Hubris and Nemesis: Olympic Rio de Janeiro and the contradictions of Brazil’s development model

Posted on August 17, 2016

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Hubris nemesis olympics ceremony

This blog post was written for the Political Studies Association blog.

 

In October 2009, then-President of Brazil, Luis Inácio Lula da Silva, stood before the International Olympic Committee (IOC) and delivered a speech that sounds as bitterly ironic now as it seemed momentous at the time. With the same rhetorical virtuosity that helped him to two presidential terms and to depart from office with the highest approval ratings in the democratic world, Lula assured the Committee that Brazil’s “time had come”. While for the other candidates it would be just another Olympics, for Brazil it would be an “unequalled opportunity, enhancing Brazilians’ self-esteem, consolidating recent achievements, and stimulating further progress.”

Such was the political and economic context of the vote, that these bold claims seemed entirely justified. After a short downturn following the global financial crisis of 2008, Brazil’s economy bounced back the following year with an impressive 7.5% GDP growth rate. Poverty had fallen precipitously between 2003 and 2009 and the country’s middle-income bracket had correspondingly expanded, prompting much excited talk that Brazil was becoming a “middle-class” country. When the IOC did indeed award the Games to Rio it seemed to confirm the optimistic narrative. With Lula ending his second term on a high, the future seemed bright for this continental nation for whom – as the saying goes – the future never quite seems to arrive.

Seven years on and Lula’s promise of the Olympics as both a symbol and catalyst of Brazil’s development today rings hollow. Recent polling suggests that a majority of Brazilians believe the Games will lower rather than enhance the country’s international reputation. Meanwhile the glistening sports stadia standing in stark contrast to dilapidated schools and hospitals now seem to symbolise a path wrongly taken, rather than another scheduled stop on the road to progress. Even the man most directly associated with the Olympics legacy, Rio’s Mayor Eduardo Paes, has described it as a “missed opportunity”. So where did it all go wrong? The trajectory of change in Rio de Janeiro over this period provides some key insights into Brazil’s broader national plight. In particular, it points to how underlying structural features of the country’s political system and economic model have impeded the consolidation of notable advances made during the first decade of the century.

Brazil’s complex three-tier governmental structure and highly fragmented party system place a premium on the formation of precarious and often highly compromising governing coalitions. Following Lula’s re-election in 2006 his Partido dos Trabalhadores (Workers’ Party, PT) entered into alliance with the Partido do Movimento Democrático do Brasil (Democratic Movement Party of Brazil, PMDB). This party, whose origins lie in Brazil’s military dictatorship, combines a broadly pro-business outlook with an ideological fluidity that allows it to opportunistically form coalitions at different levels of government.

Just as the PTPMDB coalition was born in 2006, Sérgio Cabral of the PMDB was elected Governor of Rio de Janeiro state, and two years later Eduardo Paes, also of the PMDB, became city Mayor. This was the first time since Brazil’s redemocratisation that Rio de Janeiro’s three layers of government had come into alignment, providing the political foundations for the radical urban reform agenda that would follow.

This policy agenda appears both complex and contradictory. From the federal level the PT made huge investments in major infrastructure and housebuilding programmes in Rio, as in other cities. Federal government has limited influence at the city scale, and such interventions are nowhere near enough to address Rio’s manifold challenges in infrastructure, mobility and housing. Nonetheless, these programmes have at least upgraded important infrastructure components in strategic (in many cases, low-income) areas of the city, and have somewhat eased Rio’s long-standing housing deficit.

State and municipal policies, however, have had more ambivalent impacts. The State Governor’s “pacification” programme, designed to establish permanent police presence in favelas (informal neighbourhoods) dominated by drug trafficking gangs, was initially popular and succeeded in bringing down violence in the city. However, the programme has been damaged by instances of police abuse and has recently come under pressure due to both financial restraints and a resurgence of gang activity in some areas. From the municipal level multiple transport and infrastructure initiatives were launched, largely directed towards delivering the Olympics and bolstering the tourism sector. These programmes have spent vast quantities of public money on what are widely viewed as vanity projects, causing mass arbitrary favela evictions in the process. Officially bankrupt as of last month, the State of Rio de Janeiro has had to apply for emergency federal funds in order to keep core services going. Through its coalition with the PMDB, then, thePT has become associated with wasteful and anti-poor policies and alienated much of its electoral base, despite its own direct interventions tending to have more positive effects.

However, the PT’s guilt is not merely by association. Urban interventions at all levels of government have followed a model of lucrative subcontracting, in particular to a select group of mammoth construction firms. This pattern is linked to the PT’s industrial strategy of promoting “national champions” through generous subsidies, allowing them to concentrate knowledge and resources and, so, compete globally. Such corporate welfare may have seemed like money well spent before and in the immediate aftermath of the global financial crisis, as it stimulated economic activity in key domains with positive multiplier effects. However, as global demand for Brazilian exports declined from 2012 onwards, further rounds of economic stimulus were unable to reverse a steady decline in the growth rate. As Brazil entered recession in 2014 and Brazil’s corporate sector essentially declared an investment strike, the subsidies began to look like straightforward transfers from the public purse into private pockets, with little wider benefit.

This industrial model also reinforced an already incestuous relationship between big business and government, with disastrous political consequences. From 2013 onwards news gradually began to leak of a vast corruption scandal involving the state oil company Petrobras, all of the main political parties (including, but far from restricted to, the PT), and many of the construction giants. With the economy already in a tailspin, this news precipitated a political crisis that has rocked Brazil’s very foundations. Long-standing opponents of the PT, predominantly from the upper-middle class and cheer-led by the country’s deeply conservative media establishment, took to the streets to call for the impeachment of Lula’s successor, President Dilma Rousseff. In April, little more than 18 months after her re-election, Rousseff was removed from office on highly dubious charges of budgeting irregularities. Her impeachment is expected to be ratified by the Senate in the coming months.

As the Olympics officially opened on 5th August, it was not Rousseff who attended, but instead her former vice-President, now interim President, Michel Temer. His party? The PMDB. Ever opportunistic, the PMDB sniffed a chance for power that it could never have gained via the ballot box and broke with the PT during the crisis of March-April 2016. Now Temer leads a government that claims to be saving the country from the corruption and fiscal laxity of the PT years. The chutzpah that this should come from the country’s most notoriously corrupt party, which has bankrupted Rio de Janeiro, and was the PT’s most prominent partner in government, is little less than astonishing.

And yet the PT cannot complain too much about its fate. Through its Faustian Pact with the PMDBand a patrimonial corporate elite – best illustrated by the folly of the Rio Olympics – it had become part of the problem. The PT believed it could manage the challenges of Brazil’s political fragmentation, economic imbalances and social inequalities by combining modest investments for its voters alongside backroom deals with the conservative elite. Ultimately, it found out, it could not.

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