Friday, January 25, 2008

Contrary Fact of the Day

Today's Wall Street Journal's story about how lobbyists smoothed the way for sovereign wealth funds' massive investments in bulge bracket investment banks has all the earmarks of a classic WSJ expose: front page billing, a load of detail about how the process works and who the players are, lots of case study detail. Instead of uncovering a scandal, though, the story opens the window to a heretical thought: occasionally at least, lobbyists win one on the merits. Consider, for example, this exchange between an Ogilvy lobbyist and James Webb:

Blackstone executives briefed several dozen lawmakers, with the firm's chief executive, Stephen Schwarzman, sitting in on some sessions. Stiff opposition came from Sen. James Webb, a first-term Virginia Democrat. Sen. Webb wrote a novel published in 1991, "Something to Die For," in which Japan uses its financial muscle to gain influence in Washington. The senator worries Beijing could do the same.

Mr. Webb wanted the China investment deal delayed so regulators could examine whether Blackstone's stake in a semiconductor company posed national-security problems. One of Mr. Berman's partners pointed out that the firm produced off-the-shelf chips. Sen. Webb withdrew his objections to the deal, though he remains skeptical of sovereign investors.

Exhibit B: Dubai Aerospace tries transparency as a lobbying strategy:

Wall Street and the U.A.E. thought they had turned the corner by spring 2007 when another Dubai-owned company, Dubai Aerospace Enterprise Ltd., bought two firms that owned small U.S. airports and maintenance facilities that serviced some navy transport-plane engines. The Dubai firm pledged to submit to government security reviews and submit its employees for security screening. It also thoroughly briefed lawmakers on the deal. It ran into no obstacles on Capital Hill.

"I call the strategy, 'wearing your underwear on the outside,'" says one of Dubai Aerospace's Washington lobbyists, Joel Johnson, a former Clinton White House communications adviser. "We have to show everybody everything -- no secrets, no surprises."

Of course, elected officials have to be very careful not to appear to compromise security, so it's likely that lobbying on this front won't succeed unless the logic at least seems bullet-proof enough to protect the responding politician. Still, it's worth keeping in mind that lobbyists can have reason on their side and sometimes even deploy it as an effective lobbying tool.

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