Rio 2016: An Olympic Debacle

The 2016 Summer Olympics are set to kick off exactly a month from today in Rio de Janiero, Brazil. Elite athletes from all over the world who have trained relentlessly for this moment will convene on the southern end of the country to compete for 306 sets of Olympic medals in 28 different sports. These will be the first Olympic games held in South America and only the third overall to be held in the Southern Hemisphere. For Brazilian politicians and business leaders, the Olympic games seemed like the perfect way to showcase the country’s booming economy and attract foreign investment back in 2009 when Rio de Janiero beat out Chicago, Madrid, and Tokyo in its bid to host the games.

However, a lot has changed in the seven years since. The price of oil has plunged, the Brazilian economy is in shambles, and its government is marred in allegations of corruption and other criminal activity. In short, Brazil is no longer the starlet of the developing world that it once was. Instead, it would appear as if the Rio Olympics are potentially shaping up to be a huge debacle due to a massive set of problems and complications that the country of Brazil faces, such as concerns over gang violence, the Zika virus, the safety of foreign tourists, and the economic and environmental toll that the games will have on Rio’s most impoverished residents as well as the country itself, who is currently facing the worst economic recession since the 1930’s.

As if to serve as an omen for things to come, a mutilated body washed up on the shores of Copacabana Beach, the site of the Olympic beach volleyball arena, this past weekend. Chief operating officer for the Rio 2016 organizing committee Rodrigo Tostes Solon de Pontes brushed off this disturbing find, assuring the public that “We are a big city, and we have the problems that a big city has. These things could happen in big cities all over the world.”

Dismembered bodies washing up on the beaches of Rio are the least of Brazil’s concerns, especially considering the phase of great economic and political uncertainty and upheaval which the country is currently undergoing. At the forefront of this turmoil is Brazilian President Dilma Rousseff, who has been accused of being involved in one of the largest corruption and money laundering scandals in the country’s history involving the state-controlled oil company Petrobras.

According to the ongoing investigation known as Operação Lava Jato (Operation Car Wash), Rousseff may have knowingly omitted knowledge that a group of Petrobras officials colluded with an organized cartel of other companies to overcharge Petrobras for construction and labor. These officials would inflate the project costs, pocket the surplus money, and would subsequently funnel the funds to friendly political parties as campaign donations, essentially creating a quid pro quo system in which elected government officials would award state contracts in exchange for political donations to their political parties. The money laundering scheme is suspected of having moved over $22 billion Brazilian Reals (approximately $6.8 billion  as of this writing) through “suspicious contracts“, with some of the people involved amassing over $100 million in their Swiss bank accounts through these illicit transactions. Though Rousseff herself has not been implicated in the scandal, the fact that she served on Petrobras’s board of directors during this time made many Brazilians suspicious and led to massive protests demanding Rousseff’s impeachment from office.

brazil protests
(AFP/AP)
brazil protests 2
Brazilians take to the street demanding the resignation of President Dilma Rousseff following corruption and money laundering allegations. (AFP/AP)

On April 17 of 2016, opposition members in Brazil’s lower house of legislation, the Chamber of Deputies, secured the necessary two-thirds majority among the 513 Chamber’s members in order to pass impeachment charges against Rousseff. In addition to the omission charges that she faces due to the Petrobras scandal, Rousseff also faces charges of illegally falsifying Brazil’s finances before the 2014 election in an attempt to hide the country’s staggering public deficit through a method known as fiscal peddling, where states essentially put off monthly debts until a later time in order to make their economic numbers look better. Brazil did this by having public banks pay for unemployment and other governmental assistance programs for the poor with their own funds with the promise to pay them back the following month.

Brazil's lawmakers celebrate after they reached the votes needed to authorize President Dilma Rousseff's impeachment (AFP/ Evaristo Sa)
Brazil’s opposition lawmakers celebrate after they reached the votes needed to authorize President Dilma Rousseff’s impeachment (AFP/ Evaristo Sa)

The problem arose when the government failed to transfer the funds needed to these banks and institutions. Rather than paying them, these public institutions basically loaned the money to the federal government. This is in clear violation of article 36 of Brazil’s Fiscal Responsibility Law, which states “Credit operations between a state financial institution and the member of the federation who controls it, when the latter is the beneficiary of the loan, are prohibited”.

Following a drawn-out 20-hour debate, the Senate, Brazil’s upper house of legislature, voted 55 to 22 in favor of suspending Rousseff from her presidential duties for 180 days while she is on trial. Vice president Michel Temer stepped in to serve as intern president, though he himself also faces potential impeachment and abysmal approval ratings as well as having previously been under investigation for corruption and bribery twice before. But it gets worse. On top of choosing an all-male cabinet, 15 of the 26 members are under criminal investigation, five of which have been implicated in Operation Car Wash.

In his short time in office, Temer has focused on righting the wrongs of his predecessor by cutting social program funding in an attempt to climb out of the nearly R$171 billion ($52 billion US) budget deficit his intern government posted for 2016— double what Rousseff’s economic advisers had forecast. Temer also proposed legislature that would guarantee health and education get the necessary amount of funds required by constitutional law— that is, 13.2 percent of Brasil’s budget for health and 18.0 percent for education— while placing spending caps on these sectors based on inflation rates rather than revenues.

Dilma Rousseff and Michel Temer. (Source)
Michel Temer  and Dilma Rousseff. (Source)

On June 8th, 2016, the impeachment trial of Dilma Rousseff began, which she immediately denounced as a “coup”. One of the first key witnesses brought to the stand by the prosecution was Antonio Carlos Costa D’Avila, a fiscal auditor for the Federal Audit Court (TCU- Tribunal de Contas da União). Upon seeing the stark irregularities in the delayed bank transfers on behalf of the government, D’Avila claimed he felt “goose bumps”, but continued to say that his findings pale in comparison to what was committed by Rousseff’s predecessor, former President Luiz Inacio Lula da Silva.

On June 27th, the board of members tasked with investigating the allegations released a 224-page report to the Brazilian Senate which found that Rousseff had passed three separate budget decrees which moved around R$2.3 billion ($710 million US) without the approval of Brazil’s congress. The report also claimed that Rousseff’s administration delayed the repayment of funds to state banks and institutions for too long, thus amounting to an illegal loan from these banks and institutions to the state. However, the report also stated that the investigators found no evidence that Rouseff had any direct involvement in the “fiscal pedaling” system, concluding that she is not guilty of violating fiscal or budgetary laws. It is uncertain as to what, if any, impact the board’s findings will have on the ongoing trial, which is set to wrap up around the same time as the Olympic games do.

Though the Brazilian public applauded the decision to impeach Rousseff, they remain weary of the politicians pushing for her impeachment, many of who face corruption and bribery investigations themselves. A shocking 37 of the Senate’s 65 officials currently face charges for corruption or other serious crimes, including leader of the conservative opposition who spearheaded the impeachment process, Eduardo Cunha. Cunha was previously implicated in the Panama Papers as having accepted over $5 million in kickbacks between 2006 and 2012, money which he then hid in secret Swiss bank accounts. Cunha also faces potential impeachment for his involvement in the Petrobras scandal. While the opposition party has hailed the impeachment process as a means of ousting corruption from the Brazilian government, some have seen through this ploy and accuse them of using this political instability simply as a means for them to regain power while circumventing the ballot box.

Brazil’s political dilemmas have bled into the country’s economy and have taken a toll on every part of Brazil, from the run-down favelas to the sleek-and-shiny Olympic Village. The governor of the state of Rio de Janeiro declared a state of “financial calamity” last week and has asked the federal government for R$2.9 billion ($891 million) in budgetary support, saying that these funds are crucial in order to avoid a “total collapse in public security, health, education, transport and environmental management” and in order to ensure that the Olympic games go off without a hitch. Though the Brazilian government itself is strapped for cash, Intern President Temer has received the authorization from Brazil’s legislature to give the state of Rio a one-time payment of 2.9 billion reals ($850 million) in emergency funding to complete any unfinished infrastructure needed for the games as well as pay for civil servants, many of which have gone on strike due to lacking the necessary funds for equipment, supplies, and salaries.

Thousands of educators and their supporters flooded the streets of Rio de Janiero demanding better working conditions and wages. (AFP)
Thousands of educators and their supporters flooded the streets of Rio de Janiero demanding better working conditions and wages. (AFP)

Rio budgetary crisis spells trouble for the Olympic games, with much of the city’s infrastructure for the games still being constructed. With the games starting exactly 30 days from today, construction crews are building against the clock. One of the key pieces of infrastructure which still needs to be finished is Rio’s number four metro line, which will run from  the Copacabana in the South Zone of Rio to Jardim Oceânico in the West Zone of Rio. Despite the state of Rio spending at least 21 times the original budget on the metro line, it remains horribly unfinished.  Six thousand workers have been diligently working around the clock to ensure that the metro line is in service by the beginning of the games.

Aerial shot of the unfinished Olympic beach volleyball stadium on the Copacabana Beach that was taken in June. (Credit Rafael Fabres for The New York Times)
Aerial shot of the unfinished Olympic beach volleyball stadium on the Copacabana Beach that was taken in June. (Credit Rafael Fabres for The New York Times)

One growing source of concern in Rio is the prevalence of drug-dealing street gangs who have long prowled the favelas of the city with impunity. Though the Brazilian government aimed to stomp out this violence eight years ago with the creation of the heavily-armed Pacifying Police Units (UPP- Unidade de Polícia Pacificadora), many would argue that they have in fact made the situation much more dire. The UPP has often been accused of accepting bribes from local gang leaders to look the other way on drug deals as well as carrying out extrajudicial killings. Amnesty International has indicated that police forces in the state of Rio de Janeiro were responsible for 8,471 deaths (5,132 in the city of Rio itself) between 2005 and 2014, many of which were labelled as “resistance followed by death”. This labeling prevents independent investigations and essentially grants immunity to the officers involved, making it rare for a Brazilian officer to be suspended for killing a suspect let alone fear an indictment or time in prison over it. Shootouts between the UPP and gangs often result in stray bullets hitting innocent civilians, with over 76 people having been hit with stray bullets so far this year— including 21 fatalities. Fear of retribution among the favela is so high that some are worried that the “law of the gangs” is too ingrained in favela culture for the UPP to properly work; drug traffickers essentially dictate the flow and operation of local business, telling them when to open and close as well as extorting business owners for protection money.

In the months leading up to the games, the UPP has increased their crackdowns on Rio’s poorest favelas, often resulting in massive flashes of violence between the armed forces and the gangs. One of the most notable recent incidents occurred when nearly two dozen men armed with assault rifles and grenades raided Souza Aguiar hospital, Rio’s largest public hospital, and freed a local kingpin who had been taken to the hospital following a shootout with the police. The raid left one person dead and another two injured.

The Brazilian and Rio state government have been pouring money into the region in order to amaze out-of-country visitors while also hiding the true state of their country. The biggest example of this can be seen en route from Rio’s Galeão International Airport in the north of the city to the Olympic stadiums in the south. The freeway that stretches from the airport to the south beaches passes right through one of Rio’s most impoverished and crime-ridden favelas, Maré. In order to shield the eyes of foreigners from witnessing the horrors of Rio’s impoverished citizens, the city decided to erect a “sound barrier” that obscures passerby’s view of Maré completely. That is, except for one small stretch of the highway that is adjacent to a brand-new modern school that the state recently constructed in Maré, where the wall suddenly becomes see-through. The government allegedly built this wall as a means to block the sound of cars racing down freeway from reaching the favela’s residents, but as parliamentary assistant to the Rio state legislature Tomás Ramon noted, these residents “don’t have sewage systems, they don’t have housing rights, they don’t have anything,” so it is a bit odd that the city would be so concerned about “the ears of the poor people who don’t have food in their stomach”.

Director of Amnesty International Brazil Atila Roque put it best when he said that “Rio de Janiero is a tale of two cities. On the one hand, the glitz and glamour designed to impress the world”. And on the other, the gritty, unpleasant truth of the city’s rampant poverty and crime— two issues that are very much intertwined. The city of Rio and the country of Brazil at large are putting the development and welfare of the general public aside to focus on not only lining their own coffers with public money, but also attracting investments from foreign multinational corporations, some of which seek to exploit the country’s most impoverished, most vulnerable citizens for the economic gain of a few. However, this system is clearly unsustainable and will sooner or later collapse due to the Brazilian government’s tendency of covering up structural problems rather than taking active steps to fix them at the root. But the Brazilian government can only continue putting proverbial bandages on the proverbial fissures on the dam that is the nation of Brazil for so long before the floodgates swing open and all these issues burst through like a tidal wave.

These issues have long been brewing under the surface and only needed a catalyst such as the 2016 Rio de Janiero Olympics to truly set off a chain of events that will ultimately bring about some form of change— whether it is positive change or negative change is yet to be determined. The increased media attention generated by the Olympic games will hopefully put Brazil’s budgetary, political, social, and environmental problems in focus, though it is clear that the Brazilian government will do everything in its power to salvage whatever is left of their tattered image and reputation. It is also clear that most mainstream media outlets will simply gloss over these issues and instead focus on the games themselves, providing there’s no major catastrophe which occurs. However, as we learned from the actions of the Brazilian government, one can only suppress pressing issues such as the ones that plague Brazil for so long before they bursts into the open for everyone to see.

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