President Dilma Rousseff’s political honeymoon is over.

It has been a bad few weeks for the novice administration, which is fire fighting on several fronts, including a festering ethics scandal involving Rousseff’s second in command, the minister of the presidency, Antonio Palocci, a case that has finally given the shrunken opposition something into which to sink its teeth. More worryingly, cracks are emerging in the broad 11-party coalition that supports Rousseff. Emboldened, deputies are venting their frustration with Rousseff’s top-down managerial style by refusing to toe the line and this week the main government ally, the Partido do Movimento Democrático Brasileiro (PMDB), handed the executive a humiliating defeat in congress over controversial reforms that weaken the country’s forestry code.
This is a major test for the government and such is the concern about the potential fallout that Rousseff’s predecessor and mentor, Lula da Silva (2002-2010) has been deploying his crisis management skills behind the scenes. Lula began the week in Brasília with senators from the ruling left-wing Partido dos Trabalhadores (PT) to discuss strategies in defence of the troubled Palocci. He then met 10 leaders from allied parties at the home of the senate president, José Sarney (of the PMDB), a meeting also attended by Vice-President and senior PMDB baron Michel Temer. Such is the allied discontent that Lula later warned Rousseff and Palocci that if the presidency does not engage more actively with congress the coalition risks rupture – the PMDB is already threatening to lend its support to opposition calls for a parliamentary committee of enquiry into Palocci.
The coalition allies complain about the lack of communications with the Planalto palace, noting that “things were different” with Lula, who moves readily among political circles. As president, Lula made a point of regular informal lunches with his allies to take the political temperature and oil the wheels of the coalition. Rousseff, in contrast, is uncomfortable in that back-slapping atmosphere, preferring to leave it to Palocci. His departure would clearly be a major blow to her administration. Not only is Palocci an invaluable political fixer he is also well respected within the business community as the voice of economic orthodoxy in the ruling PT.
Rousseff, who is also battling to recover from a recent bout of pneumonia, has stood firmly by her number two, alleging an orchestrated campaign by his opponents to undermine him. However, Palocci’s survival may now depend on Rousseff’s ability to get her hands dirty and negotiate with, rather than dictate to, her political allies.
A shot across the bow Late on 24 May the federal lower house approved by 410 votes in favour to 63 against, with one abstention, an important overhaul of the forestry code, effectively relaxing longstanding legislation designed to protect the Amazon forest and curb deforestation. The reform is a victory for the powerful ruralistas (agri lobby), who secured the backing not only of the opposition Partido da Social Democracia Brasileira (PSDB) but also the PMDB. Indeed, thanks to a last minute amendment by the PMDB, the final bill assigns to states environmental legislative and administrative powers that were previously the exclusive remit of the federal government.
That the PMDB base backed the ruralistas in defiance of the government is an ominous sign. Until now, the PMDB leadership, led by Vice-President Michel Temer, had managed to maintain party discipline, despite grumblings over Rousseff’s “authoritarianism”. Now that the PMDB genie is out of the bottle, it may be difficult to put it back.



The government will now attempt to water down the bill overhauling the forestry code in the senate. Failing that, President Rousseff has made clear that she will veto sections of the final law, including a controversial legal and financial amnesty for those that deforested illegally prior to 22 July 2008.

Latin American Weekly Report, 26 May 2011