Sunday, June 23, 2013

Brazilian Demonstrations and Joga Bonito

For every football fan around the world the whole idea of the FIFA  2014 World Cup in Brazil is a dream come true.  Brazil is the home of Joga Bonito, "the beautiful game."  The World Cup is the biggest sporting event in the world.  715 million people watched the 2006 World Cup final in Germany, and in the 2010 World Cup in South Africa, 3.2 million spectators watched the 64 matches in stadia all around the country.

For Brazil as a rising emerging market economy, with aspirations on the international political stage, the World Cup is much more important than the sporting event itself.  So, what is going on with the increasingly chaotic and violent protests in Brazil?

For all its successful industrialization and modernization of agriculture for export, Brazil's political, economic and social failures are always simmering under the surface. In 2007, President Lula's "Growth Acceleration Plan," conceived by his successor and current President Rousseff, allocated an initial $5 billion to building infrastructure like roads, sewers, and sea ports to facilitate trade.  No government or private entity can give a plausible accounting of what was accomplished for how much spending in Phase I, and yet in March 2010, an additional $880 billion in spending was announced for airport construction and building up of the energy grid.

Much of this announcement was aimed at winning the bid for FIFA World Cup 2014, Phase II will probably be shown in the future to have been another sham.  In Sao Paolo, which is to be one of the biggest venues for 2014, it still takes three hours or more by taxi from the airport to the business district from Terminal 1.  A brand new Terminals 3 was supposed to be built for the World Cup, and it is barely under construction, while Terminals 1 and 2 have not had the promised major renovations.  Sao Paolo is the busiest airport in Brazil.

Outside Rio and Sao Paolo, away from the luxury condos on the beach, are the favelas, the totally autonomous slums, which are violent and dangerous.  There is nothing romantic about them, and they are certainly not for tourists.  The government, according to the British soccer press, was supposed to allocate 550 million pounds for increased security for tourists and to control potential kidnappings from the gangs in the favelas. Most of this effort has been cosmetic and ineffective, since there are probably more guns and weapons in the favelas than are in the hands of the metropolitan and state police forces.

Despite all the income created from the export of commodities and oil production, Brazil spends too much from a budget that relies much more on taxation than do other emerging market countries.  Brazil is legendary for corruption in every walk of life.  Brazilian professional football is so corrupt that even the iconic Pele as Sports Minister could not clean it up; the Brazilian league makes its money by exporting its best players to foreign leagues in England, Italy, Germany, and France.

Even corporate icons like Petrobras are hopelessly inefficient organizations when measured against the best of their global peers.  Being a state-sanctioned monopoly gives them a lot of room to puff their chest, but the private corporate sector insulates itself from the social tensions.

In the country's vast interior, the government's reach is limited and resources are plundered like in the Old West, and the Indian population neither knows or cares who the Prime Minister is.  The educational system, if one could call it that, is a sham.  The elite can send their children to lycées in Switzerland and France, so they have no stake in what goes on for children of the favelas.

As the commodity cycle has slowed, the economy slows down, tax receipts fall, social programs don't grow as they have, and the people who have become accustomed to fare subsidies, food subsidies and generous social programs are angry.  They are especially irritated when they read about billions being spent for new stadia which will have no conceivable economic function after the World Cup.

The Wall Street Journal reports on what's happening to the common citizen now, before the influx of at least 5-6 million international visitors for the World Cup,
"You can't go to work, you leave home and you don't know if you're coming back," said Carlos Garcia, 50, a taxi driver (in Sao Paolo). Mr. Garcia said that in the last month alone, his girlfriend's cousin had been shot dead while being robbed, he had been held up at gunpoint by a young boy, who stole a tablet computer, his cellphone and wallet, while his 25-year-old daughter had been mugged.""Can you imagine, it's a tragedy," Mr. Garcia said.
At this point in time, the Cup will probably be held in Brazil, even if it is not ready according to its contractual  obligations.  To switch venues--which could be done to Germany for example-- would be an unacceptable embarrassment for Brazil who would probably boycott the Cup and permanently damage the global brand of FIFA.  So, everybody is all in committed to Brazil 2014 at this point.

The professional agitators and outside influences know this too.

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