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Ruby of the Month: Loretta Napoleoni

06 June 2013

It has been said of the Italian economist turned journalist, author and political analyst, Loretta Napoleoni, that her “great skill is to join the dots, to follow the money: to do, in short, all the things that financial and policing authorities ought to do”.

Through her best selling books, such as, Terror Incorporated: Tracing the Dollars behind the Terror Networks (2005), and Rogue Economics: Capitalism's New Reality (2008), Loretta explains how our political and economic systems have been exploited by semi legal then illegal, criminal and terrorist elements to form a parallel economy to our own, and why eradicating this economy is impossible without making hard decisions.

Our corroded system is not safe and nothing, Loretta says, will make it safe. Her clean, objective eye continues to uncover any number of ‘inconvenient truths’ in the world, today, many of which we would prefer to remain ignorant.

Lorretta lives in the UK and has just returned from Sicily where she has been advising a professor in economics who is running for Mayor of Sicily’s second largest city, Catania.

“I’m a bit involved with him at the moment,” she says, her captivating ability to tell a story accented by her Italian mother tongue.

“By mid June, he will know if he is elected and then he has asked me to be involved in his administration. I’m not sure what I will do. The logistics… I live in London and this is Catania, Sicily… the Mafia is there also…” she stops short with an explosive and derisive, “Ah”, begging the question: “will you have to fight the Mafia and won’t that be dangerous?”

“I don’t think you can fight the Mafia the way people think about ‘fighting’ an enemy or something else,” she answers. “The Mafia is a mentality. If you are to engage with any chance of success you have to fight the way people perceive reality.

“The Mafia is very much in politics. A step forward would be to clean up the political arena and produce politicians that are not corrupted,” she notes, acknowledging with wry honesty how hard unplugging them from power would be.

Born in Rome, Loretta was firmly entrenched in the world of economics as a student and in her career, when an old school friend, who, unbeknownst to Loretta, was a member of Italy’s terrorist organisation the Red Brigade, put her name forward to tell the organisation’s story.

Red Brigade members, Loretta explains, were notoriously silent, not even speaking to their lawyers at their trials: “No one knew very much about them, who they were, why and how they did what they did, which, of course, was good for their own security.”

Loretta saw what such access could provide, but her overriding reason for wanting to get involved – no matter the danger – was to find out why her best friend had never bothered to recruit her?

The answer: Loretta could never have been swayed.

The same stands true today: “I was thinking about it just recently, the question about how I define what it is I do. You see I’m not linked to any organisation. I don’t teach anywhere – in the sense of being tenured to any university. I’m not part of any commercial venture or working for a think tank. I am totally, totally independent.

“I would perhaps define myself as an old fashioned intellectual. It’s really quite rare to find people working on their own like this any more. It’s why I always sound very controversial because I can afford to be controversial. I’m not limited by another perspective. Sometimes, I feel, oh my gosh what am I doing, but most of the time I feel better doing what I am doing because I am more true to myself.”

Meeting the top members of the Red Brigade, Loretta soon realised the day-to-day struggle was not about ideology and the cause, but about securing adequate finance. Running an organisation, no matter its products, requires cash, lots of cash. The head of the Red Brigade, Loretta found, spoke more like the bankers she knew in her day job than the bankers themselves.

Eventually, her economics background drove her to want to understand how this economy had come about, what its importance was to the continuance of illegal, criminal and terrorist activity and what might unplug and halt its progress.

What she has uncovered is fascinating and shocking; the connections, ramifications and end game dizzyingly far reaching.

From trafficking humans and narcotics to blood diamonds, arms, and the role of offshore facilities, the growth of the criminal economy following World War II can be traced through three distinct stages, says Loretta.

Firstly, there was state sponsorship of existing regimes and/or ‘freedom fighters’ during the Cold War as the West and the Soviet Union battled it out for supremacy in third world countries.

Self-determination, which she believes began around the 1970s as deregulation set in, meant terrorist groups began to build their own businesses, mostly illegal, to fund their own operations.

The third phase began with globalisation and the fall of the Berlin Wall. Terror groups linked with apolitical criminal organisations anywhere to form their own networks and a shadowy economy running parallel to the legitimate economy, connected to it in both covert and overt ways, grew.

Running alongside “Rogue Economics”, is the demise of western-style capitalism as evidenced by the GFC.

“The era of multiplying money through money is over,” thinks Loretta.

Capitalism works if you are modernising, industrialising, as in China and Brazil. Europe, Loretta points out, is a post-capitalist society in debt crises with a contracting economy.

Australia, she believes is doing a little better because of our resources but without the mines we’d be in a similar position to Europe.

“I don’t see an implosion of the Euro for the time being,” Loretta says.

“Interest rates are coming down worldwide giving European governments the ability to service the debt in the short run, but I think what will happen is an impoverishment of the economy and of the population.

“We know there is a rich elite getting wealthier and that migration out of Europe is an issue. I think there will be a pick up in the agrarian economy, but that economy is just not big enough to sustain the levels of growth we’ve been used to and the inherent lifestyle expectations that growth brought with it.”

As for the criminal economy, Loretta remains pessimistic: “Phenomena like the GFC benefit this economy. In the wake of the crisis there is more illegality, more criminality. There is not more terrorism. However, because they all move in the same environment I would say the terrorist and illegal economy is actually bigger today than it was before.”

The simple but difficult actions needed to short circuit this rogue economy revolve around stopping supply: “Legalise drugs in a controlled way. This would deal criminal finance networks a massive blow. People smuggling is also a huge business. There is not one single policy that can solve this problem but drugs, for sure.

“On the financial side: outlaw all the offshore facilities. This is, of course, impossible. I know. To implement these measures you need a global government, which we do not have. If you did these two things you’d almost halve the criminal economy.”

Loretta also spoke with us about where Europe is heading, and the role of women, read on for more…