Financial Times Europe - 19.09.2019

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2 ★ FINANCIAL TIMES Thursday19 September 2019


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I N T E R N AT I O N A L


M E H R E E N K H A N— STRASBOURG
TO B I A S B U C K— BERLIN


Jean-Claude Junckeryesterday cast
doubt on the possibility of a Brexit deal,
warningtime was tight s UK primea
minister Boris Johnson had yet to spell
out his demands on the Irish backstop.
Speaking to MEPsyesterday, the
European Commission president said
he was “not sure we will get there


.. Very little time is remaining.”.
The warning comes after Mr Juncker
and Michel Barnier, the EU chief negoti-
ator, had lunch with Mr Johnson in Lux-
embourg on Monday — a meeting in
which the UK prime minister did not


provide ideas onreplacing thebackstop.
“I can’t look you in the eyes and say
progress has been achieved,” said Mr
Juncker, who described the lunch as
“friendly, constructive, and in part posi-
tive”.
He added: “I have no sentimental
attachment to the backstop. That is why
I called on the British prime minister to
come forward with concrete proposals,
operational and in writing, on all alter-
natives that would allow us to reach
these objectives.”
Mr Juncker was heckled by Brexit
party MEPs in the chamber.
The UK is due to leave the bloc on
October 31 and has demanded removal
of a backstop arrangement that would
keep the UK inside the customs union
and aligned to EU rules to prevent a
hard border on the island of Ireland in
the absence of a free trade agreement.

Mr Barnier, also speaking at the
debate, said the EU was still waiting for
“a legally operative solution in the with-
drawal agreement that responds to each
one of the problems” of the Irish border.
The UK has suggested allowing

Northern Ireland to stick to EU rules on
food and livestock. However, the EU has
warned that this would not prevent a
hard border in the absence of customs
arrangements forother types of goods.
Britain is also demanding the freedom
to diverge from EUsocial and environ-
mental regulationsafter Brexit. Mr

Barnier said this demand would reduce
the ambition of any future trade deal.
EU officials have grown increasingly
pessimistic about the chances of secur-
ing a deal with the government and the
probability it can pass through a divided
House of Commons.
Mr Junckersaidit was only this week
that Mr Johnson seemed to “understand
the meaning of the single market” and
the costs of leaving it for Northern Ire-
land, according to an official.
The impact of leaving the UK is being
felt across corporate Britain, according
to the CBI, the UK’s largest employers’
organisation. A survey revealed a sixth
of UK-based companies had moved
their headquarters abroad as part of
planning for Brexit.
The CBI saidcontingency plans drawn
up by businesses to contend with Brexit
were now hurting the country, with a

wide-ranging survey showing the extent
to which companies were planning
to move operations as they face up to
the impact that a no-deal could have
on cross-border trade, staff and
regulations.
Germany’sBDI industry federation
voiced extreme concern” over the lack“
of preparation on the UK side for a cha-
otic no-deal Brexit.
“We cannot see a plan by the British
government to avoid a no-deal Brexit.
On the contrary, the actions of the Brit-
ish government are unsettling,” said
Joachim Lang, BDI director-general.
He added: “We are extremely con-
cerned about the state of no-deal prepa-
rations on the British Isles. As things
stand today, numerous legal regulations
on horizontal issues such as tariffs are
missing, as are rules for certain sectors
such as agriculture.”

S I M E O N K E R R— DUBAI
The audacious strike on the heart of
Saudi Arabia’s oil industry at the week-
end — claimed as a drone attack by
Yemen’s rebel Houthis — raises ques-
tions about Riyadh’s strategy in its
neighbour’s civil war.
The Saudi interventionbegan in 2015
in an operationcalled Decisive Storm.
But almost five years on, the deadlocked
conflict has dragged the kingdom
deeper into dispute withIran.
Riyadh assembleda military coalition
at the request of Yemen’s ousted leader
to halt the sweeping assault of the Iran-
backed Houthi militia,a longstanding
Saudi foe. Beyond restoring the govern-
ment of its exiled ally President Abd-
Rabbu Mansour Hadi, Saudi Arabia’s
objective was to remove the threat of
missile attacksfired into Saudi Arabia
from the Houthis’ northern Yemeni
heartlands.
But Saturday’s attack revealed the
limits of Saudi Arabia’s reach. The UAE,
part of the originalcoalition, has drawn
down its military presence in Yemen but
still backs southern secessionist forces
that have since turned on the Saudi-
backed Yemeni government forces,
theirformer allies.
“Wishful thinking isn’t a substitute
for strategy,” said Peter Salisbury, senior
Yemen analyst at International Crisis
Group.
“The war began with the assumption
that a successful rebel group that has
seized the capital and was working with
a significant chunk of the prewar mili-
tary could be uprooted by air strikes and
pay-offs to their rivals. That didn’t
work.”
Air strikes have now struck at
the heart of the Saudi economy,
targeting the kingdom’s vital
Abqaiq oil processing facility.
Saudi officials have blamed
Iran for providing the rebels
with the drone and missile
technology that allowed
them to strike deep into
Saudi territory.
Riyadh has saidinitial


investigations showed that, while Ira-
nian weaponry was used in the attack
thatshut down half the kingdom’s oil
production, it did not originate in
Yemen. US officials have also reportedly
said the strike originated in Iran. Tehran
denies the allegations.
Regional tensions have been growing
since US president Donald Trump
pulled the US out of the 2015 nuclear
pact signed by his predecessor, impos-
ing stringent new sanctions on Iran that
plunged its economy into recession.
Saudi Arabia has backed Washington’s
“maximum pressure” campaign that
seeks to reduce Iran’s oil exports to zero,
putting the kingdom and its Gulf allies
on a collision course with Tehran.
Mr Salisbury said: “This has been the
policy conundrum for a while now:
without a political settlement, Yemen
threatened to play a role as a trigger
or to become embroiled in a wider
regional conflict, in particular if a
Houthi or Houthi-claimed attack was
successful.”

What began as a complicated civil
war,after the ousting of longstanding
president Ali Abdullah Saleh in the
wake of the 2011 Arab uprisings,
mutated into a regional proxy conflict
fuelled by Saudi Arabia and Iran.
Backers of the Saudi-ledcoalitionsaid
the intervention was necessary to check
the Houthis’ military progress, which
they regard as an extension of Iranian
influence that would pose a threat to
Gulf security as well as the strategic
waterways linking the Red Sea with the
Indian Ocean via the Gulf of Aden.
The Saudi air campaign in March
2015, followed by a UAE-led amphibi-
ous assault on the southern port city of
Aden, managed to push Houthi forces
out of Aden and back into Yemen’s high-
lands in the north. Decisive Storm
marked the rise of Crown Prince
Mohammed bin Salman, then a newly
appointed defence minister, s an asser-a
tive actor on the regionalstage.
“Were it not for the Arab coalition’s
intervention, it is more than likely that

we would be seeing a fully-fledged Ira-
nian revolutionary guards operation
based on the Gulf of Aden,” said
Mohammed Alyahya, editor-in-chief of
Saudi-owned Al-Arabiya news net-
work’s English website.
Western powers, which initially
backed their Gulf allies’ coalition
against Yemen, have becomealarmed as
the conflict has turned intoa humani-
tarian disaster. Almost 100,000 people
are estimated to have died nd the pop-a
ulationstands on the brink of famine.
As the kingdomconsiders thedamage
in Abqaiq, Mr Trump said the US was
“locked and loaded”, raising speculation
of a military response, though the presi-
dent later said he wanted to avoid war.
Houthi commanders, meanwhile,
have told foreigners to leave Saudi oil
facilities,as they vow to carry out fur-
ther attacks.
A statement warned: “We can reach
wherever we want and at the time we
determine.”
Attacks expose weak point age 16p

J O N AT H A N M O U L E S— LONDON

Stanford University’s Graduate School
of Business as suffered a 6 per cent fallh
in applications for its MBA course in
large part because anti-immigrant
rhetoric and US-China trade tensions
are driving foreign students away from
top US universities.

The California university, which ranked
number one in the 2019 Financial Times
global MBA survey, is the latest to admit
a decline in interest for the two-year
full-time course that started this month.
All of the top 10 US schools on the FT’s
list have now suffered application
declines in the last two years.
The tightening of US visa rules for
overseas students in recent years has
discouraged many of those who would
like to work locally after graduation.
MBA programme heads fear that this
has been made worse by the trade battle
with China, one of the biggest sources of
overseas students for US business
schools.
“Immigration and visa issues are just
more complicated now,” Paul Oyer,
Stanford’s dean of MBA programmes,
told the Financial Times.
He added that an “incredibly hot”
jobs market in the US had also made
potential applicants reluctant to miss
out on opportunities for promotion at
their employer by returning to full-time
study.
Hardest hit this year wasTuck School
of Business t Dartmouth College. Untila
now it had managed to maintain its
numbers but applications for this year’s
intake was down 22.5 per cent.
University of Chicago’sBooth School
of Business s the only institution amongi
the so-called “magnificent seven” of top
US institutions to record a rise this year,
up 3.4 per cent. But this was still down
on two years ago for the school, which
suffered an 8.2 per cent drop in 2018.
Negative headlines about foreign stu-
dents and trade disputes were discour-
aging various overseas applicants, but
particularly those from China and India,
according to Bill Boulding, dean of Duke
University’sFuqua School of Business,
whose applications fell 14.6 per cent this
year.
“China is a huge market for business
schools,” he said. “We need to keep an
open line of communication that creates
an opportunity for us to move to a better
place, not this negative cycle.”
Business school heads worry that
declining demand will dilute the quality
of candidates for employers that come
to campuses to recruit after graduation.
Rather than damage the overall school
brand in this way, some deans have
closed their MBA programmes, most
notably Iowa’s Tippie School of Busi-
ness, which was ranked 84th in the
world by the FT when it decided to shut
its full-time course in 2017.
“I wouldn’t be surprised if we saw
more closures,” Mr Oyer said, adding
that he had heard “a big 10 school” moot
the idea recently. “They cannot get the
numbers,” Mr Oyer said.
Mr Boulding also predicted further
MBA course closures, but not whole
institutions, arguing that business
schools were adjusting their course
offerings to make them better suited to
people who would rather study more
flexibly, either online or part time.

Commission president


uncker doubts chances of Brexit dealJ


EU side warns on tight


timetable for agreement


and claims lack of UK ideas


‘I called on the British PM


to come forward with
concrete proposals on all

[backstop] alternatives’


Education


Stanford MBA


applications


fall as foreign


students shun


US colleges


Middle East. audi ArabiaS


Air strike shows flaw in Riyadh’s Yemen strategy


Intervention was intended to


curb Iran but has exposed


the kingdom’s vulnerability


Saudi Arabia’s
role in Yemen’s
war marked the
rise of Crown
Prince
Mohammed bin
Salman, below
Fawaz Salman/Reuters

‘Wishful
thinking

isn’t a
substitute

for strategy’


Peter Salisbury,
International
Crisis Group

DA N I E L D O M B E Y —MADRID

One by one, Spain’s political chiefs
appeared on televisionthis week to ex-
plain that the country’s fourth election
in four years wassomeone else’s fault.

Invective and accusations flew after
King Felipe decided no party leader had
the prospect of winning a parliamentary
majority, putting the country on the
path to a poll on November 10.
Following the king’s announcement
on Tuesday night, Pedro Sánchez, the
caretaker prime minister, scolded his
rivals for not respecting the result of
Spain’s last vote in April, when his
Socialists came top with 29 per cent.
Leaders of those other parties accused
Mr Sánchezof not wanting to work with
them, and of plotting a new election all
along. The recriminations highlight
how, after 40 years of political stability,
Spainhas become one of Europe’s more
ungovernable countries.
Mr Sánchez, who failed to form a sta-
ble administration based on the Social-
ists’ 123 seats in the 350-member Cham-
ber of Deputies, hopes to edge back
towards the old two-party system by
increasing his share of the vote in the

November poll. But the risk for the pre-
mier is that the political paralysis he
seeks to endmay be reinforced instead.
“Sánchez loves risky bets,” said Lola
García, a journalist and analyst. “He
wants to recover the Socialists’ tradi-
tional space, from the centre to the left.”
Mr Sánchez is not unique in his ambi-
tion. Both his Socialists and their tradi-
tional rivals in the centre-right People’s
party expect to win back ground from
the insurgents who have transformed
Spain’s politics since the financial crisis.
Those newcomers include the far-left
Podemos and the pro-business Ciudad-
anos parties, each of which came close
in previous elections to overtaking the
Socialists and the PP respectively, and
most recently, the far-right Vox, which
won 10 per cent of the vote in April.
The problem for the Socialists and the
PP is that, while the rerun election may
nudge the electorate back to casting
“useful votes” for established parties, it
is highly unlikely to usher in the old
days when the two established parties
alternated in power.
People close to the Socialists say Mr
Sánchez hopes relatively small shifts in
support can reduce his reliance on the

far left. Meanwhile, people connected to
the PP sayPablo Casado, the PP’s leader,
is all but certain to improve on April’s
result, the worst in his grouping’s his-
tory, but has little prospect of doing well
enough to form a government.
“Another vote probably won’t change
things too much overall, although it
could increase the vote of the estab-
lished parties,” said Toni Roldán, a

former economics spokesman of the
Ciudadanos party.
Both established parties want to win
back votes from Ciudadanos, which
came within a percentage point of the
PP in April’s election but has since fallen
back by about 3 points in the polls.
The Socialists also hope to garner
votes from Podemos, whose opes ofh
becoming the country’s leading leftwing
force have faded as the economy has
recovered from the financial crisis.

Meanwhile, the PP is trying to regain
support from the far-right Vox.
But much could go wrong for the
Socialists in the two months before the
election.
“The three big factors are going to be
whether abstentionism hurts the Social-
ists disproportionately; whether the
parties on the right get into a bidding
war that leaves the centre ground open
for Sánchez; and Catalonia,” said Anto-
nio Barroso, an analyst at Teneo, a
consultancy.
In particular, the election could be
shaped by sentencing in October in the
trial of separatist Catalan leaders facing
charges, including rebellion and sedi-
tion. In the past, it was Catalan votes
that helped shore up minority govern-
ments led by the two big parties.
The call for a firm response to Catalan
separatism has also become a rallying
cry on the right. “I don’t know if
Sánchez’s people are taking proper
account of the problem Catalonia could
pose for their plans,” said Ms García,
suggesting another inconclusive elec-
tion would weaken the prime minister
and could prolong the impasse. “Ulti-
mately, no one is going to get a majority.”

Political blame game


Election recriminations fly in ungovernable Spain


Pedro Sánchez:
caretaker PM
accused by other
party leaders of
plotting a new
election all along

MAKE A SMART INVESTMENT


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