The EconomistAugust 29th 2020 Finance & economics 592
1Mr Hoganhad grandplans when he
took office, includingensuring that the
transatlantictraderelationshipdidnotde-
teriorateonhiswatch.Hehadbeguncon-
ductinga “major”reviewofeutradepolicy,
strengtheningitstradedefences,andtry-
ingtocobbletogethera fixforthebroken
systemofsolvingdisputesattheWorld
TradeOrganisation(wto).
Foralltheseaspirations,MrHogan’slist
ofachievementslooksa littlethin.Hisre-
lationshipwithMrLighthizergotofftoa
rockystart.Evenaftera micro-dealagreed
onAugust21st,Europe’sexportersfaceta-
riffsonbillionsofdollars’worthoftheir
wares,inretaliationforsubsidiesforAir-
bus,a Europeanplanemaker.Acollabora-
tionwithMrLighthizertoworkouta com-
mon response to China’s economic
distortionsappearedtohavestalled.(Anda
botchedbidtoleadthewtoearlierthisyear
didnotexactlycoverMrHoganinglory.It
endedafterherealisedthathewouldprob-
ablynothavethesupportofalltheeu’s 27
membercountries.)
Arguably, the odds in all this were
stacked against him. Achieving much
within theBrussels bureaucracy in less
thana year—andinthemiddleofa pan-
demic—isa tallorder.NoEuropeantrade
representativewilleverhaveasmuchpow-
ertoputpressureontradingpartnersasMr
LighthizerhasbeengivenbyPresidentDo-
nald Trump.AndAmerica’s engagement
withitsalliesoverChinahasbeenshallow,
ratherthana truecollaboration.
MrHogan’sresignationnotesaidthat
hehopedhistorywouldjudgehisachieve-
mentsfavourably.Perhapsthebestthatcan
besaidisthattheylookmoreimpressive
whenyouconsiderhisconstraints. 7T
he biggest crisis in the 24-year history
of the world’s biggest sovereign-wealth
fund was defused at the very last minute.
On August 24th Norges Bank Investment
Management (nbim) announced that Nico-
lai Tangen, its incoming boss, would liqui-
date his entire stake in akoCapital, the
$20bn hedge fund he founded. He will
transfer it to akoFoundation, a charity he
set up in 2013. He will also sell his personal
investments and park the proceeds in a
bank account. Although Mr Tangen had
previously ruled out selling up, he gave in
to mounting political pressure in order to
begin what he has called his “dream job” onSeptember 1st.
The controversy, which has lasted
months, has probably done most damage
to the reputation of the central bank.
(nbim, which has holdings worth around
10trn Norwegian kroner, or $1trn, sits with-
in it.) The bank broke “guidelines, rules
and laws” when it selected Mr Tangen, ac-
cording to the main supervisor of nbim.
His name never appeared on the bank’s of-
ficial list of candidates for the fund’s top
job, though he had been considered a seri-
ous contender for months. And the central
bank may not have given enough thought
to how to resolve potential conflicts of in-
terest; Mr Tangen’s old fund holds shares in
some of the same companies as nbim.
Mr Tangen had planned to mitigate po-
tential conflicts of interest by reducing his
stake in akofrom 78% to 43%, appointing a
trustee to exercise his vote and give away
any dividends that would accrue during his
tenure at nbim. But that was not enough
for Norwegian lawmakers. On August 21st
the parliamentary finance committee con-
cluded that the sovereign-wealth fund’s
boss was not permitted to “have any own-
ership or interests that create or may ap-
pear to create conflicts of interest that
[weaken] the trust and reputation of
Norges Bank”.
On the same day Jan Tore Sanner, the fi-
nance minister, asked Oystein Olsen, the
central bank’s governor, to find a solution.
The result was Mr Tangen’s parting with
stakes worth about 10bn kroner. “I think it’s
fair to say that Olsen owes me a beer,” he
joked at the press conference announcing
the divestment. Many Norwegians had ex-
pected Mr Tangen to turn down the job
rather than sell his holdings.
Some concerns about Mr Tangen’s ap-
pointment relate to his past as a buccaneer-
ing fund manager. “I worry that he will in-
troduce more risk into the management of
the fund,” says Karin Thorburn of the Nor-
wegian School of Economics. The fund
typically gets a mandate from parliament
that includes a reference index determin-
ing its allocation of bonds and equities and
its regional split, as well as a tracking error
that fixes how much nbim can deviate
from the reference index. Mr Tangen could
push for a bigger tracking error to give him
the room for manoeuvre he was used to in
his previous job.
None of this makes for a relaxed start to
the new job. Mr Tangen will have to restore
public trust in the management of the
fund, which for most of the 12-year tenure
of his predecessor, Yngve Slyngstad, had
been well-regarded. Mr Olsen may be in an
even less enviable position. He has saved
his job for the time being, but many expect
him to resign after a face-saving period, be-
fore his tenure ends in December 2022. As
one dream is realised, another may be com-
ing to an end. 7BERLIN
The incoming boss of Norway’s oil
fund pays a big price for his new gigNorges BankAn expensive
dream
A
homeowner in Achrafieh does not
care if the investigation is a sham, only
that it rules that the explosion was an acci-
dent. Otherwise his insurance policy will
pay nothing. The owner of a ruined bou-
tique down the hill in Mar Mikhael would
prefer the opposite result: her policy covers
terrorism, unlike most, and will compen-
sate her for an estimated $100,000 in re-
pairs and lost inventory. The manager of a
car-rental firm wonders if his explosion
cover will include one of the largest non-
nuclear explosions in history, since his ve-
hicles were flattened by falling debris, not
the blast itself.
The explosion that ripped through Bei-
rut on August 4th, caused by 2,750 tonnes
of ammonium nitrate stored improperly
for years at the port, devastated much of
the city centre. More than 200 people are
dead or missing, thousands wounded, and
an estimated 300,000 are homeless. The
damage to property could reach $15bn. A
chunk of that will land on insurance com-
panies in Lebanon, with consequences for
banks and foreign reinsurers.
In 2018 Lebanese insurers paid out
around $90m to settle property and casual-
ty claims. Insured losses at the port alone
could now run to $250m. Victims have filed
2,500 claims for $425m in damages acrossBEIRUT
The explosion at Beirut’s port will also
blow a hole in insurers’ balance-sheetsLebanon’s insurersBroken cover
Damage assessment