O Financial Times sobre o Brasil

Brazil’s Olympian World Cup blues

But there is more to the country than only seeing red

Poor Dilma Rousseff. Brazil’s president projects the tedious aura of the efficiency of Angela Merkel, except with the delivery of the Marx brothers. Late preparations for the World Cup have already embarrassed the country, while those for the 2016 Olympic Games are “the worst” the international committee has ever seen. The economy is also in a slump. Brazil, once a market darling, has fallen out of investor favour. The country needs a credibility shock. If Ms Rousseff does not deliver it, October’s presidential elections will.

Her government faces three immediate challenges. The first is a corruption scandal at Petrobras. In 2006 the state-controlled oil company paid a total $1.3bn for a Texas refinery that had been bought by its seller for only $42.5m a year before. As Ms Rousseff was then chairwoman of Petrobras, the deal damages her supposed reputation as a savvy manager, competent to run the country.

The second is the growing risk of energy shortages. Brazil’s power grid essentially runs on hydropower, with more expensive fuel-fired turbines as back-up. The trouble is that a prolonged drought has drained many of Brazil’s reservoirs, even as government subsidised electricity has increased consumption. As a result, the grid is working at full capacity, but only thanks to the more expensive generators. Blackouts are a real risk. As Ms Rousseff is a former minister of energy, this further damages her image as a technocrat.

Neither of these problems has yet resonated much with the electorate. But the third one, the World Cup, which kicks off on June 12, surely could. Last year widespread disquiet over the high cost of the tournament, versus the shoddy state of public services, led to 1m-strong street riots (“We want Fifa-standard hospitals too,” was a common protest slogan). There is a high chance of more protests again – not enough, perhaps, to spoil what will surely be a splendid event, but it will still be seen worldwide by millions who will be watching the soccer on television.
It would be worse still for Ms Rousseff if the national team does badly. Brazilians might forgive the costs of the tournament if they win, but not if they fail to notch-up a respectable performance – reaching at least the semi-finals, say. Otherwise, the cost and disruptions of the matches will have been for nothing. And by mid-July, when the football ends, the election will be getting into full swing.

Investors and many Brazilians are becoming increasingly itchy about this state of affairs. Although Ms Rousseff is, for now, the favourite to win the October 5 election, even some in her own party have lobbied for former president Luiz Inácio Lula da Silva to be their candidate instead of her. Ms Rousseff is renowned for talking rather than listening, yet there are signs that even she is taking the criticism on board.

Last week she raised social welfare payments and cut taxes to help goose the economy. Nice idea, except what Brazil needs are supply-side policies that boost efficiency, not more demand-led measures that boost already-high inflation. Against that, however, there is talk she might give the central bank formal independence in a second term (originally, an opposition idea). She may also recruit central bank chief Alexandre Tombini to replace Guido Mantega, her hapless finance minister. Both moves would be welcome.

Whether the Merkel-seeming but Marx brothers-delivering Ms Rousseff is indeed the right person to set Brazil back on track is another matter. After all, her first administration has been a disappointment. But at least there are signs that the country’s political markets are working as they should, by transmitting widespread and growing concerns. These are now starting to push the policy debate in an investor-friendly direction. That can only be a good thing.
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