The FUTURE ACCORDING
to MARC RICH

Oil, aluminum, mercury. You became the most powerful commodity trader because you had a knack for creating new markets and for seizing opportunities. Where would you go today? In what commodities would you invest?

All commodities will be good business. The world will produce more products for more people and will thus need more raw materials.

Which will be, in your opinion, the most sought-after commodities in the twenty-first century?

Energy and water will probably become very important.

How do you see the future of oil?

Oil will play an important role for a long time to come, but there is no denying that it is a finite commodity.

Where do you see the oil price going?

Up and down, but up in the long term. Without any doubt.

Do you see a business opportunity in renewable energies?

As much as I like oil, it’s obvious that oil has to be replaced in the future. Without doubt renewable energy will play an important role in this process. As it will become more expensive to get the remaining oil out of the ground, its price will inevitably go up. Higher oil prices will motivate innovation in the renewable energy sector, and higher prices will motivate people to switch.

Where would you invest?

I would invest in wind energy, but also in nuclear energy. Global warming and the reduction of carbon dioxide emissions will be important issues in the future.

You know the intricacies of the Middle East better than most other Western businessman. What is your opinion of the Iraq War?

The Iraq War was a mistake. It’s mind-boggling that a handful of politicians can lead a nation into full war for such skimpy reasons. Obviously Saddam Hussein was a bad guy, but there are plenty of bad guys in this world and the United States hasn’t bothered to remove them. It would seem that George W. Bush was driven by personal reasons, which makes the whole story worse, of course.

What personal reasons do you think of?

Saddam Hussein provoked Bush. Bush rose to the bait. It was such a foolish thing to do. He didn’t control his emotions. Terrible. Terrible for a president.

Was it a war for oil?

I don’t think so. You could have had the Iraqi oil cheaper simply by lifting the embargo, but the oil argument probably helped to convince some of the decision makers.

Do you think the oil industry had an influence on the decision to invade Iraq?

The oil companies will take business when it’s offered to them, but I don’t believe the oil industry, as you call it, pushed for that war. I think that perception stems from the fact that some of the Republican hawks were connected to that industry.

How do you judge President George W. Bush?

George W. Bush turned out to be a very bad president, disappointingly bad. His father was much better.

What was bad about him?

The Iraq War was the worst, of course, but I don’t know a good thing he did.

What do you think of Barack Obama?

It’s wonderful that there was a change. Barack Obama might be a good president. He already changed the atmosphere in the world. People again anticipate good things to come from America. I hope Obama will be a good president; it would be good for the world.

I would have preferred Hillary Clinton, though.

Did or do you support Hillary Clinton financially?

No, I didn’t and I don’t.

Barack Obama’s unlikely rise to power reminded me of you. You both came from humble origins and made it to the top.

Yes, but I’m not black, I’m only the black sheep.

You both represent the classic American success story. The rest of the world admires the United States for making such opportunities possible.

The United States was an open country and still is an open country. I was able to do many things there that would have taken me longer elsewhere. Business-wise it was a good thing to do, but practically it was terrible. In retrospect I should have never gone with my company to the United States.

What were, in your opinion, the three biggest mistakes of U.S. foreign policy over the last fifty years?

Cuba, Vietnam, Iraq, and the notion of being all-powerful and thus being able to disregard everybody else’s opinion and interests.

And the three biggest successes?

I think the biggest success story of the Americans is their capability of renewal.

Where do you see the roots of the global financial crisis?

Too much credit. Too much lending of money. The banks didn’t control the risk.

Because of short-term thinking?

No question about it.

Are you affected by the crisis?

Everybody is affected by this crisis.

How much money did you lose?

I won’t tell.

But you would say that it is the worst financial crisis ever for you personally?

Yes.

How will we get out of it?

We will get out of it, but not so fast.

How long will it take to overcome the crisis?

Three to five years, I think.

Can the governments be part of the solution?

Probably. They tried. They provided the banks with capital and credits that the banks should pass on, but the banks don’t pass it on, so it was only partly successful.

One of the consequences of the financial crisis will be more regulations and less free markets.

Could be.

Would it be bad?

It goes in the wrong direction. I believe in the free market. Government regulation is often negative, restrictive, and impedes the normal flow of business. Political interventionism is the biggest threat to efficient markets.

Will the world be more free or less free in five years?

Broadly speaking, people will always strive to be free. The quest for freedom is probably as old as humanity.

Let me ask in a different way: Will we see more regulation and less liberalization?

Liberalization and regulation come and go in cycles; they are the product of the economic and political landscape in a given moment. Unfortunately, there seems to exist an underlying trend for more regulation. Whenever there is a problem somewhere, even if it’s a single event affecting few people, as long as it gets enough publicity, some politician will clamor for a new regulation or law.

Will the world be more globalized or less globalized?

The world will be more globalized. Whatever people pretend, globalization is not really a recent invention. Cross-border trade has been around since people started traveling and exchanging goods.

How do you see the Russian policy regarding oil and other commodities?

The Russians are looking firstly for themselves. You can’t really blame them for that.

Foreign energy companies in Russia such as Royal Dutch Shell and British Petroleum were forced to sell their stakes to the state companies. Do we witness a renationalization of the commodity markets in Russia?

We are indeed seeing a renationalization of certain strategic sectors.

How should the West react to this policy?

The West is not in a good position to criticize the Russian policy. You have only to read the newspapers to see that other countries are equally protective of their pet companies and “national champions.”

How do you see Russia’s future?

You have to separate the noise from the music. The music is that Russia will slowly, slowly drift in the same direction—by and large—as most developing nations: toward democracy and market economy. We live in an age of instant and all-encompassing information and relative freedom of movement. This means that politicians can’t fool people like they used to.

China has become both a major supplier and consumer of commodities.

The Chinese government needs to provide a billion people with food, energy, housing, transportation, et cetera, and they want to catch up with the developed countries. This means they will want to control as much oil and other commodities as they can lay their hands on.

How will this change the commodity markets and politics?

China is a political and strategic player before an economic one. This will clearly have an impact on the market, as most other market participants are guided purely by economic principles.

You were trading with the Chinese much earlier than others. What is special or easy or difficult about doing business with the Chinese?

They play by different rules than the Western companies. Whoever believes he can force his rules and his values on a Chinese business partner will be disappointed by the result. If you can play their game, you can have success.

China’s policy regarding commodities is considered quite aggressive. It is investing billions in Sudan and Zimbabwe, whereas American companies generally steer clear of investment. What is your opinion?

China has the critical mass of a world power. It is simply too big and economically too important to be bullied or boycotted. The Chinese are obviously fully aware of this and use it smartly to their advantage.

Are the Europeans, when it comes to securing the supply of commodities, naive?

They are not naive, but contrary to the centralistic-run China, where the political power is largely in sync with the economic power, the Europeans simply cannot speak with one voice or act as one entity.

Why do you think it is acceptable to do business with countries and governments that are not exactly beacons of democracy and human rights?

Take China or Vietnam as an example. If you sell them computers, mobile phones, and TVs, they will be able to see what is going on in the world. They will be able to form their own independent opinions, which is the most important thing for any democracy. By trading goods with these countries, you actually help their citizens. The more contacts there are, the better the chance for everybody to improve.

One could argue that doing business with such regimes is morally wrong because it only supports them.

The Cubans as a people, for example, are not “bad,” but because of the U.S. embargo many children and old people must suffer unnecessarily. Yet the forty-seven-year-old embargo has not succeeded in removing Fidel Castro.

Can there be democracy without free markets? And vice versa—can there be free markets without democracy?

Free markets can exist temporarily without democracy. However, the combination of free markets and modern means of communication such as the Internet, which free markets always adopt immediately, will slowly convert that country into a democracy. As I was saying before, politicians can’t fool people like they used to.

Are there any deals that you would not make for ethical reasons?

I would not engage in any illegal activity, of course.

Have you ever traded arms—legally, I mean?

We’ve been approached to become involved in the arms business a few times over the years. We’ve always pointed out very clearly that it’s our policy not to get involved in such business. Neither I nor my companies sold, traded, or trafficked in arms for any country—including friendly countries.

You are very active as a philanthropist, not least in Israel. After the Lebanon War of 2006 and the recent conflict in Gaza, will there ever be peace between Israel and the Palestinians?

My foundation has made substantial efforts to foster a better understanding between Israelis and Palestinians. It’s not an easy task, but I believe the two should be able to live together peacefully sometime in the future.

What are the reasons that there has been no peace yet?

The whole situation is hugely complex, but one of the reasons is certainly the settlers.

What has to change in order to give peace a chance?

Peace is a long-term project, in some cases tremendously long-term. It needs a certain economic well-being of the peoples involved. It needs tolerance and the experience that wars and terrorism don’t pay off. All of these need to be learned, and it can take generations until people have accepted it.

Do you see the rise of Islamist fundamentalism in oil-producing countries like Iran or Saudi Arabia as a threat?

Fundamentalism of all colors is a threat.

What would happen to the global oil supply and to the oil price if fundamentalists would take over the power in Saudi Arabia?

The oil price would become even more volatile because of the uncertain and unpredictable behavior natural to fundamentalists and extremists of any type, but even fundamentalists will eventually succumb to the temptation of turning crude oil into easy money to buy themselves the support of their population.

Arabs. Russians. Africans. Chinese. Indians. Europeans. You traded with all of them. How do they differ when it comes to business?

Business everywhere is driven by the same motives, creating and selling things to make an income, but there are differences between different peoples or nations. It’s all about local codes. To know and accept them can make a big difference in business.

Who was your toughest business partner?

My toughest business partners were Pinky [Pincus Green] and Alec [Hackel]. That was one of the reasons we were so successful.

What were your three biggest successes analyzing the world markets?

Crude oil, aluminum, and currencies.

What were your three biggest failures?

Not to have had bigger positions of the three best ones.