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In the year that makes or breaks Brexit, what could 2018 bring?

LONDON — This is the year when the biggest political and economic conundrum to face the UK in modern times will be solved, further complicated or even abandoned in all but name.

Within 10 months, the British government and European Union (EU) aim to have an agreement on their divorce and at least the outline of their future trading relationship. They have different ideas about what Brexit should look like and different views on how the talks themselves should be ordered.

Then there are the divisions within each camp. The UK’s governing Conservatives, whose decades-old rift over EU membership was the catalyst for Brexit, remain split over what it really means. The opposition Labour Party is avoiding the question, and the Scottish nationalists don’t want to leave at all.

The EU may be putting its unity before any other priority, but negotiations could reveal conflicting national interests among the remaining 27 members.

So after a year of flawed predictions, here’s a look at several scenarios that just might come to pass in 2018.

THE BASE CASE
While the UK wants the full trade deal done by the time it leaves on March 29, 2019, the EU wants it ready to go by January 2021. This is what EU experts reckon could happen:

After a couple of months of uneventful talks, an agreement is reached on the transition deal that businesses have been crying out for. It’s not legally binding yet, but it’s enough to prevent a mass exodus of companies. In March, trade discussions start.

The UK fights for the City of London, but soon realizes that all the banks have contingency plans anyway and a fair amount of business will still be done in London after the split. The EU won’t budge on its refusal to let the UK keep the best bits of membership and Prime Minister Theresa May’s Conservatives won’t let her make the concessions that would be needed to remain in the EU’s single market.

In October there’s an outline agreement, which is vague, but detailed enough to be clear that Britain is headed for a trade deal that’s a lot like the one Canada struck with the EU.

It will keep tariffs off most goods, but put up barriers at customs and won’t do much for the service industries that make up most of the UK economy. Carsten Nickel of Teneo puts the chances of this scenario at about 60%.

The Irish border is back as a major obstacle. In the end, Ms. May calls the bluff of her Northern Irish allies in the Democratic Unionist Party (DUP) and they accept that in some areas they will have different rules to the rest of the UK to keep the border with the Republic of Ireland open.

Growing popular support for Labour under Jeremy Corbyn makes the DUP reluctant to walk out on Ms. May and let the leader they loathe come to power.

The dreaded cliff-edge scenario has been avoided, but companies start preparing for the trade barriers that lie ahead. No one knows when the detailed trade negotiations will finally end, so businesses are stuck with the outline for a while to come.

THE UPSET
Talks on transition go well enough. Then, by October, it’s clear negotiations on the future trade partnership are failing. The question of how to keep the Irish border open without a customs agreement rears its head again.

This time, it proves impossible for Ms. May to satisfy her three most difficult audiences: the Irish government, which is backed by the EU; the Democratic Unionist Party, which is propping up her government; and the ardent Brexit-backers within her own party.

Despite two weeks of crisis talks with the DUP, no deal is reached. Ms. May’s minority government collapses and an election is called for Thursday Nov. 15. The Conservatives have no time to choose a new leader so against the odds Ms. May takes the party into the short campaign.

On election day, the first in the fall since 1974, voter turnout is down. Labour manages to mobilize the youth vote while elderly Conservatives stay at home on a damp autumn day. Shortly before dawn, Mr. Corbyn is declared the winner and becomes prime minister with a small majority of 20. Once in government, Labour’s policy moves toward closer ties with the EU.

By December, the time for talking is over as Brexit day looms. At an emergency negotiating session on Christmas Eve, the UK’s chief negotiator, Keir Starmer, accepts the EU’s offer of membership of the European Economic Area.

It means Britain will maintain full access to its biggest market for goods and services, but now has to accept rules it has no say in making. It has also failed to “take back control” of immigration, a major issue in the Brexit debate.

THE WALKOUT
Talks on transition take longer than the UK hoped and the start of proper trade discussions is delayed. It soon becomes clear that the services industry is going to be largely left out of the future trade deal.

Businesses squeal and Brexit-backers at home wonder in public why Ms. May agreed to pay a hefty divorce bill in return for such a bare-bones trade deal. Loose ends that weren’t properly tied up in the first few months of talks continue to dog discussions.

The EU again reminds the UK that it needs to find a way to keep the Irish border open after the split, but it won’t give an inch to help find a solution.

The October deadline comes and goes and toward the end of the year talks break down with the UK team reluctantly walking out. Both sides are now hurtling toward a no-deal Brexit in March 2019 unless they can patch things up quickly.

THE WISH
Talks on trade and transition start quickly in January and by February a deal on transition is agreed.

The UK convinces the EU that it should offer it a “Canada plus, plus, plus” deal. That means a broad trade agreement that keeps tariffs off goods and also allows services companies, including banks, to continue to operate across the continent. The EU was divided on financial services but the pragmatists in Europe win the day.

Britain also convinces the EU that it needs to get a fully detailed trade agreement drafted in time for exit day so that it can be signed immediately after Brexit. Businesses and customs officials now have a palatable two years to prepare for the shift to the new arrangement. — Bloomberg

Davao mall management assures workers absorbed in other operations

TOP MANAGEMENT of the NCCC Mall in a statement on Wednesday said its “660 workers affected by the Dec. 23 mall fire will not be displaced and instead have been absorbed by the company in its other operations.” NCCC spokesperson and PR manager Thea Padua said, “As early as the first day of the tragedy, top management already decided that the affected workers would not be displaced and instead would be absorbed in our other operations.” She added that NCCC has also coordinated with the Bureau of Fire Protection (BFP) on behalf of the mall tenants and business owners who have asked permission to pull out their belongings. She asked the tenants to be patient as the BFP said the premises remain under its custody for investigation. Top management also met last Thursday, Dec. 28, with relatives of the victims of the Dec. 23 tragedy in a meeting arranged through the office of the Davao City Mayor, and pledged to provide needed support for these families. Ms. Padua said NCCC is fully cooperating with the authorities in support of a full and impartial probe of the tragedy.

MPBL to debut at the Big Dome

ALL ROADS lead to the Smart Araneta Coliseum as the inaugural staging of the Maharlika Pilipinas Basketball League (MPBL) unfurls on Jan. 25.

League Commissioner Kenneth Duremdes confirmed this to BusinessWorld in an online interview.

“We have seven teams seeing action. It’s a go for us,” Mr. Duremdes wrote.

Pending the possible last-minute inclusion of Subic and Cavite, teams seeing action in the MPBL founded by eight-division world boxing champion and Senator Manny Pacquiao are Bulacan Kuyas, Valenzuela Classic, Marikina Athletics, Tanduay Rhummasters, Caloocan Supremos, Navotas Redcore and Muntinlupa.

A former PBA Most Valuable Player and one of the league’s 40 Greatest Players, Mr. Duremdes has opened the doors to ex-pro players to give them a sanctuary and continue pursuing the career they’ve loved and chosen.

“We don’t have limit for ex-pros, but we want to have at least three players from their respective towns or cities. We want to feel that homegrown atmosphere, which is the main objective of this league,” said Mr. Duremdes.

Contrary to belief, the MPBL, according to Mr. Duremdes, is not a professional league, which was created to rival the PBA.

“No, it’s not. The MPBL is an amateur league and our goal is to develop more up and coming players and discover new heroes from different towns or provinces,” added Mr. Duremdes. — Rey Joble

Corporate governance and productive conflict

When an online newspaper article declared that “Sereno violated SC collegiality,” I took some time to view the YouTube videos of the House Justice Committee hearings on the impeachment complaint against Chief Justice Maria Lourdes Sereno. During the hearings, her fellow justices testified on her alleged questionable practices. I found myself cringing many times through the videos. It’s not every day that the dirty laundry of a hallowed institution is washed so publicly.

It will be a while before the impeachment issue is settled by the Senate, if it ever gets there. But hearing about infighting from the associate justices has diminished whatever notions of professionalism and collegiality I may have had about the Court. It seems that the justices concerned (the CJ included) are not able to resolve their differences in a constructive manner.

I shouldn’t be surprised. Groups of highly qualified and intelligent people tasked with complex decision making usually face all sorts of conflicts. Occasionally, these groups fail to resolve such conflicts in positive ways. Researchers and corporate insiders have reported the same problem for corporate boards.

The SEC’s Code of Corporate Governance states its first principle: “The company should be headed by a competent, working board to foster the long-term success of the corporation….” Most people would think that this principle refers mainly, if not only, to the technical competence of board members. Unfortunately, having the most technically competent members do not guarantee effective board decisions.

When highly successful and technically competent people are assembled in a board, some of them will strongly believe in their ideas and push for these quite forcefully. Ideally, others with different views will push back. The important debate that follows (what governance researchers call “substantive conflict”) should result in the best decision for the good of the company.

In practice, however, individual members may push their ideas too hard and, in the process, fail to show adequate collegial respect for or even listen to and consider the views of others. This lack of interpersonal (not technical) competence turns useful, substantive conflict into harmful interpersonal conflict. Before long, emotional infighting begins to sap the board of its energy and its effectiveness.

Beverly Behan, in Building Better Boards, refers to these problematic members as “pit bull” directors — overly aggressive and combative directors whose “questions of management and fellow directors always sound accusatory rather than inquisitive.” She elaborates, “Pit bulls can have enormously corrosive impact on a board’s culture. They inhibit open discussion and put nearly everyone around them on the defensive.”

Similarly, Katha Kissman, in Taming the Troublesome Board Member, refers to “controlling personalities” who have “an obsessive and inappropriate need or desire to control other people or situations and acts in a domineering, intimidating, or threatening manner in order to get his or her way.”

Consequently, a harmful side effect of infighting is that members who have legitimate questions hesitate to bring them up, fearing further escalation of interpersonal conflict. A false sense of consensus engulfs the board, and critical questions are no longer asked.

Kurt Eichenwald described the bad governance effect of infighting within Enron in his book entitled Conspiracy of fools: A true story. When Enron’s board audit committee, chaired by renowned accounting expert Robert Jaedicke, met to review possible accounting problems, they were assured by the external auditor that “Arthur Andersen’s financial statement opinion for 1999 will be unqualified. There were no significant audit adjustments, or disagreements with management, or other significant difficulties.” Earlier questions about the company’s conflicted accounting and compensation practices critically raised by both Enron insiders and external auditors were not discussed. Worse, no questions were asked by the audit committee members. Jaedicke would later claim during a congressional investigation that Enron management hid information from the board.

If boards are to function properly, the roots of dysfunctional interpersonal conflict must be addressed. Kissman suggests that a possible first step in managing a troublesome board director is for the board chair to initiate a conversation with the director to clarify perceptions, to develop options for resolution, and to solicit the board member’s understanding and agreement to a course of action and a plan for follow-up to ensure successful resolution for all.

For the board as a whole, Kissman recommends that directors be oriented on the importance of working as a team and on board meeting etiquette. Board job descriptions and annual team-building and leadership development exercises should also be helpful.

The board is ultimately responsible for the prudent direction and oversight of the corporation. All directors, led by the chair, must work collegially to work through substantive conflicts while getting interpersonal conflicts out of the way. Those who govern should always act wisely and not like fools.

 

Dr. Benito L. Teehankee is full professor of management and organization at De La Salle University.

benito.teehankee@dlsu.edu.ph

Spotify hit with $1.6-B copyright lawsuit

MUSIC streaming company Spotify was sued by Wixen Music Publishing, Inc last week for allegedly using thousands of songs, including those of Tom Petty, Neil Young and the Doors, without a license and compensation to the music publisher.

Wixen, an exclusive licensee of songs such as “Free Fallin” by Tom Petty, “Light My Fire” by the Doors, “(Girl We Got a) Good Thing” by Weezer and works of singers such as Stevie Nicks, is seeking damages worth at least $1.6 billion along with injunctive relief.

Spotify failed to get a direct or a compulsory license from Wixen that would allow it to reproduce and distribute the songs, Wixen said in the lawsuit, filed in a California federal court.

Wixen also alleged that Spotify outsourced its work to a third-party, licensing and royalty services provider the Harry Fox Agency, which was “ill-equipped to obtain all the necessary mechanical licenses.”

Spotify declined to comment.

In May, the Stockholm, Sweden-based company agreed to pay more than $43 million to settle a proposed class action alleging it failed to pay royalties for some of the songs it makes available to users.

Spotify, which is planning a stock market listing this year, has grown around 20% in value to at least $19 billion in the past few months. — Reuters

Amazon Café leaves the gas station

COFFEE and tea flavors that were previously accessible only to people on the road are now available in one of Manila’s biggest malls.

In 2002, the PTT Group launched the coffee shop chain Café Amazon which was linked to PTT service stations around Thailand. In the span of 15 years, the coffee shop chain expanded to over 2,000 stores in Southeast Asia and Japan. In 2016, Café Amazon arrived in the Philippines, with branches opening at the two-hectare PTT-SCTEx station, followed by another at PTT-Dasmariñas, Cavite. On Dec. 13 last year, Café Amazon was launched at SM North EDSA’s The Annex — its first branch in the country outside a gasoline station.

“[Because] it was successful in Cambodia, Laos, Myanmar, why not in the Philippines where demand for coffee is growing?” PTT Philippines Corp. Café Amazon business development executive Anusorn Preugpaibul told BusinessWorld. The coffee shop’s brand recognition is extensive since it “has been [around] for 15 years and we have over 2,000 stores in Southeast Asia and Japan,” he noted.

“We emphasize on [its being a] ‘green oasis’ which means we want customers to come in and chill… and look at Café Amazon as a meeting place [where] people would enjoy coffee and pastries,” Mr. Preugpaibul said of the “taste of nature” concept.

The cafe’s beverages range from 21 flavors of coffee, tea, juices and smoothies, and milk and chocolate. The best-sellers include Amazon coffee, hot cappuccino, iced white chocolate macchiato, lychee juice, green tea with milk, and its signature Thai tea with milk.

New drinks are launched every quarter and drinks that become popular are added to the regular product list. “The Thai tea and green tea are actually from seasonal drinks that have been popular among customers. And therefore, has been put in our regular menu,” said Mr. Preugpaibul, adding that the products are targeted to the middle class and millennials who want to enjoy affordable coffee.

PTT Philippines Corp. business partner developer Dianne Karla Maling said in a separate interview that they promote “the value for money” — citing the most expensive beverage is sold for P150 and they come in “high quality” cups with a volume greater than other beverage brands.

“Most of our iced and frappe products come in 22 oz size (except for some of the smoothies, lemon tea, and black tea that come in 16 oz size). The hot drinks come in 8 oz size,” Mr. Preugpaibul said in a text message. — Michelle Anne P. Soliman

Driverless ride-hailing cars to debut at CES 2018

RIDE-HAILING start-up Lyft, Inc. and self-driving software company Aptiv Plc will show off a fully automated ride-hailing service at the Consumer Electronics Show (CES) in Las Vegas later this month.

The “point-to-point” ride-hailing system will incorporate Lyft’s app with Aptiv’s automated driving platform, offering rides to attendees of the annual show, the companies said in a statement. Operating in complex areas like the Las Vegas Strip will “accelerate the availability of automated driving platforms for commercial applications,” the companies said.

Lyft and its larger US rival, Uber Technologies, Inc., see autonomous vehicles as pivotal to their longer-term business prospects. Lyft last year announced plans to enable self-driving developers and car makers to plug into its network of nearly 1 million rides per day as it looks to bolster the nascent technology. Meanwhile, Aptiv — formed in December when supplier Delphi Automotive Plc split into two companies — is seeking to capitalize on the changing dynamics of the car sector, where parts makers with expertise in self-driving technology and electrification have become hot commodities.

The former Delphi bought self-driving start-up NuTonomy, Inc. for $450 million in October, speeding up its plans to supply car makers with autonomous vehicle systems.

Apart from forging partnerships, Lyft is opening a self-driving vehicle development facility in Palo Alto, California, called “Level 5,” a nod to the designation of fully autonomous vehicles that don’t require human supervision. The self-driving Vegas rides available during CES will be staffed by a safety driver in the front seat, the companies said. — Bloomberg

Cotton was 2017’s star crop; funds bullish in 2018

THE longest winning streak in two decades propelled cotton to 2017’s biggest increase among crop commodities, and hedge funds are ready for more gains in 2018.

Of the nine components tracked by the Bloomberg Agriculture Subindex, only cotton and wheat contracts posted gains last year. The fiber lead the way with an 11% advance as demand grew for US exports. Prices capped 2017 with 10 straight weekly gains, the best streak since 1998.

Cotton was also one of the few crops that hedge funds got more positive on during the course of the year. Money managers held a net-long position, or the difference between bets on a price increase and wagers on a decline, of 102,402 futures and options as of Dec. 26, according to US Commodity Futures Trading Commission (CFTC) data released Friday. That’s up from 76,052 at the end of 2016.

Cotton’s stellar performance came as crop woes in Pakistan and India, two of the world’s biggest growers, raised prospects for American shipments. In the 2017-2018 season, commitments for US cotton exports are running 29% higher than a year earlier, government data show.

The investors also added to their bullish outlook in soybean meal in 2017, the CFTC show. By contrast, the funds lowered their net-long holdings in soybean oil, while turning bearish on coffee, sugar and soybeans during the year.

Cotton’s gains are especially notable in a year that was dismal for most other crops amid large global gluts. Combined wagers on benchmark corn, wheat and soybean contracts reached a net-short position of 421,450 contracts as of Dec. 26. That’s the most-bearish ever in data that starts in 2006.

While both varieties of winter wheat posted gains in 2017, they were pretty small, coming in at less than 5%. The other members of the Bloomberg Agriculture Subindex — corn, soybeans, soybean meal, soybean oil, sugar and coffee — finished the year with losses. The gauge reached a record low in December, data going back to 1991 show. — Bloomberg

World Rapid Championship

World Rapid Chess Championship
Riyadh, Kingdom of Saudi Arabia
Dec. 25-30, 2017

Final Top Standings

1-3. Viswanathan Anand IND 2758, Vladimir Fedoseev RUS 2771, Ian Nepomniachtchi RUS 2780, 10.5/15

4-9. Bu Xiangzhi CHN 2654, Magnus Carlsen NOR 2908, Alexander Grischuk RUS 2813, Boris Savchenko RUS 2685, Rauf Mamedov AZE 2695, Gadir Guseinov AZE 2714, 10.0/15

10-18. Peter Svidler RUS 2743, Wang Hao CHN 2770, Yu Yangyi CHN 2752, Vladimir Onischuk UKR 2748, Vladislav Artemiev RUS 2687, Ding Liren CHN 2734, Penteala Harikrishna IND 2687, Sergey Grigoriants RUS 2572, Zhao Jun CHN 2600, 9.5/15

Total of 134 participants

Time Control: 15 minutes play-to-finish with 10 seconds added after every move starting move 1.

This year’s world rapid and blitz championships were hosted in Riyadh, the capital city of the Kingdom of Saudi Arabia. The tournaments were renamed the ‘King Salman World Rapid & Blitz Championship’, and had a record $2 million prize fund with $250,000 going to the winner.

There were no preliminary qualifying events – the rules simply state that you may join so long as your rating is 2600 and above.

There were some misgivings on the choice of Saudi Arabia for the championships. On the safety and security front Saudi Arabia has several disputes with its neighbor Yemen which has the potential to escalate to a full-blown war. I am sure our BW readers had seen in the papers that Yemen had launched 2 missiles against Saudi. Although they were both intercepted before hitting their targets you can imagine how nerve-wracking this can be!

On the political side there was a howl of protest from the Israeli Chess federation and the Association of Chess Professionals (the president of ACP is GM Emil Sutovsky, an Israeli Jew) that Israeli players were not given visas to enter Saudi Arabia. Naturally they pointed to the FIDE motto Gens Una Sumus (“we are one people”) and that its Statutes provide that “FIDE events may be hosted only by Federations where free access is generally assured to representatives of all Federations.”

There were a lot of discussion about this and I assume this will continue even after the event. My personal opinion is that the organizers from FIDE and Saudi did the best they could — it was not as if there was a queue of potential hosts and sponsors willing to take over the event.

You will remember that a few months ago Saudi Arabia along with United Arab Emirates, Bahrain and Egypt cut diplomatic ties with Qatar due to its “harboring a multitude of terrorist and sectarian groups that aim to create instability in the region.” Saudi even went so far as to close its border and halted air and sea traffic with Qatar. For the World Rapid Chess event though FIDE managed to negotiate with the Royal Family to extend visas to the Qatari players. Another issue was the government relations between Saudi Arabia and Iran, which have lately been icy. Once again the organizers managed to clear the way for the Iranian players to get visas.

FIDE was also confident that they can get a special dispensation for the Israeli players. Unfortunately though the US President Donald Trump chose this time to escalate tensions between the Arab world and Jews by declaring that Jerusalem is the capital of Israel and announcing that the US embassy would be moving there. This proved to be the straw which broke the camel’s back and the Israeli players had to stay home.

Enough talk about politics! Let’s go to the chess.

The Jordanian player IM Sami Khader (born 1972) is unknown to most of us, but he has some serious skills, for example during the 2016 Baku Olympiad he was the silver medalist on Board 5 with eight wins out of eight games for a performance rating of 2932. Here in Riyadh he came through with a brilliant victory against one of the toughest to beat players, nicknamed “Minister of Defense.”

Khader, Sami (2392) — Karjakin, Sergey (2760) [B94]
WCh Rapid 2017 Riyadh (2.43), 26.12.2017

1.e4 c5 2.Nf3 d6 3.d4 cxd4 4.Nxd4 Nf6 5.Nc3 a6 6.Bg5 Nbd7 7.Qe2 h6 8.Bh4 g6 9.f4 e5 10.fxe5 dxe5 11.Nf3

In Negi’s best-selling book on “1.e4 against the Sicilian” he recommends here 11.0–0–0!. Obviously Black cannot take the knight because of 11…exd4 12.e5 dxc3 13.exf6+. Negi then goes into a very detailed and involved analysis of what happens after 11.0–0–0 Qc7 ending around 10 moves later with the verdict that White is better. Khader does not go full throttle right away and tries to keep control of the complications.

11…Qc7 12.0–0–0 b5 13.Nd5 Nxd5 14.exd5 Bd6 15.Qe3 Bb7 16.Bd3 f5?

Best was either …Nd7–b6xd5, or even 16…0–0! if 17.Qxh6 then 17…e4! (threatening …Bf4+ winning the queen) 18.Ng5 Bf4+ 19.Kb1 Bxg5 20.Bxg5 exd3 21.Rxd3 Qe5 Black is doing very well.

17.Nd4! Qb6?!

Obviously Karjakin was counting on this move.

18.Bxf5! gxf5 19.Qg3 Nf8

[19…exd4 20.Qg6+ Kf8 21.Qxf5+ Kg7 22.Qxd7+ Black’s isolated king will fall]

20.Nxf5 Rh7 21.Rhe1 Kd7 22.Bf6?

An inaccuracy as now Black has 22…Bb4 considerably complicating matters. Once Karjakin lets this possibility slip there is no more salvation.

22…e4? 23.Nxd6 Qxd6 24.Qg4+ Kc7 25.Bh4 Qg6 26.Qf4+ Kd7 27.Rxe4 Rc8 28.c3 h5 29.Re6 Nxe6 30.dxe6+ Ke8 31.Qd6 Qh6+ 32.Kb1 Be4+ 33.Ka1 Bd3 34.Qxd3 Kf8 35.e7+ Kg7 36.Qd4+ Kf7 37.Rf1+ Ke6 38.Rf6+ Qxf6 1–0

This was not Karjakin’s tournament. He later on went down again to a 15-year-old boy (still only an FM but has already fulfilled the requirements for the GM title), Andrey Esipenko, the reigning World Under-16 Champion. The video of the event shows that the two players on the next board, Ponkratov and Grischuk, couldn’t stop looking over their shoulders to see Karjakin being taken down.

Karjakin, Sergey (2760) — Esipenko, Andrey (2564) [B11]
WCh Rapid 2017 Riyadh (8.9), 27.12.2017

1.e4 c6 2.Nf3 d5 3.Nc3 Bg4 4.h3 Bxf3 5.Qxf3 Nf6 6.d3 e6 7.Bd2 Qb6

This is Esipenko’s pet line in the Caro-Kann Two Knights Defense.

8.0–0–0 d4 9.Ne2 c5 10.e5 Nd5 11.Nf4 Nb4 12.Kb1 Nd7 13.Qe4 Nc6 14.Nh5 0–0–0

Black shouldn’t take the proferred pawn. After 14…Ndxe5 15.f4 Nd7 16.f5 e5 17.Be2 followed by Bf3 and g2–g4 White will have a full-blown initiative. Black with his pieces not yet properly coordinated will have to shed one or two pawns to hold the balance.

15.f4 c4!

One moment White is trying to break through in the center and the next it is Black who has a strong offensive against the opposing King.

16.dxc4 Ba3 17.Bc1

[17.b3 Nc5 18.Qf3 d3 19.Bxd3 Rxd3 20.cxd3 Nxb3 Black mates]

17…Nc5 18.Qf3 d3! 19.cxd3

[19.Bxd3 Bxb2! 20.Bxb2 Na4 21.Kc1 Qxb2+ 22.Kd2 Rxd3+ 23.Qxd3 Rd8 Black is clearly winning]

19…Na4 20.Rd2 Nd4 21.Qf2 Nc3+ 22.Ka1 <D>

Position after 22.Ka1

Now for the nice finish.

22…Qb3! 23.bxc3

[23.axb3 Nxb3#]

23…Qxc3+ 24.Bb2 Bxb2+ 25.Rxb2 Qc1+ 26.Rb1 Nc2+ 27.Qxc2 Qxc2 28.g3 b5 29.cxb5 Rd4 0–1

The Tbilisi KO World Cup held last September had 7 rounds of mini-matches involving 128 of the top players of the world. Who would have thought that the reigning world champion Magnus Carlsen would only last up to the 3rd round? It was Bu Xiangzhi who brought him down with a sudden kingside attack. Here in Riyadh Bu Xiangzhi prevented any thoughts about “revenge being a dish best served cold” by upsetting Carlsen again with yet another kingside assault.

Carlsen, Magnus (2837) — Bu, Xiangzhi (2730) [A28]
WCh Rapid 2017 Riyadh (1.1), 26.12.2017

1.c4 Nf6 2.Nc3 e5 3.e3 Nc6 4.a3 d5 5.cxd5 Nxd5 6.Qc2 Be7 7.Nf3 0–0 8.b4 Nxc3 9.dxc3 Qd6 10.Bd3 f5 11.e4 f4 12.h3 a5 13.Bb2 Bf6 14.Rd1 Qe7 15.0–0 Be6 16.Qe2 Qf7 17.Rd2 g5 18.b5 Ne7 19.c4 Ng6

The follow-up will be 20…g4 21.hxg4 Bxg4 and the pin will be hard to break.

20.Nh2 Rad8 21.Rfd1 Qe7 22.Qh5 Rd7 23.Ng4 Rfd8 24.Nh6+

[24.c5 Bg7 25.c6 bxc6 26.bxc6 Rd6 27.a4 The coming Ba3 is awkward to meet]

24…Kh8 25.Nf5 Qc5 26.Qe2 Nh4 27.Nxh4 gxh4 28.Qh5 Rg8 29.Bf1 Rdg7 30.Kh1 Qe7 31.Qf3 Rg5 32.a4 Bf7 33.Rd7 Qe6 34.Qe2?

GM Yermolinsky pointed out here that the correct move for White is 34.Qa3! so that Black’s …Qb6 anytime can be met by c4–c5.

34…Bh5 35.f3 Rg3

Threatening 36…Bxf3.37.gxf3 Rxh3+ 38.Bxh3 Qxh3+ 39.Qh2 Qf3+ 40.Qg2 Qxg2 checkmate.

36.Kh2 Qb6! 37.c5 Qxc5 38.Kh1 0–1

Here Carlsen lost on time, but it does not matter since it is mate in 2: 38…Rxh3+ 39.gxh3 Qg1 checkmate.

This was a really exciting event. Rapid chess, if you ask me, is the way to go for the coming years.

 

Bobby Ang is a founding member of the National Chess Federation of the Philippines (NCFP) and its first Executive Director. A Certified Public Accountant (CPA), he taught accounting in the University of Santo Tomas (UST) for 25 years and is currently Chief Audit Executive of the Equicom Group of Companies.

bobby@cpamd.net

Solar’s bright future is further away than it seems

By Tyler Cowen

THERE is now a doctrine of what I call “solar triumphalism”: the price of panels has been falling exponentially, the technology makes good practical sense, and only a few further nudges are needed for solar to become a major energy source. Unfortunately, this view seems to be wrong. Solar energy could be a boon to mankind and the environment, but it’s going to need a lot more support and entrepreneurial and policy dynamism.

Varun Sivaram, in his forthcoming Taming the Sun: Innovations to Harness Solar Energy and Power the Planet lays out this case in what may be the first important policy book of 2018. To be clear, Sivaram, who holds a doctorate in physics, is a solar expert and an energy adviser — he’s no enemy of alternative energy sources. He thinks government should increase its support for energy research and development, aiming at diverse pathways, applied at various stages of technology development, and targeting game-changing breakthroughs. In other words, we need to recognize the limitations of today’s solar power if we are going to make it really work.

The first disquieting sign is that solar companies are spending only about 1% of their revenue on research and development, well below average for a potentially major industry. You might think that’s because things are going so great, but some major solar users may have already maxed out their technology. According to Sivaram’s estimates, four of the five most significant country users — Italy, Greece, Germany, and Spain — have already seen solar energy flatten out in the range of 5% to 10% of total energy use. The fifth country, Japan, is only at 5%.

Germany and the state of California have experienced operational problems as solar has grown as an energy source. Because the sun isn’t continuously available, solar power at large scale doesn’t integrate well with the electric grid, which favor steady sources such as fossil fuels or nuclear. Solar power creates an expense for the whole system, even if the panels themselves are cheaper.

Silicon technologies dominate the panel market today, but Sivaram sees greater dynamic potential in perovskite, organic and quantum dot solar cells, and possibly orbital solar power satellites. Breakthroughs in those areas might lower costs and increase solar potency, making the calculus more favorable to green energy.

A common view is that solar power will come into its own once batteries and other storage technologies make steady improvements. Yet Sivaram notes that lithium-ion batteries in particular are not well-designed for storage across days, weeks and months. Also note that about 95% of global energy storage capacity is from hydroelectric power, a discouraging sign for the notion that solar energy storage is on a satisfactory track.

solar panel

Promoting solar energy also isn’t in the interest of regulated utilities. They fear a scenario where many users deploy solar power to detach from the energy grid, either wholly or in part. Other customers’ bills would have to rise to cover the costs of the grid, and that in turn would encourage even more secession into solar and alternate energy sources. Because that scenario is a financial loser for the utilities, regulatory institutions discourage utilities from integrating solar power into the grid, which limits competition.

Solar energy has great potential for emerging economies, but some very basic preconditions are not in place.

India, for instance, would need to end its kerosene and electricity subsidies. Freer trade in solar technologies is found in Tanzania and Rwanda but not always in West Africa.

In sum, just improving silicon panel solar technologies may not be enough. Sivaram calls for “systemic innovation,” based on “refashioning entire energy systems — including physical infrastructure, economic markets, and public policies — to enable a high penetration of solar energy.” I would add that we should reconsider the abandonment of nuclear energy, a topic that Sivaram touches upon but does not emphasize.

One lesson is that marginal improvements aren’t always enough, and economic dynamism is more important than we have been realizing. A whole series of integrated breakthroughs may be required to move significantly closer to a green energy future. I do think the US will eventually get there, but after reading Taming the Sun, I have to wonder if we are up to the challenge now.

 

BLOOMBERG

Alvarez: Sereno’s impeachment ready by March

HOUSE SPEAKER Pantaleon D. Alvarez, in an interview with ANC on Wednesday, said impeachment proceedings against Chief Justice Maria Lourdes P.A. Sereno may be finished “before the House adjourns for the Holy Week break” in March. “Oo, palagay ko naman tapos na ang (impeachment) committee nun. In fact nag-umpisa na rin kami na i-consolidate ’yung lahat ng mga ebidensya at yung mga testimonies na nakalap namin,” Mr. Alvarez said. (Yes, I think the committee would be done by then. In fact, we’ve already started consolidating all the evidence and testimonies we’ve gathered.) For his part, Oriental Mindoro Representative Reynaldo V. Umali, who chairs the House impeachment committee, said he is set to meet with the secretariat to finalize the list of resource persons who will be invited when hearing resumes on Jan. 15. — Minde Nyl R. dela Cruz

Organic Champagne making a slow fizz into glasses

REIMS, FRANCE — A bubble it is not: the organic movement is only slowly taking root in France’s Champagne region, although its proponents believe environmentally friendly techniques can help the sparkling wine express even finer subtleties.

Organic farming has experienced a boom in recent years, in France, too, where the wine industry has been keen to adopt practices that shun synthetic chemicals and fertilizers.

If 5% of all agricultural land in France was being organically farmed or in the process of conversion in 2015, the figure was 8.7% for the wine sector, according to data from the public-private agency that promotes “green” farming in France.

But there are regional disparities, and the Champagne region is trailing with just 1.9% under organic production, even if the amount of land there carrying an “Agence Bio” (or AB) certification increased by 14% between 2015 and 2017.

Organic farming is not for those looking to make a quick buck or jump on the latest bandwagon.

“If you’re just looking to put a pretty seal on your label, you’ll be disappointed very quickly,” said Pascal Doquet, president of the association of organic Champagnes.

Doquet said he spent “six years between the beginning of the conversion process and the first sale of bottles” bearing the AB seal.

The slow maturation of Champagne, an element of its quality and the cachet which allows the wines to command premium prices, is a disadvantage when going green.

Converting the land to organic farming is a three-year process. Then, there is the requirement that Champagne must mature in bottles for at least 15 months, with many makers leaving it even longer.

Another crucial element is climate, which needs to be cool with little sunshine to help the grapes mature slowly.

And dampness is also a challenge, especially as organic farming sharply limits which treatments can be used.

For many practitioners, organic is as much a philosophy as a process.

Doquet said he has had to become a “real farmer,” cultivating the vine’s “capacity for resistance,” while other wine makers were mere “technicians.”

TERROIR IN A BOTTLE
The respect for the environment that underpins the organic movement’s philosophy fits in with the French concept of terroir, where soil, topography and climate all combine to influence the taste of the wine.

Less invasive farming techniques can therefore help produce wines that better reflect the nuances of their environment, or “make the terroir sing,” as Eric Rodez, head of a family winery at Ambonnay in the Marne Valley, puts it.

It was a much more “demanding” way of wine-making, “living life by the rhythm of nature, not the clock of the world,” he argues.

But his family winery, which consists of six hectares and produces around 50,000 bottles per year, now produced “liberated wines” with more “expressive” scents and flavors, Rodez says.

The idea has caught the attention of at least one of the leading Champagne houses — Louis Roederer Champagne.

Unusual among large houses in that it grows its own grapes, 10 of Louis Roederer’s 240 hectares are certified as organic. And it plans to gradually convert all of its land in future.

“For me, organic is an obvious choice, because it is the terroir that makes wines unique,” said the house’s cellar master, Jean-Baptiste Lecaillon. “That uniqueness can’t come from a massive blanket of chemicals that neutralize flavors.”

‘ECONOMIC SHORT-TERMISM’
Even if the Champagne region doesn’t yet embrace organic farming widely, it has been reducing its use of chemicals.

Over the past 15 years, the region has cut the use of nitrogen fertilizers and pesticides by half, according to the Comite Champagne, the trade association for the 300 Champagne houses and 15,000 wine makers.

And in 2014, it launched its own certification of “sustainable viticulture,” specially tailored to the Champagne region.

So far, more than 4,000 hectares out of the region’s 34,000 hectares have received the certification.

Nevertheless, few of the big Champagne houses appear to be in any rush to go organic.

Lecaillon said those who did must be ready to accept that “in certain years, they could lose 10, 20 or even 30% of the harvest,” without the help of chemical fertilizers and treatments.

But it’s not just a question of “economic short-termism” that is preventing Champagne houses from going green, Lecaillon said.

Since most large Champagne houses buy much of their grapes from growers, those growers would be required to go organic, too.

Consumers, too, have little leverage to pressure producers into going green, because organic Champagnes are still a niche market and are rarely seen on supermarket shelves. — AFP

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