By Leonardo Goy and Alonso Soto
BRASILIA (Reuters) - Brazil's presidential chief of staff traded barbs with the speaker of the lower house of Congress on Thursday, as President Dilma Rousseff's government marshalled its defence for the impeachment proceedings launched against her on Wednesday.
The heated charges, with each camp branding the other liars, added acrimony to a political crisis as the unpopular president begins what is likely to be a drawn-out battle to stay in office even as Latin America's largest economy reels from a deep recession and a vast corruption scandal.
Rousseff is expected to narrowly survive the proceedings because her party and allies appear to control enough seats to defeat those who support impeachment.
The government estimated conservatively that it already had firm support from 140 lawmakers in the lower house - shy of the 172 votes needed to block the process - and was seeking more, an aide to Rousseff said.
However, the government hopes to halt the impeachment proceedings at the initial, committee stage, the aide said.
Even though it may not ultimately unseat Rousseff, the process adds one more obstacle for a government struggling with political gridlock, when it desperately needs congressional support for policies meant to restore economic growth.
"This will have a negative impact on the real economy," said Carlos Thadeu de Freitas, chief economist at the National Confederation of Commerce and a former central bank director.
The opposition has charged Rousseff broke budget laws to safeguard economic stimulus during her successful re-election campaign last year. The president, in office since 2011, denies any wrongdoing.
Credit ratings agencies Fitch and Moody's said on Thursday that political uncertainty stemming from the impeachment proceedings could undermine efforts to shore up public accounts.
Standard & Poor's downgraded Brazil's credit rating to junk in September, and a similar move from another agency could trigger large capital outflows.
Still, Brazilian markets cheered the prospect for fresh political winds in the capital Brasilia, where many hold Rousseff's interventionist policies responsible for worsening the economic downturn. Some investors said they hoped a harsh political reckoning for the left-leaning president would force her to adopt a more market-friendly agenda.
In addition to the ongoing recession, which deepened to a 4.5 percent contraction on an annual basis last quarter, Brazil is struggling with inflation of more than 10 percent and unemployment at a six-year high. Investment, consumer confidence and industrial output have been plunging for three years.
ACCUSATIONS FLY
The bickering on Thursday began when House Speaker Eduardo Cunha, an avowed enemy of Rousseff although his party is the largest in the her unruly coalition, said she tried through an intermediary to shield him from an ethics probe just hours before he approved impeachment proceedings on Wednesday.
As such, he told reporters, Rousseff lied in a televised address on Wednesday night when she said she had not attempted to negotiate with Cunha to influence the ethics committee in return for his setting aside the impeachment request.
"I want to make quite clear that yesterday the president lied to the nation," Cunha said.
Shortly afterward, Jaques Wagner, Rousseff's chief of staff, said that Cunha was the liar and that the intermediary he cited had not even been with the speaker early Wednesday.
Wagner repeated that the government has not negotiated with Cunha over an ethics probe into allegations that he took bribes and hid money offshore. Cunha has denied the charges.
Rousseff, in her address on Wednesday, expressed outrage at Cunha's decision to open impeachment proceedings.
The lower house ethics committee is expected to open an investigation into Cunha next week with the backing of Rousseff's Workers' Party. That could lead to his ouster well before a presidential impeachment process can be concluded.
Under the Constitution's provisions for impeachment, a special committee with members from all parties will decide on the merits of the impeachment request, which needs two-thirds, or 342, of the votes in the lower house. Rousseff would then be suspended pending a 180-day trial by the Senate.
The speaker said on Thursday he planned to call a meeting on Monday to choose the committee members, but their deliberations could easily stretch on for months. The committee is expected to have more than 60 members.
Three congressmen from the Workers' Party filed a motion with the Supreme Court on Thursday, asking it to stay Cunha's decision to begin the impeachment process.
Even if the proceedings get under way, they are not expected to reach a vote in the lower house before February. If approved, deliberations could take another six months in the Senate.
At present, it appears unlikely that Rousseff's foes have the votes to remove her from office.
"The opposition doesn't have enough votes, zero chance at this moment," said Leonardo Picciani, lower house leader of Cunha's own party, the fractious Brazilian Democratic Movement Party (PMDB). "I don't believe that balance will turn against Rousseff any time soon," he added.
Among the Brazilian public, opinion polls show about two in three people support her impeachment.
Brazil's political establishment is already close to paralysis due to an investigation into a massive graft scandal at state-run oil company Petrobras. That sweeping investigation has implicated dozens of lawmakers in the governing coalition, including Cunha, and some of Brazil's biggest corporate kingpins.
(Reporting by Leonardo Goy and Alonso Soto; Additional reporting by Eduardo Simões in Sao Paulo; Writing by Brad Haynes and Paulo Prada; Editing by Daniel Flynn and Frances Kerry)
