The New Confessions of an Economic Hit Man

by John Perkins

  http://projects.huffingtonpost.com/worldbank-evicted-abandoned/worldbank-projects-leave-trail-misery-around-globe-kenya

  Zambia is forced to pay $15.5 million to vulture fund Donegal International for a loan Zambia took out from Romania in 1979, which Donegal bought from Romania in 1999 for $3.2 million. Donegal had been suing for $55 million.

  http://news.bbc.co.uk/2/hi/business/6589287.stm

  2008

  In A Game As Old As Empire (San Francisco: Berrett-Koehler, 2008), edited by Steven Hiatt, twelve distinguished authors explore the many facets of modern-day economic hit men and the devastating consequences of the corporatocracy.

  www.bkconnection.com/books/title/a-game-as-old-as-empire

  EHMs cause a global financial crisis. On September 16, 2008, the failures caused by large US financial institutions — experienced by the exposure of subprime loans and credit default swaps — devolve into a global economic crisis, European bank failures, and stock value reductions worldwide. These and other factors contribute to a global recession that many consider to be the worst since the Great Depression.

  www.bloomberg.com/bw/stories/2008-10-10/stock-market-crash-understanding-the-panicbusinessweek-business-news-stock-market-and-financial-advice

  www.telegraph.co.uk/finance/financialcrisis/3174151/Financial-crisis-US-stock-markets-suffer-worst-week-on-record.html

  The European Network on Debt and Development (Eurodad), a network of fifty-one nongovernmental organizations from sixteen European countries, releases a report titled Critical Conditions: The IMF Maintains Its Grip on Low-Income Governments. “This report finds that since the Conditionality Guidelines were approved, the IMF has not managed to decrease the number of structural conditions attached to their development lending. Moreover, the Fund continues to make heavy use of highly sensitive conditions, such as privatization and liberalization. Eurodad’s analysis finds that a quarter of all the conditions in Fund loans approved after 2002 still contain privatisation or liberalisation reforms.”

  www.eurodad.org/uploadedfiles/whats_new/reports/critical_conditions.pdf

  The Jubilee USA Network releases a briefing note titled Are IMF and World Bank Economic Policy Conditions Undermining the Impact of Debt Cancellation? “[Twelve] years since the inception of the Heavily Indebted Poor Countries Initiative (HIPC) in 1996, the main debt relief program at the World Bank and IMF, the initiative suffers from serious flaws. Among them are the harmful economic policy requirements attached to both debt relief and lending from the IMF and World Bank. These harmful policy requirements . . . are undermining and sometimes even negating the benefits of debt cancellation. . . . These requirements often hurt the poorest and most vulnerable people and should be stopped immediately to enable debt relief to meet its life saving promise.”

  www.jubileeusa.org/fileadmin/user_upload/Resources/Policy_Archive/208briefnoteconditionality.pdf

  In an article for the Nation, James S. Henry, a senior adviser to the Tax Justice Network and author of The Blood Bankers: Tales from the Global Underground Economy (New York: Four Walls Eight Windows, 2003), recounts the staggering extent of the offshore financial industry. From the article: “In the last thirty years, fueled by the globalization of financial services, lousy lending, capital flight and mind-boggling corruption, a relatively small number of major banks, law firms, accounting firms, asset managers, insurance companies and hedge funds have come to launder and conceal at least $10 trillion to $15 trillion of private untaxed anonymous cross-border wealth.”

  www.thenation.com/article/attack-global-pirate-bankers

  2009

  The International Policy Centre for Inclusive Growth releases a one-pager examining IMF policy prescriptions and conditionalities. Titled Is the Washington Consensus Dead?, the paper describes the harmful effects of conditionalities in no uncertain terms: “The simple truth is that conditionalities are paternalistic. They are meant to alter behaviour and induce changes in economic, political and social structures. They also serve as a sort of collateral; in some cases they are a form of coercion to ensure adoption of otherwise unpalatable reforms.”

  www.ipc-undp.org/pub/IPCOnePager82.pdf

  More proof that economic hit men continue to manipulate economic forecasts to “sell” IMF policies. The Center for Economic and Policy Research releases a report titled IMF-Supported Macroeconomic Policies and the World Recession: A Look at Forty-One Borrowing Countries, which examines Stand-By Arrangements, Poverty Reduction and Growth Facilities, and Exogenous Shocks Facilities between the IMF and forty-one countries. “The paper finds that 31 of the 41 agreements contain pro-cyclical macroeconomic policies. These are either pro-cyclical fiscal or monetary policies — or in 15 cases, both — that, in the face of a significant slowdown in growth or in a recession, would be expected to exacerbate the downturn. . . . In many cases the Fund’s pro-cyclical policies were based on over-optimistic assumptions about economic growth. For example, of the 26 countries that have had at least one review, 11 IMF reports had to lower previous forecasts of real GDP growth by at least 3 percentage points, and three of those had to correct forecasts that were at least 7 percentage points overestimated. Most likely there will be more downward revisions to come.”

  www.cepr.net/documents/publications/imf-2009-10.pdf

  Jackals are alive and as active as ever. Honduran President Manuel Zelaya is ousted in what some allege is a CIA-supported coup d’état. Shortly after the coup, the New York Times reports on US administration denials of CIA involvement; two years later, the former culture minister of Honduras, Rodolfo Pastor Fasquelle, outlines US involvement on Democracy Now!, using cables released by WikiLeaks as evidence.

  www.nytimes.com/2009/06/30/world/americas/30honduras.html

  www.democracynow.org/2011/6/1/former_honduran_minister_us_undoubtedly_played

  www.democracynow.org/2015/7/28/clinton_the_coup_amid_protests_in

  The Guardian publishes leaked memos from Barclays bank that purport to reveal “a number of elaborate international tax avoidance schemes by the SCM (Structured Capital Markets) division of Barclays.” According to these documents, Barclays is alleged to have been “systematically assisting clients to avoid huge amounts of tax they should be liable for across multiple jurisdictions.” Barclays obtained a court injunction that night, forcing the Guardian to remove the documents from its Web archive. WikiLeaks releases the original leaked memos and describes the circumstances.

  www.WikiLeaks.org/wiki/The_Guardian:_Censored_Barclays_tax_avoidance_leaked_memos%2C_16_Mar_2009

  Israeli billionaire Dan Gertler is alleged to have earned a 500 percent return as a middleman on a mining deal in the Democratic Republic of the Congo, and is alleged to have cheated the DRC’s government out of $60 million (one of Gertler’s many dealings in the DRC, as detailed by Bloomberg.com).

  www.bloomberg.com/news/articles/2012-12-05/gertler-earns-billions-as-mine-deals-leave-congo-poorest

  An op-ed in the Guardian likens the International Monetary Fund to a cold-blooded murderer in the way it punishes developing economies. On the IMF’s actions against Latvia: “Latvia missed a 200 million euro disbursement from the IMF in March for not cutting its budget enough. According to press reports, the government wants to run a budget deficit of 7 percent of GDP for this year, and the IMF wants 5 percent. Latvia is already cutting its budget by 40 percent, and is planning to close some public hospitals and schools in order to make the IMF’s targets, prompting street protests.”

  www.theguardian.com/commentisfree/cifamerica/2009/may/13/imf-us-congress-aid

  2010

  WikiLeaks releases vast numbers of documents and files related to the wars in Iraq and Afghanistan; the collections become known as the “war logs.” As summarized on Alternet.org: “These ‘Afghan War Logs,’ like the Iraqi war logs after them, and much material in WikiLeaks’ recent release of diplomatic cables, reveal above all that US Executive war-making is marked by massive deception of the American people — particularly lying
about (1) the enormous civilian casualties the US is causing and (2) its claim to be pursuing a ‘counter-insurgency strategy’ designed to install a democratic Afghan government. The Times and Guardian stories describe how these official US documents reveal constant US Executive Branch lying to the American people.”

  www.alternet.org/story/149393/WikiLeaks%27_most_terrifying_revelation%3A_just_how_much_our_government_lies_to_us

  In the Citizens United v. Federal Election Commission decision, the US Supreme Court declares “the corporate expenditure ban unconstitutional, holding that independent expenditures [can] not be constitutionally limited in federal elections, and implicitly that corporations [can] give unlimited amounts to other groups to spend, as long as the expenditures [are] made independently from the supported candidate” — thus giving rise to the super PAC.

  www.cnn.com/2012/02/15/opinion/wertheimer-super-pacs

  Global Justice Now releases a report titled The Great Hunger Lottery: How Banking Speculation Causes Food Crises. The report examines the “astonishing surge in staple food prices over the course of 2007–2008, when millions went hungry and food riots swept major cities around the world,” and shows how this crisis “was fueled by the behavior of financial speculators.” Continued speculation on food commodities “has led to food prices becoming unaffordable for low-income families around the world, particularly in developing countries highly reliant on food imports.”

  www.globaljustice.org.uk/sites/default/files/files/resources/hunger_lottery_report_6.10.pdf

  ProPublica launches an investigation (ongoing through 2015) into the Wall Street “money machine,” exploring how Wall Street “took advantage of complicated mortgage-based instruments to reap billions, only to exacerbate the eventual crash.” One of its more recent articles (published in April 2014) examined the conviction of former investment banker Kareem Serageldin and attempted to understand “why the largest man-made economic catastrophe since the Depression resulted in the jailing of a single investment banker — one who happened to be several rungs from the corporate suite at a second-tier financial institution.”

  www.propublica.org/series/the-wall-street-money-machine

  www.propublica.org/article/the-rise-of-corporate-impunity

  Mother Jones documents the US government’s longtime kowtowing to big oil in an article titled US Government, Brought to You By Big Oil. The article provides extensive evidence in support of the argument that “the oil companies not only write their own regulations and perform their own oversight; they also set energy policy and draft laws.”

  www.motherjones.com/mojo/2010/06/us-government-brought-you-big-oil

  Vulture funds’ debt repayment suit steals Liberian funds earmarked for much-needed postconflict development. In the same year that Liberia is awarded $4.6 billion in debt relief from the International Monetary Fund and the World Bank, the country is forced to settle with Hamsah Investment and Wall Capital, two so-called vulture funds, which sued Liberia in 2009 for a $6.5 million loan originally taken out from US-based Chemical Bank in 1978. The amount the vulture funds were suing for purportedly climbed to a whopping $43 million by 2010; Liberia agreed to settle for just over 3 percent of that amount.

  www.bbc.com/news/world-africa-11819276

  2011

  Eurodad releases a report titled How to Spend It: Smart Procurement for More Effective Aid, which condemns “tied aid” and estimates that, of $69 billion annually, “more than 50 percent of total official development assistance is spent on procuring goods and services for development projects from external providers. . . . ‘Tying aid’ to the condition that all purchases are made from firms from donor countries is the least effective form of procurement. It turns aid into boomerang aid: a financial flow that is only channelled to developing countries on the books. Although first agreements to untie aid were signed at the OECD [Organisation for Economic Co-operation and Development] in 2001 . . . about 20 percent of bilateral aid is still formally tied. Development projects funded with tied aid are also 15 to 40 percent more expensive. Furthermore, in reality the majority of formally untied aid contracts from bilateral agencies also go to donor country firms. Two-thirds are awarded to firms from OECD countries, and 60 percent ‘in country,’ to firms from the donor country that funds a project.”

  www.theguardian.com/global-development/2011/sep/07/aid-benefits-donor-countries-companies

  The full report can be found on Eurodad’s website:

  http://eurodad.org/files/pdf/5284d26056f24.pdf

  WikiLeaks releases the “PetroCaribe Files,” documenting “how the US tried — and failed — to scuttle a Venezuelan oil deal even though it would bring huge benefits to Haiti’s impoverished people.”

  www.thenation.com/article/161056/petrocaribe-files

  A cable released by WikiLeaks “shows how US and international donors pushed ahead with a rigged presidential election” in Haiti.

  www.thenation.com/article/161216/WikiLeaks-haiti-cable-depicts-fraudulent-haiti-election

  A leading newspaper in Nigeria, ThisDay, reported that the US State Department, in conjunction with Shell Oil, planted operatives within the government to influence domestic and foreign policy. According to ThisDay, “Shell’s top executive in Nigeria told US diplomats that Shell had seconded employees to every relevant department and so knew ‘everything that was being done in those ministries.’ She also reportedly boasted that the government had ‘forgotten’ about the extent of Shell’s infiltration and were unaware of how much the company knew about its deliberations.”

  http://beforeitsnews.com/african-american-news/2011/01/after-WikiLeaks-u-s-outlines-africa-priorities-amid-revelations-338594.html

  Khalil Nakhleh, a former development worker and consultant in Palestine, publishes a book titled Globalized Palestine: The National Sell-Out of a Homeland (Ewing Township, NJ: Red Sea Press, 2011). According to the Amazon.com description: “The book asserts that aid advanced to Palestine under occupation is political aid par excellence, advanced to the Palestinians specifically to acquiesce and submit to an imposed political agenda and program. It shackles, mortgages, and holds hostage the entire current society and future generations in political and economic debt. It is aid that focuses on consumption and mortgaging people. It is aid that is anti-production and anti-liberation.”

  www.amazon.com/Globalized-Palestine-National-Sell-Out-Homeland/dp/1569023557

  Global Justice Now releases a report titled Power to the People? How the World Bank–Financed Wind Farms Fail Communities in Mexico. By examining the case study of the La Mata and La Ventosa wind farm in Oaxaca — the World Bank’s “flagship Clean Technology Fund (CTF) project in Mexico” — the report “shows that the CTF is a flawed model for climate financing, with inherent biases towards funding energy utilities and the private sector in middle income countries. In dispersing loans rather than grants, the CTF risks loading further debt onto poorer countries contrary to the original purpose of climate financing.” Regarding the La Mata and La Ventosa wind farm specifically, the report finds that all of the electricity created by the project will be “sold at a discounted rate to Walmart,” that the project “misrepresented its finances to gain additional funding from the UN’s Clean Development Mechanism,” and that the project will be used to promote further private sector wind projects in the Isthmus of Tehuantepec — projects that “have met with considerable local resistance . . . amidst concerns that they form part of an attempt ‘to grab indigenous lands and convert them into resources for the market.’”

  www.globaljustice.org.uk/sites/default/files/files/resources/mexico_oaxaca_la_ventosa_-_final.pdf

  Global Justice Now releases a report titled Broken Markets: How Financial Market Regulations Can Help Prevent Another Global Food Crisis. The report “shows how financial speculation has boomed, turning commodity derivatives into just another asset class for investors, distorting and undermining the effective functioning of agricultural markets. It shows how the changes in the financi
al markets translate into changes in the prices of food, and the devastating impact this has had on the world’s poorest people.”

  www.globaljustice.org.uk/sites/default/files/files/resources/broken-markets.pdf

  “Did Lobbying Cause the Financial Crisis?” asks a headline in the Economist. The answer — It seems so, yes — comes from a paper, written by three IMF economists and published in the National Bureau of Economic Research, titled A Fistful of Dollars: Lobbying and the Financial Crisis. The paper establishes a strong correlation between lobby activity, deregulation, riskier loans, and ultimately — after it all went wrong — bailouts. As described in the Economist, the paper finds that “banks were an active participant in deregulation, pushing for weaker rules that allowed all those ill-advised mortgage loans. . . . The IMF economists found that lenders that lobbied the most also tended to make riskier loans. They also found that the areas of the country dominated by lenders who spent the most lobbying dollars also tended to have higher rates of default. Lastly, if you thought there was connection between Washington connections and bailouts, you would be right as well. The economists found that the firms that lobbied the most were also the most likely to get bailout cash.”

  http://business.time.com/2011/05/26/did-lobbying-cause-the-financial-crisis/print

  www.nber.org/papers/w17076

  The Democratic Republic of the Congo narrowly escapes being forced to repay an illegal $100 million debt to an American vulture fund. FG Hemisphere wins a suit in the Jersey Islands against the country, and the court awards $100 million on a debt that the fund originally purchased for a $3 million. Happily, however, in the following year, the purchase is proven to be illegal, and the UK Privy Council rules in a final judgment that the vulture fund cannot collect the $100 million award. This ruling, unfortunately, came too late to prevent the DRC from being forced to settle with another American vulture fund, Red Mountain Finance, in 2002; the DRC agreed to pay $8 million on a debt that Red Mountain reportedly bought for $800,000, and for which they then sued for $27 million.