Analysis: Brazil's Rousseff backs off Cabinet purge

BRASILIA Fri Jan 13, 2012 2:17pm EST

Brazil's President Dilma Rousseff participates in the singing of Christmas carols during a yearend party with members of her staff and employees of Planalto Palace in Brasilia December 16, 2011.  REUTERS/Ueslei Marcelino

Brazil's President Dilma Rousseff participates in the singing of Christmas carols during a yearend party with members of her staff and employees of Planalto Palace in Brasilia December 16, 2011.

Credit: Reuters/Ueslei Marcelino

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BRASILIA (Reuters) - At first blush, it might seem like the clock is ticking on Fernando Bezerra's days as a Brazilian Cabinet minister.

Bezerra has been fighting sensational charges of nepotism and other ethics breaches in the Brazilian press. The most egregious accusation: that he used his power to direct a disproportionate share of funds for natural disaster prevention to his home state, instead of states where dozens of people have died in recent weeks from predictable seasonal floods.

Yet it appears that Bezerra, who has denied any wrongdoing, and most other ministers under a cloud of suspicion are going to keep their jobs. President Dilma Rousseff is backing off her plans for a major Cabinet reshuffle early this year, having decided that she needs their parties' support to pass key economic legislation.

Rousseff fired six ministers because of corruption or ethics breaches in 2011, a stance that marked a departure from politics as usual and boosted her popularity ratings. Top aides have said since September that Rousseff was going to undertake an even broader purge shortly after her first anniversary in power on January 1, even if it meant losing the support of some junior partners in her 17-party coalition.

Brazil's slowing economy, which flatlined in the third quarter and is still weak, appears to have changed her plans.

Rousseff will likely need all the support she can muster in order to keep inflation under control and pass legislation Brazil needs to modernize its mining and energy sector, and prepare to host the 2014 World Cup and the 2016 Olympics.

"She has adopted a defensive position, because she is vulnerable," said political scientist Bolivar Lamounier.

Lamounier cited Bezerra, minister of national integration, as a case in point. His powerful political family from northeastern Brazil is an example of the kind of old-style politicians whose expectations of patronage might not jibe with Rousseff's aspirations of cleaning up Brazilian politics, but whose support she needs to retain nonetheless.

"They are a powerful clan, a historically backward oligarchy that still holds power in Pernambuco," he said.

2012: A RISKY POLITICAL YEAR

With local elections in October, 2012 is a crucial year for Rousseff, one to avoid getting into fights with her partners. Nor can she risk excluding from her cabinet allied parties like Bezerra's PSB, which might field rivals to her re-election chances in 2014.

Rousseff had hoped to put her own stamp on a government she inherited from predecessor and mentor Luiz Inacio Lula da Silva, on whose huge popularity she rode into office. The changes are now expected to be limited to replacing ministers who were fired or are leaving to run for local office.

Government sources say there would be no immediate change at the top of state-run oil giant Petrobras, whose chief executive, Jose Sergio Gabrielli, is thought to be toying with the idea of running for governor of Bahia state in 2014.

Brazil's economic team, headed by Finance Minister Guido Mantega, is expected to stay in place as Rousseff's government focuses on curbing inflation and boosting growth that lost steam last year in the global slowdown from the euro zone debt crisis. Emerging power Brazil has an economy about the size of Britain's

but growth slowed from a booming 7.5 percent in 2010 to around 3 percent in 2011.

Brazil's first woman president ended her first year in power with a staggering 72 percent approval rating, compared to the charismatic Lula's 66 percent, according to a CNI/Ibope poll.

Even with that level of support, it is hard for Rousseff to shake up the political system and break with the past.

Despite enjoying a massive majority in Congress and a smaller opposition than her two predecessors faced, Rousseff was not able to achieve much more than an increase in the minimum wage in 2011. Her government suffered defeat over a proposal to tax financial transactions to pay for healthcare, which raised questions about its ability to maintain fiscal discipline.

David Fleischer, a political science professor at Brasilia University, expects Congress to pass pending forestry and mining codes, a hotly debated bill sharing out with the rest of the country the royalties enjoyed by Brazil's three oil producing states, and a law regulating foreign farm land acquisitions.

But tax reform, a top demand by Brazilian businessmen who complain that high taxes and poor services, port and roads make it harder for Brazil to compete in a slowing global economy, will not happen, analysts and government aides said.

Opposition leader Senator Sergio Guerra, of the Brazilian Social Democracy Party (PSDB), says that's because Rousseff has not shown leadership and is at odds with her coalition allies.

Guerra said nothing had changed under Rousseff because the ousted ministers were replaced by members of the same parties.

"(Rousseff's) government hasn't even started yet," he said.

(Additional reporting by Jeferson Ribeiro; Editing by Brian Winter and Philip Barbara)

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