The quid pro quo in Georgia
In 2011, the Trump Organization signed an estimated $300 million deal with the Silk Road Group, a large, private Georgian investment company, to develop two Trump-branded towers in Georgia—one in Batumi and the other in Tbilisi. Eventually, the companies moved forward only with the Batumi project and decided to drop the Tbilisi tower.
In 2012, President Donald Trump flew to Georgia to announce the deal with the Silk Road Group to develop a $250 million tower in Batumi, a locale that he bragged would be the “Monte Carlo of the Caucasus.” Standing alongside him for this announcement was then-Georgian President Mikheil Saakashvili, Trump’s personal friend who had championed the deal. According to The New York Times, the 2011 partnership between the Silk Road Group and the Trump Organization “was born of a two-year friendship between Mr. Trump and Mr. Saakashvili.”
The project quickly stalled, however, after Saakashvili’s party lost the parliamentary elections in 2012. Saakashvili’s successor, Bidzina Ivanishvili, criticized the Trump-Silk Road deal and complained, “It was kind of like a trick. [The previous government] gave him money and they both played along, Saakashivli (sic) and Trump. And, as you know, Saakashvili was the master of lies. I don’t know what project this is, I’ve never been seriously interested. We won’t do anything based on such fairy tales.” At the time, the Trump Organization did not respond to reporters’ requests for comment on the deal.
According to Bloomberg, “The Batumi tower was part of a broader Trump search for deals in the former Soviet Union.” Meanwhile, questions regarding Trump’s ties with Russia—ties that he denies—have continued to dog his presidency and triggered the resignation of his first national security adviser, retired Lt. Gen. Michael Flynn. The former head of the British intelligence service MI6, Sir Richard Dearlove, suggested that Trump may have become significantly dependent on Russian money in the wake of the 2008 financial crisis.
The stalled project in Georgia seemed to magically take on new life almost immediately after Trump’s election, highlighting an obvious problem with this presidency: Foreign nations will see favoring Trump businesses as the easiest way to get concessions out of Washington under a Trump administration. As Bloomberg reported of the sudden shift in attitude in Georgia: “The Georgian development is one of many Trump deals suddenly in a new light now that they are associated with the incoming U.S. president. Experts say some may find financing or approval more easily, raising concerns over conflict of interest.”
Trump’s Conflicts of Interest
Lincoln Mitchell, an academic and expert on Georgia, added in the same article that the government of Georgia thinks, “‘if we play to his economic interests, maybe we’ll get some favors politically.’ That’s how politics works in the former Soviet Union.”
In January, in another turnabout, the Trump Organization and the Silk Road Group issued a joint statement formally ending “the development of Trump Tower, Batumi.” The head of the Silk Road Group, Giorgi Ramishvili, commenting on the announcement, suggested that the conflicts in Georgia were so obvious that even the Trump team, which has largely disregarded conflicts of interest in other countries, felt it had to act. Trump Organization Chief Legal Officer Alan Garten, however, declined to comment on Ramishvili’s assertion that the project was cancelled due to conflicts of interest concerns.
Follow the paper trail
According to Trump’s July 2015 and May 2016 financial disclosures—which were not verified by regulators and therefore may not include all of his foreign deals or assets—Trump was the head of the following two companies related to the Batumi project:
- Trump Marks Batumi LLC, member, president
- Trump Marks Batumi Member Corp., president, director, chairman
It is important to note that Trump’s business conflicts in Georgia are not the only ones that might influence his policy toward the country. Georgia is strategically important and is at a crossroads of oil and gas pipelines for much of Europe. The regions of Abkhazia and South Ossetia, which make up 20 percent of Georgia’s territory, remain under military control of breakaway pro-Russia forces backed by Moscow, and Georgians and Americans alike should be concerned that Trump’s suspicious ties to Moscow might lead him to further encourage Russian expansionism in Georgia—at the clear expense of America’s interests.
Read the full series of columns here.
Carolyn Kenney is a policy analyst with the National Security and International Policy team at the Center for American Progress. John Norris is a senior fellow at the Center.
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Senior Policy Analyst, Sustainable Security and Peacebuilding Initiative
Senior Fellow; Executive Director, Sustainable Security and Peacebuilding Initiative