Oct. 23 (Bloomberg) -- Former guerrilla leader Jose Alberto Mujica has traded his fleece jacket for a suit in hopes of being elected Uruguay’s president on Oct. 25. He may need to win a runoff against ex-President Luis Alberto Lacalle to fulfill that goal.

Mujica, a member of President Tabare Vazquez’s Frente Amplio coalition, has 45 percent support compared with 29 percent for National Party leader Lacalle, according to an Oct. 21 poll by Montevideo-based Grupo Radar. Colorado Party nominee Pedro Bordaberry is third with 14 percent support. If no candidate gets more than 50 percent of votes, the top two will contest a second round on Nov. 29.

Mujica, 74, has tried to dispel concerns about his revolutionary past by promising to hand control of economic policy to former Economy Minster and running mate Danilo Astori, and by praising Brazilian President Luiz Inacio Lula da Silva, said Michael Heydt, a Latin America analyst at Dominion Bond Rating Service in New York.

“Mujica has done his best to allay fears that many people had by choosing Astori as his vice president and expressing admiration for Lula,” Heydt said. “Both men are running on a continuity of macroeconomic policies.”

Under Astori, who was minister from 2005 to 2008, Uruguay’s agriculture-based economy expanded by more than 6 percent a year.

Uruguay’s 2.6 million voters will also choose all 30 senators and 99 lower house deputies. At the same time, a referendum will be held on whether a 1986 law granting amnesty for crimes committed by military and police officers during the dictatorship in the 1970s and 1980s should be annulled.

Second Round

If Mujica, a former lawmaker and agriculture minister, doesn’t win outright, he may fall to Lacalle in the second round vote, said Nery Pinatto, director of MPC Consultores, a Montevideo-based polling company. Many Colorado and other minority party supporters would lean toward Lacalle in a run-off because they don’t believe Mujica would let Astori decide economic policy, Pinatto said in a phone interview.

“He’s promised to hand off economic policy, but that’s one of the primary functions of a government and we’ve never seen that happen in any country in the world,” Pinatto said

Mujica and Lacalle declined Bloomberg News requests for interviews.

Uruguay’s $32 billion economy, which is about the same size as those of Latvia and Costa Rica, suffered from neighboring Argentina’s 2001 debt default and subsequent currency devaluation. As Argentina’s economy slumped in 2002, Uruguay’s contracted 10 percent and its peso lost half of its value.

Commodity Prices

Since then, the country of 3.3 million people has reduced its dependence on exports to Argentina by expanding trade with Europe, Asia and the U.S. A $1.1 billion pulp mill built by Finland’s Espoo-based Metsae-Botnia Oy, the biggest investment in Uruguay’s history, started production in late 2007.

Benefiting from higher global prices for commodities such as beef and soybeans, the government nearly quadrupled central bank reserves to $7.9 billion and cut unemployment to 7.2 percent in August from 12.3 percent when Vazquez took office. The government forecasts that the economy will expand 1.2 percent this year and 3.5 percent in 2010.

“Tabare Vazquez is going to leave office with a 60 percent approval rating,” said Ignacio Zuasnabar of pollster Equipos Mori in a phone interview from Montevideo. “That’s unprecedented in this country.”

New Partners

As president from 1990 to 1995, Lacalle helped form the Mercosur trade bloc with Argentina, Brazil and Paraguay and led a failed effort to sell off some state-owned enterprises, including the national phone company. Lacalle, 68, has tried to capitalize on concerns about Mujica’s ability to govern with a campaign slogan calling for a “steady path.” He now says the country should rely less on Mercosur.

“We will be as independent as we need to be in order to prosper,” Lacalle said in an Oct. 6 speech. “We are going to reach deals with China, India and Russia because there are a lot of players out there and it’s time to end our dependence on one or two.”

Mujica was jailed in the 1970s for his participation in the Tupamaros movement, which opposed Uruguay’s military dictatorship. He was one of hundreds of detainees the national government threatened to kill in retribution for terrorist acts. He was freed in a 1985 amnesty.

Tailor Shop

Photos of Mujica visiting a tailor’s shop to get outfitted in what he said was his first suit ran in Uruguayan newspapers ahead of an Aug. 6 meeting with Lula in Brasilia. In a joint appearance with the Brazilian leader, Mujica, who often wears a fleece jacket and beret, appeared in a grey pinstripe jacket without a tie.

Mujica says Lula, a 63-year-old former union leader who rose from being a peanut vendor as a child to head the world’s eighth-biggest economy, is an inspiration.

“Lula didn’t lead a revolution, but he pulled out 50 million people who were mired in poverty and gave them dignity,” Mujica wrote on his campaign blog. “I celebrate and will try to copy Lula and his capacity to be president of all his people without abandoning the poorest, which is where his heart lies, as does mine.”

To contact the reporter on this story: Bill Faries in Buenos Aires at wfaries@bloomberg.net;

Last Updated: October 22, 2009 23:00 EDT