More Turbulence in Brazil as Court Debates 2014 Election Result

(Bloomberg) -- With eighteen months to go until Brazil's next election, the country's top electoral court is about to debate whether to scrap the result of the last one.

On Tuesday the seven-member court, known as the TSE, will begin deliberations about whether to nullify the results of the 2014 presidential election on the grounds that the winners allegedly received illegal campaign financing. The court could invalidate Dilma Rousseff and Michel Temer's election victory, as president and vice-president respectively, with Rousseff losing her political rights and Temer losing the presidency.

The chances of the court deciding to throw the country's leadership into chaos again less than a year after a traumatic impeachment process appear slim and Temer himself appears unconcerned. On hearing the news the case would begin on Tuesday he said, "They've set a date? Great." The political risk consultancy Eurasia Group puts the odds of the president being forced out of office by the TSE at 20 percent. But the court case is yet another headache for a government with dreadful approval ratings as it tries to push through unpopular reforms. Further questions about Temer's legitimacy come at a bad time for the government, as it faces increasing opposition to its reform agenda in Congress.

A swift ruling looks unlikely but Temer's confidence is probably well-founded, according to Carlos Pio, a professor of international political economy at the University of Brasilia. He believes that the proximity of the next elections will weigh on the judges' minds. "The likelihood is of a ruling in his favor, and he knows that," he said.

Judge Herman Benjamin, the rapporteur on the case, is expected to recommend that the court annuls Rousseff and Temer's victory but it is unclear how many of his fellow judges agree. The court could opt for a softer punishment or even decide to split the ticket, holding Rousseff accountable for the illegality and exonerating Temer. Gilmar Mendes, president of the TSE, said that he would not comment on the case before the trial at an event in Sao Paulo on Monday evening.

Adding to the uncertainty, two of the court members are due to retire imminently. They will be replaced by Temer appointees but may cast their votes before stepping down, potentially tipping the balance against him.

If the court does nullify the 2014 ticket, Brazil's constitution states that Congress must elect a new president within 30 days. However, Temer has made it clear that he would appeal any adverse ruling. Court proceedings could drag on until the next election, due in October 2018.

Former president Fernando Henrique Cardoso said a ruling that resulted in Congress electing another president would cause "more confusion" in an interview with CBN radio on Monday morning.

"Brazil has been on the floor for a while, but it is starting to sit up," he said. "Taking too much time over a judgment that puts the current situation at risk has negative consequences."

Even a favorable decision by the court is unlikely to alleviate the pressure on the government. "I don't think it is going to fix Brazil," Pio said. "But it will give a longer time horizon to the president."

To contact the reporter on this story: Bruce Douglas in Brasilia Newsroom at bdouglas24@bloomberg.net.

To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, Robert Jameson, Raymond Colitt