Brazil’s impeachment crisis: next stop, regime change

The prospect of President Dilma Rousseff’s departure from office and – more specifically – the likelihood that Vice President Michel Temer could take over as soon as mid-May with Rousseff formally suspended from office and awaiting the outcome of impeachment proceedings – has, by and large, cheered foreign investors in Brazil.

Known as an ideologically flexible pragmatist, Temer has sought to reassure investors and foreign companies in general by signalling that he would enact more economically orthodox, liberal and pro-market economic policies than the current President, outlining an approach that has drawn comparisons to the current darling of Latin America’s financial markets, Argentine President Mauricio Macri.

Impeachment proceedings continue to hurtle forward for President Dilma Rousseff – following a 17 April vote in the Brazilian Congress to move forward with charges of manipulating government financial figures for political gain. The vote was substantially in excess of the requisite two-thirds majority and has paved the way for the Senate to move forward.

The internal Senate Committee, which will hear the President’s defence – which is expected to fall on deaf ears – has already been selected and Rousseff’s suspension is expected to follow as early as 12 May, with a final two-thirds majority in the 81-member Senate required for the subsequent final impeachment vote to follow. Notwithstanding any sudden and unexpected reversal in the fortunes of the President and her beleaguered PT party, President Rousseff is unlikely to serve out the first half of her second term; a cheering prospect for the investors who never warmed to Dilma’s populist policies and have abhorred the instability of Brazil’s long-running, internecine anti-corruption purges over the last year and a half.

However, even – as is now widely expected – he does take over from Dilma Rousseff on an interim basis, it is as-yet far from clear whether Temer would even be granted the time necessary to make an impact. This is primarily because following any impeachment of the current President, and the subsequent collapse of her PT government, the clamour for general elections would grow quickly and loudly.

In this scenario, with allegations of impropriety regarding manipulation of government figures also overshadowing Temer’s candidacy, and with some opinion polls suggesting he would get as little as 1%-2% of the popular vote in any presidential elections, Temer himself is unlikely to last long as Brazil’s leader. However, the clamour for a break from the policies of the PT government is strong, and any future leader of Brazil is likely to adopt a more open, less interventionist, and less statist approach to the economy than the soon-to-be ex-president.