Rousseff Thin on Options to Avoid Brazil Senate Impeachment

  • Senate may vote on impeachment in as soon as two weeks
  • Markets have welcomed a possible government by VP Temer

How Long Does Rousseff Have Left as Brazil President?

Dilma Rousseff is running out of time and options as her enemies close in on the first impeachment of a Brazilian president in 24 years.

After a dramatic defeat in an impeachment vote in the lower house of Congress on Sunday, she may have only a couple of weeks to reverse growing momentum for her ouster in the Senate. Rousseff’s main aides already said she will fight back during her trial in the upper chamber, and may file legal challenges before the Supreme Court. Others in her ruling coalition suggested she could back calls for new elections.

Rousseff is scheduled to make a statement at 5:30 p.m. local time on Monday.

"She won’t resign. There’s no time or consensus for elections, so she’ll continue fighting back the way she has done so far," said Ricardo Ribeiro, political analyst at Sao Paulo-based business consulting firm MCM. "Frankly, I don’t think there’s much to prevent her ouster at this point."

Investors Focused

Following Rousseff’s defeat in the lower house, investors are now focused on how fast the impeachment process will unfold and what real chances Vice President Michel Temer would have to pull the economy out of its worst recession in decades. Initial euphoria over Temer’s plans to downsize government and cut spending has given way to concerns that he may struggle to unite a divided country, and that his party may get wrapped up in the two-year corruption scandal that has rocked the Rousseff administration.

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Still, markets have rallied this year on the prospect of a Temer government. After gains in Asian trading, Brazil’s real and stock market fell on Monday following a central bank intervention in the currency markets.

"More than welcoming Temer, the financial market wants to see Rousseff go," said Marcos Troyjo, who teaches and co-heads an emerging markets forum at Columbia University in New York. "He has a positive flight plan for the economy, but the question is how much of it he can implement."

Congressional Defeat

In a surprisingly strong showing, the opposition on Sunday night garnered 367 votes, 25 more than the two-thirds majority it needed to send the impeachment motion to the Senate.

Senator Romero Juca, the head of Temer’s PMDB party, the largest in the country, said Sunday that the opposition has the simple majority required to temporarily remove Rousseff in as little as two weeks. If that occurs, the Senate has as long as six months to try the president and hold another vote whether to permanently oust her.

"The next stage -- in which she would be tried in the Senate with the president of the Supreme Court presiding -- could be much closer, but it does appear that the necessary two-thirds majority would also be reached to remove Rousseff from office permanently," according to Marco Maciel, an economist for Bloomberg Intelligence.

The question is whether Senate chief Renan Calheiros, one of the more pro-government leaders in in the PMDB, will play along with a fast-track plan to remove Rousseff from office. He told reporters on Monday just before a scheduled meeting with the president that the Senate would refrain from moving too fast or too slow on impeachment.

"We can neither expedite the process and make it look like we’re steamrolling it, nor prolong and make it look like we’re dragging things out," he said.

‘Immense’ Pressure

Similarly to what happened in the lower house, there could be motions before the Supreme Court to sort out procedural issues that would delay the vote, according to Teneo Intelligence, a New York-based advisory firm.

Corruption investigations involving some of the key players in Brazil’s political scene could further complicate the plot if the Senate fails to push through impeachment quickly, Joao Pedro Ribeiro, an analyst at Nomura Holdings Inc., wrote in a note to clients. Calheiros and lower house speaker Eduardo Cunha, who also hails from the PMDB party, are under investigation on allegations they received benefits from the scheme of kickbacks at state-run oil company Petrobras. They have denied wrongdoing.

In addition to his meeting with Rousseff on Monday afternoon, Calheiros is scheduled to talk to Supreme Court Chief Justice Ricardo Lewandowski.

"Renan won’t actively support impeachment, but he also can’t withstand immense public pressure and hold it up," said MCM’s Ribeiro.

Political consulting firm Eurasia Group said there is only a 20 percent chance the Senate will reject the impeachment motion.

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