However, short-sighted politicians and conservative bankers were not reputed for promoting the unknown, that was the field of visionaries: men like Elon Musk, founder of Tesla Motors, who was not just any automobile builder. Musk believed the future of energy lay in renewable resources, not fossil fuels. With his Tesla lithium-ion batteries, electrical energy could be stored to power cars, homes, business, using sustainable and renewable energy sources such as solar power.
Tom Barton turned his attention to lithium, the largest of deposits of which lay in Chile, where the mineral was extracted from brine at the Atacama Salt Flat. Other South American countries including Argentina and Bolivia had significant exploitable resources, especially the latter at the Uyuni Salt Flat; the world’s largest salt flat. However, hype apart, Barton targeted an American company for his investment: the Western Lithium Corporation in Nevada, which held the world’s fifth largest lithium resource, for his investment portfolio. It was a logical supplier to the Tesla Gigafactory being built in the same state.
In 2010, of a total of more than eleven million cars were sold in the US, a mere two and a half percent were hybrid and just nineteen of which were fully electric. Three years later hybrid sales doubled and electric cars rocketed to nearly one hundred thousand. By 2020, Tesla planned to sell half a million fully electric vehicles each year.
That was however a drop in the ocean for eight billion consumers, many of whom would struggle to find the bare essentials, as fossil fuels, tropical forests, arable land, fisheries and fresh water resources were devoured at a frightening rate.
*
“Look what your drunken friends have done now,” yelled Fitzwilliams pointing at the BBC news flash on one of the multiple screens in his office that provided him with a minute by minute account of market, business and world news.
W
reckage of Malaysian Airliner
Kennedy winced. Anything that went wrong in Russia, or China for that matter, was his fault. He had already received an Interfax news flash on his phone: the crash of a Malaysian jetliner in the Ukraine, just two days after the downing of a Ukrainian SU-25. If it turned out it had been hit by a pro-Russian rebel missile, as feared, then the consequences would be grave.
It would of course affect the bank’s business if sanctions were reinforced. Since the first hint of trouble the previous October, when Victor Yanukovych, the ousted Ukrainian president had rejected EU overtures by signing a trade agreement with Russian, INI London had been reducing its engagements in Russian markets.
To Fitzwilliams regret, the bank had considerable investments in Russia, but most of its loans were through banking pools where its exposure was reduced. In any event these were insured. The real pain meant, apart from a catastrophic change in international relations, the disappearance of rich commissions on future business if Russia became a pariah state, which until this latest disaster had seemed a fairly distant threat.
Tough new sanctions would inevitably hit Putin’s inner circle, which could in turn would affect Sergei Tarasov, Fitzwilliams’ business partner, who like others of his class hoped Putin would tone down his belligerent rhetoric and seek a more accommodating partnership with the West.
Already, London based oligarchs were keeping their heads down, fearing for their business and Putin’s wrath if it was suspected their loyalty to Mother Russia was in any doubt.
The Obama administration reacted by announcing an intensification of sanction against Russia, sending Michael Fitzwilliams into a panic. Stocks had already dropped on the Moscow exchange with the rouble coming under acute pressure following Moscow’s failure to end the fighting in Ukraine.
The MICEX index fell over four percent as a disastrous week was made worst with the announcement Russia’s oil giant Rosneft, along with Gazprombank OAO, the country’s third-largest bank, would be barred from US capital markets.
*
Russia was already suffering as it struggled, without success, to move away from its commodity based economy, almost entirely dependant on oil and gas exports together with a handful of basic minerals.
The prospect of another Cold War was daunting, given Fitzwilliams’ investment in the Russian market. Unchecked deindustrialisation and demographic collapse was already gnawing at the foundations of Putin’s Russia, and on top of that he was acerbating the situation by stumbling blindly into a conflict with the West. Russia’s dependence on foreign capital meant its economy would suffer for years to come, as it squandered its foreign reserves to pay off debts labelled in foreign currency.
And if that was not bad enough the situation was aggravated by the Fed’s policy hints on money tightening, which was bound to come sooner or later, with serious implications for Russia, and the other BRICs, all of which had borrowed cheap dollars.
WATERFORD – IRELAND
“John, thanks for coming down. Tom Barton will be joining us, he’s flown in to Waterford, should be here anytime now. We’ll be having lunch together on the boat, with a little cruise down to Dungarvan.”
He saw a shadow of doubt on France’s face and laughed, “Don’t worry the weather is fine, the sea’s as flat as a mill pond.”
“Fine.”
“I suppose you’re wondering why I’ve asked you to come down,” Fitzwilliams asked with a weak smile.
Francis shrugged.
“I hope I wasn’t interrupting your vacation?”
“No, not all Michael.”
“I wanted to talk to you well away from prying eyes and one never knows … microphones and all that,” he said seriously.
Francis was puzzled, but held back his curiosity.
At that moment a car pull up on the quayside. It was Tom Barton who had been picked up at Waterford Airport by Fitzwilliams’ chauffeur.
They waved and Barton looking bronzed waved back. He had been flown in on the company jet from Biarritz where he was holidaying.
After exchanging greetings the three men headed towards the sun deck where a table was laid out for lunch.
“We’re lucky for a change, the weather is almost Mediterranean,” said Fitzwilliams laughingly.
A waiter served drinks as the banker pointed out the local landmarks to Barton.
“So, here’s to us.”
They raised their glasses, the two visitors looking at Fitzwilliams expectantly.
“Well I won’t keep you in suspense. The reason I’ve invited you both here is that I’m worried. Seriously worried. Our little meeting here is in the strictest confidentiality, which explains why we’re here on the Marie Gallant at Kilmore Quay.”
“I admit the boat is not very discrete,” he said with an apologetic smile as he nodded to the strollers on the quay, “but inquisitive journalists and the like will just see me on holiday with the family and friends cruising around the south coast.”
It was early August and Francis had been relaxing in his elegant eighteenth century home in Dún Laoghaire, a few kilometres to the south of Dublin, when, the previous day, he, like Tom Barton, had received a cryptic message from Fitzwilliams inviting him down to Wexford for the weekend.
Early that morning he had driven down to Wexford along the coast road from Dublin. Fitzwilliams was clearly anxious; something that John Francis had never seen before, at least not to the point where he seemed unsure of himself, as he obviously was now.
“I’m seriously concerned about what will happen if shooting starts.”
“Shooting?”
“The Russians.”
“I see.”
“We’re in deep. I mean very deep.”
Francis scrutinized Fitzwilliams, wondering if he was unwell, not entirely himself, perhaps a little paranoid. He had himself followed the events in the Ukraine and the crash of the Malaysian airliner, which was obviously worrying, however he did not consider it would cause more than a temporary crisis in the West’s relations with Moscow.
“Yes … and the trouble is I don’t know to what extent the bank has been used to facilitat
e the affairs of certain unsavoury Russians, including our friend Putin and his cronies.”
“I see.”
“What I’d like you to do John, is imagine a worse case scenario and draw up a contingency plan.”
Francis was surprised as he obviously did not have all the information Fitzwilliams possessed on the bank’s dealings with its Russian partner.
“Tom could help you, discretely. He’s familiar with our recent expansion.”
“And Pat?”
“I’m not pointing at Pat, but he’s always been a bit too close to Sergei. Anyway, this kind of strategy is not in his brief,” he replied. Then adding as an afterthought, “at the moment he’s too tied up in China … and his wife.”
Francis smiled. Pat Kennedy was still very enamoured with his new Chinese wife, who was very rich in her own right, at fact that seemed to peeve Fitzwilliams who had up until Pat’s marriage with Lili always been his master and mentor. Pat was now slipping out of his control, independent, though under the influence of Lili, whom Fitzwilliams saw as Cixi, a young version of the Dowager Empress, manipulating the pliable Kennedy.
Francis had always suspected Fitzwilliams’ relationship with Kennedy had been one of master and servant and since the start of the Ukrainian crisis, the banker had unjustly focused his growing ire on Kennedy. A situation which made Francis wonder whether Fitzwilliams was not right in himself, though there was little doubt the growing Russian conundrum was a source of serious worry for the man.
In the lead up to the events, Francis had to admit to himself he had become concerned Michael Fitzwilliams had bitten off too much. The bank’s ambitious expansion into Russia and China had been too rapid and though Michael was solid, the conjuncture was such that even the strongest could bend under the burden.
K
ilmore Quay – Wexford – Ireland
All that aside, Francis in his role as Fitzwilliams’ counsellor in matters of geopolitical strategy could not squirm out of the corner he now found himself in, which was essentially one of taking sides. On the one hand was his friend, the CEO, and on the was Kennedy, with whom he had grown close, having shared numerous adventures in the course of their business relations.
There was little doubt the banker in his drive to developed the group had allowed his roving emissary too much freedom with the result Kennedy had become his own man, developing his own ambitions. As head of the banker’s think tank, the responsibility and loyalty of Francis was towards Fitzwilliams, whose his empire was in danger, and this was an unequivocal call for help.
“I want us to be prepared in the case that things go wrong.”
Francis nodded, wondering to himself what precisely he had in mind.
“So let’s enjoy the fine weather while you’re both here,” Fitzwilliam said leaning back, waving to the sea and the sky as the Marie Gallant II slipped out of the small harbour, admired by the summer strollers visiting the picturesque fishing port.
“Here’s to us.”
They lifted their glasses.
“As I see it John,” said Fitzwilliams in a pensive tone, “Putin is at the source of all these problems.”
“Well Michael, it would perhaps be best if you didn’t voice your opinions about Putin too loudly.”
“Oh! Why?” said Fitzwilliams suddenly alert.
“It’s very simple Michael, he’s probably one of your most important individual clients.”
“What!”
“Remember, Vladimir Vladimirovich is one of the world’s richest men and your associate Sergei one of his friends.”
“So?”
“Well, there’s little doubt that Sergei has channelled part of Putin’s fortune through your bank to one of your favourite safe havens.”
Fitzwilliams stalled, a sheepish look on his face, it was not often someone cornered him.
“No doubt, but it doesn’t make me happy.”
“Happy? Maybe not happy, but responsible, yes.”
“His fortune is estimated at between forty and seventy billion dollars, perhaps even more, estimations are wild. And even if it is exaggerated he certainly outranks any other of the world’s politicians and most business leaders.”
“Corruption,” said Fitzwilliams weakly, as though he felt uneasy using the word.
“Sorry to say it Michael, but money overrides everything. The major oil companies are mostly pressing ahead with their plans in Russia in spite of threats and sanctions. Look at Aquitania, they have begun drilling in Russia’s Arctic with Rosneft, even though Rosneft is on the sanctions list.”
“We’ve got a lot of money tied into oil in Russia.”
“Well companies like Aquitania must be doing a lot of soul-searching now, we’re all getting drawn deeper into the Russian quagmire.”
“According to what I’ve heard,” said Barton, “it’s not only the political risk, some people are wondering if they’ll ever make money in their Arctic regions. The cost of getting oil out of the ground is too high.”
“Yes and no. Most of Putin’s wealth comes in the form of his holdings, like Surgutneftegaz and Gazprom. He controls around forty percent of the shares in the oil and gas company Surgutneftegaz, five percent stake in Gazprom, the largest energy company in the world, and fifty percent of Gunvor, that’s a Swiss based trading company that trades oil worth one hundred billion dollars a year.”
“Well, he’s lost a few billion in the last couple of months,” said Barton. “The Micex has gone through the floor.”
Francis laughed.
“Maybe he only declares a salary of a couple of hundred thousand dollars and a very ordinary Moscow apartment, not forgetting a Lada for getting around when he’s not racing through the streets with sirens at full belt and flashing blue lights. But he is a modern day autocrat with as much power as a tyrant.”
Fitzwilliams nodded ruefully. “And I got into bed with him.”
“You heard what Putin said about press reports on his fortune?” asked Barton, “Gossip, nonsense, nothing worth talking about, picked out of someone’s nose by journalists and smeared on their little papers.”
“Our Russian friend has delightful repartee,” said Fitzwilliams with a derisive snort.
“Like it or not he owns Russia. Anything he desires he can have with a snap of his fingers.”
“His cronies will give him anything he wants.”
“Is there no opposition?”
“Of course there is, but it’s a dangerous business.”
“He’s not invulnerable, if he miscalculates the whole thing could come tumbling down and the long knives would wreak havoc. That’s why he has to have a nest egg somewhere.”
“It didn’t do Gaddafi or Saddam much good.”
“He still young man … relatively speaking,” said Barton. “That’s why he needs to consolidate his and his friends wealth, in case the people turn nasty.”
“If he makes a mistake and the economy is hard hit, it would not be a workers’ revolution,” Francis told them, “it would come from the new business and middle classes who have grown used to their privileges. Little remains of Russia’s industrial might and the proletariat as such no longer exists.”
“Well that’s another story, the question is what do we do to pre-empt the negative effects this could have on the bank if things get worse?”
The Russian empire had shrunk, its economy commodity based, its manpower in decline, and its borders potentially difficult to defend in East Asia. Rushing into the arms of a mighty China could prove disastrous as the Middle Kingdom held not only a number of old grudges against Moscow, but also a long list of territorial claims à la Crimea. China’s claims in the South China Sea were an illustration of the attitude it could take if and when it turned its attention to Eastern Siberia.
BASQUE COUNTRY
It was the eve of the French national holiday as Pat Kennedy and John Francis stepped out of the bank’s jet at Biarritz’s Parme Airport. During the one hour flight from the City Airport the
y had changed from business suits into summer slacks and polos. Incognito, Kennedy told Francis, ready for the drive to Hendaye in a hired yellow Renault Twingo passe partout. Kennedy had persuaded Francis to join him for a summer break, escaping the stress of the on-going crisis that was weighing heavily on the City of London.
They were the guests of Tom Barton and Sophie Emerson for the five day weekend at her villa in Hendaye, twenty kilometres to the south of Biarritz. The fact Kennedy had more or less invited himself, was of little importance for Tom or Sophie, on the contrary it was a long-standing standing invitation and they were delighted to see the two Irishmen.
Pat had earned his break after months of jetting back and forth to Hong Kong and Beijing promoting the bank’s business in China, which as he put it, was another kettle of fish in comparison to Europe, where the crisis rumbled on with almost daily plans to save Greece, Ireland or some other peripheral country. Each passing day brought news of ministers rushing to Brussels, then announcing hundreds of billions in loans, all of which seemed to do nothing to douse the flames that were engulfing the eurozone.
They were welcomed by cocktails and lunch served by the pool overlooking the Baie de Chingudy. The weather was perfect. “Not always the case,” Sophie warned them, “the hills are not green for nothing.”
“Better than London,” said Pat.
“… and even better than Dublin,” added Francis.
“Don’t talk about Dublin,” complained Kennedy. “Even our credit rating has been downgraded to junk.”
They all laughed.
The fear was, like Greece, Ireland would need a second bailout from Brussels. The eurozone debt crisis seemed to be spiralling into an uncontrollable dive as EU leaders wrangled over who would foot the bill for the one hundred billion euro package for Greece.
“I see London’s gloating over Ireland’s problems,” said Barton.
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