What are grown-up investors to make of relations between Russia and the West? The rhetoric emanating from politicians and media commentators, in the US and UK at least, seems to be drawn from another era. Mainstream British and American newspapers are full of coverage about the Kremlin’s connections to US President Donald Trump, Secretary of State Rex Tillerson and Trump’s former National Security Advisor Michael Flynn. Some headlines go into full Cold War retro mode, talking of spy swaps and “Soviet agents”.
Russia’s official media has, typically, responded in spades. Against the background of the Ukraine crisis and related sanctions, accusations of “Kremlin meddling” in the US election have been met with more, even harsher, anti-Western rhetoric from Moscow. Such spiralling paranoia makes it seem like we’re through a bizarre re-run of the halcyon days of McCarthyism and Mutually Assured Destruction.
Although a Londoner born and bred, Poland loomed large in my childhood conscience. That’s because one of my very first memories involved a goalkeeper described as “a clown with gloves”.
Back in 1973, the great Jan Tomaszewski stunned the football world by single-handedly holding England to 1-1 draw against Poland, diving left and right, saving shot after shot, in front of 100,000 screaming home fans at Wembley. Tomaszewski’s outstanding performance – a triumph of athleticism, guile and, above all, self-belief – stopped England, then a footballing superpower, from qualifying for the 1974 World Cup.
“Am I surprised the EBRD is still going after 25 years – yes, I am!” says Ian Goldin with a hearty laugh. “During the early days, we all thought it would be just a transition bank and its role would then diminish,” he continues. “I honestly couldn’t have imagined the bank would be operating today on this scale and across such a broad range of countries”.
Goldin was the EBRD’s Principal Economist from 1994 to 1995. While his tenure was relatively short, he left for good reasons – to return to his native South Africa as an advisor to then President Nelson Mandela – and remains close to the EBRD, speaking at the Annual Meeting today.
Now a Professor at Oxford University’s Martin School, Goldin leads a cross-disciplinary programme of collaboration and research into the identification of long-term global problems. The EBRD, he says, “can make a significant contribution” towards tackling the challenges of the next 25 years.
“It means a very great deal, institutionally and also for me personally”. That’s how Sir Suma Chakrabarti, President of the European Bank for Reconstruction and Development, reflects on EBRD’s 25th Anniversary Annual Meeting, which opens today in London.
“The 1989 fall of the Berlin Wall was a crucial moment, the tearing down of the iron curtain – I remember it vividly,” Sir Suma tells bne-Intellinews. “The EBRD was then set up quickly, to help transition former Soviet-bloc countries away from communism and towards open-market economics – it’s been a fantastic story”.
China’s new membership of the European Bank for Reconstruction and Development is “a win all round”, says EBRD President Sir Suma Chakrabarti, rejecting criticism that allowing the People’s Republic to join contradicts the multilateral’s Articles of Association.
“It’s definitely a win for the EBRD to have the world’s second-largest economy as a shareholder, allowing us to do proper business development in China and encouraging Chinese companies to work with us,” Sir Suma tells bne IntelliNews, during an exclusive interview in London.
Mario Draghi is being hailed, once again, as a rhetorical wizard. The president of the European Central Bank has done it again. After the October meeting of the ECB’s Governing Council, Draghi dropped hints the Frankfurt-based bank would soon be unleashing yet more quantitative easing across the Eurozone, further lowering interest rates, or both.
No matter that the ECB has been churning out €60bn of virtually printed money a month since March and is committed to do so until September 2016. That’s a Euro-QE programme of €1,100bn – an astonishing 8% of the Eurozone’s annual GDP. No matter, also, that the ECB’s benchmark interest rate is 0.05%, with the central bank deposit rate at minus 0.2% – both record lows – or that Draghi has previously said such rates were at “their lower bound”. The ECB is now “vigilant” – a trigger word previously pointing to imminent policy action.
For several days in late July and early August, thousands of farmers across North East France used tractors to obstruct roads from Germany. The aim was to prevent trucks carrying agricultural goods from crossing the Rhine. In South West France, too, more Gallic protesters, similarly mounted on tractors, blocked farm produce coming from Spain.
In Russia, meanwhile, customs authorities invited TV cameras to film the destruction of 20 tons of French and Spanish cheese using a bulldozer, while crushing a range of other foods – including bacon, tomatoes and nectarines.
These two bizarre events – French tractors stopping food imports from within the EU, and televised “fromagicide” – are not unrelated. Both stem from Moscow’s decision a year ago to ban farm produce from America, Canada, Norway, Australia and, most significantly, members of the EU.
In early July, the leaders of Brazil, Russia, India, China and South Africa assembled in Ufa, around 700 miles east of Moscow, for the seventh annual Brics summit.
Overshadowed by Europe’s currency imbroglio and China’s stock market nosedive – along with the usual plethora of summer sporting events – this diplomatic gathering in the Bashkirian capital deserved far more media attention than it got.
Long-standing international sanctions against Iran could be dropped. That’s pretty astonishing given that, in the eyes of many Westerners, the country remains a pariah. The Lausanne framework agreement, which emerged after fraught negotiations in early April, means Iran – easily the world’s most significant isolated nation – could be returning to the global stage.
Even under sanctions, Iran’s $450bn economy is already among the top 25 largest on earth. Home to 81m people, it could soon get a lot bigger still. Since Hassan Rouhani became President in mid-2013, there’s been talk not only of Western rapprochement, but of Iran as an investment destination. The image Rouhani conveys – a moderate cleric, with a doctorate in law from a British university – contrasts sharply with that of his predecessor Mahmoud Ahmedinejad, a firebrand religious hardliner.
The UK is guilty of “constantly accommodating” China, hissed an anonymous White House official in mid-March. The British government had just announced the UK would become a founder member of a new China-led financial institution that one day could rival the World Bank.
Ever since Beijing launched the $50bn Asian Infrastructure Investment Bank last October, US officials have insisted Western countries “could help shape the standards and rules” this institution will adopt “by staying on the outside”. The real reason for Washington’s lack of engagement, of course, actually lay in fears the AIIB will become an instrument of Chinese foreign policy. That, after all, is precisely the role the World Bank has played for the US for the best part of 70 years.