Home » Global Governance
Category Archives: Global Governance
Meet the Secretive Committees that Run the Global Economy
By: Andrew Gavin Marshall
8 October 2015
Originally published at Occupy.com
There exists an overlapping and highly integrated network of institutions, committees and secret meetings of ad-hoc groups that collectively run the global economy. This network consists of finance ministries, central banks, international organizations and the various conferences and confabs that bring them together. This network is responsible for facilitating global financial diplomacy and managing the architecture of global financial governance. In short: it is the most powerful and informal political structure in the world.
With the United States at the center of the system, the Treasury Department and Federal Reserve Bank are the two most important American institutions in global financial governance – and the Treasury Secretary and Federal Reserve Chairperson are the world’s two most powerful financial diplomats. Both institutions are headquartered in Washington, D.C., just down the street from the headquarters of the International Monetary Fund (IMF) and World Bank Group, two global financial bodies created in 1944 to manage the world economy on behalf of the rich Western nations that founded them.
Twice a year, the IMF and the World Bank host large international conferences. The Spring Membership Meeting, typically held in April, and the Annual membership meeting draw a crowd consisting of most of the finance ministers and central bank governors from the IMF’s 188 member nations, representing the Fund’s Governing Board. They descend on D.C. where the meetings are typically held (though occasionally they are hosted in other countries as well), and draw scores of journalists, academics and thousands of bankers and financiers who are eager to meet, greet, wine, dine and make deals with the political decision-makers of the global economy.
The top five shareholders of the IMF (United States, Japan, Germany, France and U.K.) reflect the membership of an ad-hoc group of finance ministers that began meeting in 1973, thereafter known as the Group of Five (G-5). At the time, U.S. Treasury Secretary George Shultz described the group as “a channel for informal and very frank communication on monetary and other issues, both of a long-term and more immediate character.” But the G-5 was hardly the first of such groups.
In 1962, the Group of Ten (G-10) was formed as a meeting of finance ministers and central bank governors from the rich industrial nations, including the U.S., West Germany, Japan, France, U.K., Italy, Canada, Belgium, Sweden, Netherlands (and eventually Switzerland, although the name remained the same). The G-10 would meet alongside the leaders of the IMF, the Organization for Economic Cooperation and Development (OECD) and the Bank for International Settlements (BIS).
Following the U.S. unilateral decision to end the Bretton Woods monetary system in 1971, a series of committees and groups were established to provide forums for major economies of the world to negotiate forming a new monetary system, and to integrate developing economies into the institutional apparatus of global financial governance. The Group of Ten was utilized as one such forum.
In 1972, the G-10 laid the groundwork for the establishment of a special Committee of 20 to be formed within the IMF, whose membership reflected the composition of the IMF Executive Board, but at the ministerial level – giving it a much higher level of political authority than the board, which is composed of mid-level officials from their respective national finance ministries. The committee would include most G-10 members alongside several developing country representatives, and was formally institutionalized in late 1974 as the “Interim Committee” of the IMF.
(Although the Group of Five was formed in 1973, it wasn’t until 1975 that it held the first meeting at the head of state level, with the addition of Italy to the group. The following year, Canada was invited to participate, and thereafter it was known as the Group of Seven (G-7), effectively functioning as the steering committee for the global economy.)
Fast forward to the mid-1990s, when the G-7 nations instructed the Group of Ten to consult with emerging market economies on ways to reform the global financial architecture in cooperation with major international organizations like the IMF, World Bank, OECD, and BIS, which were increasingly opening their membership and ownership positions to large emerging market economies.
The idea was thus: If developed countries give developing countries a stake in the existing system, they won’t use their new-found wealth and power to oppose that system. And all the while, the West was to remain at the center. Through crisis and collapse and “rescue” efforts led by the IMF, BIS and World Bank, developing and emerging market economies were encouraged to accept Western economic “advice” on how to manage their economies. If they wanted bailouts in the form of loans from international institutions, those countries had to follow conditions that demanded a total restructuring of their economies and societies along G-7 lines – designed to transform them into modern “market economies” capable of integrating into the larger global economy.
The groundwork was laid out over the following years, and in the course of 1999, the IMF’s Interim Committee was reformed into the International Monetary and Financial Committee (IMFC). The G-10 organized several seminars involving major emerging market economies and, together with the G-7, formed a new group known as the Financial Stability Forum (FSF), a meeting group of central bankers, finance ministers and regulators who were handed responsibility for maintaining financial stability in the world. Finally, 1999 also saw the organizing efforts of the G-7 result in the formation of yet another forum, the Group of Twenty (G-20).
The G-20 was born in December of 1999 at a meeting of finance ministers and central bank governors from the G-7 nations, along with Russia, China, India, Brazil, Indonesia, Korea, Australia, Mexico, Saudi Arabia, South Africa, Turkey, Argentina and the European Union. The event was attended by top officials from the IMF, World Bank and the European Central Bank. But despite all the international noise, the G20 was largely the initiative of two men: Canadian Finance Minister Paul Martin and U.S. Treasury Secretary Lawrence Summers.
The G-7, or G-8 once Russia was invited in, remained the main forum for global economic leadership. But in the midst of the global financial crisis in 2008, the G-20 was the group convened by U.S. President George W. Bush, who brought together heads of state for the first meeting that took place in Washington on November 15. That meeting produced an agreement among G-20 nations to pump trillions of dollars into their economies in order to bail out their banking systems.
In 2010, then-President of the European Central Bank, Jean-Claude Trichet, explained at a meeting of the Institute of International Finance (IIF) that the G-20 had emerged “as the prime group for global economic governance.”
Speaking to a crowd of hundreds of the world’s most powerful bankers and financiers, Trichet explained, “Global economic governance embraces supranational institutions – such as the IMF – as well as informal groupings – such as the G-7 and the G-20. Both are necessary, and both are complementary.” Trichet praised the evolving system as “moving decisively towards a much more inclusive system of global governance, encompassing key emerging economies as well as the industrialized countries.”
To this day, the hierarchy of global economic governance follows a familiar pattern. Take the IMF’s meetings, where 188 of the world’s finance ministers and central bankers meet. The International Monetary and Financial Committee (IMFC) holds a meeting, functioning as the steering committee to the Fund. And prior to IMFC meetings, the G-20 finance ministers and central bank governors hold a series of meetings, including a joint meeting with the IMFC, as they already have a significant crossover of membership.
But before the G-20 meets, the ministers and governors of the G-7 nations typically meet privately for an hour or so, attempting to form a common position or strategy in dealing with the wider groupings of the G-20 and IMFC, in which all G-7 nations are represented at the ministerial level. The chiefs of the world’s major international organizations (IMF, World Bank, OECD, WTO, BIS) participate in almost all of these meetings, acting as advisers to and receiving high-level political direction from these groups.
The hierarchy of global economic governance emanates out of the United States, in close cooperation with Germany, Japan and the other members of the Group of Seven. From there, it networks through the Group of Twenty and the IMFC, which in turn collectively function as the steering committee for the world’s major international organizations, and act as the board of directors of the global economy.
Kissinger’s Plan: “Use Economics to Build a World Political Structure”
Power Politics and the Empire of Economics, Part 1
By: Andrew Gavin Marshall
1 June 2015
The following is an excerpt of the introductory chapter to my book. Read the full chapter here.
The President sat and listened to his closest adviser as they plotted a strategy to maintain Western domination of the world economy. The challenge was immense: divisions between industrial countries were growing as the poor nations of the world were becoming increasingly united in opposition to the Western world order. From Africa, across the Middle East, to Asia and Latin America, the poor (or ‘developing’) countries were calling for the establishment of a ‘New International Economic Order,’ one which would not simply serve the interests of the United States, Western Europe, and the other rich, industrial nations, but the world as a whole. It was on the 24th of May 1975 when President Gerald Ford was meeting with his Secretary of State and National Security Adviser, Henry Kissinger, easily the two most powerful political officials in the world at the time. Kissinger told the President: “The trick in the world now is to use economics to build a world political structure.”
Ford and Kissinger agreed that the United States could not accept a new ‘economic order’ that would undermine American and Western power throughout the world. Uprisings, revolutions and liberation movements across Africa, Asia and beyond had largely thrown off the shackles of European colonial domination, establishing themselves as independent political nation-states with their own interests and objectives. Chief among those goals was for economic independence to follow political independence, to take control of their own resources and economies from the Europeans and Americans, to determine their own economic policies and help to redistribute global wealth along equal and just lines.
The problem for the Western and industrial nations, with the United States at the center, was that formal colonial domination was no longer considered acceptable. In previous decades and centuries, the rich and powerful nations would directly colonize and control foreign societies, establishing puppet governments and protectorates, extracting resources, exploiting labour and expanding their own national power and international prestige. Following the end of World War II, such practices were no longer politically or publicly acceptable. The era of decolonization had taken hold, and the people of the world were failing to remain passive and obedient in the face of great injustices and inequality. War had become a bad word, colonialism was no longer en vogue, and belligerent political bullying by the rich countries increasingly risked a major backlash, threatening to unite the entire world against the West.
A new strategy for global domination had to be constructed. The West could not afford a direct political or ideological confrontation with the developing world, with many top American officials, including Henry Kissinger, acknowledging that if they were to pursue such a strategy they would be isolated and lost, with even the Europeans and Japanese abandoning them. Foreign ministers and heads of state could not appear to be attacking or seeking to dominate the developing world.
It was decided that the war would have to be waged largely in the world of economics and finance, where the conversation would change from that of colonialism and imperialism to the technical details of economic policy. The imperial interests and objectives of the powerful nations that had existed for centuries could no longer be articulated in a direct way. But those same interests and objectives would not vanish. Instead, they would be hidden behind bland, vague and technical rhetoric. The language of economics provides the appearance of impartiality, backed up by pseudo-scientific-sounding studies and ideologies, accessible only to those with the proper training, education and experience, otherwise inaccessible and incomprehensible to the general public. Empire was a thing of the past. In its place rose a new global economy, built by banks not bombs, expanding the reach of corporations not colonies, managing debt not dominions.
The “world political structure” which Kissinger described would not, however, make militaries and foreign ministers and diplomats irrelevant. They would still have a role to play in maintaining and expanding empire, though never calling it by its proper name, instead using words like ‘democracy’, ‘freedom’ and ‘markets’. But the role of such officials would often become secondary to that of the financial and economic diplomats, who would increasingly become the first line of offense in constructing the “world political structure,” the Empire of Economics.
Two days after Kissinger articulated this strategy to President Ford, another meeting was held at the White House with several more high-level cabinet officials. The discussion was a follow-up on the U.S. strategy to construct such a system. Stressing that political diplomats and foreign ministers could not take on the developing world directly, Kissinger told the assembled officials, “it is better to have the Finance Ministers be bastards, that’s where I want it.”
This book is the story of how financial diplomats, politicians, bankers, billionaires, family dynasties and powerful nations have used economics to build a “world political structure,” engaging in a constant game of power politics with and against each other and the rest of the world to construct and maintain their Empire of Economics for the benefit of a small ruling class, the global Mafiocracy: a super-rich, often criminal cartel of global oligarchs and family dynasties.
It is a brutal, vicious world of secret meetings, behind-the-scenes intrigue, financial warfare and coup d’états, economic colonization and debt domination. It is the unforgiving world of empire, an immense concentration of global wealth and power, a parasitic system of world domination built on the impoverishment and exploitation of billions. And it is a world obscured and hidden behind the dry, dull and seemingly empty rhetoric of economics. It is a language in need of translation, a reality in need of elucidation, and an empire in need of opposition.
Power Politics and Empire
It was the largest and most powerful empire the world had ever known. It spanned the globe, across oceans and seas, countries and continents, enveloping much of the known world – and the people throughout it – within the domineering shadows of its political, economic, social, cultural and financial institutions and ideologies. Those who ruled were the wealthy and war-like family dynasties, individual oligarchs, kings of coin, titans of industry, and a religious priesthood of proselytizing propagandists. These rulers would engage in a constant game of ‘power politics’ with and against each other in the quest to gain title, money and influence.
They lie, cheat, steal, kill and conquer; they plant their flags and preach their gospels, serve their interests and those of their unknown (or sometimes) masters. It requires a constant cunning, managing an endless lack of trust for all those around you, fearful that on your way up, others might seek to cut you down. To play the game of power politics in the age of empires is to be pragmatic, strategic and ruthless; it requires no less, but frequently more. It is a practice passed down through families, institutions and ideologies. No, this is not ‘Game of Thrones’, but rather, the Game of Globalization in the Empire of Economics: power politics of the 21st century.
But the game itself has been with humanity as long as empire, and was always seen at the center of the system of power within every empire. Human systems – that is, what we call ‘civilization’ and ‘society’ – are, ultimately, human creations with humans in control. Thus, power – at its center – is always dependent upon the interactions, relationships and emotions of the few individuals and families who rule. When such people get angry or throw a tantrum – because the neighbor boy stole his toy (or Russia annexed Crimea, for example) – wars are waged, and the poor are sent to go murder or be murdered, cities burn to the ground, nations crumble into dust.
The game is not known to many, save for those who play it. The masses are left with simple images, rumours and speculation, if anything at all. A public persona of the more visible rulers must be carefully constructed so as to legitimize their authority. The people must be satisfied to the bare minimum, so that they do not rise up in resentment and fury against the few who live in the most obscene opulence and imperial impunity. If the consent of the population is not maintained, a ruler must seek to control them in other ways, which generally means seeking to crush them, to punish them into submission and subservience. Kill and conquer at home and you can kill and conquer abroad.
Control is based upon a mixture of consent and coercion. The people must be either willing to let the rulers rule, to accept their position in society without question, or they must be made to fear the reach and wrath of the rulers, to be punished and persecuted, segregated and isolated, beaten, raped and murdered. The rulers must be vicious, but appear virtuous. If, however, a choice must be made between acting ruthless and appearing righteous, it is better for the rulers to be wretched and murderous, for the game of power politics is never won by virtue alone, but being vicious can get you far enough without assistance.
Niccolo Machiavelli wrote his book The Prince more than 500 years ago as an examination of power politics and methods through which one can achieve and maintain power within the old warring Italian city-states. Having long served as an adviser and strategist to various rulers, including princes, popes and dynasties, Machiavelli asserted that “it is desirable to be both loved and feared; but it is difficult to be both and, if one of them has to be lacking, it is much safer to be feared than loved.” He explained that this was so because “love is sustained by a bond of gratitude which, because men are excessively self-interested, is broken whenever they see a chance to benefit themselves.” On the other hand, “fear is sustained by a dread of punishment that is always effective.” Machiavelli has long been accused of being a cynic or pessimist in his interpretations of human nature, but this misses the point.
Machiavelli’s work was examining the attitudes, nature and actions of those who wielded significant power, which was always a small minority of the population. Indeed, far from a cynical interpretation, The Prince is rather a pragmatic and accurate interpretation of a deeply cynical world where every institution and individual wielding significant influence engages in a constant game of power politics designed to benefit themselves, maintaining or expanding their own power, often at the expense of others. It is a world where every relationship, title, position and even marriage holds strategic significance. For those individuals and families who rule, every decision must be made as a calculated attempt to preserve and expand their power. If this is not done, they will not remain rulers long, for this is how the game is played and won, and if one does not play by the rules, others will. Thus, the more cunning and ruthless a strategist, the more likely they are to elevate through the hierarchy because they will do what others will not, acting without hesitation to manipulate or crush others in order to rise higher.
It is a game – like that of all empires past – in which the few compete and cooperate with one another in the advancement of their own individual, familial, national or global interests, expanding their empires. It is a game in which the vast majority of humanity are – as they have long been – left to suffer the consequences, fight the wars, drown in debt, poverty, hunger and misery. On occasion, and increasingly often, groups of people – segments of the population – rise up in resistance, riot, revolt or even revolution. This is when the people are able to engage more directly in the game of power politics, because they change the game. Suddenly, all the key players at the top notice the building fury of the masses and so the game itself is put at risk. The key players will almost always – even in spite of their frequent competition and opposition to each other – work together if it means protecting the game itself.
A useful comparison is that of a Mafia crime network, in which the various heads of families may sit at the same table though they often feud with one another, working together to mutual benefit when possible, though occasionally whacking one another off when the competition grows fierce. It is a delicate balancing act of competition and cooperation, but when the criminal network is itself threatened, perhaps through the efforts of an ambitious district attorney or crackdown on organized crime, the various families will seek to unite in their efforts to protect the racket which benefits them all. If they remain divided in the face of growing opposition and potential external threats, they increase the risk that they will be conquered. When the game is threatened, the players must stand together or fall apart.
For successful rulers, the balance of competition and cooperation – vicious and virtuous – is present both in their relationships with other rulers, and with the larger populations. And so the rulers themselves – the oligarchs and dynasties – span both private and public realms: they are presidents and prime ministers, kings, queens and sultans, corporate chiefs, billionaires and bankers, consultants and advisers, academics and intellectuals, technocratic tyrants and plutocratic princelings. Their world is not our world. But it rules, wrecks and ravages our world and the people and life within it. It is a game that steers humanity toward certain extinction resulting from excessive environmental devastation, guided by that ever-present drive within those who have the most for more, more, more.
The game is little more, at its core, than basic gangsterism, its players little more than petty tyrants. Such personalities, egos and interests populate all sectors of society, all institutions, frequently appearing in inter-personal relationships. The more power they have, the greater the repercussions of the game. At the top of the global power structure are the personalities and families of immense wealth, political influence and prestige. With the same basic principles of a Mafia structure, the individuals and institutions that play the game of power politics in the age of globalization – in the Empire of Economics – are perhaps best understood as a global Mafiocracy. It makes no difference whether a nation is ruled by a monarchy, a dictatorship or democracy: the Mafiocracy is ever-present, and ever-expanding in its wretched reach.
The State of Empire
The world is defined and dominated largely by institutions, individuals and ideologies. The institution of the nation-state is perhaps the most obvious example, best represented by the world’s most powerful country, the United States of America. The government of the United States is composed of three separate branches (or institutions): the executive (President and Cabinet), legislative (Congress/Senate) and judiciary (the Supreme Court). The executive leads the government, while the role of the legislative and judiciary is (theoretically) designed to keep a check on executive power, preventing it from accumulating too much authority in one branch, threatening the potential for tyranny.
Since World War II, the executive branch has accumulated increased powers within the U.S. government, with a wide mandate to manage foreign and economic policies specifically, with little oversight and few checks from the legislative and judiciary branches. The executive is composed of a wide array of institutions itself, each with their own specific mandates, interests, and varying degrees of influence. These include the many cabinet departments, such as the Treasury Department, Defense Department (Pentagon), State Department, CIA, National Security Council (NSC), Department of Homeland Security, and many more. In addition, since 1913, the Federal Reserve has functioned as the central bank of the United States, operating with a large degree of independence from the other branches of government, including political independence from the executive branch (apart from the President’s ability to appoint the Chairman and Board of Governors), and no oversight from Congress (though the Fed chairman will occasionally testify to Congress).
Individually and collectively, these government departments and institutions manage hundreds of billions and even trillions of dollars in assets and funds, making them individually larger than most multinational corporations and banks in the world. These departments within the U.S. government are largely responsible for the maintenance and expansion of the American imperial system. Since the time of ancient Nubia and Egypt thousands of years ago, much of the world has been dominated by empires, rising, expanding and collapsing over centuries and millennia, running through ancient Greece, Rome, China, Aztec and Inca, Persian, Ottoman, and in the past five hundred years with the rise and demise of the European empires whose reach expanded the globe. For the most part, imperial systems have been dominated by families, often called royalty, sultanates, emperors or emirs. The essential interest and priority of all empires has been to protect and expand their empire, largely for the benefit of its ruling class or groups, with the imperial family at the center of power.
It is only a phenomenon of the post-World War II period that denial of the existence of empire is commonplace. Through the two World Wars of the 20th century, empires collapsed and faded into history. World War I led to the collapse of the German, Russian, Austro-Hungarian and Ottoman empires. World War II led to the collapse of the Japanese and Nazi empires, and its aftermath resulted in the erosion of European colonial domination, as the British, French, and other European colonial powers had to adjust to a new global order under American hegemony. It was in the post-World War II period that the United States had achieved unprecedented economic and political power. With just over 5 percent of the world’s population, the U.S. controlled roughly half the world’s wealth. Citing this very statistic, the U.S. State Department (responsible for managing diplomacy and foreign policy) published a policy paper in which top officials acknowledged that the global inequality that existed between the U.S. and the rest of the world would lead to “envy and resentment.” The “real task” of the United States was “to devise a pattern of relationships which will permit us to maintain this position of disparity without positive detriment to our national security,” doing away with “the luxury of altruism and world-benefaction.”
Europe was devastated by the war, and the United States occupied the West with the Soviet Union occupying the East of the continent. The European empires were crumbling, and the process of decolonization had begun to take the world by storm, with the U.S. attempting to manage the process on behalf of its Western European allies. In its strategy for world domination, the United States sought to rebuild its former war-time enemies – Germany and Japan – into economic powerhouses, with West Germany acting as the locomotive for European integration (into what is now the European Union) and Japan acting as a counterweight to the spread of Communism in East Asia. Western Europe, Japan and other allies depended upon the United States military to protect their ‘security’ interests around the world, arming favorable dictators, supporting coups, fuelling civil wars, undertaking large occupations and counter-insurgency operations targeting independence, anti-colonial and revolutionary movements around the world.
Despite the imperial realities of this system, there was an overwhelming tendency within the United States and its industrial allies to deny the existence of imperialism altogether. Instead, these nations were merely economically and technologically advanced democracies who sought to protect ‘freedom’ and ‘democracy’ around the world in a largely ideological confrontation with the Soviet Union, which presented itself as the image of socialism and communism in a struggle against the capitalist imperial powers of the West. The Soviet Union’s influence was dominant in Eastern Europe, with a few close allies scattered across the Middle East, Africa and Latin America. The United States and its Western allies, however, were the dominant powers across much of the rest of the Middle East, Asia, Africa and Latin America. The only real sense in which the Soviet Union presented a challenge for the United States was in its military and nuclear capabilities. This was the period known as the ‘Cold War’, though despite its confrontational rhetoric dividing East and West, communist states from capitalist democracies, it was largely a struggle waged against the rest of the world, the ‘Third World’, otherwise known as the developing world or ‘Global South’. It was in the poor, colonized nations and regions of the world where the majority of the world’s resources were located, and thus, where the Western imperial powers needed to maintain control.
While the United States rebuilt Germany and Japan into economic locomotives, becoming the second and third richest countries in the world, American economic power experienced a relative decline. This created strong allies for the United States, and while they remained militarily dependent upon their imperial patron, their growing economic power gave them increased leverage. With their increased economic power came increased potential to act independently of the U.S. and other rich nations. Competition between the great powers increased during the same period that newly independent nations of the developing world were increasingly uniting in opposition to a Western-dominated world order.
On May 1, 1974, the vast majority of the world’s nations voted in favour of the U.N. Declaration on the Establishment of a New International Economic Order (NIEO), proclaiming that “the greatest and most significant achievement during the last decades has been the independence from colonial and alien domination of a large number of peoples and nations which has enabled them to become members of the community of free people.” Among the ‘principles’ adopted in forming the NIEO were “equality of States, self-determination of all peoples,” and the outlawing of war, seeking “the broadest co-operation” of all nations of the world in banishing the “prevailing disparities” and securing “prosperity for all.”
Each nation of the world would have the right “to adopt the economic and social system that it deems the most appropriate for its own development,” and establish control over their own natural resources. The people who continued to live under colonial domination, racial oppression and foreign occupation had a right “to achieve their liberation and the regain effective control over their natural resources and economic activities.” In 1974, this would include Israeli-occupied Palestine, South African apartheid, and U.S.-occupied Vietnam. The last line in the document stated that the Declaration should “be one of the most important bases of economic relations between all peoples and all nations.”
But Henry Kissinger had other plans. As Secretary of State and National Security Adviser, Kissinger was the chief imperial strategist in the United States, and remains one of the most influential foreign policy strategists in the nearly four decades since he left office. Kissinger’s “trick” to use economics in building a “world political structure” would largely be pursued through the finance ministries, central banks and international organizations (such as the IMF and World Bank) which are controlled by the rich and powerful nations. In the face of a growing threat, the rich nations banded together in various forums, conferences and diplomatic gatherings, the most notable of which came to be known as the Group of Seven, bringing together the U.S., Germany, Japan, the United Kingdom, France, Italy and Canada. Through these various institutions and initiatives, a “world political structure” would be incrementally constructed as the Empire of Economics.
Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada.
 Memorandum of Conversation, 24 May 1975: Foreign Relations of the United States, 1973-1976, Vol. XXXI, Foreign Economic Policy, Document 292:
 Memorandum of Conversation, 26 May 1975: Foreign Relations of the United States, 1973-1976, Vol. XXXI, Foreign Economic Policy, Document 294:
 Niccolo Machiavelli, The Prince (Cambridge University Press, 1988), page 59.
 Memo by George Kennan, Head of the US State Department Policy Planning Staff. Written February 28, 1948, Declassified June 17, 1974. George Kennan, “Review of Current Trends, U.S. Foreign Policy, Policy Planning Staff, PPS No. 23. Top Secret. Included in the U.S. Department of State, Foreign Relations of the United States, 1948, volume 1, part 2 (Washington DC Government Printing Office, 1976), 509-529:
 General Assembly, “Declaration on the Establishment of a New International Economic Order,” Resolution adopted by the General Assembly, United Nations, Resolution 3201 (S-VI), 1 May 1974:
 General Assembly, “Declaration on the Establishment of a New International Economic Order,” Resolution adopted by the General Assembly, United Nations, Resolution 3201 (S-VI), 1 May 1974:
The Global Mafiocracy and the Empire of Economics
By: Andrew Gavin Marshall
26 March 2015
I am aiming to raise $500 in order to complete and publish for all to view and read a sample introduction chapter to my book about the Global Mafiocracy and the Empire of Economics. The chapter would provide a sampling of the subject matter, style and approach to discussing these complex issues in a way that is understandable and approachable to as wide an audience as possible. The sample chapter would be completed relatively soon (in the next week or two), so long as the funding objective is reached so that I can afford to put in the time to complete the draft.
So what is the subject matter and focus of the book?
– Translating the world of Economics and Finance into basic English, dismantling the ‘technical’ language of ‘experts’ into a more direct and honest dialectic
– An introduction to the Global Mafiocracy: the banks, corporations, asset management firms, sovereign wealth funds, insurance companies and holding companies that collectively own each other and the wider network of global corporate and financial institutions, manifesting as a relatively small cartel of roughly 150 large financial institutions that wield unparalleled financial power in the modern world. How did the cartel evolve? What institutions are dominant within it? Who are the individuals and groups that lead these organizations? How is the cartel’s wealth and power accumulated and exercised? What role does the cartel play in the world of global finance, economic and politics?
– Behind the major corporate and financial institutions are individuals and families, smaller units of concentrated power who own the largest shares and steer the operations of the global cartel. These individual oligarchs and family dynasties – from the Rockefellers in the US, to the Wallenbergs in Sweden, Agnellis in Italy, Desmarais’ in Canada, to the House of Saud in Saudi Arabia, Oppenheimer in South Africa, among others – control and.or influence large percentages of wealth within their respective nations and in the world of globalized financial and corporate networks. How did these dynasties and oligarchs emerge? What do they own and control? How is their wealth and power organized and exercised? What are their ideologies, beliefs, objectives?
– Empire and Economics: When people think of Empire, they often imagine the old European colonial powers venturing off to Africa, Latin America and Asia where they would militarily occupy and colonize foreign lands, regions and peoples for their own imperial benefit. While formal colonialism is largely an historical anachronism, unjustifiable and increasingly untenable in the modern world, Empire itself has never vanished. While the military and overtly political components of empire and imperialism remain relevant in the modern world (think: U.S. military, CIA, State Department, NATO, etc.) the most effective and evolved means of imperialism in the world are exercised through the economic and financial spheres. In these realms, empire is more effective because its ideology, objectives, actions and effects are hidden behind vague and obscure language, the “expertise” of economists, finance ministers, central bankers and other technocrats who claim to be separate of politics and only interested in economics. Empire is more evolved in these spheres because it has become the vanguard of the global Mafiocracy and imperial system, leading the political and often military apparatus of empire, far more institutionalized and advanced on a global scale than any parallel in political and military spheres.
– Global Financial Diplomacy and Governance: What are the institutions that manage and shape the imperial economic order? In the world of financial diplomacy and governance, those institutions which wield incredible (and increasingly expanding) power and authority remain largely unknown or misunderstood to the general public. The book will examine some of the origins, evolution and character of many of these institutions, including: the International Monetary Fund (IMF), World Bank, Bank for International Settlements (BIS), Organization for Economic Cooperation and Development (OECD), World Trade Organization (WTO), central banks and finance ministries, among others. What are the specific roles, functions and objectives of these institutions? How do they wield power? In whose interest do they operate? Who leads them?
– State Power: The institutions that make up the world of financial diplomacy and governance rely principally upon state power for legitimacy and political might. Whether it’s a central bank, a finance ministry, the IMF or other agencies, the role of powerful nation states such as the United States and other rich nations is central to the system and structures of the global Empire of Economics. The centrality of state power is made all the more apparent through an examination of the origins and evolution of less formal groupings of nations, such as the Group of Seven (G7), the Group of Five (G5), the Group of Ten (G10) and the Group of Twenty (G20), the principal political forums for the system of global governance and empire. Who attends these forums? What institutions are represented? What are the ideologies and competing interests? What effect do they have? What is the role of the ’emerging market’ nations of China, Russia, Brazil, India, Turkey and South Africa within this system?
– The Global Financial Mafia: What is the relationship and interaction between state power, the various Groups of nations, international institutions, finance ministries and central banks with the global cartel of banks and corporations, and the oligarchs and family dynasties that control the cartel? In what forums do the individuals who lead these various institutions interact, cooperate, communicate, socialize and organize? At various global and national think tanks, foundations, forums, conferences and social events, politicians, finance ministers, central bankers and top technocrats meet, often in secret, with the heads of banks and corporations, patriarchs and matriarchs of powerful family dynasties and other oligarchs. Among such events and forums are: the Bilderberg Group, International Monetary Conference (IMC), World Economic Forum (WEF), the Trilateral Commission, the Institute of International Finance (IIF), and the Group of 30, among others. These forums and events provide political leaders and the heads of influential institutions with a private forum where they are able to have off-the-record, often secretive discussions on important issues of global importance to the populations of their respective nations and the planet as a whole. Collectively, this group, and the institutions which dominate it, compose the Global Mafiocracy: a global political, social and economic system dominated by relatively few nations and institutions that operate largely in the interests of a small, criminal cartel of banks and corporations, a global financial Mafia.
– Top-Down: These institutions, individuals and ideologies will be examined and discussed not as a dry, historical account, but in terms of telling a series of stories. I want to try to present this information and analysis in the same way in which it appeals most to me, a fantastic, interesting, often horrifying and shocking tale of intrigue, empire, power politics, petty tyrants, in-fighting, domination, destruction and empire. I want the people who lead and participate in this system to become as familiar to the reader as they are to me, to see an image and read stories about the personalities and complexities of those who rule and wield power. What emerges is a story, or series of stories, worthy of the the intrigue and interest in historical and fictional accounts of imperial families and ancient empires, of mythical worlds, fantasy tales and science fiction societies. Get a view of our world from the top-down.
– Bottom-Up: In parallel to the institutions, individuals and ideologies that dominate and shape our world from the top-down, there are also processes, people, protests and mass movements or revolutions that shape and re-create and re-imagine the world from the bottom up. While Europe’s finance ministers meet in secret, off the record conversations in distant castles located in Luxembourg, deciding the fate of Europe and its citizens, mass protests and demonstrations and riots take place on the streets of Athens, Madrid, Lisbon, Rome and Frankfurt, in which the populations oppose and reject the decisions being made in far-off places by largely unelected technocrats who do not serve their interests. What role do protests and popular movements have in shaping and changing the modern world? How do the dominant institutions and individuals view and respond to such events and processes? Do they fear the potential of the people? What is that potential, or what could it be? What is the bottom-up story of the Global Mafiocracy and Empire of Economics?
– A Series of Stories: History, its chief actors, institutions and evolution is best understood when told as a story, with characters that readers and observers can relate to, understand, find an interest in, to be intrigued and even horrified. It would seem that the best way to explain the overly and unnecessarily complicated world of economics and finance is to explain it not as one would read in a textbook or industry publication, nor reportage in the financial press, nor through the dry and deceptively dull language and rhetoric of economics, academics, finance ministers, central bankers, technocrats and politicians. No, this is a world best understood through the stories, characters, challenges, triumphs, disasters and wars waged by the personalities and people who have shaped and changed this world. A system of human ‘civilization’ is, after all, ultimately a product of humans, and is, therefore, as deeply flawed, complex, conflicted and intriguing as are most human tales of the rise and fall of kings, queens, emperors, dictators, or the triumphs and tribulations of the ‘common person’, those on the streets, in the schools, bustling around the cities, towns and in the urban slums. Human beings understand human struggles and human stories. Thus, this book is not a history of economics and finance, it is a story of human beings, struggle, suffering, success and complexity. In short, it is a story like any other.
I need your help to write these stories and complete this book, what will be the first in a series. For now, my objective is to write a sample chapter, drawing from the many thousands of pages of research I have done in recent months and years. This chapter would be made available online for all to read, to truly gain a better understanding of the focus, approach and objectives of this book. To do this, I need your help. If this is something you would be interested in reading, please consider donating or sharing and promoting this through social media and other avenues.
My objective is to raise $500 in the short-term. If that goal is reached, the sample chapter will be completed (in rough form) and published online for all to read in April of 2015.
Thank you very much for all the support and encouragement.
Andrew Gavin Marshall
Global Power Project: Bilderberg Group and Europe’s Technocrat Titans
By: Andrew Gavin Marshall
10 February 2015
Originally posted at Occupy.com
This is the tenth installment in a series examining the activities and individuals behind the Bilderberg Group. Read the first, second, third, fourth, fifth, sixth, seventh, eighth and ninth parts in the series.
I previously examined the functions of the Bilderberg meetings; the composition and concentration of financial markets and the Mafiocracy that rules them; the nature of technocracy, and the role of finance ministers, central banks and the IMF in managing the European debt crisis. This installment takes a closer look at the top technocrats of the European Council and the European Commission.
The “Troika” of the European Central Bank (ECB), International Monetary Fund (IMF) and European Commission (EC) was largely tasked with managing the response to the debt crisis, organizing bailouts, imposing austerity and saving the banks at the expense of the populations of Europe. The Troika reported to the Eurogroup of 17 finance ministers who represented all of the countries that used the euro as their single common currency.
The European Union project evolved and expanded over decades since the end of World War II, and always with an elite-driven, technocratic structure. As the E.U. moves through the debt crisis, its solutions and actions invariably delegate more authority to both existing and new technocratic institutions that wield immense power over nation-states within the E.U. Sovereignty is increasingly transferred from the nation and its democratically elected leaders to the supra-national technocratic structure of the E.U., and the top bureaucrats and technicians who run it.
The European Council and the European Commission are the major centers of power within the E.U.’s political structure. The European Central Bank is equally if not more powerful, but it doesn’t answer to any political authority since it’s considered to be “independent” (aka exclusively in the service of private interests). The European Council groups together the heads of state (presidents and prime ministers) of all E.U. nations, comprising the supreme governing authority of the E.U. The Council is presided over by a permanent president. Over the course of the European debt crisis, that president was Herman Van Rompuy.
Herman Van Rompuy
Herman Van Rompuy was a prominent Belgian technocrat and politician. Trained as an economist, Van Rompuy worked for Belgium’s central bank from 1972 to 1975, thereafter going into politics where he rose through the ranks to become a budget minister in the 1990s. When Van Rompuy was asked by Belgian King Albert to form a coalition government in December of 2008, Van Rompuy became Belgium’s Prime Minister, described by Reuters at the time as “a budgetary hardliner.”
As European leaders were attempting to negotiate and horse-trade to fill key appointments in the EU apparatus in late 2009, Van Rompuy was considered a “dark horse” to occupy the first-ever permanent president of the European Council. Van Rompuy was relatively unknown outside Belgium and had only been the country’s Prime Minister for 11 months when he got the top job in the E.U.
Roughly a week before European leaders announced him as their selection, Van Rompuy attended a private dinner with members of the Bilderberg steering committee on Nov. 12, 2009. Van Rompuy was invited to the dinner by then-chairman of the Bilderberg meetings, Etienne Davignon, a former top E.U. technocrat, in order “to promote his candidacy” for the top job. At the dinner, which was attended by top industrialists, financiers and even war criminals like Henry Kissinger, Van Rompuy was able to impress the group with a speech and engage in “off-the-record” talks with the unelected oligarchs. At the dinner meeting, Van Rompuy reportedly raised the issue of E.U. financing, suggesting that a continental E.U. tax could even be envisioned.
Seven days later, Van Rompuy was announced as the final choice for president of the European Council. According to The New York Times, Van Rompuy’s selection was seen as the “result of backroom negotiations among [E.U.] leaders jockeying for future and more important economic portfolios that could be more powerful in the enlarged European Union” – in some ways a similar method as how the Chinese choose who sits in the top political positions of authority within the Communist Party and State.
The Financial Times celebrated the appointment of Van Rompuy to the top spot, noting that “the art of Belgian political leadership consists of bringing consensus to a broad and fractious coalition,” which is “exactly what the president of the European Council will have to do.” As the prime minister of Belgium, the paper wrote, Van Rompuy had “demonstrated an ability to bring a laser-sharp focus to a complicated political process.”
Together with the President of the European Commission, the ECB and the Eurogroup of finance ministers, Van Rompuy indeed played an important role in the management of Europe’s debt crisis. After attending the Bilderberg steering committee meeting in 2009, just prior to getting Europe’s top job, he later attended a Bilderberg meeting in 2011 while sitting as president of the European Council.
José Manuel Barroso
José Manuel Barroso finished his second term as President of the European Commission in late 2014, after serving in that post for the previous ten years. Prior to that, he served as prime minister of Portugal from 2002 to 2004. Barroso has attended numerous Bilderberg meetings: in 1994, 2003, 2005 and 2013. On top of that, Barroso has attended meetings of the Trilateral Commission, including the one that took place in Portugal in 2003 while Barroso was prime minister. He also attended the Commission’s annual meeting in 2007 that took place in Brussels while he was the European Commission president.
Barroso courted controversy in 2003 when he became one of only a few European heads of state to support George W. Bush’s “with us or against us” war on Iraq. His position put him in good standing with the U.K. and Italy, yet he also managed to maintain good ties with France and Germany, making him an effective choice to head the EC. Barroso was at the same time, however, “unpopular at home,” noted the BBC, because he implemented “an austerity program to reduce the country’s budget deficit.” But for European leaders, the fact that Barroso was able to hold together a political coalition of opposing parties “while driving through the unpopular reforms” made him an ideal candidate to function as “a consensus politician.”
The Economist reflected on Barroso’s short time as prime minister, noting the austerity program and commenting that he “has done a good job of running Portugal.” Barroso was chosen for one of the top spots in the E.U., overseeing the vast bureaucracy of the European Commission, through a series of “backroom deals, in which various other juicy EU jobs that are up for grabs are shared around.” Those who backed Barroso were doing so under the presumption that he would “hold his liberal economic line.”
A few months into his first term, in early 2005, the Financial Times reported that Barroso had “laid out pro-business plans to revive Europe’s economy,” which Britain’s E.U. Trade Commissioner Peter Madelson described as “proposing a program for Europe that we would describe as ‘New Labour’ in Britain,” and adding that “we are seeing the best chance in a decade to restore authority to the European Commission.” Apart from not giving business interests everything they wanted, the FT conceded that in many areas, “Barroso’s agenda is unashamedly pro-business,” including “a new drive for lighter regulation.”
Barroso’s program “put pressure on countries to make labour markets more flexible and cut back on welfare spending,” noted The New York Times. As people across Europe expressed fear that Barroso was “about to pursue an excessively liberal economic agenda,” Barroso began attempting to please his critics, speaking to trade unionists and declaring his intention to “fight against poverty,” stating that Europe would “maintain and reform our European social model.” That public relations campaign in turn worried business and financial interests, so the Commission president launched “a concerted campaign to attempt to show he remains firmly committed to pro-business economic reforms.”
A couple of weeks later, Barroso delivered a speech at the Spring meeting of the Institute of International Finance (IIF), whose membership is composed of top executives from hundreds of the world’s largest banks and financial institutions. Barroso began his speech noting that “your association has achieved a lot in the last two decades,” and continued:
“It has acted as an important market place for ideas [and] has provided a clear and influential voice for change in the fields of finance, economics and governance.” The world’s “stable financial order” was, Barroso declared, “in no small part thanks to the contribution of this institute.”
Barroso explained his understanding of the global economy to his esteemed audience, noting that the rapid growth in “emerging markets” was increasing global wealth, but also increasing competition for that wealth with countries like China and India able to better exploit cheap labor while the U.S. with its high-tech boom was leaving Europe behind.
“The status quo is no longer an option for the E.U.,” Barroso continued. The E.U. must change “in order for Europe to fully reap the benefits of ongoing globalization,” and the continent had to “increase the flexibility of markets” and strengthen its “productivity.” Translation: deregulate all markets, dismantle labor rights and protections, reduce living standards so as to create a cheaper labor force capable of competing with Asia, and increase finance for research and development to spur high-tech growth. Among the major “priorities” were making workers “more adaptable and labour markets more flexible.” No doubt, Barroso’s audience of bankers and financiers agreed with him.
It should be noted that the top leadership of the IIF are frequently Bilderberg members and participants, and that other speakers invited to the IIF’s Spring meeting included “senior government officials from Brazil, Chile, China, Slovakia, Spain and the U.K.,” as well as “leading international economists,” the managing director of the IMF, and the former president of Mexico.
In 2007, Barroso publicly commented on the unique nature of the European Union, referring to it as “the first non-imperial empire,” and explaining: “We are a very special construction unique in the history of mankind… Sometimes I like to compare the E.U. as a creation to the organization of empire. We have the dimension of empire.”
Barroso became a globally influential official in the spring of 2009, as the world grappled with the repercussions of the financial crisis and the heads of central banks, finance ministries, international organizations and leaders of the Group of 20 met to reshape the global financial and economic order. The focus at the 2009 meeting was to design “the future of financial regulation.” The Telegraph noted at the meeting that “Barroso and his team have had a quiet but immensely influential role in the whole process,” as many of the words and phrases adopted in the G20’s final communiqué were drafted in Barroso’s Commission office, which had drafted an earlier report on the subject. Barroso declared that “we need open, competitive, market economies… with effective regulation and supervision.” To accomplish this, “strong international institutions” (like his) were needed as well as “corporate governance,” a global reflection of today’s “economic culture of Europe.”
The next and final installment in the series examines Barroso’s continued role, and the role of the European Commission, from 2009 onwards.
Global Power Project: Bilderberg Group and the International Monetary Fund
By: Andrew Gavin Marshall
3 February 2015
Originally posted at Occupy.com
This is the ninth installment in a series examining the activities and individuals behind the Bilderberg Group. Read the first, second, third, fourth, fifth, sixth, seventh and eighth parts in the series.
In previous installments, this series has examined the historical role played by Bilderberg meetings in influencing major institutions and policies across North America and Western Europe over the past half century; the role of the meetings in supporting the rise of corporate and financial-friendly politicians to high office; the representation of interests from among the global financial elite, and the promotion of technocracy (particularly in Europe) and the representation of key technocratic institutions and individuals from Europe’s finance ministries and central banks, who’ve played important roles in the management of Europe’s financial and debt crises between 2008 and 2014.
This installment continues with an examination of Bilderberg’s role in facilitating the advancement of transnational technocracy in the EU, bringing in some of the top technocrats from leading European and international organizations to meet in secret with finance ministers, central bankers, politicians, corporate executives, bankers and financiers. The role of finance ministers and central banks has been the focus of the previous two installments in this series. Now we look at the IMF, which, together with the European Central Bank (ECB) and the European Commission (EC), functioned as the “Troika” tasked with managing the international response to the debt crisis, organizing the bailouts and imposing harsh austerity measures and structural reforms upon the nations and people of Europe.
The IMF: It’s Mostly Fiscal
In 1992, the Financial Times published a feature article by James Morgan, the chief economic correspondent of the BBC, in which he explained that with the fall of the Soviet Union, the Group of Seven nations (specifically their finance ministries and central banks) and the International Monetary Fund have come “to rule the world and create a new imperial age.” Morgan wrote that the “new global system” ruled by the G7, the IMF, World Bank and other international organizations “worked through a system of indirect rule that has involved the integration of leaders of developing countries into the network of the new ruling class.”
The IMF is designed to come to the “aid” of countries experiencing financial and monetary crises, to provide loans in return for the nations implementing austerity measures and key structural reforms, and to promote easy access for foreign investors (ie. banks and corporations) to buy up large portions of the local economy, enriching both domestic and foreign elites in the process.
Thus, a nation which gets a loan from the IMF must typically dismantle its social services, fire public sector workers, increase taxes, reduce benefits, cut education and health care, privatize state-owned assets and industries, devalue its currency, and dismantle labor protections and regulations, all of which plunges the population into poverty and allows for major global banks and corporations to seize the levers of the domestic economy and exploit the impoverished population as cheap labor.
The IMF was created near the end of World War II, tasked with managing the global “balance-of-payments” between nations: that is, maintaining the stability of global deficits and surpluses (the borrowing, lending and trading) between countries. However, as the post-War international monetary system collapsed in the early 1970s, the IMF needed to find a new focus. In the late 1970s, the New York Times noted that the “new mandate” of the IMF was “nothing less than rescuing the world monetary system – and with it, the world’s commercial banks.”
As the major Western commercial banks lent out vast sums of money to developing nations during the 1970s, they created immense liabilities (ie. risks) for themselves. As interest rates on debt began to rise, thanks to the actions of the Federal Reserve, heavily-indebted countries could no longer pay the interest on their loans to banks. As a result, they were thrust into financial and debt crises, in need of loans to pay down their debts and finance government spending. A key problem emerged, however, in that major commercial banks (who stopped funding developing nations) could not force them to implement the desired policies. What was needed was a united front of major banks, powerful industrial nations and international organizations.
Enter the IMF: controlled by the finance ministries of the majority of the world’s nations, with the U.S. Treasury holding veto power over all major decisions. The IMF was able to represent a globally united front on behalf of the interests of commercial banks. All funding from governments, international organizations and banks would be cut off to developing nations in crisis unless they implemented the policies and “reforms” demanded by the IMF. Once they signed a loan agreement and agreed to its conditions, the IMF would release funds, and other nations, institutions and banks would get the green light to continue funding as well.
The IMF’s loans, policy prescriptions and reforms that it imposes on other nations have the effect of ultimately bailing out Western banks. Countries are forced to impoverish their populations and open up their economies to foreign exploitation so that they can receive a loan from the IMF, which then allows the indebted nation to simply pay the interest on its debt to Western banks. As a result, the IMF loan adds to the overall national debt (which will have to be repaid down the line), and because the nation is in crisis, all of its new loans come with higher interest rates (since the country is deemed a high risk).
This has the effect of expanding a country’s overall debt and ensuring future financial and debt crises, forcing the country to continue in the death-spiral of seeking more loans (and imposing more austerity and reforms) to pay off the interest on larger debts. As a result, entire nations and regions are plunged into poverty and abusive forms of exploitation, with their political and economic systems largely controlled by international technocrats at the IMF and World Bank, mostly for the benefit of Western commercial banks and transnational corporations.
The IMF has amassed great power over the past few decades, and because its conditions and demands on nations primarily revolve around imposing austerity measures and “balancing budgets,” the IMF has earned the nickname “It’s Mostly Fiscal”. However, due to the effects of the fiscal policies demanded and imposed by the IMF, causing widespread poverty, increasing hunger, infant mortality, disease and inequality, many populations and leaders of indebted nations view the IMF as far more than “fiscal.” In fact, former Egyptian dictator Hosni Mubarak once referred to the IMF as the “International Misery Fund,” a sentiment shared by many protesters in poor nations experiencing the effects of harsh austerity measures.
The IMF and Bilderberg
As one of the world’s most important and influential technocratic institutions, the IMF has a keen interest in the goings-on behind closed doors at annual Bilderberg meetings, just as the group’s participants have a keen interest in the leadership and policies of the IMF. In fact, it is largely an unofficial tradition that the managing director of the IMF is frequently chosen from among Bilderberg participants, or in the very least, attends the meetings following their appointment. In a 2011 article about that year’s Bilderberg meeting, I commented on the race to find a new managing director of the IMF, noting that only Christine Lagarde, the French finance minister, had previously attended a Bilderberg meeting (in 2009), and therefore, she seemed a likely choice.
Lagarde began her career at a corporate law firm in the United States, becoming the first female chair in 1999. In 2004, at the request of the French Prime Minister, Lagarde joined the French government of President Jacques Chirac as a junior trade minister and began to rise through the ranks. When Nicolas Sarkozy became president in 2007, Lagarde took up the post of finance minister, a position that Sarkozy had also previously held. As Foreign Policy magazine explained, both Sarkozy and Lagarde had a similar vision for France: “free markets, less regulation, and globalization.” Together, they imposed various austerity measures and structural reforms in France, and due to Lagarde’s ideological allegiance to the American-brand of “market capitalism,” she was given the nickname, “The American.”
Throughout the financial crisis, and really from 2008 onwards, Lagarde was pivotal in brokering a major bailout deal between the G7 nations, working with her “close personal friend,” Hank Paulson, the U.S. Treasury Secretary (and former CEO of Goldman Sachs). Lagarde became a skilled operator at G7 and G20 meetings, and was a regular figure at World Economic Forum (WEF) meetings. As the [New York Times noted]( in late 2008, Christine Lagarde’s “biggest fans are business leaders and foreign finance officials who have seen her in action.”
In 2008, the Financial Times ranked Lagarde as the 7th best finance minister in Europe. In 2009, she was ranked as number one, with the Financial Times writing that she “has become a star among world financial policy-makers.” That same year, she was invited to the Bilderberg conference. The following year, Lagarde was ranked in third place, having “played an important role in the Eurozone debt crisis, helping overcome Franco-German differences on the bloc’s eventual rescue plans.”
In 2011, Christine Lagarde’s name was put forward as a possible replacement for then-IMF managing director Dominique Strauss-Kahn. The influential economist Kenneth Rogoff said that Lagarde was “enormously impressive, politically astute,” and was treated “like a rock star” at finance meetings all over the world. The New York Times noted that while Nicolas Sarkozy had a challenging relationship with German Chancellor Angela Merkel, Lagarde “nurtured a close personal relationship with Mrs. Merkel.”
Shortly after Lagarde officially began to campaign to become the head of the IMF, the German, British and Italian finance ministries endorsed her candidacy, with the main rival for the top spot being the governor of the central bank of Mexico, Agustin Carstens, who secured the backing of the Latin American nations as well as Canada and Australia. Lagarde then received the golden seal of approval when she was endorsed by the U.S. Treasury Department, the only veto power voter at the IMF. Then-Treasury Secretary Timothy Geithner commented that Lagarde would “provide invaluable leadership for this indispensible institution at a critical time.” While she was campaigning, Lagarde also managed to secure the backing of China, after she met for lunch with the Chinese central bank governor and deputy prime minister.
German Chancellor Merkel commented that “there are very few other women in the stratosphere of global governance.” As the publication Der Spiegel wrote, “[Lagarde] knows ministers and national leaders throughout the world, and she is on a first-name basis with most of them.” German finance minister Wolfgang Schauble was described as “her most important partner” in the EU and “her anchor in Germany.”
Gillian Tett, writing in the Financial Times in December of 2011, noted that “never before has a woman held such a powerful position in global finance,” and much like Chancellor Merkel, Lagarde now “holds real power.” Throughout the course of the European debt crisis, she used that power. Leading one of the three major institutions of the Troika, Lagarde played a central role in the organization of bailouts and enforcement of austerity across the Eurozone. A former top technocratic official in the IMF wrote an op-ed in the Financial Times in 2013 in which he explained that the IMF, alongside the European Commission and the ECB, are together “the troika running the continent’s rescues,” which “means political meddling had been institutionalized.”
The actions of these institutions were so damaging to the economies and societies – and social stability – of many European countries that a formal investigation into the activities of the Troika was held in the European Parliament in late 2013 and early 2014. The final report, produced by Members of the European Parliament (MEPs), concluded that the Troika’s structure and accountability resulted “in a lack of appropriate scrutiny and democratic accountability as a whole.” After all, the growth and empowerment of technocracy coincides with the undermining and decline of democracy.
Christine Lagarde, who has spent her career as a corporate lawyer and finance minister, has steered the IMF on its consistent path of functioning as a transnational technocratic institution concerned primarily with serving the interests of global financial markets. As such, her participation in Bilderberg meetings – in 2009, 2013 and 2014 – brings her into direct contact with her real constituency: the ruling oligarchy.
World Economic Forum 2015: Global Governance In a World of Resistance
By: Andrew Gavin Marshall
26 January 2015
This article and its accompanying infographic have been jointly published by the Transnational Institute and Occupy.com.
The annual meetings of the World Economic Forum (WEF) in Davos, Switzerland, bring together thousands of the world’s top corporate executives, bankers and financiers with leading heads of state, finance and trade ministers, central bankers and policymakers from dozens of the world’s largest economies; the heads of all major international organizations including the IMF, World Bank, World Trade Organization, Bank for International Settlements, UN, OECD and others, as well as hundreds of academics, economists, political scientists, journalists, cultural elites and occasional celebrities.
The WEF states that it is “committed to improving the state of the world through public-private cooperation,” collaborating with corporate, political, academic and other influential groups and sectors “to shape global, regional and industry agendas” and to “define challenges, solutions and actions.” Apart from the annual forum meeting in Davos, the WEF hosts regional and sometimes even country-specific meetings multiple times a year in Asia, Latin America, Africa and elsewhere. The Forum is host to dozens of different projects bringing together academics with corporate representatives and policy-makers to promote particular issues and positions on a wide array of subjects, from investment to the environment, employment, technology and inequality. From these projects and others, the Forum publishes dozens of reports annually, identifying key issues of importance, risks, opportunities, investments and reforms.
The WEF has survived by adapting to the times. Following the surge of so-called anti-globalization protests in 1999, the Forum began to invite non-governmental organizations representing constituencies that were more frequently found in the streets protesting against meetings of the WTO, IMF and Group of Seven. In the 2000 meeting at Davos, the Forum invited leaders from 15 NGOs to debate the heads of the WTO and the President of Mexico on the subject of globalization. The participation of NGOs and non-profit organizations has increased over time, and not without reason. According to a poll conducted on behalf of the WEF just prior to the 2011 meeting, while global trust in bankers, governments and business was significantly low, NGOs had the highest rate of trust among the public.
In an interview with the Wall Street Journal last September, the founder and executive chairman of the WEF, Klaus Schwab, was asked about the prospects of “youth frustration over high levels of underemployment and unemployment” as expressed in the Arab Spring and Occupy Wall Street movements, noting that the Forum was frequently criticized for promoting policies and ideologies that contribute to those very problems. Schwab replied that the Forum tries “to have everybody in the boat.” Davos, he explained, “is about heads of state and big corporations, but it’s also civil society – so all of the heads of the major NGOs are at the table in Davos.” In reaction to the Occupy Wall Street movement, Schwab said, “We also try… to put more emphasis on integrating the youth into what we are doing.”
So, what exactly has the World Economic Forum been doing, and how did it emerge in the first place?
It began in 1971 as the European Management Forum, inviting roughly 400 of Europe’s top CEOs to promote American forms of business management. Created by Schwab, a Swiss national who studied in the U.S. and who still heads the event today, the Forum changed its name in 1987 to the World Economic Forum after growing into an annual get together of global elites who promoted and profited off of the expansion of “global markets.” It is the gathering place for the titans of corporate and financial power.
Despite the globalizing economy, politics at the Forum have remained surprisingly national. The annual meetings are a means to promote social connections between key global power players and national leaders along with the plutocratic class of corporate and financial oligarchs. The WEF has been a consistent forum for advanced “networking” and deal-making between companies, occasional geopolitical announcements and agreements, and for the promotion of “global governance” in a world governed of global markets.
Writing in the Financial Times, Gideon Rachman noted that more than anything else, “the true significance of the World Economic Forum lies in the realm of ideas and ideology,” noting that it was where the world’s leaders gathered “to set aside their differences and to speak a common language… they restate their commitment to a single, global economy and to the capitalist values that underpin it.” This reflected the “globalization consensus” which was embraced not simply by the powerful Group of Seven nations, but by many of the prominent emerging markets such as China, Russia, India and Brazil.
Indeed, the World Economic Forum’s main purpose is to function as a socializing institution for the emerging global elite, globalization’s “Mafiocracy” of bankers, industrialists, oligarchs, technocrats and politicians. They promote common ideas, and serve common interests: their own.
Geopolitics, Global Governance and the Arrival of the “Davos Class”
The World Economic Forum has been shaped by – and has in turn, shaped – the course and changes in geopolitics, or “world order,” over the past several decades. Created amidst the rise of West Germany and Japan as prominent economic powers competing with the United States, the oil shocks of the 1970s also produced immense new powers for the Arab oil dictatorships and the large global banks that recycled that oil money, loaning it to Third World countries.
New forums for “global governance” began to emerge, such as the meetings of the Group of Seven: the heads of state, finance ministers and central bank governors of the seven leading industrial powers including the U.S., West Germany, Japan, U.K., France, Italy and Canada, starting in 1975. When the debt crisis of the 1980s hit, the International Monetary Fund and the World Bank achieved immense new powers over entire economies and regions, reshaping the structure of societies to promote “market economies” and advance the interests of domestic and international corporate and financial oligarchs.
Between 1989 and 1991, the global power structure changed dramatically with the fall of the Berlin Wall and the collapse of the Soviet Union. With that came President George H.W. Bush’s announcement of a “New World Order” in which America claimed “victory” in the Cold War, and a unipolar world took shape under the hegemony of the United States. The ideological war between the West and the Soviet Union was declared victorious in favor of Western Capitalist Democracy. The “market system” was to become globalized as never before, especially under the presidency of Bill Clinton who led the U.S. during its largest ever economic expansion between 1993 and 2001.
During this time, the annual meetings of the World Economic Forum became more important than ever, and the role of the WEF in establishing a “Davos Class” became widely acknowledged. At the 1990 meeting, the focus was on Eastern Europe and the Soviet Union’s transition to “market-oriented economies.” Political leaders from Eastern Europe and Western Europe met in private meetings, with West German Chancellor Helmut Kohl articulating his desire to reunify Germany and cement Germany’s growing power within the European Community and NATO.
Helmut Kohl laid out his strategy for shaping the “security and economic structure of Europe” within a unified Germany. Kohl’s “grand design” for Europe envisioned a unified Germany as being “firmly anchored” in the expanding European Community, the main objective of which was to establish an “internal market” by 1992 and to advance toward an economic and monetary union, with potential to expand eastward. Kohl presented this as a peaceful way for German power to grow while assuaging fears of Eastern Europeans and others about the economically resurgent country at the heart of Europe.
At the 1992 WEF meeting, the United States and reunified Germany encouraged “drastic steps to insure a liberalization of world trade,” and furthered efforts to support the growth of market economies in Eastern Europe. The German Economics Minister called for the Group of Seven to meet and restart global trade talks through the 105-nation General Agreement on Tariffs and Trade (GATT). At that same meeting, the Chinese delegation included Prime Minister Li Peng, who was the highest-level Chinese official to travel internationally since the 1989 Tiananmen Square crackdown.
Of great significance also was the attendance of Nelson Mandela, the new president of South Africa. When Mandela was released from prison in 1990, he declared the policy of the African National Congress (ANC) was to implement “the nationalization of the mines, banks and monopoly industries.” When Mandela attended the January 1992 meeting of the WEF just after becoming president, he changed his views and embraced “capitalism and globalization.” Mandela attended the meeting alongside the governor of the central bank of South Africa, Tito Mboweni, who explained that Mandela arrived with a speech written by ANC officials focusing on nationalization. As the week’s meetings continued, Mandela met with leaders from Communist Parties in China and Vietnam, who told him, “We are currently striving to privatize state enterprises and invite private enterprise into our economies. We are Communist Party governments, and you are a leader of a national liberation movement. Why are you talking about nationalization?”
As a result, Mandela changed his views, telling the Davos crowd that he would open South Africa up as a market economy and encourage investment. South Africa subsequently became the continent’s fastest growing economy, though inequality today is greater than it was during apartheid. As Mandela explained to his official biographer, he came home from the 1992 WEF meeting and told other top officials that they had to choose: “We either keep nationalization and get no investment, or we modify our own attitude and get investment.”
At the 1993 meeting, the main consensus that had emerged called for the U.S. to maintain its position as a global economic and military power, and for it to take the lead encouraging greater “co-operation” between powerful nations. The major fear among Davos participants was that while economies were becoming globalized, politics was turning inward and becoming “renationalized.”
Later that year, Anthony Lake, Bill Clinton’s National Security Adviser, articulated the “Clinton Doctrine” for the world, explaining: “The successor to a doctrine of containment must be a strategy of enlargement – enlargement of the world’s free community of market democracies.” Lake explained that the United States “must combine our broad goals of fostering democracy and markets with our more traditional geostrategic interests.” No doubt, the Davos crowd welcomed such news.
At the 1994 meeting, the director-general of GATT, Peter D. Sutherland, declared that world leaders needed to establish “a new high-level forum for international economic co-operation,” moving beyond the Group of Seven to become more inclusive of the major “emerging market” economies. Sutherland told the assembled plutocrats that “we cannot continue with the majority of the world’s people excluded from participation in global economic management.” Eventually, the organization Sutherland described was formed, as the Group of 20, bringing the leading 20 industrial and economic powers together in one setting. Formed in 1999, the G20 didn’t become a major forum for global governance until the 2008 financial crisis.
In 1995, the Financial Times noted that the new “buzzword” for international policymakers was “global governance,” articulating a desire and strategy for updating and expanding the institutions and efforts of international co-operation. The January 1995 World Economic Forum meeting was the venue for the presentation of an official UN report on global governance. President Clinton addressed the Davos crowd by satellite, stressing that he would continue to push for the construction of a new “economic architecture,” notably at meetings of the Group of Seven.
In 1997, the highly influential U.S. political scientist Samuel Huntington coined the term “Davos Man,” which he described as a group of elite individuals who “have little need for national loyalty, view national boundaries as obstacles that are thankfully vanishing, and see national governments as residues from the past whose only useful function is to facilitate the elite’s global operations.” An article that year in The Economist came to the defense of the “Davos Man,” declaring that he was replacing traditional diplomacy which was “more likely to bring peoples together than to force them apart,” noting that the WEF was “paid for by companies and run in their interests.”
Samuel Huntington presented a thesis, summarized in a 1997 Financial Times article, that outlined a world that “would be divided into spheres of influence,” within which “one or two core states would rule the roost.” Huntington noted that the “Davos culture people,” while extremely powerful, were only a tiny fraction of the world’s population, and the leaders of this faction “do not necessarily have a secure grip on power in their own societies.” The Financial Times, however, noted that while the “Davos culture people” did not constitute a “universal civilization” being such a tiny minority of the world’s population, “they could be the vanguard of one.”
Russian Oligarchs and the Rise of China
In fact, at the previous year’s meeting in Davos, the World Economic Forum functioned precisely as the vanguard for seven Russian oligarchs to take control of Russia and shape its future. At the 1996 meeting of the WEF, the Russian delegation was made up largely of the country’s new oligarchs who had amassed great fortunes in the transition to a market economy. Their great worry was that Russian President Boris Yeltsin would lose his re-election later that year to the resurgence of the Communists. At the WEF meeting, seven Russian oligarchs, led by Boris Berezovsky, formed an alliance during private meetings, where they decided to fund Yeltsin’s re-election and work together to “reshape their country’s future.” This alliance (or cartel, as some may refer to it), was the key to Yeltsin’s re-election victory later that year, as they held weekly meetings with Yeltsin’s chief of staff, Anatoly Chubais, the architect of Russia’s privatization program that made them all so rich.
Berezovsky explained that if the oligarchs did not work together to promote common ends, it would be impossible to have a transition to a market economy “automatically.” Instead, he explained, “We need to use all our power to realize this transformation.” As the Financial Times noted, the oligarchs “assembled a remarkable political machine to entrench and promote the market economy – as well as their own financial interests,” as the seven men collectively controlled roughly half the entire Russian economy.
Anatoly Chubais commented on this development and the role of the oligarchs, saying: “They steal and steal and steal. They are stealing absolutely everything and it is impossible to stop them… But let them steal and take their property. They will then become owners and decent administrators of this property.”
In the 1990s, with the spread of global markets came the spread of major financial crises: in Mexico, across Africa, East Asia, Russia and then back to Latin America. At the WEF meeting in 1999, the key issue was “reform of the international financial system.” As the economic crises spread, the Group of Seven nations, and the Davos Class, told the countries in crisis that in order “to restore confidence [of the markets], they should adopt politically unpopular policies of radical structural reform,” promoting further liberalization and deregulation of markets to open themselves up to Western corporate and financial interests and ‘investment.’
The major emerging markets have been frequent participants in annual Davos meetings, providing a forum in which national elites may become acquainted with the global ruling class, with whom they then cooperate and do business. China has been a major feature at Davos meetings. China started sending more high-level delegations to the WEF in the mid-1980s. During the 2009 meeting, two prominent speakers were President Putin of Russia and the Chinese Prime Minister Wen Jiabao. Both leaders painted a picture of the crisis as emanating from the centers of finance and globalization in the United States and elsewhere, with the “blind pursuit of profit” and “the failure of financial supervision” – in Wen’s words – and bringing about what Putin described as a “perfect storm.” Both Wen and Putin, however, declared their intentions to work with the major industrial powers “on solving common economic problems.”
In 2010, China’s presence at Davos was a significant one. Prime Minister Wen Jiabao, who attended the previous year, was not to return. In his stead, his chosen successor, Li Keqiang, attended. China’s economy was performing better than expected as its government was coming under increases pressure from major global corporations.
Kristin Forbes, a former member of the White House Council of Economic Advisers and an attendee at Davos, commented, “China is the West’s greatest hope and greatest fear… No one was quite ready for how fast China has emerged… Now everyone is trying to understand what sort of China they will be dealing with.” China sent its largest delegation to date to the World Economic Forum, with a total of 54 executives and government officials, many of whom were intending to “go shopping” for clients among the world’s elite.
Li Keqiang, the future Chinese prime minister, told the Davos audience that China was going to shift from its previous focus on exports and turn to “boosting domestic demand,” which would “not only drive growth in China but also provide greater markets for the world.” Li explained that China would “allow the market to play a primary role in the allocation of resources.”
In 2011, The New York Times declared that the World Economic Forum represented “the emergence of an international economic elite” that took place at the same time as unprecedented increases in inequality between the rich and poor, particularly in the powerful countries but also in the fast-emerging economies. Chrystia Freeland wrote that “the rise of government-connected plutocrats is not just a phenomenon in places like Russia, India and China,” but that the major Western bailouts reflected what the former chief economist at the IMF, Simon Johnson, referred to as a “quiet coup” by bankers in the United States and elsewhere.
Davos and the Financial Oligarchy
The power of global finance – and in particular, banks and oligarchs – has grown with each successive financial crisis. As the financial crisis tore through the world in 2008, the January 2009 meeting of the World Economic Forum featured less of the Wall Street titans and more top politicians. Schwab declared, “The pendulum has swung and power has moved back to governments,” adding that “this is the biggest economic crisis since Davos began.” Goldman Sachs, which in past years was “renowned for hosting one of the hottest parties at the World Economic Forum’s glittering annual meeting in Davos,” had cancelled its 2009 party. Nonetheless, Jamie Dimon, CEO of JPMorgan Chase, decided to continue with his plans to host a Davos party.
In 2010, thousands of delegates assembled to discuss the “important’ issues of the day. And despite the reputation of banks and bankers being at all-time lows, top executives of the world’s largest financial institutions showed up in full force. The week before the meeting, President Obama called for the establishment of laws to deal with the “too big to fail” banks, and European leaders were responding to the anger of their domestic populations for having to pay for the massive bailouts of financial institutions during the financial crisis.
Britain and France were discussing the prospect of taxing banker bonuses, and Mervyn King, governor of the Bank of England, suggested the possibility of breaking up the big banks. Several panels at the WEF meeting were devoted to discussing the financial system and its possible regulation, as bankers like Josef Ackermann of Deutsche Bank suggested that they would agree to limited regulations (at least on “capital requirements”).
More important, however, were plans for a series of private meetings of government representatives and bank chiefs, who would meet separately, and then together, in Davos. Roughly 235 bankers were to attend the summit – a 23% increase from the previous year. Global bankers and other corporate leaders were worried, and warned the major governments in attendance against the financial repercussions of pursuing “a populist crackdown” against banks and financial markets. French President Nicolas Sarkozy spoke to the Forum’s guests about a need for a “revolution” in global financial regulation, and for “reform of the international monetary system.”
The heads of roughly 30 of the world’s largest banks held a private meeting at Davos “to plot how to reassert their influence with regulators and governments,” noted a report on Bloomberg. The “private meeting” was a precursor to a later meeting at Davos involving top policymakers and regulators. Brian Moynihan, CEO of Bank of America, said of the assembled bankers, “We’re trying to figure out ways that we can be more engaged.” According to Moynihan, a good deal of the closed-door discussion “was about tactics, such as who the executives should approach and when.” The CEO of UBS, a major Swiss bank, commented that “it was a positive meeting, we’re in consensus.” The bankers said they were aware that some new rules were inevitable, but they wanted to encourage regulators and countries to coordinate the rules through the Group of 20, revived in 2009 as the premier forum for international cooperation and “global governance.”
Josef Ackermann, CEO of Deutsche Bank, suggested that “we should stop the bank bashing,” and affirmed that banks had a “noble role” to play in managing the economic recovery. Christine Lagarde, France’s Finance Minister and current Managing Director of the IMF, encouraged a “dialogue” between governments and banks, saying, “That’s the only way we’re going to get out of it.” Later that week, the bankers met “behind closed doors with finance ministers, central bankers and regulators from major economies.”
The key message from finance ministers, regulators and central bankers was a political one: “They [the banks] should accept more stringent regulation, or face more draconian curbs from politicians responding to an angry public.” Guillermo Ortiz, who had just left his post as governor of the central bank of Mexico, said, “I think banks have misjudged the deep feelings of the public regarding the devastating effects of the crisis.” French President Sarkozy stated that “there is indecent behavior that will no longer be tolerated by public opinion in any country of the world,” and that bankers giving themselves excessive bonuses as they were “destroying jobs and wealth” was “morally indefensible.”
As the 2011 Davos meeting began, Edelman, a major communications consultancy, released a report that revealed a poll conducted among 5,000 wealthy and educated individuals in 23 countries, considered to be “well-informed.” The results of the poll showed there to be a massive decline in trust for major institutions, with banks taking the biggest hit. Prior to the financial crisis in 2007, 71% of those polled expressed trust in banks compared with a new low of 25 percent in 2011.
Despite the lack of public trust in banks and financial institutions, Davos remains devoted to protecting and expanding the interests of the financial elite. In fact, the Foundation Board of the World Economic Forum (its top governing body) includes many representatives of the world of finance and global financial governance. Among them are Mukesh Ambani, who sits on advisory boards to Citigroup, Bank of America and the National Bank of Kuwait; and Herman Gref, the CEO of Sberbank, a large Russian bank. Ernesto Zedillo, the former President of Mexico who is also a member of the board, currently serves as a director on the boards of Rolls Royce and JPMorgan Chase, international advisory boards to BP and Credit Suisse, an adviser to the Bill & Melinda Gates Foundation, and is a member of the Group of Thirty and the Trilateral Commission as well as sitting on the board of one of the world’s most influential economic think tanks, the Peterson Institute for International Economics.
Also notable, Mark Carney, the governor of the Bank of England, is a member of the Foundation Board of the World Economic Forum. Carney started his career working for Goldman Sachs for 13 years, after which he was appointed as Deputy Governor of the Bank of Canada. After a subsequent stint in Canada’s Ministry of Finance, Carney returned to the Bank of Canada as governor from 2008 to 2013, when he became the first non-Briton to be appointed as head of the Bank of England in its 330-year history. From 2011 to present, Carney has also been the Chairman of the Financial Stability Board, run out of the Bank for International Settlements in Basel, Switzerland.
Apart from heading the FSB, Mark Carney is also a board member of the BIS, which serves as the central bank for the world’s major central banks. He is also a member of the Group of Thirty, a private and highly influential think tank and lobby group that brings together dozens of the most influential economists, central bankers, commercial bankers and finance ministers. Carney has also been a regular attendee at annual meetings of the Bilderberg Group, an even more-exclusive “invite only” global conference than the WEF.
Though there are few women among the WEF’s membership – let alone its leadership – Christine Lagarde has made the list, while simultaneously serving as the managing director of the IMF. She previously served as the French finance minister throughout the course of the financial crisis. Lagarde also attends occasional Bilderberg meetings, and is one of the most powerful technocrats in the world. Min Zhu, the deputy managing director of the IMF, also sits on the WEF’s board.
Further, the World Economic Forum has another governing body, the International Business Council, first established in 2002 and composed of 100 “highly respected and influential chief executives from all industries,” which “acts as an advisory body providing intellectual stewardship to the World Economic Forum and makes active contributions to the Annual Meeting agenda.”
The membership of the WEF is divided into three categories: Regional Partners, Industry Partner Groups, and the most esteemed, the Strategic Partners. Membership fees paid by corporations and industry groups finance the Forum and its activities and provide the member company with extra access to meet delegates, hold private meetings and set the agenda. In 2015, the cost of an annual Strategic Partner status with the WEF had increased to nearly $700,000. Among the WEF’s current strategic partners are Bank of America, Barclays, BlackRock, BP, Chevron, Citi, Coca-Cola, Credit Suisse, Deutsche Bank, Dow Chemical, Facebook, GE, Goldman Sachs, Google, HSBC, JPMorgan Chase, Morgan Stanley, PepsiCo, Siemens, Total, and UBS, among others.
Depending on its finances from these sources, as well as being governed by individuals from these and others institutions, it is no surprise that Davos promotes the interests of financial and corporate power above all else. This is further evident on matters related to trade.
Davos and “Trade”
Trade has been another consistent, major issue at Davos meetings – which is to say, the promotion of powerful corporate and financial interests has been central to the functions of the WEF. As the Wall Street Journal noted, “it is pretty much a tradition that trade ministers meet at Davos with an informal meeting.” At the 2013 meeting, U.S. Trade Representative Ron Kirk explained at Davos that the Obama administration was “committed to reaching an agreement to smooth trade with the European Union,” saying in an interview that “we greatly value the trans-Atlantic relationship.” The week’s meetings suggested that there “were signs of progress toward a trade accord.” Thomas J. Donohue, the president of the U.S. Chamber of Commerce, who was present at Davos, commented that “half a dozen senior leaders in Europe are ready to move forward.”
In fact, at the previous Davos meeting in January 2012, high level U.S. and EU officials met behind closed doors with the Transatlantic Business Dialogue (TABD), a major corporate grouping that promotes a U.S.-E.U. “free trade” agreement. The TABD was represented at the meeting by 21 top corporate executives, and was attended by U.S. Trade Representative Kirk, WTO Director-General Pascal Lamy, the European Commissioner for Trade, Karel De Gucht, other top technocrats, and Obama’s Deputy National Security Adviser for International Economic Affairs, Michael Froman (who is now the U.S. Trade Representative). The result of the meeting was the release of a report on a “Vision for the Future of EU-US Economic Relations,” which called “to press for urgent action on a visionary and ambitious agenda.” The meeting also recommended the establishment of a “CEO Task Force” to work directly with the “High Level Working Group” of trade ministers and technocrats to chart a way forward.
Just prior to the 2013 meeting in Davos, the TABD corporate group merged with another corporate network to form the Transatlantic Business Council (TBC), a group of top CEOs and chairmen of major corporations, representing roughly 70 major corporations. The purpose of the TBC was to hold “semi-annual meetings with U.S. Cabinet Secretaries and European Commissioners (in Davos and elsewhere).” At the Davos 2013 meeting, the TBC met behind closed doors with high level officials from the U.S. and EU. Michael Froman, who would replace Ron Kirk as the U.S. Trade Rep, spoke at the meeting, declaring that “the transatlantic economy is to become the global benchmark for standards in a globalized world.”
The following month, the U.S. and EU “High Level Working Group” released its final report in which it recommended “a comprehensive trade and investment agreement” between the two regions. Two days after the publication of this report, President Obama issued a joint statement with European Council President Herman Van Rompuy and European Commission President José Manuel Barroso, in which they announced that “the United States and the European Union will each initiate the internal procedures necessary to launch negotiations on a Transatlantic Trade and Investment Partnership,” or TTIP. At the announcement, Kirk declared the sectors that will fall under the proposed agreement, stating that, “for us, everything is on the table, across all sectors, including the agricultural sector.”
The World Economic Forum in a World of Unrest
Perhaps most interestingly, the World Economic Forum has been consistently interested in the prospects of social unrest, protests and resistance movements, particularly those that directly confront the interests of corporate and financial power. This became particularly true following the mass protests in 1999 against the World Trade Organization, which disrupted the major trade talks taking place in Seattle and marked the ascendency of what Davos called the “anti-globalization movement.”
These issues were foremost on the minds of the Davos Class as they met less than two months later in Switzerland for the annual WEF meeting in 2000. The New York Times noted that as President Clinton attempted to address the issue of restoring “confidence in trade and globalization” at the WEF, global leaders – particularly those assembled at Davos – were increasingly aware of the new reality that “popular impressions of globalization seem to have shifted” with growing numbers of people, including the protesters in Seattle, voicing criticism of the growing inequality between rich and poor, environmental degradation and financial instability. The head of the WTO declared that “globalism is the new ‘ism’ that everyone loves to hate… There is nothing that our critics will not blame on globalization and, yes, it is hurting us.”
The guests included President Clinton, British Prime Minister Tony Blair and Mexican President Ernesto Zedillo, along with the leaders of South Africa, Indonesia, Malaysia and Finland, among others. The head of the WTO and many of the world’s trade ministers were also set to attend, hoping to try to re-start negotiations, though protesters were also declaring their intention to disrupt the Forum’s meeting. With these worries in mind, the Swiss Army was deployed to protect the 2,000 members of the Davos Class from being confronted by protesters.
As the World Economic Forum met again in January of 2001 in Davos, “unprecedented security measures” were taken to prevent “hooligans” from disrupting the meeting. On the other side of the world, in Porto Alegre, Brazil, roughly 10,000 activists were expected to converge for the newly-formed World Social Forum, a counter-forum to Davos that represented the interests of activist groups and the Third World. As the Davos Class met quietly behind closed doors, comforted by the concrete blocks and razor wire that surrounded the small town, police on the other side of the fence beat back protesters.
In the wake of the financial crisis, the WEF meeting in 2009 drew hundreds of protesters to Davos and Geneva where they were met by riot police using tear gas and water cannons. Inside the Forum meeting, French Finance Minister Christine Lagarde warned the assembled leaders, “We’re facing two major risks: one is social unrest and the second is protectionism.” She noted that the task before the Davos Class was “to restore confidence in the systems and confidence at large.” Protesters assembled outside held signs reading, “You are the Crisis.”
The January 2012 WEF meeting took place following a year of tumultuous and violent upheavals across the Arab world, large anti-austerity movements across much of Europe, notably with the Indignados in Spain, and the Occupy Wall Street movement just months prior in the United States and across much of the world. As the meeting approached, the WEF announced in a report that the top two risks facing business leaders and policy makers were “severe income disparity and chronic fiscal imbalances.” The report warned that if these issues were not addressed it could result in a “dystopian future for much of humanity.” The Occupy Movement had taken the issue of inequality directly to Davos, and there was even a small Occupy protest camp constructed at Davos.
As the Financial Times noted, “Until this year  the issue of inequality never appeared on the risk list at all, let alone topped it.” At the heart of it was “the question of social stability,” with many Davos attendees wondering “where else unrest might appear.” Beth Brooke, the global vice chair of Ernst & Young, noted that “countries which have disappearing middle classes face risks – history shows that.”
With citizens taking to city streets and protesting in public squares from Cairo to Athens and New York, the Financial Times noted that discontent was “rampant,” and that “the only consistent messages seem to be that leaders around the world are failing to deliver on their citizens’ expectations and that Facebook and Twitter allows crowds to coalesce in an instant to let them know it.” For the 40 government leaders assembling in Davos, “this is not a comforting picture.”
In Europe, democratically elected leaders in Italy and Greece had been removed and replaced with economists and central bankers in a technocratic coup only months earlier, largely at the behest of Germany. Mario Draghi, the head of the European Central Bank (ECB), was perhaps “the most powerful leader in Europe,” though an Occupy movement had sprung up at the headquarters of the ECB in Frankfurt as well.
During the Forum, Occupy protesters outside clashed with police. Stephen Roach, a member of the faculty at Yale University and a chairman of Morgan Stanley Asia, wrote an article in the Financial Times describing his experiences as a panelist at the “Open Forum,” held on the last day of the Davos gathering, in which citizens from the local community could participate along with students and Occupy protesters. The topic he discussed was “remodeling capitalism,” which, Roach wrote, “was a chance to open up this debate to the seething masses.” But the results were “disturbing” as “chaos erupted immediately” with chants from Occupy protesters denouncing the forum and calling for more to join them. Roach wrote that it was “unruly and unsettling” and he “started thinking more about an escape route than opening comments.”
Once the discussions began, Roach found himself listening to the first panelist, a 24-year-old Occupy protester named Maria who expressed anger at “the system” and that there was a “need to construct a new one based on equality, dignity and respect.” Other panelists from the WEF included Ed Miliband from the U.K., a UN Commissioner, a Czech academic and a minister from the Jordanian dictatorship. Roach noted that compared to Maria from Occupy, “the rest of us on the panel spoke a different language.”
Having spent decades as a banker on Wall Street, Roach confessed that “it as unsettling to engage a hostile crowd whose main complaint is rooted in Occupy Wall Street,” explaining that he attempted to focus on his expertise as an economist, “speaking over hisses.” He explained that all of his “expert” insights on economics “hardly moved this crowd.” Maria from Occupy, Roach wrote, got the last word as she stated, “The aim of Occupy is to think for yourself. We don’t focus on solutions. We want to change the process of finding solutions.” As “the crowd roared its approval,” Roach “made a hasty exit through a secret door in the kitchen and out into the night.” Davos, he wrote, “will never again be the same for me. There can be no retreat in the battle for big ideas.”
In October of 2013, The Economist reported that “from anti-austerity movements to middle-class revolts, in rich countries and in poor, social unrest has been on the rise around the world.” A World Economic Forum report from November 2013 warned of the dangers of a “lost generation” that would “be more prone to populist politics,” and that “we will see an escalation in social unrest.” Over the course of 2013, major financial institutions such as JPMorgan Chase, UBS, HSBC, AXA and others were issuing reports warning of the dangers of social unrest and rebellion. JPMorgan Chase, in its May 2013 report, stated that Europe’s “adjustment” to its new economic order was only “halfway done on average,” warning of major challenges ahead. The report complained about laws hindering the advancement of its agenda, such as “constitutional protection of labor rights… and the right to protest if unwelcome changes are made to the political status quo.”
The 2014 meeting of the World Economic Forum drew more than 40 heads of state, including then-president of Ukraine, Viktor Yanukovich, as well as Mexico’s Enrique Pena Nieto, Japanese Prime Minister Shinzo Abe, British Prime Minister David Cameron, Brazilian Presient Dilma Rousseff, Iranian President Hassan Rouhani, Israeli Prime Minister Benjamin Netanyahu and Nigeria’s Goodluck Jonathan. U.S. Treasury Secretary Jacob Lew and prominent central bankers such as Mario Draghi and Mark Carney also attended alongside IMF Managing Director Christine Lagarde and World Bank president Jim Yong Kim.
As the meeting began, a major report by the World Economic Forum was published, declaring that the “single biggest risk to the world in 2014” was the widening “gap between rich and poor.” Thus, income inequality and “social unrest are the issue[s] most likely to have a big impact on the world economy in the next decade.” The report warned that the world was witnessing the “lost generation” of youth around the world who lack jobs and opportunities, which “could easily boil over into social upheaval,” citing recent examples in Brazil and Thailand.
Brazilian President Dilma Rousseff is due to attend the annual Davos meeting this week. But just prior to that meeting, violent protests erupted in the streets of Brazil in opposition to austerity measures imposed by President Rousseff, recalling “the beginnings of the mass street demonstrations that rocked Brazil in June 2013.” One wonders whether Rousseff will be attending next year’s meeting of the WEF, or whether she will still even be president.
Indeed, the growth and power of the Davos Class has grown with – and spurred – the development of global unrest, protests, resistance movements and revolution. As Davos welcomes the global plutocrats to 2015, no doubt they’ll be reminded of the repercussions of the “market system” as populations around the world remind their leaders of the power of people.