Brazil media calls for unity on World Cup

Fuleco, the World Cup's official mascot has not yet
 conquered the national fans, producers of toys said
they are targeting international tourists

It's finally happening. The World Cup starts today after 7 years of (not very good) planning, discussions and protests. In the past year, particularly, the World Cup helped Brazil show its true face to the world. The "football nation" is now an angry emerging middle class nation, that claims for more quality in the public services. It's also a stable democracy nation, which went through massive protests without a single change in its institutions. It is still a struggling nation, that suffers to put investments in due course, but it is learning.

No, we are not the skyrocketing Christ statue The Economist showed back in 2009. In fact in today's Folha de S. Paulo edition, Vinicius Torres Freire, an economics columnist, calls attention to the possibility of a technical recession (two quarters of decrease in the economic activity) in the first half of this year.

But we are not that bad. The fact the country managed to go through the protests maintaining its institutions should not pass unseen. Unlike any other emerging country with recent upheavals (Turkey, Thailand or Egypt, just to name a few) Brazil's democracy has not been questioned by the protests.

The truth (or at least the close we can get to it) lies as usually in the middle. Brazil is a country which is just learning how to invest -- as states another Folha's article, signed by Marceo Miterhof. After decades of crisis and after addressing the more pressing issues of inflation, economic stability and income distribution, the country has just started to focus its attention on the infrastructure problems. Differently than the last big investment decade of the 1970's this time the investments came under the democratic regime with all its checks and balances. It's been a tough learning.

This is why today the Folha's balance of the World Cup infrastructure legacy showed that little over 50% of the 167 planned improvements were completed in time for the games. The rest was either abandoned or postponed to after the games.

As Folha's editorial states today, it's time to bring attention to the event itself and to support the national team. This does not mean forgetting all the criticism, it means remembering the positive aspects that the event also has. I don't think anybody in Brazil believed the World Cup would bring an end to all of the country's problems. It actually contributed to expose the naked reality of a country that has improved recently but still has a long way to go.

As I already mentioned here, I believe the games will occur without any major problem. The main strikes of metro workers and homeless in São Paulo were controlled in the last minute, just in time for the event. It's the Brazilian way, always finding a solution at the last moment.

I'm also curious on what will be the political result of the games. So far, it seems the World Cup has backfired for the Worker's Party. But who knows what can happen after the World Cup nationalist marketing flood. The latest presidential poll published last wednesday showed that for the first time Dilma lost the upper hand when compared to the sum of her two main adversaries. A second round in the elections is now more likely than ever.

The World Cup is around the corner, and the elections too

Brazil is living a huge strike wave days before the World Cup. This week São Paulo came to a halt when bus drivers stopped working. And this friday president Dilma almost couldn't finish her speech in Brasilia due to the protest of public servants in strike. 

Protests during Dilma's speech this friday

It's no surprise that strikes occur at this time of the year, as each union has its own calendar of negotiations. But now organized workers are taking advantage of the World Cup to leverage their negotiation position, as the world's eyes are turned to Brazil. And that's been picked up by the Brazilian press. 

In this saturday's edition, Folha de S. Paulo calls attention to the fact that Dilma is even considering buying a terrain near the Itaquerão stadium in São Paulo to halt homeless protests in the region. The land would be designated to housing projects.

Both Folha and O Globo gave a fairly big space to former football player (now a member of the World Cup committee in Brazil) Ronaldo's quote about being ashamed of the country's lack of organization  -- it was the cover of Folha. Also on the World Cup, O Estado de S. Paulo revealed that the already very ambitious Brazilian project of receiving the World Cup in 12 cities was even more gigantic: it involved 17 cities, according to Fifa.

Elections

This week another survey for the presidential election was released. From Ibope/Nielsen, the results point out to a small recovery from Dilma Rousseff, from 37% to 40% of the vote intentions, but also a greater chance for a second round of elections, as her adversaries grew more. 

To wrap this post up, I just liked to call attention to Aloizio Mercadante's interview to Folha de S, Paulo two weeks ago. There, the current minister of the Civil House admitted the government's price control policy (a very unusual, not to say inefficient, way of halting inflation). He was later unauthorized by the Finance minister Guido Mantega, but my personal opinion is that mr. Mercadante's ideas resonate deeply in the Brazilian government, and are the first honest acknowledgment of the true Brazilian economic policy. (See Mercadante's interview).

Dilma vote intentions keep falling as rumors of Lula's return arise

Ricardo Noblat, columnist for O Globo wrote this monday that Lula and Dilma are waging a secret battle for the right to be the Workers' Party (PT) next candidate to the elections this year. According to Noblat, Lula has always envisioned coming back to the presidential seat (no matter how many times he declared he was done with it)  and that was why he chose Dilma to be his successor, a political nobody until 2011 when she started appearing next to Lula in big cerimonies.

But now that Dilma has become used with power, Lula would have a hard time dissuading her from her rightful reelection, unless she keeps going down the vote intention polls, which is precisely what we are seeing in this year. Last saturday Datafolha (the research institute from Folha de S. Paulo) showed the vote intentions for Dilma went down to 38% from 44% on the previous poll, in a scenario where Aecio Neves (PSDB senator) and Eduardo Campos (PSB, and currently governor of the state of Pernambuco) would be the president's main challengers.

André Vargas asked for a removal from the vice-presidency
of the Chamber of Deputies after complaints

Truth or not, it seems the situation is getting worse to Dilma every week. Last week Globo Television showed PT deputy André Vargas (that until this monday occupied the vice-presidency of the Camber of Deputies) in what it seemed to be a  lobbying negotiation with a convicted money dealer, Alberto Youssef. The investigation started after Vargas was getting a ride on Youssef private jet. This monday, Vargas asked for a 60 removal from his position as vice-president.

In the World Cup front, the news are not positive also. In Rio, an union from the workers of the constructing business started a strike and stopped the already delayed work for the World Cup and the Olympic Games this monday. In São Paulo the work in the World Cup stadium were stopped last month after the third death of a construction worker on the site. The stadium may be inaugurated in the end of this month.

Bad news for Dilma were again good news for the market. This monday, following the wave of popularity decrease the dolar hit a five month low against the real. Economists heard by O Estado de S. Paulo interpreted this as a sign that investors see a chance of change for better in the Brazilian government -- in a similar reaction to what happened when the president suffer a popularity decrease. Of course the market may be also responding to the 25 basis points increase on the country's interest rates decided by the Brazilian Central Bank on april 3rd.

World Cup: 100 days to go

This tuesday marked the 100 day countdown to the 2014 World Cup. It is really an interesting coincidence that this event that fueled the protests of last year reaches this symbolic milestone now, as millions of people are occupying the streets of Brazil -- just this time for a different reason: to celebrate the Carnival. 

[If the tranquility of the Carnival mass celebration, in clear opposition to the violence of the protests, may strike you as a contradiction bear in mind two things. First  the Carnival is a people's party, so it may be seen as opposed to the opulent stadiums built for the benefit of a few. Another hypothesis is that the Carnival is the moment when the "silent majority" that actually disapproves violence in the protests (as seen through the Data Folha survey) actually comes to the street. These are at least two reasons I could think of.]

In Rio, millions celebrated the Carnival,
that had no reports of protests

Both O Globo and Folha de S. Paulo dedicated different stories to the landmark towards the World Cup. Just O Globo put with all the letters that the event is dividing the country. In a beautifully written article published on the sports section, the newspaper interviews two former players from the Brazil football (I'll always mean soccer by that) team with distinct visions of the World Cup and its meanings. The text start by saying that so far the sole legacy from the event are the protests and calls this 100 days journey as a journey to self discovery. 

Folha decided to approach the event with a different strategy. In the Economics section, the newspaper talked about the inflated prices in hotel rooms and how they are driving an increase in temporary rents from people that own houses near the stadiums that will host the event -- an american tourist paid US$ 1,640 for renting a three bedroom apartment near the stadium of Porto Alegre, more than what could be earned in a whole month in the area. In another related article it also says that the hotels in the cities that are just serving as training sites for the football teams are not receiving much reservation from tourists. 

The controversial part of the tournament was raised by the OpEd section in an article signed by Ronaldo Nazario (Ronaldinho), a member of the committee in charge of organizing the World Cup. The former Brazil forward plays defense on the text, saying the US$ 3.4 billion investment on the stadiums since 2007 were not much compared to the  US$ 323 billion spent on health care in the same period. "Brazil is progressing a lot, in social and economical terms, and has been correcting the inequalities in the recent years. We need to keep pursuing a better country. This final is played every two years in october and not in july", says Ronaldo calling protesters to express their dissatisfaction in the ballots and not inside or outside the stadiums.

Press versus Black Blocs

Since the protests started on june 2013, the press has been a target of some of the revolted young people. Last week, after the journalist from TV Bandeirantes, Santiago Andrade, died on consequence of a firework explosion detonated by one of the Black Bloc protesters, this confront was more than evident. On one side we had still some of the same voices (that supported the violence of Black Blocs from the beginning) trying to downsize the meaning of the death, at the same time we had somewhat an overreaction on part of the media.

Before going further on this issue it is necessary to clarify somethings. The press has always been in the radar of leftist movement's critic in Brazil. And it is not without any reason: part of Brazilian press supported the military cup of 1964 (namely through the work of a liberal journalist called Carlos Lacerda, that latter turned against the regime) and a greater part just omitted the critic to the regime in order to keep running. Globo Television is seeing as a member of the later, especially after they called a immense manifestation for the direct presidential election as a commemoration of the city of São Paulo's anniversary. 

This is on the roots of the anger against the media. At almost all the manifestations and protests I covered at some point I could hear protesters shouting: "Fora Rede Globo, o povo não é bobo"(something like "Go away Globo Network, people are not stupid"). Not surprisingly protesters attacked reporters from day one, but maybe because the violence coming from the police was bigger (with a photographer losing the vision of one of his eyes due to a rubber bullet), the press focused its attention to the violence from the police. Latter, namely in Rio, O Globo started covering more closely the actions of Black Blocks that managed to remove the multitudes of protesters from the streets through their violence (the phrase if from a musical producer from Rio, I just borrowed). 

This week main TV news shows devoted a lot of time to give a proper dimension of Santiago's death, and ask for Justice (16 minutes in Jornal Nacional, of Globo TV, and 15 minutes in the Jornal da Band, of the Bandeirantes television, where Santiago worked). The two young Black Blocs responsible for the death were quickly arrested, in Brasilia, deputies were quick in drafting laws against protests, from an intelligent one that typifies the crime of disorder (allowing the police to actually remove people with rocks and dangerous behaviors from the protests, something they couldn't do due to a gap in legislation) to extremely dangerous ones, such as the one that relates protests to terrorist activity. 

That's not part of the overreaction, yet. For me, the overreaction came with the attempt of putting the decentralized group of the Black Blocs as part of a leftist movement aimed to create chaos on the verge of the World Cup. Newspapers quickly assumed, basing on vague an unconfirmed declarations, that the Black Blocs were connected to PSOL (a leftist party, that is very active in the protests) and quickly connected them with a Rio deputy, Marcelo Freixo.

The press steps back
Today, on their sunday edition, both Folha de S. Paulo, and part of O Globo, acknowledge part of the overreaction, which is a good thing. Folha devotes a full page to understand the movements behind the protests, and differentiate leftist, anarchist and other independent social movements from the Black Blocs. Folha also ran a survey in Rio that shows that more than 70% of the people still supports the protests, event almost 100% (I believe 98% or so) are against any act of violence from protesters and the police. Stories about the need to train better the police also were published during the week, which is also aiming to the correct direction.

The impression I get, looking from a big distance, is that finally the Black Bloc has lost its momentum. The group seduced part of young people that don't see any chance of manifesting themselves in the country's democracy, as correctly pointed out Vladimir Safatle, on Globo News this week. It is not the case that the country has no means of participating, we actually have a lot of institutionalized ways of participating, but they are opaque to the vast majority of the population. In the roots of this problem is the traditional lack of political participation among the whole population and the huge disbelief in the political parties (a disbelief that is more or less occurring also in developed countries). 

A youth longing for opportunities and an economy needing more qualified workers

Jefferson Luís, creator of one of the "rolezinhos" 

After reading some more about the "rolezinhos" phenomena I have to acknowledge an error in my previous post. As it seems and as some more protests in favor of the initial movements showed throughout this week, the initial events were not intentioned to raise some level of theft. They were instead just meetings from teenagers that long for more spaces of socialization, and that too like the safe and fresh environment of the country's biggest shopping centers.

It is true that Brazil's shoppings often stand out as an immense contradiction even when compared to their surroundings. Particularly on the one shopping in São Paulo (the Shopping Metro Tatuapé) that hosted one of the rolezinhos, there is a considerable contrast between the security inside and outside the building. It is one of the many contradictions that still persist in Brazil as I pointed out during this week. Today O Globo has a story about movements this time made to support the rolezinhos.

Newspapers were also not short of articles trying to understand the phenomena, listed by sociologists heard by O Globo as a protest of an apolitical youth that also want to be included in the consuming society. During the week one of the organizers from the movements, 20 year old Jefferson Luís, was interviewed by O Globo, O Estado de S. Paulo, TV Record, G1  and Vice websites. Working as a full time helper in a company on Guarulhos, on the metropolitan region of São Paulo, Jefferson is a funk singer that has 2.5 thousand Facebook followers and wanted just to have a good time with his friends in a shopping, but things got out of control.  El País Brazil also posted a nice article underlining the meaning of the rolezinhos and how poor young people in Brazil are constantly mistreated.

The three biggest Brazilian newspapers all came with different cover stories this Sunday. O Globo and O Estado de S. Paulo with more economic stories, the first bringing to attention the lack of intermediate qualified workers in Brazil which contradictory as it seems forces industries to hire more qualified technicians and graduated workers to execute simpler tasks and the second showing how the 23 billion tax benefits conceded by the Federal Government for automakers has undermined local governments to pay their expenses.

Folha de S. Paulo on the other hand explored the political side of the 2014 World Cup in yet another scandal: a 870 million reals bill that local governments payed for the event, that should, by contract, be paid by the Brazilian Fifa's subsidiary.

Country's economy will be highlighted this week
It will be the first time Dilma will attend Davos as a president. In another effort to reduce the malaise between the government and the rating agencies, the president is supposed to address markets to show the existing opportunities in investing in infrastructure in Brazil. All of this one week after Brazil's Central bank raised interest rates from 10% to 10,5% a year. It seems the government decided to be serious about the economy in the beginning of the electoral year.

2014 predictions and expectations

This year is definitely a big year for Brazil. The country will host the World Cup after 54 years, there is a presidential election coming and a lot of expectations on whether the last year protests are going to repeat or not. I wouldn't say there is a turmoil or volatile environment in the country right now. I'd put it more like a feeling that people are longing for change.

There is surely a notion now widespread that the country lost a lot of opportunities in attracting foreign investment when it was abundant and when Brazil was Latin America's darling. This feeling was long ago vented by more orthodox economists when president Dilma begun to fight the high interest rates. A fight which she has been defeated last year.

Now it seems that the pessimism is a consensus. We should not grow in 2014 more than the expected 2.3% that we should achieve in 2013. The government expenditures are likely to rise in an election year, bringing together the inflation rates. The reforms and changes long needed to attract investment and improve the education, judicial, political and health care systems will be once again delayed and we will be left with more and more demands for the next president or the next Dilma Rousseff's term in power.

The forecasts aren't necessarily gloom but neither they are exciting. It seems the country is running on auto pilot. I believe former president Fernando Henrique Cardoso, in an article for O Globo, captured the right needs for the country right now. It is mandatory that we increase productivity, that we establish new and strategic free trade treaties with countries that are recovering economically, such as the United States, and struggle to maintain Brazil's importance over South America. The Worker's Party ideology played a major role, says Cardoso, in delaying this pragmatic move towards market integration and foreign investment attraction.

I agree with that in general. Brazil is likely to be stuck in the current level of development and income if it doesn't invest in education and improve the tools for private investment. Ideology has been the worst enemy of our economic policy the last few years, this is true. There are somethings, though, that deserve consideration and contextualization.

Personally I believe that the Worker's Party experience through Lula's two consecutive terms as a president gave the impression that the government lost the chance to grow bigger, and to increase the national power of Brazilian companies. The main point at the time was the sense that during the crisis, the country bended once again to the financial markets (mostly responsible for the crisis itself) and increased the interest rates was the wrong move. I heard more than once from economists to politicians that the country, back in 2008, had lost a window of opportunity to slice interest rates to international levels.

This certainly changed with Dilma. The president aimed straight to the interest rates and had the feeling she won the battle. In 2011, the first year of decreases, inflation was kept down, and the financial system survived. There wasn't a huge increase in the families debt and the economy kept running. But when inflation eventually came, the government refused to take a step back and allow for a spike in interest rates. It rather took a different, non-conventional, path, decreasing taxes for specific sectors. This was the first "hubris" mistake I would say Dilma has learned the hardest way last year.

Another thing that changed during Dilma's office was the privatization. Since the privatization of state companies during the Fernando Henrique Cardoso term, there were a lot of opposition against the private initiative in Brazil. This is not at all unjustified. The first auctions of public goods privileged the price the companies would pay for the government instead of the price they would charge their customers for their services. This created a lot of aversion to this model of administration as winning companies charged higher fares for their services. Under the Lula's government some roads were auctioned following the exact opposite model (privileging customer's fares rather than the government prize) but this also had the inconvenience of making it difficult for companies to fulfill their investment commitments (specially under Brazilian bureaucracy) and was also rejected as a model.

Dilma had then the mission to change the model, offering the best of the two worlds: a fair price for the users of the conceded services and the guarantee that the investments were to be made. The word privatization was never again used, after Cardoso's term, and was substituted for concession, which should mean that the government would still have a regulating power and would be ultimately the owner of the public good. A lot of discussion was made on the return that the market required for the investments (considered in the beginning to high on the part of the government and too low on the part of the market). Another topic was the know-how requirement for the companies that would take part on the auctions. After first big airport concession in São Paulo, Brasília and Belo Horizonte, where some of the winners didn't have a lot of experience with busy and huge airports the rules of auctions were also changed.

Making a long story short, all of this contributed for the delays on the auctions. While there were some unpredictable things (considering that the government was also learning from the process), the ideology played also a major role here. If the government had been less tough in her first concern that private companies were demanding too much return for their investment, perhaps the auctions would have occurred during a time Brazil was still attracting foreign investment. The long discussion and the indefinition made the country fold when it had the best hand.

Both the notion that inflation should be a higher concern than low interest rates at all costs, and that there is a serious need to make the private concessions happen are in the speech of Ministry of the Presidential Chief of Staff, Minister Gleisi Hoffmann today on an interview to Folha de S. Paulo.

What to expect, then, from this very busy year? I believe there will be some building up of the Brazilian stock markets (though this is more a hope than a prediction) after the tragedy of 2013 and hopefully the World Cup will happen without major problems, but not without protests (there is a big one already scheduled for january 25th, called "No World Cup"). The doubt is over the presidential election and the next year. If the elections were today, Dilma would win. The big question in this case would be whether she would be committed more to an ideological administration than to the pragmatism that I believe is needed right now for the country.