How Strongmen Subvert Democracy

Kim Jong Won The art of the hollow deal

JUNE 16TH–22ND 2018 How strongmen subvert democracy

ORBAN ERDOGAN DUTERTE PUTIN

Contents The Economist June 16th 2018 3

5 The world this week Middle East and Africa 33 Housing in the Middle East Leaders Villas and slums 7 Politics 34 Iraq’s election How democracy dies Burnt ballots 8 America and North Korea 34 The war in Yemen Kim Jong Won Port in a storm 10 AT&T and Time Warner 35 Ghanaian football Green light Why fans are jaded 10 Chinese finance 35 Teenage mums in Africa Xi, make me chaste Impregnated and expelled America and North Korea The master negotiator seems 12 Russia 36 Congo’s coming election Mr Kabila’s intentions to have no clue how to haggle Free Oleg Sentsov with North Korea: leader, page On the cover 13 Britain and the EU 8. Kim Jong Un did better than The rise of autocrats in weak Softer is better United States Donald Trump at their strange states holds lessons for 37 Voting (1) meeting in Singapore, page democracies everywhere: 20. Mr Trump wants his own Letters Multiple choice leader, page 7.After decades foreign policy, but will not 38 Voting (2) 16 On Timor-Leste, want to pay for it: Lexington, of triumph, democracy is Husted, we have a problem losing ground. Why? Page 51 Parliament, American page 41 politics, banking, 38 Whaling in Alaska Germany, football Summer ice The Economist online 39 STDs Rash behaviour Daily analysis and opinion to Briefing supplement the print edition, plus 20 The Singapore summit 40 Preventing suicide audio and video, and a daily chart Enough to make a The sorrows of Werther Economist.com Rodman cry 41 Lexington E-mail: newsletters and The cost of America First mobile edition Europe Economist.com/email 23 Germany and central The Americas Print edition: available online by Europe 42 Canada’s economy 7pm London time each Thursday In bad Oder Breaking a few eggs Economist.com/printedition Britain and the EU A hard 24 Macedonia’s name 43 North American World Cup available online Brexit seems ever less likely. Audio edition: A new country Friends on the pitch to download each Friday Good: leader, page13. Theresa Economist.com/audioedition 24 The World Cup 43 Health in Latin America May has conceded just enough Beautiful game, ugly reality Polio’s comeback to avoid parliamentary 25 Women in cabinets 44 Chile defeats. But she is being Spain shows the way Money from mist driven towards a softer 25 Poland’s leader version of Brexit, page 30. Brexiteers fear being stitched Where’s Jaroslaw? Asia Volume 427 Number 9096 up by the establishment: 26 Turkey’s floundering 45 Development in India Bagehot, page 32 Published since September1843 economy Nutrition v debt relief to take part in "a severe contest between Pillow talk intelligence, which presses forward, and 46 Cricket in Afghanistan an unworthy, timid ignorance obstructing 27 Charlemagne Khyber pastime our progress." Europe and Trump 46 Pakistan’s economy Editorial offices in London and also: Beijing, Berlin, Brussels, Cairo, Chicago, Madrid, In need of re-stitching Mexico City, Moscow, Mumbai, Nairobi, New Delhi, Britain 47 Elections in South Korea New York, Paris, San Francisco, São Paulo, Seoul, Shanghai, Singapore, Tokyo, Washington DC 30 The politics of Brexit Rising Moon Problems postponed 48 Banyan 31 Philatelists fight back Squeezing Taiwan Dad’s Army revisited 31 The Daily Mail Paul Dacre is away The economy is 32 Bagehot Canada Brexiteers, back in the box already feeling the effects of Donald Trump’s trade war, page 42

1 Contents continues overleaf 4 Contents The Economist June 16th 2018

China 64 Banking in Africa Making waves 49 Foreign-language media A propaganda drive 65 Employing refugees Situations vacant 50 Activism in Hong Kong Reading the riot act 66 Free exchange The Fed and feedback

International Science and technology 51 Democracy’s decline Rise of the strongmen 67 Materials science Industrial plants China’s shadow banks Now 68 Seismology Obituary Anthony Bourdain, that it has made progress in Business A light shaking chef, food-writer and tackling its debts, China faces 54 Renewable energy 69 Anti-predator behaviour insatiable traveller, page 78 the real test: leader, page10. On the solarcoaster Fight or flight? Stricter oversight of shadow 55 Bartleby 69 Scientific honesty banking, prompted by fears of Alternative employment Subscription service financial instability, begins to Something to crow about For our full range of subscription offers, 56 Latin American oil firms including digital only or print and digital bite, page 60 70 Military communications combined, visit In deep water Jaw-jaw and war-war Economist.com/offers 56 Google and AI or call the telephone number provided below: or Playing with fire Telephone: +44 (0) 845 120 0983 Books and arts +44 (0) 207 576 8448 57 Italian business Subscription for 1 year (51 issues) Price of protection 71 Inequality and its costs Print only The crack-up Euro-zone countries €229 57 Entrepreneurship in Denmark DKr 1,709 Germany 73 David Lynch’s memoir Hungary HUF 78,042 The painting and the moth Norway NKr 1,839 Taking off Poland PLN 1,011 58 Airbnb and Uber in Japan 73 A poet’s debut novel Sweden SKr 2,089 Together, once Switzerland SFr 296 Can share, won’t share Turkey TL 814 59 Schumpeter 74 Alberto Giacometti Other Europe (ex UK) €229 Multinationals’ malaise Rising up to heaven Middle East – GCC US$352 South Africa ZAR 4,670, US$285 Inequality and health Is the Middle East and Africa US$285 gap between rich and poor to Finance and economics 76 Economic and financial blame for suicide, drug abuse indicators and mental illness? Page 71 60 Chinese finance Statistics on 42 economies, Principal commercial offices: Light on the shadows plus a closer look at coal The Adelphi Building, 1-11John Adam Street, 61 International trade London WC2N 6HT Tel: +44 (0) 20 7830 7000 Hidden barriers Obituary Rue de l’Athénée 32 62 Buttonwood 1206 Geneva, Switzerland Playing Argentina 78 Anthony Bourdain Tel: +4122 566 2470 The power of food 63 American banks 750 3rd Avenue, 5th Floor, New York, NY 10017 Under the rug Tel: +1212 5410500 1301Cityplaza Four, 63 Statistics in Greece 12 Taikoo Wan Road, Taikoo Shing, Hong Kong Significant figure Tel: +852 2585 3888 Other commercial offices: Chicago, Dubai, Frankfurt, Los Angeles, Paris, San Francisco and Singapore Plant-reinforced concrete How carrot-power can make buildings stronger, page 67

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Leung had angered the illegal migration. Critics defeated in a primary election. Politics Chinese government by wondered whether the word Mr Sanford previously made supporting independence for “axis” had quite the right headlines in 2009 when, as Hong Kong. historical ring to it. governor, he disappeared for a week. It turned out he was Lorry drivers staged strikes in Scales of justice having an affair. The official several Chinese cities. They Jean-Pierre Bemba, a former explanation for his absence, were protesting against fuel Congolese warlord, had his that he was “hiking the Appa- costs and competition from conviction for crimes against lachians”, became a popular app-based haulage services. humanity overturned on euphemism forinfidelity. appeal. He still awaits sentence Reversal of fortune on a separate charge ofbribing The non-believer With a tiny majority in Parlia- witnesses, but the Internation- The G7 summit in Canada ment and faced with a rebel- al Criminal Court ordered his was the most rancorous in the lion from a handful ofTory release. His supporters want club’s history. America clashed Donald Trump and Kim Jong MPs opposed to Brexit, the him to return to the Democrat- with its allies over climate Un, North Korea’s dictator, British government promised ic Republic ofCongo and run change and trade. Donald held a summit in Singapore. MPs what Remainers hope forpresident. Trump refused to sign the final Mr Kim promised “complete will be a “meaningful” vote on communiqué, accusing Justin denuclearisation” in exchange whether to approve whatever An American soldier was Trudeau, the Canadian prime forAmerican security guaran- deal emerges from talks with killed and fourwounded in minister, ofmaking “false tees. Mr Trump called it “a very the EU. This week’s machina- Somalia after they were statements”. “There’s a special great moment in the history of tions make it more likely that attacked by al-Shabab, a jiha- place in hell” forthose who act the world”. Critics noted that the United Kingdom will end dist group. America is mulling in bad faith, said Mr Trump’s North Korea has always bro- up with a “soft” Brexit. whether to scale backits mil- trade adviser, Peter Navarro. ken such promises in the past. itary operations in Africa. The governments ofMacedo- America extradited Ricardo South Korea’s ruling party nia and Greece agreed on a A coalition led by Saudi Ara- Martinelli, a formerpresident won provincial and municipal new name forthe former, bia and the United Arab ofPanama, to his home coun- elections by a landslide, cap- which is seated at the UN as Emirates attacked Hodeida, try to face trial on charges of turing14 of17 governorships. It the Former Yugoslav Republic the main entry port foraid in corruption and wiretapping. marked the first time that ofMacedonia. The country’s Yemen, in a bid to wrest it He is accused ofusing public liberal candidates had ever new name, Northern from the Houthis, a group of money to spy on 150 rivals. won in several south-eastern Macedonia, is designed to Shia rebels who chased the provinces. The popularity of appease Greeksensitivities government out ofSana’a, the Pope Francis accepted the Moon Jae-in, the president, has about cultural appropriation. capital, in 2015. The UN had resignation ofthree Chilean been buoyed by the recent warned that fighting over the bishops. They include Juan detente with North Korea. port could disrupt the supply Barros, who was accused of offood to Yemeni cities, put- covering up sexual abuse of Hundreds ofpeople stormed ting millions at riskofhunger. children by a priest. government offices in Vietnam to protest against a A fire destroyed part ofa depot draft law that would let in Iraq where ballot papers foreigners hold leases ofup to were being stored after a dis- 99 years on property. They fear puted election in May. Iraq’s that Chinese investors will buy parliament had ordered a lots ofland. The law’s recount ofthe ballots amid adoption has been delayed. allegations ofvote-rigging.

Taiwan’s president attended The Aquarius, a rescue vessel Use it or lose it the opening ofa new building carrying more than 600 America’s Supreme Court forthe American Institute in migrants from north Africa, sided with Ohio, which had Taiwan, America’s unofficial was refused access to Italian removed the name ofa man embassy in the country. China, ports by Matteo Salvini, Italy’s who did not vote regularly On the eve ofthe 2018 World which bristles at anything that new nationalist interior from the electoral register. Cup, the 2026 tournament was even hints at diplomatic recog- minister. After two days of Federal law forbids the auto- awarded jointly to the United nition ofTaiwan, had warned impasse, Spain, under its new matic removal oflax voters States, Canada and Mexico. America not to send a senior Socialist government, stepped from the rolls, but states have a The members ofFIFA, official. America dispatched a forward to offerthe ship a duty to keep their information football’s governing body, lowly undersecretary ofstate. berth in Valencia. Italy did up to date. The court found ignored recent tensions among accept migrants on an Italian- that a notice ofintent to re- the three countries in choosing A court in Hong Kong sen- flagged ship. move the man from the regis- their joint bid over Morocco’s. tenced a prominent activist, ter did not violate the rules. Mr Trumpwill no longer be Edward Leung, to six years in Austria’s chancellor, president by the time the prison forhis role in a riot in Sebastian Kurz, proposed the MarkSanford, a Republican tournament is played. It is also 2016 triggered by officials’ creation ofwhat he called an congressman from South possible that the North Ameri- efforts to remove street stalls “axis ofwilling” among Ger- Carolina who has often criti- can Free-Trade Agreement will selling traditional snacks. Mr many, Italy and Austria to curb cised Donald Trump, was have been dissolved by then. 1 6 The world this week The Economist June 16th 2018

Voters in a referendum in Tesla is to reduce its global fierce resistance from Amazon, Business Switzerland overwhelmingly workforce by 9%, or around Starbucks and others with rejected a proposal to remove 3,500 employees, part ofan headquarters there. Amazon A federal judge approved the the ability ofcommercial effortto streamline manage- described the levy as “hostile”. proposed merger ofAT&T and banks to create money ment and generate sustainable Such “head taxes” are being Time Warner, a big defeat for (through lending). The Swiss profits. The job cuts won’t considered in other cities, the Department ofJustice, National Bankdescribed the affect production workers, including San Francisco, where which had tried to blockthe result as a relief; the Vollgeld who are racing to reach the the growth oftech firms is deal on antitrust grounds. Both plan envisaged the public all-important target ofmaking blamed for pushing locals out companies argued that com- holding current accounts 5,000 Model 3 cars a weekby ofthe housing market. bining their assets was neces- directly with the central bank. the end ofJune. sary in a media environment A spanner in the works that has been disrupted by A national-security threat? Toyota paid $1bn fora stake in Amazon, Netflix and others. The Trump administration Grab, a ride-hailing startup The decision opened the door reached an agreement with based in Singapore. It is the to more dealmaking in the ZTE, a Chinese maker oftele- latest big investment by a industry. Soon after the ruling coms equipment, that over- conventional carmaker in Comcast launched a $65bn turns a ban on ZTE acquiring technologies and firms that are takeover bid forsome of21st American components. In disrupting the industry. Grab Century Fox’s assets, topping return ZTE must pay a $1bn fine operates in eight South-East a rival offerfrom Disney. forviolating sanctions against Asian countries. In March it Iran and North Korea, replace bought Uber’s business in the The Federal Reserve lifted its its senior management and region; under the deal, Uber benchmarkinterest rate by a allow America to monitor its tooka 27.5% stake in Grab. quarter ofa percentage point, activities. That was not enough In a decision with ramifica- to a range ofbetween 1.75% and forCongress, which moved to German authorities handed tions forthe country’s gig 2%, the second rise this year. scotch the deal. ZTE’s share Volkswagen a €1bn ($1.2bn) economy, Britain’s Supreme The last time the rate was 2% price swooned on its first day fine for cheating emissions Court ruled that an indepen- was mid-2008, before the oftrading following a two- tests, one ofthe biggest-ever dent contractor forPimlico worst ofthe financial crisis. month suspension. penalties levied against a Plumbers could be classified as The Fed hinted at two more company in Germany. an employee, entitling him to rises this year, and dropped its Adyen, a Dutch payments paid holiday, sickpay and prediction that monetary platform that counts Netflix Just a month after it passed the other benefits. The court found policy would remain stim- and Uber among its customers, measure unanimously, that, although the plumber’s ulative forsome time. made its stockmarket debut in Seattle’s governing council contract bore features ofbeing Amsterdam. Its share price rescinded a tax on the city’s self-employed, his workwas In France the High Council for doubled above the offerprice, biggest companies amounting controlled and restricted by Financial Stability forthe first giving it a market value of to $275 per full-time employee. the firm, akin to a normal job. time raised the “countercycli- €14bn ($16.5bn). It was one of The tax was intended to raise cal” capital buffer, obliging the biggest European tech- money to ease Seattle’s home- For other economic data and banks to fund themselves with nology IPOs in recent years. lessness problem, but met news see Indicators section additional equity amounting to 0.25% ofrisk-weighted assets. The aim is to force banks to store up capital when the economy is strong. The HCFC is worried about mounting household and corporate private-sector debt, which hit 130% ofFrench GDP in late 2017.

Seeking a better relationship Christine Lagarde, the managing director ofthe IMF, said that protecting Argentina’s poor and most vulnerable was central to the plan thrashed out between the fund and the Argentine government following the sharp fall in the peso. The IMF is extending a $50bn line ofcredit to Argentina in return forquicker reductions ofthe budget deﬁcit and hard targets to tame inﬂation. The deal also includes measures to increase welfare spending if the economy worsens. Leaders The Economist June 16th 2018 7 How democracy dies

Lessons from the rise ofstrongmen in weakstates S DEMOCRACY in trouble? cy—all in the name of thwarting the enemies of the people. INearly 30 years after Francis They accuse honest judges of malfeasance and replace them Fukuyama declared the end of with stooges, or unleash tax inspectors on independent televi- history and the triumph ofliber- sion stations and force their owners to sell. al democracy, this question is no This is the stage of “illiberal democracy”, where individual longer outlandish. America, rights and the rule of law are undermined, but strongmen can long a beacon ofdemocracy, has still pretend to be democrats since they win free-ish elections. a president who tramples on its Eventually, in stage four, the erosion of liberal institutions norms. Xi Jinping is steering authoritarian China towards one- leads to the death of democracy in all but name. Neutral elec- man rule. And across the emerging world, strongmen stride tion monitors are muzzled; opposition candidates locked up; tall. Turkey’s president, Recep Tayyip Erdogan, having locked districtsgerrymandered; constitutionsaltered; and, in extreme up or purged more than 200,000 Turks for political reasons, cases, legislatures emasculated. will probablyprevail in electionsthatstarton June 24th and as- sume sultan-like powers. Nicaragua’s regime is pulling out The battle is not always to the strongman protesters’ toenails. Vladimir Putin is about to reap a huge pro- Thisprocessisneitherinevitable norincurable. India hashad a paganda coup from the World Cup. vibrant democracy for 70 years; Botswana for more than 50. Indices of the health of democracy show alarming deterio- Deteriorations can be stopped and even reversed. In recent ration since the financial crisis of 2007-08. One published by weeks Malaysians voted out Najib Razakand the UMNO party The Economist Intelligence Unit, our sister firm, has 89 coun- that had ruled since independence; protesters in Armenia tries regressing in 2017, compared with only 27 improving. broke a decade of one-party rule. Last December South Afri- Some surveys find that less than a third of young Americans cans forced out President Jacob Zuma, a would-be strongman thinkit is “essential” to live in a democracy. Small wonder that who let his cronies loot the state. Even Turkey is not doomed: this year has seen a boom in books with frightening titles such opposition parties have a good chance of winning control of as “How Democracy Ends” and “The People vs. Democracy”. parliament this month. This pessimism should be put in context. It is a recent rever- It is hard to say which democracies are at risk. Economic sal afterremarkable progressin the second halfofthe 20th cen- stagnation and surges in immigration are often precursors of tury. In 1941 there were only a dozen democracies; by 2000 trouble. But they are neither necessary nor sufficient. Few only eight countries had never held an election. A broad poll would have predicted that democracy would totter in Poland, of 38 countries shows that typically four out of five people a booming economy with few immigrants that has benefited prefer to live in a democracy. And not all threats to pluralism hugely from European Union membership. More important are ofthe same order. In mature democracies such as America, than the underlying conditions is the degree to which strong checks and balances constrain even the most power- would-be autocrats learn from each other—how to spread fake hungry president. In immature democracies, such institutions news, squash pesky journalists and play the populist card. are weaker, so a strongman can undermine them quickly, of- Their weaknesses are remarkably similar, too. From Malaysia ten without much fuss. That is why the most worryingdeterio- to South Africa, strongmen have eventually been felled by ration, goingby both the numberofcountries and the speed of popular revulsion at the scale oftheir corruption. retreat, is in the fragile, young democracies of the emerging These similarities hold some lessons. The main one is that world. From Venezuela to Hungary, these reversalsreveal strik- institutions matter. Western democracy-promotion has often ing similarities (see International section). That suggests rea- focused on the qualityofelections. In fact, independent judges sons foroptimism—as well as lessons forthe West. and noisy journalists are democracy’s first line ofdefence. Do- nors and NGOs should redouble their efforts to support the How to undermine a democracy rule of law and a free press, though autocrats will inevitably Put crudely, newish democracies are typically dismantled in accuse those whom they help ofbeing foreign agents. The sec- four stages. First comes a genuine popular grievance with the ond is that the reversals have been driven by opportunistic status quo and, often, with the liberal elites who are in charge. strongmen rather than the voters’ embrace of illiberal ideolo- Hungarians were buffeted by the financial crisis and then terri- gy. That ultimately makes these regimes brittle. When auto- fied by hordes of Syrian refugees passing through en route to crats steal too brazenly, no censor can stop people from know- Germany. Turkey’s pious Muslim majority felt sidelined by ing—and sometimes booting them out. The last, more secular elites. Second, would-be strongmen identify enemies uncomfortable lesson is that the example set by mature de- forangryvotersto blame. MrPutin talksofa Western conspira- mocracies matters. America’s powerful institutions will con- cy to humiliate Russia. President Nicolás Maduro blames strain President Donald Trump at home. But they do not stop America for Venezuela’s troubles; Hungary’s prime minister, his contempt for democratic norms—the serial lying, the cosy- Viktor Orban, blames George Soros for his country’s. Third, ing with dictators—from giving cover to would-be autocrats. havingwon powerbyexploitingfearordiscontent, strongmen Reports of the death of democracy are greatly exaggerated. chisel away at a free press, an impartial justice system and oth- But the least-bad system ofgovernment everdevised is in trou- er institutions that form the “liberal” part of liberal democra- ble. It needs defenders. 7 8 Leaders The Economist June 16th 2018

America and North Korea Kim Jong Won

The masternegotiatorappears to have no clue how to haggle with North Korea S A television spectacle, it all along. For Mr Kim, the offer of a meeting as equals with the Awas irresistible. The star of sitting president of the United States—external validation of “The Apprentice” striding com- his godlike status at home—was an unexpected and long-de- mandingly along the red carpet, sired windfall. He could have used the summit as a signal that reaching out his hand, ready to he means to overturn the North’s record of deceit. But, despite strike the deal of a lifetime. And supposedly intense pre-Singapore negotiations, this week’s grasping it, Kim Jong Un, the agreement contains no binding North Korean commitments. leader of the world’s most re- “Complete denuclearisation” sounds good, but the North pressive dictatorship, his Mao suit, hairstyle and grievances did notsetouta timetable. Itmay, asin the past, take the term to imported directly from the 1950s, who just nine months before refer to the withdrawal of American troops from South Korea, had promised to “tame the mentally deranged US dotard with or even to when America itself disarms, as it is in theory fire”. In the end, fire did not prove necessary: a suspension of bound to do under the Nuclear Non-Proliferation Treaty weapons-testing and an invitation to a summit was all it took. (NPT)—which, incidentally, the North has abandoned. Nor did President Donald Trump said it was an “honour” to meet Mr the agreement mention verification. Mr Trump’s team insists Kim, who duly promised “complete denuclearisation” in ex- this will be intrusive, but Mr Kim’s “proof” of destroying test change forsecurityguarantees. Itwas, MrTrump said ata press sites has so far involved letting a few journalists watch at a safe conference, “a very great moment in the history ofthe world”. distance. Verification must involve inspectors with the right to To the extent history is playing any part in all this, it is in its visit any of North Korea’s hundreds of facilities, civilian and tendency to repeat itself. North Korea has promised disarma- military, at short notice. Mr Kim’s willingness to accept such a ment again and again over the past 30 years, only to renege regime is the real test ofwhether the agreement is serious. each time after pocketing generous inducements. If the flimsy Worryingly, Mr Trump seems determined to be the deal’s agreement Messrs Trump and Kim signed in Singapore is to salesman. At the press conference, as he gushed about Mr turn out differently, as Mr Trump insists it will, America must Kim’s qualities, he announced that America was unwisely be clear-eyed and exacting in the detailed nuclear regime that cancelling military exercises with South Korea while talks it negotiates with the North. Alas, so farMrTrump seems more with the North were under way. As the South’s partly con- eager to play the talks forratings—threateningnot only a mean- scriptarmyneedsfrequenttrainingto remain battle-ready, that ingful deal, but also America’s position in Asia. was a big concession for which he appears to have received nothing. Mr Trump says that sanctions on the North will re- Singapore canoodles main until the process of disarmament is irreversible. He also One unquestionably good thing did come out of this week’s acknowledges that China is already enforcing the sanctions summit. Talking is much better than the belligerent exchange less diligently (it is also arguing for further loosening)—“but that went before it (see Briefing). War appears to be off the ta- that’s OK”. Mr Kim must know that Mr Trump will struggle to ble, and forthat the world can be grateful. getothercountriesto tighten the screwson the North again. Mr The othergood thingis that glimmerofhope. Youcan never Trump hasa lot riding on the North Korean deal, but just as he completely dismiss the idea that Mr Kim does mean to change abandoned a good Iranian nuclear agreement, so must he be direction. Still in his 30s (like much about him and his country, willing to abandon a bad North Korean one, or Mr Kim will his exact age is a mystery), he may be daunted by the bleak string him along. That is the test ofMr Trump’sseriousness. prospect of a lifetime of nuclear brinkmanship. For his regime to endure, he needsenough wealth to buyconventional weap- Put the Nobel on hold ons and pacify the urban middle class, which in recent years America’s Asian allies are rightly worried that Mr Trump will has begun to enjoy some meagre luxuries. He may also be un- sacrifice theirsecurityforthe sake ofa dead-end deal. He failed comfortable about his country’s reliance on China for every- to warn South Korea and Japan that he was cancelling the mil- thing from oil and remittances to the plane that flew him to itary exercises (using a North Korean phrase, he called them Singapore. If Mr Kim sees nuclear weapons partly as bargain- “provocative” war games). He talked about America’s Asian ing chips, his investment in warheads and the missiles needed commitments as an expensive burden in the same breath as to carrythem asfarasthe United Statesmakesthishis moment saying that he wanted to pull his troops home. He raised the ofmaximum leverage. Now would be the time to talk. fairness of trade, as if security was contingent. Dealing with Mr Trump was right to test this possibility. The potential North Korea is a chance for Mr Trump to strengthen the NPT prize includes not just the step back from war talk, but the re- and pax Americana. He looks more likely to weaken both, risk- moval of a persistent threat to Asia and, lately, the United ing regional arms races and even war. States. Also, given China’s disputes with America over trade Mr Kim has gone from pariah to statesman in six months. and security, North Korea could become a template for how His regime’s abhorrent treatment of its own people is largely the two superpowers can worktogether, to everyone’s benefit. forgotten. His repeated violations of treaties and UN Security Measured by such aspirations, however, Singapore was a Council resolutions have been partly forgiven. Striking any disappointment. Mr Trump boasts ofthe tremendous achieve- sort ofdeal with such a figure is unpleasant. Striking a bad one ment of simply being there; in reality the North wanted talks would be a moral and diplomatic disaster. 7 A greatstrateegyg is worthless if it fails in implementation. 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AT&T and Time Warner Green light, amber warning

A colossal media deal is given the go-ahead. Consumers ought to worry T&T has already had one directly rather than via cable-TV packages, as Facebook and Astarring role in American Google are takingad revenues. MrLeon wasalso unpersuaded antitrust history. Its enforced by the DoJ’s argument that AT&T would threaten to withhold break-up in 1984, into a group of its content from rival distributors in order to raise prices. regional firms and a long-dis- This newspaper believes that the deal should have been tance carrier, helped unleash squashed fordifferent reasons. Vertical mergers can be danger- competition in the country’s ous for consumers if one of the parties already wields too telecoms industry. This week much power in its own industry. Ideally, infrastructure firms AT&T was centre-stage in another momentous antitrust deci- would face enough competition to keep prices low, and con- sion, one thatthreatensa much worse outcome forconsumers. tent firms would battle to sell services over that infrastructure. On June 12th Richard Leon, a federal judge, ruled that the America is movingin the opposite direction. Two in five Amer- firm, which has largely been put back together in recent de- ican householdssubscribe to an AT&T service. The deal gives it cades, can acquire Time Warner, an entertainment giant. As- a powerful incentive to favour its own content over that of ri- suming no appeal by the Department of Justice (DoJ), which vals. AT&T’s unspoken long-term goal is probably to sell ex- brought the lawsuit against the merger, the deal will create a pensive bundles of infrastructure and content to near-captive colossus able to sell HBO, CNN and other TV networks over its customers. The repeal of rules governing net neutrality, which own wireless and satellite connections. A frenzy of dealmak- took effect on June 11th, compounds the problem by letting in- ing is expected, as other infrastructure firms join forces with frastructure firms favour their own content. those that create content. Comcast, the largest broadband pro- vider in America, has entered a bidding war with Disney for Pipe up much of 21st Century Fox. Verizon, AT&T’s arch-rival in wire- This week’s defeat may well make the DoJ think twice about less, may move to buy CBS and perhaps Viacom. obstructing other tie-ups. After the judge’s verdict, shares rose The ruling was a humiliation for the DoJ. Some see this as in would-be dealmakers—among them T-Mobile and Sprint, deserved comeuppance for a politicised decision to oppose two telecoms firms whose plans to merge also ought to be the merger. It is true that antitrust authorities very rarely op- stopped. Yet, if anything, America needs a more activist ap- pose “vertical mergers”, in which firms in different parts ofthe proach to antitrust. In 1970-99 regulators brought an average of supply chain combine. And Donald Trump is famously unim- 16cases a year; in 2000-14 that numberfell below three. Ameri- pressed with CNN’s coverage of him. Ifthe DoJ’s stance was in- ca also needs more choice in wireless and broadband markets. deed swayed byMrTrump, thatisobviouslywrong—butnot in Municipalities should be able to build wholesale fibre net- itselfa reason to wave the deal through. works to give their communities more high-speed broadband In fact, the judge used different arguments. He accepted the options; the Trump administration should urge the industry to case made by AT&T and Time Warner that the media land- build a national wholesale 5G wireless network. Otherwise, scape has changed. Conventional firms face fiercer competi- AT&T’s place in the annals of antitrust will stand for a decline tion from tech giants—the likes of Netflix are winning viewers in competition as well as an upsurge. 7

Chinese ﬁnance Xi, make me chaste

Now that it has made progress in tackling its debts, China faces the real test EVER has China’s bond tors assumed that the government would rescue any big firm Corporate-bond defaults Nmarket had such a stormy in trouble. The real worry is not that the defaults will go too far, China, yuan bn spring. It has already set a record but that officials will lose their nerve. 12 9 for defaults in the second quar- China needs to deleverage because, over the past decade, 6 ter. The cost of credit for firms total debt has risen from 150% of GDP to nearly 300%. This is a 3 0 has shot up. Even the state- cloud over the global economy: such a rapid increase often 2014 15 16 17 18 owned companies that invest in predicts financial trouble. Although it is far too early to relax, April-June quarters infrastructure, previously sacro- China has made headway in the past two years in stabilising sanct, are seen as risks. What has gone wrong? its debt burden. Partly, that reflects a lucky rise in commodity The answerisnothingatall. Defaultsare progress forChina, prices, which has buoyed profits at struggling steel and coal which needs to clear a backlog of accumulated debt. This firms. But the stockmarket crash of 2015 and the huge capital year’s casualties amount to a mere 0.1% of the bond market. outflows in 2016 also persuaded President Xi Jinping that fi- But that is still an improvement on the recent past, when inves- nancial frailties were endangering national security and that1

12 Leaders The Economist June 16th 2018

2 the country needed a change in policy. ises, growth will slow to 4.4% by 2020 from nearly 7% last year. Some government actions have been dramatic, notably the Milderslowdowns have scared the government offthe path of arrests of tycoons who made lavish investments abroad. Oth- prudence before. This time it must hold the line. ershave been bureaucratic, such asa mergerofbankand insur- The second, less obvious, risk is that China will revert to a ance watchdogs in order to improve oversight. The most im- stodgily inefficient banking system. Entrepreneurs have flour- portant, though, has been the start of a clean-up of the ished over the past decade, thanks in part to easier access to financial system. Banks have written off some 5trn yuan credit. Amid the clean-up, the concern is that banks will again ($780bn) of bad loans, raised almost 1trn yuan in fresh capital favour state-backed borrowers. Defaults have so far been con- and are on course to raise another 1trn yuan. That adds up to centrated in the private sector. an infusion about three-quarters the size of America’s bank If the government is to create a financial system that is safe rescue after the financial crisis. Regulators are also reining in without beingsclerotic, it needs to change incentives. It should China’s once-booming world of shadow banking. Banks have not bail-out state-owned firms (or, if that is too much, those in been ordered to bring off-balance-sheet loans back onto their non-strategic sectors). It should let small, weak banks fail, be- books (see Finance section). Asset growth in the banking sec- cause national lenders are less beholden to local interests. It tor fell by nearly halflast year. should also distinguish between good and bad competition in finance. China is right to throttle undercapitalised shadow Safe, not stagnant banks. But it also needs to allow for technology firms such as Two risks darken this picture. The first is that the government Tencent and Ant, Alibaba’s financial affiliate, to compete will backtrack. The first bond default in China did not come against banks, so longas all comply with the same regulations. until 2014 and today’s failures are provoking cries of pain. That goes for foreign lenders, too. The task for China is not just Banks want an easing of strict new asset-management rules. to solve the problem of past excesses, but to lay the founda- Fitch, a rating agency, estimates that, if corporate debt stabil- tions forfuture growth. 7

Russia Free Oleg Sentsov

The outrageous penaltyimposed on a peaceful film-makershould be reversed S YOU settle down to watch Crimea later that year when Russian soldiers in plain uniform Athe World Cup in Russia, re- staged a coup there. Mr Putin lied when he said that they were member Oleg Sentsov, a Ukrai- not Russian troops, just as he lied later that Russia was protect- nian film director serving a 20- ing ethnic Russians against Ukrainian “fascists”. year sentence in a prison camp Mr Sentsov organised rallies against the annexation. The in Siberia. He has committed no Russian security services arrested him and took him to Russia, crime. Rather, he was jailed for where he was charged with “terrorism”. Mr Putin’s enforcers protesting against Vladimir Pu- claim that he plotted to blow up a statue ofLenin and set fire to tin’s illegal annexation of Crimea and the war Russia’s presi- a door of the office in Crimea of Russia’s ruling party. He was dentunleashed in eastern Ukraine fouryearsago. On May 14th innocent—the main witness said he had been forced to give MrSentsovstarted a hungerstrike demandingthe release ofall false testimony, and withdrew his statement in court. Nor was 64 Ukrainian political prisoners from Russian jails. The open- there a terrorist act. Lenin’s statue was not blown up, and no ing of the World Cup on June 14th was Mr Sentsov’s 32nd day one was injured in the fire. The aim of Mr Sentsov’s show trial without food. He is rapidly acquiring the moral stature once was to reinforce Mr Putin’s narrative of Crimea’s “liberation” accorded to people like Anatoly Marchenko, a Soviet dissident and to strike fear into those who dispute it. who was on hunger strike for 117 days and died soon after he ended it in December1986. Foul referee World leaders supported Mr Sentsov, though they could Mr Putin’s regime, rather like its Soviet predecessor, is built on clearly do more. Emmanuel Macron, the French president, falsehood and the threat ofviolence. His actions in Crimea led raised the case with Mr Putin. PEN America, a writers’ organi- to a war in eastern Ukraine which has claimed 10,000 lives, in- sation, and dozens of artists in Russia and in the West have cluding those of 298 passengers and crew who perished on a called forhis release. One Western leaderwho has not done so Malaysian Airlines plane that was brought down by a missile isPresidentDonald Trump. Instead, last weekhe called forRus- supplied by the Russians almost four years ago. Thousands of sia to return to the G7. It was expelled forthe seizure ofCrimea, Crimean Tatars have been terrorised, jailed or driven out of which, in his words, “happened a while ago”. their homeland. Mr Sentsov is peacefully and courageously Mr Sentsov’s plight is a reminder that the struggle goes on. denouncing all this—and seems ready to die for his cause. It He is an ethnically Russian-Ukrainian citizen who was born in goes without saying that he should be freed immediately and Crimea and considered it to be part of the Ukrainian state that that the world should loudly demand as much. Mr Putin is un- emerged from the Soviet collapse in 1991. (Nearly everyone likely to heed such calls. But he has reason to fear the undenia- apart from the Russian government shares this view.) In 2014 ble fact of the death in custody of a man like Mr Sentsov. Ashe he joined the movement that toppled Viktor Yanukovych, a no doubt recalls, the Soviet Union did not collapse in a hail of thuggish autocrat fond of gold chandeliers. Mr Sentsov was in bullets, but because people stopped believing its lies. 7 The Economist June 16th 2018 Leaders 13

Britain and the EU Softer is better

A hard Brexit seems everless likely. Good HEN Britons voted to May’s government, the customs union will cover the whole Wleave the European Union United Kingdom. And it will have no firm time limit. two years ago, they had no The softening may not end there. Britain has promised that chance to say what sort ofBrexit its Northern Irish backstop will include “full alignment” with they wanted. But Theresa May, the relevant rules of the EU’s single market. Again, Mrs May who became prime minister in might find that she has to apply this to the whole country, to the aftermath of the referen- avoid a unionist rebellion. Britain would thus find itself in a dum, quickly decided that they notionally temporary, but in fact indefinite, arrangement that wanted the most drastic break possible. Without consulting included membership of the EU’s customs union and full her cabinet, let alone Parliament, she announced “red lines” alignment with much of the single market. Soft Brexit would for her negotiation with Brussels that put Britain on course for have been achieved, via a backdoor in Belfast. the fullest ofseparations. This “hard” Brexit—in which Britain would free itself from Soft, strong and very long the clutches of European judges, trade policy and migration Though the logic of the negotiations now points to a soft exit, rules, at significant cost to its economy and security—has long such an outcome is not yet inevitable. Britain’s soft landing looked inevitable. Parliament’s resistance to Mrs May’s ex- outside the EU faces three main risks. The first is that the rest of treme plan has been timid and the Labour opposition feeble. the EU leaves Ireland in the lurch and drops its demand that Yet this week the tide turned. Rebel Tory MPs look likely to the border remain invisible. But EU leaders’ language on the wrest control of Brexit’s endgame from the government (see border has ifanything been toughening. Britain section). Meanwhile, the pennydropped amongBrexit- The second risk is popular outrage when the EU refuses to eers that the Irish border presents a near-insurmountable give Britain privileged access to the single market unless it al- roadblockto a hard exit. With less than six months of negotiat- lows the free movement ofpeople. If, as seems likely, the EU re- ing time left, it is becoming clear that Brexit will be softer than fuses to dilute this principle, Britain could apply brakes that Mrs May set out. That is good news forEurope and for Britain. some member states have already used: registering new migrants, limiting their access to benefits and even excluding U-bend if you want to them from public-sector jobs. That may be enough to appease This week’s showdown got the government to promise MPsa some Brexit voters, given that net migration of EU citizens has “meaningful” vote on the deal MrsMaynegotiates with the EU already fallen more than half since the referendum. Others near the end ofthis year. The assumption had been that a vote might be bought off if Mrs May fulfilled other Brexit promises, to rejectMrsMay’sversion ofBrexitwould lead to a drastic “no such as stumping up more money for the health service. And deal” outcome, in which Britain simply left without covering although a hard core would never forgive any softening of its financial obligations or establishing its future relationship Brexit, many more will tune out next March, once Brexit is for- with the EU. That need no longer happen, because Parliament mally achieved and the blue passports have been issued. will now be able to force the government to start again. The gravest risk for Mrs May is not the will of the people— That still leaves plenty of room for a hard Brexit. Although polls suggest most Britons favour a soft Brexit. It is the Euro- the negotiations have laid bare the cost of such a policy, the phobic wing of her own Tory party. If the prime minister government has stuck to its demands and red lines. Brexiteers seems to be going soft, her MPs may trigger a leadership chal- bluster that any problems can be overcome with a bit of posi- lenge. But she might well win such a contest, given the lack of tivity and patriotism, or argue that they are a reasonable price obvious replacements. Even if she fell, her successor would to pay for freedom from Brussels. They have persuaded the run into the same problem in Northern Ireland. Some Tories prime minister that the referendum obliges her to take Britain complain thatthe Northern Irish tail iswaggingthe British dog; out ofthe EU’s single market and customs union at any cost. they might prefer to see a customs border in the Irish Sea than But there is one area where Britain cannot opt for maximal the wrecking of their hard-Brexit dream. Yet the government’s separation, however great Mrs May’s appetite for self-harm. reliance on unionistvotesmakesthistail hard to ignore. Would Brussels has demanded that in Northern Ireland, for the sake a diehard Brexiteer prime minister risk yet another election, in of peace, there must be no new checks or infrastructure at the a bid to win enough seats to ditch the unionists? It would be a border. Mrs May agreed to this in December, and has since reckless gamble that exhausted voters might punish. been seeking a way to reconcile an independent trade policy The road to a soft Brexit is bumpy. But the remorseless logic with an invisible, open border. She has failed—unsurprisingly, ofthe Irish borderispushingBritain in thatdirection. And then since even the EU’s most frictionless frontiers, like those with what? Some Leavers see a soft Brexit as a transition to a com- Norway or Switzerland, involve some checks. So Britain will plete break. Some Remainers see it as a platform from which to resort to a “backstop” plan, keeping Northern Ireland in the rejoin the EU. Others, from both camps, thinkthat such a semi- EU’s customs union until it finds a solution to the border pro- detached state is the worst of all worlds. History suggests that blem, which it may never do. To avoid customs checks be- Britain might be in for a long stay in transition. Norway, the tween Northern Ireland and the British mainland, which model cited by many fora softBrexit, entered a temporary eco- would incense the Northern Irish unionists who prop up Mrs nomic arrangement with the EU in 1994. It is still in force. 7 ANDROID ADVERTISEMENT

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The exclusion of disabled people from jobs in the digital sector means their interests are under- represented in the design of digital systems 16 Letters The Economist June 16th 2018

A beacon of democracy Income-tax rates can vary from members oftheir own side”. East German influence commune to commune. Given that only 43% ofRepub- Hats offto Banyan fornoting One ofthe Brexiteers’ more licans believe in evolution Charlemagne’s piece on the the democratic rise ofTimor- convincing arguments for (according to a Pew poll), if legacy of1968 in Germany Leste (May 26th). Since the leaving the EU was that it had members ofthat party are mentioned the effect that the restoration ofits indepen- become involved in too many willing to embrace Darwinian fatal shooting ofBenno dence in 2002, Timor-Leste has things that were better han- science in order to deride Ohnesorg, a student, had on faced numerous challenges in dled at the national level. Yet Democrats then the partisan radicalising the universities the development ofits state whenever this subsidiarity hatred runs much deeper than (June 2nd). The bitter irony is institutions. Nevertheless, it argument is applied to British I thought possible. that the acquittal ofKarl-Heinz has held a succession offree, national politics, it always WILLIAM COPP Kurras, the police officer who fairand peaceful national seems to run into the sand. Montreal shot Ohnesorg in 1967, owed elections marked by record Until that changes, I suspect much to the suppression of levels ofvoter participation that the trend formore and Bank-account numbers evidence by his police col- and several smooth transfers more British MPs to be univer- leagues. Many years later ofpower among competing sity educated will continue. Yourspecial report on finan- Kurras admitted that he was a political blocs. As a result, ROBERT SATCHWELL cial inclusion (May 5th) gave a member ofEast Germany’s Timor-Leste stands alone Haarby, Denmark clear picture ofthe progress governing party and had among the countries ofSouth- made in providing financial worked as an informant forthe STASI East Asia to be described by A bipartisan approach services to the unbanked. East’s secret police, the . Freedom House as wholly free. Savings, postal and retail One wonders whether Timor-Leste’s progress in Lexington’s column on the banks who are members of Kurras was acting on instruc- the political domain provides “primeval” tribalism ofAmeri- our association are on their tions from the STASI when he reason to hope that it will can politics drew on two ways way to adding 400m new killed Ohnesorg. The East make comparable strides with we might bring about a lasting accounts by 2020, from a 2014 German leadership must have respect to other state institu- peace between the parties: baseline. People living in been delighted to see the tions. That said, the country’s either ending our two-party remote areas, just like those in strains in West German society judicial, prosecutorial, public system, or ushering in an the cities, crave basic banking that his murder generated; the defence and private counsel historic political realignment services, namely transaction appearance of a cover-up institutions require consider- (May 26th). But another factor accounts. The 1.7bn people stoked the fires. able support. Promoting the that could bring the parties who remain unbanked will be PATRICK EYERS rule oflaw by guaranteeing an together is political overreach. the hardest to reach. Innova- Chichester, West Sussex effective justice system and This might happen when the tion and digitisation will help ensuring an independent leaders ofone party believe address this. Ooh! Aah! Cantonese! judiciary should be a national they are invincible and their But enhancing savings priority. cause is universal, which opportunities is a big chal- PHILLIP RAPOZA doesn’t play well in America. lenge. Storing money, either Former international judge on For example, suppose the through traditional banks or the Special Panels for Serious Democrats seized control of all by channelling village savings Crimes in Timor-Leste levels ofgovernment and groups into banks, is the next New Bedford, Massachusetts immediately began jailing step after using a basic transac- Republicans fortreason. Or tion account. Research shows Local knowledge they tookaway broadcasting that poorer communities, like licences forFox News and richer ones, preferto save than I agree with Bagehot’s view every station running conser- borrow. That is rational. that Parliament has become vative talkradio. Despite the IfAfrica and other regions unrepresentative ofthe people partisan divide, most Demo- are to make greater strides they it purports to serve (May12th). crats would band together need better financial frame- His suggestion ofgetting more with independents and Re- works and rules. Consumer I wish to express my admira- non-college educated people publicans to reject such overtly protection should come first. tion forwhoever penned the into Parliament will certainly undemocratic decisions. There Rules already on the books caption (above) forthe picture help at the margins, but some- would be a widespread un- need a careful rethink, too. accompanying the article on thing much more radical needs derstanding that in the span of West Africa, forexample, football in China (“Long-term to be done. two years, they (the Demo- sorely needs easier agent goal”, May19th). I’ve come to The answer, forone ofthe crats) would be on the chop- banking rules to unleash expect clever wordplay from most centralised countries in ping blockwhen Republicans financial services. Another your staff, but this one was the rich world, is to decentral- inevitably regained control. area is Application Program- superb. ise power. Denmark, forin- B.J. RUDELL ming Interfaces (APIs) and STEPHAN TEODOROVICH stance, has fewer people than Associate director open banking, where common West Los Angeles, California 7 London, yet has three elected Centre for Political Leadership, standards in emerging markets tiers ofgovernment: local, Innovation and Service would help protect those who regional and national. Each Duke University are vulnerable and less Letters are welcome and should be has clearly defined responsibil- Durham, North Carolina digitally savvy. addressed to the Editor at IAN RADCLIFFE The Economist, The Adelphi Building, ities (schools in the commune, 1-11John Adam Street, health in the region, defence I noticed the research that Director London WC2N 6HT nationally) and, crucially, the found 77% ofrespondents World Savings and Retail E-mail: [email protected] power to raise the money to considered “their rivals to be Banking Institute More letters are available at: finance these activities. less evolved humans than Brussels Economist.com/letters Executive Focus 17

The Economist June 16th 2018 18 Executive Focus

EXECUTIVE DIRECTOR – based in Oslo The Extractive Industries Transparency Initiative (EITI) is the global standard for the governance of oil, gas and mining sectors. This is an outstanding opportunity to lead the EITI to drive efforts to ensure that natural resource wealth becomes a key engine for sustainable economic development and poverty reduction. The Executive Director is responsible for the day-to-day running of the EITI and its International Secretariat in Oslo, Norway. The Secretariat’s staff of 25 supports EITI implementation in 51 countries, working together with a global network of governments, industry and civil society supporters. The Executive Director should ensure that the EITI Board and Members’ Meeting are supported by the Secretariat in realising the EITI Principles. The Executive Director is responsible for overseeing the EITI’s work globally, ensuring that appropriate support is available for EITI implementation, and working to improve the EITI’s credibility and effectiveness. Key responsibilities Specifi cally, the Executive Director should: • Support EITI implementation in the 51-member countries, including to all stakeholder groups in their efforts to realise the EITI Principles. • Support the EITI Chair and EITI Board to ensure that the EITI is governed to the highest standards, in a spirit of openness, collaboration and trust. • Ensure effective fi nancial management of the EITI International Secretariat and promote fi nancial and technical support for EITI implementation in the 51 countries. • Ensure that the EITI’s staff are appropriately selected, supported and managed. Required qualifi cations • Extensive experience in fi nancial management and governance of a complex organisation, ideally with a considerable multi-stakeholder component. • Demonstrated success in building relationships with interlocutors at senior levels within governments, industry and civil society organisations. • Demonstrated leadership skills. • Strong commitment to the broader global pursuit for transparency and good governance. • Excellent command of both written and spoken English and ideally French, with Arabic, Spanish and Russian being an advantage. How to apply Please send your cover letter and CV no later than Monday 25 June 2018 to Brynjar Wiersholm ([email protected]), HR Director at the International Secretariat.

The International Civil Aviation Organization (ICAO) is seeking highly qualiﬁ ed candidates for the following senior leadership position.

Chief Finance Branch, Montreal, Canada

If you have an advanced university degree, ex tensive experience in ﬁ nancial management or related ﬁ eld, including senior level managerial experience, ICAO would like to hear from you.

Female candidates are strongly encouraged to apply.

For more details, please go to

http://bit.ly/icao-chief-ﬁ nance

Deadline for applications: 22 July 2018

The Economist June 16th 2018 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 16th 2018 20 Brieﬁng The Singapore summit The Economist June 16th 2018 Enough to make a Rodman cry

BEIJING AND SINGAPORE Kim Jong Un did betterthan Donald Trump at theirstrange meeting HINK of it”, the president enjoined passes as a resort—suddenly seemed a tan- Un, the leaderofNorth Korea, in Singapore “Treporters, “from a real-estate per- talising possibility, perhaps with the North on June 12th. With 2,500 reporters attend- spective.” When presented with images of Korean Open being played on an adjacent ing, the summit was quite the TV spectacu- North Korean artillery ﬁring fusillade after links. As his supporters have noted, Presi- lar. It even had a tearful CNN appearance fusillade into the sea, he said at his some- dent Donald Trump brings a unique view- by one of Mr Trump’s “Apprentice” what surreal post-summit press confer- point to foreign policy. participants, Dennis Rodman, a former ence, he had seen a place that would It was Mr Trump’sbackground as a real- basketball player who counts himself a “make a great condo. You…could have the ity TV performer, though, rather than his friend to both leaders. There was a bizarre best hotels in the world right there.” Trump property-development chops, that set the “trailer” showing the sunlit uplands of Towers, Wonsan—a North Korean city that tone forhis summit meetingwith Kim Jong North Korea’s peaceful future as a coming attraction. At one point Mr Kim said to Mr Trump that it would seem to many like something out of“a fantasy”. Notunaccustomed to livingin a fantasy, Mr Kim took to this limelight in a very effective way. He made use ofhis time on the stage with both domestic North Korean and international audiences very much in mind. Mr Kim runs a maﬁa state with the most brutal secret policemen and the ugli- est human-rights record on Earth. An estimated 120,000 North Koreans, in some cases whole families, rot in labour camps. Countless children are malnourished and mentally stunted. Since he came to power in 2011, Mr Kim has cracked down savagely on those trying to escape to China. He has executed an uncle and assassinated a half- brother (in whose favoured Singapore hotel, the St Regis, MrKim stayed the night before the summit).

When “poison pen” is not a metaphor Mr Kim ought to be at The Hague. Yet in Singapore, the dictator, who also has ten UN Security Council resolutions arrayed againsthim, wasthe toastofthe town ashe waved at the crowds down by the Marina Bay casino and posed for a selfie with the Singaporean foreign minister. By coming across as warm, jovial and eminently reasonable, the capo has morphed into something respectable, even statesmanlike. There is talk of him starring at the UN Gen- eral Assembly in New York in the autumn and Mr Trump says he will be welcome in the White House. Chunks of all this, carefully edited, were beamed back to North Korea as evidence ofthe leader’s global stature; the first picture state media had ever shown of Mr Trump was of him shaking hands with Mr Kim, his partner in peace. Only occasionally was it possible to glimpse Mr Kim’s mafia-state paranoia in Singapore, as when a gloved aide inspected and wiped the pen with which he was to sign the joint document with Mr Trump. The document itself was striking—and, 1 The Economist June 16th 2018 Briefing The Singapore summit 21

2 considering the flurry of working-level cises America regularly runs with South mit, said Geng Shuang, a spokesman for talks led by experienced nuclear negotia- Korea were “very provocative”—a term fa- the Chinese foreign ministry, “is what Chi- tors in the run-up to the summit, disap- voured by China and North Korea—and na has been looking forward to and striv- pointing—in its lack both of detail and of “inappropriate” while negotiations were ing forall along.” North Korean concessions. The two sides in progress: “We will be stopping the war China’s satisfaction means that, as well committed themselves “to build a lasting games, which will save us a tremendous as becoming a statesman and seeing fewer andstablepeaceregimeontheKoreanPen- amount ofmoney.” military exercises on his doorstep, Mr Kim insula”—not, as South Korea would have That was a big unilateral concession. It may also find the sanctions against his re- liked, to a peace treaty.Mr Trump declared alarmed South Korea and Japan, neither of gime eased. Mr Trump, in his press confer- that he would provide “security guaran- which was warned of the move in ad- ence, promised that the UN-mandated tees” to North Korea, but did not say what vance; even some Republican politicians, sanctions regime against North Korea they would be. In return Mr Kim gave his including Ed Royce, chair of the House For- would remain in place until it took materi- “firm and unwavering commitment” to eign Relations Committee, betrayed a cer- al steps towards dismantling its nukes. Mr complete denuclearisation of the Korean tain unease. The American army com- Geng, though, argued that UN rules allow peninsula, but with no timetable, arrange- mand in the South declared that it would sanctions to be loosened to “support” de- ments for verification or definitions of ei- continue as before until otherwise in- nuclearisation. And reports from the Chi- ther “denuclearisation”—a term that in structed. The exercises have real practical nese-North Korean border suggest that, North Korea is typically taken to include value in training South Korea’s partly con- whatever the official sanction regime, the removal of all American forces from script army.They are also a potent symbol trade is already reviving—something Mr South Korea—or “complete”—which, when of America’s commitment to the security Trump acknowledged when he thanked “a itcomestoNorthKoreanideasaboutdenu- very special person, President Xi of China, clearisation, can mean global. who has really closed up that border, may- As Victor Cha, who helped to run Asia be a little bit less so over the last couple of policy for George W. Bush, noted, the months, but that’s OK.” Absent massive agreement is less specific than previous provocation it is hard to imagine how North Korean pledges to curb its weapons America could reimpose a “maximum programme, such as the one he worked on pressure” sanctions regime even if it want- in 2005. Yoichi Funabashi, a former editor ed to—which Mr Trump does not. of the Asahi Shimbun in Japan, and a lead- South Korea, for its part, may devise ing voice on Korea policy, was more di- workarounds that allow a degree of eco- rectly critical: “IfHillary Clinton were pres- nomic co-operation before any sanctions ident ofthe United States and had come up are lifted. Earlier this month the two coun- with yesterday’s agreement, Donald tries reopened the liaison office in the Kae- Trumpwould have rightly attacked her for song industrial complex, the site of their a ‘fake’ denuclearisation...The word ‘denu- deepest economic co-operation. Straight clearisation’, [as used in the agreed text] is after the summit, the South approved stu- so elusive...it does not mean anything.” dent exchanges between Seoul National A more charitable reading would see University and Kim Il Sung University, the the agreement as a broad outline for fur- North’s flagship institution. ther lower-level meetings to flesh out “at As that move shows, the South Korean the earliest possible date”; Mr Trump has response has been positive. The office of charged his secretary of state, Mike Pom- Moon Jae-in, the president, hailed the sum- peo, with the task. Alternatively,it could be mit as a “historic event that has helped seen as the minimal possible substance re- A star is born break down the last remaining cold war quired for the surrounding spectacle and legacy on Earth” and provided copious pic- its self-serving claims of a historic peace of its allies. “Without those comments, he tures of Mr Moon beaming down at televi- deal to be sustained by both parties. It may could have sold the summit as a political sion footage that showed Mr Kim and Mr in time deliver tangible results. But there is success,” says Janka Oertel, an expert in Trump shaking hands. The fact that the no evidence that Mr Kim sees denucleari- East Asian security at the German Mar- summit took place at all is a win for Mr sation as meaning that he should disman- shall Fund. “But alienating his allies in that Moon, who has made the peace process on tle the nucleararsenal he, hisfather and his way could do serious harm. It is also a mas- the Korean peninsula a central issue of his grandfather put so much effort into creat- sive gift to China.” presidency. That does not mean that the ing and the industrial complex which sup- cancellation of the military exercises was ports it. In practice he seems to be offering With enemies like this met with equanimity. A later statement no testing for the time being and some ac- Indeed, China lost no time in pointing out from the president’s office said that Mr cess to sites the programme might be aban- that it was the first to propose a “freeze for Trump’s press-conference remarks re- doning anyway. As Mr Trump has said that freeze” deal—no military exercises, no nuc- quired a “clearer understanding”. When he wants the nuclear weapons gone, and lear tests. Previous American administra- Mr Pompeo met with South Korean and that the Singapore agreement will make tions refused this gambit because it equat- Japanese officials in Seoul on June 14th to that happen, he will either have to show ed legal and legitimate operations by allies share details ofthe summit and discuss the progress towards that end, blithely lie with an illicit weapons programme con- next steps, he had some explaining to do. about the end having already been demned by the UN. They were also well The conservative opposition is more achieved despite evidence to the contrary, aware that Beijing was self-interestedly strident on the subject: Hong Jun-pyo, the or change his mind and get tough—which seeking to see a big chunk of America’s chairman ofLiberty Korea, the main oppo- would presumably mean bellicose—again. presence in Asia negotiated away. Now an sition party, said that “South Korea’s secu- For the moment, though, tough is a American president who sees alliances as rity is now just hanging off a cliff.” But the thing of the past. At the post-summit press a costly burden, rather than as a source of president and the peace process are both conference Mr Trump astonished many strength, has given it what it wanted, at popular. Having lived within range of the viewers by saying that the military exer- least for a while. The outcome of the sum- North’s artillery for decades, South Kore-1 22 Briefing The Singapore summit The Economist June 16th 2018

2 ans are less concerned by the presence or reconsider his approach to Mr Kim; some sitting down with its dictator is “not a absence of nuclear weapons than by the in the administration seem to be distanc- pretty sight” but is a “necessary” part ofMr threat of an actual war, which seemed ing themselves from his announcement Trump’sjob, the senator averred. more possible late last year than it had for about “war games”. But Mr Kim is well- IfMrTrump standsfirm on the cancella- some time. Mr Moon’s Minjoo Party had placed to stringAmerica alongand play for tion of the joint exercises, though, opposi- huge success in local elections on June13th; time, offering concessions slowly, insin- tion to a move that so clearly signals an Mr Hong’s days may be numbered. cerely,or both. American disentanglement from security Mr Kim will welcome sanctions relief That said, he has lost one of his old in the region—justified by Mr Trump, as is and money from South Korea. He tolerates cards. He cannot play the world statesman so often the case, on the basis of excessive significantly more commerce than his pre- and still rely on being able to wrong-foot costs which allies ripping off America decessors did. Today’s sanctions, applied adversaries with all-out weirdness; nor- were unwilling to shoulder—will mount in at full force, threaten the modest boom he malisation has some costs. But America Washington, and in Japan, too. The Japa- has presided over since taking power, and has lost a card, too. If it finds it wants to re- nese government’s immediate response to thus riskangering the elites who have ben- inforce sanctions, it will be hard to get Chi- the Singapore summit was a certain relief; efited from it. The promise of more devel- nese support back. “If North Korea does it had not been the disaster it might have opment now that the push for nuclear not make another nuclear test or launch been. The Japanese view is that it is too ear- weapons has paid offis an attractive narra- missiles again, I don’t think China will im- ly to assess how the process of denucleari- tive for the North Korean public. On the pose newsanctions,” saysLi Nan, a scholar sation wasadvanced bythe summit. And it day of the summit Rodong Sinmun, North atthe Chinese AcademyofSocial Sciences, takes comfort from the fact that, when it Korea’s official party newspaper, splashed a think-tank. comes to Mr Trump’s scorn for American on a night-time jaunt Mr Kim took around Backin Washington, the summit scram- alliances in Asia, it is in a different position Singapore, admiring the glittering skyline bled the usual dividing lines between mil- from South Korea. Japan is home to the and saying he had learnt much about eco- itary hawks and the foreign-policy estab- American navy’s Seventh Fleet, to air-force nomic development in the city state. lishment. Striving to offer credit where units and to US Marines—all expeditionary some is due, veteran diplomats praised Mr forces based in Asia not just to defend Ja- The long con Trump for abandoning his “fire and fury” pan and Taiwan but also to project power This does not mean that Mr Kim is interest- threats. One was Mr Cha, who might well and to act as a deterrent. Those are mis- ed in the sort of full-on market economy have been Mr Trump’s ambassador to sions likely to be needed foryears to come. which serious foreign investment would South Korea had he not made clear his hor- Mr Funabashi is much less sanguine: require. Nor are North Korea’s proto-capi- ror at talk of pre-emptive military strikes “So far as thinking in Japan goes, the big- talist elites. A proper opening of the coun- on North Korea. “If the bar for success in gest casualty of this summit is likely to be try would surely lead to their being out- this summit is war or peace,” he said, “it’s a the credibility of the US as an ally...Trump competed by South Korean or Chinese pretty low bar. We got peace. So in that now poses the biggest challenge to [prime companies. But a glitziertyranny has its ap- sense, we’re certainly in a better place than minister Shinzo] Abe’s political survival.” peals, especiallyifa little economic growth we were six months ago when there was a On this broader point, though, it is too improves morale. lot oftalkabout preventive military attacks soon for Japan to despair—or China to re- For this to work, Mr Kim needs time, and armed conflict.” joice. Chinese military planners have long and that is what he can be expected to play Meanwhile, some of the hardest-line, dreamed ofpushingAmerican forces as far forin the coming negotiations. Mr Pompeo brook-no-compromise members ofthe Re- from their shores as possible, ideally back has talked of“major disarmament” within publican Party discovered a new fondness to the “third island chain” (strategist speak two-and-a-half years. A former CIA direc- for foreign-policy realism—at least when it for Hawaii). Now they face an American tor, he has no illusions about North Korean is practised by a president their voters back president who talks happily about pulling tactics. But there would be limits to how home adore. In 2015 Tom Cotton, a senator his troops out of at least part of Asia unbid- quicklythingscould go even ifNorth Korea from Arkansas, organised a letter from 47 den. But China has learned to watch what acted in good faith. Siegfried Hecker, who senators to the leaders ofIran saying that if American presidentsdo, notwhatthey say, used to run America’s bomb-design lab at the Iran deal was not backed by Congress it saysMrLi. Afterall, MrTrump campaigned Los Alamos, and colleagues at Stanford could be overturned once a new president on a promise to withdraw troops from University estimated last month that, even tookoffice. On June12th a newly pragmatic bases all around the world. But after Penta- if the North were serious about it, the pro- Mr Cotton explained to Hugh Hewitt, a ra- gon bureaucrats and generals worked on cess could take more than a decade. dio host, that ostracism remains his fa- him, “they are still there.” With missiles and a stockpile ofbombs, voured approach to “two-bit rogue re- They may be in place for some time to as well as a uranium-enrichment pro- gimes [that] don’t have nuclear weapons, come. So may Mr Kim. As for Trump Tow- gramme, to deal with, the effort would yet”. But now that North Korea can deliver ers, Wonsan, the world will have to wait have to be far more painstaking than the nuclear warheads all the way to America, and see. 7 process Barack Obama’s secretary of state, John Kerry, put in place for the Iran deal. It would require a stringent, and thus hard- to-negotiate, verification regime to be in operation from the beginning; ad hoc in- spectionsofparticularsitesare not remote- ly enough. It would need the help ofthe In- ternational Atomic Energy Agency and also, possibly, the European powers that Mr Trump alienated by tearing up that hard-won Iran deal. Time plays to Mr Kim’s advantage. He intends to remain in powerfordecades. Mr Trump might be voted out in 2020. Mr Trumpmay return to Washington, DC,and Bye bye bombers? Europe The Economist June 16th 2018 23

Also in this section 24 A new name for Macedonia 24 The World Cup 25 Women in cabinets 25 Poland’s invisible leader 26 Turkey’s ﬂoundering economy 27 Charlemagne: Europe’s struggle to respond to Donald Trump

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

Central Europe Poland, whose populist Law and Justice (PiS) leadership has reopened the issue of In bad Oder war reparations, passed a “Holocaust law” banning references to Polish complicity in Nazi atrocities and issued an advertising campaign promoting the term “German death camps” (referring to Nazi death BERLIN campsin Poland). ViktorOrban, Hungary’s nationalist prime minister (pictured, with Germany’s troubled relations with the Visegrad states show the limits to its power Mrs Merkel, has endorsed the construction ERMANY has long considered itself a Germany’s trade and investment flows of a “memorial to the victims of the Ger- Gbridge between east and west Europe. with the V4 are greater than with China. man invasion” in central Budapest. Berlin Karel Schwarzenberg, a Czech former for- That inspires both gratitude and resent- does not always help its own cause. On eign minister, recalls Helmut Kohl telling ment. Recently, the Czech and Slovak May 4th construction began on Nord- him in the 1990sthat, having tethered itself prime ministers berated German firms for stream 2, a gas pipeline between Russia to the West during the cold war, his coun- paying local staff less than those in their and Germany which bypasses Poland and try now had to tether itself to its east, lest it German plants. A widely shared analysis inflames historical fears of being caught “slide about like loose ballast on a ship”. by Thomas Piketty, a French economist, between the two powers on either side. Kohl’s point was that a Germany alienated shows outflows of profits from such for- Yet the tensions along its eastern border from its eastern neighbours, particularly eign investmentsin the V4 outweighingEU also demonstrate the limits to German the “Visegrad” (V4) states of Poland, the transfers to the region. power. For all its economic heft, Berlin has Czech Republic, Slovakia and Hungary, Residual memoriesofthe second world notbeen able to getthe V4 statesto take in a would destabilise the European vessel. war make it “very easy for authoritarian few hundred refugees. These days, Mrs But its relations with the V4 have re- [V4] governments to exploit anti-German- Merkel talks more about controlling Eu- cently hit a low. The picture is not uniform. ism”, notes Thorsten Benner of the Global rope’s outer borders than about managing From Berlin, the Czech Republic and Slova- Public Policy Institute. That is clearest in the burden of refugees who cross them— kia look friendlier than Hungary or, partic- the V4’s order ofpriorities. ularly, Poland. But there is a sense that the Meanwhile, Germany’s leaders feel un- NORWAY M R region is drifting away. “People here are A U able to do much about the march of au- E ESTONIA S SWEDEN R S EU seeing that they have taken the Visegrad I thoritarianism within the , which is

A for granted for too long,” says Milan Nic of North ST LATVIA most acute in Poland and Hungary. “Wag- Sea D DENMARK O R the German Council on Foreign Relations. N Baltic LITH. ging our finger at Warsaw will only make Germany’s size is part of the problem. BRITAIN Sea things worse,” sighs an official in Berlin, The V4 felt (literally) marginalised by An- BELARUS talking of Polish attacks on the indepen- NETH. gela Merkel’s decision to keep her coun- Berlin Warsaw dent press and judiciary. Similar consider- try’s borders open to refugees at the peak BELG. GERMANY POLAND ations explain Mrs Merkel’s marked reluc- ofthe crisisin 2015. Withoutconsultation, it Prague tance to condemn Mr Orban’s assaults on UKRAINE seemed to them, the chancellorhad turned Paris CZECH REP. NGOs and his flirtation with anti-Semi- SLOVAKIA them into transit corridors for undesirable FRANCE Bratislava tism. Her Christian Democrats are a bul- Budapest migrants drawn by the promise of a cushy SWITZ. AUSTRIA wark against calls to expel his Fidesz party HUNGARY SLOV. ROMANIA life in Germany. Their irritation turned to CRO. from the European People’s Party, the um- A ITALY d Belgrade anger when she later urged every EU state 300 km r brella group ofthe continent’s centre-right. ia t BOS. ic SERB. to admit a quota ofrefugees. S One explanation for this German cau- Visegrad countries e Its economic might, too, is daunting. a BULGARIA tion is the growing presence in the V4 of ri-1 24 Europe The Economist June 16th 2018

2 val influences. China in particular has wanted to “empower other conservatives ately after Paris on being re-elected chan- ploughed in investment (funding a new throughout Europe”—apparently a refer- cellor, to stress that new co-operation with railway from Budapest to Belgrade, for ex- ence to V4 governments. France should not marginalise the V4. ample). In January, amid suggestions that Germany’s leaders are divided on what In their gloomier moments, Germans the EU could cut financial transfers to Hun- to do. Some, especially in business and in fear things could get much worse. The gary and Poland, Mr Orban told business the Christian Social Union (CSU), Mrs Mer- Frankfurter Allgemeine Zeitung recently leaders in Berlin: “We need financing for kel’s conservative Bavarian sister party,are speculated about “Polexit”, or Poland quit- new roads and pipelines. If the EU can’t for cosying up to the V4. The CSU even in- ting the EU. A Bundeswehr planning sce- provide it, we’ll get it from China.” Two vited Mr Orban to its party conference in nario leaked in November imagined the months later the Chinese foreign minister January. Others, like Joschka Fischer, Ger- EU’s eastern states splitting off and joining called the V4 “the most dynamic force in many’s former foreign minister, think the an autocratic, Eurasian block by 2040. the EU”. His government is interested in country should deepen integration with None of this is likely. But the fears alone fundingPoland’s“Intermarium”, a scheme France and relegate the V4toanouterring point to the endurance of Kohl’s convic- to integrate central Europe along a new of partners. Germany’s government is tion thata stable Europe requiresGermany north-south axis linking the Baltic and closer to the first pole, delegating the polic- to be surrounded by close allies. Economic Adriatic seas. Some German policymakers ingofdemocraticnormsto the EU while re- walls have fallen, but new ones have aris- consider America in the same category.On warding the Czechs and Slovaks, tolerating en—walls separating different value sys- June 4th Donald Trump’snewambassador Mr Orban and resetting relations with Po- tems that seem impossible for the conti- to Berlin raised hackles when he said he land. Mrs Merkel visited Warsaw immedi- nent’s “semi-hegemon” to remove. 7

Macedonia’s meaning The World Cup In the name of peace Beautiful game, ugly reality Why a longed-forBalkan breakthrough looks precarious

LEXANDER THE GREATconquered parliamentary votes prop up Mr Tsipras’s MOSCOW the ancient world in farless time leftists; and by Kyriakos Mitsotakis, A Russia’s president hopes that fans will than it tookthe two countries that claim leader ofNew Democracy,Greece’s main lookbeyond politics his mantle to agree on a name forone of opposition. Mr Mitsotakis, whose fa- them. But better late than never. On June ther’s term as prime minister foundered LADIMIR PUTIN rarely speaks English 12th Greece and its northern neighbour after he talked reason on Macedonia, Vin public, but he made an exception in announced a breakthrough. After nearly seems keen to avoid a similar fate. He 2010, when Russia won the right to host the 30 years oftussling, they decided that the rejects the new formula on the grounds World Cup in 2018. “From bottom of my Republic ofMacedonia should hence- that it still lets the neighbours assert a heart, thankyou,” he told the FIFA organis- forth style itself“North Macedonia”, a Macedonian language and ethnicity. ing committee. For Mr Putin the tourna- formula implying that neither state has a For protesters in Greece, any sharing ment, like the Sochi Winter Olympics in monopoly on the historical legacy of the ofthe M-word is treachery. In Macedonia, 2014, offered a chance to showcase Russia’s region. As a sign ofgoodwill, Macedonia meanwhile, the new name must be put to revival under his leadership. “We want to had already removed a statue that looked a referendum. Constitutional changes show to the world the new Russia, open rather like Alexander from its airport. also need a two-thirds majority in parlia- and hospitable in every sense,” said the Ever since communist Yugoslavia ment, which Mr Zaev does not have. The sports minister at the time, Vitaly Mutko. broke up in 1991, Greece had lobbied to country’s president, Gjorge Ivanov, react- Since then Russia’s actions on the stop the new country from using a name ed icily when told ofthe deal. A stormy world stage have been anythingbutfriend- to which it claims cultural title (it has a election campaign may result. As Alex- ly. Its annexation of Crimea in 2014, the province called Macedonia, forinstance). ander once put it: “How great are the war in eastern Ukraine and military inter- America praised Alexis Tsipras and Zoran dangers I face to win a good name.” vention in Syria have cast a pall over rela- Zaev, prime ministers ofGreece and tions with the West. Mr Mutko himself Macedonia, forshowing “vision, courage landed at the centre of the Sochi Olympics and persistence” in their efforts. doping scandal. (Mr Putin rewarded him On the face ofthings, the deal will with a promotion to deputy prime minis- enable Macedonia swiftly to join the ter.) The poisoning of a former spy, Sergei European Union and NATO, where its Skripal, in Salisbury earlier this year led to progress has been blocked by Greece. calls from the British government for offi- That will relieve Western governments, cials to boycott the World Cup. Last month, which in 2001only just stemmed Mac- Dutch-led investigators implicated Russia edonia’s slide into a civil war between its in the downing of Malaysia Airlines Flight ethnic majority, whose language is close 17 over eastern Ukraine. As a group of vic- to Bulgarian, and a large ethnic-Albanian tims’ relatives wrote ahead of the tourna- minority. To many observers ofthe re- ment, “We are painfully aware of the dark gion, keeping the country stable and irony that the Russian leaders who will avoiding any revival ofits internal ten- profess to welcome the world with open sions matter much more than its name. arms, are those who are chiefly to blame Yet among both electorates the deal for shattering our world.” may struggle to win acceptance. It was Yet as the cup kicks off, the world seems denounced by Independent Greeks willing to look past politics. Although the (ANEL), the nationalist party whose nine Alexander solved knotty problems faster Russian team—the lowest-ranked of all the competitors—will be lucky to make it be-1 The Economist June 16th 2018 Europe 25

2 yond the group stage, Mr Putin stands to Poland reap a PR victory. The tournament will bear little resemblance to the 1980 Olym- Where’s Jaroslaw? pics, when America led a 65-nation boycott in response to the Soviet Union’s invasion of Afghanistan; only Iceland among the participants has joined Britain in refus- WARSAW ing to send high-level representatives. The country’s real leaderhas More than 1m foreigners are expected to disappeared from view visit Russia over the next month, taking advantage of simplified visa procedures. The OLAND has both a president and a biggest buyers oftickets are from America. Pprime minister, but Jaroslaw Kaczynski, Russia has spared little expense to pre- chairman of the ruling Law and Justice sent a friendly face, putting some $11bn to- (PiS) party, is its real leader. Mr Kaczynski, wards infrastructure and a host of shiny who turns 69 next week, is an ordinary MP new stadiums. (Corruption and overruns with no cabinet post. Yet since PiS came to have been widespread, though not nearly power in 2015, he has been behind the at the level of the $50bn Sochi Olympics.) overhaul of the country’s institutions, Wide pedestrian walkways and lush most recently the judiciary, which the greenery greet visitors to Moscow,the pro- European Commission says threatens the duct of years of renovation. The centre Putin puts the boot in rule oflaw. Along with Viktor Orban, Hun- boastsnearlyuniversal wifi coverage and a gary’s prime minister, he has stoked plethora of craft-beer bars. “I already love separating the farthest-flung, Russia’s nationalist fears at home and defied Brus- it,” declared Jonathan Mascorro of Texas, World Cup offers an attractive target for sels by refusing to take in refugees from the as he pondered options for bahn mi and lone-wolf attacks. The Islamic State (IS) Middle East. pho at a Vietnamese restaurant in Mos- group made explicit threats ahead of the But recently, Mr Kaczynski has hardly cow’s Gorky Park this week. Smaller re- tournament, posting propaganda images been seen, spending several weeks in a gional host cities will have sparser ameni- with popular footballers in alarming military hospital in Warsaw; he emerged ties, but have also been spiffed up. Hordes orange jumpsuits. only briefly before slipping out of sight of English-speaking volunteers have been The Kremlin will also have to keep at- once more. His absence has raised ques- recruited; taxi drivers have been encour- tention away from its own repression at tions about PiS’s future—and Poland’s. aged to brush up on their language skills, home. As the fans arrive, cinemas have Known to his followers as prezes (chair- too. (As one Moscow cabbie quips: “I’m al- been showing “Leto”, a new film directed man), Mr Kaczynski has dominated his ready tired ofsayingkhello.”) Even typical- by Kirill Serebrennikov, who has been un- party for over a decade. In 2006-07, during lysurlytrain conductorsare beingtaught to der house arrest on trumped-up corrup- PiS’s first stint in power, he served as prime smile at customers. tion charges fornearly a year. Russia’s lead- minister, while his twin brother, Lech, who To preserve the festive atmosphere, the ing opposition politician, Alexei Navalny, died in a plane crash in Russia in 2010, was Russian authorities will have to contend jailed last month over anti-Putin protests, president. This time, he has stayed out of with several difficulties. One is the threat looked set to be released on the opening the limelight, installing less divisive figures of clashes. Violence between Russian and day.OlegSentsov,a Ukrainian film director in office. English hooligans in Marseille marred the jailed on fabricated terrorism charges, has Mr Kaczynski’s disappearance has European Championship in 2016. Russian been on hunger strike since May 14th, de- prompted rumours about his health. Offi- police have cracked down since, rounding manding the release of other Ukrainian cially, he is having trouble with his knee. up rowdy fans and warning local hooli- political prisoners (see leader). Once the The hospital says he has osteoarthritis—a gans that there will be no tolerance for dis- fans depart later this summer, they will re- condition that does not usually require so turbances. Anotherperil comes from terro- main. The beautiful game can offer only a long a stay. rism. With 11 host cities, and 2,500km temporary respite from ugly realities. 7 Mr Kaczynski has no clear successor. Mateusz Morawiecki, a former banker whom Mr Kaczynski promoted to prime minister in December, lacks a strong politi- Women in cabinets Senior members of government by sex cal base. In a recent poll, just14% ofrespon- Feminists were delighted by Justin Tru- June 2018, % EU-28 average dents tipped him as Mr Kaczynski’s succes- deau’s response when he was asked, 0 25 50 75 100 sor; 43% answered “don’t know”. P S shortly after becoming Canada’s prime Spain Women Men For now, i remains on top. The party minister, why half the members of his Sweden still leads in polls, though its advantage cabinet were female. “Because it’s 2015,” France over the centrist opposition has narrowed he said. Three years on, not many coun- Germany* a bit. On June 8th Mr Kaczynski emerged tries have followed his lead. In France Denmark from hospital after over a month, thanking last year, Emmanuel Macron named a Netherlands journalists waiting outside his home for cabinet in which half of the 22 cabinet Romania* “their interest in a humble member of par- posts went to women. Most other govern- Italy liament”. But with further treatment due, ments, however, remain largely male. Ireland speculation about his condition continues. Spain’s new leader, Pedro Sánchez, has Poland Anyone hoping to replace Mr Kaczynski unveiled a strikingly female cabinet, with Britain* will have to be “verypatient”, said the inte- 11women out of18 ministers, the highest Greece rior minister, Joachim Brudzinski, one of EU share in the . But Europe still has a way Hungary his confidants, last month. Yet as Poland to go: Hungary’s cabinet has a grand heads into election season, the chairman’s Source: European Institute *Countries with female total of one woman. for Gender Equality heads of government health will weigh heavy on PiS. Europe, too, will be watching. 7 26 Europe The Economist June 16th 2018

Turkey currency. “My brothers who have dollars or euros under your pillows, go and Pillow talk change your money to lira,” he said at a recent rally. “We will spoil this plot together.” On paper, the economy has been booming. In the first quarter, according to data released this week, GDP grew by 7.4% KONYA yearon year, the same pace as in the whole of 2017. But the government-induced credit Surrenderyourdollars, urges President Erdogan binge that has yielded such juicy numbers HEN Turkey’s President Recep Tay- zarrely, that high interest rates cause infla- over the past couple of years is giving way Wyip Erdogan urged his supporters in tion, the lira went into free fall. It recovered to a hangover. The current-account deficit December 2016 to defend their currency, only after he allowed the bank to make has widened to $5.4bn in April (over 6% of the lira, by selling their dollars, euros and two big rate increases, of 300 and 125 basis GDP when annualised), up from $3.7bn a gold, scores of them answered the call. In points, in two weeks. year earlier, increasing Turkey’s reliance on Konya, a city in Turkey’s conservative The problem with Turkey’s economy volatile portfolio inflows. Foreign direct in- heartland and a reservoir of votes for Mr goes well beyond bank rates. “One funda- vestment has steadily decreased since Erdogan and his Justice and Development mental question isthe lossofconfidence in 2015. With credit running dry and compa- (AK) party, some locals outdid themselves. the functioning of the economic system nies sitting on a mountain of debt, a sharp A district mayor gave a week off to munici- and monetary policy,” says Seyfettin Gur- slowdown is inevitable, says Zumrut Ima- pal workers who sold more than $500, a sel, the head of Betam, a think-tank. The moglu, chief economist at TUSIAD, a busi- carpet dealer handed out free rugs to cus- other is what may be in store for Turkey’s ness lobby. tomers who exchanged more than $2,000, stability and its reeling democracy after and a surgeon offered free horse rides to snap presidential and parliamentary elec- But are they bothered? anyone who showed up with a receipt tions on June 24th. Outside investors have In Konya, home to the mausoleum of the from a currency-exchange office. Similar already been spooked by constitutional 13th-century Persian mystic and poet Jala- campaigns sprouted up elsewhere. Within changes that will give the president huge luddin Rumi, the signs of a downturn and a week, people across the country had con- new powers after the vote, abolishing the a currency crisis are increasingly clear to verted more than $440m to liras. postofprime minister, politicisingthe judi- the poet’s followers, known as the whirl- They may now regret it. In dollar terms, ciary and curbing parliamentary over- ing dervishes, and to generations of hard- those who followed Mr Erdogan’s advice sight. Rumours that Mr Erdogan might call working, devout businessmen. Aconstruc- 18 months ago have lost a quarter of their another election if voters entrust him with tion boom that began years ago has cash. But the collapse ofthe lira, which has the presidency but hand control ofthe par- stopped because of lack of demand, says lost a third of its value against the dollar liament to the opposition have rattled Saban Topal, a local developer. Prices ofce- since the start of emergency rule in July nerves further. Pollsters expect Mr Erdogan ment, iron and otherbuildingmaterials, all 2016, pushing inflation into double digits, to keep his job, but predict a much tighter of them linked to energy imports denomi- has spared few people in Turkey. Ordinary race in the parliamentary contest. nated in dollars, have rocketed. Last year, folk have seen their spending power col- As always, ministers have promised re- Mr Topal paid a contractor 135,000 liras to lapse. Turkish companies groan under the forms, a return to central-bank indepen- install a piping system in one of his build- weight of foreign debt amounting to some dence and fiscal discipline as soon as the ings. Thisyear, he says, the same contractor $300bn, more than a third of GDP. Accord- elections are over. But with the exception demanded 240,000 liras for the same job. ing to Bloomberg, some of the country’s of the recent rate increases, the signals Local farmers wring their hands about biggest corporate borrowers are trying to from Ankara have hardly been reassuring. similar increases in the price of fertiliser restructure loans totalling almost $20bn. In the past two months Mr Erdogan’s gov- and petrol. Citing a decline in investor confidence, ernment has gone on a spending spree to The conventional view is that the econ- Moody’s, a ratings agency, recently down- woo voters, offering cash bonuses of over omy, which has more than doubled in size graded the ratings of17 Turkish banks. $400 per year to each of the country’s 12m since the ruling party came to power in Mr Erdogan bears much of the blame. pensioners, tax breaks for new property- 2002, has been the key to MrErdogan’s and Over the past few years he has favoured- buyers and an amnesty for money, gold AK’s fortunes. That may no longer be true. cheap credit and high growth over infla- and other assets brought in from abroad. Most Turks say the economyistheirbiggest tion. In May, after he announced he would The president is once again blaming for- concern in the elections, butthere is little to exercise more control overthe central bank eign countries for the decline of the lira suggest that AK voters in Konya or else- in the years to come and proclaimed, bi- and exhorting Turks to get rid of their hard where will vote forthe opposition. There is evidence instead that government propaganda, funnelled through media beholden The miracle unravels to Mr Erdogan and his cronies, has had its Turkey desired effect. According to one study, a AK Turkish lira per $ Consumer prices GDP mere 4% of voters blame the lira’s de- Inverted scale % increase on a year earlier % change on a year earlier cline on government policies; 65% believe 2.0 12 12 it is “an operation against Turkey by foreign 2.5 11 10 powers”. At the equestrian club outside 3.0 10 8 town where customers once received free 9 6 3.5 horse rides for selling their dollars, Fahret- 8 4 tin, a university librarian, complains about 4.0 7 2 + the increasingpricesofforeign science text- 4.5 6 0 – books. “This is a plot,” he says, referring to 5.0 2 the weakening lira. “They are trying to top- 2015 16 17 18 2015 16 17 18 2015 16 17 18 ple Erdogan, and to provoke a crisis in Tur- Source: Thomson Reuters key. But they will not succeed.” 7 The Economist June 16th 2018 Europe 27 Charlemagne It’s rough out there

To uphold its cherished rules, Europe must learn when to bend them especially Germany, to what he considers their rapacious trade policies. (Officials in Berlin are braced for a catastrophic NATO summitin Brusselsnextmonth.) ThisiswhyMrMacron’scallsfor “European sovereignty” are starting to find a German audience. Fornowsuch fine wordsare rarelytranslated into deeds; fewGer- mans accept that their huge trade surplus leaves them politically exposed, for example, and the defence debate remains difficult. But, says Luuk van Middelaar, a Dutch commentator, “it’s dawn- ing on them that something needs to change.” A third strand is containment. The EU is striking deals, and co- ordinating responses to American protectionism, with allies like Japan and Canada. It is battling to keep the Iran deal alive with guarantees to firms investing there. Europeans’ dependence on the dollaras the world’s reserve currency limits theiroptions. But the containment strategy is growing in importance. What is Europe fighting for? Donald Tusk, president of the European Council, made it clear in Canada: “The rules-based international order is being challenged, quite surprisingly…by its main architect and guarantor, the US.” But it is getting harder to stand up forrules. The West lost its bet that prosperity would turn China towards democratic capitalism; neighbours like Russia OU can’t fault them for trying. Discussing trade at last week’s and Turkey are flexing their muscles; and the transatlantic ally Ydisastrous G7 summit in Quebec, Europe’s leaders met Do- has lost any interest it once had in submitting to external con- nald Trump’s volley of insults and half-truths with a fusillade of straint. Europeans are left to hope that their economic and regu- facts. Emmanuel Macron explained how market access works. latory muscle is enough to shore up rules and institutions, even Angela Merkel brought up America’s procurement rules. Thrown as much ofthe rest ofthe world reverts to the law ofstrength. off-guard, Mr Trump responded by suggesting that the G7 should transform itself into a tariff- and subsidy-free zone (see Finance Closing markets fortrade is like drinking forsobriety section). The fact that this would involve submitting to the rules This should mean playing two games, not one, says Mr van Mid- and institutions he has built his political identity opposing was delaar. For decades Europe could support rules and order at not lost on the president’s European friends. A better illustration home while outsourcing security to America. Many Europeans ofthe transatlantic gulfwould be hard to find. secretly yearn to return to that happy arrangement once (they as- The past few months have been especially rough for Europe’s sume) Mr Trump leaves office in 2021; or sooner, if he is ham- relationswith America, asMrTrump firstwithdrewfrom thenuc- strung by a hostile Congress after the November mid-terms. But lear deal with Iran and then slapped tariffs on aluminium and Europe needs a strategy that does not rely on the whim of Ameri- steel imports. But the confrontation in Canada had a scales-from- can voters. As powershifts eastward it is anyway becoming hard- the-eyes feeling to it. The United States is “saying goodbye” to the erto thinkofwaysin which America needsEurope. MrTrump isa West, lamented Germany’s ambassador. One European official symptom ofthese changes; he is not driving them. says his colleagues returned from the summit looking as if they This calls for a bit of creativity, a virtue not found in abun- had stucktheir hands in a toaster. dance in Europe. On trade there is a risk of succumbing to Mr What to do? Several responses suggest themselves. Capitula- Trump’slogic ofescalation, forthe presidentthinks tariff wars are tion is one. When Mr Trump’smetals tariffsloomed, some tremu- easy to win. Brussels’s trade wallahs, burned by previous talks lous Germans wanted the European Union to seek a deal with with American officials they say were conducted in bad faith, are America that would cut duties on all industrial goods. But after now keen to rule out any bilateral deals with Mr Trump’sadmin- the encounter in Canada Mrs Merkel seems to have toughened istration. One alternative, suggests Mr Lee-Makiyama, is to push up, and the EU will now indeed apply countervailing tariffs on for plurilateral talks, conducted via the WTO and includingJapan some American products: “We won’t let ourselves be ripped off and Korea, on the reduction or elimination ofcar tariffs. again and again,” she said afterthe summit. Yet nastier battles are A spot offlexibility could help in other areas, too. In the Brexit on the horizon. Obsessed by the luxury German vehicles he sees talks the EU’s insistence on treating all “third countries” as identi- on the streets of Manhattan, Mr Trump has instructed his Com- cal could jeopardise security co-operation with Britain, one of merce Department to investigate whethercarimports are a threat only two serious military powers in the EU, after it leaves. It to national security. That is preposterous. Yet the tariffs thatmight would be perverse for Brussels to limit the scale of Europe’s de- follow could force many European automotive firms to abandon fence ambitions just as the neighbourhood is getting rougher. Mr the American market, given theirtiny margins. “There is not a sin- Macron understands this. Mrs Merkel may be getting there. gle German chancellor who could sit still if this happens,” says It is easy to see why rules matter to the EU. They allow for ex- HosukLee-Makiyama, a Brussels-based trade expert. Other trans- traordinarily deep relations among governments and undergird atlantic rows, on taxation, industrial policy and energy, are brew- prosperity and peace in the world beyond. But just as skyscrapers ing. Europe’s industrialists are ever more fretful. are built to sway with the wind, Europe must find ways to adjust A second strategy is improving resilience. Mr Trump likes to to a world where the weather is growing stormier. If Mr Trump link the miserly defence spending of most European countries, helps teach that lesson, so much the better. 7 ANDROID ADVERTISEMENT

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(MrWibergisblind),taking the door, into visual ones. on that challenge is at the MrAlcaideislookingforwardto heart of good design. afutureinwhichtechnologyfor “I think the beauty of designing people with disabilities merges something for people with with mainstream technology. disabilities is that it has (Visualfy’s technology can, for to be intuitive, it has to be example, recognise the sound functional.Ithastobea ofabreakingwindowandsend simple, perfect design.” E RSXMƼGEXMSR XLEX WSQISRI ManelAlcaide,co-founder mayhaveenteredyourhome.) and CEO of Visualfy, based in “Fivepercentoftheworld Valencia,Spain,emphasisesthe population has some sort importance of employing people of disability,” he says. “If we with disabilities from the start. don’t empower them with the “I cannot imagine creating technology to contribute to technologyfordeafpeople acommonfuture,itwillbea withoutdeafpeople,”hesays. waste of talent and resources.” Visualfy has developed an Besides, he adds, “we will all appandasuiteofdevices face special needs at some that help people with hearing pointinourlives.Wewillhave loss to function better at to bear with the disabilities homeandinpublicspaces. associated with age. But if Its technology converts sound technology exists that can help cues,suchasalarmclocks us, there’s no reason why they or someone knocking at should limit our quality of life.” Manel Alcaide, co-founder and CEO of Visualfy 30 Britain The Economist June 16th 2018

Also in this section 31 Dad’s Army v Brexit 31 The Daily Mail after Paul Dacre 32 Bagehot: Brexiteers cry stitch-up

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

The politics of Brexit single market. This week the president of the CBI business lobby, Paul Drechsler, Problems postponed warned that sections of manufacturing might become “extinct”. As if on cue, Brit- ain’s biggest carmaker, JLR, announced that it was moving all production of its Land Rover Discovery model from Bir- mingham to Slovakia. Theresa May concedes just enough to avoid parliamentary defeats. But she is being Above all looms Northern Ireland. driven towards a softerversion ofBrexit Even as Westminster was agonising over F POLITICS is the art of survival, Theresa rupted Mr Grieve’s speech to offer conces- Mr Grieve’s amendment, Brussels was de- IMayisprovingadeptatit. Aweekago she sions. In the end Mrs May promised Tory bating something else altogether: the adroitly averted resignations by Brexit rebels she would accept the thrust of the “backstop” solution to avoid a hard border ministers. This week the prime minister Grieve amendment when the bill returns in Ireland. Although Mrs May insists that persuaded MPs to reject all amendments to the Lords. Brexiteers’ subsequent efforts this fallbackoption will not be needed, she made by the Lords to the EU withdrawal to dilute this offerare unlikely to succeed. has put forward a plan for a backstop un- bill. Yet her habit of putting off tough deci- Even so, some critics said the rebels had der which all of Britain, not just Northern sions and offering concessions only at the been sold a pup because they were too Ireland, would be in a customs union with last minute has risks. It is also steering her scared to challenge Mrs May’s leadership. the EU. And she has faced down MrDavis’s away from a hard Brexit. They certainly do not want to oust her. In- demand that it be made temporary by say- The week’s most dramatic scenes were deed, part ofthe prime minister’s appeal to ing only that it is “expected” not to last be- in the Commons. Mrs May faced down an her backbenchers rests on her weakness. yond December2021. Thatisfarfrom being amendment designed to make Britain join In effect, she is warning that, if she softens a time limit. a customs union with the EU, by deferring herBrexitpolicytoo much, she might be re- Herdelayed white paperon Brexit, now the issue until the trade and customs bills placed by a hard Brexiteer such as Boris due in early July, will tout a technological return next month. But until late on June Johnson, the foreign secretary. solution to avoid a hard border, known as 12th she was heading for defeat on an Yet both Parliament and Mrs May are “maximum facilitation”. Yet because the amendment by a Tory MP, Dominic strongerthan theyseem. The concession to EU doubts this will ever work, it is now Grieve, to give Parliament the right to de- Mr Grieve matters because it makes a no- treatingthe backstop as the most likely out- cide what happens ifthe Commons rejects deal Brexit, already tricky forlackof prepa- come. Itwantsto add regulatoryalignment the eventual Brexit deal. Mr Grieve’s aim is ration, all but impossible, and a soft Brexit on top, to avoid border checks, and it is un- to stop the government presenting MPs farmore likely. Cross-party co-operation in happy with Mrs May’s suggestion to apply with Hobson’s choice: take the deal, or get a hungParliament has become a key factor. the backstop to the whole country, be- Brexit with no deal at all. Anna Soubry, a Tory rebel, and Chuka cause this could give Britain full access to David Davis, the Brexitsecretary,huffed Umunna, a Labour pro-European, have the single market without all its obliga- about an unconstitutional bid to usurp the teamed up. Mr Grieve is close to Labour’s tions. ButBrusselswelcomesMrsMay’sac- government’s treaty-making role. Yet the shadow Brexit secretary, Sir Keir Starmer, ceptance that, at least for some years, Brit- day began badly for the government, with who worked with him as directorofpublic ain should stay closely tied to the EU. That the unexpected resignation of a junior jus- prosecutions when MrGrieve served as at- Brexiteers are up in arms about this (see tice minister, Philip Lee, who said he want- torney-general. Bagehot) is just another bonus for Brussels.1 ed to fight Brexit from the backbenches. Playing down the no-deal threat is also And party whips soon realised they had to driving Mrs May,as a matter oflogic, in the Correction: In last week’s story on Brexit and security, give ground to avoid defeat. The proceed- direction of a softer Brexit. So is a growing we wrongly attributed an estimate of the cost of an alternative to the Galileo satellite system of £3bn-5bn ings took on a surreal air as the solicitor- chorus from businesses worried about to Bleddyn Bowen, an academic at Leicester University. general, Robert Buckland, repeatedly inter- leaving the customs union and the EU’s In fact the estimate was made by officials. The Economist June 16th 2018 Britain 31

2 One sad feature is the ineffectiveness of The Daily Mail Greig, who edits the Mail on Sunday, will the Labouropposition. Jeremy Corbyn, the take over in November. party leader, has got better at taunting Mrs Paul Dacre is away How much power will he have? Mea- May for her indecision and cabinet splits. suringnewspapers’ influence is tricky. One Labour now backs a customs union. But study found thatbybackingLabourin 1997, despite abigrebellionbyLabourMPsback- the Sun might have accounted for 8-20% of ing the European Economic Area (or Nor- Tony Blair’s winning margin. But most re- wegian) option to keep Britain in the single search suggests the media have limited Middle England’s “conductor” passes market, Labour is officially against, be- sway over public opinion. Despite its re- on the baton cause two-thirdsofitsseatsvoted forBrexit lentless criticism of Jeremy Corbyn, 17% of and it would entail accepting free move- AUL DACRE, who thinks ofhimselfas a the Mail’s readers voted for his party at the ment ofEU citizens. Pconductor, emerges from his office at last election. There were more Labour-vot- Yet both points have answers. Polls sug- 6pm each weekday to tune up his orches- ing Mail readers (about 250,000) than the gest that a large majority of Labour voters tra: the writers and editors of Britain’s sec- entire circulation of the left-wing Guard- backed Remain in 2016, and a similar ma- ond-bestsellingnewspaper, the Daily Mail. ian. Fleet Street’s loudest voices could not jority now want to stay in the single mar- He paces around the newsroom, ripping prevent Theresa May losing her majority. ket. As for free movement, Stephen Kin- up pages, rewriting headlines and dressing The Mail’s power derives instead from nock, a backbench supporter of the down hacks. It is, Mr Dacre has said, an ex- politicians’ belief that it is powerful. They Norwegian option, says constraints on it ercise in “remorseless energy”. The next credit Mr Dacre with insight into the would be far easier to negotiate under the morning that energy tumbles onto the whims of suburban “middle England”. emergency provisions of the EEA treaty doormats of suburban England. Judges Politicians treat newspapers as proxies for than under Labour’s preferred bespoke quibbling over Brexit? “Enemies of the public opinion, says Rasmus Nielsen of model offullaccessto the single market. As people”! Food wholesalers hiring staff Oxford University, since polls struggle to the Brexit deadline nears, Labour could yet from Hungary? “Is there no one left in Brit- gauge the strength of feeling on any topic. shift its position on this further. ain who can make a sandwich?” Theyalso recognise thatotheroutlets often This would parallel Mrs May’s own Since Mr Dacre got the job in 1992, the follow up the Mail’s stories, granting it in- movement. So far her survival skills have Sun and Daily Telegraph have each ap- fluence beyond its own readership. served her well. But having seen off anti- pointed six editors. Five prime ministers Mostly, politicians fear that the Mail Brexit rebels this week, her next challenge have occupied Downing Street. Mr Dacre could give them a bloody nose. The late may come from the Brexiteers. The EU is hasgone unchallenged. Even when he was Tessa Jowell, once a minister, said that the showing worryingly little negotiating flex- on holiday, says an ex-lieutenant, “the pa- papergave hera “clinical beating” on plans ibility in return for her concessions. And per would come out in his image”. Yet the to let pubs open through the night. Mr Blair the clock is ticking towards Brexit day next orchestra will soon have a new conductor. thought falling out with its editor meant “a March. The prime minister cannot defer On June 6th Mr Dacre announced that he huge and sustained attack”. “When you’re the difficult decisions much longer. 7 would move to a backroom role. Geordie coming up with policy, you’ll be thinking: ‘What will the Mail think of this?’” says a government press officer. Its influence does not appear to be tied to its circulation, which rose early in Mr Dacre’s tenure but has fallen by 41% since 2002. This is partly because the Mail has kept more readers than other papers (the Telegraph has shed 50% and the Sun 59% of theirreaders overthe same period) and because neitherthe web norTV hassupplant- ed its agenda-setting role. Mr Dacre does not have a computerin his office and shuns Twitter: instincts dictate his coverage. Politicians hope Mr Greig might go easi- eron them. MrDacre spends14 hoursa day at work, scribbling tirades against the “liberal elite”. His successor once edited Tatler, a society magazine, and used to discuss po- etry over breakfast with Lucian Freud. Ri- vals expect him to lighten the paper’s tone to appeal to youngerreaders. Astudy byre- searchers at Oxford University found that under-35s were far less likely than older people to trust the Mail. Some are excited that Mr Greig is a Re- mainer. He is unlikely to change the paper’s stance on Brexit, which Mr Dacre insists would be “commercial suicide”. Yet Philatelists fight back he could provide less resistance to a wa- Brexit-supporting MPs and newspapers have long criticised the Royal Mail’s decision not tered-down exit deal than his predecessor to release a set of stamps to mark Britain’s departure from the EU. On June 12th it might have. “It will probably be more nu- unveiled a set to commemorate the 50th anniversary of “Dad’s Army”, a TV comedy anced,” says Nicholas Coleridge, who was about a bungling band of Home Guard volunteers. Looking at the catchphrases featured once his boss at Tatler. The orchestra will on the stamps, some have wondered if the set is, in fact, a subtle tribute to Brexit. play on, but perhaps a little more quietly. 7 32 Britain The Economist June 16th 2018 Bagehot Back in your box

Brexiteers fearbeing stitched up by the establishment sign over the question of putting a time-limit on a “backstop” plan to remain in the EU’s customs union, and accused Mrs May, in private, of practising a “blancmange” style of leadership. Guido Fawkes, a pro-Brexit website, raises the possibility that Leave supporters have been “played”. The Brexiteers are busily creating a stab-in-the-back theory that they can use to explain their defeat and rally support in the future. Mrs May is a Remain voter who has sold out the Brexiteers at every possible opportunity, the argument goes. The establishment has done everything it could to frustrate the will of the people, often working in secret with the Brussels bureaucrats, with businesspeople stirring up fear of economic calamity and Olly Robbins, Mrs May’s chief adviser on Brexit, massaging her into a more Euro-friendly position. The feeling of betrayal is already making for some ugly politics. On June 12th, almost two years to the day after Jo Cox, a La- bour MP, was murdered by a deranged neo-Nazi for her “trea- son”, the Daily Express splashed the headline “Ignore the will of the people at your peril” on its front page. Anna Soubry shocked the House of Commons by revealing that at least one fellow MP was going to vote against their conscience after receiving threats, and that one had gone to a public engagement with “six armed HE Brexiteers are one of the most successful pressure groups undercover police officers”. Things are likely to get uglier ifthe EU Tin British history—arguably the second-most successful after insists that the free movement of people is the price of a softer the Anti-Corn Law Leaguers who inspired the creation of The Brexit, with the UK Independence Party roaring back to life and Economist in 1843. They persuaded David Cameron to hold a ref- Brexiteer MPs campaigning against Britain’s “vassal status”. erendum on Britain’s membership of the European Union. They Almost every passing headline deepens the Brexiteers’ won it against the massed ranks of the British and global estab- gloom—and whets their appetite for more tales of betrayal. Mr lishment. And they persuaded Theresa May to pursue the hard- Trump has made it clear that Britain won’t be exempt from his est possible Brexit, despite a narrow victory. Not bad for a group America-first trade policy. Arron Banks, a businessman who gave of“swivel-eyed loons”, as Mr Cameron’s clique called them. £12m ($16m) to one of the Leave campaigns, has been accused of But are the loons snatching defeat from the jaws of victory? A having nefarious links to Russian officials (though a Commons growing number of people on both sides of the Brexit argument selectcommittee failed to land anyblowson him and he leftearly calculate that they are. Dominic Cummings, the former cam- for lunch). Paul Dacre, a fierce Brexiteer, will retire on November paign director of Vote Leave, thinks that Brexit is being “irretriev- 14th as editor of the Daily Mail, to be replaced by an old-Etonian ably botched”. Ambrose Evans-Pritchard, a pro-Leave journalist, Remainer. Peter Kellner, a pollster, points out that 13 out of 14 re- says that “the quixotic bid for British independence has failed”. cent polls suggest that the majority of people think that voting to On the Remain side, Jonathan Powell pronounces hard Brexit leave was a mistake. The most striking number was that 28% of “dead”, killed by the conundrum ofthe Irish border. Labour Leavers no longer back Leave. This raises doubts about The first Brexiteer to recognise that their treasured project was the Conservative strategyofadvancinginto the LabourParty’sin- turning into a “train wreck” was Mr Cummings, a man who com- dustrial heartland on the strength ofBrexit. bines tactical genius with a rare ability to see the big picture. Mr Cummings argues that Mrs May made a fundamental strategic A counter-insurgency is born mistake in triggering Article 50 (which starts the clock for taking It would be a mistake to underestimate a group of people who Britain out ofthe EU within two years) before she had prepared a turned a crackpot fantasy into an era-defining vote. The Brexi- coherent plan for leaving. Akin to “putting a gun in your mouth teers command at least 60 solid votes in Parliament and have re- and pulling the trigger”, this shifted the balance of power irre- peatedly shown that they are willing to burn down the village in trievably towards Brussels. order to save it from the Eurocrats. Mrs May’s strategy of kicking Other Brexiteers are now catching on. On June 6th Boris John- the can down the road gives them further opportunities to exert son, the foreign secretary, delivered an agonised speech to a their influence in the future. group of Conservative donors which was recorded and leaked. But the Brexiteers don’t have an obvious champion who Mr Johnson argued that Britain runs the risk of ending up in “a could replace Mrs May. Mr Johnson is too buffoonish, Michael sort of anteroom of the EU” and blamed this unhappy prospect Gove is too cerebral and Jacob Rees-Mogg is too absurd. The on a combination of insufficient will on the part of the prime Fixed-term Parliaments Act gives the government enormous minister and strong resistance on the part of the establishment. power to survive rebellions. Many Brexiteers are worried that He claimed that Britain needed a strong leader like Donald Tory fratricide could deliver Britain to Jeremy Corbyn, ensuring Trump—“he’d go in bloody hard”. He called the Treasury the that, rather than becoming more like Singapore, as they want, it “heart of Remain”. He lamented that Britain was so terrified of would lookmore like Venezuela. Above all, this weekof high par- short-term disruptions that it would sacrifice long-term gains. liamentary drama revealed that the Tory Remainers are at last Nor was this just Boris being Boris. In the same week David willing to fight for their cause with the same ruthlessness and Davis, the secretary of state for exiting the EU, threatened to re- style with which the Leavers have fought fortheirs. 7 Middle East and Africa The Economist June 16th 2018 33

Also in this section 34 Burnt ballots in Baghdad 34 The battle for Yemen’s main lifeline 35 Corrupting the beautiful game 35 Expelling teenage mums 36 Congo’s Kabila may run again

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

Housing in the Middle East wants cheaper ones. The government has also set the minimum size for new apart- Villas and slums ments at 110 square metres (1,184 square feet), bigger than most people want or can afford. As a result, property transactions in Jordan were down by about 14% last year, even though developers have built 1bn di- AMMAN AND CAIRO nars ($1.4bn) worth of unsold apartments since 2015, says Zuhair al-Omari, the head Expensive homes are easy to find in the Arab world. Flats forthe poor, not so much ofthe developers’ association. HE billboards almost seem to taunt Jordan 26% of houses have at least two Elsewhere, though, predictions of a lux- Tmotorists crawling through traffic be- people per room, and 5% have at least four. ury-housing glut have not yet come to fru- low. They hawk luxurious town houses Even in the oil-rich Gulf states, young peo- ition. The difficulty and expense of build- and villas with sumptuous pools in comple struggle to find affordable housing. The ing mean that the only profitable portion pounds that sound like Californian sub- crisis has deep social consequences. Young ofthe Egyptian housingmarketisatthe top urbs: Palm Hills, Eastown, Allegria. “Wel- people cancel engagements and postpone (hence all those billboards). Demand has, come to the greener side of life,” oozes one marriage because they cannot afford to so far, kept pace with supply. Richer Egyp- sign. But this is not California. It is Cairo, make a home together. Crime is a growing tians see property as the only reliable re- Egypt’s chaotic and crowded capital. The problem in Cairo’s teeming slums. pository ofvalue. road is lined with endless rows of ram- The Egyptian government has tried to shackle redbrick buildings. Most are unfin- Market manipulators fill the gap at the bottom of the market. In ished, their innards exposed, steel bars For decades Arabs have migrated from ru- 2014 it unveiled a $40bn scheme with poking from the rooftops. The greener side ral areas to cities in search of work. Cairo’s Arabtec, an Emirati contractor, to build 1m oflife is many kilometres away. population has nearly doubled since 1996, low-income units. But the project stalled The drive along Cairo’s ring road is one to 23m. Amman, the capital of Jordan, has the following year for lack of funds. Frus- sign of a paradoxical problem. Egypt has grown even faster, partly owing to an in- trated Egyptians have taken matters into both a building boom and a housing short- flux of Iraqi and Syrian refugees. Add to their own hands. The towers lining Cairo’s age. At the high end, business is roaring. that Arab baby-boomers (mostly born in ringroad are known as ashwaiat, the plural Developers are building tens of thousands the 1990s and 2000s), who will soon look of “random”. They were built illegally, of homes in upscale compounds, drawing to buy homes and start families. Egypt without permits or safety inspections. young families with the promise of an es- alone has 50m people under the age of 20. Families invested their life’s savings to se- cape from the city. But for most Egyptians It will need to build up to 600,000 new cure a plot of land and start construction, these homes are out of reach. Villas can homes each year just to keep pace. then added a floor or two whenever they start at 10m Egyptian pounds ($560,000)— The market ought to provide them, but had the cash. But most cannot afford to fin- about 200 years’ pay at average wages. governments distort it. Corruption and ish. Of Egypt’s 43m homes, 9m are vacant, Poor Egyptians, and even the shrinking mismanagement of land is a problem. and halfofthose are incomplete. middle class, have few options. Egypt has a Builders must cope with burdensome reg- Many of these problems converge in shortage of 3m homes. Its existing stock is ulations and antiquated zoning laws. One Boulaq, a district of 40,000 people in cen- overcrowded. The average Egyptian family study in Jordan found that they pay a third tral Cairo. Residents have lived there for has 3.3 children. More than 2m families, 9% of a project’s value in taxes and fees. Rent generations, often in dismal single-room of the total, live in one- or two-room controls also make it unprofitable to build flats with shared bathrooms and kitchens. homes. Almost 1m Cairenes live in slums in many places. Some Cairenes pay less for But the prices are unbeatable. With rent the government considers unsafe, without monthly rent than for a hookah at their controls, some pay as little as ten pounds basic amenities like sewerage and water. neighbourhood café. per month. Now the government wants Thousands ofpeople live in cemeteries. Large parts of Amman are zoned for them out. They live on some of Cairo’s The problem is not limited to Egypt. In high-end units, even though the market most valuable land, just backfrom the Nile 1 34 Middle East and Africa The Economist June 16th 2018

2 and behind a row of five-star hotels. Au- with Hadi al-Amari, the leader of Fatah, at thorities plan to bulldoze the neighbour- a meeting in the Shia holy city ofNajaf. For hood and spend $227m building a new, now, at least, both are downplaying their modern community. Sketches from the differences. Mr Sadr has denounced Shia project’s British architect show rooftop gar- chauvinism, urged reconciliation with dens and wide pedestrian boulevards. Sunnisand reached outto the region’sSun- Though the warped market makes it ni champion, Saudi Arabia, and its crown hard to tell, the economic case for this prince, Muhammad bin Salman. Mr seems dubious. Few wealthy Egyptians Amari, by contrast, has spent much of his want to live downtown, and there are career in Shia Iran and says he answers to signs that the luxury market may soon its leader, Ayatollah Ali Khamenei. slow. Many developers now offer financ- If the initial election results are upheld, ing with no down-payment, instead of the Mr Sadr’s coalition would have 141 of the customary 15%. For existing residents, the 165 seats needed to form a government. But project means uprooting their lives. Some a manual recount could take until Septem- have accepted a lump sum fortheirhomes, ber and a re-run might not be held until lo- at well below market value. Others were cal elections in December. Meanwhile the moved to Al-Asmarat, a new public-hous- need for a functioning government is ing complex 15km south-east of Boulaq. growing. Iraqis are facing the worst elec- They received two-bedroom flats and a tricity blackouts in years. Turkey’s new year of free rent. After that they will pay a Voters’ wishes to ashes Ilisu dam threatens to cut off the Tigris riv- 30-year mortgage at 300 pounds per er and cause water shortages in Iraq. month. But the neighbourhood has almost its leader, Nuri al-Maliki, a former prime Confidence in the political system was no entertainment or retail, except for a few minister, tied for fourth in the poll. Mr Ma- already fallingbefore the latest crisis. Only army-run shops. The commute to down- liki and his allies cried foul and said a new 44% of Iraqis voted, and only 35% of MPs town Cairo can take an hour or more. It electronic-voting system made the poll elected in 2014 kept their seats. Damn de- might be affordable, but it is not a place easier to rig. mocracy, say many Iraqis; if only we had a many Egyptians want to call home. 7 Mr Sadr blames Mr Maliki and his com- strongman again. 7 rades for corruption and a costly sectarian war, which drained Iraq of oil wealth that Iraq’s election might otherwise have been used fordevel- The war in Yemen oping shantytowns where millions of Mr From ballot box to Sadr’s followers live. In 2016 the cleric’s Port in a storm supporters stormed Baghdad’s Green tinder box Zone, where the governmenthasitsoffices. But if protests over the election lead to clashes, Saraya Salam would be a poor match for the better-armed militias backed Burnt votes and an election recount by Iran. Their political arm, Fatah, came threaten to plunge Iraq into crisis The battle forYemen’s main lifeline second in May. “Fighting among Shia HAT would politicians the world groups would lead to the collapse of the HE war in Yemen has entered what Wover like to do when they lose an political process,” says Muhanad Seloom Tmay be a decisive phase. Early on June election? Annul the results and burn the ofBritain’s Exeter University. 13th convoys of Yemeni fighters, backed by ballots, of course. In Iraq such dreams Iraqis hope their judges will stave off a Saudi Arabia and the United Arab Emir- come true. On June 6th outgoing MPs vot- constitutional crisis. On June 13th the top ates (UAE), advanced north along the coast ed to hold a recount of Iraq’s election and court upheld parliament’s order for a full towards Hodeida. The city is held by the sack the head of the electoral commission. recount. It is still considering calls to re-run Houthis, Shia rebels who seized the capi- They were furious that a populist Shia cler- the election or extend the term of the cur- tal, Sana’a, in 2015. Emirati jets and war- ic, Muqtada al-Sadr, won the poll, held in rent prime minister, Haider al-Abadi, an- ships supported the attackers. One aid- May. Then, on June 10th, a warehouse in other Dawa stalwart. If it cannot decide by worker counted more than 30 air strikes in Baghdad containing a million ballots went June 30th, the current parliament’s term the first half-hour offighting. up in flames. Firefighters claim to have will end and Iraq will have no parliament Hodeida is Yemen’s main port. It han- saved most ofthem, but the equipment for forthe first time since 2005. dles the humanitarian aid on which four counting the votes was destroyed. Western countries, prioritising stability, out of five Yemenis depend. Prolonged Weary of the democratic process, Mr endorsed past Iraqi elections, in spite ofac- fighting could leave millions at risk of star- Sadr and his rivals are again readying their cusations of fraud. But they are now less vation. The Saudi-led coalition promises to militias. An arms cache that exploded un- vocal, reflecting their declining troop pres- keep the port operational, but it could be der a mosque in Mr Sadr’s Baghdad strong- ence, influence and, possibly, interest in damaged either in combat or by sabotage hold killed about 20 residents and brought Iraq. “We fear speaking out might only fur- (the Houthis reportedly placed landmines his militia, Saraya Salam, onto the streets. ther destabilise the country,” says a West- around the city). Saudi Arabia says the re- “Certain parties are trying to drag Iraq into ern diplomat in Baghdad. Some countries bels use it to smuggle Iranian-made mis- civil war,” he warned. hoped that Mr Abadi, a known quantity, siles, which theyhave fired atthe kingdom. The fiercest rancour is between the Shia would hang on to the premiership. Behind The days before the offensive saw fran- factions vying for the post of prime minis- the scenes and with remarkable unanim- tic efforts to avert it. Martin Griffiths, the ter. Mr Sadr’s electoral bloc, Sairoun, seeks ity diplomats from Iran, the West and Gulf UN envoy to Yemen, offered to put the UN to wrest power from Dawa, a Shia Islamist countries have urged Iraq’s politicians to in charge of the port. But the Houthis quit party that has led the government since unite before the country implodes. talks ahead of the coalition’s June 12th 2005. Dawa held the most seats in the out- They have had some success. On June deadline to withdraw from the city. going parliament, but the electoral bloc of 12th Mr Sadr announced a new alliance The coalition hopes to capitalise on 1 The Economist June 16th 2018 Middle East and Africa 35

Impregnated and expelled Corrupting the beautiful game Own goals The war on

ACCRA conception Ghanaian football faces a bribery scandal and jaded fans MWANZA OR shopping,” says a man, laying that the city’s stadium could make more Tanzania tosses pregnant girls out of $65,000 on a table. “Thankyou,” money from funerals than football. “F school, forlife says Kwesi Nyantakyi, the president of Erratic scheduling is a problem. The the Ghana Football Association, scoop- current season started late because one ARY (not her real name) was16 when ing it into a plastic bag. The bribe was a team was fighting its relegation in court. Mshe became pregnant. The father set-up, secretly filmed fora documentary The exodus ofstars is another. “Aplayer sold chips by the road near her home in by Anas Aremeyaw Anas, an undercover shows up for just a season,” says Nana northern Tanzania. She felt special when journalist. So was a sponsorship deal Darkwa Gyasi, a pundit. The best leave he gave her money. But when her belly which Mr Nyantakyi appears to negoti- for Europe, but many go to rival African swelled, he ran off. At school she was ate, taking a cut through his own private leagues, where big clubs such as TP Ma- caned in front of teachers, pupils and her company.The film-makers offered mon- zembe in Congo pay higher wages. own shamefaced parents. Then she was ey to more than100 mostly west African Ghanaians crowd into halls to watch expelled. “I would not have had sex”, she football officials, including a Kenyan European matches on television. As a says, “if I knew you could get pregnant referee due to officiate at this month’s child, Sylvester Ali would run from after doing it once.” World Cup. Only three declined. school to watch his local team. These A quarter of Tanzanian girls aged 15-19 The revelations have thrown Ghana- days he follows Arsenal instead. “I’d are pregnant or have given birth. The gov- ian football into turmoil. Mr Nyantakyi, preferto sit here, have a bottle of Coke, ernment’s response is to kick them out of who denies wrongdoing, has resigned. and watch good-quality football on a school for good. Official statistics record Domestic matches have been suspended clear screen,” he says, sitting in a bar in that between 2003 and 2011, more than indefinitely.On June 7th the government Accra. He hasn’t been to a stadium for 55,000 girls dropped out because of preg- said it would dissolve the football associ- about 20 years. nancy. This is surely a vast underestimate; ation. It has been badly and crookedly Still, there is a kickabout on every cases are often recorded as simple truancy. managed fordecades, which is why corner. MarkNoonan, the American The main way back into education is Ghana, a football-mad country,has a chiefexecutive ofHearts, says football in through vocational training or at a fee-pay- league that no one wants to watch. Ghana is like cocoa or gold: “It’s one of ing school, which most cannot afford. This In the1970s fans would hang from their national treasures.” For the faithful policy is reinforced by compulsory preg- floodlights, recalls Sam Suppey,then a few,passion is undimmed. Fans serenad- nancy tests. Teachers pull girls out of class goalkeeper forAccra Hearts ofOak, one ed their team bus through the streets after to give a urine sample or, more often, to be ofGhana’s biggest clubs. Now many a recent win against Asante Kotoko, their squeezed and prodded in the abdomen. teams play in near-empty grounds. In great rivals. “Never say die”, runs their None of this is explicitly required by January an official in Kumasi suggested motto, “until the bones are rotten.” law. Vague rules say a student may be expelled for an “offence against morality”. In recent years the tone had been changing. 2 Houthi disarray. In December the rebels known as the “coastal resistance”. Last yearthe education ministry presented broke with their ally,Ali Abdullah Saleh, a The Saudisand Emiratiscalculatethatif draft guidelines for pregnant girls to re-en- former dictator, whom they killed. Mr Sa- they control Yemen’s lifeline, they can ter school. The ruling-party manifesto said leh’s nephew, Tareq, now leads one of the force the Houthis into a negotiated settle- that those in primary school should con- factions fighting alongside the coalition. ment. Capturing it would be a financial tinue their studies. Also on the coalition’s side are southern blow.The rebels pocket millions of dollars But then John Magufuli, the president, fighters, many of whom want indepen- from taxes on cargoes. But they would made hisviewsknown. “Aftergettingpreg- dence from the north, and local Sunnis, probably compensate by raising taxes on nant, you are done,” he thundered last1 goods that enter their territory, which the

150 km war-weary population can ill afford. SAUDI ARABIA The Houthis do not have a record of Teens and mothers compromise—not in this war, norin the decade-longinsurgencyagainstMrSaleh that Saada Sparsely preceded it. They may try to draw the co- populated alition into urban combat. (Hodeida is Red home to 600,000 people, though many SENEGAL Sea Sana’a Marib have already left.) They threatened to fire YEMEN more missiles at Riyadh and Abu Dhabi. Hodeida Hodeida is the last big Houthi-con- SIERRA Recent gain trolled city on the coastal plain, where the LEONE EQUATORIAL RWANDA GUINEA KENYA population is wary of the rebels. Next the Mwanza Taiz Births per 1,000 ERITREA GABON TANZANIA Mokha coalition will have to move into the moun- women aged tainous highlands, where the Houthis en- 15-19, 2016 MALAWI Aden joy more support. It would rather cut a 150-200 100-149 DJIBOUTI Gulf of Aden deal. “We are trying to drive them back to the negotiating table,” says an Emirati offi- 50-99 Areas of control, June 13th 2018 The Economist UN 25-49 Houthi Coalition led by Saudi Arabia/UAE cial. As went to press of- Source: American Enterprise Institute’s ficials held out hope that a disaster could <25 Critical Threats Project be averted. But the window is closing. 7 Source: World Bank 36 Middle East and Africa The Economist June 16th 2018

2 year. Halima Mdee, a lawmaker who criti- Although Tanzania’s approach is un- merely expressions of the “free speech” of cised Mr Magufuli’s stance, was arrested usual, it is not unique. Sierra Leone and enthusiastic supporters, he insists with an and charged with insulting the president. Equatorial Guinea also expel pregnant admirably straight face. But he does not In the past, says one teacher, sympa- girls, notes a report published by Human rule out the possibility. “You cannot deny thetic schools could quietly readmit girls Rights Watch, a pressure group. Laws else- he has a certain experience in running the after they had given birth. But none dares where in Africa vary widely. In Malawi country,” MrNkanga says. do so now. An official in one district called pregnant girls are suspended for 12 The path towards a third term involves for the arrest of pregnant schoolgirls, to months, but then allowed to return in the fiddling with the constitutional court, “serve as a lesson to the rest”. Five were ap- following academic year, subject to some which ruled in 2016 that Mr Kabila could prehended by police. tedious paperwork. In Senegal they are re- stay in office while waiting for elections to Punishment does not seem to reduce admitted with a certificate saying they are be organised. Over the past few months, teenage pregnancy. The rate is higher than healthy. A handful of places, including several judges have retired (how willingly in neighbouring Kenya, which allows Rwanda and Gabon, encourage mothers to is unclear) giving Mr Kabila the chance to mothers to return to class. It is highest ofall continue their studies. In 24 countries appoint new ones. Many Congolese politi- in poor, rural areas, where contraception is there is no clearpolicy, leavinggirls’ fates to cians fret that the court could soon rule scarce and sex may pay forbetter grades or the whims oflocal officials. that, since the constitution was amended a motorbike ride to school. A government For many girls, getting pregnant is the in 2011, the count should be restarted. That survey found that 11% of 15- to 19-year-old end of their dreams. Some risk backstreet could potentially give Mr Kabila another girls had experienced sexual violence. One abortions. Others get married. Many end term. A similar gambit was used by the activist, too nervous to be named, recalls up as maids; a few, as prostitutes. Mary president of neighbouring Burundi, Pierre how she was expelled after being raped at now scrubs pots and pans for a living. “I Nkurunziza, in 2015. 14. Girls get the blame for pregnancy, she would go backto school,” she says, wistful- Mr Kabilia may, however, face an unex- says, rather than men and boys. ly, “ifI got the chance.” 7 pected opponent. On June 8th the Interna- tional Criminal Court(ICC) acquitted Jean- Pierre Bemba, a warlord who has spent the Congo’s coming election past ten years in prison in The Hague. Mr Bemba (pictured) had been convicted of The indispensable Mr Kabila crimes against humanity in 2016, but on appeal the court overturned the verdict on the basis that he could not be held wholly responsible for the rapes and massacres KINSHASA histroopscommitted. In 2006 he came second to MrKabila in Congo’s first election in Congo’s president wants an unconstitutional, unpopularthird term. An old rival, almost half a century. His return could be freshly acquitted ofwarcrimes, may complicate matters seismic. KrisBerwouts, the authorof “Con- AST month residents ofBinza Delvaux, a go’s Violent Peace”, says that Mr Bemba Lneighbourhood of Kinshasa, the lively has “the aura of an anti-Kabila icon”. More capital of the Democratic Republic of Con- than most, he can get his supporters to go, awoke to discover a huge poster in the protest on the streets. local market. It showed Congo’s president, IfMrKabila runs, can he win? The presi- Joseph Kabila, with the caption “Our Can- dent is fiercely unpopular. In most of Con- didate”. Around the same time, crude ad- go it is near impossible to find anyone who vertisements started appearing on televi- will say a good word about him. Polling by sion stations praising the “indispensable” the Congo Research Group at New York Mr Kabila. In cities across the country, T- University shows that only 17% ofthe pop- shirts bearing the president’s face have ulation would vote for the ruling party been handed out at free concerts put on by (which is not yet entirely united behind its his party,the People’s Party forReconstruc- leader). But the election could be rigged or tion and Democracy (PPRD). bought. The leading opposition candidate, Congo, a dysfunctional, vast country of Moïse Katumbi, a wealthy former gover- perhaps 80m people, is catching election nor and one-time ally of Mr Kabila, held a fever. This is odd. According to Congo’s huge rally in Kinshasa on June 9th. Mr Ka- constitution MrKabila, who has been pres- tumbi, in exile since 2016, appeared by vid- ident since the murder ofhis father in 2001, eo link. Whether he teams up with Mr is barred from running fora third term and Bemba isfarfrom clear. Byexcluding candi- ought to have stepped down in 2016. In- dates and dividing the opposition, Mr Ka- stead, he chose simply to stay in office. bila could sneak through under the first- After two years of “glissement” (sliding) he past-the-post system without having to seems to have decided to hold elections— steal too many votes. and run in them—whatever the constitu- A veteran of two types of campaign If he did so, most Western diplomats tion says. A vote is scheduled for Decem- would accepthis victory. Theyvalue stabil- ber 23rd. It is unlikely to be free, fairor even now wants to hold elections is that he may ity above all. Most Congolese, however, peaceful, but it may at least take place. have found a way to make himselfa candi- would not be thrilled by the prospect of “Everything is going well,” says Corneille date. To be sure, he has not yet explicitly more of the same. Some 13m people re- Nangaa, the head of the electoral commis- said he will run. PatrickNkanga, the nattily quire urgent humanitarian assistance, ac- sion, who has been buzzing around Euro- dressed spokesman of the PPRD, says that cording to the UN. In a country of lush, fer- pean capitals and Washington, DC to per- the posters and advertisements trumpet- tile forests, over 2m children are close to suade doubters. ing Mr Kabila do not necessarily mean that starving. A third term for a useless presi- The reason Mr Kabila has relented and the president will stand again. They are dent would not help it change course. 7 United States The Economist June 16th 2018 37

Also in this section 38 Voting and SCOTUS 38 Whaling in Alaska 39 Sexual habits 40 Preventing suicide 41 Lexington: The cost of America First

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

Voting (1) quixotic choice, while allocating their other choices strategically. Multiple choice Second, it shifts incentives away from negative campaigning—because candidates are trying not just to turn out their base, but also to win as many second- and third-choice votes as possible—and to- PORTLAND, MAINE wardsalliance-building, asMrEvesand Ms Ranked-choice voting, used statewide forthe first time everin Maine, could provide Sweet demonstrate. Finally, boosters argue a solution to America’s dysfunctionally partisan politics that introducing RCV limits the efficacy, LIBERAL,” said Robert Frost, an can cities—including Minneapolis, San and therefore the amount, of money spent “A American poet, “is a man too broad- Francisco, Portland (Maine) and Santa Fe— by single-issue campaign groups, because minded to take his own side in a quarrel.” have recently adopted it, too. In an RCV they often finance negative ads. An ad released less than a week before election, voters rank the field by prefer- In theory, RCV elections will more often election day by MarkEves and Betsy Sweet ence, from first to last (though they can al- be won by candidates broadly acceptable (pictured above), opponents in Maine’s ways choose to vote for just one candi- to most voters. Kyle Bailey and Cara Mc- Democratic gubernatorial primary, date). If one candidate gathers a majority Cormick, who have led Maine’s RCV cam- seemed a paragon of Frostian liberalism. offirst-place votes when all votes are in, he paign, said they have staged dozens of Ms Sweet, who resembles a slightly less wins. If not, the candidate with the small- mock RCV beer elections in microbrewer- caffeinated Elizabeth Warren, urged her est number offirst-choice votes is eliminat- ies (which abound in Maine: winter here is supporters to vote for Mr Eves; while Mr ed, and his secondary, tertiary and so forth long, cold and dark) to show voters how Eves asked his supporters to back Ms votes are redistributed. That process con- the process works. Mr Bailey said the loud- Sweet. On election day the two gripped tinuesuntil one candidate eventually has a est backers would often argue for oyster and grinned together outside an elemen- majority. stout, or some other niche beer style, but tary school in Portland’s lovely West End. How long that takes varies. San Francis- the most votes would inevitably accrue to In fact, their alliance was not wet left- co’s mayoral race took place on June 5th a “middle-of-the-road IPA”—which per- ism; it was a strategic gambit. On June 12th but the winner was not confirmed until haps had fewer or less ardent fans, but Maine conducted the first-ever statewide June 13th. Bycontrast, three yearsago Ethan which everyone could drink. election using ranked-choice voting (RCV), Strimling won a majority of votes outright Opponents argue that RCV is too com- in which voters rank the entire field rather in Portland, Maine’s mayoral race. As The plicated—and indeed, in Maine, people’s than just voting for a single candidate. Economist went to press, Sean Moody ap- enthusiasm for RCV sometimes outstrips Trailing in the polls, Ms Sweet and Mr Eves peared to have won the Republican gover- their ability to explain it. (Though on elec- figured they could boost their chances by nor’s race outright, while Janet Mills held a tion day Maine’s secretary of state, whose campaigning forsecond-place votes. steady lead on the Democratic side. office released a detailed video explaining RCV has long been a darling of political RCV boosters say it changes campaigns RCV, said he had received no complaints scientists. But Maine’s experiment should and elections in three laudable ways. First, about ballot complexity.) RCV support in interest anyone frustrated by America’s it encourages voter turnout. A study of 79 the state has split along party lines: Repub- cripplingly partisan politics. RCV may be elections in 26 American cities found that licans largely opposed it, while the RCV unable to force liberals and conservatives RCV was associated with a 10% increase in campaign’s watch party offered six types to like each other, but it could at least blunt turnout compared with non-RCV primary ofKombucha (fermented tea) on tap. the electoral effects ofhyperpartisanship. and run-off elections, and San Francisco’s Paul LePage, the abrasive and bombas- RCV is not new. Australia has used it for race had the highest primary turnout in tic outgoing governor, won two elections a century, Malta and Ireland for slightly years. Voters turned off by the front-run- without a majority, thanks to liberals split- less. Some Oscar winners are chosen by ners have less incentive to stay home. They ting their vote. Perhaps Maine Republicans RCV, as are prizewinners at the World Sci- can give their first-choice vote to their fa- doubt their ability to appeal to a majority ence Fiction Convention. Several Ameri- vourite candidate, even if he might be a of voters, and instead must discourage 1 38 United States The Economist June 16th 2018

2 turnout while pandering to their own Ohio’s law. The state gave Mr Harmon a ficult for many minority, low-income, dis- base? The state party filed an unsuccessful chance to say he hadn’t moved, so sitting abled, homeless and veteran voters”— lawsuit in May, tortuously arguing that out a few elections wasn’t “the sole criteri- mainly Democrats—“to cast a ballot or re- RCV impinged on their rights of associa- on” on which he was nixed from the rolls. turn a notice.” There is a racial component, tion under the First Amendment. The state removes voters, Justice Alito ob- too. Since 2012, 4% ofvoters in a white sub- After Maine’s voters approved RCV by served, “only if they have failed to vote urb were removed under this programme, referendum in 2016, Republicans in the leg- and have failedto respond to a notice.” compared with 10% of voters in predomi- islature narrowly passed a bill blocking its The real reason Mr Harmon and thou- nantly blackCincinnati neighbourhoods. implementation. But backers gathered sands of other Ohioans were dropped With Husted on the books, Ohio is un- enough signatures—in a frenzied, dead-of- from the rolls, Justice Breyer wrote in dis- likely to remain the only state with such a wintercampaign across the state—to pass a sent, wastheirdecision to sitouta fewelec- scheme. Since 2010, Republicans have pur- “people’s veto” that retained RCV in this tions. “If the registrant had voted at any sued an electoral upper-hand through ger- election, and asked Maine’s voters on this point”, he “would not have been re- rymandering (the subject of a trio of Su- year’s ballot whether they wanted to use it moved.” Voter-registration laws allow preme Court rulings coming this month) again. Guardedly optimistic as results fil- statesto “confirm” a voterhasmoved byre- and voter-ID laws. With newlicence to edit tered in on election night, Ms McCormick quiringthe receipt ofa return postcard, Jus- voting rolls, other states are sure to mimic vowed that, if Maine voters approved it tice Breyer noted, but Ohio illicitly uses Ohio. When the rulingarrived, Jon Husted, (and it looks as ifthey did), she and her col- non-voting as the first sign somebody may Ohio’s secretary of state, invited copycats. leagues would take their campaign to have moved. “As a matter of English us- His state’s law, he said, offers “a model for more states. Get ready to rank, America. 7 age”, he wrote, “you cannot confirm that other states to use”. 7 an event happened without already having some reason to believe at least that it Voting (2) might have happened.” Whaling in Alaska Infrequent voting should not elicit a Husted and busted hunch that someone has moved, Justice Summer ice Breyer argued; nor does the failure to send back the postcard prove anything. In 2012 more than 1m notices posted to Ohioans— people who had not voted in the previous federal election—were never returned. Ac- A divided Supreme Court strikes a blow UTQIAGVIK, ALASKA cording to the logic of Husted, about 13% of forlowerelection turnouts A dispatch from the melting north Ohio’s eligible voters could therefore be HE Supreme Court is not comprised of struck off. The “streets of Ohio’s cities are T IS whaling season in Utqiagvik, the T“nine junior varsity politicians”, Justice not filled with moving vans”, Justice Inewly official—as well as ancient indige- Stephen Breyer insists. For Chief Justice Breyer quipped; and there is no reason to nous—name for Barrow, Alaska’s, and John Roberts, America’s top jurists are um- think so many of its residents of the Buck- therefore America’s, most northerly settle- pires with no skin in the game. With a 5-4 eye State clear out when only about 4% of ment. This village ofabout 4,500 residents, ruling on June 11th in Husted v Philip Ran- Americans move county each year. the majority of whom are Inupiaq, sits at dolph Institute, a significant voting-rights Only Justice Sonia Sotomayor ad- the edge of the Arctic Ocean. Whaling sea- case, these paeans to dispassionate non- dressed the political stakes. Low voter son is a time of year when the community partisanship ring a bit hollow. All five jus- turnout and rates of postcard return could comes together around thousand-year-old tices appointed by Republican presidents be caused by “language-access problems, cultural traditions. voted to uphold an Ohio law dispropor- mail-delivery issues, inflexible work The community’s name means “the tionately erasingDemocrats from the voter schedules and transportation issues”, she place where we hunt snowy owls”. But out rolls; all fourDemocratic appointees voted wrote, and these factors “make it more dif- on the jumbled sea ice that stretches from to strike it down. town to the horizon, local residents are fo- Politics loom large in the background, cused on bowhead whales. Culturally and but the main opinions in Husted turned on nutritionally, bowheads are the most im- a thorny question of statutory interpreta- portant subsistence food species for native tion. When Congress passed the Help residents in this isolated settlement, acces- America Vote Act (HAVA) in 2002, a fol- sible only by air or by sea during the short low-up to the National Voter Registration summer months when the water is open. Act (NVRA), what did it mean when it told Food that is not harvested locally is flown states not to remove people from registered in. A gallon of milk at the AC, the largest voter lists “solely by reason of the person’s grocery store in town, costs $10. failure to vote”? A short walk away from the AC, Isabel Larry Harmon, an Ohioan who was Kanayurak, a local elder, sits at a desk on turned away when he showed up to vote the second floor of the blue-painted Bar- against pot legalisation in 2015, argued that rowVolunteerSearch and Rescue building. his state violates federal law. After voting This is the community’s shore-based hub in 2004 and 2008, Mr Harmon skipped the for whaling. Ms Kanayurak’s father was a next three elections and says he doesn’t re- whaling captain. Now her son is. She has member receiving a postcard from the been involved with whaling all her life. A state asking him to verify his address in wide window in front of the desk gave her 2011. This pattern of non-voting, with the a long view north across the sea ice. Volun- unreturned missive in the middle, resulted teers like Ms Kanayurak monitor the VHF in Ohio disenfranchising Mr Harmon. radio 24 hours a day during whaling sea- Writing for the majority, Justice Samuel son. Over channel 72, these volunteers Alito said there is nothing untoward about Postcard from DC communicate with whaling camps far out 1 The Economist June 16th 2018 United States 39

The problem is not only limited to syphilis. Other sexually transmitted diseases (STDs) are roaring back. Rates of gonorrhoea have, after a brief period of decline, surged 46% since 2010. Chlamydia, an extremely common STD which can result in female infertility, has nearly doubled since 2000. Nearly every sort of American has been affected. Even though people under 30 account for a large share of new infections, STDs have also risen among the elderly. Among adults aged 55 or over, chlamydia has more than doubled since 2010, while gonorrhoea has more than tripled. The public-health departments of New York City and Los Angeles County have sounded alarms, as have rural states like Mississippi, where STD rates are among the highest in the country. The way STDs are spread—through un- A whale of a time protected sex with the infected—is no real mystery, even to those adolescentsbrought 2 on the ice. They share landing reports, give populations are doing well, probably be- up in the most wholesome settings. So safety warnings and co-ordinate supply cause warming temperatures in the Arctic what accounts for the rise in transmission? deliveries. Villagers across town tune in as are increasing the availability of food. But A few theories exist. The first lays the well. Everyone is waiting for the joyous with continued rapid changes to the cli- blame on dwindling public dollars for STD yells that signal a successful hunt. mate and oceans, the future for these prevention and monitoring programmes. Bowhead are beamy black whales, the whales—and the Inupiaq traditions sur- Since 2003, the CDC’s STD prevention bud- size ofa school bus and a halfat most, with rounding them—is uncertain. get, which funds state health departments a characteristic downturned jaw.These an- A pair of bowhead rib bones form an and clinics, has declined by 40% in real imals live exclusively in the cold waters of arch at the edge of the beach three blocks terms. The funding slide continued the far north, filtering minute krill out of awayfrom the Search and Rescue building. through presidencies of both parties, al- the water for food and using their massive By 9pm, as the sun is finally dropping to- though the Trump administration pitched skulls to blast through sea ice up to two feet wards the horizon, the arch casts a long a 17% cut to the programme last year (and a thickin order to create breathing holes. shadow across the snow. Far out on the ice 19% reduction to the CDC’s HIV prevention In the season so far, the crews have and in the indigo waters of the Arctic programme to boot). Clinics offering confi- landed eight whales and struck and lost Ocean, the whaling crews of Utqiagvik are dential services are especially important ten. International Whaling Commission still working. 7 for young people, who often do not seek regulations grant the community a com- testing through their general practitioners bined quota of 25. “It’s going pretty good,” “both because of stigma, and because doc- Ms Kanayurak said of the season. “But you Sexually transmitted diseases tors do not really like to talk about sex”, have to watch howthe weatherisand how says David Harvey, the executive director the ice is going,” she said. Rash behaviour of the National Coalition of STD Directors, As they have done for thousands of an advocacy group. years, hunters paddle umiaks, whale boats Another explanation is that sex is now made from the skin of bearded seals seen as less risky. The most widely feared stretched over wooden frames. Wearing venereal disease, HIV, is much less scary white parkas and remaining quiet in the than it once was. Gay and bisexual men, WASHINGTON, DC boats, hunters hope to blend in with the who are still at extremely high risk of HIV The numberofpeople with STDs soars ice. Once a crew has struck a whale, other infection in America, are now encouraged crews pitch in to help land the animal, us- EARLY 20 years ago, the Centres for to take prophylactic pills once a day that ing motorised aluminium skiffs and block NDisease Control and Prevention can reduce the chance of infection by 99%. and tackle. (CDC) released an ambitious proposal to For those who contract HIV, antiretroviral Whale meat is eaten boiled, fermented, “eliminate syphilis from the United medicines offer the chance of a near-nor- fried and frozen. Ms Kanayurak has no States”. The plan seems to have worked mal life. But the pills do not shield gay men preference. “Everybody likes the spring rather poorly. Soon after the proposal’s is- from other STDs. They have accounted for ones,” she says of the whales. After a long sue, infection rates began to head in the a mightily disproportionate share of the winter when the sun doesn’t rise above wrong direction and then worsened. From newly infected. the horizon formore than two months, vil- 2000 until 2016, the most recent year for A similar dynamic may be at play for lagers cherish fresh meat. which data are available, the rates of syph- heterosexual couples, where the principal For time immemorial, successful crews ilis quadrupled. Congenital syphilis, a fear is often unintended pregnancy. Birth- have earned respect from their communi- nearly eradicated condition in which the control pills and intrauterine devices can ty. And as has been done for centuries, infection is passed from mother to fetus, reduce the worries of an unannounced ar- hunters share out whale meat, with careful has also sharply increased—by nearly 28% rival, but they can also encourage couples attention to elders, like Ms Kanayurak, from a low base in one year. That is dis- to ditch the rubbers. For those who have who cannot harvest their own. In the sum- tressingnotonlybecause the disease iseas- not been properly tested, this could spread mer, villagers celebrate a successful hunt ily detected and treated by a course of anti- more infections. with a communal feast. biotics, but also because afflicted mothers America is not the only place where Recent surveys show that bowhead have a 40% chance ofa stillbirth. STDs are surging. In 2017 England saw a 1 40 United States The Economist June 16th 2018

2 20% increase in syphilis and a 22% increase suicide-prevention lifeline, and tend to op- in gonorrhoea. It was also the site of the Ignorance is blisters erate on a shoestring. (On June 30th Crisis first antibiotic-resistant strain of gonor- United States, sexually transmitted disease Connection, Minnesota’s hotline, which rhoea. In Western Europe rates of STDs infection rates, 2000=100 handles 50,000 calls a year, will be forced have seen similarly large increases (more to shut down for lack offunds.) 500 than 50% in some countries) from 2010 to One idea is a bill currently being con- Syphilis 2014. This suggests that changing sexual 400 sidered by Congress, which would change mores, rather than a particularly virulent the 11-digit number ofthe suicide lifeline to strain of American exceptionalism, might 300 a more easily memorised three-digit num- be to blame. Chlamydia ber, like 911, the nationwide number for American lawmakers have unbridled 200 emergencies. Studies suggest that celebrity enthusiasm for abstinence-only sex educa- suicides can have a “Werther effect” tion, spending an average of $60m a year 100 (named after Goethe’s novel): a spike in on it. Experimental evaluations show the Gonorrhea copycat suicides. In the days after the programmes to be claptrap, with no effect 0 deaths of Kate Spade, a handbag designer, on delaying sexual activity. Ruling out ab- 2000 02 04 06 08 10 12 14 16 and Anthony Bourdain, a foodie, writer stinence, the most effective way to prevent Source: Centres for Disease Control and Prevention and presenter (see Obituary), calls to the STD transmission among sexually active lifeline increased by 63%, further evidence young people is with condoms. Yet their can apparently be taken as an offensive both for the Werther effect and for the im- use among young people has steadily de- judgment of a partner’s “cleanliness”. For- portance of hotlines. According to the clined in recent years, according to CDC going them can be risky, though. Mutual CDC, suicide rates increased for all age surveys. William Yarber, a senior scientist assurances, unless backed up by recent groups younger than 75, with the group at the Kinsey Institute at Indiana Universi- testing, can be misleading. “Both men and aged 45 to 64 reporting the largest overall ty,thinks this has much to do with unhelp- women tend to not accurately report their increase (from 13 per 100,000 people to 19 ful stigma surrounding condoms. They are sexual history,”says Mr Yarber. “Especially per 100,000) and the greatest number of seen as unsexy, and insisting on their use ifthe moment is there.” 7 suicides (232,108). Native Americans and elderly white men seem to be particularly vulnerable. Preventing suicide Many still see suicide as a choice rather than a public-health problem, which is The sorrows of Werther whyinitiativesto preventsuicide are much newer (a national strategy was first de- vised in 2001) than those aiming at the prevention of cancer or heart disease. They are also far less generously funded com- CHICAGO pared with other leading causes of death. The suicide-prevention grants named after How to stop so many people from killing themselves GarrettLee Smith, the son ofa senator who UICIDE is often born of despair, but sui- Centres for Disease Control and Preven- killed himself, have been funded at the Scide prevention is far from hopeless. tion (CDC) shows a sharp spike in suicide same rate of $35.4m since 2013. The nation- What is required is a better understanding across the country (see map). al suicide-prevention hotline, which has of the suicidal brain, says Dan Reidenberg In practical terms, measures that in- helped more than 6m people since it start- of SAVE, a non-profit organisation. Re- crease the distance between a suicidal ed in 2005, has also been funded with the search suggests that people cannot remain thought and access to lethal means can same $7m a year forthe past five years. acutely suicidal for much more than an make a big difference. After the Australian The most effective help, though, re- hour, and that half of those who do com- government reduced the country’s stockof mains the support of friends, family and mit suicide take the final decision less than guns by around one-fifth through a gun neighbours, especially if they can learn to ten minutes before killing themselves. Yet buy-back programme in 1997, the rate of detect warning signs such as withdrawal, what goes on in the brain in those minutes suicide by gunshot dropped by almost talk about wanting to die or the sudden remains a mystery. It is one that is worth 80%. America is unlikely to follow Austra- misuse of booze or pills. “The solution lies trying to solve, since a new report from the lia in the near future, but even a require- in social, economic, spiritual and other ment to store guns safely at all times could connections,” says Jerry Reed of the Na- help; half of all American suicides are by tional Action Alliance for Suicide Preven- From despair to where gunshot. Pharmacists still sell painkillers tion, echoing Émile Durkheim, the sociolo- loosely in pots, enabling people to pour gist who wrote the first study that treated Suicide rate, 1999-2016, % change the whole lot down their throats in one suicide as a health problem, rather than a movement. They could follow Britain, religious or moral one. -1 0 10 20 30 40 AK ME which in 1998 switched to blisterpacks that Melancholy suicide is a state of great WI VT NH require users to punch pills out one by one. sadness “causing the patient no longer to Deathsfrom overdosesofparacetamol (the realise sanely the bonds which connect WA ID MT ND MN IL MI NY MA active ingredient in Tylenol) dropped by him with people and things around him”, OR NV WY SD IA IN OH PA NJ CT RI 44% in 11years. wrote Durkheim in Le Suicide at the end of CA UT CONE MO KY WV VA MD DE In theory, all suicides are preventable the 19th century. At the time, doctors pre- until the last minute of life. Robert Gebbia, scribed buckets of cold water thrown over AZ NM KS AR TN NC SC DC head of the American Foundation for Sui- the head to combat suicidal thoughts. The OK LA MS AL GA cide Prevention, would like the federal gov- Western world has made progress in treat- HI TX FL ernment to provide $150m forresearch into ing mental illness since, but a few buckets prevention. He would also subsidise the of icy water over the heads of America’s Source: Centres for Disease Control and Prevention 160 local call centresthatserve the national lawmakers might do some good. 7 The Economist June 16th 2018 United States 41 Lexington The rising cost of America First

Donald Trump wants his own foreign policy, but will not want to pay forit and Iran deal, was a cinch. Each step was applauded by partisan Republicans, and the costsAmerica will incurasa result are mostly remote and hard to quantify. Haranguing America’s allies for better trade and security terms, the main vehicle for Mr Trump’s claim to be pushing America First, has been no harder. Western leaders are reluctant to argue back, because ofAmerica’s heftand occasionally—as in his scorn for their paltry defence spending— because Mr Trump has a point. The stifling etiquette of diplomatic relations has magnified the dramatic effect of his grand- standing. Mr Trump was horribly rude to Justin Trudeau after the G7 gathering last week. Yet the common diplomatic view that the sky fell in because he refused to sign the shindig’s communiqué seems faintly ludicrous. By such means Mr Trump has been able to smash the maximum amountofcrockery, formaximum political effect, ata modestorintangible cost. Buthe will nowhave fewer opportunities for low-cost bullying or audacious dealmaking available to him. He has no more big Obama foreign achievements to unwind. The next wave of international entities in his sights—NAFTA, NATO and the United Nations—would be far more damaging to leave, politically and otherwise. Mr Trump’s decision to with- ITH the ink still drying on the Singapore declaration, Presi- draw from the Iran nuclear deal and levy metals tariffs on Cana- Wdent Donald Trump was asked why the North Koreans da and the Europeans has already raised the cost of mistreating were any likelierto honourits terms than all the previous nuclear allies. It has forced them to take retaliatory action and probably agreements they have flouted. The difference, he said, was him- made them less willing to provide support forfuture Trump deal- self. “I don’t think they’ve ever had the confidence, frankly, in a making, especially with Iran, which his advisers would like to president that they have right now.” It was a reminder that the turn to next. That is in part because they know the president’s dis- only unifying principle in Mr Trump’s maverick foreign policy is regard for the Palestinians has made the “ultimate deal”—a settle- his relentless eye forpersonal advantage. ment oftheir argument with Israel—extremely unlikely. On trade, That is apparent in his North Korea policy more broadly. To Mr Trump faces even more steeply rising costs. He has so far con- use a real-estate analogy: when he was first briefed on the state of vinced hissupportersthatprotectionism can be profitable aswell North Korea diplomacy by his predecessor, Mr Trump perhaps as emotionally satisfying. Yet the negative consequences of the saw it less as an existential threat than a fixer upper—an opportu- tariffson foreign carsand trade warwith China he has threatened nity for an easy win. Negotiations had long been frozen over might make them think again. Mr Trump’sopportunities foreasy America’s demand that Kim Jong Un’s regime should give up its America First wins, in short, appear to have been exhausted. nucleararms and the regime’s refusal to do so. Yet there were two ways an America president could shake things up: by promising Crude yet calculating Kim JongUn more normal relations, orthreateninghim with war. There are three ways this could go. First, he could restrain him- Most North Korea-watchers considered the first unconscionable self—a prediction often made, and never borne out. Indeed there and the second unrealistic. Mr Trump, unburdened by such nice- are fresh reasons to think Mr Trump is not about to become more ties, tried them both, sometimes in the same breath. conventional. All presidents become more active abroad as their Whateverthe merits ofthe ensuingdetente, the tactic has paid troubles mount at home; and he, beset by legal peril, could use a off handsomely for the president. It has enabled him to create a foreign distraction more than most. Alternatively, he could dou- semblance of historic progress, which has driven his supporters ble down and attack the international system more fiercely. That wild with glee and bookmakers to slash their odds against him would be consistent with his record—except in one respect. Mr bagging the Nobel peace prize. And in case the deal comes to Trump has proved the prognosticators wrong because he under- nothing, he says he has a contingency plan. He will simply “find stands his interests better than they do. His divisive behaviour is some kind ofan excuse” to absolve himselfofblame. This was so more popularthan they imagined. By extension, it is not uncalcu- predictable it is amazing Mr Trump retains such power to shock. lated: MrTrump wantsto promote himself, notmayhem. So ifthe Almost all his disruptive foreign-policy moves, the rows with al- rising costs of his confrontational foreign policy erode his sup- lies, withdrawals from international agreements, tariffs and port, he would probably moderate the policy. threats of worse on every front, can be viewed primarily as tacti- That raises a third possibility. The president may maintain his cal ploysintended to push hisself-image asa decisive leader, hon- antagonistic style, but follow through on fewer threats and prom- our ill-considered campaign pledges or stoke the partisan, ises. He may still threaten war, in trade and militarily, but he will nationalist and xenophobic sentiment from which he draws not start one, because wars are expensive and end up unpopular. strength. Yet this strategy is liable to produce diminishing returns. He will still float audacious deals, but he will settle for smaller- For additional context, consider that Mr Trump’s haymakers bore pacts—recognition of an Israeli land-claim, perhaps, or a at the world order and diplomatic convention have so far been stillborn deal with the Taliban—that he can spin as something easy to throw. Obliterating Barack Obama’s legacy, by withdraw- bigger. On balance, this seems likeliest. It is how he conducted his ing from the Trans-Pacific Partnership, the Paris climate accord business. Italso bestdescribesthe stunthe pulled in Singapore. 7 42 The Americas The Economist June 16th 2018

Also in this section 43 A North American World Cup 43 Polio returns to Venezuela 44 Making money from mist Bello is away

Canada Canada gamely argues that the United States would also be hurt in a trade war. Breaking a few eggs Canada is the biggest destination for exports from 36 ofthe 50 American states. Bi- lateral trade in goods and services is im- mense: $674bn in 2017. It is also, despite what Mr Trump says, balanced. In 2017 the OTTAWA United States had a small surplus with Canada, of $8.4bn. Yet Mr Trudeau’s bar- The economy is already feeling the effects ofDonald Trump’s trade war gaining position is weak. “We absolutely LL dishes on the lunch menu at La Can- Mr Trump’s onslaught than Canada’s. need them, but they could live without Atine du Centre-Ville, a pop-up restau- Two-thirds of its trade is with its southern us,” says Philip Cross, an economist. rant near Parliament Hill in Ottawa, are neighbour. The steel and aluminium tariffs Mr Trudeau must pick his battles. In the made from ingredients that annoy Donald affectindustries that employ 30,000 Cana- NAFTA negotiations Canada and Mexico Trump. The Mini-Quiche aux Trois From- dians. The C.D. Howe Institute, a think- are resisting an American demand for a ages uses Canadian eggs, milk, cheese and tank, predicts that the barriers will cost “sunset clause”, which would require re- chicken “bacon”; the Galette de Saucisse 6,000 jobs and reduce Canada’s GDP by approval ofthe accord every five years and de Dinde is made with turkey. The Cantine 0.11%. If Mr Trump carries out his threat to thus discourage long-term investment. Mr pops up every year to publicise Canadian impose a 25% tariffon cars the damage will Trudeau cancelled a meeting with Mr dairy, poultryand eggs, which are protect- be far greater. Canada’s vehicle industry Trump last month because the Americans ed by import quotas and tariffs. This year’s employs about 130,000 people and ships made acceptance of a sunset clause a pre- version, on June 12th, was festive, with 85% ofits wares to the United States. condition. Mr Trudeau is also defending banners flappingundera blue sky and din- In the face of such threats the value of NAFTA’s dispute-settlement rules while ers enjoying free food. But the people Canada’s dollar has fallen from 80 cents in trying to roll back the steel and aluminium wearing “Askme, I’m a farmer” T-shirts are mid-April to 77 cents. Economists had ex- tariffsand forestall new ones on vehicles. worried. pected business investment to take over as They fear that they will be the next ca- the main source of growth from spending Playing chicken sualties in the trade war that Mr Trump is by consumers, who have record levels of But to stop investment and jobs from mov- waging against the United States’ allies. debt. But investors, unsure they will be ing south, “Canada is going to have to With good reason. The 25% tariff the Un- able to continue exportingfreely to the Un- make some concessions,” says Laura Daw- ited Statesslapped on steel thismonth, and ited States, are holding back. The central son, head of the Canada Institute at the the 10% levy on aluminium, apply to im- bankcited thisasone reason itdid not raise Woodrow Wilson Centre in Washington, ports from Canada as well as from Mexico interest rates on May 30th. DC. Among them might be raising the and Europe. Canada, like the others, will At first, Canada’s prime minister, Justin threshold at which Canada taxes pur- retaliate by raising tariffs on goods, like toi- Trudeau, had hoped to win leniency by chases of American goods from C$20 to let paper and lawnmowers, made in re- charming the volatile American president. around C$1,000, the American level. Can- gions that matter politically to Mr Trump. That tactic failed in spectacular fashion ada might consent to more onerous condi- The renegotiation that Mr Trump demand- after the G7 summit on June 8th and 9th tions fora vehicle to be imported duty-free ed of the North American Free-Trade hosted by Mr Trudeau in La Malbaie, Que- within NAFTA, includingon wages and the Agreement (NAFTA), which includes the bec. When MrTrudeaudefended Canada’s amount ofNorth American content. United States, Mexico and Canada, drags riposte to the steel and aluminium tariffs in To appease Mr Trump, Mr Trudeau may on. The economy is already suffering. To a press conference at the end of the sum- have to pamper farmers less, which is a avoid further damage, Canada may have mit, Mr Trump tweeted that he was “very good idea anyway but politically perilous. to stop coddling farmers. dishonest & weak” and accused him of Canada’s system of supply management, Few economies are more vulnerable to making “false statements”. which sets limits on the production of 1 The Economist June 16th 2018 The Americas 43

2 dairy, poultry and eggs, has long irritated Health the United States (and should anger Cana- Milk money dians, who pay more for food than they Agricultural producer support Disease déjà vu need to). Canada subjects imports of those % of farm receipts products beyond a ceiling to punishing ta- 40 riffs (298% in the case of butter). Mr Trump EU-28 has been angry about this since he met 30 dairyfarmersfrom Wisconsin in April 2017. Canada Polio has come backto Venezuela. It is When he repudiated by tweet the agree- not the only countryat risk mentwith otherG7 countrieshe blamed in 20 part Canada’s “massive tariffs” on Ameri- N1961Venezuela became the firstcountry 10 can farmers. Pierre Lampron, head of the United Iin Latin America virtually to eliminate Dairy Farmers of Canada, says Mr Trump States malaria, using a combination of DDT, an is trying to wipe out Canadian farmers. 0 insecticide, and drugs. The oil-rich country 1986 90 95 200005 10 16 Canada points out that American farm has now made health history again, this subsidies almost match its own (see chart). Source: OECD time in a bad way. On June 7th Venezuela’s So far, such arguments have not moved Mr health department reported to the Pan- Trump. Mr Trudeau has already indicated producers will also lose protection. “If that American Health Organisation (PAHO) the that Canada has “flexibility” on dairy, the train goes by,it’s goingto hit us all,” he says. first case of polio in South America since biggest of the protected sectors. In negotia- Mr Trump’s aggression has inspired 1991. This is a big worry, not only for Vene- tions with other trade partners, it has of- rare unity in Canada. The House of Com- zuela but for its neighbours. The re-emer- fered a bit more access to those sectors and mons unanimously passed a motion back- gence of polio strongly suggests that Vene- compensated farmers. Canadian negotia- ing Mr Trudeau’s decision to retaliate zuela’s vaccination programme has failed. tors have reportedly offered similar con- against steel and aluminium tariffs. Doug With thousands of Venezuelans a day flee- cessions to the United States, which said Ford, a populist newly elected to be Onta- ing the country’s political and economic they were insufficient. Marcel Laviolette, rio’s premier, said he stands shoulder-to- crisis, there is a risk that polio and other an egg producer from a village near Ot- shoulder with him in defending jobs in the highly infectious diseases will spread to tawa, expects Canada to concede more. Al- province. If Mr Trudeau picks a fight with more countries in the region. though most of the discussion has been farmers to save the economy,however, this Itisnotclearwhatthe source is ofthe in- about dairy, he fears that poultry and egg moment ofunity will soon pass. 7 fection reported to PAHO, which occurred in a child nearly three years old from the Football Warao indigenous community in the rural state of Delta Amacuro. The child might have been infected by someone who had Once and future amigos been to a country where polio is still en- demic (Afghanistan or Pakistan). Or it could be a rare “iatrogenic” case, caused by Squabbling neighbours win the right to host the football World Cup a mutation of the polio vaccine itself and ALL building, tariffwars and Twit- speech by a teenage Liberian refugee, passed on through faeces-contaminated Wter-borne insults set the tone for the now playing football in Canada. “The water, food or touch. Either way, the occur- United States’ relations with Mexico and people ofNorth America have always rence demonstrates the dangers of leaving Canada these days. But, like a bickering welcomed me. Ifgiven the opportunity,I holes in vaccination campaigns. family in a photo studio, the three coun- know they’ll welcome you,” he said. Some 2.1m-2.6m babies in Venezuela tries managed enough ofa show ofaffec- Mr Trumplobbied hard forthe cup, have never been vaccinated, according to tion to be granted the right to co-host one with promises and threats. He sent FIFA the Venezuelan Society of Public Health ofthe world’s biggest sporting events. On three letters pledging that the United (SVSP), an independent group of health June13th FIFA, football’s global governing States would let in fans from anywhere, specialists. Venezuela waited more than a body,voted to award the 2026 World Cup in effectofferingto suspend the travel month to inform PAHO ofthe case in Delta to the three erstwhile amigos. Their bid, ban he imposed on seven Muslim-major- Amacuro rather than 24 hours, the dead- dubbed “United”, beat a rival one from ity countries. Tothat he added a hint of line set by internationally agreed guide- Morocco. “The beautiful game transcends menace. “It would be a shame ifcoun- lines. That gave the disease time to spread. borders and cultures,” said an elated tries that we always support were to The SVSP has said it is aware of four possi- Carlos Cordeiro, president ofthe United lobby against the US bid,” he tweeted in ble cases and there may by now be many States Soccer Federation. April. FIFA responded by reminding all more. Measles, which was stamped out in Under FIFA’s newly transparent vot- parties ofits code ofconduct. the Americas in 2016, also made a come- ing system, the football associations of Mr Trump’sbase generally prefer back in Venezuela. Some 2,000 people more than 200 countries, rather than a home-grown sports to football. Ann have fallen sickthere, according to PAHO. committee ofFIFA fatcats, had a vote. Coulter, a right-wing commentator, once These failures are part of a broader col- They backed the North American bid said that “soccer is like the metric system, lapse ofVenezuela’s health system, caused over the Moroccan one by a margin of which liberals also adore because it’s by the socialist regime’s ruinous policies, two to one. United’s infrastructure is European.” The United States and Cana- which have led to shortages, economic de- mostly built. It promised FIFA $11bn in da both failedto qualify forthis year’s pression and hyperinflation. In 2017, the profit, twice that offered by its rival. World Cup, which is due to start in Russia last time the health ministry published United’s main handicap was the on June14th. But both nationalists and data on disease levels, it reported that in United States’ divisive president, Donald globalists will surely be cheering in 2026. the previous year maternal mortality rose Trump. United officials quietly pointed The United States’ 250th birthday will fall by 66%, infant mortality jumped by 30% out that he will leave office by 2025 at the during the World Cup. Perhaps the final and the numberofmalaria cases increased latest. Its closing presentation featured a will be played on the Fourth ofJuly. by 76%. The economy has since worsened. So, no doubt, has Venezuelans’ health. 1 44 The Americas The Economist June 16th 2018

2 When they flee, they can bring infec- Chile of a coastal mountain range and strong tions with them. An estimated 1.5m have winds. Earlier attempts to turn the mist left in the past four years, many of them Making money into usable water failed. In 1990 fog nets at settling in neighbouring Colombia and Chungungo, a fishing village north of Los Brazil. They are less likely to use health ser- from mist Tomes, captured 8,000 litres a day. Villag- vices in their new countries, creating dis- ers argued about how to share responsibil- ease blind spots that make it harder to con- ity formaintaining the atrapanieblas. Climate change, which is expected to tain outbreaks. Venezuela’s measles COQUIMBO outbreak has now spread to Brazil, Colom- decrease rainfall in the region, has spurred The fog-catchers ofCoquimbo bia and Ecuador, which have an estimated a new quest forunconventional sources of 1,033 cases between them. All of the 798 N THE school playground in Los Tomes a water. The projectatLosTomesispart ofan cases under investigation in Brazil are in Ilone child, José Ossandón, plays with his attempt to revive fog capture by encourag- the two states that border Venezuela; in emboque, a ball-and-cup game. The eight- ing better governance. A government de- one of them 69% of the people with mea- year-old is the school’s only pupil. His velopment fund has put up cash. A team sles were Venezuelans. teacher, Nilda Jimena Gallardo, herself a from the Catholic University of the North Transmission would be harder if the re- former pupil, says that enrolment has (UCN) sought out agricultural co-opera- gion’s health services were stronger. This dropped from 65 when she started teach- tives whose members have shown that week Paraguay set an example by becoming 43 years ago. Drought has driven fam- they can work together. “The question is ing the first country in the Americas to ilies away,she says. “Only the old remain.” not whether the fog collectors work but eliminate malaria since Cuba in 1973. But Los Tomes is an agricultural co-opera- who’s going to provide and maintain there are reasons to worry about other tive, one of178in Chile’sCoquimbo region. them,” says Daniela Henríquez, a sociolo- countries, even Brazil, which haslong been Nineteen comuneros try to grow wheat gist who leads the UCN team. a regional role model, especially in the and raise sheep and goats on 2,800 hect- At Majada Blanca, a goat-herding com- area of vaccination. The government of ares (7,000acres) ofsemi-arid scrubland. A munity north of Los Tomes, three 150- President Michel Temer has frozen most decade-longdroughthasmade thatharder. square-metre fogcatchersfeed a plantation federal spending in real terms until 2036 to Hilltop springs where the animals once of young olive trees, a splash of green in reduce a massive budget deficit. This drank have dried up. As herds shrank and the brown scrub. When the trees mature comes on top of cuts by previous adminis- yields fell, farmers’ children moved away they will produce 750 litres oforganic olive trations that reduced spending on health to take jobs in cities or at copper mines. oil a year, which the comuneros will be as a share of the budget from 10% to 7.7%. Hope for Los Tomes comes in the form able to sell for about $12,000. They reckon “Hospitals don’t have money to run any- ofthree 60-square-metre (646-square-foot) the water source will be a big selling point. more,” says Jorge Kalil, a professor of clini- nets stretched between poles on a ridge “We’ll be pioneers in the production of cal immunology at the University of São above the community.These atrapanieblas qualityolive oil made with fogwater,” says Paulo and a former director of the Butan- capture droplets from the fog that rolls in one of them, Ricardo Álvarez. A privately tan Institute, which produces vaccines. from the sea 4km (2.5 miles) away. They owned brewery in Peña Blanca was quick Public-health campaigns have not been trickle down to a pipe, which channels the to spot fog water’s marketing appeal. It is spared, says Ligia Bahia, a professor at the water to two troughs at the foot of the the main ingredient of its artisanal beer, Federal University of Rio de Janeiro (UFRJ) ridge, from which livestockdrink. The ban- called Atrapaniebla. who also works with Fundação Oswaldo ner-like nets can harvest 650 litres (140 gal- It makes a profit, but most fog-harvest- Cruz (Fiocruz), Brazil’s other vaccine pro- lons) of water a day. “We’re content: it’s ing projects require subsidies in their early ducer. Fiocruz backed research that led to produced the resultswe wanted,” saysJosé stages. The development fund paid 5.6m the discovery of Chagas disease, an insect- Ossandón, the child’s father and the presi- pesos apiece to put up the structures at Ma- borne illness, the eradication of smallpox dent ofthe co-operative. jada Blanca; when the nets wear out, the from the Americas and the containment of Chile has been investigatingfogcapture villagers will have to replace them at a cost the outbreakofthe Zika virus in 2015-16. since the 1950s. The dense fog that arises of 100,000 pesos each. Coquimbo has This year Brazil had its worst outbreak from the Humboldt current, called the ca- more than 40,000 hectares of land with of yellow fever since the 1940s; 237 people manchaca, can be harvested with the help the right conditions for putting up fog- have died. The virus appeared in areas catchers. If it were fully exploited, the re- where it had never been, which made it gion could harvest 1,400 litres a second, hard to delivervaccines. Scientists say they enough to supply all its drinking water. could have anticipated the outbreakif they That might lure back educated young had had more resources. The monkeysthat people from the cities. A chance to develop harbour yellow fever “were dying like flies tourism nearthe Fray Jorge national park, a in the forest reservations before the out- remnantoftemperate rainforestwhich has break”, says Pedro Lagerblad de Oliveira, survived thanks to its own natural fog-col- the lead researcherofthe Institute of Medi- lection mechanism, brought Salvador Ve- cal Biochemistry at UFRJ. Even after the lásquez to his birthplace of Peral Ojo de outbreak, “there was not a single public Agua. Enrolment in the school has call” offering grants for research in yellow dropped from around 20 when he was a fever, he says. pupil to five. The village has teamed up Scientists suspect the virus may be able with an agricultural co-operative to put up to jump from mosquitos prevalent in for- man-made fog collectors, which water a ested areas to a type that is common in cit- semi-arid conservation area. It offers tours, ies. That could spread the disease to more cabins and a campsite. Stands selling people. Without government-backed re- handicrafts line the road. “Roots, the land search on that risk, “we simply don’t and the desire to start this brought me know”, says Dr Lagerblad. Latin America back,” says Mr Velásquez. If parched Co- cannot afford to skimp on disease preven- quimbo is to catch more people, it will tion, as Venezuela has discovered. 7 Also available as a beer need more fog-catchers. 7 Asia The Economist June 16th 2018 45

Also in this section 46 Cricket in Afghanistan 46 Pakistan’s unravelling economy 47 Elections in South Korea 48 Banyan: Squeezing Taiwan

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

Development in India And what if they then compared these numbers and adopted policies based on Infant nutrition v debt relief which projects promised the biggest bang forthe buck? This, in essence, is the approach that the governments of two of India’s 36 states and territories are now considering. The DELHI model being used in Andhra Pradesh and Rajasthan, with funding from the Tata Several states are experimenting with a new way ofsetting priorities Trusts, a charity, was developed by a Dan- N A country as big and poor as India, the 2005 and 2007 in Sitapur, a district in the ish economist, Bjorn Lomborg, and tested Iscale ofhuman need can seem daunting. state of Uttar Pradesh, 100% of the money in countries such as Haiti and Bangladesh. Yet the immensity of the mountain is not was stolen. Leakage from such pro- Over the past year Mr Lomborg’s team has the sole problem. Just as tricky is finding grammes is now reckoned to have fallen to consulted hundreds of experts and inter- the best angle of approach. Alas, the vote- around 30%, and in some statesto less than ested groups, picked some 79 policies for hungry politicians, stodgy bureaucrats, 10%. MrModi’s strong personal backing for consideration and commissioned dozens dreamy professors and opportunistic mid- social programmes has ensured impres- of economists to analyse them. If the pilot dlemen who often end up steering policy sive progress for many, such as a national schemes work well, Tata Trusts would like do not always succeed in making the most campaign to eradicate “open defecation”. to extend the process across the country. ofscarce resources. But what if, instead of promoting fa- Take the town of Panipat in Haryana, a voured schemes, Indian governments in- A game oftag state that abuts the national capital, Delhi. stead challenged experts to propose the In some respects the results from Raja- Last year auditors from the central govern- cleverest interventions they could think sthan are predictable. Yes, it does pay in the ment found that it had dedicated 60% ofits of? What ifthey then got economists to cal- long run to improve infrastructure, though budget from Beti Bachao, a national culate, as objectively and scientifically as the predicted payback of 1.2 rupees for ev- scheme meant to correct gender imbal- possible, their likely cost-benefit ratios? ery rupee spent on urban sewage treat- ances by fostering and educating girls, to ment does not look especially compelling. erecting a “themed gate” at the entrance to No, the hugelyexpensive loan waivers that the town that proclaims Panipat’s bold TB or not TB several Indian states have recently offered commitment to this worthy goal. Such India, Rajasthan, estimated benefits angry farmers are not a good idea, yielding of different projects*, rupees wasteful boasting is not unique. Since to- benefitsoflessthan one rupee forevery ru- day’s national government took office in Project Per rupee spent pee spent (see chart). 2014 it has, by official count, spent some Engaging private-sector care for TB 179.4 Some potential returns are astonishing, $643m (twice what the previous one did) E-markets for farmers 65.0 however. According to a paper that was on publicising its own programmes and presented by Nimalan Arinaminpathy, an Training mothers in nutrition and hygiene 43.0 achievements in TV spots, billboards and epidemiologist at Imperial College, Lon- 26.0 full-page newspaper ads that typically fea- Digitisation of land records don, clever interventions to combat tuber- ture the smiling image of the prime minis- Prevention of cardiovascular disease 23.0 culosis (TB), a disease that kills 30,000 peo- ter, Narendra Modi. Extra food for poor mothers and children 7. 0 ple a year in Rajasthan alone, could bring a In other respects, however, Mr Modi’s Expanding the rural ambulance network 3.3 return of up to 179 rupees for every rupee government has worked hard to put public Supporting startup incubators 1.8 of government spending. This is not be- money to better use. A decade ago a gov- Cervical cancer screening and treatment 1.4 cause India makes no efforts to deal with TB ernment survey calculated that only16% of Farm-loan waivers 0.8 . The trouble is that the government’s funding for a national food-distribution hitherto highly successful anti-tuberculo- programme actually reached the intended Source: Copenhagen *Over varied sis campaign, the world’s largest such ef- Consensus time periods beneficiaries. Police found that between fort, is struggling to reach the country’s1 46 Asia The Economist June 16th 2018

2 poorest and most vulnerable. Arinaminpathy’s numbers are not fantasy; simply providing poor mothers and chil- The rate of new infections could be cut they are backed by robust statistics and dren with extra food. Noting that nearly drastically by enlisting private village doc- match similar findings in Bangladesh. In- three-quarters of all civil cases in Raja- tors and chemists, using better diagnostics dia’s government has, in fact, already be- sthan’s courts have to do with land dis- and seeking out cases in places where they gun to push its TB programme in the direc- putes, another paper calculated that over a are likely to occur rather than waiting for tion he has suggested. 50-year period, the return from fully dig- them to be reported. The biggest savings Other proposals with big payoffs in- itisingland records could be 26 to one—and would come from a steep drop in future clude computer-assisted learning, cheap this in a state often praised for its efforts to costs for treating patients with multi-drug- treatment of non-communicable diseases improve the property register. resistant forms of the disease, a group that and educatingmotherson hygiene and nu- In Jaipur, the capital ofRajasthan, econ- makesuponly4%ofTB patients but ac- trition. One paper suggests this last policy omists and officials at an event explaining counts for40% ofthe government’s bill. Mr could be six times more beneficial than Mr Lomborg’s findings were not universal- ly enthusiastic. “There isnothingnewhere, except that we have tagged everything Cricket in Afghanistan with a number, even though we may be comparing apples and oranges,” sniffed an Khyber pastime elderly economist, who nonetheless thought the exercise useful. One cynical academic averred that politicians will al- Afghans love cricket. Even the Taliban must play along ways opt for showy handouts rather than HEN they win, the skies ring with ghans, including most ofthe current unsexy long-term solutions, however inef- Wjoyful gunfire. Afghanistan’s cricket team, discovered it while living as refu- ficient that may be. A state official, perhaps team is wildly popular. They are mobbed gees in Pakistan in the1980s and1990s, mindful of approaching elections, blithely in the street and featured in endless ads. and brought their passion backhome declared that all this fancy research simply After one victory,staffat a European when they returned. The national team proved that the state’s government was al- embassy in Kabul mistookthe celebra- first gained recognition in 2008, rising ready doing everything right. tions foran attackon their compound. from lowly Division 5 to the cusp of Mr Lomborg himself appeared unfazed On June14th Afghanistan became the qualification forthe World Cup in 2011. by the sniping and politicking. “We’re not 12th country to play test cricket, taking on More success followed, including qual- trying to change the world,” he said. “It’s India in Bangalore. Test matches, the ification for subsequent World Cups and enough just to nudge the conversation to- game’s oldest format, last for up to five victories over test-playing opponents. wards the rational end ofthe spectrum.” 7 days and can be played only by an elite It is hard to earn a living as a cricketer club ofnations selected by the Interna- in Afghanistan, so most local stars play in tional Cricket Council. Afghanistan’s richer foreign leagues. Rashid Khan, a Pakistan’s economy ascent from cricketing obscurity to “test 19-year-old bowler, received $1.4m to play status” is a rare source ofnational pride in this year’s edition ofthe Indian Pre- In need of in a country torn apart by conflict. Its mier League (IPL), where he dazzled progress is all the more remarkable given television viewers across the world. Mr re-stitching that its team cannot play at home. Other Khan’s IPL salary is 2,500 times Afghani- sides refuse to visit Afghanistan for fear stan’s GDP per person, so his example ofbeing blown up. So Afghans have to inspires many.Dozens ofnew cricket To stave offa currency crisis, will play their “home” matches in India. academies have opened around the Pakistan turn to the IMF, China orboth? Until recently,cricket was virtually country to cater to the growing demand. unknown in Afghanistan. Many Af- Youmight expect the Taliban to dis- N 1918 a British army officer brought his approve ofcricket, as they do ofmost Ifrayed football to be repaired at a factory kinds offun, from kite-flying to music to in Sialkot, a city in what is now Pakistan. hobnobbing with the opposite sex. Yet, Although more accustomed to makingten- although the bearded zealots are wary of nis racquets and cricket bats, a local artisan football, they have a soft spot for the was nonetheless able to restitch the ball sound ofwillow on leather, even found- and, even better, replicate it, according to ing a national team in 2000. It seems they the Sialkot Chamber of Commerce and In- were reassured by the game’s modest dustry. Overthe next100 years, the city has attire oflong trousers and long sleeves. prospered as a manufacturing hub, mak- As cricket’s popularity has surged, the ing surgical, leather and sporting goods. It Taliban have found it politically expedi- exported over 920 tonnes of sports balls in ent to ride on the team’s coat-tails. They the first three months of 2018, according to have, forexample, avoided killing people Sialkot Dry Port Trust. It is even the source at cricket matches, allowing the game to of the (stitch-less) Adidas footballs that be played in relative peace. They have will be trapped, dribbled and passed in the even been known to contact Afghan World Cup beginning this week. cricket officials to wish the national team Despite this sporting contribution, well before big games. however, Pakistan’s exports as a whole Ofcourse, this indulgence does not have lagged behind the country’s aspira- extend to women’s cricket, which they tions. Its import bill, including onerous deem an abomination. A short-lived payments for oil, has expanded uncom- national women’s team was disbanded fortably, raising its current-account deficit in 2014, amid Taliban threats. Some preju- to 5.3% of GDP this fiscal year (which ends Willow, leather and grit dices cannot simply be batted away. this month), according to Standard Char- tered, a bank. That, in turn, has put heavy1 The Economist June 16th 2018 Asia 47

loans on Chinese goods. Eventually, those he can override the ingrained regional di- Punctured loans will need to be repaid, of course, vide in South Korean politics. Busan and Pakistan, $bn which could pose problems if the CPEC in- Ulsan, citiesin the conservative south-east, Central-bank foreign-exchange liabilities vestments earn disappointing returns. But elected mayors from Minjoo for the first Forward/swaps position eventually is not now. time. The unrelenting parliamentary ob- Central-bank foreign-exchange reserves The problems of the present originate struction of Liberty Korea, the main oppo- 20 elsewhere. As well as higher energy costs, Net international reserves sition party, may have alienated some of 15 they reflect loose fiscal policy and rapidly its supporters. It has spent the past yeartor- growing domestic credit. Fixing these will pedoing Mr Moon’s plans, most notably 10 require some combination of lower gov- (and ironically) derailing legislation to 5 + ernment spending, higher interest rates curb the powers ofthe president. It also de- 0 and a cheaper currency. Although China nounced MrMoon’spolicyofdetente with – 5 will not want to see Pakistan go bust, it will North Korea, accusing him of being a com- not want to dictate its macroeconomic munist sell-out. Hong Jun-pyo, the party’s 10 policies either. That is the IMF’s job. China, chairman, stormed out of its post-election 15 then, is more likely to supplement an IMF gathering on June 13th and later hinted at 2007 08 09 10 11 12 13 14 15 16 17 18 programme than supplant one. his resignation with a post on his Facebook Source: Standard Chartered Politicianswill lamentPakistan’slossof page that read, “The buck stops here.” economic independence, but similar ob- It was especially unfortunate for the op- 2 pressure on the rupee. It stumbled by jections have not prevailed in the past. Be- position that the vote came the day after about 5% during trading on June 11th, the tween 2001and 2013Pakistan turned to the Donald Trump, America’s president, met third big drop since December. IMF three times. In fact, there were as Kim Jong Un, North Korea’s dictator, for a This was described as a deliberate “de- many IMF bail-outs of the country over summit in Singapore (see Briefing). Mr valuation” byalmosteveryone butthe cen- that period as there were World Cups. Ap- Moon played no small part in bringing the tral bank, which maintains that the curren- parently,it’s time foranother one. 7 two sides together, and has himselfmet Mr cy is left largely to market forces, even as it Kim twice. These diplomatic overtures, in has squandered its foreign-exchange return, have succeeded in dispelling the con- serves (down from $19bn in 2016 to $10bn South Korean politics frontational atmosphere on the peninsula, this month) in an effort to prop it up. This to the reliefofmany South Koreans. fear of falling probably reflected political Rising Moon Television networks covering the elec- pressure from the outgoing government, tions did their best to compete with the which saw a strong rupee as a sign of eco- drama ofthe Trump-Kim summit. One sta- nomic prowess. It completed its term at the tion used a Harry Potter theme to illustrate end of May and will contest a general elec- the contest, depicting the candidates as tion on July 25th. In the meantime, the wizards complete with cloaks and wands. The ruling partywins a landslide country is in the hands of a technocratic Another portrayed them as Jedis and kit- victoryin local elections “caretaker government”. It is a good mo- ted them out with lightsabers to fight it out. ment, then, to let the currency slip. OONJAE-IN, South Korea’spresident, Minjoo’s resounding electoral success It may slip further. The oil price remains Mtookadvantage ofhis country’s early- strengthens Mr Moon’s progressive man- painfully high and the central bank’s fire- voting system to cast an advance ballot in date. In the National Assembly, left-wing power is even more limited than the head- provincial and municipal elections. When parties and independents now hold more line data suggest: ifits hard-currency liabil- the day of the vote came, on June 13th, he than half of the seats, which may allow ities are deducted from its hard-currency went for a hike. He ambled up Bugaksan him to push laws through. South Koreans assets, its “net” foreign-exchange reserves mountain in shorts, hiking shoes and a are broadly supportive of his efforts to are now negative, points out Bilal Khan of short-sleeved check shirt, his dog Maru tame conglomerates, root out corruption Standard Chartered (see chart). padding along obediently by his side. and create a more equitable society by im- When Pakistan has previously found it- Mr Moon’s relaxed air was entirely jus- proving health care, pensions and labour selfin thispredicament, ithasturned to the tified. A few hours later exit polls indicated conditions. But the mood could easily sour IMF for help. The country’s policymakers that his left-leaning Minjoo Party had tri- iftalks with the North go wrong. 7 are adamant they will not do so again. umphed in elections that were widely Many Pakistanis are expecting help from seen as a verdict on his first year in office an alternative source instead: China. They (he became president after a snap election believe their eastern ally is bound to step in May 2017).The party won all but three of in, if only because it is partly responsible the country’s 17 races for mayor or gover- for their plight. According to this view, the nor—an unprecedented landslide. It also deteriorating balance of payments reflects snagged11outof12 seatsin the National As- heavy spending on imported materials for sembly that had been up for grabs in by- the China-Pakistan Economic Corridor elections, strengtheningMrMoon’sminor- (CPEC), a string of ambitious transport and ity government, although it is still well energy projects that form part of China’s short of a majority. At 60%, turnout was wider Belt and Road Initiative. higher than at any time since the first prop- This argument probably overstates erly democratic local elections were held both China’s culpability and its generosity. in1995, when 68% ofthe electorate went to China is not chiefly responsible for the de- the polls. According to one survey, Mr cline in Pakistan’s dollar reserves, because Moon’s approval rating, which had al- the higher import spending entailed by the ready been hovering in the mid-70s, hit CPEC has been accompanied by greater 80% on the day ofthe vote. lending from Beijing. Toput it crudely,Chi- The result is especially striking because na has invited Pakistan to spend Chinese it suggests that Mr Moon is so popular that Moon is the star 48 Asia The Economist June 16th 2018 Banyan Squeeze of access

As China tries to tighten the vice, Taiwan seeks to expand its horizons mere assistant secretary of state (and also the spouse of a pro-Tai- wan congressman). During the proceedings, America’s de facto ambassador, Kin Moy, bowed three times before a table laden with fruit and flowers and then lit incense. “I offeryou this [building], a tangible symbol that the United States is here to stay,” Mr Moy told President Tsai Ing-wen and assembled guests. The AIT chairman, James Moriarty, described democratic Taiwan as a “model for the Indo-Pacific region” and promised continued American support for “Taiwan’s ability to defend itself”. Mr Trump has approved $1.4bn in arms sales. China no doubt sees the building’s 99-year lease as yet another provocation. Xi Jinping, who recently awarded himself an un- limited lease on China’s presidency, insists that Taiwan’s return to the motherland cannot wait for ever. But whether China will pick a fight over Taiwan now is another matter. It is not clear that Mr Trump cares for the island, except as a pawn in trade negotiations with China. He is said to have criticised State Department speeches in support of Taiwan as complicating his dealings with Mr Xi. And he did not send Mr Bolton. Bonnie Glaser of the Cen- tre for Strategic and International Studies, an American think- tank, reckons that China is getting less anxious. IVEN all the hoopla of President Donald Trump’s summit Pressure only grows on Ms Tsai, however. China has put Tai- Gwith Kim JongUn, North Korea’s dictator, the openingon the wan in the doghouse since she came to office two years ago. same dayofa newAmerican not-quite-an-embassyin Taipei was Though she has gone out of her way not to antagonise, she will never going to hog the headlines. Yet to judge by how much Chi- not acknowledge that Taiwan is part ofChina. And she has failed nese officialshave harangued American diplomatsand congress- to condemn her prime minister, William Lai Ching-te, who has men about who was going to attend the ceremony in Taiwan’s professed to be a “Taiwan independence worker”. capital, China appears to care every bit as much and perhaps Official relations across the Taiwan Strait are frozen. China de- more about America’s actions in Taiwan than about geopolitical nies Taiwan a seat at international forums such as the World rivalry on the Korean peninsula. Health Organisation. It bullies international airlines and hotel Since 1979, when America broke diplomaticrelationswith Tai- groups into referring to the country as a mere region of China. In wan in order to open them with China, its “one-China policy” April it put on the biggest naval exercises ever carried out in the has been the bedrock of dealings with China. This means never South China Sea, followed by live-fire drills in the Taiwan Strait. referring to Taiwan as a country and always “acknowledging” Chinese bombers circle the island. Meanwhile, diplomatic allies that both China and Taiwan hold to the idea that there is but one peel off. In May the Dominican Republic and Burkina Faso China, even if the two sides disagree over the definition. The switched sides, leaving just18 countries that recognise Taiwan. fudge has allowed America to enjoy close unofficial relations with Taiwan. China rarelyappeared bothered byAmerica’sunof- Tsai’s matters ficial representation in Taipei, known asthe American Institute in And yet. The more China closes Taiwan’s diplomatic space, the Taiwan (AIT). Fora longtime it was housed in a dingy former mil- more Ms Tsai’s creative use of unofficial diplomacy grows. Her itary building in an unprepossessing part ofthe city. “New Southbound Policy” attempts to forge deeper ties with The newbuildingunveiled on June 12th, in contrast, isa design South-East Asian neighbours and beyond, including those icon in the fancy district of Neihu. It cost $250m. It looks, smells caught up in disputes with China over territorial claims in the and feels just like a formal embassy. Most of its nearly 500 staff South China Sea. (Taiwan also claims much of the sea, but is far are American diplomats, albeit on temporary leave from the less pushy about it.) State Department. It issues visas. The Trump administration has The scope of the policy is broad, ranging from promoting tou- considered sending marines to guard it. rism to easing the plight ofmigrant workers to investing in manu- To China, which wants everyone to act as ifTaiwan belongs to facturing (Taiwan ranks well ahead of China in investment in it, the new buildingis provocative. So, too, is a piece oflegislation, Vietnam, forexample). The emphasis on the Indo-Pacificregion is the Taiwan Travel Act, passed unanimously by Congress and bearing fruit. Merriden Varrall and Charlie Lyons Jones of the signed in March by Mr Trump, which encourages exchanges be- LowyInstitute, a think-tankin Sydney, saythatAustralia’sinterest tween American and Taiwanese officials. China has stressed that in the New Southbound Policy contrasts sharply with its wait- a high-level official at the opening would jeopardise talks on and-see approach to China’s Belt and Road Initiative. Japan has trade as well as co-operation over North Korea. China’s night- signed a memorandum on search-and-rescue operations with mare was the attendance of Mr Trump’s national security advis- Taiwan, bolstering its maritime security; intelligence-sharing er, John Bolton. He has called for America to “revisit” its one-- may be formalised next. And Taiwanese officials are increasingly China policy. being invited to regional dialogues on the Indo-Pacific organised In the event, the administration kept the opening low-key, if by think-tanks. Taiwan does not enjoy being chastised by China. only so as not to distract attention from the Singapore summit. But, as Ms Varrall and Mr Jones suggest, China also does not real- The most senior American official present was Marie Royce, a ise quite how counter-productive its approach is. 7 China The Economist June 16th 2018 49

Also in this section 50 Tough justice in Hong Kong

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Propaganda step up its efforts to seize “discourse power” from the West. According to the South Nation shall preach Xi unto nation China Morning Post, a newspaper in Hong Kong, it allocated 45bn yuan ($6.6bn) for the purpose. The money has been poured into expanding “flagship” foreign-language media, in print and online as well as on air. In 2009 China Daily, then the country’sonlyEnglish-language daily,launched China is spending billions on beefing up its foreign-language news media an edition tailored for the American mar- NTHE 26th floorofan iconicglasssky- over” average for journalists in the city,the ket. In the same year Global Times,atab- Oscraper, nicknamed the “Trousers”, in news site said, quoting someone head- loid owned by the party’s main mouth- Beijing’s main business district, half a doz- hunted for a job. (CGTN’s choice of name piece, People’s Daily, began publishing its en casually dressed 20-somethings gather may help, too: when they were called own English-language daily, offering in a rainbow-coloured lounge, chatting CCTV,China’s overseas television opera- somewhat racier fare than that of China away on ergonomic chairs. The office has tions suffered from association with sur- Daily, while still avoiding criticism of the the vibe ofa hip tech startup. In fact, itis the veillance equipment.) party.(Global Times hasbeen producingan headquarters of the country’s foreign-lan- To ensure its grip on the message put American edition since 2013, with the help guage television service, which rebranded out by its domestic and international ofits own printing-press there.) itself in 2016 as China Global Television broadcastingservices, includingCGTN, the Network (CGTN). The young staff are Chi- government consolidated them in March All China, all the time nese who have studied abroad and are into a single media group known as Voice Over the past decade, Xinhua, China’s proficient in one of the network’s five lan- of China (its name in English perhaps con- main news agency, which publishes in nu- guages—English, French, Spanish, Arabic sciously echoing that ofthe American gov- merous languages, has set up more foreign and Russian. CGTN is at the forefront of ernment’s broadcasting service, Voice of bureaus than any rival, boosting its tally to China’s increasingly vigorous and lavishly America). The reorganisation allows 180 from just over110. In 2010 it set up a glo- funded efforts to spread its message CGTN and the other services to retain their bal television channel in English, called abroad. Xi Jinping, the president, has told separate identitiesundera combined man- CNC World. China Radio International, the station to “tell China stories well”. agement controlled by the Communist part of Voice of China, now broadcasts in CGTN—a consolidation of the foreign- Party’s Publicity Department, a powerful 65 languages, up from 43 a decade ago. language operations of CCTV, the state agencyin charge ofpropaganda and media These outfits have also been building up broadcaster—is secretive about its budget censorship. Voice of China’s missions in- their online presence in English and other but open about its ambitions to compete clude “overall planning of important pro- languages, making extensive use of social with global broadcasters such as CNN and pagandareports”.Writinginastate-owned media that are blocked in China such as the BBC. In November it plans to open a newspaper, Jia Wenshan of Renmin Uni- Facebook, Instagram and Twitter. In 2012 new broadcasting centre in Chiswick, a versity in Beijing said the group would try China Tibet Online, an official website, be- wealthy suburb of London. It will comple- to “combat fake news, give the lie to the gan publishing in French and German. ment the two others the station inherited ‘China threat’ propaganda meme and fight Results have been mixed. In 2009, from CCTV in Washington and Nairobi, the Western media’s hegemony”. when China began beefing up its foreign- each of which has around 150 reporters. Chinese officials have long complained language news media, Pew Research Cen-1 BuzzFeed News, citing an e-mail sent by a that Western media dominate global dis- local recruiter, reported this week that the course and harbour prejudice against Chi- Award: On June 13th Rosie Blau, our former China new centre is planning to hire more than na. A decade ago, hit by a barrage of critical correspondent who is now editor of our culture and lifestyle magazine, 1843, won an award for excellence 350 London-based journalists over the coverage in the wake of anti-Chinese un- from the Society of Publishers in Asia for her reporting next 18 months. Salaries on offer are “well rest in Tibet, the government decided to in this section on Chinese culture. 50 China The Economist June 16th 2018

2 tre asked people in 38 countries about their China by censors. Officials call their com- when rioting broke out following officials’ views of China. The median rating was mon practice of giving foreign-language efforts to clear away food stalls selling tra- 50%. By 2017it had dropped slightly,to 47%. media such leeway “neijin waisong”: strict ditional snacks(the violence wasjoined by But respondents in developing countries domestically, relaxed externally. They young people who were enraged by the were more positive than those in rich ones. point to Russia Today as a role model. deployment of large numbers of police). A survey in 2016 of youth from 18 African Despite his calls for innovation, how- On June 11th a well-known activist, Ed- countries found that, of those who had ever, Mr Xi has also been talking up the ward Leung, was jailed under the Public watched CGTN, 63% had liked the channel need for news media to act as the party’s OrderOrdinance forsixyears forhis role in and only 13% had a negative view. More mouthpiece. China’s foreign-language me- the mayhem two years ago—the worst dis- than half said they agreed with CGTN’s dia have been payingheed. Fawningcover- order on the streets of Hong Kong since the “ideological agenda”. In countries where age of Mr Xi is a staple of their output. On Cultural Revolution. A lesser-known co- media are already muzzled, people may be YouTube, more than 1.6m views of CGTN’s defendant received a seven-year term. The lessjudgmental aboutstate-controlled out- video “A side to Xi Jinping you probably two sentences were the longest meted out lets run by foreigners, says Hugo de Burgh haven’t seen before”, uploaded in January, to any of the more than 100 people who ofthe University ofWestminster. suggest it may have learned a trick about have been prosecuted in connection with For CGTN, the headline numbers look the packaging offlattery. 7 the episodes of2014 and 2016. good. It has 62m followers on Facebook, as Mr Leung, who is 27, enjoys a degree of many as the BBC and Al Jazeera combined. public sympathy. Soon after the riot, with Two-thirds of CGTN’s online traffic, how- Activism in Hong Kong charges relating to it hanging over him, the ever, comes from China itself—mainly then-student of philosophy at the Univer- from people who want to learn English. The riot act sity ofHongKongstood in a by-election for CGTN does not release audience numbers, the Legislative Council, or Legco. He won but analysts believe that few people out- 15% of the vote—an achievement that side China have heard of, let alone watch, alarmed the government in Beijing be- the channel. In America’s biggest cities, HONG KONG cause it suggested some public approval more people watch the online videos of for the support he had given to the idea of A lengthy jail term sends a message to NTDTV, a channel founded by Falun Gong, Hong Kong’s independence from China. the territory’s rebellious youth a spiritual movement that is outlawed in Later that year he was barred from stand- China, than those of CGTN, reckons Sarah N 1967 Mao’s tumultuous Cultural Revo- ing in another Legco election forhaving ex- Cook of Freedom House, a think-tank. Vid- Ilution washed into Hong Kong, stirring pressed such views. eos posted on CGTN’s YouTube page rarely anti-colonial riotsand bombings. The terri- There is no doubt that Mr Leung acted attract more than a few hundred views. tory’s British rulers decided to restore or- badly: he pleaded guilty to hitting a police ThoseontheBBC’s often exceed 50,000. der by imposing tougher legislation aimed officerduringthe riot, forwhich he wasgiv- Circulation figures for China’s foreign- at preventing crowds from assembling. A en a concurrent sentence of one year. But language print media are similarly dodgy. new Public Order Ordinance required per- police arrested him within minutes of his An audit in 2014 found that 94% of copies mission for a public gathering of three or assault ofthe officer, longbefore the unrest of China Daily’s weekly European edition, more people. If an illegal assembly result- descended into what was far more clearly which ispriced at£2 ($2.65), were beinggiv- ed in a breach of the peace, each partici- a riot, involving brick-throwing and lighten away. If the newspaper has made in- pant could be convicted ofrioting. ing of fires. The jury acquitted Mr Leung of roads in the West it is largely by paying That sweeping law has been used by incitement. Many local lawyers and politi- Western newspapers to distribute its con- the post-colonial government to deter fur- cians have accused the court of sentencing tent as free inserts. In 2016 People’s Daily ther outbreaks of unrest such as occurred him too harshly. reached a deal whereby Britain’s Daily in 2014 when pro-democracy protesters oc- Among those who have waded into de- Mail would run up to 40 ofits stories every cupied busy streets for weeks, and in 2016 bate about the case is Chris Patten, Hong weekonline. (People’s Daily, in turn, would Kong’s last colonial governor. In a state- run a similar number of stories from the ment, he noted that in the build-up to the Mail Online). Beijing Review,aweekly territory’s handover in 1997, his adminis- magazine in English, publishes articles in tration had revised the Public Order Ordi- the advertising pages of foreign publica- nance “because it was clear that the vague tions, including The Economist. The tactic is definitions in the legislation are open to used in broadcasting, too. In 2015Reuters, a abuse.” Many of those changes were re- news agency, found that China-friendly vised after China took over to make the news and other programmes made by CRI lawstricteragain. “Itisdisappointingto see were airingon atleast33 radio stationsin14 that the legislation is now being used polit- countries, including America, with no ac- ically to place extreme sentences” on knowledgment ofCRI’s involvement. democrats and other activists, he said. It is not for want of trying that China’s Hong Kong’s judiciary remains widely foreign-language media find it hard to admired for its independence. But the compete. Every now and then CGTN tries numbersofworriersare growing. “The dis- to make itself appear less of a mouthpiece cretion of prosecutions is ultimately held by covering sensitive social and political by a political appointee. There is no insula- topics that are off-limits to its domestic-fac- tion from that political process,” says Alvin ingcounterparts. In a recentepisode of“Di- Cheung of New York University, who has alogue”, a talk show on CGTN, the host worked as a barrister in Hong Kong. Carrie prodded his guests into talking about an Lam, Hong Kong’s chief executive, has online essay written by a disgruntled Bei- brushed aside suggestions of political in- jinger lamenting the “emptiness” of life in terference in this case. In a territory where the city—even though the once-viral piece anxieties about China’s hidden hand run had been scrubbed from the internet in A philosopher given time to think deep, her words will change few minds. 7 International The Economist June 16th 2018 51

they’ve done something wrong.” He adds: “In America if you steal state secrets they put you in the electric chair, don’t they?” At an election on June 24th, Mr Erdogan is expected to consolidate his power. De- spite double-digit inflation and a tottering currency (see Europe section), he is likely to win re-election (though his party may struggle). And his office will become much more powerful, thanks to a constitutional change he pushed through lastyear. As “executive” president, he will be able to issue decrees with the force of law and pack the judiciary with loyalists. Turkey exemplifies a dismal trend. The world has grown far more democratic since the second world war. In 1941 there were only a dozen democracies; by 2000 only eight states had never held a serious election. But since the financial crisis of 2007-08, democracy has regressed. Most watchdogs concur. The latest survey by Freedom House, an American think-tank, is called “Democracy in Crisis”. In 2017, for the 12th consecutive year, countries that suffered democratic setbacks out- numbered those that registered gains, it says (see chart1on next page). According to the Democracy Index from The Economist Intelligence Unit, a sister company of The Economist, 89 countries regressed in 2017; only 27 improved. The latest “Transforma- tion Index” from the Bertelsmann Founda- tion, another think-tank, which looks at emerging economies, finds that the “quality of democracy…has fallen to its lowest level in 12 years.” What these indices mea- Geopolitics sure is not simply democracy (ie, rule by the people), but liberal democracy (ie, with Democracy’s retreat a freely elected government that also respects individual and minority rights, the rule oflaw and independent institutions). This distinction is important. In “The People v Democracy”, Yascha Mounk of Harvard University stresses that liberalism BUDAPEST, DIYARBAKIR, KUALA LUMPUR, LUSAKA AND MANAGUA and democracy are separable. Voters often Afterdecades oftriumph, democracy is losing ground. Why? wantthingsthatare democraticbutnot lib- N A glass case at the Diyarbakir Bar Asso- tried to mount a coup, putting tanks in the eral, in the most basic sense, which has Iciation are a striped shirt, dark coat and streets, bombing parliament and nearly as- nothing to do with left- or right-wing poli- coiled belt. They belonged to the former sassinating the president, Recep Tayyip Er- cies. For example, they may elect a govern- chairman, Tahir Elci, a lawyer who was dogan. It was quickly scotched. Mr Erdo- ment that promises to censor speech they murdered in 2015 amid clashes between gan launched a purge. Over 200,000 dislike, or back a referendum that would the Turkish army and Kurdish separatists. people, mostly suspected members of the curtail the rights ofan unpopular minority. He was standing by the Four-Legged Mina- Gulen movement—the Islamist sect said to At the same time, plenty of liberal insti- ret, a 500-year-old landmark in the ancient have led the failed putsch—were jailed or tutions are undemocratic. Unelected city, callingforpeace. Someone shot him in sacked. Anyone could be arrested for hav- judges can often overrule elected politi- the head. No one knows who killed him. ing attended a Gulenist school, holding an cians, for example. Liberals see this as an The government blames Kurdish terrorists. account at a Gulen-owned bank, or even essential constraint on the government’s Many Kurds blame the government. After possessing $1 bills, which the government power. Even the people’s chosen represen- Elci’s death, the army pounded the rebel- says were a markofGulenism. tatives must be subject to the law. In a liber- held part of Diyarbakir to rubble. The de- Millions of Turks are now terrified of al democracy, power is dispersed. Politi- bris, including body parts, was heaped their president. However, plenty admire cians are not only accountable to voters onto trucks and dumped by a river. Locals him for protecting them from the Gulen- but also kept in line by feisty courts, jour- are scared to talkabout any ofthis. ists. Adem, an estate agent in Istanbul, con- nalists and pressure groups. A loyal oppo- Barely a decade ago, Turkey was a bud- gratulates Mr Erdogan for “cleaning away sition recognises the government as legiti- ding democracy and aspired to join the the enemies within”—echoing a govern- mate, but decries many of its actions and European Union. Now it is galloping to- ment slogan. He says, of the purge’s vic- seeks to replace it at the next election. A wards dictatorship. In 2016 army officers tims: “They’ve been arrested because clear boundary exists between the ruling 1 52 International The Economist June 16th 2018

2 party and the state. hefty minorities approved of non-demo- This system is now under siege. In cratic alternatives. A worrying 24% By the people 2 many countries, voters are picking leaders thought that military rule would be fine, “Would … be a good or bad way of governing our who do notrespectit, and graduallyunder- and 26% liked the idea of “a strong leader” country”, global median* mine it, creating what Viktor Orban, Hun- who “can make decisions without interfer- Good Bad Don’t know gary’s prime minister, proudly calls “illib- ence from parliament or the courts” (see 020406080100 eral democracy”. Eventually, when chart 2). In general, autocracy was more Representative enough checks and balances have been re- popular among the less educated. democracy moved, a would-be autocrat finds it easier With such large majorities favouring it, Direct democracy to neuter democracy itself, by shutting leaderscannotopenlyadmitthatthey plan down the opposition (as in Turkey) or neu- to abolish democracy. However, many Rule by experts tering the legislature (as in Venezuela, have grown adept at subverting its essence Rule by an unconstrained where the government staged a sham elec- while maintaining its outward appear- leader tion on May 20th). ance. The details vary from country to Rule by the military The mature democracies of the West country, but it is striking how much the are not yet in serious danger. Donald new autocrats have in common and how Source: Pew Research Centre *38 countries Trump may scorn liberal norms, but Amer- attentively they learn from each other. ica’s checks and balances are strong, and To oversimplify, a democracy typically cy is safe,” says Mr Mounkofa theory pop- will outlast him. The real threat is to less declines like this. First, a crisis occurs and ular with political scientists. mature democracies, where institutions voters back a charismatic leader who Picking the right enemies is crucial. Mi- are weaker and democratic habits less in- promises to save them. Second, this leader grants are good, because they cannot vote. grained. Nonetheless, what happens in the findsenemies. Hisaim, in the wordsof H.L. Mr Soros is even better, because he is rich, West affects these places. America once in- Mencken, a 20th-centuryAmerican wit, “is funds liberal causes and is, you know, Jew- spired subjugated people and sought to to keep the populace alarmed (and hence ish. He can be painted as all-powerful; but promote democracy. Itnowhasa president clamorous to be led to safety) by an end- because he is not, he cannot harm the who openly admires Vladimir Putin and less series ofhobgoblins, all ofthem imagi- demagogues who demonise him. claims a “special bond” with Kim Jong Un. nary.” Third, he nobblesindependentinsti- Stirring up ethnic hatred is incredibly Meanwhile, China supplies an alterna- tutions that might get in his way. Finally, he dangerous. So rabble-rousers often use tive model. Having grown much less dicta- changes the rules to make it harder for vot- dog-whistles. South Africa’s former presi- torial afterthe death ofMao Zedong, itis re- ers to dislodge him. During the first three dent, Jacob Zuma, denounced “white mo- concentrating power in one man, Xi stages, his country is still a democracy. At nopoly capital” rather than whites in gen- Jinping, whose term limits as president some point in the final stage, it ceases to be eral. Many leaders pick on small, have just been removed. Some would-be one. All fourstages are worth examining. commercially successful minorities. Zam- autocrats cite China as evidence that au- In Hungary, two shocks undermined bia’s late president, Michael Sata, won thoritarianism promotes economic faith in the old order. First came the finan- power after railing against Chinese bosses. growth—though what they often mean is cial crisis. Before it, many Hungarians took Criminalsmake ideal enemies, since no that they too want to be presidents for life. out absurdly risky foreign-currency mort- one likes them. Rodrigo Duterte won the Globally, public support for democracy gages. When the Hungarian forint crashed presidency of the Philippines in 2016 on a remains high. A Pew poll of 38 countries against the Swiss franc and they lost their promise to kill drug dealers. An estimated found that a median of 78% of people homes, they were furious. Fidesz, a party 12,000 extra-judicial slayings later, the agreed that a system where elected repre- that was once quite liberal but has become country is no saferbut his government has sentatives make laws was a good one. But dramatically less so, won an election in an approval rating ofaround 80%. 2010 by blaming the previous government Would-be autocrats need a positive and vowing to make borrowers whole. agenda, too. Often they pose as defenders How big is my backslide? 1 The second shock was the Syrian refu- ofan identity that voters hold dear, such as Decrease in democracy index score, 2008-18 gee crisis of 2015-16. Hardly any Syrians set- their nationality, culture or religion. Po- tled in Hungary, but thousands passed 35 30 25 20 15 10 5– 0 land’srulingparty, forexample, waxes lyri- through on the way to Germany, so Hun- cal about the country’s Catholic way of Turkey garians saw them on television. They gave life, and lavishes subsidies on big families, CAR Fidesz’s leader, Mr Orban, two handy ene- who are likely to be rural and religious. Mali mies: the Muslim hordes and the liberal Parties of the nationalist right have Burundi elite who wanted to let them in. learned from the left how to exploit identi- Bahrain Mr Orban built a fence that largely typolitics. Both sidestend to favour “group Mauritania stopped the flow of refugees. But still, he rights” over those of individuals. The Ethiopia continued to play up the threat. His gov- “Hungarian nation is not a simple sum of ernment ordered a poll asking voters what Venezuela individuals,” Mr Orban said in 2014, “but a they thought of a fictitious plan by George community that needs to be organised, Yemen Soros, a Hungarian-American billionaire, strengthened and developed.” Steve Ban- Hungary to bring1m Middle Eastern and African mi- non, Donald Trump’s nationalist guru, Nicaragua grants to Europe. A campaign poster calls him “a hero”. Azerbaijan showed Mr Soros grinning evilly and em- To remain in power, autocrats need to Tajikistan bracing opposition leaders holding wire nobble independent institutions. They do Honduras cutters. “They would remove the fence to- this gradually and quietly. The first target is Gabon gether” ran the slogan. On April 8th Mr Or- often the justice system. Poland’s ruling Dom. Rep. ban’s party was re-elected with a thump- party passed a law in December forcing ingmajority. In May MrSoros’s foundation Nauru two-fifths of judges into retirement. On closed its office in Budapest. “Hungary dis- May 11th Mr Duterte forced out the chief Russia proves the notion that when you reach an justice of the Philippines, who had object- Source: Freedom House income perhead of$14,000 yourdemocra- ed to his abuse ofmartial law. 1 The Economist June 16th 2018 International 53

2 The media must be nobbled, too. First, nents. Critical media find themselves un- rated “free” by Freedom House. Ofthose in an autocrat in waiting puts his pals in der new ownership, often that of Mr the cleanest 20, only Singapore and Hong charge ofthe public broadcasterand accus- Ortega’s family. Kong fail to qualify as free. es critical outlets of spreading lies. Rather None ofthischippingawayatdemocra- Autocracy and graft create a vicious cir- than banning independent media, as des- cy sparked unrest. It was only when Mr Or- cle. Power with few constraints enables pots might have done a generation ago, he tega tried to grab Nicaraguans’ pensions those who wield it, or their friends, to get slaps spurious fines or tax bills on their that they rioted. The ruling Sandinistas’ rich. The more they steal, the more incen- owners, forcing them to sell their business- mismanagement and grafthas leftthe pub- tive theyhave to rigthe system to remain in esto loyal tycoons. Thistechnique was per- lic-pension pot all but empty. Mr Ortega charge. If they lose power, they risk prose- fected by Mr Putin in Russia, and is now told workers to top it up. In response, tens cution, as Mr Zuma is discovering in South widely copied. In Turkey, the last big inde- of thousands took to the streets in April Africa. Thus, whenever an autocrat makes pendent media group was in March sold to and tore down hideous statues erected in a stirring speech about national pride, his a friend ofMr Erdogan. honour of Ms Murillo. The regime has real aim may be to deflect attention from Getting the security forces on side is es- clung to power only by shooting people. his own skulduggery. Mr Orban’s oppo- sential. Robert Mugabe, Zimbabwe’s for- Autocrats who plan to stay in power for nents would love to discuss why his mer president, took their loyalty for grant- ever need to indoctrinate children. “Most friends are now among the richest people ed and was thrown out. Other strongmen countries don’t have events from two in Hungary, orwhy there is a huge football are less complacent. To keep the men with years ago in their school history books. We stadium in his tiny hometown. But his guns happy, Venezuela’s president, Nicolás do,” says a Turkish liberal, aghast that Turks friends control the media, and would rath- Maduro, lets them loot the national food- as young as four are taught that their presi- er talkabout immigrants. distribution system. Abdel-Fattah al-Sisi, dent saved the nation from the Gulenists. Democrats can fight back. Five recent the president of Egypt, who won 92% of Venezuela’s Bolivarian University offers examples stand out. In Sri Lanka, the oppo- the vote in March, lets the police top up free tuition to students who submit to lec- sition united to beat a spendthrift, vicious their salaries by robbing civilians. tures blaming America forfood shortages. autocrat. In the Gambia, the threat of an in- With the courts, press and armed forces vasion by neighbouring countries forced a in his pocket, a strongman can set about Liberalism and its discontents strongman to accept that he had lost an neutering every other institution that Much has been said about the failures of election. In South Africa, an elected leader counts. He can sideline parliament, redraw liberal democracies. Although they are who subverted institutions and let cronies the electoral map and bar serious oppo- typically rich and peaceful, many of their loot with impunity was tossed out by his nents from politics. citizens are disgruntled. Globalisation and own party in January. In Armenia, an auto- Whatever ideology they profess, auto- technology have made them fear for their crat was ousted in April by mass protests. crats are often opportunistic. President jobs. The culture wars ensure that more or And in Malaysia, the prime minister, Daniel Ortega in Nicaragua started as a rev- less everyone feels disrespected by some- Najib Razak, tried to steal an election in olutionary Marxist, seizing power in 1979. one. The rise of autocracy is in part a reac- May but failed. Despite gerrymandering, He lost an election in 1990 partly because tion to these big historical trends. But it is censorship and racist appeals to the Malay he was anti-Catholic. So he rebranded also because power-hungry leaders have majority, voters dumped the ruling party himself as a devout Catholic—pushing a learned how to exploit them. You cannot of the past 61 years. Its sleaze had grown ban on abortion even if the mother’s life is have autocracy without an autocrat. too blatant. America’s justice department at risk—and was re-elected in 2006 against Many people crave power. Some, be- has accused Mr Najib of receiving $681m a divided opposition. Last year his wife, cause they want to change the world. from 1MDB, a state fund from which $4.5bn Rosario Murillo, became vice-president, Some, for its own sake. Some, because disappeared. He says the money was a gift thus establishing a dynasty resembling the power brings adulation, money and sex. from an unnamed Saudi royal. The opposi- dictatorship he once overthrew. Many who attain powerhave all these motion gleefully contrasted the vast sums Mr Mr Ortega and his Sandinistas have tives. Small wonder they cling to it. Najib’s wife spends on jewellery with the commandeered the supreme court, which Most authoritarian regimes are filthy. difficulty ordinary folks have making ends abolished presidential term limits, and Of the countries and territories in the dirti- meet. “Najib just makes up his own rules,” created shell “opposition” parties to simu- est third of Transparency International’s says a taxi-driver who switched sides to late choice while repressing genuine oppo- corruption perceptions index, not one is backthe new government. That strongmen make up their own rules is why liberal democracy is worth de- Freedom House democracy index score Below 10 11-20 21-30 31-40 41-50 51-60 61-70 71-80 81-90 91-100 na fending. And in the longrun, itseems to de- 2018, 0=least free, 100=most free liver better material results. A study by Da- ron Acemoglu of the Massachusetts Norway 100 Institute of Technology found that switch- ing from autocracy to democracy adds 20% Turkey 32 to income per head over 30 years, though 72 Hungary some economists dispute these findings. China 14 Guillermo Vuletin of the World Bank ar- Syria -1 Venezuela 26 gues that autocrats fall when economies Philippines 62 slump, and the democrats who succeed Gambia 41 them take creditforthe inevitable recovery. Malaysia 45 Sri Lanka 55 What is certain, however, is that freely elected governments bound by the rule of law have less power to abuse citizens. “Lit- tle by little they took away our rights,” says a journalist in Diyarbakir, who was recent- South Africa 78 ly arrested for five innocuous tweets. “Ev- ery day I check the news to see which of Source: Freedom House my friends has been detained.” 7 54 Business The Economist June 16th 2018

Also in this section 55 Bartleby: A job is just for Christmas 56 Oil giants in Latin America 56 Google’s AI troubles 57 Italian business and the Maﬁa 57 Entrepreneurship in Germany 58 Japan’s sharing economy 59 Schumpeter: Multinationals’ malaise

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Solar energy industry stalls. “In the short term, the policy change will rack the China market with On the solarcoaster angst,” says an industry insider there. The clampdown comes at a time when the solar industry globally is increasingly able to compete toe-to-toe on price with more conventional sources of power generation, such as coal, natural gas and nuc- Aftera clampdown in China, could the global photovoltaic industrysurvive lear. Countries in Europe, including Britain without subsidies? and Spain, and elsewhere too, have drasti- LITTLE over a decade ago, when Jinko- withdrawal can tear it down. On June 1st cally slashed FITs. It all raises an important ASolar, a Shanghai-based company, en- this happened with a particularly heart- and tricky question: is this the end of the tered the solar business, it was such a nov- stopping lurch when Chinese authorities, line forsolar subsidies? ice that when it visited international trade with almost no notice, strictly limited new China provides an illustration of the fairs, all it had was a bare table and a board solar installations that qualified for FITs, likely answer, which is that FITS may be with its name scribbled on it. But it also blitzing the shares of Jinko and some of its disappearing but other subsidy-lite alter- had luck, a technological edge and lots of peers in China, as well as ofFirst Solar, one natives are taking their place. Analysts say public money on its side. ofAmerica’s biggest solar suppliers. China’s decision to scrap FITs follows a The industry globally was riding high Analysts reckon that at least 20GW of rise to about $15bn last year in the deficit in on subsidies. Generous feed-in-tariffs solar projects expected to be built in China the subsidy fund earmarked for develop- (FITs), financial incentives forinstalling so- this year will now be scrapped (see chart). ers; plugging the gap would have strained lar, made Germany the world’s largest so- As demand wilts, they predict, Chinese public finances. As a result ofthis shortfall, lar market by around 2010. Germans panel prices will fall by at least a third. Ben- solar developers were not getting the sub- turned to China for cheap sources of crys- jamin Attia ofWood Mackenzie, an energy sidies they were owed. As one industry in- talline silicon solar panels, not least be- consultancy, says that, depending on how sider puts it, everyone loves subsidies—but cause subsidised land and loans enabled quickly the price falls encourage an uptake only when they get paid. China’s fledgling manufacturers to under- of solar in new markets, this could be the Paolo Frankl of the International Ener- cut European and American competitors. first year since 2000 that the global solar gy Agency, a global forecaster, notes that When European solar subsidies China had recently begun to experiment, slumped during the euro crisis, the Chi- via a programme called “Top runner”, with nese government once again stepped in to UnFIT for purpose an alternative to FITs that is gaining popu- support its renewable-energy champions. China, solar photovoltaic market larity internationally. This is a reverse auc- It offered FITs to slather the remote west of tion in which solar developers that offer to Subsidy owed Increase in capacity, GW China with solar farms. By 2013 China had $bn Before capacity cuts, GW build and run projects most cheaply win. eclipsed Germany as the world’s largest The price they bid is what they will charge 15 60 solar-panel market; last year it installed 53 FORECAST in long-term power-purchase agreements gigawatts (GW), almost five times as much (PPAs) for the electricity they generate. as in America, now the next-biggest mar- 10 40 Such reverse-auction PPAs have produced ket. Jinko became the world’s largest pro- startlingly low bids in sunny places from vider of solar panels in 2016, shipping al- 5 20 Arizona and Nevada to Mexico, Abu Dhabi most10GW globally last year. Sixofthe top and India. In China recentPPAssharplyun- ten producers are Chinese. dercut the FITs, he says. One even beat These ups and downs are known glob- 0 0 coal-fired power. Hence China’s aim to en- ally as the “solarcoaster”: just as subsidies 2012 13 14 15 16 17 18 19 20 courage more of such auctions to make so- can quickly build the market up, their Source: Wood Mackenzie lar, on the face ofit, subsidy-free. The bene-1 The Economist June 16th 2018 Business 55

2 fits could be significant in China. Lower they would otherwise. That said, it is hard Bloomberg New Energy Finance, a con- prices of panels as a result of a temporary these days, in China or elsewhere, to build sultancy, says that by 2019 more markets glut will encourage more aggressive bids, any power plant without some public sup- may embrace solar, given the fall in panel saving the government money and mak- port. And purists say that any fossil-fuel costs. The cheaper solar gets, the more ap- ing solar more competitive against coal. project that goes ahead without taxing the pealing it becomes, especially in poor Yet though few doubt that PPAs are bet- carbon it produces is also enjoying an im- countries struggling to satisfy rising energy ter than FITs, there is still fierce debate plicit subsidy. demand. Mr Attia of Wood Mackenzie about whether they are also a sort of mar- China’s move—though it will stall new notes that pre-qualified bidders for a solar ket-distortingsubsidy. Forinstance, utilities solar installations for a while—may none- tender in Kuwait, announced after June 1st, may be forced to offer renewable PPAs, theless make the global industry healthier involved Chinese property, miningand de- rather than fossil–fuel alternatives, be- over time. The shift may hasten consolida- fence firms, which are not usually associat- cause governments hold them to renew- tion in the industry in China, bringing the ed with photovoltaics (PVs). They may op- able-energy targets. The very existence of four main manufacturing components, portunistically be attempting to shift a long-term contracts may make it cheaper polysilicon, wafer, cell and panels, under surfeit ofChinese PV abroad. for solar developers to get funding than one roof, as they are at Jinko. The price cutsmayalso give Chinese so-1 Bartleby A job is for Christmas, not for life

The insecurityoffreelance life HE decline of the conventional job of Work”, Sarah Kessler tells the stories of Thas been much heralded in recent several workers. One, Curtis Larson, a years. It is now nearly axiomatic that peo- computer programmer, prospered be- ple will workfora range ofemployers in a cause of his skills—he eventually took a variety ofroles over their lifetimes, with a full-time job, at SpaceX, Elon Musk’s rock- much more flexible schedule than in the et firm. But others found the pay low and past. Opinion is still divided over wheth- the benefits poor. As Ms Kessler writes: er this change is a cause for concern or a “It’s easier than ever to get work done chance for workers to be liberated from without hiring someone as an employee. the rut ofoffice life. But the growing group of non-traditional Is the shift really happening? Some fig- workers that results has no access to la- ures from the Bureau of Labour Statistics bour protections or safety nets provided (BLS), released on June 7th, showed that by law to employees.” only 10.1% of American workers were in Some gig-economy workers have tried “alternative employment” last year, a toorganisetheircolleaguesintotheequiv- lower proportion than the 10.7% recorded alentoftrade unionsin America. But itis a in 2005. In contrast, a study of the British difficult task. Gigemployees do not gather economy by the Institute for Fiscal Stud- to any change in their circumstances. An in a single place where theycan be recruit- ies (IFS) shows that the self-employed sec- old friend of Bartleby has a rolling contract ed. Ittooka longfightfora British plumber tor has been growing, with the number of to provide tech support to a big firm. The to win his case this week before the Su- self-employed sole traders rising by 25% money is good but there is no paid holiday, preme Court to be classed as a “worker” between 2007-08 and 2015-16. sickpayorpension, and the contract can be with benefits rather than self-employed. These two measures are different. But ended with a month’s notice. The most vulnerable employees seem getting a good statistical fix is not easy The IFS figures show that, although the to be those classed as “contingent work- whenthejobsarehardtodefine.Theecol- number of self-employed traders has in- ers”—3.8% of the American workforce, ac- ogy of the alternative-employment mar- creased since 2007-08, theiraggregate turn- cording to the BLS. These temporary ket has many species. At the top end are over dropped by19%and their average pro- workers can be viewed as a “reserve independent consultants with six-figure fits fell by 23% in real terms over the same army” oflabourthatemployerscan use to salaries and tax advantages from their period. The eight years in question, which hold down wages. (This might explain the self-employed status; at the bottom are included the Great Recession, were thus sluggish growth ofreal earnings in Ameri- cleaners on the minimum wage working much worse for self-employed Britons ca of late; but that argument holds water for an agency. Some people will be on than for conventionally employed people, only if the reserve army is growing over “zero hours” contracts where they are un- whose real earnings fell by 6%. One expla- time, and the BLS data cast doubt on that.) sure of their income from week to week. nation may be that a lot of self-employed Such workers are more likely to be un- Then there are jobsin the “gigeconomy”— work comes from firms “contracting out” der 25 and less likely to have health insur- people connected to work via websites, tasks in busy periods. When the economy ance than those in regular employment; such as freelancers labelling photos to stutters, they have less need forhelp. 55% of them would prefer a permanent helpartificial-intelligenceprograms.Plen- As for the gig economy, it actually job. Insecurity makes it difficult for such tyofpeople use the gigeconomyto top up seems to be quite a small part of the alter- workers to save for home ownership or income, rather than relying on it. native-employment sector. Far more peo- even to get married. Alternative employ- The best placed are skilled profession- ple work in construction or business ser- ment may be a trendy concept, but some alsand artisanswhose workisin demand vices than drive cars for Uber. And of the alternatives turn out to be not that from a wide range of customers. But gig-economy workers are not a homoge- great forordinary workers. many people will be dependent on a sin- nous group. In her book, “Gigged: The Gig gle client, which makes them vulnerable Economy,the End ofthe Job and the Future Economist.com/blogs/bartleby 56 Business The Economist June 16th 2018

2 lar manufacturers, stung by 30% tariffs im- biggest companies in Latin America, both 2013 began to unstitch this by allowing for- posed by the Trumpadministration in Jan- symbols of national sovereignty with a eign firms to bid for oil contracts in trans- uary, an opportunity to regain history of cronyism and corruption, is parent auctions broadcast online. The re- competitiveness in America (which main- about as clear as a barrel ofoil. forms also aimed to reduce Pemex’s tains subsidies of its own via tax credits). Start with Petrobras. The appointment bloated workforce by around half. The tariffs kept their silicon PV products of its market-friendly former chief finan- MrLópez Obradoropposed all this, and out of the American market, bolstering cial officer, Ivan Monteiro, to replace Mr pledged to reverse the reforms via referen- sales ofFirst Solar. But a fallof30% or more Parente has restored some confidence. But dum. But though the reforms are unpopu- in PV pricesshould make the tariffsless ofa the strike and an unpredictable presiden- lar with voters, investors view them as vi- hindrance. Analysts say that is why First tial election are big challenges ahead. tal. Mr López Obrador, whose pragmatic Solar’s shares have fallen by a fifth since The lorrydrivers, who operate on razor- streakisincreasinglyvisible aselection day June1st. thin margins, demanded a return to the nears, now promises only to review the Solar experts expect the solarcoaster to costly price subsidies ofthe past. Some 87% contractsalreadyawarded, to checkfor cor- rattle out of its current trough. But the ride of Brazilians supported them, according to ruption. But even without repealing the re- still has a long way to go. Though solar was Datafolha, a pollster. So, the government’s forms, he could stall them through bureau- the world’s biggest source of new power- short-term goal isto workouta fuel-pricing cratic gridlock. The consequences of that generating capacity last year, it still gener- system that protects drivers from excessive forPemex would be bleak. 7 ates a paltry 2% of global electricity. Tech- volatility without tearing holes in Petro- nological improvements to make it better bras’s pockets. Fuel prices might be adjust- at turning sunlight into energy are slowing ed once a month or once every three Technology politics down. Here again, China offers a lesson. Its months, rather than every day. Taxes could “Top runner” programme rewards those be tweaked in order to serve as a pressure Playing with fire companies experimenting with the latest valve: high when oil is cheap, low when it PV technologies, in a bid to make solar is expensive. Petrobras has been on a tra- more competitive. Jinko says no other jectory toward market-oriented policies, countryofferssuch a scheme. The shame is efficiency and privatisation, but the strike that it is only open to Chinese firms. 7 and debate about price controls has Google runs into more flakon artificial slowed that progress and revealed just intelligence how unpopular privatisation would be. Latin American oil giants Pemexisalso in a political predicament. ISCOVERING and harnessing fire un- Enrique Peña Nieto, Mexico’s outgoing Dlocked more nutrition from food, feed- In deep water president, repeatedlypromised thatthe en- ing the bigger brains and bodies that are ergy reforms he passed in 2013 would low- the hallmarks of modern humans. Goo- er fuel prices for ordinary Mexicans. Alas, gle’s chief executive, Sundar Pichai, thinks Mr Peña raised the price of fuel by around hiscompany’sdevelopmentofartificial in- 20% in January last year. The gasolinazo, as telligence trumps that. “AI is one of the MEXICO CITY AND SÃO PAULO Mexicanscall it, triggered widespread prot- most important things that humanity is ests and rioting. working on,” he told an event in California Beware the heavyhand ofthe state But the gasolinazo was just one explo- earlier this year. “It’s more profound than, I T SEEMED like such a comeback. When sion in the minefield that is oil politics in don’t know, electricity or fire.” IPedro Parente took over as boss of Petro- Mexico. Since Lázaro Cárdenas, a former Hyperbolic analogies aside, Google’s bras in 2016, Brazil’s state oil firm was president, expropriated the oil sector in AI techniques are becoming more power- drowning in $130bn of debt. It had lost 1938, state control over oil reserves has be- ful and more important to its business. But $200bn in shareholder value, and its exec- come knitted into Mexican notions of na- its use of AI is also generating controversy, utive board had been gutted by the mas- tional sovereignty. The energy reforms of both among its employees and the wider sive Lava Jato corruption scandal. Mr Par- AI community. ente slashed subsidies, sold assets and One recent clash has centred on Goo- adopted a market-friendly pricing policy. gle’s work with America’s Department of The company’s debt shrank and the share Defence (DoD). Under a contract signed in price reached a 3½-year high in May. 2017 with the DoD, Google offers AI ser- Then, on June 1st, Mr Parente resigned vices, namely computer vision, to analyse and Petrobras’s shares plunged by over military images. This might well improve 20%. The cause was a ten-day lorry drivers’ the accuracy of strikes by military drones. strike that crippled Brazil’s economy and Over the past month or so thousands of forced Petrobras to freeze diesel prices for Google employees, including Jeff Dean, ten days and the government to subsidise the firm’s AI chief, have signed a petition them for two months. That revived a con- protesting against the work; at least 12 have versation about price controls and fuelled resigned. On June 1st the boss of its cloud concerns about future state meddling. business, Diane Greene, conceded to those The same fears hang over Pemex, Mexi- employees that the firm would not renew co’s state-owned oil giant, ahead of a gen- the contract when it expires next year. eral election on July 1st. The populist front- The tech giant also published a set of runner in the polls, Andrés Manuel López seven principles which it promises will Obrador, is promising to freeze fuel prices guide its use of AI. These included state- for three years. As significantly, he railed ments that the technology should be “so- for years against reforms in 2013 that cially beneficial” and “built and tested for opened Mexico’s oilfields to foreign firms safety”. More interesting still was what and sought to turn Pemex into a more effi- Google said it would not do. It would “pro- cient leviathan. The future of two of the Truckers’ pricing power ceed only where we believe that the bene-1 The Economist June 16th 2018 Business 57

2 fits substantially outweigh the risks,” it been granted—indeed, they may not be— Entrepreneurship in Germany stated. It eschewed the future supply of AI but the request flies in the face of the AI services to powersmart weapons ornorm- community’s accepted norms ofopenness Taking off violating surveillance techniques. It and tech-sharing, says Miles Brundage, would, though, keep working with the who studies AI policy at the University of armed forces in other capacities. Oxford. The standard defence offered on Google’s retreat comes partly because behalf of Google is that it does not have a BERLIN its AI talent hails overwhelmingly from the history of patent abuse, and that it files Germany’s startup system is opening a computer-science departments of Ameri- them defensively in order to protect itself new chapterin technology innovation can universities, notes Jeremy Howard, from future patent trolls. DeepMind’s pat- founder of Fast.ai, an AI research institute. ent strategy is understood to be chiefly de- ta rooftop barin Berlin on May29th, the Manybringliberal, anti-warviewsfrom ac- fensive in nature. Aglitterati of Germany’s startup scene ademia with them, which can put them in Whatever Google’s intent, there are toasted a new arrival. Silicon Valley Bank, direct opposition with the firm in some ar- signs that the homogeneity of the AI com- a commercial lender which counts as cus- eas. Since AI talent is scarce, the firm has to munity may lessen in future. New paths tomers half of American startups that pay heed to the principles of its boffins, at are being created to join the AI elite, other went public in 2017, has just opened an of- least to some extent. than a PhD in computer science. Hopefuls fice in the country. “They are doing unique, Military work is not the only sticking- can take vocational courses offered by cool things here,” gushed Greg Becker, the point for Google’s use of AI. On June 7th a firms such as Udacity, an online-education bank’sboss. One ofhisfirstGerman clients batch of patent applications made by firm; the tech giants also offer residencies is Lilium Aviation, whose electric flying DeepMind, a London-based sister com- to teach AI techniques to workers from dif- taxis have mastered the tricky combina- pany, were made public. The reaction was ferent backgrounds. That might just lead to tion of a drone-like vertical take-off and swift. Many warned that the patents a less liberal, less vocal AI community. If forward jet propulsion. would have a chilling effect on other inno- so, such courses might serve corporate in- Silicon Valley Bank arrives as a new vators in the field. The patents have not yet terests in more ways than one. 7 breed of German startups is gaining alti- tude. At first e-commerce firms dominated the scene, often by copying ideas from Italian business and the Mafia abroad. Rocket Internet, an early success, went further, cloning American e-com- Price of protection merce modelsin othercountries, too. Rock- PALERMO et and Zalando, a fashion e-tailer, did initial public offerings in 2014. Afterthat only two Anti-extortion groups are making a difference big stockmarket debuts followed, of Hello- HE toll of“pizzo” protection pay- Their effortshave registered on a Fresh (which sells meal-kits) and Delivery Tments made by firms to Sicily’s Mafia national level. A group in Naples, the Hero (a food-delivery firm), both in 2017. is closely monitored. Nearly halfpay up Italian Federation ofAnti-Racket and The latest crop have in common an em- these days, according to estimates from Anti-Usury Associations, says that pizzo phasis on science and manufacturing, Ger- the Confartigianato, a national business payments now amount to a fifth at most many’s historical strengths. These younger association—a big improvement from the ofall income forItaly’s organised-crime startups are developing technologies that early1990s, when at least four-fifths of groups, down from a whopping halfin address areas such as health care, finance Sicilian firms paid it. Backthen the levy the early1990s. The biggest drop came in and transport. As would be expected in a claimed nearly a tenth ofthe turnover of the past fouryears, says the group’s foun- decentralised economy, Berlin is gradually victimised businesses. Today’s ratio is der, Tano Grasso. ceding ground as the hub of the startup around halfthat. Other regions in Italy’s But the system itselfis worth more to scene. At UnternehmerTUM, an incubator south, where the pizzo system is most crooks than the money and is unlikely to just outside Munich, for example, a han- entrenched, have also seen big drops. disappear. This is because it provides gar-sized workshop is buzzing with 3D For that businesses can thanka clutch power over payers, who are often also printers, welding stations and a gigantic ofanti-pizzo groups. One is Addiopizzo pressed into aiding more lucrative crime metal-cutting machine. It is attached to the (“goodbye, pizzo”) in Palermo, which by, say, concealing drugs or firearms, or by Technical University of Munich (TUM) but 1 advises businesses on pressing charges turning a blind eye to a robbery, fugitive against crooks. It also encourages them to hideout or insurance scam. publicly forswear pizzo payments. Extor- An operation may begin with a squirt Backing heavyweights tionists now thinktwice before bullying ofsuperglue in a shop’s keyhole, or a Germany, number of startup funding deals* shopkeepers, knowing there will be a bottle ofpetrol left on a doorstep. Mafia 2015 2017 flurry ofmedia attention and police members might threaten a new bar’s 0 30 60 90 120 150 investigations, says its founder, Daniele prospects by starting drunken brawls. E-commerce Marannano. Such ops are “word-of-mouth marketing” Software & Addiopizzo has endorsed as pizzo-free for pizzo compliance in a targeted area, analytics notes Giuseppe Todaro, an entrepreneur 1,045 (and counting) businesses in Paler- Health mo and surrounding areas that display in Cinisi, near Palermo, who handed over window stickers to discourage would-be about €245,000 ($290,000) in 17 years. Fintech extortionists. Entrepreneurs say the Many remaining payers are largely con- stickers seem to work, a claim supported tent to continue, he says, forthe pizzo Mobility by intercepted phone calls in which payments also elicit useful services from Industrial mafiosi complain about the difficulty of the Mafia. These include help with debt products Advertising meeting extortion targets. Other anti- collection; stopping a competitor from technology pizzo groups including Libero Futuro, also opening; and discouraging workers from Energy in Palermo, have cropped up. unionising or suing formistreatment. Source: EY *Venture-capital financing 58 Business The Economist June 16th 2018

2 owned by Susanne Klatten, heiress to an and ageing population. industrial fortune. Successes do exist. There are thriving Its boss, Helmut Schönenberger, lists platforms to share meeting rooms, office some ofthe stars born there in the past five space and parking spots. One popular site years. One is Lilium. Another is NavVis, is Laxus, which lets cash-poor city dwell- which makes 3D maps of indoor spaces. ers share designer handbags. Airbnb’s Konux, another young firm, makes artifi- own offering of “experience sharing”, in cial-intelligence sensors that predict when which people sell and buy experiences and where railway-trackrepairs are due. such as city tours and cooking classes, is Such firms are off most people’s radar. more successful in Japan than almost any- “You’ll nothear about many ofthem,” says where else, says Mike Orgill, its head of Peter Lennartz of EY, a consultancy. Unlike policy in Asia, as foreigners in particular e-commerce firms, startupsthatmake busi- seeka window into the country. ness-to-business products, such as mea- Yet regulation, which tends to favour surement systems, are bound to be less vis- big companies and industries, is a key ob- ible. But they are becoming increasingly stacle to faster and more mainstream popular with investors. growth. The minpaku law’s 180-day limit, Although e-commerce startups still which local authorities have the right to draw the lion’s share of financing, that is tighten further, is a nod to powerful hotel largely because they are more mature. The chains. Shinjuku, a ward in Tokyo that is three biggest venture-capital rounds in popular with visitors, is banning home- 2017, all in e-commerce, accounted for al- Airbnb and Uber in Japan owners in residential areas from renting most a quarter of the total amount invest- out their homes from Mondays to Thurs- ed in Germany last year. But the number of Can share, won’t days. Uber, a ride-hailing firm, is prevented funding rounds in e-commerce fell by 34% from offering anything but its premium between 2015 and 2017 (see chart on previ- share services, such as black cars with profes- ous page). For startups in health care the sional drivers, thanks in large part to the figure more than doubled; in mobility it in- TOKYO objections of established taxi fleets. There creased fourfold. are ways to get round it—a local ride-shar- Japan’s sharing economy is minuscule This shift reflects the emergence of new ing app, Notteco, has avoided the regula- compared with what it could be firms in industry hubs such as Frankfurt, tionsbygettingpassengersto payfor petrol Germany’s financial centre; Hamburg, IRBNB, an American platform for book- and tolls rather than a fee for transport, for which has a cluster of logistics firms; and Aing stays in other people’s houses, can example. But the rules hinder growth. Munich, home to firms such as BMW, Air- barely conceal its frustration. A law passed Another hurdle is the attitude of the bus and Siemens. In 2014-16, Hamburg had last year for the first time legalised min- Japanese public. Many people are simply 253 new business founders per 10,000 paku, or home-sharing, in Japan, but also ignorant of the existence of sharing apps. working people annually, compared with sharply restricted it. From June 15th hosts Others reckon they may be illegal. “Public 238 in Berlin. The capital remainsthe centre can rent out their property fora maximum anxiety is the main factor impeding the de- for entrepreneurs in e-commerce and en- of 180 days each year, provided they regis- velopment of the sharing economy,” tertainment; but the number of funding ter with the local authorities. Most hosts thinks Yusuke Takada of the government’s rounds for startups in Berlin increased by will not meet that deadline because they Sharing Economy Promotion Office. An- 14% between 2015 and 2017, compared with are still obtaining their registration num- other barrier is social custom. Chika Tsu- 33% forthose elsewhere. bers, and on June 1st Japan’s main tourism noba, the head of Anytimes, a local plat- Wherever they are based, funding body unexpectedly decreed that any with- form where users share skills from rounds at all stages of a firm’s life are be- out them had to cancel reservations at gardening to baby-sitting, says women in comingbiggerand easier. Fora young com- once. Airbnb accordingly eliminated four- particular feel they should be doing every- pany with a strong product, team and glo- fifths of its roughly 60,000 listings in Ja- thing themselves, pointing to criticism she bal ambitions, raising money has never pan. Holidays are at risk. attracted after hiring a cleaner through the been easier, says Julian Riedlbauer of GP The experience illustrates the country’s site. Mr Ueda says the Japanese fret that Bullhound, a tech advisory firm in Berlin. hesitant approach to the sharing economy, sharingplatformswill notprovide the high In 2017 investors poured €4.3bn ($4.8bn) in which people rent goods and services level ofservice they are accustomed to. Be- into German startups, 53% more than the from one another through internet plat- cause ofthis, the Sharing Economy Associ- average in 2015-16. KfW, the federal devel- forms (a broader definition includes com- ation has developed a “trust mark” to give opment bank and one of the biggest start- panies rentingout goods they own, such as consumers more confidence. up financiers, is about to launch a subsid- bikes, for a short time). A generous esti- International firms are also adapting iary that will invest €2bn in early-growth mate of the sharing’s economy value in Ja- their tactics. Airbnb is “partnering with ar- firms in the next decade. pan is just ¥1.2trn yen ($11bn), compared eas that don’t get as much love as they Firms have better access to talent as with $229bn for China. “It’s a very difficult might like,” says Mr Orgill. It worked with well as to money. Entrepreneurship pro- situation,” says Yuji Ueda of Japan’s Shar- the authorities and locals in Kamaishi, on grammes at technical universities are pro- ing Economy Association. the north-east coast, to attract tourists, liferating. And according to Dietmar Har- Opportunities certainly abound. Al- even creating a local guidebook. As for hoff of the Max Planck Institute for most 29m tourists visited Japan last year; Uber, helping established firms is not Innovation and Competition, a think-tank, the goal is to attract 40m by 2020, when To- something the firm does anywhere else, experienced managers are more willing to kyo hosts the Olympics. But the number of notes Ann Lavin, who heads policy in join startups. Lilium, for example, poa- hotel rooms is not keeping up with de- Asia-Pacific for the firm, but it is piloting a ched senior staff from Airbus and Tesla mand. Japan’s government reckons that ride-hailing programme for local taxis on when it was a fledgling with just $10m of sharing could also help it to provide public the remote island of Awaji, near the city of backing. Forentrepreneursthere seem like- services such as transport, especially in ru- Kobe. This caring, sharing approach may ly to be furtheroccasions forparties. 7 ral areas, as it struggles with a declining pay off, but it will take more time. 7 The Economist June 16th 2018 Business 59 Schumpeter Canaries in the coal mine

As the global trade system fractures, multinational firms are cutting cross-borderinvestment to supercharged performance. Schumpeter has grouped the biggest 500 companies by market value into local firms and multinationals (firms which make over 30% of their sales outside their home region). Since 2015 the globetrotters’ profits have increased by 12%, compared with 30% for the homebodies. Multinationals once had glittering returns on equity; last year they managed only 11%, compared with 12% for local firms. UNCTAD measures the returns of just the foreign operations of multinationals, excluding their domestic businesses (which for American firms can be lucrative). Such returns dropped to 7% last year, from 9% before the financial crisis—probably below their cost ofcapital. Faced with soggy profits, bosses are being more cautious, an impulse further amplified by trade tensions. For one thing, regulators are more likely to block deals. Chinese buyers in particular are effectively playing roulette. Even saintly Canada prevented a $1bn takeover of a construction company, Aecon, by a Chinese firm in May. America’s security watchdogs recently kiboshed the takeover ofQualcomm by Broadcom, a rival semiconductor firm then domiciled in Singapore. And who wants to build new cross- border supply chains while the world’s trade regime is in flux? Perversely, protectionism can sometimes stimulate cross-bor- FYOUlookonlyatthe headline numbers, populism and protec- der investment. After the 1930s, some firms “tariff hopped” by Itionism seem to be weirdly good for global business. Since 2015 building factories within countries to avoid exporting to them. there has been Brexit, the rise of fringe parties in the euro zone, The White House doubtless hopes this will happen in America, the election of President Donald Trump and a more nationalistic which Mr Trump says is “open for business”. There are a few ex- China under Xi Jinping, its president. Yet over this period the pro- amples—some foreign solar-panel manufacturers made plans for fits of the world’s biggest 3,000 listed firms have risen by 44% in new plants in Uncle Sam’s backyard aftertariffswere announced dollar terms. Share prices have soared. As fortariffs, fornow they in January. But across all industries, inbound investment into are little more than an irritant for most bosses. Plenty of Western America fell by 39% in 2017, according to the Bureau of Economic firms are still keen on exotic thrills far beyond their borders—in Analysis. The number of greenfield projects in the United States May, Walmart bid $16bn forFlipkart, an Indian e-commerce com- announced by foreign firms fell by 29% in the first quarter of 2018 pany. Starbucks is opening a new shop in China every15 hours. compared with the prior year, according to fDi, a data firm. Lookmore closely, however, and you will see thatthe decayof Perhaps digital flows could provide a new leg for globalisa- globalisation is accompanied by a steady demoralisation of mul- tion, a view backed by McKinsey, a consulting firm. Netflix now tinationals. Between the fall of the Berlin Wall in 1989 and the has more subscribers abroad than at home, for example. But subprime crisis some 20 years later, a few thousand corporate these flows are fragile. They tend not to create lots of jobs, exports cosmopolitans became ever more powerful, acting as the brains or tax revenues for the recipient countries, which is their main ofthe global economy, controllingintellectual property aswell as motivation for welcoming multinationals. And protectionism international supply chains. During the past decade, however, has gone digital, too. The control oftech innovation is at the heart they got stuckin a rut. And, as a new report from UNCTAD, a mul- ofthe rows between America and China. tilateral body, underlines, that rut deepened last year. Consider cross-border investment by firms, which consists of Fade away takeovers and greenfield investments such as factories. It fell by The base case isthatcross-borderinvestmentwill be subdued un- 23% in 2017. The sums flowingto Asia and Latin America were sta- til Mr Trump leaves office. The weight of multinationals in the ble, but dropped in all other regions. As a share of global GDP, pool of global investment (including takeovers) will fade. It has such investment has fallen by half compared with 2007, to 2.4% already dropped to 6% last year, compared with a 20-yearaverage last year—the lowest ratio since the financial crisis. And global of8% and a peakof10% in 2007. supply chains have stagnated. One gauge is the share of all ex- But iftrade tensions persist beyond the American presidential ports that comes from cross-border inputs. Having steadily risen election in 2020, firms may seek a more radical rethink. One op- from 26% in 1995 to 31% in 2010, it has since dropped to 30%. tion would be to separate the flow ofinvestment from control. In Multinationals’ malaise has deep causes. Many global firms the 19th century global firms often gave contracts to local manag- succumbed to indiscipline and poured money into vanity pro- ingagents to run theirforeign businesses. These could be revived. jects abroad. Plenty relied on arbitrage, basing production in Or multinationals could seek only minority stakes in their oper- places with cheap labour and booking profits in countries with ations abroad, guaranteeing them local autonomy. low taxes. But Chinese wages have risen. European countries and Such structures could muffle political risks but are far less effi- America have made it harder to dodge taxes. In many industries cient than the model of globally integrated firms that thrived in local scale is more important than global reach. Walmart, for in- the 2000s. Consumers and productivity will both suffer, and instance, is selling control of its business in Britain to J. Sainsbury, a vestors might, too. But after the past few months it is the duty of local company, after years ofdim performance. anyone runninga multinational firm to considerhow to redesign As multinationals’ advantages have eroded, so has their claim their business for a pricklier, nastierworld. 7 60 Finance and economics The Economist June 16th 2018

Also in this section 61 Protectionist America 62 Buttonwood: Playing Argentina 63 Regulating American banks 63 The hounding of a statistician 64 Pan-African banking 65 Employing refugees in Europe 66 Free exchange: Feedback and the Fed

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

Chinese finance the first time in its decade of existence. In- surers had also been sucked in, selling Light on the shadows short-term, high-yield products. But in 2017 sales of these fell by about half. Between 2010 and 2017 non-banks issued a third of all new credit; in the first four months of SHANGHAI 2018 their share plunged (see chart). The reason is much tighter regulation, Stricteroversight ofshadow banking, prompted by fears offinancial instability, ordained from the top of the political sys- begins to bite tem bythe economicofficialsaround Presi- HE teller at ICBC, China’s (and the been dizzying, from almost nil ten years dent Xi Jinping—notably Liu He, a vice-pre- Tworld’s) biggest bank, ushers a new, ago. Its structure is byzantine. And its pa- mier. A government adviser says their well-heeled customer into a private room. thologies have been worsened by the be- appraisal of the past few years is that the It is not for VIP treatment but a stern warn- lief that if anything goes wrong, the gov- economy has performed well, and that all ing. The customer wants to invest in pro- ernment will cover the losses. The the big dangers have been outgrowths of ducts offering higher returns than a basic International Monetary Fund has repeat- the financial system. He pointed to three savings account. The teller fixes a camera edly highlighted shadow banking as one incidents that shook Mr Liu and his col- on her and reels off a series of questions. ofthe big dangers to the Chinese economy. leagues: the stockmarket boom and bust of Are you aware that prices can go down as 2015; the ensuing gush of capital outflows; well as up? Do you understand that the The best disinfectant and the recklessinvestmentsofcompanies bank does not guarantee this product? Yet in the past year shadow banking’s such as Anbang, a disgraced insurer. Only when the customer has been record- seemingly unstoppable progress has all So since 2016 the focus of economic ed saying “yes” does she get her wish. but stopped. Last year the 30trn yuan mar- policy has been to reduce financial risks. Some complain that these videotaped ket for “wealth-management products” This is not the first time these have been agreements, now mandatory at Chinese (WMPs), a main conduitforsavingsto fund targeted, but ZhangLicong, an analyst with banks selling similar investment products, banks’ off-balance-sheet loans, stalled for CITIC Securities, a broker, says that this feel like interrogations. But forthe financial campaign has been the hardest-hitting yet. system, they are a step away from the prec- The rise in corporate debt has slowed. ipice. Banks have used such transactions to Blinking in the spotlight Banks have recognised more of their bad channel cash into off-balance-sheet loans, China, non-bank credit as % of total credit loans, writing off about 1.5trn yuan per serving riskier corners of the economy. year. The government has merged regula- 50 Firms with little lending expertise have torybodiesto strengthen itsoversight. And also muscled into the same space. 40 it has clamped down on shadow banking. The catch-all phrase to describe this is Officials began slowly, requiring banks shadow banking. It is a global phenome- 30 to video customers acknowledging the non, partly a response to stricterregulation risks of WMPs, a way of forestalling dis- after the financial crisis of 2007-08. But 20 putes if they go bad. They soon turned to China is at the extreme end. Its shadow- peer-to-peer (P2P) lending, a small, unruly banking sector is vast, fuelled by a big rise 10 segment of shadow banking. The authori- in corporate debt. Estimates of its assets ties capped loan sizes and required lenders 0 run from 50trn to 90trn yuan ($7.8trn- 2003 05 07 09 11 13 15 18 to go into partnership with custodian 14trn); the middle of that range is more banks. The number of online P2P plat- than three-quarters of GDP. Its growth has Source: CEIC forms has dropped from 3,433 at the end of 1 The Economist June 16th 2018 Finance and economics 61

2 2015 to below 1,900 today. Then they or- International trade dered banks to reassess their own books. Many had classified large dollops of credit Hidden obstacles as investments in order to hide bad loans. The biggest step in the clean-up came on April 27th, when regulators published sweeping new asset-management rules. Among other things these bar firms from WASHINGTON, DC giving punters guarantees against losses American trade policy is more protectionist than the president thinks and from pooling funds to invest in bank loans. Banks will still be able to offer in- USTIN has agreed to cut all tariffs and vestment products, but they will resemble “Jall trade barriers between Canada Border barriers mutual funds. They have until the end of and the United States,” claimed Presi- Tariffs, % 2020 to comply, longer than first planned. dent Donald Trump to laughter on June US imports from US exports to Banks need the time. They are under pres- 8th, at the G7 summit in Quebec. The next 3 036912 sure to fortify their balance-sheets with day, in apparent seriousness, Mr Trump— Agricultural more capital. Even before factoring in the who has slapped tariffs and quotas on im- Japan new rules, Jason Bedford, an analyst at ports of aluminium and steel from all the Canada UBS G7 , a Swiss bank, reckons China’s banks countries, and others—called for unfet- China have an equityshortfallofabout1trn yuan. tered trade within the group: “No tariffs, no The regulators’ clampdown was over- barriers. That’s the way it should be.” EU due. Moody’s, a rating agency, says the Over the next two days a more familiar Non-agricultural new asset-management rules give it more Mr Trump reappeared. After Mr Trudeau China confidence in China’s banking system. The said, at a post-summit press conference, EU biggest banks’ share prices have rallied by that Canada would not be pushed around, Japan about a third since the start of 2017, in part he fired off a barrage of tweets calling him Canada nil nil reflecting the easing of investors’ worries. “very dishonest & weak”. He blasted Eu- Source: World Trade Organisation There is, however, still far less enthusiasm rope too. And he tweeted: “Sorry, we can- for hard-charging smaller banks, which not let our friends, or enemies, take advan- have a sketchier asset mix and a much tage ofus on Trade anymore.” levyon dairyproducts(which applies after weaker deposit base. Suspend disbelief and suppose that Mr quotas with much lower tariffs have been China’s growth has held up well over Trump’sofferofa barrier-free world is seri- filled). He despises the European Union’s the pasttwo years, partlythanksto a strong ous. He may want to tear down tariffs and 10% tariff on cars. But others can play that global economy. But the stricter rules are quotas out of a yearning for open markets game too. Once quotas are filled, shelled now starting to weigh on activity. Infra- and lower prices forconsumers. More like- peanuts going into America face a tariff of structure investment, a pillar of growth, ly, he reckons that the status quo is unfair 132%, and raw tobacco duties of 350%. EU has slouched to its slowest since 2012. Li- because America is more open than any negotiators note that America applies a quidity is also tightening. Annual growth other rich country. In a free-trading world, 14% levy on incoming train carriages. in the broad M2 gauge of money supply other countries would have to lower their Averages are generally more instructive has slowed sharply, to 8%, the lowest in barriers by more than America would. Is than anecdotes. According to the World more than 30 years, and companies are he right? Reality is a little more complicat- Trade Organisation (WTO), on a trade- finding finance harder to obtain. Since late ed than he may suppose. weighted basis in 2015 America’s tariffs av- 2016 the gap between the yields on AA-rat- MrTrumpisfondofpickingouthistrad- eraged 2.4%, slightly higher than Japan’s at ed corporate bonds and those on top-rated ing partners’ egregiously high tariffs. In his 2.1%, but a bit lower than Canada’s at 3.1% government bonds has doubled to two Twitter tirade he slammed Canada’s 270% and the EU’s at 3.0%. Even these figures percentage points. Borrowers have de- should be treated with caution. America faulted on 20bn yuan of bonds in 2018, up allows in more products tariff-free than the by nearly a third from a year ago, though EU, for example, but the duties it does still just 0.1% ofthe overall market. charge are higher. And trade-weighted av- The question is whether China will erages can mislead, because goods with flinch as the pain mounts. In the stop-go crushingly high tariffs will naturally have style of the past decade, supervisors have lower weights. relaxed their grip whenever the growth To Mr Trump, who prefers one-on-one toll looked too high. Banks have already deals to multilateral rules, bilateral figures been lobbyingthem to ease up: the extend- may mean more than averages. Some of ed deadline for complying with the asset- America’s highest tariffs are on products it management rules is one result. “Regula- buys relatively little of from the EU. Tex- tors are using very strong drugs to cure an tiles, apparel, footwear and travel goods ill person,” says a manager at a Chinese accounted for 6% of American imports in bank. “If the drugs are too strong, they will 2017, but 51% of tariff revenue, mostly paid create another disease.” on stuff from Asia. According to WTO data, So far the government has paid little American tariffs on agricultural products heed to such gloomy talk. Mr Liu, the vice- imported from the EU, Canada and Japan premier, said recently that investors must are lower than on those flowing the other bear the risks fortheir own investments. In way. But the picture is different for other most countries that would sound like com- goods (see chart). mon sense. But in China it was taken as a All these figures describe the tariffs hawkish sign. The camerasin the banks are trade negotiators usually haggle over. But not just for show. 7 Shell game they leave some things out, like defensive 1 62 Finance and economics The Economist June 16th 2018

2 duties against imports that are subsidised Canada and Japan. (Overall, China doles laws like the Jones Act, which says that orsold below cost. America is a heavy user out more support than those three.) boats travelling between American ports of both. It applies far more than the EU, Other non-tariff barriers include the must be made in America, carry the Amer- Canada or Japan. Its trading partners “Buy American” rules that favour America ican flag and be owned and operated by sometimes object that it breaks its WTO suppliers for public procurement, and American citizens. Of 22 sectors measured commitments in the process. In December complex labelling requirements. Not all in 44 countries in the OECD’s Services Canada filed one such complaint. barriers have protectionist intent; other Trade Restrictiveness Index, America had Overall, however, rich-world tariffs are countries have plenty of them, too. Their seven that were more restrictive than aver- generally low already. Other distortions effects are tricky to quantify, but trade age. Italy was the only country in the G7 are more pernicious. Agricultural subsi- geeks think they crimp commerce among with more. None of this, of course, means dies are one example. According to the rich countries more than tariffsdo. thatAmerica isa closed economy. But ifthe OECD, in 2014-16 the gap between pro- Finally,there are barriers to trade in ser- president were serious about creating a ducer prices and world market prices for vices as well as goods. These include rules barrier-free G7, every memberwould have agricultural goods in America was small- obliging foreign insurers in New York to work to do—and America more than he er—ie, less distortionary—than in the EU, hold more capital than domestic ones, or seems to imagine. 7 Buttonwood Playing Argentina

Navigating a market with bags ofpotential but plentyofperils HERE is a type of footballer who in- management group. Tspires the affection of fans and the ire A harder task will be managing the ofcoaches. He istalented, usually extrava- peso. Inflation in Argentina is 26% and set gantly so. But he is also wayward to the to rise further. That means the peso will same lavish degree. Discipline seems be- need to drift down to keep the real ex- yond him, on or off the pitch. It was said change rate steady and exports competi- of one of this kind, Stan Bowles of tive. Yet it must not fall too quickly. That Queens Park Rangers and England, that if might spur locals, who recall a brutal de- he could pass a betting shop as well as he valuation in 2001, to rush into dollars. A passed a ball he’d be a rich man. run on the peso and on Argentina’s banks Which brings us, naturally, to Argenti- would be fatal. A fresh sell-off in other na—not to its footballers, who have most- emerging-market currencies would put ly fulfilled their potential, but to its econ- pressure on the peso. A particular worry omy,which has not. A century ago, it was is Brazil, Argentina’s biggest trading the country of the future. It betrayed that partner, which faces a rocky period ahead promise without ever quite extinguishing ofits own elections in October. hopes that it might eventually live up to it. Still, the IMF’s package is enough to Like a talented but troublesome sports- less, describes Argentina’s recent travails. fund Argentina until 2020. And if the man, it keeps being given another chance. But there is a crucial difference, says Gra- emergency repairs go well, the country The board of the IMF will soon approve a ham Stock of BlueBay Asset Management. can look forward with optimism. Should $50bn support package for Argentina. It Argentina was already on the right course. real incomes begin to rise and the middle has had countless such programmes in Mauricio Macri was elected president in class to swell, the value of stocks might the past without much changing. The 2015 to fix the economy, but his efforts ran multiply.The MSCI dollar index of Argen- fund is betting that this time is different. aground. Rising interest rates in America tine stocks surged last yearon such hopes. Should investors make a similar wager? prompted investors to take a charier view Much of that gain has been lost. Bank Judicious bets on serial underper- of emerging markets. Argentina’s central stocksare a wayinvestorsmightchoose to formers can pay offhandsomely.Reforms bank had eased its inflation targets and cut regain equity exposure. “Nothing good have led to bountiful investment returns rates; skittish investors saw a lack of re- happens without access to credit,” says in surprising places, such as Turkey and solve. The peso fell by a fifth in two weeks. Andrew Brudenell of Ashmore, a fund Brazil in the early 2000s or Pakistan and manager. Businesses will need working Ukraine after 2013-14. None of these Pass or shoot? capital and loans. Consumer economies places became an earthly paradise. But Things could now go one of two ways. thrive on credit. And Argentina is under- moving from an unruly economic policy With luck, byOctober2019, when elections served in this regard. Bank credit to the to something more disciplined is a big are due, inflation will be falling and the private sector amounts to just16% ofGDP. turnaround. Many attempts fail. A pru- economy will be picking up. In the mean- Progress never follows a straight line. dent course in such cases is to buy hard- time, real interest rates are likely to stay Reformedcharacters, such as Turkey, have currency or short-dated bonds at first. high, offering investors in short-dated since fallenfrom grace. Complacency sets Only later should riskier assets, such as bonds a handsome return. But with such in. It is much the same with wayward equities, be considered. rewards come risk. The medicine might footballers. The pragmatic coach does not Turnarounds follow a pattern. They not take. Reforms may be derailed by hard- bank on changing a maverick. He instead start with a devaluation. The flow of for- ship and unrest. It helps that Argentina has hopes to keep him on track long enough eign capital dries up. There is a costly ef- negotiated a fairly modest tightening in fis- to benefit the team. It is an approach that fort to prop up the currency.It dawns that cal policy. The IMF has learned that if it investors might also consider. stiffermeasures are needed to restore con- wants the patient to recover, it must not kill fidence. The IMF is called in. That, more or it first, says Claudia Calich ofM&G,afund- Economist.com/blogs/buttonwood The Economist June 16th 2018 Finance and economics 63

Regulating American banks count opening and closing procedures”, One Democratic congresswoman, “employee misconduct” and bad technol- Carolyn Maloney of New York, asked why Under the rug ogy. Remedies included refunding fees, the OCC had not broadened its inquiry to closing unwanted accounts and correcting other banks and called its failure to take information misreported to creditbureaus. public action “deeply disturbing”. Stephen Banks changed procedures. Over 250 such Lynch, also a Democrat, from Massachu- NEW YORK fixes were required. But beyond this aggre- setts, said that by failing to provide public gate information, the OCC has published accountability and thus lumping the good Otherbanks may have misbehaved as nothing—naming no banks, not saying with the bad, the review created moral WellsFargo did. Which ones? whether any were penalised financially, hazard. After The Economist went to press, F THERE is a single example of how dra- nor whether malpractice was concentrat- Mr Otting was due at a similar hearing be- Imatically the regulatory environment ed among a few or was widespread. fore the Senate BankingCommittee, where has changed for American banks in the Banks had much to grumble about un- he could expect more acute discomfort. past 18 months, it may be the trickle of in- der Barack Obama. Their sins were broad- State attorneys-general and class-action at- formation that has recently emerged about cast and they paid heavy fines, yet because torneys are doubtless pondering lawsuits. an inquiry into their sales practices. The they settled with regulators out ofcourt, al- For many years, Wells Fargo was con- Office of the Comptroller of the Currency legations went unproven. Under Mr Ot- sidered to be a model bank—thanks largely (OCC), a banking watchdog, began it in ting, Donald Trump’s appointee, the OCC to its prowess in persuading customers to 2016 after widespread malpractice was un- seems to be trying a very different ap- open new accounts. The ghost-account covered at Wells Fargo, one ofthe country’s proach. Unless they had fees refunded or scandal putpaid to that. Itwould be no sur- biggest banks. It ended the inquiry quietly ghost accounts closed, not even customers prise if others had chosen to emulate its by writing to several banks on June 4th; it were told ofthe dodgy practices. virtues—and adopted its vices, too. 7 sent the letters to Congress on June 11th. The public learned of the probe only be- Statistics in Greece cause of diligent reporting by American Banker, a trade publication which appears to have gleaned its information mainly Significant figure from banking consultants. The OCC responded to American Bank- The hounding ofthe country’s formerchiefstatistician is disturbing er’s report by releasing enough information to suggest that some bankswere guilty MAGINE the tale ofSisyphus, the myth- statistical agency in 2010, after Greece of at least minor jiggery-pokery. It con- Iical king doomed to spend eternity had been bailed out forthe first time and firmed as much in testy exchanges be- pushing a boulder up a hill only for it to its budget-deficit figures were found to tween the comptroller, Joseph Otting, and roll backdown, retold by Kafka. The have been severely underreported. He members of the House of Representatives result would be very like the tortuous oversaw a relatively small revision to the Financial Services Committee on June story ofAndreas Georgiou, Greece’s deficit for2009, from 13.6% to 15.4% of 13th. The inquiry encompassed more than formerstatistics chief. GDP. Nevertheless, his detractors—from 40 large and medium-sized banks and cov- Since 2011Mr Georgiou has faced both ends ofthe political spectrum—have ered three years of activity. The banks had several criminal charges. One is that he accused Mr Georgiou ofconspiring with opened 10,000 accounts without custom- inflated budget-deficit figures, forcing outsiders to subject Greece to austerity. ers’ permission, the same offence (though Greece to seeka bail-out and resulting in Political appointees to the statistical on a much smaller scale) as at the heart of alleged damages of€171bn ($190bn). agency’s board initiated the charge that the Wells Fargo affair. Another is that he violated his duty by he violated his duty. The OCC blamed “short-term sales pro- failing to seekapproval from the statis- The sheer number oftimes that char- motions” with poor controls, “deficient ac- tical agency’s board before sending the ges against Mr Georgiou have been figures to the European authorities. dropped and refiled raises eyebrows, says Although Mr Georgiou was acquitted Elias Papaioannou ofLondon Business several times on both charges, the acquit- School. But the case, he argues, accords tals were annulled and he was retried. In with a broader picture ofa dysfunctional, 2017 he was found guilty ofa violation of overloaded judicial system that is open to duty. He has now learnt that the Supreme influence from politicians and oligarchs. Court had rejected his appeal, rendering Swingeing cuts to salaries and budgets the conviction final. It carries a two-year have worsened the problem. suspended sentence. In May prosecutors Cases such as Mr Georgiou’s are said they were refiling the charges that he unlikely to tempt foreigners to invest in inflated the figures and thus injured Greece—at least not without demanding Greece. He will now be tried fora third compensation for the riskthat they will time in the court ofappeals. Iffound be ensnared in litigation. Nor will they guilty, he could face life in prison. convince investors that Greece’s days of Yet both Mr Georgiou’s numbers and fiddling figures are well in the past. his methodology were verified by Eu- Mr Georgiou says that the bleakimpli- rope’s statistical agency. The method is cations ofhis case extend beyond Greece. still accepted by Greece’s creditors and its Unscrupulous politicians will be tempt- government. The chiefstatistician is also ed to fudge figures to win votes, or to give legally required to be independent: statis- lenders false reassurance. His experience tics tend not to be decided by committee. may be a cautionary tale forstatisticians A formerofficial at the IMF, Mr Ge- too. Objectivity is their most precious orgiou moved to the newly independent virtue. They can pay dearly forit. Role model 64 Finance and economics The Economist June 16th 2018

Banking in Africa selling consumer goods. Ecobank’s mobile app, which lets people open accounts on Making waves their phones, has attracted over 5m users since its launch in 2016. The other helpful trend is the spread of regional banks’ corporate clients. A recent LOMÉ study by the Boston Consulting Group finds that the top 30 African companies As Westernlenders retreat, African banks see an opportunity to build now operate in an average of 16 countries, pan-continental businesses twice as many as a decade ago. Standard DE AYEYEMI’S office in Lomé, the capi- Bank’s clients range from construction Atal of Togo, is a good place to think Continental shift firms to airlines, says Sola David-Borha, about crossing borders. Ghana is ten min- Presence of pan-African banks Total assets, who heads its operations on the continent utes’ drive away. From his window the Number of African countries 2017, $bn outside South Africa. “They are helping to boss of Ecobank can watch trucks rumble 0 10203040 grow our market share, as we use our ex- along the seafront, some bound for Bur- Ecobank 22.4 pertise to support their expansion.” kina Faso, a day’s journey,or Mali, perhaps (Togo) Regional banks are also using their geo- another day on. At night, cargo ships twin- Standard Bank 152.3 graphical reach to act as natural conduits (South Africa) kle offshore. From here Ecobank’s vi- United Bank for cross-border flows of capital, such as sion—“to integrate the continent”, Mr for Africa 11.3 migrants’ remittances. Mr Nwaghodoh ar- Ayeyemi says—is clear. Whether it will be (Nigeria) gues that UBA’s large footprint reduces the BMCE 32.3* profitable is less obvious. (Morocco) cost of intra-African trade, since the bank Ecobank was founded in 1985 by busi- can stand at both ends of the transaction. Attijariwafa 50.3 ness leaders with backing from the Eco- (Morocco) He also cites the example of the aid sector, where donors need a “last-mile” presence nomic Community of West African States, Orabank 3.2 a regional bloc. It has branches in 33 coun- (Togo) to distribute cash or pay workers. tries, more than any other African bank Source: Company reports *2016 The growth of cross-border banking (see chart). It is not alone in its ambitions. carries risks, says Amadou Sy of the IMF. Nigeria’s United Bank for Africa (UBA) iting loan books with hidden troubles. Regulators need to patch the holes through wants to make half its profits elsewhere in Most banks, she argues, would do better to which a crisis in one country could leak the continent by 2022. South Africa’s Stan- focus on a few key countries. into another. Asupervisorycollege for Eco- dard Bank recently opened in Ivory Coast, Consider Ecobank. The board ousted a bank, comprising regulators from the its 20th African country. Moroccan banks previous boss in 2014 over allegations of countries where it operates, first met in are trekking across the Sahara. mismanagement. In 2016 a recession in Ni- 2015. European experience showsthatsuch African bankers have long preached geria, its biggest market, resulted in a $131m measures are not always enough, warns some version of what Tony Elumelu, pre-tax loss. It has shut 74 branches there Thorsten Beck of Cass Business School in UBA’s chairman, calls “Africapitalism”: the and laid off2,000 staff.Ithasscaled back its London. “When a bank actually fails,” he idea that far-sighted, home-grown busi- ambitions beyond west Africa. Although it says, “then the politics comes in.” Al- nesses can drive development. In Nigeria has returned to profit, about 10% of its though most African banks hold plenty of banking reform in 2005 set off a wave of loans are non-performing. Expansion may capital, problem loans have been rising. consolidation. The survivors were heftier have been too rapid, Mr Ayeyemi admits. Yet Mr Sy also notes that regional banks and more profitable, with capital to invest But regional bankers see two big trends can spur competition and export innova- abroad. Kenyan banks have used their in their favour. The first is new technology, tion. A study by Mr Beck published in 2015 edge in innovation, such as mobile bank- says Mr Ayeyemi, which makes it possible found that African firms got loans more ing, to push into neighbouring markets. to operate on a continental scale as never easily when foreign banks held a larger Regional banks are now filling gaps left before. Ecobank can design products and market share—as long as those banks came by their European and American rivals, process data centrally, he notes, providing from Africa or elsewhere in the developing which are retreating from a continent they services even where it lacks physical world. Expansion has not yet paid off for once dominated. Barclays sold a majority branches. Is Africa’s diversity a problem? Africa’s banks. But, like the incoming stake in itsAfrican businesslastyear. Other “You don’t ask Unilever the same ques- waves beyond Mr Ayeyemi’s window, global giants have also reduced their expo- tion,” he replies, likening retail banking to they have the tide behind them. 7 sure to African markets, which they judge too small and too risky in an era of tight- ened regulation. African banks work closer to the ground. “Banking is a relationship game,” says Ugochukwu Nwaghodoh, chief financial officer of UBA. “We have local knowledge.” The pan-African vision often clashes with the reality of a fragmented continent. Africa’s regional banks earn lower returns and grow more slowly than domestic rivals, calculate consultants at McKinsey. One problem is the wide diversity of regulations and markets. Another is that banks are too small outside their core markets to grow organically, says Olamipo Ogunsa- nya, an analyst at Renaissance Capital. Some have made risky acquisitions, inher- Rumbling across Africa The Economist June 16th 2018 Finance and economics 65

cades had caught up with natives. But time and patience are short. “We’re at a critical junction,” says Thomas Liebig of the OECD. The political mood has hardened. Last year the populist Alternative for Ger- many entered the Bundestag; coalition talks this year nearly collapsed over migration. The right-wing Sweden Democrats have been polling strongly, ahead of an election in September. “The talent pool is not huge. The refugees who arrived here in Sweden are less skilled than we initially thought,” says Pat- rick Joyce, a Swedish economist. Of the 92,000 adult asylum-seekers who arrived in 2015, halfdid not finish high school. Lan- guage is often the biggest hurdle. The skills asylum-seekers do have often do not fit local needs. Many newcomers to Germany are experienced car mechanics, for example, but Germany’s shortage is in mecha- tronics, which requires knowledge of in- Employing refugees in Germany and Sweden formation technology rather than fiddling with fuel pumps. Situations vacant Even when refugees’ skills are in demand, regulations can still keep them out of jobs. Germany lacks workers in some certified professions, which require STOCKHOLM lengthy training. Nurses from abroad, re- gardless of experience, must do up to three The hope that refugees would help to meet European economies’ shortages of years of vocational training before being skilled workers is proving hard to fulfil taken on. Such barriers push refugees into HE canteen of Stockholm University 1.6m open jobscannotbe filled with appro- less skilled, poorly paid jobs. Sweden has Tcould scarcely be more Swedish. Young priately skilled workers. Today Germany fewer regulated trades. Even so, employ- blond students sip coffee and tap away on lacks 110,000 nurses and carers; by 2030 it ment rates among graduates of the health- Macs. In room 3.89, an outpost of the cam- will need 300,000 as its population greys. care fast-trackscheme are halfthe average. pus, is another, newer Sweden. Refugees, When 2.6m asylum-seekers arrived in The best hope ofmatching supply more all of them teachers, from lands far to the Europe in 2015-16, the political mood quick- precisely to demand is to build up the skills south and east are preparing for the class- ly turned sour. Yet many argued not only ofyoung migrants. “Apprenticeships really rooms of their new home. Several keep that it was right to welcome them on hu- are the golden route in Germany,” says Mr their coats on as Khadije Obeid takes them manitarian grounds, but also that both the Liebig. Most refugees are young; within a through the basics of the curriculum and new arrivals—most of them young and, it few years they can gain a skill that is in de- showsa YouTube clip abouteducation law. was said, educated—and their host coun- mand and a job foryears to come. But time “In Syria the teacher has much authority,” tries could gain economically. to train is a luxury: often their priority is to says Samer, an English teacher, as he raises get a job, however poorly paid, to send his hand above his head. “Here he is equal Hope and experience money home or to reunite their families. to the students,” he adds as he lowers it. Those hopes have not yet been borne out. And both countries have become less gen- The ten women and seven men are on a Both Germany and Sweden have pumped erous in granting permanent residency, re- “fast-track” programme for refugees with resources into getting newcomers into ducing both migrants’ incentive to train experience in occupations where labour is training or employment and have shifted and employers’ incentive to train them. short. As well as learningSwedish, they get legal barriers in order to let them work Now comes a new difficulty: getting 26 weeks of daily classes, teaching practice sooner. But Sweden’s fast-track pro- women to work. Those who arrived in and mentoring. The hope is that they will grammes serve only a fraction of the 2015-16 were mainly men; their wives are then train or, if their previous qualifica- 110,500 adult arrivals in 2015 and 2016 following them. Female refugees typically tionsare recognised, go straightto the class- (around half of whom were granted asy- have the lowest employment rates of any room. The government is running some 30 lum). In 2017 only a third of refugees who group. “Getting them into work and to other programmes, for builders, chefs, completed a two-year full-time integration leave children ata creche can be a big barri- medics and more; 5,300 people were en- programme were working or studying er,” says Caroline Jonsson from the Public rolled in 2016 and 2017, of whom around three months later, according to Statistics Employment Service. “But here in Sweden 1,000 were in the teachers’ scheme. Within Sweden. In the firstquarterof2018 thisrose we don’t have stay-at-home mums.” two years most fast-trackers are employed. to 41%, but only 6% were in unsubsidised Focusing on female refugees, as both In 2015 no European country took in jobs. Refugees in Germany have historical- Germany and Sweden have begun to do, more asylum-seekers, relative to its popu- ly fared a bit better. Yet nearly three-quar- can pay. If they have jobs, the better their lation, than Sweden. None accepted great- tersofthose in workhave jobsneeding few children—especially daughters—tend to do er absolute numbers than Germany. Both skills and with poor prospects. when they join the labour market, says the countries badly need workers. Sweden is Given time, things may come right. Of OECD. Aswith men, so with women: mov- training 8,500 fewer teachers annually refugees arriving in the EU in the 1990sand ing on from receiving refugees to integrat- than it should. A study by the German early 2000s, 56% were in work after a de- ingthem is a longgame. But in fractious Eu- Chamber of Commerce estimates that cade; those who had clocked up two de- rope, how long do policymakers have? 7 66 Finance and economics The Economist June 16th 2018 Free exchange What goes around

The Fed should bearin mind how rate rises affect global markets—and feedbackto America N JUNE 13th the Federal Reserve raised its benchmark inter- growth and other variables are influenced in large part by the Oest rate by a quarter of a percentage point, the seventh such Fed. Indeed, Ms Rey has argued that countries which open them- increase since it began shouldering rates away from zero in De- selves to global capital flows necessarily sacrifice some mone- cember 2015. Markets shrugged—a rather different reaction from tary-policy independence (in effect, to the Fed). Flexible-ex- the one that followed a policy adjustment made five years ago change rates seem to dampen but not eliminate these effects. this month. The chairman then, Ben Bernanke, dared advise in- The Fed cannot prioritise economic conditions abroad over vestors that the Fed might soon start winding down its stimula- domestic priorities and hope to stay politically independent. Yet tive bond-purchases. Traders fellto theirfaintingcouches, but not what goes around may also come around, to affect the American before pausing to sell. Yields on ten-year Treasury bonds leapt. economy. Changes in global risk sentiment prompted by Fed Currencies around the world flopped. This “taper tantrum”, as it tightening can reduce the price of assets held by Americans as became known, raised concerns that Fed tightening might so per- well as the prospects and share prices of American multination- turb global markets that America itself could suffer. Having sur- als, amplifying the effect of the initial change in policy. This loop, vived both tapering and rate increases, Fed officials now seem in- evident during the taper tantrum, kicked in again as the Fed pre- clined to dismiss such worries. They should not. The danger of a pared to begin raisinginterestratesin 2015. Lael Brainard, a Fed go- nasty Fed feedbackloop remains. vernor, warned of such feedback effects shortly before rate in- Wise central bankers are prepared for ill winds blowing from creases began, noting that expected tightening pushed the dollar abroad. Thanks to global financial integration, these have up and led to straitened financial-market conditions, imposing a strengthened in recent decades. The ratio of assets held across “material restraint” on American growth even before the first borders to world GDP has roughly tripled since 1995. In the same bump in rates. period market movements have become more closely aligned in- Ultimately the Fed raised rates only twice by the end of 2016, ternationally. According to a new working paper by Òscar Jordà, ratherthan the five timeswidelyforeseen in mid-2015. Butasrates Moritz Schularick, Alan Taylorand FelixWard, this co-movement have gone up, worries about feedback have since subsided. In has reached levels unseen for at least 130 years—surpassing the May Jerome Powell, now the Fed’s chairman, noted that while highs of the early 20th century.Correlations are particularly high global financial conditions affect the American economy, the role across equity markets (see chart), a trend the authors believe is of American monetary policy in driving them is “exaggerated”. driven by shared fluctuations in the appetite for risk. So, as even Ms Brainard herself reckons that the risks of feedback are lower the most casual observers can see, bad days for Asian shares are than they were. Markets are more likely to be wrong-footed by usually accompanied by ugly ones in Europe and America. announcements about unprecedented asset-purchase pro- America’s financial powermeans it is responsible for a dispro- grammes than by garden-variety interest-rate tweaks, she has portionate amount of shared trouble. The vast majority of trade noted. And when rates are above zero, the Fed has more room to is invoiced in dollars. Dollar-denominated assets account for react to a policy miscalculation. What is more, the American two-thirds of global foreign-exchange reserves, with Treasury economy seems as hale as ever. Job growth looks imperturbable. bonds making up the bulk. America’s banks play a crucial role in The gut-wrenching surge in Treasury yields of 2013 fizzled out; in- global financial intermediation, helping to propagate changes in deed, the yield on ten-year bonds is still a shade lower than at the sentiment around the world. Foreign banks hold lots of Ameri- end ofthat year. can assets. Shifts in their value affect the banks’ capital-adequacy ratios, pushing them to adjust their riskposture. Careful now Thus the world cannot help but sway to the Fed’s tunes. But the world economy is no less integrated or dollar-dependent Messrs Jordà et al reckon that American monetary policy is in- than it was a decade ago. And the winds may be shifting. Global creasingly important in driving global risk appetites. Their work growth looks likely to slow.Emerging markets are feeling the heat echoes that of Silvia Miranda-Agrippino and Hélène Rey, who from a rising dollar. Credit growth seems to have levelled off. write that the price of risky assets around the world, credit Most important, the world economy is no more ready fora financial storm than it was during the taper tantrum, or when Ms Brai- nard sounded her alarm. Interest rates across much of the world The Fed’s feedback loop remain close to zero, and asset-purchase plans could prove politi- Correlation* of financial cycles in: cally difficult to expand—particularly in Europe. Debt loads in 1=perfect alignment, 0=no relationship much of the world are higher than in 2013, leaving households 0.8 more vulnerable to tighter credit conditions and governments Equity prices less able to spend flagging economies to safety. Political systems 0.6 are under strain. As the rancour at the G7 suggests, the scope for Total loans international co-operation in a crisis has surely diminished. 0.4 Against all that, the cushion between the Fed’s benchmark 0.2 rate and zero, at less than two percentage points, is thin indeed. + The Fed is understandably keen to increase it while markets look 0 resilient. Yetitshould take care, especiallywith the pace ofrate in- House prices – creases. Feedback from global markets may be subdued for now. 0.2 But that doesn’t mean America’s monetary policymakers should 1885 1900 10 20 30 40 50 60 70 80 90 2000 12 take it for granted. 7 Source: “Global financial cycles and risk premiums” by *Across 17 advanced Òscar Jordà, Moritz Schularick, Alan Taylor and Felix Ward economies Economist.com/blogs/freeexchange Science and technology The Economist June 16th 2018 67

Also in this section 68 Measuring submarine earthquakes 69 Anti-predator behaviour in cetaceans 69 Detecting scientiﬁc cheating 70 Battleﬁeld communications

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

Materials science strong it can make concrete by adding platelets, but initial studies suggest that the Industrial plants impact could be considerable. Just 500 grams of platelets can reduce the amount ofcement needed to make a cubic metre of concrete by about 40kg—a saving of 10%. Dr Saafi and his team have now embarked on a two-year study to investigate the process in more detail and to perfect the best How to make buildings, cars and aircraftfrom materials based on natural fibres mix foruse by the construction industry. SING carrots to create concrete, turn- platelets for industrial applications, in- Unlike cement, wood is already a com- Uing wood into plastic, or even com- cluding as an additive that helps toughen posite material. It is made of cellulose fi- pressing it into a “super wood” that is as the surface ofpaint as it dries. bres embedded in a matrix of lignin, an or- light and strong as titanium might sound Each platelet is only a few millionths of ganic polymer that serves a number of like a series of almost Frankensteinish ex- a metre across. It consists of a sheet of stiff purposes, including providing woody periments. Yet all three are among the lat- cellulose fibres. Although the fibres are mi- plants with their rigidity. In May Stora est examples of employing natural fibres nute, they are strong. By combining plate- Enso, a Finnish forestry-products com- from plants as eco-friendly additives or al- lets with other materials a powerful company, launched a wood-derived alterna- ternatives to man-made materials. posite can be produced. Dr Saafi is mixing tive to oil-based plastics. This material, Materials-science researchers are find- the platelets into cement, which ismade by called DuraSense, looks a bit like popcorn. ing that plant fibres can add durability and burning limestone and clay together at It consists of wood fibres, including lignin, strength to substances already used in the high temperature. (The chemical reaction obtained from pulping and other opera- construction ofbuildingsand in goods that between them releases carbon dioxide tions. The fibres are mixed with oil-based range from toys and furniture to cars and from the limestone.) To turn cement into polymers and other additives, such as col- aircraft. A big bonus is that, because plants concrete it is mixed with aggregates such as ouring agents. The resulting granules can lock up carbon in their structure, using sand, stones and crushed rocks, which act be melted and moulded in the same way their fibres to make things should mean as reinforcement, and with water, which as plastic is in factory processes. Adding less carbon dioxide is emitted. The produc- reacts with the chemicals in the cement to wood fibres, the company says, can reduce tion of concrete alone represents some 5% form a substance called calcium silicate hy- the amount of plastic needed to make of man-made global CO2 emissions, and drate. This starts off as a thick gel, but then goods with plastic parts by 60%. making1kg ofplastic from oil produces 6kg hardens into a solid matrix that binds the Stora Enso has also found a use for pure ofthe greenhouse gas. aggregates together. lignin, which is often a waste product of Start with the carrots. These are being papermaking, since most paper is made of investigated by Mohamed Saafi at Lancas- Carrot soup pulp with the lignin removed. Stora Enso’s ter University, in England. Dr Saafi and his Byaddingvegetable plateletsto the mix, Dr engineers have worked out how to use lig- colleagues do not use whole carrots, but Saafi and his colleagues can make concrete nin as a substitute for the oil-based resins rather what they call “nanoplatelets” that stronger. This is useful in itself, but it also and adhesives employed in the manufac- have been extracted from carrots discard- permits a reduction in the ratio of cement ture of engineered timbers, such as ply- ed by supermarkets or as waste from food- to aggregates that is required to achieve a woods. Nor are they alone in looking for processing factories. Sugar-beet peelings given level of strength. Reducing the structural applications for lignin. Along are also a useful source of nanoplatelets. amount ofcement in this way consequent- with others they are seeking ways to use it The researchers are working with Cellu- ly reduces CO2 emissions. to replace oil-based materials in carbon-fi- Comp, a British firm that produces such The group is still exploring exactly how bre composites, which are used to make 1 68 Science and technology The Economist June 16th 2018

2 lightweight parts forcars and aircraft. some of the lightweight titanium alloys field of science can lead to new develop- Bycontrast, HuLiangbingand Li Teng of used in high-strength aerospace compo- ments in other, apparently unrelated the University of Maryland are trying to nents. It is also bulletproof. In one test Dr fields. The NPL is Britain’s national metro- make a better material by removing, rather Hu and Dr Li made a laminated sample by logy laboratory, devoted to the science of than adding, lignin. Their aim is to create a placingfive sheetsofthe stuffon top ofone measurement. It is linked to other labs “super wood” that is stronger than most another, each sheet having its fibres around Europe by fibre-optic cables that metals. Their approach is to treat blocks of aligned at right-angles to those ofthe sheet are used to synchronise the measurements wood with sodium hydroxide and sodium below. When shot at, this material splint- of atomic clocks. Those cables often run sulphate in a chemical process similar to ered but was still able to trap a steel projec- beneath roads, and the vibration of traffic that used to remove lignin from paper- tile that passed effortlessly through a simi- overhead introduces noise into the line making pulp. The difference is that they re- larly sized sample ofnatural wood. that interferes with measurements, and move only enough lignin to make the The team are now trying to commer- must constantly be cancelled out. wooden blocks easier to compress. They cialise their process, which Dr Hu thinks Dr Marra proposes to use other sorts of do that by squeezing the treated wood at will be cheap to scale up. It works on both noise to detect earthquakes. The idea is to around 100°C, which causes most of the hardwoods and softwoods, so a range of shine a high-quality laser beam through pores and tubelike fibres within the wood materials can be created. Dr Hu reckons one of the optical fibres in the cable. At the to collapse. This increases its density three- that, one day, houses, cars, furniture and otherend thatfibre isconnected to another fold and its strength elevenfold. many other things will be made mainly or in the same cable for the return journey, That puts super wood on a par with partly from densified wood. 7 forming a loop. The seismic waves from a nearby earthquake will deform the cable minutely, leaving the returning light slight- Seismology ly out of phase with the light emitted by the laser. The discrepancies involved are A light shaking tiny: on the order of millionths of a metre for a cable several thousand kilometres long. Measuring them requires equipment capable of discriminating between femto- seconds. A femtosecond is a millionth of a billionth of a second, which is roughly to a second what ten cents is to the GDP of the Submarine cables could be used as earthquake detectors entire planet. ARTH is observed as neverbefore. Satel- pose. Dr Marra and his colleagues hope to But Dr Marra’s bright idea works. In Elites track typhoons, monitor volcanic- use the planet’s 1m-kilometre network of 2016, for instance, the NPL was able to spot ash plumes and catalogue the changing undersea fibre-optic cables, which carry a magnitude-six earthquake that had ways in which human beings use the land. the internet from continent to continent struck central Italy from the noise it pro- The sort of high-quality imagery that, a (see map), as a giant submarine sensor. duced in the fibre-optic cable, 79km long, couple of decades ago, was the preserve of Dr Marra is particularly interested in which rather circuitously connects the spiesin rich and powerful countriesis now earthquakes. The dry bits of the planet are NPL’s headquarters in London with a data freely available to users ofGoogle Maps. well-stocked with seismographs. The centre in Reading. An underwater trial in But despite its name, most of Earth is oceans are much less well covered, with 2017 used a 96km cable between Malta and covered in water, and it is much harder to only a handful of permanent sensors on Sicily. It detected a tremor ofmagnitude 3.4 monitor what goes on beneath the waves. the sea floor. This means that many small that had an epicentre 89km from the ca- In a paper just published in Science, Giu- earthquakes go unrecorded because the vi- ble’s nearest point. seppe Marra, of Britain’s National Physical brations they cause are too mild to be One advantage of subsea cables is that Laboratory (NPL), proposes to shine a little picked up by distant land-based sensors. they experience less noise. The Sicily- light into the oceans by co-opting infra- The genesis of the idea is a good exam- Malta cable had background noise levels a structure built for an entirely different pur- ple of the way in which advances in one fifth to an eighth ofthose in cables on land. Dr Marra and his colleagues have not yet tested their system on a fully fledged Floor coverage Undersea cable ocean-crossing cable. But they hope that, Active and planned undersea fibre-optic cables when they do, things will be even quieter, June 2018 Tectonic-plate boundary helping them detect all sorts of seismic rumbles which go unheard today. That would be a boon to geologists. Dozens of

e g

d cables cross the mid-Atlantic ridge, for in- i r

ic t stance. This is where the Eurasian and Afri- an tl A can tectonic plates drift away from those - d i that carry North and South America, creat-

M ing new crust in the process. There may be other uses, too. In principle, the system can track any source of sound, from the migrations of animals such as dolphins and whales to the gas guns used in oil and gas exploration. If the communication cables that carry Earth’s data traﬃc can be used to work out what is going on in the 70% of the planet covered

Sources: by water, then it really would count as a TeleGeography; USGS world-wide web. 7 The Economist June 16th 2018 Science and technology 69

Anti-predator behaviour Scientiﬁc honesty Fight or ﬂight? Something to crow about

It depends on whetheryou are a pilot Computeralgorithms can test the whale ora dolphin dodginess ofpublished statistics HAT the best form of defence is attack N AN ideal world the data on which a sci- Tisan old maxim. In reality,itis frequent- Ientific study is based should be, if not ly untrue; running away is a far better op- publicly available, then at least available to tion. But it seems to be the approach taken other researchers with a legitimate interest by pilot whales when faced with a pod of in asking. Sadly, this is not always the case. killer whales which are looking fordinner. Though attitudes are changing, many sci- That, at least, is the conclusion of Mat- entists are still quite proprietorial about thew Bowers of Duke University in North their data. They collected them, they rea- Carolina. He came to it as the result of a son, and thus they own them, and with study,just published in Experimental Biolo- them the right to analyse them without gy,whichheandhisteamconductedon sharing them with rivals. pilot whales (pictured) and Risso’s dol- This attitude, though selfish, is under- phins—two closely related species of small standable. But sometimes it can cover a cetacean. He knew that killer whales, Charge! darker secret. The statistics presented in a which are partial to snacking on both of paper may have been manipulated to these species, chat with one another dur- covered, the data therein were correlated achieve a desired result. The authormay, in ing the normal course of events, even if with the biologists’ records ofevents. other words, have cheated. If he releases they tend to stay quiet when making an at- As might be expected, neither pilot the data, that cheatingwill be obvious. Bet- tack. He therefore speculatedthatpotential whales nor dolphins reacted much to the ter to keep them hidden. prey would react to distant killer-whale calls of conspecifics, of the other prey spe- That, though, will be harder in the fu- communications, it being risky to do noth- cies or of humpbacks. Both, though, react- ture—at least for sets of data that consist of ing. What he did not know was what the ed rapidly to killer-whale calls. integer numbers in a known range, as do, reaction would be. The dolphins did so by forming into a for example, the answers to many ques- To find out, he and his colleagues gath- tight cluster and then bolting at top speed tionnaires in psychology experiments. As ered a library of cetacean calls. These in- away from the observation vessel that was they describe in a paper in PsyArXiv Pre- cluded those ofkiller whales, pilot whales, playing the calls. The pilot whales also prints, Sean Wilner and his colleagues at Risso’s dolphins and humpback whales. formed a tight cluster on hearing the killer- the University of Illinois at Urbana-Cham- They then played these calls to pods of whale calls. But in contrast to the dolphins paign have come up with a way of recon- their target animals, in order to find out they increased their chatter, turned in the structing, given the mean, standard devi- what happened. direction of the boat broadcasting the calls ation and number ofdata points in a result In a series of experiments—ten on pilot and moved at a steady,almost threatening, (all three ofwhich are usuallystated aspart whales and four on Risso’s dolphins—the pace directly towards it. of such a result), all the possible data sets researchers tagged one member of the pod Since no actual killer whales were in- which could have given rise to that result. under observation, in order to gather de- volved in this experiment, Dr Bowers can- They call the resulting algorithm COR- tailed information about what was hap- not say what would have happened in any VIDS (Complete Recovery ofValues in Dio- pening to it. They also employed a team of subsequent confrontation. But he suspects phantine Systems). If CORVIDS cannot experienced marine biologists to make ob- that it would have led to a form of attack come up with a valid set ofdata fora result, servations ofthe entire pod from boats. called mobbing. This is a tactic employed that result is self-evidently fishy. If it can re- The tags were fitted with several instru- by terrestrial and aerial prey species but construct a valid data set or sets, then the ments: pressure sensors to measure depth; not widely recorded under water. As the team running it can look at them and as- magnetometers to record orientation with name suggests, it involves members of a sess whether or not they lookplausible. respect to Earth’s magnetic field; acceler- group of potential prey attacking a preda- The trick behind CORVIDS is to find all ometers to measure movement; and mi- toras a mob, confusingit and threatening it possible combinations of numbers that crophones to record chatter. They were at- with injury. This generally causes it to re- solve the linear equations from which the tached to the animals’ bodies by specially treat, permitting the potential prey to get statistics being examined are calculated. designed suckers and detached them- on with their lives in peace. The principle of how to do this was selves four hours after attachment, to float Why pilot whales and Risso’s dolphins worked out in the third century AD by Dio- to the surface forrecovery. behave differently in response to the threat phantus of Alexandria (hence the “D” in The team employed two small vessels from killer whales is unclear. Both live in “CORVIDS”). Diophantus did not, how- to tag the target animals and to observe as groups of several dozen animals and so ever, have access to computers and so far as possible from the surface the posi- have the numbersneeded forcollective de- could not take the idea very far. Mr Wilner tions and behaviours of pod members. fence. It may be because pilot whales are does, and has. One or other of these boats played the re- bigger than Risso’s dolphins. But the dol- To simplify the task of spotting anoma- corded calls, in random order, modified to phins are not so small as to be a negligible lies, CORVIDS turns the possible data sets sound as if the creatures making them threat to a killer whale. As to seeing a pod into histograms and arranges them into a were about a kilometre away. The observ- of pilot whales take on killer whales, that three-dimensional chart. This makes any ers were not told which calls were being would surely be the money shot of any unusual patterns apparent. For example, broadcast, in order not to bias their obser- wildlife documentary that managed to get every reconstructed data set may be miss- vations. Once the detached tags were re- the footage. 7 ing values at one end of the scale. That 1 70 Science and technology The Economist June 16th 2018

2 might make sense occasionally. Generally, circumstances it may take hours to run. But messages to all the others within range. As though, such a gap would be a red flag. It another recently published algorithm is the number of nodes increases, these mes- would suggest either that the statistics not beset by this problem. SPRITE (Sample sagesrapidlymultiplyand crowd outother were reported incorrectly or that there Parameter Reconstruction via Iterative traffic. The upshot is that a MANET with were problems with the underlying data. Techniques) was described last month in more than about 30 nodes starts to experi- Such problems might be caused by any- PeerJ Preprints by James Heathers ofNorth- ence problems, and one with more than thing from biased methods of data collec- eastern University, in Boston. SPRITE is a about 50 will grind to a halt. tion to outright fabrication. “heuristic search algorithm”—meaning Faced with that, America’s Defence Ad- CORVIDS is likely to be of immediate that it may not nab all possible solutions. vanced Research Projects Agency, DARPA, value to editors and reviewers at academic But its speed makes it a useful first step. If decided in 2013 to launch a challenge to journals, who will be able to spot pro- the data sets it finds do not show any build a MANET with more than 50 nodes, blems with submitted papers early,and so strange patterns, CORVIDS is unlikely to with the carrot of a juicy contract for the discussthemwiththeauthors.Thatwillof- show oddities either. winner. The challenge worked. Earlier this ten be easier than asking forevery paper to Sloppy reporting of statistics in re- year the American army tested a MANET be accompanied by its data and then research papers is widespread. How com- with 320 nodes at its urban-trainingfacility working the statistics from those. If an un- mon made-up studies are is anyone’s at Fort Bragg, North Carolina. This system resolvable problem does show up then the guess. With CORVIDS, SPRITE and their can support the equivalent of a brigade- technique can be applied to previous work kind around, though, there will soon be no sized expeditionary unit, with voice, text by the author in question, to see if any- hiding place for such failings—and the and data trafficatup to 30m bitspersecond thing systematic is going on. trustworthiness of scientific papers will (bps). Each node is a hand-held unit like a A drawback of CORVIDS is that in some take a step up. 7 chunky smartphone. During the test, users were distributed across dozens of buildings. To make things extra tricky, some of them were in basements. The new MANET was able to perform so well because it overcame both the routing-table problem and the hello-message problem. Engineers at Persistent Systems, a firm in New York that designed it, simplified the routing task by employing tricks such as remembering the route taken to reach another node and reusing it, rather than working out the best path every time a message is sent. Another trick they per- fected is“overhearing”. Thisoccurswhen a node happens to pick up a message it was not intended to receive, and can provide a shorter path than the planned one. To deal with the hello-message problem, the packets that carry those messages are simplified. Louis Sutherland, Per- sistent Systems’ head of business Military communications development, likens the process to saying “hi” rather than “hello, how are you?” Jaw-jaw and war-war Persistent Systems is not the only company trying to develop better MANETs. Thales, a European defence giant, has one itclaimscan support150 nodesatspeeds of up to 6m bps. TrellisWare, of San Diego, claims 8m bps over more than 200 nodes. Nor need MANETs be restricted to commu- A new type ofbattlefield networkis in development nications between people. They could en- OBILE armies need mobile commu- nodes. Mobility brings a need for constant able robots, whether on the ground or in Mnications. Those communications, reconfiguration. the air, to work in co-operative groups. Per- though, must be secure—and not just from In theory such a system is possible. It is sistent Systems already has a contract to eavesdropping. They also need to be unin- called MANET, an approximate acronym supply communications for the American terruptible. And that is a problem. Many for mobile ad-hoc network. In practice, army’s PackBot ground robots. mobile networks (think Wi-Fi routers or though, a workable MANET has proved MANETs will also appeal to some mobile-phone towers) operate via hubs. impossible to design—until now. groups of civilians. Rescue workers in Destroy the hub and you destroy the net- The main problem is mathematical. To places hit by natural disasters, where exist- work. Even a peer-to-peer system in which avoid the pre-programmingrequired by ex- ing communications have been destroyed, messages travel in a series of hops be- isting systems, a MANET must maintain will benefit. So may miners. A MANET can tween nodes (in the form of the devices routing tables that keep track of the shor- easily stretch from above ground into un- that comprise the system) rather than via a test routes between nodes. Updating these derground areas. Industrial sites where hub, can be degraded by a loss of nodes. tables takes geometrically increasing there is too much interference for conven- Existing versions of such systems, which amounts of processing power as the num- tional communications may be suitable are usually static, rather than mobile, re- ber of nodes increases. A second, related for MANETsaswell. Altogether, then, these quire each node to be set up individually, problem is that to maintain the routing ta- particular MANETs may soon paint a pic- in advance, to talk to particular other bles each node has to send regular “hello” ture ofcommunications perfection. 7 Books and arts The Economist June 16th 2018 71

Also in this section 73 David Lynch’s memoir 73 A poet’s debut novel 74 The Giacometti legend

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Inequality and its costs more unequal a society, they wrote, the worse it was likely to perform on such The crack-up measures. Indeed, the social damage wrought by inequality might be severe enough that the rich in less equal societies would benefit from efforts to even things up. The bookattracted itsshare ofcriticism, as theories of everything tend to, in partic- ularforconfusingcorrelations with causal- Is inequalityto blame forsuicide, drug abuse and mental illness? ity. Nonetheless, it helped to inspire a bur- HERE issomethingpeculiarlyhaunting geoning debate about the costs of The Inner Level: How More Equal Societies Tabout the recent suicides ofKate Spade, widening inequality. a well-known designer, and Anthony Reduce Stress, Restore Sanity and Improve “The Inner Level” seeks to push that de- By Richard Bourdain, a chef and author (see Obitu- Everyone’s Well-being. bate forward, by linking inequality to a cri- Wilkinson and Kate Pickett. Allen Lane; 352 ary). Evidently success—building brands sis of mental health. This time the authors’ pages; £20. To be published in America by and businesses, achieving wealth and argument focuses on status anxiety: stress Penguin Press in January 2019; $28 fame—does not ease the psychic pain that related to fears about individuals’ places in many people suffer. Even at the top of the social hierarchies. Anxiety declines as in- capitalist pyramid, these deaths insist, been evenly distributed. comes rise, they show, but is higher at all there isno escape from innerdemons. That In a paper published in 2010, Kate Pick- levels in more unequal countries—to the sad rule applies to nations as much as ce- ett and Richard Wilkinson found that extent that the richest 10% of people in lebrities. Nearly 45,000 Americans took about one in ten people in Japan and Ger- high-inequality countries are more social- their own lives in 2016, an increase of al- many suffered some form ofmental illness ly anxious than all but the bottom 10% in most 30% since 1999, according to new fig- in the year they studied, compared with low-inequality countries. Anxiety contrib- ures released by the Centres for Disease one in five Britons and Australians and one utes to a variety of mental-health pro- Control. Another 42,000 died from opioid in four Americans. If economic ups and blems, including depression, narcissism overdoses, victims of America’s drug epi- downs are the source of such troubles, and schizophrenia—rates of which are demic. The world’s richest large country, they seem to have torn at the minds of citi- alarming in the West, the authors say, and the city on a hill, sometimes seems to be zens in some societies more than others. rise with inequality. coming apart. But why? The key to the puzzle, Ms Pickett and Mr Manifestations of mental illness, such In “The Sane Society”, published in Wilkinson argue in their new book, “The as self-harm, drug and alcohol abuse and 1955, Erich Fromm, a German-American Inner Level”, is inequality. When the distri- problem gambling, all seem to get worse psychologist and philosopher, asked bution of income spreads apart, a society with income dispersion, too. Such relation- whethera society could grow sick—wheth- beginsto malfunction, affectingthe mental ships seem to apply within countries as erconditions within it might so distress the health ofeveryone living within it. well as between them. Damaging drug use inhabitants as to generate mass mental ill- is higher in more unequal neighbour- ness. Fromm’s argument focused on the Curse of the social animal hoods of New York City, in more unequal strains of economic life at the time he was The pairhave addressed the subjectbefore. American states and in more unequal writing, such as the tendency to work long In “The Spirit Level”, a bestseller released countries. The authors emphasise that it is hours in pursuit of ever more consumer in 2009, they sought to demonstrate a link a person’s relative position rather than ab- goods. In recent decades globalisation and between high levels of inequality and all solute income that matters most. A study mechanisation have added new kinds of manner ofsocial ills, from poor health and of 30,000 Britons found that an individ- worry. Yet, so far as mental health is con- obesity, to crime and violence, to educa- ual’s place in the income hierarchy predict- cerned, the pain of these trials has not tional failure and low social mobility. The ed the incidence of mental stress more ac-1 72 Books and arts The Economist June 16th 2018

2 curately than absolute income did. And in rich are generally less empathetic and ers, concludes that, “If there is a satiation America, relative income is more closely more likely to think they deserve special point” beyond which income no longer linked to depression than absolute in- treatment than others. Modern capitalism, boosts subjective well-being, “we are yet come. It is not enough to lift all boats, their the authors suggest, selects for assertive- to reach it.” Moreover, the highly egalitari- work suggests, if the poshest vessels are al- ness, for a lack of sentimentality in busi- an policies of the post-war decades were ways buoyed up more than the humblest. ness and comfort in sacking underlings, themselves made feasible by rapid eco- The fact that relative status matters so and for showy displays of economic nomic growth. Slower growth in recent much is a result of human beings’ intrinsi- strength. From the top to the bottom of the years has strengthened the hands of politically social nature, Ms Pickett and Mr Wil- income spectrum, people use conspicuous cal leaders looking to trim the safety-net. kinson argue. Group interaction and co- consumption and other means of enhanc- So the linkbetween growth and equali- operation have been an essential compo- ing their image to project status. ty is stronger than the authors allow. More nent of humanity’s evolutionary success; The least secure are often the most like- important, theyaverthatinequalitycauses indeed, the authors say, its social nature ly to exaggerate their qualities. For exam- stress without admitting the possibility helped drive the growth of human brains. ple, countries with lower average life-ex- that some other factor is contributing to Across primates, they write, the size of the pectancy tend to do better on measures of both, orindeed that social breakdown con- neocortex—a part of the brain responsible self-reported health; 54% of Japanese say tributes to inequality. They argue, for in- forhigher-level cognitive functions—varies they are in good health compared with stance, that “social cohesion is reduced in with the typical group size ofa species. Liv- 80% of Americans, though the Japanese more unequal societies”, noting that high- ing in complex social groups is hard cogni- live five years longer on average. Whereas er inequality is associated with less will- tive work. Survival requires an under- 70% of Swedes consider themselves to be ingness to help others, diminished levels standing of roles within the social above-average drivers, 90% of Americans of trust, and lower participation in civic hierarchy,and intuition of what others are groups, from recreational clubs to unions. thinking. Thus people are necessarily sen- But causation almost certainly runs in the sitive to their status within groups, and to other direction as well. Civic institutions social developments that threaten it. foster solidarity, reminding citizens that Such hierarchies are found in all hu- there is such a thing as society. Research man societies. But as inequality rises, dif- suggests that higher levels of “social capi- ferences in status become harder to ignore. tal” are associated with more support for There is more to be gained or lost by mov- redistribution and welfare states. ingfrom one rungon the ladderto another. And however much some maintain that Towards a great awakening disparities in pay-cheques do not corre- That is not to say that close community ties spond to differencesin human worth, such are an unalloyed good. They constrain in- well-meaning pieties feel hollow when dividual freedom, increase suspicion of high-rollers earn hundreds or thousands outsiders and discourage mobility, all of of times what ordinary folk take home. which limita place’sdynamism and inven- Money cannot buy everything, but it can tiveness. But low levels of trust, poor go- buy most things. The steeper the income vernance and corruption do all that too. gradient, the less secure everyone be- The ideal, perhaps, is a world in which comes, in both their self-respect and their strong communities help individuals to sense ofthe community’s esteem. thrive—a Nordic model, producing high in- And so people compensate. They take comes, low inequality and rosy levels of pills, to steel their nerves or dull the pain. well-being. Unfortunately, such societies Some cut themselves. Some adopt a more Feast and famine cannot simply be conjured out ofa hat. submissive posture, avoiding contact with Which is one reason to be sceptical of others. Yet such withdrawal can feed on it- do. Such figures cast declamations of the policies proposed by Ms Pickett and Mr self, depriving recluses of the social inter- America’s greatness, and the politicians Wilkinson, such as an infusion of “eco- action that is important to mental health, who make them, in a new light. nomicdemocracy”. Workerrepresentation undermining relationships and careers “The InnerLevel” is not a page-turner in on boards is one suggestion; a move to- and contributing to economic hardship. the usual sense. But it holds readers’ atten- wards employee-owned or co-operative- Others respond in the opposite way, by tion by elaborating a phenomenon most style firms is another. These are not crazy behaving more aggressively and egotisti- will already have observed, and by provid- ideas. Worker representation in Germany cally. Studies of narcissistic tendencies ing an explanation for the dysfunction has probably dampened inequality with- showed a steep increase between 1982 and they see around them, from the brazen dis- out makingthe country an economic back- 2006, the authors report; 30% more Ameri- regard for rules among many corporate water. But it is hard to imagine that such cans displayed narcissistic characteristics and political leadersto the nihilism ofdrug schemes alone could put a broken society at the end of the period than at the begin- addicts and school-shooters. And yet the back together. Reversing the cycle of insti- ning. Scrutiny of successive American co- idea that inequality alone is responsible tutional fraying, gaping inequality and horts found a progressive rise in those list- for all this, and that reducing inequality mental distress seems likely to require a ing wealth and fame as important goals will solve it, does not in the end convince. much broader civic rejuvenation. (above fulfilment and community). Over That is partly because the authors are That is not impossible. American his- time, more people cited money as the not always as circumspect with their evi- tory has been punctuated by civic awaken- main motivation for attending college dence as they should be. They declare, for ings that yielded social, political and eco- (rather than intellectual enrichment). instance, that “growth has largely finished nomic reforms. Those movements were Domineering responses to anxiety are its work”, and that “higher average materi- generally bottom-up affairs, however, associated with loss of empathy and delu- al standards in the rich countries no longer powered by a sense of purpose and moral sions of grandeur. Thus highly successful improve well-being”. This is a controver- outrage. WhetherAmerica, Britain orother people often display narcissistic or even sial judgment. Work by another pair of an- sickly places retain the capacity for such psychopathic behaviour. In surveys, the alysts, Betsey Stevenson and Justin Wolf- mobilisations is an open question. 7 The Economist June 16th 2018 Books and arts 73

The making of an auteur South African ﬁction The painting and Together, once the moth

Room to Dream. By David Lynch and Kristine OK, Mr Field. By Katharine Kilalea. Tim McKenna. Random House; 592 pages; $32. Duggan Books; 208 pages; $21. Faber & Canongate Books; £25 Faber; £12.99 NE evening in the 1950s David Lynch HEN Max Field, a failing British con- Oand his brother were wandering Wcert pianist, breaks his wrist in a train along the quiet, dimly lit streets of Boise, accident, he tries out a new life. He buys a Idaho, when they encountered a stum- replica Le Corbusier house in Cape Town bling, naked woman. “Maybe it was some- that was, according to the estranged wife thing about the light and the way she came ofits architect, intended only as a modern- out of the darkness, but it seemed to me ist holiday home. After Max moves there that her skin was the colour of milk, and with his wife Mim, his life seems to deteri- she had a bloodied mouth,” Mr Lynch re- orate further. Out of this simple premise members. He wanted to help her, but did emerges a dazzling debut novel. not know what to do or say. “She was Katharine Kilalea is a poet who grew up scared and beat up, but even though she Damn good coffee in “Twin Peaks” in South Africa and hasworked in an archi- was traumatised, she was beautiful.” tecture practice. All these experiences in- FansofMrLynch will recall a disturbing ing heat inside”. He didn’t “get there” until form “OK, Mr Field”, whether through her scene like this one from “Blue Velvet”, a he was 18. Of one Catholic girl in high luminous use of language, her descrip- film released in 1986 that starred Isabella school, he reports: “We probably did more tions of Cape Town or her understanding Rossellini. That movie, the director’s on the early dates than later, because she of how space can be constricting and ex- fourth, established him as an auteur of kept going to catechism and finding out pansive, vertiginousand comforting, at the woman-in-trouble surrealism. Critics have more things she wasn’t allowed to do.” same time. Detailsare observed intimately, strived to interpret his idiosyncratic oeu- Characters in his life might as well be char- like pin-pricks. The muscles around the vre, but “Room to Dream”, a story of his acters in his films. “His head was as big as a eyes of Hannah Kallenbach, the architect’s life, shows that many of his themes derive five-gallon can,” he writes of an acquaint- wife, contract “very slightly as though fo- from childhood—ideas and images lurking ance, “and he had a huge beard and giant cusing on something very small or squint- in shadows that Mr Lynch has filled with torso and the legs ofa three-year-old.” ing against the sun”. imagination and dread. Mr Lynch betrays an affinity for spiritu- Max narrates the book. His voice is de- “Room to Dream” is itself an unusual ality, numerology, conspiracy theories and tached and wry, not unlike a character artefact. Its chapters alternate between a fate. He thinks Lyndon Johnson was be- from a story by Samuel Beckett. Events biography by Kristine McKenna and a hind the Kennedy assassination, since he seem to just happen to him; he frequently memoir by Mr Lynch. Ms McKenna nar- was just “one twenty-five cent bullet” seems absurd. “I didn’t miss her in the way rates the major turning points in her sub- away from the presidency. He believes you’re meant to miss someone you love,” ject’s life: his move to Virginia for high people “can go into the future”, though he he thinksafterMim leaveshim, before real- school, where he became a painter; the ear- allows that this is “not easy”. Scenes in his ising how much her absence has affected ly experimental films he made in Philadel- films come to him in dreams, “the logic” of him. Soon he finds himself talking more phia, including a creepy short called “The which appeals to him. He is a devotee of and more to an imaginary version of Han- Grandmother”; his acceptance at the transcendental meditation, and he be- nah, and then driving to her house each American Film Institute in Los Angeles, lieves in karma: “There’s a law of nature night to spy on the real woman. where he studied alongside Terrence Ma- that says what you sow is what you reap As with much ofBeckett’s writing, “OK, lick and Paul Schrader and embarked on and you come into life with the certainty Mr Field” is often bleakly comic. But at mo- his first feature film, “Eraserhead” (1977). that some of your past is going to visit you ments it is also tender(without being senti- Several of his friends tell Ms McKenna in this life.” mental), depicting the strange dream-like that Mr Lynch combines a sweet nature With each quirk Mr Lynch gives fans inner life of someone who is terribly lone- with dark, twisted fascinations. Jack Fisk, further clues to understanding his art. Lau- ly. Its descriptions of piano-playing—even who would become a production designer ra Palmer of “Twin Peaks”, his television with a damaged wrist—are superb: on his films, recalls a moth landing in the masterwork, seems to be his favourite That night, as I sat at the piano, the piece thick paint of one of his pictures and strug- woman in trouble, aside perhaps from wasn’t just a retelling of the story of Chopin gling to death: “I remember he got so excit- Marilyn Monroe, whose story he says he and his situation (like mine, only more lone- ed about that, seeing that death mixed in wanted to tell on screen. He implies that ly), it was something that was happening, with his painting.” Mr Lynch asked Raf- Monroe may have been murdered by the there on the piano, a relationship unfolding faella de Laurentiis, a film producer, forher Kennedy family (the book is full of suspi- between two hands which were like two uterus when she had a hysterectomy (she cious deaths, both famous and obscure). characters, one expressive, the other inexcit- gave him a pig’s instead). When he castMsRossellini in “Blue Vel- able, who’d been together once but were Still, the humour and eccentricity ofMr vet”, it was not just her beauty but the look now detached. Lynch’s own reminiscences and observa- in her eyes, “a fear in there”, that made her This sense of something being separated tions are the book’s main pleasure. He is right forthe part. MrLynch has been seeing from what made it whole runs through the reticent, in an old-fashioned way, about his the same dark visions since he was a boy, novel. Ms Kilalea sketches this sad, slightly love affairs (he has been married four translating them to a spectacular canvas. surreal situation without mawkishness or times). But he says he likes “librarian types As he writes in this book, “you’re basically morbidity. “OK, Mr Field” introduces a …theirouterappearance hidingsmoulder- who you are from the start.” 7 striking new voice in fiction. 7 74 Books and arts The Economist June 16th 2018

Art and posterity with the stiffformality ofan Egyptian pha- raoh; “Chariot” (1950) echoes figures un- Rising up to heaven earthed from Etruscan tombs. Several early works, made while he was a member of the Surrealist movement, recall the simplified forms ofancient Cycladic art. But his output is also distinctly contem- NEW YORK porary. Eschewing the heroic, monumen- tal approach which for centuries was Alberto Giacometti’s figures are as compelling today as when they were made sculpture’s default mode, his figures are HE man strides forward, bent slightly Guggenheim exhibition, says Giacometti evocations of disquiet and discontent that Tat the waist as if resisting a stiff breeze. was “an artist in some way lonely in his fit a world disillusioned with bombast. He is not so much gaunt as spectral, own time”. The bodies he models or carves have lost stretched out like chewing gum, as insub- After the second world war, Ms Fonta- their physical integrity, a sense of a clear stantial as smoke. And yet, despite his frail- nella notes, abstraction was widely boundary between exterior and interior. ty,he is determined, even heroic. “Walking viewed as the art of the future. Stubbornly, They are kneaded, gnawed at, poked and Man I”, a bronze made by Alberto Giaco- Giacometti returned to the human form. In gouged, reaching out across vast expanses metti in 1960, is a searing monument to an the1940sand1950she developed hissigna- even as they seem about to collapse under era of anxiety,and a symbol of endurance ture style, creating those impossibly atten- their own weight. They are rooted to the in the face ofoverwhelming odds. uated figures that his friend Jean-Paul Sar- ground, their striving made more poignant During his own life Giacometti, who tre compared to “the fleshless martyrs of by its obvious futility. was born in Switzerland in 1901, some- Buchenwald”. But while these fragile mor- times seemed too outmoded and idiosyn- tals, often so spindly that they seem to be The strength offrailty cratic to win acclaim. But his reputation on the point of vanishing, emerged in re- Thissense ofyearningand seeking, but not has continued to grow while those of his sponse to war and genocide, they embody finding, is equally evident in his lesser- contemporaries, who clung to modernist more than horror. These “fine and slender known drawings and paintings. Typical of orthodoxy, have faded. Today his human- natures rise up to heaven,” Sartre contin- Giacometti’s restlessness is “Yanaihara ity and pathos appeal to audiences in a ued; “they are dancers, they are made of Seated Full-Length” (1957), a portrait for way that more formal sculptors cannot. A the same rarefied matterasthe glorious bo- which the sitter posed 230 times, for five to flurry of recent activity has solidified his diesthatwere promised us.” Workssuch as eight hours each day. After all that effort, place among a small group of artists, in- “Walking Man I” and “Man Pointing”, both the subject’s features are almost entirely cluding Pablo Picasso and Frida Kahlo, currently on view at the Guggenheim, obliterated by a smear of brown paint—a whose workand persona have seeped into seem damaged but aspiring, resolute in the testament to the difficulty of capturing an- public consciousness. face ofadversity. other human being in full. A large-scale retrospective of his work Giacometti also stood apart from his By providing resources for scholars, opened at the Guggenheim Museum in peers in his willingness to embrace the and facilitating exhibitions, Ms Grenier New Yorkon June 8th (Tate Modern in Lon- past. Rejecting the modernist exhortation and the foundation have helped keep the don hosted a similar show last year). to “make it new” (in Ezra Pound’s phrase), Giacometti legend alive. Yet they have suc- Meanwhile the Giacometti Institute will he conducted a lifelong dialogue with a ceeded only because his work still reso- open in Paris on June 21st. Both are projects sculptural tradition stretching back thou- nates. A master ofvulnerability, Giacomet- of the Fondation Giacometti, which was sands of years. Many of his statues stand ti offers solace in an age ofdoubt. 7 established in 2003 to promote study and appreciation of the artist, and to manage the world’s largest collection of his paintings, sculptures and drawings (be- queathed by his widow, Annette). The institute will serve as a permanent exhibition space; enthusiasts will be able to make a pilgrimage to Giacometti’s studio, preserved like a holy shrine after his death in1966 and now reconstructed. Giacometti has also featured on the sil- ver screen. “Final Portrait”, a homage released in America in March, stars Geoffrey Rush as the tormented genius. His stock is rising at the auction house, too. In 2015 “Man Pointing” (1947) fetched $141m, the highest price ever paid fora sculpture. It helps that Giacometti looked the part. With his craggy features and mane of wild grey hair, his roguish charm and serial infi- delities, he conforms exactly to popular notions of what an artist should be. But, says Catherine Grenier, director ofthe Fon- dation Giacometti, the artist himself was largely uninterested in fame and fortune. He insisted on following his own path, shrugging off the whims of art-scene fashion. Megan Fontanella, chief curator of the The legend in his lair Courses 75

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Ministry of Education, Culture and Research Request of the Republic of Moldova The Ministry of Education, Culture and Research of the Republic of for EOI Moldova announces the public tender for the private partner selection Operationalising a to implement the Public-Private Partnership Project “Design and Commodity Exchange construction of the polyvalent arena of national interest”.

The Federal Government of Nigeria, through an Act of the National Assembly More information available at (NSIA Act 2011), established the Nigeria Sovereign Investment Authority (“NSIA”). www.mecc.gov.md/ro/content/concurs-ppp-arena-polivalenta. NSIA’s mandate includes, amongst others, promoting fiscal stability, building a Deadline – July 4, 2018. savings base for future generations of Nigerians and enhancing the development of Nigeria’s infrastructure. As part of its mandate to invest in projects that contribute to infrastructure development and economic diversification, NSIA has obtained approval from Appointments its Board to invest in a commodity exchange (“the Exchange”). The focus of the Exchange will be on agricultural commodities, including Maize, Paddy rice, Sorghum, Cocoa and Soybean. To advertise within the classified section, contact: Consequently, NSIA is seeking a formal Expression of Interest (“EOI”) from organisations with a strong track record of commodity exchange set-up and UK/Europe operations in emerging markets to partner with the NSIA to operationalise the Agne Zurauskaite - Tel: +44 20 7576 8152 Exchange (“the Assignment”). United States All interested parties must formally indicate interest and provide information Richard Dexter - Tel: +1 212 554 0662 demonstrating suitability and competency to undertake the Assignment. Such information should include a detailed company profile, description of similar Asia assignments undertaken, CVs of relevant personnel/parties to the Assignment. Shan Shan Teo - Tel: +65 6428 2673 Please forward a soft copy of your EOI to [email protected] on or before 6:00pm GMT, 29th June 2018. Interested parties may also send inquiries to the aforementioned email address for further information or Readers are recommended clarification. to make appropriate enquiries and take appropriate advice before sending money, incurring Please note that this is an invitation for EOI. Upon receipt of your submission, any expense or entering into a binding commitment in relation to an advertisement. we will only issue a formal Request for Proposal to qualified candidates. The Economist Newspaper Limited shall not be liable to any person for loss or damage incurred or suffered as a result of his/her accepting or offering to accept an invitation www.nsia.com.ng contained in any advertisement published in The Economist. The Economist June 16th 2018 76 Economic and financial indicators The Economist June 16th 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 13th year ago United States +2.8 Q1 +2.2 +2.8 +3.5 Apr +2.8 May +2.5 3.8 May -466.2 Q4 -2.6 -4.6 2.96 - - China +6.8 Q1 +5.7 +6.6 +6.8 May +1.8 May +2.3 3.9 Q1§ +121.0 Q1 +1.1 -3.5 3.55§§ 6.41 6.80 Japan +1.1 Q1 -0.6 +1.3 +2.5 Apr +0.6 Apr +1.1 2.5 Apr +196.2 Apr +3.9 -4.7 0.02 110 110 Britain +1.2 Q1 +0.4 +1.4 +1.8 Apr +2.4 May +2.5 4.2 Mar†† -106.7 Q4 -3.8 -1.8 1.51 0.75 0.79 Canada +2.3 Q1 +1.3 +2.3 +4.9 Mar +2.2 Apr +2.1 5.8 May -53.8 Q1 -2.6 -1.9 2.32 1.30 1.32 Euro area +2.5 Q1 +1.5 +2.3 +1.7 Apr +1.9 May +1.6 8.5 Apr +473.7 Mar +3.2 -0.8 0.48 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 0.61 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 0.85 0.85 0.89 France +2.2 Q1 +0.7 +2.0 +2.1 Apr +2.0 May +1.8 9.2 Apr -7.8 Apr -1.0 -2.4 0.85 0.85 0.89 Germany +2.3 Q1 +1.2 +2.2 +2.0 Apr +2.2 May +1.7 3.4 Apr‡ +322.8 Apr +7.9 +1.1 0.48 0.85 0.89 Greece +2.3 Q1 +3.1 +1.8 +1.9 Apr +0.6 May +0.7 20.1 Mar -1.8 Mar -1.2 -0.3 4.58 0.85 0.89 Italy +1.4 Q1 +1.1 +1.4 +1.9 Apr +1.1 May +1.2 11.2 Apr +53.0 Mar +2.7 -2.0 2.81 0.85 0.89 Netherlands +2.8 Q1 +2.1 +2.8 +5.0 Apr +1.7 May +1.5 4.9 Apr +84.9 Q4 +9.7 +0.8 0.67 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 1.38 0.85 0.89 Czech Republic +3.7 Q1 +1.6 +3.5 +5.5 Apr +2.2 May +1.8 2.3 Apr‡ +1.9 Q4 +0.7 +0.9 2.13 21.9 23.3 Denmark -1.3 Q1 +1.7 +1.8 +6.1 Apr +1.1 May +1.1 4.0 Apr +20.9 Apr +7.7 -0.7 0.51 6.33 6.64 Norway +0.3 Q1 +2.5 +1.9 -1.3 Apr +2.3 May +2.2 3.9 Mar‡‡ +22.8 Q1 +6.5 +4.9 1.90 8.02 8.43 Poland +5.2 Q1 +6.6 +4.2 +9.2 Apr +1.7 May +1.9 6.1 May§ -0.8 Apr -0.7 -2.2 3.25 3.63 3.74 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 62.4 56.9 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 0.65 8.63 8.70 Switzerland +2.2 Q1 +2.3 +2.2 +8.7 Q4 +1.0 May +0.8 2.6 May +66.6 Q4 +9.2 +0.8 0.09 0.99 0.97 Turkey +7.4 Q1 na +4.3 +5.1 Apr +12.1 May +10.9 10.6 Feb§ -57.1 Apr -5.5 -2.8 16.32 4.63 3.52 Australia +3.1 Q1 +4.2 +2.8 +4.3 Q1 +1.9 Q1 +2.2 5.4 May -36.8 Q1 -2.5 -1.2 2.81 1.32 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 2.35 7.85 7.80 India +7.7 Q1 +10.1 +7.3 +4.9 Apr +4.9 May +4.7 5.3 May -48.7 Q1 -2.2 -3.5 7.93 67.6 64.4 Indonesia +5.1 Q1 na +5.3 +4.7 Apr +3.2 May +3.6 5.1 Q1§ -20.9 Q1 -2.2 -2.5 7.23 13,932 13,291 Malaysia +5.4 Q1 na +5.5 +4.5 Apr +1.4 Apr +2.5 3.3 Apr§ +12.2 Q1 +3.2 -2.8 4.23 3.99 4.26 Pakistan +5.4 2018** na +5.4 +4.2 Apr +4.2 May +5.0 5.9 2015 -16.7 Q1 -5.8 -5.4 8.50††† 119 105 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 6.10 53.2 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 2.61 1.34 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 1,077 1,128 Taiwan +3.0 Q1 +0.8 +2.7 +3.1 Mar +1.6 May +1.5 3.7 Apr +84.8 Q1 +13.5 -0.9 0.95 29.9 30.2 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 2.57 32.2 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 8.08 25.5 15.9 Brazil +1.2 Q1 +1.8 +2.2 +8.9 Apr +2.9 May +3.4 12.9 Apr§ -8.9 Apr -1.1 -7.1 9.82 3.71 3.32 Chile +4.2 Q1 +4.9 +3.7 +7.6 Apr +2.0 May +2.4 6.7 Apr§‡‡ -3.1 Q1 -1.1 -2.0 4.57 635 663 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 6.58 2,860 2,934 Mexico +1.3 Q1 +4.6 +2.1 +3.8 Apr +4.5 May +4.4 3.4 Apr -15.9 Q1 -1.7 -2.3 7.96 20.6 18.1 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 3.27 3.28 Egypt +5.3 Q4 na +5.4 +3.7 Apr +11.5 May +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 1.92 3.59 3.53 Saudi Arabia -0.9 2017 na +1.0 na +2.6 Apr +4.4 6.0 Q4 +15.2 Q4 +7.0 -4.4 na 3.75 3.75 South Africa +0.8 Q1 -2.2 +1.9 -1.6 Apr +4.5 Apr +4.8 26.7 Q1§ -8.6 Q4 -2.7 -3.5 9.00 13.2 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 16th 2018 Economic and ﬁnancial indicators 77

Markets % change on Coal Consumption, % change on a year earlier Dec 29th 2017 The world’s coal market experienced an Index one in local in $ China India Rest of world Jun 13th week currency terms unexpected revival in 2017, according to 6 United States (DJIA) 25,201.2 +0.2 +1.9 +1.9 an annual energy round-up from BP, an China (Shanghai Comp) 3,049.8 -2.1 -7.8 -6.2 oil firm. The uptick was driven partly by a 22,966.4 +1.5 +0.9 +2.9 Japan (Nikkei 225) resurgence of demand for coal in China, 4 Britain (FTSE 100) 7,703.7 -0.1 +0.2 -1.0 which increased by 0.5% year on year, Canada (S&P TSX) 16,265.8 +0.5 +0.3 -3.1 after falling for three consecutive years. Euro area (FTSE Euro 100) 1,215.1 +0.6 +0.4 -1.5 Although China is attempting to diversify 2 Euro area (EURO STOXX 50) 3,479.6 +0.5 -0.7 -2.6 away from the dirtiest fuels, it used more + Austria (ATX) 3,357.3 +1.7 -1.8 -3.8 Belgium (Bel 20) 3,813.9 +0.6 -4.1 -6.0 coal to satisfy its growing electricity 0 demand. The global power sector still France (CAC 40) 5,452.7 -0.1 +2.6 +0.6 – Germany (DAX)* 12,890.6 +0.5 -0.2 -2.2 remains heavily dependent on coal, too. Greece (Athex Comp) 769.7 -1.5 -4.1 -6.0 Despite growth in the use of renewables 2 Italy (FTSE/MIB) 22,216.2 +1.9 +1.7 -0.3 in recent years, and efforts to shift power Netherlands (AEX) 564.0 +0.3 +3.6 +1.5 generation away from coal, it accounts 4 Spain (IBEX 35) 9,899.1 +1.1 -1.4 -3.4 for around two-fifths of the total, the 2008 09 10 11 12 13 14 15 16 17 Czech Republic (PX) 1,082.0 +0.8 +0.4 -2.3 same share as two decades ago. Source: BP Denmark (OMXCB) 895.9 -0.5 -3.4 -5.3 Hungary (BUX) 35,868.6 -3.5 -8.9 -13.6 Norway (OSEAX) 1,018.3 +1.4 +12.3 +14.5 Poland (WIG) 58,686.2 -0.7 -7.9 -11.9 Other markets The Economist commodity-price index Russia (RTS, $ terms) 1,147.6 -2.6 -0.6 -0.6 2005=100 % change on % change on Sweden (OMXS30) 1,571.1 +0.8 -0.4 -5.5 Dec 29th 2017 one one Switzerland (SMI) 8,634.6 +1.0 -8.0 -9.0 Index one in local in $ Jun 5th Jun 12th* month year Turkey (BIST) 93,504.8 -3.3 -18.9 -33.6 Jun 13th week currency terms Dollar Index Australia (All Ord.) 6,133.1 -0.1 -0.6 -3.4 United States (S&P 500) 2,775.6 +0.1 +3.8 +3.8 All Items 156.3 156.2 +0.2 +10.7 Hong Kong (Hang Seng) 30,725.2 -1.7 +2.7 +2.3 United States (NAScomp) 7,695.7 +0.1 +11.5 +11.5 Food 156.7 155.0 -2.7 +0.9 India (BSE) 35,739.2 +1.6 +4.9 -1.0 China (Shenzhen Comp) 1,731.4 -2.7 -8.8 -7.3 Indonesia (JSX) 5,993.6 -1.3 -5.7 -8.2 Japan (Topix) 1,800.4 +1.3 -0.9 +1.1 Industrials Malaysia (KLSE) 1,763.6 -0.8 -1.8 -0.5 Europe (FTSEurofirst 300) 1,517.5 +0.4 -0.8 -2.7 All 155.9 157.5 +3.3 +23.1 Pakistan (KSE) 43,507.5 -1.4 +7.5 -0.5 World, dev'd (MSCI) 2,140.2 +0.2 +1.7 +1.7 Nfa† 148.8 148.1 +2.6 +12.8 Singapore (STI) 3,392.5 -2.2 -0.3 -0.2 Emerging markets (MSCI) 1,135.7 -1.3 -2.0 -2.0 Metals 158.9 161.5 +3.5 +27.6 South Korea (KOSPI) 2,468.8 +0.6 +0.1 -0.6 World, all (MSCI) 519.7 nil +1.3 +1.3 Sterling Index Taiwan (TWI) 11,173.2 -0.3 +5.0 +4.5 World bonds (Citigroup) 938.4 -0.1 -1.2 -1.2 All items 213.1 212.8 +1.2 +5.6 Thailand (SET) 1,718.3 -1.2 -2.0 -0.7 EMBI+ (JPMorgan) 783.6 -0.9 -6.3 -6.3 Argentina (MERV) 30,228.4 -0.7 +0.5 -25.9 Hedge funds (HFRX) 1,274.6§ +0.2 -0.1 -0.1 Euro Index Brazil (BVSP) 72,122.1 -5.2 -5.6 -15.5 Volatility, US (VIX) 12.9 +11.6 +11.0 (levels) All items 166.6 164.8 +0.8 +5.3 Chile (IGPA) 27,943.0 +0.5 -0.1 -3.3 CDSs, Eur (iTRAXX)† 69.1 +2.7 +53.1 +50.1 Gold Colombia (IGBC) 12,301.3 nil +7.2 +11.8 CDSs, N Am (CDX)† 63.6 -1.2 +29.5 +29.5 $ per oz 1,295.3 1,298.9 +0.4 +2.8 Mexico (IPC) 46,760.6 +3.5 -5.3 -10.1 Carbon trading (EU ETS) € 15.3 -4.4 +88.3 +84.6 West Texas Intermediate Peru (S&P/BVL)* 21,137.4 -1.0 +5.8 +5.0 Sources: IHS Markit; Thomson Reuters. *Total return index. $ per barrel 65.5 66.4 -6.9 +42.8 Egypt (EGX 30) 16,178.3 +1.7 +7.7 +7.1 †Credit-default-swap spreads, basis points. §Jun 12th. Israel (TA-125) 1,392.6 +0.8 +2.1 -1.2 Sources: Bloomberg; CME Group; Cotlook; Darmenn & Curl; FT; ICCO; Indicators for more countries and additional ICO; ISO; Live Rice Index; LME; NZ Wool Services; Thompson Lloyd & Saudi Arabia (Tadawul) 8,270.5 -1.3 +14.4 +14.5 Ewart; Thomson Reuters; Urner Barry; WSJ. *Provisional South Africa (JSE AS) 58,437.2 +0.6 -1.8 -8.2 series, go to: Economist.com/indicators †Non-food agriculturals. 78 Obituary Anthony Bourdain The Economist June 16th 2018

through leech-filled jungle. Deliberately get lost. For he was famous now. Not as a chef, forhe’d never been a really great chef, and he loathed the commercialism of the celebrity-chef crowd; he would rather write “serial wanker” in his passport. But just as his own curious, restless self. His motto was to keep moving, as far as he could. Keep moving. Tryeverything. In all thisbuzzingaround, however, one thing was certain. Food had power. He recognised no god, was hostile to any kind of devotion. But “the food thing” ordered his life. That first taste of a glistening, vaguely sexual, seawatery oyster on a fishing boat in France, at 12, was an initiation. It determined his future. As for that nerve-shattering kitchen chaos, it masked the mechanical precision of a submarine crew. Endur- ance. Achievement. Three hundred eggs Benedict, not one returned. Food imposed absolutes: the things you must do (use a sharp knife) and things you must not do (eat unopened mussels, use a garlic press). And food conferred a place in a hierarchy ofthe scarred. Even ifyou entered as a miserable puta, hard workgot you respect. The power of food was also extraordi- The power of food narily simple. His aim in his first TV series, “A Cook’s Tour”, was to find the perfect meal. And he knew it wouldn’t be in some five-star restaurant. Food made him happi- est ifhe experienced it in a purely emotion- al way. It might be the company, the mo- Anthony Bourdain, chef, travellerand food-writer, hanged himselfon ment, or some memory it evoked: of his June 8th, aged 61 mother’s grilled-cheese sandwiches, or his HEN interviewers dug to the essence most definitively in 1999 when the New mother-in-law’s meatloaf. A plate of piss- Wof him, Anthony Bourdain said he Yorker published a piece by him and he be- poor peasant food could become some- was a simple man. He knew his life didn’t came a storyteller, life got no simpler. The thing sublime, like feijoada in Brazil. His give that impression. Much of it was set in piece was called “Don’t Eat Before Reading perfect meal was the street-stall pho of his roaring, steamy, yelling kitchens, from his This”. It reminded finnicky New Yorkers favourite country, Vietnam. In “Kitchen first job as a dishwasher at the Dread- that fine cookery was all about cruelty, Confidential” he warned readers to be- naught in Provincetown, Massachusetts, blood, engorged livers, rot and decay. Peo- ware ofrestaurant dirt. He learned to relish through the slow climb as prep drone, line ple liked it, so he wrote a book, “Kitchen many unwashed hands delving in one pot. cook or sous chef at various eateries round Confidential”, mostly at 5am between New York, to head chef at Les Halles in kitchen shifts, in which all the dirty secrets Fermented shark Manhattan. He weathered the hazards of of restaurants came out. Uneaten bread So much globe-trotting frayed him. And it pots, knivesand fire, the dread ofscorching sent out to the next table. Leftover butter destroyed his marriages, though few knew the demi-glace or spilling a plate, under the strained of cigarette ash and used for hol- better how food could bring people close. half-friendly hail of colleagues denounc- landaise. Long-stored fish served up on In his TV series perfect strangers opened ing him as a pédé, a maricón, a puta and a Mondays. He praised offal and foie gras, up to him, telling him their stories over motherfucker, the international language cursed fascist vegetarians. People de- meals in their homes. He didn’t go in as a ofcuisine everywhere. voured it, and outofthatcame TV serieson journalist, but as a guest, asking “What do At Les Halles, he got through by crunch- three networks. He just floated the idea of you like to cook? What makes you happy?” ing aspirins like sweets. Before that he was going to cool places, eating great food, In reply they would offerhim food steeped high all the time. From his teens he while they paid. And they bought it. in culture, history and memory. It could be dropped acid, furiously miserable that he From that point he travelled seven vile—fermented shark in Iceland, warthog was too young and too suburban to have months a year, to almost every country on rectum in Namibia. But he would always experienced the 1967 Summer of Love. In Earth. There he’d hop on a boat, a train or eatit. Itwasn’tworse (he said) than a Chick- New York he moved on to heroin, just be- motorbike. He rode like a rocker with his en McNugget. And he wanted to return the cause it was the most dangerous drug in gristly, tendony, jujitsu-honed body lean in kindness. On one trip to the Middle East he the room. He would always try anything jeans and T-shirt. He would seek out dim, wondered aloud—as similar feasts were once, but he used heroin for seven years. hidden dives known only to locals. (Once, served up byboth Jewsand Arabs—wheth- Should have died. He quit cold turkey, then in deepestTokyo, he ate the bestseafood of er the world’s problems couldn’t all be stuffed his nose with cocaine. On drugs he his life in such a place. Twenty courses, a solved if people just sat down, without was a self-destructive lout. Aggressive, de- saké shot between each one). As well as fear, and ate together. For good food was pressive, almost unemployable. A mess. eating, he would have adventures. Go sky- made with love, just as good sex was. To And when all that changed in the 1990s, diving. Swim in a frozen lake. Hack share it was to love one another. 7

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