Disaster Capitalism

Making a Killing Out of Catastrophe

Antony Loewenstein

• Publisher: Verso
• Year: 2015
• Print ISBN:
  9781784781187
• eBook ISBN:
  9781784781170
• Topic: Economics
• Subtopic: Political Economy
• Index: Economics

Disaster has become big business. Best-selling journalist Antony Loewenstein trav?els across Afghanistan, Pakistan, Haiti, Papua New Guinea, the United States, Britain, Greece, and Australia to witness the reality of disaster capitalism. He discovers how companies cash in on or?ganized misery in a hidden world of privatized detention centers, militarized private security, aid profiteering, and destructive mining.

What emerges through Loewenstein's re?porting is a dark history of multinational corpo?rations that, with the aid of media and political elites, have grown more powerful than national governments. In the twenty-first century, the vulnerable have become the world's most valu?able commodity.

Part I

1

Pakistan and Afghanistan:
“Looking for the new war”

Frankly, I’d like to see the government get out of war altogether and leave the whole feud to private industry.

Major Milo Minderbinder, in Catch-22 (Joseph Heller)

The rain pelted the car’s windshield as we sped through Kabul’s streets, which resembled a sea of mud. Women in burqas appeared, faceless and shapeless, and disappeared just as quickly. Young boys put out begging hands when the traffic stopped us, desperate for coins or food. I saw some children pushing wheelbarrows full of bricks, while others played alongside the road. Large trucks roared past, pumping their horns.

I was half an hour from the center of Afghanistan’s capital, on Jalalabad Road, which was lined with large compounds owned by logistics companies and protected by guards. Behind one of the nondescript fences were the premises of a private security firm. Speaking to senior players in the private security industry in Afghanistan was notoriously difficult because it was an inherently secretive business, but I had been promised time with a senior manager.

My driver and I pulled up near a concrete barrier. It only took a few seconds before two local armed guards appeared to ask what we were doing here. The men each carried an AK-47 and wore a cap emblazoned with the security company’s logo. They took me to a small office near the main gate and offered me a seat and tea. Rain dripped through a small crack in the wooden ceiling, splattering on the dirt below. One of the guards talked to me as he searched my bag. He had spent a number of years in Karachi, the financial capital of Pakistan, but had been with this company in Kabul for two years, and said, “They’re a good employer.” He liked the job because it provided a steady income.

I was invited into the compound. There was a large courtyard where four-wheel-drive vehicles were parked, and this was surrounded by multi-story, transportable buildings. Around twenty Gurkhas, recent recruits, milled about in one corner. The company’s managing director approached and introduced himself. Jack was an affable man in his sixties who wore beige chinos, a blue shirt and a navy fleece jacket. He told me that he had fought as a British soldier in some of the toughest wars of the last few decades, including those in Iraq, Afghanistan, and Central America, but said he made far more money in his current job. “Western militaries should pay their soldiers more money, otherwise they’ll continue moving to PMCs,” said Jack, referring to private military companies. (“We don’t call ourselves mercenaries,” he later told me. His company thought the word had a bad connotation.)

Jack lead me into his office, a small, dimly lit room with a window, a desk, and a black leather couch, and on the walls, a map of Kabul outlining where his company operated, a map of Afghanistan, and a photo of the Hindu Kush mountain range. As we entered, he calmly told me that his corporation “survives off chaos.”

Jack’s company had come to Afghanistan in 2002, the first PMC to arrive after the October 2001 US-led invasion. Now there were more PMCs, about 75 percent of which were Afghan-run. Up until serious resistance against the invaders had begun, in 2004, the violence was relatively low-level. The company offered “assistance to anyone”—journalists, NGOs, and UN employees—for a hefty fee, with its personnel earning at least $1,000 per day. But from 2002 onwards, the company worked with the Afghan government because of a correct perception that its Ministry of Interior could not properly secure businesses and people.

This was the birth of the apparent necessity for private security in Afghanistan. The thinking was that a tough war required hiring the best security, which mostly meant former soldiers looking to make a quick buck. Cultural or social sensitivity and knowledge of a country were not prerequisites.

Kabul’s view of PMCs had changed over the years, however, from initially welcoming them to now viewing them with suspicion. The Americans and foreigners still used them to protect their bases, around 3,000 of them, utilizing employees from the “Five Eyes” intelligence sharing nations (the United States, Britain, Canada, New Zealand, and Australia) and NATO.¹ “It’s chaos,” Jack said, explaining that the Afghan laws against PMCs were applied unevenly. He equated this with injustice, telling me that “in a civilized country, people are not guilty before appearing in a court. Here, you’re guilty and arrested first.”

With a hint of regret, Jack said: “With constantly changing regulations here, life is difficult.” In 2002, he recalled, there had been an abundance of ammunition and guns, and “it was easy to operate.” The United States and the United Kingdom were focused on chasing Osama bin Laden and the Taliban, so PMCs could purchase weapons easily and “get the job done” without having to worry about any pesky official oversight. But now, Jack said, the Afghan government had tried to dismantle the foreign PMCs and replace them with locally run outfits and the state-controlled Afghan Public Protection Force (disbanded in 2014 and folded into the Ministry of Interior). He said these groups were incapable of performing their duties competently, yet his company was losing commercial contracts to them.

Nevertheless, in Kabul, Jack’s company still managed four embassy buildings, the UN headquarters, and a few banks—what he called “static work.” They avoided shadowing convoys, a risky enterprise that required transporting foreign troops’ goods through often hostile tribal territory. Jack said such areas were only accessible upon handing over “brown envelopes” (bribes)—as he put it, “the dollar works here.” Of course, foreign companies were not allowed to pay bribes; in theory, these firms could be prosecuted at home. But Jack merely smirked when I asked if any companies were doing this.

Jack could not understand why so many activists in the West were “obsessed” with imposing tighter regulations on PMCs. He took pride in the way his company delivered its service. He had an apolitical though patronizing mindset—he had no regard for the exploitation occurring in this privatized war zone, instead seeing it as a job that involved taking some risks. When I challenged him over his lack of curiosity about the problems of outsourcing security during a conflict, he responded that there was nothing inherently unethical about providing a safe service on time. He was also extremely arrogant, believing that he should be able to do business anywhere he wanted.

Jack’s company employed six international staff, a number of Gurkhas, and 1,200 Afghans. He spoke proudly of hiring so many locals, saying that many of them were sent to “night school to learn computer skills to use in our HR office and visa section.” He said it was one way for a foreign company to contribute something tangible to Afghan society. “My young men and women are the people who could be leading the country,” he said. “My 1,200 pay packets feed 12,000 people in their families. If I didn’t employ them, where would they work?”

Responding to the idea that Afghan sovereignty was undermined when PMCs were at work, Jack said, “The US is not capable of running empires.” He pointed out that Washington’s occupation of the country was done so badly that it was inevitable that outside forces would enter the fray to make money. Besides which, Jack said, it was ultimately cheaper for states to employ PMCs than to put their own “boots on the ground,” because the military companies took care of their own insurance, provided vehicles, and managed all the administration. As for anything else a PMC needed, after being in the country for years, Jack understood how the system worked and who in Kabul you had to approach for such things as permission to register weapons. “I’m my own government,” he said.

Jack continued his justifications: “America, Britain, and [other] foreign forces, in both Iraq and Afghanistan, are not big enough to rebuild nations. PMCs are needed to fill the void, protecting contractors, building prisons and schools. They’re now an essential part of war.”² (He admitted that this might not have been the case in Afghanistan if the United States had used more troops in the first place.)

Not that Jack saw a long-term future for his company in Afghanistan. He believed that when most Western forces finally departed the country, he and his staff would follow them. “We’ll stash some weapons in caves,” he told me cryptically, “[but] I don’t see any PMCs here then.”³ His company did, however, already operate in several other places around the world, and he expected more wars—in Iran, the Korean Peninsula, and Africa. “If we can make money, we’ll go there,” he said.

In his mind, the PMC business had no negatives. It was purely “jobs for boys leaving the army who can continue their trade.” He expanded on how positively he felt about the work: “Money is not the sole motivator for me, I just want to have a job … I would be bored staying at home. I feel secure. I don’t have an operational role and we have good intelligence around the country. It’s better than the British military, actually, direct from the provinces and local Afghans, and we inform the UK military if it’s relevant to them. We talk with [British security company] G4S, who’ll pass intelligence on to us, and vice versa. We’re all mates, [we] trained together and fought together globally over the years. We really just compete over contracts.” It sounded like a very cosy PMC club.

Jack mentioned an issue I constantly heard about during my stay in the country: a potential Afghan mining boom. “There are massive mineral resources here,” he explained, adding that “unless corruption is resolved,” greed would win out. “Western corporations won’t come here to invest,” he said, “but already India and China are buying up land with resources and waiting until security improves.” He said his company had been approached by mining multinationals but that they would “need diplomatic permission to operate legally here.”

By 2014, Afghan ministers were touting the nation’s resources as the best way to bring stability and revenue after the Americans departed. The China Metallurgical Group Corporation (MCC) bought rights to a massive copper mine at Mes Aynak in Logar province in 2008, and after finding rare and ancient Buddhist relics in the region the new owners said they would extract the artifacts or destroy them. At the time of writing there was no news of the mine even opening, though the Afghan government claimed to have increased security around the site in 2014 in a push to get mining started. Claims of 75,000 jobs being created, along with a quarter of a billion dollars in annual revenue, should be viewed with skepticism. In 2015 I visited a local community near Aynak mine and found village elders angry over being displaced from their homes, caught between a raging Taliban and Islamic State insurgency in the area and a trigger-happy Afghan military who are paid to defend the mine’s interests.

Integrity Watch Afghanistan had accused local actors of illegally shipping hundreds of millions of dollars of minerals, oil, and gas annually to Iran and Pakistan.⁴ The Afghan government had promoted other sites across Afghanistan as perfect opportunities for foreign investors, but security, corruption, and meager tax or royalties, upset villagers moved for botched mines and failed contracts, and instability continued to impede progress. US geologists estimated in 2010 that the country was sitting on at least $1 trillion worth of lithium, iron, and copper.

After nearly one and a half hours, the friendly, fast-flowing conversation ended. As Jack and I exchanged farewells, I could hear the Gurkhas training outside in the drizzling rain. Before I left, I looked out Jack’s window—first to the horizon, where dark, menacing clouds hovered, then at the countless similarly appointed compounds around me that lined the main road. It was clear that many PMCs benefited from the war. They didn’t ever want the conflict to end.

Before the US-led invasion of Afghanistan, the country was ruled by the Taliban: people were executed in football stadiums, music was officially outlawed, and young girls were banned from schools. It was a barbaric regime, though not so barbaric that it could not negotiate with the US energy company Unocal over running a Turkmenistan-Pakistan pipeline through the country; extremism was rarely a barrier to disaster capitalism. After the invasion, Afghanistan became the perfect place for a war economy to thrive. The Trans-Afghanistan pipeline (also known as the Turkmenistan-Afghanistan-Pakistan-India pipe, or TAPI), scheduled to open in 2018, was intended to transport Caspian Sea gas in a modern continuation of the Silk Road.

The battle that surrounded Iraq’s invasion of Kuwait in August 1990 provided a solid model for post-9/11 war propaganda. The US public relations firm Hill+Knowlton was employed to demonize the Saddam Hussein regime—a campaign paid for by a group of Kuwaiti oil sheiks who named themselves Citizens for a Free Kuwait. One of its stunts involved a young woman, calling herself Nayirah, who told a meeting of the United States Congressional Human Rights Caucus that she had seen Iraqi soldiers take babies from incubators and place them on the floor to die. It was a lie—the woman was actually the fifteen-year-old daughter of the Kuwaiti ambassador to the United States. Nonetheless, it succeeded in encouraging the support of military action against Iraq.

The enlistment of PR personnel continued when the George W. Bush administration declared its “war on terror” in 2001. Countless Hill+Knowlton staff became government staffers to assist in selling the fight, initially against the Taliban. Victoria Clarke, director of the firm’s Washington office, left the company to become defense secretary Donald Rumsfeld’s press spokesperson, leading the charge to embed journalists in US military units, which helped ensure military-friendly coverage. One of the sharpest critics of this process was the late journalist Michael Hastings, who challenged the close relationship between the press and military in his 2011 book, The Operators.⁵ Many colleagues damned him for daring to reveal the conceit of the embedding process.

Another Hill+Knowlton staffer, Jeff Raleigh, became a member of the Afghanistan Reconstruction Group, helping the US ambassador in Kabul to encourage public support for the corrupt Afghan government.⁶ He worked for the Rendon Group, a company paid tens of millions of dollars by the US government to push war propaganda in Iraq and Afghanistan in the wake of 9/11, and to prepare “a counternarcotics information campaign” in Kabul. This was despite the central government caring little for the anti-drug campaign experience that company founder John Rendon said he had gained while he had been a state official in Massachusetts.⁷ In 2006, the company was paid $4 million to persuade Afghans not to grow opium poppies, and so stop fuelling the global heroin trade. The campaign was a spectacular failure.⁸

Hill+Knowlton was just one example of a company that straddled the worlds of big business and high-level government, and in doing so benefited financially from war.⁹ Another was DynCorp, one of the firms the United States relied on to conduct the training of its military forces across the world. Its résumé included providing bodyguards to protect Haitian president Jean-Bertrand Aristide in the 1990s, services for the US military in Somalia, Kosovo, and Bolivia, and assistance in the post–Hurricane Katrina clean-up. But demand for the company’s work surged after 9/11, when the US government began outsourcing its war on terror.

The State Department had handed out contracts to DynCorp worth over $1 billion, for “police advisers” to assist US efforts to build up the Afghan security forces. But the results had been disappointing, to say the least. Serious allegations of waste, mismanagement, and overcharging were rampant, and the effectiveness and trustworthiness of the Afghan police force remained in doubt. A 2009 UN report found that at least half of the Afghan police who had been trained by the Americans were corrupt, while a particularly disturbing statistic was the growing number of so-called “green-on-blue” attacks, in which Afghan recruits turned on their trainers.¹⁰ Yet in 2012, after years of consistent failu...

Table of contents

• Cover Page
• Halftitle Page
• Title Page
• Copyright Page
• Dedication
• Contents
• Introduction: The Mad Max Economy
• Part I
• Part II
• Conclusion: Breaking the Spell
• Acknowledgements
• Bibliography
• Notes
• Index