Brazilian president Dilma Rousseff has been fighting for political survival as her country struggles with a deep recession.
And although in recent months calls to impeach the president had been losing steam, several recent developments have once again shaken things up.
In a recent note to clients, Barclays' Bruno Rovai argued that Rousseff's chances of impeachment were once again on the rise.
"President Rousseff is becoming more isolated as her support base decreases, therefore, impeachment risks increase," he wrote in the note.
Specifically, Rovai pointed to three different sectors of her support that have weakened in the past week:
- Rousseff's campaign manager was arrested last week. The Federal Police arrested the architect of Rousseff's two campaigns, João Santana, (and his wife) over allegations of illegal payments received in both parties' offshore accounts. Rovai argues that this damages her public image and can make it harder for her to get support in the congress against impeachment.
- Rousseff's own party expressed strong criticism over measures implemented by her government at an event celebrating the party's 36th anniversary. The party "is setting the ground to move away from President Rousseff by disagreeing with her economic agenda," wrote Rovai. At the same time the largest party in Congress is putting together an agenda to confront Rousseff, which will further isolate her.
- Social movements have started showing signs of not approving of her agenda. Social movements in aggregate were one of the only things that Rousseff could count on— but now they've started to waver. If their discontentment continues to increase, she might be looking at much larger protests against her government, which will make her lose the legitimacy of her votes.
Notably, there are protests scheduled for March 13, which will reflect how much support Rousseff might have forfeited.
"Although there is a low likelihood to see left social movements combined with votes from the opposition protesting together, there is a higher probability that the protests increase to the point that crystallizes the loss of popular support, challenging Congress members to stay with the popular vote, again leaving President Rousseff much more isolated," argued Rovai in the note.
Rousseff's approval rating remains near historic lows, as just 11% of respondents across the country said that her performance was "good or excellent," down from December's 12%, according to the Wall Street Journal.
Meanwhile, 64% of respondents rated her as "bad or terrible."
"All together, this new set of information increases the probabilities that the president will be impeached this year," writes Rovai.
"An isolated strained president becomes very susceptible to an impeachment, and the proof of pudding will be in the street protests."
Back in early January, Eurasia Group's president Ian Bremmer and chairman Cliff Kupchan singled out Brazil as one of their top risks going into 2016.
At the time they believed that Rousseff was still likely to survive impeachment. However, if she were kicked out, they argued, the new administration would not fare much better.
After an initial boost of optimism, the new administration would struggle as current vice president Michel Temer's "liabilities would outweigh the upsides of his taking office" in Eurasia's view.
So even though she is not exactly a favorite in Brazil right now, her exit would not necessarily be a good thing.
In any case, the bottom line is that things are looking dark for Rousseff.
Again, as Rovai wrote (emphasis ours):
President Rousseff has many goals to accomplish, many stakeholders to please, and no resources with which to achieve this. The president’s lack of political capital has reached alarming levels, and we believe that the longer the impeachment process lies in the House of Representatives, the higher the likelihood that it will be approved. Meanwhile, any fiscal measures (or any material measure for the sake of argument) will demand much more from the government than it can offer at this juncture. We continue to see President Rousseff fighting to regain governance and credibility with her support base, while trying to pass unpopular fiscal measures to try to contain the fiscal deterioration that threatens the sustainability of the debt ratios of the country. These two battles are very hard to win separately, but fighting them together is almost impossible.
Doesn't sound good.
