06 December 2010

A partial response to a question unanswered

Of the many elements of my question that Lula did not respond to, the notion of changing federal, state, and local laws in order to host mega-events is one of the most important and insidious. In Brazil, we are staring down the barrel of multiple mega-events, none of which will be produced and consumed using the slow and cumbersome tools available to fledging democracies.

One of the methods used by the Brazilian executive branch to dribble democratic processes is known as a MP (Medida Provisória), similar to the kind executive order used by George W. to invade Iraq

In July 2010, President Lula signed  MP  496/10  that allows cities that will host the World Cup to extend their debt levels above their level of revenue, violating a federal law that requires cities to maintain balanced budgets. This MP opens the path for excessive public spending. According to lawyers and economists, this will encourage reckless public spending under “emergency conditions”, creating a situation similar to the 2007 Pan American Games which was ten times over budget, was able to sidestep well-established contracting procedures, left behind useless and decaying structures,  and resulted in multiple lawsuits against the organizers.

Lula held the contrary view, saying that “this is important so that we don’t repeat the errors of the Pan. We tried to construct a pact to figure out who was responsible for what and it didn’t work”. Acho que isso é muito importante para a gente não repetir os [erros dos] Jogos Pan-americanos. A gente tentou construiu um pacto para saber qual a responsabilidade do governo federal, estadual e municipal. Não deu certo”, lembrou.

Not satisfied with the indebtedness of cities, it is also necessary to open the nation’s frontiers to any and all materials imported to construct, amplify, or reform buidings for the World Cup and Olympics. MP 497/10 creates a free trade zone that is equivalent to a massive public subsidy for foreign firms to do business in Brazil, putting national firms at a competitive disadvantage. The elimination of trade barriers of this kind requires specific legislation that contravenes existing norms, using the excuse of the “emergency” of the mega-event to open the gates to Trojan horses disguised as white elephants.

Last week, the city government of Rio de Janeiro passed the Pacote Olímpico, a series of laws that opens up areas of the city and gives financial incentives for hotel construction, allows for reforms of specific buildings such as the Sambódromo and Gasómetro. The full details of the law are not yet available to the public.

We’ve seen over the last weeks the ways in which the state has been violently intervening in Rio de Janeiro in order to securitize urban space for these events. To be sure, the mega-events are not the only motivation for invading and occupying strategic parts of the city with state and federal troops, but the perpetual “state of emergency” that Rio and Brazil are now living under as we adequately prepare ourselves to receive the FIFA and IOC overlords is forcing some radical change in the city.

(I’m not sure if any one has undertaken a larger sociological examination of the role that “inviting the world to Rio” is going to have on Carioca society. Cariocas’ are generally reluctant to invite people into their homes, preferring to meet in public spaces, bars, street corners, etc. The airing of dirty laundry in the face of the world’s press, which will undoubtedly be going through the metaphorical closets, might be rather embarrassing and can be considered one of the risks of hosting mega-events).

Lula, of course, is in favor of the World Cup and Olympics as they represent significant gains in Brazil’s political-economic standing. For him, it is well worth spending as much as 100 billion public dollars, which in the larger scheme of the Brazilian economy is barely noticeable. The problem is not that the World Cup and Olympics are happening, but that they are being used to promote agendas that will weaken already fragile institutions, create non-democratic space and places, exclude the majority of the population from active participation, and subsidize record profits for national and trans-national corporations with public money. This is hardly the kind of platform that Lula would have promoted 8 years ago, but one that is painfully consistent with the political-economy of the PT over the past 5-6 years.

There is no evidence to support the notion that cities, states, or nations ever recuperate their investment in mega-events. The short and medium term consequences for what I would consider necessary social spending (housing, education, transportation, health) are dire. In the case of Rio de Janeiro, the investments in transportation infrastructure are not going to attend to the real needs of the city, but will rather further segment the city along class lines and contribute to the enrichment of areas that are already privileged in the urban context.

This is nothing new, but it is interesting to hear how the “leftist” president of Brazil justifies all of the public spending in the name of creating a consumer society predicated upon a “unsustainable” model of development. I use quotes there because the idea of “sustainability” has become a farcical and empty trope that makes people feel better (or ignore entirely) that their consumer choices are false ones (i.e. Prius or Lexus / Pepsi or Coke / Brahma ou Skol – the same decision processes that have the same result of perpetuating cycles of production and consumption).

Lula is justifiably proud of many of the accomplishments of his government, but the idea of eliminating or lowering tariffs on foreign companies and altering laws so that FIFA and the IOC can come in and contribute to the explosive growth of a consumer society (of which the recent invasions are meant to “secure”) is abusive, short-sighted, and un-democratic. The proof is in the alteration of laws which will stimulate short term gains for a few, which the cities and their residents will live with the debt and alterations to urban space for the next generations.

Lula’s closing comments at the collective interview provide deep insight into the way he (and the incoming president, Dilma) view the role of government.

“If you look at the world today, among the largest hydroelectric dams under construction, the three largest are being built in Brazil, Santo Antônio, Girão, Belo Monte. That’s 418 megawatts of energy being constructed simultaneously in Brazil. If you were to analyze the railways being constructed in the world, three of the largest are being built in Brazil: norte-sul, de 1.530 km, nordestino that will link Ceará and Pernambuco passing for Piauí, 1.900 km, and the East-West that will link Bahia with Belém. So we have three of the biggest rail lines in the world under construction. If you look at what we are doing, you will see that we are also building for of the biggest refineries in the world, Comperj in Rio de Janeiro (US$ 20 billion), Maranhão (US$9 billion), Ceará (US$12 billion), Pernambuco (US$12 billion). If you were to analyze the investments in petroleum exploration being undertaken around the world, you would find that the biggest investment being made in the world today is being done in Brazil and through 2014 will be invested US$224 billions in oil exploration. I am saying all of this to you to demonstrate the volume and solidity of investment being undertaken in Brazil.”

This is the new look of the Worker’s Party in Brazil. It is a very different one than took the stage 8 years ago. The discourses of social justice and democracy have flown out the window as quickly as the economy has grown. The environment is something to be exploited and sold, either as valuable commodity or as an “authentic” tourist experience. Economies and democratic institutions are not growing at equal rates.   The prevailing idea is that as long as everyone is getting at least a little bit more wealthy, and people can buy things and have their lights on, then bring on the mega-events to show the world that Brazil is capable of being just like Europe and North America, where financial and social troubles were left behind when Reagan, Thatcher, Kohl, and Chirac took office.

What Lula doesn’t say, and refused to answer, was that he has signed laws and is working to create cities that will encourage private urban governance and the spectacularization of consumption and leisure in the form of blinged-out stadiums, fancy waterfront restaurants, and exclusive shopping districts.

Get your authenticity packaged up by staying in a 2 star boutique hotel in the Complexo de Alemão, or Pavão-Pavãozinho, where just last year drug traffickers ruled! Don’t worry, it’s occupied by shock troops, nothing to fear (anymore). Come to Rio, your safe, yet legally justified, debt-laden haven for unlimited capital accumulation where things will look just like Barcelona by 2016, if everything goes according to plan.


Rodrigo M. Nunes said...


I completely agree with the argument that the quest for economic growth (however misguided the strategy of growth in place might be) has come at the expense of democracy. As for the PT's commitment to social justice, that has also taken a back seat in recent years. Although, to be fair, reforms that would serve to really redistribute income in BRazilian society are very hard to implement due to the huge number of veto players in place, regardless of the party in power. But I must admit, it's ironic to hear Lula laud the pharaonic projects being built these days. HE sounds just like the military governments of yore. "Brazil needs to be great and show the world that it is modern;" it's as if Brazilians have this perennial inferiority complex.

That being said, why is creating a free trade zone tantamount to governmental subsidies to foreign firms? You're not spending money. Furthermore, Brazilian firms are not completely unable to compete with foreign ones. This would have been true in the early 1990s, but now...And finally, don't you think that this kind of competition could serve as a mechanism of oversight concerning expenditures etc?

cheers bro

Dr. Christopher Gaffney said...

Thanks for the comments and questions.

Why is creating a free trade zone tantamount to governmental subsidies to foreign firms?

Because only goods that are being imported for the WC are exempt from taxation. That is, if a Brazilian firm has steel arches for stadia on offer, their goods will be subject to taxation whereas the foreign company will not. More, the stadiums designs are predicated on models from Europe and the USA which are going to utilize engineering techiques and materials that are not currently available in Brazil. For instance, in the case of the roof for the Novo Caraca the Brazilian consotrium in charge of constuction is sub-contracting a German-Dutch firm to buid the roof. All of the materials for the roof will be imported, the labor will be imported (and not taxed), and the knowledge transfer will likely be minimal. It's not an issue of the competitivity of Brazilian firms, but the whlesale importation of architectural and engineering (both physical and social), that I doubt will leave much in the way of lasting benefits for Rio or Brazil.


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