The Olympics Are Gone, So Now What?

(ATR) Rio de Janeiro, and Brazil, are at a crossroads.

With the Olympics over, a three year period of mega-event hosting is ending in Rio. This included the 2013 Confederations Cup, 2013 World Youth Day, 2014 FIFA World Cup, and 2016 Olympics.

Legacy for the Games is tangible, but like every Games it will take years to see the true impact. In the short term the city of Rio has new transportation routes in the form of bus rapid transit, a new subway line, and light rail. Two new urban parks were created in Deodoro, from Olympic venues, and Madureira. High-performance training centers and top-notch facilities will remain in the Olympic Park in Barra, even as private investors develop the rest of the land.

The city and federal governments are in political transition. Between the Olympics and Paralympics the federal government impeached Dilma Rousseff, lifting former Vice-President Michel Temer from interim leader to President. Temer is a center-right politician, who ended 14 years of leftist rule in Brazil.

In 10 days Brazilians will go to the polls in nationwide municipal elections. The elections will be the first step in electing a new mayor for Rio de Janeiro. Mayor Eduardo Paes, the face of the 2016 Olympics, has served his term-limit of eight years and is ineligible to run.

The IOC and Rio 2016 organizers were quick to label hosting the Olympics and Paralympics a success, with many comparing the effects of the Games to the 1992 Olympics in Barcelona. Around the Rings spoke with several academics to see where Rio is now, where it could be, and what the effects of hosting the 2016 Games might lead to.

Brazil Remains in Economic Quagmire

Rio is in a unique economic position because after hosting the Olympics the city remains in good standing, but the state of Rio and federal government are much worse off.

Brazil has seen negative growth over the last 18 months and the situation does not seem to be looking up. To compound the matter the state of Rio, which relies on revenue from oil production, has seen prices continue to languish worldwide. The state of Rio de Janeiro promised to help in cleaning up Guanabara Bay and deliver the new metro expansion for the 2016 Games. Olympic targets of 80 percent treatment of sewage floating into the bay will not happen until at least the 2030s according to the government, and a federal bailout was required to finish financing the subway.

Rodrigo Zeidan, a Brazilian economist teaching at NYU Shanghai, put the situation bluntly to Around the Rings:"the State is utterly and completely broke." He says the reliance on oil revenue and the current recession has "devastated the tax base" of the state. Still, there is hope for the future if the federal government can use the crisis to enact budgetary reform.

"Rio is not the only state that is broken," Zeidan said. "Bailouts may happen, but it should only happen if it comes with budget rules that constrain fiscal profligacy. Our current fiscal crisis is not only the effect of an economic downturn, but the result of reckless spending by the states and the federal government."

Zeidan says a new budgetary reform law PEC 241 needs to be passed to help prevent a deepening of the crisis. The law will put a cap on government spending for the foreseeable future, which could create credibility in the new government, which will bring more foreign investment.

Mauricio Santoro, a political scientist at the State University of Rio de Janeiro, told ATR the Rio state government must also reform to offset its dependency on oil revenues.

"[The state government] must eliminate negative practices, such as the tax exemption without control to large enterprises, and improve its financial management," Santoro offered. "There remain major challenges."

Future Political Divisions

Whomever Rio de Janeiro elects as the next mayor will not enjoy the same benefits Eduardo Paes faced when in charge.

Paes, whose style Santoro described as "controversial," held power in Rio at a rare time when the city, state, and federal governments were aligned policy-wise. Paes belonged to the Brazilian Democratic Movement Party (PMDB). The party was a one-time ally of the leftist Worker’s Party government, before supporting the impeachment of Dilma Rousseff to take power.

The PMDB candidate in Rio, Pedro Paulo, is the preferred candidate of Paes but is unlikely to finish in the top two of the Oct. 1 election, therefore missing the run-off election. Currently, a right-wing evangelical politician leads opinion polls in Rio.

"It is difficult for the next mayor of Rio to have such a favorable scenario in terms of alliances, especially with the instability in Brasilia and the financial failure of the state government," Santoro said.

"There is a sense of frustration and disorientation in Rio de Janeiro, and Brazil as a whole, due to the recession and political crisis. These feelings are particularly strong in Rio because the city was a great showcase of a Brazilian success story of the last decade, for her role as headquarters of mega events."

On a national level the political future remains murky. President Temer is unable to run in 2018 for violating campaign finance laws in Sao Paulo. The ongoing Lava Jato corruption case has claimed many high-profile politicians including Eduardo Cunha, the mastermind of the Rousseff impeachment. Former president Luiz Inácio Lula da Silva, who brought the Olympics to Brazil, has been charged with corruption in the scheme.

Members of Temer’s cabinet have openly supported amnesty deals for the Lava Jato investigation. The notion has not succeeded in the Brazilian congress but the power shifts created by the investigation will certainly affect the 2018 election.

Development, but for Whom?

Mayor Paes says the Rio 2016 Olympics were the "transformation Games." Rio has changed as a city from hosting the Games, but who benefited remains up for debate.

Santoro says most of the urban infrastructure was built in middle to upper class areas, although the Deodoro and Madureira public spaces were arguably the most transformational. He says these areas still remain lacking in public recreation areas, but the benefits accrued from both could change the tide.

Like Santoro, Zeidan says urban infrastructure was a dire need for Rio, but will not be enough to produce continued growth. He says the city desperately needed new subway lines decades ago, but putting the burden of the transport network on bus lanes makes it too inefficient.

"The Olympics is rarely worth it for a large city," Zeidan said. "We need a complete makeover of the transportation system in Rio. The initiatives from the Olympics will help, but the demand is much higher than the increase in supply generated by the investments related to the Olympics.

"Then again, we need much higher investments for at least 25 years. It is probably not going to happen."

The success of the Olympic Games will be tied to Brazil’s fortunes in the coming years. While Santoro says many infrastructure upgrades will remain independent of GDP changes Brazil faces, potential sustained growth will not be. He believes there is a chance Rio can use the Olympics as a catalyst to move forward, and must seize this opportunity to reverse 40 years of urban decline.

"The destiny of Rio de Janeiro depends on what happens with Brazil as a whole, and if the city suffers the ill effects of the national recession," Santoro said. "I hope that the city can reinvent itself as a hub to provide advanced services, be more open and connected to the global economy, and can overcome its structural problems of inequality, violence, transport deficiencies and housing.

"My fear is we fall again into a long decline, like the city lived through [after losing capital status]."

Written by Aaron Bauer in Rio de Janeiro

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