Theranos

“Without Reagan the cold war would not have ended, but without Shultz, Reagan would not have ended the cold war.” This quotation of Mikhail Gorbachev – from the preface of In the Nation’s Service, a biography of George Shultz – now has a bittersweet taste. Reagan died in 2004, Shultz in 2021 (at 100) and Gorbachev in 2022. The cold war is having a renaissance that threatens the legacies of all three.Vladimir Putin has returned Russia to authoritarianism, suspended its participation in the last US-Russia arms control pact and, with the invasion of Ukraine, put the risk of catastrophic confrontation between major powers back on the table.This would have been heartbreaking for Shultz, a second world war veteran who as secretary of state was at Reagan’s side during the summits that ended the cold war. He was a statesman and Republican of the old school who endorsed the wars in Vietnam and Iraq. He was also complicated.In the Nation’s Service, which Shultz authorised but did not control, portrays a man who loved not wisely. He was loyal to Richard Nixon during Watergate, loyal to Reagan during Iran-Contra, loyal to his party when it was cannibalised by Donald Trump and loyal to Elizabeth Holmes when Theranos, her blood-testing company, was exposed as a fraud.“It’s a thread through his life, excessive loyalty, and it grew out of his service in the marines in world war two, where obviously if you’re in combat your life depends on the loyalty and support of your comrades in the Marine Corps,” says the book’s author, Philip Taubman, a New York Times reporter and bureau chief in Moscow from 1985 to the end of 1988.“But as he carried that on through his life, it was a very strong impulse and so he stuck with Nixon too long.”Shultz, who studied at Princeton and the Massachusetts Institute of Technology and became dean of the University of Chicago, was Nixon’s labour secretary and led an effort to desegregate southern schools systems. He was the first director of the Office of Management and Budget before becoming treasury secretary.He resisted many of Nixon’s requests to use the Internal Revenue Service (IRS) to investigate his “enemies” but did give in to the demand to pursue Lawrence O’Brien, a top Democrat. The Watergate scandal engulfed the White House but Shultz did not resign until May 1974, three months before Nixon himself.Speaking at a Stanford University office in Washington, Taubman, 74, says: “I pressed him on this involvement in the Larry O’Brien investigation. I said, ‘I don’t understand how you allowed that to happen and why you didn’t resign at that point.’“His basic defence was he understood Nixon was involved in misconduct and he thought that had he resigned and Nixon had put someone else in the treasury secretary’s job, there would have been less of an obstacle for Nixon to use the IRS in punitive ways. It was a kind of self-congratulatory explanation. He clearly should have resigned before he did.”Reagan brought Shultz into his cabinet in 1982. Shultz hoped to ease cold war tensions but met with opposition from anti-Soviet ideologues.Taubman, who spent a decade writing the book, with exclusive access to papers including a secret diary maintained by an executive assistant, explains: “It was incredibly brutal. It was probably, if not the most ferocious infighting of any postwar American presidency, certainly one of the top two. He just ran into a buzzsaw.“The people around Reagan who set the tone for foreign policy in the first year … were hardliners on the Soviet Union. What they wanted to do was not contain the Soviet Union, which had been the American strategy since the end of the second world war. They wanted to roll back Soviet gains around the world and Soviet influence.”Shultz rarely got to meet Reagan one-on-one. “He was mystified by Reagan and he was puzzled and unsettled by the turmoil in the administration. For a guy who’d lived through the Nixon administration, you’d think he would have been a hardened internal combatant.“He would come back to his office and tell the aide who recorded all this in his diary, ‘I can’t get through to the president. How is it that the secretary of state can’t meet with the president of the United States to talk about US-Soviet relations?’ … It took several years before he and Reagan began to kind of connect.“One of the things that was clear, as I did the research, was just how disengaged Reagan was. There would be decisions taken that he would sign off on and then they would be reversed by people under him. It was incredibly chaotic and he wouldn’t grasp it by the lapels and say, ‘OK, I agree with George, this is what we’re going to do.’ He just let this turmoil fester until the second term.”In February 1983, history was given a helping hand when a blizzard forced Reagan to cancel a Camp David weekend. He and his wife, Nancy, invited Shultz and his wife to dinner. Shultz could see that for all his hot rhetoric about the “evil empire”, Reagan hoped to ease tensions with Russia.“If you’re looking for the key moments in the ending of the cold war,” Taubman says, “you have … the realisation among the two of them that they have in common a fundamental desire to wind down the cold war, the ascension of Gorbachev, his appointment of Eduard Shevardnadze as Soviet foreign minister, and the beginning of real negotiations over a huge range of issues: arms control; issues involving countries like Cuba, Nicaragua, Angola where there was proxy fighting going on; human rights issues, which Reagan felt very strongly about, as did Shultz, which Gorbachev and his predecessors had resisted but Gorbachev eventually began to agree to discuss.”The capitalist Reagan and communist Gorbachev held their first meeting in Switzerland in 1985. Shultz went to Moscow to negotiate the terms of the summit and made sure the leaders kept talking in private. He was pivotal in making another summit happen in Iceland the following year.But again he was deferential to a fault, this time over Reagan’s “Star Wars” program.Taubman says: “Shultz completely understood that the Strategic Defence Initiative (SDI), the space-based missile defence exotic technology, was unworkable but he wasn’t brought into the discussions until the last minute, just a few days before Reagan was going to give his speech about it on national television. He opposed it. He tried to get Reagan to back away.“When that failed, he tried to get Reagan to be less grandiose about the objectives – failed in all of that. Then … he got in line, saluted and supported it right through the summit in Reykjavik in 1986 where, had Reagan been more flexible about Star Wars, they might have achieved far-reaching arms control agreements. But Reagan wouldn’t give ground.”Gorbachev visited Washington in 1987 and signed a landmark deal to scrap intermediate-range nuclear missiles. Reagan went to Moscow in 1988. The tension drained out of the cold war and Shultz was “indispensable”, Taubman argues. “He was literally the diplomat-in-chief of the United States and he and Shevardnadze were the workers in the trenches who took the impulses of Gorbachev and Reagan and turned them into negotiations and then agreements.”But Shultz’s triumph was short-lived. “He was saddened when George HW Bush came into office because Jim Baker, the incoming secretary of state, and Brent Scowcroft, the national security adviser, decided Reagan and Shultz had gone too far too fast with Gorbachev. They put a pause in relations and that really annoyed Shultz and disappointed him.“He probably was somewhat hopeful under [Russian president Boris] Yeltsin, where things began to look more promising again. Then with Putin he was involved in so-called ‘track two’ diplomacy, where he and Henry Kissinger and some other former American officials would go to Moscow or Beijing and have consultations with Russian and Chinese leaders, talking about things that couldn’t be talked about in official diplomatic channels. He began to realise that Putin was taking Russia back into an authoritarian model.”Shultz’s loyalty was tested again when his beloved Republican party surrendered to Trump, who in 2017 became the first US president with no political or military experience. Trump’s “America first” mantra threatened alliances Shultz and others spent decades nurturing. Yet Shultz was reluctant to speak out.Taubman recalls: “I had a very tough interview with him about this because I knew he was no fan of Donald Trump and that he could see the Republican party was taking a dark turn. So I sat down with him and I said, ‘What are you going to say about Donald Trump? The election’s coming up. Do you feel any obligation to speak out publicly?’“He bobbed and weaved and didn’t really want to say anything and then eventually he said, ‘Henry Kissinger and I are talking about what, if anything, to say.’ A number of weeks later, they did say something. But being somewhat cynical, I’m afraid, I think it was calculated to have minimal impact. They issued a statement on the Friday of Labor Day weekend, which is notoriously a time when everyone’s gone home for the long weekend, saying, ‘We two Republican stalwarts do not plan to vote for either candidate.’“So that’s not bad … but they didn’t denounce Trump and they said, ‘We’re ready to serve if asked, not in an official position, but as an informal adviser to whomever gets elected.’ They sort of punted at that point before the election.“Trump comes into office and increasingly Shultz is concerned about the direction he’s going and the party’s going but he didn’t want to speak up publicly.”Taubman remembers a private meeting in San Francisco, where Trump came up.“Shultz pulls out of his pocket the text of a speech about immigration that Reagan had given, which was a fabulous, wholehearted endorsement of the role of immigrants in American history and how they had continually revitalised the country. He read that text to that group, I think, for as blunt a rebuff of Trump as he could muster at that time.“Then he spoke out later, critically of Trump’s foreign policy. But when all this crazy stuff went down in Ukraine and Rudy Giuliani, of all people, was over there trying to undermine the US ambassador, an outrageous intervention in American foreign policy, he said nothing about it at the time.“He was not unwilling to part company with the party and certainly with Trump but he never chose to take a public stand. I don’t know to this day whether he just didn’t want to anger the president. Probably to his dying day Shultz maintained a respect for the office. Maybe he was just too old to want to engage in a battle with the party and Trump. But there’s no question he and I had private conversations and thought the party had taken a dark turn.”Shultz took a position at Stanford but there was a sour postscript to his career. In his 90s, he threw his weight behind Holmes and her company, Theranos, which promised to revolutionise blood testing. He helped form a board, raised money and encouraged his grandson, Tyler Shultz, to work at the company.When Tyler took concerns about Holmes to the media, she set her lawyers on him and put him under surveillance. Shultz refused to cut ties with Holmes, causing a deep rift in the family. In 2018, Holmes was indicted on charges involving defrauding investors and deceiving patients and doctors. Last year, she was sentenced to more than 11 years in prison.Taubman says: “I think, frankly, he fell in love with Elizabeth Holmes. It was not a physical relationship but I believe he was infatuated with her and she understood that and played on it in a calculating way.“She got him to do all kinds of things to help her put together her board of directors: Henry Kissinger, Bill Perry, all kinds of senior national security officials, none of whom knew the first thing about biomedical issues. Then he played a major role in selling her to the media, and suddenly she’s on the cover of Fortune and Forbes. She’s the darling of Silicon Valley.“I learned … that he wanted to talk to her every day on the telephone and she would show up at his parties. He invited her to the family Christmas dinners. It was a shocking situation, especially in retrospect.”Taubman confronted Shultz. “He continued to defend her to my amazement and, frankly, my disappointment. I came at him pretty hard and he would not let go. He wouldn’t disown her. By this point, it was clear what was going on at Theranos. This was the ultimate expression of excessive loyalty.”Shultz’s family is still bitter.“Tyler continues to be hurt by his grandfather’s conduct. Puzzled by it. He attributed it in his own podcast to either colossal misjudgment or, ‘My grandfather was in love with her or he had a huge financial benefit invested in her.’ All of which was true.“It turns out she gave George Shultz a lot of Theranos stock and, at its peak valuation, that was worth $50m, so there may have been a financial motive too. At the sentencing, George’s son Alex [Tyler’s father] testified and talked about how she had desecrated – which is a wonderful word, a very apt word – the Shultz family.”Taubman reflects: “As I was working on the biography in those last years, when I would talk to people about Shultz, there were no longer questions like, ‘Tell me about his service as secretary of state, tell me what he did to end the cold war.’ It was all, ‘What’s he doing with Elizabeth Holmes?’ It stunted his last decade.“It shouldn’t overshadow what else he did. It was a sad coda at the end of his life. When you look back, he was a major figure in the latter half of the 20th century and pivotal figure in ending the cold war. And for that he deserves enormous credit.”
In the Nation’s Service: the Life and Times of George P Shultz is published in the US by Stanford University Press More