The young, business-savvy pretender to Brazil's throne

RECIFE/BRASILIA Thu Dec 19, 2013 1:57pm EST

1 of 2. Governor of Pernambuco state, Eduardo Campos speaks during a press conference of his opposition Brazilian Socialist Party (PSB) in Brasilia, in this October 5, 2013 file photo.

Credit: Reuters/Ueslei Marcelino

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RECIFE/BRASILIA (Reuters) - To some Brazilians, especially in the business world, Eduardo Campos has all the traits of a perfect president.

Handsome, young, and the grandson of a beloved politician. Leftist enough to appeal to Brazil's poor masses, but eager to please big business and convinced of the merits of free trade. Critical of President Dilma Rousseff's heavy hand in the economy, but promising no huge changes in policy.

Yet therein lies Campos' main problem, his critics say - he's trying to appeal to everyone, and so appealing to very few. And polls ahead of next year's election, at least so far, suggest they are right.

The 48-year-old governor of the poor but booming state of Pernambuco has sketched out a broad agenda designed to appeal to environmentalists, foreign investors, labor unions and virtually anyone else fed up with slower economic growth under Rousseff in the last three years.

He downplays polls showing him in third place with support of only 10 percent or so, predicting his numbers will grow as the October election draws closer and more people learn about him - a scenario most political analysts agree is likely.

"The most important thing the next president must do is to recover the confidence of the market and the business community," Campos, the leader of the Brazilian Socialist Party (PSB), told Reuters in a recent interview in his office in Recife, the state capital.

Dressed casually in jeans and a blazer, and fussing constantly with an iPad that he uses to keep his aides on their toes almost around the clock, Campos said he would focus above all on recovering the magic that made Brazil a star performer among emerging markets last decade.

Getting that opportunity will be hard.

Rousseff has high approval ratings and a huge party machine behind her. Polls show that she could win more than 50 percent of votes, allowing her to avoid a runoff against Campos or the other main opposition candidate, Senator Aecio Neves of the centrist Brazilian Social Democracy Party.

Despite an economy that is expected to grow barely 2 percent this year and next, and huge street protests in June that briefly caused her popularity to dive, Rousseff is still buoyed by low unemployment and social welfare programs that have earned her Workers' Party the loyal support of Brazil's poorest.

João Augusto de Castro Neves, an analyst for the Eurasia Group think tank, said that running against such a popular president has left Campos hesitant to criticize her directly even as he tries to pull together the broad coalition needed to get elected in Brazil, a country of 200 million people that is roughly the size of the United States.

"That's why he sounds so vague," Castro Neves said. "He's kind of been all over the place so far. People haven't been able to detect a clear message."

NOSTALGIA FOR LULA

Senator Neves, who polls show in second place with about 18 percent of the vote, faces similar criticism. But the balance has been especially tricky for Campos because his party was as recently as September part of Rousseff's ruling coalition.

He was also a minister of science and technology under her predecessor and political mentor, Luiz Inacio Lula da Silva, who ran Brazil from 2003 to 2010 and remains the country's most popular politician.

Campos says his party left the coalition because Rousseff steered away from the pragmatic policies that characterized Lula's government, which appealed to unions and other leftists but also kept business leaders happy and could be quite conservative in monetary policy and other areas.

Some analysts have observed that Campos almost seems to be running as a throwback to Lula's more cautious first term.

Indeed, Campos' main criticism of Rousseff is over her management style and the way she has alienated the private sector. He cited her government's quest to force down interest rates in 2011 and cut electricity prices in 2012 as big mistakes - the first hurt banks' balance sheets and stoked inflation while the second caused huge losses for power companies.

Echoing the complaints of some business leaders who feel Rousseff's leadership lacks vision, Campos said: "She's a manager instead of a chairman of the board. That can only turn out badly."

Still, conveying such nuanced critiques to a wide audience has been challenging, as a TV ad Campos ran in October showed.

In the ad, a narrator asks: "Where is that country that a few years ago awakened the admiration of the world ... and now is afraid of inflation again? That one day brought a man of the people" - a clear reference to Lula - "into power, and now feels that those in power don't speak the language of the people?"

"Is it possible we're on the wrong path?"

Campos then appears. "We're not on the wrong path," he says, "but we have to admit: It's taken us as far as we can go."

ADMIRATION IN THE BUSINESS WORLD

Campos may have muddied the ideological waters further in October when he struck an unexpected alliance with Marina Silva, a popular environmentalist who was, like him, also a minister under Lula but has been very critical of Rousseff.

Silva placed a strong third in the last election, in 2010, and enjoys credibility with younger and well-educated voters.

But her support has yet to cause a meaningful jump in Campos' poll numbers, while his supporters in big business now fear that Silva's influence could lead him to adopt greener, less pro-development policies than they would like.

Nevertheless, most of the executives who have met Campos on his frequent tours of Sao Paulo, the country's financial and business hub, seem to admire him.

Many cite his extensive political experience, which began in 1988 at age 21 when he helped with the gubernatorial campaign of his late grandfather, Miguel Arraes, an icon of the pro-democracy campaign as Brazil's dictatorship ended in the 1980s.

While still in his twenties, Campos was Arraes' cabinet chief and then won a seat in the state legislature.

Campos also has won plaudits for his professional, private sector-style management of Pernambuco. The state's economy has grown at an average rate of 5.1 percent since Campos became governor in 2007, compared to the 3.7 percent national average.

While Pernambuco has clearly benefited from federal projects, such as a large new refinery in the Suape port complex, business leaders in the state give him credit for seeking their input and maintaining stable rules.

"He's had a very favorable situation, but he's also had the competence to take advantage of it," said Ricardo Essinger, vice president of FIEPE, an industry association in Pernambuco.

Another sign of the perceived threat posed by Campos is that, over the past three months or so, several officials in Rousseff's government have begun bashing him in private conversations. They hardly ever mention Neves.

Diplomats are also watching closely. Roberta Jacobson, the U.S. State Department's top official on Latin America, met with Campos in Brazil earlier this year.

Being from Pernambuco, in Brazil's northeast, could be a blessing for Campos come election time. His huge popularity could allow him to steal votes from Rousseff in a region that her party easily carried in recent elections, increasing his chances of forcing a runoff.

Finally, Brazil's economy, which has grown modestly this year after a sharp slowdown in 2012, is expected to post sluggish growth again next year. That could play in Campos' favor, especially if unemployment starts to rise, though he says he's not rooting for such a scenario.

"For us, we don't need the country to get worse to win the election," he said. "We have our own plan."

(Editing by Todd Benson, Kieran Murray and Paul Simao)

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