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Rio: fit for the Olympics?

A mudslide kills many in a favela built on a dump in Rio. The election for Lula’s successor (unofficially) begins. Lula fails to budge on opposing Iran sanctions. Obama proposes to continue taxing Brazilian ethanol out of the U.S. market. James Cameron defends Amazon natives, and Apple fights over the iPad name.

 Top News: Unusually heavy rains for April turned disastrous in the Rio de Janeiro metropolitan area last week, bringing the city to a stop for a few days and resulting in over 225 deaths, mostly caused by mudslides toppling hillside slums.  The single biggest cause of death was in the Morro do Bumba, in neighboring Niteroi, where about fifty houses were buried and, to this point, 43 bodies have been recovered and one injured person has died; at least one hundred others are still missing.

Morro do Bumba was built on a former garbage dump, not only making rescue efforts dangerous but calling into question government policies that generally turn a blind eye to illegal building of the communities known as favelas, which because of Rio’s topography are often built on hills.  In the aftermath of the floods, critics pointed to a 2004 university study requested by the city that showed Morro do Bumba was at risk. Rio de Janeiro’s mayor, Eduardo Paes, ordered eight communities in his city evacuated, and the state government announced it would build 10,000 units of housing for the displaced. It was the second time since Rio won the 2016 Olympics that the city has been the focus of world-wide attention for a negative news story, the first being when a police helicopter was shot down in an area controlled by drug gangs.

The campaign leading to October’s presidential election, which does not officially get underway until July, is more or less underway, now that the “pre-candidates” have been required to leave their official government posts. The two favorites are Jose Serra, now-former governor of Sao Paulo, and Dilma Rousseff, now-former chief of staff (officially minister of the “civil house”) of President Luiz Inacio Lula da Silva.

They are currently in a statistical dead heat, according to polls. In Serra’s first major speech of his “pre-candidacy”, on April 10, he called for an end to divisions between the rich and the poor – not a surprise because his party, the PSDB, is less popular among the poor than Rousseff’s (and Lula’s) Workers Party.  At the same time, Rousseff appeared to be attempting to calm markets by declaring she would maintain Lula’s (and the prior president Fernando Henrique Cardoso’s) macroeconomic policies, an appeal to the business class who fears Rousseff is further to the left of Lula. A third candidate, environmentalist Marina Silva of the Green Party, is well-respected but has not gained much traction.

Lula traveled to Washington this week for the Nuclear Security Summit, just as Brazil and the United States were signing a new military cooperation agreement. But Folha de Sao Paulo reported in its print edition today that a last minute meeting between Lula, Obama and the Turkish prime minister failed to sway Obama’s call for sanctions against Iran; Brazil, a rotating member of the U.N. Security Council, has maintained warm relations with Iran, a major commercial partner, despite internal and external criticism. Miguel Jorge, Brazil’s minister of development, is currently visiting Tehran with Brazilian business leaders.  Next week, Lula will host the second meeting of leaders of Russia, China and India, the other so-called BRIC countries, in Brasilia.

Money: Brazil and the U.S. have reached a tentative agreement that will stave off Brazil’s planned World Trade Organization-approved retaliation for American cotton policies, as negotiations continue between the two countries. Brazil had threatened additional tariffs on over one hundred American imports if the United States did not reverse its policies by the end of March. Meanwhile, Obama’s proposed budget for 2011 seeks to maintain tariffs on ethanol imports and subsidies to American ethanol producers, which effectively prices Brazil, the world’s second-biggest ethanol producer after the U.S., out of American markets.

New numbers continue to show the growth of the Brazilian middle class during the recent world financial crisis.  So called “Class C” grew from 45 percent to 49 percent of the population in 2009, and the lower D and E classes shrunk 5 percent, in a study by Cetelem and Ipsos.  The study used the traditional measure of class in Brazil, which is not income per se but other measures like the possession of certain goods (cars, televisions, refrigerators) and the education level of the head of household. At the same time, average income for Class C also rose.

Brazilians are obsessed with inflation, which explains their highest-in-the-world real interest rates (despite significant reductions over the last year), so a first quarter figure of +2.06 percent, led by food prices, raised eyebrows. But vice-president Jose Alencar said the temporary change should not lead to increased interest rates.

Elsewhere: Avatar director James Cameron caused a stir, and landed on the front page of The New York Times, for his visit to the Amazon, during which he met with indigenous leaders and protested the planned Belo Monte dam, long a controversial project in Brazil that would flood tribal areas. (Bids for the dam’s construction will soon be taken.)

Governor Jose Arruda of the Federal District, i.e. Brasilia, was freed from prison as he awaits trial for charges of corruption but must remain in Brasilia; his month-long stay marked the first time a governor had been jailed for corruption charges in Brazilian history.

In Sao Paulo, a private educational institute was exposed for selling awards that placed schools and universities on a faux top-150 list in the name of the Ministry of Education.

And finally, Brazil has caught up with Europe and Japan in at least one important category: disputes over the word “iPad.” The arrival of Apple’s new toy to the country — at exorbitant prices that import taxes will undoubtedly require — has been delayed because Apple does not own rights to the product’s name here.