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Opinion from a Libertarian ViewPoint

How Biden’s Foreign-Policy Team Got Rich – The American Prospect

Posted by M. C. on July 7, 2020

There is no Biden Doctrine. “He’s not a guy who knows history. He’s not a guy who is intellectually curious,” said Emma Sky, who advised the U.S. military in Iraq. “It’s all about personal relationships.” Those close bonds may cloud his judgment. He has expressed “love” for Israeli Prime Minister Benjamin Netanyahu even after he had defied the Obama administration and stood by the late Egyptian President Hosni Mubarak as he assaulted protesters. In effect, Biden’s foreign policy is a blank slate, onto which often-conflicted advisers from the traditional national-security establishment will project actual policies.

https://prospect.org/world/how-biden-foreign-policy-team-got-rich/

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They had been public servants their whole careers. But when Hillary Clinton lost the 2016 election, two departing Obama officials were anxious for work. Trump’s win had caught them by surprise.

Sergio Aguirre and Nitin Chadda had reached the most elite quarters of U.S. foreign policy. Aguirre had started out of school as a fellow in the White House and a decade later had become chief of staff to U.N. Ambassador Samantha Power. Chadda, who joined the Pentagon out of college as a speechwriter, had become a key adviser to Secretary of Defense Ash Carter in even less time. Now, Chadda had a long-shot idea.

They turned to an industry of power-brokering little known outside the capital: strategic consultancies. Retiring leaders often open firms bearing their names: Madeleine Albright has one, as do Condoleezza Rice and former Secretary of Defense William S. Cohen. Their strategic consultancies tend to blur corporate and governmental roles. This obscure corner of Washington is critical to understanding how a President Joe Biden would conduct foreign policy. He has been picking top advisers from this shadowy world.

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At the outset of a new administration, high-ranking officials often join one of a dozen such firms, which are surprisingly bipartisan in their makeup, to help companies navigate the areas where their relationships give them power. The model was pioneered by Henry Kissinger, who through Kissinger Associates represented American Express and Coca-Cola, among other banks and transnationals. In Beijing, Washington, and developing countries, strategic consultants help corporations manage tricky regulations, potential crises, and new markets. Their behind-the-scenes work in world capitals can look a lot like lobbying.

The problem for Aguirre and Chadda was that neither young man was a marquee name. Chadda realized that the latest crop of senior officials hadn’t yet started their own named consultancies. “The thought for us was to build a living and breathing platform, with those who are enthusiastic about serving again,” he said. Staying up late one night, they drafted a plan and came up with the first target they would pitch.

Michèle Flournoy had served as undersecretary of defense for policy from 2009 to 2012. Both Aguirre and Chadda had known her well in the Obama administration. Since leaving office, she’d spent several years in consulting and was hitting her stride. With Flournoy as senior adviser, Boston Consulting Group’s defense contracts grew from $1.6 million in 2013 to $32 million in 2016. Before she joined, according to public records, BCG had not signed any contracts with the Defense Department.

Flournoy, while consulting, joining corporate boards, and serving as a senior fellow at Harvard’s Belfer Center, had also become CEO of the Center for a New American Security in 2014. The think tank had $48 million on hand, and defense contractors donated at least $3.8 million while she was CEO. By 2017, she was making $452,000 a year.

If a Democrat were to win office, she would likely become the first woman defense secretary. She had considered an offer to serve as deputy to Trump’s first secretary of defense, Jim Mattis, but ultimately withdrew from the vetting process and stuck to consulting. “That’s more of a labor of love,” she told me. “Building bridges between Silicon Valley and the U.S. government is really, really important.”

Intrigued by Aguirre and Chadda’s idea of starting her own shop, she had one condition: find another big name, so it wouldn’t just be Flournoy and Associates.

They needed another co-founder. Establishing a new firm was an investment and a risk, and many Obama officials were already spoken for, some headhunted by corporations or consultancies, others returning to academic appointments or finding respite in research institutions—many wearing all those hats at once.

Flournoy could carry her own private practice, but she didn’t want a firm with her name on it alone. The trio reached out to defense and intelligence honchos, but with no luck. Then a particular Washington fixture came to light.

He had been Vice President Joe Biden’s right-hand man for almost two decades and finished out the Obama administration as deputy secretary of state. He was known for his unimpeachable ethics. Having written Biden’s speeches for years, he had started to enunciate with the vice president’s drawl when he appeared on CNN. He had never cashed in on his international connections, years of face time with Saudi, Israeli, and Chinese leaders.

His name was Tony Blinken. With his commitment to join Flournoy as founding partner, a new strategic consultancy was born. They called it WestExec Advisors.

WEST EXECUTIVE AVENUE runs along the West Wing of the White House, the connection between presidential power and the offices where aides sit and do the real work. The name WestExec Advisors trades on its founders’ recent knowledge of the highest echelons of decision-making. It also suggests they’ll be walking down WestExec toward 1600 Pennsylvania Avenue some day soon.

The Obama campaign in 2008 made a pledge to exclude lobbyists from policy deliberations and, once in office, policymaking. “Lobbyists are not bad people,” then-Sen. Joe Biden said. “Special interest groups are not bad people. But they are corrosive.” Biden was the most modest vice president in recent history, coming into office with a net worth of less than $150,000. But afterward, he made big money, profiting from a multimillion-dollar book deal and earning $540,000 annually from a University of Pennsylvania center named for him that doesn’t involve any teaching. He nevertheless promoted himself as Middle-Class Joe. “I work for you—not any industry,” he tweeted last year.

But many of the people who work closely with Biden are enmeshed in the opaque world of strategic consultancies and by extension a network of the world’s biggest businesses. If they’ve been consulting for corporations with offshore interests, this spells potential conflicts. “One of the biggest gaps in ethics laws is that we don’t require strategic consultants to register as lobbyists,” said Mandy Smithberger of the Project on Government Oversight.

When it comes to foreign affairs, Biden and his advisers are nonideological and mainly transactional. In Obama’s situation room, he sometimes urged restraint, according to people who were there, and sometimes was hawkish. Rather than being associated with a particular school of statecraft or a signature policy accomplishment, Biden is known for his intimacy with world leaders.

Tasked by Obama to end the Iraq War, Biden supported Nouri El-Maliki, the leader he knew, and rescued the Iraqi prime minister’s career even though it ended up fracturing the country. When Maliki narrowly lost in 2010, Biden didn’t give Iraqi political parties time to broker a new coalition. With Biden’s endorsement, Maliki gained a second term; he grew more authoritarian, which is now widely believed to have led to the rise of ISIS. Biden ignored experts who were skeptical of Maliki and preferred to glad-hand. “He came to deal with Iraqi politicians like local political kingpins in Delaware or Pennsylvania,” said Robert Ford, who was deputy ambassador in Baghdad from 2008 to 2010.

Biden’s foreign policy is a blank slate, onto which often-conflicted advisers from the national-security establishment will project actual policies.

There is no Biden Doctrine. “He’s not a guy who knows history. He’s not a guy who is intellectually curious,” said Emma Sky, who advised the U.S. military in Iraq. “It’s all about personal relationships.” Those close bonds may cloud his judgment. He has expressed “love” for Israeli Prime Minister Benjamin Netanyahu even after he had defied the Obama administration and stood by the late Egyptian President Hosni Mubarak as he assaulted protesters. In effect, Biden’s foreign policy is a blank slate, onto which often-conflicted advisers from the traditional national-security establishment will project actual policies.

If “personnel is policy,” as Sen. Elizabeth Warren likes to say, we can learn a lot about Biden from his team. In addition to Blinken, advisers include Nicholas Burns (The Cohen Group), Kurt Campbell (The Asia Group), Tom Donilon (BlackRock Investment Institute), Wendy Sherman (Albright Stonebridge Group), Julianne Smith (WestExec Advisors), and Jake Sullivan (Macro Advisory Partners). They rarely discuss their connections to corporate power, defense contactors, private equity, and hedge funds, let alone disclose them.

I asked a Biden spokesperson if the campaign would commit to more transparency and expand the Obama-era pledge to strategic consultants. “There’s a difference between consulting and lobbying,” he told me. “There’s a pretty strong line there … So, presumably we don’t have a ban on people who were consultants at one time or another, since I’m one myself.”

AGUIRRE AND CHADDA RENTED an office suite three blocks from the White House. The newly hired operations director drove over card tables, folding chairs, and a Wi-Fi router in the trunk of her car. But this was hardly a scrappy startup.

WestExec promised to be more boutique than conventional consultancies like Albright Stonebridge Group or RiceHadleyGates. Most clients would have direct access to either Blinken or Flournoy. They also recruited an assortment of former colleagues as contractors to chip in, among them Deputy Secretary of Defense Robert Work, Ambassador to Israel Dan Shapiro, and Deputy CIA Director Avril Haines, who had helped design Obama’s program of using drones for extrajudicial killings.

Now, they needed clients. The first step was hosting a party.

At their April 2018 launch, Aguirre and Chadda stood with drinks across the hall from WestExec’s now furnished suite. It had a clubby feel thanks to purple lights and concrete walls. It must have been heartening to look across the room at Susan Rice, Tom Donilon, and Denis McDonough eating canapés as a DJ spun.

The next day, they were back to reaching out to venture capitalists and corporate leaders. Their whole approach was based on word of mouth and the power of their founders’ reputations. Initially, WestExec’s website, with its cool black-and-white portraits in dark suits, simply listed Blinken by his role in the firm. By April, a boldfaced title had been added under his name: “Former Deputy Secretary of State and Former Deputy National Security Advisor to the President.” It must have appealed to clients.

To look more established, WestExec found partners in a private equity group and a Google affiliate.

The private equity firm Pine Island Capital Partners was incorporated a year earlier by John Thain. Blinken and Flournoy joined a startlingly high-profile roster of former policymakers, including four retired senators and the former chair of the Joint Chiefs. (Pine Island declined to comment.) Thain, an investment banker, had tanked Merrill Lynch, sold it off to Bank of America, and paid himself several bonuses along the way. At the height of the subprime mess, he spent $1.2 million remodeling his office, installing a $35,000 golden toilet. He seemed like a less-than-ideal partner for public servants.

Another partnership was with Google’s in-house think tank, Jigsaw. WestExec collaborated with the tech company, as first reported by The Intercept, in pitching an artificial-intelligence venture to the Pentagon. That AI initiative, known as Project Maven, led to an insurrection among Google staff upset about collaborating with the military. Though Jigsaw has since been removed from WestExec’s list of partners, the Prospect has learned that Blinken and Flournoy have continued to work quietly and informally with Google engineers and executives, spitballing potential geopolitical threats. Schmidt Futures, Google founder and billionaire Eric Schmidt’s philanthropy, has also hired WestExec.

The founders told executives they would share their “passion” for helping new companies navigate the complex bureaucracy of winning Pentagon contracts. They told giant defense contractors how to explain cutting-edge technologies to visitors from Congress. Their approach worked, and clients began to sign up.

One was an airline, another a global transportation company, a third a company that makes drones that can almost instantly scan an entire building’s interior. WestExec would only divulge that it began working with “Fortune 100 types,” including large U.S. tech; financial services, including global-asset managers; aerospace and defense; emerging U.S. tech; and nonprofits.

The Prospect can confirm that one of those clients is the Israeli artificial-intelligence company Windward. With surveillance software that tracks ships in real time, two former Israeli naval intelligence officers established the company in 2010. Gabi Ashkenazi, former chief of staff of the Israel Defense Forces, serves on its board. Windward also claims former CIA director David Petraeus as an investor, as well as a Hong Kong billionaire (most U.S. military-tech companies avoid money from China, experts told me, so they turn to investing in Israel).

Strategic consultants’ behind-the-scenes work in world capitals can look a lot like lobbying.

WestExec says they do not lobby. “We’ll tell you who to go talk to, but we’re not going to go in there for you, and we’re not going to facilitate the introduction,” said one staffer. One of their offerings that attracted corporations, the same staffer told me, is an “on-call National Security Council.”

It wasn’t until companies renewed contracts in December 2018 that Aguirre and Chadda felt that their strategic consultancy was in place. The plan was paying off. WestExec didn’t need to do any marketing. CEOs had recommended them to other CEOs.

LAST YEAR, WESTEXEC’S corporate interests and their policymaking at last collided. On January 7, 2019, Tony Blinken and Michèle Flournoy chaired the biannual meeting of the liberal organization Foreign Policy for America. Over 50 representatives of national-security groups gathered in a boardroom at the Madison hotel in Washington. Blinken and Flournoy’s roles with WestExec were not listed on the invitation or on the FP4A website.

The group worked through 24 agenda items, and the last one was “The War in Yemen.” Many Obama diplomats had expressed remorse for enabling Saudi Crown Prince Mohammed bin Salman’s destructive campaign in the Arab world’s poorest country. In 2015, Obama had dispatched Blinken to tell Mohammed Bin Salman that the U.S. supported Saudi Arabia’s right to defend itself and nothing more. But four years later, the U.S., through its arms sales, was party to an ongoing war. The death toll was over 100,000 in an asymmetric conflict, and the defense contractor Raytheon had sold Saudi Arabia more than $3 billion worth of bombs.

Four hours into the marathon policy discussion, many former officials joined progressive advocates in urging an end to weapons sales. The starting point, per FP4A’s agenda, was to “ask Congress to halt U.S. military involvement in the conflict.” Most participants supported cutting all weapons sales, but one person stood apart: Flournoy tried to persuade the group that an outright ban on arms sales to Saudi Arabia wouldn’t be a good idea. Putting conditions on their use was a better compromise, she said, one that defense contractors wouldn’t lobby against, according to two attendees. Flournoy told me she had made a distinction between offensive and defensive weapons, saying that Saudi Arabia needed advanced Patriot missiles to protect itself.

It was an argument she had been making around the capital, but it didn’t resonate among the left-leaning room and didn’t affect the group’s recommendation. To two people present, it sounded like Flournoy was working for Raytheon, which produces Patriot missiles.

Flournoy would not confirm whether WestExec currently works for them. “Raytheon was not being considered as a client at that point,” she said. “When I take a policy position, I do so because I think it is in U.S. interests, and the views I express are solely my own, no one else’s.”

Another WestExec staffer wouldn’t comment on whether the consultancy has Raytheon as a client but would only say the defense contractor is “in the ballpark,” noting they work for a “defense prime,” meaning one of the top five defense firms among which Raytheon ranks. (WestExec’s own Robert Work has served on Raytheon’s board since 2017.)

WestExec is only one of Blinken and Flournoy’s overlapping roles, which keep them updated on trends that others lack access to. Flournoy, for instance, serves on the Pentagon’s Defense Policy Board, the President’s Intelligence Advisory Board, and the CIA director’s External Advisory Board; each of these positions gives members access to sensitive information, which in turn provides insights useful to attracting and serving corporate clients. Membership requires ethics disclosures, though none of those documents are publicly available, adding another layer of opacity.

Flournoy also joined the board of Booz Allen Hamilton in October 2018, and it has signed 61 contracts with the Defense Department since. Last year, the role earned her $192,474 ($76,986 as cash, $115,488 in equity). She is on the boards of the artificial-intelligence company SparkCognition, the nonprofit Mitre Corporation, the IT company CSRA, Amida Technology Solutions, and Rolls-Royce North America.

“When we do take on a defense firm, we’re careful and just thoughtful about the nature of the work that we do,” Flournoy told me. “There’s work we would do, and there’s work we wouldn’t do.”

AGUIRRE AND CHADDA FELT their strategic consultancy had far surpassed their hopes. As Joe Biden launched his presidential campaign in spring 2019, they were committed to the firm they had built. If Democrats took the White House, they won’t close up WestExec.

“Think about it: If Biden were to win, we do think that companies will start coming to WestExec, for ‘Hey, what is the commerce secretary thinking?’” one of the firm’s members said. “Because we likely have a history with that person or that staffer in our network somewhere. That will be something we can provide that we just don’t provide right now.”

Blinken is back to consulting for the vice president. In a video on Biden’s Twitter feed this April, he was introduced as senior foreign-policy adviser, explaining the candidate’s China policy. At the same time, WestExec advertises on its website that it will “develop a strategy for expanding market access in China” for clients. And a recent post on WestExec’s LinkedIn page displays Obama and Blinken chatting at the end of the board table.

Chadda denied that Blinken was having it both ways. “Volunteering for a political campaign, much like any other private pursuit, is done outside of formal employment and should never be implicated,” he told me.

Despite multiple requests, neither the firm nor the Biden campaign would provide WestExec Advisors’ client list. “Transparency is very important to us,” said a Biden spokesperson. Blinken had recused himself from work at WestExec, according to the campaign, yet his profile remains on the consultancy’s website as well as on Pine Island Capital Partners’. Unmentioned on either page is his role in the campaign. After requests for comment from the Prospect, a Biden campaign official responded that Blinken will take a leave of absence from WestExec effective August 1. He is also ‘in the process of leaving Pine Island Capital Partners,’ the campaign official added.

Such representational juggling is likely to influence how decisions are made. “Registered lobbyist is a bullshit distinction,” a former Obama official said. “For me it’s: Are you making a living based on monetizing a set of relationships or a policy domain with personal interest?”

At the end of June, the campaign announced who would oversee foreign policy for Biden’s transition team. It was Avril Haines, another former security chief whom Aguirre and Chadda had hired, now aiming to return with her WestExec colleagues back to West Executive Avenue.

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