Lula Returns to the Fray With Release From Brazilian Jail

(Bloomberg) -- Former President Luiz Inacio Lula da Silva walked out of jail and back into Brazil’s political spotlight after a high-profile court decision reversed rules for imprisoning convicts.

TV footage showed the leftist leader in the southern city of Curitiba where he’s been serving a sentence for corruption since 2018. He addressed a crowd of supporters who gathered in front of the building, waving red flags and singing as police stood watch.

“The doors of Brazil will be open for me to travel around the country,” he told his supporters.

The move thrusts the charismatic and highly-influential 74-year-old politician back into the political stage at a highly polarized time. Domestic law still prevents Lula from running for public office due to his conviction, but his presence may galvanize the left in their opposition to rival President Jair Bolsonaro and the market-friendly policies his administration is pursuing.

“Lula is going to hit the streets day one with a vengeance and it’s certainly going to be more than noise,” said James Gulbrandsen, chief investment officer for Latin America at NCH Capital.

Brazilian markets fell on the news, with stocks and the real both posting losses of more than 1.5%.

Out of jail, however, he could also be used by Bolsonaro to regain the support of Brazilians who are disappointed with his government but strongly reject the leftist leader, said Thomas Traumann, a communications consultant who has advised former ministers and presidents.

Corruption Sentence

Lula’s defense lawyers requested his release after the Supreme Court ruled late Thursday that convicted criminals should be incarcerated only after all their appeals are exhausted.

The ex-president was convicted of corruption in 2017 and lost two appeals since then, but he has not exhausted the entire process. He has repeatedly denied wrongdoing and has said he’s victim of political persecution. In September, Lula had rejected an offer to leave jail

for house arrest. Since his arrest, his allies had insisted on the narrative that he was a political prisoner.

There are several other ongoing cases against the former president, who was in office from 2003 to 2010 and a key figure in the government of Dilma Rousseff, his handpicked successor, for another two terms. Lula was expected to run for president again in 2018 before being imprisoned, and was still featured heavily in ads for the campaign of the candidate of his Workers’ Party, Fernando Haddad, who lost to Bolsonaro.

Court Decision

Thursday evening’s 6-5 decision by Brazil‘s Supreme Court reversed the recent practice of jailing criminals whose convictions were upheld on first appeal -- which was instrumental in the success of the Carwash anti-corruption probe.

Dozens of Senators and deputies, as well as members of Bolsonaro’s own family and several advocacy groups had pressured judges to keep the status quo. The leader of Bolsonaro’s party in the Senate, Major Olimpio, said the decision was cause of “shame” and that the top court’s justices “voted in favor of criminals and against the Brazilian people.”

To contact the reporters on this story: Simone Iglesias in Brasília at spiglesias@bloomberg.net;Matthew Malinowski in Brasilia at mmalinowski@bloomberg.net

To contact the editors responsible for this story: Walter Brandimarte at wbrandimarte@bloomberg.net, Julia Leite

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