BRASILIA The impeachment process against Brazilian President Dilma Rousseff was annulled by the acting speaker of the lower house of Congress on Monday, but the stunning decision appeared likely to provide only a temporary reprieve for the leftist leader.
Just days before the Senate was expected to put Rousseff on trial, Waldir Maranhao said there were procedural flaws in a lower house vote on April 17 that approved the impeachment charges and the chamber would need to vote again.
His decision, which caught off-guard investors betting on a more business-friendly government taking power imminently, roiled Brazilian financial markets and plunged the impeachment process into confusion. However, markets quickly pared their losses as investors bet the move would delay rather than prevent Rousseff's removal from office.
Hours after Maranhao's decision was made public, an opposition party appealed to the Supreme Court to overturn it. Meanwhile, Senator Aecio Neves, an opposition leader who lost the 2014 election to Rousseff, called on the Senate to stick to its plan to vote this week on the president's trial.
Antonio Queiroz, head of the non-partisan Congressional research department, said Maranhao's move would not permanently derail the impeachment proceedings against Rousseff, who opponents accuse of breaking budget laws.
"It will just delay things," he told Reuters. "The Supreme Court will most likely overturn this decision by the acting speaker, or the plenary of the lower house will."
However, the development further complicated a political crisis that is fueLling Brazil's worst recession in decades.
An ongoing investigation into a massive kickback scheme at state-run oil company Petrobras (PETR4.SA) has ensnared dozens of top politicians and seen CEOs from Brazil's biggest construction firms jailed for paying billions in bribes in return for bloated building contracts.
Last week, Rousseff was for the first time caught up in the Petrobras case, when the prosecutor general requested the Supreme Court's permission to investigate her for allegedly obstructing the investigation.
But Rousseff has steadfastly denied any wrongdoing in the Petrobras case or having committed any crime that would warrant her impeachment. She has vowed from the beginning of the impeachment process to fight it by all means legally possible. It was not clear whether she had any idea that Monday's stunning development was in the works.
The bombshell came from a man who took over as acting speaker just last week when his predecessor Eduardo Cunha - who launched the impeachment process - was removed by the Supreme Court on corruption charges. Maranhao had broken with his center-right Progressive Party and voted against impeachment in last month's lower house vote.
After approval by the lower house, the impeachment process was passed to the Senate, where a Senate committee recommended on Friday that the president be put on trial by the full chamber for breaking budget laws.
But in a statement on Monday, Maranhao said the impeachment process should be returned by the Senate so that the lower house can vote again. Citing irregularities such as party leaders instructing their members which way to vote, he said a new vote would take place within five sessions after the case was returned by the Senate.
Until Monday's move, it had been widely expected that the full Senate would on Wednesday vote to place Rousseff on trial, which would result in her immediate suspension for up to six months. In that case, Vice President Michel Temer would step in as interim president, remaining in the post until elections in 2018 if she were found guilty and removed permanently.
MAY BE 'JUST A DELAY'
Win Thin, global head of emerging market currency strategy at Brown Brothers Harriman in New York, said he believed Maranhao's surprise decision would not derail impeachment.
"It's just a delay," he said. "There's still plenty of votes in both houses to impeach, but it just supports what I've been warning for the last few weeks: which is that this process is not going to be fast and easy."
Rousseff, speaking at a event in the presidential palace, appeared surprised at the news of Maranhao's move, which came as she was speaking. The crowd broke out into wild cheers, but Rousseff cautioned them.
"It's not official and I do not know the consequences, so let's be cautious," she said to supporters.
Brazil's currency weakened as much as 5 percent and stocks tumbled after the announcement, before recovering much of their losses. Petrobras shares dropped as much as 12 percent, but were last trading down 6 percent.
The decision sparked rare signs of optimism in government ranks after weeks of setbacks.
Senator Humberto Costa, from Rousseff's ruling Workers Party, expressed optimism that her presidency would be saved, saying: "this is a first step towards getting the impeachment annulled permanently."
(Additional reporting by Maria Carolina Marcello; Writing by Brad Brooks; Editing by Daniel Flynn and Frances Kerry)
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Updated Date: May 10, 2016 01:15 AM