Janine Wedel - Shadow Elite - How the World's New Power Brokers Undermine Democracy, Government, and the Free Market

Meanwhile, the official and private organizations in and out of which such movers and shakers glide either just go along to get along or are ill equipped to know what these actors are up to in the various venues in which they operate. In McCaffrey’s case, no institution, from the Pentagon to the defense contractor to NBC, had an incentive to be anything but complicit. Operators like the general have surpassed their hosts, speeding past the reach of effective monitoring by states, boards of directors, and shareholders, not to mention voters. And while the players sometimes cause raised eyebrows, they are highly effective in achieving their goals—and often benefit from wide acceptance. Much more than the influence peddlers of the past, these players forge a new system of power and influence—one that profoundly shapes governing and society.

This new breed of players is the product of an unprecedented confluence of four transformational developments that arose in the late twentieth and early twenty-first centuries: the redesign of governing, spawned by the rising tide of government outsourcing and deregulation under a “neoliberal” regime, and the rise of executive power; the end of the Cold War—of relations dominated by two competing alliances—which intensified the first development and created new, sparsely governed, arenas; the advent of evermore complex technologies, especially information and communication technologies; and the embrace of “truthiness,” which allows people to play with how they present themselves to the world, regardless of fact or track record. While it may be jarring to mention such seemingly disparate developments in the same breath—and to name “truthiness” as one of them—the changes unleashed by these developments interact as never before.

The proliferation of roles, and the ability of players to construct coincidences of interest by those who perform them, are the natural outcome of these developments. So, for example, increased authority delegated to private players (facilitated by privatization, the close of the Cold War, and new, complex technologies) has enabled them to become guardians of information once resting in the hands of state and international authorities. While supposedly working on behalf of those authorities, such players (working, say, as consultants for states or as special envoys or intermediaries between them) can guard information and use it for their own purposes, all the while eluding monitoring designed for the past order of states and international bodies. And they get away with it. Appearances of the moment have become all-important in today’s truthiness society, as comic Jon Stewart expressed in his quip: “You cannot, in today’s world, judge a book by its contents.” 6Today’s premier influencers deftly elude such judgment. Pursuing their coincidences of interest, they weave new institutional forms of power and influence, in which official and private power and influence are interdependent and even reinforce each other.

The phenomenon I explore in Shadow Elite is no less than a systemic change. A new system has been ushered in—one that undermines the principles that have long defined modern states, free markets, and democracy itself.

Naming the Animal

I call the new breed of influencers “flexians.” When such operators work together in longstanding groups, thus multiplying their influence, they are flex nets. Flexians and flex nets operate at one extreme of a continuum in crafting their coincidences of interests.

Performing overlapping roles can be—and often is—not only benign, but can serve the interests of all the organizations involved, as well as the public’s. Yet in an international arena that “multiplies the possibilities for double strategies of smugglers . . . and brokers . . . there are many potential uncertainties and mistranslations surrounding individual positions,” as two political-legal scholars point out. Take, for instance, the individual who acts “as a political scientist in one context . . . and a lawyer in another; a spokesperson for nationalistic values in one context, a booster of the international rule of law in another.” This peripatetic political scientist/lawyer is not necessarily engaged in a “double strategy.” But his activities on behalf of one organization can be at odds with those on behalf of another—even to the point of undermining the goals of either, or both. Flexians take these coincidences of interest to the n th degree. When an individual serves in interdependent roles, and is in the public eye promoting policy prescriptions, and when fundamental questions lack straight answers—Who is he? Who funds him? For whom does he work? Where, ultimately, does his allegiance lie?—we have likely encountered a flexian. 7

To get a sense of flex activity as we could watch it becoming acceptable, let’s take a look at Gerhard Schroeder, the Social Democratic chancellor of Germany from 1998 till 2005. While he did not flog a cause as do true flexians, he exhibited certain flex features and almost crossed the boundary into flexian-hood. In September 2005, before losing his bid for reelection, Schroeder signed a pact on behalf of his government with Gazprom, the Russian energy giant that commands a quarter of the world’s natural gas reserves and represents a murky mix of state and private power. The agreement was to construct a Baltic Sea pipeline to run directly from Russia to Germany and supply gas to Germany and other western European nations. That December, after the election, he accepted a position as the head of Gazprom’s shareholders’ committee, a post roughly equivalent to board chairman. As the Washington Post editorialized, through his actions, Schroeder “catapulted himself into a different league.” 8

Germany paid a political price for the deal. Some Western Europeans warned that the pipeline would saddle Europe with greater dependency on Russian gas. And with the Russian navy ordered to protect the pipeline, critics foresaw new potential for espionage. Moreover, the two countries’ central European, Baltic, and Ukrainian neighbors, bypassed by the pipeline’s sea route, were outraged at being relegated to nonpartner status. In Poland, the deal unleashed sentiment recalling the Hitler-Stalin pact that had carved up the nation like a side of beef. 9

Other peculiarities characterized the deal. The pipeline consortium’s chief executive is Mathias Warnig, an ex-Stasi captain. As an East German spy, Warnig had worked with Vladimir Putin in the 1980s when the Russian president was overseeing the KGB bureau in Dresden. (The chair, or once deputy chair, of Gazprom’s board of directors from 2000 to 2005 was Dmitry Medvedev, a Putin associate from St. Petersburg who became first deputy prime minister in 2005 and took over as president in 2008.) And according to Russian sources, while the German public learned of the pipeline deal in fall 2005, certain elites in Moscow had heard of it a full half year earlier. 10

In this episode, crudely put, one sovereign state bought the chancellor of another state, one that is not only sovereign but the third largest industrialized nation in the world. Schroeder’s arrangement with Gazprom evokes the unregulated deal making of a disintegrating command economy, such as those of 1990s transitional eastern Europe, and the circumvention of the free market by a public officer. During the Cold War, obviously, the deal would have been impossible. The Soviet Union did not have private companies, even ones thoroughly entangled with state power as it does today, to make private pacts with foreign leaders. The idea that the chief representative of a key ally of the United States would strike a deal with its rival that could potentially undermine its own national interest seems unthinkable; and the idea that word of such a deal would be spoken of in Moscow long before Berlin, equally unthinkable. Yet the end of the Cold War has shaken up not only relations among states but also their relations to markets, while creating new opportunities and incentives for the merging of official and private interests and power. Gazprom stands as a monument to what a Russian sociologist has called the “privatization of the state by the state”—a practice that apparently is becoming more acceptable. 11