The New Confessions of an Economic Hit Man

by John Perkins

  I tried to emulate both McNamara and my boss, Bruno. I adopted manners of speech that imitated the former, and I took to walking with the swagger of the latter, attaché case swinging at my side. Looking back, I have to wonder at my gall. In truth, my expertise was extremely limited, but what I lacked in training and knowledge I made up for in audacity.

  And it worked. Eventually the team of experts stamped my reports with their seals of approval.

  During the ensuing months, I attended meetings in Tehran, Caracas, Guatemala City, London, Vienna, and Washington, DC. I met famous personalities, including the shah of Iran, the former presidents of several countries, and Robert McNamara himself. Like prep school, it was a world of men. I was amazed at how my new title and the accounts of my recent successes before the international lending agencies affected other people’s attitudes toward me.

  At first, all the attention went to my head. I began to think of myself as a Merlin who could wave his wand over a country, causing it suddenly to light up, industries sprouting like flowers. Then I became disillusioned. I questioned my own motives and those of all the people I worked with. It seemed that a glorified title or a PhD did little to help a person understand the plight of a leper living beside a cesspool in Jakarta, and I doubted that a knack for manipulating statistics enabled a person to see into the future. The better I came to know those who made the decisions that shape the world, the more skeptical I became about their abilities and their goals.

  I doubted whether limited resources would allow the whole world to live the opulent life of the United States, when even the United States had millions of citizens living in poverty. In addition, it wasn’t entirely clear to me that people in other nations actually wanted to live like us. Our own statistics about violence, depression, drug abuse, divorce, and crime indicated that although ours was one of the wealthiest societies in history, it might also be one of the least happy societies. Why would we want others to emulate us? Looking at the faces in the meetings I attended, my skepticism often turned to silent anger at the hypocrisy.

  Eventually, however, this also changed. 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, and 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 also began to wonder who benefits from war and the mass production of weapons, from the damming of rivers and the destruction of indigenous environments and cultures. I began to look at who benefits when hundreds of thousands of people die from insufficient food, polluted water, or curable diseases. Slowly, I came to realize that in the long run no one benefits, but in the short term those at the top of the pyramid — my bosses and me — appear to benefit, at least materially.

  This raised several other questions: Why does this situation persist? Why has it endured for so long? Does the answer lie simply in the old adage that “might makes right,” that those with the power perpetuate the system?

  It seemed insufficient to say that power alone allows this situation to persist. Although the proposition that might makes right explained a great deal, I felt there must be a more compelling force at work here. I recalled an economics professor from my business school days, a man 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.

  Of course, we are not the first to do this. The list of practitioners stretches back to the ancient empires of North Africa, the Middle East, and Asia, and works its way up through Persia, Greece, Rome, the Christian Crusades, and all the European empire builders of the post-Columbian era. This imperialist drive has been and continues to be the cause of most wars, pollution, starvation, species extinctions, and genocides. And it has always taken a serious toll on the conscience and well-being of the citizens of those empires, contributing to social malaise and resulting in a situation where the wealthiest cultures in human history are plagued with the highest rates of suicide, drug abuse, and violence.

  I thought extensively on these questions, but I avoided considering the nature of my own role in all of this. I tried to think of myself not as an EHM but as a chief economist. It sounded so very legitimate, and if I needed any confirmation, I could look at my pay stubs: all were from MAIN, a private corporation. I didn’t earn a penny from the NSA or any government agency. And so I became convinced. Almost.

  One afternoon Bruno called me into his office. He walked behind my chair and patted me on the shoulder. “You’ve done an excellent job,” he purred. “To show our appreciation, we’re giving you the opportunity of a lifetime, something few men ever receive, even at twice your age.”

  CHAPTER 10

  Panama’s President and Hero

  I landed at Panama’s Tocumen International Airport late one night in April 1972, during a tropical deluge. As was common in those days, I shared a taxi with several other executives, and because I spoke Spanish, I ended up in the front seat beside the driver. I stared blankly out the taxi’s windshield. Through the rain, the headlights illuminated a billboard portrait of a handsome man with a prominent brow and flashing eyes. One side of his wide-brimmed hat was hooked rakishly up. I recognized him as the hero of modern Panama, Omar Torrijos.

  I had prepared for this trip in my customary fashion, by visiting the reference section of the Boston Public Library. I knew that one of the reasons for Torrijos’s popularity among his people was that he was a firm defender of both Panama’s right of self-rule and its claims to sovereignty over the Panama Canal. He was determined that the country under his leadership would avoid the pitfalls of its ignominious history.

  Panama was part of Colombia when the French engineer Ferdinand de Lesseps, who had directed construction of the Suez Canal, decided to build a canal through the Central American isthmus, to connect the Atlantic and Pacific oceans. Beginning in 1881, the French undertook a mammoth effort that met with one catastrophe after another. Finally, in 1889, the project ended in financial disaster — but it had inspired a dream in Theodore Roosevelt. During the first years of the twentieth century, the United States demanded that Colombia sign a treaty turning the isthmus over to a North American consortium. Colombia refused.

  In 1903, President R
oosevelt sent in the US warship Nashville. US soldiers landed, seized and killed a popular local militia commander, and declared Panama an independent nation. A puppet government was installed and the first Canal treaty was signed; it established an American zone on both sides of the future waterway, legalized US military intervention, and gave Washington virtual control over this newly formed “independent” nation.

  Interestingly, the treaty was signed by US Secretary of State John Hay and a French engineer, Philippe Bunau-Varilla, who had been part of the original team, but it was not signed by a single Panamanian. In essence, Panama was forced to leave Colombia in order to serve the United States, in a deal struck by an American and a Frenchman — in retrospect, a prophetic beginning.1

  For more than half a century, Panama was ruled by an oligarchy of wealthy families with strong connections to Washington. They were right-wing dictators who took whatever measures they deemed necessary to ensure that their country promoted US interests. In the manner of most of the Latin American dictators who allied themselves with Washington, Panama’s rulers interpreted US interests to mean putting down any populist movement that smacked of socialism. They also supported the CIA and NSA in anti-Communist activities throughout the hemisphere, and they helped big American businesses like Rockefeller’s Standard Oil and United Fruit Company. These governments apparently did not feel that US interests were promoted by improving the lives of people who lived in dire poverty or served as virtual slaves to the big plantations and corporations.

  Panama’s ruling families were well rewarded for their support; US military forces intervened on their behalf a dozen times between the declaration of Panamanian independence and 1968. However, that year, while I was still a Peace Corps volunteer in Ecuador, the course of Panamanian history suddenly changed. A coup overthrew Arnulfo Arias, the latest in the parade of dictators, and Omar Torrijos emerged as the head of state, although he had not actively participated in the coup.2

  Torrijos was highly regarded by the Panamanian middle and lower classes. He had grown up in the rural city of Santiago, where his parents taught school. He had risen quickly through the ranks of the National Guard, Panama’s primary military unit and an institution that during the 1960s gained increasing support among the poor. Torrijos earned a reputation for listening to the dispossessed. He walked the streets of their shantytowns, held meetings in slums that politicians didn’t dare to enter, helped the unemployed find jobs, and often donated his own limited financial resources to families stricken by illness or tragedy.3

  His love of life and his compassion for people reached even beyond Panama’s borders. Torrijos was committed to turning his nation into a haven for fugitives from persecution, a place that would offer asylum to refugees from both sides of the political fence, from leftist opponents of Chile’s Pinochet to right-wing anti-Castro guerrillas. Many people saw him as an agent of peace, a perception that earned him praise throughout the hemisphere. He also developed a reputation as a leader who was dedicated to resolving differences among the various factions that were tearing apart so many Latin American countries: Honduras, Guatemala, El Salvador, Nicaragua, Cuba, Colombia, Peru, Argentina, Chile, and Paraguay. His small nation of two million people served as a model of social reform and an inspiration for world leaders as diverse as the labor organizers who plotted the dismemberment of the Soviet Union and Islamic militants like Muammar Gadhafi of Libya.4

  My first night in Panama, stopped at the traffic light, peering past the noisy windshield wipers, I was moved by this man smiling down at me from the billboard — handsome, charismatic, and courageous. I knew from my hours at the BPL that he stood behind his beliefs. For the first time in its history, Panama was not a puppet of Washington or of anyone else. Torrijos never succumbed to the temptations offered by Moscow or Beijing; he believed in social reform and in helping those born into poverty, but he did not advocate communism. Unlike Castro, Torrijos was determined to win freedom from the United States without forging alliances with the United States’ enemies.

  I had stumbled across an article in some obscure journal in the BPL racks that praised Torrijos as a man who would alter the history of the Americas, reversing a long-term trend toward US domination. The author cited as his starting point Manifest Destiny — the doctrine, popular with many Americans during the 1840s, that the conquest of North America was divinely ordained; that God, not men, had ordered the genocide of native North Americans, the destruction of forests, the near-extinction of buffalo, the draining of swamps, the rechanneling of rivers, and the development of an economy that depends on the continuing exploitation of labor and natural resources.

  The article got me to thinking about my country’s attitude toward the world. The Monroe Doctrine, originally enunciated by President James Monroe in 1823, was used to take Manifest Destiny a step further when, in the 1850s and 1860s, it was used to assert that the United States had special rights all over the hemisphere, including the right to invade any nation in Central or South America that refused to back US policies. Teddy Roosevelt invoked the Monroe Doctrine to justify US intervention in the Dominican Republic, in Venezuela, and during the “liberation” of Panama from Colombia. A string of subsequent US presidents — most notably Taft, Wilson, and Franklin Roosevelt — relied on it to expand Washington’s Pan-American activities through the end of World War II. Finally, during the latter half of the twentieth century, the United States used the Communist threat to justify expansion of this concept to countries around the globe, including Vietnam and Indonesia.5

  Now, it seemed, one man was standing in Washington’s way. I knew that he was not the first — leaders like Castro and Allende had gone before him — but Torrijos alone was doing it outside the realm of Communist ideology and without claiming that his movement was a revolution. He was simply saying that Panama had its own rights — to sovereignty over its people, its lands, and a waterway that bisected it — and that these rights were as valid and as divinely bestowed as any enjoyed by the United States.

  Torrijos also objected to the School of the Americas (renamed the Western Hemisphere Institute for Security Cooperation, in 2001) and to the US Southern Command’s tropical warfare training center, both located in the Canal Zone. For years, the United States armed forces had invited Latin American dictators and presidents to send their sons and military leaders to these facilities — the largest and best equipped outside North America. There they learned interrogation and covert operational skills as well as military tactics that they would use to fight communism and to protect their own assets and those of the oil companies and other private corporations. They also had opportunities to bond with the United States’ top brass.

  These facilities were hated by Latin Americans — except for the few wealthy ones who benefited from them. They were known to provide schooling for right-wing death squads and the torturers who had turned so many nations into totalitarian regimes. Torrijos made it clear that he did not want training centers located in Panama — and that he considered the Canal Zone to be included within his borders.6

  Seeing the handsome general on the billboard, and reading the caption beneath his face — “Omar’s ideal is freedom; the missile is not invented that can kill an ideal!” — I felt a shiver run down my spine. I had a premonition that the story of Panama in the twentieth century was far from over, and that Torrijos was in for a difficult and perhaps even tragic time.

  The tropical storm battered the windshield, the traffic light turned green, and the driver honked his horn at the car ahead of us. I thought about my own position. I had been sent to Panama to close the deal on what would become MAIN’s first truly comprehensive master development plan. This plan would create a justification for World Bank, Inter-American Development Bank, and USAID investment of billions of dollars in the energy, transportation, and agriculture sectors of this tiny and very crucial country. It was, of course, a subterfuge, a means of making Panama forever indebted and thereby returning it to its puppet st
atus.

  As the taxi started to move through the night, a paroxysm of guilt flashed through me, but I suppressed it. What did I care? I had taken the plunge in Java, sold my soul, and now I could create my opportunity of a lifetime. I could become rich, famous, and powerful in one blow.

  CHAPTER 11

  Pirates in the Canal Zone

  The next day, the Panamanian government sent a man to show me around. His name was Fidel, and I was immediately drawn to him. He was tall and slim and took an obvious pride in his country. His great-great-grandfather had fought beside Bolívar to win independence from Spain. I told him I was related to Tom Paine, and I was thrilled to learn that Fidel had read Common Sense in Spanish. He spoke English, but when he discovered I was fluent in the language of his country, he was overcome with emotion.

  “Many of your people live here for years and never bother to learn it,” he said.

  Fidel took me on a drive through an impressively prosperous sector of his city, which he called the New Panama. As we passed modern glass-and-steel skyscrapers, he explained that Panama had more international banks than any other country south of the Rio Grande.

  “We’re often called the Switzerland of the Americas,” he said. “We ask very few questions of our clients.”

  Late in the afternoon, with the sun sliding toward the Pacific, we headed out on an avenue that followed the contours of the bay. A long line of ships was anchored there. I asked Fidel whether there was a problem with the canal.