book reviews

Book Review: “House of Trump House of Putin” – the political crisis of US capitalism

The turmoil and crisis in the executive branch of the US government is not simply the product of one lone lunatic; Nor is it simply the product of US capitalism in crisis; it is the product of huge changes in world capitalism – a world system in crisis. And if we as workers are ever to change the world, we have to first understand it, including this crisis at the top. Craig Unger’s new book “House of Trump House of Putin” puts much of the information out there to help in that understanding, even if he himself might not fully understand the information.

There are several threads that he develops, and it goes all the way back to the degeneration of the Russian Revolution. (Yes, history matters!)

Stalin’s Gulag and Russian Prison Gangs
The Stalinist bureaucracy had created a massive prison system – the Soviet “gulag” – in which to house not just political prisoners, but also hundreds of thousands of members of different oppressed ethnic groups. First and foremost among these groups were the Russian Jews, as Stalin reinstituted the historic Russian anti-Semitism.

Like any vast prison system, prisoner gangs developed among the Russian gulag inmates. And, being a disproportionate number among the prisoners at large, Jewish prisoners were disproportionately represented within these prison gangs. In the 1950s, after the death of Stalin, eight million of these prisoners were released and returned to Soviet society. These gangsters were among them and they continued their criminal activities once released. They formed an incipient gangster petty capitalist class.

Russian Jewish Emigres
In 1974 a bill was passed in Washington that normalized trade relations with the Soviet Union on condition that they allow Russian Jews to emigrate to the US. So it was that over 600,000 Russian Jews emigrated to the US. Many thousands settled in Brighton Beach In Brooklyn, an area that became known as “Little Odessa”. Among those many thousands were some of the gangsters who had gotten their start in the Russian gulag. And, naturally enough, they continued their activities in the US.

Two New York lawyers connected with and represented these Jewish gangs were Roy Cohn and Michael Cohen.

Nor was the role of these gangsters confined to the United States. One of them, Marat Balagula, actually had ties with Gorbachev when the latter was a regional Communist Party boss! So, we can see that these gangs, whose traditions actually went all the way back to Russian Tsarist days, had forged connections with the Soviet bureaucracy even before the Soviet Union collapsed. When it did, in 1989, these ties came full bloom. The gangs merged with the other criminals – the Soviet bureaucracy – to rob Soviet society blind. 150 state owned companies were sold off for just $12 billion in one of the world’s greatest robberies ever.

Putin’s “Kleptocracy
“What Russia faced was nothing less than the looting of its natural resources… and the birth of Putin’s kleptocracy, an era of unimaginable corruption and greed,” writes Unger. “It was as if a virus had been injected into the system, spreading and institutionalizing corruption throughout a Mafia state run by a kleptocrat who ruled over a web of crooked patronage networks.” (Later, Putin evolved and developed a political base. Oaklandsocialist has described that process here

Enter Donald Trump

Enter a young Long Island real estate investor into this scene, one who was obsessed with himself, one who was determined to break out into the big time of real estate development – Manhattan (vs. Long Island). Enter Donald Trump.  In 1975, when Manhattan real estate prices had hit rock bottom due to a fiscal crisis of the city government, the young Donald Trump made his one truly successful independent investment. He bought the decrepit Commodore Hotel for $1. When the city and the real estate market recovered, Trump’s investment became wildly profitable.

From there it was all downhill.

Atlantic City and Bankruptcy
Convinced of his own genius, and determined to build a monument to himself, he entered the Atlantic City gambling industry with the construction of the Taj Mahal and other related developments there. These hemorrhaged money from the start, eventually forcing Trump to declare bankruptcy. (But not before his daddy made him a $3.3 million gift by buying that amount of poker chips at the Taj which he never used!) Today, Trump plays off that bankruptcy was having been simply normal business operations, but it was nothing of the sort; it was the result of a monstrous ego having made a stupid investment. While it was in operation, though, it engaged in millions of dollars of criminal activities such as money laundering and tax evasion scams.

Trump’s bankruptcy meant that he was no longer able to get financing from US banks and other financial institutions.

Money Laundering for Russian Mafia/Oligarchs
Enter the Russian mobsters/oligarchs.

As early as the 1970s, Trump had come to the attention of the Soviet then-bureaucrats and future capitalists to-be. Ever on the lookout for “influential” people in the US that the Soviet bureaucracy could make links with, they had done so through Trump’s having visited Czechoslovakia with his second wife, Ivana in 1978.

That relationship was nurtured for years, and in the 1990s it came to fruition in the Trump Tower in Manhattan. This was a giant money laundering operation for the Russian mafia in which one-third of the units in the top floors went to them.

“Yaponchik” Ivankov (left) and “Boss of Bosses” Semion Mogilevich.
They played key roles in the Russian Mafia.

At that time, Trump had developed a new business model: Rather than invest his own money, he simply lent his own name to projects financed with other people’s money. And whose money first and foremost? Why, the Russian mafia of course! For example, of three high rises built just outside of Miami, one third of the condo units sold there went to these Mafiosa. This does not include the use of Limited Liability Corporations (LLC’s) – front corporations whose real owners are hidden. According to Unger, a conservative estimate is that 20% of all units in Trump branded properties were sold to LLC’s and by the late ‘90s some $1.5 billion of Russian flight capital was being laundered through Trump branded properties in the US. This figure does not include Trump branded developments in other countries like the Philippines, India and elsewhere.

The disastrous (for his investors) failure that was the Taj Mahal is simply symbolic of capitalism in the 21st century, just as is Trump the degenerate symbol of his class. Capitalism’s own internal contradictions mean that it is no longer profitable to invest in the means of production. Instead, speculation is the order of the day. Likewise, Trump himself symbolizes in the extreme what has happened with his class, where the overall interests of the class take a back seat to the interests of the individual capitalist. 

Degeneration of US Capitalist Class & K Street Lobbyists
It’s on this basis that the world’s greatest bribery industry has developed – the “K Street” lobbying industry in Washington DC. Thousands of high paid lawyers and former politicians-turned-bribers have flooded the capital, laundering their bribe money as “campaign donations”. Through this, the interests of US capitalism as a whole can often be discarded as this or that individual capitalist bribes individual politicians, or groups of them, to look out for his or her interests.

This degeneration has combined with the globalization of capitalism. Through this process, the interests of the US capitalist class as a whole are somewhat less tied to the interests of their government or state – the US government. The two processes have meant that foreign capitalists can more easily find an entry point into influencing the US capitalist government.

Unger describes an aspiring Russian oligarch who was first introduced to the lobbying schemes in DC. “‘You mean you have firms with highly paid professionals who are paid to bribe congressmen?’ He asked. He couldn’t get over it. He had spent years navigating the perilous world of Bratva (Russian gangster) protection rackets, and here the Americans had sanitized corruption, institutionalized it, and made it into part of the white collar, professional world! Not only was it legal, it was a highly paid profession…. Lobbyists were ready, willing and able to jump in bed with anyone who could write a big check — including Russians.”

“Casino Jack” Abramoff
Possibly the lobbyist/fixer supreme of recent decades has been Jack Abramoff, who went so far that he eventually served four years in prison. Before his fall, however, Abramoff had secured a $1 million donation to the slush fund of Congressman Tom de Lay’s “US Family Network”. The donation was from two Russian oligarchs, Marina Nevskaya and Alexander Koulakovsky. As soon as the bribe came in, de Lay dropped his opposition to a bill that, in effect, enabled the International Monetary Fund to bail out Russia.

Donald Trump with Paul Manafort
He played a lot bigger role than Trump lets on.

Paul Manafort
Much has been in the news in recent months about Paul Manafort, who specialized in lobbying for some of the most corrupt and rotten dictators around the world. These include Marcos in the Philippines, Saddam Hussein, Mobutu Sese Seko, Ceaucescu and, of course, the mafia-linked former head of the Ukrainian government, Yanukovitch. His was known as “the torturers’ lobby”, and it had a truly global reach. According to his lieutenant, Rick Gates, Manafort had a “whole separate government” on a world scale. He also served as the head of Trump’s presidential campaign and, even after being forced to step down still maintained close links with the campaign.

Far Wider Net
But the net is far wider. Russian oligarch Oleg Deripaska hired former US senator and Republican presidential candidate Bob Dole as a lobbyist. Russian conglomerate Alfa hired the lobbying outfit of former Mississippi governor Haley Barbour. Gasprombank hired the outfit of former Republican majority leader Trent Lott and former Democratic senator John Breaux. Mitch McConnell received major donations from Ukrainian oligarch/US citizen Leonard Blavatnik.

Nor should we think that the right wing had a monopoly on these links. Among others, former Congressman Ron Dellums was also involved. And, most interestingly, so was Tad Devine, who had worked for the “torturers’ lobby” – Paul Manafort. Prior to that, he’d worked on the presidential campaigns of both John Kerry and Al Gore. Following his representing various torturers, Devine became the chief campaign strategist for none other than…. Bernie Sanders!

“Deep State” or Capitalist State?
A popular idea within both the left and the far right is that of the “deep state”, a state within the state. This is conspiracy theory nonsense. There is only the capitalist state, in all its different aspects, and what happens within the legislative branch of the state is not isolated from other branches, including law enforcement. Not mentioned by Unger is the story of  Gary Uher, one of the original investigators of Sater. He later retired from the 

FBI and became part of XMark, a personal security company that helped guard Trump. Then there were of former Attorney General Loretta Lynch, Leslie Caldwell and Kelly Anne Moore, all of whom participated in the investigation of Sater and who later helped represent him when went private. See this story. What Unger does outline, though, is the case of Louis Freeh, former director of the FBI after Mueller. On his leaving the FBI, Freeh was hired by the oligarch run real estate firm Prevezon Holdings to settle a $230 million tax fraud scheme. (Note: Tax evasion in these situations is often linked with money laundering.) After successfully settling the case, Freeh bought a $9.38 million dollar mansion right down the road from… Mar a Lago!

Donald Trump with Bayrock partners Tefvik Arif (center) and Felix Sater at the Soho launch party in 2007. Sater is a convicted financial swindler.
Trump now claims he barely knew Sater and wouldn’t even recognize him in a room. According to Unger, Sater played a key role as the nexus between the Russian Mafia, Putin and Trump.

Felix Sater and Bayrock
Then there is Felix Sater and Bayrock Corporation where he played a key role. Bayrock, described by Unger as “resemb(ing)… an updated version of the KGB” connected Putin, the Russian mafia/oligarchy and Trump all together. When questioned on BBC’s Panorama about his ties with Sater, Trump went off. “Maybe you’re thick,” he said. Then he went on, “And, by the way, I hate to do this but I do have that big group of people waiting, so I have to leave. I have to leave.” With that, he got up and walked off the set.

Yet why has Mueller evidently not interviewed Sater? Part of the reason is that Sater has worked as an FBI informant for years, and according to Unger, the FBI was “infatuated” with him. His role in connecting Trump to the Russian oligarchy would not exactly make Mueller’s FBI look very good!

There is a deeper reason, though: What is happening with the Mueller investigation is that the mainstream of the US capitalist class is trying to regain control over its presidency. But it does them no good if in the process they further discredit themselves with tens of millions of people in the US. That is exactly what they risk by exposing Trump’s long time role as a money launderer for the Russian mafia. The reason is hiding in plain sight: The entire real estate industry is rampant with money laundering for drug cartels and other criminal elements. Exposing Trump’s role runs the risk of exposing the industry as a whole.

This last, however, is not pointed out by Unger. And while he lays the factual details out, there can be a tendency to get lost in those details and fail to see the general points. Once again, those points are:

  • The fact that what Trump represents is the degeneration of US capitalism and the class that rules it – the US capitalist class.
  • The fact that the rise of the gangster capitalist class and a gangster state in Russia was an inevitable course for the capitalist restoration in that country.

However, his book provides all the factual evidence. Along the way, it also provides the evidence of Trump’s collusion with Putin in the 2016 elections. It wasn’t just the then-secret meeting between Don, jr. and other Trump representatives with Putin representatives at Trump Tower. As Unger shows, “Trump’s surrogates repeatedly and deliberately reached out to Russian officials,” through at least 18 known phone calls and emails from Michael Flynn and others.

The collusion is just the tip of the iceberg compared to the degeneration and crisis of US and world capitalism as a whole. However, far from being a tempest in a teapot, far from being a struggle that is irrelevant to the struggles of the working class, this crisis reveals the very essence of the system that is destroying the planet. It helps clarify the ground that we are walking on, the laws of motion of the system that the working class has to bring down if human society is to survive. In order to bring down the system, we have to understand the system. 

Added Note: It is unfortunate that most of the socialist left has not picked up on the issue of Trump having served as a money launderer for the Russian oligarchs/mafia. Oaklandsocialist has been reporting and commenting on the role of Trump as a money launderer for over a year now. For other articles from Oaklandsocialist on the issue, see:

2 replies »

  1. Thanks for the link, uh…clem. Interesting interview with some excellent points. A couple of points where I disagree, though. Davis writes, “At meetings of the Standing Committee of the Politbureau they must scratch their heads and whisper to one another: ‘are you sure he isn’t one of ours?‘“ The implication is that Trump is not one of “theirs”, but as that book shows, and as other articles I’ve written show, he is in fact one of “theirs”, at least to the extent that his main financial role for decades has been laundering money for the Russian mafia/oligarchs, of which Putin is the leader. In fact, Unger shows that the Soviet bureaucracy had made contact with Trump as far back as the 1970s.

    The other point is that Davis claims that Trump did not win a significant number of white working class votes. I think he’s mistaken. I, personally, know several white union activists who voted for Trump. And I don’t think the president of the UAW was entirely off the mark when he estimated that 30% of the UAW membership voted for Trump.

    But the main point, which Davis hints at – maybe more than “hints” – is where all this is headed: Towards what could be called one-man rule. He gives the example of Peron. A good example. I have to say that in all my 72 years I never thought I’d live to see the day that something like this was possible! I’ve written about that extensively also. See, for example:

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