By Pierpaolo Barbieri
Editor's note: Pierpaolo Barbieri is Ernest May Fellow at the Belfer Center at Harvard's John F. Kennedy School of Government. His book, "Hitler's Shadow Empire: The Nazis and the Spanish Civil War," will be published by Harvard University Press in 2013. His next project is about the failure of Pan-American integration.
(CNN) -- Back in 1950, the European Reconstruction Program organized a contest for posters promoting the U.S. Marshall Plan. Among over 10,000 entries, the winner was Reijn Dirksen, then barely 25 years old. His entry portrayed a ship braving stormy waters and a dark fog, pulled forward by multiple sails: the Continent's flags. The hull of the ship was made of letters spelling "Europe" and the caption read, "All our colours to the mast."
Early on Friday, the Norwegian Nobel Committee in Oslo did something unusual: Instead of rewarding the Nobel Peace Prize to an individual, it gave it to the European Union -- an international institution facing a 3-year-old existential crisis that looks nowhere close to being over.
Almost immediately, critics pointed out the odd choice, mocking the award to an agglomeration of countries, many of which are in recession and internal turmoil. In the last two years, many a respectable economist has argued the end was nigh for Europe's single currency, as well as the EU at large.
The Union has been likened to the League of Nations and a fascistic government due to its perceived "democratic deficit," the indictment that current supranational institutions do not answer to electorates directly enough. It's safe to assume no comparison featuring the League of Nations is a happy one.
But such criticism is gravely misplaced. The Nobel communique does not begin to describe what the EU has done for Europe, but history can.
In the century between 1848 and 1945, the Continent lived in constant crisis. Nationalisms emerged, empires crumbled, and conflagration became the rule.
For countries long mired in internal divisions, Europe became a shining light.
Pierpaolo Barbieri
Thrice did Germany and France go to war with each other, and twice they dragged the whole world with them. One of those world wars involved an unspeakable genocide conducted at industrial scale by a developed nation. In its aftermath, as Churchill warned, "an iron curtain descended across the Continent," and whole nations lived in the misery and rubble left behind by aerial bombing.
Opinion: Nobel Peace Prize a wasted opportunity
Along with demography and economics, ideas have the power to drive history. Like British-sponsored free trade in the 19th century and revolutionary Marxism in the early 20th, European integration caught on. A year after Dirksen finished his poster, the ship of Europe began to be built in earnest through the Treaty of Paris, which effectively tied the economies of France and West Germany together.
By 1956, the Soviet Union proved itself no better than the devils it had once fought when it violently crushed the Hungarian Revolution. In stark contrast, a year later six Western European nations signed the Treaty of Rome, pledging "ever closer union" and giving birth to the European Economic Community, which has since evolved into the EU.
For countries long mired in internal divisions, Europe became a shining light. A remarkably peaceful transition in Spain followed three decades of iron-fisted dictatorship by Francisco Franco, brought about by a devastating civil war.
In a country where philosopher Jose Ortega y Gasset had once written that "Spain is the problem and Europe the solution," the promise of integration underwrote Spain's first-ever successful experiment with democracy. Similarly, authoritarian regimes in Portugal and Greece gave way to pro-European republics respectful of human rights.
And when the Berlin Wall finally fell, what former Soviet subjects wanted turned out to be not so different. They sought the freedoms and opportunities that the EU embodies. The process of integration -- along with the work of organizations like the Open Society Institutes -- contributed to a strengthening of democratic institutions in the Czech Republic, Hungary, and Slovenia. No lasting dictatorial strongmen emerged, forcing many political scientists to revise their overly deterministic models. Just compare the post-Soviet fate of dictatorial Belarus with that of democratic Poland.
With all its imperfections, Europe today is the largest single market in the world, featuring effective anti-trust regulations, curtailing economic nationalism, and promoting free trade agreements with counties as far away as Asia and Latin America. New potential members are eager to join, from booming Turkey to crisis-ridden Iceland. Despite all the talk of stalling, Turkish membership will eventually come to pass.
True enough, the sovereign debt crisis has revealed flaws in the design of the monetary union. And the democratic deficit must be addressed through directly elected EU officers. But Europe is far more likely to emerge strengthened from the ordeal than apart. It's not just European institutions like the central bank and the Commission that speak of "more Europe" as the solution. So do national leaders like the French president and the Italian prime minister. The disagreement is not so much about the federalist future, but about how to get there. That is why even the careful German chancellor speaks of Europe as a "Schicksalsgemeinschaft" -- a "community of destiny."
Indeed, looking at the research from this year's Nobel Memorial Prize winner in economics, Tom Sargent, Europe does not compare badly with the early United States, which took a decade to transition from the Articles of Confederation to the Constitution.
The success of Dirksen's ship "Europe" is ultimately twofold. Within its members and potential members, it has made the word "dictator" into an anachronism, a seemingly impossible feat from the perspective of 1945, not to mention 1848. And beyond the Continent, it has proven that post-national integration is not only possible, but also desirable. The individual colors on the mast are still there -- but they all sail together.
The Americas -- where the founding fathers in both Northern and Southern republics once dreamt of integration -- should take note. Perhaps one day the Nobel Peace Prize will reward that project. In the meantime, Europe sails on.
Why Europe deserved the Peace Prize
Can You Fix a Scratched DVD with a Banana?
I have two children; they have their favorite DVDs; and sometimes mommy needs them to be watching those DVDs. So when the favorite DVDs get scratched and stop playing, it's a problem!
Whether it's DVDs, CDs, or game disks for your Xbox or Wii, there are ways to fix and buff out scratches. The Internet is full of solutions — claims that handy products you might have around the house will fix those scratches. So here are the unscientific results of my attempts to fix disk scratches with common household substances — from best (#1) to worst (#4).
Methodology: I used two forms of scratched disks, ones that had small scratches resulting in a few skips or pixilation points on the disk, and then seriously scratched disks that wouldn't play at all in my DVD player.
#1 Car Wax
I took a fingernail file to a Barney disk (boy was that satisfying), and when I placed it in my DVD player, the screen read "invalid disk" (again, wonderfully joyful).
I put Turtle car wax (liquid form) onto a soft cloth and buffed the disk in an in-to-out motion (not wax on wax off /Mr. Miyagi style). I rinsed the disk thoroughly and let it dry.
I placed the disk back into the player and, amazingly, it went straight to the menu and played flawlessly. The purple dinosaur rides again, and car wax did the job!
[Related: Worst Ways to Clean Your TV]
#2 Furniture Polish
I have always used Pledge furniture polish on scratched DVDs, and when I tried it on a minimally scratched disk, Pledge brought it back to life easily. But with a seriously scratched disk that wouldn't play, I had to polish twice with Pledge for it to come back to life. It was a close second to the car wax — and it smelled better. I think any furniture polish would work; I just used what I had under the sink.
#3 Banana
WHAT? A banana? Yep, this was advised by multiple sites online, so I had to try it. First, I rubbed the banana itself all over the disk, then I finished by rubbing the waxy interior of the peel all around the disk's surface. I cleaned it well with water, polished with a soft cloth, and let it dry.
The results were pretty good, especially considering I had such low expectations. The minimally scratched disk was good as new after the banana treatment. It does make some sense: that waxy stuff on the peel is pretty slippery — as I'm sure you know from all those years watching cartoon characters slip on banana peels.
But apparently, it wasn't waxy enough to fix the seriously scratched and unplayable disk. Even after multiple banana cleanings including soft-cloth buff-outs in between, I couldn't get the unplayable disk back from the dead with just the Chiquita treatment.
#4 Toothpaste
Toothpaste, especially the abrasive baking soda kind seems too rough for removing scratches; I was worried it would add scratches of its own to the disk, but I gave it a try. On the minimally scratched disk, I rubbed very gently with Colgate as I tried to clean off scratches and scrapes. When I put the disk in the player, the area where the disk previously skipped was still skipping. So I tried again and this time used baking-soda paste and really rubbed it in hard. When I tried again, the skipping area played straight through — no problems. Turns out there is a fair amount of extra poly-carbonate layered over the data pits on the disk, so buffing can take a top layer off and minimize the scratches.
But when I tried the toothpaste trick on the seriously scratched and unplayable disk, it was completely unsuccessful at resurrecting it. I tried three separate times to buff with toothpaste and then rinse/dry, but it just didn't fix the disk.
Alternate Solutions
SKIP Dr.
If you have a lot of scratched or unplayable disks, it might be worth investing in something like the Skip Dr., which I bought for $30 online. You place your disks into it, crank the handle, and it uniformly takes the top layer of polycarbonate off the disk. It's a more abrasive solution than the toothpaste, and it worked on both my minimally scratched disks and the unplayable disk.
Trade-in your scratched DVDs
Both Walmart and BestBuy have trade-in programs for DVDs. At Walmart, you bring in a DVD, pay $2 per disk, and they give you access to that title via their Internet streaming service Vudu. At BestBuy, you trade in a physical disk and they give you a $5 coupon towards the purchase of a Blu-Ray movie. Neither store says anything about scratched or unplayable disks, but they do have stipulations about original packaging and other limits, so do read the fine print.
Finally, whenever I write a story that mentions a brand-name product, I see in the comments that people think I'm being paid for the promotion. But no, I'm not sponsored by Pledge any more than I'm getting a lifetime supply of Chiquitas for this article; I personally tested each of these products and give you my honest recommendations.
We'd love to hear your crazy solutions for fixing DVDs. Post them on our Facebook page. If your idea is crazier than the banana, I'll be seriously impressed.
The Country With the World's Most Successful Education System
The teachers are respected; high talent is attracted into teaching; it is considered to be one of the most important professions.”
-Finnish Prime Minister, Matti Vanhanen
We probably don't need to go much beyond the above quote to explain the great success of Finland's educational system.
Although the country is comparatively small, Finland has the principal research and development offices of Nokia -- along with 800 other high-tech companies, some overflowing their expertise into neighboring Russia.
This country, not too far from the Arctic circle, is considered to be in the top three of the world’s most competitive countries.
The reason seems clear: its educational system.
The Finnish government keeps the pressure on students to a point that they complain of a lack of fun at school. At the same time, there are no nationwide exams or even final tests. There is continuous assessment -- a mixture of monthly tests and teacher evaluations.
The Finns make sure that all children get fed by providing free meals at school. They subsidize student travel, which they feel is a major part of the education process.
However badly behaved, no student fears expulsion. The emphasis is "getting to the bottom of" whatever behavior problems emerge.
Only 15 per cent of those who apply to be teachers are accepted, even though pay levels are about average for Europe. A master’s degree is required. (Not unrelated, for it's size this country has one of the highest percentage of Ph.D.s in the world.) Teachers are regularly sent on courses during their long holidays to upgrade their knowledge and skills.
The Finns focus on students in need and reject a class-stratified educational system. They feel that equality in the classroom ends up being a plus and not a hindrance to overall progress.
Thus, the educational gap between the "haves" and the "have-not's" shrinks, and the overall level of student and adult achievement in the country is raised.
How Does Finland's Education Become The Best In The World?
I am sure that many of you noticed that many of today’s kids cannot do the math without a calculator like many of us older people. Many also can’t read, talk or write as well either. Not all, but a lot more than before. I get comments every day about this problem. We used to be among the best in high school education four decades ago. We are now 34th in math in the world. Our children have been dumbed down for decades by an antiquated education system, that tracks neither the money spent per school, nor the educational results that they accomplish for our tax money, per month or quarter.
We as a country are among the four HIGHEST SPENDERS on education, delivering the 34th in education results. Wouldn’t it make sense to study Finland, who has the best education results? With our annual county primary and secondary school budget of $370 million this year, spend a couple of thousand on each, and have a team of principals evaluate what we could use. Why are we not learning from the best, who by the way are doing the job less expensively than we do? Wouldn’t it make better sense to spend a few thousand dollars there than spending two or three times the normal amount of millions in high schools that are going nowhere with ACT scores in ten years?
Finland is the top country in the OECD-PISA tests which is the international authority for high school level testing according to the US Department of Education. It happens to be a beautiful place also.
Education in Finland starts with preschool at age 6. The preschool emphasis is on fun and THE IMPORTANCE OF LEARNING. Preschool is followed by nine years of compulsory basic education. From 9th or 10th grade one can go to the Upper Secondary school (like senior high school) or a 3 -year vocational school, but the curriculum is so heavy in either of these that one can cross from one to the other, or finish one and then go to the other for emphasis on trade skills. Either branch can lead to a university for a masters or PhD degree or to a Polytechnic College that focuses on trade skills with the possibility of a Bachelor’s or Master’s degree.
Although the great majority of Finns finish their education by age 25, later than most other nations, education is looked upon as a life-long process in any job. People are generally much more educated in any trade or professional jobs than they are in other countries. They do an excellent job in having the highest work force readiness of any nation.
Please review at least the top URL I am presenting from Finland in English. For more details, go to:
http://www.edu.fi/english/SubPage.asp?path=500,4699
National testing, school ranking lists and inspection systems do not exist in Finland.
http://finland.fi/netcomm/news/showarticle.asp?intNWSAID=41557
http://online.wsj.com/public/article_print/SB120425355065601997.html
Being a teacher in Finland, as in most industrialized countries, is the most highly respected position. Medical doctors come second. I do not think that this is a cultural difference. The education system is set up such that they earn people’s respect every day by the way they are centrally managed in the country to the highest standard in the world and by the level of authority that is given to the teachers. Teachers are also very well trained. Keeping both teacher competence and school quality the best is a national mandate in Finland.
Could we get there? Of course we could, if we had an educational plan driving it on the same level as the top five countries do in the world. Unfortunately the Knox County Board of Education has tougher tasks to do. Like approving payment of bills for anything you can think of. Or arguing for many 2-3 hour sessions about what the school calendar should be. I was there, I saw it and could not believe it. Stuff that is more important to them than the quality of education we deliver for $370 million of our hard-earned tax money.
The Finnish education system has the top university graduate students with a master’s degree volunteering for becoming a teacher, and to teach in the field in which they earned their degree. There are assistant teachers of course with lesser qualification under lower grades and in pre-school.
Could we get there? Absolutely, if there was a large enough incentive plan for teachers to get a masters degree and beyond.
All parents understand that education is very important for their children and would never second-guess a teacher’s decision in Finland. If the child did something bad in school, you can bet that both the teacher and the parent would be in total agreement for the punishment. Therefore it rarely happens, because parents and teachers are always in agreement, and the teachers have a very good relationship with the students.
Could we get there? Absolutely, if the kids came home with better math results, and if all of us parents realized how vital it is to back the teachers in front of our kids. Like it or not, their future depends on the teachers. We parents cannot teach our children all the courses they need.
In Finland, the children have enormous respect for teachers, but call them by their first names. Teachers and the children eat lunch together, which is free to all children. How about that? I think that this is also the result of parents and teachers working totally in harmony to educate the child.
In Finland the children are not graded before the fifth grade. The teachers decide how they are progressing. They are later tested, but their grades are not told the parents or the child during the following few years of education. This method appears to build high confidence and self esteem. The kids have a high graduation rate, scholastically achieving more than we do. So parents have no worries about how well the children will be taken care of by the teachers. There is no reason for it. Remember again that the teacher is a university graduate with a master’s degree. Only the teachers know how the child is doing. The teachers meet weekly to discuss what problems any of the children have and make decisions on the spot about what type of class and teacher could be the best for their advancement toward a high school diploma. This could be a specific special education class. This is a very interesting approach that obviously works very well. We could try it. Charter schools, here we go if public schools cannot do it.
Finland has a national education policy and national testing. Morals and ethics are in the curriculum. This is a big difference between their system and ours. The teachers make all decisions about how their class will be run, how the education material will be presented and what books are to be used. They keep up with the best worldwide. There are two official languages in Finland: Finnish and Swedish. People typically speak four languages in Finland. One is Finnish, then English, Swedish, and one of German, French or Russian at minimum. They have some ethnic problems with immigrants, gypsies and some northern Lapp tribes; but they keep those cultures and languages alive as well.
Could we delegate more authority to teachers? Absolutely, depending how their continuing education is progressing.
All areas in the school are decorated. There may be a fireplace where they eat or wait for classes to start. The focus is on what the students would like, to make the school a very pleasant place to be, for students as well as for teachers. Disrespectful or property damaging behavior is unimaginable in this environment. If it happens, I imagine it is dealt with lightning fast with repercussions at home as well, but I heard that teachers do not tell on the students to parents.
Children are actually given very little homework to do. Teachers work about 40% less class hours than US teachers do. Both of these surprised me, but it stands to reason that a happier, friendlier and more effective school environment that does the job well, with less teaching hours and less homework, makes for happier teachers and children. It is the principal that makes this happen.
The principal is more like a general manager although he/she comes from an educational background. He/she makes sure that his/her school is operating at its optimum, including all teachers and supporting services including medical, dental and special ed-related functions. It is noteworthy that special ed kids are diagnosed by any teacher, the case is discussed immediately in their weekly meeting, diagnosis is confirmed and the child is placed into the right classroom possibly not in the same school, with the most qualified teacher for his/her problem. The communication environment is completely open among students, teachers and principals. This area is very different from the US model, and more than 50 countries are studying how they accomplish the results they accomplish.
Could studying them help us? Absolutely. It would do us a lot of good I believe.
Very important: The Finns realize that when their teachers excel and are satisfied, and so are their students. Teachers in Finland are well paid. An elementary school teacher makes $45-50/hour. A high school teacher makes $75-80/hour. The typical per class load is 18-20 students.
The biggest difference I found between the USA and Finland is the average teaching hours spent per year per teacher. This figure is a little more than 1,100 hours for US teachers, and it is 570 hours for teachers in Finland, and just as a second example it is about the same for Japanese teachers as it is for Finnish teachers.
The USA teacher works the longest hours in the world (http://www.mels.gouv.qc.ca/stat/bulletin/bulletin_29an.pdf), yet we are the 34th in the world in math and Finland is on top. We are clearly not using our teachers as smartly as the top-performing countries. Wouldn’t it make sense for the Knox County school system to send a couple of principals on a fact finding mission to Finland and other top performers when our performance is so low?
Finland’s cost of education per student is about 12% less than the Knox County average, and a lot less than our lowest performing high schools, or Oak Ridge or Maryville. Clearly there is something very important we could learn from these people if we sent a couple of principals there for a few weeks.
I don’t understand why I have to be the one bringing this to the attention of the Knox County school system. If they tell you that they knew about this all along, like they told me when I discovered that we sunk to 34th place in math, just ask them two questions: How long they have known this, and What have they done about it? We deserve a much better school system than what we have. That is certain. And so is the reason why we do not have it: our board of education and school system shows no interest in learning from the best and have continued a poor performance record to date with our children.
I think that we could certainly take one or more beneficial ideas away from the Finnish method for much better results in our schools. Their per-student expenses are a little lower than ours, yet the cost of living is higher. Charter schools would be best equipped to adopt some Finnish methods because they would be independent of KCS Central. Charter Schools determine their own curriculum and budget, producing better results. The principal calls the shots. Not a central school district organization.
Knox County Board of Education and Jim McIntyre, I hope that you read this article, and will look at the Finnish Education system for some ideas that could make our education results much better. We may not be able to use all ideas, but we could use some almost immediately and we could use others later that may require some changes first. After all, they are the best performing country in the world, TN is the 40th in the USA which is a low 34th in the world. If we cannot learn from them, we will not learn from anyone.
I hope that you all will find this article interesting and useful. As to my comments about our school system management, the Board of Education and KCS Central, I am telling you what I found to be the truth. They enforced this situation that our children are in. Where does the buck stop? Who is really responsible? Is it Joe's Pizza Parlor? I don't think so. Is it the Knox County Board of Education? BINGO!!! They knew that the academic results were “heading south” for a long time by their own admission when I published my findings. Did they tell the public? No they did not. Did they do something to reverse it? No they did not. Did they instead approve more and more hundred’s of millions of our tax dollars to be spent without good academic results? Yes, every year.
I hope that Jim McIntyre, our new superintendent of schools will change all this, without asking for more tax money first
Test Free TOEFL
Those who jump off a Paris bridge are in Seine.
Teacher: The only reason I always try to meet and know the parents better is because it helps me to forgive the children.
What do you call kids born in whorehouses?
Brothel sprouts.
I break for imaginary objects
What do you call a used tampon floating in a river?
A blood vessel.
Why do women prefer old gynecologists?
They have shaky hands!
What's the difference between sin and shame? It is a sin to put it in,
but it's a shame to pull it out.
How many men does it take to screw in a light bulb? One ...
Men will screw anything.
Money can't buy you love, but it sure makes shopping fun!
Wrestlers don't like to be put on hold.
My electrician usually worries about current events.
What's the difference between meat and fish?
If you beat your fish it will die!
What do you call skunks having oral sex?
Odor eaters!
What do elephants use as tampons?
Sheep!
What do you call a dog with no back legs and metal balls?
Sparky!
What did one lesbian frog say to the other?
"You know, we do taste like chicken!"
Confessions of an Economic Hit Man
WHO BENEFITS FROM DEVELOPMENT AID?
Development Aid, Project Aid etc. is aiding the industry of the donor country. It is usually TIED AID, meaning that the loans provided through the "aid" program have to be used to buy equipment and services from the "donor" country industry.
The "donor" countries decide how and where to spend the money. In Indonesia they negotiate the project with the related government organisation. Any briberies to be paid to win the contracts are just build into the loan amount. So, who benefits from the "development aid"??
Mainly the donor country industry. The "developing country" receiving the aid is in fact subsidizing the donor country industry who receives the funds generated thru the loan program. The donor country ties the loan to its industry. The receiving developing country ties itself to a heavy burden of inflated loan repayment.
In Indonesia the IGGI and other development projects starting in the 1970's were all developed on this basis.The donor country identifies projects it wants to finance but ties its loan to supply of services and equipment from its own industry. Indonesia was not allowed to select where to spend the money.
A Dutch loan went to Dutch companies, a German loan to German companies etc.
The IGGI then graciously published the "Aid" granted to Indonesia including details of the loan commitment but no reference to the fact that these are "tied" loans, inflated loans approved by the "donor Country" government based on the contract negotiations of its industry.
The Indonesian Domestic Satellite project in 1975 was financed by the US Exim Bank so all the services and equipment had to be supplied by US companies, in this case Hughes, Ford Aerospace and ITT. These companies conducted the contract negotiations with the relevant Indonesian government agencies and submitted the required budget to their government.
Development aid was beneficial for Indonesia as it enabled the country to develop its infrastructure. It was however, no less and perhaps even more beneficial for the "donor country and its related industry". Indonesia tied itself to a heavy burden of inflated loans which included bribery money, and the donor industry received good-size orders helping develop its bottom-line and stimulating economic growth figures.
It gives rise to the question : Who is aided by Development Aid?
The "Confessions of an Economic HitMan" provide a glimpse of the situation. More specific and in-depth information should be provided by country.
'Confessions of an Economic Hit Man'
by Jude Wanniski
Memo To: Website Fans, Browsers, Clients
From: Jude Wanniski
Re: A Book About the Evil Empire
If you happened to glance at the NYTimes Book Review today, you might have noticed a book on the best-seller list for the first time, in ninth place. The blurb tells us: “Confessions of an Economic Hit Man, by John Perkins. (Barrett-Koehler, $14.97.) A former employee of an international consulting firm denounces the American global empire and its ‘corporatocracy.’”
What’s this all about? The book was published last fall, but only now shows up as a best-seller? It only recently was brought to my attention by a website fan who knows I’ve long argued that the International Monetary Fund and its sister organization, the World Bank, constitute an “Evil Empire.” The two “international financial institutions” (IFI’s) were founded in 1945 during the genesis of the United Nations as “do-good” enterprises. The IMF would assist countries trying to keep their currencies tied to the dollar under the terms of the 1944 Bretton Woods Agreement. The World Bank would lend money at low interest rates gathered from the rich countries to help poor countries get off their backs.
Over the years, the process has been corrupted, with both the IMF and World Bank becoming controlled by the multinational corporations and their banks. When President Nixon went off the gold standard in 1971, the IMF’s reason for existence evaporated, because Bretton Woods and the fixed dollar went up in smoke. Now the problem for the big banks like Chase Manhattan, Citicorp and the Bank of America became two-fold:
1) As surplus dollars accumulated in their reserves and there were no credit-worthy Americans wanting to borrow, the banks had to think of ways to lend the money abroad or it would sit in their vaults earning zip, which means it really is losing money as the paper dollar – freed from its gold anchor – was inflating and losing purchasing power. Citigroup’s Walter Wriston (who died last week) came up with the idea that the surplus should be loaned to poor countries, even though they had no collateral, because governments had to pay off their hard-currency loans or lose their international credit ratings.
2) If the countries that borrowed from Chase or Citicorp could not pay back interest or principle and did not worry about stiffing the private bankers, they would have to swallow the non-performing loans. The solution was to have the IMF, looking for something to justify its existence, step in to collect the debt. All it had to do was persuade the U.S. Congress to ante up billion or two of taxpayer dollars to fill their coffers (and “replenish” them from time to time). They could then go to the deadbeat country and say, “We will give you this money so you can pay Chase and Citicorp what you owe them, but you will have to raise taxes on your own people and devalue your currency as the conditions for the loan!
What we have in this book from Mr. Perkins is an account of a foot soldier in these operations of the Evil Empire. I’ll get his book and check it out, but from what I can gather about it on the Internet he is well within the ballpark of what has been going on. Are bankers evil by nature? Of course not. But as bankers they follow the money, not giving a second thought to the conditions in which they leave their debtors. The first priority of any institution is self-preservation, and for the big banks, that means getting paid back on their loans. Is this any way to run the world? No. It is a dreadful way to operate, and it would end if our government returned to a dollar/gold system and abided by it. If not, I’m afraid nothing Mr. Perkins writes or that I write will change a thing. The folks who control the money control our government and that’s that. It is interesting that Perkins does identify the Bechtel Corporation and Halliburton as agents in this quiet conspiracy to make sure the good old USA flourishes, even though it means the relentless impoverishment of the poorest countries of the world.
Here is an interview that Amy Goodman of "Democracy Now" had with Perkins on November 9 last year. Remember his perspective is not from the highest level, but note he mentions George Shultz as an agent of the Evil Empire, which Shultz has been for decades. It was Shultz who, with Walter Wriston and Milton Friedman, persuaded Nixon to float the dollar and blow up the Bretton Woods monetary system. Shultz, now an octagenarian, is still a power in the Establishment, a key player at the Bechtel Corporation and a member of the Pentagon's Defense Policy Board, a member of the Perle Cabal. Of course, the three men – thought it was the right thing to do at the time, but in retrospect it wasn’t.
--------------------------------------------------------------------------------
Tuesday, November 9th, 2004
Confessions of an Economic Hit Man: How the U.S. Uses Globalization to Cheat Poor Countries Out of Trillions
We speak with John Perkins, a former respected member of the international banking community. In his book Confessions of an Economic Hit Man he describes how as a highly paid professional, he helped the U.S. cheat poor countries around the globe out of trillions of dollars by lending them more money than they could possibly repay and then taking over their economies.
John Perkins describes himself as a former economic hit man – a highly paid professional who cheated countries around the globe out of trillions of dollars.
20 years ago Perkins began writing a book with the working title, Conscience of an Economic Hit Men.
Perkins writes, "The book was to be dedicated to the presidents of two countries, men who had been his clients whom I respected and thought of as kindred spirits – Jaime Rolds, president of Ecuador, and Omar Torrijos, president of Panama. Both had just died in fiery crashes. Their deaths were not accidental. They were assassinated because they opposed that fraternity of corporate, government, and banking heads whose goal is global empire. We Economic Hit Men failed to bring Rolds and Torrijos around, and the other type of hit men, the CIA-sanctioned jackals who were always right behind us, stepped in.
John Perkins goes on to write: "I was persuaded to stop writing that book. I started it four more times during the next twenty years. On each occasion, my decision to begin again was influenced by current world events: the U.S. invasion of Panama in 1980, the first Gulf War, Somalia, and the rise of Osama bin Laden. However, threats or bribes always convinced me to stop."
But now Perkins has finally published his story. The book is titled Confessions of an Economic Hit Man. John Perkins joins us now in our Firehouse studios.
AMY GOODMAN: John Perkins joins us now in our firehouse studio. Welcome to Democracy Now!
JOHN PERKINS: Thank you, Amy. It's great to be here.
AMY GOODMAN: Its good to have you with us. Okay, explain this term, economic hit man, e.h.m., as you call it.
JOHN PERKINS: Basically what we were trained to do and what our job is to do is to build up the American empire. To bring – to create situations where as many resources as possible flow into this country, to our corporations, and our government, and in fact we’ve been very successful. We’ve built the largest empire in the history of the world. It's been done over the last 50 years since World War II with very little military might, actually. It's only in rare instances like Iraq where the military comes in as a last resort. This empire, unlike any other in the history of the world, has been built primarily through economic manipulation, through cheating, through fraud, through seducing people into our way of life, through the economic hit men. I was very much a part of that.
AMY GOODMAN: How did you become one? Who did you work for?
JOHN PERKINS: Well, I was initially recruited while I was in business school back in the late sixties by the National Security Agency, the nation's largest and least understood spy organization; but ultimately I worked for private corporations. The first real economic hit man was back in the early 1950's, Kermit Roosevelt, the grandson of Teddy, who overthrew of government of Iran, a democratically elected government, Mossadegh’s government who was Time's magazine person of the year; and he was so successful at doing this without any bloodshed – well, there was a little bloodshed, but no military intervention, just spending millions of dollars and replaced Mossadegh with the Shah of Iran. At that point, we understood that this idea of economic hit man was an extremely good one. We didn't have to worry about the threat of war with Russia when we did it this way. The problem with that was that Roosevelt was a C.I.A. agent. He was a government employee. Had he been caught, we would have been in a lot of trouble. It would have been very embarrassing. So, at that point, the decision was made to use organizations like the C.I.A. and the N.S.A. to recruit potential economic hit men like me and then send us to work for private consulting companies, engineering firms, construction companies, so that if we were caught, there would be no connection with the government.
AMY GOODMAN: Okay. Explain the company you worked for.
JOHN PERKINS: Well, the company I worked for was a company named Chas. T. Main in Boston, Massachusetts. We were about 2,000 employees, and I became its chief economist. I ended up having fifty people working for me. But my real job was deal-making. It was giving loans to other countries, huge loans, much bigger than they could possibly repay. One of the conditions of the loan – let's say a $1 billion to a country like Indonesia or Ecuador – and this country would then have to give ninety percent of that loan back to a U.S. company, or U.S. companies, to build the infrastructure – a Halliburton or a Bechtel. These were big ones. Those companies would then go in and build an electrical system or ports or highways, and these would basically serve just a few of the very wealthiest families in those countries. The poor people in those countries would be stuck ultimately with this amazing debt that they couldn’t possibly repay. A country today like Ecuador owes over fifty percent of its national budget just to pay down its debt. And it really can’t do it. So, we literally have them over a barrel. So, when we want more oil, we go to Ecuador and say, Look, you're not able to repay your debts, therefore give our oil companies your Amazon rain forest, which are filled with oil. And today we're going in and destroying Amazonian rain forests, forcing Ecuador to give them to us because they’ve accumulated all this debt. So we make this big loan, most of it comes back to the United States, the country is left with the debt plus lots of interest, and they basically become our servants, our slaves. It's an empire. There's no two ways about it. It’s a huge empire. It's been extremely successful.
AMY GOODMAN: We're talking to John Perkins, author of Confessions of an Economic Hit Man. You say because of bribes and other reason you didn't write this book for a long time. What do you mean? Who tried to bribe you, or who – what are the bribes you accepted?
JOHN PERKINS: Well, I accepted a half a million dollar bribe in the nineties not to write the book.
AMY GOODMAN: From?
JOHN PERKINS: From a major construction engineering company.
AMY GOODMAN: Which one?
JOHN PERKINS: Legally speaking, it wasn't – Stoner-Webster. Legally speaking it wasn't a bribe, it was – I was being paid as a consultant. This is all very legal. But I essentially did nothing. It was a very understood, as I explained in Confessions of an Economic Hit Man, that it was – I was – it was understood when I accepted this money as a consultant to them I wouldn't have to do much work, but I mustn't write any books about the subject, which they were aware that I was in the process of writing this book, which at the time I called “Conscience of an Economic Hit Man.” And I have to tell you, Amy, that, you know, its an extraordinary story from the standpoint of – It's almost James Bondish, truly, and I mean –
AMY GOODMAN: Well that's certainly how the book reads.
JOHN PERKINS: Yeah, and it was, you know? And when the National Security Agency recruited me, they put me through a day of lie detector tests. They found out all my weaknesses and immediately seduced me. They used the strongest drugs in our culture, sex, power and money, to win me over. I come from a very old New England family, Calvinist, steeped in amazingly strong moral values. I think I, you know, I’m a good person overall, and I think my story really shows how this system and these powerful drugs of sex, money and power can seduce people, because I certainly was seduced. And if I hadn't lived this life as an economic hit man, I think I'd have a hard time believing that anybody does these things. And that's why I wrote the book, because our country really needs to understand, if people in this nation understood what our foreign policy is really about, what foreign aid is about, how our corporations work, where our tax money goes, I know we will demand change.
AMY GOODMAN: We're talking to John Perkins. In your book, you talk about how you helped to implement a secret scheme that funneled billions of dollars of Saudi Arabian petrol dollars back into the U.S. economy, and that further cemented the intimate relationship between the House of Saud and successive U.S. administrations. Explain.
JOHN PERKINS: Yes, it was a fascinating time. I remember well, you're probably too young to remember, but I remember well in the early seventies how OPEC exercised this power it had, and cut back on oil supplies. We had cars lined up at gas stations. The country was afraid that it was facing another 1929-type of crash depression; and this was unacceptable. So, they – the Treasury Department hired me and a few other economic hit men. We went to Saudi Arabia. We –
AMY GOODMAN: You're actually called economic hit men – e.h.m.s?
JOHN PERKINS: Yeah, it was a tongue-in-cheek term that we called ourselves. Officially, I was a chief economist. We called ourselves e.h.m.'s. It was tongue-in-cheek. It was like, nobody will believe us if we say this, you know? And, so, we went to Saudi Arabia in the early seventies. We knew Saudi Arabia was the key to dropping our dependency, or to controlling the situation. And we worked out this deal whereby the Royal House of Saud agreed to send most of their petro-dollars back to the United States and invest them in U.S. government securities. The Treasury Department would use the interest from these securities to hire U.S. companies to build Saudi Arabia new cities, new infrastructure which we’ve done. And the House of Saud would agree to maintain the price of oil within acceptable limits to us, which they’ve done all of these years, and we would agree to keep the House of Saud in power as long as they did this, which we’ve done, which is one of the reasons we went to war with Iraq in the first place. And in Iraq we tried to implement the same policy that was so successful in Saudi Arabia, but Saddam Hussein didn't buy. When the economic hit men fail in this scenario, the next step is what we call the jackals. Jackals are C.I.A.-sanctioned people that come in and try to foment a coup or revolution. If that doesn't work, they perform assassinations. Or try to. In the case of Iraq, they weren't able to get through to Saddam Hussein. He had – His bodyguards were too good. He had doubles. They couldn’t get through to him. So the third line of defense, if the economic hit men and the jackals fail, the next line of defense is our young men and women, who are sent in to die and kill, which is what we’ve obviously done in Iraq.
AMY GOODMAN: Can you explain how Torrijos died?
JOHN PERKINS: Omar Torrijos, the President of Panama. Omar Torrijos had signed the Canal Treaty with Carter much – and, you know, it passed our congress by only one vote. It was a highly contended issue. And Torrijos then also went ahead and negotiated with the Japanese to build a sea-level canal. The Japanese wanted to finance and construct a sea-level canal in Panama. Torrijos talked to them about this which very much upset Bechtel Corporation, whose president was George Schultz and senior council was Casper Weinberger. When Carter was thrown out (and that’s an interesting story how that actually happened), when he lost the election, and Reagan came in and Schultz came in as Secretary of State from Bechtel, and Weinberger came from Bechtel to be Secretary of Defense, they were extremely angry at Torrijos – tried to get him to renegotiate the Canal Treaty and not to talk to the Japanese. He adamantly refused. He was a very principled man. He had his problem, but he was a very principled man. He was an amazing man, Torrijos. And so, he died in a fiery airplane crash, which was connected to a tape recorder with explosives in it, which – I was there. I had been working with him. I knew that we economic hit men had failed. I knew the jackals were closing in on him, and the next thing, his plane exploded with a tape recorder with a bomb in it. There's no question in my mind that it was C.I.A. sanctioned, and most – many Latin American investigators have come to the same conclusion. Of course, we never heard about that in our country.
AMY GOODMAN: So, where – when did your change your heart happen?
JOHN PERKINS: I felt guilty throughout the whole time, but I was seduced. The power of these drugs, sex, power, and money, was extremely strong for me. And, of course, I was doing things I was being patted on the back for. I was chief economist. I was doing things that Robert McNamara liked and so on.
AMY GOODMAN: How closely did you work with the World Bank?
JOHN PERKINS: Very, very closely with the World Bank. The World Bank provides most of the money that’s used by economic hit men, it and the I.M.F. But when 9/11 struck, I had a change of heart. I knew the story had to be told because what happened at 9/11 is a direct result of what the economic hit men are doing. And the only way that we're going to feel secure in this country again and that we're going to feel good about ourselves is if we use these systems we’ve put into place to create positive change around the world. I really believe we can do that. I believe the World Bank and other institutions can be turned around and do what they were originally intended to do, which is help reconstruct devastated parts of the world. Help – genuinely help poor people. There are twenty-four thousand people starving to death every day. We can change that.
AMY GOODMAN: John Perkins, I want to thank you very much for being with us. John Perkins' book is called, Confessions of an Economic Hit Man.
January 25, 2005
Copyright © 2005 Jude Wanniski
Jude Wanniski Archives
The Family Firm - Learn From Indonesia
The Family Firm
A TIME investigation into the wealth of Indonesia's Suharto and his children uncovers a $15 billion fortune in cash, property, art, jewelry and jets
By JOHN COLMEY and DAVID LIEBHOLD Jakarta
When the end came for Suharto, Indonesia's long-serving President appeared oddly passive. As
students and angry mobs took to the streets and soldiers responded with gunfire and tear gas, the
five-star general hovered in the background, making few attempts to set things right. When he finally
quit a year ago this week, he stood meekly to the side as his successor, B.J. Habibie, took the oath of
office. Suharto has hardly been heard from since.
But Indonesia's onetime autocrat has been far busier than most of his countrymen realize. Just after
his fall from power there began feverish movements of his personal fortune. In July 1998, reports
emerged that a staggering sum of money linked to Indonesia had been shifted from a bank in
Switzerland to another in Austria, now considered a safer haven for hush-hush deposits. The transfer
caught the attention of the United States Treasury, which tracks such movements, and set in motion
diplomatic inquiries in Vienna. Now, as part of a four-month investigation that covered 11 countries,
TIME has learned that $9 billion of Suharto money was transferred from Switzerland to a nominee
bank account in Austria. Not bad for a man whose presidential salary was $1,764 a month when he
left office. (Suharto, for his part, denies that he has any bank deposits abroad and insists that his
wealth amounts to a mere 19 hectares of land in Indonesia, plus $2.4 million in savings.)
Those billions are just part of the Suharto wealth. Though the Asian financial crisis has trimmed the
family empire considerably, the former President and his children retain a staggering fortune. It was
built over three decades from a skein of companies, monopolies and control over vast sectors of
economic activity in Indonesia--from oil exports to humble pilgrims making the yearly visit to Mecca.
(They flew on planes leased from companies controlled by Suharto's children.) According to data from
the National Land Agency and Properti Indonesia magazine, the Suharto family on its own or through
corporate entities controls some 3.6 million hectares of real estate in Indonesia, an area larger than
Belgium. That includes 100,000 sq m of prime office space in Jakarta and nearly 40% of the entire
province of East Timor.
Within Indonesia, the six Suharto offspring have significant equity in at least 564 companies, and their
overseas interests include hundreds of other firms, scattered from the U.S. to Uzbekistan, the
Netherlands, Nigeria and Vanuatu. The Suhartos also possess plenty of the trappings of wealth. In
addition to a $4 million hunting ranch in New Zealand and a half-share in a $4 million yacht moored
outside Darwin, Australia, youngest sonHutomo Mandala Putra (nicknamed Tommy) owns a 75%
stake in an 18-hole golf course with 22 luxury apartments in Ascot, England.Bambang
Trihatmodjo, Suharto's second son, has an $8 million penthouse in Singapore and a $12 million
mansion in an exclusive neighborhood of Los Angeles, two doors down from rock star Rod Stewart
and just up the street from his brother Sigit Harjoyudanto's $9 million home. Eldest daughter Siti
Hardiyanti Rukmana may have sold her Boeing 747-200 jumbo jet, but the family's fleet of planes
included, at least until recently, a DC-10, a blue-and-red Boeing 737, a Canadian Challenger 601 and
a BAC-111. The latter once belonged to the Royal Squadron of Britain's Queen Elizabeth II, according
to Dudi Sudibyo, managing editor of Indonesia's Angkasa aerospace magazine.
Neither Suharto nor his six children responded to requests for interviews, though lawyers for the
former President and son Bambang asserted that their clients did nothing illegal. Indeed, no one has
proven that the Suhartos broke any laws. Their companies mostly consist of operating entities that
turn profits, create jobs and import Western technology. Yet allegations that the former First Family
benefited from favoritism, commonly heard in Indonesia since the early 1980s, began to grow louder
when the former President resigned. His successor quickly announced an official investigation into
such charges. Tommy, the youngest son whose corporate empire at one point included the
Lamborghini sports car company, is already in legal jeopardy, facing charges of defrauding a state
agency of $11 million in a real estate deal. The South Jakarta district court recently rejected a plea
from Tommy's lawyers that he be tried in a civil court and is proceeding with a criminal trial.
In an interview at the State Palace, Habibie told TIME he will not cover up for his former mentor, but
he has so far declined to freeze the family's holdings or to follow up on the investigation in any
meaningful way. Private asset-tracing firms are excited at the prospect of a Suharto treasure hunt, if
only Jakarta would hire them. "In terms of dollars, we think this could be bigger than anything we have
ever seen before," says Stephen Vickers, Asia chief for Kroll Associates, which helped investigate the
wealth of the Philippines' former President Ferdinand Marcos. "My bags are packed."
The search won't start in earnest unless the man in charge of the government's investigation, Attorney
General Andi Muhammad Ghalib, gives the go-ahead. Ghalib, a three-star general in the Indonesian
military, told TIME that he has found no evidence that his former supreme commander wrongly
acquired state assets. But Ghalib has been moving slowly, and some of his own staff members are not
convinced the investigation is serious. In the opinion of an official in the Attorney General's office,
"Ghalib is on a mission to protect Suharto."
Nonetheless, the code of secrecy shielding the family is breaking down. After hundreds of interviews
with former and current Suharto friends and government officials, business associates, lawyers,
accountants, bankers and relatives, as well as examinations of dozens of documents (including bank
records of outstanding loans), TIME correspondents found indications that at least $73 billion passed
through the family's hands between 1966 and last year. Much of that was from the mining, timber,
commodities and petroleum industries. Bad investments and Indonesia's financial crisis have reduced
the sum substantially. But evidence indicates that Suharto and his six children still have a
conservatively estimated $15 billion in cash, shares, corporate assets, real estate, jewelry and fine art-
-including works by Indonesian masters Affandi and Basoeki Abdullah in the collection of Siti Hediati
Hariyadi, the middle daughter known as "Titiek."
Suharto laid the foundation for the family fortune by establishing the intricate nationwide system of
patronage that kept him in power for 32 years. His children, in turn, parlayed their ties to the President
into the role of middlemen for government purchases and sales of oil products, plastics, arms, airplane
parts and petrochemicals. They held monopolies on the distribution and import of major commodities.
They obtained low-interest loans by colluding with or even strong-arming bankers, who were often
afraid to ask for repayment. Subarjo Joyosumarto, managing director of Bank Indonesia, the central
bank, confirms that during the time of Suharto, "there was an environment that made it difficult for the
state banks to refuse them."
While the Indonesian economy was growing fast, it was possible to make light of the Suhartos' rentseeking
ways. Now, with half the population below the poverty line as a result of the financial crash,
there is little doubt that the family grew wealthy at the expense of the nation. A former business
associate of the children estimates that they skipped tax payments of between $2.5 billion and $10
billion on commissions alone. "It is very likely that none of the Suharto companies has ever paid more
than 10% of its real tax obligations," says Teten Masduki, an executive member of Indonesian
Corruption Watch, an anti-graft non-governmental organization. "Can you imagine how much revenue
has been forgone?"
Many Indonesians also blame Suharto for creating a climate of corruption that pervaded the entire
economy. The World Bank estimates that as much as 30% of Indonesia's development budget over
two decades disappeared through civil-service-wide corruption that filtered down from the top. "If you
don't pay bribes, people think you're odd," says Edwin Soeryadjaya, a director of an Indonesian-U.S.
telecommunications joint venture. "It's very sad. I cannot say that I'm proud to be an Indonesian. This
is one of the most corrupt countries in the world."
GREAT EXPECTATIONS
How did Suharto Inc. attain its wealth, its power and its hold over the imaginations of millions of
Indonesians? When Suharto became acting President of Indonesia in 1967, his unique blend of
forcefulness and Javanese political subtlety was already manifest. The ousting of "President for Life"
Sukarno, the nationalist founder of the country, took two years and, through an accompanying anticommunist
purge, claimed as many as 500,000 lives. But Suharto, an obscure general from a
hardscrabble village in central Java, led an outwardly modest life. He and his late wife Siti Hartinah
("Madam Tien") initially lived in a simple bungalow in the Menteng district of Jakarta and drove a 1964
Ford Galaxy. That was in marked contrast to Sukarno, the self-styled "God-King," with his grand
presidential palace and his glamorous third wife Dewi, a former Japanese hostess at Tokyo's
Copacabana nightclub.
Behind the facade, however, Suharto showed an early interest in making money. In the 1950s, he was
allegedly involved in sugar smuggling and other extra-military activities in Central Java that may have
cost him command of the Army's Diponegoro Division during a 1959 anti-corruption drive. In his
autobiography, Suharto asserts that he bartered sugar for rice to ease a local food shortage and that
he did not benefit personally. In any case, the military transferred Suharto to a less influential position
at the army staff college in Bandung, West Java.
In 1966, Suharto Inc. began to take shape. Before being officially named President, Suharto issued
Decree No. 8 to seize two Sukarno-controlled conglomerates with combined assets of $2 billion. They
became PT Pilot Project Berdikari, a company that Suharto placed under the management of Achmad
Tirtosudiro, a former general who now heads a powerful Muslim organization founded by President
Habibie. The firm was to become one of the main levers of the Suharto empire.
The President's fortunes began to soar along with those of a few close associates, most prominently
Liem Sioe Liong and The Kian Seng, better known as Mohammad "Bob" Hasan. In late 1969, Suharto
gave a partial monopoly--it later became total--over the import, milling and distribution of wheat and
flour to PT Bogasari Flour Mills, controlled by Liem's Salim Group. Over the years Liem--known as
"Uncle Liem" to the Suharto brood--and Hasan became Suharto's most trusted non-family associates
and eventually amassed vast commercial empires.
The bedrock of the Suharto fortune was the presidential yayasan, or foundation. Dozens were set up,
ostensibly as charities, and they have in fact funded a large number of hospitals, schools and
mosques. But the foundations were also giant slush funds for the investment projects of the Suhartos
and their cronies, as well as for the ex-President's political machine, Golkar. According to George
Aditjondro, a sociology lecturer at Australia's University of Newcastle, they ultimately numbered 97
and were controlled by Suharto, his wife (who died in 1996), her relatives in the countryside, his
cousin and half-brother, the six children, their spouses and parents, trusted military men and
associates such as Habibie, Hasan and Liem. "The foundations bought stocks, built companies, lent
money to businessmen," says Adnan Buyung Nasution, a lawyer who last year tried unsuccessfully to
set up an independent commission on the Suharto wealth.
The foundations accepted "donations," though they were often less than voluntary. Beginning in 1978,
all state-owned banks were required to give 2.5% of their profits to both the Dharmais and
Supersemar foundations, according to former Attorney General Soedjono Atmonegoro. Suharto's
Decree No. 92, in 1996, required that each taxpayer and company making more than $40,000 a year
donate 2% of income to the Dana Sejahtera Mandiri foundation, set up to support poverty-alleviation
programs (the order was rescinded last July). To this day, civil servants and members of the military
donate a portion of their monthly salaries to the Amal Bakti Muslim Pancasila foundation, which was
used by Suharto to win Muslim support.
While "donations" provided most of the foundations' revenue, there were other sources as well. In
1978, Suharto foundations took control of 60% of Bank Duta, a leading private bank, according to a
former Bank Duta official. That share was gradually increased to 87%. The foundations invested
heavily in private companies established by Suharto family members and cronies. After that, a helpful
ministry or state-owned firm would award a contract or a monopoly to those companies.
Since Suharto's downfall, the foundations have been a major target of Indonesian investigators. Soon
after Suharto's resignation, then-Attorney General Soedjono examined the books of the four largest
yayasan. What he found was unsettling. "These foundations were set up to deliver social services," he
says, "but Suharto had distributed the money to his children and friends." Soedjono discovered that
one of the largest foundations, Supersemar, had dispersed 84% of its funds on unauthorized pursuits,
including loans to companies owned by Suharto's children and friends. Suharto, as chairman, had to
sign any check over $50,000. Soedjono submitted a preliminary report on his findings to President
Habibie last June. He was fired five hours later. (The President says Soedjono was dismissed
because he stepped outside the line of command on another matter.)
OIL AND LAND
The Suharto reach extended well beyond the foundations' interests, and few deals were more
lucrative than the family's oil businesses. In his first decade in power, Suharto allowed state oil
conglomerate Pertamina to be run as a private fief by its founder Ibnu Sutowo, a former general once
known as the second most powerful man in Indonesia. Sutowo's plan to build a huge tanker fleet for
Pertamina brought it to the brink of financial collapse in 1975. He was fired the following year, though
it wasn't clear whether the cause was mismanagement or his political ambitions. Now 84, Sutowo tells
TIME it was neither. He says Suharto asked him in 1976 to set up a second trading company to ship
Indonesian crude oil to Japan. "He said to me, 'I want you to take $0.10 for every barrel traded by the
new company,'" Sutowo recalls. "When I said no, I think he was shocked."
After Sutowo was fired, Pertamina eventually imported and exported much of its oil through Perta Oil
Marketing and Permindo Oil Trading, two small companies in which Tommy and older brother
Bambang acquired significant stakes in the mid-1980s. According to a senior official in Habibie's
government, the firms received a commission of $0.30 to $0.35 a barrel. In the 1997-98 fiscal year, the
two companies handled an average of 500,000 barrels a day, for yearly commissions of more than
$50 million. Says former Mines and Energy Minister Subroto: "Pertamina could have exported directly.
There was no need for these companies."
In addition, a former business associate of Tommy and Bambang says there were extra, unofficial
markups on oil exports and imports that earned the firms as much as $200 million a year in the 1980s,
when prices were high, and about half that in the 1990s. Suharto family companies received
Pertamina's contracts for insurance, security, food supplies and other services--a total of 170
contracts in all. Last year, shortly after Suharto's fall, Pertamina canceled many of them and
announced instant savings of $99 million a year. Says the former associate of the Suharto scions:
"They milked Pertamina like a cow."
One major Suharto money spinner was PT Nusantara Ampera Bakti, or Nusamba, which was
launched with $1.5 billion in 1981 by three of the foundations, together with Bob Hasan and Suharto's
eldest son Sigit (who held 10% each). The firm became a sprawling conglomerate with more than 30
subsidiaries in finance, energy, pulp and paper, metal and automobiles. Nusamba's jewel was a 4.7%
share in Freeport Indonesia, an American-controlled company that runs the world's largest gold mine
in the province of Irian Jaya. In 1992 the foundations apparently transferred their 80% share to Hasan,
though it is not clear how much he paid for it. So far, government investigators have not asked to see
Nusamba's books. Says Otto Cornelis Kaligis, head of Suharto's eight-member legal team: "When you
talk about Nusamba you have to ask Bob Hasan. In the investigation of President Suharto, the
Attorney General never asked any questions about Nusamba."
The family profited not only by winning concessions from the government but occasionally by
disrupting the lives of individual Indonesians who stood in the way. When Suharto wanted to build a
cattle ranch getaway in West Java in 1973, he displaced the inhabitants of five villages spread over
751 hectares. According to official records, he paid a total of $5,243 in compensation. Some villagers
say they got nothing. Muhammad Hasanuddin, who was a boy at the time, remembers when his
family's two-hectare rice farm was lost. "We saw the fat cows, herded by dozens of men pompously
riding on horseback, trampling our ruined fields. The whole family could only cry." Hasanuddin's father
ended up as a pedicab driver in Jakarta.
Similar stories abound. In 1996, a company owned by Tommy forced villagers off their land in Bali to
build a 650-hectare resort. The firm had a permit for only 130 hectares, which it illegally expanded,
according to Sonny Qodri, chairman of Bali's Legal Aid Institute. Residents who refused to sign an
agreement to sell their land were intimidated, beaten and sometimes put in a pond up to their necks.
Two were brought to court and jailed for six months. Nothing remains of the project now: recession hit
just as the bulldozers were moving in.
Hasan Basri Durin, chairman of the National Land Agency and Minister of Land Affairs, says the
Suharto family typically paid peanuts for the property it acquired--the average was 6% of market
value--and reluctant sellers often changed their minds after visits from thugs or soldiers. "Sometimes
they didn't pay one cent," says Hasan. "But it's legal because they [the Suhartos] have the
documents." Only about half of Indonesia's farmers hold a registered title to their land, so proving
ownership can be difficult--and proving intimidation even harder. As a result, few have come forward
to complain.
CHILDREN OF FORTUNE
For years, Indonesia's corruption was the kind of petty favor-buying and commission-giving commonly
found in the developing world. Two factors pushed the country into a league of its own. The first was
Indonesia's position as an up-and-coming star performer in the Asian economic miracle, which
brought a cascade of funds pouring into businesses and real estate. The World Bank estimates that
between 1988 and 1996, Indonesia received more than $130 billion in foreign investment. "All this has
been possible under the eyes of the West, which supported Suharto for 30 years," says Carel Mohn,
spokesperson for Transparency International, a non-governmental organization based in Berlin.
The second factor was "the children," as the Suharto kids are known. All six are involved in business,
a calling for which they were groomed from an early age. "I remember when we were younger, me
and Bambang and his other friends would go over to Uncle Liem's house," says a childhood pal of
Suharto's second son. "Uncle Liem would always give us a package of money wrapped in
newspaper." The package, he recalls, would contain banknotes worth $1,000 or more. Says Wati
Abdulgani, a businesswoman who dealt with a family company in the 1980s: "The kids saw what was
being given to their uncles and they thought, 'What about us, when we grow up?'"
Sigit, the eldest son, was apparently pushed into business by his mother, Madam Tien, whose own
behind-the-scenes dealings in the 1970s earned her the nickname "Madam Tien Percent." A friend of
Mrs. Suharto recalls a conversation with her at the time the government was building Jakarta's
Soekarno-Hatta International Airport. "She told me, 'I want Sigit to learn about business,'" says the
friend. "I told her I thought he should first finish university. She said, 'No, no, Sigit can't think straight.'"
Two sources who worked on the airport project say that by the time both terminals were finished in
1984, $78.2 million had been given to Sigit in markups that appeared as cost overruns. He graduated
to bigger deals. The collection of ticket proceeds from a national lottery, set up in 1988 by the
Department of Social Affairs, was handled by a Sigit-linked company until Muslim leaders' antigambling
protests forced its closure in 1993. "The gambling scheme earned Sigit and his company
millions of dollars every week," says Christianto Wibisono of the Indonesian Business Data Center,
which has been gathering information on Suharto-related businesses and other firms since 1980.
Second son Bambang, who founded the Bimantara Group in 1981 with two members of his former
rock band, was helped in business by Uncle Liem. From 1967 until last year, the National Logistics
Agency (Bulog) imported and distributed basic commodities such as wheat, sugar, soybeans and rice
through Suharto-linked companies, including six belonging to Liem. At Bambang's request, Liem gave
him a slice of the business. Through sugar trading alone, the son is estimated to have earned as much
as $70 million a year, essentially for stamping documents. The system worked so well that each of the
children was given a cut as he or she moved into business, a practice that continued until last year.
From 1997 to '98, Liem had a contract from Bulog to import about 2 million tons of rice valued at $657
million. As part of that contract, Suharto's youngest daughter Siti Hutami Endang Adiningsih
("Mamiek") imported 300,000 tons of rice worth $90.3 million. Over the past 18 years, under the
pretense of stabilizing food prices, the Suhartos' deals with Bulog have earned them an estimated $3
billion to $5 billion, according to a former government official.
Eldest child Tutut rose to become the queen bee of the Suharto clan. The base of her empire is Citra
Lamtoro Gung Group, and its first big business was building and operating toll roads. The group's tollroad
arm won its first project in 1987 after the government turned down two competing bids. Financing
came from two government banks, a state-owned cement company and a Suharto foundation. When
the president of state-owned Bank Bumi Daya turned down Tutut's request for an interest-free loan, he
was fired. By the mid-1990s, her roads were earning $210,000 a day, and in 1995 the concession on
her Intra Urban Tollway System, the most lucrative in Indonesia, was extended through the year 2024.
Explains Teddy Kharsadi, director of corporate affairs at toll-road company PT Citra Marga Nusaphala:
"The extension was a reasonable consequence of our investment."
Tutut's empire also includes telecommunications, banking, plantations, flour milling, construction,
forestry, sugar-refining and trading. Foreign companies learned to take on a Suharto as a partner if
they wanted to do business in Indonesia, and Tutut was first on most lists. "A lot of big multinationals
insisted on having the right connections, and these were certainly useful to them," says Graeme
Robertson, an Australian-born Indonesian citizen whose Swabara Group is active in coal and gold
mining. At the peak of Tutut's power, according to sources close to the family, investors seeking to
meet her first had to pay as much as $50,000 as a "consulting fee" to her minders.
In the early 1990s, Indonesia began to heed the advice of market-oriented economists to privatize
many of its state firms. The First Family was a major beneficiary. Suharto ended the state
telecommunications monopoly in 1993--by giving licenses for an international direct-dial operation and
for Indonesia's first digital mobile phone network to Bambang's PT Satelit Palapa Indonesia
(Satelindo). At the same time, state-owned PT Telkom transferred its customer base to Satelindo
when it launched its own satellite, the country's third, with the help of a $120 million loan from the U.S.
Export-Import Bank. TIME has learned that Jakarta gave Satelindo the licenses and Telkom's
customers without a tender or payment. Thanks to the government, Bambang found himself in control
of the company, which the market valued at $2.3 billion in 1995 when a subsidiary of Germany's
Deutsche Telekom paid $586 million for a 25% stake. Bambang also received a major share of a $90
million facilitation fee from Deutsche Telekom as part of the sale.
TOO MUCH OF A GOOD THING
The Suharto children's interests became so extensive they started colliding with each other. Bambang
and Tutut vied to set up their own television stations. Tommy competed with brother Sigit in aviation
and with Bambang in shipping and car production. In 1990 the government solicited bids for a contract
to provide switching equipment for 350,000 telephone lines. Japan's NEC teamed up with a company
controlled by Bambang. Competitor AT&T gave Tutut a 25% share in its local venture, now called PT
Lucent Technologies Indonesia. The project was ultimately split 50-50 between Tutut's AT&T group
and Bambang's NEC. In 1996, Tutut came up against Sigit for rights to develop the vast Busang gold
mine in East Kalimantan. Tutut's partner, Canadian company Barrick Gold, was opposed by Sigit's
partner, Bre-X Minerals. This time, both sides lost; Busang turned out to be the biggest hoax in mining
history.
The competition grew so intense that the Suharto progeny began seeking monopolies in evernarrower
lines of business. Bambang got a contract to import the special paper used by the national
mint. Tutut took over the processing of drivers' licenses. A company owned by Sigit's wife, Elsye,
became the sole authorized producer of Indonesia's mandatory identification cards. In 1996 Suharto
grandson Ari Sigit devised a scheme to sell $0.25 revenue stickers as proof of tax payment for every
bottle of beer and alcohol consumed in Indonesia (that business collapsed when producers stopped
shipping beer to tourist mecca Bali in protest). Nine months before Suharto's resignation, Ari was
gearing up to launch a "national shoe project"--all Indonesian children would have to buy school shoes
from his company. "At the end," says an American lawyer with 20 years' experience in Indonesia, "the
only thing that was transparent was the corruption."
When the Suharto regime fell, the children used their influence to extricate themselves from ailing
businesses and debts. In April 1994, Tommy launched the Goro supermarket chain with two of his
companies and the Central Village Cooperative, a large, government-run farmers' organization.
Together they borrowed more than $100 million in loans, according to Bank Bumi Daya records. No
repayments were ever made on the loans. On May 4, 1998, Tommy sold his shares to the farmers and
their cooperative for $112 million in cash, saddling them with the entire debt. "The children were very
wild," says Ibnu Hartomo, younger brother of Madam Tien. "It seems that they have forgotten about
ethics." Angry mobs burned down one Goro store in south Jakarta during riots in May 1998, a week
before Suharto resigned.
Though much of the Suharto fortune has been lost through mismanagement and the country's
economic collapse--Tommy's PT Sempati Air, for instance, went bust in 1998--the family still has many
viable businesses. One of many small examples: Sigit's PT Panutan Selaras produces 25% of the
"premix" high-octane gasoline used in Indonesian cars and owns 22 filling stations in Jakarta,
Surabaya and Central Java. Tommy's PT Humpuss Trading, meanwhile, is also producing the highend
gasoline.
And then there's real estate. While prices have plunged in Indonesia, the family's property holdings
are today worth $1 billion, and many--including rubber and sugar plantations, malls and hotels--
continue to bring in revenue. In the mid-1980s, Bambang paid the government $700 per sq m for a
plot of land in central Jakarta on which now sits the Grand Hyatt Hotel, the prime asset of his publicly
listed PT Plaza Indonesia Realty. In Bali, the children ended up with some of the most lucrative gems
of the tourist industry: Bali Cliff Hotel (Sigit), Sheraton Nusa Indah Resort (Bambang), Sheraton
Laguna Nusa Dua (Bambang), Bali Intercontinental Resort (Bambang, until two months ago), Nikko
Royal Hotel (Sigit, until six months ago), the Four Seasons Resort in Jimbaran (Tommy) and the Bali
Golf and Country Club in Nusa Dua (Tommy). Tutut and Tommy bought the land under Jakarta's
National Police Headquarters for a fifth of its market value. Minister of Forestry Muslimin Nasution
says 4.5 million hectares of forest and plantation land is connected to the Suharto children. Observes
Melbourne-based economist Michael Backman, who has written about the Suhartos in his book Asian
Eclipse: Exploring the Dark Side of Business in Asia: "Anyone who says the family businesses are
broke has got it wrong. They still have shares in timber, oil palm plantations and hotels, all of which
are big dollar earners."
THE WHEELS OF JUSTICE
Suharto continues to insist that his assets are modest and located entirely in Indonesia. "He told me, 'I
don't have one cent abroad,'" says Kaligis, his top lawyer. "If anyone is found to have set up an
account in his name overseas, he has instructed me to launch a lawsuit against them." Since Suharto
resigned, son Bambang and his family have been spending time in Los Angeles; Titiek has been in
Boston, where her son goes to high school. The rest of the Suhartos live most of the year in
Indonesia. Sigit spends hours on his favorite Versace couch (no one else is allowed to sit on it),
playing video games and watching tapes of Javanese shadow puppet performances.
But the wheels of justice have barely started moving. Attorney General Ghalib says Suharto has
handed over to the government seven foundations with $690 million in assets. Members of Ghalib's
own staff, however, say Suharto continues to control those holdings and that the foundations are
worth far more than that. Three of the foundations together have an 87% stake in Bank Duta, which
had assets of $1 billion in 1990. Yet in investigating the foundations, Ghalib has not gone beyond their
printed records, which he has turned over to a state auditing board for analysis. Says Ghalib's
predecessor Soedjono: "This investigation isn't going anywhere."
The ongoing reform of Indonesia's banking sector also seems to be helping Suharto family members
and associates cover up their debt obligations. Last October, the government announced a plan to
merge four state banks--with a total of $11.5 billion in nonperforming loans--into one. The six Suharto
children and several companies affiliated with them are listed by the government as owing $800
million in bad debts to the four banks. The amount may well be understated: between them, Bambang
and Tommy have $635 million in bad loans from just one of the four, Bank Bumi Daya. An official with
the bank says that its accounts were falsely reported to the government, including $172 million lent to
Hashim Djojohadikusumo, Titiek's brother-in-law, to buy stock in another bank. Borrowing money to
purchase bank shares is illegal in Indonesia. Asked to respond, Hashim's office said he was too busy
for an interview. When TIME informed Habibie of the loan, the President immediately began looking
into it.
A genuine investigation into the Suharto booty will probably have to await the next government. A
parliamentary election scheduled for June 7, to be followed by a presidential vote in November, could
change the political equation substantially. Two leading presidential candidates, Amien Rais and
Abdurrahman Wahid, say they would order a trial for Suharto, probably followed by a pardon if he
returns ill-gotten gains. Megawati Sukarnoputri, daughter of founding President Sukarno and herself a
presidential candidate, hasn't made her stand clear. Some analysts think she will leave Suharto alone,
out of gratitude for his not imprisoning her father.
The children, however, could be in for rougher treatment. "As long as their father is alive," says a
Suharto family friend, "he can probably protect them. After he's gone, they're going to have to run."
Three of the six children have homes in the U.S., so prosecutors there could go after them under
tough new laws aimed at corruption and money laundering. Bambang, meanwhile, controls two U.S.-
listed companies, which could be subject to investigation under the Foreign Corrupt Practices Act.
Suharto himself has at least one strong legal shield: the presidential decrees that laid the foundation
for Suharto Inc. Former Finance Minister Mar'ie Muhammad's anti-corruption watchdog, the
Indonesian Transparency Society, has labeled as illegal 79 of the 528 such orders issued between
1993 and May 21, 1998. Yet Suharto was careful to have each decree approved by his rubber-stamp
parliament, usually at the end of his five-year presidential terms. Moreover, notes Juan Felix
Tampubolon, one of Suharto's lawyers, Indonesia has a statute of limitations on most offenses: "For
every crime he committed, if any, before 1981, the right to prosecute has expired under the statutory
period." For Suharto of Indonesia, that--along with $9 billion in an Austrian bank-- should offer
considerable comfort in retirement.
With reporting by Zamira Loebis, Jason Tedjasukmana and Lisa Rose Weaver/Jakarta, Laird
Harrison/Los Angeles, Isabella Ng/Hong Kong, Kate Noble/London and other bureaus
Siti Hardiyanti Rukmana "Tutut"
Age: 50
Estimated wealth: $700 million
Major holdings: Citra Lamtoro Gung Group, with interests in more than 90 companies
ranging from telecommunications to infrastructure, including tollway projects in
Indonesia and the Philippines
Property: 12-room, $1 million house with tennis court and heated pool near Boston;
house on London's Hyde Park Square
Last sighted: Requesting a hike in tollway rates from Indonesia's parliament
Operating style: Politically ambitious, Tutut ascended to the level of Minister of Social
Affairs in her father's last cabinet. Got her start in business at age 25, when "Uncle" Liem Sioe Liong
gave her 14% of BCA, the country's largest private bank. She has also adopted her nephew Ari Sigit's
out-of-wedlock daughter, Suharto's great-grandchild. A family friend who traveled to San Francisco on
one of Tutut's jets attests to her generosity: "She gave me a first-class ticket home to Jakarta. I can
still remember the smell of leather seats and Armani cologne in the bathrooms"
Bambang Trihatmodjo
Age: 45
Estimated wealth: $3 billion
Major holdings: 38% of Bimantara Citra, one of Indonesia's largest conglomerates
with 27 subsidiaries and interests in everything from oil and gas to hotels,
telecommunications and animal feed
Property: $8.2 million Singapore apartment, $12 million Los Angeles estate (a visitor
says the latter has two houses, two swimming pools, a tennis court and a basketball
court. "The interior design in the guest house was sort of nouveau riche, but worse,
with tiger-striped fabric on the couches")
Last sighted: At a bowling alley near Los Angeles
Operating style: Has been transferring cash overseas and buying shares in foreign markets for
several years. In 1997, say Dutch authorities, he made a "private visit" to the Netherlands-controlled
Caribbean island of Curaçao--apparently to make a large deposit in the local branch of an international
bank. A friend says Bambang once cared about the needy but something happened on the way to the
bank: "I think he saw all the people around him getting rich and felt left out"
Hutomo Mandala Putra "Tommy"
Age: 36
Estimated wealth: $800 million
Major holdings: 60% of Humpuss Group, which has more than 60 subsidiaries in
industries ranging from construction to pharmaceuticals
Property: Ranch in New Zealand, Mill Ride Golf Club, an 18-hole course he partly
owns in Ascot, England. Plays there twice a year and is said to have a respectable 12
handicap
Last sighted: Jakarta courthouse, where he is the only Suharto child to stand trial for
graft
Operating style: Accomplished stock car racer (once sponsored by Marlboro). Like brother Sigit, he
loves to gamble, thinking nothing of losing $1 million in a single sitting. One gaming partner says he
used to leave Jakarta on his plane with millions of dollars to wager in European casinos and stop in
Singapore on the way home to deposit what was left. "Tommy loves money," says a former business
partner. "And he always wanted it up front." Like his father, says a friend of the family, Tommy is "very
polite, very cool"
Sigit Harjoyudanto
Age: 48
Estimated wealth: $800 million
Major holdings: 40% of brother Tommy's Humpuss Group; silent partner in hundreds of other
companies and properties
Property: Two homes in exclusive Hampstead area of London worth $12 million each, one in Los
Angeles, one outside Geneva
Last sighted: Suharto family compound in Jakarta neighborhood of Menteng
Operating style: Serious gambler. Frequented roulette and baccarat tables in London (he loved the
Ritz), Atlantic City, Las Vegas and Perth; gambling partners say he wagered up to $3 million a night,
with career losses of more than $150 million. After Sigit suffered a bad run in Las Vegas in the late
1980s, his father banned him from gambling abroad. Jakarta bookies organized a call-in cable TV
show featuring a baccarat table; Sigit, a friend says, lost more than $20 million: "They set up the scam
just for Sigit"
Siti Hutami Endang Adiningsih "Mamiek"
Age: 34
Estimated wealth: $30 million
Major holdings: Stakes in several of her siblings' companies plus interests in fruit,
transportation and telecommunications. In 1995 the government appointed her
company Manggala Krida Yudha to undertake a $500 million reclamation project
expanding the North Jakarta seaport. She in turn tried to subcontract the project to
Hyundai Engineering for $100 million, but the deal was canceled by the government in
an effort to purge corruption
Property: 264-hectare fruit park in West Java
Last sighted: At her home in Jakarta
Operating style: Low-profile chain-smoker. Entered business too late to make much money. Is widely
known for her Mekarsari Park near Bogor, set up in 1995 to promote botanical research. A friend says
she once approached Mamiek with a business venture. Mamiek got back to her a week later: "I can't
do it. Daddy already gave that to Tommy"
Siti Hediati Hariyadi "Titiek"
Age: 40
Estimated wealth: $75 million
Major holdings: Financial services, power, computers, banking, property
Property: Home on London's Grosvenor Square
Last sighted: Boston, where her son is attending high school. Her husband, Lieut.
General Prabowo Subianto, is in Jordan looking after his brother's business interests
and visiting an old friend, Jordan's King Abdullah
Operating style: Chain smoker. Hates dogs. In Jakarta, she slept in one room; her
husband and his Alsatians in another. Likes Harry Winston, Bulgari and Cartier. "She
loves big chunks of jewelry," says a woman who has accompanied her on excursions to Switzerland
and England. Former chairwoman of the Indonesian Fine Arts Foundation, Titiek has a personal art
collection valued at more than $5 million. Adores movie stars. At a 1994 Suharto party in Bali to
celebrate the opening of Jakarta's Planet Hollywood, she danced the night away with martial arts star
Steven Seagal
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