The big carrot in U.S. relations has been access to Western banks and real estate.
Before we come to the insinuations of money laundering, which Steve Bannon believes to be the Trump clan’s real vulnerability in the Mueller investigation, let’s understand that the sticks in U.S.-Russia relations have consisted mostly of NATO expansions and democracy promotion.
The carrots have been mainly economic, understood to include a welcomeness to capital flight that, if we take Russian law more seriously than the Russians do, amounts to an openness to money laundering.
Occasionally there have been flare-ups, as when $10 billion turned up at the Bank of New York after Russia’s 1998 International Monetary Fund bailout. Murders of Putin opponents in London have had to be papered over not just in the interest of banks and real-estate sellers, but because allied governments agreed it was prudent to let Russian oligarchs use Western banks.
Mr. Trump’s participation in this market is unimpressive in perspective. He bought a mansion in Florida out of bankruptcy for $41 million and sold it four years later to a Russian billionaire for $95 million. His son Don Jr. told an audience in 2008, “We see a lot of money pouring in from Russia,” presumably related to the family’s condo developments.
This, at a time when more than a fifth of all £10 million-plus properties in London were selling to Russians, when Russians were buying up sports teams, factories, even big chunks of Facebook and Twitter .
Mr. Trump failed in his dream to build Trump Tower in Moscow, probably because local investors were looking for ways to get money out of Russia, not for ways to reinvest it locally while paying extra to put the Trump name on a building.
What about his reliance on Deutsche Bank , whose rogue employee in Moscow (fingered by the bank itself) cost it $630 million last year in money-laundering fines? From one rogue operator in Moscow, it’s a leap to suppose the bank’s wealth-management office in New York made itself a vehicle for illicit Russian loans to the Trump Organization.
Don’t his Russian dealings make President Trump susceptible to blackmail? This idea is grossly exaggerated. Think of the KGB files on JFK or Bill Clinton. The trouble the U.S. refrains from making for Vladimir Putin, by not revealing its own files on Russia, attests to a mutually assured destruction that greatly limits this weapon so beloved by conspiracy theorists.
It’s also worth noticing how readily the financial carrot became a stick after the Crimea grab, despite the wailing of Western financiers and developers. Sanctions were imposed on top Russians where it hurt, limiting their access to Western banks. Of special note is a clampdown launched in early 2016 on big-ticket real-estate purchases made with cash, aimed specifically at Manhattan and Miami.
Eyebrows went up at the time. Weren’t these markets near and dear to the Trump Organization? Yet the Trump administration has not only expanded the crackdown but extended it to deals financed by wire transfer.
One lesson is that money-laundering enforcement is inevitably political. For years the U.S. government ignored suspicious-activity reports from U.S. banks related to Mexican officials—until the Mexican government itself in the 1990s signaled it was ready to weather a crackdown.
Mr. Bannon, with his usual knee-deepness, therefore is onto something. Words can be found in statutes to criminalize practically anybody who participates in what the government later decides was a suspicious transaction.
Yes, it would be a grotesque case of selective prosecution to go after a president because he sold condos to rich Russians. Factor in a shrinking approval rate, a Democratic takeover of the House, a GOP no longer keen to defend its president. There was always something profoundly injudicious, in an age of lunatic partisan warfare, about somebody with Mr. Trump’s baggage seeking the White House in the first place, however much Americans like to think even real-estate developers can grow up to be president.
Still, fruitful would be an honest reassessment of Russia policy since the Soviet collapse. Here’s some news to everyone except the global oligarchs gathered this week in Davos to hear Mr. Trump: It long has been understood that a Western openness to Russian flight capital is a key safety valve of the Putin regime. It props up Russian stability. No local would invest in the local economy if there weren’t a way to get his or her highly stealable winnings off the table. Not for nothing was the 2016 visit by a Russian lawyer to Trump Tower concerned with the U.S. Magnitsky Act, a loaded gun aimed at the Russian elite’s enjoyment of Western financial services.
Even today U.S. policy toward Russia is leavened with a large element of hope-for-the-best because other options aren’t obvious. There has been no effort to shut down Russian energy sales. Sanctions have been pinpricks aimed at getting the attention of Mr. Putin’s billionaire friends. The truth is, whatever his past in Russia, Mr. Trump has little room to reinvent this wheel.