 Good evening. Thank you all for coming. I think it will be a very, we're in for a very interesting evening. We're addressing the question, what in the world is going on? The world is undergoing dramatic transformations affecting our social, political and economic lives. We're living in interesting times, which are challenging times for financial professionals responsible for making informed investment decisions. Those of us still brave enough to read the news may have discerned some concerning trends. Against this backdrop, tonight is especially encouraging for three reasons. First, there are adults in the room. Our distinguished panel of experts are from the diverse fields of the military, IT security, investments and the media. They all have valuable perspectives on the challenges of the day that go far beyond the latest soundbite. The second reason this event is heartening is you, the audience, who are interested in the insights of these experts. Still more adults in the room. The third reason is the CFA Society Switzerland, who have sponsored this event as part of their commitment to developing excellence and integrity in the financial profession. There are still more adults in the room. The CFA Society Switzerland is committed to developing competence and ethics in financial professionals. To this end, the CFA Society provides education and promotes the highest standards for ethics and integrity. Both are essential to secure the necessary trust and confidence in the financial system. These traditional values of competence and integrity are not obsolete. Worldwide, there are 162,000 CFA charter holders in over 163 countries. There has been a 20% increase in candidates globally for the CFA program. These 275,000 individuals are signing up for an average of 300 study hours for each of the three exams covering finance, economics and ethics. Fortunately, it is these individuals who represent the future. We should not, we cannot take this expertise and integrity for granted. We must acknowledge and support CFA charter holders in the workplace. The CFA Society Switzerland benefits from the leadership of the executive staff and our outstanding board of directors who lead with expertise, diversity and dedication. I'd like to invite the board members to please stand to be recognized and please take the opportunity tonight to meet our board members. For now, we can all become a bit better informed with the insights from our expert panel, moderated by Stefan Klaproth. During the presentations, you'll notice that there are cards on your seat. If you have questions, please fill out the questions, raise it and someone will come and collect it so that you can ask your own questions via Stefan. After 22 years as frontman of Swiss TV's news magazine, Zane for Zane, Stefan is one of the most experienced news anchors in the German speaking world. Please join me in welcoming Stefan. Good evening, ladies and gentlemen. In fact, it's a bit early for a 10 o'clock news anchor, but I'm more than happy to be with you here. There are moments when the fate of the world hangs by a thread and in such moments we would really like to know what the thread is made of and what determines whether or not it will hold. In the morning of June 28, 1914, the assassins of the Serbian Black Hand anarchist movement were waiting in Sarajevo for the Austrian heir to the throne, grimly determined to kill Archduke Franz Ferdinand and his wife Sophie. The arrival time of the royals and the precise description of the route they would take from the outskirts of the city to the city hall had been published in the newspapers, thereby playing into the hands of the murderous anarchists. Nevertheless, they wanted to be sure of their target and so had posted five more would-be murderers along the route in addition to the main assassin. At 10.20 am, Franz Ferdinand and Sophie's motorcade rolled up at walking pace. Assassin number one is just about to do the deed when he sees a policeman standing behind him. He freezes in fear. Assassin number two loses his nerve and does nothing. Assassin number three, however, knocks his hand grenade against the street lamp to release the detonator and throws the fist-sized bomb at the Archduke. According to the police reports, Franz Ferdinand himself fended off the grenade with his arm and it exploded behind the vehicle. The assassins, the assassin immediately swallowed a cyanide capsule as planned but the dose was too low and so he jumped desperately into the nearest river but at a spot that was so shallow that the law enforcement officers had no trouble fishing him out immediately. All true. At 10.30 am, the Archduke arrived at the town hall intact as scheduled. What happened then? Did the future Kaiser security guards react? Were additional police forces called in immediately to provide the safe escort back out of Sarajevo? Or indeed the royal imperial troops who were taken part in maneuvers nearby? By no means. Franz Ferdinand himself gave the order that he and his entourage would leave the city again in the same formation and with the car roof open. He could be persuaded to make only a minimum change to the route cancelling the short detour through the narrow old town and instead remaining on the quayside along the riverbank. This minimal measure, this small route change might almost have changed the course of world history and prevented the assassination that triggered the first world war because the remaining assassins were left in the old town now with no potential target. Unfortunately, and rarely has the word unfortunately taken on more historical dimensions, unfortunately no one had informed Franz Ferdinand's chauffeur about the route change and so the driver as originally ordered turned into the old town at 10.50 am at Moritz Schiller Delicatessen. Having been alerted to his mistake, he stopped the car completely in order to turn around in unhurried fashion. Gavrilo Princip, the best marksman among the six assassins could hardly believe it. He had just bought himself a tuna fish sandwich in the Moritz Schiller Delicatessen in somewhat dismal mood. He had even been contemplating suicide out of disappointment that their assassination plan had apparently failed all along the line and out of fear of being arrested. But now, through the shop window, he saw Archduke Franz Ferdinand and Archduchess Sophie sitting not a stone throw away in an open-topped car. He stepped onto the street and shot his two victims at close range with the two bullets that started the world war and left 20 million dead. What determines the course that life takes? Chance? Terrorists? Sloppy security measures? The philosopher Peter Slaterdike wrote about the assassination in Sarajevo. Since then, we have known that if your money is on the world coming to an end, then make sure Austrian officials are involved in organizing the proceedings. Yes, at the end of the day, it's always officials who are to blame if you ask the philosophers. But in the real world, so much can go wrong. And the fact about the Sarajevo assassination which could be straight out of a soap opera screenplay proved it. In the real world, so much can go wrong that it's amazing there aren't more unnecessary wars and conflicts. A man who has done his best to help prevent war in his role as a senior official in NATO's highest spheres will now talk to us about the current geostrategic security situation which some are comparing with that in June 1914. Tim Waugh is a former senior official of the NATO consultation command and control agency based in Brussels. His NATO responsibilities range from being chief of staff of the agency to more recently taking on the role of project director for the NATO satellite programs and NATO deployed communication projects including the major projects for Afghanistan. Prior to his NATO career, he served in the British Army for 30 years, his last appointment being commander communications and signal brigade commander of one British Corps in Germany and director of the staff at Supreme Headquarters Allied Powers Europe. From a geostrategic and security point of view, we could not wish for a more qualified speaker to answer the question what in the world is going on. And the highly qualified expert is needed for this purpose more than ever these days. For since 1914, in addition to bad coincidences, unintelligent statesmen and lousy security precautions, a further risk factor has been added which means the fate of the world now no longer hangs by a threat but by the hair of a badly fitting to pay. Donald Trump, this agent orange of world politics creates so much nervousness and insecurity with his fluttering tweets that you can but exclaim, my God, which however is imprecise, perhaps you know the joke what is the difference between God and Donald Trump? Answer God knows that he's not Donald Trump. Ladies and gentlemen, please greet our speaker with a round of applause as cheerful and jubilant as the sound of the thousands of people who gathered at 11 a.m. on November 11, 1980 in 18 in Whitehall, London to celebrate the end of World War I. You may also throw your hats in the air as they did then for the man who will now explain the state of the world to us with a sharp eye of a geostrategic security expert and to whom we want to signal just briefly to show that we too always take a close look at every situation that we have discovered that his first name, Tim, does not simply mean Tim as with other Tims but is in fact the abbreviation of his three malefless actual names, Thomas Ian McDonnell, Tim Wall. Ladies and gentlemen. I'm delighted that my talk isn't related to those subjects. For the past year or so, the past press has been very full of the commentary about how the United States and Europeans are addressing their commitments to Western security. Rather disconcertingly, NATO has been the object of many misleading statements by our friend President Trump. So let me start with what NATO is and what NATO is not. NATO, the North Atlantic Treaty Organization, was launched in 1949 with the founding document The Washington Treaty. It is a short document of just a few pages. The treaty makes it clear it is not just a defend territory but to defend values, the principles of democracy, individual liberty and the rule of law. And in recent years, human rights has been added to that list. It is most famous then and now for Article 5, which declares an attack on any NATO member state is an attack on all. This makes it what is known as the Collective Defence Treaty. Collective because it obligates its members to reciprocal commitments and defence because it is limited to protecting the territory of its members. But critically, it does not just depend on military strength but on national policy and political will as well and the fact that they will use it. There is no authority for offensive action and that is an important point to take. In 1949 there were 12 founding members of the NATO and US and Canada and 10 Western nations. Today there are 29 nations of NATO with the recent additions of Montenegro and more nations wish to come. Now I said what is NATO? NATO is a political and military alliance. I can't tell you how many times I've heard someone erroneously claim that NATO is just a military alliance. It is in essence a political alliance with a strong military structure and capability that facilitates military cooperation aimed at deterring attacks against member states and defending them if necessary. There is no NATO army or air force as such. I often hear the term NATO forces. In many ways that is a misnomer as NATO only has limited assets. The naval air force and army tactical units needed for operations come from the NATO nations and are continually and are contributed by the member states based on the agreed composition for a particular task or mission such as Kosovo or Afghanistan. Now this is a new NATO headquarters which has recently been built in Brussels. They often say organizations only build new headquarters just before their demise. I hope that is not true and I don't believe it is. But whatever the future those sloping roofs there can be used for the next James Bond movie skiing sequences. Now I'd like to move on to budgets because this has been one of the subjects that Trump has been on about for the last few months. There are what are called NATO common funded activities. The actual NATO common funded budget provided by the nations as you see there is not very big at least by government standards and is shown broken into three components. The civil budget is used mainly for running the political headquarters. The NATO military budget is used mainly for running the military headquarters and support. And then we have the NATO security investments budget is cut for for 2018 at 950 million which provides a strategic operational infrastructure such as ports, airfield and communications systems to allow national forces to join or blister on to NATO networks. These NATO common funded activities amount to a total of less than three billion and are paid by annual assessments by the member states. The assessments are based according to the member states gross domestic products. And you can see of course from that that the Americans provide most of the funding. All that being said there is a genuine balance between the United States spend on defence and what the European allies and Canada spend. Here is the GDP issue that has become famous with Trump's comments. The US spends twice as much on defence as all the other allies combined. These imbalances have been a source of US concern for decades. Presidents as far back as Kennedy have been decrying the gap and urging more equitable burden sharing by NATO and by non NATO members of defence costs. One of the two countries who are meeting the 2% guideline were doing so mainly by counting the pensions paid to their retired military personnel as well. Greece was a leading example of this. So the heads of government agreed to endorse that at least 20% of their defence spending should be allocated to the purchase of major equipment. Taken together the standing guideline has been the 2% and 20% percentage gain per percentage goal. You will note there at the top that the word aim. This has never been agreed as a something that we must achieve. It's not mandatory, it's an aim to achieve it. And funnily enough it was the Germans who said we do not want to have it guaranteed. And so we've left with this as a statement of 2% is what they want to achieve by 2024. This is NATO operations and missions. I don't want to dwell on this for too long. What I want to show you is that these are the sort of things that we've done over the years recently. Some of them have been done outside of the article 5. And this is a real significant change in NATO at the end of the 20th and the beginning of the 21st century. We are doing now what we call coalitions of the willing. What is happening is that we are allowing and designating NATO missions based on the ability of nations who wish to participate. For instance the Libyan attack or piracy in the Indian Ocean and the Horn of Africa. This gives increased flexibility to responses and arguably gives NATO a more diverse security role. Now what are today's challenges? The major strategic threat to NATO today is Russia. I don't think you'd be surprised for me to say that. As you know the relationship between West and Russia has seriously deteriorated since the annexation of Crimea and the Russian incursions into Ukraine. Which still continue no longer headline news. The Russians claim that their history is one of invasion from the West. So not only do they need to protect themselves against an aggressive NATO. But they wish to support Russian cultural populations wherever they exist. And Crimea and Eastern Ukraine are excellent examples. Russia seems to be cranking up its sabre rattling at least to show they have a capability. Which is giving them a new shape to their forces. This is particularly worrisome for the Baltic states who have sizable Russian populations who listen to propaganda from Russian television. Around 30% of Latvia, 23% in Estonia and 8% in Lithuania are Russian speakers. These countries are making inroads into integrating these populations into the mainstream. But the Lithuania ambassador to NATO told me we should not underestimate the difficulties brought about by decades of Soviet propaganda. But he would say that wouldn't he. However there are figures in Moscow today who I've spoken to who still stubbornly consider the Baltic states to be in their orbit to control despite the NATO membership. In addition within the last 12 months Russia has held extensive military exercises in the western provinces. And has increased its naval, air and cyber disruption activities. This has forced NATO to take preventative measures. And significantly the Russians have local military superiority in some of the border areas close to possible confrontation with NATO. I've also mentioned a threat, an internal threat. We have NATO nations that are facing decisions about what kind of democracy they want. Is it a liberal democracy based on the NATO preamble statement or is it an electoral democracy in which governments are elected but power is increasingly centralized. Or where elections take place but the rule of law and individual limit is like freedom of speech and the press are strictly controlled. Very difficult. Equally at the moment the warmth of Turkey's relationship with Russia is worrying. They have bought Russian air defense equipment which is not compatible with NATO. And have caused German air force jets to move some of their aircraft from Turkey to an air base in Jordan. But Turkey is strategically important to NATO and much effort is being used at present to persuade them to moderate their positions. In fulfilling its role NATO as I mentioned earlier has to rely on the forces of nations. Let me give you example of some of the difficulties. The first is raising the forces required. You will see I put a picture of a football crowd. In the UK the size of the British Army today is 73,000. More people go to watch Manchester United on a Saturday. Similarly in Germany because of the steady reduction of defense spending since 1980 they no longer have the capacity or spares to keep a large part of their frontline air and naval assets in operation. It is very worrying that we have to rely on this very low level of capability to raise forces. If this is to improve and if the 2% GDP defense investments levels are to be reached even in major NATO nations it will require a change in domestic policies. How popular is defense today in European democracies? I leave you to judge. Thus to provide the appropriate force levels NATO needs US forces and US political commitment. The transatlantic relationship is vital. In assessing NATO I have to mention the ability of NATO to respond to aggression. Initially there is a NATO defense force or response force of 20,000 soldiers provided from national forces which can be deployed immediately. This slide shows you a map of the Baltic area where NATO has deployed forces because of the perceived Russian threat in the area. The initial forces shown here are what we call trip wire but at the last NATO summit the nations agreed to reinforce this force level by making what is known as 30, 30, 30, 30 which is shown there. A simple incursion to take the Swalke gap between Belarus and Kaliningrad or Russian territory would isolate the land link to the Baltic states. What would be NATO's response? I hate to speculate. I have carefully avoided the nuclear dimension but deterrence is still the fundamental element of NATO nuclear credible posture and collective defense. There is a great deal of debate on the future because Russia has recently tested and developed new systems capable of delivering and I mentioned this particularly low yield nuclear capabilities in the early days of any confrontation or crisis. Some pundits believe the Russians have come to believe that NATO U.S. lack of credible deterrence for a low yield nuclear event based on the western political responses to Crimea and Syria. Today it is reported that the U.S. has 180 tactical nuclear bombs in Europe. They are outdated and have not been recently tested but could be used if necessary. However the U.S. have realized the danger if there is one and appear to be taking action. They have now a trillion dollar program to modernize their nuclear capability within the next 30 years. In March 2018 they announced they will introduce a low yield warhead option for a selective number of in-service submarine launch missiles. So we are getting into that war again. Whatever the reality all this activity challenges the existing nuclear deterrence theory. Requires a re-examination of the NATO procedures for nuclear sharing and consultation. And puts major question marks on the future for non-proliferation arms control particularly the start of the strategic treaty and the intermediate nuclear forces treaties which as you may have read is causing concern both in the U.S. and in Russia. This is a highly classified subject as real capabilities are difficult to define. But is one which engenders considerable debate in academic military circles. And let me say just this that deterrence is dynamic and it's not static and has been that way for decades. It's therefore tailored to the prevailing situation. So what are the other issues with which NATO has to deal and wrestle in the modern world? A few years ago they established a new staff division called emerging security concerns. This is what they do and I will go through it very quickly with you because time will get the better of me if not I'm not careful. Counter-terrorism this is anti-terrorist intelligence coordinated is coordinated by national international cooperation. But the ability to address the conflicting threats and understand where to target expertise is a role that fits with the NATO portfolio. Energy security is a concern linked to both physical and cyber attacks. An overall coordinating body to look at vulnerabilities and options to sustain supplies has a defense related component. I should also mention Nord Stream 2 the energy pipeline from Russia to Germany which has raised questions as to the source of supplies and the loyalty and reaction of nations in the event of a crisis. Weapons of mass destruction are still a concern and the monitoring of possible uses of new developments and capabilities are continuing activity. The pressures of migration are now obvious it has provided a real challenge for the alliance and what we've got to do now is we're developing guidelines to ensure that we can help the nations where possible but bearing in mind that we have to be within the human rights legislation and that is particularly difficult for a military organization. Data and AI is one thing that I would want to mention is now the main technical challenge. Handling and control of data is paramount in a defense scenario where you're dealing with the media responses and counter measures. Security of data becomes ever more important consuming issue. This is coupled to the rise of AI in the battlefield and communication, situational awareness tools and robotics. There is an imminent danger of autonomous weapons malfunction and a human override is vital. With warfare warfare the level of technical possibilities will always shape the struggle for advantage. The balance is between the speed of change and the speed of obsolescence. I'd like to dwell for a moment on the cyber side. It's a complex area which you'll hear about later. NATO has invested a considerable amount of time and effort in cyber defense and has a well developed threat assessment capability and a 24 hour operational centre to identify and counter any threats to NATO networks and individuals. This threat is both external and internal and requires very invasive methods of what I call cyber hygiene. At the recent NATO summit and reiterated last week by the Secretary General, that type of asymmetric hybrid warfare in cyberspace and in the electromagnetic spectrum is today our most serious defense concern for our corporate security. Information warfare and cyber warfare could affect us all including the financial community and its disruption will be the aim of whoever the enemy is. Now I want to deal very quickly with two subjects and that's the European dimension. First of all the interface with the EU defense aspirations is an interesting debate. As most of the EU forces are NATO forces and are thus double-hatted. Or as a Turkish general whose English was very poor once said to me they are dull headed. Which is probably right. The command arrangements often depend on NATO infrastructure and many national officers in NATO quarters have a dual role in the European defense staff. There is however increased cooperation particularly on cyber threats although I have to admit that the enthusiasm for the European defense identity is not shared universally. Tensions apart there are many political statements about the coherence and complementarity of efforts across a common set of 74 proposals. But I do believe that it will continue to make limited progress as long as NATO has a major defense security role. I was asked very briefly to mention Brexit in my talk and I'll do so briefly. Personally it's the worst decision that has been taken by my nation in my lifetime. However from a NATO perspective it raises many issues particularly relating to command. The sharing of information and the European defense cooperation. At present the deputy supreme commander Europe a UK general is the nominated head of European defense forces in the event of a conflict. Here's a planning role on European defense matters. Even though in the past the UK has been the least enthusiastic member of the European Union about European defense identity. He can no longer fulfil this role after Brexit and I suspect you will see a struggle between France and Germany for this position. Equally many European missions such as recent anti-Paris naval missions have been commanded by the British. This can no longer happen. Perhaps more important that the UK will not have access to European defense funds provided by the EU which have become an important source of funds for research and cooperative equipment development. For instance the UK will no longer have guaranteed access to Galileo the European GPS system and cannot compete for involvement in its procurement. The view of some is that the exchange of defence related threat and intelligence data between the UK and Europe will be constrained whatever national interest take precedence perhaps no real difference. But finally UK has also been over the years has reigned in the aspirations to a real European defense pillar and has acted as a broker between NATO and the EU to ensure NATO primacy and thus constrained EU security policy from within. This will I'm sure not continue. Now I've got one last slide to show you and that is the coalition of the willing. We have two capabilities that have been provided by nations not all the NATO nations. One is the early warning aircraft and the recent one which is now going to be in Italy in Sigonella was first flown in June this year and is to provide an unmanned aerial vehicle capability for NATO with five aircraft. I leave you with one thought. What is the future of NATO? I believe that as long as there is a strong need for the US to play a world role and that Europe continues to believe that the transatlantic bridgehead is necessary for our security and peace NATO will continue. It has played this role successfully over the last 50 years. Its effectiveness will finally depend on how much money governments are prepared to spend in funding defense against the many other domestic funding priorities. I leave you with one thought. So although it's not strictly a NATO matter, what will the future war look like? In the past we've tended to fight the next war based on previous experience and procedures. Perhaps these days are gone and the quote shown here is right. It will be fought in cyberspace with modern technology taking the predominant role. That is my prediction but who knows. Tim Moir ladies and gentlemen, thank you so much.