Thursday, January 19, 2017

Donald Trump and Nuclear Disarmament: What's In It For HIM?

Donald and Melania Trump land in DC (AP photo)
Yesterday, I wrote that "activists and advocates should be prepared to be agile in the face of sudden (and possibly surprising) developments" - particularly in the age of Trump.

I don't believe it's possible to predict what Trump will do. (That itself is a problem.)

I do think it's valuable to think about possible scenarios. Maybe thinking ahead can help us respond effectively to unpredictability.

I felt uncertain about sharing the thoughts below, because (a) they come nowhere close to addressing the Trump phenomenon overall; and (b) I felt unsure how providing these specific thoughts might be helpful. I was encouraged by an article by Kjølv Egeland: "You heard it here first: Donald Trump will set in motion a radical nuclear disarmament process." It helped remind me we're all trying to unpack this new situation with the best tools at our disposal, and that the question should never be, "How could you think that?" but rather "If it does turn out to be true . . .  what then?"

Trump's conflicts of interest

Following the Trump press conference last week, and the critique by Walter Shaub, the head of the Office of Government Ethics, I started to think about desirable divestment paths for Trump.

It seemed self-evident to me that, as Shaub said, the steps Trump offered last week are "meaningless from a conflicts of interest perspective." I think that's accurate.

Trump Tower Chicago
It also seemed to me that everything with the Trump name on it would have to be divested. Otherwise, how could a President Trump be "blind" to the the effects of his actions on his assets? It is conceivable that his company continue in business and be involved in some aspect of the real estate business in a way that shielded him from conflicts -- but certainly not by being the principal in high-profile real estate deals with his name on them.

Besides, is divestment so difficult? And how much money are we talking about, anyway? I had heard a lot about Trump's debt, and I thought maybe his net worth may not be all that high. (And I also wondered about whether the valuation of the Trump brand was a sore point . . . )

You can find estimates of Trump's finances online -- e.g. in Forbes and Bloomberg.  A quick review suggests that Trump has a lot of equity in his real estate empire . . . but inherently that empire involves a lot of debt, too. A skilled analyst could pretty quickly describe the risk scenarios he faces. (Maybe one should do that, and explain it to the rest of us.)

What surprised me is that the valuation that observers attach to Trump's brand is not very high, in the overall scheme of things. The Forbes survey puts the value at about $123 million. The Bloomberg survey assigns a much lower number. Donald Trump probably assigns it a much higher number. Much higher.

It's easy to understand how there could be significant differences of opinion about the future income streams that can be expected by licensing the Trump name. It's different than projecting the future income streams from buildings -- even fabulous buildings.

Donald Trump could probably find acceptable offers for all of his real estate -- right now, today. On the other hand, no one will pay him what he thinks his licensing business is worth.

Well . . . Donald Trump could conceivably unwind his real estate holdings, but hold onto the licensing. Where would that leave him . . . and us?

Mt. Rushmore is for suckers . . . 

It's not a secret that Donald Trump sees more and more of his wealth coming in the form of licensing fees:

"By the mid-2000s, Mr. Trump was transitioning to mostly licensing his name to hotel, condominium and commercial towers rather than building or investing in real estate himself. He discovered that his name was especially attractive in developing countries where the rising rich aspired to the type of ritzy glamour he personified." (New York Times, January 17, 2017, "For Trump, Three Decades of Chasing Deals in Russia")

It makes perfect sense, from a financial perspective. Walk away from all the risk attached to the real estate investments themselves, and instead participate purely in the revenue.

The problem of course, is to get the licensing business on the basis where it reliably produces income streams in the hundreds of millions of dollars annually, indefinitely. In other words, a problem of scale. It would practically require a Trump tower in every capital in the world.

Trump Tower Manila - licensing the Trump name
As Donald Trump enters his term (or terms?) as US president, he faces three risks/opportunities to this business strategy:

(1) Direction - Obviously, success in the presidency helps the brand. Failure or fiasco hurts the brand. (I'm betting that Donald Trump is banking on success.)

(2) Magnitude - Donald Trump is the first to recognize that just being president isn't enough. Being a so-so president could be worse for the brand that not even being president at all. (That tweet writes itself.) No, Trump is thinking big.

(3) Orientation - The peculiarity of Trump's business that it is global. As indicated above, the best scenario for the Trump brand would likely come in the form of five-star hotels in every world capital. So the challenge to Trump is that he doesn't just need to "make America great again" - he needs a home run of global proportions.

That's a lot to expect of oneself.  On the other hand, this is Donald Trump we're talking about. And I suspect his attitude is, "Presidents do great things. That's why they carve their faces into the sides of mountains. (Although, if they were smart like me . . . . ")

The more I think about it, the more I think (a) Donald Trump's presidency is inextricably tied up with his business interests -- no divestment is possible; and (b) we have not really begun to imagine the enormity of what he's got in mind.

What's the world peace equivalent of OPM?

Putin and Trump
My theory is that Donald Trump is aiming for a nuclear disarmament deal - a "yuge" one.


* A nuclear disarmament deal would satisfy the "magnitude" and "orientation" conditions above -- what better way to make generations to come in countries worldwide embrace the "Trump" name?

* It's consistent with the Trump orientation toward Russia. The US and Russia are the two countries driving the continued existence of nuclear weapons in the world. The obstacle to getting rid of those weapons is that the two governments can't seem to talk with each other.

* It's consistent with Trump's disdain for the US defense and intelligence establishments. There is a 70-year buildup of resistance to nuclear disarmament within the US establishment. Maybe it takes someone like Trump to bulldoze that resistance.

* It's consistent with Trump's misbehavior - towards the Left. To carry off a nuclear disarmament deal, Trump will need the continued support of the Right. (He'll have the support of the Left without asking for it.) Seeing the inauguration boycott by Democratic members of Congress, triggered by Trump's insult to John Lewis, you'd be forgiven for thinking, "He couldn't have stirred up a bigger hornet's nest if he tried." It feels similar to the way figure like Nixon could be the one to restore US relations with China.

* The bulk of the work has already been done by other people. The countries of the world are already involved in negotiations on a global ban on nuclear weapons. Yesterday, the president of China threw his weight behind global nuclear disarmament. The missing ingredient all along has been the US and Russia. Bringing a nuclear weapons ban to fruition after other people have teed the deal up for you is about as close as you can get to doing a real estate deal with OPM (other people's money).

Vote on resolution to negotiate a ban on nuclear weapons in 2017 (L-41)
Green - Yes (123, 76%)
Red - No (38, 24%)
Beige - Abstained
(For more, see

In other words, as big as any disarmament agreement with the Soviet Union would be, an agreement now has the potential to have a truly global and historic impact.

None of this proves that a nuclear disarmament deal is what Donald Trump has in mind, of course. It does suggest, however, that there are many ways in which it would be easy for a nuclear disarmament deal to be in his mind.

Two other things. First, much has been made of the fact that Donald Trump has a short attention span, doesn't have firm attachment to policies and positions, and is unpredictable. I'm not disagreeing with that. I simply think that it is also true that he's aiming for something.

Second, don't underestimate the human dimension. (Yes, even for Donald Trump.) I keep thinking about Donald Trump's Uncle John, and what he told Donald about nuclear weapons. I suspect Donald Trump keeps thinking about that, too.

As I said above, the question is, "If it does turn out to be true . . .  what then?" As we have witnessed for the past year, there is no shortage of people who have been lured into the same camera frame with Donald Trump, only to regret it later. (Billy Bush comes to mind.) How much conflict of interest should be tolerated in the pursuit of a policy one actually embraces?

Are supporters of a global nuclear weapons ban prepared for the day when Donald Trump makes it his cause?

Please share this post . . . .