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How the US Was Arm-Twisting Dirt Poor Romania to Blow $1.4 Bn on Attack Helicopters

In the 1990s Romania - up to its neck in debt - was told purchasing US-made helicopters was a way to get into NATO in the first enlargement round

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This is an excerpt from an article that originally appeared in Harper's Magazine

Meanwhile, other European countries were experiencing a less congenial form of lobbying. Romania, for example, was among those hoping to join the alliance and enjoy the supposed fruits of this latter-day Marshall Plan.

But the country was in ruins, with an economy that had barely recovered from the levels induced by the demented economic policies of Nicolae Ceausescu, the tyrannical ruler who had been overthrown and executed in 1989. A 1997 World Bank report noted that “the majority of the poor live in traditional houses made of mud and straw, do not have access to piped water and have no sewage facilities.”

Such dire conditions made little impression on visiting arms salesmen. Representatives of Bell Helicopter Textron, manufacturer of the Cobra attack helicopter, persuaded the Romanian government in 1996 to agree to a $1.4 billion deal for ninety-six Super Cobra helicopters, to be manufactured locally and rechristened the Dracula.

This presented Daniel Daianu, a respected economist appointed Romania’s finance minister in December 1997, with a problem. His country didn’t have the money. “There were huge payments, billions, coming due in ’98 and ’99, in external debt payments,” he told me. “That was why I was so against the deal.”

In response, the United States applied leverage. Picking his words carefully, Daianu explained that Americans in Washington and Bucharest “intimated to me with clarity that this was the way to get easier access into NATO” — in the first round, along with Poland and the others.

Daianu was learning some interesting things about the way Washington works. He found himself the object of “gentle pressure” from “American businesspeople and people who were a sort of conduit between the American administration of the time and the companies involved in this deal.” As he stuck to his principles, the pressure from such people “intimated” that “this is the way to take care of your retirement, and your children’s.”

At the same time, there was pressure back in Washington, some of it not so gentle. Romania was heavily dependent on an IMF loan guarantee, which gave the fund considerable leverage over the country’s budget. As it happened, Karin Lissakers, the U.S. executive director on the IMF’s board during the Clinton Administration, knew a lot about the sales practices of arms corporations — she had worked during the 1970s for Senator Frank Church’s Subcommittee on Multinational Corporations.

The subcommittee had delved into the unwholesome sales techniques of U.S. arms corporations abroad, uncovering many egregious cases of bribery. So when a Textron representative came calling to demand that the fund remove the block it had effectively imposed on the Romanian deal, she was not impressed.

Her visitor, Richard Burt, had been a New York Times reporter specializing in national-security issues before moving over to the State Department, where he ultimately served as ambassador to West Germany. After leaving government service in 1991, he found steady employment as a high-powered consultant.

Among his clients was the Textron Corporation (he sat on the firm’s international advisory council), and he had a separate connection to Bell Helicopter, from which a company he chaired, IEP Advisors, had collected $160,000 between 1998 and 1999 for lobbying. Meanwhile, Burt maintained a useful foothold in the Pentagon, serving on the influential Defense Policy Board.

“Rick Burt came to see me and said the IMF was being completely unreasonable in blocking the helicopter deal,” Lissakers told me. “He wanted me to pressure the IMF country team, pressure them to approve the loan. His tone was bullying — the implication was that I was accountable to Congress and would suffer consequences. This was at a time when hospitals in Bucharest had no running water! I always regret I didn’t throw him straight out of my office.”

“She’s full of shit, and that’s on the record,” responded Burt heatedly when I relayed Lissaker’s comments. “That’s not at all what I was doing. I was not pimping for this at all.” He insisted that he himself always thought the helicopter deal was a bad idea, and was simply sounding out the IMF position. He also insisted that the $160,000 IEP Advisors was paid in 1998–99 was merely for “advice — not lobbying.”

Daianu resigned and the helicopter deal was canceled, but Romania did finally make it into NATO, in 2004, along with six other countries. By that time, Lockheed had scored a major payoff with a $3.5 billion sale of F-16s to Poland, and the newly enlarged NATO had proved its military usefulness in the U.S.-led coalition that bombed Serbia, a Russian ally, for seventy-seven days in 1999 on behalf of Kosovo separatists. “The Russians were humiliated in Kosovo,” Jackson said, “and that was the first time they showed militant opposition to NATO.”

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