Dead-of-Night Reversal Puts Brazil Impeachment Back on Track

  • Senate likely to hold key vote on Rousseff Wednesday evening
  • Government doesn't rule out filing appeal with Supreme Court

Rousseff Reversal Put Impeachment Back in Play

The drive to oust President Dilma Rousseff is back on track after the head of the lower house reversed a decision that had earlier threatened to throw the entire impeachment process into chaos.

Lawmaker Waldir Maranhao released a statement in the dead of night revoking his own call to annul impeachment sessions in the lower house. That puts the Senate back in the spotlight, with a vote on whether to put the unpopular president on trial still slated for Wednesday. If successful, it would temporarily remove her from office. Rousseff is charged with illegally using state banks to plug a hole in the budget.

Demonstrators protest against Dilma Rousseff in Sao Paulo, on May 9, 2016.

Demonstrators protest against Dilma Rousseff in Sao Paulo, on May 9, 2016.

Photographer: Cris Faga/NurPhoto/Sipa USA via AP Photo

Yesterday’s wrangling jolted investors and underscored the intensity of a power struggle that is sure to heat up even further in coming days. Since proceedings began in Congress late last year, legislators have engaged in shoving matches over procedural debates and Rousseff has accused her vice president of plotting a coup against her. The Supreme Court has also been forced to step in on several occasions to clarify legal questions and further involvement by the highest court can’t be ruled out.

TV footage showed anti-impeachment protesters burning tires to stop the traffic in some of Sao Paulo’s main roads, including that leading to the international airport. Police later intervened and cleared the way, but government supporters have scheduled more protests for the next few days.

"Even the best laws aren’t good enough for the scale of this battle," said Carlos Pio, a professor of politics at the University of Brasilia. "The impeachment process will continue and with it the noise, challenges and uncertainty that we’ve been seeing."

Early Trading

The unrest comes as Brazilians suffer from an outbreak of the Zika virus, nearly double-digit inflation, rising unemployment, the worst recession in a quarter century and a ballooning graft scandal involving the state oil company. The downturn is draining government coffers and making it increasingly difficult for state and city governments to provide basic services. Authorities in Rio de Janeiro warned that with less than 100 days to go before they host the Summer Olympic Games, they are running out of money to pay public servants, fuel police cars and maintain hospitals.

Brazilian assets rallied across the board. The Lyxor ETF Brazil, an exchange-traded fund, rose more than 4 percent in Paris. In Brazil, the real rallied 0.8 percent while futures for the Ibovespa index of stocks jumped more than 1 percent. Brazil is already the world’s second best-performing stock market this year.

Decision Revoked

Rousseff’s allies spent most of Monday trying to capitalize on the lower house leader’s call to annul last month’s impeachment vote in the lower house. Attorney General Jose Eduardo Cardozo said the administration could file an appeal with the Supreme Court by arguing that Maranhao was right in trying to halt the process. Earlier, Maranhao argued that lower house deputies shouldn’t have announced their intention ahead of the April 17 vote to send the motion on to the Senate.

Then, Maranhao reversed that call.

“I revoke my decision issued May 9, 2016, in which the lower house sessions were annulled,” Maranhao was cited as saying in a statement released by his office. No further reason was given.

Earlier, political consulting firm Eurasia Group said the Supreme Court probably wouldn’t uphold the attorney general’s appeal anyway.

"We would be very surprised if the STF accepts Maranhao’s decision," analysts including Christopher Garman wrote, referring to a locally used acronym for the court. "The STF will deliberate quickly if necessary, which means the scheduled senate vote for Wednesday is likely to hold."

Some questioned the motives of Maranhao, a little-known politician from the country’s northeast who himself is under investigation for corruption. The president seemed taken aback by his announcement and urged caution during a speech earlier in the day.

Investor concern that Maranhao’s decision would stall the impeachment process sparked a selloff in Brazilian assets on Monday, with the real and the benchmark Ibovespa stock index falling as much as 4.6 percent and 3.5 percent, respectively. They recovered as the day progressed.

Senate President Renan Calheiros gave markets a boost by announcing his decision to move ahead with impeachment proceedings just before trading closed, saying his counterpart in the lower house was trying to "toy with democracy." He said the impeachment vote could occur after 7 p.m. local time on Wednesday. Legislators from the opposition cheered while supporters of the government stood up and shouted at the senator in protest.

How the Senate Impeachment Process Works

  • With a tally of 15 against 5, a Senate committee backed a report saying there is enough evidence to try Rousseff
  • Senate will vote on report and needs simple majority of 41 votes to start official impeachment hearings
  • If they win, Rousseff will temporarily step aside and Vice President Michel Temer takes over 
  • Her mandate will be terminated if the opposition win a subsequent vote by a two thirds majority
  • For a full overview of the process: Impeaching a Brazilian President Is Complicated
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