December 4, 2015 / 12:36 AM / 2 years ago

Brazil speaker and government fan impeachment fire

BRASILIA (Reuters) - Brazil’s presidential chief of staff traded barbs with the speaker of the lower house of Congress on Thursday as President Dilma Rousseff’s government marshaled its defense for the impeachment proceedings launched against her on Wednesday.

Brazil's President Dilma Rousseff speaks during a news conference at the Planalto Palace, in Brasilia, Brazil December 2, 2015. REUTERS/Ueslei Marcelino

With each camp branding the other liars, the unpopular president looked likely to face a drawn-out battle to stay in office at a time when Latin America’s largest economy is reeling from a deep recession and a vast corruption scandal.

Rousseff is expected to narrowly survive the proceedings because her party and allies, for now, appear to control enough seats to defeat those who support impeachment.

The government estimated conservatively that it already had firm support from 140 lawmakers in the lower house - shy of the 172 votes needed to block the process - and was seeking more, an aide to Rousseff said.

Even though it may not ultimately unseat Rousseff, the process adds one more obstacle for a government struggling with political gridlock as it seeks congressional support for policies meant to restore economic growth.

“This will have a negative impact on the real economy,” said Carlos Thadeu de Freitas, chief economist at the National Confederation of Commerce and a former central bank director.

The opposition has said Rousseff broke budget laws to safeguard economic stimulus during her successful re-election campaign last year. The president, in office since 2011, denies any wrongdoing.

Rousseff’s chief of staff, Jaques Wagner, said the government and its allies were appealing to the Supreme Court to overturn the impeachment request because it lacked legal basis. He accused Rousseff’s opponents of being bad losers trying to reverse their narrow election defeat by undemocratic means.

“If temporary unpopularity is reason to remove an elected official, we will have a greatly weakened democracy,” Wagner told reporters.

Credit ratings agencies Fitch and Moody’s said on Thursday that political uncertainty stemming from the impeachment proceedings could undermine efforts to shore up public accounts.

Standard & Poor’s downgraded Brazil’s credit rating to junk in September, and a similar move from another agency could trigger large capital outflows.

Still, Brazilian markets cheered the prospect for fresh political winds in the capital Brasilia, where many hold Rousseff’s interventionist policies responsible for worsening the economic downturn. Some investors said they hoped a harsh political reckoning for the left-leaning president would force her to adopt a more market-friendly agenda.

The real strengthened against the dollar and the Sao Paulo stock market’s Ibovespa index rose more than 3 percent.

In addition to the ongoing recession, which deepened to a 4.5 percent contraction on an annual basis last quarter, Brazil is struggling with inflation of more than 10 percent and unemployment at a six-year high. Investment, consumer confidence and industrial output have been plunging for three years.

ACCUSATIONS FLY

The bickering on Thursday began when House Speaker Eduardo Cunha, an avowed enemy of Rousseff although his party is the largest in the her unruly coalition, said she tried through an intermediary to shield him from an ethics probe just hours before he approved impeachment proceedings on Wednesday.

As such, he told reporters, Rousseff lied in a televised address on Wednesday night when she said she had not attempted to negotiate with Cunha to influence the ethics committee in return for his setting aside the impeachment request.

“I want to make quite clear that yesterday the president lied to the nation,” Cunha said.

Cunha’s decision to launch impeachment proceedings came after the Workers’ Party announced on Wednesday that it would vote against Cunha on the lower house ethics committee. The committee is expected to open an investigation next week into allegations the speaker took bribes and hid money offshore.

That could lead to his ouster well before a presidential impeachment process can be concluded.

Cunha said on Thursday he planned to call a meeting on Monday to choose the impeachment committee members, but their deliberations could easily stretch on for months. The committee is expected to have more than 60 members.

Even if proceedings get under way, they are not expected to reach a vote in the lower house before February. If approved, deliberations could take another six months in the Senate.

Rousseff wants to speed up a vote on impeachment in the lower house, according to her chief of staff, who favors calling Congress back in the summer recess in January to hold a vote.

An early vote before Brazilians get back from their summer holiday would favor Rousseff since the pro-impeachment campaign is only expected to gather support on the streets once Carnival is over in February.

“The opposition doesn’t have enough votes, zero chance at this moment,” said Leonardo Picciani, lower house leader of Cunha’s own party, the fractious Brazilian Democratic Movement Party (PMDB). “I don’t believe that balance will turn against Rousseff any time soon,” he added.

Among the Brazilian public, opinion polls show about two in three people support her impeachment.

Brazil’s political establishment is already close to paralysis due to an investigation into a massive graft scandal at state-run oil company Petrobras. That sweeping investigation has implicated dozens of lawmakers in the governing coalition, including Cunha, and some of Brazil’s biggest corporate kingpins.

Reporting by Leonardo Goy and Alonso Soto; Additional reporting by Eduardo Simões in Sao Paulo; Writing by Brad Haynes and Paulo Prada; Editing by Daniel Flynn, Frances Kerry and Andrew Hay

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