Judge’s bar on Lula puts Brazil on edge of constitutional crisis

Investors bet on government collapse as court blocks Rousseff’s appointment of predecessor
Demonstrators gather next to Planalto Palace to protest against the government in Brasilia on March 17, 2016. Brazil's former president Luiz Inacio Lula da Silva was sworn in Thursday as chief of staff to his embattled successor Dilma Rousseff amid angry protests from opponents who accuse him of trying to dodge corruption charges. Lula took office in a tumultuous scene at the presidential palace, where a protester shouted
Brazil was teetering on the brink of a constitutional crisis on Thursday after a judge blocked President Dilma Rousseff’s appointment of her predecessor, Luiz Inácio Lula da Silva, to her cabinet, prompting clashes in Congress and on the streets.
Just as Mr Lula da Silva’s swearing-in ceremony drew to a close, a federal judge issued an injunction, suspending the ex-president’s appointment on the grounds that it prevented “the free exercise of justice” in corruption investigations.
Opposition politicians hailed the decision as a triumph for Brazilian democracy, while the government vowed to appeal, lambasting the order as part of a “coup” by the country’s elite, reminiscent of Brazil’s period of military rule. Brazilian assets ralliedas investors bet on the government’s collapse.
“Since the end of the dictatorship and the transition to democracy over recent years, this is our most dramatic political moment — we have no idea what tomorrow will even look like,” said Gabriel Petrus, analyst at the consultancy Barral M Jorge Associates in Brasília.
“Dilma’s strategy of defence is attack and this risks creating social unrest and more violent demonstrations on the streets,” said Mr Petrus.
Mass protests swept the country on Wednesday and Thursday night after a court released incendiary recordings of Mr Lula da Silva’s private conversations that fuelled accusations he had been appointed as minister only to shield him from immediate arrest. Military police fired tear gas at protesters outside the presidential palace following clashes with supporters of the Workers’ party (PT), while demonstrators vandalised union and government buildings in some cities on Thursday.
State prosecutors requested Mr Lula da Silva’s arrest last week over charges of money laundering and fraud, accusing the former president of secretly owning a beachside penthouse at the centre of investigations into corruption at state oil company Petrobras.
Since the end of the dictatorship and the transition to democracy over recent years, this is our most dramatic political moment
Gabriel Petrus, Barral M Jorge Associates
The Supreme Court also published this week the plea testimony of senator Delcídio do Amaral, a Workers’ Party insider who was arrested last year, accusing Ms Rousseff and Mr Lula da Silva of being aware of the bribery and kickback scheme. Ms Rousseff, who is facing impeachment proceedings over separate allegations she broke budget laws, and Mr Lula da Silva have denied any wrongdoing.
As a minister, Mr Lula da Silva would have immunity in all courts apart from the Supreme Court, which analysts said was more likely to act in his favour.
During the swearing-in ceremony of her mentor earlier on Wednesday, Ms Rousseff accused the opposition of plotting a coup against her government.
“The shouts of the coup plotters will not deter me and will not bring the nation to its knees”, she said as the cries of protesters could be heard outside the presidential palace.
Brazil gripped by Lula recordings
Later on Thursday the lower house of Congress kicked off the impeachment process against her that has been held up for months, approving a committee to study allegations that Ms Rousseff fiddled the country’s accounts to increase election spending — allegations she denies.
While accustomed to political scandal, Brazilians reacted with shock on Wednesday night after Sérgio Moro, the federal judge leading investigations into Petrobras, released wiretaps of Mr Lula da Silva’s private conversations.
In the most explosive recording, Ms Rousseff called her mentor to tell him she was sending him a document confirming his ministerial appointment and that he should use it “only if it is necessary”, interpreted by the opposition as proof that the appointment was designed to protect him from arrest.
In other recordings, the ex-president is heard swearing and making light of the investigations in soundbites aired on television and radio that have gripped the country like one of its dramatic soap operas.
The government has accused Mr Moro, who has been heralded a hero across much of the country, of breaking the constitution.
Additional reporting by Carina Rossi in São Paulo