Brazil's Rousseff looks weak, but so do her election rivals

SAO PAULO Wed Apr 16, 2014 11:50am EDT

Brazil's President Dilma Rousseff speaks at a joint news conference with European Council President Herman Van Rompuy and EU Commission President Jose Manuel Barroso (unseen) during an EU-Brazil summit in Brussels February 24, 2014. REUTERS/Francois Lenoir

Brazil's President Dilma Rousseff speaks at a joint news conference with European Council President Herman Van Rompuy and EU Commission President Jose Manuel Barroso (unseen) during an EU-Brazil summit in Brussels February 24, 2014.

Credit: Reuters/Francois Lenoir

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SAO PAULO (Reuters) - With Brazil's economy struggling, a scandal at its state-run oil company and nearly three-quarters of voters saying they want change from their government, President Dilma Rousseff looks vulnerable in her bid for re-election this October.

But for her to lose, somebody else has to win. And her two main rivals have big, potentially fatal flaws of their own.

Senator Aecio Neves and former governor Eduardo Campos, who are both running on centrist, pro-business platforms, have failed to make significant headway in polls and still badly trail the left-leaning Rousseff despite her recent struggles.

That suggests that Rousseff, while no longer the strong favorite she was a year ago, is still likely to win the vote. A recent surge in Brazil's stock and currency markets - fueled by investors who are tired of Rousseff's heavy hand in the economy and are betting on a change in government - risks being overdone, or at least premature.

The challengers' biggest problem, polls suggest, is an inability to win over Brazil's lower-middle class, which swelled during an economic boom last decade and now accounts for more than half of the country's 200 million people.

That group, known here as the "C Class," has benefited from significant gains in income and quality of life and many fear that a change in government could jeopardize their progress.

Many of those same voters are also frustrated with poor health care and education, as well as high inflation and other symptoms of Brazil's recent economic slowdown, and could be convinced by the right candidate to make a leap, pollsters say.

However, in a country where deep class divisions are still a fact of life and politics, neither Campos nor Neves, who are both well-off, well-spoken grandsons of famous politicians, have been able to convince the masses they are on their side.

"There's a desire for change, but it coexists with a substantial conservatism," said Renato Meirelles, a pollster for Data Popular who has extensively studied the "C Class."

"I haven't seen an indication yet that (Campos and Neves) will be able to achieve that balance at a national level."

The latest survey, released April 5 by pollster Datafolha, showed Rousseff with 38 percent support, while Neves had 16 percent and Campos 10 percent. Remaining respondents said they would vote for other candidates or spoil their ballots, a common protest tactic in a country where voting is mandatory.

If the election goes to a runoff, as many expect, Rousseff would beat both Neves and Campos by about 20 percentage points, Datafolha said. Other polls have shown similar results.

POLLS FOLLOW CLASS LINES

Rousseff's approval rating has sagged this year as the inflation rate hit 6 percent and the economy entered its fourth consecutive year of slow growth.

Allegations of corruption and mismanagement at Petroleo Brasileiro SA, or Petrobras, have damaged Rousseff's image as a competent manager and may lead to a congressional probe.

Through it all, though, support for Rousseff's rivals has barely budged.

Her challengers dismiss the numbers, saying Brazilians don't usually pay close attention to campaigns until mid-July, when the soccer World Cup ends and candidates get free TV air time to tout their platforms to the general public.

That's true. Rousseff trailed her rival by 10 points at this stage of the 2010 campaign, when most voters still didn't know she was the preferred successor of then-President Luiz Inacio Lula da Silva, who oversaw last decade's economic boom and remains wildly popular with Brazil's poor.

By contrast, a majority of Brazilians today are already relatively familiar with Neves and Campos, Datafolha said, thanks to a campaign that has started unusually early.

Neves already leads Rousseff among wealthier Brazilians, with a 37 percent to 20 percent advantage in the Datafolha poll among respondents with household income of more than about $3,300 a month. Campos had 15 percent support.

Yet that demographic only accounts for about 5 percent of the electorate. Among respondents with household income of less than $720 a month, which accounts for nearly half of voters and includes much of the "C Class," Rousseff had whopping 54 percent support versus 13 percent for Campos and 11 percent for Neves.

Leaders of his Brazilian Social Democracy Party say Neves, 54, is aware of the need to broaden his appeal to poorer Brazilians. He has spoken often in recent weeks of everyday hardships like long commutes and poor health clinics, while saying that as president he would continue to increase the minimum wage - a hallmark of Rousseff's government.

But Neves has also embraced what he admits are "unpopular" measures, such as cutting public spending.

He says such policies are necessary to restore balance to Brazil's economy, but Rousseff's campaign plans to portray them as certain to cause a jump in unemployment - striking at perhaps the biggest fear of the "C Class."

Meanwhile, Neves has struggled to shed an image as an out-of-touch scion of a political dynasty with an apartment in Rio de Janeiro's most fashionable beachside neighborhood.

Last August, he condemned Rousseff for giving a speech with her back turned to a statue of his grandfather, Tancredo Neves, who was elected president in 1985 but died before taking office. Local media said the statue was about 100 yards away from where Rousseff spoke.

Campos, 48, was able to reach across class lines while governor of the poor northeastern state of Pernambuco - a job his grandfather also held in the 1980s.

He was also a minister in Lula's government, and a member of Rousseff's coalition until last September, meaning he can sell himself as an agent of change who also knows how to protect last decade's economic gains.

Indeed, officials close to Rousseff say she is far more concerned about facing Campos than Neves in a runoff.

But Campos has been stuck for months at around 10 percent in polls, indicating he has failed to inspire voters despite consistent - and overwhelmingly positive - media exposure since last October, when he struck an unexpected alliance with Marina Silva, a popular environmentalist who will be his running mate.

If Campos does start to win over poorer voters, especially in the northeast, Rousseff's campaign believes it can quickly contain those gains by sending Lula out on the campaign trail.

Lula is also from Pernambuco.

(Editing by Todd Benson and Kieran Murray)

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