The persistence of flooding and rain, with a cyclone and frost, paints a picture in which, more than a month after the beginning of the biggest climate tragedy in the Brazilian southernmost state, Rio Grande do Sul, the end is still uncertain. The management of the disaster, however, is walking towards a new stage. With billions in funds in an election year, the reconstruction of the state of Rio Grande do Sul is already underway, but its course is still open to dispute.
“This is the drama of the moment we are living through,” sums up Tarson Núñez, political scientist, activist and researcher at the Observatory of the Metropolis in Rio Grande do Sul.
“Governments and the private sector already have the recipe and the tools in hand. They just need to get their hands on the money, which is already available,” says Núñez. “It's urgent that we, the academic and popular sectors, think about what we want from this reconstruction,” he argues.
In an initial estimate, the Rio Grande do Sul government mentioned BRL 19 billion (US$ 3,635 billion) to rebuild the state. Experts such as economist Luís Otávio Leal and consultant Claudio Frischtak told GZH, a local newspaper, that the figure would be even higher: between BRL 85 billion and BRL 90 billion (respectively, US$ 17,218 billion).
In its first package of measures, the Lula government (Workers’ Party) announced BRL 50.9 billion (US$ 9,738 billion) for Rio Grande do Sul, especially through low-interest credit lines and tax deferrals. In Congress, the president of the Senate, Rodrigo Pacheco (Social Democratic Party), is advocating the approval of a “war budget”, with loose fiscal rules.
“Disaster capitalism”
For Victor Marchezini, sociologist and professor at the Natural Disaster Monitoring and Alert Center (CEMADEN, in Portuguese), “disaster capitalism has manifested itself in Porto Alegre.”
Using a term coined by Canadian journalist Naomi Klein in her book The Shock Doctrine, Marchezini refers to private and public managers using shock experiences – such as catastrophes – to advance business opportunities in a way that would not be possible in normal situations.
In the case of Rio Grande do Sul, this option is seen in the hiring, by the government of Eduardo Leite (Brazilian Social Democracy Party), of US consulting firms such as Alvarez & Marsal (A&M) and McKinsey. For Núñez and Marchezini, this poses another problem besides benefiting private interests.
If reconstruction is guided by the logic of the market, he points out, the cities will deepen the development model that caused the tragedy in the first place. “It's always the way we occupy the territory that generates the consequences of what the rain is actually revealing,” Marchezini summarizes.
“The clouds didn't create the catastrophe,” says Tarson. “The rain might not have had such a huge impact if the fields of the Serra [escarpment] had not been flattened to plant soybeans, which reduced the vegetation cover, silted up the rivers, and made the water fall faster,” he explains. “A large part of the disaster resulted from an economic model that causes this process.”
“That's why reconstruction cannot be guided by the same political and economic groups that caused the degradation seen in recent years,” Marchezini worries.
With a team from the Federal University of São Carlos (UFSCar, in Portuguese), Victor visited places like Teresópolis (Rio de Janeiro state), Barreiros (Pernambuco state) and Ilhotas (Santa Catarina state) after climatic tragedies, in a research project that resulted in the book Abandonados nos Desastres (Abandoned in Disasters, in a rough translation). “We saw situations that we are seeing in Rio Grande do Sul happening very fast,” he says.
“The moment could be used to take advantage of large-scale federal resources to think about reconstruction from a new paradigm, centered on people and not profit,” observes Núñez, for whom “this is the fundamental question posed today."
“I fear that the drama of the situation will serve as a kind of smokescreen so that we don't discuss the ultimate causes of this calamity,” he warns.
McKinsey “spreading American capitalism”
Last Tuesday (28), the “cooperation agreement” between the state government and McKinsey & Company was published in the Official Gazette of Rio Grande do Sul. The consulting firm, founded in the US in 1929 and whose work can be seen in at least 60 countries, will “support” the government “in managing the crisis” caused by the “heavy rains”.
The company's actions, says the summary, will be “planning for the re-establishment of economic activities”, “identifying levers to support the productive sector” and “mapping sources of financial resources.” The work will be carried out for 60 days without payment. Then, it can be renewed, but it is unknown at what price.
In the book The Firm: The Inside Story of McKinsey, The World’s Most Controversial Management Consultancy, journalist Duff McDonald states that the company helped “companies and governments create and maintain many of the corporate behaviors that have shaped the world we live in.”
Becoming “an indispensable part” of high-level decisions, writes McDonald, McKinsey helped “invent what we see as American capitalism and spread it to every corner of the world.”
“Historically, clients have turned to McKinsey to help them solve problems. Over the decades, the consultancy has been responsible for advising on everything from mass layoffs to acquisitions and new business possibilities,” an article in Exame, a Brazilian magazine, explains.
The A&M privatization hurricane
Alvarez & Marsal was first hired by Porto Alegre's mayor, Sebastião Melo (Brazilian Democratic Movement). The services would have been offered voluntarily by Pedro Bortolotto, who was born in Porto Alegre and is currently one of the company's directors in Brazil. Asked about the choice, Melo justified it by saying “Because I can decide."
Four days later, Leite followed suit. The “donation of services free of charge” to the state government was signed on May 14, will last for 30 days and can be renewed.
Present in Brazil since 2004, A&M made headlines for having employed former judge Sergio Moro in 2020, after receiving BRL 65 million (over US$ 1,23 million) to judicially manage companies targeted by Operation Car Wash, which he led. The possible conflict of interest is being investigated by the General Accounting Office (TCU).
The company has already left its mark on the state of Rio Grande do Sul itself. Without a bidding process, it was hired to carry out a financial assessment of the Rio Grande do Sul Basic Sanitation Company (Corsan, in Portuguese). Shortly afterwards, it provided its services to Aegea Saneamento, which, for BRL 4.1 billion (around US$ 780,8 billion)l won the privatization of the former state-owned company.
But it is its work in New Orleans, in the United States, after 80% of the city of Louisiana was submerged by Hurricane Katrina in 2005, that is one of the main works on A&M's CV.
“Among those who saw an opportunity in the New Orleans flooding was Milton Friedman, the great guru of the movement for unfettered capitalism,” describes Naomi Klein in her book The Shock Doctrine.
“Friedman's radical idea was that, instead of spending part of the billions of dollars of reconstruction money remaking and improving the pre-existing public school system in New Orleans, the government should provide vouchers to families, which they could spend at private institutions – many of them for-profit ones – that would be subsidized by the state,” he says.
A&M followed to the letter. In 19 months, four public schools remained, and another 318 went into private administration. The 4,700 teachers who were members of the union, which was very active, were fired.
“The American Enterprise Institute, an organization affiliated with Friedman's thinking, expressed its enthusiasm because ‘Katrina had accomplished in one day what Louisiana education reformers had been trying to do for years’,” says Klein.
In 2014, the then-Democrat mayor of New Orleans, Ray Nagin, was sentenced to ten years in prison for fraud, bribery and money laundering during reconstruction. He had to return $585,000 to the public coffers.
“Today New Orleans has 200,000 fewer inhabitants than before the hurricane. The entire area of the city's historic district, inhabited by the Black and poor population, was rebuilt with a business model. Housing has become too expensive for its original inhabitants. The environment was gentrified,” describes Tarson Núñez.
“Porto Alegre flooded fundamentally because of a failure to maintain flood prevention equipment. Therefore, many areas were flooded,” points out the researcher from the Observatory of the Metropolis.
“However, for example, next to the Gremio arena [Gremio is a soccer team] there is a huge area of low-income housing whose houses the government couldn't remove because people living there got their right to the land through collective struggle. The real estate market has been eyeing these areas for years. Now, with the flooding and the destruction of the houses, what is A&M going to suggest?” asks Núñez.
Another consulting giant company working in the aftermath of the disaster in Rio Grande do Sul is the British firm Ernst & Young (EY). So far, however, no contracts have been made official by being published in the state’s Official Gazette.
In a statement, the company said it was “called in by the Government of the State of Rio Grande do Sul” and will “provide support in designing the strategy for raising and using the resources needed to promote the reconstruction of the state.” The consultancy, says EY, “will be carried out for four weeks, on a pro bono basis” from the signing of the contract, which is still to be approved. BdF contacted the other companies, but they did not respond by the time this news story was published.
“I find it ‘strange’ that a consultancy company is willing to work without being paid for its services. Look, like any company, they aim to grow and generate profits. They operate according to the logic of the market and act in the contractor's interests. These consultancies are not naïve,” says geographer Claudia Marcela Orduz Rojas.
Eduardo Leite's government told Brasil de Fato that “the nature of the partnership with the consultancy companies is the same as that with universities and academia. They are partners for the reconstruction of Rio Grande do Sul, who will provide support for carrying out the projects listed in the Rio Grande Plan."
Disaster capitalism in Brazil
“Everything happens very quickly and is intertwined because the shock doctrine ‘recipe," drawn up by American economist Milton Friedman, has already been tested several times,” Rojas explains.
In the disputes over the direction of disaster management, speed is one of the many aspects that give an advantage to sectors that are not, for example, coping with a submerged house, a contaminated body or a missing friend.
“The shock treatment allows for the gradual elimination of the public sphere (progressive privatization of strategic sectors), the guarantee of total freedom for corporations (which will see their income grow) and the maximum reduction in social spending. The proposal is so radical and harmful to most of the population that it can only be applied in exceptional situations,” Rojas said.
Claudia studied the collapse of the Samarco tailings dam (Vale / BHP Billiton), which killed 19 people in 2015 and dumped mineral waste into the Doce River Basin in the state of Minas Gerais. For her, this was the “first major experiment in disaster capitalism in Brazil”.
For her, it was only possible as a result of three shock therapies: first, the dam burst; second, an “ambitious neoliberal, anti-democratic and unpopular economic program” to repair the damage which, driven by corporations, opened up a market niche.; third, the imposition of collective torture mechanisms on those affected by the tragedy, to “reduce social spending” and “neutralize resistance”.
Asked what lessons the episode can offer on how to deal with the tragedy in Rio Grande do Sul, Rojas points out that “ private companies cannot lead the reparation and reconstruction processes."
“Emergencies, misery and vulnerable people have become the world’s most valuable commodities,” says the researcher. “Profiting from chaos, devastation, and misery seems to be the sole objective of the ‘disaster industry’, which has an unconditional ally: the state,” she says.
The Secretariat for Reconstruction of Rio Grande do Sul, created by Governor Eduardo Leite on May 17 and headed by Pedro Capeluppi, has four sub-secretariats. None of them deal with environmental issues or climate emergencies. They are Projects for reconstruction; Structuring projects; Partnerships and concessions; and Market intelligence.
For Victor Marchezini, a consequence of disaster capitalism that “maybe was inaugurated in Brazil by Rio Grande do Sul is that, although it mobilizes civil society to collect donations, it also becomes a source of money for celebrities who go to the scene of the disaster, gain followers, etc. Or even [spread] fake news, which engages their followers.”
Popular reaction and dispersal
Tarson Núnez saw the building where he lives in Porto Alegre surrounded by water for four days. “I was evacuated, but it wasn't in a Civil Defense boat or a Military Police boat. It was a volunteer boat,” he says.
“One element that this tragedy reveals is the enormous capacity for empathy, solidarity and popular self-organization in our society,” he points out. “It wasn't the state that organized the volunteers. They organized themselves, and the state joined in afterwards,” says Tarson.
In addition, in Núñez's view, the scenario strengthened environmental organizations and movements that “had been suffering setback after setback.” These include the Gaucho Association for the Protection of the Natural Environment (Agapan, in Portuguese), which couldn't prevent the Leite administration from changing 480 points of the state's environmental legislation.
It has also awakened “a sense of urgency to collaborate” among researchers and educational institutions: “The [climate] emergency has catalyzed a movement that had been dormant. People with intellectual and technical skills are now working to influence this debate,” says Tarson Núñez.
“Solidarity kitchens are amazing. They are saving thousands of people. But all these initiatives emerging from the bottom up quite solidly and with technical capacity are scattered. And they need to be unified,” says Tarson.
In Claudia Rojas' opinion, environmental tragedies will become increasingly frequent and thus “the next phase of disaster capitalism will become more complex and sophisticated.”
“The ‘disaster infrastructure’ will be available to anyone who can pay, at whatever price the market imposes. Everything will be for sale, from helicopter rescues to drinking water and beds in shelters. The disaster economy is not only growing but is widely assimilated by market dynamics. With every crisis, the bet on capital is doubled,” says Rojas.
That's why, says Rojas, “it's crucial to establish and strengthen a broad coalition of people, not corporations. It is essential to reframe the idea and meaning of wealth. It is vital to ensure that power and knowledge, whose purpose is to serve life, stop serving themselves.”
Edited by: Rodrigo Chagas
