Robert Gates, George W. Bush’s choice to replace Donald Rumsfeld as Defense Secretary, is a trusted figure within the Bush Family’s inner circle, but there are lingering questions about whether Gates is a trustworthy public official.
The 63-year-old Gates has long faced accusations of collaborating with Islamic extremists in Iran, arming Saddam Hussein’s dictatorship in Iraq, and politicizing U.S. intelligence to conform with the desires of policymakers – three key areas that relate to his future job.
Gates skated past some of these controversies during his 1991 confirmation hearings to be CIA director – and the current Bush administration is seeking to slip Gates through the congressional approval process again, this time by pressing for a quick confirmation by the end of the year, before the new Democratic-controlled Senate is seated.
If Bush’s timetable is met, there will be no time for a serious investigation into Gates’s past.
Fifteen years ago, Gates got a similar pass when leading Democrats agreed to put “bipartisanship” ahead of careful oversight when Gates was nominated for the CIA job by President George H.W. Bush.
In 1991, despite doubts about Gates’s honesty over Iran-Contra and other scandals, the career intelligence officer brushed aside accusations that he played secret roles in arming both sides of the Iran-Iraq War. Since then, however, documents have surfaced that raise new questions about Gates’s sweeping denials.
For instance, the Russian government sent an intelligence report to a House investigative task force in early 1993 stating that Gates participated in secret contacts with Iranian officials in 1980 to delay release of 52 U.S. hostages then held in Iran, a move to benefit the presidential campaign of Ronald Reagan and George H.W. Bush.
“R[obert] Gates, at that time a staffer of the National Security Council in the administration of Jimmy Carter, and former CIA Director George Bush also took part” in a meeting in Paris in October 1980, according to the Russian report, which meshed with information from witnesses who have alleged Gates’s involvement in the Iranian gambit.
Once in office, the Reagan administration did permit weapons to flow to Iran via Israel. One of the planes carrying an arms shipment was shot down over the Soviet Union on July 18, 1981, after straying off course, but the incident drew little attention at the time.
The arms flow continued, on and off, until 1986 when the Iran-Contra arms-for-hostages scandal broke. [For details, see Robert Parry’s Secrecy & Privilege. For text of the Russian report, click here. To view the actual U.S. embassy cable that includes the Russian report, click here.]
Gates also was implicated in a secret operation to funnel military assistance to Iraq in the 1980s, as the Reagan administration played off the two countries battling each other in the eight-year-long Iran-Iraq War.
Middle Eastern witnesses alleged that Gates worked on the secret Iraqi initiative, which included Saddam Hussein’s procurement of cluster bombs and chemicals used to produce chemical weapons for the war against Iran.
Gates denied those Iran-Iraq accusations in 1991 and the Senate Intelligence Committee – then headed by Gates’s personal friend, Sen. David Boren, D-Oklahoma – failed to fully check out the claims before recommending Gates for confirmation.
However, four years later – in early January 1995 – Howard Teicher, one of Reagan’s National Security Council officials, added more details about Gates’s alleged role in the Iraq shipments.
In a sworn affidavit submitted in a Florida criminal case, Teicher stated that the covert arming of Iraq dated back to spring 1982 when Iran had gained the upper hand in the war, leading President Reagan to authorize a U.S. tilt toward Saddam Hussein.
The effort to arm the Iraqis was “spearheaded” by CIA Director William Casey and involved his deputy, Robert Gates, according to Teicher’s affidavit. “The CIA, including both CIA Director Casey and Deputy Director Gates, knew of, approved of, and assisted in the sale of non-U.S. origin military weapons, ammunition and vehicles to Iraq,” Teicher wrote.
Ironically, that same pro-Iraq initiative involved Donald Rumsfeld, then Reagan’s special emissary to the Middle East. An infamous photograph from 1983 shows a smiling Rumsfeld shaking hands with Saddam Hussein.
Teicher described Gates’s role as far more substantive than Rumsfeld’s. “Under CIA Director [William] Casey and Deputy Director Gates, the CIA authorized, approved and assisted [Chilean arms dealer Carlos] Cardoen in the manufacture and sale of cluster bombs and other munitions to Iraq,” Teicher wrote.
Like the Russian report, the Teicher affidavit has never been never seriously examined. After Teicher submitted it to a federal court in Miami, the affidavit was classified and then attacked by Clinton administration prosecutors. They saw Teicher’s account as disruptive to their prosecution of a private company, Teledyne Industries, and one of its salesmen, Ed Johnson.
But the questions about Gates’s participation in dubious schemes involving hotspots such as Iran and Iraq are relevant again today because they reflect on Gates’s judgment, his honesty and his relationship with two countries at the top of U.S. military concerns.
About 140,000 U.S. troops are now bogged down in Iraq, 3 ½ years after President George W. Bush ordered an invasion to remove Saddam Hussein from power and eliminate his supposed WMD stockpiles. One reason the United States knew that Hussein once had those stockpiles was because the Reagan administration helped him procure the material needed for the WMD production in the 1980s.
The United States also is facing down Iran’s Islamic government over its nuclear ambitions. Though Bush has so far emphasized diplomatic pressure on Iran, he has pointedly left open the possibility of a military option.
Beyond the secret schemes to aid Iran and Iraq in the 1980s, Gates also stands accused of playing a central role in politicizing the CIA intelligence product, tailoring it to fit the interests of his political superiors, a legacy that some Gates critics say contributed to the botched CIA’s analysis of Iraqi WMD in 2002.
Before Gates’s rapid rise through the CIA’s ranks in the 1980s, the CIA’s tradition was to zealously protect the objectivity and scholarship of the intelligence. However, during the Reagan administration, that ethos collapsed.
At Gates’s confirmation hearings in 1991, former CIA analysts, including renowned Kremlinologist Mel Goodman, took the extraordinary step of coming out of the shadows to accuse Gates of politicizing the intelligence while he was chief of the analytical division and then deputy director.
The former intelligence officers said the ambitious Gates pressured the CIA’s analytical division to exaggerate the Soviet menace to fit the ideological perspective of the Reagan administration. Analysts who took a more nuanced view of Soviet power and Moscow’s behavior in the world faced pressure and career reprisals.
In 1981, Carolyn McGiffert Ekedahl of the CIA’s Soviet office was the unfortunate analyst who was handed the assignment to prepare an analysis on the Soviet Union’s alleged support and direction of international terrorism.
Contrary to the desired White House take on Soviet-backed terrorism, Ekedahl said the consensus of the intelligence community was that the Soviets discouraged acts of terrorism by groups getting support from Moscow for practical, not moral, reasons.
“We agreed that the Soviets consistently stated, publicly and privately, that they considered international terrorist activities counterproductive and advised groups they supported not to use such tactics,” Ekedahl said. “We had hard evidence to support this conclusion.”
But Gates took the analysts to task, accusing them of trying to “stick our finger in the policy maker’s eye,” Ekedahl testified
Ekedahl said Gates, dissatisfied with the terrorism assessment, joined in rewriting the draft “to suggest greater Soviet support for terrorism and the text was altered by pulling up from the annex reports that overstated Soviet involvement.”
In his memoirs, From the Shadows, Gates denied politicizing the CIA’s intelligence product, though acknowledging that he was aware of Casey’s hostile reaction to the analysts’ disagreement with right-wing theories about Soviet-directed terrorism.
Soon, the hammer fell on the analysts who had prepared the Soviet-terrorism report. Ekedahl said many analysts were “replaced by people new to the subject who insisted on language emphasizing Soviet control of international terrorist activities.”
A donnybrook ensued inside the U.S. intelligence community. Some senior officials responsible for analysis pushed back against Casey’s dictates, warning that acts of politicization would undermine the integrity of the process and risk policy disasters in the future.
Working with Gates, Casey also undertook a series of institutional changes that gave him fuller control of the analytical process. Casey required that drafts needed clearance from his office before they could go out to other intelligence agencies.
Casey appointed Gates to be director of the Directorate of Intelligence [DI] and consolidated Gates’s control over analysis by also making him chairman of the National Intelligence Council, another key analytical body.
“Casey and Gates used various management tactics to get the line of intelligence they desired and to suppress unwanted intelligence,” Ekedahl said.
With Gates using top-down management techniques, CIA analysts sensitive to their career paths intuitively grasped that they could rarely go wrong by backing the “company line” and presenting the worst-case scenario about Soviet capabilities and intentions, Ekedahl and other CIA analysts said.
Largely outside public view, the CIA’s proud Soviet analytical office underwent a purge of its most senior people. “Nearly every senior analyst on Soviet foreign policy eventually left the Office of Soviet Analysis,” Goodman said.
Gates made clear he intended to shake up the DI’s culture, demanding greater responsiveness to the needs of the White House and other policymakers.
In a speech to the DI’s analysts and managers on Jan. 7, 1982, Gates berated the division for producing shoddy analysis that administration officials didn’t find helpful.
Gates unveiled an 11-point management plan to whip the DI into shape. His plan included rotating division chiefs through one-year stints in policy agencies and requiring CIA analysts to “refresh their substantive knowledge and broaden their perspective” by taking courses at Washington-area think tanks and universities.
Gates declared that a new Production Evaluation Staff would aggressively review their analytical products and serve as his “junkyard dog.”
Gates’s message was that the DI, which had long operated as an “ivory tower” for academically oriented analysts committed to an ethos of objectivity, would take on more of a corporate culture with a product designed to fit the needs of those up the ladder both inside and outside the CIA.
“It was a kind of chilling speech,” recalled Peter Dickson, an analyst who concentrated on proliferation issues. “One of the things he wanted to do, he was going to shake up the DI. He was going to read every paper that came out. What that did was that everybody between the analyst and him had to get involved in the paper to a greater extent because their careers were going to be at stake.”
A chief Casey-Gates tactic for exerting tighter control over the analysis was to express concern about “the editorial process,” Dickson said.
“You can jerk people around in the editorial process and hide behind your editorial mandate to intimidate people,” Dickson said.
Gates soon was salting the analytical division with his allies, a group of managers who became known as the “Gates clones.” Some of those who rose with Gates were David Cohen, David Carey, George Kolt, Jim Lynch, Winston Wiley, John Gannon and John McLaughlin.
Though Dickson’s area of expertise – nuclear proliferation – was on the fringes of the Reagan-Bush primary concerns, it ended up getting him into trouble anyway. In 1983, he clashed with his superiors over his conclusion that the Soviet Union was more committed to controlling proliferation of nuclear weapons than the administration wanted to hear.
When Dickson stood by his evidence, he soon found himself facing accusations about his fitness and other pressures that eventually caused him to leave the CIA.
Dickson also was among the analysts who raised alarms about Pakistan’s development of nuclear weapons, another sore point because the Reagan-Bush administration wanted Pakistan’s assistance in funneling weapons to Islamic fundamentalists fighting the Soviets in Afghanistan.
One of the effects from the exaggerated intelligence about Soviet power and intentions was to make other potential risks – such as allowing development of a nuclear bomb in the Islamic world or training Islamic fundamentalists in techniques of sabotage – pale in comparison.
While worst-case scenarios were in order for the Soviet Union and other communist enemies, best-case scenarios were the order of the day for Reagan-Bush allies, including Osama bin Laden and other Arab extremists rushing to Afghanistan to wage a holy war against European invaders, in this case, the Russians.
As for the Pakistani drive to get a nuclear bomb, the Reagan-Bush administration turned to word games to avoid triggering anti-proliferation penalties that otherwise would be imposed on Pakistan.
“There was a distinction made to say that the possession of the device is not the same as developing it,” Dickson told me. “They got into the argument that they don’t quite possess it yet because they haven’t turned the last screw into the warhead.”
Finally, the intelligence on the Pakistan Bomb grew too strong to continue denying the reality. But the delay in confronting Pakistan ultimately allowed the Muslim government in Islamabad to produce nuclear weapons. Pakistani scientists also shared their know-how with “rogue” states, such as North Korea and Libya.
“The politicization that took place during the Casey-Gates era is directly responsible for the CIA’s loss of its ethical compass and the erosion of its credibility,” Goodman told the Senate Intelligence Committee in 1991. “The fact that the CIA missed the most important historical development in its history – the collapse of the Soviet Empire and the Soviet Union itself – is due in large measure to the culture and process that Gates established in his directorate.”
To push through Gates’s nomination to be CIA director in 1991, the elder George Bush lined up solid Republican backing for Gates and enough accommodating Democrats – particularly Sen. Boren, the Senate Intelligence Committee chairman.
In his memoirs, Gates credited his friend, Boren, for clearing away any obstacles. “David took it as a personal challenge to get me confirmed,” Gates wrote.
Part of running interference for Gates included rejecting the testimony of witnesses who implicated Gates in scandals beginning with the alleged back-channel negotiations with Iran in 1980 through the arming of Iraq’s Saddam Hussein in the mid-1980s.
Boren’s Intelligence Committee brushed aside two witnesses connecting Gates to the alleged schemes, former Israeli intelligence official Ari Ben-Menashe and Iranian businessman Richard Babayan. Both offered detailed accounts about Gates’s alleged connections to the schemes.
Ben-Menashe, who worked for Israeli military intelligence from 1977-87, first fingered Gates as an operative in the secret Iraq arms pipeline in August 1990 during an interview that I conducted with him for PBS Frontline.
At the time, Ben-Menashe was in jail in New York on charges of trying to sell cargo planes to Iran (charges which were later dismissed). When the interview took place, Gates was in a relatively obscure position, as deputy national security adviser to President George H.W. Bush and not yet a candidate for the top CIA job.
In that interview and later under oath to Congress, Ben-Menashe said Gates joined in meetings between Republicans and senior Iranians in October 1980. Ben-Menashe said he also arranged Gates’s personal help in bringing a suitcase full of cash into Miami in early 1981 to pay off some of the participants in the hostage gambit.
Ben-Menashe also placed Gates in a 1986 meeting with Chilean arms manufacturer Cardoen, who allegedly was supplying cluster bombs and chemical weapons to Saddam Hussein’s army. Babayan, an Iranian exile working with Iraq, also connected Gates to the Iraqi supply lines and to Cardoen.
Gates has steadfastly denied involvement in either the Iran-hostage caper or the Iraqgate arms deals.
“I was accused on television and in the print media by people I had never spoken to or met of selling weapons to Iraq, or walking through Miami airport with suitcases full of cash, of being with Bush in Paris in October 1980 to meet with Iranians, and on and on,” Gates wrote in his memoirs. “The allegations of meetings with me around the world were easily disproved for the committee by my travel records, calendars, and countless witnesses.”
But none of Gates’s supposedly supportive evidence was ever made public by either the Senate Intelligence Committee or the later inquiries into either the Iran hostage initiative or Iraqgate.
Not one of Gates’s “countless witnesses” who could vouch for Gates’s whereabouts was identified. Though Boren pledged publicly to have his investigators question Babayan, they never did.
Perhaps most galling for those of us who tried to assess Ben-Menashe’s credibility was the Intelligence Committee’s failure to test Ben-Menashe’s claim that he met with Gates in Paramus, New Jersey, on the afternoon of April 20, 1989.
The date was pinned down by the fact that Ben-Menashe had been under Customs surveillance in the morning. So it was a perfect test for whether Ben-Menashe – or Gates – was lying.
When I first asked about this claim, congressional investigators told me that Gates had a perfect alibi for that day. They said Gates had been with Senator Boren at a speech in Oklahoma. But when we checked that out, we discovered that Gates’s Oklahoma speech had been on April 19, a day earlier. Gates also had not been with Boren and had returned to Washington by that evening.
So where was Gates the next day? Could he have taken a quick trip to northern New Jersey? Since senior White House national security advisers keep detailed notes on their daily meetings, it should have been easy for Boren’s investigators to interview someone who could vouch for Gates’s whereabouts on the afternoon of April 20.
But the committee chose not to nail down an alibi for Gates. The committee said further investigation wasn’t needed because Gates denied going to New Jersey and his personal calendar made no reference to the trip.
But the investigators couldn’t tell me where Gates was that afternoon or with whom he may have met. Essentially, the alibi came down to Gates’s word.
Ironically, Boren’s key aide who helped limit the investigation of Gates was George Tenet, whose behind-the-scenes maneuvering on Gates’s behalf won the personal appreciation of the senior George Bush. Tenet later became President Bill Clinton’s last CIA director and was kept on in 2001 by the younger George Bush partly on his father’s advice.
Now, as the Bush Family grapples with the disaster in Iraq, it is turning to an even more trusted hand to run the Defense Department. The appointment of Robert Gates suggests that the Bush Family is circling the wagons to save the embattled presidency of George W. Bush.
To determine whether Gates can be counted on to do what’s in the interest of the larger American public is another question altogether.
Robert Parry broke many of the Iran-Contra stories in the 1980s for the Associated Press and Newsweek. His latest book, Secrecy & Privilege: Rise of the Bush Dynasty from Watergate to Iraq, can be ordered at secrecyandprivilege.com. It’s also available at
Amazon.com, as is his 1999 book, Lost History: Contras, Cocaine, the Press & ‘Project Truth.’
An exclusive look at how the agency penetrated the outlaw bank to spy on drug lords and terrorists
As bank busts go, the mushrooming scandal over the Bank of Credit and Commerce International may be the great-granddaddy of them all. The collapse of BCCI, in what is said to be a multinational fraud of historic dimensions, allegedly involved bribery, corruption, money laundering, gunrunning, drug smuggling, terrorism and upwards of $5 billion in lost or stolen assets in more than 70 different countries. It has now set off a search for scapegoats in Washington, where it is widely believed the U.S. government was slow to pick up the scent. Jack Blum, a former U.S. Senate investigator who has played a key role in bringing the BCCI mess to the American public’s eye, last week summed up Washington’s “overall distaste” for the BCCI case in graphic terms. The scandal, Blum said, was obvious to many government officials but never mentioned-something like “a cesspool overflowing on the front lawn.”
And the CIA was in the middle of it. From a variety of sources both inside and outside the agency, NEWSWEEK has established a pattern of CIA involvement with BCCI that is more extensive, and more troubling to some, than the bland official statements that have been issued so far. Although agency officials insist the CIA’s relationship with the bank was entirely proper and legal, there is little question that it had what one source called “intimate knowledge” of BCCI’s alleged dealings with terrorists, drug dealers and corrupt government officials all over the world. BCCI was “aggressively” targeted as a gold mine of intelligence on a wide variety of illicit activities, according to CIA Deputy Director Richard Kerr-and that, according to NEWSWEEK sources, almost certainly means the CIA’s Directorate of Operations had its own informants working inside the bank. The CIA kept funds at various BCCI branch offices, and it allegedly used BCCI’s home office in Pakistan as a conduit for some of the $2 billion in secret U.S. aid to mujahedin rebels fighting Soviet forces in Afghanistan. A large chunk of that covert funding, Blum testified, was allegedly stolen by corrupt Pakistani officials using BCCI accounts.
The BCCI collapse is now rattling tellers’ cages from Hong Kong to London, and its spinoff political scandals are likely to shake at least some Third World governments. In New York, Manhattan District Attorney Robert Morgenthau last week upstaged the U.S. Justice Department by indicting BCCI and two of its top executives, founder Agha Hasan Abedi and CEO Swaleh Naqvi, on charges of fraud, larceny, bribery and money laundering. Morgenthau called the BCCI case “the largest bank fraud in world financial history.” In Washington, Sen. John Kerry of Massachusetts (page 21) held subcommittee hearings featuring Jack Blum and William von Raab, the outspoken former head of the U.S. Customs Service. Both accused the Reagan and Bush administrations of dropping the ball on BCCI, and von Raab said there had been a “general softening of resolve [among] senior U.S. officials” because of .”incredible pounding” from Beltway influence peddlers working for the bank.
What the CIA knew, and when it knew it, were pivotal issues. Kerry cited a 1986 agency memo, five pages long and stamped SECRET, summarizing the agency’s knowledge of BCCI’s activities-including the clandestine acquisition of First American Bankshares of Washington, D.C. In -fact, NEWSWEEK’S sources say, the 1986 memo was followed by a much more detailed, 30 page report in 1989. Both were prepared by the CIA’s Directorate of Operations, an obvious indication that the agency was actively involved in penetrating BCCI for intelligence-gathering purposes. Calling BCCI a “radical Third World bank,” the CIA memos alleged that BCCI was involved in money laundering, “narco-financing,” gunrunning and holding large sums of money for terrorist groups. The memos also alleged that BCCI had established a so-called black operation. This bank-within-a-bank consisted of secret ,’managers’ accounts” used to enable favored clients to move money without attracting the attention of international banking authorities.
One obvious question was whether the CIA was in any way involved with BCCI’s alleged wrongdoing. Like other agency officials, Deputy Director Kerr last week insisted that the CIA’s involvement with the bank “is absolutely legal, does not involve any illegality on the part of BCCI working with us … and has been very effective in terms of our performance against the bank itself as a target.” Other intelligence sources told NEWSWEEK that the BCCI connection had proved invaluable in helping U.S. and allied intelligence agencies track terrorists worldwide. Information from BCCI sources led authorities in Europe to freeze bank accounts maintained by terrorist groups and shut down front companies that financed their activities, these sources said. “The opportunity to collect intelligence far outweighed [the risk of] any dealings with unsavory characters,” one U.S. intelligence official said. “When you’re pursuing scoundrels, you can’t be a boy scout.”
The implicit message was: trust us. But the allegations against BCCI were so extensive and so unsettling that it was hard to take such reassurances entirely at face value. As Blum put it, BCCI served as a sort of “Federal Express service” for weapons, drugs, gold and currency for smugglers all over the world. He testified that BCCI helped to finance and ship Scud missiles from North Korea to Syria and Chinese Silkworm missiles to unidentified countries in the Middle East. A State Department terrorism expert, Peter Burleigh, testified that information developed by U.S. intelligence showed that the Abu Nidal organization had used a BCCI branch in Europe and a front company in Warsaw to trade in weapons.
Press accounts also speculated about the possibility of a BCCI connection to the Irancontra affair. Richard Secord, the retired Air Force major general who was Oliver North’s principal associate in Iran-contra, flatly denied that he or North used BCCI although it was true, Secord told NEwsWEEK, that the “enterprise” got one or two cheeks drawn on a BCCI account from Manucher Ghorbanifar, an Iranian arms dealer who played middleman during the Reagan administration’s covert attempts to negotiate the release of U.S. hostages in Lebanon with the Iranian government.
Then there was the question of how much the CIA knew about the theft of U.S. aid to the mujahedin and heroin smuggling through Pakistan. According to some press accounts, the CIA knew that corrupt Pakistani officials allegedly used the bank to launder drug money. According to Blum’s testimony: “People who are very close to the mujahedin have said that many of the Pakistani military officials … were stealing our foreign-assistance money and using this bank both to hide the money they stole, to hide and market American weapons … that they stole and to market and manage the funds that came from the selling of heroin that was apparently engineered by one of the mujahedin groups.” Blum said the allegation that the CIA knew about this purported corruption was an “unresolved” issue-and CIA Director William Webster has now ordered a full review of the agency’s role in BCCI.
But the hot issue in Washington last week was whether the CIA had done all it could to alert the rest of the U.S. government to the bank’s alleged violations of U.S. law. Kerr insisted that the CIA “regularly put out since the early ’80s the whole set of reporting to the government describing those activities.” But von Raab, whose Customs Service led an investigation of BCCI, received the 1986 report only in the fall of 1988, and he said it “didn’t pro particularly useful as an i tool.” He also said that Customs, which is a part of the Treasury Department, did not regularly receive these CIA reports.
The Treasury Department, the Federal Reserve Board and the Justice Department, meanwhile, all played hot potato with the question of the CIA memo. The Federal Reserve Board, which approved the acquisition of First American in 1982 on the basis of what may have been misleading information about its Arab purchasers, says it never got the memo and seemed exempt from immediate blame. The Justice Department, which prosecuted officials at a BCCI branch in Tampa, Fla., for money laundering in 1990, huffily maintained that it was now pursuing all the available leads to BCCI’s alleged behind-the-scenes ownership of First American. And Treasury officials said the department got a single memo only in 1988, when von Raab asked the CIA for any information it had on BCCI. As von Raab testified last week, he got the memo after calling Robert Gates, then deputy director of the CIA and now George Bush’s nominee to replace William Webster. Gates, he said, quipped that BCCI was known within the agency as “the Bank of Crooks and Criminals International.”
Other congressional sources suggested a different explanation-one that pointed back to the CIA. By this theory, the CIA was well aware it had scored a major intelligence coup by penetrating BCCI and was reluctant to disrupt the flow of information on terrorism and other forms of international thuggery. Its memos through channels conveyed a sense of BCCI’s unsavory character-but may also have sent an implicit “hands off ” message as well. “I don’t think the CIA was involved in the BCCI collapse,” a Senate source said. “It penetrated the place and was aware of [the BCCI frauds]. That’s what the CIA is supposed to do-gather intelligence. Where the CIA was derelict was in valuing this intelligence over the dangers of the mounting frauds. It could have blown the whistle, but it didn’t.”
The contributing factor, as Blum and von Raab insisted in their testimony last week, was that responsible officials in the Reagan and Bush administrations were repeatedly assured by a claque of highpowered Beltway lobbyists that BCCI was on the up and up. Chief among those lobbyists was Clark Clifford, chairman of First American and one of the ranking patriarchs of the Democratic Party. Clifford and his law partner Robert Altman, also First American’s president, made millions advising BCCI on a variety of legal issues-but they maintain they were duped, like everyone else, about the true nature of BCCI’s activities. Last week Blum testified that Amjad Awan, the BCCI official who was convicted in the Tampa money-laundering case, was allegedly advised by Altman to leave the country to avoid a Senate subpoena. “It didn’t happen,” said Washington attorney Carl Rauh, who is representing both Altman and Clifford. “Neither Mr. Clifford nor Mr. Altman ever suggested in any way that anyone leave the country to avoid testifying on anything.”
With every new revelation, it becomes more evident that the BCCI scandal isn’t about to go away. It has already cast a cloud over Clifford’s elder-statesman status, and raises more questions for the Senate Intelligence Committee in considering Robert Gates’s nomination as director of Central Intelligence. Most of all, last week it seemed to resurrect many of the old questions about the CIA-and whether the pursuit of vital secrets can lead governments to look the other way.
Pakistani financier Agha Hasan Abedi established the Bank of Credit and Commerce International in Luxembourg in 1972. His stated goal: to create the first multinational bank for the Third World. Operating in a shroud of mystery and with little regulatory supervision, BCCI managed to accumulate $20 billion in assets spread over 73 countries. In the late 70’s, BCCI’s reach began to extend into the U.S., culminating in the secret acquisition of Financial General Bankshares of Washington in 1982. Six years later a federal grand jury in Florida charged BCCI with laundering drug money. Weakened by a Ponzi-like pile of fraudulent loans, BCCI turned to Abu Dhabi’s Sheik Zaid bin Sultan al-Nahyan, who invested $1 billion and took majority control last year.
A New York grand jury has indicted BCCI, alleging a $5 billion scheme to bilk depositors, launder money and bribe Peruvian bankers.
The Federal Reserve Board charges that BCCI used front men to buy several U.S. banks.
Investigators say that BCCI built an “influence peddling” network of prominent people in Washington, like former defense secretary Clark Clifford.
The Justice Department is investigating allegations of BCCI fraud in D.C., Miami, Atlanta and Tampa, Fla. Attorney General Richard Thornburgh has come under fire for the probe’s slow start.
The Bank of England seized the bank on July 5, charging that BCCI had concealed massive losses and had made millions of dollars in fraudulent loans to cronies and fictitious individuals.
Investigators say BCCI was the personal banker for Panama’s Manuel Noriega and assisted terrorist Abu Nidal in buying arms.
Ghaith Pharaon, allegedly a BCCI front man in the U.S., is under suspicion for his apparent close ties to top Argentine officials.
What was BCCI’s ultimate aim in trying to penetrate the U.S. banking system?
Did the CIA and No. 2 man Robert Gates subtly head off investigations into BCCI?
Did the CIA know that Pakistani officials allegedly used BCCI to steal millions in U.S. aid for Afghan rebels?
Did European banking regulators drag their feet on BCCI?
What happened to $43 million in BCCI loans to Guatemala?
Did ex-Peruvian president Alan Garcia use BCCI to allegedly loot $55 million from the country?
This column has been updated to include a reaction from the IMF.
The International Monetary Fund has just dropped a bombshell, and nobody noticed.
For the first time, the international organization has set a date for the moment when the “Age of America” will end and the U.S. economy will be overtaken by that of China.
And it’s a lot closer than you may think.
According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016 — just five years from now.
Put that in your calendar.
It provides a painful context for the budget wrangling taking place in Washington right now. It raises enormous questions about what the international security system is going to look like in just a handful of years. And it casts a deepening cloud over both the U.S. dollar and the giant Treasury market, which have been propped up for decades by their privileged status as the liabilities of the world’s hegemonic power.
According to the IMF forecast, which was quietly posted on the Fund’s website just two weeks ago, whoever is elected U.S. president next year — Obama? Mitt Romney? Donald Trump? — will be the last to preside over the world’s largest economy.
Most people aren’t prepared for this. They aren’t even aware it’s that close. Listen to experts of various stripes, and they will tell you this moment is decades away. The most bearish will put the figure in the mid-2020s.
But they’re miscounting. They’re only comparing the gross domestic products of the two countries using current exchange rates.
That’s a largely meaningless comparison in real terms. Exchange rates change quickly. And China’s exchange rates are phony. China artificially undervalues its currency, the renminbi, through massive intervention in the markets.
The Comparison That Really Matters
In addition to comparing the two countries based on exchange rates, the IMF analysis also looked to the true, real-terms picture of the economies using “purchasing power parities.” That compares what people earn and spend in real terms in their domestic economies.
Under PPP, the Chinese economy will expand from $11.2 trillion this year to $19 trillion in 2016. Meanwhile the size of the U.S. economy will rise from $15.2 trillion to $18.8 trillion. That would take America’s share of the world output down to 17.7%, the lowest in modern times. China’s would reach 18%, and rising.
Just 10 years ago, the U.S. economy was three times the size of China’s.
Naturally, all forecasts are fallible. Time and chance happen to them all. The actual date when China surpasses the U.S. might come even earlier than the IMF predicts, or somewhat later. If the great Chinese juggernaut blows a tire, as a growing number fear it might, it could even delay things by several years. But the outcome is scarcely in doubt.
This is more than a statistical story. It is the end of the Age of America. As a bond strategist in Europe told me two weeks ago, “We are witnessing the end of America’s economic hegemony.”
We have lived in a world dominated by the U.S. for so long that there is no longer anyone alive who remembers anything else. America overtook Great Britain as the world’s leading economic power in the 1890s and never looked back.
And both those countries live under very similar rules of constitutional government, respect for civil liberties and the rights of property. China has none of those. The Age of China will feel very different.
Victor Cha, senior adviser on Asian affairs at Washington’s Center for Strategic and International Studies, told me China’s neighbors in Asia are already waking up to the dangers. “The region is overwhelmingly looking to the U.S. in a way that it hasn’t done in the past,” he said. “They see the U.S. as a counterweight to China. They also see American hegemony over the last half-century as fairly benign. In China they see the rise of an economic power that is not benevolent, that can be predatory. They don’t see it as a benign hegemony.”
The rise of China, and the relative decline of America, is the biggest story of our time. You can see its implications everywhere, from shuttered factories in the Midwest to soaring costs of oil and other commodities. Last fall, when I attended a conference in London about agricultural investment, I was struck by the number of people there who told stories about Chinese interests snapping up farmland and foodstuff supplies — from South America to China and elsewhere.
This is the result of decades during which China has successfully pursued economic policies aimed at national expansion and power, while the U.S. has embraced either free trade or, for want of a better term, economic appeasement.
“There are two systems in collision,” said Ralph Gomory, research professor at NYU’s Stern business school. “They have a state-guided form of capitalism, and we have a much freer former of capitalism.” What we have seen, he said, is “a massive shift in capability from the U.S. to China. What we have done is traded jobs for profit. The jobs have moved to China. The capability erodes in the U.S. and grows in China. That’s very destructive. That is a big reason why the U.S. is becoming more and more polarized between a small, very rich class and an eroding middle class. The people who get the profits are very different from the people who lost the wages.”
The next chapter of the story is just beginning.
U.S. Spending Spree Won’t Work
What the rise of China means for defense, and international affairs, has barely been touched on. The U.S. is now spending gigantic sums — from a beleaguered economy — to try to maintain its place in the sun.
It’s a lesson we could learn more cheaply from the sad story of the British, Spanish and other empires. It doesn’t work. You can’t stay on top if your economy doesn’t.
Equally to the point, here is what this means economically, and for investors.
Some years ago I was having lunch with the smartest investor I know, London-based hedge-fund manager Crispin Odey. He made the argument that markets are reasonably efficient, most of the time, at setting prices. Where they are most likely to fail, though, is in correctly anticipating and pricing big, revolutionary, “paradigm” shifts — whether a rise of disruptive technologies or revolutionary changes in geopolitics. We are living through one now.
The U.S. Treasury market continues to operate on the assumption that it will always remain the global benchmark of money. Business schools still teach students, for example, that the interest rate on the 10-year Treasury bond is the “risk-free rate” on money. And so it has been for more than a century. But that’s all based on the Age of America.
No wonder so many have been buying gold. If the U.S. dollar ceases to be the world’s sole reserve currency, what will be? The euro would be fine if it acts like the old deutschemark. If it’s just the Greek drachma in drag … not so much.
The last time the world’s dominant hegemon lost its ability to run things singlehandedly was early in the past century. That’s when the U.S. and Germany surpassed Great Britain. It didn’t turn out well.
Updated With IMF Reaction
The International Monetary Fund has responded to my article.
In a statement sent to MarketWatch, the IMF confirmed the report, but challenged my interpretation of the data. Comparing the U.S. and Chinese economies using “purchase-power-parity,” it argued, “is not the most appropriate measure because PPP price levels are influenced by nontraded services, which are more relevant domestically than globally.”
The IMF added that it prefers to compare economies using market exchange rates, and that under this comparison the U.S. “is currently 130% bigger than China, and will still be 70% larger by 2016.”
The IMF is entitled to make its case. But its argument raises more questions than it answers.
First, no one measure is perfect. Everybody knows that.
But that’s also true of the GDP figures themselves. Hurricane Katrina, for example, added to the U.S. GDP, because it stimulated a lot of economic activity — like providing emergency relief, and rebuilding homes. Is there anyone who seriously thinks Katrina was a net positive for the United States? All statistics need caveats.
Second, comparing economies using simple exchange rates, as the IMF suggests, raises huge problems.
Currency markets fluctuate. They represent international money flows, not real output.
The U.S. dollar has fallen nearly 10% against the euro so far this year. Does anyone suggest that the real size of the U.S. economy has shrunk by 10% in comparison with Europe over that period? The idea is absurd.
China actively suppresses the renminbi on the currency markets through massive dollar purchases. As a result the renminbi is deeply undervalued on the foreign-exchange markets. Just comparing the economies on their exchange rates misses that altogether.
Purchasing power parity is not a perfect measure. None exists. But it measures the output of economies in terms of real goods and services, not just paper money. That’s why it’s widely used to compare economies. The IMF publishes PPP data. So does the OECD. Many economists rely on them.
Brett Arends is a senior columnist for MarketWatch and a personal-finance columnist for The Wall Street Journal.
Date of Article: (Nov 21 1934).
When Bill Clinton delivered his acceptance speech at the Democratic convention on July 16, 1992, it didn’t contain any surprises, nor were any expected. There were the usual feel-good platitudes: he wanted to talk with us “about my hope for the future, my faith in the American people, and my vision of the kind of country we can build…. This election is about putting power back in your hands and putting the government back on your side…. It is time to heal America.” Any speech writer could have pulled boiler-plate from the files and pasted together something similar. Speeches for occasions like this one aren’t meant to be long on specifics.
Toward the end of the speech Clinton mentioned that “as a teenager I heard John Kennedy’s summons to citizenship. And then, as a student at Georgetown, I heard that call clarified by a professor named Carroll Quigley, who said to us that America was the greatest country in the history of the world because our people have always believed in two things: that tomorrow can be better than today and that every one of us has a personal, moral responsibility to make it so.”
This was not the first time that Clinton had paid tribute to the memory of his Georgetown professor. A few days earlier, a story on Clinton’s background mentioned that he had never forgotten Quigley’s last lecture. “Throughout his career he has evoked [this lecture] in speeches as the rhetorical foundation for his political philosophy,” according to the Washington Post, which offered another Clinton quotation praising Quigley’s perspective and influence. A kindly old professor appreciated as a mentor by an impressionable, idealistic student? This is how it was interpreted by almost everyone who heard it, particularly since Quigley’s name was not exactly a household word.
But in certain rarified circles among conspiracy theorists, Clinton’s reference to Quigley was surprising. Now that Clinton had one foot in the White House, the conservative Washington Times soon ran an item that tried to clear matters up. Professor Quigley, according to the Times, specialized in the history of a secret group of elite Anglo-Americans who had a decisive influence on world affairs during the first half of this century. Quigley, in other words, was a conspiracy theorist — but one who had an impeccable pedigree as “one of the few insiders who came out and exposed the Eastern establishment plan for world government.” These words belong to Tom Eddlam, research director for the John Birch Society. As someone who had sold two of Quigley’s books, Eddlam knew plenty about Quigley. But we can’t have a Democratic draft-dodging liberal candidate who admires a Birch Society conspiracy hero, so the Times quickly resolved the issue by noting that Quigley wanted the conspiracy to succeed, whereas the Birchers wanted it to fail. Thus the Times summed matters up, in six column inches.
Clinton’s supporters depict him as an intellectual, someone whose heroes traffic in solemn ideals. If so, Clinton presumably read Tragedy and Hope, Quigley’s best-known book, which appeared while Clinton was at Georgetown. At any rate, Quigley’s work is well worth looking at, along with Clinton’s early career, for its possible clues to Clinton’s thought.
Reading Quigley may turn you into a student of high-level conspiracy, which is exactly what many influential people around Clinton and elsewhere say you shouldn’t be. Almost all of the 3,000 members of the Council on Foreign Relations (CFR) will go on record ridiculing any of the conspiracy theories that, according to all polls, are taken seriously by large majorities of average people. CFR member Daniel Schorr will tell you again and again that Oswald was a lone nut, and CFR member Steven Emerson will write article after article debunking Pan Am 103 and October Surprise theories. It’s not that people in high places know better, it’s simply that they have more to protect and cannot afford to be candid.
As new research is published about the JFK assassination, for example, it becomes clear that virtually all the high-level players, from LBJ on down, assumed it was a conspiracy from the moment the shots were fired. It took until recently for dedicated researchers to dig this fact out. But thirty years later many journalists still find it useful to defend the Warren Commission or belittle its critics.
Carroll Quigley was a conspiracy historian, but he was unusual in that he avoided criticism. Most of his conspiracy research concerned the role of the Rhodes-Milner Round Table Groups in Britain from 1891 through World War II. His major work, Tragedy and Hope (1966), contains scattered references to his twenty years of research in this area, but his detailed history of the Round Table was written in 1949. The major reason he avoided criticism is because his work wasn’t threatening to people in high places. Quigley’s research was too obscure, and too much had happened in the world since the events he described. Quigley was also an insider, so his criticisms of the groups he studied are subdued. He did his undergraduate and graduate work at Harvard, where he received a doctorate in 1938. He later taught at Princeton and Harvard before settling in at Georgetown’s conservative School of Foreign Service in 1941, where he remained for the rest of his career. He was a consultant for the Brookings Institution, the Defense Department, the State Department, and the Navy, and taught western civilization and history. In 1962 the Center for Strategic and International Studies was established on the Georgetown campus, where it maintained close ties with the School of Foreign Service. CSIS included a number of people on its staff who had high-level CIA connections. Quigley moved in these circles until his death in 1977:
I know of the operations of this network [the Round Table Groups] because I have studied it for twenty years and was permitted for two years, in the early 1960s, to examine its papers and secret records. I have no aversion to it or to most of its aims and have, for much of my life, been close to it and to many of its instruments. I have objected, both in the past and recently, to a few of its policies, but in general my chief difference of opinion is that it wishes to remain unknown, and I believe its role in history is significant enough to be known.
In his 1949 detailed look at the Cecil Rhodes – Oxford – Alfred (Lord) Milner – Round Table nexus, published posthumously in 1981 as The Anglo-American Establishment, Quigley was more forceful with his criticism. While endorsing this elite’s high-minded internationalist goals, Quigley wrote that “I cannot agree with them on methods,” and added that he found the antidemocratic implications of their inherited wealth and power “terrifying.” This is as tough as he got with his comments:
No country that values its safety should allow what the Milner Group accomplished in Britain — that is, that a small number of men should be able to wield such power in administration and politics, should be given almost complete control over the publication of the documents relating to their actions, should be able to exercise such influence over the avenues of information that create public opinion, and should be able to monopolize so completely the writing and the teaching of the history of their own period.
Quigley also avoided criticism because his books are the product of years of painstaking research into primary diplomatic sources. To qualify as a critic of his analysis, someone would have to duplicate that research — and so far no one has. It also helped that Quigley was doing most of his work at a time when conspiracy theories were considered curious and quaint, but not threatening. Clinton, at any rate, had no reason to feel uneasy about citing the virtually unknown Quigley in his convention acceptance speech.
But serious researchers can hardly afford to pass over Quigley’s potential significance so lightly. The Washington Times, to begin with, is clearly mistaken to brush Quigley off as simply one more liberal elitist one-worlder. Certainly he is no streetcorner agitator, whether of the right or left. But his understated critique of his elite colleagues is nevertheless a searching one.
In the years following the publication of Tragedy and Hope in 1966, writers on both the right and left began to recognize this. For example, New Left writer and activist Carl Oglesby came to realize that some of his ideas about elite power in the U.S. had been anticipated by Quigley. On the far right, meanwhile, Quigley found a convert in W. Cleon Skousen, a former FBI agent who later became a star of the John Birch Society’s lecture circuit. In 1970, Skousen published a book-length review of Quigley’s Tragedy and Hope that was titled The Naked Capitalist. It quoted so heavily from Quigley’s work that Quigley threatened to sue for copyright infringement.
Skousen chose to emphasize Quigley’s mention of subterranean financial arrangements between certain Wall Street interests and certain groups on the U.S. left, in particular the Communist Party. Oglesby, meanwhile, shared Quigley’s interest in the challenge posed to Wall Street’s Eastern elite by newer oil and defense-aerospace money concentrated in the Southwest. But as Oglesby recognized, Quigley’s meticulous research into elite power shaded insensibly over into the study of “conspiracy”:
Am I borrowing on Quigley then to say with the far right that this one conspiracy rules the world? The arguments for a conspiracy theory are indeed often dismissed on the grounds that no one conspiracy could possibly control everything. But that is not what this theory sets out to show. Quigley is not saying that modern history is the invention of an esoteric cabal designing events omnipotently to suit its ends. The implicit claim, on the contrary, is that a multitude of conspiracies contend in the night. Clandestinism is not the usage of a handful of rogues, it is a formalized practice of an entire class in which a thousand hands spontaneously join. Conspiracy is the normal continuation of normal politics by normal means.
But it’s a bad word for polite editors, so the issues surrounding the “C” word are almost never discussed in print. One needs to tease out Oglesby’s observation that there is a qualitative difference between the way that the left and right in the U.S. have addressed this issue. Both tendencies can at least get together on which groups deserve attention: the Council on Foreign Relations, which became the American branch of the Round Table in 1919; Bilderberg, which has held secret meetings in Europe for select participants since 1954; and the Trilateral Commission, a group that began in 1973 and now has 325 members from Japan, Europe, and America. CFR consists of Americans only, whereas Bilderberg adds the Europeans and TC also adds the Japanese. The Americans in Bilderberg and TC are almost always members of CFR also.
But some leftists and left-liberal sociologists prefer to take the curse off their interest in such groups by calling their investigations “power-structure research.” The implication seems to be that tracing interlocking directorates, let’s say, belongs to science in a way that tracing Lee Harvey Oswald’s intelligence connections never could. Still, G. William Domhoff, the most prominent of the “power structure” researchers, admits that attempting to maintain this quarantine can itself become unscientific:
Critics of a power elite theory often call it “conspiratorial,” which is the academic equivalent of ending a discussion by yelling Communist. It is difficult to lay this charge to rest once and for all because these critics really mean something much broader than the dictionary definition of conspiracy. All right, then, if “conspiracy” means that these men are aware of their interests, know each other personally, meet together privately and off the record, and try to hammer out a consensus on how to anticipate or react to events and issues, then there is some conspiring that goes on in CFR, not to mention in the Committee for Economic Development, the Business Council, the National Security Council, and the Central Intelligence Agency.
And what makes Domhoff’s middle ground on the problem of conspiracy so difficult to maintain is precisely the existence of inconveniently concrete cases like Oswald’s. If there was a conspiracy and cover-up, then it was carried out by interested individuals rather than by blind social forces. The best that Domhoff can do with the JFK assassination is to ignore it, which he does.
But this won’t do for Michael Albert, editor of the leftist Z Magazine and a Domhoffian “structuralist,” who has attempted to finesse this problem. His argument on the JFK assassination, as best I can understand it, goes something like this: JFK was a predictable product of established institutions; these institutions wanted a war in Vietnam; it’s inconceivable that JFK would have disagreed with this because his behavior was determined (that is, he could not have changed his mind), and therefore, the assassination of JFK, conspiracy or not, made no difference to our history and is unimportant. The problem with Albert’s approach is that he’s fairly close to vulgar Marxism, which by now has been thoroughly discredited.
To my thinking, the reason why the JFK assassination is so important is this: It’s one thing to believe that there are rich people who become richer because their environment tells them to behave that way, and quite another to believe that there is a powerful, secret government that doesn’t have to play by the rules. If you can prove that the assassination was a conspiracy, then the first notion becomes silly and insignificant. Essentially, conspiracy theories restore notions of freedom and responsibility that have been stripped from the “value free” social science establishment. Quigley is between Domhoff and Oglesby on our spectrum, which is not a left-right spectrum but rather a conspiracy spectrum. Oglesby deals seriously with the JFK assassination while Quigley does not. But Quigley at least follows the money trail and believes that human agency and individual actors are important forces in history. Domhoff, on the other hand, is more interested in class distinctions and general behavior.
Skousen is much more conspiratorial than Oglesby. He applies conspiracy thinking to complex issues where a middle ground would be productive (such as CFR, Bilderberg, and Trilateralism), and treats them in an either/or fashion as if they were similar to the JFK assassination. It doesn’t work very well. The New World Order may be a bad idea, but to assume as a starting point that it’s a Communist plot doesn’t help us understand the who or why behind it.
Before returning to Clinton, it will help to fill out our spectrum a bit. So far we have Domhoff, Quigley, and Oglesby in a line, and Skousen off further on the pro-conspiracy end. On the anti-conspiracy end we should add Erwin Knoll, longtime editor of The Progressive. According to Knoll, “none of the conspiracy theories we have scrutinized meets the test of accuracy — or even plausibility — we normally apply to material published in The Progressive, so none has appeared in the pages of this magazine. Knoll’s advisory board includes three members of the Council on Foreign Relations, so this fits okay. There’s also Chip Berlet, who berates unwitting leftists for falling prey to conspiracy theories that the devious right has conspired to foist on them. He isn’t critical of conspiracy thinking on the basis of the evidence, but waits until the theorist can be shown to have incorrect political associations. Berlet doesn’t fit anywhere on our spectrum; he’s running his own show.
A conspiracy bookseller named Lloyd Miller is farther out than Skousen. Miller is aware of Quigley and sells his books. While Oglesby is toying with an American ruling-class Yankee-Cowboy split that goes back a generation or so, Miller dwells on a split between the Knights of Malta and the Knights Templar going back to the year 1307. The modern derivative of this struggle provides his hypothesis that “the overt and covert organs of the Vatican and British Empire are locked in mortal combat for control of the world.” In Miller’s theory, Jesuit-controlled Georgetown is the Vatican headquarters on the American front, and Quigley is a Vatican agent exposing the Anglo-American connection. Miller is more sophisticated than this description allows, but I have difficulties with him. On a case by case basis, the theory produces as many questions as answers. More importantly, perhaps, my historical interests and imagination don’t extend much beyond the last 100 years.
Miller is mentioned because there are similarities between his analysis and the theories of Lyndon LaRouche. For anyone who wants to figure out what LaRouche is talking about, it is necessary to be conversant with esoterica concerning Freemasonry, the Knights of Malta, and British imperialism. The alternative is to see all of the above as code words for Jews, and LaRouche’s enemies — namely Chip Berlet, Dennis King, and the Anti-Defamation League — tend to take this easy way out. I don’t believe that right-wing globalist conspiracy theories in general, or LaRouche’s theories in particular, can be dismissed by claiming that they are disguised anti-Semitism — that is to say, code-word versions of the old international Jewish banking conspiracies. While there is some anti-Semitism on the right, it is no longer the driving force it might have once been. Most right-wing theories are more sophisticated than Berlet, King, or the ADL are ready to believe.
I don’t consider any of the people I’ve mentioned as crackpots, because I’m convinced that there are vital issues at stake. All of them are doing their best with checkered evidence, and for the most part I share their instincts if not always their conclusions. Regardless of where we decide to place Bill Clinton on the spectrum, which will be discussed after a review of his career, at least two other former (and future?) presidential candidates have staked out positions. Ross Perot believes that there is massive corruption and occasional conspiracies in high places; he belongs somewhere close to Quigley. Pat Robertson is a less hysterical version of Skousen, modified for post anti-Communism, and should also be taken seriously. Along with Ross Perot’s movement, some see Robertson’s Christian Coalition as a populist challenge to our one-party Republocrat system.
Most of Pat Robertson’s latest book, The New World Order (1991), is a popularized yet articulate presentation of recent American history as controlled by the Council on Foreign Relations, the Trilateral Commission, Bilderberg, the Federal Reserve System, and Wall Street. Several pages are spent on Quigley’s theories, which provide the background for an understanding of the Rhodes Trust, CFR, and the foundations with their “One World agenda.” Unfortunately, the only mention of this book in the left press ignores the analytical material that Robertson draws on, and dismisses “its more bizarre conspiracy theories such as those targeting mainstream figures as dupes of the Devil.”
Yes, Robertson finally couches his theories in a Biblical context (after keeping the Bible out of it for the first two-thirds of the book), and most of us don’t find the Bible necessary or compelling. But when leftists skip to the end in order to belittle his critique, at a time when they have lost the capacity to provide an alternative critique, this is self-defeating. My main objection to Robertson is that he doesn’t deserve to have a monopoly on these important issues; his vision is too apocalyptic and too narrow. Unlike the politically-correct “progressive” press, however, I consider him potentially closer to populism than to fascism.
Robertson spends several pages recounting the 1976 campaign of Jimmy Carter, and describes how he concluded that Carter’s strings were being pulled by the same Trilateralists who created him. A similar analysis — much more detailed and convincing — can also be found from a leftist perspective. It wasn’t too many years ago, before politically-correct thinking carried the day, that the left took Trilateralism seriously. Since 1980, the only left perspective on Trilateralism has been written by a Canadian professor. His Gramscian categories tend to be academically overbearing, but he took the trouble to interview 100 Trilateral Commission members.
The Jimmy Carter story is depressing. Hamilton Jordan reportedly said, “If, after the inauguration you find Cy Vance as secretary of state and Zbigniew Brzezinski as head of national security, then I would say that we failed.” That’s exactly what happened, and seventeen other key members of the administration were also Trilateralists. For his entire administration, every move on foreign policy was cleared with the hard-liner Brzezinski.
Robertson’s book was written just one year before Clinton’s name became a household word. One wonders how Robertson reacted to Clinton’s reference to Quigley in his acceptance speech. And then what Robertson thought when he learned that Clinton checked off on almost every group you care to name: he is a Rhodes Scholar, a CFR member, a Trilateral Commission member, a Bilderberg participant, and most of his appointees are at least one of the above. If Clinton’s mention of Quigley in July 1992 had been an isolated case, then one might interpret this as simply a ploy to disguise his elitist loyalties. But Clinton has mentioned Quigley many times over the years, and I suspect that on this he is sincere. Then again, it’s hard to believe that Clinton is unaware of Quigley’s anti-elitist tendencies. What’s going on here?
After shaking John Kennedy’s hand, they say that William Jefferson Clinton never doubted that he was headed for the White House. A band major in high school, he was favored by his school principal, who encouraged him to run for class offices and to participate in a leadership program that sponsored his trip to Washington. He attended Georgetown from 1964-1968, majoring in international affairs and immediately running for student office (“Hello, I’m Bill Clinton. Will you help me run for president of the freshman class?”). When he wasn’t listening to Quigley or networking and glad-handing his way through a student council election, he was working in the Senate Foreign Relations Office of Senator J. William Fulbright, an Arkansas Democrat and former Rhodes Scholar who started criticizing the CIA and Vietnam policy in 1966. During his first two years, Clinton was a trainee in Georgetown’s ROTC unit, and could be seen around campus in Army fatigues.
Between Quigley and his Georgetown connections, Fulbright and his Rhodes Trust connections, and Clinton’s keen interest in his own political power, it’s not surprising that the big, bearded, amiable Clinton became a Rhodes Scholar in 1968 and went off to spend two years at Oxford. Another power behind Clinton was Winthrop Rockefeller (1912-1973), two-time Republican governor of Arkansas, who reportedly functioned as a father figure. At Oxford, Clinton participated in one or more demonstrations against U.S. policy in Vietnam in front of the American embassy, and used his connections to stay out of the draft. After Oxford he went to Yale Law School. In the fall of 1972 he directed McGovern’s campaign in Texas. He ran for Congress in Arkansas in 1974 after finishing Yale, but barely lost. Then he taught law in Arkansas until 1976, when he was elected state attorney general after running unopposed. That year he also headed up the state campaign for Jimmy Carter. Two years later he won the race for governor.
The anti-war sentiments among Clinton’s Oxford colleagues did not produce an antipathy toward the CIA. Robert Earl, later an assistant to Oliver North at the National Security Council, was one of these colleagues. And while governor, Clinton was aware that an airfield in Mena, Arkansas played a major role in secret contra logistics involving gun and drug running. Clinton’s security chief is being sued for an alleged Mena-related frame-up, and many believe that there were cover-ups by both state and federal agencies.
Bill Clinton is promoted as the first baby boomer and anti-war activist in the White House. Yet I was also these things, and I cannot identify with Clinton at all. In order for this piece to make any sense, it’s important that I show how two different anti-war protesters might have stood together in a demonstration for different reasons, after arriving from different directions.
To begin with, one has to divide the student movement into two periods, before and after 1968. This year was pivotal: the McCarthy campaign, the RFK and MLK assassinations, the police riot in Chicago. Anti-war protesters on conservative campuses such as my University of Southern California and Clinton’s Georgetown, were almost always bona fide prior to 1968. There was no percentage in it otherwise, as the polls were overwhelmingly in favor of U.S. involvement in Vietnam. At USC I organized a peaceful draft card turn-in ceremony in 1968. We were physically ejected from the campus by fraternity boys, and had to continue in a church across the street, where the frat rats feared to tread. A poll by our student newspaper showed that most students agreed with the fraternity. At USC, and the same was probably true of Georgetown, a student politician couldn’t get more than a handful of votes by taking an anti-war position.
In 1969 everything suddenly changed. Major anti-war organizing efforts appeared on campus, coordinated through national networks. I guessed that these new activists, who seemed to come out of nowhere to organize the Vietnam Moratorium, were former McCarthy-Kennedy campaign workers. Although I had been co-chairman of our SDS chapter the previous year, these were all new faces to me. I was astounded and a little suspicious. Everything had turned around completely: now no student politician could hope to win without the long hair, the beads and sandals, and speaking at freshmen orientation by abandoning the lectern and sitting on the edge of the stage, “rapping” to them movement-style.
When it came time to confront the draft, these same student politicians used their mysterious connections to get out the easy way. Sometimes they pulled strings to secure a place in the overbooked National Guard, but most got out clean. Almost half of all undergraduate men were released when the first lottery was held at the end of the year, which of course brought our anti-draft movement to a halt. I now refer to my 1969 experience as the “Sam Hurst syndrome,” after the articulate and good-looking student body president who sat on the edge of the stage and rode into power on the post-1968 wave. It’s my euphemism for slick, well-disguised self-interest and a great head of hair.
I noticed that new students could not tell the difference between Sam Hurst’s activism and mine. Students with safe lottery numbers sadistically inquired about my number — they would find it amusing if my number was also safe, now that I had been convicted for refusing induction. It was every man for himself. Then it got worse. By September 1970 the big movement on campus centered on Timothy Leary’s old colleague Richard Alpert, who now called himself Baba Ram Dass and told overflow crowds that the best way to do revolution was to sit in the lotus position and do nothing. Soon Rennie Davis of Chicago Eight fame was spending his time puppy-dogging a teenaged guru from India. Within another year there was no discernible movement at all, just embarrassing burnouts like the Weather Underground and eventually the Symbionese Liberation Army, which kidnapped and brainwashed Patty Hearst.
Bill Clinton is even slicker than Sam Hurst. His anti-war activism, as well as everything else he did, developed from a focused interest in his own future. After 1968 it would have been unthinkable for Clinton to ignore the anti-war movement and face political obsolescence — not because of his revulsion over carpet bombing, but because it was time to hedge his bets. Clinton is not an intellectual, he’s merely very clever. A clever person can manipulate his environment, while an intellectual can project beyond it and, for example, identify with the suffering of the Vietnamese people. But this involves some risk, whereas power politics is the art of pursuing the possible and minimizing this risk. Almost everything that happened to the student movement is best explained without conspiracy theories. There are, however, some bits of curious evidence that should be briefly mentioned. Each of these alone doesn’t amount to much, but taken together they suggest that something more was happening — the possibility that by 1969 a significant sector of the ruling class had decided to buy into the counterculture for purposes of manipulation and control:
Student leaders James Kunen and Carl Oglesby both report that in the summer of 1968, the organization Business International, which had links to the CIA, sent high-level representatives to meet with SDS. These people wanted to help organize demonstrations for the upcoming conventions in Chicago and Miami. SDS refused the offer, but the experience convinced Oglesby that the ruling class was at war with itself, and he began developing his Yankee-Cowboy theory.
Tom Hayden, who by 1986 was defending his state assembly seat against those trying to oust him because of his anti-war record, was quoted as saying that while he was protesting against the Vietnam War, he was also cooperating with U.S. intelligence agents.
The CIA was of course involved with LSD testing, but there is also evidence that it was later involved in the distribution of LSD within the counterculture.
Feminist leader Gloria Steinem and congressman Allard Lowenstein both had major CIA connections. Lowenstein was president of the National Student Association, which was funded by the CIA until exposed by Ramparts magazine in 1967. He and another NSA officer, Sam Brown, were key organizers behind the 1969 Vietnam Moratorium. (In 1977 Brown became the director of ACTION under Jimmy Carter; his activism, which was more intense and more sincere than Clinton’s, didn’t hurt his career either.)
Symbionese Liberation Army leader Donald DeFreeze appears to have been conditioned in a behavior modification program sponsored by elements of U.S. intelligence.
The CIA has a long history of infiltrating international organizations, from labor to students to religion. I submit that if an anti-war activist was involved in this type of international jet-setting, the burden is on them to show that they were not compromised. Clinton comes close to assuming this burden.
The major point here is that by 1969, protest was not necessarily anti-Establishment. When thousands of students are in the streets every day, and the troops you sent to Vietnam are deserting, sooner or later it’s going to cut into your profits. If you can’t beat them, then you have to co-opt them. Clinton’s mentors and sponsors realized this, Clinton himself sensed the shift, and until more evidence is available it’s fair to assume that his anti-war activity was at a minimum self-serving, and perhaps even duplicitous.
How else can we explain why he has recently embraced the very organizations who got us into Vietnam in the first place? He joined the Council on Foreign Relations in 1989, attended a Bilderberg meeting in 1991, is currently a member of the Trilateral Commission, and has appointed numerous Rhodes Scholars, CFR members, and Trilateralists to key positions. These are the very groups whose historical roots, according to Quigley, are essentially conspiratorial and antidemocratic. A cynic would say that Clinton appropriated from Quigley what he needed — which was a precise description of where the power is — and ignored those aspects of Quigley that did not fit his agenda. He may have read a book or two by Quigley, but he didn’t inhale them.
On February 2, when Clinton’s nominee for CIA director was asked some polite questions, Senator John Chafee (R-RI) joked about what he called “a Mafia that’s taking over the administration.” Be sure to smile when you say that, Senator. The new director, R. James Woolsey, was an early supporter of the contras and served as defense attorney for Michael Ledeen and Charles E. Allen, he has Georgetown-CSIS connections, and he’s a Rhodes Scholar, CFR member, and Yale Law School graduate, several years ahead of Clinton. Yale, of course, is thick with CIA connections. The new CIA director was close to Brent Scowcroft at the Bush White House, and is a director of Martin Marietta, the eighth-largest defense corporation, whose contracts include the MX missle and Star Wars weapons.
It’s becoming clear that on inauguration day we merely had a changing of the guard. But it’s still the same old team at headquarters, wherever that is, and you won’t find any television cameras there. Ultimately, then, Clinton’s references to Quigley are worth as much as his anti-war record. And both are worth nothing at all.
1. David Maraniss, “Bill Clinton: Born to Run…and Run…and Run. Washington Post, July 13, 1992, p. A1.
2. “Clinton a Bircher?”, Washington Times, July 22, 1992, p. A6. For a more useful discussion of the right and Quigley, see Frank P. Mintz, The Liberty Lobby and the American Right: Race, Conspiracy and Culture (Westport CT: Greenwood Press, 1985), pp. 145-51.
3. This conclusion in inescapable after reading Dick Russell, The Man Who Knew Too Much (New York: Carroll & Graf, 1992).
4. Who’s Who in America, 1976-1977 (Chicago: Marquis Who’s Who, 1976).
5. Carroll Quigley, Tragedy and Hope: A History of the World in Our Time (New York: Macmillan Company, 1966), p. 950.
6. Carroll Quigley, The Anglo-American Establishment (New York: Books in Focus, 1981), pp. xi, 197.
7. Carl Oglesby, The Yankee and Cowboy War (New York: Berkley Publishing, 1977), pp. 6-7.
8. Quigley, Tragedy and Hope, pp. 945-9.
9. Ibid., pp. 1245-6.
10. Oglesby, p. 25.
11. G. William Domhoff, “Who Made American Foreign Policy, 1945-1963?” In David Horowitz, ed., Corporations and the Cold War (New York: Monthly Review, 1969), p.34.
12. Erwin Knoll, “Memo from the Editor,” The Progressive, March 1992, p. 4.
13. Chip Berlet, Right Woos Left (Political Research Associates, 678 Massachusetts Avenue, Suite 205, Cambridge MA 02139), July 28, 1992, $6.50.
14. A-albionic Research, P.O. Box 20273, Ferndale MI 48220.
15. Kate Cornell, “The Covert Tactics and Overt Agenda of the New Christian Right,” Covert Action Quarterly, No. 43, Winter 1992-93, p. 51.
16. Laurence H. Shoup, “Jimmy Carter and the Trilateralists: Presidential Roots”; Laurence H. Shoup and William Minter, “Shaping a New World Order: The Council on Foreign Relations’ Blueprint for World Hegemony, 1939-1945”; and several other relevant articles. In Holly Sklar, ed., Trilateralism: The Trilateral Commission and Elite Planning for World Management (Boston: South End Press, 1980).
17. Stephen Gill, American Hegemony and the Trilateral Commission (New York: Cambridge University Press, 1991).
18. Association of National Security Alumni, Unclassified, February-March 1992, pp. 6-9.
19. James Simon Kunen, The Strawberry Statement: Notes of a College Revolutionary (New York: Avon Books, 1970), pp. 130-1.
20. Steve Weissman, Big Brother and the Holding Company (Palo Alto CA: Ramparts Press, 1974), pp. 298-9.
21. AP in San Francisco Examiner, June 21, 1986.
22. Martin A. Lee and Bruce Shlain, Acid Dreams: The CIA, LSD, and the Sixties Rebellion (New York: Grove Press, 1985).
23. Kai Bird, The Chairman: John J. McCloy, The Making of the American Establishment (New York: Simon & Schuster, 1992), pp. 483-4, 727.
24. Richard Cummings, The Pied Piper: Allard K. Lowenstein and the Liberal Dream (New York: Grove Press, 1985).
25. Douglas Valentine, The Phoenix Program (New York: William Morrow, 1990), p. 337.
26. Douglas Jehl, “CIA Nominee Wary of Budget Cuts,” New York Times, February 3, 1993, p. A18.
27. Robin W. Winks, Cloak and Gown: Scholars in the Secret War, 1939-1961 (New York: William Morrow, 1987).
S&P’s action either means politicians in Washington will move to resolve budget differences, or the first shot has been fired for the eventual downgrade of the world’s largest economy and debtor nation.
The heavily-indebted US will have a deficit of 10.8 per cent of gross domestic product during 2011, according to the International Monetary Fund, and net government debt will exceed 70 per cent of gross domestic product, worse than some troubled European countries.
But some point out that on some financial metrics the US is already far below other triple A rated countries. “The market broadly knows that the US is not triple A and has not been for a very long time,” says Rob Arnott of Research Affiliates.
He argues that using corporate accounting methods, and capturing the full measure of state and local debts, government sponsored entities, social security, medicare and Medicaid programmes, “the true state of US government debt is well over 500 per cent of GDP”.