Authors@Google: Loretta Napoleoni - Rogue Economics

>>presenter: Hello, everybody. Hi. Thanks for joining us today. I'm really, really pleased
to introduce to you Loretta Napoleoni in today. Loretta is a writer, journalist, and economist.
She is the leading expert on the relation between our economies and terror, and that's
what she's going to discuss with us today. We will have 30 minutes of discussion and
then another 30 minutes for Q & A. I believe we have--
[Loretta coughs]
a lot to learn from Loretta's, from this session today and from her book. So, I hope you and
Loretta as well, will enjoy the session. So, join me in welcoming her and thank you.
[applause]
>>Loretta: Well, thank you very much for being here today. So, what I'm going to do is tell
you a story and through the story, I will show you how terrorism and the economy are
actually intertwined. In particular, what I want to put forward to you is how the War
on Terror, which was launched by George Bush after 9/11, has caused the credit crunch,
the recession, and all the tribulations of the current economy.
And finally, at the end of the speech we'll have a look at the future. And the danger
is that the consequences of this War on Terror may actually be much more serious than the
crisis we have witnessed until today.
Now, why I told you, "I'll tell you a story," is because I think in order for you to understand
what is the economics of terrorism, I have to start from the beginning. Otherwise, you
won't understand how this economy actually has developed.
And I will tell you my personal story because it is happened to me, about 15 years ago,
to stumble in to the economics of terrorism. It's not something that I wanted to discover
or it was something that I was working on. In fact, at the time, I was working as a banker
in the city of London.
So, it all happened about 15 years ago, I got a phone call from a friend who was looking
after the rights of political prisoners in Italy. In particular, we're talking about
the Red Brigades. The Red Brigades was the armed organization which was particularly
strong in Italy from the 60s to the 80s. It was a Marxist organization and--
[clears throat]
one of their characteristics was not to talk to anybody, including the lawyers. So, they
sat through the trials without saying one single word.
So, it was a bit of mystery how the Red Brigades came about, how they were organized. So, in
1992, they declared the end of the armed struggle, and they decided that they would tell the
story of how the organization was formed to a group of people. And they made a list of
people and I was one of the people on the list.
Now, you'll be surprised, as I was surprised myself. But the reason why I ended up on that
list is because my childhood friend became a leader of the Red Brigades. So, she was
arrested in 1978, I discovered, by opening the newspaper. And there was her picture.
I didn't know anything. She had never actually spoke to me about her political conviction
and to me, she was a perfectly normal individual. And yet, she was one of the leaders of the
Red Brigades.
So, I stayed in touch with her, but we never spoke about politics at all because she was
one of the unrepentant members of the organization, so she was bound to silence. Anyway, in 1992,
when they decided that the armed struggle had finished, she put my name forward. And
a group of female members of the Red Brigade actually backed my name as potential person
to talk to because they met me at the time I was a leader of the Italian Feminist Movement.
Of course, I didn't know that they were members of the Red Brigades. This is the life we lived
in the 1970s in Italy; your best friend being a terrorist and you didn't know.
[chuckles from audience]
Anyway, so, now this proposal came at a very difficult time of my life because I just head
a management buyout of the company I worked with so, I was very busy at the time. Plus,
I just had a baby so that was the last thing I wanted to do was to go back to Italy and
tour all the high-security prisons, meeting people I haven't seen since the 1970s.
But, in the end, I actually decided to do it. And the reason why I did it, is because
I wanted to know why my best friend from the age of six, had never tried to recruit me.
Why she actually never asked me to become a member of the Red Brigades. Now, you'll
be surprised again, but the truth is that, at that time, the way the organization worked
was to recruit people primarily among member of the family and best friends. So, why not
me?
So, I went back, and I learned very, very quickly why I was not recruited. I actually
had failed the psychological profile of a terrorist. So, there's a group of people who
decide if you are the right person to be recruited or not. So, it came out that I was too single-minded
and too opinionated to make a good soldier, which is true.
So, but it was at that point that I realized that perhaps, terrorism, it was something
totally different from what I had read in newspapers, or what we actually had discussed
in the 1970s.
So, I got more and more in to investigating why they recruit people and once they recruit
people, what do these people actually do? And what I discovered is that, in reality,
a terrorist organization is run like an army. There's a very small group of people -- the
leaders -- that actually run the show; all the others follow orders. And these orders
are always based upon searching for money.
So, what the average terrorist does, all day long, is find money in order to fund the organization.
There's no discussion about ideology. There's no discussion about politics because once
you get in, you're already indoctrinated.
So, when I was asking members of the Red Brigades why they decided to fight against the state
in a certain way, they actually didn't really know how to answer me because they had no
idea. I mean, of course, the leaders is a different thing, but the people that actually
did carried out attacks on a daily basis, they had no idea. Once I start asking them,
"Well, tell me how did how did you manage to get the money? How did you fund the organization?"
then they were really happy to talk to me. So, some of the stories were amazing. For
example, there was one guy who was a psychiatrist; he was a part-timer. The Red Brigades had--
[bird chirps]
500 full-timers at any time and then they had about 2,000 part-timers. So, the people
who basically did carried out a normal life, and then they helped the Red Brigades on the
side. So, he loved sailing. He had a beautiful sailing boat. So, what he did in the summer
was to sail back and forth from Italy to Lebanon, pick up the weapons from the PLO, which, of
course, came from the Soviets, carried back the weapons in Sardinia, and then various
organizations, for example, ETA or the IRA, will come and pick up their share of these
weapons.
And for this service, the Red Brigades received a fee. So, he was very happy to tell me that
because he thought it was a great idea. Plus, he was having a great time sailing. So, this
is where I thought, "Well, maybe there is something more to terrorism than ideology.
Maybe, well, what I really need to investigate is the economics of terrorism."
So, the idea to actually do a research in this field came after I had lunch with Mario
Moretti. Mario Moretti was the leader of the Red Brigades when Aldo Moro, the former Prime
Minister of Italy, was kidnapped. He was actually the guy who executed him.
So, I had lunch with him in one of these high-security prisons. And while I was talking to him, I
know it's, but this is why I want to tell you this story because it's an amazing story.
So, while I was having lunch with him, I had the distinct feeling that I was back in the
City of London having lunch with a banker.
This guy spoke the language of finance so well. And the way he expressed himself, he
was a true manager. And he was explaining to me how he was managing his company, which
happened to be called the Red Brigades.
So, this is where I thought, "Well, that's it. This is what I should be doing." I'm an
economist. I mean I'm trained in the economic terms. I worked a long time in the City, so
this is when I began my investigation. And I must tell you it was very difficult to find
anybody to fund my research until 9/11 because everybody thought I was completely insane
to talk about the economics of terrorism.
So, I funded myself and I did the right thing. So, what did I discover? Well, I discovered
that since World War II an economic system has been created by armed organizations. And
this economic system has gone through three major evolutionary stages.
The first one is the state sponsor of terrorism, the second one is the privatization of terrorism,
and the third one is the globalization of terrorism. So, to a certain extent, this economy
has been following the evolution of the international economy and eventually of the globalized economy.
So, what is the state sponsor of terrorism? Well, this is when the two superpowers were
fighting a war by proxy using fully funded armed organizations at the fringes of the
sphere of influence that they controlled. So, we're talking about the Soviet Union on
one side and the United States on the other side.
So, what was the modality? Well, basically these armed organizations were funded with
legal and illegal activities. And I think the best example, of course, is the Contras
in Nicaragua. So, we have the US Congress, who actually funded a certain amount of money
to support what were considered "freedom fighters." And then because this money were not enough,
we have the Reagan Administration launch a series of covert operations in order to fund
them.
So, that's the mix that we're basically going to find. So, another interesting characteristic
of this stage is the fact that these groups, these armed organizations, did not fight their
own wars, but they fought this war by proxy. So, they basically fought whatever the superpower,
the sponsor, wanted them to fight. This situation changed at end of the 70s, beginning of the
80s, when terrorism was privatized.
And the guy who actually did the first privatization was Arafat. So, he managed to gain independence
from his sponsor by setting up the same kind of system; so, a mix of legal and illegal
activities, but controlled by his organization -- so, by the PLO. Now, and the results were
fantastic.
I mean, we see that, for example, there are some documents coming from the CIA where they
list that the amount of money that actually are produced on a daily basis by the PLO,
and it's higher than the GDP of some of the small Arab countries. So, they actually did
very, very well.
So, this is the phase of the privatization of terrorism.
Another example, nearer to London, for example, is the IRA. IRA did the same thing. So, we,
so that the IRA controlled all the transportation, private transportation system, in Northern
Ireland. So, every time somebody got into a taxi in Belfast, without knowing, was actually
funding the IRA. The Orange, were, in the construction business, so every time somebody
actually remodeled his flat in Northern Ireland, in reality, was funding the Orange group.
So, this is how much terrorist organizations managed to penetrate the legal economy, the
everyday economy.
So, the last evolutionary stage is, is the one that we know better which is, of course,
the globalization of terrorism because this is the one that created an organization like
Al-Qaeda. Now that happened in the 1990 with the deregulation of the international financial
system. All the barriers came down, so countries, I mean, armed organizations, were able to
link up with each other in a much better way than the one I just described to you about
sharing arms.
So, they started to do business with each other but also, they started to do business
together with criminal organizations. They money launder, the dirty profits, through
the same channels. So, we see the birth of a new international economic system. Now,
Al-Queada is very much the stereotype of this new phase because it is an organization which
was able to fund itself cross-border. So, the portfolio of somebody like Osama bin Laden
was an international portfolio.
But, so was the portfolio of Arafat, but the difference is, of course, Arafat was focused
on one single part of the world, which was, of course, Lebanon and Palestine, while Osama
bin Laden was actually looking at the global world. So, in other words, 9/11 was a transnational
attack, which was funded in different parts of the world. It was put together; it was
planned in one part of the world, Afghanistan, and was carried out in a different country,
in the United States. Now, we have never seen anything like that. So, that is the, the product
of this globalization of terrorism.
So, what I did before 9/11, I actually calculated the size of this economy. So, this is an economy
where we find three main components. So, the first components is the illegal economy, which
is described as "capital flights." This is a jargon to describe money they move from
countries to countries, undetected, unreported, and illegally. So, bribes, which go from one
country to another, but also tax evasion gets calculated into this. So, and this is 500
billion dollars. Then there is, there is the Gross Criminal Product. This is money generated
by, by criminal organizations across the world.
So, we have from petty crime to organized crime, which is another 500 billion dollars.
And then we have what I have defined as the "new economy of terrorism." So, these are
money that are generated only by armed organization. And one part is, of course, illegal, but one
part, which is about one-third, is actually produced by legitimate businesses.
So, people that are part of an armed organization who fund this organization through help from
families, for example, but also, through work that they carried out. And I think a good
example of this is the attack that was carried out on July 7th in London, where most of the
funding was legitimate. People had either worked or used their salaries or used help
from their friends. So, there was not criminal money coming in in order to fund this attack.
So, in total, we're talking about 1.5 trillion dollars, which is about five percent of the
world economy as it was in the year 2000, or more than the GDP of the United Kingdom.
So, we're talking about a lot of money.
Now, what was interesting, actually, is that when I went to look at where did this money
get recycled because most of this money is dirty money, so one way or another, it has
to be washed somewhere. So, what I found out, that the majority of this money was denominated
in US Dollar, and it was actually money laundered inside the United States. So, this has very
serious implications in economic terms.
I'll try to explain to you if you don't understand in the question/answer, you can ask me. But,
what's happened is this; imagine all this 1.5 trillion dollars moving every year inside
the United States. Now, this goes straight into the US economy, so it actually sustains
the US economy. But more to the point, because it sustains the US economy, so it helps the
US economy to grow, it has an impact upon the US money supply.
The US money supply is the amount of cash that every year is printed by the Federal
Reserve in order to meet the demand coming from the economy. So, the higher the growth
of the economy, the higher will be the number of bank notes that the Federal Reserve will
print. So, I went to look at the US money supply to see what was happening because,
of course, what I thought is, "If this money come in and have to be money laundered, one
way or another, some of this money have to come out in order to go back to the origin."
So, imagine a Columbian drug dealer, he wants his money back; he wants his profit. He's
not going to invest all the money in the US. Part of it has to come back and then with
those money, of course, he will buy weapons. So, with those money, he will sustain the
growth of the illegal, terror, and criminal economy -- our 1.5 trillion dollars.
So, I went to look at the US money supply figure and what I noticed is that from the
1960s onwards, an increasing amount of cash, which is printed every year, left the United
States, never to come back. Now, these are money that are taken out of the US in suitcases
or bulk shipments or in containers. And I discover that many economists from the Federal
Reserve's had written extensively on the topic warning the government that something was
majorly wrong. Where are all this money going? And, of course, this money went to fund the
terror, criminal, and illegal economy. So, this is, this is how the circle of money actually
gets closed.
But what is very interesting is the fact that the United States, as a country, was benefiting
from this flow of money. Not only because the money was coming in to be money launder,
but above all, because the United States can borrow against the total amount of dollars
in circulation in the entire world. Not only against the amount of dollars in circulation
inside the United States. And this is because the US is the reserve, I mean; the dollar
is the reserve currency of the world.
This privilege in economics is called the seigniorage. So, the country that has the
reserve currency can borrow against the total volume of dollar. So, this is explain why
the United States can have a debt, which is enormous in terms of any other nation, but
it is allowed because the US has the dollar. So you see how important is the dollar for
the US? So, what this research implies is the fact that, in reality, the United States
had been borrowing against the growth of the illegal, criminal, and above all, terror economy.
So, it was actually borrowing against its own, the growth of the economy run by its
own enemies. So, --
[clears throat]
this was quite shocking. And, but the situation changed with the introduction of the Patriot
Act. See, after 9/11, if you remember in October 2001, the US passed a legislation which was
called the Patriot Act that reduces greatly the rights of citizens inside the US in order
to protect them against terrorists. But, there's a section, which is a financial section. In
this financial section, --
[microphone noise]
what the, the government actually posts is a prohibition to all US bank and US registered
banks to do business with offshore facilities -- so, offshore banks. That means that it
block the entry of all this dollars into the United States. So, it was, in reality, an
anti-money laundering legislation.
At the same time, it also gave the US more entirely authority -- the power to monitor
all dollar transaction taking place all over the world. Now, the Patriot Act completely
changed the way money flowed from one country to another country.
And, and I'll explain you why. It was first of all, extremely unpopular among international
banks because nobody wants the US authority to monitor what you're doing with your client.
It, plus, of course, according to the Patriot Act, if a bank failed to report of a suspicious
transactions taking place anywhere in the world in dollars, it could be criminally persecuted.
Now, you may remember that there are several banks, for example, Lloyds and UBS, were actually
have been fined by the US authority on the basis of the Patriot Act. So, what did the
banks actually do? The banks started to advise their clients to get out of the dollar investment
into euro investment. And that explain why all of a sudden, from October 2001 the euro
start shooting up and the dollar start falling. Now, the same thing, of course, happened with
illegal and criminal money. The criminal organization did exactly the same thing. They said, "Ok,
we can't money launder anymore in the US. Well, you know, let's go to Europe."
And then Europe was an ideal location because we just got a new currency, the euro, which,
so, the, the, the way the European euro was functioning was ideal. There were no barriers,
they were not controlled from one country to another, the market was large enough, the
euro was a brand new currency. And above all, we did not have any legislation, any an, anti-money
laundering legislation or, or any legislation similar to the Patriot Act.
So, each country had different legislation, but they were very weak. So, in reality, the
Patriot Act, instead of stopping terror money being cir-, circulating around the world,
but also money laundering, it simply shifted the epicenter of this activity from the United
States to Europe. Now, but, at the same time, terrorism kept growing, in reality, from 9/11
to date. We have frozen only 125 million dollars of terror money. The majority of this money
have been frozen in the first six months after 9/11.
Now, in 2005, I chaired this group of experts on terrorist financing and we worked for six
months, basically tracking the money in order to find a solution to the problem. And what
we did, we actually put forward a proposal whereby the, the Patriot Act was gonna be
scrapped. A start of an international body was gonna be created in order to monitor the
transaction of different currencies, not only of the dollar.
To bring about a sort of cohesive international policy, in order to fight terrorist financing,
and the Bush Administration, of course, who which was in power at the time, did not even
take into consideration even one of this suggestions. So, it was, to a certain extent, a waste of
time. But, but the problem remained because the Patriot Act is still in place.
Terrorists, as you know, has not stopped. On the contrary, actually, the terrorist activity
around the world has increased, and the unit cost of a terrorist attack today is much lower
than it was in 2001. Now, if you think about the, just executing 9/11 costs about half
a million dollars, the attacked took place a few days ago in the tube in Moscow probably
costs a fraction, an in, a very small fraction of that amount. So, we are still facing this
problem.
Now, the reason why all of this is happening is because the Bush Administration reaction
to 9/11 was very much single-minded. It was also unilateral reaction, so the United States
decided to pass the Patriot Act, did not consult anybody, they did not talk to the Europeans,
who actually had the much better understanding of terrorism and its finances.
But the reason why all of this happened is because, in reality, the, what the Bush Administration
really wanted to do was not so much bring Osama bin Laden to justice or stop terrorist
financing, as much as implement a plan which was a plan to relaunch the role of America
within the international community as the most important and hegemonic power.
Now, all of this is contained in the Project for the New American Century, is, is a blueprint
of the vision of the future of the neoconservative, which was created under the supervision of
Dick Cheney. Among this project, we find one key point, which was the decision to go into
Iraq to bring about a regime change at any possible cost.
[clears throat]
So, 9/11 became a sort of opportunity to carry out this kind of policy. And therefore, in
2003, we actually went to war in Iraq on the basis of false information. Now, what I wanted
to reflect now, and this is what links this story to the present is how did the US actually
funded this kind of war and very, very strong economic effort? As I told you before, the
money laundering was not any more, any longer in circulation inside the US economy.
The truth is the funding took place by selling government bonds in the international markets.
So, basically, getting into debt. And I remind you that Bush came to power in 2000, we doubt
about the deficit claim, on the contrary, Clinton left a very small surplus. So, the,
the best way to sell government bonds on the international market and be competitive is
to cut interest rate. If you cut interest rate, the value of the bond rises. Now, from
9/11 to the summer of 2003, when they thought that the war in Iraq was basically finished,
interest rates in the United States goes from six percent to 1.2 percent.
This is the time in which we find also, the bubble of the subprime taking place and inflating
beyond any imagination. This is the time in which banks, because they had the interest
rate basically coming down continuously, started to give free credit to everybody, including
to people who actually could not afford to, to get it. So, that's the link we find between
terrorism on one side, and the current crisis. In reality, the, the bubble burst because
the system had been based upon a constant diet of low interest rates, and this is when
the world economy was actually overeating.
This is a, took place at a time in which, actually, interest rates should be increased
instead of decreased. Now, so the, the credit crunch very much is related to the fact the
United States needed desperately to place this kind of debt, in or-, we're talking about
four trillion dollars. This is the debt accumulated during the Bush Administration from 2001 to,
to basically the day he left the White House. But then what is the relationship between
this kind of debt and what is happening today? I mean, today we see that the relationship
between the United States and China is getting tougher and tougher.
This is quite risky for the world economy because we are on very shaky ground. The reason
why we haven't gone into a major depression is because one country, China, has continued
to grow and has continued to supply us with cheap products. And the reason why this relationship,
at the moment, is shaky is based upon the fact that the country that bankrolled this
four trillion dollars needed by the US to fight this war, is actually China. China bought,
up to 2009, up to 75 percent of the issue of treasury bonds of the United States. In
2010, it's gone down to five percent. So, the US is actually funding its debt either
domestically or through other countries -- Japan being one.
The tension between the two countries is based upon, as you read in the newspaper, it's based
upon the willingness of the US to do anything to force China to unpeg its currency to the
dollar. Because, of course, the Chinese do, have pegged the currency to the US dollars
in order to defend the kind of debt they have accumulated.
So, imagine if the renminbi appreciates and the dollar depreciates all those four trillion
that the Chinese actually have, will lose in terms of value. It's very easy to understand
that. But, at the same time, of course, pegging the renminbi to the dollar allows the Chinese
to comp-, to continue to be competitive with their products on the international market.
While the US dollar, of course, coming down as been very, very good for the US exports.
In fact, the trade balance is positive when the trade balance was actually negative in
2005 and 2006.
So, the policy of the US, at the moment, is the policy of a country, which is really in
a big, big trouble and it's desperately trying to solve its economic troubles by imposing
certain kinds of condition to other countries. And these other countries, because today,
as China is the case, because today are much, much stronger than they were in the past,
are basically saying no.
Now, this is very serious. Meaning, if we go down the road of protectionism, which is
exactly what is happening, and it's not only the United States, it's also -- Europe is
doing the same thing, in order to defend their own, our own products from the cheap Chinese
products. And if the Chinese retaliate, as they've done, and I think the Google story
is very interesting, because it's taking place in a particular moment in which the relationship
between China and the United States are at a very low point.
I mean, the Chinese, I just came back from China, I was there for three weeks, the Chinese
are trying to impose harder and harder condition to western business in order to do business
in China as a sort of retaliation for what is happening in the United States. So, it's
a very delicate, very delicate situation.
So, to conclude, I think that if we go down the protectionist route, if this relationship
between China and the US, which are vital for our economy, actually fall apart, we may
risk to end up in a situation very similar to the Great Depression. The Great Depression,
in reality, was not caused by the crash of '29. It was actually caused by the protectionism,
which was applied after the crash of '29. Now, we if go down that road, the truth is
that Osama bin Laden will have won this war because the reason why 9/11 took place is
to destroy the power of the United States, not only in economic terms but also in political
terms to destroy that role, that symbol, that the United States always had of democracy
and freedom.
And if we go down the protectionist route, I am afraid that this is what is going to
happen. And I don't think we should let this happening at all. I mean, we should do something
about that because otherwise, we would live in a world that will not be the one we know
as being reshaped by an individual, Osama bin Laden, and a bunch of religious fanatics;
you know the terrorists. Well, thank you.
[applause]
>>presenter: You willing to take some questions?
[pause]
>>male #1: Thanks, that was really interesting. Just a question about, so, you ended the note
saying that we should really do something about this. How do you balance, well, the
internal pressures coming from the United States from the different lobbies to protect
their production within that, with the need, and for the United States to get better relationships
with China? Also, you've given the fact that the United States is, it's a government which
is, I can't, what, the electorates and they have their own pressures, whereas the Chinese
can really afford to take much longer term--
[clears throat]
much longer term positions on that policy.
>>Loretta: Well, I, I think that an organization like Google, for example, can do a lot because
you, you're on, you're on the Net. I mean, I believe that most of the true information
actually circulating on the Net is not through the newspapers anymore; people should be educated.
Now, the story I told you, it is quite complex, but it's not very difficult to understand
and yet, I haven't read the story like this in any newspapers. I mean -- nobody is linking
this, this phenomena. But the truth is that you can link it using data and using economic
information.
For the US, I'm afraid that Obama has very good intention, but the people who are advising
him are the same people that in the 1990s did the deregulation. So, the, we need a major
change of also of advisor -- a new vision of the economy.
And the truth is that the US should accept the fact that perhaps it's not any longer
the most important economy and take some steps. One could be to reorganize the monetary system.
I mean the dollar can't be the currency of the world anymore. We can't have a reserve
currency, a currency, that depreciates regularly, month after month after month.
I mean, people that hold that, that currency in the end, you know this is why gold has
gone up so much. I mean, a lot of people, in fact, are buying gold in order to protect
themself because the dollar is coming down. The euro is doing the same thing. So, I mean,
it's quite serious situation, so I would think that the best thing would be to get economies
together and politicians in order to have a new Bretton Woods whereby China plays a
very important role. But I don't see this happening. I mean there's not that willingness
exactly as in the 19, the 1929 crisis.
[pause]
>>male #2: Thank you very much for coming, it's very interesting. One question on terrorism
because you mentioned the, the cost of carrying out 9/11 and then the cost of, the relative
cost with carrying out the bomb attacks in Moscow. I'm always surprised, too, when these
news come that actually this is not happening more often, and I wanted to ask you w-, w-,
do you know why that isn't? If I were a, a, a terrorist I would be doing things like that
every week. And I--
[laughter]
I think they have, they have the means and they definitely have resources and the people--
>>Loretta: Now, that's a very good question.
>>male #2: to do this.
>>Loretta: Well, I mean, something like this happens every day in certain countries. Pakistan,
for example, Afghanistan, Iraq, so what we're seeing after 9/11 is the concentration of
terrorist activity in a part of the world which, of course, there was not terrorists
before. So it's ok, but Central Asia and then, of course, the Middle East where we have terrorists
for
[clears throat]
decades. But the reason why they're not doing so much is because they're not very good at
it. So, the organization I described you, the Red Brigades, doesn't exist anymore. I
mean, today the model of a terrorist organization is very, very different. So, it's a virtual
kind of terrorism. A lot of these people get recruited through the Net, they actually don't
go through a proper training, they don't go through the selection that I was rejected
to, right? So, they are amateurs.
I mean, think about that guy, for example, that the, the, what was it? The 26th of December
was lighting a match on a plane, sitting next to three other people in order to blow the
explosives that was in his shoes. Why didn't he go to the toilet to do it? I mean, you
know this is; I know this seems very logical to us, but a lot of these people are fanatics.
A lot of these people are not very smart. That's why they get recruited and this is
why they get indoctrinated.
>>male #2: Actually, there's a big correlation between fanatism and just plain stupidity.
>>Loretta: There is. Absolutely. I mean, to be honest, I, of all the people I've interviewed,
I mean I also interviewed members of the al Zarqawi group for another book I wrote and,
and most of them, to me, sounded not very, very smart. But, then you get the leaders
who are really smart but yes, who would become a terrorist? I mean, terr-, it doesn't really
make sense. Yeah, I, does it make sense to become a terrorist? Have you ever seen a terrorist
actually succeeded in doing something? Yes, you, you have a situation like Fidel Castro,
but it's a completely different context. Anybody there today thinks that can bring down the
United States or the United Kingdom by blowing himself up in a tube; it's stupid. It's not
gonna happen.
[pause]
>>male #3: Just following that train of thought, did you find more about why your friend joined
the Red Brigade?
>>Loretta: Oh, yes. My friend joined the Red Brigades because she actually thought that
Italy was a block democracy, which is true, I mean we have the same government for 35
years, and today we'll continue to have the same government for another 35 years. Only
the name of the leaders changed.
And she thought that the only way to unblock the, the democracy was through the armed struggle.
But she was recruited by her boyfriend, and apparently she was targeted by this guy. So,
this guy was trained in order to seduce her, to recruit her, because she worked at the
Ministry of Defense, and she was the person in charge of the route that every day a group
of key politician took in order to go to work from home. And you know she got 35 years in
jail for that. How stupid can you be?
[pause]
>>male #4: You mentioned the three stages of terrorism: state sponsor, privatization,
and globalization. Can you try and have a guess at what's, what the next one will be?
>>Loretta:
[laughs]
Well, I think what is happening now actually, is a sort of privatization within the globalization.
These small groups, I mean, for example, the, again, going back to the Moscow attack which
is the most recent. Apparently, those two women had been recruited through the Internet.
They received very, very basic training, and they self-funded themself.
So, I would say that this is a sort of privatization model, again. The same thing is the Ju-, the
July 5th here, July 7th.
They also, the Madrid attack, to a certain extent, was the same. I mean, the idea that
terrorist organization are funded as it was in the 1980s and 1970s by sponsor is actually
not what is taking place, especially in the west. Now, we do find some groups in Iraq
which receive money from Saudi Arabia. For sure, we have sponsor that are sending money
in Pakistan and Afghanistan, but these are different kind of terrorism, I would say.
These are actually borderline with separatist kind of fighting with the civil war, because
this is clearly the situation in Iraq.
But, talking about the kind of model that is supplied in our country so, in the West,
I would say that we have a sort of privatization within the globalization. And it's cheap because
you know people get very scared. But y-, y-, you know, the Moscow bombing was on the front
page of every single newspapers and for 24 hours, it was the most important news.
And, so, this is the impac-, impact of 9/11 you know because 9/11 was such a tremendous
event that got stuck in our subconscious. So now each time something similar happen,
you relive that kind of terrorist mastermind attack, which, of course, is not the case.
But and the government, of course, help a lot because instead of rationalizing, instead
of saying no, in reality, as we've said before, that these guys, in reality, are not doing
it very often.
So, either they're not good, or we are very good, but one way or another we're winning
on this front. The governments use this terrorist threat in order to scare us because they have
learned by scaring us, they are able to make us accept certain kind of policy that we would
never accept otherwise.
[pause]
>>presenter: More questions?
[pause]
>>female #1: Yes, I was wondering, as we mentioned, that you, that you rose a daughter and so
on, what's your opinion on the role of, of the UK? Also, taking into account that there's
an election coming.
>>Loretta: Within terrorist, maybe?
>>female #1: Yeah, and economy. What do you think of the UK economy situation?
>>Loretta: Well, the UK economy-
[laughs]
is in very bad shape.
[audience laughs]
>>Loretta: That's for sure. Well, I, I, I think it would be interesting to watch the
campaign in the next weeks because, you see, to a certain extent both parties they have
to justify the presence in Iraq. And this is going to be a key issue. Although, the
justification is very much on ideological terms.
We are, you know, protecting freedom and democracy and whatever, not in economic terms. But,
one thing is sure and the public opinion now knows that the reason why we have so many
casualties it is because the UK soldiers did not wear the protective equipment that the
Americans have. And the reason why they didn't want to wear the equipment until recently
is because they were underfunded. They were underfunded also in terms of weapons; they
were underfunded in terms of equipment, helicopters.
So, it'd be interesting to see how this particular aspect of the war, because running a war for
a long time is extremely expensive, and even if this war is only fought by professionals,
the war is very expensive. So, i-, in a moment like this, where we have major recession taking
place in which the UK economy is not really taking off, I would say that none of the economies
is taking off, because the data that came out yesterday about Germany also are extremely,
extremely negative. There's a very high number of small to middle size companies in Germany,
which actually have closed in the last six months. Because there is not sufficient credit
to sustain them, so I would think that something like that, the justification of a war that
is so expensive and we're not winning.
Plus, a war that was, that was born out of a pack of lies should be on the table in the
electoral campaign. But, I doubt it, it's any of the two parties; I'm talking about
the Conservative of course, and Labor, won't touch that topic because if they do, it may
turn out to be the Pandora Box. But, backfire.
>>male #5: The US is out of Iraq, I mean UK.
>>Loretta: Sorry?
>>male #5: The UK is out of Iraq.
>>Loretta: No, it's not.
>>male #5: Mostly out.
>>Loretta: No, no, no, no, no.
>>male #5: But they're not in combat actually. [laughter]
>>Loretta: Yes, they are. They are in combat. I, I can guarantee you. Y-y-y, you can use,
see the bodies coming. I mean -- these guys are in combat. I mean--
>>male #5: You're talking about the war in Afghanistan.
>>Loretta: No, no, no. I'm talking about Iraq. The UK is at war and it's shoulder to shoulder
with the US. It's the second largest contingent after the US.
[pause]
I promise you, unfortunately.
>>presenter: Ok, we've got another question here.
>>female #2: Well, first of all, thank you very much and I feel that it would be great
if more people were aware of what you just explained to all of us here today. I would
like to know your opinion about the role that the media is playing in this war of terror.
You've talked about the changes that you would like to see happening in the economy. Today,
the media have succeeded in, in giving us lunatic reasons behind the war of terror,
one of them being religion, of course. What would be the major changes that we need in
our media landscape for this to maybe change?
>>Loretta: I think the media is very much responsible for this failure to communicate
to the world really what is happening. But, in all fairness, I think that in certain countries,
the situation is better than other countries. I mean, clearly, if you talk about a country
like Italy, the media is controlled. So, yeah, it's very much, you can say.
But, in this country, the media is less controlled. And I think one of the main problem is the
fact that today journalist has to work much more than he did in the past so he has less
time to do a proper research and on top of that, the spinning, because you know this
is all linked to spinning, the spinning came at the moment in which journalists were desperate
in order to fulfill all the different tasks that they have to do on a daily basis.
The 24-hour media, for example, so, in all fairness, I don't think the media, particularly
in this country, but also would say in the US, has done purposely a bad job. I think
the media was just ill-equipped to do the job properly, and continues to be so. Because
to do this kind of research, I mean, I told you, I mean I started my story 15 years ago
in 1993, basically. So, it takes a long time to understand the intricacy of the system
also.
>>female #2: Isn't that a media choice at the end?
>>Loretta: Well, I don't think it's a choi-, I mean, I think if you are employed, I mean,
if you're employed by The Observer today, for example, The Observer they say it may
close, but it used to be a very good paper. But if you're employed The Observer and you,
the only way to keep your job because you, there are no money is to write instead of
one really good article every two weeks with a serious research, but 15 mediocre articles,
what are you going to do? I mean you will do the mediocre.
And if somebody like Alastair Campbell calls you and invites you to a nice breakfast and
spins you, you know, you gonna take those news and you gonna print it. So, it's the
problem is the system. The problem is, I think, that the printed media is disappearing. Something
new is coming out, which is on the Net, and we are in this transition and unfortunately,
these horrible events took place during this transition.
And people believed, see everybody believed what, what the, the leader told. I mean, who
would've thought that Colin Powell, when he went to the Security Council in February 2003,
actually said one lie after another. I mean--
>>male #6: That was in the newspaper. The same thing, that it was all lies.
>>Loretta: Was it?
>>male #6: Yeah. The UK--
>>Loretta: Well
>>male #6: The UK has left Iraq, by the way.
>>Loretta: Sorry?
>>male #6: The UK has left Iraq. I tried to Google it, gone to Wikipedia, whatever.
[audience laughs]
>>Loretta: The UK has left Iraq?
>>male #6: Yes.
>>Loretta: Well, maybe Wikipedia has been hacked by the Chinese also, yeah?
[audience laughs]
Every is possible. Every is possible. But, I don't think that unless you have they left
in the last two hours, I don't think the UK is not in Iraq anymore.
>>presenter: On that point of debate, thank you very much, Loretta Napoleoni, it's been
a pleasure having you here, and thank you everybody for coming.
[applause]