Brazil's Rousseff to fight on after heavy impeachment defeat

BRASILIA — Brazilian President Dilma Rousseff's government vowed on Monday to fight impeachment after the lower house of congress delivered a humiliating defeat that paved the way for her likely removal from office months before the country hosts the Olympics.

In a vote late on Sunday that sparked jubilation among Rousseff's foes, the opposition comfortably surpassed the two-thirds majority needed to send the leftist president for trial in the senate on charges she manipulated budget accounts to boost her re-election in 2014.

Surveys of lawmakers published by newspapers suggest that the opposition has the votes it needs to win a simple majority in the senate next month to open a trial against Rousseff, at which point she would be suspended from her post. She would be replaced by Vice President Michel Temer as acting president and he would serve out Rousseff's term until 2018 if she is found guilty.

"The president will not be disheartened and will not stop fighting," Attorney General Jose Eduardo Cardozo told a news conference in the early hours of Monday, citing Rousseff's fight against Brazil's former military dictatorship, during which she was imprisoned and tortured.

The government has said it will fight on several fronts by challenging the vote in the supreme court, organising street protests against impeachment and seeking to secure the votes in senate to block a trial.

"If someone thinks she is going to bow down now, they are fooling themselves," Cardoso said.

Brazil's Bovespa stock index was flat at midday on Monday, after rallying more than 20 per cent this year on hopes that impeachment would spell an end to 13 years of leftist Workers Party rule.

The central bank intervened to prevent a sharp rise in the currency, offering up to $4 billion in derivatives at an auction. The real weakened to 3.53 per dollar, while yields on rate futures fell.

The impeachment battle, waged during Brazil's worst recession since the 1930s, has divided the country of 200 million people more deeply than at any time since the end of its military dictatorship in 1985.

It has also sparked a bitter battle between Rousseff, a 68-year-old former Communist guerrilla, and Temer, 75, that could destabilise any future government and plunge Brazil into months of uncertainty.

Despite anger at rising unemployment, Rousseff's Workers Party can still rely on support among millions of working-class Brazilians, who credit its welfare programmes with pulling their families out of poverty during the past decade.

Celebrations erupted on Sunday night as deputies delivered a crushing blow to Rousseff. The floor of the lower house was a sea of Brazilian flags and pumping fists as dozens of lawmakers carried in their arms the deputy who cast the decisive 342nd vote, after three days of a marathon debate.

Fireworks lit up the night sky in Brazil's megacities of Sao Paulo and Rio de Janeiro after the vote.

The final tally was 367 votes cast in favour of impeachment, versus 137 against, and seven abstentions. Two lawmakers did not show up to vote.

Paralysed government

The impeachment battle has paralysed government in Brasilia, at a time when the country is preparing to host the Olympics in Rio de Janeiro in August and is also battling an epidemic of the Zika virus, which has been linked to birth defects in newborns.

Claudio Couto, professor of political science at Fundaçao Getulio Vargas, said that Sunday's loss dramatically weakened Rousseff's ability to strike political bargains and shore up support for her government.

"It is almost impossible the Senate will not take up the impeachment. And with her removal for up to six months, the government's power of persuasion will be dramatically diminished," he said.

Opinion polls suggest more than 60 per cent of Brazilians support impeaching Rousseff, Brazil's first woman president, less than two years after she narrowly won reelection.

While she has not been accused of corruption, Rousseff's government has been tainted by a vast graft scandal at state oil company Petrobras and by the economic recession.

Temer, a constitutional expert, has expressed strong support for the judge and prosecutors leading the Petrobras investigation and dismissed government allegations that he would obstruct their enquiries to protect his PMDB party.

Hundreds of thousands of demonstrators from both sides took to the streets of towns and cities across Brazil on Sunday, in peaceful protests. Millions watched the vote live on television.

"Impeachment sends a clear message that the politics of this country needs to be cleaned up," said Alesandra Dantas, a 28-year-old social worker, who joined anti-Rousseff demonstrators on the grass esplanade outside Congress.

Critics of the process say it has become a referendum on Rousseff's popularity — currently languishing in single digits — and sets a worrying precedent for ousting unpopular leaders in Congress in the future.

Rousseff — who would be the first Brazilian president impeached for more than three decades — is accused of a budgetary sleight of hand employed by many elected officials in Brazil: delaying payments to state lenders in order to artificially lower the budget deficit.

While Rousseff herself has not been charged with corruption, more than half the lawmakers who decided her fate on Sunday are under investigation for graft, fraud or electoral crimes, according to Congresso em Foco, a prominent watchdog in Brasilia.

However, business lobbies have thrown their weight behind her ouster, as they look to Temer to restore business confidence and growth to the $2 trillion economy.

Adriano Pires, head of the Rio de Janeiro-based Brazilian Infrastructure Institute, said Rousseff's departure could lead to an opening of the country's crucial oil sector. Union leaders have voiced concerns about privatisations and job cuts.

Once regarded as an emerging markets powerhouse, Brazil has been hit by the end of a long commodities boom and lost its coveted investment grade credit rating in December. Fitch, which has a negative outlook on Brazil's “BB+” sovereign rating, said it would focus on a new leader's attitude to the corruption probe and efforts to stem the steep rise in government debt.