Brazil's president may lead a 'walking dead administration'

Andrew Cummings
May 19, 2017

"I did not buy the silence of anyone", President Temer said, referring to the allegations made against him.

Brazilian markets slumped on concerns that the investigation could derail Temer's economic and fiscal agenda. Raising his voice, he said efforts to mend Brazil's economy - including an austerity program and unpopular pension reforms - could be put at risk if he stepped down.

Temer admits to meeting Batista but says hush money was never discussed.

"I won't resign. I repeat". Instead, the veteran center-right politician - who took over previous year with a promise to restore Brazil's stability after the impeachment of leftist president Dilma Rousseff - came out swinging.

Former president Luiz Inacio Lula da Silva, a leftist icon for many in Latin America, faces five corruption trials, while a third of the Senate and a third of Temer's own cabinet are under investigation.

"Michel Temer is like that boyfriend who doesn't know it's over", one Twitter user said.

Government-controlled companies were among the biggest decliners in the Ibovespa, with the preferred shares of oil company Petróleo Brasileiro SA, or Petrobras, closing 15.8% lower and power company Eletrobras SA's preferred shares ending down 17%.

Brazil's Treasury and central bank said they stood ready to keep markets liquid before acting to smooth volatility in local currency and bond markets.

"If Temer doesn't fall, he will lead a walking dead administration", said Claudio Couto, a political science professor at Fundacao Getulio Vargas, a Sao Paulo-based university and think tank.

Scattered protests erupted across the country with both Temer's rivals and supporters urging him to step down.

"After that, it's hard to say what will happen", Praça said.

The political storm erupted late Wednesday, when the Brazilian newspaper O Globo reported that Temer had been the target of a police sting operation in which he was recorded condoning a payment by a Brazilian businessman to the jailed speaker of the house aimed at ensuring that the politician stayed silent on corruption.

"Temer has weathered many crises during his short term in office, but this is by far the most serious".

Officers in the southern city of Curitiba searched the home of federal deputy Rodrido Rocha Loures, a longtime confidant of Temer and a member of the president's party.

The Brazilian Bovespa index fell 8.8% after reports that President Michel Temer was involved in an alleged bribery, claims that Mr. Temer has denied.

The scandal started with Globo's report late Wednesday that Temer had been secretly recorded while talking to Joesley Batista, an executive from the meatpacking giant JBS, on March 7. That witness, Eduardo Cunha, was a key player in the ouster of Rousseff - and is now in prison himself. "So, I feel I have the right not to trust all this and to examine, in more detail, all these tapes, these recordings, before passing a definite judgement", Carlos Marun of the Brazilian Democratic Movement Party said.

Brazil's Vice President Michel Temer speaks during a news conference in Brasilia, Brazil April 11, 2016.

Temer's approval ratings are hovering around 10 percent.

But with so many lawmakers under investigation for corruption, there are widespread calls for the constitution be changed to allow for direct elections now. Activists from across the political spectrum called for large protests this weekend.

The daily reported on Thursday that Temer would tender his resignation at a press conference, and that he had already informed who is expected to appoint a replacement until the presidential election in 2018.

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