2016 Rio Olympics endangered by measure in Congress (News Feature)

By Diana Renee Mar 16, 2010, 2:12 GMT

Rio de Janeiro - The Brazilian Senate threatened to make the 2016 Olympics unfeasible if it approves a bill this week that the lower house of the Brazilian Congress has already passed.

If it passes in a scheduled Wednesday vote, the bill will deprive the budget of the state of Rio of around 4 billion dollars per year, the Games' organizing committee (CO-Rio) warned Monday in a statement.

CO-Rio slammed the planned constitutional reform that seeks to put an end to the royalties paid to oil-producing Brazilian states, and instead proposes that the money be distributed among the 27 units that make up the Brazilian federation.

'The reduction in income from the exploitation of oil will make the state of Rio de Janeiro unable to carry out the works necessary for the Rio 2016 Games,' the statement said.

Rio has been designated to host the first Olympics ever held in South America.

The royalties in question are among the warranties that Brazilian officials gave the International Olympic Committee (IOC) prior to the designation in October.

'During the bidding process, the Brazilian government fielded a set of warranties which went on to be part of the contract that has been signed with the IOC and became an obligation for the Brazilian state,' the statement noted.

CO-Rio said that any change in Rio de Janeiro's contribution would amount to 'breach of contract.'

'The Rio 2016 Committee has full confidence that the legislative powers will bear in mind those facts,' the statement said.

The state of Rio de Janeiro, where the Campos oilfield is located, is the source of around 80 per cent of the crude oil produced in Brazil, and the state received about 4 billion dollars in royalties last year.

Under current law, these royalties are intended to compensate the states in question for the environmental and socio-economic impact of oil drilling and related activities.

However, a bill put forward by centrist legislator Ibsen Pinheiro, which was passed last week by the lower house of Congress, would share these royalties among Brazil's 26 states and the Brasilia federal district.

The bill has yet to go through the Senate and, even if passed, it would have to be signed by Brazilian President Luiz Inacio Lula da Silva, who could still veto it.

Lula has been a very committed supporter of Rio's bid to host the Games.

However, few think that he would accept the political erosion of vetoing legislation some six months before the October general election in which voters will choose his successor.

'It is unlikely that the president will take a measure to benefit a few (oil-producing) states and which will be unpopular in around 20 others,' political analyst Lucia Hippolito said Monday.

Rio Governor Sergio Cabral and Mayor Eduardo Paes were organizing protests to convince the Senate to reject the bill, and they called a street demonstration for Wednesday.

'The amendment is unconstitutional, and I have no doubt that it will not progress, that the justice system will annul it, that President Lula will veto it,' Paes said.

If the measure does become law, the central government could still try to find alternatives to restore Rio's financial resources to keep Brazil's Olympic dream alive.