CHAPTER 40


Istanbul: Tools of Modern Empire

In the 1970s, economic hit men were executives and consultants at a few multinational corporations and consulting companies. Today’s EHMs are executives and consultants at thousands of multinational corporations, consulting companies, investment funds, industry groups, and associations — as well as an army of lobbyists that represents all of these.

The similarities of the EHMs of the past to those of the present, as well as the differences between them, were on my mind in April 2013. It was less than a month after my Vietnam trip. I stood at the window of my hotel in Istanbul and looked out at the ancient buildings and minarets of this city that has been both the seat and the victim of empires for centuries. After the publication of Confessions of an Economic Hit Man, I had been invited to Istanbul a number of times to speak at conferences of business executives. This historic city had become a center for international conferences.

I thought about the core tools we EHMs used in my day: false economics that included distorted financial analyses, inflated projections, and rigged accounting books; secrecy, deception, threats, bribes, and extortion; false promises that we never intended to honor; and enslavement through debt and fear. These same tools are used today. Now, as then, many elements are present in each “hit,” although that likely is evident only to someone willing to delve deeply into the story behind the story. Now, as then, the glue that holds all of this together is the belief that any means are justified to achieve the desired ends.

A major change is that this EHM system, today, is also at work in the United States and other economically developed countries. It is everywhere. And there are many more variations on each of these tools. There are hundreds of thousands more EHMs spread around the world. They have created a truly global empire. They are working in the open as well as in the shadows. This system has become so widely and deeply entrenched that it is the normal way of doing business and therefore is not alarming to most people.

These men and women convince government officials to give them favorable tax and regulatory treatment. They force countries to compete against one another for the opportunity to host their facilities. Their ability to locate their production plants in one country, their tax-sheltered banking in a second, their phone call centers in a third, and their headquarters in a fourth gives them immense leverage. Countries must vie with one another to offer the most lenient environmental and social regulations and the lowest wage and tax rates. In many cases, governments swamp themselves with debt so they can offer perks to subsidize corporations. In the past decade we’ve watched this happen to countries such as Iceland, Spain, Ireland, and Greece, in addition to the economically developing countries, where it has been going on longer. When the subtler approaches fail, government officials learn that some damaging aspect of their personal lives, which they thought was secret, will be exposed or even, in some cases, fabricated.

Another change is evident in the justification used for the EHM tactics. Then, it was protecting the world from Communist take-over, from the Vietcong and other revolutionary groups, or from threats to our affluent American way of life. Today, the justification is stopping terrorists, fighting Islamic extremists, promoting economic growth, or saving our affluent way of life.

Later that day, I left my hotel to meet with Uluç Özülker, Turkey’s former ambassador to Libya, the country’s representative to both the European Union and the Organisation for Economic CoOperation and Development (OECD), and a highly regarded diplomat and scholar.

We ordered Turkish coffee on the outdoor patio of a bistro with a spectacular view of the Bosporus, the waterway that allows transportation between the Mediterranean and the Black Sea and separates Asia from Europe. We talked about the critical role the Bosporus played as an avenue of commerce for ancient Greece, Persia, and Rome.

“You spell it out in your book,” Uluç said. “Economics is the key to power.”

I pointed at a passing freighter. “Trade.”

“Yes.” He smiled. “And debt.” He took a sip of the strong, dark coffee that had been delivered by a waiter while we chatted. “You emphasize that your job was to bind countries with debt.” He peered over the rim of his cup. “Fear and debt. The two most powerful tools of empire.” He set the cup down on the table. “Most everybody thinks military might is the driver of empire, but war’s important because it — and the threat of it — instills fear. People are terrified into parting with their money. They take on more debt.” He smiled. “Whether we owe money or favors, debt shackles us. That’s why the economic hit man approach is so effective. More so than war.”

When I asked about his experiences in Libya, he said that Muammar Gadhafi provided an excellent case study in modern empire building. “He was a harsh dictator, and yet, in my opinion, he made most of his people better off. Unlike many of the other leaders you write about — in Indonesia, Ecuador, and other places — he used Libya’s oil money to improve conditions. But his Soviet leanings upset the US.” Uluç went on to explain that, after the collapse of the Soviet Union, Gadhafi found himself isolated and in a very precarious position. As a consequence, Gadhafi decided to reconcile his differences with the West. “He sold out to England and the US when he acknowledged Libya’s role in the bombing of the Pan Am flight over Lockerbie, Scotland. He also assured London and Washington that their companies would get his country’s oil. That ended most of the economic sanctions against him.”

“Why did the US and England side with the rebels who fought him, then?”

“It’s complex and entangled.” Uluç took another sip of coffee. “Short version: the French resented the new Anglo–American–Libyan ties and the fact that Paris lost out on oil deals.” He described how President Sarkozy had offered support to disgruntled tribal leaders and factions from Egypt and other Arab countries, as well as within Libya itself, who were attempting to depose Gadhafi. Eventually, the United Kingdom and the United States saw that defending Gadhafi’s regime — one they had strongly denounced in the past — was resulting in worldwide condemnation. “Besides,” he added, “Gadhafi encouraged other Arab countries to sell oil for Libya’s gold dinar instead of dollars.”

“Echoes of Saddam Hussein — and now Iran.”

“Yes. As you know, Washington and Wall Street view attacks on the dollar and the Federal Reserve practically as acts of war. So, the US and Britain joined France and the other NATO countries in a ‘civil war’ that eventually overthrew and assassinated Gadhafi. It was a classic case of the very things you write about, Mr. Perkins. Economic hit men, jackals, and the military, all working together in ways that were at first subtle and then overt.”

He watched a passing ship. “It happened here, too, you know. The US played a deciding role in the 1980 coup in my country.” We talked about how President Carter had sent three thousand troops to support the coup, and $4 billion in aid. In typical EHM fashion, some of the money had been filtered through NATO and the OECD. Following the coup, not surprisingly, the IMF stepped in to support privatization and takeovers by big business. “Turkey,” Uluç said, “bought into the game of what you call the corporatocracy.”

I pointed out that the globalizing corporate network had destabilized the world economy, building it on wars or the threat of war, debt, and abuse of the earth’s resources — a death economy. “Less than 5 percent of the world’s population,” I said, “lives in the US, and we consume more than 25 percent of the resources, while half the world suffers from desperate poverty. That’s not a model. It can’t be replicated — not by China, India, Brazil, Turkey, or any other country, no matter how hard they try.”¹

“Yes,” he said. “Fear, debt, and another very important strategy: divide and conquer.” He talked about the schism between Sunnis and Shiites and about how civil wars and tribal factions create power vacuums that open the doors to exploitation. “In such disputes,” he continued, “both parties take on more debt, buy more arms, destroy resources and infrastructure, and then accept even more debt to finance reconstruction. We’re seeing it throughout the Middle East, in Syria, Iraq, Egypt, Afghanistan . . . So many countries are the building blocks for billionaires.”

I asked what he thought it would take to transform the death economy into a life economy. “You have to go after the businessmen, the CEOs and major stockholders of the multinationals that run the world. They are the roots of the problem.”

The next day, flying home from Istanbul, looking down on the Mediterranean, I found that, in addition to guilt, I felt a growing sense of anger. Our business and government leaders were taking the EHM system way beyond anything imaginable in my time — or in the era of the feudal emperors who, during the so-called Dark Ages, ruled the lands beneath my plane.

I couldn’t help suspecting that future historians would look back on the post-9/11 era as an even darker age.

My anger mounted at the realization that we in the United States are told that we must fear scarcity, that we should buy more, work harder, keep accumulating, bury ourselves in more and more debt. This mentality goes beyond the personal to become an aspect of national patriotism — our country must amass increasing amounts of the world’s resources. We are assured that the debt used to finance the military is necessary for our own good — the same argument that had been used on the subjects of those feudal emperors.

It was particularly infuriating to recall that, when we point out that military spending reduces our benefits, we are told that social programs encourage indolence, whereas programs that support armies, subsidize windfall profits, and encourage corporate barons to speculate with our tax dollars fuel the engines of economic growth — that top-down economics works, despite the overwhelming evidence of the past decade to the contrary.

As I looked down at the English Channel, once the dividing line between archenemies Protestant England and Catholic France, I was struck by how much stronger this system has become since my EHM days, and how, after 9/11, the EHM system came home to roost. The use of debt and fear, the Patriot Act, the militarization of police forces, a vast array of new surveillance technologies, the infiltration and sabotage of the Occupy movement, and the dramatic expansion of privatized prisons have strengthened the US government’s ability to marginalize those who oppose it. Giant, corporate-funded political action committees (PACs), reinforced by Citizens United and other court decisions, and billionaires like the Koch brothers, who finance groups such as the American Legislative Exchange Council (ALEC), subvert the democratic process and win elections by flooding the media with propaganda. They hire cadres of lawyers, lobbyists, and strategists to legalize corruption and to influence every level of government.

When I arrived back in the United States, I discovered something that reinforced my anger. Although Ecuador’s president, Rafael Correa, had survived the coup attempt and had announced that Ecuador would auction off oil rights in its Amazon region, he was once again under attack by one of those divide-and-conquer campaigns. He was being strangled by those “roots of the problem” that Uluç had described — the people who control the big corporations.