Beware of the scaremongers

The beach at Copacabana in Rio de Janeiro.

The beach at Copacabana in Rio de Janeiro.

This column apppeared in Arab News on June 05, 2016:

By Rasheed Abou-Alsamh

Brazil is constantly being criticized by outsiders who love poking holes in the reputation of the country. With record unemployment, two digit annual inflation, the worst performing economy in the first semester of 2016, the ongoing impeachment of President Dilma Rousseff, and ongoing outbreaks of dengue and Zika viruses, there are plenty of negative things to criticize in the country.

But it is when exaggeration gets the best of people’s criticism that one cannot stand still and not rectify their wildly inaccurate utterances. Two recent pronouncements come to mind: One was a petition that was signed by 150 prominent doctors and scientists warning that the Rio Olympics in August had to be canceled or moved elsewhere because of the risk of the Zika virus being picked up by participants in the sporting event and then spreading the disease around the world. The other pronouncement was that the violence in Rio de Janeiro was so acute that foreigners should just stay away from the Olympics if they wanted to remain alive.

The signatories of the petition said that the Zika epidemic was very severe in Rio de Janeiro; that the disease was recently found to be more dangerous than previously thought, and that Rio’s public health infrastructure was already overwhelmed and would not be able to deal with the larger number of cases during the Olympics.

The World Health Organization did not agree with the dire warnings, saying, “Canceling or changing the location of the 2016 Olympics will not significantly alter the international spread of Zika virus.” It noted that Brazil was among 60 countries where the virus was present, and that there was no public health justification for postponing or canceling the games.

The worried doctors and scientists claim that the 500,000 foreign tourists expected at the Rio Olympics will be perfect carriers of the virus back to their home countries. But a Cambridge University professor disagreed in a BBC interview, saying that August is the coolest month in Rio due to it being winter in the Southern Hemisphere, which will consequently cause a decrease in the reproduction of the mosquitoes that transmit the virus.

While Rio de Janeiro has an unfortunate reputation of being violent and crime-ridden, the security situation has greatly improved over the past 10 years, with heavy police patrols in the tourist areas such as Copacabana. Even so, the International Business Times ran a scare-mongering story this week claiming that 41,000 deaths a year in Brazil are due to firearms, and that 21 cities out of a recent study of the 50 most violent cities in the world are in Brazil. These figures may be true, but it is also true that most of this violence is being done by poor people against other poor people.

To beef up security in Rio during the Olympics, the Brazilian government will be deploying 38,000 military personnel to patrol the most dangerous parts of the cities and an additional 47,000 security forces from the civil, military and federal police as well as Civil Defense and National Force members.

Brazil is not a paradise of non-violence and vibrant health, but it is not the hellhole that many foreign observers make it out to be. It would be a shame if their negative scaremongering manages to scare away tourists that are thinking of visiting Brazil during the Olympics or afterward. It is a beautiful and friendly country that deserves to be visited by as many foreigners as possible.

New budget is a breath of fresh air

A Saudi man at a gasoline station in Jeddah. (AFP photo)

A Saudi man at a gasoline station in Jeddah. (AFP photo)

This column appeared in Arab News on Jan. 03, 2016:

By Rasheed Abou-Alsamh

The new Saudi budget approved and announced last week by the Cabinet is a breath of fresh air in that it addresses the budget shortfalls in intelligent and must-needed ways.

Announcing an immediate 40 percent to 50 percent rise in fuel prices was something long overdue since we have had some of the cheapest gasoline in the world for many years. With the barrel of oil at less than $40 a barrel and our government spending needing at least a price of $90 a barrel to balance our accounts, something had to give.

Our electricity and water rates are also being readjusted upward starting Jan. 11. These rises are also long overdue. Our cheap water and power rates have meant that many Saudis have wasted both by leaving their lights and air-conditioning on the whole day, even when they were not home! This wastage of our resources is sinful and should be stopped. Hopefully, the rate rises will make those who are wasteful more appreciative of our resources, which are not infinite.

Those of us who have lived abroad and have paid much more for our utilities have learned the value of these utilities and have learned how to be thrifty, turning off lights when not using them and not leaving the tap running when shaving or washing the dishes. These are simple behavioral adjustments that any human being can learn.

The introduction of a value-added tax that the Kingdom along with other Gulf Cooperation Council states are planning to introduce perhaps by next year, is also a very good move to raise income for our respective governments. This obviously would be like a sales-tax added to the cost of services and goods, except for food and other essential items. The Kingdom is also going to raise taxes on tobacco and sugary drinks, which is excellent news. There are far too many young smokers in our country, fueled in part by very cheap cigarettes. In the UK and the US, cigarettes are taxed heavily in an official effort to discourage smoking. In New York City a pack of cigarettes can cost $15 because of the taxes. Can you imagine our youth having to pay SR56 for a single pack of cigarettes? Many would stop smoking overnight. Of course, I do not think our taxes on tobacco will initially be as high as that, but I do hope the tax is significant enough to make a sizeable portion of our population reconsider their smoking habits.

Some foreign commentators have been quick to ring the death knell for the Kingdom because of the new budget, calling it austerity-driven. Obviously these people are keen to rush to these conclusions because of ill-will toward us. But they seem to have forgotten that the country has more than $600 billion in foreign reserves, and that we have gone through low oil prices before in the early 1990s, when the barrel of oil hit a low of $20. We survived that and will, God willing, survive this downturn again.

The new budget for sure has seen come cutbacks in spending on the crucial education and health sectors, but nothing very drastic. I was looking at the budgets for our state universities and was surprised that so much was being allocated for each. King Saud University in Riyadh was allocated more than SR5 billion in the new budget, while King Abdulaziz University in Jeddah got more than SR4 billion. Quality education is expensive.

As good citizens we have to do our part to help our leaders balance the books. We cannot expect the state to keep giving us everything we need for free. This is unrealistic and will bankrupt any society that tries to do so. But we also cannot forget the poorer Saudis and the difficulties they will face with higher prices and the inflation that they are sure to bring. The government has assured the public that measures will be put into place to protect them. I hope they will be enough to protect the truly disadvantaged, and that those of us with the means pay our share of these new fees and taxes in order to make a better country for all Saudis.

Gasoline hits $7.30 a gallon in Brasilia!

AS you can see from this picture to the right, residents of Brasilia woke up this morning to yet another hike in gasoline prices. According to the Correio Braziliense newspaper some gas stations are already charging from R$3.02 a liter ($7.30 a gallon) for regular gasoline, to R$3.17 a liter ($7.66 a gallon) for “aditivada” gasoline.


Just four days ago I wrote that Petrobras’ distribution arm had promised not pass on additional costs to gas station owners given that the new crop of sugar cane was being processed all across the country. Petrobras blamed rising costs of gasoline on the high price of ethanol (made from sugar cane), that by federal law it must blend into all gasoline sold in Brazil. Obviously they cannot be trusted nor believed.

The Correio said that all gasoline stations across the Distrito Federal would be raising their gasoline prices above the R$3 a liter level by next week. With nearly 40 percent of the cost of a liter of gasoline going to federal and local taxes, both the federal and local governments could do something to ease the pain of motorists at the pump. Unfortunately for us, that is highly unlikely as neither wants to see a reduction in revenue that these gas taxes help rake in. Shame on them!

Brazilians in shock at gasoline prices: $7 a gallon!

GASOLINE prices rose again last week in Brasilia to an eye-watering R$2.94 a liter, or $1.85 a liter. In US gallon terms, that’s a whopping $7.03 a gallon, something that American drivers would never accept.

Here in Brazil, the public has grown accustomed to heavy government taxing of fuels, despite a government program started in the 1970s to use alcohol as fuel for cars in an effort to reduce dependence on petroleum products. All gasoline in Brazil has alcohol added to it, in a 75% gasoline to 25% alcohol mix, and most cars built here have flex engines that can run on either gasoline or alcohol.

Brazil has long touted its self-sufficiency in oil production, importing oil only occasionally to meet spikes in demand. Indeed, its recent find of offshore oil below a four-kilometer wide layer of salt in the seabed, has been heralded as a chance for the country to become an oil exporter.

In the meantime, however, greedy sugar cane growers have been busy exporting huge amounts of Brazil’s sugar and alcohol production because they realized they could get more money for them on the international market than at home. This has pushed local sugar prices to extremely high levels, with a 5-kilo package of refined sugar selling for R$10 ($6.30) in supermarkets. This also pushed alcohol prices for cars to R$2.84 a liter at the pump, making it uneconomical to use in flex cars. Alcohol burns faster in car engines than gasoline does, so to make it worthwhile for car owners to use alcohol as a fuel its price must be less than R$2 a liter.

The administration of President Dilma Rousseff has said that it intends to reclassify alcohol as a fuel so that it can regulate it better. Alcohol is currently classified as an “agricultural” product. It also said it was thinking of taxing sugar exports at R$4 a kilo as a possible emergency measure to force sugar cane growers to export less sugar. Incredibly, Petrobras, the national Brazilian oil company, was forced to import alcohol from the United States this year to mix in with the gasoline it sells in the country. By law all gasoline has to have at least 20% alcohol in it, so fuel distributors were blaming this requirement for the escalating price of gas at the pump.

The price of gasoline in Brasilia has already been hiked three times this year, and gasoline station owners had warned that prices would reach R$3.03 a liter this week. Thankfully, the main fuel distributor in the country, which is owned by Petrobras, announced today (19/04/2011) that it was not going to pass on another increase in gasoline prices to fuel station owners because the new crop of sugar cane has begun to be processed at sugar mills around the country, easing supplies that had been stretched because of record exports and the inter-crop period.

There are two solutions to ending the sky-high prices Brazilians pay for gasoline: Either take out the alcohol that is mixed in to it, or cut the hefty federal and state taxes that are levied on gasoline. According to the Syndicate of Fuel Station Owners of the Distrito Federal, 37.75 percent of the cost of a liter of gasoline sold here goes to taxes: 24.58 percent in local taxes and 13.17 percent in federal taxes. Cutting those taxes would certainly ease the pain at the pump that consumers are feeling, but I doubt that there is any political will to forgo this revenue either on the federal or local level. As for taking the alcohol out of the gasoline, a federal law would have to be amended to do so, which means that Congress would have to agree to this, which would take time and be politically-fraught.

Brazil needs to rethink its commitment to renewable sources of energy, such as alcohol, and make it a national priority it once was. The first step is reclassifying alcohol as a strategic fuel. Then they need to discourage sugar producers from exporting so much sugar and alcohol. Certainly, the strength of the national currency, the real, has to be reigned in by lowering the interest rate, which at 11.75% a year, is sucking in huge amounts of dollars from overseas, further weakening the exchange rate with the US dollar. Higher fuel and sugar prices are already pushing the inflation rate up, and Brazil is therefore not expected to contain inflation to the rates it predicted it would at the beginning of the year.

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