CASH-AND-CARRY DIPLOMACY

By NANCY GIBBS

It was just before Christmas, and the President, in a forgiving mood, was trying to enlighten critics who had presumed to think that American officials could be bought by globe-trotting tycoons. "One thing we know," he explained anthropologically, "is that the culture out of which they come doesn't draw the same bright lines between politics, government and business that we do." He was describing the Asian-American donors whose largesse had done so much to help re-elect him in 1996 and embarrass him in 1997. But he might just as well have been describing his own roots in Arkansas' cash-and-carry politics, a "culture" that Clinton brought with him to Washington and that by last week had allowed him to startle a city that does not normally blush when money and power run naked together.

On Friday morning, the White House released 148 pages of memos, E-mails, routing slips and other bureaucratic flotsam that painted the clearest picture yet of the courtship between donors and policymakers. For months the White House has denied that the money gushing in from wealthy Asian interests clouded anyone's foreign-policy judgment. Yet the records show that the interests of American foreign policy were sometimes on loan to the President's political fortunes--and fortune hunters.

Warren G. Harding was right in saying his friends were a bigger problem than his enemies, and Clinton is finding it to be true. Time and again the President provided big contributors with the sort of encouragement that when presented in business circles in the Far East, might be mistaken for official credentials. This created, in effect, a shadow diplomatic corps. For businessmen abroad, a picture with the President is worth a lot more than a thousand words--or dollars, for that matter. One supporter, Johnny Chung, whose $366,000 in donations qualified him as a "managing trustee" of the Democratic National Committee, made 49 visits to the White House--access that kept the National Security Council's China expert, Robert Suettinger, working overtime. Suettinger warned that Chung was a "hustler" trying to cash in on his White House connections to build a consulting firm.

Suettinger got the hustling part right. During a 1994 visit, Chung traipsed around with two six-packs of beer, snapping pictures and introducing White House aides to the chairman of a Chinese beer company, even dropping by the offices of Clinton, Al Gore and Hillary Clinton. Suettinger warned last year that further contact with Chung might prove embarrassing but prefaced his comments with the wisecrack that to the degree that giving Chung existing photos of him with Clinton "motivates him to continue contributing to the D.N.C., who am I to complain?"

The NSC documents were released by the White House in response to a request from the Senate Intelligence Committee, which is considering the nomination of Anthony Lake to be the new CIA director. The giant pile of data did achieve its ostensible purpose: it showed that Lake was not a party to the unseemly fund-raising operation. But in making the case for Lake, the White House damaged itself in the larger battle to rise above the fund-raising scandals that are swamping it. Press secretary Mike McCurry conceded that at times the NSC's "good, sound counsel" was ignored, a reflection of, "among other things, the shortcomings that existed in our process for scheduling appointments here at the White House."

And those are the shortcomings the White House was prepared to admit. There were also some it was busy last week trying to determine. In two separate stories, the Washington Post reported that the FBI is investigating whether the Chinese government may have been orchestrating donations to the Democrats through two of their most active fund raisers, Charlie Yah Lin Trie and former D.N.C. vice chairman John Huang. According to the Post, the Justice Department has asked the National Security Agency, which monitors communications, to comb its files for evidence of this activity in international phone calls and electronic messages. The stories "ratchet the tension up two notches," says a White House aide, even though they raised more questions than they answered. There was no evidence that the Chinese ever succeeded in directing money to D.N.C. coffers or that Democratic officials knew about the effort. But in the current atmosphere of flying subpoenas and endless investigation, it was easy to suspect the worst. There is enough scandal in the water supply now that even low-level staff members boil their memos before they send them. Senior White House officials avoid taking notes because anything written down is likely to turn up as Exhibit A in someone's broadening investigation.

When it starts in April, the main show on Capitol Hill will be the hearings in Senator Fred Thompson's Governmental Affairs Committee, which last week sent out 52 subpoenas on everyone from donors to fund raisers to federal agencies to phone companies in an effort to determine who was in touch with whom. Though Thompson has talked a good line about a bipartisan investigation of fund raising by both parties, there is only one Republican target. Thompson asked the Justice Department for a dozen FBI agents. Senate committee sources told Time that the panel will be given eight investigators and two document analysts, an unprecedented number.

Clinton has "categorically" denied that donations had any influence on policy, but damning evidence that he did not draw bright enough lines between politics and policy comes from his own NSC. In Clinton's re-election-mad White House, NSC chief Lake had tried to maintain a fire wall between foreign policy and campaign politics. But he was clearly frustrated, as he said in answers to the Senate panel, because "the White House had no formal process for vetting foreign nationals invited to the White House." It probably didn't help matters that White House chief of staff Mack McLarty knew in Little Rock, Arkansas, many of the people who kept insisting in letters and memos on their friendship with Clinton as they planned trips to the Orient and demanded talking points, letters of credential and other favors. By the time McLarty was eased out in 1994 and replaced by Leon Panetta, the die was cast. Panetta never stepped back in to fix the process, says a Lake intimate.

The result: visitors to the White House who had no business being there and left with photographs to prove they had been there. In the case of Chung, his access to Clinton seemed to go to his head. Four months after he and other Chinese visitors had their photograph taken with the President, Chung was pressing Clinton's personal secretary for a letter of introduction from Clinton for use in Beijing that would help him negotiate the release of Harry Wu, a Chinese-American human-rights activist imprisoned for two months on espionage charges. Although he never received the presidential seal, Chung got the next best thing: a letter from the chairman of the President's political party, Don Fowler, thanking Chung for "being a friend and great supporter of the D.N.C." and wishing him success on his China mission.

This time Suettinger made his alarm plain. He wrote to Lake that Chung's mission was "very troubling" because it interfered in a "diplomatically difficult and high-stakes issue." He added, "All we can do is hope the Chinese recognize Chung's credentials are thin and that his message should be treated with caution." Suettinger feared that Chung could "do damage" and recommended that "we be very careful about the kinds of favors he is granted."

The documents do illustrate a few cases in which Lake and his staff prevailed in asserting national security over electoral victory. When Trie, a D.N.C. fund raiser and an old Clinton friend from Arkansas, asked for a presidential photo with Chinese officials he was hosting in April 1993, Lake argued against the meeting because the officials were not high ranking. He got his way. But as the Chung case shows, the President's donors had a greater interest in diplomacy than was previously known. In March 1996, Trie sent a letter to Clinton questioning whether his deployment of two aircraft carrier battle groups to the Taiwan Strait at the time would provoke a war with China, an outcome that, Trie warned, could have a "negative outcome" for the President politically, "especially in this campaign year." Clinton responded with a boiler-plate reassurance that the only U.S. intent was to help the two sides peaceably resolve an ongoing dispute over China's military maneuvers in the strait. The letter may not have constituted a big foreign-policy concession, but it burnished a big donor's stature in China, where connections mean everything and where Trie was concentrating his business interests.

Another troubling document is an April 1996 E-mail message from NSC's Suettinger that warned Vice President Gore about attending a fund-raising lunch at a Buddhist temple near Los Angeles. Gore's attendance, he said, would appear to give U.S. policy a pro-Taiwan, anti-China tilt at a time of great tension between the two. "My reaction would be one of great, great caution." The State Department expressed similar concerns. The result? Gore went, but there were no Taiwanese flags flying to make for uncomfortable photo ops, and no Taiwanese politicians playing a visible role. The lunch netted the D.N.C. $140,000 and unlimited grief ever since because of multiple fund-raising irregularities.

Though he was the man at the center of the storm, Lake ended the week thrilled by the release of the documents because they showed that he had tried, if not always successfully, to keep Clinton's Asian-American friends from mucking around in foreign policy. "They're releasing everything," Lake confided to a close adviser, "and everything is going to be fine."

As for Clinton, things could be worse. He won the election. His popularity is high. The economy is booming. His strategy of becoming the apostle of bipartisanship has the Republicans on the defensive, and polling shows that the country likes his program (no surprise, as polls had already told him it would be popular). At the National Prayer Breakfast two weeks ago, Clinton found room for improvement, exhorting the crowd to "pray for the people in public office, that we can rid ourselves of this toxic atmosphere of cynicism and embrace with joy and gratitude this phenomenal opportunity and responsibility before us." Which is just another way of praying that the past won't come back to haunt him.

--Reported by J.F.O. McAllister, Viveca Novak, Karen Tumulty and Michael Weisskopf/Washington

With reporting by J.F.O. MCALLISTER, VIVECA NOVAK, KAREN TUMULTY AND MICHAEL WEISSKOPF/WASHINGTON