Lula Gives Milei the Cold Shoulder on Bet He’ll Need Brazil

(Bloomberg) -- President Luiz Inacio Lula da Silva has decided to put relations between Brazil and Argentina on hold until he has clarity about the incoming administration’s plan to deal with its largest trading partner in South America, according to Brazilian government officials familiar with the strategy.

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Lula, who’s been a close ally of Peronist governments in Argentina, on Sunday wished “good luck and success” to the government of Javier Milei — without mentioning the president-elect by name. In a post on social media, he said Brazil will “always be ready to work together with our Argentine brothers.”

But that is as far as he’ll go.

After being called by Milei a “communist with whom he wouldn’t deal” in an interview with Bloomberg News, Lula will now wait for the new Argentine government to reach out to Brazil through institutional channels to decide how to proceed, the officials said, requesting anonymity to discuss the strategy.

That means a traditional call to congratulate the president-elect is unlikely to happen any time soon. Also, Lula isn’t holding his breath for an invitation to attend Milei’s Dec. 10 inauguration, although he would consider going if a gesture of reconciliation is made, the officials said.

A spokesperson for Milei declined to comment.

Lula did make clear his support for Economy Minister Sergio Massa during the presidential race, asking Argentines to consider the future of regional integration when casting their vote. A team of campaign strategists who helped the Brazilian president defeat Jair Bolsonaro last year was also dispatched to Buenos Aires in August to work on Massa’s campaign.

Read More: Javier Milei Gets a Challenge From Team That Beat Jair Bolsonaro

While Lula’s interference didn’t help to ease tensions, Brazil is betting that Milei will eventually tone down his rhetoric to maintain working relations with a key trading partner, one that has been advocating on Argentina’s behalf at multilateral lenders such as the International Monetary Fund and the New Development Bank from BRICS countries. Lula, they said, wouldn’t want to see ideological differences overshadowing Brasilia’s historic relationship with Buenos Aires.

And while Milei may reject a recent invitation to join the BRICS group led by Brazil, Russia, India, China and South Africa, it would be way more painful to pull Argentina out of the Mercosur trade bloc, they added.

The South American customs union formed by Brazil, Argentina, Uruguay and Paraguay is an important instrument of regional integration that’s negotiating trade deals that would matter to Argentina, including with the European Union and Singapore.

Read More: Milei Opens a New Era: What Comes Next in Argentina Policymaking

--With assistance from Manuela Tobias.

(Updates with no comment from Milei’s spokesperson, adds detail on Lula backing Massa starting in sixth paragraph.)

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