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Court ruling steers Brazil back to center: Update

05 Apr 2018 23:01 (+01:00 GMT)
Court ruling steers Brazil back to center: Update

Adds arrest order for Lula.

Rio de Janeiro, 5 April (Argus) — The looming imprisonment of popular former president Luiz Inácio Lula da Silva is shifting the landscape for Brazil's presidential elections, potentially bolstering centrist candidates who would sustain or deepen oil industry reforms.

Oil companies demonstrated confidence in Brazil´s oil sector at a major upstream auction last week, in spite of uncertainty over who will replace economic reform-oriented president Michel Temer in October 2018 elections. The former president known as Lula has clung to the top spot in voter polls even though he was convicted last year of money laundering and passive corruption in the sweeping "Lava Jato" investigation tied to state-controlled Petrobras and a pool of tainted contractors led by Odebrecht.

But it now appears that Lula will be behind bars long before the pivotal election. In a marathon session concluded early today, Brazil's federal supreme court STF voted six to five to reject the latest habeas corpus request filed by Lula, a maneuver meant to stall his imprisonment but that also could have freed many of the politicians and businessmen that have already been convicted in the Lava Jato case.

In an unexpected development this afternoon, crusading federal judge Sergio Moro ordered Lula to turn himself into federal police by 5pm local time tomorrow, a decision that is likely to further agitate the former president's supporters, many of whom have already fortified the area around his Sao Paulo apartment.

The expectation had been that Moro would wait until the appeals court that upheld Lula´s conviction had ruled on a new set of procedural appeals filed by the former president's legal team.

Moro has prohibited the use of handcuffs when taking Lula into custody.

"It should be clarified that, because of the dignity of the position held, a reserved room…was prepared in advance…for the commencement of sentence, and in which the former President will be separated from the other prisoners, without any risk to moral or physical integrity," Moro wrote in today's decision.

This will not be the first time Moro has taken Lula into custody. In March 2016, Moro ordered his temporary detention for questioning, a decision that quickly mobilized his supporters and resulted in tense stand-offs with police.

This morning´s ruling and his imminent imprisonment effectively derail Lula´s plans to seek a third four-year term in a two-phase election in October, likely opening the field for less popular, orthodox candidates.

In January, an appeals court upheld a conviction against Lula stemming from the former president's indirect receipt of a beachside property from one of the contractors, OAS, that participated in a scheme that diverted money from Petrobras.

The appeals court's decision dimmed Lula's chance for re-election, as certain convicts are barred from seeking office for eight years, and today's high court decision is another major blow to the former union organizer's presidential aspirations. A final decision on his qualification to run will be made by the federal electorate court TSE, likely not before August.

Up to now, the legal complications surrounding Lula´s divisive candidacy have helped fuel the far-right candidacy of Jair Bolsonaro. Clearer odds that Lula will not be able to run should bolster traditional candidates such as center-right Geraldo Alckmin and center-left candidate Ciro Gomes.

Lula's Workers' Party (PT) is likely to field a substitute candidate, such as former Sao Paulo governor Fernando Haddad, if Lula is barred from running, but he is less popular than his mentor.

The former president still has a chance to survive. The STF has indicated it could overturn its own jurisprudence requiring convicts begin serving their sentence after the first appeals process. A revision of the court's 2016 decision could see Lula and other convicted politicians escape imprisonment, a provocative potential move that has triggered rare warnings by the military´s top brass and heightened tension on the streets of Brazil´s major cities.

Lula supporters have decried the alleged persecution of the former president, and claim the case against him is another step in a coup d'etat that in 2016 led to the removal of his successor, former president Dilma Rousseff, who was impeached for illegal maneuvers in federal accounts.