The Shock Doctrine: The Rise of Disaster Capitalism

by Naomi Klein

The corporation that gained most from the chaos was Halliburton. Before the invasion, it had been awarded a contract to put out oil fires set by Saddam’s retreating armies. When those fires did not materialize, Halliburton’s contract was stretched to include a new function: providing fuel for the entire nation, a job so big that “it bought up every available tanker truck in Kuwait, and imported hundreds more.” 50 In the name of freeing up soldiers for the battlefield, Halliburton took on dozens more of the army’s traditional functions, including maintaining army vehicles and radios.

The private recruiters, many of whom had never served in the military, were paid bonuses every time they signed up a soldier, so, one company spokesperson bragged, “If you want to eat steak, you have to put people in the army.”

Disgusting

To him and his colleagues, the buffer zone looked like little more than an excuse for the government to do what it had wanted to do before the wave: clear the beach of fishing people. The catch they used to pull from the waters had been enough to sustain their families, but it did not contribute to economic growth as measured by institutions like the World Bank, and the land where their huts once stood could clearly be put to more profitable use.

Missing from all the artists’ impressions and blueprints were the victims of the tsunami—the hundreds of fishing families who used to live and work on the beach. The report explained that villagers would be moved to more suitable locations, some several kilometers away and far from the ocean. Making matters worse, the $80 million redevelopment project was to be financed with aid money raised in the name of the victims of the tsunami.

Salt to the wound

the entire reconstruction process would result in “victimizing the victims, exploiting the exploited.”

Why do we do this in our own lives?

Outside the gates of the district government, leaders of the march accused their elected representatives of abandonment, of corruption, of spending aid money meant for the fishing people “on dowries for their daughters and jewelry for their wives.” They spoke of special favors handed out to the Sinhalese, of discrimination against Muslims, of the “foreigners profiting from our misery.”

In short, the rest of Asia could keep the sweatshops, call centers and frenetic stock markets; Sri Lanka would be there waiting when the captains of those industries needed a place to rest up.

But Sri Lanka’s president, under pressure from Washington lenders, decided that the planning could not be entrusted to her government’s elected politicians. Instead, just one week after the tsunami leveled the coasts, she created a brand-new body called the Task Force to Rebuild the Nation. This group, and not Sri Lanka’s Parliament, would have full power to develop and implement a master plan for a new Sri Lanka.

There's just no democracy anymore

The creation of the task force represented a new kind of corporate coup d’état, one achieved through the force of a natural disaster. As in so many other countries, in Sri Lanka, Chicago School policies had been blocked by the normal rules of democracy; the 2004 elections proved that. But with the country’s citizens pulling together to meet a national emergency, and politicians desperate to unlock aid money, the express wishes of voters could be summarily brushed aside and replaced with direct unelected rule by industry—a first for disaster capitalism.

Washington backed up the task force with the kind of reconstruction aid that was by now familiar from Iraq: megacontracts to its own companies.

Sri Lanka wasn’t the only country that got hit by this second tsunami—similar stories of land and law grabs have come out of Thailand, the Maldives, and Indonesia. In India, tsunami survivors in Tamil Nadu were left so impoverished that up to 150 women were driven to sell their kidneys in order to buy food.

“Governments have largely failed in their responsibility to provide land for permanent housing,” the report concluded. “They have stood by or been complicit as land has been grabbed and coastal communities pushed aside in favour of commercial interests.”

one demanding the right to work, the other demanding the right to play. Backed up by the guns of local police and private security, it was militarized gentrification, class war on the beach.

“The government thinks our nets and our fish are ugly and messy, that’s why they want us off the beach. In order to satisfy foreigners, they are treating their own people as if they are uncivilized.”

The enormous outpouring of generosity after the tsunami had held out the rare possibility of a genuine peace dividend—the resources to imagine a more equitable country, to repair shattered communities in ways that would rebuild trust as well as buildings and roads. Instead, Sri Lanka (like Iraq) received what the University of Ottawa political scientist Roland Paris has termed “a peace penalty”—the imposition of a cutthroat, combative economic model that made life harder for a majority of people at the very moment when what they needed most was reconciliation and an easing of tensions.

"A peace penalty"

Katrina was not unforeseeable. It was the result of a political structure that subcontracts its responsibility to private contractors and abdicates its responsibility altogether. —Harry Belafonte, American musician and civil rights activist,

It occurred to me that this affable young doctor, and the spa-like medical care I had just received, were the embodiment of the culture that had made the horrors of Hurricane Katrina possible, the culture that had left New Orleans’ poorest residents to drown. As a graduate of a private medical school and then an intern at a private hospital, he had been trained simply not to see New Orleans’ uninsured, overwhelmingly African-American residents as potential patients. That was true before the storm, and it continued to be true even when all of New Orleans turned into a giant emergency room: he had sympathy for the evacuees, but that didn’t change the fact that he still could not see them as potential patients of his.

Deplorable (healthcare)

The 120,000 people in New Orleans without cars, who depended on the state to organize their evacuation, waited for help that did not arrive, making desperate SOS signs or rafts out of their refrigerator doors.

That's the difference

“The storm exposed the consequences of neoliberalism’s lies and mystifications, in a single locale and all at once,” wrote the political scientist and New Orleans native Adolph Reed Jr.

The story is typical of the lopsided state that Bush built: a weak, underfunded, ineffective public sector on the one hand, and a parallel richly funded corporate infrastructure on the other. When it comes to paying contractors, the sky is the limit; when it comes to financing the basic functions of the state, the coffers are empty.

Well said. woof.

Within weeks, the Gulf Coast became a domestic laboratory for the same kind of government-run-by-contractors that had been pioneered in Iraq. The companies that snatched up the biggest contracts were the familiar Baghdad gang: Halliburton’s KBR unit had a $60 million gig to reconstruct military bases along the coast. Black-water was hired to protect FEMA employees from looters. Parsons, infamous for its sloppy Iraq work, was brought in for a major bridge construction project in Mississippi. Fluor, Shaw, Bechtel, CH2M Hill—all top contractors in Iraq—were hired by the government to provide mobile homes to evacuees just ten days after the levees broke. Their contracts ended up totaling $3.4 billion, no open bidding required.

In New Orleans, as in Iraq, no opportunity for profit was left untapped.

As in Iraq, government once again played the role of a cash machine equipped for both withdrawals and deposits. Corporations withdrew funds through massive contracts, then repaid the government not with reliable work but with campaign contributions and/or loyal foot soldiers for the next elections.

Interesting

“Every level of the contracting food chain, in other words, is grotesquely overfed except the bottom rung,” Davis wrote, “where the actual work is carried out.”

Same with Starbucks

The attacks on the disadvantaged, carried out in the name of reconstruction and relief, did not stop there. In order to offset the tens of billions going to private companies in contracts and tax breaks, in November 2005 the Republican-controlled Congress announced that it needed to cut $40 billion from the federal budget. Among the programs that were slashed were student loans, Medicaid and food stamps.19 In other words, the poorest citizens in the country subsidized the contractor bonanza twice—first when Katrina relief morphed into unregulated corporate handouts, providing neither decent jobs nor functional public services, and second when the few programs that directly assist the unemployed and working poor nationwide were gutted to pay those bloated bills.

Well said

At first I thought the Green Zone phenomenon was unique to the war in Iraq. Now, after years spent in other disaster zones, I realize that the Green Zone emerges everywhere that the disaster capitalism complex descends, with the same stark partitions between the included and the excluded, the protected and the damned.

The American Society of Civil Engineers said in 2007 that the U.S. had fallen so far behind in maintaining its public infrastructure—roads, bridges, schools, dams—that it would take more than a trillion and half dollars over five years to bring it back up to standard. Instead, these types of expenditures are being cut back .23 At the same time, public infrastructure around the world is facing unprecedented stress, with hurricanes, cyclones, floods and forest fires all increasing in frequency and intensity. It’s easy to imagine a future in which growing numbers of cities have their frail and long-neglected infrastructures knocked out by disasters and then are left to rot, their core services never repaired or rehabilitated. The well-off, meanwhile, will withdraw into gated communities, their needs met by privatized providers.

public infrastructure

A right-wing journal in the U.S. pronounced Blackwater “al Qaeda for the good guys.”28 It’s a striking analogy. Wherever the disaster capitalism complex has landed, it has produced a proliferation of armed groupings outside the state.

Yet the vast infrastructure is all privately owned and controlled. The citizens who have funded it have absolutely no claim to this parallel economy or its resources.

When Katrina hit, FEMA had to hire a contractor to award contracts to contractors. Similarly, when it came time to update the Army Manual on the rules for dealing with contractors, the army contracted out the job to one of its major contractors, MPRI—it no longer had the know-how inhouse.

And when the Department of Homeland Security decided it needed to build “virtual fences” on the U.S. borders with Mexico and Canada, Michael P. Jackson, deputy secretary of the department, told contractors, “This is an unusual invitation … . We’re asking you to come back and tell us how to do our business.” The department’s inspector general explained that Homeland Security “does not have the capacity needed to effectively plan, oversee and execute the [Secure Border Initiative] program.”

The companies at the heart of the disaster capitalism complex increasingly regard both the state and nonprofits as competitors—from the corporate perspective, whenever governments or charities fulfill their traditional roles, they are denying contractors work that could be performed at a profit.

precisely

Apparently charities and NGOs were infringing on their market by donating building supplies rather than having Home Depot supply them for a fee.

Wow

The next phase of the disaster capitalism complex is all too clear: with emergencies on the rise, government no longer able to foot the bill, and citizens stranded by their can’t-do state, the parallel corporate state will rent back its disaster infrastructure to whoever can afford it, at whatever price the market will bear. For sale will be everything from helicopter rides off rooftops to drinking water to beds in shelters.

If we continue in this direction, the images of people stranded on New Orleans rooftops will not only be a glimpse of America’s unresolved past of racial inequality but will also foreshadow a collective future of disaster apartheid in which survival is determined by who can afford to pay for escape.

This may also partially explain why so many Bush supporters are Christian end-timers. It’s not just that they need to believe there is an escape hatch from the world they are creating. It’s that the Rapture is a parable for what they are building down here—a system that invites destruction and disaster, then swoops in with private helicopters and airlifts them and their friends to divine safety.

Yes. The parallels between disaster capitalism and evangelical rapture.

Put bluntly, the world was going to hell, there was no stability in sight and the global economy was roaring its approval.

The creeping expansion of the disaster capitalism complex into media may prove to be a new kind of corporate synergy, one building on the vertical integration so popular in the nineties. It certainly makes sound business sense. The more panicked our societies become, convinced that there are terrorists lurking in every mosque, the higher the news ratings soar, the more biometric IDs and liquid-explosive-detection devices the complex sells, and the more high-tech fences it builds. If the dream of the open, borderless “small planet” was the ticket to profits in the nineties, the nightmare of the menacing, fortressed Western continents, under siege from jihadists and illegal immigrants, plays the same role in the new millennium.

Shimon Peres, then foreign minister, explained to a group of Israeli journalists that peace was now inevitable. It was a very particular kind of peace, however. “We are not seeking a peace of flags,” Peres said, “we are interested in a peace of markets.”12 A few months later, the Israeli prime minister, Yitzhak Rabin, and the Palestinian Liberation Organization chairman, Yasser Arafat, shook hands on the White House lawn to mark the inauguration of the Oslo Accords. The world cheered, the three men shared the 1994 Nobel Peace Prize—and then it all went horribly wrong.

The debates about who derailed the peace process, or whether peace was ever the real goal of the process, are well known and have been exhaustively explored. However, two factors that contributed to Israel’s retreat into unilateralism are little understood and rarely discussed, both related to the unique ways that the Chicago School free-market crusade played out in Israel.

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.14 It’s hard to overstate the impact of such a large and rapid population transfer to a country as small as Israel.

“they are not drawn to Israel, they feel expelled from the USSR by the political instability and economic deterioration there.”

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.

Once again, the new arrivals played a decisive role in the boom. 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.”

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.

With the most tech-dependent economy in the world, Israel was hit harder by the dot-com 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 Tel Aviv business newspaper Globes declared in a headline that 2002 was the “Worst Year for Israeli Economy Since 1953.”

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.

Overnight, Israel became, in the words of Forbes magazine, “the go-to country for antiterrorism technologies.”

It is not an exaggeration to say that the War on Terror industry saved Israel’s faltering economy, much as the disaster capitalism complex helped rescue the global stock markets.

• When Boeing begins building the planned $2.5 billion “virtual fences” on the U.S. borders with Mexico and Canada—complete with electronic sensors, unmanned aircraft, surveillance cameras and eighteen hundred towers—one of its main partners will be Elbit. Elbit is the other Israeli firm most involved in building Israel’s hugely controversial wall, which is “the largest construction project in Israel’s history” and has also cost $2.5 billion.