The Role of Private Corporations in the Contribution to Neocolonialism - Rachel Nayman '26

In July 1947, George Kennan warned in the journal Foreign Affairs, “The main element of any United States policy toward the Soviet Union must be that of a long-term, patient but firm and vigilant containment of Russian expansive tendencies.” ¹ Containment is usually taught through famous Cold War events, such as the Marshall Plan and the Cuban Missile Crisis, that reshaped American foreign policy.² But those moments only scratch the surface of how far the US went to defend capitalist markets and its global standing. In 1967, President Lyndon B. Johnson admitted that the United States, “acting through the Central Intelligence Agency,” had provided support for “private American voluntary organizations.” ³ In acknowledging this, Johnson revealed a dangerous mechanism the US began to weaponize during the Cold War. Driven by the imperative to limit the spread of communism, the US government encouraged crossing the boundary between the public and private sectors. Through encouraging this, the US exhibited neo-colonialist behavior. Classical colonialism, direct occupation of a territory by a foreign power, largely ended after World War II.⁴ European powers were exhausted and could no longer maintain overseas empires.⁵ Nationalist movements across Asia and Africa led to mass gains in sovereignty in those areas.⁶ At the same time, the US and USSR emerged as global superpowers, reshaping the old order. As tensions between them intensified, the US rushed to secure 36 international allies, a process that led to exploitative relationships. Neo-colonialism is the indirect control of less developed countries by developed nations, often driven by economic pressure.⁷ As a result of private companies working in tandem with the United States to advance its geopolitical goals, global power dynamics were reshaped out of public view, ushering in a new era of imperialism, best understood as neocolonialism.

In the 1970s, under Indonesia’s new government, the International Telephone & Telegraph Corporation (ITT) established significant influence over key telecommunications infrastructure. After Indonesia gained independence from the Netherlands in 1945, the country faced political instability and widespread poverty.⁸ Foreign firms saw Indonesia’s outdated infrastructure and the economic opportunities that it offered. The newly appointed President Suharto openly welcomed these investments. According to a 1966 telegram from the US Embassy, Suharto “seemed buoyant and confident”⁹ and showed enthusiasm for supporting the Americans “in crushing Communists.” Suharto’s public stance signaled Indonesia’s alignment with the US, making it attractive to American companies, including ITT. In 1967, Suharto passed a foreign investment law that established a formal framework for private capital in Indonesia.¹⁰ ITT then entered Indonesia, promising that its development of telecommunications infrastructure would drive economic growth.¹¹ As part of this arrangement, the company established Indostat, which managed Indonesia’s international satellite communications via the Intelsat standard.¹² Through Indostat, ITT controlled Indonesia’s access to the global network. This meant that the country’s international communications were effectively run by a foreign corporation and therefore dependent on an external entity. Indonesia’s government did not have sole control over its own information channels, a critical component of economic and political sovereignty. In turn, ITT could influence how Indonesia interacted with the global economy, forming a neo-colonial dynamic of dependency between the nation and an American private company.

The threat to Indonesia’s sovereignty was far greater than it appeared on the surface, given ITT’s ties to the US government. Originally founded in Puerto Rico in 1920, the company’s success in World War II brought it to the global spotlight by the 1970s. ITT’s communications network in South America was used by Allen Dulles and US intelligence, and evidence suggests that its infrastructure was involved in espionage.¹³ Dulles was a lawyer who served as the United States Director of the CIA from 1953 to 1961.¹⁴ Thirty years after WWII, the same time as ITT began developing Indostat, the American government compensated the company with $27 million for its damages to German factories.¹⁵ Furthermore, while actively involved in Indonesia, ITT had a CIA director and an ex-president of the World Bank on its board. Within the US, the company was also caught in a financing scandal of the 1972 Republican National Convention, pledging $400,000 in support of the Nixon administration.¹⁷ Though formally a private company, ITT had a well-documented connection to the US government. Considering the company’s motivation in Indonesia and the dependency it built, the US’s ties to ITT add an insidious dimension. All the information needed to draw a connection was publicly accessible but remained well hidden. ITT’s presence in Indonesia effectively extended US geopolitical influence under the cover of being a private enterprise.

The Indonesian government’s eventual banishment of ITT and other foreign investors reflects the nation’s eventual recognition of the threat posed by the American company. On September ¹⁹, 1980, ITT officials and the US ambassador to Indonesia received a letter from the government regarding concerns over their role in the country’s largest telecom company.¹⁸ The government demanded that ITT sell its telecommunications facilities and Indostat.¹⁹ Indonesia then passed a law that made Indostat, now state-owned, the sole provider of international services.²⁰ The forced sale of ITT’s assets and the nationalization of Indostat reveal that Indonesia recognized that the neo-colonial structure had become embedded in its telecommunications system. Suharto’s broader shift away from external corporate involvement reflected a growing recognition of the pernicious connection between foreign investment and the perpetuation of imperialist systems.

John Perkins, in Confessions of an Economic Hit Man, gives a personal account of his involvement in another scheme by an American company to build neo-colonialist dynamics in Indonesia. As an economist for the US engineering firm Chas. T. MAIN, Perkins produced misleading economic forecasts to persuade developing countries to take on debt-ridden infrastructure projects. In 1971, his first assignment in Indonesia made clear to him the scale of financial dependency his work caused. Perkins crafted projections to push Indonesia into an energy project that did not serve its best interest, under the guise of modernization. In doing so, he helped create a one-sided economic relationship that disproportionately benefited his company and the United States. Looking back, Perkins admits, “We were promoting US foreign policy, corporate, and personal interests.”²¹ Every deal Perkins made earned him and his colleagues a fortune. Most turned a blind eye. However, that was not the case for everyone. As he spent more time in Indonesia, Perkins recalled his colleague Howard quitting, declaring: “I’ll not be part of that scam, no matter what you say about the miracles of economic growth!”²² Buying into these projects brought insurmountable debt to developing countries, and in this case, Indonesia was the target. MAIN’s work did not rely on military occupation to build structural dependence but rather on persuasively pitched investments that economists such as Perkins helped create. That illustrates how neo-colonial dynamics form subtly, sustaining systems of dependency that are hardly recognizable from the outside.

American private corporations’ role in perpetuating neo-colonial dynamics through the creation of long-term economic dependency became more extreme following 9/11, as evidenced by Bechtel in Iraq. In 2003, President George W. Bush awarded approximately $2.8 billion to Bechtel, another US engineering company, through USAID to rebuild Iraq’s infrastructure.²³ The process would tie Iraq’s recovery to foreign firms.²⁴ Initially, the company anticipated a great opportunity. Cliff Mumm, Bechtel’s president for infrastructure work, “once hoped the new Iraqi government would turn into a steady Bechtel client, bringing the company lucrative new contracts in a country where virtually every road, power plant and waterworks needs repair.”²⁵ This expectation reveals that Bechtel did not intend to stay temporarily in Iraq. The company was prepared to enter projects that would yield immense profits for them in the long run, creating a lasting exploitative dynamic as Iraq’s debts grew. That debt would create a dependency that would limit economic independence, a situation that the US used to gain an upper hand in the Middle East. Reflective of this tension, Bechtel’s presence in Iraq was not received well, as locals recognized the imposition of America’s geopolitical goals. As the company began building, administrators received assassination threats, a hospital site security manager was murdered, and Iraqi workers refused to participate.²⁶ That reaction was the locals’ way of resisting neo-colonialist behavior from Bechtel and the US. David Harvey, a renowned analyst of Marxism, wrote: “The insurrection that followed can in part be interpreted as Iraqi resistance to fundamentalism against their own free will.”²⁷ Bechtel was building projects with government funding that would introduce a foreign economic system in Iraq, and these systems were designed to last far beyond the end of active wartime. That whole process directly benefited the US. Perkins, who had now quit MAIN, wrote how he noticed “our business and government leaders were taking the system…way beyond anything imaginable in my time.”²⁸ Given that the US was at war with Iraq and that they were being directly funded by the government, Bechtel had immense resources to build this dependency. Meanwhile, the US government was not directly building the debt-ridden infrastructure; the operation was kept hushed.

Critics may argue that infrastructure investment by private foreign corporations is essential for developing nations. Newly independent Indonesia needed capital and employment opportunities, which was a large reason Suharto initially opened the country’s doors to foreign businesses. ITT and MAIN brought essential telecommunications and energy infrastructure into Indonesia that the country previously lacked. Bechtel’s work in Iraq involved rebuilding crucial services destroyed by the conflict. While this is all true, these benefits created power imbalances and a dependency on a foreign entity. The American corporations—ITT, MAIN, and Bechtel—left Indonesia and Iraq with large debts while also building stakes in strategic sectors. In both countries, developments masked the beginnings of neocolonial control.

The experiences of Indonesia and Iraq demonstrate how private corporations reinforce neo-colonial systems; dependency theory reveals how these relationships create enduring structures that limit developing nations’ ability to achieve economic independence. The dependency theory argues that developing nations are systemically positioned to rely on more developed countries.²⁹ Both Indonesia and Iraq allowed foreign investment because they were struggling to kick-start their economies. However, ITT ultimately gave an American firm with political ties a large stake in Indonesia’s communications sector. At MAIN, Perkins sold energy deals to Indonesia with the intention of making a profit for the US. Bechtel’s post-war restructuring of Iraq embedded American interests within the country. All of these arrangements were framed as mutually beneficial while reinforcing structural dependencies. The obsolescing bargain complicates the dependency theory’s claim that developing countries are indefinitely powerless in their relationships with foreign corporations. The obsolescing bargain argues that, while initially developing nations concede sovereignty to attract foreign investors and capital, as local capacity builds, they can regain leverage as investments are embedded within their economies.³⁰ Indonesia’s nationalization of Indostat and its forced divestiture from its telecommunications sector illustrate this. By claiming Indostat and control over its own communications infrastructure, the Indonesian government demonstrated that independence can be regained. However, the Indonesian example also underscores the limitations of the obsolescing bargain. Renegotiation did not entirely erase the structural imbalances created during ITT’s period of control, nor did the country remain insulated from external influences.³¹ The years of ITT in Indonesia had already shaped the economic landscape.

By embedding themselves within critical sectors of developing economies, corporations such as ITT, MAIN, and Bechtel played a central role in perpetuating systems of dependency. Closely following these companies’ behavior and ties with the US government reveals that the end of classical colonialism did not end imperialism entirely. Imperialist structures still exist, and neo-colonialism has proven remarkably resilient because they operate inconspicuously. The cases of Indonesia and Iraq remain critical for understanding how such systems may evolve. Neo-colonialism directly curtails developing countries’ ability to achieve economic independence, as seen in Indonesia and Iraq. The inability to achieve economic independence prevents these countries from addressing issues within their own nations. As Perkins warns, this system reflects a broader “death economy.”³² Allowing this system to continue will hurt not just developing countries but everyone else as well. Though it managed to survive the end of classical colonialism, imperialism need not define the future.

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23., 24. Antonia Juhasz, “Bechtel Takes a Hit for War Profiteering,” August 3, 2006. https://antoniajuhasz.net/article/bechtel-takes-a-hit-for-war-profiteering/.

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30. Oleg Abdurashitov, “The Obsolescing Bargain Model and the Digital Economy,” Kaspersky. https://www.kaspersky.com/about/policy-blog/the-obsolescing-bargain-model-and-the-digital-economy

31. Alfred G Nhema, and Tawanda Zinyama, “Modernization, Dependency and Structural Adjustment Development Theories and Africa: A Critical Appraisal,” Macrothink Institute, March 7, 2016. https://www.macrothink.org/journal/index.php/ijssr/article/viewFile/9040/7444#:~:text=The%20dependency%20theory%2C%20furthermore%2C%20locates,Larrain%2C%201989:118).