NED and the Empire's New Clothes

Since the first Reagan administration, the U.S. taxpayer has been enlisted in the export of "American-style democracy" through a hybrid organization called the National Endowment for Democracy (NED). The component parts of the NED—the two major political parties, big business, and big labor—represent the acceptable boundaries of American politics. The NED, in effect, represents the American system. And by giving it its missionary role, the U.S. government could not be sending a clearer message abroad: that this is how politics must be.

The modern promotion of U.S.-style democracy abroad stems from an earlier form of American ethnocentrism, one which posited that the rest of the world, not being like us, was dangerous, probably evil. Foreign policy consisted of promoting our sons of bitches on the grounds that theirs posed a threat to world peace.

However, according to NED president, Carl Gershman, the NED has moved beyond the old sterile argument that the U.S. should favor authoritarian regimes over totalitarian ones, "a debate which was based upon the assumption that the best we could hope for was the lesser evil."[1]

Gershman—who has headed the program virtually since its inception—knows whereof he speaks. Before taking up his NED post, he served as aide to Reagan's U.N. Ambassador Jeane Kirkpatrick, whose sole claim to geopolitical fame is the now wholly discredited theory that America should support authoritarian regimes over totalitarian ones because the former were more prone to reform.[2] Before that, he was chairman of Social Democrats-USA and an intellectual gofer for AFL-CIO president Lane Kirkland.

Indeed, consistent with an SD-USA line, so-called totalitarian states were targeted by the NED. For example, groups connected to the reactionary Polish Catholic Church were offered grants during the 1980s. But other money went to countries that might strike the uninitiated as not especially in need of American-sponsored tutelage in democracy—that is, "dictatorships" like Costa Rica and France, where right-wing opponents of Nobel Peace Prize winner Oscar Arias and Socialist President François Mitterand received grants. In effect, NED's program could have been written by Kirkland and some of his neoconservative allies.

Overall, in its first ten years of operations, the NED—whose funding comes from Congress but whose grants are dispersed largely by four private foundations (the Republican Party-controlled International Republican Institute, the Democratic Party's National Democratic Institute, the quasi-independent and politically correctly named American Center for International Labor Solidarity [formerly the Free Trade Union Institute], and the U.S. Chamber of Commerce-headed Center for International Private Enterprise)—spent roughly $200 million dollars on some 1,500 grants.[3] Although backing pro-American political forces abroad has always been the main weave of the program, the promotion of American-style business unionism represents a critical accessory.

Of course, the history of American union-government overseas cooperation goes back decades. Long before the NED was a glint in the Reagan administration's eye, conservative AFL-CIO presidents George Meany, and later Kirkland, actively collaborated with the Central Intelligence Agency in identifying militant labor leaders and infiltrating popular, mass-based labor movements (see the articles by Anthony Carew and Douglas Valentine in this issue). Moreover, the AFL-CIO participated in the formation of rump, or "kept," labor organizations and sought to promote new leaders, usually through patronage, who opposed any fundamental change and favored the U.S. model of trade unionism that sees labor as just another interest group—not the basis of class struggle.

Then, in its first decade, the NED worked with the AFL-CIO to undermine militant labor movements, while fostering "democratic and independent trade unions," a thinly veiled euphemism for American-inspired labor organizations devoid of worker participation. Before the collapse of the Soviet Union, Washington recognized that working-class organizations were bound to form throughout the world. Thus, the NED/AFL-CIO's major goal was undermining any movement that displayed pro-Soviet tendencies. The two encouraged the formation of relatively weak and feeble trade unions that opposed state control over national economies, such as the Force Ouvriere in France, the Federation of Korean Trade Unions in South Korea, and the Free China Labor League in the People's Republic of China. The NED used the AFL-CIO as an extension of American Cold War policy to promote toothless labor organizations—usually in the form of labor federations with leadership over national labor movements—as a foil for genuine labor movements. In Poland, however, the grantee of choice was Solidarity, which did, in effect, undermine the regime.

The NED's operations were carried out through the AFL-CIO's foreign labor organizations, the American Institute for Free Labor Development (AIFLD); the Asian-American Free Labor Institute (AAFLI), and the African-American Labor Center (AALC). Operations were concentrated in regions where significant labor movements—such as those in South Africa and South Korea—posed a special threat to the interests of transnational corporations and U.S. foreign policy.

Since the fall of communist and authoritarian regimes around the world in the early 1990s, the program has promoted "the globalization of democracy" because, a recent NED annual report has stated, "it works," though neither "work" nor "democracy" seem to have much to do with the program; indeed, it is unclear that there is a single example of political reform, democratic or otherwise, anywhere in the world that can be attributed to an NED program.

Rather, the NED serves two functions. First, it exists as a junket-sponsoring cash cow for "conventional-wisdom"-spouting political experts, right-wing ideologues, rabidly anticommunist and frequently corrupt trade unionists, and businesspeople hot on the trail of emerging market opportunities. Much of the money lavished by the program is spent sponsoring conferences in exotic lands, where the participants get no closer to the democracy-deprived persons they claim to serve than the maids at the four-star hotels where they hole up.

Harper's magazine editor David Samuels, who reported on a 1995 NED-sponsored conference at the elegant Esplanade Hotel in Zagreb, Croatia, summed up the absurdity of the event—the theme of which was "Strengthening Democracy." "All the [Eastern European] participants now understand...the Americans have come to talk not to them but to each other," Samuels noted. "For the next two days, [the Americans] will eat all they can at the breakfast buffet...order coffee from room service, and watch CNN and MTV, all the while feeling guilty about the great and unnecessary expenses they have incurred in order to come here."[4]

But extravagant waste is just part of the problem. Over the years, the NED has also faced numerous corruption charges of its own. Irving Brown, a Gershman mentor, was accused of funneling NED funds to right-wing groups in France, such as the Union Nationale Inter-universitaire, in the mid-1980s for overt political activities. In February, an appeals court overturned a suit the right-wing Cuban American National Foundation (CANF) had brought against the former chief of the U.S. Interests Section in Havana, Wayne Smith.[5] Smith had charged—truthfully, the court's decision implied—that the NED gave nearly $400,000 to CANF between 1984 and 1988 at the same time the foundation was setting up a political action committee that donated an equal amount to the campaigns of pro-CANF congressmen in Washington. Federal law prohibits the use of government funds for campaign purposes.

In a 1993 report, Barbara Conry of the libertarian Cato Institute—an outspoken foe of U.S. foreign aid—noted that General Accounting Office audits "have repeatedly revealed financial mismanagement at the program," including personal credit card payments made from NED accounts and grantees filing rent receipts and staff payments for non-existent offices.[6]

Yet the NED has survived numerous attempts to kill it. Most recently, after Clinton proposed upping its budget by half in 1994, freshmen Republicans in the House voted to cut off all funding, as an anti-foreign aid gesture. But the effort was reversed by the Senate after appearances from Andrei Sakharov's widow, Elena Bonner, and no less than three ex-presidents: Ford, Carter, and Bush. Still, some of the organization's $31 million annual budget does get through to recipients. And when it does, the agenda is an insidious one.

Again, labor unions offer a useful example. In South Africa, the NED and AFL-CIO sought to undermine the growth of the Congress of South African Trade Unions, a Black federation that had close ties to the South African Communist Party. On the other side of the globe, in South Korea, the NED supported and funded the development of the FKTU, the government-dominated labor federation, in opposition to the more militant KCTU independent labor federation, which has advocated greater workers rights and democracy and waged damaging strikes against leading corporations, even after Washington went on record praising the establishment of the KCTU as a sign of growing civic pluralism in South Korea.

Conversely, the NED has refused to support the Federation of Independent Trade Unions of Russia—despite the fact that it represents the vast majority of Russian workers and has displayed a remarkable degree of independence and militancy since the fall of the Soviet Union—because it was originally a creation of the Soviet government. Thus, the NED continues to evince its roots in Kirkpatrick-inspired political theory, supporting the Korean federation organized by a formerly authoritarian regime but refusing to work with a Russian one, because it was set up by a communist government.

None of this surprises veteran NED watchers, as they note how the program was founded both to replace and augment traditional covert funding to pro-American political groups around the world. Hoping to diminish the impact of the 1970's congressional exposés of CIA covert action, the NED was intended as a respectable, overt means to the same ends. As Allen Weinstein, founding and then acting president of the NED told the Washington Post in 1991, "a lot of what we do today was done covertly 25 years ago by the CIA."[7]

Weinstein was not being entirely fair; the NED—though its funding remains a fraction of that still devoted to covert action by the CIA—offers a more subtle, sophisticated, and politically acceptable method for furthering U.S. foreign policy interests. Where the Cold War-era CIA once crushed genuinely democratic movements and organizations in countries allied with the U.S., the NED attempts to coopt them—by making them dependent on U.S. funding or by recruiting their leaders—or exclude them altogether from a political consensus shaped in America's own image.

In his pathbreaking book on America's newly revised role as civics teacher to the world, William Robinson points out the connection between the promotion of globalized markets and polyarchy, a kind of "low intensity" democracy in which multiple voices and institutions broaden civic participation—or, at least, the appearance of same—while at the same time excluding more "excessive," high intensity forms like the original lavalas movement in Haiti, radical free trade unionism in South Korea and South Africa, or anti-free market parties in Russia.[8]

Saluting the efforts of NED and its partners—the Agency for International Development (AID), the U.S. Information Agency (USIA), Voice of America and others—Deputy Secretary of State Strobe Talbott formulated the equation more crudely. "It's an issue not just of moral politik, but of realpolitik," he told a Carnegie Endowment for International Peace audience in 1996. "Democracies are more likely to be reliable partners in trade and diplomacy and more likely to pursue foreign and defense policies that are compatible with American interests."[9]

This, of course, is nothing new. Washington has mouthed banal paeans to democracy. Even Henry Kissinger's overwrought memoir—Years of Renewal—makes the argument that the Nixon State Department's role in the overthrow and murder of Salvador Allende—Chile's popularly elected president—was yet another milestone in America's ongoing crusade to further democracy around the world.[10]

Still, to fully understand the NED's mission, it is necessary to think in terms of supply as well as demand. Clearly, the demand side of promoting democracy has changed with the fall of communism; pro-American forces abroad, NED supporters recognize, should be finessed rather than coerced. At the same time, the NED is a more pluralistic institution than was the CIA.

The NED's political durability is guaranteed through bipartisan support, says analyst Elizabeth Cohn, author of a forthcoming report on the American democracy-promoting institutions.[11] But to maintain this support, it must give a piece of the action to each of the elements that comprise what Cohn calls "Democracy, Inc.": the Democratic and Republican parties, mainstream unionism, and the business community. This diversity, of course, is no broader than the ruling institutions of America, and, as there, the right remains in the ascendance.

Yet, says Cohn, to understand what the NED does, "we have to move beyond the Cold War framework of thinking. Some of what it promotes we [progressives] would all support," just as, presumably, there are things about the American form of democracy that we agree with. The NED "was clearly set up to create a world in the image of U.S.-style democracy." This, of course, begs two important questions: Is American-style democracy a good thing for the world? And what happens when forces abroad seek another form of democracy? The first question is left to the reader to answer. The second can best be understood by looking at the record.[12]

In locations as far afield as Serbia, Mongolia, and Peru, the NED plays a zero-sum game. The money and perks it dispenses—measly by American standards but enticing to half-starved democracy advocates in the developing and former communist worlds—lures the best and the brightest overseas, ensconcing them in organizations approved by NED and, since all NED grants must ultimately receive State Department approval, by Washington.[13] There, the locals get caught up in a process where the rules and boundaries of permissible ideological content and political activism are laid down by NED-approved American political experts and ideologues. At the same time, more radical, "excessive" democratic movements and institutions dry up.

And just as the NED's board of directors ranges from the liberal (former New York University President John Brademas) to the moderate (former New Jersey Governor Tom Kean) to the extreme right (Reagan's Undersecretary of Defense Fred Iklé), so NED-sponsored projects vary from the worthy (funding anti-dictatorship newspapers among Burmese exiles) to the ridiculous (distributing tens of thousands of copies of Newt Gingrich's "Contract with America," retitled as "Contract with the Mongolian Voter") to the vicious (supporting former Front for the Advancement and Progress of Haiti-FRAPH-members).

Yet, during the 1990s, the political consensus that gave the NED its pluralistic cover and assured it bipartisan support in Washington has frayed somewhat. Congressional Republicans have opposed the NED or any organization that favors even watered-down labor rights, while it has attempted to promote labor unions that embrace neo-liberal capitalist principles. In the former Soviet Union, the NED and the AFL-CIO have sponsored independent unions representing the approximately five percent of all workers in Russia who were supporting privatization against the former communist Federation of Independent Trade Unions of Russia (FNPR). As the 45 million-member FNPR opposed privatization, the NED-inspired federation defended government neoliberal reforms.

At the same time, the election in 1995 of John Sweeney as president of the AFL-CIO significantly changed the orientation of the American labor movement in the international arena. In the post-World War II era, the AFL-CIO has been one of the great labor failures worldwide as membership has declined from 35 percent of the labor force in 1955 to about 15 percent in 1995. Any foreign labor movement looking to the AFL-CIO could see that it was an utter failure and a poor model for building worker power. Indeed, by 1995, even American workers were aware of this failure. Though old cold warriors within the AFL-CIO continued to support the international policy of promoting weak unions worldwide, the new leadership sees neoliberal capitalism as the greater threat to labor.

Shortly after Sweeney became president, the four international institutes of the AFL-CIO were closed and folded into the American Center for International Labor Solidarity (ACILS), an NED front organization in Washington known colloquially as the "Solidarity Center" and founded by AFL-CIO, AID, and the NED. Asked if the AFL-CIO continues to work with the U.S. government in undermining progressive labor unions abroad, San Francisco-based labor activist Michael Eisenscher noted, "most of the spooks from the CIA that were on the Federation's payroll have been mothballed."[14] At the same time, the AFL-CIO has supported progressive labor activists that the U.S. government considers suspect. The AFL-CIO's delegate to a hemispheric labor conference held in San Francisco last year intervened with the State Department to get visas for communist labor leaders from Chile to attend.

Nevertheless, the AFL-CIO continues to take NED funding and use it for purposes that remain in sync with the program's overall agenda. In Russia, for example, an AFL-CIO backed-campaign against the non-payment of wages by Russian industry leans toward amelioration of the symptoms, rather than a militant attack on the cause: the Yeltsin government's wholehearted embrace of free market ideology.

Meanwhile, the AFL-CIO's partial defection—though denying the NED an important domestic constituency and a union cover for its pro-free market activities abroad—has not stopped the program's work in this field. ACILS has taken over the AFL-CIO's regional field offices throughout the world and has reinforced the federation's contacts, in order to promote the faddish principles of neoliberal capitalism and the development of "free democratic and independent trade unions." Although the AFL-CIO is not actively involved in the operations of ACILS, some of its international unions, particularly the once staunchly anticommunist American Federation of Teachers, are actively involved in its educational and institution-building affairs, particularly in the former communist bloc. And, of course, NED's political wing has actively supported Russian president Yeltsin and his allies, offering funds to 41 parliamentarians in the 1996 elections (despite NED rules that funding not go directly to politicians abroad) and even providing make-over artists so that Yeltsin could go on television without looking like a walking corpse.[15]

With or without the AFL-CIO, the NED continues to serve American foreign policy, funding organizations that promote economic restructuring, undermine workers' rights, and increase layoffs, while paying lip service to labor rights. In China, it funds organizations that encourage privatization and train employers in anti-labor strategies. Moreover, in 1997, while the NED offered extensive funding for an American-inspired free labor development in Burma, it provided no support for a grassroots labor movement in American ally Indonesia under Suharto, the recently deposed dictator of 33 years, where workers have actively sought to organize independent trade unions and whose leader languished in jail.

Ultimately, with the NED, Washington sets a double standard for itself and everybody else. In 1997, congressional opponents of the Clinton administration expressed outrage over foreign—specifically, Chinese—interference in U.S. elections, a story picked up and played repeatedly by the media. Eventually, the investigation was dropped for fear it would gore too many bulls on both sides of the aisle. But imagine if the Chinese had gone further: openly funding congressional candidates, researching low-voter turnout and America's antiquated voter registration system, infiltrating trade unions, sponsoring conferences in Washington supporting groups critical of the U.S. government and actively promoting the efficacy of Chinese-style state-run enterprises. Imagine the NED.

1. Mike Feinsilber, "One Expert's Views on How Democracy Triumphed," Associated Press, Feb. 13, 1990.
2. Gershman, when executive director of the conservative Social Democrats-U.S.A, once praised Jonas Savimbi—longtime leader of the CIA-sponsored mercenary force in Angola—as "one of the most impressive political figures I have ever met." CovertAction Information Bulletin, No. 7, Dec. 1979-Jan. 1980, p. 25.
3. "$200 Million!: Sponging Up Grants for Democracy," Columbus Dispatch, Oct. 15, 1993, p. 8A.
4. David Samuels, "At Play in the Fields of Oppression," Harper's, May 1995, p. 50.
5. "Florida Libel Verdict Reversed; Ex-Diplomat Had Accused Exile Group of Misuse of Funds," Washington Post, Feb. 4, 1999, p. A9.
6. Barbara Conry, "The NED Is No Friend of the Taxpayer," Chicago Tribune, Dec. 13, 1993.
7. David Ignatius, "Innocence Abroad: The New World of Spyless Coups," Washington Post, Sept. 22, 1991. This view was reiterated by former CIA Chief William Colby. Discussing NED programs, he opined, "it is not necessary to turn to the covert approach. Many of the programs which...were conducted as covert operations [can now be] conducted quite openly, and consequentially, without controversy." "Political Action—In the Open," Washington Post, Mar. 14, 1982, p. D8.
8. William I. Robinson, Promoting Polyarchy: Globalization, U.S. Intervention, and Hegemony (New York: Cambridge University Press, 1996).
9. Strobe Talbott, "Support for Democracy and the U.S. National Interest," State Department Dispatch, Mar. 18, 1996, p. 121.
10. Henry Kissinger, Years of Renewal (New York: Simon and Schuster, 1999).
11. To be published by the Albuquerque-based Interhemispheric Research Council.
12. Elizabeth Cohn, interview with authors, Mar. 19, 1999.
13. In its most recent reported annual spending (for FY 1997), NED's four components made grants totaling $26.4 million out of a total budget of $31.6 million. Annual Report, National Endowment for Democracy, 1997 (Washington, D.C.: NED, 1998).
14. Michael Eisenscher, interview with authors, Mar. 21, 1999.
15. Saul Landau, "U.S. Spends $30 Million a Year to Meddle in Foreign Elections," Sacramento Bee, Apr. 19, 1997, p. B7.

U.S. funds have been flowing for several years to the Serbian opposition, both within Kosovo and throughout Yugoslavia, much of it from taxpayers.

According to the U.S. Institute of Peace in Washington (an organization with a long record of anti-Serbia involvement), the Agency for International Development sent nearly $10 million to Yugoslavia in 1998 through two programs, Support for East European Democracy and the Office of Transition Initiatives. The U.S. Information Agency granted more than $1 million that year, and the National Endowment for Democracy nearly a million.

But by far the largest amount has been given to anti-government organizations by the Fund for an Open Society-Yugoslavia, a branch of the Soros Foundation based in Belgrade, until recently in Pristina, and in Montenegro. In fiscal year 1998, it bestowed some $14.8 million in grants for a wide range of activities, mostly for "information," "arts and culture," "education," and "youth" programs.

It is likely that the 1999 figures are much greater, and the overall totals are undoubtedly increasing exponentially every day.