Tag Archives: opposition

Turkish opposition head says will step up struggle as march nears end

Turkey's main opposition Republican People's Party (CHP) leader Kemal Kilicdaroglu walks during the 23rd day of a protest, dubbed "justice march", against the detention of the party's lawmaker Enis Berberoglu, near Tuzla in Istanbul province, Turkey July 7, 2017. REUTERS/Osman Orsal

By Gulsen Solaker

TUZLA, Turkey (Reuters) – Turkey’s main opposition leader said on Friday his three-week “justice march” from Ankara to Istanbul had helped Turks “cast off a shirt of fear” under emergency rule, and vowed to stiffen his party’s challenge to the government once the protest ends.

Kemal Kilicdaroglu, head of the main opposition Republican People’s Party (CHP), has attracted tens of thousands of people to his march since setting off on the 450 km (280 mile) journey to protest a government crackdown since last year’s failed coup.

“Thousands of public servants, teachers, journalists were jailed or sacked and nobody could speak up. However, this march was done to take off this shirt of fear, for justice and I am pleased because we reached our goal,” Kilicdaroglu told Reuters during a lunch break on the outer edges of Istanbul.

“We will fight for (justice) inside and outside parliament,” said the 68-year-old politician, wearing a white shirt and a baseball cap with the word ‘Justice’ printed on it.

President Tayyip Erdogan accuses the protesters of “acting together with terrorist groups”, referring to Kurdish militants and followers of a U.S.-based cleric who Ankara says was behind last year’s coup.

The government has defended the crackdown, saying it was a measured response to the threats which Turkey faced from the July 15, 2016 coup attempt, and turmoil across its borders with Syria and Iraq.

On Friday the number of protesters accompanying Kilicdaroglu reached some 50,000. A large rally is expected on Sunday in Istanbul, supported by parliament’s third largest party, the pro-Kurdish HDP.

“The battle in parliament will most likely be tougher in the coming days because they want to limit our right to speak by changing the internal bylaws and it is impossible for us to tolerate this,” Kilicdaroglu said.

“Therefore this battle will get tougher, and it may even spill over to the streets.”

(Writing by Ece Toksabay; Editing by Dominic Evans)

Venezuela opposition challenges Maduro with unofficial referendum

Venezuelan opposition leader and Governor of Miranda state Henrique Capriles attends a meeting of the Venezuelan coalition of opposition parties (MUD) in Caracas, Venezuela July 3, 2017. REUTERS/Carlos Garcia Rawlins

By Diego Oré and Eyanir Chinea

CARACAS (Reuters) – President Nicolas Maduro’s foes announced plans on Monday for an unofficial referendum to let Venezuelans have their say on his plan to rewrite the constitution and the opposition’s alternative push for an election to replace him.

The opposition, starting a fourth month of street protests against the socialist government it decries as a dictatorship, will organize the symbolic vote for July 16 as part of its strategy to delegitimize the unpopular Maduro.

Venezuelans will also be asked their view on the military’s responsibility for “recovering constitutional order” and the formation of a new “national unity” government, the Democratic Unity coalition announced.

“Let the people decide!” said Julio Borges, the president of the opposition-led National Assembly, confirming what two senior opposition sources told Reuters earlier on Monday.

The opposition’s planned vote, likely to be dismissed by the government, would be two weeks ahead of a planned July 30 vote proposed by Maduro for a Constituent Assembly with powers to reform the constitution and supersede other institutions.

“The government is trying to formalize dictatorship,” said opposition leader Henrique Capriles, warning the South American OPEC nation was approaching “zero hour”.

According to a recent survey by pollster Datanalisis, seven in 10 Venezuelans are opposed to rewriting the constitution, which was reformed by late leader Hugo Chavez in 1999.

Maduro, 54, Chavez’s unpopular successor, says the assembly is the only way to bring peace to Venezuela after the deaths of at least 84 people in and around anti-government unrest since the start of April.

“The people have a right to vote and the people will vote on July 30, rain or shine!” Maduro said to cheers during a speech at an open-air event on Monday with candidates to the new assembly, during which he also prayed and danced.

Opponents say Maduro’s plan is a ruse to consolidate the ruling Socialist Party’s grip on power and avoid a conventional free election that opinion polls show he would lose.

Critics also accuse the government of threatening people with layoffs or loss of state-provided homes if they do not vote. Maduro on Monday urged state workers to participate, saying for instance that every single employee of state oil company PDVSA should cast a ballot.

‘DARKNESS’ NOT FOREVER

The next presidential vote is due by the end of 2018, but protesters have been demanding it be brought forward, even as Maduro’s opponents worry about how free and fair such a vote would be.

The two highest-profile potential opposition candidates for a presidential election are Capriles, who has been barred from holding office, and Leopoldo Lopez, who is in jail.

Opposition protesters also want solutions to a crushing economic crisis, freedom for hundreds of jailed activists, and independence for the National Assembly.

Maduro, a former foreign minister who was narrowly elected in 2013 after Chavez’s death from cancer, says protesting opponents are seeking a coup with U.S. support.

His allies say that a new Constituent Assembly would annul the existing legislature and would also remove chief state prosecutor Luisa Ortega, who has split with the socialists during the crisis and become a thorn in their side.

Officials have turned on Ortega and are petitioning the Supreme Court to remove her. On Monday, the comptroller’s office announced a national audit of state prosecutors’ offices.

Ortega’s office described it as “revenge for the current institutional crisis” and accused comptroller officials of “abuses” in trying to enter buildings without prior notice.

“The darkness does not last forever nor does it extend in its totality,” Ortega said in an address to the National Assembly. “We must make big efforts to reactivate the institutional and electoral paths.”

(Additional reporting by Alexandra Ulmer and Andreina Aponte; Writing by Andrew Cawthorne and Alexandra Ulmer; Editing by Frances Kerry and Mary Milliken)

Turkey’s opposition leader launches court challenge as he marches to Istanbul

Supporters of Turkey's main opposition Republican People's Party (CHP) leader Kemal Kilicdaroglu walk with a giant Turkish flag on the 19th day of a protest, dubbed "justice march", against the detention of the party's lawmaker Enis Berberoglu, near Izmit, Turkey, July 3, 2017. REUTERS/Umit Bektas

By Daren Butler

ISTANBUL (Reuters) – Turkey’s main opposition leader launched a European court appeal on Tuesday over an April vote that granted President Tayyip Erdogan sweeping powers, stepping up his challenge to the government as he led a 425 km (265 mile) protest march.

Erdogan accuses the protesters, marching from Ankara to Istanbul, of “acting together with terrorist groups”, referring to Kurdish militants and followers of a U.S.-based cleric who Ankara says was behind last year’s coup.

Kemal Kilicdaroglu, head of the main opposition Republican People’s Party (CHP), hit back on Tuesday, defending his “justice march” and accusing the government of creating a one-party state in the wake of the failed putsch on July 15.

On the 20th day of his march, triggered by the jailing of a CHP deputy on spying charges, Kilicdaroglu signed an appeal to the European Court of Human Rights against the election board’s decision to accept unstamped ballots in the April 16 referendum.

“Turkey has rapidly turned into a (one-)party state. Pretty much all state institutions have become branches of a political party,” he told reporters. “This is causing profound harm to our democratic, parliamentary system.”

Kilicdaroglu, 68, wearing a white shirt and a baseball cap with the word ‘justice’ printed on it, then set out on the latest leg of the march from the city of Izmit, around 100 km (60 miles) along the coast to the east of central Istanbul.

The protest has gained momentum as it passes through northwest Turkey’s countryside and representatives of the pro-Kurdish HDP, parliament’s third largest party, joined the march on Monday near the jail of its former co-leader Figen Yuksekdag.

There are deep divisions among opposition parties but Yuksekdag, stripped of her parliamentary status in February, issued a statement from her cell on Monday calling for them to put those differences aside.

“We must set up the shattered scales of justice again and fight for this together,” she wrote, saying justice had hit “rock bottom” with the jailing of 11 HDP lawmakers and around 100 mayors.

The party rejects charges of ties to the Kurdistan Workers Party (PKK) militant group, designated a terrorist group by Ankara and its Western allies, which launched an insurgency in 1984 in which more than 40,000 people have been killed.

“TERROR GROUP” ACCUSATIONS

As the protesters advance, Erdogan has stepped up his attacks on the march, saying the CHP was longer acting as a political opposition.

“We can see that they have reached the point of acting together with terror groups and those powers which provoke them against our country,” he said in a speech to officials from his ruling AK Party on Saturday.

“The path which you are taking is the one of Qandil, the one of Pennsylvania,” he said, referring to the northern Iraqi mountains where the PKK is based and the U.S. state where Erdogan’s ally-turned-foe Fethullah Gulen lives.

Kilicdaroglu launched his march in Ankara on June 15 after Enis Berberoglu was jailed for 25 years for espionage, becoming the first lawmaker from the party imprisoned in a government crackdown in the wake of the attempted coup.

Since the purge began, more than 50,000 people have been jailed pending trial, 150,000 have been suspended or dismissed from their jobs. Ankara has also shut down 130 media outlets and some 160 journalists are in prison, according to union data.

In April a referendum was held on constitutional changes that sharply widened Erdogan’s presidential authority and the proposals won 51.4 percent approval in a vote, which has triggered opposition challenges including the latest CHP move.

Opposition parties have said the poll was deeply flawed and European election observers said the decision to allow unstamped ballot papers to be counted had removed a main safeguard against voting fraud.

(Additional reporting by Gulsen Solaker; Writing by Tuvan Gumrukcu and Daren Butler; Editing by David Dolan and Richard Balmforth)

Mexico opposition officials targeted by government spying: report

A Mexican flag is seen over the city of Tijuana, Mexico from San Ysidro, a district of San Diego, California, U.S., April 21, 2017. REUTERS/Mike Blake

By Michael O’Boyle

MEXICO CITY (Reuters) – Three senior opposition officials in Mexico, including a party leader, were targeted with spying software sold to governments to fight criminals and terrorists, according to a report by researchers at the University of Toronto.

The officials, who included conservative National Action Party (PAN) head Ricardo Anaya, received text messages linked to software known as Pegasus, which Israeli company NSO Group only sells to governments, the report by Citizen Lab said.

Mexican President Enrique Pena Nieto has asked the attorney general’s office to investigate charges that the government spied on private citizens, saying he wanted to get to the bottom of the accusations that he called “false.”

Last week, Citizen Lab, a group of researchers at the University of Toronto’s Munk School, identified 12 activists, human-rights lawyers and journalists who had also seen attempts to infect their phones with the powerful spyware.

John Scott-Railton, one of a group of researchers at Citizen Lab who have spent five years tracking the use of such spyware by governments against civilians, said Mexico’s case was notable for the number of targets and the intensity of efforts.

“What we have already provided, in our prior reporting, is strong circumstantial evidence implicating the government of Mexico,” he said.

Anaya, PAN Senator Roberto Gil Zuarth and Fernando Rodriguez, the PAN’s communications secretary, received infectious messages in June 2016, when lawmakers were discussing anti-corruption legislation, the report said.

The PAN officials did not immediately respond to a request for comment on the report, which was published on Citizen Lab’s website: http://bit.ly/2sl8UiH.

Pena Nieto’s office said in a statement that it “categorically refuses to allow any of its agencies to carry out surveillance or intervention of communications” except for fighting organized crime or national security threats, and only with court authorization.

Mexico’s government purchased about $80 million worth of spyware from NSO Group, according to a report by the New York Times last week.

The spying allegations have added to the problems facing Pena Nieto, whose popularity has waned due to rising violence and signs of widespread corruption.

Among the previous targets who Citizen Lab identified were Carmen Aristegui, a journalist who in 2014 helped reveal that Pena Nieto’s wife had acquired a house from a major government contractor, as well as lawyers representing the families of 43 students who disappeared and were apparently massacred in 2014.

At least nine of the people who were targeted filed charges with authorities on June 19. On June 22, Pena Nieto promised a thorough investigation and insisted that Mexico was a democracy that tolerated critical voices.

The president’s office said in its latest statement that any new allegations would be added to the current investigation.

(Editing by Lisa Von Ahn and Frank Jack Daniel)

Turkish opposition leader accuses ‘dictator’ Erdogan of judicial interference

FILE PHOTO: Turkey's main opposition Republican People's Party (CHP) leader Kemal Kilicdaroglu walks during a protest, dubbed "justice march", against the detention of his party's lawmaker Enis Berberoglu, on the outskirts of Ankara, Turkey June 17, 2017. REUTERS/Osman Orsal/File Photo

By Gulsen Solaker

CAMLIDERE, Turkey (Reuters) – Turkey’s main opposition leader accused President Tayyip Erdogan on Tuesday of meddling in the judiciary and called him a “dictator”, as he extended his cross-country protest march against the jailing of a parliamentary ally into a sixth day.

Kemal Kilicdaroglu, 68, head of the secularist Republican People’s Party (CHP), set out last week from the capital Ankara on a 425-km (265-mile) march to Istanbul after fellow party member Enis Berberoglu was jailed for 25 years on spying charges.

Berberoglu was the first CHP lawmaker to be imprisoned in a government crackdown that followed the abortive military coup in July 2016. More than 50,000 people have been jailed and more than 150,000 sacked or suspended from their jobs.

“I will always be on the side of justice. If someone tells me my rights are a favor, I will speak of his dictatorship. I say you (Erdogan) are a dictator,” Kilicdaroglu said in a speech after stopping at a national park near Camlidere, a rural area about 100 km outside of Ankara.

His comments were an apparent response to criticism from Erdogan over the weekend in which the president said justice should be sought in parliament and the CHP was only being allowed to march as a favor from the government.

Erdogan has likened the protesters who came out in support of Kilicdaroglu in Ankara and Istanbul to those who carried out the attempted coup, and said, “You should not be surprised if you receive an invitation from the judiciary.”

Kilicdaroglu responded on Tuesday by accusing the president of attempting to influence the judiciary. “If I prove that your government sends notices to the courts and gives them orders, will you resign your post like an honorable man?” he said.

Rights groups and government critics, including members of Kilicdaroglu’s CHP, say Turkey has been sliding toward authoritarianism since the coup bid. The government says its crackdown is necessary given vast security threats it is facing.

“I have been participating in the march since the beginning,” said one woman, 59, who declined to give her name. “We want justice for our children. This is the only reason we are marching.”

The slight, bespectacled Kilicdaroglu has so far clocked up a little more than 100 km, trudging along a highway westwards from Ankara and at times carrying a sign that says “Justice”.

CHP officials said he was eating only soup in the morning and over the course of the day the same food given to the roughly 1,000 other supporters marching with him.

He alternates between two pairs of trainers and at night massages his feet with salt to soothe the swelling. He sleeps overnight in a caravan specially prepared for him.

Kilicdaroglu, who aims to march to the jail where Berberoglu is being held, on Tuesday condemned the government’s purges, naming academics he said had been stripped of their posts for no reason and asking why journalists were being jailed.

Some 160 journalists are imprisoned in Turkey, according to the journalists union, and authorities have shut down 130 media outlets since the failed coup.

“Shoulder-to-shoulder against fascism,” and “justice, justice” chanted the crowd of around 1,000 on a hillside who listened to his speech. Some carried a banner that said: “You’ll never walk alone”.

The march is expected to last around 25 days, with participants walking some 16-20 km daily.

(Additional reporting by Tuvan Gumrukcu; Writing by Daren Butler)

Turkish PM urges opposition head to call off 20-day protest march

Supporters of Turkey's main opposition Republican People's Party (CHP) join party's leader Kemal Kilicdaroglu during the second day of a protest, dubbed a "justice march", against the detention of the CHP lawmaker Enis Berberoglu, in the outskirts of Ankara, Turkey June 16, 2017. REUTERS/Osman Orsal

By Daren Butler and Tuvan Gumrukcu

ISTANBUL/ANKARA (Reuters) – Turkey’s prime minister urged the head of the main opposition party on Friday to end a 425 kilometer (265 mile) march from Ankara to Istanbul in protest over the jailing of one of his lawmakers, saying justice “cannot be sought on the streets”.

Kemal Kilicdaroglu, 68, head of the secularist Republican People’s Party (CHP), set out on the march on Thursday after Enis Berberoglu was jailed for 25 years on spying charges. He was seen off by thousands of supporters and has garnered much attention in a country where government dominates the media.

Kilicdaroglu trudged along a highway outside Ankara on Friday dressed in dark slacks and blue shirt. Sunburned and wearing a cap, he carried a sign that said “Justice”.

Rights groups and government critics, including members of Kilicdaroglu’s CHP, say Turkey is sliding toward authoritarianism, citing a crackdown that followed last year’s failed coup that has seen more than 50,000 people jailed and 150,000 sacked or suspended from their jobs.

“I advise Kilicdaroglu to desist from this act,” Prime Minister Binali Yildirim told reporters. “Justice cannot be sought on the streets, Turkey is a state of law… Even if we don’t like a court’s ruling, we have to respect it.”

Berberoglu was accused of giving the Cumhuriyet newspaper a video it used as the basis of a May 2015 report that alleged trucks owned by the state intelligence service (MIT)were stopped and found to contain arms and ammunition headed for Syria.

Berberoglu is the first CHP lawmaker to be jailed in the government crackdown, which has seen eleven members of parliament from the pro-Kurdish opposition party jailed.

Kilicdaroglu has called the arrest “lawless” and motivated by the presidential palace, a reference to President Tayyip Erdogan. His march, planned to end at the Istanbul prison where Berberoglu is being held, is expected to take more than 20 days.

‘DEMOCRACY’

“We have been, and will be, calling and defending justice, justice, justice, and democracy, democracy, democracy,” he told reporters during his march. “No matter what they say.”

Turkey’s justice minister said Kilicdaroglu was trying to foment opposition to the judicial system.

“It is not possible to break the balance of the scales of justice by walking on roads,” Bekir Bozdag said.

Erdogan acknowledged the trucks belonged to the MIT but said they carried aid to ethnic Turkmens battling Syrian President Bashar al-Assad and Islamic State, and not weapons for rebels.

Erdogan accused Cumhuriyet’s editor-in-chief Can Dundar and Ankara bureau chief Erdem Gul of undermining Turkey’s reputation and vowed Dundar would “pay a heavy price”.

Last year, Dundar and Gul were sentenced to at least five years jail in a related case. The prosecutor is now seeking another 10 years for the two over the report on the trucks. Dundar is being tried in absentia after leaving Turkey. Gul remains in the country and free while his case is in process.

(Writing by David Dolan; editing by Ralph Boulton)

Venezuela opposition accuses security forces of robbing protesters

Venezuelan National Guard members take position while clashing with demonstrators rallying against Venezuela's President Nicolas Maduro in Caracas, Venezuela June 6, 2017. REUTERS/Marco Bello

By Eyanir Chinea

CARACAS (Reuters) – Venezuelan opposition leaders on Tuesday accused security forces of assaulting and robbing demonstrators who participate in protests against President Nicolas Maduro.

Two videos distributed over social networks appear to show police and troops taking protesters’ possessions during rallies on Monday, spurring outrage among many Venezuelans who already complain of excessive use of force during the two months of protests.

Opposition legislators on Tuesday filed a complaint with the state prosecutors’ office against the police and the National Guard in relation to the alleged robberies.

Reuters could not independently verify the content of the videos. The Information Ministry did not immediately respond to a request for comment.

“(Interior Minister) Nestor Reverol gives them license to steal,” said legislator Juan Matheus, adding that the complaint includes accusations of cruel and inhumane treatment.

One video shows four police officers surrounding a woman who is reeling from the effects of tear gas, with one of the officers pulling what appears to be a watch from her wrist.

In another, troops take a protester’s helmet and handbag before boarding motorcycles.

The government says it is fighting opposition “terrorist cells” trying to overthrow Maduro.

They say the effort is similar to a 2002 coup that briefly ousted late socialist leader Hugo Chavez, noting that protesters routinely disrupt traffic and damage public property while mounting barricades of burning debris.

Legislators said during Tuesday’s congressional session that they had registered 16 attacks against journalists on Monday alone, with some 300 during the two months of protest. Ruling Socialist Party legislators did not attend the congressional session.

Francisco Zambrano, a journalist with website Runrun.es which is critical of the government, said in a telephone interview that troops had blocked his way when he attempted to run from a cloud of tear gas fired to disperse demonstrators.

“I identified myself as a journalist, but they still opened my bag, threw my things to the ground and searched my pockets,” said Zambrano. “I thought it was a regular procedure until they took out my cell phone and one of them kept it.”

Information Minister Ernesto Villegas, asked on Monday about an incident involving troops throwing a television camera off a highway, said the National Guard as an institution was being unfairly held responsible for actions by individuals.

“I know and have worked with men and women of the National Guard, who are honorable and are out there risking their lives. They have also been the victim of aggression,” he said during a televised interview.

The protests have left some 65 people dead and thousands injured.

The government is preparing an election at the end of July for a constituent assembly that will have the power to rewrite the constitution and potential dissolve state institutions.

Maduro’s critics call it a power grab meant to keep him power indefinitely.

(Additional reporting by Andreina Aponte, Corina Pons and Deisy Buitrago; Editing by Lisa Shumaker)

Turkish authorities briefly detain spokesman for pro-Kurdish opposition: lawmaker

FILE PHOTO: Osman Baydemir, spokesman for the Peoples' Democratic Party (HDP), addresses members of parliament from his party during a meeting at the Turkish parliament in Ankara, Turkey April 18, 2017. Picture taken April 18, 2017. REUTERS/Umit Bektas/File Photo

ANKARA (Reuters) – Turkish authorities briefly detained the spokesman of the pro-Kurdish Peoples’ Democratic Party (HDP) for insulting police on Friday, a party lawmaker said, the latest detention of a high-profile politician from the pro-Kurdish opposition.

Osman Baydemir was released after a brief detention and testimony at the local prosecutor’s office, fellow lawmaker Meral Danis Bestas said.

Baydemir, 46, was elected to the Turkish parliament in 2014. In addition to representing the southeastern province of Sanliurfa, he also serves as the HDP’s national spokesman.

More than a dozen HDP lawmakers have been jailed, mostly due to alleged links with the Kurdistan Workers’ Party (PKK), which has waged an insurgency against Turkey for more than three decades. The HDP denies direct ties to the PKK, which is considered a terrorist organization by the United States, Turkey and the European Union.

The party’s co-leaders, Selahattin Demirtas and Figen Yuksekdag, have also been jailed, which handicapped its campaign against the April referendum to change the constitution and grant President Tayyip Erodgan sweeping new powers. Turks narrowly backed the constitutional change on April 16.

The HDP says as many as 5,000 of its members have been detained as part of a crackdown that followed last year’s failed coup, and which rights groups say targets dissent.

Prosecutors want Demirtas jailed for 142 years and Yuksekdag for up to 83 years on charges of terrorist group propaganda. Demirtas was sentenced in February for “insulting the Turkish people, the government and state institutions”.

A ceasefire between the Turkish state and the PKK broke down in July 2015 and the southeast subsequently saw some of the worst violence since the PKK launched its insurgency in 1984.

(Reporting by Ece Toksabay; Editing by David Dolan and Stephen Powell)

Venezuela opposition leaders wounded in anti-government march

Riot security forces release jets of water from their water cannon on demonstrators during riots at a march to the state Ombudsman's office in Caracas, Venezuela May 29, 2017. The banner reads "The favorite Ron". REUTERS/Carlos Garcia Rawlins

CARACAS (Reuters) – Two Venezuelan opposition leaders were wounded on Monday by security forces dispersing protests in the capital Caracas against President Nicolas Maduro, according to one of the leaders and an opposition legislator.

Maduro’s adversaries have for two months been blocking highways and setting up barricades in protests demanding he call early elections and address an increasingly severe economic crisis that has left millions struggling to get enough to eat.

Fifty-nine people have died in the often violent street melees, which Maduro calls an effort to overthrow his government.

“We were ambushed,” said two-time presidential candidate Henrique Capriles, who accompanied protesters in an effort to march to the headquarter of the government ombudsman’s office but was blocked by security forces.

“This government is capable of killing or burning anything,” Capriles said in a press conference.

He said 16 others were injured in the march, adding that he would file a complaint about the issue with state prosecutors.

Legislator Jose Olivares, who is a doctor, tweeted a picture of a bruise on Capriles’ face that he said was the result of a soldier hitting him with a helmet during the clashes.

During the same march, opposition deputy Carlos Paparoni was knocked to the ground by a water cannon sprayed from a truck, requiring that he receive stitches in his head, Olivares said.

The Information Ministry did not immediately respond to a request for comment.

(Reporting by Corina Pons, writing by Brian Ellsworth; Editing by Andrew Hay)

Hush money scandal jeopardizes Brazil’s feeble recovery

Demonstrators shout slogans during a protest against Brazil's President Michel Temer in Sao Paulo, Brazil, May 18, 2017. The sign reads "Out Temer and Elections now!." REUTERS/Nacho Doce

By Alonso Soto

BRASILIA (Reuters) – Hopes Latin America’s largest economy could emerge from its worst-ever recession this year were plunged into doubt on Thursday after President Michel Temer was shaken by allegations he condoned bribing a potential witness.

Fears the scandal could force Temer to step down or derail his ambitious reform agenda drove the biggest daily drop in the Brazilian real since 1999, while the benchmark Bovespa stock index closed 9 percent lower.

Government officials, lawmakers and economists told Reuters the crisis surrounding Temer, 76, could slow the pace of interest rate cuts and diminish consumer and business confidence enough to extend the recession into a third year.

Central Bank data this week suggested Brazil’s economy finally grew in the first three months of the year after eight consecutive quarters of contraction. A second month of job growth in April also fueled hopes of a recovery.

“The government went from its best moment to its worst moment in a matter of seconds,” said a Temer aide, who asked for anonymity to speak freely. “Even the opposition was betting on the approval of the reforms. Now we need to reestablish normalcy.”

Since he took office following the impeachment of leftist President Dilma Rousseff a year ago, Temer has regained investors’ confidence with measures to stop hemorrhaging in public finances. The government recorded a budget deficit of more than 10 percent of gross domestic product last year.

In a defiant address to the nation, Temer insisted that he would not resign and his ministers tried to ease market alarm by promising to push ahead with reforms.

Still, the specter of renewed political uncertainty raised doubts about the recovery and senior politicians said they could not press on with reforms in the midst of calls for Temer to step down.

Senator Ricardo Ferraço, a Temer ally in charge of drafting the government’s labor reform, said he had halted his work until the political crisis was resolved.

The lawmaker sponsoring the government’s flagship pension reform, Arthur Maia, also said there was no room to advance on the legislation in the midst of the turmoil created by the allegations against Temer.

“This certainly makes approval of the reforms more difficult,” Senator Valdir Raupp, a close ally to Temer, told Reuters. “Halting legislative work is the worst path to take. We have to see how things evolve in coming days.”

CAUTIOUS CENTRAL BANK

Government officials also said they worry the crisis could hamper investors’ interest in multi-million dollars auctions of oil rights, hydroelectric plants and infrastructure projects later this year. Temer was betting on those investments to add momentum to the recovery

Risks that labor and pension reforms could stall will likely prompt the central bank to slow the pace of interest rate cuts, limiting a source of relief for businesses battered by the recession, economists said.

The sharp depreciation of Brazil’s real could raise inflation expectations and cut short the easing cycle, economists said. The real closed down nearly 8 percent at 3.38 per US dollar.

“Although there is still room to cut rates, the central bank will be more cautious on the pace of easing,” said Alessandra Ribeiro, partner with consultancy Tendencias.

“The scandal compromises the recovery, which could be much weaker than originally expected or even fizzle away.”

Earlier this week, many market economists expected a more aggressive 125-basis-point rate cut at the bank’s next meeting on May 31. Investment banks expected the bank’s benchmark Selic rate to drop below 8 percent this year.

A surge in Brazilian interest rate futures shows traders are scaling back their bets for steeper rate cuts.

For Jose Carlos Martins, head of construction industry group CBIC, political paralysis would further undermine an economy struggling with more than 14 million unemployed.

“The chaos in the markets should serve as a warning for Congress to continue with the reforms,” Martins said. “Paralysis will send a terrible message to everyone.”

(Reporting by Alonso Soto; Editing by Andrew Hay)