Argentina President-Elect Calls for Brazil’s Lula to Be Freed

(Bloomberg) -- Alberto Fernandez has set the stage for his first diplomatic tiff even before he takes office as Argentine president. An hour after his election win, he called for Brazil’s left-wing legend Luiz Inacio Lula Da Silva to be freed from prison.

Fernandez told supporters in Buenos Aires that Lula, who governed Brazil from 2003 through the end of 2010, was unfairly jailed. While he made similar comments during the campaign, his decision to raise it in the election aftermath risks friction with Brazil’s right-wing President Jair Bolsonaro, a political rival of Lula.

Argentina President-Elect Calls for Brazil’s Lula to Be Freed

Bolsonaro, on a trip to Asia and the Middle East, lamented Fernandez’s victory, saying he won’t congratulate the president-elect but won’t turn against him either. “Let’s wait some time to see what is his real political stance,” he told reporters in Abu Dhabi.

Fernandez, whose win puts a left-wing political movement known as Peronism back into national power in Argentina, visited Lula at his prison in the southern Brazilian city of Curitiba in July.

The former Brazilian president is serving nearly nine years for corruption and money-laundering. Last month he rejected prosecutors’ request that he leave prison for house arrest, in accordance with a Brazilian law that lets prisoners with good conduct and who have already served one-sixth of their jail time complete their sentence under a less-restrictive system.

Lula was the most high-profile figure ensnared by a graft probe known as Carwash, which uncovered a kickback scheme involving state-owned companies, construction firms and politicians. His arrest prevented him from running for president last year, even as opinion polls showed him leading the race that ultimately was won by Bolsonaro.

Mercosur’s Future

While Bolsonaro had warned Brazil could leave the Mercosur if Argentina pivots to the left after the elections, on Monday he said Brazil could join forces with other members of the trade bloc to suspend Argentina if Fernandez disrupts trade deals.

“But I hope that won’t be necessary; I hope Argentina won’t be willing to change route on trade,” he said.

What Our Economist Says

“Bolsonaro has been outspoken against Fernandez throughout the campaign. Economy Minister Paulo Guedes defends more trade openness, and he has suggested in the past that this would be easier outside Mercosur. Fernandez’s victory may provide an additional political incentive for Bolsonaro to seek more independence from the bloc. Less proximity with its main trade partner would be bad news for Argentina -- as boosting exports is one of the country’s best hopes to generate the dollars it needs.”

-- Adriana Dupita, Latin America economist, Bloomberg Economics

Mercosur comprises Brazil, Argentina, Paraguay and Uruguay. The bloc recently reached a trade deal with the EU after 20 years of talks. Brazil runs a trade surplus with Argentina.

©2019 Bloomberg L.P.

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