Size doesn’t matter: McCain sells Montenegro out to Putin

In his acceptance speech at the Republican convention, John McCain lashed out at Putin and the Russian oligarchs, who, “rich with oil wealth and corrupt with power…[are] reassembling the old Russian Empire.”

Yet despite McCain’s tough talk, behind the scenes his top advisers have cultivated deep ties with Russia’s oligarchy–indeed, they have promoted the Kremlin’s geopolitical and economic interests, as well as some of its most unsavory business figures, through greedy cynicism and geopolitical stupor. The most notable example is the tale of how McCain and his campaign manager, Rick Davis, advanced what became a key victory for the Kremlin: gaining control over the small but strategically important country of Montenegro.

According to two former senior US diplomats who served in the Balkans, Davis and his lobbying firm, Davis Manafort, received several million dollars to help run Montenegro’s independence referendum campaign of 2006. The terms of the agreement were never disclosed to the public, but top Montenegrin officials told the US diplomats that Davis’s work was underwritten by powerful Russian business interests connected to the Kremlin and operating in Montenegro. Neither Davis nor the McCain campaign responded to repeated requests for comment. (Davis’s extensive lobbying work, especially on behalf of collapsed mortgage giants Fannie Mae and Freddie Mac, has already attracted critical media scrutiny.)

At the time, Putin wanted to establish a Russian outpost in the Mediterranean, and Montenegro–a coastal republic across the Adriatic from Italy–was seen as his best hope. McCain also lobbied for Montenegro’s independence from Serbia, calling it “the greatest European democracy project since the end of the cold war.” For McCain, the simplistic notion of “independence” from a country America had gone to war with in the late 1990s was all that mattered. What Montenegro looked like after independence seemed not to interest him. This suited Putin just fine. Russia had generally sided with Serbia against the West during the Balkan wars of the 1990s, but for the Kremlin, cutting Montenegro free from Serbia meant dealing with a Montenegro that could be more easily controlled. Indeed, today, after its “independence,” Montenegro is nicknamed “Moscow by the Mediterranean.” Russian oligarchs control huge chunks of the country’s industry and prized coastline–and Russians exert a powerful influence over the country’s political culture. “Montenegro is almost a new Russian colony, as rubles flow in to buy property and business in the tiny state,” Denis MacShane, Tony Blair’s former Europe minister, wrote inNewsweek in June. The takeover of Montenegro has been a Russian geostrategic victory–quietly accomplished, paradoxically enough, with the help of McCain and his top aides.

Birthday cadaver John McCain weakly shuffles behind Rick Davis as conman Follieri and Anne Hathaway greet them in Montenegro.

In mid-September The Nation‘s website published a photo of McCain celebrating his seventieth birthday in Montenegro in August 2006 at a yacht party hosted by convicted Italian felon Raffaello Follieri and his movie-star girlfriend Anne Hathaway. On the same day one of the largest mega-yachts in the world, the Queen K, was moored in the same bay of Kotor. This was where the real party was. The owner of the Queen K was known as “Putin’s oligarch”: Oleg Deripaska, controlling shareholder of the Russian aluminum giant RusAl, currently listed as the ninth-richest man in the world, with a rap sheet as abundant as his wealth. By mid-2005 Deripaska had already virtually taken control of Montenegro’s economy by snapping up its aluminum plant, KAP–which accounts for up to 40 percent of the country’s GDP and some 80 percent of its export earnings–in a nontransparent privatization tender strongly criticized by NGO watchdogs, Montenegrin politicians and journalists. The Nation has learned that Deripaska told one of his closest associates that he bought the plant “because Putin encouraged him to do it.” The reason: “the Kremlin wanted an area of influence in the Mediterranean.”

Deripaska’s Queen K yacht.

In mid-2005 Ambassador Richard Sklar, the former lead US official in the Balkans, ceased advising the Montenegrin government (he’d worked as a pro bono adviser after leaving the US diplomatic service) when it became clear the plant was being handed to Deripaska under heavy Russian pressure. “I quit because it was a bad deal, not for any political reasons. The Russians scared all the other buyers off. They offered far too little money and got themselves a sweetheart deal.”

Russia’s virtual takeover of Montenegro was well under way by January 2006, when Rick Davis introduced Deripaska to McCain at a villa in Davos, Switzerland. They met again seven months later, at a reception in Montenegro celebrating McCain’s birthday, as reported in the Washington Post.

The story of how Oleg Deripaska, 40, rose from a Cossack village to become a Putin-blessed aluminum tycoon with an estimated $40 billion fortune does not begin with a lemonade stand and old-fashioned elbow grease. Like most post-Soviet success stories, Deripaska’s rise began abruptly and violently, during the chaotic reign of Boris Yeltsin. Among all the battles for control of valuable state assets in the 1990s, none were as bloody as the “aluminum wars,” in which organized-crime gangs hired by competing interests assassinated dozens of executives, shareholders and bankers. During a visit to the United States in 1995, Deripaska threatened the lives of two aluminum rivals, Yuri and Mikhail Zhivilo, according to a RICO lawsuit filed against Deripaska in New York district court in 2000. The RICO case is just one of many lawsuits, including one filed in Israel by a former business partner claiming that Deripaska illegally wiretapped an Israeli cabinet minister. In addition, German prosecutors have begun a criminal money-laundering investigation in Stuttgart. (Deripaska did not respond to requests for comment.)

Deripaska understands that success in Russia today comes from a mixture of brute force, political influence and personal connections. In 2001, about a year after Putin signed a decree granting legal immunity to Yeltsin’s family, Deripaska married Yeltsin’s granddaughter, thereby cementing his own immunity and power. Throughout Putin’s reign, Deripaska has adhered to an unwritten understanding between Putin and the oligarchs: as long as they support the Kremlin, they can operate with impunity. Deripaska has thus taken on numerous projects dear to Putin, such as building a new airport in Sochi for the 2014 Olympics and buying out Tajikistan’s aluminum plant to help Putin reassert control over that key ex-Soviet republic. Deripaska openly admits that his RusAl holdings are subservient to the Kremlin’s wishes, telling the Financial Times last year, “If the state says we need to give it up, we’ll give it up.”

Yet Deripaska faced a serious obstacle to his business ambitions, hampering his duties as a Putin surrogate. Because of numerous accusations of involvement in death threats, extortion, racketeering and money laundering, he had been barred from entering America since 1998. Putin has lobbied for Deripaska’s US visa. In an interview with Le Mondeearlier this year, Putin complained, “I have asked my American colleagues why. If you have reasons for not delivering him a visa, if you have documents on illegal activities, give us them…. They give us nothing, explain to us nothing, and forbid him from entry.”

Deripaska and Putin confer in Sochi.

The visa ban was costing Deripaska billions: for years he and fellow RusAl shareholders had sought to cash in their wealth by launching an IPO in London, which could have netted up to $10 billion for RusAl’s owners. However, finding institutional buyers would be difficult if not impossible as long as RusAl’s primary owner was barred from entering the United States.

Despite rampant Russophobia among Republicans, Deripaska turned to powerful GOP figures to solve his problem–especially to Republicans connected with McCain. In 2003 Deripaska hired former presidential candidate Bob Dole, who had nearly picked McCain as his running mate, and Dole’s lobbying partner Bruce Jackson (also a McCain aide) to lobby the State Department to overturn the visa ban, according to Glenn Simpson and Mary Jacoby of the Wall Street Journal. Over the next few years Dole’s firm, Alston & Bird, was paid more than $500,000 to push for Deripaska’s visa.

Deripaska also reached out to a Washington-based intelligence firm, Diligence, chaired by GOP foreign policy hand Richard Burt, McCain’s top foreign policy adviser in 2000 and an adviser in ’08 (Burt left Diligence in 2007 to join Henry Kissinger’s consulting firm). Deripaska’s business partner in London, Nathaniel Rothschild, an heir to the English Rothschild fortune, bought a stake in Diligence, according to the New York Times and confirmed by a Rothschild spokesman. The firm offered Deripaska many useful services: corporate intelligence gathering, visa lobbying through considerable GOP connections and, crucially, help in obtaining a $150 million World Bank/European Bank for Reconstruction and Development loan for a Deripaska subsidiary, the Komi Aluminum Project. Getting the loan was useful in providing a layer of comfort to Western investors skittish about RusAl. So Diligence, now partly owned by Rothschild, provided a “due diligence” report to the World Bank, which the Bank then used to approve its loan to Deripaska.

Not surprisingly, the lobbying worked: in December 2005 Deripaska was issued a multientry US visa, according to the State Department. During his brief stay he signed his World Bank loan, spoke at a Carnegie Endowment meeting and attended a dinner for Harvard University’s Belfer Center, where, thanks to a generous donation, he became a member of its international council.

However, Deripaska’s trip did not end well. Under the visa’s terms, he was forced to endure lengthy FBI questioning. According to the mining-industry newsletter Mineweb, the list of his enemies had grown from jilted former business partners to the heads of powerful US metals companies and government officials unhappy with RusAl’s control of key Third World bauxite mines, which threatened beleaguered US aluminum giants. The interview went badly–according to people who know him, Deripaska had little patience for prying bureaucrats. When he left the country, the visa ban was reinstated. Once again Deripaska turned to powerful Republicans–this time, to McCain and campaign manager Davis, who arranged the January 2006 Davos introduction. The McCain campaign later claimed that “any contact between Mr. Deripaska and the senator was social and incidental,” but afterward Deripaska thanked Davis for arranging “such an intimate setting.” The Washington Post reported that Davis was “seeking to do business with the billionaire.” Indeed, Deripaska’s subsequent thank-you letter mentioned his possible investment in a metals company Davis represented through a hedge-fund client.

If you’re wondering how Deripaska came to know Davis & Co., the answer lies in Russia’s next-door neighbor Ukraine.

In December 2004 Ukrainians poured into the streets of Kiev and other cities in the peaceful “Orange Revolution,” which overthrew a Putin-backed corrupt leader, Viktor Yanukovich, who had tried to steal the country’s presidential election that year (during which the pro-Western opposition candidate, Viktor Yushchenko, was poisoned and almost died). It was a serious blow to Russia’s geopolitical standing.

Putin’s Ukrainian proxies were also in trouble. Shortly after the Orange Revolution, a murder investigation was launched against the country’s richest oligarch, Rinat Akhmetov, Yanukovich’s main backer. Akhmetov fled the country. In exile in Monaco, he turned to Davis’s business partner, Paul Manafort–the second name in the lobbying firm Davis Manafort. An old GOP hand, Manafort, like Davis, had played a key role in Dole’s failed 1996 presidential run and had worked for dictators like Ferdinand Marcos of the Philippines and Mobutu Sese Seko of Zaire. Akhmetov initially hired Manafort to improve the image of his beleaguered conglomerate, SCM, but soon Manafort’s role shifted to helping Yanukovich.

Paul Manafort (right) and Rinat Akhmetov (left) in Davos.

Manafort assembled a skilled team of political operatives in Ukraine and set about raising the popularity of Yanukovich’s pro-Russian Party of Regions, which Akhmetov financed. It was a very lucrative deal for Davis Manafort–and successful (according to Ukrainian investigative journalist Mustafa Nayem, Akhmetov paid Manafort upward of $3 million). Yanukovich’s disgraced party won a resounding victory in the March 2006 elections–and Akhmetov returned as the top Ukrainian oligarch. Thanks in part to the work of Davis Manafort, the Orange Revolution was essentially undone, putting Putin back in the chess match over Ukraine’s future.

Publicly McCain and his campaign chief’s lobbying firm were on opposite sides. In 2005 McCain had nominated Orange Revolution hero Yushchenko for the Nobel Prize, and that spring he’d honored Yushchenko in the headquarters of the International Republican Institute, whose board McCain has chaired since 1993. But behind the scenes the former head of IRI’s Moscow office, Philip Griffin, was recruited by Manafort to work on Yanukovich’s campaign against Yushchenko. Davis Manafort’s work was considered so detrimental to US interests that a National Security Council official called McCain’s office to complain, according to the New York Times. The McCain campaign denies receiving the NSC complaint.

But the firm’s work was only just beginning. The same month Davis Manafort helped deliver this victory to Putin’s proxies, it started work on another key Kremlin success story: an independent and Russia-dominated Montenegro.

First, a little history. Montenegro was the smallest of the former Yugoslavia’s six republics. When Slobodan Milosevic was overthrown in October 2000, Montenegro’s longtime strongman, Milo Djukanovic, figured the West would reward him by supporting his push for independence. But the European Union and the United States opposed Montenegro’s secession, which they feared would undermine the new, pro-Western leaders in Serbia and bring more war. So under heavy pressure from the EU, an agreement was struck in 2002 putting off an independence referendum for at least three years.

Djukanovic then looked beyond the West for support. That same year his closest ally and mentor, Milan Rocen, was dispatched to Moscow as ambassador of the Serbia-Montenegro confederation. Rocen nurtured ties to Putin’s Russia, and by 2005 the biggest Montenegrin industrial asset, the KAP aluminum plant, was snatched up by Deripaska at Putin’s request. After that, Russia surprised everyone by dropping its objections to Montenegrin independence, which Russia’s historic ally Serbia vigorously opposed. “There seemed to be a belief that Deripaska and the Russians wanted to gain control of the aluminum plant as part of a Russian move for greater influence throughout Montenegro,” says former ambassador Sklar.

Meanwhile, Rick Davis was also eager for a piece of Montenegro’s independence, lobbying hard for Davis Manafort to run the referendum campaign. Bob Dole, who has been paid $1.38 million by the Montenegrin government since 2001 to lobby for it in Washington, urged his Montenegrin friends to hire Davis. Whether it was because of Dole or, as some speculate, the Russians, Davis got his deal.

Though Davis has claimed no connection to his partner Manafort’s controversial activities in Ukraine, he nevertheless hired at least three specialists recommended by Manafort, from the same team Manafort used for Yanukovich’s victory, to work on Montenegro’s independence referendum. They included Russian political operative Andrei Ryabchuk, an elections specialist who had previously worked on pro-Putin campaigns in Russia. Ryabchuk told The Nation that he was “recruited by Manafort’s people” out of Moscow to the Ukraine operation and then on to Montenegro.

Davis’s team was vetted by Montenegro’s Russian ambassador Rocen, who was returning from Moscow to oversee the independence campaign. Why was Davis hired? The top McCain aide was as much a political symbol as a campaign consultant. “I think the Montenegrins hired Rick to have political cover–it was important to show they had support from the United States,” said an American democracy expert who’s worked in Montenegro. Though disclosure is required by Montenegrin law, Davis Manafort’s contract with the ruling Montenegrin party was never publicly released. In addition, Djukanovic’s party never listed payments to Davis Manafort on its election filings, lending credence to private claims by top Montenegrin officials that Russian business interests paid for Davis’s work through hired third parties, an oft-used though illegal tactic in Eastern Europe to disguise money trails.

At key points in the campaign, Davis reached out to Deripaska’s allies for help. With the referendum too close to call, the Serbs tried to sway public opinion by threatening to revoke scholarships and other education privileges of Montenegrin students if the country should secede. This caused a panic–so to counter the Serbs, Davis turned to Deripaska emissary Nathaniel Rothschild (Rothschild has reportedly become the richest of all the Rothschilds, thanks to his privileged role as a Deripaska adviser).

Three weeks before the independence referendum, Davis asked Rothschild to come to Montenegro. After arriving in his private Gulfstream jet, Rothschild was trotted out before the cameras with the Montenegrin prime minister, where he pledged $1 million to support students who might be hurt by Serbia’s scholarship threat. Another Deripaska ally brought in to secure the student vote was Canadian billionaire Peter Munk, CEO of Barrick Gold, the world’s largest gold-mining corporation (it was Munk who had hosted the Davos meeting between McCain and Deripaska a few months earlier). Munk, who serves on the advisory board of RusAl, delivered pledges of support from Canadian universities.

At the same time Deripaska’s allies were employed by Davis, Dole was lobbying McCain to promote Montenegro’s independence. Dole’s aides held a teleconference with McCain’s Senate office when Montenegro’s foreign minister visited Washington; shortly thereafter, the referendum passed by a razor-thin 0.5 percent. In April 2006 McCain announced that Montenegro’s independence was the “greatest European democracy project since the end of the cold war.” Despite opposition cries of vote rigging, the United States and other major powers accepted the results–and Putin’s Russia recognized newly independent Montenegro before the EU did.

A few months after the vote, McCain and a contingent of GOP senators visited Montenegro. The day before they arrived, Djukanovic had flown to Putin’s dacha on the Black Sea. “Your government made it possible for large-scale Russian investments,” Putin told the Montenegrin leader. Djukanovic then returned to Montenegro and warmly received McCain, who also met with the Montenegrin president, speaker of Parliament and opposition leader Predrag Bulatovic. Bulatovic told McCain about how Russian capital was taking over the country and of his concern that “this investment can have a negative impact on the democratic process.” McCain listened but kept criticism of Russia to himself. Meanwhile, Davis was still in the country, helping Djukanovic’s Russia-allied party win the upcoming parliamentary elections. (At the time, Djukanovic was under investigation by Italian prosecutors for cigarette smuggling and “Mafia-type activities.”)

Soon after the referendum, the powerful figures behind Montenegro’s independence were carving up the country. That summer Rothschild started discussions with top Montenegrin officials about gaining control of the valuable shoreline, including the half-billion-dollar Porto Montenegro project, which aims to become the world’s top mega-yacht marina, complete with luxury hotels, shopping and the country’s first eighteen-hole golf course. The property was handed to the Munk-Rothschild-fronted offshore consortium for a pittance, according to MANS, the local NGO partner of Transparency International, in yet another backroom deal. Eventually, Deripaska’s role in Porto Montenegro, which was initially secret, was formally acknowledged, although the full list of owners is still a mystery. Deripaska is also developing an 8 billion-euro resort in southern Montenegro and seeking control of a coal mine and a thermal power plant.

Roughly two years later, in March of this year, Rothschild hosted a high-dollar fundraiser for McCain at London’s posh eighteenth-century Spencer House, which Rothschild donated for the occasion. Given the close relationship between Rothschild and Deripaska, some speculated that Deripaska was the hidden hand behind the event. The conservative watchdog group Judicial Watch filed a complaint with the Federal Election Commission, alleging that the fundraiser amounted to an illegal contribution by foreign nationals to McCain’s campaign.

Aside from a little campaign dough, what has McCain gotten out of all this? It’s hard to tell–either he was utterly clueless while his top advisers and political allies ran around the former Soviet domain promoting the Kremlin’s interests for cash, or he was aware of it and didn’t care. McCain was reportedly so angry about Davis Manafort’s role in stifling Ukraine’s Orange Revolution that he almost removed Davis as campaign manager. But in the case of Montenegro, he should have known what Davis & Co. were up to. After all, McCain lent a helping hand. And by the time he visited the country, the Russian takeover was plain to see.

The story of how McCain’s closest aides and employees have been undermining his vociferously expressed opposition to Putin and Russia’s oligarchs offers a highly disturbing preview of what a McCain administration might look like. When McCain’s campaign proclaims “country first,” one has to wonder, Which country? The one with the highest bidder?

This article first appeared in The Nation. Research support was provided by the Puffin Foundation Investigative Fund at The Nation Institute.

John McCain is making a big show of criticizing the government “bailout” of insurance giant AIG. But it turns out that AIG, which received $85 billion in US tax dollars earlier this week, is one of the largest donors to McCain’s pet think tank, the comically named “Reform Institute,” which he co-founded in 2001 “in direct response to the millions of Americans who, during the 2000 presidential campaign, expressed profound disillusionment with corrupt fundraising activities.” Indeed.

Apparently, AIG was so troubled over the issue of corrupt fundraising activities that they loaded in as one of the top VIP donors in McCain’s nonprofit think-tank, whose website lists AIG in the “over $50,000″ donor category–although exactly how much over that $50,000 is still unclear. Why the hell an insurance company like AIG was doing pouring money into think tank whose state goal had no connection to insurance whatsoever–unless, of course, that money was just meant to gain access to McCain. Perish the thought.

The “Reform Institute” has taken a lot of heat as a front organization designed to funnel money to McCain’s political career. As Ari Berman wrote, McCain’s campaign co-chair, Rick Davis, served as the president of the nonprofit Reform Institute for three years, earning $395,000 in salary. Davis also headquartered his lobbying firm, Davis Manafort, in the Reform Institute’s offices at that time. He is just one of several McCain people who passed through the Reform Institute’s revolving door while McCain prepared for the 2008 campaign. McCain formally stepped down from his own institute in 2005, but he remains deeply linked to the Reform Institute to this day.

So when McCain declared this week that “The government was forced to commit $85 billion” to his mega-donor AIG, the question becomes, “What forced you to do it?” The American taxpayers never got a red cent in donations from AIG–but now, they’re being forced by people like McCain, whose career profited from AIG donations, to buy his backer’s massively indebted trash heap in what can only be described as the worst business deal in this nation’s history, or the worst example of crony nationalization. AIG isn’t just funding McCain’s policy think tank, it’s also quite literally thinking for the presidential hopeful. Martin Feldstein, who serves on the board of AIG, is one of McCain’s top economic advisers. Earlier this month, Feldstein gushed in the Wall Street Journal over McCain’s plans to cut taxes even further, and to shift healthcare costs from employers to employees in a “tax credit” scheme that many believe will solely benefit insurance companies, at the expense of workers. Since AIG is–or was–the world’s largest insurance company, it stood to gain from McCain’s policies.

The one thing Feldstein does understand is insurance. Feldstein and his cronies at AIG essentially bought themselves an insurance policy–you might call this type of insurance “in case our insanely corrupt, hyper-leveraged operation should ever go bankrupt” insurance–with donations like the “over $50,000″ given to McCain’s Reform Institute. That insurance paid off handsomely and like clockwork with the government’s $85 billion nationalization. It’s exactly the kind of insurance policy deal that every American has dreamed about, but never known. And never will know.

Now that Feldstein and McCain have successfully worked the American public in the AIG scheme, they have a plan for the entire American economy. They’re calling it “reform.” And the first thing they want to get their hands on is your health insurance, or what’s left of it.

As McCain himself wrote in the current issue of Contingencies magazine:

“Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.”

So if you’ve been asking yourself lately, “Can it get any worse?” the answer was put best in a horrible ’70s classic rock song by Bachman-Turner Overdrive: “B-b-b-baby you just ain’t seen nuthin’ yet!”

This article first appeared in The Nation.

John McCain boards the “Kiss My Elitist Ass Express” Yacht

John McCain has been hammering rival Barack Obama for being little more than a vapid “celebrity” and “elitist.” But The Nation has obtained a photo revealing just how star-struck a straight-talking maverick can become when offered the chance to celebrate his birthday aboard a yacht filled with celebrities–even if one of those celebrity types turns out to be an A-list con man.

The photograph finally confirms reports that in late August, 2006, McCain celebrated his 70th birthday aboard a yacht, the Celine Ashley, rented by A-list con man Raffaello Follieri, now serving a five year jail term, and his then-movie star girlfriend Anne Hathaway. In the current edition ofVanity Fair, Michael Schnayerson reported that Follieri rented the Celine Ashley for the month of August 2006. Montenegro’s leading daily newspaper, Vijesti, earlier reported that during McCain’s visit in 2006 he celebrated with birthday cocktails and sweets aboard the Celine Ashley yacht.

In the photograph, taken in Montenegro at the end of August, McCain is shown giddily shuffling up the yacht ramp like an old Tim Conway, heading towards the smiling Follieri and Hathaway. Just ahead of McCain and shaking hands with Follieri appears to be Rick Davis–McCain’s top aide and now co-manager of his campaign, who accompanied him on the trip and advised the government of Montenegro.

The yacht that McCain partied on was likely paid for with stolen money.

A few months after McCain’s yacht party, Follieri strengthened his ties to McCain’s orbit by retaining Rick Davis’s well-connected Washington lobbying firm, Davis Manafort, and offering Davis both an investment deal and help in securing the Catholic vote for McCain’s presidential bid.

The Straight Slime Express: Closeup of grinning Follieri shaking McCain campaign chairman Rick Davis’ hand, while the waifish Hathaway looks on proudly.

Follieri, who posed as Vatican chief financial officer in order to win friends and investments, pleaded guilty Wednesday in a Manhattan district court to conspiracy to commit wire fraud, eight counts of wire fraud and five counts of money laundering. As part of the plea, Follieri admitted to misappropriating at least $2.4 million of investor money and redirecting it to foreign personal bank accounts that were disguised as business accounts.

At the time he met McCain, Follieri was adept at collecting friends in powerful places and using those connections to attract investments in projects which later turned out to be bogus. His ties to Bill Clinton and his entourage have been well-documented; the charismatic Follieri, whom Vanity Fair has likened to an ambitious nineteenth-century protagonist from a Balzac novel, ingratiated himself to President Clinton and aides by posing as a mega-donor to the Clinton Global Initiative. He also formed an investment partnership with California business mogul and Clinton donor Ron Burkle to develop surplus real estate properties owned by the Catholic Church, which Follieri claimed to represent. Burkle later sued Follieri for $1.3 million in misappropriated funds.

Arthritic old celebrity-whore McCain, wearing his “Real People” baseball-cap disguise, shuffles up the ramp towards the Follieri-Hathaway Bang Yacht birthday party.

Yet Follieri’s ties to McCain’s orbit have been largely overlooked by the media. Follieri first met McCain when the Arizona Senator visited Montenegro from August 29-31 as part of a Congressional delegation that included Republican senators Lindsay Graham, Richard Burr, Saxby Chambliss, Mel Martinez and John Sununu. [We'll have more on what else McCain was doing in Montenegro in a forthcoming article in the print edition of The Nation.]

What, exactly, was McCain doing aboard Follieri’s yacht? Or put another way, was this McCain’s 70th birthday wish–to spend an evening floating on the Adriatic with one of Hollywood’s top actresses and her smooth-talking Italian beau?

The Follieri-Hathaway Bang Boat #1: Italian conman cops a double-feel while pressing against Hathaway’s bikini’d behind.

An even bigger mystery is how Follieri’s boat came to be docked in Montenegro on McCain’s birthday. According to a journalist in Montenegro, the yacht had been anchored there for several days before McCain’s arrival, and only sailed away after McCain boarded. According to Vijesti, locals were told that McCain was meeting “friends from Florida” on the yacht.

McCain aides later confirmed the encounter with Follieri, but said it was “entirely social and nothing came of it.” Follieri, they told the New York Daily News, was just a “passing acquaintance.” (Though the McCain campaign promise to comment on the encounter, it did not respond to The Nation’s request by the time this article was published.)

But the real reason to ride Follieri’s yacht was to watch Hathaway blow him while he’d ignore her to talk about business deals. Note the voyeur-guest’s bored, dangling legs.

It must not have seemed that way to Follieri. According to the Italian newspaper Il Sole 24 Ore, in January 2007 Follieri sent Rick Davis a packet of information on his companies Follieri Capital and Follieri Media, apparently hoping to get financing from Pegasus Capital Advisors, a hedge fund in Connecticut that Davis represented. “Follieri’s proposal to Davis had two dimensions to it–first, as an investment opportunity for Davis’s fund; but secondly, there was the political dimension, in which Follieri offered to help deliver Catholic votes to McCain,” said Claudio Gatti, a reporter for Il Sole 24 Ore, who investigated Follieri for eighteen months.

In February 2007, according to a recent article in the New York Daily News, Follieri retained Davis’s lobbying firm, Davis Manafort. According to the paper, “on Feb. 27, 2007, Davis Manafort partner Rick Gates signed a confidentiality agreement drafted by the Follieri Group. In the contract…Gates agreed not to disclose any information about Follieri’s deal to get Clinton pal Ron Burkle to buy Catholic Church properties.” (Gates did not respond to repeated requests for comment.)

Two months later, Burkle sued Follieri, who later repaid the $1.3 million owed to Burkle’s Yucaipa Funds. That fall, the Wall Street Journal exposed Follieri’s life as a high-society con man. In June of this year, Follieri was finally arrested and charged. Following his guilty plea this week, Follieri now faces up to five years and three months in jail.

This article first appeared in The Nation online.

The outbreak of war in Georgia on Friday offers a disturbing and somewhat surreal taste of what to expect from John McCain should he become our nation’s Commander in Chief. As the centuries-old ethnic animosities between Georgia and Ossetia boiled over into another armed conflict, drawing in neighboring Russia, McCain issued a stark-raving statement from Des Moines that is disturbingly reminiscent of the language used in the lead-up to NATO’s war against Yugoslavia in 1999, a war McCain zealously pushed for:

“We should immediately call a meeting of the North Atlantic Council to assess Georgia’s security and review measures NATO can take to contribute to stabilizing this very dangerous situation,” McCain said.

Calling on NATO to “stabilize this dangerous situation” is not going down well with Russia, where images of dead Russian peacekeepers and of frightened Ossetian refugees streaming across its borders have put the country in a very vengeful mood. It’s hard to imagine what measures NATO could take under a McCain presidency, but in the mind of a man who thinks US troops should stay in Iraq for 100 years, and who runs around singing “Bomb Bomb Iran!” it’s not hard to guess–and even harder not to be horrified by what it may mean come January 2009, should he win.

McCain’s call to NATO-ize the war is not only frightening, it’s also delusional: both NATO and US forces are already stretched beyond the breaking point, even by Joint Chief of Staff chairman Michael Millen’s own recent assessment.

But McCain’s brain remains undeterred by reality, a fact that became painfully clear today in Des Moines when he also demanded, “The US should immediately convene an emergency session of the United Nations Security Council to call on Russia to reverse course.”

The problem with McCain’s bold demand about going to the UN is that Russia already tried doing exactly what McCain called for–and got rejected by McCain’s neocon pals in the Bush Administration. Early this morning, Russia convened an emergency session of the UN Security Council, calling on both sides to immediately cease hostilities, return to the negotiating table and renounce the use of force–but the last part about renouncing the use of force is exactly what Georgia’s president Mikhail Saakashvili refuses to do.

The Bush Administration showed that it too has no patience with crunchy “renounce the use of force” resolutions. According to a Reuters report from earlier in the day:

At the request of Russia, the U.N. Security Council held an emergency session in New York but failed to reach consensus early Friday on a Russian-drafted statement.

The council concluded it was at a stalemate after the United States, Britain and some other members backed the Georgians in rejecting a phrase in the three-sentence draft statement that would have required both sides “to renounce the use of force,” council diplomats said.

The meaning of this is clear: the United States and Britain are backing Saakashvili’s invasion. Why would we back Saakashvili’s reckless war, when last year even Bush was denouncing the Pinochet-wannabe’s violent attack on his own people during a peaceful opposition protest in Georgia’s capital, as well as shutting down the opposition media and exiling of political opponents? That would be a brain-teaser if the last seven years hadn’t answered this question so many painful times already.

But with McCain, answering this is a little trickier. When he issued today’s Des Moines statement calling for Russia to do what Russia already did a few hours earlier, you have to ask yourself: either McCain’s short-term memory is totally shot, encased in an impenetrable tomb of aluminum-zirconium plaque… or worse, McCain simply doesn’t give a damn about reality, he just wants to get Georgia’s war on, as badly as Saakashvili does.

The awful truth is probably a combination of the two, which is the worst of all worlds, considering McCain’s raving Russophobia, and his campaign team’s financial and ideological ties to Saakashvili. As has been reported, McCain’s top foreign policy advisor, neocon Randy Scheunemann, has a long financial relationship with Saakashvili to lobby his interests in the United States.

According to the Wall Street Journal:

In 2005, Mr. Scheunemann asked Sen. McCain to introduce a Senate resolution expressing support for peace in the Russian-influenced region of South Ossetia that wants to break away from Georgia, the records show.

Such resolutions of Senate support are symbolic but helpful to countries in their diplomatic relations. The Senate approved Sen. McCain’s resolution in December 2005, and the Georgian Embassy posted the text on its Web site.

Sen. McCain has endorsed Georgia’s goal of entering NATO, a matter for which the country hired Mr. Scheunemann to lobby. In 2006, Senator McCain gave a speech at the Munich Conference on Security in Germany in which he said “Georgia has implemented far-reaching political, economic, and military reforms” and should enter NATO, a text of his speech on the conference Web site shows.

Scheunemann, a bearded, pear-faced gun geek who looks like what might have happened to an aging GI Joe doll if it had spent years stuffing its face at pricey restaurants while power-schmoozing politicians and petty dictators, also worked for recently-disgraced Bush fundraiser Stephen Payne, lobbying for his Caspian Alliance oil business. The Caspian oil pipeline runs through Georgia, the main reason that country has tugged the heartstrings of neocons and oil plutocrats for at least a decade or more.

Randy Scheunemann: NeoCon Joe With A Lobbyist Grip!

In 2006, McCain visited Georgia and denounced the South Ossetian separatists, proving that Scheunemann wasn’t wasting his Georgian sponsor’s money. At a speech he gave in a Georgian army base in Senaki, McCain declared that Georgia was America’s “best friend,” and that Russian peacekeepers should be thrown out.

Today, Georgian forces from that same Senaki base are part of the invasion force into South Ossetia, an invasion that has left scores–perhaps hundreds–of dead locals, at least ten dead Russian peacekeepers, and 140 million pissed-off Russians calling for blood.

Lost in all of this is not only the question of why America would risk an apocalypse to help a petty dictator like Saakashvili get control of a region that doesn’t want any part of him. But no one’s bothering to ask what the Ossetians themselves think about it, or why they’re fighting for their independence in the first place. That’s because the Georgians–with help from lobbyists like Scheunemann–have been pushing the line that South Ossetia is a fiction, a construct of evil Kremlin neo-Stalinists, rather than a people with a genuine grievance.

A few years ago, I had an Ossetian working as the sales director for my now-defunct newspaper, The eXile. After listening to me rave about how much I always (and still do) like the Georgians, he finally lost it and told me another side to Georgian history, explaining how the Georgians had always mistreated the Ossetians, and how the South Ossetians wanted to reunite with North Ossetia in order to avoid being swallowed up, and how this conflict goes way back, long before the Soviet Union days. It was clear that the Ossetian-Georgian hatred was old and deep, like many ethnic conflicts in this region. Indeed, a number of Caucasian ethnic groups still harbor deep resentment towards Georgia, accusing them of imperialism, chauvinism and arrogance.

One example of this can be found in historian Bruce Lincoln’s book, Red Victory, in which he writes about the period of Georgia’s brief independence from 1917 to 1921, a time when Georgia was backed by Britain:

[T]he Georgian leaders quickly moved to widen their borders at the expense of their Armenian and Azerbaijani neighbors, and their territorial greed astounded foreign observers. ‘The free and independent socialist democratic state of Georgia will always remain in my memory as a classic example of an imperialist small nation,” one British journalist wrote…. “Both in territory snatching outside and bureaucratic tyranny inside, its chauvinism was beyond all bounds.”

On Thursday, following intense Georgian shelling and katyusha rocketing into Tskhinvali, refugees streamed out of South Ossetia telling reporters that the Georgians had completely leveled entire villages and most of Tskhinvali, leaving “piles of corpses” in the streets, over 1,000 by some counts. Among the dead are at least ten Russian peacekeepers, who fell after their base was attacked by Georgian forces. Reports also say that Georgian forces destroyed a hotel where Russian journalists were staying.

In response, Russian jets bombed Georgian positions both inside South Ossetia and into Georgia proper, attacking one base where American military instructors are quartered (no Americans were reported hurt). By mid-afternoon Moscow time, as local television showed burning homes and Ossetian women and children huddling in bomb shelters, armored Russian columns were crossing into Georgian territory, and Georgia’s President called for a total mobilization of military-aged men for war with Russia.

The invasion was backed up by a PR offensive so layered and sophisticated that I even got an hysterical call today from a hedge fund manager in New York, screaming about an “investor call” that Georgian Prime Minister Lado Gurgenidze made this morning with some fifty leading Western investment bank managers and analysts. I’ve since seen a J.P. Morgan summary of the conference call, which pretty much reflects the talking points later picked up by the US media.

These kinds of conference calls are generally conducted by the heads of companies in order to give banking analysts guidance. But as the hedge fund manager told me today, “The reason Lado did this is because he knew the enormous PR value that Georgia would gain by going to the money people and analysts, particularly since Georgia is clearly the aggressor this time.” As a former investment banker who worked in London and who used to head the Bank of Georgia, Gurgenidze knew what he was doing. “Lado is a former banker himself, so he knew that by framing the conflict for the most influential bankers and analysts in New York, that these power bankers would then write up reports and go on CNBC and argue Lado Gurgenidze’s talking points. It was brilliant, and now you’re starting to see the American media shift its coverage from calling it Georgia invading Ossetian territory, to the new spin, that it’s Russian imperial aggression against tiny little Georgia.”

The really scary thing about this investor conference call is that it suggests real planning. As the hedge fund manager told me, “These things aren’t set up on an hour’s notice.”

Where this war is leading is impossible to say, but as Iraq and Afghanistan, not to mention Chechnya, have shown, wars have a funny way of lasting longer, costing more in money and lives, and snuffing out whatever individual liberties the affected populations may have. As good as this war is for Saakashvili, who has become increasingly unpopular at home and abroad, or for McCain, whose poll numbers seem to rise every time the plaque devours another lobe of his brain, it also bodes well for the resurgent Prime Minister Putin, who seems to have become increasingly peeved with his hand-picked successor, President Dmitry Medvedev’s flickering independence and his liberalizer shtick. There’s nothing like a good war to snuff out an uppity sois-disant liberal who’s getting in your way–even McCain, frozen in an antiperspirant-induced fog, can still grasp this basic reptilian concept.

As I’m filing this, Russian forces are battling to take back Tskhinvali, while Saakashvili has been alternately claiming to have pulled his forces back, or that his forces are in full control of the city and defeating the Russians. Meanwhile, Georgia has been on a massive, successful, multi-layered PR offensive in the West, helped by years of cultivating people like John McCain as well as the army of neocons and old cold warriors who naturally gravitate to a fight with Russia.

This article first appeared in The Nation. Write to Mark Ames at ames@exiledonline.com. And buy his book Going Postal: Rage, Murder and Rebellion.