Dancing With the Devil in the City of God: Rio De Janeiro on the Brink

by Juliana Barbassa

He put a little weight into it and the door gave way with a wood-against-wood squeak that echoed in the dim living room.

  “It’s the damp,” he said.

  His tone wasn’t apologetic, just factual. I stepped in and felt the air brush against my face, moist and unwelcome like the breath of a stranger in a crowded bus.

  Lights on, I could see the ad hadn’t lied: newly finished floors in blond wood, spotless white walls. I also saw what it left out: the entire sixth-floor unit was face-to-face with one of the granite monoliths that surge against Rio’s skyline. This was, indeed, an Ipanema apartment that would allow me to “walk to the beach!” as announced. It hadn’t promised a view.

  I approached the living room window. There were about six feet separating the apartment from the rock face; the gulf between them smelled of mulch and was lit by a diffuse, filtered light much like what you’d find at the bottom of a canyon. Looking up I realized I was indeed near the bottom of a deep crevasse formed by the twenty-story brick building and the mountain. Soft green moss and a delicate filigree of ferns covered the granite, fed by the humidity that condensed against the cool façade and trickled down in rivulets. Mold spores—abundant in much of Rio because of the tropical humidity and the nearby ocean—were already tickling my nose. In five minutes I’d be wheezing.

  Further exploration revealed a bucket half full of dirty water with a submerged mop, testament to someone’s good intentions toward the filthy kitchen floor, and missing faucets. They were gone from the kitchen and the bathroom, ripped out of the stone counters, leaving jagged holes.

  I looked around for the broker—was this the right apartment? Two bedrooms, one bath, newly refurbished? Number 608? He had sagged in place by the door, all of his body language informing me he’d done enough when he left his air-conditioned office and met me, half an hour late, by the building’s front gate with a key in hand.

  “Yup,” he said, thumb jabbing toward the “608” nailed to the open front door. He wasn’t wasting words on the obvious. The missing faucets, the mold, the dirt? “I just open the doors, ma’am.”

  A month after my arrival there was a break in the news cycle, and I had begun to look for an apartment. This pushed me to confront another very volatile aspect of life in this city: the economy.

  The apartment with the missing faucets was the twenty-fifth, or twenty-sixth, or twenty-seventh place I’d looked at; I lost track after the first couple dozen. It listed for the equivalent of $1,500 a month, plus $250 in condo fees and $125 in property taxes, which are the tenant’s responsibility under landlord-friendly Brazilian law. With it, my search seemed to have hit a wall—a mossy, weeping wall of sheer granite.

  The Brazil I remembered was affordable, at least to visitors who came bearing dollars. When Lula took office in 2003, one dollar went far, buying 3.5 Brazilian reais; when I arrived seven years later, one dollar bought 1.7 reais, and Rio no longer offered visitors a dose of exotic on the cheap. Bar tabs in those first few weeks rivaled any in San Francisco; a passion fruit caipirinha to take the edge off a long day could run upwards of fifteen dollars. Even a night drinking the local Antarctica beer in family-sized bottles and making do with some bolinhos de bacalhau, salted codfish croquettes, or aipim com carne seca, fried yucca and sun-dried beef—traditional bar food that dispenses with refrigeration—added up to an unhealthy sum.

  Still, I started the apartment hunt with some confidence, secretly harboring images of ocean views, a porch with a hammock, flocks of parrots flying by. After all, I was moving from one of the most expensive cities in the one of the most expensive countries in the world. I knew how to handle hot markets; I was that person who showed up for an open house with a credit report, photocopies of my documents, and a nicely ironed shirt to beat out the competition. But I wasn’t prepared for monthly rents that hovered between San Francisco and Manhattan for dank flats with no discernible natural light—or faucets.

  Since then, I’d dropped the parrots and the ocean breeze from my wish list, and I’d jacked up my price range to a laughable two thousand dollars a month. The units that fell in that category included, in addition to the glorified cave with the mossy view, flats where the refrigerator purred like a big cat in the living room, and an apartment where the bathroom was so small the door only opened two feet before it hit the toilet. That shouldn’t be a problem, that broker offered; I could just squeeze around it.

  All of them included maid’s quarters: claustrophobic little rooms with just enough space for a child-sized bed and micro-bathrooms so tiny that the showerhead was often above the toilet, so that the person showering had to straddle the seat below. Even one-bedroom apartments with kitchens barely large enough for a stove came with these brick-and-mortar testaments to the vast inequality that provided generations of middle-class Brazilians with a steady supply of nannies, cooks, and maids. Looking these over, I wondered if there was still room in this new Brazil for live-in help for anyone but the wealthiest. At the end of my first month in Rio, I was finding there was barely any affordable space for me.

  Brazil was thriving. Back in 2008, when the U.S. subprime mortgage debacle had sent housing prices on a death spiral that would drag the economy down with it, Lula waved off worries, saying the crisis that had torn through the United States like a “tsunami” would be a little ripple, a “marolinha” when it reached Brazil.

  His comment came the day after President George W. Bush signed a $700 billion financial bailout bill. Brazil would not have a similar package, Lula said, just specific measures: “Everything will happen in its right time.”

  Back then, many thought his remarks smacked of hubris, naïveté—or ignorance. Former president Fernando Henrique Cardoso, who as finance minister had captained the 1994 economic plan that changed the name of Brazil’s currency to the real, had tamed hyperinflation, and later, as president, had stabilized the economy with austerity measures, gave his successor a condescending talking-to. “We have to say it: the emperor is naked,” he said in a critical speech at the time. “Put your clothes on, President.”

  As it happens, Lula was mostly right. Reassured, the population went out and consumed. Banks in Brazil were in much better shape than in the United States, with tighter controls and far more conservative lending practices. Even as the U.S. economy tanked, Standard & Poor’s became the first ratings agency to raise Brazil’s foreign debt to investment-grade status; Fitch followed days later.

  Brazil’s economy hiccupped in 2009, but by the end of the year it had shaken off the downward drag of the crisis overseas. Foreign investment continued to grow as global money pulled away from what were traditionally safe perches—the United States and Europe—and landed in emerging markets like Brazil. By the end of the year, Rio had been chosen to host the Olympics; it seemed nothing could go wrong. The cover of The Economist in November 2009 nailed the optimism of the time: “Brazil takes off,” announced the headline above an image of Cristo launching like a rocket into space.

  As President Barack Obama took over from Bush, the American government would throw even more cash after that first bailout package in its attempt to stanch the bleeding. But by late 2010 the United States was still shaky at the knees, muddling through a jobless, joyless recovery, its suburbs littered with the abandoned homes of families who couldn’t afford mortgages. Housing prices there had hit a trough and flatlined.

  Brazil, on the other hand, was making good on that Economist cover. During Lula’s tenure the stock market quadrupled, outperforming every other major bourse in the world. In 2010, when I made my move back to Rio, Lula was wrapping up his second mandate and the country had just elected his handpicked successor.

  Dilma Rousseff, the daughter of a Bulgarian communist who immigrated and did well in real estate, had an entirely different background. In contrast to Lula’s poverty she had an upper-middle-class upbringing, complete with French lessons and piano. Both presidents came of age under Brazil’s m
ilitary regime, which held the country in its grip for twenty-one years after deposing a democratic government in 1964. Although both resisted the generals’ rule, their experiences forged entirely different political personas. Lula learned to be a leader by talking hundreds of thousands of autoworkers into strikes that paralyzed the heart of Brazil’s industry, then by sitting down at the negotiating table to hammer out deals with the bosses. Dilma, as Brazilians would later refer to her, took up arms against the dictatorship.

  She was sixteen when the military took power. Even as a teenager, she joined the opposition; by the time she was nineteen, she was part of an urban guerrilla group that advocated the regime’s overthrow. In spite of her young age, former militants later remembered her as a capable organizer and manager. In January 1970, at twenty-two years old, Dilma was detained. She would be tortured and held for nearly three years.

  A photo taken in November of that year shows her sitting before a military court in Rio de Janeiro. She’d been subjected to twenty-two days of torture. She looks fragile, short-haired and thin, with a finely drawn mouth and delicate bone structure: arched brow, graceful jawline. But her eyes are narrowed to paper-cut thin slits. She looks up and away from the uniformed men in their ornately carved high-backed chairs. They are the ones who cover their face before the unknown photographer. A slump in her shoulders is her only concession to what she’d endured.

  Lula at his best transfixed a crowd, pulled emotional strings; abroad, he sold the song and dance of Brazil. Dilma lacked his charisma and his jogo de cintura, his political ability to weave, dodge, and flatter. Even as a candidate she seemed wooden, unable to forge a personal connection with her audience. But she scored high in the polls. This was in part because she was Lula’s protégé and would keep in place the social policies that had burnished his political halo, but also because she was seen as a wonk and a taskmaster, someone who could run Brazil more seriously, with less fanfare.

  Many voters were ready to welcome a president with a less . . . flexible nature. Lula would step out of office riding high on the population’s affection, but his administration had also engineered one of Brazil’s most sordid political corruption scandals. The affair involved Lula’s closest allies in an illegal campaign slush fund and a cash-for-congressional-votes scheme. Its nickname, mensalão, or the big monthly, came from the kickbacks of roughly twelve thousand dollars offered to smaller-party legislators in exchange for their cooperation.I

  The scandal broke in 2005 and reached the highest echelons of the Workers’ Party, tainting the head of Lula’s cabinet, José Dirceu; the party’s chairman, José Genoino; and its treasurer, Delúbio Soares. The media had a field day; the revelations featured scenes that seemed straight from a low-budget political thriller, including off-the-books payments in the Bahamas for the manager of Lula’s campaign and the arrest of an aide caught boarding an airplane with $100,000 in his underpants and another $100,000 in Brazilian money stuffed in a suitcase.

  That this far-reaching arrangement did not bring down the president was a tribute to Lula’s charisma, but also a recognition that Brazil’s Congress had been a dysfunctional cesspool of bribery and influence-peddling long before the mensalão came along.

  Arguably, a more important factor in Lula’s continued popularity was the economy.II Although his predecessor, Fernando Henrique Cardoso, had tamed inflation and brought stability to the country in the mid-1990s, substantial growth didn’t come until about a decade later, fueled in part by China’s increasing demand for Brazil’s biggest commodity exports. This poured money into Brazilian coffers and helped create jobs and goodwill. It also created the conditions for Lula’s real coup.

  “It’s cheap to take care of the poor,” Lula often said. The words rang of genuine concern or populism, depending on the audience. They were also true. Once in office, he set about making good on campaign promises to eradicate misery. His first program, Fome Zero, or Zero Hunger, was a bungled mess. But in 2003 he launched Bolsa Família, or Family Purse, a cash transfer program that gave small amounts of money directly to the country’s neediest. What he did essentially was unify a handful of existing programs, pump them with more funds, and give the money to the woman in the family. In exchange for the cash, recipients had to make sure the kids got their shots and went to school.

  This was a roaring success on many fronts. The program didn’t cost much: $10.5 billion, less than 0.5 percent of Brazil’s GDP, and about 2.7 percent of all government spending (in 2013 numbers). The outlays averaged just under $70 per household. These modest amounts made a world of difference to the recipients. More than two-thirds of beneficiaries also worked; 90 percent said the money went toward food. It was one of the factors buoying the expansion of Brazil’s middle class, which jumped from 66 million to 108 million within the decade.

  The program sent a powerful message. In a country with a history of neglecting its needy, Bolsa Família was a stalwart ally of the working mother, of the father suddenly out of a job, and a monthly reminder that the state cared. Soon its bright yellow card was a fixture across Brazil. Bolsa Família started off with 3.6 million recipients; by 2009, the end of Lula’s time in office, the number had quadrupled.

  Because it went straight from the federal government to the recipient, the funds bypassed the trapdoors of corruption and misuse that inevitably funneled away resources sent through local governments. It also became indelibly associated with the president’s image, and created a direct link between appreciative voters and Lula. Over time, Bolsa Família would become his biggest political asset, helping reelect him and then elect his successor.

  In 2010, while Lula campaigned next to Dilma, Brazil appeared to be on an unstoppable winning streak. It was a great year. GDP grew 7.5 percent, the highest in a quarter century. The infamous gap between rich and poor diminished faster than in just about any other country as real wages rose for all. Most extraordinary, income went up the most for the poorest.

  Brazilians wanted more of it. Dilma was elected the first female president of Brazil in October.

  When she took over on January 1, 2011, the country was giddy with possibility. The cash-transfer programs had banished hunger from many quarters, and unemployment had dwindled to a record low. When the economy needed a little hand during the worst of the global recession, policy makers lowered select sales taxes and the historically high interest rates. The country went on a collective shopping spree, spending what it had and putting the rest on brand-new credit cards. After a lifetime of very limited access to credit on all fronts, from credit cards to car loans to mortgages, Brazilians were discovering something Americans knew only too well: the joy of consuming now and paying, well, later.

  It worked. You couldn’t pick up the paper without reading about another consumption record. There were record car sales, which would go on year after year straight through the toughest belt-tightening in the United States and Europe; record numbers of first-time flyers, with 11 million Brazilians boarding a plane for the first time in 2010; and record amounts of cash spent on trips abroad. In 2010, Brazilians were the biggest spenders of all U.S. visitors, dropping an average of almost $5,000 per person per visit.

  In the customs line at the Rio airport I’d see couples weighed down by enough stuff to furnish a small apartment. I’d later learn this was, in fact, what they were doing. In 2010 nearly 1.2 million Brazilians flew to the United States—64 percent more than ten years previous. Altogether they dropped a whopping $5.9 billion on shiny mementos from America’s consumer paradise—things like iPods, MAC lipstick, Victoria’s Secret Gilded Pear Crème body lotion. They also brought home bigger-ticket items such as computers or high-end baby carriages, which could easily cost double in Brazil. If washing machines came with handles, they would have bought those, too. Travel agencies concocted tours that channeled these new tourists straight into outlet malls. Brazilians even bested their own waistlines. In 2010, 15 percent of the population
was obese, up from 11.4 percent in 2006.

  The newfound affluence was visible in the number of adults with metallic smiles, sporting the braces they could now afford, and in the proliferation of extravagant children’s birthday parties. When a coconut vendor in Ipanema tried to make change for me while conducting a loud argument with his wife about redoing their kitchen through the smartphone cradled against his shoulder, I knew something had really changed.

  This economic effervescence applied to real estate as well. New rules in 2005 made for more flexible lending by private and public banks, and many Brazilians could consider buying a house for the first time. The terms were still far from the American heyday of zero down and single-digit interest rates, but for those who had grown up in a country where buying a home was only for the wealthy who could pay up front and in cash, interest rates of 12 percent with 30 percent down looked like a fantastic deal.

  A popular housing program for the lower-income brackets—Minha Casa, Minha Vida, or “My Home, My Life”—offered rates of less than 5 percent, opening up the market to families that had been entirely excluded. In 2009, when the program was created, one million families were promised their own homes within a year.

  This didn’t feel like the housing bubble I’d seen in the United States. The Brazilian surge was based on pent-up demand for credit and housing from a burgeoning new class of consumers.

  This confidence was reflected in Rio.

  To head up the state’s finances, Governor Sérgio Cabral did as he’d done in public security; he chose in 2007 a chief economist with a technical background and a proven record instead of going with the business-as-usual approach of awarding choice positions to political supporters. His choice, Joaquim Levy, had served under President Lula and helped put the nation’s fiscal and financial house in order before moving to Washington, D.C., as vice president for finance and administration at the Inter-American Development Bank. Cabral’s offer drew him back to Rio.