Kohl's Leveraged Buyout
SCHORR, DANIEL
Washington Notebook BY DANIEL SCHORR Kohls Leveraged Buyout It used to be dollar diplomacy that swayed Europe. Now it is D-mark diplomacy, andit works wonders. Hereis a capsule summary of...
...Maybe that's why America hails them as heroes...
...The last three foreign leaders to address the U.S...
...The Congress left in its wake a sense of disillusionment and despair that made one think back to the 27th Congress in March 1986...
...He beat off a conservative attack and downgraded the importance of the Politburo by withdrawing from its ranks the most senior officials, including the heads of the military establishment and the KGB, the two centers of real power...
...As they saw it, Gorbachev had little to show for 54 months of perestroïka other than more misery at the bottom and more faltering at the top...
...government has crushing financial burdens at home...
...The Bush Administration's reluctance to join in large-scale assistance is not hard to explain...
...As Germany proposed to leave America by the wayside in giving aid to the Soviet Union, so Japan proposed to leave America behind in giving aid to China...
...As Germany moved off on its European agenda, so Japan gave signs of unfurling its own Asian agenda...
...That fear has receded...
...One official in Houston noted that it would take more money to clear up the savings and loan scandal than to reconstruct the entire economy of East Germany...
...Oversimplified, but not very...
...Gorbachevs Sinking Ship Mikhail Gorbachev, meanwhile, has survived the 28th Congress of the Communist Party of the USSR, which is to say that he remains in unquestioned command of a sinking ship...
...Saying he did not want to talk about this, the President did talk about it at some length and with evident pain...
...All Bush could do is express his recognition that others have different priorities...
...He presented Kohl to crowds as a friend, as though saying that it was time to close the book on the killing of some 23 million Soviet citizens by the visitor's countrymen...
...It was all quite remarkable...
...The Soviet Union has become a nonthreatening negotiating partner—the keytounificationforGermanyand, indeed, for a Japan seeking the return of the Kurile Islands, seized by Stalin as a prize of war...
...These men were, like Andrei Sakharov and Natan Sharansky, prisoners of conscience, not prisoners for greed...
...Enjoying a good working relationship with Chancellor Kohl, he could see what was coming and, at the Houston summit of the top seven industrial nations a week earlier, in effect discreetly stepped out of the way...
...It is obliged to mollify a conservative wing already upset by everything about Bush from perceived weakness on supporting Lithuanian independence to a retreat on the "no new taxes" pledge...
...Kohl got a better reception in Gorbachev's hometown than he would probably get in the hometown of British Prime Minister Margaret Thatcher...
...The U.S...
...Glasnost was seen as having done better, since it has unleashed much invigorating discussion, although it has also given vent to much ugly hatred...
...That Ridley represented no anomaly in the Thatcher inner circle became clear when Foreign Secretary Douglas Hurd said, in a BBC interview, that it would be " remiss" not to consider Germany's past reputation...
...Increasingly unpopular with the public, having no other real power base than the bankrupt organization that continues to control significant assets, he stuck with the discredited Communist Party...
...The reason for the latter goes beyond America's public poverty and the Administration's domestic political considerations...
...So the President was put in the position of defending the honor of a son who may have been negligent in protecting his father's honor...
...Bush Without a Wallet For President Bush the shock was buffered...
...At a secret seminar in March, a summary of which began circulating July 15, Thatcher had been advised by British and American scholars that she should work to keep Germany firmly in the Western alliance, to put limits on German military power, and to help stabilize the Soviet Union as a counterweight to German dominance in Europe...
...In lowering the Party's profile he received some unsolicited and probably unwelcome help in the resignations from the Party of Boris Yeltsin, the recently elected President of the Russian Republic, and a couple of dozen delegates of the Democratic Platform who are talking about creating their own party...
...To cite Soviet aid to Cuba as a reason for withholding assistance to the Soviet Union may sound almost silly, yet it seemed anecessarygestureto the Right...
...How he now proposed to proceed he did not say...
...Here was the President defending— feeling he had to defend—the honor of his son...
...President Nixon had his brother F. Donald, who borrowed from Howard Hughes to keep his failing restaurants afloat, and a nephew, Donald, who worked for fugitive financier Robert Vesco...
...Gorbachev in his keynote speech said that it was "absurd" to have tried to start the transition to a market economy by raising food prices—as though he had been away when it happened...
...Gorbachev tells Kohl it's all right about Germany being in NATO...
...As a result, the television networks that night and the principal newspapers next morning gave the story bigger play than either theindustrial nations' meeting or Gorbachev's struggle to maintain power in the Kremlin...
...Thus Gorbachev scored merely a tactical triumph...
...Still, to let Germany and Japan go off on their own and pursue major enterprises in their regions is to give up on the coordination that is the ostensible purpose of these economic summits...
...I knew perfectly well that they were paying me for the name and any value that the name might have...
...Chancellor Helmut Kohl tells Gorbachev he is ready to give the Soviets large-scale assistance...
...The Administration has political burdens, too...
...The Bush drama, developing after the tumultuous tour of Nelson Mandela of the African National Congress, suggested an interesting counterpoint...
...And he had cause to ponder how soon Soviet-German understandings would oblige the United States to reconsider its insistence on keeping a nuclear presence in Europe...
...Franklin D. Roosevelt had his son James, who was paid $ 15,000 by an insurance firm for no apparent reason, and was frank to say, "I wasn't being kidded...
...The young Bush had become the latest star in a familiar morality play—the temptations of the President's kin...
...power to influence the course of events across both oceans...
...President Carter had his brother Billy, who served as a paid and unregistered foreign agent for Libya's Colonel Muammar Qaddafi...
...This had an ironic ring in the light of what was now happening: Germany was acting to stabilize the Soviet Union, the two were reaching understandings on limiting German military power, and they were clearing the path for keeping Germany firmly in NATO...
...Hereis a capsule summary of the events leading up to the mid-July Moscow-Bonn breakthrough on German unification: President George Bush tells President Mikhail S. Gorbachev that the United States isn't ready to give the Soviet Union direct aid...
...The Houston summit also taught another lesson about the ebbing of American influence...
...Much is being made of the new peaceful face of NATO...
...No other Western leader has been accorded such intimacy by Gorbachev...
...But the cold fact is that with about $3 billion in credit guarantees and some $750 million in stationing costs for Soviet troops in East Germany already committed, and a larger package of economic assistance in the making, as well as the promise that a unified Germany will bea hard-currency customer for the Soviet gas and oil previously bought by East Germany for rubles, Chancellor Kohl has accomplished something like a leveraged buyout of East Germany...
...It was only a few days earlier that her Minister of Trade, Nicholas Ridley, had been obliged to resign after warning about "a German racket designed to take over the whole of Europe" in an interview with the Spectator magazine...
...It is of some significance that most of the July 15-16 get-together between the Chancellor and the Soviet President took place in the foothills of the Caucasus near Stavropol, where Gorbachev was born and began his political career...
...As for his talk of possibly leaving the leadership of the Party, it turned out to be just that—talk...
...President Bush says that "we have more will than wallet," but will is not much good without wallet...
...Now po novomy had become a sarcastic epithet, and most delegates at this month's gathering considered Gorbachev less a messiah than a fraud...
...While Neil Bush's troubles are not, according to Attorney General Dick Thornburgh, of a level calling for criminal investigation, there will undoubtedly be an unusually large crop of prosecutions resulting from the S&L scandal, a new wave of prisoners of greed to add to the Wall Street manipulators like Ivan Boesky...
...He offered no new program, pleading instead for patience until September...
...America's influence with its two vanquished enemies converted into allies rested on their fear of the Soviet Union...
...Kinfolk are expected to be sensitive to the seductions they are offered...
...Congress and capture the heart of America have all been jailbirds—Lech Walesa of Poland, Vaclav Havel of Czechoslovakia and Mandela...
...The slogan then was po novomy—in the new way...
...And the delegates rose in a stormy ovation for Gorbachev, thrilled by his promise to lift the dead hand of stagnation and chart a course of sweeping reform into a bright new Socialist era...
...Gorbachev says he isn't ready to see a unified Germany in the North Atlantic alliance...
...For Thatcher the new Soviet-German entente is a nightmare come true...
...To the delight of the Democrats, and perhaps the relief of the "Keating Five" Senators glad to yield the spotlight, Neil Bush suddenly stood stage center as a metaphor for the savings and loan scandal—maybe even, to hear Democratic Representative Robert G. Torricelli of New Jersey tell it, "the metaphor for an entire decade of greed, mismanagement and excess...
...More important, it represents an acknowledgment of diminishing U.S...
...There are laws about conflicts of interest applying to the President's official family, but none for his real family...
...Yet he had reason to reflect on whether a resurgent Germany, making its own arrangements and peace settlements, was the harbinger of what the new Europe would be like...
...Stealing the Headlines At the news conference winding up the Houston summit on July 11, the last question to President Bush was about the involvement of his son Neil with a failed savings and loan institution in Denver...
Vol. 73 • July 1990 • No. 9
