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Trump’s Latest Favor for Russia: A Pass on Election Interference

On his 600th day in office, following months of dire warnings from his own intelligence officials, President Trump finally did something to try and prevent Russian interference in the upcoming Midterm elections. But appearances can be deceiving, especially when it comes to Trump and Russia.

An executive order signed by Trump on September 12th declared a national emergency to deal with interference in U.S. elections, which it rightly describes as “an unusual and extraordinary threat to the national security and foreign policy of the United States.” But Trump’s executive order does little to stop it. It targets unspecified, large companies while giving the president full discretion to choose from a range of sanctions that have failed to deter Russian aggression in the past. Democrats in Congress blasted the order as toothless. Daleep Singh, a former assistant Treasury secretary in the Obama administration, testified before Congress that it represented more a press release than a change in policy.

The real purpose of the executive order, Trump’s critics maintain, isn’t to deter Russian election meddling. It’s to deter far tougher legislation in Congress. Two bipartisan bills pending before the Senate would inflict severe economic pain on Russia if it continues to meddle in American politics. One measure, dubbed the “sanctions bill from hell” by its co-sponsor, Senator Lindsey Graham, rattled nerves when it appeared in Moscow newspapers over the summer. Both Graham’s bill and the leading effort, introduced in January by Senators Chris Van Hollen and Marco Rubio, threaten to shut off the flow of U.S. dollars to the Kremlin.

[Read Van Hollen and Rubio’s DETER Act here. Graham’s “sanctions bill from hell” can be found here.]

It may come as a surprise to many Americans that some of the money paying for Russia’s bad behavior comes from the United States.  The Kremlin has borrowed billions of dollars from U.S. investors over the years through sales of Russian sovereign debt, which effectively are loans to Vladimir Putin’s government. Yes, you read that right: public pension funds from New York to California, along with asset managers, hedge funds, and U.S. banks are financing a regime that is deliberately trying to undermine American democracy and the U.S.-led Western alliance. A Moscow-based credit rating agency estimated last month that the United States holds 8 percent of Russia’s sovereign debt — or more than $12 billion, based on the latest figures from the Russian Central Bank.

Cutting off these financial flows is the kind of serious step missing from Trump’s executive order.  The administration’s reason for rejecting sanctions on Russian debt was outlined in a congressionally-mandated study by the Treasury Department earlier this year. The concern is over the “negative spillover effects” on global financial markets and businesses. In other words, the White House is worried that sanctioning Russian debt might do economic harm to America’s friends and allies — something that doesn’t seem to apply to the president’s trade war with Canada.  And Treasury’s warnings have proved overblown. Since April, when ruble debt was more popular outside Russia than ever before, foreign investors have been quietly dumping their holdings with none of the predicted upheaval.

The only economy that will be seriously harmed by sanctions on Russian bonds is Russia’s. It would put downward pressure on the ruble and drive up Russia’s borrowing costs, forcing Putin to scrap his ambitious spending plans for what is likely to be his last term in office. More importantly, it would put Russia in the same league as Iran and Venezuela, the only two other nations that have had their debt sanctioned by the United States, according to the Congressional Research Service.  Both Senate bills go a step further, and would also bar Americans from doing business with big Russian banks like Sberbank. Russian Prime Minister Dmitry Medvedev said such an action would be a declaration of “economic war” and promised to retaliate “economically, politically, or, if necessary, by other means.”

There’s no good reason for the White House to reject these penalties, serious as they are, or even tougher ones, because there’s an easy way for Russia to avoid them: Don’t interfere in U.S. elections.  Without a sure, strong response, the American electoral system remains as vulnerable as it was before Trump’s executive order. It’s clear that existing sanctions weren’t enough to stop Russia from wreaking havoc in the 2016 U.S. presidential election. Van Hollen and Rubio’s bill, the Defending Elections from Threats by Establishing Redlines, or Deter Act, would bring a cruise missile to the fight; the president is bringing a pop gun. “That’s why it is imperative that the Senate and House take action because, clearly, the administration abdicated its responsibility in this area,” Van Hollen told me. It remains to be seen whether Congress can do what the president cannot or whether Trump’s executive order will lay the matter to rest.

It’s important to remember what’s at stake.  Confidence in our elections, the foundation of American democracy, was dealt a serious blow in the 2016 presidential race. It was further weakened by Trump’s refusal to accept the findings of his own intelligence community on Russian interference.

Now, the president’s long-delayed response sends the signal that the United States can’t or won’t do what it takes to protect its sovereignty.  This abject failure of leadership raises troubling questions about where the president’s loyalties lie. It suggests once again that Trump is putting the interests of Russia above that of the country he was elected to lead.

Watergate’s John Dean on the Chennault Affair

My Rolling Stone Q&A with Watergate figure John Dean got a lot of people talking. Dean told me that Nixon might have survived if he had Fox News. He also said that he doesn’t expect Trump to resign and a whole lot more.

One thing that we didn’t have room for was a question I asked John Dean about the Chennault Affair, another Nixon scandal that involved collusion with a foreign power to win an election and allegations of treason.

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The Scorpion and The Frog

41k6bh9dczl-_sx304_bo1204203200_I just finished reading The Scorpion and the Frog, the book by Felix Sater’s Wall Street pal, Salvatore Lauria.

It’s an interesting read about Sater’s time on Wall Street and his dealings with Mobsters.

Even more interesting are the details about his cooperation with the CIA in Russia against al Qaida that helped keep him out of prison for racketeering.

A lot of these details were new to me, so I thought I would post a little summary of what’s in the book.

Sater’s lawyer, Robert S. Wolf, has called some of the CIA-related portions of the book “fabricated.” However, The Scorpion and the Frog was the subject of a 2002 legal proceeding in federal court in Los Angeles. Lauria sought to stop publication of his own book. Not because it was fiction, but because it told the truth.

According to Lauria, he had agreed to write the book on the condition that his real name not be used. His publisher, however, went ahead and used his real name, and Lauria was worried that he could be physically harmed by the people named in the book. A bench trial was held and in the end a federal judge cleared the way for the book’s publication.

With that said, here’s my abridged version of what the book says:

Felix Sater walked away from his Mob-linked Wall Street business in 1996 and headed for Russia. He would spend the next two years there before returning to the United States to surrender to the FBI in 1998 and plead guilty to racketeering.

Sater had two jobs in Russia. The first was a deal to bring AT&T bulk long distance service and pre-paid phone charge cards to the country. The second was to find a deal that could get him out of jail. 

Sater began to develop contacts at secret Russian military installations known as closed cities, which held “some of the great secrets of the Soviet Union,” Lauria wrote.

The closed cities were opening up. Their representatives were contacting “various countries and rogue organizations interested in buying everything from missiles to assault rifles to millions of rounds of ammunition,” Lauria wrote. They also would make munitions and missiles “to order.”

“We ran into guys selling shiploads of arms to Arabs and other Muslims — Libya, Iraq — countries that were hostile to the United States,” Lauria wrote.

At some point, according to the book, Sater made an initial contact with “someone connected to the CIA.”  

Sater gave this version of events to New York magazine.

One night, Sater told me, he went to dinner with a contact that he assumes was affiliated with the GRU, the Russian military-intelligence agency, where he was introduced to another American doing business in Moscow, Milton Blane. “There’s like eight people there,” Sater said, “and he’s sizing me up all dinner long. As I went to take a piss, he followed me into the bathroom and said, ‘Can I have your phone number? I’d like to get together and talk to you.’ ” Blane, who died last year, was an arms dealer. According to a government disclosure made 13 years ago in response to a Freedom of Information Act query, Blane had a contract with the Defense Department to procure “foreign military material for U.S. intelligence purposes.” Sater says the U.S. wanted “a peek” at a high-tech Soviet radar system. “Blane sat down with me and said, ‘The country needs you,’ ” Sater said.

Back to the book. Sater’s unofficial contact in the CIA came to see him and told him the agency wanted a radar tracking system that the Russians had developed before the fall of the Soviet Union. The radar tracking system had never been deployed, and the CIA worried that the system could fall into the hands of our enemies. 

“We looked around through Lex’s contacts and found we could definitely get the radar system. For once, this was a deal we were doing with no interest in the money.  We were doing it to enhance our own position regarding the legal charges, and also as something that might benefit the country. Money or profit was not an issue. We just wanted the credit for doing it. With a direct line to the radar system, we contacted our lawyer in New York, who went to Washington DC to talk to the CIA”

The CIA was interested. The agency sent a man to Russia, and Sater located the radar tracking system. (In other parts of the book, Lauria calls it a “missile guidance system.”)

With that success,  Sater was approached about acquiring a dozen Stinger missiles. The Stinger was the portable, shoulder-fired missile that used a heat-seeking sensor to home in on an aircraft’s engine. They could be fired from as far away as 5 miles away and could easily bring down a passenger airliner.

The CIA was desperate to get hold of them.  Lauria states that at least 12 Stinger missiles were obtained by Osama bin Laden. 

As he had with the radar tracking/missile guidance system, Sater found that he could get the Stingers, albeit in a round-about way.

Sater could not buy the Stingers directly from al Qaida. “Instead, he used his contact with a KGB general who claimed he had strong ties with Ahmad Shah Massed, leader of the Northern Alliance,” Lauria wrote.  Sater alaso used “connections he thought he had with both sides in the Afghan War.” This is interesting. Was Sater dealing with the Taliban?

According to Lauria, Sater obtained photographs of the Stinger missiles as well as the the serial numbers of three of them to verify their authenticity. Sater also obtained what he thought was an active cell phone number for bin Laden. His attorney supplied it all to the CIA.

The CIA offered to pay Sater $300,000 per missile. Lauria insists there was no profit built into the deal. However, one of their partners, Gennady “Gene” Klotsman went behind their backs and demanded $3 million per Stinger. The CIA was furious and called off the deal.

A few days after the attacks of Sept. 11, 2001, Lauria got a phone call from Sater. The information they had provided about Osama bin Laden was now being actively pursued. 

“Our situation had improved,” Lauria wrote.