(Adds Temer meeting with former President Cardoso)
By Anthony Boadle and Alonso Soto
May 31 Brazil's scandal-plagued President Michel
Temer has gained some breathing room due to an incipient
economic recovery and the failure of his allies to agree on a
caretaker to keep his fiscal reforms on track if he is ousted.
Temer, who is being investigated for corruption by the
Supreme Court, went on the offensive this week to convince
Brazilians he is their best bet for pulling the nation out of
its worst recession.
But his coalition allies are divided on whether it is best
to dump the damaged president quickly, or to keep him for the
sake of an economic recovery that began to pick up in the first
At stake is pension reform, crucial for balancing the
budget, and which may now have to be further watered down.
"Our commitment at this point is only to back the reforms.
If we see that they are not advancing, then we should quickly
look for an alternative government," Congressman Eduardo Cury, a
vice president of the PSDB party, told Reuters.
The PSDB, the largest party in the governing coalition, is
waiting for an electoral court hearing next week about Temer's
fate before deciding whether to abandon him and back his
replacement by a caretaker president.
In a bid to keep the PSDB on board, Temer met on Monday with
the party's elder statesman, former President Fernando Henrique
Cardoso, and pressed on him the need to focus on the shared
reform agenda before dealing with the political future.
"We are going to focus on approving the reforms. After
creating this precondition for renewed growth, we can talk about
politics and elections," said Investment Minister Wellington
Moreira Franco, who attended the meeting.
Coalition allies have not been able to agree on who the
caretaker could be if Temer falls. It would have to be a
politician who has experience, credibility and is not under
investigation for corruption.
"We do not have too many names that fit that bill," said a
lawmaker in the PSDB party who asked not to be named because of
the sensitivity of the matter. "This is a hurdle and Michel
Temer is benefiting from the lack of consensus."
Owners of the world's biggest meatpacker, JBS SA,
said in plea-bargain testimony that Temer condoned bribing a
potential witness in the sprawling "Car Wash" corruption case,
and that they had paid him nearly $5 million in bribes in recent
years. Temer denies all accusations and has refused to resign.
Temer's hold on power faces a more immediate threat from
Brazil's top electoral court, the TSE, when it meets next week
to decide whether to annul his 2014 election due to the use of
illegal campaign funding. He was the running mate of former
President Dilma Rousseff, who was impeached last year.
Analysts say Brazil's political crisis could speed up a TSE
decision or encourage the judges to be lenient toward Temer to
avoid a traumatic second ouster of a president in the space of a
BACK ON TRACK?
A bullish Temer said at an investment conference on Tuesday
that he was committed to delivering labor law and pension
reforms in undiluted shape, and handing over a country back on
track when he completes his term at the end of next year.
Inflation has dropped below the government target and Latin
America's largest economy grew in the first quarter for the
first time in two years, the leader said.
Temer lost political support in Congress when the corruption
allegations emerged two weeks ago, but if his reforms move
forward and the economy continues to brighten, he could survive,
PSDB lawmaker Betinho Gomes said.
A bill that will reduce labor costs for business is awaiting
final Senate approval, and most politicians agree Temer's
landmark fiscal savings measure, reform of the costly pension
system, will probably clear Congress this year, though in a
substantially weakened form.
Lawmakers have told Reuters the bill could still establish a
minimum retirement age but drop other cuts to benefits that were
expected to save 600 billion reais over 10 years.
The speaker of the lower house and member of the allied
Democrats party, Rodrigo Maia, on Tuesday fully endorsed Temer
and his reform agenda at the investors forum.
Government officials said Temer's allies realize he is not
the most attractive option to lead Brazil until the 2018
elections, but at present appears to be the only viable one.
"He represents reform and a return to a normal economy,
whereas the allies lack consensus on a name to replace him," a
presidential aide told Reuters on the condition of anonymity
because he was not authorized to speak on the matter.
"The tide is clearly turning in favor of the president," he
said. "The worst of the crisis is over."
The government expects the electoral court to rule in
Temer's favor and is confident he can successfully appeal any
decision to unseat him, the aide said.
Brazil's immediate political future is so uncertain few
analysts will venture a prediction.
"It's still too early to say if he will survive. There is a
lot of backstage negotiation and everyone is waiting for the
court decision next week," said Danilo Gennari of the
Brasilia-based consultancy Distrito Relações Governamentais.
"Temer has won a breather, but I don't know if the tide is
turning or if it is his last breath."
(Reporting by Anthony Boadle, Alonso Soto, Silvio Cascione and
Ricardo Brito in Brasilia; Editing by Alistair Bell and Jonathan