HRC: State Secrets and the Rebirth of Hillary Clinton (18 page)

While everyone in the government would have preferred to strike the peace deal that Holbrooke sought in the region, few thought it was a practical possibility. The differences in the interests among the Pakistani government, the Karzai government, and the insurgents were too vast to close. With negotiation virtually removed from the table, the only space left to Hillary, and to Holbrooke, was to manage the civilian side of American efforts to help develop Afghanistan on the ground and negotiate with allies for more money, troops, and equipment. “The job of the State Department was not to negotiate peace,” said Vali Nasr, who worked for Holbrooke. “It was to facilitate the war.”

Holbrooke continued to bring up parallels between Afghanistan and Vietnam, and he wasn’t shy about talking to the press, which infuriated the White House. Obama thought Holbrooke had walked out of another era. He quickly became the central point of tension between the White House and State on the war, the most pressing foreign policy matter in the first two years of Obama’s presidency.

Obama’s National Security Staff spent months trying to get Holbrooke fired, in part because he was abrasive and in part because he was a rival power center. For his part, Holbrooke was loyal to the
presidency, but its new occupant flummoxed him. Privately, he complained bitterly to the people closest to him that Obama, lauded as a second coming of John F. Kennedy, didn’t socialize with his own modern-day version of Camelot. And Holbrooke was his own worst enemy, providing ammunition for White House aides to undercut him with the president.

“It wasn’t so much on the policy. So much of what Holbrooke did was about Holbrooke, and it did create a certain level of drama that the Obama team didn’t appreciate,” one source with a foot in each camp said. “It wasn’t as much what he was trying to do. It was the way he was going about it. I think it was more a style thing, and obviously Holbrooke engaged a lot with the press. You felt like there was this other center of push that wasn’t in sync with what the Obama team was trying to do.”

After a September 2009 George Packer profile in
The New Yorker
painted the veteran diplomat as the last best chance for America in Afghanistan, a furious
McDonough confronted Holbrooke in the West Wing. McDonough, too, was an avid player of the press game. The month before, when David Rothkopf wrote a piece in the
Washington Post
lauding Hillary’s development of a foreign policy agenda,
McDonough shot Rothkopf a terse e-mail. “Interesting choice for a profile,” he chided, making clear he thought it was Obama, not Hillary, who deserved credit.

In February 2010, Jim Jones, the president’s national security adviser,
wrote a letter to Ambassador Karl Eikenberry suggesting that Holbrooke would soon be relieved of his post. The letter was transmitted in a way that made it available to many State Department employees, and of course, the contents of the letter leaked, undermining Holbrooke with foreign leaders and in Washington.

Hillary kept a file on such efforts to marginalize Holbrooke and turned her notes on Jones over to Donilon at one point. Furious with the backbiting, she went to Obama to tell him that he could either fire Holbrooke over her objection or get his squad to back down. Holbrooke remained in place. Holbrooke’s aides lost count of the number of times his job was rumored to be on the line, and he was
acutely aware that Hillary was the only person standing between him and an ignominious dismissal. “When you meet with Hillary, can you put in a good word for me?” Holbrooke asked Pakistani foreign minister Mehmood Qureshi. “Say I’m doing a good job.”

Throughout, Holbrooke kept trying to work the Axelrod route. He even showed up at an event for Axelrod’s charity, CURE, at real estate mogul and socialite Connie Milstein’s house. And it wasn’t a one-way street. While Obama found Holbrooke grating, “David had some admiration for him,” the West Wing source said. “I don’t think he disliked him at all. It was always an issue of time. But he thought it was appropriate to talk to him because he was handling some big issues.”

Hillary’s ability to protect Holbrooke—even if she couldn’t get Obama and the National Security Council staff to respect him—spoke to her own standing. But no doubt it would have been greater had she not been forced to spend capital in his defense.

Over time, Steinberg, who had been close with Donilon for years, turned out to be another source of strain between the White House and Hillary’s State Department. Donilon and Steinberg had come up together in the State Department, and they were both also close to Assistant Secretary Kurt Campbell. But Steinberg’s relationship with both men frayed, according to senior Hillary aides. His tension with McDonough became so bad that when McDonough was promoted to deputy national security adviser in October 2010, Steinberg stopped going to the “deputies meetings” that McDonough ran, the aides said.

Hillary tapped Kris Balderston, the hit list author, to keep the Clinton political network humming at State. A longtime lieutenant to both Clintons, Balderston, who called everyone “buddy,” liked to talk in salesman’s terms about Hillary’s “power to convene” and her commitment to making sure her partners could “do well by doing good.” What he meant was that Hillary could use the Clinton Rolodex to focus private-sector money, government power, and the expertise at colleges and nonprofits to solve global problems. At best, they would do a public service and make a buck. At worst, they would make a powerful friend. Balderston became, for lack of a better term, Hillary’s special ops guy at State.

He wrote Hillary the first memo on his concept for an office that would mirror Bill’s Clinton Global Initiative on December 8, 2008, less than a week after she was named to her job and more than six weeks before she took office. Though she had to wait for some of her lieutenants to clear the Obama vetting process and a Senate confirmation vote, she had made it a priority to empower Balderston, the political fixer who could help her build unique networks connecting her State Department to other government agencies, the nonprofit sector, and the corporate world. While many Democrats believe that government is the answer to the world’s problems, and many Republicans believe the same of the private sector, Balderston’s office was the embodiment of Hillary’s core Clintonian belief
that government, business, and charitable organizations are all vital components of a thriving society.

“It’s more than raising money,” said one source familiar with the concept. “It’s networking other people’s intellectual property, networks, lists, that sort of thing. You need somebody who does more than just raise money.” Just like the Clinton Global Initiative.

But intellectual property and network expansion would have to wait—Hillary needed cash. Balderston was still setting up the office when Hillary approached him at the end of February 2009. “I have the first project for you,” she said. The job: raise more than $60 million from the private sector in nine months. In an era of billion-dollar presidential campaigns, that might not sound like much jack. But the government generally doesn’t raise money from the private sector, in large part because of the potential for corporate donors to give with the expectation that they will get specific government actions in return. Moreover, Congress and the Bush administration had shunned the very initiative Hillary wanted Balderston to execute.

Hillary had just returned from China, the anchor stop on her first trip overseas, where she had been surprised to find that the United States didn’t have a plan to build a pavilion at the world’s fair the following year, the Shanghai Expo. Chinese officials were incensed at the insensitivity to a major international showcase event in their country, and they gave Hillary an earful. They had been complaining to American businesses, too. From China’s perspective, America’s failure to build a pavilion would be a little less insulting than a boycott of the Olympics but not much. At the time, Hillary and Obama were touting an American “pivot” toward Asia, a shift of focus away from Europe and the Middle East and toward China, Japan, and their neighbors, as a central part of their foreign policy agenda. The elevation of State through the Strategic & Economic Dialogue was but one example of the new emphasis on building a more comprehensive relationship with China. After all, the world’s two most powerful nations had common interests in issues ranging
from the world economy to fighting terrorism. Certainly, snubbing China at the encore to the 2008 Beijing Olympics would complicate those efforts.

So the expo held outsize symbolic importance in the new partnership Obama wanted to build. “It became important to [Hillary] because it was made clear to her by the Chinese senior leadership that it was important to them,” said José Villarreal, a veteran Clinton fund-raiser with ties to China. “It was inconceivable to the Chinese that they could have a world expo and not have the United States there, especially not have the United States [be] virtually the only country that was not going to participate.”

While she was in China, Hillary confessed that she hadn’t been briefed on the fair—few politicians fail to blame their staff when necessary—and committed to looking into it when she got home. This impending diplomatic faux pas over the Shanghai Expo would be a serious affront to a country that the United States was in the process of courting. In addition to the downside risk, the expo offered Hillary two opportunities. First, she could draw a sharp contrast with the Bush administration, which had made clear that it wouldn’t use government resources to raise money for a pavilion. “The Department of State is not now authorized, and does not in the future intend to seek authorization from the U.S. Congress, to provide funding for any aspect of the U.S. exhibition at the World Expo,” the department wrote in a 2006 request-for-proposals for a private entity to try to build a pavilion on America’s behalf. That effort had been going nowhere when the Chinese approached Hillary.

The U.S. government had soured on the world’s fair idea after a scandal involving the American operation at the 1998 expo in Lisbon, and Congress had subsequently placed
a nearly comprehensive ban on the State Department directly funding pavilions at future world’s fairs. But lawmakers had left a loophole for staff to raise money from private donors, corporations, NGOs, and foreign governments. That loophole was just the right size for Balderston and his new shop to fit through. Under federal law and ethics regulations,
Hillary could even express her support to potential donors without making a direct appeal for money—a wrinkle in the law that would create great controversy when the secretary of health and human services, Kathleen Sebelius, helped raise private funds to promote Obamacare in 2013.

As a second bonus, setting up a fund-raising operation for the fair gave Hillary an invaluable early opportunity to strengthen and expand her network among top American business executives, a potential source of campaign contributions if she decided to run in 2016.

Balderston was a political operative but not a fund-raiser per se, and Hillary turned to two longtime Clinton money bundlers, Elizabeth Bagley and Villarreal, to jump-start the capital campaign. Bagley, a former ambassador to Portugal and a million-dollar donor to the Clinton Foundation, was named as Hillary’s special representative for global partnerships, a role that Balderston would later take over.
A former adviser to both Clintons and the treasurer of Al Gore’s 2000 campaign, Villareal had been a “Hillraiser,” one of her big-time campaign cash bundlers. He was also a former member of the board of directors of Walmart Stores.

Villarreal had heard about the Shanghai Expo issue on a trip to China to visit his daughter a few months earlier, when Chinese Walmart executives gave him the same grilling on America’s expected absence from the fair that Hillary would get from government officials. When he heard Hillary had been in China, he told Cheryl Mills he would be happy to help organize a U.S. pavilion—and Hillary tapped him to do just that as the U.S. commissioner for the expo.

In addition to the sheer magnitude of the fund-raising challenge, Villarreal, Bagley, and Balderston faced a set of rules that complicated their effort. They had to raise all the money from private donors, and Hillary couldn’t solicit corporate contributions directly. To make matters worse, several of America’s biggest players in China, including Coca-Cola and GM, were already building their own pavilions to safeguard their own relationships with the
Chinese. As a result, they were not likely to contribute money to the official U.S. pavilion.

Hillary had a lot riding on her ability to turn an international slip into a diplomatic coup that saved face for both the United States and China. The talk about her clout as an international celebrity was nice, but could she deliver? Her fund-raising commandos didn’t have the luxury of time. They couldn’t wait for the charitable-giving arms of major corporations to process requests. Instead, they went straight to CEOs, and they made it crystal clear that the ask was from Hillary.

“We knew how to get to the leadership of companies, and of course, being able to suggest that this was a project that was very, very important to Secretary Clinton really, really helped in opening doors,” Villarreal recalled. Hillary even drafted a letter of support for potential donors, just in case they needed more proof than a name drop. Sources say she carefully walked on the legal side of the line, but there was no doubt that she was engaged. “She did a really good job of actually getting into the muck of raising that money,” said one source.

In the summer of 2009,
PepsiCo CEO Indra Nooyi, one of the world’s most powerful women, according to
Forbes
, committed $5 million, a contribution that helped get the ball rolling.
Chevron, General Electric, Honeywell, Microsoft, Intel, Yum!, the National Basketball Association, Pfizer, and nearly five dozen other corporations and foundations jumped on board. Just scratching the surface, the list included a who’s who of major donors to the Clinton Foundation. In addition to Microsoft, Yum!, and Pfizer, common contributors to the Clinton Foundation and the U.S. effort at the expo included Bloomberg LP, Citigroup and its foundation, Dow Chemical, Procter & Gamble, and Sidney Harman. (
Harman’s company gave to the Shanghai Expo while his family foundation gave to the Clinton Foundation.)