Can Rio get out of the red?


Rio summer skyline: the light just beyond

This blogger’s book about how Rio de Janeiro works is almost finished, and one of the most interesting bits learned along the way came at the very end, from an article in this month’s Piauí magazine (paywall– but a subscription is worthwhile, it’s one of the best publications in Brazil): the country’s centralized tax system, in contrast to the local property tax systems in countries such as the US, fosters clientelism (and corruption, one concludes) and tends to keep everyday citizens’ local needs and demands out of the favor-exchanging loop. Accessible and suitable housing, health care, transportation and schools somehow never came into existence.

Those needs and demands could never be fully ignored. Over centuries, Brazil developed compensatory measures to keep the lid on the deeply unequal socioeconomic hotpot. The poor were placated with a thirteenth salary, labor courts that favor employees, the FGTS payroll deduction fund, some measure of upward mobility, periods of economic growth —  plus a generous supply of holidays, telenovelas and Carnival, among other compensations. The rich skimmed contracts or paid off politicians and modernized the country for themselves.

That social pact is breaking down.

So now we have prison rebellions and massacres, in different states, with Rio very much a possible next target.

We may never know if the wave of revolts, said to have been spurred by a gang alliance upset, simply mirrors Brazil’s generalized political instability (ostensibly set off by the Lava Jato investigations and former president Dilma Rousseff’s impeachment) or if it’s directly connected to it. Recent reports link politicians and drug trafficking gang members in the state of Amazonas, which saw this year’s first of three rebellions.

There are many odd connections coming to the surface these days, indicating that crime is by no means hermetic. Rio jewelers and at least one restaurant, Manekineko, have been accused of laundering payoffs to former governor Sérgio Cabral.

Brasília is struggling to address festering prison violence and overcrowding. The announced measures are mostly old promises, but drug decriminalization is at last moving towards the center of policy debate. Meanwhile, this past Tuesday president Temer made army troops available to governors.

The gangs’ impressive power suggests that force must be used to retake control of Brazil’s prisons, though Defense Minister Raul Jungmann said Tuesday that soldiers would merely inspect prisons on a surprise basis, without prisoner contact. In the state of Rio Grande do Norte, one prison has been without jail cells since 2015.

Rio state has its own struggle: to come to an agreement to pay wages and bills and, with its Civil Police, penitentiary guards and health care workers on strike, deliver public services.

Under the groundbreaking aegis of Supreme Court President Cármen Lúcia Antunes Rocha, the federal Finance Ministry and the Rio state government drafted an agreement that would allow the state to put off debt payments to the federal government and receive Treasury-guaranteed loans. But Finance Minister Henrique Meirelles has demanded austerity in return for such eased terms– and that would have to be approved by the state legislature. Local representatives already rejected a package that governor Pezão sent them last year, containing many of the same measures Meirelles wants to see, such as pay cuts and reduced workdays plus increased pension fund contributions, for state employees.

Rio state’s just-signed 2017 budget includes estimated revenues of R$ 58 billion and a deficit of R$19 billion.

The full Supreme Court, which reconvenes Feb. 1, must also approve the agreement.

With the Finance Ministry, judges, legislators, the governor, public servants, strikers and unruly prisoners all in play (in scalding summer heat), the pressure is on. Rio’s debt solution would serve as an example for other financially strapped states, such as Minas Gerais and Rio Grande do Sul. If the agreement fails, we’re likely to see increased social unrest here and elsewhere.

What could bring relief? Higher oil prices — except, with so much uncertainty in the world, a new bonanza isn’t likely to happen any time soon.

All of this is playing out (or stalling) against the Lava Jato backdrop, which may take some of Rio’s top politicians off the job, anyway. O Globo newspaper has reported that the jailed former state Public Works secretary Hudson Braga, is working on a plea bargain that would incriminate members of the state legislature and the state accounting tribunal. Earlier reports of corruption indicate these may well include state legislature president Jorge Picciani, head of a PMDB dynasty and the man meant to lead voting on the state’s debt relief/budget cutting package; and Jonas Lopes de Carvalho, president of the state accounting court.

Pezão himself is not safe from Lava Jato. Given his role in the state’s virtual bankruptcy and continued doubtful spending, he also has little public support.

Meanwhile, Rio’s newly-installed mayor, Marcello Crivella, is still getting a feel for the job. O Globo‘s reporting turned, at year-end, from unequivocal praise for outgoing mayor Eduardo Paes’ blue-ink bottom line (based on a study he commissioned, possibly on the taxpayer tab) to constant criticism of Crivella. His evangelical church owns TV Record, which last year aired a popular Biblical telenovela, Os Dez Mandamentos (The Ten Commandments).

The mayor has indeed delayed and waffled on filling top city posts and engaged in an ongoing showdown with bus concessionaires over a fare increase– something unimaginable in the previous administration. His vice mayor, Fernando MacDowell, is a public transportation expert. Doubling as municipal transportation secretary, he’s brought on board the young blogger, cyclist and transportation history aficionado, Atílio Flegner.

In the face of the Paes’ administration’s refusal to grant interviews for this blogger’s book, Flegner was one of several amateurs who contributed to the daunting task of putting together a panorama of metropolitan Rio’s transportation patchwork.

MacDowell and Crivella have been more forthcoming than their predecessors, when it comes to airing ideas and priorities. What remains to be seen is their capability to get the city moving again, in the face of entrenched (and increasingly frail) construction and transportation interests. Crivella has said he will try to complete the Transbrasil BRT, although it parallels a SuperVia train line, run by Odebrecht. Half of City Hall’s public works projects are currently on hold.

The Olympic venues –including the Maracanã stadium– are all closed, awaiting concessionaires and outsourced management. Some legacy, say many cariocas.

What next? Yellow fever.

Some observers compare Brazil to the United States. Inequality and polarization in both countries, they say, could point to the emergence of Trump-like candidates here. Already, São Paulo has a can-do businessman as its new mayor. One shouldn’t forget, however, that it’s the recent middle-class growth in countries such as Brazil that sucked the air out of the American middle class. Edmar Bacha’s “Belindia” still fits, especially when you look at the country’s prisons. Broad-based demands for adequate public services, which came to the fore in the 2013 demonstrations, are a new phenomenon and a political factor unlikely to disappear.

Politicians, in addition to preserving their skins, face the toughest questions: How to rework a social pact and still keep a country, a state, a city together? How to effect needed reform (such as changes to the constitution regarding political, tax, social security and police structures) — when disorder and violence threaten, statesmen are scarce and inequality is ever less acceptable?

Despite the changing and uncertain landscape, Rio — and Brazil–  may turn to one longtime survival technique: muddling through. This time, however, muddling through is likely to be particularly painful, if not deadly.


About Rio real

American journalist, writer, editor who's lived in Rio de Janeiro for 20 years.
This entry was posted in Brazil, Transformation of Rio de Janeiro / Transformação do Rio de Janeiro and tagged , , , . Bookmark the permalink.

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