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In the days before our current North Korea crisis....

Bush's North Korean Flip-Flop

In March, 2001, Bush surprised the world by announcing, during a visit by South Korean president Kim Dae-jung,  that the United States would not resume Clinton-era talks with North Korea.  Kim was visiting the US to seek Bush's support for the so-called "Sunshine Policy" of peace and reconciliation with North Korea, a work which won Kim the Nobel Peace Prize. [1]  The South Korean president favored resuming talks from the Clinton days, considered successful for achieving a moratorium on North Korea's missile testing in 1999.  Bush refused, citing skepticism about the trustworthiness of North Korean leader Kim Jong Il. [2]

Three months later in June, 2001,  Bush surprised the world again by having a sudden change of heart.  He decided to resume the talks after what the State Department said was "an intense review by Washington on its policies towards North Korea." [3]  
The New York Times, however, paints a different picture of why the president changed his mind after all the tough-talking he did back in March.

The Sunday, June 10, 2001 New York Times revealed that GW had gotten some fatherly advice on the matter.  The Times reports that George Bush, Sr. sent his boy a memo, arguing need to reopen talks with North Korea.  He wanted GW to adopt more moderate stand than the one backed by Pentagon. [4]

Was this the advice of an experienced ex-president, seeing an error in his son's handling of foreign policy matters?  

Actually, it was more likely the advice of a private investment banker with extensive business holdings in South Korea, a banker who has a good deal of fatherly influence.  Meet the Carlyle Group, a $13 billion dollar private investment and buy-out firm (private, which means their business dealings are not subject to public scrutiny).   Investing heavily in defense companies, they are the government's 10th largest defense contractor [5], and they stand to make billions from the War on Terror.  

George Herbert Walker Bush carries the title of Senior Advisor to Carlyle's Asia fund, and it was Bush Senior who is credited with spearheading Carlyle's entrance into the South Korean market.  Carlyle quickly bought out Korea's KorAm Bank and Mercury, a telecommunications company. [6]
Stability between North and South Korea is critical in order to ensure Carlyle's success there.  Instability in the region means instability in the region's economy.

This whole episode, though, touches on a bigger matter:  How much influence does Bush Sr. have over the younger George Bush?  The Carlyle Group money is spread worldwide, with extensive holdings in the Middle East.  In 2000, Bush Sr. traveled with former British Prime Minister John Major (now chairman of Carlyle's European fund) to Saudi Arabia to meet with King Fahd bin Abdul Aziz Al-Saud  and leading Saudi businessmen. [6.5]  Bush Sr. has met twice in Saudi Arabia with members of the Bin Laden family who were, until late October, investors in the Carlyle Group. [7]  In fact, at the very moments when hijacked airliners were destroying the World Trade Center and thousands of innocent lives,  The Carlyle Group was having a conference of sorts with the Bin Laden family at the Ritz Carlton in Washington, DC. [8]

Will President Bush's renewed tough stance on North Korea hurt The Carlyle Group?  They don't seem to be worried.  They announced January 17th that they will be investing $80 million dollars in Korean tech firms. [9] Maybe they know something we don't.  Let's hope they know what they're doing. Even though they are a private investment firm, it's not really their own money they are investing as much as it is the retirement funds of millions of civil servants.  CalPERS, the California state employees pension fund, is invested in The Carlyle Group to the tune of $425 million dollars.[10]  The Texas teachers' pension fund sunk another $100 million into Carlyle six months after GW became the governor of Texas. [11] Let's hope for the sake of these public servants and others that The Carlyle Group, a group with no oversight or public accountability, doesn't turn out to be another Enron.

Sources:

[1] The Nobel Foundation - The Nobel Peace Prize 2000

[2] CNN - New U.S. stance toward N. Korea raises concern

[3] CNN - Seoul hails U.S. decision on N Korea

[4] New York Times - Fatherly Advice To the President On North Korea

[5] Government Executive Magazine- Top 100 Defense Contractors

[6] Red Herring - Carlyle's Way 

[7] Judicial Watch - Bush Sr. in Business with Bin Laden Family Conglomerate through The Carlyle Group

[8] Red Herring - Carlyle's Way

[9] CNET Investor News - Carlyle says to invest $80 mln in Korea tech firms

[10] DC Internet.com News CalPERS Invests $425 Million in The Carlyle Group

[11] CorpWatch - Bush Advisers Cashed in on Saudi Gravy Train


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