End Game

by Matthew Glass

  ‘Marion, I’m sorry about this. I wish I could have stopped it. I know you’re exposed. After me, you’re probably the person most exposed by all this.’

  ‘It’s the whole department, Bob. The president’s got to realize that. He’s got to realize what he’s done.’

  ‘Well, he’s done it.’

  Ellman thought about what a fool she looked. She thought about the kinds of conversations she was going to have the next time she had to persuade other countries to join an American initiative. Much as she liked Bob Livingstone, it was a curse to work with a weak secretary of state. There was no other department where weakness at the top made everyone so vulnerable.

  ‘Did you speak with Liu?’ asked Livingstone.

  ‘No. Do you want me to?’ Ellman wasn’t looking forward to her next conversation with the Chinese UN ambassador. She thought she had a reasonable working relationship with Liu, but this was going to test it. The Chinese had already lost face over the resolution. Now they were losing even more face with the US going into Uganda alone. And the president’s line in his statement about America having an interest in freedom and justice everywhere was gratuitous. More than gratuitous, inflammatory. However the president meant it – and Ellman realized he had probably viewed it from the domestic perspective, as an explanation to the American people about his motivation for sending troops to a foreign country – the Chinese were going to interpret it as a shot straight at them. They were incredibly sensitive to anything that could be interpreted, however indirectly, as a criticism of their political system and human rights record.

  She was about to ask Livingstone about that line, but stopped. He understood the nuances as well as she did. That line would never have come from him. It would have made it into the statement only despite his attempts to finesse it.

  ‘Bob,’ she said, ‘I could talk to Liu, but I’m not sure what I’d say. Have we got a line? Have we got anything to say apart from what the president said already?’

  ‘We could say we’re going to stick to the terms of the resolution, we don’t have any hidden objectives in the region.’

  ‘I’ve said that to him already. I can say it again but what’s the point? Anyone can see it’s not what we say that matters.’

  There was silence on the line. Ellman regretted having made that last remark.

  ‘Yeah, maybe we should leave it,’ said Livingstone eventually. ‘The president’s spoken. I don’t know if we want to gloss it.’

  ‘What’s the gloss? It is what it is.’

  ‘Yeah. You’re right.’ Livingstone paused. ‘I’ll talk to Haskell, see what he thinks.’

  Steve Haskell was the US ambassador in Beijing.

  ‘Sure,’ said Ellman. ‘Talk to Haskell. But you said it yourself, Bob. The president’s spoken. If the Chinese want to say something in response, they’ll find a way.’

  5

  WU GUOZENG WAITED for Steve Haskell to sit down. Haskell had brought one of his senior aides as interpreter and note-taker. Wu had an interpreter with him as well, although his English was just about as good as Haskell’s. Between stints at the Chinese mission to the UN, four years in roles at the Washington embassy, and five years as the Chinese ambassador to the US, Wu had spent upwards of a dozen years in the States. This was his second year in the job as vice-foreign minister with responsibility for North America, and he was widely tipped as a potential future foreign minister for the People’s Republic.

  Haskell’s diplomatic credentials were a little slimmer. He was a longtime Republican Party donor and, as Tom Knowles’ appointee, had taken up his post as ambassador in Beijing just a year previously. But he had a thorough working knowledge of China and could even hold his own in Mandarin, and his appointment was widely considered to be an astute one. First as a partner with the international law firm Spearman Maybury and then with the investment bank UDB Philips, he had run offices in Hong Kong and Shanghai and otherwise been involved in China for over thirty years, and his network in the Chinese business community and amongst government financial officials was unrivalled.

  Wu had a long face and thinning hair with a combover. Haskell had once been red-headed but now had a bare cranium. There wasn’t enough left for a combover should he have even wanted one. The two men had met regularly since Haskell arrived at the US embassy and generally they got on pretty well. Wu had a good sense of humour and was fairly open and pragmatic. He had been around American diplomats and politicians for so long that he was realistic about what could be achieved and how best to go about it. Steve Haskell liked to think he was fairly pragmatic as well.

  He knew, however, that this wasn’t going to be an amicable conversation. He imagined there must have been much discussion in the Chinese government compound in Beijing, the Zhongnanhai, over the two days since the president’s announcement of Jungle Peace. Whatever Wu privately felt, Haskell knew that the Chinese vice-minister had a message to deliver, and it was one that would have come from a lot higher up in the hierarchy than his vice-ministerial department. Haskell just wasn’t sure how hard the message was going to be.

  The president’s announcement had received generally positive coverage in the American press, and the US blogosphere was largely supportive. Most Americans seemed to see the action as a disinterested mission by the US to liberate a long-suffering part of the world from a resident evil. Steve Haskell himself saw the mission in this light, but he was well aware of Chinese sensibilities on the matter. He could hardly fail to be – not from the noise being made in China, but from the silence. The Chinese media was virtually ignoring the issue and very little in the way of blogosphere comment was being allowed past the government censorship operation on the net. The Security Council vote had received only perfunctory mention and the president’s announcement had passed without notice. Haskell had been around China long enough to know what that meant. When the regime felt that it had been attacked and could turn injury to its advantage, it whipped up a fury. He had been in Shanghai in the late nineties and had seen the government-sponsored demonstrations after the accidental bombing of the Chinese embassy in Belgrade. Chanting crowds had thundered past the Spearman Maybury building and he and his staff had been trapped for two days, having to spend a night in the office. But everyone knew the anger was largely manufactured and the staged demonstrations were under close government control. When there was public anger in China, you knew where you stood. Silence was something else. Silence was more ambiguous, threatening. When the Chinese government clamped down on news reporting from abroad, it usually meant it was seriously scared of losing face. That was when it was at its most dangerous.

  Wu spoke in Mandarin. He had a note for the United States government from the government of the People’s Republic. He handed Haskell a sealed envelope.

  ‘This note refers to the recent commencement of hostilities by American forces in Uganda,’ said Wu. ‘My government wishes to ensure that we have clarity between our two governments on our expectations in this issue.’

  Haskell’s aide translated the words, although Haskell’s Mandarin was pretty sharp. He responded in English. Normally he was comfortable conversing in Mandarin, but for certain conversations he wanted to be sure he was entirely in control of the nuances in his speech.

  ‘I’m certain that clarity is critical and whatever we can do to achieve that will be a good thing.’

  Wu nodded. ‘My government, as you know, does not oppose your mission. If we oppose your mission we would have voted against resolution 2682.’

  ‘And the US government is grateful that you didn’t.’

  ‘We will, however, oppose anything that goes beyond the provisions of the resolution.’

  ‘We would not anticipate taking any action that goes beyond the resolution,’ replied Haskell.

  ‘The resolution refers only to Uganda.’

  ‘And to other countries who may invite member states to assist them in bringing the actions of the LRA to an end.’

  ‘That i
s correct,’ said Wu. ‘I am not aware of any other states who have issued such an invitation.’

  ‘Nor am I,’ said Haskell. He smiled.

  Wu frowned. ‘Ambassador, we will oppose any intervention in other states.’

  ‘We have no intention of intervening in other states.’

  ‘This will be a very delicate situation.’

  Haskell didn’t respond immediately. His aide had translated the word that Wu had chosen, xianruo, as ‘delicate’, but Haskell’s Mandarin was good enough that he knew the word also had a strong connotation of fragility. And the tone in which the vice-minister said it left no doubt that it concealed a host of further, more worrisome meanings.

  Haskell had been briefed by State. Border demarcation between Uganda, Sudan and Congo in the jungle-clad region in question was blurred, to say the least, and there were a number of areas of dispute between the countries. Steve Haskell couldn’t imagine a US Apache pilot worrying too much over the niceties when in pursuit of enemy combatants on the ground. International law over hot pursuit could be interpreted to allow incursion into other states. It could also be interpreted to forbid it.

  Facing an insurgency that roamed across the borders of three states, it wasn’t too hard to imagine incidents that the Chinese government could use to protest against the mission if it chose to do so.

  ‘I will read this note now, Vice-Minister, if I may, in case I need to ask you for any clarification.’

  ‘Please,’ said Wu.

  Haskell opened the envelope. It was a brief note, containing little more than what the Vice-Minister had already said. It gave no greater insight into the Chinese government’s intentions.

  Haskell put the note away. ‘We will of course provide a response as soon as my government has had time to consider this note.’

  Wu nodded.

  ‘However, I trust that your government will interpret our actions in the spirit of our mission. The Lord’s Resistance Army is a truly evil group and I personally believe that removing it is something that we all should be interested in seeing done. The United States has no interest in this mission but to do that, and to do it as quickly as possible with least cost in the lives of our soldiers and the lives of civilians on the ground.’

  Wu gazed at him impassively. Haskell knew the vice-minister wouldn’t respond to that. This was a minuted conversation and he wasn’t being tasked by his superiors with giving a moral evaluation of Jungle Peace.

  ‘I just want you and your government to understand that,’ said Haskell.

  Wu smiled briefly. ‘We look forward to receiving a reply from your government.’

  IN THE CAR, Haskell read over the note again, then handed it to his aide.

  ‘It’s interesting they chose Wu to deliver the message,’ he said.

  The aide nodded, reading the note.

  Haskell had expected to be called in to see the Chinese foreign minister. It was a good sign, he thought, that the Chinese government seemed to be keeping it one level lower down.

  ‘What do you think?’ said Haskell. ‘I don’t think they’re going to make too much noise about it.’

  ‘Doesn’t look like it.’

  ‘The media silence says to me: we’re embarrassed by this. Something happens that they don’t like, they’re still going to be embarrassed by it. Even more so. I think the message here is, don’t make us say anything on this. Don’t put us in a situation where we have to say something, where we have to remind people what’s going on. You have a resolution, and we can live with it, but don’t go outside the terms of that resolution because then you’re going to force us to make a protest, and we don’t want to do that. It won’t be good for either of us.’

  ‘And that would happen if the government of Sudan started making complaints that we were in their space. They’d demand Chinese backing in public and the Chinese would feel they’d have to give it.’

  ‘Exactly,’ said Haskell. ‘So the message is: stay out of Sudan.’

  ‘On the other hand,’ said his aide, ‘this could be a genuine warning. If we do something they interpret as wrong they might use it as a pretext to get aggressive. They could see this note as setting a line in the sand. At the extreme, they might even want us to overstep it. They might want a pretext to show how tough they are.’

  Haskell frowned. It was possible. ‘I wonder where the army stands on this.’

  His aide shrugged. She handed back the note. ‘I’m just playing devil’s advocate. If they were setting up a pretext, this wouldn’t have been a private warning. It’d be on the front page of the Renmin Ribao and every media outlet in the world would get a press release. It only works as a pretext if everyone knows the line in the sand has been drawn. If it’s done in private, it doesn’t help them.’

  ‘I guess that’s true.’

  ‘On balance, Ambassador, I think you’re right. They’re saying, do what you have to do in Uganda, get in and out as quick as you can, and while you’re there, stay out of Sudan so we don’t need to do anything.’

  Haskell read over the note again. Then he folded it and put it back in its envelope. ‘Yeah,’ he said. ‘I think that’s what they’re saying.’

  6

  THE MEETING ROOM was a small, glassed-in oblong on one side of the thirty-fourth floor of a tower in midtown Manhattan. Twenty-three people were crammed inside around a table that had been designed for ten, chairs layered two deep. In the middle of it all sat Ed Grey.

  Grey was fifty-one, a big, handsome man with slicked-back hair who was the principal partner of Red River Investments. The term hedge fund had gone out of fashion, discredited by the global financial crisis and made unattractive by regulation, and Red River was technically a DIV, or Diversified Investment Vehicle, but its activities were pretty much the same. Grey had come out of one of the few operations in the hedge fund world that had bet on the collapse of the subprime market and earned staggering returns for its temerity – or perspicuity – when the financial world was imploding in the heady summer of 2008. Grey himself had established his reputation with a series of audacious bets on oil and gas prices during the downturn and had garnered enough of a client following to go out on his own and set up Red River in 2012. He named the company after the ranch in Colorado that he had bought with a fraction of the earnings of those years. The vast bulk of his profits went into the fund, together with an initial subscription of $2 billion from external investors. Six years later, he had upwards of $16 billion of client funds under management, leveraged up to close to $60 billion through bank financing.

  The people around him ranged in age from mid twenties to late thirties, mostly men, a couple of women. Casual dress was the order, chinos, even one or two in jeans. There were other people in Red River – the chief operations officer, finance officer, compliance officer, a couple of marketing people, various administrative people – but these twenty-two were the heart and brain of the firm. Six of them were portfolio managers, the traders who were allocated capital from the fund and structured the deals that made Red River’s money. The others were market analysts and quantitative analysts working for the portfolio managers, scouring the markets, developing ideas, doing research and running quantitative models that would enable the portfolio managers to make their trading decisions.

  Ed Grey himself directly managed a portfolio of around thirty per cent of the firm’s capital, mostly in commodities and developing markets, as well as acting as the CEO and chief investment officer. His most senior portfolio manager, Tony Evangelou, was a big-hitting equities trader who focused on US and European markets, and managed around a quarter of the fund. The rest of the capital was more or less evenly divided among the other managers who had expertise in bonds and foreign exchange.

  Communication across the group was essential. Grey and Evangelou were focused on finding the big, event-driven opportunities that could earn forty, fifty, sixty per cent returns as one-off bets. The other managers largely worked steady, low-risk trades that earned a
reliable eight to ten per cent a year and gave the DIV a baseline return. But any one of the managers might come across a one-off opportunity for extraordinary returns or be seeing trends in his or her market that might be relevant to any of the others. As a multistrategy, global DIV, the portfolio manager group had to be able to form a view of the way key economic trends around the world were heading, and structure their trades accordingly. They sat at the same desk and were always exchanging information, but Grey liked to get them together in the meeting room as well, sometimes daily. Most times he got the analysts in with them also. Discussion was open. Anyone could put forward an idea and anyone could challenge it.

  Today, he had Uganda on his mind.

  Tony Evangelou thought it was nothing. ‘No one cares, Ed. No one sees it making a difference to anything.’

  ‘It’s a big yawn from where I sit,’ said Maria Lomax, who traded foreign exchange. ‘No one’s seeing a scenario where it matters.’

  The other portfolio managers agreed.

  ‘Then we challenge that,’ said Grey. When the market uniformly expected trends to go in one direction, the trick was to find the reason the market might be wrong, quantify the probability and structure a trade that gave a huge payout if you were right and that imposed no loss – or even made you some money – if you weren’t.

  But there was no trade to be done if the probability was zero.

  ‘What makes the market care?’ said Evangelou. ‘Nothing. It’s too small, Ed. It’s not a bite on a rat’s ass.’

  ‘Say the military lose some guys in there.’

  Evangelou shrugged.

  ‘Say we get sucked in.’

  ‘It’s not Iraq. What’s the spend? It’s chickenfeed.’

  ‘You want to check that?’ said Ed to one of the analysts.

  The analyst nodded. Through research into Defense Department spending at various levels of foreign-deployed force, he would be able to create a set of scenarios for military spending that he could run through his models. A significant rise in military spend would raise the budget deficit, which would affect the dollar, interest rates, bond prices and likely a bunch of other asset classes as well.