I clean out my office every 20 years or so, whether it needs it or not. Memories, not just clouds of dust, get stirred. Yesterday morning, I came across an artifact from the telecommunications revolution: Libya’s ballot in the 2003 election of the inaugural board of the international communications company, Intelsat Ltd. The document confirmed my recollection that the country’s maximum leader, Colonel Moammar Qaddafi, had personally cast all 1,373,469 of Libya’s votes against me.
We will leave for another day, when you’re older, the details of how I happened to come into possession of the Colonel’s secret ballot, but I can satisfy the immediate curiosity. Yes, he had solemnified the document by impressing what appeared to be a large ring into a splotch of goo at the bottom of the page. And yes, his signature was almost as ridiculously oversized as Donald Trump’s.
About the larger curiosity? I have no direct knowledge of why the Colonel had cast a bullet vote against me. Many authoritarian countries, facing a choice among Smith, Jones, Brown, and Green, would sprinkle a few votes over the disfavored candidates, to suggest, presumably, a deliberative process in which dissenting voices had been duly respected. The Colonel was not a man for nuance.
I did recall, however, a visit with an emissary from the Libyan Embassy in Washington. Some six months prior to the election, an expensively dressed gentleman, deferential in the extreme, came to my office seeking clarification as to how his country’s shares in the old organization would be redeemed at privatization. When I told him that, depending on a given country’s financial infrastructure, the funds would be wired either to the national treasury or to the central bank but not to individual citizens, he seemed disappointed.
I should probably begin this story somewhere near the beginning.
* * *
When Margaret Thatcher arrived at 10 Downing Street, she caught my eye. She was a woman, a Tory, a native-born product of the British middle class (the “daughter of a green grocer,” as the dismissive phrase had it) who at university had majored in chemistry, of all things. In other words, she was a political unicorn. More substantively, she was an autodidactic student of the fecundity of free markets. She may not have studied Adam Smith’s texts at the knee of an Oxbridgian don, but she had lived the reality of boundless opportunity in a free society. She was a believer.
Her most striking proposal — outlandish to many of her Tory supporters, outrageous to all of her Liberal-Labor opponents — was to “privatize” two of Britain’s most prestigious commercial enterprises: British Telecom (BT), the dominant provider of domestic telephone service, and Jaguar, the iconic manufacturer of luxury motorcars. Her basic argument was that, under government ownership deemed necessary during the post-war recovery, both companies had by the early Eighties become sclerotic and uncompetitive. (As she had witheringly described BT’s consumer handsets, “You may have any color you wish as long as it’s black.” Jaguar automobiles, at one time an emblem of British manufacturing excellence, seemed to spend more time in the shop than tooling down country roads.) Mrs. Thatcher proposed to sell both companies to private investors.
For me, it was love at first sight. Mrs. Thatcher was attempting to validate the core Buckley proposition that the state need not advance inexorably — that the state could, at least at the margins, be rolled back. In the spring of 1982, I handpicked a production crew and flew to London to do a film on Mrs. Thatcher’s initiative. She sat for extensive interviews and then opened doors to her key associates, as also to top executives at BT, Jaguar, and elsewhere. (It probably didn’t hurt our prospects that my production company was producing Ronald Reagan’s television appearances from the White House. Mrs. Thatcher’s first words to me were, “And how is our president?” I, shading the truth not intolerably, replied, “He sends his very best regards, Madame Prime Minister.”)
Privatization proved to be a good story. From the early returns of her campaign, it was becoming clear that (a) both companies would respond to consumers with wider choice and better service. (BT’s home receivers would come in primary colors! Jaguar sports cars would give James Bond’s Aston Martin a run for it down country roads!); and that (b) employees would receive market-rate compensation, many of them with equity incentives; and that (c) the sale of government assets would produce a fiscal windfall for Mrs. Thatcher’s budget. This initiative of the “Iron Lady” was on its way to a win-win-win.
We aired our film in the American market on PBS, where it was seen by a tiny audience that, against all odds, included an aide to President Reagan. Late Friday that week, the aide called to ask whether I could deliver a tape to the White House. Like, now. The President wanted to screen the film at Camp David over the weekend.
No more than a fortnight later, I was summoned to the White House, where a senior official complimented me on the film and then asked, “How would you like to head up our own privatization initiative?” In those earlier and simpler times, when you were asked by the Leader of the Free World to take up an assignment, your instinct was not to say, “Let me check with my lawyer,” but rather, “Yes, sir.” I at least had the wit to ask, “Do you have a particular entity in mind?” The answer was, “The president wants to privatize Intelsat.”
Proceeding ass-backwardly, I accepted the assignment and then began to look into what an “Intelsat” might be. It turned out that the organization was catalyzed by John F. Kennedy as a response to Soviet ambitions in the arena of satellite communications. It turned out, further, that Intelsat had been a roaring success, growing over the years to include 146 member-states. (The Soviet counterpart, named Intersputnik, never attracted more than 20-some members and was, by apples-to-apples comparison, technologically clunky.) By the turn of the century, Intelsat had become the dominant carrier of global communications — for voice, for video, and for alpha-numeric data. Individuals, families, businesses, governments, and private groups of all kinds came to rely on it for both private and institutional connections. The prime mover within the organization — the largest user — was the U.S. signatory, the Communications Satellite Corporation, or Comsat. It was a private company, a sizable Fortune 1000 company, but the president had the right to appoint three members to its 15-person board. He appointed me and, following a spirited scrum, the U.S. Senate confirmed the appointment in 1983.
So far, so very good. What neither the Great Communicator nor his aides had bothered to tell me, however, was that Intelsat was not a commercial organization governed by contract. It was an intergovernmental organization (IGO) governed by treaty. (Think the World Health Organization or the United Nations.) Its bylaws stated clearly that any material change in the organization would require the unanimous approval of the treaty signatories, all of which were sovereign nations. I don’t know whether you have ever tried to persuade 146 sovereign nations to agree on a risky and consequential reform, but it can take some time. In my case, it took 20 years.
* * *
A few observations along the winding road to privatization:
• The first generation of technical people at Comsat/Intelsat were top-of-the-line engineers and Cold War cowboys. You could not imagine any one of them calling a private citizen and pleading, “Hey, Elon. We’ve stranded a couple of astronauts in space. Could you bring them home, please?”
How good were those pioneers? They put satellite after satellite into geosynchronous orbit. Let me translate that: They lobbed bulky but fragile devices, each costing nine figures, to that point in space where the centrifugal and centripetal forces were in exact equilibrium and the satellite could then circle the earth in a moon-like orbit. Push it too hard on launch and the satellite, released from the earth’s gravitational restraint, would plunge into outer space for a millennium or so. Push it not quite hard enough and the satellite, now tugged downward by those same forces, would, with God’s grace, plunge into the ocean rather than into downtown Chicago. That magic point in space, by the way, is 23,000 miles above the surface of the earth. This is not an engineering term, but for a launch director to fire a satellite into geosynchronous orbit is the equivalent of a Steph Curry buzzerbeater from the backcourt.
• As U.S. administrations changed, so did the official posture toward our project. Bush 41 showed no signs of ideological exhilaration for privatization, and his enthusiasm for Margaret Thatcher was usually well contained, but he was an honorable man. He knew how important our initiative had been to his predecessor. Bush 41 gave us everything we needed. Clinton was fascinated at first but, ever the political oddsmaker, soon concluded that we would never make it across the finish line. He didn’t scrap the project, but he didn’t want his fingerprints on it when it failed. Bush 43, wrestling with 9/11 and discretionary wars, was otherwise engaged. I’m not sure he even put out a press release when we got to the magic number of 146.
• A hat tip is due here to two of my indispensable allies in the early years. First, the irrepressible Melvin Laird, who had served as secretary of defense during the Vietnam War and was no stranger to long and difficult missions. And second, the unflappable Fred Dent, who had served as secretary of commerce, and whose anodyne presence was required in the room when meetings ran late and tempers flared. Patriots, both.
• This story may be unfamiliar to you because, from Day One to the last day, our project was pursued in stealth. For two reasons. Comsat’s most important customer was the U.S. government and, more specifically, its security agencies. The customer came to rely on our “high-value information products,” as they were described in the original bureaucratese. These products, according to the customer, proved “vital” to US national security interests.
We never mentioned those testimonials in our marketing material. We never mentioned the full menu of services we provided. We never even mentioned our most important customer.
We held our breath. If a bulldog journalist had pulled hard enough on a loose thread, our whole project might have unraveled.
The other reason was France. One of our most tightly held secrets was the names and number of signatories who had committed to privatization. We defended the practice by saying that we hoped to prevent leaks, and there was some truth to that. But the real reason is that we didn’t want the French to know the moment when they held the high cards — the moment, that is, when they and their band of Francophone brothers could extract maximum benefit from their bloc vote. (The French, remarkably, were on the best of terms with their former colonies — eight of them Intelsat members, many of them located in North Africa. All of the foreign ministers seemed to have attended the same grande école in Paris. By my informal count, four of those member-countries — Senegal, Algeria, Ivory Coast, and Morocco — had voted in lockstep with the mother country on every issue from the minor and procedural to the consequential and strategic over the full course of 20 years.)
• And you can never overstate the importance of luck in a complicated human endeavor. Here’s just two examples.
The board was meeting one weekend in Bermuda for an operational review. It was a plenary session, with lots of staff and invited observers. Around that time, the abrasions of transition — surface wounds from the begrudged transition from plump IGO to trim private enterprise — had been rubbed a bit raw. In an attempt to slow the process, or perhaps even to abort it, a prominent European telecom executive launched what appeared to be a carefully scripted critique. His summary phrase that sticks to mind was this: “The gentleman from the United States is seeking to turn thousands of bureaucrats into hundreds of business people.” My European friend may have been seeking to start a revolt against the “arrogant” American. I’m not sure. But he misfired. After the meeting, three delegates who had been fence-sitting for months sought me out for the secret handshake. They were business people, and they knew that we would not survive in a competitive environment if we could not skinny down to fighting weight.
Another piece of luck was the aforementioned visit from the well-dressed Libyan. When I had on the spur of the moment dismissed the notion of paying Libya’s share of the sales proceeds — a tiny fractional share worth a guesstimated $45 million — to an individual Libyan, the Colonel had begun to badmouth me around authoritarian circles as “completely inflexible.” Thank you, Colonel. You spared me awkward conversations with waves of gratuity seekers.
In 2002, we backed into the markets by floating a small bond issue. We had crossed the Rubicon from IGO ownership on the way to private ownership.
* * *
And so we approached Election Day, 2003. We insiders gathered at a meeting in Rome to review the nominees for the new board of directors of our new company. The U.S. was allotted four seats, and my name was written all over one of them. As we rushed to close the deal, however, we were obliged to shore up support at several weak points along the coalition line. We traded away two seats to big players in telephony, another to a premiere satellite manufacturer and, finally, the fourth to a best-in-class rocket launcher. I agreed, in each case, that these tactical moves were necessary. (As the names were announced, I even did my best to feign enthusiasm.)
The second-largest shareholder, the United Kingdom, had two allotted seats and they were up next. Their first nominee, as expected, was a senior executive from BT and the second was “Mr. Neal Freeman of the United States.” There was a moment of stunned silence, followed by a burst of raucous applause. (I can report reliably that the arrogant and inflexible American was touched.)
To this day, I have no idea how that happened. All I know is that it was the result of a conversation conducted far, far above my pay grade.
Footnote. By the time I completed my assignment, Ronald Reagan had been lost in the fog of Alzheimer’s for eight years. My principal government contacts — at the departments of state and commerce — had turned over many times and the relationships had become attenuated. Every other member of the hardy crew that had set out with me two decades earlier had either retired or died. I felt like one of those Japanese soldiers who stumbled out of the jungle in 1947 asking how the war was going.
In the absence of an official option, I reported back to Nancy Reagan. When I told her that we had won one more for the Gipper, she did me the kindness of pretending to know what I was talking about.