Confessions of an Economic Hit Man

by John Perkins

  One day in 1971, about a week before my scheduled departure for Indonesia, I arrived at Claudine’s place to find the small dining room table set with an assortment of cheeses and breads, and there was a fine bottle of Beaujolais. She toasted me.

  “You’ve made it.” She smiled, but somehow it seemed less than sincere. “You’re now one of us.”

  We chatted casually for half an hour or so; then, as we were finishing off the wine, she gave me a look unlike any I had seen before. “Never admit to anyone about our meetings,” she said in a stern voice. “I won’t forgive you if you do, ever, and I’ll deny I ever met you.” She glared at me—perhaps the only time I felt threatened by her—and then gave a cold laugh. “Talking about us would make life dangerous for you.”

  I was stunned. I felt terrible. But later, as I walked alone back to the Prudential Center, I had to admit to the cleverness of the scheme. The fact is that all our time together had been spent in her apartment. There was not a trace of evidence about our relationship, and no one at MAIN was implicated in any way. There was also part of me that appreciated her honesty; she had not deceived me the way my parents had about Tilton and Middlebury.

  CHAPTER 4

  Saving a Country from Communism

  I had a romanticized vision of Indonesia, the country where I was to live for the next three months. Some of the books I read featured photographs of beautiful women in brightly colored sarongs, exotic Balinese dancers, shamans blowing fire, and warriors paddling long dugout canoes in emerald waters at the foot of smoking volcanoes. Particularly striking was a series on the magnificent black-sailed galleons of the infamous Bugi pirates, who still sailed the seas of the archipelago, and who had so terrorized early European sailors that they returned home to warn their children, “Behave yourselves, or the Bugimen will get you.” Oh, how those pictures stirred my soul.

  The history and legends of that country represent a cornucopia of larger-than-life figures: wrathful gods, Komodo dragons, tribal sultans, and ancient tales that long before the birth of Christ had traveled across Asian mountains, through Persian deserts, and over the Mediterranean to embed themselves in the deepest realms of our collective psyche. The very names of its fabled islands—Java, Sumatra, Borneo, Sulawesi—seduced the mind. Here was a land of mysticism, myth, and erotic beauty; an elusive treasure sought but never found by Columbus; a princess wooed yet never possessed by Spain, by Holland, by Portugal, by Japan; a fantasy and a dream.

  My expectations were high, and I suppose they mirrored those of the great explorers. Like Columbus, though, I should have known to temper my fantasies. Perhaps I could have guessed that the beacon shines on a destiny that is not always the one we envision. Indonesia offered treasures, but it was not the chest of panaceas I had come to expect. In fact, my first days in Indonesia’s steamy capital, Jakarta, in the summer of 1971, were shocking.

  The beauty was certainly present. Gorgeous women sporting colorful sarongs. Lush gardens ablaze with tropical flowers. Exotic Balinese dancers. Bicycle cabs with fanciful, rainbow-colored scenes painted on the sides of the high seats, where passengers reclined in front of the pedaling drivers. Dutch Colonial mansions and turreted mosques. But there was also an ugly, tragic side to the city. Lepers holding out bloodied stumps instead of hands. Young girls offering their bodies for a few coins. Once-splendid Dutch canals turned into cesspools. Cardboard hovels where entire families lived along the trash-lined banks of black rivers. Blaring horns and choking fumes. The beautiful and the ugly, the elegant and the vulgar, the spiritual and the profane. This was Jakarta, where the enticing scent of cloves and orchid blossoms battled the miasma of open sewers for dominance.

  I had seen poverty before. Some of my New Hampshire classmates lived in cold-water tarpaper shacks and arrived at school wearing thin jackets and frayed tennis shoes on subzero winter days, their unwashed bodies reeking of old sweat and manure. I had lived in mud shacks with Andean peasants whose diet consisted almost entirely of dried corn and potatoes, and where it sometimes seemed that a newborn was as likely to die as to experience a birthday. I had seen poverty, but nothing to prepare me for Jakarta.

  Our team, of course, was quartered in the country’s fanciest hotel, the Hotel InterContinental Indonesia. Owned by Pan American Airways, like the rest of the InterContinental chain scattered around the globe, it catered to the whims of wealthy foreigners, especially oil executives and their families. On the evening of our first day, our project manager Charlie Illingworth hosted a dinner for us in the elegant restaurant on the top floor.

  Charlie was a connoisseur of war; he devoted most of his free time to reading history books and historical novels about great military leaders and battles. He was the epitome of the pro–Vietnam War armchair soldier. As usual, this night he was wearing khaki slacks and a short-sleeved khaki shirt with military-style epaulettes.

  After welcoming us, he lit up a cigar. “To the good life,” he sighed, raising a glass of champagne.

  We joined him. “To the good life.” Our glasses clinked.

  Cigar smoke swirling around him, Charlie glanced about the room. “We will be well pampered here,” he said, nodding his head appreciatively. “The Indonesians will take very good care of us. As will the U.S. Embassy people. But let’s not forget that we have a mission to accomplish.” He looked down at a handful of note cards. “Yes, we’re here to develop a master plan for the electrification of Java—the most populated land in the world. But that’s just the tip of the iceberg.”

  His expression turned serious; he reminded me of George C. Scott playing General Patton, one of Charlie’s heroes. “We are here to accomplish nothing short of saving this country from the clutches of communism. As you know, Indonesia has a long and tragic history. Now, at a time when it is poised to launch itself into the twentieth century, it is tested once again. Our responsibility is to make sure that Indonesia doesn’t follow in the footsteps of its northern neighbors, Vietnam, Cambodia, and Laos. An integrated electrical system is a key element. That, more than any other single factor (with the possible exception of oil), will assure that capitalism and democracy rule.

  “Speaking of oil,” he said. He took another puff on his cigar and flipped past a couple of the note cards. “We all know how dependent our own country is on oil. Indonesia can be a powerful ally to us in that regard. So, as you develop this master plan, please do everything you can to make sure that the oil industry and all the others that serve it—ports, pipelines, construction companies—get whatever they are likely to need in the way of electricity for the entire duration of this twenty-five-year plan.”

  He raised his eyes from his note cards and looked directly at me. “Better to err on the high side than to underestimate. You don’t want the blood of Indonesian children—or our own—on your hands. You don’t want them to live under the hammer and sickle or the Red flag of China!”

  As I lay in my bed that night, high above the city, secure in the luxury of a first-class suite, an image of Claudine came to me. Her discourses on foreign debt haunted me. I tried to comfort myself by recalling lessons learned in my macroeconomics courses at business school. After all, I told myself, I am here to help Indonesia rise out of a medieval economy and take its place in the modern industrial world. But I knew that in the morning I would look out my window, across the opulence of the hotel’s gardens and swimming pools, and see the hovels that fanned out for miles beyond. I would know that babies were dying out there for lack of food and potable water, and that infants and adults alike were suffering from horrible diseases and living in terrible conditions.

  Tossing and turning in my bed, I found it impossible to deny that Charlie and everyone else on our team were here for selfish reasons. We were promoting U.S. foreign policy and corporate interests. We were driven by greed rather than by any desire to make life better for the vast majority of Indonesians. A word came to mind: corporatocracy. I was not sure whether I had heard it before or had just invented it, but it seeme
d to describe perfectly the new elite who had made up their minds to attempt to rule the planet.

  This was a close-knit fraternity of a few men with shared goals, and the fraternity’s members moved easily and often between corporate boards and government positions. It struck me that the current president of the World Bank, Robert McNamara, was a perfect example. He had moved from a position as president of Ford Motor Company, to secretary of defense under presidents Kennedy and Johnson, and now occupied the top post at the world’s most powerful financial institution.

  I also realized that my college professors had not understood the true nature of macroeconomics: that in many cases helping an economy grow only makes those few people who sit atop the pyramid even richer, while it does nothing for those at the bottom except to push them even lower. Indeed, promoting capitalism often results in a system that resembles medieval feudal societies. If any of my professors knew this, they had not admitted it—probably because big corporations, and the men who run them, fund colleges. Exposing the truth would undoubtedly cost those professors their jobs—just as such revelations could cost me mine.

  These thoughts continued to disturb my sleep every night that I spent at the Hotel InterContinental Indonesia. In the end, my primary defense was a highly personal one: I had fought my way out of that New Hampshire town, the prep school, and the draft. Through a combination of coincidences and hard work, I had earned a place in the good life. I also took comfort in the fact that I was doing the right thing in the eyes of my culture. I was on my way to becoming a successful and respected economist. I was doing what business school had prepared me for. I was helping implement a development model that was sanctioned by the best minds at the world’s top think tanks.

  Nonetheless, in the middle of the night I often had to console myself with a promise that someday I would expose the truth. Then I would read myself to sleep with Louis L’Amour novels about gun-fighters in the Old West.

  CHAPTER 5

  Selling My Soul

  Our eleven-man team spent six days in Jakarta registering at the U.S. Embassy, meeting various officials, organizing ourselves, and relaxing around the pool. The number of Americans who lived at the Hotel InterContinental amazed me. I took great pleasure in watching the beautiful young women—wives of U.S. oil and construction company executives—who passed their days at the pool and their evenings in the half dozen posh restaurants in and around the hotel.

  Then Charlie moved our team to the mountain city of Bandung. The climate was milder, the poverty less obvious, and the distractions fewer. We were given a government guesthouse known as the Wisma, complete with a manager, a cook, a gardener, and a staff of servants. Built during the Dutch colonial period, the Wisma was a haven. Its spacious veranda faced tea plantations that flowed across rolling hills and up the slopes of Java’s volcanic mountains. In addition to housing, we were provided with eleven Toyota off-road vehicles, each with a driver and translator. Finally, we were presented with memberships to the exclusive Bandung Golf and Racket Club, and we were housed in a suite of offices at the local headquarters of Perusahaan Umum Listrik Negara (PLN), the government-owned electric utility company.

  For me, the first several days in Bandung involved a series of meetings with Charlie and Howard Parker. Howard was in his seventies and was the retired chief load forecaster for the New England Electric System. Now he was responsible for forecasting the amount of energy and generating capacity (the load) the island of Java would need over the next twenty-five years, as well as for breaking this down into city and regional forecasts. Since electric demand is highly correlated with economic growth, his forecasts depended on my economic projections. The rest of our team would develop the master plan around these forecasts, locating and designing power plants, transmission and distribution lines, and fuel transportation systems in a manner that would satisfy our projections as efficiently as possible. During our meetings, Charlie continually emphasized the importance of my job, and he badgered me about the need to be very optimistic in my forecasts. Claudine had been right; I was the key to the entire master plan.

  “The first few weeks here,” Charlie explained, “are about data collection.”

  He, Howard, and I were seated in big rattan chairs in Charlie’s plush private office. The walls were decorated with batik tapestries depicting epic tales from the ancient Hindu texts of the Ramayana. Charlie puffed on a fat cigar.

  “The engineers will put together a detailed picture of the current electric system, port capacities, roads, railroads, all those sorts of things.” He pointed his cigar at me. “You gotta act fast. By the end of month one, Howard’ll need to get a pretty good idea about the full extent of the economic miracles that’ll happen when we get the new grid online. By the end of the second month, he’ll need more details—broken down into regions. The last month will be about filling in the gaps. That’ll be critical. All of us will put our heads together then. So, before we leave we gotta be absolutely certain we have all the information we’ll need. Home for Thanksgiving, that’s my motto. There’s no coming back.”

  Howard appeared to be an amiable, grandfatherly type, but he was actually a bitter old man who felt cheated by life. He had never reached the pinnacle of the New England Electric System and he deeply resented it. “Passed over,” he told me repeatedly, “because I refused to buy the company line.” He had been forced into retirement and then, unable to tolerate staying at home with his wife, had accepted a consulting job with MAIN. This was his second assignment, and I had been warned by both Einar and Charlie to watch out for him. They described him with words like stubborn, mean, and vindictive.

  As it turned out, Howard was one of my wisest teachers, although not one I was ready to accept at the time. He had never received the type of training Claudine had given me. I suppose they considered him too old, or perhaps too stubborn. Or maybe they figured he was only in it for the short run, until they could lure in a more pliable full-timer like me. In any case, from their standpoint, he turned out to be a problem. Howard clearly saw the situation and the role they wanted him to play, and he was determined not to be a pawn. All the adjectives Einar and Charlie had used to describe him were appropriate, but at least some of his stubbornness grew out of his personal commitment not to be their servant. I doubt he had ever heard the term economic hit man, but he knew they intended to use him to promote a form of imperialism he could not accept.

  He took me aside after one of our meetings with Charlie. He wore a hearing aid and fiddled with the little box under his shirt that controlled its volume.

  “This is between you and me,” Howard said in a hushed voice. We were standing at the window in the office we shared, looking out at the stagnant canal that wound past the PLN building. A young woman was bathing in its foul waters, attempting to retain some semblance of modesty by loosely draping a sarong around her otherwise naked body. “They’ll try to convince you that this economy is going to skyrocket,” he said. “Charlie’s ruthless. Don’t let him get to you.”

  His words gave me a sinking feeling, but also a desire to convince him that Charlie was right; after all, my career depended on pleasing my MAIN bosses.

  “Surely this economy will boom,” I said, my eyes drawn to the woman in the canal. “Just look at what’s happening.”

  “So there you are,” he muttered, apparently unaware of the scene in front of us. “You’ve already bought their line, have you?”

  A movement up the canal caught my attention. An elderly man had descended the bank, dropped his pants, and squatted at the edge of the water to answer nature’s call. The young woman saw him but was undeterred; she continued bathing. I turned away from the window and looked directly at Howard.

  “I’ve been around,” I said. “I may be young, but I just got back from three years in South America. I’ve seen what can happen when oil is discovered. Things change fast.”

  “Oh, I’ve been around too,” he said mockingly. “A great many years. I’ll tell yo
u something, young man. I don’t give a damn for your oil discoveries and all that. I forecasted electric loads all my life—during the Depression, World War II, times of bust and boom. I’ve seen what Route 128’s so-called Massachusetts Miracle did for Boston. And I can say for sure that no electric load ever grew by more than 7 to 9 percent a year for any sustained period. And that’s in the best of times. Six percent is more reasonable.”

  I stared at him. Part of me suspected he was right, but I felt defensive. I knew I had to convince him, because my own conscience cried out for justification.

  “Howard, this isn’t Boston. This is a country where, until now, no one could even get electricity. Things are different here.”

  He turned on his heel and waved his hand as though he could brush me away.

  “Go ahead,” he snarled. “Sell out. I don’t give a damn what you come up with.” He jerked his chair from behind his desk and fell into it. “I’ll make my electricity forecast based on what I believe, not some pie-in-the-sky economic study.” He picked up his pencil and started to scribble on a pad of paper.

  It was a challenge I could not ignore. I went and stood in front of his desk.

  “You’ll look pretty stupid if I come up with what everyone expects—a boom to rival the California gold rush—and you forecast electricity growth at a rate comparable to Boston in the 1960s.”

  He slammed the pencil down and glared at me. “Unconscionable! That’s what it is. You—all of you—” he waved his arms at the offices beyond our walls, “you’ve sold your souls to the devil. You’re in it for the money. Now,” he feigned a smile and reached under his shirt, “I’m turning off my hearing aid and going back to work.”