Part II: 1971-1975
Part III: 1975-1981
excerpted from the book
Confession of an Economic Hit
by John Perkins
Berrett-Koehler Publishers, SF,
Part II: 1973-1975
"Vietnam is just a holding action," one of the men interjected,
"like Holland was for the Nazis. A stepping-stone."
"The real target," the woman
continued, "is the Muslim world?'
I could not let this go unanswered. "Surely,"
I protested, "you can't believe that the United States is
"Oh no?" she asked. "Since
when? You need to read one of your own historians - a Brit named
Toynbee. Back in the fifties he predicted that the real war in
the next century would not be between Communists and capitalists,
but between Christians and Muslims."
'Arnold Toynbee said that?" I was
"Yes. Read Civilization on Trial
and The World and the West."
"But why should there be such animosity
between Muslims and Christians?" I asked.
Looks were exchanged around the table.
They appeared to find it hard to believe that I could ask such
a foolish question.
"Because," she said slowly,
as though addressing someone slowwitted or hard of hearing, "the
West - especially its leader, the U.S. - is determined to take
control of all the world, to become the greatest empire in history.
It has already gotten very close to succeeding. The Soviet Union
currently stands in its way, but the Soviets will not endure.
Toynbee could see that. They have no religion, no faith, no substance
behind their ideology. History demonstrates that faith - soul,
a belief in higher powers - is essential. We Muslims have it.
We have it more than anyone else in the world, even more than
the Christians. So we wait. We grow strong."
"We will take our time," one
of the men chimed in, "and then like a snake we will strike."
"What a horrible thought!" I
could barely contain myself. "What can we do to change this?"
The English major looked me directly in
the eyes. "Stop being so greedy," she said, "and
so selfish. Realize that there is more to the world than your
big houses and fancy stores. People are starving and you worry
about oil for your cars. Babies are dying of thirst and you search
the fashion magazines for the latest styles. Nations like ours
are drowning in poverty, but your people don't even hear our cries
for help. You shut your ears to the voices of those who try to
tell you these things. You label them radicals or Communists.
You must open your hearts to the poor and downtrodden, instead
of driving them L further into poverty and servitude. There's
not much time left. If you don't change, you're doomed."
I wrote in my journal:
Is anyone in the U.S. innocent? Although
those at the very pinnacle of the economic pyramid gain the most,
millions of us depend - either directly or indirectly - on the
exploitation of the LDCs for our livelihoods. The resources and
cheap labor that feed nearly all our businesses come from places
like Indonesia, and very little ever makes its way back. The loans
of foreign aid ensure that today's children and their grandchildren
will be held hostage. They will have to allow our corporations
to ravage their natural resources and will have to forego education,
health, and other social services merely to pay us back. The fact
that our own companies already received most this money to build
the power plants, airports, and industrial parks does not factor
into this formula. Does the excuse that most Americans are unaware
of this constitute innocence? Uninformed and intentionally misinformed,
yes - but innocent?
Of course, I had to face the fact that
I was now numbered among those who actively misinform.
The concept of a worldwide holy war was
a disturbing one, but the longer I contemplated it, the more convinced
I became of its possibility. It seemed to me, however, that if
this jihad were to occur it would be less about Muslims versus
Christians than it would be about LDCs versus DCs, perhaps with
Muslims at the forefront. We in the DCs were the users of resources;
those in the LDCs were the suppliers. It was the colonial mercantile
system all over again, set up to make it easy for those with power
and limited natural resources to exploit those with resources
but no power.
I wondered what sort of a world we might have if the United\ States
and its allies diverted all the monies expended in colonial wars
- like the one in Vietnam - to eradicating world hunger or to
making education and basic health care available to all people,
including our own. I wondered how future generations would be
affected if we committed to alleviating the sources of misery
and to protecting watersheds, forests, and other natural areas
that ensure clean water, air, and the things that feed our spirits
as well as our bodies.
I came to understand that most of those men believed they were
doing the right thing. Like Charlie, they were convinced that
communism and terrorism were evil forces - rather than the predictable
reactions to decisions they and their predecessors had made -
and that they had a duty to their country, to their offspring,
and to God to convert the world to capitalism. They also clung
to the principle of survival of the fittest; if they happened
to enjoy the good fortune to have been born into a privileged
class instead of inside a cardboard shack, then they saw it as
an obligation to pass this heritage on to their progeny.
I vacillated between viewing such people
as an actual conspiracy and simply seeing them as a tight-knit
fraternity bent on dominating the world. Nonetheless, over time
I began to liken them to the plantation owners of the pre-Civil
War South. They were men drawn together in a loose association
by common beliefs and shared self-interest, rather than an exclusive
group meeting in clandestine hideaways with focused and sinister
intent. The plantation autocrats had grown up with servants and
slaves, had been educated to believe that it was their right and
even their duty to take care of the "heathens" and to
convert them to the owners' religion and way of life. Even if
slavery repulsed them philosophically, they could, like Thomas
Jefferson, justify it as a necessity, the collapse of which would
result in social and economic chaos. The leaders of the modern
oligarchies, what I now thought of as the corporatocracy, seemed
to [fit the same mold.
I recalled an economics professor from my business school days,
a ma from northern India, who lectured about limited resources,
about man's need to grow continually, and about the principle
of slave labor. According to this professor, all successful capitalist
systems involve hierarchies with rigid chains of command, including
a handful at the very top who control descending orders of subordinates,
and a massive army of workers at the bottom, who in relative economic
terms truly can be classified as slaves. Ultimately, then, I became
convinced that we encourage this system because the corporatocracy
has convinced us that God has given us the right to place a few
of our people at the very top of this capitalist pyramid and to
export our system to the entire world.
I had researched Guatemala and I understood [Omar] Torrjos's [President
of Panama] meaning. United Fruit Company had been that country's
political equivalent of Panama's canal. Founded in the late 1800s,
United Fruit soon grew into one of the most powerful forces in
Central America. During the early 1950s, reform candidate Jacobo
Arbenz was elected president of Guatemala in an election hailed
all over the hemisphere as a model of the democratic process.
At the time, less than 3 percent of Guatemalans owned 70 percent
of the land. Arbenz promised to help the poor dig their way out
of starvation, and after his election he implemented a comprehensive
land reform program.
"The poor and middle classes throughout
Latin America applauded Arbenz," Torrijos said. "Personally,
he was one of my heroes. But we also held our breath. We knew
that United Fruit opposed these measures, since they were one
of the largest and most oppressive landholders in Guatemala. They
also owned big plantations in Colombia, Costa Rica, Cuba, Jamaica,
Nicaragua, Santo Domingo, and here in Panama. They couldn't afford
to let Arbenz give the rest of us ideas:'
I knew the rest: United Fruit had launched
a major public relations campaign in the United States, aimed
at convincing the American public and congress that Arbenz was
part of a Russian plot and that Guatemala was a Soviet satellite.
In 1954, the CIA orchestrated a coup. American pilots bombed Guatemala
City and the democratically elected Arbenz was overthrown, replaced
by Colonel Carlos Castillo Armas, a ruthless right-wing dictator.
The new government owed everything to
United Fruit. By way of thanks, the government reversed the land
reform process, abolished taxes on the interest and dividends
paid to foreign investors, eliminated the secret ballot, and jailed
thousands of its critics. Anyone who dared to speak out against
Castillo was persecuted. Historians trace the violence and terrorism
that plagued Guatemala for most of the rest of the century to
the not-so-secret alliance between United Fruit, the CIA, and
the Guatemalan army under its colonel dictator.
"Arbenz was assassinated' Torrijos
continued. "Political and character assassination."
He paused and frowned. "How could your people swallow that
CIA rubbish? I won't go so easily. The military here are my people.
Political assassination won't do." He smiled.
"The CIA itself will have to kill
We sat in silence for a few moments, each
lost in his own thoughts. Torrijos was the first to speak.
"Do you know who owns United Fruit?"
"Zapata Oil, George Bush's company
- our UN ambassador."
"A man with ambitions:' He leaned
forward and lowered his voice. 'And now I'm up against his cronies
This startled me. Bechtel was the world's
most powerful engineering firm and a frequent collaborator on
projects with MAIN. In the case of Panama's master plan, I had
assumed that they were one of our major competitors.
"What do you mean?"
"We've been considering building
a new canal, a sea-level one, without locks. It can handle bigger
ships. The Japanese may be interested in financing it."
"They're the Canal's biggest clients:'
"Exactly. Of course, if they provide
the money, they will do the construction."
It struck me. "Bechtel will be out
in the cold:'
"The biggest construction job in
recent history." He paused. "Bechtel's president is
George Shultz, Nixon's secretary of the treasury. You can imagine
the clout he's got - and a notorious temper. Bechtel's loaded
with Nixon, Ford, and Bush cronies. I've been told that the Bechtel
family pulls the strings of the Republican Party."
... both the 4 Depression and World War 11 led to the creation
of organizations like the World Bank, the IMF, and the General
Agreement on Tariffs and Trade (GATT). The 1960s was a pivotal
decade in this period and in the shift from neoclassic to Keynesian
economics. It happened under the Kennedy and Johnson administrations,
and perhaps the most important single influence was one man, Robert
McNamara. McNamara was a frequent visitor to our discussion groups
- in absentia, of course. We all knew about his meteoric rise
to fame, from manager of planning and financial analysis at Ford
Motor Company in 1949 to Ford's president in 1960, the first company
head selected from outside the Ford family. Shortly after that,
Kennedy appointed him secretary of defense.
McNamara became a strong advocate of a
Keynesian approach to government, using mathematical models and
statistical approaches to determine troop levels, allocation of
funds, and other strategies in Vietnam. His advocacy of "aggressive
leadership" became a hallmark not only of government managers
but also of corporate executives. It formed the basis of a new
philosophical approach to teaching management at the nation's
top business schools, and it ultimately led to a new breed of
CEOs who would spearhead the rush to global empire.'
As we sat around the table discussing
world events, we were especially fascinated by McNamara's role
as president of the World Bank, a job he accepted soon after leaving
his post as secretary of defense. Most of my friends focused on
the fact that he symbolized what was popularly known as the military-industrial
complex. He had held the top position in a major corporation,
in a government cabinet, and now at the most powerful bank in
the world. Such an apparent breach in the separation of powers
horrified many of them; I may have been the only one among us
who was not in the least surprised.
I see now that Robert McNamara's greatest
and most sinister contribution to history was to jockey the World
Bank into becoming an agent of global empire on a scale never
before witnessed. He also set a precedent. His ability to bridge
the gaps between the primary components of the corporatocracy
would be fine-tuned by his successors. For instance, George Shultz
was secretary of the treasury and chairman of the Council on Economic
Policy under Nixon, served as Bechtel president, and then became
secretary of state under Reagan. Caspar Weinberger was a Bechtel
vice president and general council, and later the secretary of
defense under Reagan. Richard Helms was Johnson's CIA director
and then became ambassador to Iran under Nixon. Richard Cheney
served as secretary of defense under George H. W. Bush, as Halliburton
president, and as U.S. vice president to George W. Bush. Even
a president of the United States, George H. W. Bush, began as
founder of Zapata Petroleum Corp, served as U.S. ambassador to
the U.N. under presidents Nixon and Ford, and was Ford's CIA director.
On October 6,1973 (Yom Kippur, the holiest of Jewish holidays),
Egypt and Syria launched simultaneous attacks on Israel. It was
the beginning of the October War - the fourth and most destructive
of the Arab-Israeli wars, and the one that would have the greatest
impact on the world. Egypt's President Sadat pressured Saudi Arabia's
King Faisal to retaliate against the United States' complicity
with Israel by employing what Sadat referred to as "the oil
weapon." On October 16, Iran and the five Arab Gulf states,
including Saudi Arabia, announced a 70 percent increase in the
posted price of oil.
Meeting in Kuwait City, Arab oil ministers
pondered further options. The Iraqi representative was vehemently
in favor of targeting the United States. He called on the other
delegates to nationalize American businesses in the Arab world,
to impose a total oil embargo on the United States and on all
other nations friendly to Israel, and to withdraw Arab funds from
every American bank. He pointed out that Arab bank accounts were
substantial and that this action could result in a panic not unlike
that of 1929.
Other Arab ministers were reluctant to
agree to such a radical plan, but on October 17 they did decide
to move forward with a more limited embargo, which would begin
with a 5 percent cut in production and then impose an additional
5 percent reduction every month until their political objectives
were met. They agreed that the United States should be punished
for its pro-Israeli stance and should therefore have the most
severe embargo levied against it.
Several of the countries attending the
meeting announced that they would implement cutbacks of 10 percent,
rather than 5 percent.
On October 19, President Nixon asked Congress
for $2.2 billion in aid to Israel. The next day, Saudi Arabia
and other Arab producers imposed a total embargo on oil shipments
to the United States.'
The oil embargo ended on March 18, 1974.
Its duration was short, its impact immense. The selling price
of Saudi oil leaped from $1.39 a barrel on January 1, 1970, to
$8.32 on January 1, 1974.2 Politicians and future administrations
would never forget the lessons learned during the early- to mid-1970s.
In the long run, the trauma of those few months served to strengthen
the corporatocracy; its three pillars -big corporations, international
banks, and government - bonded as never before. That bond would
The embargo also resulted in significant
attitude and policy changes. It convinced Wall Street and Washington
that such an embargo could never again be tolerated. Protecting
our oil supplies had always been a priority; after 1973, it became
Almost immediately after the embargo ended, Washington began negotiating
with the Saudis, offering them technical support, military hardware
and training, and an opportunity to bring their nation into the
twentieth century, in exchange for petrodollars and, most importantly,
assurances that there would never again be another oil embargo.
The negotiations resulted in the creation of a most extraordinary
organization, the United States-Saudi Arabian Joint Economic Commission.
Known as JECOR, it embodied an innovative concept that was the
opposite of traditional foreign aid programs: it relied on Saudi
money to hire American firms to build up Saudi Arabia.
Although overall management and fiscal
responsibility were delegated to the U.S. Department of the Treasury,
this commission was independent to the extreme. Ultimately, it
would spend billions of dollars over a period of more than twenty-five
years, with virtually no congressional oversight. Because no U.S.
funding was involved, Congress had no authority in the matter,
despite Treasury's role. After studying JECOR extensively, David
Hoilden and Richard Johns conclude, "It was the most far-reaching
agreement of its kind ever concluded by the U.S. with a developing
country. It had the potential to entrench the U.S. deeply in the
Kingdom, fortifying the concept of interdependence.
I understood, of course, that the primary objective here was not
the usual - to burden this country with debts it could never repay
but rather to find ways that would assure that a large portion
of petrodollars found their way back to the United States. In
the process, Saudi Arabia would be drawn in, its economy would
become increasingly intertwined with and dependent upon ours,
and presumably it would grow more Westernized and therefore more
sympathetic with and integrated into our system.
Saudi Arabia was a planner's dream come true, and also a fantasy
realized for anyone associated with the engineering and construction
business. It presented an economic opportunity unrivaled by any
other in history: an underdeveloped country with virtually unlimited
financial resources and a desire to enter the modern age in a
big way, very quickly.
I always kept in mind the true objectives: maximizing payouts
t1 U.S. firms and making Saudi Arabia increasingly dependent on
the United States. It did not take long to realize how closely
the two went together; almost all the newly developed projects
would require continual upgrading and servicing, and they were
so highly technical as to assure that the companies that originally
developed them would have to maintain and modernize them. In fact,
as I moved forward with my work, I began to assemble two lists
for each of the projects I envisioned: one for the types of design-and-construction
contracts we could expect, and another for long-term service and
management agreements. MAIN, Bechtel, Brown & Root, Halliburton,
Stone & Webster, and many other U.S. engineers and contractors
would profit handsomely for decades to come.
Beyond the purely economic, there was
another twist that would render Saudi Arabia dependent on us,
though in a very different way. The modernization of this oil-rich
kingdom would trigger adverse reactions. For instance, conservative
Muslims would be furious; Israel and other neighboring countries
would feel threatened. The economic development of this nation
was likely to spawn the growth of another industry: protecting
the Arabian Peninsula. Private companies specializing in such
activities, as well as the U.S. military and defense industry,
could expect generous contracts - and, once again, long-term service
and management agreements. Their presence would require another
phase of engineering and construction projects, including airports,
missile sites, personnel bases, and all of the infrastructure
associated with such facilities.
Under this evolving plan, Washington wanted the Saudis guarantee
to maintain oil supplies and prices at levels that could fluctuate
but that would always remain acceptable to the United States and
our allies. If other countries such as Iran, Iraq, Indonesia,
or Venezuela threatened embargoes, Saudi Arabia, with its vast
petroleum supplies, would step in to fill the gap; simply the
knowledge that they might do so would, in the long run, discourage
other countries from even considering an embargo. In exchange
for this guarantee, Washington would offer the House of Saud an
amazingly attractive deal: a commitment to provide total and unequivocal
U.S. political and - if necessary - military support, thereby
ensuring their continued existence as the rulers of their country.
It was a deal the House of Saud could
hardly refuse, given its geographic location, lack of military
might, and general vulnerability to neighbors like Iran, Syria,
Iraq, and Israel. Naturally, therefore, Washington used its advantage
to impose one other critical condition, a condition that redefined
the role of EHMs in the world and served as a model we would later
attempt to apply in other countries, most notably in Iraq. In
retrospect, I sometimes find it difficult to understand how Saudi
Arabia could have accepted this condition. Certainly, most of
the rest of the Arab world, OPEC, and other Islamic countries
were appalled when they discovered the terms of the deal and the
manner in which the royal house capitulated to Washington's demands.
The condition was that Saudi Arabia would
use its petrodollars to purchase U.S. government securities; in
turn, the interest earned by these securities would be spent by
the U.S. Department of the Treasury in ways that enabled Saudi
Arabia to emerge from a medieval society into the modern, industrialized
world. In other words, the interest compounding on billions of
dollars of the kingdom's oil income would be used to pay U.S.
companies to fulfill the vision I (and presumably some of my competitors)
had come up with, to convert Saudi Arabia into a modern industrial
power. Our own U.S. Department of the Treasury would hire us,
at Saudi expense, to build infrastructure projects and even entire
cities throughout the Arabian Peninsula.
Although the Saudis reserved the right
to provide input regarding the general nature of these projects,
the reality was that an elite corps of foreigners (mostly infidels,
in the eyes of Muslims) would determine the future appearance
and economic makeup of the Arabian Peninsula.
Osama Bin Laden
The United States made no secret of its desire to have the House
of Saud bankroll Osama bin Laden's Afghan war against the Soviet
Union during the 1980s, and Riyadh and Washington together contributed
an estimated $3.5 billion to the mujahideen. However, U.S. and
Saudi participation went far beyond this.
In late 2003, U.S. News & World Report
conducted an exhaustive study titled, "The Saudi Connection".
The magazine reviewed thousands of pages of court records, U.S.
and foreign intelligence reports, and other documents, and interviewed
dozens of government officials and experts on terrorism and the
Middle East. Its findings include the following:
The evidence was indisputable: Saudi Arabia,
America's longtime ally and the world's largest oil producer,
had somehow become, as a senior Treasury Department official put
it, "the epicenter" of terrorist financing...
Starting in the late 1980s - after the
dual shocks of the Iranian revolution and the Soviet war in Afghanistan
- Saudi Arabia's quasi-official charities became the primary source
of funds for the fast-growing jihad movement. In some 20 countries
the money was used to run paramilitary training camps, purchase
weapons, and recruit new members...
Saudi largess encouraged U.S. officials
to look the other way, some veteran intelligence officers say.
Billions of dollars in contracts, grants, and salaries have gone
to a broad range of former U.S. officials who had dealt with the
Saudis: ambassadors, CIA station chiefs, even cabinet secretaries...
Electronic intercepts of conversations
implicated members of the royal family in backing not only Al
Qaeda but also other terrorist groups.
After the 2001 attacks on the World Trade
Center and the Pentagon, more evidence emerged about the covert
relationships between Washington and Riyadh. In October 2003,
Vanity Fair magazine disclosed information that had not previously
been made public, in an in-depth report titled, "Saving the
Saudis." The story that emerged about the relationship between
the Bush family, the House of Saud, and the bin Laden family did
not surprise me. I knew that those relationships went back at
least to the time of the Saudi Arabian Money-laundering Affair,
which began in 1974, and to George H. W. Bush's terms as U.S.
Ambassador to the United Nations (from 1971 to 1973) and then
as head of the CIA (from 1976 to 1977). What surprised me was
the fact that the truth had finally made the press. Vanity Fair
The Bush family and the House of Saud,
the two most powerful dynasties in the world, have had close personal,
business, and political ties for more than 20 years...
In the private sector, the Saudis supported
Harken Energy, a struggling oil company in which George W. Bush
was an investor. Most recently, former president George H. NV.
Bush and his longtime ally, former Secretary of State James A.
Baker III, have appeared before Saudis at fundraisers for the
Carlyle Group, arguably the biggest private equity firm in the
world. Today, former president Bush continues to serve as a senior
adviser to the firm, whose investors allegedly include a Saudi
accused of ties to terrorist support groups...
Just days after 9/11, wealthy Saudi Arabians,
including members of the bin Laden family, were whisked out of
the U.S. on private jets. No one will admit to clearing the flights,
and the passengers weren't questioned. Did the Bush family's long
relationship with the Saudis help make it happen?
Part III: 1975-1981
... my times in Colombia also helped me comprehend the distinction
between the old American republic and the new global empire. The
republic offered hope to the world. Its foundation was moral and
philosophical rather than materialistic. It was based on concepts
of equality and justice for all. But it also could be pragmatic,
not merely a utopian dream but also a living, breathing, magnanimous
entity. It could open its arms to shelter the downtrodden. It
was an inspiration and at the same time a force to reckon with;
if needed, it could swing into action, as it had during World
War II, to defend the principles for which it stood. The very
institutions - the big corporations, banks, and government bureaucracies
- that threaten the republic could be used instead to institute
fundamental changes in the world. Such institutions possess the
communications networks and transportation systems necessary to
end disease, starvation, and even wars - if only they could be
convinced to take that course.
The global empire ... is the republic's
nemesis. It is self-centered, self-serving, greedy, and materialistic,
a system based on mercantilism. Like empires before, its arms
open only to accumulate resources, to grab everything in sight
and stuff its insatiable maw. It will use whatever means it deems
necessary to help its rulers gain more power and riches.
... I was loyal to the American republic,
but what we were perpetrating through this new, highly subtle
form of imperialism was the financial equivalent of what we had
attempted to accomplish militarily in Vietnam. If Southeast Asia
had taught us that armies have limitations, the economists had
responded by devising a better plan, and the foreign aid agencies
and the private contractors who served them (or, more appropriately,
were served by them) had become proficient at executing that plan.
In countries on every continent, I saw
how men and women working for U.S. corporations -though not officially
part of the EHM network - participated in something far more pernicious
than anything envisioned in conspiracy theories. Like many of
MAIN's engineers, these workers were blind to the consequences
of their actions, convinced that the sweatshops and factories
that made shoes and automotive parts for their companies were
helping the poor climb out of poverty, instead of simply burying
them deeper in a type
of slavery reminiscent of medieval manors
and southern plantations. Like those earlier manifestations of
exploitation, modern serfs or slaves were socialized into believing
they were better off than the unfortunate souls who lived on the
margins, in the dark hollows of Europe, in the jungles of Africa,
or in the wilds of the American frontier.
Mafia bosses often start out as street thugs. But over time, the
ones who make it to the top transform their appearance. They take
to wearing impeccably tailored suits, owning legitimate businesses,
and wrapping themselves in the cloak of upstanding society. They
support local charities and are respected by their communities.
They are quick to lend money to those in desperate straits. Like
the John Perkins in the MAIN résumé, these men appear
to be model citizens. However, beneath this patina is a trail
of blood. When the debtors cannot pay, hit men move in to demand
their pound of flesh. If this is not granted, the jackals close
in with baseball bats. Finally, as a last resort, out come the
Ecuador had suffered under a long line of dictators and , right-wing
oligarchies manipulated by U.S. political and commercial interests.
In a way, the country was the quintessential banana republic,
and the corporatocracy had made major inroads there.
The serious exploitation of oil in the
Ecuadorian Amazon basin began in the late 1960s, and it resulted
in a buying spree in which the small club of families who ran
Ecuador played into the hands of the international banks. They
saddled their country with huge amounts of debt, backed by the
promise of oil revenues. Roads and industrial parks, hydroelectric
dams, transmission and distribution systems, and other power projects
sprang up all over the country. International engineering and
construction companies struck it rich - once again.
of an Economic Hit Man
Index of Website