Kleptocracy, Inc.

As the stock markets crashed on Friday, April 4, Donald Trump left Washington, D.C. He did not go to New York to consult with Wall Street. He did not go to Dover, Delaware, to receive the bodies of four American servicemen, killed in an accident while serving in Lithuania. Instead, he went to Florida, where he visited his Doral golf resort, which was hosting the Saudi-backed LIV Golf tournament, and stayed at his Mar-a-Lago club, where many tournament fans and sponsors were staying too. His private businesses took precedence over the business of the nation.

Many of his guests were also interested in boosting Trump’s personal interests, as well as gaining the American president’s favor. One of them was Yasir al-Rumayyan, who runs the $925 billion Saudi sovereign-wealth fund and is also the chair of the LIV tournament. Other sponsors of the tournament included Riyadh Air, a Saudi airline; Aramco, the Saudi state oil company; and, startlingly, TikTok, the Chinese-owned social-media platform whose fate Trump will personally be deciding, even as he profits from its sponsorship and support.

Once upon a time (and not even that long ago), blatant conflicts of interest, especially involving foreign entities, were something presidents sought to avoid. No previous inhabitant of the White House would have wanted to be seen doing personal business with companies from countries that seek to influence American foreign policy. Such dealings risk violating the Constitution, which prohibits government officials from accepting “gifts, titles or emoluments from foreign governments.” But during Trump’s first term, the court system largely blew off his commercial entanglements. Now he not only does business with foreign as well as domestic companies that have a direct interest in his policies, he advertises and celebrates them. We know the identities of the golf-tournament sponsors not because investigative journalists burrowed deep into secret contracts, but because they appear on official websites and were displayed on a billboard, observed by The New York Times, at his golf course.

Both the website and the billboard would have been scandals in any previous administration. If they are hardly remarked upon now, that’s because Trump’s behavior is a symptom of something much larger. We are living through a revolutionary change, a broad shift away from the transparency and accountability mandated by most modern democracies, and toward the opaque habits and corrupt practices of the autocratic world. For the past decade, American government and business alike have slowly begun to adopt the kleptocratic model pioneered by countries such as Russia and China, where the rulers’ conflicts of interest are simply part of the fabric of the system.

The change began during Trump’s first term—Vice President Mike Pence once made a 180-mile-plus detour on a trip to Ireland, in order to stay at a Trump hotel—but Trump was constrained by his advisers and perhaps by what was then still his fear of legal consequences. This time around, he knows he got away with a series of crimes, including an attempt to overthrow an election. His advisers are supine; he feels no more constraints. New standards were already set in December, when the Trump Organization announced the construction of a Trump Tower in Saudi Arabia, an investment that posed a clear conflict of interest for the president-elect.

Trump’s family also created a cryptocurrency business, World Liberty Financial, that could, in practice, serve as a vehicle for anyone to pay him indirect bribes. Nobody around him objected. After Trump’s return to office, his administration, unbothered by appearances of impropriety, did indeed quickly suspend a civil investigation into Justin Sun, a Chinese entrepreneur and an adviser to World Liberty Financial, who had also invested at least $75 million in the company. More recently, The Wall Street Journal discovered that executives from Binance, the cryptocurrency exchange, met with Treasury officials to ask for looser oversight, even while they were at the same time negotiating a private business deal with World Liberty Financial. In the past, Binance has been fined $4.3 billion, a record, for letting terrorists, drug traffickers, and people under sanction use its exchange, so the company’s interest in looser oversight is not theoretical.  

In keeping with the new atmosphere, the inauguration itself became an ostentatious display of the new administration’s kleptocratic values. American tech CEOs were the most prominent guests and got the most attention, but several foreign business partners of the Trump Organization also attended inauguration-related events, posed for photos with Trump, and referenced their connections to his presidency in promotional materials. Several lesser-known companies involved in regulatory and other negotiations with the U.S. government quietly donated hundreds of thousands of dollars to Trump’s inauguration. Soon afterward, in a late-night purge, Trump fired 17 inspectors general, all people who were responsible for monitoring corruption and ethical violations inside the government.

Trump isn’t just disregarding old norms for his own sake. He’s making it easier for others to cut corners too. From the beginning of his career, Trump participated enthusiastically in the opaque, offshore world of shell companies and anonymous bank accounts, a milieu that has always attracted autocrats, criminals, and anyone else who seeks to hide their money. As of 2018, more than one out of every five condos in Trump-branded buildings had been purchased by shell companies whose true owner was unknown, and anonymous owners continued to buy into his businesses during his first term as president. Now his administration is helping other businesses that operate in the shadows to stay there. Trump’s Treasury Department announced last month that it would no longer enforce the Corporate Transparency Act, hampering recent congressional efforts to end money laundering, tax dodging, and other lawbreaking by anonymous investors. In an executive order, Trump suspended enforcement of the Foreign Corrupt Practices Act, which prohibits American and foreign companies from paying bribes to do business. The Department of Justice is also disbanding a task force set up to administer sanctions on Russian oligarchs close to Vladimir Putin.

Oversight will be removed from many domestic financial and government institutions too. Trump ordered a full work stoppage at the Consumer Financial Protection Bureau, which had been created to protect consumers from manipulation by banks and other financial institutions He has fired top officials overseeing ethics, whistleblower protections, and labor rights, including the heads of the Office of Government Ethics, the Office of Special Counsel, and the Merit Systems Protection Board. Meanwhile, Justice Department officials are drafting plans to reduce investigations of fraud and public corruption, which means that prosecuting crooked officials will be more difficult. Cuts to the IRS mean that tax fraud will also be harder to identify and prosecute. Just last week, the Justice Department announced that it would curtail investigations of cryptocurrency fraud and disband its National Cryptocurrency Enforcement Team.

[From the June 2024 issue: The new propaganda war]

One particular Trump backer has already profited from this new world in which conflicts of interest just don’t matter. Elon Musk, who has no mandate other than the personal blessing of the president, now has enormous influence over the very same government institutions that have long subsidized and regulated his companies. Musk slashed jobs at the National Highway Traffic Safety Administration, the federal agency that oversees auto safety and crash investigations, including those involving his own electric-vehicle company, Tesla. Musk oversaw mass firings at other regulatory agencies that had launched more than 30 investigations into his companies, which include SpaceX and Neuralink.

At the same time, major government agencies, including the General Services Administration and the Federal Aviation Administration, are using or were considering the use of Starlink, a product of SpaceX. The State Department planned to buy armored Teslas. One Commerce Department official, Evan Feinman, resigned last month because of an administration push to use Starlink to provide rural broadband services. “Stranding all or part of rural America with worse internet so that we can make the world’s richest man even richer is yet another in a long line of betrayals by Washington,” he said. Musk isn’t breaking the law, and he doesn’t have to say or do anything to encourage these changes. His new role as America’s premiere oligarch means that all kinds of people and agencies will kowtow to him anyway.

Musk has also had real influence over American foreign policy. If they are upheld by courts, DOGE’s cuts to USAID, to the U.S. Institute of Peace, and to U.S.-backed foreign broadcasters, including Voice of America, will all deliver deep blows to American diplomacy and soft power, in addition to the damage they will do to international health care and humanitarian aid. The end of American-funded broadcasting by itself will particularly benefit China, which competes with the U.S. in the realm of narratives and ideas as well as economics. It’s curious that Musk was in a position to make these decisions, all so favorable to Chinese soft power, even though he has important ongoing business relationships in China. His “gigafactory” in Shanghai, opened with hundreds of millions of dollars in Chinese loans, has become Tesla’s largest production site.

But in Trump’s administration, outside interests are no big deal. To take one of many examples, FBI Director Kash Patel, during his Senate hearings, revealed that he has accepted $1 million to $5 million in stock as payment from the corporate parent of Shein, a Chinese e-commerce company that has been accused of using forced labor in its supply chain; he told senators that he would not divest. Patel has also consulted for the Czechoslovak Group, a foreign arms conglomerate that J. D. Vance, when he was still a senator, said had “ties to the inner circle of Russian President Vladimir Putin.” Although Patel, in his new role, will be responsible for countering Russian and Chinese influence and espionage operations, 51 Senate Republicans nevertheless confirmed him.

But these are only the conflicts of interest we know about. How many people benefited last week from advance knowledge that Trump would reverse his position on tariffs? How many others are making other stock-market bets based on their access to government information? We don’t know the answers, and Trump’s Department of Justice is unlikely to want to find out. We are living in the dark, just as people do in other kleptocracies, and this changes everything.

Earlier this year, I published a book, Autocracy, Inc., which argues that many modern dictatorships are best analyzed not through the prism of ideology but through the political and financial interests of the people who run them. The presence in the American government of so many people, most notably the president, whose financial interests can be directly and immediately affected by their political decisions means that we now need a different way of analyzing American policy too.

To understand Trump’s policies toward Russia and Ukraine, for example, one should ask not merely How will they end the war? and How will they shape America’s relationship to Europe? but Who in Trump’s immediate circle will benefit from the lifting of sanctions? and Have the Russians made explicit financial offers already, and to whom? The rare-minerals deal now being negotiated with Ukraine deserves especially close scrutiny. We need to establish which Americans, exactly, will benefit, and how.

The right question to ask about Trump’s tariff policy is also financial: How will this enormous change to American trade policy benefit Trump? One answer is already clear. The countries and large companies damaged by these tariffs, some of which could face huge losses or even bankruptcy, will have an enormous incentive to play up to the president, to offer him political donations, and maybe even to offer business deals to him, his family, or his friends in order to get some kind of exception made for themselves or their industry.

In a law-abiding administration, personal finances wouldn’t be an important part of the public debate. But this administration’s leaders have decided that laws and norms of behavior that have held for a century or more don’t apply to them. The Republican-led Congress has so far decided not to enforce them either. It’s now up to the media, to outside organizations, and to whistleblowers to keep reporting the slide into kleptocracy to the public and to the courts, to make sure that remaining laws are enforced. It’s up to the Democratic Party to follow the lead of opposition movements in other kleptocracies and to put corruption at the center of their arguments. Before it’s too late, everyone who can do so must communicate what is happening: American government, American foreign policy, and American trade policy are slowly being transformed, not to benefit Americans but to benefit the president, his family, and his friends. Only voters can stop them.

This article was adapted in part from the preface to the paperback edition of Autocracy Inc., which will be published in the United Kingdom in May and in the United States in August.