Brazil party set to abandon Rousseff, making impeachment more likely

BRASILIA - Brazil's largest party willdecide on Tuesday to break away from President Dilma Rousseff'sfloundering coalition, party leaders said, sharply raising theodds that the country's first woman president will be impeachedamid a corruption scandal.

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Brazilian President Dilma Rousseff attends a ceremony where new health measures aimed at combating the zika virus and microcephaly throughout Brazil were announced, at Planalto Palace in Brasilia, Brazil, March 23, 2016.??[Photo/Agencies]

The fractious Brazilian Democratic Movement Party (PMDB)will decide at its national leadership meeting on the pace ofdisengagement from the Rousseff administration, in which itholds seven ministerial posts and the vice presidency.

A formal rupture appears inevitable and will increase theisolation of the unpopular Rousseff, freeing PMDB members tovote for her impeachment.

That makes it likely Rousseff will be temporarily suspendedfrom office by Congress as early as May and replaced by VicePresident Michel Temer, leader of the PMDB, while the Senatedecides if she should be permanently ousted.

In the first step toward an imminent rupture, TourismMinister Henrique Eduardo Alves, a PMDB leader and formerspeaker of the lower house of Congress, announced on Monday hewas resigning from Rousseff's cabinet. "Dialogue, I regret tosay, has been exhausted," Alves said in his resignation letterto Rousseff.

Temer aides said the vice president is ready to take overand move fast to restore business confidence in Brazil, in aneffort to pull the economy out of a tailspin. Brazilian mediareported over the weekend that a team of Temer aides is drawingup a plan for his first weeks as president.

Brazil's stocks and currency rose Monday on the prospect ofRousseff's removal. Many blame her for running Latin America'slargest economy into the ground, while Temer is widely viewed asfar more business friendly.

The Economist Intelligence Unit said in a note to clients itno longer expects Rousseff to survive impeachment, joining otherrisk analysts who have raised the odds of her removal.

Party officials calculate that 70 to 80 percent of the 119voting members of the PMDB directorate will vote to end theparty's alliance with Rousseff and the ruling Workers' Party.

One told Reuters that 75 had already pledged to do so.

Rousseff is an economist by training and a former Marxistguerrilla who was imprisoned and tortured during Brazil's longmilitary dictatorship. She vigorously denies any wrongdoing andrejects impeachment charges that she manipulated governmentspending accounts to help her re-election in 2014.

The impeachment process only adds to the crisis hittingBrazil, shaken by its biggest corruption scandal - aninvestigation into political kickbacks to the ruling coalitionand other parties from contractors working for state oil companyPetrobras.

Rousseff's government is also grappling with Brazil's worstrecession in decades and an epidemic of the mosquito-borne Zikavirus, as it scrambles to host the Olympic Games in Rio deJaneiro in August.

The Petrobras scandal has weakened Rousseff by reaching herinner circle with allegations against her mentor andpredecessor, Workers' Party founder Luiz Inacio Lula da Silva.

An attempt by Rousseff to appoint Lula to her Cabinet wasthe last straw for many of her allies who saw it as a desperatemove to shield him from prosecution by a lower federal courtthat is overseeing most of the Petrobras case.

Brazil's top court is expected to decide later this week ifLula can indeed become a minister.

LULA DOWNCAST

With the prospect of impeachment ending 13 years of rule byhis Workers' Party, Lula said he was "saddened" by the PMDB'sexit from a coalition he forged in 2006. The former unionleader, who remains Brazil's most influential politician, toldforeign reporters in Sao Paulo he thought agreement was stillpossible.

But in Brasilia, a presidential aide said the break was"irreversible" and the Rousseff government was now focusing onindividual members of the PMDB and other parties to try toconvince them to vote against impeachment by offering government jobs and pork barrel for their districts.

Lula also called for tax breaks and other measures to getthe economy growing again.

The departure of the PMDB is expected to lead other smallerparties to bolt from the governing coalition, which will furtherundermine Rousseff's ability to muster one third of the votes inCongress needed to block her impeachment.

The two largest, the Progressive Party (PP) and theRepublican Party (PR), each with 40 seats or more in the lowerchamber, have signaled that they are leaving.

An impeachment vote is expected as soon as mid-April in thelower house. If she fails to block it with the votes of 171 ofits 513 members, Rousseff would face a trial in the Senate whereshe has lost crucial support among the PMDB.

One PMDB senator, Valdir Raupp, said it would be almostimpossible for them now to stop the impeachment if it passes thelower house. PMDB senators believe it would be almost impossible for them tostop the impeachment if it passes the lower house. Rousseffwould be suspended for up to six months at the start of thetrial and Temer would become acting president.

Temer is already looking at ways to cut public spending totackle a widening fiscal gap that cost Brazil's its investmentgrade credit rating, the O Estado de S.Paulo newspaper reportedon Sunday.

It said a small team of aides led by Wellington MoreiraFranco, Rousseff's former civil aviation minister, isconsidering sweeping welfare cuts in social programs that wouldbe carried out by the finance minister of a Temer government.

Two names under consideration for that job are formercentral bank governors Henrique Meirelles and Arminio Fraga, thenewspaper said. A spokesman for Temer declined to comment on thereport.