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Brazil’s Temer turns to reforms, but can he deliver?

By: financialpost.com 7 months ago
Brazil’s Temer turns to reforms, but can he deliver?

BRASILIA, Brazil — President Michel Temer’s administration turned its attention Thursday to pressing its reform agenda, but it is unclear if it has the support to govern after convincing a small majority in Brazil’s Congress not to suspend the leader and make him stand trial on corruption charges. The vote late Wednesday was only the […]

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How Brazil’s Temer turns to reforms, but can he deliver?

BRASILIA, Brazil — President Michel Temer’s administration turned its attention Thursday to pressing its reform agenda, but it is unclear if it has the support to govern after convincing a small majority in Brazil’s Congress not to suspend the leader and make him stand trial on corruption charges.

The vote late Wednesday was only the latest in a series of threats to Temer’s political survival: He emerged victorious from a court challenge earlier this year to the vote that elected him vice-president, he resisted calls for his resignation when corruption allegations recently came to light, and he has now beaten two attempts to be removed from office and put on trial on graft charges. Temer called the corruption charges against him absurd and politically motivated.

With all obvious threats to his removal behind him, Temer and his advisers appeared eager to get back to the business of governing. But with so much political capital spent on merely surviving, analysts are questioning whether there’s any left over to pass an unpopular overhaul of pensions or make changes to labour laws aimed at reviving Brazil’s economy.

“We want to approve a social security reform in 2017 itself,” Eliseu Padilha, Temer’s chief of staff, told the G1 news portal after the vote. But such an overhaul would require a super-majority in Congress, and other senior politicians are already talking about focusing on less ambitious measures.

Many lawmakers who supported Temer in Wednesday’s vote said that keeping the president in power was necessary to sustain a nascent economic recovery after the deepest recession in decades in Latin America’s largest economy led to high unemployment and pushed millions back into poverty.

Helio Gurovitz, a columnist with media giant Globo, said the opposite might be true.

The “problem is that Temer’s continuation also offers risks to the economy,” he wrote Thursday. “The principle of these is the threat to the reform agenda, especially on social security. Temer emerged from yesterday’s vote with a parliamentary base ever more weakened.”

Investors seemed relieved with the currency trading generally stable against the dollar early Thursday and the main Bovespa stock index opening up.

But analysts warned that the respite might not last.

“Markets who applauded the arrival of Temer on the scene may have been premature in their celebration because I think reformism has been blemished by association with Temer,” said Matthew M. Taylor, a professor at the School of International Service at American University.

The 77-year-old Temer spent recent weeks shoring up support, doling out local projects, plum positions and favourable decrees in a bid to avoid being put on trial for charges of obstruction of justice and leading a criminal organization. He needed backing from at least a third of the 513 deputies in the Chamber of Deputies — or 171 votes. He passed that mark with 251 votes for him.

But that margin was smaller than his victory over a similar vote on separate corruption charges in August, when he secured 263 votes.

In both cases, the number of supporters fell well below the 308 votes, or three-fifths of the chamber, that he would need to pass his big proposals, such as a revamp of the pension system that he says would help boost the economy.

The charges against Temer stem from a mammoth corruption investigation that began as a probe into money laundering and ended up uncovering systemic graft in Brazil’s halls of power. Dozens of politicians and businessmen have been jailed since the probe launched in 2014.

Prosecutors allege Brazil’s government was run like a cartel for years, with political parties selling favours, votes and appointments to powerful businessmen. They say that Temer took over the scheme when he took power last year.

Many Brazilians are exhausted by the seemingly endless allegations of corruption against their leaders and are holding their breath for next year’s elections.

“I am confused by all these crises and accusations of corruption that come one after the other,” said Anita Ferreira Pinto, a 46-year-old housewife who was window shopping in Sao Paulo. “I no longer know what to think or what is best for Brazil.”

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Associated Press writer Mauricio Savarese reported this story in Brasilia and AP writer Sarah DiLorenzo reported from Sao Paulo. AP writers Stan Lehman in Sao Paulo and Peter Prengaman in Rio de Janeiro contributed to this report.

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