The orphans of Odebrecht

The first night in jail was probably not too uncomfortable for Ecuador’s once-powerful vice president Jorge Glas. But this wasn´t where he was supposed to end up after president Lenin Moreno moved into Carondelet palace in May. Like Moreno himself, the impact of the region-wide Odebrecht corruption scandal that landed Glas behind bars was underestimated from the start.

An Ecuadorean court yesterday granted a request by the attorney general’s office to detain Glas for alleged bribery and conspiracy, accusations that have already tainted senior politicians from Brasilia to Bogotá after the contractor signed a 2016 international plea deal over its elaborate bribery scheme. The region´s new heroes are state prosecutors like Brazil´s Rodrigo Janot, Ecuador´s Diana Salazar and Venezuela´s Luisa Ortega.

But nabbing greedy politicians who took millions of dollars in bribes to direct lucrative energy and infrastructure projects into Odebrecht´s hands might prove to be the easy part in this dark saga.

It will be much harder to repair or complete a long trail of orphaned projects that are critical to the region´s economic growth. Some projects like Peru´s $7bn southern gas pipeline and the Dominican Republic´s $2bn coal-fired power generation complex are stuck in limbo, waiting for a new contractor to finish the job. The same is true for a $600mn refined products pipeline in Ecuador, which is already grappling with a defective $2.2bn refinery upgrade and a precarious $600mn LPG terminal dock delivered by other contractors. There are highway concessions, bridges and water projects out there too.

Who is going to clean up this mess? And who is going to pay for it? The first question will take years to answer. But the cost is almost inevitably going to be paid by ordinary people through higher taxes, hidden surcharges and vastly diminished social spending, not to mention many thousands of squandered construction jobs in economies already battered by the 2014 commodities price crash.

The popular reaction is hard to predict, but with so many traditional politicians and political movements now discredited, we should not be surprised by the revival of radical left and right-wing sentiments driven by a broad sense of injustice. Colombia´s rebranded Farc or Brazil´s Jair Bolsonaro have no shortage of campaign slogans to choose from.

This is a hardly a trend confined to Latin America. But the Odebrecht imbroglio certainly helps to feed the fringes in a way that conventional themes of poverty and disenfranchisement no longer do as effectively among Latin America´s free-spending middle classes. This is less about power than about money.

Marcelo Odebrecht, scion of the sullied construction empire, is probably used to white-collar prison life in Brazil by now. Glas might have to do the same in Quito. Long after such villains are forgotten, Latin America will be paying the price for Odebrecht´s legacy of rust and rubble.

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