Temer needs to overcome political challenges to avert crisis

In his year-end statement, Brazil's President Michel Temer said the country is going to defeat the crisis in 2017, and the government's challenge will be to recover from job cuts and achieve “sustainable, responsible” economic growth. The president also said he is planning to focus his efforts on approving a number of reforms to make it possible.

Experts heard by Agência Brasil say Temer will need to overcome political barriers to pursue those reforms and pull out of the economic crisis. They cited the impact of Operation Car Wash corruption investigation on Brazilian politics and a petition pending before the Superior Electoral Court (TSE) over compliance issues with the campaign finance of Temer's ticket along with now-ousted president Dilma Rousseff in the 2014 presidential election.

Car Wash

The Supreme Court (STF) is expected to examine the plea bargaining statements of 77 executives at Odebrecht construction giant, implicating politicians from various parties in the intricate corruption scheme put together by the builder. A total of over 800 testimonies are pending before Teori Zavascki, the Supreme Court justice in charge of the Car Wash case at Brazil's top court.

In early December, details of a statement heard from Odebrecht's former Vice-President of Institutional Relations Cláudio Melo Filho emerged, with media reports that important people in Temer's government had been implicated including Chief of Staff Eliseu Padilha, former Planning Minister Romero Jucá, and former Government Minister Geddel Vieira Lima. They denied any wrongdoing, and one of Temer's aides quit.

For Antônio Flávio Testa, a political scientist and researcher at the University of Brasília (UnB), one of the president's challenges is the prospect of investigations proving the involvement of members of the government in the “Car Wash” corruption scandal. Cláudio Couto, another political scientist at Fundação Getúlio Vargas (FGV) São Paulo, says the scandal may also engulf his allies in Congress. “No lawmaker can cast stones because the investigations could lead up to them as well.”

Campaign irregularities

In December 2014, the campaign finance of then-president Dilma Rousseff and Michel Temer, her running mate (and then-incumbent vice-president) was approved with comments by the electoral court. But a dispute was filed by the PSDB, the party of their main opponent in the 2014 election, citing irregularities. This still poses potential problems for Temer.

Herman Benjamin, the electoral justice in charge of the case, has recommended against the ticket and the annulment of the election result, with a final ruling expected in the first few months of 2017, pending Benjamin's examination of accounting expert reports and witnesses' testimonies.

“In my view, if Temer fails to revive the economy and the Car Wash scandal continues to engulf people around him, this could expedite the proceedings. Or it could take longer if there are signs of economic recovery and his allies put up successful defences,” said Antônio Testa.

“It's hard to tell how things are going to turn out,” says Paulo César Nascimento, a lecturer at the Institute of Political Science, University of Brasília. In his opinion, there are “risks for Temer as Car Wash moves further and depending on the outcome of the Rousseff-Temer campaign finance dispute, which could even lead to the current president being removed from office,” he said.

Bitter remedies

Nascimento expects that 2017 will be a year of “bitter remedies, sluggish growth, and painful reforms.” “There is no other way—Brazil will have to go through all this so that in 2018, with the endorsement of an election and congressional support, things can improve,” he went on.

Early in 2017, Temer has a pension reform to complete. But certain points of his proposals have already begun to draw criticism—they include a new rule setting the minimum retirement age at 65; a minimum 25-year contribution length for retirement eligibility; and the prospect that retirees will only be eligible for full pension benefits if they have contributed for at least 49 years. The disputes over these proposals should make the task of passing the reform harder.

For Antônio Testa, the reform is set to meet with opposition from workers, and it will take Temer a great deal of political expertise and ability to overcome it. In his opinion, the president should seek support from the population.

“He needs to do it now because his government began nearly halfway through the term of office, and Brazil has a very tight agenda to carry out. By September 2018, the country will have begun to shift its focus to the [presidential] succession,” he said.

Political scientist Claudio Couto agrees that approving the reforms will be a difficult task. “The government has a heavy reform agenda to push through. Temer says he wants to be a reform-driven president, but we know that this is no simple task, not least because it draws opposition,” he said, pointing out the president's political ability.

“Temer has served as Speaker of the Chamber of Deputies a number of times, and he has this ability. So did former president Lula. But Rousseff didn't, even assigning political tasks was difficult for her. A president needs to have this kind of ability rather than treat their cabinet as waiting staff ready to take orders.”

Translated by Mayra Borges