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Rio says Olympics threatened by oil reform

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RIO DE JANEIRO (Reuters) - A proposed cut to Rio de Janeiro's share of Brazil's oil revenues has provoked a furious reaction in the beach-side city, with officials saying the change would jeopardize its ability to host the World Cup and the Olympic Games.

The head of Rio's Olympics organizing committee on Monday became the latest official to warn against an oil reform amendment approved by the lower house of Congress, saying a resulting funding shortage could leave the city unable to prepare for the 2016 Games.

"The reduction in revenues from oil exploration would leave the state of Rio de Janeiro without the conditions to complete the works needed for the 2016 Games," Carlos Arthur Nuzman said in a statement.

Nuzman, who also is head of the Brazilian Olympic Committee, added that a lack of funding could lead to a breach of Rio's contract with the International Olympic Committee, which awarded the city Latin America's first Olympics last October.

The approval of the amendment last week forcing Rio to share its oil riches with other states could cost the state about 7 billion reais ($4 billion) a year, officials say. State officials say the amendment would mean a cut of about 80 percent in Rio's share of future oil royalties.

full article:

http://ca.reuters.com/article/sportsNews/idCATRE62E4QJ20100315

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Wow.

Before this becomes a Rio bashing thread, can Brazilians tell us whether this could really have a large negative effect on Rio 2016, or is this Rio's state politicians using the Games (and world cup) as a pawn to get their own way?

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seems be a political reaction to press the brazilian senate not to approve the amendment. Anyway, according the article, Pres Lula has the right to veto.

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I hope he doesn't mind, but I thought it worth putting Dinhu4ever's detailed post in here, to save the confusion of having two threads:

A huge discussion has been going on in Brazil right now about the so-called "Ibsen Amendment", a proposition made by one of Brazil's congressmen to redistribute the money generated from the Oil production in the country. To sum it up, it means the oil-producing states (the biggest ones being Rio de Janeiro and Espírito Santo) would receive significantly less from all the oil they make. In Rio's case, the loss may add up to R$ 7,2 billion (around US$ 4 billion) each year. This value represents 12 to 15% of the total fundraising (I couldn't come up with a better word for arrecadação. "Revenue" doens't sound quite right in this situation) of Rio de Janeiro.

On March 10th, the lower house approved the project, much to the chagrin of Rio's government. Now, governor Sérgio Cabral and mayor Eduardo Paes initiated a campaign against the amendment, calling it a "lynching" against the state and saying that it may affect the World Cup and Olympics preparations. Paes instituted a Ponto Facultativo (sorry, I don't know how to say that in English, but it's baiscaly a day when companies allow you to miss work/school without being penalized for it) so that people can join an act of protest (schedueled to take place this wednesday) I believe they're calmer now, considering that Lula will most likely veto the project should it pass through the Upper House of Congress, but we can't be sure.

At first, Nuzman, Rio 2016 president, said that the Federal Government will cover any budget shortcommings we may face. However, it was published today on the official website a letter in which he states that the money being taken away from Rio is essencial and may seriously compromise the preparations leading to the Games. He recalled that in the host city contract and the organization of the Games is now a responsibility of the Brazilian State represented by it's three levels of Government. Should we not be able to keep up with our obligations, this would represent a breach of contract with the IOC.

This is, IMHO, the first real problem we're facing. What do you guys think?

Sources (all in portuguese):

Nuzman says everything is alright

Perda de royalties afetará jogos, diz Organização

Cabral reclama de Massacre contra o Rio

The letter on the Rio 2016 website

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I hope he doesn't mind, but I thought it worth putting Dinhu4ever's detailed post in here, to save the confusion of having two threads:

No problems with that, Rob! Thx for saving me the trouble ^^'

And even if it's not going to destroy our monetary funds, it'll be a harsh blow to them. Several key projects depend on the royalties. The depolution of the Guanabara Bay and the lake system in Rio (not the Rodrigo de Freitas Lagoon, it's a joint venture so it should be safe), for example. I do believe most of the OCOG budget will come from the Federal Government, but still, it's not reassuring to know that part of our revenue will be cut when we have so much to do. They couldn't think of a worse time to propose this.

As I said, what worries me the most is the whole breach of contract deal. What sort of mesures could the IOC make should this happen?

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Man, things are starting to get tragicomical.

Rio de Janeiro state governor even cried (yes, with tears) about that subject during a speech. You must remember him, the same one who said he would answer the questions in portuguese in the final presention because it's the language of his heart... :huh:

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Man, things are starting to get tragicomical.

Rio de Janeiro state governor even cried (yes, with tears) about that subject during a speech. You must remember him, the same one who said he would answer the questions in portuguese in the final presention because it's the language of his heart... :huh:

Now Nuzman, CEO of Rio 2016, entered in the political discussion saying that this amendment threaten Rio's plans.

Gosh, how I hate politics!!!!!!!!!!!!!!!!!!!!

Probably, if approved, Federal Govt. will pay all the olympics, but I think, this melancolic appeal will work and Lula will not sign the amendment.

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I suppose to an outsider it's hard to judge if it really is damaging or a risk to the games or not.

Sounds to me more like a classic and heated states/regional rights versus central government spat, and the olympics has become a popular and emotive political lobbying point to throw into the hue and cry.

Welcome to the Olympic host world, where the games become a political card in every debate over the next six plus years. There'll be bumpier moments ahead.

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This will probably end up being vetoed by President Lula, unless he leaves office before the bill lands on his desk.

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This will probably end up being vetoed by President Lula, unless he leaves office before the bill lands on his desk.

The project are under constitutional urgency, so the Senate Comissions' speakers have to presente their conclusions to the House in 45 days (at least I believe that's what it means). However, if they make changes to the original text, the project would have to go back to the Congress and be voted again. So, yeah. It may take a while.

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I suppose to an outsider it's hard to judge if it really is damaging or a risk to the games or not.

Sounds to me more like a classic and heated states/regional rights versus central government spat, and the olympics has become a popular and emotive political lobbying point to throw into the hue and cry.

Welcome to the Olympic host world, where the games become a political card in every debate over the next six plus years. There'll be bumpier moments ahead.

Yeah, perfect, Roltel!

The olympics and the world cup became a political card... And, as you know, Rio de Janeiro is a place loved and hated. So this debate started lots of hard discussion on Internet (those in GB are nothing compared to this). Even me fought the father of my wife because of this (He hates Rio without any reason).

The olympics are not in check, since the money will be there, and Federal Govt. is the major "sponsor" of the project, as you guys know.

Maybe some minor things are threaten, but the olympic will not suffer with this "royalties money law" inside Brazil.

And I agree, it will be long six years...

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Interesting development, I hope for Rio's sake that the issue is resolved. I am rooting for Rio 2016 to be as successful as it can be.

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Apparently, if the amendment is approved, Rio will fall from the 1st to the 22nd position in royalties share. Not a pretty scenario. And now the dispute is getting really petty, with the City Senate threatening to remove Ibsen Pinheiro's Pedro Ernesto Medal (the House's highest honor) and the State Senate have proposed a motion to make him a persona non grata in there! 35 State Senators have already co-signed the motion. This is getting quite out of hand. Tomorrow's manifestation is risking to become quite a circus. It'll be a tense time till the Upper House of Congress votes the projects. *sigh*

Oh, Rio2016 official site has published the Nuzman's letter in English. Here it is:

The Rio 2016 Olympic Games Organizing Committee addresses the public to clarify its position on the consequences of the approval, by the Chamber of Parliament, of a new model of the division of the income for the exploration of petroleum in national territory.

During the process of candidature, the Brazilian government presented a number of guarantees that were included as part of the contract signed with the International Olympic Committee and became one of the Brazilian State’s obligations, represented by the federal, state and municipal government, according to their specific constitutional competences.

The reduction of income for the exploration of petroleum will leave the state of Rio de Janeiro without the resources to do the necessary construction work for the Rio 2016 Games. Any decision that affects the capacity of the State of Rio de Janeiro to fulfill their many obligations has a negative impact on the organization of the games and, if it is not remedied, it will represent a breach in the contract.

The Rio 2016 Committee has complete confidence that the legislative powers will take these facts into consideration, avoiding that the country, in a return to the past, disobeys the obligations they took on.

The Rio 2016 Committee makes itself available to the governor Sérgio Cabral, to fight for Rio de Janeiro’s rights and for the reliable compliance with the obligations taken on in an international contract.

Carlos Arthur Nuzman

2016 Olympic Games Organizing Committee

President

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Rio's politicians are being quite drama-queens here, again they are playing the emotional card factor, but they won't give up on these Games.

I just don't know what the IOC must be thinking about all this stuff.

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Rio's politicians are being quite drama-queens here, again they are playing the emotional card factor, but they won't give up on these Games.

I just don't know what the IOC must be thinking about all this stuff.

It's way too early to hit the panic button. They're probably not impressed with the bad PR this will give Rio 2016 and the IOC and the Olympics, but beyond that I doubt they're hugely worried. They know as well as anyone that if Rio messes up, it's Brazil's reputation that takes a severe downward turn. I would think they're quite confident in their own minds that Brazil won't let that happen.

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Rio's politicians are being quite drama-queens here, again they are playing the emotional card factor, but they won't give up on these Games.

I just don't know what the IOC must be thinking about all this stuff.

http://globoesporte.globo.com/Esportes/Noticias/Olimpiadas/0,,MUL1531528-17698,00-COI+AFIRMA+ESTAR+CONFIANTE+DE+QUE+O+RIO+CUMPRIRA+SEUS+COMPROMISSOS+PARA.html

"IOC is not worried about games in Rio" said IOC Speaker Emmanuele Moreau, indeed she pointed: "The Federal Govt gave us guarantees for the games. The is a contract signed".

About the governor of Rio, Espirito Santos and Sao Paulo states, and other politicians, they are representing their interests since their states will lost funds.

The president of PDT (Democratic Work Party), Carlos Lupi, said PDT will vote for block the amendment in Senate.

PT (Workers Party, from president Lula) leader on senate, deputy Carlos Vaccarezza (from Sao Paulo state) already talked to Lula asking him to make a veto on the project. Other PT politicians thinks that the amendment is not constitutional...

I do think this amendment will not pass in the senate.

Interesting development, I hope for Rio's sake that the issue is resolved. I am rooting for Rio 2016 to be as successful as it can be.

Very good!!! We are all rooting for this...

But, there is one idiot (from Jabaquara, Sao Paulo) that always comes here when some "bad news" about Rio breaks the press...

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http://oglobo.globo.com/economia/mat/2010/03/16/senadores-de-estados-produtores-de-petroleo-querem-retirada-do-pedido-de-urgencia-916075074.asp

Rio, Espirito Santo and Sao Paulo senators will ask more time to discuss the proposal and postpones the vote in Federal Senate.

Indeed, the pre-salt main city and port was already chosen: Itaguaí, Rio de Janeiro.

Santos city and Sao Paulo made a huge lobby to put it in the Sao Paulo state, but they lost.

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This is called blackmailing. Sérgio Cabral is using the Olympic card in order to not lose the revenues. I don't think he needed to have thrown the biggest fit in our federative history - after all, the new revenue share is evidently inconstitutional - but he did. He shouted, cried, blackmailed and even threatened seeking independence from the federation. He'll be remembered as the biggest drama queen in the history of our Republic.

It's evident that the Senate will approve the law project. The Senators represent the States in the federation. It's like asking 26 states if they want to receive the oil revenues or if they want to leave them all to the state of Rio de Janeiro. Seriously, what do you think they'll choose?

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Well, that's an interisting development. Guess it makes sense, though. But I'm far from sold on the idea that the Union would give such a large part of its money just to cover the non-producing states and leave the producing ones with their original share of royalties.

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This is called blackmailing. Sérgio Cabral is using the Olympic card in order to not lose the revenues. I don't think he needed to have thrown the biggest fit in our federative history - after all, the new revenue share is evidently inconstitutional - but he did. He shouted, cried, blackmailed and even threatened seeking independence from the federation. He'll be remembered as the biggest drama queen in the history of our Republic.

It's evident that the Senate will approve the law project. The Senators represent the States in the federation. It's like asking 26 states if they want to receive the oil revenues or if they want to leave them all to the state of Rio de Janeiro. Seriously, what do you think they'll choose?

Don't think so, because parties have interests, specially in Rio de Janeiro and Sao Paulo. Now, the Northeast region is finding some oil in ocean (yesteday Petrobras announced Sergipe have lots of oil on the sea)...

This amendment represent the notorious opinion of South state people, not all Brazil.

I do think if, even, the amendment passes on senate, President Lula will make it's veto.

I'd like to show my opinion.

A 50/50 proposal could be a good thing.

50% of royalties stays in producers states and the other 50% are divided between the rest of Brazil.

It's a reasonable decision, since this money can really help many poor places in Brazil, and at the same time, help those cities that have issues to solve because of the exploration of oil in the sea.

And the change should be gradual, starting in 2017.

This is a reasonable project to me.

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This is called blackmailing. Sérgio Cabral is using the Olympic card in order to not lose the revenues. I don't think he needed to have thrown the biggest fit in our federative history - after all, the new revenue share is evidently inconstitutional - but he did. He shouted, cried, blackmailed and even threatened seeking independence from the federation. He'll be remembered as the biggest drama queen in the history of our Republic.

It's evident that the Senate will approve the law project. The Senators represent the States in the federation. It's like asking 26 states if they want to receive the oil revenues or if they want to leave them all to the state of Rio de Janeiro. Seriously, what do you think they'll choose?

Of course, I'm from Sao Paulo and I want part of this money for my state and my city.

The oil is in the Brazilian coast, all Brazilians must be benefited, and not just the cariocas. Jeez, it seems the world is not enough for them - they have the Olympics, one of the new wonders (Christ the Redeemer), probably they'll host the finals of the 2014 WC, Rio de Janeiro is our postcard to the world and now they want all the oil money to them - and then they ask why they're so much hated in this country :P :P

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As regards the Olympics themselves, the Federal Government is, by far, the biggest funder of the Olympics. And, in the Pan-Ams, the Government of the Rio de Janeiro State failed to honour their obligations so that the Federal Government pretty much paid the total bill. So it's not like the Olympics would be in total jeopardy in case the State of Rio de Janeiro had problems.

I'm not saying I agree with the project. It's crazy. The other states are using a law indefinition regarding the division of the sea resources between or federation entities in order to gang-rape Rio. The royalties from all the iron in Minas Gerais or from the biggest mine in the world of Carajás are not divided by other states, are they? But the HUGE reaction from Eduardo Paes and, specially, César Maia, is one of the mopst ridiculous things I've ever seen.

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The money is already for Rio de Janeiro and Espirito Santo (and in a future Sao Paulo), these states already produces oil in their shores and already receives royalties for this... The other states, specially those from South, that want to take it...

If the resources on the sea doesn't allow to Rio (Rio is not the only state to receive those...), so let's also share the royalties from Itaipu, a hydropower in the border of Brazil... The river starts in Minas Gerais state and it's not only property of Parana cities along the Itaipu Dam...

Ask any Parana's citizen if they agree with that.

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Of course, I'm from Sao Paulo and I want part of this money for my state and my city.

Ibirapuera, the São Paulo participation in the municipal and state fund distribution is ridiculously small. I may support this if I were from Bahia or Piauí, which will be heavily benefitted, but it's just naive for someone from SP to defend this point of view. After all, a large chunk of the pre-salt is in the São Paulo coast - and you're advocating to the division of its funds betwen all federative states.

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