AEI: Caught Between Its Likudist Heart and Its Corporate Head

Today’s quotation in the Financial Times attributed to Danielle Pletka, the Vice President for Foreign and Defense Policy Studies of the American Enterprise Institute (AEI), was a stunner. “If we …begin to sanction foreign companies through more stringent sanctions in the Iran Sanctions Act, I think there will be serious repercussions for our multilateral effort.” 

Whatever would possess AEI and Pletka, who personally has been one of the most prominent and enthusiastic cheerleaders of the rapidly spreading state divestment movement against companies doing business in Iran, to offer a cautionary note about adopting unilateral sanctions, let alone stress the importance of preserving multilateral unity with limp-wristed European allies in dealing with a charter member of the “Axis of Evil”? Judging from its provenance at what must be considered Neo-Con Central, it certainly couldn’t be common sense.

In fact, Pletka’s observation probably reflects growing tensions between AEI’s corporate contributors, many of whom are represented on its board of trustees, on the one hand, and, on the other, the hard-line neo-conservative views of its foreign-policy fellows, such as Richard Perle, Michael Ledeen, Michael Rubin, Joshua Muravchik, and Pletka herself; academic advisers, such as Gertrude Himmelfarb, Eliot Cohen, and Jeremy Rabkin; and its board chairman, Bruce Kovner.

As AEI jumped on the divestment bandwagon initiated by Perle protégé Frank Gaffney’s Center for Security Policy (CSP) earlier this spring with its publication of a list of evil-enabling companies, some of its corporate contributors with interests in some of those same companies — or in countries where those companies are based — objected. After all, multinational corporations, such as ExxonMobil, Motorola, American Express, State Farm Insurance, Dow Chemical, Merck & Co., Dell Inc. – all of which are represented in various ways on AEI’s board of trustees – not to mention General Electic, Amoco, Kraft, Ford Motor, General Motors, Eastman Kodak, Metropolitan Life, Proctor & Gamble, Shell, General Mills, Pillsbury, Prudential, Corning Glass Works, Morgan Guarantee, and Alcoa – all of whose foundations have reportedly contributed significant amounts of money to AEI – generally oppose economic sanctions that interfere with their investment and commerce, especially if they are unilateral and especially if they result in many jurisdictions (i.e. states) enacting different sanctions with which companies must comply. 

“I know for a fact that some companies who are AEI contributors have complained to the president of AEI [Christopher DeMuth] about AEI’s involvement in this,” said William Reinsch, the president of the National Foreign Trade Council (NFTC), an association of some 550 of the biggest U.S. companies that, among other things, opposes unilateral economic sanctions. “There has been a significant level of upset by a number of [them].” In some cases, he added, companies complained about their inclusion on the list posted by AEI, while “others believe that it’s not an appropriate activity for AEI to be engaged in.” 

Indeed, it is very strange that a think tank purportedly devoted to “limited government,” “private enterprise,” free markets and other neo-liberal ideals and funded in major part by the foundations of multinational corporations is actively leading a campaign to impose unilateral sanctions (and divestment) against multinational corporations like themselves and, in some cases, their own subsidiaries. After all, the history of such sanctions – against the Soviet Union, Cuba, and Iran itself, for example — shows that they often result in both resentment and retaliation – not just by the target country (Iran in this case), but also by friendly governments whose own companies stand to be negatively affected. That, in fact, was the point of the FT article whose lead sentence ran: “European governments are warning Congress that US legislation aimed at Iran could hit European energy groups, undermine transatlantic unity on Tehran’s nuclear programme and provoke a dispute at the World Trade Organisation.” 

(Even the Bush administration, whose incumbency was due largely to the financial contributions of corporate givers, has opposed pending divestment and related sanctions legislation. “The Administration fears legislation such as H.R. 2347 would have the effect of dividing and splintering the coalition of allies and friends, which would be harmful to our common goal. Thus, passage of such legislation could result in a net loss, alienating friends, and having little to no prospect of modifying Iranian behavior.” The letter, delivered August 1, had virtually not impact, as the legislation in question, the Iran Sanctions Enabling Act, was approved by the House, 408-6.) 

While Pletka’s statement shows that she clearly understands the argument, however, there is no sign yet that AEI is reassessing its championship of sanctions and divestment. Despite her caution, the conference at which she voiced it was described by one corporate attendee as a “pep rally” for the divestment campaign. The question then is what will the corporate funders of AEI – which clearly like its free-market orientation but abhor divestment and sanctions – do? Will they back up their complaints by pulling their support? Or do they believe that the costs of its neo-conservative foreign-policy agenda are outweighed by the benefits of its effectiveness in promoting its neo-liberal economic agenda? 

Not that corporate money is the only funding that keeps AEI afloat. Far-right foundations, which lined up behind the neo-cons in the late 1980s, leaving the paleo-cons penniless, have provided a lot of support. Scaife-related foundations have given the think tank more than two million dollars since 2002; while the Lynde and Harry Bradley Foundation has given well over three million dollars since 2003; and the Smith-Richardson Foundation almost as much. And the neo-conservatives themselves aren’t without means, either. The Kovner Foundation, presumably the AEI chairman’s main philanthropy, gave nearly 4.2 million dollars to AEI in 2002, more than 3.7 million dollars in 2003, approximately 2.3 million dollars in 2004, and 1.3 million dollars in 2005, according to tax filings reviewed by IPS. Even multi-national corporations may find it hard to keep pace. 

Still, the question remains: why do corporations provide funding to highly political think tanks that aren’t more responsive to their interests?    


Jim Lobe

Jim Lobe served for some 30 years as the Washington DC bureau chief for Inter Press Service and is best known for his coverage of U.S. foreign policy and the influence of the neoconservative movement.



  1. As one of the four co-founders of the AEI’s twin, the Center for Strategic and International Studies, in September, 1962, my experience suggests that the apparent conflict between the funders and the funded at AEI reflects in part the difference between the dollar bottom line of the funders and the ideological bottom line of AEI’s professional foreign policy geeks. The funders are tacticians, whereas the funded view themselves as strategists with a different time frame. In fact, perhaps without knowing it, the corporate funders may have a sounder strategy for the future of civilization.

    The blindness of both those who fund the NeoCons and those NeoCons who are funded is evident in the current rage of the oil industry executives over the nearly unanimnous support by Iraqi politicians of the current “stalling” in approving the future ownership of Iraqi oil.

    The question is, whether the meltdown of Iraqi society and economic inrastructure can be a precursor of paradigmatic revolution, as suggested in my recent article in

    From a really long-range global perspective of what is in the enlightened interests of America, the latest good news in the Iraq oil imbroglio is the growing Iraqi insistence that the law on sharing revenues among Iraqis must come before the broader law on sharing revenues with foreigners. Sharing the oil profits among Iraqis, in turn, might bypass ethnic and religious conflicts and unite the autonomous nations of the Fertile Crescent by the simple expedient of demonopolizing the “state-owned” oil industry through the issuance of equal, non-alienable, voting shares of stock to every resident of Iraq.

    The bad news is that international oil investors might counter this “stalling” by boycotting the restoration of the Iraqi oil industry as a bargaining tool. Of course, the counter-counter might be a rescue operation by China, Russia, and Iran, who might be happy to restrict their operations basically to engineering contracts, such as my consulting firm, the NAEDC (Native American International), recommended to the Navajos and Crow nations thirty-five years ago when Japan offered vastly more favorable terms than did the big domestic coal producers. This was killed by the oil/coal industry as a national security risk. My life was at risk already since I was costing the energy titans billions of dollars by advising the tribes on how to bargain by transferring their vast Indian-owned assets to Chase Manhatten bank and, in effect, ordering it to bargain on their behalf in Congress.

    In Iraq, foreign oil-industry bargaining power is increasing as a result of the general meltdown of civilized life. A decade of economic warfare against Saddam Hussein during the 1990s before the 2003 invasion had already turned the Iraq economy into a basket case. Now the bottom of the basket is falling out. One arena of leverage to pressure the Iraqis this time around is the Iraqi electricity industry, which depends on both the production and refining of oil in Iraq. This summer the local regions that produce electricity have begun to cut off their supply of electricity to the national grid in order to maintain their agreed allotments from the total national production. This is devastating the capital, Baghdad, which consumes much more electricity than it produces and now is worse off even than it was in the immediate aftermath of the 2003 invasion. No modern city ever before has gone back to the stone age. Insurgents are gaining proficiency in sabotaging both oil and electricity production, so that now only two high-tension lines are functional out of the dozen or so that feed electricity into Baghdad. No tactical solutions are in sight. Only a totally new strategic paradigm can make a difference.

    The problems in Iraq are compounding each other, so that eventually either the U.S. government or the Iraqis or both must compromise. The most viable compromise would be the Just Third Way of the See Eee Sess Jay (Center for Economic and Social Justice),, as I have been advocating together with its president, Norman Kurland, with all the necessary operational details now for many years in my various writings, including those published in

    Common sense sometimes triumphs only when all other paradigms have proven to be bankrupt. Right now the people of Iraq have only two options. One is to support their own ethnic and religious group in a quest to control the central government, and the other is to risk everything by trying to destroy it. In fact, most Iraqis are trying to do both at once and are proving to be eminently successful in this quest.

    The most critical question as the ballyhooed “surge” proves its bankruptcy is how to change policy in Washington. How do we persuade President Bush that he could go down in history as the world’s greatest peacemaker by the simple, cost-free recognition that the ultimate sovereignty, under God, belongs to every single person in the Fertile Crescent, not to a centralized state government beholden to foreign interests? How can his advisers shift the governing paradigm from peace through power (either “soft” or “hard”) to peace through compassionate justice?

    A few years ago, political pundits in America coined the phrase, “It’s the economy stupid!” Now the real global issue both within and among countries is more specific: how to broaden individual ownership of the means of production in a capital-intensive era, without stealing from the already rich, when 90% of the future wealth of humanity will be produced not by labor but by capital. The threat mentality in counter-terrorist thinking must be replaced by an opportunity mentality. The most effective strategy to marginalize the terrorist mentality may be summarized in the simple motto of the American Revolutionary Party: “Close the Wealth Gap! Own or be Owned!”

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