24 THE CITY MAGAZINE | August 2016 s l u x u rY l o N d o N. C o . u k s THE CITY MAGAZINE | August 2016 25

| FEATURE |

s l u x u rY l o N d o N. C o . u k s

The Brexit result in the early hours of 24 June took almost everyone by surprise. People had talked about

the possibility of such a vote, but no-one believed it would happen. Despair, shock, anger, confusion abounded, and, as the UK awoke to the news of a Leave victory, one thing was on everyone’s minds – what would the future look like now?

The referendum in Britain has had ripples that will be felt the world over. The problem is, it is hard to envisage this new future. Nothing like this has ever happened before. Forecasters, analysts and experts predicted the initial drop in the pound, and other financial instability, and they have so far been proved right, but as the dust settles on the scramble out of Europe, what do the coming months and years really look like? How will this look in real terms for London? What next for the City?

In Frankopan’s book, it is clear that major world events in history have radically and permanently altered our financial centres – the Plague; the Black Death; 9-11 – all took major tolls on major cities. According to Frankopan, Brexit will have a similar effect. “Any sustained ‘black swan’ event that persuades international investors to look elsewhere for returns will radically alter the financial standing of a country,” he says, “We need stability for prosperity and tolerance. We’ve just committed a version of ritual suicide by choosing to exit the European Union. I hope – and think – that we will be able to work together to contain the worst of the damage. But there is no question that the vote to leave has reduced London’s position worldwide. The weakening of the UK, EU and London will all accelerate the demise of Europe, and of course bring about the rise of the East that much more quickly.”

But it is not only Europe where things are looking uncertain. “There are lots of

Historian Peter Frankopan’s recent book The Silk Roads: A New History of the World, aims to re-evaluate our Western centric view of history. The East is where the power lies, says Frankopan. Europe is not the centre of the world anymore. In the wake of Brexit, it’s time to look towards the past

words: emma johnson

Astana at a big Silk Roads event – it’s amazing what is going on, out of sight, and barely reported over here.”

He is talking in part about the development of the Shanghai Cooperation Organisation (SCO), an increasing presence in political, military and economic circles. Founded in 2001, its members include China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. “It is becoming increasingly influential, and gradually turning into a viable alternative to the EU,” Frankopan writes in his book.

On the 24 June, as news of Brexit trickled in, Tashkent, India and Pakistan signed the SCO memorandum of obligations, thereby starting the formal process of also joining the SCO as full members – a fact that was barely even reported over here. While even Turkey, frustrated with their delayed EU membership process, has been looking towards the SCO. The Turkish prime minister announced in 2013 that his country would seek to join the SCO as a full member. The SCO he stated, “is better and more powerful and we have values in common”.

London’s place in the world is shifting, and it’s clear that the referendum is likely to have accelerated this change. Frankopan explains that in the past, as now, to make money in finance you had to be in the right place. This used to mean things like location, natural resources, trade routes; today, the Global Financial Centres Index (GFCI) ranking measures the top worldwide financial centres on things such as financial sector development, infrastructure, human capital and reputation. This ranking has always put London in the top five, and in March this year, it was at the top of the list. “I imagine the GFCI ranking wasn’t worth the paper it was written on the morning we woke to learn we’d voted for Brexit,” says Frankopan.

For Frankopan, ranking a city in this way is to miss the point completely. “Economists like ‘data’ and think that it is possible to extrapolate future trends

from past ‘facts’. Funnily enough, historians – who, after all, work on the past – never look at the world in these terms. We focus on fragilities and continuities.”

And, when you compare the City of London with other financial

hubs – New York, Tokyo, Zurich, even Dubai, Shanghai, Seoul, Tel Aviv – they all have their own

very specific brand of brilliance. “London is a city with a unique and very particular set of advantages,” explains Frankopan.

“But, then, I see all cities in this way. Like Venice in its heyday,

or Samarkand and Bukhara. The point is that those advantages often

turn out to be an Achilles heel. That’s why understanding the rhythms of history is so very important. Nothing lasts forever. Understanding the factors between the rise and fall of cities, of empires, of languages, of businesses is absolutely fundamental to any investor, any CEO and citizen. Put simply, we should listen to historians more. All banks have a chief economist; why not a chief historian too to explain what is going on in the world?”

Frankopan warns that for London to maintain its position, there needs to be a soft touch and a lot of care. “I think my current anxiety is trying to work out what the City will look like in 18 months’ time. It’s not unusual, by the way, for countries and states to slit their own throats as we’ve clearly done with Brexit – and, in fact, we won’t be able to properly move on until we’ve understood why we did it and why those who voted Leave did so. What I can tell you, though, is that when the decision is made to go it alone, the same thing always happens in the long run: an acceleration of decline and system collapse. We’re going to have to roll our sleeves up to stop that from happening.”

The Silk Roads was the No 1 bestselling non-fiction book in The Times and The Sunday Times charts in June 2016. It is also a New York Times Bestseller and has topped charts in India and Pakistan. The Silk Roads : A New History of the World, 2015, £30, Peter Frankopan, Bloomsbury Publishing PLC, Bloomsbury.com;

THE SHIFTING AXIS

LOOKING EAST

IN THE CITY

potential flash points in the world,” counters Frankopan. “The South China sea, where I can see many things going wrong; Russia, certainly, in lots of different ways; Saudi Arabia and the Gulf too. Big picture history teaches you that small incidents can have huge global consequences. And we know that. That’s Lesson One of the Assassination of Franz Ferdinand [the Austrian archduke whose assassination led to WW1].”

In the light of Brexit, centres of strength will shift and change. London’s particular rise to prominence over the past four centuries was in part due to the socio-acceleration of Northern Europe, and its position in terms of global trade routes. The question now will be whether we are still so tied to Europe’s successes and failures. “London has long been prominent because of its global position,” says Frankopan. “In the last 400 years, London’s role has been as the fulcrum for global exchange, regardless of where goods and products actually end up. The problem is that ideally there is some overlap between the two. The world that I work in – the region east of the Balkans (Russia, Turkey, the Middle East, Iran, India and Pakistan, China and South East Asia) has increasingly little need for western European institutions – hence the rise of Singapore, Shanghai, Hong Kong, Dubai, Doha and Abu Dhabi. Europe was once at the wrong end of the Eurasian landmass. It looks to me like that’s where we are headed once again.”

Our focus on Europe may have left us missing the bigger picture. “We are completely out of position and out of touch,” says Frankopan. “We don’t have a friend east of Greece: we disdain the Turks, can’t bear the Russians, think the Middle East and Iran are aligned against us, spend no effort on Central Asia, India and Pakistan, and don’t understand China. This world is knitting together. I was just in

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