Confessions of an Economic Hit Man

conference of all the partners involved, we brainstormed for several hours. The solution we settled on was to charter a Boeing 747, fill it with supplies from Boston-area stores, and send it off to Saudi Arabia. I remember thinking that it would be fitting if the plane were owned by United Airlines and commanded by a certain pilot whose wife had played such a critical role in bringing the House of Saud around.

The deal between the United States and Saudi Arabia transformed the kingdom practically overnight. The goats were replaced by two hundred bright yellow American trash compactor trucks, provided under a $200 million contract with Waste Management, Inc.² In similar fashion, every sector of the Saudi economy was modernized, from agriculture and energy to education and communications. As Thomas Lippman observed in 2003:

Americans have reshaped a vast, bleak landscape of nomads’ tents and farmers’ mud huts in their own image, right down to Starbucks on the corner and the wheelchair-accessible ramps in the newest public buildings. Saudi Arabia today is a country of expressways, computers, air-conditioned malls filled with the same glossy shops found in prosperous American suburbs, elegant hotels, fast-food restaurants, satellite television, up-to-date hospitals, high-rise office towers, and amusement parks featuring whirling rides.³

The plans we conceived in 1974 set a standard for future negotiations with oil-rich countries. In a way, SAMA/JECOR was the next plateau after the one Kermit Roosevelt had established in Iran. It introduced an innovative level of sophistication to the arsenal of political-economic weapons used by a new breed of soldiers for global empire.

The Saudi Arabia Money-laundering Affair and the Joint Commission also set new precedents for international jurisprudence. This was very evident in the case of Idi Amin. When the notorious Ugandan dictator went into exile in 1979, he was given asylum in Saudi Arabia. Although he was considered a murderous despot responsible for the deaths of between one hundred thousand and three hundred thousand people, he retired to a life of luxury, complete with cars and domestic servants provided by the House of Saud. The United States quietly objected but refused to press the issue for fear of undermining its arrangement with the Saudis. Amin whiled away his last years fishing and taking strolls on the beach. In 2003, he died in Jiddah, succumbing to kidney failure at the age of eighty.⁴

More subtle and ultimately much more damaging was the role Saudi Arabia was allowed to play in financing international terrorism. The United States made no secret of its desire to have the House of Saud bankroll Osama bin Laden’s Afghan war against the Soviet Union during the 1980s, and Riyadh and Washington together contributed an estimated $3.5 billion to the mujahideen.⁵ However, U.S. and Saudi participation went far beyond this.

In late 2003, U.S. News & World Report conducted an exhaustive study titled, “The Saudi Connection.” The magazine reviewed thousands of pages of court records, U.S. and foreign intelligence reports, and other documents, and interviewed dozens of government officials and experts on terrorism and the Middle East. Its findings include the following:

The evidence was indisputable: Saudi Arabia, America’s longtime ally and the world’s largest oil producer, had somehow become, as a senior Treasury Department official put it, “the epicenter” of terrorist financing…

Starting in the late 1980s—after the dual shocks of the Iranian revolution and the Soviet war in Afghanistan —Saudi Arabia’s quasi-official charities became the primary source of funds for the fast-growing jihad movement. In some 20 countries the money was used to run paramilitary training camps, purchase weapons, and recruit new members…

Saudi largess encouraged U.S. officials to look the other way, some veteran intelligence officers say. Billions of dollars in contracts, grants, and salaries have gone to a broad range of former U.S. officials who had dealt with the Saudis: ambassadors, CIA station chiefs, even cabinet secretaries…

Electronic intercepts of conversations implicated members of the royal family in backing not only Al Qaeda but also other terrorist groups.⁶

After the 2001 attacks on the World Trade Center and the Pentagon, more evidence emerged about the covert relationships between Washington and Riyadh. In October 2003, Vanity Fair magazine disclosed information that had not previously been made public, in an in-depth report titled, “Saving the Saudis.” The story that emerged about the relationship between the Bush family, the House of Saud, and the bin Laden family did not surprise me. I knew that those relationships went back at least to the time of the Saudi Arabian Money-laundering Affair, which began in 1974, and to George H. W. Bush’s terms as U.S. Ambassador to the United Nations (from 1971 to 1973) and then as head of the CIA (from 1976 to 1977). What surprised me was the fact that the truth had finally made the press. Vanity Fair concluded:

The Bush family and the House of Saud, the two most powerful dynasties in the world, have had close personal, business, and political ties for more than 20 years…

In the private sector, the Saudis supported Harken Energy, a struggling oil company in which George W. Bush was an investor. Most recently, former president George H. W. Bush and his longtime ally, former Secretary of State James A. Baker III, have appeared before Saudis at fundraisers for the Carlyle Group, arguably the biggest private equity firm in the world. Today, former president Bush continues to serve as a senior adviser to the firm, whose investors allegedly include a Saudi accused of ties to terrorist support groups…

Just days after 9/11, wealthy Saudi Arabians, including members of the bin Laden family, were whisked out of the U.S. on private jets. No one will admit to clearing the flights, and the passengers weren’t questioned. Did the Bush family’s long relationship with the Saudis help make it happen?⁷

PART III: 1975–1981 CHAPTER 17. Panama Canal Negotiations and Graham Greene

Saudi Arabia made many careers. Mine was already well on the way, but my successes in the desert kingdom certainly opened new doors for me. By 1977, I had built a small empire that included a staff of around twenty professionals headquartered in our Boston office, and a stable of consultants from MAIN’s other departments and offices scattered across the globe. I had become the youngest partner in the firm’s hundred-year history. In addition to my title of Chief Economist, I was named manager of Economics and Regional Planning. I was lecturing at Harvard and other venues, and newspapers were soliciting articles from me about current events.¹ I owned a sailing yacht that was docked in Boston Harbor next to the historic battleship Constitution, “Old Ironsides,” renowned for subduing the Barbary pirates not long after the Revolutionary War. I was being paid an excellent salary and I had equity that promised to elevate me to the rarified heights of millionaire well before I turned forty. True, my marriage had fallen apart, but I was spending time with beautiful and fascinating women on several continents.

Bruno came up with an idea for an innovative approach to forecasting: an econometric model based on the writings of a turn-of-the-century Russian mathematician. The model involved assigning subjective probabilities to predictions that certain specific sectors of an economy would grow. It seemed an ideal tool to justify the inflated rates of increase we liked to show in order to obtain large loans, and Bruno asked me to see what I could do with the concept.

I brought a young MIT mathematician, Dr. Nadipuram Prasad, into my department and gave him a budget. Within six months he developed the Markov method for econometric modeling. Together we hammered out a series of technical papers that presented Markov as a revolutionary method for forecasting the impact of infrastructure investment on economic development.

It was exactly what we wanted: a tool that scientifically “proved” we were doing countries a favor by helping them incur debts they would never be able to pay off. In addition, only a highly skilled econometrician with lots of time and money could possibly comprehend the intricacies of Markov or question its conclusions. The papers were published by several prestigious organizations, and we formally presented them at conferences and universities in a number of countries. The papers—and we—became famous throughout the industry.²

Omar Torrijos and I honored our secret agreement. I made sure our studies were honest and that our recommendations took into account the poor. Although I heard grumbling that my forecasts in Panama were not up