Brazil and the World Cup

When President Lula da Silva’s government won Brazil the right in 2007 to host the 2014 FIFA World Cup, the idea was to capitalise on the country’s post-1994 economic boom and to move from the status of a rapidly growing, emerging economy to that of a developed country.

Now, with less than a month to go before the tournament kicks off, social tensions are running high in the country where football is something of a religion. The dilemma facing most Brazilians is that, in spite of their love for the beautiful game, many are appalled by the high cost of hosting the World Cup in the midst of an economic downturn. Bloomberg has estimated that the final bill, including ambitious infrastructure projects, could be as much as US$14.5 billion.

Aldo Rebelo, Brazil’s sports minister, maintains that the World Cup will provide a “lasting legacy of economic growth” – an extra 0.4% growth annually until 2019 – and will boost the economy in the short term by around US$90 billion and some 3.6 million jobs. Many Brazilians are not, however, convinced by such projections and the World Cup has been a lightning rod for protests.

Last June, during the Confederation Cup, a warm-up event for the World Cup, with rocketing public expenditure, a higher cost of living, funding for schools and hospitals remaining stagnant, and corruption scandals, as many as 80 Brazilian cities were rocked by demonstrations, sparked by a proposed bus fare increase in São Paulo. The country is yet to regain its equilibrium.

More recently, on May 15, there were street protests in some 50 cities across the country. The turnout was reportedly relatively low and the demonstrations were generally peaceful, but there was looting in the north-eastern city of Recife and clashes with police in São Paulo, where the largest protest march took place.

In spite of the anti-World Cup message and the “FIFA, go home” slogans, the protesters have varying and specific grievances. For instance, in São Paulo, the protests were dominated by the Movimento dos Trabalhadores Sem Teto (MTST) – homeless workers who have been occupying land near the Itaquerão stadium, which will host the opening match of the World Cup – and by teachers, many of whom have been on strike for several weeks; in Rio, it was mainly teachers and bus drivers.

This week, on Tuesday, bus drivers organised a wildcat strike in São Paulo, which brought the city’s transport system to a halt, whilst teachers remained on strike and the MTST continued to protest against the construction companies that have profited from the World Cup, even as their demands for more affordable housing within the city limits are in vain. With the eyes of the world on Brazil, the pressure is sure to continue for better social services and higher pay for public servants, including police officers, in worsening economic conditions

The difference between the euphoria of being granted the World Cup in 2007 and the current economic malaise could not be starker. Then, Brazil was a leading member of the BRICS, the new kids on the economic block, was the seventh ranked economy in the world and increasingly assertive on global trading arrangements and in hemispheric politics.

With the global financial crisis, however, Brazil’s economy has suffered, with low levels of growth – less than 2% in 2011-2013 and an estimate of 1.5% in 2014 – and an inflation rate that could reach 6.5% this year, not very high but sufficient to compound the problems associated with slow growth, a current account deficit in the region of 3.5% of GDP, and reduced foreign direct investment, which Brazil desperately needs to re-energise its faltering economy.

Brazil’s economic difficulties have, moreover, been exacerbated by the lack of political will to take tough decisions with the country facing general elections in October. Worse yet, if President Dilma Rousseff is re-elected with a weak mandate, which seems quite likely at this point, her new administration’s capacity to act decisively would be severely inhibited with predictable knock-on effects on the economy – reduced capital flows, weaker growth, continuing and worsening social problems. The country could find itself trapped in a vicious circle for some time yet.

Brazil, of course, has huge natural resources and proven management skills. What it needs is strong political leadership to address its pressing socio-economic problems and boost confidence. Winning the World Cup might help in the latter regard but there are deeper structural problems to be addressed. And then there is the little matter of the Olympic Games to be held in Rio in 2016, with reports that preparations are already behind schedule and over budget.

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