Amid `Extremist' Risk, Brazil Presidential Prospect Softens Tone

(Bloomberg) -- Six months ago Sao Paulo Mayor Joao Doria revealed unbridled presidential ambitions, traveling the country and the world professing an aggressive pro-market agenda and a management style with the slogan “Speed It Up."

In an interview in his Sao Paulo office this week he struck a more humble, down-to-earth tone, talking about the need to do more in his home town, forge alliances with other centrist parties, and focus on a welfare and job-growth agenda as a means to meet his national objectives.

Why the change in attitude? Candidates from the far left and far right have risen in the polls ahead of next October’s general election, threatening Brazil’s recovery and possibly surprising overly optimistic investors, says Doria.

"If we continue divided, the election will be lost to one of the two extremist candidates," the 59-year-old former host of the Brazilian version of “The Apprentice” said in a fifth-floor conference room at City Hall. "Brazil needs alternatives so this risk doesn’t last until October."

Brazil’s political class is reeling after the worst recession on record and a three-year corruption scandal that has put dozens of executives, legislators and party leaders behind bars. Trust in politicians has been shattered. What Brazilians are looking for in next year’s election is a clean and experienced candidate, according to Datafolha opinion poll.

Political Spectrum

Enter Doria, who had never held elected office before becoming the first candidate in over two decades to win Sao Paulo’s mayoralty election in the first round last October.

Click here to read more on Mayor Doria’s Economic Proposals

Yet national politics in this continent-sized country are something altogether different. There, former President Luiz Inacio Lula da Silva of the leftist Workers’ Party has extended his lead in opinion polls to around 36 percent of voter intentions, despite having been convicted of corruption charges. If the verdict is upheld by an appeals court, he would be barred from running next year.

On the opposite end of the political spectrum is a former army captain, Jair Bolsonaro, who has roughly 16 percent of voter intentions. As a legislator in the lower house of Congress for 26 years only two of his bills have been approved, and his understanding of economics, he says, is superficial.

Excess Optimism

To Doria, unrealistic expectations make the situation ripe for disappointment: Lula may not be barred from running and Bolsonaro may manage to overcome the high rejection rates in his opinion poll numbers. "There’s excess optimism. Brazil can’t handle another populist government, it’ll be the new Venezuela of Latin America," he said.

Even if Lula were to be banned from running, the former metalworker still needs to be reckoned with, Doria said. "Candidate or not, Lula will be an electoral force."

While a market-friendly government is still likely to win in 2018, the risks to that scenario are growing and the election "carries much more uncertainty than recent votes in Brazil," research analyst Joao Pedro Ribeiro at Nomura Securities International Inc wrote in a Nov. 2 note.

While Lula presided over considerable growth and income distribution, critics say that by creating an over-sized welfare state he and his impeached successor, Dilma Rousseff, played a key role in undercutting the government’s finances. Brazil lost its investment grade rating in 2015.

Doria has notched some successes since taking office. He has cut wait times at the city’s public hospitals while also attracting federal funding and private donations to overcome budget shortfalls.

Yet critics say his haste has seen him launch several half-baked ideas, such as feeding school children with processed, surplus foods, a proposal he later withdrew. He also drew flak for traveling frequently and challenging his political mentor, Sao Paulo state Governor Geraldo Alckmin, who belongs to the same Brazilian Social Democracy Party, or PSDB. After months of on-and-off rivalry, the two have sought to portray an image of unity in recent weeks.

Doria’s approval ratings have steadily declined this year, from 44 percent in February to 32 percent last month, according to Datafolha polling firm. "The decline means little for Doria’s potential to be competitive in a national election, but it does make it harder for him to secure the PSDB’s nomination," Eurasia Group political risk consultancy said in an October research note.

His decision to cut down on travel and focus on Sao Paulo doesn’t mean he’s abandoned his bid for Brazil’s top job. In order to promote those national ambitions, he needs to first deliver in Sao Paulo, he said.

About the apparent shift in strategy and rhetoric 11 months into his tenure with the national elections up ahead, he says it’s the hallmark of a good leader to recognize change and react to it quickly.

"You need to grab the board and surf the wave before it swallows you," says Doria, who doesn’t surf, sleeps little but works out every day.

To contact the reporters on this story: Raymond Colitt in Brasilia at rcolitt@bloomberg.net, Vanessa Dezem in Sao Paulo at vdezem@bloomberg.net, Julia Leite in Sao Paulo at jleite3@bloomberg.net.

To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, Robert Jameson

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