With no easy options, Brazil's Rousseff strains to manage unrest By Jeferson Ribeiro and Brian Winter BRASILIA/SAO PAULO (Reuters) - Few people in Brazil know what it's like to be 20-something and angry at the government quite like President Dilma Rousseff. Rousseff, a Marxist guerrilla during the 1960s who fought against a military dictatorship, now finds herself on the other side of power. She's struggling to defuse protests by more than 1 million people in the past two weeks that have unsettled markets and could threaten her re-election next year. The irony has not been lost on protesters, one of whom held up a poster last week with a mug shot from Rousseff's arrest for subversion at age 22 and the words: "Your ideals were the same as ours! We want that Dilma back! Despite her past and her leftist policies now, Rousseff's aides say that, like other politicians, she has had a tough time understanding what exactly the protesters want and deciding how to react. The hard truth is that she has no easy options. Protesters' calls for higher spending on hospitals, schools and public transport could not come at a worse time for the government, which is trying to rebuild its credibility with investors through a renewed focus on fiscal discipline. The nameless, leaderless protest movement, which blossomed thanks to social media and strong participation of university students, has brought together Brazilians angry about corruption, poor public services and billions of dollars being spent to host soccer's World Cup next year. Dozens of people have been injured and two killed, although most of the protests have been peaceful. The demonstrations have subsided in recent days but more are planned for the coming weeks. While vowing to crack down on a violent minority that have looted stores and vandalized government buildings, Rousseff has praised the democratic spirit of most protesters and vowed during a televised speech on Friday to address their concerns. Rousseff was to meet on Monday with governors and mayors to win backing for plans to build more public hospitals and prioritize a project aimed at improving transportation in Brazil's cities. She also is lobbying them to support a congressional bill that would funnel all royalties from new oil fields to public schools and other education projects. The economy, however, is struggling to gain steam, inflation is eating away at purchasing power, and rising interest rates are making consumer credit more costly. In addition, two straight years of what many economists decry as fiscal slippage under Rousseff make increased spending even harder. That means Rousseff does not have much room for maneuver and protesters are unlikely to see any concrete improvements to daily life in the near term. Still, Rousseff's ability to convince Brazilians that she is at least on their side will be key to preventing the protests from degenerating into even worse violence or becoming so disruptive that they push aside the rest of her agenda at a time when the economy is looking delicate. "From this point on, she's going to start making decisions with less certainty" because of the scrutiny stemming from the protests, said Marcio França, a congressman for the PSB Party, part of Rousseff's ruling coalition. Rousseff is a widely respected career technocrat but she sometimes comes off as gruff and authoritarian. Her strong approval ratings, however, began to slide before the protests began, a trends that is likely to continue in the near term. So far, the unrest has been directed at politicians of all stripes, not her in particular. Some aides worried that having Rousseff address the nation could turn her into the primary target of the protesters' ire. One thing that Rousseff has not discussed much since the crisis started is her personal past. Rousseff, the daughter of a Bulgarian aristocrat, was a teenager when she joined one of several small guerrilla groups that proliferated in Brazil in the late 1960s. Her ex-husband Carlos Araujo told Reuters in 2010 that Rousseff helped plan some of the group's activities but never engaged in violence herself. After her arrest in early 1970, Rousseff was taken to a detention center. There, she was beaten and hung upside down by her knees from a metal rod while interrogators applied electric shocks to her head, ears and nipples, trying to get her to give them the names of fellow guerrillas, according to an interview she gave in 2005 to Folha de S.Paulo. Rousseff remained in jail for 3 1/2 years. Following her release, she studied economics and evolved into a more moderate leftist, and then took a series of government jobs after democracy returned to Brazil in the 1980s. During her presidential campaign in 2010, Rousseff's TV ads cast her guerrilla years as a struggle for democracy and greater equality in a country that, then as now, has one of the world's biggest gaps between rich and poor. Since then she has rarely spoken about her guerrilla period, in part because she does not believe it defines her but also because of concerns it might alienate more conservative voters, aides say. In her Friday speech, she seemed to refer to her struggle only obliquely. "Brazil fought a lot to become a democratic country," she said. It wasn't easy to get where we did, just as it isn't easy to get where many of those who went to the streets want to go. Some aides have urged her to share her story more often but Rousseff has pushed back, arguing that people would much rather hear about the broader tale of Brazil's growing prosperity in the past 10 years. Some demonstrators also have said they are eager to hear Rousseff talk about Brazil in more personal terms. "She seems good, but I ask myself who she is," said Ana Cattaldi, 27, at a march in Sao Paulo on Saturday. Is she a product of marketing? Or is she angry like we are? When the protests intensified with some 200,000 people joining in last Monday, Rousseff dispatched a top aide to deliver a written one-sentence message to reporters saying that peaceful protests were "legitimate." That was typical for a president who has given only a handful of media interviews and prefers to speak instead in speeches or tightly managed "conversations" with officials that are then broadcast on radio. She has been criticized for not meeting enough with leaders in Congress or representatives of social movements and activist groups that form the base of her leftist Workers' Party. One reason for her aloofness, aides say, is her disgust with the way business is done in Brasilia. Since taking office, she has fired or urged the resignation of seven of her own ministers after they were accused of corruption - a stance that has earned her a clean reputation and boosted her popularity. Rousseff has surrounded herself instead with a core group of about a half-dozen aides and ministers, and spends much of her time in her comfort zone, managing economic policy. The results have been mixed. Unemployment has remained near historic lows, but many investors blame Rousseff's frequent interventions for an economy that has slowed sharply since she took office and inflation running above 6.5 percent. One member of her inner circle, Trade Minister Fernando Pimentel, is another former guerrilla who knew Rousseff in the 1960s, and still walks with a limp after he was hit by a car during a failed kidnapping in that era. He was one of the few officials last week to speak about the protests. He denied that the government was "out of tune" with the protests, and played down any impact they might have on Rousseff. "They're against the status quo," Pimentel told Reuters as he left a meeting with Rousseff. Not against the government. Editing by Todd Benson, Kieran Murray and Bill Trott