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Edward Snowden: The Untold Story | Threat Level | WIRED

Edward Snowden: The Untold Story | Threat Level | WIRED.

The message arrives on my “clean machine,” a MacBook Air loaded only with a sophisticated encryption package. “Change in plans,” my contact says. “Be in the lobby of the Hotel ______ by 1 pm. Bring a book and wait for ES to find you.”

[…]

He is a uniquely postmodern breed of whistle-blower. Physically, very few people have seen him since he disappeared into Moscow’s airport complex last June. But he has nevertheless maintained a presence on the world stage—not only as a man without a country but as a man without a body. When being interviewed at the South by Southwest conference or receiving humanitarian awards, his disembodied image smiles down from jumbotron screens. For an interview at the TED conference in March, he went a step further—a small screen bearing a live image of his face was placed on two leg-like poles attached vertically to remotely controlled wheels, giving him the ability to “walk” around the event, talk to people, and even pose for selfies with them. The spectacle suggests a sort of Big Brother in reverse: Orwell’s Winston Smith, the low-ranking party functionary, suddenly dominating telescreens throughout Oceania with messages promoting encryption and denouncing encroachments on privacy.

[…]

I read a recent Washington Post report. The story, by Greg Miller, recounts daily meetings with senior officials from the FBI, CIA, and State Department, all desperately trying to come up with ways to capture Snowden. One official told Miller: “We were hoping he was going to be stupid enough to get on some kind of airplane, and then have an ally say: ‘You’re in our airspace. Land.’ ” He wasn’t. And since he disappeared into Russia, the US seems to have lost all trace of him.

I do my best to avoid being followed as I head to the designated hotel for the interview, one that is a bit out of the way and attracts few Western visitors. I take a seat in the lobby facing the front door and open the book I was instructed to bring. Just past one, Snowden walks by, dressed in dark jeans and a brown sport coat and carrying a large black backpack over his right shoulder. He doesn’t see me until I stand up and walk beside him. “Where were you?” he asks. “I missed you.” I point to my seat. “And you were with the CIA?” I tease. He laughs.

[…]

He has been in Russia for more than a year now. He shops at a local grocery store where no one recognizes him, and he has picked up some of the language. He has learned to live modestly in an expensive city that is cleaner than New York and more sophisticated than Washington. In August, Snowden’s temporary asylum was set to expire. (On August 7, the government announced that he’d been granted a permit allowing him to stay three more years.)

[…]

Snowden is careful about what’s known in the intelligence world as operational security. As we sit down, he removes the battery from his cell phone. I left my iPhone back at my hotel. Snowden’s handlers repeatedly warned me that, even switched off, a cell phone can easily be turned into an NSA microphone. Knowledge of the agency’s tricks is one of the ways that Snowden has managed to stay free. Another is by avoiding areas frequented by Americans and other Westerners. Nevertheless, when he’s out in public at, say, a computer store, Russians occasionally recognize him. “Shh,” Snowden tells them, smiling, putting a finger to his lips.

[…]

Snowden still holds out hope that he will someday be allowed to return to the US. “I told the government I’d volunteer for prison, as long as it served the right purpose,” he says. “I care more about the country than what happens to me. But we can’t allow the law to become a political weapon or agree to scare people away from standing up for their rights, no matter how good the deal. I’m not going to be part of that.”

Meanwhile, Snowden will continue to haunt the US, the unpredictable impact of his actions resonating at home and around the world. The documents themselves, however, are out of his control. Snowden no longer has access to them; he says he didn’t bring them with him to Russia. Copies are now in the hands of three groups: First Look Media, set up by journalist Glenn Greenwald and American documentary filmmaker Laura Poitras, the two original recipients of the documents; The Guardian newspaper, which also received copies before the British government pressured it into transferring physical custody (but not ownership) to The New York Times; and Barton Gellman, a writer for The Washington Post. It’s highly unlikely that the current custodians will ever return the documents to the NSA.

That has left US officials in something like a state of impotent expectation, waiting for the next round of revelations, the next diplomatic upheaval, a fresh dose of humiliation. Snowden tells me it doesn’t have to be like this. He says that he actually intended the government to have a good idea about what exactly he stole. Before he made off with the documents, he tried to leave a trail of digital bread crumbs so investigators could determine which documents he copied and took and which he just “touched.” That way, he hoped, the agency would see that his motive was whistle-blowing and not spying for a foreign government. It would also give the government time to prepare for leaks in the future, allowing it to change code words, revise operational plans, and take other steps to mitigate damage. But he believes the NSA’s audit missed those clues and simply reported the total number of documents he touched—1.7 million. (Snowden says he actually took far fewer.) “I figured they would have a hard time,” he says. “I didn’t figure they would be completely incapable.”

[…]

Snowden speculates that the government fears that the documents contain material that’s deeply damaging—secrets the custodians have yet to find. “I think they think there’s a smoking gun in there that would be the death of them all politically,” Snowden says. “The fact that the government’s investigation failed—that they don’t know what was taken and that they keep throwing out these ridiculous huge numbers—implies to me that somewhere in their damage assessment they must have seen something that was like, ‘Holy shit.’ And they think it’s still out there.”

Yet it is very likely that no one knows precisely what is in the mammoth haul of documents—not the NSA, not the custodians, not even Snowden himself. He would not say exactly how he gathered them, but others in the intelligence community have speculated that he simply used a web crawler, a program that can search for and copy all documents containing particular keywords or combinations of keywords. This could account for many of the documents that simply list highly technical and nearly unintelligible signal parameters and other statistics.

And there’s another prospect that further complicates matters: Some of the revelations attributed to Snowden may not in fact have come from him but from another leaker spilling secrets under Snowden’s name. Snowden himself adamantly refuses to address this possibility on the record. But independent of my visit to Snowden, I was given unrestricted access to his cache of documents in various locations. And going through this archive using a sophisticated digital search tool, I could not find some of the documents that have made their way into public view, leading me to conclude that there must be a second leaker somewhere. I’m not alone in reaching that conclusion. Both Greenwald and security expert Bruce Schneier—who have had extensive access to the cache—have publicly stated that they believe another whistle-blower is releasing secret documents to the media.

[…]

Some have even raised doubts about whether the infamous revelation that the NSA was tapping German chancellor Angela Merkel’s cell phone, long attributed to Snowden, came from his trough. At the time of that revelation, Der Spiegel simply attributed the information to Snowden and other unnamed sources. If other leakers exist within the NSA, it would be more than another nightmare for the agency—it would underscore its inability to control its own information and might indicate that Snowden’s rogue protest of government overreach has inspired others within the intelligence community. “They still haven’t fixed their problems,” Snowden says. “They still have negligent auditing, they still have things going for a walk, and they have no idea where they’re coming from and they have no idea where they’re going. And if that’s the case, how can we as the public trust the NSA with all of our information, with all of our private records, the permanent record of our lives?”

[…]

Snowden keeps close tabs on his evolving public profile, but he has been resistant to talking about himself. In part, this is because of his natural shyness and his reluctance about “dragging family into it and getting a biography.” He says he worries that sharing personal details will make him look narcissistic and arrogant. But mostly he’s concerned that he may inadvertently detract from the cause he has risked his life to promote. “I’m an engineer, not a politician,” he says. “I don’t want the stage. I’m terrified of giving these talking heads some distraction, some excuse to jeopardize, smear, and delegitimize a very important movement.”

[…]

While in Geneva, Snowden says, he met many spies who were deeply opposed to the war in Iraq and US policies in the Middle East. “The CIA case officers were all going, what the hell are we doing?” Because of his job maintaining computer systems and network operations, he had more access than ever to information about the conduct of the war. What he learned troubled him deeply. “This was the Bush period, when the war on terror had gotten really dark,” he says. “We were torturing people; we had warrantless wiretapping.”

He began to consider becoming a whistle-blower, but with Obama about to be elected, he held off. “I think even Obama’s critics were impressed and optimistic about the values that he represented,” he says. “He said that we’re not going to sacrifice our rights. We’re not going to change who we are just to catch some small percentage more terrorists.” But Snowden grew disappointed as, in his view, Obama didn’t follow through on his lofty rhetoric. “Not only did they not fulfill those promises, but they entirely repudiated them,” he says. “They went in the other direction. What does that mean for a society, for a democracy, when the people that you elect on the basis of promises can basically suborn the will of the electorate?”

[…]

Snowden’s disenchantment would only grow. It was bad enough when spies were getting bankers drunk to recruit them; now he was learning about targeted killings and mass surveillance, all piped into monitors at the NSA facilities around the world. Snowden would watch as military and CIA drones silently turned people into body parts. And he would also begin to appreciate the enormous scope of the NSA’s surveillance capabilities, an ability to map the movement of everyone in a city by monitoring their MAC address, a unique identifier emitted by every cell phone, computer, and other electronic device.

[…]

Snowden adjusts his glasses; one of the nose pads is missing, making them slip occasionally. He seems lost in thought, looking back to the moment of decision, the point of no return. The time when, thumb drive in hand, aware of the enormous potential consequences, he secretly went to work. “If the government will not represent our interests,” he says, his face serious, his words slow, “then the public will champion its own interests. And whistle-blowing provides a traditional means to do so.”

[…]

Snowden landed a job as an infrastructure analyst with another giant NSA contractor, Booz Allen. The role gave him rare dual-hat authority covering both domestic and foreign intercept capabilities—allowing him to trace domestic cyberattacks back to their country of origin. In his new job, Snowden became immersed in the highly secret world of planting malware into systems around the world and stealing gigabytes of foreign secrets. At the same time, he was also able to confirm, he says, that vast amounts of US communications “were being intercepted and stored without a warrant, without any requirement for criminal suspicion, probable cause, or individual designation.” He gathered that evidence and secreted it safely away.

[…]

One day an intelligence officer told him that TAO—a division of NSA hackers—had attempted in 2012 to remotely install an exploit in one of the core routers at a major Internet service provider in Syria, which was in the midst of a prolonged civil war. This would have given the NSA access to email and other Internet traffic from much of the country. But something went wrong, and the router was bricked instead—rendered totally inoperable. The failure of this router caused Syria to suddenly lose all connection to the Internet—although the public didn’t know that the US government was responsible. (This is the first time the claim has been revealed.)

[…]

“It’s no secret that we hack China very aggressively,” he says. “But we’ve crossed lines. We’re hacking universities and hospitals and wholly civilian infrastructure rather than actual government targets and military targets. And that’s a real concern.”

The last straw for Snowden was a secret program he discovered while getting up to speed on the capabilities of the NSA’s enormous and highly secret data storage facility in Bluffdale, Utah. Potentially capable of holding upwards of a yottabyte of data, some 500 quintillion pages of text, the 1 million-square-foot building is known within the NSA as the Mission Data Repository. (According to Snowden, the original name was Massive Data Repository, but it was changed after some staffers thought it sounded too creepy—and accurate.) Billions of phone calls, faxes, emails, computer-to-computer data transfers, and text messages from around the world flow through the MDR every hour. Some flow right through, some are kept briefly, and some are held forever.

The massive surveillance effort was bad enough, but Snowden was even more disturbed to discover a new, Strangelovian cyberwarfare program in the works, codenamed MonsterMind. The program, disclosed here for the first time, would automate the process of hunting for the beginnings of a foreign cyberattack. Software would constantly be on the lookout for traffic patterns indicating known or suspected attacks. When it detected an attack, MonsterMind would automatically block it from entering the country—a “kill” in cyber terminology.

Programs like this had existed for decades, but MonsterMind software would add a unique new capability: Instead of simply detecting and killing the malware at the point of entry, MonsterMind would automatically fire back, with no human involvement. That’s a problem, Snowden says, because the initial attacks are often routed through computers in innocent third countries. “These attacks can be spoofed,” he says. “You could have someone sitting in China, for example, making it appear that one of these attacks is originating in Russia. And then we end up shooting back at a Russian hospital. What happens next?”

In addition to the possibility of accidentally starting a war, Snowden views MonsterMind as the ultimate threat to privacy because, in order for the system to work, the NSA first would have to secretly get access to virtually all private communications coming in from overseas to people in the US. “The argument is that the only way we can identify these malicious traffic flows and respond to them is if we’re analyzing all traffic flows,” he says. “And if we’re analyzing all traffic flows, that means we have to be intercepting all traffic flows. That means violating the Fourth Amendment, seizing private communications without a warrant, without probable cause or even a suspicion of wrongdoing. For everyone, all the time.”

[…]

Given the NSA’s new data storage mausoleum in Bluffdale, its potential to start an accidental war, and the charge to conduct surveillance on all incoming communications, Snowden believed he had no choice but to take his thumb drives and tell the world what he knew. The only question was when.

On March 13, 2013, sitting at his desk in the “tunnel” surrounded by computer screens, Snowden read a news story that convinced him that the time had come to act. It was an account of director of national intelligence James Clapper telling a Senate committee that the NSA does “not wittingly” collect information on millions of Americans. “I think I was reading it in the paper the next day, talking to coworkers, saying, can you believe this shit?”

Snowden and his colleagues had discussed the routine deception around the breadth of the NSA’s spying many times, so it wasn’t surprising to him when they had little reaction to Clapper’s testimony. “It was more of just acceptance,” he says, calling it “the banality of evil”—a reference to Hannah Arendt’s study of bureaucrats in Nazi Germany.

“It’s like the boiling frog,” Snowden tells me. “You get exposed to a little bit of evil, a little bit of rule-breaking, a little bit of dishonesty, a little bit of deceptiveness, a little bit of disservice to the public interest, and you can brush it off, you can come to justify it. But if you do that, it creates a slippery slope that just increases over time, and by the time you’ve been in 15 years, 20 years, 25 years, you’ve seen it all and it doesn’t shock you. And so you see it as normal. And that’s the problem, that’s what the Clapper event was all about. He saw deceiving the American people as what he does, as his job, as something completely ordinary. And he was right that he wouldn’t be punished for it, because he was revealed as having lied under oath and he didn’t even get a slap on the wrist for it. It says a lot about the system and a lot about our leaders.” Snowden decided it was time to hop out of the water before he too was boiled alive.

At the same time, he knew there would be dire consequences. “It’s really hard to take that step—not only do I believe in something, I believe in it enough that I’m willing to set my own life on fire and burn it to the ground.”

But he felt that he had no choice. Two months later he boarded a flight to Hong Kong with a pocket full of thumb drives.

[…]

rather than the Russian secret police, it’s his old employers, the CIA and the NSA, that Snowden most fears. “If somebody’s really watching me, they’ve got a team of guys whose job is just to hack me,” he says. “I don’t think they’ve geolocated me, but they almost certainly monitor who I’m talking to online. Even if they don’t know what you’re saying, because it’s encrypted, they can still get a lot from who you’re talking to and when you’re talking to them.”

More than anything, Snowden fears a blunder that will destroy all the progress toward reforms for which he has sacrificed so much. “I’m not self-destructive. I don’t want to self-immolate and erase myself from the pages of history. But if we don’t take chances, we can’t win,” he says. And so he takes great pains to stay one step ahead of his presumed pursuers—he switches computers and email accounts constantly. Nevertheless, he knows he’s liable to be compromised eventually: “I’m going to slip up and they’re going to hack me. It’s going to happen.”

Indeed, some of his fellow travelers have already committed some egregious mistakes. Last year, Greenwald found himself unable to open the encryption on a large trove of secrets from GCHQ—the British counterpart of the NSA—that Snowden had passed to him. So he sent his longtime partner, David Miranda, from their home in Rio to Berlin to get another set from Poitras. But in making the arrangements, The Guardian booked a transfer through London. Tipped off, probably as a result of GCHQ surveillance, British authorities detained Miranda as soon as he arrived and questioned him for nine hours. In addition, an external hard drive containing 60 gigabits of data—about 58,000 pages of documents—was seized. Although the documents had been encrypted using a sophisticated program known as True Crypt, the British authorities discovered a paper of Miranda’s with the password for one of the files, and they were able to decrypt about 75 pages. (Greenwald has still not gained access to the complete GCHQ documents.)

Another concern for Snowden is what he calls NSA fatigue—the public becoming numb to disclosures of mass surveillance, just as it becomes inured to news of battle deaths during a war. “One death is a tragedy, and a million is a statistic,” he says, mordantly quoting Stalin. “Just as the violation of Angela Merkel’s rights is a massive scandal and the violation of 80 million Germans is a nonstory.”

Nor is he optimistic that the next election will bring any meaningful reform. In the end, Snowden thinks we should put our faith in technology—not politicians. “We have the means and we have the technology to end mass surveillance without any legislative action at all, without any policy changes.” The answer, he says, is robust encryption. “By basically adopting changes like making encryption a universal standard—where all communications are encrypted by default—we can end mass surveillance not just in the United States but around the world.”

[…]

“The question for us is not what new story will come out next. The question is, what are we going to do about it?”

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Slaves of Happiness Island | VICE United States

Slaves of Happiness Island | VICE United States.

My message to the head of the Louvre would be to come and see how we are living here,” said Tariq,* a carpenter’s helper working on construction of the Louvre Abu Dhabi, a $653 million Middle Eastern outpost of the iconic Parisian museum. Set to be completed in 2015, its collection will include a Torah from 19th-century Yemen, Picassos, and Magrittes.

“See our living conditions and think about the promises they made,” Tariq told me through a translator.

[…]

Recruiters promised him a salary of $326 a month—for a $1,776 recruitment fee to be paid in advance. With a cousin guiding him through the process, Tariq flew to Abu Dhabi to work for the Regal Construction company, one of roughly 900 construction outfits that employ foreign workers in the emirate.

But when Tariq arrived, Regal didn’t need him. For 24 days, he waited without pay, living in a squalid workers’ camp. When work finally materialized, he learned he would make only $176 a month. His boss confiscated his passport so that he couldn’t change jobs or leave the country. He sends half his salary back to his family. After 11 months in the Gulf, he still has not paid back the loan he took out to get there.

[…]

Though it is now only a sunbaked construction site, Saadiyat, a ten-square-mile atoll 500 yards off the coast of Abu Dhabi, will be home to branches of the Louvre, the Guggenheim, and New York University, alongside hotels, shopping, and luxurious homes. It will be a cultural paradise, conjured by the country’s vast oil wealth but built on the backs of men who are little more than indentured servants.

[…]

The Saadiyat Island Cultural District is the flagship project of TDIC (Tourism Development & Investment Company), a state-owned firm responsible for much of Abu Dhabi’s development. Announced in 2007, with an initial budget of $27 billion, according to media reports, Saadiyat will be the largest mixed-use development on the Arabian Gulf.

TDIC’s website promises fantasias of contemporary architecture. Plans show museums that look like they are pierced with moonbeams or modeled after the feathers of giant birds. After a day of culture, visitors will be able to relax at the St. Regis hotel or the Shangri-La. They will be able to play golf on world-class courses, or lounge by a series of man-made lagoons and mangrove forests, and then eat at one of dozens of gourmet restaurants run by international celebrity chefs. While construction of all these projects is happening piecemeal, Saadiyat, as envisioned by Sheikh Sultan bin Tahnoon al Nahyan, chairman of TDIC and member of Abu Dhabi’s royal family, may be completed by 2020. For at least five more years, the island will need a veritable army of laborers.

[…]

Workers at the Louvre are all employed by a company called Arabtec, one of the Gulf’s largest construction outfits. The government of Abu Dhabi holds a 20 percent stake in Arabtec, and workers have staged strikes against them for years.

In 2007, up to 30,000 Arabtec workers went on strike in Dubai. Men building Burj Khalifa, the world’s tallest skyscraper, put down their tools. The strike had been coordinated with mobile phones to protest low wages and poor living conditions. Police arrested 4,000 strikers. At the end of ten days, Arabtec promised a pay raise. Managing Director Riad Kamal told Reuters that the impact on the company’s profits would be less than 1 percent.

But the strikes—and crackdowns—continued. Three thousand more workers went on strike in Dubai in 2011. They made $176 a month and wanted a $41 raise. The police arrested 70 men they claimed were ringleaders. “Their presence in the country is dangerous,” Colonel Mohammed al Murr, director of the Dubai Police’s General Department of Legal and Disciplinary Control, told the National, a state-owned newspaper.

After this, Bangladeshi workers, who were alleged to have helped organize the strikes, were banned for an indefinite period from seeking UAE visas.

[…]

Arabtec also replaced Bangladeshis with Pakistanis. It was classic divide-and-rule strategy, harking back to the British Empire. In August 2013, the tension exploded into riots between Pakistanis and Bangladeshis in Saadiyat Village. Workers turned their tools against one another. The police fired live ammo into the air.

After the riots, Pakistani workers were shipped off to other camps.

[…]

While wages may sometimes rise, the Emirates will never permit workers to formally organize. Workers’ councils, or any form of unionization, are strictly banned.

[…]

Ibrahim lives in one of Abu Dhabi’s labor camps, in a low-rise building set among row after row of identical blocks. Like most camps, it is hidden deep in the desert, far from central Abu Dhabi. Forty thousand men can live in a single camp. They are Nepali, Bangladeshi, Pakistani, Indian—and work for a variety of companies. Often, since they don’t speak English, they won’t know what project they’re building.

Corporate buses ferry workers to job sites. Even these are no respite from the heat. Despite laws to the contrary, many buses have no air conditioning. Commutes last up to two hours, and the temperatures often reach more than 100 degrees Fahrenheit.

Ibrahim showed me a cell-phone video of the windowless dorm he shares with ten men. Outside, he has only a mosque, a hypermarket, and the sun.

On his one day off, Ibrahim told me, he would like to stroll Abu Dhabi’s corniche. But there’s no public transit. He is a virtual prisoner in the workers’ city.

Besides a few cashiers, the camps contain no women—just as the UAE, flush with laborers, is two-thirds male. Men save up for occasional visits to Ethiopian prostitutes. They too are migrants, often former maids who ran away from abusive employers. Because of their dark skin, Ethiopian prostitutes aren’t favored by the country’s Emirati elite and have to charge prices that even laborers can afford.

“We are so bored, and it’s a long time away from home,” Ibrahim told me when I asked him about the women. “We sit in that room for the whole day. We can’t go outside because of the heat, can’t afford to get to the beach or the mall.”

Some workers sleep with each other. Several of Ibrahim’s acquaintances have been jailed for having romantic relationships with other men. To save face, one of them, a Pashtun, told his family he’d been charged with murder.

“A beautiful boy is like a girlfriend,” Ibrahim said. Bus drivers, among the best-paid workers, court good-looking young men with promises of meals at restaurants and cell-phone credit.

[…]

Roughly 10 percent of the UAE’s 9.2 million residents are citizens. The rest are “expats” (if they’re white-collar professionals) or “migrant labor” (if they’re working class). Foreigners can live in the Emirates for generations, but short of proving Emirati heritage, there’s no way they can get citizenship. They can be deported at whim.

Amid this disenfranchisement, Emiratis can appear to foreigners like aristocrats. One can be arrested just for flipping them off in traffic.

Pravasalokam is a hit TV show in Kerala, India. A reality program whose name means “Workers’ World” in Malayalam, the show depicts the rescue of workers who have disappeared—due to jail, poverty, or abuse—in the Gulf. The Gulf nightmare is well known, yet migrants keep coming. The $14 billion a year in remittances they send home is integral to the economies of Nepal and Bangladesh (in Bangladesh the two largest sources of foreign currency are migrant labor and garments). But migrants are pushed by war as well as cash. Many workers hail from Kashmir, Pakistan’s Taliban-dominated Khyber-Pakhtunkhwa province, and other crisis areas in South Asia.

Whatever his country of origin, a migrant almost always has to pay a recruiter fee (which is then shared with subcontractors inside the Emirates). While hiring companies claim to cover costs like airfare, visas, and medical exams, recruiters in the sending countries and their partners in the UAE often skim a year’s potential wages from the worker himself. In some countries recruiters dodge local labor laws by hiring subcontractors, who trawl villages for the illiterate, the desperate, or those simply frustrated enough to risk the dangers of the Gulf. Workers take out loans, empty their families’ savings, or use land as collateral.

At Mafraq Workers’ City No. 2, a labor camp 23 miles from central Abu Dhabi, I interviewed workers cutting one another’s hair in an improvised outdoor barbershop. They crowded around me, telling me about salaries of $150 to $300 a month and police who hassled them if they dared visit the beach in their salwar kameez. While Emiratis are dependent on migrant labor, they’d prefer that the workers stay invisible in their off-hours.

Friends crouched in the shade beneath buses. One group sneaked a forbidden bottle of wine. The rules here were as strict as summer camp—no booze, no cooking, no gambling, no porn.

[…]

Saadiyat Island is also home to what is billed to be the most humane labor camp in the entire Gulf. In response to international pressure, TDIC created what they call the Saadiyat Accommodation Village to house all workers building Western cultural institutions. In the words of its developer, it “provide[s] an internationally recognized world-class standard of living.” Its huge cricket field, writing classes, and a library containing Steinbeck are everything a visiting dignitary could desire.

[…]

Tariq, the Louvre worker, told me, “The grounds are the only things that are good. Everything else will make you feel awful. The bathrooms always stink. We don’t even have doors there. The food given to us is inedible.”

[…]

According to Ross, Saadiyat Village is a “high-security zone” where workers are constantly monitored.

Workers live more than a mile beyond a checkpoint they are forbidden from walking to. Their only escape is a bus that runs once a week to Abu Dhabi. In the wake of the Arab Spring, security concerns are cited to outside visitors as a reason for keeping the all-male workforce in physical isolation. But if controlling and isolating workers helps TDIC manage the fallout of international pressure, it also produces a less than ideal side effect for the press-shy Emiratis: It helps workers organize and resist.

[…]

The most simplistic accusation against Abu Dhabi is that by building branches of the Louvre or Guggenheim, the city is buying culture. This logic pretends that Cleopatra’s Needle ended up in Paris through the goodness of Egyptian hearts, or that Lord Elgin didn’t just pillage the marbles that bear his name.

Those accusations also perpetuate another myth: The UAE has no culture of its own.

Two generations ago, the Emiratis were Bedouins, nomadic desert people whose main economic activity was pearl diving. They built wind towers, trained falcons, and composed swashbuckling poetry. Emirati culture was rich, but Emiratis were poor. Now they are wealthy. From the lens of European dominance, Emiratis can seem like improper overlords.

Or perhaps Europeans are just jealous. The UAE’s oil money could have disappeared in the coffers of Western energy companies or corrupt leaders. Instead, Sheikh Zayed bin Sultan al Nahyan, the founding father of the UAE, built a munificent welfare state. Emirati citizens get free education, health care, and electricity, as well as generous wages subsidized by the government. They pay no taxes. But the foreigners who compose 90 percent of the population don’t share in this largesse.

[…]

One afternoon I stood inside the Sheikh Zayed Grand Mosque, in central Abu Dhabi. Built in 2007, the gigantic structure made me gasp at its loveliness. Its design spans the breadth of Muslim art: The domes were Taj Mahal, the stucco Moroccan, the tiles Turkish, the gold palm columns seemingly from the future. It embodied the cosmopolitanism of the Muslim world, vital with the energy of this young country.

[…]

Andrew Ross from Gulf Labor stressed that an institution’s responsibilities don’t end with construction. “If you visit Saadiyat, you find NYU is the only finished building. Apart from the workers’ village, it’s surrounded by nothing. It will have construction going on for 20 years around it.”

[…]

“You know how Ford said you can have any car you like as long as it’s black? In the UAE they can make whatever you want, as long as it’s a building. They can’t make free speech or human rights,” Ahmed Mansoor told me in the curtained-off back room of a Dubai restaurant.

[…]

When I asked him about the Western cultural institutions being built on Saadiyat, he told me, “All these glittering buildings and huge names are there to hide an ugly face… Artists around the world appreciate the human struggle for freedom. In the UAE, we are only buying the image.”

Can you have art without freedom? Splendid objects get made for the highest bidder. Challenging ideas require something more than the Emirates may care to provide.

I put this question to a young artist born in the UAE. He told me: “By entertaining any vision of a culturally engaged metropolis, [the UAE] has opened up a Pandora’s box. Critical culture is forced into a more subversive form. This subversion itself can be a form of poetry. I have to think like this, because I live here and I need to survive the aftermath of my own thoughts.”

[…]

I asked a butcher the price of a cow’s head. The crowd screamed as undercover cops yanked him away. The butcher was arrested, seemingly as punishment for speaking to a Westerner. Terrified that he might also be arrested, Ibrahim suggested that we leave the market quickly.

[…]

“I have nothing to do with the workers,” said Zaha Hadid, the star architect behind one of Qatar’s phantasmagoric soccer stadiums being built for the 2022 World Cup, when the Guardian asked her in February 2014 about the deaths of 882 migrant laborers constructing her design. “It’s not my duty as an architect to look at it.” Hadid is now designing the Abu Dhabi Performing Arts Centre on Saadiyat.

The West’s museums lie atop metaphoric graveyards. Art’s temples have always been built on the backs of the poor. The Louvre in Paris touts its history in the passive voice on its website: “Was built to the west of the city”; “wings begun under Louis XIV were partially completed.” But what of the peasants who sweated and died in the construction? Of them, official histories have little to say. Neither do official histories mention the miners who mined the fortune that let Solomon R. Guggenheim build the museum that bears his name.

Defenders of Western institutions in Abu Dhabi are right about one thing. They are not unique. The labor abuses at the Louvre or NYU are the same labor abuses that are happening throughout the UAE. The UAE is not the worst country for workers in the Gulf, and the Gulf is not the worst region for workers in the world. Most countries sustain themselves on the labor of transient, disposable people. This may be unofficial, as in the United States (our agricultural industry would collapse overnight without undocumented migrants), or it may be institutionalized, as in the UAE.

Why New York Real Estate Is the New Swiss Bank Account — New York Magazine

Why New York Real Estate Is the New Swiss Bank Account — New York Magazine.

“The global elite,” says developer Michael Stern, “is basically looking for a safe-deposit box.”

[…]

The influx of global wealth is most visible on the ultrahigh end, as Stern and other builders are erecting spiraling condo towers and sales records are regularly shattered by foreign billionaires, like the Russian fertilizer oligarch Dmitry Rybolovlev, purchaser of the most expensive condo in Manhattan’s history ($88 million), and Egyptian construction magnate Nassef Sawiris, who recently set the record for a co-op ($70 million). But much of the foreign money is coming in at lower price points, closer to the median for a Manhattan condo ($1.3 million and rising). In fact, if you’ve recently been outdone by an outrageous all-cash bid for an apartment, there’s a decent chance that, behind a generic corporate name, there’s a foreign buyer and an offshore bank account.

[…]

The Census Bureau estimates that 30 percent of all apartments in the quadrant from 49th to 70th Streets between Fifth and Park are vacant at least ten months a year.

To cater to the tastes of their transient residents, developers are designing their projects with features like hotel-style services. And the new economy has spawned new service businesses, like XL Real Property Management, which takes care of all the niggling details—repairs, insurance, condo fees—for absentee buyers.

[…]

Even those with less reflexively hostile reactions to foreign buying competition might still wonder: Who are these people? An entire industry of brokers, lawyers, and tight-lipped advisers exists largely to keep anyone from discovering the answer. This is because, while New York real estate has significant drawbacks as an asset—it’s illiquid and costly to manage—it has a major selling point in its relative opacity. With a little creative corporate structuring, the ownership of a New York property can be made as untraceable as a numbered bank account. And that makes the city an island haven for those who want to stash cash in an increasingly monitored global financial system. “With everything that is going on in Switzerland in terms of transparency, people are being forced to pay taxes on their capital that they used to hold there,” says Rodrigo Nino, the president of the Prodigy Network. “Real estate is a great alternative.”

[…]

“Real estate is a wonderful way to cleanse money. Once you buy real estate, the derivation of that cash is forgotten.”

[…]

Every year, the British real-estate brokerage Knight Frank publishes a document called “The Wealth Report.” The latest edition produces the curiously precise estimate that there are 167,669 individuals in the world who are “ultrahigh net worth,” with assets exceeding $30 million. “Of course, the big question is: are the rich getting richer?” the report asks. It answers gleefully in the affirmative, forecasting that over the next decade, the ranks of the ultrarich will increase by 30 percent, with much of the growth coming in Asia and Africa.

This new global wealth is being lavished on the usual status items—planes, yachts, contemporary art—but Knight Frank is pleased to report that the rich favor real estate most of all. Real estate can serve as a convenient pied-à-terre, an investment hedge against a wobbly home currency, or an insurance policy—a literal refuge if things go bad. Other financial centers boast a similar mix of glamour and apparent security—Knight Frank’s list of the top-ten “global cities” includes London, Paris, Geneva, and Dubai—but New York is forecast to add more ultrahigh-net-worth individuals than any city outside Asia over the next decade.

[…]

As expensive as New York’s luxury real estate might seem, it’s a bargain compared to other global capitals; a million dollars will buy twice as much space here as it does in Monaco or Hong Kong. New York is perceived to be more stable than Miami, Shanghai, and Beijing. It is much cheaper than London, where tabloid-fanned outrage over property prices has created an uncomfortable political climate and various new or proposed taxes are aimed at foreign investors and offshore entities. In New York, by contrast, buyers of new construction often qualify for a tax abatement.

[…]

The first rule of selling property to the ultrarich is that you can’t try to sell them property—you offer them status, or a lifestyle, or a unique place in the sky. A marketing video for 432 Park Avenue, scored to “Dream a Little Dream,” features a private jet, Modigliani statuary, and Harry Macklowe himself costumed as King Kong. One recent morning, at the development’s sales office in the GM Building, Wallgren led me down a hallway lined with vintage New York photographs, through a ten-by-ten-foot frame meant to illustrate the building’s enormous window size, to a scale model of Manhattan.

“If you bend down like this,” Wallgren said, stooping to street level, “you can really appreciate the height of it.”

[…]

“Rich people come to the U.S., and these people are busy,” he said. “What is, for these people, very important? I am asking you! To save the time.” Perepada doesn’t drag his clients to a bunch of open houses. He takes them to Jean Georges, gets them hockey or Broadway tickets, rents helicopters or horse carriages, sets them up with plastic surgeons. He says that by building a rapport, he is able to sell 80 percent of his properties with a simple phone call.

[…]

“Did you see The Wolf of Wall Street?” Perepada asked as we drove. “I love this movie. You see how he works? Amazing. ‘If you trust me, you have to buy. If you don’t trust me, you need to work with someone else.’ This is my regulation: Trust me, take it.”

[…]

Jajan believes the most important service he offers is reassurance. “The client wants an adviser here; he wants to feel comfortable knowing he has someone he can trust here in the United States.” Jajan’s firm offers a range of management functions. “We recently purchased a vacuum cleaner,” he told me. “It was for one of our high-net-worth clients that bought $15 million worth of property this year. We’re not about to say, ‘We don’t do that, we’re lawyers.’ ”

[…]

An anonymous high-net-worth client of Credit Suisse, who spoke to U.S. Senate investigators after taking advantage of an amnesty for tax cheats, described the process by which he would manage his funds when visiting Zurich. A remote-controlled elevator would take him to a bare meeting room where he and his private banker would discuss his money; all printed account statements would be destroyed after the visit.

The theatrical secrecy is designed to build personal trust between such bankers and their clients, which is especially vital when the goal of the transactions is to conceal assets from the prying eyes of rivals, vengeful spouses, or tax collectors. Moving the money itself is a relatively simple matter: A wire or a suitcase can convey cash from China to Singapore, or from Russia to an EU member state like Latvia, and once the funds have made it to a “white list” country, they can usually move onward without triggering alarms. Concealing the true ownership of a property or a bank account is trickier. That’s where the private bankers, wealth advisers, and lawyers earn their exorbitant fees.

Behind a New York City deed, there may be a Delaware LLC, which may be managed by a shell company in the British Virgin Islands, which may be owned by a trust in the Isle of Man, which may have a bank account in Liechtenstein managed by the private banker in Geneva. The true owner behind the structure might be known only to the banker. “It will be in some file, but not necessarily a computer file,” says Markus Meinzer, a senior analyst at the nonprofit Tax Justice Network. “It could be a black book.” If an investor wants to sell the property, he doesn’t have to transfer the deed—an act that would create a public paper trail. He can just shift ownership of the holding company.

Recently, scrutiny from the United States has punctured some of the traditional secrecy of Swiss banks. But that has just pushed clients to boutique advisory firms, often run by the same personnel. “Banks like working with those firms,” Meinzer says, “because they are then legally in the clear, without the risk of going to prison.” As international blacklisting has pushed some offshore locales toward greater legal compliance, new havens have arisen. New Zealand trusts offer similar secrecy to those of the Caymans, without the stigma.

It’s a sophisticated, well-oiled system that rarely requires crude subterfuge. Though U.S. authorities track all transfers over $10,000, a wire into a real-estate lawyer’s escrow account should look perfectly routine. “A lot of times, I don’t even know where my clients are from,” says the lawyer Bruce Cohen. “But I know that certain countries are very careful about the money that leaves their country.”

[…]

The best—though still fuzzy—global estimates say as much as $1.5 trillion in criminal proceeds is laundered each year. The United Nations figures that as little as one-fifth of one percent of that is ever recovered.

 

Sun and Shadows: How an Island Paradise Became a Haven for Dirty Money | International Consortium of Investigative Journalists

Sun and Shadows: How an Island Paradise Became a Haven for Dirty Money | International Consortium of Investigative Journalists.

Like most small tax havens, Seychelles has an outsized impact that belies its modest market share. As Al Jazeera’s undercover muckrakers discovered, offshore patrons and the accountants, bankers and other operatives who help them usually don’t settle for a single offshore company or bank account. They create elaborate webs that use multiple jurisdictions, multiple front men and multiple layers of ownership. Smaller havens such as Seychelles are crucial links in these chains of secrecy and in the wider offshore system.

They support a system that, critics charge, caters to drug traffickers, fraudsters, money launderers and high-net-worth tax dodgers, fueling onshore corruption and poverty. By one estimate, as much as $32 trillion in private financial wealth is hidden is offshore havens — roughly equivalent to the annual output of the U.S., Chinese and Japanese economies combined.

[…]

Seychelles is happy to help offshore clients embrace the flexibility of the international tax system: “Paying less tax as long as it is within the parameter of the law is legal. It is not even your patriotic duty to pay a cent more.” 

[…]

in a nation where the president’s party controls 31 of 32 seats in the legislature, Michel’s silence on questions about his offshore assets will close the door on any discussion of the issue.

“A president and his cronies stashing their money in an offshore account, in order to keep it away from their own tax authorities — in any other part of the world, these people would be on their knees, begging for forgiveness,” says Ferrari. “Here, guess what? It’s just business as usual.”

[…]

The offshore action in Seychelles centers on the main square, in a series of unlovely multi-story office complexes. Accountants and corporate operatives work in mostly interchangeable, white-walled offices, on desks cluttered with manila folders. They take their lunches at one of the Victoria members-only clubs, and spend the afternoons receiving a steady stream of foreign clients, or chatting on the phone with the European and American lawyers who help steer new business their way.

[…]

In 1995, the Republic of Seychelles enacted the Economic Development Act, a law that offered broad immunity from prosecution and extradition to any foreign national who invested at least $10 million in the local economy.

U.S. officials described it as the equivalent of a “Welcome, Criminals” banner. Britain’s Serious Fraud Office called it “the perfect present for drug barons, fraudsters and money launderers.” Under international pressure, the government backed down, at least on paper. The law was taken off the books.

[…]

For critics of tax havens, the argument that banks are integral to the offshore world isn’t a defense; it’s evidence of how deep offshore abuses are rooted in the global financial system. Many of the world’s biggest banks — including HSBC and JPMorgan Chase & Co. — have been sanctioned for failing to follow anti-money laundering rules. Barclays itself paid $298 million tosettle U.S. criminal charges that it shifted hundreds of millions of dollars on behalf of banks and individuals in Cuba, Iran, Libya and other rogue nations.

[…]

Around the world, offshore financial centers are often touted as economic engines that help small, resource-starved places improve themselves. But it is often a few well-connected locals — along with expatriate lawyers and accountants from the U.S., the U.K., Australia and other rich nations — who enjoy most of the profits.