Posts

19-7-18

Dear Partners in thought,

I wanted to depart temporarily from politics and geopolitics to address a topic that is more centred on my professional field with the unbelievable story of Theranos and its founder, Elizabeth Holmes. EH was the Steve Jobs-like black turtleneck- and slacks-clad blond girl-wonder, Stanford dropout, precocious entrepreneur extraordinaire, female role model who astounded the world of tech and finance with her Theranos start-up while in fact leading the biggest fraud in modern Silicon Valley history. She was a real poster “child” for entrepreneurial success, a genuine medical visionary, having gathered a senior team with years of tech experience and a board comprising leaders of our times. Bad Blood, written by John Carreyrou, a Wall Street Journal investigative reporter, twice Pulitzer Prize winner and the man who uncovered the EH fraud, is a very well crafted, highly enjoyable account of this unbelievable story, which saw him awarded several top prizes in journalism. Bad Blood is a story of the ambitious (and noble) ends justifying any means and a very personal obsession to succeed at all costs combined with a tyrannic and dishonest approach to management. As an aside, it would make a great movie or mini-series, which I am sure has not escaped Hollywood or Netflix.

When she grew up in DC in an upper middle class family, Elizabeth Holmes matter of factly told her family at age 9-10 that when she would grow up, she’d be a billionaire (and in fact not the President of the U.S., as the family wondered, as he would actually marry her as she would have one billion dollars). She grew up as an intensely competitive child, piling up the little Monopoly buildings on the way and making sure all of her competition was going bust (this early real estate background being puzzling…). As she became a sophomore in one of Houston’s finest high schools, she decided to focus exclusively on her studying, which ultimately led her to Stanford and starting a chemical engineering degree. When there she worked for the lab of famed Engineering Department head, Channing Robertson, assisting one of her first future Theranos employees, Shaunak Roy, who was concluding a PhD. When her father asked EH at Christmas dinner that year if she thought of pursuing a PhD programme, she responded: “No Dad, I am not interested in getting a PhD, I want to make money”. She dropped out of Stanford in 2003 at age 19, after one year, (breaking up with her freshman boyfriend, telling him she would have no time for him going forward) having decided to found Theranos and work on a revolutionary and patented while at Stanford blood-testing patch which could not only identify diseases but would cure them, something she wisely reduced to simple patch-less micro-fluidic testing so drug companies could in turn benefit from a more time- and cost-efficient means of developing their own products. Very few Silicon Valley actors and observers had run into such an ambitious individual before, indeed reminding them of the likes of Bill Gates and Steve Jobs.

EH, who possessed an incredible charisma and great, unblinking-eyed, convincing powers even at a very young age, raised initial capital (USD 6 m) from leading venture capital veterans whom she had been exposed to (like Tim Draper from famed Valley DFJ, Larry Elison from Oracle and his early 70s backer, financier Donald L. Lucas, who also became Chairman of the Board and others) and family, gathering around her a first class senior team with years of experience gained at IBM, Intel and Panasonic and having Channing Robertson on the Board. The first problem arose in 2006, three years on and at an impressive valuation of USD 165m post third round, when her CFO of eight months, who kind of worked on trust, started to query the validity of Theranos’s testing methods after a trip of EH and team to Novartis in Switzerland when the pharma company became very impressed with Theranos and its main product, wanting to secure a financial arrangement to develop a project together. As the CFO, who was responsible for upbeat sales forecasts based on product and client development, was becoming increasingly worried that investors might be misled through less than above-the-board testing demonstrations, he decided to confront EH at one of their regular meetings. EH told her CFO that there had been indeed a few hick ups with testing processes thus making the team have a ready made one just to use with investors and partners so they could avoid disappointing expectations. She also promptly added that he was not a team player and that he should leave right now – and not only the room (he would disappear, other staff speculating as to why, some embezzlement story floating around in his wake).

EH went on a campaign describing the future of preventive medicine in which drugs would be specifically tailored to individual needs thanks to Theranos’s blood- monitoring technology, stating that Theranos could eliminate 100,000 American deaths a year from adverse drug reactions. She started focusing on using as little blood as possible and avoiding needles in her experiments, partly as a long-lasting phobia and what would become a company trademark. As 2006 went on, she raised another USD 9m for a second round or so-called Series B and USD 32 m from a Series C round. While EH had received no medical or scientific training, she had developed a great vision and was able to sell it. In the summer of 2007, she took her admiration for Apple and Steve Jobs a step further, hiring several of Apple’s employees to work for Theranos, especially in the design area, including Ana Arriola who became its Chief Design Architect. Ana started also to change the look of EH and her wide gray pantsuits and Christmas sweaters to the black outfit that quickly became her trademark in Silicon Valley. Meanwhile the company kept moving forward, leaving East Palo Alto of ill repute to set up shop on the right side of the tracks.

Theranos was not just a tale of fraud. Its management culture was one of tyranny, fear and dishonesty prompted by the imperative need to keep dark secrets, with staff being fired through what could be seen as an ever revolving door policy enforced by EH (and later boyfriend and Executive Chairman, Ramesh Balwani, a.k.a. Sunny, a successful Bombay-born Valley entrepreneur, 20 year+ EH’s senior who acted after 2009 as the top enforcer at Theranos with a personal focus on staff timesheets and productivity). No senior staff could stay very long at Theranos, willingly or not, the former through crisis of conscience, the latter though periodic purges. Following the CFO, the heads of engineering, chemistry, marketing, sales, design, IT as well as the general counsel and many in their teams would be fired either as they were perceived as not loyal enough or actually because they asked too many questions about the validity of the testing processes at Theranos. EH demanded absolute loyalty from staff, this feature being an overriding quality. She would have files “built” on leaving employees, insist on the strictest belt-and-braces non-disclosure agreements and would ask her IT team to control all staff communication and ensure they knew what they were doing at all time, also making sure dinner was brought on-site so they would only leave by 10 pm every day and thus worked longer hours. Early board members like Avie Tevanian, one of Steve Jobs friends since NeXT decided to leave, having greatly supported the company, after legal threats from Theranos following his incessant questioning, including with true believer Chairman Lucas of how the company really operated. EH showed a renewed intensity in developing the business asking her engineering team to work 24-7 (which was turned down by her engineering head to his latter sorrow) and making teams compete against each other, without sharing information, so she could be the only one to have the full picture. Departments were not working together, operating in tight silos officially to enhance security, with the sales team never seeing any testing validation data before they would market the product. Paranoia was running high as EH and Sunny were strong believers in that Laboratories of America and Quest Diagnostic, the leading American lab rivals, would stop at nothing to undermine Theranos, while they barely noticed it at the time. So focused on speed to market she was, she even hired a competing engineering team to ensure that progress went faster, which it did, resulting in the head of her first team and his entire staff to be asked to leave. EH slept four hours a night, popping chocolate-coated coffee beans during the day. In August 2007, she went after former and current key employees who wanted to set up a company of their own (albeit for the veterinarian segment, judged easier) under license of the company technology, pursuing them in court and showing her extreme care for the company’ proprietary information or, as it turned out, to protect the secret of the viability of Theranos to develop a reliable testing process. Finally, while not disclosing her relationship with her number two, Sunny, she displayed tone-deaf nepotism by hiring her brother, Christian, as director of product management together with three of his Duke fraternity brothers (all aptly named “The Frat Pack”), the group benefiting from access to EH and Sunny well beyond their seniority, essentially based on the key feature of total loyalty. This approach was also combined with a pervasive lack of empathy as shown when a depressed (due to his qualms with the Theranos culture) and (as such) recently demoted head of chemistry committed suicide and EH’s first reaction was to have the in house counsel to ask his widow to send back his laptop and privileged information/or made sure she destroyed them (incidentally first concealing the death from most staff and then allowing the rumour that the employee had died from a cancer relapse).

While many discussions, leading to funding agreements with Big Pharma such as Astra Zeneca, Novartis, Pfizer or J&J entailed early testing and validation projects which in the end fizzled out by lack of concrete results, EH focused on the leaders of the grocery retail sector with Walgreens and Safeway, both old world companies that needed to reboot growth. While EH was able to enter into two potential exclusive agreements with both – Walgreens for supermarkets and Safeway for drugstores – she did not let them and their consultants (especially Walgreens’ Collaborative, a consulting firm whose task initially was to vet Theranos’ testing processes) to even have a look at their lab, which was not ready for inspection as not fully developed. Unbelievably the senior management of both Walgreens (led by Dr. J, a very colourful head of innovation and true believer in EH) and Safeway (with its CEO also swayed by EH) were too enthusiastic for a new future via healthcare to risk losing the Theranos opportunity by probing too closely testing processes at Theranos and alienating EH. Walgreens had a bad case of FoMO (Fear of Missing an Opportunity) fearing that CVS would then replace them while Safeway was pressured by stock market analysts to find a fast way to grow a stagnating business. In the end both companies came up short and in the case of Safeway with USD 250m in non-existant blood testing revenues as well as USD 100 m of store redesign costs when they set up state of the art, quasi-luxury in-house clinics throughout 2012. Theranos could not show their mini-labs or lab to any parent as all of their equipment was straight from Chicago’s Abbott Laboratories, Germany’s Siemens and Italy’s DiaSorin. Trying parallel expansion routes, EH also met four star General James Mattis in 2011, now Secretary of Defense, then the Head of U.S. Central Command to explore how Theranos could assist finger pricking blood testing to help diagnosing and helping wounded soldiers in the Afghan war theatre, a concept that was immediately strongly supported by Mattis. The discussions with the military bogged down on regulatory matters in spite of EH trying to sway the course of events her way against the views of the military medical leadership and going straight back to Mattis, the latter who retired shortly thereafter, making the project vanish without much internal support (incidentally this military link was often mentioned by EH to various parties, including her leading ad agency of past Apple glory, who had a contract of USD 6m a year, and whose team thought that this small start-up, an unusual client, was funded by the Pentagon and also understood why secrecy explained they could not have access to reports supporting its scientific claims).

On 7th September, 2013, the WSJ did a front page Weekend piece on EH and Theranos right at the time of the official commercial launch of Theranos (ten years after its set-up!) with the first wellness center cum blood testing facility installed in the Walgreens store in Palo Alto as a prelude to nationwide roll-up to be started in sunny Phoenix. Both events would be artfully used to validate the product as EH was deciding to go for another, this time very meaningful, fundraise that would value the privately-held company at USD 6 bn (with some investors then participating when they had turned down the opportunity at USD 40 m). We see two founding partners of a San Francisco hedge fund being wheeled in to a meeting with EH and Sunny, in the Theranos building, going through a security team supervised by Mattis’s connection, Jim Rivera, former head of security at the Pentagon, and being escorted everywhere including to the restroom, still with some off-limit areas like the lab facilities (for some good reasons that it is not yet functional). One of the key deciding factors for investors in addition to EH’s clear visionary leadership and top salesmanship, combined with Theranos’s supposed scientific accomplishments, is the unquestionable quality of its board of directors. In recent years, EH managed to reshuffle her board, inviting 92 year old George Schultz, former secretary of state to Ronald Reagan (who concluded the September 2013 WSJ article comparing EH to Bill Gates and Steve Jobs), James Mattis following his retirement from the Army earlier that year, Henry Kissinger, former secretary of defence William Perry, former senate armed services committee chairman Sam Nunn and former navy admiral Gary Roughead. It would be hard not to be impressed with such a display of former senior officials (all fellows at the Hoover Institution at Stanford) who clearly must have done their homework on Theranos before lending their name and time as Board members in exchange for grants of stock (incidentally further validating the links of Theranos with the defense establishment). Sadly target investors were shown financial projections that were five to twelvefold higher than internal projections, something that would never cross their minds with such a great overall story, amazing leadership, prestigious board and top legal advisers, including famed David Boies, keeping watch. In February 2014, the company was valued at USD 10 bn with EH owning slightly more than half of it.

The first serious potential blow to EH and the company came from an unexpected quarter – from a young Stanford graduate recently hired named Tyler whose grandfather was…George Shultz. Tyler had grown suspicious of the quality of the mini-lab and testing processes at Theranos, had met with EH who placated him far more she would have with another employee, sending him to recheck with more senior staff. When Tyler was still not convinced, having had exchanges with the New York Health Department to double check matters, he went to his grandfather who thought EH would explain everything, which in turn was left to Sunny in an unusually less blunt but still venomous way, asking for an apology from Tyler, who in turn decided to quit. Amazingly, EH contacted George Shultz asking for Tyler to stop his vendetta “or else”, a message that was conveyed to him as he was still in the company’s parking lot by his own mother, with George still “doting” on EH, thinking he was wrong on Theranos. Meanwhile the specialist printed media were sending EH to stardom with Fortune’s article entitled “This CEO is Out for Blood” in its 12th June 2014 issue, the new valuation of the company, the ascetic and reclusive profile, and the repeated comparisons of EH to Bill Gates and Steve Jobs. Forbes followed suit with an article entitled “Bloody Amazing” and pronouncing EH as the youngest woman to become a self-made billionaire, being pictured in Forbes 400, the issue showing the wealthiest Americans. Other articles on EH followed with USA Today, Inc., Fast Company and Glamour with NPR, Fox Business, CNBC, CNN and CBS News offering extended coverage of the new Valley girl wonder. EH was becoming truly unassailable. She was the recipient of the Horatio Alger Award with Time Magazine naming her one of the top 100 most influential people in the world. President Obama made her a U.S. Ambassador for Global Entrepreneurship and Harvard Medical School a fellow. She had the right profile that attracted all the attention of the time, something that she may not have looked for but she thoroughly enjoyed, judging from the frequency of her rock star interviews. What differentiated her from Marissa Meyer or Sheryl Sandberg was that EH had been a tech “founder” billionaire. From ascetic and reclusive, EH went quickly to the status of “ubiquitous celebrity”. She quickly changed her habits and image, hiring her top advertising agent to work as the company’s Chief Creative Officer on her new image and that of Theranos.

The demise of EH and Theranos was dated February 2015 when John Carreyrou, an investigative journalist at the WSJ, twice Pulitzer Prize winner and the subsequent author of our book, began to look into the whole story. The lack of peer reviewed data mentioned in more recent and inquisitive The New Yorker article seemed very suspect to him while the process as described by EH did not have the ring of a scientist or medical expert that she could not actually be and derided as “comically vague” by the magazine. He went back to the WSJ piece of seventeen months earlier, realising the impact it had had on EH’s image, company’s achievements and subsequent meteoric fundraising. He contacted various former company employees and individuals involved with Theranos, getting the impression that the technology just was not working as the world thought. Most former employees were obviously worried by their non-disclosure agreements and requested anonymity which was given. JC established very quickly through Alan Beam, the former head of the lab, all the testing process problems as if the flood of information had waited to erupt for too long even if the technical aspects required time to be digested. Management culture, style and the role of Ramesh “Sunny” Balwani were particularly addressed by JC’ interviewees, with some focus on the romantic relationship between the number one and number two at the company, all the while the New Yorker article had portrayed EH as a single whom the Kissingers had tried to fix up on dates, showing a lack of forthrightness with her board that might hide other key matters. Tyler Shultz was particularly eager to talk to JC, believing that in end his grandfather would do the right thing. So was Rochelle Gibbons, the widow of Ian Gibbons, the former head of chemistry who committed suicide. And increasingly, others. As it is like a detective story that is enjoyable to discover I will let you taste personally the ways JC uncovered the fraud and its many legal developments which ultimately led on 14th March 2018 to the SEC charging Theranos, EH and Sunny with “conducting an elaborate years-long fraud”. In order to resolve the agency’s civil charges, EH was forced to relinquish her voting control over Theranos, give back a substantial share of her stockholding and pay a USD 500,000 penalty, agreeing not to be a member of any public company for ten years. The SEC sued Sunny in California, having been unable to reach a settlement wth him. This set of civil remedies may seem little in relation to the magnitude of the fraud that was committed though, post-pool publication, EH and Sunny have been charged with Federal wire fraud (criminal charge) in relation to defrauding investors and the Federal Government by the U.S. Attorney for the Northern District of California on 16th June, 2018, paving the way to potential jail time that would potentially and ultimately match the immensity of the fraud.

The most remarkable feature in this story of fraud is that it was a fraud that was orchestrated and hidden for so long and that EH was able in the meantime to attract so many talents as staff and board members without any problem and in spite of a terrible work environment and management culture. One should also remember that, while devoid of any formal medical or scientific training, EH was indeed a talented individual having identified a segment where she wanted to do good and make money as an entrepreneur, something that should not be totally forgotten. When EH started Theranos , another young dropout from Harvard this time, was also making history: Mark Zuckerberg. He would change the world, as EH wanted, but would have to deal with hubris and serious issues, prompting some drastic personal and corporate adjustments, later. Theranos is also one of the most recent and biggest story of “vaporware” or “fake-it-until-you-make it” culture that is on and off prevalent in Silicon Valley. There will be may books and studies focused on EH to ascertain whether she was under the spell of Sunny or a real sociopath having created a corporate hell on earth, as it may be more likely, who took all the decisions as she did, controlling 97% of the voting rights of the company as of late 2013, rendering the board pointless in terms of decision-making if only as counterweight.

One of the main questions will remain why nothing could be done to stop that fraud earlier even if and when many tried to blow the whistle and more importantly how and why so many senior personalities enabled it by being true believers, especially among short-sighted potential partners who needed solution for their own futures and most certainly heavyweights at the board level. Finally the Theranos story is a story of Big Tech – with a health care focus that indeed lacked the adequate tech – (which the company could have been a leader of and was briefly to some extent) and its impact on our lives and society, changing it for the better and for the worse, depending where one looks. On this Big Tech evolution I recommend that you read regularly the great articles of Rana Foroohar from the FT, today one of the best journalists and writers dealing with the many implications of tech for us. Let’s remember that it is an investigative journalist who uncovered the Theranos fraud.

Incredible story of our times. Bad Blood is a book that should be read also as it is linked to “who we are” and why, even if we are, some of us, awed by tech wonders and their makers, we need to ensure that the creation of dreams and especially staggering wealth does not involve fraud and follows best practices and behaviour, lest we see other Theranos or Uber older formula arise…It is also a question of values and about what kind of society we wish to be and our children to grow and believe in.

I dedicate this book note to Kris, a brother and a great banker, who goes through tough times and I love. Life is short and what differentiates the greats is their care.

Now I have a question: Who’s going to play EH in the movie?

Warmest regards

Serge

Serge Desprat 19th July, 2018 (Martha’s Vineyard, MA)

11-7-18

Dear Partners in thought,

“A true American hero” is how John McCain is most described, increasingly so and this for many reasons. It may look excessive if not Hollywood-like, except that it’s not. America has always been a country of exception – indeed the indispensable country – often with individuals of exception at its helm, not all running it but always contributing to its destiny. John McCain is one of them and “The Restless Wave” his testimony, a book that stresses his longlasting drive I recommend reading for those who like great stories and believe in a world ran by our traditional Western liberal, not to say American, values. McCain is emblematic of a disappearing specie in our times which is that of the moderate Republican, a value- based internationalist, free trader, strong on defense and pro-capitalist individual (incidentally my political home, assuming I were to hold a U.S. passport).

The son and grandson of two Admirals (his grandfather was on the deck of the USS Missouri when Japan surrendered), McCain was nevertheless not predestined to greatness (in his very own words), having followed his recent forebears’s footsteps to Annapolis, where he graduated at the bottom of his class. We know that the Vietnam war and his extremely tough prisoner experience changed everything, later leading to a career in the U.S. Senate as first, junior, then senior, moderate, Republican Senator for the State of Arizona. This book, while reminiscing about the key aspects of his whole career and persona is really more focused on the period following his defeat against Barack Obama in the 2008 Presidential elections. McCain could have been President if not for the wind of history bringing in the first African American President and a dubious choice of running mate, which he still supports, though being aware of its weaknesses. The book is well structured and its chapters focus on key topics and people having marked America and McCain very directly over the last ten years, which I will cover broadly. After reading this book, if there was an adjective to describe McCain across the aisles, it would be “honorable” and that would be a major understatement.

In No Surrender and Country First, MacCain discusses the 2008 campaign and the men and women involved in it, among whom, also his brief primary rival, the lawyer- turned actor-turned U.S. Senator Fred Thompson (a tall, massive, easily recognisable Law & Order character, always projecting the requisite gravitas that would get him later to the U.S. Senate). While he campaigned for two years, McCain, while running, also fulfilled his duties as a U.S. Senator, his main focus at the time being supporting the Iraq surge which was unpopular and risking costing him dearly in the Republican primary where Mitt Romney, the ex-Bain Capital founder, former Governor of Massachusetts and future 2012 nominee, was his main rival then. We see him with his friend Senator Lindsay Graham of Florida (often a duo that would rise against DT’s policies years later) in Iraq. There is a notable ceremony of naturalisation of Hispanic immigrants, often illegal, who were fighting within the U.S. forces in Iraq. We see a couple of boots representing two dead soldiers that had made the ultimate sacrifice with General David Petraeus, the Roman legion strategist and fighter, first in class at West Point and the figurehead of the surge, saying: “They died serving a country that was not yet theirs”. McCain wishing “that every American who out of ignorance or worse curses immigrants as criminals or a drain on the country’s resources or on our “culture” could have been there”, wanting “them to know that immigrants many of them having entered the country illegally, are making sacrifices for Americans that many Americans would not make for them”. Going back to the race and the primary he finally secures, McCain goes into his strategy of running a McCain-Libermann ticket, with Joe Lieberman, an independent, formerly Democratic Senator, before going for Sarah Palin, whom he will select as running mate, going in great details to explain the rationale for it. McCain knows early on Obama’s strong competitive advantages based on his age, image of change at so many levels and comparative party positioning though he bets on his experience and foreign policy acumen. The polls are close but the Lehman Brothers collapse changes everything, putting Obama in the lead and making the McCain team not expecting miracles. In addition he has to fight some of his more extreme supporters’ racial slurs against Obama and defend responses that are not strong enough from him and his team, assuming they were obvious to start with. His team feels outspent, out-advertised and out-organised, expecting to lose which they do on election day. There is a feeling that, while he does not like to lose (who does?) he was stoically ready for it.

About Us is about the formal breach of American ideals in the fight against terrorism in the aftermath of 9-11. While having declared on 9-12 that “We are coming. God may have mercy on you, but we won’t”, McCain discusses the extreme measures taken since late 2001 to respond to the losses of 3,000 lives at The World Trade Center in NY, including the Enhanced Interrogation Techniques (EIT) or torture in an other name and the dilemma counter-terrorists and the military face in defending the U.S. from further attacks. McCain feels strongly it is wrong politically, intellectually and morally to torture terrorists and not applying the Geneva Convention to these enemy combatants, while branches of the U.S. government feel it can apply EIT to seized terrorists as they are not signatories to any convention. McCain believes that in doing so the application of EIT openly damages the interests, reputation and interests of the U.S. globally. We go through various cases of EIT application, including the famous one in relation to the Abu Ghraib Confinement Center. McCain calls on all Americans to live America’s ideals to remember that “we are always Americans, and different, stronger and better than those individual who wish to destroy us”. Once again, “the moral values and integrity of our nation, and the long, difficult, fraught history to uphold them at home and abroad, are the test of every American generation”. This chapter is the first of a few to focus on values, that define McCain. It is also a very hard issue to deal with, remembering 9-11 and its trauma (We all have very personal ways and memories to relate to 9-11 and the end of an era; I worked briefly on the 93rd floor of the South Tower in 1987). It is definitely a problem of conscience though I can also hear the voices in the trenches of the Len and women who protect us, doing what we don’t and don’t want to know, stressing that the end justifies the means and that in front of the most abject terror, war can only be total.

In the Company of Heroes deals with McCain’s natural, close, involvement with the U.S. troops on the ground in both Afghanistan and Iraq (he will have gone more to Afghanistan) and his admiration for the military leadership and tactical brilliance of Generals Petraeus and Odierno as well as the new ways to fight insurgency led by “Team of Teams”‘ General McChrystal, the latter who was removed from command by President Obama following the ill-famous Rolling Stones interview on how the U.S. could win the war in Afghanistan, outside the traditional chain of command. It is palpable that McCain relates vividly to these soldiers away from home, fighting for their country as he did in another life. Arab Spring unsurprisingly covers the seismic regional power shifts initially triggered by the self-immolation of Tunisian fruit trader Mohamed Bouazizi that was followed by home-made leadership and regime changes in Tunisia, Egypt and Yemen, the dreadful civil war in Syria and the internationally-led elimination of Muammar Qaddafi and his regime in Lybia. McCain goes in detail about each key zone of change and spends time on the attack of the Benghazi mission resulting in the death of Special Envoy Christopher Steven, whom he knew and admired for his “all in” trademark attitude, that would have long repercussions including in the campaign of the 2016 presidential elections. McCain also covers in detail the Syrian conflict and its many vivid ramifications in terms of migrations and political and human consequences within the EU. In Fighting the Good Fight (with and against Ted Kennedy), McCain focuses on immigration, legal and illegal, and narrates his many bill efforts and working most of the time with the senior Senator of Massachusetts to craft bipartisanship solutions until his death from brain cancer in 2009. It is also about the old bipartisanship, of the kind I mentioned in “The Hellfire Club” among veterans, even if Ted (another “great” I was fortunate to meet in 1982 in Boston) was not. Then comes Russia and Putin, the latter’s McCain’s primary foe in Nyet (know thine enemy) where he goes through the change in relationship with the Kremlin since the advent of President Putin and a gradually more nationalistic foreign policy in the mid-eighties, focusing on Georgia and the slow descent to war as well as the Magnitsky Act and its related sanctions following the death in jail of Russia-based asset manager Hermitage’s Bill Browder’s lawyer. As a sequel, McCain covers in Know Thyself (defending the West) the invasion of Crimea and the Ukraine conflict in Kiev and in the east, the killing of Russian opposition leader Boris Nemtsov, as well as the attempts to destabilise Montenegro following its desire to join NATO and the EU. As MacCain concludes: “China is the challenge of the century but Putin is the clear and present danger…”. In deference to my Russian friends and while Russia has had a very unilateral, nationalistic, foreign policy, at times using the widest range of tools at its disposal to compensate for its relative strength status, one should never forget the Russian trauma associated with the loss of empire, the way it may not have been treated afterwards and the utter need for respect as a key international player. While being aware of McCain’s rationale, there may indeed be merits in engaging with Russia so as to gradually make it change its approach and perceptions in order to work with her in the concert of nations. In this respect, events like the World Cup, an organisational and sporting success for Russia may be one the early steps toward normalisation, even if the hybrid war may perdure for a while as my expert friend Dmitri Trenin recently wrote for the famed Carnegie Moscow Center.

In Part of the Main (American Exceptionalism) is a key chapter. McCain quotes Saint Exupery, the famed author of The Little Prince, expressing during WWII when flying with U.S. forces, the inextricable link between American interests and the global progress of American ideals. McCain believes that the U.S. has a special responsibility to champion human rights “in all places, for all people, at all times”. Because “it is who we are” (incidentally, I used that one often lately). He is not shy of proclaiming: “I am a democratic internationalist, a proud one and I have been all my life”. He goes on to focus on Burma and his involvement in making changes happen in that country ruled by the military.

Always respecting Obama as a man and a President, he briefly mentions his foreign policy record. He defended the Libyan intervention but was appalled at too early a withdrawal on the ground of avoiding another Iraq quagmire, coining the “leading from behind” approach. He was angered by the refusal to provide Kiev with weapons to protect its sovereignty. He was sad when the Obama administration did not uphold the red line after the use of chemical weapons in Syria, naming it the biggest mistake of his presidency, hurting American interests and values. While he never doubted Obama’s sincerity, he regretted that Obama did not make the hard calls when needed, confounding allies, encouraging enemies and having many good people stranded, starting an American leadership withdrawal in fact if not in name. However McCain never doubted that Obama shared the 75 year old bipartisan consensus that American leadership of the free world was a moral obligation and a practical necessity.

While discussing American exceptionalism, McCain starts clearly distancing himself from DT (even if he would vote for some of his legislative proposals like the tax cuts but not others like the repeal of Obamacare). McCain clearly stresses how appalled he is about DT’s style in communication and overall tactics and his disdain for American values, the global progress of democracy and the rule of law abroad. He finds disturbing DT’s “lack of empathy for refugees, innocent, persecuted, desperate men, women and children” and finds abhorrent his mention of welfare or terrorism being for him their only reasons to come to America. He cannot condone DT’s absence of interest in the moral compass of world leaders and their regimes. He lambasts DT’s attacks on free media and his use of “fake news to discredit unflattering news stories. He cannot stand DT’s showing with praise the world’s worst tyrants. His criticism goes far beyond DT, when he attacks former State Secretary Rex Tillerson who warned State Department employees not to condition relations with nations “too heavily” on their adoption of values “we’ve come to after a long history of our own” (to his credit, RT’s VMI Commencement address last May, heavily reported, shows his regrets and clear adherence to traditional American values). There is no doubt that McCain is appalled at the treatment by DT of allies, be it in relation to NATO, trade or the G7, regardless of the necessary changes that the U.S. may wish in striking more balenced relationships. There is a long, emotional address to the U.S. Senate that MacCain gave on the occasion of the health care debate that transcends it, focused on the role of the Senate itself, going to the core of American history and values, which is particularly moving in our challenging times. This speech also underpins the need for enhanced civility and cooperation in politics and society, two features which have been seriously damaged lately, also given the example provided by those who should lead by example at the top.

McCain is fighting brain cancer, knowing the odds, but keeping hope that he will be around for a bit longer to contribute a few more times. (If I may say, even if mine was non-cancerous, I relate more than others to the unfairness of the affliction and the powerlessness attached to it, feeling his approach all the more admirable). He looks forward and is simply grateful. Grateful for 50 years of service to his country and having lived so long – he is 81 -, contributing so much. I am sure this American hero knows that tough times, also for countries, don’t last, and that tough countries do. In one sign of control over his own destiny, he sent the clear message to DT that he should not attend his funeral. After you have read his book, you will feel that McCain, whom you would have liked to have known more earlier, whilst being an American hero, is also like founding father Thomas Paine, a citizen of the world.

Merci, Monsieur McCain.

Warmest regards,

Serge

PS: If I may I would like to provide you with a tailored excerpt of the powerful words of his prologue. Written only a few years ago, they would have seemed mundane, if not quaint. Written in 2018, they sound reminiscent of a distant golden era while pushing us to go back to it.

(America is) “the most wondrous land on earth, indeed. What a privilege it is to serve this big, boisterous, brawling, intemperate, striving, daring, beautiful, bountiful, brave, magnificent country. With all our flaws, all our mistakes, with all the frailties of human nature as much on display as our virtues, with all the rancor and anger of our politics, we are blessed. We are living in the land of the free, the land where anything is possible, the land of the immigrant’s dream, the land with the storied past forgotten in the rush to the imagined future, the land that repairs and reinvents itself, the land where a person can escape the consequences of a self-centred youth and know the satisfaction of sacrificing for an ideal, where you can go from aimless rebellion to a noble cause and from the bottom of your class to your party’s nomination for President.

We are blessed, and in turn, we have been a blessing to humanity. The world order we have built from the ashes of world war, and that we defend to this day, has liberated more people from tyranny and poverty than ever before in history. This wondrous land shared its treasures and ideals and shed its blood to help make another, better, world…We have sought to make the world more stable and secure, not just for our own society…To fear the world we have organised and led for three- quarters of a century, to abandon the ideals we have advanced around the globe, to refuse the obligations of international leadership for the sake of some half-baked, spurious nationalism cooked up by people who would rather find scapegoats than solve problems is unpatriotic. American nationalism isn’t the same as in other countries. It isn’t nativist or imperial or xenophobic, or it shouldn’t be. Those attachments belong with other tired dogma that Americans consigned to the ash heap of history.

We live in a land made from ideals, not blood and soil. We are custodians of these ideals at home, and their champions abroad. We have done great good in the world because we believed our ideals are the natural aspirations of all mankind, and that the principles, rules and alliances of the international order that we superintended would improve the prosperity and security of all who joined with us. That leadership has had its costs, but we have become incomparably powerful and wealthy as well. We have a moral obligation to continue in our just cause, and we would bring more than shame on ourselves if we let other powers assume our leadership role, powers that reject our values and resent our influence. We will not thrive in a world where our leadership and ideals are absent. We wouldn’t deserve to.

All is said.

Serge Desprat – 11 July, 2018 (Boston)

3-7-18

Dear Partners in thought,

As we are now well into the summer, I decided to turn yet again to the world of novels which has always provided us with a way to escape, a feeling that is very welcome.

I wanted to tell you about “The Hellfire Club” by Jake Tapper, the very Jake from CNN’s State of the Union. This novel has nothing to do with today’s politics (directly at least, but indirectly who knows?) so friends of Fox News and the like can enjoy a break without the fear of so-called liberal and radical fake news. The action takes place in the DC of the 1950s where America and its leadership were rebuilding the world and where the “swamp” we hear about was getting perfected. Whist a novel all the protagonists and general background are real and the research very thorough. As an aside, Jake could easily be a main character with his Gary Cooper’s 1950s good, clean, looks (No, I am not gay).

We are in 1954 and Joe McCarthy, working with Bob Kennedy (indeed, how do we forget), is at his fifth year of eradicating the red threat from all walks of American life, having no qualms of breaking careers and doing away with otherwise good people. We run into Joe Alsop as well as Richard and Patricia Nixon, him the current VP and of course Ike, the D Day mastermind, who has been in the White House for two years. We have a chat with LBJ then Senate minority leader and running Texas for the Democrats, in a time, long ago, when they did. The hero is Charlie Everett Marder, a Columbia academic, specialist of the Founding Fathers, turned Republican congressman when asked to take up a seat after his predecessor died in mysterious circumstances (we know something is afoot early on). Like many of his peers he is a war veteran who saw the horrors of the former world conflict, him in France. He is married to Margaret, a very independent lady, zoologist by trade, whom he met in college and was not just studying “for her Mrs. degree” to borrow from a well-know line of the times. He is an idealist do-gooder and wishes to change things for the better, but learning fast he has to compromise to survive and still matters in his new career in DC.

Bipartisanship is a reality in American politics then, mainly through weekly poker games among veterans that form a class transcending parties and where policies are promoted or killed in a late night, smoke-filled, atmosphere of camaraderie forged on the battlefields of Asia or Europe. As an observer says: “It’s both reassuring and disconcerting to see them all friendly-like” but the bond is there nearly ten years after the war as they share humble memories, knowing that their main achievement was to survive. They all drink like fish (“Political life seems to require new levels of drinking”) as if alcohol was a fully accepted cement of policy- making. We witness the first black congressmen – again two veteran Tuskegee airmen – at a time when the civil rights movement is not yet at full speed. Clubs rule the day, some more known that others like the Alfalfa or the Gridiron, some far more obscure, not to say secret like the Hellfire Club that has its roots in 17th century England and an infamous history of debauchery by its then aristocratic members. Fights take place when companies that manufactured military goods during the last war wish to get funding from the Appropriations Committee in an effort led by its prominent Chairman and a fight ensues, led by Estes Kefauver, a leading Democratic Senator (who – trivia time – won the New Hampshire primary in 1952 before being sidelined). Investigations are launched into the pernicious effect of comic books on the American youth. We learn that a boy thought he was a super hero and could fly). It is reminiscent of today’s articles and the young’s (and no so young’s) addiction to their iPhone. In a famous line, we learn that via a book pushed by the crusaders that “Batman and Robin were like a wish dream of two homosexuals living together. Superman was a fascist, Wonder Woman a lesbian dominatrix”. Good people do prevail as in all good novels that wish to et us to read more.

It is America at its best (with funny quirks) and at times worst – even then – running the world, setting up the Western Alliance, telling us why it makes sense. And I bought it. And still believe in it.

As it is a novel I shall stop here and not return like MacArthur. Enjoy this great book.

Warmest regards,

Serge

Serge Desprat- July 2018 (Paris)

15-6-18

Dear Partners in thought,

I was hesitant to comment on “The President is Missing” from James Patterson and Bill Clinton as I did not want to stray from my core initiative, not to say mission. However I thought that when a former American President and a leading thriller writer band together, there might be a message or two to be found, especially in our troubled times. The book is clearly a novel but the subject matter, the co-authorship and even the title led me to do a review of sorts, especially at the start of the summer in Prague when a dose of lightness (of being and this time very bearable) is always nice, whatever the prevailing times.

JP and Bill are both displayed as fully-fledged authors on the same cover type font (and unsurprisingly not this time with JP before his “co-author”). I will admit that, yes, I have liked JP’s books ever since “Jack and Jill”, especially those written in the late nineties-early noughts. And even if Anne-Sophie (my very educated and wise wife) takes JP’s books as not real literature as three page chapters in big print don’t pass the test, I always liked JP’s knack for good stories, including his choice of characters, like the famed Alex Cross, even if I tend to agree that he has found a peculiar way to bring the old industrial revolution to penmanship through the use of an ever larger team of writing partners, potentially dampening something on the way. What decided me was the title – “The President is Missing” – that could be taken literally (and indeed one should, while I will respect the plot’s fine prints for better beach times) – but that could also be a tongue in cheek one, probably never admitted (or admissible, though that sounds so much Mueller investigation-like) as it could be argued that the actual President is indeed missing, this in more ways than one. Or maybe is he too much around these days and we would like him to be missing? (but always in good health, in sunny Florida, that is, so there is no unfortunate confusion).

Bill seems to have had a good time working with JP, if we except the book tour when “Monicagate” was brought back unexpectedly to the fore in a TV interview (and JP was on-his-feet swift in his defence or that of the book focus which showed, regardless of any view on the 20 year old matter, some nice and true grit). As an aside, it is an interesting point that we call Bill Clinton Bill while we never call George W Bush (whom we miss too, especially now) George, though I digress. Bill brought in the experience, the kind of which you only get by walking the corridors of the West Wing and projecting that unique track record of having run the greatest show on earth. The book is definitely on top of JP’s writing quality, mixing a great plot with a level of authenticity that can only come from an insider like Bill. Chapters are no longer three pages and while the type font is the same, wording density and quality is way above the usual JP fare. The book at 500+ pages is also much longer than the usual JP productions. It would be interesting to know whether Bill actually did some of the writing though probably not, focusing on contents veracity (in chapter 4, there is an episode mentioning the political demise as a congresswoman of his chief of staff that will make readers knowingly smile at the likely self-deprecating wink).

The President is Jonathan Lincoln Duncan (note Dun-can rings like Clin-ton and the reference to Lincoln, Professor Gaddis’s hedgehog-fox supremo), a former Governor of North Carolina (and not Arkansas) and speaks in the first person, making us feel somehow that he will make it to page 513. The atmosphere feels real which is the least to expect but is especially well rendered in the painting of each scene and the delivery of the characters. There is an effort to depict those senior civil servants with humanity so we know where they come from, how they got there and what makes them tick. The President is very human, a recent widower with a relapsing illness fighting impeachment in his first term. Run of the mill stuff. There is a Martin Sheen’s President Bartlett’s “West Wing” feel to JLD up to the depiction of his personal assistant. We go from crisis to crisis to ceremonial events that shows us the daily life of Presidents with uprisings in Central America, followed by assassination attempts in the Gulf and memorials to fallen soldiers, going back to the Sit Room to oversee a drone strike against a terrorist cell in Yemen and finally night walks without Secret Service detail running into fellow Irak 1 war vets and ex-members of the Big Red One. (note that Hillary was quite supportive of the book as stated in the “thanks” and that JLD met also his wife at law school – UNC at Chapel Hill not Yale – though similarly in the library).

The President is taking the lead to thwart a massive viral cyber attack after his daughter, a grad student at La Sorbonne (excellent choice), is approached with information about the mother of all terrorist plots against the U.S. and a plan to meet her father in DC to tell more. A Turkish cyberterrorist boy wonder looks to be behind the threat though is saved by the President when a Ukrainian hit team targets him in Algeria for elimination, making us and a select congressional committee wonder. An attractive professional Serbian lady sniper in an early stage of pregnancy (very differentiated foe indeed) and her merc team get involved. Ensues a number of intense developments like a shooting at a baseball stadium, car chases along the Capitol area and more shooting, without us and the President still knowing what the threat really is. Then there is a Benedict Arnold in our midst, one of six tested senior officials in the know of the threat, who might have arranged the earlier hits, in cahoots with the terrorists. A foreign power is behind all this, which the ever friendly Mossad tells JLD could be Russia, which does not raise eyebrows. I will not spoil the story anymore, knowing you want me to stop.

The story is well crafted, if only a little bit convoluted. In any case the plot, which is very enjoyable, does not really matter. What does are the messages conveyed by JP & Bill as they are the reason why they banded together so they could stress a few key themes along the way and make them more easily absorbed in the novel format by the widest possible audience.

The main message is raising the awareness of the risk of cyberthreats to our way of life and the need for state of the art cybersecurity (I have to disclose my wife and I are lead investors in a great UK cybersecurity start-up before I go any further (*)). The book provides a crash course on what cyberthreats, phishing and other cyber warfare weapons, tactics and targets are and the nation states and their patriotic proxies that have used that new war tool (some far more than others offensively as is well known – my intent is not to conduct a seminar on cyber warfare – but basically all the leading powers). It is clear that recent years and all the hackings that took place during the last U.S. presidential campaign, posing a risk to the very democratic process, that have been attributed directly and indirectly to Russia, have led JP and Bill to stress the point, all the more as it was close to home for the latter. Richard C. Clarke, the cyber warfare Czar under four Presidents was consulted for insider accuracy (read his 2010 Cyber War, which is non-fiction but reads like a novel). The timing of the book ahead of critical November mid-term elections at a challenging time for America is no coincidence. Cyber warfare is a major and exponential threat to our societies as we rely increasingly on technology and thus make ourselves, our key infrastructures and our very democratic process unwittingly weaker and asymmetrical targets in the process.

The book has also other messages which are peppered along with quite a few depictions of emblematic scenes of daily American life (e.g. on one of his “nights out” in the Capitol area, JLD witnesses an African American teenager being forcibly arrested by two police officers and has a very balanced thought he shares with us) and sayings that warn of newer risks and stress these old Western liberal values:

• “What happened to factual down-the-middle reporting?”
• “We can’t survive without a free press.”
• “We’re using modern technology to revert to primitive kinds of human relations. The media knows what sells – conflict and divisions. It’s all quick and easy. All too often anger works better than answers; resentment better than reason; emotion trumps (hm, hm – me here) evidence.”

There is a beautiful address to the joint session of Congress from JLD that encapsulates what America is and its values as we grew up to know them, that could have been given by Bill or by Ronald Reagan for that matter as it transcends partisanship and is the best summary of why Bill and JP became a band of brothers on this one occasion.

Going back to Western values, one of the common mistakes voters make when tempted by the sirens of populism is to forget the things that actually work in their lives. It is a case of taking things for granted and gradually forgetting about them, if only to regret them when the consequences of their action or inaction leads to the disappearance of key things and rights that seemed inalienable. What is key in a book like JP’s & Bill’s is also as much its messages as its sheer existence and the fact that we came to a point in our Western world when we can freely read a novel very close to the topic and actors of national leadership without suffering censorship. We actually do not think about it but that right was made possible because others fought for it, hence our duty to defend the values upon which that right was built. Nothing lasts forever if not protected and challenging times, like ours, should show that these rights and values are indeed eminently fragile.

One of the memorable quotes in the book, on its last page, comes from Ben Franklin when asked after the Constitutional Convention what kind of government the founders had given to the nascent America. His reply: “A republic, if you can keep it”.

Warmest regards,

Serge

(*): Just for fun, information and to inject some personal angle on the core topic of the novel: http://www.cyberessentialsdirect.com

Serge Desprat- 15th June, 2018 (Boston)

14-6-18

Dear Partners in thought,

I would like to tell you about a wonderful book published in 2015 as it directly and indirectly deals with many key subjects we regularly cover, which is the famed “In Defense of a Liberal Education” by Fareed Zakaria. This book and his author are actually emblematic of major issues facing us today such as immigration, globalisation, meritocracy and what – and implicitly where – we (well, mostly but not only, our kids) should study in an age focused on securing jobs and lives constantly redefined by the tech revolution.

Fareed Zakaria was born and raised in Mumbai in a Muslim family (a fact not so well-known – he is secular and non-practising), educated at the Cathedral and John Connon School in Mumbai. Then he came to America in 1982, having been accepted at Yale (his older brother, Arshad, had gone to Harvard a few years earlier – they never played the Game). He was a President of the Yale Political Union and a member of Scroll & Keys society (He was actually quite politically conservative there while considering himself a centrist today). He went on to do a PhD in Government at Harvard (political sciences in the local lingo) studying under Samuel Huntington (well-known for “The Clash of Civilisations” in 1993) and Stanley Hoffman, the latter a great Vienna-born immigrant and European Affairs guru I mentioned in my brief 1982 dealings with. Interestingly Fareed eventually would help set up the Yale-NUS program (National University of Singapore) creating a strong Asian presence for Yale and mixing the best of both worlds (*). At age 28, he became the Managing Editor of Foreign Affairs, the Bible of the Council of Foreign Relations, which as you know, has been the NY-based establishment beacon of American foreign policy-makers for decades. Today, while being known for his CNN work (see below), he also has a weekly column in the Washington Post (Go see “The Post” with Streep and Hanks by the way) and has contributed to Newsweek, The Times and the Atlantic Monthly. Fareed is indeed a most accomplished chap and a very professional one too, also oozing balance and modesty. He is the embodiment of the American dream and why immigration, a pillar of American success, is key to the continued growth of the indispensable country.

Fareed is the “trailblazer” representative of the rising Asian-American class, many of whom, still very often not-American born, have excelled at integration and literally invaded Ivy League world and the likes (I was at the Yale Commencement Ceremony last May and had a feeling New Haven, CT was a suburbs of Singapore). Typically only 10-11% of college classes of Harvard, Yale and Princeton are comprising foreigners but the proportion of Asian-Americans far exceeds that number today, based obviously on merit that cannot be ignored by admission committees in spite of quota rumours and pressures often heard. In all fairness these Asian-Americans are culturally far more American than Asian, as I have noticed with my very interesting and enriching encounters and friendships – one in particular. What is key is their successful blending of the hard work ethics, often dismissed discipline and, to some extent, scientific approach provided by their Asian roots with the entrepreneurial freedom, conventional wisdom challenging and”sky is the limit” ethos traditionally breathed by their country of adoption. They simply have brains, work hard, are focused, want to succeed and benefit from the greatest learning environment. They also show immigration can be very successful for the host country as they will go on to expand the American (apple) pie. One could be forgiven to say that they are the very kind that Make America Great Again (with or or without the red cap). This is an interesting feature for us to realize during those times of immigration tragedies and debates even if the comparison could be simplistic as illegal immigrants may not all possess the same qualities or aspirations as they cross the border simply to escape strife, persecution and/or desire a better life. And they are illegal, which these Asian-American Ivy Leaguers are not, even if a tiny few may have been initially.

Another feature linked to topics often debated is Fareed’s first really widely recognised opus in 2003 which was “The Future of Freedom: Illiberal Democracy at Home and Abroad”. In this book he was the precursor, 12 years before the rise of Western populism, of the dangers that democracy itself (“democracy is the worst of all systems except for all the others” to quote Winston Churchill) could have hidden in its midst and was indeed hidden so far, especially in America, as voting participation was so low and considered the game of the “educated” or knowledgeable ones. In its aftermath came “The Post American World” published in 2008 which was also an extension of the message of “The Future of Freedom” as America, in the midst of the Iraq quagmire, was confronted with the demise of the unipolar world arisen from the ashes of the Berlin Wall (I found this book so good that when on holiday in Cambridge, Massachusetts I bought a few copies and sent it to mentors and friends – usually the same!). I also recommend their reading as they provide an unusual rear view mirror which Fareed did not think about then, so much his visions came true across the Western world (and elsewhere – Read the FT’s Gideon Rachman’s Tuesday 26th June excellent piece on “Trump Leads a Global Revivalism of Nationalism”).

Coming back to the current note on the book published in 2015 (his latest), Fareed stressed that liberal arts education was under attack as many states governors had then pledged not spending taxpayer money on subsidising them while he lamented that English and History majors were in decline. Fareed remembered the focus he had known in India for “skills-based” education so students could simply find good jobs. He explains his journey to the top of American learning, discovering literally a new world. He then goes on explaining why that skills-based approach is short- sighted and mistaken. He offers a brief history of liberal education and then expounds on the key virtues of a liberal arts education: How to write clearly, how to express yourself convincingly and how to think analytically. In fact he goes back to the roots of education which is not to focus on a job but to make one “thinks” so one can do whatever she wants, including finding a great job. This mission of education and universities in particular to shape thinking abilities is crucial and immemorial for many good reasons tested by history. Technology cannot replace this even if it can provide different tools and media to shape thinking as long as it does not replace it or individuals do use it as a mean instead of an end. Fareed takes engineering as an example stressing that this skills-based value-added profession is great but that it is strongly enhanced by creativity, lateral thinking, design, communication, storytelling and importantly learning and keeping at it – all gifts of a liberal education. A liberal education can also provide the tools to empower individuals to think for themselves and not be subjected by ready-made opinions that fit too nicely what one wants to hear – the problem of our times. Liberal education can be the guarantor of a working democracy as it usually comprises and therefore safeguards values that have defined our Western societies – those old Western liberal values (you see the full circle here).

The book is also a very enjoyable read as Fareed is very witty, starting on the very first page as what one should do when coming to America today (I will let you enjoy it). While focused on liberal education, he also goes through the key developments that led to the creation of an unparalleled meritocratic educational system, very much representing the views of the founding fathers, which perdures until today. To expand on his views, it is remarkable that in 2018 “everybody” can go to Harvard, Yale or Princeton if one has a great story to tell and achievements to show. While cultural background of course matters as well as, some would say, zip codes – as it gives those applicants a privileged environment to have grown into -, money is no object thanks to the massive endowment funds that will keep funding excellence: Harvard has a USD 35bn endowment while Yale and Princeton rely upon a USD 25 bn fund each that are run by dedicated asset managers and the highest level professionals in the trade (such as David Swansen for Yale) devoted to funding tuitions for students in need as well as research to keep these places of learning at the top of their leagues worldwide. Admissions Committees also want diversity as they value its benefits to all so not all NY Upper East Siders go enjoying the ivy. However it is true that there is a finite number of slots (1500 per class at Yale College) and admission committees need making choices among a pool of extremely highly talented applicants, not all of whom who will make it. Higher education, particularly at the top, still is a key American competitive advantage, an indispensable creator of leadership material and the perfect example of the symbiosis of business and society that has so well defined America. And many of them are focused on liberal education even if one should never forget the likes of MIT and the very suitably Valley-located Stanford (the latter, yes George, Nikos and Haitao, which I am told has a great business school 🙂 ).

I would also like to recommend you to join the Fareed Zakaria daily Global Briefing (Google and subscribe) which is a very quick summary of key issues you can get every day from main headlines selected by Fareed (it is enjoyable as it also takes one minute to read). I also recommend for those who do not fear weekly challenges (usually on Sunday) to take the Fareed quiz: ten questions on international relations news, some obvious, many trivial. It is a real test of ego as I do not know anyone who did 10/10 and most fall below 5 (my record is 8/10 but I was lucky on one or two questions) http://www.cnn/fareed.zakaria.com (If you do a ten please let me know). Lastly, I find his CNN GPS on Sunday very good (11 am EST/3 pm London/4 pm Paris/5 pm Athens) as he covers key topics of international relations with maestria, inviting key people and not just those easy to handle (he had a famous and quite friendly and civilised one hour exchange with Steve Bannon when the latter was holidaying with the Northern League recently).

So the word of the day is “Think” and the message is that society, whilst needing to protect its core identity, gets richer through diversity as America amply demonstrated thus far. Fear of the unknown can be helped through education, liberal of course, like our values.

This book note is dedicated to Qi, a close friend and mentee, but first and foremost a Yalie gentleman and scholar, who came from China age 6 and is ensuring the American dream goes on while quietly taking, during the storm, the leadership mantle that America and the world need.

I wish you a great summer. I am now off to Paris and then to Boston, where it all began.

Warmest regards,

Serge

(*) Back in 2013, my daughter mistakenly applied to Yale NUS thinking she was applying to Yale, making for some funny developments. It turned out she went to the main Yale, became a History major and now is going to work in Boston for a great strategy consulting boutique. And to think she did not have the benefit of reading Fareed’s book! (I assume too much maybe 🙂
And if I may, by the way, getting into the Ivy League is not about whom you know or you can bribe. It is about core values. It is about merit. Relentless hard work. Discipline over years. Abnegation. Dedication. As I am sure you know.
Last point on immigration, lest my message may be misconstrued. Recognizing immigration as a tested component of American excellence does not mean foregoing a regulated approach to it and the need to maintain “identity”. It means understanding American history and ethos, going away from bigotry and also ensuring through appropriate legislation that good women and men looking for a better life have a fair shot at contributing to building that unique American pie in all walks of life and, of course, not only via the hallowed grounds of Harvard and Yale.

Serge Desprat- June 2018 (Prague)

7-6-18

Dear Partners in thought,

My new book note is not about a novel this time but given the backdrop Leo Tolstoy would have written one.

As Moscow is home to the current World Cup, it seemed only fair to look for a book about Russia today. With “From Cold War to Hot Peace” a catchy title that says it all, Michael McFaul, the 7th U.S. Ambassador to the Russian Federation from a breezy January 2012 to February 2014 provided us with a great opportunity through his vivid account of the great relational shift between Moscow and the West that took place during his tenure. More than about MacFaul’s tenure this book is about the Russian Federation, the new Russia that had aspirations to be like us (or what we were) but gradually got back to its eternal roots as if the colour of the snow had never left it.

This book is not like any other for some of us, to paraphrase Dean Rusk for another time, who were “present at the creation” doing our bit to help change after seventy years of darkness but not really understanding what we were doing or actually not doing. Many of you will recognise themselves in this book and will wonder again at the speed of time. Thirty years already, a blip in history, a life for us.

Prior to his ambassadorship, McFaul worked in the Obama Administration for Tom Donilon in the U.S. National Security Council as Special Assistant to the President and senior director of Russian and Eurasian Affairs. He was no Russian affairs novice and likely the best ever prepared U.S. Ambassador to Moscow as he has started promoting a rapprochement between Moscow and the West in his high school in native Montana in 1979 – quite a challenging proposition at the time of the Soviet invasion of Afghanistan. His direct exposure and involvement started in 1983 when as a sophomore at Stanford he went on to his first journey to Russia, discovering Leningrad and the Soviet Empire. He then later spent a semester abroad in Moscow, mingling with the Refuseniks and getting a first hand exposure to the system’s doomed features. He then witnessed Gorbachev’s rise, Glasnost and Perestroika and irreversibly the gradual country’s demise. Back as a Fulbright scholar and working with the National Democracy Institute, a pro-democracy promotion NGO, he celebrated the birth of new Russia that he wanted to help becoming like another country, espousing capitalism and the Western ways on the way. Following the Soviet Union’s chaotic collapse and the start of the bumpy Yeltsin era, McFaul helped found the Carnegie Moscow Center in 1994, today one of the best if not the best Moscow-based international relations think tank (now ran by the excellent Dmitri Trenin) that has maintained an invaluable conduit between two different worlds that have kept growing apart since 2012. Known to have been one of the artisans of the famed “reset” (even if it was once poorly translated when Hillary Clinton first gave her “box” to Sergei Lavrov in 2009), he saw his dreams as a young man coming true when both Russia and the U.S., putting behind thorny issues such as the Iraq war and NATO expansion, were increasingly working together on solving world issues, such as with the signing in Prague in 2010 of New START to limit nuclear weapons. These were the times of President Medvedev, who seemed like a pro-Western moderniser, even if a cautious one. There were solid majorities in both countries convinced that the possibilities for further cooperation were only the natural way forward. Russia was popular in America and America was popular in Russia. Such a description seems today hard to believe so the picture changed rapidly and deeply from a nascent partnership to a state of intense rivalry, even if Russia is not the Soviet Union of old. This book is about understanding the road traveled from the viewpoint of a man – a true believer – who had always believed in working with Russia and came to be thoroughly disheartened as he hoped to crown his long life passion and cement the reset process.

Before going into the Obama period and the “reset” and its subsequent setbacks, McFaul covers the 1991-2008 period so we get a refresher of the major events of the period. He first goes into the first elections in the late 1980s that changed the Soviet Union forever and introduced figures that became familiar such as Yeltsin, the boss of the Communist Party in Russia but also the soon to be known nationalist firebrand, Zhirinovsky and many others. We go rapidly through the August 1991 coup and the official and technical demise of the Soviet apparatus starting on December 31, 1991. Interestingly, he goes as an NDI representative into early exchanges with “our new Russian partners” that started revealing even then their frustrations with the U.S. focus on democratic consolidation or how the West, and not the Russians, knew what was best for them – a feature hat those of us who were in the trenches of transition (*) did not realise the impact then. He then goes on through Yegor Gaidar’s economic liberalisation reforms (known as sick therapy by his detractors) accompanied by voucher privatisations creating the most massive transfer of public wealth to individuals (a few it turned out, with the rise of the Oligarchs, underpinned by corrupted system that tainted Russia like an original sin). Then came the replacement of Gaidar by the more conservative Chernomyrdin, the December 2013 electoral backlash and the “fascist” threat embodied by the misnamed Liberal Democrats (LDRP) of Zhirinovsky, the elections of December 1995 and the rise of Genady Zyuganov’s Communist Party, the appearance of the nationalist General Lebed and resulting weakening of the Lib-Dems, the presidential elections of 1996 and rise of the top Oligarchs though the loan for “campaign funding programme” and their increasing control of Russian natural assets and media and then the deliquescence of the Yeltsin era, helped by the Russian financial crisis of August 1998 with more confrontational matters such as the bombing of Milosevic’s Serbia and the second “invasion” of Chechnya in 1999. In December 2000, Yeltsin resigned as President making McFaul struggling as to his reasons, most likely linked to cementing the future election of his unknown prime minister, Vladimir Putin, he’d oaf the Security Council, before being head of the KGB rising as a low level Kremlin bureaucrat who had been out of job following Sobchak’s reelection loss as Mayor of St Petersburg.

The nineties were an epic time for Russia, which McFaul describes well. There was a focus of form and not substance in the nascent democratic process and clearly the supporting West, while knowing that, wanted to preserve the gains of a Cold War victory and not let Russia slip into chaos, which was very possible, or an adversarial stance. This cautious Western approach, crafted on the way, allowed for side effects that with time became major events fraught with systemic corruption in reshaping a country like the transfer of Russian state assets to so-called oligarchs first though the voucher privatisation process, which they ended up managing artfully and then the 1996 loan for shares programme to allow a very embattled Yeltsin to be reelected. The West was not happy about these developments but made what it perceived to be the less bad choice, still supporting Russian authorities, in order to preserve stability at a time when the U.S. and the world were largely basking in a strong economic environment devoid of major political or military threats. It is therefore difficult, as McFaul points out, to take a view on whether Yeltsin had a positive or negative impact on its country depending on a number of features. Some of the constitutional changes that took place and strengthened the presidency, made for Yeltsin, certainly help Putin to keep strengthening executive power in Russia once President.

Putin’s era is seen by McFaul as Russia’s Thermidor (the French revolutionary month that put a decisive end to the era known as “the Terror” in the mid-1790s). He had been a carrer KGB professional with postings in East Germany, notably in Dresden where he saw first end of the collapse of the Soviet Union, an event that deeply marked him. He kept deepening market reforms with debt restructuring, a 13% flat tax rate on individual income (to make sure fraud was erased) and Andrei Illarionov, his chief economic adviser and his team were both pro-market and pro- Western liberals. He even considered the possibility of Russia joining NATO when asked by Western media, though this was never seriously tested. While pursuing reforms and staying nominally close to the West, Putin decided within year in office to control the media, forcing in exile moguls Vladimir Gusinsky and Boris Berezovsky, the latter his godfather in Russian politics. He later arrested Russia’s richest man and owner of Yukos on fraud charges as he was getting into more support for NGOs and independent candidates in the Russia electoral process. While those developments took place, the focus of the U.S. was squarely on post-9- 11 matters and soon the Iraq war triggering a benign neglect for Russia which was not deemed to really matter anymore (Colin Power thought that Putin “had restored a sense of order in the country and moved in a democratic way” which surprised the expert McFaul). George W. Bush having met Putin early on in his presidency claimed he had been able to get a sense of his soul and that all was fine, making his own foreign policy team and Dick Cheney’s, as well as experts like McFaul, worry that he might have missed that Putin had been train to lie (after he expressed his doubts in the New York Times, McFaul was never reinvented by GW to provide his views on Russia). 9-11 definitely led to a warming up of the U.S.-Russia relationship as Putin was quick to support the U.S. and offered assistance in many areas such as the fight against the Taliban in Afghanistan, intelligence sharing on terrorist networks ad support opening U.S. bases in Uzbekistan and Kyrgyzstan. In spite of some conflicts on missile defence and the ABM treaty, cooperation was deemed to at the level of WW2 by Igor Ivanov, Putin’s foreign minister. GW in turn was calling Putin an “ally”, a term not used for a Kremlin leader since FDR did. While the U.S. rejoiced about this new state of affairs, they still admitted Bulgaria, the three Baltic states, Romania, Slovakia and Slovenia to join the alliance which they did formally in 2004. While the initial invitation did not break the relation (the Baltic states were a particular strain), the Iraq invasion broke the camel’s back as Russia was not consulted and Putin thought that such an initiative with likely drastic consequences on te stability of the Middle East would have been better handled (with hindsight he was right even if his motivations were Russian-focused). McFaul rightly states that this issue of not being involved in global affairs went back to the core of Putin’s grievances that Russia had been relegated to a secondary, if that, power which only mattered due to a remaining nuclear arsenal. This was all about regaining respect and been back at the table, which will explain other developments in later years. Then on top of Iraq occurred two revolutions, Pink in Georgia in November 2003 and Orange in Ukraine 2004, where the West, and the U.S. in particular, was seen as the winner behind the scenes while Russia was the loser given its proximity to those countries, former Soviet brethren, that went markedly closer to the other side. The Orange revolution made Putin more anti-American in his rhetorics and policies, marking a clear shift away from any cooperation with the West. While McFaul points out that the six-day war between Russia and Georgia (thankfully limited as Tbilissi was not seized) of August 2008 remains a point of contention as to who started it (not for him and most observers), it was clearly a way for Russia to reassert its power in the Near Abroad and restarts counting as a great power.

McFaul who joined the Obama campaign after Tony Lake and Stanford undergrad pal Susan Rice asked him to (the latter in typical campus mode: “Get your shit together”) started to organise Russian briefings for the campaign team on a subject that nobody cared about – until Georgia August 2008 came around. America started to react with more criticism to Putin’s Russia and allowed for a carefully crafted policy towards Russia. As Obama phrased it “Improved relations with Russia should not be the goal of U.S. policy but a possible strategy for achieving American security and economic objectives in dealing with Russia”. The multi-facetted reset button was on its way, ready to be pushed, though with awareness that Russia actually mattered and could be disruptive to world affairs (there is a long chapter about all the facets which make for good reading). MacFaul goes deeply on his constant fight for democratisation and struggle to push forward “universal values” in Russia as he was a member of the Obama Administration. We are taken to the first and last Moscow summit where New START, denying Iran the nom, missile defence cooperation, repealing of Jackson-Vanick…all of which are covered by a few chapters that sound a bit technical at times, if of course very key in terms of policy- making. One part “burgers and spies” depicts what could be an episode of the Americans with spies or “illegals” being posted in America.

In March 2012, Vladimir Putin came back as President, having taken a break as prime mister for four years and somehow adapting if not rewriting the constitution. McFaul had arrived in Moscow, taking his Ambassadorial post, two months before Putin’s return as President (even if it is argued that he never ceased been one). While McFaul’s version is extremely valuable, it should never be forgotten, as we in the West may have in the 1990s, the deep shock and humiliation represented by the loss of Empire and relegation of Russia as a secondary power, all while the West and particularly the U.S. likely lacked consideration for that traumatic experience and focused on teaching Russia how to be a market. I will let you enjoy the rest of the book, which I found a bit boring as McFaul was too much of an aunt and less of a principal, displaying too much of an NGO ethos in the job.

The rest and doubtless crux of McFaul’s book is about his ambassadorial travails in Moscow and his engaged and complex relationship with the Kremlin and the Putin Administration especially following the Crimean and Ukrainian developments of 2014. This is the climax of his enjoyable if at times slightly long and personal account-settling book of what could have been titled the right man at the wrong times and location which I will let you discover without letting the Siberian cat out of the bag of tricks.

Warmest Regards,

Serge

(*) I was at EBRD at the time – the European Bank for Reconstruction and Development, the public international financial development institution set up in early 1991 to facilitate “market transition” in the former Soviet sphere. While my Russian experience was limited to one investment due to most of my focus on Central Europe, my ultimate boss (and later unwitting mentor) and I concurred only a couple of months ago that we were very “naive” during those days and, I think, when it came to Russia, oblivious to the traumas of loss of empire and their impact to come, so much the world in the nineties seemed naturally rosy and can-do-no- wrong unipolar to us, leading to a benign and victory-based arrogance, devoid of understanding of local history, in terms of leading the way. While busy on ensuring that our Western model took roots, we were also oblivious to the rise of the oligarchic class in Russia and to some extent throughout the region and the rampant corruption and illicit control of assets that went with it (and is at times totally forgotten locally in some countries, even part of the EU, as now seen as “old money”).

Serge Desprat- June 2018 (Prague)