/ 31 August 2012

Brazil faces Olympic hurdles

Brazil is conscious that the world will focus on its handling of the Olympics.
Brazil is conscious that the world will focus on its handling of the Olympics.

“Do you think we will be able to manage anything more than a couple of carnival floats, some football and traffic jams?" mused a friend.

It is a few years since I have heard such expressions of national self-doubt. When I arrived in Brazil almost 10 years ago, the country had just elected its first left-wing president, Luiz Inacio “Lula" da Silva. Both the currency and the stock exchange were in free fall as investors took fright.

Lula's first term in office combined cautious economic orthodoxy and some important social reforms. The minimum wage was raised significantly and a cash transfer programme was introduced for poor families. A start was made in reforming the Brazilian justice system. The government kept an eye on public spending, ran a primary budget surplus and began to reduce the national debt. Inflation remained low and living standards rose. Brazil shrugged off the world financial crisis. Winning both the next World Cup and the Olympic Games followed the discovery of a massive oil field off the coast of Rio de Janeiro. Who could argue with Lula's triumphant declaration that “God is Brazilian"?

These days this proposition may have fewer takers. Economic growth stalled last year because a hugely overvalued currency choked it. This year looks even worse, because the global recession has hit export demand. The government's success in reducing its still astronomically high inequality was a spur to domestic demand, and the export of primary commodities such as soya, coffee and iron ore underpinned economic growth. But this masked two weaknesses: a terrible infrastructure and a bureaucracy that is vast, crushing and often corrupt.

Lula's presidency, which ended with stratospheric approval levels, does not seem quite so successful if viewed from this perspective. Reforms petered out in his second term. Government spending continued to expand, but most went on increasing the size of the grossly inefficient state. His successor, Dilma Rousseff, is being forced to make some tough decisions that Lula ducked.

<strong>Travel chaos</strong>
Lecturers at federal universities have been on strike for three months and nearly half the federal workforce recently joined them. Striking police blocked roads and worked to rule at airports, causing travel chaos. Much of the judiciary is also on strike, having received no pay increase for more than five years, and inflation has chipped away at the cost of living. Trade unions affiliated to Lula’s Workers’ Party largely led the strikes and Rousseff's determination to face them down has caused dismay among many of her traditional supporters.

To her credit, Rousseff has taken a strong stand against corruption, dismissing a clutch of ministers from the Lula era who were facing accusations. This has won her support across the political spectrum and she may also gain credibility for her determination to restore discipline to public finances. However, with no overall majority in Parliament and growing opposition within her own party, facing down the corporate state will be a big challenge.

Brazil is conscious that the world will focus on its handling of the Olympics. As Rio's mayor, Eduardo Paes, put it: “For 30 years the only BBC news about Rio was violence. Now they are showing other things. There will be criticism, but the city's image is being transformed."

This will be true if it can rise to the challenge. But as Brazilians often joke, their country has a bright future ahead of it and always will have. &ndash; © Guardian News & Media 2012 Conor Foley is a humanitarian aid worker and editor based in Brazil