And that wasn’t the end of it. Once the company was up and running it came time to wrestle with another component of the “custo Brasil,” as investors referred to the hidden costs of functioning in the country. This was the labyrinthine tax system.
Brazil has one of the world’s highest tax burdens. It grew from 22 percent to 36 percent of its GDP over the last three decades, putting it on par with countries like the United Kingdom and Germany. The corresponding figure in the United States is 25 percent. Not only that, but the tax code is so complex that compliance requires firms to hire a cadre of dedicated specialists and takes companies an average of 2,600 hours per year. This puts the country dead last in a ranking of 185 countries produced by PricewaterhouseCoopers, the World Bank, and the International Finance Corporation. This was enough to give investors pause.
Still, the moment was such in Rio that there seemed to be no shortage of interest. There were new galleries, bars, restaurants, and boutiques. Downtown, old brothels were being turned into five-star hotels. In Ipanema and Leblon, new venues catered to the growing expat crowd and the newly traveled Cariocas who returned from their foreign trips looking for a taste of what they’d seen abroad.
One of these new places caught my eye—a little Mexican joint that opened in Ipanema soon after I got my apartment. It was stylish, with angular wood paneling, its handful of tables spilling onto the mosaic sidewalk. The first time I stepped in for a burrito and a margarita, the owner came over for a chat. Aglika, dark hair highlighting her alabaster complexion, had the fine features of a painted doll and liquid, emotive eyes.
The salt on the rim of the glass was Himalayan, she said. Later I’d find out the tortillas came from Texas and the peppers were packed into a shoe box and shipped to Miguel, the chef and Aglika’s husband, by his mother in Mexico. This kind of careful sourcing was something any New Yorker would recognize, but in Rio, it stood out. Across the street was a food-by-weight restaurant like so many others, with rice, beans, vegetables and meat; next door was a lanchonete, Brazilian fast food, with the traditional array of juice, cold mate tea, and the chewy cheese-bread called pão de queijo.
Back in the United States, Miguel had been a chef. Aglika was a concert pianist who’d garnered acclaim for an energetic style that belied her birdlike frame. He was from Mexico; she was Bulgarian. They met in Chicago and led a charmed life in a city that appreciated what they had to offer: she had a university position teaching music; he worked at a renowned restaurant.
But there was something that cut short many of their plans. Miguel had gone to the United States like so many immigrants, with lots of ideas and no papers. Those who knew his skills didn’t question his identification. But any time Aglika and Miguel contemplated a move or he thought of opening up his own place, there it was, chafing their progress.
In the United States they could open a restaurant under Aglika’s name, but that would be . . . Miguel paused, searched for a word. We were sitting in the restaurant after the lunch rush. The kitchen was under control, so he could take a break. English was his second language; Portuguese was now the third. Our conversation wove together these two and Spanish, as did the tables around us.
“Frustrating?” I offer. He accepted. “Yes, frustrating.” But it was more than that. I’d written about immigration in the United States and had seen too often how the lack of papers put a final period in lives where there should have been a new paragraph. Not having papers put a stop to his dream, any chef’s dream, of having his own restaurant.
One night, during a distinctively Chicago variety of snowstorm, they curled up on the couch to discuss their options. There was one the solution to their quandary: they’d leave the United States and move somewhere warm, somewhere up and coming, and open their own restaurant. Their first idea was Spain, but Aglika’s brother was already in Rio, doing well for himself renting furnished apartments to foreigners. He’d come in as a partner, offering them his knowledge of the location and business savvy.
Brazil has a generous immigration policy for those with cash to contribute. For a $300,000 investment in a business, anyone can get a visa and start a new life. Because it was Brazil, however, securing that visa took Miguel four months of visits to the Brazilian consulate in Mexico—“one more document, querido, one more copy, come back next week”—and a sit-down strike in which he refused to leave the building until the consul gave him that last required signature. But he got it and landed in Rio in October 2010. By January they had opened Azteka two blocks from Ipanema Beach, just in time to make a killing during Carnaval.
Miguel could pour his creativity into bringing to Rio authentic Mexican food with the flavors of his hometown, Acapulco. Beautiful Aglika circulated among the handful of tables that spread onto the Portuguese stone sidewalk, welcoming customers. The hole-in-the-wall was a hit. It wasn’t cheap, at fifteen dollars or so for a sandwich, but nothing in this new Rio was. Most evenings, chatter in various languages mingled in the warm breeze. Tourists, Cariocas, and journalists from the growing number of countries interested in Brazil gathered there for the food, the conversation and the people-watching.
There were hitches, of course. Miguel was used to working in an all-organic restaurant and Aglika was a nut about health, but in Rio they had to make do with organic greens purchased at twice or three times the price of conventional and organic chicken. As for the other meats . . . some weeks there was organic pork, but the source wasn’t reliable, so they had to give up.
Fitting in socially was easy, Miguel said. “Our cultures are very similar, Mexico and Brazil . . . very similar traditions, a way of being that is relaxed.” The hard part was the work, he said. Deliveries came on Brazilian time, meaning maybe this week, maybe the next, with seldom a phone call of warning; staff cycled through by the dozen before he found dependable waiters and kitchen help.
“I was used to working with professionalism, you know? This was the hardest part,” he said, talking about employees who failed to show, shipments of chicken that came late, or in which the supplier didn’t have the parts he ordered and simply delivered what was available. “I used to think maybe because we are foreigners they were different with us, but no, not really, this is the way. Maybe it is too relaxed.”
The rent was high and the place was small; their menu was limited to burritos, tortas, and tacos. But they knew they’d found a niche, and that Cariocas were open to what they had to offer. As I settled in, so did they. About 40 percent of new businesses in Brazil shut down within two years, crushed by the heavy load of laws, taxes, paperwork. But nearly three years after moving, they’d had a second child, a Carioca addition to their Mexican-Bulgarian-American mix, and were making plans to expand the restaurant, open up something more elaborate, with a real kitchen, furthering their bet on Rio.
The sense of opportunity and cost racing each other to the top that I had seen in Ipanema made me curious about how this was playing out across the city. In particular, I wanted to know what all this meant for the families living in Rio’s favelas.
These informal settlements were the only alternative for many families. Even during the economic boom of the previous decade, the population of Rio’s favelas had grown faster than of the city as a whole. How were those Cariocas managing within this mad real estate market? And what of the broader changes in the economy—were the rising cost of living and the better prospects noticed by the likes of Aglika and Miguel reaching Rio’s poorest residents?
I decided to start with Santa Marta. It had been the first community with a UPP and was now a showcase favela, the example of transformation displayed to important visitors. Madonna had stopped by, escorted by the governor himself. Alicia Keys had visited. This community would let me gauge how the working poor were managing in this burgeoning economy and would also give a sense of how this new security program impacted everyday life.
Santa Marta was a ten-minute taxi ride from the AP’s office. I go
t out across the street. The boxy, flat-roofed units were stacked against the vertiginous hillside in a tableau reminiscent of Mondrian, geometric and abstract. It was a small favela, contained on the right by the cable car line that took residents to the top and on the left by a brick wall nearly nine feet tall. At the very top was the UPP base.
I crossed the busy thoroughfare, passed the stand advertising community tours by local guides, and started the hike up along the Rua Marechal Francisco de Moura, where the favela meets the city. A for-sale sign in the window of a bare-bones building made me stop. I called on the spot. The asking price: $115,000. Here, too, it seemed real estate prices had lost their tether to reality. For that much you could find a modest home in any number of small towns across the United States, complete with your own little patch of lawn and a garage. In Rio it got you a basic two-bedroom apartment at the foot of a favela, with a view of a perennially congested road and officers strapped with semi-automatic weapons.
The road leading up was paved and wide enough for a car. Vendors crowded the shoulders with makeshift stands selling cell phone chargers, pork fritters, lacy underwear. A sign from a government agency advertised technical courses for electrical, plumbing, and metalwork. Farther up, a trailer without wheels played the part of a sports bar, its bulky TV blaring out a soccer game watched by patrons arranged around plastic tables cluttered with empties. Their eyes followed my progress without interest; visitors drew only the mildest curiosity these days.
I walked up the narrow alleys between homes that grew two, three, sometimes four stories high. It didn’t take long to catch the nauseating scent of sewage, and to see the gray water washing down an open trough. Overhead, entwined bundles of cables thicker than a man’s arm carried pirated electricity and cable TV up the hill. Water connections were also jerry-rigged, with PVC pipes snaking up, down, and around hurdles to feed the water tanks that squatted, heavy, atop the narrow buildings.
The tanks, blue or tan, were nearly always the same brand, Eternit; they were a precaution against the unreliable water delivery. I sounded out the name, giving it the sibilant Carioca pronunciation that turns t’s and d’s into soft fricative sounds—eh-ter-nee-tchy. Forever. Looking over the densely packed homes, built room by room as money was set aside for bricks, at the external pipes with their idiosyncratic paths, the gnarled wires drawing electricity from a friend of a friend down the way, it was clear that whatever improvements came with the police presence, much remained as it had always been, with the residents relying on their own ingenuity, their cobbled-together resources, and their network of connections to get even basic services.
Eventually I reached a small clearing ringed with businesses. Here, closer to the street, were the most solid homes, well-finished residences with plate-glass windows fitted into aluminum frames and air-conditioning units sprouting out the sides. A duo of Dutch artists had painted the houses in lollipop colors—bright orange, green, blue. Yes, it was better than the unadorned cement gray that streaked black during the rains, but to me it gave the place the artificial gaiety of an amusement park.
On that Friday afternoon the public square was easing into the weekend’s relaxed rhythms. Teenagers played Ping-Pong at a table in the middle of the plaza; smaller boys ran after a soccer ball in the outskirts, dribbling it through the table’s legs. A tiny kid flew a kite from a rooftop, its span wider than his ribby frame. The sound of children at play, the occasional yelp of a stray dog, a hidden rooster crowing from the heights, the din of distant stereos, the slap and drag of flip-flops as women, tired from the day, carried up groceries for dinner brought to mind the cozy, your-business-is-everybody’s-business feel of a small town.
A chattering crowd broke the peace and spilled out from the cavernous hall that opened up onto the square and housed Santa Marta’s samba group. I wedged myself in to see dozens of adults get their junior high and high school diplomas. This was the first graduation of a state education program brought to Santa Marta after the UPP.
A state official said his piece about the long neglect of communities like this, about society’s debt, but it was hard to hear. The stereo was turned up as loud as it would go, blaring a tinny, distorted rendition of Michael Jackson: “If they say why, why? Tell them that it’s human nature. . . .” Women sang along with abandon, free of any allegiance to the original lyrics or the English language. The courses were offered in Santa Marta, run with the help of residents, and held before or after work hours. This made it a big draw with mothers who had to squeeze in studies between their jobs and their kids, like Kátia Castro. After the simple ceremony, she beamed over her plastic cup of syrupy-sweet Guaraná, balancing her three-year-old on her hip and swaying to the music.
This was her story, but change a few details and it could be the tale of so many other women there that afternoon. Born in Santa Marta, Kátia had started work at fourteen, scrubbing other people’s homes for less than minimum wage. Then came kids, bills, a husband who left, more bills, more work . . . an avalanche that carried her along. She’d never had a chance to go back to school. Even now, she didn’t know what she’d do with the degree—get a job, but what job? She wasn’t sure. The broad smile ebbed for a moment. There was a break in the music. The speakers rattled with the bass line of a Carioca funk classic. Kátia shrugged off the heaviness of the questions and joined in the chorus: “Eu só quero ser feliz, andar tranquilamente na favela onde eu nasci. . . .” “I just want to be happy, walk peacefully in the favela where I was born. . . .”
Zé do Carmo took in the commotion from his barbershop. It was set at a prize spot in the square: against the back wall, with a commanding view of all that happened there and of anyone who climbed up the alleys. When Santa Marta was still in the hands of the Red Command, his regulars included the gang’s soldiers and the drug users who came up for a fix and stuck around for five-dollar trims. All he asked was that dealers not flash their weapons around the shop. It scared away customers.
Above all, Zé do Carmo, full name José do Carmo dos Santos, was a businessman.
When I said I wanted to talk about the economy in Santa Marta, he gestured at a stack of empty beer crates at the entrance of the one-room barbershop.
“Sit down, sit down!” he said, and opened the fridge that stood behind the single barber’s chair. “Beer, Coke, ice-cold water?”
Like so many favela residents, he’d come from the northeast, from the state of Ceará. He was two years old when the family settled in Santa Marta. At twelve he was working as a delivery boy. He dropped out of high school but learned as he worked, jumping from job to job, until he became a store manager for a French clothing brand. In 1996 he opened up his own barbershop.
Since then he’d done so well a newspaper columnist had dubbed him “O Eike de Santa Marta,” Eike from Santa Marta. Eike Batista was Brazil’s celebrity billionaire, a maverick whose companies all had an x in their name for their ability to multiply cash, he said. At the time, he was the wealthiest man in the country and eighth richest in the world. The barber considered the comparison a good omen. Like Eike, reputed to consult astrologers, Zé do Carmo was a superstitious man and always wore at least one yellow piece of clothing to attract money. He wouldn’t reveal the total he took home every month, to avoid the olho gordo, the evil eye of jealousy, but said if he were rich, he’d be on the beach.
“I still have a lot of hair to cut,” he said with a grin that split his nut-brown face and tilted up the ends of a wispy, pencil-sketch mustache.
The UPP and the upturn in Rio’s luck had been good for him. He was willing to give some examples: He’d nearly doubled the rent on the six houses he owned in the morro to $300. When business was brisk in the barbershop, he cleared more than $2,500 a month; and then there was the salon his wife, Mônica, ran just a few feet away. Unlike most entrepreneurs in favelas, who lived and worked informally, avoiding the maze of paperwork and taxes, he’d legalized his business and paid his
share.
“Things are good and improving,” he said. “We’re integrating with the city in a way I’ve never seen. My clientele used to include a lot of addicts. Now I even get tourists who come up here to see the community and take advantage of our prices for a haircut.”
A regular client came. Zé do Carmo continued to talk as he carved what looked like racing stripes into his close-cropped hair. The young man flicked his startling cat-yellow eyes at me in annoyance. He didn’t want his barber distracted.
I left Zé do Carmo to his work. A walk around the square showed other enterprises had also traded an existence at the margins for legality. The head of Santa Marta’s business association, Andréia Roberto, was having an end-of-the-day beer and poured me a glass as she pointed out the advantages of going legit: if you call for a truckload of beer, for example, the company has to bring it to your store. They can’t just dump it at the bottom of the hill, at the favela’s entrance, as they used to do when they knew locals couldn’t complain. The grocery a few yards away took credit cards, only possible for those registered with the state.
But her husband was not convinced. He ran a little bar on the square and had seen a lot of bills and bureaucracy since he registered with the state, without enough new customers to make up for it. He’d had to unplug one of his two refrigerators, he said, now that he paid for electricity, but he still had to deal with blackouts. You can complain, he told me, but that doesn’t mean they’ll fix it. It just means you have to pay.
Glancing farther up the hill, it was clear this new affluence wasn’t evenly spread. Above the square, up a cement stairway and deeper into Santa Marta, the homes were humbler. At the very top were frail shacks cobbled with wood and zinc, with sheets of plastic tacked to roofs and walls to keep out the rain. Along the way, alleys between houses narrowed and twisted, forming bottlenecks so tight the traffic was single-file. The air was hot and still within this maze, thick with frying garlic, Pine-Sol, and sewage. Around one bend I saw a woman resting her ample frame on a step outside her canary-yellow home. It was a bottom unit, the one closest to the slick granite; the inside was lit only by the blue, flickering glow of the TV set. The single room she shared with her six children had no windows.
Dancing With the Devil in the City of God: Rio De Janeiro on the Brink Page 11
