Memoirs

by David Rockefeller

  Over the past thirty-five years IESC has sent more than fifty thousand retired executives abroad. They have completed almost thirty thousand projects ranging from the reorganization of a chicken-processing factory in the Philippines to advising the governments of Poland, Hungary, and the Czech Republic on the transition to a free-market economy. IESC is a true partnership, with much of the funding provided by the Agency for International Development and the brains and muscle supplied by American executives. In addition to aiding in the emergence of a more modern private sector in countries throughout Asia, Africa, Latin America, and now Eastern Europe, IESC has also played a significant role in stimulating demand for U.S. products.

  FIGHTING PROTECTIONISM

  Just after the Kennedy Round of GATT (General Agreement on Tariffs and Trade) negotiations were concluded in late 1967, W. Michael Blumenthal, then a deputy special representative for trade negotiations, spoke to the Chase International Advisory Committee in New York. Mike warned us that the forces of protectionism were once again stirring in the United States. Twenty years of diminishing tariffs and a dramatic surge in low-cost imports from abroad had placed American textile and steel manufacturers under great competitive pressure, and they wanted quota or tariff relief. According to Mike, Congress was poised to accommodate them. To make matters worse, he said, the American corporate and banking community had done nothing to counter the protectionist arguments. He urged us to take action quickly, or the system of international trade that had produced the dramatic economic expansion of the post–World War II years might begin to crumble.

  After the meeting, Eugene Black, William Hewitt, the CEO of Deere & Company, and I went to see Arthur K. Watson of IBM World Trade and persuaded him to take the lead in forming ECAT, a group composed of CEOs from about fifty major American corporations doing business overseas. We hired Bob McNeil, who had been one of the Kennedy Round negotiators, as executive director, and we were able to fend off the immediate threat.

  We thought ECAT would be disbanded once protectionist pressures had subsided. They never have, and ECAT has remained in existence and continues to be one of the strongest voices for free trade in an increasingly protectionist Washington.

  THE TRILATERAL COMMISSION

  No organization with which I have played a founding role has attracted as much public scrutiny and attention as the Trilateral Commission. Pat Robertson has insisted that Trilateral is trying to create a world government and claims that it springs “from the depth of something evil.” My son Richard, when he was a student at Harvard in the 1970s, told me his friends assumed that Trilateral was part of a “nefarious conspiracy.”

  On the lighter side, Garry Trudeau, author of the popular “Doonesbury” comic strip, delights in lampooning Trilateral. In one classic example a slightly paunchy businessman announces to a bartender that he is in the mood to celebrate because he has “just been accepted for membership in the Trilateral Commission.” The bartender has never heard of the group, so the businessman explains “it is a powerful coterie of statesmen and international financiers which periodically meets in secret to shape the destiny of the western world.” His job, the businessman relates, is to set “world zinc prices.”

  Trilateral, like Bilderberg, is a much more benign organization than the conspiracy theorists have depicted. It is a broadly based effort to bridge national differences and, in this case, invite the Japanese into the international community.

  The idea for an organization including representatives from North America, Europe, and Japan—the three centers of democratic capitalism—resulted from my realization in the early 1970s that power relationships in the world had fundamentally changed. The United States, although still dominant, had declined relatively in terms of its economic power as both Western Europe and Japan recovered from the devastation of World War II and entered a period of dramatic economic growth and expansion. As a result the comity that characterized relationships among these regions for more than two decades had deteriorated alarmingly, and I believed something needed to be done.

  I spoke about this in March 1972 before Chase investment forums in Montreal, London, Brussels, and Paris, calling for an “international commission for peace and prosperity” composed of private citizens drawn from the NATO countries and Japan to examine “such vital fields as international trade and investment; environmental problems; control of crime and drugs; population control; and assistance to developing nations.”

  I thought it essential to include the Japanese for a number of reasons. First of all, Japan had become a global economic power, and its high-quality products, especially automobiles and electronics, had made inroads into markets everywhere. Japanese export success, however, had produced a hostile reaction in the United States and Europe, and there was a strong perception that Japan was a “free rider” on the international trading system, aggressively exploiting opportunities abroad while only grudgingly opening their domestic market. Japan’s economic prowess combined with its curious reluctance to engage seriously in international dialogue made it imperative to include them in the process I had in mind.

  Zbigniew Brzezinski, then teaching at Columbia University, was a Bilderberg guest that year, and we spoke about my idea on the flight to Belgium for the meeting. I had been urging the Steering Committee to invite Japanese participants for several years, and at our session that April, I was again politely but firmly told no. Zbig considered this rebuff further proof that my idea was well founded and urged me to pursue it. I arranged a follow-up meeting with Zbig, Robert Bowie of the Center for International Studies at Harvard, Henry Owen of the Brookings Institution, and McGeorge Bundy of the Ford Foundation, who all heartily endorsed my proposal to form a trilateral organization.

  I then convened a larger group, including five Europeans and four Japanese, for a meeting at my country home in the summer of 1972. Among the Japanese were Saburo Okita, who later became minister of foreign affairs, and Kiichi Miyazawa, who would serve as minister of foreign affairs, minister of finance, and prime minister. After a lengthy discussion we determined to set up the new organization. Zbig agreed to serve as director, and Benjy Franklin, my college roommate and colleague at the Council on Foreign Relations, agreed to help with organizational matters.

  Trilateral was established on a trial basis; at the end of three years we would review its activities and accomplishments and decide whether it should be continued. Each region had its own executive committee and secretariat. At our first executive committee meeting in Tokyo in October 1973, two task forces reported on political and monetary relations among the three regions, and we published their findings in an effort to influence the behavior of our respective governments. For the second executive committee meeting in Brussels in June 1974—just after the first OPEC “oil shock” and calls for a “new international economic order”—we concentrated on the energy crisis and relations with developing countries.

  We cast our nets widely in terms of membership and recruited labor union leaders, corporate CEOs, prominent Democrats and Republicans, as well as distinguished academics, university presidents, and the heads of not-for-profits involved overseas. We assembled what we believed were the best minds in America. The Europeans and Japanese assembled delegations of comparable distinction.

  The inclusion among that first group of an obscure Democratic governor of Georgia—James Earl Carter—had an unintended consequence. A week after Trilateral’s first executive committee meeting in Washington in December 1975, Governor Carter announced that he would seek the Democratic nomination for president of the United States. I have to confess that at the time I thought he had little chance of success. Much to my amazement, however, he not only won the Democratic nomination but defeated President Gerald Ford in the November election.

  Carter’s campaign was subtly anti-Washington and antiestablishment, and he pledged to bring both new faces and new ideas into government. There was a good deal of surprise, then, when he chose fifteen members of Trilate
ral, many of whom had served in previous administrations, for his team, including Vice President Walter Mondale, Secretary of State Cyrus Vance, Secretary of Defense Harold Brown, Secretary of the Treasury Michael Blumenthal, and Zbigniew Brzezinski as national security advisor. In his 1975 autobiography, Why Not the Best?, Carter wrote that “membership on this commission has provided me with a splendid learning opportunity, and many of the other members have helped me in the study of foreign affairs.” Predictably, I was accused of trying to take control of Carter’s foreign policy.

  As economic conditions worsened in the late 1970s and the United States suffered a series of foreign policy reverses culminating in the Iranian hostage crisis and the Soviet invasion of Afghanistan, Trilateral attracted a great deal of unfavorable attention. In the 1980 presidential primary campaign, for instance, one of Ronald Reagan’s supporters ran an advertisement that stated, “The people who brought you Jimmy Carter now want you to vote for George Bush,” and highlighted the membership of both in Trilateral. I am not sure how many votes were changed by this ad, but such is the nature of politics in a democratic society. I should note, however, that President Reagan ultimately came to understand Trilateral’s value and invited the entire membership to a reception at the White House in April 1984.

  In December 1999, on the trip back from the ceremonies marking the official return of the Panama Canal, President Carter and I, who were both members of the U.S. delegation, spoke about Trilateral. He again generously credited the commission with broadening his understanding of international issues and their impact on the United States. And that, I would argue, is really the point. Trilateral has never been a sinister force; rather, it has provided an invaluable forum for dialogue among the leadership of three pivotal regions of the world. I am pleased that Trilateral remains a vigorous and effective collaborator on the world scene.

  “CONSTRUCTIVE ENGAGEMENT”

  These organizations reflect my belief in the principle of “constructive engagement.” As an intelligence officer during World War II, I learned that my effectiveness depended on my ability to develop a network of people with reliable information and influence.

  Some may feel this technique is cynical and manipulative. I disagree. Such an approach enabled me to meet people who were useful in achieving goals and gave me opportunities to form lasting friendships that have greatly enriched my life.

  I have kept a record of most people I have met since the 1940s. Their names are stored in an electronically operated Rolodex that contains upward of one hundred thousand entries. Each card records my first contact and all subsequent meetings, and I can quickly review the nature of my past associations before seeing someone again. In a surprising number of countries—Mexico and Brazil, for instance—I have met every head of state since World War II, several of them many times. The continuity of these relationships has stood me in good stead on many occasions.

  The world has now become so inextricably intertwined that the United States can no longer go it alone, as some prominent politicians have urged that we should. We are the world’s sole superpower and its dominant nation economically. One of our principal duties is to provide judicious and consistent leadership that is firmly embedded in our national values and ideals. To do otherwise is to guarantee a return to the conflict that characterized the blood-drenched twentieth century. It is that fear, and that hope, that make me a proud internationalist.

  *My daughter Peggy has visited Cuba a number of times since 1985 and developed a good rapport with President Castro. This may partially explain Castro’s exuberant behavior. I did meet privately with Castro the following day at the Council on Foreign Relations building on Park Avenue.

  CHAPTER 28

  SOUTH OF THE BORDER

  My retirement from Chase in 1981 also gave me the opportunity to devote more time to my enduring interest in Latin American affairs, which had begun soon after World War II. In fact, I trace the origin of my personal involvement with Latin America to a romantic second honeymoon that Peggy and I spent in Mexico in early 1946. Nelson had given Peggy and me letters of introduction to friends of his in Mexico’s vibrant artistic community as well as to businessmen with whom he had worked during the war, so we met a number of people who would become lifelong friends.

  After visiting Mexico City, Peggy and I rented a car and driver and traveled north to San Miguel de Allende, Guanajuato, and Manzanillo, and then south to Puebla, Orizaba, and Oaxaca. The tour opened our eyes to a new world: the picturesque villages filled with people dressed in bright colors crowding the mercados where everything from tacos to beautifully made handicrafts were sold; and the charming old Spanish city of Puebla on the rim of the Valley of Mexico, which produced such beautiful pottery that we could not resist purchasing a number of pieces. We also learned more about the ancient civilizations of that land. Remains of the ancient Olmecs and Mayans, as well as the more recent Aztecs, were everywhere.

  ENCOUNTERS IN BRAZIL

  By 1948 I had begun to travel extensively for the Chase in Latin America, beginning with the Caribbean, Panama, and Mexico. I gradually acquired an imperfect but working knowledge of Spanish and quickly became enchanted by the warmth of Latin hospitality.

  An added incentive for my first Chase trip to Brazil in 1948 was the chance to travel with Nelson to a country he knew intimately and believed had limitless economic potential. We began our tour in the great industrial city of São Paulo, where I was introduced to many of his friends, including our host, Walther Moreira Salles, a banker, agriculturist, politician, and former Brazilian ambassador to the United States. Walther accompanied us on a tour through the states of Parana, São Paulo, and Mato Grosso. This was the beginning of a friendship I would treasure for half a century.

  Coffee was Brazil’s principal export, and Walther was one of Brazil’s largest coffee growers. Matao, his plantation, had more than a million coffee trees—a most impressive sight. Walther was a cultured gentleman with a broad interest in the arts. His gracious, self-effacing manner belied the fact that he was chairman and principal shareholder of Brazil’s third largest bank and had vast holdings in industries throughout the country.

  One stop on our weeklong tour was at a huge cattle ranch, Fazenda Bodoquena, in the state of Mato Grosso do Sul on Brazil’s wild and untamed border with Paraguay. The ranch was in the geographical center of South America and abounded with wildlife—monkeys, parrots, jaguars, and alligators. Its English owners were offering it for sale because their manager had been murdered by local Indians. Walther had formed a syndicate to buy it and had invited Nelson to join. Intrigued by its romantic remoteness as well as its economic potential, I asked to take a small share as well, and over the next twenty years I visited it several times.

  In 1967, Nelson, needing cash to finance his next presidential campaign, asked me to buy his share of Bodoquena. With some hesitation I agreed, realizing that I would have to become more involved in its management, which I had neither the time nor the expertise to do. After talking with Walther we decided to buy out the other members of the syndicate and invite Robert O. Anderson, whom I had known since my days at the University of Chicago, to become our partner. In addition to being CEO of Atlantic Refining, Bob owned one of the largest cattle ranches in the United States. He assumed responsibility for Bodoquena’s operation and over the next decade built up the herd to more than ninety thousand. In 1980 we sold it for a substantial profit.

  AN ERA OF OLIGARCHS AND ECONOMISTS

  Doing business in Latin America was a very different proposition from banking in New York or London. In each country a small group of powerful oligarchs ran the economy, largely to suit themselves. While North American–style democratic institutions existed in a few nations, the majority were controlled by authoritarian regimes: Juan Perón in Argentina, the Somozas in Nicaragua, Fulgencio Batista in Cuba, the Trujillos in the Dominican Republic, François (Papa Doc) Duvalier in Haiti, Perez Jiménez in Venezuela, Manual Odria in Peru, Alfredo Stroessner
in Paraguay, and Getulio Vargas in Brazil. These caudillos condoned oppression, extravagance, and corruption. Given these conditions it is not surprising that most Latin American countries seethed with social discontent and seemed always on the verge of revolution.

  With a few notable exceptions most Latin leaders were ardent nationalists, wary of the United States. By the early 1950s most had established statist regimes and had either maintained or reinstituted protectionist policies similar to those advocated by Argentine economist Raul Prebisch, the first secretary-general of the United Nations Economic Commission for Latin America (ECLA). Prebisch and his colleagues had concluded that Latin American economic growth would be short-lived because of slackening world demand for its primary exports and its failure to develop a strong manufacturing sector capable of producing competitive goods for export.

  ECLA’s solution was to shift Latin America’s capital and labor resources away from the production and export of primary products such as coffee, sugar, and minerals to the creation of manufacturing industries that would permit import substitution, and to encourage greater economic cooperation and integration within Latin America. Prebisch argued that a temporary period of protectionism would allow entrepreneurs to strengthen and diversify their economies while shielding them from destructive foreign competition. This prescription was broadly adopted throughout the hemisphere.

  Unfortunately, protectionism and the augmented government powers needed to sustain it became a permanent—not a temporary—policy in the larger Latin American countries. As a result foreign investment and trade began to decline in the mid-1950s and accelerated in the 1960s. ECLA’s pernicious doctrine not only failed to stimulate the growth of competitive indigenous manufacturing, it also ushered in a high rate of inflation that depressed economic growth and worsened already abysmal social conditions. The consequences were devastating and enduring. For four decades after 1945, Latin American economies lagged behind other regions of the world. Argentina, historically the most affluent of the major Latin American countries, had a gross domestic product before World War II that was double Italy’s. By 1960, Argentina had squandered its advantage and found its GDP lagging behind Italy’s and surpassed by those of the newly industrializing countries of East Asia. This poor performance was replicated in every Latin American country.