Confessions of an Economic Hit Man

by John Perkins

  However, my BS in business administration had not prepared me as an econometrician, so I spent a lot of time trying to figure out how to go about it. I went so far as to enroll in a couple of courses on the subject. In the process, I discovered that statistics can be manipulated to produce a large array of conclusions, including those substantiating the predilections of the analyst.

  MAIN was a macho corporation. There were only four women who held professional positions in 1971. However, there were perhaps two hundred women divided between the cadres of personal secretaries—every vice president and department manager had one—and the steno pool, which served the rest of us. I had become accustomed to this gender bias, and I was therefore especially astounded by what happened one day in the BPL’s reference section.

  An attractive brunette woman came up and sat in a chair across the table from me. In her dark green business suit, she looked very sophisticated. I judged her to be several years my senior, but I tried to focus on not noticing her, on acting indifferent. After a few minutes, without a word, she slid an open book in my direction. It contained a table with information I had been searching for about Kuwait—and a card with her name, Claudine Martin, and her title, Special Consultant to Chas. T. Main, Inc. I looked up into her soft green eyes, and she extended her hand.

  “I’ve been asked to help in your training,” she said. I could not believe this was happening to me.

  Beginning the next day, we met in Claudine’s Beacon Street apartment, a few blocks from MAIN’s Prudential Center headquarters. During our first hour together, she explained that my position was an unusual one and that we needed to keep everything highly confidential. She told me that no one had given me specifics about my job because no one was authorized to—except her. Then she informed me that her assignment was to mold me into an economic hit man.

  The very name awakened old cloak-and-dagger dreams. I was embarrassed by the nervous laughter I heard coming from me. She smiled and assured me that humor was one of the reasons they used the term. “Who would take it seriously?” she asked.

  I confessed ignorance about the role of economic hit men.

  “You’re not alone,” she laughed. “We’re a rare breed, in a dirty business. No one can know about your involvement—not even your wife.” Then she turned serious. “I’ll be very frank with you, teach you all I can during the next weeks. Then you’ll have to choose. Your decision is final. Once you’re in, you’re in for life.” After that, she seldom used the full name; we were simply EHMs.

  I know now what I did not then—that Claudine took full advantage of the personality weaknesses the NSA profile had disclosed about me. I do not know who supplied her with the information—Einar, the NSA, MAIN’s personnel department, or someone else—only that she used it masterfully. Her approach, a combination of physical seduction and verbal manipulation, was tailored specifically for me, and yet it fit within the standard operating procedures I have since seen used by a variety of businesses when the stakes are high and the pressure to close lucrative deals is great. She knew from the start that I would not jeopardize my marriage by disclosing our clandestine activities. And she was brutally frank when it came to describing the shadowy side of things that would be expected of me.

  I have no idea who paid her salary, although I have no reason to suspect it was not, as her business card implied, MAIN. At the time, I was too naive, intimidated, and bedazzled to ask the questions that today seem so obvious.

  Claudine told me that there were two primary objectives of my work. First, I was to justify huge international loans that would funnel money back to MAIN and other U.S. companies (such as Bechtel, Halliburton, Stone & Webster, and Brown & Root) through massive engineering and construction projects. Second, I would work to bankrupt the countries that received those loans (after they had paid MAIN and the other U.S. contractors, of course) so that they would be forever beholden to their creditors, and so they would present easy targets when we needed favors, including military bases, UN votes, or access to oil and other natural resources.

  My job, she said, was to forecast the effects of investing billions of dollars in a country. Specifically, I would produce studies that projected economic growth twenty to twenty-five years into the future and that evaluated the impacts of a variety of projects. For example, if a decision was made to lend a country $1 billion to persuade its leaders not to align with the Soviet Union, I would compare the benefits of investing that money in power plants with the benefits of investing in a new national railroad network or a telecommunications system. Or I might be told that the country was being offered the opportunity to receive a modern electric utility system, and it would be up to me to demonstrate that such a system would result in sufficient economic growth to justify the loan. The critical factor, in every case, was gross national product. The project that resulted in the highest average annual growth of GNP won. If only one project was under consideration, I would need to demonstrate that developing it would bring superior benefits to the GNP.

  The unspoken aspect of every one of these projects was that they were intended to create large profits for the contractors, and to make a handful of wealthy and influential families in the receiving countries very happy, while assuring the long-term financial dependence and therefore the political loyalty of governments around the world. The larger the loan, the better. The fact that the debt burden placed on a country would deprive its poorest citizens of health, education, and other social services for decades to come was not taken into consideration.

  Claudine and I openly discussed the deceptive nature of GNP. For instance, the growth of GNP may result even when it profits only one person, such as an individual who owns a utility company, and even if the majority of the population is burdened with debt. The rich get richer and the poor grow poorer. Yet, from a statistical standpoint, this is recorded as economic progress.

  Like U.S. citizens in general, most MAIN employees believed we were doing countries favors when we built power plants, highways, and ports. Our schools and our press have taught us to perceive all of our actions as altruistic. Over the years, I’ve repeatedly heard comments like, “If they’re going to burn the U.S. flag and demonstrate against our embassy, why don’t we just get out of their damn country and let them wallow in their own poverty?”

  People who say such things often hold diplomas certifying that they are well educated. However, these people have no clue that 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. Despite credentials, such people are as uneducated as those eighteenth-century colonists who believed that the Indians fighting to defend their lands were servants of the devil.

  Within several months, I would leave for the island of Java in the country of Indonesia, described at that time as the most heavily populated piece of real estate on the planet. Indonesia also happened to be an oil-rich Muslim nation and a hotbed of communist activity.

  “It’s the next domino after Vietnam,” is the way Claudine put it. “We must win the Indonesians over. If they join the Communist bloc, well…” She drew a finger across her throat and then smiled sweetly. “Let’s just say you need to come up with a very optimistic forecast of the economy, how it will mushroom after all the new power plants and distribution lines are built. That will allow USAID and the international banks to justify the loans. You’ll be well rewarded, of course, and can move on to other projects in exotic places. The world is your shopping cart.” She went on to warn me that my role would be tough. “Experts at the banks will come after you. It’s their job to punch holes in your forecasts—that’s what they’re paid to do. Making you look bad makes them look good.”

  One day I reminded Claudine that the MAIN team being sent to Java included ten other men. I asked if they all were receiving the same type of training as me. She assured me they were not.

  “They’re engineers
,” she said. “They design power plants, transmission and distribution lines, and seaports and roads to bring in the fuel. You’re the one who predicts the future. Your forecasts determine the magnitude of the systems they design—and the size of the loans. You see, you’re the key.”

  Every time I walked away from Claudine’s apartment, I wondered whether I was doing the right thing. Somewhere in my heart, I suspected I was not. But the frustrations of my past haunted me. MAIN seemed to offer everything my life had lacked, and yet I kept asking myself if Tom Paine would have approved. In the end, I convinced myself that by learning more, by experiencing it, I could better expose it later—the old “working from the inside” justification.

  When I shared this idea with Claudine, she gave me a perplexed look. “Don’t be ridiculous. Once you’re in, you can never get out. You must decide for yourself, before you get in any deeper.” I understood her, and what she said frightened me. After I left, I strolled down Commonwealth Avenue, turned onto Dartmouth Street, and assured myself that I was the exception.

  One afternoon some months later, Claudine and I sat in a window settee watching the snow fall on Beacon Street. “We’re a small, exclusive club,” she said. “We’re paid—well paid—to cheat countries around the globe out of billions of dollars. A large part of your job is to encourage world leaders to become part of a vast network that promotes U.S. 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, these leaders bolster their political positions by bringing industrial parks, power plants, and airports to their people. Meanwhile, the owners of U.S. engineering and construction companies become very wealthy.”

  That afternoon, in the idyllic setting of Claudine’s apartment, relaxing in the window while snow swirled around outside, I learned the history of the profession I was about to enter. Claudine described how throughout most of history, empires were built largely through military force or the threat of it. But with the end of World War II, the emergence of the Soviet Union, and the specter of nuclear holocaust, the military solution became just too risky.

  The decisive moment occurred in 1951, when Iran rebelled against a British oil company that was exploiting Iranian natural resources and its people. The company was the forerunner of British Petroleum, today’s BP. In response, the highly popular, democratically elected Iranian prime minister (and TIME magazine’s Man of the Year in 1951), Mohammad Mossadegh, nationalized all Iranian petroleum assets. An outraged England sought the help of her World War II ally, the United States. However, both countries feared that military retaliation would provoke the Soviet Union into taking action on behalf of Iran.

  Instead of sending in the Marines, therefore, Washington dispatched CIA agent Kermit Roosevelt (Theodore’s grandson). He performed brilliantly, winning people over through payoffs and threats. He then enlisted them to organize a series of street riots and violent demonstrations, which created the impression that Mossadegh was both unpopular and inept. In the end, Mossadegh went down, and he spent the rest of his life under house arrest. The pro-American Mohammad Reza Shah became the unchallenged dictator. Kermit Roosevelt had set the stage for a new profession, the one whose ranks I was joining.1

  Roosevelt’s gambit reshaped Middle Eastern history even as it rendered obsolete all the old strategies for empire building. It also coincided with the beginning of experiments in “limited nonnuclear military actions,” which ultimately resulted in U.S. humiliations in Korea and Vietnam. By 1968, the year I interviewed with the NSA, it had become clear that if the United States wanted to realize its dream of global empire (as envisioned by men like presidents Johnson and Nixon), it would have to employ strategies modeled on Roosevelt’s Iranian example. This was the only way to beat the Soviets without the threat of nuclear war.

  There was one problem, however. Kermit Roosevelt was a CIA employee. Had he been caught, the consequences would have been dire. He had orchestrated the first U.S. operation to overthrow a foreign government, and it was likely that many more would follow, but it was important to find an approach that would not directly implicate Washington.

  Fortunately for the strategists, the 1960s also witnessed another type of revolution: the empowerment of international corporations and of multinational organizations such as the World Bank and the IMF. The latter were financed primarily by the United States and our sister empire builders in Europe. A symbiotic relationship developed between governments, corporations, and multinational organizations.

  By the time I enrolled in BU’s business school, a solution to the Roosevelt-as-CIA-agent problem had already been worked out. U.S. intelligence agencies—including the NSA—would identify prospective EHMs, who could then be hired by international corporations. These EHMs would never be paid by the government; instead, they would draw their salaries from the private sector. As a result, their dirty work, if exposed, would be chalked up to corporate greed rather than to government policy. In addition, the corporations that hired them, although paid by government agencies and their multinational banking counterparts (with taxpayer money), would be insulated from congressional oversight and public scrutiny, shielded by a growing body of legal initiatives, including trademark, international trade, and Freedom of Information laws.2

  “So you see,” Claudine concluded, “we are just the next generation in a proud tradition that began back when you were in first grade.”

  CHAPTER 3

  Indonesia: Lessons for an EHM

  In addition to learning about my new career, I also spent time reading books about Indonesia. “The more you know about a country before you get there, the easier your job will be,” Claudine had advised. I took her words to heart.

  When Columbus set sail in 1492, he was trying to reach Indonesia, known at the time as the Spice Islands. Throughout the colonial era, it was considered a treasure worth far more than the Americas. Java, with its rich fabrics, fabled spices, and opulent kingdoms, was both the crown jewel and the scene of violent clashes between Spanish, Dutch, Portuguese, and British adventurers. The Netherlands emerged triumphant in 1750, but even though the Dutch controlled Java, it took them more than 150 years to subdue the outer islands.

  When the Japanese invaded Indonesia during World War II, Dutch forces offered little resistance. As a result, Indonesians, especially the Javanese, suffered terribly. Following the Japanese surrender, a charismatic leader named Sukarno emerged to declare independence. Four years of fighting finally ended on December 27, 1949, when the Netherlands lowered its flag and returned sovereignty to a people who had known nothing but struggle and domination for more than three centuries. Sukarno became the new republic’s first president.

  Ruling Indonesia, however, proved to be a greater challenge than defeating the Dutch. Far from homogeneous, the archipelago of about 17,500 islands was a boiling pot of tribalism, divergent cultures, dozens of languages and dialects, and ethnic groups who nursed centuries-old animosities. Conflicts were frequent and brutal, and Sukarno clamped down. He suspended parliament in 1960 and was named president-for-life in 1963. He formed close alliances with Communist governments around the world, in exchange for military equipment and training. He sent Russian-armed Indonesian troops into neighboring Malaysia in an attempt to spread communism throughout Southeast Asia and win the approval of the world’s Socialist leaders.

  Opposition built, and a coup was launched in 1965. Sukarno escaped assassination only through the quick wits of his mistress. Many of his top military officers and his closest associates were less lucky. The events were reminiscent of those in Iran in 1953. In the end, the Communist Party was held responsible—especially those factions aligned with China. In the Army-initiated massacres that followed, an estimated three hundred thousand to five hundred thousand people were killed. The head of the military, General Suharto, took over as president in 1968.1

  By 1971, the United Stat
es’ determination to seduce Indonesia away from communism was heightened because the outcome of the Vietnam War was looking very uncertain. President Nixon had begun a series of troop withdrawals in the summer of 1969, and U.S. strategy was taking on a more global perspective. The strategy focused on preventing a domino effect of one country after another falling under Communist rule, and it focused on a couple of countries; Indonesia was the key. MAIN’s electrification project was part of a comprehensive plan to ensure American dominance in Southeast Asia.

  The premise of U.S. foreign policy was that Suharto would serve Washington in a manner similar to the shah of Iran. The United States also hoped the nation would serve as a model for other countries in the region. Washington based part of its strategy on the assumption that gains made in Indonesia might have positive repercussions throughout the Islamic world, particularly in the explosive Middle East. And if that were not incentive enough, Indonesia had oil. No one was certain about the magnitude or quality of its reserves, but oil company seismologists were exuberant over the possibilities.

  As I pored over the books at the BPL, my excitement grew. I began to imagine the adventures ahead. In working for MAIN, I would be trading the rugged Peace Corps lifestyle for a much more luxurious and glamorous one. My time with Claudine already represented the realization of one of my fantasies; it seemed too good to be true. I felt at least partially vindicated for serving the sentence at that all-boys’ prep school.

  Something else was also happening in my life: Ann and I were not getting along. I think she must have sensed that I was leading two lives. I justified it as the logical result of the resentment I felt toward her for forcing us to get married in the first place. Never mind that she had nurtured and supported me through the challenges of our Peace Corps assignment in Ecuador; I still saw her as a continuation of my pattern of giving in to my parents’ whims. Of course, as I look back on it, I’m sure my relationship with Claudine was a major factor. I could not tell Ann about this, but she sensed it. In any case, we decided to move into separate apartments.