So why they haven't arrested him?
This is certainly out of a TV show, I honestly think the arrest "threat" was another political maneuver to freak out the PT and lead them to make their worst move ever, in that we agree, worst political mistake, and so simple to foresee if they weren't so damn stubborn and proud, they really think they still hold the same popularity and acceptance as before.
Now that these other guys are finally in power they are not going to let it go, no arrest(s) will be made, they will try to shut down lava jato as much as possible, because they are all in it, all parties that start with "P", the media might help to try to divert attention or not, I'm still not that knowledgeable about them to be sure.
They haven't arrested him because with Dilma's maneuver his investigations had to be stopped by the prosecution and sent to the office of the prosecutor general. That office continued the investigation, although much slower (as they are), and Lula was indicted a week ago, and now the process will continue with a judge from the Supreme Court. The investigations move much more slowly at this level.
And "these other guys" have been in power since Dilma took over. The Executive power has very little ability to interfere with Lavajato; they can do it through the Minister of Justice, which controls the Federal Police and related. The latest one nominated by Dilma threatened to close the investigation on his first interview on the job, but public pressure kept him at bay; the guy Temer wanted to name as his replacement had been critical of Lavajato and he had to pick a new guy, again, because of public pressure.
The Legislative power can do more to interfere with Lavajato. So far there have been a few of law changes proposed by congressmen from PT to limit the prosecutors power in the investigations. One of them failed this week after the prosecutors from Lavajato and the so-called "corrupt media" publicly denounced them.
Thankfully our democracy is strong enough that the investigations will go on as usual. And if there's one thing PT is good at it's in being a fierce opposition, so hopefully they'll change sides and stop working against Lavajato and instead create more public pressure every time someone in Congress or the new president tries to attack it again.
I didn't mean to sound like that at all but precisely because our countries have such similarities and I've seen almost like to like events unfold before; hyper critical right-wing against the leftist, media controlled by oligarchs, leftist failing to combat corruption and some being consumed by it thus making the whole movement look bad yet still holding out for democracy. We already experienced this in Mexico and I don't want to see Brazil the same as Mexico is right now, where even the thought of an impeachment against our right-wing president is answered with violence and repression, I want to be wrong but if the right-wing get control of Brazil again and the leftist movement dies I'm afraid you won't see another impeachment against a president in a very long time.
And I don't completely side myself (even tho I gain nothing) with Dilma or PT, but all the journalist I respect and my own conclusions leads me to believe this isn't going to end well for Brazil.
Our political system is probably quite different. The funny thing about Brazil is that the concepts of right and left don't apply here. The vast majority of political parties describe themselves as center, which just means "we'll do what's best for ourselves". That includes PMDB. The two runner-ups from the last presidential election, behind Dilma, were left or center-left candidates. But even when a left-wing candidate wins, they need the "center" to rule, as you need Congress to get things done. There are about 25 political parties in Congress.
The problem with our government isn't just corruption from left-wing politicians. Lula was involved in a huge corruption scandal back then that convicted and arrested major players from his party, but he still was easily reelected and had record approval ratings, people didn't care. Why? Because in order to rule with such a complex political system, you need to be a skilled politician. Lula had that in spades. Dilma had zero experience before presidency and she turned out to be absolutely terrible at it. She, like most non-politicians, hates this system, the "I'll do a thing for you here, you do a thing for me there". The end result is what we're seeing now, she lost support from every political party in the country -
including her own, who was openly against her plans for economic recovery (austerity) from the day her second term started. Lula was against her as well, he wanted her to pick the guy Temer just picked to run the economy instead of the one she got.