Two weeks ago, Lord John Browne, CEO of BP, spoke to a crowded Burden Auditorium about the virtues of BP and global corporate citizenship. In his speech, he defended globalization and multinational corporations such as his own and suggested that corporations can play a vital, if limited, role in securing social welfare around the globe. RC students studied BP cases and the positive NPV forecasts of the firm’s decision to unilaterally reduce greenhouse gas emissions.
Now, the author of a new book makes provocative allegations against BP and the entire globalization movement as it is practiced. In his new book The Best Democracy Money Can Buy, BBC investigative reporter Greg Palast contradicts John Browne’s central claims, and moreover, suggests that BP, like Enron and United States officials, is profiteering from globalization in emerging nations. His evidence and conclusions might leave some wondering if John Browne’s pro-globalization speech was part of a calculated public relations effort.
Palast is a lead investigative reporter for the BBC, an American journalist in self-exile who often complains that his inflammatory findings are not aired by U.S. corporate media. Last November, he was the reporter who broke the story about the mistaken disqualification of thousands of legal voters by Florida Secretary of State Katherine Harris, who hired a Texas-based company to “purge” illegal voters from voter eligibility lists. The report aired in November on the BBC, before the Supreme Court stopped recount attempts. The story was run in the U.S. in The Washington Post seven months later.
A former post-graduate student in economics under Milton Friedman, where he says “What I saw there was a kind of mad, almost religious fervor for free markets which had almost nothing to do with reality,” Palast is an unrelenting critic of U.S. corporate media and the “pro-globalization consensus” in America. In a recent interview, he gives a powerful presentation of “the other side” of globalization theory, which stands in contrast to the markedly pro-globalization speech excerpts of John Browne featured in last week’s Harbus.
In his interview on CSPAN, the U.S. government cable channel, Palast began an interview by criticizing a recent pro-globalization series on PBS, which the New York Times said “in case after case shows how countries as different as Chile and China became richer by opening up their economies,” a series that Palast says was paid for by BP.
Excerpts from Palast’s recent CSPAN interview follow. His comments include sharp criticism of the World Bank and IMF in developing nations, Enron, Saudi Arabia and U.S. interests, and rampant corruption throughout the principal actors of globalization.
The PBS Pro-Globalization Special
Palast: “What you’re getting tonight is propaganda film. First of all, they should make it clear that this is paid for by [BP]. A multinational oil corporation… BBC would never take a dime from BP, they have to come over here to buy a network. I actually don’t find this very cute at all, I think it’s a film which is utterly unbalanced. What this is is a long, deep kiss to globalization…
“No dissent is allowed from the pro-globalization consensus on American television. And no real information is given out . It’s cheerleading and nonsense and I think it actually crosses the point of unethical journalism, when you have a multinational oil company talking about the wonders of multinational oil companies, and they’re paying for it on the public broadcast system.”
Policies and Programs of IMF, WB and WTO
Palast: “These policies are a financial coup de tat of third world nations. I need to thank all the people who slipped me confidential documents from inside the IMF…
“I have inside documents from the World Bank regarding ‘country assistance plans’ – long documents about Tanzania, Argentina, Ecuador, you name it… These are not pretty documents. It’s not about the wonders of globalization… [The documents] contain what the IMF and World Bank together call “conditionalities,” about 111 for each nation. [In other words], if you want to borrow money on the international market, you go with their terms [“conditionalities”].
“In the case of Argentina, for example, under the ironic heading of ‘Helping the Unemployed,’ is a requirement to drop what is effectively their only unemployment insurance by 20%. It is [IMF and World Bank] programs which have smashed these economies into the ground. There is a demand that they cut their primary expenditures in Argentina, in the midst of a recession, by three billion dollars. It took their recession into a depression and now there is roughly 40% unemployment in Argentina…
“Joe Stiglitz, former Chief Economist of the World Bank and a recent Nobel Prize winner, was recently fired by the World Bank on the orders of the United States Treasury for simply asking the question, ‘are we really helping people, or are we crushing them?’
“What [Stiglitz] was finding was that every nation to which they gave advice, whether it was Argentina, or Tanzania, or Indonesia, or Ecuador, you end up with the capital in flames and the economy on its back. No exceptions. And he said the World Bank said, ‘What are the [economic] exceptions to our rules?’ China, Botswana, Venezuela – and what do those three countries have in common? They all told the World Bank’s economists to go packing and get the heck out of our countries.
“You’re not going to call China a free market economy, and I don’t like their repressive political policies, but they do grow at 7% a year, and they’ve done that by running exactly 180 degrees away from free market Thatcherite, Reaganite programs.”
On Why the IMF and World Bank Persist
Palast: “Stiglitz had it correct when he said they’re like ‘medieval doctors’: …they add leeches, they bleed the patient, the patient gets sicker and they just add more leeches until the patient dies. And then they say, ‘Listen, it’s not our fault. There’s still blood left in the patient.’
“After September 11th, our president said we had to spend $50 to $100 billion to make sure our economy doesn’t falter, yet when the Argentine economy was on its back, these guys are telling the nation to cut cut cut, reduce employment, cut pensions by 15%. It’s not just cruel, it’s economic insanity. It’s like turning off the engines on a plane in stall.
“That’s the weird thing about reading these documents of the World Bank and IMF, that they keep saying that these policies, taking the hard currency savings of the people of Argentina, taking it out of their bank accounts and using it to pay off foreign banks is somehow going to restore the economy of Argentina. It’s not only unfair, it’s straight nuts.
“We wouldn’t accept any of these conditions here in the United States. Imagine ordering a 13% cut in Social Security tomorrow morning. It would not happen.
“This is the globalization program, and behind it is BP and is a corporation we called Enron, because…as Stiglitz explained to me, step one [of IMF/World Bank plans] is the demand for mass privatization, which he called ‘briberization,’ because he hasn’t met a case, and I as an investigative reporter haven’t met one case yet, anywhere on this planet, ordered by the IMF that didn’t involve massive bribery. And he said they knew about it, and in some cases, like in the case of Russia, even encouraged the bribery.”
How Money Transfers Back Into U.S. Treasury Coffers
Palast: “What happens is we require these nations to hold massive reserves. And when I say we, the IMF and World Bank, which is 51% owned by the U.S. Treasury, requires some of the poorest nations in the planet to hold massive reserves at the Treasury where they get 4%, and you have to understand they’re borrowing money at 21%, for example, in the case of Argentina. So they’re borrowing at 21% but they have to lend back to the United States at 4%. It’s an impossible treadmill.
“One of the cruelest, one of the examples from an insi
de [confidential IMF] document – The World Bank required Ecuador secretly to raise the price of cooking gas, a basic requirement of the Ecuadorian people, by 80%. They knew it would cause, it says right in the document, this will cause social unrest that will have to be met with resolve. ‘Social unrest’ is the euphemism for ‘riots in the street.’ That happened. And ‘resolve’ means tanks in the street.
“And I went to Stiglitz and said, ‘It looks like they’re planning a riot here,’ and he said, ‘Yeah, they call it the IMF riot.’ They would turn up the heat until a nation explodes…and then of course the capital of the nation leaves…and then they have no choice but to accept the 111, or in the case of Ecuador, the 164 ‘conditionalities.’
“And it’s cruel stuff. And by the way this gets you back to BP. One of the conditionalities in Ecuador was that they give a permit for the Trans-Andean pipeline, a gas pipeline, which is an ecologically destructive, insane project. Who’s going to get that permit? It was set up for BP. No wonder BP is paying for this film to be on PBS tonight, this infomercial for their operations worldwide.”
A Dose of Tough Medicine for Long-Term Health?
Palast: “They’re leeches on the body. Look at the effect of Argentina, one of the documents say… [Jim Wolfensohn] said his programs, if followed, which they followed to a T, would lead to an upswing in the economy by the end of 2001. Well on December 20th 2001, the capital burned. People were hungry. People had no money. It was a nation that was the richest in Latin America that is now flat on its back because they followed the IMF program. The IMF’s ‘wonderful medicine’ is poison.
“You know, if you broke into a bank and stole the money, you’d go to jail, but if you’re the government acting under IMF orders, well then that’s called shock therapy or medicine…
“This is not opinion. What I’m doing is giving you the analysis that came out of one of the chief economists of the World Bank, [and the confidential] inside documents…”
Palast On Saudi Arabia and Terrorism
Recently, RC students studied a new case on the challenges facing Saudi Arabia entitled, “Saudi Arabia: Getting the House in Order.” Palast refers to several case facts and makes provocative allegations in a BBC report that aired recently and is available on his website.
In his BBC television report, Palast produces a confidential FBI memo leaked to a U.S. defense expert that prevented investigations of the Saudi Royal Family and groups they funded that were suspected of terrorism. Palast interviewed a Washington Lawyer who had FBI agents tell him they weren’t allowed to investigate Saudis, on orders from higher U.S. officials.
Said Palast in the report, “The States wanted to keep the Saudi Royal
family in control of the world’s biggest oil spigot, even at the price of turning a blind eye to any terrorist connection, so long as America was safe.” Palast reported that George W. Bush received “one of his first millions” from a member of the Bin Laden family, with whom the Bush family did business. For example, both families were major investors in the defense contractor company The Carlyle Group, on whose board sits George H. W. Bush. In recent years, The Carlyle Group has become one of the largest U.S. defense contractors.
In the report, Palast said, “I received a telephone call from a high-placed member of the U.S. intelligence agency. And he tells me that while there have always been constraints on investigating the Saudis, under George [W.] Bush, it’s gotten much worse. After the elections, the agencies were told to back off investigating the Bin Ladens and Saudi Royals, and that angered agents.
“And I was told that, since September 11th, the policy has been reversed. FBI Headquarters told us they could not comment on our finding. A spokesperson said, there are lots of things that only the intelligence community knows, and that no one else ought to know.”
On his CSPAN interview, Palast complained that this story was at the top of the news on BBC but not aired in the U.S., and that “this looking away is dangerous to our national security,” but that it has “benefited The Carlyle Group well.”
Palast on Enron and Bush
“I talked to a Senator [of Argentina] – again on BBC television; you won’t see it on U.S. television – he said in 1988 he got a call from a failed oil man named George W. Bush who said, ‘Listen, my daddy’s just being elected President now, and it would really help relations between your country and ours if you would give a pipeline you have between Argentina and Chile to a company called Enron.’
“And the Enron offer was for a fraction of the value of the [Argentinean] state assets – the same happened to the [state-owned] banks, the same happened to the [state-owned] water companies – it was a big giveaway of assets. The IMF said, ‘Well, it may be a giveaway, but at least we’ll get rid of those lousy Peronist managers and we’ll now have real entrepreneurs running these systems.’
“Yeah, you had real entrepreneurs figuring out how to strip the assets out of the country, so the capital left. The money left, and when the money left, of course that took out the underpinnings of the economy.
“You can’t live without capital on this planet, no matter what type of economy you have. You need capital, and if you have a system that systematically drains the capital, whether it’s through seizing your bank accounts or taking out the investments from the [Argentinean] oil companies, which were sold off to the Spanish, you’re going to bleed.
“I’m not talking about the New World Order or any of these things. What I’m talking about is plans that fail, and when they fail, they won’t stop ordering the same things, and when these nations are on their backs, they have no choice but to accept the [IMF/World Bank] conditions.
“If you think we had it bad with Enron, ask the people of India where the police beat the hell out of people who protested their plants there, ask the people of Argentina who have contaminated water sold by Enron, or pipelines and assets ripped off by this company at a fraction of the [real value], and the whiff of corruption just wafts up from these projects. That’s why Stiglitz called these projects ‘briberization.’
“That’s the reality of globalization, not the great theoretical stuff. We can talk theory forever, but I think what creates resentment on this planet is unfairness and poverty. And that’s not going to be relieved by a globalization plan, which in its actual application, is destructive.”
[More about Greg Palast and his work can be found on his website: //www.gregpalast.com. His new book is titled The Best Democracy Money Can Buy.]