The Trump Tower Peace Theory

Why Donald Trump's real estate holdings abroad are so dangerous for Americans at home.

TOPSHOT - US President-elect Donald Trump boards the elevator after escorting Martin Luther King III to the lobby after meetings at Trump Tower in New York City on January 16, 2017.  / AFP / DOMINICK REUTER        (Photo credit should read DOMINICK REUTER/AFP/Getty Images)
TOPSHOT - US President-elect Donald Trump boards the elevator after escorting Martin Luther King III to the lobby after meetings at Trump Tower in New York City on January 16, 2017. / AFP / DOMINICK REUTER (Photo credit should read DOMINICK REUTER/AFP/Getty Images)

President Donald Trump ascended to office with an estimated $3.5 billion of personal wealth tied up in his global real estate empire. This has raised a variety of concerns about conflicts of interest, particularly the potential for cronyism and corruption. But the greatest danger is that U.S. foreign policy will be fundamentally distorted by the president’s business interests. We face what might be dubbed a “nepotist peace”: The United States will avoid any conflict that puts a Trump Tower, the embodiment of his familial business empire, at risk.

The Trump global empire includes real estate properties in all corners of the world, including Azerbaijan, Brazil, and South Korea. The president has chosen to maintain his personal ownership over these business assets rather than the customary blind trust arrangements used by former presidents and political appointees. Control over the Trump Organization was transferred to the president’s children. Previous presidents faced accusations of international conflicts of interest — during the Vietnam War, Lyndon B. Johnson was criticized for cozy ties with military contractor Brown & Root — but the scale and scope of Trump’s personal entanglements are unprecedented.

As Walter M. Shaub Jr., the director of the U.S. Office of Government Ethics notes, the president cannot “‘un-know’ that he owns Trump Tower. The same is true of his other holdings.” The president stands to lose personal wealth if a military conflict imperils any Trump property. In the vast majority of cases, insurance coverage for commercial property excludes damages sustained in interstate wars. The president therefore faces a direct, personal incentive to avoid escalating conflicts that could potentially result in the destruction of Trump Organization assets.

We typically associate “peace theories” — from well-established ones such as the democratic peace theory to quirky variants such as the McDonald’s peace theory proposed by Thomas Friedman in 1999 — with a desirable outcome, namely a reduction in the likelihood of interstate conflict. However, the nature of Trump’s personal entanglements is more pernicious to U.S. national interests. The motivation to maintain peace is asymmetrical: While the president faces incentives to protect Trump properties from the consequences of conflict, adversaries may actually be emboldened by their perception that he will act cautiously.

Trump properties are physical, immovable assets largely unprotected against hostile action. The president’s failure to divest from his business empire gives U.S. adversaries an instrument of personal coercion. All manner of U.S. adversaries, including sovereign states and terrorist organizations, could seek to influence the president’s foreign policy by threatening Trump assets.

Even if we optimistically assume the best of this president, his business interests still threaten U.S. national interests. Without divestment, the president cannot credibly signal to America’s adversaries that he will act impartially. If its enemies believe the United States will hesitate in situations where a Trump property is at risk, they will ignore U.S. threats or hold out for greater concessions.

The presence or absence of Trump properties can also lead to harmful favoritism in U.S. foreign-policy making. The now-stalled immigration ban conspicuously excluded majority-Muslim nations with a Trump business presence. The president’s Cuba policy rollback appears designed to stymie competitors in a market where potential investments by the Trump Organization are on hold due to its moratorium on new international projects.

These distortions also exacerbate the president’s economic conflicts of interest. It is no coincidence that Philippine President Rodrigo Duterte appointed the developer of Trump Tower Manila as his country’s special trade envoy to the United States. Foreign governments with Trump properties within their borders will now feel compelled to ensure the profitability of the president’s financial entanglements. U.S. allies may come to see Trump Towers as a mechanism to prevent America’s potential abandonment, akin to the presence of U.S. bases and troops. Compared with host nation support for U.S. military forces, subsidizing a Trump Tower is chump change.

Consider Trump’s business interests in South Korea. The president owns a 59 percent interest in Trump Korea LLC, a joint venture with Daewoo. Trump World Seoul consists of six properties located in Seoul, Busan, and Daegu. In particular, Trump World I, II, and III are located in the heart of Seoul, which would be subject to heavy North Korean conventional artillery bombardment in the event of a major peninsular conflict.

North Korea may thus perceive threats by the president as noncredible given his personal exposure to financial loss. Despite Trump’s tough rhetoric and sending aircraft carriers to nearby waters, Kim Jong Un may reasonably calculate that the president will not risk annihilation of what the Trump Organization describes as an “unmatched project that is a true asset to the Trump portfolio.”

Trump World Seoul also puts the president at risk of personal coercion by the North Korean regime. Kim Jong Un could seek to deter U.S. intervention by threatening to specifically target and destroy Trump’s business assets in the event of U.S. escalation. Kim need not physically destroy a Trump Tower to harm the president’s bottom line: Prominently identifying Trump properties as targets will affect their economic viability.

Similar problems will arise in other parts of the world. The president has stated publicly that he has a “little” conflict of interest in Turkey because of a “major, major building in Istanbul.” That may have been what led him to congratulate President Recep Tayyip Erdogan for winning a referendum widely criticized as an authoritarian power grab.

Iran could also leverage Trump properties to influence U.S. foreign policy. The Trump International Hotel & Tower Baku in Azerbaijan allegedly entangled the president financially with Iran’s Islamic Revolutionary Guard Corps. The newly opened Trump International Golf Club in Dubai, staffed by Trump Organization employees, is located only about 100 miles across the Strait of Hormuz from Iran and could be targeted for retaliation.

Then there’s the Qatar diplomatic crisis. The president has long-standing business relationships with Saudi Arabia and the United Arab Emirates, but the Trump Organization has been frustrated in Qatar. After his official visit to Saudi Arabia in May, Trump singled out Qatar for criticism as a terrorist sponsor and even appeared to take credit for instigating the crisis. This left Secretary of State Rex Tillerson scrambling to contain diplomatic damage that could undermine U.S. operations against the Islamic State: Qatar hosts U.S. Central Command’s forward headquarters and about 10,000 U.S. military personnel at Al Udeid Air Base, which is a crucial staging ground for airstrikes in Syria and Iraq.

Trump has shattered long-standing U.S. traditions regarding transparency and conflicts of interest. His reluctance to divest from his overseas business assets creates a troubling wedge between his personal interests and the national interests of the United States. If he faces no consequences, the danger will extend to future administrations. We are at risk of a broader nepotist peace, in which international relations is determined by the shadowy business interests of men like Trump, Vladimir Putin, and Erdogan. To foreclose similar problems in the future, Americans must demand greater disclosure and accountability from their leaders.

Photo credit: DOMINICK REUTER/AFP/Getty Images

Phillip Y. Lipscy is an associate professor in the department of political science and Munk School of Global Affairs and Public Policy at the University of Toronto. He is the author of Renegotiating the World Order: Institutional Change in International Relations.

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