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The War for Control of the Periphery

Steven Hiatt, ed., with introduction by John Perkins, A Game as Old as Empire: The Secret World of Economic Hit Men and the Web of Global Corruption (San Francisco: BK Currents, 2007), 310 pages, paper $24.95.

Hannah Holleman and R. Jamil Jonna are doctoral students in the Department of Sociology at the University of Oregon.

Just before John Perkins, author of the bestselling Confessions of an Economic Hit Man, decided it was no longer possible to remain silent about his intimate involvement in the economic warfare waged against the Global South, he sat despondently before the ruins of Ground Zero, totally incapable of visualizing the tragedy: all he could see was a U.S. contractor delivering millions of dollars of weapons to the mujahadeen in Afghanistan. Perkins understood himself—a former economic advisor for a multinational utilities contractor, similar to Bechtel—and others like him, to be products of a “system that promotes the most subtle and effective form of imperialism the world has ever witnessed.”1 Mainstream commentators addressing Perkins’s book ignored the vivid recounting of his own personal involvement as an economic hit man. This is undoubtedly because Perkins used this experience to emphasize the substantial connections between U.S. intelligence agencies, multinational corporations, and political elites of the Global South, laying bare the true motives of “development.” As an “economic hit man,” Perkins fabricated nearly every economic forecast he was asked to produce—as his bosses clearly expected him to do. This led him repeatedly to attack U.S. economic dogma in Confessions:

We prefer to believe the myth that thousands of years of human evolution has finally perfected the ideal economic system, rather than to face the fact we have bought into a false concept and accepted it as gospel. We have convinced ourselves that all economic growth benefits mankind…that the people who excel at stoking the fires of economic growth should be exalted and rewarded, while those born at the fringes are available for exploitation….The real story is that we are living a lie. (p. 216)

Critics rightly pointed out the dearth of supporting evidence for the damning confessions, even though Perkins provided numerous and well-documented historical comparisons­—for example, CIA involvement in overthrowing left-wing Latin American governments and the conscious application of debt servitude throughout the world. In response to critics and the media blockade, Perkins and Berrett-Koehler, the publishers of Confessions, pulled together a group of activists, academics, muckraking journalists, former “economic hit men,” and editor, writer, and activist Steven Hiatt to produce A Game as Old as Empire. The book serves as a guide to the machinations of modern imperialism.

Like Perkins, agents of imperialism throughout history have often recorded the results of the policies they helped implement. Imperial agencies have completed official reports that detail the most horrendous lived experiences and deaths of the victims of imperialism. Imperialism, inherent to capitalism as an economic system, has also had, from the earliest excursion, the ideological cover of the most prestigious economists confusing freedom and the free market, liberty and greed, economic development and plunder. In this sense, the exposés and analysis in A Game as Old as Empire will not surprise students of the history of capitalist development. However, readers have likely never seen together such a series of essays by insiders exposing their own roles in facilitating the accumulation of capital—activities which led to the immiseration of the world’s masses and the undermining of democratic hopes. These accounts are especially unique because they are compiled in a volume whose originating motivation is social change.

Hiatt, author of the first essay, “Global Empire: The Web of Control,” gives background information on the realignment of politics and the global economy after the Second World War. As many European colonies gained formal independence, Western elites were determined to manage this process so as to maintain their access to resources, labor, and markets of the Global South, thus creating a “built-in subsidy from the former colonies to their former rulers” (17). The threat that true independence posed to Western access was twofold: (1) “Asian, African and Latin American nations might become masters of their own economies, directing them to maximize their own development,” and (2) “there were alternative models: Cuba and Vietnam to name the most prominent” (17). Even with the risks, the benefit of the West’s strategy at this point was clear: “independence offered the West an opportunity to shed the costs of direct rule—responsibility for administration, policing, and development—while maintaining all the benefits of empire” (17).

During the Cold War, the West competed with the Soviet Union to provide development loans to newly independent states and thus “bring these countries into the West’s web of control economically and politically” (17). Loans were taken out, often by corrupt elites for their own enrichment, with the treasuries of the Global North as insurance, and the public coffers of the Global South as collateral. As Marx pointed out over a century ago:

The national debt, i.e. the alienation [by sale] of the state—whether the state is despotic, constitutional or republican—marked the capitalist era with its stamp. The only part of the so-called national wealth that actually enters into the collective possession of a modern nation is—the national debt. (Capital, vol. 1, 919)

One after another, the economies of the Global South, crippled by decades, if not centuries, of colonial-capitalist exploitation, defaulted on these loans. This, of course, was expected, and it provided the West the opportunity to restructure economies in the name of “free trade.” This restructuring was, ostensibly, to pay debts and facilitate growth. The true effects have been the opening and draining of the markets of the Global South and the exponential growth of interest and loan amounts that have indebted entire populations while providing record rates of profit for companies in the Global North. Elites here and abroad have colluded to enrich their own class while becoming the architects of the largest gap between the rich and poor, and the largest concentration of wealth in such few hands, in recorded history. “This system has been called a ‘Marshall Plan in reverse,’ with the countries of the Global South subsidizing the wealthy North, even as half the world’s population lives on less than $2 a day” (19).

The next ten essays in the book give an arresting, detailed picture of what this global economic context means for people. A face is given to what we often speak of abstractly as corruption and graft, and we begin to understand how “corruption, always the handmaid of Power, serves as a mechanism of both profit and control—and diverts attention from the real springs of power” (24). Indeed, the book demonstrates that the system is actually organized, through both states and legal structures, to benefit those at the top. For Perkins, the real spring of power is the “corporatocracy”: “the powerful group of people who run the world’s biggest corporations, the most powerful governments and history’s first truly global empire” (2). In each story corporations seem firmly rooted, not mere instruments, in the struggle for geopolitical control.

Lucy Komisar’s (chapter 4) exposé of the notoriously corrupt Bank of Credit and Commerce International (BCCI) serves as an entrée into the shady interface between some of the twentieth century’s most vile dictators, infamous drug cartels, religious extremists, powerful political elites (Democrats and Republicans), well-known multinational corporations, and the bloodiest CIA operations. This is an appropriate backdrop for the contributions of S. C. Gwyne (chapter 2), formerly an international banker, Steve Berkman (chapter 8), a former World Bank fraud investigator, and John Christensen (chapter 3), former BCCI employee and official in Jersey—a politically autonomous island and burgeoning offshore tax haven ­located in the British Isles. Each provides more evidence that the practices of BCCI are systematic, and thus necessary for the functioning of the global economy.

Gwyne gives a first-hand account of the life of an enterprising international banker: “dressed in a suit that costs more than the average native makes in a year, he does not take excessive interest in local people…obedient, aggressive and amoral; his efficiency depends precisely on that very narrow view of the world around him” (34). All he must do to ensure promotion is appease cronies of the local ruling elites (in this case, those associated with Ferdinand Marcos), ignore the fact that the deal is “less than sound” (i.e., “pure insanity” from a financial perspective [36]), and “cover his ass” by getting a government guarantee. Of course, it is well-known that the national bank assuming responsibility doesn’t “stand a snowball’s chance in hell” of making good on their guarantee (38). By the time payments are suspended the banker has moved on, the loan is rescheduled, and the odious debt thus accumulated ($28 billion at the time Marcos was overthrown) is left to the Philippine people to repay (39). Berkman’s discussion of the World Bank’s intransigence in response to repeated investigations revealing rampant fraud deviates only slightly. Instead, it is the World Bank guaranteeing

millions of dollars for roads that could not be found, millions paid for the rehabilitation of infrastructure that could not be verified, millions to approve services that somehow never reach the poor, millions to facilitate better economic policies, and millions to improve governance…Such rampant corruption can lead only to the conclusion that fraud and embezzlement are more the rule than the exception in the Bank’s portfolio. (173)

In each case loan money is safely spirited away to offshore tax havens, as detailed by Christensen, resulting in “widespread unemployment, low levels of public services, and a general lack of economic and social opportunity” (66). Christensen concludes: “corruption in the Global South cannot survive without the complicity of wealthy countries’ financial institutions” (45) and “offshore banking lies at the core of a system that enables businesses and the super rich to operate beyond the reach of onshore public or legal authority” (54).

The debt relief movement grew in response to this cycle of plunder, demanding that the United States and other countries cancel odious debt. Yet after endless rescheduling and rollovers, James S. Henry (chapter 11) makes it crystal clear that for all the hype about debt forgiveness, countries are more indebted today than when relief plans started to take effect. Henry provides voluminous data and a concise overview of the specific debt-relief plans proposed by countries, such as the United States, and multilateral institutions, while also providing a critical assessment of the actual results of plans implemented. He also provides a thoughtful series of proposals that would come much closer to removing the foot of first world banks from the throats of those in the Global South. Despite the failure of debt relief, such movements have certainly weakened multilateral institutions and this likely explains the increasing importance of export credit agencies (ECAs), which are investigated by Bruce Rich in chapter 10. According to Rich, ECAs annually pour “more money into the developing nations than all development aid worldwide, both bilateral and multilateral, including aid from UN agencies and the World Bank” (198). They are “now collectively the world’s biggest public financial institutions” (199).

The central purpose of ECAs is “to boost the overseas sales of their countries’ multinational corporations” (198). Since they operate with little to no oversight there is a tendency to fund the most socially and ecologically destructive projects proposed—most notably the Three Gorges Dam in China (201). However, one of their most useful functions is facilitating corporate welfare. ECAs do this by forgiving billions in loans, adding directly to the national debt, and making additional money available for the next round of super-projects (214–15).

The remaining three pieces (excluding the conclusion) take us inside the most brutal conflict zones of the world today. In the hunt for mineral resources in Congo, Kathleen Kern (chapter 5) details how militaristic rulers and militias on both sides of the conflict are trained, armed, and tutored by the U.S. military. Through the 1990s—as power shifted back and fourth between Congo and Rwanda/Uganda—multimillion dollar mining contracts, bank loans, and military aid packages also alternated, with the “holocaust on the equator” growing more brutal each year (94). Several corporations (e.g., Bechtel, Halliburton subsidiary Brown & Root, and mining companies Barrick Gold and Heritage Oil and Gas), with boards composed of powerful political figures, provided logistical support at key points in the conflict and were awarded lucrative contracts. Mining companies arrived along with militaries just prior to invasions to secure contracts on the spot (99–100). The Congolese interviewed by Kern knew better than to blame the conflict on Rwanda and Uganda—they “may be the pirates, but multi-national corporations based in the First World have equipped them to do their plundering” (98).

The theme of brutal and corrupt leaders colluding with states and multinationals appeared again in Nigeria, the leading oil exporter in West Africa and one of the fastest-growing sources of oil and gas for the American market. Andrew Rowell and James Marriott (chapter 6) follow a hostage situation in the Niger Delta. In the process they describe the geopolitical rivalry brewing between China and the United States and the desperate resistance of indigenous tribes.­ Cynically, recent OPEC president and former Nigerian minister of state petroleum resources, Dr. Edmund Daukoru, played down the civil strife afflicting the region and agreed with local military commander, Major Paul Okuntimo, who stated that uninterrupted oil extraction in the Niger Delta is impossible “unless ruthless military operations are undertaken” (123).

In Iraq, where “ruthless military operations” are the norm, Greg Muttit (chapter 7) investigates the “non-profit” International Tax and Investment Center (ITIC), which boasts a “board of directors…populated by executives of some of the world’s largest multinational corporations,” (134) and was responsible for drafting the notorious production sharing agreements (PSAs) governing oil extraction, which grant nominal control of oil resources to Iraq and direct control to the oil corporations. The ITIC—“a private-sector version of the OECD or IMF” (135), according to Ken Potter, vice president of Chevron Overseas—made its name “reforming” the oil and gas laws of Eastern-bloc countries. The head of ITIC, Dan Witt, moved to Iraq just after the invasion, intent on repeating the process. Privileged access to pivotal figures in the occupational authority, collusion with the IMF, and the presence of 150,000 U.S. troops, ensured success—though not without a fight.

Muttit also interviews Iraqi oil workers who face racist presumptions over their ability to run oil refineries, the continuation of a 1987 ban on the right to organize, and perpetual harassment by occupying forces. Despite these obstacles, these workers remain the front line of defense in the battle against privatization. In spite of looting (in the presence of U.S. troops), workers from the Iraqi Drilling Company began rebuilding their facilities immediately after the invasion—for the third time in two decades—and started to organize illegally. They did so, not just for the purpose of workers’ rights but, in the words of labor leader Hassan Juma, to “protect the national economy because we knew very well that the Americans and their allies came for the oil” (142). Juma, head of the 23,000-member oil workers union, says that Iraqis “see privatization as economic colonialism. The authorities are saying that privatization will develop our sector and be useful, but we do not see it as development at all: we view any plan to privatize the oil sector as a big disaster” (154).

As can be seen from the above, A Game as Old as Empire is well worth the read, giving some hope for change and providing insight into processes and exchanges that, for most of us, is information out of reach, or at least very difficult to obtain and understand. However the book has two weaknesses that it shares with other books focused on “globalization”: a lack of historicity and an unsophisticated economic analysis. These weaknesses emerge fully in the final chapter.

The primary focus of the book is the imperialistic activity, especially of U.S. entities, since the recession of the 1970s. The writers suggest that these horrors are a departure from a more sane past, or admirable intentions, especially in regard to the United States. (This is akin to the myth that a “neoconservative cabal” is responsible for the ills we are now witnessing.) It is therefore important to highlight the historical reality that the exploitation chronicled in the book is not a new phenomena.

Indeed, it has its roots in the earliest capitalist regimes. The forced extraction of wealth and labor from the noncapitalist regions of the globe, to the growing capitalist core, began with the division and domination of the East, Africa, and then the Atlantic regions, between the Portuguese, Spanish, Dutch, French, and later the English. Much like the consequences of policies today, “millions died, not outside of the ‘modern world system,’ but in the very process of being forcibly incorporated into its economic and political structures. They died in the golden age of Liberal Capitalism; indeed, many were murdered…by the theological application of the sacred principles of Smith, Bentham and Mill.”2 The United States was born out of this era of global conquest and as a new nation, it sought a position within the empire of capital. As historian Roxanne Dunbar-Ortiz makes clear, “this was not simply the founding of a republic for propertied, mostly slave-owning, white males, but more importantly a settler-colonialist and imperialist-aggressor state.”3 Under Jefferson, and later Jackson, “the term ‘freedom’ became a euphemism for the continental and worldwide expansion of the world’s leading slave power.” She reminds us that, “the U.S. has not become the most powerful military machine and dominant power on earth and in history by accident or by staying home and minding the cows and banks.”4

Further, Hiatt explains, in the first chapter, that the stagflation crisis in the 1970s led to changes in the focus of U.S. companies and politics. He ties this crisis to the glut of petrodollars in U.S. banks at the time, but the discussion is not tied clearly to the historical developments within capitalism. Therefore, readers are encouraged to see “globalization” or “neoliberalism” as aberrations, or new and independent phenomena, rather than aspects of a system dominated most recently by monopoly-finance capital and characterized by “an endless cycle of stagnation and financial explosion.”5 A more comprehensive economic analysis would help explain the need of companies and states to push financial products and endless wars due to the lack of investment outlets in production. Understanding the historical developments of the system is crucial if we are to have any hope of taking aim at the source, rather than the symptoms, of our pain and suffering.

The weaknesses in the historical and economic analysis of the book are primarily important in the sense that our understanding of problems leads to our strategies for solutions and the prioritization of our work. In the concluding chapter of the book, Antonia Juhasz points out that “while the game may be as old as Empire, the resistance and alternatives to it have an equally long, important and instructive history” (265). This is true, but the history to which we are directed begins after the Second World War, obliterating the historical continuity of capitalism and resistance to it, as well as the possibility of an analysis of the actual causes and power relations that give rise to the vagaries of the system. Instructive resistance, in her essay, begins with the global justice movement in response to the founding of Bretton Woods institutions. In reality, opposition, not just to the various manifestations of power, but to the source of that power in the social relations of the capitalist system, did not begin with the birth of these institutions (IMF, World Bank, WTO, GATT, etc.)—nor will it end with them. Rather, resistance to the system began (and continues today) with the earliest enclosure movements and the subjugation and forced dependency of masses of people on the irrationality of a market system to meet their most basic needs. The neoliberal model, and the tendencies we now call “globalization,” rather than a departure, are logical extensions of the practices of imperialist nations from the start, however modified. Power relations, and the division between who pays and who benefits, are also still fundamentally the same.

As Eduardo Galeano writes, “in systems organized upside down, when the economy grows, social injustice grows with it.”6 Our only hope is a fundamental transformation of this system and its attendant power relations. The core of such a transformation is the extension of democracy into the economic, as well as the political sphere, or the socialization of production and decision making on a society-wide scale. With decisions about production and distribution placed squarely in the hands of the demos, or the people, rather than the private owners of capital and other elites, we might see the world described by Elvira, a garment worker in the Philippines, who imagines “a society where basic needs are provided, there is enough food, there is housing for everyone, all children can go to school, hospitals are for everybody, and there is a job for everyone—a job that helps people to develop their potential as human beings” (263). What is needed, in other words, is a world no longer subject to “a game as old as empire.”

Notes

  1. John Perkins, Confessions of an Economic Hitman (San Francisco: Berrett-Koehler Publishers, 2004).
  2. Mike Davis, Late Victorian Holocausts (London; New York: Verso, 2001), 9.
  3. Roxanne Dunbar-Ortiz, “The Grid of History,” Monthly Review 55, no. 3 (July-August 2003), 88.
  4. Dunbar-Ortiz, “The Grid of History,” 89-90.
  5. John Bellamy Foster, “The Financialization of Capitalism,” Monthly Review 58, no. 11 (April 2007), 1.
  6. Eduardo H. Galeano, Open Veins of Latin America (New York: Monthly Review Press, 1997), 282.