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In 2009, when Rio de Janeiro won the right to host the 2016 Olympic Games — beating out Madrid, Tokyo and Chicago — Brazil was flying high. Although it had not escaped the consequences of the 2008 financial crisis, it had suffered less economic damage, and had come back more quickly, than other countries, including the United States. With the economy booming, the federal government felt so flush that its popular president, Luiz Inacio Lula da Silva, had instituted a series of expensive social programs that helped push millions of poor Brazilians toward a better life. The Economist magazine predicted that Brazil would soon be the world’s fifth-largest economy, leapfrogging Britain and France.
“I’ve never felt more pride in Brazil,” said Lula (as everyone in Brazil calls him) after Rio’s bid victory was announced. “Now, we are going to show the world we can be a great country.”
He was not the only one who felt that way. On Rio’s Copacabana Beach, a huge party broke out.
The games begin in six weeks, but nobody is partying anymore. The economic — and social, and political — conditions facing Brazil and Rio have changed drastically. A huge corruption scandal that began at the country’s giant oil company, Petrobras, resulted in exposés and investigations into dozens, if not hundreds, of high-ranking politicians and members of the business elite. Lula’s hand-picked successor, Dilma Rousseff, is being impeached for covering gaps in the government’s budget in ways that were allegedly illegal. (She has never been connected to the larger scandal, however, despite having once been the chairwoman of Petrobras.) Lula himself is under investigation.
The country’s economy has also fallen off a cliff, its gross domestic product dropping by 3.8 percent last year alone. Both the state of Rio de Janeiro and the city are broke — and the federal government is not in great shape either. Teachers and police have had their paychecks delayed. Those much-praised social programs have been cut back. Inflation is on the rise. So is crime. The state security budget has been cut. Just days ago, armed men attacked Rio’s largest public hospital, successfully freeing a drug kingpin. Plus there is the Zika virus, which has hit Brazil hard. According to the International Monetary Fund, Brazil’s economy has slipped to ninth in the world, behind not only Britain and France but also India and Italy.
Are the Olympics responsible for those problems? Of course not. But they have highlighted them.
Cities that hold Olympics rarely, if ever, break even on the Games. In Rio’s case, it will not even be close. Brazil originally budgeted more than $14 billion to hold the Olympics, money that would be spent on infrastructure — stadiums, transportation improvements, the Olympic Village and so on — as well as security and other logistical requirements.
That number is now estimated at about $20 billion. But Rio is only likely to reap, at most, $4.5 billion in revenue, said Andrew Zimbalist, a sports economist at Smith College in Massachusetts whose recent book, “Circus Maximus,” examines the economic consequences of the Olympics and the World Cup.
Instead, what cities promote when they bid for the Olympics are two things. The first is tourism: The Olympic Games, carried on television all over the world, offer a city publicity like almost nothing else. Barcelona and Sydney are great examples of cities that became much more prominent as tourist destinations after they held the Summer Games, in 1992 and 2000, respectively.
Second, cities claim that the infrastructure and improvements that are made to accommodate the games will improve residents’ lives long after the athletes have left. As part of its bid, Brazilian officials promised to clean up the notoriously polluted Guanabara Bay in central Rio, where the sailing competition will be held. They would build stadiums, yes, but also infrastructure that would ease Rio’s congested traffic. Officials also said that the Olympics would boost tax revenue and economic growth — not only in the years before the games, but for years afterward.
It may turn out that the Rio Olympics will increase tourism, but the bad publicity surrounding Rio’s preparation for the games makes that a dubious proposition. As has been widely reported, the bay remains polluted, and the government has essentially given up on cleaning it up; it simply does not have the money. Thousands of people who live in favelas — Rio’s notorious slums — have been ousted from their homes, often relocated hours from their schools and jobs, to make way for the needs of the Olympics. But all that Olympic construction has not been enough to stem the decline of Rio’s economy.
Perhaps the best example of the problem with Rio’s Olympic-mandated infrastructure is a new 10-mile rail line that will connect the hotels of Ipanema and Copacabana to the western suburb of Barra da Tijuca, where the Olympic Park has been built. It will cut the travel time from over an hour by car — on a good day — to less than 30 minutes. But after many delays, the rail line is now expected to open just four days before the opening ceremony. The cost has risen to $2.8 billion after an initial estimate of $1.6 billion. Serious questions have been asked about whether there will be enough time to properly test the new line before putting it into use.
At this point, virtually all the problems troubling the country seem to be reflected in Rio’s Olympic preparation. Corruption? Prosecutors are investigating a number of construction companies building the Olympic sites, starting with Odebrecht, which is involved in more than half of the Olympic projects. Zika? The virus has caused some public health officials to call for the games to be canceled, and at least several athletes — golfer Rory McIlroy was the latest — have declined to participate. Zika is the ultimate in bad publicity. Lack of money? The Brazilian organizers have had to cut about $500 million from the Olympic budget — affecting everything from the opening and closing ceremonies (they are being pared back) to the athletes’ dorm rooms, which will not have televisions. (Organizers were going to charge the athletes for air conditioning but backed away.)
Other miscues have added to the pre-Olympics woes. In April, a bike path that had been built next to the ocean as part of the games’ infrastructure improvements collapsed, killing two people on the same day the Olympic torch was lit in Greece. (More bad news came Friday, when the World Anti-Doping Agency suspended the accreditation of a lab that was renovated, at great expense, to handle the drug-testing operations for the games.)
Last week, the governor of the state of Rio de Janeiro declared a state of “public calamity” — a declaration usually associated with a natural disaster — essentially acknowledging that it was bankrupt and would be unable to honor its commitment to the Olympics without help. The federal government stepped in with an emergency $850 million loan, some of which will be used to complete the new rail line.
The Rio Games will go on, of course, and for those of us watching on television, it will be a splendid spectacle. Most of the Olympics will take place in a kind of bubble, largely divorced from the city’s problems. But after they end on Aug. 21, almost three weeks after they begin, most of us will move on. The people of Rio will be left to pick up the pieces.
(NEW YORK TIMES)
