Tony Nash joins Fergus Nicoll at the BBC for Business Matters podcast where they discussed about US sanctions on Iran, the battle for the new head of World Trade Organization, Texas’s stand on green technology, and the coronavirus update right in Houston, Texas.
This podcast was published on October 9, 2020 and the original source can be found at https://www.bbc.co.uk/sounds/play/w172x18z44jxg52
BBC Business Matters Description:
The US has imposed sweeping new sanctions on Iran, this time targeting its major banks as the Trump administration continues its strategy of “maximum pressure.” We’ll hear from Barbara Slavin, Director of the Future of Iran Initiative at the Atlantic Council. Also in the programme, the selection of a new director general of the World Trade Organisation (WTO) is entering its final stage and with both the final candidates being female, whoever gets it, it will be the first time the job has been taken by a woman. We’ll hear from Annamie Paul, the new leader of the Green Party of Canada on her vision for how the economy can be overhauled to create sustainable jobs. And we’ll hear from one entrepreneur who has taken the pod-serving idea of coffee machines like Nespresso, and used it to serve different kinds of whiskey.
All through the show we’ll be joined by financial professional Jessica Khine in Malaysia and Complete Intelligence economist Tony Nash in Texas.
FN: On US sanctions on Iran: it’s damned if you do and damned if you don’t, I guess at this kind of fervid election time, you’ve got to have a foreign policy and yet you get a slamming if it comes up at what looks like a cynical moment.
TN: I just want to clarify something that your guest said. The U.S. Treasury Department made a specific statement about agriculture, food, medicine and medical devices and said that they specifically don’t apply to those commodities. This applies to 11 Iranian banks. The U.S. is working on peace agreements across the region. They’re working on withdrawing troops from Afghanistan by the end of the year. Saying that this is whipping up disagreement in the region, I actually don’t think is the case. The U.S. is proving with the actions that it’s really going to great lengths to bring peace to the region.
FN: So you would say presumably that when we heard Barbara say that Mike Pompei just kind of looking busy for busy’s sake, you’d say the State Department, Foggy Bottom is much more active, proactive.
TN: Well, if Mike Pompei wants to just look busy, there’s plenty of other stuff we can do. It’s not as if Iran is just something on the edge waiting to happen. There’s a lot going on with the US State Department, quite frankly, a lot more than has gone on for years.
As you know, I lived in Asia for 15 years. I lived in Europe for a spell before that. I’ve seen the U.S. State Department in action in these cities. Although the U.S. State Department has become quite assertive over the last two or three years, at least they’re doing something productive. There wasn’t much going on previously aside from upholding status quo, kind of rigid lines.
FN: OK, Tony, thanks. Great to have you with us. Now, I’m hoping are we going to bring you a first time appearance on Business Matters on the part of the financial professional? Jessica Khine’s with us from Nusajaya in southern Malaysia. Jessica, you’re hearing us okay? I know we’ve had a little bit of difficulty establishing connection. Good morning.
JK: Good morning, gentlemen. Glitches are over and delighted to join you.
FN: Well, that’s fantastic. Tell us a bit about Nusajaya. I had to admit I had to look it up, but it looks to me about perfect for commuting over the strait to Singapore.
JK: Yes. That is provided that the pandemic does not frighten the two governments, Singapore and Malaysia. And once upon a time, I was able to pop into my car, drive down with a special cash card to pay the Singapore Transport Authority as I crossed the causeway, you know, quickly flashed my passport at both customs and Immigration and pop into a meeting in the central business district in Singapore. But sadly, that has now been prevented and forbidden since March the 18th. And if you think that today where, you know, October the 9th in Asia, it has been an absolute business killer.
FN: In what sense? A business killer?
JK: No physical driving over a causeway for a meeting with a client, an institution, you know, a lunch with a friend. It’s quite frustrating to be a mere 10 kilometers north of Singapore. Tony, you have your Asian experience. I don’t know if you ever knew that the tip of southern Malaysia was so close to Singapore.
TN: Of course, I was actually in Nusajaya for one of the launch events years and years ago, and the intention was that it would be kind of a suburb to Singapore.
JK: Something like that, I think. Was it was it Mark Mobius who identified the state called Leisure Farmers as somewhere where, you know, the sultan had provided affordable land and wanted to have a lot of Singaporeans have a decent second weekend home?
TN: I’ve had a lot of friends who lived in that area and in those developments, and the plan was that they would commute into Singapore. Of course, that’s been very difficult in 2020.
FN: Jessica, what’s the state in Malaysia? Across Malaysia, if you look north to Kuala Lumpur, what is the state of the domestic fight against coronavirus? Because I’ve seen a spike in the last week or so, I think.
JK: Yes, indeed. They badly calculated the outcome after holding some elections in the state of Sabah, which you might know is to the east of the of peninsular Malaysia. And I think where you have a lot of people congregating together, insufficient ventilation. I actually even found out that a particular NGO had lured Sabah citizens to fly back by subsidizing their flight tickets, saying, come on, come back and vote for us, etc.. So that was slightly poorly planned. Numbers of new cases which had been, you know, a very proud single digit for a thirty four point six million population nation, suddenly got catapulted right up into 600, 400, 300. And it’s quite a sort of a, you know, quote unquote horror movie situation at the moment.
FN: Go on, finish that. And then just tell us quickly whether there’s been an impact within Malaysia on business and the way people travel around to do business.
JK: I think the complete lockdown in the first quarter was grim. And now interstate travel is not banned. But is business choked? Absolutely. And I think, you know, it’s such a global pattern that, you know, I couldn’t beg to differ in any way. But I think we we are already aware that many governments have not been able to implement, you know, the best policy. And the continuing discussion does seem to be, do we sacrifice growth or do we pander to the the virus?
And and it’s, you know, unique, unique nature.
FN: And a quick word. Bring us up to date. And in Texas, Tony, how do things stand since we last spoke?
TN: I think they stand pretty well. The governor here just started to lift even more restrictions here. We’re in the top five states in terms of the the lowest R0 contagion rate in the U.S. It’s very low here. We may hear case numbers, but the hospitalization and casualty numbers are very, very low here. So things here seem to be getting much, much better and have done so over the past six to eight weeks very much. And so it’s getting better. I just hope things move on.
FN: Tony Nash on Texas of course, you know, massively organized around the petroleum industries. What is the tolerance or or interest in Green Party as such a green new deal as such in Texas?
TN: I’m in Houston. It’s not very high at all. Obviously, that endangers a lot of jobs here. What’s happening in Canada is slightly different with the Tarzans and the cost of getting crude out of the ground there versus shale in west Texas, which is cheap on a relative basis. We produce much less expensive from a cost perspective, hydrocarbons in Texas. In parts of Canada, you have to have crude trading at relatively high levels for it to be economical. I can understand why it would be more interesting there. Here in Texas, we get out of the ground a lot cheaper. So it makes kind of less sense here.
FN: We’ve got to go to a break in a moment, Tony, but what’s been the impact. Has the coronavirus shut down earlier in the year? What happened with with fracking and so on in Texas?
TN: Coronavirus is one blow, but what we had about three or four weeks before coronavirus was, if you remember, the Saudis and the Russians did an OPEC deal where they really crushed the price of crude. The crude markets were oversaturated on the supply side and the price was down already. And then we had a second blow with a coronavirus. The oil and gas sector is really damaged this year, not only because of COVID, but also because of what the Russians and the Saudis did to prepare crude markets for this, meaning oversupply in a market where demand just evaporated.
FN: Tony, how on earth do you pick between two talented, experienced, clever people of this in a competition of this kind?
TN: Yeah, they’re both great. I think we have a trade expert against a reformer expert. And I think the question really is, what does the WTO need right now? Do they need trade expertise or do they need reform? Given that Azevêdo regime at Servicio has been pretty lackluster and so well, I would love to see an Asian head at the WTO. At this point, a reform is much more important because issues like nontariff barriers continue to allow countries to circumvent trade rules. And until there is reform to actually track and name the names of that stuff, we’re going to continue to see massive problems in trade.
FN: Will come to Jessica in a moment on that desire for an Asian head of the organization. But, Tony, just amplify that point about reform, because both candidates use that word. Everybody says the WTO is seriously wanting. But what are the most egregious problems and who’s standing in the way of this reform?
TN: I think it’s an institutional problem more than an individual problem. What is it? I think it’s the ability for countries to try to circumvent the rules. The WTO hasn’t necessarily kept up with technology and kept up with trade policies and the value buildup of goods. And this is why, like in the U.S., I moved to the U.S. three years ago. I spent most of my life in Asia.
This is why the U.S. has done things like the USMCA to really prepare for re-regionalization of trade patterns. What we saw from 1990, 2000 until 2015 was the clustering of trade power in Northeast Asia. And that has led to a lot of concentration of risk and supply chains. What we’re seeing, especially in the wake of coronavirus, is a desire for companies and countries to de-risk their supply chains by re-regionalizing, their supply chain.
So in the late 80s, early 90s, we saw regionalization of supply chains with the E.U., with NAFTA and with other regional agreements. It’s only when China came into the WTO that you saw this real dash for a hard centralized concentration in Northeast Asia.
FN: Very interesting, Jessica. I’m not sure what whether you want to add to that. But just let’s start at least with this point about maybe it’s a myth, Asian solidarity for an Asian candidate. Would you assume that across Southeast Asia, for example, there would be enthusiasm for the candidate presented by Seoul?
JK: I think the important point is that just to honor someone we have recently lost Ruth Bader Ginsburg. Women belong in places where decisions are being made. So I, for one, am absolutely over the moon about the two candidates. It is true that there is some tension from China and Japan regarding a union, his candidacy. But I think that it’s time to grow up. I fully concur with Tony that, you know, in. The whole organization called WTO, I think reform is crucial, the ability to track name and shame, you know, perpetrators who are consistently breaking rules and laws and policies is absolutely important.
But the other the counter weight to that is that I think we’ve also got to fight this big move, which has been reinforced post pandemic of kind of globalization. Tony used the word re regionalization. But I think the supply chain issues, I think there’s whoever comes in is going to have, in a way, a sort of a poisoned chalice. There’s got to be a lot of work that’s done to clean the house. I’m delighted that its two strong candidates, but I might agree with Tony that the reformer might possibly win over the candidate with a strong color and background in trade.
TN: And Tony, it’s worth noting that, you know, we should probably just stop. You know, it is no longer a remarkable thing for a woman to head such an organization. We have Christine Lagarde at the ECB. We have Kristalina Georgieva, the IMF chief economist, the IMF, Gitter Gopinath, and so on. We had the former head of the Fed, of course, was a woman. So is this now normalised?
TN: I think it’s great that we’re in this position. But I don’t think anybody is as shocked that there are two women battling to enter the WTO. I don’t think this is the 1980s. It’s in 2020. I think it’s definitely normalize.
FN: These guys do Martin and their colleagues. These are the dreamers who who just turn everything over, reinvent things and and who’s who’s to who’s to quibble about that centuries old tradition, whatever these guys are doing something radical and new.
TN: It’s a tough hill to climb because the whiskey drinkers that I know like the tradition and they like the process. Your comment about the chemistry set was pretty apt, actually, because it’s for anybody who has a taste for any certain kind of food, it doesn’t matter what can be done super quickly. The enjoyment is in the process. It’s in the refinement and it’s in the care that it takes for that stuff to come to market.
FN: That’s what they say about Business Matters. Thank you very much, guys. Great pleasure. Good to have you with us, Tony, as always.