Protests Sink Rousseff Bid to Buff Brazil Image With Soccer

Brazil’s President Dilma Rousseff planned to use this month’s Confederations Cup soccer tournament to showcase her country’s readiness to stage the World Cup next year. Instead, it’s become the venue for mass protests on whether the Cup is worth the cost.

Two died and hundreds were injured as 1 million took to the streets throughout Brazil earlier this week to demand cheaper bus fare, better schools and more hospitals, while criticizing the 30 billion reais ($13 billion) spent to prepare stadiums and cities for the world’s most watched sporting event. Thousands have been demonstrating in cities throughout Brazil today as the national squad beat Italy in its third Cup match. Protesters in Belo Horizonte where Mexico defeated Japan clashed with police.

Brazil is spending three times more than initially planned to prepare for the 2014 games, which the government said would allow the nation to showcase its hospitality and reflect its growing economic prowess. Instead Rousseff was jeered in the opening Confederations event as images of violence in the streets of major cities overshadow the soccer matches. She pledged in a televised address to the nation last night to meet with protesters and improve public services while condemning the week’s violence in her first public appearance in three days.

“I have both the obligation to hear the voice of the streets and to dialog with all segments within the confines of law and order,” Rousseff, 65, said. “If we let violence take us off our path, we will not only be wasting a big historic opportunity, but also will be running the risk of losing a lot.”

Lower Approval

While 40 million Brazilians emerged from poverty in the past decade, faster inflation and inadequate public services have eroded Rousseff’s approval rating for the first time since taking office in January 2011.

Protesters this weekend fielded a range of grievances, from teachers marching for better pay to gay rights activists last night opposing a bill to let psychologists recommend medical treatment for homosexuality. Protesters in Rio de Janeiro today lined up hundreds of soccer balls on the beach to represent the country’s murder victims.

Riot police in Belo Horizonte struggled to contain rock-hurling crowds as an estimated 66,000 people protested, according to Globo TV. Local police say there were two protests in Salvador where Brazil played that attracted roughly 5,200 people. The game was carried out peacefully.

Stocks Battered

Brazil’s stocks, bonds and currency are being battered by an emerging markets sell-off after economic growth missed estimates made by analysts for a fifth straight time in the first quarter. The world’s second-biggest emerging market in 2012 posted its second-worst economic performance in 13 years while inflation this month breached the 6.5 percent upper limit of the government target range.

The Ibovespa stock index yesterday fell 4.6 percent this week, completing its fourth straight weekly drop, as investors abandon emerging markets on expectations the Federal Reserve will begin tapering a bond-buying program that has flooded emerging markets with cash in recent years. The index has fallen 23 percent this year, the worst performer among 18 major equity markets.

Rousseff’s approval rating dropped eight percentage points to 71 percent in June from March, according to a poll commissioned by the National Industrial Confederation and published June 19. The survey of 2,002 people from June 8-11 had a margin of error of two percentage points.

Public Discontent

Public discontent overflowed into the streets June 6 when students in Sao Paulo marched against a 7 percent increase in bus fares. The demonstrations have mushroomed, peaking on June 20 as nearly one million protesters marched throughout Brazil, according to estimates by newspaper Folha de S.Paulo.

Marches that started out peacefully that night erupted in violence as police clashed with mobs trying to storm government buildings and vandals looting banks and shopping centers. An 18-year-old was killed when a vehicle ran over protesters in the city of Ribeirao Preto and a 54-year-old street cleaner died after having a heart attack during the protests in the northern city of Belem.

“The government and society cannot allow a violent and authoritative minority to destroy public and private property, attack temples, torch cars, stone buses and try and create chaos,” Rousseff said.

Marxist Guerrilla

A former Marxist guerrilla once imprisoned by the country’s 1964-1985 military dictatorship, Rousseff last night vowed to ensure order while promising to spend oil royalties on education and improve health care services. Authorities in Rio and Sao Paulo earlier in the week revoked the bus fare increases that originally sparked the unrest.

Demonstrators last night blocked the highway to Sao Paulo’s international airport, while 4,000 took to the streets of the city today to demand an end to government corruption, according to Folha newspaper. Tens of thousands protested in the southern city of Santa Maria today, Globo said.

Protests are beginning to sour what was supposed to be the height of the tourism season with the Confederations Cup and next month’s visit by Pope Francis, according to Krys Denisieski, operations director at Receptivo Rio, a Rio tour operator.

“When they see those images on TV, they become terrified,” Denisieski said about tourists, adding that she has received 26 cancellations since the protests began. “As a citizen I think it’s great. As an entrepreneur I think it’s terrible.”

FIFA Departs

Amid the unrest Sepp Blatter, head of soccer’s governing body FIFA, departed the South American nation, surprising Brazilian officials who had expected him to remain for the length of the two-week Confederations Cup. FIFA said Blatter will return to Brazil June 26 for the semi-finals.

The tournament so far provides a contrast to Rousseff’s ambition of hosting a competition that she said in a speech last month would allow Brazil to “shine” on and off the pitch as a “joyful” and “peaceful” country.

Even former and current members of Brazil’s national squad have been critical of government spending on the World Cup. Rivaldo Ferreira, a member of the team that won the 2002 tournament, said on his Twitter account that the expenditure was “shameful.” Neymar da Silva Santos Jr., who has been named man of the match in his three appearances so far in the tournament, wrote on his Facebook page before taking the field this week the protest movement had inspired him to play.

‘People United’

Fans inside Rio’s Maracana stadium during world champion Spain’s record 10-0 win over Tahiti on June 20 chanted “the people united will never be beaten” as some held up a banner reading “We don’t need the World Cup.”

The fans are critical of World Cup spending in a country where health care is lacking and education infrastructure is crumbling. Brazil has 1.8 doctors on average per 100,000 inhabitants compared to 3.2 in Argentina, while in Brasilia, more than 80 percent of public schools have inadequate facilities such as leaky roofs, according to a watchdog organization known as the Federal District Court of Auditors.

Meanwhile the stadium in Brasilia is forecast to cost 14,300 reais per seat, compared with 10,000 reais per seat for the Cape Town arena, the costliest of the 2010 World Cup. Costs for the arenas more than tripled since Brazil’s proposal to FIFA in 2007, according to a Senate report.

“For the government it was a marketing disaster,” said Carlos Manhanelli, head of Sao Paulo-based communications and marketing company Manhanelli Asociados. “They wanted to sell an image abroad of a modern country with new stadiums but they ignored the needs at home, people dying in hospitals.”

Rousseff has defended the spending, saying it will improve public infrastructure and the investments will stimulate economic growth. Last night she called on Brazilians to reciprocate the kind of hospitality the Brazilian soccer squad for decades received abroad in the World Cup.

“We can’t live with this violence that embarrasses Brazil,” she said.

To contact the reporters on this story: Tariq Panja in Rio de Janeiro at tpanja@bloomberg.net; Alex Cuadros in Sao Paulo at acuadros@bloomberg.net; Blake Schmidt in Sao Paulo at bschmidt16@bloomberg.net

To contact the editor responsible for this story: Andre Soliani at asoliani@bloomberg.net

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