"Fingerspitzengefühl"

Firms pay top dollar to hear the world according to Kissinger

When word leaked that Henry Kissinger was flirting with the notion of running for Governor of New York, it was almost as disorienting as if William (“the Refrigerator”) Perry were to announce he was switching from football to tennis. For almost two decades Kissinger and foreign affairs have been synonymous, and it was hard to imagine Candidate Henry working the boardwalk at Coney Island or milking a cow at the state fair. So it was scarcely surprising when he announced last week that he had decided to stick to the global path rather than explore the campaign trail.

Nine years out of office, Kissinger has maintained a luster rarely matched by any former Secretary of State since Martin Van Buren made the leap to the White House in 1837. Even without his Air Force jet, Kissinger travels with the aura of power. He alerts the embassies. Bodyguards watch over him. The maid at London's posh Claridge's covers the floor with towels because Kissinger, she says, does not like to walk barefoot on hotel carpets. Arriving in Paris, Kissinger is invited to the Elysée Palace for a chat with President François Mitterrand; in Peking, Deng Xiaoping suggests a talk over tea. Back in New York City, the famous face and graveled accent cause a stir even at the Four Seasons, Manhattan's power-lunch emporium.

The expertise and access gained in years of power are carefully nurtured, valuable commodities, to be marketed now through Kissinger Associates, his international consulting firm. It is widely regarded as the Tiffany of that arcane new business known as corporate risk analysis, a growth industry in today's turbulent world. His firm consists of only nine advisers and researchers, a far cry from the 12,000 under his command at the State Department. The senior members are longtime Kissinger colleagues—and protégés—who bring their own distinction: former Under Secretary of State Lawrence Eagleburger and retired General Brent Scowcroft, who was Kissinger's deputy and then successor as National Security Adviser. But what sets this firm apart from others is Kissinger, who retains his clout even though he was frozen out by the Reagan Administration. Kissinger is sole owner of the firm, which grosses an estimated $5 million a year.

In his Park Avenue office, Kissinger works at a desk covered with precise rows of labeled folders, suggesting a world tidi-

er than it is. Gone are the old trappings of office—the direct phone link to the President, the reams of classified documents. But he dismisses secret papers as too short-range to be useful now. Experience enables his team to glean much from press reports. He is out more than in, meeting clients in corporate boardrooms, making more than 50 speeches a year for a minimum of $20,000 each, cultivating new contacts as old ones phase out.

Kissinger Associates' selected clientele of international conglomerates and financial institutions is as top secret as the

papers Kissinger once dealt with, but like all such secrets the names tend to leak: Volvo, Fiat, Atlantic Richfield, Fluor Corp., H.J. Heinz Co., S.G. Warburg investment bank in Britain. Foreign governments, however, need not apply. "We are not lobbyists," Kissinger says sternly. "We do not deal with the U.S. Government on behalf of any client."

The clients, 27 at present, pay top-of-the-line fees of about $225,000 for advice about the risks they face with their international investments. Political upheavals, debt crises, pressures to nationalize foreign holdings—all can affect millions of dollars in private investments. Kissinger, tight-lipped about the nature of the advice, volunteers. “An obvious case is South Africa. They want to know what do I think is going to happen there? In the Middle East? We give them a political risk assessment.” Kissinger’s advice to prospective clients is blunt: “If they are looking for hot tips, they are not going to get them. We can be useful in strategy, mid-

dle-term decisions.” What they get, says Eagleburger, is “Henry’s fingerspitzengefühl,” his instinctive feel for a situation.

Furio Colombo, president of Fiat, USA, explains why his parent company, which builds airplane engines, agricultural equipment and airports as well as automobiles, turns to Kissinger Associates: “He understands not just the external factors but the company’s inside way of thinking, the different kinds of products, different cultural needs. He is both flexible and deep, two things that don’t come together easily.”

There is also a personal component: when Fiat Chairman Giovanni Agnelli flies in from Italy, Kissinger has been known to call his wife Nancy and have an extra place set at their next dinner party.

The president of one U.S.-based company says that “Kissinger offers not only a valuable geopolitical analysis of the world, but also provides valuable entrée and contacts to government and business leaders around the world.”

Kissinger bridles when rivals suggest that he trades on his name and contacts. “We are not door openers,” he snaps. “Everywhere I have traveled in the past year, the heads of governments receive me. I do not ask them to do a favor for a client, and I don’t bring clients in with me.” The flare of anger indicates how deeply the criticism stings. He refutes the innuendo: “Some time ago a foreign company offered me $1 million, to be deposited in a Swiss bank the minute the company chairman walked through the door of a certain important finance minister. It would have required one

phone call—the minister was a close personal friend. I turned it down.” He also scoffs at critics who say the clients are buying the name. “Nobody continues paying you for your name. You either do something they can justify to their boards, or they drop you.” So far only two, in financial trouble, have done so.

In addition to his role as diplomat-for hire, lecturer and special commentator for ABC, Kissinger composes a newspaper column every month for the Los Angeles *Times* syndicate. While the column, carried by the Washington *Post*, is vintage Kissinger in its grand sweep and magisterial voice, his careful avoidance of direct criticism of the Administration has made it less trenchant—and less influential—than it might otherwise be. It all adds up to a life that is both lucrative and satisfying. Still, he says, “I would put national service above business, as a general proposition—if it is important.” Then he laughs: “I don’t want to sound like I’m looking for a job.”
—By Bonnie Angelo

Marketing expertise: Kissinger and Eagleburger in their New York office

*“If they are looking for hot tips, they are not going to get them.”*

TIME, FEBRUARY 17, 1986

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[L.C.]

# "Fingerspitzengefühl"

## Firms pay top dollar to hear the world according to Kissinger

When word leaked that Henry Kissinger was flirting with the notion of running for Governor of New York, it was almost as disorienting as if William (“the Refrigerator”) Perry were to announce he was switching from football to tennis. For almost two decades Kissinger and foreign affairs have been synonymous, and it was hard to imagine Candidate Henry working the boardwalk at Cooney Island or milking a cow at the state fair. So it was scarcely surprising when he announced last week that he had decided to stick to the global path rather than explore the campaign trail.

papers Kissinger once dealt with, but like all such secrets the names tend to leak: Volvo, Fiat, Atlantic Richfield, Fluor Corp., H.J. Heinz Co., S.G. Warburg investment bank in Britain. Foreign governments, however, need not apply. “We are not lobbyists,” Kissinger says sternly. “We do not deal with the U.S. Government on behalf of any client.”

The clients, 27 at present, pay top-of-the-line fees of about $225,000 for advice about the risks they face with their international investments. Political upheavals, debt crises, pressures to nationalize foreign holdings—all can affect millions of dollars in private investments. Kissinger, tight-lipped about the nature of the advice, volunteers, “An obvious case is South Africa. They want to know what do I think is going to happen there? In the Middle East? We give them a political risk assessment.” Kissinger's advice to prospective clients is blunt: “If they are looking for hot tips, they are not going to get them. We can be useful in strategy, mid-

dle-term decisions.” What they get, says Eagleburger, is “Henry's fingerspitzengefühl,” his instinctive feel for a situation.

Furio Colombo, president of Fiat, USA, explains why his parent company, which builds airplane engines, agricultural equipment and airports as well as automobiles, turns to Kissinger Associates: “He understands not just the external factors but the company's inside way of thinking, the different kinds of products, different cultural needs. He is both flexible and deep, two things that don't come together easily.”

Kissinger bridles when rivals suggest that he trades on his name and contacts. “We are not door openers,” he snaps. “Everywhere I have traveled in the past year, the heads of governments receive me. I do not ask them to do a favor for a client, and I don't bring clients in with me.” The flare of anger indicates how deeply the criticism stings. He refutes the innuendo: “Some time ago a foreign company offered me $1 million, to be deposited in a Swiss bank the minute the company chairman walked through the door of a certain important finance minister. It would have required one

In addition to his role as diplomat-for-hire, lecturer and special commentator for ABC, Kissinger composes a newspaper column every month for the Los Angeles Times syndicate. While the column, carried by the Washington Post, is vintage Kissinger in its grand sweep and magistrial voice, his careful avoidance of direct criticism of the Administration has made it less trenchant—and less influential—than it might otherwise be. It all adds up to a life that is both lucrative and satisfying. Still, he says, “I would put national service above business, as a general proposition—if it is important.” Then he laughs: “I don't want to sound like I'm looking for a job.”
—By Bonnie Angelo

TIME, FEBRUARY 17, 1986

Mayor E. Lynn Minnmann, in jacket, and Gary Mahannah on a nearly deserted Main Street

# Sac City Fights for Survival

## In a failing Iowa farm town, residents chip in for a new plant

U.S. 20 slices decisively through rich Iowa farmland, where the dirt is almost as dark as the two-lane asphalt ribbon that bisects the table-flat prairie west of Fort Dodge. The highway dips, then rises gently to Sac City, a town devastated by plunging crop prices, sagging spirits and the near collapse of rural America in the past decade.

In many respects Sac City looks terminal. The population is down to 2,400, from 3,000 in 1980. Fister's Department Store is out of business. Iowa Public Service has trouble collecting electric bills from nearly bankrupt farmers, and the utility's Sac City office has dropped from six employees to two. Bill Brenney, the town's remaining optometrist, says, "People are spreading payments way out. Accounts receivable are way up." The town's children look elsewhere for jobs, and not even fathers can help sons. Says Ralph Youll, co-owner of Youll Plumbing and Heating: "We've only made money one year in the last five. My son Jerry came home from college and wanted to get into the business, but I had to tell him no."

Sac City's reluctant Scrooge is Arnold Thomas, 32, who heads the local office of the Farmers Home Administration. He has the unpleasant duty, as the agent of the Federal Government's lender of last resort, to foreclose on farmers who cannot keep up their debt payments. After a two-year moratorium on foreclosures, Thomas is now sending out letters politely advising farmers on how to avoid default through loan reschedulings, reamortization, even voluntary liquidation. "It bothers me to foreclose," says Thomas. "If it didn't, you wouldn't be human. I try to leave my job at the office. Otherwise it'll eat you up."

A little hope, though, is rolling into Sac City. After numerous meetings with an industrial search firm in Des Moines, the town leaders have turned up a hot prospect for new business: Fibercraft Inc., a division of Equity Automotive Corp. of

Delano, Minn. The company will take over a 37,500-sq.-ft. warehouse abandoned in 1982 by Lear Siegler's Noble Division. Starting next month Fibercraft will turn out fiber-glass camping trailers and initially provide 40 precious jobs. In two years the payroll could rise to 100 people. "Everybody's excited," says Marilyn Hobbs, executive director of the Chamber of Commerce, beaming at a line of 50 Fibercraft job applicants last week. "For the first time in ages, people are talking positively. We've finally got something going in this town." Fibercraft comes at a price, measured on a gigantic red United Way-style thermometer at Main and Fifth, site of the town's only traffic light. To persuade the company to

Sign Painter Eldon Kolbe tallies donations

"We've got something going in this town."

SHELBY KATZ

KATZ

move to Sac City, town developers, in addition to supplying free manufacturing space, promised to pay its moving expenses from Minnesota, finance equipment and even supply some operating capital. The total: $175,000. As of last week, in just 24 days, the thermometer had risen to $165,000. The money is being raised by telephone solicitation and house-to-house canvassing. Cash is flowing in from savings accounts, mattresses, old socks and garage sales. Older farmers in surrounding Sac County, whose debt is low because their land is paid for, have dug deep and made contributions of $5,000 or more. The Sac City Sun Star, which has cut its publication cycle from twice to once a week as the town has suffered, runs pledge coupons along with ads from the two supermarkets and local auto and farm-implement dealers. "No contribution is too small," says Hobbs. "We're practically raiding our kids' piggy banks." One high school sophomore gave $10 out of his accumulated allowance.

The fund drive is reminiscent of the fervent, evangelical campaigns organized by citizens in economically ravaged Southern towns after the Civil War to raise money to build textile mills. Residents do not feel the money is being extorted. To them, donations are an investment in their future, in an economy less dependent on farming. Too small to qualify for federal development grants, Sac City and thousands of other towns in rural America must raid residents' pockets for the money to lure companies that can provide jobs.

"Things are different out here," says Dennis Holcomb of Shive-Hattery Engineers in Des Moines, whose search helped find Fibercraft for Sac City. Says Holcomb: "Iowa is full of small towns that can't come up with tax exemptions or low-interest loans the way bigger cities can in the East. So they turn to their friends and neighbors. It's truly a heartening thing to see."

To raise even more money, Equity Automotive will issue stock, at $1 a share, to those who contribute to the fund-raising campaign. In return, Fibercraft has promised to name a Sac City official to its board, giving the community some voice in what the plant does after it moves in. Says Anne Lubeck, who runs the Corner Store at 16th and Main: "It will be such a psychological lift. We haven't had a lot to celebrate around here for a long time."

Even as Fibercraft moves in, Sac City continues to lose other businesses. Within the past three weeks an engine-repair facility and a veterinary-supply firm closed their doors. But another manufacturer has talked about taking over the vacated quarters of a seed processor. Said City Administrator Gary Mahannah: "We're fighting a holding action until the farm economy turns around. The trick is to survive until that day comes." So far, the score is about even between Sac City and the mortgage payments that were due yesterday. —By John S. DeMott. Reported by Lee Griggs/Sac City

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TIME, FEBRUARY 17, 1986