Brazil Capital Reels After Anti-Lula Rioters Storm Congress

(Bloomberg) -- Brazil’s capital was recovering early Monday from an insurrection by thousands of supporters of ex-President Jair Bolsonaro who stormed the country’s top government institutions, leaving a trail of destruction and testing the leadership of Luiz Inacio Lula da Silva just a week after he took office.

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Rioters ransacked congress, the presidential palace and the top court in Brasilia on Sunday, hoping to trigger a military intervention. It took hours for security forces to regain control of the main government buildings. Hundreds of arrests were carried out through the night, but thousands of Bolsonaro supporters remained in the area.

Lula, who was visiting a city destroyed by rains in the state of Sao Paulo, returned late to the capital and decreed federal intervention in Brasilia’s security, which will likely be confirmed by congress during an extraordinary session early Monday. In a show of strength, he’s likely to meet with the heads of congress and the top court, as well as state governors who are expected to fly into Brasilia.

While the scenes of protesters flooding into the country’s main government buildings have obvious parallels with the Jan. 6 invasion of the US Capitol two years ago, there were suggestions of complicity in Brasilia. Gleisi Hoffmann, the president of the ruling Workers’ Party, criticized the authorities in the capital for not preventing the civil unrest. Lula said police who failed to confront protesters would be prosecuted.

“There’s no precedent for this in the history of our country,” the president said in televised comments, vowing to prosecute the rioters. “We’re going to find out who the financial backers are.”

In the early hours of Monday, top court Justice Alexandre de Moraes criticized the “despicable terrorist attacks on democracy” and ordered Federal District Governor Ibaneis Rocha removed from office for 90 days while his responsibility in the security breach is investigated.

Moraes also gave police 24 hours to disband Bolsonaro’s supporters who have been camping in front of military headquarters across the country since the conservative leader lost to Lula by a razor-thin margin in an election runoff on Oct. 30.

Takeaways From Pro-Bolsonaro Riots in Brazil’s Capital: TOPLive

Acts of Vandalism

The extent of the market impact amid the resurgence of political volatility remains unclear. Bonds fell during the start of European trading on Monday, with the yield on dollar-denominated notes rising four basis points to 6.53%. An exchange-traded fund that tracks the MSCI Brazil Index fell as much as 2.4% during early trading in London before trimming losses.

Protesters were draped in Brazilian flags and wearing the yellow national jersey associated with conservative politics when they flooded into the country’s main government buildings on Sunday afternoon.

Some rioters broke windows, furniture and carried out other acts of vandalism at government headquarters, while others took videos and selfies. Communications Minister Paulo Pimenta said several works of art were damaged.

In Pictures: Brazil Protesters Storm Government Buildings

President Joe Biden called the storming “outrageous,” while leaders across Latin America and Europe were quick to pledge solidarity with Lula. On Twitter, Chile’s President Gabriel Boric characterized the attacks as “unprecedented,” while Colombia’s Gustavo Petro called on members of the Organization of American States to convene and apply the democratic charter.

What Bloomberg Economics Says

“Markets and the economy are unlikely to go unscathed. Bloomberg Economics’ simple model suggests a spike in political uncertainty to around the levels from an April 2017 peak could weaken the real by 1.8%, push stock prices down by 3% and shave around 0.7 percentage point off January economic activity.”

— Adriana Dupita, Latin America economist

— Click here for the full report

The unrest on Sunday follows months of protests in front of military installations by Bolsonaro supporters who were demanding an intervention to prevent Lula from returning to power after the runoff. In late December there was a bomb scare near Brasilia’s airport. More than a hundred buses of Bolsonaro supporters arrived in Brasilia ahead of the Sunday protests.

The former president, who left the country for the US to avoid taking part of the Jan. 1 power transition ceremony, issued a half-hearted condemnation of the events hours later.

“Peaceful demonstrations, within the law, are part of democracy. But depredations and invasions of public buildings like we saw today, similar to the acts done by the left in 2013 and 2017, are not within the rules,” Bolsonaro said on Twitter.

Read More: Bolsonaro Issues Muted Condemnation of Riots at Brazil’s Capital

The events in Brazil come at a time of intense political volatility in Latin America, a region known for its recurrent instability and social turmoil. In Peru, Pedro Castillo was ousted as president and swiftly jailed after he tried to dissolve congress last month. In Argentina, President Alberto Fernandez is seeking to impeach the leader of the Supreme Court after a series of clashes between the government and the justice.

State of Alert

Local governments across Brazil and big companies have implemented measures to avoid new episodes of violence. State-controlled oil giant Petroleo Brasileiro SA is monitoring security at its refineries to make sure it isn’t exposed to protests, Jean Paul Prates, the incoming chief executive officer, said on Sunday.

Robert Muggah, co-founder of the Igarape Institute, a think tank in Rio de Janeiro, called the riots the most significant threat to Brazilian democracy since the 1964 coup, and that it will be celebrated by many members of Brazil’s far right.

“They will treat this as a rallying call for future disruptions,” Muggah said. “Today’s violent insurrection is a reminder that democracy can never be taken for granted.”

Other experts said the riots are likely to hurt the support for the far right as most Brazilians condemn violence.

Christian Lynch, a political scientist at the State University of Rio de Janeiro, said Sunday’s events will do irreversible damage to Bolsonaro’s movement, and that the response from all branches of government will be swift and unforgiving.

“It will crush the legitimacy of the far right,” he said. “The system will bring an end to any tolerance for these people.”

--With assistance from Colleen Goko.

(Adds Capitol riot parallels in 4th paragraph, updates market reaction in eighth. An earlier version of this story corrected the spelling of Justice Moraes’s first name.)

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