I know many Brazilian’s here in Portugal who have families and friends in Brazil. World Cup 2014 is causing much unrest in an already troubled country. Protests focus on the misspending of public money for stadiums and infrastructure improvements that are demanded by FIFA to host the World Cup.
The original cost estimate for preparing for the World Cup was around $1 billion and has now grown to more than $11 Billion mostly financed by public funds because of the lack of private investment. This does not include the costs during the month long event. The projected extra revenue from foreigners and locals is only about $3 billion. In comparison for the 2010 World Cup, South Africa spent $3 Billion and only made back $400 million. The profit from the advertising and marketing goes to FIFA which pays little taxes since they are a non profit organization.
What Brazil Gets in Return
Sports and Government officials argue that all of the needed infrastructure spending will help the economy. The reality is most of the spending is way over budget and will not even be completed in time for World Cup 2014. Most of the new stadiums will become white elephants requiring more money to maintain than they bring in in the future. This was exactly the result in South Africa because of the 2010 World Cup.
Real Problems Exposed
I can see one benefit for Brazil. The controversy of the World Cup spending will focus attention on the real problems of the country. An inept political leadership and corrupt political system. In 2007 Brazil was doing great under president Lula. Poverty was being eliminated and many social and economic problems were being solved. The Wold Cup bid was won and accepted by the public. Lula successor Dilma Rousseff has destroyed most of the progress of the Lula administration in just a few short years. I believe her administration is mostly to blame for the problems. These problems are not unique to Brazil. I live in Portugal which has similar problems. The US is also no stranger to wasteful spending. Remember Alaska’s bridge to nowhere?
Can the Problems be Solved?
When the matches start the attention will fall on them and the problems will be a sideline story. After the last match the country will continue as usual. As in the southern EU countries and many South American countries there are big problems of inefficient spending of public money. This should be an outrage but most of these countries accept it as the “traditional” way of government operations. Traditions such as nepotism, closed bids for projects, excessive red tape, bribery of inspectors, and little or no transparency or accounting of public money spending, are ignored unless exposing them advances a political agenda. This is the real cause for all of the problems, and they won’t go away on their own and can’s be solved easily.
Future Consequences of the World Cup for Brazil
Rousseff is up for reelection in October and the world cup debacle will doom her chances for re-election. The only thing that might save her is if Brazil wins the cup. Most likely all of the corruption and human rights violations will be swept under the rug and the country will go back to business as usual until just before the 2016 Olympics in Rio and the problems will surface all over again.