October 13, 2014 / 4:46 PM / 3 years ago

Rousseff puts Cardoso, 83, at core of Brazil's election battle

Brazil's President and Workers' Party (PT) presidential candidate Dilma Rousseff reacts during a news conference in Brasilia October 10, 2014. REUTERS/Ueslei Marcelino

SAO PAULO (Reuters) - Under pressure in Brazil’s closest election race in decades, President Dilma Rousseff is centering her campaign around a familiar bogeyman - an 83-year-old former president associated with a more turbulent, elitist era.

In numerous TV ads and speeches, Rousseff has warned that a vote for her opponent in the Oct. 26 runoff vote, centrist Senator Aecio Neves, would mark a return to the policies seen under Fernando Henrique Cardoso, who was president from 1995 to 2002 and is from Neves’ Brazilian Social Democracy Party (PSDB).

The attacks, which have been unusually personal by the relatively collegial standards of Brazilian politics, highlight how Rousseff and Neves are scratching for every single vote as polls show them locked in a virtual tie two weeks away from the runoff.

The focus on Cardoso also shows how both candidates are battling for Brazil’s so-called “C Class” - lower-middle class voters who enjoyed huge gains under Rousseff’s leftist Workers’ Party over the past 12 years but are now weighing a change due to mounting frustration over corruption, resurgent inflation and a stagnant economy.

As president, Cardoso passed free-market reforms that ended decades of runaway inflation and helped lay the groundwork for a long economic boom after he left office.

He also pioneered social programs that slowed the spread of AIDS in the country and gave poorer Brazilians a monthly stipend for keeping their kids in school.

Yet many voters, especially those in the C Class, remember his presidency as a period of double-digit unemployment and financial crises, as well as an era in which Brazil’s elite still dominated schools, government and other walks of life.

“Shoo, ghosts from the past,” Rousseff’s official Facebook page said in a post that accused Neves of “being inspired” by Cardoso and enumerated unpopular spending cuts and tax increases that followed a currency devaluation in 1999.

Other spots have played up Cardoso’s image as an aloof son of privilege and former sociology professor who taught in France and the United States. One ad displayed a newspaper headline from two decades ago in which Cardoso called Brazilians “hicks” and featured a photo of him in an ornate suit he wore upon induction to the Brazilian Academy of Letters last year.

“He never hid his disdain for Brazil, especially for Brazilians who weren’t born in a golden crib and had to work in order to live,” Rousseff’s Facebook page said.

‘NOT ANCIENT HISTORY’

Cardoso and his allies say Rousseff’s campaign is trying to distract from the troubled present.

“They’re desperate,” Cardoso told Reuters.

He admitted to being disappointed by the attacks and had just recorded a video for his own Facebook page refuting some of them.

“I‘m not the candidate, and the electorate knows that,” he said. “I don’t think this strategy will work for them.”

Rousseff’s aides counter that Cardoso is fair game, noting that Neves and the PSDB advocate a return to the same austere government spending and free trade policies that, they say, left Brazil vulnerable during the 1990s.

Neves has said he would name Arminio Fraga, a former central bank president under Cardoso, as his finance minister.

“This is not ancient history,” an adviser to Rousseff’s campaign said, speaking on condition of anonymity. “We’re talking about a model that didn’t work, and a man still involved in daily politics. Debating this is completely legitimate.”

Cardoso remains an influential figure inside the PSDB and last week led talks with environmentalist Marina Silva that ended with her endorsing Neves.

Silva was eliminated from the election in the first round of voting on Oct. 5 but won 21 percent support and her endorsement helps Neves as he tries to catch Rousseff in the runoff.

Cardoso’s legacy is an emotional topic because it captures the ideological debates still dominating Brazilian politics, namely the balance between economic growth and fiscal discipline - and whether it’s necessary to choose one over the other.

His so-called “Real Plan” introduced a new currency and brought inflation from 2,500 percent in 1993 to about 5 percent in 1997. That allowed many Brazilians to save and invest money for the first time, causing poverty to fall.

Rousseff herself celebrated Cardoso’s achievements during a less politicized moment in 2011, sending him a letter for his 80th birthday that lauded his democratic “ideals” and said he “contributed decisively to ... economic stability.”

Yet sustaining the anti-inflation plan meant painful spending cuts and the privatization of some loss-making state-owned enterprises. Economic growth under Cardoso averaged about 2 percent - half the annual pace seen under his successor, Luiz Inacio Lula da Silva, although a bit better than during the Rousseff years.

Rousseff has significantly loosened the fiscal rigor that prevailed under both Cardoso and Lula, arguing that without recent tax cuts and increased budget spending the economy would have suffered even more in recent years from the after-effects of the global financial crisis.

Her policies have helped keep unemployment near historic lows of about 5 percent.

She has warned that Neves would oversee a budget “squeeze” that would depress the economy, just as under Cardoso.

Fraga countered in a recent interview that “a squeeze has quite frankly already happened,” blaming Rousseff’s lax fiscal management for inflation running above the government’s 6.5 percent target ceiling and a recession earlier this year.

RESPONDING TO ATTACKS

Leaders in Neves’ party believe that if they can keep voters focused on recent economic troubles, while preventing the attacks on Cardoso’s legacy from scaring them, they can extend Neves’ lead among the C Class - which is looking like this election’s swing demographic.

That group, often defined as those in households earning between about $700 and $1,800 a month, accounts for about 40 percent of the electorate. They currently favor Neves by a margin of about 49 percent to 42 percent.

Other income groups are much more polarized, with poorer voters favoring Rousseff by a double-digit margin while richer ones overwhelmingly prefer Neves. Overall, Neves had a tight lead of 2 percentage points in polls released on Thursday by Datafolha and Ibope, within the margin of error.

“Whoever wins the C Class wins the election, but it’s a volatile group susceptible to TV advertising,” a PSDB official said. “That’s why we can’t let these attacks go unanswered.”

To wit, Neves ran his own TV ad on Friday in which a narrator read aloud Rousseff’s letter to Cardoso in 2011.

“Who’s speaking the truth?” the narrator asked. “The Dilma who attacks to win votes, or the Dilma who wrote and signed (this letter)?”

Some voters find the debate mystifying. Leyla Domingues, a 24-year-old cashier at a Sao Paulo bakery, said she doesn’t really remember Cardoso’s presidency - though her parents do.

“They say those were bad years when nobody had jobs,” she said. “I can see why nobody wants to go back to that.”

Editing by Todd Benson and Kieran Murray

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