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The global case for staying in the EU

Brexit would be bad not just for Britain but also for Europe and the rest of the world.

“The West” is not a fashionable concept, at least in Britain. To some, it implies a world dominated by former imperial states that are reluctant to see emerging powers shape the global agenda. A term from the Cold War, it is certainly problematic – narrowly interpreted, it could exclude democracies far from the North Atlantic, such as Australia, Brazil or Japan. But the concept remains valuable: the Western countries and their allies are committed to democracy, liberal values and the rule of law, at home and in the wider world. That parts of the West from time to time fail to uphold these ideals (say, by invading Iraq in 2003) does not make them less important. When the European Union, an important pillar of the West, is fragile, so is the rules-based global order.

In December 2003, the EU adopted its first ever “security strategy”. Partly written by Robert Cooper, a British scholar-diplomat, the opening sentences proclaimed: “Europe has never been so prosperous, so secure nor so free. The violence of the first half of the 20th century has given way to a period of peace and stability unprecedented in European history. The creation of the European Union has been central to this development.”

Those statements are still broadly true. However, the world looks a lot uglier than it did in 2003, since when the West has suffered several reverses. The messy consequences of the invasions of Afghanistan and Iraq tarnished the reputations of the United States and its close allies. So did the financial crisis of 2008, which encouraged hostility to American-led globalisation. Then the failure of the Arab spring from 2011 onwards led many to conclude that the Middle East was not ready for Western political values.

Meanwhile, China’s economic and military growth has seemed inexorable. It has become more politically repressive at home and more assertive in its neighbourhood. China deploys its economic muscle to ensure that governments such as Britain’s temper their criticism of its domestic politics and refuse to meet the Dalai Lama.

Russia’s economy boomed when the oil price was high (peaking at $147 a barrel in 2008) and has slumped since the price fell in 2014 (today it is around $30). But Russia’s military modernisation continues apace. Since 2008 Moscow has sent armies into Georgia and Ukraine. Some of Russia’s top military strategists talk in a relaxed way about using tactical nuclear weapons and appear to regard them as merely large conventional weapons.

The government in Moscow, like that in Beijing, thinks that large countries are entitled to establish spheres of influence in their vicinity, meaning that neighbours should neither criticise them nor have independent foreign policies. To many Russians, it is obvious that the annexation of Crimea is justified by their country’s historical ties, size and power, whatever international law says. Similarly, many Chinese view their assertion of sovereignty over islets in the South China Sea as superior to any ruling by the international courts. Several of Russia’s and China’s neighbours are, unsurprisingly, scared of them.

A number of important emerging powers, such as Brazil, India and South Africa, though democratic at home, make a point of not supporting democratic causes internationally. They have generally followed strongly “realist” foreign policies – for instance, by not backing Aung San Suu Kyi when she was imprisoned in Burma. They have avoided criticising Russia’s annexation of Crimea or its military adventures in the Donbas. Their unwillingness to line up beside Western powers that not long ago ruled or exploited them is perhaps understandable, and the anti-American feelings that influence some of these countries’ elites are just as evident in certain European social-democratic parties. Nevertheless, the reluctance of many emerging powers to support the liberal order has strengthened the hand of those who argue that the current Western model of development, based on pluralism and human rights, is outmoded.

The presidency of Barack Obama, elected in 2008, has not done much to help the West. For very understandable reasons, he reacted against the failed interventions of his immediate predecessor by making clear that he wanted minimal military entanglements overseas. He has done little to promote democracy and human rights through US foreign policy or military intervention. His patient pragmatism has delivered tangible achievements, such as détente with Cuba and the deal with Iran to limit its nuclear programme. But his failure to support the moderate opposition in the early years of the Syrian Civil War – and his refusal to punish President Bashar al-Assad for crossing the red line of using chemical weapons – reinforced the perception in Moscow, Beijing and many Arab capitals that Obama was a weak leader who could be pushed around.


So, the past ten years have not been good for the West. The problems of the EU have only accentuated Western difficulties. When the Centre for European Reform was founded, in the late 1990s, the EU was an almost unremitting success story – about enlarging the club, building a single currency and attempting to forge greater political unity, including in the field of foreign policy. But the financial crisis exposed major flaws in the construction of the euro. Since then the eurozone’s leaders have taken important steps forward, such as creating a bailout fund and parts of a banking union; but they have erred in overemphasising austerity, thereby damaging growth and increasing the burden of unsustainable levels of debt in some countries. Eurozone economic output remains below the level of 2008.

The recent refugee crisis, like the euro’s difficulties, has made the EU look reactive, poorly led and acrimonious. More than a million refugees and illegal migrants entered the Schengen area of passport-free travel last year. Several governments have imposed temporary border controls in an effort to stem flows of refugees. Schengen will not survive without drastic, sovereignty-eroding reforms. Most important, the external border needs strengthening, and not only with more effective physical barriers. The several EU databases that cover criminal records, fingerprints of asylum-seekers and visa information are not currently connected. Police forces and officials overseeing border areas cannot easily access these databases or alerts on suspected terrorists – which is why some of those involved in the Paris attacks in November (who were all EU citizens) were able to enter the Schengen area without being detained.

The EU needs to speed up the creation of reception centres near the Schengen frontier where asylum-seekers’ applications can be processed. Those rejected need to be sent home swiftly (unless war is raging in their countries), to deter others from making the journey. A scheme for sharing out bona fide asylum-seekers, though unpopular in some capitals, is essential; otherwise most of them will end up in Sweden and Germany.

EU leaders must do what they can to tackle the root causes of the refugee flows. Peace in Libya would help; a reconciliation between the two rival governments is a diplomatic possibility. Though a ceasefire in Syria remains a distant prospect, conditions in refugee camps in the Middle East could be improved. Chancellor Angela Merkel has been right to push the EU into seeking a bargain of realpolitik with Turkey, though it could easily unravel: President Recep Tayyip Erdogan has promised to clamp down on migrant flows in return for the EU giving money and visa-free access, as well as taking refugees from Turkish camps and resuming accession talks.

EU leaders are in fact moving ahead with several of the measures required to save Schengen. For instance, in December they agreed to create a new border force and coastguard to strengthen Schengen’s external border. The European Parliament, which had been blocking links between databases on grounds of privacy, has become more co-operative.

But there are still big divisions among the member states on what to do about the refugees. It may be that, as with the euro’s travails, EU leaders will do just enough to stop Schengen falling apart, but not enough to make it successful and confidence-inspiring. But the Schengen area could cease to exist in its present form, or simply shrink. Both the euro and the refugee crises have already done much to nourish anti-EU populism across much of Europe.

The slowing of the EU’s geographical expansion has weakened the Union’s ability to influence its neighbourhood. Given that its membership had risen from 15 to 28 countries between 2004 and 2013, and given the unappealing character of potential members such as Serbia, Albania, Kosovo, Macedonia, Moldova and Ukraine, this slowdown was inevitable. Nevertheless, the EU’s failure to put sufficient energy and resources into its neighbourhood policy has contributed – together with many other ­factors – to the instability afflicting parts of eastern Europe and the Arab world.

Given all these problems, it is not surprising that defending the EU has become an unfashionable cause. Nor that celebrated historians have started to draw on historical analogies to predict the Union’s demise. Writing in these pages (6 November), Brendan Simms and Timothy Less argued that, just as Austria-Hungary, the USSR and Yugoslavia had disintegrated, so the EU, another “attempt to create a supranational entity”, was likely to go the same way. And Niall Ferguson wrote in the Sunday Times in November: “Like the Roman empire in the early 5th century, Europe has let its defences crumble . . . As Gibbon saw, convinced monotheists pose a grave threat to a secular empire.”


Although the EU is a long way from disintegrating, its weakness and unpopularity matter for all those who care about the West, its values and its contri­bution to global order.

An effective EU is an essential component of a strong West. The Union has brought peace and stability to its own members and much of the European continent. It is a beacon of Western values – democratic government, the rule of law and market economics – and does its best to make its neighbours respect those values, sometimes successfully, sometimes not. The EU is a muddled and messy organisation but is in essence a community of law, and its chief mission is to spread the rule of law.

The EU can act alone or in alliance with the US, often tempering the unilateralist instincts of the Americans. Indeed, without the EU, the West would be a much more American concept – with important satellites such as Britain, France, Germany and Japan following in the Americans’ wake – than it is today.

The Europeans are strong believers in global governance, another unfashionable but important concept. They understand that, without effective international institutions and rules, strong countries can bully weak ones. Given the strength of the United States, it is not surprising that the Americans are often lukewarm in their commitment to global governance; they do not like to be constrained.

It is the Europeans who play a pre-eminent role in the UN, the international financial institutions and the World Trade Organisation. It is the US that is sometimes slack in paying its UN dues and more often prepared to act militarily without the authorisation of the UN Security Council; and the US that delayed for five years – until December – an IMF reform will allow China’s voting power to surpass that of Belgium.

Ever since the 1990s the EU has pioneered global efforts to limit carbon emissions and it played a vital role in forging the Paris accord in December; the US, China and India have often dragged their feet on efforts to tackle climate change. The EU and its member states have taken the lead in forging a host of arms control agreements, but the US (like Russia and China) has boycotted those on landmines and cluster munitions. The US continues to spurn the International Criminal Court (like Russia and China) and has not ratified either the Comprehensive Test Ban Treaty or the UN Convention on the Law of the Sea.

Cynics may see global governance as high-minded hot air, with little connection to the forces shaping the real world, but it matters. A lawless world is inherently dangerous, especially when, as is the case now, so much is in flux. How can one manage international financial markets, global trade, climate change or the threat of terrorism without international rules and institutions? Strong, emerging powers are less likely to frighten their neighbours if they are constrained by institutions of the sort that did not exist in Europe in 1914. The EU gets this, and so does the US sometimes; for instance, they both agree that the lack of effective regional institutions in east Asia is worrying. So long as the EU exists, it will bang the drum for global governance and implore the Americans to be more respectful of it.

The EU is also important in resolving many conventional foreign policy issues. In this domain the EU works through unanimity and so can act only when all its members agree. But sometimes it does act, and with success. Its best-ever foreign policy was to enlarge into the former communist countries of central and eastern Europe. Eleven of them have now joined the EU, having to jump through a series of hoops – on media freedom, independent judiciaries, market economics and so on – before being allowed in. Michael Gove and Liam Fox, both noted Eurosceptics, have acknow­ledged the EU’s positive role in fostering democracy in central Europe.

Of course, there is sometimes backsliding. The performance of Viktor Orbán’s Fidesz government in Hungary has been problematic. But pressure from the European Commission forced him to back-pedal on measures that endangered the independence of Hungary’s media regulator, the central bank and the judiciary, though the commission should have been tougher. Recently the commission has warned the new Polish government over its steps to limit the independence of the constitutional court and state broadcasters.

One should not pretend that the EU is always a useful or effective diplomatic actor. It has consistently failed to contribute much of value to the Middle East peace process, partly because its own members disagree about how to deal with Israel and Palestine. Nevertheless, many people are unaware of the crucial and positive role that the EU has played in resolving some other major diplomatic conundrums in recent years.

In 2013 the then EU high representative, Catherine Ashton, brokered a deal between Serbia and Kosovo that settled their worst disagreements and allowed both to move closer to the EU. The EU’s “rule of law” mission in Kosovo, though not without problems, has improved the judicial system, police force and customs service. Meanwhile, EU police trainers and peacekeepers have been making life safer for Bosnians.

A second example is Somalia. The EU’s anti-piracy naval mission off the Somali coast, supervised by a British headquarters, has helped to bring about a sharp fall in attacks on shipping. The EU has also paid for the African Union peacekeeping force that has restored stability to Mogadishu; trained 5,000 local troops and police; and boosted the capacity of Somalia’s and its neighbours’ naval forces and courts (so that pirates can be tried).

Iran’s nuclear programme provides a third case of effective EU action. In 2003, the British, French and German foreign ministers, plus the then EU high representative, Javier Solana, launched a diplomatic effort to limit the programme. Eventually the Americans, Russians and Chinese joined in. After 12 years of on-and-off talks, Iran finally decided to go for a deal because of UN, US and EU sanctions – and, in particular, those of the Europeans, which excluded it from the SWIFT bank clearing system and hurt the Iranian oil industry. Iran trusted Solana and his successor, Ashton, which allowed them to play a pivotal role.

A fourth instance is Burma, where EU sanctions discouraged foreign companies from investing. In 2012, when the generals showed signs of wanting to reform, the EU told them that if Aung San Suu Kyi’s National League for Democracy was allowed to contest elections, and political prisoners were freed, the sanctions would go. (The US could not make a comparable offer because lifting its sanctions requires years of congressional deliberation.) The generals took the bargain. The EU has subsequently funded peace talks between the government and ethnic rebel groups, as well as election monitors, and trained the Burmese police.

Take also Ukraine. Given the horrific fighting in the Donbas over the past two years, it is easy to forget that the uprising in Kyiv’s Maidan was triggered by the then president, Viktor Yanukovych, rejecting an EU trade agreement. The EU responded to Russia’s actions in Crimea and the Donbas with sanctions, some of which make it hard for Russian firms to raise capital in Western markets. Chancellor Angela Merkel cajoled several reluctant EU partners to back sanctions because Germany – though it has friendly ties with Russia and important economic interests there – was outraged by the Russians’ violation of international law. The falling oil price hurt Russia even more than the sanctions, but President Vladimir Putin appears keen to get them lifted, which may explain why the Donbas has been quieter in recent months.

The EU matters for internal security, too. Most Britons are scarcely aware of the EU’s work in the area known as “justice and home affairs”. The refugee crisis and the Paris attacks are spurring greater co-operation on
policing and counterterrorism. In this area Britain has a special position, as it may opt in to only those EU measures that it likes.

Nobody would call Theresa May an EU enthusiast but a year ago she decided, to her credit, to maintain Britain’s involvement in the most important parts of justice and home affairs, though many Conservatives urged her to pull out of everything. Thus, Britain is still part of Europol, the police co-operation agency. This has an impressive track record of breaking up pan-European criminal networks, including those that profit from abusing children, and it is now starting to play a role in counterterrorism. Britain will remain involved in several of the EU’s criminal databases. It will also stay in the European Arrest Warrant scheme, which allows suspected terrorists and criminals to be extradited speedily from other EU countries, as happened in the case of Hussein Osman, who fled to Italy just after the 21 July 2005 London Tube attacks. So although most Britons view the EU as a mainly economic enterprise, they should not forget its role in making the European continent more peaceful and secure.


Having said that, many of the arguments in the coming referendum campaign will focus on the economic costs and benefits of membership. The EU economy is the world’s largest single market by value. Although EU leaders have made mistakes in managing the euro, the single market remains a success story. Other countries want access and will bargain to achieve it. The EU has negotiated trade-opening agreements with about 60 other countries and there are many more – with Japan, India, Australia, Thailand, the US and the Mercosur countries of Latin America – in the pipeline. The day Britain leaves the EU, it loses the benefits of these deals (it would have to negotiate its own bilateral free-trade agreements from scratch, but it would lack the negotiating clout of the much larger EU economy). “Brexit” would also deter foreign direct investment. Firms ranging from investment banks, drug manufacturers and car companies to consultancies invest in the UK to gain access to the single market.

Although many words have been devoted to the impact of Brexit on the British economy, little has been written about its impact on the EU itself or, indeed, on the wider world. The UK’s departure would undoubtedly weaken the EU by energising Eurosceptics across the continent. When it comes to economic policy, the British are the biggest champions of extending the single market, negotiating trade agreements and cutting red tape. Without the British, these causes would suffer. So would co-operation on justice and home affairs, where, despite their opt-outs, the British have been extremely influential – say, in leading co-operation on counterterrorism and in providing the current head of Europol.

The EU’s defence policy has been unspectacular but useful since Tony Blair and Jacques Chirac invented it in 1998: it has run 32 peacekeeping, rule-of-law and humanitarian missions on three continents. The EU would lack credibility in defence without the participation of one of the EU’s two serious military powers (France being the other). EU foreign policy would also carry much less weight, because Britain has contributed a global perspective and deep expertise in some critical areas, including the five instances mentioned above.

Then there is the German question. For the first time in the history of the EU, one country is preponderant. Germany’s power has grown over the past five years, because of the strength of the German economy; Merkel’s skills and experience, which have given her great sway with other EU governments; the relative weakness of France; the waning influence of the European Commission; and the British government’s unwillingness to play a leading role in Europe. This situation is good for neither Germany nor the rest of EU. A British departure would accentuate the problem of German hegemony, creating all sorts of tensions and insecurities in Berlin and other capitals.

In the US, senior officials and strategists usually understand these issues more clearly than do many Europeans. They see the EU’s crucial role in strengthening the West against those who would weaken it. They also worry a great deal about the prospect of Brexit. It is true that in recent years Germany has become the chief interlocutor of the US on economic issues, and France on many security problems. But US officials know that the British help continental Europeans and Americans to understand each other better; and that an EU minus Britain would be economically weaker as well as less influential strategically. They see that the world is an increasingly dangerous place, and they want a strong EU – with Britain in it – to help tackle the many challenges to Western interests and values.

Charles Grant is the director of the Centre for European Reform

This article first appeared in the 18 February 2016 issue of the New Statesman, A storm is coming

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Enough to educate 17 million children: the true cost of Brazil’s Car Wash scandal

As a new Netflix series dramatises one of the world’s largest corruption cases, Global Witness puts a figure on the cost of the scandal.

In the 1980s, Alberto Youssef was, alongside an older sister, smuggling whisky and electronic products from Paraguay to Brazil. Once, while being chased at a high-speed by police, VCRs kept falling out of the pick-up truck he was driving. Few would have guessed that this almost comical character would, one day, become a key player in what has been called the biggest corruption scandal in history. But then, the Car Wash, or as it’s known in Portuguese, Lava Jato, stretched far and wide across Brazil at a huge cost.

New research by Global Witness shows the damage caused by the Car Wash scandal far exceeds the sums stolen. The cost to the Brazilian treasury may be nearly eight times higher than the £1.4bn actually taken, enough to cover the salaries of more than a million nurses or provide a year’s education for over 17 million children.

Police only began to uncover the extent of the Car Wash scandal in 2013, when they became suspicious about the sheer quantity of cash churning through a bureau de change in a humble petrol station in the country's capital Brasilia. That led to the arrest of Youssef, which in turn led to further arrests. It soon became clear that this was no ordinary money laundering operation. Police had stumbled upon a racket that would involve at least 28 major corporations and 20 political parties, resulting in over 100 convictions. The list of those implicated reads like a Who’s Who of the Brazilian political elite, including two of the country's presidents.

Former Brazilian president Luiz Inacio Lula da Silva has been sentenced to more than 12 years, after it emerged he took bribes for helping a construction company win contracts with Petrobras. Lula says the case is politically motivated and remains free while appealing it. A ruling in a federal court on Monday, however, could send him behind bars, even as he takes the case to the Supreme Court.

Current president Michel Temer has also been at the centre of corruption investigations, most recently over allegations of bribery concerning a deal for operating services at the Port of Santos, Latin America’s largest container port. Congress has twice blocked Temer from standing trial on corruption charges while in office, and he denies the allegations.

The scandal has also inspired The Mechanism, a new Netflix drama from the director behind the biopic of Pablo Escobar, Narcos. The sums of money involved in Car Wash were almost at Escobar levels, but the billions lost to Brazil’s hard-pressed public services mean the scam might also have caused harm on a scale comparable to the druglord’s activities.

The fraud revolved around Petrobras, Brazil’s state-owned oil company. Instead of awarding huge contracts for construction projects, oil rigs, shipping and so on in the normal manner, the work was rotated around a cartel of companies in orderly fashion. Petrobras would over-pay the companies by at least 3 per cent, with the extra money forming a kickback to the directors responsible for awarding them the contracts. These directors would pocket some of the money, and hand the rest to the politicians who had appointed them to their lucrative posts. The money then went to the campaigns of Brazil’s political parties and provided backdoor funds that kept otherwise unstable governing coalitions together.

The result was a Byzantine racket of astonishing intricacy and scale in which everyone took a cut. Bribes came in the form of bricks of cash, expensive art works, aircraft and yachts; anonymously-owned companies in tax havens and foreign bank accounts helped launder the loot. One Petrobras director alone channelled €20m to banks in Monaco from accounts in the Bahamas, Panama and elsewhere.

“Once the mechanism is established, only the corrupt can take part,” says José Padilha, the Brazilian writer and director of The Mechanism. “If you’re an honest politician you’re doomed. The honest businessman will not get any contracts. There are only crooks.”

This “mechanism” had been running uninterrupted for at least 12 years.

Was this really the biggest corruption scandal of all time? Virtually every Car Wash explainer in the UK press poses the question – but none provides an answer. That’s probably because it’s notoriously hard to quantify value throughout history. In 193 AD, the Roman Praetorian Guard assassinated their emperor and held a fraudulent auction to appoint his successor, striking a deal worth 250 pieces of gold for each soldier in the army. (The empire was not theirs to sell). If not the earliest documented fraud, it was surely the most audacious – but trying to convert the ransom into modern currency is a fool’s errand.

But Padhila has no doubt. “It’s the biggest corruption scandal in the history of mankind,” he says. “It involves a mechanism which has been operating in Brazil in one form or another since at least the Eighties. Too many Brazilians fall into the trap of ideology, but the mechanism has no ideology. It is left wing and right wing. The whole political system is corrupted. Democracy has failed.”

Regardless of whether Car Wash is the biggest bribery case of all time, it certainly features in the ranks of the world’s corruption mega-scandals, sitting alongside mammoth state-thieving operations such as Malaysia’s recent “1MDB scandal” – US lawsuits claim an estimated $4.5bn has gone missing from a state development fund – and France’s Elf scandal, which shook the body politic and in which at least $400m was creamed off international oil contracts. All these scandals were linked to illicit political funding.

Taking a look at the cost of Car Wash to Brazil, first off there is the amount filched from the state oil company in improper payments. A Federal Police report seen by Global Witness conservatively estimates this at £1.4bn – all of which had to be laundered, sometimes moved physically. To put this logistical feat in context, if withdrawn in £10 notes the sum would make a stack eight miles high equivalent to almost 16 Burj Khalifas, the tallest building in the world (or, if you like, 343 Christ the Redeemers). The 119 tonnes of cash would take a fleet of 97 Ford Transit vans to deliver.

Then there is the £2.1bn fine Petrobras has agreed to settle a US investors’ class action, already bigger than the amount actually stolen. But both the theft and the losses are dwarfed by (and reflected in) the collapse in Petrobras’s share price. Before the scandal broke in September 2014, shares were at $19.33 but as of March 2018 they had dropped to $14.07. The government suffered a paper loss of £14.1bn for its 29 per cent stake in the company.

September 2014 was also the moment that global oil prices began a long decline, but the damage was too great for Petrobras to hide. “I would say 90 per cent of the fall in share price is due to Car Wash,” says Tiago Cavalcanti, a Brazilian economist at the University of Cambridge.

Petrobras’s 3.7 billion shares are supposed to furnish Brazil with a healthy income, and in the three years before Car Wash exploded, they provided Brazil with an average annual dividend of £360m. No dividend was paid in 2015, 2016 or 2017, costing the country £1.1bn.

Then comes the kicker. So vast was the upheaval  with billions slashed in investment   that some believe it helped bring about the worst recession in Brazil since records began. In March 2014, when the first Car Wash arrests were made, the Brazilian unemployment rate was 7.1 per cent. By last summer it was at 13 per cent. São Paulo consultancy GO Associados, headed by economist Gesner Oliveira, calculated that the fallout from Car Wash hit GDP by 2.5 per cent in each year the investigation was going on, from 2015 to 2017. The consultancy has now told Global Witness it has revised those figures up to an extraordinary 3.6 per cent — which would mean almost the entire drop in output during 2015 and 2016 was accounted for by Car Wash.

GO Associados said that would imply an annual $4.6bn (£3.3bn) in lost tax for each of the three years the fallout from Car Wash was at its most extreme £9.9bn. This figure would appear to be on the conservative side: it is based on the hit to the economy from Petrobras’s reduction in spending plans  but does not take into account the wider impact on Brazil’s giant construction companies, many of which lost contracts elsewhere in Latin America as a result of the scandal. Such firms were also banned from any public contracts in Brazil. The figure also fails to include the reduction in foreign investment in Brazil as a result of the political turmoil.

So even setting aside Brazil’s paper loss – Petrobras shares may well continue to rise  Lava Jato could have cost the government at least £11bn in revenue in lost tax and lost dividends from its stake in the company. That’s almost eight times the amount stolen from Petrobras in the first place.

“That number sounds very plausible and the calculation is logical,” says Cavalcanti, who has himself calculated that without Car Wash and other governmental policies Brazilian GDP would have grown by 1.2 per cent in 2015 and 2016 (as opposed to an actual fall of 3.8 per cent and 3.6 per cent). “Another reason for the recession was the falling price of commodities, but Peru and Chile did not have the fall Brazil had. Certainly Car Wash was a very big factor in the recession.”

Who knows the real difference that £11bn could have made in a country where universal healthcare is still some way off and about 7 per cent remain illiterate. The real price of Car Wash is incalculable.

“I feel disgust and exasperation,” says Padilha.

You might think that at such terrible cost, the Brazilian public would rather the fraud had never been exposed. But a recent poll suggests 94 per cent of Brazilians think the investigations should continue despite the current turmoil. For many, this is a golden opportunity to tackle the corruption that has afflicted the Brazilian body politic for decades before the mechanism started turning.

Because according to the filmmaker, Petrobras is the tip of the iceberg.

“There is no public contract in any village, town, city or state that is not affected, from the tiniest new road to the biggest government project,” he says. “All are corrupted - and none of this is exposed yet. In my country you can turn any stone and there will be cockroaches underneath.”

Ed Davey is an investigative journalist for Global Witness.

This article first appeared in the 18 February 2016 issue of the New Statesman, A storm is coming