Will Brazil’s vice beget virtue?

We’re learning day by day that the wrecking ball of corruption piloted by Odebrecht and other Brazilian contractors swung far and wide across Latin America in the 2000s. Projects to build pipelines, highways and other strategic infrastructure are stalled, and senior politicians are quivering.

Latin American prosecutors gathered in Brasilia yesterday to coordinate their investigative efforts. Spurred by Brazil’s Car Wash probe of state-controlled Petrobras and Odebrecht’s December 2016 international plea deal, the prosecutors want to find out who took bribes, and how much of the loot from overpriced projects their governments might recover.

The rot may have gone straight to the top. Peru is after former president Alejandro Toledo. Colombia, Panama and Chile are scrutinizing how their sitting presidents financed their electoral campaigns. 

The investigations, if conducted vigorously and expeditiously, hold the potential to set a new standard for integrity and accountability in the region. Brazil’s top prosecutors have won admiration for taking on the country’s most powerful businessmen and politicians.

We won’t see such prosecutorial rigor in most other Latin American countries. After all, turning up for a meeting in Brasilia is not the same thing as turning in your boss. Odebrecht’s biggest bribery operation outside of Brazil seems to have been in Venezuela, where the increasingly authoritarian regime could use the corruption case to target its opponents.

Beyond the dramatic revelations of kickbacks and secret offshore bank accounts, there has been little reflection on the conditions that brought about the systemic corruption in the first place. Brazilian contractors lined their pockets at a time when strict local content rules ensured them lucrative deals by keeping out foreign competitors. Domestic contractors were entitled to the business, and they did whatever it took to keep it that way. Then they exported their unscrupulous methods to other countries where they had no trouble finding greedy politicians to secure big-ticket projects.

The other word for local content mandates is protectionism, which happens to be back in vogue in some parts of the world. A protectionist climate, together with Latin America’s fragile governing institutions and a culture of impunity, would breed the conditions for another swing of the wrecking ball.

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