Xiaomi Rewrites the Rules of Business the Gain in Spain AI and Jobs

Xiaomi rewrites the rules of business

The gain in Spain

AI and jobs: the radiologist’s tale

How to win the World Cup JUNE 9TH–15TH 2018 America’s foreign policy

Contents The Economist June 9th 2018 5

10 The world this week Middle East and Africa 33 Peace and privatisation Leaders Ethiopia’s new prime minister 13 Trump’s foreign policy Demolition man 34 Conflict in Nigeria Wild fire 14 Trade retaliation Rules of war 34 Africa’s shady middlemen The death of Ely Calil 14 A new Spanish government The gain in Spain 35 Protests in Jordan Uneasy lies the head 15 AI and work Donald Images aren’t everything 36 Saudi Arabia Executive action Reform and repression Trump’s powers are not as vast 16 Football as his lawyers claim, page 37 How to win the World Cup 36 The war in Yemen How to make things worse On the cover Even if Donald Trump strikes Letters a deal with North Korea, his United States 18 On central banks, life foreign policy will harm insurance, work, 37 The rule of law America and the world: Singapore, Prince Pardon me? leader, page13. America’s Charles, hyphens 38 Elections in California president is undermining the Almost blue it rules-based international order. Can any good come of Briefing 39 Pharmaceuticals Right to try it? Page 20. Talks between 20 Trump and the world America and North Korea Present at the destruction 39 Charles and David Koch might just succeed, but at Kochtopus fishing what price? Page 45 40 Local government Spain’s new government Europe Scandimonium Populists of the left and right are on the rise in Europe. 24 Spain’s new prime 41 Lexington The Economist Despite its political turbulence, online minister Bernie Sanders A smooth takeover Spain is different: leader, page Daily analysis and opinion to 14. The new prime minister, supplement the print edition, plus 25 Italy Bashing migrants The Americas Pedro Sánchez, tries to audio and video, and a daily chart combine change, stability and Economist.com 26 Animal-lovers v nature 42 Brazil Politics after the strike a fragile mandate, page 24 E-mail: newsletters and Starving the beasts mobile edition 26 Bosnia 43 Abortion in Argentina Economist.com/email Refugee politics Of rosaries and ovaries Print edition: available online by 27 Turkey 44 Nicaragua 7pm London time each Thursday The Kurdish kingmaker Ortega’s last act Economist.com/printedition 28 Charlemagne 44 An eruption in Guatemala Audio edition: available online Angela Merkel plays it cool Fuego’s fury to download each Friday Economist.com/audioedition Britain Asia 29 Grenfell Tower 45 The Trump-Kim summit The long shadow Pushing the envelope 30 Russian oligarchs 47 Tourism in Japan Offski? No room at the inn Good capitalism v bad Britain’s Conservative Party Volume 427 Number 9095 30 European security 48 “Tribals” in India Revolution rocks is engaged in a surprising Published since September1843 Galileo’s middle finger debate on the virtues of to take part in "a severe contest between 31 Culture wars 49 Banyan markets: Bagehot, page 32 intelligence, which presses forward, and Malaysia: one country, an unworthy, timid ignorance obstructing Brexit v Bernard-Henri Lévy two systems our progress." 32 Bagehot Editorial offices in London and also: Good capitalism v bad Beijing, Berlin, Brussels, Cairo, Chicago, Madrid, Mexico City, Moscow, Mumbai, Nairobi, New Delhi, New York, Paris, San Francisco, São Paulo, Seoul, Shanghai, Singapore, Tokyo, Washington DC

1 Contents continues overleaf 6 Contents The Economist June 9th 2018

China 66 Stock exchanges Whose price is it anyway? 50 Caring for the dying Loved to death 67 Joblessness in Asia The luxury of 51 Inheritance unemployment Good will-writing 68 Free exchange Driverless cars International 52 Success in football Science and technology What it takes to win 70 Medicine Trade war America’s allies From A&E to AI The World Cup It rewards should stand up to its reckless Business 71 Climate change liberalism, internationalism mercantilism: leader, page14. 55 Chipmaking Negative thinking and open markets: leader, Donald Trump’s tariffs have Hyenas and cheetahs 72 Evolution page 16. How to win, page 52. united his opponents at home 56 Bartleby Animal magic Football is sometimes an art, and abroad, page 63. How Teaching entrepreneurship too, page 73 retaliation hurts American exporters, page 64 57 Microsoft buys GitHub Books and arts Homecoming Death Star 73 The art of football Subscription service 57 The Algosaibi affair A beautiful game For our full range of subscription offers, Bankers’ bane including digital only or print and digital 74 Bill Clinton’s debut novel combined, visit 58 Tax evasion in China Economist.com/offers Good guy with a gun or call the telephone number provided below: Yin and yang Telephone: +44 (0) 845 120 0983 or 75 Nuclear secrets and lies +44 (0) 207 576 8448 59 Fashion sharing The writing on the wall Something rented, Subscription for 1 year (51 issues) 75 The Lost Colony Print only something new Euro-zone countries €229 Myth and madness 7 59 Logistics in China Denmark DKr 1, 09 76 Johnson Hungary HUF 78,042 Manna from heaven Norway NKr 1,839 Arms and the man Poland PLN 1,011 60 Air India Sweden SKr 2,089 Grounded Switzerland SFr 296 Xiaomi The forthcoming IPO 78 Economic and financial Turkey TL 814 62 Schumpeter Other Europe (ex UK) €229 of China’s most successful Xiaomi thinks different indicators 3 consumer brand shows how Statistics on 42 economies, Middle East – GCC US$ 52 plus our monthly poll of South Africa ZAR 4,670, US$285 the rules of business are Middle East and Africa US$285 changing: Schumpeter, page 62 Finance and economics forecasters 63 Trade wars (1) Friends and foes Obituary Principal commercial offices: 64 Trade wars (2) The Adelphi Building, 1-11John Adam Street, 80 Zhao Kangmin London WC2N 6HT Backfire An army underground Tel: +44 (0) 20 7830 7000 64 Sovereign money Rue de l’Athénée 32 How to lend it 1206 Geneva, Switzerland Tel: +4122 566 2470 65 Buttonwood 750 3rd Avenue, 5th Floor, New York, NY 10017 Euro-zone equities Tel: +1212 5410500 66 Royal Bank of Scotland 1301Cityplaza Four, Cut your losses 12 Taikoo Wan Road, Taikoo Shing, Hong Kong Tel: +852 2585 3888

Other commercial offices: AI and jobs Clever machines Chicago, Dubai, Frankfurt, Los Angeles, will make workers more Paris, San Francisco and Singapore productive more often than they will replace them. The lessons from radiology: leader, page 15. Artificial intelligence will improve the speed and precision of medical treatment, page 70. It has PEFC certified already revived the semi- This copy of The Economist is printed on paper sourced conductor industry’s animal from sustainably managed spirits, page 55 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 otherwise, 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 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

Business | Dispute Resolution | Real Estate | Mishcon Private “We believe technology will lead us to a 100% accessible world.”

Manel Alcaide, Co-Founder of Visualfy, Spain

Understanding that deafness creates isolation, Manel wanted to break down barriers between the deaf and the hearing world through the use of technology. He created Visualfy, which translates sounds into visual and sensory alerts on a smartphone and other devices. Enabled by Android’s open-source operating system, users can completely customise alerts in the app to their needs. Through Visualfy, Manel brings dignity to disability and aspires to create a world that is inclusive and accessible to all.

Watch the mini-documentary about the app that visualises what can’t be heard: g.co/androidstories

10 The world this week The Economist June 9th 2018

A strike by lorry drivers in female drivers is lifted. Mean- But it did not spell out how Politics Brazil, which blocked roads while, Saudi prosecutors said lower courts should balance and led to shortages offuel 17 activists had been detained, concerns about discrimina- and food, ended after ten days. with eight released “temporar- tion, compelled speech and The government agreed to ily”. Some had been cam- religious freedom in future subsidise diesel for 60 days to paigning forwomen’s rights. cases. placate the drivers, whose strike was provoked by rises in Ethiopia’s government said Getting ready for a date fuel prices. Pedro Parente that it will implement a peace North Korea removed three resigned as the chiefexecutive deal, signed in 2000, that generals from their posts, ofPetrobras, the state-con- ended a bloody two-year war prompting speculation that trolled oil company, which sets with Eritrea. Ethiopia had they opposed the forthcoming fuel prices. refused to withdraw its troops summit between Kim Jong Un, from disputed territories the country’s dictator, and A Mexican federal court or- awarded to Eritrea in 2002 by a Donald Trump. The White Italy at long last got a new dered the government to start border commission that was House announced that the government. Nominally head- a new investigation into the created by the deal. Abiy meeting will take place at a ed by a non-political lawyer, disappearance in 2014 of43 Ahmed, Ethiopia’s new prime hotel on the Singaporean Giuseppe Conte, it is in reality students in Iguala in the state minister, also lifted a state of island ofSentosa. an uneasy coalition formed ofGuerrero. The court said an emergency, which was im- from the populist left-wing earlier investigation by prose- posed by his predecessor Malaysia’s new government Five Star Movement and the cutors, which found that police following protests. appointed an attorney- nationalist Northern League. It had turned over the students general. Tommy Thomas, an is promising both tax cuts and to drug gangs, had not been More than 1,000 people in the ethnic Indian, is the first benefit increases, which could independent. The new one is Democratic Republic ofCongo non-Malay to hold the job. He rapidly clash with the EU’s to be overseen by a truth com- were given an experimental promised there would be “no budget rules. mission, which will be led by Ebola vaccine, as health work- cover-ups” in the investigation the victims’ familiesand a ers try to stop the spread of the into the 1MDB scandal, in Spain got a new government, human-rights group. disease. which billions ofdollars were too. Its prime minister, siphoned out ofa develop- Mariano Rajoy, was ousted by Taxing times The golden prize ment fund. Separately, the a censure motion related to old More primaries were held to governor ofMalaysia’s central corruption charges against his choose candidates for Ameri- bankresigned. party. The new prime minister ca’s mid-term elections. Cali- is Pedro Sánchez, ofthe Social- fornia held a “jungle” primary, A court in Hong Kong sen- ist party, which controls only where the top two vote-getters tenced two pro-independence 24% ofthe seats in the lower go through to November re- politicians and their three house. gardless ofparty. Despite a formeraides to fourweeks in crowded field that threatened jail fortrying to barge into a In Slovenia, an anti-immi- to split the party’s vote, Demo- meeting at Hong Kong’s Legis- grant party won the most seats cratic candidates in the seven lative Council in 2016. The in a snap election, but fell short seats it is targeting in the state politicians had been elected as ofa majority. Forming a gov- made it through. Gavin New- legislators but had been barred ernment may prove difficult or Thousands ofpeople protested som, a formermayor ofSan from taking their seats for not impossible, since other parties in Jordan against the govern- Francisco, became the Demo- taking their oaths properly. refuse to deal with it. ment’s plans to increase taxes cratic candidate forgovernor. and cut subsidies, part ofan Police in the Chinese city of A volcanic disaster IMF-backed programme. King Chengdu raided an under- Scores ofpeople died and Abdullah responded by sack- ground church and detained nearly 200 were missing after ing the prime minister. He told its pastor and several other the eruption ofthe Fuego the new government to review people to prevent a planned volcano in Guatemala. Fast- the entire tax system. service in commemoration of moving pyroclastic flows of the violent suppression ofthe gas, ash and lava engulfed Iran is to build new centrifuges Tiananmen Square protests of nearby villages. The eruption at the Natanz nuclear site, 1989. America’s secretary of sent plumes ofash 6km (3.7 increasing its capacity to state, Mike Pompeo, called on miles) into the atmosphere. enrich uranium. But it said it China to “make a full public Guatemala declared three would stay within the limits accounting” ofthe massacre. days ofmourning. on enrichment set by the nuclear deal in 2015 with world In a 7-2 decision, the Supreme Rodrigo Duterte, the president Nicaraguan security forces powers, which America pulled Court ruled in favour ofa ofthe Philippines, drew killed nine people in the city of out oflast month. Highly Christian baker who refused howls ofprotest from femi- Masaya. That brings to at least enriched uranium is needed to to fashion a same-sex wedding nists for kissing a woman on 127 the number ofpeople who produce nuclear weapons. cake (though he offered to sell the lips at an event foroverseas have been slaughtered since the couple any cake offthe Filipina workers. Mr Duterte protests began in April against Saudi Arabia issued driving shelf). The court found that said it was his “showbiz” style. the authoritarian rule ofPresi- licences to ten women, weeks officials in Colorado had not The woman in question said dent Daniel Ortega. before a decades-old ban on given the baker a fairhearing. “it meant nothing.” 1 The Economist June 9th 2018 The world this week 11

“intelligent” cash machines, Walmart reached a deal by General Motors. The carmaker Business where money can be deposit- which a private-equity firm hopes to roll out its first self- ed anonymously. will take an 80% stake in its driving vehicles next year. Chinaofferedtobuy$70bn- Brazilian operations. The worth ofAmerican goods, David Drumm, the former supermarket chain expects to With his health deteriorating, including oil and gas, through boss ofAnglo Irish Bank, was booka loss as a result ofthe David Koch stepped down its state-owned companies if found guilty ofdishonestly transaction. Walmart entered from his role at Koch Indus- America ditches its plan to inflating the size ofthe bank’s Brazil in 1995, eventually be- tries, one ofAmerica’s biggest impose tariffson Chinese deposits before its collapse and coming the country’s third- privately held conglomerates, products. It was the latest subsequent bail-out during the largest retailer, but it has where his brother, Charles, is move to avert a trade war financial crisis. It was a rare chalked up seven consecutive chiefexecutive. David Koch is between the two countries, instance ofa senior executive years oflosses there. also ending all his political submitted after talks between being held to account legally activities. The Koch brothers Chinese and American negoti- for events leading to the crisis. Continuing the pain on Brit- are most famous forcreating a ators led nowhere. Meanwhile, Mr Drumm’s trial lasted for 81 ain’s high streets, House of networkofdonors forconser- trade hostilities broke out days. The jury tookjust ten Fraser said it was closing 31of vative causes. between America and its hours to convict him. its 59 department stores, caus- allies, after the Trump adminis- ing thousands ofjob losses. Its Howard Schultz announced tration pressed ahead with flagship store on London’s his retirement as chairman of tariffson steel and aluminium. South Africa’s GDP Oxford Street is on the list to Starbucks, ending his manage- The European Union drew up % change on previous quarter* shut shop, one ofthe most ment ties to a company that he a list ofAmerican products 4 visible casualties ofthe online bought in 1987, turning it into targeted forretaliation. Mexico disruption to retail. the world’s most extensive 2 got a head start, levying penal- + chain ofcoffee shops. Mr ties on imports from America, 0 Ramping up Schultz, who gave up the such as porkand bourbon. – Elon Musksaid that Tesla CEO’s job in 2016, has been 2 would probably reach its target mentioned as a potential Dem- Savvy Satya 4 ofmaking 5,000 Model 3 cars a ocratic presidential candidate. Microsoft agreed to buy 2015 16 17 18 weekby the end ofJune. Tes- Source: Thomson Reuters *Annualised GitHub, an online platform for la’s production glitches have Environmentally friendly developers to write and share South Africa’s economy worried investors. This week Monsanto is no more. Bayer code, for$7.5bn. The deal shrankby 2.2% at an annual Mr Musksurvived a vote at the scrapped the name, which for underscores Microsoft’s em- rate in the first quarter, the annual shareholders’ meeting decades invoked ire among brace ofopen-source software worst contraction in almost a to relieve him ofthe chair- green activists because ofits under Satya Nadella, some- decade. Agriculture, mining man’s role, which he holds development ofgenetically thing that was unthinkable and manufacturing all record- alongside the job ofCEO. modified crops, when it com- under previous chiefexec- ed big drops in output, un- pleted its takeover ofthe com- utives. Its pivot towards cloud- derscoring the broad-based SoftBank’s Vision Fund pany this week. based computing and services nature ofthe decline. Cyril unveiled a $2.3bn investment has rejuvenated its share price, Ramaphosa, the president, has in the division that is devel- For other economic data and allowing Microsoft to use only vowed to increase investment. oping autonomous cars at news see Indicators section stock to pay for GitHub.

The British government sold 925m ofits shares in Royal Bank of Scotland, the biggest chunkit has oﬄoaded since bailing out RBS in 2008, reducing the public’s stake to 62%. The shares were sold at a much lower price than the government paid forthem, repre- senting a £2.1bn ($2.8bn) loss to taxpayers from this sale alone. More tranches ofshares are expected to be sold over the next few years.

Commonwealth Bank of Australia was fined A$700m ($535m) by Australia’s financial-crimes agency forbreak- ing rules on money laundering and financing terrorism. It was a record corporate penalty in the country. The bank admitted to lapses in checking 53,500 transactions at its COLLECTION Fit y Fathoms

RAISE AWARENESS, TRANSMIT OUR PASSION, HELP PROTECT THE OCEAN BEIJING · CANNES · DUBAI · GENEVA · HONG KONG · LAS VEGAS · LONDON · MACAU · MADRID

©Photograph: Laurent Ballesta/Gombessa Project ©Photograph: Laurent www.blancpain-ocean-commitment.com MANAMA · MOSCOW · MUNICH · NEW YORK · PARIS · SEOUL · SHANGHAI · SINGAPORE · TAIPEI · TOKYO · ZURICH Leaders The Economist June 9th 2018 13 Demolition man

Even ifDonald Trump strikes a deal with North Korea, his foreign policywill harm America and the world ICTURE this: next week in weak. Mr Kim probably wants a deal of some sort, though not PSingapore President Donald full disarmament (see Asia section). On trade, China would Trump and Kim Jong Un crown surely preferaccommodation to confrontation. their summit with a pledge to Yet in the long run his approach will not work. He starts rid the Korean peninsula of nuc- from false premises. He is wrong to think that every winner lear weapons. A few days later creates a loser or that a trade deficit signifies a “bad deal”. He is America and China step back wrong, too, to think that America loses by taking on the costs from a trade war, promising to of global leadership and submitting itself to rules. On the con- settle their differences. And in the summer, as sanctions bite, trary, rules help deter aggressors, shape countries’ behaviour, the streets ofTehran rise up to cast offthe Iranian regime. safeguard American interests and create a mechanism to help These gains would be striking from any American presi- solve problems from trade to climate change. RAND, a non- dent. From a man who exults in breaking foreign-policy ta- partisan think-tank, has spent two years assessing the costs boos, they would be truly remarkable. But are they likely? And and benefits of the postwar order for America. It powerfully when Mr Trump seeks to bring them about with a wrecking endorses the vision that Mr Trump sneers at—indeed, it con- ball aimed at allies and global institutions, what is the balance cludes, this order is vital forAmerica’s security. ofcosts and benefits to America and the world? Mr Trump’s antics would matter less if they left the world order unscathed (see Briefing). But fouryears will spread anar- Don’t you ever say I just walked away chy and hostility. The trading system will be unable to enforce You may wonder how Mr Trump’s narcissism and lack of de- old rules or forge new ones. Short of a war with, say, Russia, tailed understanding could ever transform America’s standing America’s allies will be less inclined to follow its lead. In Eu- forthe better. Yet his impulses matter, ifonly because he offers rope more voices may complain that sanctions against Russia a new approach to old problems. Like Barack Obama, Mr are harmful. In Asia countries may hedge against America’s Trump inherited a country tired of being the world’s police- unreliability by cosying up to China or by arming themselves, man, frustrated by jihadists and rogue states like Iran, and wor- accelerating a destabilising arms race. Countries everywhere ried bythe growingchallenge from China. Grindingwars in Af- will be freer to act with impunity. These changes will be hard ghanistan and Iraq, and the financial crisis of 2008, only to reverse. Soonerorlater, America will bearsome of the costs. deepened a sense that the system of institutions, treaties, alli- Worst of all, Mr Trump’simpulses mean that China’s rise is ances and classically liberal values put together after 1945 was more likely to end in confrontation. He is right to detect a surge no longer benefiting ordinary Americans. in Chinese ambitions after the financial crisis and the arrival Mr Obama’s solution was to call on like-minded democra- of Xi Jinping in 2012. That justifies toughness. But Mr Trump’s ciesto help repairand extend thisworld order. Hence the Irani- dark, zero-sum outlook is destined to lead to antagonism and an nuclear deal, choreographed with Europe, Russia and Chi- rivalry, because it refuses to see that China’s rise could benefit na, which bound Iran into the Nuclear Non-Proliferation America or to follow the logic that China might be content to Treaty. And hence the Trans-Pacific Partnership, which sought live within a system ofrules that it has helped devise. to unite America’s Asian allies around new trading rules that would one day channel Chinese ambitions. I just closed my eyes and swung Mr Trump has other ideas. He launched air strikes on Syria If the “master negotiator” so underestimates what he is giving after it used nerve gas in the name of upholding international up, how can he strike a good bargain forhis people? He values norms—and thus looked better than Mr Obama, who didn’t. neither the world trading system nor allies, so he may be will- Otherwise he treats every relationship as a set of competitive ing to wreck it for the empty promise of smaller bilateral defi- transactions. When America submits to diplomatic pieties, cits. That could lead to retaliation (see next leader). Iran could conventions or the sensitivities ofits allies, he believes, it is ne- resume nuclear work, as ruling clerics ape North Korea’s strat- gotiating with one hand tied behind its back. egy of arming themselves before talking. Mr Trump may give If any country can bully the world, America can. Its total Mr Kim the prize of a summit and an easing of sanctions in ex- military, diplomatic, scientific, cultural and economic poweris change for a curb on North Korea’s long-range ballistic mis- still unmatched. Obviously, that poweris there to be exploited, siles. That would protect America (and be betterthan war), but which is why every president, including Mr Obama, has used it would leave Asian allies vulnerable to the North’s nukes. it to get his way abroad even if that involves threats, intimida- America First today; in the long run America Alone. tion and, occasionally, deception. But it is hard to think of a America’s unique willingness to lead by fusing power and president who bullies as gleefully as MrTrump. No other mod- legitimacy saw off the Soviet Union and carried it to hegemo- ern president has routinely treated America’s partners so ny. The world orderitengineered isthe vehicle forthat philoso- shoddily or eschewed the idea of leading through alliances. phy. But Mr Trump prefers to fall back on the old idea that None has so conspicuously failed to clothe the application of might is right. His impulses may begin to impose a new geo- coercive power in the claim to be acting forthe global good. politics, but they will not serve America or the world for long. In the short term some of Mr Trump’s aims may yet suc- Remember the words ofHenry Kissinger: order cannot simply ceed. Iran’s politics are unpredictable and the economy is be ordained; to be enduring, it must be accepted as just. 7 14 Leaders The Economist June 9th 2018

Trade retaliation Rules of war

America’s allies should stand up to its reckless trade policy F ALL President Donald mum effect at minimum cost. Value of US imports OTrump’s assaults on multi- They should act in unison and within the spirit ofthe rules- $bn, 2017 lateralism, his trade policy is the Tariffs imposed, % based system. Condemnation of America’s actions by the rest most relentless. On June 1st his ofthe G7 on June 2nd wasa firststep. Countriesare also rightto Steel 28 25 administration expanded tariffs complain about the tariffs to the WTO. The rules may yet per- of 25% on steel and 10% on alu- mit retaliation; the idea that Mr Trump’s tariffs have anything Aluminium 17 10 minium to include imports from to do with national security is laughable; and it would smack allies: the European Union, Can- of double standards for retaliators to defend the multilateral ada and Mexico. The tariffs are justified by “national security”, system while circumventing it. a ruse to render them legal at the World Trade Organisation Any retaliation should be carefully calibrated. It is sensible (WTO). The White House may not stop there. It is investigating to target symbolically important goods. Mexico has imposed whether imports of cars and car parts also pose a “threat”. tariffs on bourbon and pork, which are produced in states that America’s allies are brandishing their own lists of levies on are home to Republican leaders. Canada plans to tax imports American imports, as is China. Should they strike back? from swing states, such as chocolate from Pennsylvania and The argumentsagainstretaliation are clear. Atit-for-tat trade orange juice from Florida. Mr Trump’s trade policy is already war will unleash destructive mercantilism, which lurks every- unpopular among Republicans in Congress, some of whom where, not just in the White House. Even in good times, politi- are trying to curtail the president’s power to act unilaterally on cians usually forget that the main benefits of trade are higher trade. America’s allies should aim to weaken the remaining productivity and cheap imports. Instead, they keep tariffs low support forprotectionism. chiefly to open foreign markets fortheir hard-lobbying export- Retaliatory tariffs should be structured so as to do as little ers. The more barriers they encounter abroad, the less value economic damage as possible at home. That means omitting they will see in supporting the global trading system. Decades goods for which there are few available substitutes, as well as ofprogress towards freer trade could unravel. parts and components. Otherwise, supply chains will be put But doing nothing entails costs, too. Mr Trump’sgoals go far at risk and governments will probably be drawn into the busi- beyond tariffs on a few metals. He seeks trade terms that will ness of picking winners. To see how easily that happens, wit- force supply chains to move to America, damn the economic ness the thousands of requests by American importers for ex- consequences. For example, the administration wants the emptions from Mr Trump’ssteel and aluminium tariffs. North American Free-Trade Agreement (NAFTA) to expire automatically after five years, robbing firms of the certainty Bully pulpit they need to invest in Mexico. To roll over on tariffs today The Economist was founded in opposition to tariffs and mer- would invite further, more damaging assaults tomorrow. cantilism. Barriers to trade distort economies and harm con- There are no good options. But on balance, it is better to try sumers, especially poor ones. Yet, in the long run, a measured to deter Mr Trumpnow,while the scale of the dispute is small. show of strength in the face of Mr Trump’s aggression offers Countries should organise their response so that it has maxi- the best hope forkeeping markets open. 7

A new Spanish government The gain in Spain

Populists ofleftand right are on the rise in Europe. Despite its political turbulence, Spain is different HOUGH only a few days (pictured). His Socialists control only 24% ofthe lower house. Told, June has been cruel to Not forthe first time, Spain and Italy appearto shadow each the European Union. In Italy, on other through economic and political tumult. Either or both June 1st, the firstall-populist gov- governments may be short-lived. And nervous markets have ernment was formed since the pushed up the bond yields of both. But there the similarities second world war. It brings to- end. Spain these days counts as a bright spot, unlike Italy, getherin bizarre conjunction the which has much to learn from its Iberian cousin. maverick left-wing Five Star Of the two southern European states, Spain had by far the Movement, a party founded nine years ago by a television co- worse financial crisis of 2008. Its property bubble burst, crip- median, and the hard-right nativists of the Northern League. pling the banks and causing mass unemployment that peaked Also on June 1st Mariano Rajoy, Spain’s prime minister, was at 26%. In 2012 Spain was bailed out by its European partners, dispatched in a confidence vote that has brought to power an in contrast to Italy which managed to hold on. Despite these even narrower minority government under Pedro Sánchez problems or, more likely, because of them, Spain has had the 1 The Economist June 9th 2018 Leaders 15

2 better recovery. It reduced its budget deficit, cleaned up its the voters at the election in March chose parties from the polit- banks and freed its labour market. Thanks to growth that has ical extremes. Italy has had no equivalent of France’s presi- exceeded 3% a year since 2015, Spain’s output is now above its dent, Emmanuel Macron, to reconstitute the splintered centre. pre-crisis level. Italy,by contrast, has been slow to deal with the In Spain, too, established parties have suffered at the hands losses at its banks, and its labour-market reforms have been ofinsurgents. One new lot, Podemos, is anti-capitalist and left- timid. Its recovery is among the weakest in the euro zone, and wing (it wants to scrap the labour reforms, among other output still languishes below the pre-crisis peak. things), but it has struggled to reach 20% in polls. By contrast, the other newcomer, Ciudadanos, is broadly liberal and some- Bust and boom what technocratic. It belongs to the centre and has become its The difference lies in political leadership. In many ways, Mr country’s most popular party. Crucially, Spain has no signifi- Rajoy has served his country well. Taking office in December cant movement on the nationalist right, unlike Italy, France 2011, in the teeth of the crisis, he administered tough medicine and many others, including Poland and Hungary. Indeed, tol- consistently. Until this month a remarkable political survivor, erance of refugees and migrants has been an impressive fea- he had managed to hold on to power without a parliamentary ture ofSpanish democracy. majority fortwo and a halfyears. Difficulties lie ahead. Unemployment, and the debt stock, He had his limitations. His pigheadedness meant that he are still too high. The Catalan crisis continues to fester. But Mr could not stop the drama in Catalonia from turning into a cri- Sánchez promises to maintain both the old government’s bud- sis, culminating in a unilateral declaration of independence get and, it seems, its labour reform. He also looks a better bet last October. That prompted direct rule from Madrid, lifted than the stubborn Mr Rajoy to explore political solutions in only now that the separatists, who won a regional election in Catalonia. In due course, these may require new constitution- December, have at last agreed on a new government. Above al changes. Progress will not be easy,and Mr Sánchez may not all, Mr Rajoy could never throw off the shadow of old corrup- get farbefore his weakparliamentary position derails him. But tion scandals in his People’s Party. A court verdict on some of Spain’s politics look more stable than Italy’s, with its fading these triggered the censure motion that destroyed him. mainstream parties and the pantomime-horse of populists in Yet he leaves Spain in better shape than Italy—not just eco- government. Hard reform and economic recovery have pre- nomically but politically.Italy’s big problem is that the elector- vented greater political instability. For that, at least, Spaniards ate has lost confidence in mainstream politics. Well over half owe muchas gracias to dour Mr Rajoy. 7

AI, radiology and the future of work Images aren’t everything

Clevermachines will make workers more productive more often than theywill replace them ADIOLOGISTS, say the pes- the very field that is used as a cautionary tale about the robo- Rsimists, will be first against pocalypse, shows why. the wall when the machines One isthe nature ofAI itself. The field issuffused with hype. take over. Analysing medical Some papers show artificial radiologists outperforming the images is a natural fit for “deep ones in white coats (see Science section). Others, though, still learning”, an artificial-intelli- put the humans ahead. The machines may eventually take an gence (AI) technique which first unambiguous lead. But it is important to remember that AI, for attracted attention for its ability the foreseeable future, will remain “narrow”, not general. No to teach computers to recognise objects in pictures. A variety human is as good at mental arithmetic as a $10 pocket calcula- of companies hope that bringing AI into the clinic will make tor, but that is all the calculator can do. Deep learning is broad- diagnosis faster and cheaper. The machines may even be able er. It is a pattern-recognition technique, and patterns are every- to see nuances that humans cannot, assessing how risky a pa- where in nature. But in the end it, too, is limited—a sort of tient’s cancer is simply by looking at a scan. electronic idiot-savant which excels at one particular mental Some AI researchers think that human beings can be dis- task but is baffled by others. Instead of wondering whether AI pensed with entirely. “It’s quite obvious that we should stop can replace a job, it is better to ponder whether it could replace training radiologists,” said Geoffrey Hinton, an AI luminary, in humans at a specific task. 2016. In November Andrew Ng, another superstar researcher, when discussing AI’s ability to diagnose pneumonia from The human touch chest X-rays, wondered whether “radiologists should be wor- Thatleadsto a second reason foroptimism: the nature ofwork. ried about their jobs”. Given how widely applicable machine Most jobs involve many tasks, even if that is not always obvi- learning seems to be, such pronouncements are bound to ous to outsiders. Spreadsheets have yet to send the accoun- alarm white-collar workers, from engineers to lawyers. tants to the dole queue, because there is more to accountancy In fact the application of AI to medicine suggests that the than making columns offigures add up. Radiologists analyse a story is more complicated. Machine learning will indeed lotofimages. Buttheyalso decide which imagesshould be tak- change many fields, allowing the rapid analysis of enormous en, confer on tricky diagnoses, discuss treatment plans with piles of data to uncover insights that people might overlook. their patients, translate the conclusions of the research litera- But it is not about to make humans redundant. And radiology, ture into the messy business of real-life practice, and so on. 1 16 Leaders The Economist June 9th 2018

2 Handing one ofthose tasks to a computerised helper leaves ra- automated diagnostic aids. That has been a boon, letting nur- diologists not with a redundancy cheque, but with more time ses—or even patients—undertake procedures that might previ- to focus on other parts oftheir jobs—often the rewarding ones. ously have required a doctor. A third reason for optimism is that automation should also No one knows how sweeping the long-term effectsofAI on encourage demand. Even in the rich world, radiology is expen- employment will be. But experience suggests that technologi- sive. If machines can make it more efficient, then the price cal change takes longer than people think. Factory-owners should come down, allowing its benefits to be spread more took decades to exploit the full advantages of electricity over widely and opening up entire new applications for medical steam. Even now, the computer revolution in the office re- imaging. In the Industrial Revolution the number of weavers mains unfinished. Bigtech firms such as Google, Facebook and rose as the work became more automated. Improved efficien- Alibaba have the resourcesand the in-house expertise to begin cy led to higher production, lower prices and thus more de- making use of AI rapidly. Most other companies will proceed mand forthe tasks that the machines could not perform.Medi- more slowly, especially in tightly regulated areas like medicine itself provides a more recent example. “Expert systems” cine. If you happen to be training for a career in radiology—or were the exciting new AI technology of the 1970s and 1980s. anything else that cannot be broken down into a few easily They eventually made their way into hospitals as, for instance, automated steps—it is probably safe to carry on. 7

Football How to win the World Cup

Though tainted by corruption, the tournament rewards liberalism, internationalism and open markets OOTBALL is a simple putters; the West, sublime shot-makers. Only four countries “Fgame,” explained Gary Li- rated “notfree” byFreedom House, a charity, have qualified for neker, formerly the captain of this year’s World Cup, and none is likely to get far. The last England’s team. “Twenty-two country with an autocratic government to win the tourna- men chase a ball for 90 minutes ment was Argentina in 1978. The women’s contest has only and at the end, the Germans al- everbeen won bydemocracies(America, Germany, Japan and ways win.” Billions of fans will Norway), though China once made it to the final. nonetheless pour their hopes International football punishes inward-looking countries into the World Cup, which begins in Russia on June 14th. Many and rewards those with more cosmopolitan attitudes. When people will join in even if their countries have not made it to picking team managers, wise countries pass over their nation- the competition. Bangladeshisfollowthe World Cup fervently, al heroes and appoint managers of any nationality who have ignoring killjoy officials who have tried to stop them flying proved themselvesin western Europe’stough football leagues. flags. The flags of Argentina and Brazil, that is—Bangladesh’s They also call upon theirdiasporas. African countries can field national team is ranked 197th out of 207 in the world and has half-decent teams largely because so many of their players never qualified forthe World Cup. have refined their skills abroad. Rich-country teams also bene- The Economist is looking forward to the competition, too. fit from the talents of immigrants. Fully half of France’s victo- Not because we think the country that hosts our head office rious squad in 1998 were ofmigrant stock. has much of a chance of winning it—we are too rational for that. But because, first, improbable athleticism, drama and Why nations fail heroism can elevate the game to the level ofart (see Books and Football can also teach countries how to spot and hone hu- Arts). And, second, because we see in the World Cup the fulfil- man capital. The best performers not only have systems for ment ofsome ofour most cherished values. finding gifted children, but also ways of spotting late develop- Admittedly, much about the tournament is distasteful. Its ers who failed to make the first cut. Their academies turn out governing body, FIFA, has a woeful history of cronyism and intelligent, creative players rather than dribbling automatons. corruption. This year’s competition will be a fillip forVladimir Then, if they are clever, they drop their best footballers into a Putin’skleptocraticregime. (In March, afterRussia tried to mur- competitive market. A simple model of countries’ aptitude for der an exile and his daughter in the city of Salisbury, England football, which weighs things like wealth and interest in the briefly considered withdrawing from the World Cup, but then game, suggeststhatAmerica oughtto be doingbetter(see Inter- decided to express its disapproval by—horrors!—instructing national section). One possible reason for the failure of its Princes William and Harry to boycott the tournament.) men’s teams is that America’s professional soccer league is a Yet the competition itself, as opposed to the murky process cartel. Salaries are capped, and the lower-division teams in ofdeciding where it is played, showcases progress. Teams real- which domestic players might develop cannot be promoted. ly are better than they used to be. It also rewards good govern- So liberal internationalists should enjoy the World Cup, de- ment. Autocratic regimes such as China and Russia can ruth- spite the Putinophile propaganda that will no doubt disfigure lessly drill track-and-field athletes—indeed, the Olympic it from time to time. Football, like life, is gloriously unpredict- games sometimes resemble an authoritarian pageant. But dic- able. For what it is worth, our model suggests that one country tatorships are rubbish at football, which requires more creativ- is best-placed to dominate the beautiful game; indeed, it has ity and flair. The contrast between the former East and West performed slightly worse than it should have done over the Germany is striking. The East trained massively muscled shot- years. That country is Germany. 7 Noisy attacks aren’t hard VQƓPFų

But could you catch the silent attacker lurking beneath the surface?

8VLQJDUWĻFLDOLQWHOOLJHQFH'DUNWUDFḨQGVWKH TXLHWF\EHUWKUHDWVLQVLGH\RXURUJDQL]DWLRQ QRPDWWHUKRZWKH\JRWLQ )URPVWHDOWK\DWWDFNHUVDQGLQVLGHUWKUHDWVWR KDFNVRIFRQQHFWHGREMHFWVRULQGXVWULDOQHWZRUNV 'DUNWUDFHGHWHFWVLWDQĢJKWVEDFNLQUHDOWLPH )LQGRXWKRZDWGDUNWUDFHFRP

:RUOG/HDGLQJ&\EHU$, 18 Letters The Economist June 9th 2018

The role of central banks industry by underestimating what would life involve and Some good advice how long people will live. So would there be meaning to it The Free exchange column in rather than looking at the past, ofthe sort that Herman Mel- your issue ofMay 26th recom- models on longevity riskneed ville’s Bartleby wanted? As the mended that central banks to take account offactors such growth ofservices, artificial grant the general public access as the pace and duration of intelligence and better redistri- to their digital currencies by improvements in life expectan- bution make these a tangible offering accounts to everyone. cy that can potentially occur in reality, we have an unparal- Thus, in times ofrecession, the the future. leled opportunity to spread the interest paid on these digital- WEIMENG YEO benefits ofeconomic well- currency accounts would Newark, California being that Westerners have become a potent tool formon- enjoyed forover100 years. etary policy.However, offering One emerging trend in the DEEP SAGAR this service directly to the industry is “shared value Berkhamsted, Hertfordshire public raises fundamental insurance”. Because life insur- Bagehot thinks that a good questions. A central bank ers make more money when Politics in Singapore constitutional monarch is one might become a superpower people live longer, their profits who keeps his thoughts to in retail banking, disrupting are aligned with their custom- YourBanyan columnist (May himself(May19th). Monarchs traditional commercial bankers’ good health. Life insurance 26th) notes that “voting is are not elected, so in a democ- ing by refinancing the credit can encourage healthier life- clean” in Singapore. Further- racy they should not have the supply via deposits. Commer- style choices with financial more, that the ruling People’s power to turn their opinions cial banks would have to incentives. The idea is to help Action Party (PAP) has won 14 into laws. Fairenough. But increase interest rates accom- customers overcome cravings general elections since 1959 denying royals the possibility panied by a fallin their mar- forinstant gratification and because it runs “the country ofexpressing well-informed, gins in deposit and lending, stop being over optimistic competently”. I thankBanyan competent views takes this endangering financial stability. about their health, which forthe compliment. After all, point too far, and deprives a In periods ofstress, there is a behavioural economists say how many formerBritish country ofa valuable source of high riskofdigital bankruns. lead to unhealthy lifestyles. colonies are there where independent thought, argu- The column also argues The shift from infectious to voting has always been clean ably like NGOs, which are also that accounts foreveryone lifestyle diseases has been and their governments consis- unelected and politically could distribute more significant. Just three choices— tently competent? unbeholden. Consider Prince “helicopter money”, or newly physical inactivity,an But Banyan insists there is Albert’s soft-power contribu- minted money,to the public. unhealthy diet and smoking— more to the PAP’s longevity: a tion to industrial-age Britain. However, the distribution of a now cause more than 50% of “favourable electoral system” Bagehot dismisses Prince central bank’s money as a deaths and 80% ofthe disease and a cowed electorate, among Charles’s views as unconven- giveaway to the public is not burden, according to the other things. The PAP won 70% tional, though admittedly merely an accounting Oxford Health Alliance. This ofthe popular vote in the last prescient at times. Those are problem. It would involve opens up a new role forlife general election. Could a two qualities not in abundant distributional decisions that insurers, but one that is com- “favourable electoral system” supply in political soundbites. are usually the domain of plementary and supportive of have delivered that? Your Perhaps it takes a monarchy to elected governments, not of their core product ofprotecting correspondents have been take up a certain kind ofadvo- independent central banks. people against the unplanned stationed in Singapore for cacy, where votes do not factor PROFESSOR JOACHIM WUERMELING contingencies oflife. decades. Did Singaporeans in. Agree with him or not, I fail Member of the executive board This model has been strike them as a people easily to see why a thinking monarch Deutsche Bundesbank successfully implemented in brainwashed into believing is any less “dignified” forit. Frankfurt South Africa, where demon- that the PAP and Singapore are EDWARD CECIL strable increases in life expec- “synonymous”? Madrid Data points tancy have been observed, Singaporeans are well- and is now being adopted by a travelled, well informed and Peculiar politicians Another reason why the life- networkofsome ofthe largest some even read The Economist. insurance industry is strug- global insurers in their market, They continue to vote forthe I suggest the hyphen is redun- gling (“Declining years”, May including Ping An, AIA, PAP because it continues to dant in this line from your 19th) is that it is unable to quan- Generali, John Hancock, deliver them good govern- piece on “Cabinet splits and tify longevity riskfully in Manulife and Sumitomo. ment, stability and progress. party twists” (May12th) over relation to the solvency of life- ADRIAN GORE The PAP has never taken this Brexit: “the European Research insurance portfolios. Life Group chief executive support forgranted. As Lee Group consists of60-odd insurance is too dependent on Discovery Vitality Hsien Loong, the prime backbenchers”. actuarial statistics that extrapo- Johannesburg minister, noted recently, the ANDREW BILLINGTON late from the past and are political system is contestable. Marsden, West Yorkshire 7 PAP rather poor in assessing this Our new column on work We have kept it so. The risk. The adage that past results could well lose power, and do not guarantee future perfor- I lookforward to reading more would deserve to do so ifit Letters are welcome and should be mance applies in this case. ofBartleby’s reflections (May ever became incompetent and addressed to the Editor at IMF The Economist, The Adelphi Building, A study by the on life 26th). Many workers ponder corrupt. 1-11John Adam Street, expectancy argued that mor- day in and day out that if FOO CHI HSIA London WC2N 6HT tality tables used by life-insur- economic survival was pos- High commissioner for E-mail: [email protected] ance actuaries exacerbated sible without the wholesale Singapore More letters are available at: Economist.com/letters longevity riskwithin the occupation ofemployment, London Executive Focus 19

HELLENIC REPUBLIC PUBLIC DEBT MANAGEMENT AGENCY

The Hellenic Public Debt Management Agency is seeking to appoint its Deputy General Director. The Agency functions under the supervision of the Ministry of Finance and is responsible for the management of the ﬁnancing needs of the Hellenic Republic and for the optimization of the debt structure and cost of funding, taking account of risks and the prevailing international market conditions. The Deputy General Director’s responsibilities may include the design and implementation of the Republic’s medium- term debt management strategy, the management of the Republic’s borrowing program and debt portfolio, and the development and execution of an effective investor relations strategy. Candidates must have extensive and distinguished professional experience in the area of capital and ﬁnancial markets. Excellent knowledge of the Greek language is mandatory.

A full job description and application form can be found at http://www.minﬁn.gr/PDMA

Applications should be submitted by email to hirings_pdma@minﬁn.gr.

Enquiries can be addressed to Konstantinos Spiliotopoulos, Chairman of the Board of Directors of the Agency, at enquiries_pdma@minﬁn.gr.

Deadline: 22 June 2018

The Economist June 9th 2018 20 Brieﬁng Donald Trump and the world The Economist June 9th 2018

lomats from almost all America’s allies Present at the destruction have looked on aghast. Mr Trump’s voters are thrilled. In foreign policy, perhaps more than anywhere else, he is doing ex- actlywhathe said he would do: pulling out ofthe Paris climate agreement and the Iran OTTAWA AND WASHINGTON, DC deal, moving America’s embassy in Israel America’s president is undermining the rules-based international order. Can any to Jerusalem, getting tough with China. good come ofit? Many in business are more or less on ANADA is a fairly laid-back place. On eign policy an abject failure. His “America board, too; happy with growth at home, C the morning of May 25th, a Friday, Jus- First” view was that it was no longerAmer- they give the president the benefit of the tin Trudeau, the prime minister, looked re- ica’s job to clean up that mess, but to pur- doubtoverseas—and when itcomesto Chi- laxed, dressed in jeans, having walked to sue its own interests. It was time for Ameri- na-bashing, plenty of them are all for it. his office opposite the parliament building ca’s enemies to fear it, for its allies to pay Some allied governments, notably those in Ottawa. Mr Trudeau talked to The Econo- their fair share and for the country to be ofIsrael and Saudi Arabia, are delighted. mist about the trade negotiations with the more selfish in pursuing what it wanted. There are three perspectives from United States, explaining that his job was The American foreign-policy establish- which to lookat this. The most prevalent in to stand up for Canadian interests, that ment he turned his back on returned the the foreign-policy establishment and the President Donald Trump understood this, compliment, and was dismayed by his chancelleries of Europe is despair. The and that the two had “a very good working election victory. Some among its number rules-based order ushered in after the sec- relationship”. nevertheless harboured hopes that having ond world war, which provided both the But Canada is also a place that depends campaigned in bile, the president would greatest-ever increase in human wealth on the United States for two-thirds of its govern in beige, constrained by the reali- and global trade and a whole human life- trade. There was nothing relaxed about Mr ties of office, “grown-ups” in his team and time without worldwide armed conflict, is Trudeau’s response when, a few days later, the persuasion ofhis allies. being dismantled. No good will come of it. Mr Trump slapped tariffs on steel and alu- It didn’t happen. Just over 500 days into The second perspective could be called minium from Canada, Europe and Mexico, his presidency, Mr Trump is up to his ears “Yes, but”. Yes-but-ism doesn’t exactly re- ostensibly for reasons of national security. in foreign-policy controversy and showing ject despair, but tempers it with various ca- Mr Trudeau said the idea that Canada was no signs of being constrained. He has ap- veats: that MrTrump’soutrages may not be somehow a national-security threat to the pointed his second secretary of state, the as profound, unprecedented and perma- United States was “quite frankly insulting hawkish Mike Pompeo, and his third na- nent as they might seem; and that the old and unacceptable”. France’s president, Em- tional security adviser, the ultra-hawkish rules-based order was already failing in a manuel Macron, called the tariffs “illegal” John Bolton. In the past three months, in number ofrespects. and warned: “Economic nationalism leads addition to imposingtariffson his allies, he The third perspective is openness to to war. That is exactly what happened in has abrogated the nuclear deal with Iran, surprising success. This holds that Mr the 1930s.” When Canada hosts the G7 set the stage fora trade warwith China and Trump’s one-off mixture of ambitions and summit in Charlevoix, Quebec on June offered Kim Jong Un ofNorth Korea a sum- style means he might be able to achieve 8th-9th, it risks looking like the G6+1. mit, which is due to take place in Singapore things that people working in old ways Mr Trump came to power arguing that on June 12th. within the old system simply could not. the world was a mess and American for- Trade experts, policy veterans and dip- These are perspectives, not camps. 1 The Economist June 9th 2018 Briefing Donald Trump and the world 21

2 Those who despair, or think “Yes, but”, president, Moon Jae-in (himselfa victim of fetched. The peace plan drawn up by his may also be open to surprise—indeed most Mr Trump’sbullying in other matters), will son-in-law, Jared Kushner, is said by one of of them are, to some extent. That said, few not achieve a rapid or total denuclearisa- those consulted on it to be “a really serious of them suspect the successes, if any, to be tion ofthe Korean peninsula. But it may of- effort”; that this is seen as something one other than short-lived. fer a road to rapprochement where there could not take for granted about a White To lookat Mr Trump from any of these was none before, and a lessening of ten- House plan says a lot in itself. But any perspectives requires first assessing who sions on the peninsula which, though ex- chance that it would be well received by he is and how he operates. Mr Trump is in- acerbated by Mr Trump, have been a seri- the Palestinians was scuppered when Mr curious and profoundly narcissistic, which ous long-standing security concern. The Kushner’s wife, Ivanka Trump, opened the means he is also thin-skinned. He is often summit could look, at least, like a success. Jerusalem embassy. The prospect of a deal impetuous, with no taste for long-term Turningto the Middle East, Mr Trump’s is “a fantasy”, according to Mr Indyk. strategy or the consideration of conse- ditching of the Joint Comprehensive Plan It is hard to make progress on Israel and quences. He lies as only someone can do of Action (JCPOA), as the Iran deal is for- Palestine if you see everything in terms of who does not care about the truth. mally known, was part of a broader push winners and losers. The same is even truer to increase pressure on Iran; uncritical sup- on trade, where Mr Trump is completely The lack of humility port for Saudi Arabia and Israel is another driven by bilateral trade balances. But his Mr Trump appears to see the world as he part. The ditching ofthe deal was followed willingness to do what others have not saw the New Yorkproperty market, a place by a tough speech by Mr Pompeo present- may get him a claimable victory here; it is of screw or be screwed. A deal where the ing a laundry list of demands to Iran. The possible that China might find ways to other guy walks away happy is one where split with the Europeans makes co-ordinat- shrink its trade surplus. An economy that you could have got more. He sees interna- ing pressure on Iran harder and creates a big can soak up a lot of Boeings, soya and tional relationsashe sawrealitytelevision: “major disconnect between the objective liquefied natural gas. unpredictability and absurdity raise the and the means,” says Martin Indyk, a Mid- There is almost no way to put a positive ratings, turnover in the characters keeps dle East specialist at the Brookings Institu- spin on the steel tariffs against America’s things fresh and you should never let any- tion, a think-tank. allies (see Finance section). But a success- one forget who is the star ofthe show. But the Iranian economy is chronically ful-looking North Korea summit, a cowed “He’s entirely unpredictable day to day, weak, and European companies may not Iran and Chinese concessions on trade to his own staff,” complains Nicholas choose to deal with itiftheyface American would look like winning to Mr Trump and Burns, a former American ambassador to reprisals. Pressure on Iran could build. “For his supporters, and to some other observ- NATO who is now at Harvard’s Kennedy all those who say there’s no chance this ers, too. His approach would have brought School. “That’s a big problem.” This is can work, there’s a part of me that says: about what others dared not attempt. largely true and renders joined-up policy- well, I wonder,” says Dennis Ross of the making and sustained effort more or less Washington Institute for Near East Policy. Like a kid that’s found his dad’s gun impossible. But the unpredictability is not Anew alignment ofinterests between Isra- Now look again, from the perspective of total. The nature of Mr Trump’sgoals hard- el, Saudi Arabia and other Arab states despair. There is no guarantee of anything ly changes: you can expect him to try to helps. “If it’s properly handled there is a which even resembles a success. But even press ahead with things mentioned on the way to push back against the Iranians in ifMr Trump could claim a hat-trick, the po- campaign trail, to undo anything achieved the region,” says Mr Indyk. tential downsides could more than offset by Barack Obama, and not to think hard, if Blunting the Shia crescent would be any gains. With North Korea, for example, at all, about consequences. Youcan expect widely seen as a triumph. An even bigger there is the disturbing possibility that Mr angry and fatuous tweeting and weird per- triumph would be regime change in Kim might offer to give up his ICBMs, sonal touches, as in the remarkable, cloy- Iran—a far bolder, some would say fool- which lookas ifthey can carry weapons to ing letter to Mr Kim of May 24th. You can hardy, policy aim, and one that would be any part of America, but not, yet, all his expect everything to be transactional. At very hard indeed to sell to America’s non- bombs or all his shorter-range missiles. every point Mr Trump wants to get some- Middle Eastern allies. ThusSouth Korea and Japan would remain thing for himself—something which will Mr Trump’s suggestions that his deal- under threat—and feel betrayed by an ally lookgood. making skills might be applied to Israel interested in protecting only itself. That The fourmajorpolicy moves ofthe past and Palestine, meanwhile, remain far- could open the wayto a regional arms race.1 three months—scrapping the Iran deal, offering a summit to Mr Kim, setting the scene for a trade war with China and slap- The lost world Decrease Increase ping steel tariffs on his allies—all reflect Change in approval of US leadership, 2016-17 No data >20 10-200-9 0-9 10-20 who Mr Trump is and how he works. No Percentage points other recent president would have under- taken one of these, let alone all four at the same time. To his undoubted pleasure, they have scandalised much ofthe foreign- policy establishment. So what is it like to look at them from the perspective of being open to the surprise ofsuccess? First comes the on-off-on-again Singa- pore summit with Mr Kim (see Asia section). Mr Trump has both been more threatening to the North Korean regime than any previous president and, in offering a summit that will show the two men as equals, more accommodating. The summit, which would not have come about without the efforts of the South Korean Source: Gallup 22 Briefing Donald Trump and the world The Economist June 9th 2018

2 North Koreans have told foreign contacts that the fate of the JCPOA means their country will not trust any deal offered it. This is one of the big downsides of pulling out ofthe Iran deal. It did not just put at risk a well-crafted plan that genuinely constrained Iran’s nuclear capacity and put in place unprecedented limits and safe- guards—strictures from which Iran could now walk away at any time. It damaged America’s trustworthiness: the hegemon broke its word. That is why the Pentagon and many diplomats argued against it. Meanwhile some Iranian analysts warn that, as America piles on new sanctions, Iran is more likely to restart uranium enrichment than embrace democracy. On trade, a Chinese move on the bilateral deficit which satisfied Mr Trump would do nothing to solve the genuine problems in the world trade system, nor, Mr Trump might be sad to learn, reduce America’s overall trade deficit much. And the damage being done to the World Trade be “lasting and corrosive”. “We have yet to Jacksonian and Wilsonian. The cold war Organisation (WTO) by claiming that come to terms with the full extent of the produced a hybrid between the Hamilto- things such as car imports are a national- damage he’s doing to America’s role in the nian approach—international engagement security matter will make things worse. world,” says Michael Fullilove, who heads favouring American interests, particularly In all three casesthere isanother worry: the Lowy Institute for International Policy those ofbusiness—and the internationalist that Mr Trump comes cheap, and can be in Sydney. “The leader of the free world and idealist Wilsonians. The unilateralist- played. The Kims have wanted the valida- doesn’t believe in the free world.” isolationist heirs to Andrew Jackson went tion of a peer-to-peer summit for decades; It is against this background that one along with this, but when the Soviet threat this Mr Kim has so farpaid very little to get has to set the “Yes, but” perspectives: yes, was removed they soon saw all those for- one. Moving the embassy to Jerusalem but it is not all that new; yes, but it will not eign encumbrances as a pain. Mr Trump, was a very big deal for Israel, which might last; yes, but the world has changed. who has a portrait of Old Hickory in the have been willingto do a lotto make ithap- Some of what Mr Trumpis overturning Oval Office, takes the same view. A 19th- pen—but was not asked to. And a move on is quite recent, and not all that popular; to century precedent does not make this a the trade balance Mr Trump makes so walk away from it is simply to cross over to good approach to the 21st. But it does make much of might spare China from having to a path not taken but still clearly visible. The Mr Trumplookless aberrant. take steps that would strike at its theft ofin- JCPOA had many enemies. The Paris cli- tellectual property, its subsidies and its re- mate agreement was carefully crafted so as They didn’t stop to think ifthey should strictions on foreign investment. not to need Senate ratification—which it Another “Yes, but” point is to stress the re- had no hope ofgetting. HillaryClinton told silience of the old apparatus. The State De- The pirates don’t eat the tourists American voters that she would reject the partment, which seemed to be going to pot Thus it is possible to be open to short-term Trans-Pacific Partnership (TPP) trade deal under Rex Tillerson, is likely to see morale success and still gravely regret Mr Trump’s negotiated under Mr Obama, as Mr Trump pick up under Mr Pompeo; the Pentagon rejection of the world order that a biparti- has done—though for her it was a reluctant provides continuity. Congress has tried to san consensus in American foreign-policy and not entirely convincing concession, constrain Mr Trump on some things, as circles has long embraced. RAND, a think- while forhim it was a proud boast. when he hastried to ease sanctionson Rus- tank firmly rooted in this consensus, re- Many of Mr Trump’s bugbears were is- sia. The Europeanswill grouse, buthave no cently completed a two-year project on the sues before. Anger at China’s theft of intel- real alternative other than to stick with the benefits to America of the international lectual property and restrictions on invest- NATO alliance. America’s Pacific partners rules-based system. It concluded that the ment has been building for decades. Mr are at pains to keep what Roland Paris of system has boosted the effectiveness of Obama pressed NATO allies to spend more the University of Ottawa calls a “docking American diplomacy and military on defence, too. He also kept troops in Iraq bay” for the United States in TPP, should it strength, and helped to advance American and Afghanistan that many of his suppor- one day wish to return. interests: “A strong international order is ters wanted to see brought home, just as What is more, the degree of Chinese strongly beneficial forthe United States.” Mr Trump is doing. “Historians will look competition to American pre-eminence Hence the despair at that order’s weak- back and see more in common between can be overestimated, according to Joseph ening. “[Mr] Trump has fundamentally Obama and Trump,” says Allan Gyngell, a Nye, an expert on American power at Har- changed American policy for the worse,” doyen of Australian foreign policymaking vard’s Kennedy School. America remains says Mr Burns. “He’s the weakest president at the Australian National University in far ahead militarily. Convertibility for the in my lifetime, and the most dangerous. Canberra. yuan is for the future. Jake Sullivan, of the I’m not alone. These are mainstream There is also a case that Mr Trump is in Carnegie Endowment for International views.” So they are. Richard Haass, the fact part ofa long tradition: “America First” Peace, recently wrote in Foreign Affairs that president of the Council on Foreign Rela- was a slogan of four successive presidents “rumours of the international order’s de- tions, and a Republican, thinks people al- from Woodrow Wilson onwards. Walter mise have been greatly exaggerated.” ready view America differently. “The Un- Russell Mead of Bard College identifies And there is little evidence that the ited States has knocked itself off the four guiding philosophies for American American public has taken a decisive Jack- pedestal,” he says. The effects are likely to foreign policy: Jeffersonian, Hamiltonian, sonian turn. Polling by the Pew Research1 The Economist June 9th 2018 Briefing Donald Trump and the world 23

2 Centre shows them evenly divided be- sia and China, are making hay. The weaker nese company made a deal with an Indo- tween those who want their country to be the West, the less threatened Russia feels, nesian company that is the Trump Organi- active in world affairs and those who say it and the more it sees a chance of encourag- sation’s partner in a large development. should concentrate on problems at home. ing European countries to break with the Might the individual, transactional ele- The share of those favouring foreign activ- sanctions that hurt its economy; Italy, un- ments of Mr Trump’s policy add up to ism has actually been rising, from 35% in der its new government, is a tempting tar- something grander, that might even be 2014 to 47% last year. In 2016, 3m more vot- get. The fact that Mr Trump is trying to called Trumpism? If so, according to John ers chose Mrs Clinton, a much more inter- thwart efforts to discover the degree to Negroponte, a former ambassador and di- nationalist, foreign-policy consensualist, which Russia attempted to undermine his rector of national intelligence, it probably than Mr Trump. This, though, is a one-term opponent in the 2016 election does not just looks something like this. Build up Ameri- argument. If, seeing what he has wrought, add to the distrustwith which foreign-poli- ca’s economy, freeing it from years of over- America chooses Mr Trump again in 2020, cy people see him. It may also encourage zealous regulation (peace through the evidence for a decisive turn will be Russia in similar efforts elsewhere—or, in- strength). Maintain alliances (just about) much stronger. deed, renewed efforts in America. and investheavilyin the country’smilitary That leaves the biggest “Yes, but” of all: power (peace through might). Use that that the international system, somewhat Hold on to your butts strength to make gains in chosen areas ossified, facesa newworld forwhich itwas China is startled by how rapidly American around the world, including in the long not designed. Both the astonishing rise of leadership has dwindled. Though Com- challenge from China. China’seconomicpowerand, more recent- munist Party officials are somewhat wary Mr Trump, some say, would not be the ly, its increased authoritarianism at home of taking on great-power responsibilities, first American president to be widely de- and assertiveness abroad underXi Jinping, they see tempting opportunities to portray rided by the foreign-policy establishment mark deep shifts in geopolitics. With India China as the defender of world order in yet prove surprisingly successful in bring- comingalongbehind, Europe lookingtrou- matters such as climate change and trade. ing peace and prosperity. Ronald Reagan bled, and risks from climate chaos too, the And China knows how to get its way with spoke in direct ways no one expected— changes seem set to continue. Mr Trump, at least on some things, as the “evil empire”—and was ready to intensify For many experts, this is a reason to case of ZTE, a telecoms-equipment com- the cold war. He supported a huge deficit- strengthen today’s structure. But the idea pany based in Shenzhen, recently showed. backed increase in military spending, not that the old world order is not a good fit for America punished ZTE for breaking laws to mention some unsavoury friends in Lat- the current and coming world can also be on Iranian sanctions with a ban on semi- in America. He was willing to pick trade taken as meaning that a little creative de- conductor purchases in the United fights and throw America’s weight around. struction might helpfully broaden minds Sates—in effect a corporate death-sentence. For all these reasons he was condescended and reshape institutions. China lobbied hard fora reprieve. Chinese to and disparaged by all sorts of experts in Unfortunately, there is no reason to requests for such special favours under Mr his first term. And that was before the ill- think that Mr Trump’s destructive efforts Obama were routinely dismissed by offi- advised, illegal shenanigans of Iran-Con- will lend themselves to any creative after- cials who explained that this was not how tra came to light. Yet the cold war ended, math. They have the consistent effect of things worked in America, governed by America got richer, its military forces be- weakening core alliances and alienating the rule of law. But Mr Trump publicly or- came more capable and the world-trade neighbours. “It’s no longerthe case that the dered his government to lift the ban on system was liberalised. United States will simply just protect us,” May13th. But Mr Reagan had values. He was an the German chancellor, Angela Merkel, ac- The degree to which Mr Trump’spolicy eternal optimist, a champion of America knowledged last month. As yet, none of decisions can be influenced by favourable asan example to the world. He possessed a America’s Western allies has found any treatment of the business interests from consistent world view and a moral com- wayofgettingconcessionsfrom MrTrump. which he continuesto benefitisnotclear. If pass—albeit one that occasionally erred. If most of America’s allies (which Mr they can, it is a fair bet that a number of He knew stuff; he made notes; he believed Trump often refers to as competitors) are countries, including China, will seek such there could be win-win deals. Although unhappy, itsreal strategiccompetitors, Rus- leverage. On May 10th a state-owned Chi- he, too, got through lots of national security advisers (six in all), for much of his time in office he had the consistent support of exceptional secretaries of state and defence, George Shultz and Caspar Weinber- ger. And he was lucky in his geopolitical adversary/partner, Mikhail Gorbachev—a man now taken by Mr Xi as history’s greatest example ofa precedent not to follow. The chances of Mr Trump being looked back on as a latter-day Reagan are nil. The chances that he might achieve some of his short-term aims are real. Unfortunately, to the extent that Mr Trump succeeds, he, his followers and those of like mind elsewhere will feel that their scorn ofthe rules- based international order is vindicated, while continuing to do nothing to find a durable replacement. They are right that it is in some ways outdated and inadequate. They are wrong that it is unnecessary—as a world of trade wars, nuclear proliferation, fractured alliances and regional conflict may soon show. 7 24 Europe The Economist June 9th 2018

Also in this section 25 Italy’s new government 26 A Dutch park that mimics nature 26 Bosnia’s borders 27 Turkey’s Kurdish kingmaker 28 Charlemagne: Angela plays it cool

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

Spain Carles Puigdemont, Catalonia’s former regional president. His appointment signals A smoothly executed takeover that the new government will uphold the constitution (which bars secession) and will be more active in making that case abroad. Third, in a country where feminism is MADRID gaining ground, 11 of the new cabinet’s 17 members are women. It is a cabinet “in the Pedro Sánchez tries to combine change, stability and a fragile mandate image ofSpain”, Mr Sánchez said, commit- ITH unforeseen suddenness, a new named Nadia Calviño, currently the Euro- ted to social and gender equality as well as Wpolitical era has begun in Spain. Hav- pean Commission’s director-general for economic modernisation, with science ingousted Mariano Rajoy, the long-serving budgets, as his economy minister. and innovation as motors. conservative prime minister, in a parlia- The new prime minister has not offered Such gestures will be an important part mentary censure by 180 votes to 169, this to repeal Mr Rajoy’s liberalising labour- of Mr Sánchez’s rule, because his scope for week Pedro Sánchez, the Socialist leader, market reform, as the unions would like. bringing about radical change is small. His formed a newgovernment. Itwill be weak, This reform has helped to spur a rapid fall Socialists, who have only 84 of the 350 commanding an even smaller minority in in unemployment during the past four seats in Congress, will govern alone. Mr Congress than its predecessor, but not nec- years of strong economic recovery from Rajoy’s PP had 134 seats and could count on essarily brief: a general election may not the euro crisis. All this means that the polit- Ciudadanos, a liberal party, with 32. come forat least a year. ical shake-up has caused scarcely a ripple Mr Sánchez, a 46-year-old economist, amonginvestors, who are more concerned The ghost of the past has appointed a cabinet that mixes old with Italy’s political crisis. Before calling an election—due in the sum- faces from previous Socialist administra- Second, the new foreign minister, Josep mer of 2020 at the latest—Mr Sánchez tions with new figures, several from re- Borrell, is an experienced former minister promises to roll back several measures gional governments that his party runs. Its and president of the European Parliament, (such as restrictions on freedom of assem- make-up sends three messages. Some are and also a Catalan. Mr Borrell campaigned bly) imposed by the PP when it had a ma- designed to rebut the charge by Mr Rajoy’s against the drive for independence by jority, and to which mostofthe current par- People’s Party that the new prime minister liament is opposed. He promised a law is a hostage to the Catalan nationalists and requiring equal pay for equal work for Podemos, a populist leftist party, whose A damn close-run thing women and men, and more efforts to help parliamentary votes helped to bring him Parties in Spain’s Congress of Deputies the long-term unemployed. to office. Seats and split on no-confidence vote* on June 1st 2018 Above all, Mr Sánchez brings a breath The first message is stability and com- PSOE Podemos/Compromís offresh air. Pollsshowthatthe country had mitment to Europe. Mr Sánchez has made Catalan nationalists Basque nationalists tired of Mr Rajoy. He doggedly hauled a virtue of his limited support by pledging PP Ciudadanos Others Spain out of a deep economic slump with to stick to Mr Rajoy’s budget (and its target 0 50 100 150 200 reforms of the broken financial system as GDP of cutting the fiscal deficit to 2.3% of ). For well as ofthe labourmarket. But the consti- This would “guarantee the governability tutional crisis over Catalonia took its toll of our country at an extraordinarily com- Against on his government. Above all, Mr Rajoy plexmoment”, he said in Congress. Raising failed to grapple with, investigate or apolo- Source: El País *Canarian Coalition abstained more than a few socialist eyebrows, he gise fora steady stream ofcorruption cases 1 The Economist June 9th 2018 Europe 25

2 and scandals involving his party. to kick out the 500,000-600,000 immi- On May 24th a court found that the PP grants who are reckoned to be living with- had run an illegal financing scheme, and out authorisation in Italy. “The good times that Mr Rajoy’s evidence denying this for illegals are over,” he declared. “Get lacked credibility. Since he had often high- ready to pack your bags.” The NGOswho lighted, in the Catalan context, that Spain’s save migrants from drowning in the Medi- judiciary is independent and the rule of terranean and land them in Italian ports law paramount, that made his position un- (so far with the full permission of the Ital- tenable, asMrSánchezquicklygrasped. Mr ian authorities) he branded as “substitute Rajoy, a great survivor whose stolid ap- people-smugglers”. And he announced pearance hides sharp political instincts, that immigrants who are refused humani- had been outwitted at last. This week, in a tarian protection would henceforth be tearful farewell, he resigned as the PP’s shut into closed encampments. leader, a post he has held for the past 15 That sort of talk has helped to push the years. League’s poll ratings up to 26% from less Mr Sánchez is nothing ifnot daring. Just than 18% at the general election held on 19 months ago his political career seemed March 4th. But it can be counter-produc- over, after he was deposed as leader of the tive. On the day that at least 60 migrants, Socialist party by its regional barons. They most ofthem Tunisians, drowned trying to had turned againsthim followingtwo elec- reach the Italian island of Lampedusa, Mr tion defeats, and because he was prolong- Salvini claimed Tunisia “often and willing- ing a parliamentary deadlock by refusing ly exports convicts”. The government in to allow the formation of Mr Rajoy’s mi- Tunis summoned the Italian ambassador nority government. His response was to to convey its “profound astonishment”. get into his ancient Peugeot and travel It is true that in the year to June 6th, Tu- round the country, rallying the party faith- nisians made up the largest national con- ful. In May 2017 he got his revenge by unex- tingent among migrants reaching Italy, ac- pectedly winning back his old job in a Italy counting for 21% of the total. Two factors, party primary election. however, explain that. Acontroversial deal His position is not without risks. The PP Bashing migrants made by the previous government in still controls the Senate; it thinks it has Rome with the UN-recognised administra- been unfairly bundled out of office with- tion in Libya, and allegedly with some of out an election and promises the incoming the country’s powerful militias, has drasti- government a rough ride. Mr Sánchez said ROME cally reduced the flow ofarrivals via Libya. he would try to get a more generous bud- The overall number of migrants reaching The new government loses no time get passed for next year, but that depends Italy this year has fallen to 13,768 from making its priorities clear on maintaining his heterogenous base of 61,201 in the same period last year. Mean- support. Nevertheless, it is hard to unseat a OMETIMES silence speaks louder than while, the number of Tunisians ready to Spanish prime minister, since the constitu- Swords. Italy’s interior minister, Matteo risktheirlivesto seekworkabroad because tion requires a parliamentary majority for Salvini, did not utter a word of condemna- of the economic crisis in their country has an alternative. MrRajoywasthe first to suf- tion ofthe murder ofSoumaila Sacko, a 29- risen sharply. But Mr Salvini appears to fer this fate in 40 years of restored democ- year-old Malian trade unionist, on June have believed a rumour that the increase racy. If necessary, a government can roll 2nd. Mr Sacko was campaigning to im- was due to an amnesty (in reality, an annu- over a budget fora second year. prove the miserable conditions of thou- al pardon that led to the release of only The biggest challenge remains Catalo- sands of African day-labourers who pick around 400 prisoners). nia. Mr Sánchez supported Mr Rajoy’s im- fruit and vegetables in Calabria, the “toe” One reason that Italy cannot expel its il- position of direct rule after Mr Puigde- of Italy. Some, like Mr Sacko, are legal resi- legal immigrants is that most oftheir coun- mont’s unilateral declaration of dents. Others are not. Mr Sacko was help- tries oforigin refuse to have them back. Mr independence. This weekthat was lifted as ingtwo otherimmigrants find metal sheets Salvini said that he intends to negotiate the separatists formed a new government. to use as roofsfortheir shacks when a man more repatriation agreements. Italy has The prime minister said he wants dia- opened fire from a car. It was left to the more than 20 of these, but Mr Salvini’s ill- logue, as did Quim Torra, his Catalan coun- prime minister, Giuseppe Conte, to express judged words have jeopardised one of the terpart. Mr Sánchez can try to lower the his condolences three days later in a fewofthem thatworks. So farin 2018, Tuni- tension, for example by appointing a less speech asking the Senate for a vote of con- sia has taken back 1,224 of its citizens. Mr militant attorney-general. But creating fidence in Italy’snew, populistgovernment Salvini’s blunder signalled a looming common ground will take time. (he duly obtained the backing ofthe upper doubt: whether poor countries of origin The risk for Mr Sánchez is that his gov- house and, on June 6th, that of the lower will be any readier to co-operate with the ernment is seen as a last gasp ofthe old po- house, the Chamber ofDeputies). leader of a xenophobic, hard-right party litical duopoly, discredited during the eco- Mr Conte, a law professor, belongs nei- than they have been with previous, mod- nomic crisis as well as by corruption ther to the Northern League, which Mr Sal- erate Italian governments. (which has spattered the Socialists, too). vini leads, nor to the Five Star Movement In his speeches to parliament, Mr Conte The unspoken reason forthe success of the (M5S), the senior partner in the coalition. vowed to lobby for new EU rules on immi- censure was that Ciudadanos, riding high He was originally proposed by M5S, and gration, including the “compulsory and in the polls, is the only party wanting an his somewhat more sensitive approach re- automatic” distribution of migrants from immediate general election; the rest want flected differences between the two par- Italyto partnerstates. Butthe latest attempt to avoid one. The Socialists are becalmed ties overimmigration that could yet under- to hatch a deal, attalksin Luxembourg, was at around 20%. Mr Sánchez hopes he will mine their collaboration. failing as he spoke. Mr Salvini has mooted be able to lift that number before going to No sooner had Mr Salvini been sworn an alliance with Hungary. Yet it is the gov- the country. It is his biggest battle yet. 7 in than he was proclaiming his eagerness ernment of Viktor Orban and others in 1 26 Europe The Economist June 9th 2018

2 eastern Europe thatconstitute the main ob- Bosnia via Turkey closed in 2016, so it has been a stacle to a compromise. big surprise that so many refugees have Paradoxically, Mr Salvini may get a Playing politics suddenly started turningup. Some are flee- more receptive hearing further west in ing recent fighting, but most are not. Ac- countries that are the ultimate destination with refugees cording to Peter Van der Auweraert, of the ofmany ofthe migrants crossing the Medi- International Organisation for Migration, terranean. The prospect of a government the majority ofthe new arrivals are people in Rome keen to tighten border control who have been stuck in Serbia or Greece should be welcome there. Austria’s interi- and, frustrated by theirsituation, are trying A mysterious influx or minister, Herbert Kickl, a member of the this new route. Refugee centres in Serbia right-wing Freedom Party, greeted Mr Sal- HEY have been living in tents in parks are rapidly emptying out. Others come via vini as an ally. More significantly, Ger- Tand community centres, and the au- Albania and Montenegro. many’s chancellor, Angela Merkel, took a thorities are straining to care for them. But Last year only 755 new refugees were more sympathetic line than before in an 23 years after the end of the Bosnian war, registered in Bosnia; this year the number interview in which she said Italians had which saw2.2m people, orhalfthe popula- has already reached almost 5,000, of felt left alone to cope with the migrants tion, displaced, the new refugees in Bosnia whom half may have already left for Croa- who began to pour out of Libya after the are Syrians, Afghans, Iraqis and others. tia, an EU member since 2013 and formerly, fall of its late dictator, Muammar Qaddafi, Some 500 a weekhave recently been cross- with Bosnia, part of Yugoslavia. On May in 2011. Her remark did not go unnoticed in ing into the country, on what they hope is 30th Croatian police opened fire on a van Italy. Sometimes words speak louder than their way to western Europe. carrying migrants crossing from Bosnia, in- silence. 7 The Balkan route to Europe from Syria juring two children. Ministers from the region are due to hold a meeting on the mounting crisis in Sarajevo, the Bosnian capital, on June 7th. In an effort to halt the flow, Bosnia has sent extra police to its borders with Serbia and Montenegro. Hungary, which built a highly effective fence on its border with Serbia to stop illegal crossings, has promised 23km of razor-wire fencing to Monte- negro to help seal parts of its border with Albania. Among the refugees are a new category. Some 10% are Iranians. Last year Serbia and Iran stopped requiring visas for Dutch environmentalism each other’s citizens. In March cheap direct flights between the two countries began. Starving the beasts The new arrivals, most of them Mus- LELYSTAD lims, have stirred up political arguments. When Bosnia’s bloody war ended in 1995, A parkthat mimics nature angers animal-rights activists the country was divided into two: the N A cloudy night Anderijn Peeters, a rochs, and let them roam. The result is a mainly-Serb Republika Srpska and the Bos- Ohorse-trainer turned environmental landscape ofplains, wetlands and forest niak (ie, Muslim) and Croat Federation. protester, parks at a wildlife preserve roamed by thousands ofhoofed mam- Milorad Dodik, the president of Republika 30km east ofAmsterdam. The backofher mals. Some call it the Dutch Serengeti. Srpska, claims that Bosniak politicians van is full ofhay. Two more cars of activ- The problems begin in winter. With have a secret plan to import Muslim mi- ists pull up, after driving circuitously no predators, the herds are limited only grants to change Bosnia’s demography and through neighbouring suburbs to con- by the food supply.(Mr Vera wanted to thereby take control of the whole country. fuse police. Their mission: to feed the re-introduce the wolf, but residents were In fact, few if any of them want to stay. But wild animals. They sling a bale ofhay not enthusiastic.) In December, the ani- with elections looming in October, facts over the fence. Suddenly, a pickup truck mals begin to go hungry and edge up to are not likely to stand in the way of politi- driven by off-duty parkrangers speeds the fences. Passers-by watch them starve. cal point-scoring. 7 into the lot, fog lights blazing. Angry But the Netherlands has one ofthe words are exchanged. Soon the police world’s strongest animal-rights move- AUSTRIA EU members arrive. “This is something I’m prepared to ments (the Party forthe Animals has five HUNGARY go to jail for,” says Ms Peeters. But the seats in parliament). Its outrage has led SLOVENIA officers leave it at a scolding. the forest service to compromise: rangers Republika Srpska ROMANIA

C Ms Peeters and thousands ofothers now shoot animals that are too fargone. R O are up in arms over the government’s Feeders preferto intervene. A T I BOSNIA policies in the Oostvaardersplassen, a Activists like Ms Peeters say the Neth- A Sarajevo parkof56 square km reclaimed from the erlands is too small for a wild park, and SERBIA B Bosniak-Croat U sea in the 1960s. In 1995 the forest service that fencing animals in makes humans L Federation MONTE- G adopted a plan inspired by a maverick responsible for them. But Joke Bijl, a A A NEGRO KOS. R d I forest service spokeswoman, says this is a r i A ecologist, Frans Vera, who wanted to a t i c recreate what he believed was the di- misunderstanding: all animal popula- S e verse pre-human ecosystem ofthe Neth- tions run up against barriers. A cull may ITALY a MACEDONIA erlands. Rangers introduced red deer, be on the cards, but the animal under- ALBANIA wild horses and Heckcattle, a German ground expects to be backnext winter, dodging the rangers with bales ofhay. GREECE breed created to mimic the ancient au- 150 km The Economist June 9th 2018 Europe 27

Turkey over 800 people for protesting against the Afrin incursion. A Kurdish artist, Zehra Do- The Kurdish kingmaker gan, was sentenced in March 2017 to nearly three years in prison for a painting of Nu- saybin’s smouldering ruins in which she depicted army vehicles as scorpions. Just because they have tired ofMr Erdo- NUSAYBIN gan does not mean Kurdish voters are sure to back Mr Ince. Since the early 1990s, An oppressed minoritycould decide whetherTurkey’s strongman retains power when the CHP formed an alliance with UNDREDS of new apartment blocks candidate of the secular Republican Peo- one of the HDP’s predecessors, the secular Hare rising from the rubble of Nusay- ple’s Party (CHP). Mr Erdogan remains the opposition has done little to endear itself bin, a city in Turkey’s Kurdish south-east. favourite by a large but narrowing margin. to the Kurds, says Gonul Tol ofthe Middle The government is doing its best to con- For the Kurds, the choice is not as East Institute, a think-tank. Nationalists crete over the devastation. But traces of the straightforward as it might seem. Some within the party have long had the upper horrific clashes between the Turkish army continue to see Mr Erdogan as a symbol of hand over progressives, she adds. and insurgents of the Kurdistan Workers’ reform: the leader who made it easier for But if any secular politician can make Party (PKK), which claimed thousands of them to use theirown language and follow inroads in the Kurdish south-east, it is the lives nationwide in 2015 and 2016, are easy theirown customs without beingharassed affable Mr Ince. Unlike most of his col- to find. A third of the city, including some by the police. Others hope Mr Erdogan leagues, he opposed strippingMrDemirtas 6,000 buildings, was destroyed by helicop- might revive negotiations with the PKK, and other HDP parliamentarians of their ters and tanks during the siege. Debris still which he launched a decade ago but dis- immunity. He also made a point of visiting lines some of the streets. Bullet holes pep- owned in 2015. (That was when he un- the Kurdish leader in prison and called for per outlying houses and the minaret of a leashed the army against the insurgents his release before the election. His party’s mosque. Only last October, workers un- who had holed up in towns like Nusay- manifesto now promises more autonomy earthed another dead body. Few locals bin.) Most Kurdish voters, however, no lon- for local governments, a key Kurdish de- speak openly of any of this. The fighting, ger give him the benefit of the doubt, says mand. “Between him and Erdogan, people accompanied by a series of PKK terror at- Vahap Coskun of Dicle University in Di- here feel closer to Ince,” says Ferhat Kut, an tacks, has ended. But the fear persists. yarbakir, the south-east’s largest city.Mr Er- HDP official in Nusaybin. On June 24th Turkey will hold snap dogan himself has ruled out new peace ForMrInce to have a chance in a run-off elections, and towns like Nusaybin may talks. Earlier this year, he launched an of- against Mr Erdogan, he would probably determine the fate of the entire country. fensive against Kurdish insurgents in Syr- need a clear endorsement from Mr Demir- Whether the opposition can wrest control ia’s Afrin. Officials now suggest that a new tas. The Kurdish candidate will not en- of parliament from the ruling Justice and operation against PKK bases in northern dorse anyone before the first round, but he Development (AK) party,and the presiden- Iraq is only a matter oftime. would plainly like to see the back of Mr Er- cy from the strongman Recep Tayyip Erdo- The government insists it is fighting ter- dogan. Turkeyisfacinga choice between “a gan, depends largely on Kurdish votes. ror. But its crackdown has respected few democracy and a dictatorship”, he told The The Kurds in Turkey number some 15m. boundaries. Some 95 Kurdish mayors have Economist through his lawyers. For the Those in the south-east, as well as secular been sacked and replaced by state appoin- Kurds in particular, the past few years have Kurds elsewhere, tend to vote for the Peo- tees. Nearly 5,000 HDP officials and nine been a previewofthe kind ofregime Mr Er- ples’ Democratic Party (HDP), a group also MPs, includingMrDemirtas, aswell asdoz- dogan has in mind, he adds. Mr Demirtas backed by some leftists and liberals. Those ens of Kurdish journalists, have been ar- refers to himself as a political hostage. He elsewhere, the children and grandchildren rested. Earlier this year, police detained might be a kingmaker soon. 7 of villagers displaced by war in the 1980s and 1990s, many of them assimilated into Turkish culture, have frequently voted AK, as have some religious Kurds. The HDP is locked out of an alliance formedby the rest ofthe opposition, so under Turkey’s electoral rules it needs at least 10% of the vote to enter parliament. Unless it does so, Mr Erdogan’s AK will almost certainly retain its long-held majority. If the HDP gets past the magic number, though, parliament may be up for grabs. And that could prompt a political showdown with a re-elected President Erdogan. The Kurdish vote may even prove decisive in the presidential election, too. In the first round, the vast majority of Kurds are sure to vote for the HDP’s candidate, Sela- hattin Demirtas, who has spent the past 19 months in prison, facing dozens of flimsy “terror propaganda” charges and up to 142 years behind bars. Assuming the contest goes to a run-off, as the polls suggest, they and the rest ofTurkey will probably end up choosing between Mr Erdogan and the opposition front-runner, Muharrem Ince, the Demirtas: in jail, but on the campaign trail 28 Europe The Economist June 9th 2018 Charlemagne Angela plays it cool

There is still no sense ofurgency in Germany. That is a problem forEmmanuel Macron on the global order requires a European response. Tellingly, it was French diplomatic muscle that was deployed in the (vain) attempt to squeeze concessions from the Iranian government that would convince Mr Trump notto abandon the nuclear deal. Mrs Merkel may have more to say in the weeks ahead, perhaps at a Franco-German meeting on June 19th, just before an EU summit that has long been trailed as a milestone fordecisions on the euro zone. Germany hates isolation, and right now, as Jan Te- chau at the German Marshall Fund in Berlin puts it, the country “ison everyone’sshitlist”. Faced with the threatoftariffson itscar exports, Germany wants to negotiate a way out of the trade spat with America, but France and others resist bowing to Mr Trump. Separately, Germany’s security establishment fears the government’s miserly defence spending will place it in Mr Trump’s crosshairs at a NATO summit next month. But it is hard to guess at Germany’s intentions. Where MrMac- ron telegraphs his plans early, loudly and clearly, Mrs Merkel is re- active and inscrutable. She has not made a single consequential speech as chancellor. Her memorable moments are instead im- provised: the selfie with a Syrian refugee in 2015 that came to stand for her open-door immigration policy; the declaration to HEN it came, it was everything and nothing at the same journalists as she left a car in 2013, amid the revelations that Wtime. Foroverhalfa yearEmmanuel Macron, France’spresi- American spooks had tapped her phone, that there can be “no dent, waited for a German response to the grand ideas for Eu- spyingamongfriends”. To add to the confusion, she has a habit of rope’sfuture he had laid outatthe Sorbonne lastSeptember. Gov- creating expectations that she leaves unfulfilled. She notes that ernments rose and fell while Mr Macron drummed his fingers; Germany erred in letting refugees fester in the Middle East before the transatlantic bond stretched, and came close to snapping. they swept into Europe, or that Mr Trump’sunilateralism obliges When Angela Merkel finally gave heranswer, on June 3rd, it came Europe to masterits own fate. But rarelyare such words translated not in a big speech or a government statement, but in an inter- into deeds. The questions are simply left hanging in the air. view with the Frankfurter Allgemeine Sonntagszeitung (FAS), a conservative broadsheet. How very like the German chancellor. Après Macron, le déluge The responses to Mrs Merkel’s interview were like descrip- What might shift the chancellor? Two possibilities from abroad tions of the same object viewed through opposite ends of a tele- suggest themselves: one French, one Italian. On economics and scope. For those sympathetic to French ambitions, the chancel- security the chancellor faces domestic constraints. Her centre- lor’s offers were weak, offering only baby steps towards the right Christian Democratic Union is on hair-trigger alert to block strengthened euro zone Mr Macron urges, constrained by the any moves towards a euro-zone “transfer union”; its coalition same old German red lines about rules and risk. Others were ex- partners, the ailing Social Democrats, have alighted on scepti- cited by what appeared to be the start of a genuine conversation, cism towards military spending as a vote-winning strategy. after months of waffle and delay. Some noted that Mrs Merkel The new ingredient is France. Mr Macron says all the right went into considerably more detail than Mr Macron on matters things to please Germany, but also puts forward an argument it like reform of the euro zone’s bail-out fund. So was this the start fears is right: that an unreformed Europe is exposed to destructive ofsomething beautiful, or a great big German nothingburger? populism. That may be why Berlin and Paris are abuzz with ru- It was both, and neither. Consider the ideas Mrs Merkel of- mours of a looming grand bargain: German concessions on the fered the FAS. She supported Mr Macron’s proposed European euro, and perhaps slightly less grudging support for Mr Macron’s military intervention force, widely mistrusted in Germany—but military plans, in exchange for French agreement that the EU can wants it folded into the ponderous EU structures Mr Macron is negotiate with America before the tariffs are lifted. (Such ru- keen to circumvent. The chancellor backed a euro-zone invest- mours, admittedly, do not come overburdened with evidence.) ment fund, but on the condition that it remain tiny. She called for Mr Trump’s tough line on trade and defence may be splitting a centralised European asylum system in which the authority to France and Germany, but that creates opportunities fordeals. grant refugee status would shift from national to EU officials, a The darker scenario is a crisis sparked in Italy. The conven- proposal so radical that it has no chance of becoming law. Some tional wisdom is that the outlandish fiscal plans of the populist see ambition in all this. Others, the exact opposite. government that took office last week will further harden Ger- Mrs Merkel often seems to channel the view of her compatri- man hearts against proposals to spread risk in the euro area. This ots that Europe faces no systemic crisis. Germany feels rich and is certainly true for now. But if an Italian showdown with Brus- secure; if other countries are in difficulties, the remedies lie at sels appears to threaten the integrity of the euro zone as a whole, home. Mr Macron speaks a different language, of urgency and Mrs Merkel will shed her caution and act to contain the damage, “European civil war”. The euro zone needs action. Europe must for instance by deliberately turning a blind eye if the European have an intervention force limited to members able and willing Central Bank turns on the money tap. This is plainly no way to to deploy assets, including Britain, not one burdened by min- run a fragile currency union. But Mrs Merkel has only ever acted nows in the name of “inclusivity”. And Donald Trump’s assault when staring into the abyss. 7 Britain The Economist June 9th 2018 29

Also in this section 30 Russian wealth in London 30 Galileo’s middle ﬁnger 31 Brexit v Bernard-Henri Lévy 32 Bagehot: Good capitalism v bad

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

Mental health forced to move away from the neighbour- hood, businesses are struggling, too. Ofthe The long shadow 50 or so he is working with in the area, at least three have shut and four have moved away since the fire, says Allen Pluck of the Portobello Business Centre. “The place is a little bit like a ghost town.” Many residents work in the gig economy, so lack the support and stability offered by salaried jobs. The Grenfell fire, and its aftermath, have put many locals underunbearable strain In response to these circumstances, lo- OR two weeks, the families of those der(PTSD), butotherswill sufferfrom anxi- cals have turned to one another. Grenfell Fwho died came to tell theirstories to the ety, depression and the exacerbation of ex- United, a community group, organises a Grenfell Tower Inquiry. The father who isting conditions. As John Green, the monthly silent walk, which “provides a was flying home from Egypt while his fam- psychologist leading the NHS mental- chance to reflect and remember in a digni- ily burned; the parents whose daughter health response, notes, “it wasn’t just the fied manner,” says Natasha Elcock, who had moved from Italy to London to make a fire”. What followed may have made lived on the 11th floor. Religious establish- life; the young man who stood and things worse. ments have provided support, and work watched the flames as his mother and sis- In the immediate aftermath, survivors together more closely than before the fire. ter were trapped inside. Translators mut- struggled to find the support and quiet The Al-Manaar mosque, a short walk from tered live renderings of the speeches to they needed to deal with what had hap- the tower, now runs children’s holiday friendsand family unable to speakEnglish. pened. In the absence of co-ordinated as- camps with the West London synagogue. Sir Martin Moore-Bick, the judge who is sistance from the government, charities Such is the sense of community, “People leading the investigation, sat on stage and rushed in to help people, but often over- pop into the mosque like it’s the pub,” says listened, seldom speaking except to offer whelmed them. The area buzzed with vol- one local (meaning it as a compliment). words ofcondolence. unteers bringing absurd quantities of But charities and community spirit can Since the fire at Grenfell Tower last June clothing and food, as well as journalists only do so much. NHS psychologists are 14th, which killed 72 people and injured 70, looking for stories. In the end, says Cathy studying the response to other disasters, official investigations have made slow pro- Long, who lives locally and is writing a re- including the Aberfan landslide in 1966 gress. Areview ofbuildingregulations pro- porton the falloutofthe fire forthe London and the earthquake in Christchurch, New duced cautious recommendations last School of Economics, “we needed a relief Zealand in 2011. Many people in the area month. Sir Martin’s inquiry into the causes effortto deal with the reliefeffort.” knew someone who lived in Grenfell Tow- and aftermath ofthe fire published prelim- A year on, 129 of the 210 households er, or had once lived there themselves, inary findings on June 4th. A criminal in- that survived the fire remain in temporary which made the fire “far more traumatic” vestigation, which is considering personal accommodation or hotels. Many have yet than, say, a terrorist attack in a big city, ex- and corporate manslaughter charges, will to be offered somewhere they consider plains Dr Green. People with PTSD often probably conclude no earlier than 2019. suitable; others struggle to make big deci- try to ignore their problems and do not Less noticed than these legal proceed- sions about where to live. It is a worrying seeksupport. So teamsofnurseshave gone ings is a parallel effort to tend to the minds situation, saysAlexDinerofthe North Ken- door-to-door to assess residents for symp- of the many people affected by the fire. sington Law Centre, which offers free legal toms. Around 1,000 people have been Such was the scale of the horror, the local advice, as there is a well-established link treated fora mental-health problem, many arm of the National Health Service esti- between housing and mental health. referred by these outreach efforts. The mates that 11,000 people may end up suf- “They face the most difficult housing situa- number is expected to rise. fering from mental-health problems. Most tion imaginable,” he says. With residents There is now a focus, among charities will be cases of post-traumatic stress disor- absent and a school beneath the tower and the NHS, on reaching those unlikely to 1 30 Britain The Economist June 9th 2018

2 seek treatment. Following conversations percentage are very rich, says Katia Niki- economy. Foreigners hold roughly £10trn with Grenfell United, the NHS rebranded tina, the publisher of Zima, a magazine for of British assets. Russia’s share of that is its “mental health” services as “health and Russians in London. Last year 48 Russians just 0.25%, a smaller proportion than that well-being”, to avoid stigma—which is par- came to Britain on Tier1visas, which allow ofFinland and South Korea. ticularly common among first-generation holders and their families to stay for three Parts of west London have acquired migrants, says Lydia Giblin, a psychothera- years and fourmonths ifthey invest £2m in many new Russian residents, and shops to pist workingwith bereaved families.At the government bonds or companies. Only serve them (including an outfitter of ar- Al-Manaarmosque, imams lacked training the Chinese were more numerous. moured luxury cars). Yet even in “prime” to deal with traumatised people, so the But the number of visas has dropped London—that is, the top 5-10% of the mar- mosque brought in counsellors used to sharply since the minimum investment ket—buyers from eastern Europe and the dealing with Muslim clients, says Abdu- sum was raised and money-laundering former Soviet Union account for only rahman Sayed, head of the trust that runs checks tightened in 2015. In the eight years around 5% of sales, according to data from the mosque. The Curve, a support-centre before that—which Transparency Interna- Savills, a property firm. Outside the capi- led by the council, provides knitting tional, an anti-corruption watchdog, calls tal’s swankiest districts, Russians’ influ- groups, yoga and English-language classes, the “blind faith” period—705 Russians ar- ence is minuscule. The departure of oli- as well as therapy. It has had to overcome rived, making up 23% of the total. Accord- garchs might affect prices on some streets antipathy from locals, many of whom ingto TI, Russians have invested more than in Kensington, but not beyond. hold the council responsible for the fire. £700m under the scheme. The same is true of Britain’s private The anniversary,along with the memo- Some of those with most to lose from a schools. Some have done well out of Rus- ries stirred up by the inquiry, is proving to Russian exodus may be lawyers. Oligarchs’ sian parents. But of the 53,678 foreign pu- be particularly anxious. The government big deals and bigger personal bust-ups pils who attend schools that belong to the has assured locals they will have the final have brought in business over the years for Independent Schools Council, only 2,806 say over what happens to the site of the home-grown law firms and the London of- are Russian. China, by contrast, sends fire, with a memorial the most likely op- fices of American ones. Last month Linkla- 9,008 pupils from its mainland, and a fur- tion. For now, the blackened tower juts ters was ticked off by MPs for its work on ther 5,188 from Hong Kong. against the skyline, sheathed in white plas- deals involving Russian companies, after it In all, if more oligarchs like Mr Abra- tic. It is, says Mike Long, the minister at Not- refused to answer questions about the flo- movich decide to leave, the impact might tingHillMethodistChurch, “a visiblescar”. tation of En+, a holding company for Oleg be less than widely thought—at least out- There are many more invisible ones. 7 Deripaska, a businessman under Ameri- side Chelsea. 7 can sanctions. Figures from Dealogic, a data provider, show that Britain’s “Magic Russian wealth in London Circle” oflaw firms have advised on 25 list- Brexit and security ings ofRussian companies on London’s ex- Offski? changes in the past two decades, a tenth of Galileo’s middle the total listings they oversaw. London lawyers have also helped oli- finger garchs embroiled in litigation. Russian liti- gants accounted for a tenth of cases heard in the London Commercial Courts be- Departing oligarchs may not leave as A row overa satellite project could tween March 2017 and April 2018. Six years big a hole as many think damage widerco-operation on defence ago Mr Abramovich was unsuccessfully TAMFORD BRIDGE, home to Chelsea sued by a fellow oligarch, Boris Berezov- OST diplomats hoped that the Brexit Sfootball club, is hardly a slum. But it has sky, for breach of contract. Fees were esti- Mvote in June 2016 would not impinge fallen behind the glitzynew stadiums ofits mated to have come to £100m. on security. After all, the issue had hardly nearest rivals in England’s Premier League. Yet the high profile of London’s high- featured in the campaign. All sides have a And that is how things are likely to remain, rolling Russians belies the relatively small strong interest in continuing to work to- for on May 31st Chelsea announced that it role that their money plays in the wider gether. And European defence co-opera- had shelved a £1bn ($1.3bn) scheme to rede- tion makes little sense without Britain, the velop its west London stadium. The club’s biggest spender and one of Europe’s only billionaire owner, Roman Abramovich, two global military powers. Yet a row over has not had his British visa renewed; this, it Britain’s participation in the Galileo satel- seems, was his response. The club pointed- lite positioning system could now upset all ly cited the “current unfavourable invest- such calculations. ment climate” for its decision. The British were for years hostile to Ga- Mr Abramovich appears to be a casual- lileo, which they saw as unnecessarily ty of Britain’s deteriorating relationship (and expensively) duplicating America’s with Russia, which has worsened since the global positioning system (GPS). But once poisoning of Sergei Skripal, a former KGB work on Galileo began, Britain became agent, in March. As Britain’s most famous more enthusiastic, not least because its oligarch, Mr Abramovich was an obvious firms secured some of the juiciest con- target forthe government to demonstrate a tracts. The British are paying some 12% of tougher attitude to those with ties to Rus- the total cost of Galileo, which is expected sia’s president. He has since acquired citi- to exceed €10bn ($12bn) by its completion zenship of Israel, and is reportedly plan- in 2020. British-based firmshave won back ning to move there. Many Londoners around 15% of this. Indeed, Galileo has be- wonder what would happen if more rich come a driver of the thriving British space Russians were to follow suit. industry, which has an annual turnover of There are around 65,000 Russians in £14bn ($19bn)—half of it accounted for by Britain, mostly in the capital. Only a small Roman’s amphitheatre satellite broadcasting companies—and en-1 The Economist June 9th 2018 Britain 31

2 tertains hopes of becoming the world’s Culture wars biggest after America’s. Galileo is run by the European Space Agency,which is not part of the EU and in- Brexit v Bernard-Henri Lévy cludes non-members such as Norway. But the European Commission provides the Remainers’ secret weapon: a play by a French philosopher, offSloane Square money and takes the key decisions on how it is spent. Its lawyers say these preclude INCE the vote to leave the European “liberal heart”. So far, so sensible. But BHL contracts with providers outside the EU,so SUnion, a striking number ofBritons has also persuaded himselfthat he is the the commission wants to stop Galileo have exhibited symptoms ofa new man to stop this popular revolt. work by British-based firms after Britain medical condition, “Brexit derangement On June 4th at the Cadogan Hall in leaves the union next March. It is also en- syndrome”. BDS has afflicted some of the London he performed a one-man play suringthatnon-memberscannotblockGa- country’s most prominent figures. Lord called “Last Exit Before Brexit”. French lileo procurement decisions. After all, Adonis, a formerLabour minister, has was the most common language at the Brexit means Brexit, jokes one Eurocrat. argued that Brexit is “largely the creation bar, followed by German. The few who The commission also insists that, as a ofthe BBC”. Alastair Campbell, Tony spoke English did so with the plummiest non-member, Britain cannot have full ac- Blair’s formerspin-doctor, tookto the ofaccents. The play consisted ofa 90- cess to Galileo’s “public regulated service” seafront in Brighton to blast out “Ode to minute monologue, culminating in the (PRS), a militarily secure, unjammable part Joy” on the bagpipes. rousing peroration: “Please remain; yes of the project. Norway and America have This weekBernard-Henri Lévy dem- you can; last exit before Brexit.” asked for access to the PRS. But the EU is re- onstrated that BDS is not just a British The notion that a Frenchman standing sisting it, on the argument that letting non- phenomenon. BHL, as he is known, styles on a stage in Chelsea and berating the members into such sensitive areas would himselfas one ofFrance’s leading public British could change people’s minds undermine the club’s “strategic autono- intellectuals. He sports expensive suits, about Brexit was always far-fetched. But my”, a new concept of questionable value. white shirts unbuttoned nearly to the BHL’s performance was even odder than If Britain were allowed in, others would waist, and elegantly sculpted hair. He is this suggests. He played himself, in a demand the same treatment. regularly quoted on a wide range of hotel room in Sarajevo preparing a This legalistic approach has proved a subjects, from genocide to gastronomy. speech on Brexit. He strode around the red rag to British ministers. Unless the EU Brexit, he is convinced, will make Britain room, called up images on his computer, changes its views on contracts and the PRS, more insular and deprive the EU ofits talked to people on the phone (Salman the government threatens to pull out of Rushdie made a guest appearance), Galileo altogether. Some continental com- jumped fully clothed into a bath and panies might pinch contracts from British spent the last half-hoursoaking wet. competitors. But losing their expertise BHL served up a bit ofred meat for his would delay the project and could add as bejewelled audience, denouncing Boris much as €1bn to the bill. Losing access to Johnson, the foreign secretary, as a bigot British ground-stations on Ascension Is- (loud applause), proclaiming that Brexit land and in the Falklands would be an an- would reduce Britain to a small island noyance. Britain’s suggestion that it might (louder applause) and calling for“the try to recoup the money it has invested in annulment ofthis disaster” (even louder Galileo is unlikely to get far. But the threat applause). But he devoted most ofthe that, if it is cut out of the programme, Brit- time to his hobby horses: Europe’s betray- ain might build a satellite positioning sys- al ofthe Balkans, the ugliness ofeuro tem ofits own is more serious. notes (“Give us faces, not bridges!”), the At least technically,it would be feasible, excesses ofthe #MeToo movement, the says Bleddyn Bowen, a space expert at wonders ofhis own hair, and his remark- Leicester University.He reckons it could be able ability to make women go rigid done at a cost of some £3bn-5bn. Some enduring orgasm. It may not have been thusiasts talk of sharing this cost with Aus- great drama, but it was the greatest ex- tralia or Japan, and getting a new system I think, therefore I ham ample ofBDS yet seen. up and running almost as soon as Galileo itself. But Mr Bowen thinks the idea is essentially a bluff. The benefits from creating The government now says participation in eign minister, says Brussels is being yet another satellite positioning system Galileo is a strategic choice that “will have “stupid” over Galileo. would be marginal, and the cost seems a permanent effect on our future defence The row could also worsen the legal prohibitive when the defence budget is un- and industrial co-operation.” and practical difficulties over broader co- der immense pressure. For in the end it is a question of trust. operation on domestic security. The EU ar- More worrying, says Sophia Besch of Britain is the closest military and security gues that post-Brexit Britain cannot remain the Centre for European Reform, a think- ally that many EU countries have. France a full member of Europol, the policing tank, are the implications of going it alone and Germany want to involve Britain agency, or the European Arrest Warrant forwider defence co-operation. In January more deeply in building up Europe’s mili- process for extradition. EU countries sus- 2017 Theresa May was criticised when she tarycapacity. Iflawyerscan obstruct future pect that Britain may not always share hinted that Britain’s future defence rela- co-operation with the British over Galileo their commitment to data privacy. Mrs tions with Europe might be affected by the on security grounds, that sends a deeply May’s insistence on escaping from the ju- terms of any Brexit deal. The prime minis- unhelpful message forworking together in risdiction of the European Court of Justice ter later backtracked by promising that Brit- other areas. That is why some EU countries is another obstacle. Security was once ain’s defence commitments were uncondi- thinkthe commission is going too far in de- thought to be one of the simplest parts of tional. But the threat to exclude Britain manding British exclusion from the pro- the Brexit negotiations. Now even it is from Galileo has reopened the question. ject. Joschka Fischer, a former German for- proving to be trying. 7 32 Britain The Economist June 9th 2018 Bagehot Good capitalism v bad capitalism

The Conservative Partyis engaged in a surprising debate on the virtues ofmarkets publish a book arguing that Adam Smith was a much more complicated thinker than many libertarians, including the Adam Smith Institute, believe. Smith worried that markets were prone to being hijacked by rent-seekers and that companies could become tools of oppression. Right-wing think-tanks are producing blueprints for reforming capitalism, just as they once drew up blueprints forunleashing it. The Tories are making sure that they praise the good version of capitalism. Liz Truss, the chief secretary to the Treasury, often applaudsdigital disrupterssuch asAirbnb and Deliveroo. She frequently pitches her argument to young people, who might be attracted to Mr Corbyn for cultural reasons but who are also keen on starting their own companies or, at the very least, picking the fruits of the entrepreneurial economy in the form ofhome-delivered meals and Uber rides. The Conservatives are determined not to repeat the mistake oflast year’s election, when they lacked a positive economic message to sell. At the same time, they are targeting bad capitalism. Its most egregious form is cronyism. Many of Britain’s privatised industries are much too close to government. This can lead to dismal service, as on the railways. It also encourages a cycle of connec- HE cabinet has become a killing field ofpolitical careers. Four tion-greased over-investment, followed bycollapse, asin the case Tseniorministers have leftforthe backbenches in the past eight ofCarillion, a giant outsourcer. months—and ifthere isanyjustice then two more, Chris Grayling, Cronyism often goes along with rent-seeking. The govern- the transport secretary, and Gavin Williamson, the defence secre- ment worries that some sectors of the economy, particularly tary, will soon be following them. But one minister is thriving property and utilities, are rife with it. Ministers have threatened against the odds. Since becoming secretary of state for the envi- to punish developers who “bank” land, rather than building. ronment last June, Michael Gove has revived his reputation and Greg Clark, the business secretary, has published a green paper revitalised his department. Some bookmakers put him as the fa- on the way that energy companies use their market power to vourite to replace Theresa May as Toryleader. short-change households, particularly the poorest, by making it The skills that have brought him to this unexpected position hard to switch providers and, in effect, charging loyal customers were on display in a speech he delivered on June 6th at Policy Ex- higher prices. Mr Gove broadened the debate by suggesting that change, a right-of-centre think-tank, about the state of capitalism. large swathes ofindustry might be affected by rent-seeking. Man- He started off by praising the system as the most successful agers have devoted too much energy to boosting their salaries wealth-creating machine the world has seen, but went on to la- and not enough to encouraging productive investment, he said. ment “the failure ofourcurrent model ofcapitalism to deliver the Another variety of bad capitalism is market dominance. The progress we all aspire to”. Productivity growth is sluggish. Wage Social Market Foundation, a centrist think-tank, argues that eight growth has stagnated. Economic insecurity is rife. A well-con- outoften consumermarketsthatitexamined were dominated by nected oligarchy is sucking up a disproportionate share of the a small number of incumbents. Mr Hammond is pondering proceeds of growth. If Jeremy Corbyn, the Labour leader, had whether new regulations are needed to curb the excesses of the spoken in similar terms, the tabloids would be up in arms. internet giants. Backbench Tory MPs routinely complain about Mr Gove’s speech is a good example ofhis ability to identify a the fact that bricks-and-mortar shops are going out of business, change ofmood in his party and articulate it for the broader pub- turning high streets into mausoleums, while internet-based com- lic. For most of the four decades following Margaret Thatcher’s panies escape from paying taxes. election in 1979, Conservatives thought it was enough to praise capitalism and demonise the state. Today, with much ofthe priva- From each according to his ability tised rail system in chaos and some franchises being taken back These new Torycritics of capitalism are less successful at provid- under public control, sentient Toriesare telling a more complicating solutions than they are at diagnosing the problems. In his ed story. They are making a sharp distinction between good and speech, Mr Gove put forward a series of clever suggestions—such bad capitalism, and suggesting a much more active role for the as creating different classes of shares, so that company founders state in promoting the first and tackling the second. can retain more control when companies go public—without Several ministers have echoed Mr Gove’s thoughts, though fleshingout how they might workin practice. They are also guilty none has expressed them quite so vigorously. Mrs May has re- ofunderestimatingthe forces they are up against. The rewards for vived Edward Heath’s talk of “the unacceptable face of capital- lobbying and cronyism are huge. Interest groups have an aston- ism”, a phrase which Thatcherites once dismissed as heresy. Phil- ishing ability to grind down reformers—look at the way that Mr ip Hammond, the chancellor of the exchequer, says he wants to Clark’s reforms ofcorporate governance have been reduced to al- curb capitalism’s excesses. Matt Hancock, the culture secretary, most nothing. But these are reasons to redouble their efforts to re- promises to tame the “Wild West” ofthe internet. form the system, rather than retreat in despair. Mr Gove is surely Some of the brightest Tory MPs outside the cabinet are also rightthatifcapitalism’sfriendsdon’treform the system, then cap- askinghard questions about capitalism. Jesse Norman is about to italism’s enemies will do it forthem. 7 Middle East and Africa The Economist June 9th 2018 33

Also in this section 34 Farmers v herders in Nigeria 34 Africa’s shady middlemen 35 Austerity and fury in Jordan 36 Saudi Arabia’s calculating leader 36 The next battleground in Yemen

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

Peace and privatisation ernment opening state-owned telecoms, electricity and logistics, as well as the high- Reformer-in-chief ly profitable national airline, to foreign investors for the first time. It would also allow full orpartial privatisation ofrailways, sugar factories, industrial parks, hotels and some manufacturing firms. ADDIS ABABA Recent economic indicators seem to have jolted the government into action. A Ethiopia’s new prime ministeris moving fast. Is it fast enough? vast programme of public investment pro- HE speed of events caught Ethiopians against a British citizen, Andargachew pelled annual GDP growth to around 10% Toff guard. When Abiy Ahmed took of- Tsige, who had been on death row. for most of the past decade, albeit from a fice as prime minister on April 2nd he did Mr Abiy says he plans to amend the low base. But the IMF reckons that growth so as the head of a deeply divided ruling constitution and introduce term limits for will slow by more than two percentage coalition. The inexperienced 42-year-old, his position. On June 2nd his cabinet said points this year (to a still respectable 8.5%). who came from the Oromo wing of the the state ofemergency would be lifted two Public debt, most ofwhich is in foreign cur- ethnically based coalition, was viewed months earlier than planned. Then, on rency, hashitalmost60% ofGDP. There has with deep suspicion by many of his estab- June 5th, the politburo of the ruling co- been a spate of defaults on Chinese loans lishment colleagues. He was taking charge alition, the Ethiopian People’s Revolution- in recent weeks, and local contractors com- of a country under a state of emergency ary Democratic Front (EPRDF), said it plain the government is not meeting its ob- after more than three years of anti-govern- would at last implement a peace agree- ligations. Earlier this year the IMF raised ment protests and ethnic unrest. Few ex- ment, signed in 2000, that would hand Ethiopia’s risk of debt distress to “high” be- pected him to achieve much soon. over disputed territories to Eritrea and put cause of the possibility that it will not earn The past few weeks have pleasantly a formal end to the war the two countries enough foreign currency to pay its debts. surprised. After an inaugural address in fought (and Ethiopia won) from 1998 to Export revenues have barely budged which he called for unity and apologised 2000. Thatcould pave the wayforreconcil- forfive years. In some important industries for the government’s killing of protesters, iation and, perhaps, give Ethiopia renewed that the government is trying to promote, the formerarmy officer toured the country access to Eritrea’s ports. such as garments and leather goods, they to muster support. At mass rallies and have even declined. As a result, Ethiopia’s town-hall meetingshe adopted a strikingly Busy, busy Abiy foreign reserves are thought to cover just different tone from that of his two most re- Until this week Mr Abiy appeared to be overa month’sworth ofimports. Business- cent predecessors. Hailemariam Desalegn, paying less attention to Ethiopia’s troubled es say the shortage of foreign exchange is who resigned in February, was timid and economy. His few remarks suggested that the worst in recent memory; many have aloof. Meles Zenawi, who ruled as a he planned to leave untouched the state- waited more than a year to receive their al- strongman from 1995 to 2012, wasstern and led development model pursued by the location from state-owned banks. Pharma- cerebral. Mr Abiy, by contrast, presents EPRDF since it came to power in 1991. At a cies are running low on basic medicines himself as a friend of the country’s young meeting with business leaders in April he such as antibiotics. Solomon Mulugeta, protesters. “We want to work hand-in- said that the government would preserve general manager of the metal manufactur- hand with you,” he told cheering crowds its monopoly in key sectors such as infra- ers’ association, saysfactoriesare lying idle in Oromia, the centre ofunrest. structure, banking and telecoms. Few re- for want of raw materials. Inflation is run- Exiled opponents have been invited garded him as an economic liberal. ning at nearly15% a year. home. Representatives of dissident media So the news that the EPRDF would in The planned sell-offs should ease some outlets based abroad have been encour- fact liberalise swathes of the economy to of the hard-currency strains. The an- aged to set up shop in Addis Ababa, the boost growth and exports came as another nouncement also sends an important sig- capital. Terrorism charges against dozens shock. The plan, according to a statement nal to foreign investors that the govern- of activists have been dropped, including released on June 5th, would see the gov- ment is now serious about economic1 34 Middle East and Africa The Economist June 9th 2018

2 reform. But Getachew Teklemariam, a con- and convoys ofpolitical bigwigs. NIGER CHAD sultant and formergovernment adviser,ar- States with sharia The general lack of security also aﬄicts gues that simply selling minority stakes in Fulanis, who say they have taken up arms public monopolies is insuﬃcient. “It’s only to protect themselves. Indeed, just weeks the ownership structure which will NNIGERIAI G E R I A before the raid on Lawaru that injured Ms change,” he says. “The rules of the game Gidwell, at least 50 unarmed Fulanis, most PLATEAU

are the same.” Others fret that hasty priva- BENIN of them children, were killed in an attack tisations might be marred by corruption. Niger Abuja Lawaru they blamed on farmers. The question is whether Mr Abiy has a ADAMAWA Nigeria’s government is often bad at vision for the economy beyond the part- easing tensions. Some states, such as Be- sale of public enterprises. Ethiopia still has nue, have passed laws that ban herdsmen no stockmarket. The banking industry, Lagos BENUE from grazing cattle on open land. Promi- which will remain off-limits to foreigners, 250 km nent southern Christians such as Wole CAMEROON is overdue a shake-up, for instance by al- Gulf of Soyinka, an author and Nobel laureate, lowing management contracts with for- Guinea thinkthe ban does not go farenough. They eign banks. The foreign-exchange regime, Fulani militia attacks 40 want Fulani herdsmen to be declared ter- Fatalities, January 1st - 10 which allocates currency to industries the May 31st 2018 rorists. That would give the police greater 1 government wants to support, is riddled Source: ACLED powers to restrict their movement. Many with graft. Businesses are hobbled by red northerners thinksuch a ban would infuri- tape. Conglomerates owned by the army ed sharply as climate change pushes herd- ate herders and fuel furtherconflict. and party dominate much ofthe economy. ers south. Clashes are deadlier, too, thanks A more promising approach is being Market reforms, as well as a new ap- to guns looted from the arsenals of Libya’s tried in states such as Plateau, where offi- proach to peace with Eritrea, had been un- former dictator, Muammar Qaddafi, and cials are attempting to revive and protect der discussion within the ruling coalition smuggled around the region. traditional grazing reserves and routes. for many months before Mr Abiy took of- The fighting is stretching a government Manyofthese datebackcenturiesbut have fice. But he has brought an urgency to deci- that is also trying to contain a jihadist in- been encroached on by farmers as Nige- sion-making that had been lacking ever surgency in the north-east and banditry in ria’s population has expanded. Plateau since the death of Meles six years ago. the oil-rich Niger Delta. Violence in the state has also been praised for organising “These are pretty much the decisions of Middle Belt, which is about a third of Nige- peace talks and mediating between hostile the politburo taken five months ago,” says ria’s land mass, is every bit as brutal. groups. Thingsdo nothave to fallapart. But one Ethiopian analyst. “The difference is In the past year armed Fulani groups the government needs to urge people to the pace ofchange.” 7 have surpassed Boko Haram, a jihadist talkrather than reach fortheir guns. 7 group, as the deadliest threat to civilians. The Armed Conflict Location & Event Data Conflict in the Middle Belt Project (ACLED), a non-profit organisation, Africa’s shady middlemen estimates that armed Fulani men have Wild fire killed almost1,000 civiliansthisyear; Boko Vulture, departed Haram have slaughtered 200 or so. The fighting aggravates religious tensions in a country with a perilous north- LAWARU south, Muslim-Christian divide. Most Fu- lani herders are Muslim; most of the farm- Nigeria is failing to contain a bitter Ely Calil, backerofa farcical coup plot, ers they attack are Christian. In April two conflict between farmers and herders died on May 28th Catholic priests were killed in Benue state, ARIS GIDWELL unwinds the ban- along with 17 congregants. The massacre HE sudden, violent death of a man Mdage from her forearm and removes provoked national protests. “One spark Twho had prospered for decades from a wooden splint. Two fingers are missing. could ignite a flame that no one can extin- oil brokering in Africa is not necessarily Her arm shakes as she tells how, as dawn guish,” says an aid worker trying to reduce suspicious. Ely Calil was Nigerian-born, of broke, she heard shouts warning the resi- intercommunal violence. Lebanese descent, and well known to Afri- dents of Lawaru, in Adamawa state in Thatsparkmaywell come from the gov- can presidents, European ministers and north-east Nigeria, to flee. She ran towards ernment. Ms Gidwell says that, after her Western oil firms. He died on May 28th, re- a neighbouring village with her 25-year- village wasattacked on December4th, resi- portedly from a broken neck after falling old son. Tragically, men wieldingmachetes dents who tried to help her were fired on down the stairs ofhis large London home. caught them. They robbed and wounded by a Nigerian military helicopter. The chief Mr Calil amassed a fortune thanks Ms Gidwell, and murdered her son. of a neighbouring village says his palace largelyto hischumminesswith two Nigeri- The attack on Lawaru and its surround- was destroyed in an air strike after the an dictators of the 1980s and 1990s, Ibra- ing villages was probably carried out by herdsmen had left. AmnestyInternational, him Babangida and the flagrantly corrupt nomadic Fulani herdsmen, a group that is a watchdog, says that Nigeria’s air force Sani Abacha. He was one ofa breed of “fix- scattered across much of west Africa’s killed at least 35 people fleeing Fulani at- ers”, or “bagmen”, who flit between Africa semi-arid Sahel, from Mali to the Central tacks. An air force spokesman initially and Europe, cultivating ties with politi- African Republic. Many of those killed claimed that only “warning shots” were cians and taking a cut from “facilitation were sedentary farmers, mostly from the fired. Later he said that a helicopter and payments” from investors bidding for li- Bachama tribe. The incident is part of a fighter jet had returned fire at “hoodlums”. cences to drill foroil or dig forgold. growing wave of violence between no- That Nigeria is using the air force to sep- Although softly spoken, he was brazen. mads and farmers that has ebbed and arate warring communities suggests that He once let a journalist from Harper’s ob- flowed across Nigeria’s central “Middle the police cannot cope. It would help if serve his negotiations over gourmet din- Belt” since at least 2011. they sorted out their priorities. On paper ners in Paris. Until recently laws in several Although strife between herdsmen and Nigeria has about 300,000 police, but per- European countries—unlike America’s farmers dates backcenturies, it has escalat- haps half of them guard the homes, offices more stringent Foreign Corrupt Practices 1 The Economist June 9th 2018 Middle East and Africa 35

Austerity and fury in Jordan nothing”. It is only a slight exaggeration. The poorest Jordanians get help from Uneasy lies the the National Aid Fund, a state-run body that makes payments to 92,500 families. A head recent study found that most beneficiaries get less than 50 dinars each month. The latest budget also introduced a new $250m CAIRO cash-transfer scheme. It will cover public- sector employees who earn less than King Abdullah tries to calm his subjects 18,000 dinars per year, and other Jordani- O LAND a job in Jordan’s public sector ans who meet a lower income threshold. Tis to land a job for life—unless you are The average recipient will get around 30 di- the prime minister. Starting on May 30th nars each month. A huge portion of Jor- thousands of Jordanians came out to prot- dan’s welfare spending goes on inefficient est against subsidy cuts and new taxes subsidies, but cutting them provokes fury. planned bythe governmentofHani Mulki. Fuel prices have increased five times this On June1st King Abdullah tried to appease year; electricity rates are up by 55%. Bread them by cancelling increases to fuel and prices nearly doubled in January. electricity prices. When that failed he A proposed income tax worries Jor- Mr Calil, dapper and brazen sacked Mr Mulki, the sixth prime minister dan’s middle class. For all the controversy to lose his job since 2011. But on June 4th it has caused, the draft law being discussed 2 Act—did not punish bribery in third coun- protesters were back in the streets. in parliament is quite cautious. It would tries. Mr Calil was detained by officials in Few Jordanians will miss Mr Mulki, a lower the minimum taxable income to Paris in 2002 as they investigated maladroit politician. But he was arguably 8,000 dinars per year for individuals and embezzlement and backhanders paid to Jordan’s most reform-minded prime min- 16,000 for families (from 12,000 and Abacha. He was not charged, but later con- ister. Before he took office in 2016 the king- 24,000). Those are still generous exemp- ceded that his actions might be considered dom was careering towards insolvency, tions in a country with an average salary illegal under new laws. with a debt-to-GDP ratio that had soared ofaround 5,400 dinars. MPs wager that the These days Western fixers must com- from 62% in 2011to 93% four years later. Mr bill would expand the tax base to 10% of pete with rivals from China and other Mulki halted the slide by raising revenue the population, up from 3%, and raise a countries with less fussy rules. Last year and reducing energy subsidies. The debt modest 300m dinars a year. But trade un- America imposed sanctions on Dan Ger- ratio hasstabilised at95%. The government ions say it would harm members. Many tler,an Israeli with a businessempire in the also accepted a $723m loan from the IMF tookpart in a general strike on June 6th. Democratic Republic of Congo. The Amer- with promises offurtherreforms. KingAbdullah hastold the newgovern- ican Treasury described Mr Gertler’s for- Those changes are longoverdue. Jordan ment to review the entire tax system. But tune as the result of “opaque and corrupt acts like an oil-rich Gulf state, with gener- the new prime minister, Omar al-Razzaz, a mining and oil deals”. He is close to Joseph ous subsidies and a public sector that em- former World Bank economist, will have Kabila, the country’s president. ploys one in three workers. But it has no little room for manoeuvre. Jordan cannot Mr Calil stood out in one respect: natural resources. The economy grew by a afford to step back from fiscal reforms. whereas others merely cultivated the paltry 2% last year. Wars in Syria and Iraq, More unrest seems likely. The Islamic Ac- powerful, he once sought to overthrow a and a recession in Saudi Arabia, have hurt tion Front, the local wing of the Muslim president who displeased him. He was a Jordanian exporters. Regional turmoil has Brotherhood, wants early elections. A few leading backer of the “Wonga Coup”, a far- also scared off tourists. protesters have even chanted slogans cical plot by British and other mercenaries Jordan can no longer count on Gulf lar- against the monarchy.For decades Jordani- to topple the government of Equatorial gesse, like a $5bn grant offered in the first an leaders could count on wealthy allies to Guinea in 2004. The hired guns identified days ofthe Arab Spring in 2011. “Saudi Ara- pay for short-sighted economic policies. Mr Calil as their “Cardinal”—though they bia kept the Jordanian economy afloat,” The bill is coming due. 7 also dubbed him “Smelly”. Theysaid he re- says a Western diplomat. But the Saudis cruited their Old Etonian frontman, Simon are upset with Jordan’s reluctance to send Mann, and helped finance the scheme. troops to Yemen and its refusal to join an Phone records and other evidence corrob- embargo of Qatar. They have not offered a orated this account. Mr Calil introduced rial since 2016. Though America will give the plotters to Severo Moto, an exiled Jordan $6.4bn over the next five years, a priest who was being flown towards Equa- 28% increase over the last aid package, this torial Guinea on the night the plot was will not fill the gap. foiled—and would have become president The IMF wants Jordan to lower its debt- had it succeeded. to-GDP ratio to 77% by 2022. Officials hope “His bigmistake was gettinginvolved in to achieve that through growth. But since a big and dangerous game, the worst-con- 2010 the growth rate has been stuck at 3% ducted coup plot in years,” says Nigel Mor- or less, and the IMF expects it to stay there gan, an ex-spy who helped to thwart the until 2022. Wonga Coup and who interviewed MrCa- Instead, Jordan will need to balance its lil afterwards. According to Mr Morgan, Mr budget. But this will hurt an already strug- Calil offered to betray the other plotters, gling population. One in five Jordanians promising information about the scheme lives below the official poverty line of 70 to South Africa in an effortto stave offpros- dinars ($99) per month. That is hard to sur- ecution. Do fixers like Mr Calil do anything vive on anywhere in Jordan, especially in useful for Africa? “They’re vultures, pure Amman, the expensive capital. One of the and simple,” says Mr Morgan. 7 protest slogans is ma’nash,or“wehave Hands up for handouts 36 Middle East and Africa The Economist June 9th 2018

The war in Yemen How to make things worse

Yemen’s main port could become the next battleground EMENI forces backed by Saudi Arabia the head oftheir political council, in a Yand the United Arab Emirates (UAE) Saudi air strike in April. Warlords have have been on a roll lately. Over the past swept down from the mountains to month the coalition has pushed 80km reinforce Houthi positions. But many north (see map), repelling the Houthis, a Yemenisfeel alienated by the zealous group ofShia rebels that chased the highlanders. Sunnis in the coastal plains government out ofSana’a, the capital, in are particularly disgruntled. Should 2015. It is now12km from Hodeida, the Hodeida fall, they could provide the main port, which is held by the Houthis. coalition with fresh recruits. Were it to take Hodeida, the coalition Martin Griffiths, the UN envoy to could furthersqueeze Houthi-controlled Yemen, hopes a deal on Hodeida will areas, where most Yemenis live. The port lead to new peace talks. As The Economist is Yemen’sprimary conduit forhumani- went to press, he was heading to the UAE Saudi Arabia tarian aid, which 22m people, or 80% of with a Houthi promise to leave the port if the population, depend on. Warwould the UN runs it. In return, the UN hopes Loosening up and disrupt the flow, leaving 8m people at risk the coalition will allow the central bank ofstarvation, says the UN. to resume paying civil servants in rebel- cracking down The UN and some Western govern- held areas. ments have urged the coalition to stop. One man could stand in the way. Six times over the past two years, hu- Muhammad bin Salman, the crown manitarian appeals and American pres- prince ofSaudi Arabia, entered the war in The calculations ofCrown Prince sure have staved offan Emirati-led attack 2015 at the invitation ofthe government. Muhammad bin Salman on Hodeida. But control ofthe port With a chance finally to hobble the HE holy month of Ramadan used to be would bring the coalition closer to its Houthis, and stickit to their Iranian back- Tan occasion for royal amnesties in Sau- goal ofregaining the entire coastal plain, ers, he may not want peace. di Arabia. But instead of granting pardons, landlocking the Houthis and giving it Muhammad bin Salman, the crown prince more leverage in peace talks. 150 km SAUDI ARABIA and power behind the throne, has added The main fighting force is led by the to the 2,000 or so political prisoners de- UAE, which has already taken several Saada Sparsely tained since September. Over the past Yemeni ports in the south. It commands a populated month hisgoonshave arrested 17 liberal ac- force comprised ofthree Yemeni groups. tivists. Nine are women, some of whom The largest consists ofsouthern fighters, Red Sea campaigned forthe right to drive. often with Salafist and separatist lean- Sana’a Marib Prince Muhammad has loosened the ings. They have been joined by northern YEMEN kingdom’s social restrictions. The decades- fighters once loyal to Ali Abdullah Saleh, Hodeida old ban on female drivers will be lifted on a formerdictator whom the Houthis Recent gain June 24th. But when citizens demand new killed in December when Saleh broke off Taiz ERITREA rights, instead of waiting patiently to be their alliance. Local Sunnis, who call Mokha granted them by royal decree, they are of- themselves the Tihama (coastal plain) Gulf of Aden ten locked up. The effect has been stifling. resistance, also lend support. All told, Aden Before talking politics over the phone, Sau- they number over 20,000. DJIBOUTI dis take precautions, such as using virtual The Houthis, meanwhile, are showing Areas of control, June 4th 2018 private networks and encrypted dialling signs ofattrition. Many were demoral- Houthi Coalition led by Saudi Arabia/UAE services. Many have purged their Twitter ised by the death ofSaleh al-Sammad, Source: Risk Intelligence accounts or closed them. “Sorry. I’m not ready to talk,” writes a once-verbose activist. They are all terrified, says a diplomat. tivists used simply to disappear into custo- hammad’s economic- and social-reform Prince Muhammad sees no contradic- dy. Now they are named and shamed after drive, SCL Group, a British firm, conducted tion in all this. His social contract apes that being arrested. Photos of female cam- dozens of focus groups with ordinary Sau- of the United Arab Emirates, which grants paigners appear on the front pages of the dis and found evidence of widespread dis- subjects social freedomsprovided they for- press, stamped in red with the words content with the monarchy. It advised the go political ones. In less than a year as “spies”, “traitors” and “agents of embas- regime on how to stay in power. crown prince, he hastaken directcontrol of sies”. Twitter bots spread the allegations. Prince Muhammad’s strategy of sup- media outlets and big businesses, or ap- Spyware, delivered as text messages, pressing dissent while loosening up in pointed his men to their boards. Once- combs phones for fresh suspects. some areas appears calculated. He has powerful clerics and princely challengers Western firms, skilled in secret psycho- made many enemies by sidelining fellow have been squashed. Gone is talk of hold- logical operations, have been hired to help royals, shaking down businessmen, lock- ing elections for the Shura council, a royal- shape public opinion. They include SCL ing up liberals and alienating religious ly appointed proto-parliament. Group, the parent company of Cambridge leaders. But few question his rule. Saudis The prince has also overhauled the Analytica, the political-data firm that seem to be adapting to the likelihood that state security police, recruiting former claims to have helped President Donald one unaccountable man will rule them for Egyptian officers to hound dissidents. Ac- Trump win election. Before Prince Mu- decades to come. 7 United States The Economist June 9th 2018 37

Also in this section 38 Elections in California 39 Freedom and pharmaceuticals 39 Charles and David Koch 40 Minot, North Dakota 41 Lexington: Berned out

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

The rule of law that request or the subpoena the special counsel could enforce it with. Pardon me? The lawyers also claimed that Mr Trump was in any event incapable of obstructing the course of justice because, as America’s chief law enforcement officer, he could do whatever he liked with Mr Co- WASHINGTON, DC mey’s investigation. That is a more ticklish argument: the obstruction laws are com- Donald Trump’s powers are not quite as vast as his lawyers claim plicated and the ambit of presidential UST as a frog in warming water cannot dent’s ambitions, mostly played along. To power vast. Yet, again, it rests on the ques- Jsense its own destruction, America is extend the amphibian analogy, this illus- tion of Mr Trump’s motivation. The presi- said to be increasinglyinured to the harm trates a combination of executive activism dent is entitled to exercise his constitution- President Donald Trump is doing it. The and congressional dysfunction that has al powers, but not for corrupt purposes, scandalsand affrontsare too manyand too been simmering for decades. It has left which is why MrMueller’s wants to askMr various to keep in mind—and also too con- America more vulnerable to a rogue presi- Trump what his purposes were. fusing. It is hard to tell a toxic tweet from a dent than at any time since Watergate. major corruption scandal from an attack The president’s lawyers made three Uneasy lies the head on the constitution. Just as the frog begins broad claims for their client. They said he In case the special counsel had the temer- to suspect there is something seriously was not obliged to submit to Mr Mueller’s ityto presshisrequest, MrTrump’slawyers amiss, along comes a reason to think his request for an interview, on the basis that raised a third spectre. The president “could, pond is just a bit warmer than normal. he had already provided the investigator ifhe wished, terminate the inquiry, or even An extravagant legal row this week sug- with sufficient documentary evidence. exercise his power to pardon if he so de- gests there may be little time left for com- That is surely wrong. The special counsel is sired.” Two days after the letter was pub- placency. In a leaked 20-page letter written believed to want to ask Mr Trump why he lished, Mr Trump echoed that point on to Robert Mueller, the special counsel who sacked James Comey. Ifhe did so because Twitter. “As has been stated by numerous is, among other things, investigating Mr he was dissatisfied with the FBI director’s legal scholars, I have the absolute right to Trump for possible obstruction of justice, performance, Mr Trump acted within his PARDON myself, but why would I do that John Dowd and Jay Sekulow, both lawyers power. But if he did so because Mr Comey when I have done nothing wrong?” for the president at the time, made a series was pursuing an investigation into Mr It is unclear whether he really does of breathtaking claims for the powers of Trump’s associates’ ties to Russia, he have that power. No president has par- his office. It amounted to an argument last abused it. Asthe presidenthasoffered both doned himself before. And the notion that heard from Richard Nixon: that the presi- explanations, Mr Mueller reasonably one could seems to jar with the view, held dent is above the law. Yet the Republicans wants oral clarification from him on the by most legal scholars, that the president who control Congress, and are therefore matter. And in a rule-of-law state, Mr cannot be indicted in office. The nearest chiefly responsible for checking the presi- Trump has no political grounds to refuse thing to an authority on the matter, though 1 38 United States The Economist June 9th 2018

2 it has no legal force, is an opinion written dent has a careerlong habit ofmaking blus- more incentive to play to the centre rather in 1974 in which a justice department law- tery threats that he does not follow than the fringes. However well-intended, it yer argued that the president did not have through on, often in an effortto secure only was no match for America’s toxic national the power to self-pardon. Nixon resigned modest advantages (as Kim Jong Un may polarisation. Rather than moderating, par- three days later. be about to discover in Singapore). Mr ties just gamed the system. Yet this was ultimately because Con- Trump’s former lawyers, having claimed Seven of the 23 districts held by Repub- gress, belatedly but resoundingly, had vast powers for the president in a bid to licans but won in 2016 by Hillary Clinton turned on him. And that looks farless like- spare him an interview with Mr Mueller, are in California. In two of them, Republi- ly these days—even in the event that Mr seem to have employed the same tactic. Le- can incumbents attracted viable Republi- Trumpdefied a subpoena from MrMueller gal scholars noted that the shabby quality can challengers, which probably would or absolved himself of a crime. Freed by oftheirlegal argumentalso had a distinctly not have happened with a traditional his decision not to seek re-election, Paul Trumpy feel to it. The lawyers argued that primary. In most ofthem, Democratic chal- Ryan, the Speaker of the House of Repre- Mr Trump’s meddling with the FBI did not lengers outnumbered Republicans. sentatives, did musterthe courage to sayhe break a particular statute on obstruction. A small Republican field facing a large was not for presidential self-pardoning. Yet they failed to mention a far more perti- one composed of first-time, relatively His counterpart in the Senate, Mitch nent statute in Article I ofthe constitution. evenly matched Democrats threatened McConnell, kept silent. Meanwhile he re- A more pessimistic view is that, even if “lockouts”, in which the top two finishers fuses to allow a vote on draft legislation in- Mr Mueller were to call Mr Trump’s bluff, by vote-share both come from the party tended to protect the Mueller investigation the stakes are too high for the president to that receives fewer total votes. To flip the from the attack Mr Trump has threatened. fold as he usually would. The presidency is House in November, Democrats need to If Congress will not fulfil its duty to check not a deal he can easily walk away from. pick up 24 seats; lockouts would have monarchical ambitions, America can ex- That this might even be a consideration made their road back to a majority signifi- pect more errant presidents. presupposes, of course, that Mr Mueller cantly rockier. How far Mr Trump may be willing to has him on the hook for a serious offence. Although the official results may not be test Congress’s acquiescence is one of the He may not. Though, it must be said, that is known for weeks (California accepts most important questions of his presiden- not the impression Mr Trump and his law- mail-in ballots postmarked on election cy. It is possible to be optimistic. The presi- yers are giving. 7 day), all seven Republican-held Clinton districts look likely to feature two-party general match-ups. Democratsare unlikely Elections in California to win a clean sweep, but our model sug- Almost blue it gests they will take Mr Levin’s 49th, and party workers like their chances in the nearby 39th and 48th. Orange and San Die- go Counties have grown more diverse, and their relatively wealthy, well-educated Re- publicans are not President Donald SAN CLEMENTE Trump’s core constituency. Mr Trump’s Democrats avoid disasterin California’s consequential, dysfunctional primaries elimination of the state-and-local tax de- duction is an albatross for Republicans in IKE LEVIN has the perfect hair, wash- week: they appear to have avoided a catas- high-tax California. Mand-wear grin and firm yet unthreat- trophe born of their own enthusiasm and Republicans found themselves locked ening handshake of a seasoned politician. California’sbizarre system. out of a California Senate race for the sec- What he lacked, at least by the standards of Introduced in 2010, jungle primaries ond straightcycle. Dianne Feinstein, the 84- California’s wealthy 49th district, was were intended to encourage moderation. year-old incumbent, will face Kevin de money. Paul Kerr, a property investor and The thinking was that, by avoiding parti- Leon, a progressive state senator, in No- one of Mr Levin’s 16 rivals in the primary san primaries, candidates would have vember. But Republicans avoided a lock- on June 6th, spent more than $4m of his out in the governor’s race. John Cox fin- own money. Another rival, Sara Jacobs, ished second to Gavin Newsom, the spent more than $1.5m of hers. But one day lieutenant-governor. Mr Cox has little before the vote, Mr Levin was unfazed. chance in November, but his presence “There is no substitute for a grassroots gives Republicans an incentive to go to the campaign,” he says in his nondescript of- polls and vote for downballot candidates. fice in a nondescript office park in San Cle- Overall, Democrats emerged from mente as he rattles off the number of America’s biggest primary night in good phone calls made and homes visited. shape. In New Jersey they drew more vot- Mr Levin finished in second place, ers and chose electable candidates in the slightly ahead of Ms Jacobs, and well be- three districts they most want to flip. Bob hind Diane Harkey, a Republican former Menendez, the scandal-ridden incumbent state representative. Butin California’sjun- senator, saw off a primary challenge by a gle primary—in which all candidates, re- thin margin. In New Mexico’s safely gardless of party,appear on a single ballot, Democratic first congressional district, with the top two advancing to the election Deb Haaland saw off five challengers; in proper—second place is a victory. Total November she will probably become the Democratic votes exceeded Republican; first Native American woman elected to assuming he can consolidate his rivals’ Congress. And in Missouri Democrats supporters, MrLevin may well become the flipped their 42nd state legislative seat first Democrat in 15 years to represent the since Mr Trump took office. His approval 49th. Across California and America, ratings may have gone up a bit, but he is Democrats can breathe a little easier this Welcome to the jungle still driving Democrats to the polls. 7 The Economist June 9th 2018 United States 39

Pharmaceuticals that use a control group. are better known for their political activ- Even those rare patients who have the ism, which has made them heroes in con- Right to apply financial means to get experimental drugs, servative circles and the favourite bogey- which are not covered by insurance, are men of liberals. On June 5th Charles unlikely to benefit. Only one in ten drugs announced in a letter to employees of that go into trials end up proving safe and Koch Industries that his brother was step- effective. Of those, most offer incremental ping down from his political and business improvements. All these things raise con- interest because of poor health. David was New medical legislation offers hope to cerns that the new law could mainly bene- diagnosed with prostate cancer over two ailing libertarians fit those looking to make a quickbuck from decades ago and has battled the illness N May 30th, surrounded by patients the desperate and the dying. eversince. Whatwill David’sretirementdo Oand their families, President Donald Many believe the Goldwater Institute is to the conservative movement? Trump signed into law the spectacularly only just getting warmed up in its attempts While the professorial Charles runs the misnamed “right to try” legislation. The to limit the FDA’s powers. Ms Coleman dis- family company out of Wichita, the more new law appears to offer terminally ill pa- agrees, saying the new law isn’t an “open- urbane David settled in New York and be- tients the right to get experimental new ing salvo”. However, she does say the insti- came the public face ofthe brothers’ politi- drugs that might save their lives. In fact, it tute isworkingon anotherproposal. This is cal activities. He was the vice-presidential does no such thing. Sittingat his desk in the to allow pharma firms to talk to doctors candidate of the Libertarian Party in 1980 Oval Office, pen in hand, Mr Trump pre- about using medicines for ailments for and an outspoken (and munificent) sup- dicted it would save “hundreds of thou- which theyhave notbeen approved. There porter of Scott Walker, the Republican go- sands” oflives. It will not do that either. are known harms to such “off label” pro- vernor of Wisconsin, when he faced a re- The main point of right-to-try laws is to motion, so the FDA prohibits it. “We think call election after a fight with public-sector cut the Food and Drug Administration that is silly,” says Ms Coleman. 7 unions. He is a driving force at the Cato In- (FDA) outofthe picture when terminally ill stitute, a libertarian think-tank; Americans patients want access to an unproven medi- forProsperity(AFP), a free-marketgroup he cine. The FDA is already fairly gung-ho started in 2004; Freedom Partners, a net- about providing this. It receives about work of donors fostered by both Kochs; 1,000 applications a year and approves all and other outfits promoting the libertarian but 1%. The agency makes sure there is credo. Together, they form what critics dub sound science behind the request, and no the “Kochtopus”. They will now have to do obvious indication that the medicine without him. would harm the patient. Sometimes its The brothers’ activism reached fever drug experts are able to recommend better pitch during the presidency of Barack ways ofgetting the treatment. Obama, whom the Koch brothers consid- Thankfully these irritating bits of bu- ered a seriously misguided socialist. In a reaucracy have been duly dispatched. This newsletter sent to his employees, Charles victory comes courtesy of campaigning even compared the Obama administra- work by a libertarian think-tank, the Gold- tion to the regime ofHugo Chávez, Venezu- water Institute, based in Arizona. It has ela’s authoritarian leader. As they became been pushing right-to-try legislation for the biggest backers of Tea Party organisa- around fouryears, and itcan nowbe found tions and helped to raise an estimated in 40 states. Speaking about the impact of $400m to prevent the re-election of Mr these laws on patients, Arthur Caplan, a Obama in 2012, the brothers transmogri- professor of bioethics at NYU School of fied from libertarian outsiders to influen- Medicine in New York, says he can think of tial conservative power-brokers. one person who may have been helped. The price they paid for their often Starlee Coleman, a policy adviser for Financing politics opaque activism was steep: an end to their the Goldwater Institute, is clear that the privacy (until they took on the Obama ad- motivation behind the federal law is, in Kochtopus’s ministration, the Koch brothers were virtu- good measure, philosophical. The institute ally unknown) and widespread vilifica- believes that dying patients, who know garden tion. Greenpeace published a report the risks, should not have to ask the gov- calling Koch Industries the “kingpin of cli- ernment’s permission to try a medicine. CHICAGO mate-science denial”. An exposé in the The law does offer pharma firms legal New Yorker described how the Kochs gave What David Koch’s retirement means cover in situations where a patient is given millions of dollars to non-profit groups forthe conservative movement an experimental drugand this ends up kill- that promote scepticism about climate ing or harming them. But Dr Caplan says HE Koch brothers are to the left what change, criticise environmental regulation pharma firms are more concerned over TGeorge Soros is to the right: villains ac- and welfare programmes and support how such “adverse” events damage them cused of using their billions to subvert the minimal taxes for industry—ostensibly in on Wall Street, something the law cannot will of the people. Charles Koch and his the name of their libertarian ideals which, address. Irrespective of right-to-try legisla- younger brother David are fabulously rich conveniently, aligned with their corporate tion, some pharma firms simply will not thanks to the success ofKoch Industries, an self-interest. David Axelrod, Mr Obama’s give awaydrugsuntil theyare ata late stage oil, gas and commodities conglomerate chief political strategist, singled out the and have FDA approval, as there is too based in Wichita, Kansas, that is America’s Kochs in an op-ed in the Washington Post as much risk involved. Even firms willing to second-biggest private company and em- billionaire oilmen secretly funding the Tea take those risks may not be in a position to ploys more than 120,000 people. Yet like Party while pretending it was a grassroots help. Thiscan be because suppliesof drugs Mr Soros, who made his billions as a movement for change. The Kochs received are limited, or because a right to try could hedge-fund manager and supports liberal death threats that require the brothers to make it harder to recruit patients for trials causes on both sides of the Atlantic, they travel with security guards. “They became 1 40 United States The Economist June 9th 2018

2 the caricature of capitalists,” says Daniel well as the professorships they finance, the city’s then 40,000-odd residents found Schulman, author of “Sons of Wichita”, a willendureevenwithoutDavid’sactivein- themselves homeless. “There wasn’t a bookon the Koch clan. volvement, as long as the funds are flow- spare couch in town,” says Thomas In the past couple of years the Kochs ing. They are run by seasoned political op- Schmidt, a retired high-school teacher have toned down theiractivism, in part be- eratives who have become more eclectic in whose house was flooded. It took weeks cause they could not bring themselves to their choices. AFP recently paid for an ad- for the waters to recede, and several back Donald Trump’srun for the presiden- vertisement thanking Heidi Heitkamp, a months more before people could move cy. (Charles once likened the choice be- senator from North Dakota who is one of backinto their homes. The after-effects can tween Mr Trump and Hillary Clinton to the most vulnerable Democrats up for re- be felt to this day. Empty, water-damaged choosing between cancer and a heart at- election, for helping to pass legislation homes still dot the landscape. In March the tack.) They differ from Mr Trump on trade loosening some of the key provisions of city broke ground on a new flood wall. and immigration, explains Grover Nor- Dodd-Frank, a stringent set of banking The people of Minot had barely recov- quist ofAmericans forTaxReform, a lobby rules. And the Charles Koch Institute, ered from these twin shocks when they group. Three organisations financed by the which does public-policy research, is now faced another test: the car park debacle. In Kochs, including AFP and Freedom Part- focused on criminal-justice reform to fight 2011 the city council approved a $10.5m ners, announced on June 4th the launch of what Charles calls the “overcriminalisa- project for a developer to build parking a multimillion-dollar campaign against Mr tion of America”. It is a cause espoused by downtown. It was meant to take three Trump’stariffson imports. liberal heroes such as Cory Booker, a sena- years, but work stalled and in 2015 the city The Kochs’ political organisations, as tor from New Jersey—and by Mr Soros. 7 paid the developer another $2.5m. The parking lots were eventually completed, at twice the original budget. Local government Like much of the Western world, Minot was reeling from rapid change, immigra- Scandimonium tion and inefficient government. For a deeply conservative town in the middle of North Dakota, it was all too much. In 2016, a few months before a political tidal wave hit America, Minot tooka radical step ofits MINOT, NORTH DAKOTA own. Spurred by a citizens’ initiative, the city voted to overhaul its government, How a small town in North Dakota got its groove back halvingthe size ofthe council to seven. Pre- EW places have seen as much change in town. That brought with it money and mi- viously only four the 14 aldermen had to Fas short a period of time as Minot, a grants, but also crime and inflation. In the contest their seats and Chuck Barney, the town of about 50,000 in North Dakota four years to April 2012 the median house mayor, ran unopposed. That has changed. (slogan: “We’re ready for you”). Much of value in America fell by a fifth. In Minot it Itseemsto have worked. The newcoun- the city is descended from Norwegian jumped by nearly a third. In the same per- cil is younger and more dynamic, empha- stock. The biggest event on its cultural cal- iod Minot’s population grew 14%, com- sising the importance ofbeing able to walk endar is a celebration of Nordic culture pared with 3% forAmerica as a whole. The around, of making Minot more pleasant (slogan: “Pure Scandimonium!”). Until Hispanic population grew even faster. and reviving its centre. Despite grumbling about a decade ago, it was the sort of place “The shock for this community came from by a few older residents about changes—a where people left their homes unlocked the diversity of colour and language,” says plan fornewrubbish binsechoed previous and their car keys in the ignition. TomBarry,the city manager. grievances—the city seems upbeat. Then came the oil boom, spurred by the After oil, the deluge. In 2011 the Souris “People are more optimistic today be- discovery of new oilfields in the Bakken river burst its banks and flooded the valley cause of the change in the nature of city rock under the ground to the west of the in which the town sits. Overnight12,000 of government,” says Michael Sasser, the edi- torofthe MinotDaily News, a conservative local paper. The long-awaited car parks are functional and local elections on June 12th are attracting competition: three candidates are running for mayor and three open council seatsare beingfoughtover by six contenders. Oil prices are rising again, which could lead to a boomlet, but the town is keen not to repeat the mistakes of the past. It is in- vesting in its downtown and hopes, if not to attract office workers from elsewhere, at least to offer a life vibrant enough to per- suade its own educated young people to stay put. Bars and cafes have started pop- ping up. And it is more diverse. Grocery stores selling foreign foods have prolifer- ated, says one councillor proudly, and foreign languages no longer elicit surprise. Minotians once travelled to the China- town in Winnipeg, Manitoba—not exactly a metropolis—to shop, says Josh Wolsky, an alderman. But “now everything you can Noah place like home get in Winnipeg you can get here.” 7 The Economist June 9th 2018 United States 41 Lexington Berned out

Democrats will soon decide that Bernie Sanders is an indulgence they cannot afford ton, Sandernistas say, he would have done. President Donald Trump says the same. It is nonsense. Mr Sanders won 4m fewer votes than Mrs Clinton and none ofthe most populous states. He won quirky, liberal hotbeds like New Hampshire, or through the caucus system that mimics them. He was considered competitive chiefly as a result of bored journalists’ efforts to inject drama into the yawnathon ofMrs Clinton’s slow-walkto the nomination. The most fervent Sandernistas tended not to be Democrats at all. They were college kids and independents, many of whom subsequently drifted offto a third-party nominee. Amiddle-aged Sandernista in the crowd in Los Angeles, Jacinta, said she voted for the Green candidate in 2016, considered Democrats and Re- publicans as birds of a feather, and was frustrated that neither backs free movement across the southern border. Most Sanders voters, by contrast, were loyal Democrats who simply didn’t much like Mrs Clinton. Having little attachment to Mr Sanders’s statist ideas, they nonetheless swung grumblingly behind her. This helps explode the second myth: that the Democrats have veered to the left, where the rumpled Mr Sanders awaits them. There are, to be sure, signs of a long-running leftward drift in the party, as it loses its last conservative whites to the populist HE little smile, hastily suppressed, said it all. Bernie Sanders is right. But there are also counter-signals. Mr Sanders’s demand for Ta grim, almost mirthless, figure. Yet a cry of “Bernie for presi- “universal health care” hasbeen taken up byalmosteveryDemo- dent!”—echoing around Los Angeles’s docklands like a portent— cratic candidate in the mid-terms—but there is such ambiguity caught the 76-year-old senator from Vermont off-guard. One mo- about what it entails as to make this no more meaningful than ment his craggy face was glowering over the mistreatment of the civil rightsamongotherdistantaspirations. None ofMr Sanders’s local truckers, fleeced of job security and benefits; the next it had other big ideas—including free college and massive public melted, like frost in spring, into a joyful smirk. Mr Sanders, the works—is getting much play. Nor have Sanders-endorsed candi- runner-up to Hillary Clinton in the 2016 Democratic primaries, dates fared well in the primaries. Our Revolution, a group Mr still burns with ambition. But are Democrats still feeling it? Sanders formed to promote his acolytes, has been a failure. “It A recent day on Mr Sanders’s tail in southern California, doesn’t do anything,” gripes a strategist for one ofits candidates. where he fired up a trio of left-wing crowds, suggested many are. At a gathering ofunionised workers at Disneyland, the “Happiest Rumpled, crumpled, Trumpled Place on Earth”, he raised cheers by angrily endorsing their de- The energy on the left is focused on opposing Mr Trump’s attack mand for a $15-minimum hourly wage. (But he had bad news for on liberal democracy, noton carryingforward MrSanders’s revo- their children: “Ducks don’t talk, mice really don’t talk,” said Mr lution. The success ofmoderate candidates in the Democratic pri- Sanders, taking no prisoners. “That’s fantasy, this is reality.”) In a maries suggests this is making the party more pragmatic and stirring rally in downtown Los Angeles, he was later feted by the mindful ofparty unity than Mr Sanders, an ideologue who is not leaders of the Black Lives Matter movement who once derided a Democratic Party member, might like. him. In 2016 Mr Sanders appeared to have given little thought to This illustrates how asymmetrical the extremist drift in Amer- their cause. Now, burnished by a new campaign for criminal jus- ican politics is. While the right gallops towards the ethno-charged tice, he waswelcomed bysome ofAmerica’sforemostcivil-rights edge of reason, the more diverse, heterodox left yo-yos between activists as a visiting prophet. “I believed that he could beat Do- defining itself against its governing wing, as Sandernistas did in nald Trump and I still believe he could!” hallooed Shaun King, a 2016, and swinging back to moderation to stave off the latest Re- campaigner with a million followers on Twitter. publican attack. Put another way, the Democrats, unlike their This is a kind of fervour the centre-left, retreating in America counterparts in Europe’s multiparty systems, are often spared the and acrossthe Westbefore the populistright, rarelyconjures. Itre- burden ofhaving to workout what they stand forbeyond oppos- callsMrSanders’sthrumming, thrown-togethercampaign rallies, ing the right. Despite a lot of blather about liberals and progres- so unlike Mrs Clinton’s dull appearances. No wondermany hope sives, to be a Democrat under Mr Trump is mainly to be pro-liber- he will reignite in 2020. Polls suggest Mr Sanders is the most pop- al democracy and protective ofimmigrants, minorities and other ular politician in America. Betting markets make him the favour- targets ofthe president. That leaves little free time to feel the Bern. ite for the next Democratic nomination. If the contest were held Mr Sanders still has a chance in 2020. His odd charisma, name next month, his superior name-recognition and lists of small- recognition and ability to work up a devoted crowd are real ad- time donors might see him home with ease. Yet the vote is two vantages. His genuine concern forthe underdog is all the more at- years off, and the punters are probably mistaken. Mr Sanders’s tractive set against Mr Trump’s counterfeit concern. But if Demo- following, influence and prospects have all been exaggerated. crats picked Mr Sanders, it would not be forhis ideas, which have Set aside, for now, hiscrotchety-great-uncle charisma, and the little support within their party, let alone America. It would also idea that Mr Sanders is a major force rests on two myths. The first be delightful to Mr Trump, who fancieshis chances of destroying is that he almost won the Democratic nomination: had he not “crazy Bernie”. If only for that reason, it is good that Mr Sanders’s been stiffed by the party establishment, which assisted Mrs Clin- moment in American politics has probably passed. 7 42 The Americas The Economist June 9th 2018

Also in this section 43 Of rosaries and ovaries 44 Daniel Ortega’s last act 44 The volcanic fury of Fuego Bello is away

Brazil Both the ideology and the techie tactics have echoes in the campaign of Mr Bolso- Too soon to party naro, whose Social Liberal Party counts for almost nothing but whose Facebook page has 5.5m followers. He tweeted support for the drivers but distanced himself from ap- SÃO PAULO pealsforpolitical intervention bythe army. Military rule might “return by the ballot”, A lorry-drivers’ strike that paralysed the countryhas ended. It will have big meaning through the generals that he consequences fornational elections in October plans to appoint to his cabinet ifhe is elect- SEMBLANCE of normality returned to lado, a professor of public policy at the ed, he told reporters at an evangelical ASão Paulo, Brazil’s biggest city, after a University ofSão Paulo. “march forJesus” on May 31st. ten-day strike by lorry drivers that had par- Although the lorry-drivers’ rebellion No candidate reflects better the elector- alysed traffic, shut down petrol stations made life miserable, 87% of Brazilians sup- ate’s anti-establishment mood. The pro- and emptied grocery-store shelves. The an- ported it, according to Datafolha, a pollster. portion ofBrazilians saying that “tradition- nual gay-pride parade, held on June 3rd, As well as calling for cheaper fuel, many al political partiesdo notcare about people brought 3m people to Avenida Paulista, the drivers demanded a crackdown on corrup- like me” jumped from 69% in November city’s main street. Football fans packed tion and crime, which have dominated 2016 to 86% in March this year, according to bars to watch Brazil’s team play a World headlines under recent administrations, IPSOS Global, a pollster. The share who Cup warm-up game against Croatia. including that of Mr Temer. Petrobras has think Brazil needs “a strong leader who But this resumption of ordinary life is been a byword for graft. Under earlier will break the rules” rose from 48% to 89%. deceptive. The drivers’ strike, called to bosses it was the conduit for enormous Mr Bolsonaro “feeds off fear and hopeless- protest against higher fuel prices, marks an bribes paid by construction companies to ness”, saysCláudio Couto, a political scien- ominous beginning to a political season politicians. Celso Rogerio Gomez das Ne- tist. His view that “a gay son needs a beat- that will culminate in national elections in ves, a mechanic taking a break at a corner ing” appeals to some social conservatives. October. It has demonstrated Brazilians’ bar in São Paulo, admits that Petrobras His iron-fisted approach to crime (he taste forirresponsible policies and boosted raised prices to compensate for higher would give police a “blank cheque” to the prospects of the most extreme candi- costs, but also thinks that its executives shoot miscreants) is popular with a bigger date in the presidential race, JairBolsonaro, were “stealing from the Brazilian people”. group. Like Donald Trump, or Rodrigo Du- a right-wing formerarmy captain. terte in the Philippines, he gets points for It also showed that the next president Fear of Jair supposedly plain speaking. “He says what will have a hard time enacting the reforms Some drivershungbannersfrom theircabs he thinks,” saysa taxi driverin São Paulo as needed to maintain economic stability. demanding “military intervention” to deal he drops off a carful of revellers clad in The strike ended only after Michel Temer, with crime and corruption. Far-right rainbow colours at the pride parade. the country’s unpopular president, agreed groups dominated online discussion of In the first nationwide poll since the to subsidise diesel for60 days and to adjust those themes during the strike, according strike of voting intentions for the first its price monthly rather than daily. That to an analysis by a data lab run by Fabio round of the presidential election, Mr Bol- prompted the resignation on June 1st of Pe- Malini, a scholar of internet culture at the sonaro came outahead againstthree differ- dro Parente as chief executive of Petrobras, Federal University of Espírito Santo. The ent lists of potential rivals, with 21-25% of the state-controlled oil company, which digital savvy ofthe strikers, who organised the vote. Three-quarters of his supporters had raised prices in response to higher in- through thousands of interconnected say they will not change their vote before ternational oil prices and a weaker real. WhatsApp groups, foreshadows the role election day. The only politician who out- The strike could prove to be a watershed that social media are likely to play in the polls him is Luiz Inácio Lula da Silva, a left- moment forthe elections, says Pablo Ortel- presidential election, says Mr Malini. wing former president. But he is in jail for1 The Economist June 9th 2018 The Americas 43

2 corruption and isunlikelyto be able to run. tions are available on the internet. Women St Kitts & Nevis Mr Bolsonaro’s closest rival is Ciro Antigua & Barbuda who want a surgical abortion, which Gomes, a centre-left former governor who HAITI Dominica causes less bleeding, can usually find priv- DOM. REP. St Lucia occasionallysoundslikeapopulist.Hegets CUBA Barbados ate doctors willing to perform them. That the support of11-12% of voters. That would St Vincent & can cost $1,000—far more than most poor JAMAICA the Grenadines rise if Lula endorses him. Geraldo Alck- Grenada women can pay. Even misoprostol may be min, the centrist former governor of the Trinidad & Tobago out of their reach, especially for teenagers PANAMA GUYANA state of São Paulo, is backed by just 6-7% of VENEZUELA or for women whose husbands or boy- voters. His Facebookpage has 900,000 fol- SURINAME friends control the cash. Some resort to lowers, about a sixth of the number that COLOMBIA backstreet abortions or unsafe medication Mr Bolsonaro’s has. sold online. Argentina’s health ministry Mr Alckmin’s supporters argue that he ECUADOR counted 31 deaths from abortions in 2016, will do much better than the polls suggest. which may be an underestimate. His Party of Brazilian Social Democracy The biggest problem for many comes (PSDB) has a large number of seats in con- PERU BRAZIL after the procedure. Whereas rich women gress, which will entitle him to lots of free can go to their doctors if something goes advertising time on television and public BOLIVIA wrong, the poor must seek treatment in moneyforhiscampaign.ThePSDB can add public hospitals, where staff might report to that by forming coalitions; last week it CHILE them to the police. In 2014, the latest year PARAGUAY opened negotiations in congress with cen- for which official figures are available, tre-right parties. By early August, Brazilians 47,000 women were hospitalised for com- will come to realise that Mr Alckmin, who ARGENTINA plications. Although the vast majority are trained as an anaesthesiologist, is a “doc- treated and sent home, a few high-profile punishments have frightened many wom- tor” for the country’s economic and politi- URUGUAY cal ills, says Luiz Felipe d’Avila, an adviser. en. In 2016 a 27-year-old woman who mis- Voters “are more rational than irrational”, Abortion laws, 2018 carried was sentenced to eight years in pri- he believes. Prohibited, except Permitted son for murder after hospital staff accused The financial markets hope that is true. to save a woman’s life within national her of inducing an abortion. Her convic- gestational limit Mr Alckmin is the only one of the leading and to preserve a woman’s health tion was overturned on appeal. candidates with any enthusiasm for the and on socio-economic grounds in cases of rape Tragedies and injustices have changed programme of economic reforms begun (eg, economic resources, age in cases of incest Argentines’ conservative attitudestowards by Mr Temer, which helped pull Brazil out or marital status) abortion, says Maxine Molyneux, a sociol- of its worst-ever recession. Mr Temer Source: Centre for Reproductive Rights ogist at University College London. In pushed through a constitutional amend- 2004 two-thirds of Argentines opposed ment to freeze government spending in she popped the pills alone at home and liberalising the law. According to a poll real terms and liberalised the labour mar- spent a day in bed. The DIY abortion gave published in March this year, the same pro- ket. But he has failed to curb pension her “a sense of relief and autonomy”, she portion now favour legalisation. spending, the main long-term threat to the recalls. Feminist groups such as Ni Una Menos budget. His cave-in on diesel prices will Like many countries in Latin America, (Not One Less), formed in 2015, have cam- add to the fiscal burden that the next presi- where mores have been shaped by the paigned with increasing vigour against do- dent will inherit. The lorry drivers have Catholic church, Argentina outlaws most mestic violence and the macho culture made it more urgent that Brazil elect a re- abortions (see map). Women who un- that encourages it. That has spilled over former as president in October. They have dergo them can be jailed for four years (or into demands for more liberal abortion also made that less likely. 7 longer if the baby is deemed to be viable laws. A younger generation of women has outside the womb). The law makes excep- helped that cause. On this year’s Interna- tions for pregnancies that are the result of tional Women’s Day, March 8th, tens of Argentina rape or that endanger the mother’s health thousands of women wearing green or for fetuses that are malformed. Despite scarves, many ofthem teenagers, marched Of rosaries and Argentina’s restrictive rule, nearly a half- in supportoflegislation. “Getyourrosaries million abortions a year take place there, off our ovaries”, their banners demanded. ovaries say campaigners forless restrictive laws. The same month a smallercrowd respond- On June 13th the lower house of Argen- ed by carrying a huge papier mâché fetus BUENOS AIRES tina’s congress will vote on a bill to legalise through the centre of Buenos Aires, chant- elective abortions within the first14 weeks ing “yes to life, no to abortion”. Ifthe countrydoes not make elective of gestation. A Yes vote, followed by ap- Congressional opinion has not shifted abortions legal now, it may do so soon proval in the senate, would have repercus- as much as voters’ attitudes have. The vote HEN María Florencia Alcaraz discov- sions beyond Argentina. Elective abortion in the lower house is expected to be very Wered that she was pregnant in 2015 is now legal for just 3% of women in Latin close. If the measure passes, it will move she was unprepared for motherhood. The America and the Caribbean. If Argentina on to the senate, where most legislators contraceptives she was taking hadn’t votes to allow it, that will rise to 10%. Wom- have already said they will vote against it. worked. Aged 30, she was employed as a en from neighbouring countries might Argentina’s president, Mauricio Macri, journalist in the justice ministry. With a come to Argentina for abortions. Other who is personally against liberalisation, general election in the offing she worried countries might follow Argentina’s lead. says legislators should vote according to that she would lose her job under a new In practice, Argentina has a two-tiered their consciences. He says he will not veto government. Unable to end the pregnancy abortion regime. Rich and middle-class a law that loosens restrictions. Even if the legally in Argentina, she turned to friends women can get relatively safe (but illegal) measure fails, campaigners believe that le- for advice. One gave her misoprostol, a abortions by taking misoprostol, which galisation will soon happen. “It’s inevita- stomach-ulcer drug often used to induce costs about 2,800 pesos ($112). Although ble,” says Sabrina Cartabia, a pro-choice abortions. At 13 weeks into her pregnancy prescriptions can be hard to get, instruc- activist. “The country has moved on.” 7 44 The Americas The Economist June 9th 2018

Nicaragua ing dialogue” between the government for an early election, probably in 2019, two and such groups as students, farmers and years before it is due. A fair vote would Ortega’s last act representatives ofcivil society. probably end Mr Ortega’s rule. His foes Hoping to end the turmoil Mr Ortega will not participate in an election if he agreed to participate in talks with his foes, runs. His candidacy would only be legal mediated by Catholic bishops. This has because the national assembly scrapped not allayed his opponents’ anger. In tele- presidential term limits at his bidding in vised meetings last month the president 2014. The opposition would also boycott A slaughterofthe president’s listened impassively as teenage students the vote if Mr Ortega nominates his wife, opponents will not keep him in power called him a murderer and read out a list of Ms Murillo, to run in his stead. AY 30th was Mothers’ Day in Nicara- the dead. Opposition groups want the ne- Before any election the opposition will Mgua. On that day hundreds of thou- gotiationsto be aboutrestoringdemocratic demand the dismantling ofthe machinery sands of people marched in Managua, the institutions and holding early elections. that Mr Ortega set up to perpetuate his country’s capital, in solidarity with moth- Mr Ortega refused to talk about that. The power. The changes needed include re- ersofstudentswhohadbeenkilledinprot- bishops withdrew from the talks, in effect placing all seven members of the electoral ests against the government of Daniel Or- ending them. Then came the Mothers’ Day council, says Juan Sebastián Chamorro, tega, the authoritarian president. By the deaths, which destroyed the trust that the director of Funides, a think-tank fi- end of the day more mothers had cause to might have allowed them to prosper if nanced by the private sector. If Mr Ortega mourn. Masked men fired on the crowd at they resume. does not agree to such demands, calls for sundown, killing 16. In Masaya, a town This leaves MrOrtega with few choices. his immediate resignation will grow loud- near Managua, nine people, including a 15- Tobecome an outrightdictator,like Nicolás er. Some opponents favour a national year-old boy,were killed by security forces Maduro in Venezuela, may not be possible. strike, like the one that brought Mr Ortega on June 2nd. Human-rights groups are in- Nicaragua’s private sector is more power- to power in 1979, as a last resort. vestigating claims that a plane sprayed cy- ful than was Venezuela’s in 2013, when Mr The last time he lost an election, in 1990, permethrin, an insecticide, on citizens. Maduro became the country’s president, the Sandinistas did not go quietly. On the By the count of the Inter-American points out Mateo Jarquín, a graduate stu- eve ofthe transition the central bank trans- Commission on Human Rights, at least 127 dent in political science at Harvard Univer- ferred millions of dollars to government people have been killed and 1,000 injured sity. No one knows how the armed forces loyalists on Mr Ortega’s orders. As bureau- in protests that began in April. They started would respond to an imposition of dicta- crats vacated their offices they carried as a reaction to cuts in pensions, which Mr torship. Mr Ortega has largely abandoned desks and chairs with them. Nicaraguans Ortega imposed after his regime had frit- the left-wing ideology that helps sustain call that episode of asset-stripping la piña- tered away much of the national pension Mr Maduro’s tyranny. ta. The carnage ofMother’sDayshowsthat pot. He later reversed the cuts, but other The alternative to continued repression the price of getting rid of Mr Ortega this grievances, including corruption, presi- is to accede to the opposition’s demands time will be even higher. 7 dential power grabs and the elevation of Mr Ortega’s wife, Rosario Murillo, to the vice-presidency, continue to inspire protests. State media suggested that the killings were caused by protesters to stir up anti- government sentiment. The repression has disrupted an alliance with business formed by Mr Ortega, who led the left-wing Sandinista revolution against a thuggish dictatorship in the 1970s and returned to power after an election in 2006. Business leaders gave him a free hand in politics, which he used to take control of independent institutions, subvert opposition parties and rig subsequent elections. In return, Mr Ortega adopted business-friendly policies. That led to economic growth of better than 4% a year on average from 2007 to 2017; inflows of foreign investment more than trebled over that period. Mr Ortega’s brutality has exposed that bargain as morally bankrupt and politically unstable. The unrest since April has cost the economy $600m, about 4% of GDP, says José Adán Aguerri, the head ofCosep, an employers’ association. Hundreds of millions of dollars have left the country. Fuego’s fury Nicaragua’s three most powerful business- Parts of Guatemala’s lush green countryside became deathly grey after the Fuego men called forearlyelectionsin interviews volcano, 25km (16 miles) south-west of Guatemala City, started its strongest eruption with newspapers. “The model that got us in 44 years on June 3rd. The volcano sent ash billowing 6km into the air, closing the here is exhausted,” said Carlos Pellas, Nica- capital’s airport. It set off lahars—fast-flowing mixtures of rock, debris, ash and ragua’s only dollar billionaire. Business water—and red-hot pyroclastic flows, which buried several nearby villages. The leaders now talk openly of a post-Ortega confirmed death toll has climbed to 99. Around 200 people are still missing. era and of a “permanent consensus-seek- Guatemala’s president, Jimmy Morales, declared three days of mourning. Asia The Economist June 9th 2018 45

Also in this section 47 Japan’s stretched tourism industry 48 India’s “tribals” protest 49 Banyan: Racial politics in Malaysia

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

The Trump-Kim summit young Mr Kim seem keen to make it so. Simply meeting face-to-face will allow Pushing the envelope them to crow about their fortitude and foresight in forcing the other to the table. The White House staked early bragging rightson June 4th. Team Trump marked the boss’s500th dayin office—orasaidesput it, BEIJING and SEOUL “President Donald J. Trump’s 500 days of American Greatness”—with an assertion Talks between America and North Korea might succeed, but at an alarming price that the American-led campaign to tighten HEN a great powerpromises a small- high regard. The island only acquired its UN sanctions on North Korea over the past Wer country a “win-win” deal, dip- current name in 1972, however, with help 18 months is responsible for pushing the lomats mordantly joke, that means the from Singapore’s tourism board. Before North closer than ever before to giving up great power plans to win twice. Yet the that, it was known as “Pulau Blakang its deadly arsenal. UnderMrTrump, Amer- summit between America and North Ko- Mati”, which translates as “Island of death ica has pursued a policy of “maximum rea in Singapore on June 12th may prove an from behind”. pressure” on the North, includingthreats to exception: a negotiation that could con- Diplomacy between America and rain “fire and fury” on it should it persist in ceivably allow not only the two main pro- North Korea has always had a surreal edge. its intransigence. tagonists to preen and claim victory, but At a powwow in 2000 in Pyongyang, the Back in his Stalinist dystopia, Mr Kim that might also please several interested North Korean capital, Madeleine Albright, has peddled a conflicting but equally stir- observers. Both South Korea and China then America’s secretary of state, was ring story, says a scholar from a Chinese have high hopes for the meeting. Japan is greeted with mass callisthenics and bayo- government-sponsored think-tank who more suspicious. But the biggest loser, if a net drills. The two sides have been negoti- travels to North Korea several times a year. deal is struck, is likely to be totally ob- ating over the North’s nuclear-weapons “Kim Jong Un has told the North Korean scured bythe flashingcamerasand swoon- programme since 1992, when Kim Il Sung, elites that when they kept testing nuclear ing anchors: the American-led security ar- the grandfather of the current despot, Kim weapons and missiles last year, the aim chitecture that has brought decades of Jong Un, was in power (see timeline on was to force the United States to the table,” stability to Asia. next page). The North has broken many the scholarsays. “So the North Korean peo- The summit is takingplace in a posh ho- promises to forgo nuclear arms. Korea- ple thinkthis is a victory forKim Jong Un.” tel on Sentosa Island, a resort district con- watchers have long debated whether the nected to the rest of Singapore by bridge, Kim regime sees nuclear weapons as vital Kodakmoment cable-car and monorail. Close at hand are to its survival, or rather as useful leverage Beyond the immediate photo-ops, how- many golf courses, beaches, a wax muse- over the outside world. After all, the ever, it is not clear what the summit will um and a Universal Studios theme park, North’s ability to pound the capital of the yield. American veterans of Korea talks complete with a space ride billed as an South, Seoul, with thousands of dug-in ar- have aired all sorts of possible induce- “intergalactic battle between good and tillery pieces has given it decades of deter- ments to get Mr Kim to disarm: the loosen- evil” and “Revenge ofthe Mummy”, which rence without nukes. ing of sanctions, big dollops of aid and in- promises a “plunge into total darkness”. Either way, the “complete, verifiable vestment, a formal peace treaty to end the “Sentosa” is a Malay word meaning and irreversible disarmament” that Amer- Korean war, establishing diplomatic rela- “peace” or “tranquility”. This is seen as a ica seeks is probably out of reach. But the tions in the form of “interests sections” good omen in South Korea, where fortune- summit could still be declared a success, as (one step short of embassies). Mr Trump tellers and pregnant symbolism are held in both President Donald Trump and the hastalked ofoffering“verystrong” guaran-1 46 Asia The Economist June 9th 2018

2 tees that the Kim regime will be safe from promises to give up nuclear weapons, sub- sation and mobilisation of the unused American attackifit agrees to disarm. mitto international inspections, and rejoin fundsofresidents”. Since MrKim tookover The problem is that all this has been the Nuclear Non-Proliferation Treaty (NPT) in 2011, the economy has grown in the low tried before. The two Koreas first forswore from which it had earlier stalked. single digits every year bar one, according nuclear weapons in a solemn agreement Back then, America offered explicit se- to statistics compiled by South Korea’s cen- in 1992, shortly after America removed tac- curity guarantees that it had no intention tral bank. Although those numbers are un- tical nuclear weapons from its bases in to attackor invade North Korea with either reliable, they mark a striking departure South Korea. But in 1994 the ageing “Great nuclear or conventional weapons and from the economic collapse and wide- Leader”, Kim Il Sung, kicked out interna- guaranteed that it had no nuclearweapons spread famine over which Mr Kim’s father tional inspectors and threatened to divert deployed in South Korea. Even the idea of presided. North Korean officials have told plutonium from a nuclear reactor into half exchanging interests sections has been foreign visitors that Mr Kim hopes to emu- a dozen primitive bombs. Under an tried, at China’s urging, Mr Hill recalls. He late Vietnam, which has grown rapidly “Agreed Framework” in late 1994 the North worked mightily to convince a sceptical after making peace with America, in part promised to abandon illicit work on pluto- Bush administration to agree to the idea, to hedge against a rising China. nium weapons, in return forAmerican aid, then took it to the North in 2007. “They re- At a minimum, Mr Kim will be keen to oil and civilian nuclearreactors. In 1999 the jected it on the spot,” the former ambassa- secure some easing of sanctions. Imports North was bribed with sanctions relief to dorsighs. “The North Koreans tend to want of solar panels from China, which had give up missile testing, and in 2000 a sum- something until they don’t want it.” been rising rapidly until last year as well- mit between leaders of the two Koreas to-do residents of Pyongyang tried to be- prompted talk of a visit by President Bill Just maybe come independent of the unreliable pow- Clinton (in the end, he only made the trip There are reasons to imagine, however, er supply, fell to zero in March for the first after leaving office). By 2002 North Korea thatthe North maybe more eager for a deal time in eight years, according to Chinese revealed it had a secret uranium weapons this time than it has been in the past. customs statistics analysed by NK News. programme and expelled international in- Though nuclearweapons remain the pillar Fuel prices spiked in early April, and NGOs spectors, leading to a multilateral peace of Mr Kim’s regime and are popular with have begun to notice shortages of fertiliser drive called the “six-party talks”. Those ordinary North Koreans, the elites have in the countryside. None of this will have lasted until a nuclear test in 2006. The also become attached to the minor eco- improved the mood of North Korea’s North tested five further nuclear devices nomic boom over which Mr Kim has pre- quasi-capitalists. “These people like mak- between 2009 and 2017. North Korea also sided, says Andrei Lankov of Kookmin ing money, and ifthey stop making money defied the UN Security Council to test bal- University in Seoul. Mr Kim has even or sufferdiscomfort, that will be a problem listic missiles of increasing range, culmi- promised to embrace growth as well as de- forthe leadership,” says Mr Lankov. nating last year in several tests of devices fence, after years of putting weapons- What is more, Mr Kim may see a chance capable ofhitting the American mainland. building first. of a breakthrough. North Korea has made Christopher Hill, a former American Mr Kim has gone further than his fore- great efforts to understand American poli- diplomat, recalls stirring language about bears in giving priority to economic devel- tics in the Trump era. North Korean offi- working towards a “permanent peace re- opment, tolerating a big, semi-legal “grey cials have been asking foreign contacts gime on the Korean Peninsula” in an agree- market” and allowing the running of de about such arcana as the implications of ment signed by America, China, Japan, facto private enterprises within state- the recent Republican loss of a Senate seat North Korea, Russia and South Korea in owned firms. He has even encouraged in Alabama. According to the Chinese aca- 2005, as part of the six-party talks. That private investment by his subjects. One demic, the regime has decided that Mr agreement also included North Korean government regulation calls for the “utili- Trump has no firm ideology and is a deal- maker unlike any president they have en- countered. Against that, his recent pull-out North Korea’s nuclear path Two summits between leaders of North of the Iran nuclear deal makes him look Second summit and South in demilitarised zone Missile tests with South Korea like a deal-breaker. On balance, he says, Mr Partially demolishes Says it will disable underground nuclear test site Kim’sside sensesopportunitiesworth test- Threatens to Withdraws from NPT nuclear facilities. ing. The current rivalry between America leave Nuclear US agrees to Planned summit with Mr Trump in Singapore Non-Proliferation Declares unfreeze assets and China provides another opportunity, Treaty (NPT), reactivation of and provide aid then relents nuclear facilities 6th nuclear test to play them offagainst each other. Mr Trump, meanwhile, seems deter- UN inspectors say Announces it Expels UN Further UN sanctions North Korea is has nuclear inspectors; mined to be emollient. Despite declaring hiding evidence of weapons pulls out of nuclear fuel for Agrees to talks and 4th and 5th in late May that he was calling off the sum- bombmaking freeze testing Carries out 1st restarts nuclear tests mit because of the North’s “open hostil- on long- underground nuclear range missiles nuclear test facilities UN agrees on ity”, Mr Trump warmly received one of Mr new sanctions Expels UN 2nd nuclear 3rd nuclear test Kim’s henchmen at the White House, bear- Signs “agreed framework” inspectors test ing an absurdly large letter from his boss. with US to freeze and from nuclear Agrees to Restarts dismantle nuclear facilities return to nuclear reactor Soon afterwards, Mr Trump reinstated the programme in exchange NPT. One for nuclear reactors, First summit day later, Sinks meeting, despite the lack of any clear pub- aid and easing of between demands South lic commitments from the North on disar- sanctions North and reactor Korean South since from US warship mament, for example. (The contents of the end of Korean War giant letter have not been disclosed.) John Bolton, Mr Trump’s national security adviser, has been kept in the background, 1993 94 95 96 97 98 99 2000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 after he infuriated the North by citing Lib- NK supreme Six-party talks with Sources: CSIS; The Economist ya’s complete dismantling of its nuclear leaders and Series of US-North China, Russia, US, Japan US presidents Korean talks and South Korea programme as a model, even though the Kim Il Sung Kim Jong Il Kim Jong Un Libyan leader who agreed to this, Muam- Donald mar Qaddafi, ended up dead in a ditch. Bill Clinton George W. Bush Barack Obama Trump Most importantly, Mr Trump seems to 1 The Economist June 9th 2018 Asia 47

mercy of North Korea’s short- and medi- was shut down after a nuclear test by the um-range missiles, possibly tipped with North in 2016. South Korean companies nuclear bombs. Such bald proof of Ameri- have been buying up land near the demili- ca’s willingness to sell out its allies, in turn, tarised zone thatdividesthe two countries. would alter the strategic balance in Asia in Some have set up their own offices for in- the long run. Friends would begin to ques- ter-Korean co-operation. “The South Kore- tion whether America would stand up for ans,” says MarkFitzpatrickofIISS,aninter- them in disputes with China, for example. national think-tank, “may well find ways The natural response would be to hedge to work around sanctions or interpret bets and to reach an accommodation with them in a way that allows them to re-up China, dramatically diminishing Ameri- economic engagement.” ca’s clout in the region. In otherwords, MrKim has very little to China can see several ways to end up lose from the summit. Mr Trump may feel ahead after a Kim-Trump summit. If North that he, too, is likely to get good press from Korea reduces its nuclear capabilities, that the event. But America could come out eases a security headache in China’s back- worse off, even ifits president does not. 7 yard. Even if North Korea may have partly faked the recent demolition of an underground nuclear test site, as American offi- Tourism in Japan cials have claimed, China has reason to cheer Mr Kim’s promise to stop nuclear No room at the inn tests, which took place alarmingly close to There’s a hunger for peace the border between the two countries. If concessions from North Korea are 2 be backing away from his all-or-nothing matched by a reduction in America’s mili- ISHIGAKI AND NIKKO talk. He says he no longer wants to use tary presence in South Korea, “that would Foreigners are arriving fasterthan the loaded phrases like “maximum pressure”, be double good news for China,” says country can accommodate them given how well things are going. As June Zhao Tong of the Carnegie-Tsinghua Cen- 12th nears he has played down the pros- tre forGlobal Policy,a think-tankin Beijing. N A sunny day in May it is not hard to pects ofswift success on disarmament and Even ifMrTrump balksand walksaway Osee why the Japanese island of Ishi- talked up the chances of a symbolic win, from negotiations, as he has repeatedly gaki, some 2,000km from the capital, To- involving a peace deal formally ending the threatened to, America’sinterestsare likely kyo, is becoming a tourist magnet. This Korean war after nearly 65 years of uneasy to suffer. The summitseemsbound to dissi- year the crystal-watered, coral-reefed is- truce. That could lead to more protracted pate the pressure on the North, especially land was named the world’s hottest desti- negotiations on weightier issues—a pros- if it is seen to have failed because of Mr nation by TripAdvisor, a travel website. It is pect Mr Trump has endorsed by calling the Trump’s obstreperousness. Mr Zhao says already popular with Asians from nearby summit a “get to know you” meeting. that as soon as Mr Trump agreed to meet Taiwan and Hong Kong, and increasingly According to the Chinese academic, Mr Mr Kim, America lost the bargaining pow- with Westerners looking for a counter- Kim cannot give up his entire nuclear er painstakingly built up over recent years point to temple-touring and tea ceremo- weapons programme without pushback as international sanctions have tightened. nies in Kyoto. Last year1.4m foreign and lo- from the armed forces, which do not trust According to Mr Zhao, Chinese officials be- cal tourists visited, twice the number in American security guarantees. On June lieve that even if the Kim-Trump talks fall 2013, when a new airport opened. 4th reports emerged that he had replaced apart, “there is very little chance that the But there is trouble in paradise. Karry three senior defence officials, prompting US could now launch a disarming military Kanko, a bus company, has new vehicles speculation that he was trying to quell op- strike.” South Korea would be the first to sitting idle for want of drivers. It has al- position to his new foreign policy. protest against any such “bloody nose” at- ready cut some routes. Taxis are hard to Instead, one theory holds, Mr Kim will tack, and China and Russia would also be find. At Art Hotel the manager sometimes offerMr Trump a choice: either an immedi- loudly opposed, he predicts. doubles as a chamber maid. Guests are of- ate scrapping of missiles capable of hitting Nor do experts in the region see much fered a discount to forgo the daily cleaning America, or a slower, step-by-step pro- chance that North Korea will face addition- of their rooms, to reduce staffing needs. gramme of the sort previously attempted, al international sanctions, even ifthe sum- “We are struggling,” admits Yoshiharu Ta- leading to the eventual dismantling of the mit ends in rancour. “North Korea can live kamine, who stepped down as head of the North’s nuclear programme. That would with the consequences of a failed summit local tourist-information centre in May. be a trap, albeit an open one. In all likeli- with all the sanctions staying in place. In 2016 the Japanese government set hood, the step-by-step process would go That’s fine. Sanctions are not going to get ambitious targets for foreign visitors as a the way its predecessors have, with North tougher,” says Mr Zhao. China, notably, way to generate economic growth as the Korea benefiting from the easing of sanc- never really believed that sanctions alone population ages and shrinks. It reckoned tions before pulling out in time to preserve could bring about the American goal of that tourists might also help to reinvigorate its nuclear capacity. One possible fudge forcing North Korea to disarm, and only strugglingrural communities. There is defi- (and source of future disputes) would be strengthened them reluctantly. This week nitely room for growth; inbound tourism for the North to give up nuclear weapons it allowed flights to resume between accounted for just 0.8% of GDP in Japan in but to retain nuclear facilities that could be Pyongyang and Beijing. They had been 2016, compared with 2.1% in France and the depicted as civilian. MrTrump might find a suspended last year at the height of ten- United Kingdom, 12.9% in Thailand and limited deal on missiles appealing, by con- sions over the North’s weapons-testing. 17.6% in Cambodia. The plan is working. trast: it would allow him to say he had kept South Korea, too, seems likely to try to The government is on track to reach its his promise to protect America. preserve its detente with the North, even if goal, revised up this year, of40m visitors (a But a deal of that sort is a nightmare for America reverts to hostility. Last week the 67% increase on 2016) by2020, when Tokyo America’sclosestalliesin the region, South two sides agreed to reopen a liaison office will host the Olympics. Korea and Japan, who would be left at the in the Kaesong industrial complex, which But the rapid growth has brought pro-1 48 Asia The Economist June 9th 2018

2 blems. Akihiko Tamura, the head of the “Tribals” in India wicked-looking axes and spears, and a few government tourism agency, acknowl- have fashioned crossbows out of surgical edges that the industry faces “many chal- Revolution rocks tubing and bamboo bolts. lenges”, most obviously a shortage of la- These men see themselves as descen- bour. In the town of Nikko, a tourist spot dants of Birsa Munda, a 19th-century tribal close to Tokyo, one of Japan’s most storied leader who fought a briefbut fierce guerril- inns, Kanaya Hotel, is hiring pensioners la war against the British. Independent In- because it cannot recruit enough working- HAKADUA dia has adopted him as a nationalist; Jhark- age staff, let alone those with the right hand’s main airport is named for him. But Villagers set theirgrievances in stone skills, says Yasuo Mine, the (himself age- Omto’s headman hails these modern-day ing) chairman. T A crossroads outside the hamlet of Mundas with cries of “Our village, our Relatively few Japanese have both the AHakadua, in the state of Jharkhand, a rule!” and “Out with India!” The current ability and confidence to converse small and solemn group of villagers gath- leader of the monolith-raising movement, smoothly in English or other foreign lan- ers around a slab of rock erected near a sa- Joseph Purti, waves a thickcopy ofthe con- guages. Tobu Railway, a sprawling com- cred grove. Under the noon blaze a white- stitution above his head as he speaks. pany that runs hotels as well as tourist whiskered priest and a troupe of young “They are imposing citizenship on us,” he trains between Tokyo and Nikko, has em- women in red saris murmur, sing and says of the Indian state, urging a boycott of ployed some foreign staff to help visitors, place cups made of folded leaves at the all government institutions. but still has problems communicating base of the rock, which is covered on both Tribals, arguably the most neglected of with non-Japanese, says Kenji Aoyagi, sides with inscriptions. These include pas- India’s many minorities, make up almost who heads its foreign-tourism depart- sages from the constitution and the PESA 9% of its 1.3bn people. Between 1947 and ment. Most companies rely on point- act of 1996, which is supposed to ensure 2000 roughly a quarter were displaced. sheets, translation apps or telephone ser- self-governance for people living in “tri- Some 40% of those living in tribal villages vices to communicate with guests. bal” areas, such as this. An elderly partici- are malnourished. Manylive alongthe line There are cultural barriers, too. Shizue panthastroublereadingthetext,but no dif- that separates north India from south, and Usui, the head of Nikko’s association of ficulty explaining the locals’ grievances. regard themselves as the aboriginal inhab- okami—female hosts at inns—says they First, to the extent the state is present in the itants. Their ancestors somehow managed tend to think “tradition should be main- area at all, it is incompetent, corrupt and to live in India forthousands ofyears with- tained.” That often boils down to rigid domineering—in effect abrogating PESA out becoming culturally Indian. Many of rules about check-in, meal times and other and other laws meant to protect tribal in- their languages are primordially distinct, services. terests. Second, they fear their land is being as different from Hindi as Basque is from Infrastructure is also a concern. There stolen. Mining companies, keen to get at French. Some tribals are Hindu and others are limited international flights to cities coal and otherriches underground, run cir- Christian, but many persist in forms of other than Tokyo and Osaka. Landing slots cles around tribal leaders in court. The up- worship that predate both religions—such are in short supply in Tokyo, where the shot is that the villagers want no part of In- as erecting large stones to mark undertak- government recently approved the con- dia any more: the inscribed monolith is, in ings ofgreat significance. struction of a new runway at Narita air- effect, a declaration ofindependence. Jharkhand’s chief minister has prom- port. There are not even enough beds. To- Hundreds ofsuch monoliths have been ised to crush Mr Purti’s movement (two kyo is reckoned to have a shortage of 3,500 erected outside tribal settlements in recent days after the rally, a criminal complaint hotel rooms. Thismonth a newlawwill ex- months. The consecration of one near the was filed against everyone present). Its pre- plicitly legalise the rental of private rooms, village of Omto is followed by a rally of vious leader has been arrested on charges via platforms such as Airbnb, to help re- some 2,000 tribal men carrying primitive that include making “assertions prejudi- duce the shortage ofaccommodation. weapons. Most shoulderbows and arrows cial to national integration”. The govern- Marketing is yet another problem. The fletched with chicken feathers. Others bear ment has accused the activists of wanting government wants more people to make to cultivate opium poppies and of propa- repeat trips, and to visit places beyond the gating Maoist revolution. three big hubs of Tokyo, Osaka and Kyoto. For years the authorities have conflated It would also like to attract more tourists the campaign for tribal rights with India’s from Europe and America, since it reckons long-running Maoist insurgency. The they stay longer and therefore spend more. terms “Red Corridor” and “the tribal belt” (About 85% of visitors are Asian.) Many are used interchangeably. But the insurgen- Westerners consider Japan for a holiday cy has largely been suppressed over the but only a small proportion actually end past decade by a ferocious military cam- up going, says Tasuku Kuwabara ofMcKin- paign, without snuffing out tribals’ com- sey, a consultancy. They worry that Japan plaints of injustice. Maoist ideology plays will be expensive and do not realise the no visible role in the monolith movement. variety ofattractions it offers. Meanwhile stone slabs have started There is an obvious solution to the la- catching on in the neighbouring states of bour shortage, at least: import more work- Chhattisgarh and Odisha. The security ser- ers. Hotel Royal Marine Palace on Ishigaki vices can hardly be happy about that. It has hired nine Chinese employees, includ- may be fair to label the movement “anti- ing three this year. But their visas are limit- national”, a favourite term of abuse these ed to short periods. The local tourist office days. But at least it is not violent, if “not ex- has been asking the government to ease actly non-violent”, in the words ofan intel- visa rules to make it easier for tourist busi- lectual sympathiser. Indeed, all the angry nesses to employ immigrants. But the idea tribals are askingis that the government re- is a political hot potato. If more foreigners spect its own laws and undertakings. The were allowed to work, even more foreign- ferocious response to such an ers would be able to come as tourists. 7 Menhir of distinction innocuous request is telling in itself. 7 The Economist June 9th 2018 Asia 49 Banyan One country, two systems

It was easierto get rid ofMalaysia’s ruling partythan its racial policies Ibrahim. The second-biggest is the Democratic Action Party (DAP), which is supported by Chinese and Indian voters—ie, the victims of racial preferences—and unsurprisingly argues against them. Voters united across racial and religious divides to support the coalition, which also includes explicitly Muslim and indige- nous parties. But the government is not seizing its opportunity to undo raciallydiscriminatorypolicies. The coalition hangs together partly because all parties have agreed on a binding principle: that the constitution and its privileges forMalays are supreme. Nurul Izzah, daughter ofMr Anwar and a champion ofreform in PKR, advises caution when it comes to changingaffirmative action. “Youshouldn’t push too hard,” she says, “your efforts must gain traction with the electorate.” She worries that the assault on racial privileges that urban types want will alienate voters in rural areas, where many Malays live. If provoked, they could turn back to UMNO or to PAS, a conservative Islamic party. Saddiq Abdul Rahman, the head ofthe youth wingofDrMahathir’snew party, Bersatu, which limits membership to Malays and other in- digenous people, has no doubt that “a more multiracial, inclusive Malaysia” approaches. Buthe admitsthatrace will prove “a tough discussion” within the governing coalition. HE headquarters ofthe United Malays National Organisation The government has struck a few small blows for equality. Dr T(UMNO), a party founded to defend the interests of Malays, Mahathirselected an Indian asattorney-general, the first time the Malaysia’s biggest ethnic group, feels stuck in the past. Defeated job has gone to a non-Malay. Better yet, after a brief delay, his sofas and tired photographs speakto glory days now gone. In the choice was approved by the king, a job held in rotation among lobby is a collage of pictures of the great and good of the party, the country’snine sultans, who are the leadersofIslam in theirre- which had run the country for 60 years before losing an election spective states. The finance minister, Lim Guan Eng, is Chinese— last month. A baby-faced Najib Razak, the prime minister ousted another appointment that caused palpitations among Malay just a few weeks ago, appears close to Mahathir Mohamad, his chauvinists. And Azizah Ismail, wife of Mr Anwar, is the coun- successor. But although Dr Mahathir once ran Malaysia as the try’s first female deputy prime minister. leaderofUMNO, these days he relies on the backingofa coalition These encouraging developments are unlikely to be followed ofUMNO’s adversaries, known as Pakatan Harapan (PH). by anything more audacious. The government’s best chances for Times have changed, in other words. The same police who reform will slip away as the election grows more distant and vot- used to bully the luminaries ofPH are now concentrating their at- ers less euphoric. A tweaking ofaffirmative action policies is pos- tention on Mr Najib. Raids on his properties have yielded jewel- sible, perhaps to ensure that benefits go more to poor Malays, lery, cash and 284 boxes ofhandbags, all impounded as evidence rather than government cronies. But discrimination will persist. in an investigation into alleged embezzlement. Mr Najib himself Instead the new administration will focus on quick wins. So has been barred from leaving the country. But even as Malaysian far these have included abolishing a hated goods-and-services politics has been turned upside-down, there has been little ques- tax (the government reduced the rate from 6% to zero on June 1st), tioning of the premise on which UMNO had governed Malaysia investigating the scandal at 1MDB (a state investment vehicle since independence: that Malays deserve special privileges. from which $4.5bn disappeared on Mr Najib’s watch) and re- Race has dominated Malaysian politics since colonial times. viewing huge infrastructure projects (a planned high-speed rail Indeed, the British fomented racial discord as a means of main- linkbetween Kuala Lumpur and Singapore has been cancelled). taining control. Malays were kept toiling in the fields, whereas ethnic-Indian and -Chinese merchants and labourers were wel- Why so glumno? comed into cities. Affirmative action on behalf of Malays began How UMNO responds to its defeat, and to the more diverse politi- soon after the British left in the 1950s, and their“special position” cal culture ofthe new government, hangs in the balance. Many in was recognised in the constitution. Race riots in the 1960s led to the party doubt soul-searching is needed at all. “The politics of the adoption of the “New Economic Policy” in 1971, which insti- ethnicity is still very strong,” explains Khairy Jamaluddin, the tuted an elaborate system ofpreferences forMalays and other in- party’s greying youth chief and a candidate to become its vice- digenous groups in university admissions, hiring in the civil ser- president (as well as a former intern at The Economist). “People vice, government contracting and so on. Originally introduced as are averse to offering radical ideas right now.” a temporary measure, the policy helped shape a corrupt system More liberal members fear that a strong multiracial message ofpatronage politics that proved predictably durable. from PH may leave UMNO in the dust, particularly with younger In many respects PH marks a break with all this. The coalition voters, unless the Malay party can embrace change too. The last that UMNO led was composed almost exclusively of racially de- attempt to foster diversity within UMNO was made by a leader fined parties, including the Malaysian Chinese Association and who took over in 2009. The campaign in question, 1 Malaysia, the Malaysian Indian Congress. The biggest party in PH, in con- called for reforms to affirmative action in the name of national trast, is the Parti Keadilan Rakyat (PKR), which is proudly multi- unity. It was soon discarded. No one in the party now wants to racial, although led by another former UMNO grandee, Anwar emulate the man who dreamed it up: the disgraced Mr Najib. 7 50 China The Economist June 9th 2018

Hospices Also in this section Loved to death 51 The new popularity of wills

BEIJING Taboos make it hard to provide good end-of-life care HEN Li Songtang was 17, officials Founded in the 1980s and bearing his since 2000). Younger people, many of Woverseeing Mao’s chaotic Cultural name, Mr Li’s Songtang Hospice was one whom have no siblings, are often too Revolution sent him from Beijing to Inner of China’s first end-of-life care centres. stretched to provide care for those for Mongolia, a northern province where he There are still far from enough of them. In whom cure is impossible. Few countries became a “barefoot doctor”—a medical 2015 the Economist Intelligence Unit, a sis- face so wide a gap between the need for worker with rudimentary training. His pa- ter-firm of this newspaper, ranked support hospices and their supply (see chart). tients included an academic whom the provided to the dying in 80 countries. It One reason for the lack of care facilities government had expelled in disgrace from placed China 71st, noting that specialised is that cash-strapped hospitals have strong the capital, and who had become terminal- end-of-life care was available to less than incentives not to create hospice wards, giv- ly ill. The patient grew sicker and increas- 1% of its population and only in the biggest en that palliative treatments create much ingly troubled by his political black mark. cities. Yet demand is growingas China ages less revenue perpatient than expensive cu- Unable to console him, Mr Li eventually and a growingnumberofitselderlypeople rative ones. Some health workers think the lied that he had persuaded authorities to sufferfrom drawn-outdiseases(the annual best hospitals have an ethical duty to re- wipe the slate clean. The patient grabbed number of cancer diagnoses has doubled serve their limited resources for people hisarm with reliefand gratitude, recalls Mr who have a chance ofgetting better. Li. “I can still feel it today.” Cultural inhibitions also impede the Mr Li’s experience of caring for the dy- The outlier development of end-of-life care. Talking ing man eventually resulted in the hospice Palliative care, provision v demand, 2015 about death has long been taboo. People he runs in a three-storey building in Bei- Britain often feel that it is their filial duty to ensure 100 jing’s outskirts. The facility is home to United States Australia that sick parents receive curative treat-

about 300 people, most of them elderly Good Taiwan Germany ment, even when doctors advise that there 80 and with late-stage cancer (a patient there Japan Neth. is no chance of recovery and the treatment 1 is pictured with a nurse). On a weekend S. Korea Italy 60 the bright corridors are busy with volun- teers who have come to chat with patients. Brazil 40 Russia Zhang Zhen’e, a smiley 76-year-old who Ethiopia India Zimbabwe As part of our Open Future initiative to Zambia shares her room with six other women, Quality-of-death score* Vietnam The 20 China remake the case for liberalism, says she tries to stay cheerful because days Economist Bangladesh Iraq is hosting an online debate from spent worrying are “days lost”. A nearby Poor 0 June 8th to 18th on the question: “Should ward for dying babies, painted green and 0 20406080 the West worry about the threat to liberal decorated with mobiles, islesseasyto visit. Low Demand for palliative care High values posed by China’s rise?” Readers are Eight children snooze there, asleep in mis- Source: Economist *Measures quality encouraged to join the discussion at Intelligence Unit of palliative care matched wooden cots. economist.com/openfuture/china The Economist June 9th 2018 China 51

2 will be painful. Applications to build hos- dying patients’ spiritual needs (the official- had their assets confiscated. Under Mao, pices are sometimes challenged by local ly atheist Communist Party is wary of reli- private property was banned. It was only residents who resent the presence ofdeath gious activities, especially outside regis- in the 1980s that the Communist Partygave on their doorsteps. Mr Li says neighbours’ tered places of worship). But changing the its approval forpeople to get rich. objections have forced Songtang Hospice attitudes of patients and their families will Will-writing is now coming into vogue. to move six times. be tough. Mr Li of the Songtang Hospice Last year notary offices in Guangzhou, a A tendency to hide grave diagnoses says that, even when they are admitted to southern city, handled over 24,000 wills, from sick relatives may make some fam- hisfacility,some people are unaware ofthe up 20% from 2016. The numbers have been ilies reluctant to move patients into care severity oftheirconditions. He says he and rising at a similar rate in Shanghai. Accord- that is clearly aimed at easing the pain of his staff try to help families who want to ing to the Ministry of Justice about 1.4m dying. Such covering up is widely consid- hide the truth from the dying. wills are lodged at notary offices around ered to be a kindness, even though it de- Since 2013 an NGO in Beijing, the Living the country, five times as many as there prives patients of the ability to choose for Will Promotion Association, has been en- were two decades ago. themselves how they wish to spend their couraging people to decide in advance In imperial China, the first son normal- remaining time alive. A few years ago, the how they wish to be treated at the end of ly inherited his father’s titles. Property was mother-in-law of Zhang Li (who asked their lives. But relatives and doctors some- divided among the deceased’s offspring, that, to spare her family, her real name not times ignore such instructions. Shi Baoxin, with sons getting far more than daughters. be used) was diagnosed with terminal a doctor at a medical university in the port These days a common motive forwriting a bladder cancer. The sickwoman’s relatives city of Tianjin, says that education about will is to preserve such patriarchal values agreed to keep quiet about the diagnosis. dying should begin at primary school to in the face of what some people see as an They hoped that doing so would make her help people gain a “reasonable and scien- assault by freewheelinglifestyles and soar- final months as carefree as possible. Learn- tific” understanding of it in later life. ing divorce rates which have made family ing the truth might have killed the patient, Change will take time but some people, at relationships more fluid and complex. A says Ms Zhang: “She would probably have least, are beginning to call for it. 7 study in 2015 by the China Notary Associa- died ofdepression, not the disease.” tion found that families overwhelmingly In some cases it is the healthy who are favoured sons over daughters in allocating kept in the dark. Wang Ying of Hand in Inheritance wealth. The Chinese Will Registration Cen- Hand, a charity that tries to encourage tre, which functions like a national notary more open discussion of death, says she Dividing up the office, says many parents use wills to try to has heard of orphaned children being told make it clear that assets should be kept by grandparents that their parents are not spoils within the bloodline ratherthan passed on dead but on holiday. Hercharity organises to their children’s spouses. casual gatherings, called “death cafés”, at SHANGHAI The actual number of wills may be far which the young and healthy are encour- higher than official figures suggest because Afteran explosion in wealth comes a aged to have frank discussions about their many people choose not to involve nota- boom in wills inevitable demise. ries. Legally, wills are private. But some The government is eager to improve the N THE past few decades China’s rapid people worry that officials could still gain country’s dismal ranking in the provision Ieconomic growth has enabled many of access to them in order to work out how of care. Last year it released guidelines on its people to amass fortunes, big and small. much income tax they really owe (dodging hospice treatment that it hopes will en- The country is home to nearly 400 billion- the tax authorities is a national pastime, courage more of it. The authorities later aires, second only to America. But with the see Business). They could also be used one launched trials of new hospice wards in population now ageing, a growing propor- day to calculate death duty, they fear, five cities, including Beijing and Shanghai. tion ofChina’scitizensare grapplingwith a should the government decide to intro- They also want to promote hospice treat- related problem: what should be done duce such a tax. Officials have long been ment that is supervised by community with this dosh after they die? debating whether to do so. For now, they clinics, including at home. China has no tradition of writing wills. appear reluctant, knowing that levying In theory, hospice care should help save Scholars have found only a smattering of one would arouse considerable opposi- money that is spent on costly and ineffec- examples of ones made during the coun- tion, even if only the richest were affected. tive “cures”. China’s national health-insur- try’s 2,000 years of dynastic rule. After the The government worries that more people ance system caps reimbursements, so pa- Communists seized power in 1949, wills would simply move abroad, taking their tients sometimes have to pay a lot to have became redundant. The wealthy fled or wealth and their wills with them. 7 seriouschronicillnessestreated. But the insurance scheme deters families from considering hospice care for their dying relatives. It only covers such care at a few approved facilities(notincludingthe Song- tang Hospice), and even then does not cover the full cost. The government’s efforts to improve the regulation of hospice-care providers should eventually allow many more ofthem to be funded through national insurance. Luo Jilan ofthe China Life Care Associa- tion, a research and awareness-raising out- fit, is optimistic. She says that doctors and nurses are gaining expertise in palliative care, that powerful painkillers are becoming more readily accessible and that officials have become more understanding of 52 International The Economist June 9th 2018

Success in football factors that determine a country’s footballing potential—and to work out why some By their bootstraps countries exceed expectations or improve rapidly. We take the results of all international games since 1990 and see which variables are correlated with the goal dif- DAKAR AND MONTEVIDEO ference between teams. We started with economics. Stefan Szy- Wealth, size and interest in football explain almost halfofcountries’ international manski, an economist at the University of performance. The rest can be taught Michigan who has built a similar model, N A sunny Saturday afternoon, with- why not much larger or richer countries? has shown that wealthiercountries tend to Oin kicking distance of Uruguay’s na- That question appears to torment Xi Jin- be sportier. Football has plenty of rags-to- tional football stadium, 14 seven-year-olds ping, China’s president, who wants his riches stars, but those who grow up in poor walkonto a bumpypitch. Theyare cheered country to become a football superpower places face the greatest obstacles. In Sene- by their parents, who are also the coaches, by 2050. His plan includes 20,000 new gal, coaches have to deworm and feed kit-washers and caterers. The match is one training centres, to go with the world’s big- some players before they can train them; ofhundreds played every weekend as part gest academy in Guangzhou, which cost one official reckons only three places in the of Baby Football, a national scheme for $185m. The United Arab Emirates and Qa- country have grass pitches. So we included children aged four to 13. Among the gradu- tar have spent billions of dollars buying GDP per head in our model. ates are Luis Suárez and Edinson Cavani, top European clubs, hoping to learn from Then we tried to gauge football’s popu- two ofthe world’s best strikers. them. Saudi Arabia is paying to send the larity. In 2006 FIFA, the sport’s governing Messrs Suárez and Cavani are Uru- Spanish league nine players. A former am- body, asked national federations to esti- guay’s spearheads at the World Cup, ateur footballer named Viktor Orban, who mate the number of teams and players of which kicks off in Russia on June 14th. is now Hungary’s autocratic prime minis- any standard. We added population fig- Bookmakers reckon La Celeste are ninth-fa- ter, has splurged on stadiums that are rare- ures, to show the overall participation rate. vourites to win, for what would be the ly filled. So farthese countries have little to We supplemented these guesses with third time. Only Brazil, Germany and Italy show for their spending. China failed to more recent data: how often people have won more, even though Uruguay’s qualify forthis year’s World Cup, and even searched for football on Google between population of 3.4m is less than Berlin’s. lost 1-0 to Syria—a humiliation that pro- 2004 and 2018, relative to other team Though it is no longer the giant that it was voked street protests. sports such as rugby, cricket, American in the early 20th century, Uruguay still football, baseball, basketball and ice hock- punches well above its weight. Messrs Footballer, meet model ey. Football got 90% of Africa’s attention Suárez and Cavani reached the semi-finals The Economist has built a statistical model compared with 20% in America and just in 2010 and secured a record 15th South to identify what makes a country good at 10% in cricket-lovingSouth Asia. To capture American championship in 2011. Their football. Our aim is not to predict the win- national enthusiasm and spending on faces adorn Montevideo’s football muse- ner in Russia, which can be done best by sports in general, we also included Olym- um, along with a century’s worth of tat- lookingat a team’s recent results orthe cali- pic medals won per person. tered shirts and gleaming trophies. bre ofits squad. Instead we want to discov- Next we accounted for home advan- If tiny Uruguay can be so successful, er the underlying sporting and economic tage, which is worth about 0.6 goals per1 The Economist June 9th 2018 International 53

2 game, and for strength of opposition. Peru nent’s deadliest striker, perfected his have spent about €1bn ($1.2bn) on devel- gets extra credit forplaying so often against shooting with a rag ball in a swampy slum. oping youth academies since 2001, to meet overachievers, for example. Finally, to re- Futsal, a five-a-side game with a small ball 250 nationwide criteria. Youngsters now duce the distorting effect of hapless min- requiring nifty technique, honed the skills have up to twice as much training by the nows like the Cayman Islands and Bhutan, of great Iberian and Latin American play- age of 18. Crucially, however, sessions fo- we whittled down our results to the 126 ers—from Pelé and Diego Maradona to cus on creativity in random environments. countries that have played at least 150 Cristiano Ronaldo, Lionel Messi, Neymar One exercise involves a robotic cage that matches since 1990. and Andrés Iniesta. Zinedine Zidane was flings balls from various angles fora player Our model explains 40% of the var- one of many French prodigies who to control and pass. The men who won the iance in average goal difference for these learned street football, or ballon sur bit- World Cup in 2014, writes Raphael Honig- teams. But that leaves plenty of outliers. ume. In an experiment that asked adult stein, a German football author, learned Uruguay was among the biggest, manag- players to predict what would happen through “systematic training to play with ing nearly a goal per game better than ex- next in a video clip, the best performers the instinct and imagination of those pected. Brazil, Argentina, Portugal and had spentmore time muckingaround aged mythical ‘street footballers’ olderpeople in Spain were close behind. West Africa and six to ten. Another study found that acad- Germany were always fantasising about”. the Balkans overachieved, too. emy prospects who ended up with con- Our model reckons that since 2006 the Sadly for ambitious autocrats, the data tracts had put in more hours of informal team has performed almost exactly at the suggest that China and the Middle East practice as children. high level expected ofit. have already performed above their low Such opportunities are disappearing in England has followed, overhauling its potential. Cricket dominates Google rich countries. Matt Crocker, the head of youth programme in 2012. Mr Crocker ex- searches in the Gulf states (no doubt large- player development for England’s Football plains that players are encouraged to take ly because South Asian migrant workers Association (FA), says parents are now re- risks and think for themselves. Spanish love it). Just 2% of Chinese played football luctant to let children outside for a kicka- clubs have long excelled at this, by endless- in 2006, according to FIFA, compared with bout. Many social-housing estates have ly practising the rondo: a close-quarters 7% of Europeans and South Americans. signs banning ball games. Dele Alli, a mer- version of piggy-in-the-middle. But the China and Middle Eastern countries have curial England attacker, is unusual for hav- England under-17s that thumped Spain 5-2 occasionally managed to qualify for the ing learned in what he has called “a con- in last year’s World Cup final ran rings World Cup, but none has won a game at crete cage”. The challenge is “to organise around their opponents. Mr Crocker says the tournament since 1998. the streets into your club”, say Guus Hid- they devised their own tactics, with little The model’s most chastening finding is dink, who has managed the Netherlands, managerial help. England’s under-20s that much of what determines success is South Korea, Australia, Russia and Turkey. won their World Cup, too. beyond the immediate control of football Such self-confidence was lacking in administrators. Those in Africa cannot Deutschland über alles South Korea, Mr Hiddink recalls. When he make their countries less poor. Those in The Deutscher Fußball-Bund (DFB), Ger- took over in 2001, the country was already Asia struggle to drum up interest in the many’s national body, has done so zeal- overachieving relative to our model’s low sport. Football’s share of Google searches ously. In the early 2000s it realised that expectations, given its 2% participation has been rising in China but falling in Sau- Germany’s burly players were struggling rate. But the manager believed that his di Arabia. against defter teams. Our model reckons charges had been held back by a fear of Nonetheless, officials with dreams of Die Mannschaft, as the national team is making mistakes. “Deep down I discov- winning the World Cup can learn four les- known, should surpass everyone else, giv- ered a lot ofcreative players,” he says. With sons from our model’s outliers and im- en Germany’s wealth, vast playerpool and some help from lucky refereeingdecisions, provers. First, encourage children to devel- lackofcompetingsports. Butbetween 1990 South Korea reached the semi-finals in op creatively. Second, stop talented and 2005 it performed about a third of a 2002—making it the only country outside teenagers from falling through the cracks. goal worse per match than expected. Europe and South America to get that far Third, make the most of football’s vast glo- So the DFB revamped. German clubs since 1930. 1 bal network. And fourth, prepare properly forthe tournament itself. Start with the children. The obvious les- Long-range goals son from Uruguayisto getasmanynippers Average goal difference against team of median strength*, 1990-2018, countries with 150+ matches kicking balls as possible, to develop their Brazil 2 technical skills. Mr Xi wants the game Spain Uruguay Argentina taught in 50,000 Chinese schools by 2025. Portugal England Germany China might try something like “Project Saudi Arabia Croatia 1 119”, a round-the-clock training scheme for Ivory Coast youngsters, which helped to lift China to United States + Qatar China the top of the medal table at the Beijing Hungary Olympics in 2008. The trouble is that re- 0 Canada lentless drilling “loses the rough edges that – Doing make geniuses”, says Jonathan Wilson, better than Vietnam Blizzard 1 predicted editor of the , a journal covering Actual average goal difference Senegal the game around the world. East German Doing worse than predicted Luxembourg UEFA (Europe) CAF (Africa) players trained much harder than those in 2 CONMEBOL (S America) AFC (Asia) West Germany, but only qualified fora ma- Myanmar CONCACAF (N America) OFC (Oceania) jor tournament once. The trickis not just to get lots ofchildren 3 playing, but also to let them develop cre- 1.5 1.0 0.5– 0+ 0.5 1.0 1.5 2.0 atively. In many countries they do so by Predicted average goal difference teaching themselves. George Weah, now *Based on the criteria used the president of Liberia but once his conti- Sources: World Bank; FIFA; Google trends; Mart Jürisoo; MedalsPerCapita.com; The Economist in The Economist’s model 54 International The Economist June 9th 2018

2 The second lesson for ambitious offi- won Les Bleus the World Cup in 1998. His tional gurus like Mr Hiddink, who was cials is to make sure that gifted teenagers home country had never contacted him. among the first of a dozen former Real Ma- do notfall through the cracks. The DFB real- Today Senegal is more astute about recruit- drid bosses to have worked in Asia. Yet Mr ised that many had been overlooked by ing its diaspora, and has picked nine for- Szymanski of the University of Michigan club scouts, so it set up 360 extra regional eign-born players for the tournament. Our has shown that few managers can do centres for those who missed the cut. One model reckons the country has performed much to improve mediocre teams. He also of them was André Schürrle, who provid- about 0.4 goals per game better since 2002 finds that teams outside Europe and South ed the pass that led to the cup-winning than it did before. America are no closer to catching up than goal in 2014. In South Korea Mr Hiddink The 21st Club, a football consultancy, they were 20 years ago. The data suggest noticed that some of the best youngsters notes that among European countries the that South Korea has fared slightly worse played for the army or universities, where Balkans export the highest share ofplayers since 2002 than it did before. they were sometimes missed by profes- to stronger domestic leagues. Since 1991, Mr Szymanski believes these countries sional scouts. when Croatia’s 4m people gained inde- are experiencing a kind of footballing When Russia bid to hostthisyear’stour- pendence, none of its clubs has advanced “middle-income trap”, in which develop- nament in 2010, Mr Hiddink implored his far in the Champions League, Europe’s ing economies quickly copy technologies then-bosses to create a nationwide scout- leading club competition. Yet Croatian from rich ones but fail to implement struc- ing programme, to no avail. The Russian clubs have sold lots of players to Real Ma- tural reforms. A clever manager might team hasdeclined since then, failing to win drid, Barcelona, Bayern Munich and Mi- bring new tactical fads but cannot produce a game at the European Championship in lan, and those émigrés carried Croatia to a generation of creative youngsters. China 2016. Russia now has one of the World the semi-finals in 1998. These export pipe- is said to be payingMarcello Lippi, who led Cup’s oldest squads. Such short-sighted- lines can become self-perpetuating, thinks Italy to victory in 2006, $28m a year. Un- ness has harmed America, too, which Mr Wilson: “once a team does well at a less he is supported by youth coaches and failed to qualifyforthis year’s tournament. World Cup, and some ofitsplayersdo well, scouts who reward imaginative play, and a Our model reckons it should be one of the generation of youngsters who love the strongest countries, even accounting for game, the money will be wasted. the popularity ofothersports such as base- Our final lesson is for the World Cup it- ball and basketball. But few players get se- self: prepare properly. For starters, make rious coaching in the amateur college sys- sure you can afford it. In 2014 Ghana tem, and those who are not drafted to brought in $3m of unpaid bonuses by cou- Major League Soccer cannot be promoted rier to avert a players’ strike, while Nige- from lower divisions. ria’s squad boycotted a training session Centralised schemes are easier to estab- over wages. Fabio Capello, Russia’s former lish in small countries. Every Uruguayan boss, went without his $11m salary for Baby Football team has its results logged in months after the rouble collapsed. Navi- a national database. Iceland, which has gating dressing-room politics is trickier. qualified despite having only 330,000 peo- Winning players from Spain and Germany ple and 100 full-time professionals, has have described the importance ofbreaking trained over 600 coaches to work with down club-based cliques and dropping grassroots clubs. Since 2000 it has built 154 stars who do not fit the team’s tactics. miniature pitches with under-soil heating The hardest decisions fall to the players. to give every child a chance to play under England’s results from the penalty spot supervision. Such programmes are unfea- have been woeful, losing six of seven sible in Africa. Abdoulaye Sarr, a former shoot-outs in tournaments. Video analysis Senegal manager, says that the pool of tal- shows that players who rush tend to miss ent is huge but barely tapped. Money that penalties; the English are particularly could be spent on scouting is lavished on hasty. So the under-17s, who won a shoot- officials instead. In a conspicuous waste of everybody wants to buy them.” out in their World Cup, have worked on scarce resources, Senegal is sending 300 of Some countries are less adept. In the slowing down and practising a range of them to Russia. past 15 years Mexico’s under-17s have out- premeditated shots. performed those from Brazil, Argentina The bane and the delight of the World Belgium poaches elephants and Uruguay. Buta third ofMexico’ssenior Cup is that decades ofplanning depend on West Africa has, however, taken our third squad plays in its domestic league, com- such fine margins. A country could plan tip by tapping into sport’s global network. pared with just two or three players for the meticulously and still be thwarted by an Western Europe is at the centre of this net- others. Dennis te Kloese, the national di- unlucky bounce of the ball or a bad deci- work, since it has the richest clubs, where rector, says that the Mexican diaspora sion by the referee. “If something goes players get the best coaching. Ivory Coast, boosts viewing figures and revenues for wrong, everybody wants to rip up the which failed to qualify this time but is Afri- domestic clubs, who can pay high enough book,” says Mr Wilson. For spectators, ca’s biggest overachiever, exported a gener- wages to keep talented locals in the coun- however, this randomness offers a glim- ation of young stars to Beveren, a Belgian try, rather than venturing to unfashionable mer of hope. Teams from Asia, Africa and club. Many of them later thrived in Eng- European leagues. This domestic bias North America remain the underdogs, but land’s Premier League. When Senegal beat helpsexplain whyMexico isone ofthe few ought to have had more fairytale runs like France, the reigning champions, in 2002, Latin American countries to perform as South Korea’s in 2002. The 21st Club reck- all but two of its squad members played well as expected, rather than better. ons there is a one-in-four chance a first- forFrench teams. Exporting players is not the only way to time champion will emerge this year. For Senegal could have used its resources benefit from foreign expertise. Mr Wilson one intoxicating month, fans around the even more effectively. Patrick Vieira, who says that much of South America’s foot- world will forget the years of hurt and be- left Dakar for France aged eight, was play- balling education came from Jewish lieve that their history books, like those in ing for the former colonial power. He was coaches fleeing Europe in the 1930s. Today Montevideo’s museum, could be about to one of several immigrant Frenchmen who there is a well-trodden circuit of interna- add a glorious new chapter. 7 Business The Economist June 9th 2018 55

Also in this section 56 Bartleby: Teaching entrepreneurship 57 Microsoft buys GitHub 57 Saudi Arabia’s Algosaibi aﬀair 58 Tax evasion in China 59 The latest fashion model 59 Drone deliveries in China 60 Air India’s privatisation stalls 62 Schumpeter: Xiaomi’s IPO

For daily coverage of business, visit Economist.com/business-ﬁnance

Chipmaking certain kind ofgazelle. For much of computing history, hyenas Hyenas and cheetahs named “central processing units” (CPUs) have dominated the chip savannah. Be- coming ever more powerful according to Moore’s law, the rule that the performance of processors doubles every 18 months, BRISTOL they were able to gobble up computing tasks, or “workloads”, in the jargon. This is Artificial intelligence has revived the semiconductorindustry’s animal spirits largely why Intel, for instance, in the early UPERCOMPUTERS usually fill entire more data, generating a need for even 1990sbecame the world’sbiggestchipmak- Srooms. But the one on the fifth floor of brainier chips. er and stayed that way fordecades. an office buildingin the centre ofBristol fits To understand what is going on it helps But in recent years the world of num- in an average-sized drawer. Its 16 proces- to make a short detour into zoology. Broad- ber-crunching has changed radically. sors punch more than 1,600 teraflops, a ly speaking, the world ofprocessors is pop- Moore’s law has started to peter out be- measure of computer performance. This ulated with two kinds of animal, explains cause making ever-denser chips has hit puts the machine among the world’s 100 Andrew Feldman, chief executive of Cere- physical limits. More importantly, cloud fastest, at least when solving certain artifi- bras, an American competitor to Graph- computing has made it extremely cheap to cial-intelligence (AI) applications, such as core. One sort of chip resembles hyenas: amass huge amounts of data. Now more recognising speech and images. they are generalists designed to tackle all and more firms want to turn this asset into The computer’s processors, developed kinds of computing problems, much as the moneywith the help ofAI, meaningdistill- by Graphcore, a startup, are tangible proof hyenas eat all kinds of prey. The other type ing data to create offerings such as recog- that AI has made chipmaking exciting is like cheetahs: they are specialists which nising faces, translating speech or predict- again. After decades of big firms such as do one thing very well, such as hunting a ing when machinery will breakdown. America’s Intel and Britain’s ARM ruling Such trends have altered the chip-de- the semiconductor industry, the insatiable sign habitat. First to benefit were “graphics demand for computing generated by AI InsAItiable appetite processing units” (GPUs), a kind of hyena has created an opening for newcomers. Demand for cloud-based computing power which are mainly made by Nvidia. Origi- And it may even be big enough to allow Largest AI projects, petaflops, log scale nally developed to speed up the graphics some startups to establish themselves as 1,000 in video games, they are also good at di- big, independent firms. Alpha Go Zero gesting reams of data, which is a similar 100 New Street, a research firm, estimates Neural Machine Translation computational problem. But because they that the market for AI chips could reach 10 are insufficiently specialised, GPUshave $30bn by 2022. That would exceed the 1 been hitting the buffers, too. The demand $22bn of revenue that Intel is expected to Deepspeech2 for “compute”, as geeks call processing earn this year from selling processors for 0.1 power, for the largest AI projects has been AlexNet GoogleNet server computers. It could swell further, ar- 0.01 doubling every 3.5 months since 2012, ac- UBS AI gue the authors of a recent report by , 0.001 cording to Open , a non-profit research an investment bank. AI processors, they organisation (see chart). “Hardware has believe, will create their own demand; 0.0001 become the bottleneck,” says Nigel Toon, 2012 13 14 15 16 17 18 they allow firms to develop cleverer ser- the chiefexecutive ofGraphcore. Source: OpenAI vices and devices, which will collect even The response from various firms has 1 56 Business The Economist June 9th 2018

2 been to design processors from the ground neural networks, computational models computer as well. Putting a new chip on a up with AI in mind. The result of Graph- inspired by structures in biological brains, circuit board, as Graphcore does, that is core’s efforts is called an intelligent pro- which are used in many AI applications. added into an existing system limits spe- cessing unit (IPU). This name is not just Having such models, which can be im- cialisation and optimisation because of marketing: on GPUs, memory (the staging mensely complex with billions of parame- constraints in power, cooling and commu- area for data) and brain (where they are ters, sit in the chip allows them to be nication, says Mr Feldman. But this means processed) are kept separate—meaning “trained” more quickly—the act of feeding that he has a steeper hill to climb: while that data constantly have to be ferried back them with lots of data (pictures of cats, Graphcore has already delivered a first and forth between the two areas, creating a say), so they learn to recognise them. The batch to customers, Cerebras has yet to an- bottleneck with data-heavy AI applica- set-up also simplifieswhatisknown as “in- nounce when its product will be available. tions. To do away with it, Graphcore’s ference”, when the model applies what it Although Graphcore and Cerebras chips do not just have hundreds of mini- has learned (spotting cats, for instance). were early to see the need for specialised brains, but the memory is placed right next Cerebras is going further still. It is not AI chips, they are by no means alone. Doz- to it, minimising data traffic. only designing a new processor, which is ens of startups are creating what are Graphcore’s chip can also hold entire similar to Graphcore’s, but a specialised AI known as “application-specific integrated 1 Bartleby Start them up

Business schools can give entrepreneurs vital skills HE stereotype ofa typical MBA gradu- pand into more countries; when she re- Tate is that of a confident, well-dressed turned, she expanded its operations to person who is destined for a career in Myanmar, Jordan and Saudi Arabia. management consultancy, finance or The final element is practical skills. Jon climbing the greasy pole at an S&P 500 Smith setup Pobble, a for-profiteducation company. The stereotype of an entrepre- service, with his brother and others, just neur is a college drop-out. Yet business before taking an MBA at LBS. Previously, schools, eager to prove that they are not he had been a civil engineer and he says just factoriesformanicured professionals, that elements of the course were useful. are increasingly keen to teach entrepre- “Management accounting allowed me to neurial skills to their students. read a profit-and-loss account” he says, The temptation is to thinkthat the abil- while another course taught him how to ity and drive needed to start a business negotiate and bargain. cannot be taught. After all, who can en- Mr Smith found that developing the gender the combination of opportunism business while simultaneously studying and paranoia usually needed to start a for the course was also helpful. “We saw business? But some of those who have lots of case studies about what can go taken the path argue that an MBA course cient and compact power converter—at right and wrong,” he says, adding that has several advantages. Shoshana Stew- MIT’s Sloan business school with three “doingan MBA gives you the time to think art, the chief executive of Turquoise other graduate students. They combined through what you care about.” Mountain, a crafts business that started in their studies with their project, getting ini- Clearly you do not need an MBA to Afghanistan, who studied at the London tial funding in the second year of the start a successful business. And plenty of Business School (LBS), says an MBA gives course. And some of the advisers that people take MBAs and then continue on you three things; a network of people, helped the company had connections to to mundane corporate jobs. It is one thing confidence and exposure, and an array of MIT. A business school can also organise to start a business where the technical skills. events where budding entrepreneurs meet skills learned in an MBA maygofar.Itis The network effect can operate in sev- potential investors and, in some cases, another thing to build that company into eral ways. Oliver Samwer, who along those backers will be formerstudents. a structure that can last for decades. Ms with his brothers founded the investment Self-belief is another quality that stu- Coleman, who has now left the business group Rocket Internet in 2007, thinks the dents can gain from the classroom. Bilikiss she founded, says that the guidance pro- guest speakers at the WHU-Otto Beish- Adebiyi-Abiola came from Nigeria to MIT vided bythe school waslesshelpfulin the eim School of Management in Germany, and took a course run by Bill Aulet, a well- later stages. provided him with role models. “My known author, on entrepreneurship; she But business schools will certainly view is that it is all about the dream,” he says that helped her gain confidence in need to work harder to prove their rele- says. Every time a leader came to the pitching to a room full ofinvestors. vance; the cost of the qualification has school, it inspired him to dream of a big- When she went back to Africa she set been rising and the number of applicants ger, more global business. He has un- up a business which collects waste from has been falling. Around11% fewer people doubtedly achieved lift-off: Rocket Inter- Nigerian households. The rubbish is sold tookthe GMAT test (which acts as a de fac- net was valued at $8bn when it floated in to recycling plants and the homeowners to entrance exam) in 2016 than in 2012. If 2014 and the Samwer brothers have in- get points, which can be turned into cash. business schools can improve the skills of vested in several othersuccessfultechnol- Ms Stewart had worked for Turquoise those who try to build companies, that ogy startups. Mountain before taking her MBA at LBS. has to be good news. We have enough Sometimes the contacts are more im- While doing the course, she realised that management consultants already. mediate. VanessaColeman started a busi- the business, which helps artisans with ness called FINsix—which built an effi- marketing, sales and logistics, could ex- Economist.com/blogs/bartleby The Economist June 9th 2018 Business 57

2 circuits” (ASICs). These are meant to do in- Microsoft GitHub hasto be seen in the same light. Mi- ference in all kinds of connected devices, crosoft already uses the service for much from smartphones to sensors, known as Homecoming of its own software and developers may the “edge”. The processors come with now be more inclined to write software for trained AI models baked in, for instance to Death Star the firm’s cloud, Azure. let a video camera recognise faces without Although Microsoft has promised that having to upload the entire footage. GitHub will stay independent and main- Big cloud-computing providers have tain its status as an open platform, many Buying GitHub is taking the world’s also joined the fray, deeming AI chips im- developers, an opinionated group, are not biggest software firm backto its roots portant enough to develop their own. In amused. They still see Microsoft as the May Google launched the third generation LMOST to the day 17 years ago Steve “Death Star” space station in the “Star of its Tensor Processing Units (TPUs), the ABallmer, then boss of Microsoft, the Wars” films that kills everythingin its sight. previous versions of which already power world’s biggest software firm, called Linux But they have got it the wrong way around. many of its services, including search and a “cancer”, meaning that the open-source The deal is final proof that the rebel forces Street View.Amazon, Facebook and Micro- operating system would spell the death of have won. In most big software markets, soft, too, are developing processors. Apple, proprietary software. On June 4th, his suc- open source is now the default. for its part, ships its iPhone X with an AI cessor, Satya Nadella, announced that the The deal has given Microsoft a push in chip that helps the device recognise the firm would take over GitHub, the main the race among tech giants to become the owner and read his facial expressions. source of such tumours today, for $7.5bn. first company worth $1trn. Its share price Firms that ruled the world of hyenas, The deal is yet another sign of Microsoft’s jumped by 1% on the news—investors be- notably Intel, are now acquiring designers startling recent metamorphosis. lieve in Mr Nadella’s rationale. In late May of cheetahs. It has spent billions in recent GitHub is no household name, but its market capitalisation had already brief- years buying AI-related startups, including among programmers it is as important as ly passed that of Alphabet, Google’s par- Nervana Systems and Mobileye. The idea, Facebook—which explains the impressive ent. The winner on current trends will says Gadi Singer, in charge of the firm’s AI price tag fora firm that earned only an esti- most likely be Apple, but Microsoft and products, is to have an entire portfolio of mated $200m of revenues last year. More Amazon are now at the same level—not processors, each with its own specialisa- than 28m developers globally keep their bad for a firm that by tech-industry stan- tion—for neural networks, for self-driving code on the website, which offers all kinds dards is as old as the hills. 7 cars and forinference at the edge. of tools and services. Most important of If the history of other semiconductor these is allowing software projects, wheth- markets, such as networking processors, is er open-source or not, easily to pull togeth- The Algosaibi affair any guide, the new field of AI chips could er code from different contributors. consolidate before too long, perhaps with ForMicrosoftthe deal isa homecoming. Bankers’ bane one or two processor architectures win- It used to be a kind of GitHub itself. When ning the day. There is already talk that big Windows, its flagship operating system, cloud-computing firms, such as Amazon, ruled computing in the 1990s, developers are interested in buying startups, including flocked to it. But the firm lost its role as the CAIRO Cerebras and Graphcore. And incumbents main hub for programmers when it got a A judge blames all parties in the Gulf’s are tryingto catch up. Intel hasdeveloped a late start on the internet, fought open- biggest-evercorporate scandal program that ties together all its AI chips; source and missed mobile computing. Mi- Nvidia has tweaked the architecture of its crosoft kept pushing Windows every- HEglitzyGulfstatestake pride in super- processors, which is said to now match the where though the world had moved on. Tlatives. They have the world’s tallest performance ofGoogle’s TPUs. This only changed when Mr Nadella took building, the biggest shopping mall, even But there are forces that push toward the helm in 2014. He has re-established Mi- (for a time) the most expensive cocktail. To fragmentation. Specialisation in AI chips crosoftasa firm ofplatforms, buton a high- that list, add a slightly less glamorous en- can go very far, just as with animals (chee- er level. One such is cloud computing, try: what a judge has called one of the larg- tahs are the only large cats whose claws do where it is now a strong number two be- est Ponzi schemes in history. On June 1st a not retract, so they are ready to accelerate hind Amazon. LinkedIn, which Microsoft court in the Cayman Islands issued a ver- and catch a gazelle at all times). Pierre Fer- tookoverin 2016, is another. The social net- dict in the long-running saga of Ahmad ragu of New Street says that ever more de- work provided it with access to the range Hamad Algosaibi & Brothers Company manding AI workloads needing special of connections between professionals (the (AHAB), a conglomerate. When the Saudi treatment, fast-evolving algorithms, and “social graph” in geek) and lots of data. company defaulted in 2009, its creditors tech giants designing their custom chips all scrambled to recoup billions in losses. The may lead to a world in which lots of pro- effective bankruptcy touched off lawsuits cessor architectures thrive. Collector’s items from Saudi Arabia to Switzerland. At last, China, too, is likely to inject more diver- Microsoft, selected acquisitions, $bn after the longest trial in Cayman Islands’ sity. The government has plans to spend history, it is one step closer to resolution. tens of billions to create a national semi- 0 5 10 15 20 25 No one emerged from court looking conductor industry in an effort to be less aQuantive (May 2007) good. Central to the case was whether the dependent on Western imports. According Skype (October 2011) foundingGosaibi familyknewaboutfraud to some estimates, hundreds of firms are carried out by Maan al-Sanea, one of their developing ASICs. Alibaba has announced Yammer (June 2012) firm’s executives. Born to a Kuwaiti family, that it is working on its own AI chip, called Nokia mobile-phone Mr Sanea married into the family in 1980 unit (March 2013) Ali-NPU (which stands for neural process- and soon took charge of AHAB’s financial- Mojang*(Sept 2014) ing unit). Cambricon, a startup based in services division. Then he started borrow- Shanghai, recently unveiled a chip that is LinkedIn (June 2016) ing. The Money Exchange, one of the firms

similar to Graphcore’s and Cerebras’s. The GitHub (June 2018) he oversaw, took out more than $120bn in chip kingdom is unlikely to become a dull loans between 2000 and 2009. Much of it monoculture again anytime soon. 7 Source: Bloomberg *Minecraft was “name lending”, unsecured credit ex-1 58 Business The Economist June 9th 2018

Tax evasion in China Yin and yang

SHANGHAI Film studios and financial firms flockto new Chinese taxhavens T IS hard to go a day in China without also plunged. Iseeing Fan Bingbing. The doe-eyed Yin-and-yang contracts are illegal but starlet gazes from film posters (she has common, from the property sector to averaged fourfilms a year forthe past football clubs. For years the government decade), airbrushed ads for global brands has tried to crackdown on them. In one and glossy magazine covers. But in the high-profile case, Liu Xiaoqing, a popular past weekshe has graced articles about actress, was imprisoned in 2002. But the tax evasion. Shares in a film-production emergence oftax havens inside China is firm that she partly owns fell by10% on now complicating matters. Film studios fears that it might be ensnared in a scan- have been among the most aggressive in dal in which actors have allegedly con- taking advantage ofthem. cealed their salaries. Ms Fan has denied Their destination ofchoice has been wrongdoing. On June 3rd the govern- Khorgos, a desert outpost in China’s far ment began a probe into tax compliance west, next to Kazakhstan. The central in the entertainment industry. government hopes to build it into a key The controversy began when Cui linkin trading networks that traverse Yongyuan, a TV presenter, described two central Asia. Companies that register in Follow the Maany anonymous contracts on Weibo, a micro- Khorgos enjoy a five-year holiday from blog, one for10m yuan ($1.6m) and an- corporate taxes, followed by another five He also dismissed a $5.9bn counter- other, linked to the first, for50m yuan. He years in which they pay only about half. claim by Mr Sanea and left in place a prior said it was a case ofthe “yin-and-yang” In 2017,14,472 firms registered them- $2.5bn ruling against him. Lawyers for payments prevalent in the film business: selves in Khorgos, up more than fourfold AHAB are considering their options. The reporting a low salary fortaxation and from 2016. Local tax revenues have Gosaibis had hoped to use the Cayman pocketing a larger sum. Share prices of soared. But many ofthe firms nominally judgmentto paycreditors. There isan auto- big film firms, such as Huayi Brothers, based in the dusty border town do not matic right of appeal in the Cayman Is- actually do anything there. Roughly nine lands. But the courts probably cannot hear in ten are in asset-light industries, such as an appeal until 2019, says Simon Charlton, media and also financial services. Ms Fan the chiefrestructuring officer at AHAB. is one ofdozens ofcelebrities who have Embarrassing as it is—international registered corporate entities in Khorgos. bankers have long memories, and Saudi For private-equity firms, Tibet has be- businessmen say the AHAB case still come a popular locale for registering comes up in conversations—the ruling funds, also thanks to tax discounts. could be useful for Saudi Arabia. It wants Taxhavens and yin-and-yang con- to see the whole affair go away, and to tracts highlight the holes in China’s tax deepen foreign investors’ trust in the coun- system. The International Monetary try’s regulatory and legal systems. Mu- Fund estimates that government revenue hammad bin Salman, the ambitious from taxes on personal incomes is only crown prince, aims to attract tens of bil- 1.2% ofGDP, compared with around10% lions in foreign investment to reduce Sau- in many advanced economies. di’s dependence on oil revenues. One of China’s film business is booming; his institutional reforms is a new bank- box-office revenues were $8.6bn in 2017, ruptcy law, which was approved in Febru- up from less than $1bn a decade ago. But ary, the kingdom’s first. with the Klieg lights glaring on Khorgos, Had it been passed earlier, AHAB’s cred- studios and stars will probably have to itors might already have recouped some of start sharing more oftheir riches with the their money. Though Mr Sanea lost much government. For all the glitz and glamour of his wealth after the default, he contin- ofits film industry,China is still working ued to lead a comfortable life in the king- Fan Bingbing, on location in Khorgos out the basics ofefficient taxation. dom’s Eastern Province, ensconced in a palace with a private zoo. But in October the police were dispatched to arrest him 2 tended solely on the borrower’s reputa- ing signatures, using the family name to forunpaid debts. His assets are being liqui- tion. When MrSanea’sempire collapsed in take out unauthorised loans, and siphon- dated. Over the past few months, the Sau- 2009 in the financial crisis, it had de- ing profits to his own firms in the Cayman dis have leaned on all parties to reach a frauded more than 100 banks. His firms Islands and elsewhere (he denied the accu- deal. At least two Saudi-linked banks were took out more than 12,500 loans during a sations). The case took eight years to wind coerced this year into accepting a settle- nine-year period; at times, 20 of them ma- through the courts. Anthony Smellie, the ment plan with AHAB, which now has the tured each day. territory’s chief justice, concluded that support of two-thirds of creditors. Under The Gosaibis claimed to know none of AHAB played an “active role” in the fraud. the new bankruptcy law, that will secure a this. AHAB filed a $4bn lawsuit against Mr He sided with liquidators for six of Mr Sa- restructuring. A fraud that is nearly as old Sanea and his Saad Group, another con- nea’s companies, who should now be able as the crown prince may be the first proof glomerate, in 2009. It accused him of forg- to recoup some oftheir losses. ofthe success ofone ofhis big reforms. 7 The Economist June 9th 2018 Business 59

Fashion sharing women who have heard of the service (or Other brands are expanding upon any of its younger competitors) say they RTR’s model. Christine Hunsicker, co-foun- Something rented, would be willing to rent outfits. Renting a der of Gwynnie Bee, a RTR rival with a ball gown when an occasion arises runs at niche in plus-sizes, is launching a service something new about a sixth of what it would cost to buy for conventional retailers looking to rent it. Cleaning and insurance for minor dam- some inventory.The deal includes the digi- NEW YORK ages are always included. tal technology, cleaning and warehousing To lure more customers, RTR has services needed to run a clothes-rental The business ofrenting clothes is opened bricks-and-mortar shops in New business. Several American clothing complicated but promising York, Chicago, San Francisco, Los Angeles brands, including Ann Taylor (popular for T ABOUT 4.30am the first of thousands and Washington, DC. Foot traffic is up by business attire) and NY&Co (a fixture in Aof black garment bags arrive by truck 80% from the same time last year, says shopping malls) are testing the package. at a vast warehouse less than ten miles Anushka Salinas, who oversees sales. The Rakesh Tondon, the boss of Le Tote, anoth- (16km) from Lower Manhattan. The bags firm had revenues of over $100m in 2016, er rental startup, predicts that more retail- brim with designer dresses and other the latest year for which it gives numbers, ers will launch rentals in the next five years trendy clothing and accessories. Workers and says it is profitable at the level of oper- as they see the potential. begin inspecting the garments. A billowy, ating earnings. At the Manhattan shop at Jennifer Hyman, RTR’s chief executive, patterned blouse smells a bit ripe. A floor- 9am on a Wednesday,two women in their once said that she wants to put Zara and length red gown has a tear. A stain sullies twenties explain that they often drop in on H&M, the giants of high-street retail, out of the floral pattern ofa silksundress. their way to work to pick up clothes to business. She is nowhere near that. But her Turnaround is quick. The blouse is wear that day and change at the office. An- clothes-rentingmodel looksmore than just sent to washing machines, the gown goes other young woman who chooses casual the latest fad. 7 to one of the 75 seamstresses lined up next outfits for the weekend says her subscrip- to a wall of thread, zippers, buttons and tion is a money-saver because she has otheradornments in every imaginable col- stopped buying clothes. Retailing in China our and the silk dress makes its way to the Customers do have niggles. Sometimes “spotters”: experts who know how to get monthly subscribers receive frocks that Manna from tough stains out of delicate fabrics. Most have not been pressed or cleaned. A items are in and out in less than a day. bridesmaid’s dress rented by Reagan Sims, heaven Such efficiency is essential for Rent the a customer in Washington, DC a couple of RTR Runway ( ), a New York-based, private- years ago worked well. But more recently a ZHANGWEI, JIANGSU PROVINCE ly-owned startup with a value of almost dress she ordered for an annual ball that The world’s first commercial $800m that rents out clothes, handbags she organisescame in a size she could bare- drone-delivery service takes off and jewellery. Its dry-cleaning warehouse ly squeeze into (RTR gave her a full refund). is the world’s biggest, processing 2,000 Another snag can be shipping. RTR has ATE on a Monday morning the village of items per hour. RTR started with formal a strict policy for non-returns, charging LZhangwei is quiet. Chickens scratch dresses that women rented for weddings customers a late fee of $50 per day after a and cluck at the side of the road. Workers and other events. Now nearly three-quar- 24-hourgrace period. These charges accrue use wooden spades to spread grain on the ters of its 9m clients across America use it and can match the retail price. Late arrivals highway to dry, using half its width so that for work clothes. For $159 a month, its “un- are another headache for customers, as traffic can still pass on the other side. Yet at limited” and most expensive plan, sub- well as patchy inventory. Ms Salinas ad- the community centre at the village’s scriberscan rentfouritemsatanyone time. mits that when RTR introduced its sub- heart, two objects hint at a feat of ultra- Constant novelty seems to outweigh scription services it did not have enough modern logistics about to unfold: a circle the “yuck” factor of wearing something inventory to meet demand. RTR has since of green astroturf laid down in the central that rubbed against someone else’s skin scaled up its supply, and there are now courtyard, and a billboard on the front of not long ago. Some two-fifths of American hundreds ofunits ofeach style and size. the building bearing the logo of JD.com, China’s second-largest online retailer. A low whirr breaks the stillness as a spiky dot appears on the horizon. The drone arrives overhead with a roar, hovers for a moment, then lowers itself towards the green circle like a mantis, three sets of propellers churning the air into whorls of straw and dust. Slung beneath it is a red cardboard box branded with JD’s cheery dog mascot. Just a few feet above the ground, the drone drops the box then zips back up into the sky and disappears. The spectacle is over in 20 seconds. It is a link in a new kind of logistics chain, the world’s first operational drone- delivery programme. While Amazon, an American company, has put out numerous promotional videos on its drone-delivery plans, it will not start commercial operations until at least 2020. Meanwhile, JD.com has spent the past year building a real drone-delivery network covering 100 Clothing as a service villages in rural China with 40 drones. 1 60 Business The Economist June 9th 2018

Air India Grounded

MUMBAI Plans to privatise India’s flag-carrierhave run into predictable turbulence FTER a plane crash, air-safety in- Officials blamed a lackofprivate- Avestigators are dispatched to the sector animal spirits for the bidding wreckage site to find out what went no-show. Yet even the most bullish wrong and ensure it never happens bosses had reason to stay clear. Suspi- again. Their financial counterparts have a cions ran high that the government similar job to do with the Indian govern- would keep meddling after the sale to ment’s proposed sale ofAir India. stop job losses ahead ofnext spring’s Mooted fornearly a year, the first round general election. Its plan to keep a 24% ofpreliminary bids ended on May 31st stake in Air India, and presumably board having attracted not a single offer. seats, spooked people further. An edict Bureaucrats running the divestment preventing any suitor from integrating process had expected many suitors. Air India into its existing operations was Domestic aviation is booming. Air India greeted with bemusement. has a modern fleet, an enviable brand Narendra Modi, India’s prime min- and valuable landing rights in many ister, proclaimed while campaigning for foreign airports. No fewer than 160 que- the job in 2014 that “government has no Delivering the goods ries had come in from interested parties, business to be in business.” Four years said to include local and foreign airlines on, only one ofover 200 state-owned 2 Zhangwei currently receives a couple of as well as Tata, a conglomerate. Might a enterprises has been sold—to another drops each day, each box containing sever- bidding war ensue, some wondered? state-owned enterprise. Even those al packages ordered through JD’s shopping Not quite. Bidders were seemingly nationalised firms with outside minority app. Thanks to JD’s drones, which operate never as keen as government leaks to the shareholders are treated as government autonomously with no human guidance media suggested. For one, Air India came departments. ONGC, an oil group, for but are monitored remotely, villagers in saddled with unwanted cargo in the form example, may be lined up to sell fuel Zhangwei can expect delivery on the same of334bn rupees ($5bn) ofdebt. And a below cost, in effect paying fora state day that they place an order, like urban potential buyer would also be expected subsidy out ofits own pocket. shoppers in Beijing, New York or London. to fund the airline’s ongoing losses, of The failed AirIndia sale means the The practicalities of drone delivery around 50bn rupees a year. Indian government will probably have to only make sense in rural settings. Flying in The financial performance hints at an rekindle a recurring bail-out that has cost chaotic urban environments is too difficult airline that has seen better days. From a it over 260bn rupees over the past seven for existing drone technology. Densely position ofmonopoly until 1994, Air years. Talknow is ofgovernment car- populated cities generate sufficient orders India now has just12% ofthe domestic rying out a restructuring and putting the over a small area that they can be aggregat- market and falling. Lower-cost rivals offer airline backup forsale in a year or two. ed into daily, oreven more frequent, deliv- vastly better service. Truculent unions— That assumes the cast ofbureaucrats that eries by van. Batching sparser rural orders which cheered the failed sale—mean have run the carrier poorly develop a in the same way would result in multi-day even the most hard-nosed buyer would sudden knackformanagement. Just or week-long delivery times. have a hard time carrying out the restruc- about anybody would likely do a better Some 600m Chinese live rurally and turing the authorities admit is necessary. job—ifonly someone would place a bid. their shopping habits are encouraging the e-commerce boom, accordingto official figures. Online retail in rural areas grew by tive, who started the programme there in programme because it can get products to 39% in 2017, up to 1.24trn yuan ($183bn). JD an effort to speed its development. The her door so quickly, but she would not sees upside in providingfast, reliable deliv- firm runs two drone-dispatch centres. want there to be many more ofthem flood- ery to the countryside, helping it to take a They cover 15 villages between them. ing the skies. larger slice ofthis business. There are more drone bases in Shaanxi JD may have added drones to daily Chi- It is still waiting to earn back its invest- province, covering a total of100 villages. nese village life, but whether they will ment in drone-delivery infrastructure, al- Once the drone’s cargo hits the ground, make financial sense forthe company over though it says that making a delivery by its contents pass over to the “drone post- time remainsto be seen. Currentmodels of drone costs a fifth ofthe price than by man- man” for delivery. This is either a local JD drone are pricey, although JD says the cost and-van, once the driver’s labour is taken promoter, whose primary job is teaching will gradually come down as it scales up into account. Liu Qiangdong, JD’s chief ex- villagers how to use JD’s shopping app, or the network and builds more drones (it ecutive, says drone delivery will cut costs a worker hired on China’s leading crowd- plans to sell those it makes to other firms, by 70% once it is scaled up across the coun- working platform, Dada. In Zhangwei JD’s as well as use them for its operations). The try. Villagers tend to buy washing powder, local promoter, Zhang Xiaoyan, takes pos- government approves of its operations in accessories for their phones, maternity session and rings the owners of the pack- rural areas, and is planning to build a new goods and fresh food. The firm has made ages to see if they are at home. Only one is, train station in Suqian next to JD’s drone 20,000 such deliveries to date. so he leaves the other two at the local shop base. If JD can use drone delivery to cut its Suqian, which is near Zhangwei, was and sets off on foot to the Jiang household. costs and attract rural shoppers, that will chosen as JD’s first drone delivery hub be- The son, who placed the order, is not at help the firm compete with its arch-rival in cause of the region’s flat terrain, which home, so his mother accepts it for him. It is e-commerce, Alibaba, which has not, as makes drone flight easier. The city is also a phone case, ordered the previous day. yet, seen the value of drone delivery. JD the home town of Mr Liu, JD’s chief execu- Mrs Jiang says she likes the drone-delivery hopes that will prove to be a mistake. 7

62 Business The Economist June 9th 2018 Schumpeter Think diﬀerent

Xiaomi’s forthcoming IPO in Hong Kong shows how the rules ofbusiness are changing tight control to a new level. Mr Lei has majority voting control. Like the BAT firms—Baidu, Alibaba and Tencent—Xiaomi has a “variable-interest-entity” structure to get round rules on having foreign shareholders. The firm’s holding company, in the Cay- man Islands, has contracts with operating entities in China. The contracts give it control and profits but not ownership, which in several cases remains in the hands of Mr Lei. He is also the per- sonification ofthe brand, which appeals to younger customers. Xiaomi’s faults are also its virtues. Tight control means rapid decisions, and intimacy with many suppliers means products can be sourced out of thin air. The firm is quick on its feet. Be- tween 2014 and 2017, while many multinationals would still be searchingforUttarPradesh on the map, it went from zero to being the biggestsmartphone firm in India. Salesofitspotpourri ofcon- sumer electronics tripled over this period. And a new range of smartphoneshasled to a comeback. In 2017 salesrose by68%. Un- derlying operating profits this year should hit $1.5bn-2bn. Does all this justify a high IPO valuation? In frantic fashion, Xiaomi says that it is in the middle ofanother reinvention, from a hardware firm into an internet one. It is obvious why: with the ex- ceptions ofApple and Samsung, the industry’s profitability is ter- N1987, when Lei Jun was a computer-science student in Wuhan, rible. Xiaomi’s handset operating margin is about 1% (its cute Ion the banks of the Yangtze River, he read a book about Steve pledge to customers that it will never exceed 5% is irrelevant). Jobs and vowed to emulate him. If all goes to plan, this summer Other hardware firms, from Sony in 1999 to Nokia in 2007, MrLei will take a leap towardsthatdream with the flotation ofhis have tried similarpitchesoverthe yearswith dismal results. Now, firm, Xiaomi, at a valuation of $50bn-75bn. It is set to be the unlike then, however, the shift to services is tangible. Services are world’s largest initial public offering (IPO) since Alibaba in 2014. the newengine ofApple, which sellsapps, paymentsand content Xiaomi is probably China’s most successful consumer brand, to its installed base of 1.3bn iPhone, iPad and Mac users. It made but ever since it started selling smartphones in 2010 it has also sales of$26 per device in the past year, or$33bn. been difficult to categorise. Yes, Mr Lei sometimes dresses in Xiaomi has an installed base of190m smartphone users, who black, as Mr Jobs did, but it has never been clear if Xiaomi is Chi- spend 54 minutesa dayusingitsservices, equivalentto 20% ofthe na’s Apple or if it is more like Samsung, Sony, Nokia, or even total time on their phone. It makes $9 per user per year, from ad- Costco, a bulk-discount retailer. vertisements and commissions on selling apps and games. Mar- Schumpeter’s answer is that Xiaomi does not resemble any gins are high. If Xiaomi can maintain its market share of new rich-world firm. For decades a particular American ideal of the smartphone sales—thereby adding new internet users—and if its publiccompanyhasdominated: focused, widelyowned and pre- service revenue per user rises to $20 over a decade, this business dictable. Xiaomi is a supercharged champion of a new Chinese could be worth $35bn—supporting a chunkofits IPO valuation. model that is the opposite: deliberately sprawling, tightly con- There are glaring risks. Xiaomi’s smartphone market share trolled and hyperactive. Edward Tse, of Gao Feng, a consultancy, could plummet again, eventually dragging down the number of calls these firms “China’s disrupters”. Xiaomi’s IPO is a test of internet users. It is unclearifits services will travel across borders: how valuable investors believe the model is. sales per user in India are still very low. And the BAT firms are ex- Xiaomi is above all a creature of its environment, which in panding their ecosystems of services and could win a bigger China meansrock-starbosses, ambiguousrules, intense competi- “mindshare” of Xiaomi’s device users. To stay in the race Xiaomi tion, proximity to the world’s manufacturing hub, and fast- will probably reinvest most ofthe expected $10bn IPO proceeds. changing consumer behaviour. The firm is what Charles Darwin might call a perfect adaptation. It also seems to live in dog years, The Xfactor packingmore into the pastseven yearsthan American firms do in Xiaomi is therefore an opaque bet on constant reinvention. But it 49. Almost three-quarters ofits $18bn ofsales last year came from is only the most extreme example of a national trend. There is a sellingsmartphones, where ithasa global marketshare of7%, but second wave of tech firms waiting to IPO, including Didi-Chux- there is lots ofsprawl, which is by design. ing, which does ride sharing but is diversifying into payments, As well as smartphones, Xiaomi has hundreds of other pro- and Meituan-Dianping, which is expanding from food delivery ducts, from vacuum cleaners to electric bicycles, and even owns into ride sharing. Each of the BATs used to have a neat identity. 30% ofa small bank. It incubates new hardware suppliers by buy- Alibaba did e-commerce, Tencent did games and Baidu did ing small equity stakes in them. The cost ofthis ate up a fifth ofits search. These barriers are collapsing in a giant investment boom. free cashflow in 2016-17 and could spiral further. Ferocious com- China’s acrobatic, high-stakes, sprawling champions are the petition at home, meanwhile, has meant erratic performance. In antithesis of what investors have been taught to admire. But 2015 it made an underlying loss and in 2016 sales stagnated after Xiaomi’s IPO may show how no one cares much about that any its handset market share in China dropped. more, at least foras long as the internet boom rages on. Mr Lei has A small but rising number of American firms, including Al- not created China’s Apple. If he succeeds in floating his firm, he phabet and Facebook, have dual voting classes. But Xiaomi takes will instead have imitated Mr Jobs by breaking all the rules. 7 Finance and economics The Economist June 9th 2018 63

Also in this section 64 Retaliatory tariﬀs 64 Switzerland votes on Vollgeld 65 Buttonwood: European equities 66 The Royal Bank of Scotland share sale 66 Stock exchanges quarrel over data 67 Measuring joblessness in Asia 68 Free exchange: Driverless cars

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

Trade wars (1) ada, whose metalworkers happen to be members ofthe union too. Friends and foes The Aluminum Association, an industry body, also weighed in. Its head, Heidi Brock, labelled Mr Trump’s decision an “unfortunate outcome”. Ms Brock had WASHINGTON, DC hoped that any measures would be aimed at tackling Chinese subsidies and overca- Donald Trump’s tariffs have united his opponents at home and abroad. First, the pacity. Instead, because 97% of the Ameri- domestic and diplomatic costs; next, how retaliation hurts American exporters can industry’s jobs are in aluminium pro- OW am I going to compete?” asks cost $329 per tone more in America than in cessing, and supply chains cross back and “HSohel Sareshwala. He runs Accu- western Europe, according to data from forth in North America, the tariffs are a Swiss, a Californian company making cus- S&P Global Platts, a price-benchmark pro- headache forher members. tomised components for the manufacture vider. The gap for aluminium was $290. More pain ison the way. America’strad- of semiconductors and cars. President Do- The tariffs work like a tax, leading to more ing partners are promising tariff retaliation nald Trump’s tariffs on steel and alumi- expensive bridges, pipelines, cars and beer that could affect as much as $43bn ofits ex- nium, both of which he uses as inputs, are cans. The quotas make planning nightmar- ports (see chart). They have picked pro- eating into his profit margins and delaying ish. When South Korea’s were announced, ducts ranging from motorcycles to pork his orders. Meanwhile, Mr Sareshwala’s some categories had already been filled. (see next article). Retaliation adds to wor- competitors abroad, free of such concerns, Disquiet among the consumers of af- ries that Mr Trump will harm America’s can undercut him. fected products is no surprise. More sur- economy not help it. Taking both his trade Mr Sareshwala is not alone in his frus- prising is the resistance from those the ta- restrictions and retaliation by others into tration. On June 1st Mr Trump extended tariffs are supposed to help. Though it at first account, Joseph Francois, Laura Baugh- riffs to countries that supplied 81% of supported tariffs, the United Steelworkers, man and Daniel Anthonyofthe Trade Part- America’s steel imports and 96% of alumi- a trade union, denounced them when they nership, a consulting firm, estimate that for nium imports in 2017, arguing that this was were unveiled because they included Can- every job in steel and aluminium gained, necessary to protect national security. 16 would be lost elsewhere. Tight quotas apply to most ofthe rest. Only Trade diplomacy is likely to be dam- Australia was let off, perhaps because of a Tit for tat aged, too. Mr Trump is supposedly still try- friendship between the president and US imports subject to retaliation measures ingto renegotiate the North American Free- Greg Norman, an Australian golfer, who $bn, latest available year Trade Agreement (NAFTA) with Canada lobbied on his government’s behalf. Mr 051015 and Mexico. On June 5th Larry Kudlow, his Trump’s tariffs and quotas have drawn a Canada 10-25 economic adviser, insisted that the presi- chorus ofdisapproval from American buy- India 5-50 dent was not planningto withdraw from it. ers of metal, the governments of Mexico, EU 10-50 But talks are stalled and Mr Trump’s tariffs Canada and the European Union, and any- are diminishingthe pact’s value. NAFTA in- Russia Equivalent* one concerned about the health of the cludes special conditions that its members rules-based system ofworld trade. Mexico 10-25 must meet before attacking each other Plenty of business people besides Mr China 15-25 with tariffs; when President George W. Sareshwala are finding that inputs are Japan Equivalent* Bush imposed broad steel tariffs in 2002, NAFTA dearer and scarcer. Tariffs, imposed or Turkey Tariffs threatened, % 5-40 America’s partners were therefore threatened, have dulled foreign competi- *To raise same amount spared. Mr Trump is doing his best to show tion and pushed up the price of American- Sources: WTO; of duty as US tariffs that while he is in charge, such conditions made metal. On June 5th hot-rolled steel national governments on country’s goods count forlittle. 1 64 Finance and economics The Economist June 9th 2018

2 America’s offended allies are showing gurt is among the dozens of American pro- unusual unity. Collectively, their response ducts, from chocolate to orange juice, in looks larger than the biggest authorised by Canada’s sights. Mexico is targeting the World Trade Organisation (WTO) since cheese. It is the top destination for Ameri- its founding in 1995. But its nature is more can dairy exports; in March, forexample, it notable than its size. Normally, WTO dis- bought 8,700 tonnes of cheese. Tom Vil- pute-resolution panels hear legal argu- sack, a former Secretary of Agriculture ments and issue a ruling before plaintiffs who now runs the US Dairy Export Coun- retaliate. But although the EU and several cil, a trade body,notes that market instabil- countries have filed formal cases, they ity and a lackofclarity on policy,as well as seem unlikely to wait for the WTO’s bless- tariffs, are hitting dairy prices. ing this time. The trail of potential harm to compa- The quarrel falls into a legal grey area. nies—both from America’s tariffs and from The Trump administration is claiming that retaliation by others—also shows how glo- it is acting in the name of national security balisation makes a mockery of attempts to and that no WTO judge should be able to aim tariffs precisely at foreigners. Ameri- question a country’s own assessment of can carmakers and their vendors have that right. Canada, China, the EU, India, Ja- strungtheirsupply chains across the Cana- pan, Mexico and Turkey all say that Mr dian and Mexican borders. Granjas Car- Trump’snational-security claim is phoney. roll, a loser from Mexico’s pork levy, is America is instead “safeguarding” its in- Riding for a fall partly owned by WH Group, a giant Chi- dustry. Under WTO rules, they say, that nese food producer. gives them the right to retaliate. (Canada Harley-Davidson in a double bind. The And of course consumers lose, too. The and Mexico can claim different retaliatory companyusesa lotofsteel and aluminium EU’s proposed tariffson motorcycles, jeans rights under NAFTA.) All these claims can to make its bikes. Although much of that is and whiskey amount to a cruel tax on and will be disputed. domestically sourced, Mr Trump’s tariffs Hells Angels across Europe. The innocent Not that Mr Trumpwould pay much at- on imports have led to higher prices for lo- always suffer. 7 tention to an adverse WTO ruling on his cally made metals, too, thus raising costs. national-security claim. His administra- And the European Union is poised to im- tion is strangling the WTO’s dispute-settle- pose retaliatory tariffs on a variety of Sovereign money ment body anyway, by blocking the ap- American exports, including motorcycles pointment of new judges. He prefers raw and whiskey. Harley-Davidson had bet on How to lend it power to rules. Retaliation, even if it bends a continued boom in European sales, the rules, may remind Mr Trump of the which make up about16% ofits total. dangers of a power-based system and a The EU’s tariffs on Harleys are just one united opposition—even though that is a of several acts of retaliation taken or risky stance for those who believe that planned by America’s trade partners, A Swiss referendum shines a spotlight rules are paramount. “Is this the beginning some intended to cause political as much on the way money is created of the end of the international trading sys- as economic pain. Harley-Davidson is tem?” asks Luis de la Calle, a Mexican for- based in Wisconsin, home state of Paul O ITS opponents, the Vollgeld initiative mer trade negotiator. “I say this is the be- Ryan, the retiring Speaker of the House of Tis “suicidal” and a “dangerous experi- ginning of the defence of the international Representatives. Kentucky, the turf of ment”. To its supporters, it is the ticket to a trading system.” 7 Mitch McConnell, the Republicans’ leader “fairer and more stable banking system”. in the Senate, distils a lot ofbourbon. Swiss voters will decide for themselves on Harleys are not the only hogs on the June 10th, when the proposal forsovereign Trade wars (2) chopping block. American pork producers money, which would rewire the country’s learned on June 5th that Mexico, theirlead- banking system, are put to a referendum Backfire ing export market ($1.5bn last year), plans a that, in theory, would be binding. 20% tariff on a variety of their products. The heart of the argument is whether Americans typically disdain shoulder, but private-sector banks should be able to Mexicans happily consume the cut in dish- create money. In modern economies, most WASHINGTON, DC es such as tacos al pastor. These tariffs are money takes the form of deposits in com- “potentially devastating” for farmers, says mercial banks, rather than the cash in cir- Some American firms will be hit hard GreggHora, president ofthe Iowa Pork Pro- culation and the reserves determined by by retaliatorytariffs ducers Association. Granjas Carroll, a top the central bank. And bank deposits are OOK at all these bikers…we love the producer in Mexico, estimates that prices mainly created through bank lending. “Lbikers!” declared the pre-presidential there may rise by 15% or more, which it Lenders can thus lend far more than they Donald Trump, surveying a crowd of mo- worries will drive down consumption. hold in central-bankreserves. torcycle-owners gathered by the Lincoln Mexico’s list of threatened tariffs will Vollgeld supporters want to take such Memorial in Washington, DC, in 2016. Rid- bring pain to peddlers of fruit, too. Some money-creating powers away from banks. ers of Harley-Davidsons, in particular, 1,300 apple-growers in Washington state, Bank deposits are not as safe as sovereign have been amongMrTrump’snoisiestsup- the leading source of exports, sell between money, they say. Ifa bankcollapses, depos- porters since the early days of his cam- 12m and 15m bushels a year to Mexico. itors lose uninsured funds. Instead the paign. Riders of “hogs” often see them- Todd Fryhover, president of the Washing- public should hold current accounts di- selves as rowdy rebels. Perhaps this is why ton Apple Commission, estimates that ex- rectly with the Swiss National Bank (SNB), many have identified with Mr Trump’sdis- portsto Mexico were on trackto top $240m the central bank. Banks’ lending should be dain forconventional politics. this year. “This new tariff puts that goal in funded entirely by time deposits (savings Alas, the love affair may be heading for doubt,” he laments. accounts) or by borrowing of their own. trouble. MrTrump’strade policieshave put Dairy farmers are also complaining. Yo- Vollgeld’s backers say that bank runs1 The Economist June 9th 2018 Finance and economics 65

2 would be much lesslikelyand there would bank, believes that sovereign money SNB would have to control inflation by reg- be no need for taxpayer-funded bail-outs. would not stop financial crises. In 2007-08 ulating the amount of cash in circulation Similar ideas floated among economists in a seizure in interbank funding, rather than directly. The SNB also frets that, if granted America in the 1930s, but have never been bank runs, toppled financial institutions the power to distribute money and credit, put into practice. with no retail deposits, such as Lehman it will become embroiled in politics. The initiative’s opponents, which in- Brothers. Thomas Jordan, the head of the With opinion polls suggesting that only clude the Swiss government, the SNB and SNB, has argued that sovereign money a third of respondents will vote in its fa- the banks, say sovereign money would in- would not prevent banks from granting vour, the radical initiative is unlikely to cur large costs for little gain. The transition risky loans or overestimating future re- pass. But authorities in several countries to Vollgeld would be expensive and unpre- turns. Today’s macroprudential rules will are contemplating the merits of digital cur- dictable as banks reorganised themselves do more to avert a crisis than tearing down rencies, which could allow the public to and sought alternative, dearer, sources of the system. hold deposits with the central bank. Voll- funding. Interest rates would rise, at great Sovereign money could also compli- geld might not pass, but some more cau- cost to the Swiss economy. cate monetary policy. Rather than setting tious monetary experiments may well be Daniel Kalt, an economist at UBS, a interest rates to influence banklending, the on their way. 7 Buttonwood The wisdom of George

Orthe case forowning euro-zone shares N AN episode of “Seinfeld”, a1990s tele- heavy with the technologies of the second loans and the need for more capital had Ivision comedy,George Costanza, a seri- industrial revolution—mass-market cars, been a continuing drain on their profits. al failure played by Jason Alexander, de- petrochemicals and machinery—but light But now even Italy’s big banks are in de- cides that every instinct he has is wrong. on the digital firms that power stockmark- cent shape. “If at any point interest rates So he resolves to do the opposite. He is ets in America (see chart). Its banks, a big turn positive, you could see huge earn- soon squiring a new girlfriend and is up weightin stockmarketindices, lookleaden. ings upside,” says Eric Lonergan, of M&G, for a dream job. “It’s all happening be- Deutsche Bank is a target of short-sellers. a fund-managementgroup. Similarly,oth- cause I’m completely ignoring every urge Last year’s strong GDP growth has cooled. er firms, which still had to fork out on towards common sense and good judg- To cap it all, there are glaring holes in the wages and rents during the euro zone’s ment I’ve ever had,” he says. euro area’s design. There is no continent- depressed years, could squeeze out more Successin investingoften meansgoing wide depositorunemploymentinsurance, profits if the economy keeps growing. In against the grain—and your own feelings. for instance. A nasty recession could plau- America, bycontrast, there is no compara- To do otherwise is to be swept along by sibly breakthe zone apart. ble scope for earnings to accelerate, be- the general greed and fear. Still, fear is a So there is plenty not to like. The experi- cause the economic cycle is more mature. useful emotion. It would be unwise, for ence of owning European stocks over the To be sure, the euro is a rickety con- instance, to ignore the recent turmoil in It- longhaul hasbeen quite horrible. The Euro struct. Countries are also currency zones aly,where bond yields spiked in response Stoxx 50 ofbig euro-zone shares is no high- and they work tolerably well because of to concerns that the country might be on er now than it was 20 years ago. Its broader fiscal transfers from rich to poor regions. the road to leaving the euro. Though the sibling, which contains 300-odd compa- That is absent in the euro area—hence the worst fears have subsided, the coalition nies, is well below its peak in the summer fear of break-up. Even so, it is far from ob- that was eventually given the president’s of 2000. The inclination to steer clear is vious that this should be ranked higher blessing to form a government looks ca- quite natural. But there is a strong case for than any number ofother uncertainties. pable ofcausing trouble. doing exactly the opposite. What investors choose to worry about A natural inclination in the circum- For a start, euro-zone equities look changes. At the beginning of 2016, for instances is to turn away from euro-zone as- cheap. The earnings yield on the Euro stance, China’s debt mountain was a sets—not just bonds (where the rewards Stoxx50 is6.4%. Thatcompareswith a 4.8% source of terror for financial markets. are notably scanty in relation to the risks) earnings yield on America’s S&P 500 index Now it elicits a yawn. Few have yet but equities, too. Yet such instincts can be- and is handsome for an economy where mapped out the implications for markets tray investors. There is an argument for holding cash pays less than nothing and of President Donald Trump’sforeign poli- buying euro-zone shares precisely be- where the safest government bonds pay a cy in the way they have done for a cause their defects have now become all negative yield after adjusting for inflation. break-up of the euro. Yet it might turn out too clear to everyone. Patience may be required. But over time to be of greater consequence. The risks to Among the shortcomings is that Eu- the chances that a punt on euro-zone equi- the euro are simply more salient. And rope is ageing. It is the place to find busi- ties pays offare good. when risks are more palpable, people nesses ripe for disruption, rather than Whatismore, there isroom forearnings tend to give them too much credence. those doing the disrupting. Its bourses are to improve. Take banks, for instance. Bad Instinct does not always serve investors well. The political tremors in Italy are more like a scare than a rerun of the crisis Mechanical Europe, digital America Other Property of2012. In which case there ismoneyto be Stockmarket by sector*, % Telecoms Utilities made from European equities, says Mr Consumer Consumer Lonergan. So remember George Cos- Euro Financials Industrials Materials Energy Stoxx discretionary staples tanza. When every urge tells you to shy away,consider doing the opposite. S&P Technology Health care 500 Source: Bloomberg *At June 6th 2018 Economist.com/blogs/buttonwood 66 Finance and economics The Economist June 9th 2018

Royal Bank of Scotland 2005 and 2007. It might have been worse: which is to India what the FTSE 100 is to $3.5bn was covered by provisions RBS had Britain or the S&P 500 is to America. Cut your losses already made. The settlement cleared the Because the contract paid out the value way forthis week’s share sale. of the Nifty on a given date, arbitraging al- Another legacy of the past is still to be gorithms run by outside traders ensured cleared up. Last year, as part of the price of the derivative tracked the index closely: the bail-out, the government and the Euro- buying the Nifty in Singapore or Mumbai pean Commission agreed on a scheme un- amounted to much the same thing. But in Britain’s government resumes sales of der which RBS will give up about 3% of the February NSE ended the arrangement. It shares in the nationalised lender British market for small businesses, which now thinks all trading can happen in India F YOU are selling shares, they are worth it leads. The bank is putting up £425m to thanks to new regulatory arrangements Inot what you paid for them, but what build up smaller banks’ capabilities, plus that make it just as amenable to global cap- someone else will offer. For the Royal Bank £350m for incentives to customers to ital as Singapore. of Scotland (RBS), the sum that counts is switch banks. The bosses of the body that That claim is doubtful. In any event, £2.71 ($3.62). On June 5th UK Government will divide the cash were appointed only SGX is clearly not keen to find out. Instead Investments, which manages the state’s in May.Financial crises cast long shadows. oflicensing the Nifty brand and paying the stakes in companies, said it had placed 7.7% RBS isn’t in the sunshine yet. 7 NSE for a steady flow of data, as hitherto, of RBS at that price—10p below the previ- SGX said it would switch to what is in effect ous day’s market close—with institutional a home-brewed duplicate. Whereas the buyers, reducing its holding to 62.4%. The “real” Nifty is designed to match the price government paid £5.02 per share to rescue of an underlying basket of 50 shares, the the bankin 2008. So on those 925m shares, new product is designed to match the price taxpayers have lost £2.1bn. ofthe Nifty derivative instead. It is, in other The state has long looked unlikely to re- words, the derivative ofa derivative. coup its fivers, let alone the £6.25 per share That is just a fancy way of breaching that the National Audit Office, a public-fi- copyright, the NSE argues. It owns the Nifty nance watchdog, reckoned last year was a trademark and SGX’s product is but a thin- fair benchmark after adding the cost of fi- ly veiled clone ofits own. SGX does indeed nancing the bail-out. (In 2015 it sold 630m seem to be makingno effort to differentiate shares, or5.4% ofRBS, for£3.30 a pop.) Even itself. The marketing literature for its new if the stockmarket valued RBS as highly as derivative says it aims to track 50 shares the book value of its assets—which is true that together represent 65% of the Indian of few big European banks—the price market, just like the Nifty. The only differ- would still be only £4, a level it last saw ence is that it does not mention it by name. more than three years ago. Short of cash Lawyers on both sides are brushing up and eager to return RBS to private hands, on intellectual-property law. An arbitrator the government may as well take what it in Mumbai is due to make a ruling by June can. It sold its last shares in Lloyds Banking Stock exchanges 16th, though appeals are expected. SGX has Group, also bailed out in the crisis, in 2017. some precedents on its side. In 2005 a New On that rescue it made a small profit. Whose price is it York judge ruled that ICE, a commodity ex- In the nine years after the crisis, RBS’s change, had broken no law when it lifted lossesamounted to a staggering£58.4bn, as anyway? publicly available energy prices from NY- write-downs, fines and restructuring costs MEX, a rival, to fuel its own derivatives piled up. After the hubristic purchase in MUMBAI contracts. “Settlement prices are not copy- 2007 ofABN AMRO, a Dutch lender, which rightable because they are facts, and not India’s and Singapore’s bourses tussle led to its undoing, RBS was briefly the original, creative works,” he said. overwho owns market data world’s biggest bank, with assets of over NobodyisarguingagainstSGX’sright to £2trn. Now it is about a third of that size UYING and sellingshares in India is not setup a derivative on individual shares list- and ranks only tenth even in Europe. Its in- B for the faint of heart. Its own central- ed in Mumbai; it recently started doing just vestment bank, which brought in more bank governor reckons equity capital is that. But tracking the whole Nifty requires than a third of operating profit before the taxed up to five times. Never fear. There is a using one monthly value, calculated by crisis, accounted for under a tenth of a far well-established alternative. Investors can NSE, to “settle” the derivative. Arguably smaller sum in the first quarter of2018. just as easily buy financial instruments this calculation is closer to an art than pub- Ye t RBS is still one of Britain’s biggest that track share prices but are not them- lishing a single fact. American courts have banks—and underneath it all, these days is selves shares. Such “derivatives” are used found firms that provide such indices (for in fair shape. In the first quarter its return across the world to mirror markets in example, on which stocks are included) on equity was 9.3%, a bit short of the 10% everything from platinum to pork bellies. may indeed limit their outside use. that analysts still regard as par but decent Buttheyalso raise awkward questions: can Though the row hurts both sides, no by European standards. Its ratio of equity the exchange that generates prices by deal seems in sight. MSCI, which crafts a to risk-weighted assets, a key measure of matching buyers and sellers stop a rival us- popular emerging-markets index that capital strength, is a robust 16.4%. Last year ing the data to create its own derivatives? guides the investment of trillions world- it made its first net profit since its fall. A quarrel between the Singapore Ex- wide, has warned that tryingto throttle the The sale is another step in the bank’s change (SGX) and the National Stock Ex- dissemination of price data would make it slow emergence from the shadow of the change (NSE) in Mumbai touches that very harder for money to flow into India. It has crisis. Only last month did RBS say that it issue. Since 2000 global investors wanting argued that stockmarkets are natural mo- had agreed in principle with America’sDe- exposure to Indian shares but not Indian nopolies that should in effect be com- partment of Justice to settle, for $4.9bn in red tape and tax have gone via SGX. Under pelled to sell their prices to whoever wants cash, charges that it had mis-sold residen- a licence from NSE, punters could trade a them. Information wants to be free, but try tial mortgage-backed securities between derivative linked to the Nifty 50, an index telling that to those compiling the data. 7 The Economist June 9th 2018 Finance and economics 67

Joblessness in Asia includes“discouraged workers”, who have given up looking for a job. Its national The luxury of unemployment number was 5.4% in 2017, compared with the ILO estimate of4.2%. Countries seeking higher rates may soon get their wish. In 2013 the world’s labour statisticians resolved to change the BANGKOK AND HONG KONG definition of the labour force, excluding people, such as subsistence farmers, who In developing countries, many people cannot afford not to work produce goods for their own family’s use. MERICA’S unemployment statistics at- Thatdoesnotchangethe numberofunem- Atract close attention, even from presi- Measure forced leisure ployed. But it does shrink the labour force. dents. Early on June 1st President Donald Unemployment rate, % Thus when the new definition is imple- Trump tweeted that he was looking for- China mented, an unchanged number of unem- (new series) 6 ward to the latest figure (3.8%), released China (31 big cities) ployed people will constitute a higher per- that morning. China’s unemployment 5 centage of a smaller labour force. In a rural numbers, by contrast, attract mostly ridi- Taiwan country like Laos, the effect is dramatic. Its 4 cule. They have barely budged since 2011 unemployment rate was 0.7% in 2010 using despite the upheavals ofthe period. 3 the old definition but jumped to 9.6% in Malaysia Many China-watchers therefore hoped 2 2017, using the new,stricter one. that a new measure of unemployment, Thailand Ultimately,a low unemployment rate is dating from 2016 but published monthly 1 evidence only that people are working, not since April, would be more revealing. Un- 0 that they are working well. Work may be like the older statistic, which counts only 2014 15 16 17 18 poorly paid, periodic and precarious. In In- those registered as jobless at local labour Sources: Haver Analytics; Huatai Securities; donesia, less than half of those in employ- The Economist offices, the new measure draws on a sur- China’s National Bureau of Statistics; ment collect a recognisable wage or salary. veyofthe labourforce, collected by trained The rest mostly work for themselves or enumerators and beamed directly to Beij- Organisation (ILO) in Bangkok. At her hus- their families. ing beyond the grasp of local officials. It band’s gym, ten people wait to help him Patchy employment is by no means the now covers 120,000 households across ur- with the climbing wall. In France, he preserve of poor countries. It is becoming ban China (on top of a longer-running sur- would have to get by with only one. more prominent in richer nations also, vey of 31 cities), providing, in theory,a rep- When Annan Chanthan left his job as a notes Mr Ghose. On his last visit to Cam- resentative snapshot of the biggest graphic designer in Bangkokfive years ago, bridge University,he learnt that some staff unemployed population in the world. he thought about collecting unemploy- in the faculty cafeteria did not find out un- Tono one’s surprise, the new number is ment benefits, but neverbothered. He now til Friday whether they would be working well belowthe government’stargetof5.5%. earns more money selling lottery tickets the following week. When he was a stu- And unlike America’s figure, it also seems next to Hua Lamphong railway station dent at Cambridge decades ago, things boringly stable (see chart). That has led than he did in his formerprofession. were not like that at all, he says. In Britain many to dismiss it as propaganda. But such In poor countries, unemployment is and America, the unemployment rate is a judgmentmaybe too hasty.IfChina’sun- paradoxicallyconcentratedamongthebet- nowreminiscentofthatpastage offull em- employment figures do not behave like teroffand bettereducated. They can afford ployment. But as Asia demonstrates, full America’s, that may be because Asian un- to wait a bit for a job that matches their as- employment can sometimes be surpris- employment bears little resemblance to its pirations and qualifications. Their behav- ingly threadbare. 7 Western counterpart. iour may also explain unemployment’s In many developing countries, unem- curious stability. “Even relatively well-off ployment is low simply because few peo- people cannot wait indefinitely,” Mr ple can afford it. Jobless benefits are patchy. Ghose points out. Thus when times are In their absence, most people have to eke bad, they may settle for a worse job or stop out a living to survive. Unemployment is, looking, rather than wait longer, which in effect, a “luxury good”, notes Ajit Ghose would add to the rate ofunemployment. of India’s Institute for Human Develop- ment, a research organisation. Fulsome employment Even when they are available, benefits The peculiaritiesofunemploymentfigures may not be worth the bother. In Thailand, are not always appreciated by the govern- for example, payments last six months and ments that publish them. Some policy- range from 1,650 baht per month ($52) to makers even complain that the statistic is 15,000. To be eligible, a Thai worker must too low. “They hate the unemployment register with the social-security office. But rate in Africa; they’re very vocal about it,” only one in three does so, according to Ms Elder says. For many years, Liberia’s Warn Lekfuangfu, an economist at Chula- jobless rate was said to be 85%, an outlan- longkorn University.Many remain outside dish figure that nonetheless symbolised the formal economy, where they are de- the country’s genuine economic distress. nied benefits but also spared taxes. When the governmentcarried outa proper What do they do instead? A laid-off fac- count in 2010, it discovered that the true tory worker might lend a hand on the fam- rate, strictly defined, was under 3%. ily farm, become a casual day labourer, or Some governments nudge the measure sell trinkets on the street. “There’s a pletho- upwards. They count people who are not ra of low-wage jobs” in the region, points immediately available to start work or not out Sara Elder of the International Labour actively seeking it. Indonesia, for example, No time for tweeting 68 Finance and economics The Economist June 9th 2018 Free exchange Road hogs

Economies ofscale will push the market fordriverless vehicles towards monopoly remain academic for long. Between December 2016 and Novem- ber 2017 Waymo reported three collisions in 350,000 miles (560,000km) of driving in California; GM, the nearest American competitor, had 22 in132,000. Neitherhas been involved in a fatal accident, as Tesla and Uber have. Scale will yield still other benefits. Though some people will want their own driverless cars, the market is likely to favour AV- based ride-hailing services. Driverless cars will not come cheap. But cars used in ride-sharing services will cost less per mile than personal vehicles, which spend much of their time sitting idle. Maintenance and other costs should be lower for fleets of hail- able AVs, because centralised facilities ought to enjoy productivi- tyadvantagesoverdistributedmechanics’ shops, and because individual owners are at an informational disadvantage to their mechanics, which creates opportunities forovercharging. Individual owners might nonetheless shell out for the conve- nience of a car at their personal beck and call. Yet car-hailing services, like bike-sharing businesses, become more useful as their user-base grows. The more riders there are in an area, the more vehicles it pays to operate, and the more likely a user is to find an open ride nearby.If waiting times fall to almost nothing—as clev- HE race to bring driverless cars to market is fierce and crowd- er AVs learn to roll up at the time you usually leave home or Ted. All the leading carmakers are in the field: on May 31st Soft- work—the extra value ofhaving your own car will fade. Bank’s Vision Fund said that it would invest $2.25bn in the auton- Convenient, safe AVs, which allow riders to nap rather than omous vehicle (AV) arm of General Motors. So are tech upstarts, mind the wheel, should reduce the hassle of travelling by car. from Uber to Tesla to Waymo, Alphabet’s self-drive division and That creates a potential snag: people may travel more, making the leader in driverless technology, which recently announced congestion worse. Ironically,though, scale could fixthis too. Con- plansto add 62,000 minivansto the fleetofcarsthatwill make up gestion occurs because individual drivers do not take into ac- its autonomous ride-hailing service. Intense competition has count the inconvenience they cause to others. One way to solve both benefits and costs, but will probably prove short-lived. this is to force drivers to bear those costs, by charging them a fee. Thanks to powerful economies of scale, the roads may soon be But governments’ plans to introduce congestion tolling are un- ruled by no more than a handful offirms. popular—and charging is consequently rarer than chronically The advantages of scale begin with data. Like humans, the jammed highways. computers which power driverless cars improve with experi- But a ride-hailing service which grew to account for a substan- ence. The computers sitting in AVs are essentially in the business tial share of traffic would face a different set of incentives. Con- of learning and improving on what a good human driver would gestion costs imposed by one of its cars on another would be indo, write Ajay Agrawal, Joshua Gans and Avi Goldfarb in their ternal to that firm, which would have both the reason and the new book, “Prediction Machines”. The more data they have, the ability to do something about it—by varying prices with demand, better they become at predicting whether that blur ahead is a pe- perhaps, or by offering reduced rates to customers willing to destrian or sunlight reflecting off the road, and reacting accord- share a car. Othercarsorservicescould attemptto free-ride on the ingly.And the more milesunderan AV project’sbelt, the more un- free-flowing traffic created by dominant firms. But concentrated usual events—a moose in the road, say—the system faces. control over roadways could make the politics of road fees more Fortunately such lessons, once learned by computers, are not tractable: as the winning firms’ bargaining power rose, as fewer forgotten, and can be drawn upon by every vehicle using the middle-income households owned their own cars, and especial- same software. This, and the fact that AVs never fall asleep at the lyif,asDaniel Rauch and David SchleicherofYale University sug- wheel or pull their eyes from the road to check their phone, suggest, AV firms join with governments to provide public transport gests that driverless cars should ultimately be far safer than the and mobility services. human-driven sort, which contribute to the roughly 1.25m road deaths each year worldwide, a bigger body-count than malaria. Waymo regulation But some AV systems will be safer than others. Those that beat Assuming, that is, that governments do not take a much larger competitors on safety and general reliability will attract more role in the market. Historically, scale economies in transport, drivers and corporate partners, allowing them to gather more from railways to public transit, pushed systems towards monop- data still. oly and eventual government interference. Economies of scale Regulators might further thin the field, by forcing firms with will likewise thin the ranks of driverless contenders and create poor safety records to curtail testing or by setting standards that pressure for government involvement. Driverless cars might not only the best can meet. Indeed, performance gaps could create be much faster than those controlled by humans. But the market ethical quandaries for governments: should the safest firms be could go from cut-throat competition to oligopoly to state control forced to share their technology; should they be given exclusive with extraordinary speed. 7 rights to the roads; should policymakers tolerate preventable deaths in cars using inferior software? Such questions might not Economist.com/blogs/freeexchange Property 69

Chateau in Normandy, France For Sale - EUR 1.9m

18th century French chateau in the heart of Calvados - Normandy, France, set within 12 acres (4.8 hectares) of walled parkland. The grounds feature a fountain, well-manicured lawns, flower gardens, woods and tennis court. The chateau is comprised of 9 bedrooms, 8 bathrooms and 3 living rooms, with listed hand painted wall murals, and has been beautifully restored by the current owner/occupier. Facilities are in place both inside and outside to host weddings and events. Additionally there are numerous outbuildings, including a 3 bedroom guest cottage, two 1 bedroom apartments and office space. The property is surrounded by fields, and is 30 minutes from the sea, 2.5 hours from Paris, and 40 minutes away from both Caen and Deauville international airports.

http://www.lemesnildo.fr/ Contact: Guillaume +447532003972 [email protected] The Economist June 9th 2018 70 Science and technology The Economist June 9th 2018

Also in this section 71 Sucking carbon dioxide from the air 72 The Cambrian explosion

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

Medicine type (malignant melanoma), as successfully as the professionals. That was impres- From A&E to AI sive. But now, as described last month in a paperin the Annals of Oncology, there is an AI skin-cancer-detection system that can do betterthan mostdermatologists. Holger Haenssle of the University of Heidelberg, in Germany, pitted an AI system against 58 dermatologists. The humans were able to Artificial intelligence will improve the speed and precision ofmedical treatments identify86.6% ofskin cancers. The comput- OUR years ago a woman in her early its software for the detection, from brain er found 95%. It also misdiagnosed fewer F30s was hit by a car in London. She scans, of strokes caused by a blockage in a benign moles as malignancies. needed emergency surgery to reduce the large blood vessel. The technology is being There has been progress in the detec- pressure on her brain. Her surgeon, Chris introduced into hospitals in America’s tion of breast cancer, too. Last month Khei- Mansi, remembers the operation going “stroke belt”—the south-eastern part, in ron Medical Technologies, a firm in Lon- well. But she died, and Mr Mansi wanted which strokes are unusually common. Er- don, received news that a study it had to know why. He discovered that the pro- langer Health System, in Tennessee, will commissioned had concluded that its soft- blem had been a four-hour delay in getting turn on its Viz.ai system next week. ware exceeded the officially required per- her from the accident and emergency unit The potential benefits are great. As Tom formance standard for radiologists screen- ofthe hospital where she was first brought, Devlin, a stroke neurologist at Erlanger, ob- ing for the disease. The firm says it will to the operating theatre in his own hospi- serves, “We know we lose 2m brain cells submit this study for publication when it tal. That, in turn, was the result of a delay in every minute the clot is there.” Yet the two has received European approval to use the identifying, from medical scans of her therapies that can transform outcomes— AI—which it expects to happen soon. head, that she had a large blood clot in her clot-busting drugs and an operation called This development looks important. brain and was in need of immediate treat- a thrombectomy—are rarely used because, Breast screening has saved many lives, but ment. It is to try to avoid repetitions of this by the time a stroke is diagnosed and a sur- it leaves much to be desired. Overdiagno- sort of delay that Mr Mansi has helped set gical team assembled, too much of a pa- sis and overtreatment are common. Con- up a firm called Viz.ai. The firm’s purpose tient’s brain has died. Viz.ai’s technology versely, tumours are sometimes missed. In is to use machine learning, a form of artifi- should improve outcomes by identifying many countries such problems have led to cial intelligence (AI), to tell those patients urgent cases, alerting on-call specialists scans being checked routinely by a second who need urgent attention from those and sending them the scans directly. radiologist, which improves accuracy but who may safely wait, by analysing scans adds to workloads. At a minimum Khei- oftheir brains made on admission. The AIs have it ron’s system looks useful for a second That idea is one among myriad projects Another area ripe for AI’s assistance is on- opinion. As it improves, it may be able to now under way with the aim of using cology. In February 2017 Andre Esteva of grade women according to their risks of machine learning to transform how doc- Stanford University and his colleagues breast cancer and decide the best time for tors deal with patients. Though diverse in used a set ofalmost130,000 images to train their next mammogram. detail, these projects have a common aim. some artificial-intelligence software to Efforts to use AI to improve diagnosis This is to get the right patient to the right classify skin lesions. So trained, and tested are under way in other parts of medicine, doctor at the right time. against the opinions of 21 qualified derma- too. In eye disease, DeepMind, a London- In Viz.ai’s case that is now happening. tologists, the software could identify both based subsidiary of Alphabet, Google’s In February the firm received approval the most common type of skin cancer (ker- parentcompany, hasan AI thatscreensreti- from regulators in the United States to sell atinocyte carcinoma), and the deadliest nal scans for conditions such as glaucoma, 1 The Economist June 9th 2018 Science and technology 71

2 diabetic retinopathy and age-related mac- ulardegeneration. The firm isalso working on mammography. Heart disease is yet another field of interest. Researchers at Oxford University have been developing AIs intended to interpret echocardiograms, which are ultra- sonic scans of the heart. Cardiologists looking at these scans are searching for signs of heart disease, but can miss them 20% of the time. That means patients will be senthome and maythen go on to have a heart attack. The AI, however, can detect changes invisible to the eye and improve the accuracyofdiagnosis. Ultromics, a firm in Oxford, is trying to commercialise the technology and it could be rolled out later this year in Britain. Climate change There are also efforts to detect cardiac arrhythmias, particularlyatrial fibrillation, The power of negative thinking which increase the risk of heart failure and strokes. Researchers at Stanford University, led by Andrew Ng, have shown that AI software can identify arrhythmias from an electrocardiogram (ECG) better than an expert. The group has joined forces with a Extracting carbon dioxide from the atmosphere is possible. But at what cost? firm that makes portable ECG devices and is helping Apple with a study looking at N MAY some 250 scientists and policy tactor, and pellets of calcium carbonate. whether arrhythmias can be detected in Itypes from around the world convened These are whisked to the third receptacle, the heart-rate data picked up by its smart in Gothenburg, Sweden, to discuss a dirty called a calciner. There the calcium carbon- watches. Meanwhile, in Paris, a firm called secret of the three-year-old Paris climate ate is heated to 900°C to release pure car- Cardiologs is also trying to design an AI in- agreement. Virtuallyall simulationswhich bon-dioxide gas ready for capture, and cal- tended to read ECGs. chart paths toward meeting that compact’s cium oxide. Finally, the calcium oxide is goal—to keep temperature rise “well be- piped to a “slaker”, where it is dissolved in Seeing ahead low” 2°C relative to pre-industrial levels— water to form calcium hydroxide, which is Eric Topol, a cardiologist and digital-medi- assume not just a sharp reduction in actual reused in the second step. cine researcher at the Scripps Research In- emissions but also the removal of carbon If that all sounds complicated, chemi- stitute, in San Diego, says that doctors and dioxide from the atmosphere on a massive cally speaking it is not. Nor is the idea new. algorithms are comparable in accuracy in scale. One reason such “negative emis- A researcher called Klaus Lackner came up some areas, but computers have the ad- sions” have been absent from climate dis- with the principles 20 years ago and Dr vantage of speed. This combination of cussions—the Swedish shindig being the Keith patented his version in 2015. A pilot traits, he reckons, will lead to higher accu- first of its kind—is that no one has a good plant with a contactor three by five metres racy and productivity in health care. idea of how exactly to bring them about. acrossand three metresdeep hasbeen run- Artificial intelligence might also make The obvious solution is to plant lots of ning for three years. It extracts a tonne of medicine more specific, by being able to trees, to convert CO2 into wood. But this carbon dioxide from the air per day. draw distinctions that elude human ob- would mean foresting an area with a size What sets Dr Keith’s latest paper apart servers. It may be able to grade cancers or somewhere between that of India and from his earlier publications—and, indeed, instances of cardiac disease according to Canada. Alternative, engineered fixes those of other putative carbon-hoovers—is their risks—thus, for example, distinguish- have been dogged by potentially strato- that it offers a hard-nosed estimate of the ing those prostate cancers that will kill spheric costs, uncertain efficacy or both. system’s cost and scalability. The results quickly, and therefore need treatment, No longer, reckons David Keith. Besides lookencouraging. from those that will not, and can probably his day job as a climate expert at Harvard That is principally because each step in be left untreated. university, Dr Keith is a co-founder of Car- Dr Keith’s scheme is adapted from known What medical AI will not do—at least bon Engineering, a nine-year-old firm that industrial processes. The contactor was notfora longtime—ismake human experts counts Bill Gates among its backers. Dr pinched from factory cooling towers. The redundant in the fields it invades. Mach- Keith and his colleagues argue in a paper pellet reactor came from water-treatment ine-learning systems work on a narrow they have just published in Joule that the plants. The calciner was developed from range of tasks and will need close supervi- CO2-removal technique they have been metal-ore purification apparatus. And the sion foryears to come. They are “blackbox- perfecting is no pipe dream—even ifit does slakerwas adapted from pulp mills. The re- es”, in that doctors do not know exactly contain pipes aplenty. quired tweaks were small enough to per- how they reach their decisions. And they Their process has four steps. First, air is mit Carbon Engineering to procure the are inclined to become biased if insuffi- channelled by fans onto a honeycombed paraphernalia forthe prototype plant from cient care is paid to what they are learning plastic slab called a contactor, where CO2, existing suppliers. Crucially, this also en- from. They will, though, take much of the which is acidic, reacts with aqueous potas- abled the suppliers—and an independent drudgery and error out of diagnosis. And sium hydroxide, which is alkaline. The re- engineering consultancy hired by Carbon they will also help make sure that patients, sulting solution of potassium carbonate is Engineering—to estimate how much it whetherbeingscreened forcancerortaken filtered and exposed to a slurry of calcium would cost to build a fully fledged facility from the scene ofa car accident, are treated hydroxide. This produces potassium hy- (envisaged in the picture above) capable of in time to be saved. 7 droxide, which is recycled back to the con- extractingbetween 100,000 and 1m tonnes1 72 Science and technology The Economist June 9th 2018

2 ofcarbon dioxide a year. Evolution Factoringin operatingcosts and the cost ofcapital, the study concludes that Carbon Engineering’s system could capture a Animal magic tonne of the greenhouse gas for between $94 and $232. That is well below the $600 The Cambrian explosion was caused by a lackofoxygen, not an abundance per tonne suggested by authors ofan influ- ential American Physical Society report URING the Cambrian period, which involving them, particularly ifthose from 2011 that reviewed proposed carbon- Dbegan 541m years ago, animal life reactions are biologically mediated by, dioxide-removal schemes. Admittedly, it is tooka remarkable leap forward. The first say, bacteria, and thus involve inter- still much pricier than the $10 or so that a creatures believed by most (though not actions with enzymes. The upshot is that tonne ofthe gas is worth in emissions-trad- all) palaeontologists to be multicellular uranium compounds precipitated in ingschemes such as the European Union’s. animals appear in the previous geologi- well-oxygenated water have more 238U in But it is of the order of the $100 or so that cal period, the Ediacaran. But though them than those from anoxic water. most climate economists think would they are abundant and reasonably di- Armed with this information, Dr Wei eventually be needed to prompt the transi- verse, Ediacaran creatures do not look and his colleagues looked at the ratio of tion to the low-carbon economy implicit in ancestral to modern animals. That is in uranium isotopes in their rocksamples the Paris agreement. And Dr Keith thinks contradistinction to Cambrian fossils, and found two moments when 238U the cost can be brought down further with among which are found representatives levels plunged with respect to those of a bit oftinkering. ofall the main animal groups (annelids, 235U. The first was between 542m years Carbon Engineering and its investors arthropods, brachiopods, chordates, and 541m years ago—that is, immediately believe they can make money even before cnidarians, echinoderms, molluscs and before the Cambrian. The second was this happens. To start with, revenue would so on) that are around today.And these between 524m years and 523m years ago, be generated byturningcaptured CO2 back groups appear in what is, in geological after the Cambrian had been going for into fuel (technology to do this already ex- terms, an eyeblink. some time. Crucially, these dates match ists). Though that sounds thermodynami- Several explanations have been put what look, from the fossil record, like two callybonkers, such fuel would, from a legal forward to explain the Cambrian explo- pulses ofevolution in the history of the point of view, count as “zero carbon” be- sion ofanimal life. One ofthe most pop- animals. The first saw the emergence of cause makingand then usingit involves no ular is that it was fuelled by a dramatic brachiopods and molluscs, the second net release ofCO2 into the atmosphere. rise in oxygen levels, permitting large and that ofannelids, cnidarians, echino- Demand for zero-carbon liquid fuels active creatures to thrive. However, a derms and chordates (a group that in- looks poised to rise as climate-friendly study just published in Geology by Wei cludes the vertebrates). places adopt low-carbon fuel standards. Guangyi ofNanjing University suggests In Dr Wei’sview, then, what hap- California did this in 2007 and the Euro- this tale is not true. Though oxygen levels pened in the Cambrian was similar to pean Union followed in 2009. Such stan- certainly did rise in the late Ediacaran subsequent incidents ofbiological diver- dards force distributors to keep the average and early Cambrian, he and his col- sification, such as that ofthe mammals carbon intensity of petrol below a certain leagues suggest that what propelled afterthe extinction ofthe dinosaurs. First, threshold, and therefore to offset dirty fu- animal evolution was actually two occa- some sort ofenvironmental catastrophe els with clean ones—and none is cleaner sions when they crashed. wiped out many ofthe previous in- than Carbon Engineering’s. California’s re- Dr Wei’sevidence comes from rocks cumbents. Then, new groups emerged to quirement, which is in effect a cap-and- in the Chinese provinces ofHubei and fill the empty ecological niches. In the trade scheme, translates to a price of $165 Yunnan. Specifically,he and his col- case ofthe dinosaurs, the catastrophe per tonne of carbon dioxide, making the leagues looked at uranium in limestone was an asteroid impact. In the case ofthe company’s product competitive. Steve that had formed in shallow Ediacaran Cambrian it was periods ofanoxia of Oldham, the firm’s boss, therefore hopes and Cambrian seas. Uranium has two as-yet-unknown cause. It remains true to license know-how to fuel producers do- isotopes, 235Uand238U, that differby three that rising oxygen levels on Earth at the ing business in such jurisdictions. Mr Old- in the number ofneutrons in their nuclei. time were necessary to permit animals to ham says that ground should be broken on This small mass difference is enough to prosper. But the trigger fortheir diversity the first industrial-scale plant, which is to affect the speed ofchemical reactions may well have been the reverse. be built at an undisclosed location in America, before the end ofthe year. As both Dr Keith and Mr Oldham con- cede, recycling CO2 in this way means that Carbon Engineering’s current business model offers zero, rather than truly negative, emissions. But it gives the company breathing space to fine-tune its system and demonstrate its feasibility to investors. More Gothenburg-like gatherings may yet prompt governments to take negative emissions seriously. California is already considering subsidies for carbon-dioxide removal. As things stand, the cost of using Carbon Engineering’s kit to scrub 8bn-10bn tonnes of CO2 per year, as the climate models presuppose, would run to trillions of dollars. Then again, no one said guaranteeing civilisation’s survival was Creatures from the black lagoon going to come cheap. 7 Books and arts The Economist June 9th 2018 73

Also in this section 74 Bill Clinton’s debut novel 75 Nuclear secrets and lies 75 American mythology 76 Johnson: Arms and the man

For daily analysis and debate on books, arts and culture, visit Economist.com/culture

The art of football er they form a diptych as dramatic as Scrooge’s enlightenment or Darth Vader’s A beautiful game conversion. The first “was like stealing from a thief”. As for the second: “It is possible that a more beautiful goal has been scored…but I doubt it.” 2. Present at the creation. Greatness in sport, as in art, often comes from unseen, The World Cup is a form ofdiplomacy and a secularreligion. But sometimes grinding effort. But sometimes it arises football is also an art from sheer inspiration—a wind awakening ELÉ was nine years old when he first ature, from the Bible to the “Odyssey”, a coal to brightness, as Percy Bysshe Shel- Psawhisfathercry. Itwas1950, the yearof from Raskolnikov’s rebirth in “Crime and ley put it, or the “flash in the brain” that Jo- the Maracanazo—Brazil’s devastating loss Punishment” to Rick’s late-breaking ideal- han Cruyff said he experienced at the to Uruguay, at the Maracanã stadium in ism in “Casablanca”. In such stories the World Cup in Germany in 1974. Rio, which cost the team the World Cup. good and bad that vie in people are height- Cruyff was a master of flicks, feints, im- The child promised his father that he ened and set in conflict. Rarely have a char- pudent shots and passes that described would avenge the defeat. When the two acter’s base and noble traits collided as arcing lines of beauty. But it was his impro- countries next met in the tournament, in they did at the World Cup of1986, in which visation in a match against Sweden that the semi-final of 1970, Pelé was playing. Diego Maradona ascended from infamy to made him immortal. By his own account, With the scores tied at 1-1, he chased a pass sublimity in a single game. he had not practised what he did upon re- deep into Uruguay’s half. The goalkeeper Not just any game. In 1982 Britain de- ceiving the ball near the corner flag, a rushed from his line. Their foot race was feated Argentina in a waroverthe Falkland Swedish defender in close attendance. also the climax of a story, orrather several: Islands. Four years later, having emerged Cruyff appeared to be heading away from the story ofthe game, ofPelé’s career, ofhis from a military dictatorship, Argentina the goal, until, in a quicksilver feat of dex- country’s recovery from the Maracanazo. faced England in a quarter-final in Mexico. terity and imagination, he tucked the ball With its mortifications and sense of “We were defending our flag, the dead behind him, swivelled and set off in the worldwide communion, the World Cup— kids, the survivors,” Maradona, the team’s other direction. For an instant he seemed which begins on June 14th—is a kind ofglo- captain, said later. In the space offour min- to be running in both directions at once. bal religion. It is a form of soft diplomacy utes he scored the most scandalous goal in The “Cruyff turn” has since been at- and a safe outlet fornationalism. For many history and the finest. First he surrepti- tempted by players everywhere. Seeing it fans, it is a potent quadrennial madeleine, tiously punched the ball into the net (the forthe firsttime wasakin to hearing the im- each tournament summoning memories “hand ofGod”, he called it afterwards). For possible, unscripted E-flat sung by Maria of previous ones, the lost friends with the second goal, he seemed to function on Callas at the end of “Aida” in Mexico City, whom they were watched, past selves. a different plane to the hapless English- or watching Michael Jackson unveil his Sometimes the football itself can be cagey men. He pirouetted away from two de- moonwalk. When Cruyff died, one of the and boring. But, especially on its biggest fenders, ran half the length of the pitch, best tributes came from Jan Olsson, the de- stage and canvas, sometimes football is art. rounded the keeper and guided the ball fender he bamboozled. “I loved every- Individual moves can be balletic, a team’s home. Argentina won the game and, re- thing about this moment,” Mr Olsson said. routines exquisitely choreographed. demptively, the cup. “I am very proud to have been there.” Grand narratives unfold and crescendo, Before and afterwards, Maradona’s life 3. Dust to dust. In 2009 the artist Mark tragedies and unlikely triumphs that fea- was chequered. He grew up in poverty; lat- Wallinger curated an exhibition on the ture heroes, villains and occasionally player he failed drug tests and ballooned. But, theme of boundaries and doubts. It con- ers who contrive to be both. as he said in a memoir, “Nobody any- tained trompe l’oeil paintings, artificial 1. Darkness to light. Redemption is one where is ever going to forget those two flowers and a fake Tardis, or perhaps a real of the fundamental themes of art and liter- goals I scored against the English.” Togeth- one. Mr Wallinger called the show “The 1 74 Books and arts The Economist June 9th 2018

Thisimplosion wasa tragedyin the pur- est sense. A tragedy, wrote Aristotle in the fourthcentury BC, depicts the fallof a great but flawed man, and hinges on a peripeteia, or sudden reversal, like the Italian defender’s slur. For Bernard-Henri Lévy, a French intellectual, the meltdown represented the “suicide of a demigod”—a tragic hero of whom too much has been demanded. Watch the scene closely, and there is indeed something oddly composed in Mr Zi- dane’s demeanour as, jogging away from his opponent, he hears, stops, and turns back to meet his fate. 5. A crack in everything. According to the Japanese aesthetic known as wabi- sabi, beauty is not perfect but flawed and incomplete. Leonard Cohen expressed the same thought in “Anthem”: “Forget your perfect offering/There is a crack in everything/That’showthe lightgetsin.” So, inad- vertently, did Pelé, after he won the race Trouble at t’mill 2 Russian Linesman.” with the Uruguayan goalkeeper. Fittingly, the linesman to whom that Perhaps no one but Pelé would have able president—a former soldier who was name referred was not actually Russian. done what he did next. He did nothing. His captured and tortured by the enemy but His name was Tofiq Bahramov and he was mind whirring faster than his feet, he did never said a word (his middle name is Lin- from Azerbaijan. Bahramov officiated at not touch the ball, as the keeper expected, coln rather than Jefferson). Now he is the World Cup final of 1966, played be- but let it run on—hastily collecting it, after stressed, sick and grieving, juggling bitter tween England and West Germany at his coup de théâtre, on the other side of his enemies and uncertain friends. Suddenly Wembley Stadium in London. With the opponent. Pelé shot towards the unguard- he faces a crisis of such magnitude that it scores level in extra time, a shot by Geoff ed goal—but scuffed his kickand missed. involves saving not only America from ca- Hurst, England’s striker, rattled the cross- He still avenged his father and the Ma- tastrophe, but probably the entire human bar and bounced down over the goal line. racanazo. Brazil beat Uruguay and won the race. “Not since Kennedy stared down Or perhaps it didn’t: the German players final, in which Pelé scored. Still, much later Khrushchev over the missiles in Cuba has claimed to have seen chalkdust, indicating he said he had dreams in which, after that our nation been this close to world war,” that the ball hit the line and thus that the audacious moment of restraint, his aim the president muses. To stand any chance goal should not be given. The referee was true: “It would have been so much of success, he must go spectacularly off- jogged across to consult Bahramov, who more beautiful had it gone in.” He may be piste. Hence the title. briskly nodded an affirmative. the greatest football artist of all time, but, Alas, “The President is Missing” is itself England won 4-2. English fans mostly about this, Pelé is wrong. The kink in the missing some things that might have im- remember the fourth goal, scored in the fi- masterpiece is what makes it human. 7 proved it. It is short of real political insight, nal seconds as the joyous crowd spilled which is surprising. There is no sex, which onto the pitch. But it is the third that is a may or may not be even more surprising. work of art. Just as Hamlet’s psychology Presidential fiction What it offers instead are 128 chapters of and the Mona Lisa’s smile become more breathless, onward-rushing, monosyllabic enigmatic with each viewing, however Good guy with a prose and enough twisty plotting to give many times you watch Mr Hurst’s shot, the reader a bad case of whiplash (mixed you can never know forsure. gun metaphors intentional). The storyline 4. The tragic hero. The World Cup final swings back and forth between the presi- in Berlin in 2006 was the last game Zine- dent and his pals—an imposing chancellor dine Zidane ever played. He had already of Germany called Juergen Richter who The President is Missing. By Bill Clinton won the tournament once, spurringFrance looks “like something out of British royal- and James Patterson. Little, Brown and to victory in 1998. After that, he was more ty”, a Russian prime minister with an iron Knopf; 528 pages; $30. Century; £20 than a footballer. In a country where Jean- handshake and a gushy Israeli premier. Marie Le Pen of the National Front made it NE ofthem was a publishing machine “YouknowthatIsrael will neverleave your to the run-off in the next presidential elec- Owith scores of bestsellers under his side,” she assures the president. tion, Mr Zidane—the son of an Algerian belt. The other knew the White House like The assembled global uppy-ups and warehouseman—became the face of a the back of his hand (because he lived in it dirty low-lifers spend the book hopping more tolerant France. Crowds in Paris for eight years). Together they made a per- across highways and down cul-de-sacs. chanted forhim to be president. fect thriller-writing team. Or so claims the The plot is epic and unlikely, and includes The match in Berlin was heading for a marketing for Bill Clinton’s debut novel, such grand concerns as terrorism, comput- penalty shoot-out; Mr Zidane, France’s “The President is Missing”, co-written with er shutdowns, the threat of chaos, civil dis- captain, had already scored one in the James Patterson, whose books have sold order, and death on a gigantic scale. As a game. With ten minutes to go, an Italian de- over 375m copies. Insider knowledge! helpful timer ticks down the minutes, the fender muttered something to him (about Thrills and spills! More of the latter than denouement comes with just three sec- his mother, Mr Zidane alleged; only about the former, it turns out. onds to spare. There are baddies who turn his sister, the defender maintained). Mr Zi- In what seems a case ofwish-fulfilment out to be goodies, and a goody who turns dane headbutted the Italian in the chest. in more ways than one, “The President is out to be very bad indeed: an ambitious He was sent off. France lost the shoot-out. Missing” features a morally unimpeach- woman with a soul shrivelled by envy. 1 The Economist June 9th 2018 Books and arts 75

2 There is a female assassin who goes by the early are the evacuees who, Fred Pearce “bollocks” on the walls. A bomb sent codename Bach. writes, “languish unhappily in distant across the fence could result in “a terrorist For much of the ride, it is not clear quite towns—free of radiation but often con- Chernobyl”, yet Mr Pearce saw little being what Mr Clinton has contributed. But, just sumed by angst, junk food and fear.” Like- done to reinforce the site. as more than 500 pages tick towards zero, wise, no one seems to have died as a direct He asks how long the beleaguered nuc- the presidential co-author finally gets his result of the meltdown at Fukushima. The lear-power industry can survive—hobbled hands on the plot. Having seen offthe bad- deaths related to the accident were mainly as it is by the association with nuclear dies and saved America and the world, the suicides prompted by the chaotic evacua- weapons (“the Achilles’ heel of civil nuc- hero tries a spot ofbipartisan rallying. tion and loss of home, jobs and family. lear power”), a litany of disasters and the In an address to a joint session of Con- “Psychological fallout” can be lethal. doomsdayhyperbole ofanti-nuclearactiv- gress, he reveals why he had to abscond When the truth seems ludicrous, and ists. Mr Pearce recognises that “most civil- from the White House—while also calling falsehoods are widely believed, facts can ian nuclear activities are safe”, but notes for immigration reform, gun controls, a be elusive. In “Fallout” MrPearce, a veteran that in democracies, at least, the public has meaningful climate-change debate and a science journalist, travels the world to pin the power of veto, however sensibly they return to the FoundingFathers’ ambition to down what he calls “the radioactive lega- wield it. 7 form a more perfect union. “After the cies of the nuclear age”. He moves be- speech, my approval ratings rose from less tween weaponry and energy, cataloguing than 30% to more than 80%. I knew it mistakes, dishonesty and irrational fears. The Lost Colony wouldn’t last, but it felt good to be out of The result is a panorama of atomic grotes- the dungeon.” In his dreams. 7 querie that is at once troubling, surprising Myth and and ruthlessly entertaining. His nuclear odyssey yields some hid- madness The nuclear industry eous examples of the industry’s secrecy, particularly a visit to the Russian village of Metlino, on the Techa river in the Urals. In The writing on the The Secret Token: Myth, Obsession and the the 1950s this was the world’s most radio- Search for the Lost Colony of Roanoke. By active river; Mr Pearce reckons it may have wall Andrew Lawler. Doubleday; 426 pages; $29.95 been responsible for more sickness than all of the other nuclear incidents in history HE tale of the “Lost Colony” is a 400- combined. Upstream sat the Mayak power year chronicle of madness and delu- Fallout: Disasters, Lies and the Legacy of T plant, which “poured into it an average of sion. As Andrew Lawler recounts in “The the Nuclear Age. By Fred Pearce. Beacon one Olympic swimming pool’s worth of Secret Token”, it begins in 1587 with the ill- Press; 264 pages; $27.95. Portobello Books; highly radioactive liquids every two conceived, ill-executed attempt to found £14.99 hours.” Villagers received “staggering” the New World’s first English settlement HE Hanford nuclear complex in Wash- doses of radiation; scientists quietly moni- on Roanoke Island, and continues to this Tington state contained radioactive alli- tored the rates ofillness and death. day in the obsessive quest to discover how gator carcasses. Nuns used their blood to Such callous episodes, and better- and why the colony disappeared. Both the daub crosses on a missile silo in Colorado. known calamities such as Chernobyl and original settlers and those who, over the In Cumbria, northern England, 1,500 con- Fukushima, dominate the nuclear debate. subsequent centuries, have quixotically taminated birds were killed and buried As Mr Pearce observes, similar attention is tried to trace them seem equally deluded. with some radioactive garden gnomes. rarely given to various studies demonstrat- They are all mirage-chasers, confident (de- These lurid tales from the nuclear ing that no link exists between nuclear spite ample evidence to the contrary) that world are all real. Butthe industryalso gen- plants and local cancerrates, northe pains- the ultimate prize is within their grasp. erates myths that are widely accepted as taking schemes, such as those in Germany, In the case of the colonists, that prize true. For example, Chernobyl is not a dead to safely dispose of nuclear waste. His was mountains of diamonds or gold, or a zone: its wildlife thrives (see picture), and deepest worry is about Britain’s Sellafield quick passage to Asia. For historians, ar- many returnees have lived into ruddy old plant, home to a massive stockpile of plu- chaeologists and amateur sleuths, it is the age, eating produce from the radioactive tonium. In 1995 its fence was easily scaled equally elusive object or text that will re- soil. The evidence suggests those who die by Greenpeace activists, who sprayed veal the Lost Colony’s fate. Yet in truth there is nothing very mysterious about the failure ofthe Roanoke settlement. Thisbid to establish a European outpost offwhatisnowthe coastofNorth Carolina was doomed by ignorance of the basic facts of geography, geology and geopolitics. Conceived by Sir Walter Raleigh, a favoured courtier of Elizabeth I, as a means to “wrest the keys of the world from Spain”, the site was chosen “because on the mainland there is much gold”—and because Raleigh assumed it was strategically placed near an easy passage between the Atlantic and Pacific oceans. None of these assumptions was grounded in reality. And reality quickly struck back, in the form of disease, starva- tion, hostile natives and even more hostile Spaniards. Hoping to obtain desperately Life inside the zone needed supplies, John White, the gover-1 76 Books and arts The Economist June 9th 2018

2 nor, sailed for England. Delays caused by matter of “chasing ghosts”, Mr Lawler is on with a farmore complicated heritage. war, storms and other catastrophes meant firmer ground in his effort to explain its Mr Lawler is an intrepid guide to this it was three years before he was able to hold on the American imagination. Above treacherous territory. When he attempts to make it back. By then, the colony—which all, the legend of the Lost Colony fulfils the track down one of the most controversial included his granddaughter, Virginia Dare, need for an origin story, one that is all the artefacts associated with the Lost Colony, the first English child born in North Ameri- more powerful forits pathos. he confesses: “No scholar in his right mind ca, according to legend—had vanished, Still, it is an origin story ofan exclusion- would risk his reputation on the Dare leavingonlya fewtantalisingcluesbehind. ary, even racist, cast. Given the devastation Stone, which by now was academically ra- Thusbeginsthe second partofthis saga: wrought on native populations, the obses- dioactive. Fortunately, I was no scholar.” the fruitless search for answers—and the sive focuson a handful ofAnglo-Saxon set- This can-do spirit serves him well. His will- strange form of madness that seems to tlers—including, most poignantly, the in- ingness to chase down every lead, no mat- overcome anyone who gets too close to the fant Virginia—is overblown. The notion terhow outlandish, and his enthusiasm for subject. “The Lost Colony has a kind of in- that America began here, in the bogs and the journey as much as the destination, exorable pull, like a blackhole,” a research- shifting sands of Roanoke Island, provides make “The Secret Token” a lively and en- er tells Mr Lawler. But if the hunt itself is a a distinctly Waspy pedigree for a nation gaging read. 7 Johnson Arms and the man

Big data can illuminate legal controversies—including overthe Second Amendment HAT does it mean to “bear arms”? make-up, that is unlikely.Still, the dispute WThe Second Amendment to Ameri- has several other interesting lessons. One ca’s constitution reads: “A well regulated is that phrases are more than the sum of Militia, being necessary to the security of their dictionary definitions. Context isn’t a free State, the right ofthe people to keep just helpful; it is often crucial. The verb and bear Arms, shall not be infringed.” “bear” has 44 definitions in the Oxford Concerned by the number of firearms in English Dictionary (OED), not counting America, and the epidemic of gun vio- the ursine noun. Which “bear” is meant lence they cause, many commentators can onlybe grasped in context. Bearing in- (including Johnson) have in the past ex- terest does not mean literally carrying in- amined the first halfofthe amendment. It terest around, nor does bearing a grudge seems obvious to some that the first involve physical activity. clause qualifies the second: the right to Second, there are phrases, sometimes bear arms is tied to militia service. called “phrasal verbs”, that cannot be un- But gun-rights advocates think the sec- derstood by knowing the component ond clause stands alone. Among them words: consider bear down or bear up. was the late Antonin Scalia, who in 2008 Good dictionaries define these phrases wrote a Supreme Court opinion, DC v separately. The OED defines “bear arms” Heller, holding that the amendment guar- in an entry under “arms”: “To serve as a antees an individual right to guns, no mi- soldier; to fight (for a country, cause, etc).” litia service required. He went on to ex- But it also takes note of the contested plain “bear arms”. For him, “to bear” was meaning in America’s constitution. simple enough, meaning “to carry”. And corpus can be general, like Google Books, In any event, real-world usage matters “arms” were just weapons. He conceded which has around 500bn words of English more than dictionaries. Judges often hunt that there was an idiom, “to bear arms”, text. But it can also be specialised. Two through dictionaries to support their rul- which meant to belong to an organised newcomers are the Corpus of Founding ings, but these can miss nuances or make military force. But this was only a possible Era American English, with 139m words mistakes. Instead judges should go di- importofthe phrase, notitscore meaning. across95,000 documentsfrom 1760 to 1799, rectly to digital corpora. Nor are selected Scalia was an originalist—ie, he be- and the Corpus of Early Modern English, quotes enough. In any other field, this lieved the constitution must be interpret- with 1.3bn words from 1475 to 1800. would be called cherry-picking. Instead, ed in the lightofthe meaningofits constit- Dennis Baron, a linguist at the Universi- with the powerful, free resources now uent words in the late 18th century. He tyofIllinoisUrbana-Champaign, searched available, anyone—including readers of bolstered his argument by citing an edi- for “bear arms” in these databases, and this column—can look at a huge body of tion ofSamuel Johnson’s dictionary from found about 1,500 instances. Of these, he usages and draw firmer conclusions 1773, plus selected prose from the period says, only a handful did not refer to organ- about meaning. (Neal Goldfarb, a lawyer, in which the constitution was written. ised armed action. It is true that several has made the “bear arms” data available He was mistaken. Selective quotations state constitutions guaranteed the right to on Language Log, a blog.) can prove anything, if you have clever re- “bear arms” and explicitly mentioned self- Originalists like Scalia can find out searchers looking for them. But there is a defence. So Mr Baron’s digging does not what words really meant in the 18th cen- farmore robust way to find out what peo- completely close the case. But it has shown tury. But their opponents—who believe ple meant by this or that word in the 18th that the default meaning of “bear arms” in laws should evolve with the meanings of century. That is to gather a large number the founding era was, indeed, military. the underlying concepts—get a powerful oftexts into a “corpus”, a searchable body This research ought to prompt the jus- tool, too. Lexicographers have revolution- of material, and then look for patterns in tices to revisit Heller—though given the ised their work using such data. Time for thousands of uses of a word or phrase. A weight of precedent and the court’s lawyers to do the same. Courses Appointments 77

INTERNATIONAL TRIBUNAL FOR THE LAW OF THE SEA TRIBUNAL INTERNATIONAL DU DROIT DE LA MER

The International Tribunal for the Law of the Sea (ITLOS), an international court with its seat in Hamburg, Germany, has the following vacancy: Senior Legal Officer / Head of Legal Office (P-5)

For qualifications and experience required, as well as further details, please see the vacancy announcement on the Tribunal’s website (www.itlos.org).

Legal Notice

The Economist June 9th 2018 78 Economic and ﬁnancial indicators The Economist June 9th 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 6th year ago United States +2.8 Q1 +2.2 +2.8 +3.5 Apr +2.5 Apr +2.5 3.8 May -466.2 Q4 -2.6 -4.6 2.95 - - China +6.8 Q1 +5.7 +6.6 +7.0 Apr +1.8 Apr +2.3 3.9 Q1§ +121.0 Q1 +1.1 -3.5 3.50§§ 6.40 6.80 Japan +0.9 Q1 -0.6 +1.3 +2.5 Apr +0.6 Apr +1.1 2.5 Apr +197.0 Mar +3.9 -4.7 0.03 110 109 Britain +1.2 Q1 +0.4 +1.4 +2.9 Mar +2.4 Apr +2.5 4.2 Feb†† -106.7 Q4 -3.8 -1.8 1.40 0.74 0.78 Canada +2.3 Q1 +1.3 +2.3 +4.9 Mar +2.2 Apr +2.1 5.8 Apr -53.8 Q1 -2.6 -1.9 2.31 1.29 1.35 Euro area +2.5 Q1 +1.6 +2.3 +3.0 Mar +1.9 May +1.6 8.5 Apr +473.7 Mar +3.2 -0.8 0.47 0.85 0.89 Austria +3.4 Q1 +9.7 +2.9 +3.9 Mar +1.8 Apr +2.2 4.9 Apr +7.7 Q4 +2.3 -0.6 0.52 0.85 0.89 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 0.84 0.85 0.89 France +2.2 Q1 +0.7 +2.0 +1.8 Mar +2.0 May +1.8 9.2 Apr -12.6 Mar -1.0 -2.4 0.73 0.85 0.89 Germany +2.3 Q1 +1.2 +2.2 +3.2 Mar +2.2 May +1.7 3.4 Apr‡ +312.3 Mar +7.9 +1.0 0.47 0.85 0.89 Greece +2.3 Q1 +3.1 +1.6 +1.1 Mar nil Apr +0.7 20.8 Feb -1.8 Mar -1.2 +0.2 4.60 0.85 0.89 Italy +1.4 Q1 +1.1 +1.4 +3.6 Mar +1.1 May +1.2 11.2 Apr +53.0 Mar +2.7 -2.0 2.94 0.85 0.89 Netherlands +2.8 Q1 +2.1 +2.8 +3.5 Mar +0.9 Apr +1.5 4.9 Apr +84.9 Q4 +9.7 +0.8 0.57 0.85 0.89 Spain +2.9 Q1 +2.8 +2.7 +11.0 Apr +2.1 May +1.5 15.9 Apr +26.2 Mar +1.8 -2.6 1.28 0.85 0.89 Czech Republic +3.7 Q1 +1.6 +3.6 +5.5 Apr +1.9 Apr +1.8 2.3 Apr‡ +1.9 Q4 +0.7 +0.9 2.03 21.8 23.4 Denmark -1.3 Q1 +1.7 +1.8 -9.8 Mar +0.8 Apr +1.1 4.0 Apr +23.0 Mar +7.7 -0.7 0.47 6.32 6.60 Norway +0.3 Q1 +2.5 +1.9 -6.7 Mar +2.4 Apr +2.2 3.9 Mar‡‡ +22.8 Q1 +6.5 +4.9 1.76 8.08 8.48 Poland +5.2 Q1 +6.6 +4.2 +9.2 Apr +1.7 May +1.9 6.3 Apr§ -0.5 Mar -0.7 -2.2 3.24 3.62 3.72 Russia +1.3 Q1 na +1.8 +1.0 Apr +2.4 May +3.0 4.9 Apr§ +41.7 Q1 +3.3 +0.3 8.13 62.0 56.7 Sweden +3.3 Q1 +2.9 +2.7 +3.2 Apr +1.7 Apr +1.7 6.8 Apr§ +16.8 Q1 +3.4 +0.8 0.55 8.73 8.68 Switzerland +2.2 Q1 +2.3 +2.2 +8.7 Q4 +1.0 May +0.8 2.7 Apr +66.6 Q4 +9.2 +0.8 0.02 0.99 0.96 Turkey +7.3 Q4 na +4.3 +6.8 Mar +12.1 May +10.9 10.6 Feb§ -55.4 Mar -5.5 -2.8 15.24 4.56 3.52 Australia +3.1 Q1 +4.2 +2.8 +4.3 Q1 +1.9 Q1 +2.2 5.6 Apr -36.8 Q1 -2.5 -1.2 2.73 1.30 1.33 Hong Kong +4.7 Q1 +9.2 +2.9 +0.7 Q4 +1.9 Apr +2.5 2.8 Apr‡‡ +14.7 Q4 +4.0 +0.8 2.30 7.85 7.79 India +7.7 Q1 +10.1 +7.3 +4.4 Mar +4.6 Apr +4.7 5.3 May -39.1 Q4 -2.2 -3.5 7.92 67.0 64.4 Indonesia +5.1 Q1 na +5.3 +1.1 Mar +3.2 May +3.6 5.1 Q1§ -20.9 Q1 -2.2 -2.5 7.12 13,853 13,291 Malaysia +5.4 Q1 na +5.5 +3.1 Mar +1.4 Apr +2.5 3.3 Mar§ +12.2 Q1 +3.2 -2.8 4.20 3.97 4.27 Pakistan +5.4 2018** na +5.4 +2.2 Mar +4.2 May +5.0 5.9 2015 -16.7 Q1 -5.8 -5.4 8.50††† 116 105 Philippines +6.8 Q1 +6.1 +6.4 +31.0 Apr +4.6 May +5.1 5.5 Q2§ -2.5 Dec -1.2 -1.8 6.06 52.4 49.5 Singapore +4.4 Q1 +1.7 +3.2 +9.1 Apr +0.1 Apr +0.9 2.0 Q1 +61.7 Q1 +20.6 -0.7 2.58 1.33 1.38 South Korea +2.8 Q1 +4.1 +2.9 +0.9 Apr +1.5 May +1.8 4.1 Apr§ +69.2 Apr +4.8 +0.7 2.72 1,071 1,118 Taiwan +3.0 Q1 +0.8 +2.7 +3.1 Mar +1.6 May +1.3 3.7 Apr +84.8 Q1 +13.9 -0.9 0.99 29.7 30.1 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 2.52 31.9 34.0 Argentina +3.9 Q4 +3.9 +2.2 +3.2 Apr +25.6 Apr +25.1 7.2 Q4§ -30.8 Q4 -4.6 -5.1 7.70 24.9 16.0 Brazil +1.2 Q1 +1.8 +2.2 +8.9 Apr +2.8 Apr +3.4 12.9 Apr§ -8.9 Apr -1.1 -7.1 9.26 3.82 3.28 Chile +4.2 Q1 +4.9 +3.7 +7.6 Apr +1.9 Apr +2.4 6.7 Apr§‡‡ -3.1 Q1 -1.1 -2.0 4.57 629 668 Colombia +2.8 Q1 +2.8 +2.5 -1.4 Mar +3.2 May +3.3 9.5 Apr§ -9.8 Q1 -2.9 -2.0 6.53 2,831 2,893 Mexico +1.3 Q1 +4.6 +2.1 -3.7 Mar +4.6 Apr +4.4 3.4 Apr -15.9 Q1 -1.7 -2.3 7.83 20.3 18.3 Peru +3.2 Q1 +5.6 +3.7 +2.4 Mar +0.9 May +1.7 7.0 Mar§ -2.9 Q1 -1.6 -3.5 na 3.26 3.27 Egypt +5.3 Q4 na +5.4 +6.2 Mar +13.1 Apr +16.9 10.6 Q1§ -9.3 Q4 -2.6 -9.3 na 17.9 18.1 Israel +3.9 Q1 +4.2 +3.8 +4.2 Mar +0.4 Apr +1.5 3.9 Apr +10.5 Q4 +2.6 -2.4 1.86 3.57 3.54 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 +2.3 Mar +4.5 Apr +4.8 26.7 Q1§ -8.6 Q4 -2.7 -3.5 8.67 12.7 12.8 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. The Economist June 9th 2018 Economic and ﬁnancial indicators 79

Markets % change on The Economist poll of forecasters, June averages (previous month’s, if changed) Dec 29th 2017 Real GDP, % change Consumer prices Current account Index one in local in $ Low/high range average % change % of GDP Jun 6th week currency terms 2018 2019 2018 2019 2018 2019 2018 2019 United States (DJIA) 25,146.4 +1.9 +1.7 +1.7 Australia 2.5 / 3.2 2.2 / 3.2 2.8 (2.7) 2.8 (2.7) 2.2 (2.1) 2.3 -2.5 (-2.2) -2.4 (-1.7) China (Shanghai Comp) 3,115.2 +2.4 -5.8 -4.2 Brazil 1.2 / 2.9 2.2 / 3.6 2.2 (2.6) 2.8 (2.9) 3.4 4.1 -1.1 (-1.2) -1.5 (-1.6) Japan (Nikkei 225) 22,625.7 +2.8 -0.6 +2.0 Britain 1.1 / 1.7 0.8 / 1.9 1.4 1.4 (1.5) 2.5 2.1 -3.8 (-3.7) -3.5 (-3.4) Britain (FTSE 100) 7,712.4 +0.3 +0.3 -1.1 Canada 1.9 / 3.2 1.6 / 3.2 2.3 2.0 (2.1) 2.1 (2.2) 2.0 -2.6 (-2.7) -2.4 Canada (S&P TSX) 16,183.9 +0.8 -0.2 -3.8 China 6.4 / 6.8 6.1 / 6.9 6.6 6.4 2.3 2.4 1.1 1.0 Euro area (FTSE Euro 100) 1,208.4 +0.7 -0.1 -2.9 France 1.8 / 2.2 1.6 / 2.4 2.0 1.9 1.8 (1.7) 1.4 -1.0 (-0.8) -1.1 (-0.9) Euro area (EURO STOXX 50) 3,460.8 +0.6 -1.2 -4.0 Germany 2.0 / 2.5 1.6 / 2.7 2.2 (2.3) 2.1 1.7 (1.6) 1.7 7.9 (7.7) 7.5 Austria (ATX) 3,300.4 -1.8 -3.5 -6.2 India 6.6 / 7.7 7.2 / 8.2 7.3 (7.2) 7.5 4.7 (4.8) 4.8 (4.7) -2.2 (-2.0) -2.3 (-2.1) Belgium (Bel 20) 3,791.1 +0.2 -4.7 -7.4 Italy 1.1 / 1.6 0.9 / 1.8 1.4 1.3 1.2 (1.1) 1.2 2.7 2.4 (2.6) France (CAC 40) 5,457.6 +0.6 +2.7 -0.2 Japan 0.9 / 1.7 0.7 / 1.9 1.3 (1.4) 1.2 (1.1) 1.1 (1.0) 1.3 (1.2) 3.9 (4.0) 3.8 (4.0) Germany (DAX)* 12,830.1 +0.4 -0.7 -3.5 1.3 / 2.1 1.2 / 1.9 1.8 (1.7) 1.7 (1.8) 3.0 (3.1) 4.0 (3.9) 3.3 (3.4) 3.0 (2.6) Greece (Athex Comp) 781.1 +4.2 -2.7 -5.4 Russia 2.4 / 3.1 1.8 / 3.3 2.7 (2.8) 2.4 (2.2) 1.5 (1.4) 1.5 1.8 (1.7) 1.9 (1.7) Italy (FTSE/MIB) 21,807.6 nil -0.2 -3.0 Spain Netherlands (AEX) 562.2 +0.8 +3.2 +0.3 United States 2.6 / 3.1 2.0 / 3.5 2.8 2.5 2.5 (2.4) 2.2 (2.1) -2.6 (-2.8) -2.9 (-3.1) Spain (IBEX 35) 9,791.6 +2.4 -2.5 -5.3 Euro area 2.1 / 2.6 1.7 / 2.8 2.3 2.0 1.6 (1.5) 1.5 3.2 (3.3) 3.1 Czech Republic (PX) 1,073.3 -0.6 -0.5 -3.6 Sources: Bank of America, Barclays, BNP Paribas, Citigroup, Commerzbank, Credit Suisse, Decision Economics, Deutsche Bank, Denmark (OMXCB) 900.4 +0.7 -2.9 -5.6 EIU, Goldman Sachs, HSBC Securities, ING, Itaú BBA, JPMorgan, Morgan Stanley, RBS, Royal Bank of Canada, Schroders, Scotiabank, Société Générale, Standard Chartered, UBS. For more countries, go to: Economist.com/markets Hungary (BUX) 37,157.5 +6.7 -5.6 -10.7 Norway (OSEAX) 1,004.4 +1.4 +10.7 +11.2 Poland (WIG) 59,080.9 +3.1 -7.3 -12.1 Other markets The Economist commodity-price index Russia (RTS, $ terms) 1,177.7 +1.3 +2.0 +2.0 2005=100 % change on % change on Sweden (OMXS30) 1,559.1 -0.2 -1.1 -7.8 Dec 29th 2017 one one Switzerland (SMI) 8,545.0 -0.4 -8.9 -10.2 Index one in local in $ May 29th Jun 5th* month year Turkey (BIST) 96,657.7 -6.9 -16.2 -31.1 Jun 6th week currency terms Dollar Index Australia (All Ord.) 6,137.4 +0.7 -0.5 -2.8 United States (S&P 500) 2,772.4 +1.8 +3.7 +3.7 All Items 156.5 156.3 -0.5 +11.1 Hong Kong (Hang Seng) 31,259.1 +4.0 +4.5 +4.1 United States (NAScomp) 7,689.2 +3.0 +11.4 +11.4 Food 159.4 156.7 -2.4 +2.4 India (BSE) 35,178.9 +0.8 +3.3 -1.9 China (Shenzhen Comp) 1,779.2 +2.5 -6.3 -4.7 Indonesia (JSX) 6,069.7 +1.0 -4.5 -6.6 Japan (Topix) 1,777.6 +2.4 -2.2 +0.3 Industrials Malaysia (KLSE) 1,777.1 +3.4 -1.1 +0.8 Europe (FTSEurofirst 300) 1,512.1 +0.2 -1.1 -3.9 All 153.5 155.9 +1.7 +22.0 Pakistan (KSE) 44,144.2 +3.8 +9.1 +4.1 World, dev'd (MSCI) 2,119.4 +0.9 +0.8 +0.8 Nfa† 148.0 148.9 +2.6 +13.9 Singapore (STI) 3,467.8 +0.7 +1.9 +1.9 Emerging markets (MSCI) 1,144.4 +2.8 -1.2 -1.2 Metals 155.8 158.9 +1.3 +25.6 South Korea (KOSPI) 2,453.8 +1.9 -0.6 -0.6 World, all (MSCI) 515.7 +1.1 +0.5 +0.5 Sterling Index Taiwan (TWI) 11,201.8 +3.5 +5.3 +5.1 World bonds (Citigroup) 939.9 nil -1.1 -1.1 All items 214.5 213.1 +0.8 +7.4 Thailand (SET) 1,738.7 +0.8 -0.9 +1.1 EMBI+ (JPMorgan) 793.2 -0.5 -5.1 -5.1 Argentina (MERV) 30,432.4 +7.2 +1.2 -23.7 Hedge funds (HFRX) 1,267.3§ +0.1 -0.6 -0.6 Euro Index Brazil (BVSP) 76,117.2 -0.8 -0.4 -12.6 Volatility, US (VIX) 12.3 +14.9 +11.0 (levels) All items 168.3 166.6 +1.1 +7.3 Chile (IGPA) 27,797.3 nil -0.7 -3.7 CDSs, Eur (iTRAXX)† 67.3 -1.9 +49.1 +44.9 Gold Colombia (IGBC) 12,297.3 nil +7.1 +11.4 CDSs, N Am (CDX)† 64.3 -1.3 +31.0 +31.0 $ per oz 1,302.0 1,295.3 -1.0 nil Mexico (IPC) 45,181.8 +1.0 -8.5 -12.0 Carbon trading (EU ETS) € 15.9 +0.4 +95.9 +90.4 West Texas Intermediate Peru (S&P/BVL)* 21,348.6 +2.7 +6.9 +5.8 Sources: IHS Markit; Thomson Reuters. *Total return index. $ per barrel 66.7 65.5 -5.1 +36.0 Egypt (EGX 30) 15,908.9 -5.1 +5.9 +5.2 †Credit-default-swap spreads, basis points. §Jun 4th. Israel (TA-125) 1,382.0 +1.3 +1.3 -1.5 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) 8,383.2 +4.7 +16.0 +16.0 Ind cato s for more countries and additional Economist.com/indicators Ewart; Thomson Reuters; Urner Barry; WSJ. *Provisional South Africa (JSE AS) 58,081.9 +4.5 -2.4 -5.4 series, go to: †Non-food agriculturals. 80 Obituary Zhao Kangmin The Economist June 9th 2018

was a portrait in hard clay of a soldier guarding him in the afterlife, with his top- knot, boots and wrap-around coat. It made Mr Zhao’s heart leap to see him. All the same, he did not mention the warriors for some time. He was a quiet man. And he feared, too, that Mao’s Cultur- al Revolution was not yet over. Earlier on Red Guards had smashed a Qin statue in the museum, and he had been forced to do public self-criticism for “encouraging feu- dalism” by caring for “old things”. He refused to apologise, since with his field- work in all weathers, rising on the dot at 4am, and the hours spent in his tiny book- shelved study, at his desk set out with one page and one pen, he had done nothing incorrect. If he was incorrect, it was in failing to visit his parents as much as a son should. In the end, though, he could not resist a flash of justified pride, showing a journalist from the Xinhua news agency his “terracotta warrior of the Qin dynasty”. First he had discovered them; now he had named them. Once the national authorities were alerted, proper excavation started, and he joined the team that eventually uncovered three huge pits filled with around 8,000 in- An army underground fantrymen, officers and archers, 520 horses, 130 chariots, and real, sharp, weapons. In 1979 the Museum of the Terracotta War- riors and Horses was opened above the pits. By 2017 it had drawn 100m visitors, and Lintong, once a huddle of mud build- Zhao Kangmin, curatorofthe Lintong District Museum and discovererofthe ings, had a university, hotels and a vast in- terracotta warriors, died on May16th, aged 81 dustry ofterracotta-warrior-making. HO is the true discoverer of a buried more-than-lifesize head, rising from the Mr Zhao did not attach himself to the Wwork of art? Is it the man who stum- land of the dead, spooked them horribly; new complex. The Lintong Museum was bles on it and digs it from the earth? Or is it they took it for an earth-god. All the same his life, and other eras occupied him be- the person who, turning up later, under- Yang Zhifa, their spokesman, was quite sides the Qin. He directed excavations of a stands its importance? Fame and fortune prepared to dump the whole lotin the river palace and a temple from the Tang dynasty often hang on the answer—especially unless they could get money forthem. of618-907; a whole room ofhis three-room when the work is hailed, by many, as the It was Mr Zhao who told them that museum was devoted to Tang art. Another eighth wonder ofthe world. these things were from the Qin dynasty of held Buddhist stelae, his special interest, Zhao Kangmin cared for neither fame 221-206BC, the first imperial dynasty of a with inscriptions he had painstakingly nor fortune, but he treasured historical ac- united China, and that they must stop dig- rubbed and transcribed. Amid all this, the curacy. When visitors came to the museum ging. As a former farmer, he understood warriors took their place. He followed, but in Lintong, in Shaanxi province in north- their frustration as they stood sulkily did not join, the debates about them: most west China, where he was curator for 40 smoking; he gave them 30 yuan for their controversially, whether this astonishing years (and still sat most afternoons, in his trouble. But after years ofloving history he jump in scale and expertise was the result trilby hat, after he retired), he would hand was now a self-taught archaeologist, who ofcontact with ancient Greece. them a business card. It described him as at 24 had been asked to run the Lintong “the very first man who discovered, deter- Museum, the only one in the county. In Waiting for visitors mined, restored and unearthed the world- 1962 he had himself unearthed three terra- In 1990 the State Council officially recog- famous Terracotta Warriors and horses.” cotta crossbowmen. Manytimes, outin the nised him as their discoverer, and awarded The vital word was “determined”. When fields, he had found bricks with patterning him a special pension. The new museum, he was called out in April 1974 to look at he knew to be Qin. Now, by the half-dug however, did not refer to him. It was Yang some “relics” found in a nearby wheat- well, he knew it again. So he reverently Zhifa who haunted the souvenir shop, field, almostflyingfrom hisbicycle with ex- gathered up the “dead” limbs, down to the signingautographs asthe finderofthe war- citement, he knew at once what they were. tiniest fragments, wrapped them in linen riors. Meanwhile, five kilometres away, Mr The farmer-finders, all brothers from and took them to his museum. There he Zhao sat beside his mended warriors in a the Yangfamily, had been diggingfor water stayed all night, washing them. darkened room of his museum, waiting. to feed theirpomegranate and persimmon Over the next three days, using epoxy He had redesigned the building in the trees. As they unearthed arrowheads, glue and plaster, he pieced together two 1980s in brightly painted traditional style, bricks and body-parts of what later warriors. They towered over him. Their expecting a crowd of visitors, but few emerged as the Terracotta Army, they ruler, the First Emperor of Qin, had gov- came—save his wife, most days, with his threw them away into the wheat unless erned by force, and his masterful tyranny lunch of steamed buns. When others they were sellable. The finding of the first was clear from written records; but here turned up, his card spoke forhim. 7

Put your feet up with 184. Style and stories, brought to you by The Economist

June/July issue on newsstands now

economistsubscriptions.com/1843 The award-winning magazine of ideas, lifestyle and culture

BEST SUPPORTING ACTRESS Meghan Markle modernises the monarchy World’s First “Self-Driving” Database

Oracle Autonomous Database

No Human Labor – Half the Cost No Human Error – 100x More Reliable

oracle.com/selfdrivingdb

Humanlaborreferstotuning,patching,updating,andmaintenanceofdatabase. Copyright © 2018, Oracle and/or its affiliates. All rights reserved. Oracle and Java are registered trademarks of Oracle and/or its affiliates.