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Death of Brazil’s Presidential Candidate Resets Election

Brazilian Candidate Eduardo Campos
Eduardo Campos, presidential candidate and former governor of the state of Pernambuco, sits for a photograph after an interview in Sao Paulo, Brazil, on April, 17, 2014. Photographer: Paulo Fridman/Bloomberg

The death of Brazilian presidential candidate Eduardo Campos yesterday resets a contentious campaign less than two months before the election.

Campos died when his small plane crashed in Sao Paulo state following an aborted landing attempt because of bad weather. President Dilma Rousseff and candidate Aecio Neves said they are suspending their campaigns to attend his wake. Campos’s running mate, Marina Silva, said it’s time to mourn and didn’t comment on whether she would replace him.

The Ibovespa stock index and Brazil’s real swung between losses and gains yesterday as investors tried to assess what Campos’s death means for the October election. The volatility reflects the debate about who will gain support in the polls, with Nomura Securities International saying a Silva candidacy would hurt Rousseff and electoral researcher Instituto Analise pointing to Neves as the likely loser.

“The election becomes more competitive if Marina Silva accepts,” Christopher Garman, a director at political risk consultancy Eurasia Group, said in interview at the Sao Paulo conference where Campos had been scheduled to speak yesterday. “The tragic death of Campos makes the pathway for re-election of Rousseff more difficult.”

Campos and Neves criticized Rousseff’s handling of the economy, which has grown at the slowest pace for a president in more than two decades. In a televised interview aired the night before his death, Campos said he aimed to slow inflation to the 4.5 percent target it has exceeded for 47 straight months.

Brazil’s Economy

Brazil’s economy in 2014 will grow at less than half the pace of last year while falling short of the global average, according to analysts polled by Bloomberg. Industrial confidence as measured by the National Industry Confederation last month fell to a record low.

“Dilma will be the first president to hand over the country in worse shape than when she found it,” Campos told local media last month.

A former governor of Pernambuco state, Campos had been polling behind Rousseff and Neves since picking Silva as his vice presidential running mate in April. Campos had 9 percent support in an Ibope poll published Aug. 7. Rousseff had 38 percent and Neves 23 percent. The survey had a margin of error of plus or minus two percentage points.

First Round

The other eight candidates in the poll garnered 6 percent. To win in the first round, a candidate needs more votes than all others combined. Eurasia today in a research note reduced the chances of a Rousseff victory to 55 percent from 60 percent.

Polls conducted by public opinion research company Datafolha in March before parties officially nominated their candidates showed Silva running in second place and ahead of Neves in four election scenarios. Brazil’s electoral court prevented her from registering the party she was trying to create to run for president.

The election outcome is impossible to forecast now and polls will be held after Campos’s coalition decides on a new candidate, polling company Ibope said in an e-mailed statement. Joao Francisco Meira, director of Vox Populi, another firm that conducts election surveys, said past polls showing voter intention are no longer valid.

Datafolha is scheduled to begin a new poll today that includes Silva as a candidate, with questions pitting her against Rousseff and Neves, according to its filing on the electoral court’s website. The three-day survey of 2,884 people will also ask if Campos’s Brazilian Socialist Party, or PSB, should select Silva or someone else as its candidate. Results are slated for release as soon as Aug. 18.

‘Natural Choice’

Silva is a “natural choice” to replace Campos on the ticket, Senator Rodrigo Rollemberg, a leader of the PSB in the upper house and candidate for governor of the Federal District, said by phone today.

The party will schedule a meeting to make a decision after Campos’s burial, according to Rollemberg, who is a member of the PSB committee. Brazil’s electoral law allows 10 days to name a replacement.

“Making a decision right away could be interpreted as a lack of sensitivity, or political opportunism,” Claudio Goncalves Couto, a professor of public administration at the Getulio Vargas Foundation, an education and research institution based in Rio de Janeiro, said yesterday. “At the same time, there would be a considerable political loss if a new candidate was not named before the start of electoral advertising.”

Campaign Programs

TV and radio channels on Aug. 19 start airing campaign programs where candidates are allotted space to run ads. Based on her coalition’s representation in the lower house, Rousseff has more than double Neves’s legally allotted time and more than five times that of Campos’s coalition.

Even with the growing importance of social media, television is the preferred source of information for 76 percent of the population, compared with 1.5 percent who favor newspapers, according to a government study published in March.

Asset prices initially plunged yesterday following news of the crash. Both stocks and the real returned to positive territory, then ended the day lower. The currency, which depreciated as much as 0.6 percent and rose as much as 0.7 percent, closed down 0.2 percent at 2.2816 per U.S. dollar. The Ibovespa led world losses amid a surge in volume, finishing 1.5 percent lower following a 2.1 percent plunge earlier in the day and a gain of as much as 0.5 percent.

‘Just Shock’

“The initial market reaction was just shock as opposed to being an analysis as to what his death might mean for the race itself,” Geoffrey Dennis, head of global emerging-market strategy at UBS AG, said in a telephone interview.

Previously, UBS was forecasting a 90 percent chance that Neves would challenge Rousseff should she be forced into a second round, compared with 10 percent for Campos. If Silva runs, “it’s more like 60-40.”

The Ibovespa rose by less than 0.1 percent at 2:45 p.m. local time. The real strengthened 0.7 percent to 2.2651 per dollar.

Campos’s plane crashed into a residential area around 10 a.m. yesterday in the port city of Santos, about 70 kilometers (43 miles) outside of Sao Paulo. He is survived by his wife, Renata de Andrade Lima Campos, and five children: Maria Eduarda, Joao, Pedro, Jose Henrique and Miguel.

The plane’s two pilots and four members of Campos’s campaign team also died in the crash.

‘Young Leader’

“Brazil loses a young leader with a promising future,” Rousseff said in a speech. Silva told reporters minutes later she is “asking God to sustain” Campos’s family.

A science and technology minister under former President Luiz Inacio Lula da Silva, Campos quit Rousseff’s ruling coalition last year in the aftermath of street protests against inflation, spending on the World Cup tournament and corruption that pulled the government’s popularity to record low.

Campos made his debut in politics at 21, when he campaigned for Miguel Arraes, his grandfather and former Pernambuco governor. As a legislator in Congress he successfully pushed a bill that cut pension benefits and, as President Lula’s science minister, a measure that allowed stem cell research.

Campos vowed to tackle inequality in the world’s second-biggest emerging market, to simplify Brazil’s tax system and carry on with social programs implemented by Rousseff’s party.

“The Brazilian has that feeling that he or she pays a five-star rate, but sleeps in a tent,” Campos said in an interview aired this week. “Now is the time to unite Brazil to simplify the Brazilian state.”

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