Conflicted S2 E5 - Wall Street
From a bomb maker to double agent to… banker?
In this episode, Aimen draws on his experience as a helping banks combat financial terrosism as our hosts explore the 2008 Financial Crisis and its impact on the world order.
THOMAS: Hello and welcome back. You are listening to Conflicted. My name is Thomas Small and with me, of course, is my co-host, Aimen Dean. How are you doing today, Aimen?
AIMEN: I'm still alive.
THOMAS: Still alive. Thank God. But where would we be without you, Aimen?
AIMEN: The land of the living perhaps? [laughs]
THOMAS: Oh, I think I'm there, but I'm not, I can't ever be quite sure. So, in season two of conflicted so far, we have been focusing on how America has been faring over the last few decades in its attempt to establish their New World Order. We've examined all three of their main objectives to achieve this. Essentially, those were: first sorting out the Middle East, bringing neo-liberalism to Russia, and establishing a new relationship with them after the Cold War, and as we learned in the last episode, bringing China in from the cold and integrating it into the global economic system. We learned about China's New Silk Road, which is their initiative to basically take control of continental Eurasian trade, which if successful could create a Chinese new world order to rival America's. In this episode, America is more clearly in our sights. We'll go back to 2008, the last time everyone thought the world was about to end, the financial world at least. Yes, I mean the credit crisis of 2008 and the impact it had on the West's hopes of a global neo-liberal order.
[Theme Plays]
THOMAS: So Aimen, we're talking about banking today. What makes you an expert on banking? I understand that after you left your job as a double agent for the security services working inside Al-Qaeda, you became a banker. [Aimen laughs] How did that happen?
AIMEN: Well, it's basically exchanging one form of terrorism to another.
THOMAS: That old chestnut. You love that joke.
AIMEN: I love that joke, because it's almost true. Actually, most funny jokes are the true jokes. But in reality, when I went into the banking sector, after I left the service of MI6 and MI5, I actually was there fulfilling three functions. So the first function is the global strategic security function. The bank that I went to work for, which was one of the biggest global banks, was attacked before in terms of terrorism and they lost many staff and they lost their entire headquarters, in one of their middle Eastern countries.
THOMAS: I mean, they were, they were actually the victim of a terrorist bombing.
AIMEN: Indeed. So that's the first function I fulfilled. The second function is terrorism finance. So, no I wasn’t--
THOMAS: [Overlapping] You financed terrorism? Wow!
AIMEN: No, no, no. Okay, okay, okay, I rephrase here. I rephrase. It's CTF or counter terrorism finance.
THOMAS: [Overlapping] Oh that’s less interesting. Oh that’s too bad.
AIMEN: Making sure, basically that high-net worth individuals or charities that are operating within the Middle East and beyond are not exactly dabbling in financing terrorists.
THOMAS: And the third thing you were doing?
AIMEN: And the third thing basically is investigating companies, high net worth individuals, and sometime even banks that are operating within the Middle East for signs of either corruption, money laundering, and understanding basically how they are operating to make sure basically that there is no corruption or money laundering going on.
THOMAS: Corruption amongst high net worth individuals in the Middle East. That must've kept you busy. Now, [Aimen laughs] now when you joined the banking system, what were your first impressions of it? How was it different from the worlds you had been inhabiting in Al-Qaeda and in MI6?
AIMEN: I felt basically there is no difference between them and Al-Qaida except they’re wearing suits.
[laughter]
AIMEN: But you know, I felt, of course it's full of nerds, geeks, it's full of also lawyers.
THOMAS: Well you must have felt right at home.
AIMEN: [laughs] Yes, and one of the things is that I felt that basically that my job was quite interesting because, you know, I was moving between these three functions seamlessly. Between the security function into the counter terrorism finance function into the investigative, financial investigative function. And of course, basically I had to learn a lot. You know, I had to be mentored by other people who will teach me about finance, how banking works. How financial services work, how insurance work in order to understand how financial fraud and insurance fraud work. So it was a learning curve—
THOMAS: A steep learning curve, but presumably during your times as a terrorist and as a double agent, you were aware of how terrorist financing happens from that side. I mean, were you ever involved?
AIMEN: I was involved in it, actually. [Laughs]
THOMAS: How did that involvement work?
AIMEN: Well, we used to infiltrate charities that were operating basically in places like Afghanistan or Azerbaijan and Georgia on behalf of the Chechens or in the Philippines or in Kenya on behalf of the Somali terrorists. So basically in order to divert charitable funds and resources and donations…
THOMAS: [Overlapping] These are donations given with goodwill from people. They didn't necessarily know that you were there pocketing the money and spending it on building bombs.
AIMEN: Ah, yeah, of course. It was all done, you know, without the full knowledge of the poor donors who were thinking basically it's going to buy, you know, tents and medicine for flood victims in Afghanistan or in Somalia.
THOMAS: So you knew about terrorist financing from the terrorism side, and it was a steep learning curve to come up to speed with how the banking system works. But tell us more. How did you use the resources of banks to help governments fight terrorist financing globally?
AIMEN: Well, because basically I came with the knowledge of how terrorists move money. And then I came into a bank where they told me basically about, you know, the basics of banking. And then, I combined the two together and I started to come up with ideas of how to spot what we call hotspots of terrorism activity in terms of finance. And so we can shut them down, we can track them down. And this is when you start to see an evolution. Where the banks started to become in some countries different from others, of course, but in some countries, the banks became the eyes and ears of governments to track down the movements of individuals, not only involved in terrorism, but sometime even involved in drugs and involved in child sex trafficking because there are certain hotspots around the world where these people congregate.
THOMAS: Yes, so tell, you say you came up with ideas. What was your big idea? What ultimately, what tool did you create that allowed you to combat terrorist financing from within the bank?
AIMEN: Okay, so banks utilise something called data mining software. They are expensive. I can tell you that they cost millions of pounds or dollars or whatever. So, but the problem is, data mining is like looking into 30 needles in a billion haystacks.
THOMAS: Wow, that sounds like a big job.
AIMEN: Yeah. Therefore you still need human intelligence to direct or zoom in on certain specific spots around the world in order for the data mining software to actually yield the tangible results.
THOMAS: You need to find the right haystack so you can focus on the right needles.
AIMEN: So let's take an example of ISIS. Since ISIS now is almost destroyed, almost, like physically destroyed. In hibernation, I would say.
THOMAS: [overlapping] Yeah for now…
AIMEN: So let's take an example. A certain bank here in the UK with a very expensive data mining software operation. They were thinking logically, rather than thinking as a terrorist. [Thomas laughs] So basically, they decided that, okay, let's look at the cities on the Turkish Syrian border. If any of our debit or credit cards are used there in ATMS or in shops or at hotels or whatever, then we flag it up.
THOMAS: And these aren't major cities actually along the border.
AIMEN: Yeah cities like Urfa, cities like Gaziantep, like Kilis ,like Reyhanli …
THOMAS: Provincial cities, Turkish provincial cities.
AIMEN: So, but they all close to the Turkish-Syrian border. So it started to give them results, but the vast majority were useless results because why? It turns out basically that these cards belong to British citizens or British residents who are of Kurdish origins. And they are going there to visit their families.
THOMAS: So not terrorists.
AIMEN: They're not terrorists at all.
THOMAS: Tourists, really.
AIMEN: Tourists, not tourists only, but actually visitors, expatriates in the UK who are visiting their families for the summer or whatever. So, you know, the results were so disappointing. So, and I walk in, and I say, basically, you are looking at the wrong place. You know, there is, you have to look at Istanbul. So I remember, you know, the banker who I was dealing with, he was saying, come on Aimen. Istanbul at any given day, including residents, tourists, and visitors and day workers there will be 30 million people there. So, you know, it's impossible. I said, no, no, no, no. So I took him up, and I'm not going to mention the name of the place so they don't avoid it anymore.
THOMAS: Fair enough, fair enough, the terrorists don’t avoid it.
AIMEN: So yeah. But I draw a 16-block radius to him on the map of Istanbul. And I said, this is where you will get results.
THOMAS: And you know this, I mean this reminds me of what you were saying in episode one of this season when you were talking about being a private spy today when you would go to cities and you would talk to taxi drivers and other such people to find out where the terrorists in that city are congregating. So this is how you can use this knowledge for practical purposes with the bank. You say they're here. Look here.
AIMEN: Exactly. So when I draw that square over 16 blocks radius. They said, okay, that's, that's manageable. It's not an entire mega city like Istanbul, which is, you know, if you include Istanbul in Europe, it would be the largest city in Europe. So basically, he said, you know, that's fine. So they looked at the 16-block radius. They asked me the question, of course, how do you know? So I said, because I've been there myself. I went there, I infiltrated the place. It is an elevated place; you don't end up there by mistake. Tourists don't go there. You only go there because you want to go there. And because you have business there. It's a place basically where jihadist congregate, where immigrants from Muslim countries and…
THOMAS: [Overlapping] Because there are radical mosques there? Because…
AIMEN: Radical mosques, you know…
THOMAS: Safe houses…
AIMEN: Safe houses, you know, associations that support them. So as soon as they implemented that they started to get tangible results that ended up basically with even sometime families, UK based families, being intercepted by the Turks before they reach ISIS and then deported back to the UK.
THOMAS: To face justice here.
AIMEN: Well, not necessarily because they haven't committed a crime yet. But the idea is to bring them back, confiscate their passports, make sure they don't travel to join ISIS. So in other words, basically it really saves lives. Because these families could have been killed by the coalition bombs there when ISIS were bombed.
THOMAS: Not to mention the people they might've killed themselves.
AIMEN: Yes, exactly. So there is…so when you talk about bank saving lives… [laughs]
THOMAS: People usually don't talk about that Aimen.
[laughter]
Aimen: Indeed, but this is basically part of their CSR, their Corporate Social Responsibility. That they make sure that none of their customers is dabbling in terrorism. And this applies also to areas of concentration where drug dealings takes place. So they take the profile of the individual, let's say, basically, they wouldn't necessarily take an individual who have a Turkish surname and say, Oh, he's there, let's investigate. But if there is someone basically with an English surname, a French surname, a Pakistani surname, an Algerian surname, but end up in that area in Turkey, then…
THOMAS: It's a red flag.
AIMEN: It’s a red flag. So profiling works. It saved lives.
THOMAS: So that's Istanbul. What other cities were you able to sort of target…?
AIMEN: [Overlapping] Well Karachi, Manila, you know, in Nairobi in Kenya. So basically there are many places around the world, even places that you would think it is kind of benign, but nonetheless, there is a concentration of certain individuals there or certain activities there. Even in Bangkok for example. I mean, there are places that are famous like you know for people who unfortunately go and have, you know, inappropriate sexual relationship with young girls. So, you know…
THOMAS: To put it lightly.
AIMEN: Yeah, to put it lightly. So this is where, you know, you can really you know…
THOMAS: Infiltrate and well, what's the word you can really…
AIMEN: Detect.
THOMAS: Yeah, detect.
AIMEN: This is how you can detect terrorism intention. So, and therefore, basically you can alert the authorities.
THOMAS: So there you are now working for a bank, in fact, it was quite soon after you started in the banking system. And in 2008, the famous credit crunch, the credit crisis, the global economic crisis begins to play out really starting in April 2008 and then really hitting the fan in September of 2008. What was the environment like inside the banks as the bankers realized, Holy smokes something really bad is happening?
AIMEN: Nervousness. Oh my God, I never seen many of my colleagues nervous. And you know where I was working, it was in Canary Wharf which is the financial hub of London where the banking industry have their skyscrapers there. And I remember there is a place called the Reuters Plaza where Thomson Reuters headquarters is there and in front of the underground station, which is the equivalent of the subway in America. So I saw many people from Lehman brothers, which is just on the Plaza itself from their building coming hundreds of them with their boxes. That's it, because it collapsed, and that's it. They ceased working and their faces told me everything that I need to know.
THOMAS: Yes, Lehman Brothers, which was allowed to go bankrupt in September 2008 and Lehman Brothers, which was an enormous global investment bank, was allowed by the federal reserve bank in the United States and the treasury department of the United States to collapse. They didn't bail it out. This is usually identified as the thing that…
AIMEN: [Overlapping] Catalyst.
THOMAS: Yeah, the catalyst, the thing that really started the whole house of cards collapsing. So, lots of bankers are losing their jobs. But you didn't lose your job. Why not?
AIMEN: Because my function became more important because many companies started to default on their loans to the banks, especially in places like the Middle East. Immediately after the crisis, two large families from my own hometown owed the global banks more than $22 billion after they collapsed due to the strain of the financial crisis. So it was my job, among others, to investigate whatever assets left of those two families in order to recover as much of the bank's losses as possible.
THOMAS: So for you, the credit crunch was a job opportunity?
AIMEN: Oh, yes. Actually, I got multiple pay rises after that. [Thomas laughs] You know, because of the fact that I started working, you know, seven days a week.
THOMAS: I swear Aimen. I wish I had signed up for jihad at the age of 15 [Aimen laughs] because clearly it means that from then on you're born under a lucky star. So just to sort of provide some historical context here, the credit crisis had many phases. On the 17th of March 2008 in New York, the federal reserve bank bails out a huge bank called Bear Stearns. It bailed out Bear Stearns, which was on the verge of collapse. And this, analysts pretty much agree, increased what was already a very morally hazardous situation because all the other investment banks, which were also facing huge pressures on their, on the system at the time thought, well, we'll be bailed out too and that seems to be proved. When on the 7th of September that year, in 2008, two huge government backed mortgage security broker institutions called Fannie Mae and Freddie Mac were taken over by the government and bailed out. And then a week later on the 15th of September, the Lehman Brothers bank was not bailed out, it was allowed to fail. Even though the following day on the 16th of September, the government did bail out the huge insurance company, AIG. So there was one bail out after another one, one rescue after another, with the exception of Lehman. But the whole world realized, oh my God, something big is happening. We're all gonna go to hell in a handcart. I can't impress upon the younger listeners that at the time, everyone was glued to their TV sets. We thought, this is it. The world is coming to an end. I can remember President George W. Bush is coming out standing in front of the cameras to give this speech about how the government was going to rescue the financial system because unless the government rescue the financial system, the whole world would end. And he was white as a sheet. He just looked like, Oh my God. He actually looked more scared during that press conference then he had a seven years earlier after 9/11.
AIMEN: Indeed, because it looked like as if the entire house of cards was collapsing and there was no one to put this back together again.
THOMAS: So Aimen, why did the credit crunch happen? I mean, we've heard about these things, I remember, and people probably remember hearing about things like credit default swaps and all these acronyms and all this financial verbiage used to be flying around. What, underlies the credit crisis?
AIMEN: It all comes down, after 14 years of being a financial investigator and still to this day, I came to the conclusion that it was the result of abandoning that concept of risk. It's abandoning risk aversion when it comes to lending.
THOMAS: So you mean banks used to lend with the full knowledge that if they lent unwisely, they would lose, they wouldn't get paid back.
AIMEN: Exactly. Banks take risk when lending, because remember, banks don't just lend what they have, banks lend where they don't have. So if you think basically that a bank is, the money that they lend you when you take a mortgage or a credit card or a loan, that this is money that is already existing there in the bank and by other depositors, then you're mistaken. The banks basically lend you between nine to ten times more than what they already have in deposits. So if a bank have $1 million of deposits, they can lend up to $10 million to customers on the knowledge that not every depositor will come and take their money at the same time.
THOMAS: This system is known as fractional reserve banking.
AIMEN: Indeed.
THOMAS: So banks are empowered to lend more than the amount of money they have in the vault.
AIMEN: Yes.
THOMAS: That obviously is an extremely risky thing to do because if you lend 10 times the amount of money you have in the vault and you don't get paid back then all the money's gone. Nobody has any money.
AIMEN: Exactly, but why we have this system? Some listeners would be screaming, why, why? And we have two answers for this. The first is to make sure that more people have access to credit. Otherwise, economic prosperity will be nothing like we have seen today since the 1950s. And the second is to increase the money supply in order for more people basically to have access to actual money in the system. The reality is that 95% of the money that we have in circulation are actually digits in--
THOMAS: [Overlapping] Computers.
AIMEN: In computers in these banks. You know, really only 5% of it is really tangible cash that we can hold. And the reason for this, some people basically saying this sounds like a Ponzi scheme, sounds like, you know, as we all it a house of cards. But this is exactly why we have such a huge amount of prosperity. Because the reality is there is no physical, tangible, currency like gold or silver or platinum that can actually correspond to the amount of wealth that is in the world right now. Whether it's natural resources, land, space, data, technology. We don't have enough--
THOMAS: [Overlapping] Anything of value.
AIMEN: Anything of value to catch up with it. I think the entire global gold and silver and platinum supply doesn't exceed $10 trillion, but the wealth, every year we generate is 250 trillion. So you see there is a 24-fold shortage of anything tangible we can use as money. And so we created a system based on trust that we have money based on confidence that it has a value. We agreed that it has a value. So when people basically say that this is unsustainable, we say, no. It is sustainable because it actually has the global wealth as a cushion to stand on it. So confidence is not a bad idea but it's a little bit fragile.
THOMAS: Yeah, it certainly is fragile as was proved in 2008. So I return to the question, in this case what caused the credit crisis to happen? Why did the house of cards collapse then?
AIMEN: The house of cards collapsed because there were too many houses in the system being bought by people who cannot afford them.
THOMAS: So the banks in America and elsewhere, primarily America, were compelled to give mortgages to people who actually in the past they wouldn't have given mortgages to because they couldn't pay back the mortgage.
AIMEN: Three letters, that’s all it takes to understand what happened, three letters, CRA.
THOMAS: The community Reinvestment Act.
AIMEN: Yes.
THOMAS: Now, this was passed in 1977 it was an act that the American government passed in order to encourage banks, if you like, or force them, to give loans to people who previously had not been able to get loans in order to buy houses. And in America because of the, you know, systemic racial injustice of America there was a sort of racialist tinge to this act because traditionally African Americans and Latino Americans hadn't had access to mortgages to the extent that white Americans had.
AIMEN: Exactly, but you do this gradually. I've learned throughout my life that if you're given adrenaline shot to any economic problem, it’s going to cause another problem in another organ somewhere else. Here's the problem is that if you have done this gradually, over years so basically you start to reduce the risk criteria by let's say 5%, 5% incrementally over time, then this crisis wouldn't have happened. What happened is that basically the risk aversion criteria has been thrown out the window altogether. In order to rectify a clearly social injustice that was always there, which is the fact that African Americans and Latino Americans couldn't have access in large to mortgages in order to buy homes. But when you suddenly remove the barriers without making them gradual, just do it now in the early 2000s, what happened is that many of them now are able to buy homes. So we're talking about millions of families are rushing into the market where there aren't already millions of homes built already to cope up with the demand. So what happened is that it created a bubble where the price of these homes…
THOMAS: Skyrocketed.
AIMEN: Yeah Because--
THOMAS: More demand than there was supplies and the price went up which caused all sorts of malinvestments to occur in the economy. Huge amounts of money was pumped into house building in order to catch up with the demand, the supply expanded, the price is expanding, and then credit is being extended in greater and greater quantities to people who can't pay back the loans. And then of course, this becomes very complicated. These bad loans are then packaged by hedge funds and sold around the world where very unscrupulous hedge fund managers are convincing global banks that, no, no, no, everything's fine. These are great. We have created very sophisticated mathematical algorithms that's going to protect you, [Aimen laughs] even though these are bad loans. They're not really bad loans because look I'm waving my magic wand. They're not bad loans, but they were bad loans, and then [explosion sound] eventually, when the time came, no one could pay them back.
AIMEN: Exactly, because what's happened is, the government, you know, in its haste to rectify certain injustices and win votes and all of that, they actually created a bubble.
THOMAS: But that's interesting because you're, you see, you know, most of the time people say that the bankers caused credit crunch, but you seem to be laying the blame more at the feet of the politicians.
AIMEN: Yes.
THOMAS: For example, there's a very famous act which regulated the banks called the Glass-Steagall Act in America, which was founded during the great depression, which separated off commercial banking, ordinary everyday checking accounts…
AIMEN: [Overlapping] Retail banking
THOMAS: [Overlapping] Retail banking from securities banking.
AIMEN: [Overlapping] Investment banking, it’s called investment banking
THOMAS: Investment banking and Commercial banking were split off from each other until 1999 when the act was repealed, which allowed the previously two kinds of banking to be carried out by the same institution. A lot of people say the repeal of Glass-Steagall is what caused the credit crunch about nine years later.
AIMEN: Not necessarily. I mean, not necessarily. Many of the banks that are actually both retail, commercial and investment banks did not suffer the same fate. Lehman Brothers was actually more of an investment bank and did not have that much of a retail banking--
THOMAS: [Overlapping] That’s true and Fannie Mae and Freddie Mac were certainly not banks in any traditional sense at all.
AIMEN: Exactly
THOMAS: AIG was an insurance company.
AIMEN: Yeah, so basically this is a bit of a simplistic way of looking at it. And this is why I'm saying that the reason it happened is because the government, without, you know, unintentionally, and as you know the road to hell is paved with good intentions, created a bubble. Because, okay, you have, let's say a hundred people that you want to bring into the housing market in a village. And you wanted to lower the mortgage criteria, the mortgage lending criteria in terms of risk. So you don't remove the barrier to all hundred at the same time. Otherwise, the price will skyrocket. Speculators who are greedy will come and start speculating and driving the prices even more, you know? And as a result, you end up basically with a massive bubble. And bubbles is always synonymous with modern capitalism and even as far back as the Tulip bubble in the Netherlands in the 1600s. So what you do instead of removing the barrier for the hundred people in the village, you remove the barriers first for five. Once they settle into their homes, the next five, once they settle, the next five, and then you stop to see what is the housing stock is like. I mean, are there enough supply basically to cope up with an extra five or 10 demands? That's how you do it.
THOMAS: But this sort of gradual, long-term thinking isn't exactly what our democratically elected politicians are famous for.
AIMEN: Unfortunately.
[Laughter]
THOMAS: Well, we can talk on and on about the, the details of the credit crisis from a financial point of view. But frankly, we'd put everyone to sleep. I'd like to shift now to talk about the response to the credit crisis on the ground. Because very quickly we saw in America, and spreading from America outwards, tremendous populist movements opposed really to finance capitalism as it was being practiced. Most famously, the Occupy movement, it started on Wall Street, the Occupy Wall Street movement, and then it spread to other major cities. I certainly remember here in London when the Occupy movement came here, and they, they ended up camping out in front of St. Paul's Cathedral for weeks and weeks. And it was quite funny because, you know, I remember TV interviews with the Dean and the priest of St. Paul's cathedral, you know, who are very well intentioned, nice Anglican vicars and things, were really wringing their hands. What do they do? Do they forcibly remove these protesters who are, after all animated by an antipathy to greed, which I think Jesus Christ also felt in his heart. So they didn't know what to do. Eventually, the protesters were moved on and some of the priests resigned. You know, it was, it was really an extremely sort of heady time where you had, on the one hand, the big evil forces of the banks versus, you know, plucky protesters on the ground saying, we need a new system. The system is rotten to the core.
AIMEN: I remember one of my friends at the time asked me a question, he said, Aimen, you work in the banks in it. Don't you think these banks are evil? And my answer was, this. They are too incompetent to be evil.
[Thomas laughs]
THOMAS: Well, I mean, I don't know people have told me that Al-Qaeda is incompetent, yet they are pretty evil.
[Aimen laughs]
AIMEN: Well, the problem is with the banks and I met many of their chief executives and the chief operating officers and the chief risk officers and all of these people basically to think that they are evil. It's just basically they are normal human beings like you or me who were lucky enough basically to be in the positions where they are. But you know, do they have greed? Every human have greed. And the idea that somehow the bankers are a class of their own in terms of greed is rather… You know, I've seen more royal oligarchs, and land-owning gentry who are the personification of greed. But bankers on the other hand, well, they see themselves as the conduit for human prosperity and the servants of free market forces. That's how they see themselves.
THOMAS: Hmm. I'm not sure the Occupy protesters saw them that way.
AIMEN: Yeah
THOMAS: I mean, Aimen, let's be serious, now. You've described the system, you're, you know, in general, a very objective observer of this system. But isn't injustice to some extent, at least built into this system? Doesn't it favour some people over other people and caused this growing inequality that we see today?
AIMEN: Of course.
THOMAS: [Overlapping] Are we just supposed to accept that?
AIMEN: Yes. The entire economic system of the world as it is right now will always have inherent injustices built into it. Why? Because life is unjust. Life is unfair. You cannot escape the unfairness of this world in any sector of it, no matter what. And this is the problem. And when people basically say that we want to build a completely fair, equitable, society, and I say, while it is noble, unfortunately, when you try to go against nature, nature, fight back. You know, and this is, you know, the problem basically with the financial world. Okay, I’ll give you an example now. Let’s say that, we are in the UK here, so let's basically take the entire UK population, 65 million people, let's say that we take all the wealth that everyone owns, and let's give everyone £10,000 to start with a new life, leveling everyone at the same level. And let's start. I guarantee you Thomas, that everyone have £10,000 today, within a week, within one week, we will have millionaires emerging. Within a month, we will have multi-millionaires emerging, and within a year we will have billionaires emerging/
THOMAS: Because it's just the natural order of things…?
AIMEN: The natural order that's it.
THOMAS: This is very depressing.
AIMEN: No, it's not depressing. It's the problem that not every human is as responsible with money as others.
THOMAS: Yes and not every human is as immoral as others. I mean, some people will steal that money. Some people will trick other people out of their money.
AIMEN: Exactly, but some people basically will come up entrepreneurial ideas, you know with products, that other people want to buy and they will start accumulating this money because they are making products.
THOMAS: I suppose your point is that before long, the world would just return to more or less what we have today. [Laughs]
AIMEN: Exactly I mean, so what I'm saying to people is that, do not be financially illiterate. You need to understand what wealth is and what money is.
THOMAS: Let's get back to that in a second. I know this is one of your great bug bears. We'll get to that in a second. I want to move away now from the Western world because we've talked about how in the higher echelons of Wall Street panic broke out and the banks were bailed out and government got involved. And down on the ground level in Wall Street, the Occupy movement rose to fight against the evil bankers. Now, as all of this is playing out in the West over the next 18 months, In the Middle East, something occurs which we discussed in season one of Conflicted. The Arab Spring breaks out first in Tunis, it spreads. It spreads to Cairo, it spreads to Damascus, it spreads to Yemen. It spreads everywhere, Bahrain. The Arabs are rising up against their rulers and they're saying, we want justice, we want democracy, we want freedom, or whatever they're saying. Is there a link between these two things? On the one hand, a kind of ground swell of anti-capitalist movement in the West and the Arab Spring in the East?
AIMEN: What people don't understand is that the world is a village. And you know, in one corner you have finance, in the other corner you have industry, in the other corner you have commerce, in the other corner you have agriculture, and in the center you have water. So the water, I mean by that, basically the energy of the world in oil and gas and natural resources, like in the Arab world and the Muslim world, you know. And the finance is America. The industry is Europe and China, and the agricultural is India and Russia and other places basically. And so you see, basically the world is interdependent. So if America sneeze, the rest of the world catch a cold.
THOMAS: Well America sneezed in 2008 and by January of 2011 the Arabs were on the street.
AIMEN: Exactly, why? Because everything because of, two words, really. The supply chain. The supply chain, we come back to the supply chain. Now when there is a credit crunch here, in North America, in Europe, people stop buying products. Now these products, let's say clothing, you will see lots of clothes basically, made in Morocco, made in, from Egyptian cotton, you know, made in Bangladesh or China or whatever. I mean, basically these are made from materials obtained from different other countries. You might wear a sweater, but this sweater basically, could have been handled in four countries by the time it comes to you.
THOMAS: So a access to credit in the West contracts, demand in the West goes down, and therefore the people who've been supplying that demand, they no longer have any orders. They're not being asked to make shirts anymore.
AIMEN: Exactly. Not just only shirts, but parts or even extraction.
THOMAS: So how does that lead to the Arab spring?
AIMEN: Because what's happened here is you end up with a situation where you have more unemployed. You'll have more unemployed. The whole Arab world caught fire because one single individual who was a university graduate and unemployed, Bouazizi
THOMAS: [Overlapping] Set himself on fire.
AIMEN: Set himself on fire and the rest of the world with him on fire, actually.
THOMAS: In protest against kind of
AIMEN: [Overlapping] Unemployment.
THOMAS: Well he had a little stall. He had a little market stall--
AIMEN: [Overlapping] Because of the unemployment.
THOMAS: I see, He was forced to resort to simply selling vegetables on the street.
AIMEN: Exactly.
THOMAS: And then some unscrupulous bureaucrat was oppressing him, and he decided the whole system was rotten. So he set himself on fire. And from there it spread.
AIMEN: Exactly. So that is why, you know, the idea that somehow what affects one part of the world doesn't affect the rest, and these ideas of protectionism and we need to be putting tariffs and putting walls and putting — no. We are in the 21st century and whatever happens in one corner of the world affects the rest of it.
THOMAS: That's one way of putting it but another way of, since we're talking about the New World Order, is that, you know, if America has erected this globalized order, globalization after all. Where, as you said, agriculture is in one part of the world, manufacturing is another part of the world and it's all being financed from the huge banks in London and in New York. Doesn't it mean that the New World Order is inherently fragile? Do we want a world order where if a bank sneezes in New York, unemployment throughout the Middle East grows to such an extent that civil wars breakout?
AIMEN: Let's put it this way. When I said to you, the world is now a global village, then what we see here is that, yes, it's a fragile village, but it's a prosperous one. Because look at the levels of abject poverty in the world in 2020 and look at the abject poverty in the world in the 1900s, just a 120 years ago. In the year 1900 I think the abject poverty basically reached heights of 80 and 90%. Now abject poverty around the world basically is around 9%. So to tell me basically that globalization did not shrink poverty is rather disingenuous in anyone's argument. So that's why I'm saying that yes, it’s fragile, but because it relies on peace and order as a conduit for this prosperity. But if peace and order start to crumble and nations started fighting each other, then the entire system collapse.
THOMAS: Well, it's true. I mean, it certainly is true that that abject poverty has decreased. It's hard to tell that to, say a poor Egyptian who has no job, has no money, bread subsidies are being lifted up because neoliberal ideology is taking hold there. He can't even feed his family. So he goes into Tahrir square and just starts demanding... Well, this is the interesting thing. What is he demanding? You know, during the Arab spring, the demands were more political than economic, it was all about democracy. We want democracy. But would you say that in fact, the Arab Spring protesters were barking up the wrong tree? It wasn't really about politics, it was more about the economic systems of the Arab world that needed reform? That just changing the politicians wouldn't do that, wouldn't do the trick or extending the vote isn't really going to achieve anything? Is that what you're saying? Or is it all sort of mixed up together?
AIMEN: Look, they understand—
THOMAS: They, you mean the Arab Spring protesters.
AIMEN: The Arab Spring protesters understood from the beginning that it's the oligarchy that is ruling them, which basically monopolize the money. If you look at every country, which you know, the system entirely collapsed. If you look at Ben Ali…
THOMAS: This is in Tunisia.
AIMEN: Yeah. He, his daughter, his son in law, controlled lots of businesses basically in Tunisia. And look what happened.
THOMAS: Egypt?
AIMEN: Egypt, the president, his two sons, Gamal and Alaa Mubarak
THOMAS: [Overlapping] The whole army.
AIMEN: The whole army as well as the party apparatus, Hosni Mubarak’s party, the national democratic party apparatus. All of these people who controlled, monopolized many aspects of the economy.
THOMAS: Libya?
AIMEN: Libya, of course. Basically you have…
THOMAS: [Overlapping] Colonel Gaddafi
AIMEN: Colonel Gaddafi and his sons.
THOMAS: Saif al-Islam!
AIMEN: Saif al-Islam, Hannibal, Moatassem
THOMAS: [laughs] Hannibal! Can you imagine naming your son Hannibal, really? [Aimen laughs]
AIMEN: Well, you know, he believes that… He hated the Italians so much because basically of Italy’s history in Libya and you think basically, okay, our neighbors the Tunisians have Carthage, and we were a part of the Phoenician-Carthaginian heritage. So I should name my son, Hannibal, the scourge of Rome.
[Laughter]
THOMAS: The man who conquered Rome, well almost conquered Rome…
AIMEN: Almost conquered Rome, to spite the Italians so…
THOMAS: Anyway, So Gaddafi controls a lot of the economy. The Tunisian leadership controls the Tunisian economy, the Egyptian leadership—
AIMEN: [Overlapping] Same with Syria, Syria for example, you know Bashar al-Assad’s mother, Anisa Makhlouf, her brothers and her nephews, Rami Makhlouf and others, they control 60% of the Syrian economy. Just let this sink in 60%.
THOMAS: Yemen?
AIMEN: In Yemen, it was far more different, but it was a failure of this nation state to provide any sort of services whatsoever.
THOMAS: So you think that the Arab Spring protestors really did know that when they're protesting against their government in the name of democracy, what they're actually wanting is the dismantlement of this oligarchic, corrupt oligarchic economic system and increase there of economic opportunities for everyone, basically liberalism. Basically the thing that the American New World Order is supposed to be giving them.
AIMEN: The ruler of Dubai, Mohammed bin Rashid in 2011, he gave a speech, it was a rare speech where he was so candid. He was so candid. He was saying to the audience in a conference in Arabic, he was saying that, I always have told my colleagues and my friends remember, he is also the prime minister of the UAE as well as being the ruler of Dubai. He said, I've been saying to my colleagues in the Arab world, feed your people, give them jobs, give them opportunities. Do not allow certain people to monopolize everything. Because what's going to happen is that these people will end up rising against you, because hungry people have nothing to lose. Hungry people got nothing to lose. So, and this is why in the UAE, as well as other resource rich countries in the Arab world, you know, the royals are very rich, filthy rich. But at the same time, they do not really squeeze the people out of their savings and out of their pockets. They still allow people to have loans to build houses. They give them free parcels of land. Land is free. Give them parcels of land, give them long term loans from the government…
THOMAS: [overlapping] Encourage entrepreneurship.
AIMEN: Yeah. You know, encourage entrepreneurship, give them loans to start businesses, send them to America and to Europe to gain degrees. I remember during the election campaign here in the UK, whenever you hear, you know, people who are leaning towards, you know, socialism like Jeremy Corbyn, the former leader of the labor party, whenever basically he talks about economic models, I always look at him and say the country that you most hate in the world, which is Saudi Arabia, he’s written so much against it, it's the economic model that you want to implement, you idiot. You know it's the one you wanted because basically, he wants free education. Well, Saudi have got a free education, and actually they send their students basically to Western countries to pay their tuition fees, their tickets…
THOMAS: Hundreds and thousands of students.
AIMEN: Hundreds of thousands, I think by far now is 400,000 students who have benefited from this. They've got salaries and accommodation and their tuition fee paid and tickets back and forth to their education destinations. So, you know, free healthcare, or insurance covered by the government or by the employer.
THOMAS: A very generous housing program for citizens.
AIMEN: Exactly. So the question is, you know, what is it that you hate about them then? Apart from being pro-American. Is there anything else? Their economy is a mix of state enterprise, profitable state enterprise, and private sector enterprise.
THOMAS: Well, sure, but Saudi Arabia also has that little magic bullet of huge amounts of oil to sell.
AIMEN: I tell you something, every time someone brought up this issue and says, Oh, Saudi Arabia, Kuwait, UAE, Qatar, Bahrain, and Oman, whatever, they have oil man. They have oil so of course they would be economic successful, and I will say yes, this is partly true, but if it is purely just natural resources, then Venezuela, and the DRC, the Democratic Republic of the Congo, will be far richer than Saudi Arabia. Because the DRC sits on $25 trillion worth of—
THOMAS: [Overlapping] Natural resources.
AIMEN: Natural resources and Venezuela have more oil than Saudi Arabia. And yet, look at both of them right now. It's not about, purely just natural resources. It’s about—
THOMAS: [Overlapping] How you empower the economy to take advantage of them.
AIMEN: Exactly. Exactly. That's why when people tell me the Arab world, they rose against oligarchy. And I say yes, but they say, well, Royal families are oligarchs too. And I will say yes, but the difference here between one set of oligarchs and the other is that if one oligarch or a government. Let's put it this way, if a government runs its country as a business and take stock of the potential of this country to generate profit, then you have prosperity comes in. So if you look at the model that is followed in China, in Turkey, you know, to some extent, especially between 2003 and 2014 in Turkey, and in Saudi Arabia and Kuwait, in UAE, in Singapore, in Hong Kong, in the city-states. If you see that they are running their countries as businesses, any country will look at its capabilities. It will look at geographical position, whether advantages or not, population size, big or small, natural resources, you know, many or none.
THOMAS: Geographical location.
AIMEN: Cultural sites for tourism, natural beauty, there are many ways in which our country can look at all the negatives and positives, advantages, disadvantages, and basically makes it work. And then start with the idea. First of all, everything you've learned about economics in terms of Marxism, Capitalism, whatever…
THOMAS: All the great 19th century ideological buzzwords.
AIMEN: Exactly, throw it in the rubbish right now dear listener, please throw it in the rubbish.
[Thomas laughs]
THOMAS: Aimenomics, everyone. Here we go. Aimenomics.
AIMEN: Why? Because we live in the 21st century where the last 10 years technological advances were more than the past hundred years put together and the past hundred years were more than the past 10,000 years put together. Which means we need new kinds of economics. And with the world becoming a global village where we are so interdependent because of technology, because of the communication revolution, and the information revolution, we need to have new kind of economics.
THOMAS: Not some one size fits all, global paradigm of neoliberal American domination but...
AIMEN: Or socialism.
THOMAS: Or socialism.
AIMEN: No, we don't need Marxism. We don't need capitalism.
THOMAS: So when you said that countries should be run like companies, you're not just parroting some super right-wing capitalist perspective.
AIMEN: No, I tell you something. The right-wing people basically say the state should just regulate and should not run any business whatsoever. I disagree. And the left-wing will say that the government should own the means of production and run them for no profit motive, for the benefit of the people. That also I disagree with. What I agree with is a country where there is a state enterprise run efficiently for profit and also private sector that actually supports the public sector to achieve profit and to maximize the prosperity for the people.
THOMAS: And this is the model being pursued in these countries like Turkey and China and elsewhere that you mentioned.
AIMEN: Exactly. So when someone says to me, Aimen, have you seen any, for God's sake, any state-run company that generate profit? Because this is the skeptics always. And I tell them, yes, the largest company in the whole world.
THOMAS: Saudi Aramco.
AIMEN: Saudi Aramco. Because my father worked there, my uncles, all of them without exception work there, half of my cousins and their kids work there. So I know all about Aramco and I can't tell you basically that the largest state-run enterprise in the world is the most profitable company in the world. In 2018 they made $111 billion more than the other five largest oil companies that come behind them combined.
THOMAS: Well, of course. I want to counter by saying, well, you can sell oil, so pump oil out of the ground, you sell it. I mean, is that so difficult?
AIMEN: Look at the national oil company of Venezuela, they are making losses all the time. And basically the other five private companies just behind Aramco globally combined together, actually, they have larger production value together than Aramco. Yet their profits were less than Aramco, even though they are privately run, and Aramco is a state run--
THOMAS: It's also very important to point out that Saudi Aramco doesn't just sell oil. It actually is the linchpin of an incredibly sophisticated petrochemical industry that the Saudi state has allowed to grow in Saudi Arabia where they don't just sell the oil, they refine the oil. They oversee manufacturer of oil products. So it's a whole industry, which leads to economic prosperity there.
AIMEN: Exactly. So, you know, and Saudi Arabia and other companies basically like this. Maaden which is their minerals company.
THOMAS: [Overlapping] Mineral company.
AIMEN: They do that. So they do that. So actually, Norway does that. You know, it's not just only—
THOMAS: Yeah, the Norwegian oil company is state owned and profitable.
AIMEN: Equinor. Equinor is profitable, and this is state owned. The idea that somehow, we are afraid that the state will be inefficient, well look, if you have the will, you can create state owned companies that generate profits and compete like capitalist companies, like free market companies in that market, like each other.
THOMAS: This sounds remarkably moderate and balanced for you, Aimen. You're basically arguing for an intelligently designed and run mixed economy. Some state ownership, some private ownership, as long as everyone is animated by the profit motive in order to spread prosperity more generally.
AIMEN: Exactly. So first of all, leftist should drop this notion that profit is immoral.
THOMAS: [Overlapping] Evil.
AIMEN: And the right-wing, you know, ultra-capitalists should drop the notion that there will be no efficient and profitable state-run enterprises.
THOMAS: But Aimen, what about, dare I ask it… democracy? Human rights? Liberal societies? I mean, you've mentioned China, Turkey, Saudi Arabia. They don't really score very highly when it comes to that side of political economy.
AIMEN: Of course they don't score highly on that side.
THOMAS: Is that not something we should care about?
AIMEN: Of course we should care about the human rights of every single human being on this planet. Their right of free speech, the right to assemble, the right basically to express themselves. The freedom of conscience, freedom of religion, freedom of not having a religion to begin with.
THOMAS: How does that square with what you're advocating?
AIMEN: Okay. Because politics and economics are two separate things. And anyone who tried basically to argue otherwise. Look at China. Look at Hong Kong. Look at Singapore. Look at Saudi Arabia. Look at Norway. All of them have very different politics from each other. Yet they all achieved some sort of, you know, successful mixed economy of efficient, profitable state enterprise and a thriving private sector.
THOMAS: And perhaps the idea is: with prosperity down the line will come an increase in the protection of human rights and democracy, or not necessarily? This is of course, what animated George H. W. Bush’s New World Order. The idea that with prosperity would come, democracy, would come liberal democracy. It doesn't seem to be happening that way.
AIMEN: It doesn't seem to be happening because the more prosperous I see people become… For example, I have friends of mine in Saudi Arabia who were extremely critical of the government, the vision 2030. And the fact basically that there will be liberalization of the economy—
THOMAS: [Overlapping] This is an enormous program of reform, particularly economic, but also social and cultural reform that has been going on in Saudi Arabia since the coming to power of King Salman and the rise to power of now Crown Prince Mohammad Bin Salman in Saudi Arabia. It's called Saudi Arabia Vision 2030.
AIMEN: But with this liberalization and economic reforms comes greater repression, greater control over people's thought. I mean, basically there is less freedom of thought in Saudi Arabia in 2020 than that was in 2014.
THOMAS: Isn’t that bad?
AIMENL: Oh, of course it's bad. No question about it. But the friends who I had who were critical suddenly changed their minds when they started having good jobs. Oh I love it. Now I have a job, they were telling me about the new joint ventures between big international companies and Saudi companies. They got jobs finally after they graduated long time ago from universities in the U.S. and what about the oppression? You were talking to me about, Oh, it's such a stifling situation in Saudi Arabia. We can't speak our minds. Oh yeah. I was just basically angry about being unemployed, but now I'm employed. [Thomas laughs] You know, I have a parcel of land now from the government and they are going to give me a loan to build a house on it and finally, I can get married. Suddenly all the talk about, you know, freedom, democracy and human rights evaporated as soon as you know, Mohammed bin Salman stuffed in a, a wad of cash in their mouth.
Thomas: Aimen I know last time I said that you were depressing me. I don't want to say this time that you have depressed me, although you do have this remarkable capacity of spinning an optimistic narrative that leaves me thinking, things aren't really that good. [Aimen laughs] But as ever your perspective is informed and thought provoking. It does make me wonder if the New World Order that America set out to create in the 90s, which we discovered last time when talking about China has countered a serious rival in the Chinese’s own version of that order, that the New World Order, the idea that through globalization, prosperity will increase, that through globalization the globe will become a village and we'll all be interconnected and that ultimately in some way fitfully we will all benefit from this, maybe it's not that it is failing, but that it is succeeding--
AIMEN: Economically.
THOMAS: Just not in the way that America expected and perhaps not ultimately to America's own benefit.
AIMEN: I tell you something. Do you know who really won the globalization game so far? Really? Google, Apple, Twitter, Facebook…
THOMAS: Silicon Valley
AIMEN: Silicon Valley. They were the ultimate beneficiaries of globalization.
THOMAS: Well, we are going to talk about Silicon Valley, among other things next time on our final episode of this season of Conflicted. As we've been discussing today, after the credit crunch, the Occupy movement rose to try to fight back against what they considered to be the injustices of global capitalism. The Occupy movement in the end fizzled out or did it? In the next episode, we'll describe the way the anti-capitalism movement following the credit crunch morphed into Extinction Rebellion and other environmental activist movements. And how with the end or at least mutation of the New World Order the new game changer for global politics may be the end of the world. That's right. We'll be talking about the climate crisis in the last episode of this series. I'm sure it will be a doozy.
[Outro music plays]
THOMAS: If you would still like to find out more about the effects of the 2008 credit crunch, enter our competition to win a copy of a wonderful book called ‘Crashed: How a Decade of Financial Crises Changed’ the World by Adam Tooze. This is presently the definitive narrative history of the 2008 financial crisis. Tooze is an excellent writer and though his left-leaning views would probably irritate Aimen, the book is well worth reading. To be in the running to win, just make sure to become a member of our Facebook group before the 15th of April. Find it by searching ‘Conflicted Podcast Discussion Group’ on Facebook. In the group, you will find articles and further reading and it's also a place for you to enter into discussions with all the other Conflicted listeners. You can also find Conflicted on Twitter. We are at MHConflicted. And if you enjoy listening to the show, please do us a favor and rate us, review us, or maybe even tell other real human beings in your life about Conflicted. Join Aimen and me in two weeks’ time for the next episode of Conflicted. In which we conclude our journey across the unraveling of America's New World Order.