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ILYA MARRITZ: Hello, and welcome to Trump, Inc., an open investigation from WNYC and ProPublica that digs deep into the business side of the Trump presidency. I’m Ilya Marritz with this Trump, Inc. podcast extra. 

Recently, one of those Trump family business connections is getting a lot more scrutiny: the Trump Organization's financial ties to Saudi Arabia. It's a relationship Trump was proud to single out during the campaign.

DONALD TRUMP: Saudi Arabia — and I get along great with all of them. They buy apartments from me. They spent $40 million, $50 million. Am I supposed to dislike them? I like them very much. 

Now, Washington Post contributor Jamal Khashoggi has disappeared inside a Saudi Arabian embassy, and President Trump is pinging back and forth between tough talk and conspiracy theories.

PRESIDENT TRUMP: First, I want to find out what happened, and we're looking. Again, this took place in Turkey, and — to the best of our knowledge — Khashoggi is not a United States citizen. Is that right? Or is that — 

UNIDENTIFIED VOICE: He’s a permanent resident. 

PRESIDENT TRUMP: He’s a permanent resident? Okay. We don't like it, John, we don't like it. And we don't like it even a little bit, but as to whether or not we should stop $110 billion from being spent in this country, knowing they have four or five alternatives — two very good alternatives — that would not be acceptable to me.

PRESIDENT TRUMP: [FROM ANOTHER INTERVIEW] There’s a lot at stake. And maybe especially so because this man was a reporter. There’s something — you’ll be surprised to hear me say that — there’s something really terrible and disgusting about that, if that were the case. So we're going to have to see. We're going to get to the bottom of it and there will be severe punishment.

PRESIDENT TRUMP: [FROM A THIRD INTERVIEW] The King firmly denied any knowledge of it. He didn't really know. Maybe — I don’t — I don't want to get into his mind, but it sounded to me like maybe these could have been rogue killers. Who knows? We're going to try getting to the bottom of it very soon, but his was a flat denial.

MARRITZ: Here on Trump, Inc., we've been trying to sort out this tangle of relationships: where does the President's family business end, and where do his policies as president begin? American businesses are also struggling with their own questions. Do they focus on the bottom line and continue to expand their financial commitments to Saudi Arabia, or do they walk away? 

In the aftermath of Khashoggi’s disappearance, CEOs of some of the largest financial firms have announced they will walk away — at least from a planned business summit. 

REPORTER 1: They call it “Davos in the desert.”

REPORTER 2: Tech and media companies pulling out of a Saudi investment conference …

REPORTER 3: Uber's Dara Khosrowshahi, Jamie Dimon, Bill Ford, Steve Case, the heads of BlackRock and Blackstone …

REPORTER 4: Billionaire Richard Branson has announced he suspended all business relationships with the Kingdom. 

MARRITZ: To help sort out all of this, one of Trump, Inc.’s editors, Charlie Herman, called up two specialists: David Fahrenthold, who reports on Trump's business interests for the Washington Post, and Joe Nocera, a business columnist for Bloomberg. Here's Charlie.

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CHARLIE HERMAN: Joe, just how intertwined are U.S. businesses in Saudi Arabia? 

JOE NOCERA: Well, in some sectors, really intertwined. I mean, Silicon Valley in particular has gotten a lot of Saudi money. Venture capitalists have gotten Saudi money. Uber has gotten a lot of backing from the Saudis. In addition, all the big investment banks in the U.S. are trying to get a piece of what could be the biggest IPO ever — the IPO of Aramco, the Saudi oil company. And construction companies, and companies that do that kind of work are all diving into Saudi Arabia right now because Saudi Arabia wants to build a $500 billion, modern-age city from scratch, and has enlisted lots of CEOs to help them. Uh, many of whom now are saying they're going to stay away, at least in the short term. Um, but we'll see how long that lasts. 

HERMAN: Yeah. That's a question that I have. You have some of these CEOs, like Jamie Dimon, who runs JPMorgan Chase, or Larry Fink, who’s the world's largest asset manager — BlackRock. You know, they're saying, “We’re not going to go to this trip,” but are they saying that, or are they saying, “We're just not going to go next week, but we could be there a couple of months from now.”

NOCERA: Well, it's certainly not saying they're going to want to be there in a couple of months, but honestly, if this dies down business will resume, I think, fairly quickly. And so far, what we've seen from the President and the Secretary of State is a kind of attitude of, you know, “We have so much money at stake here. We can't afford to walk away.” And he cites, in particular, an arms deal that's allegedly worth $110 billion. Although in truth, nobody can seem to figure out where that number comes from. 

HERMAN: So how involved are the military contractors with deals in Saudi Arabia? 

NOCERA: Oh, huge. I mean, that's a — that’s a huge thing, because Saudi Arabia gets almost all of its military equipment from the United States.

And one of the things Trump has kept on saying is that, “If we don't keep selling them arms, the Chinese or the Russians or the French will.” But that is really unlikely, because they are so dependent on American arms, uh, Russian and Chinese arms just wouldn't work in the context of their military.

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HERMAN: So, David, let's talk a little bit about Donald Trump and his own history in Saudi Arabia and with the Royal family. How far back does this relationship go? 

DAVID FAHRENTHOLD: Trump's relationship with — business relationship with rich Saudis goes back to the early 1990s, where Trump had — his go-go days of the ‘80s had ended, and he ended up in a huge amount of debt and trying to get rid of some of his biggest assets. So Saudi princes bought both the Trump Princess, which was this giant yacht Trump had, and also the Plaza Hotel — two properties that, basically, Trump had bought in the ‘80s, and then in the 1990s couldn’t pay for. But we shouldn't look back at those areas and say, “Well, you know, the Saudis were cultivating him ‘cause  they thought he would be a future president.” They just saw him as a guy who was highly motivated to sell and hey could get a good deal from. 

HERMAN: So what is his company's current connections to the Saudis?

FAHRENTHOLD: The current relationship is much more important, and much more interesting. So Trump, as you know, still own his business, while in the White House — he still drives revenue from it while he’s in the White House, even though he doesn't manage the day-to-day.

And he has three hotels that the Saudis have patronized in a really important way. There's a hotel in D.C. Trump has where the Saudis spent $270,000 last year putting up, uh, people who are visiting Washington to basically lobby against a law that the Saudi Arabia doesn't like. 

And then, uh, in Trump’s hotels in New York and Chicago — both places that have truly struggled since Trump came into office — Saudi customers have increased so much so in New York that, actually, the general manager of the hotel sent a letter to investors in that hotel earlier this year saying, “You know, we've had a couple of down years, but our first quarter of 2018, revenue was up.” And almost all of the increase was attributable to this particular stay by Saudi visitors who were visiting New York with the Crown Prince. 

HERMAN: I mean, one of the things that we've been trying to understand is how much foreign money could have an influence on Donald Trump the businessman. Can you put the Saudi money in context to all the people who have invested, or been involved in Trump-related businesses? 

FAHRENTHOLD: It’s a little hard to put in context because we — we still can't tell how much they spent. And that's the key question, is how much the Saudi customers have spent with Trump and how much it's meant to him — how much profit he's made.

Trump had promised at the beginning of his administration that he was going to donate what he calls “all foreign profits” at any of his businesses to the U.S. Treasury. And that seemed like a gesture toward transparency, a way of kind of heading off the criticism of him for taking foreign governments’ money.

But they haven’t fulfilled that promise in a very transparent way. All they've done is say, “In 2017, we made $151,000 in quote-unquote ‘foreign profits,’ and we’ve donated that back to the Treasury,” but they haven't said which countries those profits came from, how they calculated those profits … So we still don't really know much at all about Trump's real business relationship with Saudi Arabia, or really any other country.

NOCERA: David, do you think that Trump's attitude about the Saudis, in this case, has less to do with genuine foreign policy and more to do with kind of the way he treats business partners, as, you know, people he doesn't want to, uh, damage or hurt or upset, even if there are larger issues at stake?

FAHRENTHOLD: It’s hard for me to know in this case. Obviously Trump has a big business relationship with the Saudis, and an important business relationship with the Saudis, but also as president — number one, he's shown a real deference toward autocratic leaders, and that could be China, Russia, and Saudi Arabia.

Also, his entire Middle East policy is premised on the idea that Saudi Arabia wins. You know, that they win the battle to sell more oil. They win the regional struggle against Iran. They've gone all the way in on Saudi Arabia and Israel. So, you know, it's not just a business relationship that conflicts in here, it's that he's given Saudi Arabia all the leverage in that relationship right off the bat as part of his Middle East policy.

HERMAN: How much does this tie into the Crown Prince Mohammed bin Salman there in Saudi Arabia? Then you also have Jared Kushner, the President’s son-in-law, who's also been very involved in negotiations in Saudi Arabia. I mean, how does this all come together? 

FAHRENTHOLD: Jared Kushner has been very close to Mohammed bin Salman. I mean, as a lot of the sort of U.S. policy elite had been earlier this year, seeing him as a reformer and as sort of the guy that they want to lead their policy, to be their main ally in the Middle East. So I think Jared Kushner has been driving this relationship, and he obviously has put a lot of faith into both Netanyahu in Israel, and Mohammed bin Salman in Saudi Arabia and said, “You know, these are our guys. We're getting rid of the Obama strategy of trying to balance with other players, including Iran. We're just going to put all our chips on these two guys.” So that's what makes it hard — in addition to Trump's business relationship — to try to back away from Saudi Arabia now.

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HERMAN: Joe, if the president or if Congress got tough on Saudi Arabia, could we expect some sort of response from them? And — and what would that look like? 

NOCERA: You know, that's, what's so interesting. Both countries have leverage on the other, and, in some ways, neither country has leveraged on the other. Yes, the United States could pull an arms deal, but there's very little they can do in terms of oil, because oil is now a world commodity.

And I mean, if the Saudis were to say, you know, “We're not going to sell you oil anymore,” all that'll do is the U.S. will go to other places, the price will go up. It'll help U.S. fracking industry. And if the U.S. wants to decide not to import more oil, it's — the same thing happens. It makes very little difference whether or not Saudi and the United States decide to keep trading oil with each other, because you can get oil — at this point — from anywhere in the world.

So there's very little the U.S. and Saudis can do to each other economically that will damage each other. It's much more reputational, in the sense that the U.S. can decide, “We're not going to send businessman to help build this $500-billion city. We're not going to go to their investment conferences anymore. We can — we can besmirch their reputation, but we really can't hurt them economically. And they can't really hurt us economically.”

HERMAN: It feels like we're kind of trapped in a dance with a partner that we may not necessarily want to be on the dance floor with. [LAUGHS]

NOCERA: [LAUGHS] Yes, that's right. And yet we have to keep dancing.

HERMAN: What I found interesting is that, recently, you've seen some very aggressive language on Capitol Hill from the President's own party, saying that they may want to respond to what has happened in all of this. Considering that the party has stayed so much in line with what the President wants, do we expect that anything could happen, and would that have any impact?

FAHRENTHOLD: I personally don't see the Republicans in Congress using a lot of leverage on Trump. People like Lindsey Graham has made some of the most noise about being outraged about what's happened with Khashoggi. There are also people who have basically surrendered all their leverage to Donald Trump in past political fights.

So I don't think, if I was Donald Trump, I'd be too worried that Lindsey Graham is going to step out and defy me. He's been way too much of a — like an acolyte in the last few months. So there could be some noise. Rubio's kind of the same way. Nobody who is making noise so far has shown the tolerance for a prolonged fight with Donald Trump that taking action on Saudi Arabia would require.

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HERMAN: Joe, where does all this leave us? 

NOCERA: Buh, it kind of leaves us where we were before. I — you know, especially since the President and Secretary of State Pompeo don't seem inclined to do much of anything except the denials of the royal family. So I think we're where we were. And I think David's completely right that the U.S.’s government has banked everything on the Saudis, their Middle East policy is — is dependent on the Saudis, and I don't think that's going to change at all.

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MARRITZ: Joe Nocera is a business columnist for Bloomberg. David Fahrenthold is a reporter at the Washington Post who covers Trump and his family business. Charlie Herman is one of the editors of this podcast. 

In response to David's reporting, the Trump Organization declined to give specifics about the hotels or about the chain as a whole. For his reporting about Trump and the Saudi government, the White House and the Saudi embassy in the United States did not respond to a request for comment.

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MARRITZ: Trump, Inc. is an open investigation, and that means we count on you for tips. You can send them to us tips@TrumpIncPodcast.org, or find out how to send secure documents at our website, TrumpIncPodcast.org.

Trump, Inc. is produced by Meg Cramer, Megan Detrie, and Alice Wilder. We had additional help this episode from Rachel Smith. The engineers are Bill Moss with assistance from James Coyle. The editors are Charlie Herman and Eric Umansky. Jim Schachter is the Vice President for News at WNYC, and Steve Engelberg is the Editor -in-Chief of ProPublica. Music by Hannis Brown.

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