×

Brazil is in crisis ahead of 2016 Olympics in Rio

Mired in deepening political and economic crises, more than 250,000 Brazilians took the streets in a wave of national protest. What will the world find when they turn to Rio de Janeiro for the 2016 Olympics?

When Rio de Janeiro bid for the chance to host the 2016 Games, everything about Brazil sparkled: Its economy was booming, its middle class had grown by the size of California's in less than a decade, and vast oil discovery off Rio's coast promised a lasting prosperity. Rio's proposal was Brazil's proposal, and boasted the nation was "well-positioned as a result of its long-term growth, supported by proven economic policies."


Anti-government protesters rally in São Paulo, Brazil on August, 16, 2015.
Jo Mount | The Washington Post | Getty Images
Anti-government protesters rally in São Paulo, Brazil on August, 16, 2015.

The nation's high spirits were contagious; the International Olympic Committee went for Rio, and Brazilians took the vote as a sign of global confidence in the country's future.

Six years later, Brazil is in dire straights, mired in the deepest crisis in decades. The economy is expected to shrink this year and next, and the majority of Brazilians are calling for the impeachment of President Dilma Rousseff, whose approval ratings are in the single digits. The country has been repeatedly wracked by national protests: the latest, on Sunday, drew out more than 250,000 Brazilians struggling to make sense of this painful reversal.

Read More Brazilians return to streets to urge Rousseff's ouster

Brazil's governing classes are being battered by a wide-ranging graft investigation that involves the state-controlled energy giant Petrobras, high-ranking members of the governing Workers' Party and the opposition (including the president of the Senate, the House, and Rio de Janeiro's governor) and the country's most powerful construction companies. Fallout will likely continue to be a destabilizing force well into next year.

The country is mired in a recession with no end in sight; its investment rating is hovering just above "junk." Inflation, which rampaged from the mid-1980s to the mid-1990s and made those years a "lost decade," is again rearing its ugly head. Unemployment is up, and Brazilians are reeling.

But this is not the Brazil of old. Although the astonishingly optimistic prospects of the past few years has been replaced by a familiar sinking feeling — and the tired joke about Brazil being forever "the country of the future," is being aired again — there are important signs that Brazil's democracy has matured. Much could still go wrong, but there is evidence there is more going on than simple backsliding.

The much-vaunted new middle class is looking beyond the stuff they can now afford and making other demands of their government: they want a middle-class quality of life, which means schools and health care, transportation and sanitation.

Read More Moody's cuts Brazil rating but says investment grade is safe

As Marcia Regina, 55, a teacher from Rio's working-class north side told the Guardian, "I can't stand being in a country where I have to pay such high taxes to get nothing whatsoever in return," she said. "In our health system, we are treated like wild animals. In terms of public safety, we are just treated as statistics. Don't even talk to me about education. They think we are all stupid."

People like Regina have heightened expectations of their country and of their elected leaders; vigorous and ongoing popular demand for transparency and fairness are promising. The massive wave of protests that preceded the World Cup made that clear; the waves of protests this year showed that demands for better governance were not over with the Cup.

And while corruption is nothing new, not even at the highest levels, the bright light being shined on it by an independent judiciary is encouraging.

This probe is destabilizing the economy, and has even thrown the companies responsible for building the Olympic Games' physical venues and infrastructure into chaos. Brazil-based multinationals OAS, Queiroz Galvão and Odebrecht, who together hold contracts worth billions of dollars for building Olympic venues in Rio, are profoundly implicated. Some of Brazil's most powerful businessmen have been arrested, including the presidents of Odebrecht, OAS, and of Grupo Galvão.

This is absolutely unheard of in Brazil; the powerful have never been held accountable in this way. That this investigation is going forward without interference is an undeniable sign of progress.

The most troubling of recent developments are calls for the president's impeachment, or even for military intervention. Brazilians have historically been unforgiving of presidents who lose control of the economy, and the old impulse to turn to the barracks in times of turmoil has resurfaced. As accountant Rosangela Almeida, 53, told the New York Times this Sunday, "A military intervention may be illegal, but the people have to mobilize to make it legal."

This is a country that suffered grievous human-rights abuses during two decades of military rule, and over a decade of hyperinflation and economic devastation following the transition to democracy. Chances for a real return of the armed forces to power are negligible, but calling for a coup is divisive and destabilizing, and could delay Brazil's reemergence from the current economic slump.

There is no solid argument for Dilma Rousseff's impeachment. She was at the helm of Petrobras' board of directors while corruption flourished, but has not yet been personally implicated. Her mishandling of the economy — Brazil's GDP is expected to shrink by more than 2 percent this year — may hurt, but it is not grounds for impeachment.

Read MoreBrazil could be a buying opportunity

A federal accounts court in charge of reviewing public finance is weighing whether her administration's delay in repaying lenders who funded social programs — a practice that made the country's fiscal health seem more robust during her acrimonious re-election campaign — breached Brazil's fiscal responsibility law. Should the court rule against Rousseff, Congress would then consider whether she is fit to finish her term in office.

In the meantime, Brazilians should take the streets, bang pots and pans, vent their frustration and make their demands known, but it is essential they wait out judicial investigations and democratic processes before calling for the president's ouster.

The Brazilian people suffered much financial hardship and political volatility to build a solid democracy. The gains of the past 30 years were hard won: Brazil's increased international profile, a stable currency, the reduced poverty rate, the diminishing inequality, the peaceful handover of power between democratically elected presidents. The merits of these achievements rest not with a single political party or political leader, but with the population; they are also the principal beneficiaries, and would do well to safeguard them.

So what will the world see when they turn to Brazil for the Olympic Games next year? Although a strong economy and political stability were selling points when Rio was pitched as host of the first Olympics in South America, recent events have gutted and remade Brazilian attitudes about their own government, their future, and about the wisdom of hosting huge, expensive international bashes — especially as the companies reaping profits from the construction are facing corruption charges. So more turmoil might be in store.

When the audiences tune in for the Olympic opening ceremony in August 2016, the country they see may well be messy, wracked by continued unrest and in the grips of painful economic and political soul-searching, but hopefully it will be a stronger democracy for having faced important flaws and broken with some of its most destructive habits.

Commentary by Juliana Barbassa, an award-winning journalist and former Rio de Janeiro correspondent for the Associated Press. Her latest book is Dancing with the Devil in the City of God. Follow her on Twitter @jbarbassa.