Opinion polls are not the only thing spooking campaign donors. Brazil's electoral
court is auditing the campaign's finances more closely than ever, prompting some
longtime donors to keep away for fear of being accused of irregularities.

Coffers closed

Corporate donations are also slumping, in large part because many Brazilian
companies have been taken over in recent years by foreign investors who don't
want to be seen as meddling in another country's democracy, said Marcio Lacerda,
a businessman campaigning for Ciro Gomes, a center-left candidate who was
briefly finance minister in the mid-1990s.

Lacerda said the Gomes camp started gathering funds in early July, but the
campaign's war chest is still thin.

"July is normally an atypical month because a lot of business donors are away on
vacation," he said. "But we're expecting more money to start flowing in within the
next 15 days," Lacerda added, noting that Gomes' recent ascent in opinion polls
should help attract donations.

Gomes soared into second place, leaving the financial markets' favorite, Jose Serra,
a distant third. Four-time candidate Luiz Inacio Lula da Silva of the leftist Workers'
Party remains in the lead, while Anthony Garotinho, a former governor of Rio de
Janeiro state, is closely trailing Serra in fourth place.

The Gomes campaign has a budget of about $8 million for the race, but it may only
use 10 percent of those funds, said Ruy Nogueira, an advisor to Gomes. The
strategy, he said, is to run an austere campaign, close to the masses.

"Ciro is the candidate that has traveled the most," said Nogueira. "He visits five cities
a day to spread his message."

Last in the polls, the Garotinho camp lashes out at Brazil's political system, which
does not allow the state to finance election campaigns.

"The polls are determining where the cash is flowing in this campaign," said
Garotinho's finance coordinator, Alexandre Cardoso, no relation to the president.

Strapped for cash, Garotinho has been forced to restructure his campaign, which
initially expected to have a budget of also $8 million.

"We had to cut the number of billboards, cancel travel engagements and simplify
our TV ads," said Cardoso, who is hoping the free TV time candidates will have
after August 20 will give Garotinho's campaign a lift and attract more donors.

At least financially, the Serra campaign is much better off, boasting a hefty budget
of around $19 million. So far, though, the extra cash has done little to give the
former health minister's campaign a much-needed lift.

Serra's advisers declined an interview request.

Lula bets the house

Of all the candidates, Lula may be in the best financial health. The former
metalworker's Workers Party has an annual budget of $6 million to play with this
year, compared with less than $1 million during the 1998 race, which President
Fernando Henrique Cardoso won in a landslide.

"The party's funding grew as our party membership grew and we increased our
representation in Congress," said Delubio Soares de Castro, who is managing Lula's
campaign finances.

Castro says Lula is prepared to bet the house to win the presidency this time
around.

In the 1998 race, the left-leaning coalition of parties supporting Lula invested $1.3
million in the candidate's third run for president. This year Lula's center-left coalition
has a campaign budget of $11 million.

While that's still lower than the nearly $14 million Cardoso spent to get reelected in
1998, the Lula camp is betting more cash may flow as he consolidates his lead in
the polls.

Even if the candidates do rake in more cash before the Oct. 6 vote, none are likely
to spend more than former president Fernando Collor de Melo did in 1989, when he
beat Lula.

In Brazil's first democratic election after two decades of military dictatorship, Collor
de Melo raised close to $94 million. It was later discovered that much of that money
was later embezzled, prompting Collor de Melo's impeachment three years later.

    Copyright 2002 Reuters.