4 ★ FT Weekend 9 November/10 November 2019
D E M E T R I S E VA STO P U LO— WASHINGTON
Michael Bloomberg’s move to enter the
Democratic presidential race could hurt
Joe Biden’s prospects, as the former US
vice-president and early frontrunner
struggles in the early voting states of
Iowa and New Hampshire.
Mr Bloomberg, the billionaire former
mayor of New York City, has long con-
templated entering the Democratic
race. But he opted not to enter the fray
earlier this year because Mr Biden, the
best known moderate in a crowded
field, appeared to have strong support
based on opinion polls. Mr Biden’s early
fundraising also eased any concerns
about his financial viability in the race.
Over the past two months, however,
Mr Biden has seen his support slip,
particularly in Iowa and New Hamp-
shire, where Senator Elizabeth Warren
has eked out a consistent lead. He has
also fallen in the fundraising rankings
after raking in $9m less last quarter
than Ms Warren.
“[Mr Bloomberg] damages Biden themost because it is just another articula-
tion of just how badly Biden is doing that
he is even contemplating getting into
the race,” said Patti Solis Doyle, a former
top aide to both Hillary Clinton and Mr
Biden, who is now at Brunswick Group.
“If it was his overarching concern that
the top three contenders cannot beat
Donald Trump, then by getting into the
race he is making Warren stronger and
erasing his overall goal.”
Howard Wolfson, a veteran political
strategist and Bloomberg aide, on
Thursday said Mr Bloomberg was
“increasingly concerned” that none of
the Democrats was “well positioned” tobeat Mr Trump. Mr Bloomberg, 77, has
told friends that he does not think Ms
Warren can beat Mr Trump because her
progressive policies would alienate
moderate Democrats and independ-
ents. But analysts and Democratic strat-
egists said his decision to enter the race
would increase the odds that Ms Warren
ends up winning the Democratic nomi-
nation by eating into Mr Biden’s sup-
port.
With his wealth, Mr Bloomberg
should be able to build a ground opera-
tion, particularly in later-voting states
where the other candidates have not yet
hired as many staff as in Iowa. He alsohas the resources to pour into Califor-
nia, a state that has become more
important in the 2020 race by moving
its primary earlier, to March, and where
expensive television ads are critical.
“Bloomberg is a household name, but
it’s not clear what political base he has,”
said Nathan Gonzales, publisher of
Inside Elections. “I don’t see many Dem-
ocratic primary voters with a deep
desire for another old white guy to enter
the race.”
Jim Manley, a former top Democratic
congressional aide, said Mr Bloomberg
should “stick to fundraising and give up
on this ridiculous idea”.Democrats
Bloomberg threat hangs over Biden
Analysts believe former
NYC mayor will boost
Warren if he enters race
L AU R E N F E D O R A N D A I M E W I L L I A M S
WASHINGTON
Just last month, President Donald
Trump described Gordon Sondland, the
US ambassador to the EU, as a “really
good man and great American” when he
declined to testify at the president’s
impeachment hearing.
Yesterday, Mr Trump had changed his
tune: “I hardly know the gentleman,” he
said. What had happened in the interim
was a dramatic U-turn this week on the
part of Mr Sondland, a former donor to
Mr Trump.
Hours before Mr Sondland was due to
testify in the impeachment inquiry last
month, his lawyer, Robert Luskin, said
his client would not appear at the order
of the US state department.
Less than two weeks later, Mr Sond-
land, a hotelier from Oregon who
became a diplomat last year after giving
Mr Trump’s inaugural committee $1m,
was back in Washington, smiling at TV
cameras before speaking to lawmakers
under subpoena in a secure room floors
below the US Capitol.
He insisted Mr Trump had told him
there was no “quid pro quo” in which the
US would release military aid to Kyiv in
return for Ukraine investigating Joe
Biden, the president’s 2020 election
rival.
But this week Mr Sondland revised his
testimony, acknowledging both that Mr
Trump’s demands for a public investiga-
tion into the Bidens were linked to the
release of $391m in aid, and that he had
at least one phone conversation with the
US president in the days that followed.
In a sworn statement sent on Monday
to Adam Schiff, the chair of the House
intelligence committee, Mr Sondland
said his “recollection about certain con-
versations” had been “refreshed” by
reading opening statements made by
other witnesses, namely William Tay-
lor, the top US diplomat in Ukraine, and
Tim Morrison, Mr Trump’s leading Rus-
sia adviser.
While he did not use the phrase “quid
pro quo”, Mr Sondland said he remem-
bered a September 1 conversation with
Andrey Yermak, an adviser to the
Ukrainian president, Volodymr Zelen-
sky, in which he told him that the
“resumption of US aid would likely not
occur until Ukraine provided the public
anti-corruption statement that we had
been discussing for many weeks”. This
was a reference to Mr Trump’s apparent
demands for Mr Zelensky to publicly
A transcript of Mr Taylor’s own
closed-door testimony was also made
public this week, alongside the deposi-
tions of Mr Volker, former state depart-
ment official Michael McKinley, former
US ambassador to Ukraine Marie
Yovanovitch, and George Kent, a top US
diplomat specialising in Ukraine. Yes-
terday afternoon, the congressional
committees published the testimonies
of Alexander Vindman, a National Secu-
rity Council official, and Fiona Hill, Mr
Trump’s former top Russia adviser. The
disclosures were part of a new public
phase of the impeachment inquiry,
which will ramp up next week with live,
televised hearings.
“Being able to see those transcripts, it
is clear how strong the whole number of
different witnesses were about the fact
that there was an explicit link between
these things Ukraine wanted and
needed and investigations that would
help the president politically,” Mr Book-
binder said.
Mr Taylor and Mr Kent will be the first
witnesses to appear in public sessions
on Wednesday, and many Democrats
have pinned their hopes on Mr Taylor, a
career diplomat and West Point gradu-
ate, being a star witness.
Person in the Newspage 9CH R I S G I L E S— LONDONTechnology groups and other large
multinationals could soon face a global
minimum level of corporate taxation
under new proposals from the OECD,
even if they have successfully and
legally shielded their profits in tax
havens.The Paris-based organisation called yes-
terday for the introduction of a safety
net to enable home countries to ensure
their multinationals cannot escape tax-
ation, even if other nations have offered
them extremely low tax rates.
The proposals constitute the second
part of a review of global tax policy by
the organisation that oversees interna-
tional co-ordination of taxes. The OECD
last month proposed that governments
should tear up a century of tax history
by allowing countries to tax operations
in their jurisdiction even if companies
have no physical presence there. It is
consulting on this second set of propos-
als, on setting a global minimum corpo-
rate tax level.
Together the two proposals aim to
eliminate the huge advantages some
companies enjoy by shifting profits
around the world to minimise their tax
bills, a strategy that has become particu-
larly common among those involved in
digital technologies. The proposals
would also reduce the incentives for
countries to lower their tax rates in an
effort to attract such footloose busi-
nesses.
For example, the first proposal would
give France the right to tax Google on
part of its sales to French advertisers.
The new proposals outlined by the
OECD would augment this rule by ena-
bling the US to ensure that Google paid a
minimum level of tax on its global prof-
its — if for example France chose not to
exercise its rights or Google was still able
to shield its profits in other low-tax
jurisdictions such as Ireland.
The proposals would not only apply to
tech giants such as Facebook, Apple,
Amazon, Netflix and Google, but also
other multinationals that make signifi-
cant sums from intangible assets such as
brands.
The OECD said: “A minimum tax rate
on all income reduces the incentive for
taxpayers to engage in profit-shifting
and establishes a floor for tax competi-
tion among jurisdictions.”
The G20 group of nations has agreed
to let the OECD draw up detailed pro-
posals by the end of 2020, which if
approved would then be introduced into
national tax systems and the tax treaties
between countries.
Countries have given their backing
because they want to avoid unilateral
measures such as digital services taxes
that many European countries have
proposed. They could inflame global
trade tensions, some fear.
The specific levels of minimum tax
rates have not yet been discussed as the
OECD wants to reach agreement on the
principles first. It has given interested
parties a month to respond to its consul-
tation.
US representatives of tech companies
gave the plans a cautious welcome,
accepting that countries would go it
alone if this global initiative failed.
But anti-poverty campaigners were
concerned that the OECD’s rules were
too feeble and would not give poor coun-
tries sufficient rights to raise revenues.
Susana Ruiz, Oxfam’s tax policy lead,
said the global minimum tax plan
“opens up the possibility that big corpo-
rations will simply shift their headquar-
ters to a tax haven to avoid paying tax”.Profit shifting
OECD unveils
plan for global
minimum tax
for big groups
White House.Congressional pressure
Impeachment panel puts squeeze on Trump
President endures tough week
after top envoy makes big
U-turn in his testimony
Mr Trump’s allies have nevertheless
dismissed Mr Sondland’s latest testi-
mony, and on Capitol Hill, many remain
sceptical the latest evidence will change
the minds of Republicans who have con-
tinued to attack Democrats over how
they are conducting the probe. While
Mr Trump is expected to be impeached
along party lines in the Democratic-con-
trolled House of Representatives, more
than a dozen Republican senators
would need to vote to convict in order
for him to be removed from office.
Mr Sondland has been a central figure
in the impeachment inquiry ever since
House Democrats published a tranche
of text messages illustrating how central
he was in pressing Mr Zelensky to bend
to Mr Trump’s wishes.
“I spike [sic] directly with Zelensky
and gave him a full briefing. He’s got it,”
Mr Sondland wrote to two other US dip-
lomats, Mr Taylor and Kurt Volker, in
late July. In a separate exchange from
early September, Mr Taylor said to Mr
Sondland: “I think it’s crazy to withhold
security assistance for help with a politi-
cal campaign.”
Mr Sondland replied that Mr Trump
had been “crystal clear no quid pro
quo’s of any kind,” adding: “I suggest we
stop the back and forth by text.”announce investigations into former US
vice-president Joe Biden, as well as his
son, Hunter Biden, who had been on the
board of Burisma, a Ukrainian energy
company. Mr Trump had also sought a
probe into alleged Ukrainian interfer-
ence in the 2016 US presidential poll.
Mr Sondland was not the first mem-
ber of the Trump administration to con-
nect aid and investigations. Just hours
after his initial testimony in mid-Octo-
ber, acting White House chief of staff
Mick Mulvaney said Mr Trump’s con-
cerns about the 2016 election were “why
we held up the money”.
But Democrats said the ambassador’s
revised testimony, which was made
public on Wednesday, marked a turning
point in the impeachment inquiry, as
the close Trump ally who has built a rep-
utation in Brussels for doing the presi-
dent’s bidding offered a first-hand
account of Mr Trump conditioning the
release of aid on a political favour.
Noah Bookbinder, executive director
of Citizens for Responsibility and Ethics
in Washington, said: “We have had a lot
of testimony from people saying that
the aid was specifically conditioned,
but it is meaningful to hear from the
person who actually delivered those
conditions.”US envoy to the
EU Gordon
Sondland,
centre, arrives
for a closed
session on
Capitol Hill
last month
Tasos Katopodis/EPA-EFEOn Capitol
Hill, manyremain
scepticalthe latest
evidencewill change
the minds ofRepublicans
N I C O L L E L I U A N D A L I C E WO O D H O U S E
HONG KONG
Office workers have blocked streets in
Hong Kong’s financial district as the
death of a student stoked anger in the
city that is struggling to contain anti-
government demonstrations.
Chow Tsz-lok, 22, died yesterday four
days after falling from a car park as
police dispersed demonstrators. The
events leading up to the incident are
unclear but many view his death as the
first fatality linked to the protests.
Hundreds of office workers marched
during their lunch breaks through cen-
tral Hong Kong and there were calls for
further protests. Thousands more
showed up at locations across the terri-
tory to pay tribute to Chow, who studied
at Hong Kong University of Science and
Technology. Crowds blocked roads and
set fire to objects and a police officer
fired a warning shot into the sky in Yau
Ma Tei, a busy shopping district.
In the city centre, some protesters
carried white flowers and wore masks to
shield their identities, as they shouted
“Hongkongers’ revenge!”
“I am completely livid,” said Sophia,
who works in banking. “We do not know
the full facts but from a reasonable per-
son’s standpoint, so many aspects are
suspicious.”
Jaon Lam, another of the marchers,
carried a picture of Chow as he joined
the group of office workers blocking a
road junction outside a Louis Vuitton
store. “His death is just one reason for
the protest today. Behind it is what the
government and the police have done in
the past few months,” he said.
Police said they were investigating the
case and denied allegations they had
obstructed medical assistance or that
officers had pushed Chow. A spokesper-
son for the Hong Kong government
expressed “great sorrow and regret”.
Hong Kong has been gripped by five
months of protests sparked by a conten-tious extradition bill that would have
allowed suspects to be sent to China for
trial.
Demonstrators have broadened their
demands to include universal suffrage
and an independent investigation into
allegations of police brutality.
A friend of Chow who studies science
at HKUST described him as cheerful
and a “keen protester”.
“I hope the people will not give up and
be disheartened. He would like you to
persist,” the young man dressed in black
said, before breaking down in tears.
Students at Chow’s university laid
white chrysanthemums and lilies on a
stage on campus that hours before had
hosted a graduation ceremony.
Black-clad students also smashed
shelves at Starbucks. The coffee chain
has been targeted by protesters after the
daughter of the founder of Maxim’s, the
restaurant company that operates the
US group’s outlets in Hong Kong, criti-
cised the demonstrations.Protest fatality
HK demonstrator death sparks further rallies
M AT T H E W R O C C O— NEW YORKDonald Trump said yesterday he had
yet to agree to roll back tariffs on Chi-
nese goods as part of a preliminary
trade pact, casting uncertainty over
progress made in negotiations.US and Chinese officials had indicated
on Thursday that both sides had agreed
to reduce their tariffs to secure a “phase
one” deal. The Financial Times reported
this week that the White House was con-
sidering rolling back levies on $112bn of
Chinese imports.
The president told reporters China
would “like to have a rollback” but
added: “I haven’t agreed to anything.”
“China would like to get somewhat of
a rollback, not a complete rollback
because they know I won’t do it,” he
said.
Shares on Wall Street, which had been
in the midst of a month-long rally after
Washington and Beijing agreed to the
outlines of a “phase one” deal, sold offafter Mr Trump’s remarks. But equities
had regained lost ground by midday
trading, with the S&P 500 unchanged
from Thursday’s close.
Peter Navarro, the hardline White
House trade adviser, belittled the Chi-
nese commerce ministry’s claims on
Thursday that the two sides had agreed
to reduce tariffs, saying the statement
“came right out of the ministry of propa-
ganda” in Beijing.
“There is no agreement to remove any
of the existing tariffs as a condition of
signing a ‘phase one’ deal,” Mr Navarro
told National Public Radio. “We would
be willing... to postpone [new] tariffs
but not roll back any existing tariffs,
that’s the fine distinction here.”
He accused Beijing of trying to “nego-
tiate in public”, adding that if the US
gave up any existing tariffs Washington
would not have leverage to get to further
phases in a trade deal.
Mr Trump said he expected to sign
the deal, if completed, in the US, possi-bly in Iowa or elsewhere in “farm coun-
try”. Initial plans to meet Chinese presi-
dent Xi Jinping on the sidelines of a sum-
mit in Chile this month were thwarted
when the gathering was cancelled.
China had previously insisted that the
trade war could be mitigated only if the
US removed some of the tariffs that Mr
Trump had imposed since he started the
economic fight last year.
The slowing Chinese economy has put
Beijing under more pressure to reach a
trade deal — which would also be a relief
for the global economy. Mr Trump also
wants to be able to show US voters that
the American economy has reaped ben-
efits from a tough approach to China,
and to dispel concerns that the trade
war has hit consumers.
“We’re getting along very well with
China. They want to make a deal.
Frankly, they want to make a deal a lot
more than I do. I’m very happy right
now. We’re taking in billions of dollars,”
Mr Trump said yesterday.Trade talks
US president denies agreeing tariffs rollback
I N T E R N AT I O N A L