Rio de Janeiro declares 'state of calamity' weeks before Olympics

By DOM PHILLIPS | The Washington Post | Published: June 18, 2016

RIO DE JANEIRO — Just weeks before it stages the 2016 Olympics, the state government of Rio de Janeiro has declared a "state of public calamity in financial administration" and warned that the situation is so dire it impedes its ability to meet Games commitments.

The Olympic Games start on Aug. 5 with Brazil already facing an impeachment trial of suspended President Dilma Rousseff, a public health crisis over the Zika epidemic and a deepening recession.

In an official decree published on Friday afternoon by acting governor Francisco Dornelles, the state government said the crisis could cause a "total collapse in public security, health, education, transport and environmental management."

Coming less than two months before the city hosts its first Olympic Games, the move stunned many in the Olympic city.

"It is completely unprecedented," said Paulo Baía, a professor of political scientist at the Federal University of Rio de Janeiro. He said while Brazilian cities had previously made similar declarations, he had never seen such a move from a state before.

The measure was intended "to call the attention of the whole society of Rio to the problems the state has, opening the way for us to take very tough measures," Dornelles said on Friday.

A spokesman for Rio 2016 said the Games would not be affected.

"This will have no impact on the Games," said Mário Andrada, executive director of communication.

"We knew since last year that the financial state of Rio state was critical. We work with them every single day. They have fulfilled all their obligations for the games. They created a state law for tax breaks that we were able to use," Andrada said.

The state of Rio has 16 million inhabitants and relies heavily on royalties from the oil fields off its coast. Hit by falling revenues and the tumbling price of oil, the state has inched further and further into the red while a huge corruption crisis has left state-run oil company Petrobras, one of Rio's biggest companies, reeling.

Rio state government has been struggling to pay salaries and pensions, public hospitals have complained they lacked basic supplies, and earlier this month, local media reported that the state-run morgue was forced to stop receiving bodies because subcontracted cleaning services were no longer being paid for.

The crisis has even impacted on the new metro line the state government is funding for the Olympics, which will now be ready just days before the games begin and will operate on a limited service.

On Friday morning, Rio state Finance Minister Julio Bueno said that if the state were a company, it would enter into judicial recovery. "I need the federal government to help me," Bueno said, according to news portal G1, which reported a likely deficit for 2016 of almost $6 billion.

Bueno said that security was the state's biggest cost. Police officers have been receiving salaries months in arrears. Since 2008, the state has spent heavily on a "pacification" policy to install armed police bases in dangerous favelas run by drug gangs. As security has worsened and violent crime risen in recent months, officers in some favelas have increasingly stayed confined to base.

Andrada said Olympic security would not be compromised as it was a federal government responsibility. "Most of the resources, funding, equipment and manpower comes from federal [government]," he said.

Baía, the political scientist, said the decree was a "political maneuver" and a desperate measure that would enable the government to get emergency financing from private lenders and avoid lengthy bid rounds.

"It means that Governor Dornelles can get loans without the authorization of the state assembly. They need to pay public servants during the Olympics to avoid public protests. He can contract services without bid loans," Baía said.

Others said the decree was a legal device for the state to get more money out of the federal government, which it would be otherwise unable to do because of Brazil's fiscal responsibility law for public authorities.

"The state of Rio has widely exceeded the limit for debt that it can legally have. The only way that they can get more financial help from the union is in the case of calamity," said an Olympic official with knowledge of the subject, who was speaking anonymously because he was not authorized to discuss the subject publicly.

The official admitted the issuing of the decree had come as a surprise.

"They were not explicit in the issuing of a decree, but we Brazilians know how things like this have to move," the official said.

During a visit to the Olympic Park on June 14, Brazil's interim president, Michel Temer, promised financial help for the games though he did not name a figure.

"We will do this with absolute conviction that we are producing something extraordinary for Brazil and the world," Temer said. He took over from Rousseff in May when she was suspended for an impeachment trial.

The state decree said the authorities would adopt "exceptional measures to rationalize all essential public services, with a view to holding the Games."

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