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Cover PriceAustria €4.00 Malta €3.30B ah ra in D in 1. 5 M au ri ti us M Ru 90Belgium €4.00 Morocco Dh40B ul ga ri a L ev 8. 75 N et he rl an ds € 4. 00C roa ti a Kn 31 Ni ger ia Nai ra 71 5Cyprus €3.30 Norway NKr36C ze ch Re p Kc1 35 Oma n OR1 .50D en ma rk D Kr 38 Pa ki st an R up ee 1 40Egypt E£19 Poland Zl 18E st on ia € 4.50 P ort uga l €4. 00Finland €4.80 Qatar QR15France €4.00 Romania Ron19Germany €4.00 Russia €5.00G ib ra lt ar £ 2. 80 Sa ud i A ra bi a R ls 15Gre ece €4. 00 S er bi a NewD43 0H un ga ry F t9 95 S lo va k R ep € 4. 00India Rup85 Slovenia €4.00Italy €4.00 South Africa R40Jordan JD3.25 Spain €4.00K az ak hs ta n U S$ 6. 50 S we de n S Kr 47

K en ya K sh s3 00 S wi tz er la nd S Fr 6. 60Kuwait K WD 1. 50 S yr ia U S$ 4. 74L at vi a La ts 4.1 5 Tun isi a Di n7. 50L eb an on L BP 70 00 T ur ke y T L7 .7 5L it hu an ia L it as 17 .5 U AE D h1 5. 00L ux em bo ur g € 4. 00 U kr ai ne € 5. 00Macedonia Den240

Plus Inside the life of Mr Dotcom Companies

LIFE & ARTS COVER STORY

Polar tourismIn the footsteps of Captain Scott,100 years after his fatal expedition

Despot decorHow to get thelook – from

golden eagles tomarble walls

HOUSE & HOME

FINANCIAL TIMES| Saturday January 28 / Sunday January 29 2012 | EUROPE

US equities

Source: Thomson Reuters Datastream

S&P 500 index

23 27Jan 2012

1300

1310

1320

1330

S&P 500 makes brief foray into bull market, Page 11

US faces headwindsEconomy expands2.8 per cent, but littlesign of growth. Page 2

UniCredit rights issueItalian bank has placedalmost all of its €7.5bnrights issue. Page 9

Reduced exposureAsian and Mideastbuyers in eurozone bail-out bond retreats. Page 8

Tehran oil threatIran’s parliament is setto ban oil exports toEurope. Page 4

Airline alliances probeBrussels turns scrutinyon transatlantic airlines’joint venture. Page 8

Rubio runs gauntletRepublicans’ Hispanicrising star angersLatinos at forum. Page 3

Costa Concordia offerCruise liner’s Italianoperator to compensatepassengers. Page 8

World Business Newspaper

Jan 27 prev %chg

S&P500 1315.36 1318.43 -0.23

Nasdaq Comp 2812.76 2805.28 +0.27

Dow Jones Ind 12662.54 12734.63 -0.57

FTSEurorst 300 1040.69 1051.72 -1.05

Euro Stoxx 50 2436.62 2460.4 -0.97

FTSE 100 5733.45 5795.2 -1.07

FTSE All-Share UK 2958.86 2987.74 -0.97

CAC 40 3318.76 3363.23 -1.32

Xetra Dax 6511.98 6539.85 -0.43

Nikkei 8841.22 8849.47 -0.09

Hang Seng 20501.67 20439.14 +0.31

FTSE All World $ (u) 209.59 -

COMMODITIES

Jan 27 prev chg

Oil WTI $ Mar 99.56 99.70 -0.14

Oil Brent $ Mar 111.46 110.79 +0.67

Gold $ 1,720.90 1,710.25 10.65

price yield chg

US Gov 10 yr 100.89 1.90 -0.03

UKGov 10 yr 114.53 2.07 -0.01

Ger Gov 10 yr 101.33 1.85 -0.01

Jpn Gov 10 yr 100.24 0.97 -0.02

US Gov 30 yr 101.17 3.06 -0.02

Ger Gov 2 yr 100.11 0.19 0.02

Jan 27 prev chg

Fed Funds Ef 0.08 0.08 -

US 3m Bills 0.06 0.05 0.01

Euro Libor 3m 1.07 1.08 -0.01

UK3m 1.01 1.01 -

Prices are latest or edition

Jan 27 prev

$ per € 1.313 1.316

$ per £ 1.567 1.570

£ per € 0.838 0.838

¥ per $ 76.7 77.3

¥ per £ 120.2 121.4

$ index 79.3 79.4

SFr per € 1.207 1.207

Jan 27 prev

€ per $ 0.761 0.760

£ per $ 0.638 0.637

€ per £ 1.193 1.193

¥ per € 100.8 101.7

£ index 80.7 80.8

€ index 90.90 91.07

SFr per £ 1.440 1.440

STOCK MARKETS CURRENCIES INTERESTRATES

World MarketsIn print and online

Tel: +44 20 7775 6000Fax: +44 20 7873 3428email: [email protected] www.ft.com/subscribetoday

Subscribe now

© THE FINANCIAL TIMESLIMITED 2012 No: 37,836★

Printed in London, Liverpool, Dublin,Frankfurt, Brussels, Stockholm, Milan,Madrid, New York, Chicago, Los Angeles,San Francisco, Dallas, Orlando, WashingtonDC, Tokyo, Hong Kong, Singapore, Seoul,Abu Dhabi, Sydney, Johannesburg

News Briefing

Twitter, darling of political activists, bows to business reality on censorship

By Richard Watersin San Francisco

Twitter, the microblogging serv-ice that has made a virtue of being used as an organising toolby political activists, has bowedto the realities of global busi-ness with a new approach tocensorship.

Disappointment over Twitter’ssense of political realism spreadwidely on the internet yester-day. Ai Weiwei, the Chinese dis-sident artist, used the US com-pany’s own service to declare:“If Twitter starts censoring thenI’ll stop tweeting.”

The company said it wouldo nl y t ak e d ow n t we et s o raccounts of users inside thecountries where it receives acensorship order, rather thanremove them for its glo ba l

a udienc e – th e a ppro ac h itwould have had to use up tonow if it had wanted to complywith an order. With a presencein more countries as it looks toexpand beyond its current basein the US, UK and Japan, therealities of business mean it willbe exposed to direct action bymore local courts.

The declaration that it willfollow local censorship lawsmarks a new and more prag-matic phase in the company’sevolution as it seeks to expandits network and start making pro fits, a cc ordin g to so meobservers.

In a blog post explaining thenew policy, Twitter said thatinternational growth would leadit to “enter countries that havedifferent ideas about the con-tours of freedom of expression”.

Evgeny Morozov, an experton internet censorship, saidthat by backing Twitter’s previ-ous, freewheeling approach,

“venture capitalists in SiliconValley were underwriting freespeech around the world. It wasgreat, but I don’t think it wassustainable”.

Other experts said the conces-sions at Twitter amounted to anecessary compromise. “It’s an

awful lot better than a global‘takedown’ policy,” said TimWu, professor at Columbia LawSchool. Twitter must complywith censorship “or face eitherphysical punishment or block-ing”, he added.

Under Jack Dorsey, the co-founder who returned to thecompany last year, Twitter hasembarked on rapid internationalexpansion that it hopes will liftits 100m users to 1bn, matching the global growth of Facebook.

The impact of Twitter’s newapproach will depend on its will-ingness to resist censorshiprequests that are not backed bycourt orders and to disclosewhen it h as been forced toremove material, censorshipexperts said.

Twitter promised to publishall censorship requests, unless itis subject to a gag order, onChillingeffects.org, a website setup to bring greater transpar-ency to global censorship.

Dissident Ai issues threat to stop tweeting

Twitter acknowledged countries’‘different ideas’ on free speech

Mega interest inDotcom caseCopyright owners andinternet groups are followingthe fate of the main characterin one of the largest criminalcopyright cases pursued bythe US. Kim Dotcom, above,head of the file-sharing siteMegaupload, is being held inNew Zealand awaitingextradition proceedings. Heis accused of enabling masspiracy of movies and music.

Report, Page 10

Call for EU to control Greek budget By Peter Spiegel in Brusselsand Kerin Hope in Athens

The German government wantsGreece to cede sovereignty overtax and spending decisions to aeurozo ne “bu dget c ommis-sion er” to secu re a seco nd€130bn bail-out, according to acopy of the proposal obtained bythe Financial Times.

In what would amount to anextraordinary extension of Euro-pean Union control over a mem-ber state, the new commissioner

would have the power to vetobudget decisions taken by theGreek government if they werenot in line with targets set byinternational lenders.

T he n ew a dm in is t ra to r,appointed by other eurozonefinance ministers, would takeresponsibility for overseeing “allmajor blocks of expenditure” bythe Greek government.

“Budget consolidation has tobe put under a strict steering and control system,” the pro-posal reads. “Given the disap-

pointing compliance so far,Greece has to accept shifting budgetary sovereignty to theEuropean level for a certainperiod of time.”

Athens would also have toadopt a law permanently com-mitting state revenues to debtservice “first and foremost”.

The German plan, circulatedyesterday afternoon to financeministry officials from eurozonecountries who make up the so-called “euro working group”,underscores the depths of mis-

trust between Greece and its EUlenders.

Despite the appointment of economist Lucas Papademos astechnocratic prime minister inNovember, attitudes towardsGreece within the EU have con-tinued to worsen.

A senior Greek finance minis-try official said Athens was una-ware of the proposal and couldnot comment. A German financeministry spokesman declined tocomment.

Greek voters have already

expressed a nger a bo ut EUattempts to assist in implement-ing reforms. Horst Reichenbach,the German national who headsan EU task force in Greece, wasdepicted in German militarygarb by leftwing Greek newspa-pers when he arrived last year.

Under the German plan, Ath-ens would only be allowed tospend on the normal function-ing of its government after serv-icing its debt. If such a law isadopted, the proposal states,financial markets and other

creditors would be reassuredthat defaults would not occur inthe future.

“If a future [bail-out] trancheis not disbursed, Greece cannotth reaten its lenders with adefault, but will instead have toaccept further cuts in primaryexpenditures as the only possi-ble consequence of any non-dis-bursement,” the document said.

Germany isolated, Page 2George Osborne, Page 5

www.ft.com/davos

Cuban reforms toencourage private

business and allow property trading

have proved popular on the socialist island, where the first national conferenceof Cuba’s Communist party is being held

this weekendReport, Page 3

AP

Cuba sets out on slow path to

liberalisation

●Berlin wants eurozone to take Athens’ reins ●Second €130bn bail-out linked to proposal



2 ★ FINANCIAL TIMES JANUARY28/JANUARY29 2012

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SUBSCRIPTIONS AND CUSTOMERSERVICE:Tel: +1 44 207 775 [email protected]/subscribetoday

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Published by: The Financial Times Limited, Number One Southwark Bridge, London SE1 9HL, UnitedKingdom. Tel: +44 20 7873 3000; Fax: +44 20 7407 5700. Editor: Lionel Barber.

Printed by: (Belgium) BEA Printing sprl, 16 Rue de Bosquet, Nivelles 1400; (Germany) Dogan MediaGroup, Hurriyet AS Branch Germany, An der Brucke 20-22, 64546 Morfelden - Walldorf; (Italy) PoligraficaEuropa, S.r.l, Villasanta (MB), Via Enrico Mattei 2, Ecocity - Building No.8. Milan; (South Africa) CaxtonPrinters a division of CTP Limited, 16 Wright Street, Industria, Johannesburg; (Spain) Fabripress, C/ Zeus12, Polígono Industrial Meco-R2, 28880 Meco, Madrid. (Sweden) Bold Printing Group/ Boras TidningTryckeri AB, Odegardsgatan 2, S-504 94, Boras. (Abu Dhabi) United Printing & Publishing Company LLC,Muroor Road, PO Box 39955, Abu Dhabi

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20162 Milano Aut.Trib. Milano n. 296 del 08/05/08 - Poste Italiane SpA-Sped. in Abb.Post.DL. 353/2003(conv. L. 27/02/2004-n.46) art. 1 comma 1, DCB Milano. Spain: Legal Deposit Number (Deposito Legal)M-32596-1995; Publishing Director, Lionel Barber; Publishing Company, The Financial Times Limited,registered office as above. Local Representative office; Castellana, 66, 28046, Madrid. ISSN 1135-8262.Sweden: Responsible Publisher, Andrew Ward; Telephone 070357088. UAE: Publisher, Adrian Clarke, Tel:+33 (0)1 5376 8250; origin of publication, twofour54, Free Zone, Abu Dhabi.

©Copyright The Financial Times 2012. Reproduction of the contents of this newspaper in any manner isnot permitted without the publisher’s prior consent. ‘Financial Times’ and ‘FT’ are registered trade marksof The Financial Times Limited.The Financial Times adheres to the self-regulation regime overseen by the UK’s Press ComplaintsCommission. The PCC takes complaints about the editorial content of publications under the Editors’ Codeof Practice (www.pcc.org.uk). The FT’s own code of practice is on www.ft.com/codeofpractice.

Reprints are available of any FT article with your company logo or contact details inserted if required(minimum order 100 copies). Phone +44 20 7873 4871. For one-off copyright licences for reproductionof FT articles phone +44 20 7873 4816. For both services, email [email protected]

GLOBAL ECONOMY

By Robin Harding

in Washington andShannon Bond in New York

The US economy grew at arobust annualised rate of 2.8 p er cent in the finalthree months of 2011, butthere was little sign of rapidgrowth ahead.

The commerce depart-ment’s first reading of grossdomestic product growth inthe fourth quarter showedacceleration from a tepid 1.8

per cent in the previoust hr ee m on th s, b ut t hedetails of the report weredisappointing.

A lm os t 2 p er ce nt ag epoints of growth came froman inventor y b uild-up – unlikely to be sustained –

while cutbacks to publicspending began to weighheavily. The governmentsector, especially defence,knocked almost 1 percent-age point off output.

The report suggests theeconomy has got over itsswoon in the summer of 2011, and is expanding steadily. But there are stillheadwinds preventing anacceleration in growth. Con-sumption rose at a modest

annualised r ate of 2 p ercent.

Final sales to domesticpurchasers, a measure of output bought by all sectorsi n t he U S r at he r t ha nexp orted or p iled up inwarehouses, r ose at an

annualised rate of only 0.9per cent, compared with 2.7p er c en t i n t he t hi rdquarter.

The report “confirms theacceleration of growth thathad b een hinted at b y aflurry of upbeat economicindicators and business sur-veys in recent weeks, butalso reveals that the econ-omy is less healthy than theheadline growth rate wouldsuggest”, said Chris Wil-

liamson, chief economist atMarkit in London.

One encouraging sign inthe report was a turnroundin residential homebuilding,rising at an annualised rateof 10.9 per cent, althoughanalysts said this might

r eflect unusually warm

weather that allowed formore days of building work.

Stuart Hoffman, chief economist at PNC FinancialServices, said he expectedUS growth to be “a trend-like 2.4 per cent in 2012, and

job growth will average

about 140,000 per month,adding up to 1.7m new pay-roll jobs over the course of this year”.

The Thomson Reuters/University of Michigan’sconsumer sentiment index,also released yesterday,showed optimism jumped inJanuary to the highest levelin almost a year, rising to75 from 69.9 in December.

Consumers wer e mor epositive about both current

and future conditions, andnearly a third of respond-ents said they had heardabout new jobs.

“The recent gains in con-fidence are now criticallydependent on continuedgains in employment,” said

Richar d Curtin, surv eydirector. “As long as mod-est employment gains areforthcoming, the data sug-gest real consumer spend-ing will post a gain of 2.1per cent in 2012.”

The d ata suggest thatNovember’s presidentialelection is most likely to befought against a backdropof modest but unspectacu-lar growth and still highunemployment.

“W hile the continuedexpansion is encouraging,faster growth is needed toreplace the jobs lost in ther ecent d owntur n and toreduce long-term unemploy-ment,” noted Alan Krueger,chairman of the president’s

C ou nc il o f E co no mi cAdvisers.

Kevin Brady, the seniorRepublican on the joint eco-nomic committee of Con-gress, said the report con-t ai ne d “ so me w el co menews” but not enough.

“The economy simp lyisn’t expanding fast enoughto generate a sufficientnumber of jobs to b ring down the unemploymentrate rapidly,” he said.

Inventory build-up boosts US growthEconomy expands

by annualised 2.8%

Details of report disappoint analysts

2.8%Annualised rate of growth infinal quarter

10.9%Rate of increase inresidential homebuilding

By George Parkerin London, Chris Gilesin Davos andPeter Spiegel in Brussels

David Cameron and NicolasSarkozy have not spokensince the stormy night inBrussels last month whenthe British prime ministerblocked a European Uniontreaty to enforce eurozonefiscal discipline and theFrench president called him“an obstinate kid”. Littlesince then has changed toimprove relations.

The two leaders will beback in Brussels on Mon-day, with both sides bracedfor more of the same, notleast after Mr Cameron’soutspoken speech in Davos

t hi s w ee k i n w hi ch h e

attacked the eurozone’sleadership and observedthat the single currencywa s bu il t o n s ha kyfoundations.

In the intervening weeksof cross-Channel froideur ,France’s credit rating hasbeen downgraded – to somer ejoicing in the Br itishmedia – in spite of sugges-tions by leading French pol-iticians that the agenciesshould instead be focusing their attention on Britain’s

public finances. One seniorEU official labelled the spat“petty, stupid nationalism”.

“We had better get usedto it,” said one British dip-lomat. “We are going to bet he w hi pp in g b oy s f orFrench politicians betweennow and presidential elec-tions [in April and May].”

Mr Cameron’s suggestionat the W or ld EconomicForum in Davos that someunnamed eurozone coun-tries – ie Germany – shouldcut their trade surplusesand do more to resolve thecrisis has gone down badlyin Berlin, even if officials

will not comment publicly.Ger many is keen to seeBritain back at the Euro-pean table, not sniping fromthe sidelines.

Quizzed by a member of the audience at Davos onwhy Germany and other big countries were bypassing proper governance proce-dures in making rules forthe eurozone, W olfgang Schäuble, the German fin-ance minister , said : “Iwould like to give you themobile number of DavidC am er on . T ha t’ s n ot a

joke.”In spite of the tension and

testy public rhetoric, thereare some grounds to believethat the substance of Mon-day’s EU summit may offerMr Cameron a chance torebuild bridges.

T he o ff ic ia l a ge nd a

focuses on the need to bol-ster Europe’s growth poten-tial and to deepen the singlemarket, areas in which Brit-ain has a significant voiceand some key allies includ-ing Ireland, the Nether-lands, Sweden and, signifi-cantly, Germany.

Furthermore, Mr Cam-eron has abandoned someof the combative languageh e a do pt ed a ft er l as tmonth’s summit. For exam-p le, he has d r opp ed hisdemand that signatories tothe new eurozone fiscalcompact, agreed outside theEU framework, should notbe able to use official EUbuildings.

Quietly, Britain has beenbrought back into the fold.Angela Merkel, Germany’schancellor, insisted the UKbe given observer status inthe d r afting of the new

treaty. With little fanfare,Mr Cameron is no longerr esisting the use of theEuropean Court of Justiceto enforce the treaty.

Privately, Mr Cameronsays r elations with M rSarkozy remain positive.The two leaders will hold asummit on military co-oper-ation next month and MrCamer on would r atherwork with Mr Sarkozy thanhis Socialist presidentialrival, François Hollande.

Additional reporting byQuentin Peel in Berlin

Editorial Comment, Page 6

Cameron andSarkozy set toresume tussle

It might have been theAlpine air, but some of thechief executives andbusiness people in Davoscame to the end of theweek feeling slightly betterthan when they hadarrived. There was stillunease about the state of the eurozone and theglobal economy’sweakness, but their worstfears had not beenreinforced.

Europeans took heartfrom the guardedly upbeatmood among US businessesabout domestic growth.Meanwhile, Americanswere partly reassured afterbeing told by Europeanpolicymakers that the mostlikely outcome for theeurozone was muddling through, rather thancollapse.

The World EconomicForum in Davos alsoprovided exposure toprofessionals fromemerging market growtheconomies, with both Indiaand Brazil sending largecontingents. Althoughnervousness rather than

bullishness about economicrecovery was theprevailing mood, there waslittle despair. WhatShumeet Banerji, chief executive of Booz and Co,the managementconsultancy, described as“Bleak house, year four”felt a little less bleak.

The exception was thebanking industry, whichstill faces deep troublesand a raft of regulationsand capital standards.Some bankers have becomeheartily sick of being criticised, a mood thatsometimes erupted inanger.

When Lord Mandelson, aformer UK minister,blamed the financial crisison banks at one meeting,some in the audiencehissed.

Business leaders alsotalked of nagging fears of an unpredictable newshock from the eurozone,the Middle East or China.A survey by PwC, theaccountancy firm, foundthat business confidencehad fallen sharply over thepast year. “Manycompanies are nervous,”said Dennis Nally, PwCchairman.

Chief executives andpolicymakers were worriedby the jobs crisis,particularly among young people. There were severaldiscussions on how, if possible, to make advancedeconomies generate more

jobs at a time of anaemicgrowth – and incomedisparity and socialinequality produced bytechnological change andglobalisation.

Many companies stressedthat their own operationswere continuing to performwell – particularly when

they have links to theboom in emerging markets.“When I went into sessionson Europe I came outfeeling depressed,” said thehead of one US bank. “Butif you listen to Braziliansor Indians, you feelcompletely different.”

John Nelson, chairmanof Lloyd’s, the Londoninsurance market, said:“The big question is howon earth the eurozonecrisis gets solved, because

if it does not happen wewill have a continued lackof liquidity in the banking system which will holdback business. People arealso concerned aboutprotectionism and fiscaland regulatory changesthat could hold thingsback.”

This prompted a renewedpush on trade. The USChamber of Commercetried to use the forum totable a transatlantic tradepact that would reducetariffs on goods.

“People know we need tocreate growth, so all of asudden there seems to be agroundswell behind this,”Tom Donohue, president of the chamber, said.

At the same time therewas a wider recognitionthat the traditional Davosfocus on the benefits of globalisation and trade hada social cost. While it hasbeen good for highlyeducated and mobileexecutives, many of whomthrong to the forum, thewest’s unskilled workershave suffered.

“The flip side of peopleenjoying cheaper goods athome is loss of jobs athome. The flipside of technology andproductivity is tremendous

job churn and insecurity,”Lord Mandelson said at adebate on the future of work. “We have to takethe rap for that.”

Multinational companies

said they faced pressurefrom investors and theiremployees to demonstratea social purpose, ratherthan just maximising profits. “We can’t treat[corporate socialresponsibility] as separatedfrom everything else – it isnow core to what we do,”

said Keith Weed, chief marketing officer of Unilever.

Not everyone agreedwith a shift in approach.“Generally, companies arepoor instruments of socialpolicy and should stayaway from that,” said MrBanerji. “Good companiesraise capital from markets,allocate it to projects andmake profits along theway. If they did that well,there would be noproblems.”

The question is whetherthe economies of westerncountries will be stableand vibrant enough toencourage companies to doso – and to create jobs.

George Soros, thephilanthropist and formerhedge fund manager, wasgloomy about Europe’schances, predicting a“vicious cycle” of deflationunless Germany acted tostimulate the eurozone.

There were plenty of concerns in Davos aboutthe economic outlook, yet,for many of those inbusiness, things could beworse. Times are difficult,but not entirely bleak.

By Ralph Atkins in Frankfurtand Patrick Jenkins in Davos

Europe avoided a “majorcredit crunch” thanks to€489bn of emergency three-y ear loans to eurozoneb an ks p ro vi de d b y t heEuropean Central Bank lastmonth, the bank’s presidentsaid yesterday.

Speaking in Davos, MarioDraghi said the funds hadplayed a vital role in secur-ing financing for the banks.“So we know for sure thatwe have avoided a major,major credit crunch,” hesaid.

Eurozone bank lending tobusinesses and consumersslowed abruptly in Decem-ber, according to official fig-ures released yesterday.The unexpectedly sharpslowdown in lending indi-cates that the ECB acted inthe nick of time by provid-ing the €489bn to eurozonebanks.

Mr Draghi acknowledgedthat in some parts of theeurozone “credit is seri-ously contracting”, and hesaid he was unsure whetherthe ECB funds had yet beenput to work to help the realeconomy. “We don’t haveany evidence of this yet. Wehave to wait. There is alag.”

His comments suggestthat the ECB believes theeurozone economy will stillb e d amaged b y a creditsqueeze, and economistss ai d t he l at es t d at astrengthened the case forfurther cuts in the bank’sinterest rates in coming

months after reductions inNovember and December.

Loans to the private sec-tor grew at an annual rateof just 1 per cent in Decem-ber, the weakest since July2010, according to ECB datareleased yesterday. Compa-nies made net loan repay-ments of €37bn comparedwith November, the largestmonthly drop since compa-r able r ecord s star ted in2003. Southern Europe wasparticularly badly hit, withSpain and Portugal report-ing lending to the privatesector at the weakest levelssince the euro’s launch.

The escalation in theeurozone debt crisis andworries about the stabilityof Europe’s 13-year mone-tary union also appeared tobe having broader effectson confidence, yesterday’sdata showed.

Bank deposits placed byhouseholds and companiess aw s te ep s ea so na ll yadjusted outflows in Decem-ber. Overnight deposits byhouseholds fell by €24bncompared with November,for instance, in the steepestdrop since at least 2003.

S uc h d at a h av e b ee nexceptionally volatile since2007, however. “This strik-ing drop in household andcorp or ate d ep osits lastm on th w il l h av e t o b ewatched very closely by theECB,” said Julian Callow,European economist at Bar-clays Capital.

Yesterday’s news con-t ra st ed w it h t he m or eupbeat message from euro-zone purchasing managers’indices earlier this week,which showed the privatesector returning to growthin January , and under-scored the challenges facing the ECB.●Fitch yesterday cut thecredit ratings of Italy andSpain by two notches, cit-ing lack of financing flexi-b ility in the face of theregional debt crisis. Bel-gium, Slovenia and Cypruswere also downgraded.

Outlook less bleak from Alpine retreat Forum mood

Nervousness hasreplaced despair among business

leaders at Davos, write John Gapper

and Gillian Tett

Mario Draghi (centre), ECB president, gestures towards a delegate before a session of the World Economic Forum in Davos yesterday Bloomberg

‘Major credit crunch’averted

by loans

By Chris Giles in Davos andPeter Spiegel in Brussels

Ger man ob jections to arapid effort to boost the sizeof eurozone firewalls to pro-tect weaker economies haveleft Berlin isolated bothw it hi n E ur op e a nd t he

wider international commu-nity over its stance on thefuture of the eurozone.

While a remarkable con-sensus has developed at theWorld Economic Forum inDavos that eurozone coun-tries have finally got togrips with austerity and

structural reforms, manyleaders and finance minis-ters have called on the sin-g le c ur re nc y a re a t oincr ease the r esour cesstanding behind the euro.

German politicians andofficials, almost alone, haveraised concerns over thatidea.

In a debate between euro-zone finance ministers yes-

terday, François Baroin,French finance minister,insisted that pledging moremoney for the p rop osedEuropean Stability Mecha-nism would save money.

“France consider s thehigher the firewall the lessit has to be used,” he said, a

view that received supportfrom his Spanish counter-part.

Similar sentiments havebeen expressed in the pastweek by Christine Lagarde,head of the InternationalM on et ar y F un d, T imGeithner, US Treasury sec-retary, George Osborne, UKchancellor, and Felipe Cal-derón, Mexico’s president

who also chairs the Groupof 20 this year.

Mr Geithner said: “Theunfinished piece [in euro-zone reform] is building astronger and more crediblefirewall.”

Germany ’s ar gument,pr es se d s tr on gl y o n

Wednesday by Angela Mer-kel, chancellor, and Wolf-gang Schäuble, finance min-ister, is that a more sub-stantial rescue mechanismwould undermine incen-tives for fiscal disciplineand economic reform. “Nofirewall will work if the realproblems are not tackled,”Mr Schäuble said yesterday.

He had no success in per-

suading his counterparts of his case as they see a largerfir ewall as essential toimproving confidence andu nl oc ki ng f un ds f ro maround the world to replen-ish the finances of the IMF.

Enlar ging these fr om€500bn to €750bn is not offi-

cially on the agenda for asummit of European headsof state in Brussels on Mon-day, but several officialssaid it would hang over thediscussions.

Herman Van Rompuy ,president of the EuropeanCouncil and chair of thesummit, has lobbied hardf or t he i nc re as e t o b eagreed in March and has

been backed by leaders of the other key EU institu-t io ns , i nc lu di ng J os éManuel Barroso, EuropeanCommission president, andMario Draghi, head of theEuropean Central Bank.

According to Europeanofficials, some of the most

intense pressure on Ms Mer-k el i s c om in g f ro m M sLagarde, who has insistedthat increasing the size of the rescue fund is a prereq-uisite to the IMF raising money for its own resourcesto fight fiscal fires.

Ms Merkel is finding littlesupport even among heru s ua l e ur oz on e a ll ie s.Although the Finnish gov-

ernment, facing an anti-bail-out backlash at home,had resisted an increase,the eurozone’s other tripleA rated country, the Neth-erland s, was op en to anexpansion, officials said.

Additional reporting byQuentin Peel in Berlin

Germany isolated over opposition to boosting bail-out fund

Davos 2012

Brussels summit

ECB support

Eurozone

VIDEOS

Critical voices at the WorldEconomic Forum, suchas that of George Soros,want more action and lessadvice from Germany. PlusMartin Wolf discussesfixing the global economy www.ft.com/davos

‘We are going to bewhipping boys forFrench politiciansbetween nowand elections’



FINANCIAL TIMES JANUARY28/JANUARY29 2012 ★ 3

By John Paul Rathbone in Havana

Miguel Ángel has achieved in Havanawhat thousands of exiles, almost adozen US presidents and, this week inFlorida, the Republican presidentialcandidates have long only promisedor dreamed about: a measure of free-dom in Cuba.

Last year, Mr Ángel reclaimed,restored and reopened his grandfa-ther’s restaurant in old Havana,which was nationalised by the revolu-tionary government in 1964. Mr Ángelhopes for bumper profits.

“I’m sitting on a potential goldmine,” says the 37-year-old entrepre-neur of his bustling establishment,appropriately called La MonedaCubana, the Cuban coin.

Mr Ángel’s tourist trap, which lies afew steps from the colonial cathedral,is one of the more exuberant signs of how Raúl Castro has softened theedges of Cuba’s Soviet-style economywith popular liberalising reforms thatencourage small private business.

Just as significantly, the president’schanges – which in January extendedto housing markets – appear to bemirrored by a similar softening inattitudes by Cuban-Americanstowards their homeland.

Mitt Romney and Newt Gingrichdrew cheers from Miami audiencesthis week when they courted Cuban

Republicans before primaries on Tues-day. There was traditional Castro-bashing and promises to reverse theObama administration’s decision to

allow unlimited family visits to Cubaand money transfers to relatives.

Yet their hardline approach appearsincreasingly out of step with broaderCuban-American voters, deemed cru-cial to winning the presidential elec-tion. Late last year, a bill proposed byFlorida’s Republican lawmakers thatsimilarly sought to tighten Cuba pol-icy drew howls of protest on Miami’susually conservative radio stations.

“Cuban-American engagement withCuba is changing,” says Phil Peters of the Lexington Institute, a Washingtonthink-tank. “It is moving beyond send-ing dollars once in a while to rela-tives, to sending dollars to help theirbusinesses, buy real estate and evenretire.”

Queuing at Miami International Air-port to check in for the 45-minutecharter flight to Havana, GladysGarcía is one blue-rinsed Cuban-American marking the changes of those with a stake in the island’sreforms and no interest in tighter USsanctions. “My sister rents DVDs andalways needs new supplies,” says the50-year-old, tapping a shrink-wrappedbox on her trolley. Although her enter-prise is modest, during busy periodsMs García says extra planes arebrought in to transport excess cargo.“There’s everything you can imagine– TVs, bicycles, motorcycle parts.”

There were more than 400,000 visits

by Cuban-Americans to the island lastyear. Emilio Morales, whose Miami-based Havana Consulting Groupadvises on Cuban business strategies,

estimates that two-thirds were withan economic motive. Exiles alsoremitted an estimated $2bn, making them the Caribbean equivalent of theChinese émigrés who first invested inthe Chinese mainland.

Even if they wanted to, such small-scale entrepreneurs lack the lobbying heft of big corporations – such as theoil companies waiting to see if aRepsol-leased rig finds oil in Cubanwaters – to fundamentally change theUS embargo, which requires congres-sional approval.

Nonetheless, the changes that theyand Mr Castro’s reforms are graduallybringing to Cuba, if not Washington,are clear. A carwash in a Havananeighbourhood promises to leave cars“looking like new”. In a leafy suburb,four mobile telephone repair shopshave sprung up around a branch of Etecsa, the state telephone company.

“We’re giving Etecsa a bit of compe-tition,” says Michael Franco, who hasregular takers for the iPhones he sells

for $400 and no complaints about thegovernment’s 50 per cent tax rateeither. “Fifty per cent of what? Itdepends how much you declare.”

Cubans wonder about selling theirhouses – to foreigners of course, as noC uban has suff icie nt capital ,although, paradoxically, only residentCubans are allowed to buy.

“Judging from the Norwegian whobought next door for his Cuban wife,my house is probably worth $300,000,”says Nelly Sanchez who is thinking of downsizing from her four-bedroomhouse.

Unlike his elder brother Fidel in the1990s, Mr Castro insists on thereforms’ necessity. This squares withtheir widespread popularity, whichalso makes them irreversible – even if for every winner there is a loser, espe-cially the retired who make do onstate pensions worth $15 a month.

Combined with resistance from Sta-linist party bureaucrats, this hasslowed the reforms needed to createenough jobs to absorb the 1m excessstate workers Mr Castro has said willeventually be laid off.

Changes expected at Cuba’s first

party conference this weekend will dolittle to accelerate the reform process,the official mantra of which is “with-out hurry but without pause”.

Cuba reformdrive brings

exiles closero homeland Raúl Castro’s policies have boosted small business, relaxed property trading andchanged the attitudes of Cuban-Americans

‘Engagement

is movingbeyond

sending

dollars once

in a while’

Changing pace:Havana’sprogramme ofliberalisationintroduced by Raúl Castro(below) has

widespreadsupport

Mr Castro is expected to endorse aVietnamese-style separation of theCommunist party from the apparatusof government. The country willremain a one-party dictatorship.Although there are currently no pris-oners of conscience, one imprisoneddissident died in a Cuban jail thismonth after catching pneumonia.

Even leaving such political consid-erations aside, the reforms are atricky balancing act. “Fast changeonly leads to Russian-style corrup-tion,” warns a Moscow-trained Cubanphysicist. However, “Slow change willfail to produce the efficiencies Cubaneeds,” says a European businessman.

Meanwhile, the reforms havealready begun to erode traditionalCuban structures and attitudes inunanticipated ways. The owner of Chaplins, a restaurant in Havana’sembassy district, was seen by a Finan-cial Times reporter this week entering the premises. And that owner? Noneother than Roberto Robaina, former

foreign minister and head of Cuba’sCommunist youth party.

Additional reporting by Marc Frankin Havana

Marshalled by the party’sbigwigs across the country,the Republican wagons arecircling Newt Gingrich inFlorida, determined tochoke his politicalmomentum with a defeatin the state’s primary.

The Sunshine state’sairwaves are thick withadvertisements warning of the dire consequences of allowing the formerSpeaker of the House of Representatives to be theparty’s candidate againstPresident Barack Obama.

If that’s not enough, abillboard along the coastalcity’s main highwaydisplays a picture of a real-life newt peering over afence, with the slogan: “NoNewt is Good Newt.”

“I’m here as a citizen,and I frankly don’t carewhat the Washingtonestablishment thinks of me,” Mr Gingrich shotback at a rally in southernFlorida, ahead of Tuesday’svote, “because I intend tochange them.”

The concerted push tostop Mr Gingrich inFlorida seems to beworking, with the latestpolls of Republican votersshowing that his chief rival, Mitt Romney, hasregained the lead in thestate.

In a Thursday morning rally in the state’s south,Mr Gingrich used the word“stupid” about a dozentimes to describe MrRomney and his policies.

But by the afternoon,with his rival’s surrogatesdogging his every step, heseemed tired as hemounted the stage in

Jacksonville to speak at aforum entitled Veterans fora Strong America:Commander-in-Chief.

As the day rolled on,high-profile Republicanslined up to excoriate MrGingrich, the mostwounding missive from

Bob Dole, the formerSenate leader and hiscongressional colleague.“In my run for thepresidency in 1996, theDemocrats greeted me witha number of negative TVads and in every one of them Newt was in the ad,”he said.

While Mr Gingrich spoketo the veterans on thedangers of radical Islam,China and the liberalmedia, supporters of MrRomney lurked in thecrowd, ready to unload onhim. “I am fascinated thathe is running as the non-establishment candidatewhen he is the epitome of the establishment,” saidJason Chaffetz, a Utahcongressman.

“I think he has atendency to becomeunhinged – and that spellsdisaster for Republicansrunning in House andSenate races this year.”

Mr Romney, theRepublican frontrunner,had thought he had

crushed Mr Gingrich onceand for all with a deluge of negative advertising in theIowa caucus four weeksago. Mr Gingrich’sresurrection in the SouthCarolina primary, where hesurged from behind toinflict a crushing defeat onMr Romney, has raised the

stakes in a bitterconservative conflict.The Republican race has

been dominated by newthird-party super politicalaction committees, whichhave spent $35m, mainlyon advertising attacking rival candidates.

These “super-Pacs”,established after a 2010Supreme Court decision,can raise unlimited fundsfor elections, as long asthey do not co-ordinatewith the candidates’campaigns. Of the $35m,almost half, about $16m,has gone on adverts justattacking Mr Gingrich.

Mr Romney took on MrGingrich aggressively onThursday evening’s

candidates’ debate inJacksonville, calling hisrival’s claims “repulsive”and his plans for a lunarcolony an expensive folly.

Mr Gingrich and hissupporters have not beenstanding still, with asuper-Pac established toback him and flail Mr

Romney in return.The Gingrich super-Pachas been funded almostentirely by the billionairecasino mogul, SheldonAdelson, and his wife, whohave put in $5m each.

In adverts in Florida,where the super-Pac hasbooked $6m in airtime, adramatic voiceover straightfrom a horror movie warnsthat only Mr Gingrich cancombat Mr Obama’s“radical socialist agenda”.

At a nearby rally for MrRomney, some of thecrowd said they supportedhim because they thoughthe was “electable”,compared with the morecombustible Mr Gingrich.

“I don’t need someonewho is going to bad-moutheveryone in Washingtonand talk sass to them,”said Theresa Rodriguez, 52,a former defence industryworker.

But Mr Gingrich still hassomething that Mr Romneylacks: an ability to channelvoter discontent. Whereaspeople who vote for MrRomney are much likehim, earning more than$200,000, according to exitpolls, Mr Gingrich fires upthe scrappy, butsolidifying, blue-collar baseof the Tea Party.

“The Republicanestablishment is just asmuch an establishment asthe Democraticestablishment, and theyare just as determined tostop us,” Mr Gingrich said.“Make no bones about it.This is a campaign for thevery nature of theRepublican party.”

Editorial Comment, Page 6

Establishment attacks on Gingrichraise stakes in Republican contest

Nomination race

Criticism of hisrival has boostedRomney at a crucial time in the Florida campaign, writes

Richard McGregor

Hispanic rising star angers Latinos

Protesters interrupted aspeech by the Republican’srising Hispanic star, MarcoRubio, at a forum for theparty’s presidential hopefuls,accusing the senator of notstanding up for thecommunity on immigration,

writes Richard McGregorin Miami.

Mr Rubio was followed atthe Hispanic Republicanconference by NewtGingrich and Mitt Romney,both courting the Latinovote ahead of Tuesday’sFlorida primary.

Mr Rubio, often touted asa possible vice-presidentialpick for the party for the2012 election, took theprotest in his stride but theincident underlined theissue’s sensitivity forthe party. Anaircraft circled

overhead, trailing a bannerreading: “Hey Marco: NoSomos Rubios.” The phrase,translating as “We aren’tRubios”, is a pun, as rubio

means blond in Spanish.Republican candidates

have softened their oftenharsh rhetoric on illegalimmigrants ahead ofthe vote in Florida, a statewith a large Hispanicpopulation.

Mr Rubio has criticisedMr Gingrich for running anadvertisement saying MrRomney was “anti-immigrant”, but many partymembers have beendisturbed by the formerMassachusetts governor’srhetoric on the issue.

“We must admit thatthere are those among us

that have used rhetoricthat is harsh andintolerable andinexcusable,” Mr Rubio

said, without referenceto Mr Romney. Hesaid it was

“impossible” todeport 11m illegalimmigrants andindicated support toallow some to stay.

INTERACTIVECompare the backgroundsand platforms of theRepublican contenders for the2012 presidential nominationwith those of Barack Obama

www.ft.com/republicans

WORLD NEWS

Marco

Rubio:criticisedNewtGingrich



★ FINANCIALTIMES JANUARY28/JANUARY29 2012

World round-up

Google has protested atdraft European Union pri-vacy rules that would regu-late how companies storeand handle personal infor-mation, saying that somemeasures could “break theinternet” – the slogan usedby web companies to defeatanti-piracy legislation inthe US.

Senior Google executives,speaking at the World Eco-nomic Forum in Davos yes-terday, raised concerns overproposals by Viviane Red-ing, the EU justice commis-sioner, that would requirepeople to give explicit con-sent to companies for thestorage and use of their

personal data.David Drummond, chief

legal officer for Google, saidthe draft proposals couldmean people having to giveexplicit permission to anyw eb si t e t he y v is i te d,because browsing involveddisclosing an internet proto-

col address. “Some haveargued that IP addressesare personal information.T ha t w ou ld m ea n t ha tevery time you navigate toa web page, so methin g would pop up. We are veryconcerned about it and weare going to participate [inth e EU c on su lta tion ] toensure that we don’t breakthe internet.”

Technology companiesrallied sufficient supportthis month to force the USCongress to postpone twobills intended to curb copy-righ t infrin gement a ndpiracy. They argued thatthese bills would “break thei nt er ne t” b y b lo ck in g alleged pirate sites frombeing visible to internetusers.

The campaign against theStop Online Pira cy Act(Sopa) and a linked billdemonstrated the rising political clout of internetcompanies. Wikipedia wasblacked out for a day aspart of the campaign.

John Gapper, Davos

Google protests at EU’s proposed rules on privacy

Internet regulation

Chinese security forceshave fired on Tibetans, kill-ing one and wounding sev-era l o th ers, a n a ctivistgroup said yesterday, in thethird reported deadly clashin south-western Sichuanprovince in a week, Associ-ated Press reports.

The Tibetans were trying to stop Chinese securityforces from detaining ayouth who posted a leafletsaying that self-immola-tions would not stop untilTibet was free, the Interna-tional Campaign for Tibetsaid. At least 16 Buddhistmon ks, n un s a nd o therTibetans have set them-selves on fire in protest in

the past year, mostly in tra-ditionally Tibetan areas of

Sichuan. Most have chantedfor Tibetan freedom and thereturn of their spiritualleader, the Dalai Lama.

The London-based groupsaid a youth named Tarpaposted a leaflet in Sichuan’sAba prefecture stating that“the reason for the self-immolation protests wasthat Tibet must be free andthe Dalai Lama must returnand, until these demandswere met, there was no wayfor the c ampa ign to bestopped”.

Security forces arrestedMr Tarpa about two hourslater, group spokeswomanKate Saunders said in anemail. “As they were taking him away, people nearbytried their best to block theway . . . The police respon-

d ed b y f ir in g i nt o t hecrowd. According to oursources, one person waskilled on the spot and sev-eral wounded,’’ she said.

Th e inc ident, a s withmost reported clashes inTibetan areas, could not beindependently verified.

Activists report Tibetan killed in Sichuan unrest

China security

President Nicolas Sarkozysays that France and HamidKarzai, the Afghan presi-dent, will ask Nato to handover all combat missions inAfghanistan to nationaltroops in 2013 – a year ear-lier than planned, Associ-ated Press reports.

The move, if confirmed,comes at a time of fatigueamong European contribu-tors to the 10-year alliedintervention in Afghanistana nd wou ld a cc elera te agradual withdrawal of Natotroops that Barack Obamapla nn ed to see th ro ughuntil the end of 2014.

Mr Sarko zy sa id: “Wehave decided in a common

accord with President Kar-zai to ask Nato to considera total h an ding o f Natoc omba t mission s to th eA fg ha n a rm y o ve r t hecourse of 2013.”

The French-Afghan pro-posal comes a week afterMr Sa rko zy su spen ded

France’s training missionsand joint military patrolswith Afghan forces follow-ing the fatal shooting of four unarmed French sol-diers by an Afghan service-man last week.

Mr Sarkozy announcedthat France would resumeits training mission fromtoday a nd with draw its

troops by the end of 2013.With Mr Karzai a t h is

side, Mr Sarkozy also saidauthority in the strategicprovince of Kapisa, east of Kabul, where nearly allFrench troops are deployed,would be handed over tothe Afghans in March.

Sarkozy and Karzai seek earlier Afghan handover

French troops

A suicide bomber detonateda car full of explosives neara funeral procession yester-day morning, killing atleast 31 people and injuring 60, a security official said.

Mourners had gatheredoutside a hospital in Bagh-dad to receive the bodies of th ree people killed th enight before, said the offi-cial. The blast occurred inthe Shia neighbourhood of Zafaraniyah, in the south-eastern part of the city.

Violence has grown inIraq over the past six weeksas a political crisis followsin th e wake o f the with-drawal of US troops. Insur-gents have often targeted

Shia districts and pilgrimson religious marches.

In a recent internet audioposting, the al-Qaeda-affili-ated Islamic State of Iraqsaid it would direct attacksagainst Iraq’s Shia commu-nity and the Shia-led gov-ernment, according to the

Site Intelligence Group, amonitoring service.

Officials say they are con-cerned that the insurgentsare trying to provoke Shiamilitias to counterattack, sostirring a sectarian war.Sunni targets have alsobeen h it in Ira q’s west,a ltho ugh it is n ot c learwhether the attacks werer el at ed t o t he s t ri ke sagainst the Shia.

Yesterday’s blast killedpeople already reeling fromviolence in the district thenight before. According tothe official, gunmen hadstormed in to a n esta teagent’s office and killedthree people. Their bodieswere being taken for burialwhen the bomb detonated.

Salam Hussein, a 42-year-

old grocer in Zafaraniyah,told Associated Press hewas watching the funeralprocession when the blastblew out his shop windows.

“It was a huge explosion,”Mr Hussein said.

Dan Morse andAziz Alwan, Baghdad

Baghdad bomb blast killsat least 31 Shia mourners

Iraq strife

16Tibetans in the past yearto have self-immolated

Nicolas Sarkozy: accord

By Michael Peel in Aleppo

and Abigail Fielding-Smithin Beirut

Violence continued acrossSyria yesterday amid thegrowing militarisation of the 10-month uprising, andfuel shortages deepened inAleppo, the commercial cap-ital.

As the UN Security Coun-cil prepared to meet fortalks on the country’s wors-e ni ng c ri s is , a ct iv is tsclaimed President Basharal-Assad’s security forceshad launched offensives inthe protest centres of Homs,H am a a nd t he r es ti veDamascus suburbs.

In Aleppo, governmentagents were deployed out-side a mosque that has beenone of the sites of sporadicprotests.

Meanwhile, the city’s resi-dents continue to strugglewith the economic costs of what some fear is a slowslide into civil war.

“We are living in a badtime,” said Abdulqadir, aworker in a shop down theroad from where about adozen security agents, somein leather jackets and oth-ers in body armour, weregathered outside a mosquein Aleppo’s Salaheddin dis-trict. “We have high pricesand people are listening tot he n ew s a nd t he y a reafraid.”

An assault by govern-ment forces in the dividedcity of Homs on Thursdayand yesterday killed 37 peo-ple, including nine children,according to Rami Abdul-rah ma n o f th e Lon do n-based Syrian Human RightsObservatory.

Activists posted imageso n t he i nt er ne t t ha tappeared to show the blood-

ied corpses of small chil-dren wrapped in plasticbags.

Opponents of Mr Assadalso claimed the regime hadmounted attacks in the cen-tral city of Hama, whilefierce fighting was reportedin Douma in the Damascushinterland, where the rebelF re e S yr ia n A rm y h astaken a tenuous control of some areas.

General Mustafa Dabi,

head of a month-old ArabLeague mission to Syriac ha rged with a ssessing Damascus’s implementationof a regional peace plan,called for an immediate haltto violence that he said hadclimbed steeply since Tues-day. The Syrian govern-

ment denies targeting civil-ians and says the attacks byits security forces are alegitimate response to anuprising by armed terroristgangs backed by foreignpowers.

In Aleppo, drivers in aline of cars at a petrol sta-

tion in the Midan districtwere preparing to queuemost of the day for fuel toarrive. Many said the sup-ply crisis had worsenedsince the new year as theF re e S yr ia n A rm y h adstepped up its operations onroads into the city.

A worker at the petrolstation, where pictures of Mr Assad adorned standsf ul l o f c ar l ub ri ca nt s,claimed opposition “terror-ists” were attacking andintercepting fuel tankers as

part of a campaign againstthe regime.

In the queue of cars snak-ing around the station fore-court, drivers blamed theireconomic troubles on boththe armed opposition andwestern countries that havei mp os ed s an ct io ns o nSyria’s oil industry.

One man said he stayedin bed some days because of shortages of heating oil.Others said the price of

sugar had doubled whilethe cost of a dozen eggs hadsoared.

A taxi driver named Rafivowed to defy wha t h etermed an opposition con-spiracy to use economicpressure to bring down MrAssad. “If we have to sellour house and our clothes,we will never surrender,”he declared, tugging demon-s tr at i ve ly a t h is b lu e

jumper.There were no obvious

signs of protests during a

car tour of several districtso f Aleppo a fter Fridayprayers, the traditional ral-lying point for protesters.

The university campus,which activists say has pre-viously seen demonstra-tions numbering hundredso f p eo pl e, w as a lm os tdeserted.

There were only whispersof dissent in a city where an umber o f tho se in ter-viewed by the Financial

Times attacked the opposi-tion – and particularly themilitarised elements of it – for causing insecurity anddestabilising the country.

Residents reported seeing sm all prot es ts of afew dozen people lasting o nl y a f ew m in ut es a ta t im e, w hi le a ma nbuying fresh herbs from afruit and vegetable stalloutside another Salaheddinmosque c laimed h e h adseen much bigger demon-strations.

“I would give you moredetails but I a m a fraidto,” he added, before turn-ing quic kly a wa y fromthe warmth of the stall-holder’s brazier and intothe rain.

Syrians pay price for conf lict

Iran’s parliament is threat-ening to ban oil exports toEurope a s early a s n extweek, a move that could hitthe ec on omica lly weakcountries of southern Eur-o pe a nd push o il priceshigher.

The European Union app-roved a ban this week on oili mp or ts f ro m I ra n b utdelayed its implementationuntil July 1, to give Greece,Spain and Italy time to sec-ure substitute supplies fromproducers such as SaudiArabia, Russia and Iraq.

Hossein Ibrahimi, a mem-ber of the Iranian parlia-ment’s national securitycommittee, said legislatorswould discuss a pre-emptiveban tomorrow with “doubleurgency”, in response to theE U o il e mb ar go . T ha tshould mean the bill will beapproved tomorrow by par-liamentarians and then bythe Guardian Council, theconstitutional watchdog,the same day. The law canthen be notified to the gov-ernment immediately.

“We want to cut oil exp-orts to Europe next week,for which we are preparing a double-urgency bill,” MrIbrah imi told th e semi-

official Fars news agency.The call for an immediate

ban was taken up in Fridayprayers across Iran. Ayatol-lah Ahmad Khatami, aninfluential conservativecleric and Tehran’s prayerleader, said in his sermonthat the EU “went down awell with the rotten rope of the US”. He said Iran wasready to pay the price forbeing “dignified”.

Oil prices rose yesterdayas the threat of an immedi-ate cutting of Iranian oilexports loomed. Brent, theglobal benchmark, rose to asession high of $111.74 abarrel. It later pared gainsto trade 60 cents higher, at$111.39 a barrel.

The physical oil marketin the Middle East and Rus-sia showed signs of tighten-ing too, suggesting somerefiners were already seek-

ing replacement barrels,analysts said. Russian Uralscrude, seen as a potentialalternative to Iranian ex-ports, rose in a tender yes-terday to a premium overBrent for the first time inmore than a month.

Any immediate Iranianban on exports would be a“big headache” for Euro-pean refiners, said SamuelCiszuk, an energy econo-mist at consultancy KBC.“They thought they had agrace period for winding down their Iranian con-tracts and this will givethem no time to adjust.”

However, others said any

ban should have little over-all effect on global oil mar-k et s, w hi ch a re w el lsupplied, partly thanks tothe quick recovery in Lib-yan production.

The office of Lady Ash-ton, the EU foreign policychief, said member stateswere already engaged intalks with suppliers “to mit-igate the potential, directand indirect effects” of theIran ia n impo rt ban a ndsecure “equivalent quanti-ties at similar conditionswithout delay”.

A senior diplomat froman EU state said: “If Iranwere to do so, this would dohuge damage to Iran’s repu-tation as an oil supplierworldwide.”

Analysts say the biggestc asu alty migh t be Iranitself, whic h wou ld beforced to find alternativemarkets for about 600,000barrels a day, about a quar-ter of the Middle East’s reg-ular overseas sales. Ana-lysts expect the NationalIranian Oil Company tohave to discount its crudeheavily to win more Asiancustomers at short notice.

PFC Energy, the consul-tancy, says that if Iran fails

to find new markets soon it

could resort to floating stor-a ge , f il li ng t ank er sanchored in the Gulf.

“That said, floating stor-age could absorb only abouttwo months’ of lost exportsat best,” said Paul Tossetti,senior director of marketintelligence at PFC Energy.

If the disruption lastslonger, analysts and tradersbelieve, Iran wou ld beforced to shut down a largechunk of its production,damaging its economy.

There has been specula-tion tha t EU san ction scould hit oil tanker opera-tors’ ability to insure shipsfor voyages to Iran, but theindustry says EU-regulatedinsurers could step in toprovide one-off insurance.

Additional reporting byJavier Blas, Peter Spiegel,James Blitz and Robert Wright

Iran ready tocut oil supply to Europe

immediately Parliamentary vote

A pre-emptive ban to snub Brusselscould take effect indays, write NajmehBozorgmehrand Guy Chazan

‘This would do hugedamage to Iran’sreputation as an oilsupplier worldwide’

European diplomat

ISRAEL

SYR IA

Aleppo

Homs

Hama

100 km

IRAQ

SAUDIARABIA

TURKEY

JORDAN

ISRAEL

LEBANON

GAZA

WEST

BANK

Damascus

Mediterranean

Sea

Commercial hub hit by inflation

Backing for regimedespite shortages

By Mure Dickie in Kyoto

There were times last yearwhen foreigners all butvanished from the elegant

wooden veranda of Kiyomizu Temple in Kyoto,one of Japan’s mostcelebrated tourist spots,but now they are flowing back – and most of themseem to be speaking Chinese.

A flood of visitors frommainland China, swelledover the past week by thelunar new year holiday, ishighlighting theimportance of Chinesedemand for Japan’stourism sector, which wasbadly hit following theearthquake and tsunamilast year.

In the former imperial

capital of Kyoto, long amagnet for foreign visitors,Chinese tourists are anever more obviouspresence at temples,

gardens and scenic spots,says Hiroaki Wakino of theKyoto City TourismAssociation. “This weekit’s almost all Chinese,” MrWakino said.

Travel to Japan plungedafter a huge earthquakeand tsunami hit the north-east coast last March,triggering a nuclear crisis.But while arrivals frommost of the world remainbelow pre-disaster levels,the number of Chinesetravelling to Japan soaredmore than 30 per cent yearon year in November andDecember.

Powering the growth is

the rapid expansion of China’s middle class, manyof whose members haveconsiderable disposableincome and are eager to

see more of the world.Meanwhile, troubled by

anaemic economic growth,Japan has put aside fearsof illegal immigration andsharply eased its visarequirements for Chinese.

Ge Fengnian, a shoebusinessman from China’ssouthern city of Guangzhou who this weektook his wife, child andparents to enjoy thepanoramic view fromKiyomizu Temple’s 17th-century veranda, proudlyshowed a three-yearmultiple-entry visa.

“We Chinese are greatshoppers,” said Mr Ge.

Indeed, surveys by theJapan tourism agencysuggest Chinese visitorswho go shopping in Japanspend an average of

Y88,000 ($1,140), more thantwice as much as Britishor US tourists.

At Isetan departmentstore next to Kyoto’s mainstation, mainland Chinesealready account for about70 per cent of applicationsfor duty-free purchases – vastly outnumbering evenSouth Koreans, still themost numerous foreignvisitors to Japan.

Chinese visitors may bebecoming less free with thewallets and purses. Whilemany tours still centre onretail outlets in Tokyo and

Osaka, some are shifting tomore cultural itineraries.

Li Yuan, an officeworker from Beijing taking in Kyoto’s sights, said shedid not plan to spend asmuch time shopping as shehad on her first trip toJapan. “I’m aiming to seemore tourist sights . . . ,”Ms Li said.

Japan has madeattracting foreign touristsa priority, aiming towelcome 25m visitors ayear by 2020. Visits fell to6.2m in disaster-hit 2011from a record 8.6m theyear before, but TakeshiMaeda, the tourism

minister, said this monthhe was aiming for arebound to 9m in 2012despite a stubbornlyexpensive yen.

At Kyoto’s glittering Golden Pavilion yesterdayafternoon, flocks of Chinese visitors filled theviewing spots. Noneseemed troubled by fearsof further seismic activityor the effects of themeltdown at the tsunami-crippled Fukushima Daiichiplant far to the east.

Radiation levels in Tokyoand Kyoto are lower thanthose even the mostconservative expertsconsider to pose a healththreat.

Brands seek Chinese ties,Page 9

Wealthy Chinese fill gap left by tourist shortfall in Japan

Umayyad mosque in Aleppo, a city where protests have been limited so far but where the continuing violence is hurting the economy Getty

Abadan refinery: a long ban would partially shut output

6.2mVisitors to Japan in 2011,from a record 8.6m in 2010

WORLD NEWS

MORE AT FT.COM

Interactive map and timelineon the Syrian uprising

www.ft.com/syriauprising



FINANCIALTIMES JANUARY 28/JANUARY 29 2012 ★ 5

The west faces a crisis of confidence, not a crisis of capitalismself-doubt before it takes root.

Travel east and no one is talking of “capitalism in crisis”. The spreadof free enterprise in Asia over thepast 30 years has lifted hundreds of millions of people out of grinding poverty. The challenge for thesecountries is not stagnant incomes,but meeting the growing politicalaspirations that prosperity brings.

In the west there is no shortageof political expression. Indeed, whenthe Occupy movement starts penning articles in the Financial Timesquoting Hayek, you could say thatpolitical expression has reachedsurreal new levels. The problemfacing western democracies is doubtabout the ability of government todeliver rising living standards: thepromise that our children’s world

will be better than our own. Myargument is that the way to addressthis doubt is not to run away fromcapitalism but to run towards it.

Let us look at how this crisis of confidence manifests itself.

First, there is the widely felt angerat the rising incomes of a wealthyfew when the incomes of the

Second, people are starting todoubt the ability of westerndemocracies to secure for themajority of their populations therewards of globalisation. The answerfrom governments has been toconstruct ever larger welfare systemsto redistribute income. Few denysome redistribution is desirable. Butsurely we know by now that it willnot address the long-term decline inthe relative living standards of themajority. Unreformed welfaresystems have not only becomeunaffordable in an age of largedeficits but they have becomeincreasingly difficult to defend whenthey have trapped millions independency and joblessness.

Some on the left, forced to give upon tax and spend, now want to

legislate and regulate for outcomesthat markets are not delivering. Thismay seem like a free lunch but weknow from painful experience thattrying to control prices and wages ina market economy is a recipe forunemployment and economic decline.

Instead of trying to compensatepeople for lack of opportunity, we

should devote our precious resourcesto increasing those opportunities andgiving people a stake in the globaleconomy. Our populations will bethe losers from globalisation if theylack the human capital, goodschools, world-class universities andinvestment in research anddevelopment that would enable themto charge more for their labour.

Finally, we must confront thefears that western political systemsare not able to take decisive stepsto deal with problems and thinklong-term. Paralysis in the USCongress and slow progress in theeurozone have not helped. We in theUK have our own problems but wehave not fought shy of taking bolddecisions, and I believe thesedecisions have inspired confidence in

our ability to act. We need furtherbold decisions in the UK oncontroversial issues such as airportcapacity, regulation and nuclearenergy if we are to stay competitive.And the west as a whole needs totake bold steps to support enterpriseif we are to bring greater prosperity.

A global free-trade deal is an

economic no-brainer but everyonesays the politics are too difficult.However, the politics of declining incomes are even worse, so inEurope let’s have the courage todeepen our single market and striketrade agreements with the likes of India, Japan and Singapore. Let’shave the confidence to open up ourinfrastructure to investment fromsovereign wealth funds and not usenational security as an excuse forprotectionism. Let’s have the self-belief to open our economies tocompetition, not hide behind thecrypto-protectionist language of reciprocity. Let’s work to strengtheninstitutions such as the World TradeOrganisation and the IMF, to showglobal markets are governed byglobal rules.

What we are witnessing in thewest is a crisis of confidence, not acrisis of capitalism. The open societyhas always had enemies. Thefortunes of our populations will befavoured if we confront them.

The writer is UK chancellor of theexchequer

Comment

When the Occupy movement writes anFT article quotingFriedrich Hayek, politicalexpression has reachedsurreal new levels

majority have fallen. This is potentwhen rewards accrue to thoseparticipating in the very industry,financial services, that contributed tothe crisis. I always thought it wasincredibly short-sighted, even stupid,of banks to pay bonuses in 2009when taxpayers had only monthsearlier spent vast sums bailing themout and propping up the wholesystem. It was reward for failure,which undermined a central premiseof free markets.

What we need now is a greaterapplication of free-market principles,not cosy protection for vestedinterests. Britain’s reforms toringfence retail banks are designedso banks that fail go bust, withoutholding the taxpayer to ransom.

George Osborne

ANALYSIS & COMMENT

There have been many parallelsdrawn recently between thecurrent economic situation and

the 1930s. It is easy to see how thecollapse of over-leveraged financialmarkets and the painful recoveryfrom a balance-sheet recession lendsitself to comparisons.

But are we witnessing a crisis

of capitalism or a crisis of confidencein the ability of western democraciesto offer decisive leadership andrising living standards to theirpopulations? I think it is the latter.In a much more extreme form, of course, this contributed to the mostdangerous development of the 1930s.In the west we have to confront this

Scotland and the Union

With a referendumon independencein prospect, a political tussle isunder way

between Edinburghand London. But it is economics that

will determine theultimate destiny of he British isles’constituent nations.

y Brian Groom

Untied kingdom

It was a day of rejoicing and feast-ing in London. On May 1 1707,

Scottish parliamentarians werewelcomed to the English capital

t he d ay t he u ni on b et we en t wonations came into force. A treaty pro-claimed that “the Two Kingdoms of England and Scotland shall . . . foreverbe United into One Kingdom by thename of Great Britain”.

In Scotland, though, the mood wassombre. Presbyterian parishes held aday of fasting and humiliation. Manypeople felt their leaders had been bul-lied and bribed into submission – “bought and sold for English gold”, asthe poet Robert Burns later put it. Itwas a time when small nations allover Europe, struggling to survive inpart because of punitive trade tariffs,were being swallowed by big powers.

Three hundred and five years later,the UK’s future is in question. AlexSalmond, nationalist first minister inScotland’s devolved parliament, isplanning a referendum on independ-ence for autumn 2014.

Mr Salmond is upbeat, though pollssuggest he will str uggle to win amajority for separation. An independ-ent Scotland would be a country that“speaks with its own voice, standstaller in the world and takes responsi-bility for its own future”, he said inlaunching his proposals this week. Incase that vote fails, he plans to offerfiscal autonomy as an alternative.

As an Englishman who lived for 10years in Scotland in the 1980s and1990s, where I became editor of anational newspaper, the Scottish ques-tion and its consequences dominatedmuch of my working life. In covering politics, regional affairs and businessfor the Financial Times, it has beenwith me ever since.

I arrived north of the border in 1988,shortly before Margaret Thatcher’snotorious “Sermon on the Mound”, anaddress to the general assembly of theChurch of Scotland that underlinedthe gulf between the Iron Lady’s free-market c r ed o and that of manyc onsensus-mind ed Sc ots. L adyThatcher may no longer be primeminister but the differences betweenScotland and the rest of the UK grow

wider. Granting a measure of devolu-tion to Scotland, Wales and NorthernIreland more than a decade ago didnot still the centrifugal forces.

The English, more than four-fifthsof the UK’s population, are becoming more assertive about their own inter-ests. Scots have “an undoubted rightto national self-determination”, asLady Thatcher acknowledged in hermemoirs. But the UK’s other residentsclaim a rightful say in the terms.

Mr Salmond calculates that Scot-land will be feeling good about itself in 2014, when it marks the 700th anni-versary of the Battle of Bannockburn– a famous victory over the English – and hosts the Commonwealth Gamesand Ryder Cup golf tournament. Pollsput support for independence at 30-40per cent, suggesting he will lose onthat question. But he is contemplating adding a second option on deeper dev-olution, or “devo max”, under whichScotland would stay in the UK butraise most of its own taxes. That com-mands up to 68 per cent support.

It is this strategy that alarms DavidCameron’s Conservative-Liberal Dem-ocrat coalition in London, fearing ademand for devo max would destabi-lise the union. It argues that Mr Sal-mond’s advisory referendum wouldbreach the 1998 Scotland Act, whichreserves constitutional issues forWestminster. Mr Cameron offers talkson an official referendum at an earlierdate, with a straight yes/no on inde-pendence. Mr Salmond insists he isacting within his powers, although herisks a legal challenge.

Whatever happens next, the unionis in flux. Although Scotland has only8 per cent of the population, the out-come has implications for the UK’sstatus in the European Union and itsclaims to be a great power at the UN.

At times the union has been rocky:Ireland joined in 1801 but left again,

apart from Northern Ireland, in 1922after a bloody war of independence.For Scots, however, the union became

a huge opportunity as the Britishempire grew. Scots-trained adminis-trators bestrode the globe, while itsinventors were at the front of theindustrial revolution.

W hat has weakened Scots’adherence to Britain?Explanations include theend of empire and secu-

larisation, which loosened the bond of Protestantism. The re-emergence of small nations such as Slovakia andthe Baltic states has encouragednationalists. Globalisation has had animpact: the more life in Scotlandresembles that in England, the moreScots feel the need to assert theiridentity. Added to that is resentmentat London’s dominance.

I witnessed the growth of Scottishself-confidence with admiration. The“Scottish cringe”, a fear that local cul-ture was inferior, was banished. Therehas been a renaissance, seen mainlyin literature and art. In some waysScotland now seems more at ease

with itself than England: it avoidedlast year’s riots, for example. And MrSalmond is relentlessly optimistica bo ut i ts f ut ur e. T he a ut ho rP.G. Wodehouse once wryly observedthat it was never difficult to tell thedifference between a ray of sunshineand a Scotsman with a grievance.Often, it is the English who now feelaggrieved, mainly over Scotland’sdisproportionate share of publicspending.

It is economics, not culture, thatwill determine the future – and thatlooks less good for Mr Salmond’s inde-pendence case. Scotland could cer-tainly survive. It would be wealthierin terms of gross domestic product perhead than Italy, New Zealand or Spainand close to the UK average. But evenif it received most of the revenue flow-ing from North Sea oil, a diminishing

resource that lies in its waters, itwould be likely to face austerity. As anewly independent small country

with large fiscal deficits and high pub-lic debt, it would not command a tri-ple A credit rating and would thusface higher borrowing costs than theUK. To reduce this, it is likely to haveto cut public spending.

Mr Salmond wants Scotland to keepsterling until it decides to join theeuro. But it would have to do thiseither without agreement, meaning itwould have no central bank as lenderof last resort, or by an accord underwhich the residual UK would insist onstrict fiscal rules, meaning Scotlandwould enjoy independence in neithermonetary nor taxation terms. The reg-ulation of financial services wouldalso be an issue. Scotland is home toseveral large institutions, including Royal Bank of Scotland and assurerssuch as Standard Life. An independ-ent Scotland would have a limitedability to stand behind deposits.

And what of devo max? That is thevaguest option. A Scotland bill cur-rently going through Westminsterwill give Scotland’s parliament at

Holyrood in Edinburgh the power toraise about 35 per cent of tax in Scot-land . Dev o max would p robab lyincrease that to at least 60 per cent.

Under one variant proposed byReform Scotland, a think-tank, Holy-rood would control most taxes, includ-ing income tax and corporation tax,leaving Westminster with value addedtax and national insurance. But toavoid deep public spending cuts, Scot-land would need its “geographicalshare” of oil revenues. ProfessorArthur Midwinter, a former adviserto Holyrood’s finance committee,says devo max would be a “recipefor political conflict with the UK”.

It would seem odd, though, to denyScots a vote on the option they con-sistently favour. The journalist NealAscherson says their preference hasbeen clear for about 40 years. “They

want a Scottish government that isnot bossed about by London, andespecially not by English politicians

in parties most Scots did not votefor,” he wrote this month.

If Scotland became independent, itis unlikely Wales or Northern Ire-land would follow suit. Wales isrelatively poor and support for

independence is low. Northern Ire-land’s Roman Catholic minority islikely to become a majority in a gen-eration or so, but that does not meanunification with the Irish Republic: inone recent poll, more than half of Catholics wanted to remain in the UK.

Carwyn Jones, Wales’s Labour firstminister, says if Scotland leaves thereshould b e a new up per house atWestminster with equal representa-tion from England, Wales and North-ern Ireland, to prevent England fromdominating.

The English are becoming moreassertively “English”. According to asurvey by the Institute for Public Pol-icy Research, 40 per cent now see Eng-lishness as more important than Brit-ishness, with just 16 per cent taking

the opposite view. More than half think either England should have itsown parliament or only English MPsshould vote on English laws, while 80per cent favour devo max becausethey think Scotland benefits unfairlyfrom the current relationship. Devomax could resolve some English com-plaints – about the share-out of publicspending, for example – but negotia-tions are bound to be fraught.

Ron Davies, a former Labour Welshsecretary, once described devolutionas “a process, not an event”. As such,it has further to run. There seems noeasy alternative in reconciling theaspirations for self-determination bythe people of four nations.

The writer, the FT’s UK business and employment editor, is a former editor of Scotland on Sunday

Walking free? Alex Salmond, Scotland’sfirst minister, who called this week fora ballot on separation. Below, the Duke

of Queensberry presents the 1707 Actof Union to Queen Anne Reuters/Alamy

‘Scots want a government that is notbossed about by London, especially notby English politicians inparties most Scots didnot vote for’

Speed read

●Salmond in the pink Alex Salmond,first minister in Scotland’s devolvedparliament, wants a referendum onindependence to be held in 2014

●Fiscal fallback Because polls say hewill struggle to win a majority, he plansto offer tax autonomy as an alternative.But this may breach an act keepingconstitutional issues for Westminster

●Economic snag With large deficitsand high public debt, Scotland wouldnot command a triple A credit ratingand might have to cut public spending

On the web

In depth Future of the Union: thedebate over the timing and natureof a Scottish referendum

www.ft.com/union



6 ★ FINANCIALTIMES JANUARY28/JANUARY29 2012

“Without fear and without favour”

Saturday January 28 2012

LETTERS

● To contribute please email: [email protected] or fax: +44 (0) 20 7873 5938 Include daytime telephone number and full address ● For corrections email: [email protected]

Ammi majus

Hardliners’ threat to capitalism From Prof Wilfred Beckerman.

Sir, It is ironic that the mainthreat to the survival of capitalismwithin a free society comes not fromthe Occupy Wall Street and similarprotest movements but from thehardline conservatives who dominateeconomic policy in Germany.Wilfred Beckerman,Emeritus Fellow,

Balliol College, Oxford, UK

Truth and falsity would be excluded From Mr Kenyon Bradt.

Sir, Alex Rosenberg claims, in The Atheist’s Guide to Reality, that“physical facts fix all the facts”;from which it follows, as StephenCave frames Rosenberg’s argument,that “we have no free will withwhich to choose between right andwrong” (“The God gap”, Life & Arts,January 21). If this claim truly is afact, it also follows that we wouldlack the capacity, the freedom, todetermine whether anything is a factor not. Just as a theist would bedetermined to be theistic, so theatheist would be determined to beatheistic. Each would be determinedto assert, on the one hand, her or his“fact” or “truth” as factual or trueand, on the other hand, the other’s“fact” or “truth” as factitious orfalse. Neither would be in a positionto determine, independently of her orhis assertion, whether that which isasserted is true or false. Truth andfalsity, along with reality generally,would be excluded from the equation

altogether.As for “physical facts”, it is not

within the domain of the physicalscientist, as physical, to determinewhether or not reality is exclusivelyphysical, or to exclude from therange of the intelligible orreasonable any reality, including adivine reality, that is notrationalisable in terms of the canonsand methodologies of physicalscience. Indeed, there may well bereasons, and intellectuallyascertainable and intelligible reasons,that are not reducible to “physicalfacts” as Mr Rosenberg conceivesthem. And there may well bematters religious that are inherentlyreasonable, which fact would notexclude them from being inherentlyemotional as well.Kenyon Bradt,Muncie, IN, US

Queen Anne’s Lacegrows wild here

From Mr Thomas Bower.Sir, Robin Lane Fox (“Top seeds”,

House & Home, January 21) refers to Ammi majus as having the popularname False Bishop and theseedman’s name Queen Anne’s Lace.I would like to report that in theformer North American coloniesQueen Anne’s Lace is in fact thepopular name for this plant thatgrows wild along many countryroads and in meadows.Thomas Bower,Washington, DC, US

Live in a bubble and stay friends with your neighbour From Mr Maarten van Hasselt.

Sir, Gillian Tett’s column “Pickyour channel and choose the news tomatch your views” (January 21)captures a trend that is interesting to me as a Dutchman living inTexas. However, it is not oneisolated to the US. If one reads DeTelegraaf in the Netherlands, onelives in a completely differentcountry to the readers of the NRCHandelsblad newspaper.

When we arrived in Houston itwas quickly explained that “West U”was the “only” place that we, as“liberals”, could live. And indeed,there are lots of Volvos and Saabsand few trucks, and if one looks atthe election signs it seems thateveryone is a Democrat. Two milesout that changes completely.

So we are all living in our“bubbles”, because in the end onedoesn’t want to be arguing with the

neighbours all the time, and there issufficient time in waiting rooms,office kitchens and gyms to watchthe “other” news. After a while mydaughter actually thought Houstonwas much more dangerous than wedid, because she saw the robberiesand murders on local television thatwe never heard about from publicservice broadcasting.Maarten van Hasselt,Houston, TX, US

Experience the new along with the old From Mr Graham Miller.

Sir, Interesting to read TylerBrûlé’s lament for the absence of paper and print reading – and itsaccompanying agreeable, frequentlysociable ambience – in Los Angeles’trendy coffee shops (“Screened outand isolated”, The Fast Lane,January 21).

This seems to be happening quitewidely with the increase in solo andsomewhat emotionless engagement

with iPads and laptops. I am alwaysdelighted to see such rationalcomments voiced by someone whosestyle and demographic presumably

cannot be dismissed as “fuddyduddy”. TB so often puts his fingeron plain sense.

The trend is perverse. If you adoptthe new things instead of – ratherthan in addition to – the good andenjoyable aspects of older techniques,media, sources, or whatever, youreally are turning your back on somany opportunities, and a richnessof variety and experience that isunprecedented in human history. As

well as driving people and businessesout of work, of course.Graham Miller,Haywards Heath, W Sussex, UK

Comment

summer of 2008 a full-blown slumpseemed unlikely, and the LehmanBrothers shock still lay ahead. Andwhile there are signs that the USeconomy has improved slightlycompared with the severe downturnin 2009, this improvement has mostlyoccurred after the 2011 survey. Lastautumn, US unemployment was wellabove 9 per cent, twice the level inthe (most stressed) summer of 2007.

One cynical explanation might bethat the survey itself is flawed: thedata run is short and the questionssomewhat vague. But there isanother theory, voiced by somepsychologists. After five long yearsof financial turmoil, Americansmight be getting used to shocks. Thetype of instability and economic painthat used to spark stress is losing itsability to unsettle people.

This theory may sound Pollyanna-ish. But there again, it might not beentirely crazy. Fifteen years ago Ilived in Tokyo where many Japanesewere initially thrown into a state

of profound shock – and stress – when their once-solid banks startedto collapse. It was even moredevastating when the “job for life”culture crumbled.

While that made the late 1990s atime of profound angst, what struckme when I returned to Tokyo after2000 was how many of my Japanese

friends seemed to be moving on.When banks collapsed and workvanished, they no longer assumedthe world would come to an end.

Something comparable might nowbe happening in America andEurope. Before 2007, economists usedto say that the west had moved intoan era of “great moderation”, in thesense that inflation was ultra low,growth relatively healthy and

capitalism seemed benign. That senseof stability extended into manynon-economic areas: trust in mostwestern institutions was pretty high.

But this impression – or illusion – of “moderation” has now beenshattered, in a way that has not

only caused economic pain andmarket volatility, but undercut trust,too. A fascinating survey shows thatwhile 65 per cent of Americanstrusted their banks in 2007, just 35per cent do so now, and trust ingovernment and business has alsocrumbled.

While this new mood of cynicism

has some debilitating consequences,it also has an advantage: whenpeople have already lost their faith,they are less prone to being shocked.Five years of watching “black swan”type events, bad government policiesand bizarre economic twists mighthave made shocks less unsettling.People are slowly adapting to a moreunstable world.

For the generation now entering the working world for the first time,such instability and pain mightalmost be the new normal. Earlierthis week I met students fromAmerica, Europe and Asia at aLondon School of Economicsconference, who told me that theydidn’t describe themselves as“generation X, Y or Z”; instead, theyprefer “generation flux”, or “genflux”. “We are embracing changeand flux, even to rejoice in it,” oneof their leaders earnestly explained.Of course, these pampered kidshave privileges that most young people lack.

But embracing “gen flux” mightyet be a good mantra for us all, even– or especially – for people (like me)who spent most of their careersliving in a world that was supposedto be “moderate”, but may haveactually been quite stressful.

[email protected]

Why being stressed has now become the new normalAre you feeling stressed right now?As 2012 gets under way, plenty of people would probably say “yes”. Butwhen the American PsychologicalAssociation recently posed thisquestion, the results were surprising.

Although 22 per cent of Americansdescribed themselves as “verystressed”, this figure was slightlydown on the previous year, and wellbelow 2007. Indeed, the measured

levels of stress have been dropping steadily over the past five yearssince the APA started its survey. Atfirst glance this looks odd. Americahas hardly seen a story of economicgrowth in the past five years. Whenthe APA first conducted this survey(in summer 2007) the economy wasin the midst of a boom. Even in the

Gillian Tett

Five years of watching‘black swan’ type eventsmight have made shocksless unsettling

‘Good’ and ‘bad’

are very real to us From Mr Mark Reader.

Sir, What Stephen Cave does notmention in his book reviews isthat religions deliver, through co-operation and altruism, many thingsthat free markets cannot provide: forexample, the things called “publicgoods” by Paul Samuelson. Theadaptive advantages such publicgoods provide would account forgenetic propensities to faith, and sofor the near universality of faithacross all cultures. Whateverphilosophers may argue, “good” and“bad” are very real to humans, andreligions help co-ordinate these.Mark Reader,Rural Business Unit,University of Cambridge, UK

Hollande calls onearts and heads

Candidate’s plan scores politically, less so economically

It is said that the French vote withtheir hearts in the first round of presidential elections, and withtheir heads in the second. FrançoisHollande, the Socialist front-runner in this year’s presidentialelection race, is attempting to walka fine line between the two withan electoral programme designedto appeal both to heart and head.

Mr Hollande has been clever inbalancing the demands of his coreconstituency, while attempting toshow the budgetary responsibilitythat will win over the deciding centrist vote. In his 60 measuresfor government he has promised toabolish tax breaks for the wealthi-est, increase the top rate of incometax and take a greater share of profits from banks and big compa-nies. Yet while he offers €20bn innew spending, it is offset by elimi-nating €29bn in tax breaks. Theseare popular messages in a countrywhere hostility to money and big business runs deep, and they willenhance his already strong elec-tion chances.

He has also cleverly underlinedthe weaknesses of his deeplyunpopular rival, President NicolasSarkozy, by promising to cut thehead of state’s salary by 30 percent. One of Mr Sarkozy’s earliestacts after his election was to take apay rise. What better way toemphasise Mr Sarkozy’s perceivedlust for money than to showrestraint oneself?

Politically astute, Mr Hollande’sprogramme nonetheless remains

questionable economically. Muchis made of the need to reduce pub-lic spending. Though he admirablysticks to government deficit reduc-tion targets, details on how publicspending will be cut remain vague.Mr Hollande shows a willingnessto break some leftist taboos – suchas refusing to reintroduce an auto-matic increase to the minimumwage – but there is little in theprogramme that speaks of growth.Under Mr Hollande’s plan, labourcosts will also rise, in part due tohis plans to reverse Mr Sarkozy’spension reform. Lowering tax ratesfor small business is welcome butthe plan to increase taxes on thebiggest will hardly incentivisealready highly-taxed companies tostay in France or to bring opera-tions back. Competitiveness is oneof the biggest challenges facing thenext government and Mr Hollandehas failed to address this.

The Socialist candidate alsorisks promising more than willbe able to deliver in Europe. Theidea that he would be better-placedthan Mr Sarkozy to convince Ber-lin to take a more active approachto Europe’s crisis – such as agree-ing to Eurobonds, for example – isunrealistic. Every campaign hasits blue-sky promises. But at thismoment in Europe’s history,France’s next president shouldnot make promises he cannotkeep. What Mr Hollande pledgesnow must not become a hind-rance to Europe’s revival shouldhe be elected.

Hester’s bonusGovernment intervention shows muddled thinking on pay

A concordat of sorts has beenreached over pay between the UKgovernment and the Royal Bank of Scotland. Apparently bowing tothe wish of David Cameron, theprime minister, that it should notpay its chief executive a bonus of more than £1m, the bank hasawarded him one worth margin-ally less.

It is difficult to see how this willsatisfy anybody. A few tens of thousands hardly makes any oddsone way or another. The sum willstill seem enormous by any normalstandards. Meanwhile, the appear-ance of a concession weakens theargument that the bonus waslinked solely to performance. Werethat so, there should have been no

grounds for tweaking it.One can feel sympathy for

Stephen Hester, the chief executivein question, at being landed in thisfuss. It is a thankless task cleaning up the giant mess he inherited atRBS and he is thought to be mak-ing a fair fist of it. If he succeeds,taxpayers will be spared a substan-tial loss.

But the government has a legiti-mate interest in what he is paidand how those rewards can be justified. RBS is an effective wardof the state, with an 83 per centstake in the hands of the tax-payer. In recent weeks, ministershave given a series of speechesdecrying the runaway inflationin executive remuneration. Thisweek Vince Cable, the businesssecretary , p laced the onus

squarely on shareholders to reinin pay.

How the government’s interven-tion forwards this agenda one iotais a mystery. If its policy on execu-tive pay is to mean anything thenit must surely focus on making remuneration transparent, predict-able and deserved. This is particu-larly the case with a state-control-led entity such as RBS, where thegovernment has a locus to inter-vene as an investor, and there is apublic right to know how bonusesfor top executives are assessed.

One of the worries about suchbonuses is that they have beendegraded from a reward forachievement beyond the call of duty to a mere entitlement. The

criteria disclosed by RBS for judg-ing Mr Hester’s bonus do not dis-pel this concern. Some of the cate-gories included, such as control-ling risk and developing the busi-ness, feel more like the core tasksof a chief executive than anything requiring additional recognition. If there are no clear circumstancesunder which a bonus would not bepaid, such an award starts to looklike the basic salary that dare notspeak its name.

There was a risk that Mr Hestermight have left if he had notreceived the expected bonus. Thatis why the scheme should havebeen better defined to begin with.By not demanding more claritynow, and focusing only on the £1mfigure, the government is exposing the hollowness of its own rhetoric.

Fly me to the moonWill Newt Gingrich ever come down to earth?

Even by the grandiose standards of Newt Gingrich’s ideas, this was abig one. “By the end of my secondterm, we will have the first perma-nent base on the moon,” the presi-dential hopeful promised.

He may have tried to reflect theglory of a genuinely grandiosepresident. In 1961 John F. Kennedyannounced the goal, “before thisdecade is out, of landing a man onthe moon and returning him safelyto earth”. But why Mr Gingrich,who is busily trying to appeal tothe Tea Party, would try to com-pare himself with a Democraticparty icon is anyone’s guess.

It could be an economic policy of sorts: like the Apollo programme,it could spawn significant techno-logical developments and put peo-

ple to work. This, however, wouldnot send his target electorate overthe moon. Kennedy’s appeal camein a speech asking Congress toauthorise big federal spending items. Wanting Washington to doanything at all will strike anti-sta-tist stalwarts as creeping Keyne-sianism, if not outright Marxism.

Kennedy also meant to mark theUS’s determination to win thespace race with the Soviet Union.Mr Gingrich did add “and it will beAmerican”, as if concerned peoplemay think he planned to outsourcethe base to the Chinese. But chas-ing the moon as a proxy for thecold war has little resonance sincethe demise of the Soviet Union.

There is one similarity betweenthe Tea Party darling and the pres-ident of 50 years ago: both havebeen accused of a predilection forwomen who were not their wives.Beyond that, Lloyd Bentsen’swords to another Republican try-ing to reach the White House ring true: “You are no Jack Kennedy.”

That leaves one possibility: theproposal was not an attempt to

appropriate Kennedy’s glory at all.It may instead have been a cleverbout of book promotion. Mr Ging-rich, a prolific if not celebratedwriter, foresaw a lunar colony inhis first book, Window of Opportu-nity, published in 1984. This is aman of ideas: if not always sensi-ble, then at least original.

Do you take your elixir in or out?

From Mr James E.S. Cockle.Sir, Your correspondent John F.N.

Wedge, on the subject of pink gin,correctly states that fewer and fewerpubs and bars keep angostura bitters(Letters, January 21). Even if theydid, I wonder how many bar staff (especially those of non-Britishnationality) would know what thiselixir is, and how to serve it; andwould they ask the customer: “In orout, sir?”

My late brother, an ex-MerchantNavy officer and therefore well upin these matters, told me this refersto either keeping the drops of bitters in the glass or swilling them

round the glass before throwing them out.James E.S. Cockle,Orgeval, France

When God switches on His photocopier

From Mr Mukul Sheopory.Sir, I was inspired to watch a

video of the majestic aurora borealisdancing in the northern skies afterreading Mike Carter’s wonderfularticle “Aurora hunters” (Life &Arts, January 14).

He mentioned that the Finnsthought it was a fox running through the sky, the Swedesimagined it to be a reflection of ashoal of herring, the Sami of Laplandconsidered them spirit guides helping

the dead reach a peaceful afterlife,and the Inuit thought it was theirancestors playing football with awalrus skull.

As I watched the celestial ballet Itried to imagine the fox, the shoaland the football match; but to me itseemed more like God attempting tophotocopy the earth. If only therewas an accompanying mechanicalsound to prove my hypothesis.Mukul Sheopory,Mountain View, CA, US

A shortstop isnever a lefty

From Mr Richard Cauman.Sir, Sadly, the official scorekeeper

must post E6 (error at shortstop, forthose more accustomed to cricketterminology) for the illustration thataccompanied your review of The Art of Fielding (“Pitch perfect”, Life &Arts, January 21). Baseball shortstopsare always right-handed, whichmeans they catch with their glovedleft hands. And let’s not go on aboutexceptions from Little League and astunt from 1903. There’s a practicalreason for this; to throw to first basea shortstop throws across his bodyfrom right to left – a lefty wouldhave to stop and re-adjust his stance

to do this. Too awkward, too slow,too many infield hits.Richard Cauman,Washington, DC, US



FINANCIALTIMES JANUARY28/JANUARY29 2012 ★ 7

Tony Blair’s faith foundation, as wellas several anti-bullying initiatives.

Mr Einhorn is a self-effacing manwho talks about his son’s games inthe baseball little league, rather thanWall Street, says Eboo Patel, of theInterfaith Youth Core, a beneficiaryof the Einhorn Trust’s largesse.

All of which is not to say that theboyish Mr Einhorn is not a ruthless,forensic adversary, in charge of abillion dollar war chest. His method,through which he has beaten returnsof the US stock market 13 yearsrunning, is tried and tested: find acompany over- or undervaluedrelative to the marketplace, and divedeep into its accounts to find outwhy. If there is a compelling opportunity, take it and publicise it.

Mr Einhorn’s battles with companyexecutives have been epic. The onethat made his name – against mid-cap financial company Allied Capital– dragged on for years, involving federal investigations, politicians andvicious media mudslinging. It was,Mr Einhorn recalls in a book hewrote about it, like “The Firm inJohn Grisham’s book, without thesexual tension and chase scenes”.

Mr Einhorn’s most successfuland most daring bet, however, camein 2007: a short position against

Lehman Brothers. After the collapseof Bear Stearns in March 2008,people began to sit up and listen.

In one particularly memorableappearance on the business channelCNBC, Mr Einhorn, wearing asweater hand-painted by his children,chatted casually with the presentersbefore launching into a devastating critique of the embattled bank.

His disagreements on analysts’conference calls with Erin Callan,Lehman’s chief financial officer,became essential listening. Ms Callanseemed out of her depth. Lehmanwas. Mr Einhorn made millions.

It is more than can be said forGreenlight’s abortive bet on PunchTaverns – a rare foray into the UKstock market, which had gone awrybefore the authorities got involved.

The FSA exonerated Mr Einhorn of deliberately flouting the rules – which leaves only his own ignorance.For a hedge fund manager who hasimmersed himself in details for hiswhole career, it is a damning indictment, even if it leaves hismoral standing relatively unscathed.On this occasion, critics might say,Mr Einhorn has sold himself short.

The writers are the FT’s hedge fund and US investment correspondents

The self-effacing outsider who has run foul of the FSA

The fund titan whoshorted Lehman hassold himself short,say Sam Jones and Dan McCrum

This is as much like insidertrading as football is likesoccer,” an apparentlyexasperated David Einhorntold anxious clients of his

$7bn hedge fund, Greenlight Capital, just hours after the UK’s FinancialServices Authority landed him andhis fund with a stinging £7m fine formarket abuse.

Given his defence – ignorance of British ways – the American hedgefund titan could not have chosenbetter words on Wednesday evening.

Mr Einhorn, a preternaturallyyouthful-looking 43 year-old and oneof the world’s most successfulactivist investors, is busy ruing thebiggest mistake of his career: ahurried order in November 2009 tosell millions of shares in the UK puboperator Punch Taverns, afterprivately learning from companyexecutives that the cash-strappedbusiness was preparing to go to themarket for more capital.

Mr Einhorn’s fine, the second

biggest ever meted out by the FSA,has rippled through the cliquey,secretive hedge fund industry – though for the most part it is theUK regulator and not Greenlightthat has come in for criticism.

“If you told me the FSA hadprosecuted some hedge fund managerthis would be the last guy that Iwould have expected it from,” saysWhitney Tilson, a rival fundmanager and the founder of theValue Investing Congress, at whichMr Einhorn regularly speaks. David,says Mr Tilson, is “intensely ethical”.

US hedge fund managers wouldhave you believe the industry is inthe grip of a terror prosecuted by aSecurities and Exchange Commissionpossessed of Jacobinic zealotry whenit comes to enforcing insider trading laws. However, while the merestwhiff of a connection to insiderdealing stateside has been enough toscatter funds’ flighty investors to thewind, the same cannot yet be said inthe UK. The FSA’s chief executiveHector Sants has been no Saint-Just.

Alongside his criticism of the FSA,Mr Einhorn opted for a martyr’sdefence: he had been “unjustly” heldto some “unwritten standard” of accountability by the FSA in aneffort to allow the agency to “expandits definition of insider trading”.

The son of a small-time NewJersey businessman who tried andfailed to break into Wall Street, MrEinhorn was almost always destinedfor a career in business. He studiedgovernment at Cornell University,but a stint at the SEC turned him onto economics. He interviewed withthe CIA, but settled eventually onbecoming a banking analyst atDonaldson, Lufkin & Jenrette. It was,in his own words, “miserable”.

The firm’s gung-ho, macho WallStreet culture was anathema to MrEinhorn. In 1993 he had his break,

He isneithera sharp-suited,cantonalmarketSvengalinor an

abstrusecomputer

whizzkid

and was offered a job at the hedgefund Siegler, Collery & Company.Three years later, with $10,000 of hisown money and $500,000 from hisparents, he cofounded Greenlight.The business plan for the firm wasplotted on the back of a napkin.

In its transition from crampedsuburban office to midtownManhattan, the firm has not lost itsalmost folksy familial culture, saythose who work there. There is apool table, a bar and couches, whereMr Einhorn likes to nap. He has alightsaber and a collection of teddybears in his own corner room.

If there is a mystique about DavidEinhorn, it is that he is not castfrom the usual hedge fund moulds:he is neither a sharp-suited, cantonalmarket Svengali nor an abstrusecomputer whizzkid. Decked in aGreenlight baseball cap and acrumpled T-shirt, he is, by design, aconsummate outsider. One peer callshim – not unkindly – the “MarkZuckerberg” of the hedge fund world.

He eschews New York’s charityscene, where the rich vie for boardseats at cultural institutions. TheEinhorn Family Charitable Trust isas low-key as its stated aims – “helping people get along better” – are comically vague. It is a funder of

Person in theNews

David Einhorn

COMMENT & ANALYSIS

Bow down at theshrine of the sageof Mount Baldy

Gautam Malkania different kind of masculinity from themachismo that had got usinto this mess. As takenaback by his success asthe rest of us, Cohenwasn’t trying to be the topdog. Mid-life-crisis proof,he wasn’t even trying tobe cool. He was just trying to act his age.

For a generation thathad lost faith in ourfathers and father-figures,the financial crisis dealta deep psychologicalblow partly because itrepresented a failure of our

grandfathers. After all, inthe boom years the highchiefs of our global villagewere more likely to beelder moneymen than elderstatesmen. We got on withour lives under the watchof silver-haired figuressuch as Jack Welch, AlanGreenspan and the “Sageof Omaha”, Warren Buffett.By contrast, politicalleaders in the west wereever more youthful. It wasas if the jobs of presidentand prime minister weremerely middle-aged,middle-managerialpositions.

As the rule of financeunravelled, many of thegrandees were removedfrom their pedestals, eventhose with unscathedreputations. Meanwhile,in workplaces in the west,successive rounds of

redundancies reduced ourown grey headcounts.

Every round of leaving drinks was a leak fromour pools of wisdom andlife experience.

With moneymen andpoliticians out of therunning, the job of post-financial crisis elderlysage was perhaps boundto go to an artist. Artistsare thought to existoutside of the system wehad lost faith in. Suitablecandidates would need aknack for finding light inthe depths of depression.Worldly experience wouldbe essential – the kind of life stories we would lookfor from our grandfathers.In short we were looking for a steady long-terminvestment that hadactually gone up. Aboveall, the successful sagewould need to be anartist who althoughfamous at least looked asif he hadn’t been co-optedby capitalism.

Ideally, then, he wouldbe one of those pennilesswriterly types – preferablya poet; even better, onepeople do not actually haveto read. And so as if byperfect cosmic alignment,Cohen descended fromMount Baldy, a destitutepoet with the aura of agrandfather, the fame of aproven but not-too-popular

rock star, and the mysticalpromise that perhaps allour pensions might besaved.

The writer is a journalist at the Financial Timesand author of the novel ‘Londonstani’

Y ou would think hehad just discovereda cure for the

business cycle.The pop-cultural

phenomenon that islate-period Leonard Cohenintensified this week aheadof Monday’s release of the77-year-old poet-turned-singer-songwriter’s newalbum. Critics and culturalcommentators haveclambered over each other

to bow down. Otherwisecalmly sceptical adults aretransformed into fawning teenage fans.

The last time we sawsuch a collectivedeclaration of devotionwas at the start of Cohen’simprobable resurgence – at the age of 73. Afterstealing the show atGlastonbury, the autumnleg of his 2008 comebacktour gave us the spectacleof fans who had justwatched the collapse of their own retirement fundsqueue up to replenish hispension.

Cohen had been forcedback on the road becausehis then manager hadsiphoned off most of hislife savings while he wasresiding in a Buddhistmonastery on MountBaldy. The subsequent tour

was a sell-out, spawning two live CDs and DVDs.His song “Hallelujah”, assung by an X-Factor television talent showwinner, was the UKChristmas number one. Atnumber two was anothercover of the same song.

It is difficult to overstateCohen’s gifts as awordsmith and performer.Nonetheless, there issomething peculiar going on here – as if the fedora-wearing septuagenarianhas inadvertently beenaddressing some deepand widespread publiclonging: the need for apost-financial meltdownelderly sage.

During his comebackconcerts, Cohen took allthe adulation withdisarming grace andgratitude. Holding his hatover his heart, heacknowledged the“financial inconvenience”audiences had undergoneto be there. Ashen-headed,he was almost apologetic.A middle-aged man nextto me was moved to tears.

The contrast with thechiefs of then recentlyfallen investment bankswas hard not to notice.Suddenly we understoodthe fedora. It wasn’t just afetching fashion statementfrom a monk out of hismonastery, it was a nod to

With moneymenout of the running,the post-crisissage was bound tobe an artist

Read more comment next week in our Capitalism in Crisis seriesHernando de Soto proposes how we can repair the foundations of capitalism and Gillian Tett imagines a world in which financier pay – and finance – are radically slimmed down

Visit www.ft.com/capitalismincrisis to explore the series

Politicians take note: class warfare need not be taxing taxes? Most Americans would callthat common sense.”

He is right, but when George W.Bush argued 12 years ago that “noone in America should have to paymore than a third of their income tothe federal government”, mostAmericans thought that was commonsense, too. Common sense thisvolatile is not common sense at all.

It is class warfare.There are two basic rationales for

socking it to the rich: a pragmaticone and a vindictive one. In an ageof very mobile capital, the pragmaticarguments for expropriating theplutocracy’s assets are weak. MrClegg and Vince Cable, UK businesssecretary, support the “emergency”50p top rate of tax on incomes above£150,000. And yet HM Revenue &Customs has reportedly calculatedthat the measure raises only a fewbillion pounds a year – next tonothing when measured against anet debt that recently reached onethousand billion pounds.

Mitt Romney, a Republicancandidate for US president, releasedhis tax returns this week. Theyshowed that he had paid just $3m onhis 2010 income of $21.6m, which is

just the tip of his quarter-billion-dollar iceberg of wealth. Mr Romney,in other words, is paying taxes at alower rate than most of the middle-class Americans he seeks to rule.And this inequity is made possible inpart by a special rule on “carriedinterest” that taxes the earnings of managers of private equity, such asMr Romney, at the super-low capital

gains rate of 15 per cent.And yet, if this rule on carried

interest were discarded tomorrow, itwould win the US Treasury only anadditional $2bn a year. If Mr Obamawere to raise taxes on those earning $1m per year, it would cover onlythe tiniest fraction of a deficit thatlast year reached $1.3tn. If Mr Clegg were to succeed in passing a new wealth tax, it would probablyraise no more revenue than suchlaws have in France, and mightactually chase wealth out of Britain.

It is not only in the Anglospherethat one finds second thoughts aboutmoney made hand over fist. Thisweek in France, Socialist presidentialcandidate François Hollandeproposed a tranche supplémentaireon incomes above €150,000. InGermany, the Free Democrats’

obsession with lowering taxes forentrepreneurs has led voters to rejectthe party.

If measures to curb inequalityhave such a weak pragmaticrationale, they must have avindictive rationale. This is payback,not a commonsense solution thatrequires – alas! – that someone’sox be gored. That is why arguments

about settling scores with the richtake the form of stunts, rather thanprogrammes or legislation.

This week David Cameron, the UKprime minister, sent the knighthoodof Sir Fred Goodwin to a “forfeiturecommittee” in the hope of degrading the former Royal Bank of Scotlandboss. Mr Cameron also weighed inagainst paying a big bonus toStephen Hester, the CEO brought in

after the financial collapse to rescuethe bank (of which UK taxpayersnow own five-sixths). As the publicrallies behind these actos de repudio,to use the Cuban term, legislatorsmay come to support the class war,and new laws may follow.

It is easy to suspect, however, thatstunts are all the politicians wish forand all the public will ever get. The

US Congress was angry enough tovote once against the $700bntroubled asset relief programme in2008 – but not angry enough todemand a seat on the executivecompensation committees of thosebanks that they committed the UStaxpayer to bail out.

When Mr Obama and his fellowDemocrats held the presidency, theHouse and a filibuster-proof majorityin the Senate, they could haveeliminated the carried interestaccounting rule in a singleafternoon. It remains in the tax codebecause Mr Obama’s party – which,let us not forget, holds the allegianceof 19 of the richest 20 postcodes inthe US – wanted it there.

To describe politicians as engagedin class war is not to condemn them.There are just and unjust class wars,

in the same way that there are justand unjust wars on the battlefield.In one of the weirder passages in hisState of the Union speech, Mr Obamasuggested the US “take the moneywe’re no longer spending at war, usehalf of it to pay down our debt, anduse the rest to do some nation-building right here at home”. Of course, as Mr Obama used to know,

the money spent for US wars can’tpay down the debt – it is the debt.

Mr Clegg has a more realisticappraisal of the situation. In hisslashing attack on crony capitalismon Thursday, he called for thepersonal tax allowance to be raisedto £10,000, saying taxpayers were atboiling point. Here he may bespeaking not so much ideologicallyor psychologically as pragmatically.Working-class taxpayers are maxedout to the point at which a tax riseor a pay cut of just a percentagepoint or two could mean missedmeals, even lost homes. There oughtto be enough combustible materialhere to maintain the ardour of Messrs Clegg and Cable for a while.

The writer is a senior editor at The Weekly Standard

There are two rationalesfor socking it to the rich:a pragmatic one and a

vindictive one. Thepragmatic case is weak

Class warfare is an enmity that darenot speak its name. When the deputyprime minister, Liberal Democratleader Nick Clegg, called for highertaxes on the rich during a speech atthe Institute for Government onThursday, he seemed to regret thattax cuts for “hard-pressed andhard-working families” could beeffected no other way.

President Barack Obama strucka similar note in his State of theUnion speech two days before, as hedefended the principle that no oneearning $1m a year should pay lessthan 30 per cent of their income intaxes. “Now you can call this classwarfare all you want,” Mr Obamasaid, “but asking a billionaire to payat least as much as his secretary in

ChristopherCaldwell



8 ★ † FINANCIAL TIMES JANUARY 28/JANUARY 29 2012

Companies & MarketsBanking bounceShould investorschase the rally ormaintain theirpessimism?Page 12

sian and Mideast buyers ineurozone bail-out bond retreat

By Mary Watkins and RobinWigglesworth in London

Large Asian and MiddleEastern buyers, predomi-nantly sovereign wealthfunds and central banks,have significantly cut theirinvestment in Europe’s bail-out fund b onds over thepast year, underscoring international nervousnessabout the futur e of theeurozone economy.

The proportion of newEuropean Financial Stabil-ity Facility bonds bought bycentral banks, foreign gov-ernments and sovereignwealth fund s has fallenfrom 54 per cent in June to

just 17 per cent in Janu-ary’s sale. Over the sameperiod, Asian and MiddleEastern b uyers of newEFSF b onds have fallenfrom 50 p er cent of newissue demand to 12 per cent.

“We saw the portion of buyers outside the eurozonewent down quite signifi-

cantly in the most recentissue,” said a banker at oneof the bookrunners of theEFSF’s €3bn sale in Janu-

ary, but stressed that thishas happened with moste ur oz on e b on d s al esrecently.

A cc o rd in g t o C re di t-Sights, which yesterdaypublished the data, euro-zone banks have stepped into take up the slack – rais-ing concerns that risks inthe region’s beleagueredbanking sector could beb ecoming more concen-trated.

New figur es from theBank for International Set-tlements released late onT hu rs da y s ho we d t ha tbanks outside the eurozonehave reduced their totalholdings of the public andprivate debt of the euro-zone’s most troubled coun-tries more than the region’sown lenders.

Holdings of Italian public

and private debt by Euro-pean banks fell 7 per cent to€730bn in the third quarterof 2011 compared to the pre-vious quarter.

French banks’ exposureto Italy shrank 5 per cent to€369bn while Spanish banksactually increased theirholdings of Italian debt rosealmost 12 per cent to €34bn.

But b anks outside theeurozone appeared to cuttheir exposure to the publicand private sector debt inthe region’s periphery moreaggressively.

Holdings of Italian bondsand loans by the banks in24 countries monitored bythe BIS fell by 23 per cent,or $67.7bn, in the thir dquarter compared to theprevious quarter. The samemeasur e d ropp ed 21 p ercent for France and 10 percent for Spain. Meanwhile,$65.3bn poured into Germang ov er nm en t d eb t a nd$77.2bn into US Treasuries,according to BIS.

Jens Larsen, chief Euro-p ean economist at RBCCapital Markets, said thefact that overseas banksw it hd re w m on ey f ro mEurope’s troubled peripheryin the third quarter of 2011highlighted why the Euro-pean Central Bank decidedto launch its three-yearloan programme in Decem-ber. “You could see it in thecredit flows. The [three-year

loan programme] was thereaction to that situation.”

J un A zu mi , J ap an ’sfinance minister, said ear-lier this month that Stand-ard & Poor’s downgrade of the EFSF – along with araft of eurozone countries – had not shaken his coun-try’s confidence in the vehi-cle’s bonds.

Indeed, the EFSF’s bondyields have fallen markedlythis month, buoyed by theimprovement in sentimentthat followed the EuropeanCentral Bank’s offer inDecemb er of unlimited,three-year loans to banks.

The 10-year €5bn EFSFbond yield has fallen from ap eak of 4.01 p er cent inNovember to 3.06 per centyesterday. The five-year€ 5b n b on d y ie ld h asdropped to 1.95 per cent.

GENERAL FINANCIAL

Reverse merger promoter raided

S EC , w il l t ak e f ur th erappropriate action to pro-tect investors.”

Reverse mergers are legalb ut authorities say theprocess has been abused bycompanies without legiti-mate operations.

US officials have focusedtheir inquiries on the USpromoters, auditors andagents that facilitate deals.

Companies in China havebeen active in seeking tolist through reverse merg-ers. M r Wey , one of themost active promoters inChina, is not accused of anywrongdoing. A message leftat his New York office wasnot immediately returned.

Accord ing to the com-pany’s website: “New YorkGlobal Group has a singlefocus: acting as a liaisonbetween the internationalcapital markets and Asian-based clients.” His firm hasmore than 200 China-relatedtransactions under its belt.

In 2005, without admitting or denying the findings, MrWey agreed to be censuredby the Oklahoma Depart-ment of Securities for alleg-edly advising a retired per-son to inv est in a p ennystock without revealing hewas a paid consultant to thecompany.

Longtop Financial, a soft-ware provider in China,said in August it may face

civil action from the SECfor failing to provide cur-rent financial statements toinvestors. In September, theSEC sued Deloitte ToucheTohmatsu for failing to pro-duce documents related toits inquiry into “possiblefraud” by Longtop.

By Kara Scannell in Houston

US authorities have raidedthe New York office andhome of Benjamin Wey, apromoter of Chinese reversemergers, according to lawenforcement officials.

Agents from the FederalBureau of Investigation exe-cuted search warrants atMr Wey’s home and NewYor k Glob al Group, thecomp any of which he ispresident, the agency con-firmed.

The FBI and Securitiesand Exchange Commissionhave been investigating comp anies involved inreverse mergers in which anon-US business acquires aUS shell company to gain alisting on a US exchange,bypassing the regulatoryscrutiny involved in a tradi-tional initial public offering.

T he P ub li c C om pa n yA cc ou n ti ng O ve rs ig htBoard, which oversees USauditors, raised concernsabout such companies in2010. Officials from theboard and SEC have beennegotiating with their Chi-nese counterparts for accessto audit papers for compa-nies in China but have not

reached agreement.James Doty, chairman of

the oversight board, said:“While I remain hopeful . . .the PCAOB cannot, and willnot, wait indefinitely. If wecannot reach a resolution inthe near term, the PCAOB,in consultation with the

P&G plans 1,600 jobcuts after earnings blow

By Barney Jopsonin New York

The damage caused to con-sumers by the eurozone cri-sis forced Procter & Gambleto take a $1.5bn writedownon acquisitions that left itsquarterly earnings far shortof market expectations.

The world’s largest con-sumer goods group by salesyesterday also said it wouldcut 1,600 jobs globally, orabout 1 per cent of its work-force.

P&G’s net earnings fell 49p er cent y ear on y ear to$1.69b n, or 57 cents p ershare, in the three monthsto December 31 due to thenon-cash writedown, whichreflected a fall in the esti-mated worth of its appli-ance and professional haircare b usinesses as theirsales and profits have dete-riorated.

P&G acquired the appli-a nc es b us in es s, w hi chmakes household productsincluding electric shavers,when it bought Gillette for$57bn in 2006. It acquiredthe business that makesproducts for hairdressersand salons when it boughtWella in 2003.

The writedown signalsthat P&G overpaid for thebusinesses. It reduces thegoodwill on P&G’s balancesheet, a figure that repre-s en ts t he d if fe re nc ebetween tangible assets of the acquired companies andthe price it paid for them.

P&G said its underlying business remained strong.Company-wide, sales grew 4per cent to $22.1bn in thequarter. Core earnings pershare excluding the write-down were $1.10 per shareversus Wall Street expecta-tions of $1.08. But it cut itsearnings forecast for thecurrent financial year dueto the strong dollar.

Shares in P&G fell 1 per

cent to $64.14. “The impair-m en ts w er e p ri ma ri lydriven by the prolongeddeterioration of the macr-oeconomic environment,the more d iscr etionarynature of the products, and

increasing levels of compet-itive activity,” the companysaid.

“Together, these factorshave led to a reduction inexpected market size andgrowth rates for both busi-nesses. This is particularlythe case in the westernE ur op e m ar ke t, w he reroughly 50 per cent of appli-ances and salon p rofes-sional sales are generated.”

Jon Moeller, chief finan-cial officer, said: “The mar-kets in both of these catego-ries are declining. That’strue for competitors, that’strue for us.”

Refer ring to Philips,P&G’s Dutch rival, he said:“If you look at their resultsfor the appliances segmentthat they have disclosedp ub licly, y ou’ll see thesame kind of dynamics.”Philips downgraded its lat-est profit forecast.

Bob M cDonald , P&G’sc hi ef e xe cu t iv e, s a id :“ Th es e c on ti nu e t o b eattractive businesses andwe remain committed tothem.”

M r M oe ll er s ai d t heimpairments should notcome as a surprise becausethe company warned in itslatest annual report thatthe two businesses couldtrigger writedowns if theydid not return to sales andearnings growth rates con-

sistent with its businessplan. In the report P&G saidthe appliances business hadgoodwill of $1.6bn, 10 percent above its estimatedvalue, and the professionalhaircare business had good-will of $885m, 30 per centabove its estimated value.

PERSONAL GOODS

$1.5bn writedownon acquisitions

Investors reduce exposure to rescue fund amid nervousness over economy

Banks’ exposure by nationalitySep 2011 ($bn)

0

100

200

300

400

French banks German banks UK banks

GreeceTo:

ItalyIreland

Mar

SepJun

SpainPortugal

Total European banks’ cross-border exposure

Source: BIS

2011 ($bn)

0 200 400 600 800 1000

ToFrance

ToItaly

ToSpain

Eurozone banks have taken up the slack as banks outside the region have cut back total holdings Bloomberg

12%Share of Asian and Mideastbuyers of new EFSF bonds

Estimated worth of

appliance andprofessional haircare businesseshave declined

Gillette was bought for$57bn in 2006

GENERAL FINANCIAL

Business with links to China targeted

Fresh probe intoairline alliances

passengers. The competi-tion authority, outlining itsprobe into the joint venturebetween Air France-KLM,Alitalia and Delta, said:“ Th e C om mi ss io n w il linvestigate whether thepartnership may harm pas-sengers on certain EU–USr ou te s w he re , i n t heabsence of the joint ven-ture, the parties would beproviding competing serv-ices.”

The investigation effec-tively narrows a previousinquiry, which the Commis-sion yesterday formallyclosed, into SkyTeam, oneof the three global airlinealliances.

A ir F ra nc e- KL M a ndDelta are leading membersof SkyTeam and the Com-mission said their joint ven-ture “represents the deepestform of co-operation withinSkyTeam and aims at thealignment of the parties’commercial incentives”.

Air France-KLM, Alitaliaand Delta co-ordinate theirtransatlantic fares, andshar e the r ev enues andprofits generated by thepartnership.

Air France-KLM did notr ule out having to makeconcessions to the Commis-sion, but expressed confi-dence it would secure regu-lator y clearance for the

joint venture with Delta.

Delta said it was “confi-d ent” the airline wouldresolve “any concerns” thatthe Commission had aboutthe joint venture with AirFrance-KLM.

Alitalia said it would co-operate with the Commis-sion’s investigation.

By Alex Barker in Brusselsand Andrew Parkerin London

Brussels yesterday steppedup its scrutiny of the part-nerships that underpin thetransatlantic airline busi-ness by launching an inves-tigation into a joint venturebetween Air France-KLM,A li ta li a a nd D el ta A irLines.

The European Commis-sion is examining “as amatter of priority” whetherthe partnership is harming the interests of passengersby limiting the competitivepressure on ticket prices forsome key tr ansatlanticroutes.

T he C om mi ss io n i salready investigating a sim-ilar joint venture involving L ufthansa and United-Continental, although it hasgiven regulatory clearanceto a partnership betweenBritish Airways, AmericanAirlines and Iberia.

The three joint ventureshave assumed a dominantposition on routes betweenEurope and the US, control-ling three quarters of NorthAtlantic seating capacity,according to Deutsche Bank

analysts.The transatlantic routes

are some of the most profit-able in the world, and air-lines participating in the

joint ventures are combin-ing their schedules to offermore daily flights, notablyto higher-spending business

TRAVEL & LEISURE

Air France-KLM, Alitalia, Delta move

More news at

FT.com

●Wegelin, one ofSwitzerland’s oldest privatebanks, which facespotential indictment fromthe US over allegedcollusion in helpingAmericans evade tax, hassold the bulk of itsbusiness to Switzerland’sRaiffeisen co-operativebanking group for anundisclosed sum

●Chevron, the second-largest US oil company bymarket capitalisation, hasreported a 3 per cent fallin earnings caused by adownturn in refining

●A tax-related windfalland strong US salesboosted Ford Motor’s2011 earnings to theirhighest in 14 years

●Eastman Chemical, theUS maker of chemicals,plastic and fibres, hasagreed to buy Solutia,a speciality materialsgroup, for $3.4bn in cashand stock

●BNP Paribas is facingdissent from a group ofinvestors objecting to theprice at which the Frenchbank has offered to buyback their bonds

●Spain’s Caixabankraised expectations of apossible takeover of rivalBankia when Isidro Fainé,its executive chairman,said the biggest retaillender in the Spanishdomestic market was“open to anything”

●Michael Szymanczyk,Altria’s 63-year-old chiefexecutive, said he wasretiring from the tobaccogroup and will be replacedby Martin Barrington,vice-chairman

Costa Cruises

makes offer of compensation

By Guy Dinmore in Romeand Cynthia O’Murchuin London

Costa Cruises, the Italiano pe ra to r o f t he C os t aConcordia liner that ranaground off the island of Giglio two weeks ago saidyesterday it had reached acompensation agreementfor passengers with 15 Ital-ian consumer bodies.

The agreement, whichoffers passengers €11,000each plus reimbursement of the cost of the cruise, returntravel and other expenses,was rejected by at least twoItalian consumer groupsthat are considering classaction law suits.

The p assenger s them-selves will decide whether toaccept the company’s offer.

Separately, Miami-basedCarnival Corp, parent com-pany of Costa Cruises, is fac-ing legal action in the USbrought by a crew member.

Costa Cruises said theagreement, reached late onThursday, covered passen-gers for loss of belongingsand psychological traumabut did not apply to thosewho had suffered injuries orto the families of those wholost their lives.

More than 3,200 passen-ger s were on b oar d thecruise liner, the largest shipb uilt in Italy, which hitrocks on January 13 andthen ran aground where it

turned on its side. Divershave recovered 16 bodiesand 16 other p eople ar elisted as missing.

Costa Cruises said thecompensation exceeded theamounts foreseen in inter-n at i on a l c o nv en t io n srelated to such events.

Carlo Pileri, president of Adoc, one of the 15 associa-tions that signed the agree-ment, called it a “historicaccord” that would avoidthe need for a class actionlaw suit. Given the lengthof time – possibly years – itmight take to pursue actionthrough the Italian courts,some consumer gr oup sbelieve passengers could beattracted by the offer of immediate compensation.

Carlo Rienzi, head of theCodacons consumer associa-tion, urged passengers to

reject the offer and join alawsuit it is organising inItaly and the US.

Marc Bern, senior partnerat Napoli Bern Ripka Shkol-nik, one of the law firmsorganising the suit, calledthe offer “insulting”. Coda-cons said it was looking forat least $160,000 per passen-ger. Confconsumator i,another consumer group,said it had decided not tosign the agreement pending the results of Italy’s crimi-nal investigation into thedisaster.

Court documents filed ina federal court in Chicagoon Thursday revealed thatCarnival was being sued bycrew member Gary Lobatonwho is seeking class actionstatus to represent all vic-tims of the accident.

“The defendants failed toproperly and timely notifyall plaintiffs on board of the deadly and dangerouscondition of the cruise shipa s t o a vo id i nj ur y a nddeath,” Mr Lobaton said inthe complaint.

The International Trans-port Workers’ Federationsaid it had won an agree-ment on compensation forthe 1,023 cr ew membersaboard the vessel when itran aground.

Francesco Schettino, theship ’s captain, is underhouse arrest accused of mul-tiple manslaughter, causing a ship wreck and abandon-ing his ship. Costa Cruiseshas blamed the captain for

the disaster and has alsof il ed a l aw s ui t a s a n“injured party”.

Additional reporting by Robert Wright in London

TRAVEL & LEISURE

The Concordia tragedy hasclaimed at least 16 lives

Dotcom frenzy Controversyafter arrest ofMegauploadfounderPage 10



FINANCIAL TIMES JANUARY28/JANUARY29 2012 ★ 9

COMPANIES | INTERNATIONAL

Pharmaceuticals

DNA analysis specialist alls into Roche’s sights

By Andrew Jack

Roche sought to strengthenits ambitions in “targetedmedicine” with a hostile$5.7bn bid for Illumina of the US, which specialises inanalysing DNA.

The Swiss pharmaceuticalgroup, a leader in oncologyand other biological medi-cines through its US subsid-i ar y G en en te ch , h asincreasingly seen the needto ensure its medicines areaccompanied by diagnosticsthat ensure they reach theright patients.

As the US Food and Drug Admin istra tio n’s with -drawal of its drug Avastin(which has no such diagnos-t ic ) f or b re as t c an ce rshowed in 2010, diagnosticsincreases the chances of r eg ul at or y a pp ro va l,reduc es the risk o f sideeffects and is ever more indemand from healthcaresystems seeking value formoney as a condition of reimbursement.

Despite Roche’s claimthat its “full and fair” bidrepresents a good price at asubstantial premium, the

Illumina board has acti-vated a “poison pill” thatgra nts o ther in vesto rsrights to buy additionalshares.

With Illumina trading a bo ve Roc he’s $44.50 ashare bid, the market isbraced for an improvedoffer. But past experiencesuggests that could takemany months, for whichRoche has the resources,patience and experience.

Roche’s $47bn buy-out of minorities in Genentech in2009 was initially hostile, aswas the purchase of Ven-tana, another US diagnos-tics business, in 2007. Bothacquisitions were master-minded by Severin Schwan,now Roche chief executive.

In 2006, Allen Stanford wasknighted by the governmentof Antigua and launched hisfirst international crickettournament, the Stanford20/20, on the island’s sandyshores. His dreams ofbuilding a bank to competewith Citigroup and JPMorganChase on an internationalscale were on their way tobeing realised, with assetsunder management on therise, writes Kara Scannell inHouston.

This week, the publicheard a different side to “SirAllen”, as he was known tohis employees, when USprosecutors began to

present their evidence tosupport allegations he ran a$7bn Ponzi scheme formore than a decade. Ifconvicted, Mr Stanford facesmore than 20 years inprison.

Mr Stanford, dressed insuits with open collar shirts,sat with his lawyers in acourtroom in Houston as USmarshals hovered over him.His brown hair has nowturned grey.

Since Mr Stanford’s 2009

arrest, his fall has beenswift. The Antiguangovernment revoked hisknighthood, acourt-appointed receivercharged with liquidating thebank sold his aircraft and yacht, and he has beenconfined to a federal prisonwhere he was assaulted andsays he faces memory loss.

His plans for a privateisland resort exclusively forbillionaires have stalled. Atthe trial, lawyers for MrStanford have complainedthat his lunch ofgovernment-provided peanutbutter sandwiches has beeninadequate.

Mr Stanford was born inMexia, Texas, a small townof 6,000 residents halfwaybetween Dallas and Houston.His grandfather, Lodis,started an insurancecompany, which Mr Stanfordand his father James laterexpanded into StanfordFinancial Group.

Stanford Financial was anumbrella company thatincluded an Antiguan bank, aUS brokerage firm andvarious other investments.

By the late 1990s MrStanford began sellingcertificates of deposit toinvestors, promisinginvestments in easy-to-tradeassets that generatedabove-average returns.

Prosecutors allege MrStanford used new customerfunds to pay out oldercustomers, in a typical Ponzischeme. They also allege MrStanford lied to investors

about how their money wasinvested, saying it was ineasy-to-trade assets when itwas instead used to fund hispersonal projects, includingthe cricket tournament, thepurchase of several smallislands and two newspapersin the Caribbean.

Mr Stanford’s lawyers saidit was a legitimate business.

No investors lost money,they said, until the USgovernment shut the bankdown.

Jason Green, a formerpresident of Stanford’sbrokerage force, testifiedthis week that Mr Stanfordwould send out emails andspread sheets with “GrowthGrowth Growth” written incapital letters. He createdteams, including theStanford Superstars, offeringcash incentives for brokerswho sold the mostcertificates.

By 2008, Forbes magazineranked Mr Stanford the205th richest American with

a net worth of $2.2bn.That October, as thefinancial crisis deepened, MrStanford addressed a teamof executives at a summit inMiami and said the marketswere suffering because ofWall Street “greed”. He saidthe bank had $5.5bn inexcess cash and couldweather the storm,according to a video shownat the trial. Prosecutors sayMr Stanford knew the bankwas bleeding cash.

Allen Stanford with the Stanford Superstars, a ‘personal project’ alleged to have been funded by investors’ money AFP

Roche launched a hostile$5.7bn bid for Illumina

Technology Hardware

Nokia hurt by steep slide in Symbian handset sales

By Daniel Thomas

Shares in Nokia closed theweek lower after analystsdigested fourth-quarterresults only slightly betterthan the calamitous num-bers they had been expect-ing, signalling their concernabout the immediate future.

Th e Finn ish h an dsetmaker shed 6.2 per cent toclose at €3.91 yesterdayafter Thursday’s results,when the company showeda drop in smartphone salesof almost a third to 19.6mhandsets as the launch of

its first Windows phonesfailed to counter a biggerthan expected slide in theolder Symbian operating system that accounts forthe majority of sales.

A fall into an operating loss and a slide in sales of afifth to €10bn in the fourthquarter largely met expecta-tions, but Nokia was cau-tious on its guidance for thefirst quarter and refused togive an outlook on the fullyear gi ve n w hat i tdescribed as another transi-tional year.

Nokia has been forced

into extensive restructuring since the arrival of StephenElop, chief executive, owing to a rapidly declining mar-ket share and a lack of a

competitive device in thesmartphone market.

Analysts on Friday cutea rn ings foreca sts a ndwarned of a further fall insmartphone sales in thefirst quarter given expecta-tions of a continued slow-down in sales of Symbian,wh ic h will be repla cedby the Windows platform.A successful smartphonerange under its partnershipwith Microsoft is seen askey to Nokia’s future inspite of the popularity of itslower-tech feature phonesin emerging markets.

Oil & Gas

Fuel shortage fears allayed after Petroplus bankruptcy By Guy Chazan

Fears that the bankruptcyof Swiss refiner Petropluswould trigger fuel shortageson UK forecourts causedpanicked headlines thisweek, but concerns weresoon laid to rest after minis-ters insisted there wasplenty of petrol available.

Petroplus, Europe’s larg-est independent refiner bycapacity, had been in trou-ble sinc e late last yea rwhen lenders froze accessto its credit lines. It held onfor three weeks before filing for insolvency on Monday.

Petroplus’s troubles werecompounded on Wednesdaywhen a French public pros-ecutor opened an investiga-

tion into whether the com-pany illegally withdrewfunds from its French unitbefore it filed for insol-vency. The company hasdenied all allegations of fraudulent bankruptcy.

In the UK the focus hasbeen on Coryton, Petro-plus’s large refinery on theTha mes estu ary, wh ic haccounts for 20 per centof supplies to London andsouth-east England. Uncer-ta in ty a bo ut Coryto n’sfuture increased after PwC,Petroplus’s administrator,suspended product ship-ments from the refinery.There were reports of panicbuyin g o f petrol in theGreater London area.

But PwC insisted that theplant was fully operationaland was moving to resumedeliveries. Analysts said UKcommercial stocks were

adequate and Coryton’s cus-tomers were making newcommercial arrangementseither with other UK refin-eries or fuel importers. BP,which lifts product fromCoryton, reported no supplydisruptions across its retailnetwork.

Petroplus


Share price (SFr)

Jan 2011 Jan2012

0

5

10

1520

Exchanges

NYSE-Deutsche Börse tie-up saga falls f lat

By Jeremy Grant

NYSE Euronext and Deut-sche Börse’s nine-monthattempt to win regulatoryapproval for their proposalto create the world’s largestexchange has reached abruising finale after the USgroup’s chief executive saidtheir chance of success wasslim.

Duncan Niederauer saidhe had misjudged Brussels’determination to define thederivatives market as Euro-pean, as opposed to global,for its antitrust analysis.

Th e two gro ups h avespent the week engaged in afrenetic lobbying campaign,much of it focused on topEuropean policymakersassembled in Davos for theWorld Economic Forum.

T he a im h as b ee n t oc on vinc e th em a nd the

European Union’s 27 com-missioners that the dealshould be approved in thei nt er es t o f c re at in g a“European champion” bet-ter able to compete globallywith the CME Group, thedominant US derivativesexchange, and other emerg-

in g exch an ges in Asia .EU antitrust authorities

oppose the deal because inE ur op e i t w ou ld b ri ng together the Börse’s Eurexfu tu res exch an ge withNYSE’s Liffe platform, cre-ating a player with 95 percent of futures trading.

The EU commissionersmake their final decisionnext week. Mr Niederauersaid: “You don’t give upuntil the end. It certainlylooks like a low probabilityo f suc cess. B ut it’s n othopeless.”

The strong line taken bythe authorities highlightshow successive exchangem er ge rs i n t he p as t 1 2months have fallen foul of tough antitrust scrutiny.

Opening shots in Stanford trial

Nokia


Share price (€)

Jan 2011 Jan2012

2

4

6

8

Prosecutors allegeMr Stanford lied toinvestors abouthow their moneywas invested

NYSE, like Deutsche Börse,has been lobbying in Davos

Also in the news . . .

By Patrick Jenkins in Davosand Rachel Sandersonin Milan

UniCredit, Italy’s largestbank by assets, has placedalmost the entirety of its

jumbo €7.5bn rights issue,providing another sign of improved investor senti-ment towards Italy and theeurozone.

The bank, one of Europe’slargest with operations in22 countries, had one of them or e r oc ky s ta rt s t o arights issue in recent mem-ory with its shares falling more than 40 per cent inthe days after the pricing was announced this month.

Underwriters on the cashcall, which was undertakenafter European banking reg-u la tors dema nded th atUniCredit shore up its capi-tal, sa id investors h adstarted to buy into thestock in the past two weeksa ft er i ts s ha re s f el l t oquarter-century lows.

Almost 100 per cent of therights issue, which closedyesterday, had been sub-scribed, according to peoplec lo se t o t he d ea l. A nyremaining shares will beauctioned next week.

T he s uc ce ss of t heUniCredit cash call, whichsome underwriters initiallyfeared would fail to findbuyers for at least a quarterof the issue, comes amidsome signs of renewed opti-mism a bo ut th e Italianeconomy since the arrivalof the technocratic govern-ment of Mario Monti.

Liberalising measuresbeing pushed through by

the government and a tourby the prime minister of European capitals havehelped to improve investorperception of Italy.

Italy sold its full target of €11bn of short-term Treas-ury bills at sharply loweryields yesterday, underscor-ing the marked improve-ment in investors’ senti-ment towards the world’sthird-largest bond market.

As a result o f its c ashcall, UniCredit will see areshuffling of its share-holder base.

The Libyan Central Banka nd Libya n Investmen tAuthority, formerly its larg-est shareholders, will havetheir stake diluted to about3.5 per cent, underwriterssay.

Italian banking founda-tions will own about 12 percent, while Germany’s Alli-anz will hold about 3 percent.

A group of Italian entre-preneurs who stepped up tobuy into the bank when itsshares tumbled should holda combined stake of 5 percent.

The largest single share-holder is expected to beA ab ar , t he A bu D ha biinvestment fund, whichpicked up extra rights inthe bank on the open mar-ket after the shares halvedin value early in the issue.

A total of 27 banks wereinvolved including leadadvisers Bank of AmericaM err il l Ly nc h an dMediobanca. Aabar wasadvised by Morgan Stanley.

UniCredit placesalmost its entire€7.5bn cash callBANKS

Diamond earrings glistened,stiletto heels tapped and asequinned gown shimmeredas Miss China sashayeddown a New York catwalk,passing within a perfumewaft of Lina Li.

Ms Li was among a groupof wealthy Chinese who hadpaid for a behind-the-scenesglimpse of western luxuryat Bergdorf Goodman, adepartment store for theaffluently elegant, whichput on a fashion show intheir honour this week.

“I liked it a lot. It was myfirst fashion show,” said anenthusiastic Ms Li. Thenshe glanced down at herswea ter a nd jean s a ndadded sheepishly: “I didn’tdress properly.”

T he c o- fo un de r o f aSh an gh a i recruitmen tagency, Ms Li is the kind of person that Bergdorf Good-m an a nd o th er l ux ur yretailers want to meet. But

if the feeling is mutual, sois a mea su re o f puzzledincomprehension.

Chinese shoppers havebecome a fixture of the lux-ury retail scene in the USa nd E ur op e, d ra wn b yprices that can be up to 50per cent lower than tax-elevated levels at home. Butmany upscale brands haveyet to bond with the trulywealthy – China’s millionmillionaires.

“It’s like they’re dancing with each other but some-t im es g oi ng p as t e ac hother,” says Christine Lu,co-founder and chief execu-tive of Affinity China, a lux-ury club that organised theNew York tou r, n amedDragon Week, to coincidewith the lunar new year.

T ha t i s w hy s ev er albrands agreed to host someof the 80-plus Chinese par-ticipants, among them MontB la nc , th e pen maker,which squeezed a Steinwaypia no into a store fo r arecital by Lang Lang, theChinese pianist.

Piaget, a watch brand,unveiled a $58,000 timepiecee ng ra ve d w it h a g ol ddragon. Estée Lauder gavethem a tour of its founder’scorner office and the firstsamples of an expensivenew eye balm. J Mendel, a

fur coat maker, showedthem its workshop.

According to provisionalfigures from the ChineseTourism Academy, 70m Chi-nese travelled outside thecountry in 2011 and spent atotal of $69bn, an increaseof 25 per cent from the pre-vious year. They are alsoincreasingly discerning.

Even when luxury brandsget the basics o f h irin g Mandarin speakers andaccepting the China Union-Pay credit card, Ms Lu saysthat misunderstandings

with the wealthy still arise.Western luxury retailers

like to ingratiate them-selves by building “uniquerelationships” that dependo n employees learn in g about customers’ lives andanticipating their needs.

B ut Ms Lu sa ys Ch inaengenders a “natural dis-trust” of pushy sales associ-ates. “We cater to a demo-graphic that doesn’t wantyou to know who they are.”

Retailers can also makethe error of judging peopleby appearances. “I remem-ber one guy,” says KaanCedric Turk, US generalmanager for Zilli, a Frenchclothes maker that sells a$26,000 o strich leath er

jacket. “He came withoutspeaking a word of English.

Wearing sneakers and araincoat . . . And he spentan amount of money thatwas mind-boggling.”

Bain & Co says that in2010 o ne-qu arter o f theRmb212bn that mainlandChinese spent on luxurieswas outside the mainland,Hon g Kon g a nd Mac ao .Coach, the handbag brand,says that at peak traveltimes Chinese tourists canaccount for 15-20 per cent of its sales in New York, LasVegas and Hawaii.

While ordinary Chinesep re fe r g ro up t ra ve l,research by th e HurunReport last year found that80 per cent of the wealthyeschew it.

Dragon Week providesthe opposite. “It’s kind of

like a concierge service,offering them access andexperiences they can’t geto th erwise,” sa ys ReneeHartman of the China Lux-ury Network, part of Affin-ity China. Champagne isabundant and the guests – most of them under 50 andproficient in English – get alist of events and choosetheir own itinerary. For aDragon Week pass, exclud-ing flights and hotels, theypaid nearly $4,000.

M s L i, t he S ha ng ha irecruitment agent, came forsomething else. “We arelooking for new lifestyles. Idon’t know fashion. I wantto know the world a littlebit more. I’ve been working hard for 10 years. I didn’thave time to buy.”

Luxury rands seek onds with

China’s eliteRETAILERS

News analysis

High-end retailers have set their sightson the country’s 1mmillionaires, writesBarney Jopson

Western luxury department stores, such as Bergdorf Goodman, are aiming to attract wealthy Chinese shoppers Alex Segre

$4,000Cost of Dragon Week pass,excluding flights and hotels




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MEGAUPLOAD CASE

Copyright owners are keeping a close eye on the extradition process of the internet file-sharing chief

US in mega battle to bring in Mr DotcomBy Neil Hume in Sydney,Tim Bradshaw in London andPam Graham in Wellington

The first thing Kim Dotcom’s neigh-bours did when they heard he hadbeen refused bail was to get on theirhorses and ride the half-mile to hisNZD$30m (US$24.7m) rented mansionand take pictures of themselves stand-ing outside.

It was not a mawkish trophy huntbut rather the locals trying to reclaimtheir community by doing something they had been too frightened to dosince the founder of Megaupload.commoved into the sprawling luxuryestate in 2010. They had stabled theirhorses for fear that they could be rundown by one of Mr Dotcom’s fleet of expensive fast cars.

“We were just so happy,” explainsFrance Komoroske, a lawyer, wholives close to “Dotcom Mansion” – themost famous address in New Zealandright now – in the normally sleepycommunity of Coatesville, north of Auckland.

She remembers how Mr Dotcom’sluxury cars, bearing number platessuch as MAFIA and GOD used to roaralong the rural road. “Kids walk toschool on the road. It’s not the placeto be speeding,” she explains, recall-ing how the cars made a rumbling sound, “like a rocket”, that frightenedthe horses.

The road is now quiet again afterthe German millionaire’s fleet of 18vehicles – including a Rolls-RoycePhantom Drophead Coupe and a 1959pink Cadillac – along with NZ$11m of cash were seized just over a week ago,when police raided the mansion andarrested Mr Dotcom for his allegedrole in a huge copyright infringementcase brought by the US.

It is not just his neighbours who arecaptivated by the detention of the38-year-old head of the file-sharing company. As the main character inone of the largest criminal copyrightcases ever pursued by US authorities,his fate will be watched extremelyclosely by copyright owners and inter-net companies the world over.

The US authorities claim that down-loads of pirated movies and musicthrough Megaupload at its peak were

responsible for 4 per cent of globalinternet traffic – although its defend-ers insist not all of that material wasillegal. Some who see themselves aslegitimate users have complained thatthey lost their files when the site wastaken offline without warning, raising the possibility of legal action againstthe US authorities.

Nonetheless, the US Department of Justice accuses Mr Dotcom and sixassociates of making more than $175min illegal profits from a massiveworldwide internet piracy enterprisethat has cost copyright owners morethan $500m. The DoJ wants Mr Dot-com to face charges of conspiracy tocommit racketeering, copyrightinfringement and money laundering.The last two charges carry maximumpenalties of 20 years in prison.

But before he can face an American jury, the US authorities must con-vince a New Zealand judge to extra-dite him – uncharted legal waters inthe long-running global battle againstpiracy.

Mr Dotcom, who denies the exist-ence of what the DoJ calls the “MegaConspiracy” and says he is not inter-ested in restarting the business thatearned him US$42m last year until thecharges are resolved, faces months in

jail after a judge this week denied himbail.

The judge cited a “significant”f li gh t r is k, d ue t o h is s ev er aladdresses, identities and passports.Mr Dotcom’s Hong Kong address isgiven as a suite in the Grand Hyatt

Hotel, which typically cost upwards of $1,000 a night.

In the past, Mr Dotcom has usedchartered jets, helicopters and yachts,the prosecution submitted. He oftenfilmed or photographed his antics,surrounded by glamour models orspraying champagne, posting them towebsites such as YouTube.

Prosecutors also emphasised hisconvictions in Germany for hacking and insider trading. In 2002 he fled toThailand, they said, before being arrested and deported to face charges.

Mr Dotcom has argued he was per-secuted by the press, even posting asuicide note to his own website on his

birthday in 2002, according to a reportin Der Spiegel. Rather than fight thepublicity battle, he emigrated to Hong K on g, w he re M eg au pl oa d w aslaunched in 2005.

Even now, there is little love lost forthe former Mr Schmitz in Germany,where his sudden re-emergence in theheadlines prompted a collective groanfrom the local tech industry.

“I have a history in phreaking [tele-phone-network hacking] and encoun-tered him virtually a couple of times,”

says one German internet entrepre-neur. “He was a jerk back then too.”

More than a decade later, his arrestand stories about his flamboyant life-style have dominated the front pagesthis week in New Zealand.

Mr Dotcom was hiding in a panicroom with a loaded gun when armedpolice swooped on his rented propertyby helicopter just over a week ago.The possession of an unlicensed fire-arm was one of the factors cited by adistrict court judge when he rejectedMr Dotcom’s bail application onWednesday.

“It suggests a level of criminalitywhich to my mind could easily extend

to exploiting criminal connections toobtain false travel documents andleave the country undetected,” saidthe judge, who added that there willbe “a delay of some months until therequest for surrender can be heard”.

Mr Dotcom, who denies any crimi-nal misconduct, plans to appealagainst the ruling, having volunteeredfor electronic tagging. He insists thatMegaupload always complied withrequests from content owners toremove pirated material and that the

site was on the verge of launching anew music service licensed by themajor record labels.

Several hip hop stars including P Diddy, Will.I.Am and Kanye Westappeared in a promotional video forMegaupload last year, angering manyin the music business. His lawyersdeclined to comment.

If the case of Julian Assange, theWikiLeaks founder who next weekwill take his year-long fight againstextradition to the UK’s supreme court,is any guide, Mr Dotcom could spendmany months yet in New Zealand,even before his US case can begin.

His arrest has triggered a fierce

debate in the country about its resi-dency laws.

Mr Dotcom was granted residencyin December 2009 after agreeing topark $NZ10m in government bonds.He is one of 10 people to enter thecountry under the Investor Plus cate-gory.

Prime minister John Key was forcedto enter the debate earlier this weeksaying officials checked that Mr Dot-com’s previous convictions for hack-ing and insider trading were subject

to clean-slate provisions in Germany.“To be honest it’s not unusual forsomeone to be given residency in NewZealand who [has] previously commit-ted a crime.”

In response to such concerns, anemail appearing to be from Mr Dot-com was sent to his new neighboursin Coatesville that began: “First of alllet me assure you that having a crimi-nal Neighbour like me comes withbenefits: 1. Our newly opened localmoney laundering facility can helpyou with your tax fraud optimisa-tion.” It ended with him inviting theneighbours – who fretted he was hack-ing into their email accounts – around

to share cocaine.The clearly tongue-in-cheek mes-

sage has backfired on him spectacu-larly this week.

However since the bail hearing MsKomoroske, admits to feeling somesympathy for him: “He looked like ascared little boy [during his courtappearance].” But her forgivenesso nly goes so far – she wan ts h imextradited to the US and wonders howhe ever passed the good charactertest.

Cyberlockers shocked

The sudden closure of

Megaupload.com last week shockedso-called “cyberlocker” industry sites,which allow individuals to storedocuments and media files in theinternet cloud, instead of their PCs.

Popular cyberlockers includingFilesonic quickly introduced newpolicies that prevent users fromdownloading a file that they did notupload themselves, reducing theirexposure to allegations of copyrightinfringement.

The Recording Industry Associationof America, a trade body that haslong lobbied for tougher actionagainst piracy, insists these moveswill contribute to a significantreduction in illegal file-sharing activityonline. It cites data from Nielson, themarket research group, showing legaldigital music sales spiked followingthe 2010 crackdown on the formerfile-sharing site Limewire and saysthe same is happening followingMegaupload’s shutdown.

“Although some contingent ofusers remain fixated on stealing

music rather than using any of themyriad legal – and often free –services available, we have seenstrong evidence that many usersquickly switch to legal sources,” theRIAA said this week. But some musicindustry observers are unconvinced.

“As with any piracy victory for themedia companies, the sweet taste oftriumph will be short lived,” saysMark Mulligan, an independent musicanalyst. “Close down one upload siteand another one will arise.”

The US authorities were only ableto have Kim Dotcom, the allegedmastermind of the “MegaConspiracy”, and his co-accusedarrested in New Zealand for large-scale copyright infringement asMegaupload had servers in Virginia.

Reaching other jurisdictions orblocking US internet users fromaccessing foreign piracy sites ismore difficult. These were the aims oftwo anti-piracy laws put forward inthe US that were put on hold afterprotests by internet groups includingGoogle, Wikipedia and Facebook.

But cyberlockers are an“anachronism in the digital piracylandscape”, Mr Mulligan says, becausepirates have become sophisticated intheir tactics, using “darknets”, private,invite-only file-sharing networks, orencrypted peer-to-peer applications.

Traffic to storage and backup services inNorth AmericaBits per second (m)

Larger than life: Kim Dotcom

filesonic.comSite closed

0

Jan 18 19 202012

21 2212:00

Jan 218:0

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rapidshare.com

megaupload.com

1974Born Kim Schmitz on January 21in Kiel, Germany

1998Convicted of computer hacking

Source: Sandvine

2002German passportissued under thename of KimSchmitz.

Deported fromThailand in relationto charges of allegedinsider trading

2003Convicted of insider trading, given20-month suspended sentence

2005Finnish passport issuedunder the name of KimTim Jim Vestor.

Established Megaupload

2010Finnish passport issued under the nameof Kim Dotcom.

Moves to New Zealand

2012Arrested on Jan 19 at his birthday partyin Auckland

2006Sped past police checkpoint at 250km perhour during theGumball Rally

Kim Schmitz

The DoJwantsMr Dotcomto facecharges ofconspiracyto commitracketeering,copyrightinfringementand money

laundering

ON FT.COMThe FT Tech Hubanalyses the web,Silicon Valley,innovation andsocial media

www.ft.com/fttechhub




Rally loses pace as US GDP data disappoint

By Dave Shellock

T he r al ly i n U S an dEuropean equities seensince the start of the yearshowed signs of running o ut o f stea m this week,although gold surged, mostperipheral eurozone govern-ment bonds gained grounda nd th e eu ro tou ch ed afive-week high.

The key event of the weekwas the Federal Reserve’sprediction that US interestrates would stay low untillate 2014, more than a year

l onge r t han i t hadpreviously estimated. Thec en tr al b an k’ s d ov is hguidance – issued alongsidea dow ngrad e t o i tsestimates o f ec on omicgrowth in coming quarters– caught the markets off guard and triggered big g ai ns f or U S e qu it ie s,Treasury bonds and gold,plus a sharp drop for thedollar.

I nd ee d, t he S &P 5 00equity benchmark brieflymoved into bull marketterritory, defined as a 20 percent rise from the cyclicallow it reached last October.

But Wall Street failed tomaintain momentum as theFed’s cautious tone wasgiven credence by disap-pointing US housing andgross domestic productdata. By midday yesterday

in New York, the index was0.3 per cent down on theweek, although it was stillon track for its best-everJanuary performance. InEurope, the FTSE Eurofirst300 slipped 0.2 per cent overthe five-day period.

The US economy grew atan annualised 2.8 per centc li p i n t he l as t t hr eemonths of 2011, slightly lessthan the consensus forecastbut up from 1.8 per cent inthe third quarter.

“Not a good GDP reportfor the growth bulls,” saidSteven Ricchiuto, chief e co no mi st a t M iz uh oSecurities USA. “Muddling through is the best termthat can be applied to thecurrent economic environ-ment, even though the risksof a downturn have beenreduced.”

There was better news onthe eurozone economy asthe region-wide compositepurchasing managers' indexmoved back into expansionterritory. Furthermore,German business confi-dence, as measured by theIfo institute, increased for athird successive month.

But analysts suggestedthe data highlighted thegrowing contrasts withinEurope. “The indicators forthe peripheral states pointto a rec essio n, whereasm od er at e g ro wt h o rstagnation is on the cardsfor Germany” said StefanAngele at Swiss & GlobalAsset Management. “Never-theless, German growthwill not be enough to com-pensate for the negativeimpact of the periphery.”

However, concerns about

the fra gile state o f th eweaker eurozone nations – as well as uncertainty overthe outcome of negotiationsove r Gr ee ce ’s de btrestructuring – were largelyput to one side by investors.

There was little initialimpact from news late onFriday that Fitch had down-graded the credit ratings of several eurozone nationsincluding Italy, Spain andBelgium.

Italy’s 10-year govern-ment bond yield finishedthe week below 6 per cent – having been well above 7per cent earlier this year – while Spain’s dipped below5 per cent. While a furtherround of successful sover-eign debt auctions offeredsuppo rt this week, theunderlying factor has beent he E ur op ea n C en tr al

Bank’s injection of liquidityv ia i ts l on ge r- te rmrepurchasing operation lastmonth.

But there was no respitefor Portuguese debt a smounting concerns that thecountry was heading for asimilar fate to Greece droveits 10-year sovereign bondyield to a euro-era high,above 15 per cent.

“Market doubts are wellgro un ded,” sa id Ka siaZatorska at Lombard StreetResearch. “Not only havedraconian austerity meas-ures failed to reduce [Portu-gal’s] borrowing needs sofar, but they also exposedthe economy to many yearsof output contraction.

“As such, the Portugueseeconomy is already in thedownward debt spiral ando nc e t he G re ek s h av e

negotiated a reduction intheir debt burden – mostlikely in a disorderly man-ner – the Portuguese will betempted to do the same.”

The Fed’s policy c om-men ts h elped suppo rt arally for US governmentbonds, with the yield on the10-year Treasury shedding 10 basis points o ver theweek to 1.93 per cent. TheGerman Bund yield fell 7bpto 1.86 per cent.

On the currency markets,the dollar c ame u ndersustained selling pressureon the back of the US rateoutlook. The euro rose towithin sight of the $1.32level, having started theweek below $1.30.

The yen had a volatileweek, selling off sharplyagainst both the dollar andthe euro but then recover-

ing much of its declines.The weakness coincidedwith news that Japan hadrecorded its first annualtrade deficit since 1980.

But Derek Halpenny atBank of Tokyo-Mitsubishisaid: “It looks like the movecould have been technicalin nature or was possibly aspeculative punt on the out-come of the [Fed] meeting on Wednesday evening.

“In that case the puntproved wrong.”

Gold was the standoutperformer in commoditiesas the dollar’s weaknesshelped drive the metal backabove $1,700 an ounce, giv-ing it a weekly ga in o f about 4.5 per cent. Brent oilpushed back above $111 abarrel on concerns abouts up pl y, w hi l e c op pe rtouched a four-month high.

GLOBAL OVERVIEW

S&P 500 falls back after bullish gains

Portuguese yields hit euro-era high

S&P 500 retreats after foray into bull territory

By Ajay Makan in New York

The fourth-quarter earnings

season gathered momentumthis week but macroeco-nomic news moved the mar-ket; the S&P 500 closed inbull market territory onWednesday as the FederalReserve forecast prolongedlow interest rates but theindex retreated yesterday asUS growth figures came inbeneath expectations.

The S&P 500 was set toend the week o ff 0.3 perc en t a t 1,314.96. It h adclimbed as high as 1,333.47 – a gain of more than 21 perc en t fro m th e c lo se o nOctober 3 – as equity ana-lysts said the Fed’s decisionto keep interest rates lowuntil the end of 2014 wasbullish for equities.

“The Fed interventionshould turn savers intoinvestors, bringing moneyback into the market,” saidDouglas Cote, chief market

strategist at ING Invest-ment Management.

“For the next three yearsat least, bank deposits willmake no money and eventhe most conservative sav-ers can’t be happy with zeroreturns.”

U ti li ty a nd m at er ia lstocks appeared the mainbeneficiaries of the Fed’smove, with both sectorsgaining in a falling market.

Apple briefly become thelargest US c ompa ny bymarket capitalisation as itsshares surged 6 per cent to$445.76 following block-buster results on Tuesday.That helped the tech-heavyNasdaq Composite index tobuck the S&P 500’s fall and

rise 0.9 per cent to 2,811.37over the week.

It also triggered a widerrally among companies thatsupply Apple with parts forits iPads, iPhones and Maccomputers, which all sawrecord sales in the com-pany’s fiscal first quarter.

For example, AdvancedMicr o Devices, w hi chsupplies Mac components,ended the week 5.5 per centh igher a t $6.77 despitecutting full-year guidance.

The news was less good

for companies supplying ot he r s ma rt pho nemanufacturers. SanDiskshares tumbled 10.2 percent to $47.13 over the weeka s t he s em ic on du ct ormanufacturer said weakdemand from mobile devicemakers would hurt 2012revenue and announced ithad put a new productionfacility on hold.

The Dow Jones IndustrialAverage, which does notinclude Apple, fell 0.6 percent to 12,660.53, lagging beh in d o ther indices a spoor fourth-quarter resultsweighed on several groups.

Mobile phone networkVerizon fell 1.6 per cent to$37.41 and rival AT&T was

off 3.8 per cent to $29.35, asboth reported unexpectedlylarge payments to theirpension funds.

Pension contributionsalso sapped margins at 3M,a lth ou gh sha res in th etechnology supplier stillc limbed 1.6 per c en t to$87.00 on strong earnings.

Caterpillar was anotherbrigh t spo t in the Dow,climbing 4.5 per cent to$110.40 as the company gavea b ul li sh f or ec as t f orspending on construction in

the US.But that was not enough

t o s us ta in a r al ly i nhomebuilders, which soldoff on T hurs day asDecember new home salesc am e i n l ow er t ha nexpected. Lennar fell 0.8 perc en t t o $ 21 .8 8 o ve r t heweek, the first weekly fallfor the stock this year.

With the quarterly earn-ings of 196 S&P 500 constit-uents reported, companieshave beaten analysts’ fore-casts at the lowest rate in adecade, according to Stand-ard & Poor’s Capital IQ.Revenue growth is also setto outpace earnings growth,suggesting US corporatemargins are being squeezed.

The financial sector of theS&P 500 slipped 0.6 per centover the week althoughdata from Lipper showedfunds investing in US banks

had attracted inflows foreight successive weeks, thelon gest suc h run sinc eMarch 2000.

Brokers Charles Schwaband E Trade Financial fell9.3 per cent to $11.62 and15.8 per cent to $8.14 respec-tively, as fourth-quarterearnings were hit by lowtrading volumes.

Utah-based Zions Bancorpfell 10.8 per cent to $16.82,as mark-to-market losses oncollateralised debt obliga-tion securities hit earningsb y $ 1 2. 1m , o r 4 c en ts ashare. Brian Zabora, atStifel Nicolaus, said Zionswas the only regional bankhe covered that still hadexposure to CDOs, instru-ments that issue securitiesbacked by the debt of low-rated companies.

Netflix jumped 19 perc en t to $119.51 o ver the

week as the video-stream-ing and DVD delivery busi-n es s s ai d i t h ad a dd ed600,000 subscribers in thefourth quarter, to reach24.4m paying customers.Shares are trading at theirhighest levels since lateOctober, when investorsdeserted the group afterprice rises led to 1m sub-scriber defections.

Netflix is up 68 per centfor the year, although thismay in part be a result of short-sellers closing outpositions as the share pricehas climbed – Netflix wasthe fifth-most shorted stockin the S&P 500 as of Janu-ary 13, according to thelatest data from Factset.

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Poor results drag down telecomsBy Duncan Robinson

European equities’ “riskon” start to 2012 showedsigns of petering out thisweek a s a spa te o f po orcorporate results temperedbullish sentiment.

The FTSE Eurofirst 300ended the week down 0.2per cent at 1,040.69. “Themarket is looking a little bitheavy because of the strong r un t ha t i t h as h ad ,”s ai d G ra ha m S ec ke r,equity strategist at MorganStanley. “Earnings seasonhas been mixed,p ar ti cu la rl y i n t heindustrial space.”

Siemens fell 6.7 per centto €72.80 after it announced

a 17 per c en t drop in itsfirst-quarter net profits onTuesday. Telecoms stockswere also hit after a spateof poor results across thesector.

Nokia ended the weekdown 10.1 per cent at €3.91after it announced weak

results. Its price initiallyrose following the resultsbut lon ger-term fea rs – particularly falling smart-phone sales – weighed onthe stock.

“We remain concernedthat Nokia’s profitability istied to the feature phonemarket, which we expect todecline in value over thesho rt to mediu m term,”wrote RBS analysts.

Ericsson fell 14.1 per centin o ne sessio n a fter itsresults featured a 73 percent drop in revenue and a

sha rp dro p in its gro ssmargins. The group was theworst-performing stock onthe FTSE Eurofirst 300 as itended the week down 11.6per cent at SKr61.05.

Deutsche Börse gained10.3 per cent to €45.80 asinvestors banked on thep ro po se d m er ge r w it hN YS E E ur on ex t b ei ng blocked by the EuropeanCommission. “The marketsare finally realising thatthere is not going to be an11th-hour turnround by thecommission or an interven-tion by Michel Barnier,”said Simmy Grewal, senioranalyst at Aite Group.

Deutsche Börse’s gainshelped the Xetra Dax endthe week up 1.7 per cent at6,511.98.

Carrefour gained 7.4 percent over the week to closea t €18.26 o n reports theretailer is in the final stagesof negotiations to replacei ts c hi ef e xe cu ti ve .“Generally, whoever is bull-ish o n Carrefou r wan tschange and this, at least on

paper, ticks a few boxes,”said one analyst.

Non-cyclicals staged arecovery after the year’sbullish start left defensivestocks lagging. RWE gained7 per cent over the week to€28.81, while French utilitySuez Environnement alsorose 6.7 per cent to €9.95, asthe CAC 40 edged down 0.1per cent to 3,318.76.

Eurozone banks contin-ued to rally with Italianbanks making the biggestgains. UniCredit gained10.1 per cent to €3.65 as itsrights issue drew to a closeyesterday. Its stock hasrisen by almost 60 per centsinc e the day its rightsstarted trading.

Italy’s third-largest bank,Banca Monte dei Paschi di

Siena, rallied 29.6 per centto €0.30 as investors werebuoyed by its plans to reachnew European Banking Authority requirementswithout a cash call. TheFTSE MIB gained 2 per centover the week as it closedat 15,946.87.

EUROPE

Deutsche Börse


Share price (€)

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Day’s

Indices Close change

S & P 500 1313.68 -4.75

DJ Industrials 12647.40 -87.23

Nasdaq Comp 2808.94 +3.66

Russell 2000 795.55 +2.64

VIX 18.79 +0.22

US 10 yr Treas Bd 1.93 +0

US 2 yr Treas Bd 0.21 -

Misys rebounds amid talk of takeover

By Bryce Elder

Misys outperformed a fall-ing London market yester-day amid revived hopes of abid or break-up.

The banking softwaremaker rebounded in thewake of Thursday’s poorly

received results on renewedtakeover talk after a failedbid from Fidelity NationalInformation Service lastyear. Misys closed 7 per

cent up at 326¾p. Commod-ity stocks pulled the widermarket lower on weak USGDP figures. The FTSE 100closed with a loss of 61.75points, or 1.1 per cent, at5,733.45, which left th eindex flat for the week.

BP lost 2.6 per cent to464½p after a US DistrictCourt ruled it could not

pursue Transocean for costsassociated with the Gulf of Mexico oil spill.

Ahead of results on Feb-ruary 9, BG Group lost 2.7

per cent to £14.31. Dealershave noted vague talk of apotential fundraising.

Miners reversed recentgains in tandem with met-als prices, with Antofagastaoff 3 per cent to £13.48 andKazakhmys lower by 2.9 percent to £11.60.

But African Barrick Goldgained 5.3 per cent to 515½p

a fter the min er said itsTusker deposit in Tanzaniacontained 4.1m ounces of ore, four times estimates.

InterContinental Hotels

fell 2.7 per cent to £13.21after UBS put it on its “sell”list on valuation grounds.

GKN was off 2.2 per centto 209¾p after weaker thanexpected earnings fromFord.

A downgrade to “under-w ei gh t” f ro m M or ga nStanley sent Cobham, thedefence contractor, lower

3.3 per cent to 182¾p. BAESystems edged up by 0.3 percent to 315½p, helped byforecast-beating resultsfrom Lockheed Martin.

LONDON

MARKETS

Latest

Source: Thomson Reuters Datastream Markets updated at www.ft.com/markets

FTSE 100 indexS&P 500 index Nikkei 225 AverageFTSE Eurofirst 300 index

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Changeon week-0.08%

Changeon week-0.23%

Changeon week+0.09%

Changeon week+0.85%

● US equitiesA dovish policy stance fromthe Federal Reserve helpedpush the S&P 500 into bullmarket territory this week,although it could notmaintain momentum in theface of disappointingeconomic figures

● UK equitiesWeak commodity stockspulled the FTSE 100 lower

yesterday although this wasnot enough to put the indexinto negative territory for theweek. The UK benchmarkhas risen 2.9 per cent so farthis year

● European equitiesThe Eurofirst 300 recordedits first weekly loss of 2012– although it touched asix-month high on Thursday– as disappointing US GDPdata offset dovish interestrate guidance from theFederal Reserve

● Asian equitiesJapanese stocks eased back

yesterday but stilloutperformed their Europeanand US counterparts overthe course of the week. Mostother Asia-Pacific marketshad shortened tradingperiods due to holidays

Markets update




MARKETS NEWS & COMMENT

Michael

MackenzieON WALL STREET

Low interest rates from the US FederalReserve are designed to have a dual positiveeffect: to help the economy and debtors.

But there is a dark side to this interest rateausterity: the relentless tightening of pressureon savers, company pension plans and otherinvestors who rely on fixed-income returns.

This week the Fed surprised many investorsby extending its near-zero interest rate policyto the end of 2014 from mid-2013.

That could entail a total of six years of lowrates, as the Fed cut overnight borrowing costs to the bone in late 2008. One wouldcertainly hope the US economy can finallystand on its own feet after such a prolongedperiod of “emergency” rates.

In the absence of tax and fiscal measuresthat could reform and ultimately boost theeconomy, the Fed is left with the task of trying to repair the mortgage and credit-bubble debt overhang via cheap money.

The Fed’s clarification of future policyclearly indicates that it does not want tomake the mistake of the previous two yearsand start anticipating a sustainable recovery.Instead, it appears set to remain “highlyaccommodative” until it is completely satisfiedthat the economy has reached escape velocity.

Such caution is warranted as US fourth-quarter growthwas a touchweaker thanforecastyesterday withactivityprimarily drivenby inventories,which suggeststhe economy willslow early thisyear. Also, theeurozone debtproblems and

doubts over the global economy are macrorisk events this year. Hence the Fed’s relianceon keeping overnight rates near zero and

buying up long-term Treasuries to force peopleout of savings and into riskier assets with theaim of ultimately boosting consumer spending.

But there are notable costs associated withthis policy stance.

For starters, the overall message from theFed is hardly a boon for investor confidence.On Wednesday, Fed chairman Ben Bernankesaid he was ready to unveil a third round of quantitative easing, or QE3, later this year,should the economy require further help.

As we have seen with QE1 and QE2, theadministration of such medicine warpsinvesting fundamentals as it delivers a brief sugar high for markets. In this respect, QE isa very blunt tool as it encourages risk taking among speculators, while many companiesand households batten down the hatches ashigher commodity costs fanned by inflationworries hit them hard.

In less than 24 hours after the Fed policymeeting ended, the S&P 500 jumped 1.5 percent and entered a bull market, having risen20 per cent from its nadir in October, only toslide back under that marker. With centralbank largesse in the form of cheap money andasset purchases the main driver of equities,

bonds and commodities, it is no surprise thatinvestors remain sceptical about the futureperformance of the economy and markets.

But the biggestcost is how lowrates arecrushing retirees, moneymarket funds,pension fundsand insurersmanaging long-term liabilitiesthat requiremuch higherreturns than areon offer.

Yesterday, Honeywell, the US industrialconglomerate, reported a fourth-quarter lossdue to pension plan costs. Other big companies with legacy pension plans along with many State and local governments face achallenge trying to meet their obligations toretirees when interest rates are so low. Itleaves insurers and pension funds with achoice of either under-funding their futureobligations or taking the risk of moving intodicier investments in search of higher returns.

This rate austerity also comes when thefirst wave of baby boomers reach retirementage in 2012.

“We have a large number of retirees thatdepend on fixed incomes and they feel poorerand less inclined to spend,” says Andrew Lo,Harris & Harris Group professor at MIT.

With consumption a key driver of theeconomy, low rates are in effect working against a sustained recovery, argues ProfessorLo. “That’s the conundrum we face now.”

For the Fed, “lower for longer” is the onlyway, but it is a double-edged sword that alsohinders the economy’s ability to generate asustainable recovery.

[email protected]

As seen with QE2,such medicine

warps investingfundamentals asit delivers a briefsugar highfor markets

The biggest costis how low ratesare crushingretirees, money market funds,pension fundsand insurers

Double-edged

sword of Fed’s‘lower for longer’ policy

Optimism over Greek debt deal forces dollar to retreat

against the euro, which fell0.4 per cent to Y101.10. Ster-ling dropped 0.8 per cent toY120.44.

“ We e xp ec t t he y ento be the natural benefici-a ry o f th e latest dovishinn ovation by the Fedand policy easing in therest of the G10, as a lackof attractive yield opportu-nities overseas complicatescurrent account recycling efforts,” said analysts atCredit Suisse.

I nv es t or s w er e a ls ostill awaiting an outcomeo n Greece’s debt ta lkswith its c reditors, withan announcement expectedover the coming days.

S te rl in g r os e 0 .2 p ercent to $1.5713, while theAustralian dollar lost itse ar li er g ai ns a nd w as0 .1 p er c en t h ig he ragainst the US dollar at$1.0636 at the close of Lon-don trading. The New Zea-land dollar fell from itshighs to $0.8224 but stilleked out a gain of 0.2 per

cent.T he e ur o w as f lat

a ga in st th e Swiss fra ncat SFr1.2073 after having tra ded in a tigh t ran geagainst the currency allweek.

www.ft.com/currencies

The Japanese yen wasone of the biggest risersagainst the dollar on Fri-day, with the greenbackdown 1 per cent to reachY76.67, wiping out all itsgains in a week that saw anunusual spike in the valueof the US currency againstthe yen.

Sharp falls in the yen onTuesday sparked specula-tion by traders that Japa-nese investors were selling the yen to buy h igher-yielding US debt. But theFed’s dovish stan ce o nW ed ne sd ay h el pe d t oreverse those falls.

The yen was also stronger

By Alice Ross

The dollar lost grou ndagainst other major curren-c ies a ga in yesterda y a sinvesto rs c on tin ued tomove into risky assets int he h op e t ha t a d ea lwould be reached over theweekend between Greeceand its creditors to avoid afull-scale default on itsdebt.

The dollar in dex wasdown 0.6 per cent as the UScurrency fell against theeuro, the pound, the yenand the Swiss franc.

European and Asian cur-rencies continued to rallyfollowing news earlier inthe week that the US didnot plan to raise interestrates until the end of 2014,later than had been antici-pated and increasing expec-tations that the FederalReserve would embark on afresh round of quantitativeeasing.

N ew s t ha t U S g ro ssd om es ti c p ro du ct h adgrown slightly less thanexpected in the fourth quar-ter of last year led the dol-lar to rise o nly brieflybefore giving up its gains.The euro rose 0.7 per centto $1.3194.

CURRENCIES

Gold reaches seven-week highon back of Fed’s rates forecast

By Emiko Terazonoin London

Commodities a nd go ldp ri ce s p os t ed w ee kl yi nc re as es , b uo ye d b yexpecta tio ns o f fu rth ermonetary easing in the USand a soft landing in China.

Gold, which jumped onthe US Federal Reserve’scomments on Wednesdaythat interest rates were toremain low until late in2014, extended its gains to aseven-week high yesterday.I n m id da y N ew Y or ktra ding, bullio n was a t$1,733 a troy o un ce, u p4 per cent on the week.

Increased liquidity and aneasier monetary policy,which led to declines in theUS currency, is seen as apositive for bullion, whichis denominated in dollars.The metal is also regardedb y m an y i nv es to rs a sprotection against rising inflation.

Matthew Turner, preciousmetals strategist at Mitsubi-shi, sa id gold investorswere hoping for reasonableeconomic growth but thatthe US Federal Reservewould keep interest ratesl ow a t t he s am e t im e.“[Investors] will probably

be anticipating that the lowinterest rates will lead tohigher inflation,” he said.

W hi le g ol d h as r is enalmost 11 per cent since thestart of the year, silver,which was in the doldrumsduring the latter half of lastyear, has gained ground. Ithas rallied 22 per cent sincethe beginning of 2012, andyesterday was at $33.75 atroy ounce, adding 5 percent on the week.

Crude oil shrugged off concerns over weak Euro-

pean growth and priceswere supported by anxietyover the Iran oil embargo.With Iran ’s parlia men texpected to pre-empt EU

sanctions by voting tomor-row for a ban on oil exportsto Eu ro pe, th e marketfirmed, with ICE MarchBrent trading at $111.15 abarrel, up just over 1 percent on the week.

While 2012 has started ona positive note for commod-

COMMODITIES

Market reports

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Against the dollar (¥ per $)

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76.6

ities – the Reuters-JefferiesCRB index is up about 4 percent since the start of theyear – the sector saw theweakest net funds inflow innine years in 2011. Investorswere deterred by volatilityc au se d b y E ur op ea nsovereign debt concernsand worries about mone-tary tightening in China.

N et f un d f lo ws i nt ocommodities totalled $15bnin 2011, the lowest since2 00 2, w he n t he s ec to rposted a small outflow. Lastyear’s total is less than aquarter of the investmentlevel in 2010, which sawinflows of $67bn, according to Barclays Capital.

Assets under manage-ment rose by 5 per cent, or

just $19bn, the smallestyear-on-year increase since2003. The asset number waspartially lifted by the rise insome commodities pricessuch as cattle, gold and oil.

Kevin Norrish, commodi-ties strategist at BarCap,said institutional investors

i n c om mo di ti es w er eincreasingly nimble in theirbuying and selling. Becauseof this, the “market wasmore volatile than it usedto be”, he said.

www.ft.com/commoditiesTwitter: @FTcommodities

Strong fund f lows drive US junk bond returnsBy Nicole Bullock inNew York and RobinWigglesworth in London

Investors have returned toUS junk bonds in numbersafter last year’s rally haltedas Europe’s debt problemsdrove them to safe havens.

Cash has poured into themarket so far in 2012 with

US mutual and exchangetraded funds that buy low-rated corporate debt taking in more than $5bn during t he p as t t hr ee w ee ks ,a cc ording to data fro mLipper, the fund tracker.

The demand has driventota l retu rn s o f a lmost

3 per cent so far in Januaryfollowing gains of 2.7 percent in December, raising h opes for dou ble-digitreturns in high-yield debtthis year.

From late summer andinto th e a utu mn , jun kbonds fell when Europe’sproblems escalated. Butfears of contagion from

Europe have eased, enhanc-ing the allure of the poten-tial for higher returns inriskier assets.

The Federal Reserve willkeep US interest rates lowthrough to the end of 2014,which, if corporate defaultrates remain low too, makes

average yiel ds of 7.5 per cent in the US junkbond market look appeal-ing.

But some strategists warnthat the market looks vul-nerable.

“There h as been somerelief that short-term pres-sures in Europe have easeda nd th at to uc hed o ff a

rally,” said Mike Kessler, acredit strategist at BarclaysCapital.

“We are cautious becausewe don’t really see that thefundamental underlying issues in Europe have beenresolved,” he added.

Seasonally, December and

January tend to be strong months for high-yield bondswith no bearing on whatc an h appen a s the yea runfolds.

Mr Kessler also said thatthe US fun d flo ws a re abarometer of the appetitefor what can be very fickleretail investors.

“Fund flows tend to go in

streaks,” he said. “We havebeen on a hot streak latelybut if we get the wro ng development, that can turnvery quickly.”

Fund flows were volatilelast year. In two separateweeks, investors redeemedmore than $3bn.

The strong interest thisy ea r, h ow ev er , h adprompted about $17bn inglobal new issuance of junkbonds, said Dealogic, thedata tracker.

Even Europe’s high-yieldbond market has flickeredba ck t o l if e, a ft er adepressed second half of last year.

Recent moves include a€900m deal in dollars andeuros by Polkomtel, thePolish telecoms group, Fre-s en iu s M ed ic al C ar e’ s$1.5bn and €250m offering,and even an Irish packag-ing company.

Bankers said that they

expect to launch severalmore deals next week tocapitalise on the renewedappetite for European high-yield bonds.

“It’s like we’re turning onthe engine again after half ayear in the garage,” saidone senior banker.

Nonetheless, most dealsare still sold in the US, due

to its healthier market andthe favourable cost of swap-ping dollar proceeds intoeuros.

While there is appetite forEuropean junk bonds in theUS, “only the better nameswill be a ble to go”, th ebanker said.

Crude oil priceswere supported byconcerns over theEU’s oil embargoon IranMore comment and data on FT.com

See www.ft.com/marketsfor more news, commentand statistics, including:● On Wall Street — ourend-of-week analysis of theUS financial markets

● Alphaville — ourirreverent financial blog● View from the Markets— video interviews withleading market analysts● The Short View — videomarket commentary● New interactive charting

feature to compare yourportfolio against leadingindices and sector peers● Personal portfolio tool withbespoke views where you canmonitor your domestic and

international holdings in anyof 30 currencies – go towww.ft.com/interactivechart● Extensive markets data,including financial data for40,000 companies● Follow us on Twitter@FTGlobalMarkets

Investors caught out by bank rally

I t h as b ee n t he m os textraordinary and brutishrally. Since hitting theirlows three weeks ago onJa nu ary 9, Un iCredit’ssh ares h ave surged byalmost 70 per cent.

Other European bankshave seen rises nearly asspectacular with SociétéGénérale, Royal Bank of Scotland and Intesa San-paolo all up about 40 percent.

But most investors havebeen caught on the wrong side of the trade. Europeanban k stoc ks h ave beencalled “uninvestable” byso me. And, a lon g withr et ai le rs , t he y a re t hemost shorted stocks, accord-i ng t o f un d m an ag ersurveys.

Yet as investors and ana-lysts catch their breath, thequestion is whether inves-tors should chase the rallyor instead maintain theirpessimism?

The main reason for therebound is clear: the Euro-pean Central Bank’s provi-sion of three-year loans tobanks, known as the Long Term Refinancing Opera-tion, has eased fears of animminent bank failure.

“There was an extremebearishness . . . The LTRO isreally making it inconceiva-ble that any of the Euro-pean banks will go under.That has had a significantcalming influence,” saysAndreas Utermann, chief investment officer of RCM,the equity fund managerbelonging to Germany’sAllianz.

T he r em ov al o f t hi s

extreme risk has left someinvestors exposed becauseof the general bearishnessaround banks and the factthat so many were under-weight.

“Investo rs h ave been

caught out by this movebecause expectations wereso low and positioning sonegative. Some investorsare clearly nervous becausethey are short or under-w ei gh t, ” s ay s T ho ma sMoore, an equity fund man-ager and bank analyst atStandard Life Investmentsin Edinburgh.

Nick Nelson, an equitystrategist at UBS, says oneof the biggest underweightsfor hedge funds at the startof the year was on banks.But while the outlook hasimproved somewhat, he

remains hesitant to endorsethe entire sector.

“A lot of the darkest fearsthat were there have gonebecause of the LTRO. Butbanks are an extreme bet.They have gone from being perceived as uninvestableto being selectively investa-ble,” he says, pointing toh is ban k’s c on tin u in g

b ea ri sh ne ss on , f orinstance, Spanish banks.

Recent data may havesurprised on the upside inEurope as well as the US.B ut Europe remains o ncourse for a recession and

that is likely to lead to arise in bad loans, Mr Nelsonbelieves.

On the other hand, therelative normalisation of the government bond yieldcurve in Italy and Spainm ea ns b an ks c an e ar nmoney from exploiting thedifference between short-a nd lo ng-term in terest

rates.That in turn has raised

fears among some peopleabout whether some bankshave just doubled up ontheir sovereign debt bets.

Many investors remain

sceptical about whether therally can go further. Thetroubles of the banking sec-tor are well-known, fromthe risks of upcoming regu-lation such as the Basel IIIcapital rules, to continuedworries about the sovereigndebt crisis.

Many investors fret thatbalan ce sheets a re still

opaque and difficult to read, justifying valuations of under half book value.

Mr Utermann argues thatinvestors should be cau-tious about chasing therally further: “If you took

part in it there is a case tolighten things a little. Youmight have gone from 2 percent exposure to 3 or 4 perc en t. A nd i f y ou h av emissed it then frankly thisis not the time to buy.”

He adds that how the sov-e re ig n d eb t c ri si s i s

resolved remains crucial forbanks, putting investors ina tricky situation.

“If any of the Europeanperipheral countries godown in an uncontrolledfashion then these bankswill be in tro uble. Thisneeds to be discounted,which makes valuationsfiendishly difficult,” headds.

But others disagree. MrMoore says that investorsignored the power of theLTRO for a month and evennow there is a lot of nega-tive feeling about banksaround. “There is a lot of pessimism out there. It sug-gests there is still scope forvaluations to re-rate,” headds.

Similarly, credit analystsat Citi say: “The fact thatinvestors are so reluctant tocommit to the rally and theeffect of the LTROs makesit all the more likely thatit continues for considera-bly lon ger th an peopleenvisage – or indeed, bymore than is warranted byfundamentals.”

Take a step back from thea ctio n o f the past threeweeks and the picture looksbleak.

SocGen of France is stilldown a bo ut 50 per c en tfrom the start of 2011 whileUniCredit is 70 per centlower.

Th e Italian ban k h asundoubtedly benefited inrecent weeks from the lift-ing o f worries a bo ut itsrights issue. But for all of i ts e xp los iv e g ai ns ,UniCredit is still down bymore than 10 per cent thisyear.

The chief executive of oneof Europe’s biggest insurersand therefore investors

says: “It is a cautionary tale– investors need to havevery strong nerves to gointo European banks at themoment.”

www.ft.com/eurozone

News analysis

European financials have rebounded, but is it time to lay low or follow the

trumpets, asksRichard Milne

European bank shares rebased (€ terms)

Jan 2011 Jan2012

20

40

60

80

100

120

140

European banks share prices (rebased € terms)

European banks enjoy strong start to 2012 ... . .. but from a very low base

30Dec 2011

3 5 9 11 13 17 19 23 25 27Jan 2012

40

60

80

100

120

140

UniCredit

SociétéGénérale

IntesaSanpaolo

Royal Bank

of Scotland

Sources: Thomson Reuters Datastream

Photo: Bloomberg








MARKET DATA

Over Change One Three Six Onenight Day Week Month month month month year

US$ Libor* 0.14100 -0.001 -0.004 -0.009 0.27000 0.55110 0.78525 1.09920Euro Libor* 0.28286 - -0.003 -0.094 0.66786 1.07057 1.38729 1.74557£ Libor* 0.57469 0.000 0.000 -0.005 0.77256 1.08456 1.39375 1.89363Swiss Fr Libor* 0.03333 0.005 0.005 0.005 0.04000 0.06667 0.11583 0.33500Yen Libor* 0.11000 - - 0.003 0.14429 0.19571 0.33571 0.55429Canada Libor* 1.02400 0.004 0.008 -0.005 1.19000 1.38200 1.53500 1.86900Euro Euribor - - - - 0.73 1.14 1.43 1.77Sterling CDs - - - - 0.67 1.09 1.47 1.98US$ CDs - - - - 0.24 0.56 0.81 1.30Euro CDs - - - - 0.95 1.25 1.45 1.80US o’night repo 0.17 0.010 -0.070 0.030Fed Funds e 0.08 -0.010 -0.010 0.010US 3m Bills 0.06 0.015 0.015 0.040SDR int rate 0.12 - 0.020 0.010EON IA 0.377 -0.002 0.003 - 0.045E UR ONI A 0 .1 98 6 0 .0 11 0 .0 08 -0 .0 43RO NI A 0 .5 00 5 0. 04 3 0 .0 33 0 .0 96S ON IA 0 .5 18 2 0. 00 1 0 .0 06 0 .0 15

LA7 Day Notice 0.35-0.30

Interbank £ 0.60-0.40 0.58-0.48 0.68-0.60 1.05-0.97 1.43-1.35 1.94-1.86

Over One One Three Six Onenight Week months months months year

*Libor rates come rom BBA(see www.bba.org.uk) and are fxed at 11am UKtime. Other data sour-ces: US $,Euro & CDs: dealers; SDR int rate: IMF; EONIA: ECB; EURONIA, RONIA& SONIA: WMBA.LA7 days notice: Tradition (UK).

Jan 27

INTEREST RATES - MARKET

Euro 0.35 - 0.15 0.45 - 0.20 0.80 - 0.55 1.25 - 1.00 1.64 - 1.39 1.90 - 1.64Danish Krone 0.42 - 0.12 0.43 - 0.08 0.85 - 0.35 1.25 - 0.75 1.32 - 1.13 1.58 - 1.43Sterling 0.68 - 0.48 0.68 - 0.43 0.80 - 0.68 1.10 - 0.98 1.39 - 1.27 1.89 - 1.77Swiss Franc 0.40 - 0.10 0.28 - 0.03 0.40 - 0.07 0.20 - 0.10 0.30 - 0.08 0.54 - 0.25Canadian Dollar 1.25 - 0.85 1.20 - 0.85 1.27 - 0.97 1.48 - 1.13 2.07 - 1.92 2.00 - 1.65US Dollar 0.18 - 0.08 0.22 - 0.12 0.25 - 0.15 0.42 - 0.32 0.59 - 0.49 0.90 - 0.80Japanese Yen 0.16 - 0.06 0.18 - 0.08 0.15 - 0.03 0.55 - 0.25 0.34 - 0.22 0.80 - 0.50Singapore $ 0.01 - 0.01 0.25 - 0.06 0.31 - 0.06 0.44 - 0.19 0.50 - 0.25 0.69 - 0.44

Source: Reuters.Short term rates are call for the US Dollar and Yen,others: two day’s notice.

Short 7 days One Three Six Oneterm notice month month month yearJan 27

Rate Current Since Last Mth ago Year ago

USUSUSEuroUKJapanSwitzerland

Fed FundsPrimeDiscountRepoRepoO’night Call

Libor target

Source: ThomsonReuters

0.00-0.25 16-12-2008 1.00 0.00-0.25 0.00-0.253.25 16-12-2008 4.00 3.25 3.250.75 18-02-2010 0.50 0.75 0.501.00 08-12-2011 1.25 1.00 1.000.50 05-03-2009 1.00 0.50 0.50

0.00-0.10 05-10-2010 0.10 0.00-0.10 0.10

0.00-0.25 03-08-2011 0.00-0.75 0.00-0.25 0.00-0.75

Jan27

INTEREST RATES - OFFICIAL

Spread SpreadBid vs vs

Yield Bund T-BondsJan 27

Spread SpreadBid vs vs

Yield Bund T-BondsAustralia 3.96 +2.11 +2.06Austria 3.07 +1.22 +1.17Belgium 3.88 +2.02 +1.98Canada 1.99 +0.13 +0.09Denmark 1.86 +0.01 -0.04Finland 2.27 +0.42 +0.37France 3.06 +1.21 +1.16

Germany 1.85 - -0.05Greece 33.71 +31.85 +31.81Ireland 7.30 +5.45 +5.40Italy 5.91 +4.05 +4.01Japan 0.97 -0.88 -0.93

Netherland s 2.17 +0.32 +0.27New Zealand 3.95 +2.09 +2.05Norway 2.39 +0.54 +0.49Portugal 15.44 +13.58 +13.54Spain 4.97 +3.11 +3.07Sweden 1.76 -0.10 -0.14S wi t ze r la n d 0 .7 6 -1 .1 0 -1 .1 4

UK 2.07 +0.22 +0.17US 1.90 +0.05 -

Yields:annualised basis.Source:ThomsonReu-ters Selectionmade byThomsonReuters.

BONDS - TEN YEAR GOV’T SPREADS

Argentina Merval 2854.51 2908.70

Australia ALLORDINARIES 4348.48 (c)S&P/ASX200 Res 4877.69 (c)S&P/ASX200 4288.37 (c)

Austria ATX 2126.66 2138.87

Belgium BEL20 2237.59 2252.03BELMid 3333.13 3323.28

Brazil Bovespa 63086.92 62953.06

Canada S&P/TSXMet & Min 1222.40 1225.84S&P/TSX60 710.80 710.77S&P/TSXComp 12465.77 12464.32

Chile IGPAGen 20291.96 20303.80

China Shanghai A (c) (c)Shanghai B (c) (c)

Shanghai Comp (c) (c)Shenzhen A (c) (c)Shenzhen B (c) (c)FTSE A200 (c) (c)FTSE B35 (c) (c)

Colombia CSE Index 13641.14 13596.33

Croatia CROBEX 1737.06 1740.08

Cyprus CSE M&PGen 338.29 307.52

Czech Republic PX 967.80 978.10

Denmark OMXC Copenhagen 20 404.96 408.91

Egypt EGX30 (u) 4432.99

Estonia OMXTallinn 545.25 549.78

Finland OMXHelsinki General 5833.69 5924.34

France CAC 40 3318.76 3363.23SBF120 2530.60 2561.20

Germany M-DAX 9940.44 9974.61XETRADax 6511.98 6539.85TecDAX 744.54 745.78

Greece Athens Gen 745.67 766.23FTSE/ASE 20 307.62 311.96

Hong Kong Hang Seng 20501.67 20439.14HS China Enterprise 11446.52 11416.88HSCC Red Chip 3957.91 3957.97

Hungary Bux 19286.15 19141.28

India BSE Sens 17233.98 (c)S&PCNX 500 4085.35 (c)

Indonesia Jakarta Comp 3986.41 3983.43

Ireland ISEQ Overall 3007.54 3023.34

Jan Jan

27 26

Israel Tel Aviv 100 (u) 1022.33

Italy FTSE MIB 15946.87 16111.04FTSE Italia Mid Cap 18834.46 18960.87FTSE Italia All-Sh 16853.81 17034.89

Japan Nikkei 225 8841.22 8849.47Topix 761.13 764.61S&PTopix 150 (u) (u)2nd Section 2209.84 2209.81

Jordan Amman SE (u) 4374.63

Kenya NSE 20 3202.34 3188.23

Latvia OMXRiga 380.56 381.27

Lithuania OMXVilnius 312.16 313.05

Luxenbourg Luxembourg General 885.46 898.42

Malaysia FTSE Bursa KLCI 1520.90 1523.86

Mexico IPC 37131.20 37240.78

Morocco MASI 11169.24 11154.01

Netherlands AEX 319.36 322.82AEXAll Share 500.53 506.13

New Zealand NZX50 3294.64 3281.68

Nigeria SE All Share 20892.66 20797.81

Norway Oslo All Share 453.95 454.28

Pakistan KSE 100 11960.21 11883.92

Philippines Manila Comp 4679.89 4611.68

Poland Wig 40467.92 40392.48

Portugal PSI General 2153.22 2172.03PSI 20 5434.89 5481.25

Romania BETIndex 4768.14 4679.79

Russia RTS 1566.50 1573.04Micex Index 1510.63 1512.08

Singapore FTSE Straits Times 2916.26 2894.43

Slovakia SAX 210.83 213.93

Slovenia SBI TOP 587.54 583.38

South Africa FTSE/JSE All Share 33895.02 34065.49FTSE/JSE Top 40 30324.28 30508.85FTSE/JSE Res 20 56222.32 56799.09

South Korea Kospi 1964.83 1957.18Kospi 200 258.65 257.52

Spain Madrid SE 869.37 874.45IBEX35 8657.30 8713.80

Sri Lanka CSE All Share 5725.44 5592.40

Sweden OMXStockholm 30 1041.40 1046.01OMXStockholm AS 327.31 328.14

Switzerland SMI Index 6033.52 6100.43

Taiwan Weighted Pr (c) (c)

Thailand B an gko k S ET 10 76 .2 9 1 06 8.5 4

Turkey ISE 100 57356.72 56958.83

UK FTSE 100 5733.45 5795.20FT30 1932.40 1948.90FTSE All Share 2958.86 2987.74FTSE techMARK100 2187.94 2197.13FTSE4Good UK (u) 4766.55

USA S&P500 1313.68 1318.43FTSE Nasdaq 5000 7373.69 7365.86Nasdaq Cmp 2808.94 2805.28

Nasdaq 100 2456.34 2454.63Russell 2000 795.55 792.91N YS E C omp. 78 59 .3 4 7 88 3.9 0Wilshire 5000 (u) 13816.27DJ Industrial 12647.40 12734.63DJ composite 4361.97 4378.19DJ Transport 5338.47 5302.85DJ Utilities 447.42 454.04

Venezuela IBC 122332.80 122320.13

Vietnam VNI (c) (c)

Cross-Border Stoxx 50 € 2428.88 2453.52Euro Stoxx 50 € 2436.62 2460.40DJ Global Titans $ 180.20 181.22Euronext 100 ID 616.86 623.77FTSE Multinatls $ (u) 1147.43FTSE Global 100 $ 994.43 1000.35FTSE4Good Glob $ (u) 4148.85FTSE E300 1040.69 1051.72FTSEurofrst 80 € 3190.46 3221.06FTSEurofrst 100 € 3174.60 3210.97FTSE Latibex Top € 4935.70 4994.90FTSE Eurotop 100 2172.43 2197.27FTSE Gold Min $ (u) 3614.35FTSE All World (u) 209.59FTSE World $ (u) 365.89MSCI All World $ (u) 1250.63MSCI ACWI Fr$ (u) 318.63MSCI Europe € (u) 1079.30MSCI Pacifc $ (u) (u)S&PGlobal 1200 $ (u) (u)S&PEurope 350 € (u) (u)S&PEuro € (u) (u)

Country Index Jan Jan

27 26

Jan Jan

27 26

Country Index Country Index

(c) Closed.(u) Unavaliable.† Correction. ™ Subjectto ofcial recalculation.For more index coverage please see www.t.com/worldindices.Auller versiono this table is available onthe t.comresearchdata archive.

STOCK MARKET - WORLD MARKETS AT A GLANCE

Day’s Total Return Returnchge % Return 1 month 1 year Yield

1 Up to 5 years (12) 107.39 +0.06 2266.50 +0.05 +5.14 0.662 5-10 years (8) 185.42 +0.21 2903.92 +0.11 +16.18 1.713 10-15 years (2) 204.28 +0.29 3255.71 -0.24 +21.79 2.284 5-15 years (10) 189.62 +0.23 2988.53 +0.04 +17.45 1.875 Over 15 years (15) 271.04 +0.03 3438.98 -0.52 +30.39 3.026 Irredeemables (1) 403.01 +0.08 4238.82 -1.83 +35.20 3.697 All stocks (38) 172.56 +0.10 2820.91 -0.17 +17.50 2.57

† Corrected values. www.ft.com/ftsegiltindices. Copyright,FTSE International 2012.

Price IndicesFixed Coupon

Index-Linked

1 Up to 5 years (2) 325.17 +0.05 -0.20 +1.50 2313.59 +0.39 +3.982 Over 5 years (17) 470.23 +0.21 -1.20 +24.47 3349.88 -1.02 +26.063 5-15 years (4) 407.74 +0.21 -0.25 +15.78 2940.21 -0.02 +17.804 Over 15 years (13) 539.95 +0.21 -1.61 +29.33 3804.12 -1.45 +30.645 All stocks (19) 447.48 +0.19 -1.05 +20.44 3212.23 -0.81 +22.24

5 yrs 1.09 1.11 2.5910 yrs 1.98 2.01 3.7615 yrs 2.53 2.55 4.25

Yield indices

Up to 5 yrs -1.13 3.06 -1.11 -1.07Over 5 yrs -0.13 19.90 -0.12 0.805-15 yrs -0.51 8.77 -0.48 0.70Over 15 yrs -0.07 24.52 -0.06 0.83All stocks -0.15 17.51 -0.14 0.77

Real yield

Jan 27

J an 27 J an 26

Jan 27 Jan 26

20 yrs 2.86 2.87 4.4345 yrs 3.17 3.16 4.41Irred 3.69 3.69 4.80

J an 27 J an 26

GILTS - UK FTSE ACTUARIES INDICES

Day’s Month Year’s Total Return Returnchge % chge % chge % Return 1 month 1 yearJan 27

Yr agoYr ago

Yr agoDur yrs Jan 27 Jan 26 Yr agoDur yrs

-2.01 3.08 -2.00 -2.14-0.18 20.02 -0.17 0.71-0.69 8.78 -0.67 0.46-0.10 24.60 -0.10 0.78-0.23 17.70 -0.22 0.68

.. .. Infation 0 % .. .. .. .. Infation 5 % .. ..

Mid Jan 27 Mid Jan 20

5 year indices are shown. Source: Creditex and Markit www.creditfxings.com.

Markit iTraxx Europe Crossover 16Markit iTraxx Europe HiVol 16Markit iTraxx Europe 16

596.25212.50140.75

648.00240.50152.22

TRADEABLE CREDIT FIXINGS

UK FTSE All Share 2958.86 0.1 -3.4UK FTSE 100 5733.45 0.1 -2.8UK FTSE 250 10854.72 0.3 -6.1UK FTSE SmallCap 2931.49 1.4 -9.2UK FTSE Fledgling 4313.20 1.5 -9.9UK Hoare Govett Sm Co 3985.87 4.5 -3.9UK Gilts: FTSE All Stocks 172.39 0.0 10.2Cross-Border FTSE World $ 365.89 1.3 -3.3Cross-Border FTSE All World 209.59 1.4 -3.8USA S&P 500 1313.68 -0.1 4.5USA Nasdaq 100 2456.34 0.8 10.8USA DJ Industrial 12647.40 -0.6 9.2Japan Topix 761.13 0.7 -15.3Japan Nikkei 225 8841.22 0.9 -13.6Cross-Border FTSE E300 1040.69 -0.2 -7.2Germany XETRADax 6511.98 1.7 -5.8France CAC 40 3318.76 -0.1 -12.8Italy Comit 30 174.30 1.5 -17.0Hong Kong Hang Seng 20501.67 1.9 -11.0

% change: sinceIndex Fri value 5 days 31/12/10

† Previous close,* Latest.Sources: Hoare Govett,FTSE Intl,Reuters.

MARKET WEEK

Overall (£) 1093 242.36 0.45 -0.07 -0.07 0.43 15.08Overall ($) † 3262 207.14 0.25 -0.07 -0.07 -0.07 -0.07Overall (€) 2276 175.50 0.46 1.34 1.34 1.82 5.29Global Infation-Lkd † 97 231.58 0.41 0.67 0.67 0.73 11.31Gilts (£) 33 251.26 0.41 -0.57 -0.57 -0.06 18.52Corporates (£) 703 225.79 0.61 1.75 1.75 2.22 7.76Corporates ($) † 2111 216.56 0.22 0.74 0.74 0.74 0.74Corporates (€) 1196 173.25 0.50 2.36 2.36 2.91 4.60Treasuries ($) † 156 204.53 0.29 -0.49 -0.49 -0.49 -0.49Eurozone Sov (€) 261 174.96 0.50 1.21 1.21 1.69 5.25ABFPan-Asia unhedged 541 168.98 0.50 2.12 2.12 2.11 9.79

Day’s Month’s Year Return ReturnIndex change change change 1 month 1 year

Sterling Corporate (£) 77 106.57 0.23 0.75 4.39 1.14 9.94Euro Corporate (€) 305 101.54 0.15 1.94 0.75 2.31 5.19Euro Emerging Mkts (€) 14 89.12 0.03 0.89 -2.55 1.53 3.35Eurozone Gov’t Bond 241 99.21 0.50 1.55 0.38 1.89 4.48

E me rg in g M ar ke ts 5 Y 2 70 .1 7 - 6. 37 - 17 .2 3 -3 9. 62 3 88 .9 3 2 5 7. 57Nth Amer Inv Grade 5Y 101.18 -0.79 -6.68 -18.72 150.13 101.18Nt h A me r H ig h Y ld 5 Y 5 62 .1 3 0 .7 3 - 40 .8 3 - 11 7. 70 7 56 .0 8 5 61 .4 0Nt h A me r H iV ol 5 Y 2 13 .1 2 - 3. 12 - 14 .2 8 - 33 .7 8 2 67 .7 7 2 00 .8 8

Europe 5Y 142.57 -7.12 -9.61 -29.81 207.96 142.57C ros sove r 5 Y 60 3.8 6 -3 1.0 1 - 43 .8 6 - 15 0.1 5 8 74. 29 6 0 3.8 6H iVol 5Y 219.08 -12.98 -20.42 -47.67 316.00 217.09J apan 5Y 162.89 -5.07 -15.25 -22.51 231.67 159.67S ov X CE EM EA 5 Y 3 05 .8 3 - 11 .9 7 - 26 .3 7 - 43 .1 7 3 8 6. 44 27 1. 09SovXWestern Europe 5Y 322.39 -5.42 -21.83 -30.02 385.03 288.55

Websites: markit.com,tse.com.All indices shown are unhedged.Currencies a re shown in bracketsater the index names. †

Markit iBoxx

FTSE

Markit iTraxx

Markit CDX

CREDIT INDICES

Jan 26

Jan 27

Jan 26

Jan 26

Jan 26

BOND INDICES

Day’s Week’s Month’s Series SeriesIndex change change change high low

Week agoYield P/E Yield P/E Yield P/E

Argentina 6.3 10.1 6.3 10.0 6.5 9.7Australia 4.7 12.8 4.7 12.8 4.8 12.6Austria 2.9 9.5 3.0 9.2 3.0 9.0Belgium 2.4 16.7 2.4 16.5 2.4 16.5Brazil 3.9 11.5 3.9 11.5 4.0 11.4Bulgaria 1.1 5.8 1.1 5.8 1.1 5.5Canada 2.8 14.4 2.8 14.5 2.8 14.3S&P/TSX 3.0 14.0 3.0 14.0 3.0 13.8Chile 2.8 16.0 2.8 16.0 2.8 16.2China 3.2 8.9 3.2 8.7 3.2 8.7Colombia 3.0 15.2 3.0 15.2 3.0 15.2Cyprys 10.2 4.5 10.6 4.3 10.6 4.3Czech Rep. 7.1 13.6 7.2 13.4 7.3 13.4Denmark 1.5 15.6 1.5 15.4 1.5 15.5Finland 4.4 13.0 5.1 12.7 5.0 13.0France 3.9 10.8 4.0 10.7 3.9 10.7Germany 3.2 10.4 3.3 10.3 3.3 10.3DAX30 † 3.7 10.4 3.7 10.4 3.8 10.1Greece 4.7 11.1 4.9 10.7 5.2 10.1Hong Kong 2.7 10.1 2.7 9.9 2.8 9.8Hang Seng † 3.4 9. 2 3.4 9.2 3.6 8.7Hungary 2.2 11.1 2.2 10.8 2.2 10.8India 1.5 17.1 1.5 17.1 1.5 16.7Indonesia 2.1 16.7 2.1 16.6 2.0 16.7Ireland 0.9 18.2 0.9 18.0 1.0 18.1Israel 4.3 11.0 4.3 10.9 4.3 11.0Italy 4.8 12.2 4.9 12.0 4.9 11.8Japan 2.4 14.3 2.4 14.3 2.5 13.9Topix † 2.5 12.8 2.5 12.8 2.6 12.3Luxemburg 4.3 12.8 4.3 12.7 4.3 12.7Malaysia 3.2 16.1 3.3 16.0 3.2 15.8

Week agoYield P/E Yield P/E Yield P/E

Malta 4.3 12.2 4.3 12.1 4.3 12.3

Mexico 1.9 14.7 1.9 14.6 1.8 14.7

Netherland 2.9 12.5 2.9 12.4 2.9 12.4

AEX† 4.3 8.9 4.3 8.9 4.5 8.6

New Zealand 4.5 15.7 4.5 15.6 4.5 15.6

Norway 4.6 9.2 4.7 9.1 4.6 9.1

Pakistan 6.4 8.8 6.4 8.9 6.6 8.5

Peru 4.8 35.7 4.9 35.5 5.0 35.2

Philippines 2.4 23.5 2.4 23.7 2.3 23.9

Poland 2.9 9.6 3.0 9.4 3.0 9.4

Portugal 8.8 10.2 8.8 10.1 8.8 10.1

Romania 3.8 10.6 3.9 10.3 3.9 10.2

Russia 2.5 6.5 2.6 6.4 2.6 6.4

Singapore 3.0 7.9 3.0 7.9 3.0 7.8

Slovenia 2.6 10.1 2.6 10.1 2.6 10.0

South Africa 3.4 15.7 3.4 15.5 3.4 15.6

South Korea 1.4 12.7 1.4 12.7 1.4 12.2

Spain 6.5 8.9 6.6 8.8 6.6 8.8

Ibex 35 † 7.3 9.0 7.3 9.0 7.4 8.8

Sri Lanka 2.1 20.5 2.1 20.3 2.0 21.1

Sweden 3.6 13.1 3.6 11.4 3.6 11.6

Switzerland 3.3 15.2 3.3 15.1 3.3 15.4

Taiwan 4.5 13.4 4.5 13.4 4.5 13.4

Thailand 3.7 13.1 3.8 12.6 3.8 12.2

Turkey 2.6 11.0 2.7 10.7 2.7 10.6

UK 3 .2 1 1. 2 3 .3 1 1. 0 3 .3 1 1. 0

U SA 2 .1 1 4. 5 2 . 0 1 5. 0 2 .1 1 4. 8

Dow Jones † 2.6 13.8 2.6 13.8 2.7 13.5

S&P500 † 2.5 14.5 2.5 14.5 2.5 14.2

Venezuela 12.3 5.7 12.3 5.7 13.6 5.1

Country yields and P/E’s relate to a sample of stocks that cover at least 75% of each markets capita-

lisation.† Losses are excluded from the P/E calculation on country indices. Source: ThomsonReuters

Jan 26 Jan 25 Jan 26 Jan 25STOCK MARKET - RATIOS Day’s Mth’s SpreadRed Ratings Bid Bid chge chge vs

date Coupon S* M* F* price yield yield yield USJan 27

High Yield US$HSBK Europe 05/13 7.75 BB Ba3 BB- 105.42 4.75 - - 4.36Kazkommerts Int 04/14 7.88 B+ B2 B- 93.55 11.28 0.00 1.55 1 0.96Bertin 10/16 10.25 NR B1 - 100.25 10.17 -0.27 -0.70 9.48

High Yield EuroRoyal Carib Crs 01/14 5.63 BB Ba2 - 98.70 6.34 -0.39 -0.67 6.17Kazkommerts Int 02/17 6.88 B + B2 B- 77.65 13.23 -0.12 0.78 12 .44

Emerging US$Bulgaria 01/15 8 .25 BBB Baa2 BBB- 113.44 3.43 -0.07 -0.31 3.13Peru 02/15 9.88 BBB Baa3 BBB 122.50 2.13 -0.01 0.11 1.82Brazil 03/15 7.88 BBB Baa2 BBB 119.88 1.31 -0.12 -0.34 1.01Mexico 09/16 11.38 BBB Baa1 BBB 141.69 1.91 0.08 -0.18 1.16Argentina 01/17 11.38 27.13 55.90 0.01 12.89 55.19Philippines 01/19 9.88 BB Ba2 BB+ 139.25 3.47 0.00 -0.02 2.16Brazil 01/20 12.75 BBB Baa2 BBB 165.81 3.28 0.00 0.00 1.97Colombia 02/20 11.75 BBB- Baa3 BBB- 157.25 3.53 -0.11 -0.06 2.22Russia 03/30 7.50 BBB Baa1 BBB 118.50 4.20 -0.09 -0.46 3.46Mexico 08/31 8.30 BBB Baa1 BBB 148.50 4.53 -0.02 0.04 2.63Indonesia 02/37 6.63 BB+ Baa3 BBB- 121.00 5.13 0.06 -0.03 2.06

Emerging EuroBrazil 02/15 7.38 BBB Baa2 BBB 115.56 1.99 -0.09 -0.62 1.61Poland 02/16 3.63 A- A2 A- 102.09 3.06 -0.07 -0.70 2.47Turkey 03/16 5.00 BB Ba2 BB+ 100.85 4.76 -0.23 -0.52 4.17Mexico 02/20 5.50 BBB Baa1 BBB 108.63 4.21 -0.02 -0.37 2.70

US $ denominated bonds NY close; all other London close. *S - Standard & Poor’s, M - Moody’s,F - Fitch. Source: ThomsonReuters

BONDS - HIGH YIELD & EMERGING MARKET

Red Bid Bid Day chg Wk chg Month YearDate Coupon Price Yield yield yield chg yld chg yldJan 27

London close. Source: ThomsonReute rsYields: Local market standard Annualised yield basis. Yields shown for Italy exclude withholdingtax at 12.5 per cent payable by non residents.

Australia 12/13 5.50 103.98 3.28 -0.09 0.02 0.11 -1.67

07/22 5.75 115.20 3.96 -0.09 0.05 0.09 -1.59

Austria 07/14 4.30 107.65 1.12 0.14 0.05 0.28 -0.70

04/22 3.65 105.03 3.07 -0.25 -0.19 0.01 -0.57

Belgium 03/14 4.00 104.75 1.73 -0.03 -0.18 -0.60 -0.65

09/22 4.25 103.23 3.88 -0.11 -0.23 -0.23 -0.42

Canada 02/14 1.00 100.01 1.00 -0.03 -0.03 0.05 -0.68

06/21 3.25 110.72 1.99 -0.06 -0.01 -0.03 -1.33

Denmark 11/13 5.00 108.43 0.26 0.02 0.02 0.10 -1.14

11/21 3.00 110.09 1.86 -0.07 0.05 0.01 -1.33

Finland 09/14 3.13 106.66 0.56 0.00 0.28 0.21 -0.74

04/21 3.50 110.12 2.27 -0.08 0.09 -0.17 -1.11

France 07/13 4.50 105.47 0.69 0.05 -0.02 0.03 -0.85

07/16 2.50 102.92 1.82 -0.10 -0.11 -0.10 -0.86

10/21 3.25 101.55 3.06 -0.11 -0.10 0.05 -0.47

04/41 4.50 112.35 3.79 -0.12 -0.05 0.16 -0.23Germany 12/13 0.25 100.11 0.19 0.01 -0.02 -0.04 -1.15

02/17 0.75 99.71 0.81 -0.08 -0.04 -0.09 -1.58

01/22 2.00 101.33 1.85 -0.08 - -0.11 -1.34

07/42 3.25 114.98 2.54 -0.05 0.06 0.06 -1.12

Greece 05/14 4.50 23.51 100.28 2.75 -1.41 -5.14 87.29

10/22 5.90 21.00 33.71 -3.49 -3.62 -0.10 22.29

Ireland 04/16 4.60 95.03 5.96 -0.30 -0.61 -2.08 -2.04

10/20 5.00 85.50 7.30 -0.13 -0.36 -1.37 -1.80

Italy 11/13 2.25 97.79 3.60 -0.29 -0.45 -1.48 0.87

09/16 4.75 100.13 4.77 -0.27 -0.62 -1.46 0.93

03/22 5.00 93.80 5.91 -0.35 -0.49 -1.08 1.11

09/40 5.00 81.83 6.49 -0.26 -0.51 -0.41 0.96

Japan 01/14 0.10 99.94 0.13 -0.01 0.00 - -0.07

12/16 0.30 99.84 0.33 -0.02 0.00 -0.01 - 0.18

12/21 1.00 100.24 0.97 -0.03 0.00 0.00 -0.26

12/31 1.80 100.81 1.75 -0.04 -0.02 -0.01 -0.22

Netherlands 01/14 1.00 101.15 0.41 0.01 0.17 0.12 -0.81

07/21 3.25 109.10 2.17 -0.07 0.03 -0.15 -1.18

New Zealand 04/13 6.50 104.65 2.54 0.01 0.04 0.05 -1.40

05/21 6.00 115.84 3.95 -0.03 0.07 0.07 -1.62

Norway 05/15 5.00 110.60 1.65 -0.04 0.31 0.03 -1.49

05/21 3.75 111.20 2.39 -0.04 0.24 -0.06 -0.90

Portugal 09/13 5.45 84.70 16.80 1.33 1.24 1.63 12.43

04/21 3.85 44.93 15.44 0.62 0.91 2.09 8.44

Spain 10/13 2.50 100.31 2.31 -0.30 -0.86 -1.45 -0.86

01/22 5.85 106.83 4.97 -0.43 -0.27 -0.43 -0.47

Sweden 08/15 4.50 111.94 1.04 -0.06 0.03 0.11 -0.95

06/22 3.50 116.34 1.76 -0.09 0.07 0.04 -1.64

Switzerland 01/14 4.25 107.95 0.12 -0.03 0.03 0.11 -0.51

05/22 2.00 112.30 0.76 -0.05 0.00 0.03 -1.11

UK 03/13 4.50 104.47 0.43 0.01 0.01 0.08 -0.31 01/17 1.75 103.47 1.03 -0.10 -0.01 -0.07 -1.39

09/21 3.75 114.53 2.07 -0.04 0.03 0.04 -1.62

12/40 4.25 121.31 3.12 0.02 0.09 0.03 -1.34

US 01/14 0.25 100.07 0.21 -0.01 -0.02 -0.08 -0.42

01/17 0.88 100.59 0.75 -0.05 -0.10 -0.22 -1.25

11/21 2.00 100.89 1.90 -0.10 -0.07 -0.12 -1.53

11/41 3.13 101.17 3.06 -0.08 0.02 0.01 -1.53

BONDS - BENCHMARK GOVERNMENTDay’s Mth’s Spread

Red Ratings Bid Bid chge chge vsdate Coupon S* M* F* price yield yield yield GovtsJan 27

US$Morgan Stanley 04/12 6.60 A- A2 A 100.92 1.04 -0.11 0.18 1.00Household Fin 05/12 7.00 A A3 AA- 101.70 1.09 -0.51 -0.89 1.05HBOS Treas UK 06/12 5.50 A A1 A 101.32 1.86 -0.03 -0.40 1.79Verizon Global 09/12 7.38 CALL CALL CALL 104.74 1.01 - - 0.89Abu Dhabi Nt En 10/12 5.62 NR A3 - 102.56 2.07 -0.06 -0.26 1.96Bank o America 01/13 4.88 A- Baa1 A 102.50 2.21 -0.01 -2.07 2.11Goldman Sachs 07/13 4.75 A- A1 A 103.81 2.08 -0.49 -1.91 1.97Hutchison 03/33 01/14 6.25 A- A3 A- 107.69 2.26 -0.04 -0.13 2.04Misc Capital 07/14 6.13 BBB+ Baa1 - 107.45 2.91 0.17 0.13 2.69BNPParibas 06/15 4.80 A A1 A 98.46 5.30 -0.31 -1.27 5.00GE Capital 01/16 5.00 AA+ Aa2 - 110.59 2.18 -0.06 -0.48 1.87Erste Euro Lux 02/16 5.00 AA+ - - 97.31 5.76 -0.09 -0.92 4.91Credit Suisse USA 03/16 5.38 A+ Aa1 A 108.48 3.15 0.05 -0.94 2.44SPI E&G Aust 09/16 5.75 A- A1 A 112.61 2.82 -0.03 -0.13 2.05Abu Dhabi Nt En 10/17 6.17 NR A3 - 109.68 4.25 -0.03 0.03 3.28

Swire Pacifc 04/18 6.25 A- A3 A 113.25 3.83 -0.09 -0.35 2.50ASNA 11/18 6.95 A- A3 A 112.06 4.83 -0.35 -0.84 3.52Codelco 01/19 7.50 A A1 A+ 128.27 2.97 -0.19 -0.32 1.64Goldman Sachs 02/33 6.13 A- A1 A 102.29 5.93 -0.27 -0.73 2.86Bell South 10/31 6.88 A- WR A 122.14 5.08 -0.07 -0.16 3.18GE Capital 01/39 6.88 AA+ Aa2 - 122.69 5.29 -0.14 -0.52 2.22

EuroHSBC Fin 06/12 3.38 A A3 AA- 100.55 1.77 -0.84 -2.01 1.63Xstrata Fin CA 06/12 4.88 BBB+ Baa2 - 100.74 2.75 -0.11 0.30 2.60CCCI 10/12 6.13 NR A1 A 101.57 3.79 -0.07 -1.04 3.67Amer Honda Fin 07/13 6.25 A+ A1 - 106.20 1.88 0.12 0.29 1.69SNS Bank 02/14 4.63 A- Baa1 BBB+ 96.50 6.50 -0.80 -1.03 6.31JPMorgan Chase 01/15 5.25 A Aa3 AA- 107.97 2.42 -0.05 -0.77 2.06Hutchison Fin 06 09/16 4.63 A- A3 A- 105.75 3.26 -0.14 -0.48 2.45Hypo Alpe Bk 10/16 4.25 - Aa3 - 99.49 4.37 -0.05 -0.30 3.68GE Cap Euro Fdg 01/18 5.38 AA+ Aa2 - 110.44 3.41 -0.09 -0.62 2.35Unicredit 01/20 4.38 A A2 A- 88.97 6.16 -0.14 -2.48 4.65ENEL 05/24 5.25 A- A3 A 93.49 6.01 -0.22 -0.26 3.89

YenAmer Int 04/12 1.40 A- Baa1 BBB 98.00 13.22 0.19 4.02 13.30Citi Group 15 09/12 1.11 A- A3 A 99.55 1.85 -0.03 -0.17 1.72ACOM 51 06/13 2.07 BB+ WR A- 99.65 2.34 -0.08 -0.36 2.21Deutsche Bahn Fin 12/14 1.65 AA Aa1 AA 103.07 0.56 0.00 0.01 0.34Nomura Sec S 3 03/18 2.28 - - - 99.22 2.43 -0.07 -0.11 1.97

£ SterlingHSBC Fin 03/12 7.00 A A3 AA- 100.67 2.39 0.02 -0.56 1.83Slough Estates 09/15 6.25 - - A- 108.15 3.78 0.09 0.06 3.02ASIFIII 12/18 5.00 A+ A2 A 96.15 5.61 0.02 0.07 4.10

US $ denominated bonds NYclose; all other London close. S* - Standard & Poor’s, M* - Moody’s,F* - Fitch. Source: ThomsonReuters

BONDS - GLOBAL INVESTMENT GRADE

US yield curve

months Years

Tomaturity

Today

Oneweekago

One month ago

Per cent

1 3 6 2 3 5 10 30

Source: Bank of England. New Sterling ERI base Jan 2005 = 100.Othe r indices base average 1990 =100.Index rebased 1/2/95. for further information about ERIs see www.bankofengland.co.uk

Australia 109.1 109.5 105.2

Canada 112.2 112.4 110.2

Denmark 106.5 106.6 106.7

Japan 184.7 183.1 182.2

New Zealand 109.0 109.0 104.2

Norway 105.8 105.9 104.5

Sweden 83.6 83.9 83.1

Switzerland 144.3 144.4 142.4

UK 80.7 80.8 81.7

USA 79.3 79.4 80.3

Euro 90.90 91.07 91.05

Mth agoJan 27 Jan 26 Mth agoJan 27 Jan 26FX - EFFECTIVE INDICES Bank of England Indices

Jul 29 2011 2012 Jan 27

Euro

USDollar

Sterling

VOLATILITY INDICESDay Chng Prev. 52 wk high 52 wk low

VIX† 18.79 0.22 18.57 48.00 14.27VXD † 16.80 0.22 16.58 42.64 12.20

VXN † 19.90 0.34 19.56 47.23 15.19VDAX‡ 21.04 0.36 20.68 26.86 20.68

† CBOE.VIX: S&P 500 index Options Volatility,VXD: DJIAIndex Options Volatility,VXN: NASDAQIndex Options Volatility,‡ Deutsche Borse.VDAX: DAXIndex Options Volatility.

Jan 27

Euro-€ £ Stig. SwFr US $ YenBid Ask Bid Ask Bid Ask Bid Ask Bid Ask

1 year2 year3 year4 year5 year6 year7 year8 year9 year10 year12 year

15 year20 year25 year30 year

Bid and askrates as ofclose ofLondonbusiness.US $is quoted annual moneyactual/360basis against3month Libor.£ and Yenquoted ona semi-annual actual/365basis against6month Libor withexcep-tionof the 1Year GBPrate whichis quoted against3month Libor.Euro/Swiss Francquoted onannualbond 30/360basis against6 monthEuribor/Libor withexceptionof the 1year rate whichis quotedagainst 3 month Euribor/Libor. Source: ICAP plc.

0.07 0.130.05 0.130.13 0.210.26 0.340.42 0.500.59 0.670.75 0.830.88 0.960.99 1.071.09 1.171.23 1.33

1.35 1.451.39 1.491.37 1.471.37 1.47

0.50 0.530.52 0.550.61 0.640.80 0.831.04 1.071.30 1.331.53 1.561.72 1.751.88 1.912.02 2.052.24 2.27

2.46 2.492.63 2.662.72 2.752.77 2.80

0.32 0.380.33 0.390.34 0.400.38 0.440.43 0.490.51 0.570.61 0.670.72 0.780.83 0.890.94 1.001.13 1.21

1.37 1.451.62 1.701.71 1.791.75 1.83

0.98 1.011.21 1.251.24 1.281.34 1.391.49 1.541.66 1.711.84 1.892.02 2.072.17 2.222.30 2.352.49 2.56

2.67 2.762.82 2.952.90 3.032.93 3.06

1.28 1.321.17 1.211.24 1.281.41 1.451.61 1.651.81 1.851.97 2.012.11 2.152.22 2.262.32 2.362.49 2.53

2.64 2.682.67 2.712.62 2.662.56 2.60

Jan 27

INTEREST RATES - SWAPS

FTSE 100 Day’sClosing price change

Admiral Group 920.50 +0.50Aggreko £20.96 -0.43AMEC £10.23 -0.12Anglo American £26.99 -0.39Antoagasta £13.48 -0.42ARM Holdings 596 -2Ashmore Group 367.50 -4.50ABF £11.73 +0.07AstraZeneca £30.36 -0.17Aviva 356.10 -3BAE Systems 315.60 +0.80Barclays 222.85 -BG Group £14.31 -0.40BHPBilliton £21.75 -0.25BP 464.55 -12.20Brit Am Tobacco £29.54 -0.18British Land 498.20 -0.60B Sky B 677 +5.50BTGroup 203.50 -4.30Bunzl 856 -1Burberry Group £13.55 +0.06Cairn Energy 282.20 -1.80Capita 632.50 -10C ap it al S ho p C nt rs . 3 32 .6 0 - 1. 40Carnival £19.20 +0.19Centrica 292.20 +0.30Compass Group 592 -6.50CRH £12.79 -0.26Diageo £14.12 -0.10Essar Energy 134.40 -1.30ENRC 728.50 -10.50Evraz 460 +2.60Experian 875 -5Fresnillo £18.01 -0.16GKN 209.80 -4.80GlaxoSmithKline £14.21 -0.21Glencore 425.35 -8.95G4S 271.10 -0.60Hammerson 388.90 -2.40Hargreaves Lansdown 415.30 -4HSBC 541.10 +1.60IAG 178.60 -1.40ICAP 345.60 +5IMI 862.50 -5.50Imperial Tobacco £22.89 +0.36Intercont Hotels £13.21 -0.36Intl Power 330 +0.80Intertek Group £21.05 -0.44ITV 77 -0.45Johnson Matthey £20.55 -0.35

Kazakhmys £11.60 -0.34 Source: ThomsonReuters

Kingfsher 255.80 -4.70Land Secs Group 693.50 -1.50Legal & General 117 -1.20Lloyds Banking G 32.43 -0.40Man Group 118.40 +0.10Marks & Spencer 332 -0.50Meggitt 368.50 -4.90Morrison Supermk 292.60 +0.50National Grid 610.50 -8Next £26.39 +0.45Old Mutual 148.60 +0.10Pearson £11.70 -0.07Petroac £14.41 -0.14Polymeta l Int . £11.25 - 0. 27Prudential 715.50 -2Randgold Resourc £72.60 +0.90Reckitt Benckise £33.79 -0.20Reed Elsevier 534.50 -4.50Resolution 274.20 -1.40Rexam 383.70 -1Rio Tinto £38.10 -0.83Rolls-Royce Hldgs 738.50 -13Royal Bank Scot 27.74 +0.07R oy al D ut ch S he l A £ 22 .4 9 - 0. 36Royal Dutch Shel B £23.12 -0.52RSAInsurance 106.90 -1.30SABMiller £24.21 -0.28Sage Group 294.50 -6.70Sainsbury 288.60 -0.60Schroders £15.21 -0.07N/V £12.30 -0.18Serco Group 509 -5Severn Trent £15.30 -0.17Shire £21.33 -0.15Smith & Nephew 612.50 -Smiths Group 973 -7SSE £12.10 -0.10Standrd Chartrd £15.88 -0.12Standard Lie 219.10 -0.70Tate & Lyle 669 -9Tesco 320.75 -2.25Tullow Oil £13.69 -0.21Unilever £20.68 -0.07United Utilities 601.50 -3.50Vedanta Resource £12.26 -0.26Vodaone Group 172.25 -1.75Weir Group £19.70 -0.52Whitbread £16.90 -0.01Wolseley £22.19 -0.55WPP 749 -4

Xstrata £11.04 -0.26

FTSE 100 Day’sClosing price change

FTSE 100 SUMMARY

Price Yield Month Break even Value No oreturn inlation* Stock Market stks

Can 4.25% ’21 142.62 -0.07 -0.02 0.00 2.23 5.2 62.3 6Fr 2.25% ’20 110.09 1.00 1. 09 2.89 1.75 20.0 166.7 12Swe 0.25% ’22 101.75 0.17 0.17 0.02 1.66 9.6 235.8 5UK2.5% ’16 341.99 -1.49 -1.47 0.28 2.40 8.0 331.6 19UK2.5% ’24 326.73 -0.29 -0.24 -1.35 2.73 6.8 331.6 19UK2% ’35 201.41 -0.09 -0.04 -1.96 3.10 9.7 331.6 19US 0.625% ’21 108.84 -0.30 -0.23 1.71 2.11 35.8 817.8 31US 3.625% ’31 149.93 0.43 0.48 1.08 2.20 16.8 817.8 31

Representative stocks rom each major market Source: Merill Lynch Global Bond Indices* Di between conventional and ILbond.† Local currencies.‡ Total market value.In line with marketconvention,or UK Gilts infation actor is applied to price,or other markets it is applied to paramount.

J an 2 6 J an 2 6 J an 2 5BONDS - INDEX-LINKED

Open Sett Chan ge High Low Est. vol Open intJan 27

Euribor 3m* Mar 99.09 99.05 -0.04 99.10 99.04 162,628 555,794

Euribor 3m* Jun 99.18 99.14 -0.04 99.20 99.13 104,813 508,427Euribor 3m* Sep 99.21 99.18 -0.03 99.23 99.16 82,752 456,146

Euribor 3m* Dec 99.22 99.18 -0.03 99.23 99.17 72,526 399,288Euroswiss 3m*Mar 99.97 99.96 - 99.98 99.96 1,965 69,207

Euroswiss 3m* Jun 100.02 100.01 -0.01 100.02 100.00 1,812 63,731Euroswiss 3m*Sep 100.06 100.05 -0.01 100.07 100.05 2,117 41,287

Sterling 3m* Mar 98.99 98.99 - 99.00 98.98 42,350 336,613Sterling 3m* Jun 99.05 99.03 - 0.01 99.06 99.02 50,567 252,003

Sterling 3m* Sep 99.10 99.07 -0.02 99.11 99.06 69,818 306,130Sterling 3m* Dec 99.12 99.09 -0.03 99.13 99.07 58,981 254,943

Eurodollar 3m†Mar 99.535 99.53 - 99.540 99.515 121,448 98 0,153Eurodollar 3m†Jun 99.525 99.52 - 99.530 99.500 133,014 994,207

Eurodollar 3m†Sep 99.505 99.50 - 99.515 99.480 145,183 718,899

Eurodollar 3m†Dec 99.485 99.48 - 99.495 99.460 125,643 804,649Fed Fnds 30d‡ Jan 0.000 99.92 - 0.000 0.000 - 66,795

Fed Fnds 30d‡ Feb 0.000 99.92 - 0.000 0.000 - 57,670Fed Fnds 30d‡ Mar 0.000 99.91 - 0.000 0.000 - 35,809

Euroyen 3m‡‡ Mar 99.670 99.670 - 99.670 99.665 1,400 224,166Euroyen 3m‡‡ Jun 99.665 99.660 - 99.665 99.660 700 148,118

Euroyen 3m‡‡ Sep 99.660 99.660 +0.005 99.660 99.655 4,616 87,208Euroyen 3m‡‡ Dec 99.655 99.655 - 99.660 99.650 4,077 53,248

INTEREST RATES - FUTURES

Contracts are based on volumes traded in 2004 Sources: * NYSE LIFFE. † CME. ‡‡ TIFFE

pages of www.ft.com.Either click on the ‘market data’ linkon the home page or go towww.ft.com/marketsdata. Bonddata can be found atwww.ft.com/bonds&rates.

UK gilt prices can be found atwww.ft.com/gilts.A full commodity data service withhundreds of price quotes can befound atwww.ft.com/commoditiesdata.

Market data on the webMuch more data, including manytables not shown in the paper andstock quotes updated during the day,are available on the market data

For additional currency data visitwww.ft.com/currencydata.

Please send any comments [email protected] 7873 4211

EQUITIES

CURRENCIES www.ft.com/currencydata

DOLLAR EURO POUND

Closing Day’s Closing Day’s Closing Day’sCurrency Mid Change Mid Change Mid Change

DOLLAR EURO POUND

Closing Day’s Closing Day’s Closing Day’sCurrency Mid Change Mid Change Mid Change

Rates are derived rom WM/Reuters at 4pm (London time).* The closing mid-point rates or the Euro and £ against the $ are shown in brackets.The other fgures in the dollar column o both the Euro andSterling rows are in the reciprocal orm in line with market convention.Currency redenominated by 1000. Some values are rounded by the F.T.The exchange rates printed in this table are also available on

the internet at http://www.FT.com/marketsdataEuro Locking Rates: Austrian Schilling 13.7603,Belgium/Luxembourg Franc 40.3399,Cyprus 0.585274,Finnish Markka 5.94572,French Franc 6.55957,German Mark 1.95583,Greek Drachma340.75,Irish Punt 0.787564,Italian Lira1936.27,Malta 0.4293, Netherlands Guilder 2.20371,Portuguese Escudo 200.482,Slovenia Tolar 239.64,Spanish Peseta 166.386

Argentina (Peso) 4.3360 -0.0015 5.6940 -0.0129 6.7930 -0.0164Australia (A$) 0.9409 0.0017 1.2356 -0.0001 1.4741 -0.0004Bahrain (Dinar) 0.3771 0.0000 0.4952 -0.0009 0.5907 -0.0011Bolivia (Boliviano) 6.9100 - 9.0743 -0.0173 10.8256 -0.0224Brazil (R$) 1.7456 0.0076 2.2923 0.0057 2.7348 0.0063Canada (C$) 1.0016 0.0019 1.3153 0.0001 1.5691 -0.0002Chile (Peso) 485.450 -1.4000 637.493 -3.0556 760.530 -3.7755China (Yuan) 6.3390 - 8.3244 -0.0159 9.9310 -0.0206Colombia (Peso) 1813.90 11.9500 2382.01 11.1880 2841.75 12.8652Costa Rica (Colon) 509.835 -1.2900 669.516 -2.9718 798.734 -3.6818Czech Rep. (Koruna) 19.1670 0.0593 25.1700 0.0300 30.0279 0.0307Denmark (DKr) 5.6608 0.0105 7.4338 -0.0003 8.8685 -0.0020Egypt (Egypt £) 6.0350 - 7.9252 -0.0151 9.4548 -0.0196Hong Kong (HK$) 7.7547 -0.0028 10.1834 -0.0231 12.1489 -0.0296Hungary (Forint) 224.277 0.5439 294.520 0.1550 351.363 0.1251India (Rs) 49.3100 -0.8050 64.7539 -1.1824 77.2516 -1.4240Indonesia (Rupiah) 8972.50 7.5000 11782.7 -12.5620 14056.8 -17.3842Iran (Rial) 11315.0 15.0000 14858.9 -8.5520 17726.6 -13.2252Israel (Shk) 3.7593 0.0123 4.9368 0.0069 5.8896 0.0072Japan (Y) 76.7350 -0.5750 100.768 -0.9483 120.217 -1.1520One Month 76.7162 -0.0024 100.748 -0.0032 120.158 -0.0023Three Month 76.6595 -0.0091 100.700 -0.0067 120.003 -0.0095One Year 76.2820 -0.0329 100.385 -0.0507 119.089 -0.0322

Kenya (Shilling) 85.0500 0.1000 111.688 -0.0811 133.244 -0.1194Kuwait (Dinar) 0.2780 0.0003 0.3651 -0.0004 0.4356 -0.0005Malaysia (M$) 3.0425 0.0010 3.9954 -0.0063 4.7665 -0.0084Mexico (New Peso) 12.9495 0.0209 17.0053 -0.0049 20.2873 -0.0094New Zealand (NZ$) 1.2156 -0.0016 1.5963 -0.0051 1.9044 -0.0064Nigeria (Naira) 160.950 0.3500 211.360 0.0581 252.152 0.0264Norway (NKr) 5.8310 0.0160 7.6572 0.0065 9.1351 0.0062Pakistan (Rupee) 90.2450 0.0200 118.510 -0.1993 141.382 -0.2618Peru (New Sol) 2.6895 -0.0015 3.5319 -0.0087 4.2135 -0.0111Philippines (Peso) 42.8650 0.0050 56.2904 -0.1005 67.1545 -0.1315

Poland (Zloty) 3.2230 0.0052 4.2324 -0.0013 5.0493 -0.0024Romania (New Leu) 3.3078 0.0090 4.3438 0.0035 5.1821 0.0033Russia (Rouble) 30.2675 0.0087 39.7473 -0.0641 47.4186 -0.0846Saudi Arabia (SR) 3.7504 - 4.9250 -0.0094 5.8756 -0.0121Singapore (S$) 1.2534 -0.0030 1.6460 -0.0071 1.9637 -0.0087South Arica ( R) 7.7754 -0.0134 10.2106 -0.0371 12.1813 -0.0463South Korea (Won) 1123.15 1.2500 1474.92 -1.1633 1759.58 -1.6879Sweden (SKr) 6.7865 0.0333 8.9120 0.0268 10.6320 0.0302Switzerland (SFr) 0.9188 0.0017 1.2066 -0.0001 1.4395 -0.0003Taiwan (T$) 29.9550 - 39.3369 -0.0749 46.9290 -0.0974Thailand (Bt) 31.1850 -0.0900 40.9522 -0.1964 48.8560 -0.2427Tunisia (Dinar) 1.5027 0.0045 1.9734 0.0023 2.3542 0.0023Turkey (Lira) 1.7824 -0.0060 2.3407 -0.0124 2.7924 -0.0152U AE (Dirham) 3.6731 0.0001 4.8235 -0.0091 5.7545 -0.0118UK(0.6383)* (£) 1.5667 -0.0032 0.8383 0.0002 - -One Month 1.5663 0.0000 0.8385 - - -Three Month 1.5654 0.0001 0.8392 0.0000 - -One Year 1.5612 0.0002 0.8430 -0.0002 - -

Ukraine (Hrywnja) 8.0340 -0.0025 10.5503 -0.0234 12.5865 -0.0300Uruguay (Peso) 19.4500 - 25.5418 -0.0485 30.4714 -0.0633U SA ( $) - - 1 .3 13 2 - 0.0 02 5 1. 56 67 - 0.0 03 2One Month - - 1.3133 - 1.5663 0.0000Three Month - - 1.3136 0.0001 1.5654 0.0001One Year - - 1.3160 -0.0001 1.5612 0.0002

Venezuela(Bolivar Fuerte) 4.2947 - 5.6398 -0.0107 6.7283 -0.0139Vietnam (Dong) 20900.0 - 27445.9 -52.2500 32743.0 -67.9225

Euro (0.7615)* (Euro) 1.3132 -0.0025 - - 1.1930 -0.0002One Month 1.3133 - - - 1.1927 0.0000Three Month 1.3136 0.0001 - - 1.1917 0.0000One Year 1.3160 -0.0001 - - 1.1863 0.0002

SDR - 0.6464 0.0001 0.8488 -0.0015 1.0127 -0.0019

Jan 27

BONDS www.ft.com/bonds&rates

Energy Price* Change

Sources: † NYMEX, ‡ ECX/ICE, u CBOT, @ NYSE Life,™ NYBOT,® CME, ´ LME/LondonMetal Exchange. * Latest prices, $ unless otherwise stated. ± Platts. ≠ The Steel Index.

Agricultural&CattleFutures Price* Change

Precious Metals (PMLondon Fix)

BaseMetals (´ LME3Month)

WTI Crude Oil † Mar 99.70 ncBrent Crude Oil ‡ Mar 110.79 ncRBOB Gasoline † Feb 2.8466 ncHeating Oil † Feb 3.0535 ncNatural Gas † Feb 2.605 ncEthanolu Feb 2.187 ncUranium 52.50 ncCarbon Emissions ‡ Jan €7.97 +0.48Diesel (French) 963.50 +5.00Unleaded (95R) 1020.00 +28.00

Aluminium 2277.00 +15.00Aluminium Alloy 2110.00 +5.00Copper 8622.00 +53.00Lead 2315.00 +16.00Nickel 21725.00 +280.00Tin 24300.00 +950.00Zinc 2195.00 +12.50

Gold 1726.00 -1.00Silver (US Cents) 3348.00 +13.00Platinum 1608.00 -7.00Palladium 684.00 -14.00

Cornu Mar 634.50 ncWheatu Mar 653.50 ncSoyabeansu Mar 1222.75 ncSoyabeans Mealu Mar 323.60 ncCocoav Mar £1563 -28Cocoa™ Mar 2.406 0Cofee (Robusta)v Jan 1860 -2Cofee (Arabica)™ Mar 219.70 ncWhite Sugarv Mar 637.70 -10.70Sugar 11™ Mar 24.73 ncCotton™ Mar 95.59 ncOrange Juice™ Mar 206.60 ncPalm Oil Dec 1070.00 -2.50Live Cattle® Feb 124.550 ncFeeder Cattle® Mar 153.625 +0.625Lean Hogs® Feb 85.950 nc

BulkCommoditiesIron Ore (Platts) ± Feb 147.50 +1.00Iron Ore (TSI) ≠ 139.80 ncglobalCOAL RB Index 107.50 +0.86Baltic Dry Index 726 -27

%C hg %C hgMnth Year

DJ UBS Spt 146.25 3.7 -7.5R/J CRB TR 317.63 3.8 -3.1Rogers RICIX TR 3791.83 5.1 -1.4M Lynch MLCX Spt568.96 4.6 6.0UBS B’berg CMCI TR1337.45 5.8 -1.0LEBA EUA Carbon 7.57 -8.4 -48.5LEBA CER Carbon 3.88 -18.5 -65.4LEBA UK Power 41.96 1.7 -12.1

Jan 26

COMMODITIES

C OM MODITIES www.ft.co m/co mmodities

GlobalHFRXGlobal Hedge Fund Index 1124.71 0.2175 1.38 1.38HFRXEqual Weighted Strategies Index 1112.88 0.1718 1.28 1.28HFRXAbsolute Return Index 949.14 0.0018 0.27 0.27HFRXMarket Directional Index 1035.44 0.2418 1.34 1.34Equity HedgeHFRXEquity Hedge Index 1018.49 0.3349 1.80 1.80HFRXEH: Equity Market Neutral Index 983.60 0.2018 0.23 0.23HFRXEH: Fundamental Growth Index 1429.08 0.2887 1.41 1.41HFRXEH: Fundamental Value Index 933.91 0.2546 1.08 1.08Event Driven

HFRXEvent Driven Index 1341.04 0.2331 2.58 2.58HFRXED: Distressed Restructuring Index 970.19 0.1948 2.81 2.81HFRXED: Merger Arbitrage Index 1497.65 -0.0130 0.26 0.26HFRXED: Special Situations Index 1095.61 0.2950 2.18 2.18MacroHFRXMacro/CTAIndex 1159.09 0.1969 -0.60 -0.60HFRXMacro: Systematic Diversifed CTAIndex 1599.03 0.0307 -2.59 -2.59Relative ValueHFRXRelative Value Arbitrage Index 1145.08 0.0939 1.49 1.49HFRXRV: FI-Convertible Arbitrage Index 665.17 0.0957 1.54 1.54HFRXRV: Multi-Strategy Index 1793.08 0.0371 1.29 1.29

HFRI Monthly Strategy Indices - USD (December)HFRI Fund Weighted Composite Index 10415.99 - -0.36 -5.02HFRI Fund o Funds Composite Index 4819.25 - -0.36 -5.56

HFR INDICESIndex Value Dtd % Mtd % Ytd %January 25

Indices calculated by HFR (He dge Fund Research Inc.) www.hr.com

BONDS www.ft.com/bonds&rates















22 ★

Saturday January 28 / Sunday January 29 2012

LEX ON THE WEB

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Gold price


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2014US interest ratesThe Federal Reservepredicted that US interestrates would not start to riseuntil the end of 2014, morethan a year later than itsprevious guidance, triggeringa rally for stocks andTreasury bonds. The UScentral bank also downgradedits estimate of growth in thecoming quarters from“moderate” to “modest”

15%Portugal worriesMounting concern about apossible default by Portugalsent the yield on the nation’s10-year government bondabove 15 per cent this week.The spike, which came in thewake of a Standard & Poor’sdowngrade of Lisbon to junk,contrasted with sharp dropsin sovereign yields seen byother peripheral eurozonecountries

$1,700Gold shinesThe price of gold jumpedabove $1,700 for the firsttime since early December asthe Federal Reserve’s stanceon interest rates triggeredconcerns about adepreciation of the dollar. Itscomments on the outlook forthe US economy helped fuelspeculation that a freshround of quantitative easingcould be on the cards

Is there any such thing inthe world of finance as agood idea that does not intime get taken too far, andflogged to destruction? Iam beginning to doubt it.

If the financial world hadany relative “winner” fromthe disaster of 2008, it washedge funds. The long-feared collapse of a big hedge fund never tookplace. Banks turned out tocreate far more systemicrisk. Some smart hedgefund managers actuallysaw the crisis coming andmade money from it.

Managers like JohnPaulson, who made a hugebet against subprimemortgages, or DavidEinhorn, who aggressivelysold short the shares of Lehman Brothers in a betthat they would go down,while publishing evidencethat the investment bank’saccounts were fatallyflawed. They emerged fromthe crisis almost heroic – and very much richer.

Their lightly regulatedbusiness model, whichallows them to borrow, tosell short, and to limitopportunities for investors

to retrieve their money,seemed superior toregulated funds.

Indeed, hedge funds soonrepaired the damage. Bythe end of 2011, according to Hedge Fund Research of Chicago, the sector’s assetsexceeded $2tn, greater thanin 2007. In the past twoyears, a net 500 new hedgefunds were created.

But it begins to look as

THE LONG VIEW

John Authers

Hedge funds have grown too big and need pruning though the sector hasoverplayed its hand. Therelease of Mitt Romney’stax returns in the USilluminated what many didnot realise – that wealthcreated by hedge funds isleniently taxed. Alternativeasset managers suddenlyface political attack.

Those proved right fouryears ago are now making mistakes. Mr Paulson tooka loss of about $500m inthe Chinese forestry groupSino-Forest last year as itfought shortseller’s chargesof fraud. As for MrEinhorn, he had to pay a£7.2m fine to the UK’sFinancial ServicesAuthority this week, formarket abuse.

The hedge fund industryas a whole is not looking so smart. According toHFR, the average hedgefund lost 5.02 per cent lastyear, only their third downyear since 1990. SinceAugust 2008, the eve of Lehman, hedge funds havealmost exactly matched theS&P 500 stock index, and

far underperformed bonds.Funds of hedge funds, with

an extra layer of fees, havefared far worse, and arestill 6.5 per cent belowtheir level of August 2008.

They have some excuses.Correlations betweensecurities and betweenasset classes are extremelyhigh. That is bad news forhedge funds, many of whose strategies rely oncorrecting mispricing anomalies, selling short

overpriced stocks andbuying cheap ones. Suchstrategies fail if all stocksmove together in responseto the latest macro news.

But global macro fundscollectively failed to exploitthe twists and turns of theeurozone crisis. Some did.But most seemed to beflummoxed by the need togauge political as well asfinancial risks.

Further, Mary Bartels of Bank of America MerrillLynch shows that thecorrelation of severalhedge fund strategies withthe stock market reachedrecord levels last year.That surely defeats theirpurpose – which is toprovide a “hedge” – andimplies that the sector isovercrowded, with toomany players overexposedto the stock market.

Richard Bernstein, a NewYork investment adviser,points out acidly thattreasury bonds offered truediversification, moving inthe opposite direction tostocks. Hedge funds,despite their name, did not.“Traditional assetallocation has provideddiversification, superiorreturns, liquidity andcheaper fees,” he said.

“Alternatives haveunderperformed, are highlycorrelated to other assetclasses, hinder liquidityand charge high fees. Thisseems to be a comparisonof a superior, lessexpensive product to aninferior, more expensiveproduct.”

Many hedge fundstrategies have a limit onhow much money can bedeployed, as there are onlyso many mispriced assets.When too much moneymakes the same bet andcopycats pile in, returnslook ever more like thestock market itself. This isknown in the industry asan “overcrowded trade”. Itlooks increasingly asthough hedge funds owetheir great performance inthe decade before the crisisto cheap leverage andcannot repeat the tricknow that far more fundsare trying to perform it.

Some hedge fundmanagers continue to usethe freedom of their lightlyregulated environment toreap fantastic returns eachyear. But many hedgefunds are run by formertraders using space on aninvestment bank trading floor and using ideasspoon-fed to them by theresearch departments of investment banks.

For the sector as awhole, the picture is nowfamiliar. Hedge funds havegrown too big, they arecopying each other and

they are tracking themarket, but charging big fees for it. That is exactlywhat has already occurredin the world of mutualfunds and unit trusts.

There are too manyhedge funds. Thoseinvestors lucky enough tobe able to invest in themshould ask their fundmanagers whether theyreally need to exist.

The correlation ofseveral hedge fundstrategies with thestock marketreached recordlevels last year

Hedge funds versusstocks and bonds


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HFRI Composite

HFRI Fund of Funds

The Lex Column Markets

The Week in Numbers

Blaming EuropeCompanies the world over are falling over themselves to blame theeurozone for weaker than expectedresults. This week, Germanindustrial Siemens said full-yeartargets would be harder to achievebecause of the debt crisis in Europe.Xerox also reported “significantlyimpacted” European revenues and itsshares fell 10 per cent. Yesterday,Procter & Gamble wrote down thevalue of its appliances and salonprofessional businesses mostly due tothe “prolonged deterioration in themacro environment”, particularlyacross Europe.

Investors should be sceptical of this blame game. After all, how oftendo managers say they were taken bysurprise by the strength in theemerging markets? Never – luckysuccess stories were always predictedand skilfully executed. Companiescannot have it both ways though.Plenty of people were worried aboutEurope a long time ago.

Then there is the question of how“it’s not our fault” events should betreated in the books. P&G, forexample, was quick to label the$1.5bn writedown as “non-core” andremind shareholders that the chargewas “non-cash” from an accounting perspective. But is an economicslowdown really a non-core event fora company that sells consumerproducts? And while writing downgoodwill is technically a non-cashitem in the current period, the truthis that in retrospect P&G paid toomuch over the book values forGillette and Wella when it originallybought them. It was real cash then.

Certainly, there are times wheninvestors should adjust earnings forgenuine shocks when trying toestimate the value of a company. Anatural disaster or a rare productrecall are two such occasions. Butfor truly global companies (P&Ggenerated a fifth of its sales fromwestern Europe in 2011), the ebbsand flows of global economic growth

are as core as it gets.

Take a chill pillJay Flatley has run scared. Thechief executive of Illumina, the USgenetic diagnostic company, hasimplemented a “poison pill” to tryto frighten off Roche, the Swissdrugmaker that this week wenthostile in its bid for the company.Essentially, this means Illuminashareholders will be able to buyshares at a favourable price if anyone buys more than 15 per centof the company. The acquirer’sstake will then be diluted andgaining full control will be costly.

Short-term investors love thisstuff. On Thursday, Illumina’s shareprice jumped 46 per cent and nowsits at $52.65, about one-fifth above

Roche’s offer price. Investors clearlyexpect the Swiss company to playthe game and pay more.

And Roche certainly has thecapacity to sweeten its offer. If thebid is fully debt funded at anassumed marginal interest cost of 3.5 per cent, Roche can raise itsoffer to $62 per share before itwould dilute earnings, calculatesDeutsche.

Mr Flately is right to negotiatehard. But poison pills entail seriousrisks. If Illumina pushes too hardand Roche walks, not only will thelatter’s shares fall back to theirundisturbed level (about half thecurrent price), but they may receivean additional discount becausemanagement has made a policy of spurning bids. It is, after all, thetakeover threat that keepsmanagement teams focused onmaking shareholders richer.

Roche, though, has won hostilebids before without bumping up theprice too much. When it wrestedcontrol of Genentech in 2009, theeventual $95 per share price wasonly 7 per cent higher than theoriginal offer.

Rivals are unlikely to enter ahostile bidding war, so Rocheshould have plenty of time toconvince enough of Illumina’sshareholders to sell withoutactivating their poison pill rights.Either way, Mr Flatley should beworried about his position.

Illumina


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StarbucksFor all its international ambitions,Starbucks remains very dependenton the US, where four-fifths of operating income is earned. If thecompany is to thrive, US profitsmust expand – despite the fact thatthere is little room for more storeswhen every suburb has a Starbucksdrive-through. The company hasmanaged this so far, growing US

operating income by half since 2007,despite a flat store count. Furthergains will be that much harder to find.

Little wonder then that thecompany is experimenting with oneof the only products as profitable ascoffee – alcohol – which it is adding to select stores. After booze, though,what’s next? The world might beready for a Starbucks cigarette.Customers could grab a pack at thedrive-through, and smoke in theircars, where it’s still allowed.

Kia MotorsKia Motors, Hyundai’s zippy sibling with a penchant for strangely-namedcars (the Cee’d, for one) is racing ahead and its confidence is growing.Figures released yesterday showwhy: revenues were up one-fifth andprofits by nearly a third. But isSeoul’s fifth-largest company bymarket capitalisation getting aheadof itself by predicting another 10 percent sales growth this year?

Carmakers are enjoying anoutbreak of optimism following atough 12 months (Japaneseearthquake, Thai floods, eurozonecrisis). Honda yesterday predicted2012 would be its best year in atleast five, while Toyota is expecting record production that will help it

regain the number one spot. Fordwas more circumspect yesterdayafter missing analyst expectations byone-fifth but it too expects themarket to grow. Global growth of 5 per cent is being pencilled in byforecasters such as LMC Automotive,with US and Asian growth of 9 percent and 10 per cent countering a5 per cent drop in Europe. However,it is Europe, worth about a quarterof revenues, where Kia is betting the

biggest; it predicts almost a quarterrise in sales. Granted, Europeans likeKia’s cars; it produced a 10 per centsales increase even as the overallmarket fell nearly 2 per cent lastyear and it managed a net margin of between 1 per cent and 2 per cent,Nomura estimates, after years of losses. But that growth will be hardto match, let alone better, aseconomic gloom worsens.

Kia’s shares have more thandoubled in the past two years andtrade at 13 times historic earningsand twice book value. That compareswith 12 and 1.4 times for Hyundai(which holds a third of Kia) and 9and 1.3 times for the Bloomberg world automakers index. There isgood reason for Kia to haveoutperformed Korea’s Kospi index byone-fifth in the past year, but less tothink it can do so again this year.



with Kazakh markings – and then on to

smaller ski-planes going to some of theworld’s most remote fastnesses: Mount Vin-son, the highest mountain on the conti-nent; Hercules Inlet, the starting point forsome of the most daunting treks; the 89thdegree; and the Pole itself.

For many years interior tourism of allkinds remained a rarity. Liesl Schernthan-ner, now the communications supervisor atthe Amundsen-Scott station, was first therein the mid-1990s: “We used to get the oddrogue adventurer, very tough, usually Nor-wegian. About six a year.”

Now as the southern sun gets lower andthe visiting season comes to an end, 2011-12is certain to be a record, with about 400visitors to the Pole, and the gift shop prettymuch cleaned out of its (rather feeble)range of stock. Is this the end of theuntouched wilderness? Is my small foot-print the harbinger of sports bars, BurgerKings and kiss-me-quick fur hats?

Perhaps not. The twin centenary celebra-tions make 2011-12 an obvious peak, and400 visitors a year is hardly an invasion. Ina world with little to shout about, Antarc-tica is a remarkable success story for sus-tainable management and international co-operation. It is governed by the AntarcticTreaty, signed in 1961, which pledged thatthe continent “shall be used for peacefulpurposes only”. And, with the odd blurryedge, that is exactly what has happened,reinforced in 1991 by a ban on mining.

Of course, if a major power or multi-national got wind of a vital resource thatwas economically extractable, the treatywould not last five minutes. But there is nosign of that. And in the meantime Antarc-tica is undoubtedly the best-run continenton earth. “There is governance but no gov-ernment,” as one polar expert put it, anarrangement that doesn’t work in theory,but does in practice.

But tourism is always a worry among thesmall community, mainly comprising offi-cials and scientists, that concerns itself with Antarctican affairs. Safety is one con-sideration: 257 people died on a sightseeing jolly when an Air New Zealand planecrashed into Mount Erebus in 1979; and inan event seared into the folk memory of both ANI and the polar station, three expe-rienced skydivers were killed at the SouthPole in 1997. “We are concerned that we do

not become the chief search and rescuefacility for the Antarctic,” said Bill Cough-ran, the current head of station.

ANI worries all the time that its clients’reach might exceed their grasp. Mountain-eering used to be the preserve of a a zealot-elite; now hundreds of people have climbed

Continued on page 2

January 17 1912: Captain Robert Fal-con Scott arrived to plant the UnionJack at the South Pole. “GreatGod,” he famously wrote in hisdiary, “this is an awful place.” The

temperature was -30C; but for Scott it wasnot just the weather that was bitter.

The previous day he had realised that theNorwegian party led by Roald Amundsenhad got there first. He and his four com-panions photographed themselves, looking

hollow-eyed and defeated. Within weeksthey would be dead.

January 17 2012: About 100 people gatheredat the same spot to commemorate the cen-tenary of Scott’s arrival.

The occasion was nothing like as grand asthe celebration of Amundsen’s achievementthe previous month, when the Norwegianprime minister theatrically skied in. Waryof both global grandstanding and associa-tion with failure, David Cameron chose notto be represented at all. The ceremony wasarranged by the Americans, who run thehuge Amundsen-Scott polar base and fly thestars-and-stripes at the Pole itself, thoughthey have no obvious right to do so.

For this day only, Britain’s flag wasallowed to flutter alongside. There werefive speeches, not all of them immediatelyrelevant, but the British adventurer HenryWorsley found a touch of soaring elo-quence when he paid tribute to the dead:“Their footsteps have long since disap-peared but they echo through eternity.”

And at least all the speakers kept it brief.The applause was muffled because the

audience were heavily gloved: it was -28C,only a fraction warmer than for Scott’sarrival. And everyone shifted quickly backinside: the Americans into their new her-metically sealed station nearby; the visi-tors to the encampment a mile north (eve-rything being north from here). In our cosydining tent we drank Chilean champagne,which was perhaps a mistake, since thePole is 11,000ft high and in that atmosphereyou get more fizz than drink.

It would be nice to believe that we weretoasting our forefathers whose suffering made our own visit possible. But I think wewere more wrapped up in what we haddone. Some had good reason: Worsley, hisface badly frost-bitten, had just yomped 920miles with a single companion along theAmundsen route from Bay of Whales. Oth-ers had skied “the last degree”, the 69 milesfrom 89 degrees south to the Pole, including Wendy Booker, a 55-year-old Boston moth-er-of-three who has had multiple sclerosisfor 15 years. (A few hours later Grant Kor-gan from Nevada, paralysed by an accidentin 2010, would achieve the same feat.)

Some of us had flown to the Pole andthen trekked for a few minutes across thefrozen wastes from the visitor centre. Andvery nippy it was too.

Yes, the tourists have arrived. The Ant-arctic no longer belongs just to would-beheroes. Me, I don’t ski; I don’t climb ladders,never mind mountains. And I don’t care forthe cold. But I got here. It may not havebeen a very heroic endeavour but it was theculmination of one of the most intenseweeks of my life. I felt pretty chuffed.

I stood in front of the commemorativesign wearing my souvenir-of-the-Faroe-Islands bobble hat and the balaclava that

Our man in Antarctica

One hundred years after Scott lost out to Amundsen in the race to the South Pole,Matthew Engel joins a group of touristson a rather more civilised exploration

Auntie Jessie knitted. And, since such amoment should always be marked with apersonal show of eccentricity, I had a quickread of a slightly out-of-date copy of theFT; shared a bowl of cherries, which hadacquired an intriguingly glacé quality; andthen went off to umpire one of history’ssillier (and certainly most southerly)cricket matches. None of us tried to matchthe skier, famous in Antarctic circles, whocelebrated reaching the Pole by stripping

to her bra and pants. We have, nonethe-less, moved on a long way from Titus Oateswalking to his doom in a blizzard.

The idea of polar tourism dates back atleast to a cruise into Arctic waters in 1875.But the Antarctic was, and remains, farmore inaccessible. And the combination of Amundsen’s efficient success and the gro-tesque travails of the Scott party discour-aged imitators. The glory had been gained,and the place did not sound much fun.

But the legend never lost its hold on theglobal imagination. In 1956, the US estab-lished its first, primitive, polar base. In1958, a Commonwealth expedition, led bySir Edmund Hillary and Sir Vivian Fuchs,reached the Pole overland using tractors,and a new era began.

In 1968, the first British tourists were ledashore by the naturalist Sir Peter Scott,son of the captain. They landed on theAntarctic Peninsula, 1,500 miles from thePole, reachable enough for small shipsfrom South America (if you can toleratethe stormy seas round Cape Horn), and thehome of seals, penguins and occasional

tufts of grass – kindergarten stuff for thetrue Polie. There is some splendid newsreelfootage of those anorak-clad pioneers, eld-

erly but doughty, stepping gingerly on tothe rocks. “It’s difficult not to feel a hint of regret,” said the commentator.

Seaborne trips remain the staple of Ant-arctic tourism, which makes sense. Thesummertime climate round the peninsulais bracing but bearable, and that’s whereall the wildlife interest is. There’s nothing in the forbidding interior except lichen – though a skua, most gluttonous of sea-birds, once made it to the Pole. Not muchscope for a six-part David Attenboroughseries there. There was no chance of thecontinent being overrun by the hordesuntil the mid-1980s. The breakthroughcame when Charles Swithinbank, a Britishglaciologist and perhaps the most famousof living Antarcticans, came up with thethought that if the ice is thick enough, itcould provide a runway as solid as theconcrete of Heathrow or JFK.

The idea was picked up and developed byAdventure Network International (ANI),which dominates this market. So throughthe short but hectic Antarctic summer,from November to January, ANI flies tour-ists to its base camp at Union Glacier on anelderly, windowless but sturdy Ilyushin

Twin centenary celebrationsmake 2011-12 an obvious peakfor tourism, and 400 visitorsa year is hardly an invasion

FT | Saturday January 28 / Sunday January 29 2012WEEKEND

Life& Arts

F o o d & D r i n k • S t y l e • T r a v e l • A r t s • B o o k s

Chilled ‘Such a moment should be marked with a show of eccentricity, so I had a quick read of an out-of-date FT’ John Beatty

Hold on powerHow Putin has stayedat the top in Russia Books Page 17

Couture club Vanessa Friedman

at the Paris showsStyle Page 5

IntrepidCaptain Scott (second from left) and his team on January 17 1912 Alamy

Football’s game changersSimon Kuper on great

and, unsung, managersBack stories Pages 20-21



2 LIFE & ARTS ★ FINANCIAL TIMES JANUARY 28/JANUARY 29 2012

Life

SimonKuperOpeningshot

Our man in Antarctica Continued from page 1

the Seven Summits – the highest peaks inall the continents. One might think thatthe Last Degree would be the culminationof a lifetime of skiing. I asked one young aspirant when he had first tried the sport.“Yesterday,” he replied.

But in the old days the highest peakswere climbed only by testosterone-filledblokes inclined to push their luck; nowthese trips are run by experienced guidesarmed with a duty of care. The Last Degreetakes skiers down a beaten track; partici-pants have GPS and satphones. There areno landmarks on the high plateau thatleads to the Pole. The main dangers seemto be altitude sickness and boredom.

Yet dangers lurk everywhere here. Everyholiday destination has its drawbacks:Rome has pickpockets; Australia hassnakes. Here there are crevasses, trapseven for the wary. “We think we can cover

almost every eventuality,” says PeterMcDowell, one of ANI’s owners. “The onething we can never cover is natural condi-tions. It’s a vast place, an unforgiving placeand it can bite you on the bum.”

ANI charges its customers a basic $42,950for the fly-to-Pole trip (and more to adven-turers, who need extra flights and special-ist back-up). That is a sum that would buyweeks of luxury and servility anywhereelse in the world. Here it buys neither.“This is one branch of the travel businesswhere the customer is not always right,”says McDowell.

That message came over loud and cleareven at the starting point: Punta Arenas, atown of chill winds and faded charm on thetip of Chile. Flying conditions from theresouth are very fickle. The old militarymaxim of “Hurry up and wait” applies. Ispent all afternoon in my hotel room wait-ing for a call before, at 7.20pm, being toldto be downstairs, ready, bags packed,checked out, in full polar gear, by 7.45pm.“What time’s the flight?” I asked languidly.“Irrelevant!” came the reply.

The Ilyushin flight was half like an away

game with the school football team, half aSoviet army mission to invade somewheresmall and rebellious (which I suspect iswhat this plane used to do). Surrounded bySeven-summiteers and similar types, I feltdesperately weedy. And that feeling neverwent away.

The Treaty countries are also deeply con-cerned about the effect of tourism on theenvironment. No academic study I haveseen supports the view that tourism shouldbe banned. Charles Swithinbank, who firstcame to the Antarctic in 1950 and made hisumpteenth polar visit, aged 85, last month,is very clear: “When ship tourism began,all the purists said ‘There’ll be beer cansall over the place.’ What’s saved us fromthat is that the tour companies are selling a pristine continent and they make verysure you don’t leave litter. It wouldn’t be intheir interests.”

Indeed, ANI counters any criticism bybeing holier than anyone else. As the win-ter darkness approaches, almost the entirecamp is dismantled; a stray tissue paper iscause for reproach. And though I hate todiscuss it, every particle of my waste wasflown back to Chile. Customers mustunlearn their basic potty training so pooand pee can be separated for easy disposal.One scientist told me that none of theofficial bases match this.

When not thinking about toilets, custom-ers fret about communications. At UnionGlacier there are only satphone connec-tions and emergency email. And, if theweather turns nasty, there is no way out.Clients are warned in advance to allow for

gle day: the sun rises in September andsets in March (and vice-versa in the north).So time is an artificial construct, designed

to maintain human biorhythms in aninhuman environment. The US base workson New Zealand time because it is sup-plied from there; ANI operates on Chileantime for the same reason. There was thusbetween us and them a 16-hour time differ-ence: to them it was 6pm and they had

just finished work. Whatever: it was stilldaylight.

There are other curiosities. There is no

single South Pole – there are seven: thegeographic pole, which is this one; thenearby ceremonial pole, where the 12 origi-nal treaty nations all fly their flags; themagnetic pole (which shifts, and is nowunder the ocean); the geomagnetic pole; thetectonic pole; the pole of relative inaccessi-bility; and the cold pole. The geographicpole – THE Pole – appears to be moving,but this is an illusion. The ice is heading

westwards at a rate of five metres a year,so everything around the Pole is moving,including the US base – and the pole mark-ing the Pole. Since the Pole is actuallybelow the ice, it remains where it is. Thusa new marker has to be created every year.

I was only at the Pole for 16 hours – notionally 5pm to 9am. But I was wide-eyedthe whole time, partly because I kept hear-ing the barely credible. I spoke to a bio– logist at the US station, Heather Moe, whotold me about Christmas Day 2011, thewarmest day in recorded South Pole his-tory: - 12.3C, almost + 10 Fahrenheit. Thelong-term significance of this is unclear.But there was also an inch of snow.

“Just to see snowfall is exciting for us,”explained Moe. “It doesn’t fall here becausethe air is so dry. All the snow is normallyblown in from elsewhere.” Whereupon itfails to melt. This, in short, is a desert: theSouth Pole gets as much sunshine asTampa, Florida, and twice as much as Lon-don. And often less snowfall than London

too. Who knew?Scott was right: this is an awful place.

These days, it is not just flat, cold andbleak: much of it is off-limits to minimisehuman impact on the science, so wander-ing is discouraged. And the Americanshave applied their customary aestheticstandards. The belching smoke gives thePole the feel of a Siberian mining town;

and the back of the base could be a build-ers’ yard in Minneapolis. There is someembarrassment about this. “We have a

five-year programme to improve things,”explained Bill Coughran, “but removal isvery complicated and expensive.”

I am thrilled to have been there, but feelno compelling urge to return. The 15 hoursscores well in the annals of polar travel;most fly-ins are in and out in four. Thewho le point, a s it was for Sco tt a ndAmundsen, is the getting there. Many of my companions had been infatuated withthe place for years. “I feel so normal here,”said Melissa McLachlan, an Australian ITconsultant. “In Sydney I’m the only personobsessed with the South Pole.”

Is this the last frontier for tourism? Notnecessarily. Mike McDowell, brother of Peter and another of ANI’s five owners,also runs companies that can take youdown to the Titanic and the Bismarck orup into orbit, which seven clients havedone already (cost: $50m). Coming soon: anorbit round the moon in conjunction withthe Russians (projected cost: $130m). Whatnext? Life on Mars? Breakfast on Pluto?Will I ever summon the courage to ask himfor a journalist’s freebie?

For now, though, I am content with mysmall achievement. I may have felt a wimpamid all the adventurers, but I have nowreported from seven continents, which is arare feat if you’re not trying And even withANI’s care, I was often bloody cold andsometimes nervous.

Olaf Bjaaland, one of Amundsen’s party,lived on long enough to meet Sir VivianFuchs. He was appalled by Fuchs’s use of mechanised transport. Now, ANI are talk-ing of upgrading conditions for their mostpamperable clients: heated tents, maybe; orsome form of en suite. It’s easy enough tobuild igloos: there could be an ice hotel, asin Sweden. Then it would be my turn tothink of future visitors as wimps. Polarexploration should not be too cushy. Istrove, sought, found and refused to yield – well, a bit anyway. I expect everyone elseto do the same. Great God, this is still anamazing journey.

the possibility of being stranded for amonth. A year ago, people were stuck for afortnight when flying conditions were

ideal, because there was a general strike inPunta Arenas. That was a busy time for“Doc Martin”, the chief medical officer,Martin Rhodes.

“A lot of our clients are business leaders.And during the strike some of them weregoing bonkers,” he said. “In the rest of theworld they have enough money to makethings happen. And that doesn’t work inAntarctica. Quite regularly, we see clientswho have serious psychological problemsand it’s usually aggression. They can’t copewith waiting, not being in control.”

Not everyone likes the egalitarianism of the operation. One Russian complainedabout having to eat at the same table asthe staff. Indeed if anything, the workershave privileges denied to clients, including access to the primitive showers. “They’rehere longer than you,” I was told. They areaccomplished, impressive and loyal, com-ing back year after year, often working inthe Arctic between whiles. “I’m not anemployer, I’m a drug dealer,” said McDow-ell. “Look out there. It’s the white powder.It’s completely addictive.”

For everyone, the tents are literally freez-ing, especially when the polar wind whipsup. But the sleeping bags are toasty. Andthe food is fantastic. I have never known ahappier, more congenial, restaurant thanthe Union Glacier dining tent.

For several days, that was the focus:there was nowhere else to go. The conti-nent was shrouded in low cloud, rendering flying impossible. Even short trips out of the camp seemed uninviting. There was arisk that we would not make the Pole intime for the centenary. Like any closedcommunity, Union Glacier became a placeof rumours. The mood grew edgy.

Suddenly there was a break in theweather, a brief one, but enough to get asmall aircraft up for the short trip toMount Vinson and despatch the mountain-eers. I was invited along for the ride. TheVinson massif rises from a horseshoe-shaped valley and when we touched down,there was no wind; there was fresh-fallensnow which had a dessert-like quality(Meringue? Baked Alaska?); and the skywas a blue I had never seen before, waybeyond Alpine: a product of the uniqueAntarctican air: its clarity, its coldness, itsdryness a nd its a ltitu de. It felt like

Shangri-La. And at that moment I under-stood what the fuss was about.

We got to the Pole just in time: 5pm onJanuary 16. The centenary ceremony wasscheduled for 2am the next morning. Cor-rect: 2am. This supposedly equated to theexact moment Scott arrived. And anyway,the American organisers did not think itwas 2am. The polar year consists of a sin-

HuddledFrom top: touristsand staff from the Amundsen-Scott base gather at the

South Pole to mark thecentenary of Scott’s arrival;the world’s most southerlygame of cricket; celebratingin the cosy dining tent atUnion Glacier John Beatty

A refreshingview of Africa

Ionce had coffee in Cape Town with aCameroonian called Ntone Edjabe. Heran an English-language journal calledChimurenga, but what I remembered

from our chat were his vignettes of Lagos(where he’d studied) and Johannesburg (where he went next). In Lagos, he said,you’d be driving down the highway andsuddenly see a guy selling cars on thehighway. Lagos was crazy, and yet it feltentirely safe. Whereas Johannesburg seemed sane, but never felt safe.

I sent Edjabe some articles, butotherwise forgot about Chimurenga untila recent issue arrived in the mail.

(Declaration of interest: I’m proud to sayI have an article in it.) I read it and wasstaggered. I’d always thought the zenithof journalism was The New Yorker, butin parts, Chimurenga is better.

It’s also more surprising: I love well-off media types from New York or London,but by now we do tend to know how theythink. By contrast, reading Chimurengayou keep thinking, “Who knew that?”Who knew that (as one article recounts)Bloemfontein has a literary scene of authors and critics writing for no money,guided by a Nigerian immigrant, andheadquartered in an Afrikaans literaturemuseum? Chimurenga changes your viewof Africa, and of journalism.

Edjabe arrived in South Africa in 1993,instantly had his passport and moneystolen, but stayed. He worked as a disc

jockey, music writer and basketball coach,and in March 2002 he producedChimurenga – the Zimbabwean Shonaword for “revolutionary struggle”.

On a Skype call, puffing on cigarettes,he recalls, “I printed 1,000 copies, which Icarried around in my bag. I sold it mainlyto friends.” He had intended Chimurengaas a one-off, but it grew into a journal,written mostly by people he knew. Hesays, “I found out later that this is howmost journals actually begin. At the timeI thought it was unique.”

His idea was to get Africans to writeabout Africa as they saw it. That is

unexpectedly tricky. Often, Africanwriters and journalists take their leadfrom depictions of Africa by whiteforeigners. Edjabe says, “Whatever wasconsidered an important book had to bevalidated first by The Guardian.”

Yet Chimurenga isn’t particularlyanti-colonial. That time has passed.Edjabe says, “You are not writing aboutthe white man. That’s not the personyou grew up with. This is not the personI have a beef with. The guy I have abeef with is the shebeen owner.”

And so Edjabe has found Africanwriters, Francophone and Anglophone,still living in Africa, who write mostlyabout a lower-middle-class Africa thatalmost never gets described elsewhere:for instance, the decaying Nairobineighbourhood that in Billy Kahora’s

account turns into a metaphor formodern Kenya.

Sometimes Chimurenga dips to thebottom. Michael Abrahams – a one-timeteenage gangster turned lumpenintellectual – recounts his incarceration ina Cape mental hospital after he attemptedsuicide. Sean O’Toole accompanies aZimbabwean immigrant sneaking intoSouth Africa, while they discuss Hustlermagazine. Much of the writing is excellent.“As a 10-year-old girl, I liked reading obituaries . . . ” is Lola Shoneyin’s opening line. Some is mediocre. Edjabe giveswriters space, and not all can handle it.

But none depicts Africa the standardway. “How does one ensure one’sdutifully collected shelf of Africanbooks is not . . . replete with child

soldiers, AK47s and rapists?” asks JeremyWeate in the books section. Well, writelike Chimurenga is the answer.

“Pan-African” is a dead political cliché,but Chimurenga is genuinely pan-African.It doesn’t pretend that all Africans loveeach other. In fact, the current issuepurports to be an edition of a fictionalnewspaper called The Chronic for May18-24, 2008: the period of South Africa’spogroms. It describes the horrors,sometimes from very close up: “First,when being assaulted with rocks, thequicker you prostrate yourself, the better.”

Yet pan-Africanism exists in practice. In

South Africa’s townships, it’s everything from binational sex to Somali tradersselling Chimurenga. Edjabe says, “That’swhat makes the xenophobic attacks of 2008 very complicated: someone who haslived with Mozambicans, and lovedMozambicans for 30 years, and then triesto chop their heads off – it is morecomplex than racial hatred.”

Chimurenga is rising. Edjabe says,“We have readers who are long-termprisoners at Pretoria Central Prison, whohave subscriptions that they get to us incoins, and readers who are successfulbusinessmen.” And there are readers in

the west. The Dutch Prince Claus Fundrecently gave Chimurenga a prize. Butthose of us eager to cheer anything produced by black Africans shouldremember the warning given to budding Bloemfontein writers: never dare assume“that being black is a sufficient andremarkable condition for art”.

Perhaps Chimurenga is art, or else it’s just as good. Like the new Frenchmagazine XXI, Edjabe has foundsomething that print does better than theinternet: long-form journalism. It makesyou almost proud to be a journalist.

Simon Kuper tries to evaluate football managers, pages 20-21

[email protected] columns at www.ft.com/kuper

The sky was a blue I’d neverseen before, way beyondAlpine – with its clarity and its

coldness, it felt like Shangri-La

DetailsMatthew Engel travelled to the South Pole asa guest of Adventure Network International(www.adventure-network.com), which

specialises in guided adventures in the interiorof Antarctica. Its seven-day South Pole Flightexperiences in December 2012 and January2013 cost $42,950 per person, includingreturn flights from Punta Arenas to UnionGlacier, and from Union Glacier to the SouthPole, as well as guides, accommodation andall meals while on the ice.



FINANCIAL TIMES JANUARY 28/JANUARY 29 2012 ★ LIFE & ARTS 3

Interview

‘We are all children of Adam’ Lunch with the FT: earlier this month Anwar Ibrahim, leader of Malaysia’s opposition, faced prison in a case that divided the country and

dented its image abroad. Days after his acquittal, he tells James Crabtree there should be no contradiction between Islam and democracy

A nwar Ibrahim is running late,snarled up somewhere in therolling carnage of Mumbai’straffic. But as I sit and wait itstill seems remarkable that he

is here at all. Only two days before, Malay-sia’s opposition leader seemed likely to endup in prison for the second time. He hadbeen on trial in Kuala Lumpur for the past11 months on charges of sodomising a maleaide, in a case that both split his homelandand dented its image abroad. Yet on Janu-ary 9 the Malaysian High Court found inhis favour, and so on the evening of hisacquittal Anwar, 64, flew to India to speakat a conference about democracy in Asia,organised by Rajmohan Gandhi, a grand-son of Mahatma Gandhi.

I am waiting for Anwar in a darkenedbooth inside Peshawri, a Moghul-themedrestaurant at the back of a fancy hotel onthe edge of city’s airport. A sign outsidesays diners will “relish the cuisine fromthe finest Indian restaurant in the world”,while inside the low ceilings, rough woodfurniture and carpets on the walls aremeant to bring to mind imperial India’snorth-west frontier. The effect is undoneonly slightly by the towering white atriumoutside, complete with palm trees andIslamic style windows.

Anwar’s political promise can divide evenhis admirers. Some are convinced he iswhat he at first appears to be: a liberalreformer; a talented technocrat who steeredhis nation through the worst of the 1997Asian financial crisis; a genuine intellec-tual, who has spent time at Oxford, George-town and Johns Hopkins universities; and

perhaps even a man capable of bringing the spirit of the Arab Spring to one of Asia’s largest majority Muslim nations.

Yet, while the record is impressive,doubts remain about whether the man can

deliver. Critics point to his early days as anIslamic student radical, or his lengthy spellin the 1990s at the heart of Malaysia’s rul-ing elite, when he rose to become deputyprime minister to the autocratic MahathirMohamad before ultimately breaking withthe regime and in 1998 ending up in jail on aseparate set of improbable corruption andsodomy charges. Others point to the frac-tious Malaysian opposition he leads, orgrumble that he talks a good game in thewest but flirts with Islamists at home.

Anwar turns up roughly half an hourlate – just about acceptable by Mumbaistandards, but he apologises politely, none-theless. He has delicate features and isstylishly dressed in an open-necked whiteshirt and black corduroy jacket, with care-fully brushed hair and a neatly trimmedbeard. Before his arrival I had checked hisTwitter feed (he has 120,000 followers) andat the top of his stream found a picture hehad posted of himself engulfed in camerasfollowing the verdict, with a comment say-ing the image looked “like Hollywood”.I ask him about it, and the events of thepast 48 hours.

He seems genuinely surprised to havewon. “There was an early breakfast withthe family; my children, my son-in-law,daughter-in-law, all were there,” he tellsme. “And I said, ‘We pray for the best, wesay there is hope,’ but then, realisti-cally . . . ” He trails off. “I got my medicine,my toiletries ready,” he adds quietly.

As we pause the menus arrive, on largeleaf-shaped slabs of wood. The food iscooked in clay ovens, inspired by cuisinefrom the region around the city of Pesha-war, now in Pakistan. In practice thismeans the choices are heavy on barbecuedmeats. Anwar picks a peshwari kebab of lamb marinaded in yoghurt and garlic. Idecide on tandoori aloo, a roasted potatoconcoction with raisins and cashews.

We also take a portion of the dal bukharaon the waiter’s recommendation – themenu describes it as a “harmonious blend”of lentils, tomato, ginger and garlic, and itis cooked overnight – while Anwar picks amango lassi and some pudina paratha.

“The pudina leaf is supposed to behealthy,” he says approvingly, althoughI’m disappointed to discover later that

pudina turns out be nothing more interest-ing than mint. The choices over, I mull apoint of etiquette that has been bothering me for much of the day. When exactly

ought one bring up sodomy over lunch? Itseems inelegant to dive right in, but thenperhaps better to get it over and done with,leaving the pudding for lighter matters.

Thankfully, Anwar spares my indecisionand launches straight into the topic, aspart of a flurry of details on the trial itself.He talks rapidly about the flaws of thecase, the complicity of the government,and a medical report he says showed no“clinical evidence of penetration” on theaide he is alleged to have assaulted.Despite the seriousness of the topic, I amstruck by how relaxed he seems. He speaksin an endearingly conspiratorial manner,leaning in to make his points before pull-ing back and often cracking a wry joke,before giggling a little to himself.

The recent trial also showed this theatri-cal side, as he tells me of attempts to winover the judge with quotes from Hamlet (“let us once again assail your ears, thatare so fortified against our story”), along with references to Nelson Mandela and the1963-1964 Rivonia trial of much of the Afri-can National Congress’ leadership. TheBard turns out to be an Anwar speciality – in 2006 he presented a paper to the WorldShakespeare Congress, while a copy of theComplete Works kept him company in jail.

He credits public pressure from allies inAmerica and Turkey for his release,although Britain’s role gets a less positivereception: “David Cameron was completelymuted”, he says, crossly. He mentionsother friends, including Al Gore andPaul Wolfowitz, whom he first metback in the 1980s and with whomhe says he still talks. He speaks of them with such affection hedoesn’t seem to be name-dropping;a neat trick.

The meal arrives, the foodsparsely presented on earthy yel-low plates. Anwar’s featuresfour large chunks of lamb, whilemine looks like a clump of crisply cooked sausage rollsdusted with fine greenishpowder. I’m a touch dis-appointed but when Ip ic k o ne u p i tcrumbles enticinglybetween my fingers,

and, dipped into aspoonful of the thick,brown dal, tastes rich,charcoaly and pleasing.

Anwar seems especiallyhappy with his pudinabread, mentioning again thesupposed health benefits. I askhow he managed physically dur-ing the trial, mindful that following hisrelease from prison in 2004 – the chargeswere eventually quashed after six yearsinside – he flew to Germany for surgery,following repeated beatings. He sighs. “Ithas been hard. Very hard,” he says, admit-ting that his back may need further work.

For all that, he seems surprisingly free of bitterness: prosecutors in Malaysia mighthave appealed his acquittal but for now heseems to be revelling in his status as a freeman. The harshest words he has to say abouthis former boss Mahathir, who led Malaysiafor more than two decades until 2003, is thathe represents the “past face of Asian lead-ers. . . of Asian values, condescending to ourcitizens; where democracy or freedom areseen as essentially western constructs.”

As his thin fingers bring together smallparcels of bread, lamb and dal, he tells methere should no longer be any reason to seea contradiction between Islam and democ-racy. “The vast majority of Muslims areunder democratic rule,” he says, “or areopting for democracy, as in Egypt.” The oldleaders – be it Mahathir, ousted Arab des-pots, or, by implication, Najib Razak, Malay-sia’s current elected leader – are out of

touch with what he describes as a newwave of Muslim democracies.

What sort of leader would he be? Anwarmentions Turkey as an inspiration. It’s aninteresting one, given Turkey’s RecepTayyip Erdogan is also accused of authori-tarian leanings and making religious alli-ances that undermine his country’s secularstate. Anwar says the two men have simi-lar hopes for Islamic democracy, and havediscussed the wider opportunity presentedby the recent Arab uprisings. “I talk aboutthe Malaysian Spring, but our route will beelections,” Anwar says, adding with aflourish, “It’s going to happen very soon!”

Yet, even if you take Anwar’s liberalismat face value, he still has domestic con-straints to contend with, not least from hisawkward and ideologically inchoate opposi-tion movement, which combines a trio of parties representing liberal, ethnic Chinese

and orthodox Islamic views.He tells me that if he wins power in the

election likely to be held this year, his goalwill be economic improvement. It is an aimfor which he again picks a western intellec-tual model, in the egalitarian ideas of Har-vard philosopher John Rawls. I find it hardto imagine Rawls being a widely agreedupon reference point within his coalition,but it is equally hard to imagine thisthoughtful man as much of a closet Islam-ist either.

Is dealing with his more orthodox Islamicallies easy? Anwar smiles, ruefully. “Fromtime to time they would object to EltonJohn coming to the country,” he says, “orto Beyoncé for dressing too sexily.” But,beyond that, he says the three oppositionparties agree on the need for basic rightsand freedoms. His own beliefs help cementthe consensus, he says: “If it was somenon-Muslim, they’d think that I was a bitwishy-washy and easy, but, no, I’m a Mus-lim. People ask, ‘Do you believe in theKoran?’ and I can say ‘Yes’.”

Pushing a little, I ask whether he wouldallow hudud , a controversial form of sharialaw that involves corporal punishment forcertain crimes, to be introduced in Malay-sia. He looks pained, and exhales slowlybefore admitting this is “one of the more

difficult issues I have to deal with”. Therefollows a lengthy exercise in square-cir-cling, in which he refuses to rule out theirintroduction but says they would need tobe in line with other rights and also tohave widespread pubic support. “We mustreach a consensus, which is not possiblein the foreseeable future, but what if you’re given a situation where all Malay-sians agree? Who am I to say no?” Theexplanation has a kind of logic, but it isalso unsatisfying.

Anwar has by now finished eating, and isdipping his fingers in a bowl of warmwater. I ask him how he found the meal.“Very heavy, but very delicious,” he says,before singling out the lassi for specialcommendation. Our time is drawing shortso we pass on pudding and order coffee,which Anwar has with honey.

I put the question that has been on mymind throughout, namely whether all thisquoting of Rawls and Shakespeare is littlemore than an alluring put-on to gainadmirers abroad. For the first time heseems riled. “I quote Shakespeare in KualaLumpur and the Koran in the Muslim vil-lages but the message is consistent – andcoherent,” he says. The response is hismost passionate, and comes with morehand waving than normal.

The problem of his twin world views cutsthe other way, he says, with his friendshipswith foreigners – and in particular Jewishforeigners – used against him by opponents.“For the past 13 years they have accused

me of being a Jewish agent orbefriending Jews,” he says. “In

every village during elec-tions these people put up

photographs of me andPaul Wolfowitz.”

But, he continues,speaking of rural vot-ers: “You gel withthem if you talk aboutthe Koran a s theessence of freedom.‘You are born free, youare all children of Adam, so why do youinsult groups based ondifference of race orreligion or colour?’”

Such attitudes arenot popular with the

orthodox religiousestablishment but he

says the debate is healthy:“Oh, they say, ‘But it’s a

different interpretation.’ Well,let the other sheiks counter me!” he con-cludes, tapping the side of a nearby min-eral water bottle for emphasis.

Anwar has a reputation as a fiery publicspeaker, and, as we prepare to leave, I askhim if he is looking forward to heading back and starting the campaign. He sayshe is, and I believe him, although I can’thelp but feel that he must wish his countrydidn’t require him to contort this way andthat, to try to bring west and east together.As we part I wish him well for the journeyahead, in both senses. I suspect it might bethe last time he quotes Shakespeare forsome time.

James Crabtree is the FT’s Mumbai correspondent

‘I quote Shakespeare in KualaLumpur and the Koran in theMuslim villages but themessage is consistent’

‘A BRILLIANT, INVENTIVE PHILOSOPHER’

Julian Baggini on John RawlsThough his name is not widelyknown outside academia, if you wereto ask an academic philosopherwhich of their colleagues from thepast 50 years will still be read ina century’s time, the answer is likelyto be John Rawls (1921-2002).

Rawls’ most celebrated work, A Theory of Justice (1971), is post-war Anglophone philosophy’s mostcredible claim to be a masterpiece.It justly sits alongside the likes ofPlato’s Republic, Hobbes’s Leviathanand Locke’s Treatises of Governmentas an indispensable inquiry into thebasis of a fair and just society.

Its most famous idea is actually

a procedural one. Rawls’s originalposition asks what principles “freeand rational persons concerned tofurther their own interests wouldaccept in an initial position ofequality”. The method echoes thatof Rousseau and Hobbes, whospeculated about what sort of social

contract people would be preparedto sign up to escape an anarchicstate of nature. Rawls’s version is athought experiment in which weimagine what would be in our bestinterests if we were placed behind a

veil of ignorance in which “no oneknows his place in society, his classposition or social status, nor doesanyone know his fortune in thedistribution of natural assets andabilities.” This strips away all self-serving, distorting thoughts of whateffect a principle would have on us.To put it another way, it invites usto follow not the golden rule of doingunto others as we would be done by,

but rather to consider what anyonewould do if they knew they might bedone by in the same way.

In the “original position”, Rawlsargued that people will follow themaximin rule to decide betweenpossible outcomes. That is to say,they will maximise the minimum

quality of life, rather than try tomaximise the welfare of the better-off. And so they would naturallyendorse Rawls’s “strongly egalitarian”difference principle, which assertsthat any increases in the prospectsfor the better-off are justified only ifthey “maximise the expectations ofthose most disadvantaged”. In other

words, the rich can get richer only ifthe poor get better-off as a result.From the original position, you wouldchoose to live somewhere like theCzech Republic rather than risk beinga loser in the richer but moreunequal Malaysia.

Rawls had his critics, of course.He was often accused of living ina north-east American academicliberal bubble, in a setting whereevery political view from left ofcentre to slightly more left of centreis represented. In particular, manyquestion why it should be assumedthat people in the original positionwould be so risk-averse. But even his

fiercest critics usually concede thathe was a brilliant, clear, inventivephilosopher. As his arch-rival MichaelJ Sandel put it when Rawls died in2002, he was “a quiet but toweringvoice for a more tolerant andgenerous way of organising moderndemocratic societies”.

PeshawriSahar Andheri (E)Mumbai 400 099

Lassi x2 Rs680.00Peshawri kebab Rs1900.00Tandoori aloo Rs1750.00Dal bukhara Rs700.00Pudina parantha x2 Rs450.00Café latte Rs275.00Coffee Rs275.00Qua Rs200.00Soft drink Rs200.00

Total (including service)Rs6447.51 (£81.90)

John Rawls, pictured in 1987 Getty



LIFE & ARTS ★ FINANCIAL TIMES JANUARY 28/JANUARY 29 2012

BoldFrom left:

autumn/winter

designsfrom Dior

Homme,Hermès,Lanvin,

Yves SaintLaurent,

Dries VanNoten, PaulSmith; and(inset) BerlutiChristopher Moore

Style

Who’s wearingthe trousersat Davos?

As clothing challenges go,packing for Davosis up there with . . .

I don’t know. Maybe thosework trips that crossnorthern and southernhemispheres (ie, climatezones)? A presidentialinauguration? Christmas atSandringham with theDuchess of Cambridge?Actually, I think this ismore complex. It’scertainly the mostcomplicated dressing challenge I have faced (andI’ve had a few, such ashow to dress for Nobelceremonies that last a fewdays, or a dinner meeting with a head of state, oreven to deliver a keynotespeech in Hawaii).

Consider the problem:five days, thousands of world leaders, globalopinion shapers,politicians, bankers,business professionals androyalty (some gangsterstoo), all with average age,IQ and median income atleast two standarddeviations above theaverage; below freezing temperatures, heavysnowfall and a schedulethat includes sessions,panels and introductorymeetings that take placeevery 10 or 15 minutes.

There is no leeway forrecovering from a bad firstimpression.

On the other hand,fashion conformity (akathe black trouser suit)makes it hard todistinguish one personfrom the next, and it isusually an accessory thatserves as an identifier:“I’m the one with the redpurse.” Finding thebalance between trying toohard and not trying hardenough is daunting. Mysolution: be comfortable,sartorially forgettable andcompletely focused. Whichdoesn’t mean scrimp onthe clothes.

Better, I decided, to taketoo much and exercise myoptions than find myself stuck with bad choices andno fall-back position.

So here is what I took:

1. No ski wear (my snowbunny days are long past),although I did allow forsome Gucci snow boots.2. A Maison MartinMargiela dress that has along-sleeved mock-wrapsilk charmeuse topattached to a wool

gabardine skirt.3. A Rodarte blackpanelled dress with a beigeturtleneck collar.4. Three of Jil Sander’sknee-length black dressesand two pairs of leantrousers with matching blazers bought separately(they are not trouser suits)paired with stretchyWolford high-neck sweaters(my winter essentials nomatter where I go).5. For evening events,which include officialdinners, industry-hostedparties and governmentceremonies, a charcoalwool Alexander McQueensuit dress, a Donna Karaninfinity wrap dress,Balmain low-rise blackleather pants with aRachel Roy leather-edgedviscose batwing blazer,and a MaxMara backlesspatent leather turtleneckbodice top with a peplumand wool jersey sleeves,plus Balenciaga blacktrousers.6. Three pairs of boots(ankle, knee, thigh).7. Spanx, for containmentof the fondue-inducedbulge.8. A Smythson of Londonthin carryall to serve as apurse (I don’t carry aregular purse).

Looked at objectively,and strewn over mybed, I must admitthat the outfits

above looked prettysimilar. And yes, they wereall black. But I got them inone suitcase, which is agood thing, because in thesnowy Swiss town thisweek (record snowfall,incidentally) listening toAngela Merkel (who washerself wearing – whatelse? – a neat black trousersuit), I found that all Ireally wanted to wear wastrousers, a black sweaterand the warmest jacketI could find.

Yes, I went shopping.Yes, I bought a black woolArmani blazer with aruffled collar. But afterhearing the likes of DavidM Rubenstein, managing director of the Carlyle

Group, debate the future of capitalism, it felt less likefailure, and more likeaction.

The Mystery Shopper isa globetrotting executivewho shops as she travels

for work

Mystery Shopper

In Milan last week the autumn/wintermen’s wear shows delivered the kindof high luxury that theoreticallyappeals to wealthy consumers fromthe Bric countries. This week, in

Paris, it was all about fashion with a capi-tal F and for the aesthetically adventurous.There was radical tailoring, theatrical stag-ing, and the invention of completely new

garments, which may sound alarming butwill probably prove influential as it filtersdown, especially when abstracted to a fewbig themes: nostalgia for the culturalunderground, prison motifs (yes, really,and no, not balls and chains), and the mili-tary.

Setting the agenda for the undergroundlook – with a whiff of the perverse thrownin – was Yv es Saint L aurent, wher edesigner Stefano Pilati’s inspiration camefrom a 1980s jacket by the house’s foundercomplete with leather lapels, asymmetriczips and dramatic buckles. Biker chic cameon mess jackets, dandyb oleros and topcoatswith b ond ed leatherexteriors and felt woollinings.

“There was a real dec-adence and transgres-sion back then. Sadly,there is no undergroundanymore,” says Pilati,himself sporting a crea-tion that r esembles aleather surgeon’s vest.

He wasn’t the only one,however; another strokeof innovation came fromPaul Smith (r ecentlyawarded the Médailled e l a V il le d e P ar isfrom Mayor BertrandDelanoë), who showed aslick, sea-inspired collec-

Going underground

tion of mould-breaking tailor-ing that included revamping aconventional puffer jacket intoa cool new courtier’s vest.

Meanwhile, one of the mostanticipated shows of the weekwas the “launch” of Berluti – abottier dating back to 1895 whoselegendarily expensive boots can

retail for more than €3,000 – as afully-fledged men’s brand, andthe collection amounted to a newsort of men’s wear that employedthe methods of women’s haute couture.

So double-faced techniques were appliedto lean, sharp-shouldered, three-piece suitsin a faded chalk stripe deliberately erodedfor a quirkier finish, and the cappuccino-hued lining of the suits was gathered in tocreate a new fit that shaped the figure. Theresult was a patrician cool for a brand inwhich LVMH apparently intends to invest€200m in the next half decade.

Then there was Driesv an Noten, where theeponymous d esignerdubbed his collection of colourful patterned suits,inspired by the Dutch art-ist Gijs Frieling, “psyche-delic elegance”, with moreextreme challenges toconvention taking theform of tights with kilts atGivenchy and schoolgirl’sskirts under posh public

school punk blazers atComme des Garcons.

Also conceptually chal-lenging, though in prac-tice easier to wear, wereLanvin’s three-piece suitswith redingotes in ChainGang stripes, a themeechoed at Givenchy ,

It ’s a m an ’s w or ldwhere luxury goodsare concerned. At least

ju dg in g b y r ec en tmoves from two of fashion’sbiggest players: in Novem-ber, PPR acquired Italiantailor Brioni and L VM Happointed Antoine Arnaultto head up the expansion(includ ing a move into

ready-to-wear) of its men’sfootwear label Berluti.

“The men’s market hasbeen under-served for toolong,” says John Auerbach,former president of Park &Bond, the men’s etail web-s it e f ro m G il t G ro up e,which has experienced con-tinuous double-digit salesgrowth since its launch five

months ago. “We are experi-e nc in g a g en er at io na lchange, both with consum-ers and retailers, and weexpect to see strong growthfor some time to come.”

Indeed, the men’s luxurygoods market is outperform-ing women’s in all catego-ries, according to the 10thedition of Bain & Com-

pany’s luxury goods world-wide market study, pre-pared for Fondazione Altag-amma. The report foundthat men’s items now repre-sent 50 per cent of the lux-ury apparel market, helpedin part by male consumersin emerging markets, espe-cially Asia, with China amajor source of growth. As

Jean-Marc Bellaiche, a sen-ior partner at New York-based Boston Consulting Group, points out, approxi-mately 70 to 80 per cent of male millionaires in the USand Japan respectively areaged 45 and over; in China80 per cent of men with thesame net worth are underthe age of 45.

“In Asia, the developmentof men’s wear is extremelyr ap id , and in China weexpect an organic growthclose to 20 per cent for mostof the Europ ean luxur yn am es ,” s a ys T h om asM esmin, a luxur y good sanalyst at CA Cheuvreux.

Still, the masculinisationof luxury is a global phe-nomenon. New York-baseddesigner Coach has seen itsmen’s business double inthe last fiscal year, growing from about 2.5 per cent tonearly 5 per cent of its glo-bal business – an increaseof more than $200m. Overtime the brand expects themen’s sector to represent 15per cent or more of Coach’sglobal sales. At Hermès,s al es a t i ts s ol e g lo ba lmen’s shop in New York(opened two y ear s ago)were higher than its salesgrowth average across theentire US.

Meanwhile, retailers fromLe Bon Marché to Isetan toBergdorf Goodman have all,

within the last year, shuf-fled their real estate to dedi-cate more space to men’sofferings. French depart-m en t s to re P ri nt em psopened a corner dedicatedto men’s luxury accessories,and Harrods has built anexotics room showcasing

accessories and footwear inan array of luxurious sol-ours and skins within itsn ew m en ’s s ho e s al onwhere business is experi-encing a significant uptick.

Then there’s ChristianLouboutin, which opened itsfirst men’s store in Paris’sGalerie Véro-Dodat lastAugust, which includes anexpanded offering completewith bags. “The men’s busi-ness represents today lessthan 5 per cent of our over-all business, but could easilybecome 15 to 20 per cent inthe near future,” says com-pany COO Alexis Mourot.

Louis Vuitton launched amen’s made-to-order shoeservice in its Milan flagship

on Via Montenapoleone,Milan’s most fashionableshopping street, with plansto roll the program out toShanghai in June.

Furthermore, aside frombuying Brioni, PPR chair-man and chief executiveFrançois-Henri Pinault hasalso announced plans to testmen’s-only concept stores forGucci and Bottega Veneta inChina. Bottega (where men’swear now accounts for 30per cent of the business) hasalready opened its firstmen’s-only stor e in theL’Avenue Shopping Centrein Shenyang and has con-firmed its first men’s bou-tique in the US, to open onMadison Avenue in May.

“We tend to see that menare now mor e asser tiveabout fashion,” says AlexisBabeau, deputy chief execu-tive of PPR’s luxury division.

In fact, with a forecastedgrowth of 9 to 10 per centfor the men’s sector versus7 to 8 per cent for women,the Altagamma report esti-

mates the global market forluxury men’s ready-to-wearat $31.2bn – roughly on parwith the women’s market.

“I think we are not facing a temporary vogue, but along-term evolution in cli-ents’ habits worldwide,”says Babeau.

His not hersThe men’s luxury goods market has gone from under-served to unstoppable – and it’s outperforming the women’s market. By Jim Shi

where designer Riccardo Tisci evokedAmerican imagery because, he says, “I’vealways been obsessed by the stars andstripes”. The show featured a trio of inmatelookalikes, with Sing Sing banded tops,albeit paired with kilts and leggings.Finally, at Galliano, now designed by BillGaytten, the criminal references came inthe form of models resembling gangster

bosses in chalk striped suits, fedoras and abeaver skin coat.

Contrasting with the loss of law-and-or-der were military looks that played on theimagery of maintaining control. See Lan-vin, where designers Alber Elbaz andLucas Ossendrijver offset their prisonprints with a new “bomber coat”: an Amer-ican Air Force bomber jacket cum long,tautly tailored, coat in moleskin.

Or see Dior Homme, where the show wasentitled “A Sold ier On M y Own” anddesigner Kris Van Assche showed borderguards’ parkas, officers’ mesh jackets andnaval slickers, mostly in shades of khakigreen, and the whole cast marched out atthe finale. Military capes, admittedly madeof Bordeaux-coloured patent leather, alsoappeared at Mugler’s collection, overseenby Lady Gaga’s stylist Nicola Formichetti;Kenzo showed felt Mao jackets; YohjiYamamoto revamped cavalry officers’tunics; and buzzed-about newcomer NoEditions proposed mega-computer camou-flage prints on hooded naval rain gear.

Not that everything in Paris was noveltyand aggression. There were echoes of the

opulent looks popular in Milan, most nota-bly at Hermès, where designer VéroniqueNichanian defined her show as “easy lux-ury” and translated that as a wrap coat inastrakhan. Indeed, astrakhan may havebeen the season’s defining prestige mate-rial, even seen on boots at Louis Vuitton.Perfect for those who prefer self-indulgenceto fashion bootcamp.

The Paris men’s wear shows were ambitious and adventurous. By Godfrey Deeny

Opulent Louboutin men’swear boutique in Paris




At Chanel Karl Lagerfeld sent out a col-lection in 150 shades of blue: sky-colouredday dresses that were a cross between a

bouclé T-dress and a sheath with straightdropped waist and low-slung pockets, thebetter to hook your thumbs; lapis skirtsuits with a silvery sheen; sequinned mid-night-blue cocktail frocks with sapphirecamellias at the throat and balloon sleeves;baby-blue evening gowns shirred and jew-

elled and puffed – all shown in the fauxinterior of a jumbo jet. If the point wasblue skies ahead, however, it felt morelike a show on autopilot: silhouettesand symbols made long ago, with extraencrustation on top. Bling and you

could not miss it.It wasn’t until Valentino that the

weight of history got shruggedoff, as designers Maria Grazia

Chiuri and Pier Paolo Picciolilooked to the p ast withoutgetting bogged down. Eight-

eenth-century France becamea springboard to moder-

nity with elaborate laceembroideries trans-

lated into cotton ongowns to give them a

contemporary tough-ness, and ornate decora-

tion lay er ed on a singlep ie ce o f t ul le . I f t he y

spanned the gap betweenonce and future, how-

ever, it was RiccardoTisc i at Giv enc hywho took things for-ward, with clothesthat looked less like

what came beforethan what makessense now.

F ro m a g ow nmade of c roc od ile

scales that had been cutand reassembled on tulle like

a mosaic – with the slightest spacebetween scales to allow for movement– to a skirt with hundr ed s of tinysequins sewn on the bias, again to

allow for movement, and embroideredfeathers at the waist that segued into a

silver chain thrown over the shoulder of a cashmere tank top, they were fierce and

functional and alluring, and they createdtheir own momentum. After all, whetheror not things go upward, they need to go

onward. Here was something to wear.

For a slideshow of the Paris couture shows go to www.ft.com/style

France’s credit rating may havesunk, and big brains may havegathered in Davos to discuss the

issues with capitalism – but inthe couture houses of Paris last

week, it seemed no one had received thememo. Except, maybe, Maison Martin Mar-giela, whose spring/summer “Artisanal”presentation – their version of couture, fea-turing unexpected materials and theirtrademark alchemical upcycling – seemedlike a case study for the Swiss forum. Nine-teenth- and 20th-century embroidered tablelinen became graceful wrap dresses and thefoil from champagne corks made a greatmetallic trench but elsewhere, well – cut-backs? There were some cut-out backs butmostly, there was more: more skirt, morebeading, more corsetry.

Instead of seeming like an act of defiancein the face of uncertainty and economicpain, the way Dior’s extravagant New Lookdid after the deprivations of the secondworld war, all this muchness seemed,rather, like a remembrance of things past.Literally so, in the case of Dior, wheredesigner Bill Gaytten decided simply to goback to the archives for his show of NewLook shirt-dresses in sheer organza, tuckedand curvy cocktail sheaths, and billowing ballgowns. The result was a black-and-white sketch of the house’s former self.

Giv en that Gay tten is in theunfortunate position of holding down the atelier while his bossessear c h, v er y p ub lic ly, for areplacement, such a backwardglance is understandable. Moreconfusing was the decisionby Alexis Mabille, otherwiseknown as a “young designer,” to quote Proust – “Il n’y a que les femmes qui ne savent pas s’habiller qui craignent la couleur ” (onlywomen who d on’t knowhow to dress are afraid of colour) – before sending out a collection of fuchsia1950s c ocktail d resses,floor-sweeping turn-of-the-20th-century gowns, and theoccasional daffodil-yellowsequinned tuxedo.

We’ve been there before;d o we r eally want to goback? Do we want to go,for example, to the time

of both silver screen andcouture legends courtesyof Giambattista Valli,whose second couture

Style

and her trademark trashy1950s shapes – skintightp enc il skir ts to thek ne e a nd c ro pp edtops, here in sequinso r p in st ri pe s; aprom dress with askir t of layer sa nd l ay er s o f tulle and lacep lu s a w id es n a k e s k i nbelt; soigné jack-ets falling off a shoulder to reveal

jewel-encrusted brassieres – thatdidn’t quite make the transition tocouture elegance. At least at Arm-ani Privé the celebrities were in theaudience, not the designer’s head;rather, he began with the idea of metamorphosis, though it took a lit-eral turn in snakeskin prints andmesh overlays that looked like noth-ing so much as athletic scales, the

one twisting and emerging from theother in a sometimes sinuous,sometimes awkward dance of blackand chartreuse.

Harking back to an era of jet-setters, socialites and movie legends, Paris couture was weighed down by history. By Vanessa Friedman

Flights of fancy

outing consisted of structured Dior-likebodices and big bows, little Ungaro-styledresses bristling three-dimensional flowers,feather peplums and floor-length skirts?

The socialites in his front row seemed tosay yes but then, that’s part of the issue:

increasingly such couture seems des-tined solely for the red carpet or thecharity gala, where channelling yester-year’s movie stars is de rigueur , and theissue of how to sit down or fit througha door is irrelevant. That’s not thedream, that’s dress-up.

Consider, for example, Elie Saab’sendless dance of filigree pastel fairy-tale embroideries or Versace, where – after an eight-year absence from the

schedule – Donatella Versace created acollection of 15 gowns that looked likenothing so much as Barbarella cou-

ture, with glinting corset constructionsthat jutted out into metallic curves at thehip or b ust, d esc end ing in skintightembroidered and encrusted skirts to the

floor. Even Jean Paul Gaultier found hisreference in a celebrity, albeit one from therecent past: the late Amy Winehouse.

The result was a runway full of beehives

Lavish

Clockwise fromleft: Chanel’s

airliner-inspiredcatwalk;Christian Dior;Armani Privé;Valentino;GivenchyCatwalking,

Reuters




Food & Drink

Talentuncorked

Burgundy attracts more than itsfair share of ambitious wannabewinemakers. The carefullygroomed vineyards on the east-

facing slope known as the Côte d’Or, thepale stone of the medieval buildings and,most of all, the often haunting quality of the wines, together cast a powerful spell.During the three weeks I recently devotedto tasting the 2010 burgundies, I keptcoming across producers that were new tome – some very promising.

Historically, only Burgundians were ableto get their hands on a patch of Burgundian vineyard but today the Golden

Slope seems to be in full ferment, withland changing hands at record prices, andmany a foreigner entering the fray. I knowof two new Franco-Japanese enterprises,and Americans now seem as entrenched inNuits and Beaune as in Paris – with AlexGambal and Domaine Dublère making particularly toothsome 2010s.

Last summer one well-heeled investor issaid to have paid so much for a tinyholding in the white wine Grand CruBâtard Montrachet that the equivalentprice would be almost €25m a hectare.

Burgundians are concerned about thisupward spiral in land prices. Presumablythis will be followed by a similarmovement in wine prices, but Burgundy’svignerons have long prided themselves onthe contrast between their steady pricing and the volatility of Bordeaux.

Jean-Marie Fourrier of Gevrey-Chambertin, just turned 40 and one of themost thoughtful vignerons of hisgeneration, decided last year to establisha négociant business named after himself (wines made from his family’s vines arelabelled Domaine Fourrier). He wants totry making wine from Grand Cru sitesother than the slice of Griotte-Chambertinthat the Fourriers already own, but he

knows he will never be able to afford anymore Grand Cru land. Instead, hisnégociant company in 2011 bought ClosVougeot and Echezeaux grapes from otherproprietors.

Burgundy lovers will rejoice at thisnews as the disposition of great vineyardsdoes not always match the capabilities of their owners in the cellar. Many of themost sought-after domaines such asFourrier, Denis Bachelet, GhislaineBarthod, Sylvain Cathiard, Michel Lafarge,Marquis d’Angerville and Etienne Sauzethave no, or minute, holdings in GrandCru vineyards.

Two things thrilled me about the 2010s,apart from the generally delightful qualityof the wines, both red and white. First,the wines of the Côte de Beaune for onceshone as brightly as those of the Côte deNuits, with a strong performance in manyof the Premiers Crus around Beauneitself. Not just the relevant domaines but

all the best-performing Beaune négociants,Bouchard Père et Fils, Chanson, JosephDrouhin and Louis Jadot, seem to haveput extra effort into their best Beaunereds in 2010. These single-vineyardBeaunes, like so many 2010s, really didexpress their individual vineyardcharacters superbly.

The other pleasing phenomenon washow well many of the lesser-knownproducers performed.

South of the Côte d’Or the quality gapcontinues to narrow between the bestproducers in southern Burgundy, theMâconnais and the Côte Chalonnaise, and

those on the Golden Slope. I found thePouillys of Daniel Barraud, the Mâcons of Héritiers du Comte Lafon, the Montagnysof Jean-Marc Boillot and the Rully Blancof Jaeger-Defaix (owned by BernardDefaix of Chablis) were particularlysuccessful in 2010.

Well to the north of the Côte d’Or, 2010seems to have been a more successfulvintage for classic, long-lived Chablis thanthe softer, riper 2009s – although thetauter, more chiselled 2008s may turn outto be even more long-distance runners.Here, I was especially impressed with theoak-free wines of Gilbert Picq and therather denser, grander ones of Jean-Pauland Benoît Droin.

But I had encountered strikingly goodwines from all these producers before.The real excitement was discovering wineproducers whose 2010s broke newbarriers, either because this was theirdebut vintage or because they seemed tohave reached new performance levels,often as a new generation takes over.

Chanterives, a tiny négociant-vinificateur based in Savigny, made its first wines, in2010, in rented space in Pommard. It is anexciting and new co-operation betweenSimon Bize’s winemaker Guillaume Bott

and Tomoko Kuriyama whose Germanwines, Riesling and Pinot Noir, havealready won considerable praise. Buy nowwhile prices are still very reasonable.

Another name that was new to me wasLivera of Gevrey-Chambertin. I tasted onlyone wine, its 2010 Chapelle-Chambertin,but it was so good that I will look out formore. This is one of many domaineswhere a new generation has its hand onthe tiller.

In Monthelie, Florent Garaudet now hashis own label alongside that of his well-established father and the 2010s I tastedsuggested that future vintages might be

worth following.One producer whose short track record

was confirmed with his 2010s wasDomaine Tessier of Meursault. ArnaudTessier took over the family domaine in2005. Initially he followed family traditionof selling off most of the grapes to othersbut he clearly has some top-quality oldvines, and considerable skill in turning them into crystalline white wines.

Antoine Jobard’s influence at thedomaine that until recently carried thename of his father François seems benign, just like the gifted winemaker sonThomas Bouley’s work at Jean-MarcBouley of Volnay.

In Chambolle-Musigny, FrançoisBertheau took over his father’s vinessome years ago and I do wonder how hehas managed to fly beneath theinternational burgundy-loving radar for solong. His 2010s are really outstanding – very pure and unforced.

Other producers whose 2010s seemed tome to be particularly successful are listed(see box on left).

For 1,500 tasting notes on 2010 burgundies,see Purple Pages of JancisRobinson.comMore columns at www.ft.com/robinson

JancisRobinson

Wine

Five of the best . . .

Williamsburgbeer bars

The craft beer revolution is breaking outall over the US with crazily monikered,anarchic new breweries being spawned ata terrifying rate. In 2010, the BrewersAssociation recorded some 1,716 Americancraft brewers in operation, a rise from1,504 in 2008. “Craft” refers to thesesmall businesses’ size and creative spiritrather than an exact method, though theyoften use traditional ingredients.

One of the spiritual homes of the revivalis Williamsburg, a down-at-heel, intenselyethnic Brooklyn neighbourhood, where theartists have arrived but somehow thedownturn has delayed total yuppification.There is no better place to experience thisuprising than in the rough and ready bars,pubs and music venues around Bedfordand Metropolitan avenues.

BarcadeThis airy, loft-like space, with 20 beers ontap and vintage arcade games, rarely feelscrowded. Crucially, the rotating list ofmicrobrews is US-only and encompassesmany local brews on tap. The beers, with

names such as Stone Arrogant Bastard(“This is an aggressive ale. You probablywon’t like it”), boast big flavours.

388 Union Avenue, Brooklyn, NY 11211,http://barcadebrooklyn.com

The Trash BarStaking a claim as NYC’s last bastion ofpunk culture, Trash has a permanent $5beer-and-shot policy – an offer the art-punks find hard to argue with. As thename suggests, this place is down anddirty but no visit to the strip would becomplete without getting “trashed”.

256 Grand St, Williamsburg, NY 11211,http://www.thetrashbar.com

Spuyten DuyvilThis sensational bar (pictured above) hasbuilt a cult-like following around its 140-strong beer list and epic cured meat andcheese platters. Local beers such asBrooklyner Weisse from the BrooklynBrewery are on tap. A sister bar, FetteSau,is situated across the road in an old autorepair shop. Its centrepiece is a SouthernPride gas-and-wood-fired smoker capableof slow-cooking 500lb of meat at a time.

359 Metropolitan Avenue, Williamsburg, NY 11211 http://spuytenduyvilnyc.com/

Radegast Hall & BiergartenOne of the joys of Brooklyn/Williamsburgfor bar-owners is the availability of quirkyindustrial buildings perfect for conversioninto gargantuan beer halls, often with agood Biergärten. The Slovakian-bornowners of Radegast Hall convertedadjoining warehouses to create this uniquespace. It channels the Austro-HungarianEmpire with beers and food from Austria,the Czech Republic and points east. Thetheme is marginally compromised by theinclusion of some sensational German andBelgian beers but, hey, who’s complaining?

113 N. 3rd St, Williamsburg, Brooklyn, NY 11211, http://www.radegasthall.com/

The Brooklyn Brewery Every Friday night the Brooklyn Brewerythrows open its doors to the public,offering eight beers on tap and most of itsbeers in large format bottles. Under myfriend, Master Brewer Garrett Oliver, it hasbecome a global force with brilliant beers

for sale the world over.#1 Brewers Row 79 North 11th Street,Williamsburg, Brooklyn, NY 11211,http://www.brooklynbrewery.com

Charlie McVeighCharlie McVeigh is owner of the Draft House

pubs in London and co-founder, withRowley Leigh, of Le Café Anglais

Chinese puzzle Nicholas Lander examines why service in Chinese restaurants sometimes fails to match the food

A t Pearl Liang, in west London,the Chinese waiter could nothave been more friendly as hetook our order for salt and pep-per bean curd, Shanghai dump-

lings, soft shell crab, stewed pork belly andmany other dishes, before asking whichsize of glass we wanted our Pinot Noirserved in.

The service was similarly engaging atAlisan, the renowned dim sum restaurantin a modern glass building on the corner of Engineers Way, just 300m from WembleyStadium. As I can vouch from bitter experi-ence, the food can be far more exciting than the football. The dishes on offerinclude sea bass congee, yam croquetteswith scallops, pak choy buns, prawn andbean curd cheung fun and, for those whocan take the heat, diced tripe with chilli.

This style contrasted markedly withwhat we have come to accept as the normin many Chinese restaurants, and whichwe experienced the other day at the Prin-cess Garden, close to Selfridges. On walk-ing past an unmanned reception desk, ourinquiry addressed to the man behind theempty bar was met by a shrug of the shoul-ders and a tilt of the head towards therestaurant. There we stood for several min-utes as waiters tried to look through us,before announcing “15 to 20 minutes” untilthey could seat us. We decided not to putthem to the bother.

Since 1976, when I was first introduced tothe most authentic Chinese food in Taipei,

I have always had the impression thatthere are as many differing approaches toservice in Chinese restaurants as there aredim sum dishes on their menus. It is alsoalmost impossible to predict how one willbe treated. In Beijing I have been madeextremely welcome despite being the onlyEnglishman among a table of Americans – and been on the sharp end of things along-side two Mandarin speakers.

To discover why, I retraced the steps of my original Asian sortie 36 years ago toHong Kong, Shanghai and Beijing – though, this time, only by email and phone.

their counterparts anywhere else in theworld. And with the increasing number of restaurant openings, particularly at themore expensive end, he believes the issueof service is finally being addressed.

For Michael Peng, of the excellent Hunanrestaurant in Pimlico, part of the problem isthat Chinese is a far more direct languagethan English. He is constantly reminding his staff to add a thank you, and to smile ormake eye contact, to ensure directness isnever misinterpreted as rudeness.

He also says Chinese restaurateurs startwith a professional disadvantage becausethey want to hire Chinese staff, which, inturn, means that their staff must have resi-dence permits. Their only option, in manycases, is to hire overseas Chinese students,most of whom are young and inexperiencedand have no real desire to be working inrestaurants other than to pay the rent.

Peng believes that one answer lies inbringing together a mixture of eastern andwestern waiting staff. Australian restaura-teur Michelle Garnaut has put this intopractice at her restaurants – Mon the Bundin Shanghai and Capital M in Beijing – where she is assisted by Espen Harbitz, herNorwegian general manager.

The widely travelled Garnaut says wait-ing staff in China are as professional andpleasant as anywhere, and that with morehospitality schools across the region, thissituation can only continue to improve – let’s hope so in The Year of the Dragon.

[email protected] columns at www.ft.com/lander

Friendly HumphreyLee of PearlLiang inLondon;some of therestaurant’sdishes

Charlie Bibby

Paulo Pong, a wine-merchant-turned-

restaurateur in Hong Kong – with whom Ihave shared several bowls of beef noodlesat Kau Kee, Central, each well preparedand equally brusquely served – offered oneexplanation. Until recently, he said, thewaiting profession has not been highlyrespected in China, prompting Chinesewaiters, in turn, not to respect their diners.And although a service charge will beadded, it may end up with the restaurateur.

Pong says the situation is graduallyimproving because of the impact of blog-gers who, in Hong Kong and Singapore,appear to be more obsessed with food than

Recommendations

These very varied producers, listedalphabetically, all seemed to performparticularly well in 2010:

Chanson, BeauneBruno Clair, MarsannayDarviot-Perrin, MonthelieDomaine Dublère, BeauneJean Guiton, Bligny-lès-BeaunePatrick Javillier, MeursaultJessiaume, SantenayBenjamin Leroux, BeauneThibault Liger-Belair, Nuits-St-GeorgesFernand & Laurent Pillot, ChassagneMontrachet

Michele and Patrice Rion, NuitsCecile Tremblay , Morey

DetailsPearl Liang, 8 Sheldon Square, PaddingtonCentral’ London W2, www.pearlliang.co.ukAlisan, The Junction, Wembley Retail Park,www.alisan.co.ukHunan, 51 Pimlico Road, London SW1,www.hunanlondon.co.uk




Food & Drink

Roman virtues

Rowley Leigh uses the bitter stalks from a plant to make an unusual salad

I

have been asked many questionsabout my involvement with theLounge, Odeon Cinemas’ luxury

“movies with meals” project. One of the most intriguing is the notion

that I might try to theme the meals inaccordance with the films. Some might becomparatively easy: The Artist , for exam-ple, could have something French, lightand airy – quenelles, perhaps – and TheIron Lady would undoubtedly feature hali-but, as her screen incarnation seemed to belooking forward to it so much. The Girl with the Dragon Tattoo could feature asmorgasbord and, I daresay, I could comeup with something for W.E. (cold fish?)although Shame and War Horse might bemore problematic. The one completeshoo-in would be a puntarella salad withCoriolanus.

I simply did not get puntarella when Ifirst discovered it some 20 years ago. Icame by a box of the strange but beautifulplants. I tore off a stem and ate it raw andspat it out in a mouth-puckering state of disbelief. Untamed, it is about as bitter as achicory can get. It needs a bit of handling.The outside leaves should be torn away,washed and boiled briefly before being dressed with olive oil and lemon andserved with roast meat, like the cicoria towhich it is closely related. It is the stalksin the middle that are addressed as salad.

At markets such as the Campo dei Fioriin Rome, you will find plastic bags of puntarella that have been cut and washedfor you, alongside other prepared salads,trimmed baby artichokes and topped andtailed fagiolini verdi (if they are in season).Should you be lucky enough to find puntar-ella elsewhere, you will have to prepare it

yourself, but this is not a burdensome task.The important part of the preparation isthe soaking of the salad in cold water for a

couple of hours, which has the merit of making the shoots even crisper while draw-ing out much of the bitterness.

The traditional dressing for puntarella – rarely strayed from in Rome, in my experi-ence – is a robust mixture of choppedanchovies, white wine vinegar and oliveoil. It is an aggressive mix but one that Ifind addictive. That combination of bitter-ness, salt and sour is typically Roman andone can imagine it being chomped by abunch of centurions 2,000 years ago as eas-ily as in a restaurant in the Trasteveretoday. Coriolanus would have regarded itas a little dainty perhaps but enjoyed itnevertheless.

I was going to commend this traditionalfare to you – well I still do – but gotdistracted when we took the pictures. I hadthe puntarella and I also happened to havea few Seville oranges looking for a home. Idebated whether to partner them with thepuntarella. The question was whether theoranges were just bitter like the salad, thuscompounding the felony, or sour like thevinegar, complementing the salad. In theend, we made both the traditional saladand the version below.

There is a simple test on these occasions:which one did the extraordinarily greedy(and skinny) photographer eat and finish?He concluded that whereas the zest of theorange is, indeed, bitter, the juice is sour.

Rowley Leigh is the chef at Le Café Anglais in [email protected] columns at www.ft.com/leigh

RECIPE

Puntarella salad with anchovies and orangesPuntarella is in the height ofseason now but is, I willhave to concede, not easilyfound. Substitutions can andmight have to be made.

The salad will work wellwith curly endive, radicchioor witloof endive, theflavours being similar iflacking puntarella’s special

crunch. A head ofpuntarella should serve sixas a starter.

Ingredients1 head of puntarella10 salted anchovy fillets2 Seville oranges4 tbs strong olive oilFreshly milled black pepper

Method● Discard the leaves fromthe outside and top of the

puntarella and separate thestalk clusters, breaking themoff or cutting them from the

base. Cut these in half andthen slice them into thinstrands. Rinse them carefullyin cold water and then soakin a large basin of very coldwater for at least an hour,preferably two. Drain andthen dry the stalks in asalad spinner.● Chop the anchovies quite

coarsely and mix them in abowl with the grated zest ofone of the oranges and the

juice of both. Add the oliveoil and a good milling ofblack pepper and then turnthe puntarella verythoroughly in this mixture.Serve with plain countrybread, either as a starter oras a side salad to a piece ofgrilled fish or some grilledlamb chops.

For a slideshow of this recipe, go to www.ft.com/leigh

FT foodies

TomAikens

Chef Tom Aikens worked for PierreKoffmann at LaTante Claire before

becoming head chefat Pied à Terre. Heopened Tom Aikensin Chelsea in 2003and also runs twobranches of Tom’sKitchen in London.

What’s your earliest memory of cookingat home?From the age of five or six, my twinbrother Rob and I helped Mum to makecookies or biscuits; the raw cake mixturewas one of my eternal delights. By theage of 12 we were cooking whole mealsfor our parents.

What was your big break?Getting into catering college at 16. Roband I were in the same year, and threemonths in one of the teachers who didn’tparticularly like me came up and said,“The only reason you’re on this course isbecause you’re a twin – we didn’t want tosplit you up, so watch what you’re doing.”That was a little bit nasty. In my head Isaid, “I’m going to make something of

myself.” I gave myself 10 years, and by 26I was head chef at Pied à Terre.

Who is the most difficult person you’vecooked for?When I opened Tom Aikens, PierreKoffmann came in – it was nerve-wrackingto be cooking for my former head chef.He was very proud.

Who would work in your dreamkitchen?I’d have Pierre Koffmann and JoëlRobuchon as my sous chefs, then some ofthe friends I have worked with – TomKitchin, Anthony Demetre, Eric Chavot –as my chefs de parties. Pastry chef wouldbe Nico Ladenis. Potwashers: Tony Blairand Gordon Brown.

What do you cook for a weekend lunchat home?I love doing roast chicken, stuffed withquartered, squashed lemons, thyme androsemary. I squeeze lemon juice over theskin and coarse sea salt; then roast for 45minutes and rest for another 15. I serve itwith wilted spinach with a little garlic, and

mashed potato.

www.tomaikens.co.ukInterview by Natalie Whittle




Travel

No 14: romantichideaways for twoAlastair Sawday isfounder of Sawday’s, apublishing house that hasproduced 24 guidebooks

specialising in characterfulplaces to stay, includinghotels, country inns,cottages and campsites.Here, as Valentine’s dayapproaches, he picks fiveromantic British bolt-holesfor two. Prices are givenper week but short breaksare also available.

Long Barrow Windmill,North Whilborough, DevonThe views from thisbeautiful white windmilltower stretch 20 milesacross the glorious SouthHams to Dartmoor. Thetower stands in its ownfive-acre field and has fourfloors, linked by a slenderhandmade staircase. The

bedroom is on the firstfloor, the bathroom on thesecond, and the top floor isa living room with wraparound windows. It hasbeen a labour of love forowner Vince Hallam, whorestored it from a 200-year-old ruin. Supremelyromantic on a stormywinter’s night and equallyas lovely on a crisp sunnyday, this comfortable yetquirky resting place offersperfect peace in the Devoncountryside. Details: NorthWhilborough is about four miles south of Newton

Abbot; from £400 per week;www.devonwindmills.co.uk

The Studio, Allt Dinas,Conwy This snugSnowdonian retreat wasonce home to Victorianartists inspired by themagnificence of the setting.It’s all about the walkinghere, whether it’s a serioushike up Snowdon, ascramble on Tryfan, or aleisurely amble to the picnicbench with views along the

Lledr Valley. After a daystretching your legs, cookup a romantic meal in thecosy kitchen and stretchout in front of the fire. Thebedroom is on a mezzanineabove, the result of theentire building beingconstructed around a vastboulder. Details: Allt Dinasis just outside Betws-y-Coed, on the edge of theSnowdonia National Park;from £320 per week; www.

snowdoniaaccommodation.co.uk

Ivy Cottage, Brinsop,Herefordshire Hidden awayon an ancient estate, thisremote bolt-hole is small andsweet. Outside its timberframes suggest medievalroots; in fact it’s a mere 300

years old. The interiors aredefinitely 21st-century,though; downstairs, a coollittle kitchen flows into asitting room with a wood-burner. Venture out on theterrace and there’s a hot-tubto splash around in and afire pit to warm up next to.Details: Brinsop is sevenmiles north-west of Hereford;from £675 per week;www.brinsopcourt.com/ivy/ index.aspx

The Old Nail Shed, Sawdon,Yorkshire The name maynot inspire romance but thisconverted stone tool shed,once part of a blacksmith’sforge, might. It’s beenbeautifully revamped and isnow sleek in wood and steel,with floor-to-ceiling windowsthat give views of the sunsetover the hills. It’s asophisticated space, thecomfy side of minimalist, andthe freestanding bath understarry spotlights is meant forsharing. If you can drag

yourself out you’ve gotScarborough’s seaside close

and the whole North YorkMoors National Park on yourdoorstep – plus a terrificpub. Details: Sawdon is about

10 miles west of Scarborough; from £450 per week; www.theanvilinnsawdon.co.uk/oldnailshed.html

North Barn, Cornworthy,Devon What could be moreromantic than waking to thesound of the river lappingbelow your window? This isone of my favourite places inBritain and a perfect place todawdle with your beloved.One wall is almost entirelyglass, so the open-plan

converted barn is bathed inlight. Paint, sketch, read,walk or lie in bed all day andgaze at the River Dart andits bobbing boats and wadingbirds. At low tide you canpick your way along theforeshore to the restaurantat Tuckenhay. Details:Cornworthy is about six milesfrom Totnes; from £450 per week; no website, tel: +44(0)1803 722384

For more on Sawday’s, seewww.sawdays.co.uk

The expert selection

Serenity North Barn,Devon

My learn-to-dive course starts

with a bold declaration. Youc an have, so the Profes-sional Association of Diving Instructors (Padi) manual

suggests, “more wildlife experiences in 10minutes on a coral reef than in 10 hours ina forest”. Batting a mozzie away from myankles, I cast a look around. I’m in a make-shift classroom in a land where the forestis particularly rampant, alongside a seawhich contains a higher density of marinespecies than anywhere in the world; inshort, I couldn’t be better positioned to putthat declaration to the test. Provided I canwrap my brain cells around O-rings andhow to measure nitrogen in minutes.

I’m in Papua New Guinea, which youmight consider an unlikely place to learnto dive. But I’m not yet sure whether I’m anatural-born diver, so I’m very happy to bein a location which is as extraordinary onthe land as it is under the sea.

It is clear as soon as you step off theaircraft at Port Moresby that Papua NewGuinea is a great place to avoid discussionson the eurozone. Ninety per cent of theland is covered in forest, sparsely inhabitedby far-flung tribes who between themspeak 800 languages – but only cobbletogether a dozen significant roads. Giventhis scarcity of Tarmac, I begin my tripwith another flight, up to a forest-linedairstrip in the highlands.

This is Mount Hagen, where my touroperator, Dive in Style, has organised acouple of days in the Wahgi Valley, 1,700mabove sea level, so I can get a feel for thepeople and the culture before heading forthe coast. First impressions are of a tropi-cal Switzerland, an exhilarating landscapethat swoops from one cloud-trailing moun-tain ridge to the next in billows of glossyrainforest. In places the undergrowth hasbeen pushed back to make way for grasshuts in clearings surrounded by carefully

tended vegetable gardens. This highlandcommunity was discovered by outsidersonly in the 1930s, when Australian gold-prospectors arrived, and the drive from theairstrip to the lodge at Rondon Ridge is upa rough track past one mission stationafter another. These days the missionariesspread their message with a radio station:Bible FM, “Hooked on the Book”.

Apart from special occasions, nose-bonesand traditional costumes have largely beenreplaced by mobile phones and shorts, buttribal allegiance still holds sway and I get tosee it in action on expeditions out fromRondon Ridge, a well-appointed lodgeperched in pioneer territory between subsist-ence settlements and cloud-wrapped forest.

Visiting a nearby village, we stumbleacross the beginnings of a compensationceremony, where both money and pigs arebeing handed over to pay for a road acci-dent in which three members of anothertribe were killed. Anywhere else it would

involve police and courts but here it issettled with a pig/cash combination thattogether totals about £30,000 per life, whilethe driver walks free.

The next day I go up into the forest inthe company of Joseph Tano, who onceguided David Attenborough during themaking of his programme on Papua NewGuinea’s bizarre birds of paradise. Theseare the birds whose extravagant plumageand bouncing, bopping mating displayshave made them stars on YouTube, but itseems they don’t perform on cue.

Climbing through dank corridors of giantpandanus, through trees that get taller andmore p rimev al as we get higher , weglimpse the king of Saxony bird, and thebrown sicklebill rails at us with a call likea machinegun, but without long lenses andweeks of patience these birds are littlemore than canopy-grazing silhouettes. Theundersea, I hope, will be more productive,as I relocate from highlands to islands.

My dive resort, Walindi, is 10 milesnorth of Kimbe on the shor es of NewBritain, an island with a gently smoking volcanic spine flanked with forest andfringed by orderly rows of palm oil planta-tions. The coastal people turn out to beslenderer and lighter-skinned than theirhighland cousins, while the fertility of their soil is redoubled thanks to the vol-canic ash which has also blackened theirbeaches. Here the vegetation is on ster-oids, the path from my rosewood-builtbungalow to the resort’s main building leads through a riot of hibiscus and helico-nia, and casuarina trees which are doubletheir normal size.

Walindi was created by an Australiancalled Max Benjamin, who bought a cocoa

Treasured island Known for its rainforests and remote tribes, Papua New Guinea is also winning a reputation

as one of the world’s best places to learn to dive. By Andrew Eames

plantation here back in 1969, only to realisethat there was a far more compelling worldunder the water just offshore. The giantwarm-water (never lower than 28C) bay isfull of islands and shallow coral reefs, so itis a paradise for divers, particularly as it isat the heart of the “coral triangle” (withIndonesia and the Philippines), the mostdiverse undersea region in the world.

But to get to see it I must first pass myOpen Water course, which is why I’m sit-ting in a makeshift classroom trying to getmy head around the correct speed of ascentto prevent my lungs from tearing like apaper bag. Fortunately, Dan Johnson ishere to help me sort it all out.

It is one of life’s peculiarities that I havecrossed the globe to one of its remotestcorners to be taught to dive by a lankyex-roofer from Essex. Happily, Johnson isfull of crackling good humour, and knowsevery inch of the science of diving, itsphysiology, and ultimately – when we get

down there – its marine biology.For three days classroom sessions are

followed by putting routines into practicein the shallow water just by the dive jetty.And then in the evenings I join the rest of the guests at what is in effec t a giantdinner party, preluded by drinks at the bar.

The r esor t, it seems, is not just fordivers. There are international travellershere, come to chill by the sea after culturalimmersion in the highlands. But there arealso real dive experts, including peoplewho have written books on the subject,making reassuring noises that I’ve come tothe right place.

After a couple of days Johnson declareshimself pleased with progress and I knowwhy: if I was learning in a cold municipalswimming pool back in London, there’d belittle incentive. But every time we get inthe water there are glimpses of diamond

jacks, and a barracuda hanging in theshadows, as a foretaste of what is to come.My mind performs surprisingly well,despite me being well on the wrong side of 50, and I manage a decent score in the final

exam. Then I’m out there, mastering a partof the planet I’d never really consideredwould ever be available to me.

My initial feeling on the boat out toRestorf island, one of Kimbe Bay’s 25 divesites, is just how big the bay is, and howunpopulated. The resort is the only sub-stantial building visible on what must be30 miles of shore.

Under the water at Restorf, though, it isheaving with activity. There’s a garden of garden eels, periscopes up and waving, asgiant sea cucumbers vacuum the seabedaround them. That’s followed by tables of pink coral and giant purple sea fans, withlurking gloomy-looking rock cod. Rocks of boulder coral are dotted with Christmastree worms, looking just like the colourfultrees you get on a Christmas cake – exceptthese ones disappear into the cake whenyou touch them.

There are clouds of yellow fusiliers, sur-geonfish with kite-shaped tails, tiger-

coloured giant clams, and sprawling spa-ghetti worms, looking like animated string.And there are clownfish galore, defending their pink-fingered anemones in true Nemostyle. It’s a whole new world – and, unlikemy recent experience with the birds of par-adise, it’s up close and it doesn’t run away.

Initially I feel incompetent, down among it all, a bit like a satellite firing the wrong boosters and struggling to stay on course.But gradually, as dive succeeds dive and Imeet a couple of small sharks and avoidthe lunges of grumpy triggerfish, I learnhow to attain neutral buoyancy, to changeheight just by breathing, and to hover, anartist in a floating world, soaking up allthe colours and shapes around me. I beginto belong.

So yes, is the answer – although by now Iknow you’ve forgotten the question. I’vedone the research and I think the Padimanual is right: you can have more wild-life experiences in 10 minutes on a coralreef than in 10 hours in a forest.

My main problem now, as a newly quali-fied diver, is what to do next. It seems that,with my PNG experience, I’ve alreadypeaked, and yet I’ve only just begun.

Panoply A diverhovers abovea sea fan inKimbe BayAlamy

Ivy Cottage, Herefordshire

The Old Nail Shed, Yorkshire

PAPUA

NEW

GUINEA

Wewak

Port Moresby

Kimbe

BismarkSea

New BritainIsland

MountHagen

AUSTRALIA

INDONESIA

200 km

P ap ua n t ri be sm en A b un ga lo w a t W al in di

Details

Andrew Eames was a guest of Dive in Style(www.diveinstyle.com). A 14-night trip takingin highlands and the coast costs from£4,100, including full-board accommodation,tours and transfers and domestic flights (or£5,300 including flights from London). Apackage of six dives at Walindi costs anadditional £260.

MORE MARINE HOTSPOTS

Tim Ecott’s pick of outstanding diving destinationsTubbataha Reefs, south of thePhilippines’ island of Palawan in theSulu Sea, is remote and onlyreachable by live-aboard dive boat.Famous for its deep walls, mantaray encounters and brilliantlycoloured soft corals, this is

adventurous diving within a 13,000hectare marine park. Two reefssurrounded by deep water are hometo large numbers of pelagic speciesincluding sharks and several typesof whale.Best time to go: March to Junewww.divequest.co.uk

Wakatobi resort in the Tukan Besiislands at the southeastern tip ofSulawesi in Indonesia is about asgood as it gets. Collaboration withlocal communities over many yearshas led to a successful programmethat conserves local reefs – home

to more than 3,000 fish species –which are easily accessible from asuperb small resort.Best time to go: April to Decemberwww.wakatobi.com

Guadalupe Island in the MexicanPacific is the best place in the world

to see great white sharks. Suspendedin a cage above the blue abyss youget very close to a visiting populationof whites that seem to be lessaggressive than those around SouthAfrica – and in better visibility.Sharks up to six metres long pass

within a few inches – making thesedives unbeatable for photographers.Best time to go: August to Octoberwww.nautilusexplorer.com

Fundu Lagoon on the Tanzanianisland of Pemba is a piece ofblue-water heaven. It’s got shallow

reefs, frolicking dolphins and aluxury lodge tucked into the tree linefrom where you watch dhowssilhouetted against the sinking sun.The diving isn’t too challenging buttaking the boat through thechannels between the islands makes

it seem as if you are exploring agenuine frontier.Best time to go: June to Decemberwww.fundulagoon.com

Tim Ecott is the author of ‘NeutralBuoyancy: Adventures in a LiquidWorld’ (Penguin £9.99)

The Studio, Conwy

Long Barrow Windmill, Devon




Pork on the wild side In southern Spain, Paul Richardson joins a gastronomic tour devoted to the celebrated ibérico ham, visiting

restaurants and producers and getting a rare chance to witness a traditional pig-slaughtering fiesta

The journey begins with a big white plate, overlain with slicesof ham so thin they are almosttranslucent, their dark scarletstreaked a nd marbled with

ivory. The first sight and taste of a top-quality acorn-fed ibérico h am a re n otthings to be readily forgotten. What sets itapart from rivals is the subtlety of its bal-ance of salt and fruity sweetness, the melt-ing tenderness of the meat and its rever-berant aftertaste, plus an extra something,an intense umami savouriness.

I am in a bar in a town in Extremadura,about as far as you can get off the touristtrail. My guide is Miguel Ullibarri of ATaste of Spain, a travel company specialis-ing in bespoke tours of Spanish gastro-nomic destinations. Ullibarri says interestin Spanish food-travel is moving out of itstraditional bastions in Barcelona, Madridand San Sebastián and into the rich hunt-ing-grounds of Andalucía, following

“routes” through the worlds of olive oil,wine, and, now, ham.

Ullibarri has just ordered a ración of three-year-old ibérico and two big glasses of red wine, and is giving me the lowdown onthe high points of our three-day tour. Wehave started in Zafra, a country town witha strong flavour of the Spanish south in itswhitewashed houses, columned galleries,and cobbled squares planted with palmtrees. From here we will plunge into thewide uncluttered landscapes of southernExtremadura as it shades into northernAndalucía, taking in ham-themed townssuch as Jerez de los Caballeros and Frege-nal de la Sierra. Then we’ll be heading south towards the undisputed capital of ibérico ham – the mountains of Aracena, anhour outside Seville. Here Ullibarri hasarranged visits to ham curing sheds andham museums, trips to specialist restau-rants and tapas bars, and something veryspecial to wind up the trip: a traditionalmatanza, the Spanish domestic pig slaugh-ter, on a family farm in the heart of thedehesa. Roughly translating as pasture-land, the dehesa is a sprawling area of

forest that covers more than 3m hectares of western Spain and eastern Portugal. It is acomplex,, partly man-made ecosystemwhose twin pillars are the holm oak andthe ibérico pig, principal consumer of theoak’s highly nutritious acorns.

We leave Zafra on the EX-101 towardsPortugal, a back road winding throughdeep dehesa criss-crossed with dry stonewalls, the rolling hills occasionally crownedby a story-book castle or the white splashof a village. Outside Burguillos I have myfirst sight of gangs of pigs rootling among

the oaks at the side of the road. They arecharcoal grey, surprisingly hairless, withfloppy ears and a fineness of leg that con-trasts with their rotund bellies. In spring and summer, the pigs are fed sparingly onmaize and wheat but when the acorns fallin late autumn, the animals are let looseinto the dehesa to embark on a pig-out of massive proportions known as the mon-tanera. They gorge on up to 10kg of acornsa day and acquire as much as 50 per cent of their final body weight during the last twoor three months of their happy lives.

Augusto Lahore, of ham producers Lazoin the village of Cortegana, at 700m abovesea level in the Sierra de Aracena, takes upthe story as we walk the fragrant corridorsof a factory where thousands of fine

jamones ibéricos hang on ropes in the moun-tain air. The pigs are slaughtered from Jan-uary until the season winds up with theonset of spring. The fresh hams are firstsalted, removed to a drying loft where they

are encouraged to “sweat” in the brief sierra summer, then taken down to thedark bodega for a long, slow cure lasting atleast two years. Speckled with naturalmoulds, the hams have the look of lichen-encrusted rocks, or the trunks of those oaksin the dehesa from which they came. Wemeet Esteban, an employee in green over-alls, who delicately carves a ham for one of Lazo’s pre-sliced vacuum-packs. Estebanoffers me a slice as a luxurious mid-morn-ing snack, pointing out the spots of whitewithin the grain of the ham: crystallisedconcentrations of oleic acid and an unfaka-ble sign of the genuine acorn-fed article.

Fifteen years ago, such hams were littleknown outside Spain. As the product hascome to be appreciated worldwide as a lux-ury on a level with foie gras and caviar, sothe interest in its background has grown.A Taste of Spain’s ibérico tour aims tofurnish visitors with an insight both into

the workings of the dehesa and the artisanprocess behind its most prestigious prod-uct: from pig, as it were, to plate.

The company tailors tours to the client’sneeds, tastes, and gastro-expertise. Interms of lodging it can call on the pick of the local bunch. Rocamador, a former con-vent on a hill like an island in an ocean of dehesa, is o ne o f Extrema du ra ’s mostfamous luxury hotels, and Convento de laParra is a pioneer of monastic chic, whilethe Conde de la Corte in Zafra is one of theprettiest town-house hotels in Spain. High-er-end options on the Andalucían leg of thetrip might include Finca Buenvino outsideAracena, where for many years Sam andJeannie Chesterton have offered the best inSpanish and English rural comforts. Forthose wanting to roll up their sleeves andget right into the dehesa action, A Taste of Spain recommends farmhouse stays atplaces such as Finca Montefrío, an 82hafarm run by Armando Escaño and Lola

López that is one of Spain’s few producersof organic jamón ibérico.

As we roll up at Montefrío, López is busywith a batch of lard, filling bottles with apale gold liquid that will soon turn pearlywhite in the chilly air. Lunch, prepared byEscaño, will be pork sirloin, kidneys and

panceta from the family’s own pigs, grilledover holm-oak coals in the open air. Freshcuts of ibérico meat have increasinglybecome a staple of Spanish restaurantmenus and it’s not hard to see why. It hasa density of flavour that compares withbeef or lamb, at several removes from theblandness of commercial “white” pork.

Early next morning, Armando takes usout into the dehesa. The first sunlightbrings up the brilliant green of winter pas-ture and reveals a carpet of fresh-fallenacorns. Luis, the farm hand, calls the herdover and the pigs trot heavily into view,crunching on acorns as they come, the suncatching the steam rising from their dungrey bodies. The silence is broken only bybirdsong and the quietly snuffling animals.Luis tells me his charges feed on whateverthe dehesa provides and they can find –

grass, insects, roots, even snakes – but arefondest of bellotas (acorns). They are con-noisseurs, he says, of the trees with thesweetest acorns, spitting out the shells dis-creetly from the sides of their mouths.

Pig-keeping and pork cookery occupy adeep seam of Spanish culture and lore, andnowhere is this heritage more impressivelydisplayed than in the ritual of the matanza.Time was when the annual winter pork-festformed a cornerstone of Spanish countrylife. Even 20 years ago every family inAracena kept a pig and held matanzas in

the village streets. The custom is now rarerthan ever but farming families such asArmando’s have continued to observe ityear in, year out. That afternoon they weredispatching two ibérico pigs on Armando’sbrother’s farm outside Cortegana, and Iwas to be a guest at an atavistic fiesta thatrarely welcomes onlookers unless their cre-dentials have been previously approved.

The family convene at a stone shackamid the dehesa, gathering nervouslyaround the door with ropes, hooks, and asolid table at the ready. When the pig-killerarrives, I recognise Esteban from the hamfactory, for whose skill with a big knife Icould happily vouch.

The matanza is a universe of traditionalwisdom that the outsider can only lookupon, admire, and marvel at its persistencein the 21st century. Its central act is bloody,but mercifully brief, and carried out in anatmosphere of respectful efficiency backedup by centuries of tradition. I watch in awe

as the animals become corpses and begintheir long day’s journey into edibility.Impressions catch on my senses like burrson a sweater: the acrid smell of burning hair, the amazing architecture of a pig’sinterior, the sight of intestines trailing inlong pink skeins, to be washed by thewomen (and it is always the women) in thestream at the bottom of the valley.

There is plenty of hard work to do, thelight is fading, and a freezing mist is swirl-ing around the holm oaks. But the grislyfirst phase of the matanza soon gives wayto the first waves of food and drink: shotglasses of firewater to keep out the cold,plates of green olives, and rashers of pan-ceta crisped over the fire. Then Armando’sbrother brings out one he made earlier: aham from another matanza that has beenhanging in his cellar for the past threeyears. My Spanish pork safari ends as itbegan, with a generous serving of a deli-cacy as unique and irreplaceable as thelandscape that engendered it: acorn-fed,long-cured jamón ibérico, sliced to perfec-tion on a big white plate.

Paul Richardson is author of ‘A Late Dinner: Discovering the Food of Spain’ (Bloomsbury)

GrazingClockwise from top:pigs in search of acorns at

Finca Montefrío, a farm closeto Cortegana, which producesorganic ‘jamón ibérico’; a hamfactory in Aracena; villagerstaking part in the traditionalSpanish ‘matanza’ Bruno Rascão

Travel

SPAIN

Zafra

SevilleHuelva

Fregenalde laSierra

Cortegana Aracena

Jerezde losCaballeros

PORTUGAL

50 km

Details

Paul Richardson was a guest of A Taste ofSpain (www.atasteofspain.com). Its four-daytrip, “Iberico Ham – the secret unveiled”,costs €2,160 per person for a group of two,falling to €1,550 per person for four

ON FT.COM

For a slideshow of picturesfrom the matanza see www.ft.com/travel




ARTS& BOOKS

It is a journey that has changed thelives of many of the millions whohave completed it. Yet the Hajj, thepilgrimage to Mecca that is one of thefive pillars of the Islamic faith, has

been relatively little studied and understoodin the west. It is not for lack of curiosity. Inthe early 16th century Italian aristocratLudovico Varthema became one of the firstEuropean non-Muslims to enter the holysite, “longing for novelty as a thirsty manlongs for fresh water”. He found his novelty– he managed to observe unicorns strolling around the site – but also punctured a mythor two: the tomb of the Prophet Moham-med, he noted a little disappointingly, wasnot suspended in the air as dictated bymedieval European legend (indeed, it was inanother city entirely: Medina).

The British Museum’s new exhibition onthe Hajj is the most complete such enter-prise yet undertaken. In a story thatstretches from ancient beginnings to moder-nity, many of the rituals are unchanging,even if the infrastructure surrounding thetrip has transformed dramatically. Whatwas once a perilous voyage with seriousrisk of illness or loss of life is today admin-istered by specialist travel agents who offerpackages with visas and vaccinationsincluded. It is just as well: annual visitorsare estimated to top the 3m mark in thenext few years. It is a testament both to theenduring hold of the Islamic faith and tothe ability of this remarkable event toadapt with the times.

The show has demanded new presenta-tion skills of the museum. Whereas theobjects from its collections normally tellthe story with sufficient eloquence, there ismore to say here. “We have tried to evokethe feeling of being there,” says VenetiaPorter, the exhibition’s curator. As youenter the corridor to go into the show, youare “accompanied” by photographs of pil-

grims and recordings of incantations.“They are saying, ‘I am here,’” says Porter.The aim is to create, or at least hint at, theecstatic relief of a spiritual journey ended.

There are three strands to the display:one on the routes of the journeys them-selves, another on the rituals of the Hajjtoday, and a survey of Mecca. There arealso contemporary art pieces sprinkledaround the show. Ahmed Mater, born andliving in Saudi Arabia, uses magnets andiron filings to illustrate the allure of theHajj in contemporary life. “This is not justsomething that happened back then, outthere,” says Porter. “The past is intrinsi-cally bound up with the now.”

The historical section of the show is atale of progress forged by continuing devo-tion (and serves as a corrective to the west-ern assumption that modernity and secu-larism go hand in hand). There are fabu-lous accounts of the journey that are, if

Pilgrims’ progressThe British Museum’s ambitious new exhibition about the Hajj or pilgrimage to Mecca shows that

modernity and secularism do not always go hand in hand. By Peter Aspden

nothing else, important documents of soci-ology. The pilgrims of the 19th century, forexample, were the first to notice the dispar-ity between their modest surrounds andthe wealth, and growing imperial ambi-tions, of western powers.

In 1885, the Persian Shia pilgrim MirzaMohammad Hosayn Farahani embarked ona Hajj that took in Tehran, the Caspianshore, Istanbul, Alexandria, Suez andJedda. He had first-hand experience, andwrote vividly, of the haughtiness of thenon-Muslim world. The middle and lower[classes] of Russia were “impolite, wicked,

devious, coarse, rude, unjust”, while theBritish, although lacking in understanding of “friendship and camaraderie”, acted“justly and humanely, and have a mild-ness, dignity and orderliness”.

Mecca was a temptation to be dangled infront of European adventurers thirsty foraction. If they commenced their journeyswith scepticism, most were impressed bythe extraordinary sights that awaited them.In 1853 the explorer Richard Francis Bur-ton, disguised as an Afghan doctor, wrote arelatively workmanlike account of his Hajjuntil he witnessed its climax in Mecca. “Itwas as if the poetical legends of the Arabspoke the truth, and that the waving wingsof angels, not the sweet breeze of morning,were agitating and swelling the black cov-ering of the shrine,” he wrote.

It wasn’t long before the Europeans tookcontrol of what was becoming a danger-ously over-wrought phenomenon. Thegrowth of mass transport resulted in seri-ous overcrowding and the spread of epi-demic diseases. In 1865 15,000 out of 90,000pilgrims died after an outbreak of cholerathat went on to spread as far as New York.At the end of the 19th century ThomasCook was appointed the official travel

agent for the Hajj by the Indian govern-ment. The agent’s son, John Mason Cook,was mindful of the burden the companyhad taken on. “I know this business issurrounded with more difficulties and prej-

udices than anything I have hithertoundertaken,” he wrote.

Pilgrim numbers continued, and still con-tinue, to rise. By the 1970s it was taking nine hours on the motorway to travel the14km from Mecca to Arafat. Finally a quotasystem was introduced in 1988. The sense of bustle is evoked in the show with a contem-porary piece, “Ro ad to Makka h”, byanother Saudi artist, Abdulnasser Gharem,which recreates a motorway sign on theway to Mecca that filters non-Muslims intoa diversion off the main road.

If the actual journeys to Mecca havebecome modernised and more effi-cient, there is a timelessness to thearts and the rituals that characterisethe Hajj. Tiles, textiles and scrolls of the highest quality continue to be cre-ated, particularly in the adornmentof the Ka’ba, the cube-like edificeconstructed, according to theKoran, by Abraham and his sonIshmael, and the most sacredsite in Islam. One magnificentlyembroidered curtain from themid-19th century comes from thecollection of Nasser David Khalili,the London-based collector with

the world’s largest private collection of Islamic art, who has loaned 45 works to theshow. Khalili, an Iranian-born Jew, salutesthe exhibition for its ground-breaking nature. “It will open the eyes of a lot of people,” he says. “For the first time in 1,400

years we have something that can givepeople a visual contact with this religiousand spiritual journey. The people who pro-duced these objects have not only left usthis legacy but they have contributed totheir own faith and their beliefs. That issomething really powerful.”

He believes that the Hajj show willencourage a more sophisticated under-standing of the Islamic faith and encouragereligious tolerance. “This exhibition showsthat if you are faithful to the religion youare born with, it allows you to exploreother religions. If you respect your ownfaith, you respect other people’s faith.

“Religion and politics have their own lan-guages. But art is universal. And that uni-versality is something we can use today tohelp us through difficulties. The languageof culture is neutral and that is what weneed now.”

The Hajj exhibition also marks some-thing of an end of a journey for the BritishMuseum itself. It is the final part of a seriesexamining religious faith, following showson ancient Egypt’s “Book of the Dead”, andTreasures of Heaven, examining the role of

saints and relics in medieval Europe.Those, in turn, followed the museum’sgreat four-part study of empires, featuring the lives and art of Hadrian, Shah Abbas I,Qin Shihuangdi and Moctezuma II.

The central questions behind those twoseries of exhibitions – how objects helpsustain political power and religious belief respectively – have been foremost inthe mind of the museum’s director, NeilMacGregor, since he took over the job adecade ago. They have infused the museumwith a sense of mission it had previously

lacked. As the Hajj show reminds us,all of humanity’s most pressing ques-tions, religious, intellectual or other-

wise, involve a journey that can bepainful and apparently never ending.And the journey’s end, as history

teaches us, is a whole new starting-point in itself.

‘Hajj: Journey to the Heart of Islam’, British Museum, London,until April 15 www.britishmuseum.org

Peter Aspden reviews Geoff Dyer on Tarkovsky in Books

ART IN SAUDI ARABIA

Contemporary show with a sharp edgeWe Need to Talk is the title ofthe first big public exhibition ofcontemporary art to be held inSaudi Arabia. What is strikingabout the works by 21 artists,including nine women, is theiroutspokenness.

In one piece, 21-year-old SarahAbu Abdullah challenges thecountry’s ban on women driving.She filmed herself painting a carshe found crashed on the sideof a road. After a longbrushwork session sweltering inthe sun, dressed in the black

abaya all Saudi women mustwear, she sits slumped anddefeated in the passenger seat.“This wishful gesture was the

only way I could get myself acar,” she says.

Another piece, by Manal Al-Dowayan, confronts the problemof women not being allowed tosay their own name in public.“You have to say you are themother of your eldest son or the

wife of someone,” she says. “Itis taboo to mention a girl’sname or even your wife’sname.” The artist, who has1,300 followers on Twitter, heldworkshops across the kingdomgathering together women toshout their names and to writethem on to prayer beads thatshe has exhibited in the show.

Also on display is work byMaha Malluh featuring the tapesissued by religious radicals inthe 1980s with such titles as“Women are the Killers” and“Men Don’t Like Women”. “Awhole generation has beenbrainwashed by these tapes,”says Malluh.

This pioneering show was puttogether by Edge of Arabia, anindependent arts initiativefunded by the Jameel familyand sponsored by Christie’s, theauction house. Edge was startedby Saudi artists AbdulnasserGharem and Ahmed Mater, in

conjunction with English curatorStephen Stapleton. “This is ahuge step,” says Gharem, whois also a lieutenant colonel inthe army. “People saypoliticians make change butnow artists, musicians, citizen

journalists give their opinions,tell of their humanity.”

One of his most powerfulworks in this show is a road

map made of rubber stampsquestioning the future directionof the country. Called “ExitOnly”, it shows one routeheading east, leading to thesymbol of a plane and a citycentre, suggesting moreatrocities, while the other,towards the west, is scored with“Islamophobia”. “The point ofthis exhibition is to create adialogue to iron out differencesand make it easier to live witheach other,” says Gharem.

Mater is a family doctor aswell as an artist. His work “TheCowboy Code” is inspired by anantipathy towards George WBush and made out of 10,000

caps from a toy gun. He agreeswith Gharem that change isessential, “otherwise there isgoing to be a bomb”, he says.

www.edgeofarabia.com

Catherine MilnerChallenging Manal Al-Dowayan’s‘My Name’ installation

Spectacle From top: pilgrimsat the Grand Mosque inMecca; ‘Magnetism’ (2011),a photogravure etching byAhmed Mater; a 17th-centuryTurkish tile depicting thesanctuary; a 19th-centuryChinese porcelain bottlecontaining holy waterfrom Mecca Reuters

European adventurers begantheir journeys with scepticismbut most were impressed

by the extraordinary sights




Arts

Turner, in his elementThe painter’s work takes on an added resonance at the Margate gallery that bears his name, writes Jackie Wullschlager

Half the shops along the freshlyp ai nt ed p ro me na de a re

boarded up; of those in busi-ness – a Wimpy Bar, a candy-pink ice-cream parlour, a joke

shop (“Open Every Day. This is Not aJoke”) – all are shut except Primark, aconcrete interloper in the Georgian/Victo-rian façade, and the Dreamland amusementarcade. From here, through a film of steadyrain, you survey a stormy sea and, at oncesolid-looking yet ethereal beneath swirling grey clouds, the glass-fronted white shedsof Turner Contemporary.

This is Margate in January, nine monthsafter the opening of David Chipperfield’s£17m museum on the exact site of MrsBooth’s boarding house, where JMW Turnerpainted during visits over many years tohis landlady/lover.

Will Turner look different in Margate? IsMargate transformed by Turner? The firstseason of exhibitions here was feeble. Buttoday sees the opening of Turner and the

Elements, a display of some 80 watercoloursand a dozen oil paintings, and it is per-fectly pitched – offering both enjoyable,high-end cultural tourism and a vibrantlyrelevant local show.

Turner told Ruskin that “the skies overThanet are the loveliest in all Europe”, andhis great lifelong theme, the movement of light on water, can find no more resonantsetting than this gallery suffused with nat-ural daylight and wide vistas of sea andsky. Maritime subjects – Turner’s best – and the prevalence of watercolours give aparticular luminosity and lightness of being. Fragile and rarely displayed, theworks on paper are graciously installed toallow each to breathe within its own space,from the sparest – a dark/white contrast of r ed uctive b ut ener getic mar ks titled“Waves”, part of a sketchbook of an 1844German tour – to exquisitely detailed com-positions such as “Venice: Shipping off theRiva degli Schiavoni”, a view from theArsenale of the emerald water and frag-ments of buildings around St Marks dis-solving into a golden haze.

Rightly prominent is an array of depic-tions of Margate and its shores. Translu-cent watercolour studies of clouds at sun-rise and sunset – “Margate”, “A StormySunset”, “Storm on Margate Sands”, thered-azure-grey harmony “Study of Clouds”– hang alongside the magisterial canvases

“Mar gate from the Sea” and “YachtApproaching the Coast”, executed inthickly applied paint and broad gestures.Ruskin reckoned that Turner, impatientwith Margate’s “inadequacy”, exaggeratedits charms to a point of insincerity, butthat is not evident here. Rather, a storybeyond the merely provincial tells itself:Turner transferring the lessons of water-colour to oils, lightening his palette, even-tually painting light itself.

Misunderstood for a century, such near-abstract works – Hazlitt’s “picture of noth-

ing, and v ery like” – are now among Turner’s most popular. But there are engag-ing anecdotal pieces here too: for example,“The New Moon, or I’ve Lost My Boat, YouShan’t Have Your Hoop”, a glowing oil-on-mahogany depiction of disputing childrenand dogs on Margate’s golden sands as thesun goes d own and a cr escent moonappears. This is the show’s poster imageand catalogue cover, and the choice embod-ies a resolutely non-intellectual approach:refreshing, informal and contrary to recentmetropolitan interpretations.

London’s last two Turner exhibitions,Tate’s Turner Whistler Monet (2005) andTurner and the Masters (2009) (which, sig-nificantly, were both collaborations withParis) centred on Turner’s place in the

canon, especially his relationship with clas-sicism. The National Gallery’s forthcoming Turner in the Light of Claude does thesame. Turner and the Elements, however,places Turner alone: an artist set not inhistory but a painter of the world aroundhim, seeking to experience, observe andrecord intense, elemental conditions, forwhom “every look at nature is a refine-ment upon art”.

Thus the claustrophobic cavernous “AMountain Pass” is menacing rather than apicturesque Alpine view. The force of

and I did not expect to escape, but I feltbound to record it if I did”.

Margate organised this show in collabo-ration with museums in Germany andPoland – this is the final leg of its Euro-pean tour. The result is a selection thatemphasises Turner as a northern visionary– sometimes almost Gothic in the spiral-ling, eddying marks that seem to anticipateVan Gogh. The whirlpool form appearsearly in his body of work – it is alreadythere in the fiery “The Hero of a HundredFights” (1800-10) – but becomes more fre-quent from the 1830s, dominating marvel-lous, sparse, pessimistic watercolours suchas “Figures in a Storm”, a hunched paircaught in a dense maelstrom fading fromblack to grey, and in “Surge of Sea in aStor m (Per hap s Related to the L ostSailor)”. “He was without hope,” Ruskinsummed up at the end of Modern Painters.In the recurring image of the vortex,Turner expressed that hopelessness, of man doomed to a senseless cycle of life anddeath, sucked to his fate.

None of this is groundbreaking in termsof Turner scholarship. It must also be saidthat the show, though pleasurable, is basedon a silly curatorial idea: to arrange the

works according to the four elements of earth (mountains), air (mostly pieces cele-brating the light of Italy), water and fire. Afifth section, “Fusion”, is the best because itdeparts from these categories. With theirairy diaphanous veils of light and sparkling reflections, almost all Turner’s works are of course “fusions” – and since it is hard tothink of a single Turner that does not depictthe elements, the premise for the show ismeaningless because it is all-inclusive.

It is also unimportant: clearly, what is ondisplay here is the best that Margate couldborrow – not the iconic Rigis or “NorhamCastle” or “Rain, Steam and Speed”, butmore than enough masterpieces to giveTurner Contemporary for the first time ashow worthy of its name.

‘Turner and the Elements’, Turner Contemporary, Margate, from today toMay 13, www.turnercontemporary.org

waves beneath the globe of white light in“The Evening of the Deluge” pulls you intoan imaginative rendering of the biblicalflood. The muted, cool tonalities of “Fish-ing Boats bringing a Disabled Ship intoPort Ruysdael” – “absolute perfection – thebest grey sea piece ever painted by man”,according to Ruskin – gives the feel of theicy sea, thundering wind, the sense of deso-lation as the lighthouse vanishes into fog.

Looping, swaying lines create the dizzy-ing vortex in the show’s highlight, “SnowStorm – Steam Boat off a Harbour’s MouthMaking Signals in Shallow Water, andGoing by the Lead”. It carries the inscrip-tion “the author was in this Storm on theNight the Ariel left Harwich” – but whenthe painting was praised, Turner snapped:

“I did not paint it to be understood, but Iwished to show what such a scene waslike; I got the sailors to lash me to the mastto observe it; I was lashed for four hours,

Was Handel meant for regional operacompanies? Certainly not. Most of his stage works were written for themost virtuosic – and, therefore, mostexpensive – voices of his time.Smaller companies today are out of their depth, because they cannotafford top-notch singers. Does thismean they shouldn’t bother? Of course they should.

Audiences on Opera North’s tourcircuit deserve to appreciate Handel’sgreatness as much as theirmetropolitan counterparts. Thecompany itself, deprived of Handelfor more than a decade, needs tonurture an 18th-century style for itsown artistic self-respect. Where non-metropolitan ensembles, such asOpera North, can score is in theseriousness with which theyinterpret Handelian drama.

On both counts, vocally anddramatically, this new Giulio Cesareis hit-and-miss. Tim Albery directs asober, severe production, designed byLeslie Travers with enough Egyptianechoes to anchor the historical talebut also with a strong whiff of 20th-century tribal war games.

There is no spectacle. The set isdominated by a rotating block thatdoubles as Pompey’s tomb, Caesar’swatchtower, Cleopatra’s boudoir andPtolemy’s body-strewn battlement.The Egyptian crown is not a piece of headgear but a set of elongated goldfinger-nails – one of several design

motifs that say much with little.The drama, nevertheless, remains

rudimentary. Albery’s vision, likeHandel’s, is at its most concentratedin solo arias. A more sprightlyconductor than Robert Howarthmight relieve the tedium of several numbers that are distinctlyunder-sung.

Pamela Helen Stephen’sandrogynous Caesar, kitted out ingeneric greatcoat, is over-parted: shetries hard, but lacks the vocal anddramatic authority to dominate thestage. Ann Taylor’s Cornelia soundsmiscast, while James Laing’swaspish Ptolemy reveals the Achillesheel of so many countertenors: wantof vocal charisma.

Two singers alone capture theemotional weight of Handel’s music.Kathryn Rudge’s plucky Sestomanages to be both stylish andmoving. Sarah Tynan’s Cleopatra,dressed in shorts, comes across notso much as the manipulativeglamour queen as a romanticallyinclined girl next door, making hermore vulnerable than the historicalstereotype but no less sexy.

www.operanorth.co.uk

Reviews

OPERAGiulio CesareGrand Theatre, Leeds

★★★☆☆

Andrew Clark

POPChildish GambinoCamp, London

★★★☆☆

Ludovic Hunter-Tilney

Donald Glover got his stage namefrom an online Wu Tang Clan namegenerator, which invents for usersthe pseudonym they’d have if theywere a member of the fearsome NewYork rap crew. Thus yourcorrespondent rather gallinglybecomes “AmateurContender”, the FinancialTimes if it were a WuTang rapper would be“Sarkastik Samurai” andGlover – a New York-

based stand-up comicand actor – is ChildishGambino (pictured).

Given Glover’sbackground in comedy(he was also a writeron Tina Fey’s TVshow 30 Rock), youmight expect his

foray into rap to be a spoof, sending up its swagger, hyper-masculinity,materialism etc. But Glover is inearnest about his Gambino role.“Damn bloggers argue whether ornot I’m serious,” he rapped at thestart of his debut show in London, aviolinist sawing away gravely behindhim, beats whipping up a ferment of self-importance. The song was called“Hero” and its sentiments – Glover/Gambino’s sexual prowess, lyricalability and all-round wonderfulness – were not meant ironically.

Beneath this braggadocio liesinsecurity. Glover has a strong senseof his precarious place in hip-hop,this “nerdy ass black kid”, as hedescribed himself in a lessvainglorious moment. His versesinveigh against internet detractors,authenticity snobs, rival rappers. Bysome strange compensatory process,he also spends a lot of time rapping either angrily or lustfully aboutwomen. The effect is solipsistic andunsympathetic – yet it’s impossiblenot to be struck by the gifted way hegoes about it.

The venue was a basement divethat shares the same name asGlover’s US top 20 album Camp. Itoffered the chance to see his skillsclose-up. “Backpackers” was adiatribe about who should andshouldn’t be allowed to rap, a topicthat ranks somewhere near thebottom of the list of issues facing theworld today. But a heavy noirshuffle and Glover’s furious deliverygave it irresistible power.

His rap technique was excellent,delivering verses with deft changesin pace and tone. Occasionally themusic threatened to grow flaccid but

then it would snap backinto shape with booming

bass and quaking beats.They hammered homeGlover’s message: take

this comedian-turned-rapper seriously.

childishgambino.com

Turbulent Clockwise frommain picture: JMWTurner’s‘Snow Storm – Steam Boatoff a Harbour’s Mouth’ (1842);‘Storm at Sea’ (c 1829); and‘The New Moon, or I’ve LostMy Boat, You Shan’t HaveYour Hoop’ (1840)

Looping, swaying lines createa dizzying vortex in the show’shighlight, ‘Snow Storm–SteamBoat off a Harbour’s Mouth’




Arts

Beat itCriticism of percussion as ‘crash bang wallop’ is laughable, saysColin Currie, one of the leaders of a new wave. By Andrew Clark

The numbers alone are aston-ishing: 200 instruments, 300sticks, 40 cymbals. Plus thetwo exotic drums standing

expectantly on the floor, a djembefrom West Africa and a darabukafrom Turkey.

Colin Currie’s estimate of howmany instruments he owns is justthat – an estimate. The drum kit andcymbals litter what he calls the store-room (otherwise the spare bedroom)of his small flat in south-east London.The sticks fill any number of drawersin a special cabinet. The biggestitems, a marimba and vibraphone, are jammed into an attic room, with justenough space beneath the eaves to lethim wield his sticks during practice.

The djembe and darabuka are thekind of traditional drum you holdunder your arm. Currie, 35, picks upthe former and makes a loud, cutting sound, the “slap” – a sonic impactcreated by keeping the hand closed onthe drum-surface. Next comes a moreresonant, higher-pitch tone, whichCurrie produces by taking his handaway after contact. Then he puts hishand in the “bell”, the hollow areainside the drum, and somehow con-trives to make a downward slide.

“It’s amazing the variety of soundsyou can make,” he says.

It used to be thought that percus-sion instruments did not really makemusic. They beat the rhythm, theygenerate a metallic sound and a lot of noise. Towards the end of the 20thcentury, buoyed by composers’ fascina-tion with them, they began to dazzleaudiences as the range and variety of instruments within the percussionfamily grew. But percussionists werestill accompanists.

Not any more. Over the past 15years percussion has become one of the biggest growth areas in music,especially classical music. With theincreasing sophistication of tuned per-cussion, such as marimba, expressivehorizons have expanded, and thenumber of musicians taking up per-cussion and excelling at it hasswelled. A generation of soloists isemerging, capable of inspiring audi-ences not just with technical virtuos-ity and physical dexterity but withtheir ability to cast a musical spell.They in turn have challenged compos-ers to explore new sound possibilities.

Until recently the field was domi-

nated by one player: Evelyn Glennie.Now Currie, also a Scot, is very muchto the fore. He has just made a newrecording of James MacMillan’s Veni,Veni, Emmanuel , the work with whichGlennie established herself as a con-certo soloist in the 1990s. Over the nextfew weeks, in a string of performancesin Sweden, California and Scotland,

Currie will premiere a percussion con-certo by Sally Beamish. In April he joins the London Philharmonic for thefirst performance of a concerto byFinnish composer Kalevi Aho. In Mayhe plays Joseph Pereira’s new work forthe Los Angeles Philharmonic. He has

been promised a piece from SteveReich, father of modern percussionmusic, and is now planning his com-missions for the 2015-16 season.

Where Glennie embodied the theat-rical side of percussion, Currie person-ifies its musical side. Picking up aclutch of marimba mallets, he saystuned percussion sounds best “whenplayers have given thought to playing the instrument with a balancedapproach – to make it smooth and

singing, to soften the edges and getrid of unwanted accents, so that someof the phrases become longer.”

Orchestral percussionists – the tra-ditional apprenticeship, taken by bothGlennie and Currie – are trained tophrase on the musical downbeat, thefunction of an accompanying instru-ment. That’s no good for a soloist,says Currie. “When it’s a solo line, it’simportant to play like a solo voice andget rid of the pedantic rhythmicshackles. Percussion sounds rhythmicanyway, because the attack is soclean, so you have to work extra hardto put across the expressive side and

build longer lines. I don’t know who isleading the way, composers or play-ers, but [the percussion world] is get-ting more interesting.”

Given composers’ lack of experiencein writing for solo percussion, someconcertos turn out to be little more

than accomplished orchestral workswith a large part for percussion.There seems little likelihood of thathappening in the Aho concerto, aneatly thumbed score of which islying next to the marimba in Currie’sattic. Although it demands a largeorchestra, the percussion is alwaysspearheading the music.

“The crucial thing is to make theseinstruments sound seamless,” he says,“so that the audience isn’t joltedevery time you change from one tothe other. It shouldn’t be the percus-sion equivalent of a showroom. I wantto make it all work as one – I wantthe music, not the theatre.”

The repertoire is growing exponen-tially. Currie says percussion concer-tos are even more popular in NorthAmerica than in Europe. “There’s areal appetite there. It’s linked to popculture – it’s as if they recognise ‘Ican relate to this’.”

Last year he gave two highly con-trasted first performances – a pop-influenced concerto by 29-year-oldDutch composer Joey Roukens and achamber work by 103-year-old Ameri-can modernist Elliott Carter. TheRoukens, the first time Currie hadtackled something by a composeryounger than himself, was “one of thebest pieces I have ever played”.Carter’s short work went down sowell at its Aldeburgh premiere thatthe composer has extended it for thefirst US performance in June with theNew York Philharmonic.

Unlike many virtuosi of otherinstruments, Currie does not seempossessive of the works he hasinspired. “Any new and effective piecethat comes our way is of enormousvalue because percussion is still afledgling art form. When a new violinconcerto is written, that’s wonderful,but there’s always the Beethoven andBrahms to fall back on. That’s not thecase for us.”

He says that for too long percussionsuffered from misconceptions. “Peoplethought it was a case of ‘crash bang wallop’. That’s laughable now. Therarity of originality is what we want,

and I’m glad a number of composersare getting to the bottom of the style.”

‘Dance Variations’ by Sally Beamish,Glasgow, March 16

Percussion Concerto by Kalevi Aho, Royal Festival Hall, London, April 18 ‘Veni, Veni, Emmanuel’ is released onChallenge Classics in MarchHard-hitting Colin Currie Charlie Bibby

If you like Bob Dylan a lot, you ought

to love Karen Dalton a little. A leg-end of the 1960s Greenwich Villagefolk scene, the singer is lionised byother performers and a tragic hero-

ine for her fans. Today, nearly 20 yearsafter her death, more of Dalton’s music isavailable than ever, and the people whoknew her best have started to talk.

Tales about Dalton are as tall as she was.She had an aura that turned men’s headsand an attitude to spur girl-crushes inwomen who paint her as a “pagan mothergoddess rooted in this planet”, as one pur-ple liner-note has it. The stories mentionher Native American blood, her hard drugsand her suspicion of recording studios, thatshe kidnapped her own child and died of Aids at 55 in 1993, a derelict on the streetsof New York. The truth is more nuanced,but no less involving, than the fiction.

Only two Dalton albums were releasedwhile she was alive. Dylan’s 2004 memoir,Chronicles, sparked her revival. He wrotethat Dalton was his favourite singer in thatGreenwich Village scene: “[She] had avoice like Billie Holiday’s and played theguitar like Jimmy Reed and went all theway with it.” The going all the way iscrucial. From the off, Dalton had an unfor-gettable blues voice, weary beyond itsyears. What she wasn’t was a songwriter.Singer-songwriters were soon all the rage.

In 2006 Dalton’s low-key debut, It’s So Hard to Tell Who’s Going to Love Youthe Best (1969), and its more extensivelyproduced successor, In My Own Time(1971), were both reissued. Glowing reviews followed. The Dalton trail, coldfor so long, was giving off heat.

1966 is the third and latest collectionof previously unreleased – indeed, previ-ously unknown – reel-to-reel recordingsto have emerged since. Each soundsthrillingly raw, low-fi and antique, but1966 is the pick. As her then husband – duettist and guitar player RichardTucker – observes, Dalton is “relaxed andin her element”. The location is an oldgold-rush cabin in the hills near Boulder,Colorado; their retreat from beatnik living “back east”. Dalton plays banjo and singsfolk standards along with songs by theirGreenwich Village peers Fred Neil andTim Hardin.

On the phone from the Pacific north-

west, Tucker, now 71, still seems slightly inawe: “I was totally amazed by her rightaway. I remember carrying her guitar forher down the street. I was like a

Play, lady, play She was Bob Dylan’s favourite singer and a folk-scene legend, but died virtually unknown. Now, as a new collection

of her previously unheard songs is released, Richard Clayton goes in search of Karen Dalton

groupie . . . The first place I saw herperform was a tiny spot on Bleecker Streetcalled the Flamenco Café . . . Peter Tork[the future Monkee] was washing dishes.”

For five years Dalton and Tucker wouldgo back and forth between New York andColorado, where the Attic folk club inBoulder became a pit-stop for musicianstravelling coast-to-coast. Dalton was adraw for the likes of Hardin, Ramblin’Jack Elliott and a pre-Byrds DavidCrosby. She played few formal gigs. “Wedid do a really good concert at the uni-versity in Indiana,” says Tucker. “Some-

where in the world is a tape.” Recording together was almost unheard of, not some-thing that occurred to young folkies exist-ing day-to-day.

Theirs was a “very tumultuous relation-ship”, Tucker recalls. “Karen was strong-willed but she wasn’t self-confident. There

was a fragility there.” They split up soonafter the 1966 session was captured by theirfriend Carl Baron. “I remember having anargument in the middle of Denver and me

getting out of the car and walking awayand never seeing her again,” Tucker says.

Dalton’s daughter, Abralyn Baird, now55, was born when Dalton was 17; her elderbrother, Johnny Lee Murray, when Daltonwas 15. Two fathers, two divorces. “Mymum was kinda headstrong. She wanted toget on with stuff,” says Baird. “In moststates then you could get permission tomarry before you were 16; it wasn’t a totalscandal or anything.”

Baird has the same “deep, hoarse” speak-ing voice as her mother. Asked to name themost erroneous of the Dalton myths, sheanswers disarmingly: “The Cherokee prin-cess one makes us all laugh.” Her mother’sparents, John and Evelyn Cariker, camefrom “mostly Irish” stock, she says. Onegrandmother was distantly related to WillRogers, the Cherokee cowboy-actor, but thelink was “pretty dilute”. A nice story then?

“Isn’t it though?” Baird replies.Dalton’s Oklahoma background was a

badge of authenticity in Greenwich Village.Tucker remembers her family as “classic

Okies”, rural flotsam of the Depression,

and her father as “incredibly alcoholic”.Baird bristles: “Her dad was a respected

welder; her mother was a nurse. Not terri-bly Grapes of Wrath.”

So what of Abralyn’s kidnapping? “Yeah,she took off with me. But, remember, shewas a 19-year-old girl.” Having already lostcustody of her son, Dalton reconciled withBaird’s father, a literature professor, whohad been granted custody of their daughter– then fled with her to New York. “Theyhad the same temperament, my mum anddad,” says Baird. “They were very forth-right, quick to anger. Very stubborn.”

Little is known publicly about Daltonafter the early 1970s other than thatshe was living in New York. Drink anddrugs surely tightened their grip butfriends such as the folk guitarist PeterWalker have refuted suggestions shedied homeless and destitute. Baird main-tains her mother had throat cancerand was in a hospice near Woodstockat the end. As for Aids, Baird says: “Well,

she could have had that too, but it wasnever said to me specifically that she did.”

Dalton’s career stalled through corporateindifference and her own intransigence.“She wasn’t seen as very commercial,”Tucker explains. “The people in charge [of record labels] didn’t get it.” Baird believesit wasn’t so much that her mother didn’twant to record albums as that she resentedthe loss of control the process implied. Hertechnique owing more to jazz than folk,Dalton is increasingly recognised, however,as an astonishing vocal interpreter.

If Dalton has a signature song it’s theballad “Katie Cruel”, which opens: “When Ifirst came to town they called me the rov-ing jewel, now they’ve changed their tune,call me Katie Cruel.” You don’t need tospend ages wondering why it appealed toher. “Oh, because it sounds like she’s talk-ing about herself,” Tucker says. “Or more

like an image of herself.”

‘1966’ is out on Delmore Recording Societyon Monday

Dylan wrote: ‘she had a voice

like Billie Holiday’s and playedthe guitar like Jimmy Reedand went all the way with it’

‘It shouldn’t be thepercussion equivalent ofa showroom. I want tomake it all work as one’

Mythical From top: BobDylan (left), Karen Dalton andFred Neil performing in NewYork in 1961; cover of Dalton’slatest album ‘1966’ Getty







Arts

Great and small Artist Vicken Parsons’ miniature, inward-looking paintings are the antithesis of her husband Antony Gormley’s

monumental statements. ‘I could fit a whole exhibition into a carrier bag,’ she tells Rachel Spence

If twin thirsts for self-publicity andinstant communication are charac-teristic of contemporary culture,then painter Vicken Parsons is not awoman of her time. She takes several

days before replying to my email requestfor an interview. When I do meet her, sheis friendly, nervous and quite devoid of the

narcissism that is a default setting for somany of her peers.

Parsons’ self-sufficiency reflects herdetachment from the contemporary artscene. Her solo show opens next month atthe Alan Cristea Gallery, five years afterher most recent UK exhibition and threesince a monograph at her regular gallery,Christine König, in Vienna.

Yet as the wife of Britain’s leading sculp-tor, Antony Gormley, few have been closerthan Parsons to the very centre of Britishart. Inevitably, the association is a double-edged sword. Thanks to Gormley’s s uccess– a life-size model of his most famous sculp-ture, “Angel of the North”, recently sold atChristie’s for £3.4m – they enjoy spacious,side-by-side studios in a custom-built com-plex behind King’s Cross. Yet the young man who opens the gate is nonplussed tofind that it is Parsons I am seeking ratherthan the author of the potent bronze figurethat presides over the courtyard.

“Oh, you want Vicken? Her studio is upthere,” he says, waving me towards theleft-hand set of two identical flights of steps. I am 20 minutes late yet Parsons,

when she opens the door, is the acme of politeness. Dressed in a grey cashmere car-digan, jeans and paint-spattered apron, blueeyes blazing out from a parchment-palecomplexion, she is simultaneously frail anddoughty, part English rose, part Viking.

I accept her offer of jasmine leaf tea – “Itlooks like tadpoles,” she mutters apologeti-cally – and drift over to the paintings,arranged on a shelf that runs along threesides of the cream-painted studio.

If much mainstream contemporary paint-ing is brash, shallow and ironic, vast insize and diminutive in substance, then Par-sons’ work is the polar opposite.

These paintings, which measure just 25cm

by 30cm and are all on unframed plywood,do not roar; they whisper. To describe themas landscapes and interiors is correct yetmisleading. Their seed has been sown byspecific places, from Daniel Libeskind’sJewish museum in Berlin to Icelandic land-scapes – “so primal and young. No mark-ings, stripped tarmac, no posts, no edges. I

loved it” – and, more generally, “tunnels,underground car parks, and other buildingswhich are spatially interesting”.

But Parsons folds those images back intoher own mind’s eye before returning themas “a painting, separate from my internal[self] and from the outside, so that it is initself something else”.

The results are rooms distilled down toskeletal architecture: doorways, corners, asuspicious-looking loop suspended from aceiling. Asymmetric lines, scratched in char-coal to emphasise their ephemeral nature,create awkward, tilted perspectives; depthsthat beckon you in yet block you out.

Pigments are parsimonious: milky blue,metallic grey, carbon black and bone whiteare thinned down to translucent layersthrough which the plywood glimmers likesun trapped behind a cloud. In such a chill,

secular climate, scant bursts of colour – aslab of tangerine, a citrus-green halo – pos-sess a quasi-sacred intensity.

These are small, subtle statements aboutsophisticated subjects: space, architecture,interiority, silence, darkness, light. Suchmetaphysical matters were the business of painters for centuries. (Parsons cites Pierodella Francesca, Matisse, Rothko and LucTuymans as influences.) But today theyhave been all but replaced by auto-referen-tial comments churned out by the high-techimage factory that is contemporary art.

Behind Parsons’ pursuit of this timelessvision lies a tale of both accident anddesign. Born in 1957 in Hertfordshire, to anactor-turned-farmer father – “a lovely man,so lovely” – and a mother who is not only“a really, really good potter” but alsoworked in a boatyard during the war, sheclearly grew up in a home less ordinary.

“I am one of five,” she says in diffidenttones, her gaze locked on the table-top.“And we all went to art school.”

There must have been lots of encourage-ment to be creative? “Oh, lots and lots andlots!” she cries, see-sawing, as she fre-quently does, between shyness and passionfor the fabric of her world. “There was noexpectation to make money. It was allquite idealistic, although my dad musthave worked incredibly hard. You neverknew it because he made it seem fun.”

Hailing from a family “that didn’t reallyhave anything”, her time at the Slade

school of art was materially gruelling: shelived in a squat without gas or electricity – “we foraged for wood and candles” – andate homemade bread and cabbage. Artisti-cally, however, there was plenty of nour-ishment. With tutors including the lateabstract artist John Hoyland, Parsonsdefied the trend for video, performance andinstallation – “they wrote, ‘Painting isdead’ on the walls,” she laughs – andembraced oil as her vocation.

In the 1980s, “when painting got biggerand bigger”, she briefly followed suit.Then, around the time she had her secondbaby, she started making small canvases.“And there was no turning back,” she says.

Why such devotion to the diminutive? “Ilike the contradiction of making a largespace within a small thing, and thenwithin the small thing, the space opens upagain. But it’s not a real space, obviously,it’s a suggested space – and sometimes it isa cancellation of that.”

Timeless From top: VickenParsons at her studio nearKing’s Cross in London; worksby Parsons, all ‘Untitled’, from2011; 2009 and 2010

Charlie Bibby

The annual London InternationalMime Festival is a broad church,as this show, from Australianartist Fleur Elise Noble,

demonstrates. How to categoriseit? Is it visual theatre, cinema,art installation or a combinationof all three? In fact, trying to pinit down would probably beunwise as the show’s originalitylies in the fact that it plays withperception and is constantlybreaking boundaries.

Noble notes in the programmethat drawing is the base “fromwhere and through which Iexplore other things” and forthis piece she fills the stage withflat planes and litters the floorwith screwed-up balls of paper.To one side of the stage is ahuge black and whitephotographic image of an emptyliving room, at the back of the

stage there’s a blank blackscreen and on a chair downstagestands a cut-out of the artistherself that, once the showbegins, starts to move.

She steps out of the cut-outand reappears, first on thescreen at the back, using alarge mop to wipe away the

black and reveal a drawing of aman, then trudging into theliving room to brighten it upwith her mop. But the sketchedman decides to move, appearing

to climb out of the flat plane andthen reappear on a scrap of paper elsewhere on the stage.This sets the pattern for theevening as Noble, mop in hand,travels about the set trying tokeep control of her creations,both sketches and filmedpuppets, as they climb out of their confines and scurry toother surfaces.

Through a combination of drawing, puppetry and projectedfilm, images travel from one flatsurface to another. Two-dimensional creations appear tobecome three-dimensional;static drawings move; walls arepeeled away. It’s intriguing,playful and has its own

idiosyncratic aesthetic. At onepoint we watch a film of Noblepursuing her own runaway cut-out down the street.

The show continuallymanipulates perspective,questions ways of seeing andgives a quirky insight into themind of the artist and herrelationship with her owncreations. But, at only 40

minutes long, it feels, for all itsskill and originality, a littleslight. It would be interesting tosee where Noble takesthis approach next and whethershe harnesses it to explore issuesother than creativity itself.

www.mimelondon.co.uk

Review Theatre

2 DimensionalLife of HerBarbican (Pit), London

★★★☆☆

Sarah Hemming

Parsons admits she is interested in “going down into a place which is hidden. Trying to get down to the unconscious, I suppose.”Yet she hesitates over the words, awarethat her work’s ineffable painterliness islost in translation. Repeatedly she remarksthat “looking is the most important thing”.

Indeed, when I look at the canvases, the

artists who spring to mind are Vermeer,Danish painter Vilhelm Hammershoi andAmerican photographer Francesca Wood-man. All made pictures about our rapportwith our surroundings; stilling their interi-ors into prisms of silence, shape and lightwith inhabitants who possess an inelucta-ble mystery.

Given the calibre of her work, the puzzleis where has she been all this time. “Inever stopped working,” she says. Indeed,her résumé is far from blank, with smallsolo shows “every year or two”, including one at Tate St Ives in 2001-02.

So why is her profile in inverse propor-tion to her talent? “I suppose all the lifestuff, getting married, having a family.”(She has three children: Guy, Ivo and Pal-oma.) “I always felt guilty when I wasn’tworking, and guilty when I was.”

She and Gormley met at the Slade. Askedif it was love at first sight, she looks as if she would rather crawl under the tablethan answer. Gradually, however, shebecomes less reticent. She loved, she says,“the way he got on with stuff. [He was]very energetic and focused. There was no

barrier to him doing what he wanted. Hewould find the materials. He would findthe way. He would work day and night. Itwas challenging and inspiring and fun.”

Gormley, an elemental personality accord-ing to those who know him, was neverhouse-husband material. Did she mindputting her own career on hold while heforged ahead? “Yes, but I also knew that wehad to feed the kids and pay the mortgage.”

She helped him in the early days, sealing him into the casts that left him blind, ableto breathe only through his mouth. Wasshe ever scared? “No,” her laughter froths.“But he was sometimes.”

No one is more aware than Parsons thather work – miniature, inward-looking – isthe antithesis of her husband’s monumen-tal statements. “I hugely admire what hedoes . . . and I do the opposite. I could fit awhole exhibition into a carrier bag!”

The dichotomy, she suspects, is no coin-cidence. “I think there is a huge, uncon-scious dialogue.”

Before leaving, I inquire about the pic-ture of an egg-pale oval floating in a lumi-nous sea. It was inspired, she explains, by ageyser in Iceland. “On the ground, it is justbubbling water, you just wait and wait,and suddenly ‘Whoosh!’ ” She makes explo-sive gestures with her hands. “And then itgoes back to being quiet again.”

I t i s a p er fe ct m et ap ho r f or t hepainter herself.

Vicken Parsons’ ‘Here’, Alan CristeaGallery, London, February 23-March 24,www.alancristea.com

If much contemporary art isvast in size and diminutive insubstance, then Parsons’

work is the polar opposite

Playful Fleur Elise Noble




Arts

Revelations in Sicily A little-known period of Van Dyck’s life is the subject for an enticing exhibition, writes Robin Blake

In 1621 Antoon Van Dyck made theoverland journey to Italy from hisnative Antwerp. As a young painter

trained in Rubens’ studio, he wentsouth to study the Italian painters of

the previous century – in particular le cosedi Titian, as he put it in his notebook, whichheaded a list of works he meant to see.

Italy, and the study of Titian, Veronese,Correggio and others, transformed VanDyck’s art and turned him into a celebrity.His sitters included members of the wealth-iest Roman and Genoese castes: two orthree ambassadors, the doge of Genoa andthe A-list cardinal Guido Bentivoglioamong many others.

Some of these portraits were the firstVan Dyck canvases to touch greatness anda choice selection of them later found theirway to Britain: the Genoese Lomellini fam-ily group now in Edinburgh, the Romanpendant portraits of the Shirleys in gor-geous Persian attire at Petworth and thethree-quarter-length of Emanuele Filiberto,Spanish viceroy of Sicily, in London’sDulwich Picture Gallery. The latter is thecentrepiece of an enticing exhibition soonto open at Dulwich, which aims to give anew account of the artist’s Sicilian adven-tures – a project that has been made possi-ble by recent discoveries in the statearchives of Sicily.

Van Dyck’s first biographer was the Ital-ian Giovanni Pietro Bellori. According toBellori, the painter sailed to Palermo inspring 1624 and, on arrival, painted the vice-roy’s portrait, paid a visit to and paintedAnguissola Sophonisba, the most famousfemale artist of the day, and made somereligious images of St Rosalia, a patron of Palermo. But when a violent outbreak of

plague struck the city he scuttled back toGenoa to complete his remaining Palermi-tan commissions in safety. He was in the

city a mere four months.Until 1999, all accounts of Van Dyck –

including my own biography – accepted thisversion of events. Then archivist GiovanniMendola published a series of documents hehad found in the Sicilian state archives – commissions for paintings, financial trans-actions and other legal papers naming theartist – that proved Bellori completelywrong. In fact, Van Dyck stayed in Palermofor almost 18 months, as the plague peakedand at last died away. For a time the citywas locked down under draconian quaran-tine regulations but, far from dashing off afew hasty works before somehow wangling his escape, Van Dyck established a studiopractice, producing numerous devotionalworks and portraits for local clients (mostof which are still to be rediscovered) andsome atypical curiosities, including a “headof a woman with sparse hair”, a head shout-ing and another yawning, and a doctorholding a book, treated satirically. Anumber of his oil sketches on paper appar-ently changed hands in the city.

The most important of Van Dyck’s Sicil-ian work, however, was for the governmentand the church, and this is mostly extant.Dulwich will show its own official portraitof viceroy Emanuele Filiberto, completedsoon after the painter’s arrival, alongsidethe suit of armour worn by the sitter,which has survived in the royalarmoury in Madrid. Of all thepainters who have attempted torepresent the peculiar sheen andglint of metallic armour, none hasbettered Van Dyck. He dwellscarefully on the steel sur-fa ce, simu lta neo uslyknu ckle-bruisin g a ndsilken, on the golden orbrass decorative chasing,on leather straps and theedges of velvet linings.

The opportunity to seet he v ic er oy ’s a ct ua la rmou r a lo ngside Va nDyck’s rendering of it is amarvellous one, but I hopethat will not obscure the por-trait’s overriding achievement – its sensitivity to the sitter’swhole idea of himself. Just as hewould later so brilliantly capture

the dandified scions of the Eng-lish aristocracy, Van Dyck hereproduced a defining image of thisson of the Duke of Savoy, grand-

son of Philip II of Spain, a man who consid-ered himself divinely armoured against theenemies of Spain and of God.

Yet viceregal armour was useless againstthe plague, and the paint on Van Dyck’scanvas was scarcely dry before Emanuele’speople began to die in large numbers. Asthe terror of a full-blown epidemic caughthold, the viceroy stuck to his post, trying toorganise practical counter-measures. But atthe end of July 1624, he too succumbed. Histraumatised people searched for an explana-tion for the disaster within the scope of their understanding. Plagues were seen asbiblical phenomena, so the answer must beto placate the wrath of God. Attempts weremade to root out the sources of evil, one of which appears to have been recorded in VanDyck’s notebook: a sketch of an old womanparaded with a conical hat and a gallows

rope around her neck. “A witch in Palermo”is the artist’s annotation.

Then, in August, from high above thecity on the slopes of Monte Pellegrino,

GreatnessClockwise fromabove: Van Dyck’s portrait of

Emanuele Filiberto of Savoy(1624); Emanuele’s

armour, on display inDulwich alongside the

portrait; Van Dyck’s‘St Rosalia in Glory’(1624)

came new hope. A heap of dry bones wasfound in a cave that, within days, had been“authenticated” as the remains of St

Rosalia, a 12th-century noblewoman wholived as a hermit on the mountain. Thediscovery of these bones kicked off a surgeof Rosalian devotion that was credited withsaving the city. Van Dyck was put to workto create her iconography in a series of canvases whose surviving examples will bebrought together at Dulwich for the firsttime: Rosalia praying on a rocky outcropabove Palermo, pleading for the city in thedistance, and being borne upwards byangels in a transport of s anctification.

This is religious art made not as mereillustration but as a form of prayer, a focusfor meditation, an imaging techniquebelieved to make the sacred real and activein the world; art of intense significance forthe suffering Palermitans. Whether createdin the heat of the epidemic, or as ex votoofferings after it was over, the paintingsplayed a major role in the imagined dramaof their city’s deliverance.

For some years, even after his return toAntwerp, Van Dyc k c on tinu ed to beinvolved with the cult of Rosalia at the

same time as the focus of his religiouspainting significantly changed. During hisearly career he had dealt in male figures:Christ, the apostles, saints and prophets.Now he thought about the female principlein religion and made a succession of pro-found studies of Christ’s death reflected inthe mind of his grieving mother.

One or two of these are landmarks in thehistory of religious art and, while I wouldnot place the Rosalia paintings in that cate-gory, they are remarkable as signposts tothis new direction. Along with the vice-roy’s armour, Van Dyck’s sharp little por-trait of Anguissola and a few traces of hiscontact with a notorious art-loving dia-mond thief who then lived in Palermo,there will be quite enough to send VanDyck’s admirers hurrying to Dulwich.

‘Van Dyck in Sicily: Painting and the Plague 1624-1625’, Dulwich Picture Gallery, London, February 15-May 27 www.dulwichpicturegallery.org.uk

Far from fleeing, Van Dyckstayed in Palermo throughoutthe peak of the plague, andestablished a busy studio there




All new in DelhiThe art market: fairs in India and Bangladesh; Christie’s celebrates Tapié;

lawsuit targets Gagosian. By Georgina Adam

The fourth edition of the India Art Fair –and the first with a new name, newinvestors and in a new, off-centrelocation – got under way this week in a14,000 sq m tent in South Delhi. The tent,hired for the occasion, was light androomy, and was hailed by manyexhibitors as a great improvement on itsformer home, the Pragati Maidanexhibition hall, dubbed a “lugubriousdinosaur” by Peter Nagy of Nature Morte;however, the new location has itsdownside, being sited a good hour fromthe centre when traffic is bad. “The big

question is, will people come back asecond time?” wondered Sree Goswami of Mumbai’s Project 88. “Sales at fairs areno longer made immediately, as was thecase a few years ago.”

The event has now achieved “museumstatus”, meaning art can be brought inwithout the payment of duty up front, aswas previously the case. But while this isa boost to the event, anything sold to aresident Indian attracts both sales taxand duty – so it is still better to concludetransactions outside the country. Manydealers as a result were reporting “reserves” rather than hard deals.

Among buyers on the first day were theleading Dhaka-based collectors Rajeeband Nadia Samdani, who bought a RashidRana from Lisson and were tempted by aHirst butterfly piece at White Cube.Tasveer Gallery was very successful withimages of animals in Indian palaces byKaren Knorr, priced from €6,000-€14,500,all going to private Indian collectors.

The fair has certainly made a bold stepup, with higher quality overall and amore international roster, including “big

box” galleries Hauser & Wirth and White

Cube. There were some big prices as well:two El Anatsui tapestries were on offer atSakshi for $800,000 each and a blingyHirst gilded cabinet with zircon“diamonds” was priced at £525,000 at

White Cube. At Paul Kasmin, WaltonFord’s take on King Kong, “Untitled”(2011), was priced at $250,000.

The event attracted an impressive roll-call of visitors, including Tate Moderndirector Chris Dercon, New Museum’sLisa Phillips with a group of trustees, thecollector of Chinese art Guy Ullens, notedlocal collectors Lekha Poddar and KiranNadar, and a phalanx of auction-housepeople, including Sotheby’s chairmanRobin Woodhead.

Still in the Indian subcontinent, theSamdanis are organising Bangladesh’sfirst ever art fair. They are holding theDhaka Art Summit in partnership withthe National Museum of Arts andsupported by the Dhaka cultural ministryon April 12-15. “Galleries in Dhaka don’trepresent artists in the same way aselsewhere,” says Nadia. “We are creating a platform so the world can get to knowour artists better.” She cites Bangladesh’sfirst inclusion at last year’s VeniceBiennale as a step to greater exposureand says 300 artists will be on show thisApril. Then the fair will skip a year, nexttaking place in January 2014, to coincidewith the India Art Fair and allowing collectors to visit both events in one trip.

dozen of the works of art are for sale, atprices between €150,000 and €2m. Theexhibition also marks a change inFrench law that allows auction houses inthe country to carry out private treaty

sales, something that was forbidden untillast year.

In New York, Gagosian is again targetedin a lawsuit brought by an elderly artcollector, another of whose paintings wasthe subject of a legal battle two yearsago. The plaintiff, Jan Cowles, 93, is themother of the former art dealer CharlesCowles, and at issue is Roy Lichtenstein’soil-on-enamel “Girl in Mirror” (1964,edition of eight). According to hercomplaint, her son – in “desperatefinancial condition” – consigned the workto Gagosian without her knowledge orapproval. The gallery agreed to sell thework for no less than $3m, on which itwould take $500,000 commission. But afterit was unsold at Frieze and Basel, itfinally went to an unnamed buyer at alower price – thought to be $2m – becauseit was “badly damaged”, according toGagosian, who allegedly took $1mcommission on the trade.

Cowles’s suit claims Gagosian switchedtwo condition reports, and that thedamaged work was in fact a second “Girlin Mirror” from the same edition,belonging to Agnes Gund, presidentemerita of New York’s MoMA. ButGagosian’s lawyers say that the Gundwork is an oil on canvas, and the claimthat reports were switched is based on a“faulty document back-up system and itsproduction was an honest mistake” by theconservator.

Cowles is asking for $10m in punitivedamages, accusing Gagosian of fraud,conversion (unauthorised s ale) anddamages for wrongful detention of property. But Gagosian’s lawyers say thatMrs Cowles and her representatives “haveonly themselves to blame that they failedto protect her art from the reach of herart dealer son” and that her action iswithout merit.

In the earlier suit, Charles Cowles solda Mark Tansey painting from his mother’scollection through Gagosian, apparentlyforgetting that it was partly promised asa gift to New York’s MetropolitanMuseum of Art. When he discovered theproblem with title, the buyer suedGagosian and the case finally settled,with the gallery paying him $4.4m. The

painting was returned and is now in theMet, “Gift of Jan and Charles Cowles”.

Correction: The next Sharjah Biennale will be held in 2013, not this year as I wrotelast week.

Georgina Adam is editor-at-large of The Art Newspaper

Wild ‘A Place Like Amravati’(1 and 2) by Karen Knorr atTasveer; below, WaltonFord’s ‘Untitled’ (2011) atPaul Kasmin Post Machine

Collecting

The scramblefor India

Thursday was Republic Day inIndia, and in the spruced-up streetsof New Delhi thousands of bandbox-perfect troops in fantastic

costumes, their scimitars and bagpipesoffset with more modern trappings of war,did a proud and proper job of celebrating getting rid of the British. This countrystill boasts a mounted cavalry regiment – glorious creatures in silks and silver. Thehorses are also fine. They may do littlemore than play polo to scare an enemy,but they and the equally awesome CamelCorps parading up Lutyens’ mightyavenues make a link with an important

ceremonial past. And I don’t mean thehuge durbahs staged by the British – those in turn were cribbed from the moreancient customs of Indian rulers. No, it’sabout the fact that this countryunderstands the power of gesture.

But there’s nothing like the scream of fighter jets overhead to bring you sharplyback to the modern world. There has beenplenty of sabre-rattling on the culturalfront this month, with the muchpublicised absence of Salman Rushdiefrom the Jaipur literary festival. Islamicextremists were his threat – but it cancome from the other side too. Just thistime last year in Delhi, I was peering atpaintings by the Muslim artist MF Husainthrough the burly shoulders of heavilyarmed policemen: threats to theorganisers of the India Art Fair fromHindu extremists had meant that someperfectly innocuous works were first

removed, then replaced under heavyguard. It was a delight to imagine howfurious the would-be troublemakers musthave been when they learnt of the greatqueues of people who then assembled togaze at these apparently explosive works.Talk about shooting yourself in the foot.

This year, as the fourth edition of theIndia Art Fair opened its gleaming tentsto the public, such churlish behaviourseemed distant. International galleries arehere in force, and perhaps most pleasing for India is the way the cultural tablesare turned: the scene here is one of westerners chasing the bulging wallets of

India’s middle classes. History has done aloop: a hundred years ago, entirecabinetmaking factories turning out fineArt Nouveau and Deco in Birminghamand Belgium depended almost solely onthe so-called Maharajah Market.

The FT’s sister company Penguin Indiaused the Jaipur festival as a launchpadfor its own assault last weekend, with amarketing campaign as retro as theCamel Corps. Take India’s best-loved pieceof nostalgia, the Ambassador car, and linkit with bookish Britain’s sweetest oldmemory, the orange and white colours of pre-Pearson Penguin fiction, and you havean irresistible flagship. The painted car’sroadshow is designed to persuade Indiansto splurge on that ultra-retro technology,the book. Who knows whether PenguinIndia’s star author Vikram Seth isamused by other marketing props, suchas A Suitable Mug and A Suitable Bag.

powerhouse stable: a Damien Hirst goldcabinet and a neon Tracey Emin among them. Hauser & Wirth make amagnificent display of big, showyinstallation pieces by the Wills & Kate of Indian art, Subodh Gupta and BhartiKher, but have also brought along somegentle drawings by Henry Moore. Thisshows a strong new trend – taking important western names to the Indianmarketplace. Online specialists in Indianart, Saffronart, have announced their firstauction of Impressionists next month, andin preparation for that are touring somebig works – by Van Gogh, for instance –

to Delhi and Mumbai. It’s another sort of roadshow new to the subcontinent, whichwill test the market in a new way – justas the Kochi-Muziris Biennale in Keralain late 2012 will mark yet another firstfor India.

But perhaps the new departure thatmost cheered me was news from theBritish artist Marc Quinn, grinning broadly as he told me that next year willsee a whole solo show of his in Delhi,under the wing of the British Council. Toput this in context, there’s only been onesuch contemporary show ever before, andthat was by Anish Kapoor, last year.Marc Quinn will be the first non-Indian:no pressure then, Marc.

India Art Fair ends tomorrowwww.indiaartfair.in

Peter Aspden’s column returns in two weeks

The company’s new publisher, ChikiSarkar, neatly continues today’s militarymetaphor by promising a publicity“Blitzkreig” for important new titles.

At the Art Fair, meanwhile, retrodoes not rule. The great majorityof the work is paint, and some of it feels barely dry: many labels

have 2011 as their dateline. Didn’t artistsuse to make their work and after a whilegallerists and dealers might come along and sell it? Well, in fact there’s a long roll call of artists making work inresponse to demand (think of Picasso).

This is obviously happening here: thefair’s growing success is creating a scenethat gallerists and artists rush to be partof. From Melbourne and Moscow, SouthAfrica and Singapore, New York andNorwich they are here in force, hoping tocoax the new Indian collector. This yeardirector Neha Kirpal has partnered withAngus Montgomery, the experienced fairorganiser that owns a sizeable chunk of Art Hong Kong, among others.

That the scene in Delhi is growing fastis evident from the likes of Abadi ArtSpace, established just a year ago by theSpanish-born adopted Delhiite José Abad,and risking its neck at its first art fairwith engaged photographic and videowork by Vineet Kumar, among others.

The presence, for the first time, of somebig-ticket galleries adds lustre. WhiteCube has a beautiful stand offering unthreatening examples from its

JanDalley Culture

Starting on January 30 in Paris, Christie’sis paying homage to the influentialFrench art critic and curator MichelTapié (1909-1987) with a show of many of the renowned artists he brought to

public attention. These include Frenchpostwar artists such as Dubuffet – including his portrait of Tapié – andMathieu, members of the Japanese Gutaigroup such as Motonaga and Shimamoto,US abstract expressionists including DeKooning, Jackson Pollock and manymore. “We have borrowed from collectors,from the artists themselves and throughthe galleries Tapié advised,” saysAlexandre Carel of Christie’s. More than a




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Books

V ladimir Putin, Russian primeminister for the past fouryears, president for the previ-

ous eight, is bidding for thepresidency once again. Victory

would open up the possibility of two fur-ther terms, taking him to 2020, the age of 67 and more than two decades at the top of a vast, turbulent country.

The outcome of the March election was,until recently, considered by those expertin Russia to be as certain as any suchevent could be. The reasons why it hasbecome less so – it remains probable – arethe subject of these works. All are in differ-ing degrees readable, insightful and presci-ent, written as they were before the demon-strations in Moscow and other citiestowards the end of 2011. They lay out insome detail the reasons why a regime thathas been widely popular should now finditself suddenly under some pressure.

Even among allies, the mix of policies,attitudes and enmities that has sustainedthe Putin regime is losing its potency. (Wecan speak of 12 years of uninterruptedpower since, as Angus Roxburgh makesclear in The Strongman, Putin remainedthe boss even when he was nominallynumber two to President DmitriMedvedev.) This month, the hierarchy of the Russian Orthodox church – a goodfriend to a leader who has made much of his faith – warned through the medium of an essay by the Archpriest Vsevolod Chap-lin that the government must respond topopular concerns or be “slowly eatenalive”. Chaplin identified the main cause of dissatisfaction as corruption and the sup-pression of investigations into officials.

Yet the end, if it comes, will indeed beslow: Putin still commands large reservesof support. He has, for nearly all his rule,enjoyed strong approval ratings, usuallyfar above those of fellow leaders in thewest. How do we account for this? Firstthere is luck, a politician’s most preciousattribute, usually conferred without regardto merit or wisdom. Putin’s springs frombeneath his feet: the still-vast reserves of oil and gas trapped under Russian soil,whose value on the world markets hasrisen fivefold since he came to power.

Second, he has been a master of nostal-gia, with a fine ability to render the Sovietperiod as one in which, granted, mistakeswere made but greatness was achieved, afascist enemy beaten and a new civilisation

ripped from the rotting corpse of Tsarism.David Satter, a former FT correspondent inMoscow and a writer with a long, strong interest in the psychic effects of commu-nism, has written a book full of vivid andwell-chosen anecdotes to illustrate this. InIt Was a Long Time Ago, and It Never

Happened Anyway he quotes Yuri Zhi-galkin, a correspondent for the USCongress-funded Radio Liberty (and thusno starry-eyed old Bolshevik) as saying of his childhood in a medium-sized town that,in the 1970s, “there was a communal spirit.It was all right to knock at the door of astranger and ask for help.”

It is this wist fulness for a lost utopia thatPutin can both share and evoke. He is atone with most Russians over the age of 40,who are able (like many of us) to colourtheir past rose. More than that: he hasbeen able to plug into a nationalism thathas survived the communist era. Putinhas resorted to many tricks and PR stuntsover the past 12 years but he is genuine inhis nostalgia.

Third, he inherited from his time in theKGB a network of comrades who were

highly trained, intelligent, ruthless andknowledgeable about Russia, its neigh-bours and the world – and held in highesteem by much of Russian society. Heelevated many of them to high positionsand to the great wealth that generallyattends such elevation in Russia. The mem-bers of the network, who have been loyaland hard-working, held similar views toPutin – that the west, especially the US,had taken advantage of Russian weaknessafter the collapse of the Soviet Union, thatRussia constitutes a separate civilisationfrom Europe and that the promotion of democracy, within and around Russia, is adanger to the country.

Master of nostalgia Vladimir Putin has played expertly to Russia’s emotions during his years at the centre of power – but at what cost? By John Lloyd

Just days before the fall of Hosni Mubarak’s regime inEgypt last year, Paul Mason,economics editor of the

BBC’s Newsnight , published animpassioned blog post about thewaves of protest sweeping throughEurope and the Middle East.

Written following a debateabout the Paris Commune withsome radical students in aBloomsbury squat, the post,which subsequently went viral,set out 20 bullet-point reasonswhy it was “kicking off every-where”. These included somelively but loosely connected obser-vations about the unrest, ranging from the obvious (the web’s reallyuseful for communicating) to thestrikingly implausible (protestersfrom St Paul’s Cathedral to TahrirSquare have been mugging up onthe Marxist theoreticians MichaelHardt and Antonio Negri).

At the end, Mason admitted thatthese were “generalisations”designed to elicit a response andshould be read as such. This bookis an attempt to turn that scatter-gun list into a more detailed analy-sis of last year’s events.

Europe has experienced revolu-tionary waves before – in 1848

and, more recently, 1989. So it isreasonable to ask whether, andwhy, we are living throughanother one. What defines theprotests? How are they linked?And where’s everywhere, pre-cisely? Mason’s title promises theearth but the book barely men-tions Russia or China.

Sadly, he never really comes upwith answers. In Why It’s KickingOff Everywhere, Mason may havefleshed out his blog with diligentreportage, trekking from Athensto Manila to find out what drove

people on to the streets. But whatemerges is not a convincing expla-nation, merely more loosely con-nected generalisations.

It does not help that Mason’spolitical sympathies are rathertoo much in evidence. For him,last year’s events were “a revoltagainst Hayek and the principles

of selfishness and greed heespoused” in which “doomedgraduates, precarious workersand the poor” fought back against“the atomising effects of the mod-ern marketplace”.

This sort of stuff might go downwell in a Bloomsbury squat but itis harder to square with the moti-vations of those who, for instance,ushered in the Arab spring. Theoriginal Tunisian rebel-martyr,Mohamed Bouazizi, a self-employed fruit seller, didn’t setfire to himself to bring down freeenterprise but to protest at thepetty restrictions imposed by akleptocratic bureaucracy thatdenied him a chance to compete.He sought fair access to the mar-ketplace, not its dissolution.

Similar frustrations can be dis-cerned in some of the Europeanprotests. For many young Greeksand Spaniards, the enemy is not

capitalism per se but a bastard-ised form that rewards politicallyconnected insiders and leavesalmost everyone else in the cold.

Mason’s relentless focus on theevils of capitalism seems evenmore out of place when he arrivesin Manila and embarks on a tourof the slums that ring the capital

of the Philippines. These, hedeclares, are “the hidden conse-quence of 20 years of untram-melled market forces, greed,neglect and graft”. Well maybe,but they are also a rough andready entry point for millions of the rural poor into a global econ-omy that has in the past two dec-ades delivered dramatic improve-ments in living standards, healthand life expectancy. That is why – despite the hardships to be foundin such places – people keep flood-ing in.

Nor does Mason offer any solu-tion. The closest he gets is whenhe calls for a “new more equitableand sustainable form of globalisa-tion – with new treaties; newtransnational organisations; [and]a new deal on global currencies”.As an outcome, it is hard to arguewith; as a prescription, though,it’s woollier than a Bloomsbury

radical’s bobble hat.But though Mason struggles to

squeeze last year’s events into thepolitical mould he has fashioned,his book does not lack insights.He is interesting about the role of technology in the unrest, espe-cially the way protesters haveused social networks. It’s not just

a case of allowing rioters toexchange tactical information (asin Britain’s “BlackBerry riots”);in repressive societies, the con-stant exchange of ideas, tweetsand posts helps to filter out duff information. One wonders, how-ever, what Mason’s BBC bosses,who paid for his global odyssey,will make of the unfavourablecomparison he draws between theriot coverage on Twitter and thaton “mainstream media”.

Mason does make some telling observations – especially aboutthe predicament facing the west,from the problem of finding jobsfor the educated young to thesheer difficulty in societies hard-wired to expect rising living standards of adjusting to dimin-ished expectations.

In the end, though, one is leftwith a feeling of disappointment.There are too few answers, and

what is offered is basically animpressionistic contribution tothe conversation. Mason’s blog post caused a stir when he put itup last year. Perhaps he shouldhave left it at that.

Jonathan Ford is the FT’s chief leader writer

1848 and all that Protest movements in the Arab world and the west are not easily yoked together, writes Jonathan Ford

Why It’s KickingOff Everywhere:The New GlobalRevolutionsby Paul Mason

Verso £12.99244 pages

In Change or Decay – a book-length con-versation between Lilia Shevtsova, astrongly liberal and sharply observantpolitical analyst based at the CarnegieCenter in Moscow, and Andrew Wood, a

former British ambassador to Russia – Shevtsova quotes Sergei Lavrov, the Rus-sian foreign minister, as saying that Euro-pean culture has had its day as the domi-nant force in the world; Russia offered analternative. Over the course of the 2000s,Putin and his comrades successfullyencouraged that vision to take deep root inthe population.

Finally, he has offered Russians whatthey say they want: a strong hand. Satterbelieves this is because Russians are made,or have been formed over the centuries,this way: he thinks that a “Russian liveswithout freedom but in his own mind he isnot a slave. He is a participant in a grandenterprise with which he and his fellowcitizens have been entrusted and whichrequires a sacrifice and a readiness toaccept total subordination.” This is asweeping judgment. But it is surely thecase that a feeble civil s ociety has inhibitedopposition and reasoned dissent.

Taken together, Putin’s magic mixturehas worked well, at least in its own terms.He won the second war in Chechnya,where current president Ramzan Kadyrov

keeps order in the state and periodicallyconfirms his allegiance to Moscow. In theshort sharp passage of arms between Geor-gia and Russia in 2008, the Georgians lostand the Russians declared the independ-ence of the two Georgian provinces of Abk-hazia and South Ossetia on its borders – recognised so far by Nicaragua, Venezuela,Vanuatu, Tuvalu and Nauru. With the vic-tory of Viktor Yanukovich in Ukraine in2010, Putin has a friendly, broadly pro-Rus-sian president in its most important part of the “near abroad”. It is on this record hewill be running in March. Why would he beunder any serious pressure?

For many reasons. Most of these have

long been evident to westerners and Rus-sian liberals, who can be discounted by theregime, but are now finding some purchasemore broadly. The luck of the oil and gasprices has a dark underside. In a report

written for the European Council on For-eign Relations, the analysts Ben Judah,Jana Kobzova and Nicu Popescu argue thata “post-Bric Russia” is no longer to becounted with Brazil, India and China as arapidly growing state – if ever it was – andquotes the economist Nouriel Roubini ascharacterising it as “more sick than Bric”.

The authors here differ on the maincauses of Russia’s economic malaise.Judah, Kobzova and Popescu believe that itis more due to “the personalisation of power, and the fusion of policy and powerthat defines Russian politics”. Satter tendsto locate the underlying stagnation in therefusal of either Russian leaders, or Rus-sian society, to face up to a past that trapsthem in abjection before autocracy.Roxburgh, a former BBC Moscow corre-spondent, highlights corruption, providing one of the strongest insights into the mal-ady that puts Russia near the bottom of theindices on clean government. He quotes aRussian businessman as telling him thatcorruption “is the entire system – the polit-ical system, the business establishment,the police, the judiciary, the government,

from top to bottom, all intertwined andinseparable”.

The use of nostalgia is Satter’s field. Rus-sia is not, he believes, able to give itself achance: in love with their chains, its peoplecannot face up to the horrors of a past theywish to ignore or romanticise. Roxburgh,who, after he left the BBC, worked forsome years as an adviser to Putin’s com-munications chief, is less censorious aboutthis – but admits that the phenomenon isstrong and deep, noting that “the mass of the Russian public is not generally thesame as ‘average’ westerners. In a televi-sion contest in 2008 to find the ‘greatestRussian’, Stalin came in third place – and,

it is thought, would have come first if theauthorities had not rigged the result toavoid complete embarrassment.”

That these attitudes persist is not solelydue to Putin and his comrades; they grewsteadily during the Yeltsin period. But theyhave acquired legitimacy since. I wit-nessed, on August 22 1991, the – finallysuccessful – efforts to tear down the statueof Felix Dzerzhinsky, founder of whatbecame the KGB (now the FSB) from infront of the Lubyanka, its headquarters incentral Moscow, as the coup againstMikhail Gorbachev was fizzling out and thedemocrats were rejoicing. It was a sight tomake the heart leap. But the crowd on thatnight was not large. Plans for a monumentto those repressed by the organisation havecome to naught: there remains only a rockfrom the Solovetsky Islands, one of thefirst Bolshevik camps, placed in theshadow of the Lubyanka in the flush of thedemocratic movement in 1990. By the early1990s, Satter writes, there was “little pressfor a memorial from Russian society. Rus-sians no longer reacted emotionally toinformation about Russian crimes.”

Putin’s men are often highly sophisti-cated. Sergei Ivanov, one of the formeragents closest to Putin who has held suchposts as head of the Security Council anddefence minister, is suave and fluent inEnglish, with a cultured taste, a leaning towards economic reform and a mind atonce hard and sharp. In the series Putin,

Russia and the West by the incomparabledocumentary maker Norma Percy – broad-cast this month and next on BBC2 andfrom which Roxburgh, an adviser for theseries, drew much of his book – Ivanov isshown as an amiable, gently ironic man,with a taste for avant-garde ballet. Yet likeall siloviki (men of power), he has a zero-

sum approach to the world: where the westis up, Russia is down, and vice versa.

Putin has been hugely effective in pro- jecting strength internally and externally,but he cannot affect some deeper trends.

Russia is in the grip of a demographiccrisis: a population that stood at some150m after the collapse of the Soviet Unionis projected (by the United Nations) to fallto between 121m-136m by 2025. It loses agreat number of its most t alented people toemigration. It has not succeeded in mod-ernising its productive capacities, and hasa declining leverage over former Sovietstates pulled west towards Europe and easttowards China.

If he takes the Kremlin again, what willthe second coming of President Putinbring? It is possible that he may decidethat the iron hand act has run its course.The demonstrations of December promptedfrom him first the usual harsh dismissal,but that was then quickly succeeded byefforts to reach out to the intelligentsiaand the civic forces, at least formally.Putin, early in his rule, said Russia’s onlydestination was Europe – and he mightreturn to something of that. The middleclass has grown greatly – as have theirfreedoms to read (especially on a nowlively internet), to travel and to discuss.The revulsion at the December parliamen-

tary election results, whose manipulationwas documented by a surprisingly feistyburst of press investigation, was damaging for Putin’s party, United Russia.

Yet there are as many fears that the ironfist won’t unclench, and that Russia willbecome even more closed, suspicious,unfree. And still, as Satter warns, there islittle appetite for a reckoning with the 20th-century past – itself a necessity for a whole-hearted reformist tide, which it must haveif real, civic, open, democratic greatness,worthy of a great people, is to be found.

John Lloyd is an FT contributing editor. Hewas Moscow bureau chief from 1991 to 1996

The Strongman:Vladimir Putin and theStruggle for Russiaby Angus RoxburghIB Tauris £20, 288 pages

It Was a Long TimeAgo, and It NeverHappened Anyway by David Satter Yale £25, 416 pages

Change or Decay:Russia’s Dilemma andthe West’s Responseby Liliya Shevtsova andAndrew WoodCarnegie Endowment$19.95, 238 pages

Dealing with apost-Bric Russiaby Ben Judah, JanaKobzova and Nicu PopescuEuropean Council onForeign Relations, 64 pages

Backing Vladimir Putinaddresses an audience at ameeting of All Russia People’sFront, an umbrella movementof his supporters, in

Kemerovo this week Reuters

Putin’s luck springs frombeneath his feet: the still-vastreserves of oil and gastrapped under Russian soil




Books

Don’t let’s be beastly The rivalry of northern

Europe’s ‘terrible twins’. By Frederick Studemann

In the realm of national stereotypes – especially those minted in England – Germany still commands a specialplace. From the latest agonies of the

eurozone crisis to the football pitch, fromthe factory gate to the stage and library,the role of the overbearing, successful-yet-dull, intellectually heavy-going German iswell-rehearsed.

Attempts to counter such perceptionsare a mug’s game, fraught with the riskof ending up sounding reproachful or – horror of horrors – humourless. The list of those who have penned hand-wringing treatises, organised dusty seminars or

made pained early morning appearances onBBC Radio 4’s Today programme in a bidto overcome Anglo-German misunderstand-ings is a long one.

Philip Oltermann is the latest person toventure into this perilous, churned-up no-man’s land. Keeping Up With the Germansavoids anything too heavy-handed and yetstill manages to offer an intelligent, enter-taining and, at times, surprising take onrelations between the two nations oncememorably dubbed northern Europe’s “ter-rible twins” – wreaking havoc in the neigh-bourhood and rubbing up against eachother while also having much in common.

His approach is that well-established jour-nalistic technique of telling the storythrough people. In this case, a motley crew– from screen diva to Oxford don, fromurban terrorist to football star – cometogether in a series of “encounters” throughwhich particular themes are debated.

And so a pub meeting between HeinrichHeine, the poet who aimed his pen at theheart of reactionary Germany, and WilliamCobbett, the campaigning pamphleteer andrambler, unfolds as a tale of differing histo-ries of politics and philosophy – the other-

worldly thinkers and poets supping withthe pragmatists. Contrasting business andeconomic models are revealed through thepeople behind the Mini and the VolkswagenBeetle. For those whose knowledge of Ger-man history is book-ended by the Beer Hallputsch and the rubble of the Berlin bunker,there is much illuminating stuff.

The tale also moves into the present day,taking in Oltermann’s personal journey asa German teenager whose parents sud-denly up sticks and move to London. TherePhilip becomes “German Phil”, who goesinto journalism and whose British-bornwife finally observes that he does not seemGerman at all. She meanwhiles confessesto feeling quite at home in Germany.

If there is a conclusion, this is it. Yes, thetwo are different, but then again not thatdifferent. And for all the sniffy Anglo-Saxon common-room dismissal of Ger-many’s “belated” development, he writes,recent history and experience point to amature country more at ease with itself.Anyone looking for evidence that some-thing is changing in Anglo-German rela-tions should consider the omission of what

many might consider to be the big, defin-ing “encounter”: that between Churchilland Hitler. Oltermann (almost) didn’t men-tion the war – and got away with it.

Frederick Studemann is the FT’sanalysis editor

In the Zone Novelist Geoff Dyer celebrates his lifelong devotion to a cinematic masterpiece. By Peter Aspden

Iwas born in the same year as Geoff Dyer and attended the same univer-sity. We almost certainly sat in thesame cinemas in the late 1970s, themost charismatic of which was the

downtrodden Penultimate Picture Palace inOxford, engaging with some of the mostleaden-paced films in history. Those Berg-man double bills, the rainy afternoons fall-ing in love with shapely and gnomic Italianactresses, masterful studies of culturalalienation from eastern Europe: these arewhat shaped us, and what persuaded ourpliant young minds to reach for what couldnot be grasped.

Their oblique subject matter was of noconcern; indeed, it was a temptation, withpotentially rich rewards. There was no bet-ter feeling than leaving the cinema tired, alittle confused, uncertain of your opinionon a film, only for its key images to startpopping into your mind, days or weeksafterwards. We believed that cinema wasthe most oneiric of the art forms, and not just because of the struggle to stay awakeduring those sprawling late-nighters. Themoving image was the thing but the moreslowly and surely it moved, the better weliked it. It gave us the time and the spacedenied us by the real world outside.

The Russian director Andrei Tarkovskyhad a special place in the canon of the

must-see impenetrables. His were the mostdifficult, and yet the purest, of those cine-matic works. Zona is an extended essay onone of those films, Stalker .

Stalker is, as described in Dyer’s bathetic

subtitle, a film about a journey to a room.It is an infinitely complex work. To sum-marise it is to traduce it. A writer and aprofessor are taken by an envoy – thestalker – to visit a “Zone”, which may ormay not exist, and which has the apparentpower, when found, to grant the visitor’sgreatest wish, which may or may not turnout also to be a curse.

Released in 1979, it is considered one of Tarkovsky’s greatest works. Quite apartfrom its technical accomplishment, it hasalso acquired cultish admiration for its pre-monitory qualities. The film’s “Zone”, deso-late, menacing, post-industrial, prefiguredthe Chernobyl disaster by seven years, andStalker can be seen as a harbinger of thatterrible event.

Dyer’s approach to the heaviness of Tark-ovskian cinema – and this will come as nosurprise to anyone familiar with his previ-ous work – is to treat it as lightly as possi-ble. The book takes us through the film ina straightforward, descriptive style, as if recounting its episodes to some impatientfriends in a pub. The jokey, blokey reduc-tionism takes us aback. This is one of the

epic works of world cinema. Surely itdeserves better than this?

But, of course, there is deft method inDyer’s fluent playfulness. He uses the filmas a springboard to philosophise more gen-erally about life and art. His footnotes,spread over entire pages, brusquely bump

us off his central narrative. Each scene inthe film is scrupulously examined and thendigressed upon. There is nothing so crudeas a search for meaning, just a kaleido-scopic array of reference points. Many of

these are autobiographical, and mostreflect shrewdly on the relationshipbetween watching a movie and living a life.

Dyer’s eclecticism of sources – nameschecked include Heidegger and Bo Derek – and lightness of tone are deceptive. This isa rigorous book, and one that celebratesproperly a lifelong devotion to an artisticmasterpiece. But it is also entertaining. Assuch, it is almost revolutionary in form. Itis often said of contemporary culture thatit has lost its sense of hierarchy, but that issomething to be applauded rather thanregretted. This is actually how it feels toengage with great art: one minute you arerapt with admiration, the next you chuckleto yourself because a prop in the corner of the frame reminds you of a naughty schoolfriend. There is always randomness amidthe reverence. To pretend otherwise is tosubmit to pomposity.

That is not to say that Dyer’s elegantdiversions always succeed. He treads a fineline between clever imaginative leaps andself-indulgence. There is an uncomfortablesection on watching the Hollywood remakeof Solaris in which he is taken aback (at

some length) by his wife’s resemblance tothe film’s leading actress, Natascha McEl-hone: “I whispered to my wife, ‘She looksincredibly like you.’ ‘I know,’ my wife whis-pered back.” How lovely for them both.

A certain pleased-with-itself quality inDyer’s prose is at odds with the agonised

quests described within it. Of all the Chris-tian values to be detected in Tarkovsky’sfilms, humility is among the most power-ful. It is not notable in Dyer’s writing.Certain cutting judgments come danger-

ously close to glibness. It is like reading AA Gill on Schopenhauer. And the authoris surely too scathing, considering theabsence of supporting argument, onKrzysztof Kieslowski, Luis Buñuel andLars von Trier. Another book, perhaps.

But it is the way Dyer handles the climaxof Stalker that ultimately converted me tohis cause. Describing a magical sequence,which he rightly describes as “one of theall-redeeming moments of any art form”,he submits to Tarkovsky’s almost super-natural powers of evocation, and finallytells his story straight. There is no inter-pretation offered, no larky digression, justthe relaxed confidence of a man who hassurrendered to the transcendent effects of awork of art.

Like me, Dyer has reservations about theDVD age, missing the days when, if youwanted to see a film again, you had to waitfor weeks and comb the weekly filmlistings. When you found a screening, itwas an event that would shape your week.That was part of the pure joy of watching pure cinema. Don’t even think, says Dyer,of watching Stalker on the small screen:

“One cannot watch Stalker on TV forthe simple reason that the Zone is cinema;it does not even exist on telly.” Therereally was a time when cinema matteredthat much.

Peter Aspden is the FT’s arts writer

Complex AleksandrKaydanovsky and NatashaAbramova in AndreiTarkovsky’s ‘Stalker’ (1979)

RGA

Zona:A Book About a FilmAbout a Journey to a Roomby Geoff Dyer

Canongate Books £16.99240 pages

Keeping UpWith the Germans:A History of Anglo-German Encountersby Philip Oltermann

Faber £12.99320 pages

China’s conscience

A Nobel Peace Prize-winner’s plea for humanity. By Jamil Anderlini

The final chapter of

No E ne mi es , N o Hatred , the selectedessays and poems

of Chinese Nobel PeacePrize laureate Liu Xiaobo, ispossibly the most st riking.

That is not because “Bei- jing No 1 Intermediate Peo-ple’s Court Criminal Judg-ment No 3901” containsbeautiful turns of phrase oroffers a glimpse into thecoruscating mind of one of China’s greatest dissidentthinkers. The significanceof this translated court doc-ument lies rather in how itreveals the paranoia andbrutality of the authoritar-ian regime that handed Liuan 11-year prison sentencein 2009.

The heavy penalty for“incitement to subvert statepower” was meted out forthe words that appear inthis book, words that tomost readers would nevercome close to a normal defi-nition of subversion orincitement. In “To Change aRegime by Changing a Soci-ety” (2006), one of the six

essays adduced in his trialas evidence of his guilt, Liuexplicitly argues againstoverthrowing the ChineseCommunist party. “Peoplewho are pushing for a freeand democratic Chinashould concentrate on agradual change in society

and expect that this willeventually force a changein regime,” he writes.

This hardly sounds likesedition. But Chinese offi-cials regularly describe Liuas a dangerous criminalwho threatens the veryfoundations of the state.The conclusion many read-ers of this powerful and fas-cinating collection of Liu’swritings will reach is thatthose foundations are notas strong as the Chinese

government likes to portrayto the outside world.

Through the excellenttranslation and editing byPerry Link, they will alsostart to appreciate his his-torical and political impor-tance and comprehend whyhe became the first Chinese

citizen living in China towin a Nobel Prize. Thiscame after he had alreadyspent one year of his cur-rent sentence in prison anddespite his once having bit-terly derided the Chineseliterati’s obsession with thehonour.

Even for those unfamiliarwith Chinese politics or thecountry’s human rightsrecord, this book shouldappeal because of the mov-ing poetry and beautifullywritten essays the editorshave included. Some of themost poignant works arethose relating to the 1989Tiananmen Square democ-racy movement and subse-quent massacre.

At the age of 34, Liu wasa key figure in those dem-onstrations and one of fourfamous intellectuals whopersuaded the army togrant safe passage for theunarmed students still inthe square on June 4 as thetanks rolled in. For his roleas a “black hand” behind a“counter -revolutionaryriot”, he spent more than 18

months in Qincheng, theprison for elite politicalprisoners, and has beensent back to prison andlabour camps for his writ-ings several times since.The idealism and outrage of the Tiananmen experiencepermeates all his work and

he often refers explicitly tothe massacre here.

In October 2010, when hiswife informed him in prisonthat he had won the NobelPeace Prize, he wept anddedicated it to the souls of those who died in 1989. Theopening line of his “FinalStatement”, which he readat his criminal trial inDecember 2009, stated thatthe Tiananmen massacrewas “the major turning point in my life”; later inthe same document heexpressed his hope that hewould “be the last victim inChina’s long record of treat-ing words as crimes”.

Alas, he was not, and inrecent weeks the Chinesegovernment has handeddown a string of decade-long sentences to otherprominent peaceful dissi-dents. As Liu said about hisown sentence, their fatesand those of the hundredsof other political prisonerslanguishing in Chinese jails“cannot bear moral scru-tiny and will not pass thetest of history”.

This book is an importantpart of that historical testand the best chance yet forthose who cannot read Chi-nese to hear the voice of China’s conscience.

Jamil Anderlini is the FT’s Beijing bureau chief

No Enemies, No Hatred:Selected Essaysand Poemsby Liu Xiaobo, edited byPerry Link, Tienchi Martin-Liao and Liu Xia

Harvard £22.95, 400 pages

The Dreyfus years

A century-old miscarriage of justice that still resonates. By Tobias Grey

In a country such asFrance, where styleand flourish havealways counted high in

the scheme of things, AlfredDreyfus was stubbornly,almost heroically uncharis-matic. The Alsatian-born,Jewish son of a well-to-dotextile manufacturer, Drey-fus’ dream was to gainentry to the French Army’sGeneral Staff. But as PiersPaul Read points out, “thearmy was one thing, theGeneral Staff another” for aFrench Jew at the tail endof the 19th century.

Read, a devout Catholic,whose books include a nota-ble study of the Templars,brings an original perspec-tive to The Dreyfus Affair .Even though there havebeen countless books onwhat Read calls “the mostinfamous miscarriage of justice in French history”,most have been written byDreyfusard historianswhose partisanship wasfanned by indignation.

The affair, which rumbledon from 1894-1906, began

when a cleaning lady work-ing for French intelligenceretrieved a torn up memo-randum from a wastebasketin the German embassy inParis. Its contents deter-mined that someone with aknowledge of French artil-lery was passing on low-

level covert military infor-mation to the Germans.

Dreyfus, who had a repu-tation as a loner with anindiscreet sense of curios-ity, soon came under suspi-cion. A sample of his hand-writing was obtained andcompared to the memoran-dum. Though not the same,some slight similaritieswere enough to have himarrested.

He spent the next 12years attempting to clearhis name, during which hewas subjected to two humil-iating courts-martial andover four years of solitary

confinement on Devil’sIsland. The Dreyfus casebecame a cause célèbre,made infamous by EmileZola’s tract “J’accuse”.

Most of the anti-Drey-fusards were Catholics,which made Read thinktwice about writing the

book: “I asked myself whether it was prudent forme, as a Catholic, to remindthe world of [Catholicism’s]role [ in the DreyfusAffair].” The result is a stu-dious, somewhat bloodlesshistory of how Dreyfuscame to be falsely accusedof selling French militarysecrets to the Germans.

Read maintains thatDreyfus was the perfect fall-guy for a military establish-ment determined to remainthe last Catholic-dominatedinstitution in the land. Thecontext Read develops isthat of an ideological strug-gle between French Catho-lics on the one hand andJews, Protestants and Free-masons on the other.

“It’s beyond question thatCatholics had good reasonto feel pushed aside by anew political class, withinwhich there were manyJews,” writes Read. “Onlyby keeping these things inthe front of our minds canwe understand what some-times seems the mindlesslyreactionary politics of

Catholics in 19th-centuryFrance.”

Though he does not glossover the anti-Semitic preju-dices held by many of theFrench military’s top brass,Read also suggests thatDreyfus’ uningratiating character contributed to his

own downfall, even thoughhe was famously pardonedin 1906. Variously describedby Read as “pushy”, “triedtoo hard” and “too cleverby half”, Dreyfus’ characterwas in stark contrast to hisbrother Mathieu – “elegant,aristocratic, debonaire” – who devoted several yearsof his life to clearing hissibling’s name.

But under closer scrutinyRead’s supposition appearsunlikely. A previous historyof the affair by Albert SLindemann notes that priorto Dreyfus only one otherJew had ever acceded to theGeneral Staff, despite a bur-geoning number of Jewishofficers. Far more likely,and as Dreyfus came tobelieve himself, it was hisJewishness that precludedany promotion and led tohim being falsely convictedfor treason.

There is not a charmoffensive in the world thatwould have changed themind of an anti-Semite suchas Colonel Ferdinand duPaty de Clam. For this

patrician French intelli-gence officer, accused byZola of being one of themain architects behindDreyfus’ conviction, it wassimply unwise to put those“who are not Frenchmen inFrance” in sensitive mili-tary positions.

The Dreyfus Affairby Piers Paul Read

Bloomsbury £25, 408 pages

Dyer rightly describes amagical sequence in ‘Stalker’as ‘one of the all-redeemingmoments of any art form’




Small talk

ChadHarbachChad Harbach shot to fame withhis debut novel The Art of Fielding , which was chosen asone of the Ten Best Books of

2011 by The New York Times.Born in Wisconsin, he studied atHarvard and went on to do aMaster of Fine Arts in fiction

writing at the University ofVirginia. Harbach is executiveeditor of the American literary

journal n+1. He lives in Brooklyn.

What book changed your life?Infinite Jest by David FosterWallace. I read it just as I wasgraduating from university and itmade me feel that writing wassomething you could do in thecontemporary world.

What is the last thing you readthat made you laugh out loud?Sam Lipsyte is the funniest writerin America. It was a story hepublished in The New Yorker.

What books are currently on your bedside table?Mortals by Norman Rush. And I

just read a chick-lit novel called

Queen Takes King by Gigi LevangieGrazer, which I really recommend.

When did you know you were going to be a writer?The day my book came out. Idoubted what I was doing until then.

Where do you write best?Out – where someone’s keeping aneye on me, like in a café.

Which literary character mostresembles you?He’s very dashing so I’m not sureif he resembles me but the onlyone I’ve come across is ChadNewsome in Henry James’sThe Ambassadors. It’sprobably entirely in the name.

Who are your literary influences?David Foster Wallace, HermanMelville, Faulkner andChekhov.

What are you scared of?Global warming, which I spendmost of my day thinking about.

When do you feel most free?Those rare moments when I havenothing to do but write.

How do you relax?I play American football everySaturday, which I find calming.

What is the best piece of advicea parent gave you?They weren’t big on the distributionof advice but they liked toadmonish me.

What would you change about yourself?I’d get a bit taller. Tall people havea real advantage in the world.

How would you earn your living if you had to give up writing?I’ve earned my living in all sorts ofterrible ways – as a janitor, a copyeditor, a psychotherapist. It wouldhave to be something new. Myparents have been farming for thepast few years so I would grow

vegetables.

Where is your favourite place inthe world?New York. It’s the kind of energyinvolved with the city and thethoughtful people who live there.

What does it mean to be a writer?What’s so wonderful about thenovel is that it’s the art form thatallows you to get the most of lifeinto it – the fullest, deepest and

most realistic version of lifethat you can capture. To

be a writer is to try tocome ever closer todoing that.

Interview by Anna Metcalfe

Chad Harbach’s ‘The Artof Fielding’ is

published by Fourth Estate

Books

Universal dilemmas

A collection of stories transcends outdated ideas about Jewishness. By Pankaj Mishra

In “The Gilgul of Park Avenue”, astory in Nathan Englander’s first col-lection, For the Relief of UnbearableUrges, a Christian financial analyston Wall Street suddenly decides he is

Jewish. At one point his wife, exasperatedby the fresh convert’s usual zeal aboutprayer and diet (“You threw out all thecheese, Charles. How could God hatecheese?”), blurts out: “If you have to beJewish, why so Jewish?”

It is not a question you could ever ask of Philip Roth and Saul Bellow, the two sec-ond-generation Jewish immigrants whocame to define Jewish-American writing inrecent decades. Bellow displayed littleinterest in a Jewish identity defined byreligious and ethnic traditions. Roth, whogrew up in New Jersey’s lower-middle-classJewish neighbourhoods at a time whenanti-Semitism was rampant, became, likemany of his peers, a beneficiary of postwarAmerica’s great material success andcultural power.

Indeed, the assimilation of second-gener-ation Jewish immigrants into secularAmerica accelerated to a point where, asthe critic Vivian Gornick has written, the“claim on existential outsiderness that,from its inception, had acted as a founda-tion for Jewish-American writing became,almost overnight, a thing of the past”.

It seems intriguing then that recent fic-tion by some prominent third-generationAmerican writers – Nicole Krauss, DaraHorn and Jonathan Safran Foer – should gosearching for roots in the Old World andIsrael. Roth himself satirised this politicaland intellectual aliyah through Henry Zuck-erman in The Counterlife, who renounceshis “old life of personal non-historical prob-lems” to move to Israel, trying to exchangehis invincible solipsism for a warm bath inthe historically defined collective.

Certainly, self-conscious reconstructionsof cultural identity and claims on outsider-ness are no guarantee of art. Moreover,the quest for authentic selfhood in thepast may actually impede an understand-ing of Jewishness in the present, or themultiple settings in which it is being

defined (and contested): the West Bankand IT campuses of Tel Aviv, retirementcondos in Florida and summer campsfor the elderly in the Berkshires, andamong the hipsters of Williamsburg as

well as the rabbis of suburban Long Island.Englander’s second collection of stories,

What We Talk About When We Talk About Anne Frank, luminously evokes theseworlds and many others. Englander, whogrew up in an orthodox Jewish neighbour-hood in Brooklyn, is not prone to being impressed by ostentatious displays of Jew-ishness – on the contrary. In the title story,a marvel of crisp, comic dialogue, heprimes us to mock the orthodox Israeli-American who asserts that “intermarriage”is the “Holocaust that’s happening now”.In “Sister Hills”, a miraculously com-

pressed fictional history of a West Banksettlement rendered in quasi-Biblicalcadences, we observe with growing uneasethe fanatical steadfastness of a millenarian.

At home in many idioms, Englanderunerringly finds the right one for eacho f h is stories, a nd h is lac on ic pro sefacilitates quick shifts of scene, emphasisand sympathy. In “Sister Hills” we alsosee the flabby software programmers andthe self-proclaimedly “leftwing” Americanw ho “ fe el s b ad f or t he A ra bs ” b utcan’t resist a real-estate bargain in theOccupied Territories.

However, anyone who comes to these sto-ries hoping to figure out Englander’s politi-cal views may be disappointed. Faced onone hand with the world’s intractabledisorder, and the claims of Judaism andZionism on the other, Englander seems tohave refined his perhaps natural gift of ventriloquism.

This preference for miniature polyphonyis not evasiveness. Englander, like all gen-uinely comic writers, is profoundly serious– a nd moral. He seems partic ularlyobsessed with the pathologies of violence:

how quickly the oppressed can turn intooppressors. The schoolboy narrator of “How we Avenged the Blums” describeshow he and his Jewish mates overcome,partly through training in martial arts, the

menace of an appalling anti-Semitic bully.But, with the bloodied villain at his feet, heconfesses: “I knew I’d always feel that to bebroken was better than to break.”

The more pacific of Englander’s readersmight nod their heads at this point. Theywould not feel so secure in their convic-tions when Englander describes in “FreeFruit for Young Widows” the ruthlessnessof a Holocaust survivor, and the debatebetween an Israeli father and son about theethics of pre-emptive killing. Here thebeliefs of the nerdy intellectual, the benefi-ciary of a long peace, are tested by the storyof the man who escaped his Nazi murderersby hiding in a pile of corpses, and then hadto massacre the family of his former Polishnurse before the latter could kill him.

Englander seems as disturbed by theimplications revealed by the stories as hisreader might be: there seems little pre-cooked about any of his fictions except oneBech-like tale about a failing writer ontour. Moving quickly through a range of

emotion – fear, farce, pathos, sorrow andeven pure joy – they tend to end abruptly.It is as though Englander would ratherleave his reader with a genuine perplexitythan a neat little solution.

In this the stories, though full of fantasy,humour and a sense of absurdity familiarto us from Sholem Aleichem to WoodyAllen, transcend any antiquarian notion of Jewishness; they explore dilemmas thatare, for want of a better word, universal.Writing in 1930, the American critic LionelTrilling claimed that the Jewish experience“demands poetry, passion, a little mad-ness”. “It will support greatness,” he pre-dicted, but only when “included in a richsweep of life, a life which would be impor-tant and momentous even without theproblem of Jewishness, but a life to whichthe problem of Jewishness adds furtherimport and moment.” Trilling was, of course, writing before the great andunprecedented calamity of the mid-20thcentury. But his words ring no less truetoday; and few literary works have betterdemonstrated their veracity lately thanthis glorious collection.

Pankaj Mishra’s ‘From The Ruins of Empire: The Revolt Against the West and the Remaking of Asia’ will be published by

Penguin in August

What We Talk AboutWhen We Talk AboutAnne Frankby Nathan Englander

Weidenfeld & Nicolson£12.99, 224 pages

Non-fiction Fiction Paperbacks Teen Fiction

It is fitting for a man bothfastidious about doing thingsthe “right” way yet willing tobe an iconoclast that SAAndrée’s favourite maximwas: “Be careful of health,but not of life.”

Andrée was head of theTechnical Department of theSwedish Patent Office from1885 until he “embracedmodernity by trying to use ahalf-ancient conveyance in aninnovative way” on July 111897: he took off in ahydrogen balloon to searchfor the North Pole. Of thethousand or so adventurerswho set out to discover oneof the last unmapped placeson Earth, at least 750 died.But only Andrée tried with aballoon. His remains werediscovered in 1930 alongsidehis expedition diary.

In The Ice Balloon, Alec

Wilkinson, a staff writer forThe New Yorker, tellsAndrée’s remarkable storywhile also allowing those ofother explorers and their ill-fated expeditions to floatgracefully through its pages.

Carl Wilkinson

The Ice Balloon: OneMan’s Dramatic Attemptto Discover the North Poleby Balloonby Alec Wilkinson

Fourth Estate £14.99288 pages

The nature versus nurturetussle has been running forcenturies and, despite themapping of the genome andour growing understanding ofthe role of DNA, it is adebate that continues torage today.

Into this fervid arena stepsJesse J Prinz, a professor ofphilosophy at the CityUniversity of New York, whosets out the argumentsmade on either side of thedebate by the likes ofThomas Hobbes and DavidHume and modern biologistssuch as Steven Pinker beforeexploring a middle groundthat neither bows to geneticdeterminism nor capitulatesto environmental pressures.

Beyond Human Natureexplores the origins ofknowledge, language, thoughtand emotion and argues thatthere is not one human

nature, but many. “From thestart of life,” writes Prinz,“we are moving beyondnature, and ourtranscendence of naturaldeterminism is our moststriking trait.”

CW

Beyond Human Nature:How Culture andExperience Shape OurLivesby Jesse J Prinz

Allen Lane £22, 416 pages It is 1920 and on Alaska’sWolverine river Jack andMabel are struggling tosurvive their first full winteras pioneer farmers whenthey are startled to see ablonde child in the snowyforest. Is she flesh and bloodor a delusion brought on bycabin fever? Could she reallybe a snow girl come to life?

Alaskan bookseller EowynIvey’s much-hyped debutdraws inspiration from theRussian fairy taleSnegurochka (or The Snow Maiden). Mabel knows thefable, and that none of thealternate endings is happy.The plot turns on whethershe and Jack, who are stillgrieving the death of theirown child, can manage tocreate their own ending “andchoose joy over sorrow”.

Ivey handles the transitionsbetween the magical and themundane with skill.Ultimately, this is a story

about finding love inunexpected places, and verywinning it is too – full of fireand ice and just about theright dose of sentimentality.The Snow Child is a sure betfor this year’s bestseller list.

Adrian Turpin

Samantha Harvey’s debutThe Wilderness charted thedecline of a mind throughAlzheimer’s. In All Is Song she conveys a similarlydistinctive internal landscapein conflict with the objectworld.

Philosopher WilliamDeppling no longer teaches ina university, preferring to holdinformal gatherings with agaggle of former students andlocal youths. William preacheslove for humanity in theabstract. But it is his brother,Leonard, who cared for theirdying father. When thesiblings reunite after the oldman’s death, their relationshipis tested as William runs foulof the police.

William may be a creepyIslington Socrates with aSpock-like love of logic. Yethe is also a Falklands warhero and suggestions ofhypocrisy or priggishness areundercut by self-deprecating

jokes. Leonard’s bewilderedpragmatism is easier tosympathise with. But who isreally the better man?

The result is intense,rewarding and bracinglyserious.

AT

The Snow Childby Eowyn Ivey

Headline Review £14.99448 pages

All Is Songby Samantha Harvey

Jonathan Cape £16.99320 pages

In Glasgow for the 1888International Exhibition,wealthy art-lover HarrietBaxter inveigles her way intothe home of up-and-comingartist Ned Gillespie, whomshe had met at his previousLondon exhibition. An ardentpatronage of Ned ensues –until one of his daughtersgoes missing. Her corpseturns up weeks later andHarriet, among others, isarrested; but her trial shedslittle light on the tragedy.

Far from a regularwhodunit, this sharply writtenintrigue is a triumph ofsuggestion and possibilitythat exerts a tenacious holdon the imagination.Recounting the affair in 1933,Harriet emerges as amarvellously unreliablewitness to her own life.

Harris populates thesemacabre proceedings withfascinating characters.Matriarchal Mrs Gillespie’soverbearing zeal, Ned’s

insipid presence, theincreasingly disturbedbehaviour of his survivingdaughter – all amplify thesense of uncertainty thatbuilds throughout thissatisfyingly long novel.

James Urquhart

Gillespie and Iby Jane Harris

Faber £7.99, 624 pages

Trekking from Nepal intoTibet to join the devoted fortheir ritual kora, a pilgrimagearound remote Mount Kailas,Colin Thubron arrives to findthe region swarming withChinese police and not a yakin sight for porterage.Peaking at over 5,480m,the arduous route is barrenbut awesome, a zone of“charged sanctity” thatemerges from Thubron’smosaic of observations.

As with Thubron’s previoustravelogues, this memoir is avehicle for his immensecultural knowledge. AlthoughKailas is sacred to Hindusand Buddhists, Thubronthoroughly explores theregion’s martial and religioushistory to take in suchancient cults as Bonworshippers. Submergeddeep within this erudition areshards of an intimatedevotion to his own departedfamily – memories of hisparents and haunting

reverences to his sister, lostin an alpine avalanche.

However heartfelt, thesefragments are few andclosely guarded by the rigourof Thubron’s penetratingcultural commentary.

JU

To a Mountain in Tibetby Colin Thubron

Vintage £8.99, 244 pages

The flat where 15-year-oldLaurence Roach lives with his

younger brother Jay isinfested with cockroaches,and the punning title refersto the insects’ ability to stayalive after decapitation, aswell as the brothers’ periodon their own when theiralcoholic mother vanishes.

Their money quickly runsout, and Laurence has tofield enquiries from a noseyneighbour, feed and cleanJay in a freezing flat andkeep social services at arm’slength. Jay identifies withScooby-Doo; with Laurenceas Shaggy and a new, cutefriend Mina as Velma, thetrio attempt to solve themystery of the missing mum.

The portrait of a kind andvulnerable teenager is verytouching as the boys’predicament gets grimmer.The theme of the family thatmust stay together at allcosts is a familiar one, butCousins’ sheer inventiveness,

coupled with Laurence’ssparky voice, keeps the storyfrom becoming depressing orworthy, even as you wonderwhether finding a selfish,violent mother counts as ahappy ending.

Suzi Feay

A British supernaturalromance with a Hollywoodflavour, Ruth Warburton’sdebut is like Mean Girlstransposed to the WestCountry, with a dash of TheCraft thrown in. Moody AnnaWinterson moves to thevillage of Winter with her dadand finds an Anglo-Saxon

grimoire in their house in thewoods. She casts a love spellon Seth, the school’s alpha-teen hunk, with spectacularresults, but when she relentsand reverses it, he’s stillsmitten – how can she knowif his love is real? Meanwhilethe girls at school now hateher and her meddling hasinfuriated the sinisterEaldwitan, a council of darkoccultists who forbid magicin front of the “outwiths” –basically, Muggles.

Seth could exist nowhereoutside female fantasy; he’stender, empathetic, gorgeousand endlessly patient with agirl who constantly screams

at him. Anna has littlediscernible personality, andbackground characters areinsubstantial; a book this sizeshould have more texture. Atleast it’s better-written thanmost magical fare.

SF

15 Days Without A Headby Dave Cousins

OUP £6.99, 288 pages

A Witch in Winterby Ruth Warburton

Hodder £6.99, 368 pages

The ArchaeologistBy Peter Redgrove

So I take one of those thin platesAnd fit it to a knuckled other,Carefully, for it trembles on the edge of powder,Restore the jaw and find the fangs their mates.

The thorny tree of which this is the gourd,Outlasting centuries of grit and water,Re-engineered by me, stands over there,Stocky, peeling, crouched and dangling-pawed.

I roll the warm wax within my palmAnd to the bone slowly mould a faceOf the jutting-jawed, hang-browed race;On the brute strength I try to build up a calm,

For it is a woman, by the broad hips;I give her a smooth skin, and make the mouth mild:

It is aeons since she saw her childSpinning thin winds of gossamer from his lips.

Poem extracted from ‘Collected Poems’ (Cape Poetry) by Peter Redgrove, edited by Neil Roberts

The poem

George Bletsis




ers of giant clubs: icons such as Ferguson,Arsène Wenger and the number one on thelist, the late Bob Paisley, who dominated

England and Europe with Liverpool from1974 to 1983. These men are good, and foot-ball knows it. They are correctly valued.Yet the other half of Szymanski’s elite arelittle-known managers: titans of the lowerdivisions such as Sturrock, Steve Parkinand Ronnie Moore. They, too, have consist-ently finished higher with their teams thantheir players’ wage bills would predict. Yetclubs and the media largely ignore them.These men are good but undervalued.

Some may question whether managers of Manchester United or Arsenal can overa-chieve, given that their players’ wages arevery high. After all, these two clubs havethe biggest revenues in English football.Surely they ought to win championships?

In fact, Szymanski’s list helps us under-stand just how good Ferguson and Wengerare. United and Arsenal are not, in fact,outsize spenders. For many years theybarely outspent some of their frustratedrivals. Both clubs habitually live withintheir means. The Glazer family, whichowns Manchester United, doesn’t give Fer-guson fortunes to spend on players’ wages.He doesn’t need it.

The Premier League has 20 clubs, so theaverage club spends 5 per cent of the divi-sion’s total wages. Manchester United arealways above that 5 per cent line but fory ea rs t he y w er en ’t f ar a bo ve i t. I n1995/1996, for instance, they spent just 5.8per cent of the Premier League’s totalwages but won the title. From 1991 to 2000,United’s average league position was 1.8 (iesomewhere between first and second spot)and yet in that decade the club spent only6.8 per cent of the division’s wage bill.Ferguson was getting immense bang forhis buck. In part, he owed this to the Beck-ham generation. David Beckham, the Nev-ille brothers, Paul Scholes, and Ryan Giggswere performing like mature stars, butgiven their youth they would have beenrelatively underpaid. Ferguson also bene-fits from his longevity. Having been at OldTrafford since 1986, by the 1990s he hadchosen all the club’s players himself. Hewasn’t paying the unwanted signings of hispredecessors to rot in the stands. Thathelped suppress United’s wages.

Ferguson kept overachieving relative tohis wage bill in the 2000s, even after Beck-ham’s generation had become well-paidstars. Admittedly, his over-performance

Paul Sturrock sits in the overlitlittle manager’s office at South-end United Football Club. A flat-screen TV on the wall is set toSky Sports. Otherwise, this is the

bare office of a man who is not putting down any roots here. Southend play inLeague Two, the bottom tier of Englishprofessional football. Their stadium, RootsHall in Essex, east England, used to be arubbish dump. On this freezing Decembernight, they are preparing to receivelowly Bradford City.

Sturrock arrived here in 2010,sapped by Parkinson’s dis-ease, to find a penni-less c lub . “My firstday was probably thebiggest shock of myl if e w he n n in eplayers turned upfor training,” he reminisces. “Five gave meletters of resignation because they hadn’tbeen paid.” Amid the sea of Essex accents,his soft Scottish burr stands out: the foot-ball industry inflicts that kind of displace-ment.

Sturrock should be at a much biggerclub. He is an excellent manager. Going into this weekend, Southend lead LeagueTwo and look headed for promotion – theusual fate for Sturrock’s clubs.

But football does a bad job of valuing managers. Football managers are moderncelebrities yet most appear to add no valueto their teams, and could probably bereplaced by their secretaries or stuffedteddy bears without anyone noticing. Onlya few managers, such as Sturrock and AlexFerguson, consistently improve theirteams. Yet some of these excellent few getoverlooked. All these findings emerge froma 37-year study of English football manag-ers by Stefan Szymanski, economics profes-sor at the University of Michigan, withwhom I wrote the book Soccernomics.

Football’s mistaken valuations of itsmanagers raise larger questions: how muchvalue do managers or chief executives inany industry add? And how do employersgauge that value?

Generally speaking, the key assets infootball aren’t managers but players. Themarket in footballers, unlike the market inmanagers, is frighteningly efficient. It’s

easy to judge players, because they per-form in public. In Soccernomics, Szymanskishowed that players largely earn what theyare worth, judged by their contribution totheir teams’ performance. He found thatthe size of each English club’s wage bill(taking data from 1978 to 2010) largelyexplained where the club finished in theleague. The club with the best-paid playerstypically came top; the club that paid leastcame last. The correlation between players’wages and league position was about 90 percent, if you took each club’s average overabout 15 years. As Sturrock says: “Moneytalks, and money decides where you finishup in the leagues.”

If players’ wages determine results, theneverything else – including the manager – is

just noise. Most managers scarcely matter.In the long run, they will achieve the leaguepositions that their players’ wages wouldpredict. Still, there is an important caveat.Players’ wages don’t explain everything – merely almost everything at most clubs.That leaves room for a few good managersto make a difference. The question then is:which managers finish consistently higher

with their teams than you would expectgiven their wage bills? Or, to borrow aphrase from Real Madrid’s manager JoseMourinho, who are the special ones?

Szymanski has tried to answer that ques-tion. He analysed the financial accounts of four-fifths of English professional clubsfrom 1973 to 2010, and identified the manag-ers who consistently overachieved. Thesemen are the elite.

We should note right away that Szyman-ski’s model gives more credit to overa-chieving managers at the top of footballthan at the bottom. England’s 92 profes-sional teams are spread over four divisions.A manager in League Two who has the90th smallest budget in England but fin-ishes 80th nationwide is overachieving.However, a manager with the third-highestbudget in England who wins the PremierLeague is probably overachieving evenmore. At football’s summit, competition isfiercer, the amount of money typicallyrequired to jump places is higher, and somanagers of giant clubs dominate the topof Szymanski’s rankings.

The managers who make his elite listdivide into two groups. One half are manag-

The real special ones

Back stories

GAME CHANGERS

Who’s top of the table?

Name Rank Rank

Bob PaisleyAlex FergusonBobby RobsonArsène WengerKenny DalglishRafael BenítezDave MackayHoward KendallSteve TilsonJohn BeckRonnie MooreGeorge Graham

David MoyesMartin AllenPaul SimpsonSteve ParkinPaul SturrockDave Stringer

David O’Leary

(by “divisionalwage” method)

(by “totalwage” method)

1

3

2

4

6

11

8

9

10

7

12

16

517

28

38

14

19

33

1

2

6

4

3

5

9

11

12

21

17

13

2514

16

8

35

33

34

finish top, because you are competing against both bad luck and the fairly well-funded overachievers Wenger and Fergu-

son. Though Mourinho’s Chelsea outspenttheir rivals, he deserves credit for winning two straight titles. But Mourinho spent onlythree full seasons in England and, therefore,doesn’t figure in Szymanski’s rankings.

Today Manchester City almost certainlyp ay the league’s highest wages (theaccounts are not available yet). If Fergusoncan keep his neighbours from a title thisseason, he will have confounded the oddsagain. Szymanski’s ranking of managersmeasures only spending on wages, not ontransfer s, b ut it’s worth noting thatWenger and Ferguson typically have rela-tively low net spending on transfers too.That makes their high rankings here evenmore impressive. By contrast, RafaelBenítez, also in Szymanski’s list, splashedout on transfers at Liverpool. So althoughBenítez economised on wages, he didn’t gethis league positions cheaply.

Down in the bottom divisions, the likes ofSturrock, Parkin, Moore and John Beckseem to perform almost as impressively asFerguson and Wenger. Sturrock et al alsofinish high in the league relative to their

clubs’ wages. Yet their overachievementmostly goes unnoticed. Beck and Moore cur-rently don’t even have clubs. Sturrock issitting in his office an hour before Parkinvisits with lowly Bradford. And Parkin isn’teven Bradford’s manager, only the assistant.Titans of the lower divisions get ignored.

The market in managers is mostly ineffi-cient: some stars go unrewarded, whilemediocrities get good jobs. What are menlike Sturrock doing right? And why don’tthey get the credit?

Sturrock played as striker for DundeeUnited from 1974 to 1989. He wasn’t a glam-orous player – his nickname was “Luggy”,after the Scottish word “lugs” for “ears” – but he was good. He then became a man-ager in Scotland, but soon wanted more. “Imade a conscious decision that I would liketo manage in England,” he says in hisdownbeat way, “thus finishing up onerainy day in Plymouth. I sat in a one-bed-room flat wondering what the hell I wasdoing there.”

He didn’t do too badly. His Plymouthwon the third division with a record pointstotal, and had almost sealed another pro-motion when he left in spring 2004 to jointhe big time: the Premier League withSouthampton. Sturrock won five matchesout of 13 there, pretty good for a smallclub. “I probably had the most successful13 games any manager’s had at that club,”he chuckles. However, he left within sixmonths because he’d fallen out with thechairman Rupert Lowe, he says. He nevermanaged in the Premier League again.Sturrock muses: “I’ve ‘been to the show’, asthe Americans would say. The one thing I’ll say is that I enjoyed every minute of it.”

Why does he think big clubs ignore him?“Two years ago I came out with it, toldeverybody I had Parkinson’s. I think thathas been a feature.” However, that cannotbe the whole story; he was undervaluedlong before that. When pressed, he talksabout what he calls “the Southamptondebacle”. Almost despite his results, hisspell there tarnished his reputation. Thefirst time the national media noticed himas a manager, he was squabbling with hischairman at an unglamorous club. Stur-rock admits, “Maybe people tagged me thatI’d failed in that environment.”

His problem is that it’s hard to judge

managers on their results. After all, resultsare mostly down to players’ wages: that’swhy Southend, say, finish lower than Chel-sea. Nobody, as far as we know, has eversystematically investigated which manag-ers overachieve relative to their clubs’wages. It’s also hard for outsiders to judge

Continued on page 21

Generally in football, the team with thebest-paid players wins. Only a fewmanagers consistently finish higher thantheir players’ wage bills would predict.These managers are the elite.

To compile his ranking of the bestmanagers in English football, StefanSzymanski, economics professor at theUniversity of Michigan, examined theaccounts of 80 per cent of England’s 92professional clubs from 1973/74 to2009/10. He only ranked the 251managers, out of a possible 699, whohad managed five full seasons or more,examining how they had performedrelative to their players’ wage bills.

The telling statistic is the size of aclub’s wages relative to those of its rivals.

The average Premier League club spends5 per cent of the division’s total wagebill. Normally, a club with an averagewage bill should expect to finish in mid-table. If that club finished above mid-table, the manager was overachieving. Ifit finished below, he was underachieving.Few of these 251 were underachievers:

men who consistently finished lower withtheir teams than their players’ wage billspredicted. Szymanski estimated thatbetween 40 and 70 of the managersconsistently overachieved. That is at most28 per cent of the 251.

He drew up two lists of overachievers.The first list ranks each English club’swage spending relative to the other 91.We have called this the “total wagemethod”. The second list measures eachclub’s spending relative only to the otherclubs in its division (“divisional wagemethod”). Each method produced aslightly different list of overachievers.The two full lists are available atwww.ft.com/szymanski. Left are the 19names who appear on both lists –

Szymanski’s best stab at identifying thebest managers in England in this era.

Of course, Szymanski’s list requiressome caveats. First, the valuations aren’texact. Arsène Wenger ranks just aboveKenny Dalglish in the table, but thatdoesn’t mean that Wenger is better. Thetwo managers worked at different clubs

at different times, and so theirexperiences cannot be compared.

Second, the list is incomplete. BrianClough might have topped it if onlythere had been financial data for hisglory years with Nottingham Forest inthe 1970s. Forest was not a limitedcompany then, and therefore did notlodge annual accounts at CompaniesHouse. Nor could Szymanski includeperformances from leagues outsideEngland, because detailed financial datawas lacking. Alex Ferguson might haveranked even higher had his brilliant

years with Aberdeen been counted.Another caveat: factors besides the

manager might have caused each club’soverachievement. It’s striking that Paisley,

Dalglish and Benítez all overachievedrelative to wages with Liverpool, andWenger and George Graham with Arsenal.Perhaps it is easier to overachieve atLiverpool and Arsenal because theseclubs produce many excellent youthplayers, allowing managers to succeedwhile scrimping on salaries.

Most footballmanagers couldprobably bereplaced by theirsecretaries orstuffed teddy bearswithout anyonenoticing

In Britain, football managers are modern celebrities but most appear not to add value to their teams. Aided by academic Stefan Szymanski and reams of club accounts, Simon Kuper reveals some unexpected top performers

diminished. From2 00 1 t o 2 01 0,United’s average

league p ositionwas again 1.8 but

in this d ec ade hespent nearly 9 percent of the Premier

League’s total onwages. No won-der, because thet op s po ts h ad

become ever morecompetitive, with Chelsea

and Manchester City getting shots of oilmoney and Arsenal and Liverpool receiv-ing growing income from the ChampionsLeague.

Ferguson requires ever more money todominate. In 2010, the last year in Szyman-ski’s database, United’s share of the Pre-mier League’s wage bill peaked just above10 per cent. Yet even that wasn’t outsize.Manchester City were spending about asmuch, while Chelsea accounted for 14 percent of the Premier League’s total outlayon wages from 2004 to 2010. That’s thelargest share for any top division club inthe 37 years of Szymanski’s database.Other teams, too, had exceeded 10 per cent

of the division’s total spending before. Inshort, Ferguson is a phenomenon.

Wenger is almost as awesome. In his firstseven seasons at Arsenal, from 1996/1997, heaveraged a league position of 1.6 whileaccounting for 7.5 per cent of the PremierLeague’s wages. That was more than Fergu-son was spending then but hardly pluto-cratic. Wenger’s performance has declinedsince. From 2005 through 2010, Arsenal aver-aged a league position of 3.3 while spending 8.8 per cent of the Premier League’s wages.That’s only modest overachievement.

Yet during Wenger’s worst moments,especially after Arsenal’s 8-2 thrashing atOld Trafford last August, his critics weretoo harsh on him. Given that he was upagainst richer clubs, and against anothergreat overachiever in Ferguson, he hadalmost no chance of winning titles. In par-ticular, his regular defeats to Chelsea werepredictable. Chelsea have vastly outspentArsenal since Roman Abramovich boughtthe club in 2003 and gave his managerClaudio Ranieri 16 per cent of the PremierLeague’s wage spending for 2003/2004.

Clearly Ranieri ought to have won thetitle. However, his failure is forgivable.Even with the highest wages, it’s tricky to

Leaders From left, managerswho have overachieved,according to academicStefan Szymanski, includeArsène Wenger, RafaelBenítez, Paul Sturrock, whohas spent much of his careerin the lower leagues, KennyDalglish and Alex Ferguson

Getty, Corbis, Dan Burn-Forti




Back stories

Undone by acheesecake

Children require effort.Even though two out of my three Cost Centres liveaway from home 30 weeks

of the year, they are immenselytime-consuming. I do not begrudgethe time but it can be challenging trying to find it. This week I hitthe perfect storm that is theDavos World Economic Forummeets tax return deadline, not tomention the day job.

Filing the tax return remindedme that if you count all the taxpaid over from the economicactivity that my businessgenerates, it comes to more than£1m a year. That is a meaningfulcontribution, even to agovernment with a budget deficitforecast at £127bn for 2011/2012. Ican certainly testify that fargreater amounts of work arerequired to earn eroding sums of money, thanks to inflation and avery competitive market. Nowonder I am time-poor.

So I thought I would cheer usall up at home by booking a weekin Portugal at the end of August. Ichose it because I thought itwould please everyone (it has golf,sun, sea, industrial quantities of British teenagers). Also, it iswhere my Medical Girlfriend istaking her family for a couple of weeks and I thought it would benice to be there at the same time.However, as I should have known,you can’t please everyone.

CC#2 is ill with the streaming cold most of us have had sinceChristmas. So ill that he called mebefore a key exam to manage myexpectations about the result. I wasrather unsympathetic, and pointedout he would be able to retake it inJune anyway. But when I got himhome for the weekend, I realisedthat a few nights’ sleep in his ownbed and some appropriate drugswould be a good idea, and banned

him from going back to school onSunday night. Most teenagerswould be delighted by such anorder but he was due to read in

chapel for Holocaust Memorial Dayand was much put out that hewould have to stand down.

I tried to alleviate thatdisappointment by telling himabout the Portugal plans butsucceeded only in depressing himmore. It was bad enough that I hadbooked a holiday that clashed withReading Festival, which attractseven more British teenagers thanPortugal. But even worse, wewould be on holiday with MG’svery lovely daughter, his age, atthe worst possible time of the year.How so? They would both begetting their exam results aboutthen, he said, and she was moreacademically capable than him.

But my real effort in the middleof all this time-guzzling activitywas last Friday, when I rushedhome from work to attend adinner for the parents of childrenin CC#3’s class. There have beentwo such gatherings since hestarted at his school 18 monthsago, at both of which Mr M hasrepresented us alone. I thought itwas about time I put in anappearance and introduce myself to some of the people we would beseeing for the next six years.

We were asked to take a dish, inour case a dessert, so Mr Mpurchased a splendid cheesecake.We were the only people to bring a bought dessert, something Ibecame aware of as I unpacked itin someone else’s kitchen.Honestly, I berated Mr M, youshould have taken it out of thebox, added some fruit and dustedit with icing sugar, thuseliminating all traces of Waitrose.Being a parent, I pointed out,takes a lot of effort.

[email protected] columns at www.ft.com/moneypenny

‘Sharpen Your Heels: MrsMoneypenny’s Career Advice for Women’ (Portfolio) is published inthe US in February

Mrs

Moneypenny

Continued from page 20

managers on their daily work. Most big managerial decisions are made in private,and the outcome of those decisions – sign-ing a certain player, say – might onlybecome apparent much later. This diffi-

culty of assessment also bedevils judg-ments of corporate chief executives. That’swhy a CEO can appear on a magazinecover as saviour of his company one monthand appear in the dock the next.

Because clubs seldom know which man-agers are good, they tend to recruit manag-ers who at least look like managers. In thecollective British mind, the ideal footballmanager is a white middle-aged man, analpha male with a conservative haircutwho used to be a great player (even thoughSzymanski has shown that playing successdoesn’t predict managerial success). Man-agers get judged on surface characteristics:their skin colour, charisma, and personal-ity clashes as reported by the media. Thesecharacteristics mostly count against Stur-rock. His Parkinson’s slows him down. Hespeaks softly: more teacher at a villageprimary school than leader of men. TaraBrady, Southend’s chief executive, says:“He’s a bit of a dour Jock. He wouldn’tcome across as over-impressive.”

After Southampton, Sturrock won promo-tion at Sheffield Wednesday and Swindon.Then he returned to Plymouth and ledthem to their highest league position in 20years. “We also sold all our best players,”he adds glumly. When results declinedslightly, Plymouth shunted him into acommercial post. He moved to Southendin 2010.

“So. Here I am,” he laughs at himself. Hehad taken probably football’s least sought-after job. When he arrived in Essex, South-end were facing a winding-up order forunpaid tax. They had almost no players – aproblem for a football club. “I signed 17players in a week,” he recalls. One was hisson Blair, who has played for his father atfour clubs. But because of Southend’sfinancial mess, the league wouldn’t registerSturrock’s signings. Only two days beforethe season began, as he was preparing hisyouth team to masquerade as the first 11,was the embargo on transfers lifted.

Brady, a smart-suited Essex man whohad made money in technology andfinance, became Southend’s chief executivein December 2010. In his office with a viewof the car park, he explains: “I am fanaticalabout football. The club needed money. Ihad money.”

In this bizarre industry, where key

employees get arrested after night-timebrawls, Brady has tried to impose somereason. He employs his own “stats guy” tocrunch data on, say, completed passes in

The real special onesthe final third of the field. From the data,he has deduced a strategy: in the lowerleagues you must hit long passes. Rela-tively unskilled players cannot pass shortlike Barcelona. You need to put the ballnear the other team’s goal, and keep itaway from your own.

Brady inherited Sturrock by accident butsoon discovered that they thought simi-larly about football. Sturrock, too, believesin numbers and employs his own “statsguy” to crunch data. And Sturrock, too,has concluded from the stats that “long-ball football done in a clever way” winsmatches in the lower divisions. Sturrockhasn’t used the long-ball game all hiscareer, and he presumably would work dif-ferently with better players, but hebelieves it works for Southend. This isn’t

“hoof-ball”, he emphasises: it’s not justblindly punting balls long. “There’s a wayof doing it. I think you’ve got to be accu-rately playing balls up to your front men.And supporting them.” Playing clever long-ball football is a craft.

Brady and Sturrock aren’t soulmates.Together they perform the awkward danceof director and manager, with each trying to lead. Sturrock says: “Tara is a hoof-ballmerchant.” Just before the match, Bradysays: “Me and Paul disagree on a numberof things. We disagree on who should playup front today.” Yet they are allies. AtSouthend, Sturrock is overachieving again.

The club’s annual revenues are £3.2m.Brady says, “We’ve the ninth highest wagebill. We should finish ninth, right?” In fact,going into the Bradford match, Southendare second in League Two.

This overachievement doesn’t surpriseBrady. He quickly came to admire Stur-

rock. “During a game he can instantly seewhat is going wrong and change it, when itwill take me till after the game to work outwhat it was.” Having a good managermakes a “massive, massive” difference,Brady believes, because there aren’t manyof them. “I think most managers arefakes,” he says. In his observation, the Cityof London is competitive and football isnot. He has concluded: “Based on the com-petition we are up against, if we have theninth-highest wage bill we should finishmuch higher than ninth.”

Southend v Bradford has attracted 5,526diehards on this cold night. Everyone hereis performing an age-old ritual: there musthave been 200,000 now-forgotten matcheslike this in English history. Bradford arelow in the table yet it fast becomes clearthat they have the better players. Theirwinger, Kyel Reid, outclasses everyone atSouthend. Clearly, Sturrock has led a poorteam to the heights. Yet tonight his magicisn’t working. Not a man to stir himself unnecessarily, he sometimes even venturesout of the dugout to call to players. After88 minutes, Bradford’s Luke Oliver pokesin the game’s only goal. The crowd files outgloomily.

A month later, Southend top the table.Sturrock looks headed for another unno-ticed promotion. He has apparentlyresigned himself to Southend: in mid-Janu-ary he signed a new rolling contract. Andyet there are recent signs that clubs arebecoming more rational in their choice of managers. Charismatic former star foot-ballers are losing their monopoly on mana-gerial jobs. Three of the 20 managers intoday’s Premier League never played first-team professional football: Chelsea’s AndréVillas-Boas, Swansea’s Brendan Rodgers,and West Bromwich Albion’s Roy Hodgson(who peaked in Crystal Palace’s reserves).The Premier League’s historical average isone in 20. Steve Bruce, the last former starplayer without much managerial successstill managing in the division, was sackedby Sunderland in November. Meanwhile,other former star players such as RoyKeane, Bryan Robson and Diego Maradonaare no longer in demand as managers of serious clubs. Something is changing.

One day the market in managers mightbecome efficient. But it will probably be

too late for Sturrock.

Simon Kuper's latest book is ‘Soccer Men’ (Nation Books, $16.99)

This weekend will delightthe growing army of chessfans who enjoy watching the game live as aninternet spectator sport.

Tata Steel Wijk aan Zeehas attracted over 10,000web viewers daily to theworld No1 MagnusCarlsen’s bid for first prize.

The live page on theTata website has all thatan armchair watcher canwant. There are links to all

the games, each with acomputer evaluation.

Click on to any gameand you have the currentposition together with ananalysis of the program’sidea of the best next move.

The page also has videos,player interviews and alink to all previous games.

While Tata has its finaltwo rounds this weekend,the Tradewise GibraltarOpen is still in mid-event.

In the past decade thishas become arguably themost interesting open inthe world, with a trulyglobal entry and some fineweb videos made possibleby Gibtelecom.

Gibraltar 2012 is thebest yet, with England’stop pair Michael Adamsand Nigel Short competing against other elite mastersfor the £20,000 first prize.The all-time best woman,Judit Polgar, is also inaction.

Online viewing is free,fun and can improve yourown game. Try it out thisweekend at Wijk and Gib.

1934

White mates in twomoves, against any blackdefence (by M Keller). Thisdefeated many previoussolvers, some of whomeven claimed no solution.

Solution, back page

CHESS LEONARD BARDEN

Winners

Crossword 13,901: K Ward, Leicestershire; P Oldham, Stockport; P Weston, BristolCrossword 13,902: AP Cooper, Leamington Spa;Polymath 640: M Symeonidou, Athens

BRIDGE PAUL MENDELSON

To play the high card fromthe shorter holding is a finegeneral maxim for playing out suits but, as ever,rarely do rules help anambitious Bridge player . . .

South opened with aGame-Forcing 2C and,when North supportedspades strongly, he made acue bid and ended in thesmall slam. West led J♥.Plan the play.

An inexperienceddeclarer might win trickone in dummy with Q♥ toavoid any later blockagebut, if you focus on thatsingle suit, you lose sightof the requirements of thehand as a whole and yourslam will fail. Here, thehearts can easily beunblocked later, but theretention of entries intothe hand which containsthe establishable suit mustnot be compromised.

To succeed, declarermust win in hand with K♥,draw three rounds of trumps, and play A♣ and5♣. East wins and is likelyto switch to a diamond.Whatever South plays fromhand, West forces outdummy’s A♦. However, youcan now play a low cluband ruff in hand, andreturn to the table with 8♥to your carefully preserved

Q♥. A fourth club can beplayed and ruffed withyour last trump. Now,declarer can cash A♥,pitching a diamond fromthe table, ruff a diamondwith the last trump, andthe final club is your 12thtrick.

N

♠ 6432♥ Q 2♦ A5♣ Q7632

W E

♠ 1087 ♠ 9♥ J 10 96 ♥ 7 54 3♦ K 98 2 ♦ J 10 63♣ 94 ♣ KJ108

S

♠ AKQJ5♥ AK8♦ Q74♣ A5

Dealer: East N/S Game

North East South West

– NB 2C NB2D NB 2S NB3S NB 4C NB

4D NB 6S

ACROSS1 Vaulting ambition involves a tricky

move (6)5 Picture making one wise after sin?

Not entirely (8)9 Start with what the setter did in 4?

(8) 10 25 that is for novice (6) 11 Customer is right in court (6) 12 Area due for reunification

accepting new chancellor (8) 14 Poor law or new folk song?

Possibly (3,3,2,4) 18 Something fishy all heard at the

beginning? Gosh! (4,8)

22 Terribly hard piece without a crack (8) 25 Garment to take to the cleaners (6) 26 Man’s in room, wanting last tool

(6) 27 Worried Irish member eats bread

in Moscow (8) 28 Mad Hatter? No, cricketer (8) 29 You need empty words on last

page (3,3)DOWN2 Rugby’s first to be entertained by

an elderly Victorian headmaster (6)3 Stroke an insect (9)4 Display outrageous paintings when

turning up in restaurant (9)5 “What’s in orbit?” I shout aloud (7)6 Five Gaelic poems (5)7 Opening letters from Dumas to

Maupassant (5)8 Good Scots, say, holding party for

blind leader (5,3) 13 Niece not even born (3) 15 Airy advance with weapon over

battle zone (4,5) 16 Untamed rebel like aggressive

insect (6,3) 17 Pretty Flamingo’s last in West Ham

ground (8) 19 Clean head of hair (3) 20 Material for nails supplied by a

tinker (7) 21 Heartless cavalier in spotted cloak

(6) 23 Publication for children (5) 24 Composer heading for London is

captured by army (5)

Copies of How to Sound Clever by Hubert vanden Bergh and So You Think You Can Spell byDavid L. Grambs and Ellen S. Levine, publishedby A&C Black, will be awarded to the senders ofthe first three correct entries opened onWednesday February 8. Entries markedCrossword 13,913 on the envelope, should besent to Weekend FT, One Southwark Bridge,London SE1 9HL. Solution on February 11.

Solution 13,912 Solution 13,901

Name.......................................................................................................

Address....................................................................................................

................................................................................................................

................................................................................................................

The first correct entry drawn on Wednesday Februar y 8 wins a Cross

Edge pen. Entries, using the form below, should be addressed to

Polymath No 642, Weekend FT, One Southwark Bridge, London SE1

9HL. The solution and winner's name will be published on Saturday

February 11.

Name...............................................................................................................

Address............................................................................................................

........................................................................................................................

........................................................................................................................

Solution Polymath 640Jotter pad

Polymath winners will receive the

Cross Edge, a capless roller ball pen with a

unique slide open and click to close action.

It has a lifetime mechanical guarantee.

www.cross.com

1 2 3 4 5 6 7 8 9

10

11 12

13 14

15 16 17

18 19 20

21 22

23 24 25 26

27 28 29

30 31

32 33

ACROSS1 White wine grape used in

Liebfraumilch (8)5 Actor who played the villain in

The Good, the Bad and the Ugly (3,5)

11 Composition for nineinstruments or voices (5)

12 Reputedly the first European toland in North America (4,7)

13 In mythology, a dryad (4,5) 14 Former kingdom in the Czech

Republic (7) 15 Medieval body armour covering

the chest and back (7)

16 1972 single by Elton John (6,3) 18 German-born scholar who wrote

The Buildings of England (8,7) 23 Numerical system expressing

the relative hardness of solids(4,5)

25 To wander from the mainsubject, in speech or writing (7)

27 Very large flatfish of the North Atlantic and North Pacific (7)

29 In literature, an intricate,complicated plot (9)

30 44th president of the US (6,5) 31 Mario, Roman Catholic

Archbishop of Glasgowenthroned 2002 (5)

32 Welsh Labour Co-operativepolitician (3,5)

33 Tool for sharpening scythes (8)DOWN1 Food item whose name derives

from an 18th century Earl (8)2 English rugby union club

nicknamed The Exiles (6,5)3 Small genus of succulent plants

native to South Africa (7)4 Toxic condition during or soon

after pregnancy (9)6 Old distilling container, with two

retorts connected by a tube (7)7 Highland council area of

Scotland (9)8 British Operation in June 1944

to seize German-occupied Caen(5)

9 British American actress Joan,sister of Olivia de Havilland (8)

10 Playwright who wrote A Trip to Scarborough (7,8)

17 Belgian who won the NobelPrize for Literature in 1911 (11)

19 Italian veal dish, literally “bonewith a hole” (4,5)

20 Inner germ layer in the digestiveand respiratory systems (9)

21 Class of vertebrates that live onland but breed in water (8)

22 Garnet also called cinnamonstone (8)

24 An aldohexose sugar (7) 26 Pietro, Italian composer of the

late Baroque era (7) 28 Terrestrial radio navigation

system (5)

POLYMATH 642 SET BY AARDVARK CROSSWORD 13,913 SET BY CINCINNUS

Diversions

Complete the grid so each row, column and 3-by-3 box (in bold borders) contains every digit, 1 to 9. For strategies on how to solve Sudoku, visit www.sudoku.org.uk

© 2012 The Mepham Group. Distributed by

Tribune Media Services. All rights reserved.

SOLUTION TO LAST SATURDAYʼS PUZZLE

Inspirational Liverpool’s Bob Paisley Getty

In the collective British mind,the ideal football manager is awhite, middle-aged alpha malewho used to be a great player



LAST WORD

Touchingthe void

At a recent corporate retreat(not mine, someone else’s)the audience was treated toa glossy video which had

been produced by a glass companylooking to sell its products to techcompanies. The viewer wasintroduced to an unlikely familythat ticked every diversity box toensure the company in questiondidn’t have to resort to producing special editions for various regions.I was about to tune out and turn toanswering emails below the tablebut, as the family’s daily lifestarted to unfold, I was captivatedby its awfulness.

The main pitch was that,assuming all goes to (thiscompany’s) plan, we will soon beliving in a wonderful world whereour every move will be made thatmuch easier by glass screens thatwill greet us in the bathroom andgive us our emails while we brushour teeth – while also advising thatwe might be low on toilet paper. Inanother room a massive glass wallmight allow for an impromptuconference call while an all-glasskitchen will be a series of flashing recipes and alerts (hot surfaces, lowmilk supply, too much salt in yourporridge and bills in need of payment).

The story took us through a busyday in a metropolis where icypanels of glass punctuated tasksboth complicated and mundane.From clothing purchases to lunchorders, business meetings to homeentertainment, members of thisideal family swiped, pinched andswooped at these screens and everypart of their day was seeminglymade better by touch-paneltechnology. In short, it was a visionof hell that’s about to engulf us.

The world that this family

resided in was so horrendous that Iwanted to smash my head throughthe flatscreen on which I wasviewing the film. Theirs was afrigid, flat, sexless world where the

unfortunate Filipinas in the family’semployment would be working double time to keep all thosesurfaces spotless and SC Johnsonwould be reporting triple-digitgrowth as Windex sales skyrocketed,what with all the spraying andpolishing going on.

My design-editor colleague Hugorecently penned an essay thatcelebrated the joy of buttons – notthe fastening type but the big bulbous green variety that kickassembly lines to life and startengines. He discussed the satisfactionthat comes with pushing a big redplastic circle (preferably back-lit)surrounded by a metal neck andknowing that machinery will come

to a grinding halt or missiles will belaunched or the alarm will besounded. He argued that everyoneloves the positive feeling that comeswith the sensation that something will happen as a result of that smalldisc popping back into place.

I’d like to know who’s waging waragainst buttons. Is it the glasscompanies in collusion with a clutchof tech companies clustered aroundSan José? Is it a sinister industrialistin a secret warehouse in the suburbsof Taipei? Or is it all those people (Ibelieve they call themselvesconsultants) who get paid far toomuch money just to find ways of saving it? It might be a combinationof all three, but I suspect that aconsultant has convinced too many

companies that it’s best to have asfew moving parts as possible andtherefore the future will be all aboutunsatisfying pokes and swipes atlifeless stretches of glass.

A vital spaceto Occupy

The other day I dropped in on a“core values workshop” atOccupy St Paul’s. This wasthe second time I had visited

the small tent city, and once again Iwas struck both by its relative

orderliness (who said protest had tobe noisy and disruptive?) and modestscale. It had looked tatty the firsttime, but now it looked tattier, asimpermanent structures showedsigns of wear and tear. Over the tinytents the white marble walls andvast dome of Sir Christopher Wren'sEnlightenment cathedral loomedwith a sort of arrogant grandeur.

This time there was an additionalirony, as the event had beenscheduled for 11am on a Sundaymorning – the time when thecathedral’s congregation, mostly verysmartly dressed, goes in to holycommunion accompanied by a half-hour pealing of bells. The sound of the carillon was deafening anddrowned out the unamplified humanvoices in the Tent University (whichholds about 30). The idea that thisraggle-taggle regiment of somewhatimpractical idealists could pose anysort of threat to the establishedorder – as the City of London police,who have bracketed the Occupy

protesters with extremists andterrorists, seem to believe – waspatently absurd. Having said that,we know that a birth in Bethlehemconvulsed the mighty Roman empire.

I went to the event out of respectand friendship for the convener, thepsychotherapist Leon Redler. Andthere was another point of interest;after it there would follow adramatic performance re-enacting scenes from the Dialectics of Liberation congress that Redler co-organised in 1967 at the Roundhouse.This was of one the legendaryhappenings of 1960s counterculture,featuring left-field luminaries of thetime such as RD Laing, HerbertMarcuse, Gregory Bateson, StokelyCarmichael and Allen Ginsberg. Theperformance was a prelude to the2012 Dialekticon, billed as a “rebirth”of the 1967 events and due to take

place at Kingsley Hall, east London,on February 12.

Some write off the worldwideOccupy movement as the self-indulgence of hippies harking backto the 1960s; or the moaning of idle

layabouts. Here would be a chanceto assess whether it is more thanthat; and further, whether any of theideas that animated the 1967Dialectics of Liberation congress stillhave validity.

Some have complained that therewas quite a lot of posturing at theRoundhouse in those heady, warmsummer days of July 1967; certainlythere was quite a lot of marijuana,and some participants, asked fortheir reminiscences, say they recallalmost nothing. The mood in 2012 is

certainly more sober.Redler began by throwing us a

challenge. It was right, he asserted,

to criticise politicians, bankers,executives of multinationalcorporations and others for“behaving ignorantly, irresponsibly,selfishly, cynically” and having “toonarrow, short-term and distortedviews”. Should we not also ask if “they” are so different from “us”?Perhaps “they are ‘us’ and we are‘them’ ”. In that case, if “we’refundamentally alike . . . our sincereinquiries can begin to permeate thesystem and provoke real and honestspeaking and t houghtfulness”.

Nothing could be further from theworld of Dave Spart, the beardedstudent activist spouting Trotskyitegibberish who appears in the Britishsatirical magazine Private Eye. Youmight think such inquiries wouldhave better hopes of success in aBuddhist monastery than a Londonstreet protest, but you could not

accuse them of a knee-jerk blaming of others.

The most prevalent criticism of theOccupy movement in the media isthat it lacks a clear agenda orprogramme. This misses the point.

What Occupy is doing primarily isopening up a space – which youmight call the space of deliberativedemocracy – as a necessarycounterpoint to the often over-managed and media-controlledroutines of official politics. What willfill that space cannot, by definition,be decided in advance.

Occupy also answers to the call of the times in ways that officialpolitics mostly doesn’t. We are toldthere is a lack of “demand” in theeconomy, but you only have to gofor a short walk in any inner-cityarea in the world to see what theeconomist Joseph Stiglitz calls “hugeunmet needs”: the need to regeneraterundown areas, to care for and lookafter neglected people and spaces.And beyond my neighbourhood oryours there is the overarching needto retrofit housing and transport toreduce carbon emissions.

How does all this relate to thesummer of 1967 at the Roundhouse?The overriding impression from the

performance was not of dope-fuelledhaze but of uncanny premonition.There was the ecologist GregoryBateson, 30 years before the Kyotoprotocol, warning of the rise of CO2

concentrations and global warming;beyond that, of how “if you followthe ‘commonsense’ dictates of consciousness you become . . . greedyand unwise”. There was StokelyCarmichael, 32 years before theMacpherson report, denouncing “institutionalised racism”. And therewas Laing, speaking of a “precariousand dangerous and confusing”moment in history when we cantrust neither “politicians [nor]scholars”, but when we may “putour trust in something hidden deepinside us”.

[email protected] columns at www.ft.com/eyres

Protest Chalked messages outside St Paul’s Cathedral as part of the Occupy movement Corbis

In recent months BlackBerry’sparent RIM has been taking athumping in the markets as resultshave disappointed and managementhas failed to offer up much in theway of vision. While a new CEO has

just taken the helm, it seems thatneither the analysts, investors norsenior management have beenfocusing on their most basic asset – the Qwerty keyboard. Never mindnext-generation operating systems,apps and increased battery life, themost appealing thing about aBlackBerry is the reassuring clickthat comes from its keyboard.

Talk to most people who fire off emails all day and few will delight inthe functionality of touchscreens.While some may hide behindattractive features like predictivetyping and horizontal keyboards, allwill agree that you can’t beat akeyboard for accuracy and thedelight that comes from pounding out a disciplinary note to under-performing colleagues or firing off a letter to the CEO of a companythat has let you down. Indeed, half the fun is giving a keyboard agood old bashing and thenhammering the send key for a finalone-two punch.

While many debate the future of BlackBerry as a serious player in themarket, its competitors should bethinking about the consumers whoaren’t interested in products thatdon’t offer the satisfying tactileexperience that comes with an arrayof buttons that clatter and click andeven occasionally stick. Just as theImpossible Project has revived thePolaroid business by producing filmand restoring cameras, there will nodoubt be big business in restoring old Nokias, BlackBerrys andSamsungs that feature quaint,reliable and accurate keyboards.

Tyler Brûlé is editor-in-chief of Monocle [email protected] columns at www.ft.com/brule

The most appealing thingabout a BlackBerry is thereassuring click thatcomes from its keyboard

The Occupy movementanswers to the call of thetimes in ways that officialpolitics mostly doesn’t

Tyler BrûléThe Fast Lane

How to give it

Sir Roger Moore

The actor Roger Moore, 84,who played James Bond inseven films, is anambassador for children’scharity Unicef(www.unicef.org).

What is the cause that isclosest to you?Unicef is [closest] now, and

has been for 20 years. Beingan ambassador for them isalmost a full-time job.

What was the first charity you remember giving to?Being on holiday as a childat the seaside, it wouldprobably be collecting for the

Royal National LifeboatInstitution. We wererewarded by a ride down theslipway in the lifeboat.

Is it more important forpeople to give their timeor money?If people do have the time,then it is wonderful for themto become volunteers. Unicefis not financially supportedby the UN [United Nations],so we rely on donations fromcorporations and individuals.A few months ago at aUnicef supply depot inCopenhagen the Duke andDuchess of Cambridge cameout and packed emergencyparcels to go to east Africa.

What is your favouriteexample of a charity inaction?Unicef covers so manythings. I have made bricksfor toilets and turned taps onfor the first time in villageswhere there was no runningwater. Those experiences are

extraordinary, and then thereare those heart-breakingexperiences where you seechildren dying frommalnutrition and from terriblewounds from landmines.

Is charity a replacementfor government provision?Help thy neighbour is veryimportant. From thebeginning of man becominghalf-civilised, charity hasexisted.

Do you think there is anargument for funding artsprogrammes above othercharities?Health comes first andforemost. If a child doesn’thave health, it won’t be able

to take advantage of theprimary education that Unicefwould help to organise.

Do you think that the richhave a moral obligation to

give to charity?We all have a moralobligation. Your poverty will

be judged, if you never shareany of it, by the enormousamount [of money] you takewith you when you leave.

What particular momentfrom your charitable workhas moved you the most?It was the smell of burningflesh on a horrendouslydraining day in a Salvadoranchildren’s hospital. The smell

just hangs in the air. At theother end of the room was achild with arms thinner thansticks; the drip going into herveins was thicker than herarm itself. The doctor toldme that she wouldn’t last thenight but, if she’d arrived 48hours earlier, she could havebeen saved.

Interview by Cally [email protected]

Harry EyresThe Slow Lane

CHESS SOLUTION

1934 1 Qa3! (threat 2 Nc5mate). If Qf8 2 Nxd2 or Qe32 Qxa8. A trap is 1 Qg1? Qf4!



FT | Saturday January 28 / Sunday January 29 2012WEEKEND

P r o p e r t y • I n t e r i o r s • A r c h i t e c t u r e • G a r d e n s

House^HomeChennaiIndia’s autohub fuelsa house boomInternational property Page 3

Bamboo buildingsRooted in beauty and strength

Architecture Pages 4-5

Hung Huang Beijing boutiques andChairman Mao

At home Page 2

In August 2011, Libyan rebelsbroke into the huge Gaddafifamily compound in Tripoli.They looted it and trashed itand then invited the world’s

media in to see it: the secret luxury,the extravagance, the decadent west-ern brands. Journalists and TV pre-senters everywhere professed them-selves amazed by the scale of whatthey saw, by the ostentation and vul-garity of it. Practically every sighted,sentient being in the world, forinstance, will have seen the gildedsofa-bed affair in the house of Gadd-afi’s daughter Ayesha, with its “head”end carved in her image.

I was unsurprised and a bit under-whelmed by the revelations of theGaddafi compound. It looked broadlyas I’d expected but, if anything, ratherdisappointing, low-key and 1970s com-pared with other dictator-style man-sions I’d seen. I’ve seen a lot of them,at least in photographs: Saddam Hus-sein’s palaces in Iraq (more than 60)with their extraordinary over-scaleddesign and bizarre sadomasochisticpictures; Imelda Marcos’s 1940s film-set rooms; emperor Bokassa’s imperialeverything; the Ceausescus’ giganticpalace in Bucharest. I’d pored over pic-tures of all these places and more – the homes of 16 dictators from the1890s to the 21st century – for my book

Dictators’ Homes back in 2005.The premise was absolute style –

what happens when people with abso-lute power and absolute resourceshave their way with their buildingsand interiors. My going-in point wasironic, frivolous and, frankly, rather

snobbish. I was hoping the interiors

would turn out to be completely overthe top. I wasn’t disappointed. I alsostarted with some assumptions,namely that dictators were prettymuch history and their decorating style would soon be too.

Working through those pictures, wecodified the principles and practice of despot decor. We produced a get-the-look checklist of the kind you see insmart interior design magazines. Theprinciples were straightforward. Theclassic dictator’s home was designed

to impress and intimidate, to tell youthat this person commanded absolutepower and resources and that you, thevisitor, were a “worm” (a Gaddafiword for his enemies). He could have

With ostentatious interiors and over-the-top designs, despot decor isemerging as a trend in big western cities. By Peter York

you for breakfast. And the classic dic-tator’s home was designed to commu-nicate all this in a nano-second. Therewasn’t time for understatement orcomplexity – and certainly none forirony. Dictators’ homes are non-ironiczones. They are designed to reinforcethe Dear Leader cult of personality butat the same time they’re very imper-sonal – there’s no room for homeyunposed photographs or the pram inthe hall. They’re places to plot and dodeals, not real private spaces.

When early last year someoneshowed me some pictures of Gaddafientertaining Jacob Zuma, the SouthAfrican president, at the compound, Icould just tick things off our checklist.French repro, check. Gold everywhere,check. Animal heroes, check. Picturesof ME as world leader, check.

But by then I had learnt a lot moreabout how dictators operate. And I’drevised my easy assumption that theywere history; the cosy march-of-progress idea that dictators would justdisappear in favour of democrats. Thenames and paymasters will change asthe centre of the world economymoves to the Bric countries but dicta-tors will be with us for decades yet.

Despot decor is increasing in certainspots around the world. It’s becoming a trend in big western cities butparticularly in London, in so manyways the most important world citywhen it comes to the global super-rich.

The rich have been making theirway to London since the 1990s. But thecredit crunch and the Arab uprising have made the city into a positive tor-rent of flight capital. There are no

A-list dictators yet but many from

their families, their favoured friendsand lieutenants – people who sharetheir taste in interiors. As they’vecome, smart central London – particu-larly Knightsbridge and Mayfair – have become more expensive andmore dictator-styled (just look at theOne Hyde Park development).

Far from being a little blip of his-tory, despot decor is coming your wayif you live in a world city or an up-and-coming one. Successful people inall those new fast-growing places want

to express their success. And despotdecor – adapted – fits the bill. Like therobber baron style of the London/Paris/New York super-rich in theEdwardian Gilded Age, it can be funand exuberant. It’s not bound byancient inhibitions or understatedantique-worship. It can be sublimelycomfortable – it certainly incorporatesevery latest strand of technology fromplumbing to IT to AV. (There’ll alwaysbe a media room and a home cinema.)

And there’s a new generation of des-pot decor. It’s the style of the playboysons of dictators who’ve been to Har-vard or the London School of Econom-ics. New despot decor aims to say allthe same things about money andpower but in a different way. Insteadof big rooms crammed with gold, thereare big empty white rooms with gianttechnology – screens and systems – and big contemporary art of the acces-sible Damien Hirst and Jeff Koonskind. Or sexy black and white photo-graphs. And lots of rare wood veneersand whale-willy leather. There’s babe-magnet modern Italian furniture fromB&B Italia and branded everything from luxury designers.

This is now the dominant style onceyou get into the prime and super-prime areas of the world’s fastest-growing cities. We may not come tolove dictators but – look around you inyour own city – we’re certainly getting the look.

Big it up Make everythingmiles too impressively big forcomfort or practicality. It worksevery time.Go for gold Slather everypossible surface with gold.The furniture, walls and ceilingmouldings – even the statuary.It says wealth/pride/power ata stroke.Go repro The old architecturaland furnishing styles ofabsolute monarchy really dothe business – lots ofdecoration, lots of powersymbolism. (But dictatorsdon’t like the real thing.Antiquesare old and often shabby andthat doesn’t cut it. Better tobuy new.)Think French while you’re inthat repro mode. Repro Frenchdecoration and furniture hasbeen the taste of thrustingbig money for 150 years.It’s fancier, curvier and

Make it in marble Marble isthe material of emperors.Marble makes things important,expensive and everlasting. Soput it everywhere. Floors andwalls, columns, tabletops andin sexy statuary. New shinymarble, of course, not dullold stuff.Get big important pictures –19th-century oils. Until recentlycontemporary art

was seen as pointless and uglyin dictator-land. And OldMasters were often just darkand grim. But art pompier

really does the business. Have your portrait everywhere. Themost important pictures –the only ones that reallymatter – are of you, the DearLeader, the superhuman.Feature yourself doingsomething heroic ormythological – or just meetingother Great Dictators.Involve brands Increasingly,dictator style is a brandedgame. Everyone knowsthe global luxury brands.You’ve got Rollers and Ferrarisout front so get Versace sofasand D&G curtains inside.Buy anything with animalheroes Lions in marble,eagles in gold. Everyone

knows what they mean –they’re Roman, they’reNapoleonic, they’re just like you!

How to get the look: when you’ve got Ferraris outside, get Versace inside

Instead of roomscrammed with gold, there are giant screensand babe-magnet Italian furniture

Dictators of taste

Dictators’ homes aredesigned to reinforce the cult of personality but at the same time they’re very impersonal

Former Yugoslav leader Josep Tito

Gilded couch inside the Tripoli home ofAyesha Gaddafi, August 2011 PA

A giant marble falcon in one of Saddam Hussein’s Baghdad palaces, 1997 AP

From left: Colonel Gaddafi of Libya; Kim Jong-il, the late NorthKorean leader; Italy’s Benito Mussolini Rex, Corbis

altogether golder (ormolu)than anything Anglo-Saxon.Think hotel The design stylethat’s most influenced dictatordecor is the look of big citygrand hotels with their eclecticmix of pastiche styles and theiroversized public spaces.Go for glass Get giant mirrorsand chandeliers the size of carsto add to the fantasy value ofthose gigantic rooms.



2 ★ FINANCIAL TIMES JANUARY 28/JANUARY 29 2012

Sir David Tang, founder of ICorrect, globetrotter and the man about toomany towns to mention, divideshis time between homes in Hong

Kong, mainland China and London. Here he invites readers’ queries for his advice on property, interiors,etiquette at home (wherever you live),

parties and anything else that may bebothering you.

If you are so fastidious aboutinteriors, which example in thecommercial world would you considerto be exceptionally wonderful, and

which exceptionally appalling?Setting aside the Solomon of taste,Mark Birley, whose creations deservemany more column inches than I amallocated, I have never forgotten theinteriors of the once-mighty BaringsBank when they first moved intotheir swank offices at 8 Bishopsgate.It was a brand new modern building.As you entered the reception, youwere surrounded by oil paintings of the bank’s forefathers, hanging intheir old gilt frames and perfectly litby amber-glowing picture lights.Then you would notice fairly decentpieces of furniture, maybe evenChippendales, and never placed at anangle, quietly punctuating themodern space and its floor-length

glass windows. The dreadful cliché“modern and old” actually held ameaning in this very sophisticatedand stylish reception. The wholeatmosphere was one of calmness andgravitas and stylishness, through not

just the inanimate objects of thebuilding and the decorations but alsothe soft touches of human animationwith good manners. This indelibleimage of a family bank of greatheritage and reputation and powercaused my greatest sense of sadnesswhen I heard about its collapse – through the incomprehensible idiocy

of sending £500,000 down toSingapore for a young trader calledNick to plug his margin calls, andthe calamitous coincidence of theKobe earthquake that precipitatedthe fall of the Japanese stock market.Maybe I am a sentimental visualistfor mourning the demise of theirheadquarters’ reception rather thantheir balance sheet.

As for the worst interiors, therevamp of the River Restaurantat the Savoy Hotel easily queue-

jumps to the front. How anyonecould have destroyed that mostbeautiful room truly boggles themind. It seems to me to be aparadigm of how money wassquandered on the perceived

reputation of western designers whohave no imagination or any sense of practicalities in designing a simplerestaurant that has by itself enoughview and atmosphere to take over,rather than to be taken over. When Iwas a director of the Savoy Groupunder that great financial institutionBlackstone I never botheredcriticising the new interiors at TheConnaught and Claridge’s because Iknew that making money formerchant bankers does not easily gohand-in-hand with even the slightestsense of sacrifice for true stylishness.

When the earnings before interest,taxes, depreciation and amortisation(EBITDA) grew, the argument wasalways: “You see, the renovationsreally work well! People love them.”But of course the equally logical andmore likely conclusion is that thenouveau riche, who are the only oneswho can really afford the sharpprices, are getting more and moreinsipid! I rather give up nowadayswith stupid people assuming thateverything must be modernised.

There is a wonderful ambiguity in your use of this word “uxorious”. Do you mean to say that you continue tobe “excessively attached ordependent” on your wife despite the

fact that she is one of these newAmazons? Do you mean to say thatthe new Amazons do not tempt youand, therefore, you can continue tobe so attached? Or perhaps youmeant another word?First, my wife is not FatimaWhitbread. On ambiguity, my fondeststory is when Nicholas Parsons, insome quiz show, asked for the authorof Seven Pillars of Wisdom. Acontestant answered, “DH Lawrence”,to which Parsons countered, “It wasTE Lawrence, but I’ll give it to you!”I remember writing to him and

offering my copy of WilliamEmpson’s Seven Types of Ambiguity,which of course is the classic forwhich pedants like you is a must! Inthe case of “uxorious”, the definitionis actually “over-fond of one’s wife”,which gives rise to the wonderfulambiguity of “whose wife”? But themost interesting aspect is that thereis no equivalent for being over-fondof one’s husband, whoever he mightbe. Could this semantic void in theevolution of language imply that theconcept does not exist for women? Nowonder Mae West, when asked howmany husbands she had had,famously replied: “Whose husbands?”

Email questions to [email protected]

In a sleepy village on the out-skirts of Beijing, not far fromQincheng, a jail for high-ranking political prisoners, Hung Huang and her husb and have b uilt

their dream home among the gnarledtrunks of an old persimmon orchard.

With its high walls, spacious lawnand buildings inspired by traditionalChinese architecture, the compound isa haven of tranquillity for China’smost well-known media mogul, fash-ion guru and social commentator.

When I arrive at her house on a cold,clear Sunday morning she has only

just returned from Paris where she wasattending a dinner hosted by Jane

Fonda and L’Oréal to celebrate 40 yearsof its “Because I’m worth it” slogan.

She ushers me in through the floor-to-ceiling glass wall that runs thelength of the 50m long, high-ceilingedmain building and serves me tea andcake. We are sitting on tall white plas-tic stools in the open-plan living space.

In her immaculate American Eng-lish, punctuated by her famouslysharp wit, she immediately comparesthe feminist pride on display at herParis dinner with the status of womenhere in China.

“After Mao Zedong and the commu-nist revolution [in 1949] women gainedthe right to work but not to be treatedas equals; the feminist movementhasn’t happened yet in China,” shesays. “Because of this, Chinese menhave lived largely unchallenged andso their capacity has diminished – it’slike an animal that doesn’t have tohunt and is served everything on asilver platter; it deteriorates and getsweak. I try to be an equal opportunityemp loyer and hir e men too b ut italmost never works out.”

Throughout a life spent in the glareof public attention, Hung has made acareer out of bold statements and boldaction.

Her mother, from a wealthy familythat joined the communist revolution,w or ke d a s E ng li sh t ea ch er a ndtranslator to Chairman Mao, the com-munist leader who ruled over theworld’s most populous nation fornearly three decades and was reveredas a living god.

When her mother remarried one of China’s top diplomats, Hung left withthem to live in America, where shereceived much of her education whileher stepfather and mother ran China’smission to the United Nations.

After previous marriages to top Chi-nese film director Chen Kaige and to asenior French diplomat, she now liveswith the man who designed and builtthe house we’re sitting in.

Yang Xiaoping is an ar tist anddesigner whose father was the officialin charge of the Forbidden City, theenormous traditional palace complex

in the centre of Beijing that was hometo Chinese emperors for centuries.

“[Yang] started working on it 15years ago and I joke that I had to sleepwith him just to get him to finish it,”Hung says. “Now he sees it as a hobbyand he’s constantly renovating, adding new buildings or expanding the gar-den or putting in a swimming pool.”

“These are people who already have150 Louis Vuitton bags and 50 Guccibags and they want something a bitdifferent,” Hung says.

While she acknowledges that someluxury brands are starting to becomeover-exposed and commoditised inChina (Louis Vuitton now has 33stores open across the country), sheargues that western brands have beenthe key to educating high-end consum-ers and creating a domestic design andfashion industry.

“Without support from Hermès andChanel and their advertising I wouldhave been out of this industry a long time ago,” Hung says. “It is a miscon-ception that Chinese design is hurt byforeign brands – it is the opposite.”

With the sun streaming in throughthe glass walls we move to the softleather couches next to the unlit fire-place and Hung rattles off the namesof some of her fav our ite Chinesedesigners. Uma Wang creates baggyclothes that give the impression of “sexiness by accident” while He Yanis exquisite at tailoring and commer-cially very savvy, according to Hung.

Two successful domestic fashionbrands she admires are Zuczug, whichalready has about 60 retail storesacross China, and Exception de Mind,

which is also growing quickly. Bothbrands are environmentally con-

scious and own organic farms toproduce cotton, and both pro-mote an understated naturallifestyle with overtones of a

classical Zen value system.“The trend in China is mov-

ing away from ostentatiousbling bling design; the next

generation of Chinese fashion buyerswants something less western, more

Oriental, more Zen,” she says.Looking around Hung’s house and

tranquil garden it is obvious thatdespite her American education andher celebrity lifestyle that is some-thing she wants for herself as well.

Jamil Anderlini is the FT’s Beijingbureau chief

Superior and inferior interiors

House^Home

The 1,200 sq m compound consists of a long rectangular garden with oldpersimmon trees scattered throughoutand long grey buildings lining twosides in a style r eminisc ent of anancient Beijing courtyard house.

The main building has a huge studyof ab out 150 sq m at one end , theelongated living room/dining room/kitc hen with a v aulted, wood en-beamed ceiling in the middle wherewe’re sitting and bedrooms and a loftat the other end.

Priceless works of art are scatteredthroughout the house, as well as the

accoutrements gathered from a life asa writer, publisher, critic and fashionexpert. Copies of Hung’s current pub-lishing venture – the fashion magazineiLook – lie on the desk next to bagsfrom her newly opened fashion store,located in Beijing’s trendiest shopping district and set up mainly to supporthomegrown Chinese designers.

She is the publisher who broughtTime Out to China and has also beenthe host of television shows, including the popular Bright Talk, making her acelebrity in her own right with morethan 3m followers on Weibo, the Chi-nese equivalent of Twitter.

Despite these accomplishments she jokes how ultra-rich friends look ather with pity that she hasn’t capital-ised on her stellar political back-ground and connections to accumulateobscene riches as many of her contem-poraries have done.

“I’ve had this cocktail conversationfor at least 10 years where they alwaysask if I’m still doing my little maga-zine,” Hung says. “They think I’vesquandered my political resources andcan’t understand that I actually likewhat I do.”

But she says it is now often thechildren of these ultra-wealthy whoare the customers in her fashion anddesign store, which has been open forabout a year in the Sanlitun Villageshopping district in downtown Beijing.

“Until now, China has been good atselling things cheaply at huge vol-umes but our branding hasn’t beengreat so my store is intended to helpyoung Chinese designers get exposureand confidence,” she says.

Her customers are mostly women– about one-third are professionals,another third are wives and chil-

dren from wealthy families whilethe other thir d ar e c onc ubinesor “second wives” of rich and power-ful men.

What they all share in common issophisticated taste and the fact theyhave shopped all over the world andare choosing her store because theywant to support Chinese design.

‘China is moving away from ostentatious bling bling design; the next generation want something less western’

Hung Huang’s favouritethings are mostly notinanimate objects butwhen I press her shepoints to a brand new teaset she has just acquiredand says that this is hernewest favourite object.The set is made of finebone china and wrapped inintricate weaving.

“The set is made by aChinese company calledShangxia, which isprobably the first attemptto create a truly luxuryChinese brand,” Hungsays. The brand isinvested by Hermès and itcombines traditionalChinese craftsmen withmodern design to createa high-end collection ofhomeware, fashion,

jewellery and furniture.

Favourite things

Sir David Tang Agony uncle

Making money for merchant bankersdoes not easily gowithstylishness

The Mao factor

The celebrity publisher and fashion expert talks to Jamil Anderlini about her stellar political background and her efforts to advance the profile of Chinese brands

At home Hung Huang

Hung Huang at her home on the outskirts of Beijing Ben McMillan

Hung Huang as a baby with her mother

Hung Huang andher husband builttheir modernisthouse in an oldpersimmonorchard; the roomsare filled with art

works

The toadstool:part of a shop

window display for a high-endfashion brand



FINANCIAL TIMES JANUARY 28/JANUARY 29 2012 ★ 3

Th e Sou th India n c ity o f Chennai (previously knowna s Madra s) h as muc h tooffer: the second-longestbeachfront in the world,

nearly 400 years of colonial and post-colonial history, and an impressiverange of performing arts. It is India’sfourth-largest metropolitan area andthe capital of Tamil Nadu, one of India’s most prosperous states.

Over the past decade, it has adoptedthe tag “Detroit of Asia” withoutirony. Unlike its shrinking US name-sake, Chennai is one of the fastest-

growing cities in the world. Invest-ment by car manufacturers such asFord, Hyundai, BMW, Renault-Nissan,and domestic companies Ashok Ley-land and the TVS group, has turnedthe city into a regional automobileand auto components hub.

The city also boasts another accom-plishment: a diverse local economy.Chennai is one of India’s largestexporters of software services, it has awell-developed healthcare industryand serves as a base for textile export-ers. But unlike nearby Bangalore, eco-nomic growth has not fundamentallyaltered Chennai’s compact city centre.

IT and manufacturing investmentshave been made in earmarked corri-dors outside the city, along arterialroads, such as the East Coast Road,the Grand Southern Trunk Road andthe Old Mahabalipuram Road, whichhave been upgraded into national high-ways. “Chennai is an old city whichgrew steadily over time, and has nottherefore imploded,” says LakshmiVenu, director of strategy at SundaramClayton, and a fourth-generation mem-ber of the family that owns and runsthe TVS industrial conglomerate. “Itwas slower to catch up but its growthhas been more sustainable.”

Residen tia l real esta te su pplyreflects changing local demand, bothin central neighbourhoods, as well asalong its suburban peripheries. “Chen-nai was always an overgrown village,where many residents had ancestralproperties,” says Savita Idnani, aChennai-based architect. Owners arenow converting homes to apartmentblocks for greater convenience.

Meanwhile, some old houses arebeing demolished to make way forapartments to accommodate younger

Gearing up in Asia’s DetroitChennai property Growth shadows IT and manufacturing developments. By Aparna Piramal Raje

World City, such as Infosys and BMW,employing 27,000 people. Residentialconstruction has been slower, to fol-low commercial expansion. The firstscheme of 200 bungalows and apart-ments “has seen substantial capitalappreciation and rental pull”, saysPrasad. Now on offer are two schemesof 700-750 units each: Aqualily – high-end villas, twin homes and apart-ments, and Iris – mid-market apart-ments. Prices vary from Rs4m-Rs8mfor the apartments and Rs10m-Rs20mfor twin houses and villas.

As a city known for its temple cul-ture, preservation of tradition androoted identity, Chennai is still com-ing to terms with its new status as aglobal urban centre. However, its lei-sure and retail environment reflectsits changing demographics. Venupoints to the prevalence of Koreanshops and restaurants as an exampleof the city’s multicultural character.

T Chitty Babu, owner of AkshayaHomes, a well-regarded local devel-oper, observes that young people aregetting on to the property ladder intheir twenties and thirties, unlike ear-lier generations, who waited untiltheir fifties. The firm is building 2.1msq ft of residential real estate in thecity, in a variety of formats. Top-end

three- and four-bedroom apartments inits “36 Carat” residential scheme, nearthe central business district, rangefrom Rs35m-Rs40m and will be readylater this year.

House^Home

Buying guide

IND IA

MahindraWorld City

CHENNAI

GrandSouthernTrunk Rd

OldMahabalipuramRoad

MYLAPORE

10 km

EastCoastRoad

Bay of Bengal

families. “My father built a bungalowin 1974 near Mylapore [the city’scultural district], and two years ago,my siblings and I converted it into sixapartments,” says S Ramadorai, Mum-bai-based vice-chairman of Tata Con-sulting Services, India’s largest soft-ware services company.

Building restrictions and small plotsizes prevent high-rise construction inthe city centre, resulting in limitedsupply. Residential sale and leaseprices in Chennai’s upmarket neigh-bourhoods are now equivalent to thosein Bangalore, its better-known south-ern counterpart.

Developers have concentrated onbuilding aspirational homes for amid-market audience in the city’s newsuburbs, at substantially lower ratesof approximately Rs3,400 (£44) per sqft. The most popular format is a set of high-rise towers of two- or three-bedroom apartments, between 1,100and 1,500 sq ft of built-up area, availa-ble for between Rs4m-Rs5m. Thesegated communities often have a coun-try clubhouse, swimming pools andgymnasium.

True Value Homes, a local devel-oper, is constructing Chennai’s “tallestresidential building” – TVH OuranyaBay – a 29-floor, 100-metre-high resi-

dential property on the IT corridor,estimated to be completed in Decem-ber. Two-bedro om flats start a tRs4.5m; the penthouse will be Rs14m.

The real estate boom of 2008 and

Pros●Compact and accessible city centre●Affordable, varied housing●Opportunity to enjoy traditional artsand cultureCons●Hot, humid climate●Less westernised than other majorIndian cities●Fewer modern leisure amenities

Contacts●Prestige Constructionswww.prestigeconstructions.com●Mahindra World City

www.mahindraworldcity.com●True Value Homes www.tvh.in●JLL www.joneslanglasalle.co.in●Akshaya www.akshaya.com

subsequent slowdown of 2009 did notescape residential developers. “Priceshave been nearly stagnant in the lastsix quarters, and there are fewer newmid-market launches and some unsoldinventory of 2008,” says AshutoshLimaye, head of research for the glo-bal rea l esta te firm Jon es Lan g LaSalle in India.

Chennai’s prospects have attractednational real estate developers. Pres-tige Constructions, a Bangalore-basedcompany, has been active in Chennaifor a while. Last week, the companylaunched a 25-acre scheme for 2,600units in 33 apartment blocks, sched-uled to be completed in three years.The flats will span 600 sq ft studios to2,500 sq ft four-bedroom units, and arepriced at Rs2.7m-Rs12m.

The Mahindra World City, an houraway from Chennai, is arguably themost ambitious real estate bet ongreater Chennai’s future. The 1,500-acre, mixed-use township is backed bythe Mumbai-based Mahindra conglom-erate, in partnership with state-runTamil Nadu Industrial DevelopmentCorporation. “The goal is to createIndia’s first integrated business citywith a self-sustaining ecosystem forwork, home, learning and play; adecongested urban space not in the

midst of cities,” says Sangeeta Prasad,the chief executive of Mahindra WorldCity Developers Ltd.

In the 10 years since its inception, 38businesses have set up in the Mahindra

New development at Mahindra World City (above) and the Mylapore district in Chennai city centre (below), which has changed little Photoshot



★ FINANCIAL TIMES JANUARY 28/JANUARY 29 2012

House^Home

Bali and thechocolate factory Architecture Bamboo, eco-friendly and strong as steel, is used to build everything from homes

to bridges and schools. By Gisela Williams

W hile Bali’s south coastis being swallowed upby villa and resortdevelopments, there isan innovative green

design movement gathering pace onthe island. The area in and aroundSibang, an off-the-map hamlet betweenUbud and Denpasar, has become anunexpected centre for buildings madealmost entirely of bamboo. But unlikethe bamboo structures that havepopped up for centuries throughoutAsia and South and Central America,these buildings are resistant to decayand radically innovative.

The principal building of the GreenSchool, a pre-school through 12-gradeinstitution in the centre of Bali, hasattracted attention in architecture cir-cles since it opened three years ago.From the outside it’s intriguing enough – three interconnected spiralroofs of thatched grass seem to float20m above the ground – but only whenstanding inside its vast open centredoes it become apparent that thisthree-storey building is supported bymore than 2,500 bamboo poles.

“Contemporary, organic-inspired,Frank Gehry-style architecture is eas-ily done with bamboo,” says Jörg Stamm, designer of the Green School’sbamboo Kul-Kul bridge, which curves

about 22 metres over the Ayung River.“On a smaller scale, bamboo can beused like steel tubes, which are being used to build many contemporarybuildings.” Because of its strength and

elastic properties, bamboo is oftenused as scaffolding on building sites inAsian cities such as Hong Kong.

However, an interest in building with bamboo is also booming thanksto its environmental benefits. Studiescarried out by civil engineer JulesJanssen at the Eindhoven Universityof Technology in the Netherlandsshow that bamboo has the tensilestrength of mild steel, but needs only1/50th of the energy for processing.Properly harvested and treated bam-boo timber can also effectively replace

hardwood. Not only does bamboo growfaster, it can be harvested in three tofive years versus the 10-15 years formost hardwoods. Yet contrary to pop-ular belief, properly harvested and

The Environmental Bamboo Foun-dation, an international think-tank forscientists and architects founded bythe Irish designer Linda Garland, hasalso helped transform bamboo into apermanent material by developing atreatment known as the vertical soakdiffusion method. This protects bam-boo timbers from insects by penetrat-ing it with a solution of borax (orsodium borate), boric acid and water.

Contemporary bamboo architectureis at such an early stage that tech-niques are still being developed on the

ground. While the massive span of thenew Big Tree chocolate factory inSibang – possibly the largest indus-trial bamboo structure in the world – has benefited from the bolt systems

House prices atGreen Village, acommunity of 32bamboo structures yet to becompleted, will

range from$300,000 to$600,000; GreenSchool is within walking distance via the Kul-Kulbridge (right)

treated bamboo isn’t necessarilycheaper.

“At the end of the day bamboo is notthat much cheaper than steel,” saysStamm. “It’s a difficult and costlyprocess to select, harvest and trans-port the right bamboo timber in a sus-tainable way.”

Much of the technical know-howcomes from Colombian-based archi-tects and self-taught bamboo expertsOscar Hidalgo-Lopez (who wrote thebook Bamboo: The Gift of the Gods)and Simón Vélez, who is credited with

inventing a unique bolt system thatcreates strong and durable joints. Heis currently building a bamboo busterminal, in Santiago de Cali, Colom-bia, the length of three football fields.

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Hola, mi amigo!” Thevoice soundedfamiliar. “Mi amigo,wait!” I turned and

saw Quentin, aka The Thesp,who works with me as aconsultant, referring business;he knows tutto il mondo. His lifeis peripatetic, as he flits throughthe Mediterranean on friends’yachts during the summer,arrives in Los Angeles for pilotseason ever hopeful, thenperhaps a stint in Aspen butalways London in June and formost of the year – it’s such aconvenient setting-off point. Heis a professional guest. Not only

does he sing for his supper – quite literally if required – healso charms the hostess andinterests the hosts, all the whileshielding them from any dudsthat may be in their group. Whythe proverbial acting big breakhas eluded him, I’m not sure,but now in his mid 50s he’ssettled into this new role.

It’s no surprise then to seehim on Bikini Beach, justoutside of Uruguay’sfashionable Punta del Este. I’mfeeling somewhat guilty – having heard reports of weatherin London I’ve extended mystay and am still in SouthAmerica at the tail end of January. Ostensibly I’m doing arecce for a client interested inpurchasing here. In reality,

watching the sun set over theocean day after day at 9pm istoo alluring: with time to writeand play in the afternoon andSkyping with GG every

morning, it’s hard to leave orfind a reason to.

The Thesp is staying with a“Euro- fabulosa” friend. “Youknow, she’s one of thoseMilanese, St Moritz, Capri and

Punta types,” he tells me. Idon’t know the type and wonderhow many there actually arebut I’m happy to see The Thespand he kindly invites our groupto join him for dinner.

Punta del Este is the name of the main town but it covers thewhole area along this point of the Atlantic. The beaches arewide with dunes and stretchalong the coast for miles. Thetown is not attractive, bar theold port – rather, it’s full of sky-rise buildings.

It’s on either side of the townthat the barefoot chic charmreally comes into play – thehigh-rises disappear, and peoplefloat from beach to bars andback again in that uniquelySouth American way – timingshold no one hostage. The smalltowns of La Barra (where BikiniBeach is found) and the uber-chic José Ignacio are where youwant to be.

It’s in José Ignacio that Isearch for my client,instinctively feeling it’s histype of place. We sit in a

beach bar drinking caipiroskasamong the beautiful and thetanned emerging from the surf.The prices would makeManhattan’s richest blanch. Thetown is small; like Punta itself,it’s on two sides so if one beachis windy, most likely the otheris not. As we drive back inland,we discover beautifulcountryside, undulating greenfields – and yet we’re fiveminutes from the beach andnext door to a beautiful lagunareplete with wildlife. This is thespot for my client, benefiting from solitude yet moments awayfrom South America’s mostunderstated glamour – JoséIgnacio is not about glitz, it’sabout pared-down beauty,beaches and nature. Prices arefar from cheap, though, and

match the cost of the cocktails.

[email protected] columns at www.ft.com/secretagent

From beach to barsand back again

invented by Vélez, the on-site Ameri-can architect of the project, PeterCelovsky, had to come up with severalsolutions of his own.

Celovsky worked for months todevelop interior walls that couldreplace concrete walls, or at least sub-stantially reduce the amount of sandand cement used. He eventually cre-ated surfaces made of woven bamboostrips held in place by small bamboopoles and a layer of plaster.

“This creates a very lightweightwall that is both incredibly strong but

also supportive in the event of anearthquake,” s ays Frederick Schilling,chief executive of Big Tree. Fibresfrom guadua bamboo are longer andmore elastic than those in wood,

which is why it is often used for seis-mic-resistant buildings. The factoryitself – a surprisingly whimsical struc-ture that resembles a woven basket inthe shape of a barn – speaks of arti-sanal handiwork rather than sterileindustrial production.

In order to adhere to industrialcodes, Big Tree builders had to coatthe inner bamboo walls with a foodgrade sealant and seal all the interiorfood production rooms. (There are alsoplenty of fire extinguishers stashedaway.) However, it’s unlikely that a

factory like this could be built inmuch of the developed world. Relaxedregulations in countries like Indonesiaare the reason why Bali is a source of great experimentation.

“We have the freedom here to workwithout strict codes that restrict possi-bilities,” says bamboo architect Arief Rabik, who is Linda Garland’s son.Rabik is also a material scientist andis currently launching a bamboo floor-ing company in central Bali funded bya grant from the Netherlands. Hebelieves that bamboo laminates andflooring will have a positive impact onthe environment.

“It’s about changing wood fromwithin,” he says. “Most carpenterswill not accept a round natural formlike bamboo that’s irregular and can’t

be standardised for their frames. Withlaminates those contractors can stillget their 2 x 4.”

Rabik agrees that buildings such asthe Green School and the Big Treefactory are important examples of bamboo’s capabilities and have helpedto improve its reputation. “Bamboo isno longer just the poor man’s wood,”he says. “It’s glamorous and environ-mentally innovative.”

Back in Sibang, another bambooproject is under way next to the GreenSchool. The Green Village is a commu-nity of bamboo homes overseen byElora Hardy, daughter of the GreenSchool’s founder John Hardy.Although only five of its 32 plannedhouses are so far complete, the projectwas chosen as a finalist for the AgaKhan Award for Architecture in 2010.

Walls here are made from bamboopoles that have been sliced into a boxypattern and even kitchen appliances,including the refrigerator, are coveredwith a bamboo laminate.

House prices range from $300,000 to$600,000. “We also have a request tobuild a million-dollar estate on a sepa-rate piece of land near the Green Vil-lage,” says Hardy. “In general thebuilding costs start at $800 per sq m,though on request we can designmuch higher-end luxury.”

Tom Navasero, founder and execu-tive director for the Asia Center forSustainability, moved his family heretwo years ago after enrolling his eldestson in the Green School. “We live inluxury in the middle of the jungle,” hesays. “We hear the sound of a river,see beautiful sunrises and sunsets andhave fresh coconut water every day.We know that our carbon footprint isvery low despite comfortable living.People talk about thinking outside thebox; we live outside the box.”

House^Home

We discover undulating green fields – and yet

we’re five minutes from the beach

DETAILS

●Big Treewww.bigtreefarms.com●Green Schoolwww.greenschool.org●Green Village

www.greenvillagebali.com●Linda Garland and the EnvironmentalBamboo Foundationwww.bamboocentral.org




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House^Home

A cross the world people talkabout hard times ahead,about cuts, strikes, debtcrises, austerity taxes and

job losses. In short, eco-nomic Armageddon. But not everyoneis gloomy. Walk into an upmarketestate agency’s head office and youwill find the mood upbeat. Here theboardroom flow charts and canteenconversations focus on plans for newoffices, new affiliations, more staff andmore business.

Agencies with ballooning ambitionsin clude So th eby’s In terna tio na l

Realty, which has recently increasedits representation in Britain from oneoffice in Mayfair to include branchesin Chelsea, Stratford-Upon-Avon andCanford Cliffs, near Sandbanks in Dor-set, a tourist spot popular with Rus-sian, US and European holiday homebuyers. Over the next two years itplans to open eight more branchesacross the country.

Charles Smith, managing director of Sotheby’s International Realty UK,says his company is moving into areasbeyond London, because overseas buy-ers are starting to look outside thecapital.

“Some of the places we are thinking of moving to will have internationalappeal,” says Smith. “For example,Dorset. If you are Russian and youhad a second home in England – inaddition to one in London – you wouldgo to Sandbanks, because it has smarthotels, glitzy bars. There are one ortwo Russians buying there now.”

In addition, the agency will openoffices in areas with strong local mar-kets such as Wilmslow, in Cheshire,where the deman d for suburba nhomes from executives whose corpora-tions, like the BBC, are moving toManchester is growing.

Internationally, Sotheby’s network of affiliates has expanded to include Peru,Turkey, Hong Kong and the Caribbeanover the past 12 months. By 2014 it willbe represented in Taiwan, Saudi Ara-bia and, possibly, Australia.

Meanwhile, Knight Frank, whichalready has offices in 78 cities aroundthe world, wants to have offices in 100cities by 2016. “Significant develop-ments in the last year have includedthe growth of the India team to anational force of over 800 staff, anincrease in staffing across Asia Pacificand new offices opened in Austria,Switzerland, Romania, Abu Dhabi,Chennai, Hyderabad and the UK,”sa ys Nic k Tho mlinso n, a seniorpartner at Knight Frank. “Another30 emerging locations have beenmarked as future additions to the net-work, including adding to our existing representation in Latin America, Bra-

zil and Chile.”Knigh t Fran k is following th e

money. Supported by overseas staff, a20-strong team of London researchersanalyse capital flows around the

Bubble agentsProperty High-end residential estate agencies are expanding their global networks. By Richard Warren

opened five branches in 2011, including an office in Mayfair, and plans to openthree more next year. It is also adding lettings departments to existing officesthat don’t have one, to cater for agrowing demand for rental properties.

“There is a lot of money floating around the globe looking for opportu-nities,” says Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors. “There is somelevel of frustration with the perform-ance of equity markets. There are highlevels of volatility in Asian equitymarkets in particular, so many peoplefrom there may see property as a moresecure investment.”

world. Where they trace high levels of wealth transferring from one locationto another, the company considersopening new branches or expanding existing ones, to create a web of inter-connected deal-making centres.

According to Thomlinson, “Indiansare looking to buy in Singapore;Malaysian buyers are looking withintheir region; Hong Kong Chinese buy-ers are looking in Phuket; and AbuDhabi buyers buy in Malaysia.”

In addition to providing referrals toother offices within the network, new

branches will serve local demand forlocal property, says Thomlinson. Andin early 2013, he adds, the agency willopen its first office in Turkey, where aburgeoning economy supports local

demand for luxury homes. The officewill open in the country’s commercialcentre, Istanbul.

“It is n ot just the movemen t o f money out of an area,” Thomlinson

says. “You must also be able to sus-tain business within the market.”

Savills, the international propertyadviser, is expanding its branch net-work in London and south-east Asia,including Singapore, where it hired938 agents in the first 10 months of 2011. The most rapidly expanding sec-tors of the company’s residentialestate agency business are prime Lon-don residential sales and lettings, andsales of British developments at exhi-bitions abroad, mainly in Hong Kong,Singapore and Kuala Lumpur. Morethan half of buyers in prime centralLondon districts such as Kensingtonand Chelsea came from overseas inthe past 12 months.

Savills appears to be unfazed by theeurozone crisis and its effects on hous-ing markets. “Expansion of the resi-dential business is a long-term game,and while there is going to be moreshort-term pain, as the eurozone crisisis going to take time to reach terra firma, we are convinced that the trendof buyers exporting wealth abroad willcontinue,” says Rupert Sebag-Monte-fiore, head of global residential realestate business at Savills. “In turbu-lent times, high net worth individualsare reassured by property as an asset.”

Christie’s International Real Estateopened an office in Hong Kong lastsummer and will add a further 20 affil-iates’ offices to its network in theAsia-Pacific region, Moscow and the

Middle East over the next three years.Neil Palmer, chief executive officer

at Christie’s International Real Estate,says the company’s expansion plansfollow that of its parent company, theart auction house Christie’s, withwhich it has a symbiotic relationship,each providing the other with referrals.

“The art world is seeing a surge ininterest in the very best and we areseeing a clear resurgence in interest inthe very best residential property, par-ticularly in the prime residential mar-kets of London, Paris, Geneva, NewYork, Los Angeles and Toronto,”Palmer says.

Other estate agents expanding theiroperations in the upper quartile of thehousing market include London-head-quartered Fine & Country, whichopened 16 offices in Britain and 11overseas in 2011, adding to its existing network of 275 offices. Another 18offices are expected to open in Britain,mainland Europe, the US and theCaribbean this year.

The company, which operates as anetwork of agents licensed to use theFine & Country brand, has experiencedgrowing interest for its licences. “Inthe recession we have seen a numberof agencies looking to get into the

more valuable higher-priced propertymarket,” says Richard Combellack,Fine & Country’s head of marketing.

Hamptons International, whichfocuses on southern England, has

Savills has expanded its branch network inSingapore, where it

hired 938 agents in the first 10 months of 2011

DETAILS

Contacts●Christie’s International Real Estatewww.christiesrealestate.com●Fine & Country www.fineandcountry.com●Hamptons Internationalwww.hamptons.co.uk●Knight Frankwww.knightfrank.co.uk●Royal Institution of CharteredSurveyorswww.rics.org

●Savillswww.savills.co.uk●Sotheby’s International Realty www.sothebysrealty.com

Chris Wormell




House^Home

Few things daunt writer andadventurer Robert Twigger.In the course of writing eightbooks, the 46-year-old hashunted the world’s longest

python, and investigated a drug ritualin Haiti that turns people into real-lifezombies. Yet even he admits to a tem-porary loss of nerve during last year’sEgyptian revolution.

“I was at home in Cairo and myfriend Paul the priest rang,” Twiggersays, reflecting one year on about therevolution that began on January 252011. “Escaped prisoners were rampag-ing along his street, which leads fromthe notorious Tora jail to the middle-class suburb of Maadi, where he lives.

“I dug out a Nagaland headhunter’sknife my grandfather gave me. If pushhad come to shove, it would have beenineffectual but it was important psy-chologically,” he says. “My mother-in-

law helped us barricade ourselves inthe flat by st acking furniture againstthe door. The huge Carrefour super-market down the road got torched.”

Cairo isn’t Twigger’s first taste of expat life. After studying philosophy atOxford, he moved to Japan. A careerteaching English as a foreign languageincreasingly frustrated him: “A lot of it involved translating obscene pop-song lyrics for schoolgirls,” he says. Soin a n a ttempt to esc ape a rut, h esigned up to learn aikido with Tokyo’sriot police. The experience became thesubject of his debut Angry White Pyja-mas, the William Hill Sports Book of the Year in 1998. Much of Twigger’swriting since has included acts of der-ring-do. But it is the philosophy of adventure, not machismo, that inter-ests him.

Twigger first visited the Egyptiancapital in 1993. He arrived to see afriend, but left having fallen in lovewith his future wife, Samia, whoworked for Reuters. The couple movedto Oxford, where they had two child-

ren. In 2004, restlessness and England’shigh cost of living compelled them tosell up and fling themselves intoCairo’s idiosyncratic property market.

Finding a house generally requiresthe services o f a simsar , a c ro ssbetween an estate agent and a localspiv. Every street has one. Once abuyer finds a street they like, they aska bawab (or building concierge) to con-tact a simsar , who then takes them tolook at places for sale. “One tip: checkout your neighbours carefully,” saysTwigger. “We got into a dispute overwho should pay for the lift mainte-nance, so the neighbour got the liftaltered so it didn’t stop at our floor.”

Maadi is about 25 minutes’ drivesouth of central Cairo, and takes itsname from the Arabic for “ferries”, areference to the lack of a bridge acrossthe nearby Nile. The suburb mixesleafy streets and high-walled villaswith western-style shops. Popular withboth expats and affluent Cairenes, it’salso home to the British InternationalSchool, attended by Twigger’s chil-dren, who are aged nine and 11.

New Maadi, the district where thefamily lives, is a fast-growing over-spill. Given the number of high-risespunctuating the skyline, it’s hard tobelieve the area was little more thandesert 20 years ago. Home comfortsare not hard to find in the city, fromthe colonial splendour of the WindsorHotel to the boutiques of Zamalek, theNile island sometimes called Egypt’sanswer to New York’s SoHo.

“My favourite place is the Al KotobKhan international bookshop aroundthe corner from us,” Twigger says.“Great cappuccinos. So peaceful.Although if you want to live like youdo in the UK, you’ll find it more expen-sive in some ways. Fine wines andsteaks will set you back. But you’llnever iron a shirt again: 10 pence eachand delivered to your door.”

Smog often blankets Cairo, making it almost intolerable in the summer.An unexpected consequence of the rev-olution was that initially cars stayedoff the roads. “I’ve never seen the skyso clear,” says Twigger. “Amazingly,

for the first time we could see theWadi Degla hills from the apartment.”

This year Twigger will spend moretime in the UK for work reasons,watching from afar as democraticEgypt takes its first steps. “I’ll missthe country,” he says. “The best thing about Cairo is that it’s a place wheresmall miracles happen daily.”

Expat lives Robert Twigger is a writer andadventurer

Cairo via

Carrefour

By Adrian Turpin

On theday therevolution began ‘Idug out a Nagaland headhunter’s knife. It would have been ineffectual but it was

important psychologi-cally’

Pros●High-quality i nternationalschools●Africa’s only metrosystem is surprisinglyeffective, enabling morethan 700m passenger

journeys a year●Red Sea resorts are acouple of hours’ drive awayCons●The political instability

following Mubarak’soverthrow●The bureaucracy can beinfuriating; connections help●Poor waste-collectionmakes Cairo one of theworld’s most polluted cities

What you can buy for . . .£155,000 Detached villawith 231 sq m of livingspace and large garden onCairo-Alex Road(www.findaproperty.com)£840,000 Luxury neo-classical 816 sq m“Mulberry” villa set inEgypt’s biggest privatepark, the gated New HydePark development(www.homesgofast.com)

Robert Twigger at theAl Kotob Khan bookshopin Cairo Shawn Baldwin

Buying guide




Time to branch outGardens Robin Lane Fox on the best trees for f lowers, fruit and colour

This weekend I will be plant-ing trees, remembering thegrea t Do cto r Jo hn son .When a man grows old, heremarked, he starts plant-

ing trees. Indeed he does, but so doyounger and newer gardeners and theexperience of veterans may help themavoid the second rate.

Why not start with trees that haveat least three attractions, flowers, fruitand autumn colour? The obviouschoices here are the Sorbusses, myrecommended first stop for any gar-dener who already has a winter-flow-

ering cherry. They include the silvery-leaved whitebeams and red-berriedMountain Ashes but they are not alltoo big for modest gardens. The finelycut leaves and pink-white berries of Sorbus vilmorinii are a first-classchoice on any soil or in any climate-zone. The trees stop at about 12ft-15ftin height and the leaves colour pret-tily beside the autumn fruits. Theferny look to the foliage means theeffect is never dull or overpowering,even in high summer’s sunlight. Sor-bus vilmorinii is easier than the evenlovelier and smaller S cashmiriana,which is perhaps best in cooler gar-dens with n eutral o r a cid soil.I have planted a shortish double“avenue” of vilmorinii and, yearslater, I look back on the effect as a big success. The trees are never clippedbut they were well spaced up to 26ftapart. The off-white flowers in latespring are also a bonus.

At a height of about 15ft-20ft, thewaxy green-grey leaves of Sorbushupehensis are almost more impres-sive. This one, too, has pink-white ber-ries and for a fortnight or so in lateOctober there is a superb combinationof leaves turning fiery pink-orangeand clusters of berries hanging in out-line. The birds, probably bullfinches,then strip the trees bare. I look nowa-days on my four big hupehensis withpaternal pride. During the dry sum-mers of the early 1990s, I struggled tokeep them watered from the hose astheir leaves drooped and fell prema-turely. Nobody warned me the treeswere not as tough as basic MountainAsh but together we pulled throughthe bad years and now that their rootsare far down, they are able to take along drought. If you plant a hupehen-sis on dry soil, allow for the effort of early vigilance to help it establish.

Drought has never troubled myother matured Sorbusses, a choice Iowe to the expert suppliers, LandfordTrees near Salisbury (www.landford-trees.co.uk). The proprietor talked meinto a line of four Sorbus americana toedge off the garden against a stonewall a bo ut 8ft h igh. The gro un d

beneath it is ferociously dry but theseSorbusses have never objected. Thetrees are upright in habit, the idealshape for a boundary line and after 25years they are about 15ft high. The

neatly cut leaves are fresh green, likea Mountain Ash, and the glory of theiryear is mid-August to September whenthey set copious clusters of brilliantscarlet-red berries. Like the relatedMountain Ashes they surprise us byshowing berries early before autumnbegins. I like this untypical behaviourand can only say that I have neverpruned or watered my americanas andnow have a tall, tidily shaped screenwithout any further effort. They areplanted about 16ft apart.

Flowering cherries are a subject foranother day but I remind you thatPrunus Amanogawa is one of the bestcolumn-shaped upright varieties forsmaller gardens or confined spaces. Itflowers quite late in May in normal

years, if you believe in such things,and the flowers are double and a goodshade of delicate pale pink. Flowering crab-apples, or ornamental Malus, areanother big subject and here I will

only remark that one of the best of all,Malus Red Sentinel, is still covered inprominent scarlet fruit three monthsafter better-known favourites, such asGolden Hornet, have dropped all theirlittle apples in the first frost. RedSentinel remains a first-class gardentree but its branches’ natural shapeis to weep slightly and spread out-wards. Be sure to buy a full standardwith a bare stem of at least 6ft, anda height in total of about 8ft-10ft.Allow space for the branches to spreada nd a ls o r ec ko n o n a d ul l a nddusty month or two in late summerwhen the leaves lose their freshness.

Mulberries, big-leaved Paulownias,pink-flowered Robinias and fine-coloured ash trees are all seductive

choices. Be warned, as no list tellsyou, that they are all late into leaf,mulberries not being fully clothed inmost years until early June. All of them are pretty trees but for this one

reason they will never be my mainchoice for a front garden. I do notwant to look out on bare brancheswhen the tulips are already over.Instead, I recommend a return to theneglected ornamental thorn trees. Theflowers attract insects by smelling likerotting meat but the scent is onlynoticeable if you go off to find it. Thetrees also have sharp thorns that givesafety assessors something to writeabout. If you buy them as full stand-ards and keep the trunks trimmed, nodog or child is going to collide withthem at eye-level. For a glossy near-evergreen leaf and excellent lateautumn berries, all the Crataegus onthe market are excellent and unde-servedly dismissed as “hawthorns” or“street trees”, as if the latter are nec-essarily second rate. In late autumn,Crataegus persimilis prunifolia hasexcellent red fruits on branches thatretain their leaves and spread out-wards and downwards. It is a delight-ful tree but Crataegus crus-galli iseven showier, having glossier leavesbut fiercer thorns, the source of itsLatin name meaning “cockerel’s leg”.The longest-lasting dark green leavesare on Crataegus lavallei, another win-ner. Crataegus crus-galli, especially,will clip into a neat formal avenuezone that is as tough as the spurs on acockerel’s leg and absolutely reliableeven in dry conditions.

When a man gets old, perhaps heshould start planting thorns. The timefor second thoughts is shorter andthere is less scope for complicationsand mistakes. Of course, it is nevertoo late for a new magnolia, a newDavidia or late summer’s white flower-ing beauties, the Eucryphias thatflourish so well on acid soil and fur-ther north in Britain. Never underesti-mate your own active future. For the

framework, however, these Sorbusses,thorns and malusses will survive,develop and flower in a reliable span. Iam glad I put them first even in mymid-40s.

Crataegus persimilis prunifolia Alamy

The impressive Sorbus hupehensis

Malus Red Sentinel, a flowering crab-apple tree, with its prominent scarlet fruit Marianne Majerus

House^Home

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