Brazil's Temer makes concessions to survive in office

BRASILIA (Reuters) - Brazil’s President Michel Temer has made policy and spending concessions in an effort to survive a congressional vote on corruption charges Wednesday that has put his reform agenda at risk, analysts and political actors said.

Brazil's President Michel Temer attends a ceremony to deliver the Order of Aeronautical Merit medals, in Brasilia, Brazil, October 23, 2017. REUTERS/Ueslei Marcelino

To please the powerful farm lobby that has two-fifths of the votes in the lower house, Temer agreed to lower fines for environmental damage. He attempted to relax a definition of slave labor but was forced to backtrack after an outcry.

In the clearest move to favor an ally, the Republican Party that has 37 seats in the 512-seat chamber and runs the Transport Ministry, Temer removed Sao Paulo’s busy and lucrative Congonhas airport from a list of airports to be privatized. The party has appointees in the ministry and state airport operator Infraero.

Critics and political observers say Temer has sacrificed austerity policies to save his presidency but will emerge from Wednesday’s vote a weakened leader unable to pass substantial measures, such as an overhaul of the pension system.

Temer faces charges in a bribery case based on testimony by an owner of the world’s largest meatpacker JBS SA that has implicated several of his cabinet ministers.

The lower house decides whether a president should stand trial before the Supreme Court, which can only take place if two-thirds of deputies vote for it.

“He will survive because he has a majority, though not my vote because I believe there is enough evidence to put him on trial by the Supreme Court,” said Fabio Sousa, a lawmaker of the centrist the Brazilian Social Democracy Party (PSDB), a member of Temer’s governing coalition.

Temer managed to block a first corruption charge in August. Now he faces charges of obstruction of justice and criminal organization for allegedly receiving bribes from JBS.

Temer has met with dozens of lawmakers in recent days to secure their votes. Presidential aides said he hopes to widen his margin of support so that he can move ahead with his reforms, paralyzed for six months by the political crisis.

Those votes come at a cost, in pork-barrel spending.

According to public spending watchdog Contas Abertas, Temer fast-tracked spending in congressional districts worth 4.4 billion reais ($1.3 billion) to help win the first vote, and is now hitting the 2 billion real mark ahead of Wednesday’s vote.

O Globo newspaper estimated the cost of Temer’s handouts to taxpayers at 12 billion reais, half of which would have come from the planned airport concession auction.

Yet most analysts believe Temer will get less votes this time, because lawmakers have started to distance themselves from his government ahead of next year’s general elections.

“After this vote, Temer will become a lame duck president. It will be very difficult for him to pass any reforms,” said David Fleischer, politics professor emeritus at Brasilia University.

Investors are waiting to see if Temer can deliver a pension reform to tackle a budget deficit that cost brazil its investment grade credit rating.

“If he does get social security reform approved, it will be badly watered down,” Fleischer said.

Reporting by Anthony Boadle; Editing by Andrew Hay