Economy

How Latin America Can Rise From The Sinkhole Of Corruption

Led by Brazil, much of the region is mired in deep corruption scandals. But revelation also shows that public institutions are fighting back.

'Out with Temer' street art in Sao Paulo
"Out with Temer" street art in Sao Paulo
Editorial

-Editorial-

SANTIAGO — Brazil may face its second presidential impeachment in less than a year, thanks to revelations of the veritable epidemic of corruption infecting so many among its political and economic elite. Elsewhere across Latin America, a similar contagion is spreading.

The arrests in Italy and Guatemala of two former state governors from Mexico's ruling Institutional Revolutionary Party (PRI) are the latest blows to that country's prolonged progression toward full democracy.

In Chile, a country perceived as among the least corrupt in the region, the socialist government of President Michelle Bachelet has seen its popularity plummet from a mix of mismanagement and a long string of scandals involving her relatives, banks, parties, businessmen and officials. In Argentina, the former president Cristina Fernández de Kirchner faces prosecution on charges of fraudulently conceding public works.

But it is in Brazil where corruption investigations are pushing the country toward political crisis and a free fall in the stock market.

The last chapter of the so-called "Java Lato" (Car Wash) investigations into Latin America's biggest bribery scandal, opened in December with the $3.5 billion fine paid in New York by the construction firm Odebrecht to help settle the case.

This is yet another case of illegal works concessions and underhand funding for politicians. It brought down the last, leftist President Dilma Rousseff, has touched her predecessor Luis Inacio Lula da Silva, and is now threatening the political survival of Dilma's successor, President Michel Temer. But Odebrecht is thought to have corrupted politicians far beyond Brazil, and revelations are hurting the world's perception of the entire region and its rulers, and harming business.

And while it is difficult to measure the exact cost of corruption, indices clearly show that countries perceived as corrupt become less competitive. In one example, Mexico's Central Bank estimated corruption to have cost the country 9% of its GDP in 2015.

The revelation of big corruption cases from 2015 and especially through 2016 shows a growing problem, and yet it could ultimately turn out to be good news. That is how Transparency International, the World Economic Forum and World Bank see it, arguing that it is not so much corruption as the fight against it that is growing. With the exception of the Panama Papers, recent revelations in the region have been the product of actions by national judicial ministries and supervisory agencies, while their international scope indicates greater cooperation between regulatory and police agencies regionally.

Studies also show that increasing corruption-related arrests and trials have an inverse relationship with corruption levels. That is, countries with more arrests see their corruption fall — while the most corrupt countries continue to have very few arrests or prosecution for such crimes.

There is also the deterrent effect: the Odebrecht scandal will make it difficult for other multinationals to try similar tactics, while Marcelo Odebrecht's imprisonment shows that money can't buy impunity. Brazilian democracy is working in spite of defects, the judiciary is independent, as is its press, free to expose murky affairs, come what may.

The revelations could not have emerged in Venezuela, where there is no press freedom.

And there have certainly been consequences. The region's biggest bribery mesh risks snaring not just Temer but also Alejandro Toledo, the former Peruvian president who used to champion clean government, and could even touch Colombia's President Juan Manuel Santos, a Nobel Peace laureate.

It may also show the path to move forward. The first thing to do is to fortify institutions, assure the separation of powers and take press freedoms very seriously. The revelations in Brazil could not have emerged in Venezuela, where there is no press freedom and where President Nicolás Maduro has the judiciary under control.

Countries must also establish or update corruption laws, like Mexico's 2012 Law Against Money Laundering and Brazil's Anti-Bribery Law, in force since 2014. Legislation must increase penalties for corruption, and protect whistleblowers. This may be hard to do, but evidence shows that revelations work, in governments as in companies.

It is a difficult task at all levels, but we believe the situation is actually improving. Justice is imposing itself and rulers and businessmen should be well aware of that fact the next time they feel tempted to break the rules, evade their taxes or jump the queue with a bribe.

Still, none of this solves Brazil's immediate problem of finding a credible government leader. We believe that the best scenario, if Temer resigns, is for an acting president to call general elections within the 30 following days as the law requires. That would open the way for the rise of new faces that could, in every sense, give the country a clean start.

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Queen Elizabeth II with UK PM Boris Johnson at a reception at Windsor Castle yesterday

Anne-Sophie Goninet, Jane Herbelin and Bertrand Hauger

👋 Hej!*

Welcome to Wednesday, where chaos hits Syria, Brazilian president Jair Bolsonaro is accused of crimes against humanity and a social media giant plans to rebrand itself. For Spanish daily La Razon, reporter Paco Rodríguez takes us to the devastated town of Belchite, where visitors are reporting paranormal phenomenons.

[*Danish]

🌎  7 THINGS TO KNOW RIGHT NOW

• Syrian violence erupts: Army shelling on residential areas of the rebel-held region of northwestern Syria killed 13 people, with school children among the victims. The attack occurred shortly after a bombing killed at least 14 military personnel in Damascus. In central Syria, a blast inside an ammunition depot kills five soldiers.

• Renewed Ethiopia air raids on capital of embattled Tigray region: Ethiopian federal government forces have launched its second air strike this week on the capital of the northern Tigray. The air raids mark a sharp escalation in the near-year-old conflict between the government forces and the Tigrayan People's Liberation Front (TPLF) that killed thousands and displaced over 2 million people.

• Bolsonaro accused of crimes against humanity: A leaked draft government report concludes that Brazilian President Jair Bolsonaro should be charged with crimes against humanity, forging documents and incitement to crime, following his handling of the country's COVID-19 pandemic. The report blames Bolsonaro's administration for more than half of Brazil's 600,000 coronavirus deaths.

• Kidnappers in Haiti demand $17 million to free a missionary group: A Haitian gang that kidnapped 17 members of a Christian aid group, including five children, demanded $1million ransom per person. Most of those being held are Americans; one is Canadian.

• Putin bows out of COP26 in Glasgow: Russian President Vladimir Putin will not fly to Glasgow to attend the COP26 climate summit. A setback for host Britain's hopes of getting support from major powers for a more radical plan to tackle climate change.

• Queen Elizabeth II cancels trip over health concerns: The 95-year-old British monarch has cancelled a visit to Northern Ireland after she was advised by her doctors to rest for the next few days. Buckingham Palace assured the queen, who attended public events yesterday, was "in good spirits."

• A new name for Facebook? According to a report by The Verge website, Mark Zuckerberg's social media giant is planning on changing the company's name next week, to reflect its focus on building the "metaverse," a virtual reality version of the internet.

🗞️  FRONT PAGE

"Oil price rise causes earthquake," titles Portuguese daily Jornal I as surging demand coupled with supply shortage have driven oil prices to seven-year highs at more than $80 per barrel.

#️⃣  BY THE NUMBERS

98

For the first time women judges have been appointed to Egypt's State Council, one of the country's main judicial bodies. The council's chief judge, Mohammed Hossam el-Din, welcomed the 98 new judges in a celebratory event in Cairo. Since its inception in 1946, the State Council has been exclusively male and until now actively rejected female applicants.

📰  STORY OF THE DAY

Spanish civil war town now a paranormal attraction

Ghosts from Spain's murderous 1930s civil war are said to roam the ruins of Belchite outside Zaragoza. Tourists are intrigued and can book a special visit to the town, reports Paco Rodríguez in Madrid-based daily La Razon.

🏚️ Between August 24 and September 6, 1937, during the Spanish Civil War, more than 5,000 people died in 14 days of intense fighting in Belchite in north-eastern Spain, and the town was flattened. The fighting began on the outskirts and ended in house-to-house fighting. Almost half the town's 3,100 residents died in the struggle. The war annihilated centuries of village history. The town was never rebuilt, though a Pueblo Nuevo (or new town) was built by the old one.

😱 Belchite became an open-air museum of the horror of the civil war of 1936-39, which left 300,000 dead and wounds that have yet to heal or, for some today, mustn't. For many locals, the battle of Belchite has yet to end, judging by reports of paranormal incidents. Some insist they have heard the screams of falling soldiers, while others say the Count of Belchite wanders the streets, unable to find a resting place after his corpse was exhumed.

🎟️ Ordinary visitors have encountered unusual situations. Currently, you can only visit Belchite at set times every day, with prior booking. More daring visitors can also visit at 10 p.m. on weekends. Your ticket does not include a guaranteed paranormal experience, but many visitors insist strange things have happened to them. These include sudden changes of temperature or the strange feeling of being observed from a street corner or a window. Furthermore, such phenomena increase as evening falls, as if night brought the devastated town to life.

➡️ Read more on Worldcrunch.com

📣 VERBATIM

We still cling to the past because back then we had security, which is the main thing that's missing in Libya today.

— Fethi al-Ahmar, an engineer living in the Libyan desert town Bani Walid, told AFP, as the country today marks the 10-year anniversary of the death of dictator Muammar Gaddafi. The leader who had reigned for 42 years over Libya was toppled in a revolt inspired by the Arab Spring uprisings and later killed by rebels. Some hope the presidential elections set in December can help the country turn the page on a decade of chaos and instability.

🇮🇷🎓  IN OTHER NEWS

Iran to offer Master's and PhD in morality enforcement

Iran will create new "master's and doctorate" programs to train state morality agents checking on people's public conduct and attire, according to several Persian-language news sources.

Mehran Samadi, a senior official of the Headquarters to Enjoin Virtues and Proscribe Vices (Amr-e be ma'ruf va nahy az monkar) said "anyone who wants to enjoin virtues must have the knowledge," the London-based broadcaster Iran International reported, citing reports from Iran.

The morality patrols, in force since the 1979 revolution, tend to focus mostly on young people and women, particularly the public appearance for the latter. Loose headscarves will send women straight to a police station, often in humiliating conditions. Five years ago, the regime announced a new force of some 7,000 additional agents checking on women's hijabs and other standards of dress and behavior.

Last week, for example, Tehran police revealed that they had "disciplined" agents who had been filmed forcefully shoving a girl into a van. Such incidents may increase under the new, conservative president, Ibrahim Raisi.

Speaking about the new academic discipline, Samadi said morals go "much further than headscarves and modesty," and those earning graduate degrees would teach agents "what the priorities are."

Iran's Islamic regime, under the guidance of Shia jurists, continuously fine tunes notions of "proper" conduct — and calibrates its own, interventionist authority. More recently the traffic police chief said women were not allowed to ride motorbikes, and "would be stopped," Prague-based Radio Farda reported.

Days before, a cleric in the holy city of Qom in central Iran insisted that people must be vaccinated by a medic of the same sex "as often as possible," and if not, there should be no pictures of mixed-sex vaccinations.

✍️ Newsletter by Anne-Sophie Goninet, Jane Herbelin and Bertrand Hauger

Thoughts on Facebook's new name? Zuckerverse? Tell us how the news look in your corner of the world: Drop us a note at info@worldcrunch.com!

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