Petrobras scandal pushes Rousseff coalition to the brink
By Anthony Boadle
BRASILIA, March 11 (Reuters) - President Dilma Rousseff can no longer count on a key ally in her ruling coalition, complicating efforts to stave off what could be the roughest patch for Brazil's economy in a quarter-century.
Leaders of the Brazilian Democratic Movement Party (PMDB), the biggest party in Rousseff's coalition, blame her for their inclusion in a probe of politicians allegedly involved in a massive corruption scheme at state-run oil company Petrobras.
PMDB legislators told Reuters they expect the dispute to get even messier in coming weeks, making them less likely to support Rousseff's efforts to cut Brazil's budget deficit and restore investor confidence in the struggling economy.
"Their passage will be tough. They are very controversial measures that affect the rights of workers," Leonardo Picciani, the PMDB leader in the Chamber of Deputies, said of two initiatives that would save the government about 18 billion reais ($5.74 billion) a year by tightening access to pension and unemployment benefits.
"The government will have to convince us they are really needed," Picciani told Reuters.
While few expect the PMDB to formally break with Rousseff's leftist Workers' Party in coming months, such open resistance to her legislative proposals adds to her long list of political and economic problems.
The economy is expected to shrink at least 0.6 percent this year, inflation is running well above 7 percent, a widespread drought has raised the possibility of water and power rationing, and public anger is rising over the corruption scandal at Petroleo Brasileiro SA, as Petrobras is formally known.
The PMDB, which has its roots in Brazil's return to democracy in the 1980s but no clear ideology, holds more seats in Congress than any other party, including a quarter of the Senate. Continuación...