The Hindu Business Line : The economics of subterfuge

On the prowl apparently are Economic Hit Men, highly paid professionals who cheat countries out of trillions of dollars, by funnelling money from the World Bank and foreign `aid' organisations into the coffers of huge corporations and the pockets of a few wealthy families which control natural resources. The EHMs use multilateral agencies to foment conditions that make nations subservient to corporatocracy. D. Murali offers a reading of the Confessions of an Economic Hit Man, by Jo hn Perkins.

SEE IF you can piece together the following jigsaw: As a guest on the `Hard Talk' show on BBC, a few days ago, the Finance Minister was not too happy with the US Ambassador, Mr David C Mulford's hasty `breach of faith' charge against India for not raising the FDI (foreign direct investment) cap in insurance to 49 per cent. The day's news is about Cabinet nod for 74 per cent FDI in telecom sector.

"America is committed to helping India to become a major world power in the 21st Century. A strong Indian aviation system is a core component of reaching that goal," the US Secretary of Transportation, Mr Norman Y. Mineta, said during the signing ceremony of the `open skies' agreement with India. A few months later Boeing was happy with the biggest aviation order from Air India for 68 planes, adding to Rs 35,000 crore. India supported the US over Iran's nuclear issue; and the Prime Minister returned home to assure us about nuclear fuel.

"The main reason we establish embassies around the world is to serve our own interests, which during the last half of the twentieth century meant turning the American republic into a global empire," writes John Perkins in Confessions of an Economic Hit Man, from Berrett-Koehler Publishers Inc (www.bkconnection.com). You may dismiss the statement as nothing new and ask, "What's the big deal, aren't we all hit economically?" But wait, economic hit man or EHM is different.

"EHMs are highly paid professionals who cheat countries around the globe out of trillions of dollars. They funnel money from the World Bank, the US Agency for International Development (USAID), and other foreign `aid' organisations into the coffers of huge corporations and the pockets of a few wealthy families who control the planet's natural resources," begins the preface, on an alarming note.

How do the EHMs work? "Their tools include fraudulent financial reports, rigged elections, payoffs, extortion, sex, and murder. They play a game as old as empire, but one that has taken on new and terrifying dimensions during this time of globalisation. I should know. I was an EHM," confesses Perkins in what he wrote more than 20 years ago. Only, the manuscript never got published till recently owing to `threats or bribes'.

For those who wonder what made him ignore the threats and bribes, the author has a long answer about his determination to come clean post 9-11. But the `short answer' is from his family, factoring in his only daughter Jessica who graduated from college and went out into the world of her own. How did she react when Perkins told her about publishing the book? "Don't worry, dad. If they get you, I'll take over where you left off. We need to do this for the grandchildren I hope to give you someday!"Perkins learns the ropes from his colleague Claudine, `a fascinating example of the manipulation that underlines the business'. She outlines to him the job description: "Encourage world leaders to become part of a vast network that promotes US commercial interests.

In the end, those leaders become ensnared in a web of debt that ensures their loyalty. We can draw on them whenever we desire — to satisfy our political, economic, or military needs. In turn, they bolster their political positions by bringing industrial parks, power plants, and airports to their people."

EHM work has paid off in the form of `inhuman conditions in Asian sweatshops', pollution committed brazenly by oil companies `committing genocide among ancient cultures', and pharma biggies denying `lifesaving medicines to millions of HIV-infected Africans'. The income ratio of the one-fifth of the world's population in the wealthiest countries to the one-fifth in the poorest went from 30 to 1 in 1960 to 74 to 1 in 1995, Perkins writes, citing the UN's Human Development Report.

The US spends over $87 billion conducting a war in Iraq, while the UN estimates that "for less than half that amount we could provide clean water, adequate diets, sanitation services, and basic education to every person on the planet," points out the book. You can see on http://nationalpriorities.org a running counter of `the US taxpayer cost of the Iraq War, based on Congressional appropriations' (it ticked past $202,467,227,734 as I write this).

It may be tautological to say that economic growth benefits humankind and that the greater the growth, the more widespread the benefits. Isn't that the gospel? Perkins draws attention to the corollary: "That those 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".

He reasons that economic growth in many countries benefits only a small portion of the population, while causing "increasingly desperate circumstances for the majority," all because our systems reward greed.

The `corporatocracy' that includes governments and financial institutions has brought us to a point where "our global culture is a monstrous machine that requires exponentially increasing amounts of fuel and maintenance."

After everything in sight has been consumed, it will have no choice but to devour itself, Perkins warns."The lives of those who `make it', and their accoutrements — their mansions, yachts, and private jets — are presented as models to inspire us all to consume, consume, consume," he rues. "Every opportunity is taken to convince us that purchasing things is our civic duty, that pillaging the earth is good for the economy and therefore serves our higher interests." Rings close to what we hear, you'd agree.

"We are an elite group of men and women who utilise international financial organisations to foment conditions that make other nations subservient to the corporatocracy," describes Perkins about the EHM profession that runs on favours in the form of loans for infrastructure, with a condition that engineering and construction companies from the US must build all the projects.

"In essence, most of the money never leaves the US; it is simply transferred from banking offices in Washington to engineering offices in New York, Houston, or San Francisco." Plus, "the recipient country is required to pay it all back, principal plus interest."

Which is where the trap begins, as you can learn from the horse's mouth: "If an EHM is completely successful, the loans are so large that the debtor is forced to default on its payments after a few years. When this happens, then like the Mafia we demand our pound of flesh." What's that? "Control over UN votes, the installation of military bases, or access to precious resources such as oil or the Panama Canal." Despite all this, the debtor still owes the money, and another country is added to `global empire'!

A dismal example that the author cites of EHM effectiveness is Ecuador, where from 1970, during what is euphemistically known as `Oil Boom', poverty level rose from 50 to 70 per cent, under- or un-employment rose from 15 to 70 per cent, and public debt climbed from $240 million to $16 billion. Less than four decades ago, Ecuador had `over 15 per cent of the world's bird species and thousands of unclassified plants'.

`Development' is happening! "A new $1.3-billion, 300-mile pipeline constructed by an EHM-organised consortium promises to make Ecuador one of the world's top ten suppliers of oil to the US." And, it looks like the price has already been paid many times over: "Vast areas of rain forest have fallen, macaws and jaguars have all but vanished, three Ecuadorian indigenous cultures have been driven to the verge of collapse, and pristine rivers have been transformed into flaming cesspools."

At a macro level, "Third World debt has grown to more than $2.5 trillion, and the cost of servicing it — over $375 billion per year as of 2004 — is more than all Third World spending on health and education, and 20 times what developing countries receive annually in foreign aid." The top one per cent of Third World households accounts for 70 - 90 per cent of all private financial wealth and real estate ownership in their country, informs the book, citing James S. Henry, author of The Blood Bankers: Tales from the Global Underground Economy.

The popular image of hit men does not work for EHM. "In countries like Ecuador, Nigeria, and Indonesia, we dress like local schoolteachers and shop owners. In Washington and Paris, we look like government bureaucrats and bankers. We appear humble, normal." And there's this confession on how EHMs go about their jobs: "We visit project sites and stroll through impoverished villages. We profess altruism, talk with local papers about the wonderful humanitarian things we are doing. We cover the conference tables of government committees with our spreadsheets and financial projections, and we lecture at the Harvard Business School about the miracles of macroeconomics."

Shall we crack down and arrest them? Not possible, because they seldom do anything illegal. "The system itself is built on subterfuge, and the system is by definition legitimate."

The system needs economists who can stick their neck out "even when hard data isn't available", as Perkins found. Such as, producing "studies that projected economic growth 20 to 25 years into the future and that evaluated the impacts of a variety of projects", by measuring economic progress through GNP (gross national product) growth.

Thus, at 26, with a bachelors degree, and some background in spying, he became an economist in `a lofty consulting company' Chas T. Main.

He rose to become Chief Economist and Manager of Economics and Regional Planning. One of the first lessons the author learns is that statistics can be manipulated "to produce a large array of conclusions, including those substantiating the predilections of the analyst".

A grimmer lesson from Claudine reads: "Once you're in, you're in for life." But the carrot was attractive; for, "the world is your shopping cart," reads another simple instruction. Perkins goes on to develop econometric models, compute electricity load factors, and crank up forecasts.

Helpfully, the accounting department cooperated by being liberal with expense account, as Perkins writes in a chapter titled `Pimping, and financing Osama bin Laden'.

A whale of a read for the weekend, so you can forget about Saddam whose confessions are still a long way to come.

Economics@TheHindu.co.in

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Farm talks flounder

Storm in a coffee cup

Facts, not merely fax

An anomaly that needs rectification

Two streams of assessments

Motor vibrator regulating the flow into a screw feeder

The economics of subterfuge