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BusinessDay 13 April 2018

Friday

Friday 13 April 2018 FT FINANCIAL TIMES C002D5556 BUSINESS DAY A1 World Business Newspaper Trump’s new tough line on Russia raises risks Experts say president’s Twitter threats are the wrong way to deal with Putin COURTNEY WEAVER, KATRINA MANSON AND KATHRIN HILLE A US administration long accused of being obsequious towards Russia is now facing warnings that its new tougher tone is pushing the country towards a possible conflict with Moscow. After spending the first 15 months of his administration facing criticism for being too fond of Russian leader Vladimir Putin, President Donald Trump has dramatically changed tack following the poisoning of an ex-Russia spy in the UK and the alleged use of chemical weapons by Syria. Last week, the White House announced its toughest sanctions against Russia — a move Mr Trump did not block. This week, Mr Trump turned to Twitter to attack Mr Putin for his support of Bashar al-Assad and to advise Russian forces in Syria to be “ready” for US missiles. Mr Trump’s rhetoric might earn him points at home, where he continues to be hounded with questions over his 2016 campaign’s connections to Russia. Yet some Russia experts warn the president is playing a dangerous game by risking a military confrontation between the countries. Daniel Fried, a former ambassador who co-ordinated sanctions policy for the US government during the Obama administration, said Mr Trump’s tweets had put the US “in [the] same chestthumping rhetorical space with Putin”. “Never thought we’d go full Khrushchev-table pounding, but here we are and it could hurt us,” said Mr Fried, referring to Mr Khrushchev’s 1960 shoe-banging protest at the UN. Andrew Weiss, a Russia expert at the Carnegie Endowment for International Peace, said Mr Trump’s language was dangerous from a foreign policy perspective. “The comments about ‘Russia: beware my missiles are coming’, are exactly the wrong way to talk about the use of force, particularly the wrong way OPCW confirms Britain’s scientific analysis of toxic agent used in Salisbury attack The Organisation for the Prohibition of Chemical Weapons has confirmed Britain’s scientific analysis of the nerve agent used in last month’s Salisbury attack. The international watchdog said on Thursday that its team could “confirm the findings of the United Kingdom relating to the identity of the toxic chemical that was used in Salisbury and severely injured three people”. Former Russian double agent Sergei Skripal, his daughter Yulia Skripal and a policeman, Nick Bailey, were to talk to a foreign government which has a huge military presence in Syria,” Mr Weiss said. Mr Trump has recently moderated his rhetoric somewhat. On Thursday, he tweeted: “Never said when an attack on Syria would take place. Could be very soon or not so soon at all!” A day earlier he tweeted that all nations needed to work together: “Stop the arms race?” The US will try to avoid a direct confrontation with Russia in Syria in much the same way it gave Moscow advanced notice before it conducted a limited air strike in Syria last year. However, the US and Russia have already clashed in Syria once this year when an Assad-backed group, that included Russian contractors, fired at a US base near Deir al-Zour, prompting the US to fire back. James Jeffrey, a former ambassador to the Middle East who served as George Bush’s deputy national security adviser, said Mr Trump’s tweets risked “painting Putin into a corner”. If any Russians are hurt, even by accident, Moscow could respond. “If you are not careful, you will bring in the Russians,” he warned. Dimitri Simes, president of the Center for the National Interest in Washington, said Mr Putin would probably face increased pressure to respond more aggressively to the US. US-Russian relations, he argued, were the worst they had been since either the Cuban missile crisis of 1962 or the Berlin crisis in 1961. “I think we’re dealing with a very serious situation,” he said. “I’m sure neither side wants a major nuclear confrontation, but we know from history that once you start a war it may be very difficult to control escalation.” In Moscow, Mr Putin’s hopes for improved relations appeared to be fading even before the recent tension. Last month, he devoted almost half of a two-hour state-of-the-nation address to bragging about new nuclear weapons which he claimed would make Russia invincible. Chemical weapons agency backs UK findings on Skripal nerve agent HENRY MANCE AND KATHRIN HILLE Stocks gain ground as Middle East jitters ebb Page A3 all hospitalised after the poisoning on March 4. Mr Bailey was discharged last month, while Ms Skripal was released from hospital on Monday. On Wednesday, she issued a statement through the Metropolitan Police rejecting overtures from Russian officials who wanted to speak to her. The OPCW’s summary report did not name the compound, which Britain has said is a military grade nerve agent from the novichok family that was developed in Russia. However, it named the chemical in its “full classified report”, which was Continues on page A2 Saudi Arabia jumps ahead of rival Qatar with $11bn bond sale Gulf kingdom says geopolitics did not play a role in its decision to move ahead of Qatar KATE ALLEN Saudi Arabia has rejected suggestions that geopolitics played a part in its decision to bring a bumper bond deal to market just days before regional rival Qatar attempts to sell debt, but said the “supply pipeline” was a factor. The Gulf kingdom raised $11bn on Tuesday in a quick-fire sale that drew $52bn of orders. It comes weeks after Saudi Arabia raised an extra $6bn of capital by refinancing a loan, and means the country has completed its capital-raising from international investors this year. Saudi Arabia, the UAE, Bahrain and Egypt cut diplomatic ties with Qatar last June, claiming that its regional policies fuelled extremism and terrorism. SoftBank teams with investors for $25bn Fifa shake-up plan China, Saudi Arabia, US and UAE investors envisage expanded Club World Cup ARASH MASSOUDI AND MURAD AHMED Japan’s SoftBank is part of an international consortium behind a radical $25bn plan to create global football tournaments for Fifa, the international governing body of the sport. The group includes investors from China, Saudi Arabia, the US and the United Arab Emirates, according to people with knowledge of the offer, which is designed to reshape the world’s most popular sport. The identity of those investors could not be learnt. The move comes as Fifa seeks to secure its financial future in the wake of corruption and bribery scandal that has plunged it into crisis in recent years. SoftBank, led by its chairman, Masayoshi Son, has been rapidly pushing into investments in varied industries from technology to renewable energy and financial services. Some of the people said the consortium was being assembled by Centricus, a UK-based group whose founders helped SoftBank raise funds to create its $100bn Vision Fund. The consortium’s proposal, which remains under discussion, envisages the expansion of the “Club World Cup”, How a volatility virus infected Wall Street Page A4 US President Donald Trump, right, spent months facing criticism for being too fond of Russian leader Vladimir Putin, left, but he has changed tack dramatically © AP On Friday, Qatar announced a series of investor meetings to pitch its first foray into the debt markets since the blockade. The emirate launched the finance-raising bid on Thursday; if the multi-tranche bond deal succeeds, it will be its first dollar debt sale since 2016. “The decision to embark on the deal [on Tuesday] was specifically related to the market conditions and supply pipeline . . . we do not take geopolitics into consideration,” Fahad Al Saif, president of Saudi Arabia’s debt management office, told the Financial Times. Mr Al Saif said that Saudi Arabia had been seeking to bring a deal to market in recent weeks but the bout of volatility meant it had to wait. “We had been ready to go since earlier in the year but we wanted to a tournament currently played with seven top teams from across the globe. Also proposed is a new international league competition for national teams, said people with knowledge of the plans. Those people said the Club World Cup would be played every four years by the top 24 club-level teams, starting in 2021. A new national team competition would take place every two years. Fifa will have a 51 per cent stake in a joint venture with the consortium, with the investors guaranteeing revenues of at least $25bn. “This whole idea is that world football is not just about Europe,” said a person with knowledge of the offer. “Football is the biggest social event in the world with 3bn followers, but it doesn’t have a global community besides the World Cup.” Gianni Infantino, Fifa’s president, told the governing body’s ruling council in Bogotá, Colombia, last month that a group of investors was willing to spend billions of dollars to acquire an expanded version of the Club World Cup, but did not reveal the identity of the consortium. Uefa, European football’s governing body, said: “We can confirm that the Fifa president mentioned an al- complete the loan financing first and not do both fundings at the same time,” he said. “Our international funding is concluded for the year.” One person involved in Qatar’s deal said on Tuesday that the meetings with investors were “progressing well”. Saudi Arabia’s three-tranche sale raised $4.5bn in seven-year debt paying a coupon of 4 per cent, $3bn in 12-year debt paying 4.5 per cent and $3.5bn in 31-year debt at 5 per cent. The maturities fill gaps in the country’s yield curve, Mr Al Saif said. The kingdom has turned to the international financial markets as part of a bid to reshape its economy after the oil price plunged between 2014 and 2016. Although crude’s recent rise has eased pressure on the country’s budget, its deficit is still forecast to be $52bn this year. leged offer to buy some rights at the Fifa council meeting in Bogotá. As Gianni Infantino did not provide any concrete details on what such an offer would entail and which entity would have been behind it, we have no comment to make on the topic.” Mr Infantino’s comments were first reported by the New York Times, with further details on the proposed tournaments and joint venture reported by the Associated Press. Fifa, SoftBank and Centricus declined to comment. Mr Infantino was elected in 2016 and has promised governance reform designed to clean up the organisation, following the arrest and prosecution of former Fifa executives related to bribery. But he has also been under pressure to restore profits at the organisation and was elected on the back of a promise to increase significantly the so-called development funds for more than 200 member nations. Under his tenure, Fifa has approved an expansion of the World Cup from 32 teams to 48, which is expected to generate more in broadcasting, ticketing and sponsorship revenues. He is up for re-election when his term ends next year.

A2 BUSINESS DAY C002D5556 Friday 13 April 2018 FT Chemical weapons agency backs UK findings... NATIONAL US futures tip higher open for Wall Street PETER WELLS US stocks look set to follow European peers higher at the open on Thursday as investors continue to assess the potential for conflict between the US and Russia over the weekend’s alleged chemical weapons attack Continued from page A1 made available to 192 state parties, including Russia. The OPCW said the toxic chemical “was of high purity” — lending credence to the UK’s argument that only a state with a sophisticated laboratory could realistically have deployed the chemical. In response, the Russian government repeated its assertion that Moscow had neither produced nor stored any chemical weapons, except those reported to the OPCW and subsequently destroyed under the body’s supervision. Georgy Kalamanov, Russia’s deputy minister of trade and industry, told Interfax: “Russia did not produce any poisonous substances other than those that were reported by Russia under the Convention for the Prohibition of Chemical Weapons in 1997. Therefore there are none in the stocks.” Moscow asked to be part of the OPCW’s investigation, but lost a vote among member states last week. Moscow also seized on comments last week by the head of Porton Down, Britain’s military laboratory, who said his team had not identified the precise source of the novichok used in the Salisbury attack. The British government responded that its tracing was based on intelligence showing that Russia has produced novichok in the past decade and experimented with its use for assassination. A key member of the Soviet research team that developed novichok in the 1970s and 1980s has also sided with the British government in its dispute with Moscow. Vladimir Uglev said he was sure the compound used was one of those his team had first developed in 1975, but cautioned that it would be impossible to prove beyond doubt where the Salisbury nerve agent had originated. The survival of the Skripals has been used to raise doubts about whether novichok could have been used in the poisoning. However, experts have said that the effect of the nerve agent would have depended on how they came into contact with it and in what form. The OPCW said it took “blood samples from the three affected individuals”, conducted “on-site sampling of environmental samples” at places where the chemical might have remained, and received splits of samples taken by the British authorities. It was also briefed by the UK government. Following the publication of the OPCW report on Thursday, Boris Johnson, UK foreign secretary, said: “There can be no doubt what was used and there remains no alternative explanation about who was responsible — only Russia has the means, motive and record.” “We will now work tirelessly with our partners to help stamp out the grotesque use of weapons of this kind and we have called a session of the OPCW executive council next Wednesday to discuss next steps,” he added. “The Kremlin must give answers.” in Syria. Futures for the S&P 500 are up 0.5 per cent, while those for the Dow Jones Industrial Average and Nasdaq 100 are 0.6 per cent higher. Treasuries have retreated slightly alongside the slightlyimproved sentiment in markets, with the yield on the benchmark 10-year US Treasury up 0.5 basis points to 2.7954 per cent. Yields move in the opposite direction to bond prices. Investors have been weighing the potential impact should the US proceed with a military strike on Syria after an alleged chemical weapons attack took place near Damascus on the weekend. Day-to-day reactions by investors have varied this week, but Wall Street spent most of Wednesday in the red after Donald Trump’s warning to Russia, which supports Syria’s government, to “get ready” for a military strike on the Middle Eastern country heightened the St Marylebone sixth formers (from left) Bryony Jones, Sophia Hood-Sargent, Kawthar Msrar, Zaira Khanzada and Emily Lee-Williams © Charlie Bibby/FT Where are all the female economists? Few women reach senior positions — and the root of the problem lies in education GEMMA TETLOW Economics affects everyone and people need to know more about it, says 18-year-old Emily Lee-Williams, who is studying the subject at St Marylebone, an inner- London state school. “But it seems quite intimidating in the media. . . If you think of an economist, you think of a rich man in a business suit who is so much higher up than you are.” Many in the profession are worried that too few women work in economics at senior level. But only recently has the source of much of the problem been identified: women are far less likely than men to study economics, let alone pursue a career in it. Just over a third of undergraduate economics students in the UK are women (overall, 57 per cent of undergraduates are women). The picture is similar in Australia and the US. “My initial thinking was that for some reason female economists were out there but not applying to the Government Economic Service,” said Osama Rahman, who jointly leads a team trying to boost the number of women among the ranks of UK civil service economists. “It was only later I realised there was a problem with women not choosing to study economics.” The subject was once at the forefront of women’s educational emancipation. The first coeducational university lecture in the UK was conducted by a professor of political economy at University College London in 1871. But, while other traditionally male subjects such as engineering have made progress in attracting women, economics has struggled. Image problem One explanation frequently given for why so few women study economics is that the mathematical nature of the subject puts them off. This does not stand up to scrutiny, as the share of women among maths undergraduates exceeds that in economics. But economics does have an image problem. Kawthar Msrar at St Marylebone school says: “It is still seen as a very male-oriented job; there is not a widespread realisation yet that girls can do it, too.” Her classmate Bryony Jones agrees: “As a mixed race woman, I don’t see anyone who looks like me doing economics.” Elinor Ostrom (1933-2012) remains the only woman to have been awarded the Nobel Prize in Economics. Rachel Griffith, professor of economics at Manchester University, will next year become only the second female president of the Royal Economic Society since its creation in 1890. The American Economic Association has gone only one better during its 133- year history. Another issue is the mistaken belief that economics is about money and forecasting. Claudia Goldin, a professor of economics at Harvard, plays the “Uber game”: “take an Uber, tell the driver you’re an economist, and nine times out of 10 they will ask you to predict the economy or the stock market.” In fact, economists work in a wide range of areas, from designing policies to improve child nutrition to examining the balance of power between employers and employees and the rise of “deaths of despair” among white working-class Americans. Economic practice — focusing on social policy issues — is another little-known field. The Australian, UK and US central banks have campaigns to encourage women to take up economics. And having just missed its targets for increasing the number of women in management positions, the European Central Bank is thinking about how it can encourage women to study the subject. In the UK, economics graduates rank second — behind graduates in medicine — in average earnings, according to data from the Institute for Fiscal Studies. Female economics graduates earned on average £20,000 more a year a decade after graduation than creative arts graduates. But typically, women place less weight than men on financial return when choosing which subject to study. Economics majors were also more likely than those in any other subject to head an S&P500 company. Differences in career choice are an important factor driving the gender pay gap. Economists are influential in public policymaking, from setting monetary policy to designing systems to allocate donor organs. Here, “the under-representation of women matters because it affects what questions economists look at”, says Sarah Smith, a professor of economics at Bristol university and chair of the RES’s women’s committee. “Ultimately it affects the advice given on public policy issues.” There is no single explanation for the under-representation of women in economics. “Social norms that go back a long time may dictate who studies what,” says Homa Zarghamee of Barnard College in New York. Even when economics undergraduates do not pursue a career in the field, an understanding of the basics has benefits. “Everyone should be able to pick up and read a great newspaper,” says Prof Goldin. “If one of the goals of education is to be able to read and understand what’s in it and to be able to question economics critically, taking an elementary course in economics is extremely important.” That has been the experience of 17-year-old Zaira Khanzada at St Marylebone school. “Since I was young, I would watch BBC News with my dad, and there would be so many things I did not understand,” says Ms Khanzada. “But studying economics has really helped; everything has clicked.” What works Many campaigns have sprung up to try to encourage women to study economics. Prof Goldin is co-ordinating a series of experiments across 20 US universities and colleges, including mentoring and improving knowledge of career paths for economists. tension. This morning, the US president tweeted he “never said when an attack on Syria would take place” adding it “could be very soon or not at all!” Germany’s Dax was up 0.7 per cent in afternoon trade, while London’s FTSE 100 was trading flat. Macron says there is proof chemicals used in Douma attack French president waits for more information before deciding on launching strikes ANNE-SYLVAINE CHASSANY, KATHRIN HILLE AND REBECCA COLLARD Emmanuel Macron said that France has proof that chemical weapons were used by the Syrian regime in an attack on a rebel holdout near Damascus that has triggered threats of western military action against the Arab state. But the French president added that Paris would only decide whether to launch strikes against Syria when it had received more information. “We will make decisions in due time,” Mr Macron said in an interview with French television on Thursday. Both France and the UK have suggested that they are poised to support any military action taken by the US in response to the suspected gas attack in Douma, which killed more than 40 people. On Thursday, the UK will hold an emergency cabinet meeting to formulate its response. Donald Trump on Wednesday warned Russia, which intervened militarily in the Syrian conflict to back President Bashar al-Assad, to “get ready” for a missile attack. At the start of the week, the US president said he would make a decision on whether to take military action in 24 to 48 hours. But on Thursday, Mr Trump appeared to backtrack on the timing of any attack. “Never said when an attack on Syria would take place. Could be very soon or not so soon at all!” he said in a tweet. Mr Macron, who has had at least two telephone conversations with Mr Trump since the attack in Douma on Saturday, has previously said that the use of chemical weapons would be a “red line” that would prompt an “immediate response from France”. He said on Thursday that he would do everything to “avoid military escalation in the region”. The prospect of western military action in Syria had raised concerns about the risk of a direct confrontation between Russia and the US. But the Kremlin said on Thursday that a hotline set up with the US to avoid accidental clashes over Syria was still active despite the rising tension. Dmitry Peskov, president Vladimir Putin’s spokesman, told reporters that the so-called de-confliction mechanism was “being used by both sides”. Mr Peskov reiterated an appeal to the US to “avoid any steps that could lead to increased tension in Syria”. “We believe that this would have an extremely destructive effect on the entire Syrian settlement process,” he said.

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