Brazil steps toward post-Lula era with Rousseff

* Rousseff sets out goals on poverty reduction, stability

* Stresses her commitment to prudent economic management

* Choice of cabinet to provide first clues on leadership

By Stuart Grudgings

SAO PAULO, Nov 1 (BestGrowthStock) – Brazil’s president-elect Dilma
Rousseff vowed to step up the fight against poverty without
forfeiting economic stability in Latin America’s largest nation
when she takes over from her charismatic former boss on Jan 1.

Rousseff, who based her campaign on extending the legacy of
outgoing President Luiz Inacio Lula da Silva, convincingly won
her first election on Sunday as Brazilians put aside doubts
over her character and voted for continued economic success.

The career civil servant must now form her transition team
and cabinet as she emerges from the long shadow of Lula and
prepares to govern the South American powerhouse as it faces
challenges to its prosperity, including a painfully strong
currency (BRBY: )(BRL=: ) that is punishing exporters.

In a sign of the changing of the guard, Lula laid low after
Rousseff’s victory on Sunday, leaving her to bask in the moment
she became the first woman elected to lead Brazil.

Rousseff, 62, paid homage to Lula in her victory speech,
pledging to extend what she dubbed a “new era of prosperity.”
She also set out twin goals for her rule — eradicating poverty
while maintaining Brazil’s hard-won economic stability.

“We cannot rest while there are Brazilians who are hungry,
while there are families living on the street, while poor
children are abandoned to their fate,” the former leftist
militant told cheering supporters in the capital Brasilia.

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Full coverage of election [ID:nBRAZIL]

Graphic of poll result http://link.reuters.com/bup23q

Election Top News page http://link.reuters.com/dux43p

Special report on Rousseff http://link.reuters.com/fab25p

Rousseff’s economic policies [ID:nN31100256]

Political risks in Brazil [ID:nRISKBR]

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Rousseff, who will be sworn in on Jan. 1, handily won
Sunday’s runoff election with 56 percent of the vote. Her
rival, Jose Serra of the centrist PSDB party, took 44 percent.

Rousseff has yet to win the affection that Brazilians have
for former metalworker Lula. But she ran a solid campaign in
which she trumpeted Lula’s achievements and faced down
corruption allegations and questions over her religious faith.

“It’s historic. Brazil elected a factory worker and now a
woman. Dilma will be a mother for the Brazilian people,” said
Ivoni Klock, a government worker who celebrated in Brasilia.

BARRIERS TO SUCCESS

Despite pledging not to cut social or infrastructure
spending, Rousseff went out of her way in her victory speech to
stress her commitment to responsible economic policies and
promised Brazil’s government would not live beyond its means.

She was flanked by Wall Street darling Antonio Palocci, a
former finance minister under Lula who is expected to be handed
a top post by Rousseff and who may be put in charge of managing
her transition team.

Financial markets have taken Rousseff’s rise to the
presidency in stride and are likely to react calmly on Monday.
In the long term, though, investors worry that Brazil could
suffer from Rousseff’s insistence that the economy does not
need major reforms to keep growing at a robust pace.

“We expect a continuation of the decent economic policies
carried out by Lula, but unfortunately there seems to be no
room for the structural reforms that Brazil needs to optimize
public spending,” said Alberto Bernal, head of research at
Bulltick Capital Markets.

Rousseff will inherit an economy that is among the world’s
hottest emerging markets but which may struggle to maintain
such lofty growth rates as it runs up against barriers such as
its poor infrastructure and suffocating bureaucracy.

Politically-difficult reforms such as tackling the bloated
social security system appear to be off Rousseff’s agenda, even
though her coalition will enjoy expanded majorities in
Congress. Instead, she is expected to focus on easing specific
bottlenecks in the economy, such as its sclerotic tax system.

Rousseff will continue to push Lula’s flagship initiatives,
including reforms to give the state a greater role in
developing vast new oil wealth and ambitious infrastructure
plans as Brazil prepares to host the 2014 World Cup and the
Olympics two years later.

The first clues on her priorities will come in the weeks
ahead as she picks her cabinet, likely to have a familiar look
to Lula’s. The inevitable horse-trading will also provide an
early test of whether she has the clout and charisma to manage
an often unruly coalition.

For Brazil’s centrist opposition, the defeat is also likely
to mark the end of an era as its de-facto leadership passes
from the 68-year-old Serra to fresh-faced 50-year-old senator
Aecio Neves, widely seen as a future presidential contender.

“For those who think we are defeated I want to say to you
that we are now only starting the real battle,” a defiant Serra
said in his concession speech on Sunday night.
(Additional reporting Isabel Versiani in Brasilia and Alonso
Soto in Sao Paulo; Editing by Todd Benson and Anthony Boadle)

Brazil steps toward post-Lula era with Rousseff