Nasdaq Composite 4871.76 4893.29 -0.44
Dow Jones Ind 17749.31 17895.22 -0.82
FTSEurofirst 300 1578.82 1574.72 0.26
Euro Stoxx 50 3656.21 3641.32 0.41
FTSE 100 6740.58 6761.07 -0.30
FTSE All-Share 3648.24 3655.28 -0.19
CAC 40 5010.46 4987.33 0.46
Xetra Dax 11901.61 11799.39 0.87
Nikkei 19254.25 18991.11 1.39
FTSE All World $ 275.83 277.54 -0.62
CURRENCIES
Mar 13 prev %chg
Gold $ 1152.00 1152.25 -0.02
price prev chg
Fed Funds Eff 0.12 0.11 0.01
US 3m Bills 0.03 0.02 0.01
Euro Libor 3m 0.02 0.02 0.00
UK 3m 0.56 0.56 0.00 Prices are latest for edition Data provided by Morningstar
HELEN WARRELL — PUBLIC POLICY CORRESPONDENT
The University of Cambridge will con- sider reducing its undergraduate intake if there are cuts to higher educa- tionfundingaftertheelection, thevice- chancellorhaswarned.
In a sign of the anxiety pervading academia over deeper austerity, Sir Leszek Borysiewicz said he would also look at modifying its one-to-one super- visions system, which has been the hall- mark of a Cambridge undergraduate educationforcenturies.
“Any shortfall in resources ultimately isgoingto impactonquality,”hetold the Financial Times. “I cannot afford to put any more in from the university and the colleges than we are already to subsidise undergraduateeducation.”
The professor said there had not yet
been any discussion between the uni- versity and individual colleges about how to deal with any spending cuts under a future government. But he indi- cated that, given the university’s dual commitments of taking undergraduates on merit and maintaining standards of excellence, cutting student numbers was likely to take priority in the event of a fundingfall.
Sir Leszek said that if resources were tight, the university would debate options such as increasing the propor- tion of undergraduates from outside the EU — which was 11 per cent of the 3,300 annual intake last year — taking on more postgraduate students or even altering its teachingtraditions.
“If we have to drop that excellence there will be a real debate within the university whether we take fewer stu- dents . . . or we actually have to change
the nature of the curriculum,” he said. “For example, making supervisions, not one-to-one but actually increasing the numbers, or reducing the numbers of supervisions.”
His comments were made just weeks after Labour pledged to reduce stud- ents’ annual tuition fees by a third to £6,000 a year. Although the party has promised to fund the £3,000 a year fee cut by reducing tax relief on pensions, the move would make universities more dependent on the government for their income.
Sir Leszek, a committed europhile of Polish descent who grew up on a Cardiff council estate, expressed the fear that universities might lose their interna- tional status and access to EU research funding if Britons voted to leave the bloc inapost-electionreferendum. Interview page 4
Cambridge warns student intake will have to fall if state funding is reduced
© THE FINANCIAL TIMES LTD 2015 No: 38,802
Printed in London, Liverpool, Dublin, Frankfurt, Brussels, Milan, Madrid, New York, Chicago, San Francisco, Washington DC, Tokyo, Hong Kong, Singapore, Seoul, Dubai
9 7 7 0 3 0 7 1 7 6 7 6 0
1 1
A group of investors including private equity executives from Apollo Global Management and Blackstone are in late-stage discussions with the owners of English Premier League club Crystal Palace over a takeover. The move comes a month after broadcasters announced they were handing over £5bn for the UK television rights to the Premier League, the world’s most lucrative domestic competition. Report i PAGE 13
Private equity executives move in on Crystal Palace
LIFE & ARTS 10 things you can do with your Isa
Simon Schama On the annihilation of ancient artefacts
FT MONEY
Magazine WPP’s Martin Sorrell at 70 | House&Home Inequality in cities | Jancis Robinson Wine packs a bigger punch SATURDAY 14 MARCH / SUNDAY 15 MARCH 2015
Briefing
i Ukraine warning to debt holders Natalie Jaresko, Ukraine’s finance minister, has warned debt holders including Russia they should prepare to lose money as the war-ravaged country seeks to stave off a default.— PAGE 7; LEX, PAGE 24
i UK tilt to Asia exposes strains with US Prime minister David Cameron’s pivot towards Asia in 2013 changed the UK’s relationship with China even at the expense of straining relations with the US, its most important strategic partner.— PAGE 6;
EDITORIAL COMMENT, PAGE 10; GIDEON RACHMAN, PAGE 11
i Herzog buoyant as Israeli election nears Isaac Herzog, opposition leader of Israel’s centre-left Zionist Union, has been buoyed over the past week by signs of weakness from a seemingly panicked Benjamin Netanyahu of the rightwing Likud party ahead of the election on Tuesday.— PAGE 5
i Art paints pretty picture for investors Art has jumped up an annual index of luxury investments, surpassing its 2008 pre-crisis peak and giving a better return for the well-heeled collector than fine wine, jewellery, coins or antique furniture.— PAGE 3
i Crosby holds court at Tory election HQ Australian election strategist Lynton Crosby has put Conservative campaign headquarters in almost total lockdown and is keeping MPs on a tight leash as they campaign for May’s general election.— PAGE 2
UK £3.00; Channel Islands £3.30; Republic of Ireland €3.50
Subscribe In print and online www.ft.com/subscribenow Tel: 0800 298 4708
London house prices
Rebased (Jan 2013)
2013 14 15
Datawatch
JOEL LEWIN
Investors have pumped record amounts of money into eurozone equity funds this year, against the backdrop of the European Central Bank’s long-awaited quantitative easing programme and the sharpslide inthevalueof theeuro.
Some $35.6bn has flowed into Euro- pean equity funds so far this year, sur- passing the previous record of $32bn set in the first quarter of 2014, while $33.6bn has flowed out of US equity funds over the same period, according todataproviderEPFR.
The figures come at the end of a momentous week when the ECB fired the starting gun on its €1.1tn QE pro- gramme. Overseen by bank chief Mario Draghi, thegovernmentbondpurchases are designed to stave off deflation in the eurozoneandboosteconomicgrowth.
The launch of QE has shifted investor appetite from the US, whose long bull market was stoked by aggressive mone- tary easing, to Europe, where QE has only just started. Europe has now dra- matically outperformed the US in terms
of share price gains and fund flows. “You’ve got the liquidity injected by
the central bank propping up assets and investors have been very eager to play that trend,” said Simon Colvin, Markit vice-president.“QEtakesalotof therisk outof themarket. It’saverybigrally.”
The start of QE stands in sharp con- trast to monetary policy in the US, where the Federal Reserve is expected to raise interest rates this year. That pol- icy divergence has sparked a dramatic decline in the value of the euro against the dollar. The euro fell 3 per cent this week alone and has dropped 13 per cent
since this year. In dollar terms, Euro- peanstocksare flat for theyeartodate.
The sharp depreciation of the euro has boosted eurozone companies by making their exports more competitive. Shares in carmakers, such as Fiat Chrys- ler, Peugeot and Renault have soared since the start of 2015, while Germany’s Dax index has risen 21.3 per cent this year to date. Meanwhile, the S&P 500 has fallen 0.7 per cent in local currency terms. But although eurozone stocks have risen, the depreciating euro has eaten into the returns of overseas inves- tors, for example reducing the Dax’s 20percentrise toa5percentreturn. Editorial Comment page 10 The Long View page 24
Investors pour record amounts into European shares in response to QE Inflows of $35.6bn so far this year as bond purchases begin and appetite for US equity fades
FTSE Eurofirst 300
Eurozone ETFs
Source: Markit
10 15 20
‘QE takes a lot of the risk out of the market. It’s a very big rally’
Prices for houses in London rose 25 per cent from the start of 2013 to January this year, but industry experts say the market is cooling. Foreign buyers have seen prices rise much more sharply as local currencies continue to lose value against the pound
MARCH 14 2015 Section:FrontBack Time: 13/3/2015 - 22:21 User: crawcourk Page Name: FRONT1-LON-02, Part,Page,Edition: LON, 1, 2
2 FTWeekend 14 March/15 March 2015
NATIONAL
FINANCIAL TIMES Number One Southwark Bridge, London SE1 9HL
Published by: The Financial Times Limited, Number One Southwark Bridge, London SE1 9 HL, United Kingdom. Tel: 020 7873 3000; Fax: 020 7407 5700 Editor: Lionel Barber
Subscriptions and Customer service: Tel 0800 028 1407; subscriptions@ft.com; www.ft.com/subscribenow
Advertising: Tel: 020 7873 4000; ukads@ft.com Letters to the editor: Fax: 020 7873 5938; letters.editor@ft.com Executive appointments: Tel: 020 7873 4909; www.exec-appointments.com
Printed by: St Clements Press (1988) Ltd, London, Newsprinters (Knowsley) Limited, Merseyside and Smurfit Kappa News Press Ld, Kells, Ireland
©Copyright The Financial Times Limited 2015. All rights reserved. Reproduction of the contents of this
newspaper in any manner is not permitted without the publisher’s prior consent. ‘Financial Times’ and ‘FT’ are registered trade marks of The Financial Times Limited. The Financial Times adheres to a self-regulation regime under the FT Editorial Code of Practice: www.ft.com/editorialcode
Reprints Are available of any FT article with your company logo or contact details inserted if required (minimum order 100 copies). One-off copyright licences for reproduction of FT articles are also available. For both services phone 020 7873 4816, or alternatively, email syndication@ft.com
FT Cityline For real time share prices call 0905 817 1690 or go to http://www.ft.com/servicetools/ftmobile/cityline. Calls cost 75p/min.
Newspapers support recycling The recycled paper content of UK newspapers in 2013 was 83.5%
ELIZABETH RIGBY — DEPUTY POLITICAL EDITOR
There is a two-word text message ambi- tious Conservative MPs dread receiving on their mobile phones as they cam- paignforMay’sgeneralelection.
“Not helpful” is the trademark repri- mand sent by Lynton Crosby, the party’s pugnacious Australian election strate- gist, to political unfortunates who stray fromhiscarefullycraftedscript.
Since Mr Crosby went full-time as election chief in autumn 2013 on a £1m- plus contract, the Tory campaign head- quarters has been in almost total lock- downandMPsarekeptonatight leash.
“He runs a campaign like a military operation,” observes a senior Conserva- tive politician who worked with Mr Crosby on former party leader Michael Howard’s unsuccessful 2005 campaign. “He’s a disciplinarian. Once the message is decided, he makes sure no one says anythingelse.”
The stocky, grey-haired 58-year-old master of election strategy made his name securing four terms in office for John Howard, former Liberal party Aus- tralian prime minister, but has long out- grown his homeland. His consultancy boasts 250 campaigns in 57 countries; clients include oil, car and tobacco com- panies. In the UK, the “Wizard of Oz” helped secure two London mayoral vic- tories forBoris Johnson.
“He is the most effective political strategist ever to emerge from the Aus- tralian political scene,” says Stephen Mills, author of The Professionals, a book charting the rise of political campaign- ers Down Under. “He is also the most commercially successful at exporting thebusinessmodel.”
TheToriesdid try tohireMrCrosby in 2010 but he was not available, to the regret of George Osborne, chancellor, who headed a campaign blighted by squabbling. “The last time we never really settled on what we were saying,” admits one senior figure from the 2010 campaign. “This time it’s very straight- forward.”
The message is clear: the Conserva- tives’ economic record and David Cam- eron’s leadership. Anything that detracts from that, what he terms the “barnaclesontheboat”, is tobeavoided.
It is a familiar tactic, says one person who worked with him on Mr Johnson’s 2008campaign.“Ken[Livingstone]had a massive lead on transport so we ignored that issue and poured every- thing intocuttingdownoncrime.”
The schedule of government news announcements (or “grid”) is tightly controlled by Mr Crosby. Since January, Mr Cameron has started each week with a “theme” — the budget deficit, jobs, or home ownership, for example — and announcements that detract from those themes are blocked. “Everything is run through the Lynton filter,” observes one seniorcivil servant.
The “air war” over the news agenda is backed up by a detailed on-the-ground campaign strategy: the “40:40” initia- tive, which targets wins in 40 new mar- ginal seats,whilealsopouringeffort into keeping another 40 seats where current ToryMPshaveslimmajorities.
Over the past year, Mr Crosby’s politi- cal polling company, Crosby Textor Group, has conducted private polling in all 80 of these seats at an estimated cost of £10,000 per survey, say party
sources. MPs and prospective parlia- mentary candidates are given detailed feedbackontheirperformance.
“He looks at whether you are popular, what people think of you . . . He’ll say things like, ‘You are not doing enough for the town’, so you need to set up this campaign or that campaign,” says one MPdefendingamarginal seat.
Each constituency has a dedicated agent reporting into 10 regional cam- paign managers who feed intelligence back to Mr Crosby. At campaign head- quarters in Matthew Parker Street, Westminster, Mr Crosby has installed a central desk where he sits with his core team. “He’s very accessible and talks to all the interns,”saysoneparty figure.
A workaholic, Mr Crosby’s emails to staff start coming through from 5am. The campaign chief also keeps tabs on all the evening political television shows and news bulletins — breaking only from his gruelling work schedule for sessionswithhispersonal trainer.
But he also likes to get out on the cam- paign trail, leaving his home in Knights- bridge at the weekends with his wife, Dawn, to visit different parts of the countryandaddress localassociations.
For the most part, MPs tolerate his
blunt, disciplinarian style for a profes- sionally-run campaign. Every four to six weeks he gathers the parliamentary party for a pep talk: stick to the script and focus on the message. “He steadies theirnerves,”saysaparty figure.
But there are grumblings too about his abrasive and ruthlessly focused approach. One female MP says she finds himsexist: “Ihear it fromalotofwomen thathe isdefinitelyaman’sman.”
Others have a more fundamental con- cern: that Mr Crosby’s tactics are failing to boost the party’s support, with the Conservatives still bobbing between 31 and 33 per cent in national polls. “I can’t see how a campaign that is safety first can break through to the extra 5 per centweneed,”saysaformerminister.
“I hope he has a plan,” says one junior minister. “We’ll see soon enough, but he’s not a miracle worker. Maybe the Wizard of Oz will actually be revealed to be a little man behind a curtain blowing hot air and telling you to f**k off, I can’t getyoutoKansasafterall.”
Additional reporting by Jamie Smyth in Australia Minority better than coalition page 12
Tories hope ‘Wizard of Oz’ magic will steer them back to Downing Street Australian campaign manager ruffles feathers but MPs will tolerate blunt style if he can deliver
ELIZABETH RIGBY AND JIM PICKARD
Ed Miliband is edging closer to ruling out any form of post-election deal with the Scottish Nationalists, with mem- bers of his own cabinet urging the Labour leader that failure to do so will costvotesbothsidesof theborder.
One senior party figure said the “direc- tion of travel” was towards ruling out any deal with the SNP amid alarm from within his party about the impact con- tinuedspeculation ishavingonLabour’s electionprospects.
Scottish Labour MPs fear the possibil- ity of a pact could make people more likely to vote for the nationalists, while there are also concerns it could put vot- ers off supporting Labour in English marginals.
“AlotofScottishMPswantus torule it out and quite a few people in cabinet too,” said one figure. But ruling out any deal could be fatal to the party’s chances of running an administration in London given its fading lead in the national polls.
Scotland is becoming the focal point for Lynton Crosby’s “wedge strategy” whereby the Tory campaign chief picks on a divisive issue to appeal to tradi- tional Labour voters while sowing the seedsofdissentwithin its leadership.
Party insiders say those attacks are going to be intensified in the last week of March.
The Tories are arguing that a vote for Labour could be a vote for an SNP- Labour alliance — as portrayed in a poster of a miniature Mr Miliband sat in the pocket of Alex Salmond, the former nationalist leader. That message is already sinking in, according to private polling by the Conservatives in the past fortnight.
For Mr Miliband the speculation is an unwelcome distraction to his core mes- sages about “cost of living” and “secur- ingthefutureof theNHS”.
The Labour leader is holding a pre- election rally in Birmingham today that will be attended by more than 1,500 partymembers.
There he will roll out the party’s elec- tion slogans: “A better plan for a better future” and “Britain only succeeds whenworkingpeoplesucceed”.
But Scotland has been dominating private conversations at the top level of Labour, with Jim Murphy, the party’s leader in Scotland, making a presenta- tion to the shadow cabinet on Tuesday. The polls have shown little respite for the party, suggesting a wave of seats changinghandstotheSNPonMay7.
The Tory attacks have left Labour grappling how to respond to the ques- tion of whether or not it would do a deal withtheSNP.
Mr Miliband said on BBC Three on Thursday that the idea of a coalition with the nationalists was “nonsense”. Later, Lucy Powell, who is running the day-to-day campaign, went on BBC’s Question Time programme to say there was “absolutely no prospect of a Labour/SNPcoalition”.
Ruling out a “coalition”, however, is easy for Labour — given that the SNP has already done so. What is difficult for the party is ruling out a looser arrange- ment such as “confidence and supply” where the junior party agrees to back its bigger partner at set piece events such as the Budget — but does not take any ministerialpositions.
Party politics
Labour leader close to ruling out deal with nationalists
It was the election that John Howard seemed destined to lose. For most of 2001, his Liberal party was trailing in the polls until a controversy erupted over Iraqi asylum seekers attempting protection in Australia.
“We will decide who comes to this country,” said John Howard at his party’s electoral launch, creating a slogan that dominated the campaign.
Mr Howard, right, says he came up with the slogan himself, but Lynton Crosby was the master tactician who realised it struck a chord with voters and pressed the issue right up until polling day. “He saw to it that all the polling booths on election day had a part of the display covered with a photograph of me
and a big banner with the slogan on it,” said Mr Howard in an interview. He went on to win.
Mr Crosby first worked with Mr Howard as deputy campaign director on his 1996 election victory. The two men formed a bond that helped Mr Howard triumph in four elections and elevated Mr Crosby’s reputation to almost mythical status Down Under.
“Lynton places a very strong emphasis on a disciplined, consistent message,” says Mr Howard. “He also understood for centre-right parties to win in Australia or the UK they need to harvest
their base vote but also get votes from what I would loosely call blue-
collar conservative voters. Mr Crosby became a master of “wedge politics”, whereby he introduces divisive issues such as asylum seekers. These issues typically appeal to blue-collar voters who would vote for a leftwing party, while sowing seeds of dissent within that party’s leadership. “In 2001, they won the election by mainstreaming the anti- refugee message in an almost xenophobic manner,” says Bruce Hawker, a political strategist who advised the Australian Labor party.
Analysts say Mr Crosby’s ability to direct campaign resources to marginal
constituencies was a crucial factor in his success. He was
also skilled in playing to Mr Howard’s strengths while
controlling his weaknesses. He advised Mr Howard to limit his
appearances in TV leadership debates but go on talkback radio — a medium that carries a lot of weight in Australian politics. “When he was the director, you had the TV debate early in the campaign and then that was it,” says Mr Howard.
Jamie Smyth, Sydney.
BARNEY THOMPSON
It is one market where bubbles are alwayswelcome.
“Champagne is hot again,” said Steve Daniel of the importer Hallgarten Druitt & Novum and a 30-year veteran of the winetrade.
Pouring a sample of biodynamic bub- bly at the annual UK tasting day in Lon- don this week, he added: “In the past 12 months both the champagne houses and the growers have felt the recovery begin.”
Of the 307m bottles shipped in 2014 from the Champagne region, French drinkers consumed more than half, get- ting through more than 162m of the total. The next biggest champagne mar- ket was the UK, with British retailers stocking up on 32.7m bottles worth more than £341m, out of a total export figureof145mbottles.
That represented a 6.1 per cent rise on the previous year and easily beat the US, which imported 19.15m bottles, Ger- many (12.6m) and Japan (10.4m), the next three thirstiest markets, according to the Comité Champagne, which repre- sentshousesandgrowers.
“We often think of champagne sales as the barometer of our national econ- omy and the past year was no excep- tion,” said Françoise Peretti, director of Champagne Bureau UK, which hosted the tasting for 63 brands. “When the economic news is better, we drink more
champagne — there is more to cele- brate.” The UK has long been cham- pagne’s leading export market, holding the number one slot for almost every year since the end of the second world war. But the real explosion took place around the millennium: in 1999, as rev- ellers geared up for their new year’s par- ties, annual imports reached 32.4m bot- tles, up by a third on the previous year andmorethan50percenton1996.
Sales dipped in 2000 because the nation’s retailers had bought every bot- tle theycouldget theirhandsontheyear
before and were overstocked after the millennium party. But as the economy boomed UK imports rose steadily, reaching 39m by 2007, fondly remem- bered by the trade as the annus mirabilis for theBritishchampagnemarket.
Champagne’s fortunes have always closely followed recessions and recover- ies and the recent crisis was no excep- tion. The UK market fell back to 30.5m in 2009, a sharper fall than in the rest of the world. Since then, sales have been steady but have fallen short of the pre- crisispeak.
The famous brands and finest wines got through the recession almost unaf- fected, said Andrew Hawes, managing director of Bollinger’s UK business, which he attributes to the rich interna- tionalcommunity“comingtoLondonto dotheirdeals”.
“You have to see London in a global context, not a UK one,” Mr Hawes said. “In the champagne market, this is a glo- bal city-state with wealthy consumers from Russia, Europe and Asia moving through. The City boys are actually a volatile market, but it’s the City boys whoarenowapartof therecovery.”
Imports. Thirst for success
If expensive bubbly is
a barometer of economic
strength, things are looking up
Popping corks: guests sample champagne in Westminster this week — Thea Baddiley
3 Born 1956, Kadina, South Australia 3 Education Economics degree from the University of Adelaide 3 Positions General adviser, deputy director and federal director in the Australian Liberal party (1980s- 2002); joint partner in the Crosby Textor Group (2002 to present); David Cameron’s chief election strategist (2012-present) 3 High points Four electoral victories for Australia’s John Howard; leading Boris Johnson to success as London mayor in 2008 and 2012 3 Low points Failing to win the UK 2005 election for Michael Howard
Crosby’s life works
30 global locations • www.efginternational.com
EFGslogan - 112x50mm - Generic ad - Q - Publication : Financial Times advert 2014 (20.08.2014)
A private bank unlike any other.
MARCH 14 2015 Section:World Time: 13/3/2015 - 19:11 User: conlonj Page Name: UKNEWS1, Part,Page,Edition: LON, 2, 1
14 March/15 March 2015 FTWeekend 3
NATIONAL
JAMES PICKFORD
Art has soared in a luxury investments index—passing its2008pre-crisispeak, and delivering a better return for the well-heeled collector than fine wine, jewellery,coinsorantiquefurniture.
The art category rose 15 per cent in 2014, compared with a 10 per cent rise overall in the annual index produced by the London-based property agent Knight Frank. In the decade since the index was first compiled, art has risen 252 per cent, beaten only by classic cars (487percent).
American pop art was the best per- former of the individual categories mentioned, rocketing 86 per cent in the past year and a cumulative 351 per cent over the decade, as moneyed collectors snapped up the instantly recognisable images of painters such as Warhol, Lich- tensteinandRauschenberg.
James Goodwin, an independent art lecturer, said this was partly explained byUSbuyers’deeperpockets.“Theirart is pricier because there’s a national cul- turalelementtothebuying.”
The art index dropped 30 per cent fol- lowing the financial crisis, but it has staged a strong recovery, driven by wealthy new international art collectors and an increasingly globalised market for thetopechelonofwork.
Buyers from emerging markets in South America, the Middle East, China and Southeast Asia have moved beyond purchasing art from their home territo- ries to pursuing the most sought-after works internationally.
Viola Raikhel-Bolot, managing direc- tor of 1858 Ltd, a London-based com- pany that helps wealthy clients build their collections, said: “There’s a very strong desire to learn because they want to make sure they’ve made the right buying decisions: they’re wearing the right watches, driving the right cars and havetherightpicturesontheirwalls.”
Art’s attractions as an asset class include its portability, lack of correla- tion with traditional investments and “safehaven”characteristics.
Some critics, such as Nouriel Roubini, an economist and art collector, have said the market is also used for money laundering and tax evasion, and have calledforregulators tobring it toheel.
The highest saleroom prices have been achieved in postwar and contem- porary art as well as Impressionist and modern art, with auction houses break- ingrecords inrecentyears.
But the layerof themarket thatgener-
ates the most eye-catching results is thin: 90 per cent of artists whose works came to auction in 2013 were sold for less than€50,000,accordingtotheTefaf Art Market Report 2014. Fewer than 50 artists had top-selling lots for more than €10m.
The market is also volatile. The lux- ury index found art subject to larger fluctuations than any other “invest- mentofpassion”,andmorevolatile than goldortheFTSE100index.
The Knight Frank art data, compiled by Art Market Research, is based on hammer prices from 32 auction houses, mainly in Europe, for Old Masters, European 19th century art, Impression- ist and contemporary art, including sculpture.
It pulled out several genres of art to compare their change in value. British Old Masters had a better year than Dutch, rising 84 per cent against 13 per cent. Russian and Chinese contempo- rary art both fell in 2014, by 3 per cent and 13 per cent respectively — though over the decade they have risen by 284 and218percent.
Ms Raikhel-Bolot pointed to another
factor behind rising prices in the fine art market: the desire among the very wealthy to leave a legacy. A boom is under way in the construction of private museums and foundations to house the worksacquiredbysuper-richcollectors, particularly in emerging markets such asAsia.
The motive is both financial and per- sonal. “If you’ve bought well and accu- mulated a significant collection, you’re not only leaving your name in lights, but you’ve secured those assets for future generations, too,”shesaid.
The art category was marginally out- performed by classic cars, which showed a 16 per cent rise in 2014. How- ever, this represented a sharp slowing in its previous growth rate. Antique furni- ture was the dog among luxury invest- ments: it fell 9 per cent in 2014, or 28 per centoverthepastdecade.
Mr Goodwin said the current trend — for new work to fetch higher prices than old — went against historical norms. But thiswasnot thefirst timesuchareversal hadtakenplace.
He pointed out: “In the mid-19th cen- tury, people were astonished that buy- ers were willing to pay more for Pre- Raphaelite pictures than for Raphael himself. It’s still thesametoday.”
Luxury index
Pop art in the frame as modern works tempt investors Wealthy collectors have seen their assets soar past the pre-crisis peak
‘They’re wearing the right watches, driving the right cars and have the right pictures on their walls’
JIM PICKARD, HENRY MANCE AND PEGGY HOLLINGER
London’s two main airports are fight- ing to win public support ahead of an imminent decision on whether Heath- row or Gatwick should benefit from extra capacity to solve the southeast’s capacitycrunch.
John Holland-Kaye, chief executive of Heathrow, has even raised the possibil- ity that Gatwick may be promoting a secondrunwaysimplytostymiehisown plans forathird.
“Some people I talk to would say, of course, they [Gatwick] never mean to do anything anyway; they just want to stop us expanding,” he said. “I have no idea.”
The comments, dismissed as “disin- genuous nonsense” by Gatwick, demon- strate how tensions are rising ahead of the publication of the independent Dav- ies Commission into Britain’s aviation capacity.
The commission will this summer recommend its preferred location for a new runway, with all three shortlisted optionseitheratHeathroworGatwick.
The two airports have spent millions of pounds on campaigns involving mar- keting,publicrelationsandlobbying.
The Gatwick adverts have focused on the environmental impact of the Heath- row third runway and the impact of noiseon320,00people.
Mr Holland-Kaye accused his rival of a “negative” campaign designed simply tostoptheHeathrowthirdrunway.
“I don’t know whether they’re doing that because they think politically that’s thebestwaytostopourmomentum,”he said. “Or whether they think that actu- ally from an economic point of view they are best served by nothing happen- ing.”
A spokesman for Gatwick said its management was “intensely serious” about a second runway and denied that itscampaignhadbeennegative.
Forthepastyearthetwoairportshave taken out lavish adverts in the press and online as well as billboards and posters in prominent places, including the entrancetotheHouseofCommons.
Heathrow even targeted the UK Inde- pendence party’s spring conference in Margate with a full-page advert in the schedule.
Gatwick, Britain’s second-busiest air- port, launched its campaign a year ago in the Shard, Britain’s highest sky- scraper. It has spent more than £10m on the campaign, including design fees, consultancyandadvertising.
The approach of Heathrow, which has not disclosed its expenditure, has been nationalistic, emphasising the UK’s glo- bal status.
Both airports are expected to step up their marketing spending before the election.
Heathrow v Gatwick
London airport rivals in final approach to win over public
Gerhard Richter’s ‘Wand’ (‘Wall’), which Sotheby’s sold for £17.4m in 2014, is flanked by pictures by Andy Warhol and Alberto Burri — Luke MacGregor/Reuters
MARCH 14 2015 Section:World Time: 13/3/2015 - 19:43 User: owendavid Page Name: UKNEWS2, Part,Page,Edition: LON, 3, 1
4 FTWeekend 14 March/15 March 2015
going to Harvard or coming to Cam- bridge.”
He accepts the Home Office’s argu- ment that there is no specific cap on international students, but protests that the way immigration has been handled has been “really quite crass”. Immi- grants, he says, are “not all spongers off the NHS and elsewhere, they’re active contributors tooureconomy”.
But despite his concerns over fund- ing, immigration and Europe, he is not ready to cut ties with the state. While it has often been suggested that universi- ties such as Oxford and Cambridge have the necessary status to go private, he saysthiswouldbea“verybig leap”.
“I have no desire to go private,” he says firmly. “You have to ask yourself, what benefits would you have? Does Cambridge university feel under threat
by any of the political parties? Well, there are financial issues that we would have to deal with but nobody is threat- ening our autonomy and our capacity to ensurethatwedeliveraneducation.”
Looking ahead, however, he admits that after the election, the next chancel- lor of the exchequer will have difficult decisions to make about the budget, and especially in weighing long-term invest- mentsagainstshort-termdetriments.
“Do you fill the pothole in the road or do you have an extra student at Cam- bridge?”SirLeszekponders.
“Those are not easy [questions] that they will have to respond to. I clearly am biased, and would opt for the latter any day.”
NATIONAL
EDWIN HEATHCOTE
A thousand new books a day. It builds up. So much so that Oxford’s Bodleian Library, one of Europe’s oldest and one of the world’s biggest, has had to com- pletely reconstruct its 1930s building in a£78mdesignbyWilkinsonEyreArchi- tects, which opens to the public next weekendafter threeyearsofwork.
The building is across the road from the library’shistoricclusterofbuildings, which architect Jim Eyre describes as “one of the most architecturally signifi- cant set pieces in Britain” comprising Christopher Wren’s Sheldonian Theatre and Nicholas Hawksmoor and James Gibbs’ClarendonBuilding.
The Bodleian dates back to 1602, with roots in even older collections, but this building was designed in the 1930s by GilesGilbertScott, architectofBankside power station, now Tate Modern, as well as Liverpool Anglican Cathedral and the originalLondonphonebox.
Architecture. Oxford
New chapter begins for Bodleian as it reopens Makeover attempts to make
one of world’s biggest libraries
more accessible to the public
Wilkinson Eyre’s sympathetic but extensive rebuilding of Scott’s structure is not, however, about storing more books; in fact it will house 50 per cent fewerbooksthanitdidpreviously.
Rather, it is about opening the build- ing up and creating the optimum condi- tions for the storage of one of the world’s finest collections of books, manuscripts, mapsandarchives.
The building might not be as old as its neighbours but it has a fascinating his- tory. It was completed in 1940 and immediatelyrequisitionedforwaruse.
The building housed the Naval Intelli- gence Division’s Inter-Services Topo- graphical Department and the Red Cross prisoners of war postal book serv- ice. Among other things, it played a part intheplanningof theD-Daylandings.
A young naval intelligence officer, Ian Fleming — the James Bond author — later “donated the manuscript of Chitty Chitty Bang Bang in recognition of the role the building had played during the war”, according to Richard Ovenden, the librarian. “At the same time, the sci- entists working on the industrialisation of penicillin were manning the anti-air- craftdefencesontheroof.”
When it was opened to the public in 1946,KingGeorgeVIbrokethekey in its ceremonial door. The lock and broken key now reside in the library’s collection and the door, in its little oval lobby, will beopentothepublic for thefirst time.
Scott’s building was remarkably modern for its time. “It was the first use of aluminium windows in Britain,” says Mr Eyre, and it also had a fumigation roomforthetreatmentofbookworm.
The architect managed to reconcile the medieval surroundings and materi- als with classical proportions and subtle ArtDecostylings.
The most striking part of the rebuild- ing has been the opening of the library to Broad Street. A row of ground floor windows has been transformed into an arcade, open to the street so the tourists — who, according to Mr Ovenden, “used to wonder what this building was, one
asked if it was a swimming pool” — are now able to drift in. Inside they can enjoy the new Blackwell Hall, a grand, double-height exhibition space, atop which the bookstacks are visible on glazed walkways known as The Floating Stack. Among the highlights of the new building are an impressive new roof- level reading room and terrace with viewsacross thecity’s skyline.
Other facilities include a new visiting scholars’ centre, lecture and seminar rooms, cold store for photographs and generous, flexible, high-tech conserva- tionfacilities.
There are 44km of book shelves and new accommodation for the Bodleian’s hugecollection,whichincludesarchives from Percy Shelley, JRR Tolkien, CS Lewis and Alan Bennett. One of the most pleasing additions is at a small but very human scale — a chair designed by BarberOsgerby, the team responsible forLondon’sOlympictorch.
The result of a competition, the new Bodleianchair,whichwillbemadecom- mercially after many inquiries, is an ele- gant oak piece with an accommodat- ingly curving form. It is designed so that readers can tip slightly forward towards their desks. The chair exemplifies the attention to detail visible throughout the building. From the new reading desks to the internal window niches with dramatic views across the interior, every detail appears to have been con- sideredandthoughtthrough.
The boundaries between private and public space in Oxford have tradition- ally been unclear and you might sud- denly find yourself being stopped from enteringaquadrangleoracourtyard.
“The architecture of the new library helps us broaden access not only to the university but it makes a place which is clearly and deliberately open to the public,” Mr Ovenden says. “We hope it will broaden engagement with the col- lectionbeyondtheinstitutionandthat it will inspire.”
Oxford Literary Festival, partnered by the Financial Times, holds events in the newly opened Bodleian
Revamp: the Charles Wendell David reading room, which houses oriental manuscripts and rare books
Exterior of the Weston Library, formerly the New Bodleian, during redevelopment Ben Bisek/Wilkinson Eyre Architects
HELEN WARRELL
The wood-panelled 18th-century Dome Room where Cambridge’s vice-chancel- lor works is a refuge nestled deep in the university’s Old Schools site. Portraits of two dour-faced Elizabethan archbish- ops stare down at the incumbent, Pro- fessor Sir Leszek Borysiewicz. The office feels remote from the wider world — an impressionSirLeszekiskeentodispel.
Ahead of a speech in Vienna about universities’ role in the EU’s economic recovery, the vice-chancellor says he would campaign to keep Britain in the EU if there was a referendum on mem- bership in 2017, as the Conservatives havepromised.
“I passionately believe that the Euro- pean Union has actually done an awful lot for continental Europe,” says Sir Leszek, the son of Polish refugees. He has another factor to consider: Cam- bridge academics depend on the EU for 15percentof theirresearchfunding.
“At the end of the day we also have to listen to the totality of what Europe means for industry, what it means for Britain’s position in the world, what it means for the status of our higher edu- cation institutions,” he says. “Pulling out, to me, out of an organisation like this, seems a rather facile way of dealing withsomeof the issuesEuropeposes.”
UK universities are battling not only to maintain influence on the European continent, but far beyond. They face competition from new, generously- funded higher education institutions in countries such as China and South Korea, which are surging in interna- tional rankings. Traditional rivals in the US, Australia and Canada are increas- ingly attractive to globally mobile stu- dents,particularlypostgraduates.
Sir Leszek, whose own field is medical science and immunology, argues that at a time when Britain should be wide open to talent from abroad, the govern- ment’s rhetoric on immigration is hav- inganegativeeffect.
“We have to fight hard enough to attract those students, to get the very best students without perceptions that we are a difficult country, that we’re not welcoming,” he says. “It’s those percep- tions that then begin to impact on the student who might be swaying between
Interview. Professor Sir Leszek Borysiewicz
Cambridge says migrant rhetoric deters students
Vice-chancellor rejects exit
from EU which gives university
15% of its research funding
‘I have no desire to go private. There are financial issues but nobody is threatening our autonomy’
Professor Sir Leszek Borysiewicz: difficult decisions loom on budget
MARCH 14 2015 Section:World Time: 13/3/2015 - 18:54 User: owendavid Page Name: UKNEWS3, Part,Page,Edition: LON, 4, 1
14 March/15 March 2015 FTWeekend 5
Eban, Israeli foreign minister, 1966-74. Mr Herzog’s francophone-educated
mother was born in Egypt and emi- grated to Palestine in 1947. She and Mr Herzog’s aunt (Mr Eban’s wife) coined his nickname, Buji, from a com- bination of bubu (“doll” in Hebrew) and joujou (a word for “toy” used by French children).
If he becomes prime minister, Mr Herzog is promising that in his first 100 days he will mend ties with the US, which have been frayed over Iran, insti- tute a “process” (he does not use the word “peace”) with the Palestinians and earmark 7bn shekels ($1.7bn)for a two- yearsocio-economicplan.
He likens running Israel to piloting a midsize ship on choppy waters. The metaphor is apt for a country whose ties with the US, its main ally, and Europe, its biggest trading partner, have been tested in Mr Netanyahu’s most recent term. Next Tuesday Israelis will help decide whether they want to give him a turnat thewheel.
After working in corporate law at a companyfoundedbyhis father,MrHer- zog entered politics under Ehud Barak, former Labour prime minister, and has held five ministerial posts in various governments.
He parries attacks on his security cre- dentials by speaking of his record as a major in Unit 8200, an elite intelligence unit, and seven years’ experience in dif- ferent prime ministers’ security cabi- nets and insists there is “no daylight” between his and Mr Netanyahu’s assess- ment of the threat from Iran, though he says the prime minister’s speech to Con- gressonthe issuewasa“mistake”.
During the campaign he has played up his blue-blood pedigree, analogous in Israeli terms to that of the Kennedys in the US. Mr Herzog’s paternal grandfather was chief rabbi of Ireland; his late father Chaim was Israel’s sixth president, 1983-93, and, in the mid- 1970s, its ambassador to the UN in New York, where Mr Herzog attended high school. His uncle was Abba
after two years. Self-effacement and teamwork of this type are rare in Israeli politics and the party has climbed from number three in the polls to number onesince.
“In Herzog, you have someone who is not charismatic — that is obvious — and someone who is not a typical leader, but is quite experienced,” says Avraham Diskin, a professor of political science at HebrewUniversity.
parties such as Yair Lapid’s Yesh Atid and give his party 30 seats in the 120- seatKnesset.
The final polls before the vote, pub- lished yesterday, indicate his party could get 25 or 26 seats, four more than Likud — a big enough lead to give him first crack at forming a government, but a small enough share of overall seats to suggest tortuouscoalitiontalks.
Mr Herzog cannot match Mr Netan- yahu for theatrical appeal. The prime minister is an arresting orator with memorable turns of phrase. The Zionist Union leader speaks softly, if eruditely, with a subtly cutting wit that can come across as sarcastic. He even pokes fun at his own lack of charisma and in one election advertisement an actor’s deep voicewasdubbedoverhisown.
But less charisma may be what Israeli voters are looking for after three terms of theflamboyantMrNetanyahu.
On the campaign trail Mr Herzog dis- plays a keen memory and grasp of detail on a range of policy issues from Iran to gay rights, addressing questioners by name. “When you travel with him across the country, you meet people who approach him to thank him for things he did,” says Stav Shaffir, a mem- berofhisparty.
The Zionist Union, so renamed to deflect the rightwing’s questioning of its candidates’ patriotic credentials, has been growing in popularity since Janu- ary, when Mr Herzog merged Labour with Ms Livni’s smaller Hatuna and promised to hand her the premiership
JOHN REED — JERUSALEM
Chants of “revolution!” and “the next prime minister” erupted in Tel Aviv’s Carmel market on Thursday as Isaac Herzog, Israel’s centre-left opposition leader and frontrunner in next Tues- day’s election stepped out of a car with hisrunningmateTzipiLivni.
The scrum of cameras surrounding the 54-year-old leader of the Zionist Union, formerly Israel’s Labour party, was a sign of how Israel’s electoral cam- paign — until now a listless dead heat between Mr Herzog and Benjamin Netanyahu, took off in earnest this week, just days before the vote, after polls swung decisively in the Zionist Union’s favour. Mr Herzog’s party is ahead of the prime minister’s Likud by a projected margin of three to four seats, possiblyenoughto leadacoalition.
Opinion polls in Israel can be unrelia- ble and the opposition leader will have a tricky time shoring up support from rival centrist, Arab, religious and other parties poised to join the next Knesset, evenifhewinsthemostvotes.
But the former lawyer and veteran politician has been buoyed over the past week by signs of weakness from a seem- ingly panicked Mr Netanyahu, who this week claimed there was a “huge world- wideeffort” tobringdownLikud.
“I am the only alternative to replace Bibi Netanyahu and I intend to win,” Mr Herzog has been telling Israelis during the campaign, urging voters not to “waste” their ballots on smaller centrist
INTERNATIONAL
Herzog urges Israelis to put blue blood before charisma Zionist Union leader cannot match Netanyahu for theatrical appeal
Projected Knesset seats
Source: Migdam Polling Institute, for Yedioth Ahronoth newspaper. Polling sample of 1,032 people, margin of error 2.5%
Zionist Union
22 13 12 12
On the stump: Isaac Herzog campaigns at a fruit and vegetable market in Tel Aviv on Thursday Baz Ratner/Reuters
‘I am the only alternative to replace Bibi Netanyahu and I intend to win’ Isaac Herzog
MARCH 14 2015 Section:World Time: 13/3/2015 - 17:35 User: jamesa Page Name: WORLD1, Part,Page,Edition: LON, 5, 1
6 FTWeekend 14 March/15 March 2015
INTERNATIONAL
GEORGE PARKER — LONDON
The UK’s relationship with China changed fundamentally in 2013 when David Cameron’s government decided to push hard to become Beijing’s inter- national investment destination of choice.
Britain was stagnating economically and Mr Cameron could see France and Germany building trade ties with China while he was mired in a dispute with Beijing over his meeting with the Dalai Lamaayearearlier.
Mr Cameron made it clear in 2013
that China was welcome in every area of the UK economy, including London’s financial district and the nuclear power sector. The premier had no plans for anothermeetingwiththeDalaiLama.
Boris Johnson, mayor of London, gave an insight into Britain’s new trade diplo- macy on a visit to Beijing in 2013 when he said: “I don’t walk into a meeting and say, ‘I say, you chaps, how’s freedom doing?’”
In its own modest way, 2013 marked Mr Cameron’s own pivot to Asia, even at the expense of straining relations with theUK’smost importantglobalstrategic partner: theUS.
Those relations were strained again this week as the White House lamented London’s “constant accommodation”of China after the UK decided to join a new
China-led financial institution that couldrival theWorldBank.
Washington’s irritation with Mr Cam- eron has also been expressed publicly in recent weeks over the prime minister’s refusal to commit to spend 2 per cent of the UK’s gross domestic product on defence—aNatopledge.
The fact that the UK defied Washing- ton on the Asian Infrastructure Invest- ment Bank reflects a cold calculation in London that while the UK-US relation- ship is “broad shouldered” and durable, China is a growth market that should be nurtured.
Allies of George Osborne, chancellor of the exchequer, said the decision was taken because the UK wanted to be in at “the ground floor” to ensure the new investment bank was ethical, transpar-
ent and efficient. But it is also another example of the UK wanting to be the first mover in initiatives involving China, including a push by Mr Osborne to make the City of London Beijing’s entrepôt toglobal financialmarkets.
The decision by the White House to
rebuke its ally for supping with the Chi- nese over the investment bank will serve only to strengthen London’s pitch to Beijing that it is a robust and reliable new global partner. UK officials also see the decision as a signal to Mr Cameron’s critics that far from turning his back on the world — or spending too much time with traditional partners such as the US —Britainhasglobalambitions.
Sir Richard Ottaway, chairman of the House of Commons foreign affairs com- mittee, said the US-UK spat over the new bank reflected the fact that Britain, and the rest of Europe, viewed China in averydifferentwaytotheUS.
“The US sees China in a strategic way — as a major maritime power in the Pacific. The Europeans see China in commercial terms,” he said. Sir Rich-
ard’scommitteewasrefusedpermission to visit Hong Kong last year to investi- gate the suppression of pro-democracy protests intheformerBritishcolony.
He said he wished Mr Cameron’s gov- ernmenthadrespondedmorerobustly.
“I think the Chinese ambassador should have been summoned and told the Chinese government should not behavethatway,”SirRichardsaid.
Yet he believes UK-China trade is resilientandcansurvivesqualls.
London officials insisted Washington knew the UK was about to sign up to the Asian investment bank and said the decision had to be brought forward becauseof theMay7generalelection. Commerce and control page 9 Editorial Comment page 10 Gideon Rachman page 11
GEOFF DYER — WASHINGTON
The Anglo-American dispute over membershipofanewBeijing-leddevel- opment bank is one of the early chapters in the growing competition between the US and China over who will write the rules for the 21st century globaleconomy.
The Obama administration reacted angrily to the British decision on Thurs- day to become a founding member of the Asian Infrastructure Investment Bank, a $50bn Chinese initiative that could end up rivalling the Washington- basedWorldBank.
Britain will become the first G7 econ- omy to join the AIIB, giving the bank an important boost of credibility and potentially funds at a time when it has beenstrugglingtoestablish itself.
The new Asian bank is one part of an ambitious Chinese push to create a new generation of financial and economic institutions that could give it greater political influence in the Asia-Pacific region and potentially in other parts of theworld.
“At the heart of this dispute is the long-term contest over the rules, norms and institutions that will govern eco- nomics and politics in Asia,” says Ely
Ratner, senior fellow at the Center for a New American Security, a Washington think-tank.
In addition to the AIIB, China is the leading country behind the Brics devel- opment bank that was launched last year and has announced a $40bn Silk RoadFundtobackprojects thatwill link ChinatocentralAsia.
The new Chinese initiatives all meet a gaping financial hole — the demand for infrastructure in developing countries. The Manila-based Asian Development Bank — one of the direct rivals of the AIIB — has estimated that the East Asia region needs infrastructure investment of $8tn over the next decade to maintain economicgrowth.
But the Chinese initiatives also repre- sent a direct political challenge to the Washington-based institutions, such as the World Bank and the International Monetary Fund, where the US has been the dominant voice since their founda-
tion after the second world war. The US has its own plans to forge a
new economic architecture for the Asian region, most notably through the Trans-Pacific Partnership, a 12-nation trade agreement that is under negotia- tion. Combined with the separate trade agreement the US is discussing with the EU, the broader American strategy is to establish a new set of global trading rules thatwouldsethigherstandardsfor intellectual property rights, state subsi- dies and environmental protection — all areas where China and the US have dif- ferent interestsandapproaches.
According to Yun Sun, an expert on Chinese foreign policy at the Stimson Center in Washington, China has already faced a number of internal chal- lenges as it tries to set up the AIIB. Offi- cials have promised the new bank will deliver funds with less bureaucracy than the World Bank, but they also real- ise that the rigorous conditions adopted by the other banks are partly designed toprevent ill-advised loansandtomain- tainastrongcredit rating.
She adds there has been pressure from interest groups in China to use the bank’s loans to “advance China’s eco- nomic agenda, especially the export of Chinese products and services”, while Chinese foreign policy strategists argue thebank“shouldsupportChina’s strate- gic interests, with a result that countries disrespectful of China should receive less favourableconsideration”.
During the cold war, the US faced the organised political and economic bloc of the Warsaw Pact. However, China is rep- resenting a very different challenge — a great power with the capacity to estab- lish economic institutions and partner- ships with countries that also maintain strong relationships with the US. “It is a new problem for the US to have,” says Mr Ratner. “Even if the US does not itself join, it will not be sufficient for Washington to simply oppose these new institutions, especially if other western countriesareactivelyparticipating.”
Some former US officials believe that the US has also hurt itself in this new competition for influence with China. Having urged China for years to be a “responsible stakeholder” in global gov- ernance, the administration supported a reform of the IMF’s quotas that would give China a larger role. However, the proposalhas languishedinCongress.
China’s desire to forge its own institu- tions is in part a reflection of the percep- tionthat ithasbeenshutoutof theexist- ingarchitecture.
Lure of investment trumps special relationship Two years ago Cameron pivoted to China knowing it would hit American ties
US-UK dispute
Regional strategies
Superpowers circle each other in contest to control Asia’s future
China’s government has welcomed the UK’s decision to join the Asian Infrastructure Investment Bank in the face of criticism from Washington, while the reaction from influential Chinese voices has been mixed.
China’s foreign ministry said Beijing was pleased with the UK move, but noted that formal approval of its application was still pending.
“If all goes well, the UK will officially become a member of the AIIB by the end of March,” the ministry said.
On Thursday, a senior US administration official said the UK decision to join the bank was taken after
“virtually no consultation with the US” and warned of the UK’s “trend toward constant accommodation of China, which is not the best way to engage a rising power”.
However, British officials have rejected White House claims that the decision to sign up to the AIIB was taken with little consultation, pointing out it was discussed over many weeks at G7 level. They say Britain had to precipitate its decision because of the approaching May general election.
The official British explanation is the UK wants to ensure the bank is ethical, transparent, and environmentally sound with good governance structures. However, there is a wider strategic objective for Britain: becoming a first- mover in the new venture will help to cement ties with Beijing.
Some influential Chinese experts saw special significance in the UK decision and hailed it as evidence of China’s growing global influence and a victory in President Xi Jinping’s campaign to realise the “great rejuvenation of the Chinese nation”.
“The AIIB has actually managed to sow discord between the US and UK,” Li Yunlong, a professor at the Central Communist Party School, the top training academy for leaders, wrote on his blog yesterday. “Britain can no longer be bothered with [the special relationship with the US] and is using the AIIB to betray its master and ingratiate itself [with Beijing].”
But the decision was not universally welcomed in China, with some influential voices pouring scorn on a country that is still widely regarded as
second only to Japan among the colonial powers that “humiliated” China in the 19th and early 20th century.
“At first this sounds like it gives us a lot of ‘face’ but actually the sun has set on the [British] empire and in international organisations [the UK] is really just a s**t-stirrer and America’s thug for hire,” Gao Cheng, an associate at the National Institute of International Strategy in the Chinese Academy of Social Sciences, a top government think-tank, wrote on her blog account.
The UK may also come in for criticism from other European countries, several of which were poised to join the AIIB last year but decided not to because of US opposition and signals that the UK would not sign up. Jamil Anderlini, Tom Mitchell and Gu Yu in Beijing and George Parker in London
Inside China Authoritative voices give mixed reaction
Growing competition: Barack Obama, US president, with Xi Jinping, his Chinese counterpart, in Beijing last year Sergei Ilnitsky/Epa
The Asian Infrastructure Investment Bank is one of several institutions created or proposed by Beijing in what some see as an attempt to create a Sino-centric financial system to rival western dominated institutions. It will be backed by $50bn of funds
AIIB
The Asian Development Bank, established in 1966, has 67 members including 48 from Asia and the Pacific. But it is seen by many in the region as overly dominated by Japan and the US, which are by far its biggest shareholders
ADB
The broader US economic strategy for the region centres on the Trans-Pacific Partnership trade agreement. The aim is to establish new global trading rules setting higher standards for intellectual property rights, state subsidies and environmental protection — areas where China and the US diverge
TPP
Closer links: the UK has joined a China-led financial institution
ANDREW BYRNE — SKOPJE
The line crackles with static but the voice on the phone recording is clear. “The electricity for the lifts should have been turned off this morning. Now we’ll switch them off mechanically,” the man says.
The man speaking is — according to Macedonia’s opposition leader — Mile Janakieski, the country’s transport and communications minister. The date is April 27 last year, the same date as the parliamentary elections. Mr Janakie- ski’s alleged motive? To stop elderly res- idents in an apartment building from leaving their homes to cast ballots against thegovernment.
The exchange is just one grim detail from what is emerging as one of the
worst election scandals in Europe in recent memory. Macedonia’s govern- ment is coming under international pressure to address accusations that it orchestrated an elaborate vote-rigging scheme to steal victory in last year’s par- liamentary elections. Claims of election fraud are the latest allegations to emerge from a political imbroglio that has engulfed the small Balkan state in recent weeks, poisoning its political cli- mate and dealing a blow to its EU mem- bershipambitions.
Since February 9, the Social Demo- crat opposition leader Zoran Zaev has released eight sets of taped govern- ment phone conversations, which are said to reveal official wiretapping of journalists, the selective prosecution of political opponents and mass voter fraud in the EU candidate country. He has not said how he got these tapes. Authorities have confiscated Mr Zaev’s passport in response to the drip-feed of leaks and accused him of launching a coup backed by foreign
intelligence services. Police on Wednesday said they have since filed criminal charges against him.
If the allegations of electoral fraud prove to be true, it would be one of the most significant electoral frauds exposed in Europe in recent decades and European officials say fresh elections would be necessary.
“They have issued more than 100,000 fake IDs,” Mr Zaev told the Financial Times. “They used €9m of public money for elec- tion purposes; campaign spending and directly buy- ing tens of thousands of votes, amounting to 22 per centofallvotescast.”
In one recording, a woman believed to be Gordana Jankulovska,
Macedonia’s interior minister, discusses “importing” ethnic Macedonian voters from the town of Pustec, in neighbour- ing Albania, registering up to 50 such voters at individual addresses and instructing them to vote for the ruling party. She could not be reached for com-
ment. Several of the recordings feature
Nikola Gruevski, the country’s prime minister, and his first cousin
Sasho Mijalkov, who runs the country’s intelligence services. Mr Gruevski’s
Internal Macedonian Revolution- ary Organisation — Democratic party for Macedonian National Unity — or VMRO party — has governed the country since 2006,
a year after it was granted EU can- didate status. Mr Gruevski does not deny the recordings’ authen-
ticity but says they have been selectivelyedited.
Some of the taped conversa- tions also reveal tensions within Mr Gruevski’s govern-
ment over his lavish refashioning of Skopje’s city centre into a baroque out- door museum to its fabled ancient heroes. The project has cost more than €400msofar.
“The allegations are being used as a form of political blackmail,” said Nikola Poposki, Macedonia’s foreign minister, who acknowledged the controversy might discourage investment and dam- age relations with European neigh- bours.
By holding out the prospect of EU and Nato membership, western govern- ments had hoped they could tame Mac- edonia’s latent ethnic tensions, resolve the country’s long-running recognition dispute with Greece and encourage lib- eral democracy in the former Yugoslav republic. Instead, EU officials acknowl- edge “grave concern” at growing insta- bility in the country, where the opposi- tion has boycotted parliament since last April’selections.
“The country’s leaders must now act and pull their country back from the
brink, in the interest of their citizens,” said a European Commission spokes- woman, who noted the revelations ech- oed fears of election manipulation expressed by observer missions at the time. “We expect the responsible bodies to investigate these allegations immedi- ately and transparently in an independ- ent, unbiased and credible manner,” she added.
But Mr Zaev has rejected a govern- mentplantorefer theevidencetoMace- donia’s courts, instead demanding fresh elections:“It’s impossible tohaveacred- iblecourtprocess inourcountry—there isdirectcontrolof the judiciaryhere.”
In the absence of dialogue between the government and opposition, EU sources said that a delegation from the European Parliament might seek to mediate in the crisis, an idea supported by Johannes Hahn, the EU’s commis- sioner for enlargement. Opposition fig- ures said only fresh elections adminis- tered by a caretaker government would resolvethedeadlock.
Election scandal. Taped conversations
Opposition claims could
ambitions to join the EU
Zoran Zaev: accused of launching a coup
‘Even if the US does not join, it will not be sufficient to simply oppose these new institutions’
MARCH 14 2015 Section:World Time: 13/3/2015 - 19:16 User: conlonj Page Name: WORLD2, Part,Page,Edition: LON, 6, 1
14 March/15 March 2015 FTWeekend 7
INTERNATIONAL
ELAINE MOORE — LONDON ROMAN OLEARCHYK — KIEV
Ukraine has warned debtholders including Russia that they should pre- pare to lose money as the war-ravaged countryseekstostaveoffadefault.
Natalie Jaresko, Ukraine’s finance minister, made the comments to inves- tors as Kiev seeks to restructure its gov- ernment debt following a $17.5bn loan agreement with the International Mon- etaryFund.
Ms Jaresko said the country’s debt operation, which targets more than $15bn of debt, “will probably involve a combination of maturity extensions, coupon reductions and principal reduc- tions”.
Ukraine’s bond markets had rallied early in the week following news reports that the country would not seek to imposeprincipalreductions.
Stressing there would be no special treatment for any creditors, including Russia, she added: “We maintain that we will treat all the claims on the Rus- sian bond on the same basis as any of our other commercial creditors. We invite the holders of the Russian bonds as well as all of our other eurobonds to participate in this process on the basis of transparency, good faith and inter-cred- itorequity.”
Following the annexation of Crimea by Russia last year, Ukraine’s external debts have looked increasingly unsus- tainable. Kiev has close to $8bn in exter- nal sovereign debt payments to make in 2015 while the country’s foreign exchange reserves have shrunk to just $5.6bn.
However, any agreement to ease Ukraine’s debt burden is likely to require the co-operation of Russia, which holds one of the country’s largest bonds.
There is little precedent for countries engaged in conflict to reach an agree- mentoverdebtrestructuring.
The IMF estimates Ukraine’s funding gap at $40bn, and has assumed that co- operationbetweenUkraineanditscred- itors will play an integral part in the country’seconomicrecovery.
Analysts disagree about the extent of losses investors in the country’s debt shouldexpect.
Ukrainian bonds trade at less than half their face value, indicating credi- tors expect to lose some of their original investment. Alexander Valchyshen, head of research at Investment Capital Ukraine, calculates that private credi- tors will need to accept a haircut of 40-50 per cent plus a reduction in inter- estratepayments to4percent.
However, others expected the coun- try to extend its debt repayment dates andeschewahaircut.
“Ukraine will probably need to push the maturities back four years,” said Robert Grant, a former ING employee, who was part of the team that advised Ukraine infourpriordebt-restructuring operations. Ukraine, he noted, has not included haircuts in past debt restruc- turings.
Casting a shadow over proceedings is the question of whether Russia will blockanagreement.
As one of the country’s largest credi- tors, Russia could block a deal on restructuringthedebt.
Last month Anton Siluanov, Russia’s finance minister, was reported as saying that the country had already included the money it was owed by Ukraine in its budget.
Restructuring
Ukraine warns creditors over bond losses Kiev says no debtholders, including Russia, will receive special treatment
Moscow is buzzing with talk of the whereabouts of Vladimir Putin, who took a week-long hiatus from public appearances from March 5 — Alexei Druzhinin/AP
BORZOU DARAGAHI — BAGHDAD
Within a quiet alleyway off Baghdad’s Mutanabbi Street, Sitar Mohsen Ali plies his trade, which is not so much the selling of books but the peddling of sub- versive, even dangerous ideas, which he doeswithafiendishrelish.
Between a bushy moustache and a shock of dyed hair, his eyes glint as he savours each interaction during one busy Friday, when those seeking books considered risqué are discreetly directed to his well-kept shop, Sotour, which means the lines on a piece of paper. “Jean-Paul Sartre? We have that,” heblurtsout toonecustomer.
Famous as the intellectual hub of Iraq and named after a 10th-century Iraqi poet, Mutanabbi Street’s used, new and rare book stores are the centre of a viva- cious literary scene, which draws well- known artists, actors, writers and politi- cians along with thousands of book lov- erseveryFriday.
Mr Ali is among the most risqué of the vendors, his thriving store a reminder that even with the rise of Islamic State of Iraq and the Levan, or Isis, and religious extremists, there has also been a spike inassertivenessamongsecularists.
Withinahighlyreligiousnationdomi- nated culturally by clergy and politi- cally by Shia militiamen and their pup- pets and masters in government, Mr Ali defiantly displays Arabic language cop- ies of Salman Rushdie’s The Satanic
Verses in front of his shop, along with his best-selling book, atheist Richard Dawkins’ The God Delusion. He sells about200copiesof thisbookaweek.
“I have this book on my laptop, but having a real copy is something else,” says Ahmed Majed, a 20-year-old col- lege student, who describes himself as a proud non-believer, as he pays 20,000 Iraqi dinars for a copy of Mr Dawkins’ book. “Not only people in this country are against this book, even in western countries.” His desire for such literature is not unusual. “Most of the youth these days like to read high-impact books, books that are seeking to answer big questions,”MrAliexplains.
Books and literary culture have faded in the Arab world, shoved aside by satel- lite television and the internet and dam- aged by declining literacy standards. But Mr Ali insists: “Iraq is the best coun- try in the Arab world for books.” He says he sells up to $10,000 worth a week, tak- ing home about 30 per cent of that after expenses. He boasts that his shop sells more than any other of the many book- storesandstallsonMutanabbi.
FallahHassan—afriendwhom Mr Ali describes as intensely pious — walks in, a regular. They have weekly debates on religion before Mr Hassan purchases a book, perhaps an Arabic translation of one of the books by the circle of influen- tial Iranian Shia scholars who broke
with orthodoxy, like Abdel-Karim Soroush, or their Iraqi champion Ahmed Qubanchi. “He is polishing me,” the 61-year-old mechanical engineer saysofhis friendanddealer.
Another customer purchases an Ara- bic-language copy of The Golden Bough, James George Frazer’s 1890 anthropol- ogy study that likened religion to mythology. “If any pious Muslim sees yousell thisbook,hemayhangyou,” the customer jokes with Mr Ali, who has been threatened before. “Just talk,” he says. “ ‘Why do you sell this book? You’reanatheist.You’reaninfidel.’”
Such threats are hard to dismiss. A huge 2007 car bomb explosion killed 26 people on Mutanabbi Street, ravaging manyof theshops, includingthefamous Ottoman-era Shahbander café. But the Iraqi government restored and reo- penedMutanabbi18months later.
These days, most of the highly reli- gious enforcers, who harass people sell- ing books or drinking alcohol, are at the front fighting against Isis. There is little formal censorship. For now the authori- ties seem more concerned with banning books and websites that promote sec- tarian strife than going after the small sliverof intellectualsandatheists.
Mr Ali, a Shia from southern Iraq, was brought up in a strict religious house- hold, but broke away. His friend and mentor, Mr Qubanchi, encouraged him to open Sotour about five years ago, when the economy was booming and theworstof thecivilwarhadabated.
“I have a cultural project,” he says. “To enlighten people and make the peo- ple read. I want to take the winning edge from the Islamists, so we don’t have to fear them.”
Iraq. Literary scene
Rushdie and Dawkins books bring secularists on to streets of Baghdad
Rise of Isis fails to curb brisk
trade of subversive ideas in
the shops of Mutanabbi Street
Sitar Mohsen Ali: says he sells up to $10,000 worth of books a week, taking home about 30 per cent
LUCY HORNBY — BEIJING
China’s richest man has warned of the perils of detaining private entrepre- neurs amid the country’s anti-corrup- tion drive, cautioning that the lack of legal structure to wind down compa- nies results in unpaid debts and col- lapsedbusinesses.
Li Hejun, head of thin film solar manu- facturer Hanergy Group, has catapulted
to the top of Chinese rich lists thanks to a spectacular rise in the shares of its Hong Kong-listed entity. He called for “relevant legislation” to address the fall- out from businessmen’s detentions at this week’s meeting of the Chinese Peo- ple’s Political Consultative Conference, an advisory body that includes some of China’srichestprivateentrepreneurs.
“I have friends who have been taken away by the disciplinary commission,”
Mr Li told said, according to Chinese media. “Information sent to the compa- nies cannot be received, contracts can- not be signed, bank loans cannot be securedandthecompanyjustdies.”
Dozens of private businessmen and women have been detained in the two years since Xi Jinping, China’s presi- dent, launched a wide-ranging cam- paign against corruption, and at least onehasbeenexecuted.
Anti-corruption drive
COURTNEY WEAVER — MOSCOW NEIL BUCKLEY — LONDON
He is the most talked-about person in Russia — even when he’s nowhere to be seen. Moscow is buzzing with talk about the whereabouts of Vladimir Putin who took a week-long hiatus from public appearances from March 5, fuelling wild rumours about his health, political futureandlove life.
On Twitter, critics of the president have been tweeting morbid jokes and memes under the hashtag “Putin is dead”, while Russian bloggers and pun- dits pore over the official Kremlin web- site looking for discrepancies in his workschedule.
Andrei Illarionov, a former adviser to Mr Putin now based in Washington, claimed in a blog post that Mr Putin had fallen victim to a palace coup and fled abroad, while Konstantin Remchukov, an influential Moscow editor, alleged
that the state-owned oil company Ros- neft’s chairmanIgorSechinwasabout to get the boot, indicating that a big gov- ernmentshake-upwas looming.
In Switzerland, the news outlet Blitz.ch ran a report claiming that Alina Kabaeva, a former gymnast and Duma deputy who has been linked romanti- cally with Mr Putin, had given birth to a child this week in the Swiss region of Ticino, suggesting theRussianpresident hadtakentimeoff fora“babymission”.
The Kremlin’s press service has brushed off the various allegations, with Mr Putin’s spokesman insisting that the president’s health is “fine”. Yesterday, the Kremlin announced he would be meeting the president of Kyrgyzstan — publicly—inStPetersburgonMonday.
Later, Russian state television chan- nels co-ordinated to show Mr Putin at a Kremlin meeting. But at least one blog- ger claimed the footage was dated, not-
ing that the president’s desk had a clock on it that was supposed to have been givenawayasagift somedaysearlier.
Mr Putin has rarely spent more than a day or two out of the spotlight during his 15 years in power, with the exception of two scandals early into his career: the Kursk submarine disaster in 2000 and the2002Moscowtheatrehostagecrisis.
In 2012, reports surfaced that he was suffering from a spinal injury after reporters noticed him limping. Before long, however, he returned to being the picture of perfect health, aided by regu- larexerciseandahealthydiet.
Nikolay Petrov, a political analyst at the Higher School of Economics in Mos- cow, said Mr Putin’s disappearance could be connected to a rift in the politi- cal elite. But the 62-year-old president might also be feeling the strain of his position—averyone-manjob.
“I think he got tired, and perhaps
there are some psychological problems or light health problem,” said Mr Petrov. “Putin has been extremely active. He has had a very huge burden on him. And the fact that there is [hands-on] man- agement means that he has to make decisionsonadailybasis.”
Though Mr Putin is likely to resurface on Monday, as promised, the kerfuffle surrounding his absence has further driven home the extent to which the Russian political system seems to be predicated on one person, said Konstan- tin von Eggert, a political commentator forKommersantFMradio.
He said: “We know there is a constitu- tional process in case the president is incapacitated, but Putin has definitely left his stamp on the Russian system to the extent that now his temporary disappearance throws everyone into disarray. It shows the system is based on onepillar.”
Putin rumours Break from spotlight fuels talk of illness
8 FTWeekend 14 March/15 March 2015
MARCH 14 2015 Section:Ad Page Time: 13/3/2015 - 16:29 User: emmertonp Page Name: AD MKTG, Part,Page,Edition: LON, 8, 1
14 March/15 March 2015 FTWeekend 9
Yourowupstream,yet the tide—just for now — is with you. You beat your rivals not merely through strength, whether in muscle or morale, but also by being better attuned to how the prevailing winds blow and currents flow. Within the rules, you chart your course while keepingtogetheryourteam.
It is a set of circumstances with which any senior executive can identify. As Ban Ki-moon, UN secretary-general, once put it when opening a champion- ship event: “Rowers know better than anyone the importance of moving togethertowardsacommongoal.”
For that fraternity, the absence of Daniel Topolski will be keenly felt when on April 11 the University Boat Race between Oxford and Cambridge is held on the Thames for the 161st year. Topol- ski, who has died aged 69, twice crewed for Oxford (one win, one loss) before his crowning achievement: guiding the dark blues between 1976 and 1985 to a record 10consecutivevictoriesascoach.
Luck came into the mix, as in the year the Cambridge boat sank. Yet there was grit in evidence too. Topolski’s own hon- ours included a 1977 world champion- ship gold. He represented Britain five timesbetween1969and1978.
For all that, he was the least likely of sculling colossi. Though he worked to build bulk and brawn, at 71kg he was logged as the lightest Boat Race oars- man in 20 years. And as coach it needed an insouciant child of the 1960s to impose iron discipline while strutting the towpath — or looming closer aboard a following launch — while clad in shab- bilybohemianfurandpalebluevelvet.
The dandyish garb evolved into wind- cheater and denim but the focus re- mained. He coached Oxford in 15 races; to victory in 12. The post was unpaid and he “arranged board and lodgings, rest weekends, cooks, diets and any- thing else I could to help the crew”. His philosophy was merely: “I like to win andI liketowinbyasmuchasIcan.”
Rivals sensed the fortitude. “Seen from the light-blue side, Dan combined charisma with a really accurate eye for good rowing,” says one Cambridge oars- man who got to know him on dry land. “Approachable and interesting, he inspiredadmirationandaffection.”
With an analytical eye and a grasp of psychology, he developed into the authoritative voice of calm analysis for the BBC as commentator on the Boat Race formorethan20yearsandat three
Olympiads. He also became a travel writer and motivational guru, while curating the work of his father, Feliks, a Warsaw-born painter and illustrator who had taught him to scull on Regent’s Park lakenearwherethefamily lived.
Born on June 4 1945 to Feliks and Marian Everall, an actress — Dan mar- ried one too — he spent his childhood surrounded by arty parental friends. After Westminster School he attended New College and, academically unen- thused, took the last fourth-class degree awarded by Oxford, in geography. He is survived by spouse Susan Gilmore, as wellas their threechildrenandasister.
As coach he found himself embroiled in successive controversies, all lending substancetohispugnaciousreputation.
In the (literal) wake of the 1978 Cambridge sinking, race officials deliberated hard before deciding Oxford were not to blame. A 1983 squabble concerned how many times a student could compete: Boris Rankov, Oxford’s captain, had already bagged fivewins.Then,assoonas thevictorious decadeended,Americancrewmembers rebelled against his training methods and the way the club was run. It came to be known as the “mutiny on the
Isis” and could at times at least look bloody: one refusenik allegedly threw tomatosoupoverTopolski.
His ranks contained homegrown crit- ics too, with one saying the loss had prompted Topolski “not to reassess his programme but merely to increase it”. Yet, rowing with reserves, Oxford won in 1987 by four lengths. The coach told the tale in the prizewinning True Blue, made into a film in which he was played byFlemishactor JohanLeysen.
He quit but returned to the squad as consultant in the 1990s, remaining a Boat Race day regular. But next month’s outing will also be different in another respect. A women’s event previously heldatHenleyis forthefirst timetotake place that afternoon and over the same westLondonstretchofestuary.
The change reflects the oarswomen’s own determination. Still, it will now also serve as a tribute to someone who 35 years ago was coaching the national women’s eight — and who from their boat plucked Sue Brown as the first cox of her gender to steer either university’s male crew. The outcome of that 1981 Topolski pick? Another Oxonian win.
Gordon Cramb and Simon Greaves
Obituary Dandy who delivered a decade of Boat Race wins
Daniel Topolski Sportsman, coach and commentator 1945-2015
In the unpaid post he ‘arranged lodgings, rest weekends, cooks, diets and anything else I could to help the crew’
Embroiled in a succession of controversies: Daniel Topolski —
FT BIG READ. CHINESE INTERNET
Beijing is keen to harness the full economic potential of online services but slow broadband connections, censorship and inconsistent regulation are foiling policy makers’ plans.
By Charles Clover
Commerce and control
G rumbling about China’s slow internet speeds is a national pastime, but few were expecting Li Keqiang, the prime minister, to join
in last week. “I have visited some devel- opingcountries thathave faster internet connections than Beijing,” he said with evident exasperation during a commit- tee meeting of the country’s largely cer- emonial legislaturethismonth.
It was the first time this problem had been publicly acknowledged by such a high official — and crystallised a dilemma facing China’s leaders. As eco- nomic growth begins to sag from double digits towhatMrLicallsa“newnormal” — 7 per cent GDP growth expected this year — the government is talking up the power of the internet to transform the economyandavoidahardlanding.
In his speech to the National People’s Congress, Mr Li mentioned the internet no less than 12 times and peppered his speech with terms such as “renxing”, a popular hashtag on Chinese social media meaning “capricious”. He also touted “internet plus,” a new strategy to “integrate the mobile internet, cloud computing, big data and the internet of things with modern manufacturing, to encourage the healthy development of ecommerce”.
It was the most high-profile signal yet that Beijing recognises the economic potential of its online users, which it said totalled 649m people at the end of last year. Another came in January, when Ma Jiantang, chief of the National Bureau of Statistics, detailed how ecom- merce c