Why Trump is Reluctant to Sanction Turkey for S-400?

Unless you are a news junkie or live in Turkey, you are unlikely to have heard of the S-400 saga.

By itself it's not a remarkable story, a row between two Nato allies over defense procurement. But if you scratch the surface, I believe there is a highly intriguing plot about Trump monetizing the Presidency.

Here is a quick rundown.

A while ago, Turkey approached the Obama administration to buy Patriot air defense missiles. The US turned them down. Not because they are reluctant arms sellers but because Turks asked for a lot more:

Ankara wanted to manufacture parts of the system and acquire the sensitive technology to eventually build their own. Building up the sophistication and capacity of the Turkish defense industry has been an important goal of successive Justice and Development Party governments and various predecessors. In the case of this particular weapons system, there were understandably those in the U.S. government who were eager to protect sensitive U.S. defense technology, even from a NATO ally.

S-400

So Turkey's president Tayyip Erdogan went to his pal Putin to ask for a substitute system, namely the S-400. 

Unsurprisingly, Putin, relishing the idea of selling Russian technology to a Nato member and cognizant of the opportunities it could provide, said yes.

When the deal was made, Pentagon got worried.

S-400 are designed to shoot down Nato aircraft, including their beloved F-35 and Turkey being a Nato member and owner of a substantial fleet of these planes, they were concerned that Russians might get some tactical information about them.

No kidding, you say.

They warned Erdogan that, for starters, Turkey would be cut out of the F-35 manufacturing process. Some 937 pieces are made in Turkey of which 400 are manufactured exclusively there.

The US rapidly moved to source these parts from elsewhere and expelled Turkey from the  program. Pentagon also stopped the training of Turkish pilots for F-35 and asked Trump and the Congress to impose significant sanctions to dissuade Erdogan from completing the transaction.

Erdogan ruled that out and the S-400 have since been delivered. Pentagon and the Congressional leaders were united in their support for sanctions and pundits in Turkey were really concerned that they could push the economy into a deeper recession.

The Khashoggi Gift

Then something very strange happened.

At the height of the crisis Erdogan said calmly that no sanctions would be imposed because he was going to talk to Donald Trump and he was sure the president would side with him.

Really you say. Well, this was déjà vu all over again, bless Yogi Berra's soul.

"I love this guy"

As I noted at the time, last December, going against Congressional Republicans, his own Secretary of Defense, the Pentagon and close allies like Israel, Trump abruptly announced that the US was pulling out of Syria, leaving the whole region to Russia and Iran.

Amazingly, he did so after a phone conversation with Erdogan, where the Turkish leader bluntly asked him "why are you even there?"

You would assume that a notoriously thin-skinned bully like Trump would take umbrage at this and  would have answered with a version of "who the hell do you think you are." Instead he turned to his mustachioed national security advisor and asked why indeed the US was there.

Then, he ordered the troop withdrawal, prompting the resignation of James "Mad Dog" Mattis, his Defense Secretary.

This was so out of character that, at the time, I suggested that it was a case of blackmail with Erdogan using the Khashoggi evidence he held and Trump's desire to protect the Crown Prince Mohammed bin Salman (MBS) gave Erdogan a say in the US foreign policy.

Intriguingly, former Nato commander retired general Wesley Clark agreed with my hypothesis.

During a CNN appearance on December 24, Clark stressed that “there doesn’t seem to be any strategic rational for the decision. And if there is no strategic rational, then you have to ask, ‘Why was the decision made? I can tell you that people around the world are asking this. And some of our friends and our allies in the Middle East are asking, ‘Well, did Erdogan blackmail the president? Was there a payoff or something? Why would a guy make a decision like this?’” [my emphasis]

But why is MBS so important for Trump?

Besides pulling out of Syria to save him, Trump also vetoed a bipartisan bill to stop selling arms to Saudi Arabia that could prolong the carnage in Yemen.

Good question.

In the Wes Clark quote, the first sentence is about blackmail, the second concerns some payoff.

The Art of the Deal or How to Monetize the Presidency

One of the reasons Donald Trump is so keen to keep MBS as the Crown Prince is an extraordinary deal his good friend Tom Barrack has been trying to put together.

Barrack, a billionaire real estate developed whose parents are Lebanese immigrants, was Trump's inaugural committee chairman. According to Michael Wolff's Fear and Fury, he is also the guy Trump calls every night while devouring Big Macs and hollering at CNN.

Barrack has been lobbying the White House to get them to allow Saudi Arabia to buy up to 40 nuclear reactors from Westinghouse, the only American firm that builds large reactors, without the nuclear safeguards which are mandatory for dual use technologies.

According to a Congressional report that came out at the end of July, Barrack insisted that Trump bypassed Congress in providing nuclear safeguard waivers, even though it is a legislative prerogative.

The 1954 US atomic energy act also insists prior congressional approval must be obtained for export of potential dual-use technology – in keeping with International Atomic Energy Agency rules. Yet, according to the report, private commercial interests “have been pressing aggressively” to bypass these controls, in concert with Trump associates. “These commercial entities stand to reap billions of dollars.”

Since the Trump Administration never worried about acting illegally (with a timid and toothless Democratic majority in the House), chances are Trump would have signed those nuclear technology waivers. 

Retired generals like Trump's first National Security Advisor Mike Flynn formed a company called IP3 with Saudi and Emirati participation and they were given unfettered access to the Administration.

According to the report, IP3 officials were granted such “unprecedented access” to Trumpworld that they considered the administration an “extended team member,” and officials met directly with “President [Donald] Trump, Jared Kushner, Gary Cohn, K.T. McFarland, and Cabinet Secretaries Rick Perry, Steven Mnuchin, Mike Pompeo, Rex Tillerson, James Mattis, and Wilbur Ross.” This access, the report explains, “yielded promises from high-level government officials to support IP3’s efforts with Saudi officials.”

You may ask why Saudi Arabia with its limitless and cheap oil and wind and solar energy options would need nuclear power. The answer does not require guesswork. In 2018 MBS declared that “without a doubt, if Iran developed a nuclear bomb, we will follow suit as soon as possible.”

MBS has been quite open about his intentions:

Barack Obama’s attempt to negotiate a nuclear cooperation deal foundered over the Saudis’ refusal to sign a legally binding pledge eschewing uranium enrichment and plutonium reprocessing – established pathways to the bomb.

As usual, the Trump Administration took the opposite track:

Now the Trump administration has reopened those talks and might not insist on the same precautions. At a Senate hearing on Nov. 28, Christopher Ford, the National Security Council’s senior director for weapons of mass destruction and counterproliferation, disclosed that the U.S. is discussing the issue with the Saudi government. He called the safeguards a “desired outcome” but didn’t commit to them. [my emphasis]

To push the deal to the finish line, Tom Barrack tried to buy Westinghouse out of bankruptcy.

Barrack approached private equity giants Apollo and Blackstone about joining their bid to buy Westinghouse, according to the report. In a September 2017 memo from Barrack, he said the firms would combine their funds with money from Saudi Arabia and the UAE.

Sadly for him, a competing bid put forward by Brookfield, a Canadian investment firm won the process and acquired Westinghouse.

Incidentally, does the name Brookfield ring a bell? If you have been reading this humble soapbox for a while, it might.

It is the Canadian company that leased the 666 Fifth Avenue that belongs to the Kushner family for 99 years and paid for the entire lease on Day One, enabling them to pay their mortgage in February 2019 and saving them from a financial disaster.

Do you know who is behind the innocuous sounding Brookfield?

The Qatar Investment Authority is the second-largest shareholder in Brookfield Properties, ranking only behind Brookfield’s former parent company.

To keep the dream alive, Barrack contacted Brookfield and asked to be involved.

Barrack contacted Brookfield’s CEO asking to get involved, and Brookfield invited Barrack’s firm to make a $50 million investment, according to a February 2018 slide presentation quoted in the report.

To sum up, Trump confidant Tom Barrack has been trying to sell the most volatile and ruthless ruler in the world, dangerous nuclear technology fully knowing that he intends to enrich uranium and build nuclear bombs.

Keeping MBS in place is important for that purpose. Another Crown Prince might not be interested.

This, in turn, gives the Turkish president enormous leverage and allows him to dictate his terms to Donald Trump.

Besides the Syria pullout, the US Treasury never sanctioned Halkbank, even though its managers were convicted of helping Iran bust sanctions to sell its oil and gas. The expected fine 0f $30-100 billion never materialized.

Clearly, Erdogan has something over Trump's head and my guess is that's connected to Trump's desire to protect MBS.

In case you are wondering how much money is involved, in 2017, South Carolina started to build two Westinghouse nuclear reactors. The original estimate of $14 billion soon ballooned to $23 billion.

That's almost $12 billion a pop. We are talking about 40 of these beauties.

Imagine Trump's cut.

The irony in all this we have Qatar to thank for in preventing this from happening. But even they know that they cannot say no to Trump when he comes asking.

And he is doing this in plain sight.