Thursday, February 26, 2009

Economic Hit Man - Prologue


This book takes up where Confessions of an Economic Hit Man left off. Back when I finished writing that book in 2004, I had no idea whether anyone would want to read about my life as an economic hit man (EHM). I chose to describe events that I needed to confess. Subsequently, traveling across the United States and to other countries, lecturing, fielding questions, and talking with men and women who are concerned about the future, I have come to understand that people everywhere desire to know what is really going on in the world today. We all want to be able to read between the lines of the news reports and hear the truths that are glossed over by the self-serving pronouncements of the individuals who control out businesses, governments, and media (collectively, the corporatocracy).

As I explained in Confessions, I tried to write that book several times. I approached other EHMs and jackals – the CIA-sponsored mercenaries who step in to influence, cajole, bribe, and sometimes assassinate – and asked them to include their stories. Word quickly spread; I myself was bribed and threatened. I stopped writing. After 9/11, when I made the commitment to move forward, I decided that this time I would tell no one until the manuscript was published. At that point it became an insurance policy; the jackals knew that if anything unusual happened to me, sales of the book would skyrocket. Writing Confessions without assistance from others with similar experiences might have been difficult, but it was my safest route. Since its publication, people have stepped out from the shadows. EHMs, jackals, reporters, Peace Corps volunteers, corporate executives, and World Bank, International Monetary Fund (IMF), and government officials have come to me with their own confessions. The stories they share in the following pages expose the facts behind the events that are shaping the world our children will inherit. They underscore the inevitable conclusion: We must act, we must change.

I want to emphasize that you will not find gloom and doom in these pages. I am optimistic. I know that, although serious, our problems are man-made. We are not threatened by a giant meteor. The fire of the sun has not been extinguished. Because we created these problems, we can solve them. By exploring the dark recesses of our past we can develop a light for examining – and changing – the future.

When you finish reading The Secret History of the American Empire, you too will, I believe, feel absolutely confident that we will do the right thing. You will have identified a plan of action. Together we will utilize the resources providence has provided to establish human societies that reflect our highest ideals.


One evening a few months into my book tour for Confessions, I found myself lecturing in a Washington, DC, Bookstore. The woman introducing me had mentioned earlier that she expected a number of World Bank staffers to attend.

Created at Bretton Woods in my home state of New Hampshire in 1944, the Bank was changed with reconstructing countries devastated by the war. Its mission soon became synonymous with proving that the capitalist system was superior to that of the Soviet Union. To further this role, its employees cultivated cozy relationships with capitalism's main proponents, multinational corporations. This opened the door for me and other EHMs to mount a multi trillion-dollar scam. We channeled funds from the Bank and its sister organizations into schemes that appeared to serve the poor while primarily benefiting a few wealthy people. Under the most common of these, we would identify a developing country that possessed resources our corporations coveted (such as oil), arrange a huge loan for that country, and then direct most of the money to our own engineering and construction companies – and a few collaborators in the developing country. Infrastructure projects, such as power plants, airports, and industrial parks, sprang up; however, they seldom helped the poor, who were not connected to electrical grids, never used airports, and lacked the skills required for employment in industrial parks. At some point we EHMs returned to the indebted country and demanded our pound of flesh: cheap oil, votes on critical United Nations issues, or troops to support ours someplace in the world, like Iraq.

In my talks, I often find it necessary to remind audiences of a point that seems obvious to me but is misunderstood by so many: that the World Bank is not really a world bank at all; it is, rather, a US bank. Ditto its closest sibling, the IMF. Of the twenty-four directors on their boards, eight represent individual countries; the United States, japan, Germany, France, the United Kingdom, Saudi Arabia, China, and Russia. The rest of the 184 member-countries share the other sixteen directors. The United States controls nearly 17 percent of the vote in the IMF and 16 percent in the World Bank; Japan is second with about 6 percent in the IMF and 8 percent in the Bank, followed by Germany, the United Kingdom, and France each with around 5 percent. The United States holds veto power over major decisions and the president of the United States appoints the World Bank president.

When my formal talk was finished, I was escorted to a table to sign books. The line snaked through the rows of bookcases. It would be another long evening. What I had not expected were the number of men and women in business attire who handed me cards indicating that they held high positions in foreign embassies and the World Bank. There were several ambassadors from other countries; a couple of these asked me to sign books for their presidents, as well as for themselves.

The last people in line were four men: Two wore business suits and ties and two, who were much younger, were dressed in blue jeans and polo shirts. The older men handed me their World Bank business cards. One of the younger men spoke up, “Our fathers gave us permission to tell you this,” he said. “We've watched them go off to work every morning at the Bank dressed...” - he pointed at them - “like this. But when protesters congregate here in Washington to demonstrate against the Bank, our fathers join them. We watch them go incognito, wearing old clothes, baseball caps, and sunglasses to support those people because they believe they – and you – are right.”

Both of the older men shook my hand vigorously. “We need more whistle-blowers like you,” one of them said.

Write another book,” the other added. “Include more of the details you presented tonight, about what happened to the countries you worked in, all the damage done by people like us in the name of progress. Expose this empire. Spell out the truth behind places like Indonesia where the statistics look so good and the reality's so bad. And also give us hope. Offer our sons alternatives. Map out a way for them to do a better job.”

I promised him I would write such a book.

Before we get into the main text of that book, I would like to examine a word he used. Empire. It has been bandied about in the press and classrooms and at local pubs for the last few years. But what exactly is an empire? Does America, with its magnificent constitution, its Bill of Rights, its advocacy of democracy, really deserve such a label – one that brings to mind a long history of brutal and self-serving rule?

Empire: nation-state that dominates other nation-states and exhibits one or more of the following characteristics: 1) exploits resources from the lands it dominates, 2) consumes large quantities of resources – amounts that are disproportionate to the size of its population relative to those of other nations, 3) maintain a large military that enforces its policies when more subtle measures fail, 4) spreads its language, literature, art, and various aspects of its culture throughout its sphere of influence, 5) taxes not just its own citizens, but also people in other countries, and 6) imposes its own currency on the lands under its control.

This definition of “Empire” was formulated in meetings I held with students at a number of universities during my book tour in 2005 and 2006. almost without exception, the students arrived at the following conclusion: The United States exhibits all the characteristics of a global empire. Addressing each of the above points.

Points 1 and 2. The United States represents less than 5 percent of the world's population; it consumes more than 25 percent of the worlds' resources. This is accomplished to a large degree through the exploitation of other countries, primarily in the developing world.

Point 3. The United States maintains the largest and most sophisticated military in the world. Although this empire has been built primarily through economics – by EHMs – world leaders understand that whenever other measures fail, the military will step in, as they did in Iraq.

Point 4. The English language and American culture dominate the world.

Points 5 and 6. Although the United States does not tax countries directly, and the dollar has not replaced other currencies in local markets, the corporatocracy does impose a subtle global tax and the dollar is in fact the standard currency for world commerce. This process began at the end of World War II when the gold standard was modified: dollars could no longer be converted by individuals, only by governments. During the 1950s and 1960s, credit purchases were made abroad to finance America's growing consumerism, the Korean and Vietnam Wars, and Lyndon B. Johnson's Great Society. When foreign businessmen tried to buy goods and services back from the United States, they found that inflation had reduced the value of their dollars – in effect, they paid an indirect tax. Their governments demanded debt settlements in gold. On August 15, 1971, the Nixon administration refused and dropped the gold standard altogether. Washington scrambled to convince the world to continue accepting the dollar as standard currency. Under the Saudi Arabian Money-laundering Affair (SAMA) I helped engineer in the early seventies, the royal House of Saud committed to selling oil for only US dollars. Because the Saudi controlled petroleum markets, the rest of OPEC (Organization of Petroleum Exporting Countries) was forced to comply. As long as oil reigned as the supreme resource, the dollar's domination as the standard would currency was assured – and the indirect tax would continue.

A seventh characteristic emerged during my discussions with the students: An empire is ruled by an emperor or king who has control over the government and media, is not elected by the people, is not subject to their will, and whose term is not limited by law.

On first glance, this seems to set the United States apart from other empires. However, the appearance is illusory. This empire is ruled by a group of people who collectively act very much like a king. They run our largest corporations and, through them, our government. They cycle through the “revolving door” back and forth between business and government. Because they fund political campaigns and the media, they control elected officials and the information we receive. These men and women (the corporatocracy) are in charge regardless of whether Republicans or Democrats control the White House or Congress. They are not subject to the people's will and their terms are not limited by law.

This modern empire has been built surreptitiously. Most of its own citizens are not aware of its existence; however, those exploited by it are, and many of them suffer from extreme poverty. On average twenty-four thousand people die of hunger and hunger-related diseases every day. More than half of the planet's population lives on less than two dollars a day – often not enough to provide the basic amenities, and about the same in real terms as they received thirty years ago. For us to live comfortable lives, millions must pay a very high price. While we have become aware of the environmental damage engendered by our consumptive lifestyles, the majority of us are either oblivious to or in denial of the costs in human suffering. Our children, however, will have no choice but to take responsibility for the imbalances we have created.

In the process of building this empire, we in the United States have managed to discard our most fundamental beliefs, those that in the past defined the very essence of what it is to be an American. We have denied ourselves and those we colonize the rights so eloquently expressed by our Declaration of Independence. We have forfeited the principles of universal equality, justice, and prosperity.

History teaches that empires do not endure; they collapse or are overthrown. Wars ensue and another empire fills the vacuum. The past sends a compelling message. We must change. We cannot afford to allow history to repeat itself.

The power base of the corporatocracy is its corporations. They define our world. When we look at a globe we see the outlines of slightly less than two hundred countries. Many of the boundaries were established by colonial powers and most of these countries have minimal impact on their neighbors. From a geopolitical viewpoint this model is archaic; the reality of our modern world might better be represented by huge clouds that encircle the planet, each symbolizing a multinational corporation. These powerful entities impact every single country. Their tentacles reach into the deepest rain forests and to the most remote deserts.

The corporatocracy makes a show of promoting democracy and transparency among the nations of the world, yet its corporations are imperialistic dictatorships where a very few make all the decisions and reap most of the profits. In our electoral process – the very heart of our democracy – most of us get to vote only for candidates whose campaign chests are full; therefore, we must select from among those who are beholden to the corporations and the men who own them. Contrary to our ideals, this empire is built on foundations of greed, secrecy, and excessive materialism.

On the positive side, corporations have proven highly efficient in marshaling resources, inspiring collective creativity, and spreading webs of communications and distribution to the most remote corners of the planet. Through them, we have at our disposal every thing we need to ensure that those twenty-four thousand people do not die of hunger every day. We possess the knowledge, technologies, and systems required to make this a stable, sustainable, equitable, and peaceful planet.

The founders of this nation recognized that revolution should not lead to anarchy. They freed themselves from tyranny, but they were wise enough to also adopt many of the commercial and legal structures that had proven so successful for the British. We must accomplish something similar. We need to accept the benefits this empire has created and use them to unite, to heal the rifts, and to close the gap between rich and poor. We must take courage, as the founders of this nation did. We must break the mold that has defined human interaction and suffering. We must transform the empire into a model of good stewardship and good citizenry.

The key to making this happen, to creating a world that our children will be proud to inherit, is through transforming the power base of the corporatocracy, the corporations – the way they define themselves, set their goals, develop methods for governance, and establish criteria for selecting their top executives. Corporations are totally dependent on us. We humans provide their brains and muscles. We are their markets. We buy their products and fund their endeavors. As this book will illustrate, we have been extremely successful at changing corporations whenever we have set it as our goal – for example, in cleaning up polluted rivers, halting damage to the ozone layer, and reversing discrimination. Now we must learn from our successes and rise to new levels.

Taking the necessary actions – those presented in this book – will require that we finish a task begun in the 1770s but never completed. We are summoned to pick up the baton carried by our founders and by the men and women who followed after them, who opposed slavery, pulled us out of the depression, and fought Hitler, and who came to our shores fleeing oppression or simply seeking the better life offered by our most sacred documents. The hour has arrived for us to muster the courage needed to continue the work all of them began. Let us not allow this empire to collapse and be replaced by another; let us instead transform it.

After that evening in the Washington, DC, bookstore, my thoughts often returned to the request made by the two World Bank executives. I had promised them I would write another book, expose the damage done by men like me, and offer hope for a better world. I needed to do that. I needed to share the stores of people who are ignored by the mainstream media because their words might anger advertisers, and to give voice to those who are shunned for insisting on anonymity because their jobs, pensions, and lives may depend on it. I needed to offer an alternative to the sanitized reports and misleading statistics that pass as “objective” or “scientific” because they include reams of information compiled by researchers who all too often are funded by the corporatocracy. I understand that there would be those who would be quick to criticize my use of quotes from anonymous speakers and from men and women who have experienced news in the making, but who are not invited to appear on the Sunday morning TV talk shows; yet I felt that I needed to honor those experiences and the voices that describe them. I owed it to the people who read Confessions, to the sons of those executives, my twenty-three-year-old daughter, and the generation those two young men and she represent around the world. For all of them – and for myself – I had to take the next step.

- pages 1- 5, The Secret History of the American Empire, by John Perkins

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