SÃO PAULO--Brazilian President Dilma Rousseff named 13 new
members to her cabinet Tuesday, juggling positions to reward allies
while maneuvering a politician tainted by a growing corruption
scandal at state-controlled Petrobras out of her government.
Eduardo Braga, a senator and former governor from Brazil's
Amazonas state, will head the powerful energy and mining ministry.
He replaces Edison Lobão, who a government witness has linked to an
alleged kickback and bribery scheme at Petrobras, accusations that
Mr. Lobão has repeatedly denied.
Both Mr. Braga and Mr. Lobão are members of the Brazilian
Democratic Movement Party (PMDB), one of Brazil's largest parties
and an ally of Ms. Rousseff's Workers" Party (PT), providing her
government with vital support for passing legislation.
Ms. Rousseff's cabinet has 39 members, more than any other of
the world's 10 biggest economies. The PT is the biggest party in
the lower house of Congress and the second largest in the Senate,
but falls far short of a majority in both. That means Ms. Rousseff
needs to forge alliances with other political parties and doling
out ministry positions is a proven method for gaining support.
The president "is facing a complicated political agenda, with
slow economic growth and charges of corruption at Petrobras," said
Rafael Cortez, a political analyst at the Tendencias consultancy in
São Paulo. "Dilma needs to improve her relations with her allies"
to get bills passed.
The PMDB will also keep the agriculture ministry. Ms. Rousseff
is replacing Neri Geller, who held the minister job for only nine
months, with Katia Abreu, a farmer and senator from the rural state
of Tocantins and the president of the National Confederation of
Agriculture and Livestock.
Ms. Rousseff's other appointments include Jacques Wagner,
currently the governor of Bahia state, as new defense minister,
Congressman Edinho Araújo as secretary of ports. In addition, Aldo
Rebelo will leave his job as sports minister to take over at the
science and technology ministry.
Ms. Rousseff's task of naming new ministers has been complicated
by the scandal at Petrobras, Brazil's biggest company by sales.
Federal investigators allege that at least two former executives
and some of the country's biggest construction companies were
involved in a yearslong kickback scheme in which bribes were paid
for Petrobras contracts, and that some of the bribe money went to
political parties.
One of the former Petrobras executives, who is cooperating with
investigators, claimed several prominent politicians were involved
in the scheme, including Mr. Lobão and various other members of
allied parties who might otherwise have been potential
ministers.
Mr. Lobão has denied any wrongdoing and said he needs to hear
any specific charges before he can respond to them.
In addition to the Petrobras scandal, Mr. Braga, the new energy
minister, will face an electricity sector that is in disarray.
Brazil is suffering a severe drought that experts say could
threaten hydroelectric dams that supply most of the nation's power.
Utilities and investors were shaken after the government
unilaterally decided to change the terms of contracts governing
generation concessions.
"The electrical sector...suffered a lot because of the
interventions of the federal government," said Joao Pedro Brugger,
who manages 500 million reais ($189 million) at Leme Investimentos
in Florianopolis.
Mr. Braga, 54, has little experience in the energy sector. He
started his political career at the age of 21 when he was elected
to the city council of Manaus, the capital of Amazonas state. He
holds an engineering degree, but has spent most of his adult life
holding elected office, with a break of a few years to run a
network of Renault car dealerships in four states in northern
Brazil.
"It's hard to say if this nomination is good or bad," said Mr.
Brugger, the investment manager. "But it would be hard for him to
be worse than Edison Lobão."
The announcement of the new ministers is the second phase of Ms.
Rousseff's renovation of her cabinet for her second term, starting
Jan. 1.
At the end of November, Ms. Rousseff announced her new economic
team, composed of former treasury head Joaquim Levy as the new
finance minister; Nelson Barbosa, who will take on the job of
planning and budget minister; and with Alexandre Tombini staying on
as president of the central bank after four years in the job.
Those first appointments won cautious approval from investors
and economists, who said the economy team has the correct
background to begin to reverse some of the old team's errors.
Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com and
Jeffrey T. Lewis at jeffrey.lewis@wsj.com
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