The Real News Network | 22 September 2023
‘Silent coup’: how capitalism defeated decolonization
BY CHRIS HEDGES
The 20th Century saw a great global uprising against European imperialism as the former colonial countries shook off their shackles and rose up for independence. More than a half century later, global inequality is sharper than ever before. To understand the current predicament of the vast majority of the world’s people, we must understand the intervening decades. Matt Kennard and Claire Provost‘s book, Silent Coup: How Corporations Overthrew Democracy, looks inside the international architecture of global corporate governance that exists to flout and crush any attempts by the former colonial world to enact development on their own terms. Matt Kennard joins The Chris Hedges Report for a look at this intriguing and essential history.
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Chris Hedges: The US, like many industrialized countries, has undergone a corporate coup d’etat in slow motion, cementing into place a system of control the political philosopher, Sheldon Wolin calls “inverted totalitarianism.” Inverted totalitarianism retains the institution, symbols, iconography, and language of the old capitalist democracy but internally, corporations have seized all the levers of power to accrue ever-greater profits and political control. Claire Provost and Matt Kennard, in their book, Silent Coup: How Corporations Overthrew Democracy, chart the way the corporate coup d’etat was orchestrated. It examines the use of an international legal system to control and plunder the resources in the developing world, including the overthrow of governments that challenge corporate dominance.
The authors expose the nefarious alliance between nonprofit organizations and corporations, one that prioritizes profit rather than justice. They document the weakening of labor laws and the evisceration of workers’ protections and rights. To enforce this predatory behavior, corporations have not only created, in essence, a global Supreme Court, but raised and funded private mercenary militias to crush labor movements and intimidate, and even murder, activists. The subversion of democracy abroad is accompanied, the authors argue, by the subversion of democracy at home. The mechanisms of control used to plunder the developing world are also used in the industrial world.
Joining me to discuss Silent Coup is Matt Kennard, a former staff reporter for the Financial Times and co-founder and chief investigator at Declassified UK: A news outlet that investigates British foreign policy. Matt, in your first chapter titled Democracy on Trial, you write about an international legal case that was launched by a Vancouver-based company called Pacific Rim against the government of El Salvador. You use this case as a template throughout the book for how large corporations loot and pillage developing countries by forcing them to accept international agreements, investment treaties, and what you call “corporate courts” that favor global corporations. So I want you to explain what happened in El Salvador and how this system works.
Matt Kennard: Well, I’ll start with the system itself and then talk about the El Salvador example. So effectively, what the system is is a shadow legal system that operates across the world and affects pretty much every country in the world. And what it does is enshrines a system whereby multinational corporations can sue states for enacting policies they don’t like, which they say infringe on their, quote, unquote, “investor rights.”
This was a system that was created in the heat of the decolonization movement and the end of the formal empire. The main body where these cases are heard is actually an arm of the World Bank and it’s called the International Center for the Settlement of Investment Disputes, ICSID. Very little knowledge about it in the developed world, everyone in El Salvador, for example, knows the name of it. It’s called CIADI by its Spanish acronym. And when we went to El Salvador everyone knew that, but that’s something we can come back to. This was created in 1966 by the World Bank. And the ’60s, obviously, was the time when many, many countries in Africa and other places were getting independence and a lot of people who had been fighting the imperial powers on the ground were now becoming presidents and prime ministers. Now, in that scenario, the traditional owners of the world were panicking and they thought, how are we going to maintain control? How are we going to ensure our investments are protected when we don’t have a formal empire to rely on, we don’t have a formal garrison of troops based in that country where we can take out a leader if he does something we don’t like?
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So they came up with this system. And in fact, it was the brainchild of a German banker called Hermann Abs who was at Deutsche Bank, and he was actually associated with the Nazi regime as well. But after World War II, he thought that the world needed a system that he called a “capitalist Magna Carta.” And he made this famous – Well, it’s not a famous speech, it should be a famous speech – But he made this speech in San Francisco in 1957 to a group of industrialists from all over the world and all the bigwigs in America were there as well. This was 1957, so the context was four years before, in 1953, MI6 and the CIA had to take out the democratically elected prime minister of Iran, Mohammad Mosaddegh, because he nationalized the Anglo-Iranian Oil Company, now BP.
The following year, the CIA had to take out the democratically elected president of Guatemala, Jacobo Arbenz because he had the temerity to redistribute a bit of fallow land back to landless peasants. And then, in 1956 there was a Suez crisis where President Nasser nationalized the Suez Canal and there was an invasion by France, the UK, and Israel. And he was saying, look, we’re going to keep coming up against this problem. We don’t want to have to have a system where we have to go in hard, overthrow governments, assassinate leaders, whatever it may be. We need a legal system, an infrastructure in place where we can exercise power above the heads of these people, so even if we get a Nasser in power, an Arbenz, or a Mohammad Mosaddegh, they can’t move.
So his idea was to say, we need a legal system that operates above states, it’s a supranational institution where investor rights can be enforced. He then joined with a British Lord called Lord Shawcross, he was actually a Labor Lord, and they wrote this document called the Abs-Shawcross Draft Convention, and it basically was a template for this system. Nothing happened until it was taken up by the World Bank in the ’60s and then created, as I said, as ICSID in 1966.
Now, we went to the World Bank Archives, as part of the reporting, in Washington DC and they were quite open on the inside about what it was about. It was about enshrining corporate power around the world and it was a geopolitical tool during the Cold War because it was a way of enforcing corporate rule in countries that might be at risk of going to communism. But anyway, it didn’t take off as a system until the end of the Cold War. And we mapped out and analyzed the number of cases, and it exploded after the end of the Cold War. And a lot of cases have been taken against Eastern European countries actually because it’s a major system that’s enforced on countries that are reintegrated into the Western-backed economic system.
When a country comes in from the cold – And we went to Myanmar Burma when it was coming in from the cold or they thought it was. It was moving towards democracy. This obviously hasn’t happened but at that time, they thought it was – And when we were there, ISDS, which is what the system is called, investor-state dispute settlement, was a large part of the menu of policies that are pushed on governments that are being reintegrated into the system. Because the Western states, Western corporations know, that it’s a vital tool for them to use to make sure that new states can’t move and can’t go against corporate power around the world.
The book starts with this story in El Salvador. We got a call, myself and Claire. I’d previously been at the Financial Times, she’d been at The Guardian. She’d been covering the aid industry and development and in the Financial Times, I’d been in Washington, so I’d been looking at the World Bank. We were both talking about… We got this amazing fellowship where the director of the organization – An amazing American investigative journalist called Gavin MacFadyen, who was actually a mentor to Julian Assange and Bernie Saunders back in the ’60s – But anyway, he said to us, look, you can do whatever you want for two years and you have a travel budget. So we thought we should be as ambitious as possible. And we both agreed that from the reporting we’d been doing, and I know you’ve done a lot of great work on this as well, Chris, we believe that the biggest political story in the world today is the fact that the corporate form, the economic instrument of corporations, has eaten the state that created it. This has been a battle that’s been waged over 400, or more than 400 years, from the first joint-stock company, which they say was created in the middle of the 16th century in London, but there’s been this battle waged.
We decided that was it. And we wanted to think of a way of doing it… And we got a call from an activist at that point and Claire had been doing a bit of work on ICS and one of her colleagues or one of her sources said, you should go to El Salvador. They’ve got this really… I say amazing case; Amazing in the sense of the resistance to it. Because she was saying, look, ISDS is one of these arcane, obscure systems that no one knows about and no one talks about, but in El Salvador, everyone knows about it. And everyone knows what ICSID is, it’s called CIADI in the Spanish acronym. And she said you’ve got to come and talk to the activists. The government was willing to fight this case, which a lot of governments aren’t as well. At the time it was FMLN in power, the party that came out of the Marxist gorillas in the 1980s.
So we went along and we saw what this system means and what this system allows to happen because the people in El Salvador understood that this was a massive attack on their sovereignty. This mining company had not been given a permit to dig for gold because it was a massive risk to the local population. Now, you would think that a government, its role, and its priorities, should be to enact policies that fundamentally protect the security and health of their citizenry; That’s what the system is about stopping. So this corporation said, well, you can’t revoke our permit. And we’re going to take you to ICSID for $300 million. And the government publicized it and it became this big cause célèbre. Everyone on the ground knew about it. So it was an amazing experience to start with.
We then went to South Africa for a second case which was maybe the craziest case of all, which was a case where Italian granite miners had taken the ANC government and the South African state to ICSID because of Black empowerment policies. These were policies that were enacted at the end of apartheid to correct the historical injustice of apartheid and part of it was to give 30% of every company to historically disadvantaged people, so Black people. This Italian company said this is an attack on our investor rights. They took South Africa to court. And in fact, that was settled out of court. And the South African government said you don’t have to apply this policy to your company. So they didn’t have to apply. And the reason the South Africans did that – We talked to ministers when we went to South Africa, or people who had been ministers at the time – And they said, we wanted to keep it as quiet as possible because we didn’t want to incentivize other companies to do this because we knew that they could win or they could at least take a lot of money from us. So actually, it was the opposite in South Africa, we went to South Africa, and no one knew about this case, which was a fundamental attack on the South African government and a fundamental attack on post-apartheid policies.
Anyway, the book developed out of that. The ISDS system is the emblematic system in the book because it’s impossible to justify. And as you know, Chris, all these systems that enforce corporate rule, that enforce investor rights, that enforce the rule of the 1%, they all have quite sophisticated ideology bolted on top of them to justify them to the general population in as much as they need to do, but also, to the people on the inside who don’t want to look in the mirror every day and think I’m a monster. ISDS doesn’t even have that, it’s one of the few systems I’ve ever come across where people find it very hard to even justify it. The only justification, they say, is that it increases the chance that a country will attract foreign investment because companies won’t be scared to go somewhere. They know if something bad happens to them, they’ll have recourse to a supranational venue where they can get compensation.
But of course, that is completely opposite to what we’re told how capitalism works. If you go to the Congo and you open a mine, you might get huge returns, but you might get expropriated or get your asset taken by a paramilitary force, but that’s part of the risk. This system ensures you against that risk and de-risks capitalism for the global corporate transnational class. So it’s a huge attack on democracy. And I’ll finish with this: It’s not only the cases that reach court, that are the problem here… In fact, that’s actually not even the biggest problem. The problem is the policy chill effect this has around the world because a lot of governments now when they’re considering taking policies that might infringe on corporate profits, that this is now getting hit with one of these cases is now a big consideration.
We got internal documents, for example, from Guatemala through the Freedom of Information Act there about, again, a mine that they were evaluating whether to grant an environmental permit and the government was talking on the inside. There were some discussions about the impact this mine would have on the local community, but in the end, they were talking about what problems they’d have at ICSID and whether they’d get sued by this company if they didn’t give the environmental permit. In the end, they gave the environmental permit because it was too big a risk. And that happens across the board, and it’s a real attack on democracy, it’s a real attack on anything, any ability of a government to react to its citizenry as it should do, ahead of corporate power. And it’s not only in the developing world now; It’s coming home to roost. We call it the boomerang effect. In fact, a lot of these systems which were set up to enforce corporate rule during the fall of formal colonialism are now coming back to hit the states that they were created in.
Chris Hedges: Let’s talk about how countries are pressured, as you do in the book, how they’re pressured into accepting these agreements, which are, of course, very disadvantageous. And then, let’s go back to El Salvador because that was one of the few examples where they were successful in fighting back.
Matt Kennard: Yeah. As an explanation, this system is enshrined in free trade agreements, bilateral investment treaties, which are called BITs, and other financial agreements or trade agreements between countries. One of the major revelations I had during the reporting of this book was about free trade agreements or so-called free trade agreements. Free trade agreements, when you hear that, you think that’s about the mutual lowering of tariffs, that’s about increasing trade. In fact, that’s probably a page of a trade agreement; They’re hundreds of pages long. And it’s about creating all these different legal mechanisms for which corporations can operate in that country unfettered. And the free trade agreements should be called corporate rights agreements, really. And ISDS, investor-state dispute settlement, a system where multinational corporates can sue states is often enshrined in free trade agreements. So it’s in NAFTA, it’s in CAFTA, it was going to be in TTIP, which was touted as the biggest free trade agreement in history between Europe and the US, which has been iced now. And then, there are bilateral investment treaties. Often, countries don’t even know what they’re getting into.
In the South Africa case, it was quite interesting; They were talking about the bilateral investment treaties that were used by this Italian mining company, and they said, these were agreements signed by Mandela after the fall of apartheid. And he’d go to, say, Belgium, and they’d say, oh, welcome. You’re coming back into the fold now. They’d have a nice dinner and then say, let’s sign this nice, little bilateral investment treaty. The imputation was that this meant nothing; it was a bit of diplomatic goodwill. That was the term that was used by people who we talked to who formally served in the ANC government. And then, 20 years later, they’re getting hit with these suits that they didn’t even know could be activated through these agreements. And that’s often what you see: The whole system is done very secretly.
In fact, when we went to the World Bank, as I said, we went to the archives but we also were inside the World Bank and we were talking to people at the different branches, the IFC, which we can also talk about, which is a majorly important institution. And within the World Bank building, we were saying, do you know where ICSID is? And people even who worked in the World Bank didn’t know where ICSID was. So it’s this bastard child that no one wants to talk about. No one knew about it which was a revelation, and even fewer people know about it on the outside, as I say, mainly because it’s completely indefensible.
But yeah, it’s the whole system is done… That’s why I call it a shadow legal system because it’s all very, very secretive; Even the cases themselves, they’re not open court. It’s very, very hard to get documentation. The system by which arbitrators have chosen is opaque, the compensation they get, the whole system is massively secretive. And the problem is it’s often in the interests of the corporation and the state to keep it that way, that’s the problem. As I mentioned, the South African government wanted to keep the case really quiet because they didn’t want to incentivize other companies to do it because this system effectively allows any company in the world to do another thing called jurisdiction shopping. So even if you were based in a country that doesn’t have a bilateral investment treaty with the country you want to sue, you open a shell company in a country that does and then activate it through that. So you can effectively do it. You can find a way if you need to.
Maybe the most corrupting part of the whole system is what’s called third-party financing which is that there are boutique financial firms that invest solely in claims against governments. They loan to companies, not only to pay for the expenses of the case but also to expand. But they say we’ll loan you this money. You don’t have to pay us back if you lose, but if you win, you give us a cut of the award. Now, we’re talking, sometimes, about billions of dollars. In the case of Occidental Petroleum, they won billions from Ecuador. There’s a case now against Honduras that is getting some attention in the media where an American company is taking Honduras to ICSID for $11 billion. A third of the GDP of the current government of Honduras is trying to shut down an SCZ, which was opened by the previous US-backed neoliberal regime. They’re trying to reverse that and they’re getting hit with this suit. The Honduran government doesn’t know what to do because this is such a huge sum of money that it could have a huge impact on their whole program and the ability for them to survive. They can’t pay for it, so it’s going to be interesting what happens to that.
It’s a massive attack on democracy. The left, which was exercised by what was called the anti-globalization movement in the ’90s, got derailed a bit by 9/11 from the War on Terror, but these systems have only grown in strength. The left needs to reengage with these issues and this system needs to be publicized as well as the other systems we talk about in the book.
Chris Hedges: Let’s talk about the case of El Salvador because it’s an exceptional case and mention the fate of this activist, Marcelo Rivera.
Matt Kennard: Yeah. The other point was, as you know, around the world – And this is another thing that’s been hushed up by the corporate media – There are inspiring activists all over the world fighting back against corporate rule. In the case of El Salvador, there were activists, there was Marcelo Rivera who was killed, but there were many others who were killed who were fighting mining projects and it’s always the same. It was always the same when we’d come across it. We’d talk to people and say, yeah, well, we can’t prove that it was the mining company because this was someone who goes past on a motorbike, lets out a flurry of bullets, kills this person, and the legal system doesn’t really work, the police, the detective system doesn’t work, so they don’t find who kills him. Everyone assumes it was associated with his activism against the mining company but it’s never proven.
I went to Columbia as well which is a very interesting case because Chiquita, the banana company formerly known as United Fruit, changed their name because they had a fear of few too many governments and it was bad press. But Chiquita was taken to court in the US under the Alien Tort statute over their behavior in Columbia because they had hired paramilitaries and paid paramilitaries to kill activists and trade unionists who were fighting Chiquita in Columbia. That case is still going, or I’m not a hundred percent sure, but it was going when I went there in 2016. Often, it is complete impunity because there are enough layers of degree of separation. Like in the case of Rivera, it was complete impunity. In Honduras, which I mentioned, which we also went to, there were lots of activists against an oligarch called Facusse who’s now died, but he was in Aguan Valley and there were lots of activists getting killed who were fighting against his companies and their actions. And though, a lot of people were getting killed, nothing ever happened, and actually, they got investment from the World Bank.
But this is what you see. No one’s fighting back against this on the inside because the whole system’s set up to promote corporate power. The only people fighting it, and the only people really who understand it and have to understand it are the people on the ground because they have no choice but to imbibe all these false ideologies which justify it to the people on the inside. They understand what the corporations are doing when their friends are getting killed for raising a hand of dissent against what they’re doing. It’s really depressing in that sense but it’s also really optimistic in the sense that there is real activism against corporate rule, and it does win sometimes.
There’s the case of Bolivia, which is talked about a lot, but in 2000, the water system in Cochabamba – The third-largest city in Bolivia – Was privatized and handed over to the American corporation, Bechtel, who jacked up prices massively and made it impossible for most people to afford water. They even made collecting rainwater illegal. Then, huge amounts of people came out in the streets and two weeks later the government had to reverse it. Five years later, they had their first Indigenous president who was a liberation leader who nationalized countless industries when he got into power and was later praised by the World Bank, and IMF for the economic success under his government. And his government did the opposite of everything you’re told to do by the IMF and World Bank which is interesting in its own right.
So yes, people are working at high, high risk. But it’s inspiring to see their bravery but also the successes that can be brought about. The reason, as I mentioned, that a lot of this is kept undercover is because it’s unjustifiable and it’s clearly impossible to justify if you know the facts. The other problem we have, and what we should focus on in the West, because we have a responsibility in that we have a freedom that these other people don’t, we can say stuff and do activism and raise the alarm with a degree of freedom they don’t have. But the media we have, the corporate media; is infested with corporations. They’re owned by corporations, but also, they also do all these advertorials now. Every part of the media is infested with corporate power and so is the NGOs.
And we came across this in El Salvador which is a good example. Now, this wasn’t to do with the ISDS case but when we went there, we went to a town on the outskirts of San Salvador, the capital called Nejapa. And Nejapa is a really poor town but they live on top of an aquifer. And no one there could afford water from the aquifer. Yet, down the road, all these multinational companies were bottling the water to make Coke and other things, one of them being SABMiller, which is one of the biggest companies in the world that bottles Coke.
We did a story for The Guardian. So naturally, The Guardian, its whole development website is sponsored by the Gates Foundation so the article went under the Gates Foundation logo. The Gates Foundation is not a benign player in the system; It’s one of the major forces for pushing a neoliberal idea of development. I went to SABMiller for comment, as you do, and they sent me a report. They said look, you’ve got it all wrong. We’ve done nothing wrong. Look at this report we co-authored with Oxfam. I couldn’t really believe that because Oxfam – I’m a bit less naive now – I thought back then, I was like, well, Oxfam, they’re doing some good in the world. But this report basically exculpated SABMiller of any wrongdoing in the Nejapa and had the Oxfam America logo and I thought, that is incredible.
And then, obviously, it goes onto The Guardian website under the Gates Foundation. Two days later – This was amazing – An interview appears on The Guardian; Not an advertorial, not flagged as anything, an interview with the Latin American division head of SABMiller. He doesn’t mention our article but it’s basically him talking about why there are problems with water in Latin America and it’s all about the political corruption. Of course, that’s the term du jour of the multinational corporations: They blame the victim. Why are those politicians corrupt? I wonder. Is it anything to do with the corporations themselves? Then, I thought that it was incredible that it wasn’t a letter, it was an interview. I looked into it and I saw that SABMiller funded a whole section of The Guardian‘s website as well. So you see, and I publicized that, and then soon after, I was banned from ever writing for The Guardian again. The problem is that I had a predilection to go against this stuff but your average reporter who’s getting bombarded with all these Oxfam reports, with these officials from SABMiller, they don’t know that The Guardian‘s funded by SABMiller. It’s very hard to push back against that, and often, nearly no one does.
It’s a panorama of control and it’s very, very hard to get the truth out about this corporate system in the corporate media. It’s not a coincidence, is it? You wouldn’t go to Pravda to understand the reality of what the Soviet Union was doing and you don’t go to the corporate media to get the reality of what corporations are up to. So to conclude, from this book, the responsibility we have is to not play that game because we have power. We have power in the West because this is where all these systems are operated from. We have power and we need to use that power to tell the truth, even if it means we get marginalized from the mainstream media, which is an inevitable consequence of doing it.
Chris Hedges: They were successful in El Salvador in blocking the mining agreement, the activists, one of the very few successes you write about in the book. I want to talk about, we have a couple of minutes left, the boomerang effect because it comes back to haunt us. And you use Germany as an example. Explain in the last two minutes what took place.
Matt Kennard: In Germany, Hermann Abs, as I mentioned, was the German banker who was the godfather of this system. And then, we went to Hamburg in Germany to look at a case, well, there were two cases actually. Germany had decommissioned their nuclear power after the Fukushima disaster in Japan because they said it was too dangerous. And this Swedish company, Vattenfall, who runs nuclear power plants in Germany, took them to these courts for billions. And then, there was another case where Vattenfall had a coal-powered power plant in Hamburg as well, which we went to. The waste from the plant was raising the water temperature in the river that ran aside it, but also, way far into Hamburg. And they challenged the environmental permit where they said, you’ve got to keep the river below a certain level. They challenged it, and then the local government basically said, okay, you can go back to how you wanted it before.
It’s a way to strong-arm people. And it was amazing talking to people in Hamburg because actually one of them said to us, I knew about the system before. I was shocked when I realized that we could get hit with this stuff. And that’s something we see all across the world. And we reported a lot in Europe. And I’ll finish with a case in Britain, recently. A major part of the book is about how corporations have chiseled off physical space from states. That’s a whole nother topic. But the main one is SEZ, special economic zones, which are like corporate utopias. You don’t have to pay a normal tax, you don’t have to pay customs duties, you don’t have to apply the minimum wage: all these things that corporations, if they designed the world, this is how it would look.
Britain, a couple of years ago, announced that we’re going to open 13 free ports. Free port sounds like a nice thing but a free port is effectively a SEZ, and that’s Britain now. So the developed world has joined the race to the bottom and is basically finding any way to sell off the few remaining things that it has to corporations. And it’s basically in Britain… NHS, for many decades, was a beacon in the world, people looked up to.
Chris Hedges: It’s the National Health Service.
Matt Kennard: The National Health Service, yes. It was created by the labor government after World War II, free at the point of use; Anyone could use it. Growing up, I’d go to… You never ever were asked about money when you went into a hospital to see the GP, it was amazing. But we are now privatizing the whole of the NHS and making it more and more like the American system which is the worst in the world in terms of how much it costs for health outcomes. So why are we doing that? We’re not doing that because the government’s thinking, okay, this is a good idea. We’re doing that because the government isn’t making policies, the corporations are making policies and enforcing them on the government. And there’s very, very little pushback against it in Britain because again, it’s all been done by stealth.
I went for an X-ray the other day and it was out in a trailer outside the hospital that was run by G4S and Serco; two companies. The whole of the NHS, our ambulances, have G4S logos on them now. Stuff you wouldn’t have thought would be possible is happening and they’re eating every part of the state and they’ve erected the mechanisms to do that internationally, but also, as you know, domestically. We haven’t touched on that and the book doesn’t really touch on that. But domestically, in terms of the US particularly, the corporations have colonized the political system and it’s impossible for most politicians now to get elected without heavy backing from the corporate sector.
So that’s why we call it a silent coup because in 2023… This is a war that has been waged for 500 years by the corporation against the state. But effectively, in 2023, they’ve won. And there’s very, very few spaces left that they haven’t colonized. And the cultural outgrowth of that as well is that the prevalence of conspiracy theories, like Bill Gates is installing chips in people’s brains, there’s a lot of it around. I don’t know. There is in the United States as well but a lot of it is that people understand that the politicians they’re seeing on TV aren’t making the decisions. And in the corporate media, there’s no analytical framework for them to understand why that is, so you reach for, I don’t know, an individual or a cabal, when in fact the answer for me is corporate power; That is where those politicians aren’t making decisions. They’re right in that. But the people who are corporations, the big ones, and in the work I do on a day-to-day level with Declassified, I look at a lot of declassified files, the British government, and they talk about it so openly. When the Prime Minister, Tony Blair or whoever it is, is talking to other presidents, he’s talking about big British businesses and how he can help them.
I did a story recently about BP in Russia under Putin and how Blair had sucked up to Putin solely because he wanted to help BP get into Russia in the early 2000s. And this is a story that is a whole nother story, but Putin, in 2003, was given a state visit to the UK, the first time since the late 19th century, over a hundred years of a Russian head. He came and went around in a horse-drawn carriage with the queen around London. A couple of days later, BP got the contract to become the biggest foreign investor in Russia’s history. And that’s how the world works. And you can’t talk about it but we need to talk about it because otherwise, people are going to be reaching for these conspiracy theories. And it’s quite scary because – You’ve done a lot of work on this but – If you look at fascism, especially about the Nazi regime, before the Nazis came into power, conspiracy theories were prevalent. And all it took was a demagogue to come along and say, it’s all the fault of the Jews. It might be some different group next time but the point is the level of discourse now is waiting for someone.
You’ve got Trump in the US. He’s a good example. He uses the confusion and he uses the inability of people to locate power to enforce a corporate fascistic agenda. We haven’t quite had it in the UK because we haven’t had anyone who’s as charismatic as Trump. We’ve got Boris Johnson, who was a bit of a [inaudible 00:35:27]. But I do worry. That’s why, to conclude, the left needs to reengage on this issue. I know you have, and you’ve been one of the most important journalists really pushing this idea, but it’s not something that is widely enough covered by the left media or the left intellectuals. For me, you cannot understand the world today unless you’re looking at it through the lens of corporate power; That is the integral issue. And the fact that the state is not operating in the interests of people anymore, and there’s no form of democracy because it’s being completely destroyed by corporations.
Chris Hedges: I want to ask… You have a section in the book called Corporate Welfare. You did mention Oxfam, but you detail these partnerships between NGOs like CARE USA, Save the Children, and these large corporations: Coca-Cola, Pharmaceutical Giant, and GSK. Talk about how it works, and how these NGOs have been corrupted.
Matt Kennard: Well, a lot of it has to do with the fact that there are cuts to… A lot of it picked up after the financial crisis because governments were cutting back on aid programs and funding places like Oxfam, and Save the Children does get some state funding, and people were donating less. So in that context, they had to survive, they had to look around for other funding models. And corporations are always there because they’ve got all the money. So corporations got in. We talked to countless NGOs about it. And often, people on a lower level who weren’t making decisions were upset about it. You don’t go into Oxfam, you don’t leave university and go into the humanitarian sector or the aid sector to partner with SABMiller, to exculpate the blame overtaking the resources of one of the poorest communities in the world. You don’t do that. So they were upset.
The higher-ups said, we sign these contracts where they have no say over our programs, they have no say over our editorial position in the case of The Guardian and the media. But it doesn’t work like that. I’m not saying those contracts don’t include that but The Guardian‘s a good example. The Guardian said to us, we make sure that when we partner with a corporation and start publishing corporate propaganda for it, producing and publishing it, we have strict parameters where we say it won’t bleed into editorial policy, they have no right to recompense. But 10, 20 years down the line, you’ve got dozens of corporations all over the website and it has an implicit and subconscious effect on the reporters because your whole institution is infested with this corporate power and it operates in a very insidious way.
I mentioned the SABMiller one, that’s one of the few cases where there was, in my opinion, a very literal relationship between the funding and the ability to barge in on the editorial side of things. But it often operates in a much more insidious role. And it’s the same with NGOs. And NGOs are, in my opinion, a major thread in this corporate imperial tapestry; They are vital to it. Because they give the patina of altruism, they give the patina of humanitarianism to this whole system, and that justifies it to the world, effectively. And often, they’re partnering with corporations and enforcing policies, or at least, supporting governments that are enforcing policies that promote corporate rule.
And the same thing goes for aid because a lot of these organizations are allied to aid institutions like that. The World Bank is an aid institution. We spent a long time investigating the International Finance Corporation which was created in 1956, again, in the heat of the decolonization movement. And the idea of that was let’s invest. Let’s not transfer capital to governments, let’s now invest in private corporations to help them go to new markets. The IFC, effectively, now is an investment bank. I went to a diamond mine in Tanzania that had been funded by the IFC. Remember, this is public money, it’s our money, and the World Bank is publicly funded. They funded a diamond mine in Tanzania which hadn’t made a profit for 10 years which is a very nice thing for them to say because if you don’t make a profit, you don’t pay tax. And they’ve got corporate accountants that can do that. And Tanzania’s tax ministry is probably like five or six guys in a room. Then, we went to a five-star hotel in Myanmar Burma which had got funding from the IFC.
So it’s about enforcing corporate rule under the guise of development, under the guise of humanitarianism, and under the guise of aid. And it’s all the opposite of what they say because the World Bank’s stated aim is the alleviation of global poverty. And they’re enforcing policies that ensure the majority of humanity continues to live in poverty. And it’s not a coincidence we live in the world we live in. That’s what they try and tell us is, oh, we can’t quite work out why it ended up like this but it’s not a coincidence; It’s because they’ve reinforced these policies. And if a government goes against them, then they get taken out by the hidden hand, which is the US military, effectively, or at least the NATO intelligence, and military infrastructure.
Chris Hedges: You talk about how the role of traditional militaries has been privatized, border control has been privatized, prisons privatized, and I wondered if you could touch on the consequences of that. And then also, you use the term “informal imperialism.” If you could address those two issues.
Matt Kennard: Yeah. We end the book with the privatization of the military and security forces around the world. In fact, we mentioned the concept of democracy in a subtitle. And in terms of democracy, maybe this has the biggest ramifications. For centuries, philosophers and sociologists have said that the power of the state rests on the fact that it has the resort to the legitimate use of force, and only the state does. So a police officer can kill someone if they’re under threat but an average Joe can’t.
We did an analysis of the numbers and in many countries private security, mainly security at this point but private security outnumbers police now. So what does that mean? And then, obviously, there’s the privatization of the military as well. The first book that I wrote was about the US military. Donald Rumsfeld made this famous speech at the Pentagon on September 10, 2001, where he basically said we need to privatize the DoD’s services. It got forgotten after the atrocities of the next day, but the plan was enforced. And in ’07 or ’08 there were more private contractors working for the Pentagon than there were DoD personnel. And you’ve got the Wagner Group in Ukraine. This is a major, major trend and we’re at the start of it as well.
This sounds like some crazy dystopian idea but there’s no reason you couldn’t see two corporations going to war themselves over resources soon. Because the other thing about this whole system is there’s no regulation. There is an informal regulatory framework in which a lot of corporations sign up to private security companies but there’s no way to enforce it and it’s like a gentleman’s agreement. And that’s something that the Western countries and Russia have colluded on because they don’t want to regulate it. It gives them one of the major facets of this system for states and one of the major benefits for them is the lack of accountability. It’s the plausible deniability: If you get a private company to do it, all the mechanisms can be enforced, in the UK, the Ministry of Defense, or in the US, the Department of Defense, they disappear. We can’t send Freedom of Information Act requests to private contractors, it’s much, much easier to hush up atrocities, so it’s in the interest of states to subcontract this out in terms of accountability. It’s really worrying.
And that goes on to what you were asking about Rivera in El Salvador. It’s much, much easier to cover up atrocities if corporations are doing them and if it’s outside of the state framework. So yeah. It’s going to be a major, major issue going forward. Everywhere we went… The book we wrote in chronological order in that we started with ISDS, we went on to aid, and then we went on to SEZs. When we were looking at SEZs and the chiseling off of physical space, we started understanding that the world that was being created by this corporate system, by this rule of the 1%, was a world of a small elite that was becoming richer and richer and then a society on the outside that was becoming more and more desperate and destitute. And in that scenario, that 1%, or even less than 1% has to wall itself off from the rest of that society that it’s destroying, and it has to guard that with these private security forces. It’s a symptom of the disease and the disease is corporate power.
Chris Hedges: Great. That was Matt Kennard, a former staff reporter for the Financial Times and co-founder and chief investigator at Declassified UK. I want to thank The Real News Network and its production team: Cameron Granadino, Adam Coley, David Hebden, and Kayla Rivara. You can find me at chrishedges.substack.com.