One of the insights I got as a long ago student of economic history remains with me to this day. It was that during the formative years of European civilization, the ruling classes in country A had almost nothing in common with the ordinary people of country A but lots in common with the ruling classes in countries B, C, D through Z. Our modern continent’s trust mechanisms reflect this in many ways. And the insight remains true today on a number of levels.
The arcane rules that formalize international diplomacy for example and govern organizations such as the UN, the EU, ASEAN, NATO etc as well as global market players and national governments, reflect this historic commonality. They create a place at the far end of Richard’s trust gradient, a place from which ordinary people are excluded, a place for intimates only.
Groups and individuals able to provide access to and communication between these intimate areas become very powerful indeed and command gigantic fees for their efforts. They make intimacies between say Enron and Arthur Andersen and Haliburton and the Pentagon look like playground games. The rewards available in intimacy’s holy of holies are staggering as this glimpse into one of those intimate places shows.
America’s profitable payback for its investment in regime change in Iraq depends directly upon the performance of the Iraq economy (ie oil). Iraq though is the world’s number one debtor nation owing upwards of $200bn to a great list of creditors. Repayments would be a drag on revenue flows and debt relief would clearly help enormously. In furtherance of this, President Dubya got his daddy’s old secretary of state and head of a group of world-class intimates, Texas billionaire James Baker, to persuade his contacts in the world’s intimate places to start forgiving Iraq its debts in what he called a ‘noble mission’.
Kuwait is Iraq’s number one creditor, in line for war reparations and debt repayments in excess of $50bn, a sum never likely to be fully repaid in reality but which would be put at further risk by Baker’s global relief efforts. So, to address the pressing risk brought about by his own success, Baker dons one of his other hats – that of director of the Carlyle Group – and offers Kuwait’s owners, the Al-Sabah family, his group’s plan for ‘monetizing’ their Iraq assets. They transfer ownership of the debt to his group and for a down payment of under $2bn and a basic 5% commission plus exes of course, the group collects from intimate connections and everyone is happy. The Al-Sabahs snatch his hand off while happily signing his debt-relief accord.
Smith’s Law triumphs again.