Foreign aid wins friends; senator's generosity rewarded

PART 2 OF 4

jcheves@herald-leader.comOctober 18, 2006 

WASHINGTON -- One of Sen. Mitch McConnell's "best friends and buddies" -- his words -- is Albert Boyajian, a rich Los Angeles bakery magnate who is a leader in the Armenian-American community.

What does a Kentucky Republican share with a West Coast ethnic leader?Money.

Boyajian wants more U.S. aid for his home country in southwestern Asia. He founded the Armenian-American Political Action Committee to reward helpful politicians with campaign cash.

McConnell is chairman of the Senate Appropriations Subcommittee for Foreign Operations. It meets once or twice a year and draws scant attention. But it controls more than $20 billion in annual foreign aid. And it brings McConnell hundreds of thousands of dollars from people hoping to influence that aid.

Boyajian said he personally educated the senator about Armenia, flying him there in 1996 for a tour and an interview with the president.

Their friendship has deepened as McConnell boosted U.S. aid to Armenia up to $90 million a year, or as much as $25 million more than the White House recommended, since the mid-1990s. He adds many millions more for specific Armenian projects.

"No one in the last decade has done more for Armenians and Armenia than Sen. McConnell," said Boyajian, 66, his voice still thickly accented after three decades in the United States.

Grateful, Boyajian said he hosts every Armenian-related fund-raiser held in California for "my good friend Mitch." (Armenian-Americans in the Golden State alone have given McConnell about $125,000.) He gives so much of his own money to Republicans, including McConnell -- about $50,000 since 1997 -- that he was awarded the Republican Senatorial Medal of Freedom by the GOP fund-raising machine McConnell chaired for four years.

Some conservatives dislike the idea of foreign aid and all those U.S. tax dollars flowing to other nations.

However, it's a blessing for McConnell, a senator from landlocked Kentucky, chiefly home to native-born Americans. Most of his ambitious fund-raising now occurs outside his state, often in major coastal cities where ethnic groups are far more politically active.

And he recognizes it. Speaking on the Senate floor 10 years ago, McConnell told colleagues: "We have a lot of Jewish-Americans who are interested in Israel, a lot of Armenian-Americans who are interested in Armenia and a lot of Ukraine-Americans who are interested in Ukraine."

"Boy, when we hear from them, we get real interested," he said.

Over the years, McConnell has rejected budget recommendations from Democratic and Republican presidents and State Departments in order to give hundreds of millions of dollars in additional aid to those three countries -- Israel, Armenia and Ukraine -- while their lobbying groups donated heavily to him.

McConnell inherited his role as Armenia's champion from Sen. Bob Dole, R-Kan., who credited an Armenian doctor for saving his life after he was wounded in World War II. Dole left the Senate to run for president in 1996 as McConnell settled in as chairman of the foreign aid panel.

That's how Yervant Demirjian, an Armenian-American banker, found himself chatting with McConnell, a Kentucky politician, in Southern California in 2004.

Boyajian, the bakery owner, organized an Armenian fund-raiser for McConnell at the Ritz-Carlton in Marina Del Rey, Calif., where the senator mingled with donors. Those who gave him the most were told they could accompany him on a chartered yacht cruise. McConnell pledged continued U.S. aid for Armenia at generous levels and collected about $35,000, federal election records indicate.

"If I can be candid, McConnell is a good friend of Armenia," said Demirjian, who gave $1,000.

"Because there are a lot of us living in California, he periodically comes out here and thanks us for our support of him," the businessman said. "And what do we get in exchange for that support? Nothing more than a stable supply of foreign aid."

'They like my views'

McConnell denied in a recent interview that campaign donations influence his foreign-aid decisions. He said his career reflects an interest in promoting freedom and opportunity abroad, from opposing apartheid in South Africa to pushing for stronger Western relationships with former Soviet states after the Cold War.

As for his ethnic donors, he said, "I assume they support myself and others because they like my views."

But a former State Department leader who worked with McConnell said the senator's fund-raising warps diplomacy. For instance, while the State Department wanted to flexibly dispense aid to former Soviet states, McConnell tapped Ukrainian-American donors and "earmarked" -- or mandated -- $225 million a year for Ukraine.

"Earmarks restrict our ability to do our job," said J. Brian Atwood, who spent six years as President Clinton's administrator of the U.S. Agency for International Development.

"It makes domestic politics and donations more important than foreign policy. Russia complained at one point that it was getting less assistance than Ukraine, which is much smaller but had better lobbying with folks like Sen. McConnell," Atwood said.

Because there is a limited sum available for foreign aid -- and McConnell usually trims it -- awarding more to one country means depriving another country or regional program.

Extra aid for Armenia, for example, angers Azerbaijan, its neighboring rival. Azerbaijan protested in the late 1990s that it received $12 per-capita in U.S. aid compared with Armenia's $180. Meanwhile, its territorial disputes with Armenia created more than half a million refugees on its side of the border.

"Sen. Mitch McConnell ... recently notified Secretary of State Warren Christopher that he would block every attempt to send humanitarian aid to Azerbaijan," wrote Galib Mammad, an Azerbaijani diplomat to the U.S., in a 1996 magazine essay.

"Curiously, McConnell went on record in 1992 as one of only four members in Congress who voted to allow aid to Azerbaijan," Mammad wrote. "Now he has changed his mind, as 1996 is an election year, and public records show that Armenian-Americans have already contributed $22,850 to him between August and December 1995."

McConnell has explained his dedication to Armenia -- and, for that matter, Ukraine -- as wanting to establish strong, independent nations along the Russian border, to curb expansionism. He recently denied favoring rivals over each other.

"I've tried to be even-handed in the dispute between Armenia and the Azeris," he said. Early this year, he added, he met with Azerbaijan's president in his Senate office.

Yet McConnell openly bragged about skewing U.S. aid toward Armenia two years ago while addressing the National Pan-Armenian Conference in Washington.

"I'll be trying to increase that amount. Armenia received $75 million last year, and that is considerably more than Azerbaijan, an imbalance that I don't apologize for," McConnell told the audience, which applauded, according to a transcript of the 2004 conference. "And we will try to achieve such an imbalance again this year."

True to his word, he earmarked $75 million for Armenia in the 2005 budget -- $13 million more than Bush requested -- and an additional $9 million from other aid accounts, mostly military aid. That was twice the sum he allocated for Azerbaijan, although Armenia has fewer than half as many people, and less poverty. For the 2006 budget, he earmarked $75 million in direct aid for Armenia -- $20 million more than Bush requested -- plus an additional $6.5 million from other aid accounts. Again, Azerbaijan received half that.

Capping funding

Sometimes McConnell's donors want foreign aid to be cut, not increased.

In 1996, the African country of Zimbabwe announced it would nationalize -- seize control of -- subsidiaries of foreign corporations on its soil. This angered the American International Group, an insurance and financial giant in New York, which owned one of the targeted companies.

So Edmund Lee, AIG's executive director of international and corporate affairs, huddled with McConnell's committee staff. AIG wanted an amendment to the foreign aid bill that would slash Zimbabwe's share unless it backed off.

The online magazine Salon.com published a copy of the follow-up letter Lee wrote July 17, 1996, to Robin Cleveland, McConnell's staff director.

"Dear Robin," Lee wrote, "I want to thank you again for taking time out of your schedule to meet with us yesterday afternoon on an extremely important issue to AIG.

"Attached for your review and consideration is draft language for the amendment we discussed during our meeting," Lee wrote. "It would cap AID funding to Zimbabwe in fiscal year 1997 at $10 million, roughly a 50 percent cut from 1996 expenditures, unless Zimbabwe waives the localization requirement for U.S. insurance companies."

The amendment proved unnecessary. Rather than forfeit aid, Zimbabwe backed off.

McConnell recently said he remembers nothing about the episode. But he referred to the threat in a Senate speech July 25, 1996.

"This committee was prepared to deal with a current trade dispute and nationalization of foreign assets in Zimbabwe, but (it) has withdrawn action relying on the good faith representations of Ambassador Midzi of the Republic of Zimbabwe," he said.

McConnell, running for re-election that year, took $2,000 from AIG's PAC within months of the episode and $2,000 more that fall. AIG also gave $40,000 to the Republican Senate and House Dinner Committee, to support GOP politicians like McConnell.

Cleveland, the former McConnell aide, now works at the World Bank in Washington. She declined to comment. Lee remains with AIG as director of corporate affairs, but he did not want to talk about his work with McConnell's committee.

"It was a long time ago," Lee said.

Reach John Cheves at jcheves@herald-leader.com.

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