Crisis-hit Rousseff under fire for 'outsourcing' government roles

The atmosphere at Sao Paulo's mass political protests against President Dilma Rousseff's government was carnival-like. Demonstrators on Avenida Paulista, the Brazilian city's main thoroughfare, sipped beers and listened to speeches and music blaring from trucks at last Sunday's rallies.

But Abraao Alberto and his companions from the Nationalist Democratic Union, a rightwing political organisation, stood out. Clad in military fatigues, they hoisted placards supporting heroes of the right such as "Grandpa Shrapnel", alias Carlos Alberto Augusto.

Their homage to the former agent for Brazil's secret police under the previous military dictatorship stems from their longing for the perceived order of army rule, which lasted for two decades until 1984.

"I had a great education during the military period. I could live in peace, I could sleep with my windows open, I can't do that any more," Mr Alberto said, lamenting what he sees as the rise of political corruption and street crime since the country returned to democracy.

Far-right protesters such as Mr Alberto might occupy the fringes of contemporary Brazilian politics, but they have one thing in common with the wider population - they support an impeachment of Ms Rousseff.

The president`s popularity is suffering amid a flagging economy and a corruption scandal at state-controlled oil company Petrobras that is undermining her ruling Workers' Party (PT).

In one of the most dramatic moments yet in the scandal, in which former Petrobras officials are accused of conniving with politicians to cream off kickbacks from the oil company, PT treasurer Joao Vaccari Neto was detained by federal police over the scam on Tuesday as he was about to go for his morning run.

"Three in every four Brazilians support the protests against the government," said poll company Datafolha. "A majority of Brazilians [63 per cent] believe the national Congress should open an impeachment process to remove Dilma Rousseff."

But while the Petrobras scandal will continue to make the headlines, there are signs that on other fronts, an atmosphere of crisis that has plagued the first 100 days since the start of Ms Rousseff's second four-year term in January may be easing slightly.

On the political front, she began the term in open conflict with Congress, with her main coalition partner, the centrist PMDB, demanding more power after trumping the PT in last year's elections to become the dominant party in the lower house.

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But this month, the president held out an olive branch to her coalition partners by handing responsibility for political co-ordination between the presidentialpalace and Congress to Michel Temer, her PMDB vice-president.

The move sparked opposition criticism that the president was "outsourcing" politics to the PMDB. "Today, President Dilma is no longer the one who governs Brazil," said Aecio Neves, leader of the centre-right PSDB party.

"It's a sign of the weakness of Ms Rousseff," Joao Augusto de Castro Neves, Eurasia Group analyst, said.

Opposition claims that the president is outsourcing the most important functions of government have been boosted by the rising profile of Joaquim Levy, the new finance minister.

A fiscal hawk brought in from the private sector to replace PT stalwart Guido Mantega, the Chicago-trained economist is unwinding the fiscal largesse and statist policies that characterised Ms Rousseff's first term.

Mr Levy is seen in markets as autonomous and as Brazil's best hope of restoring its budget balance. Most analysts believe any attempt by Ms Rousseff to dictate policies to him could result in his resignation and lead to a run for the exits by investors. "He is the canary in the coal mine," said Alexandre de Azara, chief economist of Modal Asset Management in Sao Paulo. "He cannot be taken away without creating a [market] collapse."

Mr Levy also appears able to negotiate with the PMDB, which broadly supports the fiscal adjustment. "I think Levy is going to be strengthened by Temer`s new role," said Paulo Sotero, director of the Brazil Institute at the Woodrow Wilson International Centre for Scholars.

The perceived outsourcing is reducing Ms Rousseff`s own room for manoeuvre only three months into her second term, although the PT retains control over foreign policy. A meeting with Barack Obama, US president, is set to be held in Washington at the end of June.

But it will also leave her more time to deal with Petrobras and the protest movement. While Sunday`s demonstrations were not as big as a month earlier, when more than 1m turned out across Brazil, public indignation over the Petrobras scandal is not going away.

"We want order and progress," said Mr Alberto. "We don`t want corruption, banditry and organised crime."

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