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On Russia: Tying the conflict of interests together (Updated)

March 31, 2017

 

 

With the appearance of FBI Director Comey and NSA Director Admiral Rogers in front of House Permanent Select Committee on Intelligence on Monday, what had been a quiet period in the Trump Campaign/Administration-Russia saga has come to an end. The headline will read that Director Comey confirmed that an investigation ongoing. Many suspected this, but it is still a bombshell. Let's say this again:

 

The President and his campaign is under investigation for coordinating with our chief global adversary in order to aid his election.

 

How deep it goes is still speculation. But it got me thinking: what do we know right now? There many links in the Trump-Russia story which we can be pretty sure about: they have no credible, contradictory evidence. We can use only these things to put together a scary picture for our future, even with assuming any bad faith on the part of the Administration.

 

My thoughts went to two recent things that I have read: Winter is Coming, which I reviewed here; an article at Talking Points Memo titled "The Innocent Explanation." I'll be referencing this article and my review - so you should take a quick read of both before proceeding. Here is a nice image to fill up the space until you're back.

 

 

You read them? Good. For those not familiar with TPM, its editor Josh Marshall comes from about where I do on the political spectrum. Like me, he does not disclaim his political views. But over the last two years, he has shown a strong understanding of the Theory of Trump: what he'll do, how he'll think and why. He is not a mind reader, but he's been proven right a lot more than wrong.

 

Let's look at the World of Trump in 2004. His empire was in trouble. Apprentice money wasn't rolling in yet. A string of bankruptcies from which he emerged unscathed left traditional American lenders unwilling to lend to him. He became ever more reliant on Deutsche Bank and a group of foreign lenders. We don't know the extent, but a significant amount of this capital was coming from Russia and Russian-aligned actors. Anybody who lives in New York knows this is "normal." Russian oligarchs became large buyers of Manhattan real estate since the rise of Putin, especially "trophy" properties like those that Trump markets. This isn't specific to Trump; the post-2001 US crackdown on international money laundering had the side effect of making NYC real estate very attractive for Putin's new billionaire to park cash. All the big guys in my town were seeing Russian money flow in. But this still put Trump in business both with oligarchs tied directly to Putin and their unsavory go-betweens.

 

Fast forward to 2014 - Russia invades Crimea and immediately moves to invade (or at least destabilize) Eastern Ukraine. The US responds to the aggression with the first tangible steps taken against Putin: sanctions against Putin-aligned individuals. According to Kasparov, this was the right move. Putin's band of newly rich are his power base. But they don't want to keep their state-looted money in Russia. Preventing them from moving it abroad gives great bang-for-the-buck in putting pressure on Putin's regime. Some derided the strategy at the time for not affecting Putin or Russia directly. I was one of them; I was wrong, this was a stronger move than it appeared.

 

Then we'll step back - by 2009 the financial crisis also put a crimp in Trump's business. The high profile screwing of public investors (read that story if you have an issue with my characterization) left him with even fewer sources of capital. The Apprentice was a cash cow - but it wasn't attracting the high-end American buyers he needed to fill his gold-lame style developments and halfway decent golf memberships. I bought my first Manhattan apartment in 2010 as an up-and-coming derivatives trader - exactly the type of clientele he wanted to attract. But his brand had become toxic; even then you couldn't have paid me to live in a building with his name on it (note: most Manhattan buildings had his name through licensing deals only; he often had little to do them). Every developer in America was getting stretched, and Trump had to rely further on non-traditional clientele - i.e. Russians and other shady characters.

 

Take the juxtaposition of these two elements: Trump business becoming reliant on Russian buyers vs. critically important US preventing the same from buying. We've heard so often about the potential for conflict of interest in Trump White House vs. Trump Organization. But it may be a binary situation: either the sanctions are stopped, or he takes a personal financial hit. Given his lack of access to other capital, this hit might be a fatal one.

 

Note the important thing here: I haven't said anywhere that Trump is trying to do something wrong. I haven't said that he intends to turn our country into an illiberal dictatorship. I haven't said that he is being blackmailed or has a non-public personal payoff. There is some evidence of these things, but we do not know if they are real yet. But look at what we've constructed: evidence of a massive conflict of interest based only on what we know.

 

We all have conflicts of interest. In the 15 years I worked at banks, it was a frequent compliance topic. Our personal/bank objectives sometimes came into conflict with our clients'. There were three basic steps to handle conflicts of interest: identify, disclose, mitigate. In other words, determine your conflicts, inform your clients, put controls in place to prevent (or lessen) harm to your clients. Perfection isn't possible - but this is the right thing to do legally, ethically and practically. Understanding and following these basic steps is the only way to deserve trust, whether with your clients at a bank or being President.

 

And herein lies the problem. Identify: the Administration - almost the entire GOP - has staked its future on not seriously investigating the ties. Disclose: Trump Campaign/Administration personnel have consistently lied about relationships with Putin-aligned actors. Mitigate: the policies put in by the Trump Administration/Organization to manage conflicts is laughable; his sons are running his business!

 

Let's go further: cycling back to Josh Marshall, we are going to leave slightly the realm of what we know. I'll quote him directly:

 

One thing I think we've learned about Trump over the last almost two years is that what's helpful to Trump is good. People who are helpful to Trump are also good. In fact, they're the best people. Things that aren't helpful to Trump are bad. Things that threaten Trump are especially bad.

 

Now - this is armchair psychology. But, I also have very little doubt that it is true. I'm confident enough to add it to our puzzle. Where does this leave us, using only the facts in evidence?

 

Because of Russia's attempts to help Trump win the Presidency, President Obama imposed sanctions against Putin-aligned persons. Trump's choice for National Security Adviser hinted to the Russian ambassador that sanctions would likely go away - and then lied about having done so. These same persons are critical to the success - even the survival - of Trump's business. Said business is directly harmed by said sanctions. The sanctions are a critical way to fight Russia in this 21st century Cold War. And Russia is actively working to destabilize Western governments.

 

Trump's pocketbook depends on his taking actions that would harm America's position with respect to our greatest foreign adversary.

 

And Trump thinks that things that threaten Trump are bad. 

 

[ Update: 3/30/17 ]

 

Well, it's been a wild two weeks in Washington. My own attention was taken - rightly - by the health care fiasco. But the different issues are related. Trump's ability to avoid facing the results of his intimate ties with Russia depends on his keeping the GOP in line. Especially those pesky Members of Congress with their pesky subpoena powers. So far, they support him, thinking that he can be used to implement their agenda. If he proves himself unable to do so, expect to see him pay the price on #TrumpRussia. Already, you are seeing important Republican Senators, like Richard Burr of North Carolina and James Lankford of Oklahoma becoming serious about knowing the whole truth. This is bad for Trump; one need not believe the entire Steele dossier to know there is something bad hidden beneath the rocks.

 

We can take a minute to discuss the farce of Devin Nunes. Honestly, I can't figure out what he is doing here; he is certainly not helping Trump. He could have run a cursory review, appearing legitimate while avoiding having the goods come out on his watch. But his blatant toadyism to the White House - he informed the target of his investigation about it's progress! - has clearly spoiled the willingness of "serious" Republicans to play along. The Senate has now taken over with what looks like a legitimate, bipartisan investigation. It isn't a special prosecutor. But it is bad for Trump.

 

So far I have not been challenged in any way on the original post; nobody has proposed any evidence against what I claimed "we know." But, USA Today has done some great shoe-leather reporting. We now even have solid documentation of the types of Russians with whom Trump did business. Out the window goes his claim that he had no Russian ties. We needn't continue to infer that he was dealing with Russians like every other NYC-based developer. We know. And look at the cast of characters...not just Putin-aligned oligarchs, but Putin-aligned, mob-aligned oligarchs and known criminals.

 

I'm listening right now to the start of the Senate Select Committee investigation into Trump-Russia. I'm far from the only one who has a tough time with the pace of the show here. Just because there is smoke does not mean that the Trump Campaign openly coordinated with Russia. But just because the fire isn't showing doesn't mean it won't yet.

 

And the Trump "Administration" is doing nothing to make this piece easy to write. I'm required by the internet to be the 16,000th person to point out that the disgraced former National Security Adviser has agreed to testify in exchange for immunity. Now this could be nothing - Flynn might not have much, and he appears dead to rights on a few legal issues. But he is also a very plausible "bag man" between Trump the Candidate and Moscow; he was in both inner circles with strong personal relationships.

 

Recall that the Watergate Committee was formed more than two years before Richard Nixon resigned. Even if terrible things are to come out, they may take their time.

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