Tuesday, May 26, 2009

China's trade policy was not an economic one

Kissinger: Their interest is 100 percent political. There was no emphasis at all on the economic side. Even as we arrived at the airport, one of them commented to me, "We are being overwhelmed with your businessmen. In due time we'll do business, but in our own time."

Remember, these are men of ideological purity. Chou En-lai joined the Communist Party in France in 1920, long before there was a Chinese Communist Party. This generation didn't fight for 50 years and go on the Long March for trade.

Mr Shultz: In Marxist theory, economics is paramount and all else is superstructure.

Kissinger: In Marxist practice, politics is paramount.

Mr Shultz: Then this is ideological impurity.
Kissinger: What I am saying is that they are not interested in trade for trade's sake. I am not saying they are not interested in getting things done.

Another thing struck me: When you have read the formalism of old China, it is remarkable to see the absence of hierarchy, for example, in the personal relationship between Chou and his interpreter. There was an easy personal relationship unlike what you would see in any Western official counterpart.
.....They are concerned with the Soviet military buildup on their border......

Whenever I mentioned chinese history to them, they emphasised what was new. But we were given a special tour of the Forbidden City by their chief archaeologist. Their grace and style did not give you a sense of an enormous break in continuity. At the same time, you get a mystical sense of their revolution as a tremendous emotional experience. Mao is right. It is hard to see how the next generation will feel and act the same way.

Mr Peterson: Well,Henry, it's good to have a reason to congratulate you for something other than your presumed sexual exploits.

Kissinger: You know I believe in the linkage theory!

White House Memorandum. 19th July 1971


Shag from Brookline said...

How can I eat sausage after this:

"Mr Peterson: Well,Henry, it's good to have a reason to congratulate you for something other than your presumed sexual exploits.

Kissinger: You know I believe in the linkage theory!"

Now in his 80s, Henry must be worried about the missing link, although Viagra is now available for his earlier aphrodisiac.

Jack said...

No one ever said that Kissinger should be taken at his word. He was a political operator with a lust for power. He sat in the next seat over and undoubtedly exercised his position for maximum effect.

The question is not what the Chinese had in mind regarding the political/economic focus of attention. What did Henry and his associates have in mind? When in doubt follow the money. What, if any, role did Kissinger & Associates play in the subsequent transfer of global manufacturing to China? To what extent, if any, is Kissinger's subsequent wealth the result of China's newly developed role as manufacturer to the world?

Jack said...

By the way, who is the Mr. Peterson mentioned in the conversation?

Shag from Brookline said...

Pete Peterson? Just a guess.

Myrtle Blackwood said...

Jack said:
What, if any, role did Kissinger & Associates play in the subsequent transfer of global manufacturing to China? First, his 'associates'. From the excerpt I posted it's clear that Peterson and Shultz and Nixon were/are. In 1989 Kissinger formed the China-America Society, which is a group that included clients such as Chase Manhattan Bank, Coca-Cola and American Express. All heavily invested in China.

"Kissinger, whom former China Ambassador Winston Lord calls "Uncle Henry," personally stands to profit by millions as firms he represents contract with China and other countries where the former secretary is an active facilitator, according to Larry Abraham of Insider Report, a prestigious international-investment letter. In May 1990, Abraham obtained and published details of Kissinger contracts with corporate clients. To become a corporate client of Kissinger, Abraham revealed, a corporation pays a $200,000 fee. In some cases Kissinger also will take a seat on the company's board. In 1990, he sat on boards for American Express, Union Pacific, R.M. Macy, Continental Grain, CBS Inc., Revlon Group Inc. and Freeport-McMoran, or FMR. An example of how he is able to generate additional revenues from his deals is his relationship with Freeport-McMoran, reports Abraham from that company's public records. Around the time of the 1989 Tiananmen Square massacre, its subsidiary, Freeport International Inc., had a 6.7 percent interest in China Ventures -- a limited partnership whose papers refer to a $75 million China Ventures fund set up by Kissinger to help American firms conduct business in China. Kissinger is reported in the corporate papers to have collected $375,000 for serving as chairman of China Ventures and to have received $995,000 in management fees. Back at Freeport-McMoran, according to Abraham, Kissinger was paid $25,000 for serving on the board; plus, his firm received the standard $200,000. Kissinger also negotiated in 1989 a side deal for himself involving Kent Associates Inc., a one-man corporation for which Kissinger is board chairman and sole stockholder. Under that deal, Kissinger reportedly received $100,000 per month plus Kent's standard 2 to 5 percent of profits generated from FMR contracts. In all, the documents obtained by Insider Report indicate Kissinger personally earned $600,000 from Freeport-McMoran. In 1989, Kissinger told the Wall Street Journal that 8 percent of the revenue from Kissinger Associates and Kent came from clients requesting advice about China.Lion Dancing with Wolves
Magazine article by Timothy W. Maier; Insight on the News, Vol. 13, April 21, 1997.

"economics exists for a purpose, and is meaningful and useful only insofar as it serves that purpose. The purpose is to enable us better to comprehend the structure and tendencies of the economic order - that is, the institutions and activities that affect the production and distribution of wealth. Insofar as economics gives us this understanding, no matter how abstract or far-fetched it may seem, it is undeniably relevant. But insofar as it fails to do so, no matter how elegant or scientific it may appear, it is not. ""On the Limited 'Relevance' of Economics," The Public Interest, No.21, pp.80-93, Fall, 1970]

Jack said...

And the Mr Peterson is apparently Peter G Peterson, co-founder and still an executive with the Blackstone Group. Blackstone has been intimately connected with investments in China, and the China State Investment Company made a $3 Billion investment in Blackstone Group two years ago. So it would appear that Kissinger and Peterson have profited handsomely from their political activities relating to China during their serving in the Nixon administration.

It is worth noting that this is the same Peter Peterson that has been funding an unprecedented effort to undermine the stability and integrity of the Social Security program through the Peterson Foundation. First he earns enormous wealth assisting in transfer of our economic base to China. Now he wants to undercut the working classes only viable safety net program through a persistent propaganda campaign claiming that Social Security benefits are an unearned entitlement that is too expensive to maintain. He's got his and screw the rest of the country's workers.

Shag from Brookline said...

And who remembers Kissinger's minority report of decades ago about the threat from south of the border, down Mexico way (no singing, Brenda!)?

As for Peterson, assuming his Foundation is a tax-exempt non-profit, he can, with his profits, get income tax deductions for contributions to his Foundation and use the Foundation for his propaganda campaign with minimum contributions from the Foundation to real charities. It's like Marie Antoinette having her cake and eating it too.

The political revolving door can be very accommodating to these aging gentlemen. It's easy understanding why Henry gave up Harvard tenure. (But Larry Summers kept his and is doing okay, but perhaps not in Henry's league of his own.)

Myrtle Blackwood said...

Another aspect to Kissinger and his associates is Freeport McMoran Copper and Gold.

Freeport plopped itself in Indonesia in 1967 the year a corrupt dictator was installed.

That company’s ‘Contracts for Work’ were “entered into under Indonesia’s 1967 Foreign Capital Investment Law.” ****See John Pilgers story of Indonesia’s carving up in 1967 below**** Civil unrest, regulatory, environmental and energy cost problems. “we provide support to assist security institutions deployed and directed by the Government of Indonesia”. The company has been named as a defendant in one of three actions brought on behalf of a purported class of all of the shareholders of Phelps Dodge orporation.
1967 – November.

1967 – November. Intergovernmental Group on Indonesia (World Bank, IMF control of Indonesia) + the Time-Life Corporation Conference that carved up Indonesia for the biggest western firms. The Freeport Company got a mountain of copper in West Papua (Henry Kissinger is currently on the board).

"In November 1967, following the capture of the "greatest prize", the booty was handed out. The Time-Life Corporation sponsored an extraordinary conference in Geneva which, in the course of a week, designed the corporate takeover of Indonesia.
It was attended by the most important businessmen in the world, the likes of David Rockefeller, and all the giants of western capitalism were represented. They included the major oil companies and banks, General Motors, Imperial Chemical Industries, British Leyland, British-American Tobacco, American Express, Siemens, Goodyear, the International Paper Corporation, US Steel.

Across the table were Suharto's men, whom Rockefeller called "Indonesia's top economic team". Several were economists trained at the University of California in Berkeley. All sang for their supper, offering the principal selling points of their country and their people: "Abundance of cheap labour . . . a treasure house of resources . . . a captive market." Recently, I asked one of them, Dr Emile Salim, if anyone at the conference had even mentioned that a million people had died in bringing this new business-friendly government to power. "No, that was not on the agenda," he replied. "I didn't know about it till later. Remember, we didn't have television and the telephones were not working well."

The Indonesian economy was carved up, sector by sector, at the conference. In one room, forests in another, minerals. The Freeport Company got a mountain of copper in West Papua (Henry Kissinger is currently on the board). A US/European consortium got West Papua's nickel. The giant Alcoa company got the biggest slice of Indonesia's bauxite. A group of US, Japanese and French got thetropical forests of Sumatra, West Papua and Kalimantan.

A Foreign Investment Law, hurried on to the statutes by Suharto, made this plunder tax-free for at least five years. Real, and secret, control of the Indonesian economy passed to the IMF and the World Bank through the Inter-Governmental Group on Indonesia (IGGI), whose principal members were the US, Canada, Europe and Australia. Under Sukarno, Indonesia had few debts. Now the really big loans rolled in, often straight into pockets, as the treasurehouse of resources rolled out. Shortly before the Asian financial crash in 1997, the IGGI godfathers congratulated their favourite mass murderer for having "created a miracle economy."
Globalisation in Indonesia: Spoils of a Massacre
report by John Pilger, Guardian Weekend 14 July 2001

Jack said...

"China's trade policy was not an economic one" Brenda

If war is politics by other means and economics is only the financial result of politics, what is the relationship between war and economics? The careers of people like Kissinger and Peterson display to us vivdly the interlocking nature of economic and political policies. Financial organizations like the Carlyle Group are another glarinig example of the intertwined principals and interests of those involved. Also, it is well publicised that Goldman, Sachs employees and partners have an almost revolving door relationship with high level government offices concerned with
important national financial issues.

Shag from Brookline said...

These men are descriptive of "The Power Elite" that C. Wright Mills wrote about post-WWII:

"The careers of people like Kissinger and Peterson display to us vivdly the interlocking nature of economic and political policies."

Watching them in the revolving door is dizzying.