Washington Report on Middle East Affairs, December 1998, pages 49-50

Special Report

Insider Clark Clifford’s Death Recalls Two Mideast Scandals: Premature Recognition of Israel and BCCI

By Richard H. Curtiss

Corporate attorney Clark M. Clifford, who died Oct. 10 at his home in Bethesda, Maryland, a suburb of the U.S. national capital, at age 91, was the Washington, DC insider who first put his thumb on the scale of U.S. Middle East policy to tilt it decisively toward Israel. Clifford’s behind-the-scenes White House intervention in 1948 on Israel’s behalf for domestic political purposes made him at least as responsible as any other American for the half-century of Middle Eastern turmoil and hundreds of thousands of deaths that followed.

Ironically, however, it was another misuse of his power on behalf of an entirely unrelated group of Middle East conspirators from the Bank of Credit and Commerce International (BCCI) that led to his ultimate disgrace for involvement in what the U.S. press has described as the biggest bank fraud in history. Although criminal charges against him were dropped because of his age and failing health, he settled the last of the civil claims against him from the BCCI scandal only days before his death from respiratory failure.

Clifford had been practicing law for 16 years in St. Louis when, at age 38, he secured a World War II commission in the Navy early in 1944. Shortly after the death of President Franklin D. Roosevelt in the spring of 1945, Clifford was invited to join the White House staff by a former St. Louis client who was serving as naval aide to President Harry Truman, who had succeeded to the presidency upon Roosevelt’s demise.

Finding few duties to occupy his time as deputy naval aide, Clifford ingratiated himself with White House special counsel Judge Sam Rosenman, an overworked holdover from the Roosevelt administration, who welcomed attorney Clifford’s assistance and introduced him to the inner workings of the White House. Later in the year the urbane and highly intelligent Clifford succeeded Rosenman as special counsel to Truman, a fellow Missourian.

Clifford became one of Truman’s closest confidants, dining with the president two or three times a week. Since Clifford also was responsible for arranging the president’s weekly poker game, he soon became known as an influential behind-the-scenes power broker in the administration of the new and relatively untried president who, with the leaders of Britain, France and the Soviet Union, was making the post-World War II decisions which would shape both the United States and the world for the century to come.

One of Truman’s decisions was to put the full diplomatic backing of the United States behind the November 1947 United Nations partition of Palestine. The U.N. plan gave 53 percent of the former British Mandate of Palestine to the one-third of its inhabitants who were Jewish and who owned only 7 percent of the land, and 47 percent of Palestine to the two-thirds who were Muslim and Christian Arabs. Jerusalem, with its sites holy to Christians, Muslims and Jews, was to remain a “corpus separatum,” in the words of the United Nations, under international administration.

As predicted by the U.S. foreign affairs establishment, this grossly unfair award of more than half of Palestine to its Jewish minority population precipitated bloody fighting almost as soon as the plan was announced. This turn of events forced Truman to pay more attention to his diplomats, precipitating a battle with Jewish leaders inside and outside the White House, who up until then had the president’s ear on Middle East matters.

Both battles, in Palestine and in the White House, came to a head in the spring of 1948 with the scheduled May 15 withdrawal of British forces from Palestine. The State Department, by then headed by General of the Armies and former chief of staff George C. Marshall, America’s highest ranking World War II military leader, counseled placing all of Palestine under an international trusteeship rather than recognizing a Jewish state which, while professing to accept the borders assigned to it by the U.N. plan, already seemed intent upon expanding them by force.

Clifford, who by this time had been put in charge of Truman’s campaign for the November 1948 election, concluded that U.S. support for the U.N. trusteeship plan was costing Truman the political support of the U.S. Jewish community. He therefore counseled recognizing the new Jewish state the moment it declared its independence.

At a May 12 meeting called to discuss the subject, Marshall vehemently opposed premature recognition of a state that had not even defined its own future boundaries. Marshall’s argument with Clifford led to angry words which surely were unprecedented between a U.S. president and his secretary of state. In his own memorandum of the conversation, General Marshall wrote: “I said bluntly that if the President were to follow Mr. Clifford’s advice and if in the elections I were to vote, I would vote against the President.”

No decision was made at the meeting, but on May 14 Clifford, not the secretary of state, informed Eliahu Epstein, Washington representative of the Jewish Agency for Palestine, who was soon to change his name to Eliahu Elath and his title to Israeli ambassador to the United States, that the U.S. would need a formal request for recognition in order to take the desired action.

Epstein prepared a draft request for recognition, although as yet he did not know the name of the state to be proclaimed. While a Jewish Agency employee was driving to the White House with the written request, another Jewish Agency employee heard on the radio that the new state was to be named “Israel.” At the White House gate that name was penned into the request for recognition.

Secretary Marshall was informed late in the afternoon of May 14 of the president’s decision, and U.S. Ambassador to the United Nations Warren Austin was informed at 5:40 p.m. At 6:01 p.m. Washington time (midnight in Israel) Israel came into existence and at 6:11 p.m. the U.S. announced its recognition of the new state.

Ambassador Austin retreated to his hotel room rather than appear with the delegation he headed when it announced to the U.N. the American decision to recognize Israel. Marshall then had to send Dean Rusk, the State Department’s director of United Nations affairs, to New York to talk the members of the U.S. delegation to the U.N. out of resigning en masse to protest the decision.

Clark Clifford’s triumph in the name of domestic political expedience over the experience and wisdom of America’s foreign affairs establishment was only the first of many such victories of domestic politics over foreign policy in the Middle East. It had immediate political consequences.

With the enthusiastic support of much of the mainstream American press, Truman began a slow but steady rise in public esteem. Although the last public opinion poll published before the election still showed his Republican rival, New York Governor Thomas E. Dewey, well in front, Truman won re-election handily.

American author Gore Vidal recently revived a rumor dating back to the 1948 election of extraordinary financial support elicited by Truman’s decision to recognize Israel. Vidal, a relative by marriage of John F. Kennedy, who served as president from 1961 until his assassination in November 1963, said Kennedy once told him that while Truman was conducting his famous 1948 “whistlestop” election campaign by rail across the U.S., a representative of the pro-Israel community boarded the train and gave Truman and his campaign aides a suitcase containing $2 million in cash. This was an extraordinary amount of money in an era when the entire Marshall plan, which revived the economies of all of Western Europe, cost only $13.5 billion.

Clifford, who declined a Truman offer of a Supreme Court appointment and instead spent most of the rest of his life as a highly paid corporate lawyer in Washington, carried out many high-profile assignments for Democratic presidents. For Truman he helped put together the Marshall Plan and the North Atlantic Treaty Organization and also drafted the 1947 legislation that created the Defense Department and reorganized the armed services.

He advised the Kennedy family and headed President-elect Kennedy’s transition team, which took over in 1961 from the administration of President Dwight D. Eisenhower, Truman’s successor. After Kennedy’s death, Clifford served as President Lyndon Johnson’s secretary of defense for the final 10 months of the Johnson administration.

During the Carter administration Clifford sought to mediate the Turkish-Greek dispute over Cyprus, conferred with Indian Prime Minister Indira Gandhi after the Soviet invasion of Afghanistan, and advised Carter on the Panama Canal treaty.

It was in 1978, still during the Carter administration which ended with Ronald Reagan’s election as president in 1980, that Clifford and his younger protégé and law partner, Robert Altman, began representing a group of foreign investors in what became the 1982 takeover of four U.S. banks, one of which later became First American Bankshares Inc.

Clifford and Altman later testified that they did not know that the investors they represented, who later installed them as directors of First American, were front men for BCCI. In 1991, after federal indictments were issued against BCCI and the relationship between it and First American was revealed, Clifford and Altman resigned their positions at the bank. They were indicted in 1992 on federal and New York state charges of bribery.

Former U.S. arms negotiator Paul C. Warnke and many of the other lawyers in the law firm of Clifford and Warnke left the firm. Clifford, who spent most of his time from then on working on his legal defense against the bribery charges, also underwent quadruple bypass heart surgery in March 1993, and suffered a heart attack shortly afterward. In the same year a New York judge dropped the state charges against Clifford, citing his age and deteriorating health. Altman was subsequently acquitted after a four-month trial in New York.

In February of this year the two agreed to forfeit $5 million to settle Federal Reserve Board charges that they knew BCCI owned First American and had lied about it to bank inspectors. Then in September of this year Clifford and Altman settled the last of the civil lawsuits stemming from the BCCI scandal by giving up their claims to $18.5 million in legal fees and First American stock.

Not surprisingly Clifford, the consummate Washington insider, enjoyed consistently positive press treatment between his first encounter with the Middle East in 1948, during which he subordinated U.S. national interest to partisan political interest, and his second encounter representing BCCI, which prosecutors described as a global criminal operation. He is survived by his wife of 66 years, the former Margery Pepperell Kimball, three daughters, all born before the Cliffords moved to Washington, 12 grandchildren and 17 great-grandchildren.