Memoirs

by David Rockefeller

  Once our decision became known, there was a flurry of criticism of me in both Israel and New York’s Jewish community. The Anti-Defamation League accused Chase, five other companies, and two government agencies of “knuckling under to the Arab boycott.” CBS Radio ran a three-part editorial denouncing American companies, specifically naming Chase, for “bowing to the most degrading kind of extortion. They are trading law and principle for profit.” Although we never stopped doing business with Israel and none of the major American banks had a direct presence there, Chase was singled out for criticism.

  A SURPRISE JOB OFFER

  My increasingly cordial personal relationship with Sadat took an unusual turn in 1976. I had touched base with him first in Cairo in February, and then I set off to visit other countries in the region. My final stop was to be Israel. However, a week later, as I left a meeting with the Shah of Iran, I received a call from the Egyptian ambassador saying Sadat wanted to see me in Egypt before my return to New York. Since I could not cancel my meetings in Israel, I sent word to Sadat that I would be able to see him only if I could fly directly from Tel Aviv to Cairo, without the usual stop in Cyprus required by the Arab League boycott restrictions. In order to accommodate me, Sadat agreed to a compromise: We would file a flight plan in Tel Aviv for Cyprus, but once outside Israeli airspace, we would be permitted to alter our course for Cairo.

  Sadat sent his personal helicopter to fly me from Cairo to his home at the Barrage in the Nile Delta. As we flew above the narrow green ribbon of the Nile valley, I was puzzled as to why I had received such an urgent summons. A few weeks earlier Sadat said he was also about to set off on a tour of the Gulf states, and I wondered if he might want to compare impressions.

  But Sadat had another surprise to spring on me. As soon as I entered his office, Sadat asked me to become his economic advisor. It soon became clear he was thinking of more than occasional informal advice from a friend; he actually wanted me to serve as an official financial advisor on Egypt’s economic development program. I was flattered by his offer but pointed out that as chairman and CEO of Chase, it would be difficult for me to perform the role he had in mind. I said, however, that I wanted to help in any way I could and would get back to him after giving the matter further thought.

  On our flight to New York I discussed Sadat’s proposal with my Chase colleagues. We agreed it was not feasible for me to accept. On the other hand, turning him down without suggesting a suitable alternative could easily cause offense. By the end of the flight I had come up with another candidate. Richard Debs, chief operating officer of the New York Federal Reserve Bank, had recently announced his retirement. Dick was thoroughly familiar with the economic situation in the Middle East and specifically with Egypt’s critical financial problems. Dick was the perfect candidate for the job, and I spoke with him as soon as I returned to New York. Within a few days he flew to Cairo to meet Sadat and agreed to take on the assignment on a pro bono basis.

  ANGER AND RECONCILIATION

  The warm relationship Sadat and I had enjoyed for nearly a decade ended abruptly in the summer of 1980, the product of sloppy staff work on my part. During a tour of major European countries Bill Butcher and I took just prior to my retirement from Chase, I received a message from Mohammad Abushadi, a prominent Egyptian banker, to the effect that a group of American, European, and Arab investors were organizing a bank that would operate in the Middle East. He invited Chase to take a 5 percent interest in it. The message stated that Sadat knew of the project and had even suggested Chase’s participation. Since we were in the midst of a whirlwind tour, I asked our Paris office to analyze the proposal and give me its recommendation as quickly as possible. The Paris office concluded that Chase’s role would be too small to be financially meaningful and that we would have little or no control over the new bank’s management, and advised a declination. Bill Butcher and I concurred with this analysis and asked Ridgway Knight, our political advisor in Europe and a former U.S. ambassador to Syria, to call on Abushadi to inform him of our decision.

  Even though the message from Abushadi had cited Sadat’s interest, I had not heard directly from him or from Ambassador Ashraf Ghorbal, Sadat’s customary emissary for important matters. In retrospect I should have checked with Ghorbal to determine the level of Sadat’s interest before reaching a decision. I later discovered Sadat had indeed suggested that Chase be included and was offended we had turned down the proposal without calling him. Six months later I learned the full extent of Sadat’s displeasure.

  In April 1981, Bill Butcher and I were in Cairo as part of my final tour of the Middle East. When we tried to set up an appointment, Sadat inexplicably refused to see us. I was embarrassed that my old friend would not see me on my farewell visit to his country, and I called on both Ghorbal and Vice President Hosni Mubarak, who told me the rebuff was the direct consequence of Chase’s decision not to invest in Abushadi’s project. In an effort to make amends I sent Sadat a handwritten letter of apology while we were still in Cairo. I received no response.

  In August of that same year, however, Sadat came to the United States on an official visit. Ambassador Ghorbal invited me to a special dinner in Washington for Sadat, which I took as a hopeful sign even though he and I did not have a chance to do more than shake hands. The following day Sadat spoke at the Council on Foreign Relations in New York, and I introduced him. Afterward he invited me to ride back in his car to the Egyptian mission. We had a quiet talk there about the Abushadi incident, and all was forgiven.

  Some years later I related this story to U.N. Secretary-General Boutros Boutros-Ghali, who had served as Sadat’s foreign minister for a number of years. I was relieved to discover that I was not the only one who had fallen into Sadat’s bad graces. Sadat, Boutros said, often took offense at relatively minor slights and would not speak to his closest associates for several weeks at a time. In fact, he said, it had happened to him.

  My reconciliation with Sadat came just in time. On October 6, 1981, just two months after our talk in New York and exactly eight years after he launched the Yom Kippur War, Sadat was assassinated by a group of fundamentalist Egyptian army officers. With the rest of the world I mourned the loss of a man I truly considered a hero and a friend.

  JORDAN’S KING HUSSEIN AND CROWN PRINCE HASSAN

  Another Middle Eastern leader with whom I developed a close relationship and whose courage I admired was King Hussein of Jordan. Few leaders in the world have been tested more. He survived numerous assassination attempts, personally fighting off assailants on more than a few occasions, and weathered the many turbulent political storms of the region. A descendant of the Hashemite Sherifs of Mecca who fought with the fabled Lawrence of Arabia against the Ottoman Turks during World War I, Hussein ascended the Jordanian throne in 1952 at the age of sixteen, after the murder of his grandfather Abdallah by Arab extremists and the deposition of his father, Talal. Throughout his reign Hussein showed a deep commitment to his people and a willingness to compromise for the sake of a comprehensive Arab-Israeli settlement. He was a remarkable leader and a good friend of the United States.

  In March 1971, during a round-the-world tour for Chase accompanied by both my wife and my daughter Peggy, I stopped briefly in Jordan to see the King. Amman was still an armed camp, and the King had moved his headquarters out into the country. Both Peggys remained on the Chase plane while my Chase colleagues and I drove out to see Hussein. When I told him they had remained at the airport, he apologized for not inviting them to lunch. To make amends Hussein personally flew us back to Amman in his helicopter. He boarded the plane to say hello and concluded his visit by giving my daughter his card and private telephone numbers!

  At about the same time I also became good friends with Crown Prince Hassan, to whom the King had delegated responsibility for economic development and for encouraging foreign investment. Hassan took me on a number of tours by car and helicopter of projects he was sponsoring. We also had a memorable visit to the mysterious
Nabataen and Greco-Roman ruins at Petra.

  Hassan believed Jordan’s future depended on granting greater access to foreign companies and banks, something that government bureaucrats were less willing to acknowledge. When Chase’s efforts to open a branch in Amman were rebuffed by the governor of the Bank of Jordan, Hassan intervened to have the decision reversed. In 1976, after visiting Prince Hassan’s home, I made arrangements with the Israelis to quietly cross over the Allenby Bridge from Jordan, thereby avoiding the always irritating excursion to Cyprus. Hassan insisted on flying me there himself. He landed his helicopter behind the brow of a hill, and I then carried my bag across the bridge where my Israeli hosts met me. Hassan preferred that the Israelis not learn the identity of my “driver,” although he had no problem with the fact that Israel was my destination.

  I stayed in close touch with King Hussein until his death in 2000 and have maintained my friendship with Prince Hassan. Both men played quiet but critical roles in the changes that have occurred in the region over the past four decades and have ensured that Jordan, despite its size, will continue to be an important player in Middle Eastern affairs.

  SHEIKS, SULTANS, AND SADDAM

  My friendship with President Sadat and King Hussein, and my extensive contacts with the Saudi royal family, had taken a long time to establish, but they exemplified the kind of high-level relationships Chase needed in order to build its business in the region. The OPEC price increases revealed the financial power of the region’s oil-rich nations, both large and small. Decisions taken by a relative handful of men in Saudi Arabia, Iraq, Iran, Algeria, and even in the smaller sheikdoms scattered along the Persian Gulf’s southern littoral could have profound consequences for the world’s economy.

  These vast energy reserves magnified the strategic significance of the region, particularly the nine nations bordering the Persian Gulf. The British decision to withdraw militarily from “east of Suez” at the end of 1971 terminated their century-long role as political mentor and military protector of the smaller Arab sheikdoms and sultanates along the Persian Gulf’s Trucial coast and created an economic and security vacuum that American policy only partially filled. The so-called Nixon Doctrine, with its reliance on regional powers such as Iran, Saudi Arabia, and later Egypt to bear the burden of local peacekeeping, ignored the importance of the smaller powers.

  KUWAIT’S SHEIK JABBER

  One of the world’s largest producers and exporters of petroleum and a leading member of OPEC, Kuwait had been ruled by the al-Sabah family for more than two hundred years. My primary Kuwaiti contact was Sheik Jabber, whom I had first met in the early 1960s soon after Kuwait gained its independence from Great Britain. As Kuwait’s finance minister he attended one of the luncheons I gave at Pocantico for the world’s finance ministers and central bank governors following the annual Washington meetings of the World Bank and IMF. Subsequently, Jabber visited Hudson Pines with his son, who was studying in the United States, and the young man rode El Assad, our full-blooded Arabian stallion.

  Jabber became prime minister in the mid-1960s and then emir in 1977, and I saw him frequently on my Middle Eastern journeys. On one visit I presented him with a small painting by Fritz Glarner, an American abstract painter. It was a rather unusual gift for a traditional Arab ruler; however, I was aware that works of art depicting natural forms—animal, plant, or human—were violations of Islamic law. Jabber seemed genuinely delighted with the painting, and I noted with satisfaction on a subsequent trip that he had hung it prominently in his home.*

  Jabber was a reserved man who understood that profound changes would accompany his country’s sudden accumulation of wealth, and he guided its social and political transition quite deftly. Apparently he also managed his more traditional obligations with comparable ability. The Sheik was entitled to spend the night with young, unmarried Kuwaiti women from traditional villages, with whom he would frequently produce children. The women he selected were said to consider this a great honor.

  Over the years my friendship with Sheik Jabber helped Chase navigate through the complexities of the Kuwaiti bureaucracy, including the approval in 1973 of an agreement allowing us to manage the Commercial Bank of Kuwait in return for a percentage of its earnings. Once we succeeded in turning the bank around and made it profitable, however, the Kuwaitis canceled the contract, not wanting us to share in the bank’s burgeoning profits. This was a disappointing outcome. We had hoped that a strong performance by Chase managers would persuade the authorities to allow us to broaden our operations. That never happened, and while we maintained our strong depository relationship with their central bank and a number of wealthy individuals, we failed to persuade the Kuwaitis to use us as their investment advisors or as providers of other financial services.

  The Kuwaitis were shrewd negotiators and well known in the Gulf for being prickly and inflexible in their relationships. Accordingly, our business seemed to depend on how individual finance ministers or members of the Sabah family were feeling about us on a given day. Our relationship with Abdul Rachman al-Atiqi, a longtime Kuwaiti finance minister, was typical. Respected for his integrity and candor, he was nonetheless suspicious of Western bankers and could be abrupt and arbitrary over minor matters. I arrived one day at the Kuwaiti finance ministry for what I knew would be another exasperating meeting over some minor issue and got stuck in the tiny, rickety elevator leading to his office. When we finally emerged, I said, “Mr. Minister, I see you even trap us in the elevator to express your irritation.” Although Atiqi laughed, he knew I was only half-joking.

  BAHRAIN AND BEIRUT

  In contrast to the Kuwaitis, the Bahrainis are accommodating and eager to do business with the outside world. An archipelago of small, barren islands just off the Arabian mainland, Bahrain was the location of the first oil discovery on the Arabian Peninsula in 1932, and revenues from petroleum have provided the government with the lion’s share of its income ever since.

  Sheik Isa al-Khalifa’s family has ruled Bahrain since the mid-1700s. After gaining full independence from Great Britain in the early 1970s, Sheik Isa prudently employed his limited but steady petroleum revenue to diversify his country’s economy. He also encouraged the development of “offshore” banking, insurance, and other financial services, which enabled Bahrain to supplant Beirut as the financial center of the Middle East when Lebanon fell victim to the prolonged civil war and the widening Palestinian crisis of the 1970s.

  Beirut had been the focal point of Chase’s Middle Eastern operations for years. The city flourished from the early 1950s through the mid-1970s, and our branch prospered, although it never generated the broader regional business that we had expected. We gradually learned that wealthy Saudi and Kuwaiti businessmen viewed Beirut as a resort where they could escape the strictures of Koranic law, and only secondarily as a financial center. Nonetheless, it was an immensely attractive and cosmopolitan city with a stable political system and an internationally oriented business sector.

  In the early 1970s, however, the political compact between the Maronite Christians and Sunni Muslims began to fray, and the Syrians, led by the aggressive Hafez el-Assad, intervened more directly in Lebanon’s internal politics. In addition, the PLO, driven from its sanctuaries in Jordan, began to operate from refugee camps in southern Lebanon, which invited Israeli retaliation. Lebanon rapidly degenerated into a state of anarchy.

  My last visit to Beirut was in March 1977 when a brief lull in the fighting allowed us to reopen our branch. I wanted to reassure the staff that I was aware of the risks and concerned for their well-being. At the Beirut airport the bank’s plane was forced to taxi to a location far from the terminal. A squad of fully armed soldiers in armored cars met us and escorted us into town. Fighting among the different factions and artillery shelling from the surrounding hills had turned the city into a shambles. The Saint George Hotel, where I had always stayed, was completely gutted. When I entered the Chase branch, the soldiers formed a phalanx around me. After I g
reeted the staff, the branch manager presented me with an artillery shell, carrying Russian markings, that had exploded just outside the building. The “Paris of the Mediterranean” had taken on the appearance of the Germany I had seen at the end of World War II. The seemingly calculated destruction of Beirut by unyielding religious and political zealots ranks as one of the great man-made tragedies of the post–World War II era.

  Bahrain, where we had opened a branch in 1971, was well positioned to take advantage of the opportunity presented by Beirut’s agony.

  I first met Sheik Isa in the early 1960s, soon after he became emir. He was barely five feet tall but large in friendliness and generosity, and renowned for the liberality of his gift-giving. He once presented me with a beautiful Damascene sword that had a scabbard studded with pearls; it is now part of the Chase collection. On my last visit to Bahrain in 1997 the Sheik adjourned a cabinet meeting in order to introduce me to his prime minister and the rest of his ministers, many of them his relatives, and on that occasion he gave me a handsome Rolex watch. His astute leadership allowed his small country to play a significant role among its powerful neighbors.

  THE UNITED ARAB EMIRATES

  The United Arab Emirates, seven small oil-rich sheikdoms scattered along the barren coast of the Persian Gulf between Saudi Arabia and Oman, joined together as a confederation in 1971 at the time of the British withdrawal from the Gulf. The two largest, Abu Dhabi and Dubai, have dominated the affairs of the UAE from the start.