Trump and Putin Share Ties with the Post-USSR Kleptocracy
Economist James Henry traces the rise of both Putin and Trump to the West’s failed reconstruction of the former Soviet states in the 1990’s
SHARMINI PERIES: Welcome to The Real News Network. I’m Sharmini Peries, coming to you from Baltimore. While the controversy about Russia’s alleged hacking and influencing of the US Presidential election goes on. Relatively little attention has been paid to President-elect Donald Trump’s actual connections to Russia and other countries of the former Soviet Union. One person who has delved into this issue is economist and investigative journalist, James Henry, who recently published an article in the magazine, The American Interest, titled “The Curious World of Donald Trump’s Private Russian Connections.” James Henry now joins us from New York. Thanks for joining us again, James.
JAMES HENRY: You’re very welcome.
SHARMINI PERIES: So, James in your article you outline some of the many connections that Donald Trump and his businesses have had with Russian business interests, and even with the Russian mafia. So, give us a brief outline of some of the issues you tackled and what you found.
JAMES HENRY: Well, there are two key questions that I wanted to answer about this. One is the question of –where Putin came from and why he existed? We spent a lot of time arguing about his role in the US election. But, you know, there’s a real puzzle about why we have Putin to deal with in the first place.
A second related question is — where did Donald Trump get the financing that he really benefitted from in the 2000s, after he had had six bankruptcies? You know, nobody’s basically asked the question, you know, how is he able to keep on raising capital? Well, it turns out those two questions are intimately related, because in the 1990s, partly because of a sort of failed reconstruction program for the post-Soviet economy, we ended up with a system in Russia in which, you know, there’s this very high inequality, a huge transfer of wealth to a tiny number of people. And sort of a rampant amount of lawlessness, you know, the devastation of the public sector.
Really Russia went through a kind of complete 1930s-scale depression during that period. And at the end of that…
SHARMINI PERIES: –This is when Yeltsin was the–
JAMES HENRY: Yeah, that’s when – and Yeltsin was actually you know, only elected in 1996 with a substantial amount of assistance from western experts. You know he had an 8% approval rating in January of ’96, but people from, western political campaign advisors went to work, the IMF gave him a lot of money, the World Bank chipped in and by the election, in the second round in June of 1996, July 1996, he emerges with more than 50% of the vote.
So, this is in a sense the original sin that was committed by Western experts on a political level and also on the economic level, where we not only advised the Russian government on their privatization programs and helped… but we also helped to finance it. And the result was one of the largest wealth re-concentrations in history, where you had 25 or so people helping themselves to vast amounts of natural resources in Russia.
And my article goes through a lot of that background. It’s important to understand because most Americans don’t appreciate that story and they don’t understand why there came to be a Vladimir Putin. At the same time, at the end of this period, you have this enormous amount of capital flight, flowing out of Russia, precisely because of the kind of system that we had created. So, today there’s more than $1.3 trillion of Russian flight wealth offshore, a lot of which is owned by this tiny elite. And that’s the money that came from the former Soviet Union States like Kazakhstan, Azerbaijan, and also from Russia. And a lot of it ended up being channeled into lousy investments in the west, because people were basically kleptocrats. They were looking to hide stolen assets, and they weren’t that discriminating about the kind of projects that they were investing in.
So, no accident that in 2008 Donald Trump, Jr. says, well we’ve gotten most of our money in the last few years from Russia and other former Soviet Union States. And he’d just come back from, I think, he said about six different trips in the previous 12 months.
SHARMINI PERIES: In a period of 18 months, you wrote.
JAMES HENRY: A period of 18 months, so, you know, this was a period in which Trump was kind of standing there with all kinds of, well, projects that ultimately didn’t turn out very well. Many of them ended up in foreclosure, we had the Toronto Trump Condo Hotel, just foreclosed in November. The Trump Soho before, a lot of projects up and down the east coast and many of these, as I discuss in my article, you know, involved dubious business associates, and in many cases outright criminals.
So, you know, it’s not that Donald Trump himself was sitting down and orchestrating a kind of mob-like role here. He was just willing to accept money without many questions from whatever sources, you know, came forward during this period in which he was looking to fund these projects. So, the one question we’ve asked, I think, and answered here is, you know, where do Putin and Trump both come from? They come from this failed period of political economic development in the 1990s, for which the west bears a lot of responsibility.
The second thing we’ve learned from this analysis — and I invite people to go and read it, because it’s a very detailed analysis of five different case studies that we’ve done of Trump’s business associates. You know, the typical journalist article on this topic has dealt with one case at a time. They haven’t looked across all these different deals, at the network of people and the story here is not individual bad guys, it’s the whole network of relationships that Trump and the Trump organization were able to leverage in order to do their deals. And so, we go into those deals in great detail. Some of them involve outright criminals. Others involve people that we just don’t know exactly where the money’s coming from. It cries out for more investigation. And that’s another key theme here. We think it’s really a legitimate concern on the part of the American people to know what kind of people their, you know, their President is doing business with.
The Cervantes quote at the opening of our article says, you know, “Tell me who you walk with, and I’ll tell you who you are.” And I think that, you know, we shouldn’t just be comfortable with these kinds of associations staying out there without being investigated thoroughly.
SHARMINI PERIES: Right. But one could say it is one thing for Trump to be well connected to the Russian oligarchs. One expects that of a businessperson like his stature who’s an international businessman. But it’s something else to say that these connections lead to the President of Russia, or the reason Trump has good relations with him. And does he have good relations? I mean, I remember during the campaign he said, he’s never met Putin.
JAMES HENRY: Well that may be true. He certainly has plenty of people around him who have, and you know, his campaign manager was a close advisor to a prominent Ukrainian billionaire who has, you know, bragged about his relationship with President Putin. You know, we go into a number of cases where we describe relationships with Russians who might or might not be connected to President Putin.
But the real story here is not about President Putin, this is a story about private Russian connections, about many associates in the background. Putin himself is not the only force at work in Russia. There are many other organized groups with enormous amount of power. And so I think the overall, again, the message is the network of relationships that comes into play here. And a lot of these characters are just pretty unsavory. You know, so I think it’s unprecedented for a President of the United States to have these kinds of relationships upon taking office.
So, you know, the other key message that we have here, is that there are long-term consequences for failed interventions in other countries and I think in Russia’s case, we’ve just seen the western kind of Neo Liberal model that was followed so aggressively in the 1990’s with the creation of this tiny elite, has just come back to haunt us.
SHARMINI PERIES: Right, and James, towards the end of your article you say that Trump could be considered a “useful idiot” of these oligarchs. What makes you say that? And also, of course, the bigger point here is that the public has a right to know these connections and know about what their President’s character is in the business world. That he was trumping his horn about during the elections.
JAMES HENRY: Well, the “useful idiot” remark pertains to a very specific episode back in September of 1987, before the fall of the Wall, before President Putin, in which Trump comes back from a visit in July 1987 to Moscow, and he decides to take out a full page ad in the Washington Post, the New York Times, and the Boston Globe, basically decrying US expenditures on the defense of Japan, NATO and the Persian Gulf. You know, saying that they’re wasteful, that we should stop, you know, subsidizing these areas of the world.
Now, we can debate that question, but there’s no question that most US foreign policy experts of all of both parties would have little time for that kind of view, and that on the other hand, the Soviet Union certainly, and Russia today, kind of liked the fact that United States is threatening to pull the plug on its military cooperation with NATO, for example. So, you know, I think there’s kind of a track record here where Trump’s positions on policies have basically been odd — oddly kind of in alignment with the Russian perspective here. I’m not saying that the Russian perspective is entirely wrong. I think there’s a legitimate debate to be had about, you know, the expansion of NATO and in Western Europe towards the newer states, they’ve expanded toward the Ukraine and actually invited them to join.
You know, those are kind of legitimate issues for Putin, I think. But you know, for Trump back in 1987, to already be trumpeting this position, and spending $94,000 to announce it, you know, it’s very interesting.
SHARMINI PERIES: All right, James, so what needs to be done to get to the bottom of all of these connections?
JAMES HENRY: Well, today the Electoral College is voting. We won’t find out the results until January 6th. But, you know, certainly they should be willing to take this kind of unsolved, unresolved issues into account. John McCain has called for an investigation of the Putin hacking charges by partisan commission, maybe on a 9-11 Commission-scale. You know, that would be helpful. But I don’t really see those alternatives helping out.
I think we’re going to be facing the prospect of having the President-elect Trump in office, you know, for four years at least. And during this period, we just have to keep an eye on him because the evidence is that he’s been pretty indiscriminating when he chooses who he does business with, and he’s had this long term, kind of propensity to, you know, sort of turn a blind eye to these character issues and to adopt, frankly, some dubious policy judgements with respect to NATO and Japan.
SHARMINI PERIES: All right, James, you’ve certainly raised a number of issues that if we had a reliable media in this country, there’s a lot of work there for them. I hope to have you back real soon because I think this issue is not going away.
JAMES HENRY: It’d be nice to discuss. Thanks very much.
SHARMINI PERIES: And thank you for joining us on The Real News Network.