Weekend Box: No Credit to Suisse, East Vs West in Georgia & more
Welcome to The Weekend Box, Audley’s weekly round-up of interesting or obscure political, business and cultural news from around the world.
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NO CREDIT TO SUISSE
A week ago today, Silicon Valley Bank collapsed after CEO Greg Becker told investors to ‘stay calm’ on a conference call (a reminder of the importance of thoughtful communications in a crisis). On Sunday, authorities took over Signature Bank in New York. Meanwhile, across the pond, the long-rumbling decline of Credit Suisse took on a new urgency.
The embattled investment bank has never fully recovered since 2008, rocked by scandals and crises of various forms ever since, including a spying scandal involving former CEO Tidjane Thiam; resignation of recently-appointed Chairman Antonio Horta-Osorio, thanks to breaches of COVID rules; and significant exposure to Archegos Capital and Greensill Capital. The straw that broke investors’ backs? This week’s disclosure in its annual report that there had been “material weaknesses” in financial reporting processes for 2022 and 2021, and the announcement that Credit Suisse’s biggest backer, Saudi National Bank, won’t be providing further financial help for the bank. Share price hit an all-time low on Wednesday, down almost 98% from the stock’s high in April 2007.
Predictably, rumours began to fly about which industry peer the investment bank would accept as its white knight, with Swiss peer UBS seen as the clear frontrunner. As we write, the immediate crisis has abated thanks to a lifeline emergency loan of up to SwFr50 billion from the Swiss National Bank. Shares rebounded, but whether this will be enough to give the bank the runway it needs to fix decades of financial and cultural issues remains in doubt. This weekend may well be as eventful as the last for the banking industry.
For more financial Audley Intelligence, read Rolf Merchant’s analysis of Chancellor Jeremy Hunt’s Spring budget here.
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EAST VS WEST IN GEORGIA: DEMOCRACY GOES SOUTH
At a time when Georgia’s democracy is in a precarious state, the former president who once symbolised Georgia’s hope for better may be facing death by poisoning in prison.
The physical deterioration of imprisoned former President Mikheil Saakashvili has drawn international concern. A spokesman for the Polish government this week claimed that a “humanitarian aid” team from the country is prepared to travel to Georgia to assess his health. According to an independent expert, there is evidence that Mr Saakashvili has been poisoned.
The pro-Western Mr Saakashvili was arrested on his return to Georgia from his self-imposed exile in 2021. In the years between his exit from office in 2013 and his return, the former president was charged with abuses of power in absentia by his successors to power, the Georgian Dream coalition. Speaking to The Weekend Box from Tbilisi, Senior Consultant Paul Bell says that while Mr Saakashvili was initially welcomed as a modernising influence on Georgia, overturning decades of Russian influence in the country’s politics, his government came to exhibit increasingly authoritarian behaviour.
Behind his imprisonment is the question of Moscow’s influence on Georgian Dream, founded by oligarch Bidzina Ivanishvili who made his fortune in Russia, and whether this is an attempt to curtail the influence of a pro-West political opponent on Georgia.
The crisis of Mr Saakashvili’s health has taken place against the background of civil unrest in Georgia, as citizens have protested a law resembling existing Russian legislation that would class non-government and media groups as ‘foreign agents’. In a note delivered to Sky News via his lawyer, Mr Saakashvili advised protestors to be vigilant and wary of “the vengeful mood of the oligarchs' regime.” In answer to the perceived threat from Moscow, Foreign Secretary James Cleverly has announced funding to strengthen the security of Georgia’s next elections. Yet, what can be done for Mr Saakashvili remains an open question.
For more election analysis, read Audley’s conversation with Ambassador Mark Green on Nigeria’s Presidential election here.
CORNWALL: A GOLD MINE FOR GREEN ENERGY?
As relations with China fray, the 20th-century economic ideal of interdependence with the world’s leading mineral producer is becoming far less appealing. In 2021, China was the UK’s largest import partner, the country also dominates 80% of the world’s global supply of rare earth metals. Worryingly, China’s foreign minister responded to this week’s AUKUS nuclear deal in a way that could at best be described unfavourably, and at worst, aggressively. As cracks emerge, there seems to be an ever-increasing need for the UK to rely upon its own natural resources if we want to deliver on our green commitments.
Good news from Cornwall then that a leading geothermal specialist based in the South West may be able to deliver a quarter of the UK’s lithium needs by 2035. Geothermal Engineering Limited (GEL) have been working with partners to turn the geothermal fluids found in Redruth into minerals.
Said minerals found within Cornwall are estimated to be able to fuel up to nearly 1M electric vehicles a year. This good news coincides with reports that UK Govt is snubbing British-built electric cars. We heard this week that ministers bought less than 5% of British EVs to make up their Whitehall fleet, with the Korean carmaker Kia accounting for 82% of purchases. This comes after the government rejected funding for Britishvolt, a startup manufacturer of lithium-ion batteries earlier this year. The gigafactory in Northumberland, set to have been the main manufacturer of lithium-ion batteries for British EV, will now instead focus on batteries for energy storage and high-end sports cars.
Helena Benett from the Green Alliance think tank, reminds us of China’s monopoly on the global mineral supply chain. She has underpinned the importance of domestic lithium production as well as the UK government’s commitment to the critical mineral strategy, if we want to reduce Chinese influence over international markets.
Perhaps this new Cornish discovery may just prove the light at the end of the tunnel for British energy… or at the very least, the battery to charge the light!
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THE GREAT BRITISH BASEBALL-OFF
“Baseball’s comin’ home!” isn’t likely to be chanted anytime soon in pubs across England, but the best ever performance of Great Britain in the World Baseball Classic has brought the prospect a little bit closer. (For the avoidance of doubt, baseball was invented in Britain, not the USA).
The World Baseball Classic (WBC) is in effect the baseball world cup, and features some of the best players from the Major League. In the 2023 edition, Great Britain qualified for the tournament for the first time, and by beating Colombia in the group stage earlier this week, the team recorded its first ever WBC win.
Most of the GB squad grew up and learnt the game in the US but qualify to play through having British parents. The team’s charming celebrations were a nod to their heritage: Chavez Young mimed pouring and sipping a cup of tea after scoring against Colombia, while Harry Young was dressed by team-mates in a crown and mantle like “the King of England” after nailing a home run.
Team GB didn’t manage to beat another team in the tournament, but by finishing fifth in the group the team has at least secured automatic qualification for the next WBC in 2026.
And in write-ups about Great Britain’s performance in US publications, there was palpable excitement about it leading to baseball becoming more popular in the UK. With an estimated 22,500 players on our shores, it is still a minor sport, but high-profile successes like this week’s could yet spur greater interest in British baseball.
Image credit/Karolina Grabowska on Pexels
OZEMPIC: A HARD PILL TO SWALLOW?
For months, rumours of a miracle weight-loss drug used by stars bubbled under the surface. At the Oscars on Sunday, the worst-kept secret in Hollywood was well and truly out, with host Jimmy Kimmel opening his speech by saying, “When I look around this room, I can’t help but wonder ‘Is Ozempic right for me?’” Ozempic, which is the brand name for semaglutide, is a type 2 diabetes medication with the side effect of weight loss. Few celebrities have admitted to using the drug, which mimics a natural hormone that regulates appetite to create the feeling of fullness. Semaglutide has now been approved for use by the NHS under the name Wegovy and will be offered to adults with at least one weight-related condition (such as heart disease or type 2 diabetes) and a body mass index (BMI) score of at least 35. With an obesity crisis in the UK that costs £6bn annually and is only set to rise, it’s no surprise that clinicians are looking for answers beyond the medical mantra of ‘diet and exercise.’
However, there remains a question mark over Ozempic’s safety. The longest study on these injections was conducted over less than two years and many argue it’s a ‘quick fix’, with people likely to gain the weight back if they stop taking it. There are also concerns about the societal impact of drug-like Ozempic, which is available privately for those able to pay. Jameela Jamil was one of many who criticized the fact that weight loss had become ‘an Olympic sport during awards season’ and that weight loss injections were setting unrealistic (and often unachievable) standards for others. In the past decade, the ‘body positivity’ movement has gathered momentum, but with thinness trending again, with damaging headlines such as “Bye-bye booty: heroin chic is back” in the New York Post, there are fears it is deflating. While Ozempic may have its merits for those struggling with their weight, the unrealistic standard it is helping Hollywood set might be its worst side effect.
And that’s it for this week. I hope you found something of interest that you might want to delve into further. If so, please get in touch at cwilkins@audleyadvisors.com.
For now, that’s The Weekend Box officially closed.