On a flight between Singapore City and Kuala Lumpur, I remarked to the Singaporean businessman sitting next to me how elegant the Singaporean stewardesses looked in their native dress. He chuckled knowingly and pronounced that the airline staff were not from Singapore, but were from Malaysia. The women of Singapore do not aspire to be stewardesses he said, they aspire to be doctors and scientists.
Entrepôts of various things
I wish to extrapolate from this mind-opening experience. The entrepôts of Hong Kong, Switzerland, Dubai and Singapore serve a very useful purpose in global trade. I came to know this almost accidentally when I was asked a question about shipping capital goods to Turkmenistan from the U.S. My perplexed interlocutor explained that he intended shipping capital goods to Dubai. When I asked how the goods were getting from Dubai to Ashgabat, I read the client the riot act when he informed me that the goods would be transported through Iran.
Sanctions and practicalities
It comes as no surprise to any but bureaucratic minds that the U.S. sanctions regime against Iran was a joke. International firms merely shipped everything to Dubai, which then re-exported these goods to Iran. U.S. principal parties of interest had to certify on their Shipper’s Export Declarations what the final destination of their shipments was and yes, we lawfully abided by regulations and complied with the law. Everyone else, particularly those who were not subject to U.S. jurisdiction, used Dubai and the UAE as way around the sanctions.
Swaps, as I have pointed out before, were used in the same way that Guderian used armored columns to go around the Maginot Line. I think it was de Gaulle who said that fixed defenses are monuments to human stupidity.
NEXT BLOCK SOFIA 2.0 + Fabulous Blockchain After-PartyGo to article >>
Bureaucrats who were ineffective before in sanctioning Iran, will now so restrict U.S. trade so as to make sure that Americans are the last to trade with Iran, after the French (Peugeot), the Danes, the South Koreans, the Japanese; you get my drift.
I must admit that I am in awe of the bureaucratic mind. It is capable of imbuing itself with an outsized importance rivaled only by egomania.
Entrepôts of ideas
Today, the significance of entrepôts goes far beyond the envelopment of chauvinistic regulation. Entrepôts function to efficiently deliver logistical, managerial and other global trade services among countries.
The service sectors of Singapore and Switzerland are similar in size proportional to the rest of their economies (@70%). They are both entrepôts for financing of inter-regional global trade and in a world in which reverse innovation is gaining a greater and greater importance, they are entrepôts of ideas in economies based on intelligence and activity. This is in marked contrast to economies caught flat-footed, which are sedentary and are based on the self-worship of bureaucracy.