The world’s newest petrostate heads to the polls

0:01Good morning from the Financial Times. Today is Monday, September 1st, and this is your FT News Briefing. Beijing and New Delhi are continuing to build closer ties. And Guyana heads to the polls for a high-states election. Plus, drugmaker AstraZeneca is bouncing back after a scandal in China. Really, we've got a situation where AstraZeneca's and the Chinese government's interests are aligned here. I'm Persis Love, and here's the news you need to start your day.

0:40China and India are, quote, partners, not rivals. So said Chinese President Xi Jinping after meeting with his Indian counterpart, Narendra Modi, on Sunday. The pair spoke at a regional security summit in the Chinese city of Shenzhen. and the conversation was closely watched. For one thing, she and Modi lead the world's two most populous countries, each with large nuclear stockpiles. And then in recent years, tensions between the two have been high with some clashes along their shared Himalayan border. But the trade war between each country and the United States has opened up opportunities for cooperation.

1:19As things currently stand, India faces a world-leading 50 % rate on exports to the US.

1:31Guyana heads to the polls today. It's shaping up to be a momentous election for the small South American nation. Guyana's the world's newest petro state and an influx of oil riches is changing what politicians can promise their voters. Here to tell me why this election matters is the FT's Joe Daniels. Hi Joe. Hello. So Joe, before we jump into the politics, help us just to understand a little bit more about Guyana and its relationship to oil. It's been about 10 years now since ExxonMobil first discovered massive reserves of oil there. How has that changed the country? Well, the transformation has been enormous.

2:12Difficult, really, to find a comparison. It's transformed the country from being the second poorest in the Western Hemisphere, behind Haiti, into being the world's fastest growing economy. It's a population of 830 ,000 people, landmass a little bigger than England. The discoveries so far are 11 billion barrels of oil equivalent. And with such a small population, it's oil per capita ratio that's equivalent with the Middle East. OK, so how are oil politics playing out in this election campaign? Well, it's affecting the candidates primarily on how they're going to spend the windfall of money that's going to come in over the next five years, something analysts estimate at around$41 billion.

3:00On the one hand, we have the current president of Guyana up for a second term, Irfan Ali of the People's Progressive Party. And he really wants to keep the deal with Exxon and its partners the same. They want to keep their project going. And that's a project that is essentially driven by heavy spending on infrastructure, on building bridges, roads, schools, etc. And doing kind of public-private partnerships to get this stuff built. In the opposition, you have Aubrey Norton of the Partnership for National Unity Party, or APNU. And what they're about is a much more kind of welfare state kind of model about getting money more directly into the pockets of the Guyanese, many of which are unhappy that they're not yet feeling the benefits of this oil boom.

3:58Okay, two parties, two very different visions then. Any chance for a spoiler? There certainly is. Shaking up this duopoly is this new party called the Win Party, which is led by a chap called Azradin Mohammed. He's the son of one of Guyana's wealthiest men who made his millions in gold trading. And what Azradin Mohammed is pledging is a sort of mix of economic populism. He also wants to renegotiate terms with Exxon. He's painting himself as a national unifier. He's drawing crowds. And while analysts aren't convinced he could win an outright majority with his party and become the president, there is a concern that his party could win a few seats and really disrupt things for whoever does win.

4:51And Joe, you spoke to someone who described this election as the mother of all elections. Why is this one so momentous? It's so momentous because the sheer size of revenues that are going to come in over the next five years are so enormous. Over the next presidential term, the amount of money coming in is potentially transformative. there's of course also the huge risk of so-called resource curse of becoming so distorted by all these oil revenues that we start to see rampant corruption and a weakened economy in everything but oil and susceptible to global oil shocks so the question as well of what's at stake is who manages this initial kind of development process for a country that I repeat was the second poorest in the Americas just six years ago.

5:49Joe Daniels is the FT's Andean correspondent. Thanks, Joe. Thank you.

5:58The UK has won a contract to supply Norway with at least five warships. The£10 million deal is the largest ever for Britain's warship sector, and the frigates will be built by BAE Systems in Glasgow. The new vessels are being built to counter Russian submarine activity in the Arctic and North Atlantic. Those two regions have become important theatres for NATO since Russia's full-scale invasion of Ukraine in 2022. Just this past week, British, Norwegian and US forces have been actively monitoring a Russian submarine in the North Atlantic. That's according to the UK Ministry of Defence. BAE Systems is also helping to design and build warships for other UK allies, like Canada and Australia.

6:48Less than a year ago, AstraZeneca's China division was embroiled in a scandal. There was a probe into alleged illegal drug sales and the then regional head was arrested. But today the pharmaceuticals group's China business seems to have bounced back. Here to tell us how they managed the comeback is Eleanor Olcott. She covers China for the FT. Hi, Eleanor. Hi, Persis. Okay, so give me the backstory here. What's been going on with AstraZeneca in China? So AstraZeneca is the biggest global pharmaceutical company in China by sales. China is a very, very important market for the British drug maker.

7:27has been very successful in China through various localization efforts, and particularly kind of by investing a lot of authority in their very powerful former China boss, Leon Wang. And at the end of last year, Leon was arrested in connection to this kind of probe into the alleged illegal importation and sale of a cancer drug in China. So this was a big, big shock for AstraZeneca. It was also a big shock for investors. Its share price fell by about 10 % the day that news came out. Okay. And then what are the signs that the company has bounced back in China? Well, the first is pure numbers, right?

8:11So in the first half of the year, AstraZeneca sales in China were up 4%. That's not dramatic, but it's still significant, given the backstory here. And the second indication is this kind of very politically significant meeting between AstraZeneca CEO Pascal Soriat. He was included in a group of CEOs who met with President Xi Jinping in March and photographed alongside the leader. Now, this group of individuals, the kind of list of attendees to this meeting is heavily, heavily scrutinized. And it's kind of in the grand theater of CCP politics, it's very significant that AstraZeneca, especially having gone through this recent scandal in China, was included in this kind of very elite list of CEOs chosen for this meeting with Xi Jinping.

9:06How's it managed this recovery? What's the strategy been to get back in Beijing's good books? There's been a number of things that AstraZeneca has done in the immediate aftermath of the scandal, But really, the most important thing that they've done is pledge$2.5 billion for a new research center in Beijing. Now, China is very, very keen for foreign companies to be investing in China. And so the fact that you've got such a huge investment in a strategically significant industry like biotech, biotech, really, we've got a situation where AstraZeneca and the Chinese government's interests are aligned here.

9:50So I think really the kind of the politics around that investment have helped AstraZeneca to kind of ease their position and do a bit of good government relations in China. Okay, so AstraZeneca is doing well right now. Do you expect their China business to keep moving in the right direction? So AstraZeneca has got a pretty good pipeline of drugs. They also have been purchasing some innovative assets in China to kind of beef up their pipeline of new drugs. So it looks like they're in a good position. I would just add here that this has been a very difficult time for AstraZeneca employees in China.

10:31We spoke to one employee who talked about how difficult the environment had been. I mean, Leon's presence still looms large over the company. So I think that part of the puzzle has still not yet been answered by the new leadership team, but that shouldn't be a kind of existential issue. That's the FT's Eleanor Olcott in Beijing. Thanks, Eleanor. Thank you. You can read more on all these stories for free when you click on the links in our show notes. This has been your daily FT News briefing. Check back tomorrow for the latest business news.

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