The Broken Promise of the Rio Olympics

August 5, 2016

The Rio de Janeiro you see advertised in videos promoting the Olympics is the iconic one everyone knows: Ipanema, Sugarloaf Mountain, the statue of Christ the Redeemer. But that’s just a tiny slice of this sprawling metropolis of 12 million people, most of whom live miles from the beach.

You can see the other Rio, their Rio, as you drive into town from the international airport, past the walls enclosing the freeway: a sea of red cinderblock shacks stacked precariously atop one another, with narrow roads snaking in between. One in seven Rio residents make their home in so-called favelas like these.

When Brazil won the right to hold this year’s Summer Games back in 2009, it seemed ready to vault into the club of developed nations. Luiz Inácio Lula da Silva, then the country’s wildly popular president, pitched the Olympics as an opportunity to develop Rio’s infrastructure, and remake the city into a new world capital. But this was also a rare moment of Brazilian self-confidence—one ultimately undone by hubris.

Seven years later, Lula’s Olympic dream seems a distant memory. Despite an ambitious government campaign to pacify Rio favelas ruled by violent drug gangs, since last year homicides are on the rise. With sewage lines still lacking, world-class rowers and sailors will compete in waterways tainted by drug-resistant bacteria.

Meanwhile, amid Brazil’s deepest recession in decades, Rio’s governor declared a “state of public calamity” last month because—thanks in part to the Olympics—his administration had run out of money to pay for public security and healthcare. Cops and firemen have taken to camping out at the international airport, holding banners that read “Welcome to Hell.”

Not everyone, however, has emerged a loser. Contracts for everything from stadium and train-line construction to port renovations have funneled billions of dollars in taxpayer-subsidized revenues to a handful of Brazil’s most powerful, well-connected families and their companies. This disconnect—between populist promise and the uneven benefits that followed—is emblematic of the failed Olympic ambition to remake Rio, and a slew of questionable priorities that have brought Brazil to its knees.

Rio Mayor Eduardo Paes has been the upcoming Olympics’s most vocal champion. He is a contradictory figure. He strives for a modern image, often speaking at events held by global nonprofits like the Clinton Foundation. But he also belongs to the Brazilian Democratic Movement Party, which represents the country’s old establishment. The son of a high-profile lawyer, he hails from Rio’s elite.

In 2012, Paes laid out an Olympic plan that would bring vital infrastructure and public services to all of Rio’s roughly 1,000 favelas. “The city of the future,” he declared in a TED talk that year, “has to be socially integrated.” The idea was to bridge the gap between rich and poor in the divided city, where favelas did not even appear on official maps until several decades ago.

Some projects associated with the Summer Games, such as new express bus lines, will undoubtedly improve life for working-class Rio residents—cariocas—who often face five-hour round-trip commutes each day. But not long after his TED talk, Paes drastically scaled back his plan to “urbanize” the favelas, blaming a shortfall of federal money. Instead, most of the government’s Olympic budget has been poured into the wealthy suburb of Barra da Tijuca, home to only 300,000 people.

At a total cost of $12 billion, the Rio Olympics are among the priciest in history. In marketing this number to the citizens of Rio, Paes insists that most of the money was put up by private investors. Outside researchers, however, point out that his calculations often leave out subsidies in the form of tax breaks, government loans, and land transfers.

The state is fronting almost the entire cost of the single-most expensive Olympic project: a $3-billion subway extension linking Barra to the chic beach neighborhoods of Leblon and Ipanema. All the new express bus lines lead to Barra, too.

This flood of public money is benefiting the coterie of men who own most of Barra’s land. One of them, a 92-year-old billionaire named Carlos Carvalho, controls some 65 million square feet of property in the area. His most famous project for the Olympics is the so-called Athletes’ Village.

After the games are over, all 31 of the Village’s 17-story towers will be transformed into luxury condos featuring multiple swimming pools, tropical gardens, and an unobstructed view of Jacarepaguá Lake. It makes for a glaring contrast with London, where athlete accommodations were largely converted into affordable housing after the 2012 Summer Games.

Carvalho is less tactful than Paes. In an interview with The Guardian last year, he spoke of his dream to turn Barra into “a city of the elite, of good taste.” This is why he dubbed the Athletes’ Village development Ilha Pura, or pure island. “It needed to be noble housing,” Carvalho said, “not housing for the poor.” On social media, some Brazilians expressed disgust at what they saw as Carvalho’s brazen elitism. The reaction was so inflamed that Paes felt he had to publicly disavow Carvalho’s words. (Paes and Carvalho both declined to comment for this article.)

As scarce as resources are in Brazil, subsidies are common for well-connected businessmen.

While Carvalho’s comments caused a furor, they seemed to reflect the aspirations of his customers. Starting in the 1970s, affluent cariocas began fleeing to Barra from the neighborhoods of Ipanema and Copacabana, where fancy homes owned by highly paid professionals and business owners rub up against hills blanketed by favelas.

Today, Barra resembles the sleekest parts of Miami far more than the classic images of sultry Rio. Hardly anyone walks, unless they’re maids or doormen. Gated condo complexes of shining glass and pastel cement dot the wide avenues.

But why should Carvalho’s plans for Ilha Pura matter to the taxpayer? After all, Paes says the nearly one-billion-dollar project was built entirely with private money. As part of Carvalho’s deal with the city to build Ilha Pura, however, he secured a low-interest government loan and permission to build several stories higher than the limit for neighboring developments.

Carvalho is also a partner in construction of the nearby Olympic Park, a sprawling spit of concrete sprinkled with a billion dollars’ worth of sporting facilities. Here, the city handed over lakeside land that Carvalho is expected to develop into a whole new neighborhood, once the economy rebounds and demand picks up again.

As scarce as resources are in Brazil, such subsidies are common for well-connected businessmen. But they are no guarantee of quality. For Olympic athletes arriving this month, Carvalho delivered apartments with blocked toilets, leaky pipes, and exposed wiring.

Of all the contradictions between Olympic vision and reality, perhaps the most glaring is in Carvalho’s choice of partners, the construction firms Odebrecht and Andrade Gutierrez. These companies are at the center of the multibillion-dollar corruption scandal that has plunged Brazil into political chaos, and investigators now believe they skimmed bribes from Olympic projects, too.

Both companies are cooperating with investigators. As recently as May, Paes surreally claimed the Olympics were free of corruption, even though his own party is deeply implicated in the wide-ranging bribery scheme.

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