Ruling weakens Brazil's Lula but will not end his bid

Significance

The three judges on the appeals court in Porto Alegre found Lula guilty of receiving a seaside apartment worth 2.2 million reais (currently 700,000 dollars) from construction company OAS in exchange for contracts with state-controlled oil giant Petrobras. The decision may make the former president unable to run for a third term in next October's election, but it is not yet final -- he still has further appeal options.

Impacts

• Lula was a moderate president but has recently moved significantly to the left, which would make his candidacy even more divisive.
• The Bovespa stock exchange hit a record high after the ruling, in the belief that it will take Lula out of the race.
• The impact of the ruling is likely to strengthen the current orthodox reform agenda by shifting electoral expectations.
• Even a conservative president will likely struggle to pass ambitious reforms.