Old Strategy, New Tactics: The Corruption Formula, A Look at the Instruments of US Colonization (Part 2 of 3)

A Look at the Instruments of US Colonization (Part 2 of 3)

Continued from Part 1: The Corruption Formula, Introduction 

[Disclaimer:  This is the second part of a 3 part blog post series (part 1 is here). Here we take a deep dive into the Instruments of US Colonization that helps to facilitate corruption -- the CIA, the IMF & Western aid organizations, and the roles of Corporations and Tax Havens].

Given the nature of the topic and vast amounts of information available on it, we've tried to condense some of the most pertinent and relevant information to help you the reader to better see and understand our perspective on it. Please take the time to go through all the links as well as videos and references. As always, comments, criticism, suggestions, and questions are most welcome.

What we are putting forward and the whole purpose of this blogpost series, is to show that the US came up with a new method of colonization.  A new formula if you will, whose end result is similar to old school colonization, but without the mad scramble and direct confrontation among world powers.  Thus, since the end of WWII, the US (as well as other powers) has been practicing and applying this new formula to secure third world resources, strategic interests, and extend their global influence and power.  But before we dive deep into this new 'formula', we must expand and understand the instruments and symbols of this formula -- namely the important roles that the CIA, IMF/World Bank and Corporations & Tax Havens play in keeping this formula functional.

The CIA’s role

If you do a simple google search for CIA, what you get is this vanilla definition that states:

“The Central Intelligence Agency (CIA) is a civilian foreign intelligence service of the United States federal government, tasked with gathering, processing and analyzing national security information from around the world, primarily through the use of human intelligence” [16].

While it is of course true that some of the CIA’s actions involve gathering and analyzing data, i.e. espionage type work, this definition (or any online one for that matter) doesn’t even begin to scratch the surface of the true extent and purpose of their work.

In a must read book titled “Legacy of Ashes: The History of the CIA”, author Tim Weiner provides an in depth look at the true nature of the CIA’s work.  In this book he details dozens and dozens of examples of how each US president uses the CIA to try to accomplish one main goal: namely, overthrowing and replacing a country's leadership; or the politically correct term that US politicians and news media love to use, ‘regime change’.  Therefore, a more proper definition should be, the CIA is a tool of the United States government whose role is to secretly intervene in the internal affairs of all other countries for the sole benefit of American political and economic goals, by any means necessary.

Besides simply collecting intelligence through cunning and secrecy (as most Hollywood movies portray), here is an abridged list of some of the more common tactics the CIA uses to take control of a country’s leadership and maintain sway over this leadership with the overall goal of granting the US access to the country’s resources.  Just to be clear, resources could be material like oil or a valuable metals like copper (used in the supply chains of multiple industries), or it could be geostrategic as in control over a channel or strait.

So how does the CIA “overthrow” a leader towards the US camp?

• Use of bribery with cash, coercion, and in many cases brute force to support rivals. [17]

• Hiring and use of street gangs to start rallies in favor of the local actor they want. [ibid]

• Paying off religious leaders to denounce the current leadership. [ibid]

• Again, liberally paying off and bribing anyone!  Senators, senior military officers, editors, publishers, etc. [ibid]

• Making fake pamphlets, posters, paraphernalia to help sway public opinion. [ibid]

• The use of “democracy” to flip the political leadership by subsidizing desired political parties while withdrawing funds from others, giving/withholding money to individual politicians or political actors, subsidizing publication of books & media, subsidizing journalists, and of course blackmail -- the backup ace in the hole. [ibid]

     In a nutshell, they basically follow 3 steps when trying to overthrow a leader:

1) They wage political, economic, psychological, and cyber warfare; sabotage, propaganda, counterintelligence, and of course enough money is thrown at everyone to induce the change to happen. [ibid]

2) If that fails, the US usually ends up condemning the country to harsh sanctions to impose poverty, thus forcing the current leader to adopt harsh features of a police state to keep the population under control.  While at the same time, covertly provoking a popular uprising until the change occurs. [ibid]

3) Finally, if all else fails they look to support some type of military coup, either using the existing military apparatus of the country or they just use the global juggernaut that is the US military. [ibid]

One might say that the CIA’s work is ugly, but necessary; because the US is simply trying to overthrow a bad leader or “keep the peace”.  Or perhaps one could say these things had to be done during the Cold War with Russia (from 1947 – 1991) to stop the spread of virulent forms of Socialism and Communism.  Or even more recently the US must use these tactics to intervene in the Middle East and beyond to stop the spread of "Islamist" terrorism, al-Qaeda, and ISIS (or whatever other names these fools choose to call themselves these days).

That’s fine, and we might personally agree in some cases, but what truly shows the ugly side of the underbelly and exposes the US’s true intentions, is what the CIA does after they “help” the new leadership come to power.  In all the cases that we’ve researched (see case examples in third post), and we mean all of them, the new leadership ended up running a “corrupt government”, as defined earlier above.  In other words, the US works to put bad actors/criminals in power deliberately and then helps maintain them in power despite their massive corruption.  One could ask, Why? The answer simply put is because these bad actors will aggressively act to carry out and serve US economic and political interests, i.e. enable the US to dominate the country’s resources.

So how does the US (via the CIA) support these Kleptocratic governments?

• Liberal use of tons of ‘cold-cash’ to support leaders.  The corrupt leader in turn uses the money to buy votes during staged election times – and yes, we choose the word ‘staged’ on purpose. [ibid]

• Use of warlords to run guns.  This is because corrupt leaders will need weapons to use over their own people as popular discontent grows. [ibid]

• Building powerful radio stations and media outlets for these corrupt governments, because the corrupt leadership must try to subdue and brainwash their own people from rising up. [ibid]

• Empowering and strengthening these corrupt leaders by training and equipping them with private police forces.  The US spends millions annually training and building up foreign police and military forces. [18]  

• Now this point is particularly interesting.  If the US is essentially teaching these foreign police and security officers how to run their countries, then how do all these countries end up with a ‘corrupt government’?  Is the US deliberately teaching these people how to be corrupt, or is it that the US only seems to be picking the most corrupt individuals to teach?

• Finally, the biggest form of ‘help’ provided to these corrupt leaders, is that they are connected to American military and economic aid, which is an enormous prize for these bad actors, because it means getting really powerful and rich.

As a noteworthy mention, some CIA actions not listed above include the use of torture at what they refer to as "black sites" as well as drug dealing to finance and raise cash for some of the actions listed above.  One can simply ask Pablo Escobar's son how the CIA financed all the horrible coups in Latin America. [19] [20] It is no wonder the director of the National Security Agency under Ronald Reagan - Lt. General William Odom once wrote:

"Because the United States itself has a long record of supporting terrorists and using terrorist tactics, the slogans of today's war on terrorism merely makes the United States look hypocritical to the rest of the world." [21]

To sum up this section, it’s extremely important to highlight, that the CIA is not a rogue US entity.  In other words, the CIA is not out in the world doing these things on its own.  The CIA is one of the many tools of the United States, and the US uses this tool when it sees fit.  In addition, the CIA is not the only US intelligence apparatus, currently the US has seventeen intelligence agencies [22].  So, you can imagine how much brainpower, bandwidth, and resources goes into making sure this formula works.

Speaking of the formula, we must now look at the next element or symbol; economic aid.

The role of the IMF & Western Aid

Initially after World War II, the IMF was charged with overseeing the international monetary system to ensure exchange rate stability to facilitate orderly international trade.  Likewise, the original purpose of the World Bank was to lend money to Western European governments to help them rebuild after World War II. [23]  But since the early 1970’s the IMF and World Bank have morphed to take on a much different role.

According to the IMF’s website, their purpose is to“foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.” [24]  This is also referred to as “Multilateral Aid”.  

The IMF's work consists of 3 steps: [25]

1. conducting economic surveillance
2. providing loans to needy countries
3. providing technical assistance & training

On paper it sounds fairly innocent, right?  But as the saying goes, never judge a book simply by it’s cover, and when you open the IMF/World Bank’s books, the facts on the ground are anything but innocent.

We are not going to list all the reasons as to why banks like the IMF and World Bank are so bad for the planet.  There are literally hundreds of publications and websites devoted to exposing this. We’ll just highlight some salient facts that expose their roles in the formula:

• The IMF is a very powerful and secretive institution with practically no accountability. [26]

• Rich countries dominate IMF decision-making because each vote is determined by the amount of money that each country pays into the IMF's quota system. The US, of course, has the highest voting stake and is the only nation with the power to veto all major decisions. [27] A 2004 study by  the University of North Carolina concluded that:
  

   "American policy makers regularly shape the specific content of IMF conditionality agreements.  When the US has interests at stake for its respective transnational corporations, the IMF offers larger loans. When the US has fewer interests at stake, the IMF offers smaller loans." [28]

• The IMF has spent decades propping up some of the most corrupt and repressive regimes in the world.  So far, there has been No correlation between IMF loans and growth.  Even a Clinton administration task force acknowledged that,

"Despite decades of foreign assistance, most of Africa and parts of Latin America, Asia and Middle East are economically worse off today than they were 20 years ago." [27]

• The leadership of the IMF knows exactly what it is doing.  A 2011 Joint Economic Committee study found: 
  

   "evidence suggesting that the IMF knowingly makes loans to corrupt governments while recognizing that some of its loan conditions and procedures can create circumstances promoting additional corruption … thus, IMF lending operations may be consistent with subsidizing corruption." [ibid]

• The World Bank plays a different role than the IMF, but works tightly within the stringent SAP framework imposed by the IMF.  It focuses on development loans for specific projects, such as the building of dams or roads, but their only concern is private corporate profit. [29] For example, if a project ends up destroying the local food supply or results in thousands of people being displaced, who cares? Local community concerns are rarely taken into consideration. Profits and return on investments (ROI) are paramount.

Therefore, we feel that a more proper definition that helps describe the IMF’s role would be the following:

The IMF is a tool for wealthy countries to support and enable 'corrupt governments' to play ball. Their ‘work’ consists of 3 steps:

1. They have a team of people that study a country's economy and resources inside and out, and this team works to figure out what is the best way to maximize a country’s worth, for the benefit of the wealthy countries (who see themselves, as opposed to its citizens, as its shareholders).

2. They provide these 'corrupt governments' all forms of different loan instruments that are tied to structural adjustment policies (SAP's), -- all designed to foster “growth” -- a fancy term for sucking the country dry (i.e. cutting spending on health and education, eliminating basic food subsidies, privatizing national assets, etc.).

3. Finally, they provide the gangsters in power with an economic expert that trains and teaches these thugs in power how to effectively draining out the resources of a country.

Besides loans provided by the IMF and World Bank, there are also other types of “aid” that wealthier countries like the US provide.  

One odious visual example involves the straight-up delivery of shrink-wrapped $100 bills.  

Remember the $12 Billion dollars of US cash that "vanished" in Iraq [30]

Sometimes it's project-based aid, where funds are given to finance a project that the country needs, such as a school or a hospital (which by the way either never gets built or is built using the most substandard or cheapest materials possible because most of the money allocated or given goes to the ‘corrupt leadership’, i.e. they take their cut).  

Then please don’t forgot the mother of all aid, military aid.

At this point, you might ask yourself, why do rich countries like the United States fuel and enable these 'corrupt governments' via these loans and aid?  In other words, what do they get out of it?  In a recent Guardian report, Jason Hickel says it best when he discusses a study that was published by the US-based Global Financial Integrity (GFI) and the Centre for Applied Research at the Norwegian School of Economics.

He writes, the research "tallied up all of the financial resources that get transferred between rich countries and poor countries each year...As far as I am aware, it is the most comprehensive assessment of resource transfers ever undertaken.
What they discovered is that the flow of money from rich countries to poor countries pales in comparison to the flow that runs in the other direction.
In 2012, the last year of recorded data, developing countries received a total of $1.3tn, including all aid, investment, and income from abroad. But that same year some $3.3tn flowed out of them. In other words, developing countries sent $2tn more to the rest of the world than they received.
What this means is that the usual development narrative has it backwards. Aid is effectively flowing in reverse. Rich countries aren’t developing poor countries; poor countries are developing rich ones." [31] 

OK, thus far everything we’ve described has been flowing in one direction from rich countries to poor ones.  The US for instance is spending money via the CIA to flip a leader, once the leader is flipped the US is spending money training and equipping the corrupt leadership, then the US is spending money via “foreign aid” which incentivizes and implants the corruption.  So, what is Jason Hickel of the Guardian talking about?  How does all of this money, resources, and wealth flow out of these countries?  Well that’s where the last element or symbol of formula comes into play, where powerful multinational corporations, wealthy investors, and secret offshore accounts lie.

The role of Corporations & Tax Havens

This section is simple to explain; once the "new leader" stabilizes and consolidates his power, large multinational corporations are given the green light to come in and ‘make deals’.  Every country and deal is different, but what they all share is six common characteristics:

1. All these deals are extremely complex and are shrouded in layers of secrecy.

2. The corporations work closely with the IMF & World Bank, (remember it is these banks that initially set up the 'economic surveillance' and the SAP's).  So closely in fact, that these banks have three specialized institutions that specifically support private corporations:

1. The International Finance Corporation (IFC),
2. Multilateral Investment Guarantee Agency (MIGA), and
3. the International Centre for the Settlement of Investment Disputes (ICSID). [32]

3. Under direction from these banks, companies can come in and buy up everything. The biggest beneficiaries are generally transnational corporations whose focus is in sectors such as water, energy, oil & gas, telecommunications, automobiles, agribusiness, and luxury hospitality. [ibid]

4. These deals all result in even more money going to the 'corrupt government' in the form of bribes, payments, or 'gifts' depending on the country. [ibid]

• These deals are marketed as good for the country under the guise of words like 'trade liberalization', 'privatization', 'economic growth' and 'free trade'.

5. These companies profits are for the most part protected by the World Trade Organization (WTO), which was created in 1994 as a successor organization to the General Agreement on Tariffs and Trade (GATT).  On paper the WTO is a world court of trade where mega-buck arguments on everything from trade restrictions on imports and e-commerce issues are debated and settled, and global trading rules are made.  The reality of this court, is that rich countries set the rules to allow their corporations to dominate developing countries resources and economies by opening up these countries to foreign investment and thereby making it easier for production to go where the labor and environment are easily exploited. [33]  For example:

1. The WTO has ruled it illegal for a government to ban a product based on the way it is produced, such as as goods produced with child labor. [ibid]

2. The WTO has protected pharmaceutical companies’ patents against governments seeking to produce lifesaving medicines in their countries, such as areas in sub-Saharan Africa, where thousands die every day from HIV/AIDS. [ibid]

3. WTO policies have allowed dumping of heavily subsidized industrially produced food into poor countries, which undermines local production (if any) and  has resulted in increased unemployment and hunger. [ibid]

Overall WTO rules have created a world where the richest 20 percent of the world’s population consumes 86 percent of the world’s resources, according to the United Nations Development Program [ibid].  Worse of all, if a country’s government (corrupt or otherwise) doesn’t comply with the WTO rules, then the WTO has the power to punish rule violators with sanctions.  Again, corporate profits are sacrosanct and protected above all.  [more on WTO here and here]

6. Most importantly the overall society hasn't really gained anything.  This is mainly because most (if not all) of the profits generated from any of these schemes are sent abroad.  Actually, it's the opposite, the society doesn't get zero, they get a net negative.

• Think about it...the first thing these companies demand is that: subsides for the poor are cut, protection for workers be eliminated, unrestricted access be granted onto the land, environmental safeguards be overridden, and social programs be drastically cut back. [ibid] And of course the 'corrupt leadership' agrees, because remember that's their role and why they were originally put into that position in the first place.

• The result?  The people get no windfall from corporate profits because all the money/wealth that was generated leaves the country, jobs (if any) are low paying and unstable, their environment is made toxic and in many cases destroyed, and on top of this citizens in these countries are now stuck with a mafia-style government that steals money from them and from any public funds.

The only question left to answer, is where does all the money generated in profits go?  Part of the answer is that some of the money leaves the country in the form of reported corporate profits that go back to the country of origin (parent company) of these corporations as returns for shareholders overseas.

On the other hand, the rest of the answer is not so straightforward.  Enormous sums of money disappears via illegal capital flight, this money often ends up in secret offshore accounts, western tax havens, and in investments outside the country from where the profits were generated.  For example, much of the illicit financial outflows from Latin America undoubtedly finds its way into fine art, blue chip corporate stocks, ritzy property and mansions in Miami and New York, as well as in offshore accounts in the Bahamas, Panama, or Switzerland.

Also, prior to last years infamous ‘Panama Papers’ leak, it was generally thought that these offshore tax havens were the rogue side of the global economy only used by shady people, but the Panama Papers leaks exposed to the world that in fact these offshore accounts are the global economy.  In that, trillions of dollars are being routed through and stashed in these secret untraceable accounts; by some estimates anywhere between 7.6 trillion to over 30 trillion dollars.  With everyone from politicians, prime ministers, presidents, supreme court justices, journalists, movie stars, and outright criminals using this method to move and hide money from the public eye. [34] [must listen to podcast about Panama Papers here]

Whether it's a corporation or individual hiding the true value of all the wealth they have sucked out of a country or it is the 'corrupt leadership' doing the same, all the money that leaves the country is "laundered through a labyrinthine system of offshore corporate networks, and finally secured in high-value assets in the West." [35]

Nate Sibley of the Hudson Institute details it best, he writes:

"The Panama Papers gave the public an unprecedented glimpse behind this corporate veil into a vast shadow economy concealed safely offshore...At every stage of this process, the primary mechanisms for transferring stolen cash are 'anonymous' companies, trusts, and other financial instruments whose true ownership is obscured. They may appear to be owned by a string of other (equally opaque) companies, or are perhaps fronted by middlemen while real control is exercised elsewhere. Whatever the structure, the intention is the same: to conceal the true owner’s identity so they can move ill-gotten gains around the world, without any questions being asked by law enforcement agencies." [ibid]

Today there are more than 60 to 80 tax havens in the world, and the vast majority of them are controlled by a handful of western countries, with the US leading the pack for hiding and legitimizing stolen wealth. [ibid] [good video here]  The irony here is that most of the countries that love to boast in the media about their foreign aid contributions are the same ones enabling this mass theft from developing countries.  For example, the US is actually the one of the easiest countries in the world to open up a shell (secret) company to start the process of hiding money. [see video here]

See also: Part 3: A Look at Case Studies of Corruption Formula in Action (Part 3 of 3)