The darkest hour

The economy is in freefall. The president is likely to be impeached. Brazil's democracy faces its toughest moment since the end of dictatorship.

On the night of April 17th Brazil stood still. In the streets, hundreds of thousands held their breath, many sporting the yellow-and green jerseys of the national football team, brandishing Brazilian flags, vuvuzelas at the ready. Millions more were glued to television screens in homes, bars and restaurants across the country.

Contrary to appearances it was political, not sporting, history that was being made. At 11.07 pm it was all over. Bruno Araujo of Pernambuco state, a federal deputy for the center-right opposition Party of Brazilian Social Democracy (PSDB), cast the 342nd vote in Congress's 513-seat lower house in favor of sending impeachment charges against the president, Dilma Rousseff, the the Senate for trial. That breached the necessary threshold of two-thirds; Ms Rousseff;'s foes in the chamber burst into song. Outside Congress, and in dozens of cities, car horns blared.

By the time voting ended, the government had been trounced by 367 votes to 137 (plus seven abstentions and two absentees). In ten-second speeches during a rowdy, six-hour roll-call vote, pro-impeachment lawmakers railed against economic mismanagement and corruption under Ms Rousseff's Workers' Party(PT). Brazil is suffering its worst recession since the 1930s, and the PT and its allies are embroidered in a vast bribery scandal centered on the state-run oil company, Petrobras. They were voting for their families, many proclaimed, or their constituent, or God. Others nodded to the special interests that got them elected. Few mentioned the specific charge against Ms Rousseff: that she had fiddled government accounts to disguise a big budget deficit.

The next morning Brazil awoke to a changed political landscape. Ms Rousseff looks likely to follow in the ignominious footsteps of Fernando Collor, the country's first directly elected president after two decades of military rule ended in the mid 1980s. He was impeached for corruption in 1992, less than three years into his term.

Ms Rousseff's departure would bring to an end the PT era, which began 13 years ago under her predecessor and patron, Luiz Inacio Lula da Silva. It would upend Brazil's politics - and increase uncertainty - even as the country struggles to halt an economic crisis. This is perhaps the most dangerous moment for the still-evolving democracy since the generals stepped down in 1985.

Ms Rousseff and her party denounced the lower-house decision as a coup d'etat - like the once in 1964, but with the role of the generals played by biased media, a "selective" judiciary and compromised legislators. Forty of the congressmen who voted against her have been indicted for various crimes; 15 more are under investigation in Lava Jato (Car Wash), as the Petrobras corruption investigation is known. She compared her ordeal to the torture she suffered as a left-wing guerrilla under the dictatorship, and vowed to fight on.

But she looks unlikely to win over the Senate, which began to set up a commission to analyse the lower-house motion on April 19th. The Senate's make-up is somewhat more friendly to her than that of the lower house: larger and richer states in the south and south-east, where she and her party are widely lathed, account for half of lower-house seats but only a quarter of the Senate's. But only a bare majority is required for the Senate to accept the impeachment motion for trial. Estado de Sao Paulo, a newspaper that has been tracking voting intentions, reckons that 46 out of 81 senators want an impeachment trial (and 20 are against)

The Senate is likely to vote by mid-May. If the result is as expected, Ms Rousseff would have to step aside and the vice-president, Michel Temer, would take her place for up to 180 days. Should two-thirds of senators then vote to remove Ms Rousseff from office, he would serve until her term ends in Decemer 2018.

In office, Mr Termer would have to tackle several Herculean tasks. Brazil's economy is tanking, chiefly as a result of interventionist mismanagement during Ms Rousseff's first term from 2011 to 2014. Output fell by 3.8% in 2015 and could do so again this year, the IMF reckons. Per person, output could be down by a fifth since its peak in 2010. Since the start of Ms Rousseff's second term 1.8m jobs have been lost. Some 10m Brazilians, or one in then workers, are out of work, and unemployment is likely to increase further, as businesses struggle under debt incurred in the boom years. Inflation has eased slightly but remains near 10%, further eroding incomes. 

Cleaning the stables

To restore confidence Mr Temer would need urgently to cut the budget deficit. On Ms Rousseff's watch it ballooned from 2.4% of GDP to a terrifying 10.8%. Restoring public finances would take a combination of spending cuts and tax rises, neither of which is popular - and some measures would require constitutional changes. In Nocember Mr Temer outlined business-friendly reforms that would mark a break with the PT's left-wing program.

But he would struggle to push them through. Ms Rousseff tried similar, smaller measures several times, and appointed a market-friendly finance minister, Joaquim Levy, on her re-election. The real jumped when he was named, and again whenever reforms looked likely to make it through Congress  - only to slump again when they were stymied by politics. Mr.Levy stepped down late last year, having achieved less than he had hoped. The markets' spirits recovered as the odds of impeachment improved.

Just because 72% of the lower house backed impeachment does not mean Mr Temer would be assured of simple majorities in both houses to pass legislation, let alone the three-fifths in each needed to amend the constitution. He could not even rely on his own centrist Party of the Brazilian Democratic Movement (PMDB): seven of its congressmen backed Ms Rousseff in the impeachment vote, including its leader in the chamber. 

Even more worryingly, many PMDB leaders are beholden to business interests that back reform in principle but not always in practice. A tangle of tax breaks is unlikely to be relinquished without a fight, and the coddled manufacturing sector cherishes the subsidies and trade barriers that shield it from foreign competition. Austerity would hardly be a vote-winning in October's local elections. These are especially important to the PMDB, which is more a coalition of regional bigwigs than a grouping of politicians with similar ideas about how to run a country.

The vice-president's party is not only fractious but tarnished by allegations of corruption. It was the PT's main ally until it pulled out of the governing coalition last month, and several of its congressmen have been accused of involvement in the Petrobras affair. On April 18th a former executive at the company claimed that Renan Calheiros, the PMDB speaker of the Senate, had taken $6m in bribes from a supplier of oil rigs. The supreme court has already indicted his opposite number in the lower house, Eduardo Cunha, for corruption and money-laundering. Four other senior PMDB congressmen are under investigation. (All deny wrongdoing.) Meanwhile, the electoral authority is investigating whether Ms Rousseff and Mr Temer took money from the Petrobras scheme for their re-election campaigns. If it concludes they did, it could call a new election for both president and vice-president.

With friends and donors thus tainted, Mr Temer would struggle to attract talent to his government. Arminio Fraga, a former Central Back governor close to the PSDB itself has hinted that it might unofficially support his government. And he would have to balance the pressing need for competence against the steps required to build a coalition in a Congress that houses 27 parties.

Brazilian analysts forecast that GDP would shrink by 3-4% this year with Mr Temer at the helm. That is better than 4-6% under Ms Rousseff, but still horrible. Inflation might be a shade lower than otherwise, and the currency a touch stronger. But few see growth returning before 2018, and then only sluggishly. Unemployment could reach 11% by the end of the year - and stay there. Joao Castro Neves of Eurasia Group, a consultancy, speaks of a slew of unknown unknowns". The PT has vowed "total" opposition in Congress to a government led by Mr Temer. Its allies among trade unions and social movements are considering roadblocks and perhaps a general strike - especially if Mr Temer were to pursue the measures needed to stabilize the economy, which they dub "neoliberal".

Unlike Mr Collor, who had no popular or political backing to speak of, Ms Rousseff still enjoys some. And the third of Brazilians who oppose impeachment see the vice-president as a usurper. During the house vote, 26,000 of Ms Rousseff's supporters gathered in front of Congress, separated from 53,000 pro-impeachment protesters by a steel fence erected by the police. Similar scenes - minus the fence - were repeated across Brazil. Some fear that they symbolized a country rent asunder - and a democracy at risk of tearing apart. All this leaves Mr Temer vulnerable to discontent and puts Brazil at risk of further turmoil and decline.

But there are reasons to think that the damage will be limited. The country's institutions have shown an ability to withstand the twin traumas of the impeachment process - even one as contested and flawed as Ms Rousseff's - and the Lava Jato investigation.

Even in the rush for impeachment the supreme court, despite being packed with PT appointees, set out guidelines but did not second-guess the legislature on the merits of the case against the president. All involved obeyed the rules; though the vote was decried by her supporters in the lower house, no one suggested that it should be overturned by force. Emotions ran high during the voting, and some of the rhetoric was intemperate, but the deputies mostly observed parliamentary decorum. "Few countries could have pulled this off," marvels Matthew Taylor, a political scientist at American University in Washington, DC.

The protesters outside also behaved well. There was no violence that warranted intervention by the police, let along the army. Crowds dispersed peacefully. The next morning, normal life resumed.