HONG KONG
Hong Kong had become Kennedy’s home, at least one of them, another of the different universes in which Pat Kennedy moved in his blasé way.
Liam Clancy, much younger than Pat, saw it in a different light. Hong Kong had so much to offer, it was awash in money, restaurants, night clubs, markets, shopping, fashion, art, culture and exhibitions.
But what attracted Clancy was its nightlife. He was not content to return to a silent company appartment after work. He was drawn by the lights of Lan Kwai Fong, the legendary nightlife zone in the middle of Hong Kong’s busy Central business district, the economic and financial heart of Hong Kong with its high concentration of foreign business, banks, multinational and government offices. LKF as it was known was the kind of place where a young banker could relax with people of his own age.
On occasions the bank organised events in the nightlife district, attracting young people from fashion houses, real estate firms, investing houses, the sons and daughters of the rich, and young entrepreneurs from the Mainland and the world. LKF had spread to the neighbouring streets and beyond and was the scene of regular street events and carnivals attracting dense crowds of visitors in search of an evening out in one of its hundred or more bars and restaurants.
Liam and his friends usually started with a ritual bar crawl, followed by dinner in more often than than not in one of the small restaurant in Wing Wah Lane, where Japanese, Indian, Malaysian, Indonesian or Thai specialities abounded, where the food was good, before ending up in one of the trendier night clubs in or near Central.
Liam Clancy, after starting out as a trader in Dublin at the Irish Union Bank, had quit home in desperation for crisis racked Spain in 2009, after the collapse of the Irish banking system. His idea was to make a new start in the sun where he had hoped his reserves would allow him to ride out the worst of the crisis.
After the excitement of Marbella faded, he set to work to build a consultancy providing expats with advice on their property investments and finances, a difficult enterprise given the hard times. A great many Brits who had retired to Spain saw their hopes dashed as the value of sterling dived along with Spanish property prices leaving them to repay loans contracted in euros far from home.
After two years, just when the going had gotten really hard as Liam and his two associates struggled to make ends meet, he was offered a job in the London offices of his former employer when business was starting to pick up again in the City, where Michael Fitzwilliams’ bank had entered into a partnership with Sergei Tarasov’s Russian banking group.
One of the partnership’s ventures was a new property fund set up by Pat Kennedy, the bank’s business development director. A new and dynamic team was formed under Tom Barton, the fund manager, who on Kennedy’s recommendations hired those the bank knew and who knew the bank: their ex-traders.
L
an Kwai Fong in Hong Kong’s Central District
Liam Clancy was amongst the first. With his experience at the bank’s pre-crisis trading unit in Dublin and the knowledge he had gained in Spain he was an ideal candidate. The tall good looking young man with a soft Kerry accent had acquired a smooth continental style, all of which made him an automatic choice for Kennedy, who naturally preferred an Irish lad to an English public school type.
Kennedy took Liam under his wing, he liked his self-assurance and his positive out-going attitude. Clancy progressed rapidly, taking on responsibility, building the property fund’s portfolio under the guidance of Tom Barton, making a name for himself at board level where he was seen as a young man going places.
Following the City & Colonial grab, Clancy, finding himself in a delicate situation via-à-vis the new management, jumped at the opportunity Kennedy offered him in Hong Kong where his International experience and his budding knowledge of China made him a valuable asset.
Kennedy feared a Brexit, a vision that seemed to be making more and more headway in British public opinion. The idea appalled him, an idea he shared with Clancy, as they realised the damage Little Englanders could do to the European dream. Liam had seen the idea of an independent Catalonia grow, Pat the effects of Basque Nationalism, and whilst neither was against regional cultural expression, the thought of a multitude of small states clamouring for their rights did not seem to be the way forward in what had become a fragile, if not dangerous, world.
SYRIA
It was just a question of time before Putin moved and when he did he didn’t hang around waiting for international approval, in his usual brutal take it or leave in manner he gave the Americans an hour to clear Syrian airspace.
The contrast with the West’s timid actions couldn’t have been starker. Barack Obama, the de facto leader of the Western World, had earned the sobriquet of ‘Hamlet in the Whitehouse’, the ‘to be or not to be’ president, who, at a perilous moment in the modern history of the Middle East, was incapable of acting decisively.
While Obama dithered the Duma authorised air strikes, the Orthodox Church declared a holy war and Russian warships in the Caspian Sea launched cruise missiles against Syrian rebel strongholds.
Whatever the methods it did not disguise the fact that Western policy in the Middle East, plagued with division and indecision, had been a disaster for the region and Europe would reap the fruits of the chaos it had sown, a vast uncontrollable flood of refugees.
Twenty five years after Saddam Hussein’s invasion of Kuwait, the situation in the Middle East had gone from bad to worse to catastrophic. Syria, Iraq and Yemen were embroiled in disastrous civil wars. The Lebanon and Jordan were invaded by millions of refugees. Turkey was on the point of being dragged into the conflict as it turned against its own Kurds and sided with its Sunni co-religionists, notably Saudi Arabia and the Gulf states, in a holy war against Iran and its Shiite allies.
Israel watch from the sidelines with barely disguised schadenfreud as its Arab and Iranian enemies fought a proxy war. However, its own latent conflict with Palestine remained and the smallest incident could rekindle the flames.
*
The idea that Western democracy - as preached by illuminated idealists, philosophers, do-gooders and the like - could take root in the Middle East was stillborn. Grafting Western notions of secularism, rationalism and, above all, democracy was an impossible task. The Arab Spring had withered: Egypt had reverted to military dictatorship; Libya was torn by civil war; and Tunisia, from where hope had sprung, was struggling as its tourist industry had all but collapsed after terrorist attacks had left dozens of tourists dead.
The Noble Peace Prize awarded to Tunisia’s National Dialogue Quartet was symbolic of the Arab World’s lost cause. The divisions of the Arab world were a vestige of WWI; the ill thought out division of the Ottoman Empire; the creation of the State of Israel; and the world’s voracious appetite for oil.
The West’s vision of democracy had led the fight against totalitarianism and dictatorship, which had been long and bloody: Korea, China, Vietnam, Soviet Russia, Afghanistan, South and Central America and now the Middle East, but in terms of auto-determination those wars had borne little fruit.
Certain had successfully transformed their economies, others had reverted to neo-authoritarianism, as for North Korea it had become the worst example of a dynastic tragicomic state, its leader a more terrifying version of Charlie Chaplin’s Herr Hynkel.
The George Bush’s invasion of Iraq, based on flawed intelligence related to weapons of mass destruction, concocted by his administration, had led to a decade of bloodshed and a war that transformed centuries of simmering discord between the two great pillars of Islam into a bloody confrontation: the Sunnites led by Saudi Arabia and the Shiites by Iran.
The division of the Arab world had been secretly agreed in May 1916, as WWI raged. Sir Mark Sykes and François Georges-Picot were appointed by the British and French governments respectively to decide the fate of the Ottoman empire, which had sided with the Central Powers.
Russia would get Istanbul, the se
a passages from the Black Sea to the Mediterranean and Armenia; the British Basra and southern Mesopotamia; and the French a slice of the Lebanon, Syria and Cilicia. Palestine would become an international territory.
After the defeat of Germany and its allies the map underwent a number of changes, however the principal of the Sykes-Picot carve-up remained with the seeds of future conflicts: the irreconcilable promises made to Arabs and Jews, the cause of a quasi permanent conflict between Israel and the Arab world.
The patchwork of the Middle East’s conflicting populations was visible in the Syrian civil war where hundreds of thousands of its citizens died and millions fled, seeking shelter beyond their borders, as the butchers of ISIS wreaked terror and Russia jumped into the fray.
R
ussian warship fires cruise missile
Russia’s spectacular and unexpected intervention in Syria boosted Putin’s image as a post-Soviet hero at home as the war in Ukraine ground to a halt and the euphoria over his annexation of Crimea faded. Russian warships launching cruise missiles from the Caspian provided a welcome diversion from the bad news on the economic front, the result of sanctions, falling oil revenues and a devalued rouble all which were starting have their effects.
Were the doomsters always wrong? Throughout history there had always been prophesies of things to come and in particular those of mauvaise augur, including those of Michel de Nostredame (Nostradamus), Moshe ben Maimon (Maimonides) and the Reverend Thomas Robert Malthus, not forgetting those of every religion known to man.
Bad things really did come to pass and in every civilisation. One needed to look no further than Assad’s Syria to find a modern day example. Death and destruction had been wreaked in that small country on a scale not seen since the Wars of the Crusaders. For centuries a delicate balance had been preserved between the multiple factions of Syrian society by its rulers, more especially the Ottomans. Syria as a nation state was new, arbitrarily determined by the Sykes-Picot plan. Damascus, however, it had been at the centre of regional politics for centuries and as such its peoples had known relative peace and prosperity.
Suddenly, in an unforeseeable wave of revolt, it was torn asunder by an unimaginably barbaric conflict, a mosaic of conflicting interests in civil war that pitted one community against the other, igniting religious hatred, political chaos, reducing the country to a rump of its former self with Damascus and its suburbs surrounded by rebel held fifes.
What had provoked the frenzy of killings: the barbaric beheadings and torture of Syria’s citizens, the barrel bombing of cities, towns, hospitals and schools?
The brutal breakdown of human society was never far away when extremist forces were set in motion. Beyond the strife torn Middle East was the Ukraine and nearer home the spectre of the possible collapse of Greece.
Unlikely? Why? Less than twenty years previously the Balkans had been torn apart by a terrible civil war. The stakes were high as Brussels and Berlin played a deadly, drawn-out, game of poker with Athens, the result of which could leave the south-east corner of Europe prey to political adventurers of all kind.
HARD TIMES
Almost immediately after his disembarkation at Moscow’s Sheremetyevo International Airport, John Francis spotted the signs Russia’s deepening economic crisis. There was a discernible hardening of faces, recalling times past when Russians’ struggled to survive during the chaos of the Yeltsin years and a reminder of his first visit to Moscow at the time of Leonid Brezhnev, then a city veiled in secrecy and fear, when few ordinary Russians dared exchanging glances with strangers.
That Russia was running out of money had alerted rating agencies, prompting them to issue a stream of alerts warning lenders and investors alike of the country’s fast deteriorating public finances.
Behind the visible war in Syria, in which Putin had embroiled his country, was a war of stealth led by Saudi Arabia and its Sunnite allies, in which the principal arm was oil. By flooding markets with low cost oil there was no prospect of short term recovery for Russia, and beyond Saudi Arabia’s role was America’s shale oil industry, a deadly arm if used to undercut prices and prevent Russia from borrowing on world markets at affordable rates.
To pay for his war Putin gambled his country’s foreign exchange reserves, a desperate ploy considering the government’s huge budget deficit, which had reached alarming proportions as oil and gas revenues dwindled after having accounted for half of the government’s budget during the boom years when oil reached one hundred and more dollars a barrel.
In its desperation the government squeezed oil and gas companies to bridge the gap, a move that would surely hobble their investments for the development of new fields, a souvenir of the short-sighted policies during Soviet times.
Bloated defence spending had driven Brezhnev’s Russia into a dead end and Putin’s government with its immoderate ambitions was heading down the same road spending billions on sophisticated military aircraft and missiles for its armed forces.
The idea that Putin could wave a magic wand and relaunch Russian manufacturing was ludicrous, there was no way Russia could compete with China, the USA and the EU. The USSR with its empire and satellite states had not succeeded in building a competitive economy and a dramatically reduced CIE had no chance, unless it regressed to autarchy, a Soviet style economy producing shoddy, but costly, consumer goods, cars, computers and all the rest.
As it was its non-oil exports had fallen by a quarter in 2015, despite a fifty percent devaluation of the rouble, as had investment levels.
The Russian economy economy was shrinking at an alarming rate. Even before the ongoing crisis long term forecasts had projected a decline in its economy given the country’s structural difficulties, and especially its declining population. On a comparable scale in dollar terms its economy was half that of France, smaller than that of Texas, or the size of Spain’s. The idea that Russia was a self sufficient world power to be reckoned with was risible … if it wasn’t for its nuclear arsenal.
Visiting Ekaterina’s family Francis learnt real incomes had fallen nearly ten percent and food prices had jumped almost twenty percent, a disaster for the average Russian family, confirmed by the words of a former deputy economy minister, who remarked if things continued in the same direction the average family would soon be spending half of its income on food.
*
John Francis was met by a constant stream of criticism of the West from Ekaterina's friends and acquaintances. Of course he understood defending their country and leader was normal, considering the constant flow of news pumped by RT, the state controlled media machine, designed for the eyes and ears of the Russian public, accusing the West and more especially the US of conspiring against Russia and its friends.
Muscovites were naturally proud of their achievements following the chaotic period that followed the dissolution of the Soviet Union. They were better-off materially speaking: consumers, like the Westerners at whom they now aimed their anger.
Not all members of the EU were in step with sanctions imposed by Brussels. One was Latvia, which continued to function as an offshore banking centre for Russia. There, Russian owned banks continued to flourish inappropriately aided by the BERD, the European Bank for Reconstruction and Development, in which the US was the largest shareholder.
There were however Russians who harboured doubts about the Kremlin’s direction. Internet provided a window on the outside world for those who spoke English and since the rise in relative prosperity many ordinary Russians travelled abroad for their vacations.
As Putin’s confrontation with the West accentuated, the rouble declined and inflation climbed, doubts grew. Russians became cautious and introspective. Those with the means chose expatriation and headed for London, Berlin and New York. The more wealthy bought properties in London and other safe havens, and those who could acquired a second passport from compliant foreign governments.
Francis detected a sense of resentment in the Russians he met. In their search for sca
pegoats they pointed to Ukrainians, sanctions, dissidents, gays, and a conspiracy to destroy Russian oil and gas exports engineered by Wall Street and the CIA.
The chief cause was the West’s refusal to accept Moscow’s annexation of the Crimea, an action which few Russians had opposed. Ekaterina described the fear of ostracism by those who questioned Putin’s vision of a Greater Russia in a society nostalgic for the USSR. Broader minded Russians saw the Kremlin caught in a quandary, uncertain of the way forward, its plans frustrated by falling oil prices, sanctions, inflation, devaluation.
The cost of the Crimea, its support of Ukrainian separatists and the war it was fighting on behalf of Bashar Assad’s besieged government in Damascus bore heavily on Russia’s finances.
Putin had lost a series of bets, he had persistently backed the wrong horse, and his hold on power weakened. Russians could not eat glory, they needed jobs, stability and prosperity and their faith in their leader had its limits in a world where news and opinion travelled at Internet speed.
DIVERSIFICATION
Tom Barton had diversified his investments by placing money in Colombian assets. There were numerous long term opportunities in oil, mining and minerals; the country was blessed with vast coal deposits along with oil and gemstones. He was however troubled by the long-term prospects of fossil fuels as public awareness grew on questions of environment and climate change.
Cornucopia Page 50