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Migrant furore in America and Europe

AMLO, Mexico’s answer to Donald Trump

Would a trade war wreck the economy?

China’s super-cities JUNE 23RD–29TH 2018

The Saudi revolution begins A SPECIAL REPORT РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Contents The Economist June 23rd 2018 5

7 The world this week Middle East and Africa 31 Private schools in Kenya Leaders Less rote, more play 11 Reform in Saudi Arabia 32 Bridge International The revolution begins Academies Taking on its foes 12 Turkey Time to go, Erdogan 32 Passport sagas Diplomatic impunity 12 The world economy Don’t crash it 33 Tropical diseases De bodi fine 13 Immigration Cruelty and the Separation anxiety 34 Gaza and the UN Immigration Squeeze and suffocate law: leader, page 13. Donald 14 Urban transport Trump’s policy will hurt his party Off the rails 34 Football and piracy Qatar calls foul more than him: Lexington, On the cover 15 Mexican politics page 40. Immigration and Muhammad bin Salman, the AMLO, Mexico’s answer to Angela Merkel’s hold on crown prince of Saudi Arabia, Donald Trump United States power, page 24. The leader of wants to transform his 35 Cities Italy’s Northern League is country. His taste for making waves, page 25. Letters In praise of gentrification autocracy is making the job Europe’s passport-free zone 36 America and the UN 16 On football, Donald faces a grim future: harder: leader, page11. An empty gesture Radical reforms in Saudi Trump, RBS, California, Charlemagne, page 27 Arabia are changing the Gulf speed limits, Tom Wolfe, 37 Detroit’s railway station and the wider Arab world, says reincarnation The Ford Phoenix Anton La Guardia. See our 38 University admissions special report after page 40 Briefing Affirmative dissatisfaction 20 Mexico 39 Small-town newspapers Still kicking The Economist Tropical messiah online 40 Lexington Daily analysis and opinion to Child migrants supplement the print edition, plus Europe audio and video, and a daily chart 23 Turkey’s elections Economist.com Could Erdogan lose? Special report: The Gulf A wild ride newsletters and 24 Germany’s migration E-mail: After page 40 mobile edition stand-off Mexico There are many Economist.com/email Merkel’s moment of peril reasons to worry about Print edition: available online by 25 German military drones The Americas Mexico’s most likely next 7pm London time each Thursday Innocence lost 41 Colombia’s new president president: leader, page15. Economist.com/printedition 25 Italy Duque’s dilemmas Andrés Manuel López Obrador Audio edition: available online Salvini the scrapper 42 Bello is a left-wing populist, page 20. to download each Friday 26 France’s Socialists “Closed because of football” A portrait of the relationship Economist.com/audioedition From solidarity to solitary between Mexico and America, page 71 27 Charlemagne Asia Save our Schengen 43 Pakistan’s meddling army General dysfunction Britain 44 The Maldives Volume 427 Number 9097 28 The NHS at 70 Democracy under water Theresa May’s sticking- Published since September1843 45 Administering Delhi to take part in "a severe contest between plaster City bickers intelligence, which presses forward, and an unworthy, timid ignorance obstructing 29 Brexit and Parliament 45 Sex education in our progress." A rebellion stalled Myanmar Editorial offices in London and also: 30 Bagehot Speak no evil Beijing, Berlin, Brussels, Cairo, Chicago, Madrid, Mexico City, Moscow, Mumbai, Nairobi, New Delhi, Podsnappery and its 46 Lawmaking in Indonesia New York, Paris, San Francisco, São Paulo, Seoul, reverse Bad acts Shanghai, Singapore, Tokyo, Washington DC 48 Banyan Turkey Recep Tayyip Erdogan The South China Sea deserves to lose the election on June 24th: leader, page 12. Opposition leaders have a chance to beat or crimp a domineering president, page 23

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6 Contents The Economist June 23rd 2018

China Science and technology 49 Urbanisation 67 Scientific journals A tale of 19 mega-cities Publish and don’t be damned International 68 Football penalties The lucky 12 yards 51 Public transport Missing the bus 69 Chinese space flight Fire arrows 69 Archaeology Business Dead apes telling tales China’s super-cities The 53 Urban mobility 70 Insect migration Bad science Some scientific government tries to create a Electric invasion Magnetic moment journals that claim to screen country of19giant regional 54 Bartleby academic papers with rigorous urban clusters, page 49 Get with the program peer review do not bother, Books and arts 55 Iliad in Italy page 67 Battle ready 71 Mexico and America Love thy neighbour 56 Mining in Congo 72 Rodrigo Duterte Subscription service Evasive action For our full range of subscription offers, Inner demons including digital only or print and digital 56 Shipping’s emissions combined, visit Feeling green 73 A Habsburg revival Economist.com/offers The empire strikes back or call the telephone number provided below: 57 The sharing economy Telephone: +44 (0) 845 120 0983 or Seabnb 73 American short stories +44 (0) 207 576 8448 Swamp creatures 58 Schumpeter Subscription for 1 year (51 issues) 74 Johnson Print only French philosophy and Euro-zone countries €229 business Out of their wherevers Denmark DKr 1,709 Hungary HUF 78,042 Public transport It is ailing in Norway NKr 1,839 Poland PLN 1,011 the rich world: leader, page14. Finance and economics 76 Economic and financial indicators Sweden SKr 2,089 Blame remote working, Uber, 59 US-China trade (1) Switzerland SFr 296 Statistics on 42 economies, 4 cheap car-loans and the Battle-lines drawn Turkey TL 81 plus a closer look at the Other Europe (ex UK) €229 internet, page 51. How electric 60 US-China trade (2) euro area Middle East – GCC US$352 two-wheelers are becoming a Planning manoeuvres South Africa ZAR 4,670, US$285 familiar way of getting around, Middle East and Africa US$285 61 Emerging-market page 53 Obituary currencies Fed and Federico 78 Miguel Obando y Bravo Priestly duties Principal commercial offices: 61 Reforming the euro zone The Adelphi Building, 1-11John Adam Street, A modest proposal London WC2N 6HT Tel: +44 (0) 20 7830 7000 62 Sweden’s housing market Rue de l’Athénée 32 Keep the roof on 1206 Geneva, Switzerland 63 Hedge funds and data Tel: +4122 566 2470 Wary scouts 750 3rd Avenue, 5th Floor, New York, NY 10017 Tel: +1212 5410500 63 Abraaj Group 1301Cityplaza Four, After pride, the fall 12 Taikoo Wan Road, Taikoo Shing, Hong Kong 64 Buttonwood Tel: +852 2585 3888 FAANG: the lucky few Other commercial offices: World economy A trade war is Chicago, Dubai, Frankfurt, Los Angeles, 66 Free exchange Paris, San Francisco and Singapore the worst of many threats to Trading peace for war global growth: leader, page 12. As the Trump administration threatens China with further tariffs, the prospect of a last-minute deal is receding, page 59. China mulls its response, page 60. Sino- American interdependence PEFC certified has been a force for geopolitical This copy of The Economist is printed on paper sourced stability: Free exchange, from sustainably managed page 66 forests certified by PEFC PEFC/04-31-1267 www.pefc.org

© 2018 The Economist Newspaper Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or other- wise, without the prior permission of The Economist Newspaper Limited. Published every week, except for a year-end double issue, by The Economist Newspaper Limited. The Economist is a registered trademark of The Economist Newspaper Limited. Printed by Vogel Druck und Medienservice GmbH, Leibnizstraße 5, 97204 Höchberg, Deutschland. France, Numéro Commission Paritaire: 68832 GB. Encart d’abonnement de deux pages situé entre les folios 10 et 130. Rapp. Italia: IMD srl Via Guido da Velate 1120162 Milano Aut. Trib. MI 272 del 13/04/88 Poste Italiane SpA - Sped Abb Post DL 353/2003 (conv. L. 27/2/2004 n.46) art 1comma 1DCB Milano, Dir. Resp. Domenico Tassinari РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The world this week The Economist June 23rd 2018 7

ofCongo and other paragons Masaya, a town near Mana- have the final decision should Politics ofvirtue. Nikki Haley, Ameri- gua, Nicaragua’s capital, the Brexit talks end with no ca’s ambassador to the UN, declared that it no longer deal. The government won a said the body protected abus- recognises the presidency of vote in Parliament by 319 to 303 ers ofhuman rights and was a Daniel Ortega and will govern votes after giving furtherassur- “cesspool ofpolitical bias”, itself. At least three people ances that MPs would have a especially against Israel. The were killed in an operation to “meaningful vote”. One Tory council’s supporters retort that regain control ofthe town. Remainer said that meant a the council does some good, More than 170 people have “real say”. Brexiteers said and that ifdemocracies such died in protests since April. nothing had changed and MPs as America pull out it will Mediators from the Catholic would get no say. probably do less. church suspended negotia- tions between the government Mounting trouble If at first you don’t succeed and the opposition because India’s ruling Hindu- New talks were held to try to the government refused to nationalist Bharatiya Janata end South Sudan’s five-year allow foreign human-rights Party pulled out ofan alliance Donald Trump signed an civil war. It is the first time the observers into the country. with the People’s Democratic executive order allowing the two key leaders in the conflict Party in Kashmir, prompting children ofillegal immigrants have met in two years. All Canada’s parliament voted to the state government to col- to stay with their parents in previous attempts to broker a legalise the recreational use of lapse. Kashmir’s governor, detention centres ifcaught peace deal have failed. cannabis. The law regulates its who is appointed by the BJP- crossing the Mexican border. cultivation, sets limits on led central government, will Previously, under the White Israeli jets struck25 targets in possession and prohibits assume control ofthe state. House’s “zero-tolerance” poli- Gaza linked to Hamas. The marketing that would encour- Separately, unknown attackers cy for illicit border-crossing, strikes were in response to age consumption. When it murdered Shujaat Bukhari, there had been a sharp rise in almost 50 projectiles fired at takes effect in October, Canada one ofKashmir’s most respect- familiesbeing forcibly split up. Israel, said the Israeli military. will be the second country in ed journalists. Pictures oftearful children torn the world, after Uruguay, to from their parents provoked an The UN said that war crimes make it legal to puffmarijuana New Zealand’s prime min- outcry, though a poll found were committed by forces for pleasure. ister, Jacinda Ardern, has given that a small majority ofRepub- loyal to the regime ofBashar birth to her first child, a baby licans supported the policy. al-Assad in the Eastern Ghouta Europe’s critical point girl. She will now take six Amnesty International said region ofSyria. The UN is still A political crisis rocked weeks ofmaternity leave, officials had intentionally investigating whether chemi- Germany. The alliance be- during which her duties will inflicted “severe mental suf- cal weapons were used in an tween Angela Merkel’s Chris- be performed by the deputy fering” on the migrants. attackon rebels in Douma. tian Democrats and its more prime minister. She is only the conservative Bavarian sister second elected leader in mod- The director ofthe FBI, Chris- The World Health Organisa- party, the CSU, looked as ifit ern history to give birth in topher Wray, said his agency tion said that the Ebola out- might breakdown over how to office. The first was Benazir would not repeat the mistakes breakin the Democratic handle migrants. Mrs Merkel Bhutto, a prime minister of uncovered in a report by the Republic ofCongo has largely seems to have won two more Pakistan, in 1990. Justice Department’s internal been contained, but officials weeks to solve the problem. watchdog, which criticised the warned against complacency. handling ofinvestigations into Italy’s interior minister, Mat- Hillary Clinton and Donald Hello Duque teo Salvini, called for a census Trump during the election in ofRoma. He threatened to 2016. Among other things, it deport Roma who are not found that James Comey, then Italian citizens, but said that the FBI chief, had broken poli- “unfortunately” those Roma cy by making the investigation who were Italian would be into Mrs Clinton’s e-mail allowed to stay. server public, but that he had not acted with political bias. The Hungarian parliament passed a law that would send Paul Manafort, Mr Trump’s anyone who helps illegal Kim Jong Un’s makeover con- formercampaign manager, immigrants, including lawyers tinued with a two-day visit to was sent to jail by a judge after who assist asylum-seekers, to China, where the North Kore- he allegedly tried to sway the prison fora year. The an dictator was hailed as a testimony oftwo witnesses at Iván Duque, a conservative nationalist government calls leader trying to develop his his forthcoming trail on a range who opposes parts ofthe migrants a security threat. impoverished nation. Mr Kim, ofcharges, which include peace agreement between There are hardly any ofthem who keeps babies in prison money-laundering. He had Colombia’s government and in Hungary, but many passed camps and has had members been on bail ahead ofthe trial. the FARC guerrilla group, won through on their way to Ger- ofhis own family killed, at- the country’s presidential many in 2015. tended a banquet hosted by Xi America withdrew from the election. He took54% ofthe Jinping, China’s president. The UN Human Rights Council, a vote in a run-off, defeating The British government fend- pair discussed Mr Kim’s recent body that includes China, Gustavo Petro, a far-left former ed offanother attempt by summit with Donald Trump, Cuba, the Democratic Republic mayor ofBogotá. Remainers to ensure that MPs which was held in Singapore. 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

“Together we can tackle climate change.”

Gregorio Magno, Founder of Ciclogreen, Spain

Frustrated with rising pollution levels in Spanish cities, Gregorio turned to technology to create change. His app Ciclogreen converts sustainable travel into rewards, ranging from a free coffee to a ticket for a concert. Developing on Android ’s open-source operating system enabled him to reach the greatest number of people and make the biggest environmental impact. Gregorio is now on a mission to transform cities around the world.

Watch the mini-documentary about the app that rewards sustainable mobility: g.co/androidstories РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

10 The world this week The Economist June 23rd 2018

€15bn ($17bn) from this Sep- works. Some (mostly Demo- might try to interfere with an Business tember and will end all crats) questioned Ms Kran- investigation into VW’s emis- purchases in December. inger’s appointment, claiming sions cheating. He is the most The prospect ofan all-out that—as a White House insid- senior executive at the VW trade war between America MSCI, a company that designs er—she lacks the experience to group to have been arrested and China became real. Do- stockmarket indices, said that run an independent office. over the scandal. nald Trump said he would Argentina would return to its impose tariffson $50bn of emerging-market index in 2019 The flow ofEuropean venture Down and out Chinese goods, because Bei- after an absence often years. capital hit its highest level fora jing was not dealing with That should lower the coun- decade last year, according to Recent changes to the Dow American complaints about try’s borrowing costs and Invest Europe, a trade associa- Jones Industrial Average stealing intellectual property. increase investment in its stock tion forthe industry. Ofthe Year Out In China responded in kind by and bond markets, a boost for €6.4bn ($7.2bn) in invest- 2009 Citigroup Travelers announcing penalties on Argentina, which is battling a ments, 45% went to infor- 2009 General Motors Cisco $50bn ofAmerican goods, run on the peso and has had to mation and communications 2012 Kraft Foods UnitedHealth which prompted Mr Trump to turn to the IMF forhelp. Saudi startups and 23% to biotech 2013 Alcoa Goldman threaten to levy additional Arabia will also be added to and health care. Sachs MSCI tariffson goods worth $400bn. the emerging-market 2013 Bank of America Nike index forthe first time. In the biggest banking merger 2013 Hewlett-Packard Visa Taking the war seriously in Britain in a decade, CYBG, 2015 AT&T Apple Global stockmarkets took Chasing the Fox the owner ofClydesdale and 2018 General Electric Walgreens fright at the trade news, none Disney raised its bid forthe Yorkshire banks, agreed to pay Boots more so than in China. The bulkof21st Century Fox’s £1.7bn ($2.3bn) for Virgin Mon- Source: S&P Dow Jones Shanghai Composite fell by 4% assets to $71bn, almost halfof ey. The deal creates Britain’s in a day to its lowest level in 20 which is in cash and the rest in sixth-largest bank. General Electric was booted months. The Shenzhen Com- shares. That tops an unsolicit- out ofthe Dow Jones Industri- posite dropped by 6%. Yi Gang, ed rival all-cash offerof$65bn Ford and Volkswagen said al Average. The company had the governor ofthe People’s from Comcast. that they were talking about a been on the index of30 share Bank of China, said investors “strategic alliance” which prices continuously since 1907 should “stay calm and ratio- The White House announced could see them develop com- and was one ofits original nal”. The central bankpumped that Kathy Kraninger would be mercial vehicles together. Ford components in 1896. It is re- 200bn yuan ($31bn) into nominated to head the also unveiled plans to create a placed by Walgreens Boots, a financial institutions, followed Consumer Financial Protec- hub for electric and autono- pharmacy chain. GE was the by a smaller intervention, to tion Bureau, a bugbear for mous cars, technologies where most valuable American ensure they remain liquid. Republicans ever since its it has lagged behind its rivals. company in 2000, but its share creation as part ofthe Dodd- price has halved over the past Oil prices swung up and Frankreforms. The agency is Rupert Stadler, the chiefexec- year owing to a difficult re- down in part because ofChi- being led by MickMulvaney, utive of Audi, Volkswagen’s structuring process. na’s plan to target tariffsat who is also the head ofthe luxury brand, was sent to jail American energy supplies. White House budget office, in Germany while a judge For other economic data and Investors were also jittery where Ms Kraninger currently looked into allegations that he news see Indicators section ahead ofan OPEC meeting on June 22nd to discuss whether to increase oil production after an 18-month freeze in output.

Germany’s central bankcut its forecast ofthe country’s economic growth rate this year to 2%, from 2.5%. The Bundesbankthinks the “external environment” is driving up uncertainty in the German economy.

Mario Draghi hinted that the European Central Bank could restart its bond-buying pro- gramme ifeconomic condi- tions deteriorate, just days after the bankannounced that it would phase out its purchas- ing ofassets. The ECB’s presi- dent emphasised that interest rates would remain ultra-low until at least September 2019. The ECB is to halve the amount ofassets it buys each month to РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Leaders The Economist June 23rd 2018 11 The Saudi revolution begins

Muhammad bin Salman could transform the Arab and Islamic world for the better. How to ensure he succeeds NE Saudi cleric thundered that provide weapons and other help. Last year Saudi Arabia Othat letting women drive sullied itself by detaining the Lebanese prime minister, Saad would lead to immorality and a Hariri, releasing him only under international pressure. With lackofvirgins. Anotherdeclared its main ally, the United Arab Emirates (UAE), it has led the way that women were incapable of in isolating Qatar, a contrarian emirate, by cutting land, sea taking the wheel because they and air links (the Saudis even want to dig a canal to make the were half-brained. Still another place an island). In doing so they have split the Gulf Co-oper- drew on science, ruling that ation Council, the club ofoil monarchies. As the Arab cold war driving would damage their ovaries. Such tosh is at last being spreads, Iran and other foesare gaining advantage. cast aside. On June 24th Saudi women will be allowed to drive At home Prince Muhammad has developed a taste for re- their cars. That is one step towards emancipation; among the pression. The number ofexecutions has risen. More dissenters others must be an end to male “guardianship”, for example, in are in jail, among them, perversely, women who campaigned deciding women can study or travel abroad. Yet getting wom- to drive. Everything, it seems, must be a gift from the Al Sauds: en behind the wheel isa welcome blowagainstthe idea thatIs- the name of the country, the oil bounty and now the right to lamic piety is best shown by repressing them. drive a car. He has also adopted the view that all Islamists, Female driversare the mostvisible aspect ofa social revolu- even the non-violent offshoots of the Muslim Brotherhood, tion, one brought about not from the streets but the palace of are as grave a menace as Sunni jihadists and Shia militias. Muhammad bin Salman, the crown prince. Cinemas have Thus, the Saudis and Emiratis are leading a counter-revolution opened; music is performed in public; the killjoy morality po- against the Arab spring and the hope of democracy. Sadly, lice are off the streets. Social liberalisation is part of the crown America has all but given them carte blanche. prince’s ambition to wean the economy away from oil. But as And the crown prince’s effort to boost the private sector is our special report sets out, his changes come with more au- strangely centralised. Even the promotion of entertainment is thoritarianism at home, and recklessness abroad. The world run by a government agency. His focus on “giga-projects”, no- must hope that the bold prince triumphs over the brutish one. tably plans to build NEOM, a futuristic city in the north-west with separate laws, looks mega-risky. Previous attempts to Can’t buy me love carve out copycat versions of Dubai, the business and tourism Saudi Arabia is uniquely disliked by Westerners ofall political hub in the UAE, have been a disappointment. The King Abdul- stripes. They are appalled by its sharia punishments and mis- lah Financial District in Riyadh stands almost empty. treatment ofwomen, and scared by its Wahhabi form of Islam, Instead of planning a dream city, the crown prince should which has fed gruesome jihadist ideologies such as that of Is- aim to make all of Saudi Arabia a bit more like Dubai—open to lamic State. Despite the kingdom’s wealth, businessmen the world, friendly to business, efficiently run, socially liberal, would ratherworkin freewheelingDubai than Riyadh. Fellow religiously tolerant and, above all, governed by a predictable Arabs often deride Saudis as rich, lazy and arrogant. system oflaws. Hisdecision to lockup hundredsoftycoons, of- Yet the world has a vital interest in Saudi Arabia’s fate. It is ficials and princes arbitrarily in a gilded Saudi hotel last year in the biggestoil exporter, and home to Islam’stwo holiestsites. It an “anti-corruption campaign” frightened investors. is central to the Gulf, the Arab region and the Islamic world. He should also study the UAE’s federalism. The loose union Successful reforms would help spread stability to a region in of seven emirates in 1971may be unique, but a country as large chaos, and dynamism to its economies. A more normal Saudi and diverse as Saudi Arabia has much to gain from devolving Arabia should moderate the Islamic world, by example and power. It would let different parts of the country express their because the flowofpetrodollarsto zealotswould slow. Failure, identities more freely and adapt religious rules to their tradi- by contrast, could spread turmoil to the Gulf, which broadly tions—more relaxed in Jeddah, more strict inland in Riyadh avoided the upheaval ofthe Arab spring of2011. and allowing more space for Shias in the east. It would also It is thus worrying that Saudi Arabia faces such daunting permit experimentation with economic reforms. Above all, it problems. Volatile oil revenues make up more than 80% of could lead to forms oflocal representation. government income, the IMF reckons. Even with rising crude prices, the country is grappling with a large budget deficit. For Crowning success all the gains in health and education, GDP per person has been In carrying out his transformation, Prince Muhammad is flat for decades. Saudis work mostly in cushy government weakening the old pillars ofAl Saud rule—the princes, the cler- jobs. Oil wealth has hidden a woefully unproductive econ- ics and the businessmen. Democracy can help him build a omy, and fuelled Islamic ultra-puritanism around the world. new base oflegitimacy. The crown prince could turn his popu- To his credit, Prince Muhammad recognises that change is larity among the young and women into a political force. That needed. However, he is unnecessarily adding to his task. would help him in what is likely to be a long reign once he be- Abroad, he hasproved rash. Hiswaragainstthe Houthis, a Shia comes king. Right now, he is on the road to becoming another militia in Yemen—now centred on the battle forthe port ofHo- Arab strongman. As the Arab spring showed, autocracy is brit- deida—has brought disease and hunger to Yemenis, a missile tle. Better to become a new sort of Arab monarch: one who war over Saudi cities and embarrassment to Western allies treats his people as citizens, not subjects. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

12 Leaders The Economist June 23rd 2018

Turkey Time to go

Recep Tayyip Erdogan deserves to lose the election on June 24th HAT does a president portionate. Some 110,000 people have lost their jobs in the Whave to do to destroy the army, schools and the bureaucracy; more than 50,000 people trust of Turks? Debauching the were arrested, of whom 35,000 have been convicted. Taking currency, poisoning relations advantage of a climate of fear and a state of emergency,Mr Er- with Europe and America, lock- dogan pushed through a constitutional reform that turns Tur- ing up tens of thousands of in- key from a parliamentary to a presidential system, greatly re- nocent people, muzzling the ducing the power of the legislature to check a now-mighty press, reigniting a civil war and president, ie, himself.These changes were approved by a close fiddling with the constitution to gain the powers of a sultan referendum in 2017, amid credible allegations ofcheating. surely ought to be enough. Recep Tayyip Erdogan has done all that and more in recent years. When voters cast their ballots in A vote for pluralism presidential and parliamentary elections on June 24th, they For all these reasons, Mr Erdogan should go. Who should re- should show him the door ofhis vast new palace in Ankara. place him is less obvious. Of the alternatives, Selahattin De- There was much to admire in Mr Erdogan when his Justice mirtas, the leader of the HDP, the main Kurdish party, is im- and Development (AK) party first took power in 2002. He pressive but has no chance ofwinning—notjust because he is a showed that an Islamist party could govern with moderation; Kurd in a country that mistrusts them, but also because he is women in Turkeyare free to wearwhattheylike. The economy campaigning from behind bars, having been jailed on has boomed. GDP has more than doubled, and the results, in trumped-up terrorism charges. On balance, Muharrem Ince, a terms of roads, bridges and, above all, plentiful and cheap formerteacher who now represents Kemal Ataturk’s old party, housing, are plain for all to see. The army was tamed, Kurdish- the CHP, is the best option. Despite the CHP’s statist instincts, language rights were recognised and accession talks to join the MrInce isa strong-minded and decentcandidate. He has made European Union began in 2005. a point of visiting Mr Demirtas in prison; as the child of obser- But power rots leaders. As he becomes more autocratic, Mr vant Muslims, he could win over some AK voters. Erdogan is reversing his own achievements (see Europe sec- Polls suggest that Mr Ince will find it hard to win even if he tion). Artificially low interest rates have caused a slump in the can force Mr Erdogan into a run-offon July 8th. That makes the lira (down 55% in the past four years), pushed inflation up to parliamentary ballot especially important. There is a good double digits and led firms to overload themselves with debt. chance that AK (and a smaller ally) will lose its majority. For After a period of breakneck growth, a hard landing seems im- thatto happen, though, the HDP will have to cleara10% thresh- minent. The war against Kurdish militants has resumed, both old oritwill getno seatsatall. Votersshould opt foritwherever in the south-east of the country and across the border in Syria. they can. Even if Mr Erdogan wins re-election, an opposition- As relations with NATO and the EU deteriorate, Mr Erdogan controlled chamber will be able to speak out against his has struckup an alliance ofconvenience with Russia. abuses, blockhis decrees and perhaps reverse his constitution- The vicious attempted coup of July 2016 deserved to fail. al changes. Any checks and balances are better than none. To But Mr Erdogan’s revenge has been indiscriminate and dispro- stop the sultan, Turkey needs an effective opposition. 7

The world economy Don’t crash it

A trade waris the worst ofmanythreats to global growth OOK at the headlines, and slightlysince 2017,butstill seemsto be beatingthe languid pace World GDP Lyou would struggle to be- set in the five years before that. America may even be speeding % increase on a year earlier lieve that the global economy is up, thanksto MrTrump’staxcutsand spendingbinge. Ahigher 4.0 in good health. President Don- oil price, which in past economic cycles might have been a 3.5 3.0 ald Trump continues to fire off drag, is today spurring investment in the production of Ameri- 2.5 volleys in his inchoate trade can shale. Some forecasts have growth exceeding4% in the sec- war, throwing financial markets ond quarter of2018. 2012 13 14 15 16 17 into turmoil and drawing retali- This sugar rush, however, brings dangers. The first is that it ation. The Federal Reserve is raising interest rates—an activity provides temporary political cover for Mr Trump’s reckless- thatusuallyendsin a recession in America. Tightercredit and a ness. The second is that, if America accelerates and the rest of rising dollar are squeezing emerging markets, some of which, the world slows, widening differentials in interest rates would such as Argentina, are under severe stress. push up the dollar still more. That would worsen problems in Yet the world economy is thriving. Growth has slowed emerging markets and furtherprovoke Mr Trumpby making it1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist June 23rd 2018 Leaders 13

2 harder forhim to achieve his goal ofbalanced trade. The problem is not that America depends on trade. In fact, it The trade war is the biggest threat to global growth (see Fi- is a big enough free-trade area forthe eventual damage to GDP, nance section). On June 15th the White House confirmed that a even from a fully fledged trade war, to be limited to a few per- 25% tariff on up to $50bn of Chinese imports would soon go centage points (smaller, specialised economies are more de- into effect. Three days later, after China promised to retaliate, pendent on trade and would suffer a lot more). Such self-in- the president expanded, by as much as $400bn, the other flicted harm would impose a pointless cost on the average goods America is threatening to tax. If he follows through, American household of perhaps thousands of dollars. That nine-tenths of roughly $500bn-worth of goods imported from would be bad, but it would hardly be fatal. China each year will face American levies. Meanwhile, the The bigger issue is the vast disruption that would occur in European Union is poised to impose retaliatory tariffs in re- the transition to more autarky. America’s economy is config- sponse to America’s action against EU steel and aluminium. ured for designing iPhones, not assembling their components; No wonder markets have caught the jitters. the innards of its cars and planes cross national borders many times before the final product is ready. Faced with tariffs, firms I’ll see you and erase you have to redirect labour and capital to replace imports. The president is unafraid of escalating trade disputes because Some analysts attribute Mr Trump’s presidency to the eco- he believes he has a winning hand. America buys from China nomic shock from trade with China after 2000. The turmoil almost four times as much as it sells there, limiting China’s caused by reversing globalisation would be just as bad. One ability to match tariffs. The White House hopes this imbalance estimate puts American job losses from a trade warat 550,000. will lead China to yield to its demands, some ofwhich (cutting The hit to China would also be severe. Any adjustment would the theft of American firms’ intellectual property) are more be prolonged by Mr Trump’s unpredictability. Without know- reasonable than others (shrinking the bilateral trade deficit). ing whether tariffs might rise or fall, what company would But Mr Trump overestimates his bargainingpower. If China thinkit wise to invest in a new supply chain? runs out ofAmerican goods to tax, it could raise existing tariffs It is difficult to imagine such a realignment without a global higher. Or it could harass American firms operating in China. recession. Tariffs temporarily push up inflation, making it More important, the president’s mercantilism blinds him to harder forcentral banks to cushion the blow. The flight to safe- the damage he could inflict on America. He thinks it is better ty accompanying any global downturn would keep the dollar not to trade at all than to run a trade deficit. This folly also dic- strong, even as America’s fiscal stimulus peters out after 2019. tateshistacticstowardsCanada, Mexico and the EU. MrTrump So be wary. The trade war may yet be contained, to the ben- could yet withdraw from the North American Free-Trade efit of the world economy. But America is the engine of global Agreement and slap tariffson cars. growth. In Mr Trump, a dangerous driver is at the wheel. 7

Immigration Separation anxiety

When immigration policies clash with values, the values usuallywin N TEXAS an infant is separated Take the White House’s approach, which resulted in 2,342 Ifrom his mother by the federal children being separated from their familieslast month. To use government to deter others children’s suffering as a deterrent was wrong. It is the sort of from coming. In the Mediterra- thing that will one day be taught in history classes alongside nean a boat with some 630 mi- the internment of Japanese-Americans during the second grants on board is prevented world war. To argue that the administration had to act in this from docking at an Italian port, way to uphold the law is false. Neither George W. Bush nor Ba- and Italy’s deputy prime minis- rack Obama, who deported many more people annually than ter seeks to boost his popularity by threatening to expel Roma MrTrump, resorted to separations. To claim it was necessary to people. In Berlin a coalition government may fall over how to control immigration is dubious. In 2000 the government handle immigration (see Europe section). These things might stopped 1.6m people crossing the southern border; in 2016, lookseparate; in fact they are connected. when Mr Trump was elected, the numbers had fallen by 75%. The failure to gain political consent for immigration has Deterrence no doubt played its part, but prosperity and a low- been implicated in the biggest upheavals in the West: Brexit, er birth rate in Mexico almost certainly mattered more. No Donald Trump’s victory, the grip Viktor Orban has over Hun- wonder, aftera publicoutcry, MrTrump abandoned the policy. gary, the rise of the Northern League in Italy. All these events Otherexamples ofdeterrence have fared no better. Britain’s have pushed politics in a direction that is worrying for those government concluded from the Brexit referendum that it who prefer their markets free and their societies open. This should redouble efforts to create a “hostile environment” for creates a painful trade-off. Resist the demands for more brutal immigrants. It ended up sendingnotices to people who had ar- immigration enforcement, and electoratesmaykeep voting for rived in Britain from the Caribbean in the 1950s, orderingthem candidates who thrive on blaming foreigners for everything. to produce documents to prove they were British. The harass- Accept the solutions proposed by the likes of Mr Trump (see ment, detention and deportationsthatfollowed resulted in the United States section) or Mr Orban, and Western societies will resignation of the home secretary. Likewise, in 2015 European offend against their fundamental values. governments argued that rescuing boats carrying migrants 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

14 Leaders The Economist June 23rd 2018

2 from north Africa merely encouraged more to risk that jour- wants to send tens of thousands of migrants to Italy. ney. Then as many as 1,200 people drowned in ten days, and The Platonic ideal of an immigration policy is one that has Europeans were horrified at the cruelty being meted out in the consent of the host country. It treats migrants humanely their name. European leaders concluded that voters were not but also firmly,swiftly returning those who arrived illegally or pro-drowning after all. whose claims to asylum have failed. This is easy to prescribe but hard to enact. Courts are overstretched, many cases are Shockand awfulness hard to adjudicate and poor countries may not want their citi- The left often concludes from this that people calling for en- zens back. And so rich countries tend to pay poorer ones to set forcement are cruel and racist. But that is wrong, too. In princi- up vast holding-pens forhumans, as Italy does with Libya and ple countries must be able to secure their borders and uphold the EU does with Turkey. This involves something which the law. In practice a policy of neglect invites a backlash that would not be tolerated at home, but is somehow acceptable helps people like Matteo Salvini, leader of the Northern because it is out of sight. League (slogan: “Italians First”), or Horst Seehofer, Germany’s Europeans were right to condemn the separation of chil- interior minister, who has threatened to bring down Angela dren. But they face a wave of migrants from their populous, Merkel. The outrage feeds on itself. Mr Salvini wants to deport poor, war-torn neighbours. When they draw up their own hundreds of thousands of migrants from Italy; Mr Seehofer policies, they should remember their discomfortthis week. 7

Urban transport Off the rails

Public transport is ailing in the rich world. It should co-opt the competition O THOSE who have to well. It provides a service for people who are too old, too Tsqueeze onto the number 25 young, too poor, too fearful ortoo drunkto drive or ride a bike. bus in London, or the A train in Trains and subways cause less pollution than cars and move New York, the change might not people at far higher densities. The danger is that public tran- be noticeable. But public trans- sport could become a rump service, ever less popular and ever port is becoming less busy in lessgood, partlybecause ofitsunpopularity. Fewerpassengers those cities, and in others be- mean fewer trains and buses, which leads to longer waits for sides. Passenger numbers are those who persist with them. Cars, whether driven or driver- flat or falling in almost every American metropolis, and in less, will clog the roads. some Canadian and European ones, too. That is despite To some extent, that dystopian future can be seen off by healthy growth in urban populations and employment. Nose- pricing road use properly. Many cities, particularly in America, to-armpit travellers may be even more surprised to hear that generously subsidise driving by forcing developers to provide the emptying ofpublic transport is a problem. lots of parking spaces. Elsewhere, cities have created conges- Although transport agencies blame their unpopularity on tion-charging zones. But that is a hopelessly crude tool. Most things like roadworks and broken signals, it seems more likely congestion zones in effect sell daily tickets to drive around as that they are being outcompeted (see International section). much as you like within the zone—and charge nothing to vehi- App-based taxi services like Uber and Lyft are more comfort- cles such as taxis and minicabs. It would be much better to able and convenient than trains or buses. Cycling is nicer than charge foreach use ofa road, with higher prices for busy ones. it was, and rental bikes are more widely available. Cars are Transport agencies should also embrace the upstarts, and cheap to buy, thanks to cut-rate loans, and ever cheaper to run. copythem. Citiestend eitherto ignore app-based services orto Online shopping, home working and office-sharing mean try to push them off the streets. That is understandable, given more people can avoid travelling altogether. the rules-are-for-losersattitude offirmslike Uber. Butitisan er- The competition is only likely to grow. More than one lab- ror. Although new forms of transport often compete with old oratory is churning out new transport technologies and appli- ones in city centres, they ought to complement each other in cations (see Business section). Silicon Valley invented Uber suburbs. Taxi services and e-bikes could get people to and and, more recently, apps that let people rent electric scooters from railway stations and bus stops, which are often inconve- and then abandon them on the pavement. China created dock- niently farapart outside the urban core. less bicycles and battery-powered “e-bikes”, both ofwhich are spreading. Some inventionswill fail, orwill be regulated outof She’s got a ticket to ride, but she don’t care existence (at one point, Segways were the future). But new Itisdoubtful thatmostpeople make hard distinctions between ideas, includingdriverless taxis, are comingaround the corner. public and private transport. They just want to get somewhere, Mass transport is much less nimble. As New York’s Second Av- and there isa costin time, moneyand comfort. An ideal system enue subway, London’s Crossrail and Amsterdam’s North- would let them move across a city for a single payment, trans- South metro line have shown, building new train lines is now ferring from trains to taxis to bicycles as needed. Building a incredibly complicated and expensive. platform to allow that is hard, and requires much sweet-talk- This is a headache for the operators of public-transport sys- ing of legacy networks as well as technology firms—though a tems. It is also a problem for cities. Like it or not—and many few cities, like Helsinki and Birmingham, in England, are try- people do not—mass public transport does some things very ing. It is probably the secret to keeping cities moving. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist June 23rd 2018 Leaders 15

Andrés Manuel López Obrador Mexico’s answer to Donald Trump

There are manyreasons to worryabout Mexico’s most likelynext president HESE days Mexicans agree Peña Nieto, opened energy and telecoms to competition and is Ton two things. Their football trying to impose higher standards on a failing school system. team’svictoryoverGermanyon Alas, progress has been slower than politicians promised and June 17th was magnificent. And is uneven. Mexico’s south, where a quarter of the population the elections on July 1st will be lives, has ox-drawn ploughs rather than assembly lines. By the most important in decades. Mexico’s own measure, nearly 44% ofits citizens are poor. The front-runner for the presi- The main source of Mexicans’ discontent is not inequality dency, Andrés Manuel López but crime and corruption, which have run riot under Mr Peña. Obrador, leads a coalition called “Juntos haremos historia” The murder rate has broken a record set in 2011. The ruling (“Together we will make history”). His opponents fear that he party has seen countless scandals. It emerged that Mr Peña’s will achieve just that, in a bad way. wife’s$7m home had belonged to a government contractor. In Mr López Obrador, who has run for the presidency twice an ordinary election, Mexicans would ditch Mr Peña’s Institu- before, has a folksy air of incorruptibility that enchants many tional Revolutionary Party and turn back to the conservative Mexicans. He promises a “radical revolution”. Some hear that National Action Party. But after its last crime-ridden years in as a threat. Mr López Obrador has at times opposed the mea- power, from 2006 to 2012, they are fed up with that, too. They sures earlier governments have taken to modernise the econ- want change, which Mr López Obrador certainly offers. omy. His critics liken him to Hugo Chávez, whose “Bolivarian revolution” has brought ruin to Venezuela. The nationalist The firebrand from Tabasco populism he offers is unlike anything Mexico has seen since Whatsortofchange remainsto be seen. The biography thatbe- the early1980s. And ifthe polls are right, he will win. guiles his supporters is replete with danger signals. Time and With that, Latin America’s second-biggest country will join again he has shown contempt forthe law. He has urged people a clutch of democracies where electorates have rebelled not to pay their electricity bills. After he lost in 2006 his sup- against the established order. What is about to happen in Mex- porters proclaimed him the “legitimate president” and ico feels akin to the election ofDonald Trump in America, Brit- blocked Mexico City’s main street for weeks. He has said that ain’svote to leave the European Union and Italy’sturn towards the courts should be an instrument of“popular sentiment”. populism. It may be repeated in Brazil, where the front-runner His supporters say he has matured, and that his record as to win the presidency in October is Jair Bolsonaro, who speaks Mexico City’s well-liked mayor from 2000 to 2005 shows that viciously about gay people but warmly ofmilitary rule. he was always pragmatic. He has made his peace with NAFTA The causes of popular anger vary. In Latin America, as else- and no longer talks of reversing the energy reform. He prom- where, voters are furious at elites they regard as corrupt, inef- isesto run a disciplined budget, to respectthe independence of fectual and condescending. Just as American populists decry the central bankand not to raise taxes. Some ofhis ideas, like a the “swamp” in Washington and Brazilians are aghast at the nationwide apprenticeship programme, make sense. filth of their political class, Mr López Obrador fulminates But he seems to have little idea how a modern economy or against the “mafia ofpower” that he claims controls Mexico. democracy works. He disparages independent institutions, such as the supreme court. He talks of making Mexico self-suf- A leap into the unknown ficient in food and ofbuildingoil refineries, which are unlikely The charismatic leaders who ride these resentments to power to make business sense. His ideas are simplistic. He wants to are almost always false prophets, promising security and pros- halve the salaries of senior officials, including the president, perity even as they erode their foundations. The danger they and to subject himself to a recall referendum every two years. pose to new democracies is greaterthan in more deeply rooted Though personally clean, he has formed alliances with politi- ones. Mr Trump is constrained by Congress, an independent cians who are anything but. He denounces Mr Peña’s educa- judiciary, a free press and a bureaucracy with a long tradition tion reform, which offers poor children a chance of a brighter of following the law. Mr López Obrador, by contrast, will gov- future. Yes, Mr López Obrador has reinvented himself, but as a ern a country that has been democratic only since 2000, and bundle ofcontradictions. where corruption is widespread and growing worse. The next That makes his presidency a risky experiment. The finan- president’s main job should be to reinforce the institutions cial markets might tame a López Obrador government. But a that underpin a modern economy, democracy and above all congressional majority for his party might equally encourage the rule of law. The risk with Mr López Obrador, who will be radicalism. It might go well if, say, he curbs corruption or the first non-technocratically minded president in 36 years, is stands up to America over trade. More likely, progress will re- that he will do precisely the opposite (see Briefing). main elusive. Mexico cannot stop graft without the institu- Mexican technocracy has had its successes. Orthodox eco- tions Mr López Obrador scorns. And with protectionists at the nomic policies have ensured relatively steady ifunspectacular helm in its two biggest member-states, NAFTA could well col- growth since the 1990s. Thanks to the North American Free- lapse. That would further poison relations with the United Trade Agreement (NAFTA) with the United States and Canada, States, possibly imperilling co-operation over drugs and immi- which took effect in 1994, Mexico is the world’s fourth-biggest gration. We worry about Mr López Obrador’s presidency, but exporter of motor vehicles. The outgoing president, Enrique wish him luck. Ifhe fails, worse may follow. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 16 Letters The Economist June 23rd 2018

A game oftwo ideologies Summit view County,where voters were fly”. Lawless indeed. The spoiled forchoice, an under- speed limit outside towns was “How to win the World Cup” Say what you want about funded candidate beat his then a mere 30kph. (June 9th) presented the Donald Trump—and you go on wealthy rivals, and both a PHILIP HOLBERTON heartening conclusion that at length about his penchant Republican and a Democrat Kempsey, Australia “dictatorships are rubbish at forupending the post-1945 advanced to November’s football”. It would be neat if rules-based international general election in a district Radical chic the beautiful game could only order and its long-term conse- evenly split between the two thrive in democracies. But this quences (“Demolition man”, parties. These are the exact conclusion, which is based on June 9th)—but he has succeed- kind ofoutcomes that Califor- data forthe period between ed in getting Kim Jong Un to nia’s voters wanted when they 1990 and 2018, is mistaken. the negotiating table and approved the top-two system. Italy won two World Cups committing to denuclearise Ifyou consider competition during Benito Mussolini’s the Korean peninsula. Perhaps and choice dysfunctional, I dictatorship in the 1930s (beat- what Mr Kim needed to hear to hate to imagine the words you ing an authoritarian Hungary bring him to his senses was not reserve forclosed primaries in 1938). Latin American coun- another carrot offered in the that limit voter choice, empow- tries, such as Argentina, Brazil form ofyet another interna- er special interests, and create and Uruguay, have had excel- tional gabfest, such as the even greater polarisation in lent international sides both in wholly ineffective six-party Congress. democratic periods and when talks on Iran, but an American CONYERS DAVIS under military dictatorship. president who had the gump- Acting director I enjoyed your obituary ofthe Countries in communist tion to call him “rocket man” Schwarzenegger Institute sartorial Tom Wolfe, in which east Europe, including Hunga- and growl that “mine’s bigger University of Southern California he fixed “Aproper Windsor ry, whose “Golden Team” lost than yours”. Los Angeles knot!” on his tie (May 26th). just one match between 1950 SANJIV MEHTA But in the picture accompa- and 1956 (the World Cup final Montreal You got a fast ca r nying the article, Mr Wolfe in 1954), Czechoslovakia used a four-in-hand knot on (World Cup finalist in 1962), The cost of rescuing a bank I agree that the costs and his tie, which tends to be Yugoslavia and the Soviet benefits ofspeed on public longer and narrower than the Union (four-time finalist in the The British government paid roads have to be balanced, but Windsor. Ofthe two, the four- European Championship), £5.02 per share forRoyal Bank I was surprised that your in-hand knot is actually the were an equal match for any ofScotland in 2008 and recent- leader supporting the reduc- more traditional, having a long national team in democratic ly sold 925m shares at £2.71, tion ofspeed limits in France history associated with Western Europe. Spain under representing a loss to taxpay- did not mention Germany driving horse-carriages. The Francisco Franco won the ers of£2.1bn, or $2.8bn (“Cut (“Live fast, die fast”, June 2nd). Windsor is the relatively new European Championship in your losses”, June 9th). You Sections ofthe German Auto- invention, attributed to the 1964 and produced the most reported the National Audit bahn have unrestricted speed Duke ofWindsor, who desired dominant club team ofany Office’s estimate that the cost limits. Its roads are as safe as its a wider knot with a more period, the formidable Real ofbailing out RBS was actually European neighbours and symmetrical appearance. Madrid side that won five more like £6.25 per share. This significantly saferthan Ameri- JOHN GRAVES consecutive European Cups in takes the loss to taxpayers to ca’s. This shows that govern- Houston the 1950s. £3.3bn. But the real loss is far ments do not have to control A study ofthe relationship greater, namely the opportuni- “humanity’s love ofspeed” by Reliving the future between democracy and ty forgone. Had the £6.25 cost imposing limits, but by in- football performance based on per share been put instead into vesting in smart technology to I do not forone moment data after1990, when commu- the FTSE all-index tracker, it control traffic flows and main- begrudge James Carville his nism had broken down in east would have almost doubled in tain roads. Enforcing the rules fun in his wish to be reincar- Europe and military dictator- value since, to £12 per share. So, on safe driving and strict tests nated as the bond market, ships had fallen in Latin Amer- the real cost to the taxpayer of also help. Taking away a free- because he could then ica, suffers from selection bias. the recent sale ofRBS shares dom should never be a model “intimidate everybody” The countries that do well amounts to more than £8.6bn. ifeffective alternatives exist. (“Matteo Salvini’s quest for today are by and large the JONATHAN MICHIE MARTIN IHRIG power”, June 2nd). Personally I same countries that did well in President Associate dean would like to come backas the the interwar period and in the Kellogg College Division of business law ofunintended conse- decades after the second world University of Oxford New York University quences, which I suspect war, namely countries in would be a laugh a minute. PETER WILKINSON Europe and southern Latin The top two Frenchmen who complain America. They have domin- about reducing the speed limit Wheathampstead, Hertfordshire 7 ated football irrespective of “Almost blue it” (June 9th) should be glad they did not their political stripe. Dictator- described California’s primary live in their grandfathers’ time. ships are, alas, not necessarily system, where the two candi- In 1923 Rudyard Kipling tooka Letters are welcome and should be rubbish at football. But the dates in a primary who get the tour ofFrance in a chauffeur- addressed to the Editor at The Economist, The Adelphi Building, countries that are still most votes go on to the general driven Rolls-Royce, passing the 1-11John Adam Street, dictatorships today are. election regardless ofparty, as time by writing “ASong of London WC2N 6HT PROFESSOR JORGEN MOLLER “dysfunctional”. The article French Roads”. One line E-mail: [email protected] Aarhus University then proceeded to describe the celebrates how “Ninety to the More letters are available at: Economist.com/letters Aarhus, Denmark primary elections in Orange lawless hour the kilometres РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Executive Focus 17

The Economist June 23rd 2018 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 18 Executive Focus

Chief Investment Offi cer Competitive package. Nairobi Government of India Department of Personnel and Training FSD Africa was established by the UK Government to transform fi nancial markets in sub-Saharan Africa, reduce poverty and drive inclusive economic growth. LATERAL RECRUITMENT TO SENIOR POSITIONS FSD Africa has been developing strategies for using concessional capital IN GOVERNMENT OF INDIA as an instrument for accelerating fi nancial market transformation, alongside traditional grants and technical assistance. It now seeks a dynamic, experienced and ambitious Chief Investment Offi cer to assume The Government of India invites talented and motivated Indian nationals leadership of its Development Capital activities and signifi cantly grow willing to contribute towards nation building to join the Government at this part of the FSD Africa programme. the level of Joint Secretary, which is a crucial level of Senior management in Government of India. The successful candidate will take responsibility for the existing pipeline and portfolio, refi ne the investment strategy, originate new investments, build a team and introduce the management systems Government is looking for ten (10) outstanding individuals with expertise needed to accommodate a major capital increase. in the areas of (i) Revenue, (ii) Financial Services, (iii) Economic Affairs, (iv) Agriculture, Cooperation & Farmers’ Welfare, (v) Road Transport & This is a unique opening for a strategic thinker with strong fi nancial Highways, (vi) Shipping, (vii) Environment, Forests and Climate Change, skills, who believes fi nance can play a transformational role in reducing poverty, and who wants to make a personal contribution to the (viii) New & Renewable Energy, (ix) Civil Aviation and (x) Commerce. development of more innovative, competitive and inclusive fi nancial markets in Africa. The details of eligibility criteria and conditions of service may be seen on http://Lateral.nic.in under the link “Detailed Advertisement”. This is a Nairobi-based role. For further details, including role specifi cations and information on how to apply, please see:

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The Economist June 23rd 2018 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Property 19

The Economist June 23rd 2018 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 20 Briefing Mexico The Economist June 23rd 2018

who first called him a “tropical messiah”. Tropical messiah On the campaign trail he says that a “fourth transformation” of Mexico is com- ing, after independence in 1821, a civil war and liberal reforms in the 1850s and 1860s, and a revolution that began in 1910. The Mexico City and Villahermosa, Tabasco change will be “as profound” as the revolu- Voters are so fed up with theirruling class that they are taking a chance on a tion, but “without violence”, he promises. populist, Andrés Manuel López Obrador He vows to overthrow the “mafia of pow- VEN a short walkin Tabasco can feelun- cans have long liked about Mr López Obra- er”, that he believes holds backMexico. Ebearable. When Graham Greene visit- dor, and what others fear. His concern for When he says he will “uproot the cor- ed Mexico 80 years ago, he lamented the the poor and wish to improve their lot is rupt regime”, he is talking about everyone tropical southern state’s “blinding heat sincere. However, Mr López Obrador has a in the political class except himself and his and the mosquito-noisy air” that left “no shaky grasp of economics—urging some circle. His opponents say he wants to un- escape for anyone at all”. Now Tabascans people not to pay their bills tends to drive ravel the market-friendly policies that the can at least endure the humidity with fans up prices for everyone else, for example. PRI and PAN have cleaved to since the and air-conditioning. But half of the state’s And he has little respect forrules or institu- 1980s. Some fear that in a country where residents are poor and electricity prices are tions. Thismattersbecause MrLópezObra- democracy is barely old enough to order a among the highest in the country. Twenty- dor is set to become Mexico’s president in tequila, a charismatic populist might seri- three years ago a local politician decided to an election on July1st. He has a poll lead of ously undermine it. do something radical. Andrés Manuel Ló- 25 points over his nearest challenger, Ricar- pez Obrador (known as AMLO), fresh from do Anaya of the conservative National Ac- Third time lucky an unsuccessful run for governor, organ- tion Party (PAN). José Antonio Meade, a Mexicans are fed up. During 30 years of ised a campaign of “civil resistance”, in- non-party candidate picked by the ruling growing democracy and economic liberal- structing Tabascans not to pay their elec- Institutional Revolutionary Party (PRI), is isation, they were told that Mexico would tricity bills. further adrift. There is also a chance that a become a rich country. Income per head The campaign has lasted for over two coalition led by Morena, founded four has risen by 40% over the same period. But decades. Some 570,000 Tabascan house- years ago, will win control ofcongress. growth has been uneven. The parts of the holds have racked up debts with the Feder- Mexicans are likely to deliver a voto de country near the United States have pros- al Electricity Commission (CFE) averaging castigo (punishment vote) because the pered while peasants in the south still toil 10,500 pesos ($500) each. In 2015 the CFE president, Enrique Peña Nieto of the PRI, is outdoors in the sun. The economy has began another bout of cutting off non-pay- the least popular leader for decades. Peo- been sluggish in recent years, partly thanks ers. Mr López Obrador, by then head of his ple are also angry at the PAN. Though the to a low oil price. Meanwhile, Mexicans newly created party, the Movement for Na- PAN turfed the PRI from power in 2000, are furious about corruption and terrified tional Regeneration (Morena), summoned ending seven decades of one-party rule, it ofgang violence. a brigade of vigilante electricians to recon- failed to govern much betterand the PRI re- Mr López Obrador governed Mexico nect them. He also warned the state’s go- turned under Mr Peña in 2012. City between 2000 and 2005, before un- vernor, Arturo Núñez Jiménez, that his pa- Mr López Obrador promises drastic successful presidential runs with the cen- latial office would suffer power cuts were change. Mexico will have a charismatic tre-left Party of the Democratic Revolution he to try disconnecting people again. president for the first time since the 19th (PRD) in 2006 and 2012. The question as he These events sum up what many Mexi- century, says Enrique Krauze, a historian seeks the presidency for a third time is1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist June 23rd 2018 Briefing Mexico 21

2 whether he will fix some of what is wrong wave of optimism. Mr Peña forged a co- with Mexico, or replace its (admittedly im- Slowing progress alition of Mexico’s main parties to pass perfect) institutions with a more personal Mexico, GDP, % change on a year earlier sweepingreforms and aimed forgrowth of and messianic style ofgovernment. 6% by the end of his term. But the most im- The acronym of Mr López Obrador’s 10 portant changes—to energy and educa- party is an allusion to La Virgen Morena of 8 tion—will take years to be felt. The collapse Guadalupe, Mexico’s patron saint. It is also 6 of oil prices in 2014 hurt the economy. Un- a term used to describe darker-skinned 4 der Mr Peña the economy has grown by 2 Mexicans, who often live in the poor + only 2.5% a year (see chart). 0 south. The gap between Mexico’s richest – Mr Peña is unpopular mainly because and poorest regions is twice as wide as the 2 his government has been passive and un- next-biggest one in the OECD, in Chile. 4 accountable on the two issues that matter That is partly because the North American 6 most to Mexicans, corruption and security. Free-Trade Agreement largely benefited 8 Mr Peña vowed to halve a murder rate that northern Mexico, where American firms 1980 85 90 95 2000 05 10 17 had rocketed after his predecessor, Mr Cal- built factories and created millions of jobs. Source: IMF derón, sent the army to fight drug cartels. Mr Núñez says Tabasco is “forgotten” by But after locking up several drug kingpins, central government, a feeling many south- capital offast-growing Nuevo León. his administration did not respond when erners share. That may be true. Mr López Obrador their would-be heirs began to fight each Mr López Obrador, who would become has courted voters who wearily recall his other and diversify beyond drug smug- the first president born south of Mexico antics in 2006, when his protesting sup- gling. Mexico is on course for 32,000 mur- City in half a century, wants to redress the porters shut down Mexico City for months ders this year, a record high and double the imbalance. He has plans for new infra- after he lost the presidential election nar- toll in 2014. structure in the south, vowing to pave ev- rowly to Felipe Calderón. He is making The best-known violent crime during ery road in Oaxaca, a mountainous state fewer mistakes on the campaign trail this Mr Peña’s tenure was the disappearance in with a poverty rate of 70%. He also prom- time. Advisers have, for example, persuad- 2014 of 43 student teachers, who were ises a railway from Quintana Roo to Chia- ed him to drop contentious plans for a ref- pulled off buses and almost certainly mur- pas, and a road and rail corridor across the erendum to repeal energy reforms, which dered. An early investigation was botched. Isthmus of Tehuantepec, in Oaxaca and in 2014 allowed foreign oil firms into Mexi- Later ones showed that local officials and Veracruz, paid for with loans from China. co forthe first time since 1938. drug gangs were shockingly entwined. Mr He would also build two oil refineries, in His campaign produces lighthearted López Obrador’s rivals talkabout a “smart- Campeche and Tabasco. Afanciful scheme videos, most recently a series featuring er” approach to crime. He offers a vague for “food self-sufficiency” would include middle-class Mexicans confessing to “amnesty” to low-level drugdealers. Many price guarantees for crops produced by friends and family that they are “AMLOv- Mexicans, hungry for peace, think he can- southern farmers. ers”. Crucially, he is more relaxed. When not do worse than today’s government. Winning votes in the south was never rumours spread that Russia was meddling hard for Mr López Obrador. What is differ- in the election to favourhim, he responded Another hard job ent this time is that northerners, who used with a video on social media. Standing by Then there is corruption. Under Mr Peña, it to worry that he would wreck the econ- a harbour, he introduced himself with a hasgrown more blatant, oratleastbeen ex- omy, are warming to him. Incredibly, he is smile as “Andrés Manuelovich” and said posed more effectively. Two ministries run now more popular among the richest third he was waiting for a submarine to arrive by Rosario Robles, now secretary of agrari- of voters than among the poorest. “He has with a delivery ofRussian gold. an development, saw 1.3bn pesos vanish matured,” insists Rafael De Dávila, a previ- His argument that the political system from their coffers. Several governors from ously PAN-voting electrical engineer in Es- is broken has been assisted by the torrid the PRI face charges of treating state funds cobedo, a suburb of Monterrey, the state tenure of Mr Peña, who entered office on a as personal piggy banks. The government is accused of shelving a bribery investiga- tion into Emilio Lozoya, a member of Mr UNITED STATES 1 AGUASCALIENTES 10.3 Peña’s campaign team who went on to run Pemex, the state oil firm. During Mr Peña’s 2 10.1 11.3 tenure Mexico has fallen 30 places in Tran- GUANAJUATO 3 SONORA 4 BAJA 9.6 7. 2 QUERÉ- HIDALGO sparency International’s corruption index. CALIFORNIA TARO 12.1 CHIHUAHUA 12.3 5.5 It is now135th, tied with Russia. COAHUILA Mexico 4.6 Any public faith that Mr Peña would 6 FEDERAL City MEXICO 19.2 7 curb graft melted away in 2014 when a DISTRICT TLAXCALA BAJA 14.2 5 MÉXICO 8 journalist revealed that his wife’s $7m CALIFORNIA SINALOA Monterrey 5.5 MORELOS 6.0 SUR DURANGO NUEVO house had belonged to a businessman 7.7 LEÓN who had won several contracts under his 11.4 7. 0 6.2 TAMAULIPAS Gulf of presidency. Under previous governments, ZACA- SAN 8.6 TECAS LUIS Mexico crooked bigwigs would typically build, SEE PACIFIC OCEAN 6.0 POTOSÍ say, a road and take a cut, explains Ar- 1 7. 9 ENLARGEMENT 7. 0 NAYARIT YUCATÁN mando Santacruz of Mexico United Change in vote share for 2 3 9.1 4 10.6 Against Crime, an NGO. Now, he says, they Andrés Manuel López Obrador 24.0 JALISCO MICHOACÁN VERACRUZ QUINTANA invoice for the road, funnel the money 2006-18*, % points 5 6 7 9.8 ROO COLIMA 5.3 8 PUEBLA 5.8 CAMPECHE through phantom companies, build noth- TABASCO 5.4 ing and run offwith all the loot. 15 10 –+05 5 10 15 8.5 GUERRERO BELIZE 4.1 OAXACA 3.2 Corruption has grown more visible not 00 GDP per person, 2016, $’000 3.8 CHIAPAS because the state is adept at investigating it Tehuantepec Sources: National Electoral GUATEMALA HON- but because of a nascent civil society and 500 km Institute; Oraculus; INEGI *Projection DURAS social media. In 2015 when David Koren-1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

22 Briefing Mexico The Economist June 23rd 2018

2 feld, boss of the state water authority,took enough patience to get to grips with Presi- needs foot-soldiers to knock on doors and a government helicopter to go on holiday dent Donald Trump, to maintain the rela- get out the vote. Last year it had just with his family, a neighbour snapped tionship,” he said on June10th. 320,000 members, according to the Na- some photos of them and their suitcases. Tosoothe fearsthathe would be fiscally tional Electoral Institute. The PRI had dou- Mr Korenfeld, an old friend of Mr Peña, re- irresponsible, he is rumoured to be adding ble that in the state of Puebla alone. By op- signed after the images went viral. to his team Guillermo Ortiz, a former chief posing education reforms, Mr López Mr Peña’s government has hampered of the central bank, and Santiago Levy of Obrador wins the support of a 100,000- the fight against corruption. Civil-society the Inter-American Development Bank. strong teachers’ union. His overtures to Mr leaders and journalists say they report cor- Their task will be to find the money to pay Urrutia, whose union boasts 120,000 ruption to ministers, but nothing happens. for their boss’s policies. The most expen- members, will bringmore recruits and lure Institutions to catch and prosecute graft re- sive include a universal pension for the el- other union bosses. The trickle of PRI offi- main pliable and neglected. Criticspoint to derly and disabled, scholarships for poor cials defecting to Morena may become a a bribery scandal involving Odebrecht, a students and an overhaul of water infra- flood ifthe PRI is thrashed on election day. Brazilian construction firm, which has led structure. Those promises alone would to people being charged in nearly every cost 1.7% of GDP each year at a time when AMLO aims high Latin American country. The exceptions the budget deficit is 2.9% ofGDP. Some suspect that Mr López Obrador’s are despotic Venezuela—and Mexico. Unlike Mr Trump, who abhors policy plan is not only to dislodge the PRI but to Mr López Obrador promises to “elimi- details, Mr López Obrador obsesses over adopt its model as a big-tent party. He sees nate, not reduce” corruption through an at- them. One adviser recounts his poring echoes of the social division and violence titude of zero tolerance and the shining ex- over the party’s 461-page election manifes- during the revolution, which subsided ample of his own incorruptibility. Yet in to and crossing out policies he deemed un- when the PRI centralised power and invit- 2003 while he was mayor of Mexico City affordable. As mayor of Mexico City he ed everyone to join it. The strongerMorena René Bejarano, a close political associate, worked with the private sector to refurbish grows, he may think, the more governable was caught on video accepting $45,000 in the city centre. He did not run up huge and harmonious Mexico will become. cash from a businessman. As mayor he re- debts and left office with an approval rat- One thing looks certain. In whichever fused to enforce rulings from the supreme ing of 85%. All this points to a pragmatic direction he takes Mexico, resistance will court, including one to clear a bottling fac- streak. Optimists hope that he will offset be weak. For the first time a single party is tory taken over by striking workers. He extra spending with cuts elsewhere. set to control the presidency, capital and was the superior arbiter in this case, he ex- Pessimists note that Hugo Chávez ini- congress all at once. Presidents in the 20th plained, because the court lacked “social tially posed as a moderate, too. Mr López centurywere subservientto the PRI. MrLó- sensitivity”. He seems uninterested in cre- Obrador will surely not plunge Mexico pez Obrador has created a party which an- ating the independent institutions needed into tyranny and destitution the way Chá- swers to him. Every other party faces de- to expose and prosecute graft effectively. vez did Venezuela. But many question his struction at the polls with only a divided “He thinksthere will be a bigbagofcorrup- sincerity. If he really cares about curbing PAN in a position to oppose him. tion money he can find and spend on the corruption, why did he enlist Napoleón Mr Nuñez, who has known Mr López poor,” huffsan aide to a rival candidate. Gómez Urrutia, a mining-union leader ac- Obrador since the 1980s, criticises his doc- cused of embezzling millions of dollars, as trine of “civil resistance”. It has created a Mexican stand-off a senate candidate for his party? If the PRI culture ofnon-payment in Tabasco not just Mr López Obrador openly scorns civil soci- is part of the mafia of power, why is he en- for electricity bills, but also for land taxes ety and the supreme court, neither of couraging its senior officials to join him? and water bills. He recalls telling Mr López which will bend to hiswill aspresident. He And if he truly cares about the poor, why Obrador in 1996 about the importance of pledges referendums to solve policy ques- does he vow to roll back reforms that electoral reforms to formalise democracy. tions, including a recall vote every two would make their schools better by hiring “He told me: ‘They are not important. This years duringhis presidential term. Tosome teachers on the basis ofmerit? country is going to advance with popular that looks like accountability.Toothers it is The most likely answer to these ques- mobilisations, not with legal reforms.’” a troubling break with representative de- tions is a cynical one. His young party The time to test that theory has arrived. 7 mocracy and the principle of single-term presidencies enshrined by the revolution. In stump speeches Mr López Obrador touts a brand of austere populism. There can be “no rich government with a poor populace,” he says. He vows to halve the president’s salary and those of senior bu- reaucrats, refrain from spending public money on clothes, sell the presidential plane and move the official residence to somewhere more humble. He derides a $13bn airport proposed for Mexico City, saying that its construction was unneces- sary and riddled with corruption. Govern- mentministriesin the capital are to be scat- tered around the country. He is also socially conservative, opposing both legal abortion and gay rights. Strangely absent from this populist brew is anti-Americanism, despite the un- popularity of America’s president. Mr Ló- pez Obrador insists he will not recklessly provoke Donald Trump. “We have to have Victory is in AMLO’s palm РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Europe The Economist June 23rd 2018 23

Also in this section 24 Merkel’s moment of peril 25 German military drones 25 Italy’s pugnacious interior minister 26 France’s vanishing Socialist Party 27 Charlemagne: Save our Schengen

For daily analysis and debate on Europe, visit Economist.com/europe

Turkey’s elections increasingly unscrupulous autocrat. Tur- key’s president already had a taste for Can anyone stop Erdogan? hounding opponents long before the abor- tive putsch of 2016. Over the past couple of years, he has indulged it as never before. Out for revenge against the Gulen move- BURSA ment, a sect that colonised parts of the bu- reaucracy and spearheaded the coup, he Opposition leaders have a chance ofending, orat least crimping, the president’s has filled Turkey’s prisons with tens of increasingly autocratic rule thousands of former officials, only a frac- UHAMMAD SHEIKHOUNI came to have poured into the country since the tion of whom were involved in the vio- MTurkey from Syria in 2006, long be- start of the Syrian war. But even Mr Erdo- lence; thousands of Kurdish activists; over fore his native country plunged into civil gan’s critics acknowledge that he has done a hundred journalists; and a dozen mem- war, and fell in love with Recep Tayyip Er- more forthe displaced than practically any bers ofparliament, includingone ofhis op- dogan. Adecade later, aftersettingup a tou- foreign government. Many of them also ponents in the presidential election, Sela- rism and construction company in Bursa, credit him with rescuing Turkey from the hattin Demirtas. His tolerance for dissent the formerseat ofthe Ottoman empire, the bloodiest coup attempt in its history, in within his own party has reached zero. businessman joined the president’s ruling 2016. An entire generation has already Mr Erdogan has also made sure to stack Justice and Development (AK) party. This come of age under Mr Erdogan. Armed the deck before the vote by forcing the me- year, after Mr Erdogan called early elec- with constitutional changes that give him dia to march to his beat. Most Turkish tions forJune 24th, MrSheikhouni decided full control ofthe executive and up to three newspapersnowread like AK election leaf- to run for a seat. In the meantime, he also more terms as president, Mr Erdogan could lets. The state media have, in effect, placed changed his last name—to Erdogan. rule the country well into the 2030s. two of the three main presidential con- Inside his election tent, pitched on one There is just one problem. Close to half tenders under embargo. According to a re- side of a large square in Bursa, Muham- of the electorate views Mr Erdogan as an cent report, the main state broadcaster de- mad Erdogan can hardly peel his eyes from voted a total of 13 minutes of coverage to the president’s image, printed on one of Meral Aksener and her newly hatched Iyi the walls, as he delivers his talking points. Closing in (Good) party in the last two weeks of May, “There’s no one else like our reis,” he says, Turkey, parliamentary election polling compared with 68 hours for Mr Erdogan using the Turkish word for chief. “He Selected parties, % and his allies. The imprisoned Mr Demir- opened his doors to the people of Syria, he 60 tas and his Peoples’ Democratic Party HDP helped the Somalisand he stood up for Pal- AKP ( ) did not get even a single minute of estine. He’s not only the leader of Turkey, 50 airtime. Turkey’s president used to campaign as but ofthe whole Muslim world.” 40 After 15 years in power—more than Ke- a leaderwho brought jobs, growth and ser- mal Ataturk, the founder of modern Tur- 30 vices. Since 2013, after a wave of anti-gov- key—Mr Erdogan has left an indelible mark CHP ernment protests, a corruption scandal 20 on his country. To many of his supporters, IYI and a messy split with the Gulen move- HDP ment, Mr Erdogan has reinvented himself he has turned into a father figure, the sym- 10 bol of a return to Ottoman glory, the archi- as the commander of a country at war. In MHP SP tect of Turkey’s boom years, and a beacon 0 the universe he and many of his suppor- of hope for oppressed Muslims across the Jan Feb Mar Apr May Jun ters inhabit, Turkey is underattackby West- globe. Turks routinely complain about the 2018 ern powers jealous of its bridges and high- problems posed by the 4m refugees who Source: National polls ways, by currency speculators and by their 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

24 Europe The Economist June 23rd 2018

2 home-grown helpers (meaning the oppo- 2015 to 13,000 now and (despite recent sition). “Are we going to teach these terro- tweets to the contrary by Donald Trump) rist consorts another lesson on June 24th?” crime recently hit a 25-year low. Yet public the Turkish strongman asked ata recent ral- angst remains high, thanks partly to high- ly. “We might die on this path,” he added, profile cases like the recent murder of a “but we will never turn back.” Jewish teenager by an asylum-seeker. In There is reason to think that most Turks Bavaria, a border state, voters bridle at have no intention of dying or being forced what the CSU calls “asylum tourists”: mi- to live in a country at war with itself and grants who under the EU’s Dublin regime with the rest of the world. Mr Erdogan’s should be processed in the countries strongest challenger, Muharrem Ince (pic- where they first arrive, like Italy and tured, on previous page), the candidate of Greece, but come to Germany and thanks the Republican People’s Party (CHP), to foot-dragging are not sent back within seems to have offered them a palatable al- the six months allowed by the regulations. ternative. Mr Ince has promised to end the As a long-term answerMrSeehofer pro- state ofemergency, dismantle the new con- poses nationwide “anchor centres” like stitution, restore the rule of law and con- those already operational in Bavaria. The vert Mr Erdogan’s 1,150-room presidential facility at Zirndorf, near Nuremberg, is typ- palace into an educational centre. ical: a high fence topped with barbed wire He has also pledged to resume attempts surrounds barrack-like dormitories; newly to bring peace to the Kurdish south-east, built offices are stocked with the latest de- ravaged by years of war between the army vices for taking fingerprints and detecting and separatist insurgents, and to reinstate forged passports. New arrivals are brought hundreds of academics sacked for protest- The politics of migration in Germany here on their first contact with the authori- ingabout security operations in the region. ties. Applications to stay are administered By running a spirited campaign, and by Merkel’s moment at the centre, with those denied asylum pulling few punches, the former physics transported directly to the airport. teacher has put Mr Erdogan on the defen- of peril Mrs Merkel approves of the model, but sive, emboldening many Turks who have cannot force it on federal states that prefer felt afraid to speak up since the coup. Polls ZIRNDORF to house migrants in smaller, less formal now suggest Mr Ince may have an outside hostels where they can betterintegrate into ABavarian uprising threatens the shot at the presidency if the contest heads German society. Mr Seehofer considers chancellor’s hold on power to a second round, which would take place this decentralised system unfit forpurpose on July 8th. However, Mr Erdogan is still ERMANY’S centre-right Christian (an impression not helped by a recent close to winning the contest outright on GDemocratic Union (CDU) can move bribes-for-visas scandal in Bremen), so he June 24th. fast and brutally against a leader whose deems entry bans on migrants registered The opposition has a much better time is up. In 1999 Angela Merkel knifed elsewhere the only stopgap. Almost 71% of chance of success in the parliamentary Wolfgang Schäuble in a steely newspaper Bavarians think the CSU should imple- vote—though a lot will depend on whether op-ed implicitly linking him to the corrup- ment this measure or quit the government. the HDP achieves the 10% threshold it re- tion scandal that had consumed Helmut Yet Mrs Merkel retorts that unilateral ac- quires to be represented in parliament. Kohl, his political mentor. Support for the tion by Germany could prompt a disas- Polls suggest it will do so. Exactly what this then-leader dissolved and within weeks trous domino effect of unilateral immigra- would imply under the new constitution she had taken his place. tion policies throughout the EU. remains unclear. CHP and Iyi party offi- Ghosts ofthe past haunt the party. Now The showdown came on June 14th 1 cials insist that an opposition-held parlia- it is Mrs Merkel, twelve-and-a-half years ment could rein in Mr Erdogan, assuming into her chancellorship, who is wobbling. he wins the election. That may be difficult, The Christian Social Union (CSU), the The German labyrinth though. Under the new changes, adopted CDU’s more conservative sister party, faces last year in a referendum marred by fraud an election in its home state of Bavaria in Can Angela Merkel get a credible repatriation deal with Italy and allegations, the president will have en- October at which it fears the anti-immi- others by July 1st 2018? hanced veto powers, as well as the right to grant Alternative for Germany will deny it Yes No issue decrees and to write the budget with- its traditional majority. To dissociate them- out input from parliament. He will also ap- selves from the chancellor’s decision to Horst Seehofer No Seehofer implements point his own ministers—the post of prime keep Germany’s borders open during the accepts it? new border controls? minister will go—and other senior officials. refugee crisis, the Bavarians are pushing Yes No Yes Mr Erdogan has already faced the pros- her to the brink. Whether she goes over it No Merkel fires pect of cohabitation, in 2015, when AK lost depends on the CDU. Seehofer? Can Merkel form Yes the majority it had held for more than 12 The dispute concerns an immigration majority with Yes years. He responded by sabotaging co- plan presented to Mrs Merkel in early June Greens or FDP? CDU/CSU splits? Yes No alition talks with the opposition, wooing by Horst Seehofer, the CSU interior minis- No nationalist voters with a brutal offensive ter. At successive meetings the chancellor Is it coherent? againstKurdish militantsand then calling a told him bluntly that she could not accept Yes No No Merkel forced snap election, which his party won in a its proposal to turn back migrants regis- out? landslide. The president’s aides have al- tered in other EU countries at German bor- Yes ready suggested their boss might march ders. “I can’t work with this woman any voters to the polls once again if the opposi- longer!” Mr Seehoferfumed to colleagues. Merkel Merkel New chancellor, survives with survives as possibly new tion wins parliament. Mr Erdogan certain- Monthly asylum-seeker arrivals in Ger- credibility lame duck elections ly knows how to amass power. But he no many have fallen from roughly 200,000 a longer knows how to share it. 7 month at the peak of the refugee crisis in Source: The Economist РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist June 23rd 2018 Europe 25

2 when, in a rare step illustrating their mutu- cure the outlines of a long-term reform to little option but to fire him, ejecting the al animosity, CDU and CSU MPs met sepa- the Dublin rules, probably involving more CSU from her coalition and forcing its re- rately. Both hardened their positions: Mrs resources for sealing the EU’s external bor- maining parts—the CDU and the centre-left Merkel’s troops backing her request for ders, and of bilateral deals with southern Social Democrats—to seek the support of two weeks to reach European agreements European states trading German cash for the centre-left Greens or centre-right Free tackling the problems; CSUers pushing Mr commitments to speedier repatriations of Democrats to make up its majority or back Seehofer to stand his ground. Days later migrants. The CSU has already accused her it as a minority government. That would the CSU leadership gave him its blessing to of trying to “buy” solutions, suggesting it is challenge the CDU to decide whether Mrs implement the new border controls— preparing to dismiss her proposals. Merkel had become a greater force for in- though not before July 1st, when Mrs Mer- If so, the mood in the CDU is all-impor- stability than stability. kel will present her European solution, if tant. The Bavarians are betting on a 1999 In a historical irony, Mr Schäuble, now there is one, to colleagues in Berlin. moment, when support for Mrs Merkel in the Speaker of the Bundestag, will be cru- On June 24th the chancellor will attend her own ranks dissolves. Mr Seehofer may cial. He commands respect across the an informal meeting of countries particu- test this by implementing the new border CDU’sfactionsand so farhasrallied itsMPs larly affected by migration, ahead of an EU controls against her will (his constitutional to Mrs Merkel’s side. The deposed crown summit on June 28th. At best she might se- right to do so is questionable), leaving her prince may yet turn kingmaker. 7

Italy Salvini the scrapper

ROME The leaderofthe Northern League is setting the agenda NGELA MERKEL is not the only head of Aa European governmentwith a disrup- tive interior minister. Since entering the Italian cabinet on June 1st Matteo Salvini German military drones has managed for different reasons to an- noy the governments of Tunisia, Malta, Innocence lost France and Spain. And he can scarcely BERLIN have endeared himself to Mrs Merkel by openly making common cause with his Europe’s bastion ofpacifism joins the dash forpilotless warplanes German counterpart, Horst Seehofer. On O THE reliefofcommanders and the German generals have felt frustrated in June 18th Mr Salvini even picked a fight Tdismay ofpacifists, Germany’s armed situations where they saw dangers facing with Cambodia. In the latest of several ex- forces have crossed a threshold. On June their troops but could not react. However, cursions outside his ministerial bailiwick, 13th a Bundestag committee voted to German voters have darkmemories of Mr Salvini, who is also a deputy prime approve the spending ofnearly €1bn an air strike in Afghanistan in 2009, minister and leader of the hard-right ($1.1bn) to lease from Israel five drones called in by their forces but executed by Northern League, threatened to ban ships which can be equipped with deadly the Americans, in which civilians per- carrying Cambodian rice from docking in weapons. Hitherto Germany has been ished and their government had to com- Italian ports. He claimed the rice, which is the only big Western country not to buy pensate the bereaved. exempt from EU tariffs, was competing un- “killer robots”. In part this reflects antipa- The path to the Israeli deal has been fairly with Italian produce. thy to America’s use ofremotely con- tortuous. A year ago, Social Democratic With his bull-in-a-china-shop approach trolled missiles for “targeted killings” of partners in the ruling coalition abruptly Mr Salvini has dominated the political terrorist suspects (and the people stand- withdrew their support; as a result ofthe agenda from the start, even though his ing next to them) in places like Pakistan delay, the price has risen. party is the junior partner in a coalition and Yemen. In a few years, Germany may no with the anti-establishment Five Star The Israeli order does not instantly longer have to turn to foreign suppliers Movement (M5S); polls now show his change that situation: the machines are forremote-controlled air power. It is the party in the lead. His cocktail of provoca- described as “weaponisable” but not prime mover in the so-called Eurodrone tive sound-bites and radical action (nota- “weaponised”. A new decision will be project, working with France, Italy and bly his refusal on June 10th to grant entry to needed to endow them with destructive Spain to construct a pilotless plane and an NGO rescue vessel laden with mi- power. However, critics and supporters boost the continent’s aerospace skills. grants) has made it seem as ifhe is deciding feel theireventual use in combat is al- German governments can tell a squea- Italian foreign policy. But Nathalie Tocci, most certain. In the words ofUlrike mish electorate that the new machine’s director of the Istituto Affari Internazion- Franke, a German expert on unmanned missile-firing feature is being included ali, a think-tank, is sceptical that he will aircraft, “It would be absurd to pay for the only in deference to more belligerent make a lasting impact. “I struggle to see use ofthese expensive drones and then partners; they will retain the option of anything meaningful coming out of it all,” not to arm them.” ordering a version that simply looks she says. Combat in Afghanistan, where Ger- rather than shoots. Few people will On migration, Italy’s populist govern- many has about1,000 soldiers, has believe that, but it may be a politically ment is hemmed in by constraints: the re- brought the drone debate to a head. necessary fiction. fusal of Italy’s EU partners to take an agreed quota of arriving migrants and the 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

26 Europe The Economist June 23rd 2018

France’s Socialists was only briefly a member of the Socialist Party.This month the president’s approval From solidarity to rating dropped by fully 12 points among those who have previously voted Socialist, solitary according to a poll by Elabe, while it edged up by four points among those who PARIS backed the centre-right. Mr Macron has been tagged the “president of the rich” for A veteran party finds that its supporters his tax cuts for business and the wealthy, a have fled perception he tried to counter on June 13th HE 19th-century mansion on the chic with a speech promising more generous Tleft bank of Paris, with its tiled floors health reimbursements to all. Mr Hol- and sweeping stone staircase, was for de- lande, who has published a bookreflecting cades an iconic part of French Socialist his- on his spell in office and is suspected of tory. François Mitterrand arrived there in planning a comeback, retorted on a French 1981 to celebrate his victory as the first So- TV show recently that this epithet was not cialist president of modern France. Ségo- fair. Mr Macron, the former president lène Royal, the party’s presidential candi- quipped, visibly amused by his own joke, date in 2007, waved valiantly to crowds is the “president ofthe very rich”. from the building’s balcony after her de- Originally founded by Jean Jaurès as feat. Late last year, however, the cash- the French Section ofthe Workers’ Interna- strapped party had to sell its grand head- tional (SFIO), in1905,the SocialistParty has When in Rome, persecute Roma quarters and find new premises in a mod- been behind some of France’s landmark ern office in an unfashionable suburb. The social legislation, from the first mandatory 2 refusal of the countries of origin to have episode serves as a cruel metaphor for the paid holidays in 1936 to the legalisation of backthose migrantswho do notqualifyfor ailing party. gay marriage in 2013. Yet today it is crushed asylum. On June 15th the prime minister, Last year, a party that has supplied two by Mr Macron’s mighty LREM on one side, Giuseppe Conte, agreed with France’s Fifth Republic presidents and nine prime and MrMélenchon’s firebrands on the oth- President Emmanuel Macron on setting up ministers was rudely rejected at the ballot er. The most vocal opposition to the gov- facilities outside the EU where migrants box. Its presidential candidate, Benoît Ha- ernment these days comes not from the could have their asylum requests pro- mon, came in a humiliatingfifthplace with traditional mainstream parties on the left cessed without exposingthemselves to the just 6% of the vote. At the legislative elec- or the right but, in line with European perils of a clandestine Mediterranean tions that followed the party was almost trends, from the populist extremes. crossing. But, as both men know, the main wiped out, losing 90% of its deputies and Mr Faure has struggled to breathe. His transit country is Libya, which is in violent ending up with just 30 seats out of577. Sup- speeches and interviews seem to leave lit- disarray. Actually creating these facilities porters swung instead either to Emmanuel tle impression. A mere 10% of those polled will be hard. Macron’s new centrist party, La Répu- have a positive image of him, a figure that Nor does everyone in the government blique en Marche (LREM), or to Jean-Luc rises only to 15% among left-wing voters—a identify with the rumbustious Mr Salvini. Mélenchon’s far-left France Insoumise. quarter of Mr Mélenchon’s score. The So- The foreign minister, Enzo Moavero Mila- Fully 47% of those who had supported the cialist Party is seen as tired and outdated. nesi, worked for 20 years at the European Socialist candidate, François Hollande, in Trade unionists accuse it of “treason” for Commission. The M5S, led by Luigi Di 2012, voted forMr Macron in 2017. imposingaderegulationofthelabourmar- Maio, the other deputy prime minister, is Since then, the party has bled talent. ket in 2016. At a rally in Paris this spring Mr also more moderate than the League. It has Manuel Valls, the (Spanish-born) prime Faure, jeered by unionists, had to be escort- already shelved a demand for a referen- minister under Mr Hollande, has quit the ed to safety. A party with a great history dum on membership of the euro and a party and now sits with LREM in parlia- risks consigning itselfto the past. 7 plan for withdrawing Italian forces from ment. He is said to be considering a run for Afghanistan. This week saw the first open mayor of Barcelona, the town in which he disagreement between the coalition part- was born. Mr Hamon, meanwhile, has left ners, when Mr Di Maio criticised a propos- to set up his own political movement, Gé- al by Mr Salvini to make a special count of nération.s, whose use of the modish point Roma people in Italy that would lead to médian, or middle full stop, is doubtless a non-citizens being deported (“a mass nod to the young metropolitan types he cleansing, street by street, neighbourhood hopes to attract. by neighbourhood,” said Mr Salvini). Battered and financially fragile, the So- Mr Conte was sponsored by the M5S. cialist Party has tried to pick itself up. It is But like his foreign minister, he is another movingto new premises, in Ivry-sur-Seine, technocrat without a power base, and the south-east of Paris. In March it held a lead- M5S ismore interested in economicand so- ership election, picking Olivier Faure, a 49- cial affairs than foreign policy. Mr Conte is year-old longtime party hack, who has painfully at sea in international affairs. At promised a Socialist “renaissance”. He the G7 meeting this month he backed Do- does have some interesting ideas, includ- nald Trump’s call for the readmission of ing backing a plan to introduce a pilot ex- Russia, only to be swiftly talked round by periment for a universal basic income in13 Italy’s EU partners. As for the 31-year-old Socialist-run regional departments. Mr Di Maio, he is no match for the media- Mr Faure is hoping that the party can savvy leader of the League. Mr Salvini is yet benefit from second thoughts on the still a man to watch. And, many feel, one left about Mr Macron, who served as a who needs watching. 7 minister in Mr Hollande’s government but They ran out of other people’s votes РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist June 23rd 2018 Europe 27 Charlemagne Save our Schengen

Europe’s passport-free zone faces a grim future most refugees, was nearly expelled. Instead, countries began to impose their own checks. This week new figures showed steep declines in both asylum applications and illegal border crossings. But numbers that lead- ers could once tolerate have become unacceptable. Six Schengen countries maintain some form of internal border checks. Some are tougher than others. The motorist between Belgium and France is less likely to be inconvenienced than the traveller cross- ingthe Oresund bridge between Copenhagen and Malmo. But all have stretched the rules that allow temporary controls to break- ing point, or beyond. When governments feel that they must choose between upholding national security and EU rules, they will always choose security, says Raphael Bossong of the SWP think-tank in Berlin. Few expect the six countries’ supposedly temporary controls to be lifted when they expire in November. That rankles with eastern European governments, like Hunga- ry and Slovenia, who fear a Schengen collapse could relegate them to a new second tier of the EU. But Schengen has become a casualty of the EU’s crisis of trust. Northern European states do not believe that Greece and Italy guard their borders properly, and recall how they would once wave through migrants in their IVE junior politicians, chuckling away on a pleasure boat. thousands. Anti-migration political insurgencies at home make FThere is only one known photo of the day, in 1985, when Bel- compromise harder, as Angela Merkel is learning in Germany. gium, Luxembourg, France, Germany and the Netherlands Fixing this requires overcoming the EU’s deadlocked asylum agreed to end border controls between their countries. It was a debate. It is pressure from asylum-seekers making, in the jargon, low-key start for what was to become one of the European Un- “secondary movements” from one Schengen state to another, ion’s signature achievements. The Schengen accord, named after that leads politicians to throw up the walls. Horst Seehofer, Ger- the Luxembourgish village nestled along the river on which it many’s interior minister, has come close to exploding his coun- was signed, is the world’s only large passport-free zone. It now try’s coalition over a proposal to turn back from Germany’s bor- covers 26 countries, including fournon-EU members. ders asylum-seekers registered elsewhere in the EU. His plan The village itself, justyards from borders with France and Ger- implies a closing of frontiers along migratory trails, including the many, took a while to cotton on to the potential that history had Brenner Pass between Italy and Austria. Pressure could come given it, but now offers tourists a museum, sculptures made from from the otherdirection, too. There are halfa million illegal immi- Luxembourgish steel and two slabs of the Berlin Wall. The most grants in Italy. The new government, which has vowed to deport emotional reactions come from visitors outside the zone, says them, may instead find it easier to nudge them northward. Martina Kneip, the museum’s director. In the 2000s eastern Euro- peans made pilgrimages to the village whose name had become Building fences, not bridges synonymous with the freedom they were denied fordecades. To- If today’s checks are worrying rather than devastating, a gloomi- day, Turkish visitors not yet ready to surrender the fading dream er future looms. Elizabeth Collett ofthe Migration Policy Institute ofEU membership leave heartfelt notes in the visitors’ book. Europe, a think-tank in Brussels, outlines three possibilities. First, Schengen embodies the dream of frictionless movement the slow spread ofborder controls across Schengen, quietly toler- across the EU’s single market. It eases transport of goods, boosts ated by Brussels. Second, the expansion of controls via technol- tourism and enables the cross-border commute of most of the ogy such as number-plate recognition and spot checks, including EU’s 1.7m “frontier” workers. Michel Gloden, Schengen’s mayor, racial profiling (for years French police have been roaming trains recalls the tiresome passport and customs checks of his youth. crossing from Ventimiglia, an Italian border town, and returning West German guards would sometimes wave you through; the illegal migrants). The third outcome is a regression to a smaller French gendarmes, with their machineguns, were more threaten- number of separate passport-free zones: Benelux, the Nordics, ing. Today’s arrangements suit his village’s multinational identi- Iberia and so on. ty, and have put it on the map. “When you tell people you’re from The only way out is for Europe’s leaders somehow to resolve Luxembourg, they say, ‘Whatever’,” he chuckles. “But if you say theirdifferenceson managingillegal immigration. The call isnow you’re from Schengen, everybody knows it. Even in Australia!” for complete control of the EU’s external border; a laudable but Yet Schengen is in trouble. The officials who set it in motion ill-defined goal. Some want deals with north African countries to were only dimly aware that eliminating internal borders re- reduce departures; others seek to establish camps for failed asy- quired strengthening external ones. But the logic of the system lum-seekers in the Balkans. Leaders will discuss these ideas at has unfolded remorselessly as pressure from illegal migration what is sure to be a fractious EU summit next week. has built against Europe’s southern flanks. The first jolt came in The sharp decline in immigrant arrivals ought to offer space to 2011, as refugees fled the upheaval ofthe Arab spring. A few years thrash out a deal. But instead the EU is strugglingto get over its mi- later Schengen came close to buckling, as over 1m migrants ex- gration hangover. Ms Collett compares it to the muggy period be- ploited the borderless zone, testing the asylum systems of some fore a thunderstorm, when the squirrels have scarpered and the countries to the limit. Greece, the Schengen landing-point for air is pregnant with foreboding oftrouble ahead. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 28 Britain The Economist June 23rd 2018

Also in this section 29 Brexit and Parliament 30 Bagehot: Podsnappery and its reverse

For daily analysis and debate on Britain, visit Economist.com/britain

The NHS at 70 social-care funding, which has shrunk by 1.5% a year in real terms since 2009-10. This Theresa May’s sticking-plaster has increased pressure on hospitals by making it harder for them to send mostly elderly patients home. At times of poor performance, critics of the NHS always exhort the service to be more efficient. There are obvious areas for improvement. Primary care remains a cot- Birthday celebrations forthe NHS belie the health service’s problems tage industry. It is also difficult for high-per- N JULY 5th 1948 Sylvia Beckingham four hours at accident and emergency forming hospitals to take over laggards. Yet Owas admitted to Park Hospital in (A&E) departments—another key indica- since 2010 productivity in the NHS seems Greater Manchester. The 13-year-old was tor—is the lowest since records began in to have grown fasterthan it has in the econ- the inaugural patient of the National 2003-04. This winter, hospitals from omy overall. Health Service (NHS), the world’s first uni- Northampton to Nottingham were cancel- In a nod to reality, Mrs May has pledged versal health system free at the point of ling all non-urgent operations. to increase spending on the NHS in real use. At her bedside Aneurin Bevan, the Such grim symptoms need a dose of terms by an average of 3.4% a year from health secretary, called the NHS the most historical perspective. In 1987 average in- 2019-20 to 2023-24. Breathless reports civilised step any country had ever taken. patient waiting time was 45 weeks. The called the rise “massive” and “extraordi- Elsewhere patients lined up at clinics NHS has not suddenly regressed to the nary”. The truth is more mundane. It is less with horrendous coughs, festering 1940s. Yet the trend in its performance re- than the annual average growth of 3.7% in wounds and hernias spilling into trusses. mains noticeably downwards. And the spendingsince 1948. Itfallsshortofthe 4% a Pregnant women queued, too; one in 350 cause is that demand is outstripping the year that think-tanks like the Institute for mothers were dying in childbirth, about NHS’s ability to supply care. Not only are Fiscal Studies (IFS) and the Health Founda- the same as in Gabon today. Bevan as- more patients turning up at hospital, but tion say is the minimum required to im- sumed that demand would eventually they are presenting with more complex prove services. And important things are moderate. It did not. “We never shall have cases. The number of patients at A&E is up excluded from Mrs May’s pledge, such as all we need,” he soon realised. “Expecta- 26% on a decade ago. The number of emer- training staffand building hospitals. tion will always exceed capacity.” gency admissions has risen by 42%. One in Nor is it clear where the extra money Call it Bevan’s law. Seven decades on it three patients admitted as an emergency will come from. Mrs May says part is “a is still true. In a speech on June 18th to mark has at least five conditions, against one in Brexit dividend”. But this is nonsense. the NHS’s 70th birthday, Theresa May ac- ten nearly a decade ago. Brexit will shrink the available cake for knowledged that rising demand and years The NHS has been spared cuts made to public spending, not expand it. The truth is of low growth in funding had put the ser- other public services. Since 2009-10 health that extra money for the NHS must come vice “under strain”. Promising that spend- spending has increased by 1.4% a year in from lower spending elsewhere, higher ing would rise more quickly from April real terms. But that is barely enough to taxes or more borrowing. 2019, the prime minister vowed to do more keep pace with a growing and ageing pop- Mrs May has limited room for manoeu- than apply “a sticking-plaster” to the NHS’s ulation. And the reality is even worse than vre. Overthe past 40 yearspublic spending ailments. Yet that is all she has done. this suggests, for two reasons. on health has, in effect, been paid for by In recent years the NHS has deteriorat- The first is that the cost of medical tech- spending less on other things, such as de- ed. Five years ago more than 90% of pa- nology (drugs, scanners and so on) keeps fence. Today public spending on health is tients waited less than 18 weeks from being rising fasterthan inflation. Between 2011-12 7.3% of GDP, similar to the average in other referred by their family doctor to receiving and 2016-17 the total bill for prescriptions longstanding members of the EU, up from treatment in hospital. Today less than 75% from hospital pharmacies rose by about 4% four decades ago. Mrs May cannot now do so. The share of patients seen within 70%. The second arises from cuts in adult easily swap soldiers for surgeons. More-1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist June 23rd 2018 Britain 29

2 over she has also promised to stick to her promise to accommodate their wishes, “fiscal rules”, meaning that a lot of extra The NHS cuckoo and vowed notto be intimidated. They still borrowing is unlikely.That leaves tax rises. Britain, % of government spending threaten next month to require the govern- But rather than make the case for these ment to join a customs union with the EU. 20 now,the prime ministerhas postponed the Health But the suspicion must be that, unlike the inevitable until November. implacable Brexiteers, they are willing to Mrs May was equally cowardly in her 15 wound but not to strike. approach to social care. Analysis by the IFS This is all the clearer since the argu- and the Health Foundation suggests that, Education 10 ments Mr Davis used against the rebels given England’s ageing population, spend- were so thin. His complaint that they were 5 ing on such care will almost double, from Defence improperly trying to take over the negotia- £17.1bn ($25.7bn) in 2015-16 to £33.2bn in tions was unpersuasive. They merely 2033-34. Several reviews have proposed re- 0 wanted the Commons to have a meaning- forms. Most come down to a choice be- 1955 65 75 85 95 2005 16 ful vote on a Brexit deal, not to be told that tween some form of social insurance, as in Fiscal years beginning April the only alternative was leaving with no Japan and Germany, or getting more peo- Source: IFS deal, which they see as disastrous. Nor ple to pay for care themselves. Yet Mrs would a defeat for Mrs May automatically May’s experience with a so-called “de- do the exact opposite, by encouraging weaken her hand in Brussels. The truth is mentia tax” proposed in last year’s Tory money to be pooled across different parts usually the reverse: national leaders often election manifesto makes her nervous. All of the service so that care can be more “in- win the day by explainingthat they cannot she is doing is promising a green paper. tegrated”. This might be a sensible ap- accept EU proposals they dislike because Social care is not the only area where re- proach, but it rests on shaky legal grounds ofrecalcitrant MPs at home. form is problematic. In theory the frame- and depends on keeping both Mr Hunt The charge that Tory rebels are really work for the NHS is the Health and Social and Mr Stevens in their jobs. When one of seeking to overturn the referendum result Care Act, passed in 2012. But Jeremy Hunt, them leaves his job, the momentum for re- is more telling. Acampaign against Brexit is the health secretary, and Simon Stevens, form will surely slow. indeed under way. To mark this weekend’s the chief executive of NHS England, have Mrs May’s lack of ambition means that second anniversary of the vote, a march ignored as much of it as possible. The law the NHS still faces a difficult future. But it is will call for a fresh referendum on any was meant to stop micromanagement by symbolic of Britons’ approach to their Brexit deal. Public opinion is slowly shift- Whitehall. Yet the NHS is more reliant than cherished service. There is no shortage of ing towards the view that Brexit is not just ever on central control. sepia-tinged nostalgia about the NHS.For being mismanaged but is also a mistake. Reforms made by Mr Hunt and Mr Ste- this anniversary NHS-themed tea parties Yet the main concern of the rebels is to vens are also undoing the act’s aim of get- are planned, Westminster Abbey is hold- block a no-deal Brexit that does not have ting 200 or so local teams ofdoctors to buy ing a special ceremony and the Royal Mint parliamentary backing. Mrs May’s govern- hospital services in a version of the “inter- has struck a commemorative coin. Wal- ment also has no appetite for it. Few prep- nal market” backed by every health secre- lowingin the past has become an excuse to arations have been made for leaving with tary since the late 1980s. The current plans avoid the rigours ofthe future. 7 no deal, and the cost of doing so is increas- ingly clear. Indeed, as she makes ever more concessions to the EU, Mrs May’s old man- Brexit and Parliament tra is being reversed. A bad deal, it now seems, is better than no deal. A rebellion stalled That does not make no deal an impossi- bility. The clock is ticking inexorably to- wards Brexit day on March 29th 2019. Next week’s EU summit was supposed to take a decisive step towards a settlement. Yet the draft conclusions of the summit express Theresa May finally fends offToryrebels to get the EU withdrawal bill through. But concern overslow progress in the talks and she still faces problems overBrexit in Parliament—and in Brussels over the failure to reach final agreement on TTEMPTS to defeat a government in the Lords too acquiesced, and the EU with- a way to avert a hard border in Ireland. AHouse of Commons rarely succeed, drawal bill will now duly become law. They also call forgreater preparation forall even when (as now) it lacks a clear major- Mr Grieve claimed to have won last-mi- possible outcomes, implicitly including a ity. MPs’ natural wish to support their nute concessions. David Davis, the Brexit no-deal Brexit. prime minister, their own ambitions for secretary, promised that parliamentary EU leaders have no desire for a big row preferment and the whips’ cruel ways all time would be made available for debate. with Mrs May now, notleast because they make for a reluctance to rock the boat. So it He also said the Speaker would decide if a have much else to discuss besides Brexit. proved again this week, when Theresa motion in such a debate could be amend- But they worry that her cabinet is still di- May saw off threats to amend the Euro- ed by MPs. The government had earlier vided and her government has not yet pean Union withdrawal bill to give MPs, tried to insist that a motion on a no-deal faced up to the trade-offsneeded for a deal. not the government, the decisive say over Brexit must be unamendable, depriving The fact that her promised Brexit white pa- what should happen if a no-deal Brexit MPs ofinfluence over what to do. per is not appearing until after the summit looms next year. She yielded on just It is also true that, if Parliament rejects a is another annoyance. The talk in Brussels enough points to lure most would-be re- Brexit deal this winter or the government now is ofputtingoffthe endgame until No- bels into the government lobby. fails to secure any deal at all, there will be a vember or even December. That will leave This produced the bizarre spectacle of huge political crisis. MrsMaymighthave to precious little time for last-minute bargain- Dominic Grieve, a former Tory attorney- resign, and there would be pressure for an ing—and even less for securing approval, general who had drafted the text under election. Yet the rebels’ failure to go to the which is needed from the European Parlia- scrutiny, voting against his own amend- wire leaves them weaker. They com- ment in Strasbourg as well as from Parlia- ment on June 20th. Shortly afterwards the plained loudly that Mrs May had broken a ment in Westminster. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

30 Britain The Economist June 23rd 2018 Bagehot Podsnappery and its reverse

A great divide in British politics is between MrPodsnap and his alterego clusion of such other countries as there may happen to be”, or when they think being proud of your country means looking down on others. It is an oddity ofmodern Britain that the leading practitionerofturningsense into nonsense—MrPodsnap in mod- ern dress—should be the foreign secretary. Boris Johnson seems to regard foreigners as figures of fun and likes to point out that all good things were invented in Britain. During the 2008 Olympics he claimed that, even though the Chinese might be champions at table tennis, the game was “invented on the dining tables of Eng- land in the 19th century…it was called ‘wiff-waff’.” Reverse Podsnaps also start with good points. British history is marred by imperialism and exploitation. A great virtue of Brit- ain has been its openness to foreign ideas and intellectuals. Some people voted forBrexit fordiscreditable reasons. But reverse Pod- snaps take good insights to ridiculous lengths. Emily Thornberry, now the shadow foreign secretary, once posted a tweet mocking a “white-van man” who draped his house with flags ofSt George. Tom Gann, editorofNewSocialist, maintainsthat“Britain hasthe most morally and intellectually degraded and degrading public sphere in the world”. A YouGov poll last October found that 46% of Londoners named “Londoner” as their primary identity, 25% OHN PODSNAP is a minor character in Dickens’s last complet- European, 17% British and only12% English. Jed novel,“OurMutual Friend”, but he is impossible to forget. He Reverse Podsnappery is defined by double-think when it is convinced that England is the best of all possible countries comes to nationalism. Although English nationalism is the sum and the rest ofthe world is nothing more than “a mistake”. His in- of all evils, other forms of nationalism (Irish, Scottish, Palestin- variable verdict on the manners and morals of other countries is ian) are ferventlyembraced. Itisalso defined byparochialism. Re- “Not English”, delivered “with a flourish ofthe arm and a flush of verse Podsnapsare lessinterested in othercountriesthan in using the face”. Encountering a Frenchman at dinner, he gives the “un- them to attacktheir own. Once upon a time they would fixate on fortunately born foreigner” a lecture on “le constitution Britan- the Soviet Union as a way of criticising Britain. Now they are nique”. “We Englishmen are very proud of our constitution…it more likely to fixate on Germany. was bestowed upon us by providence. No other country is so fa- Jeremy Corbyn is to reverse Podsnappery what Mr Johnson is voured as this country.” to Podsnappery. Despite being brought up in a manor house in The word Podsnappery has since found its way into the Ox- Shropshire, the Labour leader has spent his life in revolt against ford English Dictionary. But as E.P. Thompson, a Marxist histori- “Englishness”. On leaving school he decamped to Jamaica an, pointed out, many English people sufferfrom the opposite de- (where he was known as “beardie”) and Latin America. As a formation: reverse Podsnappery. This proceeds from the premise young MP he liked to relax in Irish bars singing Irish freedom that other countries are superior in every way (particularly when songs. He supports an alphabet soup of national-liberation it comes to food and sex) and Britain is infinitely ghastly. Reverse movements. He brought the same starry-eyed credulity to Vene- Posdnappery is particularly common among the better classes. zuela that Sidney and Beatrice Webb did to the Soviet Union. There is something about an expensive education in private Podsnaps and reverse Podsnaps are both in the grip of the schools and Oxbridge that disposes people to despise their own same mistake. They refuse to recognise that all advanced coun- country. Adepressing amount ofEnglish literature is an extended tries struggle with common problems such as low growth, pres- version of Cyril Connolly’s complaint that England is “a dying sure from refugees and rising inequality. They fail to see that eco- civilisation—decadent but in such a damned dull way”. nomic decisions are about trade-offs, not discovering eternal The Brexit vote has similarly divided Britain into two camps. solutions. The German emphasis on training and the British pref- Podsnaps are delighted that England is breaking away from the erence for flexibility both have costs and benefits. But rather than continent, with its meddling bureaucrats and Napoleonic legal confronting this error they delight in egging each other on. code (Podsnaps may say “Britain” but they really mean “Eng- land”). Reverse Podsnaps think Britain is rejecting cosmopolitan Time to scrap both Podsnaps values in favourofa repulsive Little Englandism. What makes the This is at its most dangerous in the Brexit negotiations. Podsnaps argument frustrating is that both have truth on their side. see the EU as a plot to destroy “le constitution Britannique”. Jacob Thus Podsnaps start with good points. Britain does have a Rees-Mogg calls soft Brexit “the equivalent of a ‘Norman Con- uniquely fortunate history. It never experienced revolutionary quest’ that would reduce Britain to the level ofa ‘vassal state’.” Re- terror like France or eastern Europe or collective madness like verse Podsnaps see the European Commission as the embodi- Germany. It contrived ways of limiting the power of the state ment of universal wisdom and EU negotiators as reasonable through parliament and the common law before any other big people negotiating with bigoted fools. Taking the country country. It played the pivotal role in saving the continent from through the complexities of Brexit without splitting it down the Nazi Germany. This is a history to be proud of. middle will be hard even forrational people. It will be impossible But this sense turns into nonsense when Podsnaps echo their ifthe British refuse to dump the twin bigotries ofPodsnap and his hero’s view that Britain possesses these virtues “to the direct ex- alter ego in the dustbin ofhistory. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Middle East and Africa The Economist June 23rd 2018 31

Also in this section 32 Bridge Academies fights its foes 32 Boris Becker, African diplomat 33 How to beat tropical diseases 34 Gaza and the UN 34 Football and piracy

For daily analysis and debate on the Middle East and Africa, visit Economist.com/world/middle-east-africa

Private schools in Kenya in the past decade, to 1,600, and class sizes have increased from an average of 42 to On the playing fields, not beaten 50-55. “We are a little bit stretched,” says James Kinyanjui Kuria, Alliance’s deputy head. A new curriculum may reduce the rote element in state education, but there are fears that teachers are not prepared, so NAIROBI it may put a furtherstrain on state schools. Duncan Olumbe, an Alliance alumnus, Foreign investment in Kenyan schools is changing elite education, and society decided that his son Roy should not follow AST year stories appeared in the press, il- come from similarly prosperous back- him to his old school. Roy was put off by Llustrated by pictures ofbloody clothing, grounds. But they reflect the past and fu- the stories of bullying; Mr Olumbe and his of an initiation ceremony at Alliance High ture ofKenyan elite education. wife liked the ways of Nova Pioneer and School outside Nairobi, in which boys In the past, rich Kenyans tended to send thought that “the transition from a private were beaten and made to lie on the foun- their children to private primary schools, primary to an overcrowded [state second- ders’ graves. The country was shocked, in in the expectation that they would do well ary] may be a bit difficult.” He is pleased part because Alliance is regarded as one of enough to get a place in a national school with his investment, but some customers the country’s top schools, and the head- and thus a free, rigorous secondary educa- are trickier. “Most parents are middle-class master resigned. The scandal has hastened tion. But in recent years, several things [by which Kenyans mean the top 2% or so]. a shift that is changing Kenyan education. have changed. Catering to the needs of a very discerning Alliance, which sits in wooded grounds One is the growth of a class of prosper- demographic brings with it a certain ele- in Kikuyu, a small town north-west of Nai- ous Kenyans, many of whom take foreign ment of challenge,” says Charles Tsuma, robi, was founded in 1926 by missionaries holidays, clog Nairobi’s streets with 4x4 the head ofNova Pioneer Boys, delicately. to educate brightAfricansand, byselecting cars and have novel views about educa- boys from all the country’s regions and tion. Kenyan schools tend to feature large Super Nova tribes, to build a country. After indepen- classes and rote-learning. At Nova Pioneer, Nova Pioneerhas plenty ofcompetition: in dence in 1963 it became one ofKenya’s “na- classes are smaller—32 pupils, on average— 2013-17 the number of private primary tional” schools, similar to Britain’s selec- and more participatory. “Many parents schools almost doubled and the number tive state “grammar” schools. Eight want a wholesome experience that isn’t of private secondaries rose by half. Some ministers in the post-independence cabi- just drilling,” says Rose Nduati, the head schools are said to be struggling, especially net in 1963 were Alliance old boys. Alumni teacher of Nova Pioneer Girls. “We’re be- at the top end of the market (1m-2.5m shil- still proliferate in the top ranks of the pro- ingtaughtcoding,” saysStaceyWanyoike, a lings a year) which is beyond the reach of fessions, government and business. Year10 student. “I find that really cool. And all but the richest Kenyans, and therefore On a hilltop 20 miles to the east are the in the other lessons, you’re not just reading relies to a large extent on expats. Nova Pioneer boys’, girls’ and primary notes, you’re taking part.” Supply is growing to meet demand, schools. They were founded in 2015 by Government policy is encouraging the thanks in part to international capital. Edu- Chris Khaemba, headmaster of Alliance growth ofprivate schools. The state is com- cation has a particular appeal to long-term from 1998-2007. Secondary-school fees are mitted to providing free secondary educa- investors, for children are locked in for up 500,000 shillings a year ($4,945). At Alli- tion for all, and although that has not yet to 12 years. Growth prospects are good be- ance, tuition is free; boarding fees are been fully implemented, risinggrants from cause governments are not satisfying the 54,000 shillings a year. central government have brought fees risingdemand forgood education. And the The pupils at both establishments have down. Pupil numbers have therefore been regulatory environment for private similarly impeccable manners and many increasing. At Alliance they have doubled schools in the three big African markets, 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

32 Middle East and Africa The Economist June 23rd 2018

2 South Africa, Nigeria and Kenya, isgeneral- chance, and helped build the idea of a na- Passport sagas ly favourable. That is not the case every- tion. The private schools will encourage where: in India, for instance, which would social stratification by allowing well-off Diplomatic otherwise be a very attractive market, al- parents to buy their children educational though private schools are proliferating, and thus professional advantage, as hap- impunity for-profit education is banned. pens in Britain and America. Kenya may Nova Pioneer, which was formed follow the same path as Brazil and Argenti- NAIROBI through a merger between Mr Khaemba’s na, where a shift into private education in Boris Beckeris not Africa’s most schools and a South African chain, is fi- the 1970s and 1980s led to neglect of the unlikely diplomat nanced by FairfaxAfrica, a Canadian fund. public sector. But the trend will also mean ADvTECH, a South African chain, bought more investment in schools, a better, more HEN people say “diplomatic ser- Makini, a group of nine schools in Kenya questioning, education and an increased Wvice”, they seldom mean an envoy and Uganda, earlier this year. In 2015 flow ofKenyans into universities abroad. who can slam an ace over the net at 130 Brookhouse, a posh Kenyan school, was And, in its way, the new model of elite miles per hour. Yet Boris Becker, a German bought by Inspired, an international chain, education brings together people from dif- former tennis star who could once do just which then opened a new campus. ferent parts of society. Wilson Sossion, for that, told a London court on June 14th that The growth ofthe business has implica- instance, the head of the teachers’ union, he should be excused from proceedings tions forsociety.The old system had its vir- who has been campaigning for the closure because he has diplomatic immunity. tues: although, over time, it was captured ofthe low-costBridge International Acade- After Mr Becker was declared bankrupt by the elite, in its early days it gave poor mies (see box) sends his children to Brook- last yearhe faced claims to his assets from a clever children from far-flung areas a house, which charges1m shillings a year. 7 private bank. Instead of coughing up, Mr Becker said that he is, in fact, a representa- tive of the Central African Republic (CAR), Cheap, private and being punished a failed state wedged between Congo and Chad. This, Mr Becker said, should end the A Bridge too far “farce” of his being pursued by creditors. In fact the farce had only just begun. On June19th officials in the CAR’s foreign min- The campaign against the world’s most controversial school chain intensifies istry told AFP, a newswire, that the dip- RIDGE is unauthorised and illegal,” ment has been sitting on the paperwork. lomatic passport was a fake, possibly from “B says Wilson Sossion, the secretary- It maintains that most ofits teachers are a batch of passports stolen in 2014. Mr general ofthe Kenya National Union of government-trained. “The reason he [Mr Beckerhad claimed to be a sportsenvoy for Teachers. “The curriculum they teach and Sossion] campaigns against us”, says the country,workingout ofits Brussels em- the medium they use are not approved. Shannon May,one ofBridge’s founders, bassy.The officials said that the job did not The teachers are untrained and unqual- “is that we show that governments don’t exist. That is despite a picture of Mr Becker ified. They should be closed down.” need to increase budgets and pay teach- on the embassy’s website, and a photo (be- Bridge International Academies is the ers more in order to improve education.” low) of his meeting the CAR’s president, world’s most controversial low-cost Bridge’s opponents are making head- Faustin-Archange Touadéra, in April, when for-profit chain ofschools. It has raised way.The ombudsman forthe IFC said he claimed to have been appointed. about $140m in investment from the likes last month that it would investigate a What is the reality? It is hard to say; per- ofBill Gates, MarkZuckerberg and the 27-page complaint by a consortium of haps Mr Becker really is a diplomat. The International Finance Corporation (IFC), unions and NGOs. Ms May is delighted. CAR is a country with a state budget of the private-investment arm ofthe World “It gives us the opportunity to have these around $380m, which is not quite double Bank. Some120,000 children are en- false assertions rebutted once again.” the annual revenue ofthe All England Ten- rolled in its schools in Kenya, Uganda, In Uganda, meanwhile, the presi- nis club at Wimbledon, where Mr Becker Liberia, Nigeria and India. It gets results: dent’s wife, Janet Museveni, said earlier won his first major title in 1985. It is known 1 in Kenya, its biggest market, costs per this year that Bridge schools were illegal pupil are $190 a year (parents pay an and should be closed. In Kenya enrol- average of$84 a year), compared with ment fell from100,000 in 2015to 80,000 $313 in government schools, and 86% of in 2017, and is still falling. Mr Sossion children score well enough to pass into claims credit. “When a union campaigns secondary school, compared with a against a company,parents will listen. national average of76%. Since halfthe Their business model will collapse.” primary-school pupils in the developing But things could take a turn in Bridge’s world cannot read or write a sentence, favour. In Kenya, opposition to Mr Sos- such schools are doing a crucial job. sion within the union has raised ques- Yet Bridge is the bête noire ofunions tions about how long he can last. In and NGOs around the world. Many Uganda, Bridge schools remain open. NGOs disapprove offor-profit education, And in Nigeria, Bridge is exploring a less and unions clearly have an interest in politically contentious way ofoperating. undermining it. In Kenya, teachers are It has a contract with the government of paid less than those in government Edo state to improve primary schooling schools (though more than in most priv- forhalfa million pupils. “The govern- ate schools) and are rewarded or fired ment-pay market has vast potential for partly on the basis oftheir performance. this business,” says Steve BeckofNova- Bridge says Mr Sossion’s claim that star Ventures, a fund that has invested in the schools are illegal is nonsense: they Bridge. Partnership with governments are not registered because the govern- probably beats being a punchball. His Excellency, Baron von Slam РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist June 23rd 2018 Middle East and Africa 33

2 for civil war and anarchy and, like Mr celled “at least” 158 diplomatic passports. It, too, is in retreat among children. So are Becker, struggles to pay its debts. It is plausi- They had been used for all sorts of pur- soil-transmitted helminths, infections ble that one arm of the CAR government poses, including breaking sanctions on caused by roundworms that can stunt does not know what the other is doing. Iran. In 2011 a Danish filmmaker, Mads mental and physical development. The It would not be the first time that a dip- Brugger, made a documentary in which he worm that caused Hannah’s elephantiasis lomaticpassporthasfound itswayinto un- apparently travelled around the CAR on a was also once widespread. But there have likely hands. In 2013 Alma Shalabayeva, fraudulently-acquired Liberian passport, been no new cases since 2011. the wife of a Kazakh billionaire, Mukhtar bought through a Dutch intermediary. In There are several reasonswhySierra Le- Ablyazov, was arrested in Rome with just the documentary he assumed the identity one has pulled offthis remarkable feat. Par- such a passport, also issued by the CAR. of a dandy diamond merchant by the adoxically, one of the reasons is the ex- Until his death in 2015, Antonio Deinde name ofMads Cortzen. traordinarily high prevalence of NTDs. Fernandez, a Nigerian billionaire, served In 2016 Walid Juffali, a wealthy Saudi, Because the entire population was ex- as the CAR’s ambassador to the UN for 18 claimed immunity from divorce proceed- posed to at least one NTD, the government years. Curiously, he had also served as a ings in Britain on the basis that he was St made it a priority early on, says Dr Joseph deputy ambassador to the UN for Mozam- Lucia’s representative to the UN’s Interna- Koroma, who managed its programme. bique. Others who have apparently been tional Maritime Organisation. Philip Ham- In the case ofschistosomiasis, Sierra Le- made diplomats by the CAR include an Is- mond, then Britain’s foreign secretary,sup- one has had a national control plan in raeli businessman and an adviser to Lib- ported his claim, arguing that overruling it place for almost a decade. That is in con- ya’s formerdictator, Muammar Qaddafi. might set a precedent that could later hurt trast to South Africa, a relatively wealthy The countries that have the most diffi- British diplomats overseas. However, a state that still does not have a mass treat- culty keeping track of all their diplomats court ruled that Juffali’s diplomatic status ment programme for the illness—even are often small and plagued by graft. In De- was irrelevant to his divorce, and he had to though it suffers some 3m infections, says cember, the tiny Comoros Islands can- pay his ex-wife a fortune. 7 Thoko Elphick-Pooley, from Uniting to Combat NTDs, a coalition of aid agencies, companies and charities. Tropical diseases Common sense also helps. Instead of dealing with these diseases separately, De bodi fine which donors unwittingly encourage by giving different pots of money for each one, Sierra Leone tackles them all at once. Each year it provides drugs for four major diseases to everyone at risk. Treating peo- FREETOWN ple at roughly the same time reduces the chances ofthem reinfecting one another. It Asurprising medical victoryin the wake ofEbola also saves money because health workers IXTEEN years ago Hannah Taylor woke tors to treat its 7m people. Corruption also can visit each village only once instead of Sup with a fever. Her legs began to swell makes the nation sicker. Most people have several times a year. to four times their normal size. They have to pay bribes to doctors and nurses for ba- Ending the stigma is also important. Ra- been that way since. People shunned her sic treatments. dio programmes where panels of experts, because of their putrid smell. “For six Fifteen years ago as much as half the victimsand local leadersanswercalls from years, I thought my big fut was caused by population was infected with the worm listeners about their concerns have helped evil witchcraft,” she said outside her shack that causes onchocerciasis, or river blind- to break down misconceptions and en- in Freetown, the capital ofSierra Leone. ness (see map). Many villagers in the courage people to get treatment. It is no The lymphatic filariasis (elephantiasis) southeast used to think it was perfectly good just lecturingvillagers about how riv- ailing her was caused by a mosquito-born normal forpeople to go blind after 30, says er blindness is caused by the black fly infection thatcould have been treated safe- Mary Hodges, from Helen Keller Interna- when they think it is witchcraft, says Dr ly with a pill costing no more than $0.50 tional, a charity that works on blindness Hodges. There has to be a conversation. before it progressed. Instead, microscopic and malnutrition. Yet by 2017 only 2% of Hannah, who was depressed about her worms infested her body, causing cata- people carried the worm, and there had condition for years, later put on a brave strophic and irreversible damage. been no new cases recorded of people go- face and campaigned to raise awareness Elephantiasis isone of17 neglected trop- ing blind from onchocerciasis in a decade. about it and to break down taboos. “De ical diseases (NTDs) that affect 1.5bn peo- Elimination is expected by about 2022. bodi fine,” she said, slapping her swollen ple, disabling children and keeping multi- Other illnesses are also being beaten. legs with a cheerful smile, “de bodi fine.” tudes poor. Huge progress has been made Schistosomiasis, also known as snail fever Hannah, who passed away last week, re- against these diseases since an agreement and bilharzia, is a parasitic worm infection cently said she was pleased her children in 2012 by pharmaceutical firms to donate that slowly destroys the kidneys and liver. would not sufferas she had. 7 billions ofdollars’ worth ofdrugs. Even so, many African countries struggle to get the necessary pills to those in need. Worming out Strangely Sierra Leone, one of the Prevalence of onchocerciasis 2002-04 2010 2018 world’spoorestcountries, isdoingbetter at (river blindness) worm beating back such diseases than almost By district, % anywhere else in Africa. This is despite a 0 4102050 devastating civil war from 1991to 2002 that SIERRA LEONE Freetown claimed 70,000 lives and wrecked the health system. What little remained of it

was gutted by an Ebola outbreak in 2014 Source: that killed lots of doctors and nurses. As a Helen Keller International 100 km result the country has only some 400 doc- РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

34 Middle East and Africa The Economist June 23rd 2018

Football and piracy Qatar calls foul

CAIRO The blockade ofQatarhas turned the World Cup into a geopolitical feud RABS have little to cheer in this year’s helping the pirates.) AWorld Cup. The fourteams from the The controversy is a preview of2022, region lost all seven oftheir early match- when Qatar will host the tournament. It es. Russia and Uruguay beat both Egypt plans to welcome fans from the Gulf. But and Saudi Arabia. Morocco beat itself, ifthe blockade continues, Saudis might scoring an own goal against Iran. Tunisia be barred from attending. They might not lost to England. The real competition is want to, either. The kingdom has mooted offthe pitch: in the Middle East, even turning part ofthe border into a nuclear watching the game is fractious. waste dump. A Qatari network, beIN Sports, paid a Egyptians have a different problem. small fortune forthe broadcast rights. It Although their government joined the had planned to recoup that by charging blockade, it did not ban people from fees ofup to $150 per subscriber. But last subscribing to beIN.Evenso,manycan- Gaza and the UN year fourArab countries imposed a not afford a World Cup package that costs blockade on Qatar. The embargo exclud- halfa month’s average pay.Instead they Squeeze and ed beIN from its largest market, Saudi turn their satellite dishes in a surprising Arabia, where it had 900,000 customers. direction. On June15thfans huddled in a suffocate And it left Saudis wondering how they caféinCairotowatchafreebroadcastof would watch their team, which had the Pharaohs playing Uruguay.The com- GAZA qualified forthe first time since 2006. mentary was in Arabic—but it came from The answer came from a mysterious Israel’s public broadcaster, Kan. America’s withdrawal ofaid is group ofhackers. In August someone The networkdenies that it is helping beginning to bite launched a bootleg version ofbeIN, non-Israelis watch the cup free, but Isra- OU may think that after a dozen years cheekily known as “beoutQ”. With a el’s foreign ministry has enthusiastically Yof blockade by Israel, three devastating cheap decoder, Saudis (and other Arabs) promoted the broadcasts in Arabic on wars and the rule of a harsh Islamist gov- can watch with only a slight delay.Qatar social media. Even Cairo taxi drivers can ernment, life in Gaza could hardly get is furious about the piracy.BeIN exec- rattle offits satellite co-ordinates. “I’d worse. But the prospect of another war utives accuse Saudi Arabia ofcomplicity, watch it in Hebrew before I gave money and a dire shortage of cash to pay for the claiming the hackers are rebroadcasting to Qatar,” jokes one fan.Though he might UN’s Relief and Works Agency, better using Arabsat, a satellite in which the wish he hadn’t watched at all. The Pha- known as UNRWA, mean that it can. Last kingdom is the largest shareholder. (Both raohs lost their first two matches and will year President Donald Trump’s adminis- the Saudis and Arabsat deny that they are probably head home soon. tration said it would withhold $305m of the $365m that has annually serviced the agency, which has supported most of Gaza’s 2m people for the past seven de- cades. Now the cash is running out. Moreover, since the end of March a se- ries of protests near the border fence with Israel has seen at least 120 Gazans shot dead by the Israeli army. Hamas, the Islam- ist movement that runs Gaza, has been sending a defiant wave of home-made rockets and mortars into Israel, plus make- shift kites laden with devices to set fire to Israeli farmland. Israel hasresponded with air raids. Gazans are terrified that Israel may be preparing for another full-blooded war to crush Hamas or even force it to make way for Fatah, the Palestinian move- ment’s more amenable wing that runs the agency’s spokesman. “We feed a million homes in Israel. Earlier this year America West Bank, the bigger chunkofa would-be food-insecure refugees in Gaza, where the promised a sharp increase in aid to Jordan, Palestinian state. situation has reached breaking point.” which hosts 2m registered Palestinian refu- UNRWA is in crisis. It has been begging UNRWA’s American and Israeli detrac- gees and is strapped for cash. Some Pales- rich Arab countries to make up some ofthe tors say that many of its beneficiaries tinians fear that this American largesse shortfall. The agency, which educates should not be counted as refugees at all, could depend on Jordan eventually revok- 270,000 children in Gaza and runs a score since most are second- or third-generation ing their status as refugees. of clinics there, says that about $200m is descendants of the 700,000 or so Palestin- Some Israeli generals, however, fear the needed to keep the showgoing. “We do not ians who fled or were evicted from what prospect of UNRWA’s being gutted. They have enough money in the bank to open became Israel in 1948. They accuse the see it as a safety valve for keeping Palestin- our schools when the academic year be- agency of pandering to a false notion that ians more or less quiescent. Otherwise, gins in August,” says Chris Gunness, the the Palestinians will get back their old they reckon, Gaza may blow up again. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS United States The Economist June 23rd 2018 35

Also in this section 36 The UN Human Rights Council 37 Detroit’s railway station 38 Race and admissions at Harvard 39 Small-town newspapers 40 Lexington: A blot against America

For daily analysis and debate on America, visit Economist.com/unitedstates Economist.com/blogs/democracyinamerica

Cities time resident must be chucked out. The surprising result is explained by three un- In praise of gentrification derlying trends. The first is that poor Americans are ob- liged to move very frequently, regardless of the circumstances of their district, as the Princeton sociologist Matthew Desmond NEW YORK, OAKLAND AND WASHINGTON, DC so harrowingly demonstrated in his re- search on eviction. The second is that poor Accusations levelled at gentrification lackforce, meanwhile its benefits go unsung neighbourhoods have lacked investment ENTRIFIER has surpassed many wor- ly to stay put if they live in these areas. At for decades, and so have considerable Gthier slurs to become the dirtiest word the same time, the benefits of gentrifica- slack in their commercial and residential in American cities. In the popular telling, tion are scarcelyconsidered. Longtime resi- property markets. A lot of wealthier city hordes of well-to-do whites are descend- dents reap the rewards of reduced crime dwellers can thus move in without push- ing upon poor, minority neighbourhoods and better amenities. Those lucky enough ing out incumbent residents or businesses. that were made to endure decades of dis- to own their homes come out richer. The “Given the typical pattern of low-income crimination. With their avocado on toast, left usually bemoans the lack of invest- renter mobility in New York City, a neigh- beard oil and cappuccinos, these people ment in historically non-white neighbour- bourhood could go from a 30% poverty snuff out local culture. As rents rise, life- hoods, white flight from city centres and population to 12% in as few as ten years long residents are evicted and forced to economic segregation. Yet gentrification without any displacement whatsoever,” leave. In this view, the quintessential scene straightforwardlyreverseseach ofthose re- noted Messrs Freeman and Braconi in their might be one witnessed in Oakland, Cali- grettable trends. study. Indeed, the number of poor people fornia, where a miserable-looking home- living in New York’s gentrifying neigh- less encampment rests a mere ten-minute One in, none out bourhoods barely budged from 1990 to walkfrom a Whole Foodslandscaped with The anti-gentrification brigades often cite 2014, according to a study by New York palm trees and bougainvillea, offering chia anecdotes from residents forced to move. University’s Furman Centre. Third, city and flaxseed upon entry. An ancient, sinis- Yet the data suggest a different story. An in- governments often promote affordable- ter force lurks behind the overpriced pro- fluential study by Lance Freeman and housing schemes, such as rent control or duce. “‘Gentrification’ is but a more pleas- Frank Braconi found that poor residents stabilisation, in response to rising rents. ing name for white supremacy,” wrote living in New York’s gentrifying neigh- Gentrification has been so thoroughly Ta-Nehisi Coates. It is “the interest on en- bourhoods during the 1990s were actually demonised that a mere discussion of its slavement, the interest on Jim Crow, the in- less likely to move than poor residents of benefits might seem subversive. That does terest on redlining, compounding across non-gentrifying areas. A follow-up study not make them any less real. Residents of the years.” by Mr Freeman, using a nationwide sam- gentrifying neighbourhoods who own This story is better described as an ur- ple, found scant association between gen- their homes have reaped considerable ban myth. The supposed ills of gentrifica- trification and displacement. A more re- windfalls. One blackresident ofLogan Cir- tion—which might be more neutrally de- cent examination found that financially cle, a residential district in downtown fined as poorer urban neighbourhoods vulnerable residents in Philadelphia— Washington, bought his home in 1993 for becoming wealthier—lack rigorous sup- those with low credit scores and no mort- $130,000. He recentlysold it for$1.6m. Busi- port. The most careful empirical analyses gages—are no more likely to move if they nesses gain from having more customers, conducted by urban economists have live in a gentrifying neighbourhood. with more to spend. Having new shops, failed to detect a rise in displacement with- These studies undermine the widely like well-stocked grocery stores, and in gentrifying neighbourhoods. Often, held belief that for every horrid kale- sources ofemployment nearby can reduce they find that poor residents are more like- munching millennial moving in, one long- commuting costs and time. Tax collection 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

36 United States The Economist June 23rd 2018

2 surges and so does political clout. Crime, can dilute the concentration of poverty— dilapidated cities. In these circumstances, already on the decline in American city which a mountain of economic and socio- arguing against gentrification can amount centres, seems to falleven furtherin gentri- logical literature has linked to all manner to insistence that poor neighbourhoods re- fying neighbourhoods, as MIT economists of poor outcomes, including teenage preg- main poor and that racially segregated observed after Cambridge, Massachusetts, nancy,incarceration and early death. Gen- neighbourhoods stay cut off. undid its rent-control scheme. trification steers cash into deprived neigh- What, then, accounts for the antipathy Those who bemoan segregation and bourhoods and brings people into towards gentrification? The first reason is gentrification simultaneously risk contra- depopulated areas through market forces, financial. Though the process has been go- diction. The introduction ofaffluent, white all without the necessity of governmental ing on for a few decades, the increased at- residents into poor, minority districts intervention. The Trump administration is tention comes in the middle of a broader boosts racial and economic integration. It unlikely to offer large infusions of cash to concern aboutthe costofhousingin Amer- ican cities. The share of households that are “rent burdened”—those spending more America and the UN than 30% ofpre-taxincome on rent—has in- creased from 32% in 2001 to 38% in 2015. The art of the empty gesture Things are worse among the poor; 52% of WASHINGTON, DC those below the federal poverty line spend over half their income on housing. Rents America withdraws from the UN Human Rights Council have risen dramatically, though this can be F ALL the international arrange- the fault of thoughtless regulations which Oments President Donald Trumphas hinder supply more than the malevolence forsaken, the UN Human Rights Council of gentrifiers. The net creation of jobs has deserves the least sympathy.In announc- outpaced additional housing in New York ing America’s withdrawal from the Gene- City by a rate of two to one. In San Francis- va-based body, America’s ambassador to co, perhaps the most restricted American the UN, Nikki Haley,called it, “a protector metropolitan area, this ratio is eight to one. ofhuman-rights abusers and a cesspool A second reason gentrification is dis- ofpolitical bias.” Given that it currently liked is culture. The argument is that the ar- includes abusers such as Congo and rival of yuppie professionals sipping kom- Venezuela among its 47 members, and is bucha will alter the character of a place in disproportionately fixated on alleged an unseemly way. “Don’tBrooklyn my De- Israeli abuses, that was hard to deny.Yet troit” T-shirts are now a common sight in America’s withdrawal will only make it Motor City. In truth, Detroit would do well harder to improve a body that has, de- with a bitmore Brooklyn. AcrossbigAmer- spite its flaws, shown recent signs of ican cities, foreverygentrifyingneighbour- promise. It also represents another small, hood ten remain poor. Opposing gentrifi- but conspicuous, dent in America’s inter- cation has become a way for people to national leadership. display their anti-racist bona fides. This The council was formed in 2006, as Haley storm leads to the exaggerated equation ofgentri- the successor to the terminally discredit- fication with white supremacy. Such objec- ed UN Commission on Human Rights, a council meeting. tions parallel those made by white NIM- body now best remembered forhaving Moreover, under America’s influence, BYs who fret that a new bus stop or had Muammar Qaddafi, Libya’s then the anti-Israel animus has been growing apartment complex will bring people who dictator, as its chairman a couple of years less evident. Between 2006 and 2009, might also alter the culture of their neigh- before its unlamented demise. The coun- when America last boycotted the coun- bourhood—forthe worse. cil was designed to be smaller, more cil, at the instigation ofGeorge W. Bush, orderly and more accountable. Its mem- six ofits12 “special sessions” were de- Porcini progressives bers are elected to three-year terms by the voted to Israel. After America rejoined, The term gentrification has become tarred. UN General Assembly, which can also under BarackObama, only one ofthe 14 But called by any other name—revitalisa- vote, by a two-thirds majority, to remove or so sessions was on Israel. The lesson is tion, reinvestment, renaissance—it would any deemed to have committed “gross clear. IfAmerica truly wanted to stand smell sweet. Take Shaw, a historical centre and systematic violations ofhuman with Israel and improve the UN body, it of black culture in Washington which rights”. Not many have been. Yet the would not now join Eritrea, Iran and limped into the 1970s as a shadow of itself assembly performs valuable work. North Korea in refusing to take part in it. after a series of race riots. Decades of de- It carries out regular human-rights That suggests its decision is motivated cline followed, in which a crack epidemic audits, known as “universal periodic more by Mr Trump’sgeneral aversion to caused the murder rate to spike. Today, reviews”, on each UN member state. It international bodies. After all, he has crime is down. The O Street Market, where has also sent investigators to the scene of previously talked ofwithdrawing from one person was killed and eight were in- many alleged atrocities, including recent- the UN altogether. Quitting the council is jured in a shoot-out in 1994, is now a tran- ly in Burundi, Eritrea, Myanmar, North farshort ofthat, but it is damaging to quil grocery store. Luxury flats with angu- Korea and Syria. Last month the council American leadership nonetheless. In- larchairsand oversized espresso machines voted to send another mission to Gaza, to deed, that is especially true given the in the lobby have sprouted opposite liquor investigate the killing ofPalestinian timing. Withdrawing from the world’s stores. An avant-garde speakeasy beckons protesters by Israeli troops. That was main human-rights forum even as its from the basement beneath a humble justified, notwithstanding the body’s president was grappling with his policy doughnut store. At the Columbia Room, a anti-Israel bias, which is symbolised by a ofdividing migrant children from their wood-panelled bar with leather chairs, standing agenda item on the Palestinian familiesis not a good lookforthe shining mixologists conjure $16 concoctions of Territoriesthat must be raised at every city upon a hill. scotch, blackberry shrub and porcini mushrooms. This is how progress tastes. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist June 23rd 2018 United States 37

Detroit’s railway station As well as the railway station, Ford is also spending $1bn on the redesign of the The Ford Phoenix 80 buildings forming its headquarters in Dearborn, a Detroit suburb. It hopes that these two big renovation projects will help persuade shareholders that it is ready for the revolution in carmaking technologies, DETROIT as well as ride-hailing and ride-sharing. Mr Ford wants Corktown to become the cen- Ford has ambitious plans forthe city’s most beautifulruin tre forthe development ofFord’s driverless ETROITERS still know how to throw a Ford is making a big bet on the gargan- and electric cars. He hopes to lure young Dparty. On June 19th more than 4,000 tuan ruin. The first thing the company had talent away from Silicon Valley to become of the Motor City’s residents, government to work out was whether the building was part ofDetroit’s comebackstory. officials, artists, employees of Ford and even structurally sound. Bill Ford, chair- Plans for the renovation are still vague, members of the Ford family gathered at man of Ford and great-grandson of Henry but Ford expects to use the ground floor for Michigan Central Station, a huge, dilapi- Ford, will not say how much the company cafés, restaurants, shops and performance dated 18-floor Beaux-Arts hulk covered paid orwhat the renovation might cost, but venuesand to turn the higherfloorsinto of- with graffiti, to celebrate its planned re- he insists that a budget has been set aside fice space. The firm has been promised birth with speeches, music and poetry. for such big construction projects. “We un- subsidies by the city and the state of Michi- Once the world’s tallest railway station, derinvested for too long in our facilities,” gan, and has already received a few calls the vacantbuildingbecame emblematic of says Mr Ford. from potential tenants. It is planning to use the city’s descent into bankruptcy and de- After surviving the recession as the halfofthe station’s 500,000 square feet for spair. ‘“The train station isdead’ meant‘De- healthiest of Detroit’s big three carmakers, 2,500 new and existing employees and to troit is dead’,” said Mike Duggan, the Ford is going through a rough patch. Last lease out the other half, preferably to tran- mayor of Detroit, who was among the rev- year Mr Ford fired MarkFields, his chief ex- sport start ups. ellers. From the moment the last train left ecutive, and replaced him with Jim Hack- For those with long memories, this ini- the station in1988, its demolition was often ett, a former boss of Steelcase, a maker of tiative has a familiar ring. Henry Ford II, discussed. Then Ford struck a deal to buy office furniture whose previous experi- grandson of the firm’s founder, tried to re- what Detroiters now hope will become a ence in carmaking consisted of 15 months vive the city’s fortunes in 1970 with the symbol ofthe city’s rebirth. as boss ofFord’s tech incubator. construction of the Renaissance Centre, a Detroit’s comeback is still tentative. Mr Hackett has announced a turna- group ofseven interconnected skyscrapers Nearly all the recovery has happened in round plan that involves cost cuts of $14bn on the riverfront. It cost around $350m to downtown and midtown, an area cover- over five years and a $1bn investment in build. The skyscrapers changed owner- ing just seven of the city’s139 square miles. Argo, a self-driving start up. But he has yet ship several times and were finally bought City officials hope that such a symbolic in- to persuade investors that he can trans- by GM, Ford’sarch-rival, foronly$72m. The vestment will direct more development form Ford into a successful maker of elec- experience has not deterred the Fords from westward, even beyond Corktown, De- tric and driverless cars while not losing trying again. “We have an emotional at- troit’s oldest neighbourhood, where the sight of petrol-drinking vehicles, the com- tachment to Detroit,” explains Mr Ford, railway station stands. Once the fief of pany’s core business. Uber, Tesla and and also a sense of responsibility to the Irish Detroiters, Corktown has a few Waymo (Alphabet’sdriverless-carunit) are city that made Ford a household name. trendy places to eat, but many of its Victor- all worth more than Ford or General Mo- He can pride himselfon already accom- ian houses are abandoned. “This marks tors (GM), the otherbigdomesticcarmaker, plishing one successful reinvention in Mo- the first time where the whole renaissance even though they lose money,and bring in tor City. He remade Ford’s River Rouge of Detroit that we have seen happening no more sales in a year than Ford or GM do plant, once a huge factory of belching downtown starts to flourish into the neigh- in less than a month. Perhaps an alliance smokestacks with its own electricity plant bourhoods,” says Big Sean, a rapper who with Volkswagen that was announced on and integrated steel mill, into a test lab for performed at the Ford party alongside June 19th, at first to develop new commer- green manufacturing methods. “What the Tracy Smith, America’s poet laureate; Josh- cial vehicles, will eventually deepen. A Rouge was in the industrial age, Corktown ua McClendon, a Detroit-born cellist; and closer association might strengthen and will be to Ford in the information age,” the Detroit Children’s Choir. energise Ford. reckons Mr Hackett. 7

Fixer-upper РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

38 United States The Economist June 23rd 2018

University admissions Fighting statistics with statistics, Har- vard’s lawyers hired David Card, a promi- Affirmative dissatisfaction nent labour economist at the University of California, Berkeley. His model includes factors like the quality of a candidate’s high school, parents’ occupations and the disputed personal rating. Under these con- trols, Mr Card claims that Asian-American applicants are not disadvantaged com- Alawsuit reveals how peculiarHarvard’s definition ofmerit is pared with whites. But given that these fac- BBOTTLAWRENCE LOWELL, the presi- tors are themselves correlated with race, Adent of Harvard from 1909 until 1933, Colour in the lines Mr Card’s argument is statistically rather thought the university had too many Jews. United States, Harvard University admission rates* like saying that once you correct for racial In the first yearofLowell’s presidency,they By ethnicity and academic ranking, 2010-15, % bias, Harvard is not racially biased. made up 10% of the student body. By 1922 60 The duelling economists disagree be- their numbers had more than doubled. To Black cause they cannot agree on what consti- address what he called “the Hebrew pro- Hispanic 50 tutes fairness. Susan Dynarski, an econo- blem”, Lowell proposed an explicit Jewish White 40 mist at the University of Michigan, argues quota of15%. When that proved controver- Asian that MrArcidiacono’s model tests forracial sial, he set about making “a rule whose 30 bias in an idealised system. Mr Card’s motive was less obvious on its face” to 20 model searches for racial bias in the con- deny admission to students suspected of text ofhow Harvard actually operates. beingJewish.Admissionto Harvard, previ- 10 For those unconvinced by fancy maths, ously granted by meeting a clear academic the basic statistics also lookworrying. Har- 0 cut-off, became more nebulous—based 12345678910 vard insists that it has no racial quotas or more heavily on the “character and fit- Worse Academic deciles Better floors, which would fall foul of Supreme ness” of applicants. The new “holistic” ad- Source: Peter Arcidiacono, *Excluding legacies and Court rulings and jeopardise the universi- missions policy worked as intended, suc- for the plaintiffs recruiting athletes ty’s federal funding. Yet the share of Asian- cessfully suppressing Jewish admissions. Americans it admits has stayed near 20% Harvard, like many of America’s top plicants. The alumni who conduct in-per- over the past decade. This is true even as universities, retains a holistic admissions son interviews rate Asian-Americans as the number of Asian-Americans in high process. Unlike elite universities in most highly as white applicants. To SFFA, this schools has increased. Caltech, a top uni- other countries, American colleges do not constitutes clear proofofdiscrimination. versity without race-based affirmative ac- simply select the cleverest pupils—they Peter Arcidiacono, an economist at tion, saw its share of Asian-Americans in- also take into account extracurricular ac- Duke University employed by the plaint- crease dramatically over the same period. tivities, family wealth and race. To critics, iffs, built a statistical model of the effect of Court filings also reveal how legacy this system still operates as an engine of race on admissions. He estimates that a preferences, which give significant advan- unfairness, except that the victims have male, non-poor Asian-American applicant tages to the relatives of alumni, skew Har- now become Asian-Americans, who out- with the qualifications to have a 25% vard’s admissions system. A suppressed perform their white peers on academic chance of admission to Harvard would internal report shows that the preference is measures but still face stiffer odds when have a 36% chance if he were white. If he the same size as that given to black appli- applying to Ivy League colleges. Students were Hispanic, that would be 77%; if black, cants. Roughly 34% oflegacy applicants are forFairAdmissions (SFFA), an organisation it would rise to 95%. Damningly for the de- admitted—more than five times the rate of founded by Edward Blum, a conservative fendants, an internal report by Harvard’s non-legacy applicants. This is tantamount activist opposed to race-based affirmative research arm, obtained during discovery, to affirmative action for well-off white stu- action, filed a lawsuit against Harvard al- reached the same conclusions. Harvard of- dents. According to a survey of freshmen leging discrimination against Asian-Amer- ficialsclaim thatthe reportwasincomplete conducted by the Harvard Crimson, the ican students in 2014. Despite a furious ef- and the analysis oversimplified. college newspaper, 88% of legacy students fort to quash the suit, Harvard was forced come from families making more than to turn over 90,000 pages on its tightly $125,000 a year. Recruited athletes, which guarded admissions process. On June 15th Harvard admits in droves to fill its lacrosse both sidesrevealed duellingstatistical ana- teams and rowing eights, are also dispro- lyses of admissions-decision data in court portionately white. By Mr Arcidiacono’s filings. Harvard’s reputation for fairness reckoning, 22% of white students are lega- and impartiality emerges bruised. cies and 16% are recruited athletes. By the admission office’s own ratings, Even if Harvard does not actually dis- Asian-Americans rank higher than white criminate against Asian-Americans, its in- applicants in both their academic prowess sistence on preserving hereditary prefer- and the quality of their extracurricular ac- ences undermines its case. Rakesh tivities. Yet their admission rates are much Khurana, the dean of Harvard College, jus- lower. For Asian-Americans in the top dec- tified the policy on the grounds that it ile of academic skill, just 13.4% are admit- would bring those with “more experience ted, compared with 18.5% of whites (see with Harvard” together with “others who chart). Asians are scored much worse on are less familiar with Harvard”. Others say another measure of applicant quality—the that it is necessary to ensure fundraising. “personal rating”—by admissions officers. Aside from the moral questions this poses, Unlike the other two metrics, personality it is worth noting that nearby MIT, which is judged subjectivelyand is decided by ad- does not favour legacy applicants, man- missions officers who have not met the ap- Admission of gilt ages to do just fine. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist June 23rd 2018 United States 39

There are two main reasonsforthe resil- ience of small-town newspapers. The first is that size matters. Businesses in small communities know that every reader of a local paper is a potential customer, and ad- vertise accordingly. Newspapers in bigger cities do not enjoy this advantage. Nor are they representative of the industry. Al- though much attention is lavished on newspapers in metropolitan areas, they represent less than 2% of all American newspapers, according to a paper entitled “Despite losses, community newspapers still dominate the US market”. Community dailies and weeklies, by contrast, account for60% ofall the papers sold. Second, small communities rally round their newspapers in ways that bigger ones do not, with rates of loyalty twice that of readers of national or regional papers, ac- cording to research by Penelope Muse Ab- ernathy of UNC. The Shawangunk Journal, published from Ellenville, New York and serving the region around it, was on the verge of shutting down when its publisher Small-town newspapers tried a new tactic: a subscription drive with an annual price of at least $55 a year Still kicking and as much as subscribers could afford to give. Some people contribute as much ev- ery month, says Amberly Jane Campbell, who describes herself as “publisher, dis- tributor, managing editor, and everything LONDON, KENTUCKY else”. The paper is now back in the black. Asking for donations is an increasingly Reports ofthe death oflocal newspapers have been greatly exaggerated popular business model. AY NOLAN surveys his media empire sign business,” he says, but local newspa- Small papers are not relying on good- Jfrom a shed-like building outside Lon- pers are important. “If journalists aren’t will alone. They are experimenting with don, Kentucky. On his desk is a stack of here, Kentucky will become as corrupt as the same things the big papers are trying, eight newspapers, including the Berea Citi- Afghanistan.” including digital advertising, events, spon- zen (“established in 1899”, circulation 4,511), This is a worry that animates discus- sored content, glossy supplements and the Mountain Advocate (“since 1904”, circu- sion of local news in America. Circulation magazines, and price increases. Some, lation 4,500) and the Pineville Sun-Cumber- and ad revenue have been shrinking for such as the Sentinel-Echo in London, are land Courier (“celebrating109 years”, circu- years, as has the number of newsroom even expecting modest growth, mostly lation 1,646). staff. Papers have become thinner or shut from online. Each paper is under local management, down altogether. America has lost a fifth of with its own publisher and editor, but No- its newspapers since 2004. Taking the First lan Group Newspapers owns a majority Media-watchers worry about “news The survival of small-town newspapers in stake in all of them and prints them at its deserts”, or areas without any newspa- America is farfrom guaranteed. The towns press outside London. Together, the eight pers. The mere presence of reporters at they serve are growing older and thinning papers have a combined circulation of city-council meetings can help keep them out as working-age Americans migrate about 25,000 and employ a dozen journal- straight, says Al Cross, the director of the from small towns to cities, often never to ists and nine ad-sales representatives. Institute for Rural Journalism at the Uni- return. Mandatory advertising by local They bring in around $2m in revenue, per- versity ofKentucky. government, a significant source of rev- haps $3m in a good year, with a profit mar- Yet look beyond the headline figures, enue, is increasingly under attack as state gin ofabout10%, says Mr Nolan. and the health of small-town newspapers legislatures try to save money. Tariffs on The local-newspaperbusinessisnot go- may not be as bad as it appears. Fully 61% imported Canadian newsprint have raised ing to make him rich. Which is why he also of weekly papers and 70% of dailies that costs. Another worrying trend is of local owns J. Frank Publishing, which under- have ceased publication since 2004 are in owners selling to big media companies as takes contract printing work for other counties with more than 100,000 people. the industry consolidates, robbing local newspapers and commercial clients, and Just 20% of weeklies and 11% of dailies dis- newspapers of the very thing that makes produces banners and signs where mar- appeared in counties with fewer than them valuable. Yet they may be “in a stron- gins are juicier. Mr Nolan, a third-genera- 30,000 people, according to researchers at ger position than their metro cousins”, ac- tion newspaperman, took over the busi- the University of North Carolina (UNC). cording to a recent report by the Tow Cen- ness in March, when his father retired to The number and variety of newspapers tre forDigital Journalism. Thatiscrucial. As Florida. It is not a role he planned. After that continue to exist—in tiny towns with Mr Nolan puts it, “We have to have a free five years in the army, including deploy- populations in four figures, at gas stations and vibrant press in America to be great in ments to Afghanistan, he returned home, in poor rural counties, and in villages America.” That is as true of little towns in initially taking a job in finance in Califor- clumped near each other—give hope to the hills and hollows of Kentucky as it is in nia. “I can make a lot more money in the even the most pessimistic observer. Washington, DC. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

40 United States The Economist June 23rd 2018 Lexington A blot against America

But Donald Trump’s ill-fated policy ofcaging children will hurt his partymore than him because the Democrats are associated with the immigrant com- munities Mr Trump attacked, his tactic also turbocharged parti- san enmity, which helped mollifythem. In the run-up to whatare expected to be gruelling mid-terms for Republicans, Mr Trump’s family separations were an effortto dust offa winning script. There are many clues to that, starting with the erratic ways the administration defended it. Restrictionists such as Jeff Sessions, the attorney-general, presented family separation as a deterrent against illegal crossings. Kirstjen Nielsen, the secretary of home- land security, said it was not the administration’s policy. Mr Trump said it was because of a law passed by the Democrats, which is pretty much his 2016 strategy. The conservative media, now as then, tried to normalise his latest transgression with snarky jokes about what a no-big-deal it was and yet how crazy it made liberals. On Fox News, Laura Ingraham described Mr Trump’s strip-lit child cages as “essentially summer camps”. The president’s roster of outraged critics was also the same. It consist- ed of Democrats, pro-immigrant groups, Hollywood celebrities and Never Trump Republicans (including Laura Bush, whose in- tervention was not the game-changer her admirers hoped). With only a small majority of Republican voters in favour of HERE is a moment in “The Plot Against America”, Philip the policy, it had long looked like a misstep nonetheless. Yet Mr TRoth’s tale of America succumbing to 1930s-style authoritar- Trump’s decision to change course represents neither a disas- ianism, when the nine-year-old protagonist experiences a pro- trous retreat nor a major moral repulse. Indeed, the farrago sig- found revulsion at the foibles on which wickedness thrives. nalled his strength as well as his weakness. Though prominent “Never in my life had I so harshly judged any adult,” he recalls of Trump supporters were unhappy with the policy, including his Jewish aunt’s preening over a brief interaction with the anti- some evangelical Christians, few blamed him forit. Franklin Gra- Semitic president, Charles Lindbergh. “Nor had I understood till ham called it “disgraceful”, but blamed “politicians forthe last 20, then how the shameless vanity of utter fools can so strongly de- 30 years”. Republicans in Congress, while working to find a legis- termine the fate ofothers.” That is as much respite as the recently lative climbdown for the president, similarly restrained them- deceased author, who combined a stubborn faith in America selves. The policy’s cancellation by executive decree looks more with a gloomy view of its politics, allows his reader. There is no like a precautionary step by a president enjoying his best ratings chance of America sharing his awakening. The power of the since his inauguration. There may even be a modest upside for boy’s epiphany lies not only in its clarity, but also in its futility. him. The row provides Republicans facingdifficult mid-term con- Roth’s pessimism about the prospect of national redemption tests—including Senator Ted Cruz, who tried to provide a legisla- should be instructive to critics of President Donald Trump’spoli- tive escape route—with a rare issue on which they can claim to cy ofcagingmigrant children in isolation from theirparents. They have disagreed slightly with the president. hope voters will recoil from both this ill-fated debasement of Mr Trump’sopponents need to tread carefully. Ifpolitics were American values and its architect. But not even the policy’s can- about being right, not winning arguments, Mr Trump would not cellation on June 20th will achieve that. Though America has ex- be president. Most Americans want migrants to be treated hu- perienced many moral corrections, from abolitionism to the civ- manely but, as his election showed, they also want strong bor- il-rights movement, they have never come in the emetic moment ders. The ever-sprungtrap MrTrump sets his opponents is that, in MrTrump’scriticspine for. The tortured issuesofrace and nation- feverish concern forthe first, they neglect the second. al identity that explain its darktimes, as they do now, are too con- tested. America’s moral shortcomings under Mr Trump, includ- A dish best served cold ing his attempted Muslim ban, slashing of the refugee The dangerforMrTrump’sRepublican supporters is less immedi- programme and draconian border policy, were the promises of ate, but greater and perhaps insurmountable. The history of his election campaign. There are indeed too many echoes of2016 America’s moral corrections suggests that what they lack in spon- in this latest row forhis opponents to feel triumphant. taneity they make up for with momentum. Democrats’ opposi- Mr Trump entered American politics, three years ago this tion to the civil war cost them the presidency for over two de- month, with a campaign-defining rant against Mexican “rapists” cades. Republicans’ opposition to civil rights cost them most of and otherillegal immigrants. Itwasreprehensible and effective in their non-white support, leading them to the white-identity poli- several ways. It positioned him with voters, most ofthem Repub- tics from which Mr Trump isnow wringing the last drop of juice. licans, who worried about immigration, and against the party’s It would be a short-term strategy, in an increasingly non-white patrician leaders, including his main rivals at that time, the Bush America, even if he were a more ruthless demagogue than he is. clan. It also showed, notwithstanding legitimate worries about Asked to compare Mr Trump with his fictional villain, Roth said the effect of immigration on wages, how well he understood the Lindbergh was imposing, a heroic aviator, and Mr Trump “just a issue’s ability to connect with the racial anxiety of America’s con artist”. His dog-whistle on immigration may sustain his presi- dwindling white majority. He thereby engineered the most ra- dency; it will not interrupt how America is changing. That combi- cially divisive election in years. Many Republicans disliked it. Yet nation spells a long-term disaster for his party. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

SPECIAL REPORT THE GULF June 23rd 2018

The new Arab revolution РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

SPECIAL REPORT THE GULF

A wild ride

Radical reforms in Saudi Arabia are changing the Gulf and the wider Arab world, says Anton La Guardia

YEAR AFTER YEAR Arwa Alneami’s pictures of women at an amuse- CONTENTS ment park captured the obsessions of Saudi Arabia’s killjoy religious po- lice. On “the ship”, a wild-swinging ride, black-clad women and white- 5 How oil shaped the Gulf robed men were made to sit at opposite ends. When they started throw- From pearls to black gold ing telephone numbers to each other, men and women had to take turns 6 The politics of Islam (pictured). The ship then sprouted opaque plastic sides to prevent men Muslims but not brothers from looking at the women, and bright lights to dazzle the gawpers. Then suddenly last year the mutawaeen disappeared. The Commit- 7 Regional politics tee for the Prevention of Vice and the Promotion of Virtue, to give them Cold war in the heat their formal title, no longer have the power to enforce public morality. 8 Geopolitics ACKNOWLEDGMENTS These days the Saudi state is all about promoting fun: concerts, fashion, Insecurity complex art, sport. The ratchet ofsocial rules has gone into reverse. Alongwith the In addition to those quoted in this 9 Beyond oil Special Report, many other people muezzin’s call to prayer the unfamiliarsound oflaughter can be heard. gave generously of their time and Ms Alneami’s pictures also capture the pathos, humour and de- Breaking the curse offered their invaluable insight. fiance of women riding bumper-cars at funfairs, the closest most could Some, given their position, could 10 One emirate leads the way not be quoted. Others did not feel come to driving real cars. But on June 24th they will, at last, be allowed to Do buy able to speak openly in the current take the wheel on Saudi roads. The artist says she and her four sisters are political climate of the region. The torn. One thinksitistoo dangerousto drive. Anotherwill dispense with a 12 The dangers of reform author wishes to express his warm driver and pick up her children from school herself. Ms Alneami and the Waiting for the backlash thanks to them all. He is also grateful for the kindness and others will be patient. She has driven in the desert but will wait until the expertise of: Elliott Abrams, Jon rush ofwomen applying fordriving lessons slows and the cost falls. Alterman, Mohammed Baharoon, Saudi women have a long way to go—they are still subject to legal Alfred Bloom, Toby Dodge, HRH Turki guardianship by husbands or male relatives who must, for instance, give Al Faisal, Nicolas Farah, Philip Gordon, Shadi Hamid, Bernard them permission to travel. But Saudi Arabia is becomingless exceptional. Haykel, David Hobbs, Hussein Ibish, The quest for normality is part of a remarkable revolution; an attempt to Martin Indyk, Nadine Kettaneh, Jane refashion Saudi society away from ultra-strict Islamic codes and diver- Kinninmont, Ali Lootah, Robert sify its economy away from dependence on oil. The kingdom is the Malley, Helal Almarri, Sheikh Nahyan bin Mubarak al-Nahyan, Ghanim world’sbiggestoil exporterand home to Islam’stwo holiestplaces, so the al-Najjar, Zaki Nusseibeh Ahmed Al success or failure of the reforms will affect the rest of the world, starting Omran, Faisal Alothinah, Mina with the Gulf Co-operation Council (GCC), a regional body that also in- al-Oraibi, William Patey, Madawi cludes Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates. As al-Rasheed, Bruce Riedel, Nasser Saidi, Ali Shihabi, Fahad al-Sumait, one Saudi official put it: “Where Saudi Arabia goes, the GCC follows. Karen Young and Khalifa al-Zaffin. Where the GCC goes, the Arab world follows. Where the Arab world 1

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2 goes, the Muslim world follows.” TURKEY TURKMENISTAN The country’s first new public cine- ma since 1979 opened in April to enthusi- Tehran SYRIA 18.3 39.3 astic audiences in a never-opened metro 6.1 LEBANON station in Riyadh, designed by the late Mediterranean Beirut Damascus Baghdad IRAN 82.0 36.4 Sea 8.5 ISRAEL Zaha Hadid, an Iraqi-born architect. The IRAQ West Bank AFGHANISTAN initial screenings were of superhero spec- Gaza JORDAN 9.9 Strip Petra KUWAIT taculars: “Black Panther” and “The Aveng- Cairo The BAHRAIN 1.6 ers: Infinity War”. But the most eye-pop- NEOM project (proposed) Gulf EGYPT 4.2 QATAR 2.7 ping aspect was the fact that men and LIBYA Nile PAKISTAN Mada’in Saleh Ras Tanura women were allowed to sit together. Dammam 6.5 99.4 Dubai Saudis might think they are in a fan- Medina Riyadh Doha Jebel Ali Abu Dhabi tasy film of their own. The superhero is Red Muhammad bin Salman, the powerful Sea SAUDI ARABIA Jeddah UAE OMAN crown prince, still just 32. “He has aston- Mecca 33.6 9.5 4.8 ished people by breaking the rules of reli- SUDAN 41.5 gious extremism and pushing for moder- GDP per person ate Islam,” says Ms Alneami. Many people 2018 forecast, $’000 28.9 INDIAN worry God will be angry because so < 1 10-19 ERITREA YEMEN 4.5 1-5 20-39 Sana’a OCEAN much is haram (forbidden), she says. Mukalla 5-10 >39 “Some ladies struggle to breathe when Gulf of Aden No data Aden they talk about the changes. I tell them DJIBOUTI 1.0 Socotra (to Yemen) ‘You go to the cinema in Dubai. Is God Population only in Saudi Arabia and not in Dubai?’ ” 2018 or latest, m Somaliland andPuntla ETHIOPIA SOMALIA 15.2 Most young Saudi men are de- Sources: IMF; UN 500 km lighted, too. A group offriends in their 20s, sitting at a coffee-shop in a mall, stand out in their T-shirts and baseball caps. A year ago, they say, the muta- he calls “the Gulf moment”. The oil monarchies of the Arabian waeen would nothave letthem in. “Theytreated usasthough we (or Persian) Gulf have moved to the centre of the Arab world. In might be wolves,” says Fahad. His friend, Ahmad, chips in: “Pre- an audio recordingleaked in 2015, Egypt’s President Abdel-Fattah viously, minds were closed. Now they are open.” But, for some in al-Sisi and his advisers are heard to dismiss the monarchies as this group, not so open as to allow their own sisters to work in mere “half-states” with so much money that they treat it “like mixed offices. As one put it: “Our families and tribes would ask rice”. But for all of their contempt, Egyptian rulers have become us: ‘Are you not men?’ ” mendicants at the feet ofthe kings, emirs and sultans of the Gulf. Two years ago, when he set out his reforms, known as “Vi- Never before have Gulf states wielded such power. “The small- sion 2030”, Prince Muhammad’s focus was almost entirely on re- est Gulfstate has more influence than the biggest Arab state,” de- viving the economy, as oil prices were dropping sharply. Wom- clares Mr Abdulla. The GCC accounts for about 60% of the Arab en’s right to drive would be leftforsociety to decide, he declared. world’s GDP but only 12% of its population (or half that, exclud- These days, social habits are changing so fast that some wonder ingforeign workers). It produces 24% ofthe world’s crude oil. Du- whether the prince is, in fact, pursuing a social and religious bai in the UAE has become a global city. transformation under the guise ofan economic one. Riyadh is the centre ofregional diplomacy. Donald Trump’s Unlike many of his peers, the crown prince has not been first trip as America’s president was to an Islamic-world summit educated in the West. He sees himself as the champion of the hosted by King Salman. Gulf states have become even bigger young (under-30s form a majority of the population). His buyers of weapons, and have been more willing to use them— changes amount to a youth revolution directed from the top most controversially in Yemen. Culture is blossoming, too. Gulf down, by a prince in his palace, rather than from the bottom up, states have bought up much of the Arabic-language media, and by angry demonstrators on the streets. The GCC states mostly launched several satellite-news channels, the most famous and avoided the uprisings of the Arab spring in 2011, and the chaos controversial of which is Al Jazeera, based in Qatar. A branch of that ensued (unrest was quelled in Bahrain). Gulf leaders have the Louvre museum is housed in a sumptuously latticed dome long known that they could not rely on oil forever, but feared on Abu Dhabi’s seafront; and Doha boasts one of the finest mu- change. The motto of the late King Abdullah was yawash, ya- seums of Islamic art. Some of the world’s best-known universi- wash (slowly, slowly). Prince Muhammad, by contrast, “is flying ties are establishing outposts in the region. high and fast”, says Abdulrahman al-Rashed, a columnist. “I have not yet recovered from shock after shock after shock.” Shifting sands Although he is seen as the superhero, the crown prince also This special report will examine how Gulf monarchies has much of the villain about him. The country has become achieved all this, and the consequences of their new promi- more authoritarian. Critics ofall stripes have been jailed; several nence. In part, they stand tall because so many of the old bas- women’s-rightsactivistswere arrested in May. The number ofex- tions of Arab power have toppled. Cairo is stagnant after the ecutions has risen sharply. Hundreds of princes, officials and uprising of 2011that ejected Egypt’s strongman, Hosni Mubarak, businessmen were hauled into the Ritz-Carlton hotel last year and the coup of 2013 that brought another, Mr Sisi, to power. Da- and made to hand over part oftheir wealth in a surreal “anti-cor- mascus is contendingwith Syria’s appallingcivil war. Baghdad is ruption campaign”. “We have the right to dance,” notes one Sau- only just recovering from Iraq’s succession of conflicts. Beirut di businessman. “But we do not have the right to speak.” never regained its place after the Lebanese civil war of 1975-90. Still, there is new energy in the Gulf. For Abdulkhaleq Abd- Yet Gulf states can boast achievements of their own. In ulla, a political scientist in the UAE, the Arab world is living what many countries there was poverty in living memory. “The water 1

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2 was yellow and my father used to filter it with his headscarf,” Much will depend on the impulses of three headstrong says Sara al-Amiri, a minister in the United Arab Emirates. Now young men: Muhammad bin Salman of Saudi Arabia; Muham- the UAE is a model of success. According to the annual Arab mad bin Zayed, the crown prince ofAbu Dhabi and the real pow- Youth Survey, issued byASDA’A Burson-Marsteller, a public-rela- er of the UAE; and Sheikh Tamim bin Hamad, the emir of Qatar. tions firm, the UAE is the country where 18- to 24-year-old Arabs These royals are less constrained by the traditions and obses- would most like to live, ranking well ahead of countries such as sionsofthe past, notablythe question ofPalestine. Neither Qatar America, Germany or Canada. nor the UAE existed as independent states when Israel humiliat- Yet there is much uncertainty. Social transformation re- ed Arab armies in 1967. Given the fear of Iran, many Gulf leaders quires Saudi Arabia, in particular, to grapple with Islamic ultra- these days regard Israel as an ally rather than a foe. puritanism. In abandoning its past caution, it has waded into an Rich, ambitious, unconstrained by democratic institutions unwinnable war in Yemen and split the GCC in a feud with Qa- and too often untempered by experience, the three royals have tar. It hopes America will do more to push back Iran. Above all, the daring to lead their countries to a post-oil future, and to pro- Gulf states have to overcome their dependence on volatile oil mote more moderate forms of Islam. But they also betray a rash- and coax their pampered people into productive work. They ness, especially in foreign policy, that could just as easily lead to must do all this without a destabilising backlash. the next round ofchaos and war in the Arab world. 7

From pearls to black gold

How oil transformed the Gulf

NATURE GAVE THE Gulf two bounties. Above, The first Saudi state of 1744-1818 was the Soviet intervention in Afghanistan. in the shallow waters of the sea, oyster beds crushed by the Ottomans. The weak second Oil turned the poor and loosely organ- have yielded pearls since antiquity. In the Saudi state of 1824-91collapsed from in- ised tribes of the Arabian peninsula into 19th century they were sold across the world ternal turmoil. The third and current one was some of the world’s wealthiest states. In through merchants in Mumbai. Below reconstituted by Abdel Aziz Al Saud and contrast with most countries, which must tax ground, in ripples of rock where the Arabian named Saudi Arabia in 1932. He received citizens to raise the money needed to provide plate pushes under the Eurasian one, some of some help from Britain. It acquiesced when services and security, Gulf rulers collected the world’s richest oil deposits were discov- he defeated the Hashemites, Britain’s ally in rents from oil and distributed some of the ered in the early 20th century—in Iran in the first world war, and took the holy cities of bounty to citizens. These “rentier states” 1908, Iraq in 1927, Bahrain in 1932 and, Mecca and Medina. But Britain prevented provided cradle-to-grave benefits in return above all, in Saudi Arabia in 1938. him from overwhelming, among other places, for obedience. In Saudi Arabia, the rulers Until then the Gulf had mostly been of the trucial coast and Oman. gave Wahhabi clerics leeway to impose social marginal importance to surrounding em- President Franklin Roosevelt met King norms and in return received religious legiti- pires. Notions of sovereignty were vague and Abdel Aziz in Egypt in 1945 after the Yalta macy for their rule. applied to people more than land. Nomadic, summit, laying the foundation for an endur- Gulf citizens were propelled from tribal lifestyles meant that rulers had limited ing, if troubled, alliance. The British with- poverty to a life of comfort. Standards of means to enforce their will, since dissenters drew from east of Suez in 1971and were health and education improved quickly. The could move elsewhere. replaced by America as the region’s protector thinly populated Gulf states hired Western The Al Khalifas who settled in Bahrain from 1979, after the Iranian revolution and experts to help them build their countries split from the Al Sabahs of Kuwait; both trace and an army of Asians to do the menial la- their origins to a migration from central bour. Foreigners make up about half the Arabia in the 17th century. The Al Thanis of population of Gulf states, ranging from 90% Qatar, in turn, rebelled against the Al Kha- in the UAE and Qatar to 30% in Saudi Arabia. lifas. The Al Maktoums of Dubai split away For all the benefits of oil, however, from the Al Nahyans of Abu Dhabi. Tribes some lamented the passing of the hardy straddle modern borders, and many of the desert life. Bandar bin Surur, a 20th-century Gulf’s ruling clans intermarried. Saudi poet, wrote: “The chiefs of Nejd’s tribes Starting in the 18th century, the Gulf who uprooted mighty armies/have become emirs came under the protection of the docile and content to feed, like chickens, on British empire, which sought to keep rivals grain thrown to them on dirt.” away from the approaches to India. The Because benefits for citizens are so British imposed truces on the internecine generous, rentier states define citizenship fights of the emirs (hence the region’s name, narrowly, even cruelly, excluding hundreds of “the trucial coast”). thousands of Arabs known as bidoon, who are In the Arabian interior, meanwhile, the not deemed to qualify. Foreign workers, too, Al Sauds in the Nejd struck a pact in the 18th are largely kept in a state of bondage through century with a puritanical cleric, Muhammad the kefala system, whereby local sponsors of ibn Abdel-Wahhab, and his followers. To- expatriates must give consent for them to gether they conquered much of the peninsula change jobs or leave the country. As with and the alliance persisted through the ebb much else, citizenship in the Gulf is a gift and flow of the Al Sauds’ rule. Supertankers of the desert from the ruler, not a right.

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The politics of religion salafists but, because they permit rebellion against impious rul- ers, they are regarded as more subversive. Still, early on the Muslims but not Brothers enjoyed good relations with Gulf rulers, who thought them useful against nationalists and leftists. But after the Iraqi in- vasion of Kuwait in 1990, when part of the Brotherhood sup- brothers ported Saddam Hussein, the Islamists were regarded with great- er suspicion. In many Arab countries the Brothers established themselves by providing social services for the poor. In the rich Saudi Arabia turns against political Islam Gulf, the Brotherhood developed a form of“rentier Islamism” in which opposition was based on religious issues, says Courtney HOWTO OVERTURN God’s law? Or, rather, how to change Freer of the London School of Economics. “Islamists have not what you had previously said was God’s law? This is the tended to focuson economicpolicy,” she argues. “Theirsisa mor- question facing Muhammad bin Salman as he loosens social re- alising agenda. For them, governments have to prove that they strictions. His conclusion? Blame it all on Iran. The crown prince are guardians ofthe morality ofthe nation.” says his country took a wrong turn in 1979. That was the year Muhammad bin Zayed of Abu Dhabi, the main power in when Shia Islamists overthrew the Shah of Iran, Sunni extrem- the United Arab Emirates, regards the Brothers as a menace. The ists opposed to the Saudi monarchy stormed the Grand Mosque UAE has arrested scores of their activists. Sheikh Tamim bin Ha- in Mecca and the Soviet army marched into Afghanistan. mad of Qatar, by contrast, has been a principal sponsor of the Before that, so the story goes, Saudis could enjoy cinemas Brotherhood (see next article). Under Muhammad bin Salman, and concerts. Even in the time ofAbdel Aziz Al Saud, the founder the hitherto ambiguous Saudis now side with the Emiratis. He ofthe modern Saudi state, women worked in the fields and rode speaks of a “triangle of evil” encompassing Iran, IS and the Mus- camels alone. But after 1979 Saudi kings, who call themselves lim Brotherhood. As such he seems to be drawing a dividing line custodians of the two holy mosques, resolved to outdo their between Arab states (and tame salafists) on one side, and all foes, both Shia and Sunni, in Islamicpiety. forms of Islamism on the other—be they non-violent Brothers or The more relaxed social rules now being introduced are jihadists. “It is a crazy analysis about the threat of a pan-Islamic thus no heresy, says the crown prince; they are simply a return to empire,” says Jamal Khashoggi, a former editor of al-Watan, a a pre-existing normality. “Islam is moderate in Saudi-owned newspaper, who now works as a its ways. It is unfortunate that extremism has hi- columnist in exile in America. “He treats IS and jacked this religion,” says Sheikh Mohammad the Brotherhood asthe same thing—the only dif- Alissa, head of the Muslim World League, a hAillld God’s c ren ference being that IS tried to create the caliphate body that has long spread ultra-puritanical ide- Religion, % of total population immediately by violence while the Brother- ology. It is a sign of the new times that, these Latest available hood wants to create the caliphate slowly, days, it is busy making ecumenical contacts Sunni Shia through democracy.” with Christians, Jews and others. 040608020 Although the Brotherhood never seemed For Stephane Lacroix of the Sciences-Po very strong in the Gulf, its election victory in university in Paris, the crown prince is building Qatar Egypt in 2012 unnerved Gulf rulers. Saudi Ara- a myth: “Saudi Arabia’s religious authorities bia and the UAE enthusiastically supported the were extreme even before Ayatollah Khomeini UAE coup that overthrew President Muhammad ruled over Iran.” The difference, he says, is that Morsi of the Brotherhood, not least because he after 1979 they were given free rein to impose was moving closer to Iran. For Mr Khashoggi, their rules in corners of the kingdom from Kuwait the campaign against the Brothers is an attempt which they had previously been kept out, such to extinguish the last embers of the Arab spring: Saudi as wealthy neighbourhoods of Riyadh. With Arabia “Democracy and political Islam go together.” the emergence ofglobal jihad, Saudi rulers have The Saudi push for “moderate Islam” may struggled to avoid association with extremist Bahrain have one paradoxical boon. Many Shias hope it groups such as al-Qaeda, the Taliban and Islam- will quieten the worst anti-Shia utterances of ic State (IS), whose religious practices and doc- Source: M. Izady, Columbia University Wahhabi clerics. Shias form substantial minor- trines resemble those of Saudi clerics except in ities across the Gulf (see chart). Many of them when and where to resort to political violence. live overthe richestoilfields. So episodes ofShia How can Saudi authorities distance Wahhabism from jiha- rebelliousness carry not just the fear of separatism, or of Iranian dism? One argument is semantic. They deny that there is any interference, but ofeconomic disaster, too. such thing as Wahhabism; what they practice, they say, is plain To varying degrees, Shias feel discriminated against across Islam as it existed among the salaf, the generation ofthe Prophet the GCC. They are often the downtrodden “other”, regarded as a and his companions (thus they accept “salafism”). A second de- fifth column for Iran if not as outright infidels. During the Arab fence is doctrinal. Real salafism is quiet and non-political, they spring in 2011, many Shias took to the streets to demand greater say. “It dictates that we should obey and hear the ruler,” says freedom. The worst unrest took place in Bahrain, where Sunni Sheikh Mohammad. A third contention is that, if salafists have rulers crushed protests by the majority-Shia population. become rebellious, that is because they have been infected by In Saudi Arabia, protests broke out in the Qatif region. Re- the ideas of the Muslim Brotherhood. Founded in Egypt in 1928 pression set offa spiral ofbloodshed, and armed clashes in Awa- during the agitation against British rule, the Brotherhood has in- miyah, home to a radical preacher, Nimr al-Nimr, who was exe- spired political Islam across the Arab world under different cuted in 2016. The unrest has been quelled and the town centre names, and with various degrees of militancy—from Ennahdha, bulldozed. Prince Muhammad now seeks to distinguish be- the “Muslim democrats” of Tunisia, to Hamas, the armed Pales- tween Shias and Iran. But resentment runs deep. “The people tinian movement that rules Gaza. who took up arms were criminal,” says one local Shia activist, Brothers are often less puritanical in Islamic practices than “but the Saudi government is even more criminal.” 7

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Regional politics phone conversation around 2008 with Muammar Qaddafi, the Libyan dictator later killed during the Arab spring, Sheikh Ha- Cold war in the heat mad is heard to predict that the “corrupt” Saudi leadership would be swept away, and to boast about supporting Saudi op- position groups. Saudi officials talkofQataris giving suitcases of cash to clients ranging from Saudi dissidents to Syrian jihadists. Overthe years, Qatarhas sought influence by promoting Is- lamist groups. The UAE has tried to magnify its role by binding it- Why are the Gulf countries feuding with Qatar? self closely to Saudi Arabia; this month the two allies signed 20 economic and military accords, vowing to create an “exception- “AT FIRST EVERYBODY thought it was a sort of joke. But al” partnership that may well supplant the GCC. after fouror five days we got a call saying we had to go back Sheikhly politics require gentle manners. A similar row to Bahrain or our passports would be withdrawn. We would was patched up in 2014. Why the bust-up now? One reason is the have to leave our mother. We would lose everything.” Alanoud rise ofMuhammad bin Salman in Saudi Arabia. Anothermay be Aljalahma, a 22-year-old premedical student, recounts how the the election of Donald Trump. The Emiratis and the Saudis have rift between the Gulf’s royal clans threatened to sunder her own close ties with Jared Kushner, Mr Trump’s son-in-law. Perhaps, family.Her mother, a Qatari doctor, is divorced from her father, a think some, Mr Trumpgave the anti-Qatar “quartet” the nod at a Bahraini general. Under the Gulf’s patriarchal rules, she and her summit in Riyadh a fortnight before the crisis. Mr Trump later two siblings have their father’s nationality. But they live with tweeted: “During my recent trip to the Middle East I stated that their mother in Doha, the capital of Qatar, and consider them- there can no longer be funding of Radical Ideology. Leaders selves to be Qataris. pointed to Qatar—look!” None of this mattered much when Gulf citizens could tra- Since then MrTrumphasdemanded thatGulfleaderssettle vel freely within the GulfCo-operation Council (GCC). “Physical their dispute quickly.Iran has gleefully stepped in to help relieve borders did not exist forus; our countries shared a lot of tribes in the blockade ofQatar. With all sides lobbying the Trumpadmin- common,” explains Ms Aljalahma. But in June 2017 four coun- istration, American officials have been working with Qatar to tries—Saudi Arabia,the UAE, Bahrain and Egypt—suddenlyostra- halt the flow of money to terrorist groups, and say it complies cised Qatar. They cut all land, air and sea links, and some told more fully than some Gulfstates. AnwarGargash, the UAE’s dep- their nationals to return home. The dispute is the most serious uty foreign minister, retorts: “It is not enough for Qatar to discuss rift in the GCC since its creation in 1981. America is worried that concerns with America and Europe. It has to discuss them with the enmity among its allies is damaging its effort to increase eco- us. It cannot be part ofa club when it undermines the club.” nomic and political pressure on Iran. The quartet has issued 13 demands, which include cutting The feud is being waged through social media, television ties with Iran and the “terrorist” Muslim Brotherhood. The most channels,newspapersandlobbyistsinthe West. The Qatari emir prominent is that Qatar should close Al Jazeera, whose gritty re- is “the reckless prince”; Qataris in turn call the Saudi crown porting broke the conventions of supine, regime-directed Arab prince “the boy”. The UAE has threatened anyone expressing journalism. When Hosni Mubarak visited the network in 1999, sympathy for Qatar with up to 15 years in jail. As the Gulf’s cold barely two years after it was launched, he exclaimed. “All this war spreads, conflicts from Libya to the Horn of Africa often fea- noise is coming out of this matchbox?” Twelve years later the ture Qatar and the UAE backing rival groups. At home, the dis- matchbox would help light the revolution that consumed him. pute has stirred ostentatious nationalism. In Doha bumper-stick- Over the years Al Jazeera has been seen as both a force for ers on cars and posters, even on skyscrapers, display the emir in free speech and a mouthpiece for terrorism. American officials 1 heroic pose over the words: “Tamim the Glorious”. In the UAE the ubiquitous im- age is of Sheikh Zayed, the late founder of the federation, to commemorate the 100th year ofhis birth. Qatar has been contrarian since the 1990s. With perhaps 300,000 nationals— the smallest indigenous population in the GCC—it is the richest emirate per head be- cause of its vast gasfields. In its quixotic foreign policy it hosts both America’s largest air base in the region and many Is- lamists. Its dynastic politics have been poisonous. In 1972 the founding emir was deposed by his cousin, who was then top- pled in 1995 by his own son, Hamad bin Khalifa. The deposed emir mounted a failed counter-coup in 1996, amid suspi- cions of Emirati and Saudi help. Sheikh Hamad abdicated in 2013 in favour of his son, Tamimbin Hamad. The Saudis and Emiratis say Sheikh Hamad still calls the shots and has never forgiven them for trying to unseat him. In a leaked recording of a supposed tele- Face time with Tamim

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2 hated its reporting of the wars in Afghanistan and Iraq; Arab au- Sana’a. Above all, Gulf states fear being tocrats detested the voice it gave to their opponents. Mostefa abandoned by America. Souag, its acting director-general, dismisses claims that it was re- For the Saudis, the Houthis are akin sponsible for the Arab spring: “That is disrespectful to the Arab to Hizbullah, the Iranian-backed militia people. People were fed up with the situation in their countries.” that dominates Lebanon, alarms Israel CriticsthinkAl Jazeera, especiallyitsArabic-language chan- and props up the Syrian regime. Against nel, has become the mouthpiece of the Qatari government. It the Houthis, the Saudis have mustered a was fawning in its coverage of Syrian jihadist groups linked to al- coalition with the UAE, and smaller con- Qaeda, and largely ignored the humanitarian cost of the war in tributions from Egypt, the GCC and other Yemen until the intra-Gulf bust-up. It fails to subject Qatar to the Sunni states—and a variety of Yemeni mi- same hard reporting it applies to other countries. That may ex- litias. Butthe campaign hasdragged on for plain why the annual Arab Youth Survey, issued by ASDA’A Bur- longer than they expected, and talk of son-Marsteller, a public-relations firm, finds that Al Jazeera has seeking a political deal is growing. “There become one ofthe least trusted news sources. is no military solution,” says one Gulf There is much hypocrisy in the charges against Qatar. Too minister, “but we still need military pres- close to Iran? Kuwait and Oman have good relations with the sure on the Houthis.” mullahs. Supports the Muslim Brotherhood? Islamists are prom- The allies this month assaulted Ho- inent in the Kuwaiti and Bahraini parliaments. Interferes in other deida, the last major Houthi port, despite countries? The UAE is close to separatists in Yemen and Somalia. the UN’scall to avertan attackthat, itfears, But Qatar is hardly consistent. It struts as the patron of Arab de- could worsen what it says is already the world’s worst humani- mocracy, but does not allow it at home. The feud could go on in- tarian crisis. Western officials fear that the longer the war goes definitely, ifonly because the main protagonists are rich enough on, the more Iran can entangle the Saudis at low cost to itself, and to take the hits. Qatarhassuffered some economicpain, butisde- the more the Houthis become a fully-fledged Iranian proxy. veloping new industries and is undergoing an infrastructure The war in Yemen was perhaps the first instance of Mu- boom ahead ofthe football World Cup it will host in 2022. hammad bin Salman’sinstinctforforceful, ifnotreckless, behav- Other Gulfstates are worried. The GCC, created to counter- iour. Anotheristhe fortnight-longdetention in Riyadh ofthe Leb- balance larger neighbours and promote economic integration, is anese prime minister, Saad Hariri, a longtime client of Saudi split, perhaps irreparably. “Ifthey can do this to Qatar, why not to Arabia’s, who displeased the crown prince. He was eventually Kuwait and Oman?” asks Shafeeq Ghabra of Kuwait University. released as a result ofinternational pressure. He points to the danger of countries run as “one-man shows”. Gulf leaders feel a profound frustration. They are richer The late Saddam Hussein wasfascinated bytechnologyand edu- than Iran, and have stronger alliances, yet they cannot beat Iran cation, yet invaded both Iran and Kuwait, he notes, “and nobody in the game of proxies. “The Iranian dollar is elastic—it stretches could tell him he was leading Iraq to disaster.” 7 so far. Why do our dollars not do the same?” asks the Gulf min- ister. There are several answers. It is easier to undermine a fragile status quo than to keep it. Iran is focused, whereas Gulf states Geopolitics scatter their money among different groups. Iran has a foreign le- gion, in the form ofthe RevolutionaryGuards’ QudsForce, that is good at building effective sub-state militias such as Hizbullah. Insecurity complex Worse, in the view of Gulf states, America is no longer a re- liable protector. Relations with Barack Obama were particularly testy. His “pivot to Asia” was a shift away from the Middle East and its endless wars. In the view of Gulf leaders (and Israel) he forsook Hosni Mubarak in Egypt during the Arab spring, then Arab oil monarchies fear being encircled by Iran and tried to cosy up to Iran by signing a nuclear deal with the mul- lahs. The reality was more complicated, not least because the ad- abandoned by America vance ofIslamic State (IS) kept America fightingin Iraq and Syria. EVERY FEW DAYS fiery rockets and explosions in the night Although Mr Trump had campaigned with anti-Muslim skyremind Saudisofthe warin Yemen. Missilesfired bythe rhetoric, Arab leaders such as KingSalman and MrSisi embraced Houthi militia, a Shia group that overthrew the Yemeni govern- him at a summit in Riyadh, where they clasped a glowing orb to- mentin 2015, are usuallyintercepted orfall harmlesslyin the Sau- gether (pictured). “Donald Trump is 100 times better than di desert. But the volleys are evidence that, after three years of Obama,” declares the Gulf minister. Mr Trump does not have war and relentless air bombardment, the Houthis are undefeat- qualms about befriending strongmen. He sees Iran as a foe to be ed. The range oftheir missiles has increased to reach Riyadh. confronted, not a power to be accommodated. Gulf leaders The detritus of the missile war is on display at the Officers hailed his move to abandon Mr Obama’s nuclear deal with Iran. Club in Riyadh, where the Saudis hold military briefings. The Still, theyworryabouthiscommitmentto confrontingIran. With centrepiece is the wreckage of a Qiam missile. It bears rough IS weakened, Mr Trump said in March, “We’ll be coming out of weld-marks showing where it had been cut into more transpor- Syria very soon. Let the other people take care ofit now.” table pieces and later reattached. Parts bear the stamp ofthe Sha- Gulf leaders were scarcely charmed by his remark that hid Bagheri Industrial Group, an Iranian firm that is blacklisted “they wouldn’t last a week” without American protection. His by the UN. Such evidence of Iran’s missile-smuggling strength- covetous attention to their wealth, though useful, can be awk- ens Saudi Arabia’s claim that the Houthis are an arm of Iran; it is ward. Pitching American weaponry to the Saudi crown prince at also used as justification for the blockade ofHouthi ports. the White House in March, Mr Trump commented about one The war highlights the fear the Saudis and their allies have item costing $525m, “That’s peanuts for you.” of encirclement by Iran and its allies, who sometimes boast of In 2017 Saudi Arabia became the highest military spender controlling four Arab capitals—Baghdad, Damascus, Beirut and in the world after America and China. Even so, the Saudis’ mili- 1

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Beyond oil Breaking the curse

Diversifying Gulf economies will be hard CALL IT THE world’s most important filling station. The complex of piers, artificial islands and offshore moorings on the finger ofland curling into the Gulfat Ras Tanura is the big- gest oil-export terminal of the world’s biggest oil exporter. Tank- ers appear out ofthe haze to suckup the crude oil and refined fu- els that, these days, mostly power Asian economies. For decades pumping oil and gas was all Gulf states had to do to build sky- scrapers and shopping malls, and provide citizens with enough benefits to keep them quiet. Every bust in the oil cycle brought 2 tary capabilities are questionable. They appear to have scored a calls fordiversification; with every boom, the talkfaded. coup in April with an air strike in Yementhat killed the Houthis’ Might the same happen again? Crude prices have more second-in-command. More often, though, the air operations than doubled since their low point in 2016, touching $80 a barrel, make the headlines because they prove inaccurate. Apart from a though they are still farbelow the peak of $146 a decade ago (see few advisers, the Saudi army has not deployed to Yemen. chart). Global economic growth has pushed the price recovery, By contrast, the small but hardened armed forces of the as have the loss of production in Venezuela, the pact between UAE have been honed with the NATO-led coalition in Afghani- Russia and Saudi Arabia to curb production and, above all, the stan and are the speartip of the Saudi coalition in Yemen. The prospect ofsanctions on Iran and perhaps war with it. Emiratis have retaken Aden from the Houthis and Mukalla from For now, Saudi Arabia seems determined to keep propping al-Qaeda’s branch in Yemen.Like Qatar, the UAE has introduced up prices in the hope of maximising the earnings from its military conscription. James Mattis, the American defence secre- planned sale ofa 5% stake in Saudi Aramco, the national oil com- tary,calls the UAE “little Sparta”. For Anwar Gargash, the Emirati pany. Given its budget deficit of9% ofGDP last year, and plans for deputy foreign minister, America’s strategy in the region is “in record expenditure this year, Saudi Arabia needs oil to rise to $87 flux”. Gulf states, he says, understand they are living in an era of a barrel to breakeven, the IMF reckons. Thisdespite the fact thatit “multiple polarity”. They must act to defend their interests, and has imposed a new 5% value-added tax, taxes on tobacco and they must show America that they can be capable allies. sweetened drinks, cuts to fuel and electricity subsidies and high- Increasingly,the Emiratis are pursuing their own war aims. er charges on foreign workers. It plans to sell parts of several They seem to be acquiescing in the break-up of Yemen, if not state-owned firms. By the end of the year, the IMF thinks, it will pushing for it, by forming an alliance with southern separatists. have burned through nearly 40% of its huge foreign-currency re- Their military deployment on the Yemeni island of Socotra, in serves, worth more than $700bn (96% ofGDP) in 2014. the Gulf of Aden, infuriated the exiled Yemenigovernment that Saudi Arabia has lots of oil left, and the world’s depen- the coalition is supposed to be restoring to power. In Somalia, dence on the Gulf is likely to increase as production in other meanwhile, the Emiratis are building ports in the breakaway re- parts of the world falls away. But short of a war in the region, gions ofPuntland and Somaliland. prices still seem unlikely to return to the boom of 2001-14. The Their objectives are murky. As a shipping hub for trade be- world, particularly China, is tween Asia, Europe and Africa, the UAE has an interest in the moving towards low-carbon safety of shipping lanes such as the Bab al-Mandab strait. And ? and renewable sources ofen- DPWorld, which runs the Jebel Ali port outside Dubai, has been Pumped up ergy. A sustained rise in oil diversifyingby buyingports across the world. But, given the pov- Brent crude, $ per barrel prices will prompt more in- ertyand strifein Yemenand Somalia, investingin harbours there vestment by Saudi Arabia’s seems strange. Perhaps the UAE is gambling that harbours 150 competitors—not least shale- around the Horn ofAfrica mayone dayprovide accessto Africa’s oil firms that have helped interior. And ports on Yemen’s shore might become alternative 125 make America the world’s hubs to Jebel Ali, shortening journeys and avoiding the narrow biggest oil producer. Strait ofHormuz—especially ifwar breaks out with Iran. 100 Steven Wright of Ha- As they hedge their bets, Gulf states have kept quiet about mad bin Khalifa University Russia’s intervention in Syria even though, by supporting Bashar in Qatar argues that, if the 75 al-Assad, Russia is acting as the air force of the Shia axis that the Gulf faces a prolonged per- Gulf leaders so fear. Moreover, Saudi Arabia has sought to woo iod oflow prices, some coun- Russia, buying weapons, signing defence-industrial agreements 50 tries may be forced to aban- and striking an unprecedented deal in 2016 to cut oil output to don their currency pegs to drive up the price of crude. Perhaps the most intriguing dip- 25 the dollar. That would cause lomatic signals have been directed at the old enemy,Israel. Saudi turmoil in foreign-exchange Arabia now says Jews have a right to their own state. Bahrain 0 and bond markets, and says Israel has a right to defend itself against Iran. How long be- 1970 80 90 2000 10 18 create an inflation shock. fore Israeli and Gulfministers start to meet openly? 7 Source: Thomson Reuters Bahrain, with a budget defi- 1

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2 cit and public debt of15% and 90% of GDP respectively last year, consumer goods, or because wages are spent on foreign travel. and reserves to cover barely a month’s worth of imports, looks Given high rates ofpopulation growth, real GDP perperson vulnerable. It will be hoping that a recent large oil find generates in most countries of the Gulf Co-operation Council (GCC) has revenues soon—or that Gulfneighbours bail it out ifnecessary. been flat or in decline for decades. Qataris may be among the With higher oil prices than forecast helping Gulf states bal- richest people in the world, but Saudis rank about 40th, along- ance the books, some in the IMF worry that complacency about side the Portuguese. Productivity, the underlying source of long- reform will set in. Yet the need to diversify economies is undi- term growth, has been stagnant. In an IMF paper in 2014, Reda minished. Oil accounts forabout 30% ofGDP and 80% ofgovern- Cherif and Fuad Hasanov argued that Gulf states suffer from an ment revenues in Gulf states on average. Much non-oil output is acute form of “Dutch disease”, in which oil revenues crowd out dependent on petroleum revenues through government spend- other activity in the tradable sector. To improve their productivi- ing on capital projects and salaries. And much of that public ty, Gulf states have to diversify their exports as, say, Indonesia, spending leaks out, through imports of materials for firms and Mexico and Malaysia have done. 1

Do buy

One emirate is a model for free trade, openness and ambition DUBAI HAS THE world’s tallest building, its fishing village into one of the world’s great artificial islands and financial districts. But busiest airport by international passengers entrepots. It is also a haven for money in a none has matched the original. In part that is and the busiest container port between troubled region. Somewhat like Hong Kong in because rivals embark on top-down projects, Singapore and Rotterdam. It is building the relation to China, Dubai acts as the point of whereas Dubai has tended to develop ideas in world’s largest concentrated solar power access for trade with Saudi Arabia and the close co-operation with businesses. plant. It is the Arab world’s most important rest of the Gulf. Just as Hong Kong benefited Dubai has benefited from the unique financial centre and, as the world’s fourth- from the British legal system, so Dubai has federal structure of the UAE in which each of most-visited city, an exuberant playground. imported British-style common law for the the seven emirates can experiment with No ambition is too outlandish. The Dubai International Finance Centre, a city economic and governance models, says United Arab Emirates, of which Dubai is a within a city where foreign lawyers adjudicate Abdulkhaleq Abdulla, a political scientist: part, wants to help colonise Mars. It is build- on business matters within its confines. “The UAE is a bird that flies with two wings, ing a space probe, to be launched in 2020, to Lacking much oil, Dubai sought to Dubai and Abu Dhabi.” Dubai has focused on find out how the planet lost its water. And, establish itself as a trading port even before growth through private enterprise, while fittingly for a city-state built in the desert, independence in 1971. Its then ruler, Sheikh Abu Dhabi provides much of the country’s oil Dubai is building a “Mars City” to study how Rashid, took a loan from Kuwait to dredge the wealth and geopolitical heft. Thanks to humans might live on the red planet. It is creek and create a port. It later built a large Dubai, the UAE is the Gulf’s most diversified experimenting with driverless pods as well as port and special economic zone at Jebel Ali, economy. But the IMF says the country still a “hyperloop” to transport people and goods south of the city, creating a hub to serve the compares poorly with other states that have in pods at high speed through the region Gulf, Africa and Asia. moved away from commodity exports. (artist’s impression pictured). Similar thinking applied to aviation, Many complain that the city-state is The desire to do business has long been with the creation of the Emirates airline and being run, in effect, as the personal holding present, its history visible along the creek in the establishment of Dubai as the world’s company of the Al Maktoums. One cost of its old Dubai where the souk boasts frankin- leading hub for international flights. Tourism success is that local citizens form just 8% of cense from Oman and saffron from Iran. Gold followed close behind. Through iconic pro- Dubai’s population. Another is that it has chains hang like curtains. Older merchants jects, such as its palm-shaped beach-front incurred large debts. Dubai had to be bailed still remember trading in rupees, so closely development, Dubai found the knack for out by Abu Dhabi in 2009. The soaring Burj was business linked with India. turning dull desert into prime property. Dubai tower was renamed Burj Khalifa in Free trade, openness, security and Others in the region try to copy Dubai honour of the ruler of Abu Dhabi—a reminder predictable rules have turned the pearl- with ports, airports and airlines, as well as that Abu Dhabi now calls the shots.

Whizz, Khalifa

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2 The biggest problem, says Steffen Hertog of the London School of Econom- The gulf between ics, is the Gulf’s distorted labour market. Employment of national and foreign workers Labour-force participation rate*, 2017, % The rentier model is exceptionally gener- By sector, 2013 or latest available, m Female Male Total ous, but it is unproductive. Gulfstates give Nationals Foreigners their citizens subsidised fuel, electricity PUBLIC SECTOR PRIVATE 020406080100 and water, as well as loans or grants for 24 0 02468High income marriage and scholarships to expensive S. Arabia Qatar World foreign universities. Saudi Arabia spends Kuwait more than most comparable countries on Kuwait Oman education, yet achieves results that are Bahrain markedly inferior. Qatar UAE Public-sector jobs in the GCC pay UAE about three times more than private-sec- Oman tor ones, where foreigners predominate Bahrain Saudi Arabia (see chart). With two-thirds of Saudi Sources: IMF; World Bank *15- to 64-year-olds workers already hired by the govern- ment, the state cannot afford to create more do-nothing jobs. Just to steady the current rate of unem- indigenous labour no longer makes sense, he says. Getting Saudi ployment—nearly13%,not counting the majority ofwomen who men to be productive requiresthem to undergo extensive on-the- are excluded from the labour market—Saudi Arabia must create job training. Theirworkethic is often poor,and they tend to leave 1m private-sector jobs over the next five years, double the num- quickly in search of a better job. However, Mr Zamil has discov- ber it managed in 2007-16. ered, to his delight, that Saudi women make better workers: For Mr Hertog, Gulf countries face “a unique development “more disciplined, more punctual and higher-quality work,” he trap” with a mix of expensive but low-skilled national workers, says. He has put up a wall in his air-conditionerfactory to make a cheap (butnotcheap enough) imported labourers, and protected separate space for women, and has moved it several times as domestic markets. As a result, they struggle to make competitive their numbers have grown. “I keep telling the boys: ‘In the past exports. In other words, Saudi Arabia is too rich for mass indus- your competitors were foreign workers. Now it’s your sisters.’ ” trialisation, yet lacks the skills to make high-value goods. Many of Muhammad bin Salman’s reforms are overdue. One place to start diversifying might be to extract more val- But in one respect—his love of “giga-projects”—the crown ue from oil. Saudi Arabia is already a leadingrefinerof crude and prince’s vision is more questionable. One plan is to build a vast has long made basic petrochemicals. But at Sadara, near the port “entertainment city” outside Riyadh more than twice as large as of Jubail, a joint venture between Aramco and the Dow Chemi- Disney World. Another is to turn a 200km stretch of pristine Red cal Company came on stream last year to make more advanced Sea coast into a destination forupscale tourists. (No drunken rev- petrochemicals that used to be imported. An industrial park is ellers, please—reform has its limits.) It will include the archaeo- being set up alongside the giant plant for others to make finished logical remains of Mada’in Saleh, a Nabataean site related to the products. Dow, for instance, is making re- verse-osmosis membranes for water de- salination. But such schemes rely on feed- Mr Zamil has discovered, to his delight, that Saudi stock at below-market prices, so divert resources that might be better used else- women make better workers: “more disciplined, more where. Such capital-intensive projects punctual and higher-quality work,” he says. also create few jobs for Saudis, and are ul- timately dependent on oil. A more promising idea is to coax more business from the rock-carved monuments ofPetra in Jordan. 20m annual foreign visitors, most of them Muslim pilgrims to His most ambitious project is NEOM, a futuristic city in a Mecca and Medina, particularly outside the peak haj season. special economic zone nearly the size of Belgium, which will ex- Meanwhile, the new focus on entertainment and culture is tend to bits ofJordan and Egypt. It will be run undera separate le- aimed in part at ensuring that some of the $20bn that Saudis gal system with international judges. Details are sketchy, but the spend each year on foreign travel remains in the country. aim is to plug into the internet cables beneath the Red Sea and A third policy is to increase the number of Saudis in jobs— create a hub forinnovation, powered by renewable energy. particularly women (see chart)—by squeezing out foreign work- In pushing such grandiose schemes, the crown prince may ers. The government is raising the cost of hiring foreigners from want to create the sense of a bright future, and a testing-ground 200 riyals ($50) a month per worker to 400 riyals this year and for new ideas. But giga-projects are risky at a time of austerity. 800 in 2020. It is also excluding foreigners from a growing list of And they betray a central-planningmindset that has already pro- jobs, such as selling mobile phones, receiving guests in hotels duced white elephants. The King Abdullah Financial City in Ri- and selling gold. The gig economy may also be helping. Though yadh lies almost empty. In a world full offailed special economic many Saudis think driving a taxi demeaning, a growing number zones, reform mustultimately focuson the country itself, notjust use their cars to work part-time for Uber, a ride-hailing firm, or Dubai-like bits carved out ofit. Saudi Arabia ranks a poor 92nd in Careem, its regional rival. the World Bank’s ease-of-doing-business index. Big projects risk In the eastern cityofDammam, Abdullah Zamil, boss ofZa- distracting attention from the hard work of, say, improving legal mil Industrial, whose companies make everything from con- standards. Foreign direct investment fell sharply last year; the struction materials to air-conditioners, says that the cuts to pub- anti-corruption campaign does nothing to reassure would-be lic spending, as well as the new taxes and levies, have squeezed partners, “What is the law in Saudi Arabia?” asks one diplomat. his profits by about 30%. Hiring Saudis simply to meet quotas for “The law is the last thing the king said.” 7

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The dangers of reform “He has many enemies. If they see he is weak they will Offer to readers pounce on him,” says one Gulf Reprints of this special report are available. Waiting for the A minimum order of five copies is required. minister. His advice to the West? Please contact: Jill Kaletha at Foster “Support Saudi Arabia. Support Printing Tel: +1 866 879 9144 Ext: 168 backlash Saudi Arabia. Support Saudi e-mail: [email protected] Arabia.” The crown prince has Corporate offer created an unexpected opportu- Corporate orders of 100 copies or more are nity to change the discourse Can the crown prince’s gamble work? available. We also offer a customisation about Islam, he says. “Ifit can be service. Please contact us to discuss your MUHAMMAD BIN SALMAN has accumulated power like more moderate then we will all requirements. no other Saudi royal. He has taken control of the economy, reap the benefits.” Some dip- Tel: +44 (0)20 7576 8148 e-mail: [email protected] the armed forces, the national guard and the intelligence ser- lomats think King Salman, now For more information on how to order special vices. Yet, in the process, the crown prince has undermined all 82, will step down to ensure that reports, reprints or any copyright queries the pillars ofthe Saudi state. He has antagonised Al Saud princes his son ascends the throne. you may have, please contact: by taking their fiefs. He has broken with Wahhabi clerics by de- In many ways, Saudi Ara- The Rights and Syndication Department nying them the power to enforce public morality. He has upset bia and other Gulf states are 20 Cabot Square businessmen by raising their costs and forcing some of them to grappling with an old question: London E14 4QW hand over part of their wealth. And he is undoing parts of the why has Arab civilisation fallen Tel: +44 (0)20 7576 8148 Fax: +44 (0)20 7576 8492 rentier system that served to buy the loyalty ofthe people. into such an abject state? Arabs e-mail: [email protected] Perhaps the crown prince is movingso fast on social reform give one of two contradictory www.economist.com/rights to keep his opponents off-balance. But it makes for erratic gov- answers: “because we have ernment: austerity measures are imposed and then removed; strayed from the path of our Future special reports appointments are made and unmade. A backlash would sur- righteous forebears” or “be- Fixing the internet June 30th prise nobody. Rumours of coups may be false, but say much cause we have failedto embrace America’s Democrats July 14th Spain July 28th about the mood. Many remember the assassination of King Fai- Western modernity”. TQ: Cryptocurrencies September 1st sal in 1975 in a family dispute that was ultimately about the intro- For decades Saudi leaders duction oftelevision. The currentsilence ofclericsleads some of- embraced the first answer, im- Previous special reports and a list of forthcoming ones can be found online: ficials to think that the worst danger is past. Others feel posing religiosity in an attempt economist.com/specialreports unnerved. “I support the change, but I am afraid of the speed of to recapture ancient Islamic glo- change,” says one ex-official, “The religious people are quiet for ries. The bounty of oil made the now. Will they continue to be quiet, or will they react violently?” model appear workable; Saudis A Saudi businessman says royal rulers, in their volte-face could have both the good life and piety (those who disliked reli- on puritanism, “have been exposed as hypocrites”. He thinks so- giosity could always go abroad). But oil rents alone are no longer cial liberalisation “will cause debates in every family”; the anti- enough. And the notion that Islam can provide all the answers corruption measures were arbitrary; and despite talk of promot- has hit a dead end, whether in the form of strict but obedient ing the private sector, Saudi Arabia remains “a family business”. Saudi salafism, the political Islam of the Muslim Brotherhood or Right now the crown prince acts with the authority of the king the murderous jihadism ofal-Qaeda and Islamic State. and controls the coercive powers of state. Beyond that, he casts Successive Saudi leadersmighthave looked outoftheir pal- himself as the champion of women and the young against the aces and marvelled at how far their country has come. The corrupt old elites. But in the absence of political parties, or real youngcrown prince insteadappearsto notice howfarithasbeen consultation, it will be hard for him to turn popularity into a po- leftbehind: the Israelisare richerand knowhowto fight; the Emi- litical force. And popularity may prove fickle. ratis live better and have more fun; the perfidious Iranian riyal seems to buy more friends than the Saudi one; and the West is less ofa guardian than it used to be. “What has Saudi Arabia con- tributed to the world?” asks the Saudi businessman. “Mecca and Medina? They were made by God. We have not contributed one thing. Ifthe oil goes, we will not even have water.” So Muhammad bin Salman is pursuing a form of modern- isation, albeit ofa strange, upside-down sort. Diversification and liberalisation are directed from the royal palace; even simple en- tertainment requires central planning and a “giga-project”. And more social freedom is accompanied by greater political repres- sion. “Muhammad bin Salman isdoingmanyofthe thingsI have been fighting for: empowering women, fighting radicalism and purging corruption,” says Jamal Khashoggi, a Saudi columnist exiled in America. “That’s great news. But why intimidate peo- ple? Why arrest people? This is the model of Arab dictators like Gamal Abdel Nasser.” The crown prince is thus repeating one tragedy of the Arab world—liberalisation by illiberal means. In doing so he may be heeding Niccolò Machiavelli’s advice that it is better for a prince to be feared than loved. But there is an all-important rider to the dictum: “A prince ought to inspire fear in such a way that, if he MBS on guard does not win love, he avoids hatred.” 7

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Also in this section 42 Bello: “Closed because of football”

Colombia’s election jorities in congress, the new president will have to strike bargains with parties other Duque, príncipe, presidente than the Democratic Centre and its conser- vative allies. His trickiest task will be to modify the peace accord, as demanded by the uribis- tas BOGOTÁ , without wrecking the peace itself. Their biggest objection is to the “transi- The new president wants to be a healer.His alliances and campaign promises will tional-justice” provisions, which offer le- make that difficult nient sentences to FARC members if they HEN Colombia’s news channels de- his career as a protégé of the current presi- confess to their crimes. Ten members of Wclared Iván Duque the winner of the dent, Juan Manuel Santos. As Colombia’s theFARC,nowapoliticalparty,willbeable presidential election on June 17th, 45 min- deputy representative to the Inter-Ameri- to take their seats in congress before they utes after polls closed, many Colombians can Development Bank (IDB), Mr Duque serve any prison time. While the accord were relieved. “I was terrified of Gustavo helped lead negotiations in 2010 to in- says the government should co-operate Petro,”—Mr Duque’s left-wing rival—said a crease its capital base. He did “the carpen- with farmers to replace coca, the raw mate- woman waiting for the winner to give his try work of talking to every country”, says rial for cocaine, with legal crops, Mr Duque acceptance speech at a convention centre Luis Alberto Moreno, who was then the wants to return to the practice, ended by in Bogotá. When Mr Duque came on stage IDB’s president. Mr Santos, offumigating coca from the air. he sought to overcome the campaign’s bit- MrDuque’sticketto the presidency was In his victory speech Mr Duque prom- terness. He would “turn the page of polar- Mr Uribe, who fervently opposed the ised not to tear up the deal, bits of which isation”, he promised. peace process launched by Mr Santos. are part of the constitution. His govern- Mr Duque’s victory, with 54% of the They bonded when Mr Uribe, mandated ment will see to it that “justice and securi- vote, was comfortable. The job that awaits by the UN to investigate an attack by Israel ty are suitable sisters”, he said. But his no- him, starting on August 7th, will be ardu- on a Turkish flotilla in 2010, asked Mr tion ofjustice contradictsthatofthe FARC’s ous. He campaigned as a sceptic of the Duque to help. In 2014 Mr Duque was leaders. Old and war-weary, they are un- peace agreement with the FARC, a guerrilla elected to the senate as a candidate of the likely to return to jungle hideouts. But Mr group thatended its52-yearwaragainstthe Democratic Centre, the party Mr Uribe Duque’s confrontation with the group state in 2016. He mustnowworkouthowto formed to oppose Mr Santos. may add to the growing number of FARC revise the accord without pushing some For the Democratic Centre, “Duque is a “dissidents” who refuse to accept the ac- former guerrillas into taking up arms. Mr great invention,” says Carlos Cortes, a po- cord. They are fighting the ELN, another Duque will have to control corruption, litical analyst. His mentor is a hate figure guerrilla group, and the Clan del Golfo, a which fuelled the anger that gave Mr Petro for many Colombians, who associate the mafia linked to demobilised paramilitary 8m votes, more than any other left-wing successful offensive against the FARC dur- groups, forcontrol ofthe cocaine trade. candidate in Colombia’s history. He must ing his presidency with atrocities by para- A return to aerial fumigation could en- speed up sluggish economic growth. And military groups. Mr Duque is unstained by courage farmers to sell coca to such groups he will also have to step out of the shadow that history. He is young, charming and and to join their ranks. The new president ofhis mentor, Álvaro Uribe, a former presi- sings vallenato, a type of Colombian folk might also end the peace talks Mr Santos1 dent who inspires as much fear and loath- music. Unlike some ofMrUribe’s allies, he ingasMrPetro. is not under investigation forcorruption or Correction: A story last week on infectious diseases in The son of a prominent politician, Mr links to paramilitary groups. Latin America (“Disease déjà vu”) stated that a case of Duque has wanted to be president since he He will have to prove that he is his own paralysis in Venezuela had been caused by polio. The Pan-American Health Organisation later clarified that, was a child. But until six months ago few man without alienating Mr Uribe, who re- according to further analysis, the cause of the paralysis Colombians knew who he was. He began mains a powerful senator. To obtain ma- would not lead to an outbreak of polio. РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

42 The Americas The Economist June 23rd 2018

2 has started with the ELN. Mr Duque has set Mr Santos’s campaign expenses. In con- of maladies, including high public debt, an strict conditions, such as requiring the ELN gress it is commonplace forrepresentatives unaffordable pension system that funnels to gather in designated zones before talks to demand porkfortheirdistricts, and kick- money to the relatively well off, and low begin. The ELN is unlikely to accept that. backs from pork-related contracts, in ex- productivity. Mr Duque’s main economic Although smaller than the FARC, the change for passing laws. Mr Duque needs proposal is to cut regulation and business group is as resilient. In the 1970s an offen- to clamp down on such practices. “If this taxes, but that will not be enough. To con- sive reduced it to just 36 fighters; it has since mess continues, Petro will be president in tain the budget deficit, he will need to cou- built itself back up to about 2,000. The four years,” says Mauricio Vargas, a politi- ple that with higher taxes charged on per- group shelters in next-door Venezuela. cal consultant. sonal income. Corruption is as difficult to fight. Like Mr Duque will inherit an economy that Wherever he turns, Mr Duque will face voters elsewhere in Latin America, Colom- is recovering from a slump in oil prices that difficult choices. In pleading for unity, he bians are fuming about serial scandals, in- began in 2014 and continued until last year. told hissupporters, “I do notrecognise ene- cluding revelations that Odebrecht, a Bra- Unlike Mr Petro, he is friendly to business mies in Colombia.” But he belongs to a po- zilian construction company that bribed and does not frighten the financial mar- litical clan that has been defined by its ene- politicians across the region, paid some of kets. But the economy suffers from plenty mies. He has workto do. 7 Bello “Closed because of football”

A search fornational redemption on the pitch HIS football World Cup is barely a an fan in Moscow put it to DW.com, a Ger- of religious suffering. “Football is the last Tweek old, but already Latin America man news agency, “We love football and sacred ritual of our time,” argued Pier has stolen the limelight. There have been we love our country.” Grown men burst Paolo Pasolini, an Italian film director. memorable performances on the pitch: into tears when singing “Contigo Peru”, an That may be true in Europe. In Latin Mexico’s humbling ofGermany, Peru out- unofficial national anthem, before the America, where popular religiosity re- playing Denmark but contriving to lose, match against Denmark that marked their mains strong, football borrows from the flashes of magic from Brazil and three country’s return to the final stages of a devotional intensity ofits fans. goals for Diego Costa, Spain’s Brazilian- World Cup forthe first time since 1982. This is not to romanticise the sport. born striker. There have been shocks, too, Another reason is that football is one of With the partial exception of Mexico, do- such as Argentina’s draw with Iceland the few things at which Latin America is mestic leagues reflect many of the re- and a battling ten-man Colombia losing world class. Between them, three South gion’s ills: they are often poorly financed, to Japan. But more than the players, it is American teams (Argentina, Brazil and tainted by corruption and feature violent the fans who have caught the eye. Uruguay) have won the trophy nine out of clashes between rival fans. But football is Multitudes of Latin Americans have the 20 times it has been contested. Foot- also a democratising force. As in the rest packed the stadiums in deepest Russia as ballers are a leading export: European club of the world it is a route forupward social if they were attending home games. Ac- sidesare stuffed with Latin American stars. mobility. In Latin America that means cording to FIFA, the organisers, five of the With 8.5% of the world’s population, Latin thatthe racial mixofnational teams tends seven countries that (after Russia itself) America accounts for a quarter of the to reflect the country more accurately snapped up most tickets in advance were teams in this year’s tournament. Although than do political or business elites. Latin American. They were Brazil Brazil does not always practise o jogo bo- Above all, the World Cup can be a (73,000), Colombia (65,000), Mexico nito (the beautiful game), Latin American source ofnational redemption. Take Peru. (60,000), Argentina (54,000) and Peru teams are more likely than their European In the 1970s it had a fine team. In the quali- (44,000). Many of the fans from the Un- rivals to turn football into an art form. fying round for the tournament in 1986, it ited States (89,000), too, are Latinos who Football also fits two characteristic fea- almost displaced the Argentina of Diego may support theircountries oforigin, and tures of Latin American culture like a Maradona, the Cup’s eventual winner. to them should be added Latino migrants glove. It is a shared public party in a region Then tragedy struck: the next year several in European countries. Supporters from where the fiesta is paramount. And it is a members of the national team and some South America have paid up to $10,000 passion, in the original sense of the word rising stars were killed in a plane crash. forthe pleasure ofwatchingtheirnational Peru at that time was racked by hyper- team, in some cases financing the trip by inflation and terrorism. Recovery came, selling cars or taking out loans. but by then football was poorly run. It What explains such devotion? The was only with a new boss of the football World Cup has a unique appeal in Latin federation and a new coach, Ricardo Ga- America. During each tournament reca, an Argentine colleague of Mr Mara- Eduardo Galeano, a leftist Uruguayan dona in 1986, that a dysfunctional group writer who died in 2015, would settle in of individuals became an attractive team front of his television having hung a sign of mainly young players. For Peruvians, on the front doorofhis flat in Montevideo football has gone from being a source of saying “Cerrado por fútbol” (Closed be- national shame to being one ofpride. cause offootball). For European fans, club Latin America could do with more of often comes before country. For Latin that. The tournament comes with much Americans it is the reverse. However of the region in a funk because of crime, much they may despair at their countries’ corruption and sluggish economies. A problems, Latin American patriotism is footballing victory wouldn’t change that. strong and uncomplicated. As a Colombi- But it would provide some joy. РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Asia The Economist June 23rd 2018 43

Also in this section 44 The Maldives’ drowning democracy 45 Bickering while Delhi chokes 45 Sex education in Myanmar 46 Indonesia’s incompetent lawmakers 48 Banyan: China militarises the South China Sea

For daily analysis and debate on Asia, visit Economist.com/asia

The army and politics in Pakistan bers went on to form the pro-military Balo- chistan Awami Party (BAP), which then se- General dysfunction cured several of Balochistan’s seats in the senate. The new senators, in conjunction with an improbable alliance of otherwise feuding opposition parties, together mus- tered enough votes to defeat the PML-N’s Islamabad candidate for chairman of the senate. (An Even as the army corrals politicians, humblerPakistanis are protesting at its Urdu-language newspaper carried details unchecked power ofhow the army allegedly helped senators ARLIER this month a spokesman for group ofprotestersthathad blocked a busy to remember how to vote, by marking the EPakistan’s army decided to respond to intersection last year. A general was photo- corners of their ballot papers.) That, in claims that it was attempting to fix next graphed atthe scene handingmoneyto the turn, put paid to the PML-N’s hopes ofpass- month’s general election. It would not be protesters. The army bristles at claims that ing legislation to scrap the woolly articles the first time. In 1990, for instance, the it steered the Supreme Court to remove Mr ofthe constitution that the courts had used army-dominated spy agency, Inter-Ser- Sharif last year on flimsy charges of “dis- to justify Mr Sharif’s dismissal. vices Intelligence, funnelled cash to oppo- honesty”. But Mr Sharif (pictured, with Imran Khan, the leader of PTI, does not nents of the left-wing Pakistan People’s gun) blames its unseen hand. denythatthe armyinterferesin politics. He Party(PPP), helping to secure its defeat. The Indeed, Mr Sharif is trying to turn the says a stronger civilian government military spokesman, General Asif Gha- impending election into a referendum on (meaningone led by him) is the answer. He foor, sternly denied that any such “engi- his treatment by the generals, although he may have his way. PTI has benefited from a neering” was going on this time around. coyly refers to them using such codewords wave of defections from the PML-N in the But a pile of evidence to the contrary is as “the establishment” and “aliens”. Last most populous province, Punjab. In priv- poking through the camouflage. month he accused the armyoffacilitating a ate, many politicians admit to being The object of the army’s meddling is terrorist attack in India in 2008, in which pressed, in some cases with the threat of Nawaz Sharif, who was ousted as prime 166 people were killed. Never has the army corruption charges, to leave the PML-N. If minister by the courts last year. Mr Sharif felt its privileged position so threatened, the PTI can make headway in Punjab, had been the beneficiary of the army’s lar- says Talat Masood, a formergeneral. where the PML-N won 116 of148 seats at the gesse in 1990, when he began his first stint last election, in 2013, Mr Khan stands a as prime minister. But they soon fell out. Misguided democracy good chance of becoming the leader of a He resigned under pressure from the Indirect elections to the upper house of coalition government. Such a government army in 1993 and was toppled again by it in parliament earlier this year give a sense of would be “preferable” to the army, adds a coup in 1999. MrSharifreturned to power how the army operates. Weeks before the Hussain Haqqani, a formerdiplomat. in 2013 eager to assertcivilian control offor- country’s four provincial assemblies were Media outlets that caterwaul about all eign and security policy, which the army due to select the new senators, the govern- this become the victims of commercial cri- regards as its exclusive domain. In reply, ment of the sparsely populated province ses. Geo, the most popular television sta- the army undermined Mr Sharif, backing a of Balochistan, which was led by Mr Sha- tion in the country, was mysteriously months-long street protest by a big opposi- rif’s party, the PML-N, collapsed owing to dropped by cable companies. They relent- tion party, the Pakistan Movement for Jus- the abrupt defection ofseveral lawmakers. ed when it toned down its criticism of the tice (PTI), aimed at overthrowing his gov- One of Mr Sharif’s allies accused the ISI of judiciary and its support for Mr Sharif. Gul ernment. It also refused the government’s orchestrating the insurrection. At any rate, Bukhari, a journalist who supports the request for help in dispersing another independents and the formerPML-N mem- PML-N, was recently abducted for several 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

44 Asia The Economist June 23rd 2018

2 hours. This week Dawn, a liberal newspa- The army’s response has been fierce: 37 instead in empty jerrycans and even a ce- per, announced that it is being barred from PTM activists have been arrested for “sedi- ment mixer, the former president still won distributing in much ofthe country.Weare tion”. Manzoor Pashteen, the movement’s 99.8% ofvotes. But although he has proved “110% muzzled”, sighs one journalist. charismatic 24-year-old leader, was last that his party remains loyal, and secured The only thing standing in the way of month prevented from boarding a flight to backing for his own right to contest elec- the army’s plan is voters’ apparent sympa- a rally in the southern city of Karachi. He tions from the UN, which regards his con- thy for Mr Sharif. His rallies draw large drove for two days to get there instead. viction as illegal, Mr Nasheed has been un- crowds. PollingbyGallupputsthe PML-N 13 When he arrived, he found10,000 suppor- able to stop the steady accumulation of points ahead of the PTI nationally, and 20 ters sitting on the ground in the dark. The power in Mr Yameen’shands. points up in Punjab. “We know the estab- firms contracted to provide chairs and New defamation laws have been ac- lishment might attempt to manipulate the lights for the event had suddenly pulled companied by attacks on journalists and elections,” says Muzzafar Mughal, a resi- out—yet another of the unexplained rever- the suppression of opposition protests. dent ofa swingdistrict in the city of Rawal- sals that are so common when criticism of Media outlets have received stern warn- pindi, “but we will vote forhim again.” the army is involved. ings not to promote candidates the govern- Indeed, many Pakistanis have recently Non-Pushtuns are starting to support ment deems ineligible. Mr Yameen, mean- begun expressing unheard-of criticism of the PTM, a source of particular concern for while, campaigns on a mix of warnings the army. A burgeoning civil-rights organi- the army. At the rally in Karachi, a 66-year- about threats to the country’s Islamic faith sation, the Pushtun Protection Movement old woman from Balochistan, where locals and boasts of his record in luring invest- (PTM), was formed last year to protest have also long complained of military ment. On this score he gets a big helping against the army’s tactics in its campaign abuses, held up a picture of her son, miss- hand from non-democratic patrons, chief against Islamist insurgents. The PTM accus- ing for a year, for the cameras. Some gener- among them China and Saudi Arabia. Chi- es the army of indiscriminately flattening als counsel a softer response. The PTM ac- nese labourers toil around the clock on the villages. It wants the UN to investigate the tivists awaiting trial have belatedly been “Friendship Bridge”, which will link the fateof20,000 missing people, and calls for granted bail, possibly a sign that the army capital, Malé, to the main airport; it is sup- the removal of military checkpoints and is relenting slightly. But it does not seem to posed to be readyin time forthe election. A curfews in the tribal regions where most of have the courage needed to make a broad- giant, Saudi-sponsored mosque is rising in Pakistan’s 30m Pushtuns live. er retreat from politics. 7 the city centre. Such concrete signs of change may, in the end, prove weightier than protests Democracy in the Maldives about the slide towards dictatorship. So far Mr Yameen has been able to brush aside Sleeping with the fishes Western criticism of his darkening record on human rights. India, a giant neighbour that has in the past waded in to uphold constitutional norms, and which is anx- ious about growing Chinese influence, has Malé shown no appetite for confrontation. Its diplomats do not have much faith in the The president sinks a divided opposition Maldivian opposition, and have found it LOW-SLUNGarchipelago inthe middle ous convicted or jailed opposition leaders hard to counter charges that India’s own Aof the Indian Ocean, the Maldives could have stood for election. Among government does not always respect faces long-term danger from the global rise them was Mohamed Nasheed, the winner democratic niceties. In short, even as the in sea level. In the shorterterm, it riskssink- of the Maldives’ first free election in 2008, tide of dictatorship rises, there are few ing in a different sense. Ten years after be- whom Messrs Gayoom and Yameen later hands working to bail out the Maldives’ ing launched, its experiment with democ- forced from office. Mr Nasheed has lived in foundering democracy. 7 racy is listing badly,unable to keep afloat. exile since being granted asylum in Britain The 19-month jail sentence handed two years ago, after fleeing a conviction on down on June 13th against an ex-president, scarcely credible charges ofterrorism. Maumoon Abdul Gayoom, is just the latest With less than a month for candidates of many distress signals. Mr Gayoom, who to register for the country’s third-ever is 80, ran the Maldives for three decades multi-party election, however, it looks in- with an iron fist before being voted out of creasingly likely that Mr Yameen will end office in 2008. He was convicted of aiding up running virtually unopposed. His take- an alleged coup plot against his own half- over of the Progressive Party of the Mal- brother, Abdulla Yameen, the country’s dives, long a vehicle for his half-brother’s president since 2013. His imprisonment rule, appears complete. An attempt by Mr marks the end of a long feud between the Yameen’s opponents to agree on a joint two siblings and also the culmination of a candidate appears to have failed. The sec- campaign by Mr Yameen to clear the way, ond-largest opposition group, the Jumhoo- ahead of national polls set for September ree Party, is rumoured to be seeking a deal 23rd, forhis own re-election. with Mr Yameen. The campaign got going in February, The larger Maldivian Democratic Party when Mr Yameenimposed a state ofemer- has gone ahead and put the exiled Mr gency after the country’s top court, show- Nasheed on its posters, even though police ing surprising wilfulness, ordered that all recently issued him with a summons to re- political prisonersbe freed. Had that ruling turn and complete his prison sentence. In been followed, the president would have May police had confiscated ballot boxes at lost his majority in parliament and might a party primary in an unsubtle attempt to have been impeached. Moreover, numer- thwart Mr Nasheed. With ballots collected Mr Gayoom’s new milieu РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist June 23rd 2018 Asia 45

Administering India’s capital Sex education in Myanmar City bickers Speak no evil

YANGON Teensmust asktheirsmartphones how little Burmese are made Delhi ASTURBATION does not exist in Eating tea-leafsalad or guava at the The national government and the city Myanmar—not the practice, which wrong time ofthe month is also dicing ofDelhi are feuding M is presumably common enough, but the with death. Women’s underwear must MONG the world’s megacities, Delhi, word itself, which is absent from the be washed separately from men’s, so as AIndia’s capital, has a good claim to sev- government-approved dictionary.When not to jeopardise masculinity.Those eral dubious distinctions: foulest air, hot- it comes to sex, accepted terms are hard to expecting babies should not eat spicy test summer, most precarious water sup- find. Linguists disagree as to whether food, let alone have sex. ply. It is currently in the running for a new “vagina” and “penis” have proper equiv- But even ifthe sexual revolution has distinction, too: the world’s most dysfunc- alents in Burmese. Most people simply not reached Myanmar, the technological tional metropolis. As a dust-storm swirled point at their body parts or use euphe- one has. Smartphones are changing the earlier this month, its chief minister and misms, says Nandar, a local activist who way ordinary Burmese understand their otherelected officials held a sit-in and hun- translates feminist literature. Parents tend bodies. In anonymous chats, young ger strike at the residence ofthe lieutenant- to speakcoyly of“flowers” and women dare to askdoctors questions governor, who is appointed by the central “pumps”—ifthey talkto their children at they would never broach in person, says government. The main opposition leaders all about the birds and the bees. Michael Lwin, who developed maymay, held a similarprotest at the chiefminister’s In theory,sex education is offered in an app providing guidance about ma- office. And the city’s top-ranking bureau- schools, but most teachers skip the topic. ternal, child and female health. crats pursued a work-to-rule boycott of They are often too embarrassed to talk But it is mainly from porn that teen- their elected bosses. about sex in the classroom. Most parents agers are learning about subjects their Considering the way Delhi’s govern- do not want them to anyway (it could elders won’t discuss. Demand is high. ment is set up, it is a wonder that the city arouse children’s curiosity,many argue). The trailer for“Violet ofMyanmar”, functions at all. Like India’s 29 states, Delhi Last year an MP from the ruling National allegedly the country’s first high-defini- is run by a government drawn from an League forDemocracy proposed giving tion adult movie, created a storm when it elected assembly. In contrast to the states’, the subject more prominence. The gov- was posted online last year. The offend- however, the powers it exercises are se- ernment did not take up her suggestion. ing material was quickly taken down, but verely restricted. The unelected lieutenant- Laws about sex are a muddle. The not before the police launched an in- governor must sign off on nearly any ap- morning-after pill is freely available on vestigation into how it ever came to be pointment or expenditure. Delhi has no supermarket shelves forless than a dollar put up in the first place. On the plus side, police force ofits own: its finest answer not a pack. Abortion is illegal, but widely at least they now have indisputable proof to any local official but directly to the na- practised. Sodomy,or “unnatural of- that masturbation does indeed exist. tional government. Unlike Indian states, fences”, as the criminal code inherited Delhi cannot run its own civil service: the from colonial times puts it, is outlawed. city’s administrators are appointed, trans- So is adultery.Even holding a woman’s ferred orsacked at the whim ofthe (nation- hand can be considered an “outrage to al) home ministry. Yet the city government her modesty”. Marital rape remains legal. is expected to provide schools, health care, During a recent Burmese New Year festi- water, sewage and other services. val, Yangon officials banned the sale of This unfairdivision has created trouble contraceptives and Viagra in the hope of for decades. But the fallout has been limit- curbing sex crimes. ed because the party running the capital The urban elite is loosening up a bit. has often happened to be the same as the “The Vagina Monologues”, a risqué play, one in charge of the national government. was recently performed in Yangon, the For ten of the 15 years before the last elec- commercial capital. (A few years ago the tion in Delhi, in 2015, for instance, the Con- mere publication ofthe V-word, in Eng- gress party held sway in both. lish, in a local paper created such a furore In that election, however, the Aam that the paper apologised.) But in much Aadmi party (AAP), an upstart anti-corrup- ofthe country,old wives’ tales still hold tion group, swept out the Congress and all sway.Womenare told that washing their other rivals, capturing an unprecedented hair when menstruating could be fatal. 67 of 70 seats in the Delhi assembly. An equally dramatic sweep the year before had seen the Hindu-nationalist Bharatiya for the poor has won praise as a model for we don’t represent business as usual, so Janata Party (BJP) win power at the centre. public health. Ordinary Delhi-wallahs say they are determined to stop us.” The stage was set fora test ofwills. petty corruption in services provided by Delhi police have routinely blocked The clash between the parties was not the city has been drastically curtailed. AAP events, arrested its workers, and so obvious at first as the AAP, fired by re- But as the AAP and Delhi’s chief minis- charged its members of the assembly with formist zeal, focused on local affairs. The ter, Arvind Kejriwal, showed growing am- petty offences. The home ministry, say party is widely acknowledged to have bitions in national rather than local poli- AAP supporters, has handicapped the city brought rapid improvements to local ser- tics, the BJP hasgrown more hostile. “Every administration by serially declining to ap- vices. Delhi public schools now produce instrument of central government control point bureaucrats to vacant posts, transfer- some ofthe country’s best exam results for has been used against us,” says Atishi Mar- ring those judged sympathetic to the AAP state institutions. Anetworkoflocal clinics lena, a former adviser. “We are outsiders, and installing BJP loyalists instead. Under 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

46 Asia The Economist June 23rd 2018

2 the BJP the city’s lieutenant-governors had existed under previous governments. drafting, in Indonesia the job can fall to have routinely cancelled appointments In another instance the lieutenant-gover- politicians, many of whom are inexperi- and vetoed proposals, even for projects nor cancelled a carefully conceived project enced. After the most recent election in vetted by the bureaucrats appointed by the to improve the distribution of medicines 2014, well over half the members of parlia- home ministry. with the terse note, “I am not sure this is a ment were new to the job. Ms Marlena, who claimed a token sala- good idea.” Another concern is graft. Polls routinely ry of just one rupee, was among nine ex- The AAP’s riposte is to agitate for Delhi find that the national parliament is consid- perts dismissed in April on the grounds to gain full statehood. That campaign, of ered the country’smostcorruptinstitution. that the home ministry had not approved course, will be another alluring target for A graft-busting commission has found the creation oftheir posts, several of which the saboteurs in the central government. 7 grounds to arrest MPs from all ten of the parties represented in it. Yet another factor is Indonesia’s politi- Legislation in Indonesia cal culture. Consensus is prized, and gov- ernments generally include a motley array Poor laws of parties. There is very little party disci- pline. Instead, as bills are thrashed out in committee, everyone weighs in, including various government departments, which are often atloggerheads. The counter-terro- JAKARTA rism bill was held up for months because of a dispute between the police and the Why lawmakers are so bad at making laws army, forinstance. HIS May,to mark the start of Ramadan, wording was characteristically vague. That The problem is compounded by region- TSharp Indonesia, an offshoot of a Japa- was shelved in June, following protests al legislation. Provinces and regencies nese electronics giant, launched the from industry. (roughly equivalent to counties) have the world’s first halal fridge. Not a fridge forha- Lawmakers are also unproductive. Last power to produce their own laws. This lal food; an appliance that is itself suppos- year parliament set itself a target of ap- creates a “jungle” of often-contradictory edly sharia-compliant (though the Koran proving 52 bills, but in the end passed only regulation, says Simon Butt, a professor of does not mention fridges). At a press con- six—a figure which is not unusually low. Indonesian law at Sydney University. ference the firm’s executives donned batik That irks voters. “They do nothing; they When local laws conflict with regulations shirts and huddled around it, giving a just talk,” laments Pochaki, a manager in issued by the central government, it is not cheery thumbs-up. Jakarta. That means that draft laws typical- clear which have precedence. Some func- The stunt was primarily a marketing ex- ly take an agonisingly long time to be en- tions of government, such as granting log- ercise, but soon Indonesian shoppers will acted. Take the new criminal code, which ging permits, end up being done at both be able to snap up manymore improbable, may at last become law in the next few levels, creating confusion. halal-certified goods. For that they can months. The one now in force, adapted In 2016 the home-affairs ministry tried thank a vaguely worded law which comes from a Dutch colonial precursor written in to simplify the legal system by voiding into effect in Octobernext year. It stipulates 1918, has not been revised since1981. Talkof 3,000 local regulations, only to be reversed that most products must be halal-certified, an update startedin the1980s, with the first by the constitutional court last year. Its de- without precisely defining which products ofmany drafts appearing in1993. cision has emboldened provincial gover- it means. Lawyers argue that it could apply Why is Indonesia so bad at lawmaking? nors and regents and adds to the impor- to inedible goods, such as fridges, and even One reason is a lack of expertise. It has tance of regional elections to be held on to services like consulting. been a democracy foronly 20 years. Before June 27th. However, such polls are usually That is by no means Indonesia’s only that, the government, rather than the legis- won on personalityand local issues, rather woolly law. Under an open-ended one lature, drew up most laws. Whereas in than lawmaking ability. Indonesia’s legal against defamation, creators of internet many other countries legal boffins do the jungle will not be cut down soon. 7 memes have been arrested for embarrass- ing politicians. An anti-pornography law allows officials to prosecute people who perform “actions deemed indecent” in public. A counter-terrorism statute, passed in May, is equally imprecise. Even those who harm the environment can be cast as terrorists. Such broad-brush rules could easily be turned on political protesters, points out Andreas Harsono of Human Rights Watch, a pressure group. Other regulations, enacted to strength- en the economy, are simply ill-thought- through. In an attempt to capture more val- ue from Indonesia’s abundant minerals, the government in 2014 banned exports of unprocessed ore. But instead of building refineriesand smelters, manyminingfirms simply shut up shop. By 2015 the produc- tion ofnickel, a big export, had dropped by 60% from its peak. A similar edict said that only Indonesian ships could export coal and palm oil and import rice, though the Parliament needs cleaning up РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

Fast beats big

Agility is the law of tomorrow The rules of business and society have changed. Flexible working may sound unproductive to some, but could add £8.1bn to the economy. How will you embrace the opportunities? Discover what you can do with the law of tomorrow, today at mishcon.com

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48 Asia The Economist June 23rd 2018 Banyan A Chinese lake

China has broken its promise, militarised the South China Sea and got away with it steps: moves not so provocative as to incite a response. One trick is not always to deploy the navy, but the coastguard and “mari- time militias”, when intimidating neighbours. That, as Andrew Erickson of America’s Naval War College argues, has allowed China to getitswaywith lessfuss. PresumablyChina thinks itcan now get away with it again. It may be right. Two years ago, a UN tribunal at The Hague ruled against China’s grandiose territorial claims in the sea in a case brought by the Philippines. But Rodrigo Duterte, who had just become president, made it clear that he would put the case to one side. He has since sucked up to Mr Xi while often slamming America, his country’s historical ally. The Philippines needs Chi- nese investment. MrDuterte will even considerjointexploitation of gas reserves with China in disputed waters. The Philippines’ existing gasfields may run out in the mid-2020s. Compared with the Philippines, Vietnam has much more powerful armed forces. And as a communist state, like China, with a history of people’s wars, it can counter China’s militias with its own, made up offishermen and other sailors. When Chi- na hauled an oil-exploration rig into Vietnamese waters, Viet- nam eventually managed to get the rig to withdraw. In public, ESS than three years ago, Xi Jinping stood with Barack Obama Vietnam takesa more robuststand againstChinese assertiveness. Lin the Rose Garden at the White House and lied through his That, however, hides behind-the-scenes discussions, which teeth. In response to mounting concern over China’s massive ter- also include joint development. China is the giant. Neighbours raforming efforts in the South China Sea—satellite images have little choice but to rub along with it. Yet there are political showed seven artificial islands sprouting in different spots—the risks. Bloody protests broke out in Vietnam during the stand-off country’s president was all honey and balm. China absolutely in 2014, with anger directed not only at China but also at Viet- did not, Mr Xi purred, “intend to pursue militarisation” on its is- nam’s own rulers. There were more anti-Chinese protests earlier lands. Its construction activities in the sea were not meant to “tar- this month. And on June 12th, Philippine independence day, Mr get or impact” any country. Duterte was thrown off guard by protests over Chinese seizures As Steven Stashwick points out in the Diplomat, a journal on of fish from Filipino vessels near Scarborough Shoal. In 2012 Chi- Asian affairs, these denials were always suspect, given the grow- na reneged on a promise to withdraw from this reef, which is on ing evidence of radar installations and bomber-sized bunkers the Philippine continental shelf, almost four times further from made ofreinforced concrete. Last month came the revelation that China than it is from the Philippines. Mr Duterte thought he had China had installed anti-ship and surface-to-air missiles on three strucka deal to allow Filipino fishermen back. The Chinese claim islands in the Spratly archipelago west of the Philippines—far, far the seizures were a mistake. But if Mr Duterte cannot show more from its own shores. (Some or all of the Spratlys are claimed by fruit from his pro-China policy, says Jay Batongbacal of the Uni- Brunei, China, Malaysia, the Philippines, Taiwan and Vietnam.) versity ofthe Philippines, the political cost will rise. That follows China’s biggest ever naval review, in the South Chi- na Sea in April. Laterin May China declared that several bombers Untruth and non-consequences had landed in the Paracel Islands, which it disputes with Viet- As for America, President Donald Trump’s administration ap- nam. It seems only a matter oftime, says Bill Hayton of Chatham pears to have a strategy of pressing China on several fronts, in- House, a think-tank, before the final step in China’s militarisation cluding trade and more robust support for Taiwan. It has rescind- ofthe sea: the deployment ofattackaircraft in the Spratlys. ed China’s invitation to annual naval drills off Hawaii, while While other claimants continue to dredge, expand and rein- inviting Vietnam instead. It has increased “freedom ofnavigation force the islets they occupy, the scale of China’s reclamation— operations” in the South China Sea (sending vessels close to Chi- which has slowed at last but which covers about 3,200 acres na’s new islands) and persuaded France and Britain to conduct (1,300 hectares) in the Spratlys alone—dwarfs all the others’ ef- them too. Presumably the red line set by Mr Obama—no Chinese forts put together. China had claimed to be serving the common construction on Scarborough Shoal—still holds. good: making navigation safer by building lighthouses, for in- America’s defence secretary, James Mattis, promised “larger stance. That never rang true. For one thing, the reclamation is an consequences” ifChina does not change track. Yet fornow Mr Xi, ecological catastrophe. Reefs are crucial spawning grounds for while blaming America’s own “militarisation” as the source of the sea’s fast-diminishing fisheries, which account for12% of the tension, must feel he has accomplished much. He has a choke- global catch. China’s recent actions further undermine its profes- hold on one ofthe world’sbusiestshippingroutesand isin a posi- sions of altruism and redraw the strategic map. Admiral Philip tion to make good on China’s claims to the sea’s oil, gas and fish. Davidson, the new head of America’s Indo-Pacific Command, He has gained strategic depth in any conflict over Taiwan. And, says that “China is now capable of controlling the South China through the sheerfactofpossession, he hasunderpinned China’s Sea in all scenarios short ofwar with the United States.” fatuous historical claims to the South China Sea. To his people, The question is what others will do about it. To date, Chinese MrXi can paintitall asa return to the rightful order. Rightnow, it is expansionary tactics have forthe most part involved incremental not clear what the larger consequences ofthat might be. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS China The Economist June 23rd 2018 49

Urbanisation the firm’s headquarters in Shanghai. She could have based herself in either city, but A tale of19 mega-cities living costs were much lower in Wuxi. At first she wondered whether her commute 更多资料请加经济学人全球首发群，qq群号529247779 was unusual. It was not. “I see familiar faces on the train every day,” she says. For those in bedroom communities KUNSHAN near London or Manhattan, Ms Hu’s train rides probably sound familiar. But three The countrytries to reshape itselfinto a series ofconurbations features make China’s super-regions ex- HINA’S urbanisation is a marvel. The beguiling. They see the clusters as engines ceptional. The first is scale. The biggest ex- C population of its cities has quintupled forgrowth that could transform China into isting city cluster in the world is greater To- over the past 40 years, reaching 813m. By a wealthy, innovative powerhouse. But kyo, home to some 40m people. When it is 2030 roughlyone in five ofthe world’scity- others think it is a trap—a government-dri- fully connected the Yangtze delta, where dwellers will be Chinese. But this mush- ven exercise in development that will lead Ms Hu is based, will be almost four times rooming is not without its flaws. Rules re- to gridlockand waste. as big, with 150m people. The average pop- stricting migrants’ access to public services Hu Qiuping, a safety manager for a ulation of the five biggest clusters that Chi- mean that some 250m people living in cit- chemicals company, is in the urban van- na hopes to develop is110m. Part ofthe rea- ies are second-class citizens (see chart), guard. She lives in Wuxi, a city of6m about son is that the physical area of most of the who could in theory be sent back to their 150km west of Shanghai. A trip between Chinese clusters will also be bigger. The home districts. That, in turn, has crimped the two used to take a couple of hours. To- most prosperous, the Pearl delta, is expect- the growth of China’s cities, which would day the bullet train takes just 29 minutes. ed to cover 42,000 square kilometres, otherwise be even bigger. Every Monday and Friday she works in about the same as the Netherlands. Restraining pell-mell urbanisation may Wuxi, inspecting the chemicals factory. Given that spread, it might seem non- sound like a good thing, but it worries the From Tuesday to Thursday she travels to sensical to talkofthe clusters as unified en- government’s economists, since bigger cit- tities. But the second point is the speed of ies are associated with higher productivity transportlinks, notablythe bullettrains be- and faster economic growth. Hence a new Paperless cities tween cities. This expands the viable area plan to remake the country’smap. The idea China, % of total population of China’s clusters. The Jingjinji region isto fosterthe rise ofmammoth urban clus- around Beijing has five high-speed train 60 ters, anchored around giant hubs and con- Urban resident lines today. By 2020 there should be 12 taining dozens ofsmaller, but by no means 50 more intercity lines, and another nine by small, nearby cities. The plan calls for 19 2030. Towns that are woven into the net- 40 clusters in all, which would account for works can see their fortunes change al- nine-tenths of economic activity (see map 30 most overnight. Plans for a new intercity Urban hukou* on next page). China would, in effect, con- 20 train to Haining, a smaller city in the Yang- dense into a country of super-regions. tze River Delta, partly explain a doubling Three are already well on track: the Pearl 10 of house prices there. “The way that we RiverDelta, next to HongKong; the Yangtze 0 measure distances has changed from space River Delta, which surrounds Shanghai; 1990 95 2000 05 10 15 17 to time,” says Ren Yongsheng of Vantown, and Jingjinji, centred on Beijing. Sources: CEIC; CICC; *Methodology a property developer in Haining. Forsome urban planners, the strategy is National Bureau of Statistics changed in 2015 The third difference is the top-down na-1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

50 China 更多资料请加经济学人全球首发群，qq群号529247779 The Economist June 23rd 2018

2 ture of the clusters. China is far from alone gap between talk and policy remains vast. deltas of the Pearl and Yangtze rivers, that in wanting to knot cities together. “Cluster Officials have called for more region-wide have the brightest prospects. policy” has been in vogue in urban plan- governance, a welcome change from the Beyond these coastal conurbations, the ning for years, with governments trying to municipal turfbattles that have bedevilled outlook is dimmer. Several of the 19 desig- devise the right mix of infrastructure and China. In January the Yangtze River Delta nated clusters seem fanciful. An economic incentives to conjure up the next Silicon area established an office for regional co- zone linking Nanning, a poor provincial Valley, or something like it. But China has ordination, the first ofits kind. But it is a bu- capital, to Haikou, a port on Hainan island, intervened more heavily than most. To en- reaucratic minnow, with little more than a some 500km and a ferry crossing away, is courage people to disperse throughout dozen employees. Stefan Rau of the Asian unlikely to amount to much. The proposed clusters, it has raised the barriers to obtain- Development Bank says it is essential that cluster in the middle reaches of the Yang- ing a hukou, or official residency permit, in regional offices have poweroverbudgets if tze, a territory larger than Poland, is too ex- the wealthiest cities and lowered them in they are to play a useful role. pansive to make sense. Even within pro- smaller ones nearby. Whereas Shanghai is mising areas, government plans can be picky about granting permits to migrants, Lustrous clusters counter-productive. Beijing could benefit Nanjing, to its west, has flung its doors Evidence about economic gains from clus- from shifting some of its universities and open to university graduates. As construc- tering in China is promising, if limited. businesses to other cities in the Jingjinji re- tion gets underway in Xiong’an, a new city Counties enjoy a 6% boost in productivity gion. But Xi Jinping, the president, has de- designed to relieve pressure on Beijing, ef- from being tied into the Yangtze super-re- cided that an entirely new city, Xiong’an, fortsto push people outofthe capital could gion, according to an article published last should be created, some 100km away. A become more aggressive. The scenes of po- year in the Journal of the Asia Pacific Econ- similar development closer to Beijing lice forcing thousands of migrant workers omy. But the researchers found few such would have a better shot at success. to leave Beijing last winter might prove to gains in other regions. That might be be- The main concern for those trying to have been a preview. cause they looked at old data. A more re- lead productive lives across the vast super- The concept of city clusters is grounded cent study, published in April by the Na- regions is more mundane: how easy it is to in the theory of agglomeration benefits, tional Bureau of Economic Research in get from A to B. The government classifies which holds that the bigger the city, the America, supported the idea of big knowl- clusters as “one-hour economic zones” or more productive it is. A large, integrated la- edge spillovers in super-regions. When cit- “two-hour economic zones”, depending bour market makes it easier for employers ies were connected by high-speed rail, the on the time it takes to cross the cluster by to find the right people forthe right jobs. As quantity and quality of academic papers high-speed rail. But it often takes longer to companies gather together, specialised by local researchers increased by nearly a get to train stations within cities than to tra- supply chains can take shape. Knowledge third, according to the authors. vel bytrain between cities. DingShu works also spreads more easily. In advanced Sceptics, however, note that the most in Shanghai and lives in Kunshan, a satel- countries, the doubling of a city’s popula- successful clusters tend not to be creations lite town linked to Shanghai by a subway. tion can increase productivity by 2-5%, ac- of the government. As China’s economy Factoring in her bus ride to the subway, se- cording to the Organisation for Economic has modernised, the tendency towards curity checks to enter the station, walking Co-operation and Development, a club concentration has been irresistible, espe- time and waiting time, she spends about mostly of rich countries. Studies have cially in coastal areas. Some towns have four hours a day commuting. She says she found that the potential gains in China are specialised in electronics, others in the is thinking about looking fora job closer to even bigger, perhaps because of its cities’ clothing industry and so on. There has also home. New rail lines to Shanghai might surprising lack of density. Take Guang- been much more migration to the coast eventually help. But for now, Ms Ding sees zhou, one of China’s more crowded cities. than to other regions. It is the clusters that herself as a victim of urban sprawl, not the If it had the same density as Seoul, it could have coalesced naturally, especially the denizen ofa seamless city cluster. 7 house an additional 4.2m people on its ex- isting land, according to the World Bank. KAZAKHSTAN RUSSIA A But China’s government has long resist- I S ed the emergence of true megacities. It S Harbin U Population, 2016 R aims to prevent the population of its two MONGOLIA biggest cities, Beijing and Shanghai, from Changchun Urumqi 112m exceeding 23m and 25m, respectively, in Shenyeng 2035—little bigger than they are today. City Hami Anshan Jingjinji City cluster N. KOREA clusters are a workaround. In the jargon of Hohhot Beijing Baotou Dalian urban planners, they represent “borrowed Ordos Tianjin size”: cities can, in principle, have the bene- Yinchuan Shijiazhuang Xiong’an Yantai S. KOREA JAPAN Taiyuan fits of agglomeration with fewer of the Xining Jinan Qingdao Lanzhou downsides such as congestion. Alain Ber- Kaifeng CHINA Luoyang taud ofNew YorkUniversity says that, ifin- Zhengzhou Wuxi Baoji Xi’an Nanjing Kunshan Yangtze tegrated well, China’s city clusters could, Hefei thanks to their size, achieve levels of pro- Shanghai River 152m Wuhan Haining Delta ductivity never seen in other countries. He Chengdu Hangzhou Chongqing Changsha says it would be comparable to the differ- NEPAL Wenzhou BHUTAN Zunyi ences between England and the rest of the Nanchang Fuzhou world during the Industrial Revolution. INDIA Qujing Guiyang This vision of hyper-productive Chi- BANGLA- Xiamen DESH TAIWAN nese clusters is a pipe dream for now. The Kunming Guangzhou Nanning Shenzhen Philippine government first mentioned city clusters Sea Zhuhai Hong Kong as a development strategy in 2006. It was Bay of MYANMAR VIETNAM Pearl River Bengal 60m not until 2016 that it elaborated the con- Haikou Delta cept. Of its 19 identified clusters, just a few LAOS HAINAN 500 km have published detailed plans so far. The Source: Wind Info THAILAND PHILIPPINES РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS International The Economist June 23rd 2018 51

Public transport 2018 the number of Tube journeys fell by 19m, or 1.4%. That was despite annual pop- Missing the bus ulation growth in London of about 1% and a 3.3% rise in employment in the past year. The Paris Metro carried only as many pas- sengers in 2017 as it did in 2012. In Berlin, LOS ANGELES public transport journeys are growing about halfas quickly as employment. Publictransport is declining in many wealthy cities. Blame remote working, Uber, There are exceptions. More people are cheap carloans and the internet taking public transport in Sydney and To- UANA, who came to America from Gua- sport and 4.2% fewer weekend trips in the kyo. And some transport agencies can Jtemala, used to take the bus to and from 12 months to April 2018, compared with the point to specific reasons fortheir emptying cleaning jobs. It wore on her. Walking to previousyear. In Chicago and Washington, buses and trains. London and Paris have the bus stop after a long day at work was DC, the decline in public-transport trips suffered terrorist attacks. New York’s sub- exhausting, especially when it rained, as it has been even steeper. way is creaking—a consequence of pro- occasionally does in Los Angeles. Now Public transport is holding up better in longed underinvestment in repairs. Else- Juana drives everywhere, even to her local other rich countries, but not by much. In where, bad weather or roadworks are said supermarket, a few blocks away. She had Toronto, adult trips have fallen every year to deter people from taking buses. two aspirations: to learn English and to get since 2014 (the city made public transport But demand for mass public transport a car. She has accomplished both. free for young children, so their numbers has weakened in so many rich-world cities Although Los Angeles has organised it- are up). In London, bus journeys are down at the same time that one-off explanations self around the car since the second world by 5% since the 2014-15 fiscal year. The Lon- seem inadequate. Notlongago annual pas- war, it has tried harder than many other don Underground has remained more senger growth of more than 2% was nor- American cities to change this. Since 1990 popular, although in the year to March mal, and transport-watchers mused that voters have approved three tax rises to pay the private car was on its uppers. The re- for public transport. A railway and rapid- cent decline, which is bad enough on a bus network has been built quickly—by Down the tubes year-to-year basis, looks even worse when rich-world standards, if not Chinese ones. United States, public-transport use, per person set next to transport agencies’ forecasts. In Public-transport users, however, are dwin- 2008=100 New York, forexample, bus trips in the first dling. In the past five years the number of four months of this year were 7.6% lower 110 trips taken in metropolitan Los Angeles than the transport agency expected. Some- New York Boston San has dropped by19%. Francisco thing seems to be driving people off the The CityofAngelsisleadinga broad de- 100 trains and buses. But what? cline. The American Public Transportation One explanation, which is convincing 90 Association’s figures show that the num- Los Chicago in some cities, is that public transport has ber of journeys in the country as a whole Angeles deteriorated. Look at Madrid, says Richard has fallen in each ofthe past three years. In 80 Anderson, a transport analyst at Imperial 2016-17 every kind ofmass public transport Washington, DC College London. Public-transport trips fell became less busy: buses, subways, com- 70 there beginning in 2008, as you would ex- muter trains and trams. New Yorkers took 2008 09 10 11 12 13 14 15 16 17 pect in a recession-hit country where un- 2.8% fewer weekday trips on public tran- Sources: Census Bureau; TransitCenter employment was rising. In response to the 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

52 International The Economist June 23rd 2018

2 downturn, the city cut services. People no- Consortium blames on the growth of on- gines have become more frugal. Cheaper ticed, and stayed away. Between 2007 and line shopping and weak consumer confi- oil greatly cuts the cost of driving around 2013 the Madrid Metro lost 19% of its cus- dence. It means fewer travellers, especially America, where fuel is only lightly taxed. tomers. Service levels, perceptions and de- to West End stations such as Oxford Circus. Even in Britain, data from the RAC Founda- mand have all improved since then, but “When the retail sectorsuffers, we suffer as tion, a research group, suggest that driving- the Metro remains quieter than it used to well,” says Shashi Verma, the chief tech- cost inflation (which includes fuel as well be before the financial crisis. nology officer at Transport for London. In as insurance and so forth) has been lower Elsewhere, though, customers are van- several cities, including Paris and San Fran- than bus- or train-ticket inflation over the ishing even though public transport is as cisco, weekday trips have held up better past ten years. good as it was, or better. Perhaps public than weekend trips, hintingthatpeople are Despite a loudly trumpeted urban re- transport has come to seem relatively dis- dropping unnecessary outings. vival, America’s suburbs and more distant mal because people have acquired better Working habits are changing, too. Gal- “exurbs” are growing faster than its central options. Uber, Lyftand other “ride-hailing” lup, a pollster, found in 2016 that 43% of cities. Many ofthese places have poor pub- car services are probably luring people American workers spend at least some of lic transport and plenty of room for cars, away from trains and buses, just as they are their time working remotely, up from 39% thanks to rules that oblige developers to demolishing the taxi trade. In San Francis- in 2012. Remote working also intensi- provide a minimum number of parking co public transport accounts for 16% of all fied—ie, telecommuters spent more oftheir spaces. Some European cities are sprawl- weekday trips, ride-hailing for 9%. People time telecommuting. In Britain, the num- ing, too. Berlin, long a cheap city (and an mostly seem to use Uber and Lyft to get to bers working exclusively at home grew artists’ haven as a result) is turning costly. places well-served by mass transport (see from 2.9m in 1998 to 4.2m in 2014, according Knight Frank, an estate agent, says that map). One study of the city by five Califor- to official statistics. home prices in the city have risen by 21% in nian academics asked ride-hailing custom- “Most people who I know work at least the past year. Those who leave Berlin in ers how they would have made their most one day a week at home,” says Sandra search of cheaper housing find an impov- recent trip if the service did not exist. One- Jones, an experton London propertyat Da- erished railway network, with only one third replied that they would have taken taloft, a consultancy. She points to two oth- train an hour on some lines. So they drive. public transport. In a study of Boston, 42% er changes that may have kept people off said the same thing. buses and trains. Even when workers do Four wheels better Self-driving taxis are likely to steal even get out ofthe house, many travel to flexible In southern California, public transport is more riders in future, because they will be “co-working” offices, which might be close heavily used by poor immigrants, particu- so cheap. They can threaten public tran- to home. The second change is a rash of of- larly immigrants from Mexico and Central sport even before they appear on the fice development around railway stations. America. But research by Michael Man- roads. Last month voters in Nashville over- The Office Group, a fast-growing outfit, ac- ville and others at the University of Cali- whelmingly rejected a plan to build sever- tually rents offices inside stations. The fornia, Los Angeles, finds that this group al tram and rapid-bus lines. Opponents of company says these are popular among are rushing onto the roads behind their the plan had argued that autonomous cars commuters from outside London, who can own steering-wheels. Between 2000 and and buses would soon be a cheaper and take a train to work and no longer have to 2015 the proportion of Mexican immigrant better way oftransporting people. transferto a Tube train or a bus. households without a car fell from 16% to In almost every city in the rich world, 5%. Meanwhile, the immigrant population Two wheels good the fiercest competition for public trans- of Los Angeles and its environs is becom- Meanwhile, other technologies nibble at port comes not from Uber, cycling or the ing a little less Hispanic and a little more buses and trains. Many cities have tried to appeal of working from one’s back garden. Asian. “The countries that were most likely encourage cycling by creating bike lanes Rather, it comes from driving. In America to send us transit riders are sending us a and allowing app-based bike-rental outfits 76% of commuters drive to work alone, smaller proportion of immigrants,” says (and, in some, scooter-rental outfits) to set and the share has risen fractionally in the Mr Manville. up on pavements (see Business section). In past decade. The final explanation for the Along with other working-class Ameri- Berlin, the network of cycle paths has emptying buses and trains is that the lone- cans, Mexican immigrants find it easier to grown from 856km to 1,433km since 2002. lycarjourneyhasbecome more appealing. buy their own cars these days because App-based rental schemes—the largest of It is certainly cheaper. The oil price be- loans have become so much cheaper and which is run by Lidl, a discount supermar- gan to fall in the summer of 2014. It has easier to obtain. Since 2015 some of them ket—have grown from 2,000 to 16,000 since rebounded, butnotto itselevated lev- have also benefited from a Californian law bikes in two years. Cycling, although still els of five years ago. Meanwhile, car en- that allows illegal immigrants to have driv- uncommon, is proportionally the fastest- ing licences. Perhaps more of them are ar- growing commuting mode in America. Golden Pier 39 Financial riving in America knowing how to drive, The consequences of the rise in two- Gate Bridge District too. Car ownership is rising quickly in wheeled travel are not entirely clear. Cy- Bay Mexico, as it is in other countries, such as cling could boost public transport by help- Bridge the Philippines, that send lots of immi- ing people get to stations; or it could under- Market grants to America. mine public transport by providing a Street However, even in the cities where pub- cheap alternative to buses and trains. Su- lictransportisfaringworst, itseems unlike- san Shaheen, a researcheratthe University ly to disappear. People will keep using it of California, Berkeley, suggests that both San Francisco when it is convenient, when they are feel- of these can happen at once. In Washing- ing pinched, or when it is raining. But the ton, DC, bicycle-sharing seems to bring days when commuters and shoppers fol- more people to public transport in the sub- lowed regular tracks around cities, like mi- urbs but draw them away in the city centre. 3km grating birds, appear to be over. Tony Trav- Another possibility is that city-dwellers Muni rapid bus Muni metro rail Rail lines ers, an urbanist at the London School of are simply travelling less. Footfall in Lon- Uber/Lyft drop-offs per square mile <100 7,000 Economics (and a convert from the Tube to don’s shops was 1.5% lower in May than a Monday 9am (2016 Autumn average) cycling) calls it: “a fragmentation of the year earlier—a slump that the British Retail Source: San Francisco County Transportation Authority world as we knew it”. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Business The Economist June 23rd 2018 53

Also in this section 54 Bartleby: Get with the program 55 Iliad in Italy 56 Glencore and American sanctions 56 Shipping’s sulphurous emissions 57 The sharing economy afloat 58 Schumpeter: French philosophy and business

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Urban mobility sure riders. Bike-sharing services are rush- ing to include them. Nearly a third of Par- Electric invasion is’s Vélib fleet, for example, is electric, though the roll-out has been tricky. For riders in American cities, however, e-scooters may steal the show. Their char- acteristics fit even more neatly into rental AMSTERDAM AND BEIJING models than e-bikes do. Powered not just by electricity, but by volleys of venture How e-bikes and scooters are weaving theirway into the transport system money, e-scooters are the latest craze com- HE streets of Beijing are thronged with gium and France are big markets too. ing out of California. Revenue for some of Ttwo-wheeled contraptions. Some ap- Whereas exports ofregularbikes from Chi- the firms renting them is increasing so fast pear to be conventional petrol mopeds but na, Taiwan and Vietnam to the European as to surprise even seasoned Silicon Valley as they zoom through red lights at pedestri- Union fell by15% between 2014 and 2016, e- venture capitalists. Bird Rides, a pioneer of an crossings their eerie silence and lack of bike exports more than doubled. Business- the business, and not yet a year old, has be- exhaust reveals them as electric. Execu- es are also joining the ride. One of Ger- come a “unicorn” faster than any other tives in suits cruise by on electric kick- many’s largest electric fleets is owned by American startup before it. Its valuation scooters, looking like big kids on their way Deutsche Post DHL, a logisticsgiant, and in- has now reportedly reached $2bn. to school, though travellingmuch more en- cludes around 12,000 e-bikes and e-trikes In some places, such as Santa Monica, thusiastically. Electric bicycles, hacked to- (three-wheeled ones). one of the first places where Bird intro- gether with a battery strapped to the frame For consumers the vehicles do not duced e-scooters, using them to get around and wired to a back-wheel hub containing come cheap. They typically cost a couple has already become a habit. With a few a motor, crowd the edges ofroads. of thousand euros—more once you add taps on an app riders can unlock them and China’s cities are at the forefront of a bells and whistles. Hence new businesses off they go. Once they have reached their quiet swarm of electric two-wheeled vehi- are popping up to rent or lease them out. destination they park the scooter at a spot cles. Millions now roam their centres. This Some of these serve couriers working in where it can be picked up by another rider. transformation of urban mobility is also the gigeconomy. Others go afterhipster lei- Each ride costs $1plus15 cents per minute. happening in the West, albeit with a nota- Anotheraspectofthe model isthat peo- ble addition that has yet to take off in Chi- ple can make money by charging them. na: firms that rent out electric kick-scoot- The road less pedalled Freelance “bird hunters” pick up scooters ers. These are taking many American cities European Union, electrically power-assisted with empty batteries and plug them in at by storm and are arriving in Europe. bicycle sales, m home. The startup pays between $5 and In the bike-mad Netherlands nearly $25 per vehicle charged, depending on 2.0 one in three newly bought bikes last year how hard they are to find (the locations of was electric, up from one in 20 a decade “dead” scooters are shown in another earlier. Commuters, from the sweat-averse 1.5 app). Charging mostly happens at night to the environmentally conscious, are and the vehicles must be backon the street keen. Some 40% of Dutch e-cyclists use 1.0 in specified locations before 7am the next them to replace carjourneys. Ridingfor fun day. That Bird and other firms can out- is on the rise, too: a best-selling model in 0.5 source thisactivityexplainswhythey have Europe last year was the e-mountain-bike. been able to launch theirservices so quick- In Germany, 15% of new bikes sold in 0 ly in so many cities. Hot on Bird’s wheels is 2016 were electric, with sales up by13% and 2010 11 12 13 14 15 16 Lime, co-founded by Toby Sun, a Chinese exports by 66% compared with 2015. Bel- Source: Confederation of the European Bicycle Industry entrepreneur, which boasts a similar1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

54 Business The Economist June 23rd 2018

2 growth rate and valuation (its chargers are tions: how to regulate them; whether their deaths happened on e-bikes, and most of called “juicers”). Launching in Paris this economics work over time; and what hap- the deceased were over 65. week, Lime will beat Bird to Europe. pens to the data they generate. Regulators have started to react. Since The spread of e-bikes and e-scooters is A need for regulation is certainly evi- July 2017 Dutch law distinguishes between in future likely to be further accelerated by dent in Amsterdam’s Vondelpark: the e-bikes whose motor allows riders to go ride-hailing giants keen to offer the full morning rush looks like chaos. Cyclists slower or faster than 25 kilometres per range of urban e-mobility options. Uber in ride in every direction, some ambling hour. The faster ones now need a licence April bought Jump, an e-bike-sharing start- slowly, others pedalling furiously. Since e- plate and riders have to follow the same up.And Lyftissaid tobeonthe vergeoftak- bikes have been added to the mix the term rules as those of mopeds, such has wear- ing over Motivate, another e-bike firm. “granny-pace” has a whole new meaning ing a helmet and having insurance. Other Both firms are reportedly also interested in asriders—often the elderlyorparents ferry- European countries have introduced simi- renting out e-scooters—as is Ofo, the Chi- ing children—overtake young racers with- lar limits. The city council of Santa Monica nese pioneer ofdockless bike rentals. out breaking a sweat. Crashes are still rare, decided on June 12th to require firms rent- On both sides of the Atlantic two- but their number has been rising. In the ing e-scooters to text customers if they wheeled e-vehicles raise three big ques- Netherlands last year a quarter of bike have been riding unsafely. 1 Bartleby Get with the program

Howan algorithm may decide yourcareer ANT a job with a successful multi- graphic group on Facebook (because they Wnational? You will face lots of com- control a high share of household spend- petition. Two years ago Goldman Sachs ing) and thus ads targeting them are more received a quarter of a million applica- expensive. The algorithms naturally tar- tions from students and graduates. Those geted pages where the return on invest- are not just daunting odds for jobhunters; ment is highest: formen, not women. they are a practical problem for compa- In their book* on artificial intelligence, nies. Ifa team offive Goldman human-re- Ajay Agrawal, Joshua Gans and Avi Gold- sources staff, working 12 hours every day, farb of Toronto’s Rotman School of Man- including weekends, spent five minutes agement say that companies cannot sim- on each application, they would take ply dismiss such results as an unfortunate nearly a year to complete the task of sift- side-effect of the “black box” nature of al- ing through the pile. gorithms. If they discover that the output Little wonder that most large firms use of an AI system is discriminatory, they a computer program, or algorithm, when need to workoutwhy,and then adjust the it comes to screening candidates seeking algorithm until the effect disappears. junior jobs. And that means applicants Worries about potential bias in AI sys- would benefit from knowing exactly Passing the ATS stage may not be the tems have emerged in a wide range of ar- what the algorithms are looking for. jobhunter’s only technological barrier. eas, from criminal justice to insurance. In Victoria McLean is a former banking Many companies, including Vodafone and recruitment, too, companies will face a le- headhunter and recruitment manager Intel, use a video-interview service called gal and reputational risk if their hiring who set up a business called City CV, HireVue. Candidates are quizzed while an methods turn out to be unfair. But they which helps job candidates with applica- artificial-intelligence (AI) program ana- also need to consider whether the pro- tions. She says the applicant-tracking sys- lyses their facial expressions (maintaining grams do more than just simplify the pro- tems (ATS) reject up to 75% ofCVs, or résu- eye contact with the camera is advisable) cess. For instance, do successful candi- més, before a human sees them. Such and language patterns (sounding confi- dates have long and productive careers? systems are hunting for keywords that dent is the trick). People who wave their Staff churn, after all, is one of the biggest meet the employer’s criteria. One tip is to arms about or slouch in their seat are likely recruitment costs that firms face. study the language used in the job adver- to fail. Only if they pass that test will the There may also be an arms race as can- tisement; if the initials PM are used for applicants meet some humans. didates learn how to adjust their CVsto project management, then make sure PM You might expect AI programs to be pass the initial AI test, and algorithms appears in your CV. able to avoid some ofthe biases ofconven- adapt to screen out more candidates. This This means that a generic CV may fall tional recruitment methods—particularly creates scope for another potential bias: at the first hurdle. Ms McLean had a client the tendency for interviewers to favour candidates from better-off households who had been a senior member of the candidates who resemble the interviewer. (and from particular groups) may be armed forces. His experience pointed to Yet discrimination can show up in unex- quicker to update their CVs. In turn, this potential jobs in training and education, pected ways. Anja Lambrecht and Cather- may require companies to adjust their al- procurement or defence sales. The best ine Tucker, two economists, placed adverts gorithms again to avoid discrimination. strategy was to create three different CVs promoting jobs in science, technology, en- The price of artificial intelligence seems using different sets of keywords. And job- gineering and maths on Facebook. They likely to be eternal vigilance. hunters also need to make sure that their found that the ads were less likely to be LinkedIn profile and their CV reinforce shown to women than to men...... *Prediction Machines: The Simple Economics of each other; the vast majority of recruiters This was not due to a conscious bias on Artificial Intelligence will use thewebsitetocheckthe qualifica- the part of the Facebook algorithm. Rather, tions ofcandidates, she says. young women are a more valuable demo- Economist.com/blogs/bartleby РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist June 23rd 2018 Business 55

2 How to deal with e-vehicle rental firms their vehicles are well distributed across a forms to allow citizens to switch easily be- more generally is another pressing matter. city.But data could become a side product. tween different modes of transport. Vehi- In summer last year dockless bikes sud- Ofo, a Chinese dockless rental-bike pio- cle makers, too, are hopingto gettheir piece denly littered Amsterdam. In September neer, is collecting a lot of data and has of the digital pie. Bosch encourages cus- the city council had thousands removed plans to sell them to property developers tomersto install an app with extra features, from the streets and announced a tempo- and local retailers. Mr Sun of Lime thinks such as navigation. rary ban on bike-share schemes. It has that its scooters could one day become mo- It is possible that e-scooters could turn since promised that it will lift the ban, but bile sensors, collecting data on everything out to be a fad and e-bikes prove to be bet- in a controlled way.The number of shared from pollution levels to street conditions. ter formany trips. But e-vehicles are sure to bikes will probably be limited to 9,000. Many companies and organisations become a permanent part of the urban- Several American cities have reacted to will have designs on such data. In Santa mobility mix. And, who knows, e-bikes the invasion of e-scooters by throttling Monica, Bird and other firms have already and e-scooters may both evolve further. their introduction, although they reduce agreed to provide the city with informa- Work is already under way to make them car traffic and pollution. San Francisco tion so it can see how often scooters are self-driving(thinkofa Segway on steroids). banned the vehicles in early June and is used and whether poor areas are under- That may eventually bring method to the now introducing a 24-month pilot pro- served. In the future citiesmayrequire data madness on the streets of Amsterdam, gramme: the city will only issue permits to to be fed into municipal mobility plat- Beijing and beyond. 7 up to five companies and they will be al- lowed to operate a maximum of 2,500 scooters in total. Santa Monica has opted Iliad formore flexibility: a “dynamic” cap on the number of scooters each firm is allowed to Battle ready deploy, which will depend on how much use its vehicles get. Its approach could be- come a model, hopes David Sacks of Craft Ventures, an investor in Bird. Asregulatoryproblemsare worked out, MILAN the second big question is coming to the The timing ofa French telecoms company’s entryinto Italy may be awkward fore: who will make money with e-vehi- cles and how much? They are certainly HOOSE truth. Choose Iliad,” en- internet. In 2002 he launched his Freebox, good business for their makers. Many e- “C treats the voice-over of a television which combined cheap web access, TV bikes are powered by gear from Bosch, a advertisement after images of President and fixed-line telephony, and in 2012 start- German conglomerate. It only started tin- Donald Trump speechifying and football- ed selling low-cost mobile telephony. kering with the technology in 2009. Today ers feigninginjuries flash across the screen. Growth came easily foryears, allowing Mr the firm provides drive units, displays and That may seem pretentious for a mobile Niel to spend time on other things, such as battery packs—the highest-margin compo- provider, but the advert is part ofIliad’s en- launching Station F, the world’s largest nent—to more than 70 e-bike brands. try into Italy, which began on May 29th. startup incubator, in Paris, and free coding The Bosch of e-scooters is Ninebot, a The group, led by one of France’s most schools in Paris and Silicon Valley. Chinese firm, which also owns Segway, prominent businessmen, Xavier Niel (pic- In France, Iliad, the third-largest mobile the maker ofself-balancing “personal tran- tured), is credited with having shaken up operator, is looking rather mature. In the sporters”. Most rental firms started by buy- the telecoms industry at home. He wants first quarter it lost broadband customers ing off-the-shelf scooters from the firm, to have a similar impact in Italy. for the first time, and missed revenue fore- which cost between $300 and $400. But MrNielstartedoutwithaporn-chatser- casts. Its share price is down by 32% this Lime, in particular, is increasingly deploy- vice for Minitel, a French antecedent to the year. Nicolas Didio of Berenberg, a private ing more customised vehicles that are bank, says Iliad had become like “a teen- more robust and have a longer battery life. ager who grew quickly and became too Yet even e-vehicles with a shorter bat- lanky”. Its lean cost structure—eschewing tery life can bring in good money, particu- high ad spending and a heavy physical re- larly scooters—which helps to explain the tail presence in favour of online sales—had sky-high valuations of Bird and Lime. Both been its competitive advantage. But it ex- have claimed in pitches to investors that pected customers to run to it, says Mr Di- they are able to pay offeach scooter within dio, and forgot they can be couch potatoes. just ten to 14 days: they bring in more than To its credit Iliad has reacted swiftly, by $20 per day on average. The revenues they shuffling management, bringing in new generate across America alone could be talent and adjusting its broadband offer huge. If 2m get deployed (a low forecast), and its promotional activities. It is to they could earn nearly $15bn a year. launch a new Freebox in September. “The The firms that have the broadest offer- market is more mature and competitive,” ing—those able to provide access to all says Thomas Reynaud, its boss, “so we’re kinds ofmodes oftransport—are most like- adapting our commercial strategy.” ly to win. As well as e-scooters, Lime also Yet the timing of its recent troubles, just rentsoute-bikesand the normal kind ofcy- as it ventures abroad, is undeniably awk- cle. Some predict that the likes ofUber and ward. A report by Macquarie, a bank, en- Lyft will emerge victorious by subsuming visages a scenario in which Iliad could end e-vehicle rentals. That raises the question up being one of the smallest operators in ofwho will control the data they generate. both France and Italy. Bird, Lime and others are rarely using Iliad’s Italian venture is the upshot of a such information other than to improve merger between Wind of VimpelCom, a their services, forinstance by ensuring that From Station F to Milano Centrale Russian firm, and Tre, of Hong Kong-based 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

56 Business The Economist June 23rd 2018

2 CK Hutchison, which was approved by the dominate, so there is little novelty in being The shipping industry European Commission in 2016 on the con- without a contract. And the law stipulates dition that space be made fora fourth oper- that providers identify their clients before Feeling green ator. Iliad was able to buy frequencies, and activation, an added cost given Iliad’s use the Wind-Tre network (which will take sparse retail networkand online focus. another year or so to fully merge), while it Another hurdle will be building a con- builds its own. sumer brand. When Iliad launched its mo- Yet gaining traction will be challenging. bile service in France, it was an established Awave ofnew environmental laws is Market conditions are unlike those when broadband provider with millions of cli- worrying shipowners Iliad launched its low-cost offer in France ents, but it is unknown in Italy. Launching in 2012: prices are already low. In a pre- at a time of political and stockmarket vola- HE shipping industry has encountered emptive move last year, TIM, a formerstate tilitymayhave limited the presscoverage it Trough seas over the past decade. Be- monopoly, launched Kena Mobile, a low- received, suggests Mr Didio, though he tween 1985 and 2007 trade volumes shot costbrand. David MarcusofEvermore Glo- quipsthatMrNiel’smaverickpersona may up at around twice the rate of global GDP bal, a shareholder in TIM, argues that “if fit with the anti-establishment mood. He but since 2012 their rate of growth has [TIM] didn’t lose to other players, it won’t expects Iliad to grab around a tenth of the barely kept pace, leaving the industry with lose to Iliad.” Bynowall the large operators market within a few years. If successful, it overcapacity. Freight rates for containers including Vodafone, one of the world’s may expand into broadband. Italy’s entre- have plunged by a third since 2008. Worse largest, have launched lower-cost offers. It- preneurs doubtless hope Mr Niel imports may be to come. The industry does not re- aly also differs in that pre-paid SIM cards startup camps and coding schools, too. 7 gard as good news President Donald Trump’sannouncement on June 15th ofta- riffs of 25% on up to $50bn of Chinese Mining in Congo goods, which will slow trade growth fur- ther. Now a veritable hurricane of new en- Evasive action vironmental laws is about to hit. NAIROBI Shipping accounts for only around 2% of global carbon emissions, but is quite Glencore dodges American sanctions ratherthan spurn its friends in Congo dirty. Burning heavy fuel oil, the industry MONG Africa’s many foreign fixers ofits indirectly-owned mines which produces 13% of the world’s sulphur emis- Aand mining tycoons, few are more Gécamines, the Congolese state mining sions and 15% ofits nitrogen oxides. And by colourful than Dan Gertler, an Israeli firm, had threatened to close. The mine 2050 ships will be producing17% ofall car- diamond trader. Just over 20 years ago at had such high debts that it would not bon emissions if left unregulated, accord- the age of23 he tooka punt on Laurent make a profit (on which to pay taxes) or ing to research by the European Union. Kabila, the rebel who in 1997 had just pay dividends to shareholders (which The International Maritime Organisa- seized the Democratic Republic ofCongo include Gécamines). To resolve the dis- tion (IMO), the United Nations agency for (then Zaire) from Mobutu Sese Seko, its pute, Glencore paid $150m directly to shipping, last September brought in rules dictator forthe previous 32 years. Having Gécamines and converted a large part of forcing owners to install equipment by met him through his son, Joseph, he lent the mine’s debt to equity. 2024 to clean the dirty ballast water their the president $20m to buy weapons. He The moves seem to have bought ships suck in and discharge. That may cost could have lost everything, but instead Glencore a reprieve in the country. A the industry as much as $50bn. In April the made it backa hundredfold. By the time month ago, some people in Kinshasa IMO agreed to halve the industry’s carbon Joseph Kabila tookover from his father, wondered ifthe firm had a future there at emissions from 2008 levels by 2050. The after the latter’s murder in 2001, he had all. It says it spoke to American officials biggest worries are new rules that cut the become the man largely in charge of before making its decision to pay Mr global limit on sulphur content of marine distributing Congo’s mining licences to Gertler. Congo provides over halfof the fuel from 3.5% to 0.5% from January 1st1 international mining companies. world’s cobalt, a by-product ofcopper Two decades on, Mr Gertler’s clout in used in electric cars, and ifGlencore Congo is undiminished. That was proved cannot mine it, Chinese firms could Life on the ocean haze on June 15th when Glencore, the world’s corner the market, they argue. (Inaccu- Global shipping largest commodities trader, decided it rately—Indian and Kazakhstani firms also Fuel sulphur limit Total seaborne trade would rather evade sanctions than not mine cobalt in Congo.) % Tonnes bn pay the billionaire the royalties he was But will it work? Though paying in 5 15 owed from a Glencore-owned mine. The euros and using non-American banks 4 12 American government imposed sanc- may avoid breaking the rules in theory, in 3 9 tions on Mr Gertler in December for practice it may not be so easy, says Elisa- 2 6 using his friendship with Mr Kabila to beth Caesens, director ofResource Mat- siphon offCongo’s mineral wealth, a ters, a Brussels-based NGO. It will be 1 3 charge he has denied. The sanctions had difficult to keep American employees out 0 0 left Glencore in a hole: Mr Gertler had oftransactions. “They’re exposing their 2000 05 10 15 20 25 sued it in Congo, and had won a freezing people,” she says. And the firm itself Fuel mix, m b/d Liquefied natural gas order on its assets. Now Glencore says it could be hit with sanctions forits connec- 6 will pay the royalties—but in euros rather tions to Mr Gertler. Nor is America the FORECAST than dollars, and using an undisclosed only risk. Though no probe has officially Diesel 4 non-American bank. been launched, Britain’s Serious Fraud That was Glencore’s second bold Office is looking into Glencore’s relation- High-sulphur Low-sulphur fuel oil 2 fuel oil move in a weekin Congo. A few days ships in Congo. IfGlencore gets away Scrubbed before, the firm solved a different pro- with it, it will show that America’s sanc- 0 blem by agreeing to recapitalise another tions can easily be sidestepped. 2015 17 19 21 23 25 Sources: UNCTAD; Goldman Sachs РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist June 23rd 2018 Business 57

2 2020 to slash emissions from sulphur, The sharing economy which cause air pollution and acid rain. If everyone complies by buying dearer low- Seabnb sulphur fuels, the bill could hit $60bn, says Suresh Sivanandam ofWood Mackenzie, a ARZAL research firm—roughly equivalent to the Boat-sharing startups vie to rule the waves entire industry’s fuel bill in 2016. Given that either2020 or2025 had been NE ofthe busiest times ofthe year at want to pose on a luxury yacht; fishing agreed as possible dates for bringing in the OArzal marina on the coast ofwest- enthusiasts who opt for less glitzy craft; sulphur cap, firms have had time to pre- ern France is a wooden sailing-boat and families. pare, but have gone into panic mode in re- festival in early summer. Hundreds of The business is not all smooth sail- cent months. In part this is because 2020 enthusiasts join Breton dances on the ing—regulation, forone thing, varies was only recently chosen after a study by quayside, but as usual most ofthe widely. French law allows boatsharing, Finland found that without it there could 1,000-or so yachts, catamarans, day- but in Greece, a tempting market, private be 570,000 more deaths from air pollution sailers and motor-cruisers remain tied to owners face more difficulties. Renters worldwide in the five years after 2020. the pontoons. usually need a boating licence, or must Many firms have belatedly realised the Few boat-owners make regular use of hire skippers. Demand to get on the huge sums involved. If they cannot pass their expensive assets. By one estimate, a water is seasonal. Building up a big fleet them on in higher freight rates, “we’re all French yacht slips its moorings on aver- ofboats takes time. Owners tend to be going to go bust,” Junichiro Ikeda, boss of age for just ten days a year, and for Ameri- middle-aged and are reachable mainly by Mitsui OSK Lines ofJapan, has warned. ca’s12m recreational boats, typical annu- word ofmouth or at boat shows. Neither are the technological choices in al usage is two weeks. Meanwhile, Undeterred, both firms are trying to adjusting to the new rules easy, says Ste- would-be sailors have had few options, scale up, partly by pursuing a flotilla of phen Gordon of Clarksons, a shipbroker. beyond pricey short charters. potential rivals. Click&Boat bought one, Shipowners will have to switch to pricier Marine versions ofproperty-sharer Sailsharing, in 2016, to access more craft. low-sulphur fuels, invest in “scrubbers” Airbnb or ride-sharer BlaBlaCar are Boatsetter has gobbled up American which remove it from the smoke of dirtier trying to match the two. In Europe a startups including one last year, Boat- fuels, or use greener alternatives such as French firm founded in 2013 by Jeremy bound, that Click&Boat also eyed. In liquefied natural gas (LNG). Although there Bismuth and Edouard Gorioux sets the April the American company added are suggestions for how the 50% cut in car- pace. Click&Boat has 70 staff crammed Smart Charter Ibiza, a conventional bon emissions can be achieved by 2050, onto a barge, its headquarters, on the charter firm, in Spain, part ofa move into such as batteries and hydrogen fuel cells, Seine in Paris. They manage bookings for the Mediterranean. none has been tried on big ships yet. a fleet of22,000 private craft, mostly in Boatsetter has also developed an For neither goal is it clear which option Europe. Rental costs vary widely but can insurance product, with a third party, for makes most sense financially. On meeting be remarkably cheap—one eight-berth peer-to-peer rentals, and has partnered the sulphur cap, there is no consensus. yacht in Arzal is advertised for just €40 a with Airbnb to offerexperiences such as Maersk, the largest container line, thinks day,forexample. The firm takes a15% wakeboarding in Miami or eating paella low-sulphur fuel is the best choice, but commission and is profitable. Last year on a boat near Barcelona. Click&Boat has France’s CMA-CGM has opted for LNG and bookings were worth €15m. started a separate site, Click&Yacht, for Mediterranean Shipping Company (MSC) America’s leader is six-year-old Boat- chartering luxury craft forthousands of for scrubbers. Shipowners worry that the setter, based near Miami. Founded by a euros a day in places like the Côte d’Azur, rules will not be uniformly enforced, says sailing enthusiast, Jackie Baumgarten, it forwhich there is plenty ofinternational David VernonofBernstein, a research firm. has raised $17mofventure-capital fund- demand. It is one thing to stay in some- They fear being the only buyers of scrub- ing and notched up over 26,000 rentals. one else’s flat. It’s another to captain a bers and the like in an industry with tight Ms Baumgarten sees three broad catego- superyacht—especially when it looks like margins, or losing money by picking a bad ries ofcustomer: aspirational types who you own it. solution. So the industry isholdingfire. De- mand for low-sulphur fuel oil and marine diesel is expected to double overnight in 2020, sending prices soaring (see chart on previous page). Eventually more shipowners will in- vest in scrubbers and LNG. Bigger lines such as Maersk and CMA-CGM, will not find this a problem. But smaller, more in- debted shipownerswill notbe able to raise finance to pay forthe conversions, says Ba- sil Karatzas, a shipping consultant in New York. They may have to scrap their ships, which could help addressthe overcapacity that has crippled industry profits since the financial crisis. “Even this dark cloud has a silver lining,” he says—ifonly forsome. 7

Correction: In our briefing on American business, “A boom like no other”, published in the edition of May 26th, chart 3 contained the wrong figures for investment by the top five firms in the S&P 500 for the first quarter of 2018. The figures shown were in fact for The yacht-sharing market could be this big a year earlier. This has been corrected online. Sorry. РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

58 Business The Economist June 23rd 2018 Schumpeter French connection

Forget McKinsey. AGallic intellectual is the key to controlling how businesses are perceived makes money. WeWork, a trendy office-rental firm, revealed in April a new profit measure, “community-adjusted-Ebitda”. The label was moronic, but not the concept, meaning “the gross pro- fitsofofficesthathave been open fora while”. Like Uber, WeWork wants to show that it has a profitable core that can be scaled up. Some firms have the opposite problem and need to show that, as well as being steady cash cows, they have new thrills up their sleeve. For instance, Google still relies on search ads forits profits. But in 2015 it changed its name to Alphabet, which became a holding firm split into two divisions, Google and “other bets”, which contains its new projects such as driverless cars. It hired Ruth Porat from Morgan Stanley to become its finance chief. The changes were meant to show that it has a serious framework for investing in new ventures. Investors have lapped it up. Stodgy Western banks keen to prove they can do fintech would be well advised to study DBS, a Singaporean bank with a market value of $51bn. Piyush Gupta, its boss, wanted to show- case the digital initiatives takingplace atthe firm. DBS tagged each customer as “digital” or “traditional” based on whether they pri- marily used digital products or not, and allocated costs to both groups. The bank can now divide itself into two businesses and OTmanybusinesspeople studypost-warFrench philosophy, show that the digital one is more profitable and is a rising share of Nbut they could certainly learn from it. Michel Foucault, who the total. The exercise helps explain a soaring share price. died in 1984, argued that how you structure information is a The most accomplished corporate taxonomists play a still source of power. A few of America’s most celebrated bosses, in- grander game; controlling not only how the firm is subdivided, cluding Jeff Bezos and Warren Buffett, understand this implicitly, but also whether it is viewed as a company at all. This is at the adroitly manipulating how outsiders see their firms. It is one of heart of Warren Buffett’s accomplishment at Berkshire Hatha- the most important but least understood skills in business. way, which he insists is neither a conglomerate nor an invest- Foucault was obsessed with taxonomies, or how humans ment vehicle, but a one-offthat can only be analysed using a spe- split the world into arbitrary mental categories in order “to tame cial setofrulesthathe hasprovided in an “owners’ manual”. This the wild profusion of existing things”. When we flip these has shielded Berkshire from scrutiny and criticism over the past around, “we apprehend in one great leap…the exotic charm of decade, even as it has underperformed the stockmarket. anothersystem ofthought”. Imagine, forexample, a supermarket Masayoshi Son, the bossofSoftBank, a Japanese telecoms and organised by products’ vintage. Lettuces, haddock, custard and tech conglomerate, has just executed a similarly mind-bending the New York Times would be grouped in an aisle called “items classification leap. The firm has long been criticised for its weak produced yesterday”. Scotch, string, cans ofdog food and the dis- cashflow and high debt, so starting in 2017 Mr Son began to de- counted Celine Dion DVDs would be in the “made in 2008” aisle. scribe it as a venture-capital (VC) operation, to be assessed using Most industries have established taxonomies that hide their the VC measure ofinternal-rate-of-return, which isboth flattering flaws. Wall Street firms disguise their risky proprietary-trading and unverifiable. He has since completed the shift by setting up profits by lumping them together with the more stable fees paid the Vision Fund, a giant $100bn affiliated investment vehicle. by clients. India’s IT outsourcing giants split their sales into bland But it is Elon Muskwho has taken recategorisation to its logical categories such as “solutions” and “application development”, end point. Tesla, his car firm, he infers, cannot be judged in the which sound better than “work outsourced by American clients present, but only the future, which he predicts using long-term to our lowly paid staff in Mumbai and Bangalore”. Mining firms production and market-value targets. So farithasworked. Even as are organised by commodity type—copper, say, oriron ore. A geo- Tesla has struggled to produce a modest volume of cars, Wall graphic taxonomy would reveal that their production is often in Street forecasts ofits sales in 2023—a total guess—have been eerily unstable countries and that they rely on one big customer: China. stable at $60bn, supported only by the intensity ofhis vision. Afew astute bosses know how to remould taxonomies, bend- ing the perceptions of investors, counterparties and staff. A daz- Is it a bird? Is it a plane? zling case is Mr Bezos at Amazon. In early 2015 investors were Taxonomies are not alchemy. Iffirms do not succeed, eventually worrying that it was a low low-margin retail business and were there is nowhere to hide, as Tesla may discover. General Electric losing their nerve. Mr Bezos changed its taxonomy by “breaking (GE) and IBM have tried to classify parts of their empires as espe- out” AWS, its cloud-hosting business, which was producing the cially “high tech”, but since overall profits have been falling inves- holy grail of high, consistent and fast-growing cashflow. This tors are not fooled—indeed, GE has just lost its spot in the elite move has been central to Amazon’s resurgent stockprice. Dow Jones index. Nonetheless, by controllinghow theirfirms are The AWS technique is being adopted by younger, loss-mak- classified and subdivided, managers can often change percep- ing, tech firms that want to go public. Uber, for example, encour- tions, and in turn reality, lowering the cost of capital and intimi- ages outsiders to split it up by cities and vintage. In the places dating competitors. Foucault had no interest in business. But ifhe where it has brokered rides for longest its margins are positive, had he mighthave splitcompaniesinto two categories: those that suggesting that it is just a matter of time before the entire firm understand the power oftaxonomies and those that don’t. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Finance and economics The Economist June 23rd 2018 59

Also in this section 60 China’s response to tariffs 61 Emerging-market currencies 61 Reforming the euro zone 62 Sweden’s frothy housing market 63 Hedge funds and data 63 The fall of Abraaj 64 Buttonwood: The lucky few 66 Free exchange: Trading peace for war

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US-China trade (1) specialised components go through all sortsofquality-control processesand regu- Battle-lines drawn latory approval. But of the 34 products the firm asked to be removed from the list, not a single one was. Inflicting pain on China could also be WASHINGTON, DC easier said than done. The Trump adminis- tration wants to stymie China’s ambitions As the Trump administration threatens furthertariffs, the prospect ofa last-minute in the strategic sectors it has identified as deal with China is receding part ofits “Made in China 2025” policy. But T IS becoming increasingly likely that the posed immediately could allow time for according to Yang Liang of Syracuse Uni- Iphoney trade war between America and further negotiation. But the prospects for versity and Mary Lovely ofthe Peterson In- China will develop into the real thing. On peace are dimming. On June 19th Peter Na- stitute for International Economics, a June 15th the Trump administration pub- varro, Mr Trump’s adviser, said there were think-tankin Washington, DC, 55% ofhigh- lished two lists of Chinese products it no immediate plans fortalks. The delay be- tech Chinese exports to America in 2013 plansto hitwith tariffsof25%, worth $50bn tween announcing the tariffs and impos- came from wholly foreign-owned enter- in 2018. The first will come into force on ing them was to give American customs prises. The $3.6bn of semiconductor im- July 6th. The Chinese snapped back with authorities time to prepare. portsfrom China in the firingline are most- their own list, laying out a retaliation of The office of the USTR has also taken its ly from subsidiaries of American equal size. Then on June 18th President Do- time to decide which products should be companies, contain chips designed and nald Trump directed Robert Lighthizer, the subject to tariffs. It wants to inflict as little made in America, and are in China only for United States Trade Representative (USTR), pain as possible on American consumers, labour-intensive assembly and testing. to draw up a further list of products worth and as much as possible on Chinese ex- $200bn that would face tariffs of 10%, and porters. Of the products announced on Collateral damage threatened yet another, covering an addi- June 15th, 95% bythe value ofAmerican im- China’s openingblows will hit agricultural tional $200bn of goods, if the Chinese re- ports were capital or intermediate goods. products that largely come from states taliated again. At least some of these tough That should lessen the immediate effect on which voted for Mr Trump. But as a trade words will probably turn into deeds. Both consumer prices in America, as only a frac- war escalates, the pain becomes more in- sides can expect to take casualties. tion of production costs will rise because discriminate. In 2017 America imported China regards the first round of Ameri- of tariffs. The USTR has also sought to en- $505bn of goods from China. If tariffs are can tariffsasa unilateral violation ofglobal sure that American importers would be expanded to cover Chinese imports worth trading rules. It has lodged a complaint at able to find alternative suppliers. Accord- $250bn, let alone $450bn, avoiding con- the World Trade Organisation (WTO). But ing to the International Trade Centre, a sumer products such as clothes and elec- Mr Trump’s team maintains that China multilateral agency, China accounts for tronics will become impossible. Products started the conflict, by stealing America’s just 8% ofAmerica’s total imports ofthe af- with few alternative suppliers will be hit. intellectual property and engaging in un- fected products. American importers will find it harder to fair industrial policy. Once tariffs have Still, tariffs will hurt American compa- avoid passing on rising costs to consumers. been imposed, the rights and wrongs—and nies by imposing costs their competitors A trade war, says Dmitry Grozoubinski of even the role of the WTO itself in the dis- do not face. Even forproducts where China the International Centre forTrade and Sus- pute—could be forgotten. accounts for a small share of imports, re- tainable Development, a think-tank, in- There is still a faint hope that July 6th building supply chains may be easier said volves “blowing up your own cities and will pass without the tariffs coming into than done. In public testimony GE, an in- wafting the resulting smoke across the bor- force. The fact that the tariffs were not im- dustrial conglomerate, pointed out that its der in the hopes it will sting their eyes.” 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

60 Finance and economics The Economist June 23rd 2018

2 China’sroom to charge tariffshasa low- American products they use. room in Yantai, is puzzled by the very idea er ceiling: in 2017 it imported just $130bn of In normal times, that would give China that an unusual, outsider president might goods from America. But it has other op- leverage, as American businesses clam- be the cause of tensions. “The American tions. It could stop Chinese students and oured for relief. But these are not normal president and the American government, tourists going to America. It could find reg- times. Forsome within the administration, for Chinese people it’s one and the same,” ulatory pretexts to disrupt the Chinese op- making investment in China less attractive he says. Sales of Japanese cars suffered in erations of American firms. According to is not an unfortunate side-effect of a trade previous spats. He hopes a trade dispute the US-China Business Council, the Chi- war, but one of its aims. Whatever form with America will have less impact than nese government has discussed with Chi- this conflict takes, and however long it the “historical feud” with Japan. nese firms finding replacements for the lasts, there will be no winner. 7 In 2012 jingoistic reports and online de- bates about islands claimed by both Japan and China prompted nationalists to attack US-China trade (2) Japanese noodle shops, rip flags and dam- age Japanese cars before authorities Planning manoeuvres clamped down. More recently, a South Ko- rean supermarket chain was, in effect, kicked out by official harassment and a consumer boycott, because of a row over American anti-missile defences in South YANTAI Korea. But so far state media and official spokesmen have avoided the slogans that China considers its response to Donald Trump’s proposed tariffs often prefigure outbreaks of public rage— OR now, at least, when speaking of the the charge, say, that a foreign power has Ftrade dispute with America, China’s hurt the feelings ofthe Chinese people. government is taking a more-in-sorrow- One reason is the need to preserve the than-in-anger tone. That helps explain the prestige of Communist leaders. State me- Chinese public’s surprisingly measured dia presents President Xi Jinping as a confi- views ofDonald Trump, and gives the Chi- dent and hospitable patriarch, more than nese government some breathing room to capable of handling men like Mr Trump. consider its options. And, notes William Zarit, the chairman of The state media have so far taken the the American Chamber of Commerce high ground. True, the Global Times,a (AmCham) in Beijing, signs of softening in chest-thumping tabloid, accused the the Chinese economy mean “this is not a American president of “gambling” that good time fora trade war.” He sympathises China will be cowed by his “capricious with American officials’ loss of patience and obstinate attitude”. No country can with Chinese moves to skew markets in isolate itself from globalisation, said the their favour, notably through unfair en- Xinhua news agency: “The wise man forcement of regulations. The most recent builds bridges, the fool builds walls.” A AmCham survey of business sentiment new Xinhua web page popped up on June found most ofits members reporting rising 20th, tracking multilateral deals that Mr revenues and healthy profits, but 75% also Trumphas quit, including on trade, climate saying that foreign companies have be- change and Iranian nuclear arms. come less welcome in China. Mr Zarit But China has yet to debate, publicly, voices concerns that America “could paint how to handle an American president China into a corner, and not adequately who is an avowed populist and won office The serried ranks consider Chinese domestic politics”. by playing on the fears and grievances of Western businesses and diplomats in workers in such places as the midwestern peds and electric bicycles through a side China long to see the country reach a new rustbelt, handing him an America First gate as they headed home. Kong Xiangbao, grand bargain between its model of asser- mandate to reshape global trade. China is a machinery repairman, fretted that his tive state capitalism and the more market- uncomfortable with discussions of demo- salary could suffer if fewer cars are made driven Western model. Team Trump’s at- cratic mandates, voter grievances or elec- for export. Li Tongxiao admitted to rather tacks on forced technology transfers and tions that overthrow establishments. liking Mr Trump, citing his “charisma”, state subsidies are broadly welcomed. But The results can be heard in a straw poll wealth and success before entering poli- businesses and allied governments want of factory workers in the eastern city of tics. Mr Li takes comfort in the domestic Mr Trump to pick the right fights. It is one Yantai, who will be among the first to suf- success of Buick in China, where drivers thing to ask China to behave differently. It fer from the American tariffs planned for lookingfora practical, upper-middle-range is another to ask it to stop climbing up the July 6th. Yantai is home to a car factory car last year snapped up more than industrial value chain, with such policies owned by SAIC-General Motors, a joint 200,000 Envisions. GM sells more cars in as the “Made in China 2025” plan. venture that makes the only Chinese-built China than in America, and this—along That would smack of containment, car to be sold in America in significant with years of watching news broadcasts which does stir Chinese public opinion, numbers. The DongYue carplantproduces that present world affairs as formulaic even at the gates of a plant making Ameri- the Buick Envision, a faintly dowdy four- meetings between powerful men—has en- can cars on the shores of the Yellow Sea, wheel drive exported to America since gendered fatalism. “The American market, 6,700 miles from Detroit. Americans are 2016, and which will cost about $8,000 though it isn’t small, isn’t big either. Be- “fearful of China’s development”, says Mr more once tariffs bite. American drivers sides, this is an issue between two coun- Kong, the machinery repairman. “They bought 41,000 Envisions last year tries. Even if I were worried, there is noth- worry it will affect America’s dominant On a muggy morning this week, the ing I can do about it,” Mr Li shrugged. status.” Plenty of Trump voters would news had reached workers wheeling mo- Qu Yang, a salesman at a Buick show- agree. Therein lies trouble. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist June 23rd 2018 Finance and economics 61

Emerging markets in the same period of 2013, the year of the Reforming the euro zone “taper tantrum”, when America’s Federal Fed and Federico Reserve said it would eventually slow its A modest proposal pace of quantitative easing. In many other countries, however, this year’s tantrum is not yet as bad as its forerunner. Brazil’s cur- rency has fallen by 9% since mid-April. But BRUSSELS the central bank has refrained from raising Why emerging markets get in a tizz At last, France and Germany have a interest rates, insisting that there is no “me- about theircurrencies common position on reform chanical relationship” between recent MAGINE if Milton Friedman had been shocks and monetary policy. HE president ofthe European Commis- Iput in charge of a central bank, only to Another reason to worry about ex- Tsion, Jean-Claude Juncker, likes to com- lose his job for expanding the money sup- change rates is debt: a weaker currency pare the euro zone to a house in need ofre- ply too quickly. Or if Robert Shiller, the makes dollaroreuro liabilities harder to re- pair. Fix the roof, he counsels, while the Nobel-prizewinning author of “Irrational pay. According to the Institute of Interna- economic weather is favourable. Leaders Exuberance”, were given a similar post, tional Finance, the combined foreign-cur- from across the European Union will have only to depart having allowed a stock- rency debt of Argentina’s government and the opportunity to take that advice when market bubble to inflate. That is the kind of non-financial companies exceeds 50% of the European Council meets in Brussels on irony that attended the resignation under GDP. In Turkey, it is 47%. But the burden June 28th-29th. pressure ofFederico Sturzeneggerasgover- elsewhere is modest. It is less than 25% of In preparation Emmanuel Macron, nor of Argentina’s central bank on June GDP in Mexico and South Africa, less than France’s president, and Angela Merkel, 14th, a casualty of deepening turmoil in 20% in Brazil and Malaysia, and closer to Germany’s chancellor, laid out joint pro- emerging markets. 10% in India, China and Thailand. posals for reforms on June 19th. The result Mr Sturzenegger was a former profes- In Indonesia, both inflation (3.2%) and of weeks of ministerial negotiation, they sorat Universidad Torcuato Di Tella in Bue- foreign-currency debt (19% ofGDP)arelow. reconciled long-standing differences on nos Aires. His most-cited paper showed Its central bank nonetheless raised rates the future of the currency bloc and set the that stated currency policy was often a twice in May to stabilise the rupiah. The scene for discussion at the wider summit. poor guide to actual policy. Many coun- country, still haunted by the Asian finan- In a victory for Mr Macron, the Germans tries claim to let theircurrencies float freely cial crisis, associates a falling currency have consented to a euro-zone budget. In but in fact “intervene recurrently to stabil- with a faltering economy. And like other other areas, notably banking reform, pro- ise their exchange rates”. Their deeds often emerging markets, it fears that currency gress is likely to be halting. belie their words. weakness can feed on itself, as declines The reforms aspire to mend the institu- Mr Sturzenegger lost his job for much fuel speculation about furtherdeclines. tional weaknesses revealed during the the same thing. Financial markets strug- This is presumably the kind of “disrup- yearsfollowingthe financial crisis. Lacking gled to reconcile his statements on the cur- tive situation” that Mr Sturzenegger had in control over interest rates and the ability to rency with his management of it, eroding mind when positing exceptions to his rule devalue their currencies, some countries his credibility. After Argentina agreed on a of non-intervention. He was perhaps un- struggled to cope with violent economic $50bn loan from the IMF, he said he would fortunate that such a situation arose so shocks. Some, like Greece, were stuck in a intervene in the foreign-exchange market shortly after he had promised to step back: “doom loop” where wobbly banks desta- only in “disruptive situations”. But when the sharp drop in Argentina’s peso on June bilised the governments supporting them, the peso soon came under renewed pres- 11th was exacerbated by the Federal Re- which in turn weakened the banks hold- sure, he resumed selling foreign-exchange serve’shawkish signalsafteritsmeeting on ing government bonds. reserves, which fell by $665m on June June 12th-13th. In emerging markets, cur- To be fair, the bloc has already done 12th-13th. He gave up the fight on June 14th, rency policy can be complicated—not least quite a lot. At the height of the crisis, a bail- allowing the currency to drop by 5.3% because of the financial markets’ demand out fund was cobbled together for emer- against the dollar on a day that ended with forsimplicity. 7 gency lending to countries that lost access his departure. to capital markets. In 2012 the euro zone Whydo policymakersin emergingmar- agreed to establish a banking union to con- kets fret so much over exchange rates? A tain risks and break the doom loop. The weak currency,after all, makes a country’s European Central Banknow supervises all exports and assets more competitive. And the euro zone’s systemically important when capital flees, it can be better to let the banks. If a bank needs winding down, the currency fall than to put up interest rates Single Resolution Board provides short- (and throttle growth) in an effort to keep term funding and imposes losses on credi- the exchange rate stable. tors, limiting the cost to the taxpayer. One reason to worry is inflation. Weak- But more than five years on, banking er currencies push up import costs, jeopar- union remains incomplete. Mr Macron is dising price stability. The plummeting keen both to push through those remain- Turkish lira, for example, has hampered ing reforms, and to go further. His proposal the fight against inflation in a country for a euro-zone budget aims to ensure where prices respond quickly to currency members’ economies continue to con- weakness. In response, Turkey’s central verge and to help those buffeted by exter- bank, like Argentina’s, has been forced to nal events. New prime ministers in Italy raise interest rates dramatically,despite the and Spain appear to agree. opposition of Recep Tayyip Erdogan, who The Germans, Dutch and Nordics, how- is seeking re-election as president. ever, resist the pooling of risks across the According to Capital Economics, finan- bloc. They worry that fiscally prudent cial conditions in both countries have countries would end up subsidising profli- tightened by more this year than they did gate ones. Italy, where an earlier version of1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

62 Finance and economics The Economist June 23rd 2018

2 the new governing coalition seemed to between 2012 and 2017, while disposable scorn the euro zone’s spending rules, will incomes went up by 13%. Almost a fifth of not have reassured them. households with new mortgages owe The Franco-German compromise gives more than six times net income. the nod to various proposals from the Low interest rates—the central bank’s European Commission. The first involves benchmark is -0.5% and banks charge reforms to the euro zone’s sovereign bail- around 1.5% annually on home loans— out fund, the European Stability Mecha- have both helped fuel the boom and kept nism (ESM). It would act as a backstop to its mortgages affordable. The share of in- bank-resolution board,beefingup banking comes going on interest has tumbled even union. And countries that have been pru- as the debt ratio has climbed (see chart). dent, but suffer an economic shock, would Swedes also save plenty: 9% of disposable be given access on relatively lenient terms income, and 16% including pensions, ac- to a precautionary line of funding, so they cording to Swedbank, a leading lender. But could seek money before they lose access Anna Breman, Swedbank’s chief econo- to the markets. So farmost ESM lendinghas mist, notes that although households in ag- been to countries already cut offfrom mar- gregate are in “fantastic” shape, it is hard to kets, and conditional on implementing know how many would be vulnerable to tough structural reforms. higher rates. The abolition of a wealth tax All this would be a step forward, says in 2007 deprived economists of valuable Guntram Wolff of Bruegel, a think-tank. data on individual households’ finances. But he thinks the reforms should go fur- Indebtedness worries both FI and the ther. The French and Germans agreed to Roofers’ convention central bank, the Riksbank, which fears keep the governance of the bail-out fund that a sharp fall in house prices could lead unchanged. But it is too complicated. In or- vousness about fiscal transfers, might not debt-laden households to spend less, der for it to be tapped, finance ministers be enough in deep downturns. knocking backgrowth and employment. It must reach unanimous agreement. Na- Mr Macron and Mrs Merkel may finally worries that banks, of which just four ac- tional laws mean that parliaments in some agree on the merits of a central budget. But count for 75% of mortgages, could find countries, notably Germany, must grant others must now be convinced. Mrs Mer- loans harder to fund. They do this by sell- their approval. That could stop the fund kel’s coalition partner, the Christian Social ing bonds, some in foreign currency, with winding down a failed bank swiftly over a Union, has expressed scepticism. The the loans as collateral. weekend, as it may need to. Dutch prime minister, Mark Rutte, has said Prudential regulation, however, is the But the Germans insisted on national he sees little point in it if countries keep domain of FI—even though the Riksbank’s control, saying that it has not held up deci- their public finances in order. Yet even a governor, Stefan Ingves, heads the Basel sion-making so far. Their reservations also well-maintained roofmay spring a leak. 7 committee, which sets international pru- stymied immediate progress towards a dential standards. As long ago as 2010 FI common deposit-insurance scheme. Mr capped mortgages at 85% of property val- Juncker had hoped to soothe northerners’ Sweden’s housing market ues (some Swedes top up with unsecured fears with a gradual implementation dur- loans). Since 2016 it has obliged borrowers ingwhich the common fund would lend to Keep the roof on to repay 1% of new mortgages each year if national schemes in times of trouble. His they exceed 50% of the value of the home, hope that banking union would be com- and 2% if above 70%. Since March they plete by 2019 now seems unrealistic. A pro- have had to repay a further 1% if the mort- posal from the commission to create secu- STOCKHOLM gage ismore than 4.5 timesgrossincome. In rities backed by a pool of sovereign bonds addition, banks typically lend only to Giddy prices and rising household debt hasbeen nixed. Withoutit,bankswill have those who can bear interest rates of7%. are testing policymakers little incentive to diversify sovereign risk. Loan-to-value ratios have levelled off. Mr Macron’s prize is a concession from LF DANIELSSON is thinking ofbuying Erik Thedéen, FI’s director-general, hopes Germany on the euro-zone budget. For the Ua holiday home—or even a new the repayment obligations will make peo- first time, the French point out, Germany house, so that he, his wife and two chil- ple “think once or twice” about taking on has acknowledged that macroeconomic dren can have a garden and more space debt and foster an “amortisation culture” stabilisation is not a matter for national than in their flat in Uppsala. He can afford in a country where mortgages can take1 governments only,but a common concern. either, he says, and as a professor of astro- Though Mr Macron envisions a budget in physics is surely able to work that out. But the region of several percent of GDP, Mrs he is hesitating, lest the giddy rise in Swed- Burden? What burden? Merkel is known to want something much ish property prices end in an ugly crash. Sweden, households stingier. Nevertheless, as Mr Macron says, “You risk having a big loan that’s worth Interest payments as % Debt as % of it would be a “real budget with annual rev- more than the house,” he says. of disposable income disposable income enues”. He would like to see it raise rev- The property market has fallen a little 20 200 enues directly, possibly from a financial- closer to Earth: prices dropped by 9% be- transactions tax, though that would be tween September and January, largely be- 15 150 contentious. cause of a surfeit of pricey new flats. They Most of the money would be invested then steadied, and are around 5% below 10 100 in innovation, helping economic conver- the peak—and 50% higher than at the start gence. There is a mention, too, ofan unem- of 2013, calculates Valueguard, a data pro- 5 50 ployment-stabilisation fund to act as an vider. As Swedes have borrowed to buy, emergency credit line for national unem- their debts have risen. Finansinspektionen 0 0 1980 85 90 95 2000 05 10 17 ployment-insurance schemes. But such a (FI), the financial-stability supervisor, esti- design, which accords with German ner- mates that borrowers’ debts rose by 36% Source: Statistics Sweden РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist June 23rd 2018 Finance and economics 63

2 manydecadesto be repaid. He would have a pilot project intended eventually to feed tightened them sooner, too, but had to into its trading algorithms, Winton has await a change in the law. In a “severe cri- worked with researchers at the University sis”, he says, the rules could be eased. of California, Berkeley, to use “differential- FI has also bolstered banks’ capital re- privacy” techniques to analyse datasets quirements for mortgages, despite low de- that Winton was wary of looking at alone. faultratesonhomeloans.Evenso,theRiks- Differential privacy works by adding noise bank is urging FI to do more to insulate to data, thus obscuring personal, identifi- lenders from possible trouble. It thinks able information without destroying the banks should face more stringent rules for dataset’s useful features. It is already used both leverage and liquid assets in kronor. by tech firms including Google and Apple, Mr Thedéen is resisting both calls. and by America’s Census Bureau. Lars Svensson of the Stockholm School The nascent industry is cleaning up its of Economics, a former deputy governor act, too. Emmett Kilduff of Eagle Alpha, an ofthe Riksbank, thinks FI has already done alternative-data provider, points to the In- too much. There is no evidence that debt is vestment Data Standards Organisation, a excessive, he says in a recent paper; the re- non-profit body set up earlier this year. It is payment rules merely make it harder for unsurprising that firms such as Eagle Al- some people to get credit, in particular team was announced on June 18th. pha and Quandl are moving into analysis, young people with modest incomes and For funds making macroeconomic bets rather than merely providing raw data. limited savings. They are in effect forced to by trading in, say, currencies or govern- Amid the proliferation, the need to sort save, or stopped from buying homes they ment bonds, real-time measures of infla- useful from pointless, and legal from du- could actually afford. tion (scraped from e-commerce sites) or bious, has never been greater. 7 Just about all agree that underlying all trade flows(from shippingdata) can be bet- this is a dysfunctional housing market. ter and more timely than the output of na- Mortgage payments are still tax-deduct- tional statistics agencies. Funds trading in Abraaj Group ible, which encourages borrowing and individual firms’ shares can infer informa- supports prices. Tight controls choke priv- tion on sales from satellite photos of their After pride, the fall ate renting. For years, population growth car parks, and on footfall in shops from and housing demand have outrun supply, data bought from mobile-phone and cred- despite the recent blip. (Migration, a hot it-card companies, rather than having to topic in September’s election, also requires rely on company reports or quarterly earn- more public housing in the short run; refu- ingsstatements. Manyofthese datasets are The Middle East’s largest private-equity gees are not likely buyers.) fine-grained. Quandl, a data provider, sells firm files forliquidation Such distortionsneed sortingout. Butfi- information on the number of Tesla cars nancial policymakers have one thing go- sold each day, broken down by each Amer- NTIL recently the Abraaj Group, a ing for them. “We are having a slowdown ican state. Uprivate-equity firm based in Dubai, in the housing market when the economy But amid the new wave ofdata vendors was riding high. It was one of just a few is still strong,” says Olle Holmgren of SEB, are some that are pushing the boundaries such firms focused on emerging markets, another of the big banks. “That’s the best of legality. John Funge of Winton’s San and a darling of “impact investors”, who scenario we can hope for.” 7 Francisco office says some are careless seek social or environmental returns, not about privacy. Anoosh Lachin of Aspect just financial ones. Assets under manage- Capital, another London quant fund, was ment of $13.6bn made it the largest private- Alternative data once offered data by a former employee of equity firm in the Middle East, and the the American government, who founded a 42nd-largest globally in 2017. Its Pakistani Wary scouts firm to “predict” the statistics released by founder and boss, Arif Naqvi, a regular at the agency he had worked for. Jonathan Davos and a patron of the arts, had won Streeter of Dechert, a law firm, says hedge awards for philanthropy. It is all the more funds are waking up to the risks of poten- surprising, then, that basic corporate- tiallysuspectdata. The main pitfalls are pri- governance missteps led his firm to file for vacy laws and insider-trading rules. provisional liquidation on June14th. Hedge funds start to worry about the The biggest risk is reputational; only The problems began in late 2017 when legal risks ofalternative datasets egregious transgressions are likely to lead four investors in its $1bn health-care fund, UANT” (quantitative) hedge funds, to penalties. In America, a conviction for includingthe Bill & Melinda Gates Founda- “Qwhich craft elaborate algorithms to insider trading requires not only proof that tion and the private-sector arm of the make trading decisions, rely on ac- the information is material and non-pub- World Bank, grew worried. Nearly $280m cess to information. That used to mean lic, but also proof of a “breach of duty”; of $545m they had been asked for was not market data, such as prices and trading vol- that it was obtained without the owner’s promptly spent on acquisitions, as is stan- ume. But some now seek an edge in novel consent, for example. Since many phone dard in the industry. Abraaj blamed delays sources. An industry has sprung up to and credit-card companies include clauses in the construction of hospitals in Pakistan serve them with, and help them analyse, in their contracts allowing them to sell in- and Nigeria. The investors asked for proof “alternative” data, such as those gleaned formation, that condition is rarely fulfilled. that the funds had not been misspent; un- from satellite images or by scraping web- In Europe, though no breach of duty is satisfied, they hired a forensic auditor to sites. Many of these data firms have been needed to prove insider trading, the bar is comb through Abraaj’s accounts. founded by entrepreneurs, but some higher in other ways. But privacy is a much News of the investigation broke in Feb- quant funds themselves are getting in- greater concern. A new EU-wide data-pro- ruary. Later that month Abraaj ceased in- volved. Winton, a large London-based tection law is backed by hefty fines. vesting and Mr Naqvi stepped down from fund, is spinning off Hivemind, a data- Some fundsare seekingwaysto explore the fund-management unit. The firm analysis unit. A full-time management newdatasetswithoutbreachingprivacy. In stopped raising money for its newest fund1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

64 Finance and economics The Economist June 23rd 2018

2 and released investors from $3bn already ruptcy proceedings. In response Abraaj complacency. Although they will carefully committed. A review by Deloitte, an audi- filed for provisional liquidation, akin to scrutinise any new fund-management tor, concluded that it had covered its own America’s Chapter11proceedings, to give it company, when it comes to established expenses with investors’ money from the greater control over its restructuring. ones they typically focus their due dili- health-care fund and another. The money Abraaj’s downfall is highly unusual. gence on the individual funds it runs. And was replaced in the health-care fund, but Debt is generally taken on by the individ- they may gloss over the fine print in agree- the other fund was left short of$95m. ual funds run by private-equity firms, or ments that govern relations between in- Even before the review was finished, the companies that those funds own, rath- vestors and funds, says Sunaina Sinha of Abraaj had started lookingforbuyers forits er than by the firms themselves. Ludovic Cebile Capital, a placement agent that fund-management arm, hoping to use the Phalippou of the Saïd Business School at helps private-equity firms find investors. proceeds to pay off its creditors. But some Oxford University says he cannot recall Abraaj’s actions seem not to have broken grew impatient. On May 22nd Kuwait’s so- any other private-equity firm declaring its agreements with investors. Its collapse cial-security fund filed a petition in a court bankruptcy. highlights the need for vigilance, especial- in the Cayman Islands, where Abraaj is in- A charismatic boss can sometimes lull ly when it comes to fashionable asset class- corporated, seeking to force it into bank- investors in a private-equity fund into es and fast-growing firms. 7 Buttonwood The lucky few

The bulkofstockmarket returns comes from a tiny fraction ofall shares N his book about the use of language, vesting. Are modish stocks a trap, then? It I“The King’s English”, Kingsley Amis de- FAANG-tastic might seem so. The “Nifty Fifty”, a group scribes a tug-of-war. On one side are Share prices, January 1st 2015=100 of popular (and thus expensive) stocks in “berks”, careless and coarse, who would the late1960s, fell hardest in the bear mar- destroy the language by polluting it. On 250 ket of the 1970s. Then again, many of FAANG (Facebook, Amazon, the other side are priggish “wankers”, Apple, Netflix and Google) them—GE, IBM, Johnson & Johnson, Coca who would destroy it by sterilisation. 200 Cola and so on—are also on Mr Bessem- The battle lines look similar in invest- binder’s list of the 50 biggest wealth cre- ment. The divide is not on points of gram- 150 ators. To have bought and sold them at mar but on attitudes towards a handful of S&P 500 the right moments required deft timing. modish companies, known as FAANG. Wise investors who do not know how 100 These stocks (Facebook, Amazon, Apple, S&P 500 excluding FAANG to pick tomorrow’s winners, or how to Netflix and Google) have been the motor time markets, opt to hold a broad index of of the S&P 500 (see chart). All but Apple 50 stocks passively. Even this approach has hit record highs on June 20th. Fill your 2015 16 17 18 drawbacks. Bull markets tend to narrow, bootsisthe attitude ofcoarse stockmarket Source: Thomson Reuters says Robert Buckland, of Citigroup, be- berks. FAANG makes more sense than cause ofrisingpressure on fund managers stocks in dying industries. For the prigs, in the S&P 500 has often been higher in the to buy the recent winners. “A bubble is the mania for FAANG stocks is as abhor- past. Mr Bessembinder’s results comple- what I get fired for not owning,” one told rent as a split infinitive. The high-minded ment the verdict of another strain of re- Mr Buckland. The stockmarket index thus investor stands apart from the herd. search, which says that most stock returns tilts ever more heavily towards a few In matters of grammar, the unsure of- are made on relatively few trading days. shares. And these may not turn out to be ten follow the sticklers. They at least have Just as it is important not to be out of the the big winners in the long term. rules. But they are often too rigid. Stock- market on those days, it is important not to The best defence is to diversify broad- market sticklers can similarly lead others omit key stocks from your portfolio. ly across markets and assets as well as astray.For most investors, it is often a mis- stocks. That includes bonds and cash, of take to shun individual stocks simply be- Double or nothing course. Anotherway to offset a concentra- cause other people are keen on them. To understand why, it helps to think of in- tion ofa certain kind ofstockisto investin A recent paper* by Hendrik Bessem- vesting as a game of chance. Imagine there equity markets outside America. The binder of Arizona State University ex- is an equal chance that a stock will rise or euro zone’s indices, for instance, have a plains why. Since 1926, most stockmarket fallby50% each year. A$100 stockthatgoes far lower weight in technology compa- returns in America have come from a tiny up 50% in year one would be worth $150;if nies. You won’t avoid a crash in modish fraction of shares. Just five stocks (Apple, it falls by 50% in year two, it is worth $75, stocks, should one occur. But at least you ExxonMobil, Microsoft, GE and IBM) ac- less than when the game started. In con- will be able to survive it. counted for a tenth of all the wealth trast, a lucky stock that rises by 50% in two Such a middle-of-the-road approach created for shareholders between 1926 successive rounds is worth $225. After mightappeartolackpersonality.Itismore and 2016. The top 50 stocks account for many rounds, most stocks lose money.But distinctive to be a stickler for convention two-fifths of the total. More than half the a few stocks make a lot ofit. or a flouter of it. Yet it is the right ap- 25,000 or so stocks listed in America in It would be foolish, though, to take this proach—and it works for language, too. the past 90 years proved to be worse in- as cue to invest solely in FAANG. There is English survives and prospers because vestments than Treasury bills. no guarantee that today’s winners will still most of its users are neither style sticklers The sway that FAANG stocks have be winners tomorrow.Sticklers will rightly nor utterly slapdash. held recently is not out of the ordinary. A point out that if you overpay for a stream ...... new report by analysts at Macquarie, a ofearnings, however good the company is, *“Do Stocks Outperform Treasury Bills?” Forthcoming, bank, find that the clout of leading stocks you cannot hope to make money from in- Journal of Financial Economics (2018) РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS  
 






 


 
 

 

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66 Finance and economics The Economist June 23rd 2018 Free exchange Trading peace for war

Sino-American interdependence has been a force forgeopolitical stability N THE 1990s America and Europe had a trade dispute over ba- Yet an end to Sino-American interdependence is not inevita- Inanas. No one worried thattanksmightsoon roll asa result. But ble. China mightyethewmore closelyto rich-countrytrade rules, trade is about more than economics. The European Union, the and intervene less in its economy and foreign-exchange markets. world’s most ambitious free-trade area, was founded on the idea Trade between America and China could continue to grow, even that trade integration would make war between members “not as the technological gap between them, and their bilateral imbal- merely unthinkable, but materially impossible”. As the risk of a ance, shrink. Expensive goods, investment and services could serious Sino-American trade war grows, attention is mostly fo- flow both ways, as between America and Europe. cused on the prospect of dearer iPhones and unhappy soyabean But this sunny future looks increasingly remote. America al- farmers. But the stakes are much higher. ready limits some Sino-American trade on national-security China’s economic miracle could not help but provoke geo- grounds. Pastspatsoverdumpingand otherunfairtrade practices political stress, given its size and illiberality. Relations between led to punitive duties on some goods, as allowed under WTO America and China are built on mutual suspicion. Geopolitical rules. An all-out trade war would blow the two economies apart. rivalry has been moderated, however, by economic interdepen- The highertariffsbeingmooted on half, ornearlyall, ofAmeri- dence: a mutual entanglement some economics wags have ca’s imports of Chinese goods would cause serious economic dubbed “Chimerica”. pain in both countries. In America the prices of many goods As China opened up, American consumers hoovered up would jump and those of others, like the soyabeans exported to cheap Chinese goods. American firms built China into their sup- China by the shipload, would plummet. A sudden drop in Chi- ply chains, enjoying low labour costs and gaining a presence in a na’s trade surplus with America, now over 3% of Chinese GDP, domestic market that would one day be the world’s largest. would be a heavy blow. Even though a weaker currency would Export-oriented development created vast numbers of Chinese make it easier to export more to other countries, China would jobs, and American investment allowed Chinese firms to gain probably need both monetary and fiscal stimulus to avoid a so- technological expertise. As China grew richer, it purchased cially disruptive rise in unemployment. American bonds to keep its currency low and its exports compet- itive. That allowed America to consume beyond its means year Bad break-up after year. This circular flow of money saw America’s current-ac- Then the real trouble would start. However warily American and count deficit grow in pace with China’s surplus. Chinese leaderseye each other, economicself-interestkeeps their Both countries have strained at these ties. Even before Donald most hawkish impulses in check. The interests of American con- Trump became president, America bristled at the theftof its intel- sumers and firms constrain officials keen to keep sensitive tech- lectual property, aggressive government support for Chinese in- nology out of Chinese hands (or snooping Chinese technology dustry, and the destabilising currency manipulation. China de- out ofAmerican households). China’s dependence on American plored its dependence on foreign technology and consumers. spending and technology limits diplomatic and military adven- These vulnerabilities were highlighted by the financial crisis, turism. The break-up of Chimerica would mean an end to those when plummeting global demand threatened to plunge China constraints. into recession, even though it is quite separate from the global fi- It might also shove the world economy back towards mercan- nancial system. tilism and competing spheres of economic influence. China is al- Support within America for a tougher line with China has ready cultivating its economic imperium via the Belt and Road been building for a while. And China is ever keener to achieve Initiative, a plan to build infrastructure for trade and to invest technological self-sufficiency. The share ofdomesticvalue-added heavily in resource-rich developing economies. Cut off from in its exports has been rising steadily. “Made in China 2025”, the American consumers, China would seek to strengthen ties with national development strategy, aims to create high-tech substi- its neighbours in the hope of selling them more stuff. As Mr tutes for foreign products from computer components to robots, Trump’s economic sabre-rattling has grown louder, China has cars and planes. started to cultivate relations with Japan and South Korea. Mr Trump would probablyviewAmerica’salliesstrengtheningtheir trade ties with China as a strategic blow—even though he has Fair trade is no robbery picked trade fights with them, too. He might limit access to the United States trade with China, $bn American market for countries that do not join his anti-China 200 campaign. A world of mutually beneficial trade could turn into Exports one in which there are no winners without losers, and no victory + without conflict. 0 America has become embroiled in trade spats with fast-grow- – ing upstarts before; with Japan in the 1980s, for example. But these involved democratic countries grateful for American pro- 200 Deficit tection during the cold war—and American presidents with quite different characters. A closer analogy might be the early 20th cen- 400 tury, when economic interdependence proved no match for ris- Imports ing nationalism and bad leadership. The fear is that Mr Trump’s tariffs are less a way to correct legitimate trade grievances than a 600 step towards a much darker world. 7 1995 2000 05 10 15 17 Source: US Census Department Economist.com/blogs/freeexchange РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Science and technology The Economist June 23rd 2018 67

Also in this section 68 How to win a penalty shoot-out 69 Commercial space flight in China 69 A new gibbon species—in a tomb 70 Moths and magnetism

For daily analysis and debate on science and technology, visit Economist.com/science

Scientific journals even when he turned to journals on a whitelist of supposedly trustworthy open- Publish and don’t be damned access journals, 38% of the 167 he ap- proached fell into the trap. Dr Bohannon’s experiment did lack a true control—submission to journals that still charge subscriptions. Nevertheless, his findings were worrying and since then, he Some journals that claim to screen academicpapers with rigorous peerreview do says, “things have only gotten darker”. not do so One aspect ofthat darkness is that com- HETHER to get a promotion or mere- tion scientist at the Hanken School of Eco- pilinga blacklisthasitselfbecome risky. Mr Wly a foot in the door, academics have nomics, in Helsinki, estimates that the Beall stopped adding to his last year and longknown thatthey must publish papers, number of articles published in question- left his job at the University of Colorado in typically the more the better. Tallying able journals has ballooned from about March. He claims to have been subjected scholarly publications to evaluate their au- 53,000 a year in 2010 to more than to pressure from a superior, to a research- thors has been common since the inven- 400,000 today. He estimates that 6% of ac- misconduct investigation by the university tion of scientific journals in the 17th cen- ademic papers by researchers in America and to threats of lawsuits by publishers. tury. So, too, has the practice of journal appear in such journals. The university, for its part, says that no editors asking independent, usually ano- Behind all this is a change in the way a pressure was put on him to take down the nymous, experts to scrutinise manuscripts lot of journals make their money. Over the list. As far as it is aware that decision was and rejectthose deemed flawed—a quality- past decade, many have stopped selling his, and his job was never in jeopardy be- control process now known as peer re- subscriptions. Instead, they charge authors cause of his work researching open-access view. Oflate, however, this habit of accord- a publication fee and permitpeople to read journals. It cannot, however, disclose ing importance to papers labelled as “peer the result for nothing. This “open access” whether or not there was a research-mis- reviewed” has become something of a business model has the advantage of in- conduct investigation. Disclosure happens gamble. A rising number of journals that creasing the dissemination of knowledge, only after a finding has been made in such claim to review submissions in this way do but it also risks corrupting the knowledge an investigation. Mr Beall’s list has been not bother to do so. Not coincidentally, this thus disseminated. taken up by another researcher who has seems to be leading some academics to in- since appended 690 new journals to it. But flate theirpublication lists with papers that Trouble with lichen this new custodian refuses to be named. might not pass such scrutiny. The truth of this was shown as far back as Meanwhile, at Cabells, Ms Berryman Experts debate how many journals 2013, in an experiment conducted by John reckons the publishers of bogus journals falsely claim to engage in peer review. Cab- Bohannon, a journalist with a doctorate in are getting ever cannier. She has seen cases ells, an analytics firm in Texas, has com- molecular biology. Dr Bohannon set up a of journals she regards as suspect claiming piled a blacklist of those which it believes sting operation by writing versions of a pa- to be on whitelists, fabricating citation are guilty. According to Kathleen Berry- per falsely claiming that a molecule found scores for papers, stating plausible time man, who is in charge of this list, the firm in lichens inhibits cancer. The papers fea- frames for peer review (claims of rapid re- employs 65 criteria to determine whether tured, he says, “laughably bad” method- view are often associated with question- a journal should go on it—though she is re- ology and a shocking conclusion that the able journals) and brazenly listing as sit- luctant to go into details. Cabells’ list now molecule is “a promising new drug” de- ting on their editorial boards scholars who totals around 8,700 journals, up from a bit spite an absence ofclinical trials. He attrib- are not in fact doing so. over 4,000 a year ago. Another list, which uted the papers to fictional biologists at Ms Berryman says, too, that some web- grew to around 12,000 journals, was com- made-up African medical institutes and sites copy wording and graphics used by piled until recently by Jeffrey Beall, a librar- then submitted them to open-access jour- legitimate journals. Other sites go further, ian atthe UniversityofColorado. Using Mr nals. Of121chosen from a blacklist, 69% of- assuming a name that is confusingly simi- Beall’s list, Bo-Christer Björk, an informa- fered to publish the paper for a fee, and lar to that of a reputable journal. And ac-1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

68 Science and technology The Economist June 23rd 2018

2 cording to Ivan Oransky, co-founder of Re- mous peer review altogether, and make ties a side then “sudden death” ensues: vic- traction Watch, a pressure group, the process open and transparent. This tory is achieved by a single winning kick questionable journals now also occasion- could be done (as sometimes happens al- that is not successfully replied to. Whether ally retract articles in a bid to appear re- ready) by publishing unreviewed papers this is truly less dependent on luckis moot. sponsible, in what can only be described on special servers and then inviting criti- Analysis suggests that no relationship ex- as a superb piece ofsubterfuge. cism conditional on the name of the critic ists between a team’s general quality and None of this would matter if institu- being public. That, though, brings other its success in such shoot-outs. What analy- tions hiring academics were appropriately risks. Anonymous critics often find it easi- sis does suggest, though, is ways to im- vigilant about checking candidates’ publi- er to be honest, especially in fields where prove the odds ofvictory. cation histories against blacklists, and sim- most researchers know each other. The first is to go first, ifgiven the option. ilarly inquisitive about the publications of One far-fetched solution is a return to That option is, admittedly, dependent on those already employed. But some, appar- journal subscriptions. These have for so the toss of a coin. But if you win the coin ently, are not. According to Brian Nosek, long been excoriated as rent-seeking profit- toss you should take it, according to Igna- head ofthe Centre forOpen Science, a not- inflatorsrestrictingthe flowofinformation cio Palacios-Huerta of the London School for-profitorganisation in Virginia that stud- that a change of course would now be un- of Economics. After analysing data on ies the matter, many institutions that hire thinkable. But those who pushed for their 1,000 penalty shoot-outs in the World Cup and promote researchers seem uncon- elimination might be wise to pause for and other competitions, Dr Palacios-Huer- cerned about where those researchers thought. As the old proverb has it, be care- ta found that teams which kick first win have been publishing—a problem made ful what you wish for. You might get it. 7 60% of the time. Moreover, toss-winning worse by recent requirements by the captains do usually take this option, so American and Canadian governments FIFA, world football’s governing body, is that taxpayer-funded research must be Football penalties trying out a system similar to a tiebreak in published in open-access journals. tennis, in which teams A and B take turns Unsurprisingly, this is an area in which The lucky 12 yards to shoot first: AB then BA then AB and so data are hard to come by. But one academic on. The current World Cup, however, will has been prepared to stickhis neckout and keep the AB then AB format. investigate his own institution. Last year The toss having been won or lost, the Derek Pyne, an economist at Thompson teams decide the order in which players Rivers University’s business school, in Brit- will take their kicks. Coaches typically se- There is an optimal strategy to penalty ish Columbia, published a paper in the lect the best players to kickfirst, leaving the shoot-outs Journal of Scholarly Publishing, itself pub- worst until last. Kickers are successful lished by the University of Toronto Press. HEN the World Cup, now underway three-quarters of the time, on average, ac- In it, he reported that many ofthe business Win Russia, progresses to the knockout cording to an analysis of penalties by The school’s administrators, and most of its phases of the competition on June 30th at- Economist. Yet the success rate falls by 12 economics and business faculty with re- tention will focus on the dreaded penalty percentage points for the fourth of the five search responsibilities, had published in shoot-out. Forty years ago, if a game was pre-sudden-death penalties. This is where journals on Mr Beall’s blacklist. Dr Pyne level after120 minutes, the winner was de- first-mover advantage appears to matter. also claimed that these papers seemed to cided by luck: a simple coin-flip. But in 1978 The success rate in the fourth penalty for further their authors’ careers. Of the pro- the rules were changed to create results the team shooting first is 70%, whereas for fessors who had published in the black- that, at least in some sense, depend on the team shooting second it is just 56%. listed journals, 56% had subsequently won skill. The question is, how much skill? Thorough analysis of player sequencing at least one research award from the Since 1982, the first competition in which by Dr Palacios-Huerta suggests that the im- school. All ten instructors promoted to full penalty shoot-outs actually happened, portance of the five penalties is U-shaped: professorduringthe studyperiod had pub- there have been 26 of them—with seven of the first and fifth matter most; the third, lished in a journal on Mr Beall’s list. the 18 teams in the nine pertinent finals least. So the best penalty takers, either in Subsequently, Dr Pyne told school offi- having arrived there thanks to success at technique or those who can cope with cials that an administrator up for promo- penalties, and two ofthe finals themselves stress, should be selected with that tion had published widely in blacklisted having been decided by them. in mind. journals. This earned Dr Pyne an e-mail The format of a shoot-out is simple. Once the sequence of kickers is settled from the university’s human-resources de- Teams take it in turn to try to kick five pen- the ball is placed on the spot, 11 metres (36 partment on June 15th, threatening him alties past the opposing team’s keeper into feet) from the goal, the mouth of which is with disciplinary action for “defamatory the goal. Ifthe score is even afterfive penal- 2.4 metreshigh and 7.3 metreswide. Awell-1 language and accusations”. When asked, the university declined to comment. Aim high Review peerreview Success during penalty shoot-outs* by shot placement, 1976-2016 Goal Save Miss What can be done about all this is hard to say. Dr Pyne thinks part of the problem is that too many academic administrators have no research experience, and so either cannot tell good publications from bad, or do not care. Few researchers, though, thrill TOP LEFT TOP CENTRE TOP RIGHT to the idea of a career in administration, so changing that might be difficult. An ex- BOTTOM LEFT BOTTOM CENTRE BOTTOM RIGHT treme reaction, albeit one supported by a growing minority of researchers who think the peer-review system is anyway creaking under the weight of publication pressure, would be to abandon anony- Sources: Opta; The Economist *434 individual penalties in 44 World Cup and European Championship games РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist June 23rd 2018 Science and technology 69

2 struck ball arrives at the goal line in just across the floor of its laboratory in Daxing, signed a number of contracts to launch halfa second, meaningthat the goalkeeper a suburb of Beijing. The launch took place small satellites for Chinese customers. It must dive pre-emptively in the direction in May, from an undisclosed location in the may not, though, keep its lead for long. that he expects the kicker to shoot. Goal- north-west. OS-X, nine metres tall, climbed Several other firms, including LandSpace keepers find high balls the hardest to deal to an altitude of40km and travelled 287km and LinkSpace in Beijing, and ExPace, in with—just 3% of penalties aimed halfway downrange. It remained airborne for five Wuhan, have similar plans and are press- up the goal or more are saved. Yet there is a minutes before crashing into desert sands. ing it hard. tendency for these shots to miss the target: This lift-off was a first not only for One- It seems, then, that in the small-satel- 18% ofhigh shots do so, as opposed to 5% of Space but also for China, for it was the first lite-launch market the Chinese are coming low shots. Overall, though, allowing for in that country ofany rocket built by a priv- in earnest. With luck, at least from the cus- misses and saves, high shots are successful ate space company rather than a govern- tomer’s point of view, OneSpace and its 79% ofthe time compared with 72% forlow ment agency. It was also the world’s first modern fire arrows are about to ignite a shots (see chart on previous page). flight of a rocket intended to pave the way private space race. 7 As to the direction, left, right or centre, for a commercial, solid-fuelled orbital of both the kicker’s shot and the goalkeep- launcher. er’s pre-emptive dive, it is best to be as un- Solid fuel is easier and cheaper to han- predictable as possible. The data suggest dle than the liquid variety, which requires there is little difference in success rates be- tanks and pumps, and its higher density tween shots that are aimed left, right or means that rockets which use it can be down the middle. Yet it is easier for a right- made smaller than their liquid-fuelled footed player to give the ball speed by aim- brethren of equivalent lifting capability. ingtowards what is, from his point of view, Fine-tuning the flight of a solid-fuelled the left-hand side of the goal (the keeper’s rocket is harder, though, because the sup- right), and vice versa for left-footed play- ply of fuel to the motor cannot easily be ers. On average, kickers strike the ball in regulated. For that reason American space this more natural direction 25% more fre- companies have followed the liquid-fu- quently than in the other direction. Goal- elled path trodden by government space keepers know these preferences and dive agencies around the world. The relative in those directions in matching propor- disadvantages ofsolid fuel do, however, di- tions, in an attempt to exploit this bias. minish as rockets get smaller. And since Preparation helps, too. The Nether- OneSpace is not planning to hoist into or- lands substituted in a specialist penalty bit the multi-tonne loads carried by, say, stopper,Tim Krul, justahead oftheir shoot- the Falcon Heavy lifter of SpaceX, Ameri- out with Costa Rica in the 2014 World Cup. ca’s leading private space company, the It worked. He dived in the correct direction firm hopes that the simplicity of solid fuel all five times and saved two penalties. will offset its disadvantages. Conversely, there is no substitute for kick- OS-X was assembled in the laboratory ing accuracy.Germany,with an 86% penal- where its remnants now reside. But OS-M, ty success rate, has the best record of any the next generation, will be built in a fac- top international team. England’s record, tory now nearing completion in Chong- by contrast, is a dismal 66%. 7 qing. These solid-fuelled rockets will be 20 metres tall and are destined for orbit. They will be able to launch payloads of up to Commercial space flight in China 205kg—a load the firm hopes eventually to Archaeology increase to 750kg by adding four booster Fire arrows rockets to the main one. Dead apes telling OneSpace’s target is the rapidly grow- ing market for small, short-lived satellites tales that will observe Earth’s surface for va- BEIJING rious purposes. At the moment these de- vices, which weigh only a kilogram or two, AChinese company plans to launch a Anew species ofgibbon is found in a are launched mainly as makeweights on rocket into orbit this year 2,200-year-old tomb missions whose principle purpose is to put HE first rockets were Chinese. In the a large satellite into space. Demand for OYAL burials are just not what they T1230s the armies of the Song dynasty, small-satellite launches is now so great, Rused to be. While still a child, Qin Shi- who were fighting Mongol invaders, start- though, that businesses can be built on it. huang, who founded the Qin dynasty and ed launching “fire arrows” propelled by Rocket Lab, an American firm, has recently unified China in 221BC, ordered a mausole- gunpowder some 300 metres into enemy begun offering dedicated small-satellite um built for himself that would measure lines. When the Song’s artillerymen real- launches, using a liquid-fuelled rocket. 6.3km across at its widest point and in- ised that these arrows continued to fly OneSpace hopes the first OS-M should be clude over 8,000 terracotta figures. His straight even after their fiery exhaust had launched before the end ofthe year. grandmother, Lady Xia, was also buried burned away their feathers, they removed The firm, which was founded in August with several companions. When her tomb the fletching and the rocket was born. 2015, owes its birth to government policies, near Xi’an was excavated in 2004, archae- Almost eight hundred years later Shu promulgated a year earlier, that permitted ologists found in it the remains of a leop- Chang, the head of a company called private capital to enter the space industry— ard, a lynx, a crane and a gibbon—a type of OneSpace, is trying to build on that histori- previously a state monopoly. It is backed small ape. cal tradition—though not for military pur- by several Chinese venture-capital firms, Gibbons were treasured in ancient Chi- poses. The charred and twisted remnants including Legend Star, Zhengxuan Capital na. They served as pets forthe elite in Lady of OS-X, the firm’s first launch, are strewn and the Hongtai Fund. It says it has already Xia’s time and as models for fine art a few1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

70 Science and technology The Economist June 23rd 2018

2 hundred yearslater. But the bonesfrom the ered differences significant enough to mer- with one of similar strength that could be tomb are particularly extraordinary. In a it the classification of Lady Xia’s pet as an turned through 120°. Because experiments paper published this weekin Science, Sam- entirely new one. like these, conducted on birds such as pi- uel Turvey of the Institute of Zoology, in The disappearance of this species, geons, have revealed that those animals do London, and his colleagues, show that dubbed Junzi imperialis by Dr Turvey and use Earth’s magnetic field for navigation, they match those of no gibbon alive, so histeam, isthe firstdocumented extinction the researchers hoped their set up would must come from a species that has become of an ape since the end of the last ice age, to do the same with the moths. extinct since Lady Xia’s day. about 10,000 years ago. It was probably It did not. Unlike birds, the moths either The gibbon received a burial fit for a caused by habitat loss as China’s human failed to react to the movement of the field queen—or, at least, a queen’s compan- population expanded atthe expense of the orreacted in an unpredictable manner. Un- ion—so its remains were reasonably intact. country’s wild animals. Today, though willingto give up theirhypothesis, though, Dr Turvey and his colleagues were thus China still supports wild gibbons, they are Dr Dreyer and Dr Warrant wondered if able to compare the animal’s skull, jaw restricted to its southern fringes. Moreover, they had simplified their apparatus too and teeth with those of modern gibbons. two gibbon species that once lived there much. Many nocturnal insects have exqui- They checked characteristics, such as the have recently become locally extinct, site night vision so the two researchers distance between eyes and the outline of though they are still found farther south. thought that perhaps the absence ofvisual molars, that are used to distinguish be- Time, perhaps, foranother powerful spon- cues within their flight simulator, which tween modern gibbon species, and discov- sor to take up the gibbons’ cause? 7 had been intentional, might actually have confounded their experiment. To test this, they lined the simulator’s Insect migration interior with white felt and introduced a triangular black “mountain” above a black Magnetic moment horizon as a landmark. During the experi- ment they started by keepingtheirmagnet- ic field in alignment with Earth’s and then, after five minutes, began moving it. The moths continued to travel in the same di- rection with respect to the field for about three minutes after the field began moving The first clearevidence ofa sense ofmagnetism in insects but then, presumably as they realised that OGONG moths are not as glamorous as mainly by the sun. For a night-flying moth, their visual cue and their magnetic cue B monarch butterflies. Their name though, that is not an option. were now in conflict with one another, means “brown” in Dhudhuroa, a now-ex- Toexplore any magnetic sense bogongs they became disoriented. tinct language once spoken in eastern Aus- might possess Dr Dreyer and Dr Warrant This finding suggests that the moths do tralia, where they live. And that is what used light traps to capture hundreds of the indeed depend on a magnetic sense to they are—in contradistinction to a mon- moths during their migrations over the navigate during their long journey, but that arch’s glorious orange and black. But drab course of two seasons. They and their col- they cannot, as it were, fly on instruments though they may be, bogongs surely match leagues then glued stalks to the moths’ alone. They have rather to have sight of vi- monarchs in migratory tenacity. backs and, using those stalks, tethered the sual markers as well. Monarchs, famously,fly across much of insects inside a flight simulator in which The test of this will be in the next series North America, starting or ending their they were free to “fly” in any direction they of experiments Dr Dreyer and Dr Warrant journeys in one of a few groves of trees in wished—though, of course, they could not are planning, which will move the “moun- central Mexico. An adult monarch, though, actually move. The simulator was sur- tain” and the magnetic field simultaneous- migrates only once. During their lifetimes, rounded by a pair of magnetic coils that ly. That, they hope will fool the insects into bogong moths that survive to do so will cancelled out Earth’s field and replaced it thinking they are flying home. 7 make a pair of 1,000km journeys. One is from their winter birthing grounds in sun- scorched Queensland and New South Wales to a small number of cool caves in the mountains of Victoria where they will spend the summer months resting. The other is backagain. How they find their way to and from these caves is a mystery.But it is less myste- rious in light of work by David Dreyer and Eric Warrant at the University of Lund, in Sweden, published this weekin Current Bi- ology. Dr Dreyer and Dr Warrant suggest that bogongs use a combination of mag- netic compasses and topography. Several types of animals, including birds, turtles and fish, are known to sense and navigate by Earth’s magnetic field, but evidence for such powers in migratory in- sects has been tenuous. A lone experiment has suggested monarchs may be able to de- tect magnetism—but, if so, that is probably just a back-up mechanism. Abundant oth- er evidence suggests monarchs navigate Compass bearing? РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Books and arts The Economist June 23rd 2018 71

Also in this section 72 A biography of Rodrigo Duterte 73 Austro-Hungary revisited 73 Floridian Gothic 74 Johnson: The great debasement

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Mexico and America nomic forces binding the countries togeth- er are irresistible. Love thy neighbour American companies in search of cheap, diligent labour attract poor Mexi- can migrants or erect factories in Mexico. Products are increasingly made in both TIJUANA countries, with some zipping across the border several times along the way. In Ti- Despite the recent surge in nativism, the relationship between Mexico and America juana the benefits are mutual: once a hub is likely to deepen for factories with unskilled labourers, it N THE Mexican-American border in now boasts many educated workers with Vanishing Frontiers: The Forces Driving OTijuana stands a building that resem- sophisticated jobs. Meanwhile, security bles the hull of a ship. In 2004 authorities Mexico and the United States Together. agencies work together to counter a drug By Andrew Selee. PublicAffairs; 336 discovered a tunnel that gangsters had dug racket that subsists on American demand pages; $28 and £20 inside it, to smuggle drugs beneath the bor- and respects no boundaries. der wall. Officials jammed the tunnel with Mr Selee’s book shows that what Mr concrete; the building was taken over by a Homelands: Four Friends, Two Countries Trump characterises as a zero-sum game is cross-border arts council, which aims to and the Fate of the Great Mexican- in fact a win-win arrangement. At La Casa By Alfredo promote cultural integration between American Migration. del Túnel, that is Mr Arveola’s conclusion, Corchado. Bloomsbury Publishing; 304 Mexico and America. These days La Casa too. He thinksMexicanschange when they pages; $27 and £18.99 del Túnel hostsexhibitionsand workshops cross the border. The same people who for aspiring artists. Among the paintings drop litter on the streets of Tijuana refrain that adorn the walls is a diptych of Adolf voters that Mexico was sending its “worst” from doing so in San Diego, he says. Hitler and Donald Trump. people, and that trade between the two Though Americans come to Tijuana for Up on the roof, with its view across the countries was unfairto American workers. beaches and bars at weekends, on week- border and into southern California, Tito Many expected his victory to lead to a fun- daysthe roadsare full ofMexicansheading Arveola is buildingthe gallery’s café. Walls damental change in relations. Yet in 2017 north for jobs. “You can tell it is a good have sprung up throughout his life, Mr Ar- bilateral trade increased. Security co-oper- thing to work in America, the cars are all veola observes, yet the two countries have ation continues. In “Vanishing Frontiers”, nice models,” Mr Arveola notes. only grown closer. As a child in the 1970s Mr Selee argues that the relationship will In thistale ofstrengtheningties, the bor- he would cross the border without papers deepen further. der-hoppersare the main protagonists. The to carry bags for Mexicans buying grocer- number in America grew from 3m in 1962 ies in American stores. Later he spent three Homes are where the heart is to 36m today. Whereas Mexican men once decades in America legally, cleaning cars Beginning with the sister cities of Tijuana went north for seasonal farm work before for a living. His current place of work em- and San Diego, “Vanishing Frontiers” is an returning home, now whole families ar- bodies a neighbourly bond that is tighten- account of the people and places at the rive and put down roots. The remittances ing even as politics becomes more vituper- forefront ofthis integration. As Mr Selee re- they send home enrich some of Mexico’s ative. This process is the subject of new ports, the two cities plan their futures to- poorest places. At the same time their dis- books by Alfredo Corchado, a Mexican- gether; theirmayorstalkofgoverning a sin- persal beyond the borderstatesmeans that American journalist, and Andrew Selee, gle urban region. A new privately funded much of America has become familiar president of the Migration Policy Institute, bridge, which crosses the wall and allows with Mexican culture. But their visibility a think-tankin Washington. San Diegans to walk straight into Tijuana has also fuelled the nativist backlash that Mr Trump wants the wall to rise higher Airport, is a striking symbol of collabora- helped elect Mr Trump. and stretch fartheracross the 3,145km fron- tion. The practical difficulties of sharing a Mr Corchado, a journalist at the Dallas tier. He won the White House by telling border persist, but the underlying eco- Morning News, has lived this story. In 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

72 Books and arts The Economist June 23rd 2018

2 “Homelands” he recounts his experiences Rodrigo Duterte ing at more than 9% per year. His tough and those of three friends—altogether, stance on shabu (crystal meth), and against three Mexicans and an American of Mexi- Inner demons the criminal networks supplying it, later can descent—as they grapple with having appealed to voters nationally. MrMiller il- two countries to call home. The book be- luminates the darkness behind his boasts. gins in Philadelphia, where the friends More than 1,400 people are thought to met, in the 1980s (back when no good te- have been murdered between 1998 and quila was imported). It eloquently chroni- 2015 by vigilante killers known as the “Da- Duterte Harry: Fire and Fury in The cles the effects ofthe North American Free- vao Death Squad”. Mayor Duterte spoke Philippines. By Jonathan Miller. Scribe; 346 Trade Agreement between Mexico, Ameri- freely ofcriminals being“legitimate targets pages; £14.99. To be published in America as ca and Canada, the militarisation of the of assassination”, but denied responsibil- “Rodrigo Duterte” in September; $17.95 border after the attacks of September 11th ity. One of the book’s most compelling 2001and Mr Trump’svictory. FTER Rodrigo Duterte won his first elec- chapters relays a former killer’s account of In the early 1990s, when he lived in El Ation in 1988—to become mayor of Da- the grisly tasks he says he performed. Paso, Texas, and wrote a weekly column vao, a city on the troubled southern island Since becoming president, Mr Duterte about trade, Mr Corchado was recognised of Mindanao in the Philippines—the shad- has applied his methods on a bigger scale, at the drive-through window ofa fast-food ow of the Moon passed over his victory. at a cost ofmore than 12,000 lives so far, ac- chain. “Is it true free trade will rescue us The local word foran eclipse is also that for cording to human-rights groups. In the from these shitty jobs?” asked the atten- a fabulous, fanged sea-serpent: bakunawa. country’s slums, arbitrary lists of sup- dant who handed over his meal. Twenty- This dark omen epitomises the ghoulish posed drug-users determine who will be five years later, El Paso has been trans- detail in Jonathan Miller’s biography. It shot to death. Notorious for his misogyny, formed by new highways and bridges, and also captures the almost fantastical nature Mr Duterte excoriates female critics with has a newfound sense of relevance. Since of Mr Duterte’s life. Since he became presi- particular savagery. Senator Leila de Lima 1994 unemployment in the city has fallen dent in 2016, his monstrous tendencies languishes in prison on trumped-up nar- by half. Yet in Mexico, beyond the border have emerged in a brutal anti-drugs cam- cotics charges afterdaringto investigate his region, politicians’ predictions about paign, his treatment of critics and authori- dealings with the Davao Death Squad. NAFTA’s dividends have proved less accu- tarian rants. As Mr Miller, a TV journalist, Maria Lourdes Sereno, formerly chief jus- rate. Despite progress in places like Tijua- poignantly shows, one of Asia’s oldest de- tice of the Supreme Court, was ousted na, overall wages have barely budged; dis- mocracies and its 103m people are suffer- from her post in May after she spoke up for illusioned Mexican voters are about to ing—even ifmany seem to approve. judicial independence. elect a populist president oftheir own. Mr Duterte presents himself as a Yet Mr Duterte remains popular—in a The decades-long wave of migration straight-talking outsider among Manila’s presidency defined by contradictions. He that Mr Corchado documents has now elites. “Duterte Harry” portrays him as the jokes about rape but has enacted progres- largely abated. But it has made Mexican- tearaway son of the governor of the prov- sive sex-discrimination laws; he supports American relations more intimate. Family ince of Davao, whose upbringing was un- same-sex marriage and has pushed for ties improved Mexicans’ views of their usual but privileged. One of five siblings, greater access to contraception. He cru- neighbour (though attitudes have been he skipped school, chased girls and hung sades against drugs but acknowledged us- damaged by Mr Trump). One American in around with paramilitarypolice who were ing patches of fentanyl, a synthetic opioid, nine is now ofMexican origin, and compa- supposed to guard him; Mr Miller thinks to relieve lingering pain from a motorbike nies from Netflix to NASCAR are courting his foul language derives from those days. accident (later he claimed he was joking). them. So are Mexican firms which peddle While his devoutly Catholic mother re- Mr Miller’s conclusions echo a psychol- the comforts of home. Mexican customs tained some control overhim, his antics in- ogist’s report written in 1998 as Mr Du- have duly found broader followings—not curred a cruel punishment: kneeling on terte’s marriage broke down. That de- just tacos and soccer but also drinkable yo- marbly mung beans with his arms out- scribed “a highly impulsive individual” gurt and pay-as-you-go phone contracts, a stretched. He went on to study law before who “has difficulty controlling his urges Mexican habit. Cultural influences run the turning his attention to his home town. and emotions” and “seldom feels a sense other way, too. The children of Mexican For 22 years Mr Duterte ran the city of ofguilt or remorse”. “Duterte Harry” deftly migrants prefer English to Spanish, Ameri- Davao, apparently maintaining popularity guides readers through this warped politi- can music to Mexican and—increasingly— ratings of 96% during that time. When he cal landscape to reveal the vulnerability of Protestantism to Catholicism. stood down, the local economy was grow- a tempestuous leader. 7 At La Casa del Túnel, Mr Arveola con- fides that he was deported back to Mexico in 2002. “I screwed up,” he says, adding that, in America, small infractions can lead to deportation. Every morning, perched on the gallery’s roof, he watches illegal immi- grants jumping the border fence below. Personally he is now content to live in Ti- juana, where he has a wife and young daughter, and feels no need to return to America. Still, he would like to obtain a visa for his child, so she can visit her half- dozen aunts and uncles in California. She will get her first English lessons when she starts school later this year, Mr Arveola says. He wants her to be fluent in both cultures (and to understand their dif- ferences). Her American name, Hannah, is a testament to his hopes. 7 Make his day РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist June 23rd 2018 Books and arts 73

ed Serialism, Arnold Schoenberg’s 12-tone having left first Austria and then Europe. musical technique, among the “biggest “There is an element of escapism into emerging genres” of 2017. Egon Schiele, an the great Habsburg era,” says Daniel Seton Austrian artist, was the subject of a recent ofPushkin Press, which has reissued sever- biopic. A current show in Liverpool juxta- al of Zweig’s books in translation, “but poses his workwith modern photography; there also seems to be this underlying an installation in Paris focuses on Schiele sense of tragedy.” Another figure from the and Gustav Klimt. Nudes by the pair fea- late Habsburg period, Sigmund Freud, ture in a forthcomingexhibition atthe Met- might conclude that its culture has become ropolitan Museum ofArt in New York. a canvas on which readers and audiences Habsburg culture is back. “Every few project their own desires and fears. 7 weeks I do a search on Twitter and there is an incredible benevolence aboutthe Habs- burgs,” says Eduard Habsburg, Hungary’s American short stories ambassador to the Vatican and the former ruling family’s unofficial social-media ma- Swamp creatures ven. “There is definitely renewed interest.” The reasons forthis burst ofenthusiasm are nuanced, even contradictory. This year’s centennial of the end of the first world war, and of the empire’s collapse, is Florida. By Lauren Groff. Riverhead Books; part of the explanation. So is a sense that 288 pages; $27. William Heinemann; £14.99 the anxieties of the late imperial period, years ofdisorientingchange in politics and LORIDA is a gift to writers. Beneath its society, overlap with today’s. “It’sa danger- Fartificial shine lies dark, primeval ous time and we need to look very closely swampland; a gulf divides the seen from at signs from the past,” says Mr Simons. the unseen. Visitors to the Sunshine State “We do live in worrying times,” agrees Mr can quickly find themselves in the realm of Habsburg; “everything is shifting, you the gothic, at once fascinatedand repelled. have a feeling you are walking in a fog.” Born and raised in Cooperstown, New Yet this notion ofthe late Habsburg per- York, Lauren Groff is one such transplant, iod as a warningcoexists with nostalgia for and a connoisseur of the tension between Austro-Hungary revisited its glamour, epitomised by the gold leaf on appearance and depth. Her dazzling third a Klimt painting. Forever 21, a teen-fashion novel, “Fates and Furies”, a portrait of a The empire strikes retailer, has emblazoned the lush art of Al- marriage built on secrets, was nominated fonse Mucha (see above), a Czech contem- for the National Book Award. Her new col- back porary of Klimt, on its denim jackets and lection plunges into similarly murky ter- sweatshirts. In the same glossyvein, a joint rain. Many of the 11stories in “Florida” de- Austrian-Czech-Hungarian-Slovak pro- scribe experiences of upheaval, violent duction reached farther into the past to disruptions to life’splacid surface. With its glitz and neuroses, the culture dramatise the life of the Empress Maria There is more than a little of David ofthe late Habsburg era is backin vogue Theresa in the 18th century. The mini-se- Lynch in Ms Groff’s Floridian landscape: N HIS novel “The Radetzky March”, pub- ries—eithera celebration ofa Catholic, con- exotic and bright, yet pulsing with hidden1 Ilished in 1932, Joseph Roth traces the servative epoch ora tale offemale empow- changing fortunes of the Trotta family erment, depending on the viewer’s amid the demise of the Austro-Hungarian bias—drew big ratings throughout central Empire. “People lived on memories,” Roth Europe. In the Czech Republic, a former writes of the era before the first world war, Habsburgterritory, a whopping47% oftele- “justasnowtheylive bythe capacity to for- vision viewers tuned in. get quickly and completely.” To the Trottas, life seems to be accelerating; nationalism, Last train to Budapest militarism and class antagonism are rife. As Philipp Blom, a historian, notes, “peo- Rumour runs amok. Little wonder that Vi- ple tend to idealise” the Habsburg empire, enna’s Burgtheater recently staged a ver- even though it was “ultimately torn apart sion of the story. “We thought it fit the by nationalism”. No one embodies the times we live in,” says Johan Simons, the dual nature ofthe Dual Monarchy’sappeal play’s Dutch director. better than Stefan Zweig, an Austrian nov- This reinterpretation of Roth’s novel is elist with a cult following. one instance of a widespread interest in Zweig’s elegant society novels are set in the art and style of the old Habsburg em- a charmingly liberal Vienna. By contrast, pire. Last year, forexample, Arthur Schnitz- his memoir, “The World of Yesterday”, is a ler’s play “La Ronde”, set in Vienna in the requiem for lost cosmopolitanism. Zweig 1890s, was staged in London; Federico was the subject ofa searingbiopic released Tiezzi, an Italian director, is reinterpreting a in 2016; he also inspired Wes Anderson’s series of Schnitzler’s works outside Flor- whimsical film “The Grand Budapest Ho- ence. “Morir”, a Spanish film released last tel” (2014). In December Brazil posthu- year, was also inspired by him. mouslyawarded him the country’shighest The revival encompasses painting and state honour for foreigners, 75 years after music too. Spotify, a streaming service, list- he and his wife committed suicide there, What lies beneath РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

74 Books and arts The Economist June 23rd 2018

2 malevolence. In “Eyewall”, a wife drinks same unnamed woman features in twin same time she is preoccupied by “glaciers her faithless late husband’s expensive Bur- stories that frame the collection. In one she dying like living creatures, the great Pacific gundy; a hurricane that batters her house roams the gentrified neighbourhoods of trash gyre, the hundreds of unrecorded induces a series of spectral encounters. In her town, ambivalent about both Florida deaths of species, millennia snuffed out as “Dogs Go Wolf”, two little girls are aban- and the pernicious expectations under ifthey were not precious.” doned on a blistering fishing atoll. In “The which mothers labour. There is a hilarious Against these threats Ms Groff sets the Midnight Zone”, a mother and her sons are riff on her failed attempt to make Hallow- particularity of individual lives, love and marooned in “an old hunting camp ship- een outfits; beleaguered costume-makers above all language. Her own is alive to wrecked in twenty miles ofscrub”. everywhere will smile in recognition. Florida’s lush, beguiling beauty. Lostin the Real and metaphorical storms prolifer- Less whimsically, the same character swamp at night, her unnamed character ate, along with ghosts, alligators and contemplates the brutality of contempo- observes how screen doors “pulsed with snakes. Two menaces in particular slither rary politics. She finds a young woman the tender bellies of lizards”. Ms Groff’s through Ms Groff’s work: the obliteration who has been attacked in an alley; she writing is marvellous, her insights keen, of women by marriage and motherhood, “can feel in [her] bloodstream the new ven- each story a glittering, encrusted treasure and looming environmental collapse. The om that has entered the world”. At the hauled from the deep. 7 Johnson Out of their wherevers

American political language has crossed a rhetorical Rubicon, and there may be no going back OST adults know all the words that alongside the physical kind. Mwill appear in this column. But they But in America the combination of may still be shocked to hear them used in vulgarity with the country’s extreme po- public, even distinguished, places. Robert larisation is producing a toxic mix. Politi- De Niro won a standing ovation at the re- cians and public figures are literally dehu- cent Tony Awards for shouting “Fuck manisingtheiradversaries. MrTrump has Trump!” Samantha Bee, in a tirade on her called some illegal immigrants “animals” comedy news show against Donald and said they are “infesting” America. Ro- Trump’s immigration policy, called seanne Barr, an actress, called Valerie Jar- Ivanka Trump, his daughter, a “feckless rett, a black adviser to Mr Obama, an off- cunt”. Their main target responded as spring of the film “Planet of the Apes”. usual, punchingbackat“no talentSaman- Michael Avenatti, a lawyer who is suing tha Bee” and “Robert De Niro, a very Low the president, called one of Mr Trump’s IQ individual” on Twitter. lawyers, Rudy Giuliani, a “pig”; New York Of course the great pioneer of vulgar magazine depicted Mr Trump as a pig on political language sits in the Oval Office. its cover. It is not altogether panicky to During his campaign in 2016, Mr Trump note that genocides are preceded by de- promised to “bomb the shit” out ofIslam- humanisation: the Nazis and the Rwan- ic State, said voters should tell firms that dan genocidaires called their victims ver- move overseas to “go fuck themselves”, min. If your opponents are pigs or apes, it and smirkingly repeated an audience is worth doing almost anything to keep member’s dismissal of an opponent as “a them from power. pussy”. Mr Trump said thata female jour- In fact, the language ofpolitics has been America has entered a rhetorical vi- nalist who had asked him tough ques- growing more informal for half a century. cious circle that may be impossible to es- tions had “blood coming out of her wher- The 1960s and 1970s—which featured as- cape. During the election of2016 Michelle ever”. In office, he has derided sassinations, Watergate and Vietnam in Obama, then the First Lady, said that immigration from “shithole” countries. America, and left-wing uprisings in Eu- “when they go low, we go high.” Those His opponents, flummoxed by his rope—led people to mistrust their “betters” grand words have withered in the heat of popularity, have sometimes tried to imi- and their lofty, crafted rhetoric. Television, the new era. Neither side is willing to tate him. It never works, but they never seeming to close the physical distance be- stand down unilaterally in an escalating learn. When Marco Rubio, a rival for the tween viewers and viewed, rewarded an war of words. In this climate, Democrats Republican nomination, took a puerile intimate, apparently genuine style in will have little cause for complaint when potshot at the size of Mr Trump’s hands— which politicians sounded like their vot- the vilest of language is flung at their “you know what they say about a man ers, not above them. The impersonality nominee in 2020. with small hands”—Mr Trump breezily and spontaneity of social media, which Is the country ofLincoln, MLK and JFK defended his genitals at the next debate. are edging out newspapers in news deliv- on an irreversible slide towards the rheto- Mr Rubio was demeaned; Mr Trump ery, is fuelling the trend. ric of the sewer? In 2016 many voters cruised on. When Michelle Wolf, a come- This is not only an American phenome- wanted a candidate who reflected their dian, delivered a foul-mouthed routine non. Russia’s Vladimir Putin once vowed anger. Today many are troubled by the attacking the president—“the one pussy to pursue terrorists everywhere—even “in tone of debate, too. The problem is that, you’re not allowed to grab”—at the White the shithouse”. Rodrigo Duterte ofthe Phil- even ifthey prefercivil politics in general, House Correspondents’ Dinner in April, ippines has called both BarackObama and they want the toughest possible fighter on her crudeness was more widely discuss- the pope a “son of a whore”. Both presi- their side. If they continue rewarding ed than her wit (and there were indeed dents remain popular in their countries, loathsome language, they should prepare some good jokes in there). practising a rhetorical form of violence to hear a lot more ofit. РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Courses 75

The Economist June 23rd 2018 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 76 Economic and financial indicators The Economist June 23rd 2018

Economic data % change on year ago Budget Interest Industrial Current-account balance balance rates, % Gross domestic product production Consumer prices Unemployment latest 12 % of GDP % of GDP 10-year gov't Currency units, per $ latest qtr* 2018† latest latest 2018† rate, % months, $bn 2018† 2018† bonds, latest Jun 20th year ago United States +2.8 Q1 +2.2 +2.8 +3.5 May +2.8 May +2.5 3.8 May -465.5 Q1 -2.6 -4.6 2.93 - - China +6.8 Q1 +5.7 +6.6 +6.8 May +1.8 May +2.3 3.9 Q1§ +121.0 Q1 +1.1 -3.5 3.47§§ 6.47 6.83 Japan +1.1 Q1 -0.6 +1.3 +2.6 Apr +0.6 Apr +1.1 2.5 Apr +196.2 Apr +3.9 -4.7 0.02 110 112 Britain +1.2 Q1 +0.4 +1.4 +1.8 Apr +2.4 May +2.5 4.2 Mar†† -106.7 Q4 -3.8 -1.8 1.43 0.76 0.79 Canada +2.3 Q1 +1.3 +2.3 +4.9 Mar +2.2 Apr +2.1 5.8 May -53.8 Q1 -2.6 -1.9 2.18 1.33 1.33 Euro area +2.5 Q1 +1.5 +2.3 +1.7 Apr +1.9 May +1.6 8.5 Apr +485.5 Apr +3.2 -0.8 0.38 0.86 0.90 Austria +3.4 Q1 +9.7 +2.9 +3.9 Mar +1.9 May +2.2 4.9 Apr +7.7 Q4 +2.3 -0.6 0.48 0.86 0.90 Belgium +1.5 Q1 +1.3 +1.7 +3.5 Mar +1.8 May +1.8 6.3 Apr -0.8 Dec -0.3 -0.9 0.73 0.86 0.90 France +2.2 Q1 +0.7 +2.0 +2.1 Apr +2.0 May +1.8 9.2 Apr -7.8 Apr -1.0 -2.4 0.67 0.86 0.90 Germany +2.3 Q1 +1.2 +2.2 +2.0 Apr +2.2 May +1.7 3.4 Apr‡ +322.8 Apr +7.9 +1.1 0.38 0.86 0.90 Greece +2.3 Q1 +3.1 +1.8 +1.9 Apr +0.6 May +0.7 20.1 Mar -2.9 Apr -1.2 -0.3 4.36 0.86 0.90 Italy +1.4 Q1 +1.1 +1.4 +1.9 Apr +1.0 May +1.2 11.2 Apr +53.5 Apr +2.7 -2.0 2.56 0.86 0.90 Netherlands +2.8 Q1 +2.1 +2.8 +5.0 Apr +1.7 May +1.5 4.9 Apr +84.9 Q4 +9.7 +0.8 0.54 0.86 0.90 Spain +2.9 Q1 +2.8 +2.7 +11.0 Apr +2.1 May +1.5 15.9 Apr +26.2 Mar +1.8 -2.2 1.19 0.86 0.90 Czech Republic +3.7 Q1 +1.6 +3.5 +5.5 Apr +2.2 May +1.8 2.3 Apr‡ +0.9 Q1 +0.7 +0.9 2.19 22.3 23.7 Denmark -1.3 Q1 +1.7 +1.8 +6.1 Apr +1.1 May +1.1 4.0 Apr +20.9 Apr +7.7 -0.7 0.42 6.44 6.69 Norway +0.3 Q1 +2.5 +1.9 -1.3 Apr +2.3 May +2.2 3.9 Mar‡‡ +22.8 Q1 +6.5 +4.9 1.78 8.17 8.56 Poland +5.2 Q1 +6.6 +4.2 +5.3 May +1.7 May +1.9 6.1 May§ -0.8 Apr -0.7 -2.2 3.17 3.73 3.81 Russia +1.3 Q1 na +1.8 +3.7 May +2.4 May +3.0 4.7 May§ +41.7 Q1 +3.3 +0.3 8.13 63.6 59.7 Sweden +3.3 Q1 +2.9 +2.7 +3.2 Apr +1.9 May +1.7 6.5 May§ +16.8 Q1 +3.4 +0.8 0.49 8.89 8.80 Switzerland +2.2 Q1 +2.3 +2.2 +8.7 Q4 +1.0 May +0.8 2.6 May +66.6 Q4 +9.2 +0.8 0.01 0.99 0.98 Turkey +7.4 Q1 na +4.3 +5.1 Apr +12.1 May +10.9 10.1 Mar§ -57.1 Apr -5.5 -2.8 16.88 4.74 3.55 Australia +3.1 Q1 +4.2 +2.8 +4.3 Q1 +1.9 Q1 +2.2 5.4 May -36.8 Q1 -2.5 -1.0 2.62 1.36 1.32 Hong Kong +4.7 Q1 +9.2 +3.6 +1.0 Q1 +1.9 Apr +2.5 2.8 May‡‡ +14.7 Q4 +3.7 +1.9 2.30 7.85 7.80 India +7.7 Q1 +10.1 +7.3 +4.9 Apr +4.9 May +4.7 5.3 May -48.7 Q1 -2.2 -3.5 7.83 68.1 64.5 Indonesia +5.1 Q1 na +5.3 +4.7 Apr +3.2 May +3.6 5.1 Q1§ -20.9 Q1 -2.2 -2.5 7.23 13,932 13,289 Malaysia +5.4 Q1 na +5.6 +4.5 Apr +1.8 May +1.9 3.3 Apr§ +12.2 Q1 +2.7 -3.3 4.23 4.01 4.28 Pakistan +5.4 2018** na +5.4 +4.2 Apr +4.2 May +5.0 5.9 2015 -16.7 Q1 -5.8 -5.4 8.50††† 121 105 Philippines +6.8 Q1 +6.1 +6.4 +31.0 Apr +4.6 May +5.1 5.5 Q2§ -1.9 Mar -1.2 -1.8 6.35 53.5 50.1 Singapore +4.4 Q1 +1.7 +3.2 +9.1 Apr +0.1 Apr +0.8 2.0 Q1 +61.7 Q1 +20.4 -0.7 2.54 1.36 1.39 South Korea +2.8 Q1 +4.1 +2.9 +0.9 Apr +1.5 May +1.8 4.0 May§ +69.2 Apr +4.8 +0.7 2.62 1,105 1,135 Taiwan +3.0 Q1 +0.8 +2.7 +3.1 Mar +1.6 May +1.5 3.7 Apr +84.8 Q1 +13.5 -0.9 0.97 30.2 30.4 Thailand +4.8 Q1 +8.1 +4.1 +4.0 Apr +1.5 May +1.4 1.1 Apr§ +50.2 Q1 +9.8 -2.9 2.61 32.8 34.0 Argentina +3.6 Q1 +4.7 +2.2 +3.2 Apr +26.4 May +25.1 7.2 Q4§ -30.8 Q4 -4.6 -5.1 8.23 27.8 16.1 Brazil +1.2 Q1 +1.8 +2.2 +8.9 Apr +2.9 May +3.4 12.9 Apr§ -8.9 Apr -1.1 -7.1 9.59 3.75 3.31 Chile +4.2 Q1 +4.9 +3.7 +7.6 Apr +2.0 May +2.4 6.7 Apr§‡‡ -3.1 Q1 -1.1 -2.0 4.60 640 664 Colombia +2.8 Q1 +2.8 +2.5 +10.4 Apr +3.2 May +3.3 9.5 Apr§ -9.8 Q1 -3.0 -2.0 6.61 2,922 3,029 Mexico +1.3 Q1 +4.6 +2.1 +3.8 Apr +4.5 May +4.4 3.4 Apr -15.9 Q1 -1.7 -2.3 7.83 20.4 18.1 Peru +3.2 Q1 +5.6 +3.7 +20.3 Apr +0.9 May +1.7 7.0 Mar§ -2.9 Q1 -1.6 -3.5 na 3.28 3.28 Egypt +5.3 Q4 na +5.4 +3.7 Apr +11.5 May +17.5 10.6 Q1§ -9.3 Q4 -3.2 -9.6 na 17.9 18.1 Israel +4.0 Q1 +4.5 +3.8 +4.2 Mar +0.5 May +1.5 3.9 Apr +9.7 Q1 +2.6 -2.4 1.99 3.63 3.55 Saudi Arabia -0.9 2017 na +1.0 na +2.6 Apr +4.4 6.0 Q4 +15.2 Q4 +7.0 -4.4 na 3.75 3.75 South Africa +0.8 Q1 -2.2 +1.9 -1.6 Apr +4.4 May +4.8 26.7 Q1§ -8.6 Q4 -2.7 -3.5 9.02 13.7 13.1 Source: Haver Analytics. *% change on previous quarter, annual rate. †The Economist poll or Economist Intelligence Unit estimate/forecast. §Not seasonally adjusted. ‡New series. **Year ending June. ††Latest 3 months. ‡‡3-month moving average. §§5-year yield. †††Dollar-denominated bonds. РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist June 23rd 2018 Economic and financial indicators 77

Markets % change on Euro area GDP,Q42007=100 Dec 29th 2017 The euro area is five years into an eco- 120 Index one in local in $ Jun 20th week currency terms nomic upswing. Though growth is likely Germany United States (DJIA) 24,657.8 -2.2 -0.2 -0.2 to slow, loose monetary policy and recov- China (Shanghai Comp) 2,915.7 -4.4 -11.8 -11.3 ery elsewhere in the world mean GDP will 110 Japan (Nikkei 225) 22,555.4 -1.8 -0.9 +1.6 increase by 2.2% in 2018 and 2.1% in France Britain (FTSE 100) 7,603.9 -1.3 -1.1 -3.7 2019, according to the OECD, a club of Canada (S&P TSX) 16,421.0 +1.0 +1.3 -4.4 mostly rich countries. Labour markets are 100 Euro area (FTSE Euro 100) 1,198.8 -1.3 -0.9 -4.6 Spain improving and support for the common Euro area Euro area (EURO STOXX 50) 3,435.3 -1.3 -2.0 -5.6 currency is at an all-time high. However, Italy Austria (ATX) 3,268.6 -2.6 -4.4 -8.0 90 Belgium (Bel 20) 3,745.8 -1.8 -5.8 -9.3 high levels of public debt still burden France (CAC 40) 5,390.6 -1.1 +1.5 -2.3 several countries. The legacy of the Germany (DAX)* 12,678.0 -1.6 -1.9 -5.5 financial crisis of 2007-08 remains stark: 80 Greece (Athex Comp) 766.1 -0.5 -4.5 -8.0 the Greek economy is 24% smaller than in Greece Italy (FTSE/MIB) 22,084.3 -0.6 +1.1 -2.7 2007 and the Italian economy 4% small- Netherlands (AEX) 554.6 -1.7 +1.8 -1.9 er. Aggregate investment in the euro area 70 Spain (IBEX 35) 9,755.4 -1.5 -2.9 -6.5 is not expected to reach pre-crisis levels 2007 08 09 10 11 12 13 14 15 16 17 18 Czech Republic (PX) 1,068.2 -1.3 -0.9 -5.7 until 2019. Sources: OECD; Eurostat Denmark (OMXCB) 888.8 -0.8 -4.1 -7.8 Hungary (BUX) 34,972.4 -2.5 -11.2 -17.8 Norway (OSEAX) 1,007.7 -1.0 +11.1 +10.7 Poland (WIG) 55,912.0 -4.7 -12.3 -18.3 Other markets The Economist commodity-price index Russia (RTS, $ terms) 1,096.9 -4.4 -5.0 -5.0 2005=100 % change on % change on Sweden (OMXS30) 1,564.9 -0.4 -0.8 -9.2 Dec 29th 2017 one one Switzerland (SMI) 8,463.4 -2.0 -9.8 -11.7 Index one in local in $ Jun 12th Jun 19th* month year Turkey (BIST) 94,436.8 +1.0 -18.1 -34.4 Jun 20th week currency terms Dollar Index Australia (All Ord.) 6,274.6 +2.3 +1.7 -3.7 United States (S&P 500) 2,767.3 -0.3 +3.5 +3.5 All Items 156.2 149.2 -5.1 +5.7 Hong Kong (Hang Seng) 29,696.2 -3.3 -0.7 -1.2 United States (NAScomp) 7,781.5 +1.1 +12.7 +12.7 Food 155.0 147.9 -8.2 -3.6 India (BSE) 35,286.7 -1.3 +3.6 -3.2 China (Shenzhen Comp) 1,612.6 -6.9 -15.1 -14.6 Indonesia (JSX) 5,884.0 -1.8 -7.4 -9.8 Japan (Topix) 1,752.8 -2.6 -3.6 -1.1 Industrials Malaysia (KLSE) 1,709.8 -3.1 -4.8 -3.8 Europe (FTSEurofirst 300) 1,498.1 -1.3 -2.1 -5.7 All 157.5 150.6 -1.7 +17.1 Pakistan (KSE) 43,682.8 +0.4 +7.9 -1.4 World, dev'd (MSCI) 2,111.4 -1.3 +0.4 +0.4 Nfa† 148.1 141.6 -4.2 +9.4 Singapore (STI) 3,315.9 -2.3 -2.6 -4.2 Emerging markets (MSCI) 1,085.0 -4.5 -6.3 -6.3 Metals 161.5 154.4 -0.7 +20.5 South Korea (KOSPI) 2,363.9 -4.2 -4.2 -7.5 World, all (MSCI) 510.8 -1.7 -0.4 -0.4 Sterling Index Taiwan (TWI) 10,927.4 -2.2 +2.7 +1.3 World bonds (Citigroup) 937.3 -0.1 -1.4 -1.4 All items 212.8 206.0 -3.3 +1.2 Thailand (SET) 1,664.3 -3.1 -5.1 -5.8 EMBI+ (JPMorgan) 777.9 -0.7 -7.0 -7.0 Argentina (MERV) 29,118.5 -3.7 -3.2 -34.2 Hedge funds (HFRX) 1,270.8§ -0.3 -0.4 -0.4 Euro Index Brazil (BVSP) 72,123.4 nil -5.6 -16.5 Volatility, US (VIX) 13.4 +12.9 +11.0 (levels) All items 164.8 160.4 -3.4 +1.7 Chile (IGPA) 27,383.8 -2.0 -2.1 -6.3 CDSs, Eur (iTRAXX)† 68.6 -0.8 +51.9 +46.3 Gold Colombia (IGBC) 12,069.1 -1.9 +5.1 +6.8 CDSs, N Am (CDX)† 62.9 -1.1 +28.1 +28.1 $ per oz 1,298.9 1,274.1 -1.4 +2.5 Mexico (IPC) 46,759.4 nil -5.3 -10.0 Carbon trading (EU ETS) € 14.2 -7.0 +75.2 +68.7 West Texas Intermediate Peru (S&P/BVL)* 20,445.3 -3.3 +2.4 +1.0 Sources: IHS Markit; Thomson Reuters. *Total return index. $ per barrel 66.4 65.1 -9.9 +49.6 Egypt (EGX 30) 16,067.8 -0.7 +7.0 +6.3 †Credit-default-swap spreads, basis points. §Jun 18th. Israel (TA-125) 1,376.1 -1.2 +0.9 -3.8 Sources: Bloomberg; CME Group; Cotlook; Darmenn & Curl; FT; ICCO; i r ICO; ISO; Live Rice Index; LME; NZ Wool Services; Thompson Lloyd & Saudi Arabia (Tadawul) 8,270.5 nil +14.4 +14.4 Ind cato s for more countries and additional Economist.com/indicators Ewart; Thomson Reuters; Urner Barry; WSJ. *Provisional South Africa (JSE AS) 56,253.3 -3.7 -5.5 -15.1 series, go to: †Non-food agriculturals. РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 78 Obituary Miguel Obando y Bravo The Economist June 23rd 2018

ful, Somoza never forgave him. The little Indian was now “Comandante Miguel”. When the Sandinistas took over later that year, he broadly welcomed it. A pasto- ral letter warned against “false socialism”, but he still hoped Nicaragua might pro- claim the justice of the Kingdom of God. A vain hope; the regime of Daniel Ortega emerged as Marxist-Leninist, and the arch- bishop’s sermons began to warn of ty- ranny again. Increasingly he backed the right-wing contras, funded by the United States, despite their atrocities in the civil war. In 1985 John Paul II made him a cardi- nal, the first from Central America, in part forhis resistance to the almost Godless left. Yet he wanted to be a mediator, surely the proper role for a Christian and a priest. Since the mid-1970s, when he had helped to end a hunger strike by political prison- ers, he had won a reputation as a peace- maker. When he got his red hat, he hoped it would mark him out as a man beyond fac- tion. Sandinista leaders did not agree. Al- though, under his aegis, the contras gradu- ally disarmed, for years he was not truly neutral. Before the elections of 1996 he re- peated, in a sermon, Aesop’s fable of the Priestly duties frozen viper that revived to bite the hand thatwarmed it: a warningto votersthat the repackaged Sandinistas had not changed their ways. Partly as a result, they lost. By now he was seen as a man of the right, sometimesa caudillo himself. He was Cardinal Miguel Obando y Bravo, Archbishop ofManagua and sometime striver caught up in financial scandals, such as the forpeace in Nicaragua, died on June 3rd, aged 92 import of luxury cars tax-free (a long way HEN the news came through in 1970 that it also tied him to Somoza. That op- from mules, as people said). His satin vest- Wthat Miguel Obando y Bravo had pressor of the ground-down campesinos ments looked finer, and he hobnobbed been appointed Archbishop of Managua, now called him “my little Indian”. He raf- with the rich and corrupt. Yet he had not the capital of Nicaragua, a journalist from fled the car and gave the money to the done with U-turns; and he was about to La Prensa was despatched to find him. It poor, but this was the start of many sharp perform the strangest of all. He ended up was not an easy task. He was not in his swerves between right and left. as the adviser and firm friend of that house in Matagalpa, of which he was then In his own mind, his career had clear treacherous snake, MrOrtega, who in 2007 auxiliary bishop. But after fording fast riv- themes. He was not a complicated man. became Nicaragua’s president again. ers, trekking through forest and braving Hiseducation in variousCentral American Their paths had crossed before. Cardi- mountain roads, the journalist found him. seminaries had been wide, but intellectu- nal Obando, when a priest, had taught him He wasmounted on a mule, in a wide som- alism seemed, to him, a foreign thing. His at the Salesian college in San Salvador. Un- brero and rough riding trousers, making Catholicism was simpler, more Nicara- der Somoza, he had negotiated his release his usual rounds of the diocese. The only guan, and of the old hierarchical style the from jail. Nonetheless, they hated each hint of priestliness lay in the spectacles people loved: vestments, incense, prayers otheruntil, in 2004, MrOrtega turned back gleaming on his broad, dark mestizo face, to the saints, spiritual instruction. When a to Catholicism and, in 2005, Cardinal and the high-collared white jacket strain- savage earthquake struckManagua in 1972, Obando officially married him to his long- ing its buttons across his boxer’s chest. he took to the streets in his broken shoes time mistress. To shocked observers he ex- The new archbishop saw himself as a and torn soutane to succour his sheep. His plained himself, with his usual simplicity, priest of the common people, a good Sale- episcopal motto, from 1 Corinthians, was by preaching ofthe prodigal son. sian (for that was his formation) carrying Me hice todo para todos, “I did everything In fact it was simpler even than that. out the Catholic church’s “option for the foreveryone.” They both came from La Libertad, under poor”. He had been born poor himself, in a the mountains and the open-cast mine, camp outside the shabby ranching-and- The kingdom ofGod where in 2010 they went together for the mining town of La Libertad in Chontales So tyranny had to be resisted, but oblique- feast of La Virgen de la Luz, with proces- province, the illegitimate son of a prospec- ly, with a biblical reference or a parable in sions and brass bands. There they saun- tor and an Indian peasant woman. But his slowly spoken sermons; he preferred to tered, two familiar native sons, and Mr Or- now he faced quite different pressures. The be a drop of eroding water, not a spear- tega opened a new road. Neither man first came in the form of a shiny new Mer- head. Under Somoza, he urged respect for talked much, because both liked silence. cedes sent to him by Anastasio Somoza, human rights and signed the bishops’ let- The president may have been contemplat- Nicaragua’s dictator. He enjoyed it, this ter ofJune 1979 that called revolution legiti- ing his next betrayals of liberty; but his “wedding present” that bound him to his mate “in the case ofevident and prolonged stocky old chaplain was perhaps just mar- archdiocese, until colleagues pointed out tyranny”. Though the call to arms was care velling at the convoluted ways ofGod. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

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