The Shock Doctrine: The Rise of Disaster Capitalism

by Naomi Klein

  64. Bivens and Bernstein, “The Russia You Never Met,” 627–28; Total, Factbook 1998–2006, April 2006, page 2, www.total.com; The profit figure is for 2000: Marshall I. Goldman, The Piratization of Russia: Russian Reform Goes Awry (New York: Routledge, 2003), 120; “Yukos Offers 12.5 Percent Stake against Debts to State-Owned Former Unit,” Associated Press, June 5, 2006; the $2.8 billion figure is based on the fact that in 1997 British Petroleum paid $571 million for a 10 percent stake in Sidanko, and at that rate the 51 percent stake would have been worth more than $2.8 billion: Freeland, Sale of the Century, 183; Stanislav Lunev, “Russian Organized Crime Spreads Beyond Russia’s Borders,” Prism 3, no. 8 (May 30, 1997).

  65. Bivens and Bernstein, “The Russia You Never Met,” 629.

  66. Reddaway and Glinski, The Tragedy of Russia’s Reforms, 254.

  67. Freeland, Sale of the Century, 299.

  68. Return of the Czar.

  69. Bivens and Bernstein report that “allegations surfaced that Chubais and four of his reform lieutenants—all of them men who had been supported by Chubais’s USAID-funded patronage—had accepted $90,000 each in bribes disguised as a book advance from Uneximbank” (one of the main oligarchic firms that was winning lucrative privatization contracts from these men). In a similar controversy, Alfred Kokh, second in charge of privatization for the Yeltsin government, was paid $100,000 by a company linked to one of the main oligarchs to whom he was awarding privatization contracts; fittingly, the money was supposedly for a book he was to write on the efficiency of privatized companies. Ultimately, neither man was prosecuted in connection with the separate book deals. Bivens and Bernstein, “The Russia You Never Met,” 636; Vladimir Isachenkov, “Prosecutors Investigate Russia’s Ex-Privatization Czar,” Associated Press, October 1, 1997.

  70. McClintick, “How Harvard Lost Russia.”

  71. U.S. District Court, District of Massachusetts, “United States of America, Plaintiff, v. President and Fellows of Harvard College, Andrei Shleifer and Jonathan Hay, Defendants: Civil Action No. 00–11977-DPW,” Memorandum and Order, June 28, 2004; McClintick, “How Harvard Lost Russia.”

  72. McClintick, “How Harvard Lost Russia.”

  73. Dan Josefsson, “The Art of Ruining a Country with a Little Professional Help from Sweden,” ETC (Stockholm) English edition, 1999.

  74. Ernest Beck, “Soros Begins Investing in Eastern Europe,” Wall Street Journal, June 1, 1994; Andrew Jack, Arkady Ostrovsky and Charles Pretzlik, “Soros to Sell ‘The Worst Investment of My Life,’” Financial Times (London), March 17, 2004.

  75. Brian Whitmore, “Latest Polls Showing Communists Ahead,” Moscow Times, September 8, 1999.

  76. Return of the Czar.

  77. Helen Womack, “Terror Alert in Moscow as Third Bombing Kills 73,” Independent (London), September 14, 1999.

  78. Aslan Nurbiyev, “Last Bodies Cleared from Rebels’ Secret Grozny Cemetery,” Agence France-Presse, April 6, 2006.

  79. Sabrina Tavernise, “Farms as Business in Russia,” New York Times, November 6, 2001; Josefsson, “The Art of Ruining a Country with a Little Professional Help from Sweden”; “News Conference by James Wolfensohn, President of the World Bank Re: IMF Spring Meeting,” Washington, DC, April 22, 1999, www.imf.org; Branko Milanovic, Income, Inequality and Poverty during the Transition from Planned to Market Economy (Washington, DC: World Bank, 1998), 68; Working Center for Economic Reform, Government of the Russian Federation, Russian Economic Trends 5, no. 1 (1996): 56–57, cited in Bertram Silverman and Murray Yanowitch, New Rich, New Poor, New Russia: Winners and Losers on the Russian Road to Capitalism (Armonk, NY: M.E. Sharpe, 2000), 47.

  80. The 715,000 statistic comes from the Russian health and social development minister. “Russia Has More Than 715,000 Homeless Children—Health Minister,” RIA Novosti news agency, February 23, 2006; Carel De Rooy, UNICEF, Children in the Russian Federation, November 16, 2004, page 5, www.unicef.org.

  81. In 1987, Russia’s per capita alcohol consumption was 3.9 liters. In 2003 it reached 8.87 liters. World Health Organization Regional Office for Europe, “3050 Pure Alcohol Consumption, Litres Per Capita, 1987, 2003,” European Health for All Database (HFA-DB), data.euro.who.int/hfadb; “In Sad Tally, Russia Counts More Than 4 Million Addicts,” Pravda (Moscow), February 20, 2004; UNAIDS, “Annex 1: Russian Federation,” 2006 Global Report on the AIDS Epidemic, May 2006, page 437, www.unaids.org; Interview with Natalya Katsap, Manager, Media Partnerships, Transatlantic Partners Against AIDS, June 2006.

  82. World Health Organization Regional Office for Europe, “1780 SDR, Suicide and Self-Inflicted Injury, All Ages Per 100,000, 1986–1994,” European Health for All Database (HFA-DB), data.euro.who.int/hfadb; In 1986, the rate of homicide and intentional injuries per 100,000 people was 7.3; in 1994 it reached its high of 32.9; in 2004 it was down to 25.2. World Health Organization Regional Office for Europe, “1793 SDR, Homicide and Intentional Injury, All Ages Per 100,000, 1986–2004,” European Health for All Database.

  83. Nikitin, “’91 Foes Linked by Anger and Regret”; Stephen F. Cohen, “The New American Cold War,” The Nation, July 10, 2006; Central Intelligence Agency, “Russia,” World Factbook 1992 (Washington, DC: CIA, 1992), 287; Central Intelligence Agency, “Russia,” World Factbook 2007, www.cia.gov.

  84. Colin McMahon, “Shortages Leave Russia’s East Out in the Cold,” Chicago Tribune, November 19, 1998.

  85. Arbatov, “Origins and Consequences of ‘Shock Therapy,’” 177.

  86. Richard Pipes, “Russia’s Chance,” Commentary 93, no. 3 (March 1992): 30.

  87. Richard E. Ericson, “The Classical Soviet-Type Economy: Nature of the System and Implications for Reform,” Journal of Economic Perspectives 5, no. 4 (Autumn 1991): 25.

  88. Tayler, “Russia Is Finished”; Richard Lourie, “Shock of Calamity,” Los Angeles Times, March 21, 1999.

  89. Josefsson, “The Art of Ruining a Country with a Little Professional Help from Sweden.”

  90. Tatyana Koshkareva and Rustam Narzikulov, Nezavisimaya Gazeta (Moscow), October 31, 1997; Paul Klebnikov and Carrie Shook, “Russia and Central Europe: The New Frontier,” Forbes, July 28, 1997.

  91. Adam Smith, The Wealth of Nations, ed. Edwin Cannan (New York: Modern Library, 1937), 532.

  92. I am indebted to David Harvey for informing this analysis. David Harvey, A Brief History of Neoliberalism (New York: Oxford University Press, 2005).

  93. Michael Schuman, “Billionaires in the Making,” Forbes, July 18, 1994; Harvey, A Brief History of Neoliberalism, 103.

  94. “YPFB: Selling a National Symbol,” Institutional Investor, March 1, 1997; Jonathan Friedland, “Money Transfer,” Wall Street Journal, August 15, 1995.

  95. Friedland, “Money Transfer.”

  96. Paul Blustein, And the Money Kept Rolling In (and Out): Wall Street, the IMF, and the Bankrupting of Argentina (New York: PublicAffairs, 2005), 24, 29; Nathaniel C. Nash, “Argentina’s President, Praised Abroad, Finds Himself in Trouble at Home,” New York Times, June 8, 1991; Tod Robberson, “Argentine President’s Exit Inspires Mixed Emotions,” Dallas Morning News, October 18, 1999.

  97. Paul Brinkley-Rogers, “Chaos Reigns as President Flees Uprising,” Daily Telegraph (London), December 22, 2001.

  98. Jean Friedman-Rudovsky, “Bolivia Calls Ex-President to Court,” Time, February 6, 2007.

  12: The Capitalist Id: Russia and the New Era of the Boor Market

  1. John Maynard Keynes, “From Keynes to Roosevelt: Our Recovery Plan Assayed,” New York Times, December 31, 1933.

  2. Ashley M. Herer, “Oprah, Bono Promote Clothing Line, iPod,” Associated Press, October 13, 2006.

  3. T. Christian Miller, Blood Money: Wasted Billions, Lost Lives, and Corporate Greed in Iraq (New York: Little, Brown and Company, 2006), 123. FOOTNOTE p. 248: John Cassidy, “Always with Us,” The New Yorker, April 11, 2005.

  4. Peter Passell, “Dr. Jeffrey Sachs, Shock Therapist,” New York Times, June 27, 1993.

  5. J
effrey Sachs, “Life in the Economic Emergency Room,” in The Political Economy of Policy Reform, ed. John Williamson (Washington, DC: Institute for International Economics, 1994), 516.

  6. “Roosevelt Victor by 7,054,520 Votes,” New York Times, December 25, 1932; Raymond Moley, After Seven Years (New York: Harper & Brothers, 1939), 305.

  7. Carolyn Eisenberg, Drawing the Line: The American Decision to Divide Germany, 1944–1949 (New York: Cambridge University Press, 1996).

  8. The Political Economy of Policy Reform, 44.

  9. Sachs, “Life in the Economic Emergency Room,” 503–504, 513.

  10. John Williamson, The Political Economy of Policy Reform, 19, 26.

  11. John Williamson and Stephan Haggard, “The Political Conditions for Economic Reform,” in The Political Economy of Policy Reform, 565.

  12. Williamson, The Political Economy of Policy Reform, 20.

  13. John Toye, The Political Economy of Policy Reform, 41.

  14. Bruce Little, “Debt Crisis Looms, Study Warns,” Globe and Mail (Toronto), February 16, 1993; The TV report was on W5 on CTV, hosted by Eric Malling. Linda McQuaig, Shooting the Hippo: Death by Deficit and Other Canadian Myths (Toronto: Penguin, 1995), 3.

  15. The information in this paragraph is drawn from McQuaig, Shooting the Hippo, 18, 42–44, 117.

  16. Ibid., 44, 46.

  17. “How to Invent a Crisis in Education,” Globe and Mail (Toronto), September 15, 1995.

  18. Information in the next two paragraphs is drawn from Michael Bruno, Deep Crises and Reform: What Have We Learned? (Washington, DC: World Bank, 1996), 4, 6, 13, 25. Emphasis in original.

  19. Ibid., 6. Emphasis added.

  20. The figure for World Bank membership refers to 1995. There are now 185 member countries.

  21. Information in the next four paragraphs is drawn from Davison L. Budhoo, Enough Is Enough: Dear Mr. Camdessus…Open Letter of Resignation to the Managing Director of the International Monetary Fund (New York: New Horizons Press, 1990), 2–27.

  22. Most of Budhoo’s allegations center on the discrepancies in the calculations for Trinidad and Tobago’s Relative Unit Labor Cost, which is an extremely important economic indicator that measures countries’ productivity. He writes, “On the basis of calculations made by our divisional statistician last year after the Fund mission returned from the field, the Relative Unit Labour Cost in Trinidad and Tobago increased by 69 percent only, instead of the 145.8 percent as stated in our 1985 reports, and the 142.9 percent as claimed in the 1986 Fund documents. Between 1980–85 the RULC actually rose by a mere 66.1 percent instead of our assertion of 164.7 percent made in the 1986 reports. Over 1983–85 relative unit labour costs moved up by only 14.9 percent, not by the 36.9 percent that was mooted to the world community in 1986. In 1985, instead of rising by the 9 percent that we had stated in the RED and Staff Report, the RULC Index fell by 1.7 percent. And in 1986 relative unit labour costs slid downward spectacularly by 46.5 percent although there is no record of this in the 1987 report or anywhere else in official Fund documentation.” Ibid., 17.

  23. “Bitter Calypsos in the Caribbean,” Guardian (London), July 30, 1990; Robert Weissman, “Playing with Numbers: The IMF’s Fraud in Trinidad and Tobago,” Multinational Monitor 11, no. 6 (June 1990).

  24. Lawrence Van Gelder, “Mr. Budhoo’s Letter of Resignation from the I.M.F. (50 Years Is Enough),” New York Times, March 20, 1996.

  13. Let It Burn: The Looting of Asia and “The Fall of a Second Berlin Wall”

  1. Anita Raghavan, “Wall Street Is Scavenging in Asia-Pacific,” Wall Street Journal, February 10, 1998.

  2. R. William Liddle, “Year One of the Yudhoyono–Kalla Duumvirate,” Bulletin of Indonesian Economic Studies 41, no. 3 (December 2005): 337.

  3. “The Weakest Link,” The Economist, February 8, 2003.

  4. Irma Adelman, “Lessons from Korea,” in The New Russia: Transition Gone Awry, eds. Lawrence R. Klein and Marshall Pomer (Stanford, CA: Stanford University Press, 2001), 129.

  5. David McNally, “Globalization on Trial” Monthly Review, September 1998.

  6. “Apec Highlights Social Impact of Asian Financial Crisis,” Bernama news agency, May 25, 1998.

  7. Hur Nam-Il, “Gold Rush…Korean Style,” Business Korea, March 1998; “Selling Pressure Mounts on Korean Won—Report,” Korea Herald (Seoul), May 12, 1998.

  8. “Elderly Suicide Rate on the Increase,” Korea Herald (Seoul), October 27, 1999; “Economic Woes Driving More to Suicide,” Korea Times (Seoul), April 23, 1998.

  9. The crisis hit in 1994, but the loan did not come through until early 1995.

  10. “Milton Friedman Discusses the IMF,” CNN Moneyline with Lou Dobbs, January 22, 1998; George P. Shultz, William E. Simon and Walter B. Wriston, “Who Needs the IMF,” Wall Street Journal, February 3, 1998.

  11. Milken Institute, “Global Overview,” Global Conference 1998, Los Angeles, March 12, 1998, www.milkeninstitute.org.

  12. Bill Clinton, “Joint Press Conference with Prime Minister Chrétien,” November 23, 1997, www.clintonfoundation.org.

  13. Milken Institute, “Global Overview.”

  14. José Piñera, “The ‘Third Way’ Keeps Countries in the Third World,” prepared for the Cato Institute’s 16th Annual Monetary Conference cosponsored with The Economist, Washington, DC, October 22, 1998; José Piñera, “The Fall of a Second Berlin Wall,” October 22, 1998, www.josepinera.com.

  15. “U.S. Senate Committee on Foreign Relations Holds Hearing on the Role of the IMF in the Asian Financial Crisis,” February 12, 1998; “Text–Greenspan’s Speech to New York Economic Club,” Reuters News, December 3, 1997.

  16. M. Perez and S. Tobarra, “Los países asiáticos tendrán que aceptar cierta flexibilidad que no era necesaria hasta ahora,” El País International Edition (Madrid), December 8, 1997; “IMF Chief Calls for Abandon of ‘Asian Model,’” Agence France-Presse, December 1, 1997.

  17. Interview with Mahathir Mohamad conducted July 2, 2001, for Commanding Heights: The Battle for the World Economy, www.pbs.org.

  18. Interview with Stanley Fischer conducted May 9, 2001, for Commanding Heights, www.pbs.org.

  19. Stephen Grenville, “The IMF and the Indonesian Crisis,” background paper, Independent Evaluation Office of the IMF, May 2004, page 8, www.imf.org.

  20. Walden Bello, “The IMF’s Hidden Agenda,” The Nation (Bangkok), January 25, 1998.

  21. Fischer, Commanding Heights; Joseph Kahn, “I.M.F.’s Hand Often Heavy, a Study Says,” New York Times, October 21, 2000. FOOTNOTE: Paul Blustein, The Chastening: Inside the Crisis That Rocked the Global Financial System and Humbled the IMF (New York: PublicAffairs, 2001), 6–7.

  22. The IMF agreement with South Korea explicitly demanded “easing restrictions in the labor market over redundancies (to enable businesses to move from one industry to another).” Cited in Martin Hart-Landsberg and Paul Burkett, “Economic Crisis and Restructuring in South Korea: Beyond the Free Market-Statist Debate,” Critical Asian Studies 33, no. 3 (2001): 421; Alkman Granitsas and Dan Biers, “Economies: The Next Step: The IMF Has Stopped Asia’s Financial Panic,” Far Eastern Economic Review, April 23, 1998; Cindy Shiner, “Economic Crisis Clouds Indonesian’s Reforms,” Washington Post, September 10, 1998.

  23. Soren Ambrose, “South Korean Union Sues the IMF,” Economic Justice News 2, no. 4 (January 2000).

  24. Nicola Bullard, Taming the Tigers: The IMF and the Asian Crisis (London: Focus on the Global South, March 2, 1999), www.focusweb.org; Walden Bello, A Siamese Tragedy: The Collapse of Democracy in Thailand (London: Focus on the Global South, September 29, 2006), www.focusweb.org.