He crossed one leg over the other. “In order to do that we need to build up an economic base that is like none in this hemisphere. Electricity, yes — but electricity that reaches the poorest of our poor and is subsidized. The same for transportation and communications. And especially for agriculture. Doing that will take money — your money, the World Bank and the Inter-American Development Bank.”
Once again, he leaned forward. His eyes held mine. “I understand that your company wants more work and usually gets it by inflating the size of projects — wider highways, bigger power plants, deeper harbors. This time is different, though. Give me what’s best for my people, and I’ll give you all the work you want.”
What he proposed was totally unexpected, and it both shocked and excited me. It certainly defied all I had learned at MAIN. Surely, he knew that the foreign aid game was a sham — he had to know. It existed to make him rich and to shackle his country with debt. It was there so Panama would be forever obligated to the United States and the corporatocracy. It was there to keep Latin America on the path of Manifest Destiny and forever subservient to Washington and Wall Street. I was certain that he knew that the system was based on the assumption that all men in power are corruptible, and that his decision not to use it for his personal benefit would be seen as a threat, a new form of domino that might start a chain reaction and eventually topple the entire system.
I looked across the coffee table at this man who certainly understood that because of the Canal he enjoyed a very special and unique power, and that it placed him in a particularly precarious position. He had to be careful. He already had established himself as a leader among LDC leaders. If he, like his hero Arbenz, was determined to take a stand, the world would be watching. How would the system react? More specifically, how would the U.S. government react? Latin American history was littered with dead heroes.
I also knew I was looking at a man who challenged all the justifications I had formulated for my own actions. This man certainly had his share of personal flaws, but he was no pirate, no Henry Morgan or Francis Drake — those swashbuckling adventurers who used letters of marque from English kings as a cloak to legitimatize piracy. The picture on the billboard had not been your typical political deception. “Omar’s ideal is freedom; the missile is not invented that can kill an ideal!” Hadn’t Tom Paine penned something similar?
It made me wonder, though. Perhaps ideals do not die, but what about the men behind them? Che, Arbenz, Allende; the latter was the only one still alive, but for how long? And it raised another question: how would I respond if Torrijos were thrust into the role of martyr?
By the time I left him we both understood that MAIN would get the contract for the master plan, and that I would see to it that we did Torrijos’s bidding.
CHAPTER 14. Entering a New and Sinister Period in Economic History
As chief economist, I not only was in charge of a department at MAIN and responsible for the studies we carried out around the globe, but I also was expected to be conversant with current economic trends and theories. The early 1970s were a time of major shifts in international economics.
During the 1960s, a group of countries had formed OPEC, the cartel of oil-producing nations, largely in response to the power of the big refining companies. Iran was also a major factor. Even though the shah owed his position and possibly his life to the United States’ clandestine intervention during the Mossadegh struggle — or perhaps because of that fact — the shah was acutely aware that the tables could be turned on him at any time. The heads of state of other petroleum-rich nations shared this awareness and the paranoia that accompanied it. They also knew that the major international oil companies, known as “The Seven Sisters,” were collaborating to hold down petroleum prices — and thus the revenues they paid to the producing countries — as a means of reaping their own windfall profits. OPEC was organized in order to strike back.
This all came to a head in the early 1970s, when OPEC brought the industrial giants to their knees. A series of concerted actions, ending with a 1973 oil embargo symbolized by long lines at U.S. gas stations, threatened to bring on an economic catastrophe rivaling the Great Depression. It was a systemic shock to the developed world economy, and of a magnitude that few people could begin to comprehend.
The oil crisis could not have come at a worse time for the United States. It was a confused nation, full of fear and self-doubt, reeling from a humiliating war in Vietnam and a president who was about to resign. Nixon’s problems were not limited to Southeast Asia and Watergate. He had stepped up to the plate during an era that, in retrospect, would be understood as the threshold of a new epoch in world politics and economics. In those days, it seemed that the “little guys,” including the OPEC countries, were getting the upper hand.
I was fascinated by world events. My bread was buttered by the corporatocracy, yet some secret side of me enjoyed watching my masters being put in their places. I suppose it assuaged my guilt a bit. I saw the shadow of Thomas Paine standing on the sidelines, cheering OPEC on.
None of us could have been aware of the full impact of the embargo at the time it was happening. We certainly had our theories, but we could not understand what has since become clear. In hindsight, we know that economic growth rates after the oil crisis were about half those prevailing in the 1950s and 1960s, and that they have taken place against much greater inflationary pressure. The growth that did occur was structurally different and did not create nearly as many jobs, so unemployment soared. To top it all off, the international monetary system took a blow; the network of fixed exchange rates, which had prevailed since the end of World War II, essentially collapsed.
During that time, I frequently got together with friends to discuss these matters over lunch or over beers after work. Some of these people worked for me — my staff included very smart men and women, mostly young, who for the most part were freethinkers, at least by conventional standards. Others were executives at Boston think tanks or professors at local colleges, and one was an assistant to a state congressman. These were informal meetings, sometimes attended by as few as two of us, while others might include a dozen participants. The sessions were always lively and raucous.
When I look back at those discussions, I am embarrassed by the sense of superiority I often felt. I knew things I could not share. My friends sometimes flaunted their credentials — connections on Beacon Hill or in Washington, professorships and PhDs — and I would answer this in my role as chief economist of a major consulting firm, who traveled around the world first class. Yet, I could not discuss my private meetings with men like Torrijos, or the things I knew about the ways we were manipulating countries on every continent. It was both a source of inner arrogance and a frustration.
When we talked about the power of the little guys, I had to exercise a great deal of restraint. I knew what none of them could possibly know, that the corporatocracy, its band of EHMs, and the jackals waiting in the background would never allow the little guys to gain control. I only had to draw upon the examples of Arbenz and Mossadegh — and more recently, upon the 1973 CIA overthrow of Chile’s democratically elected president, Salvador Allende. In fact, I understood that the stranglehold of global empire was growing stronger, despite OPEC — or, as I suspected at the time but did not confirm until later, with OPEC’s help.
Our conversations often focused on the similarities between the early 1970s and the 1930s. The latter represented a major watershed in the international economy and in the way it was studied, analyzed, and perceived. That decade opened the door to Keynesian economics and to the idea that government should play a major role in managing markets and providing services such as health, unemployment compensation, and other forms of welfare. We were moving away from old assumptions that markets were self-regulating and that the state’s intervention should be minimal.