By Sarah de Sainte Croix, Contributing Reporter
RIO DE JANEIRO – Today the organizing committee for the 2016 Olympic Games in Rio released a statement announcing that the cut in funding anticipated if the Ibsen amendment is passed will leave the state of Rio without the resources to do much of the necessary work to host the Olympic games, and would constitute a breach of the contract agreed upon with the International Olympic Committee (IOC).
The statement follows the decision last week by the Chamber of Deputies (Câmara) to approve an amendment to the law which will see royalties from oil production redistributed throughout the whole of Brazil instead of just being allocated to the state where the oil is produced.
According to the governor of Rio, the state will lose out on an estimated R$7 billion per year, and today the Olympic committee confirmed that the decision would have serious consequences for the 2016 games.
During the Olympic application process the Brazilian government laid out a series of promises which formed the basis of the bid, and it was upon these terms that the bid was won. The promise of guaranteed funding was integral in the IOC’s confidence in the Brazilian application.
The government, the state and the city are contractually obliged to honor these promises, but the cut in funding implied by the proposed redistribution of royalties would mean that the pot of money available to Rio state and city for investment in the games would be drastically reduced.
In today’s statement the organizing committee said, “The reduction in income from the exploration of oil will leave the state of Rio de Janeiro without the resources to undertake the work necessary for the Rio games in 2016. Any decision which affects the ability of state of Rio de Janeiro to uphold its various obligations will have a negative impact on the organization of the games and, if it is not resolved, will represent a breach of contract.”
The city has already begun to mark the changes brought by the Olympic win. Foreign investors were buying property in Rio within hours of the announcement and real estate prices inflated almost immediately. Work began within weeks on the conversion of Mauá Pier in Centro into a state-of-the-art leisure center and the new Ipanema subway station, inaugurated in December last year, marked the start of the planned improvements to the metro system.
In its statement today, the organizing committee for Rio expressed its confidence that the country’s legislative powers would take the contractual obligations agreed upon with the International Olympic Committee into account in their decision over the Ibsen amendment. But Rio’s governor, Sergio Cabral, is leaving nothing to chance.
Going to great efforts to garner support for his campaign against the amendment, he appeared on a TV show this morning imploring the public to join a protest rally in the city arranged for this Wednesday. But for now, just six months after the Olympic bid was won, a shadow of doubt has been cast over the future of the games.