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Brazil’s oil windfall distribution debate takes off in the streets of Rio do Janeiro

Tuesday, November 27th 2012 - 20:40 UTC
Full article 3 comments
Governor Cabral, a close political ally of President Rousseff but not when sharing profits from oil rich Rio  Governor Cabral, a close political ally of President Rousseff but not when sharing profits from oil rich Rio

Thousands of people took to the streets in Rio do Janeiro on Monday to urge Brazilian President Dilma Rousseff to veto a bill that local officials say could cost Rio state billions of dollars in lost oil revenue, and cripple plans to host the World Cup and Olympics.

For Rousseff, the protest raises the stakes on what may be the most sensitive decision she has faced in her nearly two-year-old government: how to distribute tens of billions of dollars in expected revenue from a massive offshore oil find discovered in 2007.

A bill passed by Congress this month would spread the windfall more evenly between Brazil’s 26 states and federal districts. But it would also alter royalties on existing production, angering Rio and other south-eastern states where most of Brazil’s oil is located. Rousseff has until Friday to veto the bill.

In recent days, state officials have plastered streets and buildings with banners advertising the protest in large black and white lettering and a command in red for the president: “Veto, Dilma”.

Rio is spending tens of billions of dollars building stadiums and other infrastructure for football’s World Cup in 2014 and the 2016 Summer Olympics, two events expected to attract hundreds of thousands of visitors.

Rio Governor Sergio Cabral, a key ally of the president, is leading the protest. He has cast the debate in dire language that analysts say may exaggerate the financial stakes but has nonetheless intensified political pressure on Rousseff.

“This bill will cause the financial collapse of the state of Rio de Janeiro,” Cabral warned earlier this month. “There would be no Olympics, no World Cup, no payments for retirees and pensioners.”

Approving the bill could hurt Rousseff’s relations with Cabral’s PMDB party, a large flexible movement that is an essential ally of the broad coalition that supports her ruling Workers’ Party.

Rousseff has vowed to further Brazil’s efforts to reduce poverty, in part by redistributing the windfalls from its growing commodity exports: from oil and iron ore to foodstuffs.

But on Monday police had cordoned off large swathes of Rio’s centre, along the river-like bay that gives the city its name. State and municipal officials were facilitating attendance by waiving subway and ferry fees and providing buses from far-flung towns outside the capital.

Categories: Economy, Politics, Brazil.

Top Comments

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  • ProRG_American

    Good News!!

    What Next?
    Judge Greisas Ruling overturned by appeal?
    ARA Libertad is freed from captivity?
    Grain Prices Soar?
    New Major oil discovery in patagonia?
    World Bank says Argentina rduced its poverty by 50%?
    World Bank says Argentine middle class the fastest growing in the region?
    Argentina pays it's cooperative bond holders on time?
    Cristina's chances for reelection suddenly skyrocket?

    HOOOoooooo! Shrugging shoulders......It gives me chiiiils all over my body.

    Nov 27th, 2012 - 09:06 pm 0
  • Warthog

    What a bulls**t! Only city officials are behind this and paying money for people to come in to the “riot” which sounded more like Samba caravan. Local people don't care or they say “yes” for money distribution over the country. Natural resources of Brazil belongs to entire nation, not one city with lousy plans and even worse execution. Very lame excuse to have royalties for next 50+ years to come in to Rio because of Olympics and World cup in next few years. Lets please keep these things separated.

    Nov 28th, 2012 - 12:24 pm 0
  • British_Kirchnerist

    Seems like the principle of the bill is right, just as I oppose the SNP's ridiculous anti-English “it's Scotland's oil” campaign”, but perhaps allowances should be made for the Olympics and World Cup

    #1 Great to see you seeming more on board with re-election now my friend =)

    Nov 28th, 2012 - 10:58 pm 0
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