Keeping Up With the Jones Act
Why are Ghislaine Maxwell, Vladimir Putin, and Elaine Chao so interested in the Arctic?
|Jul 31, 2020||35||1|
A YEAR AGO, when Scott Borgerson was first linked to alleged child rapist and Jeffrey Epstein’s ex, Ghislaine Maxwell, I began thinking a lot more about my January 2019 conversation with him. Greg Olear did a bang-up job introducing Borgerson on these pages, but I reckon there’s more to this story than a quant, his problematic mistress (or wife?), and some ship-tracking software.
During our two-hour meeting, Borgerson lightly touched on some heavy topics—mining, Arctic politics, and the Jones Act. I’ve spent the last year mulling over how these things are connected.
The Arctic Circle
Borgerson met Maxwell in Reykjavik at a conference for the Arctic Circle Assembly, an organization founded by Alice Rogoff, ex-wife of Carlyle Group co-founder David Rubinstein. Rogoff was one of the people Borgerson encouraged me to reach out to, and according to this July 2 story, Rogoff and Maxwell were paling around in Alaska during the Iditarod, which neatly ties everyone together.
After meeting with Borgerson, I looked up Rogoff and became increasingly suspicious of the motives behind her nonprofit. Its stated mission: “To facilitate dialogue and build relationships to address rapid changes in the Arctic” and “strengthen the decision-making process by bringing together as many international partners as possible to interact under one large open tent.” To my mind, the Arctic Circle Assembly seemed opportunistic—a way for the very rich, the very powerful, and the very ambitious to rub shoulders while adjudicating the fate of a contested region potentially worth trillions of dollars under the guise of…concern?
In fact, the gas/oil/mineral ore oligarchs of the world probably can’t wait for Greenland and the Arctic Ocean to melt. Greenland’s 836,000 square miles offer an Aladdin’s cave of vast riches if you can score the mineral rights and get under that ice.
Batteries, circuits, computers, and robots don’t work without the metals found in mined ore. Nearly everything in the 21st century demands cobalt, zinc, uranium, tin, and copper—elements just waiting under those majestic glaciers for someone with a big enough shovel.
There isn’t enough cobalt on the planet to build the batteries Elon Musk needs to supply his electric cars, trucks, and solar-powered systems. Musk knows this. My guess is that his Mars conquest isn’t about colonizing; it’s about mining. If he can pull it off, he’ll unlock unfathomable wealth. Next to him, Bill Gates will look like a pauper.
The Russians know this—they’re already neck-deep in the mining biz.
And the Chinese know this. Why do you think they were poking around on the dark side of the moon last year?
Industry and tech are desperate for metals, but mining ore is dirty, dirty, dirty business. It doesn’t take a lot of brains to extract the stuff, but to became a billionaire off of it, you need epic levels of ruthlessness. Ideally, you want to dig where environmental and labor protections are lax to non-existent—rules cut into profits—so mining companies tend to sow chaos wherever they go.
The soulless, shadowy, nesting-doll-within-nesting-doll multinational company Glencore, for example, operates in the Democratic Republic of Congo (DRC), a country that has remained nearly lawless, by design, ever since King Leopold of Belgium created hell on earth there in the nineteenth century. Glencore proudly continues the late king’s tradition. According to a report by IndustriALL Global Union, “The Paradise Papers revealed that Glencore paid huge sums of money to a corrupt fixer to obtain mining interests in DRC…Glencore operations in the Kolwezi area exposed people to horrendous conditions. Workers say they are treated like slaves, exposed to danger at work, and are exposing their families to occupational diseases because they have no facilities to wash.” (Ed. note: Glencore, founded by pardoned tax cheat Marc Rich, was also involved in the sale of Rosneft mentioned in the Steele dossier).
Last December, a lawsuit was filed in DC against Apple, Microsoft, Google, Tesla, and others on behalf of 14 children in the DRC who were killed or maimed while mining. The Guardian reports: “The lawsuit, which is the result of field research conducted by anti-slavery economist Siddharth Kara, accuses the companies of aiding and abetting in the death and serious injury of children who they claim were working in cobalt mines in their supply chain.”
Demand for metals is so great that deepsea mining is finally becoming logistically viable—and if you think killing whales is bad, wait till these companies churn up the seabed in the anarchic international waters. Several startups (and presumably, big drilling companies like Shell, which offered $1 million to anyone who could figure out how to cheaply map the ocean floor) have tried for years to figure out how to efficiently extract minerals thousands of feet underwater, but the costs were too great and the rewards too low to justify investment. The global explosion of tech is shifting that calculus. It’s just a matter of time before the seabed, aka Earth’s final frontier, becomes a wasteland.
Borgerson told me that one of the things his company, CargoMetrics, is designed to do is track the movement of bulk carriers around the world. Bulk carriers transport ore. I’m not saying that Borgerson’s objectives are nefarious, but his data may be more valuable than the cargo in those ship’s holds. What creepy oligarch wouldn’t want to know who’s shipping what ore where? Certainly Ghislaine’s Rolodex of billionaires and spies inherited from her father, Robert Maxwell, or through her many years as Jeffrey Epstein’s accomplice, could make good use of Borgerson’s data to corner markets, thwart competition, disrupt supply chains, and sell or buy from not-very-good-people for profit, profit, profit.
Nationalism is a poor man’s dog-whistle
When we begin to think of geopolitics from the point of view of shipping, mining, and logistics, the huge thrust toward chaos in the US and the UK starts to make sense. The people running these mining and energy companies are falling over each other to control valuable mineral rights. There are just three things standing in their way: functioning governments, international accords, and UN monitoring.
Turns out these are not insurmountable problems.
The US and the EU once stood at the epicenter of many international agreements drawn up to keep corporate evil world-domination plans in check. They supported the UN’s standards for shipping, mining, environmental, and labor, for example, forcing ethically challenged companies to at least attempt to work within the law.
Now those three entities—the US, the EU, and the UN—on which the welfare of humanity seemed to depend—are being destroyed from the inside via kompromat (Epstein was a kompromat kreator) and dark money. Widespread disinformation campaigns, mainly from Russia, have successfully nudged the US and the UK further into domestic anarchy. The oligarchs who run Russia, along with everyone else who gets in bed with them (ahem, Mitch McConnell), plus the shady, hard-to-pin-down mega mining companies and gazillion-dollar energy speculators like Vitol, want nothing more than for international law to melt away like icebergs.
So undermining democracy in the States has little to do with surging Russian nationalism or the result of Putin’s decades-long battle to Make Russia Great Again (MRGA) and humiliate America. True wealth and power live in the international business pacts we’ll never get our hands on.
Brexit and Trump were created to weaken international law and stir up pandemonium while the oligarchs carve up the Arctic.
Who can resist free shipping?
Over in Asia, the Chinese are forging a much more sustainable path to world domination. They’re busy building a Chinese-dominated global supply chain. For years, China has quietly pieced together a logistics network so vast that it boggles the mind, erecting modern ports and highways in all neglected corners of the world, especially Africa, to ensure that Chinese interests can move goods into—and raw resources out of—every nook and cranny.
When you own the supply chain, you control what sells where, and for how much. That’s why Amazon isn’t so much a tech company as a logistics company, and Bezos, the tsar of free shipping, is on his way to becoming the world’s first trillionaire.
Logistics is a stronger play for world domination than anarchy because trade routes nourish the economy instead of destroying it. And infrastructure-building can resemble kindness on a planet increasingly devoid of kindness. The Chinese are already in the Arctic building roads and ports in exchange for money that Greenlanders hope to use to buy their independence from Denmark. So while rich divorcees were sipping Brennivín and chowing on whale meat with Google execs and quants in Iceland, Greenland was swapping its mineral rights for Chinese cash and prizes. (And we thought Trump was crazy for wanting to buy Greenland!).
Ironically, logistics was once America’s strategy for achieving superpowerdom. Infrastructure projects in post-war Europe and developing countries greased the way for American goods to flood in. And we looked so good doing it.
The Jones Act, demystified
The heart of America’s global conquest in the 20th century lay in the so-called Jones Act, a constellation of laws written in 1920 to revive its shipping industry. The Jones Act is based on some of the US’s earliest laws, back when shipping was such a critical source of federal money that Alexander Hamilton relied on his “Essex Junta”—a group of New England shipping magnates—to help him shape government to protect their interests. In short, the law dictates that only American ships can move goods from American port to American port. And by “American,” the laws are very clear: to be registered in the US, ships have to be built in the US, owned by Americans, and crewed by Americans. Hamilton even established a proto-Coast Guard—not to seize illegal drugs and medivac heart attack victims off cruise ships, but to nab customs-dodgers sailing up and down the east coast.
By insulating shipowners, shipbuilders, ports, and sailors from foreign competition, the US government not only filled its coffers with merchant gold, but also gained a super cheap standing navy. Any and all American merchant ships and sailors can be conscripted to transport soldiers, supplies, and materiel. During the War of 1812, merchant ships were even offered bounties for harassing the British Navy on the high seas, which is arguably the main reason why the Crown finally, finally abandoned her colonies.
Every single war since then has depended on sea power—not those gunboats, aircraft carriers, and billion-dollar Zumwalt-class destroyers, but the US’s huge fleet of merchant ships. WWII, Vietnam, the Philippine War, Korea, the Gulf War—all impossible to wage without the support of these privately owned vessels and the nonmilitary personnel sailing them.
America’s first great shipping fleet went into decline after the Civil War as the nation’s attention drifted from water to land, from Europe to California. Railroads, steel, gold, and oil replaced ports and five-masted schooners. Ocean-going vessels rotted; steam-powered paddle-boats on the Mississippi became the symbol of a new inward-focused America.
Neglect shipping at your peril
At the outbreak of World War I, the US was at the mercy of foreign shippers who doubled and tripled their fees during the war. Sure, imports got hella expensive. But the skyrocketing cost of exporting goods really stung. American stuff became too expensive to sell abroad. At the war’s end, US mass unemployment, crushing racism and riots, oh and a pandemic, too, made 1919 look a lot like 2020.
Price-gouged to embarrassment, the US enacted the Jones Act in 1920 to rebuild its fleet and boost trade. The act reinforced America’s cabotage laws, adding a supercharged stimulus: a nationalized shipbuilding effort. Hard to believe now, but the US government once built and owned merchant ships that private companies could lease for cheap to reinvigorate international trade.
I don’t mean to oversimplify, but the Jones Act worked. America’s merchant fleet expanded. Goods flowed from American factories out into the world, and taxation on exports became a major source of federal revenue. A couple of decades later, those same merchant ships were used to run supplies across the Atlantic and Pacific. The shipyards created via stimulus in the twenties began cranking out Liberty ships. In other words, thanks to the Jones Act, shipping infrastructure was already in place for the States muscle onto the world stage during World War II.
But from the day it was enacted, conservatives began hacking away at the Jones Act. Its labor, regulatory, tax, and environmental restrictions offended free-market folks. Most American seamen had successfully unionized, a further offense. Oh, and nationalized shipbuilding—wasn’t that, heavens forbid, socialist? Conservative legislators forced the government to abandon its shipbuilding efforts and sell those vessels for pennies on the dollar to…surprise…their conservative anti-Jones Act supporters—the very folks who’d been so offended by the prospect of government waste.
Lacking the context and history to recognize the strategy behind the Jones Act, conservative voices eventually got their way. By the 1970s, nearly all the tax incentives designed to protect America’s maritime industry from foreign incursion had melted away. Without those tax incentives, American ship owners “fled the flag,” registering their vessels in other countries to evade US labor, taxes, and shipbuilding laws. America’s entire cruise industry is now registered elsewhere. And US-registered ships make up just three percent of the global merchant fleet.
The decline of US shipping coincides with offshoring. We’ve been told cheap labor drove manufacturing abroad, but the role of shipping in that calculation can’t be overstated. America’s trade balance flipped around 1972. We’ve imported more than we export every year since.
On the centennial of the Jones Act, Borgerson told me that he loathes the legislation, and that he’d been informally advising the Trump administration about its repeal. Indeed, the Jones Act made a brief appearance in mainstream news when Trump temporarily rolled it back for 10 days after Hurricane Maria, under the guise of expediting goods to Puerto Rico. We know Trump doesn’t give a rat’s ass about the people living on the island, so why temporarily waive a federal law on their behalf? I’d argue he was testing the waters to see who squawked the loudest about keeping the law intact.
While Trump messes with tariffs and destabilizes international accords, China’s already got America licked—like Amazon, it heavily subsides its logistics industry to keep its goods flowing into the world. You can bet that Secretary of Transportation Elaine Chao knows how this works. Her family’s shipping company is a beneficiary of substantial Chinese government support.
I’d argue that the Trump Administration’s push to abolish the Jones Act is a way to open American waters to dark money and foreign interests. Certainly repealing the Jones Act would please Secretary of Commerce Wilbur Ross, who refuses to extricate himself from Chinese and Russian shipping interests, as well as Chao and her husband Mitch McConnell, who I think have little allegiance to American interests.
One more note about American security and the Jones Act: The law doesn’t just cover ships pulling into New York harbor and Long Beach in California. Bulk carriers, cargo ships, and oil and gas ships also travel on the Great Lakes and up and down the Mississippi. Imagine all that maritime activity suddenly opening up to anyone and everyone who’s got a vessel. Remember, too, that the FAA imposes similar restrictions on American airspace. You wouldn't want just anyone flying a plane over Manhattan, would you?
Rachel Slade (@RachelSlade1) is a Boston-based freelance journalist and the Mountbatten Award-winning author of Into the Raging Sea: Thirty-Three Mariners, One Megasorm, and the Sinking of El Faro, a New York Times Notable Book of the Year.
ARCTIC OCEAN – The Canadian Coast Guard Ship Louis S. St-Laurent makes an approach to the Coast Guard Cutter Healy in the Arctic Ocean Sept. 5, 2009. The two ships are taking part in a multi-year, multi-agency Arctic survey that will help define the Arctic continental shelf. Photo Credit: Patrick Kelley, U.S. Coast Guard