Brazil's Mega Events: Risks for International Businesses during the World Cup and Olympics.

Brazil International Business, Risks in Brazil, Brazil world cup, Brazil olympicsA special guest post by Global Security Consultant and Political Risk ExpertPaul Crespo. This is the fourth post in the series.

For ten years Brazil has been the darling of the emerging market countries: the “B” in BRIC (Brazil, Russia, India & China).  With annual growth rates of 5 percent, its stock markets often doubled year to year.  Brazil is hot. It will be hosting the World Cup next summer and the Olympics in 2016.

Recently however, many of the risks of doing business in Brazil have begun to dampen some of this enthusiasm. The economy has slowed considerably, and the summer’s mass protests that rocked dozens of cities across the country, reminded us that despite the tremendous potential, Brazil is still one of Latin America’s most dangerous places to do business.

Even before these protests, FTI Consulting had given Brazil a 4 on a five-point Latin American Public Security Index, with 5 being the most dangerous. That ranking placed Brazil on par with Bolivia, Colombia and El Salvador.

While recent police sweeps and crackdowns are having some positive effects, Brazil still has some of the highest crime rates in the region. In any given year, 25 out of every 100,000 Brazilians were victims of murder or attempted murder. This is actually one of the highest rates in the world; the United States has 5.6 murders or attempts per 100,000 per year. Brazil also has high rates of kidnapping, rape, and theft. Much of Brazil’s crime is related to the drug trade.

Mega Events: World Cup, Pope’s Visit and Olympics

The unexpected mass protests in June raised concerns about Brazil’s ability to manage security risks in general, but specifically for mega events like the World Cup and Olympics. Fortunately, the June riots coincided with the Confederations Cup, a smaller scale, dry-run for the 32-nation World Cup next year. The Confederations Cup was held in six cities and provided the government and security services a perfect opportunity to test and improve their systems.

Overall, considering the scale of the protests and other risks, there were no major incidents, and the event gave Brazil added security practice in dealing with civil unrest and major events.

In July, the Pope’s visit again challenged Brazil’s security services with a massive event, this time however with less positive results. The Catholic Church’s World Youth Day brought an estimated 3 million people onto Copacabana beach in Rio to see the Pope. This mega event highlighted numerous logistical and security issues.

Significantly, on the way to the city, the Pope’s vehicle took an unplanned turn, leaving him stuck in traffic and surrounded by excited crowds, placing the Pontiff, a head of state, at serious risk. The next day, the city’s creaking metro system lost power, leaving commuters stranded for several hours. These failures again raised concerns for next summer’s World Cup.

While no single World Cup match may be larger or more complicated than the papal visit, the sporting event will present different challenges since it will include numerous events taking place in 12 cities across a country roughly twice the size of the EU. Teams and fans will have to shuttle around the sprawling country on dangerous roads and dilapidated infrastructure. Brazil needs to dramatically improve things prior to next summer.

Massive Investment in Security

As noted by Flavie Halais, “Brazil has taken up the challenge with a $900-million investment in security forces from the federal government, as well as a slew of measures, from CCTV cameras to drone monitoring, to the spectacular “pacification” programs run by certain World Cup host cities to clear the favelas from drug gangs.”  This is clearly a good start.

Also helpful is Brazil’s SESGE (Extraordinary Secretariat for the Security of Big Events) the new government agency created in 2011 to coordinate security at mega events. According to SESGE, during the Confederations Cup, approximately 45,000 security personnel were deployed to the event’s six cities. These forces included 3,500 military police officers and a battalion of riot police with armored vehicles, bomb sniffing dogs, and sharpshooters.  Still, more needs to be done.

Terrorism

In the wake of the Boston Marathon attacks, Brazil is also preparing for the possibility of terrorism at these sporting events, something it has far less experience with. In addition to face recognition gear, drones and other high tech measures, Brazil has expanded its air defenses ahead of the World Cup to ward off the threat of an aerial terrorist attack during these sporting events.

During the Confederations Cup, the Brazilian Air Force enforced a 4-mile no-fly zone for five hours over the stadiums, patrolling overhead while the games were being played below, and it plans to do the same for the World Cup and Olympics.

For added help Brazil is bringing in a slew of private and government security advisors from the US, the UK, Australia, Spain, Israel and other countries to provide specialized expertise in counter-terrorism and mega-event security.

Conclusion

Time will tell if these enhanced measures will be totally successful, but at least all these mega events are making Brazil take security much more seriously, and providing much needed improvements in public safety. In the long run this can only be good for the country and for doing business in Brazil.

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Be sure to read the other posts in this series:

Surviving a Kidnapping: How Your International Business Should Respond

11 Ways to Avoid Getting Kidnapped While on Business Overseas

Political Risk Insurance: Why Your International Business Must Have It

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paul creso  international business Brazil, Brazil world cup, brazil olympicsPaul Crespo is a global security and political risk expert. A Senior Consultant with Trident Crisis Management Group, he has appeared on Fox News, CNN and other major TV news venues. He has varied experience in corporate security, kidnap and ransom negotiations, intelligence and diplomacy as well as military operations in hotspots from the Balkans to the Persian Gulf. A former officer in the US Marine Corps he was also assigned to the Defense Intelligence Agency (DIA) as a military attaché and posted to several US embassies overseas. Paul graduated from the Georgetown University School of Foreign Service, and has a Masters degree in War Studies from Kings College, University of London, and a Masters degree in International Relations from Cambridge University in the UK. Paul Crespo can be reached at pcrespo@tridentcmg.com

 

 

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