So Far, So Good for Brazil Leader

Sunday, November 7

SAO PAULO (Reuters) - Dilma Rousseff might as well be reading from a Wall Street script in her first few days as Brazil's president-elect. The left-leaning winner of Sunday's presidential election seems to have made assuaging investors' doubts her top priority as she promises in speeches and interviews to lower taxes, bring government spending under control and maintain the stability that has made Brazil's economic boom possible. In doing so, Rousseff has distanced herself from the more radical wing of her Workers Party and sounded every bit like the career economist she is. Rousseff's next test will be choosing a chief of staff - probably the most powerful job in Brazil next to hers. Many investors are clamoring for Antonio Palocci, a key player in her transition team and a former finance minister who is seen by Wall Street as a guarantee of stability. Yet Rousseff has even capitalized on that pressure as an opportunity to show that she is in charge, telling a television interviewer that lower-level jobs ultimately do not matter. ''I'm the one who's responsible here,'' she said. ''And I can assure you that whoever is in those posts, I will be the one who guarantees the country's economic stability.'' That and other messages have been calibrated for both Brazilian and foreign ears, and they reveal much about her strategy during her initial days and weeks in office. First, Rousseff is eager to establish authority separate from that of President Luiz Inacio Lula da Silva, who plucked his former chief of staff from relative obscurity to be his successor, but is so wildly popular that he could be a permanent shadow over her presidency. Rousseff is also taking a page from a playbook that worked wonders for Lula. She is cozying up to financial markets early in her term, and saying the right things about budget austerity and stability so that she can later reap the dividends of economic growth for her working-class base. ''She's making a point of talking first to the people who have the biggest doubts about her,'' said Alberto Ramos, a senior analyst at Goldman Sachs. ' Rousseff seems willing to expend valuable political capital to reduce Brazil's tax load, which is higher than virtually every other country in Latin America, as a way to stimulate growth - and extend an olive branch to business leaders who would have preferred her opponent, Jose Serra. Meanwhile, she has carefully fended off pressure from her poorer constituency to pass a large increase in the minimum wage, telling reporters Wednesday she might change the way such raises are calculated to ease strain on fiscal accounts. This week's biggest controversy was the irritation shown by some quarters of her main coalition partner, the PMDB party, at not having been included in initial transition meetings. But even that could be seen as a positive sign since the PMDB is widely seen as more interested in pork projects than economic orthodoxy.

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