Lula's Hopes of a Comeback Crushed by Unanimous Court Verdict

• January 24 2018
• Simone Preissler Iglesias

A Brazilian appeals court unanimously upheld a graft sentence against former leader Luiz Inacio Inacio Lula da Silva.

A Brazilian appeals court unanimously upheld a graft sentence against former leader Luiz Inacio Inacio Lula da Silva, likely preventing the front-runner in presidential opinion polls from seeking election this year.

Lula lost his appeal 3-0 against a criminal conviction for accepting an upgrade to a beach-side apartment along with other benefits from a construction company in exchange for favors. The ex-president previously denied wrongdoing, calling the charges politically motivated and saying he plans to appeal the ruling.

Click here for a QuickTake Q&A with more detail on the trial

At stake is not only the legacy of the 72-year-old former union leader, but the future of Latin America’s largest economy. With elections scheduled in October, Lula currently leads the opinion polls and has pledged to roll back the market-friendly reforms of President Michel Temer, including spending caps and the deregulation of the labor market.

While Wednesday’s verdict doesn’t rule him out of the running for good, it does represent a significant blow to his chances. “With this decision, the market sees the chances of Lula’s participation in the election as very low," said Pedro Paulo Silveira, the chief economist of brokerage Nova Futura.

The Sao Paulo stock exchange rose over 3.5 percent in the day, while the real was up 3 percent. While Lula was a Wall Street favorite during his two terms in office from 2003 to 2010, he recently turned to his more radical group of supporters for political survival. Adding to investor fears, a defiant Lula told tens or thousands of supporters on Tuesday night that he didn’t need financial markets anyway.

Security has been tight around the court house in Porto Alegre, with sharpshooters on rooftops, naval ships patrolling nearby waters, and police cordoning off an area some 2.5 kilometers wide to keep protesters at arms length. Thousands of Lula’s supporters camped out in Porto Alegre during the trial.

Brazilian society is deeply divided over Lula, a savior of the poor to some and a reckless populist to others. The latest Datafolha survey showed 36 percent of voters would back him in October’s election, roughly double that of his nearest rival, right-wing Deputy Jair Bolsonaro. But 39 percent of those questioned in the same survey said they would not consider voting for him under any circumstances.

Brazilian law determines that anyone with a criminal conviction that has been upheld in an appellate court cannot run for elected office, but Lula’s likely appeal will buy him time.
Leaders of the Workers’ Party say they will launch his presidential candidacy on Thursday, regardless of the outcome of the trial.

— With assistance by Vinicius Andrade