Corruption row threatens Brazil’s economic reforms

Efforts by Brazil’s embattled government to push through unpopular austerity reforms face ever greater headwinds after the eruption of a corruption scandal weakening President Michel Temer.

Temer is staking his legacy on passage of the reforms, which center on changing the costly pension system to increase the retirement age to 65 for men and 62 for women from today’s 60 for men and 55 for women.

Temer has rock-bottom public approval ratings but he has been able to rely on a friendly Congress since legislators impeached leftist president Dilma Rousseff last year, automatically raising him, her conservative vice president, to the top job.

Since the Supreme Court’s decision last week to open corruption probes on some 100 politicians, including a third of Temer’s cabinet and many of his allies in Congress, the president’s position has deteriorated further.

He already faces widespread anger from voters over the austerity reforms, which also include liberalizing labor laws and an already-approved 20-year federal spending freeze.

Temer says market reforms are needed after more than a decade of leftist rule as the only way to lift Brazil from its worst recession in history.

But on Tuesday, angry police union members stormed the entrance of the lower house of Congress, scuffling with congressional police, to demand that police be allowed to retire earlier. Pressure is also coming from legislators themselves.

In a rare show of defiance to Temer, the lower house on Tuesday refused to fast-track the labor-law reforms. It then reversed this decision Wednesday after a rowdy debate marked by the kind of insults and shouting matches common last year during Rousseff’s impeachment.

“Brazilian society has not bought into these reforms,” said Sylvio Costa, founder of the political news website Congreso em Foco.

Temer has warned that unless Brazil imposes drastic discipline on its out-of-control budget the country faces bankruptcy. And he says that his short presidency — he will be replaced in an October 2018 election — is focused on this legacy, rather than short-term goals.

“My government will not get anything out of this: I have a year and eight months left in government. This is for the future,” he said on SBT television last weekend.

However, the politicians Temer relies on may be concentrating on their own reelection chances. In addition to the presidential poll, voting will take place for the entire lower house of Congress and two thirds of the Senate.

Last week’s expansion of the already giant corruption investigation known as “Car Wash” has also sharply reduced the government’s standing.

“Its legitimacy and ability to act have taken a strong hit,” Costa said. “Every legislator is thinking hard about whether to support them, and support for the pension reform could cost them their seats.”

The “Car Wash” probes ordered by the Supreme Court are based on mountains of testimony given in plea bargains by executives from the Odebrecht engineering company who say that for years they systematically bribed politicians.

Temer is not being investigated, but he is alleged to have chaired a meeting in which his PMDB party took a $40 million bribe from Odebrecht.

Public outrage is mounting over the allegations, forcing Temer into almost daily denials that he was involved in corruption. He also defended the hugely discredited Congress.

“There are many good people in Congress who have worked together and allowed the government to do what it’s been doing these 11 months,” he said.

Carlos Marun, head of the committee overseeing the reforms, and an ally of Temer, says the crisis cannot be allowed to put the economy in jeopardy.

“We cannot paralyze the work of Congress. The courts have to do their job and we have to do ours, which is to vote and to debate important questions for the future of the country,” he told AFP.