Brazil’s Lula takes cabinet post in bid to save Dilma Rousseff

Former Brazilian president Luiz Inácio Lula da Silva accepted a ministerial appointment Wednesday in the government of his protegee and successor Dilma Rousseff in a bid to save her increasingly threatened mandate.

He will become Rousseff’s cabinet chief, a position with wideranging powers similar to those of prime minister, in a move that implicitly acknowledges her inability to halt the disintegration of her Workers Party administration in the face of the political crisis caused by the Petrobras scandal and a deepening economic recession.

Ministerial rank also means Lula is freed from the risk of immediate arrest following the decision by public prosecutors last week to charge him with corruption. The handling of the investigation into his alleged participation in the scandal at state oil giant Petrobras now passes to the supreme court. Lula denies any involvement.

Former president Fernando Henrique Cardoso called Lula’s return to government while under investigation “scandalous”.

“This increases the moral crisis in the country,” he said.

The increasingly embattled Rousseff, who has shown a severe lack of political nous during her five years as president, is betting that the vastly more experienced Lula can rally enough support to defeat efforts in congress to impeach her.

But it signals the effective end of her power with most commentators saying she is now little more than a figurehead. Hours after Lula’s return was confirmed it was reported that the president’s few remaining allies in cabinet would be purged to make way for his supporters.

Lula returns to the presidential palace with Brazil’s political class in turmoil following Tuesday’s publication of explosive testimony from the former Workers Party leader in the senate to federal prosecutors which implicated Rousseff in the Petrobras affair.

In plea-bargain testimony following his own arrest last year as part of the probe, Delcídio do Amaral claimed he discussed with Rousseff the appointment of a judge to a senior court with the mission to free leading businessmen arrested for their role in the affair before they talked to prosecutors.

She vehemently denied Amaral’s claim, but the country’s top federal prosecutor said he could now open an investigation into her. It would be the first time during the two-year probe that Rousseff, who was energy minister and chairwoman of Petrobras’ board before becoming president, comes under formal investigation.

Amaral also accused Lula of attempting to obstruct the Petrobras investigation and said he ordered that the businessman at the centre of the 2005 mensalão congressional vote-buying scandal that almost brought down his government be paid between €25 and €50 million with money stolen from Petrobras for his silence. Lula’s team rubbished the claims.

As well as the president and Lula, the senator claimed other leading government and opposition figures were involved in corruption, bribery, obstruction of justice and influence peddling as he painted a disturbing picture for prosecutors of rampant criminality among the top echelons of power in Latin America’s largest country.

As well as defeat efforts to impeach the president, which gained new impetus following Sunday’s massive anti-government demonstrations across the country, Lula will now also spearhead attempts to tackle the deepening economic recession.

Before returning to government he had lobbied Rousseff to desist with attempting unpopular structural reforms and instead boost public spending in order to stimulate investment and consumption despite a budget deficit above ten per cent of GDP and growing concerns over Brazil’s debt burden.

Brazil’s currency and stock market plunged on news of his return and the head of the central bank signalled he was ready to quit rather than aid the former president implement a looser monetary policy with inflation running above 10 per cent.