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The Crown family: investing in weapons, war ...and Obama


By NicolasDavies - Posted on 01 May 2012

 http://www.zcommunications.org/investing-in-weapons-war-and-obama-by-nicolas-j-s-davies   


Americans who went to the polls in 2008 believing that a vote for Barack Obama was a vote for peace, now face the prospect of a presidential election in which both major party candidates will be openly wedded to endless war, cold-blooded “targeted killings,” record military budgets, and the systematic violation of U.S. and international law.

The only gains people of conscience can make in national elections this year will be to elect more real progressives to Congress, people like veteran journalist and activist Norman Solomon in California and Wenona Baldenegro in Arizona, a Navajo who would be the first Native American woman in Congress. The corporate media have made sure that the Congressional Progressive Caucus (CPC) remains the best kept secret in American politics as it has quietly grown from 6 members in 1991 to 76 members today. CPC co-chair Raul Grijalva was even named the “most valuable representative” in Congress in 2011 by the Nation magazine.

But no grass-roots movement can challenge the auction of the highest public office in the land in 2012. Since Lewis Powell wrote his infamous “Powell Memo” in 1971, big business has consolidated and expanded its control of American politics exactly as he urged it to do. American corporations divert small portions of their profits to public relations and advertising firms to apply the same techniques to politics that they use to sell the products of their commercial monopolies to the public, while Democratic and Republican Party leaders enthusiastically embrace their privileged role in a system that former President Carter has described as “legalized bribery.”

The Republican primaries have shed light on Mitt Romney’s vulture fund background and Sheldon Adelson’s legalized bribery of Newt Gingrich. On the other hand, there has been little scrutiny of the interests behind the person who is already governing the United States.

In 2008, Senator Obama out-solicited Senator McCain by more than two to one: $748 million to $354 million. Less than 10 percent of Obama’s funds were raised by trade unions and only 24 percent came from donors who gave $200 or less, compared with Ron Paul’s 39 percent and Dennis Kucinich’s 56 percent. Even George Bush raised 26 percent of his funds from small donors in 2004, so Obama’s much-vaunted reliance on small donors was a deceptive PR stunt, not a new paradigm in grass-roots democracy.

A well-publicized study by the Campaign Finance Institute (CFI) kept the Obama small donor myth alive by treating people who donated to both his primary and general election campaigns as if they were two different people, magically transforming many donors who gave more than $200 into twice as many smaller donors and boosting his small donor percentage from 24 percent to 30-34 percent in the study.

Obama raised $134 million from corporations compared to McCain’s $72 million. His advantage in bribes from particular industries was even more striking: $25 million to McCain’s $5 million from media and communications companies—as the advertising and propaganda industry eagerly embraced its new star—and $20 million to $7 million from “healthcare” companies, as insurance executives like Liz Fowler of Wellpoint moved into new offices at the capitol to revamp their failing business model. Financial firms gave the largest bribes to both candidates—$40 million to Obama and $29 million to McCain—securing government backing for the biggest real estate swindle in history and condemning millions of Americans to poverty and homelessness. For the first time since 1994, the weapons industry gave more of its $25.4 million to the Democrats than to the Republicans.

But private networks of wealthy Americans raise even more money for political campaigns than corporations do and often wield even greater influence over the officials they support. Corporations give bribes to secure policies that will boost their bottom lines, but the wealthy individuals who use their social connections to raise huge sums of money for a candidate want even more for their money. They seek the kind of personal relationship that can be the foundation of an entire political career for the candidate and the key to inordinate power and influence for their wealthy patrons.

General Dynamics, Henry and Lester Crown

One family stands out as playing exactly that role in the political career of Barack Obama: the Crown family of Chicago. The importance of this relationship in Obama’s career exposes some of the roots of his subservience to the government of Israel, his threats of aggression against Iran, his expansion of the JSOC/CIA targeted killing program, and his unswerving commitment to record military budgets in a time of economic and fiscal crisis.

The Crowns are the children and grandchildren of Henry Crown, who made a fortune in the building materials business, had reputed links to the Chicago Mafia, and discovered the armaments business as a military procurement officer during the Second World War. Henry Crown bought a controlling interest in General Dynamics in 1959 and developed it into the largest weapons maker in the world, building the Trident submarine, the Atlas rocket, the F-16 fighter, the Abrams tank and much of America’s Cold War arsenal. The General Dynamics board forced him out as CEO in 1966, but he bought back a 20 percent share in the company and regained effective control in 1970.

Henry’s son Lester succeeded him as chair of General Dynamics in 1986 and as president of Henry Crown & Co, the family’s private investment firm. Lester is 86 now, but still takes a keen interest in politics. He is chair of the Chicago Council on Global Affairs and founded the Crown Center for Middle East Studies at Brandeis University, which also received a $2.5 million grant directly from General Dynamics. He supports the arts in the U.S. and Israel—the Jewish Symphony Orchestra plays in Henry Crown Hall in Jerusalem. The Crown family is worth at least $4 billion, making it one of the richest families in America.

Under Lester Crown’s watchful eye, his children now handle most of the family’s business and political interests. His son James became President of Henry Crown & Co. in 2003 and sits on the board of General Dynamics. Altogether the Crown family gave at least $128,000 to Obama’s 2004 Senate campaign, in which Henry Crown & Co. was also Obama’s third largest institutional donor. In 2008, James Crown and his wife Paula were Obama’s fundraising chairs in Illinois and his fourth largest “bundlers” nationwide, raising millions of dollars for his presidential campaign.

Lester Crown first met Obama when he was a 27-year-old intern at the Sidley Austin law firm in Chicago in the summer of 1989. One of Obama’s law professors at Harvard, Martha Minow, had recommended Obama to her father, Newton Minow, who was a partner at the firm. Minow took Obama under his wing and introduced him to his friend Lester Crown. Crown recalls that Minow called him and “said we have in our office a young man who I think is really going places and I’d like you to meet him.” Crown says he has been a supporter ever since.

Israel, Palestine, and Iran

Lester Crown was speaking to the Chicago Jewish News in 2008 to allay fears among American Zionists regarding Obama’s views on Israel and Palestine. He stressed that, “knowing him long before he got into politics, I know he is completely supportive, without any question or equivocation, of Israel’s security. He is only interested (in a two-state solution) if Israel’s security is absolutely assured, and that was his position long before he ever went into politics.

His speeches to AIPAC are not new positions, merely the vocalization of what he has always believed.... From the time I met him, the times we talked about Israel, and we talked about it several times, he has been an ardent backer of Israel’s defense position, Israel’s security position. He has been a proponent of the two-state solution, but only on the hopes that you will have a demilitarized peaceful Palestinian entity, which you do not have now.”

If Crown is correct, President Obama only supports a Palestinian state as a “demilitarized...entity,” even as he pours U.S. military aid into Israel. In a world where every other state has a recognized right to arm and defend itself, a “demilitarized entity” would only be a sort of semi-state. In effect, what Crown and Obama favor is a “one-and-half-state solution,” precluding the genuine sovereignty for Palestine that the U.S. government officially supports and that Palestinians are struggling for. If Obama’s views are as close to Lester Crown’s as Crown thinks they are, it is little wonder that he has made no progress toward resolving the conflict.

As chair of the Chicago Council on Global Affairs (CCGA), Lester Crown knows very well that CCGA’s biennial Globalviews surveys have documented for decades that most Americans want their government to “not take either side” in the Middle East conflict. In the 2010 survey, this view was held by 66 percent of Americans surveyed, while only 28 percent want the U.S. to “take Israel’s side,” as Crown and Obama do. In the 2004 survey, when the consequences of U.S. involvement in war in the Middle East were more obvious, the imbalance was 74 percent to 17 percent.

Lester Crown takes an even more extreme view of U.S. relations with Iran. In fact, when he and his wife, Renee, hosted a fundraiser for Obama at their home in 2007, the invitations made it clear that their support was based not just on Obama’s unconditional support for Israel, but also on his willingness to start a war with Iran.

If Israel starts a war with Iran, the Globalviews survey found that only 38 percent of Americans are ready to take Israel’s side. And yet, following Obama’s meeting with Prime Minister Netanyahu in March, it was revealed that Israel had requested the sale of in-flight refueling aircraft and GBU-28 5,000 pound bunker-busting bombs and that “the U.S. administration was inclined to look favorably on the request as soon as possible.” Diplomatic and intelligence sources told Ma’ariv that this was a quid-pro-quo for an Israeli agreement to postpone starting a war with Iran until after the U.S. election in November.

Unlike Obama, President Bush refused to sell refueling planes or GBU-28 bombs to Israel based on intelligence estimates that Israel would, in fact, use them to attack Iran. But the Crown family did not make their billions by championing sectarian causes and foreign governments. They became billionaires by selling weapons and making shrewd investments. However much Obama and theCrowns see eye to eye on Israel and Iran, the bottom line in their backing for Obama is the bottom line at General Dynamics. If there had been any chance that Obama was really the peace candidate that many believed, including the Nobel Committee, the Crown family would never have invested their money and worked their connections as they did to launch him on the road to power.

Their investment in Obama has paid off handsomely. Obama has maintained the largest U.S. military budget since World War II, outstripping both the Vietnam War budget and Reagan’s massive arms build-up by more than 25 percent in real terms. Despite severe fiscal and economic pressures, the withdrawal of occupation forces from Iraq and the lack of a real threat to the U.S. from any other country, President Obama’s military budget roughly equals the military spending of the rest of the world put together.

General Dynamics Business Model Changes

To grasp how Obama’s policies benefit General Dynamics (GD) in particular, we need to understand how GD’s business model has changed as the U.S. military and intelligence budgets have doubled in the past decade. Pentagon contractors like General Dynamics have evolved from simply manufacturing weapons to playing an integrated role in military operations, targeted killings and the new surveillance state. As Dana Priest and William Arkin write in their new book, Top Secret America: The Rise of the New American Security State: “Of the 1,900 or so companies working on top secret contracts in mid-2010, roughly 90 percent of the work was done by 6 percent (110) of them. To understand how these firms have come to dominate the post-9/11 era, there’s no place better to look than the Herndon (Virginia) office of General Dynamics.”

Inside General Dynamics’ offices, a software trainer showed off one of its new products. They watched a picture of a white truck on a TV monitor as a U.S. surveillance plane followed it along a road in Afghanistan. With the click of a mouse, the technician could get: 

  • a link to a photo of the truck driver’s home and a list of recent visitors
  • an infrared view of the truck to see what might be inside it
  • a close-up and analysis of something that the driver threw out of the window
  • a higher resolution image of the truck from a U-2 spy plane 70,000 feet above it
  • a log of the truck’s previous journeys
  • a real-time map of U.S. forces in the area
  • a chat window with comments from other Americans watching the same video

 

The technician explained that all this material would be stored and searchable if other Americans became interested in the same truck again later.

Since 2001, General Dynamics has bought out 11 smaller firms specializing in satellites, signals, geospatial intelligence, surveillance, reconnaissance, imagery, and technology integration. The white truck video was one of the results. Another result is that GD now has contracts with every single one of the U.S.’s 16 major intelligence agencies—from the CIA to the NRO to the GEOINT—and an exclusive contract to provide equipment, management and staff for the Department of Homeland Security’s new headquarters in Washington.

The bottom line for major shareholders like the Crown family is that General Dynamics’ revenue has tripled from $10.4 billion in 2000 to $32.5 billion in 2010 and the value of their stock has quadrupled. GD’s Information Systems and Technology Division (IS&T) now provides 34 percent of its revenue. As the 2010 annual report explained, “(IS&T) remains the company’s revenue leader and was the fastest growing segment in 2010.... Volume was particularly strong in IS&T’s battlefield communications and information technology modernization programs.”

As I explained in “America’s Death Squads” (March, Z Magazine), this is exactly the kind of “warfare” that the Obama administration has embraced and expanded, to the obvious benefit of General Dynamics. I put “warfare” in quotes, because existing laws make clear distinctions between actual warfare, in which armed forces fight each other, and war crimes, in which armed forces target and kill civilians. Most of the thousands of victims of U.S. “targeted killings” are civilians killed in cold blood, with no opportunity to cooperate or surrender. Even President Bush’s State Department Legal Adviser, John Bellinger, warned that there is no legal basis for most of these operations. They are extra-judicial executions, not legitimate acts of war or self-defense, and have been condemned as such by the UN’s Special Rapporteurs for Extra-judicial Executions, Philip Alston and Christof Heyns.

Other divisions of General Dynamics are also riding the Pentagon’s post-2001 gravy train. Since the small post-Cold War “peace dividend” peaked in 1998, the U.S. has spent $1.3 trillion on its wars in Afghanistan and Iraq, but even more—$1.8 trillion—on procurement of new warplanes, warships, weapons and military equipment, of which only a small portion is related to its current wars. Since 2007, the U.S. Navy has received the lion’s share of new procurement spending, as the U.S. tries to shift its military focus from the Middle East to China.

As the economic balance of power tips inexorably in China’s favor, the U.S. is trying to compensate for its declining economic and diplomatic influence with an implicit but unmistakable threat to China’s vital ocean trade routes. General Dynamics’ Marine Division has grown steadily because of this over the past decade as a joint contractor for Virginia class submarines and Arleigh Burke destroyers, and as the sole contractor for Zumwalt destroyers and T-AKE navy supply ships. The Virginia class nuclear-powered attack submarine replaced the Sea Wolf class, which cost $2.8 billion a piece and was discontinued after only three were built. The Virginia class subs were supposed to save a billion dollars each at $1.8 billion. General Dynamics and Northrop Grumman now sell them to the taxpayers for $2.5 billion each, and production is ramping up to 2 ships per year starting in 2012.

General Dynamics has built 34 of the 62 Arleigh Burke class destroyers launched since 1989. Construction was due to be suspended, but the Obama administration has given the program a new lease on life as part of its Aegis Anti-Ballistic Missile (ABM) system. The destroyers are encircling Russia, China, Iran and other potential enemies in an effort to neutralize their ballistic missile deterrents. The U.S. Navy has 39 more Arleigh Burke destroyers on order, to be delivered over the next 20 years. General Dynamics’ current price is $1.8 billion per ship.

General Dynamics is also building three larger Zumwalt class “land attack” destroyers for $9.8 billion. That doesn’t count the $10 billion already spent on development costs since 1994, when the “Destroyer for the 21st Century” was first conceived as a replacement for outdated U.S. battleships. Thirty-two Zumwalt class destroyers were planned, but the development of effective anti-ship missiles by other countries rendered them vulnerable and obsolete before the first one was built. In March 2009, a U.S. Navy spokesperson called the Zumwalt destroyer “a ship you don’t need,” but General Dynamics was given a contract to build 3 ships over the Navy’s objections.

GD’s Marine Division is also developing a new generation of nuclear missile submarines and a Mobile Landing Platform to land troops and supplies on foreign shores. It also owns the only naval dockyard on the west coast, as the U.S. Navy expands its operations in the Pacific.

General Dynamics’ Combat Systems Division—which makes Abrams tanks, Stryker armored vehicles and MRAP (Mine Resistant Ambush Protected) vehicles—is the only division with slightly declining revenues, as U.S. strategy shifts from hostile military occupations to targeted killings, occupying the oceans and proxy wars led by U.S. and NATO special forces. But Obama’s strengthened military alliances with conservative European governments and Arab monarchies have boosted the division’s foreign sales, which now account for 40 percent of its revenue.

As General Dynamics’ annual report acknowledges, “We are operating in an increasingly dynamic and uncertain threat environment, complicated by daunting U.S. and global economic and budgetary challenges.”

But never fear, dear shareholders, “While the level of U.S. defense spending will be impacted by...fiscal realities, there is not a foreseeable peace dividend.... For fiscal year 2012, the President has requested Defense Department base-budget funding of $553 billion, including $188 billion for investment accounts. Through 2015, the base defense budget is expected to remain essentially flat in real terms. Pentagon efficiency initiatives have sought to enable modest investment account growth within that flat top line.”

Establishing Credentials

The U.S. system of legalized bribery ensures that candidates pass a rigorous program of ideological tests before they get anywhere near a seat in the U.S. Senate, let alone the White House. These tests take place in conversations over many years, as Lester Crown described to the Chicago Jewish News, and in endless hours of grueling calls and meetings to solicit bribes from wealthy Americans. The thoroughness and the personal nature of this process stands in stark contrast to the slick public relations campaign by which a candidate like Obama is eventually introduced to the American public.

From his first interview with Lester Crown in Newton Minow’s office in 1989 and throughout their 20-year relationship, Obama had to establish his credentials as a true believer in the ideology of American economic and military power. The backing of the Crown family then became an important and recognized signal to other military-industrial power brokers that Obama had passed scrutiny and could be relied on to serve their interests as president.

Benjamin Ferencz, who wrote the preface to my book on the U.S. war against Iraq, is the last surviving prosecutor from the Nuremberg war crimes trials. He has described how the lead defendant at the Einsatzgruppen trial, SS-Gruppenfurher Otto Ohlendorf, Ph.D., defended the massacres of tens of thousands of civilians with an argument that is all too familiar today: preemptive self-defense. Ohlendorf told the court that Germany invaded other countries to prevent them from attacking it; that Jews had to be killed because “everyone knew” they supported the Bolsheviks; and that Jewish children had to be killed because, if they grew up and found out what the Germans had done to their parents, they too would become enemies of Germany.

As Ferencz explains, this illegitimate principle of preemptive self-defense is the same one by which Presidents Bush and Obama justify their war crimes today: our fear entitles us to attack countries and kill people to prevent them doing the same to us or our allies at some point in the future. Ohlendorf never showed any remorse for his crimes, even as he went to the gallows at Landsberg Prison in 1951. He was the highly educated product of a political system dominated by military-industrial interests and extreme nationalism that made war crimes seem justifiable, rational or even necessary. By selecting its senior officials through “legalized bribery” within a superficially democratic system, the United States has developed a more sophisticated way to institutionalize and justify ever-expanding plutocracy, militarism and war crimes. This may be more sustainable and palatable—but that does not necessarily make it less dangerous.

Z


Nicolas J.S. Davies is the author of Blood On Our Hands: the American Invasion and Destruction of Iraq. He is also a local chapter leader for Progressive Democrats of America (PDA) in Miami.

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