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World Temer’s first days as Brazil’s acting president mired in controversy

Brazil's interim President Michel Temer (R) and his Foreign Minister Jose Serra attend a credentials presentation ceremony of several new diplomats, at Planalto Palace in Brasilia, Brazil, May 25, 2016.

ADRIANO MACHADO/REUTERS

Michel Temer took over as acting president of Brazil with a reassuring message to the country that he would move swiftly to address the economic crisis and end the paralysis that has gripped government for months.

But in just two weeks in office, Mr. Temer been forced to cut loose a key ally caught in an incriminating phone tap, has reversed a series of policy decisions and has made controversial political appointments under pressure from allies – a series of events that have undermined his image as a skilled political tactician and raised serious questions about his ability to implement a policy agenda full of unpopular measures.

"The honeymoon was over, if we can even say it began, just 12 or 13 days into this government, and that's surprising," said Mauricio Santoro, a professor of political science at Rio de Janeiro State University. It was a given that Mr. Temer would face left-wing opposition, he said. "But I wasn't expecting all this."

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Mr. Temer took office on May 12 after Brazil's Senate voted to open a trial of the elected president, Dilma Rousseff, on charges that she violated a federal budgeting rule, forcing her to step aside for up to 180 days. More than two-thirds of Brazilians said they wanted to see her impeached, although the primary focus of concern was her mismanagement of the sharply contracting economy and corruption in government, not the financial juggling of which she was accused.

Ms. Rousseff, who demonstrated little appetite or skill for the political deal-making that is key to managing Brazil's fragmented Congress, had been unable to pass an austerity package to try to curb the budget deficit, which this week Mr. Temer said would reach 170 billion reals ($61-billion Canadian) by the end of the fiscal year.

The chief appeal of Mr. Temer, who was her vice-president and had a low profile until he broke with Ms. Rousseff and began to manoeuvre openly for her job, was the perception that he could, at a minimum, address the economic crisis. The impeachment of Ms. Rousseff had the vocal backing of Brazil's federation of industry and other private sector lobby groups.

Mr. Temer won immediate praise for the economic team he put in place, headed by Finance Minister Henrique Meirelles, a former Central Bank of Brazil president.

Since then, however, his days in office have been characterized by fighting fires of varying sizes. Most critically, Mr. Temer lost his key lieutenant, when Senator Romero Juca was forced to step down from the critical post of planning minister on May 23. Mr. Juca was secretly recorded by a colleague plotting to advance Ms. Rousseff's impeachment in order to shut down the wide-ranging Lava Jato corruption probe, in which he is under investigation. The tape was made as part of a plea-bargain deal, and leaked to the press, apparently by the prosecutor's office. Mr. Temer was counting on Mr. Juca to stickhandle legislation, including controversial labour law reform, through Congress.

Mr. Temer's image of competent professionalism was further undermined with the appointment of a new government leader in the lower house of Congress – a post to which he named Andre Moura, who not only is under investigation for corruption but also faces attempted-homicide charges.

"The biggest problem [with Mr. Temer] so far is he's giving in too much to political pressure, and nominating questionable people to ministries and important positions," said Joao Pedro Brugger, an economist at Leme Investimentos, a financial consultancy. "The leader of the government in the lower house is facing charges for a million things. … This doesn't bode well."

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Seven different ministers in Mr. Temer's administration are under investigation for corruption. The fact that he appointed them reflects the deals and alliances the acting president had to make to get the job, Prof. Santoro said.

In addition, Mr. Temer has been forced to reverse a number of his first policy announcements. He had eliminated nine ministries when he took office, as a largely symbolic demonstration of his commitment to smaller government and cutting costs. One was the Ministry of Culture, which was folded into the Ministry of Education. Since that announcement, ordinary citizens and prominent artists have occupied ministry offices in 18 states – these are high-profile protests in a country where performers such as Chico Buarque and Gilberto Gil are hugely influential. Mr. Temer recreated the ministry eight days after eliminating it.

Widely derided for having appointed a cabinet that consists entirely of white men, in a country where 53 per cent of the population identify as black and mixed race, Mr. Temer made a closely watched effort to recruit a woman for the Minister of Culture job – but none of those he asked would accept, and in the end, he added another white man.

Mr. Temer's new Health Minister said the government would re-evaluate the size and role of the public health system – which provoked such an outcry that within a day Mr. Temer obliged the minister to retract the statement. Next, the new Minister of Justice said he would change the way the country's top prosecutor is appointed – again there was outcry, with people suggesting this would compromise the corruption probes, and again, the minister was obliged to retract.

Mr. Temer's government adopted a new logo, one that features a symbol strongly reminiscent of that used during the military dictatorship, and then was obliged hastily to change it.

"If he's changing his mind on these little issues, what can we expect when things that are really, really big and difficult are going to be negotiated,?" Prof. Santoro asked.

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Prominent columnist Elio Gaspari summarized the growing questions about the acting president's credibility with a column titled "Temer became a problem" in which he pointed out that a leader who can't manage the initial basic steps hardly inspires confidence that he will deliver on the complicated ones. "The idea that the current government can raise taxes, alter labour laws and change the age of retirement for those who are currently in the labour market – this is a dangerous illusion," Mr. Gaspari wrote on May 25.

Eliseu Padilha, who holds a cabinet job equivalent to chief of staff, did an interview on Wednesday (12 days into the government) with the newspaper Estadao in which he sought to reassure Brazilians. He began with the words, "There is no political crisis."

Brazil's gross domestic product shrank by 3.8 per cent last year, and is slated to contract by that much again this year. Inflation and unemployment are both above 10 per cent. Presenting his budget plan to the lower house on Monday, Mr. Temer pledged to slash public spending, and reform entitlements including the costly pension program. The plan did not include an increase in taxes.

Prof. Santoro pointed out that even the dictatorship had been unable to alter labour law. "It's all going to be much harder than they believed."

The Brazilian stock market has fallen by 7 per cent in the course of Mr. Temer's first two weeks in office, while the real has lost 3.5 per cent of its value against the U.S. dollar. Mr. Brugger said that reflected the private sector's disappointment. "Maybe the markets have underestimated how much political interference there would be, that the political instability would linger even after the impeachment," he said.

With a report from Manuela Andreoni

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