River of cash: election-year politics is driving Brazil's largest infrastructure plan ever. It will cost the poor the most.

Brazil's so-called "river of national unity," the 2,900-kilometer Sao Francisco, instead has become a source of national conflict--and the kind of shameful boondoggle that election years in Latin America reliably generate.

President Luiz Inacio Lula da Silva proposes to divert its waters to four parched northeastern states. The US$2 billion project is his most ambitious infrastructure venture, one the administration claims will bring clean water to 12 million, irrigate 330,000 hectares and bolster economies along its path.

Despite good intentions, this project is a huge mistake. Lula's plan involves building 1,400 kilometers of canals and tunnels. Yet it will mainly benefit the rich, take lands from indigenous peoples, and it is far too costly Even the World Bank, so often criticized for financing pointless mega-projects, has rightfully backed away from this one. Undeterred, Lula in January approved initial spending of $201 million.

The northeast needs water, absolutely It's the nation's poorest region. Droughts devastate the area on average once every decade and there is a mild drought every three years, forcing millions of flagelados, or "scourged ones"--at one time a young Lula and his family--to move to now overcrowded urban areas such as Sao Paulo. I believe that is the main reason why the president is so gung-ho to build. It's not just a headlinemaker for his own re-election this year, as some political analysts hold, but something truly close to the president's heart.

But the droughts remain largely a political problem. Average annual rainfall in the northeast is greater than in U.S. state of Texas, but government after government has failed to invest in local rain collection and irrigation projects. Scientists say that less than 10% of rainwater in the northeast is retained.

Late last year, a 59-year-old Roman Catholic bishop staged a hunger strike to stop the plan. The bishop, Luiz Flavio Cappio of Barra in Bahia, argued rightly that the venture would serve agribusiness, large landowners and construction companies. The poor, he says, can't afford to pump the water to their homes and fields. (The cleric called off his strike after 11 days when the government promised to open debate on the project.)

Other obstacles have cropped up. A state court in Bahia has determined that there were irregularities during construction bidding. The Brazilian bar association argues that it is unconstitutional to expropriate indigenous lands without Congressional approval.

Corruption also threatens Lula's scheme. The northeast has long been plagued by the so-called "drought industry." Wealthy landowners called fazendeiros divert water to their ranches, siphon off emergency aid or hire federal workers for their own, private projects at subsidized prices. In 1993, I visited the arid northeastern town of Serra Talhada and found federal well-digging equipment being used at a motorcycle dealership owned by the then-president of the lower house of Congress. He needed water to clean engines.

If the federal government wants to help the northeast, it should finance the construction of cisterns, reservoirs and aqueducts to collect and distribute rainwater to poor rural homes as well as small underground dams, which stave off evaporation. The World Bank has proposed these projects in the past, and it's a much better investment than a costly water diversion plan. That doesn't help wealthy landowners much, though, and there's the rub, politically.

Another good investment would be a cleanup of the river. Many of the 3 million people who live along its shores live without basic sanitation and sewage, so lots of what should be treated winds up flowing downstream. Erosion means tons of silt fills the basin each year. Ecologists say 1,500 tributaries of the Sao Francisco have already disappeared, and many thousands of freshwater fish along with them. In February, a Congressional committee approved a Constitutional amendment to provide $2.7 billion for a 20-year river restoration project, one that includes basic sanitation and sewage treatment, reforestation and preventative measures to reduce erosion.

A few rights, however, won't make up for this mega-disaster of a wrong. Lula needs to snap out of election-year thinking and get behind real solutions for Brazil's poor. Reelected or not, his legacy depends on it.

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