Usually the term «conflict of interest» has connotations of sleazy payback in politics. But when it comes to US President Donald Trump one such conflict of interest might actually have a welcome «peace dividend». Sounds absurd, but these are unusual times.
This week reports emerged of a potential conflict of interest involving the wider Trump family selling a stake to Chinese property investors over a landmark Manhattan skyscraper.
Ironically, the deal, if it goes through, could serve as a mitigating factor in an otherwise brewing military confrontation between the United States and China. Recent tensions over the Korean Peninsula have heightened concerns that an all-out war could erupt in the Asia Pacific.
The property in question is a 41-story building, with an address at 666 Fifth Avenue, New York City. It is owned by Kushner Companies, whose director Charles Kushner is father of Jared, the 36-year-old husband of President Trump’s daughter Ivanka.
Son-in-law Jared is also considered to be the top foreign policy adviser to the president. Indeed, it is he who is said to be the main mediating figure organizing a forthcoming summit between Trump and Chinese President Xi Jinping at Trump’s Florida resort Mar-a-Lago next month.
President Trump has no publicly known stake in Kushner Companies. But the Manhattan property deal would be worth $400 million for his Kushner family in-laws, according to Bloomberg.
The prospective buyer is Chinese investment conglomerate Anbang Insurance Company. Trump’s son-in-law Jared has reportedly recused himself of any business interests in Kushner Companies as of November last year, following Trump’s election to the White House.
Jared bought the Manhattan skyscraper in January 2007 for a record $1.8 billion. It was seen then as a strategic move by his family’s business into the high-end New York real estate market, having up to that point been involved in owning apartments outside of town, in New Jersey.
However, the gambit nearly proved to be Jared’s downfall because shortly after the purchase the financial crisis hit in 2008, leaving Kushner Companies badly stretched with mortgage payments.
The proposed deal with Chinese firm Anbang is said to offer Kushner Companies very favorable terms. One real estate lawyer described it as a «home run» for the Kushners, reports Bloomberg. Another legal affairs commentator said it amounted to a «sweetheart deal». That’s because Kushner Companies stand to not only get a $400 million cash payout, the refinancing arrangement for the property would also give them an ongoing 20 per cent stake in the asset, which is projected to fetch a future market evaluation of $7 billion.
Moreover, Kushner Companies will see its mortgage debt on the Fifth Ave building slashed to 20 per cent of the current level.
Jared can officially claim that the transaction holds no business interest for him personally since he has no longer a stake in the company. Nevertheless, it would be impossibly naive to not see how the huge financial windfall for his family is at least a source of heartwarming news. The same goes for President Trump. One can easily imagine how the heartwarming financial news for his daughter’s husband would also be a matter of, let’s say, no little interest to the president.
The chairman of Anbang Insurance, the prospective buyer, is Wu Xiaohui. According to the New York Times, Wu is married to the grand-daughter of Deng Xiaopeng, the late Chinese leader and predecessor to Xi Jinping, who oversaw the grand market reforms of China’s communist economy during the 1980s. It is thus fair to assume that Wu is well connected to ruling circles in China.
Why Anbang Insurance is prepared to pay a generous price for the Kushner property in New York is no doubt because of the «political prestige» acquired.
As the New York Times notes: «Should an agreement be reached, going into business with the family of the son-in-law of the American president would buy [Anbang chairman] Mr Wu an immense amount of credibility within China because he is seen as having influence at the apex of power in the United States».
It is not hard to see how the Chinese government would also be favorable towards such a property deal going through. Especially if it were to have a palliative effect on Jared Kushner and, in turn, his boss in the White House in their perception of China in foreign policy matters.
The real estate business is not the only aspect of Trump family interests regarding China. This week it was also reported that Ivanka, the president’s daughter, recently imported over 50 tonnes of Chinese goods to supply her clothing retail business in the US. And those imports were only for the three-month period between November last year to January this year, that is, from Trump’s election until his inauguration.
It would therefore not be cynical to surmise that all these business interests, from property to clothing, with major Chinese connections to the Trump family, are bound to have a bearing on the president’s political relations with his counterparts in Beijing. To be blunt, Trump would be inclined to accommodate his Chinese protagonists for the sake of his family and in-laws.
Normally such a flagrant conflict of interest involving an American president would be an issue of extreme public concern over ethics. It could be even grounds for impeachment. Perhaps that is why the New York Times, which is a pro-Democrat mouthpiece opposed to Trump, has taken such an ardent interest in the property affair between the Kushners and the Chinese firm.
Granted, too, if the configuration of commercial ties were unfavorable to Trump’s family, as they might be in some future business prospect, it could mean that American power is abused then in a destructive way. In principle, it is not a good way to do politics.
For now, though, Trump’s potential conflict of interests with China seem to be on the side of mitigating conflict between the two nations. The timing could hardly be more urgent given the soaring tensions between on the one hand the US and its allies, South Korea and Japan, and on the other North Korea and its traditional ally China.
North Korea’s irregular testing of nuclear weapons and ballistic missiles has ramped up tensions on the Korean Peninsula. Recurring American war exercises have also exacerbated the warmongering. The decision last week by the US to instal the new THAAD anti-missile system in South Korea, which can target China and Russia, has riled both Beijing and Moscow. US media reports are even discussing a pre-emptive military strike by American forces to «decapitate» the North Korean leader Kim Jung-un. The reported dispatch of US assassination drones to South Korea this week adds to concerns of a grave drift to war.
China would no doubt be dragged into a war with the US if the latter were to launch strikes on North Korea.
But it is clear that China wants to avoid such a cataclysmic confrontation with the US. Beijing wants a negotiated settlement to the long-running Korean dispute, one that would see denuclearization of the peninsula, a possible peaceful reunification of North and South 64 years after their civil war ended in 1953, and the eventual withdrawal of all US military forces.
The geopolitics of US-China tensions over Korea, as well as the other territorial rows in the South China Sea and in the East Sea regarding Japan, are indeed all profoundly fraught. The risk of a war breaking out between the US and China from these multiple tensions is a real danger. Especially because of Washington’s habit of being high-handed in a region that arguably it has no normative reason for meddling in.
But, in a crazy way, Trump’s family business empire may on this occasion be one «conflict of interest» that actually brings a welcome dose of accommodating reason to international relations.