Israel Sought to Exploit Kushner’s Financial Difficulties to Gain Advantage in Negotiations

There is a massive struggle for power within the Trump administration these days. It reminds me a bit of the dinosaur scene in Fantasia in which a Tyrannosaurus Rex and Stegosaurus battle to the death for mastery of their universe.  The battle in Washington is roughly between the generals and the ideologues. Of course, that is somewhat of a generalization, since some of the generals can be quite hawkish on issues like Iran, while some of the ideologues can be moderate on domestic issues.  But this remains a useful construct for the purposes of understanding this shootout at the OK Corral.

On one side are Gens. John Kelly, the president’s chief of staff, and H.R. McMaster, his national security advisor. They’re allies in a titanic struggle against Jared Kushner, and to a lesser extent Jason Greenblatt, the designated negotiators of Trump’s Middle East “deal of the century.”  That’s his widely touted package deal which will supposedly bring peace between Israelis and Palestinians and transform the Middle East into a region of peace and prosperity.

In order to pursue the policy assignments handed to him by the president, Kushner has had the benefit of America’s most highly guarded secrets: communications intercepts to and from our allies and enemies, offering him a privileged perspective on our relations with key players in world affairs.

For over a year, Kushner has had an interim security clearance permitting him such access.  He made do with such a temporary status because the FBI had made clear that due to Kushner’s muddied business dealings and meetings with shady Russian characters, he would not receive a top-secret security clearance.

In the past two weeks, Kelly has put his foot down.  He wrote a memo declaring that by last Friday any personnel with temporary clearance would lose access to highly classified materials.  This meant that Kushner would be left in the dark.  One wonders how a top negotiator responsible for two of the most sensitive diplomatic assignments the nation has to offer could perform his duties while denied such access.

Kushner’s Secret Meetings with Foreign Leaders Rankle McMaster

Kelly was supported in this battle by McMaster, whose NSA provided the incriminating intercepts which exposed Kushner’s vulnerabilities.  In addition, the NSA information revealed that Kushner had conducted secret meetings with senior officials from several countries without coordinating or clearing them with either the State Department or the National Security Council.  That meant that McMaster was finding out about Kushner’s foreign policy forays through U.S. intelligence, rather than from Kushner himself.  You can freelance in foreign affairs when you’re a Henry Kissinger, but not when you’re a Jared Kushner.  Such shenanigans don’t endear you to those who are responsible for the nation’s intelligence services and foreign policy.

You can tell just how profoundly irked McMaster was by Kushner’s covert meetings by the fact that the NSC chief revealed (and possibly compromised) some of America’s most secret surveillance operations in announcing the four countries (Israel, UAE, China and Mexico) which sought to exploit Kushner.  The U.S. intelligence community only reveals such activity when it is willing to jeopardize those operations.  And then it only does it when there is a greater national interest served.

The Deal of the Century: No Deal?

This is a particularly sensitive time in the Trump White House as a number of senior officials have reported that the Israel-Palestine plan is almost ready for primetime.  Nations throughout the region await it with anticipation.  However, with its prime architect having had his wings clipped it poses a blow to Kushner’s status both in the administration and in the eyes if the primary parties (Israeli and Palestinians).

Especially damaging in this Washington Post story is the news that the NSA, which shares its intelligence findings with McMasters’ National Security Council, picked up intercepts from senior figures in four nations who expressed their intention to manipulate Kushner to their advantage in key matters affecting their countries.  In the intercepts, the foreign officials were heard discussing the shaky finances of Kushner’s real estate holdings.  Particularly a billion-dollar property in New York which was mortgaged to the hilt.

In the annals of spy craft, we often hear of blackmailing foreign officials through sexual indiscretions or threats of exposure of homosexual acts or dangerous political dalliances.  Money is also always a weakness that spies use to exploit their prey. But rarely have I heard of a country trying to take advantage of a foreign official due to financial insolvency.   But here we are in a brave new world brought to us by the Trump presidency.

It’s worth noting that one of the potential financial backers negotiating to rescue the Kushners from their underwater position in the New York property was Anbang Insurance Group, a Chinese conglomerate nominally independent, but highly indebted to the State.  In fact, it was just taken over by the State as it faced financial difficulties of its own.

Though the deal was never completed, this could very well have been one of the ways the Chinese government sought to place Kushner in its debt.

Israel’s Role in Exploiting Kushner’s Weaknesses

The Israeli role in this story is particularly important given the complex set of peace negotiations, mainly with the Israelis (since the Palestinians rejected U.S. mediation after Trump recognized Jerusalem as Israel’s capital).  A timely investment by an Israeli company in Kushner venture could place him in debt to Israeli interests.  Especially since the Palestinians have no similar financial or political leverage.  The proof of this will be in the pudding Kushner offers to the world when he unveils the peace plan.  However, we already know many of the provisions and they are highly favorable to the Israelis and prejudicial to the Palestinians.

Indeed, shortly before Trump’s first visit to Israel as president, last May, one of Israel’s largest insurance companies, Menora Mivtahim, made a $30-million investment in Kushner apartment buildings in Maryland.  These properties have been especially troubled and face state and federal investigations over hard-nosed tactics used to dun delinquent renters and evict them for non-payment of rent.

The Kushner family is also in business with another Israeli billionaire oligarch who currently finds himself in legal hot water.  Benny Steinmetz, who made his original fortune in the mining of conflict diamonds, invested $200-million in a series of real estate deals with the Kushners.  He is now the subject of a bribery investigation by the Justice Department over his shady dealings in a Guinean iron ore mine and bribery of the nation’s leaders.

The Kushner Company also took out four loans with Israel’s largest private bank, Bank HaPoalim.  The financial institution is currently subject to a Justice Department investigation over allegations it helped its wealthy clients shield assets from the Internal Revenue Service.  It has already set aside nearly $300-million to pay for the expected penalties.

Though Kushner has divested himself of many of his holdings before he entered the White House, he still retains nearly $1-billion interest in a series of trusts which are linked to the family real estate empire.  Thus, even as he does America’s business he is highly aware that his own financial future is tied to the success of his own family business.

It beggars belief that these Israeli investors would not believe that partnering with Kushner would help them in dealing with their U.S. legal problems.  And that the Israeli government would not attempt to exploit these financials entanglements to their advantage.

It is hard to know whether such investments may be tied to specific benefits offered to the countries in the midst of negotiations.  But the mere possibility that they might compromise U.S. interests is enough to raise red flags with Kelly and McMasters.  It remains to be seen whether such financial entanglements will eventually torpedo his role in the Trump administration and send him back to Manhattan and his family’s real estate empire.