|Secretary of State Colin Powell's recent warning to a cash-starved Argentina that underlying economic reform is a necessary but insufficient ingredient for sustained economic growth was followed by a stern admonishment. "Argentina," he said, "must also address the underlying political and institutional flaws that encourage excess public-sector borrowing, corruption, politicized judicial systems and a lack of transparency in government activities."|
Observers in Buenos Aires were left to wonder whether those warnings on corruption and transparency in government activities might extend to various well-known American political consultants and lobbyists plying their trade along the Río de la Plata. If past is prologue, these informal U.S. representatives may provide unseemly examples of public rectitude, Powell's pointed warning notwithstanding.
Powell's comments came just weeks after it was revealed that the Argentine government of Eduardo Duhalde, the hapless populist desperate for outside help to patch up his country's tattered reputation for international creditworthiness, had hired a trio of Washington powerhouses as registered agents. One was Alan Stoga, head of Zemi Communications of New York and a protégé of Nixon secretary of state Henry Kissinger. Kissinger currently is of interest to Argentine prosecutors for his alleged role in egregious human-rights violations committed in South America during the 1970s (see "Kissinger Had a Hand in 'Dirty War,'" KW #1).
Aging and ailing Larry Eagleburger, secretary of state in the George H.W. Bush administration and a founding partner in Kissinger's original lobbying firm, Kissinger Associates, also was hired by a Duhalde desperately in need of vigorous defenders. So was Bill Clinton's former deputy treasury secretary, the ubiquitous Stuart Eizenstadt.
The ensuing flap over the hiring of such consultants was just one in a growing series of ironies visited upon angry and weary Argentines. Most of the estimated 20,000 people kidnapped and secretly killed a quarter-century ago by a military junta actively supported by Kissinger came from Duhalde's own Péronist Party. Kissinger's former patron, U.S. banker David Rockefeller, reportedly helped the generals run up Argentina's foreign debt; now Duhalde was turning to two of "Mr. K's" former top lieutenants for financial advice.
As desperation over the economic cataclysm and endless political wrangling grows in Buenos Aires — combined with a perceived lack of sympathy by Washington to the country's plight — local observers recall that the kleptocratic government of Carlos Saul Menem, for whom Duhalde served as vice president, had been hailed by the George H.W. Bush administration and again during the eight years of Bill Clinton. Then, these observers note, U.S. officials turned a blind eye as drug trafficking and money laundering skyrocketed in Argentina. (The difference between Menem and Duhalde, says one critical political observer in Buenos Aires, mirrors that between Vito and Michael Corleone in the movie The Godfather. In Argentina, he added, Menem plays the role of the more modern, but no less unappealing, son.)
The consultant controversy also comes as Latins are wondering just how much bragging rights the gringos legitimately can claim in the post-Enron period to the mantle of clean government. According to a poll of Buenos Aires residents released May 14 by the respected Ricardo Rouvier & Associados public-opinion firm, 56.4 percent of Argentines rejected Powell's assertions, claiming that they were both interventionist and coming from a country "with little moral authority" to make them.
"The Enron scandal," complained Joaquin Estefania in the Spanish newspaper El Pais, "with its creative accounting, revolving door between the political and economic establishments, fraud against stockholders and workers, etc., shows that crony capitalism isn't just the province of emerging or developing countries, as we have been told, but is at the heart of the system itself."
Although the lucrative contracts given to Stoga, Eagleburger and Eizenstadt raised eyebrows in a country experiencing unprecedented economic hardship, they were just the latest in a string of services purchased from high-flying U.S. "hired guns" that in the last decade have traveled to Argentina to do business. The conduct of several of these has not, observers say, suggested the strict adherence to transparency and clean government urged on Argentines by Powell.
Questions about the role played in Buenos Aires by U.S. political consultants, former diplomats and lobbyists grew during the 1990s. This particularly was so after Miami businessman Howard Glicken, a longtime fund-raiser for then-Vice President Al Gore, was indicted and later convicted for violations of U.S. campaign-finance laws, including soliciting a contribution from a foreign national. Glicken, vice chairman for finance of the Democratic National Committee in 1996, was a frequent visitor to Buenos Aires. With U.S. Ambassador James Cheek as his host, Glicken bandied about his ties to Thomas "Mack" McLarty, Clinton's top adviser on Latin America and Kissinger's current business partner.
Meanwhile, friends of former president George H.W. Bush, including several retired intelligence officials, parlayed their ties to the former U.S. chief executive into business contacts in Argentina. Questions also were raised when — after Bush's ambassador to Buenos Aires, Terrance Todman, was appointed to the board of the recently privatized Argentine state airline, a symbol of corruption during the Menem government — Clinton appointee Cheek signed on as a director of an engraving and printing enterprise now under investigation for allegedly forging millions of dollars in provincial bonds. In both cases, questions were raised whether the close bilateral relationship they promoted as envoys to Menem's government resulted in business opportunities after they left U.S. government service.
The 1999 presidential contest in Argentina featured a no-holds-barred sideshow between two former rivals and top Clinton advisers. Dick Morris, forced out of the White House after a toe-sucking dalliance with a prostitute was revealed on the eve of the Democratic National Convention in 1996, signed on as a paid senior campaign adviser to Fernando De la Rua, the standard-bearer of Menem's political opposition. James Carville advised Duhalde, by then a bitter enemy of Menem's, until the Argentine and the architect of Clinton's 1992 presidential win parted ways midcampaign. Duhalde reportedly was driven to distraction by Carville's penchant for handheld computer games.
De la Rua, heading a clean-government coalition, won the contest in a landslide. But the glow of victory by the Morris candidate over the man backed by Carville proved short-lived. Despite the election's mandate for change, De la Rua proved indecisive, and surrounded himself with bumbling loyalists. Worse, a government-sponsored labor-reform law won Argentine congressional approval following reported widespread bribery using secret funds from the state intelligence agency, SIDE.
De la Rua's own vice president resigned in protest. In a subsequent media fracas known as "Morrisgate" in November 2000, the Argentine newsmagazine Noticias alleged that Morris received at least some of a $1.6 million contract for advising the De la Rua government for eight months. The magazine claimed Morris had been paid though IKON, a lobbying firm owned by his friend, controversial Republican campaign strategist Roger Stone. It also reported that the contract, for "image consulting," was signed by SIDE chief Fernando de Santibanes.
The revelations spurred Argentine federal judge Jorge Urso to raid the presidential palace and the state intelligence headquarters as part of an ongoing investigation into corruption by the "reformist" De la Rua administration. The local press began to ask why a contract that purportedly dealt only with "image consulting" was obtained from SIDE.
In a statement to Insight, Morris said, "The contract was with SIDE because that is how de la Rua thought it could best be handled financially." Morris says he did not receive "a dime" from the contract with SIDE that he procured for his friend Stone, who in November 2000 reportedly agreed to pay $100,000 in fines if the New York Lobbying Commission did not find him and others guilty of violating lobbying rules. According to PRWeek magazine, the IKON-SIDE contract was canceled in early 2001.
In a telephone interview with Insight, the Buenos Aires magistrate says his probe into the SIDE contract is continuing. Morris, he says, is one of those under investigation. For his part, Morris notes that the judiciary in Argentina is "notoriously political" and adds that he never has been contacted by the magistrate or asked to testify or furnish any information in the case. "The fact remains," he says, "that all this was pro bono on my part with no direct or indirect compensation. No good deed goes unpunished."
De la Rua's term in office was cut short in December 2001 after the country's economy went into a free fall. He eventually was replaced by his one-time rival Duhalde. One of those who reportedly has Duhalde's ear is former CIA staffer and Reagan-era National Security Council economic adviser Norman Bailey.
The Argentine media reported that in mid-April Bailey spent a morning with Duhalde at the Olivos presidential residence outside Buenos Aires, mapping out a strategy for improving relations with the George W. Bush administration. Insiders say Bailey's access is due, in part, to the fact that he was one of the few who went out of his way to meet with Duhalde in Washington following the latter's stinging defeat by De la Rua.
During the Reagan years, Bailey came under heavy criticism for cultivating ties to political extremist Lyndon LaRouche and his followers. Even after leaving government service, Bailey was quoted as saying LaRouche had "the best private intelligence services in the world." Among the bizarre theories LaRouche and his followers peddled were that Britain's political leaders were "puppets of Jewish banking families," that Queen Elizabeth II headed a drug cartel and that Kissinger was a homosexual as well as a murderer.
In the early 1990s, LaRouche's publications touted as heroes two Latin Americans of special interest. One was ultraright Argentine Col. Mohammed Ali Seineldin, a rabid anti-Semite "Painted Faces" death-squad leader responsible for two rebellions against the elected governments of Menem and his civilian predecessor. The other was Venezuelan army officer Hugo Chavez, the pro-Castro nationalist who currently serves as that country's president (see "Fidel's Successor in Latin America," April 30, 2001). The Duhalde government recently rejected the credentials of Chavez's chosen envoy to Buenos Aires, a sociologist linked to fringe leftist parties and "Painted Faces" partisans in Argentina. According to diplomatic sources, the envoy sought to "sell" the Venezuelan model in the Southern Cone. Meanwhile, disaffected Péronists say they find in Chavez's "nationalist, revolutionary and anti-imperialist" dogma a worldview very close to that of their party's late founder, Gen. Juan D. Péron.
In the aftermath of a coup attempt in Venezuela, whose ties to Washington are denied in ways reminiscent of Clinton's parsing of the definition of sex, Buenos Aires' overheated rumor circuits again are working overtime. This time it was with speculation about the real motives behind the comments of Powell and other administration officials concerning the state of Argentina's democracy. It did not pass without notice that Powell's remarks were made before the annual conference of the Council of the Americas, founded by Rockefeller, one of those who reportedly helped Argentina's military run up the country's crushing debt burden through a series of questionable loans. Among those singled out for recognition by Powell was Stoga, the group's acting president and one of those hired by the supposedly populist Duhalde to help Argentina find its way.
Martin Edwin Andersen is a reporter for Insight magazine.