by Amy Chua
In Argentina, laissez-faire economic policies in the late nineteenth and early twentieth centuries led to the humiliating domination of Argentina’s economy by American companies like Swift, Armour, Wilson, Goodyear, and ITT. By 1935 roughly 50 percent of the country’s industrial capital was owned or controlled by American or other Western investors. Anti-American sentiment intensified, culminating in a powerful nationalist reaction under the charismatic populist leader Juan Perón. Masterfully inciting hatred against foreign capitalists and the landed estancieros, Perón nationalized Argentina’s foreign-owned railroads, gasworks, and utilities in the name of the “true Argentinians.”33
Similar majority-supported, anti-market confiscations targeting Western foreign investors, often along with internal market-dominant minorities, have occurred throughout the developing world. In Chile in the early 1970s, democratically elected president Salvador Allende nationalized hundreds of private businesses, including the American Anaconda and Kennecott copper companies, in the name of “Chile for the Chileans.” In Uruguay, Don José Batlle y Ordóñez swept to electoral victory on an antiforeigner, nationalist platform; once in office Batlle nationalized the foreign-dominated railway, electricity, and insurance industries. In Burma, the country’s revered first prime minister U Nu nationalized major British teak, cement, sugar, and transportation companies along with Burmese Indian and Burmese Chinese businesses in the name of “Burmanization.” In Indonesia, Sukarno’s sweeping nationalizations in the late fifties and sixties targeted not just Indonesian Chinese but also enormous Dutch enterprises. In Uganda in the 1960s, President Milton Obote partially nationalized major European companies, including Shell-BP. Around the same time in Tanzania, President Julius Nyerere nationalized all major foreign firms, including the entirety of the British- and Indian-dominated banking, insurance, and import-export sectors.34
The list goes on. A startling percentage of the world’s developing countries have at some point confiscated the assets or businesses of market-dominant foreign investors. Invariably, these nationalizations were majority-supported—usually with wild popular enthusiasm.
With the fall of the Soviet Union in 1989, many imagined that the pressures for nationalization in the developing world would evaporate. But as discussed earlier, this prediction was based on the erroneous assumption that nationalization in the developing world was motivated principally by socialist or Communist ideals. In reality, with a few exceptions (China, Cuba, Vietnam), nationalization in developing countries was never so much an expression of socialism as it was of intense nationalism and ethnonationalism, directed at both Western and internal market-dominant minorities.
The events of 1989, while perhaps discrediting socialism, did nothing to diminish nationalist and ethnonationalist pressures. Indeed, as chapter 5 discussed, ethnonationalist confiscations targeting market-dominant minorities have occurred frequently since 1989, for example, in Ethiopia, Indonesia, and most recently Zimbabwe. At the same time, nationalist resentment against Western “economic aggression” and IMF free market “austerity” measures has intensified. In recent years, with the rising dominance of the United States and the growing visibility of American multinationals, such nationalist resentment increasingly vents itself in concentrated anti-American hatred.
But unlike in the 1930s or even 1970s, anti-American backlash these days rarely takes the form of confiscation or nationalization of American holdings. This is not because nationalism or anti-Americanism has lessened. (When President Bill Clinton visited India in 2000, furious protests broke out, and well-known poet Kaifi Azmi wrote a poem for Clinton, saying: “Your bill is counterfeit. O shark of the markets / We know you truly well. O benevolent / intruder from the distant land.”)35 Rather, anti-American nationalizations are rare because of America’s tremendous global clout—economic, political, and military. Any country daring to expropriate American property today risks serious consequences, whether in the form of capital flight, crippling lawsuits, economic sanctions, or worse. The poor countries of the world, governments and citizens alike, fear America. That’s partly why they hate us.
Indeed, the few episodes of near-confiscation in recent years have typically involved unusual circumstances and some degree of American botch-up. In 1999, for example, the Wall Street firm Kohlberg Kravis Roberts (KKR) engineered the hostile takeover of Russia’s Lomonosov Porcelain Factory by American shareholders. But KKR underestimated the importance of the factory as a symbol of Russian cultural identity. Established by Peter the Great’s daughter in 1744, the Lomonosov Factory produced tea sets, gilded figurines, and even porcelain paintings for generations of tsars. After the Communists took over in 1917, the factory’s product line “became more politically correct: plates bearing Lenin’s visage and chess sets with manacled proletarians as pawns.” Apparently, Jane Fonda once ordered Lomonosov china, painted environmental green with the rust-colored slogan “Earth to the Workers.”36
For many Russians the idea of foreigners, especially Americans, owning the factory was anathema, or, as one factory spokeswoman put it, akin to “selling part of the Hermitage art collection.” Nor did it help matters that KKR had employed a shady local intermediary to carry out the actual transaction. In any event, self-interested managers of the factory sued for renationalization, on grounds that it had been illegally privatized—singling it out of ten thousand other similar privatizations. In the end, however, after initial losses in lower St. Petersburg courts, the American investors ultimately prevailed.37
Enron, much in the news these days, fared considerably worse in India. As late as 1991, India’s power sector was a state-owned economic nightmare. Almost half of the electricity produced in the country was given away free, and roughly another quarter was stolen. Meanwhile, India’s economy was plodding along at almost zero growth. Pushed by the World Bank, India’s new pro-market government came up with a familiar solution: jump-start the power sector through privatization and foreign investment.
In 1993, in what seemed like a match made in heaven, Enron entered into a contract with the state government of Maharashtra to build the $2.8 billion Dabhol power plant, representing by far India’s largest foreign investment. But like Coca-Cola and IBM, who were “persuaded” by Indira Gandhi in the 1970s to close down their operations in India, Enron ran into intense anti-American, antimultinational sentiment. Shortly after the deal was signed, Hindu nationalist parties rode to power in elections in Maharashtra. The new leaders condemned the terms of the contract as theft and “neo-colonialism,” favorable only to Enron and its corrupt local cronies while forcing the already impoverished local Maharashtrians to pay higher, survival-threatening prices.
“Why do we need foreigners when we have so many Indian industrialists?” demanded the new leaders as they “reviewed the legitimacy” of the contract. “Kill the Dabhol project!” “America out!” and “Enron into the sea!” became popular slogans. In what many Westerners view as a form of confiscation, Enron eventually had to renegotiate the terms of the contract.38 (Critics of Enron say its willingness to renegotiate merely confirms how outrageous their original profit margin must have been; Enron’s defenders argue that Enron, having already sunk $300 million in construction costs, was basically held up and extorted.)
Enron’s troubles in India were far from over. Even after the new contract was signed in 1995, with reduced electricity rates for the Maharashtrians, Enron stood as a hated symbol of American exploitation. Anti-Enron demonstrations, vandalism, and threats to storm the power plant persisted through spring of 2001. Enron ended up paying for local police to provide additional security, then got entangled in further scandal when New York–based Human Rights Watch issued a 166-page report charging the police with beating and illegally detaining anti-Enron protesters. At one point, the report said, “the pregnant wife of a village activist was dragged naked from her home and beaten in the street.”39
But the Lomonosov Porcelain and Enron cases are exceptional. The truth is that whi
le American multinationals are more resented than ever, and often the subject of sporadic local protest or retaliation, they are also more confident and powerful in the developing world than ever, backed by the strongest nation in the world. In India, for example, despite the Enron fiasco and seething popular antimultinational hostility, recent economic liberalizations have brought American giants like Coca-Cola and IBM charging back in. Because of the United States’ “hyperpower” status, developing-country governments—at least for now—no longer view expropriation of American assets as a viable option. As one developing-country commentator put it, “Developing countries are entirely dependent on, and controlled by, the international financial system. In short, we are at the mercy of the United States.”
Thus, even as anti-American hostility in developing countries mounts, one outlet for its expression—expropriation of American holdings—has essentially been closed off. On one level this is a cause for celebration: Perhaps what Westerners call “the rule of law”—meaning basically the sanctity of contract and protection of private property—is finally taking hold in the developing world. The problem, however, is that the pervasive, underlying hatred of the market-dominant minority remains. And there are outlets for group hatred infinitely more terrible than economic confiscations.
Destroying America
Market-dominant minorities are often the victims of homicidal fury. The Chinese in Southeast Asia, Tutsi in Rwanda, Jews in Germany, Ibo in Nigeria, and Croats in the former Yugoslavia were all, at some point, murdered en masse by enraged members of a frustrated, relatively impoverished majority who saw themselves as the humiliated “true” owners of the nation.
The September 11, 2001, killings had much in common with other mass killings of market-dominant minorities. First, they revealed an all-consuming group hatred that may have shocked Americans but is distinctly parallel to the hatred felt, for example, by the Hutu when they murdered Tutsis, who had dominated them economically and politically for four hundred years. In the eyes of the killers on September 11, as in every case when market-dominant minorities are massacred, the victims were no longer individuals but faceless embodiments of corrupt wealth, arrogance, and abusive power.
Second, this intense group hatred was fomented by a calculating, charismatic demagogue. In this respect, Osama bin Laden has his counterparts in Adolf Hitler and Slobodan Milosevic. In all these cases the leaders found great wells of anger, disgust, and spiritual misery waiting to be exploited.
Third, like other mass killings aimed at “cleansing” the nation of a hated “outsider” market-dominant minority, one of the main objectives of Islamic terrorism has been to eliminate the presence of America from the Middle East. A stunning feature of this terrorism is its global reach. Nevertheless, one of bin Laden’s primary missions has been to “purge” the “lands of Islam” of Western and particularly American infidels. “For more than seven years,” bin Laden declared in 1993, “the United States has been occupying the lands of Islam in the holiest of its territories, Arabia, plundering its riches, overwhelming its rulers, humiliating its people, threatening its neighbors, and using its peninsula as a spearhead to fight neighboring Islamic peoples.”40
Similarly, after the 1996 twin bombings of U.S. embassies in Kenya and Tanzania—in which over 250 people died and more than 5,500 were injured—bin Laden’s associate Abdul-Bari Atwan published an article called “American Harvest of Blood,” defending the suicide attacks as “the logical results of the unjust and demeaning policies which the United States has been pursuing in the Arab region and in the Islamic world.” A litany of grievances followed, summarized by Yossef Bodansky in his recent biography of bin Laden, with the main criticism aimed at the United States’ policy of sponsoring corrupt dictators in the Arab world, hypocritically “prevent[ing] the democratic tide from spreading to the region . . .” According to Atwan, “America’s insistence on imposing its own puppets on the Muslim world in order to expedite exploitation of oil and other riches—and not U.S.-Israeli relations—was at the core of the Islamist eruption.”41
After the September 11 attacks, bin Laden himself issued a strongly worded warning to Americans in a recorded statement broadcast on Al-Jazeera television. Describing the American victims generically as “killers, who have abused the blood, honour, and sanctuaries of Muslims,” bin Laden swore “by God, who has elevated the skies without pillars,” that “neither America nor the people who live in it will dream of security before we live it in Palestine, and not before all the infidel armies leave the land of Muhammad.”42
Fourth, like all acts of violence against market-dominant minorities, the September 11 attacks were an act of revenge by the weak against the powerful, motivated by tremendous feelings of humiliation and inferiority. “Weakness” is a complicated matter, with a large subjective component. Poverty breeds feelings of weakness. But so does being from a poor country. As many have pointed out, the pilots who flew their planes into the World Trade Center were well educated, with middle-class backgrounds. But they were also from countries that in their own eyes had been raped and humiliated by the West. Slobodan Milosevic was not poverty-stricken, but his statement “[I]f we don’t know how to work well or to do business, at least we know how to fight well!”43 reveals much about the psychology of a majority that perceives itself as dominated and degraded.
“Power” can also be subjective and complicated—but in the United States’ case, it is not. As a country, America is not merely disproportionately wealthy, but economically, politically, culturally, technologically, and militarily dominant over the rest of the world.
“America is the most powerful nation on Earth,” wrote Nepalese columnist Daijhi, shortly after September 11. “Its economic force controls every field of commerce. Its military strength can destroy any other nation. It is effectively both the global government and the global policeman. But a small group of dedicated people armed only with fruit knives and a passionate cause was able to bring death, destruction and humiliation upon it. The spectacular attack on New York and Washington was the most important international event since the collapse of Communist Russia.”44 Although Daijhi condemned the attack on America, the hint of pride in his tone is unmistakable. “So America is not so invincible after all,” hundreds of other developing-country commentators observed.
Many on the Arab street gloated more expressly. “Bulls-eye!” cheered taxi drivers in Egypt as they watched over and over footage of the hijacked planes slamming into the twin towers of the World Trade Center. “Mabrouk! Mabrouk! (Congratulations!),” shouted jubilant crowds huddled around televisions in shop windows.45 While most Muslims are not fundamentalists, the September 11 killings nevertheless prompted many of them to celebrate and give special thanks to Allah. “[T]here can be no question,” writes Martin Peretz, “that today, it is in the lands of Islam where the greatest number of lives are invigorated by ecstatic hatred of the United States. We see this ecstasy, at once joyful and enraged, from Gaza to Egypt to the Gulf to South Asia.”46
Demographics exacerbate the problem. The majority of the population in the Middle East are young. “Seventy percent of the Arab population has been born since 1970,” Robert Kaplan warned presciently in his 1994 essay “The Coming Anarchy.” “The most distant recollection of these youths will be the West’s humiliation of colonially invented Iraq in 1991. Today seventeen out of twenty-two Arab states have a declining gross national product; in the next twenty years, at current growth rates, the population of many Arab countries will double. These states . . . will be ungovernable through conventional secular ideologies.”47
The statement bin Laden aired shortly after the September 11 attacks, nauseating to grief-stricken Americans, hit just the right chord with millions throughout the Middle East: “I bear witness that there is no God but Allah and that Mohammed is his messenger. There is America, hit by God in one of its softest spots. Its greatest buildings were destroyed. Thank God for that. There is America, full of fear from i
ts north to its south, from its west to its east. Thank God for that. What America is tasting now is something insignificant compared to what we have tasted for scores of years.”48
The momentary jubilation, however, of the millions of poor and exploited people around the world who rejoiced at the mass murder of Americans reflects profound weakness. In the words of Turkish writer Orhan Pamuk, “It is neither Islam nor even poverty itself that directly engenders support for terrorists whose ferocity and ingenuity are unprecedented in human history; it is, rather, the crushing humiliation that has infected the third-world countries.” Pamuk continues as follows:
At no time in history has the gulf between rich and poor been so wide. . . . at no time in history have the lives of the rich been so forcefully brought to the attention of the poor through television and Hollywood films. . . . But far worse, at no other time have the world’s rich and powerful societies been so clearly right, and “reasonable.”
Today an ordinary citizen of a poor, undemocratic Muslim country, or a civil servant in a third-world country or in a former socialist republic struggling to make ends meet, is aware of how insubstantial is his share of the world’s wealth; he knows that he lives under conditions that are much harsher and more devastating than those of a “Westerner” and that he is condemned to a much shorter life. At the same time, however, he senses in a corner of his mind that his poverty is to some considerable degree the fault of his own folly and inadequacy, or those of his father and grandfather. The Western world is scarcely aware of this overwhelming feeling of humiliation that is experienced by most of the world’s population . . .49
