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INTERVIEW-Underdog for Brazil's presidency bets on post-World Cup surge

Source: Reuters - Thu, 3 Apr 2014 17:47 GMT
Author: Reuters
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By Anthony Boadle and Jeferson Ribeiro

BRASILIA, April 3 (Reuters) - Aecio Neves is running for president of Brazil and promising to turn the page on 12 years of leftist government. But he has a problem.

Despite being the grandson of a famous politician and the leader of Brazil's main opposition party, seven out of 10 Brazilians have never heard of him.

Unfazed, he says that will change after Brazil finishes hosting the soccer World Cup in July and the presidential race kicks off in earnest in the Brazilian media.

"Voters increasingly want change, but they have yet to transfer that desire for change to an opposition candidate, because they don't know their names," Neves said.

In a wide-ranging interview with Reuters, he outlined a pro-business program for restoring investor confidence in Brazil's economy, which has sputtered in the last three years under the heavy-handed policies of President Dilma Rousseff.

A Neves administration, he said, would seek to revive Latin America's largest economy by lowering taxes, curbing public spending and rebuilding Brazil's battered state-controlled oil company, Petroleo Brasileiro SA.

Some investors are betting that the dapper senator from the centrist Brazilian Social Democracy Party has a decent chance of winning.

Rousseff had appeared to be a safe bet for re-election in the Oct. 5 vote but Brazil's financial markets have risen in recent weeks on hopes that Neves, or another potential contender Eduardo Campos, can end the 12 years of Workers' Party rule.

While Rousseff still has more voter support than Neves and Campos put together, her approval ratings have fallen due to Brazil's weak economy and a snowballing scandal enveloping Petrobras, the state oil company.

Brazil's business class enjoyed boom times under Rousseff's predecessor and mentor Luiz Inacio Lula da Silva, but has lost trust in her stewardship of the economy because of state interference and deteriorating public finances.

For Neves, Rousseff's inability to rein in spending and the use of creative accounting to meet fiscal targets led to Standard & Poor's decision last week to downgrade Brazil's credit rating one notch.

"The challenge will be to recover lost confidence. You can't trust any of the government's numbers anymore," he said.

SMALLER GOVERNMENT

The 54-year-old economist won praise for his austere management as governor of Brazil's second most populous state, Minas Gerais, and he believes the same bitter medicine is what Brazil's federal government needs now.

If elected, he plans to limit government spending to the pace of economic growth, reduce the number of government ministries from 39 to about half that, and lower one of the heaviest tax burdens in the world in order to spur investment.

To restore the finances of Petrobras, Brazil's largest and most indebted company, Neves plans to raise gasoline prices "without question" and end Rousseff's policy of subsidizing fuel costs to curb inflation. The policy forces Petrobras to sell gasoline at a loss, hurting its bottom line.

"We will free Petrobras from the claws of a political clique," he said. "Petrobras is a tool for developing the nation. It cannot be used as a tool of economic policy to make up for a government's failure to control inflation."

Neves says he is open to debate on whether concessions or controversial new production sharing contracts are the best way to go to tap Brazil's vast offshore oil fields and recover Petrobras' capacity to invest and expand production.

While Rousseff has begun to turn to private entrepreneurs to rebuild Brazil's dilapidated infrastructure, such as roads, ports and airports, Neves said he would expand partnerships with the private sector to all areas of the economy.

As two-time governor of his home state of Minas, Neves eliminated its deficit while delivering some of the best school and health facilities in Brazil. He slashed the number of government secretariats, linked pay to performance for state employees and took a 45 percent pay cut himself.

Critics say his party's penchant for selling off public companies to private investors caters to big business and that a Neves administration would roll back social gains that vastly reduced poverty in Brazil under Lula and Rousseff.

Neves retorts that political cronyism and corruption has prevailed in federal government under the Workers' Party and Brasilia badly needs to hire civil servants based on merit.

His grandfather was Tancredo Neves, a beloved politician who was elected president in 1985 but died before taking office as the figurehead of Brazil's return to civilian rule after 21 years of military dictatorship.

Neves has been derided by some as a handsome playboy with insufficient heft for the presidency, and also criticized for failing to make a mark in the Senate. Still, he says he has the political courage to take the unpopular belt-tightening measures the country needs.

"I can assure you, if I win the election I will not govern with an eye on opinion polls. I will do what has to be done."

"Unfortunately, we are back to where we were 10 years ago in Brazil. Instead of discussing productivity and competitiveness, we are again talking about crisis of confidence and inflation." (Editing by Todd Benson and Kieran Murray)

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