As Brazil’s Economy Recovers, Its Politics Disintegrate Again

BloombergBy Samy Adghirni and Simone Preissler Iglesias

Brazil’s embattled President Michel Temer cut a low-key figure at last week’s G-20 summit, so low-key that it was not he but his finance minister who was listed on the official welcome brochure as the country’s representative.

The omission was the result of the president’s last-minute decision to attend the event in Germany rather than deal with the political crisis brewing in Brasilia. Temer was among the last to arrive, the first to leave and during his 36 hours there drew little public attention. By contrast, Finance Minister Henrique Meirelles spent nearly three days in Hamburg, assuring the international community that whatever the state of the country’s politics, the economy was in safe hands.

“Meirelles is the guarantor of economic stability,” said Senator Jose Agripino Maia, from the government-allied Democratas party. “If the politics is going badly, the economy is on the right track.”

While Brazil’s financial team retains the respect of its international peers, Temer’s brief and perfunctory visit reflects the precariousness of his position. He is the first sitting Brazilian president to face corruption charges and an upcoming debate in a lower house committee on whether he should stand trial may prove decisive to determining his fate. As former allies begin to distance themselves from him, speculation is rife about the ambitions of the next-in-line to the presidency, house speaker Rodrigo Maia, and his capacity to deliver market-friendly reforms if Temer is no longer able.

“Brazil’s problem is not economic: it’s political,” said Andre Perfeito, the chief economist at brokerage Gradual Cctvm. “We have to get back to normalcy. Maia is the preferred choice of Congress.”


Maia has the capacity to bring stability to the country, the head of the government-allied Brazilian Social Democracy Party, or PSDB, Senator Tasso Jereissati told O Globo newspaper on Thursday. Asked about this comment by reporters in Hamburg, Temer said that the house speaker “gives me proof of loyalty all the time”, adding that the senator’s opinions do not represent that of the party. PSDB leaders are expected to meet on Monday to discuss their permanence in government.

The house speaker traveled to Buenos Aires last week to meet senior Argentine politicians. “We need a lot of tranquility and wisdom at this moment. Instead of making it worse, we need to help Brazil get out of the crisis,” he wrote in a tweet posted on Friday morning. That message was a signal that he is preparing for a post-Temer scenario, a close ally of the speaker told Bloomberg on condition of anonymity, adding that the pressure for Maia to step in was intensifying within Congress.

Any bid on his part for the presidency would be deeply personal. One of Temer’s closest aides, Wellington Moreira Franco, is Maia’s father-in-law.

Meirelles meanwhile demonstrated loyalty to Temer and pledged continuity of economic policy in a video taped in Hamburg and posted at the weekend.

“The economic team is on board, it was chosen by him and will continue,” Meirelles said. “You can continue investing, consuming, the country will continue its growth path.”

Committee Hearings

Starting on Monday afternoon, the CCJ will begin discussing whether to recommend that the lower house votes in favor of putting Temer on trial. For the case to proceed to the Supreme Court, two-thirds of the lawmakers in the plenary of the Chamber of Deputies would have to approve.

“We have the votes to win in both the Constitution and Justice Committee and in the plenary,” Carlos Marun, the deputy leader of the government in the lower house, told reporters in Brasilia on Monday morning.

Senior cabinet ministers have been busy in recent days meeting allied lawmakers to discuss freeing up funds for pet projects to ensure their loyalty to the government, according to a member of government who spoke on condition of anonymity.

The Temer administration is working to accelerate the hearings at the CCJ, with the goal of holding a vote in a full session of the lower house by Thursday, the person said.

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