The following is an excerpt from Matt Kennard and Claire Provost's brilliant book Silent Coup: How Corporations Overthrew Democracy.
This section is my brutal edit of the original text. The book paints a more broadly and easily understood picture; I firmly recommend reading the book.
The bit below is all about how the German banker Hermann Abs suggested a sort of capitalist Magna Carta, a framework for capitalists to cut up the modern world and rule it as they liked. At the start of the excerpt, there is mention of ICSID, which is the World Bank’s International Centre for Settlement of Investment Disputes.
The excerpt shows what happened before the World Bank invented and proliferated a mechanism that allowed corporations to sue states. Most of Kennard and Provost's book clearly shows how this mechanism is abused to allow corporations to not only enjoy make billions of USD but to force huge amounts of people to live in squalor and make close to no money.
All of this is diabolical. Just note how greed infects and affects people who rarely need to meet the masses whose work and lives they parasite off; here's a quote:
I am here to woo American miners. I want to convince them of the possibilities of exploitation of my country.
This is naturally colonialism without any reparations nor responsibilities. This is leading states along a leash while emptying them of resources. The results are entirely predictable. The best thing: the book shows how these results are entirely preventable and how that's happening. But, as with all good fights, it requires regular people to succeed.
San Francisco, 1957
We found another fascinating window into the creation of the international investor-state dispute system in the archives of TIME magazine. In the late 1950s its publisher Henry Luce sponsored what was called the International Industrial Development Conference (IIDC). At the 1957 edition of this event in San Francisco, a German banker called Hermann Abs would make his pitch for such a system almost a decade before the World Bank’s ICSID was set up. TIME magazine dedicated an illustrated, eight-page supplement to conference coverage entitled ‘The Capitalist Challenge’. The specifics contained within it helped us to picture the scenes and people who were actually consulted about this system. The articles were written colourfully, with descriptions of attendees as ‘an international Who’s Who of high finance and high office’.
‘From London came financiers whose firms had bankrolled the Industrial Revolution; from Berlin the brisk businessmen who have built Europe’s sturdiest economy from the rubble of war’, these descriptions continued. The managing director of the Italian car giant Fiat was there. But the biggest delegation by far was a ‘202-man phalanx of US executives’ including those from Ritz Crackers and RCA electronics. This supplement’s articles seemed to describe, and trumpet, this meeting’s mission as nothing less than saving the world by expanding capitalism. ‘From the first luncheon in the Fairmont’s ornate Gold Room, speaker after speaker at the San Francisco conference traced the irresistible upsurge of world population and the revolution of rising expectations that has grown from its hunger for a better life,’ they said. ‘Westerners emphasized the need to protect investors in new lands seething with nationalism,’ reported one article, entitled ‘The Valiant Venture’.
Another on ‘The Anti-Capitalist Attitude’ said: One of the biggest barriers in the way of foreign investment in the world’s underdeveloped countries is not to be found in the tariff regulations or the laws governing the convertibility of currency. It exists instead in the minds and emotions of those who need foreign investment most … because they often tend to equate it with 19th century-style colonialism, they are reluctant to accept it.
These articles also helped us imagine the crowd at this conference, fraternizing after ‘intensive, day-long sessions at the Fairmont’, at parties, the city opera house, and over cracked crab and California white wine. But ‘businessmen never forget that the chief business in business is business’, they chirped, and many were on the lookout for new deals. One Asian delegate reportedly said explicitly: ‘I am here to woo American miners. I want to convince them of the possibilities of exploitation of my country.’
One of the stars of the 1957 conference in San Francisco, according to TIME’s record, was Hermann Josef Abs, head of the Deutsche Bank, and director of several giant corporations like Daimler-Benz and Lufthansa.
In the 1950s, it was Abs who helped settle Allied war claims against Germany, for which he received an Order of Merit from his government. In the 1960s, David Rockefeller, president of America’s massive Chase Manhattan Bank, called Abs ‘the leading banker in the world’. He never left the Deutsche Bank, staying on its board, and as honorary chairman, until he died in 1994.
Roll also shared a joke about the banker: upon arriving in heaven, he finds it dilapidated and in financial ruin. Abs quickly draws up a plan for the archangels: Heaven plc, with the Almighty as Deputy Chairman of the Board. (The implication: Abs would put himself forward as Chairman, above God, in a privatised afterlife.)
When it was the German banker Abs’ turn to speak, he denounced ‘the well-known attitude of some less developed countries, according to which the Western world is actually obliged to pay for the advancement of their economies’. Dismissing possible calls for reparations, he instead presented an epic plan to fight back with ‘a Magna Carta for the protection of foreign interests’ and a new ‘special international court of arbitration’ to judge violations of it. TIME called it ‘the most widely applauded concrete proposal of the conference’.
In his speech, Abs referenced a number of high-profile disputes which he said showed why his proposal was so timely. Though, when we read his remarks, they seemed to reflect more about what developing countries had to fear from foreign investors, not the other way around. In each case, powerful, rich states had intervened militarily to protect corporate interests. Abs pointed, for example, to Iran’s 1951 nationalization of oil fields held by the Anglo-Iranian Oil Company (later renamed British Petroleum).
After this happened, the Shah, who had fled the country, was restored to power following a military coup backed by MI6 and the CIA. The US and UK denied their involvement in the coup for years but it was confirmed in declassified CIA files published in 2013 by the US national security archive at George Washington University.
His second example came from Guatemala. Land reforms had threatened the holdings of the United Fruit Company (now known as Chiquita), which had since the late nineteenth century set up giant plantations across Latin America to grow fruit, primarily bananas, for export to the US and Europe. What happened next: a military coup in 1954. Again the CIA was involved (with files declassified in the late 1990s including an instructional guide on assassinations).
Abs’ third case was Egypt’s nationalization of the Suez Canal Company in 1956. The company that had operated the canal was primarily owned by French and UK investors. Then what happened? The Suez Crisis, during which the UK, France and Israel invaded Egypt and tried (unsuccessfully this time) to overthrow its president. Again details took decades to come out but in the 1990s the BBC obtained a copy of a secret war plot, drawn up by representatives of the three invading countries at a villa outside Paris.
Back then, such cases were heard on ad-hoc bases, without an institutional infrastructure. This is what Abs was proposing to change. In late 1957, just a few months after the San Francisco conference, he released as promised a draft ‘International Convention for the Mutual Protection of Private Property Rights in Foreign Countries’. Two years later, he merged his ideas with a similar proposal from Lord Shawcross in the UK, producing the ‘Abs-Shawcross Draft’. The prominent British lawyer Hartley William Shawcross seemed more closely linked to government than industry – which we imagined could have been useful for pitching the idea to states, which would have to sign up to it. A Labour Party politician and MP after the Second World War, he had been the lead UK prosecutor at the Nuremberg War Crimes Tribunal.
What if, we asked ourselves, what we had seen in El Salvador and South Africa was not a system that had gone astray, or that had been corrupted? What if it was actually the system working as intended, pushing democracy and human rights off the table, and protecting profits above all else?
At the pub down the road from the CIJ’s offices, Gavin appeared in the courtyard. ‘Tell me everything,’ he said, sitting down with us at a wooden table. We slid across the table a piece of paper – one of our printed pages from the TIME supplement about the 1957 conference in San Francisco, which showed hundreds of elite delegates in suits sitting around dinner tables in a banquet hall with vaulted ceilings and chandeliers. We were pleased that Gavin, who always had something to say, seemed speechless. He read slowly. Finally he spoke: ‘A secret Capitalist Magna Carta, huh.’ He paused. ‘That’s a big deal!’ We nodded.