Money that Poured in from Russia

How the ’98 ruble crisis came to Trump’s aid

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Posted in 2016 elections, Russia, US politics Tagged with: , , , , , ,

Having spent the last six months preparing a history of Harvard University’s mission to Moscow in the 1990s and the scandal that ensued (to appear sometime this summer), I have often been reminded of William Faulkner’s apothegm: “The past is never dead. It’s not even past.”  This is as true of the Trump-Russia story as it is of the larger and more intricate realm of US-Russia relations since the collapse of the Soviet Union.

Holman Jenkins, Jr., the least predictable columnist at The Wall Street Journal, noted last week (subscription required) that Watergate analogies in the Trump Russia controversy are beside the point.  What is wanted, he wrote, is a Pentagon Papers-style history of US policy, “an emptying out of the files” necessary to illuminate the “awkward, contradictory and humiliating straddles” of Western governments over the last twenty-five years.

Alas, we are unlikely to get that kind of retrospective from WikiLeaks. What is required instead is a great deal of shoe-leather reporting. An especially good example was to be found ten days ago in The Rich Refugees Who Saved Trump, by Caleb Melby and Keri Geiger, with Michael Smith, Alexander Sazenov, and Polly Mosendz, writing in Bloomberg Businessweek.

When Trump World Tower at 845 United Nations Plaza began construction two decades ago as the tallest residential building in the country (90 stories), its most expensive floors attracted wealthy people getting their money out of what had been the Soviet Union. Trump needed the big spenders. He was renegotiating $1.8 billion in junk bonds for his Atlantic City resorts, and the tower was built on a mountain of debt owed to German banks.

The story is the most plausible account I’ve yet seen of what Trump’s oldest son, Donald Jr., may have meant when he said, in 2008, “We see a lot of money pouring in from Russia.”  In the earlier case reported by BBw, the deluge occurred at a most propitious time, in the late 1990s, when Trump’s business was stretched thin and under stress.

Trump broke ground on the building in October 1998, across the street from the United Nations headquarters. After several years of boisterous churn and at long last some growth, the Russian economy was in crisis. The ruble had collapsed in August; the government had defaulted on its domestic debt. Savvy Russians had scrambled to get their money out of the country. From the article:

Real Estate provides a safe haven for overseas investors. It has few reporting requirements and is a preferred way to move cash of questionable provenance. Amid the turmoil, buyers found a dearth of available projects.  Trump World Tower, opened in 2001, became a prominent depository of Russian money.

Others who bought units in the building, with its 72 constructed floors and 90 stories listed on its elevator panels, included New York Yankee shortstop Derek Jeter, Bill Gates, Harrison Ford, Sophia Loren, and Kellyanne Conway and her husband, according to Wikipedia. BBw reported that

The very top floors remained unsold for years but a third of the units sold on floors 76 through 83 by 2004 involved people or limited liability corporations connected to Russia and neighboring states, a Bloomberg investigation shows.  The reporting involved more than two dozen interviews and a review of hundreds of public records in New York.

Trump scholars gradually will determine how material was the sales boost in the complicated ups-and-downs of Trump’s financial position in those days. For an explication of some of the favors owed, which in one case went back to 1976, see the current article.  This much is indelibly clear: the president has seen Russia as a prime source of revenue, if not investment, for twenty years. Again, BBw:

Simultaneous with when the tower was going up, developer Gil Dezer and his father, Michael, were building a Trump-backed condo project in Sunny Isles Beach, Fla. “Russians love the Trump brand,” [Dezer] says, adding that Russians and Russian Americans bought some 200 of the 2,000 units in Trump buildings he built.  They flooded into Trump projects from 2001 to 2007, helping Trump weather the real estate collapse, he says.

A similar situation, this one involving a troubled midtown Manhattan building owned by Trump’s son-in-law, Jared Kushner, and a billionaire Chinese would-be investor, was covered in some detail earlier this month by The New York Times and the WSJ (subscription required). The next step is to follow Bloomberg’s team in tracing Trump’s dealings with Russians back in time.

My hunch is that the WSJ’s Jenkins is right, that the 2016 campaign-collusion story will turn out to be a dead end. Much more interesting is the saga of the formation of Trump’s views of Russia over the last twenty-five years