Brazil: How to Lose Investments

It is hard to imagine how Latin America's largest nation could do much more to discourage foreign investment. But Brazil—which already offers inflation galloping at 84% a year, xenophobic politicians, irresponsible strikes, sporadic power blackouts and water shortages—has managed to add another obstacle. After 16 months of debate, President João Goulart finally signed the toughest profits-control decree in the hemisphere. In 83 ambiguous articles, it says that foreign companies can send back in profit each year no more than 10% of their "registered investments."

The trouble is that no authority has determined whether the 10% applies to straight investment alone or...