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145$1 Million to Akin Gump to Screw Press in Kazakhstan

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  • Al Giordano
    Jan 24, 2001
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      Akin Gumpsters complicit v. Press Freedom again...


      From the Washington Post, January 25, 2001

      "The money went for high-priced Washington lawyers, public relations
      firms and lobbyists; some of it was channeled through Liechtenstein-
      based foundations and offshore companies in the Caribbean, U.S.
      federal records show.

      "The spending peaked in 1999 during the run-up to presidential and
      parliamentary elections in Kazakhstan. Prominent recipients of Kazakh
      government largess during this period included the law firm of Akin,
      Gump, Strauss, Hauer & Feld ($1 million), the Carmen Group public
      relations company ($700,000), and Mark A. Siegel & Associates, a
      Washington-based political consulting firm, ($470,000), according to
      records filed with the Justice Department under the Foreign Agents
      Registration Act."

      Full Story:

      From the Washington Post
      Thursday, January 25, 2001

      Investment in Freedom Is Flush With Peril

      From Kazakhstan, A Cautionary Tale

      By Michael Dobbs
      Washington Post Foreign Service

      Thursday, January 25, 2001; Page A01

      Second of three articles

      ALMATY, Kazakhstan -- When the Franklin Printing Co. was founded here
      with $3 million of American taxpayer money in 1995, U.S. officials
      pledged it would help promote freedom of the press in Kazakhstan, an
      oil-rich Central Asian country that the State Department was hailing
      as "an emerging democracy."

      Fast forward five years, to the summer of 2000. A corruption scandal
      has erupted at the highest levels of the Kazakh government, linking
      the country's authoritarian president to multimillion-dollar deposits
      by international oil companies in Swiss bank accounts. The scandal is
      covered widely in the press in the United States and Europe, but it
      is barely mentioned in Kazakhstan's leading newspapers, including
      those printed by the U.S.-funded publishing house.

      The printing company -- named for Benjamin Franklin -- is now owned
      by a firm linked to the president's daughter. Its co-founder, a
      Russian businessman who also ran Kazakhstan's most successful
      independent newspaper, says he felt obliged to leave town after
      receiving what he describes as "an offer I could not refuse" from a
      senior member of the regime.

      Such are the perils of promoting democracy in a part of the world
      that is more accustomed to the rule of khans, commissars and
      presidents-for-life. What happened to the Franklin printing house
      could be a parable of the way in which U.S. foreign aid programs
      launched with the best of intentions can be undermined by
      authoritarian leaders determined to protect power and privileges.

      In the decade since the end of the Cold War, democracy assistance has
      become an American growth industry, providing jobs for a small army
      of political advisers, media consultants and election observers. The
      U.S. Agency for International Development (USAID) spent $649 million
      on democracy programs in 2000, up from $165 million in 1991.

      In such countries as Yugoslavia, Slovakia and Peru, democracy-
      building campaigns appear to have helped show the door to
      authoritarian governments with free elections. In other parts of the
      world -- Central Asia is an obvious example -- the programs have
      drawn criticism as being little more than constitutional window-
      dressing for corrupt autocracies.

      American democracy-builders plead for patience, saying the aid
      programs are laying the foundations for long-term change. "We are
      helping political parties, NGOs [nongovernmental organizations] and
      political activists build a political base," said Eric Kessler,
      Central Asia representative for the National Democratic Institute
      (NDI), which is affiliated with the U.S. Democratic Party. "We
      shouldn't turn our backs on the political activists of these
      countries just because the regimes will not let them be effective for
      many years."

      NDI activities in Central Asia include working with student activists
      to improve conditions in universities and combat endemic campus
      corruption, which includes bribing professors for better grades and
      paying for textbooks that should be free. Other American
      organizations hand out grants to Kazakh political activists, train
      journalists and provide legal advice to the Kazakh parliament.

      Democracy-building can be dangerous work. In 1994, as Kazakhstan's
      president, Nursultan Nazarbayev, was beginning to crack down on
      opponents, the Almaty representative of the International Republican
      Institute (IRI), which is identified with the U.S. Republican Party,
      was brutally assaulted; the attack on Eric Rudenshiold had the
      hallmarks of secret police intimidation. Mystery continues to
      surround the November 2000 murder of the IRI's representative in
      Azerbaijan, John Alvis, shortly after Western monitoring groups
      sharply criticized the Caspian republic's election procedures.

      Limits of Tolerance

      Kazakhstan, the largest and most prosperous of the five newly
      independent Central Asian republics born from the Soviet Union, has
      been a favorite of the democracy-building lobby for years. Despite
      his communist past, Nazarbayev has been viewed in Washington as a
      pragmatic, modernizing leader who placed a high priority on relations
      with the West. A country four times the size of Texas, Kazakhstan
      also has the good fortune to be sitting on huge oil reserves in the
      Caspian Sea, giving it the resources to make rapid economic progress.

      At first, Nazarbayev seemed inclined to play along. "Our post-
      communist elite wanted to join the world community," said Yevgeny
      Zhovtis, who heads an independent human rights group in Almaty, the
      former capital. "This meant playing the rules of the game, as laid
      down by the U.S."

      Under Western pressure, Nazarbayev accepted a degree of press freedom
      and political pluralism. But the limits of his tolerance soon became
      clear: There could be no infringement on his personal power, or on
      the control of the ruling elite over key sectors of the economy,
      particularly oil.

      According to Zhovtis, American pressure on Nazarbayev to introduce
      political reforms began to slacken after 1994. Nazarbayev discovered
      that as long as he did nothing outrageous such as throwing an
      important opponent into prison, there would be little outcry from
      abroad. In Zhovtis's phrase, Kazakh leaders came to understand that
      the West is less interested in human rights than geopolitics,
      preserving Kazakhstan as a stable buffer between Russia and China and
      keeping its oil flowing.

      "Without the support of the host government, we could not do very
      much," said Barnabas Johnson, an American constitutional scholar who
      worked in Kazakhstan in the mid-1990s on a rule-of-law project. "We
      dumbed everything down."

      In some ways, Johnson added, that project may have done harm. Tens of
      thousands of dollars were spent organizing visits by what Johnson
      terms "weekend warriors," delegations of American judges who would
      visit Central Asia for a few days to talk up the virtues of a fair
      judicial system. Then they would go home. "The message was that we
      were not all that serious."

      William Courtney, a former U.S. ambassador to Kazakhstan, said he
      believes the USAID programs helped convince ordinary Kazakhs that the
      United States stands "on the side of democracy." At the same time, he
      was struck by the disparity between the grandiose American rhetoric
      in Central Asia and the relatively modest results.

      A good example of the limitations of U.S. assistance is the Franklin
      Printing Co.

      In March 1995, it began life with $3 million from the Central Asian
      American Enterprise Fund, a U.S. taxpayer-funded venture capital
      institution. The idea, said Stephen J. Solarz, a former chairman of
      the fund, was to encourage private enterprise and the development of
      a free press. Before Franklin's creation, all Kazakh newspapers were
      published on state-owned presses.

      Franklin was founded as a joint venture between the U.S. fund and
      Kazakhstan's leading independent newspaper, Caravan, which was owned
      by Boris Giller, a Russian businessman. The American contribution
      consisted of a 50 percent stake in Franklin for $1 million and a $2
      million loan, to be repaid over five years.

      At first, Caravan was both profitable and widely read. It published
      occasional articles by former prime minister Akezhan Kazhegeldin, who
      had emerged as Nazarbayev's leading critic and rival for the

      As a 1999 election approached, Giller says, he came under increasing
      pressure from the authorities to sell his business and move back to
      Russia. He will not say exactly who pressured him to sell Caravan or
      how, but he compares his predicament to a scene out of the Mafia
      film "The Godfather."

      "I understood that if very serious people make a very serious offer,
      you have to say yes," he said.

      By the time Giller left Kazakhstan, in March 1998, he had bought the
      entire American stake in Franklin except for a single share, as part
      of the U.S. program to put assets in the hands of locals. But there
      was still a large loan outstanding. The president of the American
      enterprise fund, John Owens, said in an interview that the identity
      of the new owners was of "scant interest" to the fund as long as the
      loan was repaid on schedule. It was, in May 2000.

      Under the new owners, Caravan became a mouthpiece for Nazarbayev. The
      Franklin press, meanwhile, refused to publish anything at odds with
      the government line. While the ownership structure of Caravan and
      Franklin remains obscure, Western diplomats in Almaty say that
      control over the publishing house now rests with a company run by the
      president's daughter, Dariga, which already has large media holdings
      in Kazakhstan.

      "It is very frustrating," said Solarz, a former nine-term U.S.
      congressman still on the board of the enterprise fund, which was
      established under the 1992 Freedom Support Act. "We had no way of
      knowing that [Giller] would sell his shares to relatives of the
      president. Had we known that, we would never have made the

      Millions for U.S. Firms

      At the same time as millions of dollars of American aid money were
      spent to preach democracy in Kazakhstan, Nazarbayev and his principal
      political opponent, former prime minister Kazhegeldin, spent millions
      in the United States trying to influence American public opinion and

      The money went for high-priced Washington lawyers, public relations
      firms and lobbyists; some of it was channeled through Liechtenstein-
      based foundations and offshore companies in the Caribbean, U.S.
      federal records show.

      The spending peaked in 1999 during the run-up to presidential and
      parliamentary elections in Kazakhstan. Prominent recipients of Kazakh
      government largess during this period included the law firm of Akin,
      Gump, Strauss, Hauer & Feld ($1 million), the Carmen Group public
      relations company ($700,000), and Mark A. Siegel & Associates, a
      Washington-based political consulting firm, ($470,000), according to
      records filed with the Justice Department under the Foreign Agents
      Registration Act.

      As the election campaign heated up, American consultants and public
      relations experts flooded the country. Some were on the USAID payroll
      with the goal of teaching democracy in a nonpartisan way; others
      received generous retainers from the Nazarbayev government. Kazakhs
      had difficulty distinguishing the democracy promoters from the for-
      profit consultants.

      At the same time the National Democratic Institute was working with
      grass-roots activists, attempting to challenge the authoritarian
      power structure, one of its board members, Mark Siegel, was working
      for Nazarbayev as a paid political consultant.

      Justice department records show that Siegel, a former Democratic
      National Committee executive director, was paid $3,000 a day for
      public relations activities on behalf of the Kazakh government and
      for providing advice on "democratization." As an NDI director, Siegel
      is responsible for overseeing its operations in Asia.

      While most Western monitors criticized the election process as
      seriously flawed, Siegel argued that the elections had been largely
      free and fair, according to Western diplomats and aid officials who
      heard his briefings. He also helped organize trips to the United
      States by Nazarbayev and other Kazakh officials.

      In an interview, Siegel said there was no conflict of interest
      between his role as an NDI board member and his activities on behalf
      of the Kazakh government, as he never claimed to represent NDI while
      in Kazakhstan. "If anything came up at an NDI board meeting on
      Kazakhstan, I would recuse myself," he said, adding that he no longer
      receives a retainer from the Kazakh government.

      Siegel scored a public relations coup for Nazarbayev in December 1999
      when he arranged for the president to receive a plaque from the
      Washington-based International Foundation for Election Systems for
      his "outstanding contribution" to civic education and democratic
      development in Kazakhstan. The event was filmed by Kazakh television,
      and used back home to suggest a Western seal of approval for the
      election process.

      Foundation officials now say that their praise of Nazarbayev was
      limited to his backing the use of a certain civics textbook in Kazakh
      secondary schools. "We did not mean to endorse him; we just wanted to
      be nice," said Juliana Pilon, the foundation's vice president for

      Siegel is scarcely the only American political activist or public
      figure to have gotten close to the Nazarbayev government. In the
      middle of the 1999 election campaign, Roger Clinton, brother of the
      U.S. president, made two trips to Kazakhstan to give concerts hosted
      by the ruling party and had a cordial meeting with Nazarbayev. The
      Kazakh official media hailed the younger Clinton as a "goodwill
      ambassador" from the United States.

      Carmen Group's filings to the Justice Department show that the firm
      paid for an October 1999 trip to Kazakhstan by U.S. Rep. Jack Metcalf
      (R-Wash.). The filings say that Metcalf, now retired, subsequently
      delivered on the House floor an assessment of the state of Kazakh
      democracy based on talking points provided by the PR firm. A few
      months later, Metcalf's top aide, Christopher Strow, who had
      accompanied him to Kazakhstan, got a job with the Carmen Group.

      A May 4, 1999, letter from the Carmen Group to the Kazakh foreign
      minister, obtained by The Washington Post, promised to generate
      favorable press coverage for Kazakhstan in the U.S. media by
      organizing all-expenses-paid "orientation tours" for Western
      journalists. According to Justice Department filings, journalists who
      accepted such invitations included syndicated columnist Georgie Anne
      Geyer and the editor-in-chief of the conservative American Spectator,
      R. Emmett Tyrrell Jr.

      U.S. officials concede there have been mixed results in the democracy-
      building efforts: University students, for instance, are standing up
      for their rights. But in free elections, Kazakhstan may be less
      democratic than it was 10 years ago.

      Ivan Sigal, who heads the Almaty office of Internews, a media
      watchdog organization funded by USAID, says that in the past decade
      the ruling elite has continued to consolidate power. "Our assumption
      has been that the harder we press, the more the Kazakhs will move.
      But it is now clear that this is a region in transition -- not to
      democracy, but to autocracy."

      According to Thomas Carothers, a Brookings Institution scholar and
      author of "Aiding Democracy Abroad," democracy assistance is most
      effective "when a country is clearly moving forward to democracy," or
      at a moment of great political ferment, such as in Yugoslavia last
      year. There the United States had a very clear idea of what it wanted
      to achieve, the removal of President Slobodan Milosevic.

      It is much less effective in regions such as Central Asia, where
      democratic reform is not a high priority, either for the local
      leadership or the U.S. government.

      Natalia Chumakova, who heads an independent Kazakh human rights group
      called the Center for the Support of Democracy, said she feels that
      groups like hers might not have survived without assistance from
      abroad. In the end, however, "it is not for USAID to create democracy
      here," she said. "Democracy must grow in our hearts. As long as it is
      not there, no amount of outside help will create it."

      © 2001 The Washington Post Company