Brazil’s president is vowing to remain in power despite a damaging new corruption allegation, but Latin America’s largest nation could very well be rudderless as long as he stays at the head of what one analyst is calling a “walking dead administration.”
President Michel Temer struck a defiant note Thursday, promising he would be found innocent in a Supreme Court investigation into allegations that he endorsed a scheme to pay hush money to a former influential legislator who is now in prison for corruption.
But Brazil and his administration will not shrug off the incendiary allegations so easily. Stock prices and Brazil’s currency were pummeled as investors digested the allegation first reported by the newspaper Globo late Wednesday. Two small allied parties pulled their support for his agenda in Congress and one Cabinet minister resigned amid talk that others might follow.
As long as Temer stays in power, the political turmoil could leave the country adrift, just as it needs a strong hand to pull its economy out of a deep and protracted recession. Bills making their way through Congress that would loosen labor laws and shore up the pension system — two measures Temer has said are vital to restoring investor confidence in Brazil — have now stalled.
“If Temer doesn’t fall, he will lead a walking dead administration,” said Claudio Couto, a political science professor at Fundacao Getulio Vargas, a Sao Paulo-based university and think tank.
Globo reported that Temer was recorded endorsing payments to former House of…