Brazil & Southern Cone - July 2026

Since 5 June Brazil’s two most powerful criminal groups, the Primeiro Comando da Capital (PCC) and Comando Vermelho (CV), have been included on the US government’s list of foreign terrorist organisations (FTOs). The designation put serious strain on relations between the administrations of Brazil’s President Luiz Inácio Lula da Silva and US President Donald Trump, given that the Lula government has framed the designations as a threat to Brazilian sovereignty, while Brazil’s far-right ‘Bolsonarismo’ movement has welcomed the move as a key step in the fight against organised crime.

US Secretary of State Marco Rubio announced the decision to designate the PCC and CV as FTOs on 28 May - two days after Brazilian far-right senator Flávio Bolsonaro (Partido Liberal, PL) met with Trump in the Oval Office. Bolsonaro is expected to be Lula’s main rival in the presidential elections in October and managing to secure a meeting with the US president likely helped to boost his reputation among his core far-right supporters who admire Trump. In a press conference after the meeting, Bolsonaro said that he had asked the US president to designate the gangs as terrorists.

When the announcement from Rubio came two days later, Bolsonaro took to social media to praise the decision as well as to criticise Lula for his reluctance to have the US declare the Brazilian criminal groups as terrorist organisations. “While Lula went on his knees to Trump to lobby in favour of the CV and PCC, I worked to have them treated as terrorists,” Bolsonaro stated. The mention of Lula going “on his knees” referred to the president’s trip to Washington on 7 May, during which he met with Trump in the White House to ease bilateral tensions. According to a Brazilian government statement regarding the Lula-Trump meeting, the leaders discussed shared interests which included cooperation on tackling transnational crime, although the official readout made no mention of the terrorism designation issue, and various Brazilian media outlets reported that the question of whether to ascribe a terrorism label to gangs was not discussed in the meeting.

Both the Lula administration and the Bolsonarismo movement have over the past year expressed support for the prospect of increased US involvement in operations and investigations against transnational crime. But while the left-of-centre government places more emphasis on boosting cooperation on investigations and police intelligence, the right-wing opposition in Brazil has called for tougher, more militarised responses to drug trafficking gangs.

For example, in October last year, Bolsonaro posted on social media saying that he was “envious” of the US military carrying out naval strikes in the Caribbean Sea and Pacific Ocean with the declared purpose of destroying boats suspected of transporting drugs. “How envious! I hear that there are boats like these here in Rio de Janeiro, in the Guanabara Bay, flooding Brazil with drugs. Wouldn’t you like to spend a few months here helping us fight these terrorist organisations?” Bolsonaro wrote on 23 October.

In contrast, officials from the Lula administration, such as former finance minister Fernando Haddad (2023-2026), have called for cooperation between institutions in investigations to intercept the transnational flows of capital and contraband that sustain Brazil’s most powerful gangs. In November last year Haddad highlighted that Brazilian criminal organisations such as the PCC allegedly launder funds through financial services firms [SSR-25-10] and that their money laundering networks extend beyond Brazil’s borders. Brazilian authorities suspect that dirty money has been moved through investment funds managed by firms based in the US state of Delaware. Haddad also highlighted last year that illegal firearms used by Brazilian gangs are being smuggled in from the US.

Cooperation between Brazilian and US auditors and police investigators to crack down on financial crimes and arms trafficking is the kind of bilateral partnership that the Lula government has sought to implement. In April this year, Haddad’s successor as finance minister, Dario Durigan, announced that Brazil’s tax and customs authority (RFB) had reached an agreement with US Customs and Border Protection (CBP) to share intelligence on drugs and arms trafficking networks.

Escalation of tensions

Despite the announced cooperation agreement between the RFB and CBP in April and the signals of potential rapprochement between Lula and Trump in early May, US-Brazil diplomatic relations took a nosedive in late May and early June. The day after Rubio announced that the PCC and CV would be designated as terrorists, the Lula government’s communications secretariat (Secom) published a statement which welcomed international collaboration in the fight against gangs but affirmed that “we will not accept arbitrary measures coming from abroad as a pretext to attack our sovereignty and our economy”. It also stated that: “Brazil rejects any form of external interference in its internal affairs. It is Brazilians – through their institutions, laws, and security forces – who determine how crime is classified and combatted within Brazil.”

Also on 29 May, President Lula gave a speech at an event in Sergipe state where he described the US terrorism designation as a disrespectful move, saying that “we will not accept being treated like children”, before going on to affirm the commitment of Brazilian authorities to addressing organised crime. Such rhetoric from Lula appealing to national sovereignty and pride could represent an effort to boost his popularity in the months ahead of the presidential election. Portraying himself as a defender of national interests helped to temporarily boost his approval ratings last year, when the Trump government imposed steep tariffs on Brazil and sanctioned Brazilian officials, in part as a move to support Trump’s far-right ally and Flávio’s father, former Brazilian president Jair Bolsonaro (2019-2023).

From July-August last year, Jair Bolsonaro came under intense legal pressure due to allegations that he had plotted a coup d’état after his 2022 election defeat to Lula, and in September the supreme court (STF) convicted him for the coup plot [SSR-25-10]. In the months leading up to the conviction in September, Trump and other US officials described the trial as unfair persecution, while Lula criticised the US for using tariffs and other measures as a means to bully Brazil, using rhetoric that framed Trump’s tariffs as an imperialistic affront and a way to exert undue foreign interference in a Brazilian court case. It is possible that now Lula may again seek to benefit from another so-called ‘anti-Trump bump’ – a rise in his popularity through his defiant stance against US actions that could undermine Brazilian sovereignty.

Financial sector concerns

On 1 June Brazil’s Finance Minister Dario Durigan warned that the US decision to designate the PCC and CV as terrorists could cause legal uncertainty for Brazilian banks and other financial services. Speaking in an interview with national broadcaster CBN, he suggested that the widely used Brazilian payment service Pix and Brazilian banks might be subject to sanctions. “If there is an allegation that a specific Brazilian bank holds accounts belonging to PCC members, US authorities could have the US Treasury sanction that bank and prevent it from operating with Pix,” he said.

Public opinion on designations

In an opinion survey carried out by Brazilian polling firm Datafolha from 17-18 June, 59% of respondents said that the PCC and CV should be classified as terrorists, while 33% said they should not be designated. When asked whether Flávio Bolsonaro had any influence over the US decision to designate the groups, 54% of respondents said they thought he did. Of these, 57% viewed Flávio’s potential influence over the US decision as negative for Brazil and only 37% viewed it as positive.