Elliot Wilson in Reykjavik
Mike, a commodities trader from Chicago, leans over the table in Reykjavik’s Prikid bar and almost whispers: ‘What’s the deal here? Where are the breadlines?’ Our group looks befuddled. An Icelandic playwright mock-whispers back: ‘What breadlines? Did you expect Reykjavik to be full of bakeries?’ No, retorts Mike, but didn’t Iceland declare bankruptcy a year ago? So why isn’t everyone sleeping on the streets?
It’s not an unreasonable question. Iceland’s 300,000 citizens have just struggled through their worst annus horribilis since Ingólfur Arnarson built his homestead in Reykjavik in ad 874. Inflation is running just shy of 10 per cent, while the Icelandic króna has lost more than half its value in the past year. The three major banks — Landsbanki, Glitnir and Kaupthing — collapsed after years of mismanagement and over-expansion, forcing the 1,080-year-old parliament, the Althing, to beg the IMF for a bailout. British and Dutch investors lost more than £3 billion when Landsbanki was shuttered: the Althing is still locked in furious discussions about how — and whether — to repay its debts.
Such financial incompetence has infuriated this normally stoic nation. Yet the truth is that everyone is to blame, from brainless bankers to cack-handed regulators to citizens living beyond their means. Hildur, a local journalist, took out a 4 million króna (£20,000) loan with Landsbanki in 2007 to send her teenaged son to a summer basketball camp in Boston. Landsbanki convinced her to peg the loan to the Swiss franc: in just 12 months, Hildur’s loan has risen to more than £40,000. ‘I’ll still be paying this back in 20 years’ time,’ she wails.
Even the government is furious. In January 2009, a cronyist centre-right coalition was turfed out and replaced with a cronyist left-wing one. Ministers raced to slash spending, often in the face of anger from opposition MPs culpable for the crisis. Indridi Thorlaksson, chief adviser to the finance minister, is scathing about predecessors who blame anyone but themselves. ‘I have bitter feelings toward the bankers and the others that led us into this,’ he says.
Yet there’s so much to like here. Tourists love the weak króna: English, American and Irish accents dominate the streets of Reykjavik on Friday and Saturday nights. And when the bars shut there’s always something to do. One night a group of us, including the cream of Iceland’s theatre community, head out in search of the Northern Lights. Alas the aurora borealis fails to show, but we return to the city reinvigorated. Reykjavik may be floating on a iceberg of debt, but this unspoiled dead-of-winter wilderness is a marvellous place to lie in the snow and sip brandy.
Johnny Reed in Shanghai
When Shanghainese friends meet, the traditional greeting used to be ‘Have you eaten?’ This was not an invitation to lunch but an enquiry into your general wellbeing. The next meal was often uncertain, and that uncertainty became reflected in everyday language. But it’s all changed now. Food is still a bastion of Chinese culture but the daily rice bowl is no big deal in affluent Shanghai: you can tell by the waistlines. New greetings now address more pressing concerns like ‘How are your shares doing?’ — and the big favourite is ‘Where have you been travelling?’
Travel is big in China, at all levels of society. Shopping is still closest to the heart of most but the ‘I’ve-been-there’ factor is rising to prominence. Hordes flock to Shanghai attractions. They love the Bund, People’s Square and the leafy streets of the old French Concession — all things to be ticked off before getting back to shopping. And there’s about to be a big addition to the list: Expo, next year’s world fair.
Expo is everywhere in Shanghai. It’s impossible to ignore the fact that we’re now entering the final furlong of preparations. 2009 will be remembered most for the nightmare of Expo construction that brought large sections of the city to a dusty standstill. Construction is part of daily Chinese life but there are limits. It will all be worth it if Expo comes up to scratch, however: 70 million visitors are expected. Over six months, that means nearly 400,000 each day. Even with all the new metros, that’s a big number to handle.
So some may welcome the alternative, state-of-the-art 3D virtual tour of the great fair. Many thought this was financial suicide when it was unveiled: China is a very webby nation now and it seemed likely that people would go for the free web experience rather than cramming themselves into a carriage on Line 7. The virtual trailer points out that it would take 10 days to ‘physically experience’ the whole of Expo. That makes Disneyworld a doddle by comparison; the virtual option begins to look more attractive. And if you can’t face the real Expo, the virtual one will be around for many years — so unborn generations will be able to see what they missed.
Katrina Manson in Dar es Salaam
Two floating ramps that pass for ferries chug back and forth across a short stretch of water, smaller dhows silhouetted against a sky backed by high-rises reflecting the fading sun. On one, a tradesman clutches a bag of tomatoes, heading south to the villages along the coast. On the other, a tradesman clutches a bag of tomatoes, heading north to the throng of the town. Curiously, tomato buyers and sellers are available on both sides, but make pedantic efforts to pass each other by, doubling up on time and travel. Fans of that hackneyed old duo, supply and demand, will quickly spot that this is a land with an uneasy grasp of market economics.
It might be a haven of peace — the translation of Dar es Salaam, Tanzania’s commercial capital — but the duplication and needless extra expense is thanks to the strange social reality that no one wants to buy from their neighbour. ‘There’s no trust in this country,’ a senior diplomat tells me over lunch. ‘And trust is how business gets done.’
At independence in 1961, President Julius Nyerere plumped for the contorted socialist notion of ‘Ujamaa’ (that’s ‘togetherness’ in Swahili). He nationalised property — with peculiar results, among them that people took to throwing their televisions into the ocean for fear of bourgeois trademarks, and the country ran short of loo paper. He forced scattered villagers into collective towns, which proved a disaster.
But since liberalisation, Tanzania seems to have plumped for hair of the dog in its efforts to mop up its socialist hangover. The private sector operator of the container port, for example, is performing so badly that the port authority is stepping in instead, turning a car park into a makeshift container terminal. The country is slipping down the scale of ‘good place’ indices, both for corruption and the difficulty of doing business. Businessmen, miners and diplomats tell me foreign investment is considered a synonym for stealing, and foreigners are seen as parasites; even central bank officials tell me frankly that theirs is a xenophobic nation.
It’s true that foreigners have done little to ingratiate themselves here — other than fund a third of the nation’s budget. Currency traders moan that they are waiting for this week’s fresh supply of NGO dollars to pump up the shilling. And the donors — cosy in their modern idyll in the north of the city, home to bars named George and Dragon and O’Willies Irish Whiskey Tavern, and the waiting list for the yacht club — make such dependence all too easy.
Ellis in Deli
Sleepy Dili, capital of East Timor, doesn’t have much going for it. Its tallest building is just three storeys. The most obvious economic activity is the purveying of SIM cards and pirate CDs of ‘jiggy-jig’. The harbour is full of ships, but only because some dopey official mis-ordered an import of rice. When a dozen boats arrived from Bangkok laden with the stuff, there weren’t enough warehouses. So it stayed on the ships. Expensively. All year.
But East Timor, one of the ten poorest places in the world, does have one thing going for it; a parliament so dysfunctional that it can’t agree how best to invest the growing stash flowing in from oil and gas fields off its south coast. And because few East Timorese politicians can bear the sight of each other, let alone decide what to do with nature’s bounty, the $5 billion in royalties East Timor has saved up since the Timor Sea fields came onstream in 2004 is automatically shunted into boring old US Treasuries throwing off a guaranteed 1.35 per cent.
That may not seem like much, but after the global catastrophes of the last 18 months, it makes the clerks who file the paperwork of the East Timor Petroleum Fund the smartest guys in the room. At least they haven’t lost money, which is more than the self-regarding smarties of the big-name sovereign funds in Singapore, Norway and the Gulf can boast.
‘Aren’t we clever?’ says fund adviser Kevin Bailey, a former Australian soldier who is also East Timor’s honorary consul in Melbourne. He describes the fund as the ‘Steven Bradbury’ of sovereign wealth investors, citing the unlikely gold medal won by an Australian skater at the 2002 Winter Olympics after all his opponents fell over in a manic sprint to the finish, leaving Bradbury the last man standing.
Dili’s unlikely master of the universe is a 39-year-old Timorese called Venancio Alves Maria. A graduate of an Indonesian university when Jakarta brutally ruled this half-island, Alves Maria’s job is a little like logging on to an online bank account. He makes sure the millions in royalties thrown off by US petro-giant ConocoPhillips’ Bayu Undan gasfields roll into the fund on the appointed date every month, then makes sure an automatic purchase of bonds also happens. And that’s about it, save for quarterly reporting to parliament. Every quarter he uses the same template. The most recent posting, for the quarter ended 30 September 2009, shows gross cash inflows of $332 million for the period, with the fund totalling $5.3 billion and throwing off a return of $68 million.
And there’s another area where the East Timorese could teach Wall Street a thing or two: transparency. Anyone can see how the fund is doing simply by visiting its website or coming by Alves Maria’s ramshackle office behind the central bank building, after shooing away the chickens and goats by the door. Warren Buffett, eat your heart out.