The reconstruction of destroyed infrastructure is already encountering difficulties with the controversial hiring of the company that brought chaos to New Orleans after Hurricane Katrina. Alvarez & Marsal is also seen as an arm of the US government, where dozens of former CIA and Department of Justice (DoJ) employees work.
As the number of people killed (147), missing (127), and impacted (more than 2 million) rises due to the more than 1,000 mm of intense rainfall that has fallen in the last two weeks in Rio Grande do Sul, Brazil’s southernmost border state on the border with Uruguay and Argentina, financial aid is arriving from other parts of the country and from abroad.
However, there is still no precise calculation of how much will be needed to rebuild around 450 towns and cities – 80% of the territory of Rio Grande do Sul – that were completely destroyed in the Brazilian state, which has an area equivalent to three times the size of the United Arab Emirates and has a Gross Domestic Product, based on the export of agricultural commodities, that is twice the GDP of Lebanon.
Brazil’s national government has already earmarked more than 12 billion dollars to rebuild the region, which is literally under water. Although the level of the rivers and lakes that cut through Rio Grande do Sul is slowly beginning to drop, weather forecasting agencies estimate that heavy rain, winds of more than 100 km per hour, and temperatures below 0°C will reach the state later this week. The water level of the lagoon surrounding the city of Porto Alegre, the capital of Rio Grande do Sul, has risen more than two meters beyond the flood limit.
The New Development Bank (NDB), which belongs to the BRICS+ group of countries, will also allocate another US$1.115 billion for Rio Grande do Sul’s recovery. The money will support the recovery of small and medium-sized businesses, environmental protection works, infrastructure, water, sewage treatment, disaster prevention, agricultural infrastructure and logistics, urban mobility, and water resources.
The announcement of the NDB’s aid was made on Tuesday by Dilma Rousseff, the current president of the bank and former president of Brazil, who was illegally deposed in 2016. The BRICS+ bloc of countries is originally made up of Brazil, Russia, India, China, and South Africa and, since January 2024, it expanded to include Egypt, Ethiopia, Saudi Arabia, the United Arab Emirates, and Iran.
The participation of the controversial Alvarez & Marsal
However, the future reconstruction of the state of Rio Grande do Sul – and especially that of the capital Porto Alegre, where rainwater covers more than half of the territory – is already facing serious difficulties.
The city of Porto Alegre – a city with about three times the population of Gaza – has for years neglected maintaining and expanding an efficient system of flood protection pumps and dikes. This system has protected the city for almost 50 years from flooding from the system of rivers and lagoons that surround the capital of Rio Grande do Sul, but it has been progressively phased out by successive governments – especially the current one.
According to a group of dozens of former employees of Porto Alegre’s public water and sanitation system, the hydroelectric power company, and university professors, who have publicly released documents proving the dismantling of the system of pumps and dikes, the agency has a deficit of 2,400 workers specialized in operating the system.
According to a group of dozens of former employees of Porto Alegre’s public water and sanitation system, the hydroelectric power company, and university professors, who have publicly released documents proving the dismantling of the system of pumps and dikes, the agency has a deficit of 2,400 specialized workers in the operation of the system.
“Last year (2023), when the system was activated, during the floods that began in the Taquari Valley and also inundated the Metropolitan Region (which has a population twice the size of Tripoli’s), the deficiencies in the floodgates were visible. They were easy to fix, but they weren’t. The pump houses themselves, as well as the raw water pumping stations, are flooded,” say the experts.
But since Wednesday 15, there has been enormous controversy over the choice of the US company Álvarez & Marsal to draw up a preliminary reconstruction plan for Porto Alegre free of charge for 30 days, as reported by Brazil’s largest daily newspaper Folha de Sao Paulo.
According to the Brazilian online newspaper GGN, Alvarez & Marsal has a controversial track record in crisis management, which has led to profound processes of withdrawing the state from the most basic functions of the economy, even in chaotic scenarios following extreme climatic phenomena, such as the one that flooded Porto Alegre in Brazil and devastated the city of New Orleans with Hurricane Katrina in 2005.
In the United States, city contracts with Alvarez & Marsal to restore public services easily exceeded 15 million dollars, decades ago. In addition to its high consulting bill, Alvarez & Marsal boasts achievements such as having paved the way for private enterprise by suggesting the privatization of public education in Saint Louis, Missouri; and firing 7,000 public education employees immediately after Hurricane Katrina in New Orleans, Louisiana. According to writer Kenneth J. Saltman, Alvarez & Marsal, self-proclaimed “turnaround specialists”, is said to have dismantled public services and pushed through privatizations”.
Alvarez & Marsal is also seen in the United States as a kind of arm of the US government, where dozens of former CIA and Department of Justice (DoJ) employees work. This is a system of hiring and firing known as a “revolving door”, according to which former employees of these public agencies are hired by private companies, without any official supervision, to bring to their new private employers the valuable information they gathered while working for US government agencies.
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