Trump, Russian Oil, and “The Odious Smell of Truth”

Igor Sechin. businessinsider.com

By Jake Strickler, Editor-in-Chief

Last Sunday night, at about 11:00 p.m., I found myself headed through the U.S.-Mexico border, the nose of the car pointed due south. The circumstances that led me to that point are very, very T-Bird. I was eating a late breakfast and plowing through some readings in the Pub earlier that afternoon. Sitting by myself, outside, a pile of books beside me, that word, at some point, floated through the open garage-door-style window and into my ears, which perked up immediately, like a Basset Hound’s, at the sound of it: Mexico.

The truth behind the limp. Franz is far more athletic and agile than I. Photo by Margo Schwartz.
The truth behind the limp: Franz is far more athletic and agile than I. Photo by Margo Schwartz.

Pat Shields (MAGAM ’17), had somehow acquired the desire during the afternoon to watch the sun rise over the beach in Puerto Peñasco the following morning. I’m what you could call…impulsive, and especially vulnerable to schemes involving spur-of-the-moment decisions to cross borders in the middle of the night.  To make a long story short, a few hours later, Pat, myself, Franz Ferguson (MAGAM ’17), and Margo Schwartz (MGM ’17) were in Pat’s Toyota Corolla, Gertie, barreling down the highway.

I was going to write a story about that. I was going to tell you about the paradise-like hotel in which we managed to secure a room at 12:30 in the morning, or the events leading to the pronounced limp I’ve been carrying about all week, or the (in retrospect) extraordinarily dangerous ATV ride around Puerto Peñasco’s beaches that left Margo with a large bump on her head and my phone shattered.  But if you want to hear about the swath of hundreds of moored and dilapidated fishing boats straight out of Jaws that Pat and I jumped down onto and explored before being chased off by a lumbering seafarer with a gigantic beard who didn’t say a word but told us all we needed to know with his menacing glare, ask us in person.  Because when we returned to campus on Monday afternoon and I opened up my computer to find out what I’d missed in this topsy-turvy world while I’d gone off the grid for 20 or so hours, I discovered a story that I found to be much, much more interesting. And that’s the one I want to tell.

T-Birds take Penasco. Pat, Franz, and myself. Photo by Margo Schwartz.
T-Birds take Penasco. Pat, Franz, and myself. Photo by Margo Schwartz.

I’ll make it clear from the get-go that this is not a work of investigative journalism. Much of what it involves is speculation, hearsay, and unconfirmed intelligence reports. But something here stinks as much as those ancient fishing boats. And while we’ll doubtless learn more about this over the coming weeks, I felt the need to plant my flag in it early. So buckle up, because it’s a wild ride.

“There’s Something Weird Going on Between Trump and the Russians!”

The big piece of news, which broke Monday evening, was that General Michael Flynn, President Trump’s National Security Adviser, had resigned his post. This was a result of it becoming increasingly clear that Flynn had been less than honest about a December phone call with Russia’s Ambassador to the U.S., Sergey Kislyak, the topic of which was the sanctions on Russia that had been imposed by the outgoing Obama administration over Russia’s actions in Ukraine, as well as, more recently, the accusations of the country’s cyber-meddling in November’s U.S. election. As reported in the New York Times story, linked above, the content of this conversation had left the U.S. Justice Department worried about Flynn’s exposure to blackmail from the Kremlin. For a complete breakdown of what we know and don’t know about Flynn’s departure at this point, see this article.

Trump: "We oughtta get on with our lives." At Mar-a-Lago Dec. 29, 2016. Washington Times.
Trump: “We oughta get on with our lives.” At Mar-a-Lago Dec. 29, 2016. Washington Times.

The bro-mance between Trump and Putin shouldn’t come as a surprise to anybody at this point. Trump repeatedly expressed his admiration for the Russian strongman during the campaign season. In December, he responded to a question about the U.S.-imposed sanctions on Russia stemming from the fact that virtually all members of the U.S. intelligence community, regardless of party affiliation, had concluded that actions ordered directly by Vladimir Putin had influenced November’s election results with a dismissive, “I think we oughta get on with our lives.”

And then things got, well, sordid. On January 10th, BuzzFeed, admittedly not the world’s most reputable news source, published a dossier of intelligence reports allegedly “prepared for political opponents of Trump by a person who is understood to be a former British intelligence agent” operating, at the time, in Russia. This BuzzFeed article itself makes clear that the dossiers’ origin is completely unverified, and also contains a handful of factual errors. In other words, the caveat that accompanies these documents is a very simple one: they’re not gospel, and could very well be…”fake news.” If you’d like to check out the complete dossier for yourself, it’s available here, although I wouldn’t recommend clicking that link if you aspire to work for the State Department at any point in your life. I figure my chances are probably already blown considering I listen to jazz and read Marx (Karl and Groucho, for the record), so I went ahead and threw caution to the wind.  For what it’s worth, the dossier was passed around to various people on the Hill, including FBI Director James Comey, by Arizona Senator John McCain.

Trump and Putin: A relationship built on mutual admiration or "kompromat?" express.co.uk
Trump and Putin: A relationship built on mutual admiration or “kompromat?” express.co.uk

The allegation made in these documents that garnered the most attention is, of course, the most salacious: the now-infamous urination story (link is to Vanity Fair, so relatively SFW, though the fact that I have to issue that warning about a story concerning the President of the United States is very strange to me). But if you read through the whole thing, the alleged sexual incident is perhaps its least indecent element. The document claims that Putin has had Trump in his pocket for at least the last five years, and has been using him as a tool to “encourage splits and division in western alliance [sic]” and to “sow discord and disunity both within the US itself, but more especially within the Transatlantic alliance which was viewed as inimical to Russia’s interests.”  The bargaining chip that Putin and the Russian intelligence community are holding over Trump is “kompromat” or “compromising material.” Dirt, in so many words.

The documents say that the Kremlin is in possession of kompromat involving Hillary Clinton, as well, although its nature relates to recordings of phone conversations in which she directly contradicts her own stated policy agenda, rather than to deviant sexual behavior. It is intimated that the urination incident is among the least damning of the anecdotes possessed about Trump.

Trump and Gen. Flynn: a relationship not built to last. yahoo.com
Trump and Gen. Flynn: a relationship not built to last. yahoo.com

Basically, these documents confirm just about every conspiracy theory bandied about during the 2016 election. Trump, they state, was working directly in cahoots with the Kremlin to defeat Clinton in November’s election, helped, in part, by the release of embarrassing communications stolen from the Democratic National Committee related to its desire to sink Bernie Sanders’ chances at the nomination because he was seen as a greater threat to Trump’s victory than Clinton. Motivating this plot was, 1) The fact that Russia’s kompromat regarding Trump would make him far easier to manipulate in the foreign policy arena, and, 2) Putin’s personal “fear and hatred of Hillary Clinton.”

Some of this information has been confirmed by the US intelligence community, which confirmation has, of course, been brushed off by Trump as requiring outside verification and, even if true, as unimportant. Even the reports leading to Vice President Mike Pence asking Acting Attorney General Sally Yates (who Trump, incidentally, also fired on January 31st over her refusal to support his “travel ban”) to ask for Flynn’s letter of resignation have been dismissed as “unfair” by the President, who said on Wednesday that it was “really a sad thing that he was treated so badly.” (See Tweet below).

Very un-American! The President's Twitter Account.
Very un-American! The President’s Twitter Account.

But there’s another element to this story that hasn’t been widely reported on, and that’s where I’d like to turn to now.

Oligarchs, Oil, and National Power

If you read through the British intelligence dossier, past the documents about sexual deviance, kompromat, and political hit jobs, you’ll hit a couple of documents that are dry enough to almost consider skipping. The dossier is pure Jackie Susann, and then for a few pages we have an interlude of Tom Clancy at his most unengaging.

In a document dated July 16, 2016, it is alleged that “TRUMP advisor Carter PAGE holds secret meetings in Moscow with [Igor] SECHIN” and that the topic of these meetings is “issues of future bilateral U.S.-Russia energy co-operation and associated lifting of western sanctions against Russia over Ukraine.” I’ll come back to the importance of this shortly. The next document, dated July 30, states, “Russians apparently have promised not to use ‘kompromat’ they hold on TRUMP as leverage, given high levels of voluntary co-operation forthcoming from his team.”

Carter Page: a man less photographed than Thomas Pynchon. politico.com
Carter Page: a man less photographed than Thomas Pynchon. politico.com

Now, let’s back up a bit. Two very important individuals are mentioned in those statements. First, we’ll deal with Carter Page. In an interview with Trump conducted by the Washington Post’s Frederick Ryan, Jr. and published on March 21, 2016, Ryan asks Trump the following question: “We’ve heard you’re going to be announcing your foreign policy team shortly… Any you can share with us?” Trump’s response: “Well, I hadn’t thought of doing it, but if you want I can give you some of the names… Walid Phares, who you probably know, PhD, adviser to the House of Representatives caucus, and counter-terrorism expert; Carter Page, PhD; George Papadopoulos, he’s an energy and oil consultant, excellent guy…But that’s a group of some of the people that we are dealing with. We have many other people in different aspects of what we do, but that’s a representative group.” There were a few other names given, but the one I desire to highlight is that of Mr. Page. Now, the requisite question: Who is Carter Page.

A whole lot of people have been asking the same question, including Politico, who in September published a lengthy piece called “The Mystery of Trump’s Man in Moscow.” As it turns out, Page is a man who likes to fly under the radar. At the time of the publication of the Politico article, Page was listed as founder and partner of an energy investment firm called Global Energy Capital.  The firm’s website, as of the time of this writing, does not list Page as a member of their team. Per Politico, Page was reached for comment by the New York Times after being named by Trump and said that “he had been sending policy memos to the campaign and [that] he ‘will be advising Mr. Trump on energy policy and Russia.’” In a Bloomberg profile published around the same time as Trump’s announcement, Page’s ties to Gazprom, one of Russia’s large national oil companies, both professional and financial, were touted, with a former boss in charge of Merill Lynch’s Russian operations saying Page, “has a nuanced and subtle appreciation of the interplay of politics and energy.”

Sechin, Putin, and the arms-length handshake. cnbc.com
Putin and Sechin. cnbc.com

With Gazprom now in the mix, let’s move on to our second big name: Igor Sechin, Putin’s “left-hand man,” according to this Forbes profile, and President of Russia’s other behemoth national oil company: Rosneft. As I’m running up against deadline, the (completely fascinating) history of these two companies will have to be somewhat glossed over, but it goes something like this.

As detailed in journalist Steve Coll’s massive 2012 book Private Empire: ExxonMobil and American Power, as well as a case about oil consortium TNK-BP by T-Bird professors Andrew Inkpen and Michael Moffett, in the chaos following the collapse of the Soviet Union, a handful of men who had found themselves in, or maneuvered their way into, positions of political and economic power, scooped up many of Russia’s nationalized industries, frequently in bidding processes that were, shall we say, not entirely transparent. These men grew into the extraordinarily wealthy oligarchs which now control an inordinate portion of Russia’s means of production and political influence.

Bob Dudley: BP Chief and T-Bird alum. telegraph.co.uk
Bob Dudley: BP Chief and T-Bird alum. telegraph.co.uk

A handful of oil companies were formed, some purely state-owned enterprises and some public-private hybrids, some of which went on to form their own partnerships with publicly-traded international oil companies. Many of these foreign companies were burned in the process, including ExxonMobil and British Petroleum, the latter in a project led by Thunderbird grad Bob Dudley (now CEO of the company, who can be seen speaking at Thunderbird in 2011 here), who was made to flee Moscow with his family following a 2008 boardroom coup that gave him reason to believe that his personal safety was at risk. The man behind the coup, according to U.S. diplomatic cables obtained by WikiLeaks: Igor Sechin.

“You Could Have Cut Your C.I.A Budget in Half!”

Before we travel any further down this rabbit hole, a brief anecdote about Putin’s Russia, and its attitudes about natural resources as a tool for obtaining leverage in global power dynamics. As Coll details, at the time of ExxonMobil’s dealings with the Russian government and Yukos, Russia’s largest oil company until 2003, when its President Mikhail Khodorkovsky was jailed and operations slowed until ceasing in 2007, Rosneft was a bit player with about 10% of the Russian oil market. Rosneft would go on to purchase Yukos at that time, becoming the country’s biggest player in the game. And as Russia is one of the world’s largest producers of fossil fuels, that’s a game that a lot of players wanted (and still want) to be a part of.

A Rosneft operation. russia-insider.com
A Rosneft operation. russia-insider.com

In 2005, the telephone of Don Evans, George W. Bush’s recently-retired Secretary of Commerce and longtime friend of Exxon’s then-CEO, Lee “Iron-Ass” Raymond, rang. Vladimir Putin, the voice on the other end of the line told him, wanted to see him. Flying to Moscow, Evans took a private meeting with Putin in which he was asked to assume the helm of Rosneft. After some consideration, Evans politely declined, leading to the installation of Sechin in the role. At a later event, Bush’s Treasury Secretary John Snow found himself speaking to Putin about Evans’s declining to take the role. Putin reportedly told Snow that he was surprised Evans had turned him down, telling Snow, “You know, if he had taken that, you could have cut your C.I.A. budget in half!”  This story tells us much about Putin’s beliefs about oil and global power: he who controls its flow controls the world. And the closer one’s hand is to the tap, the more power that person wields. And if you can convince somebody you believe opposes you that it’s their hand on your tap, then you have the ultimate power over them: you can tell them that you’ll simply cut their hand off if they don’t do what you want them to do.

This brings us to the tortuous intersection of Sechin, Rosneft, and Page.  On December 7, 2016, Rosneft announced that they had privatized 19.5% of the company, raising a reported €10.5 billion, or about $11.4 billion. According to the press release linked above, the sale “allows the Russian state to obtain considerable revenue, which also includes the increase in the value of government’s residual controlling stake.” The aim of this sale would be to plug holes in Russia’s national budget created by a combination of the global hit in crude oil prices and economic sanctions resulting from the country’s attempted annexation of the Crimea and, later, its involvement in the U.S. Presidential election. Proving to be a prophetic statement, Rosneft’s shares were up 6.5% the morning following the announced deal.

On its face, the financing for this deal is relatively straightforward. It was presented as a 50%-50% purchase, shared between the sovereign wealth fund of Qatar and Swiss-based mining company and commodities trader Glencore. Glencore, which became publicly traded in 2011, making it the tenth-largest company in the world, is a business deserving of an article all its own. Highly secretive, it has drawn much scrutiny for its operations in failed states and conflict zones like Iraq and the DRC.

When we look at little closer, however, things get complicated. As it turns out, Glencore has put up a mere €300 million of the equity funding, Qatar has contributed €2.5 billion (according to Glencore and Rosneft), and the Italian bank Intensa SanPaolo has lent €5.2 billion. Through some highly complicated financial calculations, we can conclude that, of the €10.5 billion purchase price, €2.8 billion has come from actual equity funding, €5.2 billion from debt financing, and the remaining €2.5 billion from…? The report from Reuters linked above tells us that that question mark isn’t likely to change into anything or anyone tangible anytime soon.

This is because the remaining money comes from a fund in the Cayman Islands, which permits contributors to such funds to remain anonymous. It’s dark money. The Reuters article linked above describes this type of deal as typical of Russian business, and bearing much similarity to the country’s famous matryoshka doll: structured in such a way as to open up to reveal a yet smaller doll inside, ad infinitum.

Russian project financing. slavorum.org
Russian project financing. slavorum.org

“An Obviously Illegal Attempt to Silence Me on an Issue of National and International Consequence”

It’s at this point where I don’t know whether I should fashion a tin-foil hat or start looking into life-insurance policies. A document toward the end of the British intelligence dossier, dated October 18, 2016, provides an account of a meeting between Page and Sechin that took place at a speech given by Page at Moscow’s Higher Economic School on July 7 or 8, 2016, an event which he does admit attending in Politico‘s “Mystery Man in Moscow” article, linked above. One bullet point of the British document reads as follows: “In terms of the substance of their discussion, SECHIN’s associate said that the Rosneft President was so keen to lift personal and corporate western sanctions imposed on the company, that he offered PAGE/TRUMP’s associates the brokerage of up to a 19 per cent (privatized) stake in Rosneft in return. PAGE had expressed interest and confirmed that if TRUMP were elected US president, then sanctions would be lifted.”

Now, I’m as skeptical as the next guy. I understand that where there’s smoke there’s not necessarily fire; it could just be a couple of obscenely wealthy oligarchs sparking up Cuban cigars and toasting the doubling of their bank accounts. But let’s take a look at the facts. We have an unverified dossier, allegedly penned three weeks before the sale of the Rosneft stock took place, stating that Page and other Trump cabinet officials were offered a role in brokering the deal. A stake of Rosneft slightly larger than the one discussed in the dossier was then sold using a convoluted and untraceable web of financing. Finally, it becomes clear that a significant portion of this money has come from a fund in the Cayman Islands set up by unknown individuals. You don’t have to be Oliver Stone to see something funny going on here.

Kellyanne taking the denial act on tour. youtube.com
Kellyanne taking the denial act on tour. youtube.com

Either way, three months after this alleged meeting took place, about a month before this document was penned, and three months before BuzzFeed broke into the 24-hour news cycle with stories of sexual depravity, the Trump camp started going to pains to distance itself from Carter Page. On September 25, 2016, Trump spokeswoman-cum-campaign manager Kellyanne Conway told CNN’s Jake Tapper, when confronted with a question about Page holding private discussions with senior Russian economic officials about the lifting of economic sanctions, that Page was “not authorized” to discuss foreign policy on behalf of the Trump campaign in “any way, shape, or form.” The rest of the Trump camp soon followed Conway’s lead.

The Trumpites’ policy became the disavowal of any knowledge of Carter Page or his alleged activities in Russia under their aegis. He was cast a rogue actor; his appearance on Trump’s list of Foreign Policy Advisers was nothing more than a slip of a notoriously uncontrollable tongue. This is certainly a strange situation for a man who values his anonymity to find himself in. A telling quote comes from a “veteran Western investor in Russian energy” quoted in Politico‘s piece: “I can poll any number of people involved in energy in Russia about Carter Page and they’ll say, ‘Carter who? You mean Jimmy Carter?” This leads me to wonder if Page’s being swept under the proverbial rug had anything to do with the increasing media scrutiny focused on Russia and the DNC leaks, publicity which the British dossier reports that the Russian intelligence community was growing more and more concerned about at, well, at roughly the same time Kellyanne here tells Tapper that Page is, essentially, a lone nut. Pardon the momentary betrayal of journalistic objectivity here, but I’d like to push all of my chips onto “Hell yes.”

So where’s Carter Page now? Still under that proverbial rug? In a word, yes, as well as under investigation by the F.B.I, C.I.A., N.S.A., and the Treasury Department’s Financial Crimes Unit. For his part, he’s not going down easy. On Wednesday, in the wake of the Flynn revelations, he sent a long, reportedly unhinged letter to the Justice Department, urging them to, instead of looking into allegations that he made promises to get sanctions imposed as a result of the violation of international law lifted in exchange for personal financial gain, investigate, “the severe election fraud in the form of disinformation, suppression of dissent, hate crimes and other extensive abuses led by members of Mrs. Hillary Clinton’s campaign and their political allies last year.” He claims that the various investigations into his past conduct are a way to distract the public from Clinton’s crimes and are “an obviously illegal attempt to silence me on an issue of national and international consequence.” Among the most outrageous of the statements in Mr. Page’s letter is the following: “The actions by the Clinton regime and their associates may be among the most extreme examples of human rights violations observed during any election in U.S. history since Dr. Martin Luther King, Jr. was similarly targeted for his anti-war views in the 1960’s [sic].” It’s hard not to see this sense of persecution stemming from his abandonment by the Trump camp; I only wish that he were focusing his frustration in the correct direction.

Poetic, don't you think? Gannett.
Poetic, don’t you think? Gannett.

My guess is that things are not going to turn out well for Mr. Page. And if the Trump camp is not able to muster enough plausible deniability regarding Page, Flynn, ex-campaign-chairman Paul Manafort (who resigned after finding himself embroiled in a scandal involving $12.7 million in undisclosed cash payments from a pro-Russian Ukrainian political group), and others, it’s anybody’s guess as to how this could all turn out for him and his administration. President Trump has, predictably, called all of this “fake news,” and instructed the Justice Department to investigate “illegal leaks.” This is ironic because, if the entire U.S. intelligence community is correct and the whole debacle has played out the way their investigations have found that it has, it was “illegal leaks” that played a major role in putting Mr. Trump in the White House in the first place. Let us not forget that this is the same Trump who, just one month ago, announced his belief that Julian Assange, a man who has spent nearly five years living in London’s Ecuadorian Embassy to avoid arrest for sex crimes committed in Sweden, is a more legitimate source of information than the U.S. intelligence community as a whole.

On Wednesday, author Tim Weiner published an Op-Ed in the New York Times asking if we’re “On the Road to Another Watergate?” This isn’t the first time that the comparison has been made between Presidents Trump and Nixon. In fact, I’ve been working on an article for the past couple weeks arguing that this comparison is unfair…to President Nixon. But perhaps the most striking similarity is that both men, and those they have surrounded themselves with, have led and are leading this country into “uncharted waters,” as Mr. Weiner puts it. One major difference between these uncharted waters that I’d like to point out is that, while the collection of scandals falling under the “Watergate” catchall involved a gang of ruthless right-wing thugs and anti-Castro Cubans breaking into offices to steal files, the waters that Trump has steered us into could be those of, frankly, high treason.

In the end, there may be nothing behind these 4,400 words I’ve furiously hammered out. There may be nothing that comes of the “Russian Connection.” Maybe I’m seeing patterns in static and making myself a perfect candidate for the aforementioned tinfoil hat and screaming into the void. Or…or maybe we could be witnessing the beginnings of the completely unprecedented downfall of a nascent presidential administration which assumed that position under completely unprecedented conditions. Public opinion, even among readers of the New York Times, seems to balance precipitously somewhere in the middle, as public opinion tends to do. Either way, I’ll be watching. Closely. And so will the world.

Mr. Weiner ends his piece with a poignant observation, one that I’ll repeat here. It’s a nice way to wrap things up:

“It’s been a long time, but remember this: The road to Watergate and the resignation of Richard Nixon began in April 1969, three months after his inauguration, when the president ordered Mr. [Henry] Kissinger to wiretap members of his own staff in an effort to stop embarrassing leaks of secret information. One thing led to another until the commander in chief was athwart the Constitution.

It’s been barely three weeks since the Trump team took office, and a distinct aroma has started wafting out of Washington, what Mr. Kissinger is said to have called “the odious smell of truth.”

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