Tuesday, August 2, 2016


Last week conservative George Will pointed out that Donald Trump won't release his tax returns, and then speculated that he's not sharing his tax returns because they might show that he's "deeply involved" with Russian oligarchs, the small group of billionaires who help Vladimir Putin manage post-Soviet Russia (oligarchy = rule by a few; oligarch = a member of the oligarchy).

While doing business with Russian oligarchs is not new, it does raise serious questions if you're the presidential candidate for the White House. Let's try and understand what the Russian oligarchs are all about, and then circle back to Trump.

At the outset we want to understand the Russian oligarchs, just like America's early oligarchs, are rich industrialists who took advantage of a system where the rules had not caught up with the business environment. After the collapse of the Soviet Union there was an opening for well connected and quick thinking Russians who understood there was a Wild West market window opening up, which they elbowed their way through.

In many ways, the Russian oligarchs did what America's did in the 19th century; they went after anyone and anything that got in their way, used the political system to game their position, and got rich in the process.

This story is not new, and even helps explain the evolution of democracy in America. After America's oligarchs took advantage of their situation - creating financial empires that dwarfed those of Europe's monarchs - and ran roughshod over America's political process, a populist movement rose up to challenge America's new oligarchic class. This was accompanied by the rise and political conversion of Teddy Roosevelt, who challenged the interests of America's new elites at the beginning of the 20th century.

While this process helped make democracy, and markets, work for more Americans it still wasn't enough. The oligarchs continued to get rich(er) in America.

The rise of Wall Street and new industries after WWI made it difficult for Washington to catch up with market players. This, in part, is what allowed them to game the system in ways that led to the market collapse of 1929 and the Great Depression. It took Franklin D. Roosevelt and a second world war to challenge America's dominant elites and to change the rules of the game.

To be sure, FDR ran into many obstacles, including an attempt to overthrow his government by several of America's financial mandarins. The key point here is recognizing that oligarchs - whether they're from the U.S. or Russia - will do what they can to influence politics and game the system. This is especially the case today as we look at the current crop of global oligarchs, which include American elites as well.

This is what makes claims that Donald Trump is in bed (or wants to be in bed) with the Russian oligarchs such a problem. Here I want to make it clear that my concern isn't necessarily that Russia's new elite class want to enhance or protect their interests. This is what oligarchs do. Dogs bark. Birds fly. Snakes slither. The Founding Fathers understood this, and wrote about the need for the state to mediate and counter balance "those with property" if democracy was going to work (see especially the Federalist Papers on this).

What should worry every American is that Donald Trump may either already owe, or is looking to secure, money that he can no longer get elsewhere. We need to remind ourselves that banks and the largest financial institutions in the U.S. don't want to do business with Donald Trump. There's a reason why. And, yes, his 4 bankruptcies and his long history of stiffing contractors don't help his cause.

What this tells us is that the issue isn't the oligarchs, and the demands they will make. We understand their game. The issue is Donald Trump.

My concern is Donald Trump has demonstrated little understanding that "business is business" is a fine way to live; but it only applies if you're the only one exposed to the negotiated terms. It's an entirely different ballgame when you're capable of putting the United States of America at risk because you don't want to upset your financial backers in another country - in this case Russia.

This is why Donald Trump's much bragged about Florida real estate deal with a Russian oligarch, and his many attempts at trying to gain access into Moscow's real estate and hotel market are so important. He's desperate to break into the Russian game but his ignorance of their business culture, combined with his temperament and personality, don't necessarily fit into the Russian business style. All indicators suggest that he's been locked out so far. And if Trump has secured business it would most likely be high interest loans with Russian oligarchs, as George Will suggested.

The key here is understanding that Trump's golden ticket into the world of the oligarchs in Russia appears to be Vladimir Putin. Imagine a "President Trump" winning Putin over with, say, shifting the U.S. position on the Crimea - where we're officially opposed to Russia's intervention in the region - so that we support Russia's presence there. That's got to be worth a wink and a nod from Putin for Trump's business interests, wouldn't you agree?

Look, at the end of the day I'm not saying Trump's position vis-a-vis Russia in the Crimea is a bad one. I happen to believe that Russia has legitimate historical and strategic interests (which you can read about here and here), though I am pretty sure Trump doesn't understand these interests. What I'm concerned about is how Trump has no problem mixing his very toxic business interests in with larger U.S. foreign policy interests.

This is a serious issue. It's also what makes Trump so dangerous.

We need to remind ourselves that Trump is about Trump, and no one else. His long and well publicized personal and business history make this clear.

If Trump becomes president the Russians will effectively gain influence without having to do all the hard work of creating and molding a super spy to infiltrate the American political system. Vladimir Putin will play him like a drum. This is what makes Donald Trump an ideal Manchurian candidate - i.e. a Russian agent/tool - of the first order. Putin gets America's acquiescence, in effect, for the promise of a few loans from the oligarchs and some real estate developments in Moscow.

Europe, on the other hand, sees the collapse of NATO's security umbrella and an emboldened Russia.

For their part, China, realizing they can probably have the South China Sea for a song, becomes more aggressive, and figures out a strategy that promises to let the Trump organization in on their resource or petroleum interests in the region. America's SEATO promises, not surprisingly, vanish with the wind (unless South East Asian partners "pay up", of course).

In effect, everyone in the global community is on their own, just like in the good old days.

With America's security treaties abandoned or compromised in Europe and Asia, what could possibly go wrong?

At the end of the day, we need to remember that U.S. oligarchs became part of an empire they helped push around the world. It's what oligarchs do. One would assume that Russia's oligarchs - and Vladimir Putin - understand how all of this works. In fact, bet on it.

Does anyone seriously believe if the Russians want to buy access and enhance their global influence under a "President Trump" that Trump would be one step ahead of them and capable of saying no?

If you do I have a bridge to sell you, in Iraq. Cheap too.

- Mark

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