The New Confessions of an Economic Hit Man

by John Perkins

  It was disturbing to understand that the unspoken details behind the written words of my résumé and of that article defined a world of smoke and mirrors intended to keep us all trapped in a system that is morally repugnant and ultimately self-destructive. By getting me to read between the lines, Paula had nudged me to take one more step along a path that would ultimately transform my life.

  CHAPTER 24

  Ecuador’s President Battles Big Oil

  My work in Colombia and Panama gave me many opportunities to stay in touch with and to visit the first country to be my home away from home. Ecuador had suffered under a long line of dictators and right-wing oligarchies manipulated by US political and commercial interests. In a way, the country was the quintessential banana republic, and corporate giants such as Dole Food Company 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.1 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.

  One man whose star was rising over this Andean country was the exception to the rule of political corruption and complicity with the corporatocracy. Jaime Roldós was a university professor and attorney in his late thirties, whom I had met on several occasions. He was charismatic and charming. Once, I impetuously offered to fly to Quito and provide free consulting services any time he asked. I said it partially in jest, but also because I would gladly have done it on my own vacation time — I liked him and, as I was quick to tell him, was always looking for a good excuse to visit his country. He laughed and offered me a similar deal, saying that whenever I needed to negotiate my oil bill, I could call on him.

  He had established a reputation as a populist and a nationalist, a person who believed strongly in the rights of the poor and in the responsibility of politicians to use a country’s natural resources prudently. When he began campaigning for the presidency in 1978, he captured the attention of his countrymen and of citizens in every nation where foreign interests exploited oil — or where people desired independence from the influences of powerful outside forces. Roldós was the rare modern politician who was not afraid to oppose the status quo. He went after the oil companies and the not-so-subtle system that supported them.

  For instance, I heard that he accused the Summer Institute of Linguistics (SIL), an evangelical missionary group from the United States, of sinister collusion with the oil companies. I was familiar with SIL missionaries from my Peace Corps days. The organization had entered Ecuador, as it had so many other countries, with the professed goal of studying, recording, and translating indigenous languages.

  SIL had been working extensively with the Huaorani people in the Amazon basin area, during the early years of oil exploration, when a disturbing pattern appeared to emerge. Although it might have been a coincidence (and no link was ever proved), stories were told in many Amazonian communities that when seismologists reported to corporate headquarters that a certain region had characteristics indicating a high probability of oil beneath the surface, some SIL members went in and encouraged the indigenous people to move from that land, onto missionary reservations; there they would receive free food, shelter, clothes, medical treatment, and missionary-style education. The condition, according to these stories, was that the people had to deed their lands to the oil companies.

  Rumors abounded that SIL missionaries used an assortment of underhanded techniques to persuade the people to abandon their homes and move to the missions. A frequently repeated story was that they had donated food heavily laced with laxatives — then offered medicines to cure the diarrhea epidemic. Throughout Huaorani territory, it was said, SIL airdropped false-bottomed food baskets containing tiny radio transmitters; the rumor was that receivers at highly sophisticated communications stations, manned by US military personnel at the army base in the town named after the oil company Shell, tuned in to these transmitters. When a member of the community was bitten by a poisonous snake or became seriously ill, an SIL representative arrived with antivenom or the proper medicines — often in oil company helicopters.

  During the early days of oil exploration, five missionaries were found dead with Huaorani spears protruding from their bodies. Later, the Huaorani claimed they did this to send a message to keep missionaries out. The message went unheeded. In fact, it ultimately had the opposite effect. Rachel Saint, the sister of one of the murdered men, toured the United States, appearing on national television in order to raise money and support for SIL and the oil companies, who she claimed were helping the “savages” become civilized and educated. According to some sources, SIL received funding from the Rockefeller charities. Family scion John D. Rockefeller had founded Standard Oil — which later divested into the majors, including Chevron, Exxon, and Mobil.2

  Roldós struck me as a man who walked the path blazed by Torrijos. Both stood up to the world’s strongest superpower. Torrijos wanted to take back the Canal, while Roldós’s strongly nationalistic position on oil threatened the world’s most influential companies. Like Torrijos, Roldós was not a Communist but instead stood for the right of his country to determine its own destiny. And as they had with Torrijos, pundits predicted that big business and Washington would never tolerate Roldós as president — that if elected, he would meet a fate similar to that of Guatemala’s Arbenz or Chile’s Allende.

  It seemed to me that the two men together might spearhead a new movement in Latin American politics and that this movement might form the foundation of changes that could affect every nation on the planet. These men were not Castros or Gadhafis. They were not associated with Russia or China or, as in Allen-de’s case, the international Socialist movement. They were popular, intelligent, charismatic leaders who were pragmatic rather than dogmatic. They were nationalistic but not anti-American. If corporatocracy was built by three sectors — major corporations, international banks, and colluding governments — Roldós and Torrijos held out the possibility of removing the element of government collusion.

  A major part of the Roldós platform was what came to be known as the Hydrocarbons Policy. This policy was based on the premise that Ecuador’s greatest potential resource was petroleum and that all future exploitation of that resource should be done in a manner that would bring the greatest benefit to the largest percentage of the population. Roldós was a firm believer in the state’s obligation to assist the poor and disenfranchised. He expressed hope that the Hydrocarbons Policy could in fact be used as a vehicle for social reform. He had to walk a fine line, however, because he knew that in Ecuador, as in so many other countries, he could not be elected without the support of at least some of the most influential families, and that even if he should manage to win without them, he would never see his programs implemented without their support.

  I was personally relieved that Carter was in the White House during this crucial time. Despite pressures from Texaco and other oil interests, Washington stayed pretty much out of the picture. I knew this would not have been the case under most other administrations — Republican or Democrat.

  More than any other issue, I believe it was the Hydrocarbons Policy that convinced Ecuadorians to send Jaime Roldós to the Presidential Palace in Quito — their first democratically elected president after a long line of dictators. He outlined the basis of this policy in his August 10, 1979, inaugural address:

  We must take effective measures to defend the energy resources of the nation. The State [must] maintain the diversification of its exports and not lose its economic independence. . . . Our decisions will be inspired solely by national interests and in the unrestricted defense of our sovereign rights.3

  Once in office, R
oldós had to focus on Texaco, because by that time it had become the main player in the oil game. It was an extremely rocky relationship. The oil giant did not trust the new president and did not want to be part of any policy that would set new precedents. It was very aware that such policies might serve as models in other countries.

  A speech delivered by a key adviser to Roldós, José Carvajal, summed up the new administration’s attitude:

  If a partner [Texaco] does not want to take risks, to make investments for exploration, or to exploit the areas of an oil concession, the other partner has the right to make those investments and then to take over as the owner. . . .

  We believe our relations with foreign companies have to be just; we have to be tough in the struggle; we have to be prepared for all kinds of pressures, but we should not display fear or an inferiority complex in negotiating with those foreigners.4

  On New Year’s Day 1980 I made a resolution. It was the beginning of a new decade. In twenty-eight days, I would turn thirty-five. I resolved that during the next year I would make a major change in my life and that in the future I would try to model myself after modern heroes like Jaime Roldós and Omar Torrijos.

  In addition, something shocking had happened months earlier. From a profitability standpoint, Bruno had been the most successful president in MAIN’s history. Nonetheless, suddenly and without warning, Mac Hall had fired him.

  CHAPTER 25

  I Quit

  Mac Hall’s firing of Bruno hit MAIN like an earthquake. It caused turmoil and dissension throughout the company. Bruno had his share of enemies, but even some of them were dismayed. To many employees it was obvious that the motive had been jealousy. During discussions across the lunch table or around the coffee wagon, people often confided that they thought Hall felt threatened by this man who was more than fifteen years his junior and who had taken the firm to new levels of profitability.

  “Hall couldn’t allow Bruno to go on looking so good,” one man said. “Hall had to know that it was just a matter of time before Bruno would take over and the old man would be put out to pasture.”

  As if to prove such theories, Hall appointed Paul Priddy as the new president. Paul had been a vice president at MAIN for years and was an amiable, nuts-and-bolts engineer. In my opinion, he was also lackluster, a yes-man who would bow to the chairman’s whims and would never threaten him with stellar profits. My opinion was shared by many others.

  For me, Bruno’s departure was devastating. He had been a personal mentor and a key factor in our international work. Priddy, on the other hand, had focused on domestic jobs and knew little if anything about the true nature of our overseas roles. I had to question where the company would go from here. I called Bruno at his home and found him philosophical.

  “Well, John, he knew he had no cause,” he said of Hall, “so I demanded a very good severance package, and I got it. Mac controls a huge block of voting stock, and once he made his move, there was nothing I could do.” Bruno indicated that he was considering several offers of high-level positions at multinational banks that had been our clients.

  I asked him what he thought I should do.

  “Keep your eyes open,” he advised. “Mac Hall has lost touch with reality, but no one will tell him so — especially not now, after what he did to me.”

  In late March 1980, still smarting from the firing, I took a sailing vacation in the Virgin Islands. Although I did not think about it when I chose the location, I now know that the region’s history was a factor in helping me make a decision that would start to fulfill my New Year’s resolution.

  As I sailed up Sir Frances Drake Channel, tacking back and forth into the wind, a wooden boat with a rainbow flag sailed toward me, its sails billowing out on both sides, downwinding through the channel. A half dozen young men and women shouted and waved, hippies in brightly colored sarongs. It was obvious from the boat itself and the look about them that they lived aboard, a communal society, modern pirates, free, uninhibited.

  I felt a surge of jealousy. I wanted that sort of freedom. And then I understood. My resentment, my anger, was not about my parents. I realized in that moment that my life was a gift from those parents I had so often disparaged. I owed Mom and Dad a great deal for all they’d done to prepare and inspire me to wend my way down the path that had taken me to this moment. I also had to accept personal responsibility for all the mistakes I’d made. Blaming them, as I’d done so many times, was not just foolish and unfair; it was self-defeating.

  Soon after that I entered Leinster Bay, nestled into Saint John Island, a cove where pirate ships had lain in wait for the gold fleet when it passed through this very body of water. I nudged the anchor over the side; the chain rattled down into the crystal clear water and the boat drifted to a stop.

  After settling in, I rowed the dinghy ashore and beached it just below the ruins of an old sugar plantation. I sat there next to the water for a long time, trying not to think, concentrating on emptying myself of all emotion. But it did not work.

  Late in the afternoon, I struggled up the steep hill and found myself standing on the crumbling walls of this ancient plantation, looking down at my anchored sloop. I watched the sun sink toward the Caribbean. It all seemed very idyllic, yet I knew that the plantation surrounding me had been the scene of untold misery; hundreds of African slaves had died here — forced at gun-point to build the stately mansion, to plant and harvest the cane, and to operate the equipment that turned raw sugar into the basic ingredient of rum. The tranquility of the place masked its history of brutality.

  The sun disappeared behind a mountain-ridged island. A vast magenta arch spread across the sky. The sea began to darken, and I came face-to-face with the shocking fact that I too had been a slaver, that my job at MAIN had not been just about using debt to draw poor countries into the global empire. My inflated forecasts were not merely vehicles for assuring that when my country needed oil we could call in our pound of flesh, and my position as a partner was not simply about enhancing the firm’s profitability. My job was also about people and their families, people akin to the ones who had died to construct the wall I sat on, people I had exploited.

  For ten years, I had been the heir of those earlier slavers. Mine had been a more modern approach, subtler — I never had to see the dying bodies, smell the rotting flesh, or hear the screams of agony. But I too had committed sin, and because I could remove myself from it, because I could cut myself off from the personal aspects, the bodies, the flesh, and the screams, perhaps in the final analysis I was the greater sinner.

  I turned away from the sea and the bay and the magenta sky. I closed my eyes to the walls that had been built by slaves torn from their African homes. I tried to shut it all out. When I opened my eyes, I was staring at a large gnarled stick, as thick as a baseball bat and twice as long. I leaped up, grabbed the stick, and began slamming it against the stone walls. I beat on those walls until I collapsed from exhaustion. I lay in the grass after that, watching the clouds drift over me.

  Eventually I made my way back down to the dinghy. I stood there on the beach, looking out at my sailboat anchored in the azure waters, and I knew what I had to do. I had to take responsibility. I knew that if I ever went back to my former life, to MAIN and all it represented, I would be lost forever. The raises, the pensions, the insurance and perks, the equity . . . The longer I stayed, the more difficult it was to get out. I could continue to beat myself up as I had beat on those stone walls, or I could escape.

  Two days later I returned to Boston. On April 1, 1980, I walked into Paul Priddy’s office and resigned.

  PART IV: 1981–2004

  CHAPTER 26

  Ecuador’s Presidential Death

  Leaving MAIN was no easy matter; Paul Priddy refused to believe me. “April Fool’s,” he winked.

  I assured him that I was serious. Recalling Paula’s advice that I should do nothing to antagonize anyone or to give cause for suspicion that I might expose my EHM work, I emphas
ized that I appreciated everything MAIN had done for me but that I needed to move on. I had always wanted to write about the people that MAIN had introduced me to around the world, but nothing political. I said I wanted to freelance for National Geographic and other magazines, and to continue to travel. I declared my loyalty to MAIN and swore that I would sing its praises at every opportunity. At the time, I believed everything I said. I simply wanted out. I wanted to stop being a slaver. Finally, Paul gave in.

  After that, everyone else tried to talk me out of resigning. I was reminded frequently about how good I had it, and I was even accused of insanity. I came to understand that no one wanted to accept the fact that I was leaving voluntarily, at least in part because it forced them to look at themselves. If I were not crazy for leaving, then they might have to consider their own sanity in staying. It was easier to see me as a person who had departed from his senses.

  Particularly disturbing were the reactions of my staff. In their eyes, I was deserting them, and there was no strong heir apparent. However, I had made up my mind. After all those years of vacillation, I now was determined to make a clean sweep.