The American Enterprise Institute vs the Council on Foreign Relations

here 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

  • 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. 


    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.