Why Beijing And Business Should Worry About Donorgate

When congressional hearings into the Donorgate fund-raising scandal open this summer, the smart money says the greatest threat to President Clinton will come from Senator Fred Thompson's high-profile probe. The Tennessee Republican is a former Watergate counsel and charismatic Hollywood actor who harbors Presidential ambitions.

But White House insiders are far more worried by a parallel inquiry headed by Representative Dan Burton (R-Ind.). He's unpredictable, fiercely partisan, and tainted by his own fund-raising scandals, including charges that he tried to strong-arm a donation from a lobbyist. But by playing up China's alleged attempts to tamper with U.S. elections--and making sure his hearings are focused solely on Democratic transgressions--Burton may do real harm to U.S.-Chinese relations and Clinton's Presidency. Burton, a China hawk and human rights champion, will use his panel to assail Clinton's China policy. "He wants to wake up America to the true nature of the Chinese government," an aide says.

MANY FEARS. What frightens the White House most is that Burton's hearings will begin after June 3, when the President must notify Congress that he wants to extend China's most-favored-nation trade privileges. Congress has three months to disapprove, and the MFN battle will be brutal. By emphasizing charges that Beijing funneled money into the Clinton campaign, Burton hopes to show China can't be trusted. "This is not good news," says Calman J. Cohen, president of the Emergency Committee for American Trade, a pro-MFN coalition of exporters.

Donorgate is feeding a growing anti-China mentality in Congress. Liberal Democrats worried about job losses and conservative Republicans fearful of China's military buildup have joined forces against MFN. A top Clintonite says the mood threatens trade ties, particularly talks on China's entry into the World Trade Organization. "There's an anti-China sentiment that I'm really quite startled by," the official frets.

The White House has other reasons to dread Burton's probe. Unlike Thompson, who's committed to a bipartisan inquiry into 1996 campaign abuses, Burton is pushing ahead with one-sided hearings. And he has no deadline. Thompson is under orders to look into abuses by both parties and wrap up his hearings by yearend--leaving him hard-pressed to delve deeply. But Burton may continue into next year.

Despite Thompson's constraints, his hearings won't be a snore. He'll also focus on illegal foreign donations. And he'll explore whether Clinton changed foreign policy in return for overseas money or compromised national security by letting major donors with unsavory backgrounds--such as money laundering and arms sales--visit the White House.

But Thompson's ability to expose foreign-money abuses depends on the cooperation of key fund-raisers who have fled the country or live overseas. He's unlikely to get it. "There is a real concern about the lack of witnesses," worries a Senate aide. Burton faces the same problem, but his fallback is to play up China's hidden economic and political clout in the U.S.

The highlight of Thompson's probe may be more hearings in the fall on the growth of unlimited "soft-money" donations and spending by nonprofit groups on candidates' behalf. This spotlight will fall equally on both parties, helping to boost grass roots efforts for campaign-finance reform. That would please Thompson and Clinton, since both support an overhaul of the system.

Little wonder the Clintonites are praising Thompson while stonewalling Burton's requests for files. What he lacks in prestige and credibility, Burton makes up in power and determination to derail economic engagement with China.