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Next-level India: the secrets of Sikkim

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Mention you’re going to Sikkim and questions of geography and ontology arise: where exactly is it? And what is it? While Sikkim is in India, it’s not of India. It thumbs into Tibet to the north, borders Bhutan to the east and Nepal to the west. Cultures, people and languages have bled into it for centuries: before its annexation by India in 1975, it was an independent Buddhist kingdom, a utopian Shangri-La ruled by a king, Thondup Namgyal, descended from a royal family of Tibetan origin, and his American queen, Hope Cooke.

All of which is to say, Sikkim is a highly singular spot, a place of steep-sided hills, valleys threaded with rivers, monasteries, tumbling waterfalls and one of the Himalayas’ most storied peaks, Kanchenjunga. The way to do it is with Shakti, Jamshyd Sethna’s superb travel outfit, which offers intimate, low-impact, high-charm walking tours of some of India’s most spectacular locations. Converted village houses are linked by foot trails (and sometimes by car, but wherever possible the company avoids road travel). Each day’s walk is measured to your own abilities, encompassing a long up-and-down hike, or a more relaxed meander. The emphasis is on immersion and a spoiling simplicity and authenticity in all things, from food to accommodation.

The mother of the owner of Shakti Hee House in the Hee House Prayer Room
The mother of the owner of Shakti Hee House in the Hee House Prayer Room © Gentl & Hyers/Shakti Himalaya

Sikkim is hill country by definition. The drive to Hatti Dunga, our first village sojourn, leads upward, the car making endless switchbacks, lights twinkling from far slopes. Our guide for the week, Pujan Rai, throws out Sikkim factlets as we drive: this is the first state in India labelled “organic”, since no one uses fertilisers on their soil. Almost 50 per cent is forest. Its residents include wild boar, black bears, clouded leopards and red pandas. The former queen, Hope Cooke, now lives in Brooklyn.

Rinchenpong, one of Sikkim’s many monasteries
Rinchenpong, one of Sikkim’s many monasteries © Gentl & Hyers/Shakti Himalaya

Our base for the next few nights is a traditional tin-roof house set in a terraced garden of banana palms and marigolds, from which the steeply folded hills undulate all the way to where Kanchenjunga’s peaks crumple the horizon. Walls are painted green-blue, and wood beams picked out in grey. Our room – my husband and I are the only people staying – is cosy and comfortable, the work of British interior designer Eleanor Stanton. With an enormous bed, rattan lightshades, a marriage chest for a coffee table, original floorboards and a wood burner, everything is stylish yet appropriate to the setting. 

Breakfast the next morning – fruit, granola, vegetable curry and flatbreads – is taken on the lawn, clouds snagging on the peaks above, the noise of birdsong, a radio, dogs barking. Afterwards we walk with Pujan through the village as he points out beehives fashioned from hollow tree trunks and ginger and cardamom plantations. We enter a forest of chestnut, alder and fig trees, following paths that botanist Joseph Dalton Hooker trod in the 1840s while making cuttings of herbs, tree ferns and wild orchids to transport back to Kew.

Traditional food, made from butter beans, watercress, peas, potatoes, rice and pickles
Traditional food, made from butter beans, watercress, peas, potatoes, rice and pickles © Gentl & Hyers/Shakti Himalaya
A novice monk at Rinchenpong monastery
A novice monk at Rinchenpong monastery © Gentl & Hyers/Shakti Himalaya

This is an inhabited landscape. We tramp through small settlements, each house built on shelves of terrain a few metres wide. The terraces are neat, the livestock plentiful: cows beneath tin shelters, chickens scratching the dirt. Men and women in gold wellies (a distinctly Sikkim trend) tend the crops. In spotlessly swept yards, kittens pounce at butterflies while little boys play cricket with a ball attached to a string (a precaution against its bouncing off forever down the near-vertical slopes). There are no roads, no cars, no other tourists. Each step delivers us deeper into ways of life untouched by modernity.

At a lookout above flapping prayer flags, a table has been set out for lunch: caramelised onion tart, roast pumpkin and breaded chicken. (Lunch on the hoof comprises western fare, while dinner is delicious Indian-Nepali dishes of chicken curry served with green-pea chapatis, mustard-leaf rolls and carrots with pine nuts – ingredients picked that day and cooked by Nepali chef Tikkabadur Gurung, who travels with guests, along with a staff of four, between the houses.) Through the drifting mist, we spy a river, cataract-grey, and in the valley below, a distant road like a postcard from a different world. At the house, a yoga teacher awaits to stretch out our tight limbs.

Homemade pickles created from bamboo shoots, radishes and tree tomatoes – dinner while exploring Sikkim with Shakti is Indian-Nepali fare
Homemade pickles created from bamboo shoots, radishes and tree tomatoes – dinner while exploring Sikkim with Shakti is Indian-Nepali fare © Gentl & Hyers/Shakti Himalaya

I wake at 2.30am to hear chanting and a horn blowing outside the house. “It’s a man who comes around the village at night to ward off evil spirits,” Rai explains the following morning. This is the sort of magic Shakti seems to conjure at will. “Did you hear the horn? It’s made of the thigh bone of a young girl.” Poor girl, I say. “No, Ma’am,” Rai deadpans. “They don’t go out killing young women for their thigh bones.”

Prayer flags seen from Singshore Bridge
Prayer flags seen from Singshore Bridge © Arvind Hoon
A Cymbidium Etabarlo orchid at Shakti Radhu Khandu
A Cymbidium Etabarlo orchid at Shakti Radhu Khandu © Gentl & Hyers/Shakti Himalaya

Culturally, Sikkim leans Buddhist, its rulers were Tibetan; historical links point northwards rather than to the south. Consequently, quite a few Tibetan monasteries nest in these hills. In an effort to further our understanding of the area, Shakti has asked a Tibetan monk to accompany us over the next couple of days. Pempa Sherpa, a monk from Sikkim’s capital, Gangtok, tags along when we visit nearby Rinchenpong monastery, where novice monks, musty with sleep, conduct morning prayers, the deep baritone of their chanting vibrating through our bodies. It’s a strange cacophony of chanting, crashing cymbals, drums and horns – what I imagine a mountain would sound like if it had to conjure itself into noise.

Pempa Sherpa is twinkly-eyed, with an appealing high giggle. Rai calls him Champola, an honorary term that he shortens to Champo. We are as nervous of him as he is of us. There is a kind of ambient spiritual atmosphere that monks seem to carry about them like personal weather. It can be hard to get your head around: or at least, to know how to communicate with it. Are we speaking to a monk, a higher spiritual being or a man?


Turns out it’s a little of all three. Champola tells us that he meditated in isolation for three years, three months, three weeks, three days, three hours, three minutes and three seconds to attain his current status. The mind boggles. How does time function in isolation? How does the mind adapt? (His answers are lovely: the first three or four months were really boring. He missed his family. But soon he settled into the rhythm of the days and when it was time to go, he was heartbroken to leave. “Three years is nothing,” he says.) I peek at the screensaver on his iPhone. It’s a picture of Champola bare-chested, in a swimming cap, sitting at the edge of a pool. His wife, he tells me, is training in hotel management.

The next village house at Hee has a spectacular view of Kangchenjunga, Rai promises. We have to take his word for it since the mountains are hiding behind thick cloud. No matter. The way to Hee is another spectacular trek along forested paths once used by Tibetan traders guiding tinkling mule trains. It leads us up to an ancient monastery, the prayer wheel broken open to expose the palimpsest of prayers tightly packed within. “Dragonflies were our helicopters as kids,” says Rai. “We would tie a string around their tails and run with them.”

An incense burner at Rinchenpong monastery
An incense burner at Rinchenpong monastery © Gentl & Hyers/Shakti Himalaya

The house at Hee is a traditional, two-roomed Bhutia construction of brick, wood and tin roof, surrounded by a cardamom crop, with views (so I’m told) directly onto Kangchenjunga. We’re greeted with ginger tea and hot towels and homemade cookies. More cosiness awaits in our room, which is wood-panelled, with a window seat, olive-green walls, Bhutia textiles in muted hues, a log burner and a work of contemporary art in complementary, muddy tones. From the window it’s as if a white cloth has been raised into the sky and pinned there, against which each green leaf glows with otherworldly brightness. A wraparound verandah leads to a dusky family altar where we have an evening meditation with Champola. “Think only of your awareness, of the present moment,” he instructs. “If your mind wanders, send in the police to bring it back to awareness.” I like this benevolent version of the thought police.

We cross into a red-panda sanctuary, following paths maintained by Shakti. (Sightings are rare, however; they prefer the sanctuary’s higher reaches.) It’s a day before Diwali festivities commence, and the families in the Hindu villages are busy painting their houses. There are flycatchers on a telephone wire, whistling thrushes and Himalayan bulbuls chattering in the trees. We cross a river in torrent, leeches clinging to our ankles, and lope through outrageously lush jungle, everything green and dripping, clouds webbing the ridge overhead. All around us is the high buzz of cicadas and frogs and the noise of rushing water. India, Rai informs us, has 1,400 species of butterfly, of which almost 700 can be found in Sikkim. They rise with our footfall like confetti in reverse.

A rhododendron near one of Shakti’s picnic spots
A rhododendron near one of Shakti’s picnic spots © Gentl & Hyers/Shakti Himalaya
Changey Falls on the route from Shakti Hee House to the monastery
Changey Falls on the route from Shakti Hee House to the monastery © Arvind Hoon

Our last village accommodation is Radhu Kandu, all bleached Farrow & Ball hues, and very pleasing to the eye. Our room is in a tin-roofed bungalow perched above a dining room and covered drinks terrace, which are suspended at the edge of a cliff above the tree canopy. We forgo the afternoon walk (according to my phone we’ve already taken 18,163 steps, which seems more than enough) to stay reading beside the log burner in our room, while the mist drifts outside, muffling the noises of dogs and children returning from school. This might be my favourite house – the bedroom has a separate living area with rattan sofas, rugs woven with silver thread and an enormous bathroom.

Supper that night in the panelled dining room is Sikkimese: butterbeans, bottleneck fern, a chicken thali, rain tapping overhead on the corrugated roof. While neighbouring Bhutan might have stolen the limelight, and the patronage of luxury hotel brands, Shakti’s proposal in Sikkim seems to offer something unique: a slower, more humble experience that chimes with the Buddhist values of this jewel of a kingdom; a generosity of place and space and time. And a vivid awareness of the present moment. In other words, a form of rare enlightenment.

Charlotte Sinclair travelled as guest of Shakti, which offers five nights at Shakti Sikkim (season runs from 1 October-20 April) from $4,636 per person, based on two travelling and including private accommodation in village houses, all meals and beverages, activities, an English-speaking guide, private chef, support guide and porters, car at disposal and return transfers between Bagdogra and village houses. Flights not included



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Emerging Markets

State digital currencies: defence of the realm

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You thought cryptocurrencies were disruptive? Wholesale adoption of digital euros issued by the European Central Bank could force it to step in to bolster banks in an extreme scenario wargamed by analysts at Mediobanca.

Managing retail flows of money has historically been fiddly. Central bankers largely outsourced the job to banks owned by stockholders. As the use of cash declines and technology advances, digital currencies could enable central banks to dispense with some of these middlemen.

The EU would be more likely to press ahead with a digital euro, which it is in the early stages of considering, for strategic reasons. One of these would be to challenge what a French politician described as the US dollar’s “exorbitant privilege”. Another would be to forestall substitution of euros by cryptocurrencies or rival central bank digital currencies (CBDCs).

The People’s Bank of China has taken an early lead. Payments of digital renminbi are already being made in selected cities via smartphones. After next year’s planned launch for retail payments, the next step would be cross-border trade payments.

Current plans for the digital euro would limit its use to retail payments. If interest rates stayed negative or very low, digital euros held directly with the ECB could drain the deposit accounts that help fund lending. Mediobanca analysts led by Andrea Filtri estimate that if eurozone households and non-financial corporations each held a capped amount of €3,000, almost €1tn would switch.

This would increase funding costs only modestly. But if households and businesses moved the bulk of their deposits in a crisis, costs would balloon. The prospect of market disruption and a collapse in profits would force the ECB to step in to support banks.

Conspiracy theorists may find validation for fears of a European superstate in such wargaming. In reality, central bankers must be equally scared of scenarios that lumber them with such responsibility. But if cryptocurrencies show any signs of supplanting fiat money, you can be sure that CBDCs will be widely touted as an alternative.

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Japan’s SBI plans Hong Kong pullout on concerns over security law

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The chief executive of SBI Holdings, the financial conglomerate that owns Japan’s biggest online brokerage, said he plans to pull his company’s operations out of Hong Kong because “without freedom, there is no financial business”.

The decision by Yoshitaka Kitao will make SBI the largest Japanese financial institution to opt for a full withdrawal from Hong Kong and comes as the group is also reviewing London’s status as the optimal financial centre in Europe. 

The introduction last year of Hong Kong’s controversial National Security Law, under which 47 activists were arrested earlier this month, had created increasing fear in Japanese boardrooms, said Kitao. In particular, he said, it was “not a good place for financial institutions”, adding that increasing numbers of Japanese companies were reconsidering the scale of their operations in the former British colony.

Japanese financial institutions, he said, had become “very much afraid” of developments in Hong Kong. Kitao, who is among the most outspoken figures in Japanese finance and who is invited to regular discussions with prime minister Yoshihide Suga, said he was looking at Singapore and Shanghai as alternatives as he prepared to relocate his 100-person operation in Hong Kong. 

“If I want to do business in China, I would rather have an office in Beijing or Shanghai or somewhere,” said Kitao, arguing that the regulatory uncertainty and the ability to simply set up in China and operate under its rules meant that Hong Kong was now less necessary as a gateway to mainland business.

For now, said Kitao, SBI was likely to be the only major Japanese institution to speak so openly about pulling out of Hong Kong. 

“They are unlike me. I’m a very straightforward guy. But all the others, in their bellies, they think they should move out or won’t invest more in Hong Kong,” said Kitao. He added that while Japanese financial institutions might be wavering on their decisions, the country’s manufacturers, retailers and wholesalers were becoming more decisive about moving operations from Hong Kong to mainland China.

In a further signal of tectonic shifts in global finance, SBI is also reconsidering the attractiveness of post-Brexit London as it rolls out a planned expansion of its global underwriting business. SBI aspires to become Japan’s fourth megabank and overtook Nomura last year as the country’s largest retail brokerage,

Britain’s exit from the EU, said Kitao, meant that while London would previously have been the straightforward choice, SBI was now forced to look at alternative financial centres as it sought to grow a wholesale banking business with which he planned to compete with Nomura, Daiwa and other Japanese rivals.

“Now we are still thinking whether we will have an office or our facility in London, or Amsterdam, Luxembourg or Frankfurt . . . a lot of money is actually going out of London to other cities,” said Kitao. A UK-educated Anglophile who previously worked in London, he said he regretted that the city was no longer the simple choice. 

The uncertainties over Hong Kong and London, said Kitao, had heightened the potential appeal of the western Japanese city of Osaka — seat of the country’s largest derivatives exchange — as a possible global finance hub.

In particular, he said, London could benefit from a direct tie-up with the Osaka Exchange and the time difference would allow round-the-clock trading in UK and European instruments. 

“London still will be OK. Although a lot of money is starting to move, it will be OK,” said Kitao.



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Militias, corruption and Covid: Rio de Janeiro’s deepening crisis

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Alice Pamplona da Silva celebrated her fifth birthday last year the way a child should. Her parents presented her with cake and muffins, each bedecked in luminous icing and cut-out images of the Little Mermaid. Her hair tied in long braids, Alice beams at the family photographer.

By the first minutes of the new year, Alice would be dead, hit in the neck by a stray bullet as she watched the fireworks over Rio de Janeiro from her home in a poor hillside community close to the city centre. Locals say Alice was in her mother’s lap when the bullet pierced her body.

Last year one child was killed in Rio on average every month by stray bullets. Even since the death of Alice, another five-year-old — Ana Clara Machado — has been killed by a bala perdida — or lost bullet. The vast majority of the thousands of murders in Rio every year go unsolved and unpunished.

Brazil is reeling from overlapping crises. The economy has barely grown for almost a decade, held back by the collapse of the commodities boom and persistent mismanagement. And that was before the coronavirus pandemic created both the health emergency and a deep recession, to which President Jair Bolsonaro’s government is struggling to find a coherent response. Rio was among a number of Brazil’s big cities to announce last week various degrees of lockdowns as hospitals reach near full capacity.

A body is removed from a Rio street. Public health expert Lígia Bahia says ‘people aren’t dying because of coronavirus variants or the severity of Covil-19 — they are dying because they do not have access to healthcare’
A body is removed from a Rio street. Public health expert Lígia Bahia says ‘people aren’t dying because of coronavirus variants or the severity of Covid-19 — they are dying because they do not have access to healthcare’ © Ricardo Moraes/Reuters

With one of the more virulent variants of the virus spreading rapidly in Brazil, many countries have in effect closed off travel to the Latin American nation.

The sense of malaise in Brazil is nowhere more keenly felt than in Rio, where both the city of 6.7m and the state that shares the same name are facing a profound crisis.

Known affectionately by residents as Cidade Maravilhosa (the Wonderful City), Rio, with its sandy beaches and lush peaks, has long been the iconic image of Brazil — the host of the 2014 World Cup final and the 2016 Olympics.

But for large chunks of the population — especially those who live in poorer communities — Rio is failing.

This is exemplified by the state’s epidemic of violence and, more specifically, by its inability to prevent children like Alice being caught in the crossfire. But the rot goes deeper. According to a new study, almost 60 per cent of the city is now controlled by so-called militias — mafia-style organised crime outfits that control entry into neighbourhoods, run extortion and drugs rackets and are increasingly moving into construction and other mainstream business lines.

Chart showing that Brazil’s coronavirus death rate has increased this year, comparable to Mexico, United States, France and the UK. Seven-day rolling average per 100,000 people

Their influence over an estimated 2m residents has become so pronounced that even the authorities have begun to acknowledge that swaths of the state are no longer in their control. Fewer officials, however, are willing to acknowledge the militia’s ties with city and state politicians — an alliance that has allowed the rot to fester and spread.

“The state has failed. It has been failing bitterly. This postcard city of Brazil is built on a foundation of inequality,” says Lucas Loubeck of Rio de Paz, a group working to reduce violence in the favelas.

Economically, too, Rio is suffering. The heady days of Brazil’s commodities boom in the first decade of the millennium ended with a thud. A bruising recession five years ago has left the state’s coffers empty. Long an economic motor, tourism, too, has collapsed, buffeted on each side by Covid-19 and the city’s reputation for crime. More than 32 per cent of the city’s youth aged between 18 and 24 are unemployed, according to city officials.

“Preventing crime requires education, housing, employment. If you have that, you reduce the chance that a boy will migrate to crime. But there has not been that kind of thinking in public policy in decades,” says Loubeck.

Rio’s ability to respond to these problems has not been helped by a long history of corruption. Wilson Witzel, the current state governor, has been suspended over allegations of embezzlement of Covid relief funds. Three of Rio’s four previous governors are in jail or have served time.

Children at a Kites for Peace demonstration in a Rio favela. Last year one child was killed in Rio on average every month by stray bullets
Children at a Kites for Peace demonstration in a Rio favela. Last year one child was killed in Rio on average every month by stray bullets © Pilar Olivares/Reuters

“Rio is a ticking time-bomb,” says Michel Silva, a community leader in Rocinha, Rio’s biggest favela — the name used for poor neighbourhoods that have low-quality housing and weak property rights — which is home to more than 100,000.

From the raging urban war between drug gangs, militias and the heavily militarised local police to crises with the water supply, coronavirus and corruption at the highest levels of governance, Silva says life in Rio has become an increasingly precarious affair.

“Although the favelas have state law, the law is not applied in them. The state abandoned the favelas from the moment they emerged.”

‘Countless violations’

Many Rio favelas cling precariously to the hills and peaks that puncture the city’s skyline. Their construction began soon after the end of slavery in the late 19th century, when former slaves with little money needed somewhere to live. The unregulated, haphazardly-planned townships then swelled in the following decades as poor Brazilians from the country’s north-east moved to Rio in search of work.

When the federal capital moved to Brasília in 1960, taking with it tens of thousands of public sector jobs, Rio slipped into a long decline — a trajectory that has been broken only intermittently by cyclical spurts of growth in the oil, gas and iron ore industries. A large part of the country’s oil deposits lies off the Rio coast.

Chart showing Brazil has now recorded excess deaths for 11 consecutive months. Since the beginning of its epidemic, there have been 267,612 more deaths than the historical average for the same period  — a 24 per cent increase and 16 per cent more than the reported number of Covid-19 deaths.

By the 1990s, the favelas were awash with crime as heavily armed drug gangs, such as the Red Command and the Third Pure Command, feuded violently for control over the city’s hillsides and mountain tops. The bloodletting triggered an aggressive police response, which continues today. It is referred to, almost blithely, as Rio’s “urban war”.

On one side, the police storm the favelas with helicopters and armoured vehicles; on the other, the gangs wield machine guns, grenades and sometimes — according to residents’ reports — human shields. Occasionally the traffickers succeed in shooting down the choppers.

“We have militarised police and armed drug traffickers and a scenario of urban war. And in the middle of all this, there are millions of residents,” says Loubeck.

Edmund Ruge, a volunteer in communities in the north of the city, says: “Most people know it is not an effective way to fight the drug trade. Yet it continues. It is the status quo. And there are long-running personal vendettas, so there is this back and forth in terms of revenge killings.”

Children play on Arpoador beach, Rio, during the coronavirus outbreak. With one of the more virulent variants of the virus spreading rapidly in Brazil, many countries have in effect closed off travel to the Latin American nation
Children play on Arpoador beach, Rio, during the coronavirus outbreak. With one of the more virulent variants of the virus spreading rapidly in Brazil, many countries have in effect closed off travel to the Latin American nation © Pilar Olivares/Reuters

Almost 94,000 citizens have been murdered in the state of Rio since 2003 when a new system for recording crimes began, according to official state data. The vast majority happened in poor communities. A study of the city of Rio de Janeiro, published late last year in the Police Journal, found that more than 50 per cent of homicides occurred in just 1.1 per cent of the urban space.

Justice is rarely served. A study by state prosecutors of 3,900 homicides committed in 2015 found that five years later, there had been no punishments issued for more than 3,500 of the cases. Killings by police, which reached a high of 1,800 — or five a day — in 2019, are also rarely investigated and are not included in official homicide figures.

“The police operations violate our rights to life, to housing, to be in the favela and to be in this city. There are countless violations that we suffer,” says Gizele Martins, a resident of the Maré neighbourhood.

The situation, however, is not without some hope. Last year, the number of homicides in the state dropped to 3,500 — from more than 5,300 in 2017 — an improvement that Rogério Figueredo de Lacerda, Rio’s police chief, attributes to better management of resources and a gradually improving economy from the sharp recession mid-decade. He also hails a decrease in vehicle and cargo theft.

“We are working with daily goals. And the numbers are favourable. They are still high, but the work is showing results,” he says. “Scholars like to say ‘the police go into the favelas only to foment war’. But we don’t want war. We want a peaceful community.”

Independent crime analysts and residents of the communities warn, however, that it is much too soon to draw conclusions about the recent decrease in crime. They say that a Supreme Court ruling banning police operations in the favelas during the pandemic — as well as the impact of the pandemic itself — were the driving factors rather than a profound change in Rio’s security landscape.

Ilona Szabó de Carvalho, executive director of the Igarapé Institute, a crime-focused think-tank, points out that while violent crime declined in the city, it increased in the rest of the state — a phenomenon reflecting the judicial decision to ban police operations in the city.

“To sustain the decrease, Rio needs to undergo structural changes” such as the professionalisation of the police force and the allocation of social support to needy communities, says Szabó, who left Rio last year amid fears for her personal safety. “It is very early to cry victory.”

The ‘Cidade Maravilhosa’ in numbers

60%

Proportion of the city now controlled by so-called militias. 550 militia members have been arrested since October, the acting governor says.

4.4%

Contraction in the state’s GDP last year, compared with 0.4% growth in São Paulo. The unemployment rate for 18-24 year olds in Rio de Janeiro is 32%

3,500

Murders in Rio state in 2020, a reduction from more than 5,300 in 2017. Over 50% of homicides occur in just 1.1 per cent of the urban space, one study found

‘The militia is the state’

If observers are split over the trajectory of violent crime, they are unanimous on the threat posed by the spread of the militias.

“We cannot deny the expansion of militias. It is a scenario in which we have had few great victories,” says Col Figueredo, who says these groups are often harder to tackle because they typically rely on the implicit threat of force.

According to the study last year by two universities, almost 60 per cent of the city of Rio and more than 20 per cent of the greater metropolitan area is now controlled by these mafia syndicates, which are sometimes composed of former police officers who maintain close links with law enforcement and have awareness of police intelligence.

They initially began as extortion rackets, but have since moved into drugs and arms-trafficking and ostensibly legal avenues such as construction and transportation, which can be used to launder criminal proceeds. Crucially, the groups — commonly associated with Rio’s west zone — also control entry and exit to the areas they control.

“The militias are not a parallel power; they are not groups that operate in the absence of the state. The militia is the state,” says José Cláudio Souza of the Rural Federal University of Rio de Janeiro, who has studied the militias over two decades.

In the favelas, some locals quietly suggest a preference for the drug gangs over militias because at least the traffickers are not engaged in systematic extortion.

A police officer aims his gun at a man during a clash with residents of Morro do Borel favela. 'We have militarised police and armed drug traffickers and a scenario of urban war' in the slums, says Lucas Loubeck of Rio de Paz
A police officer aims his gun at a man during a clash with residents of Morro do Borel favela. ‘We have militarised police and armed drug traffickers and a scenario of urban war’ in the slums, says Lucas Loubeck of Rio de Paz © Uesliei Marcelino/Reuters

“We used to receive reports mostly on drug crime but now the clamour is all about the militias. The reports are now always like this: ‘For the love of god, we no longer know who to count on,’” says Zeca Borges, founder of Disque Denúncia, a hotline to report crimes.

“It is not even a question of violence. People pay militiamen and the traffickers because there is no other way. The city is just beaten, it is broken.”

The militias have infiltrated local power structures, including city councils and the state legislature, say researchers. “It is all interlinked: militias, police and political power,” says Szabó. “It starts on the campaign trail: to do a campaign in a militia area, you need to be authorised. You need to negotiate whether a candidate can actively enter an area.”

“Once you do this, you are then linked to them and you have to take care of their interests while in power, which means less oversight and less messing around in their businesses, which are vast today.”

Reviving Rio

From his office in Rio’s neoclassical Guanabara Palace, acting governor Cláudio Castro, who assumed duties in August when Witzel was removed from office pending investigation, can afford to acknowledge the extent of his state’s problems.

Anti-crime protesters march in Borel favela. Almost 60% of the city of Rio and more than 20% of the greater metropolitan area is controlled by mafia syndicates
Anti-crime protesters march in Borel favela. Almost 60% of the city of Rio and more than 20% of the greater metropolitan area is controlled by mafia syndicates © Ueslei Marcelino/Reuters

“We are focused on cleaning house,” he says, outlining a new “intelligence-led” approach to tackle the militias by choking them financially. He says 550 militia members have been arrested since October.

But the governor must also focus on Rio’s crippling economic situation, which few doubt has spurred the city’s crime epidemic.

The state has been practically bankrupt since the commodities crash in 2015 — an event that itself was exacerbated by the years-long theft of public assets by politicians and businesspeople, a scheme revealed in the massive Lava Jato (Car Wash) graft probe.

The state’s gross domestic product is forecast to have shrunk 4.4 per cent last year, slightly above the 4.1 per cent national rate and considerably worse than neighbouring São Paulo — an industrial hub — that grew 0.4 per cent. In the third quarter of last year, the unemployment level in Rio was almost 5 percentage points higher than the national average.

The state must also contend with a painful legacy of debt, which diverts much needed funds away from public services, most notably hospitals and Covid relief. The state reported debt of R$165bn ($29bn) in 2019, up from R$153bn the previous year and amounting to more than 280 per cent of revenue.

The Rocinha favela in Rio. More than 32% of the city’s youth aged between 18 and 24 are unemployed
The Rocinha favela in Rio. More than 32% of the city’s youth aged between 18 and 24 are unemployed © Ricardo Moraes/Reuters

“In Rio, inequality kills. This number of people aren’t dying because of coronavirus variants or the severity of Covid-19 — they are dying because they do not have access to healthcare, even though the city has one of the larger public networks in Brazil,” Lígia Bahia, a public health expert, told local media last month.

With the hospital occupancy rate approaching almost 80 per cent in the city, Rio on Saturday implemented fresh restrictions on the opening hours of bars and restaurants.

Castro believes that a revival of Rio’s fortunes can be driven by fossil fuels — oil and gas are the state’s “main vocation”, he says.

However, the long-term prospects for the oil sector have not been helped by Bolsonaro’s decision last month to fire the head of state oil company Petrobras when he refused to reduce oil prices paid by consumers.

Marco Cavalcanti, an economist at the Institute of Applied Economic Research in Rio, says that in the short term “the fiscal crisis requires the adoption of harsh adjustment measures”. But he adds: “Over the next decade we expect oil and gas production to increase significantly, which will provide significant revenue to the state through royalties.”

Wilson Witzel, the state governor, who has been suspended over allegations of embezzlement of Covid relief funds, is seen on screen speaking to the Rio assembly
Wilson Witzel, the state governor, who has been suspended over allegations of embezzlement of Covid relief funds, is seen on screen speaking to the Rio assembly © Andre Coelho/Bloomberg

If those changes can occur alongside improvements in the level of corruption and crime, Cavalcanti — a former official at Brazil’s finance ministry — believes Rio’s economic prospects in the medium to long term are “relatively good”.

“It is a big if, of course,” he adds.

Loubeck, the social worker in Rio’s North Zone, has a more blunt assessment, highlighting the “ocean” of unemployed people in the city’s favelas. “The state is negligent in this scenario and is therefore responsible. The state has completely failed.”

Additional reporting by Leonardo Coelho and Carolina Pulice



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