Burden of Proof

The burden of proof of benefit for public works related to the World Cup and Olympics should fall on the government, not on civil society. What is happening in Brazil is that the master plans of cities have been altered to attend to the short term demands of Swiss-based NGOs, with the promise that the outpouring of tens of billions in public funds will generate short, medium, and long term benefits. Of course, the opening of public coffers for massive public project will inevitably generate jobs and secondary benefits for a limited range of social actors. However, the justifications (be they technocratic, economic, or geo-political/symbolic) for those projects and the ways in which they (ostensibly) fit into medium and long-term city planning mechanisms that will generate more just and livable cities are not in evidence at all. Herein lies part of the problem: mega-events, almost without exception, are predicated upon short term return on public investment for private industry – economic projections that indicate massive growth for small businesses are conducted by firms contracted to demonstrate just that. There is a farcical absence of independent economic analysis that justifies multi-billion dollar investments before these investments are made. The studies and reports that are coming out now about the World Cup and Olympics in Brazil are mechanism for justifying what is already underway. The inexorable, relentless carrying off of these projects at whatever cost, needs to be justified somehow. Much like the continual selling of various wars in the USA, the continual selling of mega-investment in Brazil is an exercise in public relations based in voodoo economics.

For readers new to this blog, I am attempting to cover the massive changes in Rio de Janeiro and Brazil from a perspective based in critical geography mixed with investigative journalism. That my comments here are almost wholly in opposition to the projects underway in Brazil is based on my decade of research into the ways that sports impact urban and social relations. There is a global tendency to de-politicize sports. No one likes to think of their leisure activity as yet another field of political action. However, everyone surely understands that the marriage of sports and nationalism in international competitions cannot be effectively separated from ideas of citizenship, notions of belonging, human rights, and the foundations of a global political-economy. The complications inherent to sport are multiplied and accelerated with the World Cup and Olympics, especially as they stimulate and accelerate myriad processes already present in the places / spaces in which they occur. Mega-events crystallize the articulations between the local and the national and the global wherever they occur, opening opportunities for the questioning of and resistance to the worrisome trends of social polarization and the implementation of ever more severe tactics of neo-liberal governance.

I changed the sub-heading of the blog to “Black Boxes and Trojan Horses” as an indication of the way I see these events unfolding. That the World Cup and (to a lesser extent) the Olympics operate in secrecy is no secret. We have yet to be presented with the governance structure of the 2014 World Cup. We don’t know how decisions are being made, just that there is little or no democratic input into the ‘system’ that is taking billions and restructuring cities and social relations, especially in relation to the use of public space, the installation of new security mechanisms, and the re-articulation of the right to the city. The Olympics have adopted a new governance mechanism that erects a non-governmental authority to direct the billions into project that are defined by the needs of the Games and not the city itself. That is to say, the city needs to be restructured to suit the Games, and not the other way around. I think there is something fundamentally wrong with this and am attempting to show how and where and when and why this is happening.

My comments are occasionally hyperbolic but always based in archival and field research that I am conducting. My interpretation of media reports and press releases is hopefully providing a different perspective into the euphoric vision of mega-events that dominates popular discourse. My ire and incredulity are not couched in anti-sport or anti-event rhetoric but rather come from my belief that the World Cup and Olympics are being used as opportunities to maximize capital accumulation opportunities in perverse and negative ways. The models currently being employed are simply not capable of bettering cities, making them more livable, more just places. Rather, the autocratic imposition of these events requires a restructuring of “democratic norms” in order to facilitate the transfer of public wealth to private hands. These are lost opportunities to implement projects that would bring lasting and not short term benefits.

These events need a massive restructuring, a dose of humility, and should attend to the demands of the places in which they are held. As it is, they are ever-larger, require ever-more public funds, and re-shape spaces and places to meet the exigencies of international sport federations and their corporate partners while stimulating real-estate speculation and re-enforcing false notions of “progress” and “social development”. Of course, the massive outlay of public money for these events is going to generate benefits, employment opportunities, and improvements in transportation, communication, etc. But shouldn’t these projects have long-term urban and social planning as their foundation? It is likely that without the events that the political consensus necessary for such a massive outlay would never be possible. However, the opportunity costs are extreme and rarely measured, if only because it is difficult to do so. But considering that the Brazilian federal government just cut R$50 billion from the education budget while it is projecting to spend at least R$60 billion on mega-events indicates that these costs are real and worth considering. 

Laws, Speculation, Eminent Domain, Stadia

The scenario – in Brazil it typically takes about 38 months for a government-funded project to go from approval to payment for services. The bureaucratic hurdles to implementing infrastructure projects and social programs are so formidable that even the gods of Olympus would have to take a few extra running steps to clear them. The three year delay between approval and implementation has the house of FIFA in a fine lather, so Dilma’s left-center government has come up with a solution to the bureaucratic bottleneck: RDC.

The RDC (Regime Diferenciado de Contratações Públicas / Differentiated Regime for Public Contracts) is a fundamental element of the Medida Provisória 527, a Provisional Measure that comes from the Executive branch and requires approval from both houses of the Legislature. The original purpose of MP 527 was to create the Ministry of Civil Aviation, but as it was moving through the halls of Brasilia it picked up the RDC.

The alteration of “normal operating procedures” is a hallmark of mega-events which install states of exception and emergency in the cities and countries where they pass. The time pressures of the event and the contracts signed with Swiss-based NGOs allow for the dribbling of democratic processes and the installation of extra-legal authorities that disappear after the events, leaving no one accountable for the wreckage and debt left behind. Greece is burning in large part because of the huge debt spending for the 2004 Olympics, but no one points the finger at the IOC, the government, or the sponsors of the event. No money left in the public coffers? Austerity for the people. 

There are conflicting needs expressed in the RDC and MP 527. Brazil is woefully late and staggeringly over budget in the production of facilities for the 2014 World Cup. There is a need to have a mechanism that lowers, or at least controls, the costs of stadium and infrastructure projects at the same time that the contracting and payment process can be accelerated. There is also a need for greater transparency in the bidding and contracting processes. The problem with "acceleration" or "differentiation" is that it opens the possibility for even more corruption than usual. The main concern of those opposed to the RDC is that it will make secret the price of the projects until after the projects are awarded. This information will be “secret and will only be available to internal and external organs of fiscal control”. Basically, this means that we will never be able to find out how much projects cost.

Worse, these budgets can be kept from public scrutiny forever if they are considered to be relevant for “state security”.

On the bright side, it appears that the “super-powers” of FIFA and the IOC which would have allowed them to demand significant modifications to projects after the contracting process, potentially increasing their cost. Also on the side of transparency and democracy was the inclusion of Federal financial control organs in the list of agencies that could have access to the budgets: Tribunal de Contas da União (TCU), Controladoria-Geral da União (CGU) and Ministério Público (MP).

The Senate should vote on MP 527 this week and there may be some alterations to the final version, so more on that soon. The extreme content of MP 527 has generated significant debate about the role of transparency for mega-event installation. This is a good and necessary debate, but again, one that should have begun back in 2007 when Brazil was first handed the task of preparing for the 2014 World Cup.

See, we're sending those poor people to the puta que pariu!

In Rio, the real-estate speculation boom continues apace. This week, the city announced the winner of the Porto Olímpico contest, a massive re-urbanization prject that will bring millions of square meters of office space and upper middle class residences to the Zona Portuaria. Of course there are the normal references to the “inspiration of Barcelona” and the role of the Olympics in revitalizing the port area. Left out of the celebrations are the reports that many of the Zona Portuaria's traditional tenants and residents are being forced out to make way for the “revitalization”.

One of the most egregious examples of the approach the city is taking in their maniacal desire to re-make space and culture is the expulsion of the Samba schools that have traditionally occupied the region. Twelve schools will have 30 days to leave the area which the Porto Olímpico project will occupy. Out with the old and traditional, in with the new and consumerist. In addition to the samba schools, families and small businesses that occupy the old Federal Railway Depository (RFF) will also have to find somewhere else to go. This is all directed by CDURP, the private enterprise that is responsible for the “re-urbanization” of the Zona Portuaria with R$ 7.6 billion in stimulus from the Caixa Econômica (in addition to several billion more from the FGST, a public workers pension fund). That is to say, uma porrada de dinheiro público para lucros privados.

Speculation and "Re-vitalization", the winning project for the Porto Olimpico

To round off the post, there is a report in today’s Valor Econômico (1.7.11, A7) about the financing of São Paulo’s World Cup stadium, the Itaquerão. In addition to the low-interest R$400 million loan from BNDES, Corinthians (Lula’s team) will receive hundreds of millions from the city as well as a R$30 million exemption from ISS (Taxes for Services Provided). The cost of the stadium, which a few weeks ago was R$700 million, has jumped to R$ 1,07 billion. The city is only guaranteeing financing if the Itaquerão manages to attract the opening game of the cup, further politicizing the already highly charged relations between the CBF and the host cities.

"Neigh" to the Trojan Horse

There is nothing going right in the preparations for the 2014 World Cup. The stadia are 85% over budget from their initial projections (now more than R$7 bi) and some of the projects haven’t even started or been contracted. Five of the proposed stadia will have no effective post-cup use. The Maracanã, Fonte Nova, Verdão, and Mane Garrincha epitomize the capitalist cycle of creative destruction.  There aren’t enough places for the 32 teams to train. The transportation infrastructure within and between cities is appalling. Things are so bad that even the new CBF headquarters has come under scrutiny for financial irregularities in the transaction that gave them a sweet deal on a property in Barra de Tijuca (which I reported about last year). Dilma is getting anxious, her hair stiffening. OGlobo, (again in their impression of Fox News) is increasingly fretful, saying that “Brazil is worse than Africa.”

On top of this organizational fail, there is NO TRANSPARENCY and NO ACCOUNTABILITY. I have repeatedly sent emails to the organizing committee asking for a list of the people who comprise the organizing committee. Nothing.  Who are these people?

What is really going on here?

Historically, one of the biggest challenges to building the Brazilian state has been the country’s size. In the USA and W. Europe and Japan and Australia, there are massive, state funded infrastructure projects that link cities and their hinterlands to other cities. Infrastructure projects such as the interstate highway system in the USA (to take one case) were part of a continental-scale developmental project that accelerated flows of people, information, goods, and money. This allowed for the industrial development of the South and Southwest as well as for massive internal migration from the Northeast and Midwest in the 1960s, 70s, and 80s.

A similar project never happened in Brazil where the coastal cities have always been isolated from one another, tending to be more connected with the exterior than with other Brazilian cities. This is reflective of an colonial and neo-colonial economy based on natural resource extraction. Now, that Brazil is trying to develop its internal market and consume more of its own natural resources as it pursues a USAmerican-style consumer society. However, the lack of effective infrastructure links between the major cities and their hinterlands (which would open up the same kind of internal colonization / economic expansion that happened in the USA after the development of the interstate system) is limiting those possibilities.

So when we hear all of the complaints about the airports in Brazil, what is it that we are listening to? Given that World Cup travel will increase demand by 5% for one month (I have this data somewhere, excuse its temporary absence), what is all the shouting about?

The airports are saturated and disorganized because as the Brazilian economy has grown, demand for personal and business travel has also grown but have not been accompanied by commensurate infrastructure investment. Who is doing the traveling? The “new” middle class and the old upper classes who are trying to get here and there as comfortably and as quickly as possible. The papers are always full of pictures of long lines, cancelled flights, one or another INFRAERO manager making apologies for a half-ass airport. But really, these are complaints about the inability of the Brazilian state to invest significantly and effectively in the necessary infrastructure to accelerate flows between cities.

Cheap air travel in the USA and W. Europe is a relatively recent phenomenon and only came after significant developments in rail and road infrastructure. In Brazil, there is NO WAY to effectively travel by car or bus or rail between regions. Inter-regional transit is shaky outside of the Rio-BH-São Paulo axis, but linking these regions together has always been one of the biggest challenges for Brazil. The recent surge in demand for air travel has not been accompanied by any long-term strategic planning. Airports are clearly not the answer but they do attend to the leisure demands of the upper classes, the novelty trips of the nascent middle classes, people on business travel, and international sport federations and their blinkered, myopic, aloof, retrograde, feudal, extractive and oppressive demands.

The challenges for Brazil are huge and everything is behind schedule, increasing costs. The people in charge of producing the World Cup lack professionalism and a sense of civic responsibility. There is a growing sense in the media and in government that 2014 could be a massive embarrassment. The problems, as I have continued to identify here, are historical, geographical, political, and cultural. Using sports-mega events as a catalyst for continental-scale development projects is not a good idea. Focusing the discussion around airports is a smokescreen which will hide the real necessity: effective rail infrastructure that will begin to stitch together Brazil’s urban archipelago. This has never been mentioned as a possibility.

The World Cup is a Trojan Horse that is allowing for the implementation of a series of neo-liberal governance mechanisms to be implanted while diverting attention from the effective demands of Brazil’s seriously troubled infrastructure. The opening of the gates to a horde of international capitalist interests combined with the focus on tourist infrastructures will not leave any lasting benefit for Brazil. A country of 200 million that receives 6 million tourist visits a year should not predicate economic growth on that industry, nor should it concentrate on developing infrastructure to attend to those people. State-led investment in infrastructure is fundamental for economic growth and the larger developmental project [sic] of Brazil. It is by focusing the discussion in relation to the World Cup and Olympics that these larger necessities and failings are covered over with short term solutions by near-sighted politicians and their corporate overlords who use the event(s) as a smash and grab, shock and awe tactic to suck as much surplus value as possible out of Brazil before moving on.

Pos-Carnaval scattershot

Brazil is expensive. Everyone keeps saying it, we all keep paying it. Here’s an example from yesterday. I filled up a very small car with gas, R$104 (US$65, about six dollars a gallon in a country that doesn’t import oil and has its own refineries). Then, it was time to change the oil. The synthetic quarts, sucked out of the ground, processed, produced and sold in Brazil were R$39 each. That’s twenty dollars a quart of oil. The oil change set me back R$186. So, between filling up the car and getting the oil changed I spent R$290 or US$ 175. Not to even mention the cost of buying and maintaining cars here, nossa senhora.  If you can say carro caro five times quickly without having both words sound the same then you are probably used to such prices and don’t even think about it anymore.

Brazilians are getting more and more into debt as the consumer society expands. The front page of OGlobo’s Economia section from Sunday: Brazilians already commit 22% of their salaries to pay down debts. This is up from 13.9% in 2003. The banks in Brazil charge up to 180% per year for credit card debt, and for short term cash loans, the percentages can be even higher. The best possible business to have in Brazil is a bank. As people begin to borrow against the inflated values of their homes and apartments and buy more and more things that they didn’t even know they needed until they had someone offering just that very thing, then wow! When the bubble bursts in 2017(?), it will probably still be good to be in banking (as the recent experience in the USA has shown).

There is a direct correlation between occupying a foreign country and occupying Rio’s favelas. The Brazilian military has been leading the UN’s occupation of Haiti for many years and has used the strategies and tactics of that occupation in the military exercises in the Complexo do Alemão. Sensitive as ever to the cultural nuances of “indigenous people”, a Brazilian coronel was quoted as saying, “it doesn’t get to be an organized crime unit like in Rio. Violence happens here may times because it is a part of their culture.” (Não chega a ser uma organização criminosa como no Rio. A violência acontece aqui, muitas vezes, por fazer parte da cultura do povo.)  There are other comparisons to be made here between the USA and Brazil, but I will leave it to the reader to make those connections.

O’Bama is planning a visit to Rio for St. Patrick’s Day week. He’ll give a big public speech in Cinelândia. I’m trying to call this the “Visita d’Obama” but was told this is not grammatically correct. It’s the “Visita do Obama”, which for me is one too many O’s.

Dilma officially indicated Henrique Mirelles as the head of the APO (Autoridade Pública Olímpica). The former head of Brazil’s Central Bank will preside over an institution that was significantly reduced in size during the deliberations in the Senate. The APO went from 480 to 181 official posts. The Lula government was sparing no expense, for anything, but Dilma has had more fiscally responsible ideas in her head. Sergio Cabral and Eduardo Paes also wanted the APO to have reduced powers and they appear to have been successful in their negotiations with the federal government. I haven’t been able to find the revised text of the Medida Provisória 510, so if anyone out there has some time and inclination, I’ll update this post and give due credit!

Classes started this week. I’m teaching a course called “Producing the Olympic City” in the Master’s program of Architecture and Urbanism at UFF. If anyone wants to get on the blog, google group, or zotero send me an email and I’ll get you signed up. Falando nisso, se houver Brasileiros interessados em participar no curso, estou abrindo as portas para vocês! (BTW, for those of you not familiar with zotero.com, it’s perhaps the best thing ever invented for researchers, even though it only functions in Mozilla).

Question about mega-events for Lula

(This morning there was a collective interview for the foreign journalists in Brazil with President Lula. My question made it into the list and I was able to get it across to him. For the moment I am going to leave the question and response up here without my commentary as there are many other questions that he responded to that I am going to weave into a larger post.)

A couple of notes to contetualize the question and response. 1) BNDES, the National Development Bank, is providing R$400 million in sub-prime loans to states who are building World Cup stadiums. 2) Any and all materials having to do with the World Cup are exempt from import taxes and employees are expempt from income taxes. This is a requirement of FIFA and one that several Dutch and  Belgium PMs called attention to, undoubtedly blasting huge holes in their bid for the World Cup 3) Brazil has passed multiple laws at all levels of government that allow for the 'dribbling' of constitutional processes that would interfere with the expediencies required to host mega-events. 4) Lula is the head of the Worker's Party which formerly represented the political left in Brazil.

Pergunta Para Lula ; Question for Lula

Em 2007 seu governo, atravez do ministerio do esporte, guarantiu que não haverá dineiro publico para construir estádios pela copa do mundo. Hoje em dia o governo está disposto gastar bilhões nos estádios alem de dar isensão fiscal a todo que tem que ver com a Copa, qual é um evento privado de FIFA. Em 2009, o senhor assinou um contrato com COI  garantindo R$29 bilhões pela realização dos Jogos Olímpicos no Rio. Para realizar esse eventos é preciso altera leis nacionais, estaduais e municipais para permitir que esses eventos se-realizam. Na face dos grandes prejuiços que sofreram Grecia e Africa do Sul depois dos mega-eventos é possivel que os mega-eventos vão atropelhar processos democraticos e aumenta desigualidades sociais no Brasil?

In 2007 your government, via the Minister of Sport, guaranteed that there would not be any public money spent on World Cup stadiums. Today, the government is prepared to spend billions on the stadiums in addition to giving full tax exemption to everything that has to do with the World Cup, which is a private event run by FIFA. In 2009, you signed a contract with the IOC guaranteeing R$29 billion for the realization of the Olympic Games in Rio de Janeiro. To carry off these events, it is necessary to alter federal, state, and municipal laws. In the face of the economic damages that Athens and South Africa suffered after mega-events, is it possible that mega-events are going to harm democratic processes and increase social inequalities in Brazil?

Resposta ; Response

Se a Copa do Mundo fosse tããão desastrosa economicamente, não teria tanta gente atras dela. (ironicamente)

If the World Cup was such a financial disaster there wouldn’t be so many people after it. (ironically).

Todo pais deveria fazer uma Copa do Mundo não é apenas uma cuestao de dinheiro porque é um espectáculo que da dimensão a um pais. O que a gente ve quando vemos o que aconteceu na China, em quanto conheciamos a China antes e quando connheciamos depois?

Every country should host a World Cup and it is not merely a question of money because it is a spectacle tat gives an added dimension to a country. What did we see when we saw what happened in China, how much did we know about China before [the Olympics] and how much did we know after?

O governo não está colocado dinheiro publico. O governo abriu uma linha de financiamento à cada estado que de responsibilidade de cuidar dos estádios porque os proprios governadores apresentavam os projectos para poder conquistar o direito cediar a Copa do Mundo. O que nos fizemos foi colocar a disposição do cada estado uma quantia em dinheiro financiado pelo Banco nacional de desenvolvimento. Por tanto o governador vai pegar o seu dinheiro e vai contrair um empréstimo e vai pagar.

The government is not spending public money. The government opened a line of financing for every state that is taking responsibility for building the stadiums because it was the governors of the state that presented the projects in order to conquer the right to host the World Cup. What we did was to place at the disposition of every state a quantity of money financed by the National Development Bank (BNDES) [R$400 million per stadium]. From there, each governor can take their money, assume the loan and then pay it back.

E obviamente nos interesse baratear o custo das coisas para que a copa do mundo será o mais barata que..o seja. Acho que e incompensible que tenha pessoas que faça a vida inteira dizendo que nos fizemos reduzir impostos, reduzir impostos, reduzir impostos...quando a gente redizimos impostos, quando a gente reduz impostos pra fazer um estádio as pessoas falam que o Estado está perdendo.

It’s obvious that it interests us to keep the costs low so that the Cup will be as cheap as possible. That is, I think that it’s incomprehensible that we have people that go their entire lives saying that we need to reduce taxes, reduce taxes, reduce taxes, and when we reduce taxes to build a stadium people say that the state is losing out.

O mundo deveria ter copiado o Brasil. O Brasil foi o primeiro pais a tomar todas as medidas anti-cíclicas que foram tomadao depois pela China, e ai rediuzimos impostos para o povo poder comprar uma escada, para o povo comprar mais carro, para o povo comprar a geladeira, para o povo comprar uma maquina de lavar, para o povo comprar uma televisão. Reduzimos tantos impostos de construção civil. Então, é importante que a gente reduze impostos para a construcao dessas obras que depois que depois de estiverem prontas elas vao ser motivo de aumento da arrecadacao do proprio estado seja o estado, seja a cidade, e seja a União.

The world should have copied Brazil. Brazil was the first country to take all of the anti-cyclical measures that were taken after by China. We reduced taxes so that people could buy a ladder, but a car, buy a refrigerator, buy a washing machine, buy a television. We reduced civil construction taxes a lot. It is therefore important that we reduce the taxes [and tariffs] for the construction of these projects so that after they are ready they will be able to contribute to the increase in the receipts of the state, city, or country.

Vamos fazer uma extraordinaria copa do mundo. Eu tenho certeza absoluta que cada entity federativo vai cumprir com a suas obrigações. E que vamos fazer uma copa do mundo exemplar e que espera que muita gente vieram aqui para ver de o que estamos capaz.

We are going to have an extraordinary World Cup. I have absolute certainty that all of the federal entities are going to meet their obligations. We are going to put on an exemplary World Cup and I hope that a lot of people come here to see what we are capable of.

O que não pode acontecer e o Brasil perder a Copa do Mundo aqui no Maracanã como foi em cinquenta, vai ser um disastre economico. E vamos nos preparar para que Brasil seja campeão.

What can’t happen is that Brazil loses the World Cup in the Maracanã like we did in 1950, it will be an economic disaster. We are going to prepare ourselves so Brazil becomes champion.

Russia 2018, Quatar 2022. Does FIFA make you sick too?

FIFA's decisions are the final nails in the coffin of the World Cup as an populist event. It's been going this way for some time, but it should be clear to everyone that FIFA goes where they can "do business" their way. Where corruption and petro-dollars reside (South Africa, Brasil, Russia, Quatar), there goes FIFA. 2006 was an abberation to give some credibility to the institution, or to give the Europeans a chance to see the Cup. But now, we are seeing the depths to which FIFA has fallen and I am considering a personal boycot of international football. It will certainly free months of my life up to do something useful. So, to all of you who were thinking of coming to Brasil for the 2014 World Cup, my apartment will be empty as I'll be off in the Pantanal, far from televisions, internet, and radio. FIFA perpetrates crimes against humanity with the full support of the public.

A flight from Rio de Janeiro to Doha, for one month, US$2,284.
A flight from Rio de Janeiro to Moscow: US$1,300 (not bad actually!)

If you're revolted by these two decisions, start paying attention to what is going to happen in Brasil and to what just happened in South Africa, as it's all part of the same putrid puzzle.