Let Them Eat Carbon

Let Them Eat Carbon
Like Big Tobacco, Big Energy Targets the Developing World for Future Profits

By Michael T. Klare
May 27, 2014

In the 1980s, encountering regulatory restrictions and public resistance to smoking in the United States, the giant tobacco companies came up with a particularly effective strategy for sustaining their profit levels: sell more cigarettes in the developing world, where demand was strong and anti-tobacco regulation weak or nonexistent.  Now, the giant energy companies are taking a page from Big Tobacco’s playbook.  As concern over climate change begins to lower the demand for fossil fuels in the United States and Europe, they are accelerating their sales to developing nations, where demand is strong and climate-control measures weak or nonexistent.  That this will produce a colossal increase in climate-altering carbon emissions troubles them no more than the global spurt in smoking-related illnesses troubled the tobacco companies.

The tobacco industry’s shift from rich, developed nations to low- and middle-income countries has been well documented.  “With tobacco use declining in wealthier countries, tobacco companies are spending tens of billions of dollars a year on advertising, marketing, and sponsorship, much of it to increase sales in… developing countries,” the New York Times noted in a 2008 editorial.  To boost their sales, outfits like Philip Morris International and British American Tobacco also brought their legal and financial clout to bear to block the implementation of anti-smoking regulations in such places.  “They’re using litigation to threaten low- and middle-income countries,” Dr. Douglas Bettcher, head of the Tobacco Free Initiative of the World Health Organization (WHO), told the Times.

The fossil fuel companies — producers of oil, coal, and natural gas — are similarly expanding their operations in low- and middle-income countries where ensuring the growth of energy supplies is considered more critical than preventing climate catastrophe.  “There is a clear long-run shift in energy growth from the OECD [Organization for Economic Cooperation and Development, the club of rich nations] to the non-OECD,” oil giant BP noted in its Energy Outlook report for 2014.  “Virtually all (95%) of the projected growth [in energy consumption] is in the non-OECD,” it added, using the polite new term for what used to be called the Third World.

As in the case of cigarette sales, the stepped-up delivery of fossil fuels to developing countries is doubly harmful.  Their targeting by Big Tobacco has produced a sharp rise in smoking-related illnesses among the poor in places where health systems are particularly ill equipped for those in need.  “If current trends continue,” the WHO reported in 2011, “by 2030 tobacco will kill more than 8 million people worldwide each year, with 80% of these premature deaths among people living in low- and middle-income countries.”  In a similar fashion, an increase in carbon sales to such nations will help produce more intense storms and longer, more devastating droughts in places that are least prepared to withstand or cope with climate change’s perils.

The energy industry’s growing emphasis on sales to these particularly vulnerable lands is evident in the strategic planning of ExxonMobil, the largest privately owned oil company.  “By 2040, the world’s population is projected to grow to approximately 8.8 billion people,” Exxon noted in its 2013 financial report to stockholders.  “As economies and populations grow, and living standards improve for billions of people, the need for energy will continue to rise… This demand increase is expected to be concentrated in developing countries.”

This assessment, explained Exxon CEO Rex Tillerson, will govern the company’s marketing plans in the years ahead.  “The global business environment continues to provide a mix of challenges and opportunities,” he told financial analysts at the New York Stock Exchange in March 2013.  While the demand for energy in the developed economies “remains relatively flat,” he noted, “energy demand for the economies of the non-OECD countries is expected to grow about 65% to support anticipated growth.”

In recognition of this trend, Exxon has undertaken a wide variety of initiatives intended to boost its sales capacity in China, Southeast Asia, and other rapidly developing areas.  In Singapore, for example, the company is expanding a refinery and petrochemical facility that make up its “largest integrated manufacturing site in the world.”  The refinery is being modified to produce more diesel, so as to better service the growing fleets of trucks, buses, and other heavy vehicles in the region.  Meanwhile, the hydrocarbon processing facility at the chemical plant is being doubled to meet the rising demand for petrochemicals used in making plastics and other consumer goods, especially in China.  (“China alone is expected to represent over half of global demand growth” for these products, Tillerson observed last year.)

To promote its products in China, Exxon has established a “strategic alliance” with the China Petroleum and Chemical Corporation (Sinopec), one of China’s state-owned energy giants.  A key goal of the alliance is the establishment of an “integrated world-scale refinery and petrochemical complex” in eastern China which, Exxon officials noted, is to “become a major marketer of petrochemicals throughout China and petroleum products throughout Fujian Province.”  A major component of this joint effort, the Fujian Refining and Ethylene Integrated Project, came on line in September 2009.

Exxon is also expanding its capacity to supply liquefied natural gas (LNG) to Asia.  In partnership with Qatar Petroleum, it has built the world’s largest LNG export facility at Ras Laffan in Qatar and is building a mammoth LNG operation in Papua New Guinea.  This $19 billion project, which began operation in April, includes a 430-mile pipeline to deliver gas from the island’s interior highlands to an export terminal near Port Moresby, the capital.  “The project is optimally located to serve growing Asia markets where LNG demand is expected to rise by approximately 165% between 2010 and 2025,” said Neil W. Duffin, president of ExxonMobil Development Company.

Next on the company’s agenda is a plan to draw on the natural gas being extracted in ever greater quantities from domestic shale formations in the United States via hydro-fracking and convert it into LNG for export to Asia.  Although various American politicians have been pushing the strategic export of such supplies to Europe to “rescue” that continent from its reliance on Russian gas, Exxon has other ideas.  It sees Asia, where gas prices are higher, as the natural market for its LNG — and U.S. foreign policy be damned.  “By exporting natural gas,” Tillerson told the Asia Society in June 2013, “the United States could shore up the energy security of Asian allies and trading partners and stimulate investment in American domestic production.”

Big Energy’s “Humanitarian” Mission

In promoting such policies, Exxon’s executives are careful to acknowledge that growing concerns over climate change are generating increased resistance to fossil fuel consumption in Europe and other First World areas.  When it comes to the rest of the planet, however, such concerns, they claim, should be outweighed by a “humanitarian” impulse to provide cheap fossil energy to poor people.  Drawing on the arguments of Danish environmental renegade Bjørn Lomborg, author of The Skeptical Environmentalist, they argue that tending to the needs of the poor constitutes a greater priority than curbing global warming.  “We must also recognize that there is a humanitarian imperative to meeting these growing global energy needs,” Tillerson typically asserted in 2013.

Asked why global warming shouldn’t be of greater concern, the Exxon CEO parroted Lomberg’s anti-environmental perspective.  “I think there are much more pressing priorities that we… need to deal with,” Tillerson told the Council on Foreign Relations in June 2012.  “There are still hundreds of millions, billions of people living in abject poverty around the world.  They need electricity…  They need fuel to cook their food on that’s not animal dung…  They’d love to burn fossil fuels because their quality of life would rise immeasurably, and their quality of health and the health of their children and their future would rise immeasurably.  You’d save millions upon millions of lives by making fossil fuels more available to a lot of the part of the world that doesn’t have it.”

Although the leaders of the other giant energy firms, including BP, Chevron, and Royal Dutch Shell, are less outspoken than Tillerson, they are pursuing a similar marketing strategy.  “Demand growth [for petroleum products] comes exclusively from rapidly growing non-OECD economies,” BP noted in its recent report on the global energy outlook.  “China, India, and the Middle East account for nearly all of the net global increase.”  Like ExxonMobil, BP and the others are hard at work expanding their capacity to sell fossil fuels in these growing markets.

Nor are only the oil and gas companies pursuing this strategy.  So is Big Coal.  With coal demand declining in the U.S., thanks to the growing availability of low-cost natural gas generated by fracking, the coal firms are shipping ever more of their American output to Asia, which will contribute significantly to increasingly the carbon emissions there.  According to the Energy Information Administration (EIA) of the Department of Energy, U.S. coal exports to China rose from essentially zero in 2007 to 10 million tons in 2012.  Exports to India increased from 1.5 million to seven million tons and to South Korea from virtually nothing to nine million.  Exports to just these three countries jumped by more than 1,000% during these years.

The EIA summarized the situation this way: “Companies in key parts of the U.S. coal supply chain — both producers and railways — have increased sales to Asia because of rising Asian coal demand, overall strong export prices, and lower U.S. consumption of coal to produce electric power.”  Looked at from another perspective, diminished carbon emissions from coal in the United States — much touted by President Obama in his embrace of natural gas — has no significance when it comes to climate change, because of the greeenhouse gases being produced when all that coal is consumed in Asia.

To increase sales yet more, the giant coal companies are promoting the construction of new shipping terminals on the West Coast, including two each in Oregon and Washington State.  The largest of these, the Gateway Pacific Terminal near Bellingham, Washington, will handle up to 48 million metric tons of coal a year, most of it destined for China and other Asian countries.

Although the terminals are often promoted by local officials as sources of new jobs, they are sparking fierce opposition from community activists and Native Americans who view them as posing a severe threat to the environment.  Claiming that coal dust and spills from trains and loading facilities will harm fishing sites they deem vital, members of the Lumni tribe are citing longstanding treaty rights in their efforts to block the Cherry Point Terminal, one of the planned Washington State facilities.

In the Pacific Northwest, opposition to the coal terminals and the rail lines that will be so crucial to their operation — some of which will traverse Indian reservations and pass through green-minded cities like Seattle — is gaining strength.  The process has been similar to the way climate activists mobilized against the Keystone XL pipeline that, if built, is slated to bring carbon-dense tar sands from Canada to the U.S. Gulf Coast.  But the coal companies and their allies are pushing back, insisting that their exports are essential to the country’s economic vitality.  “Unless the ports are built on the West Coast,” said Jason Hayes, a spokesman for the American Coal Council, U.S. suppliers won’t be viewed as “reliable business partners” in Asia.

Although community and tribal opposition may succeed in blocking or delaying a terminal or two, most analysts believe that, in the end, several will be built.  “There are two billion people in Asia who need more power, so eventually more U.S. coal will get onto global markets,” says Matt Preston, an analyst for the energy consultancy firm of Wood Mackenzie.

Perpetuating the Fossil Fuel Era

In the end, all these efforts to boost fossil fuel sales in Asia and other developing areas will have one unmistakable result: a sharp rise in global carbon emissions, with most of the growth in non-OECD countries.  According to the EIA, between 2010 and 2040 world carbon dioxide emissions from energy use — the main source of greenhouse gases — will rise by 46%, from 31.2 billion metric tons to 45.5 billion.  Little of this increase will officially be generated by the planet’s wealthiest countries, where energy demand is stagnant and tougher rules on carbon emissions are being put in place.  Instead, almost all of the growth of CO2 in the atmosphere — 94% of it — will be sloughed off on the developing world, even ifa significant part of those emissions will come from the combustion of U.S. fossil fuel exports.

In the view of most scientists, an increase of carbon emissions on this scale will almost certainly lead to a global temperature rise of at least four degrees centigrade and possibly more by the end of this century.  That’s enough to ensure that the changes we are already seeing, including severe droughts, stronger storms, raging wildfires, and rising sea levels, will be eclipsed by exponentially greater perils in the future.

Everyone will share in the pain from such warming-induced catastrophes.  But people in developing lands — especially the poorest among them — will suffer more, because the societies they live in are least prepared to cope with severe catastrophes.  “Climate-related hazards exacerbate other [socioeconomic] stressors, often with negative outcomes for livelihoods, especially for people living in poverty,” the UN’s Intergovernmental Panel on Climate Change observed in its most recent assessment of what global warming will mean for planet Earth.  “Climate-related hazards affect poor people’s lives directly, through impacts on livelihoods, reduction in crop yields, or destruction of homes, and indirectly through, for example, increased food prices and food insecurity.”

Certainly, the giant fossil fuel companies bear a moral, if not as yet in our society a legal, responsibility for the intensification of climate change and the lack of serious response to it.  Beyond this, their carefully planned strategy of selling carbon products to those most at risk can only be viewed as outright immorality.  Just as health officials now condemn Big Tobacco’s emphasis on cigarette sales to poor people in countries with inadequate health systems, so someday Big Energy’s new “smoking” habit will be deemed a massive threat to human survival.

Above all, Big Energy is insuring that one small ray of good news when it comes to climate change — the contracting use of coal, oil, and gas across the developed world — will prove meaningless.  The economic incentive to sell fossil fuels to developing countries is undeniably powerful.  The need for increased energy in developing countries is no less indisputable.  In the long run, the only way to meet these needs without endangering our global future would be through a mammoth drive to expand renewable energy options there, not by shoving carbon products down their throats.  Rex Tillerson and his cohorts will continue to claim that they are performing a “humanitarian” service with their new “tobacco” strategy.  Instead, they are actually perpetuating the fossil fuel era and helping to create a future humanitarian catastrophe of apocalyptic dimensions.

Michael T. Klare, a TomDispatch regular, is a professor of peace and world security studies at Hampshire College and the author, most recently, of The Race for What’s Left.  A documentary movie version of his book Blood and Oil is available from the Media Education Foundation.


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The 95% Doctrine: Climate Change as a Weapon of Mass Destruction

The 95% Doctrine:  Climate Change as a Weapon of Mass Destruction

By Tom Engelhardt
May 22, 2014

Who could forget?  At the time, in the fall of 2002, there was such a drumbeat of “information” from top figures in the Bush administration about the secret Iraqi program to develop weapons of mass destruction (WMD) and so endanger the United States.  And who — other than a few suckers — could have doubted that Saddam Hussein was eventually going to get a nuclear weapon?  The only question, as our vice president suggested on “Meet the Press,” was: Would it take one year or five?  And he wasn’t alone in his fears, since there was plenty of proof of what was going on.  For starters, there were those “specially designed aluminum tubes” that the Iraqi autocrat had ordered as components for centrifuges to enrich uranium in his thriving nuclear weapons program.  Reporters Judith Miller and Michael Gordon hit the front page of the New York Times with that story on September 8, 2002.

Then there were those “mushroom clouds” that Condoleezza Rice, our national security advisor, was so publicly worried about — the ones destined to rise over American cities if we didn’t do something to stop Saddam.  As she fretted in a CNN interview with Wolf Blitzer on that same September 8th, “[W]e don’t want the smoking gun to be a mushroom cloud.”  No, indeed, and nor, it turned out, did Congress!

And just in case you weren’t anxious enough about the looming Iraqi threat, there were those unmanned aerial vehicles — Saddam’s drones! — that could be armed with chemical or biological WMD from his arsenal and flown over America’s East Coast cities with unimaginable results.  President George W. Bush went on TV to talk about them and congressional votes were changed in favor of war thanks to hair-raising secret administration briefings about them on Capitol Hill.

In the end, it turned out that Saddam had no weapons program, no nuclear bomb in the offing, no centrifuges for those aluminum pipes, no biological or chemical weapons caches, and no drone aircraft to deliver his nonexistent weapons of mass destruction (nor any ships capable of putting those nonexistent robotic planes in the vicinity of the U.S. coast).  But what if he had?  Who wanted to take that chance?  Not Vice President Dick Cheney, certainly.  Inside the Bush administration he propounded something that journalist Ron Suskind later dubbed the “one percent doctrine.”  Its essence was this: if there was even a 1% chance of an attack on the United States, especially involving weapons of mass destruction, it must be dealt with as if it were a 95%-100% certainty.

Here’s the curious thing: if you look back on America’s apocalyptic fears of destruction during the first 14 years of this century, they largely involved three city-busting weapons that were fantasies of Washington’s fertile imperial imagination.  There was that “bomb” of Saddam’s, which provided part of the pretext for a much-desired invasion of Iraq.  There was the “bomb” of the mullahs, the Iranian fundamentalist regime that we’ve just loved to hate ever since they repaid us, in 1979, for the CIA’s overthrow of an elected government in 1953 and the installation of the Shah by taking the staff of the U.S. embassy in Tehran hostage.  If you believed the news from Washington and Tel Aviv, the Iranians, too, were perilously close to producing a nuclear weapon or at least repeatedly on the verge of the verge of doing so.  The production of that “Iranian bomb” has, for years, been a focus of American policy in the Middle East, the “brink” beyond which war has endlessly loomed.  And yet there was and is no Iranian bomb, nor evidence that the Iranians were or are on the verge of producing one.

Finally, of course, there was al-Qaeda’s bomb, the “dirty bomb” that organization might somehow assemble, transport to the U.S., and set off in an American city, or the “loose nuke,” maybe from the Pakistani arsenal, with which it might do the same.  This is the third fantasy bomb that has riveted American attention in these last years, even though there is less evidence for or likelihood of its imminent existence than of the Iraqi and Iranian ones.

To sum up, the strange thing about end-of-the-world-as-we’ve-known-it scenarios from Washington, post-9/11, is this: with a single exception, they involved only non-existent weapons of mass destruction.  A fourth weapon — one that existed but played a more modest role in Washington’s fantasies — was North Korea’s perfectly real bomb, which in these years the North Koreans were incapable of delivering to American shores.

The “Good News” About Climate Change

In a world in which nuclear weapons remain a crucial coin of the realm when it comes to global power, none of these examples could quite be classified as 0% dangers.  Saddam had once had a nuclear program, just not in 2002-2003, and also chemical weapons, which he used against Iranian troops in his 1980s war with their country (with the help of targeting information from the U.S. military) and against his own Kurdish population.  The Iranians might (or might not) have been preparing their nuclear program for a possible weapons breakout capability, and al-Qaeda certainly would not have rejected a loose nuke, if one were available (though that organization’s ability to use it would still have been questionable).

In the meantime, the giant arsenals of WMD in existence, the American, Russian, Chinese, Israeli, Pakistani, and Indian ones that might actually have left a crippled or devastated planet behind, remained largely off the American radar screen.  In the case of the Indian arsenal, the Bush administration actually lent an indirect hand to its expansion.  So it was twenty-first-century typical when President Obama, trying to put Russia’s recent actions in the Ukraine in perspective, said, “Russia is a regional power that is threatening some of its immediate neighbors.  I continue to be much more concerned when it comes to our security with the prospect of a nuclear weapon going off in Manhattan.”

Once again, an American president was focused on a bomb that would raise a mushroom cloud over Manhattan.  And which bomb, exactly, was that, Mr. President?

Of course, there was a weapon of mass destruction that could indeed do staggering damage to or someday simply drown New York City, Washington D.C., Miami, and other East coast cities.  It had its own efficient delivery systems — no nonexistent drones or Islamic fanatics needed.  And unlike the Iraqi, Iranian, or al-Qaeda bombs, it was guaranteed to be delivered to our shores unless preventive action was taken soon.  No one needed to hunt for its secret facilities.  It was a weapons system whose production plants sat in full view right here in the United States, as well as in Europe, China, and India, as well as in Russia, Saudi Arabia, Iran, Venezuela, and other energy states.

So here’s a question I’d like any of you living in or visiting Wyoming to ask the former vice president, should you run into him in a state that’s notoriously thin on population: How would he feel about acting preventively, if instead of a 1% chance that some country with weapons of mass destruction might use them against us, there was at least a 95% — and likely as not a 100% — chance of them being set off on our soil?  Let’s be conservative, since the question is being posed to a well-known neoconservative.  Ask him whether he would be in favor of pursuing the 95% doctrine the way he was the 1% version.

After all, thanks to a grim report in 2013 from the Intergovernmental Panel on Climate Change, we know that there is now a 95%-100% likelihood that “human influence has been the dominant cause of the observed warming [of the planet] since the mid-20th century.”  We know as well that the warming of the planet — thanks to the fossil fuel system we live by and the greenhouse gases it deposits in the atmosphere — is already doing real damage to our world and specifically to the United States, as a recent scientific report released by the White House made clear.  We also know, with grimly reasonable certainty, what kinds of damage those 95%-100% odds are likely to translate into in the decades, and even centuries, to come if nothing changes radically: a temperature rise by century’s end that couldexceed 10 degrees Fahrenheit, cascading species extinctions, staggeringly severe droughts across larger parts of the planet (as in the present long-term drought in the American West and Southwest), far more severe rainfall across other areas, more intense storms causing far greater damage, devastating heat waves on a scale no one in human history has ever experienced, masses of refugees, rising global food prices, and among other catastrophes on the human agenda, rising sea levels that will drown coastal areas of the planet.

From two scientific studies just released, for example, comes the news that the West Antarctic ice sheet, one of the great ice accumulations on the planet, has now begun a process of melting and collapse that could, centuries from now, raise world sea levels by a nightmarish 10 to 13 feet.  That mass of ice is, according to the lead authors of one of the studies, already in “irreversible retreat,” which means — no matter what acts are taken from now on — a future death sentence for some of the world’s great cities.  (And that’s without even the melting of the Greenland ice shield, not to speak of the rest of the ice in Antarctica.)

All of this, of course, will happen mainly because we humans continue to burn fossil fuels at an unprecedented rate and so annually deposit carbon dioxide in the atmosphere at record levels.  In other words, we’re talking about weapons of mass destruction of a new kind.  While some of their effects are already in play, the planetary destruction that nuclear weapons could cause almost instantaneously, or at least (given “nuclear winter” scenarios) within months, will, with climate change, take decades, if not centuries, to deliver its full, devastating planetary impact.

When we speak of WMD, we usually think of weapons — nuclear, biological, or chemical — that are delivered in a measurable moment in time.  Consider climate change, then, a WMD on a particularly long fuse, already lit and there for any of us to see.  Unlike the feared Iranian bomb or the Pakistani arsenal, you don’t need the CIA or the NSA to ferret such “weaponry” out.  From oil wells to fracking structures, deep sea drilling rigs to platforms in the Gulf of Mexico, the machinery that produces this kind of WMD and ensures that it is continuously delivered to its planetary targets is in plain sight.  Powerful as it may be, destructive as it will be, those who control it have faith that, being so long developing, it can remain in the open without panicking populations or calling any kind of destruction down on them.

The companies and energy states that produce such WMD remain remarkably open about what they’re doing.  Generally speaking, they don’t hesitate to make public, or even boast about, their plans for the wholesale destruction of the planet, though of course they are never described that way.  Nonetheless, if an Iraqi autocrat or Iranian mullahs spoke in similar fashion about producing nuclear weapons and how they were to be used, they would be toast.

Take ExxonMobil, one of the most profitable corporations in history.  In early April, it released two reports that focused on how the company, as Bill McKibben has written, “planned to deal with the fact that [it] and other oil giants have many times more carbon in their collective reserves than scientists say we can safely burn.”  He went on:

The company said that government restrictions that would force it to keep its [fossil fuel] reserves in the ground were ‘highly unlikely,’ and that they would not only dig them all up and burn them, but would continue to search for more gas and oil — a search that currently consumes about $100 million of its investors’ money every single day. ‘Based on this analysis, we are confident that none of our hydrocarbon reserves are now or will become “stranded.”‘

In other words, Exxon plans to exploit whatever fossil fuel reserves it possesses to their fullest extent.  Government leaders involved in supporting the production of such weapons of mass destruction and their use are often similarly open about it, even while also discussing steps to mitigate their destructive effects.  Take the White House, for instance.  Here was a statement President Obama proudly made in Oklahoma in March 2012 on his energy policy:

Now, under my administration, America is producing more oil today than at any time in the last eight years. That’s important to know. Over the last three years, I’ve directed my administration to open up millions of acres for gas and oil exploration across 23 different states. We’re opening up more than 75% of our potential oil resources offshore. We’ve quadrupled the number of operating rigs to a record high. We’ve added enough new oil and gas pipeline to encircle the Earth and then some.

Similarly, on May 5th, just before the White House was to reveal that grim report on climate change in America, and with a Congress incapable of passing even the most rudimentary climate legislation aimed at making the country modestly more energy efficient, senior Obama adviser John Podesta appeared in the White House briefing room to brag about the administration’s “green” energy policy. “The United States,” he said, “is now the largest producer of natural gas in the world and the largest producer of gas and oil in the world.  It’s projected that the United States will continue to be the largest producer of natural gas through 2030.  For six straight months now, we’ve produced more oil here at home than we’ve imported from overseas.  So that’s all a good-news story.”

Good news indeed, and from Vladmir Putin’s Russia, which just expanded its vast oil and gas holdings by a Maine-sized chunk of the Black Sea off Crimea, to Chinese “carbon bombs,” to Saudi Arabian production guarantees, similar “good-news stories” are similarly promoted.  In essence, the creation of ever more greenhouse gases — of, that is, the engine of our future destruction — remains a “good news” story for ruling elites on planet Earth.

Weapons of Planetary Destruction

We know exactly what Dick Cheney — ready to go to war on a 1% possibility that some country might mean us harm — would answer, if asked about acting on the 95% doctrine.  Who can doubt that his response would be similar to those of the giant energy companies, which have funded so much climate-change denialism and false science over the years?  He would claim that the science simply isn’t “certain” enough (though “uncertainty” can, in fact, cut two ways), that before we commit vast sums to taking on the phenomenon, we need to know far more, and that, in any case, climate-change science is driven by a political agenda.

For Cheney & Co., it seemed obvious that acting on a 1% possibility was a sensible way to go in America’s “defense” and it’s no less gospel for them that acting on at least a 95% possibility isn’t.  For the Republican Party as a whole, climate-change denial is by now nothing less than a litmus test of loyalty, and so even a 101% doctrine wouldn’t do when it comes to fossil fuels and this planet.

No point, of course, in blaming this on fossil fuels or even the carbon dioxide they give off when burned.  These are no more weapons of mass destruction than are uranium-235 and plutonium-239.  In this case, the weaponry is the production system that’s been set up to find, extract, sell at staggering profits, and burn those fossil fuels, and so create a greenhouse-gas planet.  With climate change, there is no “Little Boy” or “Fat Man” equivalent, no simple weapon to focus on.  In this sense, fracking is the weapons system, as is deep-sea drilling, as are those pipelines, and the gas stations, and the coal-fueled power plants, and the millions of cars filling global roads, and the accountants of the most profitable corporations in history.

All of it — everything that brings endless fossil fuels to market, makes those fuels eminently burnable, and helps suppress the development of non-fossil fuel alternatives — is the WMD.  The CEOs of the planet’s giant energy corporations are the dangerous mullahs, the true fundamentalists, of planet Earth, since they are promoting a faith in fossil fuels which is guaranteed to lead us to some version of End Times.

Perhaps we need a new category of weapons with a new acronym to focus us on the nature of our present 95%-100% circumstances.  Call them weapons of planetary destruction (WPD) or weapons of planetary harm (WPH).  Only two weapons systems would clearly fit such categories.  One would be nuclear weapons which, even in a localized war between Pakistan and India, could create some version of “nuclear winter” in which the planet was cut off from the sun by so much smoke and soot that it would grow colder fast, experience a massive loss of crops, of growing seasons, and of life.  In the case of a major exchange of such weapons, we would be talking about “the sixth extinction” of planetary history.

Though on a different and harder to grasp time-scale, the burning of fossil fuels could end in a similar fashion — with a series of “irreversible” disasters that could essentially burn us and much other life off the Earth.  This system of destruction on a planetary scale, facilitated by most of the ruling and corporate elites on the planet, is becoming (to bring into play another category not usually used in connection with climate change) the ultimate “crime against humanity” and, in fact, against most living things.  It is becoming a “terracide.”

Tom Engelhardt is a co-founder of the American Empire Project and author of The United States of Fear as well as a history of the Cold War, The End of Victory Culture (from which some of this essay has been adapted). He runs the Nation Institute’s TomDispatch.com. His latest book, co-authored with Nick Turse, is Terminator Planet: The First History of Drone Warfare, 2001-2050.



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Class War: Thailand’s Military Coup

Class War:  Thailand’s Military Coup

Outnumbered by the country’s rural voters, Thailand’s once vibrantly democratic urban middle class has embraced an elitist, antidemocratic agenda.

By Walden Bello
Foreign Policy In Focus
May 27, 2014

This article is a joint publication of Foreign Policy In Focus and TheNation.com

After declaring martial law on Tuesday, May 20, the Thai military announced a full-fledged coup two days later. The putsch followed nearly eight months of massive street protests against the ruling Pheu Thai government identified with former Prime Minister Thaksin Shinawatra. The power grab by army chief Gen. Prayuth Chan-ochacame two weeks after Thaksin’s sister, Yingluck, was ousted as caretaker prime minister by the country’s Constitutional Court for “abuse of power” on May 7.

The Thai military portrayed its seizure of power as an effort to impose order after two rounds of talks between the country’s rival factions failed to produce a compromise that would provide Thailand with a functioning government.

Deftly Managed Script

The military’s narrative produced few takers. Indeed, many analysts saw the military’s move as a coup de grace to Thailand’s elected government, following what they saw as the judicial coup of May 7.

It is indeed difficult not to see the putsch as the final step in a script deftly managed by the conservative “royalist” establishment to thwart the right to govern of a populist political bloc that has won every election since 2001. Utilizing anti-corruption discourse to inflame the middle class into civil protest, the key forces in the anti-government coalition have, from the start, aimed to create the kind of instability that would provoke the military to step in and provide the muscle for a new political order.

Using what analyst Marc Saxer calls “middle class rage” as the battering ram, these elite elements forced the resignation of the Yingluck government in December; disrupted elections in February, thus providing the justification for the conservative Constitutional Court to nullify them; and instigated that same court’s decision to oust Yingluck as caretaker prime minister May 7 on flimsy charges of “abuse of power.” Civil protest was orchestrated with judicial initiatives to pave the way for a military takeover.

The military says that it will set up a “reform council” and a “national assembly” that will lay the institutional basis of a new government. This plan sounds very much like the plan announced in late November by the protest leader Suthep Thaugsuban, which would place the country for a year under an unelected, unaccountable reform panel.

The military’s move has largely elicited the approval of Suthep’s base of middle-class supporters. Indeed, it has been middle-class support that has provided cover for the calculated moves of the political elites. Many of those that provided the backbone of the street protests now anticipate the drafting of an elitist new order that will institutionalize political inequality in favor of Bangkok and the country’s urban middle class.

The Thai Middle Class: From Paragons to Enemies of Democracy

The sociologist Seymour Martin Lipset once celebrated the middle class as paragons of democracy. But in recent years, middle-class Thais have transmogrified into supporters of an elitist, frankly antidemocratic agenda. Today’s middle class is no longer the pro-democracy middle class that overthrew the dictatorship of General Suchinda Krapayoon in 1992. What happened?

Worth quoting in full is an insightful analysis of this transformation provided by Marc Saxer:

The Bangkok middle class called for democratization and specifically the liberalization of the state with the political rights to protect themselves from the abuse of power by the elites. However, once democracy was institutionalized, they found themselves to be the structural minority. Mobilized by clever political entrepreneurs, it was now the periphery who handily won every election. Ignorant of the rise of a rural middle class demanding full participation in social and political life, the middle class in the center interpreted demands for equal rights and public goods as ‘the poor getting greedy’… [M]ajority rule was equated with unsustainable welfare expenses, which would eventually lead to bankruptcy.

From the perspective of the middle class, Saxer continues, majority rule

overlooks the political basis of the social contract: a social compromise between all stakeholders. Never has any social contract been signed which obligates the middle class to foot the tax bill, in exchange for quality public services, political stability and social peace. This is why middle classes feel like they are “being robbed” by corrupt politicians, who use their tax revenues to “buy votes” from the “greedy poor.” Or, in a more subtle language, the “uneducated rural masses are easy prey for politicians who promise them everything in an effort to get a hold of power.”

Thus, Saxer concludes, from the viewpoint of the urban middle class,

policies delivering to local constituencies are nothing but “populism,” or another form of “vote buying” by power hungry politicians. The Thai Constitutional Court, in a seminal ruling, thus equated the very principle of elections with corruption. Consequently, time and again, the “yellow” alliance of feudal elites along with the Bangkok middle class called for the disenfranchisement of the “uneducated poor,” or even more bluntly the suspension of electoral democracy.

Impossible Dream

However, the elite-middle class alliance is deceiving itself if it thinks the adoption of a constitution institutionalizing minority rule will be possible. For Thailand is no longer the Thailand of 20 years ago, where political conflicts were still largely conflicts among elites, with the vast lower classes being either onlookers or passive followers of warring elite factions.

What is now the driving force of Thai politics is class conflict with Thai characteristics, to borrow from Mao. The central figure that has transformed the Thai political landscape is the exiled Thaksin Shinawatra, a charismatic, if corrupt, billionaire who managed through a combination of populism, patronage, and the skillful deployment of cash to create a massive electoral majority. While for Thaksin the aim of this coalition might be the cornering or monopolization of elite power, for the social sectors he has mobilized, the goal is the redistribution of wealth and power from the elites to the masses and—equally important—extracting respect for people that had been scorned as “country bumpkins” or “buffaloes.” However much Thaksin’s “Redshirt” movement may be derided as a coalition between corrupt politicians and the “greedy poor,” it has become the vehicle for the acquisition of full citizenship rights by Thailand’s marginalized classes.

The elite-middle class alliance is dreaming if it thinks that the Redshirts will stand aside and allow them to dictate the terms of surrender, much less institutionalize these in a new constitution. But neither do the Redshirts at present possess the necessary coercive power to alter the political balance in the short and medium term. It is now their turn to wage civil resistance.

Since the coup, about 150 people have been reported detained—including Pravit Rojanaphruk, a prominent reporter for Thailand’s Nation newspaper known for his criticism of the anti-government protest movement that precipitated the military’s intervention.

What now seems likely is that, with violent and non-violent civil protest by the Redshirts, Thailand will experience a prolonged and bitter descent into virtual civil war, with the Pheu Thai regional strongholds—the North, Northeast, and parts of the central region of the country—becoming increasingly ungovernable from imperial Bangkok. It is a tragic denouement to which an anti-democratic opposition disdaining all political compromise has plunged this once promising Southeast Asian nation.

Walden Bello, a member of the House of Representatives of the Philippines, was the principal author of A Siamese Tragedy: Development and Disintegration in Modern Thailand (London: Zed Press, 1998).



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EU Safety Institutions Caught Plotting an Industry “escape route” Around Looming Pesticide Ban

EU Safety Institutions Caught Plotting an Industry “escape route” Around Looming Pesticide Ban

By Jonathan Latham, PhD
Independent Science News
May 26, 2014

EU documents newly obtained by the nonprofit Pesticide Action Network of Europe reveal that the health commission of the European Union (DG SANCO), which is responsible for protecting public health, is attempting to develop a procedural “escape route” to evade an upcoming EU-wide ban on endocrine disrupting pesticides. Endocrine disrupting chemicals (EDCs) are those that alter hormonal regulation at very low doses to cause effects on behavior, reproduction, and gender, as well as cancer and birth defects.

In 2009, under the European Union’s then-new chemical REACH legislation, a continent-wide ban on endocrine disrupting pesticides was agreed. The European Commission (EC) was charged with taking various steps to protect public safety. These included officially defining what constitutes an endocrine disrupting effect and designating acceptable chemical detection methods. The deadline to present these criteria for ensuring protection against endocrine disrupting pesticides expired on December 14, 2013.

Instead of providing the needed safety guidance, however, the EU’s Health Commission (DG SANCO) appears to be drafting a procedural “escape route” around the endocrine disrupting ban. This legal maneuvering is being done behind closed doors and with the collaboration of some EU member states and the European Food Safety Authority (EFSA, an independent EU agency created to assess food risks for the Commission).

As initially revealed by the Pesticides Action Network of Europe (PAN Europe), only Sweden is opposing this escape route, which they consider to be an abandonment of the original democratic mandate. According to a report by Agence France Presse (AFP) Sweden is now going to sue the EU due to mounting evidence that harmful impacts of endocrine disruption are already being felt. AFP quotes Swedish environment minister Lena Ek:

“In some places in Sweden we see double sexed fish. We have scientific reports on how this affects fertility of young boys and girls, and other serious effects.”

The documents obtained by PAN Europe show that the lobbying to undermine the ban is being led by EFSA. This is in direct conflict with the missions of both EFSA and DG SANCO which are to protect public health.

The crisis has come about because EDCs are the subject of a large body of independent academic research showing that certain synthetic chemicals are already causing developmental disabilities and cancer among humans and wildlife through non-traditional (i.e. hormonal) toxicological routes. This evidence is why the ban was instigated. Because of the strength of the evidence and the low doses involved (Vandenberg et al 2012), any rigorous and effective rules to protect the public are likely to result in widespread bans and restrictions on commonly used industrial, agricultural, and household chemicals. This is one reason why AFP also reported the Swedish Minister as saying that EU commissioners were under strong industry pressure.

Tony Tweedale, a Brussels-based independent consultant to NGOs, explained to Independent Science News, there is a second reason for industry pressure:

“That hormones are often disrupted at very low doses threatens to upset industry’s decades-long total control of risk assessment which is based, for example on insensitive tests.”

While missing their mandated December deadline for providing safety rules, DG SANCO and EFSA chose to perform an economic impact assessment of potential regulations instead. Now this economic impact assessment is itself 9 months late. Sweden and others have interpreted these delays as stalling a collectively agreed action.

Before the Swedish lawsuit was announced Sweden had already expressed its concerns to the European Commission in letters to DG SANCO (published on the PAN Europe website). These letters reveal that Sweden believes the failure of DG SANCO to proceed according to the rules is deliberate and that DG SANCO is instead focused on drafting the illegal escape clause. This, believes Sweden, would likely take the form of a general derogation for pesticides that may be endocrine disruptors (1). It would be a legal technicality that effectively allowed pesticides which would have been banned to be exempt from the ban (2).

Simultaneous with Sweden’s announcement to take the European Commission to court, PAN Europe uncovered a letter from a representative of the EFSA Scientific Committee (which is helping to draw up the new scientific criteria). In this letter, which is addressed to advisors of Jean-Manuel Barroso (head of the European Commission), the EFSA official says that the permanent science advisors to EFSA are opposing the ban and aim to use traditional risk assessment to undermine it. Traditional risk assessment is the approach favoured by the pesticide industry.

Also in the letter, the EFSA science advisor complains of the pesticide legislation having no “control route” or “socio-economic route” to save endocrine disrupting pesticides from a ban. The anonymous writer suggests that an existing ‘negligible exposure’ option (EC 1107/2009, Annex II, 3.6.5) can be manipulated to keep such pesticides on the market. 
It is use of this ‘negligible exposure’ option that is opposed by Sweden, which believes that because negligible exposure is not well defined it is in danger of becoming a generic exemption (i.e. a derogation) for the use of endocrine disrupting chemicals.

The existence of this letter confirms Sweden’s interpretation of the intentions of EFSA and DG SANCO; the ‘negligible exposure’ option is indeed being lined up as a loophole for avoiding likely science-based bans on endocrine disruptors.

In the view of PAN Europe:

“By unilaterally changing the rules, DG SANCO is sidelining the EU Parliament and choosing economic interests over their own mission to protect people and the environment.”

Science Director of The Bioscience Resource Project, Allison Wilson, concluded:

“The public will be astounded and appalled to find that the institutions tasked with protecting them are secretly working against them. EFSA has shown itself to be untrustworthy and should be disbanded. Deep rethinking appears necessary since it is not only the EU that has failed to construct institutions capable of safely regulating toxic substances. Perhaps we should question the wisdom of economies dependent on synthetic chemicals and high risk products.” (3)

(1) A derogation is a partial or temporal suspension of a law.
(2) The list of pesticides Sweden thinks likely to be banned can be found here.
(3) See: Robinson C., Holland N., Leloup D., Muilerman H. (2013) Conflicts of interest at the European Food Safety Authority erode public confidence. J Epidemiol Community Health 2013;67:717-720 doi:10.1136/jech-2012-202185

Vandenberg LN, Colborn T, Hayes TB, Heindel JJ, Jacobs DR Jr et al. (2012) Hormones and endocrine-disrupting chemicals: Low-dose effects and nonmonotonic dose responses. Endocr Rev 33: 378-455.


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New York Times’ New Editor Buries Important Story on Private Equity Fee Shenanigans on Holiday Weekend

New York Times’ New Editor Buries Important Story on Private Equity Fee Shenanigans on Holiday Weekend

By Yves Smith
Naked Capitalism
May 25, 2014

Anyone in the political or public relations game knows that the best way to make a disclosure but minimize its impact is to do so on day before the long holiday weekend.

If the government had the ability to make an announcement they’d rather not make during a major holiday break, they would. And the New York Times, which does have that luxury, looks to have done precisely that with an important article on private equity fee abuses by Pulitzer Prize winning reporter Gretchen Morgenson. As we’ll see shortly, this isn’t one of her 1000 or so word weekly “Fair Game” columns; this is substantial piece of original reporting discussing several types of private equity fee abuses.

So why would the Grey Lady bury an important article by running it on long weekend? Oh, and worse, that has anodyne headline, “The Deal’s Done. But Not the Fees,” which doesn’t flag who the perps are? One has to assume that the Times isn’t too keen about rocking the boat with powerful financiers, particularly since the incoming New York Times editor, Dean Baquet, who has a track record of avoiding controversial reporting. In addition, former Lehman Brothers partner and art world denizen Michael M. Thomas dates the beginning of the end of the New York Times as a journalistic institution from when Punch Sulzberger joined the board of the Metropolitan Museum. As Thomas remarked, “He needed to be dining with people he should be dining on.”

Make no bones about it, the Morgenson story, which comes on the heels of a Wall Street Journal exposing industry leader KKR’s far too clever and potentially impermissible dealings with its house consulting firm, KKR Capstone, discloses important new fee abuses, including getting paid for services never rendered.

One of the things that the broader public may not realize is that the normally complacent investors in these funds, known as limited partners, have been pushing back against the fees charged to them by the private equity firms, who in industry parlance are called general partners. Thus this fee chicanery is particularly important because it reveals a concerted effort by the general partners to out-fox the limited partners and continue to extract more in rents from the limited partners than they think is warranted and thought they had agreed to pay. It’s an up-market version of Elizabeth Warren’s famed “tricks and traps.” . From the Morgenson story:

“In some instances, investors’ pockets are being picked,” Andrew J. Bowden, director of the S.E.C.’s office of compliance inspections and examinations, said in a recent interview. “These investors may be sophisticated and they may be capable of protecting themselves, but much of what we’re uncovering is undetectable by even the most sophisticated investor.”

Actually, what Bowden is suggesting is worse than Warren’s objections to sneaky hidden terms in impenetrable consumer contracts. While Bowden says that the general partners are waging a successful document/deal structuring complexity war against limited partners, his “pockets are being picked” suggests the SEC is also seeing cases of flat-out embezzlement.

The public assumes that the private equity kingpins get rich by virtue of their success fees, the 20% (or more in some cases, typically after a hurdle is met) that they get when their investments show a profit. It is much less widely known that general partners charge a raft of other fees, including transaction fees (which are on top of the fees paid to investment bankers and funding sources) and monitoring fees (which are in addition to the management fees). The exhaustively researched new book Private Equity at Work by Eileen Appelbaum and Rosemary Batt explains where the general partners’ income really comes from:

The conventional understanding is that general partners have earned about two-thirds of their compensation from carried interest [the upside fees] and one-third from fixed components such as fees. At some point that relationship changed. One econometric study of 144 buyout funds from 1993 to 2006 found that almost two-thirds of the revenues of PE firms came from fixed components, but this study did not show how or when the proportion of fixed-to-carry changed over this time period. (p. 254)

Why does this split matter? To the extent that private equity general partners earn their pay from sources that don’t depend on the success of the investment, their incentives are not aligned with those of the limited partners. It may be no surprise that Appelbaum and Batt (consistent with other reports on the industry) find that the shift to “heads I win, tails you lose” fee components took place during a time frame when buyout returns have been declining.

Morgenson explains, as did the Wall Street Journal in its KKR story, the big way that investors have tried pushing back is to have a big chunk of all those extra fees offset against the annual management fee (the 2% of the prototypical “2 and 20″ although for bigger funds, the management fee level is lower), via this graphic (click to enlarge):

Screen shot 2014-05-25 at 1.17.45 AM

But this approach of rebates caps how much the limited partners can recoup, as Morgenson notes:

There are two problems with these reimbursements. Because they can offset only the amount an investor pays in management fees, ancillary fees in excess of those payments are not shared; they are kept solely by the private equity firm. And some fund advisers have found ways to limit the amount of fees they must give back.

One example involves senior advisers hired by private equity firms to help oversee acquired companies. These advisers tend to be corporate executives with experience in a particular industry who work with the acquired companies; a former hotel executive might work with a portfolio of companies in the hospitality business, for instance, to help them run more efficiently.

Traditionally, these executives have been employed directly by the private equity firms, meaning that the firms, not their investors or the portfolio companies, have paid the executives’ salaries, which can be substantial. In other cases, they are paid by portfolio companies, which means that the salaries may be considered a fee to be partially reimbursed to the investors.

Recently, however, some private equity firms have found a way around this. Salaries of executives hired as unaffiliated contractors are not subject to reimbursements, private equity filings show, and by making these people contractors, rather than employees, firms can avoid reimbursing the investors for their costs. The private equity firms also increase profits by shifting the salary of the contractor to the payroll of portfolio companies.

This, readers may realize, is a more general version of the issue with KKR Capstone: limited partners were presented with a management team when the fund was marketed, and assumed all its members were on the payroll of the private equity firm and hence paid for out of its management fee charged. They were unaware that they’d be billed for many of them separately, by having their compensation charged against the income of portfolio companies.

Trust me, this practice is common in the industry. If you go on the website of many PE firms, you’ll see people identified as “senior advisors” who are nevertheless on the “management team” page. The odds are high that many of them were presented in marketing documents as if they were private equity firm members.

Morgenson concurs with this reading and flags one example:

Silver Lake Partners is a huge Silicon Valley private equity firm with $23 billion in assets, including investments in Dell, Groupon and Virtu Financial, the high-frequency trading firm. In a 2014 filing, Silver Lake noted that when it retained “senior advisers, advisers, consultants and other similar professionals who are not employees or affiliates of the adviser,” none of those payments would be reimbursed to fund investors. Silver Lake acknowledges that this creates a conflict with its investors, “because the amounts of these fees and reimbursements may be substantial and the funds and their investors generally do not have an interest in these fees and reimbursements.” Similar language is found in regulatory filings across the industry.

Morgenson identifies an even more dubious fee practice early in her article, that of managing to get paid for services never performed. She discusses the sale of Biomet, a Warsaw, Indiana- based company sold by a Blackstone-led consortium for $13.4 billion, which included a $2 billion profit. But the carried interest and the transaction fees weren’t all the general partners got out of this deal:

But for Blackstone and the other private-equity partnerships in the deal — overseen by Goldman Sachs, Kohlberg Kravis Roberts and TPG Capital — this deal will be a gift that keeps giving. That’s because, beyond the profits they share with their clients, they will be paid millions more in fees — for work that they are never going to do.

In addition to a 20 percent share of gains from the sale, as well as management fees of 1.5 percent to 2 percent charged to investors, the private equity firms will also share in an estimated $30 million in “monitoring fees.” These fees were to be charged through 2017, but given that the deal is expected to close early next year, Blackstone, Goldman Sachs, K.K.R. and TPG will be paid for two years of services that Biomet isn’t receiving.

The SEC and the media have only started peeling the many layers of the onion of private equity firm exploitation of too-trusting (and even when not that trusting, outmatched) limited partners. You’ll be reading more about these abuses in the coming weeks and months. Pass the popcorn.


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N.Y.U. Crisis in Abu Dhabi Stretches to Wall Street

N.Y.U. Crisis in Abu Dhabi Stretches to Wall Street

The New York Times
MAY 26, 2014

Martin Lipton, the superlawyer, has advised hundreds of boards of directors in the midst of crises. Now, however, Mr. Lipton is grappling with a board governance crisis of his own.

As chairman of New York University’s board of trustees, Mr. Lipton has been dealing with revelations that the university’s much-heralded new campus in Abu Dhabi might have been the product, in part, of rights abuses of foreign laborers.

Those conditions were detailed in an article in The New York Times last week that described workers being arrested, beaten and deported for going on strike; being charged a year’s wages to get their jobs; and being denied access to their travel documents. After the article appeared, N.Y.U. apologized to mistreated workers and said it would investigate.

Hours after the article was published, Mr. Lipton went into full crisis mode and sent an email to some members of N.Y.U.’s board, which is stacked with Wall Street boldface names including Laurence D. Fink of BlackRock; the hedge fund impresario John A. Paulson; and a Home Depot founder, Kenneth G. Langone.

Mr. Lipton’s email said that he had been unaware of the reported abuses and that an independent investigation would be undertaken, according to people who were briefed on the message.

The university’s president, John Sexton, followed up later in the day with a memo to the trustees, calling the reports “troubling and unacceptable” and insisting, “They are out of line with the labor standards we deliberately set.”

Yet Mr. Sexton took pains to distance the university from the reported abuses, highlighting the low accident rate at the construction site and saying that the contractors responsible for the reported problems weren’t under the university’s control. “It was built with the construction contractors working for the Abu Dhabi development entity building it, not directly for N.Y.U. Abu Dhabi itself (unlike the operational contracts for providing food, transportation, public safety, etc.),” he wrote.

Mr. Sexton might have been trying to create distance between N.Y.U. and the contractor, but it is a red herring: The general contractor that helped oversee the construction of the campus isn’t some fly-by-night firm outside N.Y.U.’s purview. Quite the opposite. The contractor is run by a trustee of N.Y.U.’s board: Khaldoon Khalifa Al Mubarak, the chief executive of the Mubadala Development Company.

It was Mr. Mubarak and others who helped persuade Mr. Sexton and the rest of the university’s board to build the campus in the first place, with a $50 million donation from the government of Abu Dhabi. In addition to running Mubadala, Mr. Mubarak, a Tufts graduate, is chairman of Abu Dhabi’s governing executive council and is also chairman of the soccer team Manchester City. He was added to N.Y.U.’s trustee board after the Abu Dhabi campus plans were announced.

Some faculty members were rankled by Mr. Sexton’s response.

“It was a classic exercise in damage control, meant to distance N.Y.U. as far as possible from the horrific wrongs inflicted on those workers, and — therefore — divert attention from the fact that Khaldoon Al Mubarak is not some faraway rogue operator but an N.Y.U. trustee,” said Mark Crispin Miller, a professor of culture and communication at N.Y.U. who has long publicly clashed with Mr. Sexton.

Another N.Y.U. professor, Andrew Ross, put it this way: “In the early days of the anti-sweatshop movement, Nike and the Gap tried to pass responsibility for labor violations on to their subcontractors. But where does the buck stop in this case? Labor standards are fine on paper. But enforcement is the real test of any protection effort.”

Building a campus in Abu Dhabi was considered a high-risk exercise from the start. Mr. Sexton and his board wanted to transform the university into an international education platform with hubs around the globe — the equivalent, to some degree, of a far-flung multinational corporation. He was supported in that ambition by a who’s who of corporate America accustomed to seeking growth abroad — and the travails it sometimes involves.

Critics argued that doing business in Abu Dhabi for would be too perilous for the university: It is arguably an oppressive regime, which has been accused of torturing political prisoners, looking the other way at abusive labor conditions for migrant workers and discriminating against homosexuals. Some trustees privately, and some outsiders publicly, groused about the project.

“By selling a degraded clone of itself to the highest bidder, N.Y.U. is doing irreversible damage to U.S. universities as a whole. This frightening love-child of Western multicultural lunacy and Arab oil money represents a new low,” Abe Greenwald wrote in Commentary magazine at the time the Abu Dhabi campus was planned.

To its credit, N.Y.U.’s board and its partners established a Statement of Labor Values intended to raise the standards for workers in Abu Dhabi. The standards set were praised by outside organizations like Human Rights Watch and became a model for other organizations, including the Guggenheim and the Louvre, which are building major projects in the area. N.Y.U. also rightly hired an outside auditor to monitor worker conditions.

Yet it now appears that at least some laborers fell through the cracks of the standards that had been set. Maybe that is inevitable in a project of this scale, but it doesn’t appear that the university sought to investigate the problems until the report by The Times last week.

An N.Y.U. spokesman, John Beckman, told me by email: “John Sexton’s communication to the N.Y.U. community was not meant to ‘distance’ us, but to make this point: that there are instances — those involving worker safety (surely an important labor issue, and one relating directly to the construction site…) and those involving contracts on the existing campus (which N.Y.U. Abu Dhabi oversees directly) — where we have a clearer picture.”

He added: “The troubling instances reported by The Times, which relate to compliance by contractors and subcontractors on the Saadiyat construction site, require more investigation; we and our partners have committed to do that.”

When I raised the issue of Mr. Mubarak’s involvement as both developer and trustee, the spokesman said, “Mr. Al Mubarak is a respected member of the N.Y.U. board and his membership is not in question.”

A spokesman for Mr. Mubarak could not be reached.

This is not N.Y.U.’s first governance crisis. While part of the N.Y.U. faculty objected to the new campus, calling it a distraction or worse, others have been upset with Mr. Sexton’s other initiatives, which they say have devalued education at the university, and led to one of the highest tuitions in the country and soaring debt levels for its students. They went so far as to approve a vote of “no confidence” against Mr. Sexton in March 2013. (The vote was 298 to 224, with 47 abstaining.)

In the middle of all of this is Mr. Lipton, the chairman of N.Y.U.’s board for more than a decade and a half, who has made his career as the top consigliere to corporate boards doing mergers and acquisitions as a founder of Wachtell, Lipton, Rosen & Katz.

In the corporate world, Mr. Lipton has long championed big ideas and campaigned against what he called “short-term-ism.” The campus in Abu Dhabi would be a prime example of the big investments he’s willing to make. But his approach to corporate governance — which has long been criticized as protecting the interests of entrenched boards against hostile takeovers and activists through his invention of the poison pill — has similarly come under scrutiny at N.Y.U.

His steadfast support of Mr. Sexton, in light of the criticism from the faculty, has rankled some who say he is simply following his corporate playbook. A group of university faculty members wrote a public letter calling Mr. Lipton’s support of Mr. Sexton “an intransigence that is as threatening to N.Y.U.’s survival as the scandals whose clear impact you deny.” The letter went on to say that Mr. Lipton’s approval of the university’s global ambitions were motivated more by the bottom line for N.Y.U. — which has raised nearly $6 billion during his tenure — than education.

“Any school that profiteers so avidly is sure to be renowned, not as ‘a world-class residential research university,’ ” they wrote, “but as a global clip joint with an academic logo; and yet, like the Gilded Age inequity at N.Y.U., that sprawling operation has your full support.”

Whatever the outcome of this crisis for N.Y.U., it is a case study that should be examined for years to come by its students — both in New York City and Abu Dhabi.

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Workers at N.Y.U.’s Abu Dhabi Site Faced Harsh Conditions

Workers at N.Y.U.’s Abu Dhabi Site Faced Harsh Conditions

The New York Times
MAY 18, 2014


Migrant workers, in their tiny apartment in Abu Dhabi, earn as little as $272 a month while building a campus for New York University. Credit Sergey Ponomarev for The New York Times

ABU DHABI, United Arab Emirates — The strike had entered its second day when construction workers at Labor Camp 42 got word that their bosses from the BK Gulf corporation had come to negotiate. Mohammed Amir Waheed Sirkar, an electrician from Bangladesh, scrambled down the stairs to meet them. But when he got to the courtyard, he saw the truth: It wasn’t the bosses who had come. It was the police.

They pounded on doors, breaking some down, and hauled dozens of men to prison. Mr. Sirkar was taken to a Dubai police station, where officers interrogated him. After a while, new officers arrived. That’s when things got rough.

“They beat me up,” he said through an Urdu interpreter, “asking me to confess I was involved in starting the strike.” Others were slapped, kicked, or beaten with shoes, a special indignity in Arab culture.

After nine days in jail, Mr. Sirkar was deported, as were hundreds of other workers.

The forceful response was typical for the United Arab Emirates, where strikes are illegal and labor conditions grim, but most of the men who went on strike last October were working on a project that originated in America: a large new campus for New York University.

Immigrants account for 85 percent of the population in the U.A.E. Migrant construction workers can work 12 hours a day, 6 or 7 days a week. Credit Sergey Ponomarev for The New York Times

Facing criticism for venturing into a country where dissent is not tolerated and labor can resemble indentured servitude, N.Y.U. in 2009 issued a “statement of labor values” that it said would guarantee fair treatment of workers. But interviews by The New York Times with dozens of workers who built N.Y.U.’s recently completed campus found that conditions on the project were often starkly different from the ideal.

Virtually every one said he had to pay recruitment fees of up to a year’s wages to get his job and had never been reimbursed. N.Y.U.’s list of labor values said that contractors are supposed to pay back all such fees. Most of the men described having to work 11 or 12 hours a day, six or seven days a week, just to earn close to what they had originally been promised, despite a provision in the labor statement that overtime should be voluntary.

The men said they were not allowed to hold onto their passports, in spite of promises to the contrary. And the experiences of the BK Gulf strikers, a half dozen of whom were reached by The Times in their home countries, stand in contrast to the standard that all workers should have the right to redress labor disputes without “harassment, intimidation, or retaliation.”

Some men lived in squalor, 15 men to a room. The university said there should be no more than four.

“Not happy,” Munawar, a painter from Bangladesh who only gave one name declared, speaking in limited English. Back home, he said, they have lives, families. “Come here,” he concluded, “not happy.”

N.Y.U. Abu Dhabi is a bold undertaking, matching the ambitions of one of the world’s wealthiest nations with those of America’s largest private university. It is also one of the most closely watched of a growing number of experiments in academic globalization. N.Y.U.’s president, John Sexton, has called the outpost, an entire degree-granting institution, “an opportunity to transform the university and, frankly, the world.

 But Abu Dhabi, the capital of the United Arab Emirates, is an unlikely setting for a university built on the American model. Academic freedom is unheard-of, criticizing government is a crime and an employment system known as kafala leaves millions of immigrant workers tethered to the companies that sponsor their visas.

N.Y.U. has said the campus will be built and run as a “cultural free zone,” where the university’s core values prevail, from the treatment of workers to the protection of scholarly inquiry. The university says that its efforts to ensure humane living and working conditions have been unprecedented.

Construction workers can live as many as 15 men to a room. Space is so scarce that a dozen men can share a space of barely 200 square feet. One of New York University’s labor values states that contractors should not house more than four people in a bedroom. Credit Sergey Ponomarev for The New York Times

Told of the laborers’ complaints, officials said they could not vouch for the treatment of individual construction workers, since they are not employees of the university but rather of companies that work as contractors or subcontractors for the government agency overseeing the project. Those companies are contractually obligated to follow the statement of labor values.

To help monitor the situation, an engineering firm, Mott MacDonald, has been on hand to interview workers and prepare annual reports. The latest, released last month, noted some challenges, including a single contractor who fell behind on one month’s wages, but concluded, “Over all, there is strong evidence confirming the N.Y.U.A.D. project is taking workers’ rights seriously.”

The report made no mention of the BK Gulf strike, or the strikers’ demands for more pay.

Mott MacDonald declined to discuss its report. John Beckman, N.Y.U.’s chief spokesman, said in a recent email that university officials were not aware of any unrest and were “working with our partners to have it investigated.”

Luxury Next Door

N.Y.U. Abu Dhabi rises just to the northeast of the city’s busy downtown, on a vast sun-baked expanse called Saadiyat Island. The island, whose name means “happiness” in Arabic, is being developed as a world-class culture destination, with outposts of the Louvre and the Guggenheim Museum that, like its neighbor, were paid for by Abu Dhabi’s ruler, Sheikh Khalifa bin Zayed al-Nahyan.

The broad slope of a lacy dome is just now coming into view on the Louvre’s site. The Guggenheim is still just a building-size hole, with a skeleton crew of workers pumping out water. But both museum projects have attracted unwelcome attention from human rights groups. In March, members of Gulf Labor, a group of artists and writers, unfurled protest banners in the Guggenheim’s New York home to call attention to working conditions in Abu Dhabi.

Richard Armstrong, the Guggenheim’s director, said it was committed to fair labor standards and noted that “the Guggenheim Abu Dhabi is not yet under construction.”

N.Y.U.’s construction is now complete. When the undergraduate program, which has so far been operating out of temporary facilities, holds its first graduation on Sunday at the new campus, former President Bill Clinton will be on hand to usher N.Y.U. into the next phase of its life as a “global network university.”

A vast majority of the roughly 6,000 people who built that campus have been housed in large labor camps. Security guards keep visitors from entering those camps, but N.Y.U. officials say the conditions there are excellent, with what are described as “on-site leisure facilities” and “a wide range of recreational pursuits.”

The company Munawar works for, City Falcon, housed him, along with a few dozen other laborers, in a small tenement building in the city’s business district.

Just a few blocks up the street are the modern buildings that have served as N.Y.U.’s temporary campus; a few blocks in the other direction is the stunning ultraluxury hotel where the university has staged cultural events.

Inside City Falcon’s squalid quarters, the bedrooms are so crowded that the men must sleep three to a stack — one on the upper bunk, one on the lower bunk and one below the lower bunk, separated from the floor by only a thin pad for a mattress. In the space between the beds, the men pile cauliflower, onions and 75-pound sacks of Basmati rice to cook after working all day and washing the construction dirt from their clothes. Tangles of exposed wiring hang down from the ceiling, and cockroaches climb the walls.

In the smaller of the two rooms in this apartment, where the only window is covered over, more than a dozen men share a space of barely 200 square feet. They drape towels down from the bed above them to eke out a tiny realm of privacy.

The men who live there, like millions of other South Asian laborers in Abu Dhabi, came for one reason: to earn money for their families back home. One City Falcon employee, a soft-spoken man with a boyish face, is helping support five brothers. Another supports four children, ages 6 to 14. Others have toddlers they have never met.

One painter said he was promised a base pay of 1,500 dirham a month, or $408. After he arrived, he said, he found out it would be 700 dirham, about what other Saadiyat Island construction workers have been reported to make.

Overtime boosts that to 1,000 dirham, or $272. But food costs more than a third of that. Cellphones, the men’s lifeline to the world they left behind, take another cut. And the annual raises they were promised have not materialized. Even working 11 hours a day, six days a week, they struggle to send home much more than $100 a month.

That is how the numbers work on paper; in reality they are far worse. Almost all of the several dozen workers interviewed, working for a variety of companies and living at a half-dozen labor camps, said that a recruiter back home charged them about a year’s wages to land them the jobs. (Recruitment fees are widespread in the U.A.E., despite being officially illegal; Human Rights Watch calls them “the single greatest factor in creating conditions of forced labor.”)

The City Falcon workers, like all the men interviewed, said they were not allowed to keep their own passports. A group of laborers in a nearby apartment who had recently finished installing furniture on the Saadiyat Island campus said they were not even allowed to hold their own bank cards. To get cash they have to ask the man they called the “owner”: the recruiter who brought them over from Bangladesh, who sleeps in the room with them.

Attempts to reach City Falcon managers were not successful.

BK Gulf, the company whose workers went on strike last October, said it was “obliged by confidentiality clauses to make no comment whatsoever without the express permission of our client.” Mubadala, the government entity overseeing the construction of the N.Y.U. campus, said it would not comment on any aspect of the project.

Challenging the System

By laying out its standards for labor in a country with no tradition of workers’ rights, N.Y.U. took on a considerable challenge — one that many companies in the region are content to ignore. Sustaining the academic freedom that is a core value of its New York campus will pose a similar challenge. In both cases, the challenge is made more complex by the fact that the university is in effect a guest of the ruling family, which has not only paid for the 21-building campus and for generous tuition subsidies, but also has contributed the first of what are expected to be several $50 million donations to N.Y.U. as a whole.

In recent years, the United Arab Emirates, which has been accused of torturing political prisoners, has intensified its crackdown on dissent. And though neighboring Qatar, which is preparing for the 2022 World Cup, recently announced reforms to the kafala system, in U.A.E. it remains firmly in place.

Immigrant workers shop for food and other supplies at the weekend market outside a labor camp in Abu Dhabi. Many South Asian laborers live in grim conditions to earn money to send back home to their families. Credit Sergey Ponomarev for The New York Times

On some of the labor protections that N.Y.U. set forth, including a ban on child labor and a requirement that workers get free transportation to their job sites, The Times’s reporting turned up no violations.

Margaret Bavuso, the executive director of campus operations for N.Y.U. Abu Dhabi, said she had worked closely with contractors and the government of Abu Dhabi to ensure better conditions than laborers in the U.A.E. could otherwise expect. “The government has become much, much more responsive in the time that we’ve been here,” she said, citing among other things new rules to ban outdoor work during the hottest hours of the hottest months.

She is especially proud of the university’s safety record, achieved in part through a program that rewards workers who notice potential hazards. According to the university, only one worker has died, and its accident rate — 0.03 accidents per 100,000 work hours — was far lower than at other large-scale construction jobs, including Olympic Park in London, which had a rate of 0.16.

At one of the recent safety awards ceremonies, Ms. Bavuso said, Al Bloom, the vice chancellor of N.Y.U. Abu Dhabi, addressed thousands of laborers who had come from countries like India, Pakistan, Sri Lanka, Bangladesh and Nepal. Ms. Bavuso says he told them: “All of you have worked so very hard on this project. Your children are benefiting from the work that you do on this project. There is no reason that those children, as they get educated in your country, that they can’t apply to go to school here. And just think about how exciting it would be for them to attend a school that you built.’ ”

Mr. Beckman, the N.Y.U. spokesman, disputed that some workers are not paid a living wage. “Wages on the N.Y.U.A.D. project are designed to place workers at the top of the range in their respective categories,” he said.

But in a separate interview, Ms. Bavuso said that beyond setting forth the broad principle of fair compensation, N.Y.U. does not actually monitor what the construction companies pay their workers, nor should it. “We’re not involved in the negotiation of the contracts that the partners are doing, just as they’re not in the negotiation of the contracts that we’re doing,” she said. “We have a relationship with our partners, and so we have to trust that what they’re coming up with are the reasonable wages on their end.”

N.Y.U. officials said that no complaints had been raised about the treatment of the security guards, cafeteria cooks and secretaries who staffed N.Y.U. Abu Dhabi’s temporary location while its permanent campus was being built. Over the years, 19 of them were identified as having paid a recruitment fee, and they were reimbursed, officials said.

As for the men who were building the new campus — who outnumber those nonconstruction staff members by about 30 to 1 — Ms. Bavuso drew a distinction. Construction workers who “were recruited for this job,” she said, are treated with the same protections as the university’s own staff. But that is not possible, she said, for a worker brought over by a construction company and moved from site to site.

N.Y.U.’s construction at Saadiyat Island is now complete. Credit Sergey Ponomarev for The New York Times

The construction workers, however, did not describe having been recruited for any particular job site. They say they were recruited by manpower agencies or by construction companies that, like most large contractors, have people stationed at several job sites. The men might spend five months on one project, two years on another, just going where they are sent.

Stuck in Limbo

With major construction at N.Y.U. now concluded, most workers have moved on to other job sites. Those who were arrested for striking are back in their home countries.

Ramkumar Rai and Tibendra Kota, two Nepali men who worked for a contractor, Robodh, on the N.Y.U. site (for months, in Mr. Rai’s case; years, in Mr. Kota’s), are still in limbo.

From a certain perspective, both were success stories. They got promotions. They got raises. They made decent money. But during their last six months on the university site, their employer fell behind on wages. And then in February 2013, their jobs came to an end.

Since then they have asked many times for their back pay, and have even gone to the company’s headquarters in Dubai, where they say they got a meeting with someone who introduced himself as the chief executive. But they have gotten only tiny sums of cash, and a request that they not pursue the matter in labor court.

It has been 16 months since they were last paid, during which time their work visas expired; even if they decided to give up the fight, they would face stiff exit fines at the airport. They could not afford to fly themselves home anyway: Over the course of more than a year without pay, they have racked up more than $1,000 in debt at the local grocery. So they stay, and they wait.

Jayaprakash Punathil, an assistant general manager at Robodh, said he was not aware of any outstanding payments.

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Said Mr. Rai:

“They keep saying, ‘We’ll send the money; we’ll send it,’ but they don’t.”

“There’s no work; there’s no money: It’s really hard,” he said. “Having done so much work, to have no money: It’s so painful.”


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