The World Cup is here, but not everyone is happy about it.
Perhaps such a statement seems obvious, but it needed to be said. As television supporters, we have grown accustomed to seeing jubilance and unrestrained patriotism in the natives at World Cup tournaments. Many of us might be inclined – on the limited evidence we have – to think life in Brazil is just one non-stop carnival, replete with laughing, singing, and samba dancing. But even as the world’s most celebrated sporting tournament now meets the global footballing capital, to assume that the BBC’s snippets of good faith reflect the national mood would make an ignorance of the country’s politics all too evident. In Brazil, football is important, but not as important as the lives of its people. Sadly, many in Brazil feel President Dilma Roussef has got her priorities all mixed up.
Make no mistake: Brazil is divided on a faultline between rich and poor. The richest 10% of Brazilians enjoy 42.7% of the nation’s wealth, while the poorest 34% receive less than 1.2%. An incendiary debate has erupted, just when the nation needs it least. Many natives in the latter portion feel the outrageous ostentations a World Cup host nation – and particularly, one of the footballing prestige of Brazil – will feel inclined to spend on simply papers over the cracks of a nation which contains some abhorrent poverty. This bugbear must not be ignored. Especially not now, as it takes a seat at the high table of the world’s fastest growing economies, and hosts the first of two globally renowned spectacles (the 2016 Olympics may yet bring problems all its own).
Sao Paolo was engulfed in strikes and protests on the eve of the grand kick-off, with bus drivers joining an ongoing workers’ revolt. Absent drivers forced at least 12 bus stations in Sao Paolo to close according to local media sources, causing immutable havoc on the already congested roads of the nation’s industrial capital. The federal police – which control Brazil’s borders, including immigration and passport control – have also threatened action. In Brasilia, officers have already marched in protest. With the eye of the world fixated on Brazil, these aren’t the scenes the nation (or, at least the part in favour of the government) wants us all to remember. There are fears that security and policing may not be able to prevent such revolts reoccurring during the tournament. Sepp Blatter, head of FIFA, the organisers of the tournament, said Brazil’s World Cup preparations are the worst he has ever seen.
There is a growing national feeling that only astute manoeuvres from the government can keep this patchwork operation from becoming unstitched. Fans commuting by rail in Sao Paolo will have seen employees of the subway network wearing blue bibs, an addition which will remain throughout the tournament. ‘Let’s have Fifa-Standard Transport’ is emblazoned on the front, a reference to the popular opinion that whilst Fifa and travelling support are to enjoy world-class stadiums and accomodation, the people of Brazil cannot even have reliable public transport. Ricardo Mendes, political analyst of the Prospectiva consultancy, highlighted that the people at the top will have to be on their very best behaviour to avoid a worldwide embarassment. ‘The government will have to do everything possible to cater to the police, public transport and others.’
All this mayhem does Brazil a great disservice; indeed, some might say it has already been an embarrassment. This is a country widely heralded to be one of the most promising growth markets. Yet it is still better known for its gross inequality and poverty. The much-vaunted City Of God film, now a modern classic, was a brilliant reminder of what many already knew about Brazil, and a first lesson for those who didn’t. In the City Of God (as in much of real-world Brazil) the grandiloquence of businessmen in the cities is paralleled by the abject penury of the poor. Even within the slums themselves, the potential for disaster looms large; the beatifying majesty of favela football often tempered by ugly scenes of drug-inspired violence. Nothing defines Brazilian life with more troubling accuracy than these two seemingly disparate concepts: football and favelas. To comprehend the ferocity of the current debate necessitates an understanding of Brazilian culture. That story begins with the sporting slums.
Football has long been one of the most globally accessible sports, which has no doubt contributed to its rise. All that is needed to play is a ball and agreed goalposts. Perhaps, then, it is little wonder that such an undemanding sport has thrived in a nation like Brazil. It is one aspect of life that does not require wealth and high social rank in which to partake; a rare civilising medium which traverses the gaping chasm between rich and poor. As will become apparent to those lucky enough to visit this summer, here, football and culture cannot be separated: they are one and the same. Natives proudly call themselves ‘o Pais do Futebol’; the country of football. Latin America’s largest nation is still the only country to have won the World Cup five times. In 1970 it was permitted to keep the old Jules Rimet trophy as the competition’s prize was revised for future tournaments, Fifa’s rules at the time bestowing that privilege on the first team to win the event three times.
The sport is one of the few equalisers in one of the planet’s most unequal countries, bringing aristocrats from the wealthiest suburbs in union with favela-dwelling street urchins. Some even believe Brazil’s performance in the World Cup could decide the outcome of presidential elections in October. Perhaps there is no aspect of Brazilian life football doesn’t touch.
But the celebrated brilliance of the football team has its roots in the darker side of Brazilian life. History holds that it is the destitute and often decadent favelas which have truly produced the kind of silky football the world has learnt to expect from Brazil. The beatifying footballing majesty of the likes of Ronaldo, Romario, and Paulinho, amongst many, many more, was built in the slums. The archetype of the beautiful Brazilian butterfly weaving and pirouetting through defences on a global stage has been forged in the fantasy of favela life. As City Of God portrayed brilliantly, football is one of the only distractions from the vices of drugs and violence for many of these street children. How have the favelas grown to hold such significance in the building of a footballing – and cultural – legacy?
From Peasants To Politics – The Growth Of The Favelas
The question is pertinent enough as to warrant a brief history lesson. First created in 1897 in Rio de Janeiro by veterans of the Canudos civil war, the favelas became a way for urban migrants to live near their workplace as the early 1900s progressed (and transport standards slumped). However, the developments were considered unsightly, particularly as the city’s business districts thrived in contrast. When in 1927 Rio’s government hired the French architect Alfred Agache to restructure the urban development, the cornerstone of his advice was that the favelas must go.
The advice took ten years to reach political eminence. In an abrupt move, a building code passed in 1937 declared favelas ‘aberrations’, moving many of their residents to ‘proleteriat parks’ manned with guards. The idea could not last, however. Rio’s three proletariat parks were only holding 4,000 people when maintenance costs rendered the idea unsustainable. Whilst the favelas would return, the pattern of governments using them as a scapegoat in moral discussions of urban poverty would also continue.
In the 1950s, favela residents became so numerous as to become an unavoidable political force. Hundreds gathered outside the mayor’s office to demand the provision of basic utilities, which weren’t always guaranteed in slum life. The government had its own requirements in return – that the rabble which kept presenting itself would order into a Residents Association, with proper leadership and governance structures. The numerous groups which formed eventually merged to form the State Federation Of Residents Associations, FAFERJ.
Whilst matters were now better organised, there were tensions between FAFERJ and the government. The same organisation which had to cooperate with the government in day-to-day matters was also responsible for organising upheaval and protests when the members were unhappy (which was often). Despite fleeting spells of animosity, negotiations saw the residency of favelas fall for the first time in a while. By 1965, 30,000 people had been relocated. This number skyrocketed between 1968 and 1975, during which time 176,000 people left the favelas behind. Their previous slum homes were burned down by the Brazilian government. It looked as if Brazil was finally solving the favela problem Agache had highlighted, almost fifty years later.
However, it was not to last. A rural exodus in the late 1970s saw Brazilians flock to the main cities, which were enjoying the boom of industrialisation and creating jobs. It was back to square one for Brazil’s government, with the twin blights of overpopulation and inadequate job supply to meet demand leading many to make their homes in favelas once more. Today, 1.4 million live in favelas in Rio De Janeiro alone. The infrastructure of the nation has simply never been able to keep pace with the rate of its economic and population growth.
Now, sport’s largest tournament is in the nation which probably loves it most. It brings a chance for change, fuelled by the attentions of the world. That’s what President Dilma Roussef has promised, anyway. Many are unconvinced, and their questions probe deep into the heart of the matter. Will the impact of events like the World Cup trickle down and truly benefit the Brazilian people, creating prospects for business and spurring investment in the country? Or, as many have wagered, are the grandiose spectacles we are witnessing ostentatious yet empty visual spectacles, constructed by the government to hide the true problems beneath?
From BRICs To Mortar
In order to answer these questions, we must first make a reasoned examination of Brazil’s current standing within the world. In the past few years, the South American nation has overtaken the UK to become the world’s sixth largest economy. The warning signs were present at the turn of the 21st century. In 2001 Jim O’Neal, chief economist at Goldman Sachs, coined the term BRICs in reference to Brazil’s status, alongside Russia, India and China, as one of the world’s most rapidly expanding economies. His report flagged the nation’s potential to ultimately become one of the four most dominant in the world by 2050.
Now, enthusiasm must be curbed somewhat. Much has changed since the heady days when O’Neal made his prediction, and, despite the country’s impressive start, things are starting to slow down. After a great year of 7.5 percent economic growth in 2010, successive years have brought as little growth as 2.7, 0.9 and 2.5 percent respectively – hardly the kind of figures needed to dethrone the likes of the US and the rest of the developed world.
Pessimism is rife in Brazilian markets, with trading volumes of stocks in Sao Paulo down almost 11% year on year according to BOVESPA. Economists have cut growth forecasts to as little as 1.24 percent for the country in 2014. With a Gini coefficient of 54.7 – one of the highest rates of inequality in the world - and inflation surging, things look bleak for many working-class Brazilians, who predominantly live below the poverty line. Though putatively Brazil may be on the ascent, there is progress to be made yet. All its inhabitants must feel the tangible benefits of prosperity, not simply the middle and upper classes.
But before we delve too deeply into Brazil’s tangled web of politics, we must backpedal. Think back to the time before it had significant wealth to worry about distributing. As recently as the early 90s, inflation was rampant. Doubts were raised that South America’s largest state would ever become the economic force its geography and size suggested it should be. Where has the money come from, and why is the world only paying attention now?
According to Citigroup, three Cs hold the key – commodities, credit and consumption. The industrialisation of developing countries like China, along with the ever-increasing demand from the rest of the world has led to a spike in commodity prices – this is no secret. Brazil was perfectly placed to capitalise. Abundantly rich with minerals and natural resources, and boasting a thriving agricultural sector, Brazil saw its food exports grow from $16.1bn to $78.4bn in the decade from 2001. Its exports of ores and metals grow ten fold from $4.9bn to $49.1bn in the same period.
Thanks to its policy of macroeconomic stabilisation – undertaken in the late 90s and still in force today – Brazil has also become a more open and dynamic economy than ever before. The private sector has opened up, leading to an unprecedented level of foreign investment in the country. Deregulation of the financial system has led to more accessible credit, which in turn has led to higher consumption levels. A sharply increasing minimum wage over the past decade has meant more purchasing power in the hands of workers. The government’s increase in social spending has reverberated around the country, contributing to a culture of credit-fuelled consumption.
Brazil’s economy grew by 7.5 percent in 2010. This was, however, heavily driven by fiscal and monetary stimulus. As inflationary pressures started to increase beyond the central bank’s upper target of 6.5%, it was forced to tighten its spending and monetary policy, causing a loss of momentum. The nation hasn’t regained it since. Nothing seems to be able to bring growth rates back in line with their ambitions.
And there are bigger problems to worry about for Roussef and her government. The nation trails all of its BRIC competitors in infrastructure. The World Economic Forum ranks Brazil’s quality of infrastructure 104th globally, behind that of China (69th), India (86th) and Russia (100th). This gulf is reflected in the spending. China spends 9% of GDP on infrastructure per annum. India spends 5% and Russia, 4%. Just 2% of Brazil’s GDP is committed on infrastructure upgrades. For a country with only 13.5% of its roads paved, this is simply not enough. Long-term growth requires foundational investment.
When its commodities boom is over, the public funds with which the Brazilian government can spend its way into growth will surely deplete. Has there really been enough investment made to secure a place in the world’s top 4 economies by 2050? Even the most quixotic of thinkers may have to cede that this is extremely unlikely, judging by today’s statistics.
Brazil’s World Cup : Blessing Or Burden?
All this is not welcome news for Brazil in the advent of a World Cup, and may yet add credence to the naysayers’ argument about the allocation of resources. Many expect thousands of Brazilians, unhappy with the forgoing of spending on public services to throw a global event they believe their nation is unprepared for, to take to the streets in protest, just as they did with the Confederations Cup a year ago. This would certainly gather global media attention, and may also deflate the party atmosphere supporters the world over are excited to see in the country famed for its love of salsa music, carnivals, and dancing. But this is unlikely. Similar forecasts have been made in the past – you may recall the potential for race-related violence being flagged up in the last World Cup, only for the tournament in South Africa to progress smoothly and without significant off-field incident. Sometimes we are our own worst enemy in fearing the unknown.
Still, there can be no doubt that some fascinating twists and turns are yet to come. The World Cup is a global sporting tournament unmatched in scale and ambition. The tournament holds unprecedented potential to spark worldwide interest in the country. Some think it will herald a mass programme of supply side investment in the economy, whilst also attracting foreign direct investment. Others see it as a total waste of money, and a catalyst for yet more social unrest, which may rear its ugly head even during the tournament. The former, more optimistic verdict has been the government’s justification for its application. Brazil’s citizens were promised a truly nationwide event, to be based on 12 development zones. New stadiums were to be built and roads and airports would be overhauled. Furthermore, increased spending on security would help control the crime and corruption which cripples the country’s poorer areas, thus removing one of the common deterrents for incoming tourists.
Opinion is still split amongst Brazilians themselves. “If the government’s idea was to please the people and increase their popularity with the World Cup, they were completely wrong,” said Matheus Trevisan, one of the organizers of the protest, to the FT. The infrastructure boom promised when Brazil won the right to host the tournament has, to onlookers like him at least, yet to materialise. President Roussef has hit back. ‘Noone who comes here to watch the World Cup will take back with them in their suitcases airports, ports, urban transport projects or stadiums,’ she said, as she attended a ceremony in inauguration of a third terminal for Sao Paolo’s airport.
This may be true, but the question is whether Brazil will make good use of the things tourists cannot take. At this early stage, we may only speculate on outcomes, but the results of spending look mixed. Ostensibly the most notable success has been the investment in the country’s airports, many of which were previously running at full capacity. The Brazilian government, though generally considered left-leaning, went so far as to privatise five of the countries airports, auctioning contracts for the development of new terminals and upgrades. The move, though surprising, looks set to be a success. The significant expansion of Brazil’s air transport facilities will benefit the 3.7 million people who are expected to travel during the World Cup. It will also advantage the host nation itself, not least because it ensures that the 600,000 projected football tourists have the transport to spend their money all over the country.
By committing to run a nationwide event in a country the size of a continent, for many the government’s main failing has been in the building and renovation of the 12 stadiums in development zones. Four sizable stadiums have been built in cities not exactly renowned for their football heritage. Brasilia, Natal, Manaus and Cuiaba entertain only third-tier football teams, with little public draw. These ‘investments’ will thus be unlikely to see a return after the World Cup, unless alternative uses can be found, and a regular paying audience guaranteed. The country’s most costly stadium was built in the capital, Brasilia. It ultimately cost more than double its initial quoted price. Of the twelve, not a single stadium went under-budget.
Meanwhile, exciting infrastructure plans the government had already named, like the development of South America’s first bullet train, have been put on hold. To many in Brazil, this is an egregious insult. Their transport needs have been cast aside at the expense of these extravagant stadiums. In their eyes, the government would rather satisfy FIFA and the inward looking world than its own people.
A Platform For Change
When considering the legacy of a World Cup, it is important to look beyond edifices of bricks and mortar. The airports, metro lines and stadiums that Roussef touts proudly, impressive as they are, fade in significance for some when compared with the possibility for change this tournament bestows on its hosts. Now, and again in 2016 when the Olympics bandwagon comes rolling into Rio, the global spotlight is firmly on Latin America’s largest emerging power. Many hope the greater legacy of the tournament will be to liberate the nation from the stultifying and self-serving elements of Brazilian politics. While the rich have got richer, the standards of living for the poor have remained woeful for too long. A global platform for their protests to permeate should increase the political pressure on Brazil’s government to change their ways. It may not only be Brazil that will learn something. FIFA too may check itself, having come under recent scrutiny for their decision to award Qatar the 2022 World Cup – a choice many feel may be rooted in corruption. If Brazil’s World Cup turns out to be less than a roaring success, a discussion should be had about whether emerging countries, with invariably more pressing social needs, should hold such huge events. The 2016 Olympics will pose an identical question.
But let’s assume this World Cup does go smoothly, as early indications suggest it might. Where does the nation go from here? The answer may be ‘in a different direction entirely’. Brazil’s approach up to this point has been decidedly Keynesian, with government spending the catalyst for growth. However, this method has proved unsustainable. It is time for leaders to seek alternatives. During growth years, supply has been hard pushed to keep up with demand. The balance of payments has deteriorated since 2004, tipping into a current account deficit in 2007. Domestic demand is now starting to exceed growth. The fact even ‘O Pais Do Futbol’ has had mixed feelings about this World Cup suggests Brazilians want their government to shift their priorities.
And shift it must. In the coming years, the focus of Dilma Roussef must be to raise national investment and savings to address these supply-side constraints. The crippling inequality must be addressed (thus proving that the President has listened to the protestors), and the education and quality of the Brazilian labour force must increase. Though things may seem rosy now, realistically time is limited. Commodities are unlikely to provide the same level of returns as they have in the past century, and expansion may only be fuelled with debt for so long. A decisive action on the government’s behalf is needed, with clear investment in the country’s infrastructure to pave the way for a more productive work force and economy. Only then will Brazil as a whole value the prosperity it has won.
Kings Of The Continent
Unsurprisingly due to its size and population of 200 million, Brazil’s GDP dwarfs other South American economies (including Mexico).
The stats on growth paint a more interesting picture:
Peru, Argentina and Columbia are impressive outliers in avoiding recession over the past five years. Chile, one of the most developed nations in the region and well known to have the highest level of economic freedom in South America (7th worldwide), has also reported impressive growth figures since 2010. It, like Argentina, has a high level of education and some of the lowest levels of corruption in South America. Peru is another potential competitor. Its economy seems responsive, and like Argentina and Chile it has a high human development index as one of the fastest growing countries in the world.
An examination of the continent as a whole suggests that Brazil is not alone in its reliance on certain sectors. Investment in South America is largely a commodities play. Copper mining makes up 20% of Chilean GDP. In Argentina, agriculture accounts for 10% with commodities are close behind. Peru meanwhile is South America’s leading gold exporter and the world’s second largest copper exporter. Agriculture makes up 6% of its industry.
Old habits die hard, and only a fool would deny that commodities will play a big part in the continent’s future. Nonetheless, if a real evolution in the economic fortunes of the region is to commence, a diversification into other industries would be needed. The ultimate aim must be to spearhead a transition into a knowledge-based economy. This is the only way to rival the likes of the developed world and China in particular, which spares no expense in its quest for global economic domination. Brazil is perfectly placed, as the centrepiece of South America, to buck the continental trend of commodity overreliance. It must lead by example. It has the resources and global exposure (evidenced by this World Cup and the forthcoming Olympics) to do this, now more than ever.
Brazil’s immense population has been enough at this stage to ensure its status as the continent’s leading economy. However, with small yet plucky neighbours showing more zeal in their quest for growth, other areas are increasingly proving more attractive zones in which to do business. The Brazilian government and private sector must make diligent supply-side investments as a matter of priority. If they do, their troubled nation can grow into the world leader it desperately wants to be – and not at the expense of its citizens.
Words: Josh Lelliott and Richard Saint
Images: Josh Lelliott