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Published: Friday August 15, 2014 MYT 12:30:02 AM
Updated: Friday August 15, 2014 MYT 12:31:08 AM

Analysis - Volatile Silva could upend Brazil's presidential race

SAO PAULO (Reuters) - The late entry of environmentalist Marina Silva into Brazil's presidential race following the death of her running mate could rally young voters and those upset over a sluggish economy and corruption, but introduce new uncertainty for investors wary of her record of unpredictable decisions.

A plane crash on Wednesday killed presidential candidate Eduardo Campos, who was widely viewed as one of Brazil's brightest young politicians. Campos, 49, had been running third in polls with about 10 percent support, trailing incumbent President Dilma Rousseff and another opposition candidate.

With dark circles under her eyes, and her voice cracking as she asked God to care for Campos' widow and five children, Silva gave no indication at a news conference hours later whether she would replace Campos at the top of the Brazilian Socialist Party's ticket in the October 5 election.

The race is being closely watched by investors who are mostly tired of slow growth and high inflation under Rousseff, and are eager for a more market-friendly leader to assume control of Latin America's largest economy.

Yet if Silva does run, as most politicians and analysts expect she will, the story of her unlikely and frequently unstable partnership with Campos illustrates why she is beloved by many, and distrusted by some.

Born into a family of poor rubber tappers in the Amazon, Silva, 56, rose to fame as an activist environment minister in the 2000s. She broke with the ruling Workers' Party out of frustration with stagnant environmental legislation and then spoke out against rampant graft, earning a reputation as a rare moral voice in Brazilian politics.

Riding a late burst of support from fellow evangelical Christians who were sceptical of Rousseff's views on abortion and other issues, Silva placed third in the 2010 presidential election as a Green Party candidate, with nearly 20 percent of the vote.

Shortly thereafter, though, she broke with the Green Party, calling for a "new kind of politics."

Her second party divorce in just two years reinforced her image among supporters as a politician of unusual principle. But it also renewed whispers in Brasilia that she was erratic and hopelessly unskilled at the steady coalition-building needed to govern this continent-sized nation.

Silva tried to found a new party, ostensibly to run for president in 2014. Yet when election regulators ruled last October that her "Sustainability Network" failed to register enough signatures, she announced less than 48 hours later that she would support Campos, a pro-business governor and member of the traditional elite with whom she had little in common.

The decision shocked the Brazilian political world, including Campos - who confided to friends later that, when first informed of Silva's support, he thought it was a joke.

He sealed the alliance because Silva gave him credibility with some voters he would struggle to reach on his own but, within days, front-page headlines were already talking of a "crisis" between the two and their parties over differences in style and platform. The partnership never really gelled.

As a result, political analysts expect that Silva would feel free to pursue an agenda significantly to the left of Campos - still preserving the pillars of Brazil's economic stability over the last 20 years, but placing more emphasis on eco-friendly development while shunning corrupt machine-style politicians.

Still, nobody really knows for sure.

"She's unpredictable, no question," said Ricardo Ismael, a political analyst at Pontifical Catholic University in Rio de Janeiro. "Campos, you knew exactly what he was about. Marina, you could see her going many possible directions."

WON'T 'REINVENT THE WHEEL'

As such, Silva's candidacy would change what had been one of the defining characteristics of Brazil's 2014 election - a race among largely known quantities.

Prior to Wednesday's tragedy, President Rousseff was leading with about 36 percent support in recent polls. Senator Aecio Neves, of the centrist Brazilian Social Democracy Party, had about 20 percent of votes while Campos was a distant third.

Yet Neves has gained ground and polls showed him statistically tied in the event of a second-round runoff, which most expect, causing a recent rally in Brazilian stocks.

While business groups may not like Rousseff's left-leaning policies, her Workers' Party has still accumulated a solid economic record after 12 years in power. Plus, many observers and politicians believe that Rousseff would be slightly less interventionist in a second term.

Neves, meanwhile, is a business-friendly scion of one of Brazil's oldest political dynasties - just as Campos was.

Silva is not quite an outsider - she has been part of party politics for 30 years, and served as a minister and senator. She is advised by several respected economists including Eduardo Giannetti da Fonseca, a university professor who said last year that Silva was "less state-focused" than Rousseff and "would not reinvent the wheel" on macroeconomic policy if elected.

Still, Brazil's powerful agribusiness sector, which accounts for about a quarter of the economy and frequently complains of excessive environmental regulation, believes Silva is too eager to sacrifice growth for conservation.

Giannetti once said "growing 7 percent and destroying environmental patrimony is much worse than growing 3 percent and preserving it."

Silva's anti-establishment style holds enormous appeal for voters that have until now felt unrepresented by the field of candidates, particularly young, educated Brazilians who led huge street protests against the political class last year.

In a survey last month by Datafolha, one of Brazil's leading pollsters, 27 percent of potential voters said they still did not know who they would vote for, or planned to spoil their ballots in protest.

That's a rich pool of available votes, and one analysts say Silva is perfectly positioned to gain support from.

Campos' death "totally changes the logic of the election," said Mauro Paulino, head of Datafolha.

Just how is an open question. Brazilian financial markets whipsawed on Wednesday as some investors felt Silva's entry could weaken Rousseff's re-election chances while others worried she could pass Neves in polls, leaving to a runoff vote without a fully reliable, pro-business candidate.

As recently as early April, Datafolha was conducting "alternate" polls with Silva as a presidential candidate instead of Campos - an implicit recognition that, given Silva's fickle past, she could still change her mind and run.

In that poll, Silva captured 27 percent of the vote - surpassing Neves, who had 16 percent support, and trailing Rousseff, who had 39 percent.

Several factors have changed since then, including a downturn in the economy, falling support for Rousseff, and rising name recognition and support for Neves. Silva may also get a "sympathy" boost from voters upset over Campos' death.

The panorama will likely start to clear up on Monday, when Datafolha says it will release a new poll - with Silva as a candidate, once again.

(Additional reporting by Eduardo Simões; Editing by Todd Benson and Kieran Murray)

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