Ministers line up to lobby for Olympic billions
Government plans charm offensive during Games to bid for deals with rich nations
James Cusick is political correspondent of The Independent and The Independent on Sunday. As an experienced member of the lobby, he has previously worked at The Sunday Times and the BBC. His career as a journalist has been split between print and television, including senior positions as producer with Sir David Frost and at BBC Newsnight. He is also an award-winning golf and travel writer, working for over a decade as the UK contributing editor for one of the USA’s leading golf magazines. He broadcasts regularly for the BBC and CNN. He lives in London.
Wednesday 18 July 2012
British ministers have been ordered to lobby cash-rich emerging nations such as Brazil and China during the Olympics to win multi-billion-pound contracts and help the stuttering UK economy.
A Government lobbying operation of unprecedented scale is about to begin as foreign diplomats and businessmen descend on London for the 2012 Games.
The Independent has obtained a list of 50 investment projects around the world that British ministers and civil servants have been told to win during the next month.
The wish-list includes lucrative Chinese healthcare deals, the construction of Brazilian shipyards and Russian railways, deepwater-drilling off the coast of Mexico and controversial oil exploration in Kazakhstan. Downing Street wants to secure at least £4 billion of new deals during the Olympics.
While the athletes compete for medals in the Olympic Park in east London, thousands of politicians, dignitaries, executives and lobbyists will be treated to lavish hospitality at the refurbished Lancaster House, a stone’s throw from Buckingham Palace.
Ministers have each been allocated specific target countries to try to close deals in the 50 projects. Many of the high-value deals are in in the burgeoning “BRIC” economies of Brazil, Russia, India and China or in the Gulf. There are also reconstruction and oil deals going in Libya and Iraq.
British firms will need to compete against cheaper global rivals who are also vying for the deals. Several countries have hired their own “pavilions” in London for the duration of the Games. Although public events will be staged at the pavilions – which include “Casa Brasil” at Somerset House, China’s business base at Richmond Hill and the Russian house near Kensington Palace – the venues will also be used for meetings of potential investors, deal-makers and politicians.
But it is Lancaster House, the 19th-century mansion opposite Buckingham Palace that has previously hosted peace conferences on Zimbabwe and Afghanistan, which will act as the hub of the business action.
It has been converted by interior designers and furniture-makers into a “British Business Embassy” where executives, investors and policy makers will meet at a series of global investment summits. Guests have been promised “visionary menus and food presentations”.
The target list of 50 deals, drawn up by economists at the UK Trade and Investment arm of the Government, is dominated by construction, energy and infrastructure projects.
The list also includes: decommissioning Japan’s Fukushima nuclear plant; building hospitals in Kuwait; new airports in Saudi Arabia, Beijing and Hong Kong; laying railways in India, Taiwan, Singapore and the Philippines; and oil production in Brazil.
The deepwater oil-drilling project off the coast of Mexico and any deals struck with countries holding questionable human rights records, such as Kazakhstan, may lead to criticism and protest.
A successful UK lobbying effort over the coming weeks is considered vital to counter plummeting exports to the Eurozone and this week’s downgrading of Britain’s growth forecast.
David Cameron says that the London Games will generate a £13bn windfall for Britain over the next four years, but in the short term he will claim that hosting the Olympics is a trade success if the £4bn target is hit. This represents less than 3 per cent of the £150bn investment opportunities identified by Vince Cable’s Business Department.
The Prime Minister has said that the inspiration for the Lancaster House “Business Embassy” was “the Festival of Britain in 1951, which was a showcase of national enterprise and innovation. Now, as then, we need to drum up business for Britain.”
There is a desire to also promote British life sciences, creative industries and retail.
Pervez Ghauri, professor of international business at Kings College, London, and a consultant at the International Trade centre in Geneva, said: “Lobbying for the target of £4 billion during the Olympic Games is realistic if not rather conservative.
“British firms should be able to achieve this target easily, and if they play their cards well, should be able to get further and continuous projects for a long time to come.”
Christine Lagarde, the IMF’s managing director, Mario Draghi, president of the European Central bank, and Eric Schmidt, the global chairman of Google, are among 200 international high-profile business leaders gathering in London over the next month.
Some of the economic deal-making will attract protest groups. Human rights activists are likely to target Syrian and Russian delegations over violations and alleged torture by the Assad regime. Representatives from Egypt, Bahrain, Saudi Arabia, Rwanda, Sri Lanka, Uzbekistan and Azerbaijan are also expected to be the focus for human rights demonstrations in London.
International travel bans applying to political leaders, including Zimbabwe’s Robert Mugabe and 300 Belarusian officials including President Alexander Lukashenko, will still apply throughout the Games and will be enforced at UK borders.
The 50-contracts list is also not without its own controversy. Vince Cable’s Department for Business has been criticised for offering £637m of exports credits to British companies aiming to become involved in deep-sea drilling off the coast of Brazil. The Brazilian operation will involve drilling in water deeper than the location in the Gulf of Mexico where the Deepwater Horizon disaster took place.
The UK government’s record on renewable energy will also come under attack if it signs deals that supports fossil fuel production.
UK Export Finance, an arm of the Business Department that underwrites export credits, last year paid out £20m for controversial investments in two Russian coal mines and a chemical plant in Azerbaijan.
Nick Dearden, director of the Jubilee Debt Campaign said: “There is a clause in the Coalition Agreement which states we will no longer use export credits to support dirty fossil fuels. It is difficult to see how deep-sea oil-drilling would not fit that description.”
Mr Dearden added “It is unseemly that when we are celebrating Olympic values, the Government is focused on investing in the industries of yesterday rather than skills and needs of tomorrow.”
The Olympic gold rush: The high-value projects that ministers have been told to target
United Arab Emirates (value of potential contracts estimated by British Government £1.26bn)
Vast £13bn project to create 1,200km rail network. Initial contracts have been awarded to Italian and Chinese companies.
Showpiece £33bn development off Abu Dhabi coast, includes branches of the Louvre and Guggenheim museums. A British contribution has come from Cheltenham-based PKL, which supplied a kitchen to cater for 3,000 construction workers.
Northern Australian Gas
Northern and Western Australia is predicted to be the world's biggest liquified natural gas producer by 2020. It is estimated £85bn will be invested in the industry.
National broadband network
The Australian government is putting up £18bn of the £23bn cost of connecting the entire country to a broadband network by 2021. MI6 has warned that Chinese contractors may install spying equipment on behalf of Beijing.
Shipyard and ship building
Shipyards are mushrooming on Brazil's Atlantic coast with more than 100 vessels a year due to be produced in a market worth £45bn.
The state-owned Brazilian petrol and gas giant is scheduled to invest £152bn between now and 2016. The British Government has opened a £600m line of credit to support deep-sea oil drilling.
Rio 2016 Olympics
Britain is in a strong position to help Rio prepare for the next Games and take a chunk of its £9bn budget.
World Cup 2014, Brazil
£3.3bn has been set aside for the next football World Cup, including 12 new or refurbished stadia and 47 other infrastructure projects.
Rising incomes and expectations have turned China's hospitals and clinics into a medical El Dorado with investment running at £9bn a year.
The world's biggest polluter is spending £4bn on green electricity production in a single region. One town, Jiuquan, has 6GW of wind turbine capacity – equal to that of the entire UK.
Chongqing Liangjiang region
The Chinese equivalent of a new town but on a regional scale, this 1,200 sq km zone is targeted for financial services and tech.
Work on the £3bn new airport begins this year. With nine runways, it will handle 130m passengers and 5.5m tonnes of cargo each year.
The construction of a tunnel between the German island of Fehmarn and the Danish island of Lolland would create a direct link all the way to Sweden and Norway. The Channel Tunnel has created demand for British engineering expertise.
Hong Kong (£22.46bn)
Hong Kong Five Railways
£8.6bn project to expand the island's rail network by 50 per cent over the next eight years. UKTI has highlighted Hong Kong as a route for investment into mainland China.
The former international airport, complete with its notorious handbrake-turn runway, is due for redevelopment. Demand for new office space in one of the world's most crowded places is enormous.
West Kowloon cultural district
£1.8bn redevelopment will feature a new modern art museum, theatres and music halls. Sir Norman Foster, the British architect, has won a competition to design the canopy.
Hong Kong – Zuhai – Macau Bridge
Vast series of bridges and tunnels to connect three of southern China's major cities at a cost of £6.8bn. It will reduce the journey time between the cities from nearly five hours to 40 minutes.
India is planning new or improved urban rail systems in 13 cities at a cost of £23bn. British firms are thought to be eyeing a scheme in the port of Kochi.
Navi Mumbai International Airport
New £1.6bn airport is being built to serve India's financial centre. Work begins in December. Swiss, French and Turkish companies are among those vying for contracts, and Britain wants a slice of the action.
With £660bn earmarked to fund re-development in India's cities, the seat of the British Raj is a prime target for UK companies.
South Rumaila oil field
The world's fourth largest oil field. £15bn of investment up for grabs over the next 20 years.
The tsunami-wrecked nuclear power plant may take as long as 50 years to clean-up. Contracts estimated at $15bn.
Oil and gas: multiple near-term prospects
New oil and gas fields continue to be opened in Kazakhstan. With 200 accumulations identified so far, contract opportunities are estimated at £6bn.
The Gulf state has ambitions to turn its airport into a regional hub, increasing its passenger numbers from 7m to 20m a year. A budget of £700m has been set aside for the project.
Kuwait occupies a strategic location on the Arabian Gulf but its existing ports are reaching capacity. Boubyan, costing £3bn, will be an entirely new port on an unoccupied island designed to act as a major gateway for shipping to Iraq and Saudi Arabia.
Kuwait, population 3.5m, plans to build eight new hospitals to increase the number of beds per 1,000 people from 16 to 33 at a cost of £1.9bn.
Tenders opened this year for the 210km-network with 97 stations, which is slated to cost £4.5bn.
The fall of Muammar Gaddafi and the conspicuous role played by the British military has generated an expectation of lucrative reconstruction contracts. But with elections due and political uncertainty in the country, the scale and budget of projects is unclear.
Deep-sea oil exploration
National oil company Pemex has signalled its intention to seek greater foreign investment and undertake risky deep-water drilling after a series of gas and oil finds in the Mexican Gulf. Campaigners have expressed concern at Pemex's lack of experience in this field.
Klang Valley Rail Network
Construction began last year for the Kuala Lumpur metro network which will eventually cover 150km over three lines at a cost of £7.2bn.
Part of the Gulf Railway project to link six states with nearly 2,000km of rail, the first contracts are due to be awarded imminently. British firm Atkins is a member of one of five consortia on a shortlist for the £8.3bn project.
As part of a £2bn project, the metro system for the Manila area is to be significantly expanded.
Formerly known as "Dohaland", this £3.5bn project is designed to preserve and regenerate the historical centre of the Qatari capital. German and American companies have already secured major contracts.
The cash-rich state is part of the Gulf Railway project and spending £23bn on a nationwide integrated rail system which it wants in place for the 2022 World Cup.
World Cup 2022
Despite scepticism about holding the football World Cup at the height of the Arabian Gulf's summer, Qatar is spending £5.2bn on the tournament, including nine new air-conditioned stadia.
2014 Sochi Olympics
Much of the preparations for the £4.1bn Winter Olympics has been personally overseen by Vladimir Putin, who has warned contractors not to delay or inflate prices.
World Cup 2018
Russia has announced that most of the tournament's £14bn budget will be spent on infrastructure with £2.4bn on stadia. England lost out to Russia in winning the right to host the World Cup.
Russia is spending £8bn on upgrading its rail links, including high-speed links for the Sochi Olympics on the Black Sea and improved rolling stock.
Skolkovo Innovation City
The aim is to build a £1bn science "city" on the edge of Moscow housing world-beating expertise in areas ranging from nuclear energy to voice-recognition technology.
Saudi Arabia (£13.2bn)
A massive expansion of the Saudi network, including the world's longest line – the 2,400km North South Railway, costing £3.4bn.
Saudi Arabia is the largest healthcare market in the Middle East and is planning investment in pharmaceutical manufacture as well as the operation of hospitals.
Sadara Petrochemical Complex
Huge chemical manufacturing site is rising from the sands in a joint venture between the state-owned oil company Saudi Aramco and American giant Dow. The £13bn project is part of a strategy to ensure greater production on Saudi soil.
Airports serving Jeddah and other regional hubs are being overhauled at a cost of about £600m.
Water and desalination projects
Saudi Arabia already produces half the global total of desalinated water and has announced a project to create solar-power desalination plants to reduce fossil-fuel use.
Plans have been announced to double the length and triple the capacity of the network to carry 4.6m people daily at a cost of £13bn.
Low carbon cities
Around £2bn is being invested to create four low-carbon cities by 2020 amid forecasts that green technology will be worth $4bn to the Taiwanese economy by 2015.
Taiwan's flagship high-speed rail network, built at a cost of £11bn, is sinking, creating demand for remedial work. New branch lines and stations are being added.
South Africa (£1.13bn)
South Africa's unequal healthcare system is looking to the UK public-private model to help fund its new health infrastructure. Around £8.5bn in long-term investments are being considered by the SA treasury.
Elevated levels of radiation have been found in mine dumps and water storage facilities in South Africa's main mining region, Gauteng. Acid mine water in abandoned mine shafts is also an environmental problem. Shortfalls in national funding will open key contracts to foreign companies. No figure has been estimated yet.
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