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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsTrump's Business Record in Russia Is Humiliating -
He never had what it takes to negotiate with Moscow.
By Leonid Bershidsky
Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.
August 29, 2017, 8:27 AM EDT
The latest Trump-Russia revelations -- this time concerning a Moscow real estate project scuttled in early 2016 -- fit in well with the comical history of Trump attempts to do business in Russia. They are the latest proof that, unlike many craftier U.S. entrepreneurs and executives, the current U.S. president never figured out how to deal with Russians.
The story began in 1987, when Trump first visited Moscow, then the Soviet capital, and negotiated with bureaucrats from the State Foreign Tourism Committee who offered him an opportunity to build a luxury hotel in Moscow. In a Playboy interview in 1990, Trump recalled that he told the officials it was impossible to get financing for a development project in which the land was "owned by the goddamn motherland." They offered a lease; he wanted ownership. The Soviets also offered to set up a dispute resolution committee consisting of seven Russians and three Trump representatives, a deal Trump didn't like. He came away thinking, correctly, that the Soviet system was a "disaster." The Soviet leader, Mikhail Gorbachev, according to Trump, didn't have "a firm enough hand" -- which didn't prevent the flustered developer from crowing how honored he was when Gorbachev impersonator Ron Knapp paid him a surprise visit in Manhattan a year later.
In the Soviet Union's last years, Communist officials had been eager for deals with Western capitalists; as with Trump, they always tried to impose their ridiculous terms. That didn't stop companies such as McDonald's from doing business in Moscow. The fast food giant set up a 50-50 joint venture with the Moscow city government to open its first restaurant on city-owned premises in 1990. It was a brilliant move that led to fast expansion: There are 614 McDonald's restaurants in Russia today. Coca-Cola supplied its concentrate to the Soviet Union in exchange for Lada cars it struggled to sell in the West -- but it has never regretted the arrangement because it immediately knew what to do when Russia opened up to private business. Trump wasn't into that kind of long-term thinking, though, and he missed his chance.
He got another, even better one in 1996, when the Moscow city government tried to involve him in the refurbishment of two derelict hotels -- the Moskva and the Rossiya, both right next to the Kremlin. They wanted him to invest $250 million. The terms have never been made public, but apparently they weren't particularly sweet. In 2004, when the Moskva was finally demolished, it was 49 percent owned by the city, and an opaque U.S.-based company called Decorum Corp. -- likely owned by Russian investors -- held the rest of the stock; by the time the hotel was rebuilt in 2013, several wealthy Russian businessmen were suing each other over the stake. Trump probably did well not to get involved, but his lack of interest in a project that was important to the city made it impossible for him to do anything else in Moscow, firmly controlled at the time by Mayor Yuri Luzhkov, whose wife became a billionaire developer during his tenure.
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https://www.bloomberg.com/view/articles/2017-08-29/trump-s-business-record-in-russia-just-got-more-humiliating