Rio Claims Victory Over Its Biggest Slum, For Now: Dom Phillips

"Flags of Brazil and Rio are hoisted in Rocinha and Vidigal," read the triumphant headline on the Brazilian news site G1. Generally, a nation's flag flying in the middle of one of its biggest cities wouldn't be cause for celebration. But both Rocinha and Vidigal were neighborhoods that had been essentially beyond government control until this week.

On Nov. 13, some 3,000 police agents, backed by armored cars and helicopters, took control of a community that for decades had been dominated by drug gangs. Not one shot was fired.

For Rio de Janeiro, the city that will host the 2014 World Cup Final and 2016 Olympics, operation "Shock of Peace" was a major propaganda coup. The city's security services had taken over Rocinha, one of the biggest favelas in South America, and neighboring communities Vidigal and Chacara do Ceu, with such speed and efficiency that the operation was over before most Brazilians knew it began.

The media was suitably impressed. TV Globo turned the invasion into a television spectacular -- even if the lack of a shootout meant that its earnest reporters in TV Globo-branded flak jackets struggled to find much to talk about.

The O Povo newspaper captured the feelings of many in an editorial that trumpeted the mission's "total success":

It is good for Brazilians to watch situations like this weekend in Rio, where the state shows its strength and reoccupies a space that, for the last few decades, remained informally abandoned to the administration of crime, of drug trafficking.

Situated in the middle of rich districts like Gavea and Sao Conrado, Rocinha wasn't just an important drug-distribution center. It was emblematic of the city's security problem and consequently a test case for its "pacification" program, intended to finally assert government control of the favelas. Next year a police base, called a UPP, will be installed in the neighborhood, the 19th so far in Rio.

Days before the invasion, the leader of the drug gang that ran Rocinha, Antonio Francisco Bonfim Lopes, was arrested trying to flee the favela in the trunk of a car. Three other gang leaders were also caught. But the weekly news magazine Veja wasn't the only outlet to ask what happened to the hundreds of other armed bandits that once ran the favela:

Where did the traffickers go? In spite of the retaking of the territory, lack of imprisonments worries the population. Of the hundreds of criminals in the favela, only five were captured.

Although the number arrested has since risen, the blog Crime News echoed a theory that first began gaining ground months ago: It suggested Rocinha's gangsters had escaped to the West Rio favela of Vila Vintem, controlled by the same gang. The blog's anonymous author claims to know the city's criminality through the "funk," or Brazilian rap parties held in gang-controlled favelas. "According to residents Vila Vintem is tense!" the blog announced Nov. 13.

There are various traffickers walking in the area, all of them were from Rocinha, there were several trucks coming to the community with a lot of people. Even shots were fired there, but the press doesn't even seem to care about this! This is the policy of UPP: Cover here and reinforce there. Certainly terror is going to prevail in Vila Vintem and the violence there is going to increase because a big portion of dealers who were in Rocinha are there now. It looks to me that it's going to be the new headquarters of the Friends of Friends faction. The West Zone is madness.

On Nov. 15, the columnist Carlos Heitor Cony struck a similar note in the Folha de Sao Paulo. "As a spectacle, it worked," Cony wrote. "The strongest won, but not the smartest."

Cony compared the traffickers to an escaping guerilla force avoiding direct conflict with a stronger adversary.

While trafficking remains one of the most lucrative businesses of the marginal and aggressive economy, as long as consumers are dependent on several drugs that exist in the market, the challenge of crime against the law will continue.

The deeper issue, many argued, was an economic one: From informal businesses to stolen electricity to the piles of counterfeit goods the authorities seized, the reality is that favelas like Rocinha are parallel cities cut off from official Brazil. The idea that a favela the size of Rocinha could even exist for so long, smack in the middle of some of Rio's richest suburbs, suggested that its problems couldn't be solved by a police occupation alone.

As Miriam Leitao argued on her economics blog for the O Globo newspaper, even outside of the drug trade, much of Rocinha's economy is black market. Of the 6,529 small businesses in the favela identified in a 2008-2009 government study, 90 percent said they weren't legally registered and more than three-quarters said they wanted to remain that way. They said they lacked the capital to become official businesses and complained of the potential for excessive red tape and taxation.

So if someone is thinking that, pacified, Rocinha will want to enter into the formal economy, they need to understand that first it is necessary to convince the business people that it is worth it; create incentives.

This is the real challenge of the pacification policy. Rio is having some success in expelling drug traffickers from the parts of the city that World Cup fans are likely to see. Overturning decades of neglect, and bringing favela communities into formal society, will be a much harder job.

(Dom Phillips is the Sao Paulo correspondent for World View. The opinions expressed are his own.)

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

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