A Brazilian Supreme Court judge on March 8 annulled the criminal convictions against former leftist President Luiz Inácio Lula da Silva, leading to speculation that the move will pave the way for Lula to run in the 2022 presidential election. Though the decision could still be overturned, the political uncertainty shook Brazilian financial markets. How likely is it that Lula will run for president next year? How does the possibility of a Lula candidacy alter Brazil’s political dynamics, and in what ways could it affect the agenda of President Jair Bolsonaro, who is likely to run for re-election? What implications does the ruling have for anti-corruption efforts in Brazil?
Valeska Teixeira and Cristiano Zanin Martins, members of Lula’s legal team and senior partners at Teixeira Zanin Martins Advogados: “A recent ruling by the Brazilian Supreme Court’s rapporteur pertaining to Operation Car Wash has shaken the country’s legal and political landscape. On March 8, Justice Edson Fachin declared null and void all criminal procedures against former President Lula—from the filing of charges (indictment) to convictions—due to the court’s absolute lack of jurisdiction. It was the recognition of the flagrant violation of the universal concept of the natural judge, therefore generating a distortion in the concept of fair trial to which every citizen in the world is entitled. The acknowledgment of the violation of this principle of law in the Lula case, even if late, clearly indicates Brazil is taking a step toward a more transparent and compliant process, which is the only viable path to reaching full government transparency. Combating corruption is not legitimate if it is used as a pretext to unlawfully persecute corporations and individuals. Our work on the frontline of former President Lula’s defense, which began approximately five years ago, clearly showed gross violations of the most basic rules of due process of law. These violations mainly involved noncompliance with the requirements of a fair trial, such as impartiality and independence of the presiding judge, who must never act jointly with or guide the prosecutors.”
Peter Hakim, member of the Advisor board and president emeritus of the Inter-American Dialogue: “The unexpected annulment of Lula’s conviction has jolted Brazilian politics on many fronts. Although not yet a declared candidate, he appears ready and eager to challenge Bolsonaro for the presidency in next year’s election. Recent polls suggest that Lula, although hardly a walkover, will not be easy to defeat. If he had not been legally barred, he might well have won the 2018 election, and he is now the only visible contender who could block Bolsonaro’s re-election. The sharp ideological and stylistic differences between the two men, compounded by the gulf dividing their core supporters, are likely to further polarize an already tense political atmosphere and turn it more divisive and rancorous. Still, both candidates need centrist votes and may yet decide to moderate their positions and rhetoric, as Lula did to win the presidency in 2002. Bolsonaro’s appeal has been declining in recent months, reflecting, in part, his government’s generally disastrous response to the pandemic, which continues to surge in Brazil. But a more important factor may be Brazil’s stumbling economy, sky-high unemployment and shrinking financial aid for vulnerable households (which included more than half of all Brazilian households). Indeed, the outcome of a Bolsonaro versus Lula election next year will most likely hinge on the state of the economy, job growth and federal subsidies. And there are some reasons for a measure of optimism, including, for example, the predicted economic resurgence of Brazil’s largest trading partners, China and the United States (in that order), and congressional support for critical economic reforms, but the obstacles to a speedy and robust recovery are numerous. One grave risk is the popular demand for heightened government spending, which could push Brazil’s debt to precarious levels and shatter prospects for the policy reforms needed to end Brazil’s long economic slump.”
Oliver Stuenkel, professor at the Getúlio Vargas Foundation: “Justice Fachin’s decision is unlikely to be overturned, and Lula is already a de-facto candidate for the 2022 presidential election and, in all likelihood, a competitive one at that. Lula had been leading the polls when his conviction and prison sentence in 2018 turned Bolsonaro into the front-runner. Since he took office, Bolsonaro has not faced an organized opposition, and no other politician has been able to fill the vacuum Lula left behind, in part because center-right parties such as the PSDB, Democratas and Novo decided not to unequivocally distance themselves from the president. Bolsonaro, too, has sought to weaken center-right parties as he prefers a more polarized campaign against a left-wing candidate. This dynamic has narrowed the corridor for centrist candidates, and São Paulo state Governor João Doria—long seen as Bolsonaro’s main challenger—has already signaled he may prefer to run for re-election rather than seeking the presidency. While a lot can change until then, the most likely scenario at this stage is thus a runoff between Lula and Bolsonaro. Lula can be expected to adopt a similar strategy to that of Joe Biden in 2020, moving to the center and allowing the pandemic and the economic collapse to take center stage and give Bolsonaro enough rope to hang himself. The fight against corruption lost relevance after the departure of Bolsonaro’s former minister of justice, Sérgio Moro. It is unlikely to play a significant role during the campaign and, given the multitude of other challenges the country faces, neither candidate can be expected to prioritize the issue after the elections.”
Daniel Runde, senior vice president and William A. Schreyer chair in Global Analysis at CSIS: “Two-term Brazilian President and six-time candidate Luiz Inácio Lula da Silva may be eligible to run again in Brazil’s 2022 election after a Supreme Court justice annulled his conviction on corruption charges earlier this month. The infamous Lava Jato anti-corruption investigation led to Lula’s arrest and the impeachment of his successor, and it significantly damaged the political brand of the Workers’ Party (PT), perhaps permanently, in Brazil. Widespread public distrust paved the way for outsider Jair Bolsonaro to beat PT opponent Fernando Haddad by more than 10 percentage points in 2018. ’Antipetismo’ persisted in municipal elections last November, in which PT candidates won the lowest number of municipalities out of all major political parties. The renewed possibility of Lula’s candidacy threw Brazilian markets into disarray, and the Brazilian real slumped near a historic low in the following days. Lula’s PT would likely reverse the Bolsonaro administration’s fiscal reforms toward the goal of OECD accession, and Lula himself has been harsh toward the business class. His history of cozying up to China also causes concern for investors; he sought a strategic alliance with China as president and wrote a letter to Xi Jinping apologizing for the Bolsonaro administration’s ‘servile’ behavior toward the United States. It is also worth noting that despite criticisms of Bolsonaro’s environmental stewardship, the highest number of Amazonian fires in the 21st century occurred in 2005, 2007 and 2010—all during Lula’s tenure. The far-left message of Lula and his energized base will likely cause Bolsonaro to take an even harder line on fiscal and social conservatism. Early indicators favor Bolsonaro as recent polling by CNN Brasil shows Bolsonaro leading Lula by 10 percentage points in a speculative race.”
Adriana Dantas, Brazilian anti-corruption/compliance attorney and chair of the Compliance Subcommittee of the International Bar Association: “The ruling is a setback for anti-corruption efforts in Brazil for a number of reasons. First, the annulment of former President Luiz Inácio Lula da Silva’s criminal convictions will pave the way to challenges from others who have also been convicted by former Judge Moro. Second, it indicates that, as has traditionally been the case in Brazil, the Supreme Court will continue to reverse tireless efforts made by the Federal Police, federal prosecutors and first- and second-instance federal judges in the area of corruption. Third, this movement, together with others we have been seeing in recent months, indicates that the enforcement advances of the past six or seven years are under threat. In this context, the OECD’s decision to create a permanent group to monitor the matter is very welcome. International pressure is key to continued progress in the fight against corruption in Brazil and in Latin America as a whole.”
Peter Sufrin, independent Washington-based analyst: “The annulment of criminal convictions against Lula reveals the curious and somewhat contradictory status of Brazilian politicians, who can maintain privileged status and at the same time function in the interests of the common people. Lula is a case in point. His 2002 ‘Letter to the Brazilian people’ outlined plans for income redistribution and poverty alleviation, which were popular with the Brazilian populace but contrasted sharply with the reality of ‘jeito brasileiro,’ by which democratic values are superseded by the old way of doing business. Although Lula’s ‘Teflon’ image demonstrates that he may have beaten the rap of the Lava Jato conviction, he embodies even more the ongoing reality of a system that forgives elites and allows for political participation long after conviction. If he can muster a viable candidacy in opposition to Bolsonaro, Lula may prove 2022 to be a contentious and exciting year for a possible return to PT leadership, solidifying his role as a man who has survived incrimination and lived to see newfound political legitimacy.”