Pressure Mounting on Brazil's Temer as Support Crumbles

  • Bar Association Says Temer omissive by not reporting crimes
  • Key coalition partner PSB party abandons Temer government

Brazil’s unpopular President Michel Temer has held on to office for over a year after the impeachment of his predecessor, backed mostly by Congress and financial markets. Under the weight of new corruption allegations against him, that support is crumbling.

Temer’s attempts to discredit charges brought against him last week in a corruption probe failed to convince many over the weekend. A key coalition partner, the PSB party, abandoned Temer and joined opposition parties in calling for his resignation. The influential bar association, OAB by its Portuguese acronym, voted in favor of starting an impeachment process against Temer.

Michel Temer

Photographer: Igo Estrela/Getty Images

“We believe that the president must resign because he no longer has the political, moral, ethical and administrative wherewithal to go on,” said Carlos Siqueira, head of the Brazilian Socialist Party, which was one of the largest in Temer’s coalition.

Other allied parties, which had joined the Temer camp hoping his pro-market reforms would pull the country out of its worst recession by next year’s election, are now looking to the judiciary and to the streets to help decide whether they too should jump ship.

“We’ll wait for the Supreme Court to position itself before we make any decision,” Jose Agripino Maia, head of the DEM party, said in an interview.

Doctored Evidence?

Temer on Saturday had requested the country’s top court suspend a corruption and cover-up probe against him, arguing that a recording used by the Prosecutor General Rodrigo Janot as evidence had been doctored. Temer portrayed the person who recorded the conversation with him, JBS Chairman Joesley Batista, as a businessman disgruntled with his government’s tighter purse strings.

News of the existence of the tape and excerpts from the conversation were first reported by O Globo newspaper late on May 17, sending shock-waves throughout the nation and triggering a sharp sell-off in Brazilian assets the following day. Markets rebounded on May 19 as the full recording was made public and many considered the tape to be inconclusive.

Yet while Temer focused on denying allegations he authorized hush money, the OAB paints a broader picture of wrongdoing. It faults the president for failing to denounce criminal activities, breaking with presidential decorum, and promising inappropriate favors to certain individuals. The OAB will file its request for impeachment in the lower house of Congress in coming days, it said early on Sunday.

Temer’s press office didn’t reply to requests for comment.

Demonstrators protest against Brazilian President Michel Temer in Sao Paulo on May 21.

Photographer: Nelson Almeida/AFP via Getty Images

Second Impeachment

“We are going to ask for the impeachment of another president of the republic, the second in a year and four months,” OAB president Claudio Lamachia said in a statement posted on the group’s website. Temer’s predecessor and the nation’s first woman leader, Dilma Rousseff, was impeached in 2016.

On Sunday afternoon tens of thousands of Brazilians demonstrated in various cities to demand Temer’s resignation.

Risk consultancy Eurasia now attributes a 70 percent probability of Temer not concluding his mandate, and says the best outcome for the future of reforms would be his quick fall from power through a ruling in the top electoral court TSE. “Despite the president’s recent attempt to counterattack, latest events strongly suggest the political momentum will continue to build against Temer in Congress, in the courts, and in the streets, rendering him virtually incapable to govern,” the firm’s director Joao Augusto Castro Neves wrote in a note to clients.

Even before Temer’s setbacks at the weekend, investors began losing their enthusiasm for the 76-year-old career politician whose approval rating in the most recent opinion survey in April was stuck in the single digits.

The chance that the government can approve by October a key pension reform it needed to fix the country’s depleted public accounts has dropped to no more than 5 percent, said Renato Nobile, CEO of Bullmark Financial Group.

Survival Mode

“The government’s goal is to concentrate forces to survive,” Nobile said.

Nobile added that the only person who could replace Temer while ensuring some level of continuity is Finance Minister Henrique Meirelles, a former Wall Street banker and architect of Temer’s fiscal austerity plan.

The risk of a drawn out political battle that could transfix the country for months has many investors dismayed. Rousseff’s impeachment took more than 8 months. A decision by the country’s top electoral court to annul the 2014 election results and ultimately force Temer out of office could also be months away and is open to appeals.

“The best scenario would be a resignation, if he were to go on TV and end this as soon as possible,” said Alexandre Bandeira, political analyst at Strattegia Consultoria, a consulting firm.

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