Home » Posts tagged 'Argentina'
Tag Archives: Argentina
Global Power Project: The Group of Thirty, Financial Crisis Kingpins
By: Andrew Gavin Marshall
25 February 2014
The following article was originally posted on 18 December 2013 at Occupy.com
Following parts one, two and three of the Global Power Project’s Group of Thirty series, this fourth and final instalment focuses on a few of the G30 members who have played outsized roles both in creating and managing various financial crises, providing a window on to the ideas, institutions and individuals who help steer this powerful global group.
The Assassin of Argentina
Prior to 2008, one of the most notable examples of a highly destructive financial crisis took place in Argentina which, heavily in debt, faced a large default and was brutally punished by financial markets and the speculative assault of global finance, otherwise known as “capital flight.” Less known in the story of Argentina’s 1998 to 2002 economic catastrophe was the significant role played by just one man: Domingo Cavallo.
A longtime member of the Group of Thirty, Cavallo formerly served both as Governor of the Central Bank and Minister of Economy in Argentina. He has been referred to by Pulitzer Prize-winning economic researcher Daniel Yergin as “one of the most influential figures in recasting the relationship of state and marketplace in Latin America.”
Between 1976 and 1983, Argentina, ruled by a ruthless military dictatorship, was marred by excessive human rights abuses and persecution of intellectuals and dissidents during the so-called “Dirty War” in which as many as 30,000 people were killed or disappeared . The terror was reminiscent of nearby Chile, where a coup that brought dictator Augusto Pinochet to power in 1973, with the help of the CIA, provided a petri-dish experiment in the implementation of neoliberal “reforms.” It was Chile’s dictatorship that set the example, and Argentina’s soon followed.
In a 2002 interview, Domingo Cavallo noted that, “The experience of Chile during the ’80s was very instructive, I think, for most Latin American economies, and many politicians in Latin America, because Chile was successful by opening up and trying to expand their exports and in general their foreign trade and getting more integrated into the world economy… And of course we used, particularly here in Argentina, the experience of Chile to go ahead with our own reforms.”
Asked about the association between economic “reforms” in Chile and the ruthless dictatorship that implemented them, Cavallo explained, “There were discussions on the feasibility of implementing market reforms in a democracy. But in 1990… the first democratic president after Pinochet maintained the reforms and also tried to improve on them [and] it was demonstrated that itwould be possible to implement similar reforms under a democratic regime.”
What specific reforms was Cavallo referring to? Under Argentina’s military dictatorship, Cavallo served for one year as Governor of the Central Bank in 1982, where he was responsible for implementing a state bailout of corporations and banks. After, Cavallo returned to academic life. But all that changed with the election of Carlos Menem in 1989, who served as president until 1999. In 1991, Menem appointed Cavallo as Minister for Economy, a position he held until 1996.
Cavallo led the neoliberal restructuring of Argentina: pegging the Argentine peso to the U.S. dollar, trying to reduce inflation, undertaking massive privatizations while opening up the economy to “free trade,” and deregulating financial markets. The New York Times in 1996 heaped praise on Cavallo for his “constructive” role in leading the economy “back to vitality and international respectability,” despite the fact that his reforms “brought high unemployment and painful reductions in social programs.”
Another NYT article credited Cavallo for the “stability” brought to Argentina through his “economic miracle,” while noting, without irony, that Cavallo’s miracle had “left million of Argentines… without a safety net” and with record-high unemployment, the emergence of urban slums, abandoned street children, over-crowded food banks, homeless shelters in churches, and even some people who were forced to eat cats in desperation. The “miracle” was so great, in fact, that despite all of the so-called stability it facilitated, President Menem ultimately dismissed Cavallo to the jubilation of tens of thousands of protesters in the streets. Though the people were pleased, financial markets expressed their disapproval .
With multiple economic and financial crises erupting around the world and in neighboring nations, Argentina, which pegged its currency to the U.S. dollar, found it could no longer compete. The touted neoliberal reforms were taking a toll as the country plunged into recession. Menem was replaced in 1999 by President Fernando De la Rua, who quickly sought support from the IMF to help repay the country’s debts owed to foreign – largely American – banks.
But Cavallo wasn’t out. In 2001, he was re-appointed as the country’s Minister of Economy just in time to receive emergency powers enabling him handle the country’s ongoing financial crisis that he helped to create . At that point, financial markets felt Argentina could not be trusted to repay its debt and the IMF refused to provide further loans, on the basis that the country had not implemented enough neoliberal reforms to meet its demands. The economy crashed and the “much-hated” Cavallo had to resign, as did the President, who fled by helicopter from the Casa Rosada as Argentines protested en masse .
Even the Federal Reserve Bank of San Francisco noted in 2002 that there was “some truth” to the view that “Argentina’s debt position would have been sustainable if only market uncertainty had not triggered a crisis.” But, it added, had Argentina made the effort asked of it to reduce its debt, it could have avoided “potentially destabilizing shifts in market sentiment.”
The role played by former Federal Reserve Chairman Alan Greenspan in creating the conditions that led to the 2008 global financial meltdown is known to many. What is less known is that Greenspan, too, is a former member of the Group of Thirty. Greenspan did not work alone, of course, in his efforts to deregulate the financial system and spur the growth of the derivatives markets, which laid the groundwork for the worst financial crisis in modern times. Larry Summers, who then served as deputy secretary and later Secretary of Treasury under Bill Clinton, was also very helpful in this regard. Summers, too, is a current member of the Group of Thirty.
Currently serving as President Emeritus and as a professor at Harvard University, Summers was the former director of President Obama’s National Economic Council from 2009 to 2011. Previously, he was President of Harvard (2001 to 2009) and, prior to his positions during the Clinton administration he was Chief Economist at the World Bank (1991 to 1993). Currently, Summers is a member not only of the G30 but of the Council on Foreign Relations, the Trilateral Commission, and he was also a member of the Steering Committee of the Bilderberg Group.
While Chief Economist at the World Bank, Summers signed an infamous 1991 memo in which it was suggested that rich countries should dump their toxic waste and pollutants in the poorest African nations — because by the time the toxins spurred the growth of cancer in the local population, they would already statistically be dead due to already high mortality rates. The memo noted : “I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.”
When Summers later went to work for the Clinton administration under Treasury Secretary Robert Rubin, he along with Rubin and Fed Chairman Greenspan formed the “Three Marketeers,” as Time referred to them, dedicated to “inventing a 21st century financial system” where they placed their “faith [in] financial markets.”
In the final two years of the Clinton presidency, Summers served as the Treasury Secretary alongside his deputy and protégé, Timothy Geithner, another member of the G30 who would go on to make a mark on the financial crisis — largely by convincing President Obama to bail out the Wall Street banks that crashed the economy, with zero penalty to them. Under the Obama administration, Summers served for nearly two years as Chair of the National Economic Council and was a highly influential policymaker . In 2009, he had spoken at the highly influential ultra-conservative think tank, the Peterson Institute for International Economics, where he explained the administration’s approach to the economic recovery, noting that , “Our approach sought to go as much as possible with the grain of the market” as opposed to regulating markets.
When Summers left the Obama administration in late 2010, he returned to Wall Street and made a fortune working for the hedge fund D. E. Shaw & Co. and Citigroup. This past summer, he was considered Obama’s favorite pick to replace Ben Bernanke as Fed Chairman, but faced such stiff opposition within the Democratic Party that he withdrew his name, leaving Janet Yellen – the Vice Chair of the Fed and herself a former member of the Group of Thirty – to step in .
What we see, in this analysis of the Group of Thirty, are the connections between those in positions of power to respond to and manage economic and financial crises, and those in positions of power who created such crises. Naturally, as well, the G30’s membership includes numerous bankers who, as fortune had it, shared handsomely in the profits of those crises. Put simply, the G30 can be thought above all as an exclusive club of financial crisis kingpins. And it is a club, no doubt, that will continue to play a significant and not altogether helpful role in global financial management for years to come — or until something is done to stop them.
Andrew Gavin Marshall is a 26-year-old researcher and writer based in Montreal, Canada. He is project manager of The People’s Book Project , chair of the geopolitics division of The Hampton Institute, research director for Occupy.com’s Global Power Project and the World of Resistance (WoR) Report, and hosts a weekly podcast show with BoilingFrogsPost .
The Maple Spring and the Mafiocracy: Struggling Students versus “Entitled Elites”
It says a great deal about our society when hundreds of thousands of students – already largely indebted, a significant portion of whom live well below the poverty line, who already work what few jobs exist for a generation forgotten before we leave home – take to the streets in protest and are portrayed as “entitled”, “spoiled brats” as they attempt to “negotiate” their very chance of having a future in this society… with a government that supports and works with organized crime, which is beholden to an economic elite, and which supports only those who can already support themselves.
There is something deeply wrong with a society in which students who struggle for a very chance in life are insulted, degraded, beaten, arrested, humiliated and denigrated. First, we were told for years that we were “lazy” and “apathetic”: Generation MTV, Generation iPod, a techno-savvy but reality-detached deluge of pseudo-humanoids. We were seen as concerned only with ‘self’, worshipping of wealth, and with celebrities like Paris Hilton and whatever Car-crashian disaster is on reality TV this week, who could blame people for thinking this? Our media raised us. Television raised us. Advertising raised us. Public relations agencies raised us. They have told us what to wear, how to behave, what to drink, what to eat, what to listen to, dance to, sing to, who to speak to, who to admire, who to hate, what to spend time thinking about, what to be concerned about, what and how to think and be. We were set up to be Generation Obscurity.
But then, something changed: our circumstances.
For those of us who grew up middle class, we started to have a harder time getting by. We worked while we were in high school, but that was okay, the extra money was nice. But then we graduated and it was time to begin our lives. So we either worked full time, or went to school, and probably work part-time. School is expensive, and whether you live in Quebec, the rest of Canada, the United States, or a great host of many other places, school is more expensive for us than it was for our parents. Our minimum wage might seem higher, but the cost of living has soared since our parents were getting their first few jobs, so in real terms, we earn much less. So we lived and often continue to live at home while we go to school or even while we work. With rent so high, and cities so expensive, who can afford their own space in this crazy kind of place? School was still too expensive, even as we worked and as our parents helped however they could. After all, they were and are struggling too. So we got student loans. And now we’re deep in debt.
Suddenly, our world was thrown into a deep economic crisis. Most of us don’t know how this came to be, or who is responsible, all we know is that we only did what we were told to do: consume. And what did that do for us? We’re in debt. All we know is that even though we didn’t cause this global crisis, we are being held responsible for it. All we know is that we are told we are in a “recovery,” but we don’t feel like it. How many people truly feel more financially secure now than they did in 2007? Do you? I don’t!
But now we are told that we are in a “recovery” because those who caused the economic crisis are doing much better. In fact, many of them are doing better than ever! During the crisis, our government’s said we had to “bail out” the banks that had colluded with the governments to create the crisis in the first place. We were scared, so we sat back and watched as our governments gave banks blank checks. First, I should add, our governments worked with the banks in passing (or dismantling) laws and regulations, implemented policies, undertook joint programs, spent enormous sums of money between them, as our political leaders left office to sit in bank boardrooms, and as bankers left the private vaults to the public treasury. This relationship between big business, big banks, and big government (most emblematic in the central banking system, in which private banks with public powers control the very value of our currencies), is what created the economic crisis. And when that crisis erupted, those same governments gave those same banks more money than ever before, to ensure that they were rewarded for creating such a massive global crisis. At the same time, the governments then gave themselves even more power over the economy and their own social and political environments, all the while ensuring that the banks and corporations were involved in every decision, and would benefit from every outcome. So those who caused the crisis rewarded themselves with more money and more power than they had when they created the crisis in the first place.
At the same time, we, the people, have to pay for everything. We have to pay with increased taxes (remember, that bailout money has to come out of YOUR pockets), with rising prices for food and fuel, with inflated property prices (if they weren’t already collapsing, in which case, we face potential foreclosure), with increased debt – not even to consume, but simply to subsist – with decreased jobs, with unemployment, with increased homelessness, increased reliance upon food stamps, increased welfare and state assistance (which comes with intense scrutiny of your personal finances and life), and now, with austerity: further tax increases, less social services and support, mass layoffs and pay-cuts, decreased support for health care and education, increased tuition, and increased struggles. But remember, we have to suffer under austerity so that our governments can pay for all the rewards they gave to the banks for… making us suffer.
This is called “Capitalism.”
Now, take Canada as an example. Canada is perhaps the best example to use in this situation because, let’s face it: we have one of the better “reputations” among Western nations of the world (though largely undeserving), we are seen as peaceful (though we are now always at war), and compared to the rest of the industrialized West, we fared through the economic crisis much better than most. Our banks, in fact – with five Big Banks that dominate the economy – are consistently rated as among the world’s “strongest banks.” In April of 2012, Moody’s Investors Service rated Canada’s banks as the “safest in the world.” And we better believe Moody’s, because they failed to predict the economic crisis itself, and as their CEO even admitted when questioned about the agency being funded by Wall Street firms, “potential conflicts exist regardless of who pays.” For four years in a row, the World Economic Forum has rated Canada’s banking system as the most sound in the world. Even the Canadian Bankers Association praises Canada’s banks. Imagine that!
Unfortunately for their self-congratulations, it was recently revealed that Canada’s banks actually received a “secret bailout” in 2008, for a total of $114 billion, or $3,400 for every Canadian man, woman, and child. The bailouts took place between 2008 and 2010, funded by the Bank of Canada, the United States Federal Reserve, and the Canada Mortgage and Housing Corp. The government continues to deny it gave the banks a bailout, instead, our Finance Minister insists, it was just “liquidity support,” which means… the government did not “bail out” the banks with public money, it just gave the banks public money… in “support.” Call it what you will, they gave them $114 billion. Mark Carney, the Governor of the Bank of Canada (our central bank), and a former executive with Goldman Sachs (what’s not to love?), even admitted that the Bank of Canada gave tens of billions of dollars to our private banks. The U.S. Federal Reserve provided $33 billion to Canada’s big banks, while the official numbers of what the Bank of Canada provided remain a “secret,” as the government has refused to respond to Access to Information requests on the subject. Available information, however, points to $41 billion given to our banks by the Bank of Canada by December of 2008. Even some foreign banks had access to money from the Bank of Canada. Thus, Canada’s big five banks – Royal Bank of Canada, T.D. Bank, Scotiabank, the Bank of Montreal and CIBC – received collectively over $114 billion in “bailouts.” Oh, excuse me, I mean, “liquidity support.” And now, these same banks have inflated a major housing bubble in Canada which is eerily similar to that which existed in the United States in 2007, with housing prices dangerously high, and the average household debt at $103,000. But don’t worry, these big five banks made “record profits” in 2011. So naturally, with record profits for banks, and record debt for Canadians, the banks have decided to increase their fees on you! And then their profits continued to increase! Naturally, the executives have been giving themselves bigger bonuses than ever.
This is called an “economic recovery.”
And remember, it’s the students in Québec who are “entitled.” People call the students “spoiled” and “entitled” because they pay less than $2,500 for tuition every year, and are trying to prevent a situation in which they will be paying roughly $4,000 per year. But the big banks, making record profits, got the equivalent of $3,400 from every single man, woman, and child in Canada. But that’s not called “entitlement,” that’s called Capitalism.
So, the banks are doing better than ever, and this means we are in a “recovery.” According to our governments and media, it doesn’t matter what situation you are in, only what situation RBC, CIBC, BMO, Scotiabank and TD are in. Starting in the year 2000, Canada’s corporations and banks started having their taxes cut significantly by the government, whether Liberal or Conservative. In 2000, corporate taxes were at 28%, and by 2006 it was at 21%. In the beginning of 2012, corporate taxes in Canada were at 15%. This was all, of course, done to create “jobs.” That is, after all, what we were told by our politicians who insisted it was the right thing to do. At the moment, Canada has a rather significant unemployment rate, and a much higher youth unemployment rate. In 2006, the unemployment rate for Canadians was 4.6%, and today it is at 7.3%. In 2006, the unemployment rate for Canadian youth between the ages of 15 and 24 was at 8.4%, but by 2012, that has increased to 13.8%. In the same period of time, corporate taxes were cut from 22% to 15%, with the stated purpose of creating “jobs.” Now, the unemployment numbers are themselves misleading, because they only actually refer to those who are on some form of government assistance, such as welfare or employment insurance. The rest of the unemployed are not counted. While the corporate tax cuts did not lead to more jobs, but rather, less… they did lead to more money for the corporations and banks. By 2011, Canadian corporations and banks had hoarded $477 billion in cash reserves as money that was saved from taxation. For every percentage decrease in corporate taxes, the government loses $2 billion in potential revenue. In response, the government turns to austerity measures, which means that you have to suffer and pay for everything, especially your own poverty. Poverty is, after all, very expensive.
In 2012, these record profit-making corporations are getting an extra $2.85 billion in additional income tax savings. Even as Stephen Harper cut the taxes further, he acknowledged that the corporations weren’t actually investing their saved money in “jobs” but that it was just “money sitting on the sidelines.” Since 2007, the cash reserves of Canada’s corporations have grown by 27.3%, reaching $583 billion in Canadian currency, and $276 billion in foreign currencies. So what can we conclude from this? Well, when politicians and corporations and banks say that they are pursuing a particular policy to create “jobs,” what they really mean is to create “profits.” So when a politician says, “We need to cut corporate taxes so that they can invest in jobs,” what is really being said is that, “We need to cut corporate taxes so that they can make profits.” This makes more sense, because this is what actually happens. So it’s not so much that politicians lie, but rather that they just speak a different language. So take note, and I guarantee this is a very accurate method, in political-speak: “jobs” = “profits.” So now when you listen to your [s]elected officials blather on, you’ll actually be able to understand what they are saying.
Oh, and in case you forgot, remember: it’s Québec students who are “entitled” and “spoiled brats.” Just making sure you remember that.
In Canada, we have a situation in which total national student debt is at $20 billion, and with tuition increases, this too will increase dramatically. But don’t worry, increased tuition costs and increased student debt is good for the banks, because they provide a lot of the loans and own the debt, and collect the interest and keep you in their pockets for the rest of your life. And remember, if the banks are doing well, the economy is doing well. You don’t matter… at all. Okay, so total student debt in Canada is at $20 billion, with the average student graduating with $27,000 in debt, few job prospects, high unemployment rates, and in a major social and economic crisis, but the Canadian government is buying 65 F-35 fighter jets from the U.S. military contractor, Lockheed Martin, worth a total of $25 billion. So, we can bail out our banks to the tune of $114 billion, and we can spend $25 billion buying military machines to go bomb and kill poor people around the world, but students shackled with $20 billion in debt must be shackled with more. And if they try to do anything about the increases in tuition, and thus, the increases in their debt, Canadian politicians and the media refer to them as “entitled,” “spoiled brats.”
Here are a few numbers to show the current divide between the rich and everyone else in Canada, what we are told is a hallmark of a flourishing democracy and recovering economy:
– the 100 best paid CEOs made an average of $6.6 million, which is 155 times the average wage for Canadians at $42,988
– the tax rate for the richest Canadians dropped from 43% in 1981 to 29% in 2010
– in Quebec, the richest 10% made 24% more in 2006 than in 1976, while the poorest made 10% less
– with average student debt in Québec at $13,000 and $27,000 in the rest of Canada, the cost of “free education” in Québec would be less than 1% of the government’s budget
– for every $1,000 fee hike in tuition, the proportion of poor students drops by 19%, thus making education inaccessible for poor people
– with youth unemployment in Canada between 14-20%, and total student debt amounting to $20 billion, the percentage of students defaulting on government loans is at 14%
– the percentage of Canadians between 20 and 24 living with their parents is 73%
– the percentage of Canadians 25 to 29 living with their parents is 33%
This is called “democracy.”
With Jean Charest as Québec’s premier, attempting to nearly double student tuition from an average of over $2,000 to nearly $4,000, it might be interesting to look at what Charest paid for his education. Charest studied in Sherbrooke in the late 1970s, where he would have paid $500 for tuition, less than $2,000 in today’s dollars. In 1978, the minimum wage (for those students who needed to work to pay their tuition) in Québec was $3.50/hour. In today’s dollars, that would equal $12/hour, while the actual minimum wage in Québec today is $10/hour. Therefore, wrote McGill University professor Michael Hilke, “it was easier for students to pay for college back then.” But Charest calls us “entitled.”
In point 7 of my article, “Ten Points Everyone Should Know About the Quebec Student Movement,” I provided sources and information regarding the deeply interconnected relationship between the government of Québec, especially with Charest’s Liberal Party in power, the corrupt construction industry, and the Mafia. Politicians, especially the Liberal Charest government currently in power, provide over-estimated public funds to the construction industry to do what costs significantly less in other provinces, and to build bridges and roads that fall apart, and it just so happens that the construction industry is owned by the Mafia. While public contracts are not the main source of revenue for the Mafia (who can compete with illicit drugs? … well, except for the oil and arms industries), getting massively over-estimated public funds allows the Mafia-connected construction businesses to throw fundraisers for the politicians and keep them in power. Thus, the interaction between the Mafia and the government is a mutually beneficial relationship, where money flows back and forth, designed to keep each party in power. But it’s unfair to blame Charest and the Liberal Party for collusion with the Mafia; they are simply carrying on a long political tradition of governments working with organized crime. So, the government supports organized crime and opposes organized students. Ultimately, both organized crime and organized polities serve the same interests. Can you guess whose? I’ll save you the effort, it’s really quite simple, and it’s not exclusive to Canada, this is a global phenomenon: follow the money.
Canada is a market leader in many aspects of the global trade in illegal drugs. In a 2009 report form the UN Office on Drugs and Crime, Canada was revealed to be the leading supplier of ecstasy to North America, and one of the world’s major producers and shippers of methamphetamine for various markets around the world, which is so significant that it was revealed that 83% of all the meth seized in Australia came from Canada, whereas in Japan it was 62%. In 2006, only 5% of the meth produced in Canada was exported. In 2007, it was at 20%. That’s pretty impressive! In 2007, 50% of the ecstasy produced in Canada was exported, primarily to the United States, Australia, and Japan. In 2007, Canada was identified by Japan as the largest single source for seized ecstasy tablets, followed by the Netherlands, Germany, and Belgium. But it’s not Canada’s fault, we are simply partaking in an already well-established global drug trade, the most profitable trade in the world following oil and arms.
This of course is a result of our governments having undertaken prohibition against illicit drugs, just as the United States had done with alcohol, which history shows, didn’t work very well. Alcohol prohibition gave an incredible boost to the Mafia and organized crime in the United States and elsewhere, and of course, included in its silky spider web were corrupt cops, politicians, and financiers. When something is “illegal” it becomes far more expensive, and thus, far more profitable. So our governments have decided to continue their policies of prohibition for illicit drugs: to keep profits up, to support organized crime, to participate in organized crime, to keep the money flowing, keep the prisons full, and to declare a mythical “war on drugs” which accomplishes nothing but further militarization designed to wipe out the competition. So Latin American countries must suffer under our increased military and repressive presence. A few months prior to the NATO invasion and occupation of Afghanistan in 2001, the Taliban had eradicated the opium trade in one year, wiping out the world’s largest opium crop. Following the invasion in October of 2001, and the installation of a puppet president Hamid Karzai in December of 2001, the new Afghan government began colluding with drug lords and opium production began to accelerate. In fact, the drug trade in Afghanistan reaches record highs nearly every year since the invasion. Between 2011 and 2012, opium production in Afghanistan increased by another 61%. In 2009, the New York Times reported that one of Afghanistan’s most powerful drug lords was the brother of Afghan President Hamid Karzai, and that he also happened to be working for the CIA at the same time. The CIA has a sordid history with the drug trade, from Indochina in the 1960s, to Afghanistan and the Iran-Contra affair in the 1980s. More recently, in 2007 there was an under-reported incident in which a CIA plane which had been used for rendition flights (i.e., kidnapping and torture) had crashed in Mexico with 3.3. tones of cocaine on board, carrying Colombian cocaine for the major Mexican drug cartel, the Sinaloa cartel.
Since 2006, the government of Mexico has been waging a massive “drug war” against several of the large drug cartels in the country. This war has been financially and materially supported by the U.S., which has been providing arms, equipment, and intelligence assistance to the Mexican army. The war has been incredibly violent, and widely under-reported in our media north of Mexico. From 2006 to 2011, there were between 45-60,000 deaths related to the drug war. In 2009, the Mexican drug lord – Joaquin “El Chapo” Guzman Loera – who heads the largest drug cartel, the Sinaloa cartel, made Forbes’ billionaires list. Journalists in Mexico who cover the war repeatedly get tortured and murdered. Within a six-month period in 2010, more than 11,000 migrants were abducted by drug cartels, either to extort money or to be used as forced labour. An investigative report by NPR in 2010 revealed a deeper and darker side of the story: the war is “rigged.” As the United States gives billions of dollars to Mexico in military and judicial aid, the Mexican government works to support the Sinaloa cartel by destroying the competition. Testimony of top Sinaloa cartel traffickers in court revealed further links between the cartel and the Mexican army. Whether through bribes or other means, including the major participants themselves passing from high-ranking police and military positions directly into the cartels, the relationship between the Mexican government and the cartels, especially the Sinaloa cartel, runs deep. The drug trade through Mexico, which is heavily implicated in bringing cocaine from Colombia to the United States, produces profits of tens of billions every year. Even a top Mexican army general and a former deputy minister of defense have now been implicated in ties to drug cartels, something which is not new in Mexico.
A small scandal emerged for the United States government in 2011 when it was revealed that a U.S. operation “allowed weapons from the U.S. to pass into the hands of suspected gun smugglers.” Codenamed Operation Fast and Furious, it was run by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), which admitted “that 1,765 guns were sold to suspected smugglers during a 15-month period of the investigation.” A gun dealer in Arizona reported that he was concerned that his guns were being sold to drug cartels, fuelling the violence that has now killed over 55,000 people, and when he expressed these fears, he “was encouraged by federal agents to continue the sales.” Internal emails released from the ATF revealed that the bureau’s top officials were regularly briefed on the gun-running operation. It was later revealed that many Mexican drug cartel figures who were being targeted by the ATF also happened to be “informants” for the FBI and the Drug Enforcement Agency (DEA), who kept the ATF “in the dark” about their relationship with the cartels. At least six Mexican drug cartel figures were also on the payroll of the FBI. Some ATF agents have blown the whistle on the operation, stating that it went back as far as 2008, and that they were “ordered to let U.S. guns go to Mexico.” Memos from 2010 revealed that several top U.S. officials in the Department of Justice, including Attorney General Eric H. Holder Jr, regularly received updates about the operation. Three National Security officials in the White House also received updates. One of Mexico’s top drug traffickers, the right-hand man of the leader of the Sinaloa cartel, claimed in court testimony that he “was working all along as a confidential informant for U.S. agents,” specifically for the U.S. Drug Enforcement Agency (DEA). U.S. weapons smuggling to Mexico is no small operation, as roughly 70% of the weapons seized in Mexico came from the United States.
In Congressional testimony, an ATF agent reported that the ATF was working on Operation Fast and Furious in cooperation with the DEA and the Internal Revenue Service (IRS). To add to that, an insider at the CIA revealed that the Central Intelligence Agency (aka: the Cocaine Import Agency), “had a strong hand in creating, orchestrating and exploiting Operation Fast and Furious.” Over fears that the Zetas cartel could totally usurp control of the Mexican government, the CIA reportedly intervened in support of the Sinaloa cartel, with its close ties to the Mexican military. In a report with the Washington Times, it was revealed that the CIA would allow the Sinaloa cartel to smuggle cocaine into the United States on a 747 cargo plane, and in turn, the CIA approached the ATF to create Operation Fast and Furious, ensuring that the trade “wasn’t one-way,” so that arms were funneled into Mexico from the U.S. as drugs were funneled into the U.S. from Mexico, all with CIA support. Meanwhile, according to the New York Times, undercover DEA agents were laundering millions of dollars in drug money for the Mexican cartels in the United States.
Within Mexico, the drug money spreads all across the economy, into skyscrapers, casinos, beach resorts, restaurants, the construction industry, and of course, political campaigns. But the 55,000 deaths in Mexico in the past six years have been good for the United States, particularly for gun sales and big banks. In fact, internal investigations revealed that Wachovia Bank, now a part of Wells Fargo, one of the largest banks in the United States, laundered billions of dollars in drug money for Mexican cartels, even as they were receiving bailout money from the United States government. It was not only Wachovia, but also Bank of America that has been implicated in laundering Mexican drug money, worth up to $378.4 billion. Other banks have been implicated as well, in both the United States and Europe. The UN revealed in 2009 that drug money actually saved the major banks, as roughly $352 billion in drug money was absorbed into the financial system during the worst of the economic crisis in 2008.
So what do we make of all this?
We are told that this is called “democracy” and a “strong economy.” We are told that this is the “best system in the world,” which benefits everyone… just not you.
I prefer to use another word to describe it: Mafiocracy.
Now, I did not come up with this word, but it applies, and I can think of no better word to describe the relationship between big business, big banks, government and organized crime. So we are faced with a Mafiocracy, whether in Afghanistan, Colombia, Mexico, the United States, or even in Québec. With collusion so deep and embedded between organized crime, state agencies, politicians, and financiers, it’s almost problematic to refer to organized crime as somehow separate, since it isn’t. So let’s call it what it is: a Mafiocracy. A local Mafiocracy, such as the one which exists in Québec between the local Mafia, the local government, and the local economic elite, is inter-related with the global Mafiocracy, atop of which sit the Kings of Capital and the High Priests of Globalization. We are in the age of Globalization, and the Mafiocracy has been significantly globalized and energized. As the Mafiocracy gets stronger, democracy gets weaker, until it is altogether gone and dead, without even a memory remaining.
The first time I heard the term “Mafiocracy” was in an incredible documentary about Argentina, entitled, “Social Genocide,” covering the country’s recent history of military dictatorships supported by the U.S., followed by the age of neoliberalism with liberal democratic governments more corrupt than the dictatorships that preceded them, with an elite so extravagant it would be almost comically-absurd if it wasn’t so disturbing. The film documents the relationship between democratically-elected leaders, narco-trafficking, organized crime, international terrorism, Western banking institutions, the IMF and World Bank, corruption feeding off of the national debt, the privatization of public wealth, and all the while demanding the population pay for the Mafiocracy through austerity and “structural adjustment,” what is translated in real terms into “Social Genocide.” When the people stood up in December of 2001, Argentina’s president declared a state of siege, which was responded to by the population who took their pots and pans out into the streets across the country and to the Plaza de Mayo in Buenos Aires, and they banged their pots and pans in the midst of police confrontations that killed 26 people, eventually forcing the president to flee from the city by helicopter. The Mafiocracy demanded the people suffer for its own excesses, for its wealth and power, and imposed a rigid, organized, structured and systematic program of “Social Genocide”: what economists, politicians and pundits refer to as “fiscal austerity” and “structural adjustment.” The people took their pots and pans into the streets and said ‘No More!”
For more than 100 days, hundreds and thousands of students in Québec have been on strike against a plan to increase tuition by roughly 75%. The Mafiocracy government, after two months of refusing to speak to the students and instead used state violence and repression against them, finally agreed to sit down and talk in April. They then cancelled the negotiations and threw out a new “proposal” which would actually increase the tuition hike. Obviously, this insulting gesture was rejected. Then there were other negotiations in early May, while the riot police were outside nearly killing a few students by shooting them in the face and head with rubber bullets, the government pressured the student leaders to sign a sham of an agreement, with extra pressure coming from the major union leaders, who only exist today because of their willingness to engage and collude with the Mafiocracy – particularly the government and big business – and so they told the students it was the best deal they would get. The deal did not include a decrease in the tuition increases. This entire process has taken place in the midst of a national media campaign against the student movement, which increased and evolved into a social movement, an anti-austerity movement, and at times, even a small rebellion against the Mafiocracy. The media framed the striking students as “spoiled brats” who were “whining and crying” about a loss of “entitlements.” The latest negotiations broke down last week. Why? Because after four days of negotiations, the only “compromise” the government engaged in, was to agree to reduce the overall tuition increases by $1. Yes, you read correctly: ONE DOLLAR.
This is what it means to negotiate with a Mafiocracy.
But the students continue to march, continue to inspire, and the movement – the Maple Spring – continues to expand beyond the students, far beyond the issue of tuition, and far beyond Québec. People walk through the streets, every day and every night, in defiance of a law passed by the Mafiocracy government which criminalized spontaneous protests. People step outside and bang their pots and pans, walk through the streets, through rain storms and sun shine, hot or cold. People are aware that they could again be pepper sprayed, tear gassed, smoke bombed, beaten with batons, trampled with horses, driven into with cars, shot with rubber bullets, or arrested en masse. But still, they go. And across Canada, and in fact, far beyond, people are taking their pots and pans and stepping out into their streets in solidarity.
Remember that description we once heard for the system of government we were supposed to be living under: “of, by, and for the people”? Is that the Mafiocracy? We were a generation reviled for our trivial technological obsessions, entertainment enslavement, and absolute apathy. So we defy those stereotypes and step out into the streets, day after day. We are no longer apathetic, and now we are called “spoiled” and “entitled.” But that’s okay; people – especially those in power, who speak through the media – always fear what they do not understand. Now the social gatherings of youth are not necessarily at bars and clubs, but in protests and casseroles (marching with pots and pans). Regardless of the outcome, we have come to realize that we are a powerful force when united, that we have to physically, intellectually, and emotionally put ourselves on the line to struggle for what is right. We realized that when our options are to either suffer or struggle, the choice is easy. We have a long way ahead of us, we struggle, we persevere, we protest, we push, we persist, we have not yet prevailed, but we are linking up with people – especially youth – across Canada and around the world. We are using the technology which in one sense had enslaved us to obscurity and apathy, and are now using it to mobilize and organize more than ever before.
We have taken the first steps which are required in a global struggle of people against a global Mafiocracy. We follow in the footsteps of those who have walked before us, whether they are in Egypt, Tunisia, Greece, Spain, Iceland, or Chile. They cannot fight our fight for us, but we can all fight together. Our struggle is global, though we may experience it in the local. With every step forward, we realize the global implications of what we are starting to do, and the world is starting to watch. The people are waking up, walking out, and trying to reshape society so that it does not simply benefit the few at the expense of the many.
This is called Democracy.
For more information on the ‘Maple Spring’, see:
Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada, writing on a number of social, political, economic, and historical issues. He is also Project Manager of The People’s Book Project. He also hosts a weekly podcast show, “Empire, Power, and People,” on BoilingFrogsPost.com.