BUENOS AIRES, March 15 (Reuters) - Argentina's economy may be stagnant but the capital city Buenos Aires is looking better than it has in years, boosting the popularity of its mayor as he prepares to run for president in October.
Mauricio Macri, a conservative businessman, has built a strong power base in Buenos Aires and is one of three leading candidates in the race. Some polls show him in first place.
Opponents say he would neglect the poor and side with big business and foreign bondholders, vilified by the government as "vultures", who are suing Argentina over defaulted debt.
But polls show Macri is the candidate most identified with change in a country where more and more voters want just that.
The 56-year-old former president of the Boca Juniors soccer club has been Buenos Aires' mayor since 2007 and has a reputation for getting things done.
Hundreds of thousands of commuters have been helped by a "Metrobus" his administration introduced on the capital's main avenue, separating bus from car lanes and unclogging both.
School nutrition programs, bicycle lanes, pedestrian malls and parks with health stations where people can check their blood pressure have flourished.
Investors lapped up a $500 million municipal bond sale this year even though Argentina has been shunned by global capital markets.
"Generally, we don't trust politicians. They offer you 10 pesos so they can steal back five. But Macri has invested in a way that has improved the city," said Maximiliano De La Torre, a hair stylist who lives in the middle class neighborhood of Villa Crespo and works at a salon in ritzy Recoleta a few miles away.
Macri says he would open Argentina to foreign investment by easing strict trade and currency controls that have hobbled the economy. Still, after eight years of heavy spending by President Cristina Fernandez on popular subsidies, he may struggle to overcome fears he would impose painful austerity measures.
Fernandez is barred from running for a third consecutive term. Polls show two thirds of voters want a break from her interventionist policies, including controls that restrict access to U.S. dollars, but they do not want to scrap the social safety net that she helped strengthen.
Macri has not said how he would reduce state spending without hurting the economy. He instead promises to cut the need for welfare by attracting the investment needed to bolster industry and create jobs.
He also pledges to respect the central bank's independence and its role in controlling inflation.
A civil engineer who started as an analyst at his father's construction company and briefly served in Congress, Macri is founder of the opposition PRO party.
He has a 60-percent approval rating in Buenos Aires, which accounts for about 10 percent of the national vote, but his political organization does not reach far beyond the city.
He may nonetheless do well in the farm belt, where growers have for years clashed with Fernandez, complaining that profits are sapped by export taxes and strict limits on the quantity of staple crops that can be exported.
"My message is clear," he told an audience of growers on Wednesday. "Starting on Dec. 10 (inauguration day) we have to export all the wheat we can, without export taxes or limits."
A major test of his appeal will be a primary election on Aug. 9. Voters can cross party lines so it will show which candidate is the strongest from Fernandez's faction of the Peronist party, and which is the best bet for knocking her group out of power.
Macri has gained ground since a scandal erupted after state prosecutor Alberto Nisman was found shot dead in his apartment on Jan. 18, four days after accusing Fernandez of trying to cover up Iran's alleged involvement in a 1994 bombing that killed 85 people at a Jewish community center in Buenos Aires.
Fernandez dismissed the claim as absurd and a judge has cleared her of the charge but Nisman's death has spawned a slew of conspiracy theories and damaged her image.
"The scandal has accelerated the polarization between the government on one side, and Macri on the other," said analyst Jorge Giacobbe. "When the government is unpopular, people want the opposite, and the most opposite to Fernandez is Macri."
Fifty five percent of Argentines believe she tried to whitewash the 1994 bombing, according to a poll by consultancy Management & Fit.
It also showed 47 percent are open to voting for Macri versus 42 percent for each of his two main rivals, congressman Sergio Massa and Buenos Aires state governor Daniel Scioli.
Any of them would likely move Argentina toward a more investment-friendly economy.
Massa used to work for the president and Scioli is from her branch of the Peronist party. That may help Macri attract independent voters who want a clean break from Fernandez, but it will likely be a tight race.
"Although Macri has increased his support and certainly gained momentum in the last month, the scenario remains highly competitive among the three leading presidential aspirants," said Ignacio Labaqui, an analyst for Medley Global Advisors.
"It will probably stay that way until the August primaries." (Reporting by Hugh Bronstein; Editing by Kieran Murray)