How the big defense took over the White House – OpEd – Eurasia Review


The Biden administration’s leadership failure is the net effect of Capitol Hill’s revolving door policy. The White House is not responsible. The Great Defense is.

In a recent speech on China policy, Secretary of State Antony Blinken managed to add a bunch of new “strategic ambiguities” to the Biden administration’s old contradictions. Progressive Democrats have lost faith in the administration. They are concerned about American welfare and the triple bear market in US stocks, bonds and cash.

With de-globalization, international macroeconomic conditions are deteriorating. The number of displaced people worldwide tops 100 million for the first time, propelled by the war in Ukraine and other deadly conflicts. The fragile status quo is more likely to worsen than it is not, due to Fed rate hikes and quantitative tightening.

Still, the White House seems intent on escalating its new Cold War with China. It’s not in the US national interest, as evidenced by the dramatic drop in Biden’s approval ratings, but it will benefit Big Defense.

Let’s start with the links (Figure 1).

Figure 1 Influence, collusion and geopolitics

Collusion with Big Defense

As the President’s Coordinator for Indo-Pacific Affairs at the National Security Council (NSC), Kurt Campbell is President Biden’s Asian czar. In 2019, he and Sullivan presented their China doctrine of “competition without disaster,” which would allow America to “challenge and coexist with China.” The doctrine is central to the “pivot to Asia,” which Campbell developed under the Obama administration.

The illusory assumption is that escalating discord into open animosity is viable without collateral damage. Replacing the former Soviet Union with China, Campbell and Sullivan declared Beijing America’s preeminent rival; and therefore the target of the “Indo-Pacific” containment.

As in the 1950s, the effective objective is to militarize containment and minimize the United States by diversifying risk towards allies and proxy conflicts towards Asia. The idea seems to be to fight to the last Asian.

New Cold War promoters like to quote George Kennan, the architect of American containment of the Kremlin in 1947. Here’s the irony: Kennan himself pushed for dialogue with Moscow as early as 1948. He denounced the version “ distorted and militarized” of the Truman administration’s containment, which “led to 40 years of wasteful, horribly expensive and disorienting Cold War process.”

Campbell-Brainard, Pentagon, Fed and Big Defense

One of President Biden’s first acts was to issue a new ethics pledge to weaken shadow lobbying. However, its defense, security and foreign affairs personalities have made a fortune in this lobbying. Campbell is not just a seasoned diplomat, but a former CEO of Asia Group LLC. According to his own testimony, the secret company has Fortune 500 clients, particularly in defense and military high technology.

In January 2021, Campbell’s appointment sparked public debate in the United States, due to his portfolio of former clients plagued by potential conflicts of interest. “Ghost lobbying” groups, like Campbell’s company, call themselves consultants to avoid the restrictions associated with traditional lobbying. Campbell himself received a monthly retainer of $25,000 from several defense companies.

In November 2021, Biden named Fed Governor Lael Brainard as Vice Chairman. In the past, Brainard was considered a dove. While the Fed has been belatedly tackling soaring inflation for months, it is overstepping the bounds in a hurry. After his appointment was confirmed, Brainard is now promoting rapid rate hikes. She is an accomplished veteran Democrat, like her husband – Kurt Campbell.

Thus, in addition to Campbell’s alleged conflicts of interest, the husband-wife bond reinforces critics’ perceptions of tacit collusion in decision-making by the executive branch, monetary chiefs, capital markets, the Pentagon and the Great Defense.

And Campbell is not alone.

Blinken, Sullivan, CNAS, and the list goes on

Jake Sullivan has advised some of the world‘s biggest companies at Macro Advisory Partners, a secret firm run by former British spy chiefs. In this role, Sullivan, who had brokered the Obama JCPOA nuclear deal, used his expertise to help companies exploit the openness of Iran’s economy.

Macro Advisory also advises public entities, such as the Taipei Economic and Cultural Representative Office in the United States. Unsurprisingly, the militarization of U.S. Taiwan policy has shifted toward and arms shipments to Taiwan have escalated alongside large donations from Taipei to Biden proxies.

Blinken has its alleged conflicts of interest. Between the Obama and Biden administrations, Blinken co-directed WestExec Advisors with Michèle Flournoy, Obama’s Undersecretary of Defense and military expert. With a key clientele in the defense industry, private equity and hedge funds, WestExec has insured Blinken over $1.2 million in compensation.

Even before WestExec, Flournoy was making more than $450,000 a year leading a think tank, the Center of New American Security (CNAS), which she co-founded in 2007 with Kurt Campbell. Former Biden press secretary Jen Psaki and current CIA chief Avril Haines, who helped Obama’s drone program for extrajudicial killings, also served on the CNAS, which was run by the CEO Victoria Nuland, a neoconservative uber-hawk, who played a key role in Ukraine’s escalation as Biden’s undersecretary of state.

The main donors of the CNAS include the crème de la crème of La Grande Défense: Northrop Grumman, Boeing, Lockheed Martin, Raytheon; energy giants Chevron and Exxon, and Soros’ Open Society Foundations.

Pentagon, Austin, Raytheon, Pine Island and Revolving Doors

Flournoy and Blinken were also strategic partners in a private equity firm Pine Island Capital Partners, led by controversial investment banker John Thain who took over Merrill Lynch in 2008, while paying himself bonuses along the way. Amid the subprime mortgage debacle, Thain spent $1.2 million remodeling his office, including a $35,000 gold toilet.

WestExec clients include Winward, an Israeli artificial intelligence company launched by Israeli naval intelligence officers with the country’s former chief of staff, Gabi Ashkenazi, on its board. Winward’s main investors were Li-Ka Shing, the Hong Kong billionaire, through venture capital fund Horizons Ventures.

At the end of 2020, Pine Island Capital, now linked to the Biden administration, was well placed to profit from the American response to Covid-19, by investing in government contractors. The company also employed Lloyd Austin, the first black Secretary of Defense.

A US Army veteran (1975-2012), Austin has a remarkable history, but it too reflects the dangers of revolving doors. As head of US forces in Iraq, he befriended Biden’s son Beau (Hunter, the other son, was connected to the Trump-era “Ukrainegate”). He was later nominated to become Vice Chief of Staff of the Army. A year later, President Obama tapped Austin to lead US Central Command.

After Trump’s triumph, Austin left the military and joined the board of steel colossus Nucor, a beneficiary of Trump’s tariff wars, and military contractors who merged in 2020 with Raytheon, one major defense lobbying spenders. Austin earned seven figures from defense companies until stepping down from all three board positions after his appointment in 2020.

Inflated threat from China for more spending

With deteriorating macroeconomic conditions, geopolitical divisions have rapidly widened from the Middle East to Asia and even Europe? Big Defense was the first beneficiary (Figure 2). As Investor’s Business Daily headlined in March, “Russia’s war on Ukraine nets defense investors $49 billion.” Without a full policy reset, this is just a prelude to much worse in Asia.

Figure 2 With geopolitics, economies falter but defense stocks climb

Source: Tradingeconomics; DifferenceGroup

In mid-May, NBC Meet the press aired a segment, which imagined conflict over Taiwan in the year 2027. In the war game simulation, run by CNAS, US-China tensions erupted into open warfare. What prompted Beijing to opt for the year 2027? Nothing. The year was “postulated” by the controversial outgoing commander of the US Indo-Pacific Command, Admiral Philip Davidson already in March 2021.

What is the CNAS solution? Flournoy calls on the United States to develop “the capability to credibly threaten to sink all Chinese naval vessels, submarines and merchant ships in the South China Sea within 72 hours.” Whether this contributes to peace is debatable, but it certainly aligns with the interests of CNAS donors, such as Northrop Grumman, Austin alumni at Raytheon, Lockheed Martin, and of course the US office in Taipei.

The original version was published by China-US Focus on June 2, 2022


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