Rousseff’s Man in Brazil Congress Said to Seek Lesser Role

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With his boss struggling to contain a widening corruption scandal and a shrinking economy, Brazil’s Vice President Michel Temer wants to scale back his role as the government’s main political coordinator.

Temer, who helped win lawmakers’ support for measures to cut a widening budget deficit, no longer wants to handle day-to-day issues as President Dilma Rousseff’s primary liaison with Congress, according to two people with direct knowledge of the issue. The role has eroded his political capital and strained ties within the Cabinet, the people said.

The move coincides with growing discontent in Temer’s Brazilian Democratic Movement Party, with more members calling for its departure from Rousseff’s ruling coalition, according to a senior party official who requested not to be named because the talks are not public.

The rift will make it more difficult for the president to cut spending, in addition to plans to shut down ministries, said Ricardo Ribeiro, political analyst at business consulting firm MCM in Sao Paulo.

“However they try to cast it, the lasting impression will be that Temer is leaving because of tensions in the government and that’s not good,” said Ribeiro. “It fuels the idea that the PMDB’s break with Dilma could be accelerated.”

Officials at the press offices for Temer and Rousseff didn’t immediately respond to e-mails from Bloomberg News seeking comment about Temer’s role as a political negotiator.

The PMDB, which plans to field its own presidential candidate in 2018, will have a meeting in November to discuss its role in the alliance.

Extraordinary Job

In an about-face from her campaign pledges, Rousseff has embarked on austerity measures, including cuts in labor and pension benefits, to rein in a budget deficit of 8.1 percent of gross domestic product and ward off a credit rating downgrade to junk status. Her approval rating has plunged to 8 percent in the latest Datafolha poll.

Still, Temer won’t abandon Rousseff altogether, said Leonardo Picciani, the PMDB’s leader in the lower house. The majority of the party still wants to work with the government but is frustrated with unmet promises and the lack of dialogue, he said.

“I don’t believe he will distance himself entirely,” said Picciani. “Things can be improved but it depends on the government’s actions to rebuild its coalition.”

Finance Minister Joaquim Levy praised Temer’s work on Monday.

“He’s been doing an extraordinary job,” he told reporters at a briefing in Washington. Levy is expected to meet with Temer this week to see how the government can balance budget cuts with the spending necessary to please political allies, one of the government officials said.

Back on Track

While political support for Rousseff’s government is still uncertain, several business associations in previous weeks have called on Congress to back measures to put Brazil’s economy back on track.

Last weekend, Itau Unibanco’s Roberto Setubal, head of Latin America’s largest bank, spoke out against attempts to impeach the President, saying it was unwarranted and would create more instability.

The stance of the business elite “contains Congress a bit more, softens the discourse about impeachment, which is restricted to a few more radical figures,” said Joao Augusto de Castro Neves, Latin America director at political risk consulting firm Eurasia Group.

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