Brazil said on August 4 it would downgrade diplomatic relations with Argentina to the level of chargé d'affaires after Argentine President Javier Milei hurled new insults at Brazilian President Luiz Inácio Lula da Silva.

Brazil's ambassador to Argentina, Julio Bitelli, will not return to his post in Buenos Aires for the time being, a Brazilian government source said, according to Reuters. Bitelli was recalled for consultations late last month after Milei criticised Lula while campaigning alongside opposition presidential candidate Flávio Bolsonaro.

The move followed an interview Milei gave to Argentine broadcaster LN+, in which he again called Lula an "ex-convict," a "thief" and "corrupt."

Argentina's ambassador in Brasilia, Daniel Raimondi, was summoned to Itamaraty, the Brazilian foreign ministry, and informed of the decision, according to the source. Brazil has not severed ties with Argentina or closed its embassy, but the move is one of the sharpest diplomatic responses Brazil has taken against the Milei government since he took office.

Argentina's foreign ministry, led by Pablo Quirno, said in a statement it "takes note of the decision adopted unilaterally" by Brazil and "regrets its decision to continue isolating itself from the rest of the region." The ministry added that Buenos Aires has "never responded to a political difference with an institutional measure," and said that principle still holds.

The diplomatic rift began in late July, when Milei addressed the National Convention of Brazil's Liberal Party in São Paulo and endorsed right-wing senator Flávio Bolsonaro for Brazil's October 4 presidential election. In that inflammatory speech, Milei warned of a "Lula risk" in Brazil, comparing it to what he called the "Kuka risk" that he said existed in Argentina before his own election, and referred to Lula as a "thief," "convict" and "totalitarian." He also lashed out at Supreme Court Justice Alexandre de Moraes for not allowing him to visit Flavio's father, former president Jair Bolsonaro, whom he called his "unjustly imprisoned" friend.

In the August 3 LN+ interview, Milei defended his earlier remarks, asking "Did I lie in Brazil?" He said Lula had been "one of the few" leaders who did not congratulate him after his 2023 election victory, expressed hope that "Brazil turns blue," and said "it is always good to get rid of leftists, thieves and corrupt people."

The two presidents, who lead Latin America's two largest economies, have not held an official bilateral meeting since Milei took office. The dispute has also drawn concern within Mercosur: Uruguayan Foreign Minister Mario Lubetkin said Montevideo was following the situation "very closely" but considered it a matter for Argentina and Brazil to resolve, warning that rising tension within the bloc "does not help at all" as Mercosur pursues trade negotiations with the European Union, EFTA and other partners.