Pressure on e. U. Alliances but europes top officials remained resolute. We will be the exporter of knowledge, technologies. Every company should contribute where they do extra in business. Europeans a particular have to go a little further. From i ranran to saudi arabio south africa leaders spoke to bloomberg about their challenges. Weve already committed to reducing expenditure on a number of fronts. We want to avoid a dangerous escalation. We are flipping the page. All straight ahead on this special edition of bloomberg best. Hello and welcome. On this special edition of bloomberg best, well look back at 2019 and europe, in the middle east, and africa revisiting the most interesting interviews with new makers, policy makers and leading figures and business, finance, and politics. Lets begin with brexit. When 2019 began theresa may was facing a march deadline to achieve a deal. By years end, a new British Government was still promising to get brexit done. It was a year of negotiation, agitation, and constant speculation as britain and the e. U. Tried to come to terms on a momentous divorce. I think a no deal brexit would be a bad idea. We know what is going to happen. There needs to be some kind of extension. The longer the better. So both parties can think about what they are trying to accomplish and what the downsides are. If it does happen, does it frees markets . I could have adverse consequences we do not expect today. Were going to go to a 24 7 war room status to make sure we are prepared not just ourselves clients,al banks, this will have unmitigated consequences we should prepare for. I think under a soft brexit or a hard Brexit LondonFinancial Center stats will diminish status will diminish over time. Technology, risk, credit, regulators will it actually changes the forecast we expect for the Financial Center in london. It will be not quite what it is today. Questions did you have to feel from g20 central bankers and finance ministers on brexit . Do they believe that an extension means that brexit gets water down . I think most people think, and i agree with them, that the process we have gone through over the last few months has made the likelihood of ultimately a no deal brexit much smaller. And i think we have seen that markets have been pricing on the assumption that a no deal brexit has become a very small risk now. Hats positive because i always believe we need to leave the European Union with thatdeal and with a plan allows us to protect our economy and protect british jobs. Have think the way things evolved is positive. We have now good to do got to get this over the line. The downside is we have created of uncertainty. The only way that we can get our economy powering forward is to put this uncertainty behind us and get the deal done and i am confident we will unleash a wall of investment into the u. K. At the moment the Prime Minister has proposed a deal unlike theresa mays deals, this one appears likely to pass the parliament. If the e. U. Agrees to it. Now in economic and financial terms it would make a lot of sense in my mind to the e. U. To agree to Boris Johnsons proposal. The question is whether the politics will deliver that. That is what we have to wait and see. The language that he used around no deal brexit, it is very harsh. It talks about no deal brexit being almost a calamity. That is not your assessment. Its important for International Investors to realize that brexit is a great opportunity for the. Uk. A great opportunity to reboot the economy. We should leave with the deal and i think that is the most likely scenario. Deal,e to not have a rather to have this linger on, i know deal or clean break becomes likely. Now, i pointed out that a no deal is difficult for those firms and integrated supply chains like the auto and pharmaceutical sectors. But within no deal, it is very opaque at the moment. It is all about how much preparation has been made, how the e. U. Will react and if we were to have a no deal, then there would be a significant stimulative policy response of the u. K. Positive to the supply and demand side. The most likeis we scenario but a no deal, there has been a lot of misplaced fears. The good news is that ther eis an agreement between a. U. K. And the European Union. As a consequence, would be there would be a transition, an orderly transition to a new economic relationship and we have been saying, the bank of england has been saying from date one after the decision of the people of the United Kingdom to move to a new economic relationship with the e. U. It was important to have a transition to that relationship, and that is what this deal would deliver if adopted. What does that mean for rates . Its hard to distill it down to one thing. The nature of adoption, the timeframe in which it happens. There are lots of potential paths. But transitions better than theing better than alternative and the alternative is a no deal brexit at the end of this month. In egeneral, what we have seen n this. K. Is that entrenched uncertainty about trade relationships, and this is the tightest trade relationship thisen the u. K and e. U. Uncertainty is having a consequence for Business Investment. We think Business Investment the level is 25 below where it otherwise would have been postreferendum. Now, if adopted it will remove much of that uncertainty. We would expect a rebound. It will not all come back. Because we do not know the exact nature of the future relationship. The future relationship is to be negotiated but we do know that the prospect of an orderly transition is put in place. We know the contours. In that environment you expect, all things being equal, the economy to pick up from a subdued phase. To make Monetary Policy more going to die and move to europe. Thats not going to happen. The citi has felt unloved in the last year or two. What the message will be to the government now is you really have to give some priority in the future negotiations to the relationship between the city and the European Union 27. Because at the moment, very little weight has been given to that. More air time has been given to the fish than the whole of the city of london. Nothing against fishermen. The next negotiation must include a serious attempt to negotiate some proper mutually regulatory agreements between the city and the rest of europe to allow people carry on trading. Still ahead on the year in conversation in europe, the newly elected president of the European Commission and tends to grapple with the climate crisis. Its existential. Theres a huge opportunity. Mario draghi cap stimulus open in 2019 but there was debate on q. E. It was a push back. But it was a constructive one. This is bloomberg. This is bloomberg best. We will revisit the years top interviews on Bloomberg Television in europe. In 2019, mario draghi ended his tenure as president of the central bank. He was unable to lift inflation to target and raise rates from record lows. A third of the Ecbs Governing Council opposed the decision to restart quantitative easing. Skeptical official spoke at was of lee with bloomberg. Spoke exclusively with bloomberg. It was an intensive and constructive discussion at the council. I could find out and everybody listened to the other s. A discussion in which other tries to take the others in which someone tries to take the other seriously. It was a push back and it was a constructive one. Up withe tries to come a common solution that everybody agrees with. Not everybody agreed with the measures that were announced yesterday. Essentially, it was about the question how effective will a further monetary easing in these various areas be . Is it something we have started to reach the end of, or is there still effectiveness in it . This was a major reason why a pushback took place. Question of quantitative easing moving further into negative territorys, will it have an effect on the economic outcomes or are the risks already higher than the benefit . Or at the level of decreasing further the deposit rate, or what will be the effect on the market Interest Rate compared to doing nothing . Would you say some of the members of the council left thinking, we should not have done this . Im sure this idea crossed the minds of some people. It definitely crossed my mind. I myself are a product of democratic culture. And football teams. I value team play. In communication. If you are divided, you tend to lose games. If you are united, you tend to score and you tend to win games. There is so much pushback against negative rates. Do we need an urgent policy review . I think its an important issue to discuss. That is something that Christine Lagarde, the next president of the ecb, will decide. Theyas indicated that started a review of our Monetary Policy. I find it important to analyze long term trends. Or lower rate of interest the population aging, how do they affect the conditions or the operating environment of the Monetary Policy. And what kind of conclusions should we draw. Not to our mandate because our mandate is enshrined in the e. U. Treaty but our price stability, target. Discuss g to important and it will also enhance our understanding of our Monetary Policy. And improve more conscious communication by the governing council. Later, well hear from draghis successor Christine Lagarde. First, lets hear from leaders in finance around the world who dealt with the impact of negative rates on markets. Starting with the ubs ceo. I am not very convinced that that has been prescribed in the past of just quantitative easing is the solution for the problems in eruope. We in europe. We need to go through a more indepth analysis of the steps necessary to create sustainable growth. So, we need to have reforms of various level, political, Economic Reforms in europe and the Central Bank Policy can only help in a transition. It is not a solution of the problem. I will be very, very careful furthersically growing the Balance Sheet of central banks, particularly when they start to go into asset risk also. We are at the risk of creating an asset bubble. Its unclear what exactly the additional benefit of this lower Interest Rate is. Nevertheless, if it happens you need to deal with it. It will put additional pressure on the sector in general. We will need to see how the answers can look like. The idea is they have no other choice because of the geopolitical issue and the global trade war, they have to do that to grow the economy. That helps your customers continue in business and do more business. Does that make sense to you . That is the core benefit of the last years is. The question is, does an additional point two or point one create an additional affect or are the Collateral Damage is not just about pension plans, do they really outweight the positives . Are ur negative rates, negative rates helping the economy in general, helping to boost inflation and bring growth back . I think when we look back on negative rates, i think when the book is written it is not going to look like a great experiment. I do not think that negative rates will bring us the benefit we would like to see. There is no question that growth has been lagging and negative rates have not allowed in acceleration of that growth. I dont think negative rates are really constructive. Well have to wait and see how this all plays out but i worry that when we look back on this experiment of negative rates we will not like what we see when it is all over and all unwound. Negative rates are something which help the economy. Many people criticize the ecb saying negative rates are bad because they negatively impact the top line of a bank. At the same time, negative rates help the european economy to stay at a modest rate of growth. So, the of banks were going down. Banks have been decent performers. Maybe now if they are low or negative for longer it would have a slightly negative impact on banks. It does. Its a marginal help to a certain extent. Im sure the cb. The ecb. And can increase the for instance. Would the ecb go into deeper negative territory . Its effectively tiers for the banks. They could. Ther eie is some room left. In theory, im sure they would prefer not to do that for many reasons. The efficacy of further negative Interest Rate is question about. Certainly is questionable. The side effects we know are significant. And i suspect it will not be required in the baseline scenario. I think the preference for the ecb would be not to have to do that. Well see what the macro environment provides. The outlook is not terrible. The market is probably too pessimistic, critically on price pressures even on inflation, including in europe at the moment. Come, as we to revisit the top interviews from bloombergs coverage of europe, the middle east and africa and 2019. Saudi arabias oil minister spoke about the kingdoms surprising decision to make deeper cuts in oil production. I wouldnt take any corrective measures without consulting and straight ahead, irans foreign minister lashed back against pressure from the u. S. We see the presence of the United States as conducive to greater instability. This is bloomberg. Nejra this is a special edition of bloomberg best. Conversationsting on business, finance, and politics in europe, the middle east, and africa. As irans economy struggled under the weight of u. S. Sanctions, tensions ratchet it up in the persian gulf. There were several incidents involving the movement of oil tankers. Iran said it could disrupt access to the strait of hormuz. The foreign minister shared irans perspective in a conversation with bloomberg editor in chief john mickelthwait. We understand, we feel the danger, and that is what we want to avoid a dangerous escalation. But we cannot give up defending our country. John your revolutionary guard has said it can what would be the situation what it would do that . We certainly have the ability to do it but we so we do not want to do it because strait of hormuz and the persian gulf are a life line. We play a major role in securing it. But it has to b e secure for everybody. Of people would say that the big issue in that region is not so much america and iran. Its saudi arabia and iran. Saudil, unfortunately, arabia believes they can purchase their security and they pay as a commodity and they buy. Fight all ofing to their problems until the last american soldier. The saudis have hired americans as mercenaries. That is how they see it. Do you see america as the saudi s mercenary force . That is how they see it. We see the president s of the United States the presence of the United States as conducive to greater instability. It exacerbates tension. It creates a false sense of security for its clients who believe they can get away with murder literally, as they did with a brutal murder. They do get away with murder of innocent civilians in yemen on a daily basis. John they made knows the good the fact they want to have regime change in iran. Would you like to see regime change in saudi arabia . No, we dont. John why not . We believe it is the business of the saudi people to decide about their government and we do not have any alternative to the current ruling regimes in the region. And that is not of our business. The business of the people to decide currently do not want to see regime change in any country. We are status quo power. Were content with our size. Were content with our population. Were content with our resources. Were. Content with our geography we dont seek anybody elses territory. We have no eye on somebody elses resources. They can live happy ever and after if they wish to, live in peace with their neighbors. The problem is they are not living in peace. Its not iran. If you want to look at malign behavior, you see that everybody in the region, everywhere where we have a problem, you have a saudi footprint, you have a uae footprint. In libya, industry done you have uae footprint. You do not have an iran footprint. If you want to look at malign behavior, you have to look elsewhere. Nejra the year in conversation continues. Europe found itself facing the threat of u. S. Auto tariffs. The e. U. Trade chief spoke to bloomberg. A we were trying to develop positive agenda where we stated we would not impose new tariffs on each other. Nejra and Christine Lagarde move to the ecb. She explains her leadership philosophy. Speaking in plain and simple language is the best way to help people with you and then taking ownership. Nejra this is bloomberg. Im, and this is a special edition of bloomberg best. Were wrapping up 2019 by playing back the years top interviews. U. S. Threatened to impose tariffs on auto imports, and eu trade commissioner promised to retaliate, but in a conversation with bloomberg in may, she made it clear she was not seeking out a confrontation. Betweenve an agreement titian or between European Commission president juncker and the u. S. Where we stated during that time we would not impose new tariffs on each other, so we hope the president will stick to those words. If he decides not to abide by that trade agreement, when do we see talley asian . One thing you said that was very clear was we will retaliate, we have to. Moment it is official, if it happens i still hope it wont then we will publish the information according to the who rules and do the final conference tester the final concentrations the final consultations, and with think it will happen quite rapidly. Clearr mandate makes it it should be just industrial goods. How do you square that when you only have a mandate for a very limited sector of eu goods . The eua to square that circle is do what we decided to do in july of last year a limited but still meaningful trade agreement on industrial goods. We also discussed some regulatory cooperation, performance assessment making it easier for companies to get their products qualified on each others markets, and that could be d