Temer may face truncated term in Brazil

Analysis

On May 17, O Globo newspaper reported that Temer had been taped in a March 7 meeting with senior executives from JBS apparently supporting bribe payments by the company to Cunha, currently imprisoned on corruption charges, to ensure his silence. Cunha, one of the key movers behind the impeachment of former President Dilma Rousseff and a member of Temer's Democratic Movement Party (PMDB), had in the past threatened to implicate other politicians in the Petrobras-Odebrecht corruption scandal in a bid to prevent his expulsion from Congress and the loss of his immunity (see BRAZIL: Early Rousseff exit appears ever more likely - March 14, 2016).

Joesley Batista, CEO of JBS's controlling company, took a concealed recording device to the meeting with Temer as part of the plea bargain, in which JBS has also paid a fine of 225 million reais (72 million dollars), in connection with the Operation Car Wash probe. On the tape, the president responded to Batista's statement that Cunha was being paid by saying, "You need to keep that up, okay?" Prosecutors subsequently released the tape, and Supreme Court Justice Edson Fachin has accepted the JBS plea bargain.

Temer purportedly also suggested that JBS should turn to Congressman Rodrigo Rocha Loures for help in resolving a legal issue; Loures was subsequently filmed receiving 500,000 reais allegedly from Batista.

Moreover, Neves allegedly sought 2 million reais from JBS to meet his legal defence fees arising from the Car Wash case.

Mounting backlash

Temer has confirmed the March 7 meeting but strenuously denied any involvement in illegal activity, saying that he did not seek to buy anyone's silence. However, four opposition legislators have already presented petitions calling for his impeachment, and Senator Ronaldo Caiado, head of the Temer-allied Democrat party, called for him to resign. Protests calling for Temer's removal have been held for the past two days in Sao Paulo, Brasilia, Rio de Janeiro and other cities.

The PSDB has already warned that, if allegations against Temer are proven, it will call on the three PSDB members of the cabinet to resign. With potential presidential aspirations in 2018, the PSDB may well abandon Temer, undermining his prospects for continuity. If impeachment calls prosper, Temer may not have the one-third support in the Lower House to block the move.

Temer travails

The Car Wash probe has already decimated the political class: in April, Fachin released a list of 108 people to be investigated, including nine members of Temer's cabinet, the leaders of both houses of Congress, 29 senators, 42 legislators, three state governors and four former presidents, notably including Luiz Inacio Lula da Silva (2003-10) (see BRAZIL: Political crisis threatens tentative recovery - March 17, 2017). However, Temer has eluded direct involvement thus far:

• Claims that Rousseff's 2014 campaign received illegal contributions, which could in theory force the annulment of the election results, do not implicate Temer himself and are in any case unlikely to be resolved before he leaves office.
• Although he is accused of seeking a 40-million-dollar payment for the PMDB during the 2010 campaign, this took place before he took office as president, and he thus enjoys temporary immunity while his mandate continues.

The obstruction of justice allegations are the first that could directly implicate Temer in illegal activity while president. Were the Supreme Court to indict him he would be obliged to step down, although the investigation may not be completed until his term is already over.

Slippery support

One of Temer's greatest guarantees of continuity thus far has been support from the financial and business community; his popular support has fallen as low as 4%, according to some polls. He has been seen as the guarantor of economic stability, austerity measures and market-backed reforms. However, this may now be in doubt:

• The Ibovespa stock exchange closed 9% down on May 18. Sharp stock market and exchange rate falls following the O Globo report will increase doubts about Temer's effect on economic stability.
• The government had already admitted that it lacked sufficient votes to guarantee passage of its key pension reform. In the current context, legislators may have even less motivation to back a reform that has already prompted strong popular opposition and a general strike.

If Temer cannot recover a degree of control quickly, he may become a liability to the interests hitherto backing him.

Alternative options?

Should Temer be forced to resign or be impeached, he would be replaced for 30 days by Lower House Speaker Rodrigo Maia (himself under investigation), while Congress chooses an interim president to serve out his term, which ends on January 1, 2019. Alternatively, Congress could pass a constitutional amendment calling early elections. Both courses are risky:

• The choice of an interim president from within its ranks by a Congress whose members are widely implicated in illicit activities would be unpopular, prompting further social unrest and undermining the credibility of the interim administration. Other names such as Finance Minister Henrique Meirelles and Supreme Court Chief Justice Lucia Rocha have been mooted.
• The outcome of new elections would be highly uncertain, with most of the candidates previously regarded as presidential hopefuls also tainted. Moreover, it is doubtful whether Congress could muster the three-fifths support required for a constitutional amendment.

At present, Lula leads opinion polls, although far short of the margin he would need to win; he also faces high rejection levels, and his candidacy would be controversial. If he were to stand despite currently pending corruption charges and win, he could potentially be removed from office if he were subsequently convicted.

Other figures largely unscathed by scandal enjoy far more limited support. They cover a broad range of the political spectrum, including former Sustainability Network presidential candidate Marina Silva; the PSDB governor of Sao Paulo state, Geraldo Alckmin; the PSDB mayor of the city of Sao Paulo, Joao Doria (see BRAZIL: Local elections complicate political map - November 1, 2016); and right-wing legislator Jair Bolsonaro (see BRAZIL: Far right may gain political space - February 8, 2017).

Moreover, in addition to their limited voter and congressional support, all candidates would face the same difficulties in forming a workable congressional majority -- the very difficulties that have led to the bribery scandals now engulfing the political class.