Oil Greases Wheel of Progress in Brazilian City

CAMPOS, Brazil —  Recession? Unemployment? While economic hard times grip much of Brazil, there’s little sign of trouble here--even in the slums.

Asphalt is paving over dirt roads. Sewer pipes are being laid. Schools are popping up. A big new hospital is nearly ready to open in this southeastern coastal city 150 miles northeast of Rio de Janeiro. In Campos’ shantytowns, a new program to stamp out child labor is paying families to keep their kids in school.

Conversations don’t focus on the factory layoffs elsewhere in Brazil or a stock market that is down about one-third from a year ago. People are talking about education, health and the extension of the four-mile bicycle path through downtown.

“They say the economy is in trouble, but here we are selling as much as we sold last year,” says Paulo Roberto Ramos Cardoso, manager at a bicycle shop. Car dealer Ezequias Lima is even more upbeat: “We’re selling more than last year.”

The source of the bonanza that has befallen this city of 500,000 is oil. Since 1998, Campos and its neighbors along the offshore oil fields of the Campos basin have been prospering from a downpour of petroleum royalties.

Campos and neighboring coastal cities comprise fewer than 1 million of Brazil’s 170 million people, but have jurisdiction over some 90% of the country’s oil production, and have earned the nickname “the Brazilian emirates.” Authorities quip that if the state of Rio de Janeiro were an independent country, its daily output of more than 1.3 million barrels would qualify it to join OPEC.

It’s a dramatic change in fortunes for Campos, which for most of the last century survived on agriculture--first coffee, then sugar. But as sugar prices fell and the government cut subsidies, the mills started shutting down. Of 31 sugar mills in the 1970s, only eight remain.

The turnaround came when the national government ended the federal oil giant Petrobras’ monopoly as part of a drive to make Brazil more self-sufficient in oil.

Royalties are calculated in dollars, and the oil region’s income started rising as Brazil’s currency, the real, began weakening in 1999. Three years ago, Campos got 9 million reals (currently $3.5 million) in annual royalties. Over the last 12 months it took in about $44 million.

The law requires the city to spend the windfall on infrastructure, so Campos launched a development program that most of Brazil’s 5,000-plus municipalities can only dream about.

Neighboring towns are linked by modern roads. Schools and colleges went up. The network of hospitals and clinics was expanded and got new equipment. A huge new hospital to care for as many as 1,200 people daily is to open in December.

“Except for bone-marrow transplants, our doctors perform even the most complex surgeries,” says the municipal planning development manager, Romilton Barbara.

In the Rui Barbosa slum, not far from Barbara’s office, the oil money enabled Luis Fernando de Oliveira to give up a dead-end job guarding parked cars at night and to enroll in a new program to improve his grade-school education.

Oliveira, who is 13 but looks barely 7, proudly shows off his T-shirt with the logo of the Child Labor Eradication Program. “After school you spend the rest of the day doing homework while learning new things. It’s great,” he says.

The main goal of the program, which started this year, is to remove children from the streets or sugar cane fields and get them into grade school.

For sending him back to school, Oliveira’s parents get 40 reals ($16) a month. That’s one-fifth of what his father makes as a construction worker and twice what the boy earned in tips as a “car watcher.”

The program has signed up more than 3,000 children in Campos, for which officials estimate the annual cost will be about $385,000.

“It is little when compared with the benefits: Kids being educated, at least with the basics, instead of being in the streets, where they would be an easy prey for crime,” said Barbara, the planning secretary.

The changes have brought a new mood to the slum, says Luciano Grain Lemus, president of the local residents association. “This is a place where there is hope.”