Portfolio
Issue 109 ■ January 2015
Exclusive to Emirates First Class and Business Class
A BROWN WINTER Trouble For Ski Resorts PAWN LOANS A High-Interest Solution MACA WARS Peru’s Super Vegetable
Travis The Uber Capitalist
Wilfred Thesiger @ Pitt Rivers Museum
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Portfolio
Exclusive to Emirates First Class and Business Class
Cover Story 30 The Uber Capitalist From its launch in 2010, Uber has grown into a company valued at $40 billion. But the ride sharing service has faced stiff opposition from governments, licensing authorities and professional taxi bodies. Fortunately, Uber’s CEO Travis Kalanick loves a good fight.
Features 36 Buying Is Easy. Delivery Is Hard.
54 A New Energy Policy
China’s huge size and underdeveloped inland logistics
Mexico’s regulator, the National Hydrocarbons Commission,
infrastructure is posing delivery problems for e-commerce
will soon hold the country’s first open auctions for oil and
firms.
gas fields.
42 Brazilian Pawnshops’ Loan Business
58 Growth Tops Environment
Due to soaring interest rates, Brazilian consumers often turn
The Indian government has swept away a host of
to loans from pawnshops to make ends meet.
bureaucratic environmental regulations in favour of economic
46 California’s Ski Resorts Face a Brown Future
growth.
California is in the grip of a massive drought, but its ski
62 Cleaner Energy Through Carbon Capture
industry has been facing declining snowfall for decades.
A $1.2 billion update to capture the carbon dioxide equivalent of 250,000 cars at a Canadian power plant and
50 Vegetable Spawns Larceny and Luxury
bury it underground may be the way of the future.
Maca, a turnip-like vegetable grown in Peru, has surged in price due to Chinese demand.
42
46
58
11
Portfolio
12
Exclusive to Emirates First Class and Business Class
Essentials 67 Green Peace When big-city buzz, crowds and shopping begin to lose their lustre, Hong Kong’s overlooked parks and green spaces are just the place to unwind.
72 Korean Baseball’s Unique Culture In South Korea, baseball is as much sport as it is a social event with singing and dancing.
67
76 The Battle for African Parks As many African countries try to alleviate poverty it becomes increasingly tempting to allow oil exploration and mining in national parks.
80 A Bad Year for Italian Olives Insects, hail, floods and bacteria made 2014 a devastating year for the Italian olive oil industry.
72
84 A Colonial Legacy Yangon, formerly known as Rangoon, was the capital of Burma during the colonial era. As a result it has some grand, but crumbling, architecture.
88 Other Business Portfolio takes a light-hearted look at the latest business news.
76
Departments
84
15 Notebook World business in a nutshell.
21 Observer Spotting and analysing business trends.
28 Column: Will Hutton Falling Oil Prices Create Opportunity
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M ESUR E ET D ÉMESUR E *
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S H O P P I N G
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BA R C E LO N A
Notebook
15
getty images
BUSINESS NEWS IN BRIEF
Middle East’s Luxury Appetite Conversely, Japanese citizens were found
The Middle easT was ranked
in consumer spending power. A recent report
10th among the top global luxury markets
by consultant Knight Frank named Qatar,
to make the most of their luxury purchases at
in the world, according to the latest report
the UAE and Saudi Arabia as the top three
home with the yen devaluating by nearly 30
by consultant Bain & Co. The report added
countries in the new luxury opportunity index.
per cent since 2012.
that the consumption of luxury goods in the
The study forecast that spending by ultra
Tourists are also increasingly influencing
Middle East surged by 11 per cent in 2014,
high net worth individuals in these countries
the luxury market in the Americas, while
largely driven by increased tourist flows to
is expected to have risen in 2014, with almost
tourists’ behaviour in Europe is sharply
the region.
a third of the wealth managers polled saying
changing as proven by the analysis of tax-free
that they expected their clients to step up
shopping in Europe, the report added.
“While the international luxury market is affected by a number of causes such as the economic slowdown, unrest in various parts
expenditure on luxury goods. Meanwhile, Bain & Co predicted that the
“With such cross-pollination of luxury spending, it no longer makes sense to think
of the world, and currency fluctuation, the
global luxury market was on target to reach
only in terms of geographies,” said Claudia
Middle East continues to demand luxury
$282 billion in 2014, down seven per cent
D’Arpizio, a Bain partner in Milan and lead
goods,” said Cyrille Fabre, a Bain partner
from 2013. The US topped the list of global
author of the study.
and leader of the retail & consumer products
luxury markets, followed by Japan and Italy.
practice in the Middle East. “The trend will
Globally, Chinese consumers were the top
“The focus is shifting to consumers, with local trends and tastes representing only
continue to grow, especially in the GCC with
spenders on luxury products, spending more
part of the picture. This new mind-set has
the opening up of new malls and luxury
than three times in other countries than
important implications for luxury brands. It
brand stores in the next five years.”
what they spend locally. However, Chinese
requires that they think about their product
consumption grew by just 10 per cent in the
offering from a more global perspective, with
steadily growing in the Gulf markets, aided by
first eight months, a clear slowdown from the
the concept of seasons, a key pillar of this
a growth in mega shopping malls and a rise
same period in 2013, the report said.
industry, becoming increasingly obsolete.” n
Expenditure on luxury goods has been
January 2015
Notebook Numbers Game
A Year of Record Recalls More than 60 million US automobile recalls set an unenviable record in 2014, largely because of the rush to prevent more deaths from
$2.4
million was
defective General Motors Co.
the price that
ignition switches and Takata Corp. air bags.
Napoleon Bonaparte’s hat netted at a recent auction in
The tally of 60.5 million
Paris. The French emperor’s
through to December 21 is
iconic hat was part of the Prince
almost double the previous annual record of 30.8 million
of Monaco’s Napoleon-era collection. It was bought by a South Korean bidder.
$700
billion market capital
20
th anniversary PS4 game console sold for over $15,000 on eBay. Sony marked its 20th year of console gaming by manufacturing just 12,300 special units of PS4s, making it a seriously limited edition. The retro console, priced at $499.99, was sold out within minutes of Sony putting it up for pre-order.
grossing the highest capital ever. apple’s shares rose 60 per cent with the success of its
according to an analysis of data on the website of the National Highway Traffic Safety Administration. GM alone recalled almost
reached by apple in 2014 has established a new record for
recalled vehicles set in 2004,
The World
company Merck & Co will
27 million cars and trucks in
fetch it rights over Lexington-
the US last year, a record for
In Figures
based Cubist Pharmaceuticals
any single automaker. Honda
Inc. Cubist has amassed an
Motor Co., the third-largest
impressive portfolio of drugs
Japanese automaker, has
iPhone 6 and iPhone 6 Plus. Exxon Mobile, with a net worth
International Labour Organisation.
to treat superbugs that are
recalled 5.4 million vehicles to
of $495 billion, ranked second
The ILO has recommended a
resistant to today’s antibiotics.
replace Takata air bags.
followed by Microsoft and
number of ways to overcome
Merck expects the deal to
Google valued at $392 billion
the difference in pay between
generate more than $1 billion
one million vehicles in 2014
and $368 billion respectively.
men and women, including wage
of revenue next year and to
included those related to
policies and equality legislations.
significantly add to corporate
steering, cruise control, engines
profits in 2016 and beyond.
and seat belts, according to
10
of Europe’s top 50 “super-polluting”
power stations and factories are owned by Britain, causing it to
$9.5
the NHTSA data, which is
billion pay-out offer made by
giant american pharmaceutical
Other recalls of more than
$2.3
billion merger
compiled from automaker
deal has been
filings to the agency.
be ranked as the third highest
struck between South africa
contributor to air pollution. The
brewer SaBMiller, the US Coco-
new air pollution figures form the
Cola Company and the South
European environment agency
african Gutsche family to form
(EEa) claim these plants cost the
Coca-Cola Beverages africa.
UK economy over £10 billion.
The new bottler will operate in 12 countries, employ over
4%
to 36% gender pay
14,000 people across more
gap has been found
than 30 bottling plants and
across all of the 38 European
have gross assets of about
countries according to the
$2.3 billion.
GETTY IMaGES
16
Portfolio
Notebook Stranded Oil FieldS inveStmentS Oil projects planned for 2015 are under threat due to crude prices dropping 49 per cent in the last six months of 2014. These ‘zombie’ projects that have little hope of a productive future proliferate in expensive Arctic oil, deepwater-drilling regions and tar sands from Canada to Venezuela. Goldman Sachs found almost $1 trillion in investments in future oil projects at risk. They looked at 400 of the world’s largest
with oil at $70. If the unprofitable projects
oil and gas companies will make final
new oil and gas fields – excluding US shale
were scuttled, it would mean a loss of 7.5
investment decisions on 800 projects worth
– and found projects representing $930
million barrels per day of production in
$500 billion. If the price of oil averages $70
billion of future investment that are no
2025, equivalent to eight per cent of current
in 2015, $150 billion could be pulled from
longer profitable with Brent crude at $70.
global demand.
oil and gas exploration around the world.
In the US, the shale-oil party isn’t over yet,
The Goldman tally takes the long view
A sharp reduction in oil projects will lead
of project finance as it plays out over the
to lower production. This means that when
According to Goldman Sachs less than a
next decade or more. But the initial impact
prices start rising again there could be a
third of planned projects are still profitable
of low prices may be swift. This year alone,
sharper rebounding price spike.
but zombies are beginning to crash it.
Airlines Poised for $12 Billion Windfall
advantage of the new era. American Airlines Group Inc., which doesn’t hedge its fuel purchases, said it may save more than $2 billion this year. Even with losses because of fuel contracts pegged to higher prices, Delta Air Lines Inc. said it expects
Airlines around the world are poised for a
to the International Air Transport
to pay about $1.7 billion less for jet
$12 billion windfall as the global oil crash
Association, the trade group for the
kerosene in 2015 while Southwest Airlines
cuts bills for jet fuel, the biggest expense
world’s major airlines.
Co. forecast savings of $1 billion.
in an industry that was battered by surging commodity prices last decade. The savings promise to produce
Investors are welcoming a respite from
weak euro is likely to damp the benefit of
a barrel in 2012 and 2013. Led by China
lower fuel bills.
fatter profits and, in the US, rewards
Eastern Airlines Corp. and Air China
for shareholders through sweetened
Ltd., the Bloomberg World Airlines Index
dividends or stock buybacks.
has soared 25 per cent this quarter while
Unlike 2008 and 2009, when sagging
Brent tumbled 37 per cent. Industry-wide
travel demand damped the boost from
fuel outlays in 2015 will drop to $192
fuel plunging 51 per cent from its peak,
billion from $204 billion this year even as
crude’s collapse to a five-year low is
consumption rises 4.8 per cent, Geneva-
providing a tailwind for airlines posting
based IATA said.
record earnings. Profits in 2015 will swell 25 per cent to $25 billion, according January 2015
For airlines based in the Eurozone, the
Brent crude that averaged more than $100
US carriers strengthened by mergers since 2008 are also poised to take
17
18
Notebook DUBAI EVENT: DUBAI SHOPPING FESTIVAL DATE: 1 JANUARY – 1 FEBRUARY VENUE: ACROSS DUBAI WEBSITE: MYDSF.AE This edition will mark the 20th anniversary of the month-long Dubai Shopping Festival. To mark the occasion Dubai Gold and Jewellery Group has designed the Dubai Celebration Chain, which is claimed to be world’s longest 22 carat gold chain measuring five kilometres and weighing 180kg. Thousands of retail outlets are participating and the event organisers have introduced special categories for trading outlets to choose from in running promotions and discounts, including opening weekend special, DSF 20th edition special and DSF raffles and scratch and win promotions. The shopping extravaganza attracts around 4.4 million visitors each year who spend more than $15 billion.
EVENT: ARABPLAST 2015 DATE: JANUARY 10-13 VENUE: DUBAI INTERNATIONAL CONVENTION & EXHIBITION CENTRE WEBSITE: ARABPLAST.INFO Arabplast is regarded as the MENA region’s leading event for the plastics, petrochemicals and rubber industry. The event will exhibit an entire spectrum of design and moulding machinery including rubber processing technology, plastic packaging and injection moulding. This three-day event provides an opportunity for exhibitors to generate fresh leads, demonstrate new products and services, and keep abreast of international trends.
DUBAI
United Arab Emirates
EVENT: SGI DUBAI 2015 DATE: JANUARY 11-13 VENUE: DUBAI WORLD TRADE CENTRE WEBSITE: SIGNMIDDLEEAST.COM The 18th edition of Sign & Graphic Imaging Middle East will bring together professionals from the graphic images, outdoor media and printing industry. This edition the SHOP ME show will take centre stage. The programme will focus on retail ideas, concepts and solution across all aspects of retail shopping. Exhibitors will promote a gamut of signage solutions such as LED signage, graphic promotions, pop up banners and much more. The show draws key decision makers, retail industry buyers and professionals from across the region.
EVENT: METAL MIDDLE EAST DATE: JANUARY 10-13 VENUE: DUBAI INTERNATIONAL CONVENTION & EXHIBITION CENTRE WEBSITE: METALMIDDLEEAST.COM Metal Middle East is the only specialised event of its kind in the region. It offers a unique platform for international companies involved in metallurgical technology, thermo processors, and foundry machinery to establish business contacts with potential clients from the region. The event programme will highlight global market trends, study the GCC market and address issues facing the metal industry today. It also features high-profile speakers, interactive panel discussions, as well as host a Gala Night.
EVENT: INTERSEC DATE: JANUARY 18-20 VENUE: TRADE CENTRE ARENA AND SHEIKH SAEED HALLS 1-3 WEBSITE: INTERSECEXPO.COM Intersec is a leading international meeting platform involving the safety and security industry. This 17th edition will have some brand new pavilions on show, including a Dubai SME pavilion offering UAE start-ups an opportunity to shine on a global stage of more than 1,3000 international exhibitors. There is also the GPEC pavilion that will cover all relevant products for internal security encompassing traffic, forensic technology and criminal science, and a Techtextil Pavilion targeting engineers, safety officers and buyers of protective clothing looking for solutions and developments in personal and property protection. Portfolio
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Observer
21
getty images
BUSINESS NEWS IN BRIEF
Malaysia’s Solar Windfall
producer of solar equipment, trailing China
Malaysia is now the world’s third-largest producer of solar equipment, thanks to trade wars that have embroiled the solar sector, reports Keith Bradfsher.
role in the global solar trade is only likely to
by a wide margin but catching up rapidly with the European Union. And Malaysia’s increase in the coming months. “We liked Malaysia because it was a cross between just a straight low-cost play and a high-engineering play – it was sort of in the middle, where it was lower-cost but good engineering,” said Tom Werner, chief
Tucked away in The former Tin
in Chemor. Hanwha Q Cells and SunPower
executive of the California-based SunPower,
mining town of Kulim, past the small farms
have giant factories even further south, while
which manufactures half its solar panels in
of banana trees and oil palms, is one of the
Solexel, a Silicon Valley startup, is preparing
Malacca, Malaysia.
solar industry’s best-kept secrets.
to build an $810 million solar panel factory
The six factories here with cavernous
© 2014 New york times News service
rooms up to nearly a half-kilometre long
in stages. Malaysia, a Southeast Asian nation with
The solar manufacturing boom in Malaysia has been almost invisible, a rarity in an industry known for heavily promoting
constitute the production backbone of First
just 30 million people, is the biggest winner
even the smallest factory opening or new
Solar. Working alongside minivan-size
in the trade wars that have embroiled the
solar panel farm as progress toward cleaner
robots adapted from car assembly plants and
solar sector. As Chinese companies have
energy. Manufacturers don’t want to draw
other industries, 3,700 employees produce
been hit with American tariffs and European
attention to moving production offshore.
five-sixths of the US company’s solar panels.
quotas, Malaysia has increasingly attracted
The factories here are almost entirely owned
Workers in Ohio make the rest.
multinationals with its relatively low labour
by American, European, South Korean and
costs, lucrative tax breaks, warm relations
Japanese companies that much prefer to talk
Panasonic of Japan has a solar panel factory
with the West and abundance of English-
about operations in their home countries.
less than two kilometres down the road.
speaking engineering talent.
The list of manufacturers is long.
SunEdison makes wafers 97 kilometres away January 2015
Malaysia is now the world’s third-largest
Hanwha Q Cells, for example, produces 1,100 megawatts a year worth of panels
22
Observer technology to
The plunge in prices through 2013,
achieve our energy
which levelled off as Chinese giants like
efficiency goals,
Suntech Power and LDK Solar began
the administration
going bankrupt from underpricing their
needs to
panels, put a heavy emphasis on cost
implement a more
competitiveness. China’s rapidly rising
aggressive and
wages, together with mounting geopolitical
comprehensive
tensions, prompted multinationals to look
trade strategy,”
elsewhere as well. That gave an edge to
said Michael
Malaysia, with its fairly low pay for skilled
Wessel, a member
engineers and machinery operators.
of the US-China Economic and
Malaysian wages were much higher than those in China for years, but the disparity has
in Malaysia and just 200 megawatts in
Security Review Commission, an advisory
now disappeared or even reversed. According
its home market in Germany. But the
group created by Congress. “If not, we’ll
to Malaysian government statistics, median
company highlights that the engineering
simply trade our historical dependence
nationwide monthly pay last year was
work is still done at its headquarters in
on foreign oil for a dependence on foreign
$765 for factory technicians and $400 for
Thalheim, Germany.
energy technologies and products.”
machinery operators and assembly-line workers. That is similar to or lower than
Production in Malaysia “gives us the flexibility to reliably address very different
Malaysia is a beneficiary of the complex
pay scales these days in coastal provinces of
and dynamic international market
interaction of global trade rules, economic
China with large export industries.
needs with high-quality products
competitiveness and environmental policies
‘engineered in Germany,’” said Jochen
in the solar industry. Tariffs have had the
10-year exemption from corporate taxes for
Endle, a company spokesman.
most immediate effect.
large domestic and foreign investors. While
One of Malaysia’s biggest attractions is the
It is a common theme. The technology
Solar prices started plummeting during
comes from overseas, but the employees and
the global financial crisis in 2009, as Chinese
holidays from federal taxes are not available.
most of the materials are Malaysian.
factories swiftly increased production,
The Office of the US Trade Representative
buoyed by large loans from state-owned
expressed concern this year about Malaysia’s
department, all of First Solar’s 3,700
banks at preferential interest rates, and free
tax breaks in a review of trade policies. The
employees on three shifts are local hires. A
or nearly free land from local governments.
White House agency has asked Malaysia to
few materials are imported from the United
Chinese manufacturers were also dumping
provide details of how they work so other
States, like certain electrical cables. But
panels, or selling them for less than it cost to
countries can assess whether the tax breaks
most others are now bought from Malaysian
make and ship them.
violate a World Trade Organisation ban on
Except for two expatriates in the finance
suppliers, like cord plates. Multinationals are also hustling to
A flood of cheap Chinese exports caused two dozen solar manufacturers in the
some US states offer breaks, comparable
export subsidies. Malaysia denies breaking any trade rules.
introduce their latest inventions just as
United States and Europe to go bankrupt or
“All of the incentives, all the things that
quickly here as in their home markets, to
close factories. The United States responded
we do, are WTO-compliant,” said Senator
maintain standardised production techniques
in 2012 by imposing stiff anti-subsidy and
Idris Jala, Malaysia’s minister for economic
and quality. “When the decision is made to
anti-dumping duties totalling about 30 per
development and efficiency.
add more robots or make other production
cent on panels from China. The European
changes,” Jeyaganesh said, “it happens almost
Union set import quotas and minimum
Solar to set up most of its production
simultaneously in Perrysburg and here.”
prices for Chinese panels last year. Pending
here, said Maja Wessels, an executive vice
The tax break cinched the deal for First
American litigation would impose duties
president at the company. “That’s easy,
irritated some of the original backers of
on panels made partly in China and partly
the 10-year tax holiday,” she said. “When
US trade action against China. Critics say
in Taiwan, closing a loophole that allowed
you look at solar manufacturing, and our
the goal was to create jobs in the United
some Chinese companies to bypass the
manufacturing in particular, low labour costs
States, not Southeast Asia. “In solar, a key
original duties.
contribute, but those taxes are critical.” n
Malaysia’s surge in the solar industry has
Portfolio
24
Observer O N E 2 W AT C H TExT: HildA d’sOuzA
John P. Tague US car rental company Hertz Global Holdings Inc. named John P. Tague as chief executive officer on November 21 last year. The board and the search committee set up by Hertz unanimously selected the travel and transportation industry veteran. Company shares surged 4.5 per cent on the announcement. Tague, 52, is a former United Airlines executive and more recently the CEO of Cardinal Logistics Holdings. He replaced Mark Frissora who stepped down last September in the midst of worrying financial issues including weak results and accounting errors. Brian MacDonald, the head of the company’s equipmentrental business served as the interim CEO. Tague’s appointment took place at a crucial juncture when Hertz confirmed that it had to restate financial statements from 2011 to 2013 and initiate a probe into accounting errors to the tune of $87 million. The company directors were trying to determine whether management had any influence on those mistakes. Hertz shares fell 14 per cent in light of the transgressions, taking the total drop in shares to 24 per cent last year. Tague brings with him eight years of experience gained at United Airlines where as president and chief operating officer he effectively turned round the company’s flagging performance. He introduced innovative products and pricing programmes that revived the airline’s business, spruced up operations and boosted customer satisfaction. Later he was appointed chairman and chief executive of Greatwide Logistics Services where, under his supervision, the company merged with Cardinal Logistics Management to form Cardinal Logistics Holdings, one of the largest US providers of dedicated transportation. Given Tague’s past performance, the board has shown confidence in his deep knowledge and experience. “The board was very clear about what we need in a new CEO for Hertz,” said Hertz’s non-executive chairperson in a statement. “We were looking for a world-class global leader who knows the travel industry and its players, has an intimate understanding of the revenue-optimisation equation, drives operational excellence, has driven turnarounds, is a superb people leader, and most of all, understands how to create shareholder value. In John we have found that leader.” Shareholders, including activist investor Carl C. Icahn who holds 10.77 per cent of Hertz, have backed the appointment. “I am happy to say that after listening to John’s ideas concerning Hertz and evaluating what he has accomplished at United, I believe he ranks at or near the top of the group” Icahn said.
Robots Fake Web Video Ad Views Computers being remotely operated by hackers account for almost one in four views of digital video ads worldwide, according to a study that estimates such fraud will cost advertisers $6.3 billion dollars this year. The fake views, which also account for 11 per cent of other display ads, often take place in the middle of the night when the owners of the hijacked computers are asleep. The result is retailers, automakers and other companies paying for web advertisements that are never seen by humans, or are seen by fewer people than they are paying for, according to a report released by the US-based Association of National Advertisers. Left unchecked, advertisers will lose $6.3 billion globally due to the fraud in 2015, said Michael Tiffany, chief executive officer of White Ops Inc., a cybersecurity company based in New York that conducted the study. The fraud could undermine confidence in a fast-growing industry. Online display advertising accounted for an estimated 10 per cent of ad spending in the US last year, a figure that is projected to nearly double, to 19 per cent, in 2018, according to EMarketer Inc. Hackers use malicious software to string together computers, many of them privately owned, into “botnets.” They then command the computers to surf the internet, watch videos and click on ads. Hackers make money by selling their botnet services to companies that specialise in driving traffic to websites, Tiffany said.
Portfolio
25
Record Fine for Cosmetic Firms
L’Oreal, which received the stiffest total
Henkel, L’Oréal, Beiersdorf
fine of ¤189 million due to its majority
and Johnson & Johnson’s
stake in the cosmetics sector at the time,
Laboratoires Vendôme,
said it would appeal.
had colluded on price
Likewise, Anglo-Dutch company
increases between 2003
Unilever, which had the second-largest fine
and 2006. “These two
of ¤173 million, said it would challenge
sanctions are among the
the decision, calling the fine “completely
most significant imposed
disproportionate and unjustified”.
to date by the competition reuters
number of popular brands.
The regulator said the extent of the
authority,” it said. The
penalties reflected the size of the French
regulator added that the
cleaning products market, at ¤4.7 billion
price-fixing had kept prices
a year, and the personal hygiene market,
Some of the world’s biggest consumer
“artificially high” affecting consumers and
which is worth ¤7 billion. The French spent
products companies, including Unilever,
“caused harm to the economy”.
on average ¤190 each a year on cosmetics
France’s Autorité de la concurrence
Reckitt Benckiser, Procter & Gamble
and personal hygiene products at the time
and Gillette, have been fined a combined
imposed sanctions totalling ¤345.2 million
of the investigation. Both markets are
¤951 million by the French competition
related to cleaning products and a further
dominated by eight companies with the
watchdog for price fixing in supermarkets.
¤605.9 million related to personal hygiene
biggest three accounting for 43 per cent
products. Most companies received two
of the personal hygiene market, led by
fines. The price-fixing affected a large
L’Oréal, which alone has 28 per cent.
The regulator said the 13 companies, Kaldewei.pdf
1
12/16/14
10:10 AM
www.kaldewei.com
which also include Colgate-Palmolive,
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Top 10
Coal Use To Surge
WoRld’s MosT EXPENsiVE REsidENCEs rank
Homes
Value ($billion)
1.
buckingham
1.550
british monarch
owner mukesh Ambani
2.
Antillia
1.000
3.
Villa leapolda
0.750
4. 5.
Four Fairfield pond 0.248.5 18-19 Kensington place Garden 0.222
6.
ellison estate
0.200
larry ellison
7.
Hearst Castle
0.191
William Randolph Heart’s Trustees
8. 9.
Seven The pinnacle 0.155 Kensington palace Gardens 0.140 17 Upper phillimore Gardens 0.128
edra and Tim blixseth
10.
lily Safra Ira Rennert lakshmi mittal
Roman Abramovich elena Franchuk
ReUTeRS
26
Global coal use is on an upwards march despite calls to halt fossil fuels demand at a UN climate summit in Peru and will hit a record nine billion tonnes by 2019, according to the International Energy Agency.
(SoURCe: CompAReCAmp.Com)
A proposal for greenhouse gas emissions falling to zero by
BEsT sTudENT CiTiEs rank
student Cities
earnings ($mil)
1.
paris
412
2.
melbourne
397
3.
london
392
4.
Sydney
388
to tackle emissions by spring 2015 was intensely debated. But the
2050 surfaced at the Lima summit, attracting support from Scandinavian countries, island states and some central American nations, and an obligation on countries to announce their plans
5.
Hong Kong
387
final agreement merely asked member states to announce their
6.
boston
386
emissions plans by 31 March.
7.
Tokyo
385
8.
montreal
380
9.
Toronto
375
10.
Seoul
372
Fears that these will not keep global warming below the 2°C rise that governments have agreed to hold it to will be stoked by the latest real-world energy trends, showing a large rise in coal consumption from the 7.2 billion tonnes used in 2010.
SoURCe: QS WoRld UNIVeRSITy RANKINGS
China is expected to account for 60 per cent of growth in the
RiCHEsT FaMilY oFFiCEs rank
Firm name
aua in $billion
1.
HSbC private Wealth Solutions
143.5
2.
Northern Trust
116.4
3.
Citi private bank
206
4.
bessemer Trust
96.6
The IEA predicts that global coal demand will grow at an
global coal industry by 2019 and, along with India, and other countries in south and east Asia, will be “one of the main engines of growth in coal consumption.”
5.
bNy mellon Wealth management
81.2
average rate of 2.1 per cent per year through 2019. This is less
6.
UbS Global Family office
67.6
than last year’s forecast of 2.3 per cent – and the actual growth
7.
pictet
55.0
8.
CTC I myCFo
40.4
rate of 3.3 per cent per year between 2010 and 2013.
9.
Abbot downing (Wells Fargo)
37.4
10.
US Trust Family office
36.2
AUA INClUdeS WeAlTH dIReCTly mANAGed by THe oFFICeS ANd FUNdS oUTSoURCed To moNey-mANAGemeNT FIRmS. (bloombeRG.Com)
Coal-fired power plants account for just 40 per cent of global electricity production, but they are responsible for more than 70 per cent of its emissions according to WWF Europe. Portfolio
Commentary
28
Will Hutton
Falling Oil Prices Create Opportunity For the past 18 months, the
exports, will flip. Russia’s 2014 budget
world’s biggest oil producer has been the US.
was based on an oil price of $100 a barrel.
So falling oil prices offer the world
At $70 a barrel, the economy will contract
economy a great opportunity. But if it is
the US will maintain this new standing
by at least three per cent in 2015, the
not leapt upon purposefully by aggressively
for the foreseeable future, according to
country will run a balance of payments
expansionary economic policy, secular
official projections.
deficit and the government’s finances will
stagnation might worsen. Because energy
spin out of control.
prices affect all goods and services, their fall
Courtesy of the fracking revolution,
The world as we’ve known it for the past 50 years is being stood on its head. With the US needing to buy less oil on
But Western governments cannot
Summers has described it.
could reinforce the trend for the general
hope that economic benefits will arrive
price level to fall further and so accelerate
international markets and China’s growth
automatically. These are new times. It has
deflation and all the ills that go with it.
sinking to its lowest mark for 40 years,
been obvious since the 2008 financial crisis
there is now, amazingly, the prospect of
that the economic landscape is wholly
European Central Bank to throw down
an oil glut. The oil price has nosedived to
different. Digitisation is gnawing away at
the gauntlet to Germany. The European
its lowest level for four years, below $70 a
established companies’ business models and
Commission has launched a plan with at
barrel – down more than a third in three
empowering new insurgents at an escalating
least an eye-catching top line – to trigger
months. There was mayhem in the markets
pace. And this is happening in a world in
an additional ¤300 billion spending on
as investors reassessed the sober prospects
which there is a massive overhang of private
vital infrastructure across the continent.
for oil companies, and banks suddenly
debt and where banks are still nursing
Except it was a phantom ¤300 billion, with
realised that they were exposed to a new
damaged balance sheets.
Germany insistent that it should involve no
round of write-offs to distressed energy companies and even to governments. But although particular companies may
Uncertainty and fear abound. Interest
This is the moment for the EU and the
extra spending by the commission, nor by
rates in Britain alone have been pegged
governments, nor extra borrowing by the
at 0.5 per cent for more than five years.
European Investment Bank. Why? Because
lose out, the first-round effect of this fall
But still business is reluctant to invest, not
there was an alleged risk of inflation.
should provide good news. High oil prices
knowing what technologies to back or not
depress economic activity. They suck money
knowing how much demand there will be
in a few months, the risk is non-existent.
from consumer spending and redirect it
for new products and services. We live in
Rather, the problem is of the opposite order:
to oil-exporting countries, which typically
an era of stagnation, “secular stagnation”,
not seizing the moment to launch a genuine
hoard it in foreign exchange reserves or
as former US treasury secretary Larry
economic stimulus of some scale. n
However, with oil prices falling by a third
unspent bank deposits. It is a tax by the few on the many. It should be no surprise, then, that in the past rising oil prices were associated with recessions and falling oil prices with booms. If the oil price carries on falling back towards $50 a barrel, and if history is any guide, the Western economy should respond The European economy, in particular, dependent on oil imports, is an obvious and immediate potential beneficiary. Suddenly,
getty images
© observer neWs service
– to the good.
the balance of economic advantage with Russia, no less dependent on oil and gas Portfolio
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Profile
30
THE UBER CAPITALIST From its launch in 2010, Uber has grown into a company valued at $40 billion. But the ride sharing service has faced stiff opposition from governments, licensing authorities and professional taxi bodies. Fortunately, Uber CEO Travis Kalanick loves a good fight, reports Guido Duken. Portfolio
31
January 2015
Profile
32
T ravis Kalanick, Uber’s CEO, is a tough man. “As an entrepreneur, I try to push the limits. Pedal to the metal.” And pushed the limits he has. ‘Creative disruption’, with its aim of creating a new paradigm by destroying the existing one, has been the buzz phrase of the computer-tech business era. Kalanick prefers his own adaptation of the same idea to describe his antagonistic approach to local governments, licensing authorities and professional taxi bodies. He calls it “principled confrontation”. Kalanick sees any laws and regulations
Uber customers can check on the location of their ride through GPS.
that are unfavourable to Uber as anachronisms in need of overhauling. His
LEGEND HAS it that Uber was born
Francisco in the summer of 2010, with a
usual method of getting his point across
on a wintry night in Paris in 2008, when
few cars, a handful of employees, and a
is a one-two combination of provocative
Kalanick and his friend Garrett Camp
small amount of capital.
statements and aggressive lobbying.
couldn’t get a cab. The two vowed then
But he is facing a tough opponent. The
and there to solve the problem with a
a cease-and-desist order from the San
licensed taxi business is one of the most
revolutionary new app. The premise was
Francisco Municipal Transportation
regulated on the planet with numerous
dead simple: push a button and get a car.
Agency, as well as the California Public
vested interests. The basic business model
The reality is less prosaic. The pair were
That October, UberCab was hit with
Utilities Commission. Among other
of metered drivers that enjoys a form of
in Europe attending LeWeb, an annual
issues, they objected to the use of ‘cab’ in
monopoly is standard in many cities.
European tech conference. Kalanick and
UberCab’s name, since it was operating
Camp had capital in their bank accounts
without a taxi licence. “We’re totally legal,
has already become a protracted battle
and were on the hunt for the next great
like totally legal, and the government
with the taxi industry and the regulators
business idea. At their flat on the outskirts
is telling us to shut down. And you can
whom he claims are deep in its pocket.
of Paris they discussed start-up ideas with
either do what they say or you can fight
And as Kalanick disagrees with everything
some other entrepreneurs. Among the
for what you believe,” said Kalanick. Their
the taxi industry stands for and what
many schemes under discussion was the
solution was simple: they ignored most of
he regards is an outdated concept, he is
notion for an on-demand car-service app.
the order and changed the name to Uber.
unwilling to compromise. “If you don’t
But the idea didn’t stand out and Kalnick
agree with the core principles, which are
largely forgot about it. Camp, however, did
a war where more fronts opened up
the premise of that compromise, then
not, and he even bought the domain name
as Uber expanded its service to the
you have to have what I call principled
UberCab.com. He eventually convinced
current 53 countries and more than 200
confrontation,” he says.
Kalnick and the service launched in San
cities worldwide. Uber is the subject of
As a result, Kalanick is waging what
But this was only the first salvo in
Portfolio
33
nations. In Paris, Uber cars had their
when his first start-up, a search engine
tyres slashed and the company continues
and file-sharing service called Scour, was
to be involved in disputes with several
targeted by the film and music industries
governmental bodies, including those
in a $250 billion copyright suit and filed
of the US and Australia.
for bankruptcy. He had more luck with his
“There’s a lot of regulations that
next venture, Red Swoosh, another file-
go way back that didn’t contemplate
sharing service, which was bought in 2007
what the future was going to look like,”
by Akamai Technologies for $19 million.
Kalanick says. Those laws didn’t imagine
Kalanick has realised that confrontation
a smartphone era where “you’d be able
is not enough to win. As a result he has
to get out an app and get a car in two
moved towards a more political approach
minutes”. In other words, the current
through the use of lobbying – Uber
taxi model and legislations are antiquated
has 16 lobbyists in the US alone. Plus
and Uber is the future.
Kalanick hired David Plouffe, who was
Kalanick takes opposition in his stride as he’s used to adversity. He was just 23
the strategist begind the 2008 Obama presidential campaign. “What we maybe
“If you don’t agree with the core principles, which are the premise of that compromise, then you have to have what I call principled confrontation”.
Co-founder Garrett Camp convinced Travis Kalanick that they should launch Uber.
ongoing protests from taxi drivers, taxi companies and governments who believe that it is an illegal taxicab operation that engages in unfair business practices and compromises passenger safety. As of December 2014, protests had been staged in Germany, India, Thailand, Spain, France and England, among other January 2015
Uber CEO Kalanick has had to deal with a lot of opposition.
Profile
34
Management, among others. This means that Uber was valued at $18.2 billion, and that made Kalanick the world’s newest tech billionaire – at least on paper. It was also recently announced that the Chinese search engine Baidu was making a significant investment in Uber, although the amount was not disclosed. According to the latest valuation, Uber is now worth $40 billion. All that money has raised the ire of Uber’s opponents. “They started off by operating illegally, without following any of the regulations and unfairly competing,” said Barry Korengold, president of the San Francisco Cab Drivers Association. “And that’s how they became big – they had enough money to ignore all the rules.” A rally is held by DC Taxi drivers against Uber operations.
Not that Kalanick cares. According to him, Uber is currently quadrupling in size each year and he is adamant he will not stop until he has won every city across the globe. With international protests just about everywhere, Kalanick has his work cut out for him, even as his ambitions are larger than ever. “We want to get to the point where using Uber is cheaper than owning a car,” says Kalanick. “Transportation that’s as reliable as running water.” BUT KALANICK is eyeing a future that goes far beyond offering rides. He sees in Uber the potential for a smoothly functioning instant-gratification economy, powered by the smartphone as the remote control for life. “If we can get you a car
David Plouffe ran Barack Obama’s presidential campaign. He now works for Uber.
in five minutes, we can get you anything in five minutes,” he says. One avenue for
In February 2011, Uber received $10
expansion is in the delivery category by
are running a political campaign and the
million in funding from Benchmark. The
running errands. “In Los Angeles, we’re
candidate is Uber,” Kalanick told Vanity
next round, in October 2011, attracted
doing something called Uber Fresh, which
Fair. “And this political race is happening
venture capitalist Shervin Pishevar
is you push a button and you get a lunch
in every major city in the world. And
who invested $20 million and brought
in five minutes,” Kalanick told CNN. “In
because this isn’t about a democracy, this
others on board. Overall, the round
DC, we’re doing Uber Corner Store. So
is about a product, you can’t win 51 to 49.
totalled $37.5 million, which valued
imagine all the things you get at a corner
You have to win 98 to 2.”
Uber at $330 million. In the most recent
store. FedEx isn’t going to go to the
round, held at the end of last year, Uber
nearest pharmacy and deliver something
money. And that is one thing that is not in
raised $1.2 billion from BlackRock,
to you in five minutes.”
short supply at Uber.
Fidelity Investments and Wellington
should’ve realised sooner was that we
To win any political race, you need
This desire to enter and dominate Portfolio
Travis Kalanick (L) and Baidu Chairman and CEO Robin Li shake hands after a signing ceremony and press conference in Beijing
“We want to get to the point where using Uber is cheaper than owning a car,” says Kalanick. “Transportation that’s as reliable as running water.” the “everything economy” echoes the ambitions of much bigger and more established companies such as Google, Amazon, eBay, and Walmart. BUT FIRST, Kalanick will have to get on top of all the challenges facing the company. Following allegations of rape against an Uber driver in December, the company was banned from New Delhi for not following the city’s compulsory police verification procedure. Uber Taiwan received over $30,000 in fines for operating illegally, including a cease
Uber Fresh is a new delivery service that promises customers lunch in five minutes.
and desist of the app, on December 5. On December 8, Dutch judges banned the UberPop ridesharing service that was launched as a pilot project in Amsterdam between July and September 2014. On December 9, a judge ordered Uber to cease all activities in Spain. And that is just a month’s worth of problems. Although Kalanick loves a good fight, the question remains whether Uber can surmount all these problems. Then again, there’s a reason why the main conference room at Uber’s shiny, new San Francisco headquarter is called the War Room. In 2011, venture capitalist Marc Andreessen said: “Uber is a software that eats taxis. It’s a killer experience.” Kalanick will be hoping
On paper, Kalanick is the latest tech billionaire. January 2015
to keep that killer experience growing. n
Profile
35
Logistics
36
Workers sort customers’ orders at a JD.com warehouse in Beijing.
BUYING IS EASY. DELIVERY IS HARD. China’s huge size and underdeveloped inland logistics infrastructure is posing delivery problems for e-commerce firms, report Shanshan Wang and Paul Mozur
Portfolio
37
A messenger from e-commerce giant JD.com sets out to deliver an order in Beijing.
I
A delivery cart passes a sign advertising JD.com’s Singles’ Day promotion in Beijing.
T WAS THE BIGGEST SHOPPING
Jiang, who owns a bakery in the
China has caught the e-commerce bug.
day of the year in China, and the
western Chinese city of Urumqi, spent
An underdeveloped retail sector and a
discounts were steep. But Jiang Shan
2,000 renminbi ($325) on a water
flourishing network of online merchants
waited to buy some of what she wanted.
purifier and kitchen supplies and would
offering huge selections at low prices have
On November 11, tens of millions
have spent even more, she said, were she
led the Chinese to look to the web first
of Chinese like Jiang bought more than
confident the products she ordered would
to buy everything from shoes and ovens
$9 billion worth of products online on
get to her quickly and undamaged. “I tend
to toilet paper and toothbrushes. The
Singles’ Day, China’s de facto e-commerce
not to buy things on Singles’ Day because
Chinese e-commerce market is already
holiday and the world’s largest internet
the logistics just worry me too much,” she
bigger than that of the United States and,
shopping event. But buying was one thing.
said. “If I get the stuff I ordered this year
by 2020, is projected to be the size of
Delivery was another.
in 10 to 15 days I’ll be happy.”
the US, British, German, Japanese and
January 2015
Logistics
38
by geography and wealth. In the largest and most affluent cities on the country’s eastern coast, just about anything can be delivered within a day. Zhang Rui, an information technology salesman who lives in Beijing, no longer buys small daily necessities at stores. “Just about anything I need at home I buy online, whether it’s groceries, toilet paper, rice, cooking oil, salt, a toothbrush or shampoo,” he said. For Jiang, living inland, it’s another GETTY IMAGES
story. She recalled when a courier refused
Workers distribute Singles’ Day packs at an express company in Nantong, China.
to help her carry a heavy parcel up the stairs to her apartment. Some couriers would not wait for her to open the package to ensure the goods she ordered
French markets combined, according to a
e-commerce company, and JD.com,
were all there and undamaged. Her
KPMG report.
its smaller rival, have tried to make
friends who live on the east coast and use
things more efficient, especially inland.
Alibaba question how she survives.
But the country struggles with
“When the package comes, I don’t
delivery, largely because of decades of
Alibaba has pledged to invest 100 billion
underinvestment in inland logistics
renminbi ($16.3 billion) in an initiative
expect it to be pretty,” she said. Even if
infrastructure and inefficient local
to link third-party companies that deliver
products have a few scratches, she said,
regulation. Goods are slow to arrive in
its shipments. The idea is to form an
“I don’t care anymore.”
the country’s interior, and damage is
alliance that uses Alibaba’s consumer and
a persistent problem – affecting both
shipment data to better anticipate orders
late 2013 one person was killed and
consumers and small businesses.
and make delivery more efficient.
seven were hospitalised after a toxic
Safety has also become an issue. In
liquid sent by a chemical company leaked
“Imagine having 30 NBA teams but only a few high school gyms to play in –
onto other parcels being delivered. In
that was China’s logistics infrastructure
2012, a China Southern Airlines plane
when e-commerce took off,” said Shen
caught fire when weatherproof matches
Haoyu, chief executive of Chinese
inside a parcel ignited. China’s delivery problems are
e-commerce giant JD.com’s business-to-
highlighted on Singles’ Day, which was
consumer website.
conceived as a way for the unmarried
Deliveries within China are so inefficient that the country spent 18 per cent of its
of China to shop away their loneliness.
gross domestic product on logistics in
Beginning the night of November 11,
2013, 6.5 per cent more than the global
items from the 278.5 million orders placed on Singles’ Day at Alibaba’s e-commerce
average and 9.5 per cent above what is spent in developed countries like the United States, said Fox Chu, director of Asia
A messenger from JD.com delivers an order in Beijing.
sites were to be shipped, largely by truck, across a land mass crisscrossed by
JD.com, on the other hand, is building
dizzying mountain ranges. The trucks
its own warehouses and shipping its own
shuttle the packages from warehouses
goods. The company can manage same-
to smaller distribution centres, drivers
can be more expensive than shipping
day deliveries in 100 cities and next-day
paying costly tolls and running into
something from Beijing to California,”
deliveries in 600 others, said Shen, the
traffic jams along the way. After goods
he said, referring to the roughly
JD.com executive.
are dropped off, many vehicles will
Pacific infrastructure and transportation at consulting firm Accenture. “Shipping goods from Fujian to Beijing
not bring packages back because of
1,900-kilometre trip from the southern Chinese province to the country’s capital.
AS WITH most things in China, the
Recently, both Alibaba, China’s main
state of logistics can be broken down
convoluted local regulations. From the distribution centres, equipped Portfolio
Logistics
40
organised to cause traffic jams.
only with shelving to hold the deluge
130,000 employees filled 1.5 billion
of packages, hundreds of thousands of
orders across China. For the increase in
deliverymen will begin the slow process of
orders on Singles’ Day, YTO hired 30,000
Singles’ Day, JD.com ran promotions the
taking each parcel to recipients spread out
temporary workers. It plans to buy its first
week before and brought in temporary
across distant Himalayan hamlets, eastern
airplane next year.
workers from around the country. The
Chinese megacities and jungle towns on the South China Sea. Part of Alibaba’s plan is to establish
This year, for the first time, Alibaba was
To help reduce the backlog during
warehouse can process more than
hoping to track the location of every item
200,000 orders a day. Although it has
ordered during Singles’ Day.
proved costly to build what is effectively its own FedEx, the strategy enables
warehouses at critical choke points to help streamline deliveries. “China is too
JD.COM’S 50,000-square-metre
JD.com to process orders more quickly
big, so we cannot buy a lot of land for
warehouse in southern Beijing, the largest
than its rivals can, even as its scale lags.
warehouses,” said Alibaba’s chief operating
in the city, shows the advantages of building
Most critically, the company is able to
officer, Daniel Zhang. “Instead, we will
its own delivery service. The huge structure
train the couriers that Shen calls “literally
choose key areas, very strategic locations
is ergonomically organised and employees
the face of JD.com.”
where resources are quite limited.”
run full speed, pushing carts loaded with
Zhu Sichang, 29, is one of those
goods in lanes segmented for those going
couriers. Zhu said his favourite time on
space with logistics partners like YTO
at different speeds. A screen displays how
his job came after he dashed up several
Express, a private delivery company. YTO
many orders each employee has processed.
flights of stairs to get an urgent delivery to
It’s a far cry from most warehouses
a customer quickly. “He saw I was pouring
The company will share the warehouse
grew huge by delivering goods ordered on Alibaba’s e-commerce sites. Last year,
in China, which are often open-air and
sweat and offered me a cup of water to
just 13 years after it was founded, YTO’s
exposed to the elements, seemingly
thank me for my hard work,” he said. n
JD.com built a 50,000-squaremetre warehouse in southern Beijing to speed up logistics.
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Finance
42
An employee examines jewellery to be pledged as collateral for a loan, at a branch of the Caixa Economica Federal, a government-owned chain of pawnshops.
Due to soaring interest rates, Brazilian consumers often turn to loans from pawnshops to make ends meet, reports Dan Horch.
Brazilian PawnshoPs’ loan Business Portfolio
43
Interest rates In BrazIl would make a loan shark blush. Credit cards charge more than 240 per cent a year. Bank loans top 100 per cent. For a rising number of consumers in need of cash, a pawnshop is actually the better option. When Angela Pereira, a stay-at-home mother in São Paulo, needed extra money to buy her daughter school supplies, she pawned a gold chain to get 530 reais (about $210). Adjusting for the country’s high inflation, she is paying interest of around 19 per cent a year, only modestly higher than what the average American reuTers
pays on a credit card. “It’s accessible and cheap,” she said. The growing prominence of pawnshops
The Brazilian Central Bank keeps raising interest rates in an effort to stem inflation.
is the latest sign that the country’s consumer debt binge may be reaching its limit. The swelling Brazilian middle
who took power in the 1930s in a
cent of the item’s value. The teller does
class – and its shopping habits – helped
military coup and showed sympathy for
not ask about employment, income or
feed the broader economy for years. But
European fascism. But he also introduced
credit history – just name, address and
growth is slowing, and consumers are
progressive reforms, including the eight-
tax ID number.
struggling to pay their bills.
hour workday. As part of his attempt
The weak economy was a flash point in
João Régis Magalhães, Caixa’s national
to lower interest rates, he abolished
superintendent of consumer finance, said
the recent election, with the incumbent
private pawnshops in 1934 and gave the
it was logical that pawn loans should
President Dilma Rousseff narrowly
monopoly to Caixa.
charge lower interest rates than other
winning in a recent run-off. The central
Like those of any other bank, Caixa’s
loans: “The operation is simple, so we
bank increased interest rates again, in an
branches have walls of ATMs; desks for
have very few costs, and the risk is very
effort to fight inflation. But that could
new savings accounts, mortgages and
low because we have a guarantee that we
weigh on growth and further complicate
loans; and rows of tellers for deposits and
will get our money back.”
the consumer debt landscape.
withdrawals. But in 463 of Caixa’s branch
The growth in pawnshop lending in
While still a relatively small portion of
offices, one row of tellers has scales and
some ways follows the broader boom
lending, the pawnshop business has been
jewellers’ kits to weigh and test precious
in household debt. From June 2004 to
booming, even as other types of loans
metals, jewels and luxury watches. After
June 2014, consumer credit in Brazil rose
have fallen out of favour. Some Brazilians,
the inspection, the teller immediately
658 per cent to $297 billion, according
even those solidly in the middle class, are
offers a loan, generally equal to 85 per
to the country’s National Association of
using pawnshops to pay off their credit cards, cover unexpected expenses or just get a cheaper line of credit. Unlike in the United States, pawnshops
© 2014 New York Times News service
in Brazil are regulated at the national level. Instead of being independent players that set their own rates and make their own rules, pawnshops are operated by a government-owned bank, Caixa Econômica Federal. The strict oversight is the legacy of the former Brazilian President Getúlio Vargas, a strongman January 2015
The growing prominence of pawnshops is the latest sign that the country’s consumer debt binge may be reaching its limit. The swelling Brazilian middle class – and its shopping habits – helped feed the broader economy for years. But growth is slowing, and consumers are struggling to pay their bills.
reuters
Finance
44
Caixa has 463 bank branches that also serve as pawnshops.
Executives in Finance, Administration
requires some kind of collateral, like a
problem,” she said. Her credit cards were
and Accounting. Caixa’s pawn loan
pawn loan, fits that bill, she said. And
soon maxed out, too. Brazilian credit
portfolio has more than doubled in the
even middle-class households are turning
cards’ minimum monthly payments
last four years to $670 million, with 1.3
to pawnshops to try to break the cycle
are often not large enough to keep the
million loans outstanding.
of debt.
amount owed from growing. So two years
The fallout from the credit binge has
At the start of the decade, Arianna
ago, she pawned her jewels and raised
been more painful for other types of
França, an event coordinator for the São
40,000 reais to pay off her credit cards.
loans. The central bank reports that 6.7
Paulo state court system, faced a medical
The interest is low enough that she is now
per cent of personal bank loans and 26.3
emergency. Her father’s health insurance
paying down her principal and expects to
per cent of credit card accounts are in
did not cover all the procedures needed to
have her jewels back next year.
default. By comparison, Caixa said that
treat his cancer.
only 0.6 per cent of pawn customers
As a civil servant, França has the
While pawn loans can provide a muchneeded lifeline, they also pose risks.
missed their payments. While other
option to use so-called consigned credit.
types of lending have slowed, pawn loans
On such loans, the borrower’s employer
For years, Valéria Ferraz, a holistic
continue to rise rapidly. Caixa is planning
automatically deducts the amount
therapist in São Paulo, has pawned
to double the number of branches that
owed each month from the borrower’s
her jewels to help pay the bills when
offer such loans by the end of 2015.
paycheque, and the rate is about the same
business is slow, then redeemed them
as on pawn loans. But like many other
when clients return. “It becomes
the National Confederation of Commerce,
civil servants and pensioners, França
addictive,” she said. “It’s so easy to get
said many low-income households, for
was already spending more than 30 per
extra money, sometimes I do it even if I
whom credit was a novelty a few years
cent of her income on consigned-credit
don’t really need it.”
ago, “are now learning how interest
payments – the limit permitted by law.
Marianne Hanson, an economist with
works and that they have to look for the cheapest alternative.” Credit that
“There’s so much credit available, you can just buy and buy. It can become a
Ferraz admitted that she had once lost a gold ring with diamonds because she had failed to make her interest payments. Portfolio
Finance
45
When a consumer defaults, Caixa displays the pawned item on its website. Interested parties bid through the bank’s ATMs. If the amount raised in the auction is greater than what the client owes, the client receives the difference. But because Caixa values jewels based only on their raw materials, without taking craftsmanship into account, the auction price rarely reflects the full value. Reinaldo Domingos, president of the Brazilian Association of Financial Educators, said pawn loans might be cheaper than other options but they are still not cheap. “For many people, the snowball of debt keeps growing,” he said. Yet for those who keep their borrowing under control, pawn loans can replace high-interest credit cards. Carmelita Valente, a retired getty images
administrative assistant in São Paulo, pawned rings, necklaces, a pendant and earrings to help with household expenses just after her husband died in 1992. Since then, Valente has never defaulted. But
Credit cards only took off in Brazil early last decade. Since then consumer credit has risen by 658 per cent.
she also has not redeemed her valuables.
so I paid off 1,200 reais. Last month I
Instead, for the last 22 years, she has used
took out 600 to pay for repairs in my
just supporting the bank,” she said. Her
her pawn account as a line of credit.
home. It depends on what I need each
income, though, does not let her save for
month,” Valente said. She currently owes
unexpected expenses. “But with God’s
2,300 reais.
help, I’ll redeem my things, someday,”
Based on her items’ value, Caixa lets her borrow up to 4,000 reais, but it is a rare month that she owes that whole sum. “A few months ago I had some money,
She said she knows that it would be best not to borrow at all.
An employee retrieves jewellery to be returned to an owner from the safe of a Caixa Economica Federal branch. January 2015
“My daughter always tells me that I’m
she said. “I couldn’t bear to let them go. They’re part of my family history.” n
Brazilian credit cards’ minimum monthly payments are often not large enough to keep the amount owed from growing. So two years ago, she pawned her jewels and raised 40,000 reais to pay off her credit cards.
Tourism
46
California’s ski resorts faCe a Brown future
Boreal Mountain Resort blows manmade snow over a ski run in order to open for business.
Portfolio
47
California is in the grip of a massive drought, but its ski industry has been facing declining snowfall for decades, reports John Branch.
At ski AreAs up And down the
second lowest of the last 90 years. With
jagged peaks of the Sierra Nevada, where
most of the snow arriving late in the
California’s drought has hit historic
season, skier and snowboarder visits in
proportions and the broader threat of
this area were down 25 per cent from the
climate change hangs heavy over an
season before, according to the National
industry built on optimism, the manmade
Ski Area Association.
snow is flying.
Similarly meagre snow packs in 2012
A couple of resorts managed to open
and 2013 have exacerbated the Californian
a few runs in November. But beyond the
drought, with ramifications far beyond the
occasional strip of white, the mountains
ski industry. A fourth lacklustre season
remained mostly bare.
would be unprecedented, according to
“From a business perspective, I’m a farmer,” said John Rice, general manager
snow records kept since 1879. Some dismiss the snow drought as an
of Sierra-at-Tahoe, a ski area south of
anomaly, pointing to near-record snowfalls
Lake Tahoe. In late November, he had a
in the Sierra Nevada as recently as 2011.
small pile of manmade snow, a mountain
When viewed on graphs, the data is spikier
of naked runs and a hope to open in early
than ever, but the trend lines point down.
December. “I’m not in the ski business,” Rice said. “I farm snow.” The season was just starting, and snow
“It might well be that there will be more snow on the Californian mountains in the next few years again,” Christoph Marty, a
may yet pile high, but the harvest in
researcher for Switzerland’s Institute for
California the last three years was bleak,
Snow and Avalanche Research, wrote in
and the globe’s long-range forecast is grim.
an email. “However, this does not change
Fortunes are as unpredictable as ever, with
the fact that there will be less snow in the
bigger swings of weather variability. While
long run.”
snow levels have decreased drastically in the West and are generally on decline elsewhere in the United States, the drop is hardly uniform. The ski industry, which expects higher temperatures, less snow and shorter seasons in the coming decades, is seen as the canary in the coal mine of climatology. “This is a very serious and as strategically significant a topic as you can get,” said Andy Wirth, president and chief
The ski industry, which expects higher temperatures, less snow and shorter seasons in the coming decades, is seen as the canary in the coal mine of climatology.
executive of Squaw Valley, a major resort near Lake Tahoe.
© 2014 New York Times News service
Californian resorts, big and small,
January 2015
Equally troubling for ski areas is the
are combating the trends with bigger
rising percentage of precipitation that falls
investments in snow making ($8 million
as liquid, not solid, even in winter, said
worth at Squaw Valley and neighbouring
Randall Osterhuber, a researcher at the
Alpine Meadows in the last three years)
Snow Lab. In the late 1970s, about 82 per
and more activities less reliant on snow,
cent of the annual precipitation at the lab,
whether indoors in the winter or outdoors
with a relatively high elevation of 2,100
in the summer.
metres, fell as snow. These days, it is about
Last year’s snowpack at the Central Sierra Snow Lab, in the heart of California
67 per cent. If the debate about global warming still
ski country near Lake Tahoe, topped out
echoes around the world of politics, it has
at a depth of about 132 centimetres, the
long since faded at ski areas.
Tourism
48
Scott Cizek, a snow-making supervisor at Boreal Mountain Resort, checks on the quality of their manmade snow.
“I don’t know of anybody in the industry who is saying that climate change is not an issue for us,” said Bob Roberts, president and chief executive of the California Ski Industry Association. The industry was among the first pushing for awareness of the global warming threat, long before the turn of the century, led by resorts like Aspen in Colorado. The National Ski Area Association adopted a climatechange policy in 2000. In 2007, snowboarder Jeremy Jones founded Protect Our Winters to further rally the winter-sports community.
Making snow requires two Californian things in short supply – temperatures below freezing, generally, and ample water. And, despite recent advances in efficiency, snow making contributes to global warming, representing 15 to 20 per cent of Squaw Valley’s carbon footprint, for example, according to Squaw Valley officials.
Squaw Valley’s Formal Sustainability Initiative is a report on the ways it intends to reduce its own carbon footprint and promote advocacy among its customers. “Our intention is to lead the fight against climate change,” the report says, while acknowledging that the A snow-making machine.
company expects changing conditions. “Ski seasons are projected to be three to six weeks shorter by the 2050s” in the Portfolio
Tourism
49
Sierra Nevada, the report reads. “Will ski areas be around in 30 to 40 years? The answer is yes,” Wirth said. “Will we look different than we do today? Yes. But we look dramatically different now than we did 40 or 50 years ago, too.” Ski areas may look more like Big Bear Mountain Resorts in Southern California. About a two-hour drive east from Los Angeles, Big Bear can open – and sometimes has opened – 100 per cent of its terrain with nothing but manmade snow. It has built a vast snow-making operation since the 1960s, a strategy that has propped up ski areas on the East Coast for decades. “We’re certainly better positioned than most areas for the possibility of warmer temperatures and less snowfall,”
A ski run, mostly bare except for small amounts of manmade snow, at Heavenly Mountain Resort in South Lake Tahoe.
Chris Riddle, Big Bear’s vice president of
November 7, operating one lift and one
marketing, said. “We’ve lived with that our
run. It closed again for a few days, waiting
snow,” Boreal’s general manager, Amy
entire existence.”
for colder conditions to make more snow,
Ohran, said. “A lot of discussions are about
and reopened in late November.
seasonal diversity, and expanding revenues
But making snow requires two
Two years ago, Boreal opened Woodward
“We have to get our heads out of the
in areas that are not dependent on snow.
Californian things in short supply –
Tahoe, an indoor action-sports gym, with
Our hearts are in skiing and snowboarding,
temperatures below freezing, generally,
year-round use for everyone from Olympic
and we want to see that succeed. But we
and ample water. And, despite recent
athletes to cheerleading squads. Ski areas
have to cast a bigger net.”
advances in efficiency, snow making
everywhere are adding non-snow activities,
contributes to global warming,
like mountain-bike parks and zip-line
relies mostly on snow from the sky. And
representing 15 to 20 per cent of Squaw
courses, especially since 2011, when federal
when it falls, the resort has a plan to make
Valley’s carbon footprint, for example,
legislation allowed expanded uses for ski
the most of it. “Every flake counts,” Rice,
according to Squaw Valley officials.
areas on government land.
the general manager, said. n
Still, snow is the thing. Sierra-at-Tahoe
Days before Mammoth Mountain opened in November, on the strength of manmade snow, crews were drilling wells for water. But ski areas play down the effects of heavy water use during a drought. They consider their system relatively closed, with minimal consumptive use. The water is used to make snow, then mostly melts back into the ground or runs off into reservoirs to be used again. Boreal Mountain Resort, a small ski area along Interstate 80 near Lake Tahoe, has many enviable qualities – a relatively high altitude and north-facing slopes. But it has invested heavily in snow-making equipment since 2007 and competes annually to be the first California area to open. It won the race last year on January 2015
Randall Osterhuber is the manager of the Central Sierra Snow Laboratory.
Agriculture
50
Dried maca ready for processing in Junin, Peru.
Thieves recenTly broke inTo
heralded as a cancer-fighting superfood
a storehouse in the farming town of JunĂn
and sold on the shelves of supermarkets
high in the Andes, knocked the manager
like Whole Foods.
Š 2014 New York Times News service
over the head and made off with about
It is so popular in China for its perceived
1,179 kilogrammes of contraband. Trucks
aphrodisiac effects that this year Chinese
have been surreptitiously crossing the
buyers showed up with suitcases full of
border, laden with an illicit substance
cash to buy up the harvest, inciting a gold
bound for China. And with the price of
rush and setting off alarms from Lima to
their signature crop soaring, once-poor
Los Angeles and beyond.
farmers bounce along the unpaved roads in shiny new vehicles. The precious stuff that has provoked
As maca booms, some Peruvians fear that they are losing control of a valuable crop with a history that goes back long
sudden larceny and luxury in Peru is not
before the time of the Inca empire. Officials
drugs, gems or precious metals. It is a
say that many Chinese buyers smuggled
pungent, turnip-like vegetable called maca,
the root out of the country in violation of a
Vegetable SpawnS larceny and luxury in peru Maca, a turnip-like vegetable grown in Peru, has surged in price due to Chinese demand, reports William Neuman. Portfolio
51
Workers harvest maca roots in the mountains outside of Tarma, Peru.
law that requires maca to be processed in Peru before it can be exported – a measure intended to protect local businesses. They also say seeds were smuggled out of the country illegally, despite a ban meant to prevent the root from being grown anywhere else. “Thousands of acres are being grown outside the country without authorisation,” said Andrés Valladolid, the president of Peru’s National Commission Against Biopiracy. Oswaldo Castillo, a maca grower and processor, worried that the Chinese “will get a monopoly over maca and be able to set the price on the world market.” He January 2015
warned that some farmers had sold maca
The Chinese buying spree and the clandestine export of whole maca and seeds has raised questions about the ability of developing countries to control access to native species.
seeds to Chinese buyers. “We can’t let the seeds leave the country,” he said. “Maca is our ancestral food. It’s our pride.” The Chinese buying spree and the clandestine export of whole maca and seeds has raised questions about the ability of developing countries to control access to native species. But it has also stunned buyers of the root in the United States, Europe and Japan, who suddenly saw prices of processed maca shoot up, or were told there was simply no maca left to ship to them. Zach Adelman, the founder of Navitas Naturals, based in Novato, California, one
Agriculture
52
Workers sort dried maca to be processed at the Koken of Peru processing plant in Junin.
of the top importers in the United States,
in the new year when they go and find a
said those plantings could have been
said his company previously paid about
bag that’s three times as much,” he said.
started only with seed smuggled out of
$3.60 for a half-kilogramme of maca
In June, as the harvest started, Chinese
Peru illegally.
powder. Now some suppliers are asking
buyers arrived in Junín, a town of 10,000
for more than $20 a half-kilogramme.
people, which sits at 4,132 metres above
sucking out its nutrients, farmers typically
“It doesn’t look like it’s coming down or
sea level on a bleak plain surrounded by
plant a field for only two years, after which
stabilising even,” Adelman said. At
windswept dun-coloured hills. Within
it must lay fallow for as long as 15 years.
Whole Foods stores, the price of his
weeks, the vegetable, a member of the
That has forced farmers to go farther and
organic maca, labelled “Incan superfood,”
mustard family with a pungent smell
farther away to find land to plant, often
recently increased to $30 for a half-
and taste, soared in value, from about
tilling dizzyingly steep hillsides.
kilogramme from as low as $20. Next
$1.80 for a half-kilogramme to more than
year, he said, shoppers will pay up to
$11 for a half-kilogramme for the most
53, considered by many in Junín to be the
$80 for a half-kilogramme.
sought-after variety.
maca king for his extensive plantings. Last
“It’s going to hit them like a ton of bricks
Because maca rapidly depletes the soil,
That is the problem faced by Hugo Arias,
Fortunes were made overnight.
year, he farmed more than 243 hectares
Many of the Chinese who bought maca
and said he would increase that by 20 per
last summer loaded the dried vegetables
cent for next year’s crop. He said he had
onto trucks and sent them clandestinely
used much of this year’s profit to buy farm
across the border to Bolivia, according
equipment and rent more land to grow
to government officials. That hurt local
maca. He is also building a large new house
processors. But of greater long-term
in town.
concern were news reports that farmers in
Wanque Zhu, a buyer from China, shops for maca products.
China had begun growing large amounts
On a recent day, Arias exhorted about
of maca. Valladolid, the biopiracy official,
200 workers harvesting maca, in a field
Out of earshot of Arias, some workers said that despite receiving a raise this year they were not benefiting enough from the stunning rise in maca prices. They are paid $11.37 a day, they said, up from $9.65 last year. Portfolio
Agriculture
53
Growers said they were staying up at night to guard drying tents and storehouses from thieves. Their worries increased after the storehouse of a Japanese buyer was raided. Maca harvest workers hold a meeting with their boss, Hugo Arias, left, in Tarma.
at a breath-sapping 4,511 metres, to work
pay us so little and treat us badly?”
a week, at breakfast. They boil the root
The price jump has also brought trouble.
and blend it with milk, fruit and sugar,
pampa as vicuñas grazed on yellowed tufts
Growers said they were staying up at night
turning it into a hot drink called maca
of coarse grass. “They say I’m exploiting
to guard drying tents and storehouses from
juice. But with the rising price, many now
people,” said Arias, wearing only a light
thieves. Their worries increased after the
forgo the staple.
windbreaker against the cold. “I don’t
storehouse of a Japanese buyer was raided.
exploit anyone. I give people work.”
The company’s local representative said the
maca anymore,” said Olga Rapri, 48, who
Out of earshot of Arias, some workers
thieves hit him on the head, then loaded
has a clothing shop in town. “Now you
said that despite receiving a raise this year
sacks of dried maca into a pickup truck.
have to be rich to have maca.” She said
harder. A frigid wind blew mist across the
they were not benefiting enough from
“I never thought the price of maca
“The poor person in Junín can’t eat
sales at her store had increased as money
the stunning rise in maca prices. They
would go so high,” said the man, Alex
poured into town during the harvest, but
are paid $11.37 a day, they said, up from
Rojas, 33, who said the thieves threatened
less than she had hoped. “People would
$9.65 last year.
to shoot him.
rather buy cars, motorcycles, tractors,
The harvesters, including some women with babies on their backs, knelt down to
Junínos, as residents here are called, typically consume maca two or three times
scrape the earth with short-handled picks to expose the maca roots, which range from about five centimetres across to the size of a small fingernail. It is hard to imagine that anything can grow in this harsh landscape besides lichen and wild grasses. But the maca is well adapted to the conditions, its pale green, frisee-like leaves hugging the cold ground. Victor Parra, 56, one of the workers, said it is so cold sometimes that he could barely pick the maca out of the soil. The harvesters were given short rest periods, he said, and brought their own food and water. They travel to and from the fields in the back of cramped trucks. “A kilo of maca is how high?” Parra said. “So why do they January 2015
Freshly harvested maca, heralded as a superfood is sold on the shelves of supermarkets like Whole Foods.
seed,” Rapri said. “They would rather invest in growing more maca.” n
Energy
54
A NEW
ENERGY POLICY Mexico’s regulator, the National Hydrocarbons Commission, will soon hold the country’s first open auctions for oil and gas fields, reports Elizabeth Malkin.
Portfolio
55
The compuTer screens lining the bubble-like control The La Muralla IV has been drilling exploratory wells in deep water.
room on the La Muralla IV, a giant floating platform, monitor pressure levels in a narrow shaft cut through bedrock to a reservoir of valuable natural gas nearly five kilometres below sea level. For six months, an international team hired by a contractor for Petróleos Mexicanos (Pemex), Mexico’s state-owned oil monopoly, has been drilling an exploratory well here in the Gulf of Mexico. Now, the work is nearly done. Drill pipes are stacked like sentries. An underwater robot has been pulled back up from the deep seafloor. A wireline sensor is gathering data to determine how much oil and gas lie below. An operation like this would attract little attention in the northern part of the gulf, where dozens of deepwater platforms are part of the mosaic fuelling America’s energy boom. On the Mexican side, though, the search is just beginning. Pemex is counting on a future in deepwater production. But after eight years of exploratory drilling, it is still years away from producing the first barrel of oil in deep waters. Before it can, Pemex must shed its past as a lumbering state monopoly and remake itself as a streamlined company ready to compete or ally with the world’s biggest firms. “The real large fields, the material opportunities for Pemex, lie in deep water,” Emilio Lozoya Austin, the chief executive of Pemex, said in an interview in Mexico City. “This is where our biggest learning curve lies.” Lozoya’s ambitious plans are part of a sweeping overhaul of Mexico’s energy sector intended to increase flagging oil and gas production. By ending Pemex’s monopoly, the government hopes to attract serious outside investment for the first time since Mexico kicked out foreign oil companies in 1938. Within a year, Mexico’s regulator, the National Hydrocarbons Commission, will hold the country’s first open auctions for oil and gas fields, including deepwater regions in the Gulf of Mexico. And Pemex will have to compete in the bidding just like any other company, either alone or with partners. “Pemex will not have any special privileges at all,” said Juan Carlos Zepeda, the president of the hydrocarbons commission. “We have two main mandates. One is transparency and the other is competition.” The change will not be easy for Pemex, long run as an arm of the government. For decades, the company’s task has been to
© 2014 New York Times News service
pump oil and provide cash for the Mexican government, a job
January 2015
made possible by generous discoveries in the shallow waters of the southern gulf in the 1970s. The result was that Pemex racked up losses and never invested for the future – when the easy oil would run out. Closed off from the global industry, it fell further and further behind the energy giants. Now, Pemex is venturing into uncharted territory, as its traditional fields decline. Since the peak in 2004, Mexican crude oil production
Energy
56
own deposits from the same Eagle Ford geological formation, called Agua Nueva in Spanish, are dormant because the small exploration companies working just kilometres across the border were excluded from Mexico by Pemex’s monopoly. Lozoya’s priority for deep water next year is to attract partners to begin production at two fields, Trion and Maximino. He acknowledged that the companies that had developed deepwater fields on the American side of the gulf were “clear candidates.” Among those are major corporations like Exxon Mobil, Chevron and Shell. Lozoya is also seeking partners for other types of deposits, including mature fields or extra-heavy offshore crude. That would allow Pemex An operator of the remote controlled submersible robot on La Muralla IV.
to increase production quickly as it focuses on its deepwater strategy.
has fallen by about a million barrels a day
high gear, Pemex has neither the financial
to an expected 2.35 million barrels a day
capital nor the expertise to produce oil and
Private investment in oil and gas
this year.
gas from its complex deepwater reserves.
production is forecast to rise steadily each
That includes the deepwater oil that the
year to reach about $27 billion by 2020.
to look for the quick win and not have a
company has discovered in the Perdido
“The potential in Mexico is still huge,” said
very diversified portfolio of investment
Fold Belt, a deposit that extends across
Luis Miguel Labardini, an oil consultant
that would give you the short-term
American and Mexican waters, or these
at Marcos y Asociados in Mexico City.
barrels, the medium-term barrels and
natural gas fields further south, where the
“There are going to be findings where
the long-term barrels,” Lozoya said.
Mexican contractor Grupo R has been
Pemex can’t do the work.”
“Obviously the short-term barrels have
drilling exploratory wells with Pemex.
“The tendency was for the government
been declining very quickly.” As Mexico’s energy overhaul kicks into
Similarly, Mexico has watched the shale gas boom in Texas from the sidelines. Its
getty images
Pemex has trouble managing its sprawling industrial properties that include refineries and petrol stations.
The government has granted Pemex a comfortable cushion of reserves, enough to produce at its current level for two
The tendency was for the government to look for the quick win and not have a very diversified portfolio of investment that would give you the short-term barrels, the medium-term barrels and the long-term barrels. Portfolio
involving fake Pemex invoices. Pemex
more decades. But it must get to work fast in deep water, because the laws return any new field to the state if commercial production does not begin within five years. “Now you have a credible threat,” Zepeda said of the hydrocarbons commission. “Before the reform, if Pemex was not performing, I could not take the area and give it to someone else.” Lozoya, 39, who has a background in corporate turnarounds and was appointed in December 2012, is in a hurry. “I think it’s something that can definitely be achieved in less than a decade,” he said of Pemex’s transformation. But he faces serious challenges. Pemex has had chief executives from the private sector in the
Mexican prosecutors are investigating one of Pemex’s largest contractors, the politically connected marine services company Oceanografía, over accusations of a $400 million bank fraud scheme involving fake Pemex invoices.
has not explained why it gave so many contracts to Oceanografía, a financially shaky company with no experience outside Mexico. To tighten control over Pemex’s $40 billion contract operations, Lozoya has centralised them in one department. He predicts this move will save the company $1 billion this year. And Pemex has trouble managing its sprawling industrial properties – from refineries to the franchises that operate its signature green and white petrol stations – that bleed money and attention from the company’s exploration and production division. The company has lost $1.15 billion this year to criminals’ tapping into its
past who tried and failed to thin the thicket of interests that allows contractors, union
issue that everybody has said we need is
leaders and managers to get rich off the
complete transparency.”
enormous wealth the company generates.
Mexican prosecutors are investigating
pipelines, a longtime problem. Lozoya argues that Pemex has taken the most important step in a turnaround.
one of Pemex’s largest contractors, the
“We have stopped talking about barrels,”
one of investors’ main concerns, said
politically connected marine services
he said. “We only talk about US dollars
Deborah Byers, a managing partner at
company Oceanografía, over accusations
and pesos now. It’s not about volumes. It’s
EY consulting in Houston. “The No. 1
of a $400 million bank fraud scheme
about value.” n
Pemex’s reputation for corruption is
Energy
57
getty images
Pemex produces around 2.35 million barrels a day, but production is falling.
January 2015
Industry
58
Growth tops
EnvironmEnt The Indian government has swept away a host of bureaucratic environmental regulations in favour of economic growth, report Ellen Barry and Neha Thirani Bagri.
A wastewater treatment plant in Vapi, a city in India’s Gujarat state. Portfolio
59
Factory owners in Vapi, a
and pesticide factories were again free to
candidate, Modi promised to open
city on the western coast of India, have
expand, and to snap at China’s share of the
the floodgates, and he has been true
been fuming, railing and arguing for
global chemical export market.
to his word. The new government is
© 2014 New York Times News service
years against a single troublesome
Rightly so, said Harshad Patel, standing
moving with remarkable speed to
number: The pollution index used by the
outside the plant where he works. The air
clear away regulatory burdens for
Ministry of Environment and Forests,
had an acrid-sweet smell, and reddish-
industry, the armed forces, mining
which identified Vapi as an area so badly
brown effluent was gushing from a
and power projects.
contaminated that any further industrial
treatment plant down the road at a rate
growth there was banned.
of 208 million litres a day into the Daman
be coming. In a report made public
Ganga River, but Patel looked untroubled.
recently, a high-level committee
June, about two weeks after Narendra
“Clean India is fine – we also like clean
assigned to rewrite India’s
Modi was sworn in as prime minister. The
India,” he said. “But give us jobs.”
environmental laws assailed the
They finally got some good news in early
More permanent changes may
new officials at the ministry told them
Indian industries have often complained
existing regulatory system, saying
the pollution index would be revised –
that convoluted environmental regulations
it has “served only the purpose of
and in the meantime, Vapi’s chemical
are choking off economic growth. As a
a venal administration” seeking to
January 2015
Industry
60
extract bribes. To speed up project approvals, the committee recommended scrapping a layer of government inspections; instead, it said, India should rely on business owners to voluntarily disclose the pollution that projects will generate and then monitor their own compliance, an approach the committee described as “the concept of utmost good faith.” Environmentalists are worried that the new approach will go beyond cutting red tape and will do away with effective regulation altogether. “If you’re building something like a brewery or a dam, faith is the last thing you want to think about,” said Leo Saldanha, coordinator of the Bangalore-based Environment Support Group. “Do you have
A fisherman walks on the banks of the Daman Ganga River.
‘utmost good faith’ in enforcing income tax,
corrupt bureaucrats sat on files that were
raft of regulatory changes and dilutions
or corporate tax law? No. This is a territory
lined up for approval, waiting for bribes.
that followed. Smaller coal mines were
on which the government wants to be weak – because they want growth.”
Modi’s new environment minister,
granted one-time permission to expand
Prakash Javadekar, made it clear that
without holding a public hearing; projects
speedy clearances would be the order of the
in forests will no longer have to seek the
inherit cumbersome regulations. The
day. The newly appointed National Board
approval of tribal village councils; smaller
environmental activist Sunita Narain, in a
for Wildlife, which must approve projects
mining projects of less than 100 hectares
recent article, described a system in which
in and around protected areas, ploughed
will no longer undergo ministry inspection.
“the same project had to be cleared by
through 140 pending projects during a
Several categories of projects will be
five to seven agencies,” not one of which
two-day gathering in mid-August. One
allowed to proceed as soon as they receive
monitored compliance. Industrialists
member said they worked at a rate of 15 to
clearances from state bodies.
complained that corrupt inspectors made
30 minutes per file.
Modi’s new government did
the rounds with their hands out, and that
More significant, activists say, were the
“We have decided to decentralise decision-making,” Javadekar said.
Chemical trucks on the roads in the morning.
New roads are being built in Vapi as industry expands. Portfolio
Environmentalists are worried that the new approach will go beyond cutting red tape and will do away with effective regulation altogether.
“Ninety per cent of files won’t come to me anymore.” He said the new government was not phasing out important environmental protections, just “those which, in the name of caring for nature, were stopping progress.” EnvironmEntal activists are alarmed at the plan to devolve power to
India. Vapi was at the top of the list. “That was the only way I felt I would get these guys to act,” he said. “Enforcement was weak, the penalties were very weak, and there was no visible deterrent penalty for noncompliance.” The moratorium did impose pain on businesses in Vapi, forcing abrupt cancellation of planned expansions. But it
state regulators, in part because state chief
did not lead to any significant reduction
ministers have powerful incentives to
in pollution levels, at least according to the control board, which renewed the ban
support industry. “It would be a rubber stamp, because the
Downstream from the plant, the riverbanks
last year.
chief minister would just call the pollution
are abandoned and villagers said their
The general election in the spring,
control guy and say, ‘Clear it,’” said Jairam
old fishing grounds are useless. Acrid
which replaced a Congress-led coalition
Ramesh, who served as environment
fumes settle thickly in the area early in the
government with Modi and his Bharatiya
minister under the previous national
morning, making it difficult to breathe.
Janata Party, seems to have changed all that.
government. “In the state, the chief
Ask business leaders here about pollution,
minister is the king, he’s the sultan.”
though, and they bristle, arguing that the
Association was an upbeat place. A copy
During a recent visit, the Vapi Industries
government inspectors’ sampling is faulty.
of the magazine Corporate India was on
regulators and industry as starkly as Vapi,
“People talk as if you go to Vapi and you
display, with the headline “The Light at the
where around 800 factories – mostly small
can’t breathe, your lungs are damaged,” said
End of the Tunnel.”
ones – produce dyes, pharmaceuticals,
Rajju Shroff, chairman of one of India’s
pesticides and other chemicals and
largest pesticide manufacturers. “It’s all lies.
owners would invest in the equipment
employ about 80,000 people. For decades
People are nice and healthy in Vapi. There is
necessary to monitor their own pollution
the factories simply dumped caustic
no problem at all.”
levels, as envisaged in the government’s
Few places embody the tensions between
byproducts and waste into open ditches;
Regulators say it is nearly impossible
Shroff said he was sure that business
new “utmost good faith” policy. Or at least, the ones who could afford it would.
when pressure mounted in the 1990s to
to police the country’s many small
clean up the mess, they banded together to
manufacturers. In frustration, Ramesh
build an effluent treatment plant.
imposed a total ban in 2010 on industrial
and 10 per cent are difficult to convince,”
growth in 43 areas that the Central Pollution
he said. “It is human nature to cheat, to do
Control Board said were the most polluted in
something to save the headache.” n
But while the effluent plant has improved
reuters
matters somewhat, Vapi is still polluted.
January 2015
“The problem is, 90 per cent are good,
In 2010, the Central Pollution Control Board said Vapi was the most polluted place in India.
Industry
61
Energy
62
Cleaner energy Through Carbon Capture
© 2014 New York Times News service
A $1.2 billion update to capture the carbon dioxide equivalent of 250,000 cars at a Canadian power plant and bury it underground may be a blueprint for the future, reports Henry Fountain.
So much Soot belched from
by a much larger and cleaner one along
this autumn, a gleaming new maze of
the old power plant in Estevan, Canada,
the vast Saskatchewan prairie. Sooty
pipes and tanks – topped with what looks
that Mike Zeleny would personally warn
shirts and socks are a thing of the past.
like the Tin Man’s hat – will suck up 90
the neighbours. “If the wind was blowing
But as with even the most modern
per cent of the carbon dioxide from one
in a certain direction,” Zeleny said, “we’d
coal plants, its smokestacks still emit
of the boilers so it can be shipped out for
call Mrs Robinson down the street and tell
enormous amounts of carbon dioxide,
burial, deep underground.
her not to put out her laundry.”
the invisible heat-trapping gas that is the
That coal plant is long gone, replaced
main contributor to global warming. So
If there is any hope of staving off the worst effects of climate change, many scientists say, this must be part of it – capturing the carbon that spews from power plants and locking it away, permanently. For now, they contend, the world is too dependent on fossil fuels to do anything less. If all goes as planned, the effort in Saskatchewan will be the first major one of its kind at a power plant, the equivalent of taking about 250,000 cars off the road. And at least in theory, that carbon dioxide will be kept out of the atmosphere forever. “Think about how far we’ve come,” said Zeleny, who recently retired after four decades here, most recently as plant manager. Despite President Barack Obama’s push to rein in emissions from power plants across the United States, coal is not going away anytime soon. The administration expects coal will still produce nearly a third of the nation’s electricity in 2030,
The Southern Company’s new $5.5 billion power plant will capture most of the carbon dioxide it produces.
down from about 40 per cent today, even if Obama’s plan survives the political Portfolio
63
getty images
China burns almost as much coal as all of the world’s nations combined. January 2015
Energy
64
onslaught against it.
whether carbon dioxide can be safely
Battling delays, the plant’s owner,
stored underground. And the technology
Southern Co, hopes to have it open next
overseas. China already burns almost as
is expensive. Updating the Saskatchewan
year. But it is more complex than the
much coal as all other nations combined,
plant alone cost $1.2 billion – two-thirds
Saskatchewan effort, and the price tag
and its appetite keeps expanding.
of which went for the equipment to
has ballooned to $5.5 billion, more than
Worldwide, coal consumption in 2020
remove the gas.
double the original estimate.
The challenge is even more stark
“It’ll work,” Harrington said. “It won’t
will be about twice what it was in 2000,
In the pine woods of Kemper County,
according to the US Energy Information
Mississippi, another carbon-capture effort
Administration, and will continue to grow
is taking shape, in a massive new power
for decades.
plant that will be fed a steady diet of coal
decades how to capture carbon dioxide
from the strip mine next door. Bruce
from power plants, scant progress has
unleashed by fracking, while cleaner than
Harrington, the operations manager,
been made. The United States and other
coal, is a major source of greenhouse
likened the hulking beast to an anthill:
nations have paid for research and helped
gases. Ultimately, many scientists say,
It seems curiously quiet on the outside,
some projects – Canada gave $220 million
those emissions will also need to be
but deep within an army of workers is
to the Saskatchewan plant’s owner,
trapped and stored.
cutting, welding and testing. Disturb it, he
SaskPower, and Southern Co received
said, and thousands of people will come
$270 million from the Department of
pouring out.
Energy – but the costs are high enough
Even the abundant natural gas
“If you want to carry on using those fossil hydrocarbons, that means
be easy at first, but it’ll work.” Though the world has known for
cleaning up their emissions,” said Stuart Haszeldine, a geologist at the University of Edinburgh. Capturing carbon, he said, “is the single best way of doing that.” Yet it is no magic bullet. Because it requires so much energy, sucking up carbon reduces a plant’s ability to make electricity – the whole point of its
Even the abundant natural gas unleashed by fracking, while cleaner than coal, is a major source of greenhouse gases. Ultimately, many scientists say, those emissions will also need to be trapped and stored.
existence. There are basic questions of
Portfolio
65
that few other power companies have done much beyond study the concept. “There’s no market,” said Edward Rubin, a professor of engineering and public policy at Carnegie Mellon University, unless governments impose “a requirement to substantially reduce emissions.” That is precisely what is happening in Saskatchewan, given the Canadian government’s recent restrictions on coal plants both old and new. But whether Obama’s new rules are aggressive enough to spur a change in the US remains unclear. Some experts see the Obama policy as a turning point, a moment that could help drive the business of collecting carbon dioxide. Yet the administration has been wary of pushing too hard, warning that any move to force existing coal plants to siphon off their carbon dioxide emissions “would affect the nationwide cost and
Bruce Harrington, left, operations manager, and Randy Stonestreet at the Southern Company’s new integrated gasification combined cycle (IGCC) power plant near De Kalb, USA.
supply of electricity.” So at a time when many experts say 10 or more projects need to be undertaken to improve the technology and reduce costs, the opposite is happening. Work to modify a coal plant in Texas is expected to start this year, but there are only a few other projects worldwide, all in the planning stage. Carbon dioxide has been buried around the world with few problems. In Norway, a million tons have been stored every year since 1996, injected into sandstone about 914 metres beneath the
Carbon dioxide has been buried around the world with few problems. In Norway, a million tons have been stored every year since 1996, injected into sandstone about 914 metres beneath the North Sea.
injected again. Over time, nearly all of it should remain underground. The oil and gas industry has done this for decades, mostly with naturally occurring carbon dioxide that accumulates underground. But each year in North America, more than 15 million tons of carbon dioxide from industry is used as well. Selling that carbon dioxide to the oil industry helps make a business case for capturing it at places like Boundary Dam. The practice could be expanded at many oil fields around the United States
North Sea. (By some estimates, that site
and beyond, experts say, potentially
alone could store as much carbon dioxide as the world could capture for years.)
with the oil, it will be compressed and
Most of Boundary Dam’s carbon dioxide
storing billions of tons of carbon dioxide
will not simply be buried in storage wells.
and serving as a bridge to the day when
could minimise the risk of earthquakes and
Instead, the emissions from burning one
it becomes necessary, and economical, to
leaks. But even then, storage wells would
fossil fuel – coal – will become a tool to
store the gas elsewhere.
have to be monitored, presumably forever,
extract and consume yet another: oil.
Picking the right geological features
at a cost someone would have to bear.
After being sold and shipped through a
Yet the prognosis for carbon capture is less clear. If the United States moves
If done poorly, storing carbon dioxide
64-kilometre pipeline to an oil field, the
forward, China and other countries may
can cause problems, said David Hawkins,
carbon dioxide will be pumped into old
make bigger strides as well.
the director of climate programmes with
wells, where it will mix with the oil inside,
the Natural Resources Defense Council,
making it flow better. The process is
hard to tell,” said Rubin. “Inevitably, there
an advocacy group. “But that’s also true
known as enhanced oil recovery, and while
will be a balance between technological
with operating an oil refinery.”
some of the carbon dioxide will come up
capability, cost and political realities.” n
January 2015
“How this will play out over time is
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Essentials
67
THE BEST OF LEISURE AND LIFESTYLE
GREEN PEACE
GETTY IMAGES
When big-city buzz, crowds and shopping begin to lose their lustre, Hong Kong’s overlooked parks and green spaces are just the place to unwind, says Brian Johnston.
January 2015
68
Essentials
Travel
T
he last time you went
of butterflies. And if skyscrapers leave you
cool-climate conservatory – whose
shopping in Hong Kong, you
cold, downsize and inspect dwarf bonsai
fogging system is as close as you’ll get to
probably missed the bargain-
instead. Even in the middle of Hong Kong’s
heaven on a humid Hong Kong day – and
priced flamingos. (Actually,
urban density and hubbub, parks and
elegant Flagstaff House, a British colonial
they’re free.) And if you’ve ascended
gardens provide a green oasis in which to
building dating from 1846, which houses a
Victoria Peak by rack railway before, you
refresh yourself.
delightful Museum of Chinese Teaware.
were probably so busy snapping photos
Hong Kong Park is the first of these
The highlight of Hong Kong Park,
of the fabulous harbour views that you
unsung gems, hidden away behind the
however, is a superb aviary, one of the
failed to notice the forest on the other
skyscrapers of Central and seldom sought
world’s largest, housing some 600 birds.
side of the hill. No need to feel bad
out by tourists. At its heart lies a pond
A visit is like stepping from an urban
about that: Hong Kong tends to hide its
full of fat carp, surrounded by flowerbeds.
jungle into a real one as you follow an
natural assets, and many visitors come
At weekends, newlyweds pose here for
elevated walkway suspended among
and go oblivious to its urban greenery.
photographs after getting married at the
the branches of the surrounding trees.
nearby registry. Further on, a viewing
Watching birds swooping against a
exhaust you, there is an alternative.
tower with interlocking spiral staircases
magnificent background of skyscrapers,
If you’ve had enough of listening to
allows fine views over the surroundings
while listening to a mossy stream tumble
honking taxis, take a break and listen to
and a courtyard below, where locals often
through the tangled undergrowth, is
honking geese instead. When you can’t
gather in the early morning to practice tai
almost a surreal experience.
face another crowd, delight in a swarm
chi. Other park assets include an enormous
Yet once the metropolis starts to
A short walk from Hong Kong Park Portfolio
Hong Kong Park is the first of these unsung gems, hidden away behind the skyscrapers of Central and seldom sought out by tourists. At its heart lies a pond full of fat carp, surrounded by flowerbeds.
January 2015
Š Brian JoHnsTon
Sweeping view of Hong Kong Harbour from Victoria Peak.
Flamingos wade in a pond in Kowloon Park.
Š Hong Kong Tourism Board
69
Essentials
70
Travel
Looming above the botanic gardens is Victoria Peak, which the Chinese call Taiping Shan or ‘Mountain of Great Peace’, which just about sums up its atmosphere. Famous for its rack railway and stunning views, it has its share of crowds and tourist hustle. takes you to the Zoological and Botanical Gardens, which opened in 1864. The zoo has a rather uninspiring collection and heavy cages, though a notable collection of rare birds. You’d do best to concentrate on the botanic gardens, which retain a stately Victorian atmosphere. Statues of British monarchs lurk among hydrangeas, camellias and poinsettias, while tree ferns © Brian Johnston
and rosewood trees overhang shady paths. The day kicks off at seven o’clock with elderly residents practising tai chi among the shrubbery, moves on to mothers and Locals gather in Yuen Po Street Bird Market.
kids taking the air, and doesn’t finish until the last chattering gibbon from the adjacent zoo falls silent at dusk. Looming above the botanic gardens is Victoria Peak, which the Chinese call Taiping Shan or ‘Mountain of Great Peace’, which just about sums up its atmosphere. Famous for its rack railway and stunning views, it has its share of crowds and tourist hustle. However, you only need to wander away from the rack-railway terminal to get lost in expanses of parkland, forests and country walks. Victoria Peak is a
© Brian Johnston
great place for picnics, kite flying, solitary A wood pigeon in the aviary in Hong Kong Park.
rambles, or simply staring at the views. One of the best walks takes just an hour and leads you on a circuit of the peak via Harlech and Lugard roads, which are Portfolio
Essentials Travel View over Hong Kong Park, framed by the skyscrapers of Central.
© Brian Johnston
© hong Kong tourism Board
Beautiful flowers in Victoria Park.
71
little more than narrow paths lined with
fields, and a jogging path. In between,
for their singing voices. You’ll see owners
giant palm trees and rhododendron. The
there are some fine lawns and landscaped
swapping tips, feeding birds honey to
only traffic is an occasional car heading
flowerbeds. If you’re here in mid-autumn,
soothe their vocal chords, and offering
towards a secluded millionaire’s villa
don’t miss the evening Lantern Festival,
them live grasshoppers on the ends of
nestled among bamboo thickets. After
when the park comes alive with hundreds
chopsticks. The birds ruffle their feathers
about half an hour (if you’re heading
of coloured lights suspended from the trees.
and burst into beautiful song that rises
clockwise from the rack-railway terminal)
Just before Chinese New Year, the park
above the background hum of air-
the path rises above the trees and
also hosts a huge flower market: orchids
conditioning units and traffic.
suddenly the whole panorama of
in white and purple, roses in every lipstick
On a much grander scale, Kowloon
Hong Kong spreads out below, making
shade, and slender lotus flowers with rich
Park is an oasis of peace in one of Hong
this one of the world’s most spectacular
purple heads.
Kong’s most crowded districts. Walk
urban walks.
Cross the harbour to the Kowloon side
along Nathan Road, with its frantic
and you’ll find two more urban escapes.
traffic, hustling salesmen and unbearable
Another splendid but rather more
A true hidden delight is Yuen Po Street
heat, and you might well miss Kowloon
strenuous walk takes you up steep Mt
bird market, a ten-minute walk from
Park altogether: it’s suspended above
Austin Road to a little white gatehouse,
Prince Edward Road MRT station. You
a row of trendy shops and the MRT
all that remains of the summer residence
can hear the bird market before you come
station. On a hot afternoon, you could do
of former British governors. The original
to it: a discordant chorus of cheeping that
no better than visit its swimming pools,
gardens are open to the public and you can
manages to rise even above the rumbling
linked together by waterfalls. Kowloon
amble though landscaped woods to the
traffic. In all truth this isn’t really a park
residents practice martial arts in the
summit of Victoria Peak. It’s refreshingly
at all, more a wide lane shaded by trees,
sculpture garden, with its bizarre modern
cool up here, and you sometimes find
but it lies behind a wall and has a tranquil
art, while children play on the swings or
yourself in the clouds. The views stretch
feel that feels more like rural China than
get lost in the maze of hedges.
away into the blue and, on weekdays, you
downtown Kowloon.
may have the hillside to yourself.
Old men gather here to discuss and
The park also houses a caged collection of bored-looking birds. Much better is the
Far down below in crowded Causeway
contemplate their songbirds, housed
park’s lake, with its variety of waterfowl.
Bay, Victoria Park is one of Hong Kong’s
in ornate wooden cages hung on tree
Here you’ll be greeted by the extraordinary
largest parks, and another welcome green
branches. Birds are favoured in Chinese
sight of a flock of flamingos wading
space among a jumble of high-rises.
culture as the harbingers of good fortune.
against a backdrop of skyscrapers: a most
Facilities include a swimming pool, tennis
If you wonder why the birds are so
unexpected sight, but just another of the
and squash courts, basketball courts, soccer
nondescript, it’s because they’re valued
pleasures of Hong Kong’s lovely parks. n
January 2015
Essentials
72
Sport
I
t was the bottom of the ninth and the home team was behind, 10-6. In an American ballpark, fans might have started glumly filing out of the
stands to beat the traffic. But here at Sajik Stadium in Bosun, home to the Lotte Giants, drums were thundering, plastic trumpets were blowing and thousands of people were singing, chanting and catcalling themselves hoarse. “I come here to scream the stress out of me,” said Ok Hyun-ju, a 44-year-old math teacher sharing drinks, chicken and roasted squid with her friends on a
K O REAn BaseBall’s UniqUe CUltUre
In South Korea, baseball is as much sport as it is a social event with singing and dancing, reports Choe Sang-hun.
September afternoon. “When it comes to
© 2014 New York Times News service
shouting whatever you like, never minding what other people might think of it, there the national pastime requires a visit to
in “cheer battles.” The crowds chant and
the stands, where the festivities are both
sing in unison, doing synchronised hand
signalled the end of another season
raucous and organised to a degree that
moves and banging out a rhythm with
in a country where baseball remains
American fans might find startling.
noise-making plastic tubes. Meanwhile,
is no place like a ballpark.” The Korean Series in November
the most popular spectator sport. But understanding South Korea’s version of
The infield stands are in a constant
cheerleaders dance on raised platforms
uproar, with the opposing fans engaging
like choreographed K-pop groups, often
Cheerleaders for the Lotte Giants perform during a baseball game at Sajik Stadium in Busan, South Korea.
Portfolio
73
The infield stands are in a constant uproar, with the opposing fans engaging in “cheer battles.” The crowds chant and sing in unison, doing synchronised hand moves and banging out a rhythm with noise-making plastic tubes. Bae Shin-gyu, centre, and other fans, cheer on the Lotte Giants.
with moves that older Koreans might frown upon. “There is much more music, much more dancing, much more singing and much more cheering,” said Daren Hoelscher, an oil and gas engineer from Houston who was watching the Giants play. By comparison, he said, “Baseball in America is mostly quiet.” Professional baseball in South Korea dates from 1982, when President Chun Doo-hwan threw out a ceremonial first pitch in a Seoul ballpark. From that unpopular dictator’s point of view, one benefit of the game was to give the people something to rally and shout about besides his regime. (He provided tax incentives to team owners, along with other forms of support, encouraging
Fans do a choreographed cheer for the Lotte Giants during a baseball game.
at a ballpark selling ice cream. “Except
and to couples. About 40 per cent of
for the ballpark, there was no place
spectators are women, somewhat lower
widespread political protests continued,
where women could shout in public and
than the percentage in the United States
eventually leading to South Korea’s
didn’t have to worry about ‘face’ in our
and roughly comparable to that in Japan,
democratisation. But baseball thrived,
Confucian society,” she said, referring to
which has its own proud baseball tradition
building on a national tendency to
the traditional decorum that had required
– including organised mass cheering.
identify strongly with hometowns – and a
women to look coy in public.
baseball to “entertain the people.”) That did not work out for Chun;
fondness for mass singing and dancing.
In those early years, the crowds were
But South Korean crowds are considerably younger than in either of
almost entirely male and known for
those countries. An Olympic gold medal
sense of liberation she felt when she first
drinking, smoking and brawling. Today,
in 2008 – the last for baseball, which was
went to a game as a high school student in
smoking and hard liquor are banned,
dropped as an Olympic sport afterward –
the late 1980s, and later worked part time
and teams actively market to women
lifted the game’s popularity among young
Ok, the math teacher, remembers the
January 2015
74
Essentials
Sport
“The hardest time being a Giants cheerleader is when the game is going badly and some drunken fans look at us full of anger and try to boo us offstage, as if it’s our fault that the team is losing.”
reason the Giants handed them out in the
2000s, the Giants spent four consecutive
first place.
seasons in last place; angry fans
Japanese fans rarely boo the opposing team, but South Koreans act as if they
responded with boycotts, and one game was played in front of just 69 spectators.
can change the game’s outcome through
The Giants finished in seventh place
sheer volume. During the recent game in
this year, their worst season since 2007.
Busan, when the pitcher for the visiting
Fans lamented a “dark age” for the team
SK Wyverns made a pickoff attempt to
and demanded the ouster of the current
first base, Giants fans pointed to him
management. Giants management issued
three times in unison with a menacing
a statement saying that it “humbly accepts
“Ma!” meaning “Hey you!” (The opposing
their admonishments.”
fans will often respond to this with “Wa!” meaning “So what?”) One long-struggling team, the
“The hardest time being a Giants cheerleader is when the game is going badly and some drunken fans look at us
Hanwha Eagles – sometimes mocked as
full of anger and try to boo us offstage,
the Hanwha Chickens – recently tried
as if it’s our fault that the team is losing,”
to improve its fortunes with cheering
Park Ki-ryang, 23, a cheerleader who
robots. The “fanbots” held up screens that
has her own fan club, said at the game
scrolled messages of support, uploaded by
in September.
fans who weren’t at the game; fans were
Bae Sin-kyu, a 54-year-old fan, knows that anger well.
South Koreans, who are known for their
also encouraged to send selfies, which
particularly fervent patriotism when
appeared on the robots’ screen faces. The
Korean teams compete internationally.
robots were also programmed to do “the
will never come again,” Bae, whose blue
Tickets are cheap, starting at about
wave.” So far, they have failed to lift the
jersey was studded with Giants pins,
Eagles out of last place.
said while waving flags during the game
$7.50. And in a distinction that Americans might find downright revolutionary, fans
Historically, the Giants haven’t had
“When we lose a game, I swear that I
against the Wyverns, which ended in a
are allowed to bring in their own food
an easy road, despite the high spirits at
10-8 loss for the home team. “But I know
and drinks (though stadiums do sell their
Sajik Stadium. The team has not won the
I will be here for the next game,” he said.
own, including Korean standbys like dried
Korean Series since 1992. In the early
“I can’t help it.” n
squid). Some ballparks provide seating at tables with built-in grills, for those who want to do their own cooking. The LoTTe Giants fans in Busan, a port city that is South Korea’s largest after Seoul, are widely considered the country’s fiercest. (While South Korea’s nine teams are strongly associated with their home cities, their names are derived from their owners, conglomerates like Samsung and Lotte, which is best known for its department stores.) Each Giants player has his own cheer song, which the crowd sings as he steps to the plate. A curious Giants tradition is for fans to inflate orange trash bags and strap them to their heads, which results in a bobbing sea of orange as they jump up and down while singing. When the game is over, they use the bags to pick up their trash – the
Park Ki-ryang and other cheerleaders for the Lotte Giants perform during a baseball game. Portfolio
76
Essentials
Environment
the
Battle african Parks for
As many African countries try to alleviate poverty it becomes increasingly tempting to allow oil exploration and mining in national parks, reports Jeffrey Gettleman.
Portfolio
77
T
are now circling several African parks
grinding poverty, including drilling for
appeared in this iconic and spectacularly
like this one, home to critically
oil in pristine natural environments.
beautiful national park, prospecting
endangered wildlife, such as colossal
for oil.
silverback mountain gorillas, among the
activity in this region, environmentalists
last of their kind.
vowed to “draw the line” in Virunga,
technology like deeper drilling has led to
Democratic Republic of Congo’s
a bonanza of new energy discoveries here
a moral obligation to pursue anything
Virunga National Park when
on the continent’s east side. Oil companies
that might lift their countries out of
a British company suddenly
Much like the fight over drilling on
With an unprecedented surge of oil
But development is far more than
Africa’s oldest national park and
struggle over oil exploration in Africa’s
just a buzzword here. The people in
a UNESCO World Heritage Site,
national parks is a classic quandary,
the Democratic Republic of Congo,
protected for its “outstanding universal
pitting economic development against
Tanzania, northern Kenya, Uganda
value” to all humankind. The World
environmental preservation. But out here,
and Mozambique – all places of recent
Wildlife Fund swung into action,
the quest for oil seems to be more volatile,
hydrocarbon finds – are among the
signing up hundreds of thousands of
and the stakes are arguably higher – on
poorest in the world, many without
supporters in a global campaign.
both sides.
electricity or clean water, their
federal lands in the United States, the
© 2014 New York Times News service
African governments say they have
he trouble started in the
While West Africa has been a major hydrocarbon producer for decades, new
In June, it made a triumphant
children often facing relentless illness
announcement: “Major Conservation
and few prospects.
Win: Oil Company Backs Off Oil
Park rangers hike down from their outpost on the Nyiragongo volcano in the Virunga National Park, where environmentalists are opposing oil drilling.
January 2015
Essentials
78
Environment
getty images
The Selous Game Reserve, also a UNESCO World Heritage Site, in neighbouring Tanzania is one of the largest protected areas left in Africa. It is also where large quantities of uranium were discovered.
Virunga National Park is one of the last outposts for endangered gorillas.
millions, rely on.
Exploration in Africa’s Oldest National
they lose the battle here, it will open
Park.” It looked like a happy ending for
the floodgates to drilling in protected
the gorillas and the trees.
spaces across the continent. The park is
the Mediterranean,” said Emmanuel de
considered one of the most biodiverse
Merode, Virunga’s director. “It could reach
slices of the planet. Its savannahs of
all the way to Spain.”
There’s just one problem: It might not be true. In a private letter sent the same day the
“Any toxins from here could flow up to
yellow grass, towering volcanoes bubbling
environmentalists were savouring their
with lava, jungles, swamps and cloud
De MeroDe has made countless
victory, SOCO International reassured
forests constitute an otherworldly place
enemies over the years. He routinely
the Congolese government that it was
for gorillas, elephants, lions and chimps –
confronts rebels, poachers and various
continuing to evaluate seismic data so
a rare mix.
other outlaws who skulk through Virunga,
that “the DRC government can take all
Beyond that, Virunga’s Lake Edward,
which lies on the border of Rwanda and
appropriate measures to pursue, or not,
where the oil is believed to lie, is part of
Uganda, in the eye of several recent wars.
such exploration.” A few days later, the
the headwaters of the Nile. While SOCO
“I’m going to keep doing what I’ve been
company’s chairman, Rui de Sousa, said at
has said it will not proceed without
doing,” he said, “just a little bit more.”
SOCO’s annual general meeting, “We have
UNESCO and Congolese approval, an oil
not pulled out.”
spill here could contaminate water that
Environmentalists have seen how
tens of millions, possibly hundreds of
malleable the boundaries of protected
getty images
Virunga’s champions say that if
It may take a lot more.
Hippos relax on the shore of Lake Edward, which is threatened by oil exploration. Portfolio
Essentials Environment
A woman hauls water from Lake Edward in Virunga National Park.
If there are billions of barrels, as in
Fund agreed to the declaration. “We had a
neighbouring Uganda, they suspect
massive support base, and overnight that
UNESCO World Heritage Site, in
the Congolese government will redraw
support base was wiped out,” said Joanna
neighbouring Tanzania is one of the
Virunga’s boundaries or possibly rename
Natasegara, the film’s producer. “The
largest protected areas left in Africa. It
it as a new park – minus Lake Edward.
declaration said Virunga was safe, SOCO
is also where large quantities of uranium
“This is the battle not only for the
was gone, and everyone could move on to
were discovered. In 2012, the Tanzanian
oldest national park in Africa, it’s also
government persuaded the World Heritage
the battle for maintaining the World
Committee, the international body that
Heritage Convention,” said Guy
now acknowledge that the battle over
designates World Heritage Sites, to modify
Debonnet, who has worked for the
Virunga is hardly over. SOCO has yet
the Selous’ boundaries so that the uranium
UNESCO World Heritage Centre. “If
to relinquish its operating permits or
area would lie just outside the site and
Virunga goes, many others will follow.”
commit to an unconditional withdrawal.
areas can be. The Selous Game Reserve, also a
mining could begin. Several observers
In June, SOCO signed a joint
the next fight.” World Wildlife Fund executives
“They’re leaving the door open,” said Zach
at the meetings said some committee
declaration with the World Wildlife
Abraham, director of the World Wildlife
members had environmental concerns,
Fund, saying it would not drill in
Fund’s global campaigns.
but ultimately did not want to appear as if
Virunga “unless UNESCO and the DRC
they were trying to keep Africans poor – or
government agree that such activities are
fights around the planet, if we don’t take
valuing animals over humans.
not incompatible with its World Heritage
a moment to celebrate achievements, we
status.” SOCO has also said it would not
lose an important opportunity.”
Many predict something similar in store for Virunga. Officially, the Congolese government
harm buffer zones adjacent to World Heritage Sites.
Still, he said, “there are so many losing
“You need to remind the audience these fights are worth fighting,” Abraham said. “Virunga is one of the most incredibly
has stayed mum. Many observers say
De Merode and those who worked
President Joseph Kabila is waiting to
with him on a Virunga documentary
beautiful places you will ever see in your
see how much oil is actually in Virunga.
film were furious that the World Wildlife
entire life.” n
January 2015
79
Essentials
Culture
geTTY images
80
Portfolio
81
S
trolling through the olive grove that abuts his family villa near the town of Calenzano on a gloomy
November morning, Federico Dufour knelt on the ground and picked up a few purplish, pellet-sized lumps. “I am ashamed to call them olives,” he said mournfully. Inviting closer inspection of a tiny perforation, he displayed the withered fruits on his palm. “Look, here’s a hole,” he said, then described the brief but devastating life cycle of an olive fruit fly that ravaged his crop. In its lifetime, each fly can deposit hundreds of eggs in as many olives, wiping out entire olive groves “in no time,” he said. “It’s an infinite drama.” This year, that drama played out in hundreds of olive oil producing farms in Tuscany and other parts of Italy, helping make 2014 Italian olive oil’s – the Bactrocera oleae, to be precise – severe hailstorms and flooding, and a devastating bacteria in parts of Puglia,
Insects, hail, floods and bacteria made 2014 a devastating year for the Italian olive oil industry, reports Elisabetta Povoledo.
worldwide. The commodity price for Italian extra virgin olive oil has doubled since last year, and the outlook is also very bad for Spain, the world’s biggest olive oil producer. “We anticipate a significant increase in olive oil prices,” starting next February or March, said Lou Di Palo, of Di Palo’s Fine Foods in New York City, who noted that prices were so far stable because the olive oil on shelves was still from last year’s release. “I feel for the olive growers in Italy, especially small producers who put so much passion in their oil,” Di Palo said. “This year was like a punch in the stomach. It’s not a monetary question; it’s their life’s work.” The looming scarcity of olive oil will affect the entire chain of production, from olive mills down the line to exporters, and has fuelled concerns about fraud and adulteration that could blight the reputation of a business worth about $2.5 billion for Italy. Then there are the nagging worries
Italy’s largest olive oil producing region,
for farmers and others about how to
cut olive production by about 35 per cent.
plan for what they fear are permanent
The devastation has already translated
changes to the climate that threaten to
into rising prices in Italy for a family
undercut a pillar of Italian identity over
The looming scarcity of olive oil will affect the entire chain of production, from olive mills down the line to exporters, and has fuelled concerns about fraud and adulteration that could blight the reputation of a business worth about $2.5 billion for Italy.
geTTY images
© 2014 New York Times News service
annus horribilis. Aside from the fly
A BAd YeAr for ItAlIAn olIves
staple, and will soon be felt by consumers
Freshly-picked olives are cleaned and processed to produce olive oil in Siena, Italy. January 2015
Essentials
82
REUTERS
Culture
The price of olive oil is set to rise significantly due to Italy’s poor harvest.
The olive fruit fly ravaged farms in Tuscany, leaving nothing but withered olives behind.
the long term.
for two months, he said. “This year,
Gerardo Gondi, another Tuscan olive oil producer, whose family estate, the
But an olive oil festival without olive oil
we’ve reached maybe 20,000 kilos for
left little to celebrate. Gondi joined other
the entire season.”
local producers at a large community hall
Fattoria di Volmiano, has a pedigree that
“It wasn’t meant to be an olive oil year,”
over two November weekends. But all
dates to the 15th century, said that more
he mused. “Everything that could possibly
he could offer at his stand was the last
than 18,000 olive trees had not yielded a
go wrong, did.”
remaining bottle of the 2013 harvest and
single usable olive this year.
His pain was widely shared. Here in
pamphlets showcasing his estate, which
Calenzano, about 19 kilometres north of
over the years has diversified to offer
stone mill also used by local farmers,
Florence, production was down about
agritourism lodgings and walking tours.
fared little better. In 2013, the mill
80 per cent. Some farmers did not even
processed 20,000 kilos of olives a day
bother trying to harvest; it was not worth
what would have been substandard oil,”
the cost.
he said. “It’s what our grandfather would
The estate’s olive press, a traditional
Truth be told, few of the local producers at the festival had any of their own olive oil to sell. Some were peddling secondary products – wines, biological spelt, legumes, honey – that might tide them over to next year and, the hope is, a better crop.
Many local farms are organic and did not use pesticides to stave off the
“It was an ethical choice to not produce
have done.” Truth be told, few of the local
fly. Biological methods were ineffective
producers at the festival had any of their
because the persistent rains made mass
own olive oil to sell. Some were peddling
trapping more difficult and required
secondary products – wines, biological
nearly constant reapplications of various
spelt, legumes, honey – that might tide
sprays, like fruit fly bait and kaolin clay.
them over to next year and, the hope
Many olive oil presses here, as well as
is, a better crop. Others were hawking
elsewhere in Tuscany, did not even open.
Sicilian or Greek olive oil, even as they
While some Tuscan towns opted to
murmured sotto voce that, though the
call off their annual olive celebrations,
oil was good, it just was not the same as
Calenzano’s administrators felt it was
their homegrown product.
important for its festival – now in its 19th year – to go on. “It’s a tradition, and we
Olive Oil labels must specify the
didn’t want to lose our link with local
origin of the olives, indicating whether
farms,” said Damiano Felli, the council
they are from Italy, the European Union
member responsible for agriculture and
or abroad. But the drop in production has
economic development.
been spurring suspicion of substitutions Portfolio
Essentials Culture and scams.
“This is global warming, people
Harmon Jenkins, whose book on olive
continue to say that it will take many
oil, Virgin Territory will be published in
economic circumstances are negative,
years for the weather to change, but the
February. “Maybe that’s what we’re facing
so the temptation is greater,” said Fedele
rain, the flooding and everything else
in the future,” she added. “More warm
Verzola, commander of the Florence
suggests otherwise,” said Dufour, who is
winters and wet summers, which is the
branch of the military police unit that
a marquis and whose full title is Dufour
opposite of Mediterranean and not what
investigates major food and health
Berte Landucci. From Liguria to Sicily it
olive trees are used to withstand.”
fraud. Speaking on a recent weekend in
was a bad year, compared by many to the
Calenzano at a seminar on olive oil fraud,
harsh winter of 1985, which froze many
their fingers that the temperatures
he called on local farmers to be “sentinels
thousands of trees and took years to
will drop below freezing this winter,
of this patrimony – not spies” and to
recover from.
killing the flies, but until now warm
“Concerns about fraud are higher when
report any suspicions about possible adulterations. The real fear in these parts is that
This year, again, the weather was to
83
Farmers throughout Italy are crossing
temperatures have prevailed. If that
blame, with a hot spring, followed by
continues, more aggressive steps must be
a tempestuous rainy summer – which
taken to combat the blight. “It shouldn’t even cost much,” said
encouraged the proliferation of the fruit
unpredictable, and that the debacle
fly – and a hot, humid autumn. “I don’t
Niccolò Taiti, the head of Calenzano’s
of 2014 is but a taste of years of bad
think this is going away, because those
tourist bureau. “But it has to be done,
harvests to come.
miserable bugs are out there,” said Nancy
otherwise trouble is assured.” n
REUTERS
the weather has become permanently
Authorities are worried that Italy’s bad harvest may lead to olive oil mislabeling and other fraud. January 2015
Essentials
84
Architecture
A Colonial LegAcy
getty images
Yangon, formerly known as Rangoon, was the capital of Burma during the colonial era. As a result it has some grand, but crumbling, architecture, reports Jane Perlez.
A view across downtown Yangon.
Portfolio
85
The once grand colonial
conditioning in sweltering heat – and a few
building of marble floors and iron fretwork
families who live for free in dank rooms.
“The future is all about cities,” said Thant
Named the Balthazar Building after
Myint-U, who is trying to convince the
trading empire, is now a wreck. Moss
the well-to-do Armenian merchants who
government that the old has value and
encrusts the walls, rainwater drips down
financed its construction at the turn of the
must be preserved. “Having a beautiful
rusted steel beams, flimsy lights glow yellow
20th century, the edifice is one of hundreds
downtown will bring investment and give
in dark interiors. A century-old birdcage
that made this city, formerly Rangoon, a
us an advantage over cities like Chennai and
elevator lies idle, stuck on the first floor. It
place of British ostentation in the tropics.
Kuala Lumpur.”
hasn’t moved in more than 60 years.
Now the race is on to salvage banks
in Yangon, an elegant outpost of Britain’s
© 2014 New York Times News service
Heritage Trust.
During the colonial period, Rangoon
flanked by Corinthian pillars, courthouses
served as the capital of Burma. (The place
merchants who sold teak, oil and rice
adorned with limestone lions, and shipping
names used by the British were retained
around the world, but lowly lawyers and
headquarters decorated with dark wood and
until 1989 when the ruling junta changed
petty traders who pay minimal rent – $20
brass fixtures before they collapse of decay.
the city to Yangon and the country to
The occupants are no longer the
a month for an office cubicle with no air-
The conservation of the buildings, laid
Myanmar.) The city had its own particular ethos. Students who had studied at Oxford
“It was built by a people who refused compromise with the East, and has wide, straight, shadeless streets, with much solid bank-architecture of vaguely Grecian inspiration.”
and Cambridge made it the crucible of Burmese nationalism, reading Karl Marx and listening to jazz. The port was one of the busiest in the region, the gateway for hundreds of thousands of Indians, who in the 1920s and ’30s were the largest ethnic group in the city. Gandhi visited. The British actor John Gielgud came in 1945 to perform Hamlet at the Empire Theatre to audiences reclaiming the city after a brutal Japanese occupation during World War II. In his 1934 novel, Burmese Days, George Orwell had his leading female character,
out on a grid of broad avenues designed
the young husband-hunting Elizabeth
by British engineers, would make the city
Lackersteen arrive by ship at the Rangoon
a star attraction of Southeast Asia, says
docks, although Orwell refrained from
Thant Myint-U, the head of the Yangon
describing the city, reserving his acidity about
Buddhist monks walk in front of the Secretariat, closed for decades, one of many such buildings.
January 2015
86
Essentials
Architecture
A man removes a rusted water pipe from the exterior of the Sofaer building, one of many decrepit structures from the British colonial era.
British rule for smaller towns in Burma.
occupied, if not maintained. Among the
in Myanmar: Many decisions are made on
Not everyone admired the colonial
abandoned structures, the Secretariat, a
an ad hoc basis, and developers are looking
cityscape as much as those who want to
vast Victorian-era complex arranged around
for cheap insider deals as the economy goes
preserve it today.
lush gardens that had served as the heart of
through a rough transition. There is no legal
the government, fell on hard times. The red
framework for protection of the buildings,
compromise with the East, and has wide,
domed buildings now need an estimated
and no discussion of how to protect the
straight, shadeless streets, with much
$100 million in repairs.
people who have been living in hallways,
“It was built by a people who refused
solid bank-architecture of vaguely Grecian inspiration,” Norman Lewis, the British
In november, Thant Myint-U showed
travel writer, said in his 1952 account of
President Barack Obama, who visited
Burma, Golden Earth. “There is much
Myanmar for an Asian summit, around the
facade and presence, little pretence at
Secretariat. “We discussed the need for an
comfort and no surrender to the climate.”
overall vision and plan for the city,” he said
The Burmese economy was nationalised soon after World War II, and under the
of the president’s tour. The Trust has won some victories. The
military government that took power in
group objected to plans for a major new
1962 the buildings of the empire were
building of more than 20 storeys in the
allowed to rot. Economic sanctions by the
historic downtown area. The government
West crippled the flow of supplies – oil,
ruled in favour of the Trust, and now
glass, fixtures – needed for maintenance.
there is an informal agreement that new
In 2005, the government moved to a
structures downtown will not rise higher
new capital, Naypyidaw, leaving empty many buildings that had at least been
than six storeys.
There is no legal framework for protection of the buildings, and no discussion of how to protect the people who have been living in hallways, towers and hidden back rooms.
But government works in strange ways Portfolio
87
towers and hidden back rooms. The Trust hopes to change that with a master plan that would sort out legal
The dome of the old Accountant General’s offices.
ownership, designate renovation projects and deal with traffic and sanitation by the end of 2015, said Thant Myint-U, the grandson of U Thant, former UN secretarygeneral, and a historian who has written books on Myanmar. At the heart of the plan will be the idea that downtown Yangon should retain its vibrancy rather than become another sanitised zone that appeals to well-to-do tourists impressed by expensive hotels and cafés, Thant Myint-U said. To preserve a sense of authenticity, he said, there will be efforts to keep residents in some of the buildings, perhaps with subsidised rents, and to limit the number of big, impersonal international hotels that attract foreign visitors but are off-limits to most locals. The distinctive charm of the teetering colonial-era buildings lies in the street life around them: the bookstalls along Pansodan Street with paperbacks laid out on the sidewalk and vendors overseeing their wares from little plastic stools; the makeshift food booths selling small snakes in screw-top jars, watermelons the size of several footballs, bright orange papayas and emerald green limes. In the Balthazar Building, the decrepit lobby serves as the kitchen for Daw Than Hla, a 63-year-old widow. In the early evening, as the office workers head home, she lights a brazier in an alcove beside the
A construction site where preservationists forced plans for a 20-storey building to be scaled back in Yangon.
elevator and tosses sliced onions in oil, the
needs renovation, but it is very convenient
house where the Chilean poet Pablo Neruda
aromas adding a decidedly domestic touch
to the courts,” he said.
lived in the late 1920s.
to the crumbling marble and iron décor as
In the parts of the city outside the
Neruda served briefly as his country’s
historic zone, the skyline has changed little,
consul in Rangoon, an unpaid posting that
though life has become more hectic after
left him poor but led to a passionate love
pointing to small rooms where her daughter,
decades of somnolence under the military
affair with a Burmese muse he called Josie
son and grandchild sleep. “My husband
dictatorship. Migrants from the countryside
Bliss. He wrote a poem during his stay,
worked in the fisheries department and
squeeze into crowded apartments; hundreds
Rangoon 1927, that includes these lines:
when he died they allowed me to stay.”
of thousands more cars, a product of the
Supreme light that opened over my hair
she prepares dinner. “I’ve lived here for 40 years,” she said,
growing economy, create some of the worst
a world at its zenith, it entered my eyes
Aung Ning Tun, a lawyer, said he would be
gridlock in Southeast Asia. Some historic
and ran through my veins
reluctant to leave, even if offered modern
buildings have been demolished, including
into every corner of my body,
office space elsewhere.
the grandiose 1895 government house
until granting me the sovereignty
resplendent with turrets and gables, and the
of an excessive, exiled love. n
In one of the cubicles on the third floor,
“It’s very hot in the building, and it badly January 2015
Essentials
Other Business
Potato Fries Seek Cultural Heritage Belgium is seeking to get its potato
“fritkot”, generally a shack or trailer.
fries recognised as global cultural
There are some 5,000 of these in
heritage, which would put them
Belgium, making them 10 times
on a par with Peking opera and
more common, per capita, than
the Argentinian tango. To become
McDonald's restaurants in the
recognised by the United Nations’
United States. UNESCO has a list of 314 items of
cultural arm UNESCO, the chips need to be endorsed by a minister
intangible cultural heritage worthy
of culture, and Belgium has three
of preservation, ranging from
of them.
Turkish coffee to the polyphonic Central African Republic.
sold in a paper cone, from a
NY City Bans Bunny Sales
REUTERs
singing of the Aka pygmies of the
Belgian fries are traditionally
GETTyIMAGEs
What do bunny rabbits have in common with hyenas, wolverines and polar bears? The adorable little creatures are about to join a menagerie of wildlife prohibited for sale by New York City pet shops.
REUTERs
88
The New York City Council voted to glut of unwanted rabbits at city shelters
Robot Flies As Airline Passenger
by people who had second thoughts about
A humanoid robot with a head, hands and
make her perform tasks too dangerous for
caring for the cuddly creatures.
feet and wearing stylish red sneakers
humans, such as cleanup after the nuclear disaster at Fukushima, Japan.
outlaw the bunny trade to help curb a
The list of animals specially banned
boarded a flight for Germany at Los Angeles
for sale by New York pet stores includes
International Airport in December, becoming
skunks, cougars, wolves, pandas, bats and
what was billed as the first robot travelling
scene at the Tom Bradley International
gorillas, among dozens of others. But city
as a paid passenger on an airline.
Terminal as she was pushed in a
officials are currently weighing lifting the
Built by the salt Lake City engineering and
The robot, named Athena, created a
wheelchair up to the Lufthansa counter to
ban on ferrets, which the Department of
robotics company sarcos, Athena was
pick up her ticket to Frankfurt. Television
Health and Mental Hygiene pronounced
purchased by Germany’s Max Planck
crews swarmed, camera flashes went off
prone to “vicious, unprovoked attacks”
society, which along with researchers at the
and people aimed their cellphone cameras
when it outlawed the creatures in 1999.
University of southern California are trying to
at her. Portfolio