The news that Brazil has overtaken Britain to become the world's sixth largest economic power is being touted as a sign that that the longtime "country of the future" has finally arrived. While the celebrations have been somewhat muted by concerns over slowing GDP growth and the country's still-heavy dependence on high energy and food prices, Brazil is heading into the coming global showcases of both the 2014 World Cup and the 2016 Summer Olympics with more than its usual swagger.
But this emerging economic prominence is raising the question of just what kind of actor Brazil will be on the world stage. In the past 20 years, Brazil has become well known for turning crisis situations into geopolitical opportunities, becoming a leading voice in international forums devoted to AIDS, poverty, and even the environment. And now, it is doing it again with a challenge that Brazilians understand all too well: a debt crisis.
Only this time, it's Europe in need of a helping hand, not the former Portuguese colony in Latin America. At an EU-Brazil summit held in Brussels last October, President Dilma Rousseff told European leaders, who had asked for assistance: "You can rely and count on us." As an initial strategy, Rousseff and her finance minister, Guido Mantega, considered using their foreign exchange reserves—estimated at $352 billion—to purchase debt through treasury bonds. However, after consulting with her BRIC colleagues at a meeting in Washington last November, Brazil decided that buying EU bonds would be too financially risky, and proposed instead to indirectly assist Europe by donating an estimated $10 billion to the International Monetary Fund.
In a setback to Brazil’s preparations for the 2014 World Cup, Federal Judge Louise Vilela Filgueiras Borer ordered an immediate halt to the construction of a third terminal at São Paulo’s main international airport. São Paulo-Guarulhos International Airport, which was recently ranked the worst in Latin America, was undergoing a renovation to double the airport’s capacity in advance of the World Cup as well as the 2016 Olympic Games.
Judge Filgueiras said the state airport authority Empresa Brasileira de Infraestrutura Aeroportuária, or Infraero, jettisoned a formal bidding process for the project and awarded the contract to Delta Constructions. In her ruling, Filgueiras wrote that the move represented a worrying precedent in Brazil—one which ignored regulations in the interest of finishing a project as soon as possible. The project was estimated to cost 1.2 billion reais ($700 million).
An April 2011 report from the Instituto de Pesquisa Econômica Aplicada (Institute for Applied Economic Research, or Ipea) warned that 10 of the 13 Brazilian airport terminals being upgraded throughout the country were not on track for completion by the start of the World Cup in June 2014. President Dilma Rousseff is now evaluating an option to rely on temporary, warehouse-like modules to accommodate the expected passenger influx for the Cup.
This is not the first setback for Brazil’s transportation authorities. In July, Alfredo Nascimento, former minister of transportation, resigned on allegations of corruption for so-called “irregularities” in the granting of contracts.
In the next ten years, Rio de Janeiro is going to host both the finals of the World Cup of soccer and the 2016 Summer Olympics. Can the city that coined the word favela (and with it all the connotations of desperation and lawlessness) and the reputation as one of the most crime-ridden cities in the world pull off these massive international events? Certainly, Rio state authorities are doing everything they can to allay international fears and address concerns.
This week I toured a once-infamous Rio favela, Dona Marta, with a representative of the governor of Rio de Janeiro’s cabinet. My impression of the favela that I visited is that there certainly has been progress. We visited one of three police precincts that had been recently established to pacify the informal neighborhood. The one we visited had seven video cameras posted throughout the favela, friendly beat police walking the narrow, twisting stairs that threaded their way among the houses, and a sense of peace, even civility. A success by any standards in what many consider to be the quintessential den of crime and lawlessness.
Unfortunately, it’s only one of over 300 favelas in Rio de Janeiro. The plan is to take each one, one at a time, with a combination of rooting out local drug lords and criminal networks and establishing a system of community policing, providing basic services (such as electricity and social services) to these informal settlements perched on cliffs overlooking the city or islands within the city. By all accounts, including that of former New York City Commissioner Bill Bratton, this is the only way to do it.
June 1: This AQ-Efecto Naím segment looks at sustainable cities in the hemisphere.