News and Features
The biggest brand name in for-profit education is floundering.
Thefts from other countries pale in relation to the looting of Russia, with
the indispensable assistance of the "Offshornaya Zona." The 1995 "loans for
shares" scheme transferred state ownership of privatized industries worth
billions of dollars to companies whose offshore registrations hid true owners.
More billions were stolen around the time of the August 1998 crash.
Insider banks knew about the coming devaluation and shipped billions in
assets as "loans" to offshore companies. The banks' statements show that their
loan portfolios grew after the date when they got loans from the Russian
Central Bank, which were supposed to stave off default. After the crash, it was
revealed that the top borrowers in all the big bankrupt banks were offshore.
For example, the five largest creditors of Rossiisky Credit were shell
companies registered in Nauru and in the Caribbean. As the debtors' ownerships
were secret, they could easily "disappear." Stuck with "uncollectable" loans
and "no assets," the banks announced their own bankruptcies. Swiss officials
are investigating leads that some of the $4.8 billion International Monetary
Fund tranche to Russia was moved by banks to accounts offshore before the 1998
The biggest current scam is being effected by a secretly owned Russian
company called Itera, which is using offshore shells in Curaçao and
elsewhere to gobble up the assets of Gazprom, the national gas company, which
is 38 percent owned by the government. Itera's owners are widely believed to be
Gazprom managers, their relatives and Viktor Chernomyrdin, former chairman of
Gazprom's board of directors and prime minister during much of the
privatization. Gazprom, which projected nearly $16 billion in revenues for
2000, uses Itera as its marketing agent and has been selling it gas fields at
cut-rate prices. Its 1999 annual report did not account for sales of 13 percent
of production. As its taxes supply a quarter of government revenues, this is a
devastating loss. Itera has a Florida office, which has been used to register
other Florida companies, making it a vehicle for investment in the US economy.
Unwilling to pay for a PCB cleanup, it argues that nature can do the job.
Industry has been doing all it can to keep an EPA report from being published.
This is not about profits and
patents; it's about poverty and a devastating disease." That
statement did not come from AIDS activists struggling to provide
sub-Saharan Africa's 25 million HIV-positive people with access to
life-extending medications. It came from the executive vice president
of Bristol-Myers Squibb, which recently announced it would slash
prices on its two AIDS drugs and forgo patents on one of them. A week
earlier, Merck & Co. said it would lower prices on its two AIDS
drugs not just in Africa but, pending review, in other heavily
affected countries as well.
What's going on is not a
change of heart on the part of "Big Pharma"--which John le
Carré describes in this issue as a group of
"multibillion-dollar multinational corporations that view the
exploitation of the world's sick and dying as a sacred duty to their
shareholders." Far from being a humanitarian action, the price
reductions represent an attempt to preserve patent rights by
diffusing international pressure for generic manufacturing.
Revealingly, neither BMS nor Merck has withdrawn from a suit against
the South African government brought by thirty-nine pharmaceuticals
seeking to prohibit importation of generic drugs, which they claim
would violate their patents.
The Indian generic
manufacturer Cipla announced in February that it would sell the
entire AIDS triple-therapy combination at $350 per person, per year,
and other generic manufacturers, in Thailand and Brazil, currently
offer AIDS drugs at a fraction of multinational prices. By
comparison, the Wall Street Journal reported that a
combination of AIDS drugs from BMS and Merck would cost between $865
and $965 per person, per year. If those prices were multiplied by the
number of AIDS patients in, say, Zimbabwe, a relatively prosperous
country by African standards, the total would come to about 20
percent of its GDP. And that sum doesn't include the investments in
healthcare infrastructure needed to distribute and monitor the drugs'
But even if poor African countries could somehow find
the money to pay the high patent-protected prices of the drug giants
(the $26.6 billion a year it would cost to provide all Africa with
AIDS drugs is no more than about a third of what Bush's tax plan
would give to America's wealthiest 1 percent), that would not be the
end of their problems. Rather, such a course would lock them into
exclusive trade agreements with multinationals and put them at the
continual mercy of Western foreign aid budgets. As new treatments are
developed, Africa would have to negotiate new price reductions,
country by country, company by company.
If the solutions
lie with generic manufacturing (not just for AIDS medications but for
a slew of vital drugs for malaria and other ills), then circumventing
existing international patent regulations is a necessity. The trial
in South Africa over compulsory licensing is one crucial test of the
viability of this option. Another potential plan would be for the
National Institutes of Health to give patents owned by the US
government on publicly funded AIDS drugs to the World Health
Organization, thereby licensing it to oversee generic manufacturing.
Why not, in fact, let governments underwrite the entire cost of drug
research--rather than, as now, underwriting substantial amounts of
the research, which drug companies then exploit--and do away with
Whatever the recourse, and despite the
well-publicized gestures by multinational pharmaceutical companies,
the solutions to Africa's AIDS epidemic lie in sustainable
competitive drug production, not momentary self-interested
When it comes to oil politics and Alaska the Bush Administration and the environmental movement are already treading the measures of a familiar dance. President Bush is insisting on the urgency of drilling for oil in the Arctic National Wildlife Refuge. He points to a supposed oil shortage that has somehow darkened homes and businesses up and down the West Coast. The environmental movement is already ramping up its national mail campaign rallying supporters for the battle to save the Refuge.
The actual game is bigger and more sinister.
Let's start by disposing of some myths. Start with the ludicrous claim of the Bush crowd that California's energy crisis can be solved by oil drilling in Alaska. Nationwide, oil provides only 3 percent of the source fuel used to generate electricity. In California the figure is less than 1 percent.
Bush is offering California exemptions from its supposedly onerous clean-air rules, claiming that once freed from such red tape the state's utilities and power producers could build a new generation of plants powered by fossil fuels. The Wildlife Refuge's oil won't be of much help here, since government officials estimate that even on an expedited schedule, oil couldn't flow from the Refuge until the year 2015.
Nor is the oil companies' problem in Alaska a shortage. Recall that back in 1995 British Petroleum, ARCO and Chevron entreated President Clinton to cancel the twenty-two-year ban on export of crude oil from Alaska to other countries. Congress had made such a ban a condition for permitting construction of the Alaska pipeline. The intent of the ban was to insure that Alaska's oil would help stave off any West Coast oil shortage. The companies wanted the ban lifted because they had a glut on their hands and required new markets.
Clinton dutifully assented, and the oil companies began exporting Alaskan crude forthwith to Japan, South Korea and China. The extremes to which they went in using Clinton's waiver to bilk US consumers came to light in January when The Oregonian won a Freedom of Information Act lawsuit, gaining access to 4,000 pages of documents in the Federal Trade Commission's files concerning the merger of BP-Amoco with ARCO.
An FTC economist had concluded that BP-Amoco was selling oil to Asian refineries at prices lower than it could sell to US refineries on the West Coast, in order to manufacture a US shortage. As evidence the FTC had e-mail traffic passing between BP managers who talked about "shorting the West Coast market" in order to "leverage up" the prices there. Another BP manager gloated that this scheme was a "no brainer." The FTC reckoned that this ploy allowed BP to hike prices at West Coast pumps by as much as 3 cents a gallon.
So the oil companies' strategy is to exploit the electricity crisis to seize at last a number of long-sought objectives: not just access to the Arctic National Wildlife Refuge, which would be a great symbolic victory, but also tax breaks worth billions for oil and gas extraction from wells across the country.
The big prize for the oil companies in North America isn't the Refuge but sites off the Alaska coast and the Gulf of Mexico: "Deepwater," says Geoff Kieburtz of Salomon Smith Barney, "is where the real pure exploration activity is going on in this country." Here we come to one of the lesser-known legacies of the Clinton era. Under the encouragement of Bruce Babbitt's Interior Department, deepwater drilling operations nearly doubled in the Gulf of Mexico in the year 2000 alone.
Among those roaring their protests at this activity is Governor Jeb Bush of Florida, who three days after his brother's inauguration implored the new team to place a moratorium on deepwater wells in the eastern Gulf of Mexico, saying that "Florida's economy is based upon tourism and other activities that depend on a clean and healthy environment."
Right now the Interior Department is looking at 688 lease applications that piled up in the Clinton years for new offshore oil development in the Beaufort Sea, and from the Gulf of Alaska's Copper River Delta (perhaps the greatest remaining salmon fishery in the world), the Cook Inlet (flanked by the Katmai National Park and the Kenai Peninsula), Bristol Bay and the Chukchi Sea up by Point Hope, the entire coast of Alaska is in play.
At the national level the big environmental groups are focused entirely on the Arctic National Wildlife Refuge, which is indeed in peril. But they would be advised to learn the history of that very Refuge. It was originally set aside in 1957 by President Eisenhower. In the same package Ike's Interior Secretary, Fred Seaton, opened up 20 million acres of Arctic coastline to oil development.
There are local groups--from the Gwich'in trying to save the Refuge and the National Petroleum Reserve west of Prudhoe Bay, to the Inupiat Eskimos defending their whale hunting grounds against oil derricks in the Beaufort Sea, to the Northern Alaska Environmental Center in Fairbanks--taking on the oil companies' grand plan. They understand the stakes more clearly than the national green groups, with the laudable exception of Greenpeace.
As for the Wilderness Society, National Audubon and the others, rapt in their fixation on the Refuge, they seem to be ceding without a fight the rest of the Alaska coast, the Gulf of Mexico and maybe even the Rocky Mountain front. Just listen to Deborah Williams, executive director of the lavishly funded Alaska Conservation Foundation. She recently journeyed to the Refuge with Lesley Stahl of CBS's 60 Minutes and vowed that not one oil rig would ever rise on the plains of the Refuge.
But at the same time Williams told the New York Times that she supports oil drilling in the National Petroleum Reserve, which is eight times as large and just as pristine as the Refuge, because "I drive a car and use petroleum products. We all have to be responsible and balanced." Williams, it should be added, was working for Bruce Babbitt at the Interior Department as his Alaska specialist when he OK'd test drilling in that very part of the Alaskan tundra.
Greed led to miscalculation, which led to brownouts and soaring rates.
For downsized workers in Bloomington, it's time to start thinking globally.
As soon as George W. Bush and Dick Cheney take up the reins of government, they'll give a big boost to waging war in and from space. Under their leadership, right-wing advocates of US global dominance and corporations eager for contracts will join forces with a military eager to make space the battleground of the twenty-first century.
Indeed, Star Wars--"missile defense" in current Newspeak--is emerging as a central goal of the new Bush Administration. It is "an essential part of our strategic system," declared Colin Powell upon being named Secretary of State.
"I wrote the Republican Party's foreign policy platform," claimed Bruce Jackson, vice president of corporate strategy and development at Lockheed Martin, the world's largest weapons manufacturer [see William D. Hartung and Michelle Ciarrocca, "Star Wars II," June 19, 2000], which is deeply involved in space military programs. In a recent interview, Jackson said that although he was "the overall chairman of the Foreign Policy Platform Committee" at the Republican convention, he hasn't led the advocacy for the full development of Star Wars because "that would be an implicit conflict of interest with my day job" at Lockheed Martin.
Such advocacy, he said, has fallen to Stephen Hadley, George W. Bush's pick for deputy director of the National Security Council. Hadley, Bush Senior's assistant secretary of defense for international security policy and a member of his National Security Council, is a proud member of the Vulcans, an eight-person foreign policy team formed during the Bush campaign that includes future National Security Council director Condoleezza Rice and Reagan Administration superhawk Richard Perle. The Vulcans named themselves after the Roman god of fire and metallurgy, and for a statue in Rice's hometown, Birmingham, Alabama, commemorating its steelmaking history.
Besides being a Vulcan, Hadley is a partner in Shea & Gardner, the Washington law firm representing Lockheed Martin. Hadley has also worked closely with Bruce Jackson on the Committee to Expand NATO--based in the offices of the right-wing American Enterprise Institute--Jackson as president, Hadley as secretary. The committee sought to enlist Eastern European countries in NATO--which would, of course, build the client base for Lockheed Martin weapons.
"Space is going to be important. It has a great future in the military," Hadley told the Air Force Association Convention in a September 11 speech. Introduced as an "adviser to Governor George W. Bush," Hadley said that Bush's "concern has been that the [Clinton] Administration...doesn't reflect a real commitment to missile defense.... This is an Administration that has delayed on that issue and is not moving as fast as he thinks we could."
To remedy that, Bush has named as Defense Secretary Donald Rumsfeld, whom the Washington Post calls the "leading proponent not only of national missile defenses, but also of U.S. efforts to take control of outer space" [see Michael T. Klare, page 14]. In 1998 Rumsfeld's commission reversed a 1995 finding by the nation's intelligence agencies that the country was not in imminent danger from ballistic missiles acquired by new powers, declaring that "rogue states" did pose such a threat. The answer? Missile defense. Trusted adviser to and financial supporter of the right-wing Center for Security Policy, Rumsfeld has been awarded its Keeper of the Flame prize. On the center's advisory board are such Star Wars promoters as Edward Teller--and Lockheed Martin executives, including Bruce Jackson.
"This so-called election was a victory for putting weapons in space, at enormous cost to world stability and to US taxpayers," declares Bruce Gagnon of the Global Network Against Weapons & Nuclear Power in Space (www.space4peace.org). He points to Bush campaign statements about deploying "quantum leap weapons" and about Los Alamos and Sandia National Laboratories playing a major role in the development of "weapons that will allow America to redefine how wars are fought." Both labs have been deeply involved in space-based lasers, an integral part of Star Wars. In 1998 the Defense Department signed a multimillion-dollar contract for a "Space-Based Laser Readiness Demonstrator" and this past November solicited final comments on development of the program, estimated to cost $20-$30 billion. Lockheed Martin, TRW and Boeing are the contractors. (Lynne Cheney has just resigned from the board of Lockheed Martin. Dick Cheney has been on the board of TRW.)
The military's would-be space warriors, meanwhile, are bullish. The US Space Command's top general, Ralph "Ed" Eberhart, exhorts the Air Force to "be the space warfighters our nation needs today...and will need even more tomorrow." The Air Force command's Almanac 2000 touts "defending America through the control and exploitation of space." The Air Force in the twenty-first century must be "globally dominant--Tomorrow's Air Force will likely dominate the air and space around the world."
The Vulcans, Keepers of the Flame and Lockheed Martin et al. will be cheering them on.
After three years of diplomatic fatigue, the United States put delegates from 170 countries out of their misery at the latest round of climate talks at The Hague in November by scuttling the negotiations and, in the process, thumbing its nose at nature as well as at the rest of the world. The good news is that the collapse of the global warming talks may set the stage for a truly transformative initiative to pacify the inflamed climate and, at the same time, dramatically expand the global economy.
The world's glaciers are melting, the oceans are heating up, tropical diseases are migrating north and the weather is becoming increasingly destructive. All that is the result of a l-degree increase in temperature over the past century. By contrast, the world will warm by up to 11 degrees this century, according to the United Nations' Intergovernmental Panel on Climate Change.
The United States killed the Hague negotiations by insisting on meeting its Kyoto goal (reductions of greenhouse gas emissions, primarily coal and oil, to 7 percent below 1990 levels) simply by planting trees and buying cheap emissions credits from poor countries. But the escalating pace of climate change makes it clear that a reliance on carbon-trading and tree-planting is nothing more than an expression of institutional denial of the magnitude of the problem. The EU, frustrated by US foot-dragging, refused to cave, demanding that Washington meet at least half its obligation through real domestic reductions in oil and coal burning. The result was a diplomatic meltdown.
Abandoning the minimalist goals of the Kyoto Protocol, many European nations are now taking their cues from science: The climate crisis requires 70 percent cuts in a very short time if civilization is to avoid the catastrophic effects of global warming. Britain, which in November suffered its worst flooding in centuries, will cut emissions 60 percent in the next fifty years. Holland, faced with a devastating sea-level rise, will cut emissions 80 percent over the next forty years. Germany is contemplating 50 percent cuts.
The US obstructionism also ignores a recent sea change in attitudes among Congressional Republicans, corporate leaders and multinational oil companies. Three years ago, Nebraska's Senator Chuck Hagel co-sponsored a resolution not to ratify the Kyoto Protocol. Today Hagel concedes the science of global warming. Last year, Indiana's Richard Lugar and James Woolsey, former head of the CIA, called for the United States to begin reducing coal and oil use by substituting energy from agricultural wastes.
Oil companies, with the exception of ExxonMobil, are similarly moving to confront the crisis. Shell has created a new, $500 million core company for renewable energy. Its director was recently appointed to head a new G-8 task force on clean energy. Texaco is putting serious resources into renewables. British Petroleum, with major solar investments, now advertises that BP stands for "Beyond Petroleum." In the auto industry, William Clay Ford recently declared an end to "the 100-year reign of the internal combustion engine." That declaration follows Ford's participation in a $1 billion joint venture with Daimler-Chrysler and Mazda to bring fuel-cell-powered cars to market in three years. (These initiatives are partly "greenwashing," aimed at pacifying environmentalists, but they also reflect preparations by oil and auto companies to maintain their role as prominent players in a new energy economy.) Most striking, at the World Economic Forum in Davos at the end of January, the CEOs of the 1,000 largest corporations voted climate change the most urgent issue facing humanity today.
What growing numbers of corporate leaders understand is that a global transition to clean energy would create millions of jobs, especially in poor countries. It would transform dependent, impoverished countries into robust trade partners, substantially expanding global markets. It would make the renewable industry a central engine of economic growth.
Ironically, the corporate powers behind the Bush administration may prove more alert to the wealth-creation potential of an energy transition than Gore. While Christie Whitman, expected to be the new EPA administrator, didn't know the difference between ozone depletion and global warming (and questioned the science behind both), Paul O'Neill, the new Treasury Secretary, has expressed serious concerns about the climate--and even, at one point, pushed for a carbon tax on oil to reduce emissions.
In May, when the parties to the climate talks reconvene, they should consider three interactive strategies:
§ Subsidy switches. The United States currently spends around $20 billion a year in direct subsidies of fossil fuels. If that money were put into renewable technologies (as well as into retraining displaced coal miners) it would provide incentives for the big oil companies to aggressively develop and market fuel cells, wind farms and solar systems.
§ A progressive fossil fuel efficiency standard. The parties should scrap international "emissions trading" and instead adopt a standard under which every country would begin at its current baseline to improve its fossil fuel efficiency by a specified amount every year until the 70 percent reduction is attained. By drawing progressively more of their energy from noncarbon sources, countries would create mass markets that would make these sources as cheap as coal and oil.
§ Creation of a large technology-transfer fund. The nations of the world should consider a tax on international currency transactions to fund the transfer of clean energy to developing countries. A tax of a quarter-penny per dollar on those transactions--which total $1.5 trillion per day--would help stabilize capital flows as well as net about $300 billion a year for wind farms in India, fuel-cell factories in South Africa and solar assemblies in El Salvador.
These measures would be far easier to negotiate, monitor and enforce. More important, they would represent a scale of response appropriate to the magnitude of the climate crisis that threatens the continuity of our organized civilization.