By Brian Winter BRASILIA, March 4 The conversations with Brazil's top business leaders often last two hours, and up to four. President Dilma Rousseff asks detailed questions but otherwise listens intently, staring back with an inscrutable frown that occasionally unnerves her guests. There is talk of investments, and the need for shared prosperity - a favorite topic of Rousseff's. But in these meetings, the conversation inevitably comes back to the severe bottlenecks that have brought the economy back to earth after a historic boom last decade. "Brazil needs to focus now on issues like productivity and reducing costs, because that's the only way we can grow in a sustainable fashion," said Marcelo Odebrecht, who runs a global conglomerate that bears his family's name. "I think we've realized that, and the president is moving in that direction," he said in an interview. "That's her focus - looking at these obstacles, and getting Brazil growing again." The meetings, which have intensified in recent weeks, are a critical part of Rousseff's efforts to convince Brazilian executives to start investing again and help lift the economy following two straight years of disappointing growth. The chats with well-known figures such as Odebrecht and mining and energy tycoon Eike Batista come as Rousseff, a Marxist guerrilla in the 1970s who evolved into a pragmatic leftist, struggles with a perception that she is unfriendly or even hostile toward the private sector. Just past the halfway point of her four-year term, the 65-year-old daughter of a Bulgarian aristocrat has indisputably made many enemies in the business world. She has condemned banks for charging high interest rates, intervened heavily in Brazil's exchange rate, and undertaken contentious reforms such as a cut in electricity rates that wiped billions of dollars from the market value of foreign and locally owned companies. Rousseff has said all her decisions respected existing contracts and laws, and were necessary to try to return Brazil's economy to its glory days of fast growth in the late 2000s. Her ability to convince business leaders that's true will be key to the rest of her presidency. Without a rebound in investment, which has steadily fallen since Rousseff has been in office, Brazil will not have the resources to address supply-side bottlenecks in infrastructure and labor that caused the economy to grow just 0.9 percent in 2012. A persistent economic slump could, in turn, endanger Rousseff's expected bid for re-election next year. Reuters spoke with several ministers, presidential aides and business leaders who have participated in the meetings, trying to determine why executives have generally not yet heeded Rousseff's call to take risks and let their "animal spirits" flourish - a reference to a term used by the British economist John Maynard Keynes, one of her favorite historical figures. Business leaders say that Rousseff seems receptive to their feedback and focused on the right problems. But she is also not shy about defending her strong belief that the state must try to shape the economy so that all Brazilians can prosper. That philosophy has guided Brazil for the past 10 years under Workers' Party rule, and helped make it one of the few countries where inequality fell as the economy grew. Yet it may also explain why some of her decisions have backfired, some say. "She always challenges these guys - You have to think as a business, but you have to think about Brazil too," said Trade and Industry Minister Fernando Pimentel, one of Rousseff's closest aides, who sits in on some of the meetings. "You want to earn money, that's natural. But how is everybody going to earn money? How will everybody get better? It can't get better just for one group, only for you," Pimentel said in an interview. A VERY POPULAR LEADER Since taking office on New Year's Day in 2011, Brazil's first woman president has earned mostly high marks from voters. Her personal approval rating has hovered in the high-70s, thanks largely to record-low unemployment levels that have been sustained despite the lackluster economic growth. By cracking down on corruption and embracing some free-market policies such as the privatization of airports and highways, Rousseff has moved beyond the shadow of her popular predecessor, Luiz Inacio Lula da Silva, who plucked the career civil servant from relative obscurity and helped her win her first-ever campaign - for the presidency - in 2010. In a region characterized by charismatic leaders such as Lula and Venezuela's Hugo Chavez, Rousseff stands out for being gray - or intimidating, depending on the beholder. Aides say she detests ceremonial aspects of the presidency, eschewing dinners and the schmoozing with congressmen and foreign visitors that Lula excelled at. She rarely gives news conferences, and she abandoned Twitter almost immediately after she won the election. "Let's chat more often in 2011," her most recent tweet says. Yet, for the most part, Brazilians see these as the signs of a serious, hard-working leader. Especially among the poor, whose lives have improved dramatically in the past decade, Rousseff is seen as a kind of stern benefactor - the "mother of Brazil," as Lula baptized her in 2010. In the corporate suites of Sao Paulo, the country's business and financial capital, executives tend to take a dimmer view. While virtually no one accuses Rousseff of being a hard leftist in the vein of Chavez or Bolivia's Evo Morales, many say she has taken too heavy-handed a role in managing Brazil's $2.2 trillion economy - and scared off some investors who never quite know what she'll do next. "I think most investors understand she's not reintroducing old-style socialist ideas. That's not what this is about," said Paulo Vieira da Cunha, a former deputy governor at Brazil's central bank who is now a partner at Tandem Global Partners, a hedge fund in New York. "What it is about is her belief in central planning, in an active industrial policy, where the government makes critical decisions," he said. "That's not unique to Brazil, by the way ... But it has bothered some people." A HEAVY HAND Indeed, there is no big economic sector that Rousseff hasn't touched in a meaningful way in the past two years. Brazil's banking industry was turned upside down by the central bank's surprise decision, starting in Rousseff's eighth month in office, to slash its benchmark interest rate, which has since fallen from 12.5 percent to an all-time low of 7.25 percent. Rousseff publicly shamed private-sector banks for not cutting their lending rates fast enough to match the benchmark's declines, calling their actions "inadmissible." Meanwhile, monthly inflation hit its highest level in almost eight years in January, leading some investors to say the cuts went too far. Rousseff has also been personally involved in the management of the exchange rate, which has oscillated between 1.52 and 2.13 per dollar during her term. The government has tried to alternately strengthen or weaken the currency in unpredictable ways, playing havoc with companies' business plans. Even the business world's favorite policy tactic - cutting taxes - has generated uncertainty under Rousseff. Instead of announcing an across-the-board cut, Rousseff has moved sector-by-sector, implementing targeted tax reductions of sometimes uncertain duration for industries like autos or home appliances. Her government has made more than two dozen separate announcements of stimulus packages. Finally, Rousseff has made some decisions that openly work against the interests of private capital. They include forcing state-run oil giant Petrobras to import gasoline and sell it at a loss, a policy that has jeopardized the company's investment plans and contributed to a 30 percent decline in its publicly traded shares since she took office. All told, Brazil's main stock index has tumbled 20 percent during Rousseff's presidency - compared to an 18 percent gain in Mexican shares and a 20 percent rise in the Dow Jones Industrial Average in the United States during the same period. The Eurasia Group, a think-tank, said in a note in February that the government's policies and poor communication have led to "a credibility problem with the private sector." The result: Investment fell 4 percent in 2012, and now stands at just 18.1 percent of gross domestic product. That gives Brazil the lowest such ratio among big Latin American economies, well behind the rates of 28 percent or so in Peru, Colombia and Chile. As a result, some among Rousseff's economic team fear Brazil's potential economic growth rate may be capped at a mediocre 3 percent or so for years to come. TRYING HER BEST? Inside the Palacio do Planalto, Rousseff's modernist palace on the high plains of central Brazil, one word best describes the reaction to the way some investors are behaving: bewilderment. To hear her ministers and aides tell it, Rousseff has spent much of her presidency explicitly catering to Brazil's business community. In fact, many of the policies for which she has been most criticized were the results of feedback she received from executives, they say. There is truth to that. In a keynote speech in 2010 prior to the presidential campaign, Armando Monteiro Neto, then the head of Brazil's main industrial lobby group CNI, cited taxes, interest rates, an overvalued real, and high input costs such as electricity as the economy's main problems. Rousseff has made faster progress on all those issues than any economist or political analyst predicted, although some initiatives - including her recent plan to force electricity costs down - have caused heavy losses for certain companies. "I think she's done what business people have asked for, and with a certain speed," said Luiza Helena Trajano Rodrigues, the chief executive of retailer Magazine Luiza and another executive who has met frequently with Rousseff. "Some of the criticism seems a little strange," Rodrigues said in an interview. "She's done a lot of difficult things." Despite being elected primarily as a figure of continuity, Rousseff has made some pro-business moves that were unthinkable under Lula, who rose in politics as a labor union leader. She stood up to criticism from the left wing of her Workers' Party to privatize airports in Sao Paulo, Rio de Janeiro and elsewhere. She also moved to cut pension benefits for incoming government workers - a decision that will help shore up Brazil's finances, which she has maintained in orderly shape. One interpretation of Brazil's struggles is that after the last decade's boom lifted some 30 million people from poverty, the policies that worked under Lula had run their course. Namely, there was no more room to grow the economy by expanding consumer credit - the main engine of growth from 2007 to 2010. So it has fallen to Rousseff to make tough structural reforms that could eventually open up a new era of economic growth - but have generated uncertainty in the short term. The minister, Pimentel, who has known Rousseff for four decades, said the dire global economy also caused her to become more reformist around the one-year mark of her presidency. "She clearly saw the bottlenecks that the Brazilian economy had, and has," he said. "She knew we couldn't put off facing these bottlenecks because in a world totally convulsed by the European crisis, we could risk totally losing our competitiveness." SHARING THE WEALTH Racing to prevent such a scenario, Rousseff has thrown open her doors to a variety of business leaders from finance, steel, aviation and elsewhere - and has won over some executives who were skeptical of her. She is mostly listening for new policy ideas and trying to gauge the economy's health. But she is also not shy about asking her guests to part with their money. For example, in a Jan. 10 meeting with Odebrecht, she asked him to consider investing in upcoming airport concessions, an aide said. In a Jan. 16 sit-down with Batista, whose holdings include oil company OGX, Rousseff urged him to participate in a major round of oil auctions later this year. Rousseff has also gathered two dozen or so top executives at a time for regular "CEO forums" inside the palace, with the next pow-wow scheduled for March 19. Still, giving executives face time has been no guarantee of convincing them to invest. Rousseff's closest contact in the business world is arguably Jorge Gerdau Johannpeter, a 76-year-old steel magnate whom she appointed to lead the Chamber of Management and Competitiveness, another nexus between government and the private sector. Gerdau is often in Brasilia, and sat down with Rousseff for four hours in one meeting in January. Yet on Feb. 21, the company which he chairs - Gerdau SA , the world's No. 2 maker of steel for builders - said it was cutting its five-year investment plan by 17 percent. It said it slashed capital spending by 24 percent in the fourth quarter alone, and attributed its decisions to "uncertainties hurting the global economy." A spokeswoman for Gerdau did not respond to multiple requests for an interview. The malaise in Brazil's private sector explains why Rousseff may be vulnerable to a more market-friendly candidate, such as PSDB party Senator Aecio Neves or Pernambuco state Governor Eduardo Campos, in next year's election. Yet polls indicate that, for now, Rousseff is popular enough to win easily. Meanwhile, an unexpected 0.5 percent rise in Brazil's overall investment in the fourth quarter of 2012 suggests that some business leaders, too, may be coming around. Odebrecht, who after meeting Rousseff said his company would invest $8.5 billion this year, up a third from 2012, said executives may learn to live over time with some discomfort. "People may argue - 'Oh, I would have done this a different way,'" he said. "But the concepts and intentions, I think it's tough to criticize her. What she's doing is right for Brazil."