Chapter 52 EYJAFJALLAJOEKULL
Iceland was back in the headlines, it was not however its banks that were
making problems for Pat Kennedy. All flights in and out of the UK and several
other European countries had been suspended as an ash cloud from a volcanic
eruption on the island moved south amid fears of engine damage.
The volcano was spewing ash high into the atmosphere and the forecast indicated
that wind would push it towards the UK and European airspace for some time to
come.
Pat Kennedy had considered it a matter of pride to pronounce the volcano’s
unpronounceable name correctly, Eyjafjallajoekull, after all he had established
himself as the head of foreign policy at the bank and was reputed to be
multilingual, even if that was somewhat of an exaggeration.
Kennedy had diligently applied himself to developing what at the outset had been
a smattering of Russian, then as the bank became more involved with Tarasov, he
engaged a Russian teacher, who to her surprise was astonished at the banker’s
ability to assimilate the language, in spite of his almost total impermeability to all
questions of grammar.
I
Pat had discovered that a few words of Russian was a good opening gambit for
his mild flirtations with the attractive young Russian women he met at Tarasov's
frequent receptions and social events, who found the oligarch's friend amusing
compared to the other stuffed shirts they met, and though they often spoke
excellent English they did not discouraging him from using the language of
Tolstoy. Tarasov was amused by the likeable Irishman’s success and did nothing to
discourage him; on the contrary, the closer Kennedy felt to all things Russian, the
more it suited his plans.
Pat liked the label ‘polyglot’ and made every effort to justify the sobriquet by
taking advantage of his frequent visits to Biarritz and Amsterdam to develop his
linguistic talents. To the dismay of his friends and acquaintances he was able to
pursue conversations in three or four languages at the same time, which caused a
certain amount of confusion, but his thick skin and naturally loquacious disposition
overcame all obstacles. The elephant-like memory that had served him in his early
career in accounting and fiscality, was now put to good use expanding his growing
vocabulary list.
With the chaos caused by the ash cloud he was forced to postpone his visit to
Moscow. The negotiations with Tarasov would have to be carried out at a distance,
which was not as problematic as it would appear, as the principals had already
been established; it was the drafting of the details and legal points that needed
finalization.
There were however plenty of other distractions in London to keep his curiosity
satisfied. Amongst these was his growing interest in art. It was a good time for art
investors and Kennedy had become one without even realizing it. His Battersea
apartment boasted a couple of new works picked up at the Sotheby’s auction rooms
in Paris. Pat often stayed at the Intercontinental and had discovered the auction
rooms just around the corner on the Faubourg St-Honoré. The original woodprints
were not big, twelve inches by eight. It was Gauguin’s name that had attracted him,
then on a closer inspection, it was the aged black-ochre appearance of the print,
stamped on thick century old ivory paper, that appealed to him. It seemed to
transport him to the exotic past and to the painter’s Pacific island paradise.
The fact that he could carry to two prints off, wrapped in a small packet, decided
him, and after a swift series of bids they were his. Arriving back in London he
spent the best part of an hour trying to figure out where he would hang them. With
their small gilt frames they had an astonishing charm. Finally he chose a shaded
wall panel in his large living room protected from any direct sunlight.
Pat had the added pleasures of knowing such treasures would never go down in
value, they were excellent investments. He had made a similar experience in
China, where during his visits to bankers’ offices and exclusive hotels, he had
discovered rare porcelain and collectors’ items, witness to centuries of Chinese
history and generations of artists and fine craftsmen. A visit to the Mausoleum of
the Nanyue King in Canton, little known to many of China’s tourists, had been a
154
revelation to Pat, of course he had heard of the Great Wall, of the Xi’an Terracotta
Army, but he had not realized the depth and breadth of China’s history. The
discovery set him on the path of finding a suitable trophy that would fit into his
London apartment, one that would contrast, but not clash with his collection of
modern art: a blue and white Qianlong porcelain vase, a permanent reminder of the
opportunities that the Middle Kingdom’s twenty first century revenge offered.
Pat Kennedy’s visit to China opened his eyes to a world unknown to him. He was
staggered by the unsuspecting power and wealth of a new generation of Chinese
business leaders, as ruthless as the British adventurers who had carved out a piece
of the decadent Qing Empire for themselves in the 19th century and transformed it
into Hong Kong. A new generation of entrepreneurs were with their newly
acquired riches restoring the glories of Imperial China, repatriating the treasures
that had been dispersed overseas, lost over a century of tumultuous change, one
that had led to the emergence of modern China.
Not only were there many incredibly wealthy individuals in China, there was also
the Chinese state, which had amassed a mountain of cash to be invested in
museums and art collections. A way of investing in its people’s future, though
many of its poorer citizens would not have agreed as the cost of daily life soared
beyond their reach.
China’s contradictions were part of the paradox that confronted Westerners like
Kennedy. On the one hand were the workers of China’s industry, most earning a
couple of hundred dollars a month, and the fabulous wealth of its business and
political elite. Hong Kong was part of that paradox; at one end of the scale the very
poor lived in abject misery and at the other end fabulous riches were accumulated.
Even well paid expatriates struggled as rents reached an all-time high, they along
with many middle class Hong Kongers were now forced to seek more modest
accommodation in areas of the city their predecessors would have considered
below them.
Inflation was at a fifteen year high with Hong Kong’s currency pegged to the
dollar, aggravated by the Fed’s policy of low interest, which meant real interest
rates in the thriving city were in negative territory. To make matters worse the
Hong Kong dollar had declined against the Chinese yuan, making nearby China
expensive in relative terms.
Francis, an economist and historian, saw a parallel between China bursting forth
from the frontiers of its ancient home, after centuries of reclusion, invading Europe
and the US with its mercantilist policies, and the Mongol invasions of the EuroAsian landmass in the 11th and 12th centuries.
In those distant times, Europe lived in its own hermetic world, where the
mysterious Orient was ruled by Prester John, inhabited by strange monstrous
creatures. Europe had not known invasion since the barbarian tribes poured in from
the steppe in Roman times: Goths, Vandals, Lombards, Suebi, Frisii, Franks, Huns,
Avars, Slavs, Bulgars, and Alans.
155
When the Mongol hordes suddenly appeared at the Europe’s gate, its kingdoms
were divided; fighting their age old wars for territory and regional power, their
forces led by knights with heavily armoured cavalry and poorly equipped foot
soldiers, conceived to fight European battles against like armies.
The Mongols brought with them a whole new dimension of warfare and
leadership, defeating and stunning European Kings in bloody battle one after the
other. It was the same with the modern Chinese. Europe had slept on its laurels,
believing in its superiority, seeing the rise of China in the early eighties as a new
and promising market, an opportunity and not a threat.
By accepting huge trade imbalances, year after year, decade after decade, in the
hope these would eventually right themselves, the West had laid the foundations
for its demise as the predominant world force. By exporting its know-how and
technology, subcontracting the manufacture of everything from low grade goods to
civil aircraft, high speed trains and computers, the West had achieved the fastest
and greatest technological transfer in human history.
By the time West’s politicians had woken up to their error it was too late. China
had accumulated vast monetary reserves, had acquired modern technologies and
had turned the table selling everything from military hardware to aircraft and high
speed trains to the world at incomparably low prices.
The attitude of the Chinese leaders was not unlike that of the Mongol Emperors to
its subjects and enemies. Güyük, the third Great Khan of the Mongols, on receiving
the emissary of Innocent IV replied in a letter: ‘Thou art the Great Pope, together
with all your princes, you must come in person to render service and pay us
homage. Only then will we acknowledge your submission. And if you do not
follow the order of God, and if you ignore my command, I shall know you as my
enemy.’
The Mongols demanded that every nation submit ― in the same way as modern
China, or be destroyed. Equally, the Mongol empire, like modern China, was not
just another state; it considered itself the supreme universal power.
The willingness of the West, and more specifically the UK, to kowtow to the
Middle Kingdom, was one of the contributing factors to the mass extinction of its
manufacturing industries. Western governments had little control of their industrial
base compared to that of Beijing; China’s government determined policy,
controlled banks, set five year plans and stimulated growth through its monetary
policies.
In Europe and the US, businesses were controlled by individuals, as they always
had been. Individualism and liberalization was Western capitalism’s model.
Business owners were uniquely interested in profits, it was their raison d’être.
What happened to the society they lived in was the responsibility of their
governments and of little concern to entrepreneurs.
The Chinese were not alone in their approach. India with its Wild West capitalism
had bred families like that of Mittal, who had bought steel mills across the planet,
shutting down high cost production plant in Europe after acquiring their
156
technology, producing cut price steel in the huge run down, polluting, ex-Soviet
combinats of Kazakhstan.
Both China and India relied on their vast populations an inexhaustible source of
cheap labour. Whilst their megapolii were rich with well-paid white collar workers,
most factories employed near to slave labour. These robotniks were fed by
hundreds of millions of poor peasants and the factories in which they worked were
supplied with raw materials dug from the ground by wretchedly low paid miners
working in abject and dangerous conditions.
In recent years, men like Kennedy and Barton, and so many other Westerners,
belatedly discovered China. They were part of the flood of generally naïve
newcomers, willing to kowtow in their ignorance to the new power, who knew
little of China and its long history as a powerful industrial nation, an imperial
power that had reigned over much of East Asia for at least two millennia, and
which during centuries had supplied Europe with quality manufactured goods and
technology.
Few remained of the old British Hong Kong hands, long retired to Blighty with
their fading memories ― shadows of Britain’s imperial past, those who had
witnessed the shambles of Mao’s Cultural Revolution, those who had unwittingly
opened China’s floodgates to the West in the early seventies. The new generation,
ignorant of the past, was amazed by China’s modern face and its industrial power,
but they were not the first to have been astounded by the Middle Kingdom’s wealth
and might.
When Portuguese, then Spanish navigators, arrived in China in the early part of
the sixteenth century, they discovered an immense developed nation administered
by a vast and highly organized bureaucracy. Its peoples were not only farmers, but
also skilled artisans: manufacturing silks, porcelain, valuable furniture and a
multitude of manufactured goods that were exported across Asia, to India, the
Middle East and Europe.
At that time China dwarfed all other nations on earth. At the end of the sixteenth
century Lopez de Velasco described China as the world’s largest kingdom at a time
when Philippe II ruled over the world’s greatest empire. As Emperor of the Holy
Roman Empire, King of Portugal and Spain, Philippe ruled over a large part of
Europe as King of Germany, Italy and the Netherlands. Spain and Portugal had by
then conquered the New World: Mexico, Chile, Peru, Brazil, Florida…as well as
the Philippines, establishing colonies in Africa, India, Malaysia and the Pacific.
Finally what would have been a confrontation between the Iberians, who ruled
over a large part of the known planet, and China, the most populous nation on earth
and its greatest centre of manufacture, was transformed into a mutually profitable
trading arrangement, which was to continue until the middle of the 19th century.
Chinese goods were exported to Europe and the New World in return for the silver
mined at Potosi, in what is now Bolivia.
At that time most of China’s peoples lived in abject misery, oppressed by its
157
imperial system. Whilst in the New World the Iberians enslaved its peoples for
their own profit.
Globalization dawned in 1521, when Magellan, whose expedition, the first to
circumnavigate of the globe, sailed west across the Pacific from New Spain
(Mexico), and arrived in the Philippines (by extension a Chinese tributary).
Magellan was killed off the island of Cebu and Elkano, his second in command, a
Basque from Getaria, completed the voyage returning to Spain in 1522.
Trade did not however begin until Urdaneta discovered a return route across the
north Pacific to Mexico in 1565. Thus commenced three centuries of trade between
China, Mexico and Spain, on specially built galleons averaging up to two thousand
tons and over fifty metres long, each capable of carrying up to one thousand
passengers. This highly profitable business was finally replaced with the invention
of steam ships and the opening of the Suez Canal in the 19th century. As for the
Portuguese they exploited the eastern route via the Cape and India, establishing a
colony in Macao, on the mouth of the Pearl River, which prospered as a trading
port over four centuries. In 1999, Macao was finally returned to China.
In the course of the 19th century China’s power was undermined by a weak and
corrupt administration, leaving the path open for foreign invasion. This period was
known as the ‘national humiliation’, it lasted from the mid-19th century, and
continued under Mao, until Deng Xiao Ping ousted the Gang of Five in 1978, and
implemented the reforms necessary to modernise China.
In the new millennium, China had simply refound its place amongst nations, its
modernisation was no inexplicable or mystifying transformation. What prevented
many first timers from understanding this, was a bewilderment due essentially to
their own ignorance reinforced by the gulf that separated the two opposed cultures
― that of Western capitalism and that of Chinese national identity, accentuated by
the almost impenetrable barrier of language.
It was now Europe and the US that found themselves on the receiving end, as
their governments were confounded by the long and persistent decline of their
respective country’s manufacturing industries, attended by the inevitable decline of
job opportunities, and incomes, for their respective citizens.
More than a decade had already passed since Americans had started to replace
their falling incomes by debt. Credit had become the opium of the American
people. In Europe’s the problem was complicated by another event: the euro,
which had been badly conceived from the outset, and Greece, one of the
Eurozone’s smaller members, was amongst the first to pay the price for that error.
Few Chinese had ever heard of Greece and even fewer could have fixed it on a
map. As for Greece’s marginal role in Europe, now threatening to bring down the
EU’s house of cards, it was as abstract to the average Chinese as the Ningxia Hui
Autonomous Region of China was to the average European.
