Brazil's Senate begins Rousseff's impeachment trial

[August 26, 2016]  By Anthony Boadle

BRASILIA (Reuters) - Brazil's Senate began the trial of suspended President Dilma Rousseff on Thursday after a lengthy impeachment process that has paralyzed the politics of Latin America's largest nation and is expected to culminate in her removal from office next week.

Thursday's session, presided over by Supreme Court Chief Justice Ricardo Lewandowski, heard witnesses for and against Rousseff, Brazil's first female president, who is charged with breaking budget laws.

The leftist leader, whose popularity has been hammered by a deep recession and immense corruption scandal since she won reelection in 2014, will appear before the 81 senators on Monday to defend herself. Her opponents are confident they have more than the 54 votes needed to convict her.

Authorities prepared barriers to contain demonstrations outside Brazil's modernistic Congress building, but virtually no Rousseff supporters turned out, underscoring the isolation of the impeached president.

If the final vote, which is expected late Tuesday or in the early hours of Wednesday, goes against Rousseff it would confirm her vice president, Michel Temer, as Brazil's new leader for the rest of her four-year term through 2018, ending 13 years of left-wing Workers Party rule.

Rousseff, a former leftist guerrilla, is charged with spending without congressional approval and manipulating government accounts to mask the extent of Brazil's growing deficit in the run-up to her 2014 re-election.

Her Senate supporters managed to discredit a key witness, a Federal Audit Court prosecutor who led the probe of Rousseff's government, because he had taken part in an anti-Rousseff demonstration.

Lewandowski ruled that Julio Marcelo de Oliveira could be questioned but his testimony would not count as proof, a development that is not expected to affect the outcome of a trial that is more political than judicial.

A survey published by O Globo newspaper on Thursday showed that 52 senators were committed to voting to dismiss Rousseff, with only 19 supporting her and 10 undecided or not polled.

Rousseff has denied any wrongdoing and described efforts to oust her as a "coup." She has refused to resign and said the accounting practices she is being put on trial for were also commonly used by previous governments.

With unemployment above 11 percent, and dozens of politicians in her coalition implicated in a kickback scandal at state-led oil company Petrobras, the trial has become a test of Rousseff's support.

Polls show ordinary Brazilians are unconcerned by the alleged accounting irregularities but want Rousseff ousted in the hope the next government can better manage the economy.

DAUNTING TASK

If confirmed president by Rousseff's ouster, Temer would face a daunting task: steering Latin America's largest economy out of recession and plugging a budget deficit that has topped 10 percent of gross domestic product.

In the unlikely case that she is acquitted, Rousseff would immediately return to office.

Brazilian assets have rallied on prospects of a more market-friendly government, with the currency rising around 30 percent against the dollar this year. Still, investors and members of Temer's fragile coalition are concerned he has yet to implement measures to control the deficit.

The secretary of the Federal Senate reads the opening of the process during a final session of debate and voting on suspended President Dilma Rousseff's impeachment trial in Brasilia, Brazil August 25, 2016. REUTERS/Ueslei Marcelino

Temer's right-leaning government has sought to speed up the trial so he can set about restoring confidence in a once-booming economy and remove any doubts about his legitimacy.

A draft budget for next year is not expected in Congress until Aug. 31, after the Senate votes, by which time Temer could have more political leverage to push through austerity measures.

Investors are concerned Temer might give in to pressure for spending increases such as pay hikes for public employees, including the nation's judges, a demand supported by Lewandowski.

Temer has proposed a constitutional limit on spending and a broad reform of Brazil's pension system to reverse a deteriorating fiscal outlook - moves applauded by credit rating agencies that last year stripped the country of its prized investment grade.

"While we expect the current administration to have a better chance of getting these reforms through Congress than the previous government, there is still no clear support to approve these measures," Moody's Investors Service said in a client note.

If Rousseff is removed, Temer must be sworn in by the Senate. He is then expected to address the nation before heading to the summit of the G20 group of leading economies in China on Sept. 4-5.

Without the legal protection of her presidential status, Rousseff could find herself in court facing an investigation into whether she and former president Luiz Inacio Lula da Silva tried to obstruct the Petrobras corruption probe.

Even Rousseff's Workers Party, hurt by corruption scandals and her dismal economic record, has distanced itself from her last-minute call for elections to resolve the political crisis.

Yet party leader Lula came to her defense on Thursday. Speaking to workers in the city of Niteroi, Lula said Rousseff may have committed policy errors but she was an honest politician who had done nothing to warrant her removal.

"What they're doing is finding a way to take power without winning votes in an election," he said. "Today is a shameful day. The senators have begun to rip up Brazil's constitution."

(Additional reporting Rodrigo Vigain Niteroi;

Editing by Alistair Bell and Andrew Hay)

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