Rio 2016 Brazilintel 1.1

i-see global research Brazilintel : Comment 1.1 October 2009 Rio2016: More than a coming out party? R io de Janeiro and Brazil have earnt the right to host the Olympic Games in 2016. That was New poles emerge the view of President Lula as he spoke to the The last ten years has seen Brazil lay the founda- IOC in Copenhagen. His compelling argument tions for its growing global significance with sound put forward a vision of a country that deserved economic management, an investor friendly at- its seat at the table. titude (despite initial concerns about the former union leader turned President Lula from currency But who would want to host an Olympics in these traders in New York), and a globally feted redis- times of crisis? It has become de rigeur for the tribution programme, the Bolsa Família. Games to be associated with scandal, massive overspend, managerial incompetence and for all Hosting the Games will further the country’s de- the hot air, a lack of a lasting social legacy. sire to be a leader on the world stage – an ambi- tion that will see it continue to press for a seat This award for Rio de Janeiro – despite the social on the UN Security Council, become a key actor and infrastructure improvements sorely needed in climate negotiations as protector of the Ama- by the city - is much more than a coming out zon rainforest, maintain its leadership in biofuel party with local legacy attached. production and engineering, and grow into the key supplier of food and other commodities to The key to this prize is intimately linked to shift- the global economy. ing global economic and geopolitical balances. As new poles of influence emerge across the Brazil seems very likely to emerge out of the world, Brazil is competing with other nations recession earlier than its western counterparts. that have shrugged off the ‘emerging’ moniker. As an indicator of its relative health, recent data The new battle for influence is part of what the for sales of new vehicles in September broke re- OECD Development Centre has described as the cords, up 14% from the same month last year now pronounced shift of power and influence for (albeit in part due to an imminent duty increase), the North to the South and from the West to the with over 2.3 million new vehicles sold this year. East. The country has worked hard to build confidence and stability into its historically volatile economy. And whilst Rio may face difficulties at a munici- Its currency, the Real, was finally tamed by the pal level in the same way that Athens did, and former President Fernando Henrique Cardoso, potentially London will, in terms of financing and whom in 1994 as Finance Minister introduced his administrative incompetence, it is the wider con- stabilisation plan to control hyperinflation. This text of competing for influence in the new global set the country on a predictable course -much to economic order and the challenge of embedding the relief of its weary citizens and the standoffish new imagery into the world’s collective conscious international community. that is at stake. Following the success of the plan, stability be- came the watchword. Its banks are required to be well capitalised (yes- it’s true!) and prudent, not dabbling in risky assets like their northern

i-see global research Brazilintel : Comment 1.1 October 2009 counterparts. Anecdotal evidence bears witness to this as well. Brazil – unlike China, is a big exporter of com- It was at the G20 Summit held in London as the modities, not consumer goods. Pre-crash, it world teetered on the brink looking for divine formed part of a supply chain that provided the intervention from the new US President, that raw material inputs to China, which were then Obama paid homage to Lula saying: ‘this is my part of the exchange of dollars for consumer man right here… the most popular politician on goods with the US. earth’. And although the bankrupt US consumer is be- Luiz Inácio Lula da Silva’s magic, which brought ginning to save, now painfully aware that their him to the presidency on the fourth time of ask- real wealth is not all it appears, China still needs ing in 2002, has evolved from hard-edged union the inputs to fulfil its high growth strategy re- leader carved in the working class districts of quired to absorb the millions migrating from a São Paulo during military rule to huggable na- rural to urban setting. tional emblem. Often emerging unscathed from his party’s problems, he has long been used to In contrast to China and the US, Brazil’s already being the star attraction. predominantly urban population are relatively enthusiastic consumers, and not indebted to the Obama’s platitudes were no joke - Lula’s approv- point of no return. Credit – which due the hyper- al rating in an official poll in September (after 7 inflation of the past had been very difficult to se- years at the helm) was over 80%. And although cure, is becoming more widespread and increas- unable to run for a third consecutive term, he ing numbers of people have income to spend. may well be a candidate in the 2014 general election – in time to welcome the Olympics to Bigger shifts post-crisis his country. A recent editorial in the Financial Times declared Lula’s pitch but is Rio ready? the term ‘emerging’ as obsolete when used to describe so called ‘late industrializing nations’. Lula’s pitch for the Games was compelling. Brazil Whilst this headline grabbing statement may be has earned the right to stage the Olympics and a step too far for some, countries such as Brazil, are holding it on behalf of Latin America and the India and China now drive the global economy entire developing world. The Games are to have and contrary to popular perception have less vol- the effect of supercharging the nation’s devel- atile, more stable (and less ageing), economies opment, providing the world with the opportu- than their once all conquering Western counter- nity to rediscover Brazil and leaving a legacy of parts , now relegated to the role of onlooker. committed investment for a city (and country) in need of a kick-start to infrastructure projects. Indeed, the global shift of economic and political influence from West to East and from North to Images of the city prepared for the bid show sys- South has been underway since before the crisis. tems such a single lane Bus Rapid Transit system Whilst derailed for a certain period, it appears – pioneered by architect Jamie Lerner in his re- that within the ‘new, new’ normal, these shifts design of the southern city of Curitiba and in use will continue to move the spheres of influence in places such as Bogota, and Mexico City, cou- to different poles across the globe. That the G20 pled with the stunning landscapes and beaches meetings have become the global economic fo- of the Zona Sul (south of the city) – images rum – belatedly replacing the G-7 as the de-facto embedded in global collective memory since the forum for navigating the post-crisis path, attests times of Carmen Miranda and the heyday of the to this. Copacabana Palace Hotel.

i-see global research Brazilintel : Comment 1.1 October 2009 Is Rio ready to be host? In many ways - whilst abundant resources. They have also been lucky. 7 years away - the Games could be viewed as Buoyant commodity prices have eased the fi- Brazil’s coming out party in the same way that nancing of social provision and delayed tough Beijing was for China. There is no doubt that the legislative decision-making – making marked Beijing Games were great success but Brazil is near term improvements to the lot of many of no China. It has neither the $20 billion to spend, Brazil’s poorest, and helping to create a large dy- nor the kind of one-party leadership needed to namic middle class. shut down factories and focus everyone’s mind on the main event. Competition for influence in a redrawn world Brazilian politics, noted for its byzantine frame- works and dalliances with patronage are often In these post-crisis times where new global axes paralysed by tactical manoeuvring when not of influence are emerging, the Olympics is pre- fighting off allegations of corruption. Equally, cisely the kind of event that Rio and Brazil need there are concerns that Brazil, and Rio de Janeiro to host. Embedding ideas and imagery around in particular with its pronounced inequality, could the world of Brazil as a country that is open for spend its time and money better by focusing on business, strong, dynamic and modern, will give social improvements and educational attain- it the one up on India, the rest of Asia and the ment. Will this be a Games for the haves, or the struggling developed economies. have-nots? Will the only supercharged growth be the rush for government contracts to be shared A recent study by the Reserve Bank of San Fran- among friends behind closed doors? cisco – ‘The Olympic Effect’, highlighted the ben- efits of hosting a games when these types of In spite of these concerns, the Olympics will be considerations are at the fore. It demonstrated seen in the light of the new global realities. Rio that trade is 30% higher for countries that have de Janeiro may not be Beijing, but it certainly hosted the Olympics. It also suggested that by isn’t Athens either. Securing the Games is a part showing a willingness to host a mega-event of Brazil’s continued progress on the new world countries signal to the world they are ready to stage. do business. Long-term stability (and fate) This is quite clearly Brazil’s plan – and with Rio itself perhaps offering up a potential means of Brazil’s development strategy over the past de- funding from the newly discovered Tupi oil field cade - started by Cardoso, maintained by Lula just off the city’s coast, alongside a returned and not likely to deviate with the next President Lula, the Games should provide a legacy of more – (though look out for movements around the jobs, more growth, and greater international massive Tupi oil field off the coast of Rio), has recognition, drawing business and investment to been one of steady, stable growth with increas- this new pole in a newly defined world. ing social provision. Often criticised from both To receive the Brazilintel Comment series free of left and right either for not opening up enough charge email news@i-seeglobal.com and achieving a higher rate growth or reneging • Rose, A &‘Brazilintel’The Olympic Effect’, March 2009. (www. inserting Speigel, M. Comment’ in the subject line. on promises of implementing a more socialist frbsf.org/publications/economics/papers/2009/wp09-06bk.pdf ) agenda, Lula’s government committed itself to Brazilintel is part of i-see global, a consultancy spe- a happy medium. So far, in light of the global cialising in integrated social, economic and environ- crisis, their stance has been vindicated. mental thinking for a rebalancing world. They have worked hard to present investors with To find out more contact Jimmy Greer: a predictable home for their capital in a land of e: jimmygreer@i-seeglobal.com t: +447843560399 or visit http://i-seeglobal.com

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Rio 2016 Brazilintel 1.1

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Rio 2016 Brazilintel 1.1 — Document Transcript