+++ V.V.I. (FT) What the vote on Dilma Rousseff’s impeachment means for Brazil

(FT) Country could enter uncharted territory if president refuses to accept result.

Brazil's President Dilma Rousseff bites on her fingernail during a signing ceremony for land reform agreements, at the Planalto Presidential Palace, in Brasilia, Brazil, Friday, April 1, 2016. Rousseff, who is battling the biggest recession in decades and a corruption probe that has circled in on members of her inner circle, is facing impeachment proceedings in Congress on allegations she violated fiscal laws. (AP Photo/Eraldo Peres)
© AP

Brazil is in the midst of a political crisis, as its lower house of Congress prepares for Sunday’s critical vote on whether to proceed with theimpeachment of President Dilma Rousseff. Can Latin America’s largest economy reconcile its significant political differences following an impeachment to deal with a deepening recession, or will the process bring further instability or even chaos?

What prompts impeachment?

Brazil’s president can under the constitution be impeached for a “crime of responsibility”, which ranges from acts that threaten national security to disobeying laws governing the budget. This is the first time Brazil has moved to impeach a president since Fernando Collor de Mello in 1992.

What has led to this situation?

The opposition has accused Ms Rousseff of obscuring Brazil’s budget deficit by illegally running up debts with state banks. She denies this is a crime and says previous administrations did the same. But her accounts were rejected in October by the tribunal that scrutinises federal government budgets — the first time it has done so since it was founded in the 1930s. The Folha de S.Paulo newspaper has reported that in 2001-2008, before Ms Rousseff became president, such budget-related debts amounted to 0.4 per cent of government revenues. This rose to 5.1 per cent in 2014, the year Ms Rousseff won a second four-year term as president while denying the country faced economic difficulties. The impeachment motion was introduced in December by the lower house speaker.

What is it really about?

While the budgetary violations are regarded as serious, the move to impeach is essentially a political trial — a vote of no-confidence. Ms Rousseff has become one of the most unpopular leaders in Brazil’s democratic history for presiding over the country’s worst recession in a century and a spirallingcorruption scandal at Petrobras, the state-run oil company. Investigations continue into accusations that politicians — mainly from the ruling coalition — collaborated with former Petrobras directors and contractors to extract bribes and kickbacks. Ms Rousseff is not accused of any crime but was Petrobras chairman when much of the wrongdoing took place.

What is the impeachment process?

A special committee of congress must prepare a report on the impeachment process, vote on it, and send it to a full session of the 513-member lower house for consideration. If two-thirds of the lower house approves the motion, it passes to the 81-member senate. If the senate votes by a simple majority to accept impeachment, the formal process begins. The president would then be immediately suspended from office and the vice-president become acting president. If two-thirds of the senate votes for impeachment, the president’s mandate would be terminated and she would be banned from public office for eight years. The senate has 180 days to reach a decision. In Ms Rousseff’s case, the process has already passed through the special committee stage and is set to go before the lower house on Sunday.

Who is behind the move?

The movement is being driven by Ms Rousseff’s former coalition partners from the centrist PMDB party, led by vice-president Michel Temer, and the PSDB, the main opposition party whose leader, Aécio Neves, she defeated in the 2014 presidential vote. Many PMDB politicians have been implicated in the Petrobras scandal — analysts have speculated some may hope a new government would better protect them from the inquiries. While Sunday’s vote is too close to call, the opposition privately believes it can get the 342 votes needed to win the vote. The senate is expected to support the impeachment if it is passed in the lower house.

Why is this different from 1992?

Facing impeachment for corruption, Mr Collor relinquished office after only two years. Like Ms Rousseff, he was deeply unpopular. The difference is he did not have the support of a main political party. Ms Rousseff, who has characterised the impeachment movement as a coup, is backed by the powerful PT and its militant supporters in Brazil’s trade unions and social organisations. If, as some believe likely, she and her party refuse to accept the result of the impeachment process, Brazil will enter uncharted territory.

How is all this playing out among Brazil’s voters?

Opinion polls show voters support Ms Rousseff’s impeachment or resignation — a recent Datafolha survey put support for impeachment at 61 per cent. Worryingly for her would-be successor Mr Temer, however, the same poll put support for his impeachment at 58 per cent.

Should markets be worried?

The Brazilian real and the country’s main stock index have risen on hopes of impeachment and an end to the country’s political deadlock. But the process remains dogged by uncertainty. Ms Rousseff could yet survive, plunging the country into two years of policy stagnation. If she is impeached, Mr Temer haspromised more business-friendly policies. But he would have difficulty controlling an unwieldy coalition and face an angry PT in opposition. He could also have his own mandate terminated if a parallel case finds his 2014 election campaign — a joint ticket with Ms Rousseff — was funded by money from corruption. Far from ending Brazil’s problems, impeachment could be only the beginning.ovfdrtuh