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Hello and welcome to World Business Report from the BBC World Service.
I'm David Harper and on this edition, in just a second, we'll find out how trade has been affected by an Asian border dispute.
Thailand is a neighbouring, very close to Cambodia.
We share a very similar culture.
So you like it or not, the threat of the people, they will come automatically.
particularly. Volkswagen's profits are down 29 % on this time last year.
How much of this is down to US tariffs and how much is down to aggressive competition?
And also... These panels are made of solid stone and they have steel cables which run between them and by tensioning them together we're able to make a solid panel which is much much thinner than it would be if it was built out of traditional stone.
How cutting -edge construction technology is finally helping to complete Antoni Gaudi's architectural vision in Barcelona.
Let's start in Asia, though, because all this week on the BBC World Service we've been hearing about the escalating tensions between Thailand and Cambodia.
There is a long history behind it, more than a century in fact, right back to colonial times, with a dispute over the border between the two countries.
In the latest flare -up, Thailand's military says Cambodian troops had attacked Thai soldiers.
Thailand responded by scrambling F -16 fighter jets and striking targets in Cambodian territory.
At least 15 people have been killed in the last few days.
The Thai Prime Minister has warned that it could develop into a war and trade between the two countries has stopped.
The Thai ambassador to the UK, Natawat Kritsanar Marah, told the BBC's Rebecca Kesby that the government is looking to end the conflict.
This issue is an issue between the two countries, Thailand and Cambodia.
We have established mechanisms which to address any differences.
We will try to continue to speak to Cambodian counterparts to address differences and address the situation.
The mechanism that is in place is the Joint Boundary Commission, which is already scheduled to meet in early September.
Are there plans to bring that forward?
September is a long way away.
The boundary issues are a complicated matter, and this has to be addressed through appropriate mechanisms. Okay, I mean, the boundary issues have been an issue for decades, though, sir, haven't they?
And what we've got at the moment is hundreds of thousands of civilians fleeing the area frightened for their lives, farmers having to leave their crops behind.
Doesn't it need to stop immediately?
Certainly. It is categoric that the Thai side did not begin the hostilities.
And so we are adamant that we have to protect our natural integrity and sovereignty.
How far is the Thai government prepared to go?
Are you ready for an all -out war with Cambodia?
No one has said that we are going into a war.
Therefore, we would wish to see that the civilians can return to their homes at earliest opportunity.
That's Natawat Kritsanamara, the Thai ambassador to the UK.
Well, let's hear more about the trading problems that it's created.
The director of the Chamber of Commerce, Cambodia, Nguyen Meng Tuc, spoke to my colleague, Victoria Holland.
The trade between Cambodia and Thailand will stop almost two weeks already.
The military, you know, from Thailand side, they close the gate, not let the people in.
The trade between Cambodia and Thailand, okay, we talk about food, all kinds of stuff, okay.
We talk about a billion dollars, okay, every year.
And what's happening now with suppliers?
As we know, a lot of chicken eggs, fruits and vegetables coming to the country from Thailand.
So where is Cambodia taking these products right now for its people?
We have local food, okay, that the Cambodian people growing inside Cambodia.
What do you usually buying from Thailand?
We buy almost everything except the rice that Thailand had to get from Cambodia.
We do have something, okay, that sell to Thailand as well, like corn, cashew nut.
And somehow we have a short fault and we had to get that from Vietnam.
We have to manage whatever we can to feed themselves, because if we don't have any food or anything from Thailand, Cambodia has to learn how to survive by ourselves.
Goon Mengtuk, the Director of Chamber of Commerce, Cambodia, speaking to us.
So how significant is this?
Dr Sam Soon is Policy Analyst at the Royal Academy of Cambodia and told me more about the trade relationship between the countries.
Before the problem, Cambodia and Thailand, they aimed for $15 billion in trade exchange.
In Cambodia, we buy a lot from Thailand, we import a lot from Thailand.
And Thailand also buys a lot from Cambodia, especially agricultural products.
People along the border, for example, Battambang province, Manti, Minchey and Poipat, those are the names of the provinces of Cambodia.
They sell their agricultural products to Thailand.
And inside Cambodia, we import a lot from Thailand.
So it means that even though the relation between the two countries sometimes is up, sometimes it's down, but trade relations are very important because we are the ASEAN members.
And Cambodia, we are very open, open for foreign investors and also for tourists.
So even though we have the problem with each other, But the business, the trade before the crisis, we have the big business with each other.
As you said earlier, there's a big size difference between Thailand and Cambodia, both in terms of the size of the country and the amount of trade.
Does Cambodia stand to be much more affected than Thailand by the current stopping of trade?
Cambodia is a small country, but actually Cambodia, we have a lot of partners.
We imported different products.
For example, Vietnam, China, South Korea, Japan, the United States, Australia, the European countries.
Thailand is the neighboring, very close to Cambodia.
We share a very similar culture.
We share a very similar tradition.
So you like it or not, the threat of the people, they will come automatically.
Even though we are the small population, we buy, we import a lot from Thailand.
So that is why Cambodia is the main market for Thailand to sell their product as well.
Is Cambodia going to be looking for other trading partners now in the light of what we're seeing at the moment, particularly for things like those food imports?
Yes, we did. And so far, the prime minister of Cambodia also negotiated with the Singaporean prime minister because last month, Singapore prime minister just came to visit Cambodia and also the leaders of other country come to visit Cambodia.
And we have China and also other ASEAN countries because Cambodia, we open the borders to other countries to import the product to Saudi and Cambodia.
So, Thailand is one of the partners, but during the crisis, we still have a lot of options.
We still have a lot of partners that can import the products to supply the requirement for Cambodian people.
And just looking to the future, Cambodia is a country that's looking to increase its position in the world, to increase trade.
There is very much a strategy for this at the moment.
I mean, Cambodia, this year, we celebrate the 75th anniversary between Cambodia and the U .S. And the negotiation on the tariff with the U .S. is still going on.
We got very special favor from the U .K. with the zero tariff, zero tax from the U .K. And also from the European countries.
I mean, they are good friends of Cambodia as well.
To be honest, I am very positive for the young generation of Cambodians.
I hope you know that we have a lot of young people and Cambodia, we are very open in terms of internet and technology.
The internet and technology and social media are the main sources for education for our young people.
So that in this case, Cambodia will have more opportunity to improve their internal product, to improve their internal capacity and to improve their diplomatic capacity to the world.
Dr. Sam Sun, their policy analyst at the Royal Academy of Cambodia.
Well, we're joined today by Randeep Somal, a fund manager for M &G Investments, just to take a look at some of the things that we are seeing across the world.
Randeep, very good to have you with us again today.
I suspect you've probably heard this clip because it's been doing the rounds for about 12 hours or so now.
This is Donald Trump and Jerome Powell, head of the U .S. Federal Reserve, in a rather uncomfortable exchange at a public tour of the central bank's $2 .5 billion renovation project.
Let's just have another listen.
It's worth hearing again.
It looks like it's about $3 .1 billion.
It went up a little bit or a lot.
So the $2 .7 is now $3 .1.
I'm not aware of that.
Yeah, it just came out.
I haven't heard that from anybody.
you're including the martin renovation you just added our entire capital you just said you just added in the third building is what that is that's a third building it's a building that's being built no it's been it was built five years ago well that's interesting isn't it uh president trump has of course repeatedly criticized mr powell for refusing to lower interest rates and randy if you were in any doubt that there's a bit of a frosty relationship there there's no proof isn't there yes i mean but president trump when he was campaigning for the presidency all throughout last year was very negative
on Chairman Powell.
Ironically, this is the same Federal Reserve Chairman that he put in place during his first term.
But he clearly wants the Federal Reserve Chair to decrease interest rates so the US economy could grow and the cost of borrowing would fall.
And just to give an example at the moment, the US rate is around about 4 .5%, whereas the European rate is nearer 2%.
So there is quite quite a divergence, but for good reason.
And there was actually, you can hear a longer version of that clip available online, bbc .com slash news.
And there is actually a little jibe about interest rates at the end of that exchange.
It doesn't get any less uncomfortable as you listen to it.
No, I think the Fed has prided itself on independence.
The order to maintain sound monetary policy means that much like in the UK, where we have an independent Bank of England, you require an independent federal reserve.
Now, there have always been skirmishes between presidents and Fed chairs.
Quite famously in 1965, it's alleged that President Johnson actually assaulted the Fed chair because he wouldn't reduce the interest rate.
So this isn't new. But I think ever since President Carter in the late 70s, presidents have understood that that role should be independent and should be seen to be independent for the sake of the markets.
Let's just have a look at the news we've heard about Paramount as well, the American media giant.
This, of course, is also quite heavily connected to President Trump, but they've now been given permission to merge with Skydance Media.
That's right. I mean, they actually had a lawsuit with the president, which has been settled.
And the federal competition commissioner has now allowed that to go through effectively.
So two giants, Paramount and Skydance, will be getting together.
together and we call them giants but the reason they're merging is that their popularity is waning one is quite heavy in tv and the other is heavy in streaming both sides are seeing a lot of competition not just from the lights of netflix amazon zulu but also traditional media like disney who have now gotten on streaming so this is more a marriage of necessity than convenience this is our whole industry that's finding its feet again in a new world uh randy thank you very much randy Sandeep Somal from M &G Investments.
We have loads more to pick up.
We'll have another chat with you in just a few minutes' time.
But let's move on to something else that's caught our eye because in the last few hours we've seen the latest figures from the German auto giant Volkswagen.
They've seen Q2 earnings drop by 29 % compared with the same period last year.
US trade tariffs are a big part of that.
Global deliveries for the company were actually up 1 .5 % in the first half of this year, but deliveries to the US declined by almost 10%.
The company says that American tariffs alone have cost them a billion and a half dollars.
That is not the whole story, though.
They're facing increasing competition, especially in the EV market.
And we've also seen some grim results this week from Hyundai, Tesla and the Stellantis group.
Let's talk to Andy Palmer now, the former CEO of Aston Martin and former chief operating officer of Nissan, who joins us live.
This is quite interesting, Andy.
Thank you. Thank you for being with us.
I'm assuming you've looked with interest at all of these announcements that we've seen this week.
These are car companies all facing the same sort of challenges.
Yes, indeed, they are.
And it's an eye of a storm, really.
There's a lot of things going on.
But I think if you ever needed reminding about the elasticity of pricing in the car industry, you see it right now.
So whether you're reacting to tariffs by increasing your price or by absorbing the tariff and therefore reducing the volumes, and you can see in the results different approaches being taken, the net effect is the same.
Basically, the car industry is seeing big declines in profitability and struggling to see what to do with it.
I thought it was very telling that Elon Musk at Tesla talked about two or three quarters of bad news going forward. So, yeah, it's going to be a difficult period.
And we can put at the center of that specifically tariffs into the US, subsidies being retreated, margin squeezes on volume, and, of course, the strategy of retooling for EVs globally.
Let's just go back to tariffs for a minute because we still haven't quite seen the dust settle there, particularly for companies in the EU like Volkswagen and, for the most part, Stellantis.
Yes. How do we think – you said there are different options for how they could deal with this.
How do we think they are going to deal with this when they find out what the future looks like?
So I think we're in a holding pattern right now.
Now, basically, people will companies will delay export of vehicles to to to the U .S. They'll still sell from stock or their used vehicles manufactured in the U .S. And it's a holding pattern to see what's going to happen.
Is it is it going to be up 15 percent tariff?
Is it going to be a 35 percent tariff?
Nobody knows how to deal with the uncertainty.
and see I think you'll you'll see now to to let that stabilize and then different decisions by different companies depending on that outcome and let's talk a little bit about that EV factor because obviously this is we know we're talking about a big change in the in the media landscape just now I mean this is as big for the car industry as streaming is for the media world and people are still struggling to adapt and and of course they're facing this incredibly aggressive competition from China?
Yeah, absolutely. China moved even 20 years ago.
China started moving strategically towards what they called new energy vehicles.
You've seen that long -term plan being executed.
And in general, I would say China is up to 10 years ahead of the West right now in terms of the technology and the maturation of cost and price, particularly around battery technology, and they're leveraging that now.
They're able to, almost irrespective of the tariffs, they're able to offer very good tech at a very competitive price.
Andy, always great to get your thoughts.
Andy Palmer, former CEO of Aston Martin and former chief operating officer of Nissan Motor Company, live here on World Business Report.
You are with World Business Report from the BBC World Service.
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Now, we're talking about the dealings between countries quite a bit today, this time China and Angola.
They've already got economic ties.
This new deal, though, brings a reduction to some of Angola's oil -backed debt to China, which stands at $10 .15 billion as of the end of last year, and that would reduce to around $7 .5 billion.
In return, China will be developing large -scale farms in Angola, producing soybeans and corn.
Lucy Corkin is a client structurer at Rand Merchant Bank, a division of the First Rand Group.
China is turning more and more from being an export -oriented economy to one that looks to domestic consumption.
And whereas we saw 10, 15 years ago one of China's key concerns was energy security, I suspect that this shift in investment focus perhaps points to a new concern, which may very well be food security.
And what has sparked this worry about food security?
If we look at the high rates of urbanization in China itself, you know, there has been a lot of talk about pulling sort of large proportions of the 700 to 800 million sort of agricultural workers in China out of poverty.
But this shift in socioeconomics also has an impact on, you know, the way that food has traditionally been grown in China and rates of urbanization will have an impact on that.
And we're also seeing a country that is consuming more as its people get richer.
So there are lots of those internal dynamics that we need to look at.
But also climate change has definitely had an impact as well.
And China has definitely been one of those countries that plans for the long term.
And I suspect that the interest in cash crops, especially the kinds of crops that they're looking to invest in, in the Angolan example in particular, is to look to meet this kind of long term security.
As I understand it, the arrangement here is that China would be getting 60 % of the produce from these farms. Presumably, this will leave some benefits for Angola as well.
It is interesting to put it in context.
I mean, Angola's population is probably between 25 and 30 million.
What is very interesting about Angola is that even though it has some of the most fertile soil on the continent, Angola's agricultural potential has never really been fulfilled since about the late 1950s when civil war, colonial warfare broke out, which then kind of merged into civil warfare.
So at the moment, Angola's agricultural potential is very much coming off a very low base.
They used to be one of the world's leading coffee producers.
There's huge potential for crops like soybean and corn.
So really, Angola has everything to gain from the volumes of investment that Citebine has been speaking about.
There have been attempts in the past from U .S. investors and from a number of others.
So as Angola's agricultural minister has said, this really is a huge opportunity and hopefully there's the groundwork for more.
And the other side of that deal, that reduction in the oil -backed debt, how significant will that be to the country?
I think it's very important.
Angola has traditionally, ever since independence, relied very substantially on oil for its financing in one way or another.
And it is significant that this change in tack happened in around 2017, which was, of course, when President Dos Santos, you know, sort of finally left the presidency.
I think it does point to the fact that Angola knows that and has known for a very long time that it stays unnumbered as one of Africa's largest producers.
Angola's leadership has, for a number of years, been trying with limited success to turn away from commodity -backed financing, but is also very careful about entering into international markets at the right time, which is why they keep on delaying a Eurobond issuance.
That is Lucy Corkin, also a research associate of the Africa Asia Centre at the School of African and Asian Studies and the author of Uncovering African Agency Angola's Management of China's Credit Lines.
Randeep is still with us and we've got a couple of other things to look at.
Randeep Somal, fund manager for M &G Investments.
In particular, we've heard some news from the Russian Central Bank.
This is Governor Elvira Nubiulina and her deputy Alexei Zabotkin.
Today we decided to reduce the key interest rate to 18%.
Inflation is falling, consumer demand is gradually slowing down, and credit policies are growing at a moderate pace.
All this allows us to continue to reduce the key rate.
We were talking about the discrepancy between some European interest rates and the US.
There's a real discrepancy there with the 20 % Russian interest rate.
That's right. I mean, it's now down to 18%.
I think what has been quite astonishing is despite the war and despite the sanctions that have been placed on Russia, just how relatively resilient the economy has remained.
We're now down to the next round of sanctions, especially from the EU, where Russian banks are going to be removed from Swift. And also the price that Russia gets in the international markets for its oil are also going to be reduced.
Maybe this is the start of actually seeing the economy really be hit by those sanctions.
But clearly there, the Federal Reserve Bank of Russia governor has decided that the economy is cooling far too much. Inflation has also come down.
So that's given them some room to cut interest rates.
And they've done 2 % there, straight off the bat down to 18.
Still high, but you can see they're trying to stimulate the economy.
Ran deep. Thank you very much. Let's go to Barcelona now and the world famous as La Sagrada Familia.
You've probably seen a picture of Antoni Gaudi's architectural masterpiece, not least because it's been under construction for over 140 years.
But now that old and new technology are coming together to finally bring the project to completion, Yasmine Morgan -Griffiths has this exclusive report from the Basilica.
Antoni Gaudi wanted to invite people to be near God.
He wanted to create a church of light.
Gaudí is one of the world's most renowned architects.
In the 1880s, he took over designing a grand basilica in Barcelona, La Sagrada Familia.
It's been under construction for more than 140 years and counting, but design tech is helping to complete construction.
I'm in an elevator going to the top of the temple's central tower, the Tower of Jesus Christ, which when finished will stand around 170 metres tall.
It's still a construction site up here at the moment, but you can get some of the most incredible views of Barcelona from up here.
Gaudí's designs for the Basilica featured soaring towers, inclined columns that branch out like trees and 300 skylights.
Jordi Fauli is the current chief architect of La Sagrada Familia, the seventh in line after Gaudí.
He had built the Sagrada Familia using the technique of his moment.
He knew the project in the future could be built with new technologies.
Gaudí had to make sure future architects could understand his designs once he was gone, and for that he relied on the principles of geometry.
Also on La Sagrada Familia's architectural team, Esteve Humbert.
Gaudí was using what is called ruled surfaces, which are made of straight lines, And just by changing the endpoints of those strings changes the curvature of the surface.
The skylights are hyperbolic.
It's a circle, the skylight, and a huge number of straight lines that surround the entrance of light.
And this form diffuses perfectly the sound and the light.
And these shapes are all over the basilica.
Because they are made of straight lines, these rules can be followed easily.
These shapes, are they quite unique to La Sagrada Familia?
Being applied in that massive scale, it was the first time in history.
Gaudi also used three -dimensional plaster of Paris models to communicate his complex geometrical vision.
The generations after him had to reconstruct this 3D puzzle.
We have more than 8 ,000 pieces being scanned.
With this information in the computer, we can recreate the same geometry.
But many of these models were smashed up during the Spanish Civil War.
Another challenge the architects face is making the basilica's overall structure strong enough to withstand forces like wind and earthquakes.
That's where Liam Duff from structural engineering firm Arup comes in.
What we have come up with is post -tension stone panels.
So these panels are made of solid stone and they have steel cables which run between them.
and by tensioning them together we were able to make a solid panel which is much much thinner than it would be if it was built out of traditional stone.
Visitors flock from around the world to admire the basilica but some local residents say ongoing construction has been disruptive but today's architects and engineers are still working to continue Gaudí's great project.
Next year we'll be able to build the cross on Jesus Tower.
And once that cross is placed, La Sagrada Familia will become the tallest church in the world.
Yasmin Morgan -Griffiths reporting from Barcelona for us.
Brandeep is still with us.
I believe you've been to see this.
I haven't. I have. Barcelona is so rich with architecture, but the Sagrada Familia really is the crown jewel when you're there.
I first went in 2005, and there's a lot of construction going on.
I've been in the interim years, and the last time was September last year.
It'd be a good map once it's finally complete.
Fantastic. I have to interrupt there.
We're out of time. Thank you very much.
