OREANDA-NEWS. Former Brazilian president Lu?z In?cio Lula da Silva was named chief of staff for his embattled prot?g? Dilma Rousseff, all but ensuring him immunity from prosecution in a widespread corruption investigation tied to state-controlled Petrobras.

The controversial appointment of the influential Lula, who replaced Jacques Wagner, deepens an already profound political crisis that has sapped the government's ability to enact major reforms needed to revive the commodities-based economy.

On 4 March, Lula was briefly taken into police custody for questioning over his dealings with Brazilian construction firms that siphoned funds from Petrobras. A federal judge is now analyzing charges against Lula on claims of money laundering and corruption, as well considering a request that he be arrested pre-emptively.

Lula led Brazil from 2003 to 2011, during a time of explosive economic growth, and is credited with helping pull millions from extreme poverty. But his popularity has waned in recent months as controversy surrounding his close relationship with key figures in the Petrobras scandal has intensified.

Upon entering Rousseff's cabinet, which is likely to be re-shuffled, the former president can only be subjected to investigations and charges brought by Brazil's supreme court. Lula denies any wrongdoing and says investigations targeting him and his family are politically motivated.

Lula's cabinet appointment has been in the works since his detention earlier this month, but the decision was taken one day after claims surfaced that he had been meddling in multiple federal investigations.

According to a plea deal between senator Delc?dio do Amaral, a former senate leader for Lula's left-leaning Workers Party (PT), and federal prosecutors, Lula paid to keep witnesses silent and was active in trying to derail the ongoing Lava Jato investigation into corruption at Petrobras.

Do Amaral also claims other members in Rousseff's cabinet played active roles in interfering with investigations.

Government officials say Lula's main role in the government will be helping Rousseff, his hand-picked successor, fight off impeachment proceedings, improve the troubled relationship with allied parties, and help revive the foundering economy.

Rousseff is facing impeachment proceedings for fiscal maneuvers unrelated to corruption at Petrobras. Recent claims by Do Amaral that Rousseff knew of fraud at the firm, which she chaired between 2003 an 2010, have increased the odds she will be forced from office before her second four-year term ends.

Strengthening ties with traditional ally Brazil's Democratic Movement Party (PMDB) is essential to Rousseff's survival. The PT and PMDB are among the main beneficiaries of the scheme at Petrobras. The PMDB, whose top leaders are also being investigated for corruption at Petrobras, has threatened to break with Rousseff, a move that would likely leave the president without the support to defeat an impeachment vote in the lower congressional house.

PMDB, which leads both Brazil's senate and lower congressional houses, has been threatening a departure for months. But the predicament of its top leaders, the majority of which are facing corruption charges, has delayed that decision.

Lula's entry back into the government is seen by many as Rousseff's decision to directly intervene in the historic corruption investigation. That could help to ease troubled relationships with other government leaders who have complained the president has not done enough to contain the damage from the investigation.

Opposition leaders say they will try to block Lula's appointment, and are considering an action against Rousseff on obstruction of justice claims related to the former president's entry.

The controversial decision come just days after massive demonstrations against Lula and Rousseff swept through Brazil.

Lula's arrival is a clear signal that the government intends to change tack on improving the economy. After half-hearted attempts at austerity measures and structural reforms, the PT is pushing for more pro-growth projects to revive the economy. Critics say the approach is risky, considering annual inflation is hovering above 10pc and the economic contraction was 3.8pc in 2015. Brazil's economy is expected to shrink by around 3.5pc this year.