May 17, 2006

Sao Paulo Violence Exposes Brazil’s Shortcomings

By Terry Wade

SAO PAULO, Brazil (Reuters) - Deadly clashes in Sao Paulo between gangs and police in the past six days have exposed Brazil's deep social problems at time when Latin America's largest country is trying to assert itself as a global leader in business and politics.

President Luiz Inacio Lula da Silva says Brazil deserves a permanent seat on the U.N. Security Council and is the natural leader in South America. Economic planners see massive Brazil competing toe-to-toe with emerging powers like China and India.

From crime that breeds in the wide gaps between rich and poor, to overcrowded prisons and police with itchy trigger fingers who often shoot to kill, the violence has highlighted the domestic political challenges Brazil must overcome to attract long-term foreign investment and cement a role as a stabilizing force in the region.

"This (wave of violence) is certainly a factor that will impact negatively how foreign companies feel about locating factories and personnel in Sao Paulo," said Chris Garman, political analyst at the Eurasia Group in New York.

The violence, which has killed at least 137 people, was led by a powerful organized crime group born as a prison gang. The unrest has added to a cumulative feeling of insecurity in Brazil's business capital, which locals like to think of as a sophisticated global city.

Signs of insecurity abound in Sao Paulo, a metropolis of 20 million, the third-biggest city in the world. Rich people live behind walls topped with electrified wires and pay thousands of dollars to bulletproof their cars.

Usually, those precautions work and before the violence started on Friday police were taking credit for having cut the murder rate by 54 percent in the past seven years.

Still, the uprising showed police were largely failing to control a sophisticated organized crime group, the First Command of the Capital, or PCC.

It led some 70 prison rebellions and over 250 attacks on police stations, courts and public buses since last Friday.

The transfer of PCC chieftain Marcos Willians Herbas Camacho, nicknamed Marcola, and about 750 other prisoners to a remote high-security penitentiary triggered the violence.

Crime may emerge as a leading issue in the presidential election, to be held in October, and a Senate committee on Wednesday passed nine public security bills.

But analysts said it could take years for Brazil to erode the power of organized crime groups.

"With conditions as they are in Brazil -- both inside and outside of prison walls -- events like this are likely to be repeated," Texas-based consultancy Strategic Forecasting said this week about the violence in Sao Paulo.

(Additional reporting by Raymond Colitt)