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Thursday, January 04, 2018

Thr Russians aren't coming--they've arrived

Over the past week I have read the new book, Collusion, by the journalist Luke Harding, which attempts to unravel the connections between Russia on the one hand, and Donald Trump and many of those who worked for his election on the other.  Despite the title, the book has relatively little to say about the Clinton hacked emails and the Russian role in the election itself. It is about something more important, a network of relations between Russians and Americans.  It is a jaunty, but not an easy read.  I am going to summarize the most important things that I learned from it, to try to fill in the picture in a couple of places myself, and to ask, as I always do, exactly what the broader significance of all this is.  The easiest way to do this is by talking about some of the major players in the story

Carter Page, born in 1971, is a graduate of the U.S. Naval Academy.  Although he does not seem to have been born to great wealth, a Naval Academy classmate told Harding that he had lavish spending habits as a student.  The Navy apparently sent him to Georgetown University to earn an M.A.  After serving his statutory five years on active duty, he went to work for Merrill Lynch, specifically in their Moscow office.  He left their employ in 2008 and founded his own energy firm in New York, but that firm does not seem to have any other employees or any business. How Page earned his living since 2008, thus, is something of a mystery.  Meanwhile, he became known as an admirer of Vladimir Putin and an opponent of the Obama Administration's anti-Russian policies, especially after the annexation of Crimea and the invasion of Ukraine in 2014. Then, in March 2016, as Trump became the favorite to win the Repubican nomination, Trump named Page as one of his five foreign policy advisers.  That July, the Russians invited him to Moscow to give a commencement address.  That address featured extensive criticism of US attempts to spread democracy in the former Soviet Union.

According to the Steele dossier, Page actually traveled to Moscow in July to meet Igor Sechin, one of Putin's closest aides.  Two years earlier, Page had written a fawning blog post about Sechin, protesting the sanctions that had been imposed upon him.  According to Steele, Sechin offered a deal. If the Trump Administration listed sanctions on Russia, joint ventures in the energy sphere might proceed. As it happened, a large venture involving Exxon in drilling in the Arctic had been put on hold by sanctions.  Sechin also dangled a large brokerage fee before Page.

Steele also reported that Page had a later meeting with a another high Russian official, Igor Diveykin.  Divekin told him that the Russians possessed damaging information about Hillary Clinton, but also about Trump--something that Trump should keep in mind.  After returning to the US, Page was one of several Trump aides to meet with Soviet Ambassador Kislyak at the Republican convention.  By this time, as it happened, the FBI had become sufficiently concerned about Page's many Russian contacts and his pro-Russian attitudes to ask for, and receive, a FISA warrant to tap his electronic communications.  US intelligence also briefed senior Congressional leaders about Page, and Harry Reed made a public comment about the briefings. In September 2016, the Trump campaign dropped and disavowed him.

Just two months ago, Page testified before the House Intelligence Committee--too late for the appearance to figure  in Harding's book.  He confirmed that he had fully reported on his Moscow trip to various Trump campaign officials, including Jeff Sessions.  He denied meeting with Sechin but admitted to meetings with two other high Russian officials.  This forced some of the Trump campaign officials to refresh their memories about having heard about Page's trip.  Robert Mueller's office will presumably get its hands on Page's contemporary reports of his meetings.

Born in 1949 in New Britain, Connecticut--where his father became Mayor--Paul Manafort holds a B.A. and a law degree from Georgetown University.  He was active in the Ford and Reagan campaigns in the 1970s and 1980s,worked in the Reagan White House, and worked in the George H. W. Bush and Robert Dole campaigns as well. Meanwhile, Manafort's lobbying firms signed lucrative contracts with a number of foreign leaders.  He might easily have been the model for the parallel career of the Doonesbury character Duke.  His clients included the American client in the Angolan civil war, Jonas Savimbi; Ferdinand Marcos of the Philippines; President Mobutu of the Congo; and many other governments as well.  During the 1990s he also received $700,000 that came from Pakistan's Interservice Intelligence Agency, or ISI, for lobbying activities and a documentary film production designed to improve the image of the Pakistani government.

During the 00s Manafort had a long and lucrative relationship with the Ukrainian politician (and eventually President) Victor Yanukovych, whose image he remade after Yanukovych was driven from power by the Orange revolution of 2004, after he had tried to steal the election.  Manafort helped get Yanukovych into power as Prime Minister just two years later, assuring anyone who asked (including Harding, who interviewed him at length) that Yanukovch was now a changed man and a friend of the West.

Around 2005, Manafort also entered into a relationship with Oleg Deripaska, a Russian aluminum magnate who cannot travel to the US because of suspected ties to organized crime.  The Associated Press has reported that Deripaska paid him $10 million a year [sic] to improve Russia's image in the West.  Shortly after signing that contract, Manafort bought a $3.6 million apartment in Trump Tower in New York.  With Manafort's help, Yanukovych was elected Ukrainian President in 2009 (the supposedly democratic and pro-west regime had proven ineffective and corrupt), and began eliminating his opposition.   The Maidan protests five years later drove him out of office and out of Ukraine. Putin's annexation of the Crimea and invasion of Eastern Ukraine followed.

Manafort had signed Trump as a lobbing client in the early 1980s.  In March 2016, he approached Trump through a mutual friend, Thomas Barrack, who introduced him to Jared Kushner and Ivanka Trump.  On March 29, 2016, Trump announced his appointment as campaign manager.  Manfort immediately began trying to do for Trump what he had down for Yanukovych--telling anyone who would listen that Trump was simply indulging in campaign rhetoric and would be a different man in office.  The Washington Post credited Manafort with securing the nomination of Mike Pence as Vice President.  But in mid-August, a story broke that a secret ledger discovered in post-revolutionary Ukraine showing that Yanukovych's right wing nationalist Party of Regions had paid Manafort $12.7 million in cash between 2007 and 2012.  Both Manafort and Trump claimed the ledger was phony and denied the story, but he left the campaign, and Steve Bannon replaced him.  Much later, in mid-2017, when Manafort tried to register retroactively as a foreign agent, he admitted to receving $17 million from the Party of Regions in 2012-14.

It has been reported that Manafort, like Page, had been wiretapped by American intelligence before the 2016 election.  Mueller's team eventually raided his home, and he has now been indicted for conspiracy against the United States, money laundering, and failing to register as a foreign agent. Just this week he has sued to block the indictment, claiming that Mueller's charge did not allow the prosecutor to deal with these matters.  It seems rather striking that while endless hours of cable television have been wasted on the issue of "collusion" regarding Democratic emails, hardly anyone ever says bluntly that Donald Trump's campaign apparently featured a director and a leading foreign policy adviser who were both suspected of being foreign agents for Russia and Russian clients in Ukraine, respectively.

Then there is the case of Michael Flynn, who rose to the rank of Lt. General in the US Army  In 2012, Flynn had been appointed head of the Defense Intelligence Agency by President Obama--in whom Flynn had no confidence whatever.  In 2013, Flynn received a mysterious, unprecedented invitation to speak at the headquarters of the GRU, Russian military intelligence, in Moscow, on leadership.  He returned saying he had enjoyed the trip very much.  In 2014 he was forced to leave his position early and retired.  He was informed that he had to report any income from foreign sources.

Flynn formed a consulting firm and co-authored a book with neoconservative Michael Ledeen.  It was very anti-Obama, and in August 2015, Flynn met Trump.   In December of that year he was invited to a 10th anniversary party for the Russian television network RT in Moscow, and sat next to Vladimir Putin. He received, but did not report, nearly $34,000 for the trip.  In March 2016 Flynn, along with Page, was named as one of Trump's foreign policy advisers, and he became an avid campaigner for Trump, declaring at the Repubican convention that Hillary Clinton should be locked up. In August, Michael Steele claimed that he received a report that Putin was very happy with the progress of his campaign to influence the American election. Visits to Moscow from a delegation of supporters of Lyndon Larouche, of Jill Stein of the Green Party, and of Carter Page and Michael Flynn had had good outcomes for the Russians, and even if Clinton won, she would be too weakened by domestic divisions to make much trouble for Russia. And just before the election, Flynn signed a $600,000 lobbying contract with a firm linked to the Turkish government--and failed to report it. (Jill Stein's Russian connection is reportedly under investigation by Robert Mueller. She drew significant numbers of votes in the states that decided the election.)

Flynn was, of course, appointed National Security adviser by Trump. Meanwhile, he was having conversations with Russian Ambassador Kislyak, including a meeting at Trump Tower with Kushner and Ivanka Trump. FBI surveillance picked some of them up.  The Obama Administration had just imposed new sanctions on Russia in retaliation for the intervention in the election, and although we do not yet have all the data, it seems that Flynn may have been discussing the lifting or easing of these and other sanctions--Putin's primary goal.  In any case, he, like Manafort and Page, was now heard by US intelligence surveillance.  He denied, to Vice President Pence and the FBI, that he had had certain conversations with Kislyak. The Justice Department informed the White House that he ws lying.  Flynn was forced out, and has now pleaded guilty to lying to the FBI and is cooperating with Mueller. It has occurred to me that the appointment of Rex Tillerson, who as CEO of Exxon had negotiated a big oil exploration deal with Russia that had to be canceled as a result of sanctions--and who has argued repeatedly that human rights considerations should not control US foreign policy--could have been designed in part to make the lifting of sanctions easier, as well.

The reader will note that I have managed so far to avoid discussing the Trump Tower meeting between Donald Trump, Jr., Manafort, and two Russians, the well-connected lawyer Natalia Veselnitskaya, and the former Soviet intelligence officer Rinat Akhmetshin, now a lobbyist and US citizen.  They had promised derogatory information about Hillary Clinton. Their goal was the repeal of the Magnitsky Act, named after a dissident Russian citizen who had died in custody, which barred Russians guilty of specific human rights abuses from the US.  Indeed, apparently some of the derogatory information they brought involved links between William Browder, Magnitsky's partner, and the Clinton foundation.  This was, clearly, just one of a number of channels that the Russians had developed to persuade a possible Trump administration to lift sanctions.  Donald Trump Jr. had been to Moscow several times himself, and the approach that led to the meeting came from contacts he had developed there, in the same way that Page, Manafort and Flynn had developed contracts of their own.  Jeff Sessions clearly knew about a lot of this, and had spoken to Kislyak himself. When Al Franken asked him about contacts between the campaign and the Russians in his confirmation hearing, he simply lied.  It is shocking that his tenure has survived the subsequent revelations.

And last, but hardly least--what about Donald Trump himself?

The President, it turns out, has sold many apartments in his properties to Russians going back to the 1980s, including some linked to Russian organized crime.  He has had Russian-American partners in deals who have been involved in criminal activity.  Ample evidence, reported at length by Harding, shows that Russians have invested in Trump properties to launder money.  And US Attorney Preet Bharara, of the Southern District of New York, used wiretaps to catch a Russian mobster running a gambling ring out of his suite in Trump tower.  Bharara, of course, lost his job shortly after Trump became President.  (This episode could be the origin of Trump's famous tweet accusing the government of wiretapping Trump Tower.)  Harding discusses other connections as well, including the remarkable sale of a Florida property to a Russian oligarch for about a 100% profit at the height of the financial crisis. But what struck me as potentially critical to the whole story was the role of Deutsche Bank in Donald Trump's career.

Trump's career as a developer has been marked by repeated failures to meet expectations, resulting in several bankruptcies.  When his Atlantic City casinos collapsed, his creditors, sadly, decided to allow him to keep operating because they thought they would be worth more with his name associated with them. However, American bankers, according to many accounts, had finally learned their lesson by the early 2000s and wouldn't lend to him again.The Deutsche Bank stepped in, apparently, to fill the gap.  Trump personally guaranteed a $640 million loan from Deutsche Bank to build Trump Tower in Chicago.  When the financial crisis struck, Trump stopped paying, with $340 million left to go.  When the bank sued to get their money, he counter sued for $3 billion, blaming them and the other big banks (correctly) for the financial crisis. A judge threw out the suit.

Amazingly, in 2010, Trump settled the matter with the help of a new series of loans from another office of Deutsche Bank, their private wealth sector.  Bloomberg estimated that by 2017 Trump owed the bank about $300 million, due in 2023 and 2024.  Meanwhile, beginning in 2005, Deutsche Bank had been involved in huge money-laundering deals with Russian interests.  Their Moscow office had developed close ties to leading Russian officials.  It does not seem at all impossible to me that the Russians had encouraged Deutsche Bank to bail Trump out in 2010 partly to secure leverage over him. Reading this part of the story, I was reminded of a recent interview in which John LeCarre described the similarity he saw between Trump and his own father, a lifelong con man, whom he described length in his novel A Perfect Spy.  LeCarre voiced his suspicion that Trump--like his father--actually has no real assets at all. I began to wonder, once again, if that might be true.

Jared Kushner is also deeply involved with Deutsche Bank, which lent him $285 million in October 2016 to pay off an earlier loan on the old New York Times building, which he had purchased from a Russian.  And in early December, Kushner met with Russian Ambassador Kislyak to propose setting up a secure communications channel, using Russian facilities, between the Trump transition team and the Kremlin.  He denied, when this was discovered, that lifting sanctions was discussed.

Where, then, does all this leave us?

The Trump campaign, from the moment that it first seemed likely to get the Repubican nomination, hired or involved three men--Carter Page, Paul Manafort, and Michael Flynn--who had close personal and business ties to the Russian government and wanted to advance its interests, specifically by loosening or ending the sanctions imposed by the Obama Administration.  At least two of them were benefiting financially from that connection.  To judge from his many friendly statements about Putin--which continued after he took office--Trump would have been delighted to improve relations as well.  That proved impossible, as it turned out, because the whole effort became so obvious.  After Manafort, and then Flynn, had to leave the campaign and the Administration, Congress passed a new and tougher sanctions law tying Trump's hands.  One reason Tillerson has fallen out of favor may be that he could no longer play the role some had envisioned for him.

Manafort and Flynn face serious legal problems as a result of their Russian connections.  The real question is whether the President of the United States, Donald Trump, is bound to the Russian government by indirect financial obligations, compromising information developed during his trip to Moscow, money laundering deals over a period of years, or something else.  That would be a very proper subject for an impeachment inquiry, but I see no possibility that the House of Representatives will undertake one any time soon. They too are in thrall of oligarchs--though not, for the most part Russian ones. I have no idea how much of the story Robert Mueller will be able to uncover. I am afraid that the real story is much too complicated and intricate for our news media, as they are now configured, to convey to the American people. I have done what I can to do so today.

As I mentioned last week, Europe in the late 16th and early 17th century was ruled by oligarchs, largely independent of state authority.  Today much of the world is ruled that way--including, increasingly, the United States.  Within the Trump campaign, when Manafort had to go because his Russian patronage was exposed, he was replaced by Steve Bannon, a creature of an American oligarch, the hedge fund manager Robert Mercer.  The Koch brothers have just rammed the tax bill through Congress. Other oligarchs are influential within the Democratic Party.  Our President and the people around him are tied to the Russian oligarchy through Deutsche Bank and perhaps in other ways.  This is the world we live in, and it still would be, even if Donald Trump were to die tomorrow of natural causes.  I do not know what it would take to change it fundamentally and I don't expect that to happen any time soon.

Please share this post widely.


Bozon said...

Great synthetic summary. Great to have this in one place.
I ordered the Collusion book, but wait listed at library.
I own too many books already...

One can say that the tendency toward globalization, and the IT revolution, greatly facilitated the many kinds of entanglements under discussion, with both intentional and unintended implications.

It is necessary for a large MNC to be involved in politics in many countries at the same time in connection with its commercial interests everywhere.

The line between public and private is highly blurred, especially for Russians, or Chinese, or japanese, etc.

This episode reminds me somewhat of the ties between the Roosevelt Administration and the Soviets, long before, and then during, WWII... The Haunted Wood, etc.

All the best

PJ Cats said...

Dear Prof. Em. Kaiser,

I've been planning a book for some time, about things the kids take for granted (overhere in Europe), but that they're bound to lose, out of stupidity, neglect and greed. I was going to call the book 'Great Accomplishments', as a memento to our ancestors, the unions and the soldiers who fought to achieve these things. Among those were things such as paid vacations, paid sick leave, access to health care, access to voting - all bad enough to lose. I now seriously think about adding 'freedom' to my list of accomplishments, as it seems to occur to no one that it doesn't take too much to actually reintroduce slavery from the point we're at today. History doesn't always advance, it can seriously reverse.
All the best and thanks as always for your insights.

Jude Hammerle said...

Dear Dr. Kaiser,

Sadly all it would take for a foreign entity to own a president would be a simple promise to the president's creditors guaranteeing her/his debt. The president should not even know about the deal until the foreign entity comes to collect its vigorish.

When the foreign entity reveals the game, the president would have three options: 1) capitulate to the pressure, 2) find a new creditor, or 3) alert the government of the pressure. If the president chooses (2) she/he transfers the obligation to a new master. If the president chooses (3) she/he forces the government to bail him out.

The foreign entity's most important move is its choice of victim. The foreign entity should select someone whose net worth is both a sham and essential to her/his image with supporters. Such a victim would have virtually no choice but to capitulate at the moment of truth. Once the ideal victim is chosen, it would be a simple matter to turn the few votes needed to elect her/him in the essentially equally divided American electorate.

Thus a foreign entity may own a president at no cost and at little risk.


Ed Boyle said...

Very informative post just like last week. Lobbyists control politics, also acros borders. The USA is a country of immigrants, many of whom try to maintain contavct with the old country and influence US policy in that sense. Mostly these are people who fled for some reason into exile, vietnamese conservatives, iranaians secularists, IRA fighters, refuseniks from soviet bloc earlier. There is a large pool of Americans who are natural spies, sympathisants for regime change in every part of the globe and they are utilized by our govt. and they lobby us actively. Russia specifically as a govt. has, like anyone else interests which it tries to project. If we look realistically at global power dconomically and militarily, it is massively dominated by countries and corporations from those countries with USA troops on the ground there. Russia, China, Iran do not. So all we have here is a contest betwen to rival interest groups, American led businessmen and politicians against Russian/Chinese led group. In the 1930s all contact with the NSDAP or Japan may have been suspect or also to Soviets, due to massive ideological differences. Nowadays ther is strong reason to doubt any fundamental ideological differences between Russia and the West. Democratic elections are held, central banking, freedom of speech, religion, free trade are all part of their lifestyle. The only difference is that they are not controlled directly fro Washington, like Europeans and Japanese whose foreign and trade policies and economic policies and cultural fare copy USA since 1945 at least. The question is whether America has reached peak influence or not due to its natural geographic position and resource and population base. The slower older contindntal powers were slow learning American democratic, trade, prduction, military strategies, techniques but are now surpassing them. Does this make them evil per se and theUSA good? Of course not. If one wants to se mordor in Russia then go ahead. Being rational is more difficult. America will not be the sole global power forever, any more than Britain was after 19th century. A group of American families, oligarchic structures, wishes it to be so and has control of media and has brainwashed everyone that it must be so. But culture changes and times change. Even young dynamic countries weary and old ones regain their strength. Why not partner with Russia and China? Bad for the CIA regime change machine? Millions dead since WW2, all due to that across the world. America helped evil dictators against social democrats, branded wrongly as communists in Asia, Latin America causing untold suffering. Russians took advantage of this. Now they themselves gave up the struggle and have copied right wing American oligarchic systems, religious norms, media types. Natural partners for us. Or should the whole world be enslaved to only our olgarchs in our mordor swamp?

Rupert Chapman said...

I think this week's post is one of your best. Your final paragraph is chilling, especially your note that both of the major US political parties are now in thrall to oligarchs. I would add that increasingly, both parties are developing political dynasties. You don't draw the parallel, but I, a student of ancient history, will - the situation reminds me worryingly of the latter days of the Roman Republic. For anyone who wishes to understand what I mean, I can only recommend that they read, 'Rubicon', by Tom Holland.

Gloucon X said...

Trump’s global business dealings were never deeply investigated because all through the campaign it was assumed that he had no chance to win.

“Today much of the world is ruled (by oligarchs, largely independent of state authority)--including, increasingly, the United States.”

I prefer the term plutocracy because it is more specific to the fact that the decisions being made always favor the richest, or at a minimum, always have their interests in mind. Neither would I describe their rule as at all independent of state authority. What we have now is regulatory capture as in that the entire state apparatus now exists merely to assist the smooth functioning of the plutocracy. We have seventeen intelligence agencies including NSA admitting they gather every bit of electronically conveyed information in the USA and also from abroad. There are no secrets anymore; yet whole countries like Panama, et al., allowed to function openly as tax shelters and money laundering shops for plutocrats. Based on these facts, do not get your hopes up that Trump will be removed over financial dealings with the Russians or with anyone else. To do so would open up too much of the shady world that allows our plutocracy to act with impunity. The Mueller investigation will end with only a few of the small fry caught and with Trump suffering merely minor embarrassment. Collusion is not illegal, it is the lifeblood of a plutocracy.

Bozon said...

I want to emphasize, re my earlier remarks,

"This episode reminds me somewhat of the ties between the Roosevelt Administration and the Soviets, long before, and then during, WWII... The Haunted Wood, etc.",

that this whole meddling thing, covert or overt, is hardly a new thing, on either side, in international relations.

I decided to reread now The Haunted Wood, just because it is so informative on an era not normally associated with our own time in the last few decades.

Imagine, Putin is now a role model, of sorts, for an enlightened conservative despot, for the Right here, whereas Stalin had once upon a time been a role model for an enlightened populist Left leader here during, and for, the Roosevelt Administration.

All the best