Egypt’s Democratic Uprising Exposes the U.S. Corporate Welfare Scheme of Military ‘Foreign Aid’

Guest blogged by Ernest A. Canning

“The problems the protesters are trying to address are extremely deep-seated…Egypt and other countries of the region have just been through a neoliberal period which have led to…high concentrations of extreme wealth and privilege, tremendous impoverishment and dismay for most of the population.” Noam Chomsky, 2/2/11

As more than a million protesters are said to have “flooded into central Cairo” this week, demanding an end to Hosni Mubarak’s authoritarian rule, William Hartung, the director of the Arms and Security Initiative at the New America Foundation and author of Prophets of War: Lockheed Martin and the Making of the Military-Industrial Complex, explained a little understood fact about the “tens of billions of dollars” in US military aid used to prop up the authoritarian Mubarak regime.

It is money that Egypt never received, as he explained during an appearance on Democracy Now (see video at end of article):

Hartung, however, has merely focused upon the military component of a much broader scam — foreign aid — which John Perkins, in Confessions of an Economic Hit Man, and in The Secret History of the American Empire exposes to be corporate welfare designed to enhance the power and control of a corrupt and brutal corporate Empire that benefits only a select few local authoritarian elites and the billionaires at the pinnacle of U.S.-based, giant multinational corporations. All at the expense of the great mass of humanity and a sustainable planet…

The illusion of ‘benevolence’ and the reality of foreign ‘aid’

In Confessions, Perkins, himself a self-described former “Economic Hit Man” (EHM) reveals how he, and other EHMs, persuade corrupt foreign “leaders” to accept “loans to develop infrastructure — electric generating plants, highways, ports, airports, or industry parks. In essence, most of the money never leaves the United States; it is simply transferred from banking offices in Washington to engineering offices.”:

In Secret History, Perkins explains that the key to the U.S. corporate Empire’s success is its invisibility. “Most of its own citizens are not aware of its existence; however, those exploited by it are, and many of them suffer extreme poverty. On average twenty-four thousand people die of hunger and hunger-related diseases every day. More than half the planet’s population lives on less than two dollars a day…”

Among the beneficiaries of foreign aid, as identified by Perkins, is the San Francisco-based Bechtel Corp., the largest engineering firm in the U.S, whose corporate executives include former U.S. Secretary of State George P. Schultz. In 2010, Bechtel, with $30.8 billion in revenue, was working on projects in some 50 countries.

Bechtel, which maintains an office in Cairo, has been involved in the construction of numerous Egyptian power plants. In 2002, it was awarded a $900 million contract for a liquid natural gas project.

KBR, formerly a subsidiary of Halliburton, a company once led by former Vice President Richard B. Cheney, was hired in 2006 to build and operate an ammonia plant in Ain Sokhna, Egypt.

Halliburton, itself, was retained to train oil field engineers and technicians in Egypt’s oil fields. As recently as Jan. 11, 2011 Halliburton’s CEO met personally with Egypt’s Minister of Petroleum to establish “the mechanisms for future cooperation and global support between [Halliburton] and the Egyptian oil sector.”

The 30 year reign of Hosni Mubarak has not simply entailed repression and authoritarian rule but a transformation from a state-based, centralized economy to a so-called “market-based economy” and, with it, a foreign debt that reached 120% of its GDP by the time of the First Gulf War in 1991.

It was at that point that the corporatocracy extracted its pound of flesh, providing Egypt with debt forgiveness and reduction in exchange for its participation in the First Gulf War.

Recently, AP reported that Standard & Poor lowered their rating for Egypt’s government bonds. While S & P attributes this to the unrest, Egypt did not descend to its current state as a the result of one week of mass protests.

While the U.S. media dutifully reports that 40% of Egyptians live on less than two dollars a day, what you don’t see are reports which link that stark inequity to global statistics and Empire, let alone comparisons to what is occurring in Egypt today and, for example, the Cochabamba, Bolivia peasant revolt triggered by Bechtel’s exploitation of that impoverished nation’s water resources some ten years ago.

What we are seeing in Egypt is not simply a rejection of a 30-year old authoritarian regime, but a democratic attempt to throw off the shackles of corporate Empire.

U.S. imperialism comes home to roost

While Perkins, in his former EHM role, was busy persuading corrupt foreign leaders to exploit their own citizens, our home grown billionaires, beginning with NAFTA, targeted the U.S. middle class with outsourcing schemes that are based on short-term greed. They extolled the virtue of cost reduction in manufacturing, while ignoring the fact that as middle-class domestic wages declined, there would be a shrinking number who could afford to buy foreign made products produced at slave wages ($2/day).

The result is the outsourcing of manufacturing and its replacement by financial services. In Wealth and Democracy, Kevin Phillips compares this development in the U.S. to empires past, arguing that it typifies the end stage of Empire.

While our day of reckoning was postponed by lending schemes which encouraged Americans to maintain a middle-class lifestyle beyond their means, the 2008 burst of the housing bubble was inevitable. The end result, for those who’ve paid attention, is that, today, the U.S. is quickly taking on many of the inequitable features that Perkins describes as occurring in exploited Third World countries.

As I recently observed in “‘Nowhere To Go’?: Nader’s Short-Sighted Tactics Reinforce ‘Lesser Evil’ Paradigm”:

Subsidizing repression

It is not just weapons and tear gas canisters that appear on the streets of Cairo bearing the “Made in the U.S.A.” labels, but the means to shut down democratic communications.

The non-partisan lobbying group, Free Press revealed that Narus, a Boeing subsidiary, sold Egypt “‘real-time intelligence’ equipment, more commonly known as Deep Packet Inspection (DPI) technology…that allows network managers to inspect, track and target content from Internet users and mobile phones as it passes through routers on the Web.”

In seeking Congressional action, Free Press observed:

Taking on ‘foreign aid’ and the military-industrial complex

Newly elected Senator Rand Paul (R-KY) told Wolf Blitzer that the U.S. should end its “foreign aid,” including aid to Israel, stating, “You have to ask yourself, are we funding an arms race on both sides?”

Foreign aid is but one component of the public monies that are squandered on the merchants of death. In 2009, the world spent $1.531 trillion on the military, a 49% increase since 2000. While direct U.S. military expenditures account for 46.5% of the world total, this percentage may be deceptively low since it doesn’t account for the amount of U.S. tax dollars that go into “foreign military aid.”

Perhaps Jim Hightower said it best in Thieves in High Places:

UPDATE 2/4/11: As revealed by the Boston Globe, a newly released Pentagon Report, which was mandated by a provision inserted into the Defense Authorization Act by Senator Bernie Sanders (I-VT), reflected that “more than 100 military contractors…committed civil or criminal fraud between 2007 and 2009” and that “billions of dollars continued to flow to contractors even after they were found to have committed fraud.”

William Hartung’s 01/31/2011 appearance on Democracy Now! follows…

Ernest A. Canning has been an active member of the California state bar since 1977. Mr. Canning has received both undergraduate and graduate degrees in political science as well as a juris doctor. He is also a Vietnam vet (4th Infantry, Central Highlands 1968).