American Enterprise Institute

Having helped lead the effort to push public support for the U.S. invasion of Iraq—including by creating influential advocacy groups like the Project for the New American Century (PNAC)—AEI writers and scholars turned their attention to Iran and other Mideast hotspots during the final years of George W. Bush's administration. Among their efforts was the establishment in 2006 of the Iran Enterprise Institute, described by writer Laura Rozen as "a privately funded nonprofit drawing not just its name but inspiration and moral support from leading figures associated with the American Enterprise Institute" (November 13, 2006, American Prospect Online). She added: "The Iran Enterprise Institute is directed by a newly arrived Iranian dissident whose cause has recently been championed by AEI fellow and former Pentagon adviser Richard Perle."

Among AEI's more outspoken scholars on expanded U.S. intervention in the Middle East have been Michael Ledeen and Reuel Marc Gerecht. In September 2007, AEI held a "book forum" that addressed Ledeen's newly published book, The Iranian Time Bomb: The Mullah Zealots' Quest for Destruction. Among those speaking at the event were Ledeen (who is AEI's "Freedom Scholar"), Clifford May of the closely associated Foundation for Defense of Democracies, and former CIA head James Woolsey. Writing in his Inter Press Service weblog, LobeLog, Jim Lobe said of the book: "Judging by the excerpts that have been released to date, Ledeen's latest tract will be entirely predictable, although, in addition to emphasizing, as he has for much of the last several years, the urgent need to support and fund the [Iranian] regime's domestic opposition, he concludes that '[t]his presidential administration or the next will likely face a terrible choice: appease a nuclear Iran, or bomb it before their atomic weapons are ready to go. While a sad exclamation point at the end of nearly 30 years of failed policy, confrontation may be virtually inescapable. Like other ideological wars of the 20th century, this war will likely only end when one side has lost.'"

According to writer Gareth Porter, AEI resident fellow Gerecht has been "more aggressive than anyone else" in making the misleading argument "that Iraq's Shiites, liberated by U.S. military power, would help subvert the Iranian regime" (see Porter, "The Warpath to Regime Change," Right Web, November 6, 2007). Gerecht has shopped his arguments for military intervention in Iran on both sides of the Atlantic. In September 2005, Gerecht gave testimony to the U.S. House Armed Services Committee during which he argued that diplomacy with Tehran was a dead end. Pointing to the Clinton administration's efforts to "give peace a chance," which Gerecht said had included apologizing for "the supposedly bad behavior of the entire Western world toward Iran for the last 150 years," Gerecht argued: "American apologies in revolutionary clerical eyes mean only one thing—weakness. And showing weakness to power-politic-loving Iranian clerics is not astute. This is 101 in Iranian political culture. Yet I'm willing to bet that most analysts dealing with Iran at the State Department and the CIA probably thought American soul-searching was a good thing, that the political elite in Tehran would respect us more." Several years later, in a widely quoted September 3, 2007 issue of Newsweek magazine, Gerecht remained on message, writing: "Fears [in Europe about U.S. intentions to designate Iran's Revolutionary Guard as a terrorist organization] are unfounded ... and rest on several basic misunderstandings. For one thing, the terrorist label is nothing new, and thus will do little to change the current state of play. For another, Iran represents a much greater threat than Europe typically recognizes. It is not a status quo state that favors stability, as most pundits and governments portray it. Iran is, instead, a radical revolutionary force determined to sow chaos beyond its borders. Assuming that normal negotiations can bring it around is, therefore, a grave mistake. The mullahs don't want peace in Iraq—just the opposite. War may come, but not because negotiations break down. The likely trigger is an Iranian provocation."

In March 2007, Gerecht shared his arguments with a European audience during a "U.S.-European Traveling Debate" cosponsored by AEI and the German Marshall Fund, which included stops in Berlin, Brussels, and Paris. Titled "Iran and the Bomb: Will It Get It and What Will It Mean?" and including Gerecht, the Washington Post's David Ignatius, as well as several policy figures from European countries, the debate series was aimed at discussing "what courses of action the United States and its allies can take against Iran" in light of Tehran's refusal to halt uranium enrichment activities despite considerable diplomatic pressure.

History. AEI describes itself as "dedicated to preserving and strengthening the foundations of a free society—limited government, competitive private enterprise, vital cultural and political institutions, and vigilant defense—through rigorous inquiry, debate, and writing." Founded in 1943, AEI is also one of the oldest policy institutes in Washington. AEI traces its origins to a New York City-based business association called the American Enterprise Association (AEA), which was founded in 1938 and soon after World War II opened a Washington office to lobby against government intervention in domestic economy. AEA, which brought together some of the country's largest corporate firms, substituted "institute" for "association" and became one of the nation's first policy think tanks. Lewis Brown, president of Johns-Manville Corp., was the principal figure behind AEA, which from its beginning had a strong pro-business posture. Like the AEA, the AEI is dedicated to the "maintenance of the system of free, competitive enterprise."

One of the institute's earliest supporters on Capitol Hill was Gerald Ford, who as a congressional representative praised the institute in a letter in 1950, beginning what AEI describes as a "long and happy relationship with the president-to-be." A key figure in AEI's early history was William Baroody, who joined AEI as president in 1954 and was responsible for bringing some of the country's most conservative economists into the institute, including Milton Friedman and Paul McCracken. Under Baroody's leadership, AEI succeeded in injecting conservative reform ideas into national media. Baroody also helped ensure not only that congressional and executive officials heard the policy ideas of AEI scholars, but also that AEI associates moved into high government positions, especially in the Ford, Reagan, and George H.W. Bush administrations.

When Ford retired from the presidency in 1976, he went to AEI, bringing with him a retinue of conservative figures including Arthur Burns, Robert Bork, David Gergen, and James Miller III. As the institute boasts about this era: "AEI had become a hotbed of innovative ideas—on deregulation, tax reform, trade policy, social welfare, and the revitalization of defense and foreign policy—that were about to debut on the political stage."

It was also during the 1970s that neoconservative forefather Irving Kristol, father of Weekly Standard editor William Kristol, became closely involved in AEI's fortunes. In his 1995 book Neoconservatism: The Autobiography of an Idea, Kristol recounts how Baroody, having been attracted by Kristol's writings in The Public Interest and the Wall Street Journal, invited Kristol to be an honorary fellow at the institute. The relationship, Kristol implies in the book, resulted in AEI expanding its free enterprise focus to include social issues and Cold War defense policies, topics closely covered by neoconservative writers. Attracted by the emergence of this new ideological grouping, writes Kristol, Baroody "made a determined effort to recruit 'neoconservatives' to AEI, and did in fact recruit, early on, Jeane Kirkpatrick, Michael Novak, Ben Wattenberg, as well as many others. ... [Baroody's] task was facilitated by the appearance on the scene of a rejuvenated Bradley Foundation and John M. Olin Foundation, now staffed by younger men and women who had been exposed to, and influenced by, 'neoconservative' thinking. Among them special note has to be made of Michael Joyce of Bradley, who turned out to be an accomplished neoconservative thinker in his own right" (Neoconservatism: The Autobiography of an Idea, p. 33).

In the 1980s, the Reagan administration attracted an array of AEI associates, leaving AEI offices relatively empty. Whether on foreign policy issues, such as support for the Nicaraguan contras or the "freedom fighters" in Africa, or on domestic issues such as corporate deregulation, former AEI figures played a prominent role. Though the Reagan years were a hey-day for AEI ideas, the time was difficult for the institute. Baroody, who had authored AEI's slogan ("Competition of ideas is fundamental to a free society"), died in 1981, and it wasn't until the late 1980s that the think tank started recovering from the organizational and financial crises that followed his death.

With the emergence of competition in the form of two new rightist think tanks, the Heritage Foundation and Cato Institute, AEI's influence diminished and its finances suffered. While AEI was no longer the only right-wing think tank, President Ronald Reagan in 1988 acknowledged the institute's pervasive influence in spearheading the "Reagan Revolution." According to Reagan, "The American Enterprise Institute stands at the center of a revolution in ideas of which I, too, have been a part. AEI's remarkably distinguished body of work is testimony to the triumph of the think tank. For today the most important American scholarship comes out of our think tanks—and none has been more influential than the American Enterprise Institute." (For a detailed, pre-1990 history of AEI, see: http://rightweb.irc-online.org/groupwatch/aei.html.)

With the 1986 appointment of Christopher DeMuth as president, AEI's fortunes and reputation began to recuperate. Twenty years later, DeMuth remains AEI's president and has taken the think tank to new heights of influence—and to an annual budget of more than $25 million, up from $8 million in the late 1980s.

Activities and Staff. AEI headquarters are located in a building on Washington's 17th Street that is a warren of right-wing operations. Before it shuttered most of its operations in 2006, the Project for the New American Century had its offices in the same building. Several PNAC principals, including Bruce Jackson, Reuel Marc Gerecht, Gary Schmitt, and Tom Donnelly, moved from PNAC to AEI. Located in the same building as AEI are the offices of the Weekly Standard, the neoconservative magazine that is the favored outlet of such AEI scholars as Gerecht and Frederick Kagan. The Philanthropy Roundtable, the rightist association of foundations that split off from the Council of Foundations in the early 1980s, also found a home in the AEI building.

Approximately 175 AEI staff members work at AEI headquarters. In addition, AEI has several dozen adjunct scholars and fellows working at research universities around the United States. AEI conducts policy research through three primary research divisions: Economic Policy Studies, Social and Political Studies, and Defense and Foreign Policy Studies. Other AEI projects include the Welfare Reform Academy, the W.H. Brady Program in Culture and Freedom, the National Research Initiative, the AEI Press, and the American, a national magazine with daily online updates.

The more centrist Center for Strategic and International Studies (CSIS) is an AEI spin-off. Although decidedly neoconservative, AEI has frequently reached out to centrist organizations as it has grown. In 1998, for example, together with the Brookings Institution, AEI established the AEI-Brookings Joint Center for Regulatory Studies.

In 2003, AEI, together with the Federalist Society, launched a new project and website called www.NGOWatch.org to monitor nongovernmental organizations (NGOs), especially those involved in foreign policy and international relations. As part of the launch, AEI organized a conference entitled "NGOs: The Growing Power of an Unelected Few," which was cosponsored by the Institute of Public Affairs, a right-wing Australian think tank. According to the conference organizers, "NGOs have created their own rules and regulations and demanded that governments and corporations abide by those rules."

Commenting on the AEI conference and its NGO Watch project, Ralph Nader wrote: "During the past 22 years, the AEI, their nearby corporate patrons, their allied trade associations and corporate think tanks have, in effect, taken over the executive branch, the Congress, and promoted the judgeships of right-wing corporate lawyers. ... What's left to do? How to keep its corporate supremacists writing those big checks? Why, go after the liberal or progressive nongovernmental associations. Describe them as a collage of Goliaths running an all-points wrecking machine over government and business" (Common Dreams, June 13, 2003).

The membership of AEI's board of trustees points to the institute's strong ties to Corporate America, including: Bruce Kovner (Caxton Associates), John Faraci (International Paper), Raymond Gilmartin (Merck), Roger Hertog (Alliance Capital Management), Kevin Rollins (Dell), William Stavropoulos (Dow Chemical), and Wilson Taylor (CIGNA), among many others. Over the past several decades, AEI's board of trustees has included representatives of scores of the nation's top corporations, including Rockwell, Amoco, Hewlett Packard, Exxon Mobil, Texas Instruments, Eli Lilly, and Citicorp. Former board members include Dick Cheney, then at Halliburton, and Kenneth Lay of Enron.

Among the many corporate contributors to AEI is the Walton Family Foundation, which was founded by the family that started Wal-Mart. According to the New York Times, Wal-Mart "has discovered a reliable ally: prominent conservative research groups like the American Enterprise Institute, the Heritage Foundation, and the Manhattan Institute" (New York Times, September 8, 2006). In August 2006, AEI visiting scholar Richard Vedder wrote an opinion article for the Washington Times, extolling Wal-Mart's benefits to the American economy, writing that, "There is enormous economic evidence that Wal-Mart has helped poor and middle-class consumers, in fact more than anyone else" (Washington Times, August 27, 2006). The article prominently identified his ties to the AEI, but failed to mention Wal-Mart's contributions to AEI.

AEI's council of academic advisers includes such leading neoconservatives and conservatives as James Q. Wilson, Gertrude Himmelfarb, and Samuel Huntington.

Among the many AEI scholars are Lynne Cheney, Nicholas Eberstadt, Mark Falcoff, David Frum, Newt Gingrich, Irving Kristol, Joshua Muravchik, Roger Noriega, Richard Perle, Danielle Pletka, Michael Rubin, and Ben Wattenberg.

AEI's influence in setting the U.S. policy agenda, especially in foreign affairs, rose to new heights in the first George W. Bush presidential term, when nearly two dozen AEI alums were working within the Bush administration (and from outside of government, the retinue of AEI scholars was promoting a neoconservative agenda). AEI knew it was going to play a prominent role in the Bush administration even before George W. took office. In a December 2000 Washington Post article, Dana Milbank wrote: "It's noon in the American Enterprise Institute's 12th-floor dining room, where Irving Kristol, Norman Ornstein, and other luminaries lunch. On the menu is swordfish and white wine. On the agenda is a Bush transition. If George W. Bush becomes president, says AEI scholar Douglas Besharov, beckoning to the dining room, 'this whole place empties out'" (Washington Post, December 8, 2000).

For the most part, AEI associates inside and outside government have worked in lockstep to advance the neoconservative vision of U.S. global dominance. But by the second Bush administration, AEI associates such as Rubin, Muravchik, Frum, Frederick Kagan, and Gingrich became increasingly critical of the Bush administration, giving scathing critiques of Donald Rumsfeld, Condoleezza Rice, and the president himself.

Some AEI scholars have argued that the Bush administration hasn't committed enough U.S. troops to win the war in Iraq. Following the November midterm elections, AEI scholar Frederick Kagan wrote in the Weekly Standard: "We face a stark choice now. We can either maintain bases and large forces in Iraq, or we can withdraw. If we withdraw, the Iraqi Army will collapse, and we will not be able to help it except by re-entering the country in large numbers and in a much worse situation" (Weekly Standard, November 15, 2006). In early 2007 Kagan authored an AEI plan on "Choosing Victory" in Iraq; what was needed was a super-"surge" of troops into the country, he argued. In September 2007 Kagan was a panelist on an AEI event titled: "No Middle Way: Two Reports on Iraq."

Funding. AEI's $25 million annual budget comes from a mix of corporate, individual, and foundation donations. Major donors include the heavy hitters of the conservative foundation world: the Smith Richardson Foundation, the Olin Foundation, the Scaife Foundation, and the Lynde and Harry Bradley Foundation, as well as smaller right-wing foundations such as Carthage, Earhart, and Castle Rock. From 1985 through 2005, AEI received more than $40 million from right-wing foundations. (For more on AEI's funding, see MediaTransparency.org.) In the 1970s, the Howard Pew Freedom Trust was a major supporter of the institute's growth spurt. In the mid-1980s, the right-wing foundations, notably Olin and Smith Richardson, cut off funding to AEI out of concern that the think tank was moving to the center politically. However, under the leadership of DeMuth, AEI regained the confidence of Olin and other major conservative foundations, though it was not until 1997 that Smith Richardson resumed funding AEI.

According to People for the American Way, corporate donors to AEI have included the General Electric Foundation, Amoco, Kraft, Ford Motor Company Fund, General Motors Foundation, Eastman Kodak Foundation, Metropolitan Life Foundation, Procter & Gamble Fund, Shell Companies Foundation, Chrysler Corporation, Charles Stewart Mott Foundation, General Mills Foundation, Pillsbury Company Foundation, Prudential Foundation, American Express Foundation, AT&T Foundation, Corning Glass Works Foundation, Morgan Guarantee Trust, Alcoa Foundation, and PPG Industries. Wal-Mart is also a major contributor to AEI.

According to AEI, "National and multinational corporations who support AEI maintain close relationships with the institute's scholars and regularly receive top-level research and analysis on specific policy interests and priorities. In addition, corporations provide important input to AEI on a wide variety of issues." Corporations provide approximately 35% of AEI's revenues.

The American Enterprise Institute for Public Policy Research
1150 Seventeenth Street, NW
Washington, DC 20036
Phone: 202-862-5800
Fax: 202-862-7177
E-mail: vrodman@aei.org
Website: www.aei.org

Jim Lobe, "AEI to Roll Out The Iranian Time Bomb," LobeLog, August 28, 2007, http://www.ips.org/blog/jimlobe/?p=58.

"U.S.-European Traveling Debate: Iran and the Bomb: Will It Get It and What Will It Mean?" American Enterprise Institute, March 2007, http://www.aei.org/events/filter.all,eventID.1489/event_detail.asp.

Reuel Marc Gerecht, "Clerical Iran: The Threat," prepared testimony for the U.S. House Armed Services Committee, September 29, 2005.

Reuel Marc Gerecht, "Deadly Persian Provocations," Newsweek, September 3, 2007.

Frederick Kagan, "Choosing Victory: A Plan for Success in Iraq," AEI, January 5, 2007, http://www.aei.org/publications/filter.all,pubID.25396/pub_detail.asp.

American Enterprise Institute, "No Middle Way: Two Reports on Iraq," September 2007, http://www.aei.org/events/filter.all,eventID.1567/summary.asp.

Irving Kristol, Neoconservatism: The Autobiography of an Idea, Free Press, 1995.

American Enterprise Institute, www.aei.org.

Laura Rozen, "Iran Hawks Reorganize," American Prospect Online, November 13, 2006, http://www.prospect.org/web/page.ww?section=root&name=ViewWeb&articleId=12209.

"AEI's Diamond Jubilee 1943-2003," American Enterprise Institute, http://www.aei.org/about/contentID.20031212154735838/default.asp.

Michael Tomasky, "Who is Roger Hertog?" American Prospect, May 6, 2002, http://www.prospect.org/print-friendly/print/V13/8/tomasky-m.html.

The American, www.american.com.

AEI Board of Trustees, AEI, http://www.aei.org/about/filter.,contentID.20038142214500073/default.asp.

Ralph Nader, "Has the American Enterprise Institute Lost Contact with Reality?" Common Dreams, June 13, 2003.

"Conservatives Help Wal-Mart, and Vice Versa," New York Times, September 8, 2006, http://select.nytimes.com/search/restricted/article?res=F30C1EF93C550C7B8CDDA00894DE404482.

Richard Vedder and Bryan O'Keefe, "Wal-Mart against the Wall?" Washington Times, August 27, 2006.

Dana Milbank, "White House Hopes Gas Up A Think Tank: For Center-Right AEI, Bush Means Business," Washington Post, December 8, 2003, p. A3.

Frederick Kagan, "Reality Check II," Weekly Standard, November 15, 2006.

Jim Lobe, "Bringing the War Home: Right Wing Think Tank Turns Wrath on NGOs," Foreign Policy In Focus, June 13, 2003.

"American Enterprise Institute for Public Policy Research," Media Transparency, http://www.mediatransparency.org/recipientprofile.php?recipientID=19.

MediaTransparency.org, Foundation Grants: American Enterprise Institute, http://www.mediatransparency.org/recipientgrants.php?recipientID=19.

People for the American Way: American Enterprise Institute, http://www.pfaw.org/pfaw/general/default.aspx?oid=4456.

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