A Sojourn in Davos:  Things Will Never Be the Same

Book Review - The Magic Mountain by Thomas Mann

For all its potential as a canvas for the display of human suffering, sick-lit never quite made it as a genre. In her 1926 essay On Being Ill, Virginia Woolf expressed dismay at the near-universal denial to give sickness its literary due alongside love, jealousy, and battle. “But no, literature does its best to maintain that its concern is with the mind; that the body is a sheet of plain glass through which the soul looks straight and clear.” Writing just seven years after the flu pandemic of 1918, which claimed fifty to hundred million lives worldwide, Mrs Woolf wondered why no novelist had dared explore the “wastes and deserts of the soul” brought to light during an attack of influenza.

Mrs Woolf need not have worried. By the time On Being Ill was published in Criterion – the literary magazine put out by British poet, dramatist, and essayist TS Eliot – critics and readers alike in Germany had already begun to heap lavish praise on Der Zauberberg. The much-anticipated latest work of Thomas Mann – at the time the country’s greatest living writer – was almost universally hailed as a tour de force for accomplishing the seemingly impossible by being both a bildungsroman – a coming-of-age story or comedy of manners – and an ingenious parody of the then-popular genre.

Published in late 1924, Mann’s masterpiece took no less than five years to reach the English language. It did so as The Magic Mountain [1] in a translation by Helen Tracy Lowe-Porter that over the years accumulated perhaps more than its fair share of critics. The 1996 translation of the book by John Edwin Woods seems to attract markedly fewer detractors.

"For Thomas Mann, the release of the Magic Mountain marked the end of a literary hibernation induced by the First World War."

For Thomas Mann, the release of the Magic Mountain marked the end of a literary hibernation induced by the First World War. While the writer had initially supported the conservatism espoused by Kaiser Wilhelm II, he underwent a volte-face after the great conflagration and became the semi-official spokesperson for the Weimar Republic, appealing repeatedly to the German intelligentsia to throw its collective weight behind parliamentary democracy.

When his debut novel Buddenbrooks was first published in 1901, Thomas Mann became an instant sensation. The book chronicles the slow and painful decline of a North German family of merchants over the course of four generations. Then, in his early twenties and with only a number of short stories and essays to his name, Thomas Mann set to writing in an attempt to eclipse his older brother Heinrich who enjoyed modest success as a novelist and was working on a portrayal of 19th century upper middleclass society.

Egged on by brotherly rivalry, Thomas Mann produced a book that would earn him the 1929 Nobel Prize in Literature – awarded for the entire body of his work but with special mention for Buddenbrooks – and remains a beloved and much-read classic to this day. Heinrich Mann’s Im Schlaraffenland (In the Land of Cockaigne) fared less well though its author did find a small following of devoted readers.

If Buddenbrooks established Thomas Mann as an author of note, and Death in Venice (1912) reaffirmed that position; The Magic Mountain dispelled any lingering doubts regarding the writer’s craftsmanship and genius. Set high in the Swiss Alps, the slow-moving yet intense story meanders through the lives of tuberculosis patients confined to the Berghof Sanatorium, nestled in the towering mountains above Davos – then also an upscale resort town catering to the well-heeled as they seek shelter from the whirlwind of human existence.

Offering a spell-binding allegory of pre-war bourgeois Europe, The Magic Mountain neatly ties into Buddenbrooks as it follows Hans Castorp, scion of a family of Hamburg merchants, as he sets out on a long train journey to visit his cousin Joachim who is taking the airs at the Berghof Sanatorium. Intending to stay for only a few weeks, Hans Castorp soon falls in love with the introspective little world he encounters at the hospice. Before long, a minor bronchial infection is all he needs to gain admittance and take his place as one of the consumptive “horizontals.”

Gone native, Hans revels in his new passive status in which the hubbub of life on the “flatlands” has been replaced by a fetishised routine of thermometer readings, meals, and servings of late-night hot milk duly spiked with a shot of cognac. At the sanatorium, life revolves slowly around petty rivalries, never-ending discussions, esoteric lectures, and the cautious exploration of the snow-covered Alpine surroundings.

While Europe marches towards war both boldly and blindly, inextricably tied to its sorry fate, the Berghof’s inhabitants marvel at the arrival of an x-ray machine, derive intense pleasure from their gramophone player, and are thrilled by the prospect of a visit to the cinema. Time itself slows down and moves along a divergent vector. It is thus that the Magic Mountain becomes a novel of ideas, brimming with picayune details on mythological and ideological minutiae that elevates the main protagonists onto an almost surreal – or hyperreal – pane.

Once properly installed, Hans Castorp falls into the orbit of long-time residents Ludovico Settembrini and Leo Naphtha who are, since time immemorial, engaged in a veritable war of words. While Thomas Mann subtly shows a preference for the former, Settembrini’s passionate humanism becomes his downfall. As Ludovico dismisses every conceivable manifestation of the metaphysical, he fails to realise that his own boundless idealism is grounded in the abstract.

An intellectual titan in his own right, Leo Naphtha – Settembrini’s nemesis – displays a pronounced penchant for the extremes and can muster nothing but contempt for compromise. Essentially irrational though not without appeal, Naphtha sees death as controlling a realm of its own – independent of life and, as such, the antithesis of Settembrini’s assertion that death is merely the absence of life. Emboldened by his dualism, Leo Naphtha glorifies disease, suffering, and death. He bravely rallies to the defence of the Spanish Inquisition, Communism, and the more authoritarian orders of the Catholic Church.

Gravitating first towards Settembrini, then drawn to Naphtha, before settling on seesawing between the two, Hans Castorp finds that the longer he remains non-committed, the harder it becomes to make up his mind. However, he need not bother as Mijnheer Peeperkorn arrives in all his Dionysian glory to swiftly bring the fray to an end. The Dutchman is portrayed as a non-intellectual tyrant whose mysterious, sensual, and incoherent personality soon realigns the Berghof’s patients into two camps: those who have surrendered to him, and the few poor souls who vainly try to resist the spell he casts. Intellectual argument is now reduced to an exercise in futility. However, the victory of emotion over reason is a pyrrhic one. Realising that the demands of everyday life cannot be reconciled with his total commitment to emotion, Mijnheer Peeperkorn takes a shortcut and commits suicide.

A notoriously difficult read, The Magic Mountain has become much more accessible in its 1996 translation. Some ninety years later, Virginia Woolf’s lamentation on the dearth of sick-lit may still ring true, the genre has now gained considerable volume. In 1966, The Magic Mountain found a companion in Aleksandr Solzhenitsyn’s Cancer Ward which arose out of the repressed but lively grassroots literary scene of the Soviet Union to become the writer’s opus magnum.

Initially distributed as samizdat in typewritten copies amongst trusted friends and literati, Cancer Ward tells the story of a group of patients undergoing crude and frightening treatments in a run-down hospital somewhere in Soviet Central Asia. Set in 1955, merely two years after the death of Joseph Stalin, Cancer Ward explores the origins and societal effects of the Great Purge of 1936-1938 when countless millions were shot or sent to wither away in labour camps.

Solzhenitsyn tackles and charts the moral responsibilities of those implicated in the purge only to conclude that the wounds inflicted are too severe to ever fully heal. As with cancer, remissions may occur but escape is ultimately impossible. Memorably, the novel ends with its main character Oleg Kostoglotov – a victim of the infamous Article 58 and sent to a Siberian labour camp for imaginary counter-revolutionary activities – visiting a zoo upon his release from hospital. In the caged animals, he sees the people he once knew: “Deprived of their home surroundings, they had lost the idea of rational freedom. It would only make things harder for them, suddenly to set them free.”

And so it is with the patients at Berghof Sanatorium. Safe in their Alpine cocoon, they are oblivious to the onset of war and the imminent demise of their rarefied way of life. Things will never be the same as Hans Castorp reluctantly prepares for his return to the flatlands to answer the call of the fatherland. i

Footnotes
[1] The Magic Mountain by Thomas Mann (translated by JE Woods), Vintage Classics 1996 (£10.68) – ISBN: 978-0-7493-8642-9.


Fidel Castro: An Antagonist Remembered

[caption id="attachment_11420" align="alignright" width="300"] Fidel Castro. Photo: AP[/caption]

The last Marxist-Leninist to hold a place on the world stage has left, signalling the end to an era that saw revolutionists taunt empires and topple autocratic regimes. A charismatic romantic to the very end, Fidel Castro died on November 25 leaving his nation in mourning as Cuban exiles in Miami celebrated the passing of their nemesis, banging pots, honking horns, and setting off fireworks.

Always firmly in charge of his own destiny, Fidel Castro escaped convention from an early age. He was born in 1926 to Ángel Castro Argiz, a former soldier in the army of Spain, and his maid Lina Ruz González, also of Spanish descent. Though illiterate for most of his life, Mr Castro Argiz managed to acquire and run a 12,000 hectare plantation just outside Birán, a hamlet on what was then Cuba’s Wild East frontier.

Recognised as the most prodigious of his eight children, Mr Castro Argiz dispatched Fidel to a school maintained by the Lasallian Order in Santiago de Cuba in 1934. Five years on, Fidel was duly enrolled at a Jesuit college. Sent to Havana in 1942 to pursue further studies, Fidel – now sixteen – soon experienced his political awakening. He rarely bothered to attend lectures, yet somehow always managed to ace his studies in between many other, more exciting, endeavours.

Dabbling in student politics and speaking out against Caribbean dictators with the fervour of youth, Fidel in 1947 joined the ragtag army assembled by Juan Bosch – an exiled writer from the Dominican Republic – on Confites Key in the Sabana-Camagüey Archipelago along Cuba’s northern shoreline. Here, an expeditionary force of some 1,200 fighters, including veterans from the Spanish Civil War, had been amassed for an invasion of the Dominican Republic and the removal of its dictator Rafael Trujillo. However, while waiting for supporting airplanes and ships to arrive, the plot was discovered and foiled after intervention by the US ambassador.

“The Americans will pay dearly for their actions. When this war is over, a much longer and greater war will begin for me: the war I am going to wage against them. I realise this is my true destiny.”

Whilst most conspirators were disarmed, arrested, and jailed, Fidel Castro managed to evade capture by swimming to a deserted nearby key and from there to the mainland. Back in Havana, he promptly got married. While on honeymoon in New York, Fidel applied for a spot at Harvard Law School but was rejected, returning home to obtain his law degree in Havana instead.

Standing for a seat in congress on the ticket of the Orthodox Party, Fidel Castro’s brush with parliamentary democracy was cut short in 1952 by the coup that brought General Fulgencio Batista to power. With the elections cancelled, Fidel decided to fight the military takeover in court, fulminating from the stand that no judge could sentence any citizen on charges of sedition as long as General Batista’s “treacherous and illegal” power grab was allowed to go unpunished. Predictably, the court ruled against him. Fidel Castro, not unreasonably, interpreted the outcome of the trial as a clear sign that the constitutional order had broken down and concluded that armed rebellion was now fully justified.

Together with his brother Raúl, who had joined him in Havana, Fidel latched on to a group of conspirators who were plotting an assault on the Moncada army barracks in Santiago de Cuba to instigate an uprising against Batista or, failing that, obtain weapons for a guerrilla army. The attack failed miserably. Whilst most of the 95 men he led were arrested, tortured, and executed, Fidel Castro again managed to escape, retreating with a small band of plotters into the nearby jungle-clad mountains.

Giving in to appeals from the archbishop of Santiago de Cuba, the renegades surrendered on the prelate’s promise of a fair trial. Sentenced to fifteen years for his part in the failed uprising, Fidel Castro served only 22 months behind bars and was freed in the general amnesty of 1955. He immediately left the island for exile in the United States, ending up in Mexico to join, and take command of, yet another plot.

The rest is, indeed, history. Third time lucky, Fidel Castro re-entered Havana at the head of a victorious rebel army on January 8, 1959. That same day, during his (long) victory speech, a white dove released by one of the onlookers landed on Fidel’s shoulder, lending the revolutionary leader a mythic aura that never quite faded away.

Holed up in a camp high up in the Sierra Madre during the final months of the guerrilla campaign, Fidel Castro wrote to a confidant: “The Americans will pay dearly for their actions. When this war is over, a much longer and greater war will begin for me: the war I am going to wage against them. I realise this is my true destiny.”

In his prophetic letter, Commander Fidel was not only referring to the US support for Fulgencio Batista, but also to the media-fuelled Spanish American War of 1898 (“Remember the Maine!”) which firmly established the United States as an imperial power and saw Spain lose its most prized overseas possessions – Cuba, Puerto Rico, the Philippines, and Guam.

Fidel Castro had always been particularly upset over the 1901 Platt Amendment which established Cuba as a US protectorate, only notionally independent, with severe restrictions placed on the country’s ability to conduct foreign policy, maintain commercial relations, or sign treaties with other nations. The US also demanded that Cuba sell or lease it such lands as were deemed necessary for the establishment of coaling and naval stations. The 1903 agreement on Guantanamo Bay Naval Station, to which the US holds an open-ended lease, was based on the provisions of the Platt Amendment.

Just as Ho Chi Minh and other revolutionary leaders before him, Fidel Castro became a communist by default rather than conviction. In need of a discourse to distance his nation from its American overlords, and a development model to yield instant results, Fidel Castro became a Marxist-Leninist. At the time, it was the thing to do.

In the immediate aftermath of the revolution, Fidel Castro did try, however, to keep things civilised with the island’s uncomfortably big neighbour. During his famous two week sojourn in New York between April 15 and 27 of 1959, touted as an unofficial goodwill visit, Fidel Castro is received by Vice-President Richard Nixon (President Eisenhower was unavailable because of an engagement on the golf course), pays tribute at the Tomb of the Unknowns at Arlington National Cemetery, admires the national monuments to George Washington, Thomas Jefferson, and Abraham Lincoln, and accepts invitations to speak at Harvard and Princeton universities. Castro also finds time for a chat with UN Secretary-General Dag Hammarskjöld and to address a large crowd gathered in Central Park to watch, awestruck, this most romantic of heroes – a revolutionary heartthrob if there ever was one – deliver a fiery speech.

It was New York that showed Fidel Castro the power of charisma on which he would draw for the rest of his life. Not overly interested in the economic aspects of his new Marxist-Leninist ideology, or the nuts and bolts of running a country, Fidel Castro had more eye for the broad overall picture which he expertly shaped after his own image: bold, decisive, idealistic, and uprooting. Under Castro, Cuba became all of that and more: it stoked the fires of revolution in Latin America and Africa, championing the cause of anti-imperialism the world over. Whenever dissatisfaction at home threatened to get out of hand, Fidel Castro would temporarily open the floodgates and allow disgruntled Cubans to cross the Florida Straits on whatever floatation device they could find.

While he was devising plots and revolutions in faraway lands, Fidel Castro’s Cuba was, of course, kept afloat by the generosity of the Soviet Union and its satellite states, leading to charges that the island had merely changed one overlord for another. That, however, short changes Castro’s revolution. As he deployed his charisma, Cubans rallied behind their strongman and his tropical-flavoured brand of communism which knocked dissidents about a good bit but never quite descended into gulag-style barbarism. Meanwhile, national pride ran high as Fidel was credited with teasing and provoking the United States and showing the world how a small island nation could get away with it.

Fidel Castro knew how to play a global audience and caused much delight with touché moments such as when he invited the firefighter heroes of the 9/11 terrorist attack on the Twin Towers in New York to Cuba for the medical treatment they had been denied at home.

During regional summit meetings, Fidel Castro could always be counted upon to spook the US president du jour, sneaking up on the world’s most powerful man, causing Secret Service agents visible stress during the stealthy approach, only to jovially pump his hand, slap his shoulder, and shout “hombre!” It never failed to instantly cause presidents to lose their composure. Fidel Castro’s antics, the much anticipated highlight of every summit, were well-known amongst his Latin American counterparts who never quite managed to supress their admiration for the gutsy Cuban.

Whenever an American president would start to lecture him on democracy and human rights, Fidel Castro listened attentively. His answer, invariably, would be to remind his opponent that he had “literally” survived five, six, or seven of his predecessors and would still be around when the present one had departed.

Fidel Castro quite enjoyed stealing the Americans’ thunder and did so whenever given a chance. During the 1992 Earth Summit in Rio de Janeiro, he managed to fly in under the radar and upset the carefully choreographed security protocol the American Secret Service had put in place for the arrival of President Bush (The Elder) whose Air Force One touched down minutes after the Cubana de Aviación plane had landed to the astonishment of all present.

A day after pulling this stunt, Castro showed up at the convention centre on the outskirts of the city where the Earth Summit was taking place, timing his grand entrance only moments after the arrival of President Bush who promptly found his charisma severely lacking as he was left standing nearly alone, and much bewildered by the electrifying buzz suddenly palpable in the hall, while gathered dignitaries and officials rushed off to catch a glimpse of the Cuban.

A rebel rouser mostly underwhelmed by the global powers-that-be, Fidel Castro may not have managed to provide his people with anything but the most basic necessities of life, he did give his nation back its pride. Supremely headstrong and with an almost Nietzschean arrogance (Ecce Homo: Why I Am So Wise/Clever), Fidel Castro was absolutely convinced that his truth was the only one that mattered. Extremely well-read and able to instantly, and without skipping a beat, embark on a reasoned and informed monologue on any topic – from fish farming to neuroscience – Castro was a remarkable polymath of formidable intellectual power.

Kept away from the public eye as his health deteriorated, not unlike Ronald Reagan after the onset of Alzheimer’s, Fidel Castro – hero even to those who didn’t share his worldview – passed away November 25, 2016, aged 90, in Havana, Cuba.


Alexander Forbes Group: Three Strategies for Growth

Alexander Forbes Group Holdings Limited, a specialised financial services group headquartered in South Africa, successfully listed on the main board of the Johannesburg Stock Exchange (JSE) on Thursday 24 July, 2014. The company focuses on employee benefits solutions for institutional clients and the financial wellbeing of individual clients, in particular employees of the group’s institutional clients.

he main services provided by Alexander Forbes Group include retirement funds and asset consulting, actuarial consulting, investment and administration services, employee risk benefits and healthcare consulting, multi-manager investment and platform solutions, individual financial advice, and personal lines insurance.

“The cornerstone of the retail growth strategy is to leverage off the group’s strong relationships with the institutional clients of the pension funds it administers, and build earlier and deeper relationships with the individual clients within the respective funds.”

The group’s primary clients comprise both the private and public sector market segments, including employers, retirement funds, investment and other special purpose funds on the institutional side, and individual members and beneficiaries of these retirement funds, as well as the wider individual market, on the retail side. Alexander Forbes’ principal geographic focus is South Africa, where it has been in operation since 1935 and is a market leader in its core businesses. The company is also present in Sub-Saharan Africa, the UK, and other selected jurisdictions which have employee benefits legislative frameworks similar to South Africa.

[caption id="attachment_9390" align="aligncenter" width="748"] Main Office[/caption]

Alexander Forbes, through Alexander Forbes Financial Services Proprietary Limited (“AFF”), is a leading employee benefits consulting, actuarial, investment and administration services provider and retirement fund administrator, with retail assets under advisement of R52.3 billion as at 30 September 2014.

Its flagship umbrella retirement fund, the Alexander Forbes Retirement Fund (AFRF), remains one of the largest of its kind in the market measured by assets, and total umbrella fund assets under management were R60.6 billion as at 30 September 2014. Alexander Forbes, through Investment Solutions, is the largest multi-manager investment company in Sub-Saharan Africa, with assets under administration and management of R300 billion as at 30 September 2014 compared to 30 September 2013, of which R269 billion were assets under management.

Key Strengths

Alexander Forbes believes that the following competitive strengths contribute to its success and distinguish the company from its competitors:

Market leader in institutional employee benefits and multi-manager investments in its home market in South Africa and in other Sub-Saharan African countries;

Institutional integrity within a high performance culture;

Well-positioned to respond to changing industry and regulatory dynamics;

Successful track record of organically developing new businesses and creating shareholder value;

Holistic offering across the value chain;

Deep understanding of the retail (individual) member base to support the retail growth initiative;

Leading and scalable multi-management platform;

Well-positioned to capture the Sub-Saharan African growth opportunity;

Long-standing institutional client relationships with high market shares and high customer retention rates;

Predictable revenue base and cash generative model;

Capital efficient business model;

Continuous investment in systems and core infrastructure; and

Stable and experienced management team.

Alexander Forbes intends to capitalise on its unique market position and improve the performance of its operations by continuing to grow its core institutional businesses and pursuing the retail, public sector, and Sub-Saharan Africa growth strategies. These growth strategies are group-wide initiatives focused on leveraging the core institutional client base and the group’s market positioning in its core businesses.

Retail Growth Strategy

Historically, the group’s various retail businesses have functioned independently. In the last few years, as part of the group’s strategic intent, a conscious decision was taken to drive the retail growth strategy with greater focus, including the establishment of a dedicated retail cluster (Retail Cluster) under a single business leader.

While retaining the specialised focus in each of the respective business lines, the Retail Cluster seeks to use the group’s trusted advisor status with its clients and provide them with a common, holistic client experience to help secure their financial wellbeing, and at the same time better leveraging the client base to deepen vertical sales integration.

The cornerstone of the retail growth strategy is to leverage off the group’s strong relationships with the institutional clients of the pension funds it administers, and build earlier and deeper relationships with the individual clients within the respective funds.

Public Sector Growth Strategy

Alexander Forbes already has significant public sector business and, based on recent public sector market research, believes that there is further potential to grow its position by mapping its current integrated value offerings and providing innovative consulting and administration services and solutions in response to identified needs in both the institutional and retail segments.

Alexander Forbes established a dedicated team, the Public Sector Division, in order to focus resources on growing its public sector client base. This team’s focus is on setting the overarching public sector strategy and supporting the implementation thereof through effective engagement strategies in order to build lasting relationships with public sector clients and stakeholders and communicate Alexander Forbes’ holistic value proposition to both new and existing clients.

After identifying opportunities and building the new business pipeline, this team also assists the various Alexander Forbes businesses in tendering for new business and retaining existing public sector clients.

Sub-Saharan Africa Growth Strategy

Many countries in Sub-Saharan Africa are expected to experience medium to high economic growth rates over the medium term. Financial services markets in a number of these countries are still at an early stage of development, which represents an opportunity for Alexander Forbes to grow into these relatively underdeveloped and underpenetrated markets, building on AfriNet’s success in Namibia, Botswana, Kenya and experience in developing businesses in Nigeria, Uganda, and Zambia. Pension and social security reforms are among the key criteria taken into account in connection with the group’s expansion in Sub-Saharan Africa.

The group aims to take advantage of favourable legislative changes to expand its operations in the region in the short to medium term. In addition, the continued expansion of South African companies into other parts of the African continent in search of incremental growth presents further opportunities for Alexander Forbes to follow its corporate clients as they expand. In expanding into new territories, AfriNet plans to continue to leverage off its institutional experience and expertise, replicating the successful South African business model, while adapting to the specific domestic commercial and regulatory environment in each country.


Mercury Capital Advisors: Customisation and  Global Presence

Headquartered in New York, and with offices in London, Tokyo, Singapore, Dubai, San Francisco, Boston, and Washington DC, Mercury Capital Advisors competes via a differentiated platform with product offerings across private equity, hedge funds, real estate, credit, distressed, venture capital, and infrastructure, as well as secondaries, co-investments and direct equity transactions. The company has a preferred distribution partner in Latin America with branches in Chile, Peru, Brazil, and Colombia.

Mercury Capital Advisors seeks to engage with the best and most successful fund managers in their respective areas of expertise, while maintaining strong relationships with many of the largest, most established institutional investors in the world. The firm supports this diverse client base by combining its global presence and experience with a bespoke service orientation consistent with the firm’s boutique ethos.

“With approximately 300 years of collective distribution and origination experience, its professionals have senior level backgrounds in alternative investing, mergers and acquisitions, investment banking, high yield, legal, and consulting disciplines.”

Coalescing deal management and advisory practices with a coordinated sales and marketing process, professionals at Mercury work collaboratively to develop and maximise fundraising programmes geared towards helping clients not only grow their assets, but also increase brand recognition. In 2015, Mercury will complement its growth trajectory with the establishment of an electronic portal to initiate access to high-net worth investors through the registered investment advisor (RIA) community.

Fundraising

As a full-service placement agent, Mercury focuses on providing each client with a customised and highly coordinated approach to the fundraising process. This begins with the development and implementation of a targeted marketing strategy tailored to the unique needs of each fund manager.

The firm also assists in the preparation of all marketing materials and data room items, as well as in the execution of the full marketing/roadshow process from fund launch to final closing. Core competencies range from emerging markets, metals and mining, energy, special situations, and power to intellectual property, agriculture, health care, consumer, and technology.

Secondaries, Co-Investments, and Direct Equity Investments

Mercury has extensive experience raising capital for secondaries, co-investments, and direct equity investments. These transactions may be executed in the context of an ongoing fundraising or as a distinct process. The firm has successfully raised capital for a number of these opportunities since inception, providing clients with capital-raising services specific to a variety of different asset classes, in addition to offering strategic advice on deal dynamics, negotiations, and communications.

Advisory

In addition to fundraising, Mercury also offers standalone advisory services to its general partner clients. These services include a comprehensive review of a client’s portfolio and strategy, guidance on the developments of key marketing and investor due diligence materials, in-depth fund performance analysis, advice on market conventions – including fund structure, terms and other investor conditions – and coaching with respect to presentation style.

Giving

Giving back and forging relationships with the community are key components of Mercury’s culture. The firm supports a number of charitable organizations, three of which were founded by Mercury employees or their spouses.

About Mercury Capital

Mercury Capital Advisors is among the world’s elite institutional capital-raising and investment advisory enterprises. With approximately 300 years of collective distribution and origination experience, its professionals have senior level backgrounds in alternative investing, mergers and acquisitions, investment banking, high yield, legal, and consulting disciplines.

Since 2003, professionals at Mercury have completed more than a hundred mandates ranging from $200 million to over $10 billion, and have raised in excess of $130 billion in commitments. The firm covers more than 2,000 limited partners globally including sovereign wealth funds, public and corporate pension funds, insurance companies, endowments, family offices, foundations, funds of funds, and consultants.


Preference Pass: Sunny Travel Savings Franchise

[caption id="attachment_12268" align="aligncenter" width="960"] Mexico: Cancun[/caption]

Avid world travelers may have experienced the hopelessness of arriving in a foreign land with little information and knowledge. At best the wary traveler ends up paying a premium for sub-par goods and services. By the time the ins and outs have been mapped, the stay is pretty much over.

Preference Pass was set up as a trusted member site to help tourists when they arrive in a foreign land. When you don’t know where to go, what to do, how much to pay, or who can help you with a problem, Preference Pass is there to provide all the information needed to stop wasting time and being ripped off. Preference Pass ensures access to the best prices and conditions on a whole variety of activities and services.

Travel websites tell visitors what to do and where to go, but do not display valuable local knowledge. If something does go wrong you don’t know where to turn for help, and those that do help often do so to take advantage of your situation, Preference Pass offers help and takes the stress out of vacationing.

Preference Pass was set up in Ireland to take advantage of EU laws and protection without the disadvantage of the EU taxation rates. Preference Pass was funded by an Irish investment fund set up with the sole purpose of turning the concept into a successful business.

Preference Pass is a global brand and online business, currently a website and soon to be an application. The product is backed up by a call center to help customers with advice, questions, bookings, and other needs.

Preference Pass was launched in 2017 in the Mexican Caribbean. The company has negotiated around five hundred offers and special deals in the region – specifically Cancun, Playa del Carmen, Isla Mujeres, Cozumel, Puerto Aventuras, and Tulum. The offers include tours, activities, restaurants, shopping, transport, entertainment, and health and beauty. The savings are in the range of 25-75% over the suppliers published or online prices.

Preference Pass has a multinational web development team, including European, North American, and South American designers and developers. All design and development is done in-house. The design philosophy has been to create a generic site which is easy to use and can be understood by the many different nationalities who use it.

The travel and tourism global market contributed $7.6 trillion in 2014 – equivalent to 10% of global GDP. In Mexico that figure is $189 billion in 2014 – 14.8% of GDP which represents the tenth-highest absolute contribution globally. Mexico welcomes almost 30 million tourists annually. The country’s tourism sector is forecast to grow at an average rate of 4.2% per year through to 2025 – outpacing the global growth rate of 3.8%. Almost two out of every three tourists arriving in Mexico are from the US, 12% from Canada, 10% from Europe, and 11 % from other Latin American countries. Japan, China, and South Korea each represent 1% of the total. Arrivals from China are growing at a rate of almost 30% annually.

Given the success of Acapulco, Mexico’s first international resort, the Mexican government decided to fund the development of tourism. Cancun was chosen as one of three locations with tourism potential. In the early 1970s, when the Mexican government conceived the project, the whole state of Quintana Roo had just over 80,000 inhabitants. It was one of the poorest and remotest areas of Mexico. In order to convince investors to back the project, the government built the basic infrastructure and the first nine hotels. Cancun has now grown into one of the most successful tourist resorts worldwide, receiving over five million visitors a year, with an average hotel occupancy rate of 82%. As Cancun grew, the government invested in additional infrastructure, resulting in the emergence of other nearby resorts such as Playa de Carmen, Tulum, Cozumel, Isla Mujeres, Holbox, etc. The state of Quintana Roo received over 10.5 million tourists in 2015, with a growth rate of 5% over 2014. Another 3.6 million cruise ship tourists also visited the state. Quintana Roo now boasts over 90,000 hotel rooms.

Marketing Focus

The marketing focus of Preference Pass has been to create a generic and customisable product enabling the company to sell similar products globally whilst shaping an environment which allows for bespoke branding for resorts to present as an exclusive offer to their guests. This approach has been very well received by resorts and hotels and has enabled the company to create unique tours and activity packages. These offers maintain the same philosophy but are built knowing the specific characteristics of the resort’s customers. The resort market these offers directly to customers at check in or before.

The benefits to the resorts are increased customer satisfaction, significant cost savings, and an opportunity for the business to generate a new source of income.

Future Plans

Preference Pass plans to create new markets in 2018 such as the yet uncovered regions of the Mexican Caribbean and other important tourist destinations in the country. Regions will be set up in a franchise format, ensuring that a local partner, who has both contacts and expertise, develops the business, using the tools and knowledge Preference Pass has acquired to date. The company plans on starting its international expansion in 2019, targeting the Caribbean and the main tourist destinations of South America, before going global.

For more information, visit www.preferencepass.com


Book Review: Private Island - Why Britain Now Belongs to Someone Else

A Balance Disturbed for All the Wrong Reasons

It remains somewhat of a mystery how Chancellor of the Exchequer George Osborne manages the UK government’s financial affairs. Presiding over a buoyant economy, planning the biggest privatisation exercise ever, and mandating yet another round of deep spending cuts, the Exchequer should be in robust health. Yet, the summer budget unveiled in July – the first wholly conservative one in eighteen years – still manages to produce a deficit equivalent to around 4.4% of GDP, propelling Britain to the very top of profligate spenders in the European Union; outdone by none and equalled only by long-suffering Spain. Even France and Greece (both -4.1%) perform better. As is usual given the circumstances, Mr Osborne assures all and sundry that surpluses will materialise at some point in the future.

The chancellor’s budget – and Britain’s plight – fits a pattern: while Tories are surprisingly good at sourcing money and boosting revenue, they often display a rather disconcerting ineptitude at managing cash flows. Thankfully, Labour governments compensate for these idiosyncrasies on both counts, thus keeping government on an even keel. This, of course, presumes a periodic alternation of power whereby both players stay true to their respective strengths. Sadly, the equilibrium has been disturbed by New Labour’s insistence on mimicking the Tories who, in turn, moved even further to the right in an attempt to maintain a safe distance from the hoi polloi.

The result of this massive shift of the body politic to the right is an unholy disaster. The UK’s public finances have become seriously unhinged. The persistent budget deficit is but one of many woes besetting Albion. A ballooning current account deficit adds to the troubles. The shortfall is mostly caused by Britain’s inability to produce goods that the world wants to buy. The country’s trade balance is $195bn (£129bn/€183bn) in the red.

"Central to Mr Meek’s grief is his argument that water, electrical power, and others constitute essential services nobody can do without."

Some mitigation is offered by the performance of the City of London, the repatriation of profits derived from overseas investments, and miscellaneous remittances, resulting in a current account deficit of about $150bn (£99bn/€141bn) for the twelve months ending October 1, 2015. This amount equals roughly 4.6% of GDP. By comparison, over the same period the euro area recorded a surplus on its current account equivalent to 2.8% of its economy with The Netherlands claiming the top spot (+10.3% of GDP) and Germany coming in a distant second (+7.8% of GDP).

Underappreciated by most pundits, the current account balance simply determines if an economy is making money or losing it. Countries in the black export the extra cash in the form of investments or loans while those in the red import funds by selling assets, attracting depositors, or enticing investors. At the end of the day, the balance of payments must, per force, be in perfect equilibrium, i.e. zero.

British journalist and author James Meek is deeply troubled by the realities of economic life. In Private Island: Why Britain Now Belongs to Someone Else [1], Mr Meek showcases and laments the sale of his country. He fails, however, to offer a remedy. Moreover, Mr Meek seems to suffer from a rather severe bout of nostalgia as he describes the sale of Britain’s crown jewels: the waterworks, electricity generators, railway and postal services, and public housing corporations, amongst a great many others.

Central to Mr Meek’s grief is his argument that water, electrical power, and others constitute essential services nobody can do without. That premise allows the writer to deduce that a water bill is akin to a tax: if payment to an authority – either public or private – is compulsory, it is a tax. From this conclusion, Mr Meek barrels on to deduct that the tax system itself has now been privatised, albeit partially.

Offering a slightly disjointed read, Private Island does manage to shed light on the human dimension of the privatisation process, showing how postal workers are mercilessly driven to exhaustion and nearly all but the über-rich have been deprived of affordable housing.

As a sales catalogue, Private Island is peerless. However, the book fails to dig a little deeper and makes no attempt to uncover the root of the problem: the failure, both surprising and monumental, of the British state to properly manage its interests.

Lest anyone should jump the gun and argue that states have no business running businesses, please feel free to take a look at Saskatchewan, Canada, to see how it’s done. There, the provincial government owns and operates a wide range of businesses through its highly profitable crown corporations whose contributions to state coffers keep taxes low while ensuring excellence in the delivery of public services. Or, stay closer to home and look at Germany where the state owns more assets than any other European country. It may be a somewhat dangerous argument, but German trains do run on time and its banks – the Landesbanken and Sparkassen – remain rock solid, if not rather dull.

In Britain, state-owned enterprises performed rather poorly and were a drain on public purse. Their sale not only bolstered the state’s finances but also plugged a gaping hole in the budget. A study by the London-based Centre for Policy Studies into the finances of 33 privatised enterprises concludes that in the twelve months leading up to March 1980 these corporations between them cost the exchequer £483m in addition to requiring almost £1.2bn in financing. British Steel earned itself a place in the Guinness Book of World Records for losing close to £1bn on a turnover of barely £3bn.

In fact, British Steel offers an interesting case study of how privatisation can go awry in ways not detected by Mr Meek. In 1980, the company was indeed an economic basket case, requiring fifteen man hours to produce a single tonne of liquid steel. However, seven years later productivity had tripled and British Steel was turning a £410m profit on a turnover of £4.1bn. If Margaret Thatcher proved anything, it was that HM Government can run a business at a profit. Pursuing an ideology rather than a fiscally sensible course of action, Mrs Thatcher proceeded to sell British Steel for a paltry £2.4bn.

Still, this is not a one-sided picture. As research from Centre for Policy Studies clearly shows, the wholesale of state-owned enterprises transformed a drain on the exchequer into a windfall. The net contribution to the government’s finances of the 33 privatised corporations went from -£483m in 1980 to +£11.561bn in 1995. Receipts in corporation tax from these companies went from £182m in 1982 to £2.612bn in 1995.

When Mr Meek deplores the sale of Britain, he would be well advised to look at other statistics than the ones tracing the still ongoing privatisation process. The UK’s lack of manufacturing prowess and the resulting current account deficit represents a more serious challenge inasmuch that, as a net importer of capital, Britain slowly sells itself to “someone else.” Earlier this year, the Bank of England’s Financial Policy Committee declared the current account deficit its most pressing of domestic concerns. Bank of England Governor Mark Carney said that “sustained borrowing from abroad to consume at home is hardly a recipe for a balanced and sustainable expansion.”

As long as Russian and Middle Eastern billionaires keep snapping up London townhouses and country estates, and savvy continental entrepreneurs keep ploughing money into British businesses and banks, the current account deficit causes few worries other than Mr Meek’s anxiety over Britain becoming foreign-owned. However, trouble arises when confidence evaporates.

To a significantly higher degree than other major economies, the UK dependents on the trust of moneyed outsiders to keep afloat. Notorious for being herd creatures, investors usually balk and head for the exit at the first sign of trouble. If anything could cause such a stampede, it is the UK’s flirtation with an exit from the European Union – the world’s largest single market – and its possible subsequent split into three or more sovereign entities. BoE Governor Carney is fully aware of this doomsday scenario and the devastating effects it will have on Britain. Expect him to issue a number of warnings over the coming months.

Meanwhile, Mr Meek’s book offers a most entertaining read, though the writer has missed a wonderful opportunity to set the record straight and offer an alternative view. He is, in effect, barking up the wrong tree.

Footnotes
[1] Private Island: Why Britain Now Belongs to Someone Else by James Meek, Verso Books 2015 (£8.99) – ISBN: 978-1-7847-8206-1.


Otaviano Canuto, World Bank: Overlapping Globalisations

[caption id="attachment_11391" align="alignright" width="138"] Author: Otaviano Canuto[/caption]

Current technological developments in manufacturing are likely to lead to a partial reversal of the wave of fragmentation and global value chains that was at the core of the rise of North-South trade from 1990 onward. At the same time, China – the main hub of the global-growth-cum-structural-change of that period – may attempt to extend the previous wave through its One Belt, One Road initiative.

Global Value Chains Seem to Have Plateaued…

Production and trade globalisation thrived from 1990 onwards. The removal of barriers to trade and technological advances that led to reduction in trade and communications costs ushered in years of sustained trade expansion. The decline in the costs of shipping goods and of managing complex production networks allowed the vertical and spatial cross-border fragmentation of manufacturing within highly integrated global production networks or global value chains (GVCs), where large swaths of lower-wage workers from Asia and Eastern Europe could be combined with the use of technology managed across borders.

GVCs facilitated a process of growth-cum-structural-transformation with substantial total factor productivity increases in the countries wherein the foregoing GVCs were incorporated. Foreign trade was instrumental for the substantial movement of population from low-value, low-productivity activities to the production of modern tradable goods. China represents a special case both in terms of speed and magnitude (see chart 1). High global GDP growth took place with an increasing weight of non-advanced economies, which helped to spark the commodity super-cycle in the 2000s and a transmission of global dynamism to natural resource-rich countries.

"The elasticity of global trade relative to global GDP has been dampened by more than what circumstantial post global financial crisis trade-dampening factors would suggest."

However, there are signs that such a strong wave has reached its peak. The elasticity of global trade relative to global GDP has been dampened by more than what circumstantial post global financial crisis (GFC) trade-dampening factors would suggest. Given the state-of-art of manufacturing technology, unbundling, and fragmentation of production processes may have approached a plateau. Furthermore, the scope for export-led hyper-growth has narrowed as the pattern of current-account imbalances prevailing prior to the GFC is unlikely to return.

… and Will Be Impacted by New Technologies and the Rise of a Services Economy

The directions taken by technological trajectories and aggregate demand in advanced economies seem to point toward a broad alteration of the balance of locational advantages for production fragments, decreasing the weight of labour costs and augmenting the relevance of local availability of complementary intangible assets. As approached by Arbache (2016) and Hallward-Driemeier and Nayyar (2017, Trouble in the making? ISBN: 9781464811746), Industry 4.0 is labour-saving, particularly on the content of unskilled labour. Customisation of products is raising the relevance of proximity to markets over production costs. Domestic consumption and GDP in advanced economies are “dematerialising” as a reflection of technological changes and the higher income elasticity of demand for sophisticated services. These and other trends suggest that a double whammy on production and exports of non-advanced economies may take place: a partial reversal of off-shoring and a slower growth of outlets for their typical exports.

[caption id="attachment_12276" align="aligncenter" width="575"] Chart 1: Share of global manufacturing value added in China, global regions, and high-income countries, 1994–2015. Source: Hallward-Driemeier and Nayyar (2017, p. 45).[/caption]

While the limitations on extending, or replicating the manufacturing export-led, fast-growth experiences of the recent past are clear, the ultimate impact of those trends on local production is less so, for reasons pointed out by Hallward-Driemeier and Nayyar (2017). As an illustration, if local income in non-advanced economies can expand for push factors other than foreign demand for manufactures, and new technologies – as it may be the case with 3-D printing – turn out to be scale-reducing, rather than scale-enhancing, one may watch the emergence of geographically disperse “micromanufacturing” activities. Population increases, urbanisation and poverty reduction may entail the maintenance of strong domestic demand for manufacturing goods in the future ahead.

Of course, it must be acknowledged that investments in appropriate infrastructure, training local technicians, and enhancing business environments – e.g. property rights – to reduce transaction costs and risks are preconditions:

“New technologies place higher demands on the availability and reliability of ICT services, the data ecosystem, skills, and intellectual property rights” (Hallward-Driemeier and Nayyar, 2017, p.113-4).

[caption id="attachment_12278" align="aligncenter" width="896"] Chart 2: Manufacturing subsectors, grouped by pro-development characteristics, 2013. Source: Hallward-Driemeier and Nayyar (2017, p. 21).[/caption]

The authors also showed in detail how “the manufacturing sector is not monolithic (…) and there is heterogeneity in [the] employment-productivity-trade space” across subsectors (p. 17) (see chart 2). As new technologies are affecting those subsectors at different paces, there will remain a – although shrinking – range of entry points for producers with low wage costs and sound business environments.

The bar in terms of local requisites of infrastructure, labour training, and soundness of business environments in non-advanced economies is being raised. And that is a precondition for keeping growth and avoiding the income gap relative to advanced economies to yawn, now that the East Asian type of spectacular manufacturing export-led growth seems to have become harder to obtain.

China Is Leveraging While Rebalancing…

China has initiated a rebalancing toward a new growth pattern, one in which domestic consumption is to rise relative to investments and exports, while a drive toward consolidating local insertion in GVCs to move up the ladder of value added is also to take place. That rebalancing has been pointed out as one of the factors behind the recent global trade slowdown, given China’s weight in the world economy and a recent trend of import substitution.

China is in a league of its own and its rebalancing-cum-upgrading will condition other emerging markets and developing economies. If it lets low-skill labour-intensive manufacturing activities go, a new wave of further GVC dislocations might open opportunities for countries currently endowed with cheap and abundant labour – under the overall global conditions outlined in the previous item. On the other hand, the densification of local parts of GVCs will represent a competitive challenge to medium-range manufactures produced in other middle-income countries. The net result will also depend on the leakages outward of its domestic demand as it rebalances toward a more consumption- and service-oriented economy. It is worth highlighting that China has already begun an attempt to leapfrog to new technologies as one can gauge by the pace of increase of operational stocks of industrial robots in manufacturing (see chart 3).

[caption id="attachment_12277" align="aligncenter" width="585"] Chart 3: Operational stock of industrial robots in manufacturing, selected countries and regions, 1995–2018. Source: Hallward-Driemeier and Nayyar (2017, p. 21).[/caption]

China’s exceptionality in terms of size and speed of growth-cum-structural-transformation in the high era of GVCs had a counterpart in terms of ultra-high investments and export ratios to GDP. The transition toward a less investment- and export-dependent growth model has been taking place from a starting point of very low consumption ratios (see chart 4, left side).

Besides high ratios of profit to wages, low levels of public social spending lead to high household savings (see chart 4, right side). No wonder rebalancing toward a consumption-based growth model was expected to be gradually pursued or otherwise GDP growth rates might collapse, rather than slide down from two digits. The change of growth pattern is requiring time-intensive structural reforms.

[caption id="attachment_12279" align="aligncenter" width="598"] Chart 4: China - low consumption, low social spending. Source: IMF (2017).[/caption]

Furthermore, like elsewhere, fears of a quasi-collapse of the global economy in the aftermath of GFC were followed by countercyclical policies. In the case of China, a Great Quantitative Easing (QE) took the form of a combination of “shadow banking” and capital expenditures on housing and infrastructure, with a high role played by special purpose vehicles (SPVs) associated with subnational entities. Restraints have occasionally been applied but the attainment of official target growth rates has been accompanied by overcapacity in some heavy-industry sectors as well as increasing debt leverage (see chart 5). Chinese authorities have announced their intent to dampen such trajectory before vulnerability to a sudden stop reaches any critical point.

… and Moving to Span Its Economy Outside

In late 2013, Chinese President Xi Jinping announced two new investment and trade initiatives for China and the surrounding region: the Silk Road Economic Belt and the Twenty-First-Century Maritime Silk Road, together known as One Belt, One Road (see chart 6).

Investments in infrastructure therein – besides the acquisition of foreign assets elsewhere – may become a way to partially diversify China’s humongous foreign-exchange reserves out of low-interest-bearing US and other foreign government securities. New markets for Chinese companies, such as high-speed rail firms, as well as for exporting some of the country’s vast excess capacity in cement, steel and other metals would follow.

[caption id="attachment_12280" align="aligncenter" width="579"] Chart 5: Total social debt in China. Source: JP Morgan, Global Data Watch, June 23, 2017.[/caption]

More recently, Mr Xi has also offered Latin American countries access to China’s One Belt, One Road initiative. Also, after US President Donald Trump announced that his country would pull out of the Trans-Pacific Partnership (TPP) led by his predecessor President Obama, Premier Xi suggested the Regional Comprehensive Economic Partnership (RCEP) as an alternative, with seven of the twelve TPP members as potential members.

Trade and Globalisation Will Be Moving Along Parallel, Overlapping Paths

The evolution of trade and globalisation along the path stemming from new technologies, the rise of the services economy and the reshuffle of GVCs previously tackled here points to an increasing convenience of trade, investment, and intellectual property rights agreements. Not by chance, former US President Obama pushed forward attempts to conclude plurilateral agreements like TPP and an equivalent treaty with Europeans (the Transatlantic Trade Investment Partnership – TTIP). By side lining China from both, pressure would be laid on it to accommodate and adapt its own policy and regulatory framework. Regardless of President Trump’s rebuttal of the TPP afterwards – and the fact that its package could have conceivably been unbundled and not necessarily taken as a whole – it contains an agenda convenient as a support to the new stage of globalisation.

[caption id="attachment_12281" align="aligncenter" width="592"] Chart 6: China - one belt, one road. Source: Xinhua.[/caption]

In parallel, One Belt, One Road may well constitute a new growth wave of Chinese exports and investments, giving a new life to the previous pattern of trade integration through its infrastructure build-out in many other countries, most of them in emerging markets. Prerequisites in terms of policy and regulatory harmonisation would not be as high as the one embedded in TPP and TTIP.

In principle, now that potential crowding-out effects of TTP and TTIP on China are dismissed, both globalisation processes may evolve in parallel, if the new globalisation pattern can proceed in the absence of formal plurilateral agreements and the One Belt, One Road takes off at length. They might even reinforce each other through the channel of transmission of global growth if they succeed. That will depend, of course, on how far current anti-globalisation backlashes manage to introduce sand in globalization wheels.

About the author

Otaviano Canuto is an executive director at the World Bank. All opinions expressed here are his own and do not represent those of the World Bank or of those governments Mr Canuto represents at its board. Follow him on Twitter: @ocanuto


The Local Climate Adaptive Living Facility (LoCAL) of UNCDF: Climate Change Impacts on Natural and Human Systems

“For women, the road was crucial. It was hard to deliver babies because of access: we had to go to the hospital by boat – it was risky. And also for the children, floods made it impossible for them to study like the others. Now we do not lose sleep over this anymore and we have much better access to services when we need them”. Mrs Seng Sareth, the first deputy in a commune council of Cambodia explains in those words how capital finance for local climate change adaptation can change people’s lives.

According to the last Intergovernmental Panel on Climate Change Report (IPCC, 2014), in recent decades changes in climate have caused impacts on natural and human systems on all continents (see Figure 1).

Africa as a whole is one of the most vulnerable regions due to its high exposure and low adaptive capacity. Climate change will amplify existing stress on water availability and exacerbate vulnerability of agricultural systems particularly in semi-arid areas. Climate change is also expected to act as a multiplier of existing health vulnerabilities.

“Adaptation is place- and context-specific and local governments are increasingly recognized as critical to progress in adaptation.”

In Asia, coastal and marine systems are under increasing pressure from both climatic and non-climatic drivers while multiple stresses caused by rapid urbanisation, industrialisation and economic development will be compounded by climate change. Extreme climate events are also expected to have an increasing impact on human health, security, livelihoods, and poverty (IPCC, 2014).

Adaptation can contribute to the well-being of populations, the security of assets and the maintenance of ecosystem goods, functions and services. Adaptation is place- and context-specific and local governments are increasingly recognised as critical to progress in adaptation.

Local governments are in a unique position to identify the climate change adaptation responses that best meet local needs, and typically have the mandate to undertake the small- to medium-sized adaptation investments required for building climate resilience. Yet they frequently lack the resources to do so – and even more to do so in a way that is aligned with established decision-making processes and public planning and budgeting cycles.

“We encourage all LDCs (...) to take advantage of the Local Climate Adaptive Living Facility to enhance their local governments’ capability to discharge their responsibility in the implementation of the National Adaptation Plans”, Ministers and representatives of Asia and Pacific LDCs, Kathmandu, Nepal, December 2014

The Local Climate Adaptive Living Facility (LoCAL) of the UN Capital Development Fund was designed and initiated in 2012 to address this challenge by delivering adaptation finance through local government systems in an effective and transparent manner.

Delivering Adaptation Finance at Local Level

The Local Climate Adaptive Living Facility (LoCAL) provides a mechanism to integrate climate change adaption into local governments’ planning and budgeting systems, increase awareness and response to climate change at local level, and increase the amount of finance available to local governments for climate change adaption.

LoCAL combines performance-based climate resilience grants, which ensure programming and verification of climate change expenditures at the local level, with technical and capacity building support. LoCAl grants provide a financial top-up to cover the additional costs of making investments climate resilient, and are channelled through existing government fiscal transfer systems (rather than parallel or ad hoc structures).

[caption id="attachment_10186" align="aligncenter" width="300"] Figure 1. Source: IPCC, Working Group II, Assessment Report 5, Figure 18-3, 2014.[/caption]

LoCAL grants are disbursed as part of a local government’s regular budget envelope and can thus finance the adaptation element of larger projects, allowing for holistic responses to climate change. LoCAL uses the demonstration effect to trigger further flows for local adaptation, including national fiscal transfers and global climate finance for local authorities, through their central governments.

LoCAL offers a proven mechanism for the international community to channel climate change finance to the most remote and vulnerable regions and populations of the world, ensuring traceability and performance monitoring and reporting.

LoCAL grants include a set of minimum conditions – essentially guaranteeing good governance, performance criteria – more qualitative in nature and fostering the effective inclusion of adaptation in local government business, and a menu of eligible investments – ensuring investments made go beyond business as usual.

LoCAL grants typically involve a number of key steps:

Climate information and vulnerability and adaptation assessments are reviewed or undertaken to inform the process. Needs and capacities are assessed.

Local governments develop in a participatory manner local adaptation programmes, integrate adaptation in their own local development planning and budgeting processes and cost and select adaptation measures to be financed through the PBCRG (Performance-Based Climate Resilience Grants).

Grants are disbursed to support the implementation of LoCAL investments in the context of local authorities’ annual planning and budgeting cycles, and selected measures are implemented.

Performance is appraised in terms of the degree to which additional resources have been used to build resilience and promote adaptation to climate change, and audits are undertaken as part of the regular national process; and the cycle starts again, as an iterative process.

Capacity building activities are undertaken at various stages according to identified needs; they target the policy, institutional and individual levels.

A Phased Approach

LoCAL operates through three phases:

Piloting – The first phase involves initial scoping, followed by testing in two to four local governments. Countries under phase I include Bangladesh, Benin, Ghana, Lao PDR, Mali, Mozambique, Nepal, and Niger.

Learning – The second phase takes place in 5% to 10% of local governments of a country. It involves collecting lessons and demonstrating the effectiveness of the mechanism at larger scale. Bangladesh and Lao PDR are already preparing for this expansion.

Scaling-up – The third phase is a full national rollout of LoCAL based on the results and lessons of the previous phases. LoCAL is gradually extended to all local governments, with domestic or international climate finance, and becomes the national system for channelling adaptation finance to the local level. Bhutan and Cambodia are entering phase III.

Scaling Up across Least Developing Countries

Since it started its work in 2012, LoCAL has been introduced or tested in ten countries in Asia and Africa. To date, LoCAL has provided grants to 29 local governments, reaching out to a population of over four million, across seven LDCs in Asia (Bangladesh, Bhutan, Cambodia, Lao PDR, and Nepal) and Africa (Benin and Mali).

The objective is to pilot a mechanism that can be scaled up to the national level, therefore targeting over 300 million people across countries.

In 2015, an additional dozen local governments from four countries – in Africa (Ghana, Mozambique, and Niger) and the Pacific (Tuvalu) – are expected to join and make use of the mechanism, thereby enabling another million poor people to benefit from this new type of access to climate finance and the adaptation investments that follow.

More LDCs have expressed interest and are preparing to join LoCAL as it offers them a proven and scalable mechanism to channel climate finance effectively and transparently to the people most in needs.

About UNCDF

The United Nations Capital Development Fund (UNCDF) is the UN’s capital investment agency for the world’s 48 Least Developed Countries (LDCs). UNCDF uses its capital mandate to help LDCs pursue inclusive growth. UNCDF uses smart Official Development Assistance (ODA) to unlock and leverage public and private domestic resources; it promotes financial inclusion, including through digital finance, as a key enabler of poverty reduction and inclusive growth; and it demonstrates how localizing finance outside the capital cities can accelerate growth in local economies, promote sustainable and climate resilient infrastructure development, and empower local communities. Using capital grants, loans, and credit enhancements, UNCDF tests financial models in inclusive finance and local development finance; ‘de-risks’ the local investment space; and proves concept, paving the way for larger and more risk-averse investors to come in and scale up. For more information, please visit www.uncdf.org.

About LoCAL

The Local Climate Adaptive Living Facility (LoCAL) is UNCDF mechanism to integrate climate change adaption into local governments’ planning and budgeting systems, increase awareness, and response to climate change at local level, and increase the amount of finance available to local governments for climate change adaption, through performance-based grants for climate resilience.

The programme is funded by the EU Global Climate Change Alliance, the Swedish International Development Cooperation Agency, the government of Liechtenstein, the government of Belgium, UNDP Global Environment Facility and UNCDF.


Peter Sloterdijk: Shaping a Multipolar National Debate

A prolific writer, publishing some sixty books over a career spanning four decades, German philosopher Peter Sloterdijk recently celebrated his seventieth birthday. Europe’s leading intellectuals and academics flocked to Mr Sloterdijk’s native Karlsruhe to pay tribute. Chancellor Angela Merkel chipped in with a congratulatory letter praising Germany’s most controversial thinker for his contributions to culture.

Mr Sloterdijk enjoys a popularity that in Germany is normally reserved for football players. His late-night talkshow on national television - In a Glass House: The Philosophical Quartet (Im Glashaus: Das Philosophische Quartett) - ran for close to ten years and obtained consistently high ratings. His lectures at the University of Art and Design in Karlsruhe are always packed, drawing student from all faculties.

Yet, Mr Sloterdijk is hard to pin down. He has steadfastly refused to elaborate a single grand thesis and is happy to shine his philosophical light on any topic, no matter how esoteric or trivial, from the sexuality of the Neanderthals to the travails awaiting German pensioners wishing to renew their driving license, meandering off into the primitive-aggressive behaviour of motorists.

Whilst enunciating his carefully crafted thoughts, Mr Sloterdijk frequently appeals to irreverence - he enjoys a good laugh even at his own expense - becoming the odd one out in a nation that still equates dryness to seriousness. His 1983 publishing debut - A Critique of Cynical Reason (Kritik der zynischen Vernunft)- instantly identified the author as an original thinker - one not bound by established convention or boxes. In the two-volume book which runs to well over a thousand pages, Mr Sloterdijk reviews both philosophical and popular cynicism as a societal expression in European history. An unlikely candidate for best-seller status, the book outsold all other philosophical works published in Germany since 1945 - and still remains in print.

Mr Sloterdijk gained a global following with the Spheres trilogy, his magnum opus spanning nearly 3,000 pages, which he touts as the book Martin Heidegger should have written as a companion volume to On Being and Time - On Being and Space. Whilst deploring the poor political and personal choices made by Mr Heidegger - who joined the Nazi Party in 1933 as a born-again antisemite and promptly broke with his Jewish mentor and champion Edmund Husserl who had secured him the rectorate of the University of Freiburg - Mr Sloterdijk has played a leading role in restoring the philosopher’s severely tarnished reputation.

He draws extensively on Heidegger’s work - in particular On Being and Time - to cast and explain contemporary life whilst he remorselessly deals with his fellow countrymen’s “polite illusions”, displaying, for example, no sympathy for Chancellor Merkel’s bold decision to open Germany borders to Islamic refugees. He also repeatedly dismisses the welfare state as a “fiscal kleptocracy” and brands the country’s political establishment a “lethargocracy”. Though most Germans thoroughly enjoy Mr Sloterdijk’s painful digs at their collective accomplishments, progressive politicians denounce him as a stooge for the rightwing Alternative for Germany (Alternative für Deutschland) party.

However, Mr Sloterdijk is no closet-fascist - not even close; he merely wishes to stir up a nationwide debate and has frequently warned that the vacuous acceptance of globalisation as the cure for all societal ills and the engine of growth inevitably leads to a resurgence of provincialism. Already fifteen years ago, Mr Sloterdijk predicted that before long society would look back nostalgically on the time when a clownesque politician such as the late Jörg Haider from Austria was considered a menace.

Times have caught up with the philosopher. Mr Sloterdijk fears that only a few politicians truly grasp the magnitude of the challenges ahead. In German politics, he can only muster some enthusiasm for the near-libertarian Free Democratic Party (FDP - Freie Demokratische Partei) which argues that the country’s welfare state has become hypertrophied and now only creates resentment on both sides of the fiscal divide - amongst those who pay taxes and those who receive benefits.

Heaving his massive frame onto a bicycle - Mr Sloterdijk’s estranged father was Dutch - the philosopher embarks on an ode to inventors - his favourite subject - whilst deftly navigating local traffic. He expresses both delight and anger at the invention, by a German man, of the retractable dog leash which now constitutes a grave danger to cyclists who may become entrapped.

Philosophy, it turns out, need not restrict itself to existentialist questions and proves equally useful to describe and help understand the mundane.

If there is one great, yet often ignored, accomplishment Mr Sloterdijk may be celebrated for, it is perhaps his thorough disassembly of the Frankfurt School (Frankfurter Schule) - the school of social theory and philosophy that forged postwar Germany and created a fertile middle ground between capitalism, communism, and fascism.

When Jürgen Habermas - arguably Germany’s greatest living philosopher and the leading exponent of the Frankfurt School - stated that Mr Sloterdijk’s work contains “fascist implications”, his colleague did not take long to strike back with a debilitating blow: “The days of hyper-moral sons of national-socialist fathers are coming to an end.” The country’s intellectuals may, perhaps in a reflex, have sided with Mr Habermas but the truth was out for all to see. Suddenly, Mr Sloterdijk became the Frankfurt School’s philosophical antipode - ending sixty years of unipolar national debate.


Florence Parly: Sales Push

French ministers of Defence are expected to not just administer the country’s armed forces, but help sell military hardware as well. A political outsider, Florence Parly was recruited into the cabinet by President Emanuel Macron and Prime Minister Édouard Philippe and given the mission to shake and shape up the French defence establishment and ensure its €41bn budget (1.7% of GDP) is allocated more efficiently. Meanwhile, Mme Parly is also tasked with ensuring the survival, if not profitability, of France’s large defence contractors, most of which barely managed to survive the lean years.

She started, rather boldly, by weaning Belgium away from its tentative decision – more of an inclination grounded in tradition – to replace its ageing fleet of 57 F16 fighters with costly US-build Joint Strike Fighters, offering the neighbours less costly Dassault Rafales instead. The €4.1bn deal includes a number of sweeteners such as technological and economic partnerships.

Aircraft manufacturer Dassault is being prodded by Mme Parly to submit a formal bid. The company is reluctant to do so after the cash-strapped Belgians unveiled far-reaching plans to integrate their diminished “air component” with the Dutch air force which already flies the JSF and is well known for its hostility towards French-made military kit.

Undeterred, Mme Parly promised to put more than 150 Belgian companies in the Rafale’s production loop. The Dassault Rafale is the problem child of the French defence industry and has so far only been sold to India, Egypt, and Qatar. In order to recoup the plane’s €46bn development cost, more users need to be found pronto. Brazil, Singapore, Switzerland, and a host of other countries already declined to purchase the fighter jet. Luckily, in early December Qatar agreed to increase its original 2015 order of 24 Rafales by a dozen – and take out an option for an additional 36 – to replace its now decidedly antique Mirages.

Thinking outside the box, Mme Parly has also been instrumental in getting the proposed Sahel Force closer to realisation. This multilateral undertaking aims to create a 5,000-strong standing force with one battalion each from the Francophone Sahel G5 – Mali, Mauretania, Burkina Faso, Niger, and Chad. The force, which enjoys the financial backing of the EU and Saudi Arabia, is to operate alongside UN and European peacekeeping missions in the region and help fight Islamic extremism. It will, of course, be equipped with French weaponry.

On the home front, Mme Florence Parly faces a much less challenging environment. Cuts to the defence budget have been markedly less rigorous in France than elsewhere in Europe, ensuring the country’s forces were largely kept intact. The 180-ship Marine Nationale was able to preserve its air strike and assault capabilities with one large nuclear-powered aircraft carrier and three amphibious warfare ships that double as helicopter carriers.

The air force and army also successfully managed to escape the worst of the chopping blade. Having become slightly blasé and too outspoken for political comfort, the country’s military brass did require reigning in. After expressing his dismay with the government’s initial defence spending plans on – of all places – Facebook, Army Chief of Staff General Pierre de Villiers was forced into early retirement. However, the general’s last stand may not have been in vain as Minister Parly unveiled plans to up defence spending by $1.7bn annually in order to reach NATO’s recommended 2% of GDP.


Marise Payne, Australia: Survivalist

Australia is determined to boost its punch with an outlay of A$200bn ($152bn/€128bn) on new military hardware. The recently unveiled ten-year spending programme is to give teeth to the defence white paper released in 2016 which maps threats to the stability of the wider Indo-Pacific Region and suggests appropriate responses. Minister of Defence Marise Payne, a senator for New South Wales and former minister for Human Services, is charged with carrying out the ambitious plan. This requires the minister to tread a fine line between Chinese sensitivities and American bluster.

Mrs Payne admitted that her country’s regional environment has become “more complex” but denied the charge that the proposed investments in capital ships and fighter planes equips Australia for the next war with the weaponry of the last one. The white paper calls for significant efforts to bolster the country’s cyber, space, and information warfare capabilities. Mrs Payne emphasised that some 800 new positions will be created in armed forces branches dedicated to defend against unconventional and asymmetrical threats. In April 2017, Australia and China formally agreed not to raid each other’s intellectual property and trade secrets via cyber-attacks.

Still, the grand buying-spree Mrs Payne has now embarked on seeks to re-arm Australia for classic warfare and includes, amongst others, “regionally superior” submarines, major surface combatants, and offshore patrol vessels – a dozen of each. Additionally, Australia is in the market for 72 F-35 Joint Strike Fighters, 15 maritime surveillance aircraft, and a host of other hardware such as in-flight refuelling planes, transport helicopters, and replenishment vessels.

“The focus on countering China is misplaced. We are in the wrong century when expecting the principal threat against Australia’s security to come from China’s power projection,” says Professor Greg Austin of the Australian Centre for Cyber Security at the University of New South Wales in Canberra: “We should be much more concerned about the emergence of an Islamic state in our region and, indeed, about cyber warfare – perils that cannot be met with destroyers and frigates.”

Mrs Payne seems to agree that an “area denial policy” for China makes little sense without the full backing of the United States – an unattractive proposition as long as President Trump is calling the shots. Moreover, long-time China watchers doubt that Australia even appears on Beijing’s radar. The aggressive policies pursued in the South China Sea are mainly directed at nearby countries and, as such, pose no direct – or indirect – threat to Australia.

A survivalist in the often vicious sectarian infighting for which Australia’s Liberal Party is known, Marise Payne has so far managed to stay well above the fray in what is derisively known as the “philosophers’ club” – the government of Prime Minister Malcolm Turnbull which is widely accused of ignoring bread-and-butter political issues. An able administrator, Mrs Payne clearly prefers a cautious and pragmatic approach over grandstanding. As such, she is considered particularly well placed to ensure Australia’s national defence remains securely pivoted on US cooperation – intensified during the Obama Administration – whilst enabling the country to meet new threats with the panache for which it is well-known – and respected.


Ank Bijleveld: The Relentless Pursuit of Synergies

Upon re-entering national politics after an absence of seven years, newly-appointed Dutch Minister of Defence Anke Bijleveld was promptly dubbed “the little general”. Standing just 1m57 tall in a cabinet of physical, if not necessarily political, giants, Anke Bijleveld immediately sprang to national attention when she attended the full cabinet’s first official meeting at the royal palace in The Hague dressed in a bright yellow outfit – complete with a faux spider climbing her left shoulder – which instantly made the minister stand out amongst the subdued tones of her colleagues’ attire.

Mrs Bijleveld needs all the attention she can get. Her appointment to the Ministry of Defence was welcomed as the definitive proof that the scandal-ridden department remains a political backwater and an afterthought when it comes to budgetary allocations. Since the Berlin Wall came down in 1989, Dutch military expenditure has been slashed by half to barely €9bn annually. Instead of fielding two full divisions – one mechanised – the country can now barely muster a few brigades.

However, with the economy in the ascendant and mounting threat levels all-round, the government of Prime Minister Mark Rutte has now reluctantly decided to revert the trend, promising to boost defence spending to at least €900 million annually by 2020. Mrs Bijleveld has assured NATO partners that The Netherlands supports the 2% (of GDP) norm and will “grow” towards attaining that distant goal. Mr Humphrey would undoubtedly have completed the sentence with “in the fullness of time.”

Mrs Bijleveld will continue the policy of her predecessors to seek succour in close cooperation with the neighbours. Plans are afoot to tightly integrate the country’s air force with the Belgian “air component” and pool resources, training programmes, and tasks such as the quick reaction squadrons both countries keep on permanent alert to intercept intruders.

As of this year, a single Belgian or Dutch squadron will be responsible for guarding the entire Benelux airspace. The transport and airborne refuelling wings of the two countries will also be merged. The new unit with two tankers, fourteen transport planes, and a modest fleet of VIP jets will be based at Melsbroek airbase near Brussels.

The move follows the successful integration of the Dutch and Belgian navies which now operate under a single command seated in Den Helder. Under the agreement, Belgium is responsible for the operations and upkeep of the shared fleet of (twelve) mine clearance vessels while The Netherlands keeps the (twelve) destroyers, frigates, and ocean-going patrol vessels shipshape. The Dutch also provide significant replenishment and amphibious resources. This way, both countries are able to maintain a shared green water navy with added expeditionary capacity.

Mrs Bijleveld’s main challenge is to align procurement policies and processes with Belgium. That represents an uphill battle since the Belgians traditionally buy most of their military hardware in France whilst The Netherlands was thus far able to maintain its own defence industry, including naval yards, mostly supplemented with US or UK-sourced kit.

Both countries did agree to pursue economies of scale by shopping together. The first real test of this intend comes when Belgium at long last decides which fighter plane is to replace its worn-out F16s. The Dutch were an early-adopter of the Joint Strike Fighter and propose to pool maintenance and operational resources should Belgium also opt for the JSF.

The trouble is that neither The Netherlands or Belgium are fully convinced of the need for a robust increase of their defence spending. Synergies and the pursuit of maximum efficiency go only so far.


Serena Williams: Writing Her Own Script for Success

She is the only woman to rank amongst the world’s highest paid athletes, claiming a spot nearly dead centre on the annual list compiled by Fortune Magazine. In 2016, Serena Williams cashed in almost $27m in prize money and endorsement deals with a variety of brands such as Nike and JP Morgan Chase. The bonanza took the athlete’s career earnings up to $84m, almost triple the amount claimed by any other tennis player. Serena Williams is not just a sports phenomenon – she has become a brand and a statement.

An exuberant winner – with signature leaps of joy, fist pumping, and other festive expressions – Serena Williams break the mould: she not only outshines her opponents on and off the court, she also inspires a generation of African-American girls who may revel, without a shred of shame, in excellence. Ms Williams resolutely shattered the notion that great accomplishments must remain devoid of swagger: she is good – the best – and makes no excuses for it.

With no less than 23 grand slam titles to her name, Serena Williams has been likened to a tennis machine, albeit a most charming one. Chris Evert, who reigned supreme during the 1980s, called her “a once-in-a-century phenomenon” whilst John McEnroe thinks she is the greatest tennis player of all time.

"In a class all her own, Ms Williams doesn’t stick to the pre-arranged script and displays zero tolerance for anything even remotely resembling racism."

In fact, she can be quite outspoken. In Wimbledon, playing Heather Watson in 2015, she menacingly wagged her finger at the stand after the crowd had become a bit too boisterous in its support for the home favourite: “don’t try me.” She went on to dispatch Ms Watson 6-2, 4-7, and 7-5. Always graceful, and magnanimous in victory, she congratulated her opponent afterwards on “the toughest match yet”. Wimbledon was not the first incident. In 2009, during the US Open, Ms Williams verbally doused a linewoman in four-letter worded abuse after repeated dubious calls. She won’t hold back and shows joy, humour, and rage in almost equal measure.

Up to recently perceived as a predominantly “white” sport, tennis has not always been kind to Serena Williams. During a 2001 match against Kim Clijsters at Indian Wells, California, the crowd booed, jeered, and racially abused the then 20-year old, cheering her every unforced error in a vituperative outburst; unashamedly – and very loudly – cheering for the Belgian player over the American one. Raising a clinched fist reminiscent of John Carlos and Tommie Smith’s iconic Black Power salute at the 1968 in Mexico City, an already-then combative Serena Williams managed to defeat the talented Kim Clijsters before refusing play Indian Wells.

Ms Williams ended her unspoken boycott of the venue in 2015, returning to donate her prize money to the Equal Justice Initiative and drawing attention to the mass incarceration the characterises the US justice system. Whilst the tennis press gleefully celebrated Ms Williams “maturity” – implying that she was childish in standing up to racism – they utterly missed her sense of candour, class, and largesse – and her courage too. She will make an appearance at her own convenience in recognition that Indian Wells needs her more than she needs the venue. The California facility near Palm Springs boasts the second-largest outdoor tennis stadium in the world and is now home to the BNP Paribas Open – the fifth-largest tournament globally. In 2009, the 29-court venue was saved from bankruptcy by Oracle CEO and co-founder Larry Ellison.

Hardened against racism by her father Richard, and long-time French coach Patrick Mouratoglou, and now primed for enduring success, Ms Williams, expecting her first child, emphasises that she is playing to win – not winning to promote any cause. Should anyone entertain other thoughts, she will not remain quiet.

Having cruised past Steffi Graf’s 22 Grand Slam singles titles, Serena Williams has scaled to a historic height. Ms Williams is, however, not done yet but from now on will write her own script – in her own time.


CFI.co Meets the CEO of Heathrow Airport Holdings: John Holland-Kaye

[caption id="attachment_12296" align="alignright" width="200"] CEO: John Holland-Kaye[/caption]

John Holland-Kaye became chief executive officer of Heathrow Airport Holdings in July 2014. His previous roles at Heathrow include delivering the new Terminal 2 which opened successfully in June 2014, growing commercial income, and improving overall passenger experience. Heathrow is now rated by passengers as the best airport in Western Europe and one of the top ten airports worldwide. Mr Holland-Kaye’s focus as CEO is on making Heathrow a great place to work, transforming passenger experience, and building strong relationships with local communities.

Prior to joining Heathrow, Mr Holland-Kaye worked in housebuilding, in both the UK and US, with Taylor Wimpey, and in brewing and leisure retail in the UK with Bass plc. His early experience was as a strategy consultant advising leisure and FMCG companies in the UK, US, Australia, and the Philippines.

Mr Holland-Kaye is married. The couple has two daughters.

Key Career Dates
2014 – Present Chief executive officer, Heathrow Airport Holdings
2012 – 2014 Development director, Heathrow Airport
2009 – 2012 Commercial director, Heathrow Airport
2002 – 2009 Divisional CEO, Taylor Wimpey
1995 – 2002 Managing director, National Sales Division, Bass Brewers
1986 – 1995 Strategy consultant, LEK Consulting


CFI.co Meets the CFO of Heathrow Airport Holdings: Javier Echave

[caption id="attachment_12306" align="alignright" width="198"] CFO: Javier Echave[/caption]

Javier Echave serves as chief financial officer of Heathrow Airport Holdings since May 2016. He is responsible for leading the organisation financially and to give passengers the best airport service in the world whilst delivering £1bn+ EBITDA growth over the current regulatory period. Mr Echave did so by enabling a volume based strategy and transforming Heathrow’s approach to cost and investment. He leads the investment appraisal of Heathrow’s multi-billion capital plan - working with airlines, the Department for Transport and the CAA to ensure Heathrow’s expansion plans are financeable and provide value and service for passengers while keeping airport charges close to current levels.

Mr Echave’s responsibilities also include the management of Heathrow’s £13bn debt portfolio through a multi-rating, multi-currency funding platform. Me Echave is a member of Heathrow Airport Holdings board of directors, chairman of Heathrow’s Fire Safety Board, and alternate company’s director at NATS Holding board of directors.

Mr Echave joined Heathrow in January 2008 and his achievements include establishing Heathrow’s current capital structure and positioning Heathrow as a strong credit in the financial markets, collaborating to transform passenger service, and delivering an ambitious cost efficiency programme, setting Heathrow’s financial investment appraisal capability and leading the transformation of the Business Finance team to become a genuine strategic business partner.

Prior to joining Heathrow, Mr Echave worked in infrastructure, services, and facility management in the UK and Spain with Ferrovial.

Mr Echave is married. The couple has two sons.

Key Career Dates
2016 – Present Chief financial officer, Heathrow Airport Holdings
2013 – 2016 Finance director Operations, Investment, and Performance, Heathrow Airport
2011 – 2013 Head of Central Finance, Heathrow Airport
2008 – 2011 Corporate finance manager, Heathrow Airport
2003 – 2008 Finance manager Planning and Performance, Ferrovial


María Dolores de Cospedal: Seeking More Bang

Almost nobody saw her coming. In barely ten years, María Dolores de Cospedal went from a political nobody to become Spain’s minister of Defence – the second woman to claim that job – and partake in the secretive Bilderberg Conference, an invitation-only event where the world’s behind-the-scenes powers-that-be meet to review global affairs and trends.

Mrs Dolores de Cospedal reached Madrid by stealth after serving first as a regional senator of the Castilla-La Mancha Region – a political backwater – and later as its president. She deftly managed to escape the fallout from a series of scandals surrounding the Partido Popular (PP), the conservative ruling party, convincing investigators that she had never accepted any of the top-up payments handed out to numerous PP officials who sought to supplement their incomes. The episode did, however, convince Mrs Dolores de Cospedal to refrain from accumulating jobs and salaries.

In a party that struggles to attract female politicians, Mrs Dolores de Cospedal soon found an open road to the top. Cleared from any and all wrongdoing, she is now being tipped as the likely successor to PP President Mariano Rajoy, the Spain’s prime minister since 2011. In order to prove her savvy, she must first make her mark as minister of Defence and stand her ground in the usually acerbic politics of Spain.

Mrs Dolores de Cospedal was appointed to the job only about a year ago and has since worked hard to push the country’s notoriously traditionalist military establishment into the 21st century. This represents an enormous undertaking. Whilst the Spanish government already in 2013 published an ambitious white paper on the country’s cyber security strategy, the role envisioned for the military amounts to little more than a footnote. The need for increased cyber security became apparent during the recent political upheaval in Catalonia when it transpired that Russia-backed agitprop stoked the fires by swamping social media networks with incendiary messages.

As a result of the 2008/9 financial crisis which hit the country harder than most, Spain’s national defence budget has shrunk by over a third. The cuts grounded the air force’s sole electronic eavesdropping plane and its fleet of aerial refuelling aircraft, limiting the range of its F18 fighter jets. A plan to lease three Airbus A330 multi-role tanker transports was put on hold because of budgetary constraints. With the early retirement of the Príncipe de Asturias, the country’s only carrier, the vessel’s air wing of eight Harriers was also disbanded. A flight of six remaining Harriers now operates from the much smaller Juan Carlos I assault ship which lacks proper storage facilities.

The cuts to the defence budget axed a total of seventeen warships besides a number of mechanised army units. Mrs Dolores de Cospedal is credited with reverting this downward trend and has managed to secure modest spending increases aimed at pushing, over the next decade or so, defence outlays to 1.5% of GDP from their current level of barely 1.2%. She also is working on a detailed plan to obtain more bang for the proverbial buck by forcing the military establishment to embrace rationalisation and efficiency: “We now need to fight to better control spending patterns in order to make best use of the scarce resources available.”