The Shadow World

A book review in the TLS of Andrew Feinstein’s The Shadow World says:

In 2010, the world spent an estimated $1.6 trillion on armaments. The United States is responsible for 43 per cent of this, outstripping its nearest rival, China, by a factor of six. According to the Congressional Research Service, in Iraq and Afghanistan alone, the US had spent $1,092 billion by September 2010, and a further $171 billion was requested for 2011. But a group of economists at Brown University estimate that the total governmental outlay of costs was at least twice this, perhaps three times higher. At 4.8 per cent of GDP, weapons spending in the US is proportionately about three times higher than in other developed countries, and there is a good case for arguing that the military-industrial-congressional complex has bankrupted America.

Indeed, the perpetual prosperity of the DC Metro area owes a great deal to this complex and the amount of money it sucks from the rest of the country and redistributes here. Well connected officers and department heads parachute out of the government to land in private industry, soaking up money on projects that are often dubious.

 

The review continues:

Feinstein argues that the arms business drives domestic and foreign policy, feeds corruption, circumvents or supplants the rule of law, undermines democracy at home and abroad, and wastes precious resources. And of course weapons kill, and manufacturers and traders fan the flames of war. There are numerous examples showing that arms dealers sell to all sides. The US supplied both Iran and Iraq when the two were at war. The arms trader Viktor Bout supplied both the Angolan government and the UNITA rebels, and later sold weapons to all sides in the war in the Democratic Republic of Congo. American arms manufacturers lobbied for the invasion of Iraq. Another example is the role of Lockheed Martin and its then CEO, Norm Augustine, in pushing for the expansion of NATO so that former Eastern bloc countries would need to upgrade their arsenals, buying US equipment. “In Romania [Augustine] pledged that if the country’s government bought a new radar system from Lockheed Martin, the company would use its considerable clout in Washington to promote Bucharest’s NATO candidacy.” The Shadow World reads like a protracted indictment, covering especially Britain, the United States, the Middle East and Africa, with some attention to Russia and the former Soviet republics. It is encyclopedic, covering the biggest contracts, the numbers and the trends, while also bringing into focus the key individuals. Feinstein acknowledges that to do justice to Latin America, China, India and Pakistan would require another volume, or several.

Time and again, from Washington, DC to London, from Baghdad to Pretoria, corruption accompanies armaments contracts. It has been this way for decades. Feinstein quotes a report from 1965 written by the British industrialist Donald Stokes, which included the remarks, “a great many arms sales were made, not because anyone wanted the arms, but because of the commission involved en route” and “it was often necessary to offer bribes to make sales”. Corruption is integral to the arms companies’ business model. In the case of the US defence contractors, they rely primarily on immense Pentagon procurements, pork-barrel politics and the unwillingness of members of Congress to give due scrutiny to procurement processes. Repeatedly, excesses such as a $7 hammer invoiced for $435 reach the public realm, and inquiries into illegal practices result in fines for the companies involved that amount to a slap on the wrist. And the system doesn’t change: the wars in Iraq and Afghanistan became an opportunity for vast new under-scrutinized spending sprees. A request in 2007 under the Iraq Supplemental Bill for $33 billion was justified by just five pages of text. Linda Bilmes of Brown University drily noted, “In my opinion as a budgeting professor … this is not the best way for the US budget system to operate”.

As an arms manufacturer, BAE Systems stands approximately in equal global first place alongside Boeing and Lockheed Martin. But unlike the latter two, fully 95 per cent of its turnover is from armaments (Boeing is evenly split between civil and military aviation, and Lockheed Martin is 30 per cent civilian), and the British defence budget isn’t big enough to sustain the company’s ambitions. So BAE Systems has gone global. It has become a major player in the US market. But its biggest and most malodorous transaction is the Al Yamamah deal with Saudi Arabia, negotiated by Margaret Thatcher, and worth about £43 billion. Its successor, the Al Salam deal, was concluded in 2007, initially for seventytwo Eurofighter jets for £4.43 billion, but could be worth as much as £40 billion. Both are government-to-government deals with BAE as the principal contractor, and both involve an extraordinary network of oil and arms sales, slush funds, offsets and kickbacks. Feinstein’s account is filled with examples (meticulously footnoted) of the kinds of bribes and inducements offered, including rent for girlfriends’ flats, expenses-paid holidays, cars and free travel.

I don’t expect anything to be done about this, but it is another depressing aspect of the principalities and powers interlocked across the globe.

What Feinstein describes is the underbelly of globalization. Alongside the public globalization of transnational corporations and financial flows, there is an illicit global economy that involves drugs, human trafficking and arms. Feinstein shows how the shadow world of weapons production and trade has penetrated the official one and is a driving force in corruption, secrecy and impunity. The arms business would not survive in its current form without pervasive corruption.

Add abortion to the human trafficking and you have a system of totalizing evil that sits astride the globe.

Feinstein has a few heroes: some courageous and persistent journalists and a few principled insiders. One of these is Franklin “Chuck” Spinney, a Pentagon staff member on a mission to fight corruption and inefficiency.

Spinney argues that the intertwining of defence companies like Lockheed Martin, their allies in government, think-tanks and the Pentagon, results not only in profligacy from $600 toilet seats to the $70bn spent on unrequired F-22s, but it also makes war more likely, [owing] to the combination of interests and the dominance of the executive over the legislature. The executive branch is able, in myriad ways, to control money going to Congressional districts, directly (through supporting weapons programmes) or indirectly (through all of the government agencies). And patronage is now crucial given the cost of elections. It is extremely difficult for a Representative with defence production in his or her constituency to oppose a President going to war.

Halliburton exemplifies the problem: the company was a major contributor to the Republican Party ($1,146,128 between 1998 and 2003) and was a big beneficiary of the Iraq war. In Britain, BAE Systems casts a similar shadow over democracy. The Serious Fraud Office took note of the Al Yamamah deal, but found it had bitten off more than the Blair government would allow it to chew. Saudi Arabia’s Prince Bandar Al-Saud made it clear that any SFO investigation into Al Yamamah would endanger the then-pending Al Salam deal (as well as threatening to stop sharing intelligence), and the government caved in. On December 14, 2006, the SFO dropped the investigation, a day described by the Guardian as “shabby, shaming” and “among the most inglorious [Tony Blair] has spent in office”. In 2008, a ruling in the High Court was scarcely less critical: “So bleak a picture of the impotence of the law invites at least dismay, if not outrage”.

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