Raining on the Samba parade: The challenges ahead for Brazil
Conventional wisdom would have us bequeath Brazil the title of prince-in-waiting on the international stage. The reality is a little less clear
Putting the ‘B’ in BRIC, Brazil is widely touted as a 21st century success story. What was once termed ‘promise’ has, according to the popular narrative, flourished into achievement.
The country's sheer size – considered together with its fertile land, its freshwater supplies (the largest in the world), and its vast hydrocarbon and mineral wealth – puts Brazil in the premier league of geopolitics. And what is more, the country finds itself at a unique juncture where it is benefiting from democratic governance, economic growth, and low inflation, combined together, for the first time in its history.
It's safe to say that the days of accumulated inflation rates of an eye-watering 1,782 percent have passed.
Some of Brazil’s current economic highlights include coming second only to China in 2010 as a developing-nation destination for foreign direct investment inflows; overtaking Germany as the world’s fourth largest car market; and maintaining its reputation as a commodities giant principally in being the world’s largest exporter of coffee, sugar, and now chickens amongst other items.
Some might say that Brazil has ‘made it’. And as is the fashion with newly ‘made’ states, Brazil has pursued a classic cliché.
Consider the following: you’re an emerging power with the collective eye of the international community fixed firmly upon you, somewhere between admiration and anxiety; you wish to meet this gaze with a bit of pomp. What do you do?
You host the World Cup.
This Saturday was a landmark on the road to 2014’s Samba football-fest as the countdown to the tournament’s kick-off reached 1000 days. But Brazil’s preparation for what is arguably the world’s premier sporting event is symbolic (and in many ways directly evident) of its current unsuitability for the role of international prince-in-waiting.
It may have been all smiles for Rousseff and Pele as they held the famous canary-yellow jersey between them in front of the adoring press, but behind their contracted cheeks and pearly-whites, things aren’t quite so cheery.
12 stadiums remain to be constructed or upgraded – not to mention a number of roads yet to be laid and airport terminals yet to be built to connect the dots.
Just six days ago a federal court in Brazil ordered an immediate halt to work on a new terminal at the main international airport in Sao Paulo. This particular outcome is typical of the lop-sided Brazilian legal system in which dams, roads, and airports are easily blocked, but day-to-day issues such as black market trading and broken contracts are less easily managed.
What is more, Brazil’s investment in infrastructure has declined since the 1970s, averaging just two percent of GDP throughout the 2000s, down from 5.4 percent in the former period.
While this is all damning stuff for Brazil’s bid to be ready on time for 2014, historical precedent tells us that Brazil will probably cross the finish line by a nose-length, just as China did when things were looking touch and go prior to its hosting of the 2008 Beijing Olympics.
But take a step back from the World Cup microcosm and it’s clear that the critical lack of infrastructure forms just one sprout of a hydra-headed strategic conundrum that threatens to derail Brazil’s meteoric rise. The reality is that Brazil currently battles a host of social, economic, and political problems.
Chief amongst these is crime. Kidnappings are relatively commonplace, as is murder. In fact, the murder rate in 2008 was 20.5 per 100,000 inhabitants and, rather worryingly, 52.9 per 100,000 in the 15-24 age bracket. Meanwhile, organised outfits such as Comando Vermelho wreak havoc in Brazil’s many favelas.
Closely following crime are suffocating, self-imposed economic regulations. On a macroeconomic level one might argue that Brazil has every right to be satisfied with the way it has ridden the global economic crisis. But in terms of stimulating productivity at home, it is lagging far behind.
For one, the Central Bank’s headline interest rate was recently dropped by half a percentage point but still rockets at 12 percent. Amazingly, the bank’s head, Alexandre Tombini, has been grilled for the decision – such is Brazil’s paranoia with inflation.
Moreover, stringent tax codes are something of a logistical nightmare for business. The World Bank estimated in 2009 that it took the average Brazilian firm some 2600 hours’ work to pay its taxes each year, ranking Brazil 150th out of 183 countries in terms of how easy it is to pay taxes.
And let’s not forget Brazil’s aforementioned black market which crushes law-abiding firms between unfair competition on the one hand and excessive bureaucratic and legal red tape on the other.
Internationally, Brazil faces other strategic hurdles. Its questionable courtship of regimes such as that in Iran has seen a red flag pinned above its head, not least in Washington. Put simply, Brazil might be best advised to drop this relationship from its social network.
At the same time, Brazil is geographically rooted in a hemisphere that already has one overlord, where suspicion of the U.S. is, as always, alive and well (not least in Venezuela). But Brazil faces a strategic dilemma in that it is not yet powerful enough to challenge its northern neighbour, while, at the same time, it has failed to take on a regional leadership role.
Indeed, some of the suspicion generally reserved for Washington has begun to filter its way toward Brasilia instead as a consensus builds in the Latin American community that Brazil’s diplomacy is increasingly domineering. Should Brazil fail to find a balance between tight cooperation with the U.S. on the one hand and taking up a genuine regional leadership role on the other, it may find itself rather in limbo.
If Brazil is able to address these core dilemmas then it may one day perform on the international stage in a manner befitting Mário Zagallo’s iconic 1970 World Cup winning team. Until then, Dunga’s 2010 outfit seems a more appropriate yardstick: solid – in comparison with its occasionally erratic forebears – if not spectacular.
Dane Vallejo is the Associate Editor of The Commentator. He tweets at @DaneVallejo
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