By Lise Alves, Senior Contributing Reporter
SÃO PAULO, BRAZIL – The speaker of Brazil’s Chamber of Deputies, Eduardo Cunha, accepted on Wednesday a request to open impeachment proceedings against the country’s leader, President Dilma Rousseff. Cunha stated that there was evidence that the President had violated Brazil’s fiscal laws and manipulated government finances.
Although both Cunha and government officials deny any discussions, the speaker’s decision comes after weeks of covert negotiations between him and the Workers Party (PT) Congressional representatives to back each other up in Congressional investigations of wrongdoing. While several impeachment requests have been filed against Rousseff, Cunha himself has been accused of corruption and is being investigated by the lower house’s ethics committee.
While Cunha said his decision was purely ‘technical’, political analysts note that the congressman made his decision after PT party representative, members of the ethics committee, voted to continue the Chamber’s investigation of Cunha. “It was a difficult decision. I did not become speaker of the Chamber of Deputies with the objective of approving impeachment proceedings against the president,” said Cunha to reporters on Wednesday.
Hours after the announcement President Rousseff hit back. In a televised address to the nation, the President said to have received ‘with indignation the decision’. “I’ve committed no illicit act, there is no suspicion hanging over me of any misuse of public money,” the president said.
“I don’t have any foreign bank accounts; I have not has not concealed from public knowledge the existence of personal property,” she said alluding to accusations that Cunha received millions in bribes from the Petrobras scandal and hid the money in Swiss bank accounts which were opened by family members.
For Neil Shearing, Chief Emerging Markets Economist for Capital Economics, although the announcement is hardly a surprise, impeachment is not likely. “There is a big difference between opening impeachment proceedings and actually removing the president from office. Our sense is that President Rousseff will muster enough votes to hold off the challenge,” stated Shearing.
Shearing says that although political turbulence is the last thing the Brazilian economy needs now, impeachment proceedings are also not likely to significantly affect the market. “While investors should be braced for volatility when markets open tomorrow, this isn’t necessarily a disaster for financial markets that is might seem.”
Finally, says Shearing, even the worst-case scenario – President Rousseff is impeached – would not necessarily be market-negative. “Ms. Rousseff is about as unpopular with investors as she is with the Brazilian public. Her government’s fiscal adjustment program – which is by far the most important policy challenge – has been derailed in Congress, partly (but not entirely) because she has become so divisive.”
A special committee comprised of members of all parties in the Chamber of Deputies will now decide on the merits of the case. If 2/3 of votes are favorable to impeachment, the case moves to the Senate. The Senate then holds a ninety-day trial after which a 2/3 majority in the Upper House is needed to formally remove the President from office.