A new research paper published by the National Bureau of Economic Research, US, shows how there are substantial economic incentives for firms to lobby for coups and covert operations.

In their working paper Arindrajit Dube, Ethan Kaplan and Suresh Naidu examine how regime changes have helped not just some partially nationalised multinational firms, but also asset traders. These regimes were changed via US-backed coups.

Using CIA unclassified information as their research material, the authors have tracked five samples of coups.

They have analysed the stock price movement of highly exposed companies in countries where the coup took place. To their surprise, they found stock price gains were three times larger at the time of the coup authorisation rather than during or after the coup. Clearly, there were information leaks.

“We find that private information regarding coup authorisations and planning increased the stock prices of expropriated multinationals that stood to benefit from the regime change. The presence of these abnormal returns suggests that there were leaks of classified information to asset traders,” say the authors.

They start from the 1953 toppling of Iranian Prime Minister Mohammad Mossadegh. He had nationalised the oil fields and refinery at Abadan which belonged to the Anglo Iranian Oil company (today known as British Petroleum), a firm partially owned by the UK government. The CIA joined forces with the UK's MI6 to engineer a coup in Iran to protect western oil interests.

A year later, the CIA overthrew the Jacobo Arbenz government in Guatemala, which was attempting to nationalise large tracts of land owned by the American-based United Fruit Company. There are similar examples from Congo, Cuba and Chile.

In fact, the authors conclude that protecting foreign investments could be a motivation for undertaking regime change.

Is any multinational corporation benefitting from the Jasmine Revolution in Tunisia and the overthrow of Hosni Mubarak's regime in Egypt?

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