The Corporations' New Secretary of State

CHICAGO - When Ronald Reagan nominated George Shultz to be Secretary of State, political pundits made much of the contrasting personal styles of Shultz and his cashiered predecessor, Alexander Haig. But Shultz' ascendancy signifies more than just the triumph of tact over tumult. It marks a new era of explicit corporate control over the foreign policy of the U.S. government.

Shultz comes to the highest ranking Cabinet post after spending the last eight years as president of the Bechtel Corporation - a giant, privately-owned multinational construction firm holding billion dollar contracts in Saudi Arabia.

While at Bechtel, Shultz enunciated - by word and by deed - what he considered to be the proper role of U.S. foreign policy.

The U.S. government, Shultz wrote in a 1979 Business Week article, must "avoid actions that undermine the ability of U.S. corporations to be reliable suppliers" to foreign customers.

The U.S. government took such an action when it prohibited U.S. firms from abiding by the Arab boycott of Israel - which required any company doing business with an Arab state to cease dealing with Israel and to force all its sub-contractors to do the same. Bechtel under Shultz' reign went along with the Arab's boycott of Israel, simply flouting the U.S. law, claimed the U.S. Justice Department in 1977. (A Bechtel executive was questioned about this on a recent ABC Nightline program, and answered: "the client is the boss.")

Never before in the post-World War II period has a U.S. President entrusted the post of Secretary of State to a corporate executive. The old Republican Party dictum, "What's good for GM is good for the U.S.," has now been amended: "What's good for Bechtel is good for the world."

It's hardly surprising that Reagan, whose pet homily is "trust the magic of the marketplace," should choose a person who knows how to wave the wand. And from the standpoint of the corporations themselves, it is understandable that they now want to assume a high profile in government.

With the world knee-deep in recession, and political and social change hitting the Mideast, Latin America and Asia, corporations face the prospect of declining profits from their overseas activities. For the largest U.S. multinationals - in oil, finance, arms, and construction - this is a particularly frightful picture, since over 50% of their profits come from abroad.

The giant U.S. firms need an official who can represent their views thoroughly and consistently: generals, academics, and lawyers no longer suffice. In George Shultz, they have found their man.