Troubled waters for Kemi
KEmI Badenoch is a brave soul pressing on with a far-reaching Israel trade and services deal amid the country’s current political turmoil. The swing to the far Right in Jerusalem has unleashed a wave of brutal titfor-tat violence on the West Bank.
As significantly, the effort by prime minister Benjamin Netanyahu to seize political control of Israel’s independent judiciary has unleashed a backlash both inside Israel, with tech companies pulling up sticks, and in the diaspora.
When I was in Israel less than a year ago a senior UK diplomat told me there had been a switch of focus in British-Israel relations.
British diplomacy in Israel had been about settlements and the two- state solution. The pendulum has swung towards trade relations, tech and telecoms start- up finance, and gambling platforms.
If Business and Trade Secretary Badenoch is successful there could be a new kind of trade accord which includes digital, health, innovation and financial services.
Whether such a deal is politically possible is hard to tell. Writing in the New York Times, former mayor of New York michael Bloomberg, founder of the eponymous financial trading service, warned that after two decades of support for Israel and its people, including building medical facilities, he feared it was ‘courting disaster’.
Bloomberg is outraged at Knesset (Parliament) votes which could undermine democracy by running roughshod over Supreme Court decisions on press freedoms, support for minorities and voting rights.
He says economic damage is already being done with the shekel, the robust Israeli currency, under fire. And he notes some financial and tech groups are pulling out of new fundings, adding: ‘I don’t blame them.’
The current judicial impasse has caused a resignation from the fiercely independent Bank of Israel, which over the decades attracted a rich vein of governors directly from the ImF and World Bank including Stanley Fischer, Jacob A Frenkel and michael Bruno.
Trade between Israel and Britain is considerable, at around £5bn a year, and UK firms are very much in evidence. Engineers responsible for the Elizabeth line in London are advising on Tel Aviv’s fast transit system. And Badenoch believes there are other key infrastructure contracts to be run.
Britain thinks it can help on deregulation of telecoms and other industries.
And Israel has the tech for digital revolution in the NHS. None of this is going to happen any time soon if the latest Netanyahu government succeeds in undermining judicial and press freedoms.
Metal fatigue
AS IF the City didn’t have enough problems, with the exodus of quoted firms to greener pastures overseas, the London metal Exchange (LmE) is in deep water.
The events which saw the price of nickel soar to $100,000 a tonne, after Russia’s invasion of Ukraine, have left scars. The involvement of Chinese investors in a scandal at the Hong Kong Stock Exchange- owned LmE raised questions at the time.
The crisis at the LmE, which has a heritage dating back to 1877, is regarded at the Bank of England as among the biggest tests for City regulation since the financial crisis of 2008. The LmE has a mixed history including the effort to fix the copper market in the 1990s. But it is the first UK exchange to face a full enforcement investigation by the Financial Conduct Authority.
The nickel contract has assumed global significance because of the use of the metal in power units for electric vehicles. The wild swings in the market are an enormous problem for global users, including car giants.
Chaos over the LmE contract is letting competitors into the space, with Londonbased Global Commodities Holdings developing a physical contract. This could be converted into an index to be traded on the Chicago mercantile Exchange (CmE).
Another own goal for the Square mile.
Double espresso
COFFEE shops were all the rage in the 17th century and the London Stock Exchange and Lloyd’s of London trace their origins to deals done in the narrow lanes of the City.
They are ubiquitous in the digital age, with coffee shops from Krakow in Poland to Austin, Texas crammed with techies.
So it’s no surprise that Starbucks, instead of selling its UK outlets, is to double down with a £30m investment in 100 digitally driven stores. Finally, someone is showing confidence in UK tech.