Don’t Cry for Bush, Argentina

George W. may not recall the names of world leaders, but when it comes to foreign affairs, he knows the value of his own family’s name.

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Texans watched with interest last winter as Governor George W. Bush was home-schooled on international affairs by former Secretary of State George Shultz and other veterans of his father’s foreign-policy team. Even Carl Bildt, the former prime minister of Sweden, was brought in for a tutorial at the governor’s mansion, in the hope that his recent U.N. experience in the Balkans could help Bush understand that Kosovars are not “Kosavarians” and that Greeks are not “Grecians.”

But no one had to prepare a prompt card to remind him who stepped down as president of Argentina in December. Shortly before Bush announced his own campaign for president, he had received a visit from Carlos Saul Menem, the right-wing leader of Argentina for the past decade. The two men retired to an Austin country club, where they were joined by Bush’s father. Governor Bush had the flu, so he contented himself with riding along as the former president and Menem played a round of golf.

The capitol press corps trailed along, dutifully recording the governor’s cordial relationship with a visiting head of state. Unknown to the assembled reporters, however, was the story of how Bush and his family became immersed in Argentine politics. The little-known tale begins with George W. making a phone call to secure a $300-million deal for a U.S. pipeline company — a deal that provoked a political firestorm in Argentina, drawing scrutiny from legislators and a special prosecutor. The episode marked one of George W.’s first ventures into foreign affairs, demonstrating the fundamental rule by which the Texas governor and his family conduct business: Always know that the Bush name is a marketable commodity.

Bush first made his presence felt in Argentina in 1988, shortly after his father was elected president. At the time, the junior Bush’s political career was just beginning — and the political career of Raúl Alfonsín, who was approaching the end of his term as president of Argentina, was ending. Alfonsín had returned his country to civilian rule, prosecuted those responsible for human rights abuses during Argentina’s rule by a military junta, and struggled to manage an economy that seemed to defy management. Determined to complete one major private-sector industrial program, he pushed for the development of a “gasoducto” that would connect Argentine gas fields with domestic and foreign markets. And he appointed his minister of public works, Rodolfo Terragno, to oversee the pipeline project.

Unlike Bush, Terragno achieved political prominence the old-fashioned way: through a life dedicated to public service. A noted journalist and public official, he was forced into exile for 10 years after the military seized power in Argentina in 1976. Only after Alfonsín restored civilian rule did Terragno return to his homeland, where he went on to serve as minister of public works, a member of congress, and most recently as cabinet chief to the newly elected president, Fernando de la Rua.

In 1988, Terragno was considering two proposals for the $300-million pipeline, one from an Italian firm called Ente Nazionale Idrocarburi and the other from Pérez Companc, an Argentine company working in partnership with Dow Chemical. After a year of consideration, the minister was close to making a decision when Enron, the largest pipeline company in the United States, suddenly entered the bidding.

At the time, the Houston-based Enron had no experience in Argentina. It had formed a business relationship with Westfield, a small Argentine firm, but Westfield wasn’t much of a player either. El Boletín Oficial — the Argentine equivalent of the Federal Register — reported that Westfield’s only asset in 1988 was $20, its corporate filing fee. Westfield was a prestanombre, literally a “borrowed name” used to provide a domestic front for a foreign firm.

Terragno was concerned that a newly formed corporation with no resources was attempting to land a contract that companies with proven track records had been working on for a year. “I had a lot of reservations about Enron because the company wasn’t well established in Argentina,” Terragno told Mother Jones, providing details of the episode for the first time.

The minister recalls that Enron sent him “a one-page outline” proposing a price Terragno now describes as “laughable.” Enron wanted to pay “something like 20 percent of the international market price,” he says. “It all seemed so inadequate. Enron asked the country of Argentina to practically give them the gas.”

Terragno was unenthusiastic about the pipeline bid, but Enron initiated a full-scale campaign to pressure him. Pro-business newspapers attacked the minister for blocking the proposal, and Terragno recalls that Ted Gildred, the U.S. ambassador to Argentina, “called me and visited me constantly” to push the deal.

Terragno wasn’t concerned about the ambassador’s lobbying — that was politics as usual. “It was good that he was representing the interest of his country’s businesses,” he says. But Terragno found that some of the politics surrounding Enron’s campaign were anything but usual.

A few weeks after the U.S. presidential election in 1988, Terragno received a phone call from a failed Texas oilman named George W. Bush, who happened to be the son of the president-elect. “He told me he had recently returned from a campaign tour with his father,” the Argentine minister recalls. The purpose of the call was clear: to push Terragno to accept the bid from Enron.

“He was taking a moment to call me because he knew that I was dealing with this,” says Terragno, adding that Bush told him that he “viewed with some concern the slow pace of the Enron project.” According to Terragno, the president-elect’s son noted that a deal with Enron “would be very favorable for Argentina and its relations with the United States.”

When a brief report on the attempt to influence the Argentine deal appeared in The Nation and the Texas Observer years later, the Bush team reacted angrily. His staff produced a copy of his day planner to show that Bush never placed the phone call, and a top-level adviser personally called reporters to dismiss the story as a fantasy by “some guy in Argentina.” Bush’s staff continues to deny his involvement, and no other media outlet ever reported on the episode, despite the high-ranking source.

More than a decade later, Terragno still recalls details of the phone call clearly — as well as his outrage. “It looked bad and it surprised me,” he says. “There was this political endorsement, apparently from the White House. I don’t know if George Bush the father was aware of it, or if it was only a business contact by his son, who hoped that his family name would have some influence.”

George W. wasn’t the only Bush plying the family name in Argentina. His brother Neil had tried to funnel $900,000 in loans from Silverado Savings and Loan, where he served as a director, into a failed attempt to drill for oil in Argentina. The S&L eventually collapsed, costing taxpayers nearly $1 billion to bail out, and federal regulators banned Neil from certain banking activities.

But Terragno was unimpressed by the family connections. He told George W. the pipeline concession would be awarded according to Argentine law. It hardly mattered — Argentine law was about to change. Time had run out for Raúl Alfonsín. His party lost the election, and he left office four months early to make way for his successor, Carlos Menem.

Enron, for its part, couldn’t have appointed an Argentine president more favorable to its interests. A right-wing follower of Juan Peron, Menem was eager to open his country to American enterprise — and his own lavish spending. He took to traveling with a huge entourage aboard Tango-01, his $66- million presidential jet. The Bushes took an immediate liking to him. The day after the 1989 election, Neil Bush arrived in Buenos Aires for a tennis match with the president-elect. The following year, President Bush made the first of eight trips to see Menem, becoming the first U.S. chief executive since Eisenhower to visit Argentina.

Several days after the president’s trip in 1990, Bush’s ambassador to Argentina, Terence Todman, wrote a stern letter to Menem’s minister of the economy to follow up on issues that Bush had “intended to address, but failed to do so for lack of time.” Todman went on to imply that eight U.S. companies would walk away from their investment plans unless Argentina stopped favoring domestic corporations. The first company on the list was Enron, which the ambassador described as being “poised to invest $250 million” — as soon as the Argentine government met its demands for tax breaks. Todman closed his letter by warning that the Enron decision was “extremely urgent,” as the gas company would make a final decision on its investment in less than a month.

Todman prevailed: Menem agreed to the company’s terms, signing a presidential decree that included Enron in a national program freeing it from tariffs and valued-added taxes.

Reports of the Enron deal outraged Argentines, who had supported Alfonsín’s struggle to create a democracy out of what remained after 10 years of military dictatorship. Lawmakers demanded a congressional inquiry, and a special prosecutor launched an investigation. Menem dealt with the scandal in a forthright manner: Since his own justice department was looking into the tax giveaway, he simply fired the investigator.

Enron ultimately abandoned the project when gas prices fell, but an Enron subsidiary later bought into the pipeline and now owns almost a third of the gasoducto. Among the subsidiary’s board members is Brent Scowcroft, national security advisor to former President George Bush.

George W. has certainly benefited from his association with Enron. Kenneth Lay, the company’s chief executive, has personally contributed $100,000 to Bush’s two gubernatorial campaigns. When Bush announced in 1999 that he was running for president, executives and political action committees connected to Enron contributed $89,650 to his campaign in the first three months. Lay signed on as a “Bush Pioneer,” pledging to raise $100,000.

The involvement of George W. and Neil in Argentina has become something of an m.o. for the Bush brothers in foreign affairs. The sons of the former president have certainly not been shy about using their family name to enrich themselves and their friends. Jeb sold $74 million worth of water pumps to the Nigerian government in 1988. Marvin tried to sell electronic fences to the defense ministry of Kuwait two years after the Gulf War, while Neil sought contracts to provide oil-field antipollution equipment. And George W. lent his name to tiny Harken Energy to help secure a huge offshore drilling contract in Bahrain (see “Slick W.,” page 48).

Undoubtedly, the family name will continue to open doors internationally if George W. is elected. Last November, an airplane with Houston registry numbers landed in Buenos Aires; on board was former President Bush, who had arrived to spend the night with his friend, President Menem, 10 days before the end of Menem’s final term. The two men attended a dinner at the home of Argentine banker José Rohm, where they were joined by the vice president of Chase Manhattan Bank, the director of Credit Suisse First Boston, the president-elect of Argentina and the former president of Uruguay.

What was the purpose of President Bush’s visit? “Fishing,” says Michael Dannenhauer, a Bush spokesman. But when the Buenos Aires daily, Pagina 12, asked several of the dinner guests why the president was in town, they smiled and quietly replied, “Business.” Bush’s “real interest,” they added, was to learn how the new government would deal with CEI, an Argentine media company whose former chief had fled the country under investigation for fraud. One of CEI’s principal investors, the paper noted, is Tom Hicks, “one of the funders of the presidential campaign of Bush’s son, George, the governor of Texas.”

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DONALD TRUMP & DEMOCRACY

Mother Jones was founded to do journalism differently. We stand for justice and democracy. We reject false equivalence. We go after stories others don’t. We’re a nonprofit newsroom, because the kind of truth-telling investigations we do doesn’t happen under corporate ownership.

And we need your support like never before, to fight back against the existential threats American democracy faces. Fundraising for nonprofit media is always a challenge, and we need all hands on deck right now. We have no cushion; we leave it all on the field.

It’s reader support that enables Mother Jones to report the facts that are too difficult, expensive, or inconvenient for other news outlets to uncover. Please help with a donation today if you can—even a few bucks will make a real difference. A monthly gift would be incredible.

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