Movable Green Zone
excerpted from the book
The Shock Doctrine
The Rise of Disaster Capitalism
by Naomi Klein
Picador, 2007, paperback
Richard Cohen, a Washington Post columnist on his support for
the invasion of Iraq
In a post-Sept. 11 world, I thought the
prudent use of violence could be therapeutic.
Henry Kissinger to Argentina's military junta, 1976
If there are things that have to be done,
you should do them quickly.
Washington's game plan for Iraq: shock and terrorize the entire-
country, deliberately ruin its infrastructure, do nothing while
its culture and history are ransacked, then make it all okay with
an unlimited supply of cheap household appliances and imported
Condoleezza Rice, September 2002, on the need to invade Iraq
The world is a messy place, and someone
has to clean it up.
Harry Belafonte, American musician and civil rights activist,
Katrina was not unforeseeable.. It was
the result of a political structure that subcontracts its responsibility
to private contractors and abdicates its responsibility altogether.
An economic indicator called "the guns-to-caviar index ...
tracks the sales of fighter jets (guns) and executive jets (caviar).
For seventeen years, it consistently found that when fighter jets
were selling briskly, sales of luxury executive jets went down
and vice versa: when executive jet sales were on the rise, fighter
jet sales dipped. Of course, a handful of war profiteers always
managed to get rich from selling guns, but they were economically
insignificant. It was a truism of the contemporary market that
you couldn't have booming economic growth in the midst of violence
But that truism is no longer true. Since
2003, the year of the Iraq invasion, the index found that spending
has been going up on both fighter jets and executive jets rapidly
and simultaneously, which means that the world is becoming less
peaceful while accumulating significantly more profit. The galloping
economic growth in China and India played a part in the increased
demand for luxury items, but so did the expansion of the narrow
military-industrial complex into the sprawling disaster capitalism
complex. Today, global instability does not just benefit a small
group of arms dealers; it generates huge profits for the high-tech
security sector, for heavy construction, for private health care
companies treating wounded soldiers, for the oil and gas sectors-and
of course for defense contractors.
The scale of the revenues at stake is
certainly enough to fuel an economic boom. Lockheed Martin, whose
former vice president chaired the committee loudly agitating for
war in Iraq, received $25 billion of U.S. taxpayer dollars in
... Lockheed itself was an "emerging
market." Companies like Lockheed (whose stock price tripled
between 2000 and 2005) are a large part of the reason why the
U.S. stock markets were saved from a prolonged crash following
September 11. While conventional stock prices have underperformed,
the Spade Defense Index, "a benchmark for defense, homeland
security and aerospace stocks," went up every year from 2001
to 2006 by an average of 15 percent - seven and a half times the
Standard & Poor's 500 average increase in that same period.
The only prospect that threatens the booming disaster economy
on which so much wealth depends - from weapons to oil to engineering
to surveillance to patented drugs - is the possibility of achieving
some measure of climatic stability and geopolitical peace.
For much of the past decade, Israel has been experiencing its
own miniaturized Davos Dilemma: wars and terrorist attacks have
been increasing, but the Tel Aviv Stock Exchange has been rising
to record levels right alongside this violence. As one stock analyst
noted on Fox News after the July 7 London bombings, "In Israel
they deal with the threat of terror daily, and that market is
up for the year."° Like the global economy in general,
Israel's political situation is, most agree, disastrous, but its
economy has never been stronger, with 2007 growth rates rivaling
those of China and India.
What makes Israel interesting as a guns-and-caviar
model is not only that its economy is resilient in the face of
major political shocks such as the 2006 war with Lebanon or Hamas's
2007 takeover of Gaza, but also that Israel has crafted an economy
that expands markedly in direct response to escalating violence.
The reasons for Israeli industry's comfort level with disaster
are not mysterious. Years before U.S. and European companies grasped
the potential of the global security boom, Israeli technology
firms were busily pioneering the homeland security industry, and
they continue to dominate the sector today. The Israeli Export
Institute estimates that Israel has 350 corporations dedicated
to selling homeland security products, and 30 new ones entered
the market in 2007. From a corporate perspective, this development
has made Israel a model to be emulated in the post-9/11 market.
Over the course of the 1990s, roughly 1 million Jews left the
former Soviet Union and moved to Israel. Immigrants who came from
the former Soviet Union in this period now make up more than 18
percent of Israel's total Jewish population.
Before the arrival of the Soviet refugees. Israel could not have
severed itself for any length of time from the Palestinian populations
in Gaza and the West Bank; its economy could no more survive without
Palestinian labor than California could run without Mexicans.
Roughly 150,000 Palestinians left their homes in Gaza and the
West Bank every day and traveled to Israel to clean streets and
build roads, while Palestinian farmers and tradespeople filled
trucks with goods and sold them in Israel and in other parts of
the territories. Each side depended on the other economically,
and Israel took aggressive measures to prevent the Palestinian
territories from developing autonomous trade relationships with
Then, just as Oslo came into effect, that
deeply interdependent relationship was abruptly severed. Unlike
Palestinian workers, whose presence in Israel challenged the Zionist
project by making demands on the Israeli state for restitution
of stolen land and for equal citizenship rights, the hundreds
of thousands of Russians who came to Israel at this juncture had
the opposite effect. They bolstered Zionist goals by markedly
increasing the ratio of Jews to Arabs, while simultaneously providing
a new pool of cheap labor. Suddenly, Tel Aviv had the power to
launch a new era in Palestinian relations. On March 30, 1993,
Israel began its policy of "closure," sealing off the
border between Israel and the occupied territories, often for
days or weeks at a time, preventing Palestinians from getting
to their jobs and selling their goods. Closure began as a temporary
measure, ostensibly as an emergency response to the threat of
terrorism. It quickly became the new status quo, with territories
sealed off not just from Israel but from each other, policed through
an ever more elaborate and demeaning system of checkpoints.
... Many residents of the former Soviet
Union who arrived in Israel penniless after seeing their life
savings disappear in the shock therapy devaluations were easily
lured into the occupied territories, where houses and apartments
were far cheaper, and special loans and bonuses were on offer.
Some of the most ambitious settlements - such as Arid in the West
Bank, which boasts a university, a hotel and a Texas mini golf
course-aggressively recruited in the former Soviet Union, sending
scouts and launching Russian-language Web sites. Arid managed
to double its population thanks to this approach, and today it
stands as a kind of mini-Moscow, with store signs advertising
in both Hebrew and Russian.
In the mid- and late nineties, Israeli companies took the global
economy by storm, particularly high-tech firms specializing in
telecommunications and Web technology, with Tel Aviv and Haifa
becoming Middle Eastern outposts of Silicon Valley. At the peak
of the dot-com bubble, 15 percent of Israel's gross domestic product
came from high tech and about half its exports.
Among the hundreds of thousands of Soviets who came to Israel
in the nineties were more highly trained scientists than Israel's
top tech institute had graduated in the eighty years of its existence.
These were many of the scientists who had kept up the Soviet side
of the Cold War-and as one Israeli economist put it, they became
"the rocket fuel for [Israel's] tech industry."
The biggest obstacle was [border] closure, a policy that was never
once lifted in the fourteen years since it was first imposed in
1993. According to the Harvard Middle East specialist Sara Roy,
when the borders were abruptly sealed in 1993, the effects on
Palestinian economic life were catastrophic.
... Workers couldn't work, traders couldn't
sell their goods, farmers couldn't reach their fields. In 1993
per capita GNP in the occupied territories plummeted close to
30 percent; by the following year, poverty among Palestinians
was up 33 percent. By 1996, says Roy, who has extensively documented
the economic impact of closure, "66 per cent of the Palestinian
labor force was either unemployed or severely under-employed."
Far from a "peace of markets," what Oslo meant for Palestinians
was disappearing markets, less work, less freedom-and crucially,
as the settlements expanded, less land.
Shlomo Ben-Ami, 2006, a lead negotiator for the Israeli government
at both Camp David and Taba
Camp David was not the missed opportunity
for the Palestinians, and if! were Palestinian I would have rejected
Camp David, as well.
When Israel's niche in the global economy turned out to be information
technologies, it meant that the key to growth was sending software
and computer chips to Los Angeles and London, not shipping heavy
cargo to Beirut and Damascus. Success in the tech sector did not
require Israel to have friendly relationships with its Arab neighbors
or to end its occupation of the territories. The rise of the
tech economy was only the first phase of Israel's fateful economic
transformation, however. The second came after the dot-corn economy
crashed in 2000, and Israel's leading companies needed to find
a new niche in the global market.
With the most tech-dependent economy in
the world, Israel was hit harder by the dot-corn crash than anywhere
else. The country went into immediate free fall, and by June 2001,
analysts were predicting that roughly three hundred high-tech
Israeli firms would go bankrupt with tens of thousands of layoffs.
... The government also encouraged the
tech industry to branch out from information and communication
technologies and into security and surveillance. In this period,
the Israeli Defence Forces played a role similar to a business
incubator. Young Israeli soldiers experimented with network systems
and surveillance devices while they fulfilled their mandatory
military service, then turned their findings into business plans
when they returned to civilian life. A slew of new start-ups were
launched, specializing in everything from "search and nail"
data mining, to surveillance cameras, to terrorist profiling.
25 When the market for these services and devices exploded in
the years after September 11, the Israeli state openly embraced
a new national economic vision: the growth provided by the dot-com
bubble would be replaced with a homeland security boom. It was
the perfect marriage of the Likud Party's hawkishness and its
radical embrace of Chicago School economics, as embodied by Sharon's
finance minister, Benjamin Netanyahu, and Israel's new central
bank chief, Stanley Fischer, chief architect of the IMF's shock
therapy adventures in Russia and Asia.
By 2003, Israel was already making a stunning
recovery, and by 2004 the country had seemed to pull off a miracle:
after its calamitous crash, it was performing better than almost
any Western economy. Much of this growth was due to Israel's savvy
positioning of itself as a kind of shopping mall for homeland
security technologies. The timing was perfect. Governments around
the world were suddenly desperate for terrorist hunting tools,
as well as for human intelligence know-how in the Arab world.
Under the leadership of the Likud Party, the Israeli state billed
itself as a showroom for the cutting-edge homeland security state,
drawing on its decades of experience and expertise fighting Arab
and Muslim threats. Israel's pitch to North America and Europe
was straightforward: the War on Terror you are just embarking
on is one we have been fighting since our birth. Let our high-tech
firms and privatized spy companies show you how it's done.
Overnight, Israel became, in the words
of Forbes magazine, "the go-to country for antiterrorism
Israel's exports in counterterrorism-related products and services
increased by 15 percent in 2006 and were projected to grow by
20 percent in 2007, totalling $1.2 billion annually. The country's
defense exports in 2006 reached a record $3.4 billion (compared
to $1.6 billion in 1992), making Israel the fourth largest arms
dealer in the world, larger than the U.K. Israel has more technology
stocks listed on the Nasdaq exchange-many of them security related-than
any other foreign country, and it has more tech patents registered
in the U.S. than China and India combined. Its technology sector,
much of it linked to security, now makes up 60 percent of all
With more and more countries turning themselves into fortresses
(walls and high-tech fences are going up on the border between
India and Kashmir, Saudi Arabia and Iraq, Afghanistan and Pakistan),
"security barriers" may prove to be the biggest disaster
market of all. That's why Elbit and Magal don't mind the relentless
negative publicity that Israel's wall attracts around the world
- in fact, they consider it free advertising. "People believe
we are the only ones who have experience testing this equipment
in real life," explained Magal CEO Jacob EvenEzra. Elbit
and Magal have seen their stock prices more than double since
September 11, a standard performance for Israeli homeland security
stocks. Verint-dubbed "the granddaddy of the video surveillance
space"-wasn't profitable at all before September 11, but
between 2002 and 2006 its stock price has more than tripled, thanks
to the surveillance boom.
The extraordinary performance of Israel's
homeland security companies is well known to stock watchers, but
it is rarely discussed as a factor in the politics of the region.
It should be. It is not a coincidence that the Israeli state's
decision to put "counterterrorism" at the center of
its export economy has coincided precisely with its abandonment
of peace negotiations, as well as a clear strategy to reframe
its conflict with the Palestinians not as a battle against a nationalist
movement with specific goals for land and rights but rather as
part of the global War on Terror-one against illogical, fanatical
forces bent only on destruction.
As has been the case on previous Chicago School frontiers, Israel's
post-9/11 growth spurt has been marked by the rapid stratification
of society between rich and poor inside the state. The security
buildup has been accompanied by a wave of privatizations and funding
cuts to social programs that has virtually annihilated the economic
legacy of Labor Zionism and created an epidemic of inequality
the likes of which Israelis have never known. In 2007, 24.4 percent
of Israelis were living below the poverty line, with 35.2 percent
of all children in poverty-compared with 8 percent of children
twenty years earlier. Yet even though the benefits of the boom
have not been widely shared, they have been so lucrative for a
small sector of Israelis, particularly the powerful segment that
is seamlessly integrated into both the military and government
(with all the familiar corporatist corruption scandals), that
a crucial incentive for peace has been obliterated.
The Israeli business sector's shift in
political direction has been dramatic. The vision that captivates
the Tel Aviv Stock Exchange today is no longer that of Israel
as a regional trade hub but rather as a futuristic fortress, able
to survive even in a sea of determined enemies.
This recipe for endless worldwide war is the same one that the
Bush administration offered as a business prospectus to the nascent
disaster capitalism complex after September 11. It is not a war
that can be won by any country, but winning is not the point.
The point is to create "security" inside fortress states
bolstered by endless low-level conflict outside their walls.
The disaster capitalism complex thrives in conditions of low-intensity
grinding conflict. That seems to be the end point in all the disaster
zones, from New Orleans to Iraq in April 2007, U.S. soldiers began
implementing a plan to turn several volatile Baghdad neighborhoods
into "gated communities," surrounded by checkpoints
and concrete walls, where residents would be tracked using biometric
technology. "We'll be like the Palestinians," predicted
one resident of Adhamiya, watching his neighborhood being sealed
in by the barrier. After it becomes clear that Baghdad is never
going to be Dubai, and New Orleans won't be Disneyland, Plan B
is to settle into another Colombia or Nigeria - never-ending war,
fought in large measure by private soldiers and paramilitaries,
damped down just enough to get the natural resources out of the
ground, helped along by mercenaries guarding the pipelines, platforms
and water reserves.
It has become commonplace to compare the
militarized ghettos of Gaza and the West Bank, with their concrete
walls, electrified fences and checkpoints, to the Bantustan system
in South Africa, which kept blacks in ghettos and demanded passes
when they left. "Israel's laws and practices in the OPT [occupied
Palestinian territories] certainly resemble aspects of apartheid,"
said John Dugard, the South African lawyer who is the UN's special
rapporteur on human rights in the Palestinian territories, in
February 2007.48 The similarities are stark, but there are differences
too. South Africa's Bantustans were essentially work camps, a
way to keep African laborers under tight surveillance and control
so they would work cheaply in the mines. What Israel has constructed
is a system designed to do the opposite: to keep workers from
working, a network of open holding pens for millions of people
who have been categorized as surplus humanity.
Palestinians are not the only people in
the world who have been so categorized: millions of Russians also
became surplus in their own country, which is why so many fled
their homes in the hope of finding a job and a decent life in
Israel. Although the original Bantustans have been dismantled
in South Africa, the one in four people who live in shacks in
fast-expanding slums are also surplus in the new, neoliberal South
Africa. This discarding of 25 to 60 percent of the population
has been the hallmark of the Chicago School crusade since the
"misery villages" began mushrooming throughout the Southern
Cone in the seventies. In South Africa, Russia and New Orleans
the rich build walls around themselves. Israel has taken this
disposal process a step further: it has built walls around the
Democratic Senatorial candidate Jim Webb, 2006
[America has drifted] toward a class-based
system, the likes of which we have not seen since the 19th century.
United Nations study, 2006
The richest 2 percent of adults in the
world own more than 50% of global household wealth.
Democratic socialism, meaning not only socialist parties brought
to power through elections but also democratically run workplaces
and land holdings, has worked in many regions, from Scandinavia
to the thriving and historic cooperative economy in Italy's Emilia-Romagna
region. It was a version of this combination of democracy and
socialism that Allende was attempting to bring to Chile between
1970 and 1973. Gorbachev had a similar, though less radical, vision
to turn the Soviet Union into a "socialist beacon" on
the Scandinavian model. South Africa's Freedom Charter, the dream
that animated the long liberation struggle, was a version of this
same third way: not state communism, but markets existing alongside
the nationalization of the banks and mines, with the income used
to build comfortable neighborhoods and decent schools-economic
as well as political democracy. The workers who founded Solidarity
in 1980 pledged to struggle not against socialism but for it,
with workers eventually winning the power to run their workplaces
and country democratically.
Washington has always regarded democratic socialism as a greater
threat than totalitarian Communism, which was easy to vilify and
made for a handy enemy. In the sixties and seventies, the favored
tactic for dealing with the inconvenient popularity of developmentalism
and democratic socialism was to try to equate them with Stalinism,
deliberately blurring the clear differences between the woridviews.
(Conflating all opposition with terrorism plays a similar role
today.) A stark example of this strategy comes from the early
days of the Chicago crusade, deep inside the declassified Chile
documents. Despite the CIA-funded propaganda campaign painting
Allende as a Soviet-style dictator, Washington's real concerns
about the Allende election victory were relayed by Henry Kissinger
in a 1970 memo to Nixon: "The example of a successful elected
Marxist government in Chile would surely have an impact on - and
even precedent value for - other parts of the world, especially
in Italy; the imitative spread of similar phenomena elsewhere
would in turn significantly affect the world balance and our own
position in it."
Latin America's new leaders are also taking bold measures to block
any future U.S.-backed coups that could attempt to undermine their
democratic victories. The governments of Venezuela, Costa Rica,
Argentina and Uruguay have all announced that they will no longer
send students to the School of the Americas (now called the Western
Hemisphere Institute for Security Cooperation) -the infamous police
and military training center in Fort Benning, Georgia, where so
many of the continent's notorious killers learned the latest in
"counterterrorism" techniques, then promptly directed
them against farmers in El Salvador and auto workers in Argentina.
Bolivia looks set to cut its ties with the school, as does Ecuador.
Chavez has let it be known that if an extremist right-wing element
in Bolivia's Santa Cruz province makes good on its threats against
the government of Evo Morales, Venezuelan troops will help defend
Bolivia's democracy. Rafael Correa is set to take the most radical
step of all. The Ecuadorean port city of Manta currently hosts
the largest U.S. military base in South America, which serves
as a staging area for the "war on drugs," largely fought
in Colombia. Correa's government has announced that when the agreement
for the base expires in 2009, it will not be renewed. "Ecuador
is a sovereign nation," said the minister of foreign relations,
Maria Fernanda Espinosa. "We do not need any foreign troops
in our country.
In Venezuela, Chavez has made the co-ops a top political priority,
giving them first refusal on government contracts and offering
them economic incentives to trade with one another. By 2006, there
were roughly 100,000 cooperatives in the country, employing more
than 700,000 workers. 28 Many are pieces of state infrastructure-toll
booths, highway maintenance, health clinics-handed over to the
communities to run. It's a reverse of the logic of government
outsourcing-rather than auctioning off pieces of the state to
large corporations and losing democratic control, the people who
use the resources are given the power to manage them, creating,
at least in theory, both jobs and more responsive public services.
Chavez's many critics have derided these initiatives as handouts
and unfair subsidies, of course. Yet in an era when Halliburton
treats the U.S. government as its personal ATM for six years,
withdraws upward of $20 billion in Iraq contracts alone, refuses
to hire local workers either on the Gulf Coast or in Iraq, then
expresses its gratitude to U.S. taxpayers by moving its corporate
headquarters to Dubai (with all the attendant tax and legal benefits),
Chavez's direct subsidies to regular people look significantly
Latin America's most significant protection from future shocks
(and therefore from the shock doctrine) flows from the continent's
emerging independence from Washington's financial institutions,
the result of greater integration among regional governments.
The Bolivarian Alternative for the Americas (ALBA) is the continent's
retort to the Free Trade Area of the Americas, the now buried
corporatist dream of a free-trade zone stretching from Alaska
to Tierra del Fuego. Though ALBA is still in its early stages,
Emir Sader, the Brazil-based sociologist, describes its promise
as "a perfect example of genuinely fair trade: each country
provides what it is best placed to produce, in return for what
it most needs, independent of global market prices .1129 So Bolivia
provides gas at stable discounted prices; Venezuela offers heavily
subsidized oil to poorer countries and shares expertise in developing
reserves; and Cuba sends thousands of doctors to deliver free
health care all over the continent, while training students from
other countries at its medical schools. This is a very different
model from the kind of academic exchange that began at the University
of Chicago in the mid-fifties, when Latin American students learned
a single rigid ideology and were sent home to impose it with uniformity
across the continent.
When one country does face a financial shortfall, this increase
integration means that it does not need to turn to the IMF or
the U.S. Treasury for a bailout.
Thanks to high oil prices, Venezuela has emerged as a major lender
to other developing countries, allowing them to do an end run
... The results have been dramatic. Brazil,
so long shackled to Washington by its enormous debt, is refusing
to enter into a new agreement with the IMF. Nicaragua is negotiating
to quit the fund, Venezuela has withdrawn from both the IMF and
the World Bank, and even Argentina, Washington's former "model
pupil," has been part of the trend. In his 2007 State of
the Union address, President Néstor Kirchner said that
the country's foreign creditors had told him, "You must have
an agreement with the International Fund to be able to pay the
debt.' We say to them, 'Sirs, we are sovereign. We want to pay
the debt, but no way in hell are we going to make an agreement
again with the IMF.'" As a result, the IMF, supremely powerful
in the eighties and nineties, is no longer a force on the continent.
In 2005, Latin America made up 80 percent of the IMF's total lending
portfolio; in 2007, the continent represented just 1 percent-a
sea change in only two years. "There is life after the IMF,"
Kirchner declared, "and it's a good life."
The transformation reaches beyond Latin
America. In just three years, the IMF's worldwide lending portfolio
had shrunk from $81 billion to $11.8 billion, with almost all
of that going to Turkey. The IMF, a pariah in so many countries
where it has treated crises as profit-making opportunities, is
starting to wither away. The World Bank faces an equally grim
future. In April 2007, Ecuador's president, Rafael Correa, revealed
that he had suspended all loans from the bank and declared the
institution's representative in Ecuador persona non grata - an
extraordinary step. Two years earlier, Correa explained, the World
Bank had used a $100-million loan to defeat economic legislation
that would have redistributed oil revenues to the country's poor.
"Ecuador is a sovereign country, and we will not stand for
extortion from this international bureaucracy," he said.
At the same time, Evo Morales announced that Bolivia would quit
the World Bank's arbitration court, the body that allows multinational
corporations to sue national governments for measures that cost
them profits. "The governments of Latin America, and I think
the world, win the cases. The multinationals always win,"
Without a story, we are, as many of us were after September 11,
intensely vulnerable to those people who are ready to take advantage
of the chaos for their own ends. As soon as we have a new narrative
that offers a perspective on the shocking events, we become reoriented
and the world begins to make sense once again.
The Shock Doctrine