On Sunday, an incredible display of political violence occurred on Brazil’s three branches of power in the nation’s capital of Brasília. Thousands of supporters of former Brazilian President Jair Bolsonaro invaded the country’s Congress, Supreme Court and the presidential palace.

Brazil’s security forces regained control of the political institutions and reports indicate that more than 400 people have been arrested as of Sunday evening.

Luiz Inácio Lula da Silva (known as ‘Lula’) assumed the Presidency on January 1, 2023. Described as left-wing and a member of the Worker’s Party, this will be the second time Lula has been elected as President.

In 2017, Lula was convicted and consequently jailed on charges of money laundering and corruption. He spent a total of 580 days behind bars.

Lula defeated former incumbent Bolsonaro in a tight race determined by a majority vote - 50.9% to 49.1% in October 2022.

Many of Bolsonaro’s supporters refused to accept the result. Lula ultimately blamed Bolsonaro for “encouraging” the riots whereas Bolsonaro rejected the accusation and stated that the insurrection was not indicative of a peaceful democratic protest.

Brazil’s insurrection comes amid a period of malaise for politics in neighbouring South American nations. In Argentina, President Alberto Fernández hopes to impeach the leader of the Supreme Court after a series of conflicts between the government and the justice.

Lula’s rise to the Presidency is part of Latin America’s “pink tide,” a political wave toward left-wing governments in eight countries, including Argentina, Peru and Chile. The insurgence demonstrates that the “pink tide” is still a very fragile ideological trend.

In December we saw protests outside of congress in Buenos Aires after Vice President (and former president) Cristina Fernández de Kirchner dropped out of the 2023 presidential election after allegations of corruption.

Read more: Market Update: Argentina’s Capital Controls, VP Gets Six Years for Fraud

At the moment, Brazil’s insurrection portrays no direct effect on Argentina. But if one thing is consistent in history, it is that populists can hold onto a significant faction of the political system, something we saw with former U.S. President Donald Trump and his supporters in the U.S. Capitol attack on January 6, 2021.

As many of our clients can testify, Argentina is a country of extreme uncertainty, and it has never been more important to work with an advisory team with years of experience in this space and an understanding of what's happening on the ground in Argentina. 

We continuously monitor the economic situation in the country, and we have come up with creative solutions around these new restrictions that your company might like to evaluate.  

If you would like to talk about these alternatives or have any questions about today’s Market Update, you can call us at 604-643-0101 or email cashgroup@cgf.com.