Aurelia Butler

The writer is chief executive of RockCreek and a former treasurer and chief investment officer at the World BankIn September 1961, the UN was in danger. Secretary-general Dag Hammarskjold had died in a tragic plane crash, and Nikita Khrushchev, the Soviet leader, was insisting the organisation acquire a new form of leadership that would doom it to lasting deadlock and irrelevance.US president John F Kennedy rose in the General Assembly chamber and told delegates: “The problem is the life of this organisation. It will either grow to meet the challenges of our age, or it will be gone with the wind . . . Were we to let it die, . . . we would condemn our future.” Today, the World Bank is coasting towards a similar fate, absent from the stage while multiple threats accumulate — from climate change, through the war in Ukraine, to crippling sovereign debt crises in low-income countries. And now the Bank’s president, David Malpass, a Donald Trump appointee, has abruptly announced his intention to resign.Whoever succeeds Malpass will do much to decide whether this fabled institution ultimately perishes or survives. Here are five priorities for them to insist on.First, climate change. We need to spend trillions of dollars to combat global warming, yet the World Bank Group’s entire disbursements were no more than $67bn for the fiscal year 2022, of which only a fraction was net disbursements. The Bank must double down on climate investment by creating a new climate-focused bank-within-a-bank which would bring to bear the organisation’s full financial clout and resources. Combating climate change also requires a bank culture focused on rapid execution and implementation, using private-sector expertise to leverage multilateral funding with private capital and institutional assets. Second, the World Bank’s finances need immediate reform to meet the future needs of low and middle income countries. While the scale and financial model of the Bank was appropriate at its inception, today the size of its lending and its inability to use modern financial tools and easily unlock private capital makes it less relevant. It is not a good sign that Ukraine’s president, Volodymyr Zelenskyy, has approached BlackRock to finance his nation’s reconstruction. It was the World Bank that underwrote the reconstruction of Europe and Japan after the second world war. Third, the new president must enhance and unleash the Bank’s unmatched resources of intelligence, research and planning against climate change. Much like the successful Consultative Group on International Agriculture Research to combat global hunger, the Bank must emphasise how quickly the climate clock is ticking, place itself at the centre of the struggle and acquire, and mobilise, world-class expertise in climate, open AI and technology.Fourth, since the second world war, some of the most brilliant solutions to the world’s problems have come from young entrepreneurs and innovators in the global south. In 1961, a World Bank loan to Japan made possible the bullet train network that became an example to the rest of the globe. It is time for the Bank to be at the cutting edge of such local private-sector innovations once more. Finally, the World Bank must recognise that fighting injustice and inequality is just as important a part of its historic mission as tackling hunger and disease. The institution was founded in 1944 on the premise that the best route to a peaceful and prosperous postwar world was a system of democracies based on Franklin Roosevelt’s “Four Freedoms” — freedom of speech and religion, freedom from want and fear. Kennedy’s words to the UN in 1961 resonate again in our age of an endangered climate and declining democracies: “Never have the nations of the world had so much to lose, or so much to gain.”  More

Welcome to Trade Secrets, this week from Washington, standing in for Alan Beattie while he takes a short break. I’ll take the opportunity to focus on something close to home: the ever growing problems of Joe Biden’s great green spending splurge.US green subsidy row switches to EV chargersJust when it seemed President Joe Biden couldn’t annoy Brussels any more than he already had with his blockbuster set of green subsidies . . . out came the US Department of Transportation with its mundane-sounding new rules on electric vehicle chargers. Chargers should have common standards so that any car can use them, the administration said, but they should also be made in the US with American parts if they want to access government cash. Part of the shot across the bows was aimed at Tesla, whose charging network snakes across the US but is currently open only to Tesla owners. But the Made in America twist, which has become a standard issue condition of any new subsidies, prompted further howling in Brussels from both the business lobby and officials.Does Biden care? It looks increasingly like he does not. As Alan explained in January, Biden’s position takes in several, sometimes conflicting objectives, including — broadly — tackling climate change by supercharging the US clean tech rollout, securing American supply chains, creating US unionised jobs and rebuilding global alliances damaged by four years of Donald Trump.A lot has been written about the path Biden’s team has to pick between boosting American jobs and manufacturing, and appeasing US allies and partners — many of whom Washington wants help from on things like, say, blocking exports of sensitive tech to China. On the one hand, about $90bn of capital has been committed to new projects in the US since the passage of the IRA last year, according to figures compiled by Climate Power, a Democratic strategy group. On the other, foreign governments are furious with what they see as discriminatory trade practices. But actually, as various parts of the administration work their way through the business of putting the Congressional legislation into practice, it seems it’s not really a balancing act at all. In recent weeks, the mood in Washington has hardened against the pleas from US trading allies.At the start of the year, there was a great sense of hope among diplomats that, although the law discriminated against their countries’ companies, the worst effects could be mitigated as the specific rules and regulations were written by the US Treasury. Biden himself in late December said “tweaks” could be made. But those hopes are fading. Among companies, too, earlier ambitions for liberal interpretation of the legislative text from the Treasury — that, say, a “free trade agreement” could be made to include loose, existing deals that were not congressionally ratified trade agreements — have faded. Lots of multinational companies, particularly those with an eye on the battery supply chain, such as car companies and battery manufacturers, are worried about rules that reward companies using minerals sourced or processed in countries with a free trade agreement with the US.Countries with large mineral deposits, such as Argentina, which has lithium, or Indonesia, which has nickel, risk being left out in the cold. European countries that process the minerals also stand to lose out.Treasury secretary Janet Yellen in late January said the US did not currently have any sort of agreement with the EU or Japan (thus ruling out counting the Trump-era mini-deal) that could pass the test. But perhaps, she said, a new deal could be struck around trade in critical minerals. This dashed the hopes of anyone who thought the Treasury’s guidance, released in late December, indicated that the definition of “free trade agreement” would be subject to a liberal interpretation. In that same guidance the Treasury did say electric vehicles that were leased would not have to meet the stringent “made in the US” and battery supply chain requirements to get the tax credit.Officials in Brussels have cautiously welcomed the administration’s exclusion of leased cars from having to meet the conditions for securing the full tax credit. But Treasury officials have been quick to point out that this is not a concession. This is simply a straight-down-the-line application of existing US tax laws.On the other side of this are the US domestic concerns — Biden came into office pledging to be a union man. The trade unions, including United Auto Workers, International Association of Machinists and Aerospace Workers, United Steelworkers, backed by AFL-CIO, have all written to the White House demanding that there are no delays or technical changes made to the law as written. No “tweaks” to help allies, in other words.And so far, that’s the way it seems to be going.As well as this newsletter, Alan Beattie writes a Trade Secrets column for FT.com every Wednesday. Click here to read the latest, and visit ft.com/trade-secrets to see all his columns and previous newsletters too.Trade linksDeveloping nations have warned against reshaping the World Bank in the aftermath of David Malpass’s departure as its head in a way that would imperil the institution’s triple A credit rating.Australia has rattled some of its trading partners with energy price caps and planned export controls designed to cushion its population from rising prices.British prime minister Rishi Sunak hopes to seal a deal with Brussels on post-Brexit Northern Ireland trade rules early this week, rejecting calls from former UK premier Boris Johnson to take a more confrontational approach.Clothing companies behind some of the world’s biggest brand names have begun to shift away from mass textile production in China as they seek to reduce supply chain risks.Trade Secrets is edited by Jonathan Moules More

Investing.com — U.S. President makes use of the Presidents’ Day holiday to make a surprise visit to Ukraine, four days before the anniversary of Russia’s invasion. U.S. stock markets are closed, leaving most of the rest of the world without a clear lead. Facebook parent Meta is trialing a subscription service (and making sure that you know how much Apple and Alphabet will charge you for using it). Hedge fund Galois Capital has become the latest casualty of the FTX collapse, and oil prices drift higher as UN inspectors deal a blow to hopes of Iranian oil returning to world markets. Here’s what you need to know in financial markets on Monday, 20th February.1. Biden beats Putin to KyivU.S. President Joe Biden made a surprise visit to the Ukrainian capital of Kyiv, at the start of a week that will mark the anniversary of Russia’s invasion.Biden said his visit was to “reaffirm our unwavering and unflagging commitment to Ukraine’s democracy, sovereignty, and territorial integrity.”Both sides in the conflict are currently engaged in a scramble to replace depleted stockpiles of ammunition. U.S. Secretary of State Anthony Blinken said at the weekend that China is considering supplying Russia with military aid and warned that any move to do so “would cause a serious problem for us and in our relationship.”Russian President Vladimir Putin is due to make a keynote speech that is expected to focus on the war on Tuesday.2. Meta to offer subscription services for Facebook, InstagramMeta Platforms (NASDAQ:META), the parent company of Facebook and Instagram, said at the weekend it’s launching a paid subscription service that will offer benefits such as account verification, a step that it said would protect up-and-coming content generators.The move – which will debut in Australia and New Zealand – is a reaction against increasing disillusionment with spam and other bad-faith material on Facebook in particular. It will cost $11.99 a month if subscriptions come through a web browser, but in a pointed jab at Apple (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOGL), it will cost another $3 a month if ordered through Apple’s App Store or Google Play, reflecting the steep commissions that the two platform giants charge.   3. Stocks adrift during U.S. holidayAsian stocks were higher but European stocks largely drifted through a day depleted by public holidays. U.S. equities markets are closed for the Presidents’ Day holiday, while Europe is thinned out by Carnival celebrations.By 06:30 ET (11:30 GMT), the benchmark Euro Stoxx 50 index was up less than 0.1%, while the euro was down by a similar amount at $1.0687.Among the few stocks moving in Europe was Reckitt Benckiser (LON:RKT), which fell over 2% after voluntarily recalling two batches of infant formula in the U.S. “out of an abundance of caution.”4. Hedge fund Galois becomes latest FTX casualtyGalois Capital, a hedge fund run by former Kraken executive Kevin Zhou, has become the latest casualty of the FTX debacle.The fund, which was managing $200 million at the time of FTX’s collapse, still has half of those assets trapped on the exchange’s platform. According to various reports, Zhou has now decided to close the fund, returning 90% of its unencumbered assets to investors. The remaining 10% will be held back “temporarily.”The Financial Times reported that Galois has sold its claims on FTX (currently in Chapter 11 bankruptcy in the U.S.) for 16c on the dollar.5. Oil edges higher on Iran setbackCrude oil prices edged higher after reports indicated further delays to the lifting of U.S. sanctions on Iran. UN monitors detected the presence of uranium enriched to just below the level needed to make a nuclear bomb (and well in excess of the level needed to make fuel for reactors, which Iran says is the only aim of its nuclear program). The disclosures will complicate any attempt to lift the U.S. sanctions on Iranian oil exports. Elsewhere, Saudi Arabia’s Energy Minister Prince Abdulaziz insisted that the OPEC+ group of oil exporters is still flexible in its output policy, despite announcing last week that existing output quotas would be frozen for the rest of the year.By 06:50 ET, U.S. crude futures were up 0.6% at $77.03 a barrel, while Brent was up 0.6% at $83.50 a barrel. More