Brazil braces for FIFA World Cup

Before the squads have even landed on South American shores, many are declaring the FIFA 2014 World Cup a disaster. Infrastructure projects are being abandoned in droves and every day a new torrent of problematic revelations are published in the international media, accusing authorities of everything from skimming money off the budget, to doing away with ‘unsightly street children’. Although some of the accounts are false, others are frighteningly real.

Stadiums are not complete, and a number of construction workers have died at two of the sites. By mid-April it seemed a key transport hub – the new Confins airport in Belo Horizonte – would not be ready in time for kick-off, despite 800 workers and millions of dollars being poured into it. The airport in Manaus, which will receive thousands of England and Italy supporters in the first round of games, might not be finished either.

Today, Brazil is a rich country, with a poor population

Even if facilities are completed in time, many Brazilians remain convinced that utter chaos will reign for the duration of the event, as already strained and inefficient resources are stretched to breaking point.

The hashtag #ImaginaNaCopa – which loosely translates as #ImagineItDuringTheCup – has been trending in the country for several months, and was deployed by frustrated Brazilians while stuck in Homeric traffic jams, or after being mugged at the beach, as a sort of silver-lining reminder that everything will be much worse during the World Cup.

However, when Brazil’s bid was accepted seven years ago, there was little doubt that they could do it. The country had been growing solidly, reaping the benefits of a decade of smart economic policies and a favourable commodities market. Luiz Inácio Lula da Silva’s last term in office was just beginning and the president was well-loved by the people – thanks in part to the booming economy, and in part to a slew of populist welfare programmes he had introduced.

Of course, that was before the financial crisis started toppling economies like dominoes, before oil prices – a vital source of revenue for commodities-rich Brazil – took a battering. But not even these two can explain how Brazil’s economy took such a steep nosedive; after all, in 2009 GDP was up 7.2 percent, while many countries were already in the red.

One step forward
Many Brazilians are less than surprised to see headlines about unfinished stadiums and abandoned airports and tramline projects – they see it as a return to the bad old days. Since the country emerged from four decades of military dictatorship in 1985, it has only had five presidents – one of whom was impeached for corruption. It is easy to forget that the country is still trying to establish a strong, democratic tradition, and establish a coherent economic policy.

In the early to mid 2000s things appeared to be progressing, finally. The economy experienced an upswing thanks to intelligent economic and fiscal policies implemented by Fernando Henrique Cardoso before he left office in 2002. The country was getting some of the infrastructure investment it had so long needed. Lula largely carried on promoting investment and presided over an oil boom that helped raise Brazil’s profile internationally.

Brazilians have long declared theirs the ‘country of the future’ – never the country of ‘now’ – and since 2009 modernisation has largely stopped, with most infrastructure projects connected to the World Cup or the subsequent Olympic Games. To say that the country has simply decelerated in line with the rest of the world is not optimistic – it is dangerous.

A number of ideologically driven policies in recent years stifled growth, and the vital government reforms the country so desperately needed failed to materialise. Taxation has skyrocketed to fund a gargantuan and inefficient government machine. Resources have been diverted into enormous projects like the World Cup infrastructure and ultra-deep-sea oil exploration projects, and basic needs like education and health have been allowed to slip to unprecedentedly low standards. Today, Brazil is a rich country, with a poor population.

Hosting international mega-events like the World Cup and the Olympic Games was meant to show the rest of the world that the country was ready for the big leagues, but the widespread and violent protests that erupted in 2013 show the population feels left behind. Living costs in big cities have skyrocketed, as has violence and crime.

“It’s really tense, and really negative. For the really wealthy the feeling is it’s going to be fine, because everything is always fine. But the middle classes, and even the upper-middle classes, are saying this place isn’t working right now. Everything is stressed out. All of the urban systems are constantly stretched to the limit. That is why people say ‘imagine in the World Cup’, because if [they] can’t even live day to day, how are we going to cope with even more people?” said Dr Christopher Gaffney, a visiting geography professor at the Fluminense Federal University in Rio de Janeiro.

With just under two months until kick-off, the World Cup Portal, the government’s World Cup site, published a list of figures detailing the economic benefits the competition has already brought to Brazil. It suggests investments have been made in culture, health and education, and the World Cup will lead to an increase of $13bn in GDP.

“Those sort of claims are made by everyone that hosts a mega-event so that the people feel like their money is being put to good use,” suggests Gaffney.

“What those evaluations don’t highlight is what could have been done with the same money, directly applied into industries. If we are investing $14bn in the World Cup, and talking about $100m in social and economic returns, that is pretty pathetic. What they have also done is attribute all growth to the World Cup. How much would Brazil have grown without all of this investment and production? If people have been busy building stadiums, they might have been busy building schools, which then would have turned into more productivity. The analysis always comes from an ideological perspective.”

But not everyone perceives it that way. For many, the World Cup has been the push the country needed to commit funds to long-awaited infrastructure projects. Fortaleza, one of the host cities, had been in the process of opening a tube line for a decade and a half, and with the World Cup looming, efforts were doubled and the line finally opened last year.

Increasing taxes while the mood in the country is so fragile would be political suicide. But 2014 will be an expensive year

“If people don’t have a more generous outlook [towards developing countries] then these events will become like rich men’s parties,” Sports Minister Luis Fernandes told The Independent. “We have to put the [World Cup organisation] problems in context. It is a work in progress rather than things getting worse. It is precisely because of the fact that its infrastructure needs upgrading that the nation wanted to stage this summer’s tournament. The World Cup and 2016 Olympics gave us an opportunity to set up investments but that would [otherwise] take us a long time to put into practice.”

Of course, the infrastructure shortfall at the root of so many of Brazil’s current woes goes back generations. Businesses have long called for an increase in investment in vital transport links, and cities lack the basic services many European capitals have boasted for centuries, like underground railways and public sanitation. But the current government spends only 1.5 percent of GDP on infrastructure – less than half the global average of 3.8 percent.

“We pay for one of the most expensive governments in the world and receive one of the most inefficient,” writes Ricardo Amorim, a Brazilian economist and commentator, in his blog. “We rank 124th globally [out of 153, according to the WEF] in terms of violence and crime, 126th in import duties, 132nd in wasting public resources, 133rd in misuse of public funds, 138th in taxes on labour, 139th in customs processes, 144th in how long it takes to open a company, and 147th in the cost of governmental regulation.”

Government debt is on the rise, and as well the World Cup Brazil will have to face elections this year. Guido Mantega, the Finance Minister, has vowed not to increase taxes, but unbridled spending poses a problem. Taxes already make up more than 36 percent of GDP, the third-largest tax burden in the world, after China and Argentina. Increasing taxes while the mood in the country is so fragile would be political suicide. But 2014 will be an expensive year.

At what cost?
There is little doubt that stadiums will be finished – but at what cost to the government. Official figures say the government has spent 31bn reais in projects associated with the event, to modernise the country’s image. Bills will mount as building work goes over deadline, and there is the familiar stink of corruption in the air. Local authorities in host cities have admitted they will face a challenge maintaining venues after the games, especially those in remote location like Manaus, which lies in the heart of the Amazon.

But Brazil has a lot going for it, and if it can get a handle on its problems the 2014 World Cup could indeed be memorable. It is a vast and diverse country that will offer visitors exciting experiences beyond attending matches. Rio and São Paulo are vibrant cities with rich cultural heritages and amazing scenery. And though prices for hotels and restaurants will go up during the games, this has become the norm when the World Cup circus rolls into any town.

The fact of the matter is, if games get called off, or flights delayed, or even if fans get stuck in traffic, there is plenty to do and see in Brazil that is amazingly worthwhile and hassle-free.

Lesser-known destinations like Fortaleza and Manaus will likely be the big winners, and visitors that choose to travel to these locations are in for a pleasant surprise. Manaus is a bustling island-city where well-preserved colonial buildings, including a century-old opera house, coexist with stilt houses built over the Amazon River. Fortaleza has miles of white sandy beaches and is more laid-back than Rio or São Paulo. In Salvador visitors will be treated to a mix of opulent colonial churches – 365 of them – and candomblé centres, where a variation of ancient African religions brought to Brazil by the slaves, is still widely practiced.

What Brazil needs now is to regroup, and push for the games to go through without issue. Brazilians must allow themselves to be empowered by the success of the World Cup, but not forget to air their grievances at the polls this October. While things might have taken a turn for the worse over the past year, this is a golden opportunity for Brazil to finally move forward and right so many of the wrongs that have been allowed to fester unchecked. And winning the thing would also be quite nice.