Banana Republic

Jared Kushner and Ivanka Trump should recuse themselves from China policy
By Norman Eisen and Noah Bookbinder

The Godfather's family: Ivanka Trump and Jared Kushner. 

Coming on top of months of revelations of China-related conflicts involving Trump and his relatives, reports that Jared Kushner’s family used his position to solicit Chinese investors were a tipping point. 

The president’s son-in-law and daughter Ivanka Trump should now broadly recuse themselves from working on China-related issues.
According to media reports, Kushner’s sister pitched a roomful of Chinese investors to participate in the EB-5 visa program and qualify for a path to U.S. citizenship by investing at least $500,000 in a New Jersey real estate project, Kushner 1. 

The proposal included dropping Jared Kushner’s name, alluding to his administration role and noting that the president will be a key decision-maker about the future of the controversial visa program. 

The implications were unmistakable; one Chinese investor who attended told a reporter that the Kushners’ proximity to the president was a key part of the project’s appeal.
This sales pitch is clearly unacceptable. 

The family business should not benefit from Jared Kushner’s name and position as assistant to the president. 

Moreover, while it’s not clear whether Kushner had any knowledge of or involvement in this conduct, he retains a financial interest in many family businesses. 

Thus, he stands to benefit when the company trades on his name. 

Kushner’s lawyers assert that he sold his interests in this particular project to a trust of which he is not a beneficiary — although we know of no reason he couldn’t be reinstated as a beneficiary in the future.
Kushner and his wife have in the past said they will comply with all ethics rules. 

If so, as a starting point, Kushner must immediately take steps to ensure that businesses with which he is or has been associated refrain from using his position to promote investments. 

In fact, no Trump or Kushner companies should utilize the EB-5 program; the possibility for the appearance of improper influence, and perhaps worse, is too great. 

Kushner also initially indicated that he would recuse himself from “particular matters” involving the EB-5 program, but under pressure this weekend appeared to be stepping back more broadly from participating in any issues related to that program — a welcome development.
But given the complex ties at issue here, and the events of the past several months, that is not enough. Other ties and negotiations between Kushner companies and China have emerged in recent months, and under federal ethics rules, these interests must be considered together with those of Ivanka Trump, also a senior presidential adviser. 

Trump’s companies, in which she retains ownership interests, do business in China, and she was recently granted provisional approval for valuable trademarks by China just as she was engaged in high-level contacts with Chinese leaders.
These involvements raise profound questions about whether the couple should more broadly recuse themselves within the area of China policy. 

There can be little doubt now that both Kushner and Trump face at least the appearance of a conflict — indeed, of multiple conflicts — when it comes to China policy, particularly on issues of trade, investment and immigration.
As one of the president’s most trusted advisers, Kushner has a much broader and more fluid portfolio than most other administration officials. 

Kushner’s situation is vastly different than that of former Obama administration secretary of commerce Penny Pritzker, who was permitted to retain her interests in a publicly traded hotel company that has properties in China. 

Compared with Pritzker’s situation, involving a company that was required to file public documents with the Securities and Exchange Commission, there is much less transparency into Kushner or his family’s privately held business investors and lenders, or the degree to which these businesses are leveraged, at the same time that his influence within the administration appears unparalleled.
This is far more than a technical issue about the scope of ethics rules. 

We now face core questions about whether administration decisions relating to an important — perhaps the most important — foreign power are being made based on the interests of the country and the American people, or based on the business interests of senior officials.
Of course, we already had that concern with Trump himself, who has refused to divest from ownership of his global web of business interests.

With regard to China specifically, Trump has also received valuable trademarks from the Chinese government, including one that China had denied for a decade but granted after Trump switched course and reaffirmed the one-China policy. 

In addition, a bank owned by the government of China is a major tenant in Trump Tower in New York.
Can Kushner and Trump be trusted to protect American jobs from flowing to China or to pressure China if necessary in containing North Korea, or act appropriately on any of the other difficult issues that will arise with respect to China when these vast conflicts of interest persist?
It is well past time for this administration to begin drawing real and meaningful lines to avoid catastrophic conflicts of interest. 

The latest reports make it is even more important that Kushner and Ivanka Trump step forward and do the right thing. 

A broad recusal on China policy would be a good — and essential — start.

Chinese Peril

Trump may have found his big ally to counterbalance China... and it's not Russia
By Seema Mody 

For all the talk about the mutual admiration between Donald Trump and Vladimir Putin, it may not be Russia that the U.S. president sees as America's critical new ally.
In his first few days in office, Trump scheduled a phone call with Narendra Modi, making the prime minister of India one of the first leaders he spoke to following his inauguration.
In its official statement Tuesday evening, the White House said that Trump and Modi "discussed opportunities to strengthen the partnership between the United States and India in broad areas such as the economy and defense."
Sources close to the prime minster said the conversation was focused on defense. 

The White House did not respond to a CNBC request for further comment.
A tightening of relations with India is something that was already accelerating under Barack Obama, whose administration saw the world's biggest democracy as a counterbalance to China's rising power. 

Trump may take the relationship further.

Hindu Sena party president, Vishnu Gupta places a garland of flowers on a poster of US President-elect Donald Trump during an event in New Delhi on January 19, 2017.
"Through successive administrations and strong congressional support, the United States has made tremendous investments to expand its relationship with India over the past several years," said Manpreet Anand, former U.S. deputy assistant secretary in the Bureau of South and Central Asian Affairs.
"The Trump administration has an opportunity to double down on those efforts as the strategic interests of our two countries continue to align," Anand told CNBC.
Foreign policy experts say Washington needs India to counter China's growing dominance in Asia and to ensure the United States cements some type of influence in that part of the world.
That task is all the more important now that Trump has withdrawn from the Trans-Pacific Partnership. 

That free trade bloc, which had the United States at its center and which excluded China, would have further buttressed U.S. leadership in Asia. 

With the TPP off the table, however, China immediately has begun to step in to fill the void.
"U.S. strategic thinkers see the rise of India as a natural balancer to China as beneficial to the U.S.," said Sasha Riser-Kositsky, Asia analyst at consulting firm Eurasia Group. 

"Over roughly the last 10 years, U.S. policy has broadly followed this logic, helping strengthen ties with India and offering unprecedented cooperation in terms of civilian nuclear power and co-development and co-production of defense technologies while asking relatively little in exchange."

'Security in the region of South and Central Asia'
Trump's hostile rhetoric toward Muslims plays well with members of India's Hindu majority.

India has a large Muslim minority, and the country has suffered many terror attacks within its borders that New Delhi claims are supported by Muslim-majority Pakistan. 

Modi's political party, called the Bharatiya Janata Party, has its roots in Hindu nationalism.
The White House also said on Tuesday that the two leaders of the largest democracies in the world discussed "security in the region of South and Central Asia."
India rarely gets involved in conflicts that do not directly involve the country, especially given India's perpetual border disputes with Pakistan. 

At the same time, however, during Modi's visit to Washington, which is expected sometime the year, the Indian leader will likely want Trump to take a more aggressive position toward Pakistan and support New Delhi's counterterrorism efforts.
Trump's rhetoric toward India — and Modi himself — has been consistently positive. 

Analysts say the U.S. president could be setting the table for a stronger relationship between Washington and New Delhi in the coming years and could ultimately elevate India's global profile, which has been a key objective for Modi. 

For years India has been living in the shadow of China as the second-best emerging market for investors.
Trump's and Modi's phone conversation on Tuesday came one week ahead of the release of India's annual budget, in which New Delhi is expected to announce further fiscal spending.
Despite economic headwinds and uncertainty around Trump's foreign policy, DoubleLine Capital's Jeffrey Gundlach told Barron's over the weekend that India is an attractive destination for investors. Bombay's Sensex stock index is trading about 6 percent below its all-time closing high.

A possible area of conflict?
One point of contention between Trump and Modi could be immigration. 

India is home to many companies that host technology work for U.S.-based companies — meaning that they employ Indians to do work previously done by American workers.
Companies in India are able to provide highly skilled workers at a discount to what Americans get paid. 

Trump arguably has been more outspoken about protecting U.S. jobs than any other president in decades.
"They also have a major item that needs to be resolved around IT outsourcing," said M.R. Rangaswami, a software executive and founder of Indiaspora, a U.S.-based community for people of Indian descent.
"The president has stated that jobs be kept in the U.S., while India is the place most Fortune 500 companies have direct IT operations or outsourcing partners. Most H-1B visas" — supposedly temporary passes that give skilled foreign nationals the right to work in the United States — "are used for supplementing the U.S. IT workforce by bringing professionals from India," Rangaswami said.
"This could become a messy issue that could cause tension."