Trump’s towering failure in Moscow reveals he’s a lousy businessman who hires sketchy characters
President Donald Trump (Ministry of Foreign Affairs of the Republic of Poland)
September 14, 2017
President Donald Trump may have endangered his presidency and American democracy with his business dealings in Russia -- but he has nothing to show for it.
The former real estate developer and reality TV star spent decades cultivating relationships in Russia, but he never actually built anything there, and The Atlantic's Julia Ioffe tried to find out why.
What she found, in short, is that Trump isn't nearly as good a businessman as he likes to brag.
“Trump wants everything and he’s dealing with the Russians, who aren’t stupid,” said one Western real estate investor in Moscow. “If you want everything from the Russians, they’re not going to give it to you. Trump’s way of negotiating is to ask for every f*cking thing. The Russians have a different philosophy of negotiation: He who asks is the weak party.”
Other big-name hotel brands have built in Moscow, but they actually run those businesses in addition to licensing their names -- which was all Trump offered.
“Trump wants a fee for branding and doesn't put money in, so most developers’ in Moscow responses are, ‘So what the f*ck do we need him for?’” said a person familiar with the licensing negotiations.
Donald Trump Jr. summed up the complex back story by admitting Russia "really is a scary place."
The younger Trump told a trade publication in 2008, when he revealed "Russians make up a pretty disproportionate cross-section of a lot of our assets," that Trump Organization was concerned about the payoffs necessary to do business in Russia, where corruption is rampant and bribes are necessary.
“Moscow is like New York in many ways, just way more corrupt,” said one Western real estate developer in Russia, who asked for anonymity to avoid upsetting his foreign partners. “To pull a building out of the ground, you need so many permits, so many authorizations -- the mind reels. And all of it is so corrupt, it’s insane.”
Ioffe, who was born in Moscow and came to the U.S. with her parents at 7, said the Trump Organization would have needed a capable and connected local partner to obtain all the necessary permits.
Trump worked with Aras Agalarov -- whose son was involved in arranging the campaign meeting between Trump Jr. and a Russian lawyer -- in 2013, but that deal fell apart over a scandal in Kyrgyzstan and amid Russian economic woes.
The future president instead relied on Felix Sater, a Russian-American convicted felon with mob ties who also worked as an FBI informant.
Sater started traveling to Moscow on Trump's behalf in 2004, and three years later also started advising the self-described Donald Trump of Russia, Sergei Polonsky, over the objections of the developer's lieutenants.
“I would never hire somebody like that,” said Alexey Kunitsin, who was then chairman of the board at Polonsky's company. “You can’t trust him in any way, not in a professional setting, not in a personal setting -- you could see it very clearly. He was telling constant crazy stories, wild fantasies about all the people he knew. He was not a balanced dude. He’s very emotional and gets into conflicts very easily.”
Sater gained a reputation as a "bullsh*tter" and raised suspicions with his colorful tales of profligate spending, and Moscow developers didn't trust him or take him seriously.
Those developers also didn't trust Trump, who was an outsider without the necessary political protection to do business in Moscow.
Sater seems to have hoped that might change after Trump announced his presidential campaign, according to emails recently obtained by the New York Times that show him bragging to Trump lawyer Michael Cohen that he had lined up financing for Trump Tower from VTB -- a bank under U.S. sanctions.
"I will get Putin on this program and we will get Donald elected," Sater said in one email, and Trump signed a non-binding letter of attempt in fall 2015 to pursue the project.
However, that deal too went nowhere because Sater lacked the right connections and because Russia's economy was still staggering under U.S. sanctions imposed the year before.
Cohen tried to revive the project in 2016 by trying to contact the players Sater had bragged about but instead sent an email to a top Putin lieutenant using his general email listed on the Kremlin website, and the official declined to respond.
Moscow developers described Cohen's action as more of a rookie mistake than evidence of high-level contacts -- and they told The Atlantic it shows why Trump never got anything built in Russia.
“That is like the stupidest, most absurd thing ever,” said one Western real estate developer. “The Russians that (Trump) associates with, I would never do business with. I’ve been involved with Russia for 25 years."
The developer offered a withering criticism of Trump's business acumen, given his famous name that's become synonymous with a certain type of luxury.
"A genuine developer could’ve done a lot with that brand,” the developer said.