The Altamira water treatment plant is practically inactive because the sewer pipes installed 10 months ago in this city of 140,000 people have not been connected to the homes and businesses. Altamira is 50 km from the Belo Monte hydroelectric dam in Brazil’s Amazon jungle region. Credit. Mario Osava/IPS

By Mario Osava
ALTAMIRA, Brazil, Aug 31 2015 (IPS)

In the case of the Belo Monte hydroelectric dam in Brazil, the projects aimed at mitigating the social impacts have been delayed. But in other cases, infrastructure such as hospitals and water and sewage pipes could improve the image of the hydropower plants on Brazil’s Amazon rainforest rivers, turning them into a factor of effective local development.

Under construction since 2011 on the Xingú river, Belo Monte has dedicated an unprecedented amount of funds to compensating for the impacts of the dam, through its Basic Environmental Project (PBA), which has a budget of 900 million dollars at the current exchange rate.

To that is added a novel 140-million-dollar Sustainable Regional Development Plan (PDRS), aimed at driving public policies and improving the lives of the population of the dam’s area of influence, made up of 11 municipalities in the northern state of Pará.

These funds amount to 12.8 percent of the cost of the giant dam on the middle stretch of the Xingú river, one of the Amazon river’s major tributaries. If distributed per person, each one of the slightly more than 400,000 inhabitants of these 11 municipalities would receive 2,500 dollars.

But the funds invested by the company building the Belo Monte hydropower plant, Norte Energía, have not silenced the complaints and protests which, although they have come from small groups, undermine the claim that hydropower dams are the best energy solution for this electricity-hungry country.

“The slow pace at which the company carries out its compensatory actions is inverse to the speed at which it is building the hydropower plant,” complained the Altamira Defence Forum, an umbrella group of 22 organisations opposed to the dam.

The most visible delay has involved sanitation works in Altamira, the main city in the area surrounding the dam, home to one-third of the local population. Installed 10 months ago, the sewage and water pipes are not yet functioning, leaving the water and wastewater treatment plants partially idle.

The problem is that the pipes were not connected to the local homes and businesses, a task that has been caught up in stalled negotiations between Norte Energía, the city government and the Pará sanitation company, even after the company expressed a willingness to shoulder the costs.

“In addition, the storm drainage system was left out of the plans; the city government didn’t include it in the requirements and conditions set for the company,” the head of the Live, Produce and Preserve Foundation, João Batista Pereira, told IPS.

Part of one of the 18 big turbines that will generate electricity in the main Belo Monte plant, ready to be inserted into one of the big circular metal holes built in the giant dam in the Brazilian Amazon. Credit: Mario Osava/IPS

The lack of storm drains is especially destructive for cities in the Amazon rainforest, where torrential rains are frequent.

The works and services included in the PBA respond to requirements of the Brazilian Environment Institute, the national environmental authority. Incompliance with these requisites could supposedly bring work on the dam to a halt. But the rules are subject to flexible interpretations, as recent experience has shown.

Pereira is one of the leaders of the PDRS, a “democratic and participative” programme where decisions on investments are reached by an administrative committee made up of 15 members of society and 15 representatives of the municipal, state and national governments.

The projects can be proposed by any local organisation that operates in the four areas covered by the plan: land tenure regularisation and environmental affairs, infrastructure, sustainable production, and social inclusion.

In these areas and some projects that the company finances, such as the Cacauway chocolate factory that processes the growing local production of cacao, the PDRS is distinct from the PBA, which addresses the immediate needs of people affected by the dam, such as indigenous people, fisherpersons or families displaced by the reservoirs.

The PBA’s activities were defined by the environmental impact study produced by researchers prior to the dam concession tender. Hospitals and clinics were built or refurbished to compensate the municipalities for the rise in demand for health services, while 4,100 housing units were built for relocated families.

These are responses to the immediate needs of affected individuals, groups or institutions, without integral or lasting planning. The only one responsible for implementation is the company holding the concession, even though they involve tasks that pertain to the public sector.

“The confusion between public and private is natural,” José Anchieta, the director of socioenvironmental affairs in Norte Energía, told IPS.

The delay in compensatory programmes generated chaos, the Altamira Defence Forum complains. Many of the initiatives were supposed to be carried out prior to construction of the hydropower plant.

The hospitals and health clinics were not delivered by Norte Energía until now, when construction of the dam is winding down. But they were most needed two years ago, when the floating migrant worker population in the region peaked as a result of work on the dam. The same is true for schools and urban development works.

This mistiming led to serious problems for the local indigenous population. The institutions protecting this segment of the population were not strengthened. On the contrary, the local presence of the National Indigenous Foundation (FUNAI), the government agency in charge of indigenous affairs, was weakened during the construction of the dam, and the overall absence of the state was accentuated.

From 2010 to 2012 an “emergency plan” distributed processed foods and other goods to indigenous villages. This led to an abrupt change in habits, driving up child malnutrition and infant mortality among indigenous communities, which only recently began to be provided with housing, schools and equipment and inputs to enable them to return to agricultural production.

Bridge under construction on a road at the entrance to the city of Altamira, in Brazil’s Amazon region. The delay in building the bridge has hindered the reurbanisation of the low-lying parts of the city that will be partially flooded when the Belo Monte dam reservoir is filled. Credit: Mario Osava/IPS

The PBA and PDRS also have different timeframes. The former is to end before the reservoirs are filled, which is to be completed by the end of this year. The latter, meanwhile, involves a 20-year action plan.

The company’s social programmes are also “an important sphere of debate, definition of projects and redefinition of public policies, which should become permanent by being transformed into an institute or foundation,” said Pereira, defending “the adoption of their democratic administration by other development agencies.”

The question is of concern to Brazil’s National Economic and Social Development Bank (BNDES), which has financed 78 percent of the cost of the construction of Belo Monte.

Besides providing a team to accompany the PDRS, it promoted a study to organise its projects and ideas in an “initiatives file” and a Territorial Development Agenda (TDA) in the Xingú basin.

But this planning and promotion effort to bring about real development has come late, when it is difficult to neutralise the negative effects, which will stand in the way of the construction of new hydropower dams in the Amazon, even with the promise of a TDA.

Belo Monte has also highlighted the dilemmas and challenges of power generation, currently dramatised by severe drought in much of Brazil.

Belo Monte, which will be the second-largest hydropower plant in Brazil and the third-largest in the world, producing 11,233 MW, will aggravate the seasonal drop in hydropower in the second half of each year, once it becomes fully operational in 2019.

That is because the Xingú has the biggest seasonal variation in flow. From 19,816 cubic metres per second in April, the month with the strongest flow, it plummets to 1,065 cubic metres in September, the height of the dry season. This was the average between 1931 and 2003, according to the state-run Eletrobras, Latin America’s biggest power utility company.

There is probably no worse choice of river for building a run-of-the-river power station, whose reservoirs do not accumulate water for the dry months. Belo Monte will represent 12 percent of the country’s total hydropower generation, which means the effect of the plunge in electricity will be enormous, fuelling demand for energy from the dirtier and most costly thermal plants.

One alternative would have been a reservoir 2.5 times bigger, which would have flooded two indigenous territories – something that is banned by the constitution.

Another would have been the construction of four to six dams upstream, to regularise the water flow in the river, as projected by the original plan in the 1980s which was ruled out due to the outcry against it.

Edited by Estrella Gutiérrez

The BNDES building, left, is across the street from the headquarters of the state oil company Petrobras, overlooking the Avenida República do Chile in Rio de Janeiro. Credit: Mario Osava/IPS

By Mario Osava
RIO DE JANEIRO, Aug 8 2015 (IPS)

Brazil’s rush to build hydroelectric dams, refineries, railways, ports and other megaprojects since the last decade, not only at home but in other countries as well, has been fueled by the sheer volume of financing from its development bank.

The state development bank, BNDES, lent 187.8 billion reals (62.5 billion dollars) last year – more than one-third of which went towards infrastructure. For years the credits granted have broadly surpassed those of the World Bank, in terms of the annual totals.

Intelligence is needed to guide the direction of different sectors of the economy, nearly always obscured by the impressive sums, and it comes from the accumulated knowledge and know-how of the bank’s 2,881 employees, 85 percent of whom hold university degrees, and 11.4 percent of whom have graduate degrees.

“Since it was founded in 1952, the BNDES has been of strategic importance to Brazil,” economist Fernando Cardim de Carvalho, a retired Federal University of Rio de Janeiro professor, told IPS. “That hasn’t changed, in essence, and to some extent the bank is more important now than in the past.

“It survived many passing political fads, from (former president Juscelino) Kubitschek’s (1956-1961) developmentalism, to the authoritarian planning of (former president General Ernesto) Geisel (1974-1979) and the neoliberalism of (former president) Fernando Henrique Cardoso (1995-2002), who unsuccessfully tried to change its culture,” he said.

“With the gradual dismantling of the state apparatus for planning and intervention since the end of the (1964-1985) military regime, the BNDES became the last of the Mohicans, the only institution left capable of formulating economic policies in the country, although in relatively restricted fields,” Cardim de Carvalho said.

The Planning Ministry “was reduced to exercising oversight and control over the implementation of budgets, and in the process of erosion that demolished Brazil’s public sector, only two organs survived in the economic arena: the BNDES and the Central Bank,” said Cardim.

But the bank, although “essential” for financing infrastructure works, is no longer able to cover investment needs in Brazil, which require additional financing mechanisms, he added.

Its operations depend on the government, “which formulates more general strategies,” he said. That led to “a big mistake, which is not the responsibility of the bank but of the governments that decided to use it as an instrument of anti-cyclical policy,” the economist lamented.

His criticism focuses on the acceleration of projects financed by national treasury funds transferred to the bank, to sustain economic growth after the global economic crisis that broke out in 2008. “The bank exists to promote long-term objectives, that transform the productive system, and imposing on it other functions and financial dependency on the national coffers is a mistake,” he argued.

For his part, Mauricio Dias David, who worked in the BNDES until 2009, blamed loans granted to “many incoherent projects and white elephants,” like football stadiums built or remodeled for the 2014 World Cup, on “financing facilities” left without control because they were considered anti-cyclical.

In the past, when it was small, the bank was “creative and had a critical capacity that was lost with its growth and growing bureaucracy,” according to Dias David, who is now a professor of economy at the Rio de Janeiro State University. “But without that critical eye, badly-designed projects are approved, whose costs and even insolvencies will blow up in our faces in the future,” he told IPS.

A poor neighbourhood in the city of Altamira in the northern state of Pará on the banks of the Xingú River, which will be flooded when the Belo Monte hydroelectric dam’s reservoir is filled. The Amazon jungle city will suffer the biggest impact from the megaproject financed by the BNDES. Credit: Mario Osava/IPS

The development bank’s financing grew six-fold during the governments of the left-wing Workers Party (PT), first under former president Luiz Inácio Lula da Silva (2003-2011) and later under his successor President Dilma Rousseff.

In addition, the number of employees nearly doubled this century, and 35.8 percent are women. They are selected by means of public contests and they enjoy job stability.

The bank’s potential attracts graduates from the best universities, because it offers “the best job in a federal institution in Rio de Janeiro,” said BNDES presidential adviser Marcelo Miterhof.

The economist, who has worked for the BNDES for 13 years, said the employees gain know-how in the bank, in the analysis of projects and in communication with companies and people from different specialised areas.

“Our technicians don’t know more about specific areas, like energy or logistics, than specialised bodies or companies,” Miterhof told IPS. “But they gain a big picture, they systematise sectors, and they have the opportunity to learn about a lot of areas.”

There are also internal mechanisms, like seminars, discussion groups, or the “knowledge café” where experts from within or outside the bank speak on different issues, such as wind energy. The exchange of public employees with other government agencies also helps make the learning process continuous.

The bank’s employees and its “thinkers” are distributed in 20 areas, such as infrastructure, industry, foreign trade, and the environment, and the strategic planning and economic research departments.

The BNDES also publishes a quarterly magazine with articles from authors from within and outside the bank.

Miterhof clarifies that as a bank, the BNDES does not promote development on its own, but depends on the initiative and demands of its clients.

But sometimes it launches its own proposals, such as a programme to modernise the tax administration, which supports city governments in improving financial administration and citizen services.

Environment

The environmental dimension has gradually been incorporated into the bank’s activities. The BNDES started to work in cooperation with the environmental authorities in the 1970s. Later, a section was created “to support the assessment of internal bank projects and policies,” which was turned into a department in the 1990s and into an “area” in 2009.

Environmental issues thus have representatives in the committees that select loan requests and approve resolutions and guidelines, who join the representatives of other areas that dictate the way the bank is governed, the head of the Environment Department, José Guilherme Cardoso, told IPS.

After the 1992 United Nations Conference on Environment and Development, or Earth Summit, held in Rio de Janeiro, the bank stepped up its environmental actions. The BNDES manages, for example, the Amazon Fund, which finances projects in the rainforest and comes up with its own initiatives as well.

One example is the BNDES Ecological Restoration Programme, which channels funds into the recovery of vegetation in ecosystems such as the Mata Atlántica (Atlantic Forest along the east coast), the pampas in the south, and the central Cerrado savannah.

The environmental question has been extended to different departments and activities, like the Sustainability Committee and the Planning Area’s Socioenvironmental Management, thus cutting across all decision-making levels, from the selection of projects to be financed to the approval of resolutions on general guidelines.

The complexity of the inter-connnected issues has increasingly been recognised in the territorial development that the BNDES is trying to foment in the area of impact of the Belo Monte hydropower plant on the Xingú River in the Amazon jungle, involving the local population and governments.

It is an approach that seeks to overcome the serious conflicts generated by such a major infrastructure project as an 11,330-MW hydropower dam, one of the world’s biggest, in a poor region.

“The mobilisation of a well-organised civil society that participates intensely in the plenary meetings on the local development plan is impressive,” said Ana Maria Glória, of the BNDES planning area, which has taken part in the process with visits to the region.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

Brazil’s investments in Africa are steadily growing. The Odebrecht company leads the firms building the Cambambe hydropower complex on the Kwanza River in Angola. Credit: Mario Osava/IPS

By Fabiana Frayssinet
RIO DE JANEIRO, Sep 10 2013 (IPS)

The Brazilian government projects the cancellation of nearly 900 million dollars in debt owed by a dozen African countries as a gesture of solidarity. But others simply see an aim to expand the economic and political influence of South America’s powerhouse.

The decision by the left-wing government of Dilma Rousseff, which is now being studied by Congress, will especially benefit the Republic of Congo, which owes 350 million dollars, Tanzania (237 million), and Zambia (113 million).

The other beneficiaries are Ivory Coast, Gabon, Guinea-Bissau, Mauritania, Democratic Republic of Congo, Republic of Guinea, São Tomé and Príncipe, Senegal and Sudan.

The decision was described by Rousseff as a “two-way street that benefits both the African countries and Brazil.”

But it was not interpreted the same way by the opposition, and some lawmakers are seeking to block congressional approval.

Cases that have been called into question include those of Republic of Congo, Gabon and Sudan, which are facing international legal action for cases of corruption and even genocide.

Authorities in those countries are “corrupt figures who buy Louis Vuitton and Mercedes Benz luxury cars. Writing off the debt of governments that enjoy such privileges sends the wrong message,” said Senator José Agripino of the opposition Democratic Party.

A statement issued by Brazil’s foreign ministry says the forgiveness of the debt is based on the rules and principles of the Paris Club of rich creditor nations, aimed at easing the debt burden of poor countries.

The communiqué said the move was not just something that occurred to Brazil in a vacuum, but formed part of “an international practice with clear objectives to keep the debt burden from being an impediment to economic growth and anti-poverty efforts.”

In an interview with IPS, political scientist Williams Gonçalves at the Rio de Janeiro State University said the argument raised about dictatorships and “supposedly corrupt governments…has nothing to do with international relations.”

Gonçalves said the critics “were not scandalised” when the United States and other economic powers “protected and financed dictatorships in Latin America.”

“And today they are protecting similar regimes in the Middle East,” he said. “Nor are the defenders of human rights and democracy raising their voices.”

Brazil’s foreign policy defends respect for national sovereignty, Gonçalves said.

“Attaching political strings and interfering in local political systems is a common practice by the United States and other major powers,” he said. “Just as we don’t want anyone to meddle in our political life, we suppose others feel the same way.”

There are other aspects to the controversy.

Senator Alvaro Dias of the Brazilian Social Democracy Party mentioned the economic objectives.

Cancellation of the debt would reopen credit lines at Brazil’s National Economic and Social Development Bank (BNDES) and bolster the involvement of leading Brazilian business consortiums in the African countries in question.

Trade between Brazil and Africa climbed from five billion dollars in 2000 to 26.5 billion dollars in 2012, according to foreign ministry figures.

In Africa, Brazilian public and private enterprises have invested in sectors like oil, mining and major infrastructure works.

Marcelo Carreiro, a history professor at the Federal University of Rio de Janeiro, told IPS that Brazil’s Africa policy has “strategic objectives” such as “the extension of a strategic security area and the expansion of market access.”

That is reflected by the selection of countries, many of which are in West Africa, geographically across the ocean from Brazil’s impoverished but fast-growing Northeast, he said.

That could give rise to “the creation of a geostrategic Brazilian sphere in the south Atlantic, responsible for conceptually expanding this country’s frontier towards the African coast,” he said.

This would safeguard “not only its strategic pre-salt area (the ultra-deep oil reserves hidden under a thick layer of salt off the coast of Brazil) but also the vast extension of Atlantic coast, in a ‘mare brasiliensis’,” protecting this country from future access by enemies to its territory.

The history professor said “this new carving up of Africa” is indicated by the inclusion of “the only country on the planet governed by a leader facing genocide charges,” the president of Sudan, Omar al-Bashir, who is wanted by the International Criminal Court.

“Sudan is triply attractive for Brazil: it is rich in oil, in need of civil construction, and hungry for industrial and agricultural goods,” Carreiro said.

“It is possibly the most advantageous market in Africa, for the Brazilian economy,” he added.

Closer ties would bring additional advantages, such as support for Brazil’s aspirations to a permanent seat on the United Nations Security Council.

But Gonçalves is not shocked by this interpretation. “The forgiveness of the debts of small states by large economies is a common thing,” he said.

“The technical explanation for this cancellation is clearing the slate for those countries to pave the way for loans from the BNDES that favour the activities of large (Brazilian) companies,” he added.

But the political science expert does not see this as running counter to the principles of aid. “Solidarity and cooperation are carried out by means of loans and the implementation of projects,” he said.

“International economic relations occur under the capitalist system, which means the aim is always profit,” he said.

But the analyst believes that unlike other kinds of aid, “these projects will be carried out under financial conditions and with social objectives that do not awaken the interest of the big industrialised economies.”

Investments by South America’s giant also reach Africa through the Brazilian Cooperation Agency (ABC), with a total of 50 million dollars in projects in agriculture, health and education in 2010.

Carreiro pointed out that shortly before the debt cancellation plan was announced in May, the Rousseff administration reported that ABC would be overhauled, and its aid would be increased by 300 million dollars, mainly for Africa.

“But that was apparently seen as too little, and Rousseff decided to speed up the decision, directly buying influence in key countries in Africa,” he said.

“Earmarking 300 million dollars for cooperation projects and writing off some 900 million dollars in debt for corrupt governments are two contradictory practices in a chaotic foreign policy,” Carreiro said.

A 2012 study by the Don Cabral Foundation showed that Brazil’s presence in Africa was growing, with 34 Brazilian multinational corporations operating in the continent. In the view of 44 percent of the companies surveyed, the government’s foreign policy over the last decade has fuelled expanding international involvement by Brazilian firms.