Posted by rogerhollander in Media, Poverty, Right Wing.
Tags: brac, bridge international, columbia journalsim review, donors choose, free market, Fujimori, glenn greenwald, grameen bank, hernando de soto, india suicides, journalism, koch brothers, mark ames, Media, micro credit, micro lending, microcredit, microfinance, milton friedman, neoliberal, omidyar network, pierre omidyar, poverty, predatory micro-loans, privatization, roger hollander, sks microfinance, tea party, third world, unitus, yasha levin
Roger’s note: This is an incredible piece of investigative journalism. When I first read that Glenn Greenwald (I sincerely hope he has or will read this article) was leaving The Guardian to enter into a new journalist project financed by eBay founder, the billionaire Pierre Omidyar, my initial response was, “Glenn, say it isn’t so.” This was based on instinct. It just didn’t smell right. The article you are about to read pinpoints the source of the odor. Greenwald’s work as an investigative journalist, first with his own Blog, then with salon.com, and finally with the Guardian, even prior to the Snowden revelations, was of vital importance with respect to its exposing the crimes of the Bush and Obama administrations. In a sense, the I.F. Stone of our day. Even if Omidyar wasn’t the sleeze bucket neo-Liberal that is pictured by Ames and Levin, you don’t magically overnight create independent journalism via anyone’s big bucks. Salon and The Guardian have roots and a history of journalistic development for which there is no substitute. Apart from exposing Omidyar, this article is a clinic on the way the ultra and neo-fascist right is working to destroy what is left of the democratic public sector; and we know from Germany and Italy in the 1930s what to expect when private corporations are in total control of the state.
By Mark Ames, and Yasha Levin
http://www.nsfwcorp.com, 11:51 a.m. November 15, 2013
“We ought to be looking at business as a force for good.” – Pierre Omidyar
“Like eBay, Omidyar Network harnesses the power of markets to enable people to tap their true potential.” – Omidyar Network, “Frequently Asked Questions”
* * The world knows very little about the political motivations of Pierre Omidyar, the eBay billionaire who is founding (and funding) a quarter-billion-dollar journalism venture with Glenn Greenwald, Laura Poitras and Jeremy Scahill. What we do know is this: Pierre Omidyar is a very special kind of technology billionaire.
We know this because America’s sharpest journalism critics have told us.
In a piece headlined “The Extraordinary Promise of the New Greenwald-Omidyar Venture”, The Columbia Journalism Review gushed over the announcement of Omidyar’s project. And just in case their point wasn’t clear, they added the amazing subhead, “Adversarial muckrakers + civic-minded billionaire = a whole new world.”
Ah yes, the fabled “civic-minded billionaire”—you’ll find him two doors down from the tooth fairy.
But seriously folks, CJR really, really wants you to know that Omidyar is a breed apart: nothing like the Randian Silicon Valley libertarian we’ve become used to seeing.
“…billionaires don’t tend to like the kind of authority-questioning journalism that upsets the status quo. Billionaires tend to have a finger in every pie: powerful friends they don’t want annoyed and business interests they don’t want looked at.
“By hiring Greenwald & Co., Omidyar is making a clear statement that he’s the billionaire exception….It’s like Izzy Stone running into a civic-minded plastics billionaire determined to take I.F. Stone’s Weekly large back in the day.”
Later, the CJR “UPDATED” the piece with this missing bit of “oops”:
“(UPDATE: I should disclose that the Omidyar Network helps fund CJR, something I didn’t know until shortly after I published this post.)”
No biggie. Honest mistake. And anyway, plenty of others rushed to agree with CJR’s assessment. Media critic Jack Shafer at Reuters described Omidyar’s politics and ideology as “close to being a clean slate,” repeatedly praising the journalism venture’s and Omidyar’s “idealism.” The “NewCo” venture with Greenwald “harkens back to the techno-idealism of the 1980s and 1990s, when the first impulse of computer scientists, programmers, and other techies was to change the world, not make more money,” Shafer wrote, ending his piece:
“As welcome as Omidyar’s money is, his commitment to the investigative form and an open society is what I’m grateful for this afternoon. You can never uphold the correct verdict too often.”
What all of these orgasmic accounts of Omidyar’s “idealism” have in common is a total absence of skepticism. America’s smartest media minds simply assume that Omidyar is an “exceptional” billionaire, a “civic-minded billionaire” driven by “idealism” rather than by profits. The evidence for this view is Pierre Omidyar’s massive nonprofit venture, Omidyar Network, which has distributed hundreds of millions of dollars to causes all across the world.
And yet what no one seems able to specify is exactly what ideology Omidyar Network promotes. What does Omidyar’s “idealism” mean in practice, and is it really so different from the non-idealism of other, presumably bad, billionaires? It’s almost as if journalists can’t answer those questions because they haven’t bothered asking them.
So let’s go ahead and do that now.
Since its founding in 2004, Omidyar Network has committed nearly $300 million to a range of nonprofit and for-profit “charity” outfits. An examination of the ideas behind the Omidyar Network and of the investments it has made suggests that its founder is anything but a “different” sort of billionaire. Instead, what emerges is almost a caricature of neoliberal ideology, complete with the trail of destruction that ensues when that ideology is put into practice. The generous support of the Omidyar Network goes toward “fighting poverty” through micro-lending, reducing third-world illiteracy rates by privatizing education and protecting human rights by expanding property titles (“private property rights”) into slums and villages across the developing world.
In short, Omidyar Network’s philanthropy reveals Omidyar as a free-market zealot with an almost mystical faith in the power of “markets” to transform the world, end poverty, and improve lives—one micro-individual at a time.
All the neoliberal guru cant about solving the world’s poverty problems by unlocking the hidden “micro-entrepreneurial” spirit of every starving Third Worlder is put into practice by Omidyar Network’s investments. Charity without profit motive is considered suspect at best, subject to the laws of unintended consequences; good can only come from markets unleashed, and that translates into an ideology inherently hostile to government, democracy, public politics, redistribution of land and wealth, and anything smacking of social welfare or social justice.
In literature published by Omidyar Network, the assumption is that technology is an end in itself, that it naturally creates beneficial progress, and that the world’s problems can be solved most effectively with for-profit business solutions.
The most charitable thing one can say about Omidyar’s nonprofit network is that it reflects all the worst clichés of contemporary neoliberal faith. In reality, it’s much worse than that. In many regions, Omidyar Network investments have helped fund programs that create worsening conditions for the world’s underclass, widening inequalities, enhancing exploitation, pushing millions of people into crippling debt and supporting anti-poverty programs that, in some cases, resulted in mass-suicide by the rural poor.
* * Pierre Omidyar was one of the biggest early backers of the for-profit micro-lending industry. Through Omidyar Network, as well as personal gifts and investments, he has funnelled around $200 million into various micro-lending companies and projects over the past decade, with the goal of establishing an investment-grade microfinance sector that would be plugged into Wall Street and global finance. The neoliberal theory promised to unleash billions of new micro-entrepreneurs; the stark reality is that it saddled untold numbers with crushing debt and despair.
One of his first major investments into micro-lending came in 2005, when Pierre Omidyar and his wife Pam gave Tufts University, their alma mater, $100 million to create the “Omidyar-Tufts Microfinance Fund,” a managed for-profit fund dedicated to jump-starting the growth of the micro-finance industry. At the time, Tufts announced that Omidyar’s gift was the “largest private allocation of capital to microfinance by an individual or family.”
With the Tufts fund, Omidyar wanted to go beyond mere charitable donations to specific micro-lending organizations that targeted the developing world’s poorest. At the same time, he wanted to create a whole new environment in which for-profit micro-lending companies could be self-sustaining and generate big enough profits to attract serious global investors.
This idea was at the core of Omidyar’s vision of philanthropy: he believed that microfinance would eradicate poverty faster and better if it was run on a for-profit basis, and not like a charity.
“If you want to reach global scale — and we’re talking about hundreds of millions of people who need this — you can’t do it with philanthropy capital. There’s not enough charity capital out there. By connecting with an institutional investor like a university, we would like to increase the level of professional investor involvement in this sector to try to stimulate more commercially viable investment products,” Pierre Omidyar said in an interview at the time. “We ought to be looking at business as a force for good.”
The idea behind micro-loans is very simple and seductive. It goes something like this: the only thing that prevents the hundreds of millions of people living in extreme poverty from achieving financial success is their lack of access to credit. Give them access to micro-loans—referred to in Silicon Valley as “seed capital”—and these would-be successful business-peasants and illiterate shantytown entrepreneurs would pluck themselves out of the muck by their own homemade sandal straps. Just think of it: hundreds of millions of peasants working as micro-individuals, taking out micro-loans, making micro-rational investments into their micro-businesses, dutifully paying their micro-loan payments on time and working in concert to harness the deregulated power of the markets to collectively lift society out of poverty. It’s a grand neoliberal vision.
To that end, Omidyar has directed about a third of the Omidyar Network investment fund—or about $100 million—to support the micro-lending industry. The foundation calls this initiative “financial inclusion.”
Shockingly, micro-loans aren’t all that they’ve cracked up to be. After years of observation and multiple studies, it turns out that the people benefiting most from micro-loans are the big global financial players: hedge funds, banks and the usual Wall Street hucksters. Meanwhile, the majority of the world’s micro-debtors are either no better off or have been sucked into a morass of crippling debt and even deeper poverty, which offers no escape but death.
Take SKS Microfinance, an Omidyar-backed Indian micro-lender whose predatory lending practices and aggressive collection tactics have caused a rash of suicides across India.
Omidyar funded SKS through Unitus, a microfinance private equity fund bankrolled by the Omidyar Network to the tune of at least $11.7 million. ON boosted SKS in its promotional materials as a micro-lender that’s “serving the rural poor in India” and that exemplifies a company that’s providing “people with the means to address their needs and improve their lives.”
In 2010, SKS made headlines and stirred up bitter controversy about the role that profits should play in anti-poverty initiatives when the company went public with an IPO that generated about $358 million, giving SKS a market valuation of more than $1.6 billion. The IPO made millions for its wealthy investors, including the Omidyar-backed Unitus fund, which earned a cool $5 million profit from the SKS IPO, according to the Puget Sound Business Journal.
Some were bothered, but others saw it as proof that the power of the markets could be harnessed to succeed where traditional charity programs supposedly hadn’t. The New York Times reported:
“An Indian company with rich American backers is about to raise up to $350 million in a stock offering closely watched by philanthropists around the world, showing that big profits can be made from small helping-hand loans to poor cowherds and basket weavers.”
Controversy or not, SKS embodied Omidyar’s vision of philanthropy: it was a for-profit corporation that fought poverty while generating lucrative returns for its investors. Here would be proof-positive that the profit motive makes everyone a winner.
And then reality set in.
In 2012, it emerged that while the SKS IPO was making millions for its wealthy investors, hundreds of heavily indebted residents of India’s Andhra Pradesh state were driven to despair and suicide by the company’s cruel and aggressive debt-collection practices. The rash of suicides soared right at the peak of a large micro-lending bubble in Andhra Pradesh, in which many of the poor were taking out multiple micro-loans to cover previous loans that they could no longer pay. It was subprime lending fraud taken to the poorest regions of the world, stripping them of what little they had to live on. It got to the point where the Chief Minister of Andrah Pradesh publicly appealed to the state’s youth and young women not to commit suicide, telling them, “Your lives are valuable.”
The AP conducted a stunning in-depth investigation of the SKS suicides, and their reporting needs to be quoted at length to understand just how evil this program is. The article begins:
“First they were stripped of their utensils, furniture, mobile phones, televisions, ration cards and heirloom gold jewelry. Then, some of them drank pesticide. One woman threw herself in a pond. Another jumped into a well with her children.
“Sometimes, the debt collectors watched nearby.”
What prompted the AP investigation was the gulf between the reported rash of suicides linked to SKS debt collectors, and SKS’s public statements denying it had knowledge of or any role in the predatory lending abuses. However, the AP got a hold of internal SKS documents that contradicted their public denials:
“More than 200 poor, debt-ridden residents of Andhra Pradesh killed themselves in late 2010, according to media reports compiled by the government of the south Indian state. The state blamed microfinance companies – which give small loans intended to lift up the very poor – for fueling a frenzy of overindebtedness and then pressuring borrowers so relentlessly that some took their own lives.
“The companies, including market leader SKS Microfinance, denied it.
“However, internal documents obtained by The Associated Press, as well as interviews with more than a dozen current and former employees, independent researchers and videotaped testimony from the families of the dead, show top SKS officials had information implicating company employees in some of the suicides.”
The AP investigation and internal reports showed just how brutal the SKS microfinancing program was, how women were particularly targeted because of their heightened sense of shame and community responsibility—here is the brutal reality of financial capitalism compared to the utopian blather mouthed at Davos conferences, or in the slick pamphlets issued by the Omidyar Network:
“Both reports said SKS employees had verbally harassed over-indebted borrowers, forced them to pawn valuable items, incited other borrowers to humiliate them and orchestrated sit-ins outside their homes to publicly shame them. In some cases, the SKS staff physically harassed defaulters, according to the report commissioned by the company. Only in death would the debts be forgiven.
“The videos and reports tell stark stories:
“One woman drank pesticide and died a day after an SKS loan agent told her to prostitute her daughters to pay off her debt. She had been given 150,000 rupees ($3,000) in loans but only made 600 rupees ($12) a week.
“Another SKS debt collector told a delinquent borrower to drown herself in a pond if she wanted her loan waived. The next day, she did. She left behind four children.
“One agent blocked a woman from bringing her young son, weak with diarrhea, to the hospital, demanding payment first. Other borrowers, who could not get any new loans until she paid, told her that if she wanted to die, they would bring her pesticide. An SKS staff member was there when she drank the poison. She survived.
“An 18-year-old girl, pressured until she handed over 150 rupees ($3)—meant for a school examination fee—also drank pesticide. She left a suicide note: ‘Work hard and earn money. Do not take loans.’”
As a result of the bad press this scandal caused, the Omidyar Network deleted its Unitus investment from its website—nor does Omidyar boast of its investments in SKS Microfinance any longer. Meanwhile, Unitus mysteriously dissolved itself and laid off all of its employees right around the time of the IPO, under a cloud of suspicion that Unitus insiders made huge personal profits from the venture, profits that in theory were supposed to be reinvested into expanding micro-lending for the poor.
Thus spoke the profit motive.
Curiously, in the aftermath of the SKS micro-lending scandal, Omidyar Network was dragged into another political scandal in India when it was revealed that Omidyar and the Ford Foundation were placing their own paid researchers onto the staffs of India’s MPs. The program, called Legislative Assistants to MPs (LAMPs), was funded with $1 million from Omidyar Network and $855,000 from the Ford Foundation. It was shut down last year after India’s Ministry of Home Affairs complained about foreign lobbying influencing Indian MPs, and promised to investigate how Omidyar-funded research for India’s parliament may have been “colored” by an agenda.
But SKS is not the only microfinancing investment gone bad. The biggest and most reputable micro-lenders, including those funded by the Omidyar Network, have come under serious and sustained criticism for predatory interest rates and their aggressive debt-collection techniques.
Take BRAC, another big beneficiary of Omidyar’s efforts to boost “financial inclusion.”
Started in the early 1970s as a war relief organization, BRAC has grown into the largest non-governmental organization in the world. It employs over 100,000 people in countries across the globe. While BRAC is known mostly for its micro-lending operation activities, the outfit is a diversified nonprofit business operation. It is involved in education, healthcare and even develops its own hybrid seed varieties. Much of BRAC’s operations are financed by its micro-lending activities.
Omidyar Network praises BRAC for its work to “empower the poor to improve their own lives,” and has given at least $8 million to help BRAC set up micro-lending banking infrastructure in Liberia and Sierra Leone.
But BRAC seems to worry more about its own bottom line than it does about the well-being of its impoverished borrowers, the majority of whom are women and who pay an average annual interest rate of 40 percent.
This twisted sense of priority could be seen after one of the worst cyclones in the history of Bangladesh left thousands dead in 2007, destroying entire villages and towns in its path. In the cyclone’s wake, the Omidyar-funded BRAC micro-lending debt collectors showed up at the disaster zone along with other micro-lenders, and went to work aggressively shaking down borrowers, forcing some victims (mostly women) to go so far as to sell their relief/aid materials, or to take out secondary loans to pay off the first loans.
According to a study about micro-lenders in the aftermath of Cyclone Sidr:
“Sidr victims who lost almost everything in the cyclone, experienced pressure and harassment from nongovernmental organisations (NGOs) for repayment of microcredit instalments. Such intense pressure led some of the Sidraffected borrowers to sell out the relief materials they received from different sources. Such pressure for loan recovery came from large organisations such as BRAC, ASA and even the Nobel Prize winning organisation Grameen Bank.
“Even the most severely affected people are expected to pay back in a weekly basis, with the prevailing interest rate. No system of ‘break’ or ‘holiday’ period is available in the banks’ current charter. No exceptions are made during a time of natural calamity. The harsh rules practised by the microcredit lender organisations led the disaster affected people even selling their relief assistance. Some even had to sell their leftover belongings to pay back their weekly instalments.”
These tactics may be harsh, but they pay off for micro-lenders. And it’s a lucrative operation: BRAC primarily targets women, offers loans with predatory interest rates and uses traditional values and close village relationships to shame and pressure borrowers into selling and doing whatever they can to make their weekly payments. It works. Loan recovery rates for the industry average between 95 and 98 percent. For BRAC, that rate was a comfy 99.3 percent.
So do predatory micro-loans really help lift the world’s poorest people out of poverty? Neoliberal ideology says they do — and the Omidyar Network represents one of the purest distillations of that ideology put into practice in the poorest and most vulnerable parts of the world.
As Cambridge University economics professor Ha-Joon Chang argued, saying of micro-lending:
“[It] constitutes a powerful institutional and political barrier to sustainable economic and social development, and so also to poverty reduction. Finally, we suggest that continued support for microfinance in international development policy circles cannot be divorced from its supreme serviceability to the neoliberal/globalization agenda.”
Omidyar Network has followed the same disastrous neoliberal script in other areas of investment, particularly its investments into privatizing public schools in the US and in poor regions of Africa.
One of the earliest Omidyar investments went to an online private charity website for needy public schools here in the US. As David Sirota wrote, huge billionaire foundations and corporations have been holding children hostage by starving public-school funding and replacing it with “charity” money from the likes of the Wal-Mart Foundation, Bill and Melinda Gates Foundation and Broad Foundation. We can add the Omidyar Network to this list as well.
Omidyar’s foundation invested in the same idea, but with a web 2.0 crowd-source twist: DonorsChoose.org allows individuals to pledge amounts as small as $10, and allows school teachers to get online asking for small sums to help their classrooms. The end result, of course, is that it normalizes the continued strangling of public schools and the sense that only private funding can save education.
Omidyar poured millions into DonorsChoose and organized donations from other Silicon Valley donors. At first, most public school teachers didn’t see the angle; many used the resource to raise funds for their own classrooms.
It wasn’t until DonorsChoose announced its partnership with the anti-public-education film “Waiting For Superman” that teachers realized they’d been duped. The movie promoted the myth that education could only be saved by the likes of Tea Party-backed school “reform” advocate Michelle Rhee. Teachers organized a boycott of DonorsChoose after the Omidyar-funded group announced it was essentially bribing its members with a $15 gift certificate to anyone who bought tickets for “Waiting for Superman.”
Two years later, DonorsChoose partnered and promoted yet another right-wing teacher-bashing propaganda film, “Won’t Back Down.”
Overseas, the Omidyar Network is embarking on a school privatization program that will make DonorsChoose look like Mother Theresa’s handiwork. Omidyar provided seed capital for a new Africa-based for-profit private school enterprise for the poor called Bridge International. In 2009, ON gave Bridge a total of $1.8 million; Matt Bannick, the top figure (managing partner) in the Omidyar Network, sits on Bridge International’s board of directors.
Bridge International’s first schools are being built in Kenya, and are slated to expand across the sub-Sahara, hoping to rope millions of poor African kids into its schools. Bridge’s strategic partner is the for-profit education giant, Pearson. Diane Ravitch, former US Assistant Secretary of Education and critic of school “reform” efforts, has warned about Pearson’s near-monopolistic power influencing the privatization of American education (see Ravitch’s article“The Pearsonization of the American Mind.”)
The idea behind Bridge International is to provide a franchised “school in a box” model under which each school teaches the exact same curriculum at the exact same time to every student. Teachers are given minimal training—they’re merely required to teach according to the script given to them and read out to their students, scripts delivered through Nook tablets. Students pay $5 a month—a lot for each student in areas as poor as sub-Saharan Africa. Currently one new Bridge International school is opening every 2.5 days around Kenya, overtaking public education—with plans to expand further.
It sounds like a good idea, but the problem is that Bridge’s business model has a very narrow set of supporters, namely: free-market think-tanks, the global for-profit education industry and proponents of a neoliberal utopia who want to defund public education and replace it with private schooling. Bridge is only a few years old, but criticism of its educational model is already piling up—even from centrist pro-business thinktanks like the Brookings Institution. Even at $4 or $5 a month, Bridge’s “low cost” education is too expensive for many in the developing world, forcing children to go to work and making families choose between buying food and paying for education. Naturally, food wins out. And that simply means that many children can’t afford to go school, which only increases and reinforces stratification and inequality.
The fight against illiteracy requires free, quality education that’s available to all children. What it doesn’t need is a bunch of neoliberal techno-disruptors who want to turn education into a for-profit industry that provides schooling only to those who can afford it. And anyway, the very notion that you can squeeze enough profit from millions of the poorest children in the world to attract mega venture capital, while providing quality education is absurd. That profit money is extracted from the very people Bridge is supposedly trying to help.
Still think that Pierre Omidyar is a “different” type of billionaire? Still convinced he’s a one-of-a-kind “civic-minded” idealist?
Then you might want to ask yourself why Omidyar is so smitten by the ideas of an economist known as “The Friedrich Hayek of Latin America.” His name is Hernando de Soto and he’s been adored by everyone from Milton Friedman to Margaret Thatcher to the Koch brothers. Omidyar Network poured millions of nonprofit dollars into subsidizing his ideas, helping put them into practice in poor slums around the developing world.
In February 2011, the Omidyar Network announced a hefty $4.96 million grant to a Peru-based free-market think tank, the Institute for Liberty & Democracy (ILD).
Perhaps no single investment by Omidyar more clearly reveals his orthodox neoliberal vision for the world—and what constitutes “civic-mindedness”—than his support for the ILD and its founder and president, Hernando De Soto, whom the ON has tapped to participate in other Omidyar-sponsored events.
De Soto is a celebrity in the world of neoliberal/libertarian gurus. He and his Institute for Liberty & Democracy are credited with popularizing a free-market version of Third World land reform and turning it into policy in city slums all across the developing world. Whereas “land reform” in countries like Peru—dominated by a tiny handful of landowning families—used to mean land redistribution, Hernando De Soto came up with a counter-idea more amenable to the Haves: give property title to the country’s poor masses, so that they’d have a secure and legal title to their shanties, shacks, and whatever land they might claim to live on or own.
De Soto’s pitch essentially comes down to this: Give the poor masses a legal “stake” in whatever meager property they live in, and that will “unleash” their inner entrepreneurial spirit and all the national “hidden capital” lying dormant beneath their shanty floors. De Soto claimed that if the poor living in Lima’s vast shantytowns were given legal title ownership over their shacks, they could then use that legal title as collateral to take out microfinance loans, which would then be used to launch their micro-entrepreneurial careers. Newly-created property holders would also have a “stake” in the ruling political and economic system. It’s the sort of cant that makes perfect sense to the Davos set (where De Soto is a star) but that has absolutely zero relevance to problems of entrenched poverty around the world.
Since the Omidyar Network names “property rights” as one of the five areas of focus, it’s no surprise that Omidyar money would eventually find its way into Hernando De Soto’s free-market ideas mill. In 2011, Omidyar not only gave De Soto $5 million to advance his ideas—he also tapped De Soto to serve as a judge in an Omidyar-sponsored competition for projects focused on improving property rights for the poor. The more you know about Hernando De Soto, the harder it is to see Omidyar’s financial backing as “idealistic” or “civic-minded.”
For one thing, De Soto is the favorite of the very same billionaire brothers who play villains to Omidyar’s supposed hero—yes, the reviled Koch brothers. In 2004, the libertarian Cato Institute (neé “The Charles Koch Foundation”) awarded Hernando De Soto its biannual “Milton Friedman Prize”—which comes with a hefty $500,000 check—for “empowering the poor” and “advancing the cause of liberty.” De Soto was chosen by a prize jury consisting of such notable humanitarians as former Pinochet labor minister Jose Piñera, Vladimir Putin’s economic advisor Andrei Illarionov, Washington Post neoconservative columnist Anne Applebaum, FedEx CEO Fred Smith, and Milton Friedman’s wife Rosie. Milton was in the audience during the awards ceremony; he heartily approved.
Indeed, Hernando De Soto is de facto royalty in the world of neoliberal-libertarian gurus—he’s been called “The Friedrich von Hayek of Latin America,” not least because Hayek launched De Soto’s career as a guru more than three decades ago.
So who is Hernando De Soto, where do his ideas come from, and why might Pierre Omidyar think him deserving of five million dollars — ten times the amount the Koch Brothers awarded him?
De Soto was born into an elite “white European” family in Peru, who fled into exile in the West following Peru’s 1948 coup—his father was the secretary to the deposed president. Hernando spent most of the next 30 years in Switzerland, getting his education at elite schools, working his way up various international institutions based in Geneva, serving as the president of a Geneva-based copper cartel outfit, the International Council of Copper Exporting Countries, and working as an official in GATT (General Agreement on Trade and Tariffs).
De Soto didn’t return to live in Peru until the end of the 1970s, to oversee a new gold placer mining company he’d formed with a group of foreign investors. The mining company’s profits suffered due to Peru’s weak property laws and almost non-existent cultural appreciation of property title, especially among the country’s poor masses—De Soto’s investors pulled out of the mining venture after visiting the company’s gold mines and seeing hundreds of peasants panning on the company’s concessions. That experience inspired De Soto to change Peruvians’ political assumptions regarding property rights. Rather than start off by trying to convince them that foreign mining firms should have exclusive rights to gold from traditionally communal Peruvian lands, De Soto came up with a clever end-around idea: giving property title to the masses of Peru’s poor living in the vast shanties and shacks in the slums of Lima and cities beyond. It was a long-term strategy to alter cultural expectations about property and ownership, thereby improving the investment climate for mining companies and other investors. The point was to align the masses’ assumptions about property ownership with those of the banana republic’s handful of rich landowning families.
In 1979, De Soto organized a conference in Peru’s capital Lima, featuring Milton Friedman and Friedrich von Hayek as speakers and guests. At the time, both Friedman and Hayek were serving as key advisors to General Augusto Pinochet’s “shock therapy” program in nearby Chile, an economic experiment that combined libertarian market policies with concentration camp terror.
Two years after De Soto’s successful conference in Lima, in 1981, Hayek helped De Soto set up his own free-market think tank in Lima, the “Institute for Liberty and Democracy” (ILD). The ILD became the first of a large international network of right-wing neoliberal think tanks connected to the Mother Ships—Cato Institute, Heritage Foundation, and Britain’s Institute for Economic Affairs, Margaret Thatcher’s go-to think tank. By 1983, De Soto’s Institute was also receiving heavy funding from Reagan’s Cold War front group, the National Endowment for Democracy, which promoted free-market think tanks and programs around the world, and by the end of Reagan decade, De Soto produced his first manifesto, “The Other Path”—a play on the name of Peru’s Maoist guerrilla group, Shining Path, then fighting a bloody war for power. But whereas the Shining Path’s political program called for nationalizing and redistributing property, most of which was in the hands of a few rich families, De Soto’s “Other Path” called for maintaining property distribution as it was, and legalizing its current structure by democratizing property titles, the pieces of paper with the stamps. Everyone would become a micro-oligarch and micro-landowner under this scheme…
With help and funding from US and international institutions, De Soto quickly became a powerful political force behind the scenes. In 1990, De Soto insinuated himself into the inner circle of newly-elected president Alberto Fujimori, who quickly turned into a brutal dictator, and is currently serving a 25-year prison sentence for crimes against humanity, murder, kidnapping, and illegal wiretapping.
Under De Soto’s influence, Fujimori’s politics suddenly changed; almost overnight, the populist Keynsian candidate became the free-market authoritarian “Chinochet” he governed as. As Fujimori’s top advisor, Hernando De Soto was the architect of so-called “Fujishock” therapy applied to Peru’s economy. Officially, De Soto served as Fujimori’s drug czar from 1990-1992, an unusual role for an economist given the fact that Peru’s army was fighting a brutal war with Peru’s powerful cocaine drug lords. At the time Peru was the world’s largest cocaine producer; as drug czar, Hernando De Soto therefore positioned himself as the point-man between Peru’s military and security services, America’s DEA and drug czar under the first President Bush, and Peru’s president Alberto Fujimori. It’s the sort of position that you’d want to have if you wanted “deep state” power rather than mere ministerial power.
During those first two years when De Soto served under Fujimori, human rights abuses were rampant. Fujimori death squads—with names like the “Grupo Colina”—targeted labor unions and government critics and their families. Two of the worst massacres committed under Fujimori’s reign, and for which he was later jailed, took place while De Soto served as his advisor and drug czar.
The harsh free-market shock-therapy program that De Soto convinced Fujimori to implement resulted in mass misery for Peru. During the two years De Soto served as Fujimori’s advisor, real wages plunged 40%, the poverty rate rose to over 54% of the population, and the percentage of the workforce that was either unemployed or underemployed soared to 87.3%.
But while the country suffered, De Soto’s Institute for Liberty and Democracy—the outfit that Omidyar gave $5 million to in 2011—thrived: its staff grew to over 100 as funds poured in. A World Bank staffer who worked with the ILD described it as,
“a kind of school for the country. Most of the important ministers, lawyers, journalists, and economists in Peru are ILD alumni.”
In 1992, Fujimori orchestrated a constitutional coup, disbanding Peru’s Congress and its courts, and imposing emergency rule-by-decree. It was another variation of the same Pinochet blueprint.
Just before Fujimori’s coup, De Soto indemnified himself by officially resigning from the cabinet. However in the weeks and months after the coup, De Soto provided crucial PR cover, downplaying the coup to the foreign press. For instance, De Soto told the Los Angeles Times that the public should temper their judgment of Fujimori’s coup:
“You’ve got to see this as the trial and error of a president who’s trying to find his way.”
In the New York Times, De Soto spun the coup as willed by the people, the ultimate democratic politics:
“People are fed up, fed up…[Fujimori] has attacked two hated institutions at just the right time. There is an enormous need to believe in him.”
Years later, Fujimori’s notorious spy chief Vladimiro Montesinos testified to Peru’s Congress that De Soto helped mastermind the 1992 coup. De Soto denied involvement; but in 2011, two years after Fujimori was jailed for crimes against humanity, De Soto joined the presidential campaign for Keiko Fujimori, the jailed dictator’s daughter and leader of Fujimori’s right-wing party. Keiko Fujimori ran on a platform promising to free her father from prison if she won; De Soto spent much of the campaign red-baiting her opponent as a Communist. That led Peru’s Nobel Prize-winning author Mario Vargas Llosa to denounce De Soto as a “fujimontesenista” with “few democratic credentials.”
So in the same year that De Soto was trying to put the daughter of Peru’s Pinochet in power and to spring the dictator from prison, Omidyar Network awarded him $5 million.
It was during Fujimori’s dictatorial emergency rule, from 1992-94, that De Soto rolled out a property-title pilot program in Lima, in which 200,000 households were given formal title. In 1996, Fujimori implemented De Soto’s property-titling program on a national scale, with help from the World Bank and a new government property agency staffed by people from De Soto’s Institute for Liberty and Democracy. By 2000, the magical promise of an explosion in bank credits to all the new micro-property owners never materialized; in fact, there was no noticeable difference in bank lending to the poor whatsoever, whether they had property title or not.
The World Bank and the project’s neoliberal supporters led by Hernando De Soto were not happy with data showing no uptick in lending, which threatened to unravel the entire happy theory behind property titling as the answer to Third World poverty. De Soto was in the process of peddling the same property-titling program to countries around the world; data was needed to justify the program. So the World Bank funded a new study in Peru in the early 2000s, and discovered something startling: In homes that had formal property titles, the parents in those homes spent up to 40% more time outside of their homes than they did before they were given title. De Soto took that statistic and argued that it was a good thing because it proved giving property title to homeowners made them feel secure enough to leave their shanties and shacks. The assumption was that in the dark days before shanty dwellers had legal titles, they were too scared to leave their shacks lest some other savage steal it from them while they were out shopping.
No one ever conclusively explained why shanty parents were spending so much more time outside of their homes, but the important thing was that it made everyone forget the utter failure of the property title program’s core promise—that property titles would ignite micro-lending thanks to the collateral of the micro-entrepreneur’s micro-shack as collateral. Thanks to De Soto’s salesmanship and the backing of the world’s neoliberal nomenklatura — Bill Clinton called De Soto “the world’s greatest living economist” and he was praised by everyone from Milton Friedman to Vladimir Putin to Margaret Thatcher. The disappointing results in Peru were ignored, and De Soto’s program was extended to developing countries around the world including Egypt, Cambodia, the Philippines, Indonesia and elsewhere. And in nearly every case, De Soto’s Institute for Liberty and Democracy has taken the lead in advising governments and selling the dream of turning titled slum-dwellers into micro-entrepreneurs.
The real change brought by De Soto’s property-titling program has ranged from nil to nightmarish.
In Cambodia, where the World Bank implemented De Soto’s land-titling program in 2001, poor and vulnerable people in the capital Phnom Penh have suffered at the hands of land developers and speculators who’ve used arson, police corruption and violence to forcibly evict roughly 10% of the city’s population from their homes in more valuable districts, relocating them to the city outskirts.
An article in Slate titled “The De Soto Delusion” described what happened in Cambodia when the land-titling program was first implemented:
“In the nine months or so leading up to the project kickoff, a devastating series of slum fires and forced evictions purged 23,000 squatters from tracts of untitled land in the heart of Phnom Penh. These squatters were then plopped onto dusty relocation sites several miles outside of the city, where there were no jobs and where the price of commuting to and from central Phnom Penh (about $2 per day) surpassed whatever daily wage they had been earning in town before the fires. Meanwhile, the burned-out inner city land passed immediately to some of the wealthiest property developers in the country.”
De Soto and his Institute for Liberty and Democracy have advised property-title programs elsewhere too—Haiti, Dominican Republic, Panama, Russia—again with results ranging from nil to bad. Even where it doesn’t lead to mass evictions and violence, it has the effect of shifting a greater tax burden onto the poor, who end up paying more in property taxes, and of forcing them to pony up for costly filing fees to gain title, fees that they often cannot afford. Property title in and of itself—without a whole range of reforms in governance, corruption, education, income, wealth distribution and so on—is clearly no panacea. But it does provide an alternative to programs that give money to the poor and redistribute wealth, and that alone is a good thing, if you’re the type smitten by Hernando De Soto—as Omidyar clearly is.
Studies of property-titling programs in the slums of Brazil and Manila revealed that it created a new bitterly competitive culture and bifurcation, in which a small handful of titled slum dwellers quickly learn to benefit by turning into micro-slumlords renting out dwellings to lesser slum dwellers, who subsequently find themselves forced to pay monthly fees for their shanty rooms—creating an underclass within the underclass. De Soto has described these slums as “acres of diamonds”—wealth waiting to be unlocked by property titling—and his acolytes even coined a new acronym for slums: “Strategic Low-income Urban Management Systems.”
All of which begs the obvious question: If De Soto’s property-title program is such a proven failure in case after case, why is it so popular among the world’s political and business elites?
The answer is rather obvious: It offers a simple, low-cost, technocratic market solution to the problem of global poverty—a complex and costly problem that can only be alleviated by dedicating huge amounts of resources and a very different politics from the one that tells us that markets are god, markets can solve everything. Even before Omidyar committed $5 million to the dark plutocratic “idealism” De Soto represents, he was Tweeting his admiration for De Soto:
“Brilliant dinner with Hernando de Soto. Property rights underlie and enable everything.”
Indeed, property rights underlie and enable everything Omidyar wants to hear—but distract and divert from what the targets of those programs might actually need or be asking for.
Which brings us back to the wonderful words written about Pierre Omidyar last month: Where is the proof that he’s a “civic-minded” billionaire, a “different” billionaire, an “idealistic” billionaire who’s in it for ideals and not for profit? How is Omidyar any different from any other billionaire—when he is funding the same programs and pushing the same vision for the world backed by the Kochs, Soros, Gates, and every other neoliberal billionaire?
When you scratch the surface of his investments and get a sense of what sort of ideal world he’d like to make, it becomes clear that Omidyar is no different from his peers.
And the reason that matters, of course, is because Pierre Omidyar’s dystopian vision is merging with Glenn Greenwald’s and Laura Poitras’ monopoly on the crown jewels of the National Security Agency — the world’s secrets, our secrets — and using the value of those secrets as the capital for what’s being billed as an entirely new, idealistic media project, an idealism that the CJR and others promise will not shy away from taking on power.
The question, however, is what defines power to a neoliberal mind? We’re going to take a wild guess here and say: The State.
So brace yourself, you’re about to get something you’ve never seen before: billionaire-backed journalism taking on the power of the state. How radical is that? To quote “60 Minutes” producer Lowell Bergman:
“What has been adjudicated and established in the wake of Vietnam and the Civil Rights movement is the ability of the press to basically write or broadcast almost anything about the government.There’s very few restrictions in that way. It’s not true when we’re talking about private power, especially major Fortune 500 corporations, or people worth more than, say, a billion dollars.”
In other words: look out Government, you’re about to be pummeled by a crusading, righteous billionaire! And corporate America? Ah, don’t worry. Your dirty secrets—freshly transferred from the nasty non-profit hands of the Guardian to the aggressively for-profit hands of Pierre Omidyar—are safe with us.
Posted by rogerhollander in Civil Liberties, Media, Whistle-blowing, Wikileaks.
Tags: documentary film making, edward snowden, glenn greenwald, guardian, investigative journalism, investigative reporting, journalism, laura poitras, Media, nsa, peter maas, roger hollander, surveillance state, whistle blower
Roger’s note: This is a very long article, but I guarantee that once you begin you will not be able to put it down. If you have any interest whatsoever in Edward Snowden’s NSA revelations you will find this account of how the story came out as intriguing as any page turning spy thriller.
By PETER MAASS
Published: August 13, 2013
This past January, Laura Poitras received a curious e-mail from an anonymous stranger requesting her public encryption key. For almost two years, Poitras had been working on a documentary about surveillance, and she occasionally received queries from strangers. She replied to this one and sent her public key — allowing him or her to send an encrypted e-mail that only Poitras could open, with her private key — but she didn’t think much would come of it.
Why he turned to Poitras and Greenwald.
The stranger responded with instructions for creating an even more secure system to protect their exchanges. Promising sensitive information, the stranger told Poitras to select long pass phrases that could withstand a brute-force attack by networked computers. “Assume that your adversary is capable of a trillion guesses per second,” the stranger wrote.
Before long, Poitras received an encrypted message that outlined a number of secret surveillance programs run by the government. She had heard of one of them but not the others. After describing each program, the stranger wrote some version of the phrase, “This I can prove.”
Seconds after she decrypted and read the e-mail, Poitras disconnected from the Internet and removed the message from her computer. “I thought, O.K., if this is true, my life just changed,” she told me last month. “It was staggering, what he claimed to know and be able to provide. I just knew that I had to change everything.”
Poitras remained wary of whoever it was she was communicating with. She worried especially that a government agent might be trying to trick her into disclosing information about the people she interviewed for her documentary, including Julian Assange, the editor of WikiLeaks. “I called him out,” Poitras recalled. “I said either you have this information and you are taking huge risks or you are trying to entrap me and the people I know, or you’re crazy.”
The answers were reassuring but not definitive. Poitras did not know the stranger’s name, sex, age or employer (C.I.A.? N.S.A.? Pentagon?). In early June, she finally got the answers. Along with her reporting partner, Glenn Greenwald, a former lawyer and a columnist for The Guardian, Poitras flew to Hong Kong and met the N.S.A. contractor Edward J. Snowden, who gave them thousands of classified documents, setting off a major controversy over the extent and legality of government surveillance. Poitras was right that, among other things, her life would never be the same.
Greenwald lives and works in a house surrounded by tropical foliage in a remote area of Rio de Janeiro. He shares the home with his Brazilian partner and their 10 dogs and one cat, and the place has the feel of a low-key fraternity that has been dropped down in the jungle. The kitchen clock is off by hours, but no one notices; dishes tend to pile up in the sink; the living room contains a table and a couch and a large TV, an Xbox console and a box of poker chips and not much else. The refrigerator is not always filled with fresh vegetables. A family of monkeys occasionally raids the banana trees in the backyard and engages in shrieking battles with the dogs.
Mauricio Lima for The New York Times
Glenn Greenwald, a writer for The Guardian, at home in Rio de Janeiro.
Greenwald does most of his work on a shaded porch, usually dressed in a T-shirt, surfer shorts and flip-flops. Over the four days I spent there, he was in perpetual motion, speaking on the phone in Portuguese and English, rushing out the door to be interviewed in the city below, answering calls and e-mails from people seeking information about Snowden, tweeting to his 225,000 followers (and conducting intense arguments with a number of them), then sitting down to write more N.S.A. articles for The Guardian, all while pleading with his dogs to stay quiet. During one especially fever-pitched moment, he hollered, “Shut up, everyone,” but they didn’t seem to care.
Amid the chaos, Poitras, an intense-looking woman of 49, sat in a spare bedroom or at the table in the living room, working in concentrated silence in front of her multiple computers. Once in a while she would walk over to the porch to talk with Greenwald about the article he was working on, or he would sometimes stop what he was doing to look at the latest version of a new video she was editing about Snowden. They would talk intensely — Greenwald far louder and more rapid-fire than Poitras — and occasionally break out laughing at some shared joke or absurd memory. The Snowden story, they both said, was a battle they were waging together, a fight against powers of surveillance that they both believe are a threat to fundamental American liberties.
Two reporters for The Guardian were in town to assist Greenwald, so some of our time was spent in the hotel where they were staying along Copacabana Beach, the toned Brazilians playing volleyball in the sand below lending the whole thing an added layer of surreality. Poitras has shared the byline on some of Greenwald’s articles, but for the most part she has preferred to stay in the background, letting him do the writing and talking. As a result, Greenwald is the one hailed as either a fearless defender of individual rights or a nefarious traitor, depending on your perspective. “I keep calling her the Keyser Soze of the story, because she’s at once completely invisible and yet ubiquitous,” Greenwald said, referring to the character in “The Usual Suspects” played by Kevin Spacey, a mastermind masquerading as a nobody. “She’s been at the center of all of this, and yet no one knows anything about her.”
Why he turned to Poitras and Greenwald.
As dusk fell one evening, I followed Poitras and Greenwald to the newsroom of O Globo, one of the largest newspapers in Brazil. Greenwald had just published an article there detailing how the N.S.A. was spying on Brazilian phone calls and e-mails. The article caused a huge scandal in Brazil, as similar articles have done in other countries around the world, and Greenwald was a celebrity in the newsroom. The editor in chief pumped his hand and asked him to write a regular column; reporters took souvenir pictures with their cellphones. Poitras filmed some of this, then put her camera down and looked on. I noted that nobody was paying attention to her, that all eyes were on Greenwald, and she smiled. “That’s right,” she said. “That’s perfect.”
Poitras seems to work at blending in, a function more of strategy than of shyness. She can actually be remarkably forceful when it comes to managing information. During a conversation in which I began to ask her a few questions about her personal life, she remarked, “This is like visiting the dentist.” The thumbnail portrait is this: She was raised in a well-off family outside Boston, and after high school, she moved to San Francisco to work as a chef in upscale restaurants. She also took classes at the San Francisco Art Institute, where she studied under the experimental filmmaker Ernie Gehr. In 1992, she moved to New York and began to make her way in the film world, while also enrolling in graduate classes in social and political theory at the New School. Since then she has made five films, most recently “The Oath,” about the Guantánamo prisoner Salim Hamdan and his brother-in-law back in Yemen, and has been the recipient of a Peabody Award and a MacArthur award.
On Sept. 11, 2001, Poitras was on the Upper West Side of Manhattan when the towers were attacked. Like most New Yorkers, in the weeks that followed she was swept up in both mourning and a feeling of unity. It was a moment, she said, when “people could have done anything, in a positive sense.” When that moment led to the pre-emptive invasion of Iraq, she felt that her country had lost its way. “We always wonder how countries can veer off course,” she said. “How do people let it happen, how do people sit by during this slipping of boundaries?” Poitras had no experience in conflict zones, but in June 2004, she went to Iraq and began documenting the occupation.
Shortly after arriving in Baghdad, she received permission to go to Abu Ghraib prison to film a visit by members of Baghdad’s City Council. This was just a few months after photos were published of American soldiers abusing prisoners there. A prominent Sunni doctor was part of the visiting delegation, and Poitras shot a remarkable scene of his interaction with prisoners there, shouting that they were locked up for no good reason.
The doctor, Riyadh al-Adhadh, invited Poitras to his clinic and later allowed her to report on his life in Baghdad. Her documentary, “My Country, My Country,” is centered on his family’s travails — the shootings and blackouts in their neighborhood, the kidnapping of a nephew. The film premiered in early 2006 and received widespread acclaim, including an Oscar nomination for best documentary.
Attempting to tell the story of the war’s effect on Iraqi citizens made Poitras the target of serious — and apparently false — accusations. On Nov. 19, 2004, Iraqi troops, supported by American forces, raided a mosque in the doctor’s neighborhood of Adhamiya, killing several people inside. The next day, the neighborhood erupted in violence. Poitras was with the doctor’s family, and occasionally they would go to the roof of the home to get a sense of what was going on. On one of those rooftop visits, she was seen by soldiers from an Oregon National Guard battalion. Shortly after, a group of insurgents launched an attack that killed one of the Americans. Some soldiers speculated that Poitras was on the roof because she had advance notice of the attack and wanted to film it. Their battalion commander, Lt. Col. Daniel Hendrickson, retired, told me last month that he filed a report about her to brigade headquarters.
There is no evidence to support this claim. Fighting occurred throughout the neighborhood that day, so it would have been difficult for any journalist to not be near the site of an attack. The soldiers who made the allegation told me that they have no evidence to prove it. Hendrickson told me his brigade headquarters never got back to him.
For several months after the attack in Adhamiya, Poitras continued to live in the Green Zone and work as an embedded journalist with the U.S. military. She has screened her film to a number of military audiences, including at the U.S. Army War College. An officer who interacted with Poitras in Baghdad, Maj. Tom Mowle, retired, said Poitras was always filming and it “completely makes sense” she would film on a violent day. “I think it’s a pretty ridiculous allegation,” he said.
Although the allegations were without evidence, they may be related to Poitras’s many detentions and searches. Hendrickson and another soldier told me that in 2007 — months after she was first detained — investigators from the Department of Justice’s Joint Terrorism Task Force interviewed them, inquiring about Poitras’s activities in Baghdad that day. Poitras was never contacted by those or any other investigators, however. “Iraq forces and the U.S. military raided a mosque during Friday prayers and killed several people,” Poitras said. “Violence broke out the next day. I am a documentary filmmaker and was filming in the neighborhood. Any suggestion I knew about an attack is false. The U.S. government should investigate who ordered the raid, not journalists covering the war.”
In June 2006, her tickets on domestic flights were marked “SSSS” — Secondary Security Screening Selection — which means the bearer faces extra scrutiny beyond the usual measures. She was detained for the first time at Newark International Airport before boarding a flight to Israel, where she was showing her film. On her return flight, she was held for two hours before being allowed to re-enter the country. The next month, she traveled to Bosnia to show the film at a festival there. When she flew out of Sarajevo and landed in Vienna, she was paged on the airport loudspeaker and told to go to a security desk; from there she was led to a van and driven to another part of the airport, then taken into a room where luggage was examined.
“They took my bags and checked them,” Poitras said. “They asked me what I was doing, and I said I was showing a movie in Sarajevo about the Iraq war. And then I sort of befriended the security guy. I asked what was going on. He said: ‘You’re flagged. You have a threat score that is off the Richter scale. You are at 400 out of 400.’ I said, ‘Is this a scoring system that works throughout all of Europe, or is this an American scoring system?’ He said. ‘No, this is your government that has this and has told us to stop you.’ ”
After 9/11, the U.S. government began compiling a terrorist watch list that was at one point estimated to contain nearly a million names. There are at least two subsidiary lists that relate to air travel. The no-fly list contains the names of tens of thousands of people who are not allowed to fly into or out of the country. The selectee list, which is larger than the no-fly list, subjects people to extra airport inspections and questioning. These lists have been criticized by civil rights groups for being too broad and arbitrary and for violating the rights of Americans who are on them.
In Vienna, Poitras was eventually cleared to board her connecting flight to New York, but when she landed at J.F.K., she was met at the gate by two armed law-enforcement agents and taken to a room for questioning. It is a routine that has happened so many times since then — on more than 40 occasions — that she has lost precise count. Initially, she said, the authorities were interested in the paper she carried, copying her receipts and, once, her notebook. After she stopped carrying her notes, they focused on her electronics instead, telling her that if she didn’t answer their questions, they would confiscate her gear and get their answers that way. On one occasion, Poitras says, they did seize her computers and cellphones and kept them for weeks. She was also told that her refusal to answer questions was itself a suspicious act. Because the interrogations took place at international boarding crossings, where the government contends that ordinary constitutional rights do not apply, she was not permitted to have a lawyer present.
“It’s a total violation,” Poitras said. “That’s how it feels. They are interested in information that pertains to the work I am doing that’s clearly private and privileged. It’s an intimidating situation when people with guns meet you when you get off an airplane.”
Though she has written to members of Congress and has submitted Freedom of Information Act requests, Poitras has never received any explanation for why she was put on a watch list. “It’s infuriating that I have to speculate why,” she said. “When did that universe begin, that people are put on a list and are never told and are stopped for six years? I have no idea why they did it. It’s the complete suspension of due process.” She added: “I’ve been told nothing, I’ve been asked nothing, and I’ve done nothing. It’s like Kafka. Nobody ever tells you what the accusation is.”
After being detained repeatedly, Poitras began taking steps to protect her data, asking a traveling companion to carry her laptop, leaving her notebooks overseas with friends or in safe deposit boxes. She would wipe her computers and cellphones clean so that there would be nothing for the authorities to see. Or she encrypted her data, so that law enforcement could not read any files they might get hold of. These security preparations could take a day or more before her travels.
It wasn’t just border searches that she had to worry about. Poitras said she felt that if the government was suspicious enough to interrogate her at airports, it was also most likely surveilling her e-mail, phone calls and Web browsing. “I assume that there are National Security Letters on my e-mails,” she told me, referring to one of the secretive surveillance tools used by the Department of Justice. A National Security Letter requires its recipients — in most cases, Internet service providers and phone companies — to provide customer data without notifying the customers or any other parties. Poitras suspected (but could not confirm, because her phone company and I.S.P. would be prohibited from telling her) that the F.B.I. had issued National Security Letters for her electronic communications.
Laura Poitras filming the construction of a large N.S.A. facility in Utah.
Once she began working on her surveillance film in 2011, she raised her digital security to an even higher level. She cut down her use of a cellphone, which betrays not only who you are calling and when, but your location at any given point in time. She was careful about e-mailing sensitive documents or having sensitive conversations on the phone. She began using software that masked the Web sites she visited. After she was contacted by Snowden in 2013, she tightened her security yet another notch. In addition to encrypting any sensitive e-mails, she began using different computers for editing film, for communicating and for reading sensitive documents (the one for sensitive documents is air-gapped, meaning it has never been connected to the Internet).
These precautions might seem paranoid — Poitras describes them as “pretty extreme” — but the people she has interviewed for her film were targets of the sort of surveillance and seizure that she fears. William Binney, a former top N.S.A. official who publicly accused the agency of illegal surveillance, was at home one morning in 2007 when F.B.I. agents burst in and aimed their weapons at his wife, his son and himself. Binney was, at the moment the agent entered his bathroom and pointed a gun at his head, naked in the shower. His computers, disks and personal records were confiscated and have not yet been returned. Binney has not been charged with any crime.
Jacob Appelbaum, a privacy activist who was a volunteer with WikiLeaks, has also been filmed by Poitras. The government issued a secret order to Twitter for access to Appelbaum’s account data, which became public when Twitter fought the order. Though the company was forced to hand over the data, it was allowed to tell Appelbaum. Google and a small I.S.P. that Appelbaum used were also served with secret orders and fought to alert him. Like Binney, Appelbaum has not been charged with any crime.
Poitras endured the airport searches for years with little public complaint, lest her protests generate more suspicion and hostility from the government, but last year she reached a breaking point. While being interrogated at Newark after a flight from Britain, she was told she could not take notes. On the advice of lawyers, Poitras always recorded the names of border agents and the questions they asked and the material they copied or seized. But at Newark, an agent threatened to handcuff her if she continued writing. She was told that she was being barred from writing anything down because she might use her pen as a weapon.
“Then I asked for crayons,” Poitras recalled, “and he said no to crayons.”
She was taken into another room and interrogated by three agents — one was behind her, another asked the questions, the third was a supervisor. “It went on for maybe an hour and a half,” she said. “I was taking notes of their questions, or trying to, and they yelled at me. I said, ‘Show me the law where it says I can’t take notes.’ We were in a sense debating what they were trying to forbid me from doing. They said, ‘We are the ones asking the questions.’ It was a pretty aggressive, antagonistic encounter.”
Poitras met Greenwald in 2010, when she became interested in his work on WikiLeaks. In 2011, she went to Rio to film him for her documentary. He was aware of the searches and asked several times for permission to write about them. After Newark, she gave him a green light.
“She said, ‘I’ve had it,’ ” Greenwald told me. “Her ability to take notes and document what was happening was her one sense of agency, to maintain some degree of control. Documenting is what she does. I think she was feeling that the one vestige of security and control in this situation had been taken away from her, without any explanation, just as an arbitrary exercise of power.”
At the time, Greenwald was a writer for Salon. His article, “U.S. Filmmaker Repeatedly Detained at Border,” was published in April 2012. Shortly after it was posted, the detentions ceased. Six years of surveillance and harassment, Poitras hoped, might be coming to an end.
Poitras was not Snowden’s first choice as the person to whom he wanted to leak thousands of N.S.A. documents. In fact, a month before contacting her, he reached out to Greenwald, who had written extensively and critically about the wars in Iraq and Afghanistan and the erosion of civil liberties in the wake of 9/11. Snowden anonymously sent him an e-mail saying he had documents he wanted to share, and followed that up with a step-by-step guide on how to encrypt communications, which Greenwald ignored. Snowden then sent a link to an encryption video, also to no avail.
“It’s really annoying and complicated, the encryption software,” Greenwald said as we sat on his porch during a tropical drizzle. “He kept harassing me, but at some point he just got frustrated, so he went to Laura.”
Snowden had read Greenwald’s article about Poitras’s troubles at U.S. airports and knew she was making a film about the government’s surveillance programs; he had also seen a short documentary about the N.S.A. that she made for The New York Times Op-Docs. He figured that she would understand the programs he wanted to leak about and would know how to communicate in a secure way.
By late winter, Poitras decided that the stranger with whom she was communicating was credible. There were none of the provocations that she would expect from a government agent — no requests for information about the people she was in touch with, no questions about what she was working on. Snowden told her early on that she would need to work with someone else, and that she should reach out to Greenwald. She was unaware that Snowden had already tried to contact Greenwald, and Greenwald would not realize until he met Snowden in Hong Kong that this was the person who had contacted him more than six months earlier.
There were surprises for everyone in these exchanges — including Snowden, who answered questions that I submitted to him through Poitras. In response to a question about when he realized he could trust Poitras, he wrote: “We came to a point in the verification and vetting process where I discovered Laura was more suspicious of me than I was of her, and I’m famously paranoid.” When I asked him about Greenwald’s initial silence in response to his requests and instructions for encrypted communications, Snowden replied: “I know journalists are busy and had assumed being taken seriously would be a challenge, especially given the paucity of detail I could initially offer. At the same time, this is 2013, and [he is] a journalist who regularly reported on the concentration and excess of state power. I was surprised to realize that there were people in news organizations who didn’t recognize any unencrypted message sent over the Internet is being delivered to every intelligence service in the world.”
In April, Poitras e-mailed Greenwald to say they needed to speak face to face. Greenwald happened to be in the United States, speaking at a conference in a suburb of New York City, and the two met in the lobby of his hotel. “She was very cautious,” Greenwald recalled. “She insisted that I not take my cellphone, because of this ability the government has to remotely listen to cellphones even when they are turned off. She had printed off the e-mails, and I remember reading the e-mails and felt intuitively that this was real. The passion and thought behind what Snowden — who we didn’t know was Snowden at the time — was saying was palpable.”
Greenwald installed encryption software and began communicating with the stranger. Their work was organized like an intelligence operation, with Poitras as the mastermind. “Operational security — she dictated all of that,” Greenwald said. “Which computers I used, how I communicated, how I safeguarded the information, where copies were kept, with whom they were kept, in which places. She has this complete expert level of understanding of how to do a story like this with total technical and operational safety. None of this would have happened with anything near the efficacy and impact it did, had she not been working with me in every sense and really taking the lead in coordinating most of it.”
Snowden began to provide documents to the two of them. Poitras wouldn’t tell me when he began sending her documents; she does not want to provide the government with information that could be used in a trial against Snowden or herself. He also said he would soon be ready to meet them. When Poitras asked if she should plan on driving to their meeting or taking a train, Snowden told her to be ready to get on a plane.
In May, he sent encrypted messages telling the two of them to go to Hong Kong. Greenwald flew to New York from Rio, and Poitras joined him for meetings with the editor of The Guardian’s American edition. With the paper’s reputation on the line, the editor asked them to bring along a veteran Guardian reporter, Ewen MacAskill, and on June 1, the trio boarded a 16-hour flight from J.F.K. to Hong Kong.
Snowden had sent a small number of documents to Greenwald, about 20 in all, but Poitras had received a larger trove, which she hadn’t yet had the opportunity to read closely. On the plane, Greenwald began going through its contents, eventually coming across a secret court order requiring Verizon to give its customer phone records to the N.S.A. The four-page order was from the Foreign Intelligence Surveillance Court, a panel whose decisions are highly classified. Although it was rumored that the N.S.A. was collecting large numbers of American phone records, the government always denied it.
Poitras, sitting 20 rows behind Greenwald, occasionally went forward to talk about what he was reading. As the man sitting next to him slept, Greenwald pointed to the FISA order on his screen and asked Poitras: “Have you seen this? Is this saying what I’m thinking it’s saying?”
At times, they talked so animatedly that they disturbed passengers who were trying to sleep; they quieted down. “We couldn’t believe just how momentous this occasion was,” Greenwald said. “When you read these documents, you get a sense of the breadth of them. It was a rush of adrenaline and ecstasy and elation. You feel you are empowered for the first time because there’s this mammoth system that you try and undermine and subvert and shine a light on — but you usually can’t make any headway, because you don’t have any instruments to do it — [and now] the instruments were suddenly in our lap.”
Snowden had instructed them that once they were in Hong Kong, they were to go at an appointed time to the Kowloon district and stand outside a restaurant that was in a mall connected to the Mira Hotel. There, they were to wait until they saw a man carrying a Rubik’s Cube, then ask him when the restaurant would open. The man would answer their question, but then warn that the food was bad. When the man with the Rubik’s Cube arrived, it was Edward Snowden, who was 29 at the time but looked even younger.
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“Both of us almost fell over when we saw how young he was,” Poitras said, still sounding surprised. “I had no idea. I assumed I was dealing with somebody who was really high-level and therefore older. But I also knew from our back and forth that he was incredibly knowledgeable about computer systems, which put him younger in my mind. So I was thinking like 40s, somebody who really grew up on computers but who had to be at a higher level.”
In our encrypted chat, Snowden also remarked on this moment: “I think they were annoyed that I was younger than they expected, and I was annoyed that they had arrived too early, which complicated the initial verification. As soon as we were behind closed doors, however, I think everyone was reassured by the obsessive attention to precaution and bona fides.”
They followed Snowden to his room, where Poitras immediately shifted into documentarian mode, taking her camera out. “It was a little bit tense, a little uncomfortable,” Greenwald said of those initial minutes. “We sat down, and we just started chatting, and Laura was immediately unpacking her camera. The instant that she turned on the camera, I very vividly recall that both he and I completely stiffened up.”
Greenwald began the questioning. “I wanted to test the consistency of his claims, and I just wanted all the information I could get, given how much I knew this was going to be affecting my credibility and everything else. We weren’t really able to establish a human bond until after that five or six hours was over.”
For Poitras, the camera certainly alters the human dynamic, but not in a bad way. When someone consents to being filmed — even if the consent is indirectly gained when she turns on the camera — this is an act of trust that raises the emotional stakes of the moment. What Greenwald saw as stilted, Poitras saw as a kind of bonding, the sharing of an immense risk. “There is something really palpable and emotional in being trusted like that,” she said.
Snowden, though taken by surprise, got used to it. “As one might imagine, normally spies allergically avoid contact with reporters or media, so I was a virgin source — everything was a surprise. . . . But we all knew what was at stake. The weight of the situation actually made it easier to focus on what was in the public interest rather than our own. I think we all knew there was no going back once she turned the camera on.”
For the next week, their preparations followed a similar pattern — when they entered Snowden’s room, they would remove their cellphone batteries and place them in the refrigerator of Snowden’s minibar. They lined pillows against the door, to discourage eavesdropping from outside, then Poitras set up her camera and filmed. It was important to Snowden to explain to them how the government’s intelligence machinery worked because he feared that he could be arrested at any time.
Greenwald’s first articles — including the initial one detailing the Verizon order he read about on the flight to Hong Kong — appeared while they were still in the process of interviewing Snowden. It made for a strange experience, creating the news together, then watching it spread. “We could see it being covered,” Poitras said. “We were all surprised at how much attention it was getting. Our work was very focused, and we were paying attention to that, but we could see on TV that it was taking off. We were in this closed circle, and around us we knew that reverberations were happening, and they could be seen and they could be felt.”
Snowden told them before they arrived in Hong Kong that he wanted to go public. He wanted to take responsibility for what he was doing, Poitras said, and he didn’t want others to be unfairly targeted, and he assumed he would be identified at some point. She made a 12½-minute video of him that was posted online June 9, a few days after Greenwald’s first articles. It triggered a media circus in Hong Kong, as reporters scrambled to learn their whereabouts.
There were a number of subjects that Poitras declined to discuss with me on the record and others she wouldn’t discuss at all — some for security and legal reasons, others because she wants to be the first to tell crucial parts of her story in her own documentary. Of her parting with Snowden once the video was posted, she would only say, “We knew that once it went public, it was the end of that period of working.”
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Snowden checked out of his hotel and went into hiding. Reporters found out where Poitras was staying — she and Greenwald were at different hotels — and phone calls started coming to her room. At one point, someone knocked on her door and asked for her by name. She knew by then that reporters had discovered Greenwald, so she called hotel security and arranged to be escorted out a back exit.
She tried to stay in Hong Kong, thinking Snowden might want to see her again, and because she wanted to film the Chinese reaction to his disclosures. But she had now become a figure of interest herself, not just a reporter behind the camera. On June 15, as she was filming a pro-Snowden rally outside the U.S. consulate, a CNN reporter spotted her and began asking questions. Poitras declined to answer and slipped away. That evening, she left Hong Kong.
Philippe Lopez/AFP/Getty Images
A protest in Hong Kong in support of Edward Snowden on June 15.
Poitras flew directly to Berlin, where the previous fall she rented an apartment where she could edit her documentary without worrying that the F.B.I. would show up with a search warrant for her hard drives. “There is a filter constantly between the places where I feel I have privacy and don’t,” she said, “and that line is becoming increasingly narrow.” She added: “I’m not stopping what I’m doing, but I have left the country. I literally didn’t feel like I could protect my material in the United States, and this was before I was contacted by Snowden. If you promise someone you’re going to protect them as a source and you know the government is monitoring you or seizing your laptop, you can’t actually physically do it.”
After two weeks in Berlin, Poitras traveled to Rio, where I then met her and Greenwald a few days later. My first stop was the Copacabana hotel, where they were working that day with MacAskill and another visiting reporter from The Guardian, James Ball. Poitras was putting together a new video about Snowden that would be posted in a few days on The Guardian’s Web site. Greenwald, with several Guardian reporters, was working on yet another blockbuster article, this one about Microsoft’s close collaboration with the N.S.A. The room was crowded — there weren’t enough chairs for everyone, so someone was always sitting on the bed or floor. A number of thumb drives were passed back and forth, though I was not told what was on them.
Poitras and Greenwald were worried about Snowden. They hadn’t heard from him since Hong Kong. At the moment, he was stuck in diplomatic limbo in the transit area of Moscow’s Sheremetyevo airport, the most-wanted man on the planet, sought by the U.S. government for espionage. (He would later be granted temporary asylum in Russia.) The video that Poitras was working on, using footage she shot in Hong Kong, would be the first the world had seen of Snowden in a month.
“Now that he’s incommunicado, we don’t know if we’ll even hear from him again,” she said.
“Is he O.K.?” MacAskill asked.
“His lawyer said he’s O.K.,” Greenwald responded.
“But he’s not in direct contact with Snowden,” Poitras said
When Greenwald got home that evening, Snowden contacted him online. Two days later, while she was working at Greenwald’s house, Poitras also heard from him.
It was dusk, and there was loud cawing and hooting coming from the jungle all around. This was mixed with the yapping of five or six dogs as I let myself in the front gate. Through a window, I saw Poitras in the living room, intently working at one of her computers. I let myself in through a screen door, and she glanced up for just a second, then went back to work, completely unperturbed by the cacophony around her. After 10 minutes, she closed the lid of her computer and mumbled an apology about needing to take care of some things.
She showed no emotion and did not mention that she had been in the middle of an encrypted chat with Snowden. At the time, I didn’t press her, but a few days later, after I returned to New York and she returned to Berlin, I asked if that’s what she was doing that evening. She confirmed it, but said she didn’t want to talk about it at the time, because the more she talks about her interactions with Snowden, the more removed she feels from them.
“It’s an incredible emotional experience,” she said, “to be contacted by a complete stranger saying that he was going to risk his life to expose things the public should know. He was putting his life on the line and trusting me with that burden. My experience and relationship to that is something that I want to retain an emotional relation to.” Her connection to him and the material, she said, is what will guide her work. “I am sympathetic to what he sees as the horror of the world [and] what he imagines could come. I want to communicate that with as much resonance as possible. If I were to sit and do endless cable interviews — all those things alienate me from what I need to stay connected to. It’s not just a scoop. It’s someone’s life.”
Poitras and Greenwald are an especially dramatic example of what outsider reporting looks like in 2013. They do not work in a newsroom, and they personally want to be in control of what gets published and when. When The Guardian didn’t move as quickly as they wanted with the first article on Verizon, Greenwald discussed taking it elsewhere, sending an encrypted draft to a colleague at another publication. He also considered creating a Web site on which they would publish everything, which he planned to call NSADisclosures. In the end, The Guardian moved ahead with their articles. But Poitras and Greenwald have created their own publishing network as well, placing articles with other outlets in Germany and Brazil and planning more for the future. They have not shared the full set of documents with anyone.
“We are in partnership with news organizations, but we feel our primary responsibility is to the risk the source took and to the public interest of the information he has provided,” Poitras said. “Further down on the list would be any particular news organization.”
Unlike many reporters at major news outlets, they do not attempt to maintain a facade of political indifference. Greenwald has been outspoken for years; on Twitter, he recently replied to one critic by writing: “You are a complete idiot. You know that, right?” His left political views, combined with his cutting style, have made him unloved among many in the political establishment. His work with Poitras has been castigated as advocacy that harms national security. “I read intelligence carefully,” said Senator Dianne Feinstein, chairwoman of the Senate Intelligence Committee, shortly after the first Snowden articles appeared. “I know that people are trying to get us. . . . This is the reason the F.B.I. now has 10,000 people doing intelligence on counterterrorism. . . . It’s to ferret this out before it happens. It’s called protecting America.”
Poitras, while not nearly as confrontational as Greenwald, disagrees with the suggestion that their work amounts to advocacy by partisan reporters. “Yes, I have opinions,” she told me. “Do I think the surveillance state is out of control? Yes, I do. This is scary, and people should be scared. A shadow and secret government has grown and grown, all in the name of national security and without the oversight or national debate that one would think a democracy would have. It’s not advocacy. We have documents that substantiate it.”
Poitras possesses a new skill set that is particularly vital — and far from the journalistic norm — in an era of pervasive government spying: she knows, as well as any computer-security expert, how to protect against surveillance. As Snowden mentioned, “In the wake of this year’s disclosure, it should be clear that unencrypted journalist-source communication is unforgivably reckless.” A new generation of sources, like Snowden or Pfc. Bradley Manning, has access to not just a few secrets but thousands of them, because of their ability to scrape classified networks. They do not necessarily live in and operate through the established Washington networks — Snowden was in Hawaii, and Manning sent hundreds of thousands of documents to WikiLeaks from a base in Iraq. And they share their secrets not with the largest media outlets or reporters but with the ones who share their political outlook and have the know-how to receive the leaks undetected.
In our encrypted chat, Snowden explained why he went to Poitras with his secrets: “Laura and Glenn are among the few who reported fearlessly on controversial topics throughout this period, even in the face of withering personal criticism, [which] resulted in Laura specifically becoming targeted by the very programs involved in the recent disclosures. She had demonstrated the courage, personal experience and skill needed to handle what is probably the most dangerous assignment any journalist can be given — reporting on the secret misdeeds of the most powerful government in the world — making her an obvious choice.”
Snowden’s revelations are now the center of Poitras’s surveillance documentary, but Poitras also finds herself in a strange, looking-glass dynamic, because she cannot avoid being a character in her own film. She did not appear in or narrate her previous films, and she says that probably won’t change with this one, but she realizes that she has to be represented in some way, and is struggling with how to do that.
She is also assessing her legal vulnerability. Poitras and Greenwald are not facing any charges, at least not yet. They do not plan to stay away from America forever, but they have no immediate plans to return. One member of Congress has already likened what they’ve done to a form of treason, and they are well aware of the Obama administration’s unprecedented pursuit of not just leakers but of journalists who receive the leaks. While I was with them, they talked about the possibility of returning. Greenwald said that the government would be unwise to arrest them, because of the bad publicity it would create. It also wouldn’t stop the flow of information.
He mentioned this while we were in a taxi heading back to his house. It was dark outside, the end of a long day. Greenwald asked Poitras, “Since it all began, have you had a non-N.S.A. day?”
“What’s that?” she replied.
“I think we need one,” Greenwald said. “Not that we’re going to take one.”
Poitras talked about getting back to yoga again. Greenwald said he was going to resume playing tennis regularly. “I’m willing to get old for this thing,” he said, “but I’m not willing to get fat.”
Their discussion turned to the question of coming back to the United States. Greenwald said, half-jokingly, that if he was arrested, WikiLeaks would become the new traffic cop for publishing N.S.A. documents. “I would just say: ‘O.K., let me introduce you to my friend Julian Assange, who’s going to take my place. Have fun dealing with him.’ ”
Poitras prodded him: “So you’re going back to the States?”
He laughed and pointed out that unfortunately, the government does not always take the smartest course of action. “If they were smart,” he said, “I would do it.”
Poitras smiled, even though it’s a difficult subject for her. She is not as expansive or carefree as Greenwald, which adds to their odd-couple chemistry. She is concerned about their physical safety. She is also, of course, worried about surveillance. “Geolocation is the thing,” she said. “I want to keep as much off the grid as I can. I’m not going to make it easy for them. If they want to follow me, they are going to have to do that. I am not going to ping into any G.P.S. My location matters to me. It matters to me in a new way that I didn’t feel before.”
There are lots of people angry with them and lots of governments, as well as private entities, that would not mind taking possession of the thousands of N.S.A. documents they still control. They have published only a handful — a top-secret, headline-grabbing, Congressional-hearing-inciting handful — and seem unlikely to publish everything, in the style of WikiLeaks. They are holding onto more secrets than they are exposing, at least for now.
“We have this window into this world, and we’re still trying to understand it,” Poitras said in one of our last conversations. “We’re not trying to keep it a secret, but piece the puzzle together. That’s a project that is going to take time. Our intention is to release what’s in the public interest but also to try to get a handle on what this world is, and then try to communicate that.”
The deepest paradox, of course, is that their effort to understand and expose government surveillance may have condemned them to a lifetime of it.
“Our lives will never be the same,” Poitras said. “I don’t know if I’ll ever be able to live someplace and feel like I have my privacy. That might be just completely gone.”
Peter Maass is an investigative reporter working on a book about surveillance and privacy.
Editor: Joel Lovell