A Dragon Defanged

By Robert Lockwood

Democratic President Earl Eastwood seeks re-election against
the formidable Connecticut Governor Sophia Kallias, a
Republican moderate with winning appeal to the critical
independent vote. A unifi ed Third World infl uenced by China
offers him the global presidency at the United Nations, if he
loses the US race. Eastwoods dependency on China curdles
his loyalties. He needs Chinas endorsement for the UN job.
And Chinese foreign investment is the only viable source of
job growth in a badly recessed US economy. The Chinese
recruit the fi nancial wizardry of Swiss-based Nikos Rallis
to fashion a Swiss-Brazilian network of equity funds. The
network launders US investments of Chinese-owned
Brazilian companies. They covertly acquire control of
Canadian and US shale oil and gas stakes and their
pipeline conduits. The network then infi ltrates critical
US defense technology sources. Eastwood, a brilliant
political tactician and the fi rst African-American
president, must act forcefully as he learns of the
Chinese scheme. His rigid, West Point ethics
are challenged by ambition, and his complicated
romantic life.

• Language: English
• Publisher: Xlibris US
• Release date: Oct 31, 2012
• ISBN: 9781479743841

Robert Lockwood

Robert Lockwood, a reformed Washington lobbyist, represented many Fortune 500 companies and institutions on matters of taxation, international trade, and defense.

Book preview

PROLOGUE

President Earl H. Eastwood, the first African American president, is now nearing the end of his first term. Democrat Eastwood, the self-effacing West Point graduate, an Eisenhower clone in character only, possessed political acumen and street smarts that eluded Ike. Yet like Ike, never hesitating to take on the shaky morality of demagogues and lesser politicians, uncovering and disrupting the greed and power that conflict with official duty.

Now, Eastwood faces reelection. The economy thirsts for something better than what he was handed in entering the White House in 2008. Federal largesse has become addictive—government benefits constitute 20 percent of Americans’ income; 50 percent of American households draw some form of government assistance, whether it be a subsidy for agriculture, health insurance, Social Security, education, job training, underwater mortgages, or over a hundred other needs or entitlements. Wall Street lusts for quick fixes in the form of repeated quantitative easing, monetary fixes that jolt short-term market spikes and plunge the country toward unavoidable inflation. The business community, not to be left in the swirling dust of mobs seeking government handouts, demands continued defense and other government spending that finance well over a third of American commerce.

Alexis de Tocqueville predicted in the 1830s that the American oyster would never tolerate gritty submission to state paternalism. The prognosis now seemed almost quaint as the nation transformed itself into a colony of ants—or bats, clinging to and suckling on the avuncular lode: Uncle Sam.

National debt closed in on and exceeded the gross domestic product, or GDP, the total value of all goods and services the nation annually produces. Moreover, the budget deficit, not at all vexing Congress as it exceeded 30 percent of the national budget prepared for fiscal year 2012, now exceeded 6 percent of GDP, the threshold beyond which European Union nations were not allowed to traverse. In a few words, the U.S. would not qualify for EU membership, putting it in the class of such economic basket cases as Greece, Spain, and Portugal.

It was against this economic paradigm that President Eastwood would mount his reelection campaign. Egos, along with yield curves, were flattened as the U.S. Federal Reserve recklessly and wrongly ignored the inflationary consequences of Keynesian bailout spending, preferring to reckon with problems inviting short-term solutions. This, as a decisive president and stalemated Congress fatuously clung to outdated ideologies that defied stimulating growth through a coordinated restructuring of the economic and industrial base. Rather, automated safety-net responses to unemployment were juiced up to ninety-nine months of benefits that materially crippled job-search incentives. Attempts to bolster spending on science, technology, engineering, and math—so-called STEM—programs triggered massive resistance from non-STEM pedagogical groups that feared the federal udder would be squirting away from their troves. The president pleaded that STEM developments were essential to adapting the paradigm to economic and industrial growth. But it was counterlobbied by public service and allied unions and organizations ironically essential to Eastwood’s reelection but not to national recovery.

Eastwood would face an unprecedented option to the usual White House incumbent’s slate for four more years. A delegation from the United Nations, believing his presidential campaign to be imperiled by both a hapless economy as well as irreconcilable factions within Eastwood’s own congressional Democrats and strongest domestic support groups, would offer a proposition that would higgle Eastwood’s ambitions. Eastwood would be able to crawl out from under the imploding, chaotic U.S. political culture, one increasingly approaching the Gotterdammerung that was curdling Greek order and stability. The UN delegation, led by ambitiously talented Africans, would bestow on the universally popular American president a new sobriquet—the global presidency.

The sultry breezes of power in yet another format initially filled Eastwood’s luffing sails. He finally dismissed early self-doubts that his reach was too far for an electoral bridge. Rather, he would run two campaigns: for the presidency of the United States of America and the leadership of the United Nations. For every conflicting impulse between the two races, he had a remedy, at least in his mind. He could pull visual foils over the differences, lasting long enough to get through both campaigns. For example, he would need the endorsement of China, as well as that of three other permanent members of the UN’s Security Council: France, Great Britain, and Russia. While assuming the fifth permanent member, the U.S. would never reject him, even as he might lose the U.S. presidency. Eastwood was already appeasing China, which held nearly 25 percent of U.S. debt. Even if he lost the U.S. presidency, his successor would have no choice but to continue the same Sino-American foreign policy. He was even more certain of French and British support and highly confident that Russia would endorse his selection as UN leader as the best of all available choices.

Always accommodating was the way so many nations saw the black American president. He was the optimizer, the one who could pull a deal from a disaster. Whether their perspectives were metaphors or myths did not bother Eastwood. He was a man of principle and far too intelligent, politically savvy, and experienced to rely on deception to work his will. He could leverage talent as well as material alternatives, and even threats, to get his way, all without leaving a trail of bloated bodies of adversaries that might later wash across settled boundaries. It was the Eisenhower in him and both the self-esteem and sense of honor that was hammered into them at West Point. His foreign and domestic adversaries and partners would initially believe him to be naive, maybe even weak. They were to be quickly disabused of such judgments by his performance.

The two campaigns have baked-in conflicts. Domestically, the economy could not be rebuilt without heavy dependence on foreign investment. Usage of U.S. industrial capacity was well below 60 percent, even as the industrial base had already become luridly anemic. Manufacturing had been the rice bowl of American economic strength over the preceding century. Over fifty years of incendiary public policies left only dark and dusky remnants on urban moonscapes. Federal environmental radicals wonkishly shut down facilities rather than patiently, systematically, and financially upgrade them technologically; education reformers dismissed vocational training as an obstacle to college degrees for all, but in too many subjects having little relevance to the traditional pragmatism of the American work experience. Many engineering schools were shuttered or scaled down unless heavily populated by foreign students who could pay the full freight. In fewer words, the value of work was no longer grounded in well-paying productive jobs that expanded the tax base, fostered exports, feathered youthful hopes and family stability, corseted national security, and raised self-esteem and national pride.

The economy that followed would permanently displace, disparage, and disperse the so-called blue collar or working class into a segmented economic syntax anchored with unskilled jobs that depleted American self-respect but welcomed the massive invasion of highly motivated and industrious workers from south of the border. America no longer produced; it just consumed. Degrees and jobs in retail, marketing, sales, and finance usurped the brainpower and aptitudes that customarily went into the technical disciplines. And the good jobs? They went first to the right-to-work and cheap labor states, then, too often, forever disappearing in the ethereal overseas plasma of cheap labor—first in developing nations like the Philippines, Japan, and Mexico and ultimately to China and India.

The domestic campaign for both Eastwood and his Republican opponent, Connecticut governor Sophia Kallias, would promise to recapture jobs from abroad. This would require tax code reform, far-reaching changes in federally driven education, and environmental and labor policies, each with its own army of lobbyists, many plucked from the 1,200 former members of Congress now selling influence, the mantra of Washington’s easy money affluence.

Eastwood keenly understood the lure of globalism, evidenced well by his very consent to secretively pursue the global presidency offered by UN leaders. He was neither dismayed nor discouraged by the dilemma of blaming globalism for U.S. economic disarray while seeking investment from its foreign beneficiaries, holders of U.S. debt, and, in some cases, adversaries.

What did disturb him was that he must first change the edifice before the foundation. That was the nature of U.S. politics. The campaign was upon him; there was neither time nor support to repair the half century of social and economic wreckages blighting the electoral landscape. His core support resided in those voters most harmed by these changes: the urban poor; minorities, especially blacks; youthful and middle-aged unemployed; and others who needed immediate assistance with food stamps, retraining programs, unemployment benefits, Medicaid, and public housing. The help needed now was locked into entitlement spending that contributed most to the budget deficit. There would be too few discretionary budgetary dollars available for resetting the economy’s foundation over the next decade, let alone the few months remaining before the November 6, 2012, election date.

It was clear—Eastwood must get direct foreign investment into the U.S. economy or at least pledged commitments. It mattered little if it came only for manufacturing, although that was, by far, the higher electoral priority benefiting his voter support base. Financial sector investment in banking and insurance would be candidates for the president’s enthusiastic attention—the financing of bridge replacements, road and highway rebuilding, and other components of the nation’s badly sagging infrastructure, and even foreign retailers that would compete with and lower the prices of goods from U.S. giants like Walmart and Kmart/Sears, which already sold mostly foreign imports. Success with direct investment, he correctly reasoned, would raise the prospects of more foreign portfolio investment in stocks and other securities. This would lessen somewhat the pressure on 401(k) and other retirement resources, widening the president’s campaign appeal to the critical over-sixty-five vote.

Of course, the sources of rescue investment sought by the president would have their own motives. Eastwood expected China to move into the shale and tar sands oil sector in the U.S. and Canada in a very big way. China would buy heavily into Canadian exploration and production companies but was much more circumspect with regard to U.S. investment. Rather, Brazil, now China’s surrogate, stepped up to the plate in the U.S., with substantial direct investment not only in the shale oil sector, but more surprisingly, in the defense sector as well. Eastwood’s cabinet officials believed Swiss investments were backing the Brazilians, but Swiss transparency regarding any financial move is always well veiled. There was little suspicion of the financing network orchestrated by China through Switzerland to Brazil. Eastwood and his campaign team were in no position to complain. If there were questionable motives in play, there would be time to uncover them . . . after the election.

Connecticut governor Sophia Kallias felt much the same way. It was all about jobs. Her ambitions were but a trope to those of the president. Her focus was on the gold ring—the White House. Kallias’s primary campaigns had its ups and downs. But her style of Republicanism was uniting worried independents with her solidly moderate Republican base as the primaries ran their course. By Super Tuesday, March 6, 2012, the Republican nomination was indisputably hers, as even the evangelicals conceded the suitability of a Jewish president, like Kallias, and locked in the conservative vote.

Kallias’s open-mindedness on energy development contrasted sharply with Eastwood’s unexpected decision to nullify a Canadian offer to build the Keystone XL pipeline, bringing tar sands and shale oil extracted from Alberta to the Gulf of Mexico. The pipeline would connect to shale oil fields in Montana, South Dakota, North Dakota, and Wyoming, continuing south through Nebraska, Kansas, and Oklahoma into Texan terminals and refineries. Kallias ignored the very environmental objections that seduced Nebraska into begging out, claiming possible damage to a massive aquifer on which the state’s agricultural eminence depended. Eastwood, on the other hand, listening to the somewhat surprisingly irrational guidance of his campaign team, caved to the environmentalists’ pleas. Besides, he was told, the Republican states, through which the pipeline would pass had relatively few Electoral College votes and probably would have given them to Kallias regardless. Moreover, Eastwood needed Chinese support for his UN aspirations if he lost the U.S. race. China welcomed the Keystone decision since more Canadian oil would now fill their needs. Ergo, he pleased key principals in both campaigns: U.S. environmentalists and China.

Ultimately, the rate at which foreign investment entered the U.S. increased to the point that Congress started dividing itself within party lines, especially where jobs were at stake. Some Michigan Democrats publicly distanced themselves from the president, accusing him of capitulating to the very environmentalists that nearly destroyed the state’s automobile industry in the first decade of the twenty-first century. Furthermore, Michigan’s manufacturing base was on the mend. The president conceded development of the stimulus package to Congress. They, of course, rewarded the Democratic union constituency at General Motors with a mutational rescue that included means to produce the Volt, an electric car that merely underwrote GM’s continued fecklessness.

But British and even Italian automakers started looking at Michigan, all needing the very energy sources that the Canadian pipeline promised. In the critically important swing states of Ohio and Pennsylvania, Swiss and Brazilian plans to build major manufacturing facilities were made contingent upon available energy supplies that the generally negative environmentalists could obstruct with their plans to oppose all pipeline transport of oil.

*     *     *

The role of Nikos Rallis was ignored and possibly unseen. Campaign exigencies narrowed the candidates’ field of vision as they hugged the platitudes of campaigns past. The political culture was changing and, with it, the essence of presidential campaigning, now riddled with global issues that would impinge on outcomes.

Rallis, called Niko by his friends, at forty-five, already had a substantial stage presence on the American scene. The scion and heir of a Greek shipping fortune, Rallis was educated at Trinity College and the Wharton School. He returned to Greece, served compulsory two-year military service as a naval officer, and then entered politics. He moved smartly, deftly, and quickly through the uniquely labyrinthine mazes of Greek politics to the cabinet-level job of finance minister.

Returning to the business of making money, he formed the Lucas Club, a funding mechanism behind a massive Greek resort development on the island of Santorini. The plan had recruited several members of Congress who became scandalized by the venture and forced to resign. Rallis later hired them as part of a new Swiss-headquartered corporation to capture the U.S. confections sector by cornering the world cocoa bean market. The scheme operated on the margins of legitimacy, ultimately collapsing under the weight of U.S. charges of securities fraud. A coconspirator, none less than the Swiss government, settled with the Eastwood administration, but only after it refused to extradite Rallis and allowed him to leave the country for unknown destinations. The Swiss claimed they had been hoodwinked by the canny Greek.

Rallis ultimately returned to Switzerland. There, he would be protected, having taken the blame for official Swiss participation in the confections scandal. In fact, again performing at his best, Rallis had yet a new plot to join China, Brazil, and Switzerland in a roundtable tableau that would profoundly affect North American energy supply, and access the U.S. defense technology base. Rallis foolishly failed to recognize that, for the Chinese, it would become a conduit to learning America’s military strategy and weakening its military might.

It was within these sidebars of the U.S. presidential campaign that Rallis’s influence would recur. The official Chinese motives and Brazilian and Swiss greed that fed the scheme were guarded as protectable trade secrets. Rallis, the kingpin organizer, always the franchiser, moved marginally about the boundaries of criminal behavior, calling the shots from his cloistered Swiss protectorate, this time as an agent provoquer. The widowed Swiss president, Ruth Maurer, was charmed by the romantically sinewy Greek. She became a willing accomplice, anticipating a promising post-political career as Rallis’s partner in his private equity firm managing Swiss and Chinese investments, including those made by the Brazilian companies as China’s surrogate.

China’s national security strategy feared U.S. Military obstacles to its regional expansion. Its goals included control over the assets and prices of U.S. energy supply and critical defense technologies. Its demands on Brazil and Switzerland pressured those governments to object and, ultimately, seek U.S. assistance in slowing Chinese interventionism. The pharaonic politburo of the Chinese Communist Party retaliated with a massive sale of 90 percent of its U.S. Treasury debt at a critical moment in the U.S. election campaign. While Eastwood wrung his hands, tied by job-hungry constituents, his challenger, Sophia Kallias, exploited the opportunity. She proposed buying the debt and selling it to the American people at a discounted price, essentially placing a significant share of national debt in their hands.

The move ultimately led to Eastwood’s withdrawal from the campaign, opening the White House door for Kallias, whose popularity soared to unprecedented levels in presidential campaign polling, all mere weeks before the election. Eastwood’s loss is a gain for the United Nations and, more elliptically, for the void in Sophia Kallias’s personal life as the two become romantically attached.

CHAPTER 1—

SWISS ASYLUM: RESCUING RALLIS

Nikos Rallis’s elevator arrived in the lobby of the Bellevue Palace Hotel in Bern. He was greeted knowingly by the fawning staff. Rallis, after all, had made the hotel his home, occupying a three-bedroom suite on the top floor. The Tiffany-like, glass ceiling of the hotel’s atrium made the morning light seem brilliant. It would contrast with the grey skies awaiting him beyond the comfortable lobby. He moved briskly through the lobby to the outside, past a well-liveried and bundled-up doorman who was effusively polite and welcoming, especially by Swiss standards.

The outside air was chilly, even on this day, Wednesday, January 4, 2012, as he stepped onto the well-shoveled sidewalk. Flurries and tiny icy shards blew into his face, making him blink and stinging his bare cheeks. He pulled his overcoat lapels around his neck and pulled up his collar, gripping his attaché case tighter with his other gloved hand as he noticed the thermometer under the hotel’s coat of arms on the hotel’s outside wall—4°C or—17°F.

The icy air, enhanced by a strong wind from Alpine northeast, alerted his mind to the difficult day ahead—a highly secret meeting with the president of the Swiss Confederation, Madame Ruth Maurer, and a few select members of her cabinet. He moved west along Kochergasse toward the Federal Palace, the wind now at his back, chilling it despite his layers of clothing: undershirt, heavy-weave Peruvian pima cotton shirt, suit jacket, and cashmere overcoat. His ushanka, the always-reliable Russian mink hat, did its job well, however. He had bought the hat for $1,200 from a foreign currency shop during a recent trip to Moscow. It seemed an extravagance then, a necessity now.

This has to work, Rallis thought. I’m climbing out of this hole. The toughest thing for me to do is doing nothing. Besides, the Swiss owe me this. Damn them. I took the fall for them. I’ll never be able to go back to the U.S. until I settle their charges against me. He had reflected on a suit initiated by the U.S. Securities and Exchange Commission, charging him with fraud in a submission for an initial public offering. Having fled the U.S., he was fugitive, for the time being, at least. He caught himself. He was distracted from today’s purpose; this was no time for pent-up anger to interfere with the work at hand.

Nikos Rallis, forty-four, has a remarkably successful career, both in politics in Greece, where he had served as minister of finance, and in his family’s shipping business as well as several entrepreneurial ventures. It was the latter that locked him into Switzerland. He had led a failed Swiss government initiative for global dominance of the confections sector. When the conspiracy overplayed its hand in the U.S. securities market, Swiss officialdom panicked. Rallis took the blame. When U.S. president Earl Eastwood demanded Rallis’s extradition, threatening to expose and humiliate the Swiss government, the Swiss allowed Rallis to quickly depart the country. They then told the U.S. that Rallis had misled them too. A financial settlement followed that restored to whole the two large U.S. confection companies that had been the target of the scam. All was settled, except, of course, the debt the Swiss owed Rallis and the charges against him. The first payment came in the form of his restoration back to Switzerland, where he didn’t mind living, although not in the bloody Bellevue Palace Hotel, he silently uttered under his breath.

Today, I’m taking the first step to collecting the rest of what they owe me, Rallis swore to himself, as he trundled past the Federal Palace’s grand entrance and onto Bundesgasse, toward the entrance to the west wing of the Federal Palace, the Chancellery, where the real work of government gets done. Thin ice veiled the statuary in the center of the courtyard, yet another reminder of Swiss rigidity, whether it dealt with the administration of its laws, its economic austerity, or even the way the country collected its garbage. I’m early, but they’re Swiss. They’ll be as ready as I am anyway, he chuckled to himself as he glanced at his watch, then quickly pulling his glove back up as the cold damp wind touched his bared wrist. It was seven thirty-five in the morning.

He entered the spartan foyer, adorned in unembellished historical icons: cantonal coats of arms, murals of Swiss landscapes, and a simple directory listing the entire seven-departmental structure of the Swiss government. Rallis moved across the immaculately clean and dry floor to the grand staircase; an elevator was for the infirm, a rule in most of Europe. Americans hated it. He easily glided up the stairs to the second floor and the offices of the federal chancellor, in whose private office the meeting would be held.

Smart move, meeting here, he thought. Too many around the president know me, especially over in her official suite. As he entered the carpeted reception room, a stark contrast in interior decor from the main entrance of the Chancellery, a young man stood up from his Louis XIV desk. Rallis was momentarily distracted by its striking beauty, with inlaid hardwoods and gold metal trim. Everything perfectly preserved, must be worth $800,000 at auction, Rallis reasoned. His business acumen and long experience in his family shipping firm framing his assessment of the piece.

Greeting, monsieur, the young man said, his fit physique typical for youthful Swiss politicians. In Switzerland, even a conciergelike position like the young man held at the moment was a sign of an enabling patronage from some big wig; the recipient would depend on his wits to take him up the rest of the ladder. I hope you’re enjoying Switzerland, he added.

Using the Bernese-German dialect with such perfect pronunciation that the young man’s neck stiffened, Rallis responded, "Leu, geng (yes, always)."

"Je suis assez impressionne que vous connaissez bien notre langue ancienne, I’m quite impressed that you know so well our ancient language," the young man responded in somewhat awkward English.

Actually, I find the Alemannic languages quite beautiful and with some roots in our ancient Greek, Rallis acknowledged.

They chatted casually as Rallis removed his gloves, coat, and hat, which were taken by a young woman who suddenly appeared. They continued discussing the subject of linguistic similarities as Rallis was escorted down the hallway to a conference room. A uniformed guard opened the door as the three persons inside simultaneously came to their feet.

Not even eight o’clock yet and they’re all in place and probably have been for some time. I love these Swiss! Rallis mused.

Greetings, Mr. Rallis, said the president of the Swiss Confederation, Madame Ruth Maurer, as she extended her hand.

I am honored by your presence, Madame President, Rallis responded, shaking her hand gently in the new official etiquette, rather than putting his lips to the back of it, as he would have done in a nonofficial social setting.

Perhaps you know my fellow councilors, she added in English, modestly referring to her colleagues among the seven federal council members. In Switzerland, the president is selected from the federal council and elected to a one-year term. And English has gradually replaced Bernese as the second language of the Bern Canton.

The councilor for foreign affairs, Monsieur Karl Stehlin, and our finance councilor, Monsieur Alain Balladur, she said, introducing the two Swiss men who extended their hands and which were met with a welcoming grip returned by Rallis.

Monsieur Balladur also oversees the Swiss Federal Banking Commission. I decided that it would be entirely appropriate and certainly more efficient to have Monsieur Balladur at this meeting in light of the subject you wish to cover, Madame Maurer added, inviting Rallis to his assigned seat.

Perhaps you would like to begin, Mr. Rallis?

Yes, and thank you, Madame President, Rallis replied. His papers were assembled before him on the conference table, but he barely glanced at them.

We are all fully aware of the recent difficulties that we had with America. Our efforts to consolidate the global chocolate market under Swiss supervision were misinterpreted by President Eastwood. It was an entirely legitimate business undertaking. We violated neither the World Trade Organization nor the U.S. or Swiss antitrust laws. What was our mistake then? We ignored the power of lobbying in the U.S., where political influence often trumps the law.

Rallis sensed the controlled but visibly smoldering anger in the president’s green eyes. She had been humiliated; Switzerland itself was denigrated by the settlement, despite the limited media coverage. Information regarding the details of the agreement between Maurer and Eastwood had been controlled as state secrets, which, in a way, they were. Maurer’s lips thinned, her face taut and tense; Rallis could see her head slightly nodding in agreement with his words. In fact, he found her rather attractive in that state. His salacious antennae, always sweeping about him, began blipping, momentarily distracting him. Maybe later, he mused to himself. Rallis was never above using romance as a leveraging tool in his business kit bag.

Back to the matter at hand, he decided and continued.

I will not go into too much detail and remind ourselves of the immense pain and disruption the affair caused all of us, especially you, Madame President, he said with deliberate directness, looking into her eyes. They had become somewhat lugubrious. Aha, she does have emotions on the other side of that face, Rallis thought, somewhat pleased with himself that he had aroused her in yet another way.

"I intend only to say that the American political culture, of which I am somewhat of a product, having done my higher education there, can easily undo even a well-drafted contract as we all learned. The members of Congress from the states wherein the American confectioners were located that we, the Swiss buyer, tendered our bids to acquire gutted our offers. After we had finalized our acquisition of the companies, Congress and the president then developed a plan to subsidize the former private owners and allow them to reacquire themselves. Under normal business conditions, these companies deserved to fail. Moreover, as we developed plans to take the companies into the public marketplace, offering stock, and other equities for public participation, the U.S. government reacted again, charging that we misrepresented asset values.

The final insult, which Madame Maurer had to sustain, was the demand by President Eastwood that the Swiss buyers abandon their investments, allowing control of the companies to be restored to the former owners. If the Swiss refused to do so, Eastwood authorized the cabinet-level delegation, negotiating with Madame Maurer, to threaten disclosure of hateful and misleading histories of financial abuse of Jewish Holocaust victims as well as other so-called financial crimes.

At this point, President Maurer softened her face, opening her lips ever so slightly so as to signal she wished to speak. Rallis immediately surrendered the floor.

If I may add something here, Mr. Rallis, she said rhetorically.

Of course, Madame President, Rallis replied with a respectful bow of his head, which elicited a gentle and, Rallis thought, a somewhat solicitous smile from Maurer.

We, Swiss, are not a vengeful people. On the contrary, we have structured our culture in a way that we accommodate, neutralize, and even defend, but only when necessary. Our Banking Law of 1934 was intended, for example, to protect the assets of Jewish parties from disclosure to and seizure by Nazi investigators. Our neutrality is legendary and our hospitality to war victims equally so. But we require all male citizens to equip themselves for military service in the event that these attributes and the constitution that enables them require that our blood and treasure be expended to defend them.

Maurer was in full control of her emotions and her thoughts, but her anger was unmistakable. She continued to speak.

President Eastwood has not been a reliable party to our agreement. We did everything that he asked. Worse, we made our good friend, Nikos Rallis, our scapegoat. She looked across the table at Rallis, finding his modest composure quite pleasing, as he closed his eyes, again bowing his head in acknowledgment of her remarks.

"The U.S. president continues to pursue us, charging again and again that we illegally cling to Jewish victims’ property in denial of the claims of the assertive heirs. And Mr. Eastwood has again made demands against our banking system. I am told that the U.S. intends to indict the chairman of Wegelin, which is the oldest private bank in Switzerland, operating for more than 270 years. I am a former law professor and have been told by our ambassador in Washington that the U.S. Justice Department will file a forfeiture complaint. I understand these matters.

Forfeiture was the same legal mechanism used in usurping our Swiss investment in the failed confections cases. It is the most potentially unjust instrument that a government can deploy since its use is entirely discretionary and, too often, premised on the weakest possible arguments, indeed speculations. But now, the U.S. Justice Department is charging that Union Banque Suisse acted as a correspondent for Wegelin, which does not have operations in the U.S. The government lawyers are saying that UBS directed funds deposited in its facilities to Wegelin. Even if this is true, it is not illegal under either U.S. or Swiss law, and I have had the Swiss banking ombudsman confirm this. The act of evading U.S. taxes, I continue to reason, is a decision of whoever acts in a way that evinced intent to defraud the U.S. That ought to be the charge, and if it were, the onus would be on the U.S. citizen who deposited funds with any custodial source for that purpose, Maurer explained in highly formalized English.

But there is still other evidence of a broad-based attempt to smear us. More recently, the U.S. ambassador to Switzerland, Mrs. Allison Sawicki, has advised Karl that the American Justice Department will take action to recover for several Jewish American heirs of Holocaust victims, the very large art collection of French painter Paul Gauguin. The Gauguin collection is currently housed in the Musée d’Art et d’Histoire in Lucerne. When does this harassment stop? Switzerland is a small country. We don’t deserve being bullied by this big kid across the Atlantic, she concluded, her voice firm.

That may be an opening for me, before I get into my spiel, Rallis thought. Madame President, I may be able to help on the Gauguin issue. I have an idea. Perhaps I could take it up with you privately.

President Maurer’s head angled slightly upward, her chin moving ever so delicately forward as she thought, He is a handsome man and always so accommodating and clever. Thank you, Nikos, she replied and then realizing she had informally called him by his first name, a reaction not lost on her Swiss colleagues. We can chat after the meeting. I am certainly interested in any workable options in managing this issue, she said finally. But I have said enough for the moment. Please, Mr. Rallis, let us have your proposal regarding our problems with the U.S.

I agree with Madame President that the U.S. has been absolutely diabolical in its treatment of us, speaking as a protected resident of Switzerland. I want to say, at the outset, I am not a vengeful person. However, I do want for us some form of relationship with the U.S. that will have financial and political benefits. I am, at heart, a businessman. My past role in leading the Swiss confections project was entirely profit-oriented. I am not a pure politician, although I have been one and obviously accept the unavoidable overlap of the two sectors. And this is the way I’ve structured my plan, Rallis started.

With a tap on his laptop, the projector on the table transmitted an image to the large plasma screen on side wall. Financing Vignettes, the image read, with a complex organization chart devolving below the title.

The structure depicted here will become clearer as I speak. I am proposing that we develop a small but highly efficient multinational investment partnership to profitably invest in the energy and defense business sectors within the United States. My concept relies heavily on support from China and Brazil. And as I conclude, I will be seeking, as an objective outcome of this meeting, Madame President, your authorization to discuss the plan in behalf of Switzerland with those two countries, Rallis said, looking at President Maurer, who neither smiled nor made any other facial gesture suggesting approval or disapproval.

"Beginning with China, the country shares Switzerland’s dislike of Eastwood’s arbitrariness toward us. Too much is left to uncertain outcomes in our relations. It’s almost as if the U.S. is rudderless, but its immense military and financial impact on the globe and us underscores the dangerously reckless course its ship of state is taking.

"My concept essentially gives us a hand on a rebuilt rudder. By financially asserting our own strength, and that is the fundamental source of Swiss influence, we can establish a presence in these two critical sectors—energy and defense. Of course, Switzerland cannot do this alone. But we have an advantage that China or Brazil lacks—we are too small to worry U.S. strategists. Therefore, we present ourselves as a surrogate, an intermediary, or even a clearing house for Chinese sovereign fund investment in these critical U.S. industrial sectors," Rallis explained, then stopped briefly as he noticed uneasiness among the Swiss political leadership.

Foreign Minister Karl Stehlin spoke first. Nikos, what makes you believe that China will want to partner with us? It would seem that its global influence and its strong financial position, vis-à-vis the U.S., are sufficient to do whatever it wishes in the foreign policy and investment arena without a need for us.

Thank you, Karl. Unquestionably, China is the eight-hundred-pound gorilla in the room, as Americans are so fond of allegorizing. And that is the problem—there is great fear in the U.S. of too-much Chinese influence. My concept calls for Chinese investments to be made directly through surrogate Swiss and Brazilian companies. We would also manage portfolio investment in these companies’ stock, bond, and other equities to secure further Chinese control over them, Rallis replied.

But, Nikos, China can deploy its investment funds through many other sources without disclosing its own interests. I refer to entities like hedge funds and other investment outlets. It was the voice of Alain Balladur, finance minister and overseer of the Swiss Federal Banking Commission.

Again, Alain, that is very true. But if you’ll kindly look at the chart on the screen. I am proposing that we create our own private equity arm called ‘Strasse Equity Fund’ or ‘SEF.’ SEF will function under your regulations, in accordance with the Investment Fund Act, Rallis replied.

I see. So SEF will not have bank status but act as a financial intermediary as the law requires, Balladur replied, squinting slightly, his hand on his chin.

Yes, and if I may continue, Rallis answered, looking for and getting nodding approval from President Maurer. It would be characterized further as the investment arm of the Swiss Sovereign Investment Fund, Rallis added.

The Swiss sovereign fund, like that of China and many other countries, especially in the Middle East, has substantial foreign-currency reserves that are often surplus to the budget requirements of such countries. The sovereign funds, therefore, exist to find investment opportunities within and outside of the originating countries. Middle East sovereign investment, for example, is found in many U.S. corporations, such as Apple, Google, General Electric, Halliburton, and dozens more.

Moreover, Rallis continued, the idea is to bring to SEF, the Strasse Equity Fund, sovereign funding from the China Investment Corporation, or ‘CIC’ as it’s called. SEF would then act as an investment agent, investing directly in companies preferred by China and indirectly in those companies’ stock and equities as I mentioned earlier.

And the role of Brazil? asked Balladur.

Brazil would make U.S. investments for its own purpose, but also, in those entities in the U.S. where a Brazilian company, heavily financed with Chinese funds from SEF, would act as if Brazil alone was the buyer, Rallis replied.

And China would cooperate with Brazil in this regard? asked President Maurer.

They already do cooperate, Madame President, but not at the level or with the intensity that this concept brings to both China and Brazil and, now, Switzerland. But there is another angle. Brazil wants to please China on which its desire to get the permanent seat on the United Nations Security Council depends. Also, Brazil’s president, a socialist like her predecessor, likes the U.S., except that it sees the Brazilian version of capitalism as far superior to that of the U.S. But it will not offend the U.S. for two reasons: first, the Security Council request could be vetoed by the U.S., and second, the U.S. is a valuable customer of Brazilian exports, especially in the aviation sector.

There was momentary silence. Finally, President Maurer spoke.

Nikos, we appreciate your leadership on this issue, she started, looking at the organizational diagram on the screen as she spoke. I can see the advantages for all parties, especially Switzerland. And I like the idea that we are involved financially, a role that we have always played well and is very suited to the size and spirit of this country. Furthermore, I see this as a way of persuading the U.S. to treat us with more understanding of Swiss statutes and the political culture from which they evolved and which they represent. I am tentatively authorizing you to act as our agent on this matter, subject to the vote of the federal council, consent which I must have before I can give final assent. Are there any objections that you might have? she said, turning to Foreign Minister Karl Stehlin, and Finance Minister Alain Balladur, both voting members of the Swiss federal council.

I believe the council will endorse the proposal and authorize Mr. Rallis to act as our official agent, Stehlin replied.

It was unclear whether Balladur felt the same way. For the moment, his bureaucratic instincts were more alerted; he needed to protect his power in regulating—controlling really—the Strasse Equity Fund’s ambitions and, of course, those of Nikos Rallis.

The meeting ended; Messrs. Stehlin and Balladur departed, leaving Maurer and Rallis.

Maurer liked the younger Greek eight years her junior. He was highly sophisticated, agreeably sociable, and entertaining in other settings where she had encountered him briefly on occasion. Naturally, she was always one step ahead of the wolf pack that had tracked the attractive woman most of her adult and even professional life. As the occasion required, she could be coy and open, elegant and inviting, charming and aloof, and mix other moods parabolically.

He is very fit and handsome and seems so sympathique, like my Jurgens was so many years ago. She winced at the very thought that she was subconsciously comparing him with the faded romance that her husband, Jurgens, had once brought to their marriage. I look terrible. Meetings wear me down. Shoulders back, Ruth. Stomach in, she said to herself.

She spoke, You’re very brave to undertake this project, Nikos. I deeply appreciate it. She wanted to take his hand, even to touch his shoulder, just to feel some part him.

The ever-intuitive Rallis sensed her needs. She is actually quite beautiful in this mood, even more elegant. Her body moves with her mind and voice. It’s almost like a rhapsodically synchronized aria, so sensual. Once more, in European fashion, he bowed his head without bending at all from the waist, now close enough that he had her perfumed scent in his nostrils. The encounter had positively moved to a very different and unexpected level, a plateau really, but with potential sideway moves that could lead to a cliff. He knew that caution and restraint were his best tactical options.

Thank you, Madame President, he replied, surprised that had allowed himself to become so attracted to her. Then recovering, he reminded her of the stated purpose of their private meeting after the earlier session.

Once more, I believe I can help with the U.S. demands for the Gauguin collection.

I would welcome that. Perhaps you should see the exhibit yourself. I would be pleased to accompany you since I find Gauguin’s art to be quite remarkable, she added. It was an invitation that Rallis knew he could not refuse.

Thank you, Madame President. I am at your disposal, he replied.

I will have my staff director set it up and call you, she added, becoming somewhat more official in her countenance. I must take a step back on this one. I was being too forward. I will just let events unfold themselves, she realized.

Rallis immediately sensed the reason for her mood shift. She’s being cautious. She doesn’t fully see my interest in her. That’s better. Of course, that would be fine, he said finally.

The president offered her hand. Rallis gently took the four fingers of her extended hand in his, with his palm upward, a more gracious and social, rather than businesslike, grip. Bending his head slightly forward, he released the hand, which had conveyed no squeeze or other signal of interest. He backed away with some disappointment that was well-concealed. Her eye contact continues, but that’s the French side of her heritage. I might have misjudged her interest in me.

A very suave fellow. I will get to know him better, the president thought, acknowledging his slightly bowed head with a forward tilt of her own and then leaving the room.

CHAPTER 2—

LEVERAGING ROMANCE

Rallis spent the next few days developing his planned visit to Beijing. The meeting would be arranged with China National Bank officials and, perhaps, a select few members of the Communist Party politburo, although the CNB chairman is no doubt quite senior in the party’s ranks, Rallis thought. He was authorized to work through the Swiss foreign affairs ministry. With the help of Karl Stehlin, federal councilor for foreign affairs, who had attended the January 3 meeting, the Swiss ambassador in Beijing would be charged with arranging the details of the meeting.

On Thursday, January 5, he was called by a member of the president’s personal staff. The president and Rallis would fly to Lucerne the next day, he was told, to review the Gauguin collection at the Musée d’Art et d’Histoire.

On Friday, Rallis was picked up from his hotel at 8:00 a.m. by a Swiss Air Force car, as arranged by the president’s office. The official car, a Citroën Metropolis, whisked him across the Dalmazibrucke, a bridge leading to a sports field customarily used by helicopters ferrying government officials. The morning traffic was relatively light, and the slightly indirect routing assured a quick trip. Arriving at the sports arena, he saw the president’s Mercedes limousine flanked by two Piranha armored vehicles, equipped with large wheels suited to conventional roadbed use. A Swiss Air Force Cougar helicopter stood by, its doors open, with crew scurrying about removing wheel chocks as the air force Citroën with Rallis aboard approached. A Swiss Army lieutenant met the car, opening the door and greeting Rallis in English.

Welcome, sir, the young army officer said. The president is aboard the helicopter. Kindly follow me.

Ever fit, Rallis had little difficulty keeping apace as the two moved quickly in the brisk morning air to the large aircraft. The Swiss Air Force has twelve AS532 Utility Cougars. Made by EADS of France, they are designed to carry a crew of two and as many as twenty-nine troops. This particular helicopter, Rallis correctly presumed, had been outfitted with a special module for transporting high-level officials.

Pres. Ruth Maurer was seated in the aircraft and greeted him warmly. Please, Nikos, join me on this side, she said, allowing them to sit together rather than across each other. She moved her shapely torso to the right, her well-tailored pants beneath a wool waistcoat exhibiting well-sculpted hips and thighs, catching Rallis’s focus as his head turned downward. He slid into the widened space. Unavoidably touching his hip with hers, he smiled apologetically but liked the feel of her firm figure. An air force sergeant appeared and assisted in strapping him into his seat and adjusting the headset that would be available for his optional use.

Within minutes, the door was closed, and the four-blade rotor of the huge helicopter began revolving, its two powerful turboshaft engines quickly reaching their lift-off speed as the aircraft began rising, then nosing forward as it moved eastward over the Kirchenfeldbrucke that spanned the Rhone River.

This is a wonderful way to see the Swiss countryside, even in winter, the president said. The trip will take us less than an hour since there are several mountainous regions that we will be flying around. I hope you can hear me without difficulty. The module that we are in is as well insulated for sound as is possible, but helicopters are always very noisy, she added. Their hearing had not yet adjusted to the noise of the engines and the air flow against the aircraft.

Switzerland is one massive Alpine ski venue in winter, especially as seen from the air, Rallis added to their mutual chuckle.

They were separated by a crevice between the two seats, but Maurer, leaning on to Rallis, pointed out of the right-side window. There, she said, the Schloss Worb, one of our ancient castles believed to have been an ancient fortress built by Romans on the route to invading Germany.

Yes, I can see it well. Actually, I visited that region of Bern a number of times and have seen the castle. The Romanesque architecture is eleventh century, but it seems to incorporate remnants of much older Roman structural models, Rallis added, providing an opportunity to nudge himself back against her, as if positioning himself to speak more easily.

Maurer welcomed the counterpressure against her left shoulder, thinking, Even through his heavy coat, I can feel his muscularity. She let herself continue to lean against him, searching for landmarks to justify her position. If you continue to look slightly to the north, you will soon see the Restaurant Rossli, one of the few three-star Michelin sites in Switzerland, she said, twisting her body awkwardly yet more tightly against him, as she pointed with her left arm through the right-side window.

She’s apparently quite comfortable with me. I would never have expected this type of contact—highly unusual among the Swiss in such a short time. It would be indelicate of me to back off. She is, after all, the president. I have no choice, except to let her continue taking the initiative, which is not at all a bad arrangement, Rallis mused to himself.

They remained together, shoulders touching with President Maurer from time to time, moving her gloved hand onto his, as if to point something out or to emphasize some aspect of whatever casual topic of talk engaged them. The crew chief stepped back into the passenger compartment and, speaking in German, advised the two that they would be landing in Lucerne in less than ten minutes.

The large aircraft circled a parklike clearing across the Reuss River and just outside the wall of the ancient city. The two could see a small welcoming party and two vehicles as the aircraft slowly descended. With apparent reluctance, Maurer moved herself apart from Rallis but leaving her right arm against his left side. On the ground, the helicopter’s rotors stopped in short measure as the door on Rallis’s side was opened by the crew chief who had dismounted from the cockpit door. Rallis moved out first, then stopped to assist the president. She was welcomed by the museum director and a local official who Rallis assumed to be the mayor, although he was unadorned in the usual official sash worn on such occasions.

Rallis followed the president as they entered the waiting cars, which quickly moved onto the nearby Geissmattbrucke, crossing the Reuss and reaching the museum, all in less than ten minutes. In the museum, the director introduced Pres. Ruth Maurer and Rallis to several key staff members and their guide and curator.

Welcome, Madame President and Mr. Rallis. We are honored that you have taken so much interest in our collection, said Peter Hegglin. The forty-year-old curator was a product of the University of Zurich with graduate studies at the Sorbonne, followed by a four-year doctoral program at Columbia. He was widely recognized as the world’s authority on the mystical Paul Gauguin.

Thank you, Dr. Hegglin. If it pleases you, we would first like to review certain selections of the collection. Then we will discuss in more detail Mr. Rallis’s particular plans for keeping it in Switzerland, Maurer responded.

Madame President, the loss of this little-known yet very large collection of the artist’s works would be devastating to the world. If it were to be turned over to the claimants or any other private source, the intensity of this singular source of so much of the artist’s contribution to humanity, as well as the arts, would dissipate, the highly erudite Hegglin responded.

"Precisement, Rallis replied, the narrowed meaning of the French word emerging in his mind as the best response. I have long been an admirer of Gauguin’s works and his Van Gogh-like determination to take impressionism beyond the prosaic level where it was aging, like an untended tumor that consumes healthy cells."

That is quite so, sir. By 1889, Gauguin had sickened of impressionism. It depressed him. The art form had lost its vitality. The Ecole des Beaux Arts, he thought, was turning out sycophants, not artists. Creativity was being stifled, and if I may borrow your analogy, the status quo impressionist fad had become a cancer tearing away the creative cellular structure of the brain, Hegglin said as he guided the entourage to the first exhibition chamber in the vast museum.

Maurer listened intently to the conversation. The significance of this vast collection of nearly two hundred little-known works of the great artist was a Swiss treasure. It stimulated young Swiss artists, pleased the substantial cohort of cultured countrymen, and attracted tourists who gaped in amazement at the collection’s depth. In the three years since it was mounted for display, the collection was now attracting scholars from Europe, Latin America, Oceania, and even Asia. Russian collectors, as well as the Russian