The CEO Game

• 05Jan

  Focus on Brazil: Corruption and the Olympic Race for Money

  Economy 1 Comment

  Following the last two pieces on the rampant violence that is going on in Brazil: A Favela Love Story and Brazil Battles Crime Rates, we now move the focus to the outcome of the crime, and its counterpart- the Brazilian corruption, which stands in the way of a bigger, mightier and more prosperous Brazil just like the crime and violence do.

  Despair, frustration, pain, misery, poverty, crime, violence and drugs are all common sites in Brazil and especially its favelas. But all of these things don’t concern nor bother Rio de Janeiro’s economists from proudly showcasing their presentations and plans for the Olympic village. The plans are ravishing indeed and have many ideas in store for Rio. For example in Copa Cabana, the most prime and well known beach location in Rio, a huge beach volleyball stadium will be built and not far away from there, the Olympic village and the rest of the facilities will be built from scratch too.

  The governor’s house is situated only a five minute drive from the Rosana favela (which we mentioned last time on A Favela Love Story), but it seems to be as if it resides not only in a different place but in a totally different reality: with glittering chandeliers hanging from the ceiling and lavish oil paintings hanging on the walls. It’s clear for everyone that in order for the governor to keep his lifestyle, the peace and order must be kept. With raging crime including kidnappings and shootouts, maintaining the order is a key challenge and goal in order for the Olympics to become a success story.

  Today, some six years before the games’ opening ceremony, crime is already providing for thousands of personal bodyguards in Rio and Sao Paolo. Moreover, the homeland security market (electronic fences, anti theft systems) seems to be doing quite well with 2$ billion a year and is getting popular by the minute, with many investors and companies worldwide competing over the Brazilian market and dough. Economy experts predict that these phenomena will keep growing, “until the opening ceremony, the security market will rise by 15% yearly” says one.

  Everyone wants a bite from the cake, and with a 5$ billion cake (the huge Brazilian investment in the games’ security measures) it’s no wonder. Brazil has no state comptroller, you know, the guy who inspects that everything is legit. Because of that and due to a tradition of corrupted decision makers like many developing countries, the greedy and cheeky foreign investors are not playing fair. When “any friend of El Presidente’ is a friend of the national treasury” becomes a way of life, it is no wonder that companies and even countries, pushing hard their products without no respect for the standard bureaucratic procedures.

  One of the protruding companies in the field of security there is ISDS. In the 2007 Pan-America games the company was involved in 20$ million deals. The company hires retired personal from combat units who train local bodyguards and policemen. But the market is a hard market, Brazil usually allows only deals who cut in the local Brazilian companies. Nevertheless, there is enough for everyone, but experts claim that it is still a bit early to discuss tenders for safe guarding the world cup games and the Olympics, because of the elections that will be held soon. “Many projects will be postponed to after the elections. These things involve a lot of lobbying, and people who are close to power and can influence the decisions made” claims an ISDS spokesman.

  Although corruption roams in Brazil, some claim it is decreasing gradually. A sign for that is the fact that the tenders for the games will be open and managed online, so theoretically they will be “fair and righteous”, but many think that in Brazil which is corruption prone, the Olympic race for money will reveal Brazil’s uglier sides.

  More on Brazil: Focus on Brazil, Focus on Brazil: Only Second to the US, Focus on Brazil: The Olympics to Boost Communications, Focus on Brazil: It’s in the Oil, Focus on Brazil: Brazil Battles Crime Rates, Focus on Brazil: A Favela Love Story and Will the Olympics be a Financial Success Story part one and two.

  Omer Shachnai

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  Tags: Brazil, Brazil's economy, Crime, Favelas, Olympics

• 03Jan

  Asia’s Big Decade Has Begun

  Economy 1 Comment

  The world’s biggest free trade zone was launched in southeast Asia, the total trade will sum up at 4.5$ trillion a year. The free trade zone includes China and 6 other countries with a population of 1.9 billion people altogether.

  The free trade agreement between China and six additional countries in southeast Asia was launched yesterday (Friday), thus creating the world’s biggest free trade zone in terms of population. Beside China, you can find amongst the members the six founding members of the ASEAN (The Association of Southeast Asian Nations) – Indonesia, Singapore, Malaysia, The Philippines, Thailand and Borneo.

  

  The Association of Southeast Asian Nations

  The agreement will cancel 90% of customs duty on import-export between these countries. The average tax price of importing commodities from the ASEAN countries to China decreased from 9.8% to a mere 0.1% and on the contrary, the average price of exporting from China to the six ASEAN members decreased from 12.8% to 0.6%. The trade volume between all these countries had ascended from 39.5$ billion in the beginning of the decade to 192.5$ million at the end of 2008 and is expected to rise even more.

  Four additional members of the ASEAN- Vietnam, Laos, Cambodia and Myanmar are expected to join the trade zone within five years. Some experts are already predicting a massive future expansion that might include Japan which is no surprise after China and Japan began talking about uniting, economic powerhouse India and even “offshore” Australia.

  During the ASEAN summit the was held last October in Thailand, the members agreed to conduct a feasibility study on the formation of wide Asian free trade zone that will include South Korea too. “Two studies were conducted simultaneously”, explained an official from Thailand’s Foreign Ministry office. The first was for a free trade zone that will include the ASEAN countries along with China, Japan and South Korea and the second was for an alliance that will include India, Australia and New Zealand too.

  The quick recovery of southeast- Asian economies from the financial crisis, in relative to the US and other Western countries, have increased the yearn to raise the integration of Asian economies. Japanese prime minister, Yukio Hatoyama who is leading the idea of forming an “East Asian Community” similar to the European Union, said in October that an “Asian economic bloc needs to aspire to lead the entire global economy”.

  Omer Shachnai

  The CEO Game.

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  Tags: ASEAN, Australia, China, East Asian Community, Financial Crisis, India, Indonesia, Singapore, Southeast Asia

• 01Jan

  Focus on Brazil: A Favela Love Story

  Economy 3 Comments

  After Brazil Battles Crime Rates we continue to question the Brazilian crime and violence which are standing between Brazil and its dream of being all that it can be.

  If you would have asked any ordinary Brazilian who lives outside the favelas to go inside on his own and roam the place, he would definitely refuse. The reason? The cramped favelas are filled with armed drug gangs who control the streets. Drugs are trafficked in broad daylight, when children 13-14 of age sell them on the street corners. Beside pinpoint operations the police try to avoid showing any presence there.

  

  Brazilian Favela

  Anyone who wants to see it on his own eyes can go ahead and do it in an organized tour. In the beginning of the tour the guide, who works for the Brazilian office of tourism, warns everyone not to take any pictures. “Lately, the gangs have started shooting at tourists who insisted of taking a photo in order to warn them”, he explains. Gang members, have also shot down a police chopper lately, using an automatic rifle. At the same time, more than 25 people were killed in the clashes between the police and the gangs and all that happened in the favela which is located just a shout away from the famous Marakana stadium, which is supposed to host the 2016 Olympics’ opening ceremony.

  Most tours then wander around the alleys of the favela, which houses some 200 thousand people. There are many favelas around Rio but they are common site around most Brazilian cities. When you look outside from the Rosana favela near Rio, you can see the famous Jesus statue whose hands are spread and you can look upon the beautiful coastline. On the contrary, one look to the inside and you can understand why the average price of an apartment in the favela is only 3,000$.

  The houses are built extremely close to each other and are very cramped as mentioned above. Beside crime the favelas are plagued by sewage, hygiene problems and litter with syringes lying around, a sad sight. Most apartments in the favela have only one room, deluxe ones have a couple. Between the apartments you can see improvised phone and power lines, this is what happens when the authorities are not functioning and the residents take care for themselves, including water, electricity, telephones and even health and education services.

  The Brazilian government has failed to wipe out the favelas in the last 30 years and by now the authorities have already realized that they wouldn’t succeed in doing so by the time the Olympics begin also. What will they do? Seems like no one in Brazil knows the answer for that. Some argue that they would either invest heavily in infrastructures, water and education or hand out large amounts of money to the favelas’ residents in order to buy tranquility for the time of the games.

  Some measures are already being taken. The government has decided to build walls around the favelas of Rio de Janeiro for instance. The authorities have explained that the irregular move is supposed to protect the rain forests from the favelas’ expansions, but they were showered by harsh criticism both from human rights activists and from the residents of the favelas.

  In conclusion, there is no solution in sight, the favelas’ sad and striking day to day reality will go on regardless of the games. It seems that just like China who hosted the last Olympic Games, the government in Brazil is seeking a fast and temporary solution to a permanent problem. Even if they would “succeed” in lowering the crime rates or dealing with poverty, literacy and other problems before the Olympics’ kickoff, all those problems will come a knocking’ a second after the games end just like they did in China.

  More on Brazil: Focus on Brazil, Focus on Brazil: Only Second to the US, Focus on Brazil: The Olympics to Boost Communications, Focus on Brazil: It’s in the Oil, Focus on Brazil: Brazil Battles Crime Rates and Will the Olympics be a Financial Success Story part one and two.

  Omer Shachnai

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  Tags: Brazil, Brazil's economy, Favelas, Olympics

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