Why Saudi Arabian diamonds could spark Brazilian political unrest

A scandal involving diamond jewelry worth some 3mn euros (US$3.2mn) that Saudi Arabia gifted Brazil’s former first lady, Michelle Bolsonaro, could impede a future political comeback for former president Jair Bolsonaro.

After losing the election to Luiz Inácio Lula da Silva last October, Bolsonaro has not ruled out a presidential run in 2026 while he remains in the US state of Florida, where he traveled before Lula was sworn in on January 1.

Newspaper O Estado de S. Paulo recently reported that mines and energy ministry officials tried to smuggle jewelry that Saudi Arabia gave to then-first lady Michelle Bolsonaro in October 2021, but tax authorities confiscated the goods at São Paulo international airport.

While Bolsonaro pleads innocence, the scandal gained traction recently after local media published footage of former government officials trying to recover the seized jewelry, claiming Bolsonaro ordered the move.

"This jewelry case weakens Bolsonaro’s [anticorruption image] and generates an almost irreversible picture that points to the suspension of his political rights, making his candidacy for the next elections unfeasible," Mário Sérgio Lima, senior political analyst at Medley Global Advisors, tells BNamericas. 

But the negative impact will not necessarily mean a political advantage for Lula in the near term.

“Control of congress is not contested between the far right representing Bolsonaro and the leftist forces. The Lula administration's rivals in congress are the center-right parties,” Carlos Melo, professor of political science at São Paulo business school Insper tells BNamericas. 

Other local analysts worry about the scandal generating further social unrest in the country after Bolsonaro supporters ransacked the presidential palace, congress and the supreme court on January 8. 

"We have to remember that there is a radical right-wing force in Brazil of 20% or 25% of the population, which has great mobilizing power. A suspension of Bolsonaro's political rights or even his arrest, in a more radical scenario, could generate many protests in the streets by his supporters and moments of social tensions," says André Pereira Cesar, a political analyst at Hold Consultoria.

"Mass protests in the streets are never good for governments and this could indeed have a secondary negative impact on the Lula government’s agenda." 

Several outlets reported that Bolsonaro routinely received jewelry while in office but did not hand it to the official collection of the presidency, as is customary.

Audit court TCU ruled that Bolsonaro must not use or sell Saudi Arabian jewelry, suggesting a formal investigation is being prepared.

“The audit court informs that, in relation to the process regarding signs of irregularities related to the attempt to enter the country with jewelry … it has adopted the necessary measures for the reorganization of the records by carrying out due diligence with the federal police and the tax authority, as well as hearing from those responsible Jair Messias Bolsonaro and [former mines and energy minister] Bento Albuquerque,” state news agency Agencia Brasil reported.

Leftist lawmakers requested the creation of a lower house commission to investigate why Saudi Arabia gave the jewelry to Bolsonaro.

In addition, the oil workers union FUP recently requested prosecutors to investigate a possible link between the jewelry and the sale of federal oil firm Petrobras’ Landulpho Alves (Mataripe) refinery to Abu Dhabi's sovereign fund Mubadala Capital.

Petrobras disclosed the US$1.8bn deal at the end of November 2021, about a month after Bolsonaro’s Middle East trip, but the union said studies by petroleum association Ineep showed the refinery was worth US$3-4bn.

Although the sale did not directly involve Saudi Arabia, FUP highlighted the close alliance between Riyadh and Abu Dhabi would warrant an investigation.