Best of times … Worst of times … Rio-conomics
Syed Nasir Ershad
Today Usain Bolt rewrote the history by winning his third consecutive Olympics gold in 100 meters sprint. Beijing-London-Rio. Three continents, three countries, three cities. He bolted them all in the Olympic Games.
The Olympics have evolved dramatically since the first modern games were held in 1896. In the second half of the twentieth century, both the costs of hosting as well as the revenue produced by the spectacle grew rapidly, sparking controversy over the burdens being shouldered by host countries. A growing number of economists argue that both the short- and long-term benefits of hosting the games are at best exaggerated and at worst nonexistent, leaving many host countries with large debts and maintenance liabilities. Instead, many argue, the bidding and selection process should be reformed to incentivize realistic budget planning, increase transparency, and promote sustainable investments that serve the public interest.
As Rio de Janeiro struggled with rising crime, funding shortfalls, underequipped police forces and hospitals, and worries over the Zika virus, its 2016 Games have highlighted the debate over the costs and benefits of hosting such a mega-event. Brazil, the first South American country to host the Olympics, faced a number of additional challenges stemming from its precarious economic and political situation. Every Olympics since 1960 has gone over budget, and Rio 2016 was no exception. While the final tally is not yet in, costs are thought to have exceeded $20 billion, compared with an initial estimate of $14 billion.
Rio’s plan involved four clusters of stadiums and facilities, connected by new highways and rail lines. Many of these projects were over budget and behind schedule: the centerpiece subway extension had cost $1 billion more than expected and was much delayed to open just days before the games began. A month before the opening ceremonies, several stadiums remained half-finished.
The scramble to finish preparations came amid political chaos after the Brazilian President Dilma Rousseff was removed from office. The country has also been facing its worst recession in decades, with their national economy shrinking by 3.8 percent in 2015. The recession has contributed to a financial crisis in the Rio de Janeiro state government, which is responsible for police, hospitals, and other public services in the city of Rio. The state has already required a $900 million bailout from the federal government to cover the policing costs of the Olympics. The games will require some 85,000 security personnel, more than twice the number needed for London in 2012, with Rio’s violent crime rising sharply as gang warfare increased in the city’s favelas, as the city’s sprawling slums are known.
Health worries had placed an additional burden on Rio. As the Zika virus has spread rapidly throughout Brazil, a number of global health experts had warned that Rio’s health system was too severely weakened to effectively fight the disease, though the U.S. Centers for Disease Control and Prevention said that the Olympics was unlikely to contribute to its spread. Several high-profile athletes had withdrawn from the games, citing the Zika threat. The Brazilian government promised that two thousand extra health professionals would be made available for the games, but the state budget crisis led to Rio hospitals running out of medicine and basic supplies.
350,000 spectators from around the world have flocked to Rio for the Olympic Games. But many believe that’s not enough to pull Brazil out of the longest recession in its history. The Games have been estimated to cost Brazil less than the cost of the London 2012 and Sochi 2014 Olympics. But, it is still a lot for a country that has been in an economic recession since long. Local hotels and airlines are getting a boost from visitors during this time, but these short-time benefits are being overshadowed by larger issues. Unsold tickets, crime and environmental concerns have all plagued the games in Rio. Meanwhile, the impact of the Zika virus remains a wildcard, and the country’s president and political hierarchy have been in turbulence for months. One benefit to Rio is the addition of $7.1 billion in new infrastructure, which includes road and subway expansions as well as new sports complexes. There is hope that Brazil will have a boost in tourism in the years after the Olympics end. But Greece remains a cautionary tale after its economy collapsed following its hosting of the Games in 2004. Can Brazil get economic benefits in the long run from hosting the biggest show on earth? That is a question hovering around in the minds of many.