What the Lula-Bolsonaro runoff means for Latin America

The runoff between Lula and Jair Bolsonaro will have consequences far beyond Brazil, and the winner will determine the agenda for a host of issues across Latin America, from diplomatic conflicts to trade and energy.

But above all, the election will set the political tone in a region where the recent resurgence of the left is proving to be very different from that of the early 2000s. It has coincided with the strengthening of more radical right alternatives than the continent has seen in the recent past, with crucial new topics up for debate, such as the role of Latin America in global environmental discussions.

In terms of trade, a Bolsonaro win could open the door for the rapid liberalization of the Mercosur trade bloc, comprising Brazil, Argentina, Paraguay, and Uruguay.

Mr. Bolsonaro’s economic team led efforts in that direction during the first years of his presidency, including the signature of a deal between Mercosur and the European Union, but it lost steam after their main partner, Argentina’s center-right former President Mauricio Macri, lost his 2019 re-election bid against incumbent Alberto Fernández.

Mr. Fernández, however, is currently treading water, and analysts believe a return of the right is the most likely scenario in neighboring Argentina’s 2023 presidential elections, re-opening the door to trade agreements and tariff cuts in the customs union. 

Lula has opted for a more cautious approach with regards to Mercosur changes, siding with Mr. Fernández’s Argentina in some of its conflicts with Brazil’s current government, but this does not mean that a Lula-led government would necessarily veto Mercosur liberalization initiatives. Lula has a history as a pragmatic...