The New Confessions of an Economic Hit Man

by John Perkins

  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 Pahlavi became the unchallenged dictator. Kermit Roosevelt had set the stage for a new profession, the ranks of which 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 nonnu-clear military actions,” which ultimately resulted in US 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 US 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 Boston University’s business school, a solution to the Roosevelt-as-CIA-agent problem had already been worked out. US 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 4

  Indonesia: Lessons for an EHM

  In addition to learning about my new career, I 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 among 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 that 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, US 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 US 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 US 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 was 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 Boston Public Library, 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. We quarreled a great deal. She complained that I had changed, that I was not the man she’d married or with whom she had shared those years in the Peace Corps. Looking back, I can see that she must have sensed that I was leading two lives.

  I justified my behavior as the logical result of the resentment I felt toward her for forcing me to get married in the first place. Never mind that she had nurtured and supported me through the challenges of Ecuador; I still saw her as a continuation of my pattern of giving in to my parents’ whims. I have no doubt now that, on some level, Ann knew that there was another woman in my life. In any case, we decided to move into separate apartments.

  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 yo
u 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 was that all of 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. A part of me also appreciated her honesty; she had not deceived me the way my parents had about Tilton and Middlebury.

  CHAPTER 5

  Saving a Country from Communism

  I had a romantic vision of Indonesia, the country where I was to live for the next three months. Some of the books I read featured photographs of women in brightly colored sarongs, 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. Men and women in brightly colored batik clothing. Lush gardens ablaze with tropical flowers. 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 tar paper 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 epaulets.

  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 US 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, 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 US 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 seemed 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.1

  I also realized that my college professors had not understood th
e 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 InterContinental. 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 to 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 gunfighters in the Old West.