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Wednesday, September 16, 2015

In Brasil The Risk Of Impeachment Looms Large

In Brazil, the Risk of Impeachment Looms Large

    
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Summary

The ongoing corruption scandal at state-owned energy firm Petroleo Brasileiro, or Petrobras, could pose a real political risk to Brazilian President Dilma Rousseff, particularly as Brazil's economic conditions worsen. The ruling Workers' Party will have to cope with a stagnating, if not declining, economy for at least two more years, dwindling support for the president, difficult decisions on cutting government spending and the risk of criminal prosecution for key members.
However, the most immediate risk comes from other parties. As the political power of the Workers' Party deteriorates, other parties are likely to continue pushing for the president's impeachment over the next few months for their own benefit. Impeachment is unlikely at this point; the process is lengthy and depends greatly on the votes of individual congressmen and evidence uncovered by investigations. But the threat exists, and the Workers' Party will try to offset it by looking for support to counter any vote to open impeachment proceedings. 

Analysis

The ruling party's political opponents, such as members of the Brazilian Social Democracy Party, have for months attempted to build public support for impeachment proceedings, but they have lacked the votes in Brazil's two-house Congress to open them. However, during the past several months, investigations against the government have advanced to the point where decisions could occur within months, thereby providing the opposition with a catalyst to again begin seeking a vote to open impeachment proceedings.
Two investigations at separate federal courts in particular could pose a risk to Rousseff's rule. One is at the Federal Court of Accounts, Brazil's highest tribunal dealing with government accountability matters, and concerns alleged fiscal irregularities for the central government from 2012-2014. The second is at an electoral court and concerns illegal donations allegedly made to Rousseff's campaign in 2014 that were obtained by overcharging Petrobras. In a worst-case scenario, the second investigation could result in the electoral court voting to annul the 2014 election — a decision that, if the government appeals and loses, would end with the resignation of president and vice president and the head of the lower house of Congress becoming president until new elections can be held 90 days after the impeachment. The Federal Court of Accounts is slated to deliver its final opinion by mid-October.
The case being heard before the Federal Court of Accounts alleges that the central government made irregular payments to state entities and did not follow existing regulations in crafting the country's annual budget on several occasions. If the government is found to have violated the law, the opposition parties could have a pretext to attempt to open a vote on impeachment proceedings in the lower house of Congress. The opposition can use public ire over Brazil's economy and the Petrobras scandal to gain support.

An Unpredictable Factor in Congress

The wild card in such a vote is the Brazilian Democratic Movement Party. The party is the largest in the senate and the second largest in the lower house, and for years its legislative heft has helped the Workers' Party pass legislation. The president of the lower house is the Brazilian Democratic Movement Party's Eduardo Cunha, who was allied with the Workers' Party until July when he broke away. Because Cunha faces criminal charges stemming from the Petrobras scandal regardless of whether the Workers' Party is in charge, he could either choose to accept or deny an opposition request for a vote on impeachment. If the opposition chooses to use a Federal Court of Accounts decision to attempt to open impeachment proceedings, it can circumvent Cunha by presenting a request to the lower house floor and hoping for a simple majority win with the votes of 257 or more congressmen. However, to open a proceeding and secure an impeachment through the lower house, legislators from the Brazilian Democratic Movement Party would have to defect to the opposition.
The party has, so far, remained loyal to Rousseff. However, its priorities clearly diverge from those of the Workers' Party. In early September, the party delayed a Workers' Party bid to reinstate a financial transactions tax, a move that could have aided Brazil's ailing public finances. Politically, continuing to work with the Workers' Party on controversial tax increases and other austerity measures could harm the Brazilian Democratic Movement Party's standing with voters ahead of the 2018 vote, in which the Workers' Party, the Brazilian Democratic Movement Party and the Brazilian Social Democracy Party will be running against each other for the first time since the early 2000s. Consequently, it may be in the Brazilian Democratic Movement Party's interest to split from the Workers' Party despite public promises of cooperation. Whether this leads to enough votes to open and conduct impeachment proceedings depends on the outcome of negotiations with members of Congress. The parties that want to impeach the president have only 113 seats and would need at least 144 more votes to open proceedings. Consequently, defections from the Brazilian Democratic Movement Party or even from the Workers' Party are necessary to make impeachment a realistic threat.

Potential Complications

Earlier in the year, as the government was preparing measures to mitigate the scandal's damage to Petrobras and to reassure foreign investors, the political parties were less willing to pursue impeachment options and likely more willing to simply let the ruling party lose public approval until the 2018 presidential vote. But the president's persistent low approval ratings and the risk of removal for both the president and vice president because of an electoral court decision likely influenced the Brazilian Democratic Movement Party's calculations and led it to prepare for the worst.
Members of the Brazilian Democratic Movement Party and the Brazilian Social Democracy Party have met to discuss possible options for a coalition government if the president is impeached. For example, recent discussions on the matter resulted in the Brazilian Social Democracy Party's attempt to extract a promise from Vice President Michel Temer not to run for president in 2018 in exchange for the party's support after a Rousseff impeachment. The Brazilian Democratic Movement Party and Brazilian Social Democracy Party are far from united on the issue of a future alliance; some members of both parties oppose the plan. But the fact that such discussions are taking place suggests that both sides consider impeachment proceedings plausible and seek to take advantage of them.
Though a presidential impeachment is far from certain, Brazil's opposition is leaning toward opening the proceedings to safeguard its political future. Over the next few months, Rousseff likely will reshuffle her Cabinet to include representatives of the Workers' Party and Brazilian Democratic Movement Party factions. This could secure the necessary votes in the lower house to deter a vote to begin impeachment. Meanwhile, the pro-impeachment camp will make its own moves to guarantee that it can begin proceedings once the Federal Court of Accounts issues a legal opinion.