The American Enterprise Institute vs the Council on Foreign Relations

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There is an important debate now in progress between key sectors of the American ruling class over imperial strategy and tactics in Iraq and Iran, the outcome of which could have momentous consequences. The struggle over future policy can be seen in Congress, in the executive branch, and between Congress and the executive branch, all influenced by ruling class money, media and expertise, and may reach the level of a constitutional crisis before it has run its course. The ruling class faction on each side of the conflict and their arguments can be encapsulated by contrasting the nature and policy positions of the American Enterprise Institute (AEI) and the Council on Foreign Relations (CFR). 

The AEI, founded in 1943, is a younger think tank than the CFR. Unlike the CFR, which has liberal and middle of the road members, the AEI has always focused exclusively on the right wing side of the political/idealogical spectrum. Variously called Washington’s “premier conservative think tank,” “the most hawkish of Washington’s think tanks” and “the innermost belly of the neoconservative beast,” during its early history the AEI worked mainly on domestic economic issues. After Christopher DeMuth became president of AEI in 1986, it began to expand its studies of both foreign and social policy. During this period AEI also adopted its disputatious intellectual style with the promotion of dubious ideas which helped Republicans and right-wing Democrats even if untrue. Examples of such ideas among many include the Bell Curve argument, which supposedly showed the racial basis of IQ, and the Laffer Curve, purporting to prove that tax cuts lead to more government revenue. The AEI’s funding base depends on major corporations like Exxon-Mobil and top conservative foundations like Bradley, Smith-Richardson, and Scaife. It does not have a large membership base like the CFR, and relies on about 50 resident “scholars and fellows” to research and write the op-ed pieces, books, and position papers promoting the “conservative revolution.” Many are also invited to join the federal government. The names of key AEI operatives include people like John Bolton, Richard Perle, John Yoo, Newt Gingrich, Paul Wolfowitz, Joshua Muravcik, Michael Rubin, Lynne Cheney (wife of the VP), Michael Ledeen, Frederick W. Kagan, and Irving Kristol. The first six of these people have been CFR members at one time or another. Former AEI trustees include Vice President Dick Cheney, who is a long-time CFR member who has also served as a CFR director. At an AEI dinner in January 2003 celebrating Irving Kristol, the neoconservative godfather, President George W. Bush underscored the institute’s impact. After commending AEI for having “some of the finest minds in our nation,” the president said: “You do such good work that my Administration has borrowed 20 such minds.” 

On its website, the AEI says it “is governed by a Board of Trustees composed of leading business and financial executives.” The top leadership of the AEI illustrates that it is industrial capital, including the oil industry, which is most prominent, with finance capital in a junior role. Officers include: 

• President Christopher DeMuth—an expert in regulatory law, he was a staff assistant in the Nixon White House and an administrator in the Office of Management and Budget during the first Reagan administration. He has worked for several corporations, including as a board member of State Farm Insurance. Since 1993 he has been the chair of three family-owned manufacturing corporations, Clean Burn, Millcreek, and DeMuth Steel Products. 
• Chair Bruce S. Kovner—founder and chair of Caxton Associates, a hedge fund that trades in global commodity markets. His estimated net worth is $3 billion, putting him in the top 100 richest Americans according to Forbes.  
• Vice Chair Lee R. Raymond—former CEO of ExxonMobil oil company, he is known for having guided this firm to the largest profit by any company ever in 2005, $36 billion, since exceeded by this same company. As one result, Raymond recently received a retirement package worth about $400 million. He is also a CFR member. 
• Treasurer Tully M. Friedman—chair and CEO of Friedman, Fleischer & Lowe, a private investment firm, and a director of Mattel, Clorox and Capitalsource.  



Founded in 1921, the CFR has long been the most powerful of U.S. ruling class think tanks. It tries to include all segments of the ruling class under the leadership of the dominant sector of financial capital, trying to maintain consensus within the powerful on what policies best serve the overall interest of their class. The organization is funded by its members, family foundations (like Ford and Rockefeller), and large corporations. Its membership of 4,282 includes a small liberal wing, a big middle group of mainstream Republicans and Democrats, and a right-wing “neo-con” sector, some of which overlaps with the AEI. It operates its think tank through its Studies Program, with an administrative staff, 48 fellows, and 25 research associates. Its in-house journal, Foreign Affairs, calls itself “the most influential periodical in print.” Its website says it is “…one of the most respected and influential think tanks in the world today” and calls its membership “…a large and diverse group consisting of many of the most influential Americans in the field of international affairs.” The CFR is accurately summed up as “the citadel of America’s establishment.” The top leadership of the organization illustrates the dominance of the largest and most powerful of finance capitalists. They include: 

• Chair Peter G. Peterson—formerly chair of the investment banking firm of Lehman Brothers, Kuhn Loeb, and the Federal Reserve Bank of New York. Currently chair of the Blackstone Group, a private equity, merger, and acquisitions firm that also provides financial advisory services to corporations. 
• Vice Chair Robert Rubin—formerly an executive with the global investment banking firm Goldman Sachs, a director of the New York Stock Exchange and Bill Clinton’s Treasury Secretary, he is now a director and the chair of the executive committee of Citigroup, which includes Citibank and has been called “the world’s largest company” with reported assets of $1.9 trillion.  
• Vice Chair Carla A. Hills—operates her own firm, Hills and Company, an international consulting business advising U.S. businesses on investment, trade and risk assessment. 
• Honorary Chair David Rockefeller—a former chair of both the CFR and Chase Manhattan Bank and called the “…indisputable chair of the American establishment.”  
• Honorary Vice Chair Maurice Greenberg—chair and CEO of the American International Group, the worlds largest commercial insurance company. 
• President: Richard Haass—an intellectual serving power, has written ten books, served as director of Policy Planning in Colin Powell’s State Department (2001-2003) and a was a Special Assistant to President H.W. Bush, (1989-1993).  




Iraq War Policy 

In 2002-2003 leaders of both the AEI and CFR were strong supporters of the U.S. invasion, occupation and “regime change” in Iraq. Since then the positions of leading members of the two organizations have gradually diverged. The AEI still believes it possible and wants to achieve military victory in Iraq, as illustrated by the current policy of escalation (“surge”) planned and successfully promoted to the Bush administration by AEI “resident scholar” Frederick W. Kagan. Late in 2006 Kagan wrote the following analysis and policy recommendations aimed at the Bush administration and the wider U.S. public: “Victory is still an option in Iraq. America, a country of 300 million people with a GDP of $12 trillion, and more than 1 million soldiers and marines, can regain control of Iraq, a state the size of California with a population of 25 million and a GDP under $100 billion. 

“Victory in Iraq is vital to America’s security. Defeat will lead to regional conflict, humanitarian catastrophe, and increased global terrorism. Iraq has reached a critical point. The strategy of relying on a political process to eliminate the insurgency has failed. Rising sectarian violence threatens to break America’s will to fight. This violence will destroy the Iraqi government, armed forces, and people if it is not rapidly controlled. 

“Victory in Iraq is still possible at an acceptable level of effort. We must adopt a new approach to the war and implement it quickly and decisively…. We must act now to restore security and stability to Baghdad. We and the enemy have identified it as the decisive point... 

“There is a way to do this. 

“We must change our focus from training Iraqi soldiers to securing the Iraqi population and containing the rising violence. Securing the population has never been the primary mission of the U.S. military effort in Iraq, and now it must become the first priority. 

“We must send more American combat forces into Iraq and especially into Baghdad to support this operation. A surge of seven Army brigades and Marine regiments to support clear-and-hold operations starting in the spring of 2007 is necessary, possible, and will be sufficient. 

“These forces, partnered with Iraqi units, will clear critical Sunni and mixed Sunni-Shi’a neighborhoods, primarily on the west side of the city. 

“After the neighborhoods have been cleared, U.S. soldiers and Marines, again partnered with Iraqis, will remain behind to maintain security. 

“As security is established, reconstruction aid will help to reestablish normal life and, working through Iraqi officials, will strengthen Iraqi local government… 

“Failure in Iraq today will require far greater sacrifices tomorrow in far more desperate circumstances. Committing to victory now will demonstrate America’s strength to our friends and enemies around the world.” 

This is the basic policy that the Bush administration adopted in early 2007 and is now following in Iraq. It basically gives up on pretending to create “democracy” in Iraq and train the Iraqi army to take over. Instead it attempts to impose a colonialist solution through U.S. military force over the longer term, with the Iraqi central “government” and the needs of the Iraqi people increasingly irrelevant to the decisions being made.  

Although some CFR fellows like Max Boot largely adhere to the AEI line, key leaders of the CFR have a different view of the current situation and what should be done in Iraq. Despite having a number of its members in key positions in the Bush White House, such as Condoleezza Rice as Secretary of State, Robert M. Gates as Secretary of Defense and Steven J. Hadley as National Security Adviser, what is apparently the dominant view within the CFR’s top leaders and probably most members did not prevail in the decision to escalate. The current view of CFR’s mainstream is best illustrated by statements from its President Richard N. Haass, the CFR-connected Baker-Hamilton Study Group and a recent CFR report by fellow Steven Simon. 

Haass, arguing that the Iraq disaster marks the end of the American era in the Middle East, is blunt in his assessment of the situation facing the U.S. in the world and in Iraq: “…I can’t think of a time when the United States has faced so many difficult challenges at once. What makes it worse is we are facing them at a time when we are increasingly stretched militarily. We are divided politically. We are stretched also economically, and there is a good deal of anti-Americanism in the world. It’s a very bad combination… 

“We have reached the point in Iraq where we’ve got to get real…this is not going to be a near term success for American foreign policy. The Iraq situation is not winnable in any meaningful sense. So what we need to do now is look for a way to limit the losses and costs…” 

The Iraq Study Group (IRG), both of whose leaders, James A. Baker III and Lee Hamilton are current members of the CFR, suggests how to limit the losses and costs by advocating a slow de-escalation in Iraq and training a “new” Iraqi army to take over. Not at all eschewing long-term U.S. domination of Iraq and its wealth of oil, the ISG envisions keeping at least 70,000 U.S. troops in Iraq for the long-term. The ISG recommended the privatization of Iraq’s oil wealth, giving U.S. oil corporations a “piece of the action,” something being currently planned by the U.S. occupation and its compliant Iraqi “government” in Baghdad. 

The February 2007 CFR report After the Surge: The Case for US Military Disengagement from Iraq, was written by Steven Simon, a CFR Senior Fellow for Middle East Studies. Simon argued that “some disasters are irretrievable,” and “the United States has already achieved all that it is likely to achieve in Iraq…. Staying…can only drive up the price…in blood, treasure and strategic position.” Simon also critiques those who have “illusions that there are unexplored or magic fixes, whether diplomatic or military.” Since the “crisis has now moved beyond the capacity of Washington to control on its own…” the U.S. should withdraw by the end of 2008. He concludes that it is “better to withdraw as a coherent and somewhat volitional act than withdraw later in hectic response to public opposition to the war in the United States.” Simon also believes that the Iraq war has prevented the U.S. from devoting proper attention to Afghanistan, which may lead to its “loss” as well.  




U.S. Policy Toward Iran 

The AEI approach to handling the U.S.-Iran competition for influence in the Middle East is to militarily attack Iran. As journalist Ewen MacAskill recently wrote in the British newspaper the Guardian: “Neo-conservatives, particularly at the Washington-based American Enterprise Institute, are urging Mr. Bush to open a new front against Iran. So too is the vice-president Dick Cheney. The State Department and the Pentagon are opposed, as are Democratic congresspeople and the overwhelming majority of Republicans. The sources said Mr. Bush had not yet made a decision. The Bush administration insists the military build-up is not offensive but aimed at containing Iran and forcing it to make diplomatic concessions. The aim is to persuade Tehran to curb its suspect nuclear weapons programme and abandon ambitions for regional expansion.” 

Some of the AEI “scholars” are adamant about the necessity of aggressive war. Joshua Muravchik, an AEI “resident scholar,” wrote the following words under the heading “Bomb Iran” for an op-ed piece which was published in the Los Angeles Times on November 19, 2006: “WE MUST bomb Iran. It has been four years since that country’s secret nuclear program was brought to light, and the path of diplomacy and sanctions has led nowhere. Our options therefore are narrowed to two: We can prepare to live with a nuclear-armed Iran, or we can use force to prevent it. Former ABC news anchor Ted Koppel argues for the former, saying that “if Iran is bound and determined to have nuclear weapons, let it.” We should rely, he says, on the threat of retaliation to keep Iran from using its bomb. Similarly, Newsweek International editor Fareed Zakaria points out that we have succeeded in deterring other hostile nuclear states, such as the Soviet Union and China…. 

“But that’s whistling past the graveyard. The reality is that we cannot live safely with a nuclear-armed Iran. One reason is terrorism…. How could we possibly trust Iran not to slip nuclear material to terrorists? 

“…another reason is that an Iranian bomb would constitute a dire threat to Israel’s 6 million-plus citizens…. And then there is a consequence that seems to have been thought about much less but could be the most harmful of all: Tehran could achieve its goal of regional supremacy… 

“The only way to forestall these frightening developments is by the use of force. Not by invading Iran as we did Iraq, but by an air campaign against Tehran’s nuclear facilities. We have considerable information about these facilities; by some estimates they comprise about 1,500 targets. If we hit a large fraction of them in a bombing campaign that might last from a few days to a couple of weeks, we would inflict severe damage. This would not end Iran’s weapons program, but it would certainly delay it… 

“…wouldn’t such a U.S. air attack on Iran inflame global anti-Americanism? Wouldn’t Iran retaliate in Iraq or by terrorism? Yes, probably. That is the price we would pay. But the alternative is worse.” 

Former CIA Middle East specialist Reuel Marc Gerecht, an AEI resident fellow, (who predicted in 2002 that a U.S. invasion of Iraq would have a positive and democratic “transformative” effect on both Iraq and Iran), also concluded in 2006 that the U.S. will probably need to go to war with Iran: “Given the Islamic Republic’s dark history, the burden of proof ought to be on those who favor accommodating a nuclear Iran. Those who are unwilling to accommodate it, however, need to be honest and admit that diplomacy and sanctions and covert operations probably won’t succeed, and that we may have to fight a war—perhaps sooner rather than later—to stop such evil men from obtaining the worst weapons we know.” 

Michael Rubin, another AEI resident scholar also supports regime change in Iran. In a Time magazine interview in 2006 he also argued against negotiations with Iran, stating that: “The very act of sitting down with them recognizes them.” Two other AEI operatives also have recently weighed in on this issue. Newt Gingrich went so far as to say recently that the Bush administration was practicing a “form of appeasement” by talking to Iran and North Korea, and John Bolton said this makes the U.S. “appear weak.” 

Finally, the war hawks at the AEI even created, in November 2006, an “Iran Enterprise Institute,” a privately funded nonprofit. This “Iran Enterprise Institute” is directed by Amir Abbas Fakhravar, an Iranian dissident living in the United States. Fakhravar’s cause has been promoted by former Pentagon adviser and AEI fellow Richard Perle. The likely purpose is to train Iranian exiles to be ready to take over ruling Iran after the United States has successfully instituted regime change. 

The dominant position within the CFR is much different than the clear warmongering of the AEI. In 2004 an “Independent Task Force,” sponsored by the CFR, advocated a “revised strategic approach to Iran.” This task force had as its co-chairs Zbigniew Brzezinski, National Security Adviser to President Carter, and Robert M. Gates, the current Secretary of Defense. The task force members concluded that Iran was not on the verge of another revolution and so the U.S. should adopt a policy of limited and selective engagement and dialogue to try to address critical U.S. concerns. The task force report pointed out that similar discussions had been surprisingly helpful with the former Soviet Union and China in the past. Incentives, not just punitive measures, were therefore recommended in the current situation. The approach of this task force was reinforced by CFR President Richard N. Haass in a recent article in Newsweek. Arguing that the U.S. war in Iraq had created a “tectonic geopolitical shift in the region,” ending the American era in the Middle East, Haass concluded that: “More and more, Iran will emerge as a player, a classic imperial power with ambitions to remake the region in its image and the capabilities to potentially translate its objectives into reality…military strikes (on Iran) would be dangerous, diplomacy is the best option.” 

In a November 2006 newspaper interview Haass stated his view on negotiations as follows: “In the case of Iran and North Korea, I would be willing to have the United States engage in diplomacy directly with them, essentially offering them whatever mix of political and economic and security benefits in exchange for demanding a package of behavior changes. We need to get away from the idea that diplomatic interaction is a value judgment. History suggests that isolation reinforces hardliners.” 

Ray Takeyh, a CFR Senior Fellow for Middle East Studies, takes the Haass conclusion even further in a recent Foreign Affairs article, arguing that the U.S. has no realistic military option and a policy of “détente” with Iran could yield many benefits, just as it did in dealings with the USSR and China: “To tame the growing power of Iran, Washington must eschew military options, the prospect of conditional talks, and attempts to contain the regime. Instead, it should adopt a new policy of détente. By offering the pragmatists in Tehran a chance to resume diplomatic and economic relations with the United States, it could help them sideline the radicals and tip Iran’s internal balance of power in their favor.” 




Whither Current U.S. Foreign Policy? 

It is unclear which main faction of the ruling class as represented by the AEI and CFR, will win the struggle for future U.S. foreign policy. So far, the AEI has won on military escalation in Iraq and a strong U.S. naval armada has been assembled off of Iran, a force which could launch a serious bombing campaign against that country the moment President Bush gives the order. On the other hand, Bush administration representatives, fresh from a nuclear agreement with North Korea, will reportedly meet soon with Iranian and other officials from neighboring nations in Baghdad. A Democrat-controlled Congress, stimulated by ruling class and other defections from the Republican consensus, is weakly indicating that Congressional approval should be required for an attack on Iran. Congressional backbone has been notoriously absent in recent years, however, so it is unclear what, if anything, they will do to either restrain this president or follow the needs and wishes of the majority of the American people. 

One general characteristic of ruling class thinking, both within the AEI and CFR, is a frequent underestimation of the rebellion capabilities of the larger population, at home and, more especially, in other countries. This rebellion has been the main reason for the defeat, so far at least, of U.S. plans for exploiting Iraq and its oil wealth. The CFR, at least, appears to have learned from this defeat, and perhaps is willing to pursue a new and somewhat more enlightened course in regard to both Iraq and Iran. But the CFR still wants to control Iraq using different tactics. It has a long history of support for imperialistic actions and an overlapping membership with the even more aggressively imperialistic AEI. Therefore, in the end, there is no substitute for the varied activities of people’s movements to prevent the worst outcomes from occurring. The AEI and CFR and the larger ruling class will sometimes battle each other and sometimes agree on what joint policies to follow. It is ultimately up to working class people to help decide, through their direct actions, or lack of them, what the outcome will be. 

Z 

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Laurence H. Shoup has taught U.S. history at a number of universities and written three books, including Imperial Brain Trust: The Council on Foreign Relations and U.S. Foreign Policy (with William Minter), first published by Monthly Review Press in 1977, reprinted by iUniverse in 2004.