With the Olympics Rios city limits are shifted: Instead of fostering the wealth of the population, the municipality opens the way for speculation in real estate.
Dominated by private companies the “public sphere” seized the opportunity of the powerful discourse of the Olympic Town to shift the city’s urban limits: it incorporates new areas through legislative changes and building access infrastructure. On the other hand it postponed structural improvements in densely populated areas, which would directly benefit the population, to the remote future. This should have been part of the main public debate about the Olympic Project, which did not happen because it has never been put forward open to popular participation.
With the 2016 Olympic Games being held in Rio de Janeiro, one can watch the end of a big urban transformation cycle. Transformations that have raised the city’s cost of living justified the privatization of public spaces and services and caused a series of rights violations by adversely affecting especially the poorer part of the population. The Olympic Games have become since then the main defense for every kind of urban intervention. This has allowed the sense of urgency in the city’s preparation for the event to empty any public debate regarding investment priorities. An estimated 100 thousand people have been removed from their homes to open space for dubious buildings, in the largest removal process of Rio’s history.
This cycle began in 2009 with three main events: the rise to power of Eduardo Paes, a politician with close ties to the real estate segment, then he was elected Mayor; strengthening the alliance between PMDB (Partido do Movimento Democrático Brasileiro) and PT (Partido dos Trabalhadores) parties at the federal level, which would become even stronger when a person from PMDB became the Vice-President in the 2010 elections, won by Dilma Rousseff (PT); and the election of Rio as the host of 2016 Summer Olympics.
Other factors were important in this change such as the discovery of the oil pre-salt layer, which allowed the state of Rio de Janeiro to receive a large amount of money from the federal government; a change in the rules of municipal indebtedness that allowed the City to make larger investments; and the federal policy that favored the big national building companies.
Thus, the perfect conditions for a deep urban restructuration in Rio de Janeiro have created, driven by local corporate interests coupled with large national companies that divided the buildings made in the city during that period. Since it is the main site of the Games, Barra da Tijuca region was the most benefited with the amount of funds invested in Rio. With around 300 thousand residents, “Barra”, as it is more commonly known, is the main front of real estate expansion, and it has been steadily asserting itself, over the last decades, as a high-end neighborhood, mainly through forceful removal, such as Vila Autódromo.
Rio de Janeiro and the national scenery
After a turbulent first term (2003 – 2006), president Luiz Inácio “Lula” da Silva (PT) finished his second term as head of state, in 2009, with the best levels of popularity of all Brazilian presidents in history, in a favorable moment for the country’s economy. His class-conciliation policy, built on the consensus discourse, led many to believe that it was possible, in Brazil, to contemplate everyone’s interests with both large corporate profits and actual income distribution. Lula managed to transfer his political capital to Dilma Rousseff, his Chief of Staff, who had never been previously elected to an executive post. Dilma was elected in 2010 and reelected, by a very slim margin, in 2014, completing a cycle of four presidential elections won by PT, the Labor Party, the last two with the support of PMDB.
Lula had really managed to take Brazil to a new level in the international political and economic scenery, changing, more than anything else, the Brazilians’ self-esteem. The general improvement in the population’s life conditions reinforced the hopes for the future. It was in this context that Brazil was chosen to host two of the largest international events in the world: the FIFA World Cup and the Olympic Games. Lula’s speech on October 2nd, 2009, the day Rio was elected as the host of 2016 Olympic Games summarizes the moment the country through which was going. To him, Brazil had just conquered its international citizenship, showing the world it was competent enough to carry out the task of holding the Games.
The general optimism was supported by a policy of formal job creation, paired with a real raise of the minimum wage, and by income distribution policies such as the Bolsa Família Program. The result was a timid, but steady, decrease of social inequality in Brazil. In the economy front, what sustained that optimism was the high oil price in the international market, coupled with the discovery of pre-salt oil by Petrobras, and the growing volume of commodities exported, especially to China. The federal government had an active part in the economic growth, through BNDES (Banco Nacional de Desenvolvimento Econômico e Social) and Investment Funds – managed by public banks – loans to Brazilian companies both domestically and abroad, and investing in large infrastructure building ventures. There was a visible growth of Brazilian companies all around the world, especially in Latin America and Africa.
Barra da Tijuca: Olympic Centrality
Rio de Janeiro became the main international showcase of what the new phase of Brazilian economy would be, and the destination of a significant share of those investments. The alliance between PMDB and PT at a national level brought financial benefits to the city, managed by PMDB both at municipal and state levels. Local real estate industry followed very attentively the election of Rio as the Olympic Games host, and saw the event as a great opportunity to expand the urban infrastructure towards the areas where its interests lie. Although Barra da Tijuca is in an area where, according to the city’s directives, growth should not be stimulated, the expansion’s vector towards the West Side was subsidized by the municipality, through access and mobility constructions, since the first year of term of office of mayor Eduardo Paes. The region is being prepared for the future demand with the duplication of roads, building of bridges, underpasses, sewage lines, telecommunications and power lines. In the Olympic Games’ Responsibility Assignment Matrix, 80% of the budget – that is R$ 5.6 billion (1.4 billion Euro: This value, as well as all the following values in Euro are based on the exchange rate of 3.98 of 28th April 2016) – are going to Barra, as well as the majority of projects (in the Chart: Barra).
Chart 1: Responsibility Matrix – Version 5.0 Jan. 29, 2016
Project costs per region (R$ million)
Chart 2: Responsibility Matrix – Version 5.0 Jan. 29, 2016
Number of projects per region
The focus on Barra da Tijuca, the neighborhood in which the main Olympic sites are installed, meets many interests, especially those of two large landowners in the region: Carlos Carvalho, from Carvalho Hosken company, and Pasquale Mauro, working for RJZ Cyrela company, both of them building and real estate companies. Both men were on the list of the four proprietors who emerged as the owners of Barra in the 1980’s and now, almost 40 years later, still have large extensions of land in speculative activity in that region. Carvalho still owns an estimated 6.000.000 m² in land located exactly in the area that is being urbanized to receive the Olympic Games. This means for him, business in the region of one billion US-Dollars (ca. 884 Mio Euro) according to a report by The Guardian. Carvalho Hosken’s net value is around R$ 15 billion (3.79 billion Euro), with a recorded gross income of R$ 392 billion in 2014 (98.17 billion Euro) that has grown an average of 10% per year over the last five years, the same period during which the investments in the region were intensified, due to the Olympics. The Italian entrepreneur Pasquale Mauro, in turn, has around 10.000.000m² along the axis Barra da Tijuca – Recreio dos Bandeirantes, where he lives, in the Parque Recreio Farm, neighboring an area called Granjas Calábria, which also belongs to him, and in which he raises buffalo. The building of the Olympic Golf Course in part of his land is of direct interest to him. These two landowners alone still own around 16.000.000 m² of land available for real estate development. For comparison purposes, the entire South Side of Rio de Janeiro has 20.000.000m².
The submissive stance of public power to private interests has also become evident through new institutional arrangements. The public private partnerships – like those of the Olympic Park and Porto Maravilha – created mechanisms to facilitate public land transfers and privatization of land management in businesses in which the public interest is notoriously ignored. This urban development project, powered by the Olympic Games, has neither been debated by the citizens nor made clear by the city government. On the contrary: has a discourse of going back Downtown and of an emotional proximity to the North Side. That is not mirrored, however, in the municipal budget of investments, which allocates the lion share of funds to keep Barra da Tijuca as the leading neighborhood in real estate sales, a position that could not be sustained without a new round of public investments in infrastructure.
In spite of the public investments, the Rio de Janeiro city government advertising campaigns sell the idea that the Brazilian Olympics are, for its most part, being paid by the private sector. However, the financial and discursive juggling that should back this assertion does not sustain. The public private partnerships that would attract investments to the city involve transfers of public land to building companies that are not being considered, public banks taking risks and funding speculative businesses announced as private investments and tax exemptions, as well as the bending of urbanistic laws. The Olympic Games budget has serious flaws, which inflates the numbers to justify a false participation of the private sector.
Including the Porto Maravilha – Wonderful Port - works in the Legacy Plan is a clear example [Editors note: originally Olympic referees and the mediacentre were supposed to be hosted in new buildings in the port zone]. Interventions in the harbor region, which are presented as funded by private companies, are actually being funded almost entirely with money from the Guarantee Fund for Employees (FGTS), administrated by Caixa Econômica Federal (CEF) since 2011; they account for 80% of the total R$ 10.3 billion “private” investments in the Legacy Plan. Besides, the investments will continue until 2026, a whole decade after the Games, and there is no relation between the harbor renovations and the Olympics.
In the Olympic Park, the public land of former Jacarepaguá racetrack, that was given as payment to Rio Mais consortium (or Parque Olímpico consortium), had its value estimated, according to its own public tendering for a public private partnership, at R$ 850 million (212.86 million Euro), plus an addition of another R$ 300 million (75.13 million Euro) due to changes in the zoning laws. This information is ignored by the Responsibility Matrix, which shows the public participation of R$ 1.15 billion (287.99 billion Euro)in the building of Olympic Park as a private investment in the budget. Besides, the Athletes’ Village is presented in the budget as a private investment, with a total cost of R$ 2.9 billion (726.24 million Euro). However, the same document has a footnote informing that the money comes from a R$ 2.3-billion loan (575.98 million Euro) by the public Caixa Econômica Federal along with a private investment of R$ 579.5 million or for “Private funds-land”(145.12 million Euro).
Right Violations and Resistance
To make this project feasible, the government has assumed the negotiations with the residents who would be directly affected by the interventions resulting from ongoing urban restructuring. It is unlikely that the removal of thousands of poor families, which highlighted the gentrification agenda for some of the city’s areas, would have been possible without the institutional structure put together by municipal and federal governments, to better meet the market’s interests. Relocations have been in general either made in housing estates from Minha Casa Minha Vida (a federal housing program), in distant areas on the city’s outskirts, or paid for with a pittance of indemnity. Removing these communities allowed the real estate industry to increase the value of new developing areas. This aims to ensure high profits to the real estate companies and to ensure future proprietors that there would be no poor houses or poor residents nearby, since those would represent a risk to the speculative activities on the fringe of real estate market expansion, which has distinction and class homogeneity as a cornerstone.
The effects of the current urban policy are being questioned by part of Rio de Janeiro’s population, which propose another form of housing in the city. Those movements are against the destruction of environment protection public areas in favor of private interests and the privatization of public spaces. Communities that demand urbanization and acknowledgement of the poorer neighborhoods formed mainly in Barra da Tijuca and are now threatened by the Olympics project, such as Vila Autódromo. There are also groups that settled in the area even before the first big developments, and they still fight to keep their identities alive; there are remainders of Maroon communities (communities of descendents from Africans that escaped slavery, in Brazil called quilombolas) and agricultural associations, suffocated by the urban growth that is taking over their traditional territories and farming land. Social movements that through their concrete fights make a much-needed ideological counterpoint. This values public spaces, identity, culture and common good when they oppose the city's commercialization.