Friday, May 13, 2016

Temer Vows To Protect Petrobras Probe

Temer vows to protect Petrobras probe

Brazil’s new leader in first speech since Rousseff suspension
BRASILIA, BRAZIL - MAY 12:  Brazil's interim President Michel Temer waves at a signing ceremony for new government ministers at the Planalto presidential palace after the Senate voted to accept impeachment charges against suspended President Dilma Rousseff on May 12, 2016 in Brasilia, Brazil. Rousseff has been suspended from her presidential duties and will face a Senate trial for alleged manipulation of government accounts.  (Photo by Mario Tama/Getty Images)
© Getty
Brazil’s new leader Michel Temer on Thursday pledged that investigations into corruption at Petrobras, the state-owned oil company, would be protected from political interference.
In his first speech as interim president since President Dilma Rousseff was this week suspended by the senate, he also promised to maintain social welfare spending for the poor and rein in a ballooning budget deficit by cutting some government jobs.
“Lava Jato has become a point of reference,” he said, referring to the Portuguese name for the Petrobras investigation, which translates as Car Wash. “As such, it must continue and be protected against any attempt to weaken it.”
Analysts have expressed concern that the federal police, prosecutors and judges pursuing the investigation might come under pressure in a Temer administration.
The interim president’s PMDB party is deeply implicated in the scandal, with important party figures and allies of Mr Temer accused of accepting bribes in relation to Petrobras.
“It is urgent that we form a government of national salvation,” said Mr Temer in a ceremony at the presidential palace surrounded by his new cabinet and other supporters.
After more than 20 continuous hours of speeches, Brazil’s senators voted 55 to 22 to remove Ms Rousseff from office and put her on trial over allegations she broke Brazil’s budget laws. She is expected to be formally impeached within several months. It is the first time a Brazilian leader has been ousted in more than two decades, bringing the 13-year rule of the Workers’ party (PT) to an end as leftwing governments across Latin America fall out of favour.
Mr Temer, who was Ms Rousseff’s vice-president, took over as interim president immediately following her suspension, ushering in a new market-friendly government.
Ms Rousseff, who insisted on Thursday that she is the victim of a “coup”, will have the opportunity to present her defence during the Senate trial, headed by the Supreme Court president. But barring any new political developments, Brazil's senators are unlikely to change their minds, with the necessary two-thirds likely voting for her impeachment as the trial comes to an end later this year.
While investors will hope her exit marks the conclusion — or at least the beginning of the end — of one of the most turbulent periods of Brazil’s modern history, analysts warned the country faces a potentially dangerous power vacuum.
The vote may have been a defeat for the PT but the farcical events over recent months — including fist fights in Congress — have destroyed Brazilians’ faith in the entire political class, according to Juliano Griebeler, analyst at the Barral M Jorge Associates consultancy.
“It’s a tricky situation as it opens the way for ‘adventurers’ to come forward and take positions of power,” he says, looking ahead to the 2018 presidential election.
Eighty-nine per cent of respondents to a recent survey conducted in Brazil’s slums by the Data Popular consultancy said they could not think of a single person capable of rescuing the country from its crisis. Among the 11 per cent who could, the top choice was Pope Francis himself.
Meanwhile, Mr Temer has already begun the task of forming his government, announcing Henrique Meirelles, a respected former banker, as Brazil’s new finance minister and José Serra, a former presidential candidate for the more conservative PSDB party, as foreign minister.
Blairo Maggi, whose family is one of the biggest producers of soyabeans in Brazil, was appointed agricultural minister and Mr Temer’s ally Eliseu Padilha was named his chief of staff. Mr Temer is also expected by some to name Ilan Goldfajn, chief economist at banking group Itaú Unibanco, as central bank president.
His government is expected to capitalise on a rare moment of consensus in Brasília to push through fiscal reforms and austerity measures, including cutting Brazil’s number of ministries from 32 to 22.
“With state and local governments facing an acute fiscal crisis, the country in a deep multiyear recession and big business interests all aligned to impeached Rousseff, the sense of urgency in Congress to approve some reforms has gone up,” says Christopher Garman at Eurasia Group, the consultancy.
Brazil impeachment – Rousseff suspended
Yet as Mr Temer seeks to haul Brazil out of a deep recession and the PT fights to rebuild itself, the country’s core problem, its political dysfunction, will probably go unsolved, says Mr Griebeler.
“Our electoral system is organised in such a way that it is not capable of making the population feel represented,” he says, citing issues such as murky campaign finance and continued impunity in spite of advances made by the Petrobras investigation. “There’s little chance of moving forward with political reform, even in a Temer government,” he concludes.
One of the biggest risks facing Mr Temer includes the continuing investigation into Petrobras, with his own name mentioned in some witness testimony. Mr Temer will also face severe pressure from Brazil’s 35 political parties, most of which supported his rise.
Markets were also subdued following the ruling following sharp gains in the months leading up to the decision. “[This] will not eradicate the political uncertainty that has prevailed during a protracted process,” said Samar Maziad, a senior sovereign analyst at Moody’s. “Brazil still faces significant credit challenges.”
After months of political chaos that has at times bordered on comedy, alienating ordinary Brazilians and drawing ridicule abroad in the process, Thursday’s vote ended true to style.
After roughly 80 speeches, one man to cast his vote was Fernando Collor, the last Brazilian president impeached for corruption, in 1992, who has made a somewhat remarkable comeback as a senator.
“This is all a symptom of a supreme crisis, a moral crisis,” he said. “A new form of politics needs to be established … we need to turn the page”.
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