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With leaders all over the world on the take for millions, the defense industry has spawned a global business that profits from war, supports corruption everywhere, and must, for its survival, fan the flames of civil wars and global conflict.

That is the premise of “Shadow World” — a powerful new documentary. In this week’s podcast, WhoWhatWhy’s Jeff Schectman talks to the film’s director Johan Grimonprez and its writer Andrew Feinstein.

As a member of the African National Congress in South Africa, Feinstein saw firsthand how the corruption and payoffs worked — and their grim consequences:

“Within five years of the advent of our democracy, our country decided to spend $10 billion on weapons that we didn’t need, that we barely used, and the primary reason for that was that $300 millions in bribes were paid. And it had a profound effect of South Africa’s democracy.

“I tried to investigate the deal… but was stopped by my own political party — which itself had benefited from the bribes…

“At a time when South Africa had six million people living with HIV or AIDS, our president at the time, Thabo Mbeki, said that we didn’t have the finances to provide these people with antiretroviral medication.”

This story reveals the other side of the arms trade — how it can kill without even firing a shot: by using up precious resources that should have been devoted to controlling lethal diseases and other problems the world faces.

Feinstein has many more horror stories — the worst of which involves former US Vice President Dick Cheney.

His book — The Shadow World: Inside the Global Arms Trade — and the film based on it, take us through the Reagan and Bush administrations and show us how the arms trade reached the highest levels of government, contributing to or leading to Iran/Contra, 9/11, the war in Iraq, and many seemingly never-ending world conflicts.

The book, published by Picador in 2012, was the first major exposé on the global arms trade. According to the The Washington Post, “Feinstein writes with a crusading spirit and a depth of detail that lend The Shadow World urgency and authority….A comprehensive treatment of the arms trade, possibly the most complete account that has ever been written.”

Here’s our podcast, with WhoWhatWhy’s Jeff Schechtman and the filmmakers.

Click HERE to Download Mp3

Full Text Transcript:

Jeff: Welcome to radio Whowhatwhy. I’m Jeff Schechtman.

The power of globalization, the influence of multinational corporations, the free flow of money, products, and ideas around the world are an indisputable reality of 21st century life. What we don’t realize, is that one of the earliest adopters of the globalization model was the international arms trade. With the cooperation of governments, intelligence agencies, and world leaders, defense contractors have spawned a global business that profits from war, supports and encourages corruption, and must for its survival help fan the flames of civil wars and global conflicts to draw its breath. This is the subject of a new documentary film Shadow World from my guests writer Andrew Feinstein and director Johan Grimonprez. It is my pleasure to welcome Johan and Andrew here today to talk about the international arms trade in their film Shadow World. Gentlemen, thanks so much for joining us. Thank you both for being here. Andrew, I want to start with you. This film is based on a book that you wrote a number of years ago based upon your own personal experiences in South Africa. Tell us a little bit about the evolution of that.

Andrew: Sure, I am the author of the book Shadow World inside the global arms trade which was really the first book written about the global arms trade published since 1979. It’s another subject that a lot of people write about. It’s another subject that [publishes necessarily for one to publish???]. So the way in which I came to it is I was an ANC member of parliament in South Africa. I served under Nelson Mandela for seven and a half years. Our experience in South Africa was that within five years of the advent of our democracy, the country decided to spend $10 billion on weapons that we didn’t need and that we barely used. The primary reason for that was $300 million of bribes were paid. It had a profound effect on South Africa’s democracy. I tried to investigate the deal in my official capacity as a member of parliament and was stopped from doing so by my own political party, which itself had benefited from the bribes. The extraordinary thing was that these incredibly brave people, who I had been involved with in the ANC for many years long before the democracy, so during the period of apartheid, were prepared to undermine the institution of the democracy that they had fought so hard to create, in order to protect themselves from the exposure of the corruption that had taken place in the field. Crucially, it was at the time when South Africa had around 6 million people living with HIV or AIDs and at the time when our then president Thabo Mbeki said that we didn’t have the finances to provide these people with anti-retroviral medication. But we had 10 billion to spend on weapons. According to a study by the Kennedy School of Government, this resulted in 365,000 avoidable deaths in South Africa. There’s this stark experience of the sort of impact that this trade can have. But I was interested in finding out not just about those who’d been corrupted, the South African current president’s 783 counts of full corruption in racketeering in relation to the deal, charges dropped a few weeks before he was elected president. But I wanted to find out also about the companies and the politicians, sitting in Washington, London, in Paris, Berlin, and Rome, who were really responsible for these deals happening and that’s what motivated the writing of Shadow World. And of course, once you have a book of 557 pages, almost 3000 footnotes, we were very keen to turn it into a film and that’s when we turned to Johan.

Jeff: Johan, talk a little bit about how you got involved in this and when you started to see this material and see what Andrew had put together. What you saw in terms of the potential to incorporate it into this documentary.

Johan: Well, I used to joke with Andrew about a little note that was hanging above each of the desks and it read: two goes to the junkyard, she wanted to read a film; and one goes to the other, “I liked the book better.” And I’m afraid that the book Shadow World is such a challenge because you could never measure up to the book, so definitely not research 500 pages and 3000 footnotes. So it was a very big challenge to put that into a cinematic format. And so…I first thought maybe that it should be a tv series because corruption is such a big theme. So you can’t imagine how much you could find about corruption and also images and including them in the result of it, war. So here we are with something that is actually living in the shadow and so you can find so much about it and sometimes you try to put a light on it. That was an additional problem. So we couldn’t find a weapon dealer that would try in the film. There was one Judith Sepkin who was portrayed as a whole big chapter devoted Judith Sepkin. Correct me if I’m wrong, Andrew, the weapon dealer living between Amman and Bayreuth, he asked that we would pay him, so that we would actually buy him off. And so you see already that the extraneous thing that we are trying to do already is compromising what we are trying to solve was a tough situation. We tried to look for some threat that actually is set forth in the book. A threat that we actually could translate to the cinematic form. Of course it would have to be a simple threat because you can only do so much in cinematic format.[ One of the templates that I thought <of> while reading Andrew’s book was, one, those weapon dealers mostly beginning with the figure of Zaharoff in the first world war were actually getting to both sides, actually not dealing with ethics but the dealing with greed or to try to make as much money as possible at the cost of people being killed in the war. They’re actually, as it seems to be, one to perpetuate war in order to sustain their greed. So that was one template that we came up with. The other was that, of course, you could zoom in on the shady character, and of course you get the better film if you can zoom in on the villains. But since they didn’t want to be portrayed we were sort of examining the book and it seemed actually that the biggest villains, biggest people involved with the arms deals on the level of corruption were actually our politicians. So we changed gear and were trying to trace that through the highest level of government. From there we had the figure of Prince Bandar bin Sultan, who was heavily involved with the corruption of arms trade with the US, who was the Saudi ambassador to the United States. And so we tried and were able to link the characters to the Bush administration, to the Reagan administration, to the corruption within the government and also including Tony Blair and the two Gulf wars.

Jeff: Andrew, one of the things in many ways as a backdrop to this entire story is this chicken or the egg question, the degree to which politicians have shaped so many of these arms deals and the other side of it, the way the arms deals themselves, in the way the arms business and the contractors have really shaped the kind of politicians that have been self-reinforcing for these kind of deals.

Andrew: Absolutely, I think that the chicken and the egg situation is the right image. Because they each feed off each other now and you’re not sure where it all started. But you have a situation where it’s always the best thing a leader can do is to be at war. You have a situation in the United States of America under Barack Obama where, according to former Defense Secretary Robert Gates, it takes more people to run one aircraft carrier than the United States has diplomats all over the planet. And the United States has ten aircraft carriers. So…there has been a profound movement from diplomacy to war making as a way of resolving differences. The problem is that the politician benefits hugely from it. Sometimes they benefit materially and financially because some of the money paid in these arms circulated back to them either in the form of campaign contribution or in some parts of the world as bribes, both personally and to their political parties, etc. But at the same time, weapons manufacturers are pushing their particular product because they have very close relationships with the politician and with the military. They have a very close relationship with the state department and with the intelligence agency. They play an extraordinary role in influencing policy. And unfortunately, because of the national security and defense imperative, all of this takes place in secrecy. So there is no accountability. There is virtually no immediate scrutiny of what is going wrong. So it is a very lucrative self-perpetuating cycle of what is happening in the arms trade. But unfortunately the consequences are devastating. The trade accounts for 40% of all corruption in all world trade. We see, for instance, in the film, how the head of the CIA, George Tenet, actually gave very partial information to Secretary of State Colin Powell for his presentation of the United Nations before the invasion of Iraq. So that effectively Colin Powell and the United States government misled the world, misled congress, misled the American people on the reasons for going to war in Iraq. And this is the most important thing that a government can do—make war. And in the United States of America, as Wilkerson, former chief of staff to Colin Powell says again: in America, this function has been privatized. So there are many, many people benefiting materially from the number and scale of war that the United States has engaged in. And we try and reveal in the film, the sort of structural underbelly, if you will, of the trade and how it affects the way we’re governed, how it affects the way our tax dollars are spent. And we really, I suppose, are asking people, whether this is what they want their government to be doing, this is what they want their tax dollars to be spent on.

Jeff: Talk a little bit more about the privatization aspect because this has become, as you allude to, far more than just the corruption and the sale of weaponry to these various countries. More and more aspects of the military itself, more and more aspects of the machinery that wages war has become privatized.

Andrew: The film very early on establishes, what we often referred to as, the Neoliberal Economic Doctrine of Margaret Thatcher and Ronald Reagan, which really deregulated the private sector. And so huge sways of the government being privatized and put in charge of companies’ hands. Now here you see that virtually every aspect of public life has been privatized. But for the function of war to be privatized is the most remarkable of all because this is the most public assumptions. And how it worked, in essence, is somebody like Dick Cheney who was Secretary of Defense. He then moved from the Pentagon to Halliburton as chief executive officer. This is one of the country’s biggest defense contractors. At Halliburton, the company was given a contract under the Clinton administration to basically do a study for the US government about which aspect of war-making could be privatized. And of course, Cheney returned the verdict with huge sways of war-making can be put in private hand. Cheney is then returned to government as vice president with his political soul mate, if you will, Donald Rumsfeld becoming Defense Secretary. And what is one of the first things that they do in government with Cheney and Rumsfeld the real driving force of this? They decide to invade Iraq on false premises, based on false intelligence that Saddam Hussein, one, had weapons of mass destruction, and two, had links to Al-Qaeda, both of which had been shown to be unequivocally untrue at the time. Two, you have these people who are swimming through what is referred to as the revolving door between the government and the private sector, turning the process of war into a private function from which they benefit hugely. Dick Cheney while in office had a massive amount of Halliburton shares in a blind trust and would’ve made tens of millions of dollars out of the billions of dollars that Halliburton made out of the invasion of Iraq. All sorts of things, Halliburton provided the basis. It provided the food. It provided the entertainment. It provided some of the equipment, uniform, weaponry, etcetera, etcetera, etcetera and made, I think the figure is over $30 billion dollars out of the invasion of Iraq. And Cheney, who had been driving forth of the strategy in the White House, benefited himself personally. So that’s why this privatization had taken place to an extent that at one point in Iraq, there were two contractors. What had been referred to at the start, as mercenaries, now, in the year of privatization, we call them military contractors. They were mercenaries. There were two mercenaries for every one US soldier in Iraq. The figure, at the moment—I mean it changes all the time—is probably around 5 to 6 contractors in Iraq, in the guise of the American military, to every American soldier. And this is an absurdity, that we’re really contracting out the war because these people think they can fight for anybody. And unfortunately, the nature of these privatized wars is such that their primary function which is supposedly to bolster our security, does exactly the opposite. With our minds off security, with things like the war in Iraq, so Al-Qaeda improved massively in Iraq and developed a huge presence in the country which it never had before. So these sorts of things are not making us more secure, they’re making us less secure. Unfortunately, in the protests, and the other things we do, due to privatization, we find ourselves arming the very people who we land ourselves fighting against in short order thereafter. So the example of the Taliban in Afghanistan, who the American government finally armed turned out to be among the perpetrators of 9/11.

Jeff: Andrew, how big is the global arms business today?

Andrew: It varies every year. It varies anywhere between about $50 – 55 billion a year to around $125 billion a year. And obviously in years when there are a lot of conflicts that figure is much higher. So it’s not a huge industry, but in terms of the impact that it has, in terms of the military policy, in terms of foreign policy, in terms of economic policy, in terms of the nature of the corruption and the way in which it undermines our government and the rule of law, because it’s also worth mentioning when a crime takes place, in the feet of the arms deals in which it’s protected by the veil of national security secretly, nobody gets prosecuted for that. There’ve been 102 violations of UN arms involved. Only two of them have resulted in any legal action. So this is the world that operates in something of a parallel legal universe. And given the size of the industry, it’s an absurdity that what we’re saying in the film and what we’re saying in the outreach of the problem, it is that we demand weight regulation and greater transparency over the arms trade that is actually performed the function that it’s supposed to perform and it does it in a legal and noncriminal way.

Jeff: In wanting to see a greater amount of transparency, a greater legal framework for this, is there something you know that is inherent in the business of international arms trade, that is almost antithetical to what operating in a legal and transparent way?

Andrew: There is something built in the trade that makes it extremely difficult to operate in a legal and transparent way. And that is the way in which it has been structured historically and still currently. While obviously the issues of national security and national defense do require a degree of confidentiality for obvious reasons, that national security veil of secrecy has unfortunately been extended to all aspects of arms dealers. So that the national security dimension, which is legitimately kept secret, is also used to keep on one hand the corruption and criminality in the trade secret, but also the source of very faulty decision-making processes and implementation secrets. The fact that many governments, including the US government, often acquires inappropriate equipment in the first instance, that equipment is often delivered way late and massively over budget. These things are now taken for granted, so I think what is happening that the modus operandi of the trade which has been going on for years—I mean I traced it back in the book to the first of the modern arms dealers, a guy called Basil Zaharoff. I would say from then, from the late1800s until today that modus operandi is being utilized. So the trade has been structured in a way that militates against any sort of transparency, any sort of openness, and bizarrely any sort of legality. It is that sort of acceptance of the status quo that needs to be broken for the arms race to be able to change meaning for me. The irony of this is that it could actually be extremely easy to do. There are certain steps. There is a good regulatory framework in place. It’s just that it isn’t enforced at all. It’s constantly violated. But if that regulatory framework would actually be enforced properly, it will go a long way to better regulating and better controlling the trade. Second of all, there is one key element that if it was made transparent in public would undermine virtually all of the corruption and a great deal of inappropriate decision-making in the business. That change will be to make transparent the use of any intermediary by governments, by companies themselves. In other words, the use of the arms dealers, the arms brokers, or the arms agents because that is where the corruption, the illegality and the inappropriate defense decision action take place because those intermediaries, who on behalf of the company, pay a bribe to ensure that the people who are commissioning the sort of equipment their clients want get constant employment jobs with them as part of the revolving door. If that dimension of the trade was made public, and there is absolutely no reason to keep that secret, then it would be so much more difficult for the trade to continue operating corruptly and inappropriately than it does now.

Jeff: One of the ironies in that is that you could make the case, at least looking at it on the surface, that for the companies that are in the arms business for the Lockheed Martins of the world and the BEAs that it would be just as, if not more profitable, doing it without those intermediaries.

Andrew: That is an interesting point. At one level, absolutely. Because if you’re finding that anywhere from 5 to 75% of the contract price is actually in inflation to accommodate the corruption, then yes, of course, they would be acting more profitably. They would be making more out of these transactions. However the difficulty comes especially for European manufacturers. The European manufacturers cannot compete with American manufacturers on the basis of price or quality of the equipment because of the huge advantage that US has. It is because of the fact that the US produces and utilizes almost as much weaponry as the rest of the world combined, American companies have huge economies of scale. So the unit price for what they produce is much lower because they produce so much more of everything than the European manufacturers. So European manufacturers see corruption as a key terrain on which they can compete with and beat the menu of American manufacturers. Now the irony of that is that does make a contract less profitable because they have to pay the bribe. But, it also means that a cleaner, more legal, more honest arms trade would massively benefit the American manufacturers.

Jeff: Of course one of the other areas in and you show this in the film and I’m sure the book a great deal with something like a Iran-Contra being the penultimate example is the movement of arms into places where it would be looked at askance if the world knew what was really going on.

Andrew: Absolutely. There are countless examples of arms going into places either where there is conflict and arms are only making the conflicts worse, ensuring that they last longer and that they are much bloodier than they need to be, but also what lies under that. So yes, certainly during the 70s and the 80s, America was funding and providing the weaponry to some of the worst dictators on the planet during that period. So they claim to be fighting communism and various other evils by supporting some of the most brutal murderous dictators in the world. The American public had very little knowledge. One, of what a lot of the people were doing, but, two, the fact that America was funding and arming them. Now it would be my contention that for the US to be arming and financing these awful people was actually not that anyone in legal terms of US law. I believe it actually undermine US security in that I don’t believe it represents America’s commitment to democracy and certain freedom, to be allying itself with these people. I think there are foreign policy consequences of that. We now move forward a little bit to the post 9/11period. And we have a repeat of that in the Middle East where the United States finds itself funding and arming groups that more often than not ultimately land up turning those weapons onto the US itself, and therefore, intensifying and making worse the problem of global terrorism. So the way in which the arms trade and foreign policy is being conducted by the United States is actually undermining the very national security that it claims to be bolstering. And while it’s dong this, the tragedy and irony is, that a number of people including weapons manufacturers, including the often dodgy intermediaries, and including politicians, senior military people etc., are making themselves extremely wealthy in the process.

Jeff: The other overlay to all of this that has happened arguably in the past 10-15 years is the privatization of many of these military operations.

Andrew: Absolutely. This is at the core of it. And we try and draw out in the film Shadow World, that it is that private privatization and deregulation that happened in the so-called faction in the Thatcher and Reagan Revolution, starting in the late 70s going to the late 80s, it is that mindset, that notion that greed is good and that if we all pursue our own selfish interests the world will be a better place. If we let corporations do pretty much whatever they want to do and we don’t regulate them, we don’t oversee them in any meaningful way, that is going to make the world a better place. In fact, that is the underpinning of the nature of the global trading <of> arms. And the ultimate manifestation of that has been the privatization of war. The privatization of the ultimate public function and that is what the United States has done. It’s embodied by Dick Cheney and Donald Rumsfeld who was spun through the revolving door between governments and the private sector. What they’ve done with it created, while in government, a conducive environment to privatize the process of war which has led to huge personal benefits to companies with whom they’re personally linked and from whom they personally benefit. Then, once back in office again, they ensure that the US is focused on making war rather than resolving conflict by diplomatic means, again ensuring that companies like Halliburton and others profit to the tune of tens of billions of dollars. So what has this national security and what it effectively has done is that it created a cycle of profitability for itself. So in profit for itself, it has created a situation of almost perpetual war for the United States of America and, crucially, a huge drain on tax revenues of the United States of America which, of course, affect ordinary Americans in their pockets when a huge percentage of their tax dollars are going into the pockets of Lockheed Martin, Halliburton and others who are accompanied through waging war on behalf of the US.

Jeff: And of course, it’s a little like talking about the banks and too big to fail. These companies, the Lockheed Martins of the world, and not to single them out, but there are so many others that you talk about, have become so big that there’s so many billions of dollars at stake and so many jobs at stake around the world, that continuous war becomes almost essential to keep an economic engine going.

Andrew: At one level, that is absolutely true. There is an economic engine that requires the process of perpetual war to keep it profitable. The other thing works bearing in mind, that almost without exception the defense contractors, or the weapons makers tend to be incredibly badly run companies. So they could use things that are often substandard. The cost of them is hugely inflated from the cost that was initially agreed in the contract. The way in which these contracts were drawn up basically allows them no penalty. It is in their own interest to try and prolong the weapons project before they deliver for many years because they actually earn more money as they’re delayed, even though those delays are a consequence of the company’s incompetence and inefficiency itself. The ultimate irony, I suppose, is that when you see certain needs that we can mess up security reasons that go unmet because of the incompetence of the company, it has huge consequences on the national security of the company. It was the prime example where Lockheed and a range of other companies contracted effectively to resupply the Americans troops with a whole lot of equipment in post 9/11 because it was seen as weakness in the US national security framework. And the contract was given to the company. It took them years and years before they actually delivered anything. The first boat that they delivered, when they eventually put it in the water years later with millions of dollars over budget, the hull cracked. During this period in which the incompetence of the company is going effectively unmonitored, America is in danger. America is vulnerable to the real consequences of this very cozy arrangement that the national security elite has. But there’s very real consequences for the security and prosperity of ordinary Americans.

Jeff: And finally, Andrew, are there any governments in the world that are beginning to take a hard look at this, or are beginning to address this in ways that go to the heart of some of these issues that we’ve been talking about.

Andrew: The tragedy is, that I cannot tell you today, but there is one government that is legitimately and with honesty, integrity, and transparency trying to address the morass that is the global trade arms. Many governments sign up to, for instance, the international arms trade treaty that is signed by the United Nations in June 2014. Every one of those countries violate such treaty on an almost daily basis. The mass majority of countries didn’t even implement their own legislation, their own regulatory environment, and their own arms control export regulation. It’s an absolutely terrifying situation and the best way to demonstrate that is the case of Saudi Arabia at the moment. So for the last two years, Saudi Arabia has been the biggest purchaser of weapons in the world. Those weapons are being used as we speak in places like Yemen, Syria, and Bahrain. If governments like the US and the countries in the European Union actually enforced their own legislation and their own arms export regulations, it would be illegal for them to provide weapons to Saudi Arabia given the conflict that it is engaged in and given the history of gargantuan corruption in every arms deal that it has done. But as we speak, all the countries of the EU, the United States of America and Canada are all exporting more and more to Saudi Arabia. Saudi Arabia is committing war crimes and crimes against humanity in those conflicts that I mentioned. And there are absolutely no consequences for them whatsoever. Instead, Saudi Arabia stands out and threatens the United States of America to stop buying certain weaponry to draw forth investments in the US unless the US promises that the Saudi role in 9/11 will not be investigated because there remains huge question marks about the role of Saudi citizens in 9/11. And, in fact, in the biggest and most corrupt arms deal of all times, something called the Al-Yamamah arms deal between the United Kingdom and Saudi Arabia, in which 43 billion pounds of weaponry, probably around 60 something billion dollars of weaponry, were sold to Saudi Arabia. Over $8 billion of bribes were paid on that transaction including over a billion dollars to the then Saudi ambassador to the US through Prince Bandar Bin Sultan. This matter was only investigated when money flowed from Bandar’s account in Riggs Bank in Washington D.C. into the account of his wife. Some of the money found its way into the hands of two of the 9/11 hijackers. If only then that any inquiry took place and the inquiry was pretty much stifled before the court went anywhere. So these sorts of things again illustrate the way in which governments are not addressing the matter of the global arms trade and the cost of that is undermining the national security of the United States of America while enriching certain people.

Jeff: Johan Grimonprez, Andrew Feinstein. The film is Shadow World. Gentlemen, I thank you so much for spending time with us today here on radio whowhatwhy.

Andrew: It’s a pleasure and thank you so much.

Jeff: Thank you for listening and joining us here on radio whowhatwhy. I hope you join us next week for another radio whowhatwhy podcast. I’m Jeff Schechtman.

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Related front page panorama photo credit: Adapted by WhoWhatWhy from SS George H.W. Bush (U.S. Naval Forces Central Command/U.S. Fifth Fleet / Flickr) and The Shadow World (theshadowworldbook.com)

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