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iAverageWall Stbonusdownto $146,200TheaverageWallStreetbonusslipped9 percent to$146,200,as banks hired morestaffand triedto cappayamid a surge incompliance costs andvolatiletrading.— PAGE 15; INSIDE BUSINESS, PAGE 16

iRateof Beijing reservesoutflow slowsCentralbank datashowedthe outflowin foreignexchangereserves atits smallestfor eight months,easing someanxiety over China’s financialstability.— PAGE 6; THE SHORT VIEW, PAGE 15

i Fischer seesstirringsof inflationStanleyFischer, theFed’s vice-chairman,hassaidthattheUSmaybe seeing“first stirrings” ofa long-

awaited inflationriseas theimpactof a strongjobs market works itswaythroughthe economy.— PAGE 2

iTurkeyeyesextra€3bn formigrantdealTheEUis nearing a deal withTurkey toturnback allmigrantsreaching Greek islands in exchangeforsweetenersfor Ankara, includingan extra€3bnin fundingand access toEuropeanvisas.— PAGE 3

iUneasein Syriaas ceasefireholdsTheweek-old ceasefirehas forced a status quothatmighthelpa USthat seeks a settlement butwantstoavoid entanglement.But onediplomatsaidthetrucehad handed thecountry toMoscow.— PAGE 4

iMexicomoves tohitbackat TrumpMexico haslauncheda charmoffensiveto counterrhetoricfrom USRepublican frontrunnerDonaldTrumpand highlighttiesworth$1m a minuteincross-bordertrade.— PAGE 4; GIDEON RACHMAN, PAGE 11

iEUrulesto raisepay of foreignworkers

A revampofEU ruleson foreign workersto beunveiledtodaywouldsee employersforced toraisethepayoftemporary staffin a movethatwouldhavea bigimpacton thebuilding trade.— PAGE 2

Datawatch

RememberReaganIs Donald Trump as dangerous as

they say?— GIDEON RACHMAN , PAGE 11

Bend and stretchEasing the pain of staying

supple— THE FIT EXECUTIVE, PAGE 12

Women in Busine

ssScrap paintball days and add childcare if

you want gender balance— SPECIAL REPORT

TUESDAY 8 MARCH 2016 WORLDBUSINESS NEWSPAPER EUROPE

World Markets

STOCK MARKETS

Mar 7 prev %chg

S&P 500 2002.15 1999.99 0.11

Nasdaq Composite 4721.96 4717.02 0.10

Dow Jones Ind 17058.40 17006.77 0.30

FTSEurofirst 300 1341.32 1344.62 -0.25

Euro Stoxx 50 3019.44 3037.35 -0.59

FTSE 100 6182.40 6199.43 -0.27

FTSE All-Share 3394.68 3405.27 -0.31

CAC 40 4442.29 4456.62 -0.32

Xetra Dax 9778.93 9824.17 -0.46

Nikkei 16911.32 17014.78 -0.61

Hang Seng 20159.72 20176.70 -0.08

FTSE All World $ 256.24 255.82 0.16

CURRENCIES

Mar 7 prev

$ per € 1.098 1.101

$ per £ 1.420 1.422

£ per € 0.773 0.774

¥ per $ 113.520 113.805

¥ per £ 161.243 161.774

€ in de x 8 7. 351 8 6. 94 7

SF r per € 1.097 1.094

Mar 7 prev

€ per $ 0.911 0.909

£ per $ 0.704 0.704

€ per £ 1.293 1.292

¥ per € 124.684 125.266

£ i nd ex 8 6. 27 8 8 6. 32 1

$ index 103.302 103.559

SFr per £ 1.418 1.412

COMMODITIES

Mar 7 prev %chg

Oil WTI $ 37.63 35.92 4.76

Oil Brent $ 40.63 38.72 4.93

Gold $ 1267.90 1277.50 -0.75

INTEREST RATES

price yield chg

US Gov 10 yr 97.41 1.91 0.04

UK Gov 10 yr 99.14 1.59 0.00

Ger Gov 10 yr 102.74 0.23 -0.02

Jpn Gov 10 yr 103.64 -0.06 0.00

US Gov 30 yr 95.55 2.72 0.02

Ger Gov 2 yr 103.18 -0.51 0.00

price prev chg

Fed Funds Eff 0.34 0.24 0.1

US 3m Bills 0.28 0.36 -0.08

Euro Libor 3m -0.23 -0.23 0.00

UK 3m 0.59 0.59 0.00

P ri ce s are la te st for e di ti on D ata prov id ed b y Mo rn in gsta r

TIM BRADSHAW — SAN FRANCISCO

Applehas lostitsfinalbid tooverturna judgment that it broke antitrust lawsbyconspiringto raiseebookprices, inits latest bruising encounter with theUSjudicialauthorities.

The US Supreme Court rejected thecompany’s bid for an appeal againstlower court rulings that it engaged in“marketplace vigilantism” against rivalAmazon and “unreasonably restrainedtrade” by creating a “cartel” with pub-lishersto controlebookprices.

The ruling comes as the companybegins a long fight with the US justicedepartment over whether it can beforced tohelp investigators breakopenaniPhonebelongingto oneof thekillersin the San Bernardino terrorist shoot-ingsin December.

It is also a blow to Tim Cook, chief

executive, who has called the case“bizarre”and defended dealsstruckbypredecessor Steve Jobs and by Apple’sinternetservices head,Eddy Cue.

“We’vedonenothingwrongthereandso we’re taking a very principled posi-tion on this,” Mr Cook said in a 2013interview. “We’re not going to signsomething that says we did somethingwedidn’tdo.So we’regoingtofight.”

Applemustpay $400min compensa-tion to people who bought ebooksthroughits iBooks store, underthecon-ditionalsettlementagreedin July2014.Five publishers have already paid out$166maspartof their2013 settlement.

ButtheDepartmentof Justicesaidthecompany and book publishers hadengaged in “cynical misconduct”against the lower prices imposed byAmazon’s Kindlestore. “Apple’sliabilityfor knowingly conspiring with book

publishersto raise theprices ofebooksissettledonceand forall,”saidBillBaer,assistantattorney-generalof thedepart-ment’santitrustdivision. “Andconsum-erswillbe madewhole.”

Customers who bought books athigher prices will be repaid in storecredits.

TheUS government accusedApple of being the “ringleader” in a conspiracywiththeworld’s largestbook publisherstoraiseebook pricesusingitsiPad,at atimewhenAmazon’s Kindle dominatedthemarket.WhereasAmazonsetebook pricesfor theKindlestore, Appleintro-ducedthe “agency pricing”modelwithits iBooks system, allowing publisherstodecidehowmuchtocharge.

The2013trial revealedthata stringof emailsweresentby Jobs andMr Cuetopublishing industry executives duringtheirnegotiationsover iBooks.

Appleset topay out $400mafter final bid tooverturnebook judgment fails

© THE FINANCIAL TIMES LTD 2016

No: 39,106★

Printed in London, Liverpool, Glasgow, Dublin,

Frankfurt, Brussels, Milan, Madrid, New York,

Chicago, San Francisco, Washington DC, Orlando,

Tokyo, Hong Kong, Singapore, Seoul, Dubai

Analysis i PAGE 6

PrivateSector reportingforduty indefence rethink

9 7 7 0 1 7 4 7 3 6 1 2 8

1 0

Aust ri a €3 .60 Macedoni a Den220Bahrain Din1.7 Malta €3.50Belgium €3.60 Morocco Dh43B ul ga ri a L ev 7. 50 N et he rl an ds € 3. 60

Croat ia Kn27. 50 Ni ger ia Naira715Cyprus €3.50 Norway NKr34Czech Rep Kc100 Oman OR1.50Denmark DKr3 2 Pakistan Rupee 280Egypt E£20 Poland Zl 18Finland €4.10 Portugal €3.50France €3.60 Qatar QR15Germany €3.60 Romania Ron17Gibraltar £2.70 Russia €5.00Greece €3.50 Saudi Arabia Rls15Hungary Ft990 Serbia NewD420India Rup195 Slovak Rep €3.60Italy €3.50 Slovenia €3.50Kazakhstan US$5. 50 Spai n € 3. 50Kenya Kshs300 Sweden SKr37K uw ai t K WD1 .50 S wi tz er la nd S Fr 5.9 0Latvia €6.99 Tunisia Din7.50Lebanon LBP7500 Turkey TL10Lithuania €4.30 UAE Dh15.00L ux em bo ur g € 3. 60

In the EU, about

two in three

women aged 25 to

64 are employed.

The proportion is

higher in all

regions of the UK

and Germany. It is

lowest in the

south of Italy and

its islands, with

fewer than four in

10 women in

employment

30 40 50 60 70 80

Germany

Greece

Spain

France

Italy

UK

Female employment ratesAged 25-64, 2014 (%)

Source: Eurostat

Countries with more than one region shown

BRYCE ELDER, ARASH MASSOUDI

AND PATRICK JENKINS

LONDON

A mystery investor has builtup a near 5 per cent in Burb-erry,promptingBritain’s best-known luxury fashion brandtoseek helpfromits financialadvisers to defend it againstany potential takeover bid.

Burberry, with a market capi-talisation of £6bn, sought aidafterits boardcouldnotdeter-mine theidentityof thestake-builder.Onepersoncloseto thecompanysaid ithad attemptedunsuccessfullyto askHSBC, thecustodian for the position, torevealits client.

Thefashiongroup,whichhasseenits valuefallby morethana quarter amid a slowdown inChinese demand, hascalled onits existing bankers at RobeyWarshaw to help, according topeopleclose tothe company.

Analysts suggestedrival lux-ury goods groups such asLVMH, orprivateequity inves-tors,couldbe behind thetrans-action. In a takeover Burberrycould be valued at £8bn, or£17a share, accordingto analy-sis fromMacquarie.“Burberryisoneof thefewluxury brandswithout family interest andthus aneasiertarget foracqui-sition,”said Macquarie analystDanieleGianera.

Burberry, headed byChristo-pher Bailey, is also concernedan activist investor may bebehindthestake.

The buyer’s stake first wentover the 5 per cent disclosurethresholdon February11, withHSBCreportinga totalholdingof5.4percentfourdayslater.

UK transparency rules usu-ally require reporting of anyshareholding over 3 per cent,but investment managers are

given partial exemption thatrequires them to disclose atmorethan5 percent.The stakehas since been reduced tobelowthatlevel.

Additional reporting by MarkVandevelde

In the spotlight Burberry rattledbymystery investor’s 5%stake swoop

ChristopherBailey, nowchief executive, directs a modelin Burberry’s studioin 2012—CharlieBibby

DAVID SHEPPARD, HENRY SANDERSON

AND ANJLI RAVAL — LONDON

Oiljumpedbackabove$40a barrel yes-terday for the first time this year andironore postedits biggest one-daygainon record as more traders bet that theworstofthe 20-monthcommodityroutwasover.

Theslump inoil andothercommod-ity prices had raised concerns for thehealthof thewider economy,with cen-tral banks warning of a possible defla-tionaryspiraland a sharp slowdowninemergingmarketgrowth.

Butmovesby someoftheworld’slarg-est oil producers to agree an outputfreeze have helped put a floor under

prices, with Brent crude rebounding50 percent sincemid-January.The international oil benchmark

gained5.6 percent to$40.96a barrel—the highest since mid-December andwith gains since mid-January reaching50.4percent.It remains wellbelowthenear-$100-a-barrel level it averagedbetween2010and2014.

Iron ore, oneofthe keycommoditiesfor many miners, rose almost 20 percentto$62.60atonne— thebiggestone-dayrisesincetheindexbeganin2009.

Officials in China,the world’s largestimporterof oilandmetals, have vowedto avoid a hard landing as they try tomove away from manufacturing andinfrastructurespendingtowardsa moreservice-basedeconomy.

While analysts caution that excesssupplies in many commodity marketsshould continue toweigh on prices, thenear-panic-levelsellingseen in January

hasabated. “Ithinkthatif we’renot atthebottomthenwecan’tbefar off,”said

Julian Kettle, head of metals at WoodMackenzie. “People are starting to getfar lessnegative aboutChina.”

Natural resources stocks have beensome of the biggest beneficiaries, withGlencore and Anglo American’s shareprice both almost doubling since thebeginning of the year after being theworst performers on the FTSE 100 in2015. They led gains alongside ChileancopperminerAntofagasta,whichis up75per centsinceJanuary20.

Copper, aluminium and zinchave allralliedby 10-25percentsinceJanuary.

China will tackle overcapacity in its

steeland coalsector, policymakers saidat the annual meeting of the nationallegislaturein Beijingat theweekend.

Saudi Arabian officials are to meetRussian counterparts in coming weekstosee ifthe world’stoptwooil exporterscanleadotherproducers tofreezeout-put, as many have seen their nationalbudgetssqueezedby thepricecollapse.

Hedge funds have largely switchedfrom betting againsttheoil price atthestart of the year to positioning them-selves forfurthergains,regulatory datashow. US oil production has started todecline in the face of lower prices,though companies may keep output

goingif thepricerecoversfurther.“We’veseena returnof riskappetite,”

saidMichaelWittner, analyst atSociétéGénérale.“[But] it’s goingto bevolatileandit’snota slamdunkthatpriceskeep

goingup fromhereina straightline.”Markets page27

Oil price jumpsasmarketssee beyondresources rout 3 Brent back above $40 a barrel3 Biggest one-day gain for iron ore


2/36


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Tuesday 8 March 2016 ★ F I N A N C I A L T I M E S 3

INTERNATIONAL

DUNC A N R OBINSON A ND A L EX BA R KER

BRUSSELS

TurkeyandtheEUarenearinga dealtoturn back all migrants reaching Greek islandsin exchange fora host ofsweet-eners for Ankara, including an extra€3bninfundingandaccessto Europeanvisas.

EU leaders and the Turkish premierwere negotiating into the night yester-day amid accusations of “blackmail”after Ankara presented a list of freshdemands justbeforethe meeting as the

priceforradicalmeasuresincludingthereturn of all irregular Syrian migrantswholandinGreece.

Diplomats said a deal was takingshape, with the EU side reluctantlyaccepting most of Ankara’s wishlist onfunding, visas for Europe’s passport-freeSchengenarea andthe directreset-tlement of Syrians from Turkey. How-ever, several EU countries balked ataccelerating Turkey's EU membershiptalks,a redlinefor Ankara.Oneseniordiplomatinvolvedin thetalksreckonedthenegotiationscouldrun intoa secondEUsummitscheduledforMarch17.

The hard bargaining is Europe’s sec-ondbigpushin lessthanthree monthsto secure Ankara's support on migra-tion, an endeavour that has led manyEU leaders to muffle their concernsabout the Turkish government’sauthoritarianturn.

A dealstruck in Novemberextended

work rights for Syrians but barelydented the flow of migrants across theAegean. “The refugees are outrunningthe EU's decisions. We’re making the

samemistakesone council to another,”saidDaliaGrybauskaite,theLithuanianpresident.“Wehave totalk [toTurkey]butwe mustresist blackmail.”

The centrepiece of the revised pactinvolvesTurkeyacceptingthe return of all migrants, including Syrians, whoreach Greek islands. That is far moreambitious than a previous plan for theEU to send back only non-Syrianmigrants. A draft of the summit dealseen by the FT casts the measure as“temporary”. Humanrights groups are

already questioning the legality of amass returns policy. Three diplomatssaid the question of whether returnswould cover all migrants, or just non-Syrians,was stillunder discussion.

Thisstrictreturnspolicywouldbe fol-lowed by a German-led group of coun-tries taking an equivalent number of Syrian migrants directly from Turkey.“Forevery Syrianreadmitted byTurkeyfromGreekislands,anotherSyrian willbe resettled from Turkey to the EUmemberstates,”the draftstates.

Thehopeisthatautomaticreturns—even for a temporary period of two orthreemonths— would deter the2,000people crossing the Aegean each day,while offering Syrians an incentive totake a legal route to Europe. DonaldTusk, the European Council president,wantsthemeasureto signalthatthe so-calledwesternBalkansmigration routetoGermany is“closed”.

Inreturn,theEU iswillingtocommitan extra €3bn of aid for Turkey from2018, once its existing €3bn pledge of supportfor 2016and 2017is exhausted.

This amountsto a promiseto continuesharingthe financialburdenofsupport-ing more than 2m Syrian refugees inTurkey.

Alongside this,the EUwouldin June grantSchengenvisaprivilegesfor Turk-ish citizens, according to the draft,althoughthisishighlycontentious.

The final outstanding issue isAnkara’s insistence that the EU fast-tracktheopeningof severalnegotiatingchapters in its EU membership bill.While Germany is relaxed about this,Cyprus has adamantly refused to cede grounduntilits ownrecognitiondisputewithTurkeyisresolved.

Turkey’s position as the staging groundfor morethan 1m MiddleEast-

ern migrants at the gateway to Europehasmadeit a pivotalplayerin theEU’seffort to contain the crisis and givenAnkara enormous leverage. Ahmet

Davutoglu,Turkishprime minister,saidthat the proposed deal demonstrated“howindispensabletheEU isforTurkeyandTurkeyfor theEU”.Speakingbeforeyesterday’s meeting, Mr Davutogluadded: “The whole future of Europe isonthetable.”

But its last-minute demands, pre-sentedlate onSundaytoAngelaMerkel,the Germanchancellor,threatenedthefragile consensus in Europe over thepolitical price it was willing to pay forTurkishco-operation.

Although Brussels has comeup withpolicies aimedat controllingthe flow—fromrelocatingrefugees acrossEuropetointroducinga Europeanborderguardand sending aid to Greece — most of

these have either flopped or not yetbeenimplemented. Additional reporting by Stefan Wagstyl

inBerlin

Turkey seekssweeteners intalkswithEUonmigrant crisisAnkara wants extra funding, visas forSchengenarea and resettlement vow

EU leaders tiptoed around Turkey’s

clampdown on media groups

yesterday, mindful that strong

public objections could jeopardise a

summit deal on migration.

Several leaders raised concerns

in public and private about Turkey’s

seizure on Friday of the country’sbiggest opposition media group

and bestselling newspaper Zaman,

which is being investigated over its

ties to outlawed cleric Fethullah

Gulen. But the criticism was

carefully weighed so as not to

endanger any pact over migration,

a priority for the bloc.

Belgium, France and

Luxembourg made critical public

remarks on the issue, while the UK

and Jean-Claude Juncker, the

European Commission president,

were among those who mentioned

the Zaman clampdown with Ahmet

Davutoglu, Turkish premier. But in a

sign of EU leaders’ eagerness to

secure a migration deal, the UK and

the commission were both happy

for talks covering justice and the

rule of law to begin as part of

Turkey’s application to join the EU.

Selahattin Demirtas, the Kurdish

leader of the People’s Democraticparty, said Turkish President Recep

Tayyip Erdogan’s leverage over the

EU on the refugee issue had given

him a free hand to use the military

against Kurdish militants in the

south-east. Since December, Turkey

has deployed the army in three

Kurdish-majority cities to disarm a

youth militia. Hundreds of fighters

and civilians have been killed.

“[Erdogan is using] the refugee

crisis to blackmail the EU,” said Mr

Demirtas. “This crisis should not

become a business deal.”

Some leaders offered mild

criticism before the summit.

François Hollande, the French

president, said: “The press must be

free everywhere, including

everywhere in Turkey.”

Germany said the issue had been

raised in Chancellor Angela

Merkel’s talks with Mr Davutoglu.But in public, Ms Merkel stayed

quiet. Alex Barker, Brussels

Zamanseizure

Leaders avoidclash

overmediacrackdown

Trapped: twomenstand nexttoa razor-toppedfenceattheMacedonianborder neartheGreek villageof IdomeniDimitar Dilkoff/AFP

‘We have totalk[toTurkey]but wemust resist blackmail’

Dalia Grybauskaite,Lithuanianpresident


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4 ★ FIN A N CIA L T IM E S Tuesday 8 March 2016

imposea siegeon therebelpocketsin alargelyregime-controlledregion.

Rebels warn that if regime advanceswipeouttheirterritory,theywillchangeto guerrilla warfare. “It won’t be over,butmaybeit willbecomelikeVietnam,”saidBassamHaj Mustafaof theNoural-Dinal-Zinkibrigades.“Wewilldigdownunderground,butwe willhangon.”

Thispresents a problemfor Washing-ton:as itlosesthetrustof theoppositionanditsregionalbackers,itcouldlosetheabilitytodeliver them totalksthatcanendthe country’swar.

“The US has burnt its regional andlocal allies,” Mr Hokayem said. “Whenthe uprising flares again, be preparedfora monsterworsethanIsis.”

Additional reporting by Noam Raydan in Beirut

ureinvolvedin talkswithwesterndiplo-mats, who asked not to be identified.“The problem with this ceasefireis theriskofcreatinganew normthatwesternofficials justify by saying ‘well, at leastthere’s a ceasefire’.”Some oppositionfig-ures, such as Observatory head RamiAbdelrahman,still support it and hopeit will be enough to get Syria’s warringsidesbacktoGenevaforpeacetalks.

The specific areas targeted by MrAssadand Russianair cover suggesttheregime is continuing offensives. Itappearstobe focusedon cuttingsupplylines in northern Syria andkeepinguppressure onthe oppositionnear itsseatofpowerinDamascus.

In central Syria, opposition activistssaythegoalseemstobetosplitrebelsinHoms andHama,whichcould ineffect

the monitoring system. Washingtonprepared a “call-centre” to reportviolations,but mediareportssuggest itdidnothaveenoughArabicspeakers.

Russia has “no interest in asking allthese Islamist rebels what particularshadeof greytheyare”, saida diplomatclose to Moscow. “For both Russia andtheUS,thisis justaboutkeepingaclean-shaven face,creatinga niceexteriorforwhatinsideis stillamess.”

Washington has little reason tochallenge the ceasefire, he added, as ithadessentially handedSyria toMoscow.Oppositiongroupsare bitterthe UShasnoappetiteto increaseits involvement,limiting itsroleto rooting outIsismili-tantsin theeast.

“America’s priority is to stay out of Syriaatany cost,”said anoppositionfig-

civilians. The US-Russia brokered dealaimstohalt violenceand stopterritorialadvances between Syria’s warring par-ties, but allows for targeting the jihadiforce Isis and al-Qaeda’s Syria branch,

Jabhatal-Nusra.Even as rebels claim that US-backed

groups signed on to the ceasefire arebeinghit,Mr Assadand Russiacanlegiti-matelyclaim theirattacksare aimedatNusrafighters,spread acrossrebelareas.

Critics say this reveals the failure of

ERIKA SOLOMON — BEIRUT

After littlemore thana weekthe“cessa-

tionof hostilities”in Syria hasslowed thebloodshedbut maintaineda patchwork ofbattlezonesacrossthecountry—asta-tusquothatmay dolittletoend thecon-flict,butcouldbeenoughforaUSadmin-istration keen to push for a settlementandavoidfurtherentanglement.

For Syria’s opposition, whichlaunched the 2011 revolt againstPresi-dent Basharal-Assad’s rule, itis stillanimprovementon conditionsbefore theceasefire.Therehas beenamarkeddropinviolencein areassuchas thesouthernregions held by rebels close to JordanandSaudiArabia.

ButtheHigh NegotiationsCommittee(HNC),which representsthe oppositionatpeacetalksin Geneva, arguescondi-tionsare notgood enough toguaranteeitwillreturntonegotiationsthismonth.

Other regions,suchas northernSyria,whereradical Islamistforcesdominatethe uprising, remain a war zone withdaily clashes and air strikes by the

regimeand itspatronRussia. This willdolittleto enda refugee crisis thathaskeptSyrians fleeingtoward Europe.

“Thisisnot cessationofhostilities.It’sa reduction of hostilities,” said EmileHokayem of theInternational Institutefor Strategic Studies, who is critical of theUSeffortsinSyria.

“It is going to create a very unequalSyria where some loyalist areas getrewarded and some opposition areasstruggleto survive.”

Before the ceasefire began, at least70,000 people were camped out alongthe frontier with Turkey, which has sofarkeptits crossingssealed, partlydueto European pressure. Activists saythousandsmorehavefledtothebordersevensincetheceasefire.

“Actually in the western countrysideof Idlib, the fighting hasn’t slowed, it’sincreased,” said activist Tareq Abdel-haq.“Therehas beenshelling nightandday . . . I believe tens of thousands of peoplehave movedto theborder.”

The Syrian Observatory for HumanRightssaid 135peoplewerekilledin thefirst week of the ceasefire, 32 of them

INTERNATIONAL

HEBA SALEH — CAIRO

Tunisiahassaid itfoileda dawnattackby suspected Isis militants againstarmyand policepostsclose toitsbor-derwithLibya.

Farhat Al Harchani, defence minister,said yesterday that security forces hadkilled at least 35 of the attackers andarrested six others in the town of BenGuerdane. Ten members of the forcesandsevencivilianswerealsokilled.

The raid by suspected Islamic State,orIsis,militantsis thebiggestoperationofits kindagainstthe Tunisiansecurityforces and underlines the dangers of spillover from the conflict in Libya,wherethe collapseof stateauthorityhasallowedthe extremistgrouptoestablisha stronghold.

Beji Caid Essebsi, president, said:“This is an unprecedented attack,planned andorganised,and whosegoalwasprobablyto takecontrolof thisareaandtoannouncea newemirate.”

Tunisia sealed all border crossingswithLibya and intensifiedaerial surveil-lance ofthe frontier. A curfewwas alsoimposed onBen Guerdanefrom 7pmto

5am for “as long as the security opera-tioncontinues”, saidnational television.

The army said it was still hunting

other members of the militant groupsresponsibleand urgedresidents to stayindoors and be vigilant. The town hasbeen sealed, added state TV, and allschoolsinthe areahavebeenclosed.

Tunisians are concerned that actionby international forces against Isis inLibya might deepen the chaos in thealready lawless nation and drive more

militantsacrosstheborder.At thesametime Tunisian Isis militants have beenusing Libya as a base from which tostageattacks ontheir owncountry.

A US air strike in February on

Sabratha in Libya killed more than 40peoplebelievedtobelongto Isis,includ-ing many from Tunisia. NoureddineChouchane, a Tunisian militant leader

alleged to have organised two attackslast year that killed dozens of westerntourists in Tunisia, was reported to beamongthosewhodied.

Someanalysts believeyesterday’s raid

maybe linkedto theSabratha airstrike,perhapsan attemptbyIsisto showitwasstillpotentdespite itslosses there.

“Ithinkit hastodo withtheSabratha

attack which largely targeted Tuni-sians,” said Issandr El Amrani, NorthAfricadirectorof theInternational Cri-sis Group. “However, there were alsosignsthatsomethinglikethis wasgoing

tohappenbecauseIsis hasbeenboast-ing on social media that it had 1,000supportersin BenGuerdane.”

Henotedthatthetownwaswhere“theTunisianstatehasitsleastpresence”andwherethereisalreadyaconduitofsmug-

gled goods from Libya, with the sametribesand familiesstraddlingthe border.Headded hehad informationthatthosetargeted in yesterday’s attack includedsecurityofficialswhowerekilledin theirhomes, suggesting the attackers hadlocalinformationor complicity.

Tunisia has recently completed a200kmbarrier,includingan earthwallandtrenches, onthe borderwithLibyatostop militantsand smugglers,but asthe latest violence suggests, some arestillmanagingto getacross.

Thisis the secondtime inlessthan aweek that security forces have clashedwith militants assumed to have arrivedfromLibya. On Wednesday,the authori-tiessaidtheyhadkilledfivemeninafight.

The group was intercepted after forceslearned militantsmight tryto cross theborderafterthestrikeonSabratha.

S Y R I A

TURKEY

Raqqa

l ppoAlll

oms

l bdl

Pre-ceasefire, Feb 24-26 Post-ceasefire, Feb 27 - Mar 4

S Y R I A

RaqqaI lli

poAle

Areas of control

Russia

US-led coalition

Airstrikes

Isis control

Isis support

Rebel-held

Syrian regime

Kurds

Rebels/Nusra*

TURKEY

aaDe

aDer

Source: Institute for the Study of War

* Jabhat al-Nusra, al-Qaeda's Syrian affiliate

S Y R I AS Y R I A

Border raid

Tunisiathwartsattackasdozensarekilled

Matteo Renzi has sought to soothe

Italians’ fears that Rome is about to

embark on an invasion of Libya, even as

contingency planning intensifies for

military intervention.

The prime minister faces one of the

most difficult dilemmas of his two years

in office over the mounting chaos in the

war-torn north African state, where Isis

has established a foothold.

Rome has long seen Libya — 200

miles away and a key source of oil and

gas — as a strategic interest, but

sending troops carries big risks.According to two polls in recent days,

an overwhelming majority of Italians

opposes military action.

Officials and diplomats say the

military has for months been planning

to lead an international coalition,

possibly involving thousands of troops

in Libya, and that those preparations

have reached their final stages.

But in an effort to quell concerns that

a move was imminent or a foregone

conclusion, Mr Renzi said in a television

interview on Sunday that military

action was no “video game” and that

Italy would not “invade Libya with

5,000 troops”, as long as he was in

office. But he added: “If there is a need

to intervene, we won’t hold back.”

Italian officials say they would only

take action if it was requested by a newLibyan national unity government.

However, UN-backed efforts to help

form a government have struggled.

The officials insist any Italian

operation would be focused on training

local military and police and protecting

infrastructure rather than directly

fighting Isis. But they are adamant they

are ready to move quickly if necessary.

“If the Libyan government makes a

request, I think that we could satisfy it

within days,” said one defence official.

Claudio Bertolotti, associate research

fellow at the Milan-based Institute for

International Political Studies,

envisages a combined force numbering

6,000 troops, of which about half would

be Italian. It would probably include

contributions from the UK, France, and

possibly others. The US has no plans tosend ground troops. James Politi

Invasion fearsRenzi plays down chancesof Libya intervention

ED C R OOKS — N EW YORK

Both contenders for the Democraticparty’s nomination in this year’s USpresidential electionhavetakena standagainst hydraulic fracturing, a tech-nique that is essential for most of thecountry’soiland gasproduction.

Ina televiseddebatebetweenthetwocandidates on Sunday night HillaryClinton, the former senator and secre-taryofstatewhois thefrontrunner,setoutideas for regulating hydraulic frac-turing, or “fracking”, to limit its envi-ronmentalimpact.

Whenthoseregulationswerein place,she said, “I do not think there will bemanyplacesin Americawhere frackingwillcontinue totake place.”

Bernie Sanders, a senator from Ver-montwhoisher onlyremainingrivalfor

the party’s nomination, said: “I do notsupport fracking.” He has previouslyargued itis impossibleforfrackingtobeconductedsafely.

Hydraulic fracturinginvolvespump-inga mixof water,sandand chemicalsinto wellsat high pressure tocracktherock,allowingtheoilandgas toflowout.

Ithas been used since the1940s, butadvancesinthe techniquefromabout15years ago have enabled a revolution inoilandgas productionin theUS.

Combinedwith horizontal drilling tosend wells sideways through layers of resource-bearing rock, modern frack-ing has made it possible to produce oiland gas from previously unyieldingshales and other “tight” rocks. About60percentofthegasand55 percentof theoil produced inthe UScomesfromshaleand similarsources,anda banonfracking would make anynew produc-tioninthoseareasimpossible.

Theopposition tofrackingfromMrsClinton andMr Sandersmarksa break fromPresidentBarackObama, whohasalloweddomesticoilandgas productiontoflourish,taking onlymodest stepstoregulatetheindustryat afederallevel.

The administration’s EnvironmentalProtection Agency concluded last yearthere wasno evidencethatfrackinghadcausedwidespread waterpollution.

Louis Finkel, executive vice-presi-dent of the American Petroleum Insti-tute, the industry group, said shuttingdown US production would make thecountryless competitive andmore reli-anton importedoiland gas. Headded:“US leadership and those on the cam-paigntrailare accountableto theAmer-ican people, and US consumers wouldbehurt bysuch anti-consumerpolicies.”

JasonHutt, chairof theenvironmen-tal and natural resources practice atBracewell, a law firm, said he did notexpecta totalor near-totalbanonfrack-

ing to take effect if Mr Sanders or MrsClintonbecame president.

“Youcan’tjustshutoffthevastmajor-ityof domesticproduction inthis coun-try: that’s a completely unrealisticenergypolicy,”hesaid.

Instead, he said, a Democratic presi-dent could be expected to take anincreasinglystrongerrole in regulatingtheindustry.Mostoiland gasregulationtodayishandledbythestates.

Mrs Clinton said at the debate shewouldallowfrackingto proceed only if the local community and the stateagreed, therewas nowater pollutionorleakage ofmethane, andtheoiland gascompaniesfully disclosedthe chemicalstheywereusing.

MarkBrownsteinofthe Environmen-talDefenseFundsaiditwasupto theoilandgas industryto disprovehersugges-tion that fracking would be rare if herproposed regulationswere in place.Hesaid: “If the industry is saying that itreally can’t produce oil and gas whileprotectingwaterand stoppingmethaneemissions, then maybe it shouldn’t beallowedto pursuethose practices.”

JUDE W EBBER — MEXIC O C IT Y

Fed up of being bashed by DonaldTrump,Mexico isplanninga USpoliti-cal charm offensive to set the recordstraight about a bilateral relationshipworth $1m a minute in cross-bordertradeandmillionsof jobs.

Rather than strike back at the manwhohaspromisedto builda“greatwall”

between the trading partners, the gov-ernment plans to re-educate presiden-tialcampaignmanagers andthemediato “counteract misinformation” aboutMexico in the US, said Francisco Guz-mán,chief of staffto PresidentEnriquePeñaNieto.

“This[the relationshipwith Mexico]

is not a threat but an opportu-nity . . . The North American region isthemostcompetitivein theworld.That[relationship] is muchmore intelligentthan a wall, which, far from boostingtrade,will restrict it,” Mr Guzmánsaid,referring to Mr Trump’s $8bn plan tobarricadethe 2,000-mileborder.

Officials and diplomats have beenwringingtheirhandsbut, until recently,

bitingtheir tonguesovertheRepublicanfront-runner’svows to deport11m ille- gal immigrants, charge Mexico for hiswall and stop companies from relocat-ing production of goods — from Fordcarsto Oreocookies —to cheaper facto-riessouthoftheborder.

Two former Mexican presidents,

Vicente Fox and Felipe Calderón, bothwarn that Mr Trump is a dangerousdemagogue. Alejandro Hope, securityeditor at digital publication El DailyPost, claims “the US-Mexico securityrelationshipwouldbeset back20years”by a Trump presidency, with abeefed-up border sparking fierce con-flictinMexicofordrugroutes.

Mexicoalso fearsa Trumppresidency

would gridlock theworld’sbusiestlandborder for everything from trade tomedical tourists heading to Tijuana forcut-pricetummytucks.

“Ifhewins,he couldintroduceretalia-tory measures that wouldn’t hurt the governmentbutwouldhurtthepeople,”saidJorgeRivera,73,a shopkeeper.

Mexico is estimated to be home tomore Americans than anywhere elseoutsidethe US,and withexotic beaches,a cheappeso,popularfoodand flowingbeer and tequila, it is Americans’ topinternationalholidaydestination.

MrTrumpused tolike Mexicotoo: heput his name on the planned TrumpOceanResortBaja Mexico,just southof SanDiego, butthe luxurydevelopment

went bustin the2008-09financialcri-sis. The businessman says he was notbuilding theresort himself buthad justlicensedhis nameto it.He settledfor anundisclosedsumin 2013withmorethan100peoplewhohad putdownmillionsofdollars indeposits oncondominiums.

Icy US-Mexican relations and a for-

tress border would not just be bad forsun-seekers or lovers of guacamole —mostavocadosinthe USareMexican—andSaraLee bread,ownedbyMexicanbrandBimbo.Forbig companiessuchasCiti, General Electric, AmericanExpressand Procter & Gamble,Mexicoisa flagshipmarket.

However,Mr Trump objectsto theUSrunning a trade deficit with Mexico —

$53.4bn last year. Yet fears that theNorthAmericanFree TradeAgreement(Nafta) would leadto theloss ofAmeri-can jobs proved unfounded: some 6m jobsexistintheUS becauseoftradewithMexico, which has grown sixfold sincethepactbeganin1994tomorethanhalf atrilliondollarseachyear.

More than 80 per cent of Mexicanmanufactured goods go to the US, butMexico’s maquiladora, or made-for-ex-port,factories churningout computers,TVs and other goods rely on importedUScomponents.

Juan,an elderlyshoeshinein MexicoCitywhospentfouryearsdrivingtrucksinChicagoas an illegalimmigrant, railsagainst Mr Trump. “He forgets the US

wasbuiltbyimmigrants,”he says.From the 1940s to the 1960s, the

bracero programme provided Mexicanfarmhands, and Luis de la Calle, aformer Nafta negotiator, said MrTrump’spolicywoulddestroyUS farmssince“thereis nowayof USagricultureworkingwithoutMexican labour”.

Syria. Fighting pause

Ceasefire fails to boost hopes for peace

Groups opposingAssad

regime refuseto confirm

return toGeneva negotiations

PR campaign

Mexico incharmoffensive tomendfences inUSand counterTrump’s rhetoricoverwall

Democratic race

ClintonandSanders takestandagainst fracking

inUSdebate

Changing conflict

‘Inthe westerncountryside of Idlib,the fighting hasn’t slowed, it’s increased’


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6 ★ FINA NCIA L T IM E S Tuesday 8 March 2016

INTERNATIONAL

GABRIEL WILDAU — BEIJING

China’s capital outflow eased in Febru-ary, with analysts saying the smallestdecline inforeignexchange reservesforeight months will reduce anxiety overthecountry’sfinancial stability.

Central bankdata released yesterdayshowed reserves fell $29bn last monthto$3.2tn, sharply lowerthanthe $99bnfallinJanuaryanda record$108bndropinDecember.

Expectations of renminbi deprecia-tionand concern aboutChina’s slowingeconomy have fuelled unprecedentedcapitaloutflowsinceofficialreserveshitanall-timehighof $3.99tnin June2014.

As renminbi selling pressure intensi-fied, thecentral bankhasdrawn onitsreserves tocurb downwardpressureonthe exchange rate. But the renminbirecovered 0.3 per cent in February,reducingthe needfor intervention.

“Thecapitalflightthesis— thenotionthat Chinese residents and companiesare desperate to get money out of thecountry and will do so regardless of short-termmovementsin theexchangerate— isinconsistentwiththe February

outflow,”wroteMichaelParker, headof Asia Pacific strategy at Sanford Bern-steinin HongKong,in anote.

AnalystshavewarnedthatChinamaybeforcedto scalebackits marketinter-

ventions in support of the renminbi toprevent reserves being depleted belowsafe levels. On Sunday a top centralbankersoughttoreassureinvestorsthatChina’s officialreserveswerecomposedexclusively ofhighly liquidassets.

The comments by Yi Gang, deputy governorof thePeople’s Bankof China,werea responseto claimsbysomebear-ish investors who believe the centralbank figures includeassets such asfor-eign real estate and private equity,

whichcannoteasilybe deployedin cur-rencymarkets.

Zhang Yu, economist at MinshengSecuritiesin Beijing, estimatesthat thePeople’s Bankof Chinaspentan average

of$15bnaday inthespotexchangeratemarket tosupportthe renminbiin Feb-ruary, down from $50bn perday attheheight of renminbipanic selling follow-ingthe surprise devaluationof thecur-rencylastAugust.Her estimatesare for grossoutflowsfromreservesanddo notinclude countervailing inflows fromtradeand foreigndirect investment.

ButMs Zhangcautioned thatoutflowpressure remains, despite encouragingFebruary data. Part of the decline in

reservesis theresultofseasonalfactors,includingthe lunarnew yearholiday.

Valuation effects also flattered theheadline reserves figure. TheUS dollarfellmodestlyin February, whichboosts

the dollar-denominated value of non-dollarassetsin China’s reserveportfolio,includingeuros,yenand sterling.

“Theadjustmentof privatesectorbal-ance sheets still requires expendingmore forex reserves, but the ammuni-tionspent oninterventionhas reduced,”MsZhangsaid. “Thecentralbankis try-ingto spendmore judiciously.”

Addi tion al repor ting by Ma Nan inShanghaiShortView page15

Capital funds

Chinaoutflowdatacalmforex reserve fearsRenminbi recovered0.3%lastmonth, reducing theneedfor intervention

CHARLES CLOVER — BEIJING

As economic slowdown stifles China’sdefencespendingboom,theprivatesec-toris joining PresidentXi Jinping’sbat-tle to transform a bloated, inefficientland army into a streamlined modernfightingforce.

With the military seeking to acquiremore for less, companies have for thepast year been allowed to compete forselectedmilitary equipmenttenders.

Dou Fengchun, who runs TaizhouHuairun Textiles, a textile plant in Jiangsuprovince,is amongthoseto haveenteredthe previouslyrestrictedsector.

“Wehadthe lowestprice, period, andthat iswhy wewon,” saysMrDou, who

won a Rmb114,000 ($17,500) contractto supply the Beijing Military Districtcommandwith “professionalprotective gear”, according to the defence minis-try’s general armaments department.Whilethecontractwas nothugein busi-ness terms, Mr Dou says it has openedthedoortofurthermilitarywork.

He declined to answerdetailedques-tions, however, as few companiesinvolvedin thenew opentendersspeak to the media for fear of harming theirchances withthe publicity-shy People’sLiberationArmy.

Military procurement was once theexclusive, lucrative realm of secretivestate defence groupsbutsincethe gen-eralarmamentsdepartmenthelda pilottender for oscilloscopes in December2014, procurement has become moretransparent, withdatapublishedonthedepartment’swebsite.

Sofar thedepartmenthas announced505opentenders,whichwerecontested

bybothprivateand statecompanies.Of these,priceswereonly disclosedon316,worthan aggregateRmb762m— a dropinthe ocean compared with thisyear’sRmb954bndefencebudget.

But,partlyforfiscalreasons,themili-tary plans on more private sectorinvolvement.This year’sdefencebudgetwasup just 7.6 percenton lastyear’s —thelowest risesince2010and only thesecond single-digit increase in the pasttwodecades.

Hencethe focuson costsavings. Themost recent attempt to estimate thescale waspublishedlastApril after thefirst experimental round of tenders. It

showed thatin thefirst threemonths of the programme, competitive tendershelped the army shave Rmb12m off aRmb90mpurchasingtarget.

Butthe reforms are“more aboutbet-terhigher-cost performance, andcurb-ingcorruption, thanabout savingnick-elsand dimes,” saysYueGang, a retiredarmy colonel. “This open system will

giveriseto greatertransparency topre-servethemilitary’s efficiencyand fight-ing capacity. It’s definitely a sign of progress.”

Theopentendersarepart ofreformsannounced in 2013 designed to trans-formthePLAfromapeasant-basedlandforce into a modern, professional mili-tary. A big troop cutback slashing300,000 off the PLA’s 2.3m headcountwasannouncedbyMrXiin September.

Theproductswheretheprivatesectorhas the biggest advantage are thosewhere there is already a fully estab-lished market, such as shoes, canned goodsor circuitboards,Mr Yuesays.

But high-tech goods are also beingsought privately. For example, BeijingRuidaenTechnologysaysit wona multi-millionrenminbitenderforradar main-tenanceequipment inDecember.

The supply chain has even extendedoverseas. One private sector group,whichdidnot wantto benamed, saysitactedas a distributionagentfor foreign

technologycompaniesthatmightnotbeawaretheyaresupplyingthePLA.

Butdespitetheopeningup,thestateislikelyto retainits dominantrolein mili-taryprocurement. Mr Yuesays thepri-vatesector’s rolewillprobablynotgrowbeyond 20 per cent, and that manyitems such as advanced weaponry willberestrictedto stategroups.

“It’s natural for the military to givethem preferential treatment withordersor subsidies,”he says.

“They haveto beartheburden ofthecostof maintainingproductionlinesformilitaryproducts.”

AdditionalreportingbyMa Fangjing

Procurement. Transparency

Private sector joins Xi’s military crusade

Openingupofarmytendersispart ofreformsseekingto save

costs andmoderniseforces

L ES L I E H OOK — SAN FRANCISCO

RayTomlinson,the programmercred-itedwith sendingtheworld’sfirstmod-ernemailandforpioneeringtheuse of the@ symbol in electronic communi-cations,hasdiedaged74.

Tomlinson wrotea programin 1971thatallowed messages to be exchangedbetween different computers on theArpaNet, theprecursorto theinternet.Electronic messages had previouslyonly been exchanged between peopleusingthesamemainframemachine.

The programmer said the first emailsentwasa trivialtest message,probablycontainingsomethingalong thelines of “QWERTYUIOP”.

Atthe time ofhis invention, Tomlin-son was researching possible uses forthe ArpaNet, the US military networkthat formed the basis of the internet,and was particularly interested in

improving ArpaNet’s “mailbox” func-tion,whichallowed usersto send mes-sages to numbered mailboxes. Up tothen this had involved someone print-ingoutthe messageand physicallyplac-ingitin themailbox.

To resolve this problem, Tomlinsonwrote a file transfer program thatalloweda messagetobe deliveredelec-tronically to a separate computerthroughArpaNet.

“Theinventionof emailcameout ofapersonal desire for a more convenientand functional way to communicate,”Tomlinsonsaid in2012.“Basically, Iwas

looking for a method that did notrequire thepersonto bethere whenthemessage was sent and enabled thereceiver to readand answercommuni-cationsat theirconvenience.”

Tomlinson alsocameup withtheideaofusingthe “@”symbolto separate thenameof therecipientfromthenameof thehost,creatingthe standardstillusedtoday. Inspiteofa historyofmorethanfourdecades, Tomlinson saidemailhadnotchangedmuchsinceitsinvention.

“The early uses were notterribly dif-ferentfromthe current uses,” he wroteon his personal web page. “The excep-tionsarethattherewasonlyplaintextinthemessagesand therewas nospam.”

He said part of the inspiration foremailhadcomefromtheideaofthetel-ephone message.“Atthe timetherewasnoreallygoodwayto leavemessagesforpeople,”he toldTheVergemagazineina2012interview.“Everyonelatchedon totheideathat youcould leavemessages

onthe computer.”Born in New York state, Tomlinson

studied electrical engineering at Rens-selaerPolytechnicand then earnedhismasters degree at Massachusetts Insti-tuteof Technology.

HejoinedBolt,Beranekand Newmanin 1967 in Massachusetts, and stayedthere for the rest of his life. BBN waslateracquiredby Raytheon and knownasRaytheonBBN.

“Itis with greatsadness weacknowl-edge the passing of our colleague andfriend,”Raytheonsaid. “Atruetechnol-ogy pioneer . . . his work changed thewaythe worldcommunicates.”

Internet

Pioneering programmerwhosent first emaildies

HENRY FOY — BRATISLAVA

MarianKotleba refersto Romapeopleas“gypsyparasites”,reveresa Naziwarcriminal as a “national hero” and hasadvocated a statewhere minorities arestrippedof theirrights.And asof thisweekend,he leadsSlovakia’sfifth-mostpopularpoliticalparty.

Inoneof thebiggestsurprisesofSatur-day’s election, morethan 200,000 castballots for the neo-NaziPeople’s Party:OurSlovakia(L’SNS)— including23percentof first-timevoters.

“The peoplehavedecided,and this isthebeginningofa newerain Slovakia.Ihope that we will succeed in rescuingSlovakia from where it is heading,” MrKotleba said on Sunday. “The govern-ment keeps favouring foreign policiesovertheinterestsof Slovakcitizens.”

Stocky andskin-headed —and with a

penchant for dressing up in uniformsmodelled on Slovakia’s wartime Nazi-supporting militia — Mr Kotleba bor-rows rhetoric and symbols from thecountry’s fascist past, has flirted withholocaustdenialandcalled forMuslimstobebannedfromthecountry.His partymanifestorejectsEU membership, sees

Natoand theUS as“criminal” organisa-tions, decries western democracy as apropagator of“dangeroussectsand sex-ual deviations” and calls for a nationalmilitiato protectethnicSlovaks.

Ignored by the mainstream mediaduring theelection,the 38-year-oldwasonthefrontpage ofthebest-sellingSMEnewspaper yesterday, the face of a far-rightresurgencein anEU memberstatewhere suspicion of outside influencerunsdeep.His riseto prominence,win-ning 8per centof thenationalvoteand14 seats in the 150-strong parliament,mirrors that of the far-right elsewherein Europe, suchas theneo-NaziGoldenDawn party in Greece and Hungary’sradicalnationalistJobbik,bothof whomhavenational MPs.

In Slovakia, some political analystsfault the anti-immigrant, anti-Muslimrhetoricof primeministerRobertFico’s

ruling Smer-SD party during the cam-paign for creating a narrative that MrKotlebausedtohis advantage. “Tosomeextent,Mr Fico’sspreadingof anatmos-phere of fear since the summer . . .clearly helped tocreatea monster,”saidMichalVasecka,a SlovaksociologistandprofessoratMasaryk Universityin Brno.

A former high-school teacher whowasbanned from theclassroom forhisextremist views, Mr Kotleba enteredpoliticswith theultranationalist Slovak Congregation party in 2005. Its mani-festo called for non-Slovaks to bestripped of certain human rights. Thatledtoa banbythe country’sauthorities.

Thenin 2013, hetappedintoangeratmainstream parties in a rural and

under-developed areaof Slovakia to beelectedgovernorofa regionof 650,000.

During that campaign, he wasindicted forhate speechafterhis mani-

festoclaimed“unfairfavouringofgypsyparasites”. A local court eventuallyrejectedthe prosecution.

Slovakia’s economy has nearly dou-bled in its 11 years of EU membership.But that has been little consolation toan underprivileged segment of thepopulation that feels abandoned by

mainstream politicians and disenfran-chisedbythecountry’sliberaldemocracy.

MrKotlebaappealstothemwithrhet-oricportraying ethnic Slovaks as undersiege fromforeigninvadersandinfluen-ceswhile romanticisingthe fascist stateofCatholicpriestJozef Tisofrom1939-1945, which allowed for thousands of Jewsto bedeportedtoNazideathcamps.

L’SNShas avoided anti-semiticstate-ments in recent years and focusedinsteadon attackingimmigration.

“The main reason for the [need] toestablish militias is total failure of thepolice to prevent and protect decentpeople from vicious antisocial elem-ents,” Mr Kotleba said last month.“Every month they fail to stop gypsyextremistssomewhere rapingor killingsomeone.Police,ledby theinteriormin-ister,protectthievesand parasites,”add-edMr Kotleba,whodeclinedto respond

toquestionsfromtheFinancialTimes.Suchstatements chimewith working-

class Slovaks in deprived areas wherethe government has failed to integrateparts of the country’s more than100,000-strong Roma community.L’SNS polled strongly in eastern areaswhereRoma communitiesare largest.

Far-right resurgence

Slovakia’s neo-Nazisgaingroundonpoliticalmainstream

Hong Kong and Beijing are risking a

“showdown” as democratic demands

clash with mainland interference, the

territory’s lawmakers have warned.Many Hong Kong citizens accuse

Beijing authorities of violating

guaranteed rights to legal autonomy

and democratic freedoms. China’s

leaders, meanwhile, warn of the rise of

“radical separatists”.

“The situation is heading for a

bigger showdown,” said Michael Tien,

a businessman and Hong Kong

lawmaker who represents the territory

in China’s rubber-stamp National

People’s Congress, which is holding

annual meetings this week. “Beijing is

convinced that it was too liberal . . .

but the tighter they squeeze Hong

Kong, the more the resistance.”

Zhang Dejiang, chairman of the NPC

and top Beijing official responsible for

Hong Kong, met delegates from the

territory on Sunday and raised

concern over violence that followed

protests by localists opposed to

Beijing’s rule.He is said to have called on

residents to focus on economic

development, rather than political

issues. But the backlash has

intensified since the detention last

year of five Hong Kong booksellers.

“China is trying to prescribe an

economic solution to a political

problem,” said Andrew Yao, another

Hong Kong businessman who is part

of the NPC. “We need all sides to sit

down, be realistic and negotiate

something that will not cross the

bottom lines of both sides.” Ben Bland

HongKongTerritory on courseforBeijing‘showdown’

7.6%Increase in thisyear’s defencebudget from lastyear’s, the lowestrise since 2010and only thesecond single-digit increase inthe past twodecades

300,000Reduction inPLA troopnumbers, from2.3m, announcedby Xi Jinping inSeptember

Rmb12mAmount shavedoff the army’sRmb90mpurchasing

target afterthree monthsof the opentendersprogramme

Soldiers takepart inanexerciseinBayingol,Xinjiang, in

JanuaryReuters

‘The inventioncame out of a personal desireforamoreconvenientwayto communicate’

‘Thegovernmentkeepsfavouring foreign policiesover theinterests of Slovakcitizens’


7/36



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8 ★ F I N A N C I A L T I M E S Tuesday 8 March 2016

P A R I S F A S H I O N W E E K

Simplydoes it

We waited 50 minutes for Kanye Westto take his seat at Givenchy, at a showthat lastedabout 15.Perhapshe lost hisway; thesetwas a labyrinthinemazeof corridors, each one screening off thenext so that the seating felt like aLondon Underground carriage at rush-hour— standing-roomfor models only.

Thankfully the wait providedexcellent material; a first, second andthird act before the grand finale. I wasseated opposite actor Bradley Cooper,US Vogue editor Anna Wintour andWendi Deng, who had presumablychosen to divert her attention from thepublicitysurrounding her ex-husband’sweekend nuptials to the model JerryHall by watching lots of fashion shows.Wintour, Cooper and Deng were joinedon their bench by Gabriel-Kane Day-Lewis, “a musician who does a bit of modelling to make money” (and theson of Oscar-winning scenery-eaterDaniel andactressIsabelleAdjani), andAndrew Bolton, the new curator incharge at the Costume Institute at NewYork’s Metropolitan Museum, andco-hostwith Wintourof May’s MetBall.

They made a compelling portrait of the modern creative power player,thoughno pictureswerein factallowed.Cooper wasn’t doing press, and a burlyminder ushered away incoming lensinterest with a glower. Unlike West,they were also punctual: Wintour is animpeccably timely attendee at theshows,and often thefirst tobe seated.

They spoke about London theatre,fromwhenceCooperhas latelyfinishedasemi-acclaimedrun in The ElephantMan.Wintour was enthusiastic about RalphFiennes’ majesty in The Master Builder

and Martin McDonagh’s play, Hangmen.They discussed Nancy Reagan, whosedeath had just been reported, and howsad she must have been to see thequagmire of Republican debate.Wintour is a fully subscribed supporterof Team Hillary, and has negotiated theseason alongside fundraisers for the

Democratic candidate. Altogether theperformance was riveting.

The clothes, when they finally came,were a little less so. Arguably, such anenormous build-up could only be metwith a tinge of disappointment. Afterlast season’s triumphant love-letter toNewYork,a lingerie-inspired collectionstaged against the sunset over theHudson and co-created with his friendthe artist Marina Abramović, RiccardoTisci’s AW16 was more straightforward

in its ambitions, though sartoriallyquite complex. The 51 looks interwovemilitary tailoring, snakeskins, leopardprint and ancient Egyptian motifs in amelange of chiffon prints, bomber

jackets and officer’s Great coats in lightblackwoolwith crimsonaccents.

“It was a mix of psychedelic music

Placing functionoverthe

fanciful,this celebrationof breezyfemininity chimed

withthe times

Still no official word on whether StellaMcCartney is launching a menswearlabel. For AW16, however, her shapeswere womanly and wide: fluid, flaredpyjama trousers,big,quiltedurbanpuf-fas (quite the trend in Paris), croppedbomber jackets (ditto), a voluminous

jacquard dress with a fine swan motif.“It’sin mylanguageto alwayshavesomekindofanimal printin mycollection,to

give some respect to the fellow crea-tures,”the designersaidof theregalbirdthat decorated sweaters and dresses.“TheswanfeltveryBritish,verybold.”

McCartney’s showwas strong,synthe-sising many of the characteristics shehasalways“playedwith”at thehouse—soft tailoring, easy lines, a focus onwearability. Theparkaswereeminentlysensible, her pointed white flatsdesignedfora womanon themove.

Inrecentseasons, theprevailingfash-ion has been for maximal styling andexcess. Thearrivalof Balenciaga,andasimpler, spare design will change that.ThisAW16wasa reminderthatMcCart-ney’s sporty, pared-down aesthetic hasalways placed function over the fanci-ful,and thisquiet celebrationof breezyfemininitychimedwith thetimes.

Known as the go-to designer for theworkingwoman—“orat least,I hopeIam”, she said backstage — lately she’sbeen more interested in the “day-to-

night” wardrobe. Hence, this workingwardrobewas punchedup withdressierdetails: a gorgeouspink dresswhichfellto the floor; a long skirt with kiltlikepleats wascolouredin equalpartskhaki

andgold; a slouchy slatevelvetsuithadsheertulle shoulders;even theeverydayparkas were neatlynipped at thewaistorfinishedin luxe-ierfabricslike velvet

FASHION

JoEllison

Givenchy

BradleyCooper, Kanye

West, AnnaWintour . . .

thefront row provided therealtheatre at Givenchy

and Egyptian,” explained the designerbackstage, with uncustomary brevity.“Egypt because it was the beginning of everything. And fur, snake and leopardbecause I’m obsessed with animals. Iused the military details for the goldand the decoration.”

Thecoatswerecertainlythe strongestpartofthe collection,all hungunderthewatchful eye of Ra. Patchwork pythonbombers and admiral coats were svelteand purposeful; the best were over-

layered with gentle quilted jackets thathad arts-and-crafts-like prints. Theywere worn with flattering mannishblack trousers and tight cropped wigsthatcovered thehead likeskullcaps.

Backstage, Cooper shook Tisci’shandin a manly display of fraternalappreciation.He thoughtit was“great”.

orsilk.Allwerewornwitha singledropearringand slickedMarcel Wavehair.

“Idon’thavetimeto gohomeandgetdressedup again.I wantto addanear-ringandaneyeand goout.”I understand

the single earring, but the eye? OneassumesMcCartney wastalkinginfash-ion-speaksingular?“No! Imean oneeyeopenand theother closed,” shelaughed.

HermèsStella McCartney

Despite early warnings that eventsin Paris and the staggering worldeconomy would dent the accelera-tion ofgrowth atHermès, thefami-ly-ownedcompanyreported a solid14.5 per cent increase in sales forthefourth quarteron February 10,andconsolidated fiscalrevenues of €4.8bnin2015,up18percent.Theyarethekindof numbersother lux-urybrands dream ofas they battlecurrencydevaluationandtheAsianconsumer conundrum: the brandposted an 18 per cent increase insalesinJapan,andamoremodest5percentinthe restofAsia.

It’s easy to see why Hermès isworking. Steered underthe leader-ship of chief executive Axel Dumasand his cousin and artistic directorPierre-Alexis Dumas, Hermès contin-uestooccupythatraretierofluxurystilltwinned with artisanal authenticity:people believe in the product. Theyinvestin it,and sensiblyso:accordingtoa study undertakenin Januaryby Bag-hunter, thewebsitethat tradesin high-endaccessories, thebrand’sBirkinbag,named for actress Jane Birkin, whichwaslaunchedin 1984, hashadan aver-age annual return in value of 14.2 percent. And that’s a lot more than gold,fashion-haters.

So, too, has Hermès’ ready-to-wearseena fillipingrowth:8 percent,underthe calm, collected eye of its 37-year-old creative director Nadège Vanhee-Cybulski, formerly of The Row. A yearinto the job, she has ironed out the

detailsthat wrinkledher firstcollection—the curioustrousershape,theslightlyFraujackets— todeliveran elegant linein wafty luxe sportif that simply whis-persexclusivity.

This season Vanhee-Cybulski hadworked on the colours and the housecodes. “I call them the new neutrals,”shesaid ofher sorbet-shadedpalette.“Iwanted tofrostthe colours,bychangingthe weave of the cloth which gives it aslightlydifferentcolouration.” Hernewcolours werekumquatorange, tobaccoand absinthe. Theycould haveseemedsickly but the tones were toughenedwithdark suedes, navysilks andshear-

ling. A blacksuedecoatwas coveredin3,500 palladium studs — a bit of heftamongallthehues.

The horsey elements one expects atHermèswereherequitehidden:a ridingsilk jockey jacket and sweatshirts hadequestrian echoes, but Vanhee-Cybul-skiis tryingto “breakperceptionsof thetraditionalriding dress”.

Her line was fluid and super-femi-

nine:“I canget obsessiveaboutlength,”she said of the seven-eighth hemlinethat defined most every look, be it theleather culottes or twillaine cashmeremohair skirts, and worn with a kneeboot with stacked heel. “I wanted anelongatedsilhouette.Utterly feminine.”

Thecharmofthe Hermès wardrobeisin its inconspicuous elegance: Vanhee-Cybulski’sgentle touchworks a treat.

Catwalking.com

Nadège Vanhee-Cybulski’selegant line in wafty

luxe sportif whispers

exclusivity


9/36

Tuesday 8 March 2016 ★ FINANCIAL TIMES 9

F T B I G R E A D . US EXCHANGES

IEX, thestart-uptrading venuemade famousin FlashBoys, is seeking tobecomeanexchangeand takeontheNYSEandNasdaq. In theprocess, ithasprompteddebate overfairness intheUSequitymarkets.

ByNicole Bullock andPhilipStafford

employing aggressive tactics. “Whileaccusing everyone of lobbying againstthem,it is IEX’s owners whoare aggres-sivelylobbyingDC,” saysone observer.

Some say it is hardly a coincidencethat theIEX applicationis being heardduringan electionyear.Attackson WallStreet have been a feature of Demo-cratic party debates, and there havebeen proposals to tax high-frequencytrading. IEXsupporterssay theyare upagainst a system keen not only to pro-tect the status quo but one that would

have toadmitits pastmistakes,raisingthestakesfortheSEC.

Politics may also play another part.Therearetwo unfilledseats onthe five-personpanel,and itscompositionmaybeshakenupaftertheelection.

The SEC is scheduled to decidewhether to approve IEX’s applicationwithinthe nextfortnight,thoughit hasalready extended the deadline once.IEX has been defiant about changes toitsstructure.“Wewant tobe approved,obviously, but not with compromisesthat limit our ability to protect inves-tors’ rights to the end,” says Brad Kat-suyama,IEX’schief executive.

IEXhasmade onesignificantchangetoaccommodate concernsraised duringtheconsultation.It altereda pieceof itstechnology so that all outgoing orderswill be sent over its speed bump, butargues thestructurestill protectsinves-tors. It is unclear whether this will beenoughtosatisfytheUSregulator.

IEXis clearlyhoping tocapitaliseonits momentum beforethe publicinter-est begins to wane, putting the SEC onthespot.

“Ithinkit willbe politicalsuicideforthemto opposeit butthey need tosaveface,” saysSpencer Mindlin, an analystatAite Group,a financial marketscon-sultancy.“[The SEC]has gonethroughcriticism of unintended consequencesand now they are on the defensive. If theygo againsta market-basedsolution,that,politely,is goingto beunsavoury.”

The speed bump battle

Most share deals no longer take place

on a trading floor or even a computer

screen sitting in an exchange. The

closest physical approximation to the

floor is a rack of servers housed within

high-security data centres, often miles

away from corporate headquarters. In

the US the New York Stock Exchange,

Nasdaq and Bats Global Markets each

operate out of different data centres

all based in New Jersey.

IEX says its mission is to level the

playing field by slowing down high-

speed traders that, it claims, gain an

advantage by placing their own

servers close to the exchanges. That way,

some fast traders learn about deals

before unwitting investors.

To blunt that edge, IEX has developed

its so-called “magic shoebox” — 38 miles

of fibre-optic cable coiled into a small

box, designed to iron out the

inefficiencies in share trading created by

both geography and physics.

The system has a built-in delay of 350

microseconds — a thousand times faster

than the blink of an eye — on trades

arriving and leaving its venue. It

estimates that timeframe is enough to

harmonise the speed on trading

information for customers that pay to be

near the servers of its rivals. IEX also

argues that competitors like NYSE and

Nasdaq have practices that are

tantamount to a speed bump by other

Themagic shoeboxSpeed merchants targetedbycoils ofcable

Warhasbrokenoutin theUS stock market. Ononesideis theestablish-ment, led by the NewYork Stock Exchange

and Nasdaq. On the other is IEX, anupstart tradingvenuewith a tinysliverof the business but outsized ambitionsto disrupt the world’s largest equitymarketby becomingan exchangeitself.

In the middle is the Securities andExchangeCommission,which is weigh-ingwhether tograntIEX equal footingwith NYSE, Nasdaq and otherexchanges, witha decision dueas soonas March 21. Beyond the question of whether to change the architecture of theUSequitymarket,theSEC hasfounditself caught up in a fractious publicdebate over what would normally be awonky processof littleinterestoutsidetheindustry.

Onereasonfor thepublicattentionisthat IEX has successfully framed its

quest as a matter central to the funda-mental“fairness”ofthe USmarkets.

TheSEC’sstatedmissionis“to protectinvestors, maintain fair, orderly, andefficientmarkets”. Butwithits push tobe an exchange, IEX is asking: whoseinterestsdoes thesystem reallyprotect?

“TheIEX applicationis a referendumon modern US markets,” says SalArnuk,principalatThemisTradingandasupporterof thecompany.

Founded in 2012, IEX has enjoyedpublicitythatmost start-upscouldonlydreamof.MichaelLewis,oneofthefore-most chroniclers of finance and mar-kets,made theNewYorkcompanythe

centrepiece of his latest book, Flash Boys:A WallStreetRevolt. Init,Mr Lewischronicles IEX’seffortsto upendwhatitperceivedas an “unfair” equitymarketwhere high-frequency traders exploitinefficiencies in a highly fragmentedmarket.

Thatfragmentationwas enshrinedin2007when theSECrevamped themar-ket,witha pieceof legislationknownasRegulationNationalMarketSystem,orRegNMS. With the new rules, the SECsought to modernise the stock marketbyencouragingthecreationof newelec-tronic trading venues to increase com-petitionandkeeppriceslow.

The result was an explosion of elec-tronic trading venues, with dozens of newgroups enteringthe business.

When IEX began trading six yearslater, some investors’ faith in this new

system had been rattled by the ‘flashcrash’ and a sensethat lightning-speedtradinghaddistortedthe market.

IEXhada simpleproposal:findawaytohaltthe industry’sarms racein whichhigh-speed traders continually assesseverystepin a tradeto shaveoffmicro-seconds.That,it says, could beachievedby what it calls a “magic shoe box” —forcingthe trading datato takea detourthrough38 milesofcoiled-upfibreopticcable to produce a 350-microseconddelay. Thedelay,equivalentto oneone-thousandth ofthetimeit takesto blink an eye, would ensure that all investorswouldbe treatedfairly,it says.

‘Notaboutspeed’

IEX claims this set-up would also haltthe lucrative business that middlemen— including exchanges such as Nasdaqand NYSE — have created from sellingultra-fast connections to high-fre-quencytraders.

“We have long thought that themar-ket was overly complex — too manydark pools and too many exchanges,and too hard to express trading inter-est,” arguesAndrewBrooks,head ofUSequitytradingat TRowePrice.“In someways the market system has failed tofully protect the interests of long-terminvestors. IEX is about innovation andspeed or thwarting speed — pushingback againsta myopicviewof speed. If you have a two to three-year [invest-ment] horizon, which we do, it is notaboutspeed.It isaboutprice.”

High-speed trading has grown in thepast decadetoaccountforabouthalfof daily market volumes in the US,althoughdownfromitspeakwhenIEXstarted. Consultants estimate that thiscottageindustrymadebillionsfromthemarketvolatilityof 2008-09.

Mr Lewis added to the controversyover high-speed trading when he

launched Flash Boys and announcedthatthe marketswere “rigged”.

“The Book”, asit becameknown, setoff a furious industry clash overwhether it fairlyportrayed theway USmarketsworked.Coincidenceornot,USregulators began levying ever-risingfinesonbanksandmarketoperatorsfor

ingmajoritybackingIEX. “A rebukeof the IEX application would be a stepbackwards for the public’s trust of themarket,”said atypicalcomment.

Dozens ofretailinvestorssupport theapplication along with Mr Lewis, con- gressmen, many large institutionalinvestorsand academics.Critics includetheexchangessuchasNYSEandNasdaqaswellas Citadel, a hedgefund, marketmakerand high-frequencytrader.

Some market participants areaggrieved that IEXhas been presented

asthegoodguyinthisfight.Somehigh-frequency tradersprivately accuseIEXof trying to game the market but areafraidto criticise itfor fearof drawingattention.Exchangebossesare equallyannoyed at their portrayal. “It [IEX]tries to intimidate anyone who criti-cisesitas the‘badguy’”, saysanexecu-tivewhodeclinedtobe identified.

Critics arguethat IEX’s applicationruns counter to the SEC’s own rules.First,exchanges arerequiredto sendbid and offer information into the

marketas soonasis practicallypossible.Second, they say, IEX’s model wouldcontradictan obscure partof RegNMSknownasRule611.

Thatregulation is intendedto ensurethatthepricesordinaryinvestorsseeontheirtradingscreensare legitimateandrepresent the most competitive price.Deliberately introducing a delay onpricing of700 microsecondswould vio-latethat.

“If IEX is allowed to become anexchange, when you see its price, you

won’tbesureif thatis stilltherealpriceor if it has become stale,” says JamilNazarali head of execution services atCitadel. “Putting in a speed bumpdoesn’t do anything. The fastest partystillgets thetrade.”

In a broadside last month, JeffreySprecher, chiefexecutiveofNYSE’spar-ent company IntercontinentalExchange,saidIEXwas effectivelyseek-ingmonopolystatus. “Itis un-Americanandit’snotfairandnotthewaythatoursystemshouldwork,”hesaid.

‘Apainstakingprocess’

The rise of IEX also threatens anotherpartof theincumbentexchanges’ busi-ness: sales of data and connections totheirvenues.Exchangesareentitledto ashare of fees from a record of all USsharetrading,whileinvestorsalso needtoconnecttheircomputerstothe plat-form. Theyaccounted for7 percentof total revenues at Bats, the US’s thirdmainstock exchange.

IEX claims that while technologycostskeepfalling,fees levied byincum-bentexchangeson brokers and marketmakerscontinuetorise.It saysdataandtechnologyshouldbe providedat a rea-sonable cost or none at all, “to institu-tionalise fairness for the greatestnumberof marketparticipants”.

Otherssay itis IEX’sbusinessthatisflawed— otherwisemore peoplewoulduse it. Bats, owned by a consortium of banks andtraders, carved outa 10 percentmarketsharebefore itappliedforan exchange licence. IEX’s detractorsargue that sending trades through IEXhasanothermotive: itis threetimesasexpensiveas othervenues andit needstojustifya returnforits biginvestors.

IttookNasdaq,whichsetout in1971to disrupt the old system of floor trad-ing,about five yearsto succeed with itsexchange application. “It is generally a

slow, painstaking process and manyupstarts never make it through,” MrAngel says. “When the SEC grants anexchangelicence,theyare puttingtheirreputationon theline. Theydon’twantsomethingata newexchangeto blowupandembarrassthem.”

Bothsideshaveaccusedeach otherof

means, a charge they reject.

Critics argue that deliberately

slowing the dissemination of

information jeopardises the validity of

prices in the market. It also runs

contrary to rules that call for official

quotes to be immediate, they say.

The other flashpoint in IEX’s filing is

its router, a software program that

sends trades to other exchanges when

it cannot fulfil an entire order in-

house. Initially, IEX did not want its

router to be subject to the speed

bump but after feedback during the

consultation period it has since

changed its position.

Any outgoing orders executed on its

market will now use the speed bump,

in the hope of hastening its approval

as an exchange.

FT graphic Sources: Credit Suisse Trading Strategy

Off exchange tradingHFT

Market share by venue ( of total US volume)

Trading places

US volume (average daily shares, bn)

Other exchangesNasdaqBXDirectEdgeX/DirectEdge A

Bats BYX/BatsNYSE ARCANYSENasdaq

Passive funds

Active funds

falling foul of rules related to the wayhigh-speed traders interacted withinvestorson theirtrading venues.

Amid the controversy Mr Lewis’sbook sales rose and IEX grew increas-inglyconfident. Itraised $75min fundsandcraftedan applicationto becomeafully regulated exchange. Its backersincluded powerfulhedge fundslikeBillAckman’s Pershing Square Capital andDanLoeb’s Third Point,as wellas ven-ture capitalists and the casino mogulSteveWynn.

ApprovalwouldallowIEX toboostitsmarketshare,as brokers will beforcedtosendit tradeswhenit offersthe bestprice.

The IEX application was lodged lastSeptember, unleashing a wave of debate. “Think of this as Reg NMSround2. Inparticularhow fardoestheSECwanttogo inlockingdownmarkettechnology?” says James Angel, a pro-fessorat GeorgetownUniversity.

The SEC has received hundreds of comment letters, with the overwhelm-

‘Themarketwasoverly

complex— toomanydark

pools andexchanges.The

systemhas failedtofully

protectlong-terminvestors’

Seekingapproval:BradKatsuyama,chief executiveofficer,isleading effortstohaveIEXacceptedas anexchange—ChrisGoodney/Bloomberg

DecidingvoteThe SEC will decide

whether to grant IEX equal footing

with NYSE and other exchanges

Activist backingThe IEX application

has support from activist investors

including Bill Ackman and Dan Loeb

MarketmovesHigh-speed trading has

grown in the past decade to account

for about half of daily market volumes


10/36

10 ★ F I N A N C I A L T I M E S Tuesday 8 March 2016

Privacy forApple isnothingmore than

amarketable serviceSir, Philip Stephens’ commentson theApplev FBIdebateoverprivacyaretimelyand to thepoint (“SiliconValleyshould stepout of thecloud”, March4).Forall Apple’smaudlineffortstoestablishitselfas a privacy paladin,itis worthwhile alwaysto bear inmindthatprivacyfor Appleis nothingmorethana marketableservice. Wearetalking, afterall, abouta company thatseeksto photographeverysinglepurchaserof itscomputers, whichmakesitsclaimto revereprivacy perserather dubious.CA Hoffman Baltimore,MD, US

Whatwas the point of your private jet exposé?Sir, Your detailedanalysisof private

jettravelfor personal reasons byS&P500executives inthe US hasrevealedan estimatedannualcost of $40m(“The corporatejet files”,March7).Thisamountsto approximately0.0036percent ofsalesforthecompanies inthe indexor 100percentof thesales generatedby 46 of the24.5mpeopleemployedby thesame companies.

Investorsare freeto selltheirsharesifthey disapproveof anycompany’stravelpolicies.

Wasthe FT’s front-pageexposé,“Diller leadsUS rankings forpersonalcorporatejet spendwith$4,500 a day”,supposed to makeany otherpoint?AlessandroCiravegna NewCollege Capital, LondonSW1, UK

First Lady’sbig initiativewas Just Say NocampaignSir, Curiously, yourobituaryof Nancy

Reagan (“Influential FirstLadywhoalways hadthe president’sear”, March7)madeno mention ofher“JustSayNo”campaign, undoubtedlyher majorpersonalinitiative during PresidentRonald Reagan’s twoterms in officeandone of themost frequentlycitedandmodifiedslogansin modernpopular culture. Althoughsurelywell-intentioned theassociated Anti-Drug

AbuseAct of 1986inauguratednotorious “mandatoryminimumsentences” forillegaldrug offenders

(even non-violent offenders), anacknowledged hallmarkof thefailedWar onDrugs. Inhindsightwe know italsoaccelerated theworld’s highestratesof incarcerationparticularlyamongyoungblack inner-cityyouth,underpinningpresent-day racialtensions.

EvenwhileMrs Reagan wasardentlyadvocatingfor America’s kidsto resistdrugs, opposingforces wereat work.TheIran-Contra affairrevealed theadministration’s concurrentsupportforrightwing groups inNicaraguawellknownto be fundingtheir operationsthroughthe illicit drugtrade,much of which endedup on America’s streets.Theensuingpolitical crisisbroughtaboutthe single largest dropinapprovalratingsof anyUS presidentinhistory from 67per centto 46percent,althoughit laterrebounded. Thissignificant campaigndeservesa

mention ifonlyas a reminderthatoverly simplisticsloganscan betraymuchmore complex andlong-lastingimpacts on society.EricStryson Managing Director,GlobalInstituteFor Tomorrow,Taikoo,Hong Kong

President Trumpwill findithard tomatchAugustusSir, Theunexpected politicalascendanceof DonaldTrumphas so joltedthe FourthEstate — andsodisruptedthe 2016US presidentialnarrative— thatpunditshavelost theirsenseof history. Butin equating thevulgar Americanbillionaire withCaesarAugustus, Martin Wolf errsegregiously (“Howgreatrepublicsmeettheirend”,March2).

After theassassinationof JuliusCaesarin 44BC andtheyoung

Octavian’sdefeatof MarkAntonyattheBattleof Actium (31BC), Rome’sfirstemperor — whowould henceforthbecalled Augustus— ushered inanunparalleled periodof efficient,prosperousand inspiredleadershipknownas theAugustanReformation.In additionto establishingboth a policeforceof 3,000menanda corpsof professional firefighters,he appointed

boardsof commissionersto safeguardpublicbuildings,the watersupplyand

themaintenanceof theroads.Moreover, Romeboasted856 publicbaths, 150tradesmen’sguilds,anetwork of paved roads, domedbasilicas(for town-hallmeetings)and11 aqueducts.

Augustus’sPrincipate preservedRome’sconstitutional framework while giving theEmperora freehand to enddecades of civil strife, create animperial civil service andinstituteacrossthe boardreforms. Hisastutestewardship paved theway forthe PaxRomana, providingthe worldwith200 yearsof peace, economicprosperityand individualand politicalfreedom — all undergirded bythe ruleof law.

Thephilosopher andmathematicianAlfred NorthWhiteheaddeclared:“Iknow ofonlytwooccasions when thepeoplein powerdid what neededto bedone aboutas well asyou canimagineitsbeing possible.” Thefirst periodwas

Romeunder CaesarAugustus; theother, theAmericanRevolutionaryera.

ShouldDonaldTrump everattaintheWhiteHouse, theerstwhile hostof “TheApprentice”wouldbe hardpressed to matchtheAugustanbrand.RosarioA IaconisChairman,The Italic Institute of America, Mineola, NY,US

Methane: the focusonfracking is a distractionSir, RobinRussell-Jones (Letters,March 4)argues thatfugitive emissionsof methanefrom gasproductionremovethe global warming advantageof natural gasover coal.Recentpublishedstudiesand our ownmeasurementssuggesta morenuancedview. Methaneleaks fromgas

productionare typicallyover1 percent, as Dr Russell-Jonesstates,butcoalminingalso emitsmethane. Ourownwork measuringcarbonisotopesinmethanein airfromChina inwintersuggestscoal is an importantcontributor to EastAsian methane.

Turningto shalegas, Dr Russell- Jones suggestsmethanelossesaverage8 percent ofproduction,withanupperlimitof 13per cent.Thiscontrastswiththemeticulous workof theUS NationalOceans andAtmosphericAdministration(NOAA)and theUSEnvironmentalDefenseFund.In Utah’ssmallUintahbasin,high leakage wasindeed measured,but in themajorBarnett Shalebasinin Texas,methaneemissionsattributed to fossil sourceswere1.3-1.9 percent of production.Gas-firedelectricityin thisregionwouldcauseless climateforcingthancoal-fired.A few“high emitters”, forexample in storage andcollection

systems,havea disproportionateimpact. Ourownworkin theUKandAustraliasimilarlyshowstheimportanceof highemitters,that ourmobile vehicle-mountedanalysereasily pinpoints.Thesesitespresumably representfinancial lossandsafetyrisks, andshould relativelyeasily be controlled.

Thefocus on frackingdistractsattentionfrom theremarkable globalmethanerise since 2007, exceptionallystrong in 2014and 2015,whichseemsmainly to be fromtropicalsources. Therisehas beenaccompaniedby a carbonisotopicshift thatsuggeststhe increaseis notprimarilyfromfossil fuelsbutfromtropicalwetlands respondingtometeorologicalevents. Is thisthe resultof a largebut “normal” decadal-scaleweatheroscillation, or is methanethecanary thatwarnsa profoundtropicalchange is occurring?We simply do not

know. Trackingtropicalemissionsdepends on a veryfew remote marinesites. Satellitedata arenot accurateenough, norcan theyuse isotopes toidentifysources.Our instrument onAscensionIslandhas recentlyfailed,andis soold that the manufacturerissoonwithdrawingservicesupport.Ascension’sair integratesa widetractof theSouthernHemisphere:for wantof£5,000we risk losingthe2016record of methaneand CO2during thecurrent greatEl Niño.Manyof ourinternationalpartnersin greenhouse gasmeasurementare sufferingsimilarbudget challenges. Thisillustratesawiderpoint:the greenhousedebateislikean invertedpyramid,witha vasttoplayer of opinion interpretingunderlying computermodels,that inturn dependona tiny basisof directinsitugreenhousegas measurement.DrEuanGNisbet RoyalHolloway,

Universityof London,UK

Thefirst shopI enteredafter landinginDelhifouryearsago sold books.Itturnedoutto beno ordinarystore.

BahriSonsin KhanMarketis tinyandalwayspacked.I wassoontalkingtoa manager anda verylargeanderudite Argentineambassador as wetriedto flattenourselvesagainstpilesof politicalbiographies to letcustomersreachthe till.

I donot recallwhatwediscussedexceptthat themanager, havingestablished myjob withthe FinancialTimes, toldme myprecisehomeaddress.I hadflown inthatdayfromEuropeandcheckedinto a hotel,andwasyetto seethehouse myself. SoIwastaken abackto beidentifiedin ametropolis of25m — untilthemanager toldme aboutthe frequentdeliveriesmade to mypredecessors.

Theeponymous BahriSons orBahriSons(so called eventhoughthereis only oneson)is a Delhiinstitution. It wasfoundedmore thansixdecadesagoby BalrajBahriMalhotra,whodiedlastweekat theageof 87fromtheconsequencesof aninfectedrat biteto hisfinger.

The1947 partitionof Indiaatindependencefrom theBritishsentmillionsof Hindusand Muslimsfleeingfrom their homesintothe twonations that arenowIndia and

Pakistan.Among themwas the19-year-oldBahri andhis family,whoabandonedtheir smalltownnearLahore andwashed up in Delhi’svastKingswayCamp forrefugees.

Bahri, whohad studied maths inRawalpindi, hadno inklingthat he

wouldeverbe a bookseller.Hisson,Anuj,who stillpercheseachdayat hisdesk ona kind ofbook-linedbalconyinside theKhan Market shop,said thenewly arrived Bahrigaveoccasionalmathslessonsto makeends meet.

Accordingto Anuj’s daughter,Aanchal Malhotra— whoworks atthefamily’s literaryagency, RedInk — her grandfather soldseats on trains anddelivereditemsby bullock cart.In1953 hewassellingpensin oldDelhiwhen hehada chancetoacquire oneof theshops being allocatedtorefugeesin thenew KhanMarket.

Butwhattosellin theshop (otherthanfountainpens)?Bahriturned to afriend whoowned theLakshmiBookstorein Janpath,an avenue inNewDelhi,and advised himtofilltheshelves withbooks.Bahri knewlittleaboutthem butnoted whatpeoplewanted andrushed offat lunchtimetoobtainthetitles fromhis mentor.

Twoeffectsof theprocesslinger.BahriSonsstill closeseveryday,infuriatingly, for lunch. Itis surely theonly shop todo soin what hasbecomea shambolicbut upmarket shoppingcentre forthe Delhielite,reputedtobe amongthe world’scostliest retailspaceper squarefoot. Second, theshop’s owners stillpay closeattentionto whattheircustomers askfor.

AnujBahri callsthe storea “curatedcollection”specialisingin non-fiction.BahriSonsis where diplomats,politiciansand journalistsgo to buythelatestvolume of cultural history orself-servingpolitical revelations.Suchbooks inIndiaaremanyandof

variable quality (thetitleof a recentministerialmemoir,OneLife isNot Enough, hadme thinking:“It’squiteenough, thank you.”).

Butifit isa book andavailablesomewherein India, BahriSonswillprobablyfindit foryou.Theonlytimethey failedmewas whenI washuntingforan obscure fictionalisedbiographyof FrederickWilson,a 19thcenturyBritishdeserterwho established atimber empire in thefoothillsof theHimalayas.I finally tracked itdown attheCambridgeBookDepotat thehillstation of Mussoorie.

AnujBahri saysBahriSons pusheslargequantitiesof booksthroughitsthreesmallshops byjudicious useof itswarehouses: “Wehavea really bigback endsowe transferstocks fourtimesa day.”Healsopoints outthathomedelivery is notsomethinginventedby Amazon. “We’vebeendelivering booksto your doorforthepast40 years withoutcharge.”

Withphysical booksales apparentlyasrobustas everat BahriSons, aselsewherein India, thenext generationis ready to continuethetraditionestablishedby theunexpectedbookseller froma Punjabitownin present-dayPakistan.“Therelationship betweenthe booksellerandthe client,the reader,is really

sacred,” saysAanchalM

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