The Secret Foreign Donor Behind the American Enterprise Institute
The right-wing think tank received big money from Taiwan’s government at the same time that it was churning out policy papers and articles urging US military aid to Taipei.
JUN 25, 2013 | REPUBLISHED BY LIT: SEP 21, 2021
The American Enterprise Institute (AEI) has emerged as one of the Beltway’s most consistent advocates for the sale of advanced fighter jets to Taiwan. Previously undisclosed tax filings reveal that while issuing research reports and publishing articles on US-Taiwan relations, AEI received a $550,000 contribution from the government of Taiwan, a source of funding the think tank has never publicly acknowledged.
In 2009, AEI, a nonprofit 501(c)(3) organization, received the contribution from the Taipei Economic and Cultural Representative Office (TECRO), Taiwan’s equivalent to an embassy.
The think tank couches its hard-nosed advocacy of arms sales and trade agreements with Taiwan as a strategic necessity for the United States. “Withholding needed arms from Taiwan in the present makes a future conflict—and US intervention therein—more likely,” wrote AEI senior research associate Michael Mazza in an October 2011 article in The Diplomat.
But AEI’s undisclosed source of foreign funding raises ethical and legal questions about AEI’s Taiwan-policy work.
“Any organization that’s trying to influence public policy should disclose its donors so the public can know who the money behind these institutions is,” said Bill Allison, a senior fellow at the Sunlight Foundation, a Washington-based organization that advocates for increased transparency and accountability in government. “It’s critical for the public to know this.”
AEI’s “schedule of contributors,” a form typically not intended for public disclosure but acquired through a filing error, names TECRO as the organization’s fourth-largest contributor during the 2009 tax year, following Donors Capital Fund ($2,000,000), Paul Singer ($1,100,000) and the Kern Family Foundation ($1,071,912). The US Chamber of Commerce contributed $473,000, making it AEI’s seventh-largest donor.
When asked about the contribution, TECRO spokesperson Lishan Chang acknowledged the transaction and explained that TECRO was helping to facilitate a Taiwanese university’s donation to AEI.
“The contribution was given by the Institute of International Relations of the National Chengchi University to AEI’s Asian Studies Program,” said Chang. “It was therefore an act of scholarly cooperation between the two research organizations with the goal of promoting academic exchanges and research on issues concerning Asia.”
The Institute of International Relations at National Chengchi University, a top public university in Taiwan, did not respond to a request for comment.
What “scholarly cooperation” was undertaken by AEI remains unexplained by either AEI or the university, but Taiwan’s president, Ma Ying-jeou, made no secret of his government’s warm relationship with AEI during a February 2009 meeting with AEI president Arthur Brooks and former AEI president Christopher DeMuth.
“[Ma] noted that the AEI has deep ties with the ROC [Republic of China] and has long supported the various policy stances of the ROC government,” said a TECRO press release.
“AEI President Brooks expressed his appreciation to President Ma for taking time out of his busy schedule to meet with him and his predecessor,” the release noted. “He added that the AEI is delighted to maintain relations with Taiwan given the values of democracy, peace and freedom that are shared by the two. He said he looks forward to continuing the friendship in the future and engaging in further cooperation.”
In 2009, the same year in which Ma hosted the delegation from AEI and the think tank reported the $550,000 contribution from TECRO, AEI employees issued a number of written products praising Taiwan’s government and urging the White House to approve arms sales to the island state.
In a November 3, 2009, article for ForeignPolicy.com, AEI resident fellow Daniel Blumenthal, the current director of the think tank’s Asian Studies group, slammed the Obama administration’s Asia policy for “the absence of any agenda on Taiwan.”
Blumenthal accused the White House of failing to uphold an “implicit bargain” in which Ma would “ease tensions with the Mainland” in exchange for Washington’s “strengthen[ing] Ma’s hand by strengthening our ties to Taiwan.”
“The Obama team is not helping Ma,” wrote Blumenthal. “We have not sold any arms to Taiwan even as China has continued its arms buildup across the Strait. And Obama has no plans of yet to deepen economic ties as Taiwan goes forward with a China [free trade agreement].”
In a November 18, 2009, article for ForeignPolicy.com, Blumenthal continued his push for arms sales. “China has built a military capable of destroying the island if America does not assist Taiwan. Though obligated by law, the Obama administration has not sold a single weapon system to Taiwan,” a reference to the 1979 Taiwan Relations Act, which requires the United States “to provide Taiwan with arms of a defensive character.”
And Gary Schmitt, an AEI resident fellow, warned about the consequences of the Obama administration’s diplomacy with China (“an approach in which China is seen as a strategic interlocutor with the United States with something approaching equal status”) in an October 2009 AEI “National Security Outlook” paper.
“This of course will have an impact on U.S.-Taiwan relations. At a minimum, it will make the diplomatic hurdle of supplying needed, high-quality military systems and supplies—such as F-16s—even more difficult. (Remember, by this time in the Bush administration, the decision had already been made to make available $30 billion worth of arms and services to Taiwan.),” wrote Schmitt.
Even in 2011, after the White House agreed to upgrade the avionics systems of Taiwan’s aging F-16 fleet, the AEI’s Mazza accused the administration of making a “split the baby” decision by refusing to “sell Taiwan the 66 new F-16 C/D aircraft that Taipei has been requesting,” in an October 2011 article in The Diplomat.
When contacted for comment, AEI declined to address questions about the independence of its Taiwan policy analysis or its funding from the Taiwanese government. “We do not discuss details of contributions beyond what is publicly available through our Form 990 and our Annual Report. AEI is an educational, non-partisan, non-profit, and operates in good standing and in compliance to the fullest letter of the law,” wrote Judy Mayka, AEI’s director of media relations.
While AEI insists its actions were lawful, legal and ethical questions still remain about the TECRO funding.
The Foreign Agent Registration Act is a 1938 federal law requiring the agents representing the interests of a foreign country in a “political or quasi-political capacity to make periodic public disclosure of their relationship with the foreign principal.”
“Maybe this money [from TECRO] goes solely toward academic research and none of [the TECRO-funded research] is ever presented to a member of Congress, but for a Washington think tank that would be shocking,” said Allison. “Clearly AEI should disclose the contribution and probably should register under FARA.”
Most FARA registrants are law firms, public relations agencies and lobbyists representing foreign countries. When asked if a nonprofit think tank could have an obligation to register under FARA, Justice Department spokesperson Andrew Ames responded that “it is possible.”
“As with any organization or individual, we would look at the specific elements and facts to determine whether organizations are required to file,” said Ames. “Without all the facts, it is impossible to determine. The department has no record of [AEI] filing with the FARA unit.”
AEI has a track record of providing an institutional base for individuals who are supportive of Taiwan.
Former Deputy Secretary of Defense Paul Wolfowitz joined AEI as a “visiting scholar” in 2007 and, in 2008, was named chairman of the US-Taiwan Business Council.
James Lilley, the US Ambassador to China from 1989 to 1991, received a fellowship at AEI after his retirement in 1991.
Lilley, who served as director of the American Institute in Taiwan, the unofficial US diplomatic mission in Taiwan, from 1981 to 1984, famously clashed with the State Department when US diplomats attempted to set a cutoff date for arms sales to Taiwan. He died on November 12, 2009.
“[President Ma Ying-jeou] said Ambassador Lilley was a strong supporter of freedom, democracy, prosperity and security throughout his life, and in his diplomatic and scholarly work he was extremely friendly to Taiwan,” said a press release from the Taiwanese president’s office, following a January 2010 meeting with an AEI delegation.
Joseph Sandler, a FARA expert and former Democratic National Committee staff counsel, explained that the legality of AEI’s FARA compliance hinges on whether the think tank’s staff took direction from the government of Taiwan.
“Presumably AEI has been supportive of Taiwan. The question is: To what extent have they consulted with the Taiwanese government?”
Sandler added, “If they in fact were taking some sort of direction or honoring requests in any way on behalf of the Taiwanese government, it would not only raise FARA questions but also questions about the academic integrity of their work.”
The prominent liberal think tank Center for American Progress is still skirting questions about its donors.