The Curmudgeon Below the Salt II

Opinion, by Michael Royster

RIO DE JANEIRO, BRAZIL – A recent Curmudgeon column dealt with the bind President Dilma found herself in because her predecessor Lula, just before leaving (?) office, vetoed a law passed by both houses of Congress. The law in question created a mammoth problem for the state and city of Rio de Janeiro, because it would make the 2016 Rio Olympics financially nonviable.

President Lula, Governor Cabral and Mayor Paes all swore to the IOC that the money would be there. They located the rainbow’s end just “below the salt” – cash in the form of crude oil, a windfall found, a few years ago, to be nestling under a layer of salt some half a league under the sea, off the southeastern coast of Brazil.

The current distribution of royalties from offshore oil exploration gives a large chunk to the federal government and a much larger chunk to a few oil-producing states. The twenty-plus non-producing states, most of them dirt poor (think Piauí) get diddly-squat. The diddly-squatters, oil-slick green with envy, looked at the money gushing into Rio de Janeiro from offshore oil and said “God ain’t Carioca, he’s Brazilian.” So the vetoed law, passed by an overwhelming majority of Congress, would allow the states to divvy up the lion’s share of the windfall in proportion to their relative poverty/misery levels. The state of Rio de Janeiro would get less than ten percent of what it now gets.

With its income literally decimated, how will Rio pay for the Olympic Games? The ruling Congressional coalition, knowing full well that Lula has every intention of being President in 2016 when the Olympics occur, began negotiations to see about enacting a new law that would pour oil on these troubled waters. So far, at least, the waters are still roiled and turbid. Even though the new law’s royalty distribution scheme would prejudice Rio less than the vetoed law, there are two particularly egregious provisions.

Briefly put, starting in 2012, the new law covers not only future pre-salt drilling, none of which has yet been contracted, but also royalties from existing concessions—in short, changing the rules during the game. Also, the new law redesigns the way the “producing” states are defined, largely excluding Espírito Santo and drastically lessening the areas deemed to be within the purview of Rio de Janeiro, benefitting more southerly states—another rule change.

Rio’s governor has threatened to sue, and has even hinted that Rio will oppose the ruling coalition during the 2012 municipal elections, if these offending provisions are included in the law. Nobody expects this to happen, because either action would clearly imperil the 2016 Olympics, but rhetoric trumps substance. Meanwhile, La Presidenta, on a foreign junket, has bailed out, saying “qué sera, será.”

As The Rio Times goes to press, the diddly-squatters are holding firm, and threaten to override Lula’s veto of the prior statute if the new one isn’t passed. Lula, who had been keeping mum for the past nine months, has now bounced back into the fray, meeting with former President Sarney and other coalition luminaries vital to his political future. What will happen? No one, not even the Curmudgeon, knows for sure.

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Michael Royster, aka THE CURMUDGEON first saw Rio forty-plus years ago, moved here thirty-plus years ago, still loves it, notwithstanding being a charter member of the most persecuted minority in (North) America today, the WASPs (google it!)(get over it!)