My most Republican college classmate – he signed up for ROTC when the rest of us were protesting the Vietnam War – recently told a reunion audience what he believes businessmen in Europe and the Middle East now think of doing business with the United States. He should know. He has made a career in Washington, D.C. as a lawyer for companies in international business transactions. His name is Mark Mazo.
What he had to say is troubling. Speaking for himself and not his law firm or any of his clients, he described a transition from respect to bewilderment:
“When I first began working as a lawyer on cross-border transactions 50 years ago, I was impressed to see that America was respected as the honest leader of the “Free World.” While Europeans felt we made mistakes and were too self-righteous, they believed American foreign policy was guided by foundational principles of freedom, liberty and rule of law applied fairly. Buttressing this respect for America was the view that our foreign policy and our governing administrations generally attracted the best and brightest people, recruited for skill and integrity.
“Today Europeans are dismayed to see a very different America. Overwhelmingly they believe America is led by a mentally unstable (or senile), lying, would-be autocrat who runs a brazenly corrupt (on a scale never before seen in Western society), malicious and vindictive government. They see embarrassingly incompetent, second-rate people placed in positions of power solely because they are first-rate sycophants without integrity (and in the case of women, because they are attractive). Most disturbing for Europeans, they see America conducting a reckless and incompetent foreign policy without principle or direction, and that uses tariffs, military force and obscene bluster to achieve the primary goal of inflating the ego of the would-be autocratic leader and making himself feel like a “Big Man in Charge.””
Mazo conceded that companies have ways of doing business with countries that are corrupt dictatorships but said that is particularly difficult for Europeans who have their own anti-bribery laws that are being enforced vigorously against U.K. and European countries. They are not able to engage in the corrupt practices that other nations’ laws may permit.
On the tariff question, he says European companies can get around tariffs by moving manufacturing to the United States, but even that strategy presents difficulties. If they want to import component parts, the tariffs increase that cost. And if they want to bring foreign workers in to help in the manufacturing, they face a dramatic risk of punitive immigration enforcement, as happened to Hyundai in Georgia a few months ago. Even the ability to invest is laced with uncertainty about getting normal U.S. government approvals on foreign investment controls.
He says these uncertainties have delayed deals and made deals less valuable. On Wall Street these days there is a new interpretation of the acronym EBITA, which has long meant earnings before interest, taxes, depreciation, and amortization. Now, he says, people are saying it means “Earnings Before Iran, Tariffs, and Donald Announcements.”
Mazo did not offer details, but it is easy to see from the daily cascade of headlines why Europeans would have the opinions Mazo describes. Countries not burdened by anti-corruption laws seem to be doing a booming business with the Trump presidency. The Saudi government has invested $2 billion in an investment fund run by the president’s son-in-law. The Qatari government has donated a $400 million airplane, ostensibly for his presidential library. A member of the United Arab Emirates royal family has invested $500 million in the Trump cryptocurrency company.
And our own Justice Department seems indifferent to these transactions. In fact it has abolished its group that enforced the Foreign Corrupt Practices Act, a law that makes it illegal for United States companies to bribe foreign officials. Nor does the Justice Department seem concerned about what appears to be domestic corruption, including the approval of a corporate merger for the CBS parent company. That is the same company that paid a mysterious $36 million to settle a meritless Trump lawsuit. Then the purchaser cracked down on Stephen Colbert and 60 Minutes programming to bring it more in line with the Trump agenda.
Given this competition, it may be very difficult if not impossible for the Europeans to keep up without violating European anti-corruption laws.
Interestingly, another speaker at the college reunion pointed out that even when the money that President Trump collects appears to be purely a gift to the government, such as contributions to fund his White House ballroom, there is a constitutional objection. It has long been assumed that an act of Congress is necessary to accept a gift because the constitution gives Congress, not the President, control over expenditures. Columbia law professor Phillip Bobbitt argued that allowing gifts not approved by Congress not only risks corruption, but it evades Congressional control. There is, he said, “no free lunch.”
It can only be hoped that in the future those who wish to make honest investments in the United States will not be singing the song made popular by the Georgia rock-and-roll group The Tams in the 1960s: “What kind of fool do you think I am?”
Luther Munford is a Northsider.
