Brazil is about to have a new president. As expected, the Senate has voted to impeachDilma Rousseff; she now steps down while the Senate considers her case. In the interim, Michel Temer, the vice-president, becomes head of state, although as the Senators’ decision was so overwhelming — 55 out of 81 voted to try her — it is likely that Ms Rousseff will lose her eventual trial. That being the case, the vote therefore removes Ms Rousseff two years and seven months before the end of her term. It also ends 13 years of rule by her leftist Workers Party (PT), the latest swing to the political centre in South America as the region grapples with the end of its commodity-driven economic boom.
Mr Temer, of the opposition Brazilian Democratic Movement party, faces a daunting task. Ceremonious and soft-spoken, with a sphinx-like reputation, the 75-year-old constitutional lawyer must deal with three simultaneous crises. Is he up to the task?
Top of the list is Brazil’s prolonged economic malaise. Investment has collapsed and consumer credit stalled amid the worst recession in a century. Mr Temer’s priority is to stabilise the economy by re-instilling private sector confidence.
Encouragingly, he has begun to assemble a credible economic team. Henrique Meirelles, a former head of the central bank, has been suggested as finance minister, while Ilan Goldfajn, a respected economist, may head the central bank. Appointing technocrats of this calibre should generate a positive expectations shock, lowering risk premia and borrowing costs. Though a far cry from the structural reforms that Brazil needs to reboot its economy, it is a good and necessary start.
The next one is Brazil’s ethical crisis, specifically the various corruption probes, such as the Lava Jato investigation into Petrobras, that hang over much of Congress, including Mr Temer, and which are also indirectly responsible for Ms Rousseff’s impeachment. Mr Temer must allow these investigations to run their course. Even if that leaves him exposed, anything else would erode his already slim popular mandate.
Brazil’s third crisis lies in the political arrangements that make it one of the most fragmented and unwieldy presidential democracies on the planet, with some 30 political parties. Reforming Brazil’s political system, though, is a task for the next president after the scheduled elections in 2018.
Indeed, in an ideal world, Brazil would have addressed this triple crisis via fresh elections in the first place. That would have cleaned Congress of its sleaze-tainted politicians while the new president would have enjoyed the popular mandate needed to pursue the changes that Brazil needs. But under Brazil’s presidential system, with fixed terms, early elections can only be called via constitutional reform, which are highly unlikely in today’s polarised political situation.
Instead, Mr Temer begins his presidency amid controversy. The legal basis of Ms Rousseff’s impeachment is a contested technical charge that she fiddled the budget. The process was also launched by a former head of Congress, who has since been indicted. Ms Rousseff supporters call it a coup, a narrative they will surely develop in opposition, further dogging Mr Temer’s administration.
The result is far from perfect. Still, it is what is. Mr Temer is a skilful negotiator and, for now, enjoys the support of Congress and business. If he can put the economy on a surer footing and let the corruption purge continue, he will also leave behind a considerable legacy. These are big ifs but it is not inconceivable he will turn them into reality.
Copyright The Financial Times Limited 2016.
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