Temer Reform Plan Could Make Him Brazil Kingmaker in 2018 Vote

  • Pension reform must be done by mid-2017: lower house speaker
  • Corruption probe an ongoing threat to Temer government

Brazil’s President Michel Temer will help shape the 2018 presidential election if he manages to pull the economy out of recession with measures to rein in government spending, the speaker of the country’s lower house said in an interview.

"Nobody will want to be a candidate against a government that has the economy in its favor," lower house chief and interim President Rodrigo Maia said in an interview in the presidential palace. "If our projections are correct, the government will be the main driver of the succession."

Voter disillusionment with politicians became apparent in the Oct. 2 municipal elections, when abstention rates jumped and candidates branding themselves as outsiders got the upper hand. Temer himself has approval ratings just a little higher than those of his predecessor Dilma Rousseff, who was ousted late in August. The 76-year-old constitutional lawyer is betting his political capital on downsizing an unwieldy state and making more room for the private sector, hoping that investment will follow. He has repeatedly said he won’t run for president.

While high inflation caused by excess spending makes it easier to sell austerity, the constitutional reform to cut pension benefits will be "much more difficult," Maia said. He expects the lower house to approve a proposal to cap government spending with a similar margin as it did in the first of two voting rounds. However the pension proposal will be trickier: if it isn’t approved by mid-2017, it risks facing congressional stalemate in the run-up to the 2018 presidential race, he said.

The government will push to vote the pension reform by the end of the first half of 2017 and will only give up on that schedule "if indeed we don’t have the votes," said the 46-year-old legislator for the right-wing Democratas party, who by law is Brazil’s interim president until Temer returns from a trip to Asia on Thursday.

One threat to Temer’s cabinet and his coalition in Congress is the fallout from the so-called Carwash corruption probe that started in early 2014 and has put top company executives and party leaders behind bars, said Maia.

Local media have reported that former executives of construction companies targeted by the probe are preparing plea bargains that would implicate 130 legislators, cabinet members and state governors.

"What’s most difficult to foresee today in Brazil is Carwash," said Maia.
"The question is who survives, who will be alive in 2018."

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