Tag: brazil

The Maracana Stadium, which hosted the final match in the 2014 FIFA World Cup, can be seen from the hills of a close-by shantytown or “favela,” in Rio de Janeiro, Brazil. The favelas are notorious for their extreme poverty and the violence and turmoil that result when drug gangs are left to dominate their neighborhoods. In preparation for the World Cup, Rio established the Police Pacification Unit (UPP) to bring order and security to particular favelas. The UPP program was initiated in 2008 and thousands of military police officers were hired. Critics charge that the UPPs do not function as normal police officers – enforcing the law, protecting public safety, providing assistance to victims of crime and investigating crime. The UPP appear to function to make sure that gang members do not carry guns or other weapons and to ensure safe passage for utility company workers to read meters. No attention was paid to the security needs of the favelados before the city authorities and real estate developers decided the slums needed law and order and as much gentrification as possible so as to present a glorious image of Brazil to the world for the World Cup and the 2016 Olympics. UPPs patrol all the favelas that are located near the Maracana Stadium, the tourist hotels, and the international airport.

Brazil’s impoverished majority are disgusted and deeply frustrated with inadequate public services, political corruption, and the vast amount of money spent to host the World Cup

To make sure that the squalid and neglected blight of the favelas did not ruin the visual splendor of the FIFA event, Brazil built walls between the stadium and some of the surrounding slums. As to Favela de Metro, one shantytown near the stadium, the decision was made to force a hundred families from their homes in order to bulldoze the dilapidated shacks out of view of FIFA fans and tourists. Those families were relocated to a slum across town.

For another favela, Vila Autodromo, close to the site of the 2016 Rio Olympic Village, a different tactic was used to force residents out. Finding resistance to the relocation plans from pesky residents, the city of Rio uprooted many of the trees that beautified the otherwise unsightliness of slum environs, full foliage trees that provided shade as gathering places of residents, to watch their children playing or simply socialize with neighbors. To date, 150 of the 500 families who called Via Autodromo home have left. Remaining residents complain that the city also cut down on garbage collection in their neighborhoods and turn off streetlights at intervals throughout the night, all in an effort to make life in the favela inhospitable. “It’s a psychological attack…a perverse strategy to weaken community and weaken our resolve,” said Jane Nascimiento from the Vila Autodromo Neighborhood Association.

In the months leading up to the World Cup, there were demonstrations in more than one hundred of Brazil’s cities, with estimates of up to one million protestors. Brazil’s impoverished majority are disgusted and deeply frustrated with inadequate public services, political corruption, and the vast amount of money spent to host the World Cup. With a total cost of an estimated $11.3 billion, and of that, $3.6 billion for 12 new and refurbished stadiums, it is no wonder that many Brazilians are outraged.

The research literature shows, in fact, that the construction of stadiums and arenas for large events such as the World Cup offer the host country little to no long-term economic benefit. Protesters argued that for the money spent in refurbishing the Maracana Stadium alone, the city could have upgraded a number of schools and increased much needed social services for the poor. In Rio de Janeiro an estimated 300,000 protestors were met with tear gas, pepper spray, and rubber bullets.

From Elite Rule to Populism

In 2002, after 500 years of being governed by elites with immense power and wealth, the voters of Brazil elected Luiz Inacio Lula da Silva as president. Lula had little formal education, quitting school after the fourth grade to work and help his family. As president, he increased the minimum wage more than 150% and, along with other reforms, this raised 26 million Brazilians out of poverty. Lula’s Chief of Staff and handpicked successor, Dilma Rousseff, took office in January 2011 and is expected to win re-election in October of this year.

Following Sao Paul, Rio de Janeiro is the second largest city in Brazil, the third largest metro area in South America, and the sixth largest city in the Americas. Of its 6.35 million population, 1.3 million live in favelas. Once the UPPs were instituted in certain favelas to prepare for the World Cup, investors began buying up houses in the newly secured areas and real estate prices and rentals soared; many residents were unable to pay increasing rents. They were forced to move, typically finding their way to further outlying locations where drug gangs and militias continue to hold sway. That investors are eying prime locations of certain favelas is underscored by real estate developer Eike Batista’s donation of $80 million Brazilian reals (roughly $36 million USD) to the UPP program.

While Lula’s and Rousseff’s administrations have made many reforms that benefit workers and the poor, activists chronicle the ongoing needs that must be addressed regarding housing, sanitation, healthcare, and education. With regard to income distribution, Brazil is one of the most unequal nations in the world. Pedro Alvares Cabral of Portugal landed in Brazil in April of 1500 and in 1532 a permanent trading post, Sao Vicente, was founded. Sugar cane cultivation followed which required much labor and this demand was met with the slave labor of the indigenous people and later African slaves brought to the Americas. Eventually, the Portuguese Crown divided Brazil into fifteen large tracts of land. The unequal distribution of land continues to be a source of conflict and protest. Land concentration in the hands of a powerful few and the crushing poverty in rural areas gave rise to the Movimento dos Trabalhadores Rurais Sem Terra (Landless Workers’ Movement – MST) in 1979. The MST today has 1.5 million members and is one of many other indigenous movements in Latin America. According to educator, linguist, and activist Noam Chomsky, these movements point to “the vibrancy and vitality of democracy in much of Latin America today — denounced in the West as ‘populism,’ a term that translates as ‘threat to elite rule with marginalization of the public in systems with democratic forms but with only limited substance.’”

Friends of the MST is a network of people and groups who support the MST in the wider struggle for social justice and economic fairness. One of its volunteers, Charlotte Casey, writes “Motivated by their slogan ‘Occupy, Resist, Produce,’ families in the encampments and settlements have found, however, that the legal battle is just a small part of the struggle for land. Violence carried out by forces opposed to agrarian reform has resulted in thousands of assassinations, death threats, and imprisonments. Political education is key to their organizing efforts, helping rural workers understand Brazilian reality and see that land in itself does not free them from exploitation. The MST organizes settlement families to pressure the government for schooling, health care, access to credit to support farm production, and other necessities. Rural workers also learn to oppose agricultural policies like genetically modified crops and patenting of seeds that benefit the bottom line for giant agribusinesses like Monsanto, but are ruinous to small farmers and do nothing to eliminate hunger in Brazil.” She also lists the MST principles:

To love and preserve the land and the creatures of nature.

To improve our understanding of nature and agriculture.

To produce food and wipe out hunger. To avoid monocultures and the use of agricultural poisons.

To preserve living plants and to reforest new areas.

To care for springs, rivers, ponds, and lakes. To struggle against the privatization of water.

To beautify the settlements and communities, planting flowers, medicinal plants, vegetables, and trees.

To adequately handle waste and combat any practice that will contaminate or abuse the environment.

To practice solidarity and fight injustices and aggression toward people, communities, or nature.

To struggle against land concentration so that all may have land, bread, education, and freedom.

To never sell the land that we have attained. Land is an absolute good for future generations.

These are not the principles of agribusiness, neoliberal policies, or elite exploiters of the earth and its masses!

Ordinary People Protest and Speak Out

It is understandable that many citizens of Brazil see the enormous sums of money spent to host the World Cup as appalling and immoral when so many are hungry and without employment, and hospital’s and schools and basic social services are neglected. While the Ministry of Sports official figure is $11.6 billion for cost of the World Cup, it has been suggested that it is closer to $15-20 billion. In addition, the government has spent $1 billion on security, including 170,000 law enforcement, military, and private security personnel. These were backed up by 10,000 members of the Shock Riot Police. During one of the many protests, Gizele Martins, a journalist and activist from one of the favelas spoke to the people: “We have the right to housing, the right to a life. The World Cup destroyed and ended many lives with policies that target poor, black favela residents. Amarildo [a bricklayer from one of the favelas who was killed by UPP forces in 2013] was just one case, but innumerable others are exterminated in the favelas. We are tired of tears of blood. We are tired of wiping up the bloodied ground.” Some have noted that the protests in 2014 were small in comparison to those in 2013. The answer from those on the ground is that the heavy-handed response of the police to peaceful protests in 2013, as well as the media portraying the protestors as criminals, deterred many from joining in ongoing protests. Those who did brave the punitive police responses were faced with greater police brutality.

Many observers look to Rousseff to continue to bring about reforms that address the income inequality in Brazil, reforms that were started by Lula. During Lula’s term in office, the number of citizens living in poverty, according to the World Bank, dropped from 21 percent in 2003 to 11 percent in 2009. Interestingly, it is reported that over a period of the last ten years, the top 20 percent of Brazilians saw their share of wealth decrease while the poorest 20 percent saw a 2.6 to 3.5 percent increase. President Rousseff, in June of 2011, initiated a social welfare program called Brazil Sem Miséria (Brazil Without Misery) to address the extreme poverty still rampant in the country. It will include many programs to bolster aid in health, education, and infrastructure. It will also expand the Bolsa Familia program, a cash transfer program for the most needy, which was launched by Lula. The Economist has called the Bolsa Familia initiative an “anti-poverty scheme invented in Latin America which is winning converts worldwide.”

Nicholas Lemann, a journalist, interviewed Lula and in an article in The New Yorker in 2011 he quotes the then-still-president: “We have to distribute wealth in order to grow. The economists were always agonizing over this. We proved that it was possible to grow, to distribute income, and to do so with social inclusion without inflation. Today, Brazil has three hundred and fifty billion dollars in reserves. We don’t owe a cent to the I.M.F., and the I.M.F. owes us fourteen billion.” Lemann also quotes an email response he got from Rousseff after sending her some interview questions: “The main aim of economic development must always be the improvement of living conditions. You cannot separate the two concepts. The creation and distribution of wealth increases living standards; likewise, increases in living conditions lead to economic prosperity.”

Re-emergence of Elite Power

Some see gains made by Rousseff’s opponent in polls as they move toward the October election and wonder if she still has a powerful draw for the Brazilian people. They point to the current slowdown in economic growth and the possibility of recession. Yet Brazil still has low unemployment and real income remains stable. And Rouseff will undoubtedly point to the gains made by her party and administration in moving millions into the middle class. In February of this year, however, MST activists took to the state palace, accusing Rousseff of capitulating to the interests of Big Agro. “Dilma’s government has taken a step back on agrarian reform because she is in an alliance with conservatives,” said national co-coordinator Marina dos Santos. “Industrial capital has appropriated the countryside and brought agrarian reform to a standstill.”

In an article in Al Jazeera America by Donna Bowater, “Whatever happened to Brazil’s World Cup protests?”, Bowater talks of the petering out of the 2013 protests that shook Brazil. Yet the mood and view of the man and woman on the street remains determined to continue the reforms that Brazilians have come to expect since Lula was in office. The author quotes a biologist, Iuri Souze, who describes the lives of people who are overlooked and disregarded by those in power: “We don’t have health or education, we have corrupt police. It’s always been like this: people were always treated like rubbish while the rich had everything.” He continued, “People are dying in favelas. People are living in sewage. It’s a chaotic state. It’s going to continue after the World Cup. We can’t put up with this life.”

The anger is understandable, despite the gains made, given that half the available farmland in Brazil remains uncultivated while four million landless peasant farmers are homeless and unable to make even a substandard living. The reality is that less than three percent of the population owns two-thirds of the land. There is no justification for this inequity. People everywhere are tired of the institutionalized, systemic inequalities that afflict societies worldwide.

We must be willing to critically call out a system of international finance that is unjust and immoral, that, “with the IMF at its centre, works to reward the international commercial banks and the elites in developing countries, at the expense of the common people in the debtor countries.”

Debt and the Monetary Foundations of Inequality

Richard Robbins, a professor at SUNY at Plattsburgh in New York, in an article on anthropologynews.org, the site of the American Anthropological Society, finds the core problem to lie in the the type of monetary system that revolves around debt and interest. He writes about an “institutionalized…debtor-creditor relationship” that inevitably creates the economic inequality that we see in the U.S. and other countries around the world. In our monetary system, money is “lent into existence by privately-owned banks.” Since all money is debt, and since not only the principal but also the interest must be repayed, “the economy must perpetually grow at an exponential rate to generate the interest on the debt and/or the dividend on investments.”

For the privately-owned banks, these debts created by the creation/lending of money are their assets. For the banks’ assets to grow, debt held by “federal, state and local governments, businesses, households, students and financial institutions” must also grow. It is no wonder that the $11 trillion worth of government, business, and public debt in 1990 in the U.S. has ballooned to almost $59.4 trillion as of March of this year. That debt is owed to the wealthiest Americans, those who are the “net-creditors.” Robbins writes, “Interest is paid out in virtually all economic transactions, since prices and rents include interest that sellers and entrepreneurs must pay as a price of money. Interest and or dividends are realized from bank deposits, loans, and investments. Based on studies done in Germany and Norway, some 90% or more of the population count as net debtors, while 10% or less are net creditors.” He also notes that as the debt has spiraled to massive amounts, the “the gap between rich and poor is greater than any time in almost 100 years and that the bottom 30% of US families have seen their median income fall by 29% since 1979.” The institutionalized debtor-creditor relationship afflicts all nations which participate in the international banking system.

Robbins sums up the sad reality: “Clearly, in the present state of things, creditors control the system. They do so by control of financial and multilateral institutions and central banks charged with protecting money as a store of value, and by ensuring that creditors receive their return on capital (eg, by bank bailouts, structural adjustment programs and ad hoc actions such as seizing portions of Cypriot bank accounts to repay debts owed to European banks). And creditors control nation-states whose legislatures are pressured to reduce taxes on creditors (eg, capital gains taxes) and support programs that force people (eg, students) to accept more debt… In sum, our monetary system is constructed in a way that ensures a growing division of wealth and income; a division that, like the economy, must grow exponentially.”

The current U.S. national (government) debt is $17+ trillion. The interest expense for fiscal year 2014 is $354,863,251,628.78 (that’s nearly $355 billion!) The debt of federal and state governments, businesses nationwide, and all people is nearly $60 trillion, as stated above, according to the latest economic data from the St. Louis Federal Reserve. The situation for developing countries clearly shows the same out-of-control black hole of exponentially growing debt. According to the World Bank’s Global Development Finance report of 2012, “The combined stock of developing countries’ external debt rose $437 billion to $4 trillion at end in 2010…” When numbers are so large, they seem to lose meaning, until we look at the real-world repercussions of such massive debt and the toll on ordinary lives: “According to UNICEF, over 500,000 children under the age of five died each year in Africa and Latin America in the late 1980s as a direct result of the debt crisis and its management under the International Monetary Fund’s structural adjustment programs. These programs required the abolition of price supports on essential food-stuffs, steep reductions in spending on health, education, and other social services, and increases in taxes. The debt crisis has never been resolved for much of sub-Saharan Africa. Extrapolating from the UNICEF data, as many as 5,000,000 children and vulnerable adults may have lost their lives in this blighted continent as a result of the debt crunch” [“The Rich Borrow and the Poor Repay: The Fatal Flaw in International Finance,” by Ross P. Buckley, professor of international finance regulation and law at UNSW Australia (The University of New South Wales)].

Current Monetary System Alternatives

The Institute of Islamic Banking and Insurance is a not-for-profit organization that “brings together people of all faiths, and those with no faith, to create the awareness of a viable alternative financial system that that aspires to realize fairness, justice and equity in dealings for the public good that must be accompanied by righteous behaviour and moral conduct . The important message of Islamic banking and insurance is that all financial dealings whether in the form of commercial transactions, financial products and services, must always produce a benefit and lead to goodness for the welfare of society.” The IIBI delineates the basics of Islamic banking that throw a revealing light on the monetary systems that are based on an institutionalized debtor-creditor relationship. It is beneficial here to quote them at length:

“In order to be Islamic, the banking system has to avoid interest. Consequently, much of the literature on the theory of Islamic banking has grown out of a concern as to how the monetary and banking system would function if interest were abolished by law.

Another Islamic principle is that there should be no reward without risk-bearing. This principle is applicable to both labour and capital. As no payment is allowed to labour unless it is applied to work, so no reward for capital should be allowed unless it is exposed to business risks.

Consider two persons, one of whom has capital but no special skills in business, while the other has managerial skills but possesses no capital. They can co-operate in either of two ways:

1) Debt-financing (the western loan system). The businessman borrows the capital from the capital-owner and invests it in his trade. The capital-owner is to get back his principal and an additional amount on the basis of a fixed rate, called the interest rate, as his compensation for parting with liquidity for a fixed period. The claim of the lender for repayment of the principal plus the payment of the interest becomes viable only after the expiry of this period. This payment is due irrespective of whether the businessman has made a profit using the borrowed money. In the event of a loss, the borrower has to repay the principal amount of the loan, as well as the accrued interest, from his own resources, while the capital-owner loses nothing. Islam views this as an unjust transaction.

2. Mudarabah (the Islamic way). The two persons co-operate with each other on the basis of partnership, where the capital-owner provides the capital and the other party puts his management skills into the business. The capital-owner is not involved in the actual day-to-day operation of the business, but is free to stipulate certain conditions that he may deem necessary to ensure the best use of his funds. After the expiry of the period, which may be the termination of the contract or such time that returns are obtained from the business, the capital-owner gets back his principal amount together with a pre-agreed share of the profit.

The ratio in which the total profits of the enterprise are distributed between the capital-owner and the manager of the enterprise is determined and mutually agreed at the time of entering the contract, before the beginning of the project. In the event of loss, the capital-owner bears all the loss and the principal is reduced by the amount of the loss. It is the risk of loss that entitles the capital-owner to a share in the profits. The manager bears no financial loss, because he has lost his time and his work has been wasted. This is, in essence, the principle of mudarabah.

There are at least three reasons for considering the mudarabah relationship to be more just than the creditor-debtor relationship:

Both parties agree on the ratio in which profits will be shared between them.

The treatment of both parties is uniform in the event of loss, since if the provider of the capital suffers a reduction of his principal, the manager is deprived of a reward for his labour, time and effort.

Both parties are treated equally if there is any violation of the agreement. If the manager violates anyone of the stipulated conditions, or if he does not work, or is instrumental in causing loss to the business by negligence or bad management, he will have to bear the responsibility for the safe return of the whole amount in question. If, on the other hand, the provider of the capital violates any of the stipulated conditions, for example, by withdrawing his funds before the stipulated time, or by not providing part or full funds at the promised time, etc., he will have to pay the manager a reward equivalent to what he would have earned in similar work.

Mudarabah is the basis of modern Islamic banking on a two-tier basis.

1st tier: The depositors put their money into the bank’s investment account and agree to share profits with it. In this case, the depositors are the providers of the capital and the bank functions as the manager of funds.

2nd tier: Entrepreneurs seek finance from the bank for their businesses on the condition that profits accruing from their business will be shared between them and the bank in a mutually agreed proportion, but that any loss will be borne by the bank only. In this case, the bank functions as the provider of capital and the entrepreneur functions as the manager.

Islam argues that there is no justifiable reason why a person should enjoy an increase in wealth from the use of his money by another, unless he is prepared to expose his wealth to the risk of loss also. Islam views true profit as a return for entrepreneurial effort and objects to money being placed on a pedestal above labour, the other factor in production. As long as the owner of money is willing to become a shareholder in the enterprise and expose his money to the risk of loss, he is entitled to receive a just proportion of the profits and not merely a merely nominal share based on the prevailing interest rate.

Thus, under an Islamic banking system, the cost of capital is not analogous to a zero interest rate, as some people wrongly assume it to be. The only difference between Islamic banking and interest-based banking in this respect is that the cost of capital in interest-based banking is a predetermined fixed rate, while in Islamic banking; it is expressed as a ratio of profit.”

Toward a Decent and Hopeful Life for All

Pundits in Brazil, the U.S., or any country which has a monetary system in which money is “lent into existence by privately-owned banks” can debate endlessly about which policies will bring about greater economic equity and narrow the gap between rich and poor. But no long-lasting change of any value will take place until we, ordinary citizens, educate ourselves about the inevitable contemptible outcomes of a system which is purposely structured in such way that, as Robbins says, “debt represents a regressive tax in which money trickles up rather than down.” We must be willing to critically call out a system of international finance that is unjust and immoral, that, “with the IMF at its centre, works to reward the international commercial banks and the elites in developing countries, at the expense of the common people in the debtor countries,” as described by Professor Buckley. “It does this by only selectively applying market principles and disciplines, that is the market is allowed to operate unimpeded when it is delivering profits to the international banks and the elites in the developing countries, and its operation is interfered with, grossly, when market forces would impose massive losses on the banks and/or the developing country elites.”

The change can only come when enough individuals insist upon – as described by the Institute of Islamic Banking and Insurance – “a viable alternative financial system that aspires to realize fairness, justice and equity in dealings for the public good that must be accompanied by righteous behaviour and moral conduct.” Then those in the favelas, slums, shantytowns, and ghettos of the world might be afforded a decent and hopeful life.

It was narrated from A’ishah (may Allah be pleased with her) that the Prophet (pbuh) used to say in his prayer, “O Allah, I seek refuge with You from sin and heavy debt.”