While Brazil’s President Michel Temer has claimed that he won’t resign despite the current political crisis, markets are already pondering on his possible successor. Incumbent Finance Minister Henrique Mereilles is the latest suggestion. The financial markets favor Mereilles as a candidate, largely due to his loyalty to Temer’s agenda.
Mereilles was a staunch advocate for Temer’s controversial and unpopular reforms. The minister supported the labor and social security reforms, which the financial markets also looked favorably upon.
One argument is that the reforms wouldn’t need to be abandoned should Temer be forced to step down as president. With Mereilles in the seat, Brazil could push ahead with its current conservative agenda and continue with its economic reforms.
Mereilles may be loyal to Temer’s agenda, but he is by no means loyal to the president. In an interview with radio CBN yesterday, Mereilles said there is no such thing as ‘unconditional loyalty’ to Temer.
The politician makes no secret that Brazil’s highest seat of power were always part of his ambition. Mereilles famously wanted to be Dilma’s running mate but was denied the opportunity by his party, the PMDB.
In addition to market support, Mereilles has the potential to keep Brazil’s government functioning. Politicians in Brazil’s left and right both like him, creating potential for political progress.
But there is also a conflict of interest: in 2012, Mereilles took control of J&F’s advisory board, following an invitation from Joesley Batista. The J&F Group had a total estimated revenue of R$65 billion in 2012 and has 7 companies, including JBS.
Nelson Jobim: another market-friendly alternative
Nelson Jobim is another suggestion as Temer’s replacement. A former deputy and minister in PSDB and PT governments, Jobim is well-respected by the judiciary and the Armed Forces. It is likely that he would be able to gain votes from Temer’s support base.
But popularity doesn’t mean Jobim’s record is clean. A member and associate of bank BTG Pactual, Jobim has some shady associates. André Esteves, owner of the bank, was arrested for trying to persuade the government to bribe Nestor Cerveró.
Meanwhile, President Temer faces charges of passive corruption, which means using his public position for illicit gains. Prosecutor Rodrigo Janot has also accused Temer of corruption and obstruction of justice. He has refused to step down, despite widespread calls to do so, and faces a possible impeachment.