Demonstrators in Sao Paulo, Brazil protesting against the World Cup
Victor Moriyama Getty Images
By Amy Kaslow
June 12, 2014

A Brazilian joke has made its way across the web in the form of a Facebook invite: the grand opening of the new high-speed train between Rio de Janeiro and Sao Paolo. “A big party! Open Bar!”

So far, 182,000 people have RSVP’d yes; it’s a guest list long enough to make any host nervous. But there will be no opening, because, well, there is no train.

This, of course, despite President Dilma Rousseff’s pledge to launch the rail line in time for this week’s FIFA World Cup. The broken promise is just one of a long list of guarantees Brazil has breached since the government won the global bid to host the games.

“We are ashamed, you know?” says Isabella Maciel de Sá, a self-described lifelong soccer fan and the country legal head of Novartis Biociencias. Maciel De Sa, who treasures her photos with Brazil’s legendary soccer star Pele and the jersey he signed, is among a growing number of citizens who craved the spotlight for their developing country and now recoil from the world’s attention.

“When Brazil was selected, everybody was very happy,” she says. “Not only because we were hosting the competition, but because we all believed that the government would finally invest in the needed Infrastructure: roads, airports, energy, and telecommunication. Unfortunately it was not the case.”

Brazil grapples with an 85% urban population that pulls hard on its existing services. Untrained and uneducated Brazilians seeking work have found rampant unemployment and crushing poverty instead. The UN’s International Fund for Agricultural Development states the situation is perilous: 35% of Brazilians live on less than two dollars a day; in the rural areas, that figure jumps to nearly 50%.

“What could have been a great opportunity to show the world the importance of soccer in the country, as well as to upgrade significantly the 12 host cities [has become] an enormous embarrassment to us serious Brazilian people,” says Maciel De Sa. She points to the “huge amount of money” the government spent building stadiums in cities that don’t even have a soccer team,” as signs of the waste and corruption that have accompanied the more than $3 billion poured into Brazil’s World Cup prep. Even Pele has weighed in, calling Brazil’s allocation of its resources a “disgrace.”

Brazil had seven years to prepare for the millions of visitors descending on its cities and stadiums–the longest planning period of any host country in World Cup history. The government intended to use its positions as this year’s host, and later as the 2016 Olympic host, to catalyze new infrastructure projects. It also vowed to complete older, stalled initiatives, like mass transit improvements.

The South American powerhouse, the continent’s biggest and most diversified economy (and the sixth largest in the world), enticed domestic and international investors.

2014 was supposed to be Brazil’s banner year.Instead, the media is flooded with daily reports of bus driver, teacher, and police strikes; sporadic rioting; open pit construction sites where finished facilities should be; abominable schools; poor healthcare; unmanageable crime; the plight of homeless workers; the list goes on.

If public corruption watchdog AMARRIBO Brasil has its way, the government scandals will soon see the light of day. Despite the exceptionally long run-up to the World Cup, Brazil has used “urgency as an excuse to do things in a certain way,” contends Josmar Verillo, AMARRIBO Brasil chairman and former president of Alcoa Latin America. “The public sector in Brazil is gigantic, filled with political appointees, inefficient, corrupt and disorganized. So certainly, time will show all sorts of misuse of public money in this event.”

The popular Brazilian muralist Paulo Ito, 36, doesn’t need corruption trials to validate his rage at the government’s “values and priorities” in his latest work: a starving dark-skinned child seated at a table, knife and fork in hand, with a plate filled by a brand new soccer ball.

“I always paint critical works,” says Ito, who adds that there is no shortage of material in his home city of Sao Paolo. “Everything spurs me, because everything works bad in Brazil. You will find this taking a bus, with violence…watching the night journal [the day’s news] on T.V.” Ito’s soccer plate image went viral, and it raises a critical question: just how did Brazil become mired in what appears to be a very flawed approach to economic development?

Verillo is disgusted with the government’s expediency in winning short-term favor from the poor through placating public payments designed to give low-income Brazilians purchasing power and boost consumption. “Without designing a way out of poverty for these people, they became happy for a period,” Verillo says. “The bill will arrive soon, and the Brazilian society will pay a very high price for that.

As the public began to examine government spending on sports arenas, they moved to the streets. By this time last summer, Brazilians staged the largest protest in a generation, faulting the government for deficiencies cutting across every aspect of Brazilian society. Ito, who rallied in Sao Paolo, was among a million other mostly middle-class Brazilians demonstrating in the country’s big cities, calling for improvements to public services and condemning government corruption and police brutality.

Gallup’s summer 2013 survey data captured record low satisfaction with Brazil’s healthcare, schools, and transportation, and a rise in citizens’ unease about their own personal security and government corruption. That survey was conducted before the anger and resentment reached a feverish pitch this year.

The government’s mistakes may put Brazil in a precarious position to finance future projects and economic development. Using statistical indicators and a survey of 4,300 executives worldwide, the 2014 World Competitiveness Yearbook pushed Brazil down a few notches, from 51 to 54, pointing to sloppiness in its labor market and widespread business mismanagement. To Verillo, the country’s corruption “is generalized…even institutionalized,” and no sector is spared.

Alejandro Salas, Transparency International’s director for the Americas, contends that there are plenty of honest investors and civil servants, but the scope of Brazil’s development to-do list makes it more vulnerable. No stranger to scandal, Brazil’s anti-corruption laws are relatively new and evolving. The nation is big enough that what is demanded on the federal level isn’t always practiced on the local level. “More money also brings those private and public actors that want to make a quick win regardless of the legality of the business.” Salas ticks off a list of things that “create a fertile environment to exploit weak anti-corruption frameworks and capacity” — they include money flow, tight deadlines to build stadiums or transport infrastructure, and “politicians [who] need financing and … to show and impress voters.”

These issues are far from unique, cautions Salas. “You cannot expect a country with general corruption problems to be able to execute such a massive project without any form of misuse of public funds. The anti-corruption framework matters and Brazil needs to strengthen it.”

Consider Petrobas, Brazil’s mega-energy concern, now under fire as more allegations surface that the oil company laundered huge sums of money when it overpaid for an oil refinery and pocketed funds stashed in offshore bank accounts. Police raided Petrobas headquarters earlier this spring.Kyra Gurney of InSight Crime, a Medellin, Colombia-based investigative unit that focuses on organized crime throughout Latin America, highlights a theme that has plagued the nation’s World Cup preparations as well. “The sheer size of the company, as well as the vast sums of money it handles, can create space for criminal opportunists.”

Stumbles are part of Brazil’s awkward advance, asserts Nancy Birdsall, president of the Center for Global Development and former executive vice president at the Inter-American Development Bank. “It’s hard to be a middle-income country that’s reaching” to be a first world economy…. “When you reach higher, you get there, maybe with a little delay.”

“They have so much difficulty spending public money well,” and the nation’s infrastructure has “always been Brazil’s Achilles heel. That’s very obvious now, [with] the World Cup and the Olympic games coming.”

Birdsall argues that Brazil’s long-term prospects are strong. But Verillo is not convinced. Yes, Brazil’s vast natural resources will attract investments, he says, “but if the investment is not made in education, health, in a serious way, Brazil will keep sliding sideways, and poverty and inequality will remain the trademarks of Brazil in the years ahead.”

For soccer-proud Brazil, the focus is on the short term. It is the only country in the world that has qualified to play in every World Cup, and it is a five-time champion of the tournament — a world record.

“It is a nation on cleats, overcoming all its problems, hard times, lack of security, education, jobs, infrastructure and showing to the world that our will is greater than anything else,” says Maciel de Sa. “It is like it’s written on the inside of our official jersey: ‘Born to play soccer.’”

Aside from its soccer prowess, Brazil is now also known for its infrastructure problems, and the government is hard-pressed to welcome many millions of visitors. None of this has put a damper on the sales of 3.8 million tickets (2.3 million have been reserved for domestic purchasers, the rest for international fans).

Overcoming the squandered opportunities and the reputational damage will be tough, says Maciel De Sa. “For the first time, I feel ashamed for cheering for my national soccer team. Not because of the team, but because we elected a president and a government that could not deliver the promises they made to the people, to FIFA, and to the world.”

Maciel De Sa is hopeful, though. “Most of all, I hope that in October, when we will have elections for president, governors, state, and federal congresses, we can give the fair payback for those who made us so embarrassed.”

“Some of us, including me, will not cheer for Brazil because we are sure that if Brazil wins, Dilma [Rousseff] will be re-elected in October.”

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