CHAPTER 45


Lessons for China

In 2015, a top Ecuadorian official told me, “We’d rather accept loans from Beijing than Washington. After all, China has never overthrown or killed our leaders — unlike the US.”

When I pointed out that China had a history of invasions in Asia, he replied, “Yes. They’ve seen those places as part of their ancient kingdom. But they haven’t done it in Latin America, or Africa, or the Middle East. The US has.”

We were discussing the debt audit commission that had reviewed the legitimacy of the loans taken on by Ecuador’s CIA-supported dictators during my EHM days. The commission’s findings had convinced President Correa to default on loans worth more than $3 billion. In retaliation for the president’s initial refusal to pay $30.6 million that was due on $519 million of outstanding global bonds in 2012, Standard and Poor’s Rating Services and Fitch Ratings slashed Ecuador’s credit rating.¹

Correa turned to Beijing. China offered Ecuador a $1 billion loan, which soon was increased to $2 billion.² As his government repaid that loan, Correa reestablished Ecuador’s global credit standing, but he also made his country beholden to China and its version of EHMs. By April 2015, Ecuador’s debts to China had risen to almost $5.4 billion — representing 28 percent of its external debt.³

In the summer of 2015, I returned to Ecuador. Fundación Pachamama had been legally dissolved, but there had been no attempt to inhibit the work of the US-based Pachamama Alliance. I joined Bill and Lynne Twist and Daniel Koupermann on our annual trip to lead a group of supporters to Achuar territory.

As we made that spectacular trip from Quito to the airstrip in Shell, from which planes would take us deep into the jungle, I once again stared at the massive concrete wall of the Agoyan hydroelectric dam — for me, a symbol of the legal crimes I’d committed, and one that evoked memories of the assassinated Jaime Roldós and the very recent attempted coup that had changed Correa.

I thought about how the abuses of the World Bank, the IMF, Wall Street, the credit rating services, and the rest of the US/European banking community have driven Ecuador and its oil resources into the arms of China. When I traveled past this dam in 2003, it was assumed that most of the country’s oil would go to the United States. By 2015, that had totally changed; China was buying almost 55 percent of Ecuador’s oil. Exports to the United States, meanwhile, had decreased from about 75 percent of Ecuador’s oil to none.⁴ I realized that, perhaps more than anything else, China’s role — not just in Ecuador but in the entire world — offers insights into the future.

China’s expansionism, like that of the United States and the other empires of history, revolves around lending money to countries, plundering their resources, and paralyzing their leaders with fear. China is playing off the fears of men like Correa and citizens of countries such as Ecuador and Honduras — and just about everywhere else.

Whereas we in the United States are taught to fear China, Russia, and terrorists, a large part of the world fears us. They fear the Pentagon and the military presence that Washington has established in more than one hundred countries. They fear the CIA, the NSA, and all the other US spy agencies. They fear the drones, the missiles, and the bombs. They fear our dollarized, debt-based money system.

In addition to the obvious physical fears are the more subtle ones. Economically developing countries fear their vulnerability to global corporations. Because of the trade agreements and conditionalities imposed on them through the debt agreements, their economies seem dependent on those corporations. They fear they can’t survive without the corporations. They fear that the corporations will go somewhere else to locate their production facilities, but they also fear that if those facilities are built within their borders, the corporations will bury the country in pollution and force workers to accept unlivable wages. They fear that the corporations will eventually leave them for another country with even less stringent environmental and social regulations, dooming to extreme poverty or starvation the people who abandoned their subsistence farms to work in the now-vacated factories.

A system based on fear and debt may seem effective; yet, history has shown that empires never last. The tragedy of America’s rise and fall in the modern world represents a colossal failure on the part of corporate and government leaders.

After the demise of the Soviet Union, the new corporate barons believed they had license to do whatever they deemed it would take to realize their goal of maximizing profits, including corrupting politicians and manipulating the legal system. “Aid” organizations such as the World Bank increased the interest rates on loans, made political demands, and imposed conditionalities on the debtor countries, influencing the way they governed themselves and related to the United States and the corporations.

It did not take long for people in those nations to recognize that they were being exploited. However, they had nowhere to turn, no counterbalancing power. The Soviet Union was gone. The economically developing countries had no choice but to give in and feel abused and resentful.

Then, almost overnight, China emerged as a new world power. Its meteoric rise as an economic giant and major player in international manufacturing and trade thrust it onto the world stage as that counterbalance.

China appears to have learned from mistakes made by the United States, its allies, and the corporatocracy. Chinese loans usually are not accompanied by draconian demands — the conditionalities of World Bank and IMF deals — such as voting for specific UN policies, trading only in dollars, or allowing the establishment of military bases occupied by foreign troops. China makes promises that the factories it builds will continue to operate in the long term. It remains to be seen whether such promises will be kept, but the United States promotes “free trade” agreements that do exactly the opposite.

However, despite China’s apparent aptitude at doing it better than the United States and its allies, the simple fact remains that China is using debt — massive amounts of it — to further its own EHM system, to control countries and their resources.

Although it is difficult to measure the total amount of debt money flowing from China, estimates are that it committed nearly $100 billion in loans to Ecuador and its Latin American neighbors from 2005 to 2013. Its current loans to the region are perhaps twice that amount and certainly surpass the combined loans of the World Bank, USAID, the Inter-American Development Bank, and the Export-Import Bank of the United States. China is the driving force behind the new BRICS (Brazil, Russia, India, China, and South Africa) bank and the Asian Infrastructure Investment Bank (AIIB), which includes more than fifty member countries. The assets and potential power of these banks dwarf those of the World Bank and all its associated financial institutions. In less than a decade, China has catapulted itself to the position of master of global debt.⁵

A New York Times article I read while in Ecuador reported events that sounded like the US EHM activities of my day — except that the Chinese were taking on more projects and spending more money than we ever did.

Where the Andean foothills dip into the Amazon jungle, nearly 1,000 Chinese engineers and workers have been pouring concrete for a dam and a 15-mile underground tunnel. The $2.2 billion project will feed river water to eight giant Chinese turbines designed to produce enough electricity to light more than a third of Ecuador.

Near the port of Manta on the Pacific Ocean, Chinese banks are in talks to lend $7 billion for the construction of an oil refinery, which could make Ecuador a global player in gasoline, diesel and other petroleum products.

Across the country in villages and towns, Chinese money is going to build roads, highways, bridges, hospitals, even a network of surveillance cameras stretching to the Galápagos Islands. State-owned Chinese banks have already put nearly $11 billion into the country, and the Ecuadorean government is asking for more.

Ecuador, with just 16 million people, has little presence on the global stage. But China’s rapidly expanding footprint here speaks volumes about the changing world order, as Beijing surges forward and Washington gradually loses ground.⁶

Our Pachamama Alliance group huddled in a hangar in Shell, waiting for the torrential jungle rain to stop so we could fly into Achuar territory. When I brought up the subject of China, there seemed to be a consensus that China had performed a miracle and should be feared. The country had risen from the ashes of Mao’s Cultural Revolution and, in the years since President Nixon’s first visit in 1972, had enjoyed amazing — “miraculous” — economic growth, like nothing ever before experienced by any country in history. However, this had come at a terrible environmental and social cost. The nation was smothering itself in pollution, and millions of Chinese were living under substandard social conditions. People expressed fear that China was rising to world prominence and that the Chinese model would cause even graver problems than the US model had.

I’d been to China a couple of times since writing Confessions of an Economic Hit Man. My last visit had been as a speaker at an MBA conference in Shanghai. Many of the Chinese MBA students who attended were members of the Communist Party and had been singled out as the future leaders of their country. They emphasized that they were very concerned about the environmental and social problems affecting their country, and they were committed to fixing them. One student, Mandy Zhang, insisted that economic growth was proof that China could create an economic miracle. “Now,” she said, “my generation must create a green miracle.”

One of the Pachamama Alliance people in the hangar asked, “What can we do? How do we stop China?”

If we are truly honest with ourselves, we in the United States have to admit that it is not so much about stopping China as about changing our own mind-sets. We need to admit that a great deal of China’s pollution is our pollution. The same can be said of the social conditions. We purchase the goods made in those factories. We seek out stores with the lowest prices, but the vast majority of their products are made in the polluting factories of China.

In a very real sense, China’s economic miracle has been possible only because of the United States — and the global corporations. Key individuals in China have joined the corporatocracy. China is the world’s largest exporter of manufactured goods. From 2001 to 2010, its reported exports increased at an average annual rate of about 20 percent. In 2004, China sold less than $200 billion worth of products to the United States; by 2014, that figure had more than doubled, to $467 billion.⁷

Instead of speculating about China, we must repent and reform. We need to take a long, hard look at what we in the United States — and our corporations, now gone global — have done. China is trying to emulate a system that is a failure. If less than 5 percent of the world’s population (living in the United States) is consuming more than 25 percent of the resources, how can 19 percent of the world’s population (living in China) hope to replicate our lifestyle? It’s certainly not possible to also add India, Brazil, and the rest of the world to that equation. We must change.

We in the United States and across the globe must stop using “them” as scapegoats. Just as we must not fear “them,” we must not blame “them” or expect “them” to solve the problem — the global problem of predatory corporate capitalism, a death economy. We need to recognize that “they” are us. We ourselves — each and every one of us — must take responsibility. We must create a new model — one that the Chinese, the Brazilians, the Indians, our own president, our corporate and government leaders, and everyone else can follow.

It isn’t about changing the mechanics of economics. It is about changing the ideas, the dogmas that have driven economics for centuries: debt and fear, insufficiency, divide and conquer. It is about moving from ideas about merely being sustainable to ones that include regenerating areas devastated by agriculture, mining, and other destructive activities. It is about revolution. The transition from a death economy to a life economy is truly about a change in consciousness — a consciousness revolution.