Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Lee.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. The
Speaker 1: weather is beautiful here in Davos at the meetings of
Speaker 1: the World Economic four and the theme globalization four point
Speaker 1: oh maybe pushed aside by the news slow yes, brexit,
Speaker 1: yes to shutdown, but also global slowdown. All of this
Speaker 1: wrapping around conversations on China, and again, as we said earlier,
Speaker 1: it could be all one or two hour conversation with
Speaker 1: Laura Chash. She's Hong Kong Exchange share working in finance.
Speaker 1: Years of Pillsbury, I'm and other law firms with far more.
Speaker 1: She is Laura Chure of the University of Wisconsin at Madison.
Speaker 1: What was it like your first day? I was coming
Speaker 1: from Hong Kong and Little Cot It was shot and
Speaker 1: this was in the late sixties. I'm betraying my age.
Speaker 1: It was the days of the Vietnam protest, so I
Speaker 1: was thrown right into that and interesting, interesting, exciting, and uh,
Speaker 1: this is a really introduction to the to the United
Speaker 1: It was a politics at the time, and Mr Kissinger
Speaker 1: and Mr Nixon to that and all. If you could
Speaker 1: have a cocktail right now at the Mandarin Bar in
Speaker 1: Hong Kong was selected members of the Trump administration who
Speaker 1: feel China is a behavioral, a cultural and a social threat.
Speaker 1: What would you say to them at the m bar? Well,
Speaker 1: I think, first and foremost, Uh, we're talking about different culture.
Speaker 1: We're talking about include sution. We have to be accepting
Speaker 1: of other people's valued and culture. But there are some
Speaker 1: common value even though we may have different culture. I
Speaker 1: think the core valued of you know, of integrity, um, honesty.
Speaker 1: These are values that the rule of law. I mean,
Speaker 1: these are values that Hong Kong hosts there and that's
Speaker 1: what made Hong Kong successful. In the last few decades,
Speaker 1: China has repeatedly promised to open its financial system to investors,
Speaker 1: foreign investors and foreign companies. What more, how's it going?
Speaker 1: First of all? And what more do they need to do? Oh,
Speaker 1: there's actually quite a lot that that the central government
Speaker 1: can do in opening up the financial market. When China
Speaker 1: joined the w TEL in two thousand and two, UH
Speaker 1: Financial Services was one of the least open of all
Speaker 1: the sectors, and over the years, gradually they have opened up.
Speaker 1: They have allowed foreign ownership in banks and security houses
Speaker 1: and so on. But because the currency is not completely convertible,
Speaker 1: so foreign investors now can access the Chinese markets through
Speaker 1: Hong Kong, so to stock connect scheme, what else can
Speaker 1: the central government do? I think they have already said
Speaker 1: a few months ago that they are eliminating the restriction
Speaker 1: on ownership. But what is more important is really not
Speaker 1: only just the ownership, but allowing foreign investor to participate
Speaker 1: in that market and vice versa. I mean that that
Speaker 1: has to be a two way street. I mean, we've
Speaker 1: seen some crazy moves on the stock markets, right, I
Speaker 1: mean one day that I think companies lost some five
Speaker 1: billion dollars, so you know, stock through downs. What can
Speaker 1: the exchange do to prevent that kind of scenario? You're
Speaker 1: talking about the exchanges in China. Well, I think the
Speaker 1: exchanges in China have a very different um problem than
Speaker 1: the rest of US because a large percentage of the
Speaker 1: participant in the domestic market are retail investors. So there's
Speaker 1: a lot of sentiment when people tray on rumors, and
Speaker 1: so that that's what brought about the big swings, and
Speaker 1: the institutional investors in China are not yet well developed.
Speaker 1: So I used to say that the institution investors in
Speaker 1: China behave like big retails. So instead of providing some
Speaker 1: uh anchor to you know, when the market was volatile,
Speaker 1: they join in the volatility and make it even more volatile.
Speaker 1: I think that is certainly an area where the institutional
Speaker 1: investor can improve um and I think that will bring
Speaker 1: stability and more stability to the market domestic market. Thank
Speaker 1: you so much, greatly appreciated. Hong Kong Exchange is their chair.
Speaker 1: This is a joy it out right now to speak
Speaker 1: with a gentleman from Nigeria, Mohammed Barkindos, OPEC Secretary General,
Speaker 1: and in conversation with his entourage as he came onto
Speaker 1: our stage, we talked about the history of nine six
Speaker 1: I think Daniel Jurgen in the prize and all of
Speaker 1: the history of OPEC, and it was a cartel, and
Speaker 1: you collegiately take offense with the idea that it's still
Speaker 1: a cartel. If it's not a cartel in OPEC, what
Speaker 1: is it. Thank you very much for having me, of course,
Speaker 1: and happy New yeah, good to see you guys. Yeah, okay,
Speaker 1: Now you're quite correct. We are no longer a cartel.
Speaker 1: I think we are a free, open, transparent organization what
Speaker 1: some of the you might call a fish bowl in
Speaker 1: the US. We have come a long way. For example,
Speaker 1: asad today, all our data, all our data, which is
Speaker 1: our key raw material, is online from sixty till date. Secondly,
Speaker 1: most of our publication of the key ones monthly oil
Speaker 1: market Report, our annual statistical bulletin, all online, accessible to
Speaker 1: all our meetings are covered by the global media and
Speaker 1: their stream. Most of the time, life were as open
Speaker 1: as any organization that you can think of, and we are.
Speaker 1: We're proud of what we have been able to achieve
Speaker 1: since the eighties, very very transparent with the data. Now,
Speaker 1: admittedly the process is less transparent to make. When someone
Speaker 1: I say here on any given morning and the president
Speaker 1: and sweets about OPEC, it's the president of the elephant
Speaker 1: in the room. Now, the President of the United States,
Speaker 1: is he around that almost? Is he the marginal producer?
Speaker 1: Marginal The President is the biggest producer in the world today,
Speaker 1: and it's logical for him to take more than a
Speaker 1: passing interest in what opic does because of what we
Speaker 1: do or fail to do, affects him, affects his industry
Speaker 1: and by extension, his economy. The last downtown has proven
Speaker 1: beyond an invisible doubt that both OPIC, the United States Ryan,
Speaker 1: the shell producers were all in the same bold trist
Speaker 1: just because of the time. I want to conflate here
Speaker 1: to basic themes in questions. One is the mystery of
Speaker 1: Russia tangential to OPEC, and the other is you've got
Speaker 1: to get to a meeting in Vienna in April. How
Speaker 1: should Russia come to the meeting with OPEC in Vienna
Speaker 1: in April. It's an odd chemistry right now? How that
Speaker 1: chemistry be in April. I think it's been good. So far,
Speaker 1: so good. We have come a long way with our
Speaker 1: Russian friends. OPEC and Russia had instituted an energy dialogue
Speaker 1: as far back as two thousand and six, and during
Speaker 1: this last downturn we have worked together with the Russian
Speaker 1: Federation to reach the historic declaration of cooperation. We also
Speaker 1: went further to implement from January twenties seventeen two last December,
Speaker 1: what we had agreed upon with very high level of performance,
Speaker 1: what we refer to as conformity or what you call compliance.
Speaker 1: The Russians had played a leading role in the entire
Speaker 1: process so far, and I've got it in good authority
Speaker 1: from the Russians. They intend to continue to work with
Speaker 1: us to sustain the balance that we have been able
Speaker 1: to achieve on a sustainable basis, so they still have
Speaker 1: a lap of partner very much. So have you got
Speaker 1: any preliminary guidance sound compliance through the early party January?
Speaker 1: What if he thinks I found the data. We had
Speaker 1: just had our technical meetings in Vienna, bringing a close
Speaker 1: twenty eighteen figures, and we took stock of the implementation
Speaker 1: of the supply adjustments from January twenty seventeen toal date.
Speaker 1: I can tell you that the level of performance was
Speaker 1: well over for both ourselves and the non Opic. We're
Speaker 1: just beginning to implement our decision on the sixth and
Speaker 1: certain of December, so it's so far, so good. We're
Speaker 1: on track to achieve our common objectives. One of the
Speaker 1: rumors here in Davos is OPAC split the polar vortex
Speaker 1: above the Arctic Circle and cause a record called in America.
Speaker 1: Over the last ten days, what we focused on is
Speaker 1: to ensure that inventories that had built up in the
Speaker 1: last downtown too unsustainable levels do not RecA in. You
Speaker 1: have visibility on that right now. I mean we count
Speaker 1: boats of Singapore. But the answer to your visibility on that,
Speaker 1: we are beginning to see very sharp reductions in supply
Speaker 1: in conformity to the supply obligations that we agreed upon
Speaker 1: on the six and seventh of December, and we have
Speaker 1: seen that the market has started to respond positively. We
Speaker 1: have seen the market structure, for example, Brent has just
Speaker 1: flipped into backwardation. And this is just the beginning of
Speaker 1: the month. Mr Kendall, thank you so much for joining
Speaker 1: us to General OPEC this morning. Let's continue the conversation
Speaker 1: here with the chief executive officers that arguably it is
Speaker 1: the single most important executive in America on the emotions
Speaker 1: of the President of the United States. Aren't Sorenson is
Speaker 1: off the fabric of Minnesota out of Minnesota law among
Speaker 1: other things. He is a Marriott CEO, and of course,
Speaker 1: as we all know that uniqueness of being the first
Speaker 1: non Marriotte to be the Marriott CEO. We can talk
Speaker 1: here the summation of your travel rewards into your new
Speaker 1: thing and your building. Hotels, guess what the governments and shutdown.
Speaker 1: Then you're at the absolute crucible of this. I read
Speaker 1: an industry article with you and John Tish about the
Speaker 1: percentage of immigrants that make Marriott go each and every day.
Speaker 1: Give us a percentage number of your employees that can
Speaker 1: relate directly to the national debate. Well, it is. It's
Speaker 1: not uncommon in our full service hotels in our urban
Speaker 1: markets to have fifties, sixties, seventy nation analities represented, all legal.
Speaker 1: By the way, we are very careful. I'm going to
Speaker 1: play the other side of the president says below. Either
Speaker 1: not illegal, The president has illegal immigrants. It is hotels
Speaker 1: is published. How do you know that they're not undocumented.
Speaker 1: We use all the tools available, including e Verify, which
Speaker 1: is provided by the I and S. But we are
Speaker 1: vigilant about the documentation and making sure that these people
Speaker 1: have the right to work in the United States. The challenge,
Speaker 1: of course government shutdown. Why because both political parties believe
Speaker 1: it's more important to leave immigration unresolved than to come
Speaker 1: up with a new consensus. Want to message them today,
Speaker 1: then we'll se message to them today. Get talking. I mean,
Speaker 1: I think the right thing is to get the government
Speaker 1: open and then to get engaged in building a national
Speaker 1: consensus around what fair immigration looks like. Because I think
Speaker 1: if you ask people across the United States, what are
Speaker 1: the rules of immigration? How do they work? People would say,
Speaker 1: I have no idea. Is this confusion right now hurting
Speaker 1: your business? Oh? It? It varies from market to market. Washington,
Speaker 1: of course, we're big. That's our hometown. We have a
Speaker 1: hundred fifty hotels or so in the Greater Washington area.
Speaker 1: Business there is down double digits since the government shutdowns.
Speaker 1: So that's the domestic tension. Let's talk about the international
Speaker 1: tension between the United States and China. You've got a
Speaker 1: decent window into what is happening in the world. Second
Speaker 1: launched economy. How big is the slowdown? Because even a
Speaker 1: company like Apple is really struggling with nit term visibility.
Speaker 1: Do you have good nit term visibility as to what
Speaker 1: is happening in the economy at the moment? Well, we
Speaker 1: know what happened last night or last week. We don't
Speaker 1: necessarily know what's going to happen three months from now.
Speaker 1: So if if you're asking that our ability to predict
Speaker 1: that's more difficult. There are there are differences. Obviously, the negatives,
Speaker 1: there's a trade war, the Chinese economy is under pressure
Speaker 1: because of it. The positive, the Chinese are trying to
Speaker 1: move towards more of a consumer economy. We are in
Speaker 1: the consumer space, so Chinese travelers within China and abroad.
Speaker 1: Chinese traveling abroad, we think is continuing to grow up,
Speaker 1: even with a weaker And they're all staying at Marriott,
Speaker 1: and no doubt I'm kidding. I don't know if you've
Speaker 1: been at the Marriott in Tulsa two e seventy one Street, Tulsa, Oklahoma.
Speaker 1: There are workers there for you who are directly affected
Speaker 1: by the shutdown, directly affected by the debate over immigration,
Speaker 1: and they've got a real job at Marriott. How does
Speaker 1: America have confidence that they will advance and prosper in
Speaker 1: the coming years. How do we as a nation get
Speaker 1: behind employers like you with these first Americans? It's all
Speaker 1: about jobs. You look at how benefited medical jobs you
Speaker 1: people will see have medical plans. All the full time
Speaker 1: folks have healthcare. Yeah, I mean they some of them
Speaker 1: have it under their spouses. And so I shouldn't say,
Speaker 1: but I think our participation rate even in retirement our
Speaker 1: participation rate is because we think it's important to build,
Speaker 1: of course, to coin and sate people fairly, but to
Speaker 1: build careers for people where they can say I can
Speaker 1: work not only last month or this month in one
Speaker 1: of your hotels, but I can build my career. I
Speaker 1: can put my kids through school, I'm gonna have a house,
Speaker 1: I can I can grow in the way I want
Speaker 1: to grow. And that's what the company has been about
Speaker 1: for decades. In some ways, Over the last couple of
Speaker 1: months or so, the company has been about managing a
Speaker 1: crisis around the hacking. What's the latest on that. Have
Speaker 1: you got any idea who was behind it and what
Speaker 1: the objectives were? I don't know that we'll ever know
Speaker 1: who was behind it. We know we know that somebody
Speaker 1: was in Star Wars reservation system for a few years.
Speaker 1: Of course, we did not find that out during the diligence.
Speaker 1: We don't think Starwood knew that before I saw the
Speaker 1: company to us, and this was something that was discovered
Speaker 1: in the fall of We moved as quickly as we
Speaker 1: could to do two things. Want to be transparent that
Speaker 1: what we knew we had to share with everybody else.
Speaker 1: And second, to find out as much as we could
Speaker 1: find out. Do you know I found out about the hacking.
Speaker 1: I had ten nights at the Ritz Carlton and Atlanta.
Speaker 1: All of a sudden shot up on my Marriott rewards.
Speaker 1: Where did this come from? Everybody was affected? Right, Well,
Speaker 1: I don't know that that's connected. Let me ask this
Speaker 1: because this is an important question. Actually, do we have
Speaker 1: firm wid protocols for when a passport gets scanned in
Speaker 1: a Marriott hotel that is now encrypted? Well? Uh, the
Speaker 1: answer is we're getting there as quickly as we can.
Speaker 1: U a couple of I want to say, a couple
Speaker 1: of comparison assports. So by the beginning of January, we
Speaker 1: determined as best we can that none of the payment
Speaker 1: card information was unencrypted, which is obviously a very good thing.
Speaker 1: We determine that about five million global passports, that is
Speaker 1: from Chinese travelers, American traveling, European travelers, about five million
Speaker 1: were unencrypted. So that's where the that's where the concern
Speaker 1: comes from. There is a debate. The U State Department says,
Speaker 1: don't worry about it, don't replace your passport. A passport
Speaker 1: number without the passport is worth nothing. But there are
Speaker 1: others who reasonably say we'll wait a second, that's my
Speaker 1: passport number. I feel violated somehow by that. What you know,
Speaker 1: what are the consequences of that? And I think for
Speaker 1: us long term, we've got to make sure that everything
Speaker 1: is encrypted. We've also got to make sure we comply
Speaker 1: with local law. So for anybody who travels abroad in
Speaker 1: many countries around the world, were required to take your passport,
Speaker 1: maybe make a physical copy of that passport, and encrypting
Speaker 1: a xerox copy is not necessarily the leading edge of technology.
Speaker 1: I want one final question. If James Diamond was sitting here,
Speaker 1: I'd ask him, as he too big as a bank,
Speaker 1: the question every day has to be his Marriott become
Speaker 1: too big with all the mergers, the scope to scale,
Speaker 1: the new rewards messing that you're doing. How do you
Speaker 1: respond to the idea of Marriott's become too big for
Speaker 1: the industry? Well, I think it's I think it's a
Speaker 1: crazy idea. I don't know that, but but but we
Speaker 1: are out seven to eight percent of the hotel rooms
Speaker 1: in the world. Seven to eight It's hardly a massive share.
Speaker 1: And by the way, about half of those rooms are
Speaker 1: run by our franchise. Is we don't even price them interesting,
Speaker 1: so it is still a highly competitive business. And what
Speaker 1: customers are italian Us is they want to be able
Speaker 1: to stay with us wherever they're going, and they're going
Speaker 1: lots of different places and lots of different purposes of
Speaker 1: their trips. Sometimes they want luxury, sometimes they don't, and
Speaker 1: we want to be there for you. Mr Thomason. Always
Speaker 1: got to catch up with you. Thank you very much
Speaker 1: for dropping by. Earlier on I caught up with the
Speaker 1: Saudi Aramco CEO. I'm in NASA speaking to me about
Speaker 1: plans for a takeover of the big Saudi petrochemical John Sabag.
Speaker 1: Take a listen to what he had to say. We
Speaker 1: are in discussion currently with the Public Investment Fund about
Speaker 1: the acquisition of seventy of the share of Serbic. We
Speaker 1: are in discussion with regard to the price that that
Speaker 1: the stage. Do we have a ballpark figure of where
Speaker 1: the price will be, not yet. I'm hearing numbers of
Speaker 1: in and around sixty billion. Is that a ballpark figure.
Speaker 1: I'm not going to comment enter price because you know,
Speaker 1: you understand this is very critical at this stage to
Speaker 1: will be to keep silent about the negotiation that's currently
Speaker 1: ongoing with public Investment fund. Well, the Energy Minister has
Speaker 1: not been silent about the financing of this acquisition. He's
Speaker 1: looking at a potential bond issuance coming up maybe in
Speaker 1: the second quarter. Could you comment on that. The financing
Speaker 1: of the potential acquisition, we are exploring. You know, we
Speaker 1: have a significant capital program. To sustain that capital program
Speaker 1: and also considering the acquisition, the potential acquisition of the
Speaker 1: stake in Cybo, are blowing all options for funding. One
Speaker 1: of it is a bond issuance and that is something
Speaker 1: that we're looking at. Let's talk about the science of
Speaker 1: the bonds, how much could potentially come to market and
Speaker 1: the potential duration of them. Well, we are at the
Speaker 1: stage we are, as I said, we are evaluating. We
Speaker 1: are when to decide soon exactly how much we would
Speaker 1: like to take from the bond market. And so it
Speaker 1: has not decided yet in terms of how much we
Speaker 1: would like to do. You know what your intentions are
Speaker 1: with the other The thirty percent is of Serbecum del
Speaker 1: Conte and well it is publicly listed company is listed
Speaker 1: in the market as the regulator giving you a waiver
Speaker 1: whereby you don't actually have to buy the thirty percent,
Speaker 1: Can you just buy the sevent We are in discussion
Speaker 1: right now with Public Investment Fund first of all, about
Speaker 1: the acquisition of the seventy percent, and the issue whether
Speaker 1: we need to or not is in discussion. With this
Speaker 1: you may with regard to that, have you had any
Speaker 1: preliminary guidance on that at all. Our intention is not
Speaker 1: to acquire anything from the public with regard to PENT
Speaker 1: of this stage. So if you're told that you would
Speaker 1: have to also acquire the thirty percent, it would actually
Speaker 1: be a deal breaker for you, guys well, as I say,
Speaker 1: this is something right now is in discussion, and there's
Speaker 1: no intention to acquire the thirty percent from the public.
Speaker 1: Our intention and our strategy is to acquire the seventy
Speaker 1: percent stake in with the Public Investment Fund. There's all
Speaker 1: the discussion is about the seventy We have no intention
Speaker 1: of acquiring the percent listed in the market. So the
Speaker 1: guidance we've had from the Energy Minister is that for
Speaker 1: the seventy percent, you will come to market, you will
Speaker 1: issue some debt later this year, perhaps in the second quarter.
Speaker 1: The guidance we've also had is that it will be
Speaker 1: an international bond. Now that's going to come with some
Speaker 1: financial disclosures. Are you prepared to disclose some of the financials?
Speaker 1: Definitely is going to be international bond. We're currently in
Speaker 1: discussion with with regard to how much and were and
Speaker 1: all of that issuance for the bonds, and everything is
Speaker 1: going well in terms of h anything that is required
Speaker 1: by the regalitis, in terms of disclosures, in terms of
Speaker 1: financial disclosures or any type of disclosure required by the
Speaker 1: issuance market, we will comply. Well, let's talk about the
Speaker 1: potential for disclosures because some of the reporting we have
Speaker 1: done has shown that Sammy Ramco's books have basically got
Speaker 1: zero debt and you're one of the most profitable companies
Speaker 1: on the planet. When you disclose to issue this bond,
Speaker 1: is that what you're going to reveal essentially that you
Speaker 1: have no debt on the book, so that you are
Speaker 1: incredibly profitable. We will reveal our balance sheets and any
Speaker 1: it's not you know, we have jvs. They have they
Speaker 1: have did in the market, they have project financing that
Speaker 1: so it's not when we uh disclosure, will disclose the
Speaker 1: whole around Cole and all of our DV in the
Speaker 1: Kingdom and out of the Kingdom some of them went
Speaker 1: to their dead market. So all the data with regard
Speaker 1: to the gearing ratio of Saudia around Cole will be shaped.
Speaker 1: Let's talk about the potential for pricing. The Kingdom came
Speaker 1: to the market quite recently ten year money a hundred
Speaker 1: seventy five basis points at the treasuries. Do you think
Speaker 1: when a ramco comes to market, actually spreads will be
Speaker 1: tighter for Sara a Ramco. That will be decided by
Speaker 1: the market when we go and seek the wants. But
Speaker 1: I think our round compositions around Cole is a very
Speaker 1: successful company. We have great results in two thousand and
Speaker 1: eighteen and our history and our track record in terms
Speaker 1: of performance, I think, well, when we share all of
Speaker 1: that information in in addition to the disclosure, yeah, the
Speaker 1: market will decide and we have to agree on ahead
Speaker 1: of that. You might have to talk to a credit
Speaker 1: rights and agency. You speaking to the credit writing agency
Speaker 1: right now? We have we did engage a credit rating agencies.
Speaker 1: So if we have all of the information required, are
Speaker 1: you going to have a better credit writing agency than
Speaker 1: the Kingdom? Well, we are, as I said, we are
Speaker 1: maintaining the Kingdom softeign credit ratings and what event we
Speaker 1: have from the other rating agencies we will be shaping
Speaker 1: when we go with the disclosure. The CEO of sari
Speaker 1: Aramco there am in NASA speaking to me a little
Speaker 1: bit earlier on if this is with our question our
Speaker 1: interview of Davos on this issue of Brexit. For those
Speaker 1: of us foreign it is baffeding in his extraordinary is
Speaker 1: a modest journalist at the Evening Standard, wandered by Mr
Speaker 1: Cameron's government to be chancelled the Exchequer, but far more
Speaker 1: importantly to us to care about design. He is an
Speaker 1: Osborne of Osborne in a little Definitive and Design. What
Speaker 1: was it like in your childhood bedroom? Did they change
Speaker 1: the wallpaper every ninety days? Well, my dad set up
Speaker 1: Osborne Little of design company and yeah, well you know,
Speaker 1: we had to showcase the product and there were always
Speaker 1: new collections and said the house was always big. Read
Speaker 1: you'd like to warpaper and they came in they said, no,
Speaker 1: we're moving this town every year. I got my bedroom reading.
Speaker 1: This is wonderful jump bringing bringing the channel. George's a
Speaker 1: massive change for you now being the editor of a
Speaker 1: newspaper before that, of course the chance of the exchequer.
Speaker 1: Did you ever think we'd be where we are now
Speaker 1: even after we found out the outcome of the vote
Speaker 1: a couple of years ago. I thought in the end
Speaker 1: we would hit a point where the promise that you
Speaker 1: can leave the EU and have all the benefits of
Speaker 1: EU membership would run out of road. I guess I
Speaker 1: hoped that there would be a more conciliatory approach, that
Speaker 1: we would find a middle way through, like a sort
Speaker 1: of Norway model for Britain outside the EU, but still
Speaker 1: pretty closely aligned the U. That feels to me like
Speaker 1: it's gone and we're confronting increasingly the two choices, which
Speaker 1: is leave the EU without a deal at the end
Speaker 1: of March or delay or stop Brexit. That that's emerging
Speaker 1: now as the two big choices of the country faces
Speaker 1: and the former Prime Minister David Cameron did kind of
Speaker 1: make the process sound quite straightforward. If the outcome of
Speaker 1: the vote was that the United Kingdom voted to leave,
Speaker 1: he would go across the Brussels and trigger Article fifty.
Speaker 1: As we found out, both of you eventually ended up
Speaker 1: leaving the government. Do you think both of you still
Speaker 1: have a certain amount of responsibility to the outcome of
Speaker 1: what has happened in the UK, since it was your
Speaker 1: government that did bring the vote to the British people. Well,
Speaker 1: I would say, first of all, David Cameron, erging myself
Speaker 1: and others did spell out to the country that there
Speaker 1: would be very serious consequences of leaving the EU, not
Speaker 1: just for the economy, but for our security relationships and
Speaker 1: indeed the Western Alliance. And I would argue that the
Speaker 1: process in some ways has been quite straightforward. We've triggered
Speaker 1: Article fifty, there's been a negotiation, it's all been done
Speaker 1: in a kind of orderly way. The problem isn't the process,
Speaker 1: it's the policy. What do people want our relationship with
Speaker 1: the European Union to be? Do we want no relationship
Speaker 1: at all? Or do we want a very close relationship
Speaker 1: and that remains as contested as possible. So you did that.
Speaker 1: That's that's the hard politics. That's not about the procedure
Speaker 1: or the process, or whether we have the right civil
Speaker 1: servants or the right negotiating team. It's about fundamental contradictions
Speaker 1: in what Grexit promised. But I think, to be fair,
Speaker 1: I don't think many of us thought it would take
Speaker 1: that long as long as it did to trigger an
Speaker 1: Article fifty. Yet it did. It took a number of
Speaker 1: months where many people thought it would happen immediately, and
Speaker 1: here we are the clock is ticking and it looks
Speaker 1: like we're running out of time. Would your advice be
Speaker 1: to the government, And I'm not sure if they're going
Speaker 1: to listen to it, George, And I'm not sure you
Speaker 1: think they would either, But would your advice be to
Speaker 1: delay Article fifty to push it back? Well, I think
Speaker 1: it's just not except stable for this country, my country
Speaker 1: to leave the European Union without a deal. That is
Speaker 1: a big shock to the British economy and indeed the
Speaker 1: European economy. It does enormous long term reputation or damage
Speaker 1: to the UK and it's not the way that a
Speaker 1: advanced nation should behave. So if we can't get a deal,
Speaker 1: if there's no Norway on the table, for example, then
Speaker 1: we have to delay brexit. If you're negotiating that with
Speaker 1: the Europeans, George, is it realistic to take it off
Speaker 1: the table? Well, there are in the negotiation with the
Speaker 1: European Union is over. The British government signed a deal
Speaker 1: in December and you know, you can have any number
Speaker 1: of European leaders here at Davos come on this show
Speaker 1: and they will tell you there is no prospect of
Speaker 1: reopening out talk. And the only person who believes there
Speaker 1: is at the moment is the reason May her cabinet
Speaker 1: doesn't think the British Parliament doesn't think it. The truth
Speaker 1: is the choices either now leave without a deal, or
Speaker 1: perhaps everyone changes their mind on treasons may deal or
Speaker 1: delay Brexit in some way, either through referendum or indeed
Speaker 1: an election, which I think is by the and underappreciated
Speaker 1: outcome of this whole. I think it could be an election.
Speaker 1: I definitely think I could be election. He's gonna tricker
Speaker 1: that well. At the end, what will happen is there'll
Speaker 1: be a confidence vote in the British Parliament and a
Speaker 1: small number of Conservative MPs will switch side in that
Speaker 1: vote because they would rather have an election than see
Speaker 1: our country leave the European units. George my advantage here
Speaker 1: as I'm an outsider and for television and radio reduce
Speaker 1: civics one on one ear and re explain the Cameron
Speaker 1: Osborne is the same party as Prime Minister Man. I
Speaker 1: think some people maybe no don't realize that they aren't
Speaker 1: even reading the evening standard eight days a week. With
Speaker 1: that said, his Prime Minister May, has she passed herself
Speaker 1: by date? I was thunderstruck. There wasn't a window there
Speaker 1: for her to gracefully resign and move on to a
Speaker 1: new Conservative majority. Did she miss that opportunity? Well, the
Speaker 1: reason Mays challenge i'd be like was that she called
Speaker 1: a general election last year and lost the majority that
Speaker 1: David running, myself and others are built up so she
Speaker 1: doesn't have any political authority and crucially in the British constitutions,
Speaker 1: for a grace from the Prime Minister to move away
Speaker 1: from the stubbornness and just step aside for a new vision,
Speaker 1: a new set of gargles, a new optics within your majority.
Speaker 1: I don't think that's realistic because I think she's going
Speaker 1: to stay. I think what's more realistic, and what she
Speaker 1: should do is take this threat of a no deal
Speaker 1: off the table. She can do that, you know, actually
Speaker 1: shouldn't need anyone else's consent to do it, otherwise she'll
Speaker 1: allow the Parliament into that space. But here's a crucial
Speaker 1: and again underappreciated point. You'll hear on shows like this,
Speaker 1: it said that there's a majority in the British Parliament
Speaker 1: to stop a no deal Brexit. Now that is the
Speaker 1: default of the moment. We're leaving the EU at the
Speaker 1: end of March, whether we have a deal or not.
Speaker 1: And in order to stop it, it's not good enough
Speaker 1: to say as a majority against leaving with that majority
Speaker 1: has to coalesce around one of the options, either an
Speaker 1: alternative deal or delaying Brexit, or asking you to delay Brexit,
Speaker 1: or a general election or a referendum. At the moment,
Speaker 1: the parliament's quite divided, so you know, I would say,
Speaker 1: looking at financial markets, you've got a price in the
Speaker 1: tail risk that Britain does leave without a deal, and
Speaker 1: then you have to say, increasingly likely the Britain is
Speaker 1: going to remain in the EU at the end of March.
Speaker 1: I don't know how many people have told you this,
Speaker 1: but you sound a little like Jeremy Corbyn. Isn't that
Speaker 1: Jeremy Corban. No one has ever told me that. Isn't
Speaker 1: that Jeremy I think Corbyn is. You know, he's partly
Speaker 1: being what all opposition leaders are there to cause trouble
Speaker 1: for the government, and of course sitting on a very
Speaker 1: divided party himself unwilling to come to a single conclusion.
Speaker 1: The problem with delaying, I'm telling you what I think
Speaker 1: is going to happen. Problem with delaying is it it
Speaker 1: doesn't actually confront the choice Britain now needs to make.
Speaker 1: It puts it off, of course, and that's why it's
Speaker 1: a convenient bucket for people to go into. But I
Speaker 1: think we are unless and I'm quite I think I'm
Speaker 1: quite pessthemistic about this. Unless somehow we can construct some
Speaker 1: kind of deal which takes Britain out of the EU
Speaker 1: but keeps us in things like the European Economic Erea,
Speaker 1: which I, by the way, would think is a fairer
Speaker 1: reflection of a vote that split the country in half.
Speaker 1: Then we're going to be confronted with the only way
Speaker 1: to stop leaving the EAR without a deal, which is
Speaker 1: stopping Brexit. How do we then look to the arch
Speaker 1: Brexiteers I'm going to mention Boris Johnson as well, who
Speaker 1: say we have a nostalgia in a vision for doing
Speaker 1: our own trade deals, doing being unilateral in our view
Speaker 1: of the world, literally harkening back to the Empire, if
Speaker 1: you will. Nonsense, it's nonsense, but they have a certain mass.
Speaker 1: How much would you gauge as an enormous great billboard
Speaker 1: on the side of the big hotel here in Davos,
Speaker 1: which is sponsored paypful that of the British taxpayer, which
Speaker 1: is Britain is the sponsor of free trade. If we
Speaker 1: leave the U without a deal, we are engaging in
Speaker 1: the biggest act of protectionism in the entire history of
Speaker 1: the United Kingdom's got nothing to do with free trade.
Speaker 1: It's about erecting trade barriers with our nearest and biggest people.
Speaker 1: Some people that George would say that the European Union
Speaker 1: it'sself embodied staff it is the protectionist regime in the
Speaker 1: ice of many people. In fact, in the eyes of
Speaker 1: many people that voted to leave, that is what the
Speaker 1: European Union stands for. You're either in our club and
Speaker 1: that's great and you can enjoy the benefits of that.
Speaker 1: But if you're outside of it, go fish. You're on
Speaker 1: your own. And aren't we living that at the moment?
Speaker 1: Aren't we finding out that that's what the European Union
Speaker 1: stands for. Well, I would argue that these are countries
Speaker 1: like France, Germany, these are our biggest export markets were
Speaker 1: in a free trade zone with them. I'm all for
Speaker 1: the EU doing trade deals with America, Japan which has
Speaker 1: just been concluded, China, even the United Kingdom to a
Speaker 1: trade deal with the United States of America. Well, I
Speaker 1: think the first priority is to have a trade deal
Speaker 1: with our nearest neighbors, which were about to tear up
Speaker 1: if we leave without a deal. And then, you know,
Speaker 1: the European Union is the best platform through which you
Speaker 1: can get a good trade deal with the US, and
Speaker 1: you know, things like permanent membership with the customs you
Speaker 1: could have been a route to a deal that more
Speaker 1: MPs would have supported. The first time I saw your government,
Speaker 1: you were in minority. Remember David Kerman. It was two
Speaker 1: swords lanes apart in the House of Commons and David
Speaker 1: Karen was going against Gordon Brown and it wasn't like America.
Speaker 1: Are you advantaged or disadvantaged that Jeremy Corbyn is Labor
Speaker 1: Party head? Would this debate be radically different if there
Speaker 1: was a different leader of the minority party. Well, the
Speaker 1: answer is yes. And it's very sad for those of
Speaker 1: us who care about a parliamentary democracy in our country's
Speaker 1: reputation that Labor is not led by a much more
Speaker 1: moderate social democrat of the kind of has led the
Speaker 1: labor body for all of my lifetime. I think if
Speaker 1: Labor had that kind of leader, well they'll probably now
Speaker 1: be a labor government as it happens. But even if
Speaker 1: there weren't a labor government right now, we would be
Speaker 1: on the cusp of a big labor government with a
Speaker 1: big majority. But we're not because the country is understandably
Speaker 1: very nervous to Jeremy Corbyn, and ultimately in the country
Speaker 1: doesn't want to have a choice. I don't think of
Speaker 1: simply Jerry Aremy Corbyn or Jacob Riesmok. Who's the going
Speaker 1: to of brexiteer type. You know there there is a
Speaker 1: center there which is looking and waiting for its voice. Well,
Speaker 1: let me give you a choice. What would be the
Speaker 1: worst outcome for the UK economy a heart Brexit or
Speaker 1: Jeremy Corbyn as the prime minister. Well, I think one
Speaker 1: leads to the other, so I'm not sure they are
Speaker 1: a choice. I think, you know, I think Brexit is
Speaker 1: a what's the Brexit argument? It's globalization has failed you,
Speaker 1: The elites have failed you. We need to completely change
Speaker 1: the way we run the country for last for or
Speaker 1: five years. That is Jeremy Corbyn's argument as well. So
Speaker 1: Brexit opens the door to Corbyn. Corbyn would be very damaging,
Speaker 1: of course, to Britain's reputation as a home of business
Speaker 1: and free markets. But we're already doing an enormous amount
Speaker 1: of damage by choosing to leave the EU and erect
Speaker 1: a protectionist barriers and tear up a key feature of
Speaker 1: the Western life. You're just joining us on Bloomberg Radio,
Speaker 1: George Osborne with US journalist as well as we talked
Speaker 1: the emotions of his United Kingdom. I want to turn
Speaker 1: the journalism. I was thunderstruck by the vibrancy of London newspapers.
Speaker 1: You're at the Evening Standard and just the cacophany there,
Speaker 1: I would say, is radically different than what we have
Speaker 1: in America, where there seems to be much more of
Speaker 1: a sameness to it. Is the joy of British journalism
Speaker 1: and print journalism is it is it at risk of
Speaker 1: going away as it has in the United States. Well,
Speaker 1: first was great fun editing a newspaper and for me,
Speaker 1: you know, I found a fund and politics, I found
Speaker 1: a great second career, and you know, I'm always trying
Speaker 1: to speak for our many readers with the kind of
Speaker 1: classic London newspaper have been for a hundred nine years,
Speaker 1: and I want us to have a broader national readership.
Speaker 1: I think in the end, you know, you've got to
Speaker 1: make it entertaining. In when I was a kid in London,
Speaker 1: the Evening Standard was the way you found out what
Speaker 1: was going on in the world. These days you turn
Speaker 1: on Bloomberg, right, you can get a collection that you
Speaker 1: can come back. You can get a constant commentary on
Speaker 1: what's going on in the world. So by the time
Speaker 1: you pick up my newspaper in the afternoon, we'll know
Speaker 1: this has happened in financial markets, or this plane has crashed,
Speaker 1: or this government is full. And you know what we
Speaker 1: can do is provide a context to it. We can
Speaker 1: make it entertaining, We can inform you. So you cover
Speaker 1: English football. We do cover English football, particularly my team
Speaker 1: Chelsea really the other day and they didn't do so
Speaker 1: well with a cab drum Thomas and I like the Tots,
Speaker 1: or like this team or the bubbles bubble got are
Speaker 1: you thinking of west Ham? Was Ham? Yes? And the
Speaker 1: cab drivers lecturing me on our Arsenal. Is that crush
Speaker 1: It was the Cabby that predicted the outcome. Yes, how
Speaker 1: we got a big Tottenham v. Chelsea game on Thursday
Speaker 1: night which I'm going home for. Are you you're leaving?
Speaker 1: This is a surveillance pre exclusive George Osbourne leaving a
Speaker 1: happy valley to go home for the game. Final question,
Speaker 1: is the a road back into politics for George Osbourne? Yes,
Speaker 1: there might well be, but at the moment I'm enjoying
Speaker 1: my life outside and I don't want to go back,
Speaker 1: you know, to this current situation. You know, I want
Speaker 1: to work on things that are building up our country's reputation,
Speaker 1: not to me. So you're waiting for this to get
Speaker 1: cleaned up, and then I'm very like I had a
Speaker 1: very lucky career in past, became chance to work with
Speaker 1: a primary very young age as well. Yeah it was,
Speaker 1: you know, and I like with David Cameron and a
Speaker 1: team I really and who we were all, you know,
Speaker 1: a happy band of brothers and sisters. You know, that's
Speaker 1: not British politics at the moment. So I would take
Speaker 1: some persuading that I give up what I'm doing now
Speaker 1: to go back to that. Georgeos greater catch the former
Speaker 1: UK Chancellor of the Exchequer and a Chelsea fan who
Speaker 1: knew that there in London right Westley were blue. Do
Speaker 1: you know what? We go back and forth on this
Speaker 1: so much West London, Chelsea, East London, West North London
Speaker 1: and Crystal South London's Crystal Palace. Okay, well I knew
Speaker 1: they were sort of there. Liverpool. Yeah, well most London
Speaker 1: clubs must say this. And this happened this weekend while
Speaker 1: I was in I think I was in. I guess
Speaker 1: it was in London. You guys do it right, because
Speaker 1: you know, I kid you about how guys fall down
Speaker 1: and all that. The fiasco in the National Football League
Speaker 1: over the last week and those two very flawed football
Speaker 1: games make you guys look like Tom likes the fact
Speaker 1: that the clock still run. The clock still goes, and
Speaker 1: they don't stop the game and go back to the decision.
Speaker 1: That was brilliant. But that's real. Seriously, anitating George Osborne
Speaker 1: and the Patriots. Well, can we make some news here
Speaker 1: Rams or Patriots? Oh well, you got about the Patriots,
Speaker 1: haven't in this contest? I don't know. To me, it's
Speaker 1: like Chelsea the Tarts. I don't have a clue we
Speaker 1: get you saying spurs Spurs Tom Keay alongside me. I'm
Speaker 1: Jonathan Thorow here in Davil, Switzerland, at the World Economic Forum.
Speaker 1: A special thanks to George Osborne. Thanks for listening to
Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on
Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm
Speaker 1: on Twitter at Tom Keene before the podcast. You can
Speaker 1: always catch us worldwide. I'm Bloomberg Radio