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Chapter 10:
AFTERWORD: THE PROFIT MARGIN
IN HIS FURIOUS meeting at the State Department on 18 December 1975,
shortly after his moment of complicity with the Indonesian generals over
East Timor (see pages 101-6), Kissinger makes the following peculiar dis-
avowal:
"I don't care if we sell equipment to Indonesia or not. I get nothing
from it,
I get no rakeoff."
One might have taken it for granted that a serving secretary of state
had no
direct interest in the sale of weapons to a foreign dictatorship; nobody
at
the meeting had suggested any such thing. How peculiar that Kissinger
should deny an allegation that had not been made: answer a question that
had not been asked.
It isn't possible to state with certainty when Kissinger began to profit
personally from his association with the ruling circles in Indonesia,
nor can
it be definitely asserted that this profit was part of any
"understanding" that
originated in 1975. It's just that there is a perfect congruence between
Kissinger's foreign policy counsel and his own business connections. One
might call it a harmony of interests, rather than a conflict.
Six years after he left office, Kissinger set up a private consulting
firm
named Kissinger Associates, which exists to smooth and facilitate
contact
between multinational corporations and foreign governments. The client
list is secret, and contracts with "the Associates" contain a clause
prohibit-
ing any mention of the arrangement, but corporate clients include or
have
included American Express, Shearson Lehmann, Arco, Daewoo of South
Korea, H.J. Heinz, ITT Lockheed, Anheuser-Busch, the Banca Nazionale del
Lavoro, Coca-Cola, Fiat, Revlon, Union Carbide, and the Midland Bank.
Kissinger's initial fellow "associates" were General Brent Scow croft
and
Lawrence Eagleburger, both of whom had worked closely with him in the
foreign policy and national security branches of government.
Numerous instances of a harmony between this firm and Kissinger's
policy pronouncements can be cited. The best-known is probably that of
the People's Republic of China. Kissinger assisted several American con-
glomerates, notably H.J. Heinz, to gain access to the Chinese market. As
it
was glowingly phrased by Anthony J.F. O'Reilly, CEO of Heinz:
Kissinger and his associates make a real contribution, and we think they
are
particularly helpful in countries with more centrally planned economies,
where the principal players and the dynamics among the principal players
are of critical importance. This is particularly true in China, where he
is a
popular figure and is viewed with particular respect. On China,
basically, we
were well on our way to establishing the baby food presence there before
Henry got involved. But once we decided to move he had practical points
to
offer, such as on the relationship between Taiwan and Beijing. He was
help-
ful in seeing that we did not take steps that would not have been
helpful in
Beijing. His relevance obviously varies from market to market, but he's
prob-
ably at his best in helping with contacts in that shadowy world where
that
counts.
The Chinese term for this zone of shadowy transactions is guan-xi. In
less
judgmental American speech it would probably translate as "access," or
influence-peddling. Selling baby food in China may seem innocuous
enough, but when the Chinese regime turned its guns and tanks on its own
children in Tienanmen Square in 1989, it had no more staunch defender
than Henry Kissinger. Arguing very strongly against sanctions, he wrote
that "China remains too important for America's national security to
risk
the relationship on the emotions of the moment." Taking the Deng
Xiaoping view of the democratic turbulence, and even the view of those
we
now suppose to have pressed Deng from the Right, he added, "No govern-
ment in the world would have tolerated having the main square of its
capital occupied for eight weeks by tens of thousands of demonstrators."
Of
course, some governments would have found a way to meet with the lead-
ers of those demonstrators. ... It is perhaps just as well that
Kissinger's
services were not retained by the Stalinist regimes of Romania,
Czechoslovakia and East Germany, which succumbed to just such
public
insolence later in the same year.
Nor was Kissinger's influence-peddling confined to Heinz's nutritious
products. He assisted Atlantic Richfield/Arco to market oil deposits in
China. He helped ITT (a corporation which had once helped him to over-
throw the elected government of Chile) to hold a path-breaking board
meeting in Beijing, and he performed similar services for David
Rockefeller
and the Chase Manhattan Bank, which held an international advisory
committee meeting in the Chinese capital and met with Deng himself.
Six months before the massacre in Tienanmen Square, Kissinger set up
a limited investment partnership named China Ventures, of which he per-
sonally was chairman, CEO and chief partner. Its brochure helpfully
explained that China Ventures involved itself only with projects that
"enjoy
the unquestioned support of the People's Republic of China." The move
proved premature: the climate for investment on the Chinese mainland
soured after the repression that followed the Tienanmen Square
massacres,
and the limited sanctions approved by Congress. This no doubt con-
tributed to Kissinger's irritation at the criticism of Deng. But while
China
Ventures lasted, it drew large commitments from American Express, Coca-
Cola, Heinz and a large mining and extraction conglomerate named
Freeport McMoRan, of which more in a moment.
Many of Kissinger's most extreme acts have been undertaken, at least
ostensibly, in the name of anti-Communism. So it is amusing to find
him exerting himself on behalf of a regime that can guarantee safe
investment by virtue of a ban on trade unions, a slave-Iabor prison
system, and a one-party ideology. Nor is China the sole example here.
When Lawrence Eagleburger left the State Department in 1984, having
been ambassador to Yugoslavia, he became simultaneously a partner of
Kissinger Associates, a director of a wholly owned banking subsidiary of
the Ljubljanska Banka, a bank then owned by the Belgrade regime, and
the American representative of the Yugo mini-car. Yugo duly became a
client of Kissinger Associates, as did a Yugoslav construction concern
named Enerjoprojeckt. The Yugo is of particular interest because it was
produced by the large state-run conglomerate that also functioned as
Yugoslavia's military-industrial and arms-manufacturing complex. This
complex was later seized by Slobodan Milosevic, along with the other
sinews of what had been the Yugoslav National Army, and used to pros-
ecute wars of aggression against four neighboring republics. At all
times
during this protracted crisis, and somewhat out of step with many of his
usually hawkish colleagues, Henry Kissinger urged a consistent policy of
conciliation with the Milosevic regime. (Mr Eagleburger in due course
rejoined the State Department as Deputy Secretary and briefly became
Secretary of State. So it goes.)
Another instance of the Kissingerian practice is the dual involvement of
"the Associates" with Saddam Hussein. When Saddam was riding high in
the late 1980s, and having his way with the departments of Commerce
and Agriculture in Washington, and throwing money around like the
proverbial drunken sailor (and using poison gas and chemical weapons on
his Kurdish population without a murmur from Washington), the US-Iraq
Business Forum provided a veritable slot-machine of contacts, contracts
and opportunities. Kissinger's partner Alan Stoga, who had also been the
economist attached to his Reagan-era Commission on Central America,
featured noticeably on a Forum junket to Baghdad. At the same time,
Kissinger's firm represented the shady Italian Banco Nazionale del
Lavoro,
which was later shown to have made illegal loans to the Hussein regime.
As
usual, everything was legal. It always is, when the upper middle class
meets
the lower Middle East.
In the same year -1989 Kissinger made his lucrative connection with
Freeport McMoRan, a globalized firm based in New Orleans. Its business
is the old-fashioned one of extracting oil, gas, and minerals. Its
chairman,
James Moffett, has probably earned the favorite titles bestowed by the
busi-
ness and financial pages, being beyond any doubt "flamboyant,"
"buccaneering," and a "venture capitalist."
In 1989, Freeport McMoRan paid Kissinger Associates a retainer of
$200,000 and fees of $600,000, not to mention a promise of a 2 percent
commission on future earnings. Freeport McMoRan also made Kissinger a
member of its board of directors, at an annual salary of at least
$30,000. In
1990, the two concerns went into business in Burma, the most grimly
repressive state in all of South Asia. Freeport McMoRan would drill for
oil
and gas, according to the agreement, and Kissinger's other client,
Daewoo
( which was then itself a venal corporate prop of an unscrupulous Korean
regime), would build the plant. However, that year the Burmese generals,
under their wonderful collective title of SLORC (State Law and Order
Restoration Council), lost a popular election to the democratic
opposition
led by Daw Aung San Suu Kyi and decided to annul the result. This devel-
opment -- producing yet more irritating calls for the isolation of the
Burmese junta -- was unfavorable to the Kissinger Freeport-Daewoo triad,
and the proposal lapsed.
But the following year, in March 1991, Kissinger was back in Indonesia
with Moffett, closing a deal for a thirty-year license to continue
exploiting
a gigantic gold and copper mine. The mine is of prime importance for
three reasons. First, it was operated as part of a joint venture with
the
Indonesian military government, and with that government's leader, the
now-deposed General Suharto. Second, it is located on the island of
Irian
Jaya (in an area formerly known as West Irian): a part of the
archipelago
which in common with East Timor -- is only Indonesian by right of arbi-
trary conquest. Third, its operations commenced in 1973 -two years
before Henry Kissinger visited Indonesia and helped unleash the
Indonesian bloodbath in East Timor while unlocking a flow of weaponry
to his future business partners.
This could mean no more than the "harmony of interest" I suggested
above. No more, in other words, than a happy coincidence. What is not
coincidental is the following:
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Freeport McMoRan's enormous Grasberg mine in Irian Jaya stands
accused of creating an environmental and social catastrophe. In
October 1995 the Overseas Private Investment Corporation (OPIC), a
Federal body that exists to help us companies overseas, decided to
cancel Freeport McMoRan's investment insurance for political risk -the
very element on which Kissinger had furnished soothing assurances in
1991. OPIC concluded that the Grasberg mine had "created and con-
tinues to pose unreasonable or major environmental, health or safety
hazards with respect to the rivers that are being impacted by the
tailings,
the surrounding terrestrial ecosystem, and the local inhabitants."
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The "local inhabitants" who came last on that list are the Amungme
people, whose protests at the environmental rape, and at working con-
ditions in the mine, were met by Indonesian regular soldiers at the
service of Freeport McMoRan, and under the orders of Suharto. In
March 1996, large-scale rioting nearly closed the mine at a cost of four
deaths and many injuries.
Freeport McMoRan mounted an intense lobbying campaign in
Washington, with Kissinger's help, to get its OPIC insurance reinstated.
The
price was the creation of a trust fund of $100 million for the repair of
the
Grasberg site after it, and its surrounding ecology, had eventually been
picked clean. All of this became moot with the overthrow of the Suharto
dictatorship, the detention of Suharto himself, and the unmasking of an
enormous nexus of "crony capitalism" involving him, his family, his
mili-
tary colleagues, and certain favored multinational corporations. This
political revolution also restored, at incalculable human cost, the
inde-
pendence of East Timor. There was even a suggestion of a war crimes
inquiry and a human rights tribunal, to settle some part of the account
for
the years of genocide and occupation. Once again, Henry Kissinger has
had
to scan the news with anxiety, and wonder whether even worse revelations
are in store for him. It will be a national and international disgrace
if the
answer to this question is left to the pillaged and misgoverned people
of
Indonesia, rather than devolving onto a United States Congress that has
for
so long shirked its proper responsibility.
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