The Economist April 11Th 2015 5

Iran’s nuclear pledges Malaysia’s illiberal lurch Europe’s economy—the parrot twitches The promise of Sky-Fi

APRIL 11TH–17TH 2015 Economist.com Tambora: the big bang of 1815 What does Hillary stand for?

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8 The world this week Asia 35 Economic policy in Japan Leaders Abe and the central bank 11 Hillary Clinton in 2016 36 Terrorism in Malaysia What does she stand for? Illiberal measures 12 Repression in Malaysia 37 Politics in Taiwan Disconnect Grassroots power 12 The euro-zone revival 37 Banning beef in India Don’t get europhoric The politics of beef 14 Nuclear non-proliferation 38 Australia’s Great Barrier Iran The promise and dangers A nuclear test for the Reef of negotiating with the mullahs: Obama doctrine Judgment day 38 The reef’s leader, page 14. The odds on a 16 Britain’s taxes nuclear deal have shortened, No to non-doms crown-of-thorns starﬁsh On the cover Coral-killers but it is not yet in the bag, The most familiar presidential page 42 candidate is surprisingly Letters unknown: leader, page 11. China 18 On equality, Britain, Hillary Clinton has no serious Singapore, airports, 39 Opinion polls rivals for the Democratic business cards Taking the pulse nomination. But voters still 40 Government websites have plenty of doubts about Frozen in time her, page 25 Brieﬁng 41 Banyan 21 Volcanoes and climate Where all Silk Roads lead After Tambora The Economist online Middle East and Africa Daily analysis and opinion to United States supplement the print edition, plus 42 Iran nuclear deal audio and video, and a daily chart 25 The Democratic Too soon to celebrate Economist.com nomination Cuba American business is A contest, or a coronation? 43 The war against IS (1) eager to cross the Florida E-mail: newsletters and Creeping towards Damascus Strait, but obstacles remain, mobile edition 28 Rand Paul An eye doctor’s vision 43 The war against IS (2) page 31. Latin America will Economist.com/email Mosul beckons start to put pragmatism ahead Print edition: available online by 28 Guns and anger of ideology in dealing with the Trigger happy 44 Libya’s civil war 7pm London time each Thursday An oily mess United States: Bello, page 33 Economist.com/print 29 Drought in California The price is wrong 45 Nigeria’s president-elect Audio edition: available online Don’t expect miracles to download each Friday 29 Chicago Economist.com/audioedition Rejecting Hanukkah Harry 45 Urban regeneration Polishing the city of gold 30 Lexington Why students make better 46 An atrocity in Kenya senators Could things get worse?

Volume 415 Number 8933 The Americas 31 Normalisation with Cuba Published since September 1843 The thrill of the thaw to take part in "a severe contest between intelligence, which presses forward, and 32 Elections in Bolivia an unworthy, timid ignorance obstructing A rebuff to Evo Morales British tax rules Labour’s plan our progress." to end a tax break for the rich Editorial offices in London and also: 33 Bello and mobile is welcome. But Atlanta, Beijing, Berlin, Brussels, Cairo, A warmer Latin climate for Chicago, Hong Kong, Johannesburg, Lima, the party must not scare off Los Angeles, Mexico City, Moscow, New Delhi, Obama business: leader, page 16. New York, Paris, San Francisco, São Paulo, Ed Miliband promises to abolish Singapore, Tokyo, Washington DC non-domiciled residents, page 53. The Tories and Labour are running dreary campaigns, pandering to their bases: Bagehot, page 54. Visit our website to read our special report on the wackiest, most diverse, least predictable British election for many years

1 Contents continues overleaf 6 Contents The Economist April 11th 2015

GDP Europe Finance and economics Pre-crisis peak=100 47 Reforming Italy’s 65 Growth in America 110 government Careful now United States Working on it 105 67 Crowdfunding 48 Turkish politics Open the floodgates 100 Taken hostage 67 The global economy 95 Euro area 48 Poland’s election Diminished hopes 90 Echoing crash 68 Financial secrecy 2007 09 11 13 14 49 Eastern Ukraine Cracking the shells Source: Eurostat Kharkiv in the fold 68 Cash in Argentina Europe’s economy Investors 50 Greece and Russia Low bill Expanding the internet are getting excited about Desperate times 70 Free exchange A group of companies have Europe again—too excited: 50 French radio Robin Hood economics bold ambitions to use leader, page 12. Companies in Vive la résistance satellites, drones and balloons the euro zone are finally to take the internet to the enjoying the benefits of a 51 Charlemagne Science and technology unconnected, page 72 A Minsk muddle tentative recovery, but its 72 Expanding the internet continuance is by no means Sky-Fi assured, page 61. Italy’s prime Subscription service Britain 74 Medical robotics minister, Matteo Renzi, is For our latest subscription offers, visit 52 Scotland To the point Economist.com/offers methodically pushing through Sturgeon calls the tune For subscription service, please contact by his reforms, but the biggest telephone, fax, web or mail at the details ones will take years to 53 Taxes and the election Books and arts provided below: All must pay Telephone: 1 800 456 6086 (from outside complete, page 47 75 Venice Biennale the US and Canada, 1 636 449 5702) 54 Bagehot Radical on the Rialto Facsimile: 1 866 856 8075 (from outside All about that base the US and Canada, 1 636 449 5703) 76 Africa’s natural resources Web: Economistsubs.com Looting machine E-mail: [email protected] Post: The Economist Subscription International 76 John Aubrey Services, P.O. Box 46978, 55 Energy efficiency Fictional diarist St. Louis, MO 63146-6978, USA Subscription for 1 year (51 issues) Green around the edges 77 Alberto Manguel United States US$160 56 Renewable energy Quirky and inquisitive Canada CN$165 Not a toy 77 The dead and the dying Latin America US$338 How to remember

Business 78 Sarah Hall’s fiction Principal commercial offices: 57 Shell and BG Born to be wild 25 St James’s Street, London sw1a 1hg Malaysia A thuggish A vote for gas Tel: 020 7830 7000 government is playing racial Rue de l’Athénée 32 58 Commercial drones 83 Economic and financial 1206 Geneva, Switzerland politics. Najib Razak should be On the up indicators Tel: 4122 566 2470 dressed down: leader, page 12. 59 Streaming video Statistics on 42 750 3rd Avenue, 5th Floor, New York, NY 10017 An anti-terror law dents A business home run economies, plus our Tel: 1212 5410500 freedom in Malaysia, page 36 monthly poll of forecasters 59 Drug dealing 60/F Central Plaza 18 Harbour Road, Wanchai, Hong Kong The net closes Tel: 852 2585 3888 Obituary 60 Ageing consumers Other commercial offices: Chasing the grey yen 86 Fredric Brandt Chicago, Dubai, Frankfurt, Los Angeles, 61 Europe’s recovery The baron of Botox Paris, San Francisco and Singapore Green shoots, risk of frost 63 Schumpeter Robert Schuller, retailer of religion

The Tambora volcano Two hundred years ago the PEFC certiﬁed most powerful eruption in This copy of The Economist is printed on paper sourced modern history made itself from sustainably managed felt around the world. It could forests certiﬁed to PEFC happen again at almost any PEFC/29-31-58 www.pefc.org time, pages 21-24

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8 The world this week The Economist April 11th 2015

California brought in the comes from a decision to ed it. Mr Le Pen had made Politics state’s first-ever mandatory reduce subsidies for electricity controversial statements restrictions on water use fol- prices, which the government downplaying the significance lowing fouryears ofdrought. had kept artificially low for ofthe Holocaust and called The restrictions will fall mostly political reasons. Manuel Valls, the French prime on urbanites, who use 10% of minister, an “immigrant” (he the water. Farms, who use At least 25 people died in was born in Spain). Ms Le Pen 40%, will be relatively un- floods in and near Chile’s decried her father’s statements scathed. (The rest is reserved Atacama Desert, normally one as “political suicide”. forenvironmental purposes.) ofthe driest areas on Earth. Emergency workers recorded Turning to Asia Dzhokhar Tsarnaev was found another125 people missing America’s secretary ofdefence, guilty ofbombing the Boston and 2,700 homeless. The Ashton Carter, began a tour of marathon in 2013, an attack president, Michelle Bachelet, Asia in an attempt to breathe that killed three people and reckons the government will new life into America’s “pivot” Gunmen from the Shabab wounded more than 250 have to spend at least $1.5 towards the continent. He Islamist militia in Somalia others. Mr Tsarnaev carried billion to repair the damage. started his tour in Japan, where attacked a university145km out the attackwith his brother, he warned countries about the (90 miles) across the border in who was killed when police Any friend will do risks ofconflict over claims to Kenya, killing at least148 tried to apprehend him. disputed islands in the East people. It was the country’s and South China Seas. worst act ofterrorism since the A police officer was charged bombing ofthe American with the murder ofan un- In India 20 people were shot embassy in Nairobi in 1998. In armed blackman in a suburb dead by police forallegedly their spree, the gunmen target- ofCharleston, South Carolina, cutting down red sandalwood ed Christians, separating them soon after a video emerged of trees, whose wood is highly from their Muslim classmates, the officer apparently shooting sought after in East Asia by before they themselves were the man as he was running furniture-makers and other killed fighting Kenyan security away. The officer claims the trades. Smuggling red sandal- forces. Kenyan military jets man had taken his stun gun. wood is a lucrative business, bombed two camps in Soma- The swift decision to prosecute but confrontations between lia used by the Shabab. formurder comes amid a Alexis Tsipras, the prime min- loggers and the authorities are national debate on the polic- ister ofGreece, visited Mos- not usually deadly. Iran and six world powers ing ofblackcommunities, cow to discuss economic (America, Russia, China, Brit- prompted by the fatal shooting co-operation with Vladimir An explosion tore through a ain, France and Germany) ofMichael Brown in Ferguson, Putin. European countries factory that produces paraxy- agreed on the “parameters” of Missouri, last August. worried that Mr Tsipras might lene (PX), a chemical used in a deal to limit the Iranian offerto obstruct sanctions plastics among other things, in nuclear programme in return Rand Paul threw his hat into against Russia in exchange for the Chinese city ofZhang- forthe lifting ofsanctions. America’s presidential race, aid to repay Greece’s colossal zhou. Last year violent protests Iran’s “breakout capability”— the second Republican official- debts; he said no such deal was erupted in a city in Guangdong the time needed to make the ly to announce that he is run- on the table. But Greece’s cash province against the construc- fissile material for an atomic ning. Meanwhile, the clock crunch is becoming ever tion ofa new PX plant. bomb—would be extended to started ticking for Hillary tighter, and the country could about a year, a condition that Clinton to declare formally run out ofmoney to repay its would hold fora decade. There after she rented offices in debts as early as next month. would also be a tougher in- Brooklyn forher national spection regime. But several campaign headquarters. A Polish radio station released crucial issues still need to be transcripts from recordings settled and much hard bar- The holiday’s over made in the cockpit ofthe gaining lies ahead ifa final The United States deported to plane that crashed in 2010, deal is to be reached by the El Salvador a formergeneral killing Poland’s president, June 30th deadline. Critics in who has been held responsi- Lech Kaczynski, and 95 others. America’s Congress are push- ble fortorture and killings The transcripts provide evi- ing forfresh sanctions. during the country’s civil war dence that officials on board in the 1980s. Eugenio Vides the plane pressured pilots to Rahm home to victory Casanova, who was head ofEl attempt to land despite danger- In Beijing a group of30 taxi Rahm Emanuel won the run- Salvador’s national guard, had ous conditions. The emergence drivers tooktheir protest offin Chicago’s mayoral lived in Florida since 1989. ofthe recordings has intruded against new restrictive laws on election, handily beating his Under an amnesty law he will on campaigning in Poland’s renewing licences to the ex- opponent, Jesus (Chuy) Garcia, not be tried at home. presidential election, sched- treme by poisoning them- by 56% to 44%. An exit poll uled forMay10th. selves with chemicals in an showed that those Chicagoans Consumer prices in Brazil rose apparent mass-suicide attempt who fretted most about the at their fastestrate since 2003. Marine Le Pen, the leader of on a busy shopping street. The perilous state ofthe city’s Inflation in the year to March the National Front in France, men had travelled to the capi- finances voted forMr Emanuel was 8.1%, mainly because of withdrew the party’s support tal from the north, near the by a margin ofmore than higher prices forfood and from her 86-year-old father border with Russia. They all two-to-one. energy. Part ofthe increase Jean-Marie Le Pen, who found- survived. 1 The Economist April 11th 2015 The world this week 9

link’s launch last year, but it rope with TNT’s extensive towards negative yields Business has been boosted by a govern- road-based logistics network. (marked in some bonds with ment decision to allow domes- maturities shorter than ten Shell said it would buy BG tic mutual funds to use it. The IMF’s latest “World Eco- years) prompted by fears of Group, an oil-and-gas com- nomic Outlook” report deflation and the European pany based in Britain, for£47 In another blockbuster deal in warned that many countries Central Bank’s quantitative- billion ($70 billion), the biggest the drug industry, Mylan face lower economic “speed easing programme. sign yet ofthe pressure to tendered an unsolicited $29 limits”, ie, reduced potential consolidate on the energy billion offerto buy Perrigo. for growth, and should “adjust Ramalinga ding-dong industry following the sharp Both companies used to be to a new reality” ofstagnant Ramalinga Raju, the founder fall in oil prices. BG’s share based in America but moved living standards. In rich econo- ofSatyam Computer Services, price had dropped by over 30% their registered offices to Euro- mies the fund reckons that was found guilty along with since last summer, making it a pean countries to take ad- ageing populations will be the nine others ofaccounting tempting takeover target. vantage oflower corporate tax. biggest hindrance to the type fraud in India’s biggest cor- Shell’s acquisition will in- ofexpansion seen in the 1990s porate scandal to date. His crease its energy reserves by and 2000s, whereas slower misconduct came to light in 25% and make it the world’s productivity in emerging 2009 when he admitted that third-biggest producer of markets will be the main factor Satyam’s books had been liquefied natural gas. holding those countries back. cooked foryears, and that a $1 billion cash pile did not exist. Interventionist, moi? A collaborative effort In an all-French affairVivendi, Jim Yong Kim, the president of Investors cheered Samsung’s a media group, started exclu- the World Bank, gave his stron- announcement that it expects sive talks with Orange, which gest backing yet to the new to make an operating profit in used to be known as France Asian Infrastructure Invest- the first quarter of5.9 trillion Telecom, to buy its Daily- ment Bank that has been won ($5.4 billion). Although motion video-sharing web- proposed, and will be led, by this will be around 30% less site. The French government FedEx was confident that it China. America has raised than in the first three months did little to assuage critics who could surmount any competi- concerns about transparency of2014, it improves on profit thinkit meddles too much in tion concerns in Europe over at the AIIB, even though many for the middle part oflast year, business matters when it its $4.8 billion bid for TNT ofits allies have signed up. Mr when Samsung’s stockwas blocked any attempt by Express, a delivery company Kim plans to place the issue hammered as it lost market Orange, in which it holds a 25% based in the Netherlands that high on the agenda ofthe share to low-cost Chinese stake, to sell Dailymotion to a has operations in 40 countries. forthcoming spring meeting of rivals. Its share price has risen foreign bidder. UPS, FedEx’s main rival in the World Bankand IMF. by 35% since October. This America, tried to buy TNT in weeksees the release ofSam- Separately, Vivendi said it 2012, but Europe’s antitrust Switzerland became the first sung’s Galaxy S6, forwhich would return €6.8 billion ($7.3 regulator withheld its approv- country to date to issue a advance orders are heavy. billion) to shareholders, resolv- al. FedEx believes its deal is ten-year sovereign bond with a ing a dispute with P. Schoen- different; it wants to combine negative yield. This is part ofa Other economic data and news feld Asset Management, an its air-delivery service in Eu- general move in Europe can be found on pages 83-84 activist hedge fund that had put pressure on the company to pay out more to investors.

In a busy weekforthe French government, it also temporarily increased its stake in Renault by 4.7% to 19.7% in order to get the carmaker to adopt a rule at its annual meeting that gives double voting rights to long-term investors who have held shares forat least two years. The rule became law last year but Renault has resisted implementing it.

Hong Kong’s Hang Seng stockmarket index soared, jumping above 27,000 forthe ﬁrst time since January 2008, thanks in part to rising trading volumes on the Shanghai-Hong Kong StockConnect scheme, which links the mainland and Hong Kong markets. Volumes had been disappointing since the The only way to ensure the health of our world is to protect the people who live in it.

Martin Philbert, Ph.D. Dean

Wherever the toughest challenges in public —and the leaders we are creating—can health may be, we will be on the front lines, accomplish. Global health challenges are creating new and exploratory paths through multiplying every day. We at the University deep science and global action that will lead to of Michigan School of Public Health work the elegant and meaningful solutions the passionately beyond the classroom to bring viable world needs. T ere is no end to what we solutions to the world’s most pressing problems.

sph.umich.edu Leaders The Economist April 11th 2015 11 What does Hillary stand for?

The most familiarcandidate is surprisingly unknown NY day now, Hillary Clinton rations.) Some candidates’ views can be inferred from the ad- Ais expected to declare that visers they retain, but Mrs Clinton has hundreds, including lu- she is running for president. For minariesfrom everyDemocraticfaction. CharlesSchumer, her most Americans this will be as former Senate colleague from New York, called her “the most surprising as the news that opaque person you’ll ever meet in your life”. Cinco de Mayo will once again Mrs Clinton’s critics on the right fret that she is a power- be on May 5th. Mrs Clinton has hungry statist. (“Give her an inch and she’ll be your ruler,” had her eye on the top job for a warns a campaign badge.) On the left they fear that she is close long time. She nearly won it in 2008 and is in many ways a to Wall Street (her campaign is predicted to raise $1 billion), di- stronger candidate now. She and her husband have built a vast vorced from the lives of ordinary Americans (she first moved campaign machine. The moment Mrs Clinton turns the key, it into a governor’s mansion in 1979) and hawkish (she backed will begin openlyto suckup contributions, spitoutsound bites the invasion of Iraq). Perhaps she is something in between: a and roll over her rivals. Some think her unstoppable: Paddy sensible moderate? She fits this bill better than, say, Elizabeth Power, an Irish bookmaker, giveshera 91% chance ofcapturing Warren or Martin O’Malley, two possible Democratic rivals the White House in 2016. who bash trade and banking. But voters need to know more. Steady on. The last time she seemed inevitable, she turned The last time Mrs Clinton set out a detailed economic plan, outnotto be. The month before the Iowa caucusesin 2008, she during the 2008 campaign, she placed herself a little to the left was 20 points ahead of other Democrats in national polls, yet ofher husband in the 1990s(less keen on trade deals, for exam- she still lost to a youngsenatorfrom Illinois. She is an unspark- ple) and quite close to where MrObama hasended up (indeed, ling campaigner, albeit disciplined and diligent. This time, no Obamacare resembles her plan more than his). The world has plausible candidate has yet emerged to compete with her for since changed, and Democrats are furiously divided over how the Democraticnomination, butthere isstill time. Primary vot- to ease inequality without constricting growth (see page 29). ers want a choice, not a coronation (see page 25). And it is hard The Centre for American Progress, one of the think-tanks Mrs to say how she would fare against the eventual Republican Clinton listens to, recently released a list ofpolicies to promote nominee, notleastsince nobodyhasanyidea who that will be. what it calls “inclusive capitalism”. This contains lots of sensi- The field promises to be varied, ranging from the hyperventi- ble stuff, such as boosting investment in infrastructure and ex- lating Ted Cruz to the staid Jeb Bush. Rand Paul, a critic of for- panding wage subsidies for hard-up workers; some intriguing eign wars and Barack Obama’s surveillance state, joined the ideas, such as encouraging “works councils” to bring labour fray on April 7th (see page 28). Still, Mrs Clinton starts as the fa- and management together; and some dubious ones, such as vourite, so it is worth asking: what does she stand for? ramping up implied subsidies for mortgages and creating make-work schemes for the young. How much of this would Air miles and briefing books Mrs Clinton favour? Some details would be nice. Competence and experience, say her supporters. As secretary On foreign policy, Mrs Clinton’s pitch is that she would be of state, she flew nearly a million miles and visited 112 coun- tougher than Mr Obama. She backed his surge of troops in Af- tries. If a foreign crisis occurs on her watch, there is a good ghanistan but regretted the expiry date he put on it. She urged chance she will already have been there, read the briefing him to arm the non-Islamist rebels in Syria; he dithered. She book and had tea with the local power brokers. No other can- chides him for failing to find a better organising principle for didate ofeither party can boast as much. foreign policy than “Don’t do stupid stuff.” Yet she leaves She also understands Washington, DC, as well as anyone. many details unfilled. For example: does she think she could For eight years she was a close adviser to a president (her hus- have strucka betternucleardeal with Iran? Nonetheless, many band) who balanced the budget and secured bipartisan agree- foreigners would welcome an American commander-in-chief ments to reform welfare and open up trade in North America. who is genuinely engaged with the world outside America. Afterwards, as a senator, Mrs Clinton made a habit of listening to, and working with, senators on both sides of the aisle, lead- Secrecy and privilege ing some Republicans publicly to regret having disliked her in Sceptics raise two further worries about Mrs Clinton. Some the past. A President Hillary Clinton could be better at ham- sayshe isuntrustworthy—a notion onlyreinforced bythe reve- mering out deals with lawmakers (of both parties) than Presi- lation that she used a private serverforhere-mails as secretary dent Obama has been. She would almost certainly try harder. of state, released only the ones she deemed relevant and then But to what end? For someone who has been on the nation- deleted the rest. The other worry, which she cannot really al- al stage for a quarter-century, her beliefs are strangely hard to lay, isthatdynastiesare unhealthy, and thatthisoutweighs any pin down. On foreign policy, she says she is neither a realist benefit America might gain from electing its first female presi- nor an idealist but an “idealistic realist”. In a recent memoir, dent. Gary Hart, a former presidential candidate, told Politico she celebrates “the American model of free markets for free that, with more than 300m people in America, “We should not people”. Yet to a left-wing crowd, she says: “Don’t let anybody be down to two families who are qualified to govern.” The tell you, that, you know, it’s corporations and businesses that campaign hasbarelybegun, butifMrsClinton isto deserve the create jobs.” (An aide latersaid she meant taxbreaks for corpo- job she desires, she has questions to answer. 7 12 Leaders The Economist April 11th 2015

Repression in Malaysia Disconnect

A thuggish government is playing racial politics. Najib Razakshould be dressed down ALAYSIA’S prime minis- time. Yet it held on to power thanks to gerrymandered voting Mter, Najib Razak, paints his districts. Even after that dubious victory, it continued to perse- country as a model of moderate cute the charismatic opposition leader, Anwar Ibrahim, who Islam—a multicultural democra- in February was sentenced to five years on trumped-up char- cy and a beacon oftolerance. He ges ofsodomy. American criticism was perfunctory. has spoken of scrapping oppres- In the past year growing numbers of activists and opposi- sive British-era laws and nurtur- tion figureshave been arrested underthe Sedition Act, another ing a creative economy. Mean- colonial law aimed originally at advocates of independence. while, his spin-doctors explain that their liberal master is the Mr Najib, who once promised to remove it from the statute man to vanquish the reactionary forces in his political party, book, now plans to strengthen it with harsher punishments UMNO, which has never been out of power and which is and a clause forbidding speech that denigrates Islam. prone to cronyism and political thuggery. Barack Obama, for Among those already arrested under the Sedition Act are one, buys this story. He is the first American president since opponents of hudud, corporal and capital punishments, in- 1966 to have visited Malaysia. And late last year in Hawaii he cluding stoning to death for adultery, laid down in Islamic law. enjoyed a round on the golf links with Mr Najib. The two men Hudud doesnotapplyin Malaysia, butIslamistsfrom an oppo- are said to click. The White House gushes about a “growing sition party want it introduced in Kelantan state in the north- and warming relationship” between America and Malaysia. east. The government does not like the idea but is quietly sup- porting it in a cynical ploy to widen splits in Pakatan Rakyat, Race to the bottom the opposition coalition struggling without Mr Anwar. Yet it is time to call Mr Najib out on the widening gulf between By encouraging the Islamists, the government is fanning ra- spin and substance. On the economic front is a growing scan- cial and religious divisions in a majority-Malay (and Muslim) dal over dubious connections and misused funds at a national country with large ethnic-Chinese and ethnic-Indian minor- investment fund, 1MDB, that Mr Najib launched and which is ities. In 1969 bloody race riots nearly tore Malaysia apart. Play- now burdened with $12 billion of debts. Malaysia’s human- ing racial politics could be disastrous in this multiracial coun- rights record is ofeven greater concern. Three years ago Mr Na- try. A better and more enlightened way for Mr Najib to boost jib scrapped a notoriouscolonial law, the Internal Security Act, UMNO’s prospects would be for him to repair its image with which allowed indefinite detention without trial. This week ethnic Chinese and Indians. he, in effect, reintroduced it. The new Prevention of Terrorism Malaysia’s friends should be blunter about this where they Act allows suspects to be detained indefinitely. Though it is have been mealy-mouthed. They should condemn Malaysia’s aimed ostensibly at jihadists, lawyers and civic groups are ap- corruption, its decaying freedoms and its racial politics. They palled at the law’s sweep (see page 36). should call for both the Sedition Act and unlimited detention This fits a pattern. The coalition that Mr Najib leads uses to go. Until matters improve, not only should golf be off the foul as well as fair means to keep the opposition down. In the agenda; so too should the prime minister’s hoped-for trip to most recent election, in 2013, it lost the popular vote forthe first Washington this year. 7

The euro-zone revival Don’t get europhoric

Investors are becoming excited about Europe again—too excited ECOVERY (noun): restora- tionary definition of a recovery. Indeed, investors’ swing from GDP Rtion to a former or better gloom to europhoria appears already to have gone too far. Pre-crisis peak=100 110 condition. The euro zone is at To start with, the recovery remains remarkably weak. The United States 105 last enjoying an upturn. Econo- euro area has actually been growing for two years since an ex- 100 mistsare savouringthe unaccus- tended double-dip recession ended in early 2013. Yet the ex- 95 tomed pleasure of revising their pansion has been so desultory that it barely deserved the Euro area 90 growth forecasts up, rather than name. The excitement generated by growth ofjust 0.3%, an an- 2007 09 11 13 14 down. Surveys of business ac- nualised rate of little more than 1%, in the fourth quarter of tivity have reached a four-year high and euro-area consumers 2014 tells its own story ofshrunken expectations. So feeble has are feeling a lot more confident. Investors are excited, too. the recovery been that euro-zone GDP in late 2014 was still 2% Money is rushing into the region’s stockmarkets. In March below its previous pre-crisis peak in early 2008. By contrast, European equity funds notched up record inflows. America’s output is higher by almost 9%. Alas, the euro zone is still a long way from meeting the dic- Having lost so much ground, the euro area clearly has enor-1

14 Leaders The Economist April 11th 2015

2 mous scope to catch up. Yet its recent improved showing de- sistent that banks are strong: witness an incipient clampdown pends on two engines that are likely to run out of steam. The on the use of deferred tax assets (a kind of credit to offset past first is the oil-price collapse in the second half of 2014, which losses) to bolster the capital bases ofbanks in Europe’s weaker has acted like a tax cut for consumers and businesses. That economies. Welcome though that is, credit will not take wing stimulus will fade towards the end ofthis year, and will go into while banks are still repairing their balance-sheets. reverse ifoil prices move up again. The second engine is the fall in the euro, by 12% on a trade- Grexcruciating weighted basis over the past year. Many European firms have And don’t forget Greece. Markets have been insouciant about done a good job ofexpandingtheirforeign salesin recent years the tensions between the radical-leftgovernment ofAlexis Tsi- (see page 61); they will do well from a weaker currency. But the pras and the rest of the euro zone. Greece is running too short euro has stopped falling (at least for the time being) and, in the of cash to be confident of avoiding a “Grexit”. The fraught ne- long run, what matters more for exporters is growth in their gotiations between Greece and its European creditors high- trading markets. With China slowing and the American econ- light how hard it is to reconcile the interests ofthe currency un- omy causing concern (see page 65), the outlook is less favour- ion’s disparate members. able. Ideally, recovery would also be based on strong demand After years of bad news it may seem churlish to belittle within the euro area—especially in Germany, which is running signs of brighter prospects. Countries like Italy (see page 47) a current-account surplus ofover 7% ofGDP. have made welcome efforts at reform; the QE programme is True, investors will continue to benefit from the European useful in bolstering inflation expectations. But neither France, Central Bank’s generous programme of quantitative easing the second-biggest economy in the currency bloc, nor Italy, the (QE), which began in early March. QE has boosted equity and third-biggest, is expected to muster growth above 1% this year. bond markets—Germany’s DAX index is up by more than 20% And the longer-term prospects for the euro area remain since the start of the year, for example. But banks play a bigger weighed down by excessive debt and low productivity role than capital markets in providing funds to euro-zone com- growth, as well as the threat of deflation and disadvantageous panies and households. And although lending to the private demography (Germany’s working-age population will be sector is beginning to edge up, loans to firms are still falling. shrinking as fast as Japan’s by 2020). According to the IMF, the Moreover, one of the main achievements in improving euro area’s potential rate of growth has deteriorated since be- euro-zone governance, the creation of a single banking super- fore the financial crisis of 2007-08 by more than that of other visor under the auspices of the ECB, is a double-edged sword. advanced economies. However welcome, an upturn should Compared with complaisant national regulators, it is more in- not be mistaken fora renaissance. 7 Nuclear non-proliferation A nuclear test for the Obama doctrine

The promise and dangers ofnegotiating a deal with Iran’s mullahs ARACK OBAMA came to of- by civil war. With time, dialogue might help America and Iran B fice with a simple message overcome the rivalry that has poisoned the Middle East since for his country’s foes: “We will the Islamic revolution of1979. It might change Iran’s disruptive extend a hand if you are willing behaviour; or perhaps the regime itself. But nobody should to unclench your fist.” He has count on that. The nuclear agreement must be judged as an done a lot of handshaking— arms-control measure: does it make a nuclear Iran less likely? with Myanmar and with Cuba The answer is a provisional yes, at least for a time. It clearly (see page 31). Can he now un- holds enough promise to justify further talks without Con- clench the fist that most threatens the world—that of Iran, gress imposing new sanctions or impeding the president’s which most people believe has for years been trying to devel- right to conduct foreign policy. op an atom bomb? The talks with Iran to limit its nuclear pro- Adeal would push Iran furtherfrom a bomb. The “breakout gramme, in return fora liftingofsanctions, are the most impor- capability”—the time it needs to make the fissile material for a tant test of the Obama doctrine that diplomatic engagement, single device—stood at about two months in 2013, stretched to with calculated risks, is better than ostracising enemies. nearly fourmonths under an interim deal in January 2014 and, Only the “parameters” of a nuclear deal were agreed to on under a final accord, would extend to about12 months, lasting April 2nd. Still, it was a potentially ground-breaking moment. fora decade (a longer duration, say 20 years, would have been If the outline becomes a final agreement, it would offer much better). The inspection system has been tightened and will be- greater assurance that Iran will not get the bomb for at least a come much more intrusive. So Iran would find it harder to decade. But two competing dangers loom. On the one hand, make a bomb. It would be more likely to be detected if it tried Mr Obama’s political foes could seek to destroy even a good and the world would have more time to respond to violations. deal. On the other, his team could yet fail to secure the safe- Much work remains before the deal is finalised. The two guards that make the difference between a good agreement sides have differences of emphasis and sometimes substance and a bad one in the weeks of bargaining to finalise an agree- that are unsurprising but nevertheless unsettling. Critical de- ment by the deadline at the end ofJune. tails over the verification and monitoring ofIran’s programme Acredible deal mightprovide balm to a region nowravaged and the consequences for any violations (for instance, how1 IBM Watson Analytics: If you can ask a question, you can work with Watson Analytics. There’s a new way to discover. With IBM Watson Analytics,™ you can uncover hidden patterns and relationships that reveal new insights for your business. No IT experience necessary. Unearth new opportunities at ibm.com/madewithibm Smarter decisions are made with IBM. IBM and Smarter Planet and their logos, ibm.com, Watson Analytics and made with IBM are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. See current list at ibm.com/trademark. ©International Business Machines Corp. 2015. Business Machines ©International See Corp. list at ibm.com/trademark. current in many jurisdictions worldwide. registered Business Machines Corp., International of trademarks are IBM with made and Analytics Watson ibm.com, logos, their and Planet Smarter and IBM 16 Leaders The Economist April 11th 2015

2 sanctions would be reimposed) have yet to be settled. Yet they rule-breaking as apparently scrupulous compliance. will determine the credibility ofthe agreement. There must be A deal that ensured “zero enrichment” would have been tight limits on Iran’s research and development. Inspectors ideal—but it was unobtainable. In the real world, any accord must be able to gain access to any sites they deem suspicious. has to be measured against the plausible alternatives, and they And “snapback” provisions to reimpose sanctions should be all look worse. Increasing sanctions to compel Iran to submit credible—not vulnerable to endless negotiations. to tougher terms would require the backing of the UN and the EU, which is unlikely to be forthcoming. A return to confronta- Spin and substance tion in the name of toughening the deal would probably con- Even if these criteria are met, undeniable dangers will remain. vince the mullahs that no accommodation with America is After a decade, when this deal begins to lose force, Iran would possible, just as the West would give up on Iran if it suddenly have the world’s blessing to develop a massive uranium-en- changed its terms. If negotiations break down, the risk is that richment programme. It could then produce a bomb’s worth Iran will remove the existing constraints on its programme. It offissile material in a few weeks. As a signatory of the Nuclear might then get a bomb before sanctions threaten the survival Non-Proliferation Treaty, Iran would still be banned from a of the regime. Military action is even less promising: the best bomb and would be subject to enhanced monitoring. Even so, chance of using force to stop Iran passed a long time ago. should the regime not change in fundamental ways, the world Bombing Iranian nuclear sites would at best set back the pro- would have to live with mullahs on the nuclear threshold. gramme by a few years at the cost of driving it underground There is nothing, in theory, to stop America (or Israel) from tak- and ofinflaming a violent region. ing action if they believe Iran is trying to cross that threshold. On balance, a decade’s respite is worth taking. In that time But if Iran has kept to the deal in the interim, the world may much may change for the better. But if Iran remains the same, take more persuading to endorse sanctions and air strikes. Par- Mr Obama’s accord will not eliminate the threat; it will only adoxically, the long-term danger may not be so much Iranian bequeath it in a different form to a future president. 7

Britain’s taxes No to non-doms

Labourwants to end a taxbreakforthe rich and mobile. It is the right policy forthe wrong reasons HE question ofhow a nation chief executive of HSBC, a bank with its headquarters in Lon- Tshould treat foreign resi- don, is a non-dom. Bizarrely, Brits can pass the status down the dents dates back at least to Plato. generations, but only on the father’s side (Zac Goldsmith, a In “Laws”, the philosopher laid Conservative MP, was a hereditary non-dom until 2009). down rules for resident aliens Labour rightly wants to overhaul this mess. Previous gov- (“he must possess an art; he can ernments have pulled theirpunches, introducingthe fees rath- prolong his visit no longer than er than scrapping the exemption altogether. There is a risk that 20 years...he will pay no resi- some non-doms will flee, potentially leaving the exchequer dent alien tax”). But Britain’s approach is the antithesis of lofty worse off on balance. Each year non-doms contribute about philosophy. At its heart is a generous tax exemption for non- £8.4 billion in income taxes and at least £150m in fees. domiciled residents, or “non-doms”, who need have only ten- But Britain’s pull is strong; the attractions ofLondon life, for uous links to another country. The Labour Party, campaigning example, extend beyond the tax system. Other countries do for a general election on May 7th, has pledged to abolish non- without the exemption. America taxes its residents on their dom status. Its proposal is welcome. worldwide income and New York has no trouble attracting Non-doms can choose whether to pay British taxes on their global elites. A principle is at stake: taxes command consent overseasearnings. Iftheyhave lived in Britain forat leastseven because they are fair. Non-dom status feeds a corrosive percep- of the previous nine years, they must pay an annual fee to tion among Britons that the mobile rich do not pay their share. avoid tax, ranging from £30,000 ($45,000) rising to £90,000, for longer stays. At the last count 47,000 of 111,000 non-doms Bash and bodge tookadvantage ofthe opt-out, with 5,000 payingfeesto the ex- The problem isthatLabour’spoliciestoo often seem lessabout chequer (see page 53). restoring equitable tax treatment than sowing discord by de- The exemption is not needed to avoid double taxation. In- monising financial success. The party wants to impose a bar- stead, its main effect is to provide a “golden hello” for the rich rage of taxes on the rich. Its “mansion tax” is based on the ker- and mobile, who can live in Britain withoutcoughingup much nel of a good idea—property taxes have not kept up with the to the exchequer—at least, relative to their means. Those who rampant growth in house prices. But restricting higher proper- benefit most channel their overseas income through tax ha- ty taxes to houses above an arbitrary cut-off of £2m is bad eco- vens, so that it is taxed nowhere. nomics. A proposed tax on bankers’ bonuses is inferior to the The greatest anomaly is the archaic definition of domicile. existing bank levy. Raising the top rate of income tax to 50% The most famous non-dom is probably Roman Abramovich, a would hurt incentives to work and yield little revenue. These Russian oligarch who owns Chelsea football club. But Britons proposals suggest Labour has lapsed into its old resentment of themselves can become non-doms if they leave the country wealth. That really would drive out the non-doms—and hurt and choose to return “temporarily”. Stuart Gulliver, the British Britain’s economy. 7 They satisfy your right foot and your left brain.

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The goal of female equality Many developing coun- ship with Europe followed by Cities taking flights tries, including Ethiopia, Tan- a referendum in which British Regarding the United Nations’ zania, Malawi, and Bangla- voters will decide the issue. Despite The Economist’s clear Sustainable Development desh, have met the child- Bagehot (March 28th) distaste for aerotropolises, Goals, organisations that are mortality goal ahead ofsched- paints an alarming picture of cities with airports at their working on gender equality ule, and many more are accel- the risks involved. But what of heart, they can be a valuable and women’s empowerment erating progress. This only the risks ofnot having a refer- asset and Britain needs one are not lobbying fortheir own underscores why it is so impor- endum? So far, despite many now (“Aerotropolitan ambi- “particular bugbear” in the tant that completing the un- years ofbroken promises, the tions”, March 14th). The ques- targets (“Unsustainable goals”, finished agenda attached to Eurosceptics have kept within tion is where to put it. The March 28th). What we are clear, measurable targets for the bounds ofconstitutional Cameron administration striving to ensure is that the 2030 needs to be a paramount opposition. But ifthere were to proposes to turn Heathrow SDGs fully address the system- objective ofthe new SDGs. be a furtherpostponement of into an aerotropolis, degrading ic injustices that women expe- MARK SUZMAN a plebiscite on Europe frustra- London with noise pollution rience daily. The earlier President, Global Policy and tion could boil over with un- and traffic congestion that Millennium Development Advocacy predictable results. At the very already is at dangerous levels. Goals fell farshort ofaddress- Bill & Melinda Gates Foundation least the argument would However, it could build an ing gender inequalities. Seattle become ever more bitter and aerotropolis in the vicinity of The targets ofthe proposed corrosive. That would also be Birmingham, England’s sec- SDG to “achieve gender equali- Electing Britain’s president very bad forBritain. ond most populous city, that ty and empower all women Two things are clear. First, would be a boon forthe British and girls”, although not per- that occasionally in a democra- economy. Among other bene- fect, are much broader and cy, and despite the fears of the fits, such an infrastructure stronger. They will cover dis- elite ofgetting a “wrong” improvement would bring an crimination against women; result, the people must be international hub airport violence against women and allowed to have their say on within one hour’s travel for girls; child, early and forced important matters in order to tens ofmillions. marriage; female genital muti- clear the air. And second, that ROBERT LESLIE FISHER lation; unpaid care and domes- there is a strong likelihood that Delmar, New York tic work; women’s participa- British voters will opt to stay as EU tion in decision-making; and full members ofthe . Nice Bumping into you their sexual and reproductive IfMr Cameron delivers his health and reproductive rights. referendum and it turns out With regard to business cards, Not a single country has that way he will have done the Schumpeter observed that achieved gender equality. The debate over the use of country, and Europe, a great “Even at the trendiest ofSilicon Thus, women’s and other televised debates in Britain service, and gone a very long Valley tech gatherings, people organisations and many gov- (“Lights, camera, election”, way towards healing the da- still greet each other by hand- ernments are standing firm to March 21st) neglects the fact maging divisions within the ing out little rectangles made keep this agenda in the SDGs. that they do not suit our country and his own party. from dead trees rather than This new development agenda parliamentary system. Britain ROBIN AITKEN tapping their phones together” is universal; it is to apply to all does not have a presidential Oxford (March 14th). There used to be countries and all people. It is system. Youdo not vote for an app, called Bump, that not a bureaucratic process that David Cameron or Ed Mili- The Singaporean model supported this by allowing is “out ofcontrol”. Women and band, unless you happen to people to tap together phones girls make up more than half live in their constituency. The On Singapore, you followed a to exchange virtual business the world’s population and prime minister is meant to be well-trodden path ofgrudging- cards. It was shut down in 2014. have a right to this agenda for the first among equals in his ly conceding the achievements The rectangles made from the achievement ofgender cabinet. The TV debates help ofthis formercolonial back- dead trees remain. equality in the next15 years. put over the impression to the water while reasserting the ULYSSES LATEINER These targets truly aim to electorate that the prime superiority ofthe Western Somerville, Massachusetts “leave no one behind”. minister has presidential governance system (“Asia’s MARIANNE HASLEGRAVE constitutional powers. He city-statesman”, March 28th). In the late 1970s, business cards Director does not, even ifthe increasing By this narrative, Singapore’s were just being reintroduced in Commonwealth Medical Trust media focus on prime min- success is but an unrepeatable China. I received one which London isters will create that power geographic and historical stated, in English: gradually by convention. anomaly, likely to implode, The responsible person You suggest that the world is MARCUS WETHERED and not worth the limitations ofthe department likely to fall farshort of the London on civil liberties. concerned. ambitious targets that were set A road less travelled is to KAREL KOVANDA in 2000 ofreducing child For the past 40 years the ques- apply Lee Kuan Yew’s legacy Brussels 7 mortality by two-thirds and tion ofBritain’s relationship internationally. Societies might maternal mortality by three- with Europe has been the yet benefit from near-absent quarters by 2015. In practice, Great Rift Valley running unemployment, robust gov- Letters are welcome and should be addressed to the Editor at however, the world will actu- through British politics. As a ernment finances, affordable The Economist, 25 St James’s Street, ally come farcloser to achiev- way ofsettling this argument quality health care and educa- London sw1A 1hg ing these goals than sceptics David Cameron has proposed tion opportunities forall. E-mail: [email protected] believed when they were a renegotiation ofsome HENRI GHESQUIERE More letters are available at: adopted. aspects ofBritain’s relation- Singapore Economist.com/letters Executive Focus 19

The Economist April 11th 2015 20 Executive Focus

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The Economist April 11th 2015 Brieﬁng Volcanoes and climate The Economist April 11th 2015 21

eruption ever does so again. But if that After Tambora turns out to be the case, it will be because the human world has changed, not because volcanoes have. The future will un- doubtedlysee eruptionsaslarge asTambo- ra, and a good bit larger still. Mixed in with the 30 cubic kilometres Two hundred years ago the most powerful eruption in modern history made itself or more of rock spewed out from Tambo- felt around the world. It could happen again at almost any time ra’s crater were more than 50m tonnes of F ALIENS had been watching the Earth floating islands of pumice in the surround- sulphur dioxide, a large fraction of which Iduring 1815 the chances are they would ing seas foryears. rose up with the ash cloud into the strato- not have noticed the cannon fire of Water- In his book “Eruptions that Shook the sphere. While most of the ash fell back loo, letalone the final decisionsof the Con- World”, Clive Oppenheimer, a volcanolo- quite quickly, the sulphur dioxide stayed gress ofVienna orthe birth ofOtto von Bis- gist at Cambridge University, puts the up and spread both around the equator mark. Such things loom larger in history number killed by the ash flows, the tsuna- and towards the poles. Over the following books than they do in astronomical obser- mis and the starvation that followed them months it oxidised to form sulphate ions, vations. What they might have noticed in- in Indonesia at60,000-120,000. Thatalone which developed into tinyparticlesthat re- stead was that, as the year went on, the would make Tambora’s eruption the dead- flected awaysome ofthe lightcoming from planet in their telescopes began to reflect a liest on record. But the eruption did not re- the sun. Because lesssunlightwasreaching little more sunlight. And if their eyes or in- strict its impact to the areas pummelled by the surface, the Earth began to cool down. struments had been sensitive to the infra- waves and smothered by ash. The sulphate particles were small red, as well as to visible light, the curious enough to stay aloft for many months, so aliens would have noticed that as the plan- When the sulphur hits the stratosphere the cooling continued into the following et brightened, its surface cooled. The year after the eruption clothes froze to year. By the summer of1816 the world was Mount Tambora (pictured), a volcano washinglinesin the NewEngland summer on average about 1oC cooler than it had on the Indonesian island of Sumbawa, and glaciers surged down Alpine valleys at been the year before—an average which was once similar in stature to Mont Blanc an alarming rate. Countless thousands hides much larger regional effects. Because orMountRainier. Butin April 1815 itblewits starved in China’s Yunnan province and the continents are quicker to cool than the top off in spectacular fashion. On the 10th typhus spread across Europe. Grain was in heat-storing seas are, land temperatures and 11th it sent molten rock more than 40 such short supply in Britain that the Corn dropped almost twice as much as the glo- kilometres into the sky in the most power- Laws were suspended and a poetic coterie bal average. ful eruption of the past 500 years. The um- succumbing to cabin fever on the shores of This cooling dried the planet out. A brella of ash spread out over a million Lake Geneva dreamed up nightmares that cooler surface meant less evaporation, square kilometres; in its shadow day was would haunt the imagination forcenturies which meant less water vapour in the low- as night. Billions oftonnes ofdust, gas, rock to come. And no one knew that the comer atmosphere and thus less rain. Rainfall and ash scoured the mountain’s flanks in mon cause of all these things was a ruined over the planet as a whole was down by pyroclastic flows, hitting the surrounding mountain in a far-offsea. between 3.6% and 4% in 1816. sea hard enough to setoffdeadlytsunamis; While lesser eruptions since then have If such numbers seem suspiciously ac- the wave that hit eastern Java, 500km had measurable effects on the climate curate, considering that most of the world away, two hours later was still two metres across the planet, none has been large of 1816 was devoid of thermometers and high when it did so. The dying mountain’s enough to disrupt lives to anything like the rain gauges, it is because they come from roar was heard 2,000km away. Ships saw same worldwide extent. It may be that no recent computer modelling of the climate 1 22 Briefing Volcanoes and climate The Economist April 11th 2015

2 that seeks to mimic the conditions Tambo- driven by the slopping of warm water east be able to trigger a climate downturn that ra created. Like all modelling results, such across the Pacific towards South America— lasts considerably longer than the few numbers need caveats. These results, was getting under way at the time ofthe Pi- years models normally predict; a set of though, and similar ones from other mod- natubo eruption in 1991undoubtedly mod- eruptions in the late 13th century, this idea els, can be accorded the credence that ulated its climatic effects. suggests, may have been part ofthe reason comes from having been proved right in Alan Robock, an expert on links be- for the subsequent global cooling known similar situations. tween volcanoes and climate at Rutgers as the “little ice age”. The 1991eruption ofMount Pinatubo in University, notes a particularly intriguing If the prior state of the climate system the Philippines was about a sixth as large initial condition that could have influ- constrains an eruption’s effects, so does as Tambora’s in terms of the volume of enced the world’s response to Tambora. that of the human world. The damage lava, rock and ash, and about a third as There had been another large eruption— done to Europe by the preceding quarter- large in terms of sulphur emissions. Satel- larger than Pinatubo—just six years before. century of revolutionary and Napoleonic lites showed that in the summerof1992 the No one knows where this 1809 eruption war could have left it particularly vulner- sulphurithad spewed into the atmosphere was, but its signature can clearly be seen in able to 1816’s “year without a summer”. was reducing the amount of sunlight get- the Greenland and Antarctic ice sheets. The situation in Yunnan would hardly ting to the Earth’s surface by well over The sulphur put into the stratosphere by have been as dire had the population not three watts per square metre; for compari- volcanoes shows up quite clearly in the been hugely expanded by the Qing dy- son, the warmingeffectofthe 40% increase year-by-year records of what was going on nasty’s encouragement ofnew settlers. in the atmosphere’s carbon-dioxide level in the atmosphere that climate scientists Similarly uncaptured in models, but since the age of Tambora is just two watts extract from polar ice cores. These records even more fascinating to speculate about, per square metre. make it possible to give dates to large erup- are the after-effects of the Tambora down- With the energy absorbed by the Earth tions in the past even if no one recorded turn. In America, the spike in grain prices reduced, temperatures fell by around half the event at the time (see chart). caused by Europe’s hunger drove a wave a degree in the year after Pinatubo; rainfall of farmers across the Appalachians to dropped off significantly, too. Computer Cooling Mr Knightley where the Ohio Valley was enjoying far models run after the eruption but before The ice cores show that the 1809 eruption more clement weather, with barges taking these effects became visible captured the was easily large enough to have had effects exports for Europe down the Mississippi in effects reasonably accurately (though they on the climate, and there is some evidence ever larger amounts. The collapse in the had a tendency to overestimate the cool- of cooling in subsequent years. In Jane grain price when Europe’s harvest recov- ing). This is one of the best reasons for Austen’s “Emma”, which according to ered contributed to the American econ- thinking that such models capture the Euan Nisbet, a geologist at Royal Holloway, omy’s first major depression. workings ofthe climate quite well. London, seems to follow the weather of The historian John Post, in a study of The historical record largely bears out 1814, spring is remarkably late, with apple Tambora’s effects published in 1977, “The what the models suggest Tambora did. treesblossomingin the middle ofJune. Pre- Last Great Subsistence Crisis in the West- Across Europe the summer of1816 was cold cooling along these lines might have made ern World”, held that the volcano re- and wet, and the harvest terrible. The ef- some ofthe subsequent effects ofTambora shaped European politics. The disorder fects were most notable around the Alps; more marked, while possibly lessening that sprangup in the bad weatherfrom 1816 in Saint Gallen, in Switzerland, the price of others. Some researchers believe that a to 1818, and its subsequent repression, grain more than quadrupled between 1815 number of eruptions close together might created a climate forauthoritarian rule that1 and 1817. Starving migrants took to the roads in theirhundreds ofthousands; mortality rates climbed due to starvation and Mountains that change the world disease. Death also stalked Yunnan, where A Eruptions with major climate effects* RING OF FIRE Tambora’s cooling shut down the mon- A Selected recent eruptions 1783 Laki F I 1912 Katmai Iceland soon and cold days in summer killed the US rice harvest forthree years running. Monsoons, which are driven by the dif- L 1991 Pinatubo ference in temperature between hot land Philippines PACIFIC OCEAN K 1982 El Chichón and cooler sea, are particularly vulnerable Mexico to the excessive cooling of the land that E 1641 Mount Parker Philippines B 1275 Quilotoa 1883 Krakatoa H volcanoes bring. Their weakening can Indonesia Ecuador have effects on more than crops. In his ex- C 1452 Kuwae D 1600 J 1963 Agung A 1258 Rinjani Vanuatu Huaynaputina cellent account ofthe global impacts ofthe Indonesia Indonesia Peru 1815 eruption, “Tambora”, Gillen D’Arcy G 1815 Tambora Wood of the University of Illinois draws Indonesia on the writings ofJames Jameson, a doctor in Calcutta, who held the lack of fresh wa- ? A B ? C DE F ? G HI JKL ter which followed the failure of the 1816 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 monsoon responsible for the cholera epi- Sulphate aerosol injected 258 Northern hemisphere demic that swept through Bengal the fol- into the stratosphere by Southern hemisphere lowing year. volcanic eruptions 200 Was this all down to one volcano? Not Tonnes m 150 entirely; nothing in the climate has a single cause. The global climate shifts in various 100 ways on a number of timescales, and its 50 particulardisposition atthe time a volcano strikes will influence the way the volca- 0 no’s effects play out. The fact that an El 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 Niño event—a swing in the global climate Sources: Rutgers University; Global Volcanism Program, Smithsonian Institution *Sulphur emissions >50m tonnes The Economist April 11th 2015 Briefing Volcanoes and climate 23

2 held sway until the middle of the century. Mr D’Arcy Wood points out that it was in Devastation in time and space the aftermath of the Tambora faminesthat farmers in Yunnan started to plant opium Time from Hours Days Weeks Months Years poppies, the value of which as a cash crop eruption offered some insurance against future failures ofthe grain harvest. On top of such structural shifts, there are the personal stories. If Shelley, Byron Climate effects and theirromanticentourage had notbeen Global supply Ash fall chain disrupted cooped up in a Swiss villa by incessant rain, would they have amused themselves Tsunami bywritinghorrorstoriesforeach other—in- Pyroclastic flow cluding John Polidori’s “The Vampyre”, the first novel to deal with seductive blood- sucking aristocrats, and Mary Shelley’s “Frankenstein”, which has shaped fears of scientific innovation from that day to this? Distance,km 10 100 1,000 10,000 Ifthe summer frosts of“Eighteen-hundred- Source: The Economist and-froze-to-death” had not driven Joseph Smith, a farmer, from Norwich, Vermont to Palmyra, NewYork, a place ofvigorous reli- ing more damage than yesterday’s did, but smaller ones like Merapi’s. Before a very gious enthusiasms, would his son Joseph that is because they hit a world in which large eruption you can expect a volcano to junior still have been able to find the gold- there is more valuable property that is like- have been dormant for centuries; it takes en tablets to which the angel Moroni led ly to be insured, not because the disasters time for the infernal forces to build up. But him a few years later, or would the history themselves are getting worse. The world’s that does not mean that the first eruption ofMormonism have been very different? worststorm orearthquake overa millenni- of any long-dormant volcano will be cata- um is not all that much worse than the strophic. It might have decades of throat- Reappraising the risks worst of a century. With volcanoes things clearing to go through before it really lets And what if this happened again? In gen- get worse and worse the deeper in time rip. It might go backto sleep. eral, volcanoes are not something people you look. It was with this in mind that geologists around the planetworryaboutverymuch. In terms of direct effects, this is still not embarked on a project to try to understand In lists of the 40 most expensive and most particularly worrying for most of the long-dormant Pinatubo’s history soon lethal natural disasters since 1970 recently world’spopulation. Seven outofeight peo- after it started to show signs of life in 1990. produced by Swiss Re, a reinsurer, no erup- ple on the planet live more than 100km Theyfound thatthe volcano seemed not to tions feature at all. Models ofthe economic from any potential eruptions. The “Global be the throat-clearing type, specialising in- losses that large eruptions could cause are assessment report” (GAR) prepared for the stead in dramatic eruptions. Stephen nothing like as well developed as those UN summit on disaster-risk reduction held Sparks of Bristol University says that un- thatthe insurance industryusesforstorms, in Sendai, Japan, in March found that 95% derstanding did a lot to make people feel floods or earthquakes, because such losses of those at risk live in just seven countries. justified in calling for a big evacuation. have mattered little. Some reinsurers, Five—Indonesia, the Philippines, Japan, Wherever the next big eruption hap- though, are beginning to put that right. Mexico and Guatemala—are on the cir- pens, though, and whether predicted or One worry is that even quite a small cum-Pacific “ring of fire”, where clashing not, it will, like Tambora, have global ef- eruption could cost a lot if it hit a built-up tectonic plates promote volcanism as well fects—and this time there will be a greater part of a developed country. A study by as earthquakes; the other two are Ethiopia range of them. The climate is not the only Willis Re suggests that an eruption of Ita- and Italy. Two-thirds of the exposed popu- global system now open to interruption. ly’s Vesuvius like the one which took place lation is in Indonesia. All disasters now reverberate more in 1631 (a much smaller event than that The good news for the people who are than they would once have done. Disrupt- which destroyed Pompeii) could lead to an at risk is that volcanoes—unlike earth- ed supply chains transmitted the losses economic loss ofwell over €20 billion ($22 quakes—provide a fair amount of warning from the Japanese earthquake and tsuna- billion). Most of the property damage before doing their thing. Scientists are in- mi in 2011 far and wide; tourism meant would be down to buildingscollapsing un- creasingly good at looking out for such many more Swedes died in the Indian derthe weight ofthe ash that falls on them. warnings, and most volcanoes that are Ocean tsunami of 2003 than in any recent The 1707 eruption of Mount Fuji produced close to lots of people are now pretty care- disaster on their home soil. Volcanoes, only 2% as much ash as Tambora did, but fully monitored, though there are excep- though, have the added ability to interfere Christina Magill of Macquarie University tions—the GAR points to the Michoacan- with one of the ways in which such con- has calculated that if both eruptions were Guanajuato cinder-cone field in Mexico as nections between far-off places are sup- rerun today the urban area affected by a worrying one. Satellites and seismology ported. As Eyjafjallajokull in Iceland heavy ashfall would be greater in the case are likely to pick up some signs of immi- showed five years ago, a quite small erup- of the Fuji eruption, since a great deal of nent eruptions from almost all the others. tion’s ash cloud can have a big impact on that ash fell on what is now Tokyo. When the warningsseem to meritit, action air traffic ifit is in an inconvenient place. The otherreason forthinkingmore seri- can be taken. During the 2010 eruptions of A really big eruption would shut down ously about the damage done by volca- Mount Merapi in Indonesia, the largest so large swathes of airspace for a couple of noes than recent history might seem to farthis century, 350,000 people were evac- weeks. If the airspace in question were merit is that geology shows that they need uated; as a result the death toll was only a hard to reroute around, that would have to be assessed on much longer timescales. few hundred. Evacuations kept the casual- both direct impacts on the aviation indus- Today’s earthquakes, storms and floods— ties at Pinatubo similarly small. try—Eyjafjallajokull cost it about $1.7 bil- which make up the bulk of the natural di- Unfortunately, predicting really large lion—and indirectimpactson itsusers—val- sasters that insurers worry about—are do- eruptions may be harder than predicting ued at about twice the direct effects in that 1 24 Briefing Volcanoes and climate The Economist April 11th 2015

2 case. The losses would not be evenly suffer from them most. It spends a lot of swamp the local and regional effects. The spread or easily predictable. The Kenyan time looking at how to get timely warnings direct damage a full-on Tambora would women who provide most of the labour of the likely regional effects of El Niño wreak in a populated region would be far for the country’s cut-flower industry suf- events to the countries and people they are greater, and its hard-to-foresee effects fur- fered disproportionately when Eyjafjalla- most likely to harm, along with advice on ther afield, like those Eyjafjallajokull had jokull kept their blooms from market. how to limit the damage. Its head, Maarten on Kenya, might conceivably reinforce Another problem not seen when Tam- van Alst, says he thinks that the climate im- each other in calamitous ways, multiply- bora erupted would be damage to the pacts of a contemporary Tambora might ing the economic damage. Still, in most ozone layer. The reactions by which chlo- be comparable to those of the big El Niño cases it seems likely that here, too, the cli- rine destroys ozone are encouraged by the of 1997-98, which have been estimated at mate effects would trump the rest. sulphate particles produced by volcanoes. $36 billion, with 130m lives affected and But that does not mean their impacts In the 19th century that didn’t matter; there 21,000 liveslost. And aswith El Niños, fore- would be as dire as those felt two centuries wasn’t any chlorine in the stratosphere. warned would be forearmed. Mr van Alst ago. As well as having a wider agricultural Now, thanks to human intervention, there and his colleague, Pablo Suarez, are trying base and more foresight, the world today is is. Pinatubo saw global reductions in to get a programme started that would more developed and bettergoverned. A lot stratospheric ozone levels and a marked study what actions should be given priori- of the damage done in famines such as deepening of the “ozone hole” over Ant- ty in that lull between the eruption and the those of the 1810s comes from agricultural arctica. If a Tambora-scale eruption were cooling that would follow. workers losing income at a time of price to happen in the near future it would have Such vigilance could come into its own rises and governments doing nothing even stronger effects. well before there isanotherTambora, since about it. Today the proportion ofthe popu- there is a way for considerably smaller lation working the land is in most places Warmer house on the prairie eruptions to have climatic effects. Erup- much lower than it was then, and most And then there is the climate. If, like Tam- tions that take place well away from the governments both perceive a need to act bora and Pinatubo, the volcano in ques- equator cool only their own hemisphere, during famines and have the capabilities tion is close to the equator, Mr Robock says and these lopsided coolings have an im- to do so. There might well be a need for hu- models predict an average cooling of per- pact on the intertropical convergence zone manitarian interventions in the weird-cli- haps 2oC in the summer of the next year (ITCZ), a belt of rain around the equator. mate years that followed; but such inter- over much of North America, Europe, Asia When the northern hemisphere cools the ventions do now happen. and Africa, and decreased precipitation ITCZ shifts south, and that causes droughts Thatsaid, there isno reason to limit con- over the Amazon, southern Africa, India, in Africa’s Sahel. Of the Sahel’s four worst cern to Tambora-sized eruptions. There are South-East Asia and China. The models years of drought during the 20th century, much larger ones on offer. Some 26,500 also make predictions about the weather three took place after northern-hemi- years ago the Taupo volcano in New Zea- in the interveningwinter: the particles that sphere eruptions: in the year after the Kat- land erupted with well over ten times the cool the surface warm the stratosphere, mai eruption in Alaska, (1913) and the years power it mustered 1,800 years ago. The which sets up a strong Arctic jet stream in a of and after the El Chichón eruption in odds of a really big eruption in any given particular configuration. Expect a peculiar- Mexico (1982 and 1983). year are tiny. Over a century, though, they lywarm winterin America’sprairies, west- A repeat of the Tambora-sized blast at mount up to maybe a few percent. So, ern Europe and Central Asia, and a very Taupo in New Zealand that took place though fewofthose alive todaywould per- cold one in eastern Canada, the Middle 1,800 years ago, on the other hand, would ish in a rerun of Tambora, the chances of East and southern China. push the ITCZ to the north and bring plen- something much worse over their life- What these shifts would mean for agri- tiful rain to the Sahel. The Amazon, times cannot be ruled out. And though culture is hard to say. The experience of though, which depends on the ITCZ stay- forewarning would help, there is no way Tambora suggests gloom, but this is not ing put, would have a dry few years. of forestalling. Humans have huge powers that world. For one thing, there is more ag- For a smallish volcano at high latitudes over the planet. But they cannot stop a vol- ricultural land in more places. That gives the effects on the ITCZ would probably cano whose time has come. 7 more scope for bad harvests in some regions being offset by better ones elsewhere. Both models and studies of the years after Pinatubo suggest that, for various reasons, the world’s plant life as a whole gets more productive in the cooler, drier years that follow eruptions. It is also possible that some parts of a world stressed by global warming might experience sudden cooling as less of a problem than it was after Tambora—though the dry- ness might exacerbate their challenges. Another reason fortempered optimism is that the world would know what was coming. Mr Robock and his colleagues would be spreading the word before the eruption was over. Futures markets would doubtless pay attention. So, one would hope, would governments. The Red Cross/Red Crescent Climate Centre is dedicated both to providing warnings about the human impacts of climate shifts and extreme weather and to acting as an advocate for the people who Pinatubo—picayune by comparison United States The Economist April 11th 2015 25

Also in this section 28 Rand Paul joins the 2016 fray 28 Armed and angry 29 Why California wastes water 29 Chicago rejects Hanukkah Harry 30 Lexington: Why students make better senators

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

Hillary Clinton in 2016 time it inspires a consensus: Mrs Clinton needs more such moments. A contest, or a coronation? New Hampshire voters expect to meet candidates in diners and veterans’ halls, and to hear them speak in a neighbour’s sitting-room. They have a record of de- PORTSMOUTH throning front-runners who take the state forgranted. Mrs Pernold Young still lives in She has no serious rivals yet forthe Democraticnomination. But voters still have Portsmouth, and jokes that “The woman plenty ofdoubts about Hillary Clinton who made Hillary Clinton cry” will be OR five seconds Hillary Clinton’s voice aide and fretted that voters might think her carved on her tombstone. Over breakfast Fcracked and her eyes grew damp. It was weak, and not ready to be commander-in- at the Café Espresso, she says she will back in January 2008 in a coffee shop in Ports- chief. Mr Obama took a different view. Mrs Clinton this time round, after support- mouth, New Hampshire. A sympathetic Watching footage of his rival as he trun- ing Mr Obama in the 2008 primary. Ap- voter had just asked her how she coped dled across New Hampshire in a campaign palled by the “quagmire” in Washington, with the hardships of running for presi- bus, he thought it a worryingly touching and disappointed by how long it took Mr dent. “How do you do it?” asked Marianne moment. “I don’t like this. I actually think Obama to learn the ways of government, Pernold Young, a local portrait photogra- this could really help her,” David Axelrod, she likes the idea of electing a worldly in- pher, mentioning that Mrs Clinton’s hair the political guru at Mr Obama’s side, later sider like Mrs Clinton, sighing: “I don’t always looked perfectly coiffed. “How do recalled muttering. want another trainee.” But she does not you keep upbeat and so wonderful?” Seven years on, as America waits to see want a coronation either. She notes that Pundits rushed to analyse the moment. howMrsClinton will conducta second bid some friendsroll theireyesatanother Clin- Mrs Clinton was exhausted, they intoned. for her party’s presidential nomination, ton presidency, especially as no serious The former First-Lady-turned-senator that flash of vulnerability is still cited in Democratic rival has yet emerged. “I’d like knew that her younger rival, Barack New Hampshire, the state that next Janu- to see Hillary be challenged,” she says. Obama, was walking away with a race for ary will host the first primary elections Such views are widespread, and have the Democratic nomination that had once (and the second vote, after the Iowa cau- been heard within the Clinton camp. Two seemed hers to lose. cuses) of the 2016 presidential cycle. This close advisers, Robby Mook and Marlon 1 As the media juggernaut gathered speed, the strange intensity of America’s relationship with Mrs Clinton was laid Hillary’s homilies bare. Supporters hailed the fleetingdisplay On diplomacy: On governing: On the Monica Lewinsky scandal: of emotion as proof of their heroine’s hu- The threat of force can often Don’t vote for anybody of this vast right-wing conspiracy manity, often hidden by her discipline and create conditions to resolve any party anywhere in the ...has been conspiring against my caution on the campaign trail. Opponents matters.” country who proudly tells you husband since the day he they will never compromise.” announced for president.” recalled Edmund Muskie, a Democrat Replying to Republicans grilling whose presidential bid was derailed in her about the murder of American On grudges: 1972 when he teared up in the face ofharsh diplomats in Benghazi: In the Bible it says they asked Jesus how many times you press attacks, and wondered if the 2008 At this point, what should forgive, and he said 70 times 7. Well, I want you all to primary was now over. Back inside the difference does it make?” know that I’m keeping a chart.” Café Espresso, suspicious journalists sur- rounded Mrs Pernold Young. Betraying the Conceding to Barack Obama, 2008: A big advantage over Jeb Bush: On the real problem Although we weren’t able to shatter that If I want to knock a story facing her compatriots: toxic state of Mrs Clinton’s relations with highest, hardest glass ceiling this time... it’s off the front page, I just I think we have a fun the press pack, many asked if she was a got about 18 million cracks in it." change my hairstyle.” deficit in America.” planted campaign stooge. The Economist The candidate herself cornered a press Sources: Hillary Clinton; 26 United States The Economist April 11th 2015

2 Marshall, visited New Hampshire and mate change, and are unhappy that so Town & Country magazine that he was not Iowa just before Easter, meeting local much outside money is flowing into their sure he was any good at campaigning any Democratic power-brokers. One of these state, notably since the Supreme Court more because “I’m not mad at anybody,” was James Demers, a strategist and lobby- eased the rules on political spending. They citing the mellowing effects of being a ist who was one of Mr Obama’s first big want to hear from Mrs Clinton how to grandfather. Despite that disclaimer, Mr backers in New Hampshire. The message “move from a plutocracy back to a democ- Clinton could not resist analysing his from MrsClinton’sinnercircle wasthat the racy”, says Mrs Fuller Clark. wife’s putative campaign in some detail, formersecretaryofstate will run as though noting that it is hard for any party to hold she faces a bitterly contested primary, Mr Sisters are doin’ it for themselves the White House for longer than two Demers says. She will use the race to ex- That echoes complaints from other Demo- terms, and arguing that should his wife plain to America why she wants the presi- crats, such as Gary Hart, a formerpresiden- run, she should “go out there as if she’s dency, while building the sort ofcampaign tial contender, who recently said it should never run for anything before and estab- machinery that propelled Mr Obama to “frighten every American” that the Clinton lish her connection with the voters.” the White House in 2008. Whether her machine reportedly intends to raise $1 bil- The problem is that the Clintons have primary involves one, two or ten candi- lion. Once the real campaigning starts, the run for many things before. Mrs Clinton dates, Mrs Clinton “knows that she has to formersecretaryofstate needsa strategy to first entered the governor’s mansion in Ar- earn every vote”. engage and excite the broader electorate, kansas in 1979, and has been in the public As one of the most famous people in especially the young, Mrs Fuller Clark eye eversince. This makes connecting with the world, constantly watched by the Se- adds: not least because she thinks that fe- ordinary folk a challenge. In a speech last cret Service, it will be hard for Mrs Clinton male politicians are judged more harshly year to a convention of car dealers, she to campaign in the traditional New Hamp- than men, which makes it hard to be acces- confided that: “The last time I actually shire way, says Terry Shumaker, a lawyer sible. “Women really want to do a good drove a car myself was 1996.” The fact that who co-chaired both of Bill Clinton’s cam- job, something that constrains them from she typically received six-figure sums for paigns in the state. But he thinks she must engaging more freely with voters.” such speeches does not help either. try, using the “intimacy” of the state to After years worrying about the Middle Republicans may be expected to paint communicate with the whole country. He East and Russia, Mrs Clinton will be grilled her as part liberal-elitist, and part big-gov- describes his old friend as an economic about health care, or the lack of full-day ernment statist. Playingon lingering public centrist, who sees government as a posi- kindergartens in half the towns in New disapproval of the Obamacare health re- tive force but believes that business is the Hampshire, predicts Colin Van Ostern, a forms, Republicans may try to revive engine ofthe economy. In 2016 she can add member of the state’s Executive Council. memories of Mrs Clinton’s failed attempts domesticand global experience to the mix. He thinks this will do Candidate Clinton at expanding health coverage during her “There is a huge hunger for Washington to much good: “WhatHillaryClinton needsis husband’s presidency. work again,” he says. And with Islamic exactly what New Hampshire demands.” Republicans will also try to use her re- State fanatics on the prowl, voters have a The challenges ofa fresh Clinton candi- cord as secretary of state from 2009-13 “visceral” need to feel safe. dacy were summed up by Bill Clinton, the against her. It is common to hear them talk Not all Democrats are convinced. Mar- man with the potential to be the cam- of a world made more dangerous by a na- tha Fuller Clark, a state senator and big paign’s greatest asset and worst liability. ive, feckless “Obama-Clinton foreign poli- Obama backer in 2008, notes that New No living ex-president enjoys higher ap- cy”. Mrs Clinton is blamed on the right for Hampshire Democrats are not “100% for proval ratings, as Americans forget the her role in offering Russia a “reset” in rela- Hillary”. She herself remains uncommit- scandals of the 1990s and remember the tions, for clashing with the Israeli govern- ted, notingthat a potential rival, the former economic growth, balanced budgets and ment ofBinyamin Netanyahu, and forgen- governor of Maryland, Martin O’Malley, bipartisan reforms of the welfare system erally squandering her time as America’s has been active in the state. In her telling, that were achieved on Mr Clinton’s watch. top envoy. Of her boast of having travelled New Hampshire Democrats want a candi- Yet in 2008 an ill-disciplined Mr Clinton to 112 countries, one putative Republican date who will fight against inequality and caused chaos in his wife’scampaign. challenger, Carly Fiorina, a former boss of for the middle class. They worry about cli- The former president recently told Hewlett-Packard, scoffs that: “Flying is an 1

Two decades in the spotlight Americans expressing a favourable opinion of Hillary Clinton, %

Says, after allegations of Bill’s infidelity: “I'm not... some little woman standing Announces first by my man like Tammy Wynette” presidential run Stands by Bill as Monica Admits she used a private e-mail Concedes to account for all official business Details released of how Lewinsky scandal breaks Barack Obama she turned $1,000 into at State Department $100,000 via cattle futures 70 Announces that Wins re-election Senate Democrats she is running for to the Senate declare Hillarycare the Senate 60 dead Hospitalised because of a blood clot 550

Votes against Loses Iowa Testifies to Senate hearings on caucuses but wins Congress about 440 Whitewater property deal Central America Votes for the use Free Trade Act New Hampshire Benghazi attack of force against primary “Women’s rights are human Saddam Hussein 330 rights” speech in Beijing

1992 94 96 98 2000 02 04 06 08 10 12 14 15 FIRST LADY SENATOR SECRETARY OF STATE

Source: Gallup; The Economist The Economist April 11th 2015 United States 27

2 activity, notan accomplishment.” iting the reset with achieving at least one Without a scrap ofevidence, many con- arms-control agreement and securing Rus- servativesremain convinced thatMrsClin- sian help in talks to curb Iran’s nuclear am- ton chose out ofpolitical calculation not to bitions. She has called the latest draft deal protect an American mission in Benghazi, with Iran, brokered by America and other leading to the deaths of America’s ambas- world powers, an “important step”, what- sador to Libya and three aides, then sought ever that means. Last year she signalled to cover up her blunders. Such suspicions that she would be more comfortable with have not been allayed by the recent revela- strictercurbson Iran’snuclearprogramme. tion that Mrs Clinton used a private server In a rare overt criticism of Mr Obama, she throughout her time at the State Depart- said in 2014 that the failure to help non-Is- ment, preserving for the archives only the lamist Syrian rebels fight against Bashar e-mails that she deemed relevant and de- Assad had left a “big vacuum” for Islamic leting the rest. And she will face queries State and other jihadists to fill. about donations from foreign govern- Mrs Clinton has come close to echoing ments, some less than democratic, to the Republican grumbles that Mr Obama is Clinton Foundation, a family charity that too apologetic about American power. She also serves to keep her in the public eye. says that her country cannot solve all pro- The Democratic grassroots have their blems, “but there’s not a problem that we own gripes with the Clintons. They have face that can be solved without the United not forgotten that Mrs Clinton voted for States.” While ruling out a return to the hu- George W. Bush’s Iraq war as a senator. It bris of the George W. Bush years, she hints took her until March 2013 to come out for that the time has come for America to re- gay marriage. But mostly the left of the engage with the world. party worries that the Clintons are too soft In domestic forums Mrs Clinton is flu- on capitalism. They recall Mr Clinton’s hard activists who vote in them, before ent in the language of the modern busi- presidency as a time when the rules on tacking back to the centre as the general ness-friendly centre-left. She is keen on Wall Street banks were loosened, in their election nears. However, if Mrs Clinton public infrastructure, universal education view setting the scene for the later finan- faces no real primary challenger, she may for the youngest children, lowering the cial crash. It remains an article of faith not need to do this. Instead, she will need cost of college and experimenting with among trade unions that the North Ameri- to woo enough Democrats to build a sense German-style wage-subsidies for the can Free Trade Agreement signed by Mr of excitement and grassroots involvement, working poor. She likes to see church Clinton with Mexico and Canada sucked without alienating swing voters. And if groups working alongside strong trade un- jobs out ofthe American heartland. she cannot achieve the same stellar levels ions and community organisations, and of support among black and young voters uses “evidence-based” as high praise for Standin’ on their own two feet that Mr Obama did, she will need to fill the any policy. In 2008 she sometimes Though no credible Democratic challenger gap some other way. sounded like a deficit hawk, with slogans has emerged, many Democrats see (or She has made her pitch to women clear. like: “We’ve got to stop spending money want to see) a vacuum to Mrs Clinton’s left. She stresses her desire to help more of we don’t have.” In 2008 she also called for Mr O’Malley, who as governor of Mary- them into the workforce. She solemnly de- a “time out” on new trade deals, though as land was hardly a socialist banner-waver, clares that women should receive equal secretary of state she backed new pacts. now sides with groups who insist that pay for the same work as men (a position During primary debates she called herself America can afford to increase federal with which no one disagrees). In the past “committed to making sure Social Security benefits for the old, breaking with years of she has campaigned to make it easier for issolvent” and said thatthe bestroute to re- broad consensus that Social Security is women to sue overalleged discrimination. form lay through bipartisan compromise. doomed to insolvency unless benefits are Abigtest involves white voters without eventually curtailed and taxes raised. a college education, who make up about a And ringin’ on their own bells Lotsofleftistsstill longforSenator Eliza- third of the electorate, but have drifted Yet even policy experts invited to private beth Warren of Massachusetts to make a from the Democrats since Bill Clinton’s sessions with Mrs Clinton in recent populist bid for the presidency, demand- day. Mr Obama only won 36% of their monthsare notsure where she stands. One ing tougher regulation ofWall Street, fewer votes in 2012, and might have done still centrist policy advisersays that, after being free-trade deals and more redistribution to worse if he had not successfully painted quizzed by her about paths to restoring the middle class. Mrs Warren says she is his Republican opponent, Mitt Romney, as middle-class prosperity, he thinks (and cer- not running, but the clamour continues. It their worst nightmare ofa boss. tainly hopes) that she will say that it is a is in part an attempt to put pressure on Mrs Should Mrs Clinton win the general false choice to argue that fairness and eco- Clinton to tackto the left. election, she will also need to be ready on nomic growth must be in opposition to Some critics worry that Mrs Clinton is DayOne to deal with Republicans. There is each other. too old (she would be 69 in January 2017, virtually no chance that Democrats will Such centrists would like to hear her making her the second-oldest newly elect- win the House of Representatives in 2016, thank Mr Obama for saving the economy ed president, eight months younger than and even ifthey retake the Senate they will from disaster after the financial crash in Ronald Reagan). Others fret about her not have a filibuster-proofmajority. 2008 and praise him for expanding health health (she suffered a blood clot on her Expect Mrs Clinton to run to Mr care. Then she could change the subject, brain in 2012). She cannot do much about Obama’s right on foreign policy. In inter- turning the country’s attention to the task either charge. views since leaving the State Department of building an economy for the 21st cen- She could deal with a different con- she has said that she urged him to take a tury, harnessing growth to boost middle- cern—that no one knows what she really muscularapproach to Russia. She has chid- class wages. If it sounds to voters more like believes—but she is in no hurry. Candi- ed Europeans for failing to stand up to a third term of Bill Clinton than four more dates usually take sharply ideological posi- Vladimir Putin (she wants them to send years of Mr Obama, that would suit many tions during primaries, to woo the die- arms to Ukraine, for example), while cred- Hillary-backers just fine. 7 28 United States The Economist April 11th 2015

Rand Paul Guns and anger RandÕs stand Trigger happy

ATLANTA A new study ﬁnds that 9% ofAmericans are armed and impulsive

LOUISVILLE N A grassy strip in South Carolina, a finds that about 9% ofAmerican adults blackman turns and runs from a have a history of“impulsive, angry be- A libertarian pitch forthe White House O police officer. The cop fires eight bullets at haviour” and possess a gun not required E IS a senator and the son of a former him, leaving him dead. Michael Slager fortheir work. Some 1.5% have anger Hcongressman who ran for president said he shot Walter Scott in self-defence issues and carry a gun outside the home. three times. Yet he can, with a straight face, after Mr Scott tookhis taser. But after a Granted, the study used a broad defini- kick off his own run for president by de- video ofthe killing went viral—which tion of“angry and impulsive”, including nouncing the “Washington machine” and showed that Mr Scott was perhaps 20 feet anyone who admitted to having had a calling forpeople to “rise up” against it. On away when Mr Slager started shooting at tantrum (violent or otherwise), smashed April 7th Rand Paul became the second Re- him—the policeman was charged with objects or got into a physical fight in the publican formally to announce his candi- murder on April 7th. Peaceful demonstra- previous five years. But still, these are dacy. Mr Paul sells himself as a man of tions erupted in the streets. worryingly big numbers. fresh ideas who will broaden the appeal of Mr Scott had been stopped fordriving The authors, from Harvard, Duke and his party. He is serious: unlike his father a car with a broken tail light. Relatives Columbia Universities, drew upon 5,600 Ron, a crotchety libertarian who ran most- speculated that he might have run away interviews conducted as part ofan earlier ly to make a point, he believes he can win— from the policeman because he owed Harvard study. They found that angry not just the Republican nomination, but child support and did not wish to be people with six or more firearms were the election itself. jailed forfailing to pay it. Many were fourtimes more likely to carry guns Mr Paul is, as he claims, a relative new- astounded that he should have died over around with them than happy owners comer to Washington. He was first elected something so trivial. However, the fact with only one weapon. to the Senate in the Tea Party wave of that bystanders nearly always have cam- Fewer than one in ten angry, armed 2010—his first ever public office. Before eras in their smartphones means that Americans had ever been admitted to that, he was an ophthalmologist in Bowl- police are finding it harder than ever to hospital for a psychiatric or substance- ingGreen, a small town in Kentucky. But he commit abuses without consequence. abuse problem, the study found. So laws is nonetheless steeped in politics, having Cops are not the only ones who have to stop mentally ill people from buying spent much ofhis youth working on his fa- trouble controlling their anger. A new guns will only do so much to keep im- ther’s campaigns. His rise has been acceler- study in Behavioural Sciences and the Law pulsive fingers away from triggers. ated bya networkofdedicated libertarians assembled by his father. These supporters, some in bow-ties and many waving Amer- Obama’s National Security Agency, argu- he does Democrats. Yet while his speech in ican flags, now follow the tousle-haired Mr ing that “the phone records of law-abiding Kentucky did not make much of it, Mr Paul Paul around the country (in Kentucky your citizens are none oftheir damn business.” is in some ways deeply conservative. He correspondent encountered one who had Mr Paul hopes that such policies will has sponsored a law that would ban all travelled from Wisconsin in the hope of appeal to young voters and minorities. He abortions, even in cases of rape or incest. giving him a 150-year-old book). attacks his own party almost as fiercely as He opposes a federal ban on gay marriage Mr Paul has attempted to build his own but thinks states should decide for them- political brand, libertarian but more prag- selves whether to allow it—personally, he matically so than his father (for example, opposes it. His foreign-policy views have he does not want to abolish the Federal Re- hardened: once he decried most interven- serve). His announcement speech in Ken- tions abroad; now he denounces Islamist tucky was typical. Some of what he called terrorists as forcefully as any hawk. for was conservative boilerplate: an end to His pitch to minorities may partly be an “big government and debt” and a bal- attemptto atone forpastmistakes. In 2013 it anced-budget amendment to the constitu- was revealed that a member of his staff tion (which will never happen). But in sev- had once secretly worked as a white-su- eral areas he laid out policies that set him premacist radio host called the “Southern apart from the Republican old guard. Avenger”. (The staffer resigned.) In 2010 he On Iran, Mr Paul was careful to attack suggested in an interview that the federal BarackObama forbeinga weaknegotiator. government had no right to tell private But he also sounded a dovish note. “Every- businesses whom they could serve or hire; one needs to realise that negotiations are he quickly backtracked and said that the not inherently bad,” he said; adding that Civil Rights Act’s bar on racial discrimina- war should be the last resort in stopping tion was right. Iran from acquiring a nuclear bomb. He To win, Mr Paul will have to convince called (implausibly) for “any law that dis- enough Republican primaryvotersthat his proportionately incarcerates people of col- small-government virtues outweigh his our” to be repealed. (He has long cam- squishiness on national security. That is a paigned for less harsh penalties for hard sell—libertarians are probably no non-violent criminals and drug users.) He more than 11% of the American electorate. stressed that he wants to improve life for Still, his efforts to introduce new ideas and people in Appalachia, Detroit and other woo new voters will probably help the Re- “impoverished areas”. He attacked Mr Rand against the machine publicans in the long run. 7 The Economist April 11th 2015 United States 29

Drought in California Chicago The price is wrong Rahmbo returns

CHICAGO LOS ANGELES Voters opt forﬁscal realism over Why is the Golden State so bad at managing water? “Hanukkah Harry” ALIFORNIA is no longer taking a laid- N APRIL 6th, to the strains of “La April 1st 2014 IDAHO

C back approach to drought. On April OBamba”, Jesus (Chuy) Garcia prom-

1st, for the ﬁrst time, the Golden State im- C ised that “Tomorrow, history will be writ-

S E

I posed mandatory curbs on water use. Go- N ten” and ﬁred up his supporters with the E

T R vernor Jerry Brown ordered 400 local wa- R battle cry: “Let’s take Chicago!” The next R A A NEVADA L ter-supply agencies, which serve 90% of dayhe lost. Rahm Emanuel, the incumbent

N UTAH residents, to deliver 25% less over the com- Sacramento mayor, received 56% to Mr Garcia’s 44%. E V ing year. Communities that have already A Turnout was low: only 40% of voters both-

San V D reduced water usage in recent years—such Francisco A A ered to go to the polls. L o L d M a as Los Angeles County—will be less affect- E lor Both candidates were Democrats. Mr Y T Co ed than their splash-happy neighbours. S Emanuel represents the party’s business- Las Vegas Mr Brown put his foot on urban hose- Lake friendly wing; Mr Garcia, the big-govern- CALIFORNIA pipes while letting farmers carry on merri- Mead ment left. Mr Garcia was handpicked by PACIFIC Hoover dam ly wasting water, for which they pay far Los Angeles Karen Lewis, the head of the teachers’ unless than urbanites. Agriculture sucks up OCEAN ARIZONA ion, forhis solid record in local politics and about 80% of the state’s water (excluding his pleasant manner. He did better than ex- 200 km the half that is reserved for environmental San Diego pected, earning 34% of the vote in the first uses). Farmers have guzzled ever more wa- Drought intensity round in February and forcing Mr Eman- ter as they have planted thirsty crops such Dry Moderate Severe Extreme Exceptional uel into a run-off. But in the seven weeks as almonds, walnuts, and grapes. Mean- since, he failed to persuade Chicagoans March 31st 2015 IDAHO while, urban water use has held relatively that he has the skill and stamina to tackle

steady over the past two decades, despite the city’s disastrous ﬁnances. Mr Emanuel,

S E

I massive population growth, thanks to N a former White House chief of staﬀ, made E

T R smart pricingand low-ﬂow toilets. Per-cap- R this the main theme ofthe campaign. R A A NEVADA L ita water use in California has declined In the last ofthree televised debates, Mr

N UTAH from 232 gallons a day in 1990 to 178 gallons Sacramento Garcia said he needed to audit the city’s E V a day in 2010. A books before he could say anything specif-

San V D Last year the governor called for all Cal- Francisco A A ic about cutting spending or raising taxes. L o L d ifornians to cut their water use by another M a He refused to reveal who would be on a E lor Y T Co 20%; residents fell short of that mark in ev- S commission of financial experts that he Las Vegas ery month except December. Mr Brown’s Lake planned to convene. His only concrete pro- plan imposes restrictions on golf courses CALIFORNIA Mead posal was to slap a luxury tax on expen- PACIFIC Hoover dam and cemeteries. It also calls for the state to Los Angeles sive jewellery and fancy cars. replace 50m square feet (465 hectares) of OCEAN ARIZONA Comparing Mr Garcia to “Hanukkah lawns with drought-friendly planting. On Source: US Harry”, a sort of Jewish Santa Claus who April 5th Mr Brown defended his decision Drought Monitor San Diego promises everything to everyone, Mr to go easy on farmers, saying that many of Emanuel outlined a plan to avert financial them are “really suffering”. Last year they yet monitor groundwater consumption in Armageddon by imposing a sales tax on let roughly 10% of the state’s irrigated land California. “You can’t cut back what you services, opening a casino and paying for go fallow because of the water shortage. can’t measure—it’s as simple as that,” development projects out of the revenues Farmers who have already planted their grumbles Andrew Fahlund of the Califor- they are expected to generate. The casino crops cannot instantly switch, but resi- nia Water Foundation, a green group. alone will generate $1 billion for Chicago dents can take fewer showers. Other places have dealt with drought over the next ten years, he said. Critics are unmollifed. California can- better than California. Israel, for example, With unfunded pension liabilities of not solve its water crisis without pricing has built large desalination plants that more than $20 billion, an operating-budget the stuff properly and dealing with those helped the country, which is 60% desert, deficit ofmore than $300m and a payment who consume the most. For years, it was cope with a seven-year drought between of $550m for the pensions funds of police the only state in the West that did not man- 2004 and 2010 and the driest winter on re- and firemen due at the end of this year, age how much groundwater landowners cord in 2013-14. In California, desalination America’s third city is veering toward in- could extract from their private wells. Last is harder because electricity is costly, solvency. In February Moody’s, a credit- year, finally, the governor signed a bill to thanks to a renewable-energy programme. rating agency, downgraded Chicago’s debt regulate groundwater extraction. And green rules make building anything to two notches above junk. Analysts say It will take decades to implement the slow. Acompany called Poseidon will this Mr Emanuel will need to raise property law, however. Communities are required year complete a $1 billion desalination fa- taxes, in spite of pre-election promises, as to complete plans for sustainable water cility to increase San Diego’s water supply his other measures will not suffice to right management by 2020, but not to manage by 7%, but only aftersixyears ofpermitting the sinking ship. “Once the vote is over, their water sustainably until 2040. Also, al- and litigation. Many other desalination economics will dominate the agenda,” though the water piped into urban bath- projects around the state have stalled or predicts Paul Green of Roosevelt Universi- tubs is carefully metered, the state cannot simply been abandoned. 7 ty. More pain is in store forChicagoans. 7 30 United States The Economist April 11th 2015 Lexington Imitation games

A mockSenate forkids works betterthan the real thing mood grew authentically grumpy. Mock-Democrats talked up the concessions they were making. Students playing Republicans retorted that they were being asked to give up farmore, thanks to amendments that would increase public spending and reward those who “just hop the borders”. The teenager cast as a Texas Re- publican channelled a real-life firebrand from that state, Senator Ted Cruz, and growled that, “worst come to worst,” he would try to shut the government down. But all kept bumping up against the rules ofthe Senate, with votingthresholds designed to thwart those pushing for total victory over the opposition. Some may scowl at a Kennedy Institute promoting bipartisan governance. In more than 46 years representing Massachusetts, the senator was a divisive figure—a big-government Democrat who often called conservative policies not just wrong but heart- less. In addition to school groups, his institute hopes to lure 175,000 individual visitors a year. Admirers will enjoy a recrea- tion of Kennedy’s office on Capitol Hill, complete with family photos, an Irish road sign bolted to one wall and, on the floor, tennis balls as played with by his dogs. Critics may splutter at an ex- hibitnamed “The Lion ofthe Senate”, hailingKennedyasa champion offederal action in such fields as education and health care. OU can learn a lot from games that simplify and ape real life. Sceptics should give the institute a chance. It is a shrine to the YNever do business with someone who cheats at “Monopoly”. Senate, more than a temple to its founder. Between school Treachery is an asset in “Risk”. Performing open heart surgery, as groups, adult visitors are also invited to stage brief debates in its in “Operation”, is harder after a few beers. replica chamber. One such debate proved pretty even-handed. Over Easter Lexington learned a thing or two attending a After a bit ofbashfulness, some visitors rose to demand more lib- $79m mock Senate that just opened on the shores of Boston Har- eral immigration laws, while others declared that in a world full bour. The students took it seriously: one even staged a mock-fili- ofwould-be migrants, America “can’t just be Mr Nice Guy”. buster, full of high-falutin’ rhetoric and puff-chested outrage. In- Institute bosseshave worked hard to give both parties a say. Its deed in some ways the teenage “senators” outdid real ones, a immigration SIM was reviewed by Democratic Senate staff but discovery that is both uplifting and a bit heartbreaking. also by aides to Senator John McCain, a Republican who from Start with the uplifting. It is cheering to see the legislative 2005-07 worked closely with Kennedy on bills that would have branch stripped to its core principles, and to realise that the sys- tightened border security while giving millions of unlawful mi- tem can work. Great care has gone into the Senate Immersion grants a pathway to citizenship. A future SIM on the Patriot Act (a Module (SIM) used at the Edward M. Kennedy Institute for the sweeping counter-terrorism law passed after the September 2001 United States Senate, followinga vision described by the late sen- attacks) is being devised by the McConnell Centre at the Univer- ator before his death in 2009, and made real by his family and a sity of Louisville in Kentucky, founded by Senator Mitch McCon- bipartisan group of backers. Democratic and Republican Senate nell, the Republican majority leader. It will ponder the trade-offs staff have worked with think-tanks and universities to simulate between freedom and security. the way that senators are tugged and pulled between party loyal- ties and the interests of 50 different home-states. Each day the in- Politics without the pomposity stitute, housed in an elegant white and grey complex beside the In one respect, the newprojectdoestake sides: itstands fora legis- John F. Kennedy Presidential Library, will focus on a single issue. lative branch that works. As the institute’s president, Jean Mac- This may be topical, such as immigration. It may be historic, such Cormack, says: “We’re unashamedlybiased towardsthe intent of as the Compromise of1850, which tried but failed to prevent the the Founders: a functioning Senate.” Its Republican supporters civil war by appeasing both slave-owning and free states. are from the governing wing ofthe party—not from the wing that School groups spend a total of two hours in committee meet- would blow Washington up. Mr McCain spoke at the institute’s ings, party huddles and a final debate in the chamber. Each visit- opening, recalling shouting matches with Kennedy, and mourning pupil receives a detailed Senate identity via a digital tablet. A ing him as a friend who knew how to make “incremental pro- student might be a Louisiana Republican hoping to run for gover- gress on the problems ofour time”. nor, who stands fornational security, stern immigration laws and That is where heartbreak intrudes, when watching teenage lower taxes; or a first-term Democrat from Alaska who faces a mock-senators trying to craft laws which might do some good. tough re-election fight in a conservative state where oil and fish They can do this, in part, because they face no pressure to raise hold sway. millions in campaign funds. No outside groups rank them on The first group to visit, from the Auburn High School in Mas- ideological score cards. The teenagers argue, sometimes hotly, sachusetts, considered a big immigration bill. Guided by actors but about principles and home-state interests. They need not fear playing congressional staff and government officials (one re- primary challenges from hardliners who scorn the very idea that duced to mock-tears after a bruising confirmation hearing), the decisions with broad, nationwide support enjoy special legiti- students strove to reconcile the demands of farm states and big macy. The youngsters’ Senate is only a game. Professional politi- business, liberal activists and shrink-the-government types. The cians should ponder why it works so well. 7 The Americas The Economist April 11th 2015 31

Normalisation with Cuba Also in this section The thrill of the thaw 32 A rebuﬀ to Bolivia’s Evo Morales 33 Bello: A warmer Latin climate for Obama

MIAMI American business is eagerto cross the Florida Strait, but obstacles remain N THE late 1950s, when the Fabulous But the embargo still forbids most have a personal stake in the island’s devel- IRockers were hitting the big time, their American trade and investment, and can opment. They have been active in Cuba all hometown ofYborCity, nearTampa, Flori- only be removed by Congress. Before it is along, visiting relatives and putting cash da, was like Havana today: run down, its lifted, lawyerssay, atleastsome of about$7 (illicitly) into their fledgling enterprises. hand-rolled cigar industry an historic relic. billion of claims by American citizens and The easing of the embargo has given such In those days, the place to be was not Tam- companies that lost property after the rev- business a boost. Many small-scale mer- pa or Miami, but Havana, which for Flori- olution needs to be paid. chants can be found in Hialeah, a Miami da bands was as tantalising as Las Vegas. On the Cuban side, the state still con- suburb. AsCarlosLoumiet, a Cuban-Amer- They never made it. In 1959 Fidel Cas- trols vast tracts of the economy, including ican lawyer at Broad and Cassel in Miami, tro’s revolutionaries took power. Less than foreign trade, banking and law. Adual-cur- puts it, “Hialeah, not downtown Miami, is two years later Dwight Eisenhower im- rency system is proving difficult to disman- the economic engine for what is happen- posed an embargo, and most ties were sev- tle because of a lack of hard currency. Inef- ing in Cuba.” ered forthe next54 years. The band’smem- ficiencies and arbitrary decision-making Amid the suburb’s boxy houses are bers did not give up on their dream. On can make doing business in Cuba a night- stores whose fortunes are tied to the is- May15th they hope to fulfil it by headlining mare. One foreign businessman active in land, such as travel agencies and remit- at the celebrated Hotel Nacional, on the the country says investors stay away be- tance firms. A vast warehouse called Ñooo seaside Malecón in Havana. “We’re very cause some have been jailed without due Que Barato!! (“Holy Shit, It’s Cheap!!”) sells excited,” says Manuel Fernandez, who process. That, he believes, even explains uniforms in Cuban school colours at $10, plans to lead 60 ageing groupies to Cuba to why there is so little Chinese investment. along with shoes, underwear and per- hear the band, now called the Ybor City Three types of American business are fumes that are often bought by the pound Rockers. “It’s monumental.” seeking entry into Cuba, by three different and smuggled into Cuba in duffel bags Rockgigs are not the only opportunities routes. The first are mom-and-pop entre- known as “worms”. Among the hottest that have been opened up by President Ba- preneurs, mostly Cuban-Americans who items, says the store’s owner, Serafin Blan- rack Obama’s dramatic announce- co, are $3.99 bags of flints for mend- ment on December 17th that restric- ing old lighters; they easily escape tions on travel to and trade with detection by Cuban customs offi- Cuba would be eased. Lawyers, tra- cials. Fabián Zakharov, a Russian- vel executives, bankers, farmers born Cuban in Hialeah, imports and tech moguls, amongthem Goo- parts for Lada cars from Russia. His gle’s top brass, are heading to the is- customers take them to Cuba in land to scope out business opportu- suitcases to help friends and rela- nities in a post-embargo future. tives fix up their old bangers. Their excitement has mounted fur- Easier travel will drum up new ther with the approach of the Sum- business for private guesthouses, mit of the Americas in Panama City restaurants and other small enter- on April 10th and 11th, where Mr prises that have opened up after a Obama and Raúl Castro, the Cuban cautious liberalisation by Cuba’s president, are expected to meet for communist government. Their fi- the first substantive discussions be- nancial backing comes largely from tween American and Cuban lead- remittances from the United States. ers in more than 50 years (see Bello Some see the spurto ground-lev- on page 33). el go-getting as the cleverest part of Although the mood is giddy, the Mr Obama’s strategy. It bolsters in- obstacles to trade and investment dependent entrepreneurs, who are remain formidable. The December likely to be supporters of the dia- 17th agreement opened a chink in logue between the United States the trade blockade: it allowed more and Cuba and of the reforms that Americans to visit Cuba without may flow from it. “This is being dri- special permits, enabled them to ven by grassroots capitalism there spend more money there and to and here,” Mr Loumiet says. send more remittances. It also per- But the embargo, and Cuba’s en- mitted banks and telecoms firms to trenched suspicion of enterprise, take steps toward operating in sets limits. The Castro government Cuba. The State Department’s des- still makes it almost impossible for ignation ofCuba asa sponsorof ter- most private firms to import sup- ror subjects the country to sanc- plies or to receive foreign invest- tions that terrify banks. It is likely to ment. Mr Zakharov says his busi- be taken offthe list soon. And they’re off, again ness suffered recently because 1 32 The Americas The Economist April 11th 2015

2 duties on car parts have soared. In Cuba countries need to sign a new air-service owners ofprivate restaurants, orpaladares, agreement. In negotiating that, lawyers complain that the government tries to stop say, Cuba will want to ensure that its own them from importing such items as exotic aircraft are not seized in the United States spices—a deliberate attempt, they say, to as forfeit for American property confiscat- keep them from flourishing. ed during the revolution. That may prove The second type are bigger businesses as tough as lifting the embargo. hoping to piggyback on greater travel and Hotel owners also want to enter a Ca- information exchanges. In February Net- ribbean paradise on America’s doorstep, flix, which lets you stream films over the not least because the embargo has given internet, said it was launching its service in foreign resortoperators, such asthose from Cuba. Although the company cautioned Spain, a headstart. Pedro Freyre of Aker- that few Cubans have broadband connec- man, a Florida law firm, calls mass tourism tions or access to credit cards, people re- the “Willy Wonka golden ticket”. Yet he turning from Cuba say that some wily lo- notes that while the embargo existsthere is cals have subscribed to Netflix and turned no scope for the sort of joint ventures that their homes into informal cinemas to de- Spanish, Canadian and other hotel chains fray costs. In February IDT Corp, a tele- have entered into. Even ifthere were, Cuba coms company based in New Jersey, lacks the energy, food and infrastructure to pulled off a surprise deal establishing the support millions ofAmerican tourists. first direct connection between an Ameri- Overshadowing all potential business can company and Etecsa, Cuba’s state tele- relationships is the embargo’s ban on the coms company. Talks had gone nowhere provision of credit. American banks give formuch ofthe previous fouryears. Cuba the widest berth. Until Cuba is re- Elections in Bolivia Direct charter flights to Cuba started in moved from America’s list of sponsors of March from New York and New Orleans, terrorism, there is “no way an American No, MAS adding to dozens a week from Miami and bank can touch a Cuban bank”, says Fer- Tampa. Ferry operators are talking to nando Capablanca of the Miami-based American and Cuban authorities about re- Cuban Banking Study Group. Even Ameri- launching direct ferry routes from the Flor- can firms allowed to trade with Cuba un- LA PAZ ida Keys, but that may take time. American der the embargo, such as grain exporters, Voters rebuke Evo Morales and the immigration officials worry that the ves- are often thwarted because they cannot ruling party sels will bring an influx of illegal immi- obtain letters ofcredit. grants. Cuban officialsfeara surge of illegal The hurdles are not stopping lawyers N WINNING power nine years ago, imports. This month Airbnb brought the from preparing for what may lie ahead. OEvo Morales, Bolivia’s president, sharing economy to Cuba by offering Law firms have drafted Iranian specialists touted his victory as the end of 500 years American visitors rooms in private homes. into their Cuba teams to advise on a post- of colonial rule. Bolivia may have been in- That is allowed under the new American sanctions future. The Florida Bar is plan- dependent since 1825, but its rulers had the rules because it supports microbusinesses. ning to send a team of international law- outlook of the imperialists. Change came The third route, taking the biggest yers to Havana in May to learn about at last with Mr Morales’s indigenous resis- American brands into Cuba, is the most Cuba’sjudicial system. Some have contact- tance movement. It would govern “for the difficult. Cuban officials shudder at the ed Spanish, Canadian and Brazilian law- next 500 years”, he proclaimed. thought of a McDonald’s in downtown yers to find out about their experiences in The president’s mastery of theatre and Havana. American airlinesare keen to start dealing with their counterparts on the is- symbolism, and his rewriting ofthe consti- scheduled flights to Cuba, but first the two land. “We have heard horror stories,” says tution to reinforce the rights of Bolivia’s James Meyer ofHarper Meyer, a law firm. large indigenouspopulation, go a long way The enthusiasm in the face of obvious toward explaining his enduring populari- pitfalls suggests an element of blind faith. ty. In electionslast October he easily won a “If we don’t see the Cubans move towards third term. His Movement To Socialism a more liberal foreign-investment and (MAS) claimed two-thirds of the seats in trade regime, you will see a lot of this ex- both chambers of the legislature. Suppor- citement disappear,” says Ricardo Herrera ters began talking of a fourth term in office ofCuba Now, a pro-Cuba advocacy group. starting in 2020, even though under the Yet progress, though slow, is probably constitution he is not eligible to run again. unstoppable. The Cuban government may So the results in regional and local elec- become so dependent on American dol- tions held on March 29th came as a shock. lars as a substitute for reduced aid in the Opposition candidates for mayor won in form of subsidised oil from crisis-ridden eight out of Bolivia’s ten largest cities, up Venezuela that it will have little choice but from five at the last vote in 2010. The MAS to continue to reform. The Obama admin- won four of the gubernatorial races in the istration has craftily raised expectations to nine autonomous administrative depart- such a degree that backsliding now seems ments (like states), down from seven last unthinkable, visitors say. Mr Herrera tells time. In two where nobody won a major- the story of a Cuban couple who, after Mr ity, run-off votes are to be held on May 3rd. Obama’s announcement in December, put The vote count in a third awaits an official away their condoms and for the first time ruling on a run-off. In those states splint- set about trying to have a baby. For some ered anti-government forces have an op- older Cubans, the thrill of the thaw will portunity to unite behind a single candi- Jamming with the Rockers tomorrow? come from the Ybor City Rockers. 7 date. The vote was a stinging rebuke to the 1 The Economist April 11th 2015 The Americas 33

2 MAS, and a warning to Mr Morales. tional election. Before the balloting MrMo- longer willing to provide a blank cheque,” Most worrying for the governing party rales threatened not to co-operate with op- he says. was its performance in the department of position mayors and governors, a tactic The president is much more popular La Paz, until now a stronghold. It lost both that may have backfired. than his party, which nevertheless re- the governorship of the department and He pinned the blame for the MAS’s mains a formidable force. The MAS was the mayor’s race in El Alto, a sprawling set- poor performance on corruption at region- the only party to field candidates in all tlement populated mainly by indigenous al and local governments and, oddly, on seats, and won more than two-thirdsof the Aymara voters, Mr Morales’s keenest sup- machismo (the victorious opposition can- 339 mayoral elections. Its local branches porters. The opposition mayor of the city didate to be mayor of El Alto was a wom- are nourished with funds from a powerful ofLa Paz, Bolivia’sseatofgovernment, was an). Carlos Mesa, a historian and former national organisation. The opposition is re-elected with a biggermajority. Although president, thinks voters are beginning to fragmented into mostly tiny parties, none the MAS enjoyed the benefits of incum- resent the self-serving way in which the of which is strong enough to take on Mr bency and the backing of the highly parti- MAS exercises power and are less im- Morales and the MAS countrywide. Their san state-run media, it received just 41% of pressed by the moral authority that comes reign will not hit the 500-year mark, but it the votes, down from 61% in October’s na- from its indigenous origins. They are “no could go on forquite a while longer. 7 Bello A warmer Latin climate for Obama

The region will start to put pragmatism ahead ofideology in dealing with the United States ATIN AMERICA can be tricky ground nounced in Panama. Mr Obama and Mr drug war’s impact on Central America. Lfor leaders of the United States. In 1958 Castro will “interact” informally in the cor- The administration is also trying to help Richard Nixon, then the vice-president, ridors ofthe summit. energy-short Caribbean countries. survived an attack on his car by enraged The second dampener is Venezuela. Second, the end of the commodity students in Caracas. Ronald Reagan was Last month the Obama administration im- boom is altering the politics as well as the widely mocked after he confused Brazil plemented a law that imposes sanctions economics of Latin America. Economic with Bolivia during a speech in Brasília. on seven Venezuelan officials for viola- growth thisyearisset forjust1%, the worst At a Summit ofthe Americas in Argentina tions ofhuman rights. That has given Nico- performance since 2009. The region’s in 2005 George W. Bush was greeted by a lás Maduro, the country’s embattled presi- “pink tide” of left-wing governments is mass rally organised by the host, Néstor dent, a chance to turn the summit into ebbing. Brazil’s Dilma Rousseff, confront- Kirchner, at which his country’s plan fora another anti-imperialist rally. His demand ed with a massive corruption scandal and Free Trade Area of the Americas was de- that it formally condemn the sanctions has the likelihood ofa deep recession, isstrug- nounced by Venezuela’s leader, Hugo the backing of a handful of hard-left re- gling to keep her job. Argentina’s Cristina Chávez. Four years later, at a similar sum- gimes, including Cuba’s. Few Latin Ameri- Fernández de Kirchner departs in Decem- mit in Trinidad, Chávez presented Barack cans like unilateral interventions by the ber; her successor will be more moderate. Obama with an anti-imperialist tract. United States, and the sanctions undercut Even Bolivia’s Evo Morales and Ecuador’s Mr Obama’s staff doubtless thought a (feeble) attempt by the South American Rafael Correa, the most successful mem- that their boss would be greeted as a hero Union to mediate between Venezuela’sau- bers of South America’s awkward squad, at the latest summit in Panama, to be held tocratic regime and the opposition. have seen opponents make gains in mu- on April 10th and 11th. At Latin America’s Beyond the headlines of discord, nicipal elections. Mr Maduro will be insistence, this is the first such get-togeth- changes are afoot in Latin America that greeted in Panama by a demand from 22 er (they started in 1994) attended by Cuba. should favour the United States. The first is ex-presidents of the centre and right that Partlywith an eye to that, in December Mr that Mr Obama has at last come up with he free opposition prisoners. Obama announced plans to restore dip- some constructive policies towards the re- This does not mean a return to the lomatic and some business ties with gion. As well as the opening to Cuba, these 1990s and the monolith of the “Washing- Cuba. This is a huge step towards lifting include immigration reform, a downplay- ton consensus” on market economics. America’s 54-year-old economic embargo ing of the war on drugs and a request to China, now Latin America’s second-big- against the island. And while many Latin Congress for$1billion in aid to mitigate the gest trade partner, is in the region to stay. Americans dislike Cuba’s Fidel Castro Some of Mr Obama’s policies might be and his brother, Raúl, the country’s cur- scrapped by a Republican successor. How rent president, they dislike the embargo the region’s expanded middle classes will even more. react to the economic slowdown is un- Two things threaten to mute the cheers clear. Inequality, the left’s main banner, in Panama. First, talks over reopening em- remains a big concern. bassies have been going more slowly What it does mean is that pragmatism than some had hoped. The United States will start to get the better of ideology. Ms wants its diplomats to be able to travel Rousseffplansa visitto Washington, to re- and operate freely on the island. Cuba place the state visit she scrapped in 2013 wants the State Department to remove it over revelations that the National Securi- from a list of state sponsors of terrorism ty Agency spied on her. Her trade minis- (where it is joined by Iran, Sudan and Syr- ter, Armando Monteiro, visited in Febru- ia). Until this happens no bank will do ary “to give the message that the business with a Cuban diplomatic mis- relationship with the United States is a sion. American officials say the result of priority”. Others in the region are likely to the State Department review might be an- make it one, too.

Asia The Economist April 11th 2015 35

Also in this section 36 An anti-terror row in Malaysia 37 Politics in Taiwan 37 Banning beef in India 38 Australia’s Great Barrier Reef 38 The reef’s crown-of-thorns starﬁsh

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

Economic policy in Japan ment would then gradually fulfill a long- standing commitment to achieve a End of the affair primarybudgetsurplusby2020-21. Japan’s gross national debt, at around 240% of GDP, is easily the rich world’s highest. Things have not worked out that way. The first rise in the consumption tax helped tip the economy back into reces- TOKYO sion. In response, Mr Kuroda surprised The government ofShinzo Abe is increasingly at odds with the central bank nearly everyone last autumn by increasing N EARLY strength of Abenomics, the Having ordained the inflation target, Mr the bank’s quantitative easing, promising Aplan of Shinzo Abe, the prime minis- Abe now appears to be undermining Mr to buy ¥80 trillion ($670 billion) of Japa- ter, to revive Japan’s economy, was the Kuroda’s ability to reach it. nese government bonds every year. Cer- tight bond between Mr Abe and his hand- For businesses and households alike, tainly Mr Kuroda, a formermandarin from picked central-bank governor, Haruhiko such discord is itself a cause of anxiety. At the finance ministry, which is obsessed Kuroda. Former chiefs ofthe BankofJapan first, Abenomics appeared to be going with fiscal prudence, wanted the govern- had adopted a defeatist stance towards Ja- well. While the bank printed money, the ment to stickwith the plan to raise the con- pan’s deflationary morass. Mr Kuroda, the government spent more to help ease the sumption tax once more. His hugely ex- prime minister believed, was a champion pain of a long-planned rise in the con- panded easing appeared as though it was ofhis desire to revitalise Japan in large part sumption tax, from 5% to 8% in April 2014. intended to strong-arm the prime minister through unorthodox monetary loosening. Stronger growth resulting from structural into the tax hike (and irked many at the In early 2013, soon after Mr Abe took office, reforms was supposed to soften the effect Kantei, Mr Abe’s office). But soon after the the central bank duly launched a radical of a planned second rise in the consump- central bank’s action, Mr Abe postponed programme ofquantitative easing. tion tax, to 10%, this autumn. The govern- the rise anyway until April 2017, arguing But now the two men appear at logger- that the economy could not bear it. heads. The main point of contention is fis- And so a strange thing: a government cal policy, which to date has been very Contentious numbers that was once gung-ho about the central loose, with a primary budget deficit (that Japan’s: bank printing vast quantities of money to is, excluding interest payments on debt) of core consumer prices*, buy government bonds is now concerned 6.6% ofGDP. Mr Kuroda (pictured above) is % change on a year earlier aboutthe risks, given no obviousprospects making it clear that he does not believe Mr budget deficit before interest payments, for an improvement in Japan’s fiscal situa- % of GDP Abe is trying hard enough to bring the def- 2.5 tion, and given that many ofits growth-en- icit down. The government, meanwhile, + hancing structural reforms have not mate- would preferhim to confine his remarks to rialised. The government would rather the 0 the bank’s monetary remit. central bank did not expand its buying of A second and related difference is – government bonds, even though the bank emerging over monetary easing itself. In 2.5 may feel bound to, now that core inflation the quest to rid Japan of deflation, Mr Ku- has slipped back to zero. True, that fall is in roda promised whatever it took to push in- † 5.0 part because of a drop in oil prices, which flation up to 2%. The BankofJapan maynot can only be good news for Japan’s econ- be doing enough to achieve this. Prices are 7.5 omy. Many economists reckon that the at a standstill. Yet the government appears 2000 02 04 06 08 10 12 15 bank should have chosen a measure of in- to be signalling that a fresh bout of bond- Sources: Thomson Reuters; *Excludes impact of flation thatexcludesthe costofenergy. Still, OECD; The Economist consumption-tax rise †Forecast buying might be too much of a good thing. zero inflation is farshort of the target of 2% 1 36 Asia The Economist April 11th 2015

2 that the bank has a mandate to reach. Terrorism in Malaysia has produced no evidence that such Should deflation return in the coming sweeping powers are warranted, the Inter- months, the bank may feel obliged to ex- Lurch to national Commission of Jurists, a human- pand its bond-buying. rights group, claims. It laments that only Some of Mr Abe’s advisers are against illiberalism one member of the government’s deten- more quantitative easing for political rea- tion panel need have legal experience. sons as well. It has boosted property and Even without the panel’s consent, police stockmarkets, and driven down the yen, may now hold suspects forup to 60 days. helping big exporters. But many small An anti-terrorlaw curtails liberties The big worry is that the law will be- businesses and households say they are come a new weapon in a worsening crack- not feeling the benefits, only higher prices HREE years ago Najib Razak, Malay- down on opponents of UMNO, Mr Najib’s for imports. A concern for Mr Abe’s advis- Tsia’s prime minister, fulfilled a promise party, which has ruled Malaysia in co- ers—and for the central bank itself—is how to repeal the Internal Security Act (ISA), a alition since the 1950s but which was near- the government-bond market has been draconian colonial-era law which had ly unseated in elections held in 2013. In the showing signs ofstrain. The central bank is long been used to lock up dissenters with- first three months ofthis year police arrest- by far the biggest buyer of bonds these out trial. In the early hours of April 7th leg- ed 36 people on suspicion of making com- days, and has chased out other market par- islators approved a new bill which rein- ments that violated the Sedition Act, an- ticipants with its massive purchases. That states some of the old law’s power. The other archaic law which is being invoked may make it hard to sell government Prevention of Terror Act gives a govern- more frequently than ever. Last month Nu- bonds in future. As it is, the lack of a deep ment panel the right to imprison terror sus- rul Izzah, a prominent MP, was arrested on secondary market has led to worrying in- pects for two years, with multiple exten- suspicion of sedition after she delivered a creases in volatility. To forestall further eas- sions, or restrict their movements for five speech in Parliament denouncing the im- ing, some advisers even speak about years. Critics spy another blow to civil lib- prisonment of her father, Anwar Ibrahim, changing the Bank of Japan’s 2% inflation erties, which were already under siege. who leads the opposition. Many think the target to a more modest one, ofperhaps 1%. The government argued that the new sodomy charge against him is politically Meanwhile, in the face ofa government law was needed to combat a mounting motivated. Other recent detainees include that is reluctant to cut spending now, hop- threat from domestic extremists inspired five staff at the Malaysian Insider, a news ing forhigher growth and tax receipts later, by Islamic State, the militia that occupies website, and a cartoonist called Zunar, MrKuroda is airinghis misgivings with un- large parts of Syria and Iraq. Officials reck- who faces nine counts of sedition and a usual bluntness, preaching the need for on that at least a dozen Malaysians have prison sentence ofup to 43 years. immediate fiscal discipline. Hiroshige died abroad fighting for the militants. Po- Mr Najib had promised to roll back the Seko, a senior government official, plays lice say that since 2013 they have arrested Sedition Act, just as he promised to junk down the differences. Both Mr Abe and Mr around 90 people suspected ofsympathis- the ISA. Yetwhile pushingthrough the new Kuroda, he says, are trying to balance the ing with them. On April 5th, just hours be- anti-terror rules, his government took the need to reduce debt against that of boost- fore Parliament began debating the law, opportunity to table changes to the act ing the economy. But, he claims, Mr Abe police nabbed 17 people who they said which would greatly toughen sentences has edged very slightly towards an empha- were planning attacks on Kuala Lumpur, and forbid speech that denigrates religion. sis on growth and Mr Kuroda very slightly the capital, and on Putrajaya, the govern- Both pieces oflegislation highlight how towards fiscal discipline. ment seat. farMalaysia has retreated from the reform- There is certainly little to reassure fiscal The timing looked suspicious to oppo- ist policies that Mr Najib espoused during hawks in the record level of spending bud- nents ofthe act, which include Pakatan Ra- his first term, which ended in 2013. Suppor- geted for the fiscal year that has just begun, kyat, the opposition coalition. Many fewer ters plead that the prime ministeris tacking includingswellingoutlayson social securi- Malaysians than, forexample, Belgians are right only to head off leadership chal- ty as the population ages. Even if the econ- thought to have travelled to Syria. Nor is lenges from even less palatable parts ofhis omy grows by 3% in nominal terms in each Malaysia, a moderately Muslim country, party (on April 2nd Mahathir Mohamad, of the next five years—an optimistic as- battling provincial Islamic insurgencies of an influential former prime minister, re- sumption—the government says it will the sort that trouble its neighbours, Thai- newed his call for Mr Najib to step down). need to find an extra ¥9 trillion to balance land and the Philippines. The government But that is not much comfortto anyone. 7 the budget, before interest payments, by 2020 as planned. Mr Abe has promised detailed plans in the summer for reducing future deficits. Swingeing cuts to social-security spending probably remain politically off-limits. Yet radical measures are needed. They will have to include getting elderly Japanese to pay more for their medical care. A health system that keeps too many people in hospital beds for too long needs to be over- hauled. And the retirement age needs to be increased further. The most important test of the relationship between Mr Abe and Mr Kuroda will come if inflation picks up in earnest, at which point the central bank will begin to tighten its monetary policy. Mr Abe may insist on keeping the monetary taps open to safeguard growth. A pre- mature falling out may only make that moment harder still. 7 Najib rescinds his promises The Economist April 11th 2015 Asia 37

Politics in Taiwan unrest. She plans to run in next January’s legislative elections as a candidate for the Sunflower seeds Social Democratic Party (SDP) which she launched on March 29th. Other SDP candidates include a lesbian-rights activist who is expected to run in a glitzy commercial TAIPEI district of Taipei, possibly against a stuffy KMT lawmaker who opposes gay mar- Social movements stirTaiwanÕs riage. The New Power Party, founded in hyperactive democracy January by a former heavy-metal rocker YEAR ago Taiwanese students occu- and human-rights campaigner, wants for- Apied the main debating chamber of mal independence from China. Taiwan’s parliament, the Legislative Yuan, It is unclear whether any of these and in an unprecedented protestagainsta trade more than a dozen other new parties that deal with China. Thousands of people have registered in the past year will gain joined demonstrations in support, many seats in the legislature. Some may merge of them brandishing sunflowers (see pic- with the KMT or, more likely, the DPP. Their ture): a rebuke to the murkiness of cross- supporters would help the DPP broaden its strait negotiations. The impact of the Sun- alliances beyond those who emphasise flower Movement and other recent grass- “ethnic” differences between original roots campaigns has been wide-ranging. dwellers of Taiwan and immigrants (or Not only have efforts by Taiwan to liberal- theirdescendants) who fled to the island at Flower power ise its trade with China faltered, but the is- the end of the Chinese civil war in 1949. land’s political chemistry has begun to KMT voters alienated by bickering be- tivists, she may have to take greater risks change too. tween the two parties over relations with with the island’s truculent neighbour. Activists are preparing to stage rallies China may be attracted by third-force par- Even the KMT has adjusted its policies on April 10th to mark the anniversary of ties’ emphasis on domestic reforms. in response to grassroots activism—and the three-week sit-in, which they agreed to The DPP has reason to worry, too. The not just on matters relating to cross-strait end following a promise by the govern- new parties have profound misgivings trade. Ithad longinsisted thatnuclear pow- ment to give the legislature more oversight about China’s economic relationship with er was vital for the island, but in the past of cross-strait agreements (politicians are Taiwan. As far as DPP leaders go, Ms Tsai is yearithashalted the construction of a new still bickering over the terms of this). Tai- relatively pragmatic and wants to keep re- nuclearreactorcomplex. The KMT’s recent- wan’s main opposition party, the Demo- lations with China on an even keel, despite ly appointed chairman, Eric Chu, says he cratic Progressive Party(DPP), would be de- her resentment of the KMT’s cosiness with wantsTaiwan to become nuclear-free. That lighted by a high turnout: as the island China. If she hopes to co-opt the young ac- is a big breakwith tradition indeed. 7 prepares for presidential and parliamentary elections next January, it welcomes any Banning beef in India opportunity to highlight the discomfiture of the ruling Nationalist Party, or Kuomin- tang (KMT). The DPP has a good chance of The pink and the saffron winning the presidential polls, although DELHI the KMT—despite its recent drubbing in Protecting cattle is popular. But the meat industry wants protecting too mayoral elections—is likely to keep a majority in the legislature. HEN the state ofMaharashtra exports growing tenfold in the past de- The DPP sees former participants in the Wbanned the slaughter ofbulls and cade. The country is now the second- Sunflower Movement and other social ac- bullocks, and the possession ofbeef, largest exporter ofbeef, behind only tivists as potential recruits. Many of them earlier this year, it was bad news for Brazil. The paradox depends on a crucial are young people who feel gloomy about those, mostly Muslims, who turn the ambiguity: “beef” in India can referto the job prospects, and who are quick to blame state’s ageing cattle into leather and meat ofeither cattle or buffalo, and In- their woes on China. On March 25th, 119 cheap cuts. But it was not surprising. dia’s water buffaloesdo not enjoy the Sunflower participants were put on trial, Maharashtra is led by the Bharatiya sacred status ofits cows. Since the gov- accused ofoffencessuch astrespassand vi- Janata Party (BJP), which hopes the ban ernment began encouraging farmers to olating laws on public assembly. One stu- will play well with its core Hindu voters. raise and slaughter buffaloes, exports of dent leader, Chen Wei-ting, told the court More startling was a declaration on their meat have boomed. More than 95% that the protesters had saved Taiwan from March 29th by the national government’s ofmeat exports come from them. economic domination by China. Tsai Ing- minister for home affairs. Standing along- On the campaign trail last year the wen, the DPP’s presidential candidate, has side religious leaders who had called for prime minister, Narendra Modi ofthe hired a few young activists, including Sun- a ban on beefexports, he said that he BJP, decried this “pinkrevolution” flower ones, to lead party departments. would try to end cattle slaughter across (named by analogy with the “green Observers speak of a new “third force” India. Then on April 6th Maharashtra’s revolution” ofthe 1960s, in which crop in the island’s politics led by such activists advocate-general struckfear into the yields soared). But during his first six who have campaigned on issues ranging hearts ofnon-vegetarians. “This is just the months in office, India’s meat exports from nuclear power to bullying in the beginning,” he said. “We may consider grew by16%. Talking down Muslim army. They sympathise far more with the banning slaughter ofother animals too.” butchers plays well with Hindu activists. DPP than with the KMT, but they compli- Verymany ofIndia’s Hindu majority But since his advocate-general’s provoca- cate the strategies ofboth. are vegetarian, and ofthe Hindu carni- tive statement, Maharashtra’s chiefmin- One of them is Fan Yun, an academic vores, most eschew eating cattle flesh. Yet ister has clarified that the state’s ban will who gave street seminars to students India’s beefindustry has flourished, with not apply to buffaloes—India’s cash cows. about democracy during the Sunflower 38 Asia The Economist April 11th 2015

Australia’s Great Barrier Reef Crown-of-thorns starﬁsh Judgment day Coral-killers

TOWNSVILLE A dilemma forthe Great BarrierReef’s ecosystem LADY ELLIOT ISLAND INCE scientists first raised the alarm 50 starfish thought to inhabit the entire reef. Australia prepares fora UN ruling on its years ago about crown-of-thorns The species has few predators, repro- care ofa natural treasure S starfish chomping their way through the duces profusely and can devastate a reef HE turquoise waters around Lady El- Great Barrier Reef, there have been three in months. But it is also native to reefs Tliot Island, a speck on the southern big outbreaks. A fourth, perhaps the most throughout the Pacific and Indian oceans, edge ofthe GreatBarrierReef, lookpristine. serious, is now under way. The Austra- raising questions about the impact on Coral, turtles, manta rays and brightly-col- lian Institute ofMarine Science rates the ecosystems ofslaughtering them whole- oured fish thrive. They are lucky. Formed “massive explosion” ofthis lethal starfish sale. Normally, theirnumbers are quite from a cay of ancient coral, the island sits strain as second only to cyclones as a low. Strong evidence links population about 80km from the Australian state of cause ofthe reef’s decline. Several in- explosions to floods that wash high levels Queensland: just far enough into the Pacif- terventions, including fencing coral ofnutrients from farms onto the reef. ic Ocean to avoid being affected by human zones and using navy divers to remove Australia’s latest plan for the Great activities that have helped bring the reefto starfish by hand, have in the past proved Barrier Reef, which it hopes will convince a crisis. ineffectual. But scientists at James Cook the World Heritage Committee not to UNESCO named ita World Heritage Site University in Townsville, a city facing the classify it as endangered, sets targets to in 1981. Nowhere else, the organisation reef, may finally have found a way to cut nitrogen loads in halfby 2018 and by says, contains biodiversity to match its 400 fight back. four-fifths seven years later. Some sugar- types of coral, 1,500 fish species and myri- Divers have started to inject starfish cane farmers along the reefhave started ad other forms of ocean life. But in June it with a solution made ofsalts from cattle- cutting backon fertilisers and pesticides; will decide whether to add it to the short bile. A single shot ofthe substance, dis- more must follow ifthe plan is to work. list of world heritage sites—just 46 out of covered by chance during research into The intensity ofcyclones is predicted to 1,007—it regards as in danger. starfish diseases, triggers a lethal re- rise, John Gunn, the head ofthe Austra- In the past 30 years half the reef’s coral action. So farit has only been used lian Institute ofMarine Science, has disappeared. Marine scientists say in areas prized by divers and points out. He argues that en- people are largely responsible for its de- tourists for coral. It has killed lightened human intervention cline. Rising sea temperatures and acidifi- more than 300,000 starfish is essential ifthe Great Barrier cation, both linked to global warming; and in its first year ofuse. Reefis to be saved from the nutrients and pesticides washed from Unfortunately, thatis combined threat ofstorms, farms into its waters, help to feed coral-eat- only a fraction ofthe tens of nutrients and the plague of ing crown-of-thorns starfish (see box). The millions ofcrown-of-thorns starfish. effect on coral skeletons, says John Gunn of the Australian Institute of Marine Sci- ence, is similar to that of osteoporosis in one of such intensity in the area was in tage site to allow some of the world’s big- humans. 1918. gest exploration companies to start export- Cyclones have added to the stress. They Each has damaged coral and polluted ing liquefied natural gas. A bigger row lashed the reef long before Captain Cook’s the surrounding water with run-off from followed over dredging at Abbot Point, an- ship, the Endeavour, snagged on its coral in farms and cities. Between them the reef other reef port, linked to coal projects by 1770, 18 years before Europeans settled Aus- has had little time to recover. For Russell Adani and GVK, two Indian companies. In tralia. But the reef always proved resilient Reichelt of the Great Barrier Reef Marine late 2013, the government approved a plan enough to recover. In the past ten years, Park Authority, a federal body charged to dump about 3m cubic metres of that though, six cyclones of Category 5, the with protecting it, the “burning question” port’s waste inside the reef’s waters. highest level, have struck it. The previous is whether this is climate change in action. Public outcry forced a rethink. On An Australian government report to the March 21st Mr Abbott flew to Hamilton Is- UN in January said that protecting the reef land on the reef to launch Australia’s final PACIFIC would take a “concerted international ef- pitch to the UN to keep it offthe danger list. OCEAN PAPUA fort” to reduce climate change. But the Together with the Queensland state gov- NEW SOLOMON country’s own foot-draggingon climate ac- ernment, his administration will spend GUINEA ISLANDS tion makes it a poor advocate. Tony Ab- about A$2 billion ($1.6 billion) over the bott, the prime minister, pronounced coal next ten years to sustain the reef. Dumping “good forhumanity” last Octoberwhen he dredge waste from port expansions in reef opened a new mine in a Queensland coal- waters has now been banned. GREAT BARRIER REEF mining region inland from the reef; An “in danger” listing could hit tourism ( ) World heritage area Coral Queensland is one of the world’s biggest to the reef, which is worth about A$5 bil- Cairns Sea coal exporters. The remark bolstered his lion a year—to say nothing ofthe country’s Townsville Hamilton Island reputation as a climate-change sceptic. self-esteem. Australians consider the reef Abbot Point It was a boom in resource exports that to be a national icon. There are signs of prompted the World Heritage Committee hope. Australia’s marine science institute AUSTRALIA Lady Elliot Island Gladstone to put Australia on notice of the possible has tracked coral re-growing in several change to the Great Barrier Reef’s status places where environmental pressure has QUEENSLAND Brisbane four years ago. Dredging waste at Glad- eased, says Mr Gunn. Restoring the whole stone, a southern reef port, was being reef to Lady Elliot Island’s immaculate 600 km dumped in waters within the world heri- state will be a bigger challenge. 7 China The Economist April 11th 2015 39

Also in this section 40 The government’s zombie websites 41 Banyan: Where all Silk Roads lead

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

Opinion polls remained limited, whetherbygovernment or others. Yuan Yue pioneered commercial The critical masses polling in China when he set up Horizon Research, a private company, in 1992. He says reports circulated by his previous employer, the Ministry of Justice, used to state that “the people all agree”—even though no one was asked what they thought. To- BEIJING day, most provincial governments have a Officials increasingly askpeople a once taboo question: what they think social-opinion research centre, while offi- N RECENT weeks official media have tion than his predecessors to let citizens ex- cial news agencies run opinion-monitor- Ipublished a flurry of opinion polls. One press their preferences through the ballot ing units and many university depart- in China Daily showed that most people in box. Yet the public has become ever more ments conduct surveys, as do commercial the coastal cities of Shanghai and Guang- vocal on a wide variety of issues—online, pollsters. Governments have opened a zhou think that smog is getting worse. An- through protests, and increasingly via re- plethora of websites, partly to solicit feed- othernoted the high salary expectations of sponses to opinion polls and government- back(see box on next page). university students. Yet anotherfound that arranged consultations over the introduc- Opinion polls today cover a vast range over two-thirds of respondents in Henan tion ofsome newlaws. The partymonitors of subjects. The biggest growth in demand province in central China regard local offi- this clamour to detect possible flashpoints, for them is driven by the Chinese govern- cials as inefficient and neglectful of their and it frequently censors dissent. But the ment itself, says Mr Yuan (who is a party duties. For decades the Communist Party government is also consulting people, member). The top rung of leaders rarely has claimed to embody and express the through opinion polls that try to establish commissions polls, but what Mr Yuan de- will of the masses. Now it is increasingly their views on some ofthe big issues ofthe scribes as “customer satisfaction surveys” seeking to measure that will—and let it day as well as on specific policies. Its main by local governments are used “very ex- shape at least some ofthe party’s policies. aim is to devise ways to keep citizens as tensively”, he says. These evaluate govern- Since the party seized power in 1949 it happy as possible in their daily lives. It ment performance on issues such as social has repeatedly unleashed public opinion avoids stickier subjects such as political re- security, public health, employment and only to suppress it with force, from the form or human rights. But people are un- the environment. They even assess the “Hundred Flowers Campaign” in 1956, doubtedly gaining a stronger voice. popularity of local leaders, although the when it briefly tolerated critical voices, to party insists that public approval on its the student-led protests in Tiananmen Chinese whispers own is not enough to guarantee a leader’s Square in 1989. For the past two decades, In the late 1980s officials began turning to promotion. the party has effectively bought people’s universities to conduct polls to gauge pop- Another type of poll has also emerged, obedience by promising—and deliver- ular responses to market reforms. The gov- to sample attitudes towards particular is- ing—a better, richer future. This will be ernment’s agency for environmental pro- sues such as raising subway fares or in- tougher in the years ahead as the economy tection undertookits first survey in the late creasing the price of petrol or water. slows. Members of a huge new middle 1990s—when environmental concerns Weightier matters are tested this way too, class are demanding more from their gov- were rarely discussed in public—about such as various aspects of China’s labour ernmentin areasrangingfrom the environ- people’s attitudes towards pollution. It in- laws, or whether the death penalty should ment to the protection of property rights. vited people to weigh economic growth be applied forcorruption (73% say yes). So the party must respond to concerns in against conservation (money won). Greater public involvement, including order to retain its legitimacy. Around the same time party officials or- through polling, has had some effect on Xi Jinping, who took over as China’s ganised polls on religious belief. policy. Anthony Saich of Harvard Univer- leaderin 2012, has shown even less inclina- But for years the use of such methods sity notes that in successive polls, conduct-1 40 China The Economist April 11th 2015

2 ed on his behalfby Horizon since 2003, the Government websites government’s failure to tackle corruption effectively has consistently featured Zombies in the cloud among respondents’ main concerns. Mr Xi’s sweeping anti-corruption campaign BEIJING appears, at least partly, to be a response to The government tries to spruce up its online presence such anxieties. Last year’s declaration of a “war on pollution” by Li Keqiang similarly VER since the dawn ofthe internet age, sites that masquerade as government had public opinion in mind. EChina’s government has fretted over ones in order to steal personal infor- Opinion polls particularly affect policy dangers that may lurkin the chaotic and mation, promote property scams or even at a local level, Mr Saich reckons. His sur- unruly realm ofcyberspace. It has distribute pornography. Actual govern- veys show that public satisfaction with lo- worked hard to monitor citizens’ internet ment sites have also been hijacked, such cal government is often lower than it is doings, and blockor filter content it does as that ofthe Anhui provincial land and with the performance of central govern- not like. Now authorities are trying to resources bureau, which carried adverts ment—not surprisingly, perhaps, since lo- rein in internet chaos they themselves forlaser hair-removal and infertility cal authorities provide the overwhelming have wrought. treatments. bulkofpublic services. Approval ratings of Officials at all levels, from central Opening new channels ofcommuni- the central government, which are (suspi- ministries to local government sub- cation with the public was one ofthe ciously) high bythe standardsofmany oth- departments, have invested billions of original aims ofmany government web- er governments around the world, barely dollars since the 1990sin their own websites. Beijing’s city government has re- shifted between 2011 and 2014 (see chart). sites. But users seeking the latest official cently pledged to respond within seven But Mr Xi still has reason to worry, as Chi- data or the current party line are often days to comments by users ofits site. But na enters what he calls the “deep water” of frustrated. Many pages have not been the clean-up effortmay also be aimed at economic reform. updated in years. Some agencies that tightening control over information that In a country so vast, populous and di- were long ago disbanded or merged into gets released. Foreign journalists have verse, it is often hard to sample representa- others have left their old web pages benefited from surprisingly frankreports tively. Internet penetration is higher in cit- floating around the internet like space on obscure local government websites— ies and among rich people, which biases junk. Some sites workonly with certain learning, forexample, about preparations online polls, while rural respondents more web browsers, some do not workat all made by police forpotential unrest on often refuse face-to-face interviews. Na- and some contain malware. sensitive anniversary dates. tional surveys sometimes exclude Tibet In March the central government The review and clean-up effort, if and Xinjiang. The opinions of the coun- announced plans to set things right. The successful, will bring welcome relief to try’s 300m internal migrants are hard to as- first step is a review, lasting until Decem- millions offrustrated users in search of sess because they are on the move, often ber, ofthe functioning and accuracy of current information. But the job will be a work in the grey economy and are suspi- official websites at all levels. Dormant big one. One place to start would be the cious of people they regard as government “zombie websites” will be shut, officials website ofthe agency in charge ofman- snoops. As in other countries, many peo- promise. State media have called for the aging government domain-names. It lists ple simply will not talk. punishment ofthose responsible for the chairman ofits parent organisation as Horizon’s Mr Yuan says he can ask al- having failed to delete them earlier. “Premier Wen Jiabao”. Mr Wen left office most anything these days, but he avoids Some ofthe chaos is caused by web- more than two years ago. the most politically sensitive subjects such as Falun Gong, a once widely popular quasi-Buddhist sect that the government feature of party rule since Deng Xiaoping that the party is ready to allow a more banned in 1999, or the Tiananmen Square launched the country’s economic reforms open airing of dissent. Mr Xi has presided protests. Last year he conducted polls on in the late 1970s: marginal improvements over increasing constraints on the press attitudes toward pro-democracy protests in the current system are preferred over and on freedom of expression in other ar- in Hong Kong and even about the coun- substantive political reform. However ex- eas. Hundreds of activists have been try’s most senior leaders—but he is guard- tensive the surveys, they stop well short of rounded up. They include five women ar- ed about who commissioned him and providing officials with the kind of feed- rested last month merely, it appears, for what he found. Most polls for the govern- backthey need—risingnumbers ofprotests campaigning against sexual harassment. ment are not made public. That makes it in recent years are an indication of that. Such repression, along with an eager- harder to call the party to account, and Nor does the increasing use of polls mean ness to canvass public sentiment, may be means academics and experts sometimes motivated bythe same strategy: to monitor cannot use the findings to advise on policy. opinion so as better to control it. The party Still, the government’s interpretation of Xi says, they say sees limited interaction between govern- opinion-poll data is becoming more so- Satisfaction with government performance, % ment and citizens as a way of blunting de- phisticated. A survey in Beijing in 1995 mands for a freer choice of who rules over Central Country/District found that 90% of people were satisfied them. The party is still afraid ofthe people, with the city government’s performance, 100 (the blanket security it imposes on sensi- for example—yet some in the government, 80 tive political occasions is a sign of this). But steeped in the party’s traditional view that even to report a poll, as state-run media do it enjoys universal public support, worried 60 almost daily, gives weight to the notion that as many as 10%, or over 1m people, that public opinion matters. It is a message were dissatisfied. The understanding of 40 that is sinking in among citizens and fuel- opinion-survey results has considerably 20 ling demands for more responsive govern- improved since then, saysShen Mingming, ment. “People are more and more clear an American-trained polling expert at Pe- 0 about their rights and about what they can kingUniversitywho conducted the survey. 2003 07 11 14 express,” says Mr Shen. That is a trend the Source: Surveys by Anthony Saich, Harvard Kennedy School The use of polling points to a persistent party would ignore at its peril. 7 The Economist April 11th 2015 China 41 Banyan Where all Silk Roads lead

Through a fog ofhazy slogans, the contours ofChina’s vision forAsia emerge has led to comparisons with the Marshall Plan, America’s aid to help western Europe rebuild after the second world war. China does not like that analogy, since it sees the Marshall Plan as part of America’s containment of the Soviet Union. It insists that its initiatives are for the benefit of all of humanity and are—favourite catchphrase—“win-win”. But it certainly hopes money and investment can win friends. Yan Xuetong, a prominent Chinese international-relations expert, has argued that the country needs to “purchase” friendly relationships with its neighbours. In Central Asia, battered by low oil prices and plummeting remittances from migrant workers in Russia, the prospect of greater Chinese involvement is welcomed. Russia itself, though wary of China’s steady erosion of its influence in the former Soviet states of the region, is now too dependent on Chinese goodwill to do other than cheer. On the maritime route, however, suspicion of Chinese intentionsisrife. Itsarrogantbehaviourin the South Chi- na Sea, where it is engaged in a construction spree to turn disputed rocks into disputed islands, has given the impression that it feels it can simply bully its smaller neighbours. So the initial reaction in South-East Asia to the belt and road OT content with both purifying the Chinese Communist hasbeen sceptical. In Malaysia, where the government’susual re- NParty which he heads and with reforming his country, Chi- sponse to a proposal from China is to applaud first and ask ques- na’s president, Xi Jinping, also wants to reshape the economic tions later, the defence minister, Hishamuddin Hussein, has said and political order in Asia. With the flair that Chinese leaders the maritime Silk Road has “raised questions” and that it must share for pithy but rather bewildering encapsulations, his vision come across as a joint (that is, regional) initiative, rather than as a for the continent is summed up in official jargon as “One Belt, solely Chinese one. Indonesia’s president, Joko Widodo, who One Road”. As Mr Xi describes it, most recently last month at the says he wants to turn his country into a “global maritime ful- Boao Forum, China’s tropical-beach imitation of Davos’s ski crum”, was doubtful at first. But he now seems inclined to help— slopes, the belt-road concept will “answer the call of our time for unsurprisingly since his own plan involves massive investment regional and global co-operation”. Not everybody is convinced. in ports and other infrastructure to which, he hopes, China will Some see it as no more than an empty slogan; others as a thinly contribute. A visit to China last month yielded a joint statement disguised Chinese plot to supplant America as Asia’s predomi- promising a “maritime partnership” and describing his and Mr nant power. Both criticisms seem misplaced. Mr Xi is serious Xi’s visions as “complementary”. But Mr Joko had also made about the idea. And it is less a “plot” than a public manifesto. clear before arriving in Beijing that Indonesia did not accept Chi- Mr Xi first floated the idea in 2013, in Kazakhstan. He mooted a na’s territorial claims in South-East Asian waters. “a Silk Road economic belt” of improved infrastructure along the In India, another new leader, Narendra Modi, the prime min- main strands ofwhat, centuries ago, was the networkof overland ister, has his own approach to these issues. He visited Sri Lanka, routes used by silk traders and others to carry merchandise to Mauritius and the Seychelles last month, three Indian Ocean and from China through Central Asia and Russia to northern Eu- countries to which he promised greater co-operation and spelled rope and Venice on the Adriatic. In Indonesia, Mr Xi proposed “a out India’s own interests as a maritime power. This was not pre- 21st-centurymaritime SilkRoad”, reachingEurope bysea from cit- sented as a riposte to China’s plans. But in January Mr Modi and ies on China’s south-eastern seaboard via Vietnam, Indonesia it- Barack Obama produced a joint “strategic vision”. Implicitly, In- self, India, Sri Lanka, east Africa and the Suez Canal. At the time, dia’sresponse to China’smaritime ambitionshasbeen to reinvig- the proposals sounded rather fluffy—the sort of thing travelling orate ties with small neighbours and to cleave closer to America. leadersoften trotout, harkingbackto a distantpastof supposedly harmonious exchanges. China as number one? In the past few months, however, the idea has been given a Mr Modi, who will be in China next month, is unlikely to be criti- real push. China has gone further toward putting its money cal of the maritime Silk Road. Like Mr Joko, he would welcome where Mr Xi’s mouth is. It has promised $50 billion to its new Chinese investment in infrastructure. But both of them probably Asian Infrastructure Investment Bank, which despite American have doubts about Mr Xi’s vision of Asia’s future—of a region opposition has sparked a race in which 47 countries have applied with China as its hub, with Chinese-led institutions playing an to join as founding shareholders. China has earmarked a further ever bigger role in Asian economies, and with a fast-growing Chi- $40 billion fora “SilkRoad fund”, to invest in infrastructure along nese navy deploying ever more visibly far from China’s shores. the land beltand the maritime road. One motive forthis splurge is Mr Xi, it appears, is guided by a dream of regional hegemony, of self-interest. Chinese firms hope to win many of the engineering countries such as South Korea and Japan drifting of their own projects—roads, railways, ports and pipelines—that the new “con- will away from America’s strategic orbit and into that of China, nectivity” will demand. Improved transport links will benefit the resurgent power reclaiming what it regards as its historical Chinese exporters. And helping its neighbours’ development birthright. This is not a plot. It is a long-term—and even credible— will create new markets. That China seems to have realised this plan, albeit one that does little to inspire the rest of Asia. 7 42 Middle East and Africa The Economist April 11th 2015

Also in this section 43 Islamic State’s gains in Syria 43 The looming battle for Mosul 44 The ﬁght for Libyan oil 45 Nigeria’s hopeful president-elect 45 The regeneration of Johannesburg 46 An atrocity in Kenya

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

Iran nuclear deal Iran establishing a record of strict compliance. It now seems likely that American Too soon to celebrate and European sanctions will be suspended at roughly the same time, not least because extraterritorial provisions in the American measures would otherwise expose European firms to lawsuits. The Iranians say that “at the same time as the start of Iran’s nuclear-related imple- The odds ofa momentous agreement have shortened, but it is no dead cert mentation work, all of the sanctions will T IS not yet a done deal. Hardliners on than merely denouncing it—the default po- be annulled on a single specified day”. In Iboth sides will do theirbest to sabotage it sition ofthe prime minister, Binyamin Net- otherwords, all sanctionswould go within in the coming weeks. Yet the odds on Iran anyahu—although the improvements it de- days of the signing of the final agreement. and sixworld powers strikinga bignuclear mands would still destroy the talks. By contrast, America and its European co- deal have shortened dramatically. The an- True, the level of detail in the “fact negotiators (France, Britain and Germany) nouncement on April 2nd of the parame- sheet” about the deal’s parameters that are insisting that sanctions will only be ters foran agreement to limit Iran’s nuclear was released by the State Department has suspended after the International Atomic programme (claimed by the Iranians to be not been matched by Iranian statements. Energy Agency (IAEA) “has verified that peaceful), in exchange for lifting sanctions, But then nor has it, in the main, been con- Iran has taken all of its key nuclear-related was more detailed than expected. But sev- tradicted. On the crucial issues to do with steps”—ie, at the end ofthe first stage ofim- eral unresolved issues mean there will be curbing Iran’s ability to produce fissile ma- plementation, not at the beginning. Lifting much hard negotiating to be done if a deal terial forbomb-making, the differences are sanctions could take between six months is to be signed by the June 30th deadline. more spin than substance. The Americans and a year, according to John Kerry, Ameri- Still, experts who had previously been note the constraints: the removal and ca’s secretary ofstate. sceptical about the prospect of an agree- mothballing of centrifuges from Natanz; Afurtherdisagreement is overreimpos- ment think it is within reach. They include the transformation of the Fordow enrich- ing sanctions should Iran violate the terms Gary Samore, Barack Obama’s senior ad- mentfacilityinto a research centre; the con- of the accord. The Iranians bridle at the viseron armscontrol forfouryears(now at version or export of Iran’s low-enriched mention of it, but the principle of sanc- the Belfer Centre at Harvard University), uranium stockpile; and the destruction of tions “snapback” is key for the West and is and Mark Fitzpatrick, a former State De- the core of the plutonium-producing reac- reflected in the careful wording of the un- partment official (currently at the Interna- tor at Arak. The Iranians, in turn, insist that dertakings. The EU will “terminate the im- tional Institute for Strategic Studies in Lon- nothing has been surrendered. “None of plementation” of nuclear-related sanc- don). France’s foreign minister, Laurent the nuclear facilities or related activities tions; America will cease their Fabius, who had rejected an earlierversion will be stopped, shut down, or suspend- “application”. While Iran can rejoice that cooked up by the Americans and the Irani- ed,” says an Iranian summary. Elsewhere, sanctionshave gone, the realityisthat their ans (he was easily the toughest ofthe nego- though, the divisions are real enough. architecture will remain in place. The UN tiators at the recent Lausanne talks), de- On the lifting of sanctions imposed in sanctions are less painful in economic scribes the accord as “an important first response to Iran’s nuclear programme— terms (they deal mainly with arms and step, even very important”. which have halved Iran’s export earnings technology transfers, and target individual So far the reaction from the Arab (even before the fall in oil price) and crip- people and firms), but trickier politically. world’s Sunni powers has been measured, pled the economy in otherways—the Irani- Once lifted through a new Security Coun- even welcoming, including from Saudi ans have done pretty well, albeit not as cil resolution they may be well-nigh im- Arabia, Iran’s rival for regional hegemony. well as they claim. America’s initial posi- possible to slap back on unless the Iranian Even the Israeli government is now talking tion had been that sanctions would come violation is both severe and flagrant about how to make the deal better rather off only in stages, and would depend on enough even for Russia to refrain from us-1 The Economist April 11th 2015 Middle East and Africa 43

2 ing its veto. TURKEY Mr Assad as the lesser evil. On April 2nd Lastly, some of the (mainly American) Tunisia, which last month suﬀered an at- Kobane Mosul sanctions on Iran have nothing to do with Erbil tackat its Bardo museum that killed 22 peo- Aleppo Raqqa its nuclear activities, but have accumulat- NINEVEH ple, announced that it would reopen its ed over the past four decades in response Hama Mabuja Kirkuk consulate in Damascus. Ostensibly, it is to Deir T to abuses of human rights, the promotion ez-Zor i track Tunisian jihadists in Syria, but oﬃ- Homs g r i of terrorism and the country’s threatening LEB. SYRIA s cials have invited the Syrian ambassador missile programme. If ordinary Iranians Tikrit back to Tunis. Abdel-Fattah al-Sisi, Egypt’s thinkthat all these will disappear too, they Damascus IRAQ president, is also farwarmertoward Mr As- Baghdad are in fora disappointment. ANBAR sad than his predecessor, Muhammad

On inspection arrangements, the Irani- E Morsi. Yet the Syrian president is losing

u Islamic State: control support p an fact-sheet is silent, beyond the commit- h strength and relying ever more on Hizbul- r a Kurdish forces control t ment voluntarily to implement the “addi- e lah and other militias backed by Iran. s tional protocol” of the Nuclear Non- Sources: Institute for the Some thinkSaudi Arabia, which is lead- Study of War; The Economist Proliferation Treaty’s system ofsafeguards. 150 km ing a ten-country offensive in Yemen, may Yet for the agreement to be credible, Iran yet do more to push Mr Assad out. Arab must be willing to go even further and al- lage close to Hama. Then on April 1st the ji- media speculate that the “Yemen model” low international inspectors to visit any hadists launched an offensive to take over could be applied to Syria. In an interview sites deemed “suspicious”, while answer- Yarmouk, just 10 kilometres (6 miles) from with the New York Times, Barack Obama ing the many questions the agency has central Damascus. Fighting continues, but appeared to call for just that: “Why is it that asked about past and possibly continuing IS is said to be in control of roughly four- we can’t have Arabs fighting the terrible research on nuclear weapons. fifths of the camp. As well as sending in its human-rights abuses that have been per- Disagreements over verification give own fighters, IS found local recruits among petrated, or fighting against what Assad opponents of the deal on both sides their angry young camp residents. They have has done?” Direct Arab action is unlikely in best chance ofundermining it. Ifleaders of been starved by the regime’s troops to the Syria, but it could get much messier yet. 7 Iran’s Revolutionary Guard block access to pointofeatingleaves, butalso dislike some some military sites, or ifthere is a refusal to of the rebel groups that control Yarmouk engage with the IAEA on the “possible mil- for playing politics with the regime rather The war against Islamic State (2) itary dimensions” of the programme, Mr than confronting it. Obama might lose the votes he needs to Observers have long feared that IS Mosul beckons head off critics in Congress who want the would advance in Syria as the Western co- right both to review the deal and to intro- alition’s plan to “degrade and defeat” IS fo- duce new sanctions should agreement on cused mostly on Iraq. Yet IS does not con- all issues not be reached by the deadline of sider the two countries to be separate BAGHDAD AND BASHIQA June 30th. A lot has gone right, but there is battlefields; it claims its “caliphate” has ef- It will not be easy to retake Iraq’s plenty that could still go wrong. 7 faced the post-colonial borders. “IS looks second city for opportunities to expand that will help it strategically and generate a lot of buzz,” N A barren military camp near Mosul in The war against Islamic State (1) says Noah Bonsey, Syria analyst at the In- IIraq, 500 balaclava-clad men train for ur- ternational Crisis Group, a Brussels think- ban warfare under the watchful eye of Creeping toward tank. As IS has struggled to make further their leader, a former general in Saddam gains in northern Syria—Kurdish fighters Hussein’s army. They are among 4,000 Damascus pushed it out of Kobane with the help of volunteers for the National Mobilisation American bombing—southern Syria is the Unit, a multi-ethnic force being assembled CAIRO natural place to seekgains. by Atheel al-Nujaifi, the governor of Mo- The new IS tactics expose the latent sul’s Nineveh province. The jihadists’ advance in Syria poses contradiction in America’s strategy. In Iraq The men are preparing to be deployed difficult questions forAmerica its coalition has uneasy partners on the to keep the peace in Mosul, if and when IKE a game of whack-a-mole, when the ground in the form ofthe Iraqi government Iraq’s second city is retaken from Islamic LAmerican-led coalition against Islamic and the Iranian-backed Shia militias (see State (IS). They would replace the police State (IS) strikes the jihadists in one place, next article). In Syria, its plans to support and military forces that melted away in the they often pop up in another. That is what mainstream rebelshave notcome to much; face of the jihadists’ onslaught last June. A happened at the start ofApril, when IS lost America is opposed both to IS and to the combination of Iraqi soldiers, mainly Ira- the city of Tikrit in Iraq but took over the Assad regime. Iran, by contrast, supports nian-backed Shia militiamen and Ameri- long-suffering Yarmouk camp in Syria. A both the Iraqi and Syrian governments, can air power recaptured Tikrit on March Palestinian refugee camp, now a suburb of helpingform local militiasto support them 31st. Now Mosul beckons. Damascus, the capital, Yarmouk has long and sending fighters from Hizbullah, its Yet the fight there will be farharder. Mo- been held by a mixture of Palestinian and Lebanese client. sul is a city of 2m people compared with Syrian rebels, and besieged by troops loyal Syria’s rebels in the south are better some 300,000 in Tikrit, which took weeks to Syria’s president, Bashar Assad. equipped and less extreme than their to retake (there are still some IS pockets). Until recently IS in Syria was confined northern peers, but even they are receiving Mosul is the Iraqi base of IS, which was mostly to the east ofthe country bordering only limited help from American and Arab present there long before it tookthe city. Iraq. But over the past week its declaration states. Fornow, itis MrAssad who is bomb- It is still unclear who will try to recap- of wilayat, or “provinces”, in other parts of ingIS in Yarmouk. In a perverse butcharac- ture the place. MrNujaifi rejectsany notion Syria have seemed less like wishful think- teristic contortion, he is claiming to defend ofa Shia-led intervention in the city. In Tik- ing. Its men have inched westward from the same 18,000 people whom he has be- rit, Shia militias had to be pulled out after their Syrian headquarters in Raqqa to- sieged forthe past two years. looting and revenge attacks on Sunni resi- wards Mr Assad’s turf. On March 31st they As the jihadist problem has spread, dents; last year hundreds of Shia soldiers killed at least 46 residents of Mabuja, a vil- some Arab states appear to be warming to were executed, and their bodies are now 1 44 Middle East and Africa The Economist April 11th 2015

and the central bank, both in Tripoli, have somehow preserved their independence, but at a cost. The bank has used the oil money to pay consumer subsidies and the salaries of government workers across Libya, thereby funding each side’s war. Few expect the NOC’s revenue to end up in the coffers of the Beida government, which has tried to get hold ofthe cash before by setting up a parallel outfit at Ras Lanuf, an oil hub itcontrols, and installinga rival chairman ofthe bank. Both efforts failed. Western companies buy the bulk of the country’s oil and have little interest in changing contracts that are paid into central-bank accounts. Moreover, the Beida government has little abilityto paysalaries, asthe database ofgov- ernment workers is in Tripoli. “Even if they do get the money, there’s no way to deliver it,” says Mattia Toaldo of the European Planting the Iraqi flag in Tikrit. But too many fight only for their sect Council on Foreign Relations, a think-tank in London. 2 being exhumed. Haider al-Abadi, Iraq’s minder of what Iraq’s security forces are More than anything, many think, the prime minister, said that the Hashid al- supposed to be. As they train, the recruits move is a sign of the Beida government’s in- Shaabi, the umbrella-group for Shia mili- sing Arabic and Kurdish ditties about a un- creasing intransigence, which has soured ef- tias, will not be sent to fight in Mosul. ited Iraqi force waging war against IS. “We forts by the UN to negotiate an end to the Mistrust between Sunni Arabs and believe in a national feeling,” says a 19- conflict and focus the fight on IS. During Iraq’s mainly Shia security forces runs es- year-old, amid raucous shouts of “Long peace talks last month Khalifa Haftar, a gen- pecially deep in Mosul. Unlike other Iraqi live Iraq!” The display of pride rooted in eral allied to the Beida administration, or- cities that are more ethnically and reli- national identity rather than sectarianism dered an airattackon Tripoli. General Haftar giously uniform, Mosul is home to myriad sets the unit apart from most of Iraq’s mili- hasreceived supportfrom Egyptand the Un- communities. Sunni Arabs, Shias, Kurds, tias. Sadly its fighters are still too few, and ited Arab Emirates, which see Libya as a Christians and Yazidis have all registered too weak, to make a difference. 7 front in a war against Islamists (they are part for Mr Nujaifi’s force. But Mosul also has a ofthe alliance supportingthe Tripoli govern- hard Sunni core, partly fuelled by disgrun- ment). But Western powers fear his war on tled former officers under Saddam who Libya’s civil war “terrorists” is really an attempt to seize per- bore the brunt of de-Baathification policy sonal power. So although they recognise the afterAmerica toppled Saddam in 2003. Ira- An oily mess Beida government, they have refused to en- qis call the place “the city of a million sol- able its control ofthe country’s finances. diers”. Some ofthem joined IS. The two sides appear to be fragmenting. On April 6th the Kurdish president, Ma- General Haftarhas fallen out with former al- soud Barzani, said his fighters, known as CAIRO lies. Mr Toaldo says the militias’ chains of Peshmerga, would assist in the campaign command are loosening. With IS added to As negotiations fail to progress, one side to retake Mosul. But officials say they are the mix it is no longer clear who is fighting tries to grab the oil revenue likely only to provide support, not enter whom. A peace settlement seems ever hard- the city. So the task will most likely fall to ORE blood was spilled in Libya’s civil er to reach. the Iraqi army, which is still being rebuilt Mwar on April 5th, when a suicide- Government workers, at least, are still be- after last June’s debacle. “American com- bomber from Islamic State (IS) killed at ing paid. But for how much longer? The def- mand and co-ordination will be the key least six people in the coastal city of Mis- icit this year is expected to be about two- factor if Mosul is to be retaken,” says Mi- rata and when the internationally recog- thirds ofGDP, and the country’s reserves are chael Stephens of RUSI, a think-tank. Iran nised government in Beida in the east running low. Winning control of Libya’s fi- may not be happy about that. struck its opponents near Tripoli in the nances may not be worth the trouble. 7 Mr Nujaifi says the government pays west. But the boldest move ofthe weekend his men salaries of about $700 a month, caused no bloodshed. On April 4th the Bei- but it has not sent them any arms. He uses da government made a grab for the coun- The dwindling prize his own money to buy guns on the black try’s cash by directing the state-run oil LibyaÕs oil production m bpd CIVIL UNREST AND TWO BIG OIL market. Officials in Baghdad cite a shortage company, the National Oil Corporation UPRISING AGAINST JIHADIST ATTACKS FIELDS FORCED ofweapons, somewhat implausibly. Sunni (NOC), to send its income not to the central QADDAFI BEGINS ON OIL FIELDS TO CLOSE 2.0 officials, and some diplomats, say the de- bank in Tripoli but to the government’s QADDAFI lay may be due at least in part to the Shia own offshore account. KILLED leanings of the government. Many minis- Libya’s oil output is down to some 1.5 ters mistrust the Sunnis, and the most ex- 500,000 barrels a day, from as much as treme Shia militiamen label them all as IS. 1.7m at its peak (see chart). Even so, its sales 1.0 This all suggests that the battle for Mosul is are the only thing keeping the country unlikely to happen this spring. Lesser tar- afloat. The revenue is being fought over by 0.5 gets in Anbar province to the west of Tikrit both sides in the conflict, which has split may come first. Some Iraqis even suggest the country between two rival govern- 0 Mosul should just be left to IS. ments—the one in Beida, the other in Tri- 2007 08 09 10 11 12 13 14 15 The National Mobilisation Unit is a re- poli—and their allied militias. The NOC Source: Bloomberg The Economist April 11th 2015 Middle East and Africa 45

Nigerian politics prices and government revenues slump, is NIGER still unclear. The APC’s main campaign promises were to beat an insurgency in the Please don’t Maiduguri north-east that has claimed at least 15,000 Kano expect miracles lives, and to end corruption.

Mr Buhari will start by trying to deal BENIN LAGOS with mismanagement in the army. Embez- zlement by generals is one reason why, de- Abuja The president-elect faces enormous spite a huge budget, the army lacks the tasks, starting with halting corruption NIGERIA equipment to defeat the jihadists of Boko UHAMMADU BUHARI is fast learn- Haram. Some generals’ heads may roll. Lagos Ming what excessive expectations can Stopping government funds being si- Niger CAMEROON do. The former military ruler, who last phoned off is a monumental task. Theft of Niger month handsomely beat the incumbent, public funds and poor government are the Delta 200 km Goodluck Jonathan, in a presidential elec- banes of Africa’s biggest economy and Presidential election, 2015, winner in each state States tion, promised frustrated Nigerians that he largest oil producer. Though the APC in- Muhammadu Buhari Goodluck Jonathan with sharia would bringchange once he isinaugurated cludes reformers, it is also full of veteran Source: Nigeriaelections.org on May 29th. Many will take him at his politicians used to taking their cut. word. “Most people are expecting a new Nonetheless, Mr Buhari’s new lot will ofdollars without bidding during Mr Jona- Nigeria,” says Ahmad Lamido, a civil ser- look into the accounts of the Nigerian Na- than’s presidency. Such “strategic partner- vant in the northern city of Kano, celebrat- tional Petroleum Corporation (NNPC). In- ship agreements” have been a way to steal ing the first-ever victory of a Nigerian op- vestigation into opaque operating con- cash from federal coffers, says Lamido Sa- position party at the ballot box. “The only tracts is the starting place, reckons Thomas nusi, a former central-bank governor person who can bring this is Buhari.” Hansen of Control Risks, a London-based sacked by Mr Jonathan for alleging that Precisely how his All Progressives Con- consultancy. The state-owned oil giant $20 billion in oil revenue had vanished. gress (APC) will reshape the country, as oil signed operating contracts worth billions Opaque “swap” deals, whereby crude exports are exchanged for refined petroleum brought back into the country, may Urban regeneration also come under scrutiny. In 2014, monitors from the Nigerian Extractive Indus- Polishing the city of gold tries Transparency Initiative, set up in 2004 JOHANNESBURG to eye deals in oil, gas and mining, said the country could be losing $8 billion a year As badlands get cleaned up, the poorstill get pushed to the margins thanks to agreements between the NNPC ENTRAL Johannesburg’s newest creative types ofall ethnicities have been and various traders. Cdraw for hipsters was once a mining- drawn to such areas as Braamfontein and At the same time, Mr Buhari must keep explosives warehouse, a relic ofthe city’s Maboneng, where refurbished buildings the current fragile peace in the oil-produc- gold rush, with part ofthe building be- offerdowntown living at reasonable ing Niger delta. He is expected to axe an ex- lieved to predate the Boer war of1899- rents. The Rough Guides travel book pensive deal which, since 2009, has paid 1902. It stood derelict foryears. Now it is named Johannesburg—not its rival, Cape former militants to stop them blowing up TheSheds@1Fox, a cavernous hall of Town—as the must-visit city of2015. oil installations and kidnapping workers. vendors selling craft beer, flambéed This first wave ofgentrification, ac- “Nigeria cannot afford the amnesty to the chorizo and artisanal tacos, attracting companied by good security, is still tenta- degree it did in the past,” says a Western trendsetters and young familiesto a tive, however. Although crime is falling, it diplomat in Abuja, the capital. The new blockthat not long ago was best avoided. is still high, as elsewhere in South Africa. government may come up with another This is the latest example ofdevel- A Starbucks coffee shop has yet to pop up. deal instead. But former generals who opers bringing fresh life to pockets of A recent violent protest in the Jeppes- were enriched on Mr Jonathan’s watch South Africa’s economic capital, foryears town area ofJohannesburg exposed the could stoke violence if they feel aggrieved. saddled with a largely deserved rep- residual cracks. Poor residents facing So could the delta’s desperately poor utation forcrime and chaos. The gentrifi- eviction by private developers turned young men. On April 3rd a major gas pipe- cation ofsmall sections ofinner-city their anger on nearby Maboneng (“Place line was blown up. Johannesburg is generally welcome. ofLight” in the Sotho language), an area Yet so farso quiet in the region—though There is nothing romantic about the that has been redeveloped into loft apart- some formerfighters said they would go to decay ofthe past two decades. As apart- ments, a boutique hotel and an art-house warifMrJonathan lost. Investorssound re- heid waned, white middle-class residents cinema. “We want to eat sushi in Mabo- assured by the smooth transition (about fled to the northern suburbs and compa- neng,” the protesters chanted, burning 800 people died afterthe last election). The nies shifted theirheadquarters. Hard-up tyres and throwing rocks, before being stockmarket has had its longest rally in two blackmigrants previously relegated to dispersed by police firing rubber bullets. years. Mr Jonathan deserves credit for ac- the margins moved into the abandoned Maboneng’s developers were not to cepting defeat graciously, which has help- buildings, seeking opportunities in the blame forthe evictions; they became a ed stave off the threat of mass violence. He City ofGold. Johannesburg became a target because oftheir success. Yet the may, in any case, be happy to see the back fearsome place offilthy streets, a horren- destitute still fear they will be sidelined of his job. At an Easter church service, he dous crime rate and the phenomenon of and packed offas the city regenerates. likened his years as a state governor and criminals “hijacking” buildings from Nonetheless, there is now a sushi restau- then as vice-president and president to liv- their owners and forcibly collecting rent rant in Maboneng. It is called “The Black- ing “in a cage”. Now it is Mr Buhari who is from poor tenants. anese,” and it is owned by a blacken- trapped, with Nigerians watching his ev- The city is slowly changing from trepreneur who was once a security ery move. Little wonder the new president dangerous to pleasantly thrilling. Young guard forcars. wants to lower expectations. “How,” he asks, “can I promise miracles?” 7 46 Middle East and Africa The Economist April 11th 2015

An atrocity in Kenya Could things get worse?

NAIROBI Mass murderby terrorists exposes a host ofdefects in the ruling establishment AISY ONYANGO hid from the gun- ating in Kenya and froze the accounts of Dmen for 12 hours as they went from more than 80 individuals and entities sus- dormitory to dormitory at Garissa Univer- pected offinancing terrorism. sity, killingherfellowstudentsbythe score. Islamist assaults on Kenya have been From a window she could spot Kenyan sol- mounting since 2011, when its government diers. When, she asked herself, would they sent troops into Somalia to fight the Sha- be coming to save her? bab, which proclaimed its allegiance to al- As dusk fell that day, April 2nd, they fi- Qaeda in 2012 and still controls swathes of nally stormed the residence. Within min- the country in the centre and south despite utes, they had shot dead the students’ tor- being pushed out of the main towns. Since mentors. Apparently only four-strong, Mr Kenyatta became president in 2012, the they were members ofthe Shabab, a fanat- group has killed more than 400 people in ical Islamist group that seeks to rule over Kenya. In September 2013 it butchered at Somalia and has terrorised neighbouring least 67 in Nairobi’s upmarket Westgate Pray for the dead of Garissa Kenya. It justifies its carnage on the ground shopping mall. In June last year it slaugh- that the Kenyan government has been tered 60 in the town of Mpeketoni, near two guards had been deployed to protect fighting it in Somalia. the island of Lamu. In November and De- the students. Garissa is a dusty little town in a poor cember it murdered 36 labourers in a quar- The day before the attack, Mr Kenyatta ethnic-Somali area 145 kilometres (90 ry and 28 people whom it hauled offa bus. had lambasted the British government for miles) from Kenya’s border with Somalia. Both those atrocities were carried out near warning its citizens against travel to certain Most of the students at the new university Mandera, in Kenya’s far north-east. In all parts of Kenya, with Garissa mentioned. are, like the 20-year-old Ms Onyango, from such incidents, the Shabab let off Muslims After the Westgate attack he had been loth other parts ofthe country. and killed the rest. to sack any of the ministers or generals in For the whole day, she and others had Criticism of the government’s tardy charge ofsecurity, though eventually a few listened to the gunmen goading and gig- and incompetent response to the slaughter heads did roll. This time he may be expect- gling as they tortured and slaughtered her in Garissa haswelled up fast. Aspokesman ed to crackthe whip more fiercely. classmates, telling them that the Shabab’s forthe interiorministryinsisted it was “not A particular worry is that the appeal of mission was to “kill and be killed”. With as bad” as during the Westgate fiasco, Islamist violence is spreading beyond the time on their hands, they discussed where when security forces took four days to de- extremists among Kenya’s 2m-plus Soma- the Kenyan soldiers might be positioning feat four terrorists—and, by the by, looted lis into disgruntled sections of Kenya’s themselves. Meanwhile, they tested the the mall. Muslim community at large, especially in students’ knowledge of the Koran, killing Yet Nairobi-based journalists who the coastal region that caters to many tour- those who failed. Some students had their jumped in their cars were on the scene in ists. The Garissa attack was launched the throats slit. Others were shot. A few were Garissa hours before Kenya’s General Ser- day after the anniversary of the assassina- reported to have been beheaded. Female vice Unit, a supposedly elite force based tion of a prominent pro-jihadist cleric in students were tricked out of their hiding near Nairobi. It took seven hours to deploy Mombasa, Kenya’s main port, known as places by the gunmen’s assurance that the and ten before it stormed the campus. Po- Makaburi. Many young Muslims on the Koran forbids the killing of women. Some lice and soldiers based near Garissa just coast fear they will be targeted by the au- victims, before being killed, were made to looked on. Moreover, despite warnings thorities in the wake of the Garissa out- call their parents to blame their death on that the university might be attacked, only rage. In recent years they have accused the Kenya’s government for policies that have government’s counter-terrorism units of supposedly led to the killing of Somalis extrajudicial killings, disappearances and Civilians killed by the Shabab in Kenya and Muslims. January 7th 2007-April 2nd 2015 arbitrary detentions. By the end of the day 142 students lay ETHIOPIA 100 In poor areas such as Garissa they also SOUTH 50 Source: Armed dead, along with six policemen and sol- SUDAN Conflict Location & accuse Kenyans from inland, including diers, plus the Shabab’s quartet. Along 0 Event Data Project members of Mr Kenyatta’s Kikuyu tribe, with al-Qaeda’s bombing in 1998 of the Mandera the country’s richest, of taking their land American embassy in Nairobi, when 213 for development. A railway and pipeline people were killed, it was one ofthe blood- SOMALIA from Lamu towards prospective oil wells iest atrocities in Kenya since independence KENYA in north-west Kenya, Uganda, South Su- in 1963. PresidentUhuruKenyatta called for UGANDA dan and Ethiopia would run close to Ga- three days of mourning—and swore ven- Nanyuki rissa. MrKenyatta’s government is anyway Dadaab geance on the killers. He dispatched air- Garissa INDIAN facing an unusually fierce wave of criti- craft to bomb two Shabab camps in Soma- Nairobi OCEAN cism across the country as a result of a lia. So far five Kenyans and a Tanzanian probe into grand-scale corruption that have been arrested on suspicion of in- Mpeketoni Lamu benefited members of the ruling elite. If it volvement in the Garissa attack. Kenya’s TANZANIA fails to deal with the Shabab and its home- central bank governor suspended the li- grown allies better than before, popular 350 km Mombasa cences of 13 Somali remittance firms oper- discontent could rise alarmingly. 7 Europe The Economist April 11th 2015 47

Also in this section 48 Turkish politics 48 Poland’s election 49 Eastern Ukraine 50 Greece and Russia 50 French radio 51 Charlemagne: A Minsk muddle

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

Reforming Italy’s government cial support forconstitutional and political reform, the former prime minister had ex- Working on it pected a say in choosing the new head of state. By ignoring him, Mr Renzi made it clear that he could outwit Mr Berlusconi and even dispense with his help. ROME On April 2nd MrRenzi dished out a similarly humbling rebuff to his coalition ally, Italy is busily pushing through reforms, but the biggest ones will take years to Angelino Alfano, the leader of the New complete Centre Right (NCD). After one of the NCD’s HEN Matteo Renzi, Italy’s prime a politician demonstrates conclusively three ministers resigned over allegations Wminister, came to power in February that he is the one in charge, his former ene- of corruption, the prime minister replaced 2014, he promised to push through a daunt- mies often switch allegiances. In retro- him with a member of the PD. Mr Alfano, inglistofreformsatthe breathtaking speed spect, it is clearthat such a turning point oc- whose party’s share in the polls has dwin- of one a month. Those who knew Italy curred on January 31st, when Mr Renzi dled to only about 3%, had no appetite for well were sceptical, and indeed Mr Renzi succeeded in pushing his choice for presi- torpedoing the government and risking an has not kept to his schedule. Nonetheless, dent, Sergio Mattarella, through Italy’s election. when he meetsBarackObama in Washing- electoral college. The PD by contrast is polling at about ton next week, Mr Renzi’s economic and Mr Mattarella appealed to the whole of 38%, and its opponents are in disarray. Mr political position will be stronger than at Mr Renzi’s routinely fractious centre-left Berlusconi’s support for the government any time since he tookoffice. Democratic Party (PD). But he was unac- cost him a split in his Forza Italia party, Italy appears to be emerging from a re- ceptable to Silvio Berlusconi, the leader of which now trails a resurgent, more radical- cession that has lasted for more than three the biggest conservative party in parlia- ly right-wing Northern League. Neither years—its longest on record. Falling oil ment. Having provided Mr Renzi with cru- movement is within 20 percentage points prices, the European Central Bank’s quan- ofthe centre-left. titative easingand a weakereuro are all do- What could go wrong for Mr Renzi? For ing their bit. Even the opening in Milan of Slow progress a start, the economy remains fragile. Un- the latest world expo on May 1st should Matteo Renzi’s promised reforms and where employment rose slightly from January to boost GDP. Mr Renzi has pencilled in they stand, February 2014 to April 2015 February. The debt-to-GDP ratio continues growth forthis year of0.7%. Reform Status to grow. The finance minister, PierCarlo Pa- Some of his advisers think that will Constitutional Going through parliament doan, says it will peak this year at 132.5%. prove an underestimate. They argue that (slowly). Will probably But his predecessors have been predicting reforms Mr Renzi has undertaken over the need a referendum a peakforten years. In factthe ratio hasfall- past 14 months are starting to have an ef- New electoral law Nearing approval en only once, in 2008, largely because Ita- fect. These include enhanced access to Labour Being implemented ly’s prime ministers hesitate to make cuts. credit for small firms, a cut in a much-criti- Public administration Stuck in parliament IfItaly fails to trim its deficit in line with cised regional tax on company turnover, Repayment of public In progress the programme agreed on with the Euro- fiscal incentives for employers in a new la- sector debts to private pean Commission, it must increase value- bour reform and an €80 ($87) monthly cut sector firms added tax by €16 billion next year—a move Help to SMEs Some measures enacted, in the tax bill oflower-paid workers. with more to come that officials estimate would shrink the Politically, MrRenzi stands tall on a bat- economy by 0.7%. To avoid that, the cabi- Overhaul of tax system In early stages tlefield littered with his vanquished ene- net this weekagreed to reduce spending by Civil justice Preliminary steps taken, mies—and humiliated allies. Abrupt turn- but still a long way to go €10 billion. But experience shows that in It- ing points are characteristic of Mediter- aly cuts of that magnitude are hard to The Economist ranean politics, based on patronage. When Source: achieve. Mr Renzi will probably seek a 1 48 Europe The Economist April 11th 2015

2 trade-off with the EC: a budget deficit in Whetheritwill isnotclear. The main oppo- 2016 of perhaps 2.2% (against a currently sition, the secular Republican People’s projected 1.8%) in return for evidence of Party (CHP), is unlikely to gain much. But structural reform. the pro-Kurdish Peoples’ Democracy Party Mr Renzi’s record on reforms has been may reach the 10% vote share needed to mixed but encouraging (see chart on previ- take seats in parliament. AK’s list of candi- ous page). The government faces obstacles dates includes Mr Erdogan’s son-in-law, including a tortuous legislative process Berat Albayrak, who has previously and administrative inertia. (“So far, I have worked for a pro-AK conglomerate, Calik. not met a director-general under the age of Other protégés are also running for safe 50,” says a prime-ministerial adviser. “You seats. But Mr Davutoglu’s influence is pal- cannot imagine how much resistance that pable as well. This suggests that Mr Erdo- creates fora reforming government.”) gan’s grip over AK may be loosening. But a third obstacle is ofMr Renzi’s own A silent power struggle between presi- making. He believes Italy cannot truly dent and prime minister was evident change until it has a government with a when they clashed over the conduct of solid parliamentary majority, certain of peace talks with Abdullah Ocalan, the im- staying in power for an entire legislative prisoned leader of Turkey’s autonomy- term. To that end, he has given priority to seeking Kurds. Mr Erdogan wants to link constitutional reform and a new electoral any concessions towards Kurds to backing law. But how long will Italians, and their Another successful operation for his executive presidency. Mr Davu- European partners, have to wait for this toglu, AK insiders say, wants the issues to paradise ofinstitutional stability? worst menace to society”. He sometimes remain separate because he too wants to Mr Renzi’s constitutional reform can claimssocial media are beingmanipulated keep Mr Erdogan’s power in check. only be passed after being bounced be- by an unnamed global “mastermind” try- Many worry that Mr Erdogan’s obses- tween Parliament’s two chambers until an ing to overthrow him and his Justice and sion with an executive presidency could identical text has been approved twice by Development (AK) party. A foreign dip- drive him to new extremes. In the past he each chamber in votes at least three lomat in Ankara, the capital, says Mr Erdo- has invoked sectarianism by targeting the months apart. That alone will take until gan is creating imaginary enemies to stoke Alevis, who practise a liberal form of Shia next year. Unless the bill wins majorities artificial crises and justify repression. Islam, to shore up AK’s Sunni base. His re- oftwo-thirds in both houses on the second At the top of Mr Erdogan’s list of foes is cent diatribes against Iranian and Shia in- vote, it will need to be put to a referendum. Fethullah Gulen, a Sunni cleric based in fluence suggest he may resort to such tac- And by alienating Mr Berlusconi, the Pennsylvania with whom he once made tics again. “No other leader has used prime minister has forgone his already common cause against army tutelage in religion to polarise the public in this way,” slim hopes of avoiding a time-consuming the early days of AK rule. He has since says Levent Gultekin, a pundit and former nationwide vote. Heaven, then, will have patched things up with the generals, and Islamist. Who knows what other illiberal to wait until at least 2017. 7 now claims Mr Gulen’s followers in the se- measures he might consider acceptable? 7 curity forces and judiciary fabricated evidence for an alleged coup plot, known as Turkish politics Sledgehammer. (Coincidentally, on the Poland’s election same day that Mr Kiraz was being taken Taken hostage hostage, all 236 suspects in the plot, most of Echoing crash them army officers, were acquitted.) Mr Erdogan has aired similar claims about a corruption probe into his inner cir- ANKARA cle, revealed in December 2013. Thousands WARSAW of alleged “crypto-Gulenist” public ser- A kidnapping becomes a pretext fora Presidential elections are still scarred vants accused of establishing a “parallel crackdown on social media by the Smolenskdisaster state within a state” have been sacked or N MARCH 31st two members of demoted. More than 70 people have been N APRIL 10th Poland marks the fifth ODHKP-C, a Marxist revolutionary investigated or convicted for “insulting” Oanniversary of the plane crash in group, strolled into Istanbul’s main court- Mr Erdogan since he became Turkey’s first Smolenskin Russia that killed its president, house disguised as lawyers and armed popularly elected president last August. Lech Kaczynski. Unexpectedly, the crash is with guns and hand grenades, and took a Reforms passed by AK during its first back at the centre of Polish politics. This prosecutor hostage. Hours later the prime two terms in power, from 2002 to 2011, are week transcripts emerged of cockpit re- minister, Ahmet Davutoglu, boasted that being rolled back. A new security bill per- cordings of senior officials pressing the security forces had conducted a “success- mits police to shoot at demonstrators and plane’s pilots to land despite dangerous ful” operation, killing both gunmen. No detain suspects for up to 48 hours without conditions. The right-wing opposition Law matter that the prosecutor, Mehmet Selim a court order. It also increases internet cen- and Justice party (PiS), led by the late presi- Kiraz, had been killed too. Three days later sorship. If Mr Erdogan succeeds in at- dent’s twin brother, Jaroslaw Kaczynski, 166 websites, including Twitter, Facebook tempts to rewrite the constitution to give was put in an awkward spot by the tran- and YouTube, were blocked for publishing himself what he calls a “Turkish-style” ex- scripts, which stir up some of its suppor- images of Mr Kiraz held at gunpoint by his ecutive presidency, it would concentrate ters’ old conspiracy theories about Russian killers. Only when they complied with a power in his hands. Then, says Kadri Gur- responsibility for the crash. Presidential court order to remove the pictures did they sel, a prominent critic, “Turkey will slide elections are due on May10th, and PiS had come backonline. into a one-man dictatorship”. hoped that anti-Russian sentiment, along Such crackdowns have become routine To push through constitutional change, with the government’s unpopularity, under Recep Tayyip Erdogan, the Islamist AK must win at least two-thirds ofthe seats would help it to victory. Instead PiS, which president, who calls social media “the in parliamentary elections on June 7th. has not won a national race since 2005, is1 The Economist April 11th 2015 Europe 49

2 behind in the polls and struggling to mod- Eastern Ukraine bombing was arrested. erate its religious-nationalist image. Many in Kharkiv favour closer ties with The favourite in the race is the current In the fold Russia, but few support separatism, says president, Bronislaw Komorowski, who Pavel Tishenko, the leader of a pro-Russian succeeded Lech Kaczynski. He is backed by labour group. The brutality of the war in the centre-right Civic Platform party, the Donbas has shattered any illusions ofa which has held power since 2007. Mr Ko- KHARKIV peaceful break-up. The local security ser- morowski hasframed the election asa con- vices have arrested 700 people accused of Ukraine’s second city shows no riskof test between a “rational Poland in the being pro-Russian operatives. The leaders rebelling, but it is farfrom secure heart of united Europe” and a “radical Po- of Kharkiv’s anti-Maidan movement last land…on Europe’s peripheries”, a refer- FTER Viktor Yanukovych, who was spring have taken refuge in Russia. A group ence to PiSÕs history of xenophobic (and Athen president, fled Ukraine in Febru- calling itselfthe “Kharkiv Partisans”, based specifically anti-German) rhetoric. For its ary 2014, Russian flags began appearing across the border in Belgorod, has been part, PiS has reached out to educated vot- around the Lenin statue in Kharkiv, Uk- tied to the recent bombings. ers by nominating Andrzej Duda, a 42- raine’s second-largest city. Pro-Russian ac- Meanwhile a separate battle is under year-old moderate conservative who tivists clashed with supporters of the Mai- way between Ukraine’s central govern- serves as a memberofthe European Parlia- dan revolution, and some spoke of a ment and Kharkiv’s mayor, Gennady ment. Mr Duda will not be speaking at the “Kharkiv People’s Republic”. But while Kernes, a former ally of Mr Yanukovych. party’s annual commemoration of the separatism caught fire in Donetsk and Lu- Mr Kernes played both sides of Kharkiv’s Smolensk disaster in Warsaw this week, hansk, it faltered in Kharkiv. Ukrainian na- divide a yearago. He barelysurvived an as- precisely to avoid association with PiS’s tionalists felled the Lenin statue last au- sassination attempt that has left him in a more radical supporters and their conspir- tumn, leaving only a shoe. Sergei wheelchair. Mr Kernes insists that Kharkiv acy theories. Yangolenko, commander of the Kharkiv-1 is a Ukrainian city, yet he refuses to call Mr Duda has kept the spotlight on eco- national-guard battalion, says the days Russia an “aggressor nation”, the Ukrai- nomic topics, particularly the euro, which when the city might have joined the rebels nian government’s official term. Ukraine’s Poland is committed to adopting but are over. He keeps Lenin’s giant ear in his general prosecutor has opened a case which PiS (and about half of voters) op- office as a trophy. against Mr Kernes for kidnapping and tor- pose. For a campaign stunt last month he Nonetheless, Kharkiv, just 40km (25 turing pro-Maidan activists, charges which travelled to neighbouring Slovakia, which miles) from the Russian border, remains Mr Kernes says are politically motivated. adopted the euro in 2009, to show that gro- tense. Dozens of bombings in recent Ukraine’s interior minister, Arsen Avakov, ceries are more expensive there. Yet the months have unsettled the city. Ukrainian also hails from Kharkiv and is a longtime war in Ukraine has made national security authorities say the attacks are part of a Rus- rival. Nonetheless, Mr Kernes plans to run the top concern of voters, according to sian terror campaign. The leader ofthe Do- forre-election thisautumn. He will get sup- polls. This benefits Mr Komorowski, who netsk People’s Republic has threatened to port from voters longing for stability. Ifhe is Poland’s most trusted politician. With come for Kharkiv, where, he says, suppor- is convicted, it could upend the city’s frag- over 40% support in opinion polls, he re- ters “are waiting forus”. The governor, Ihor ile equilibrium. mains well ahead of Mr Duda, whose rat- Rainin, says he spends three-quarters of The biggest challenges for Kharkiv are ings have risen but remain below 30%. his time on security issues. economic ones. Serhiy Zhadan, a local ac- Yet Mr Komorowski’s high ratings do In late February a blast at a parade com- tivist and writer, says financial insecurity not carry over to Civic Platform. With par- memorating the Maidan anniversary left worries people more than terrorism does. liamentary elections due in the autumn, four dead. The following week two land- As elsewhere in Ukraine’s economy, Khar- some polls put the two parties neck-and- minesblewup a local battalion command- kiv’s big enterprises are built to trade with neck. Ewa Kopacz, the Civic Platform er’s car, landing him and his wife in hospi- Russia. Reorienting them would require prime minister, has faced strikes by coal tal. They consider themselves lucky. “We capital investment that is difficult to attract miners angry at government reforms. She should be cut in half, two corpses,” says in a country at war. Lower quality com- has struggled to fill the shoes of her prede- the commander, Andrei Yangolenko, who bined with proximity make Kharkiv’s pro- cessor, Donald Tusk, who leftin September is Sergei Yangolenko’s brother. Other tar- ducts more competitive in Russia than in to become president of the European gets have included military installations, the European Union. As business with Council. She has tried to pick up support infrastructure, volunteer offices and even a Russia hascontracted, Kharkivhasbeen hit by embracing socially liberal issues, for in- bar popular with pro-Ukrainian activists. especially hard: exports fell by two-fifths stance by ratifying an international treaty The latest bomb hit a memorial on Tues- last year. Frustration with the new govern- on violence against women. There is room day. ARussian suspected of organising the ment is mounting. to Civic Platform’s left: the struggling Ukraine’s economic pain creates open- Democratic Left Alliance, the party de- ings for pro-Russian political parties. Nei- scended from the former communists, are ther Mr Yanukovych’s Party ofRegions nor polling under10%. BELARUS its voter base has disappeared entirely. In Meanwhile, while the Smolensk crash last year’s parliamentary elections, the strengthened voters’ emotional bond with RUSSIA Party of Regions’ rebranded successor, the P S Belgorod Mr Kaczynski, some i supporters believe POLAND Opposition Bloc, carried most of the east- his time is up. The atmosphere inside the Kiev Kharkiv ern regions, including Kharkiv. National party is like a “besieged fortress”, says polling data now show the Opposition UKRAINE Luhansk Andrzej Nowak, a historian discussed as a DONBAS Bloc outpacing the People’s Front party of possible PiS presidential candidate last Donetsk Arseniy Yatsenyuk, the prime minister, MOLDOVA year. Mr Nowak caused a stir in February r which won last year’s elections and has ep ni Rebel-held by suggesting that Mr Kaczynski, who is 65, D April 8th borne the blame forthe country’s continu- ROMANIA Odessa is too old to lead the party. In the end, Smo- CRIMEA ing economic woes. President Petro Po- lensk did not change Polish politics much, roshenko’s party finishes first in those says Rafal Chwedoruk at Warsaw Univer- same polls. But most voters are undecided. Black Sea 250 km sity: “It just deepened the rift.” 7 So too is Kharkiv’s future. 7 50 Europe The Economist April 11th 2015

Greece and Russia touted by Russia’s state-owned energy sporting goods from it by special train to giant, Gazprom. That pipeline would have central Europe. Desperate times shipped gas across the Black Sea and Mr Tsipras’s trip may soothe his party’s through the Balkans to central Europe. hard-left faction, which includes former South Stream was abandoned last year fol- Communist Party members who are criti- lowing EU pressure on Bulgaria. Now cal of new bail-out talks with the EU and Greece has an opportunity to join Turkish the IMF. But his government’s priority is to ATHENS Stream, its successor, which would cross reach a deal with creditors to unlock €7.2 western Turkey before passing through billion ($7.8 billion) of loans and avoid de- A Greekgets no gifts in Moscow Greece, Macedonia, Serbia and Hungary. fault. Greece managed to scrape together T HAS been five years since a Greek Russian state-owned transport compa- its €458m repayment to the IMF on April Iprime minister last visited Moscow in nies want to acquire the Greek state rail- 9th, but another€950m comes due in May. search of a handout. On that occasion, way and the northern port ofThessaloniki For the second month in a row the finance Dmitry Medvedev, then Russia’s president, as a package deal. But their proposal was ministry is scrambling for cash to pay pen- bluntly told George Papandreou to go to rejected by Taiped, the Greek agency for sions and salaries. It is raiding unspent EU the International Monetary Fund for help privatisingstate assets, duringthe previous funds, to the dismay of Greek firms work- (which he did). Before settingout from Ath- administration. Chinese firms are also in- ing on motorway projects they fear could ens on April 8th, Alexis Tsipras swore that terested. Cosco, a Chinese shipping giant, soon be stalled. Amid the funding crunch, he would not be asking Vladimir Putin, the already controls a container terminal at Pi- Mr Tsipras’s dreams of Russian investment currentpresident, forcash, even though his raeus, Greece’s largest port, and is tran- will quickly fade. 7 country’s finances are in a more parlous state now than they were in 2010. French radio In the end, the two leaders’ meeting produced little beyond a warm atmosphere and pledges to “restart and revive” Vive la résistance relations. MrTsipraswelcomed a proposed Russian gas pipeline across Greece’s terri- A strike demonstrates opposition to public-sectorreform tory and criticised European Union sanctions, as he has before. Mr Putin pledged IKE martial music after a military coup, counter. “It is not the purpose ofpublic- (not entirely credibly) to refrain from using LFrance’s public radio stations have service broadcasting to be profitable,” relations with Greece to divide the EU. broadcast little but song tracks for the striking producers declared in an open To observers in Athens, MrTsipras’s trip past three weeks. Since employees at letter. Soon, they claimed, there would be to Moscow was the most striking example Radio France, which runs seven public no budget to send reporters further than to date ofthe gesture politicsthatthe Greek stations, began a strike on March 19th, a the Paris ring road. Many union activists government, led by the far-leftSyriza party, rotating playlist has been interrupted want Mr Gallet’s head to roll. has used to keep its approval ratings high only forthe occasional news update and Yet disgruntlement over Mr Gallet’s as unemployment edges back up, banks apology forthe disrupted service. The taste for spreadsheets and new furniture freeze lending and Greece slips back into longest strike in French radio’s history, it masks a real problem at Radio France. A recession. It came as both Greeks and Rus- has paralysed programming and exasper- crushing report published this month by sians were celebratingHoly Weekahead of ated listeners. It encapsulates the difficul- the public auditor pointed to a financing Orthodox Easter, a moment when reli- ties ofreformingthe French public sector. crisis and long-running management gious and cultural affinities resonate. They The strike began as a protest, mostly failures. Between 2010 and 2013 the pay- will be officially strengthened in 2016 with by production and technical staff, against roll bill increased by nearly10%, even as a year-long cycle offestivities promoted by a cut in the public subsidy and an at- the headcount remained stable—and the Russian and Greekcultural organisations. tempt to control Radio France’s deficit, audience dwindled at two flagship sta- For Mr Putin, rapprochement with which will reach €21m ($23m) this year. tions, France Info and France Inter. Strikes Greece is mostly about gas. “Nothing has This could involve 250-330 job losses as continue despite endless union consul- really changed since the mid-2000s,” says well as other rationalisation plans. Radio tation and perks. Journalists with over a former Greek energy minister, recalling France, with nearly 5,000 employees, eight years ofservice, it noted, get nearly the Russian leader’s pledge to turn Greece runs two symphony orchestras, forex- 14 weeks ofpaid holiday a year. Fully 388 into a natural-gas hub if it signed up to the ample; Mathieu Gallet, its new boss, has staffare union representatives enjoying South Stream pipeline project then being raised the possibility ofmerging them. protected jobs. There were a staggering But resistance to reform hardened 622 works-council meetings in 2013. after it emerged that Mr Gallet, who took Only a tiny minority ofthe staff— No contest Imports Exports over a year ago, had refurbished his office about 6-10%—has taken part in the rolling from: to: Greek trade, $bn EU in Radio France’s headquarters at the cost strike. Many journalists have turned up Russia of€100,000. This circular1960sParis to workon programmes, but because 60 landmarkhas itselfcost €430m to re- technical and production staffhave 50 vamp, twice the original estimate, in- stayed at home, they are unable to broad- cluding the construction ofa brand-new cast them. The government has urged an 40 auditorium for€42m. Mr Gallet apol- end to the strike and summoned Mr 30 ogised, insisting that the workon his Gallet, supposedly an independent office had begun before his arrival and appointee, to explain himself. It ought to 20 that its wood panelling was “historic”. be possible to create consensus for 10 Part ofthe problem is a culture clash. change. “Everybody knows that reform Mr Gallet, who talks about branding and must happen,” says one Radio France 0 about a digital transformation, is regard- journalist. So far, though, this looks like a 2005 06 07 08 09 10 11 12 13 14 ed by journalists as a sharp-suited bean- case study in how not to go about it. Source: IMF; Hellenic Statistical Authority The Economist April 11th 2015 Europe 51 Charlemagne Belarus and the great bear

Russia’s antics in Ukraine are upending politics elsewhere the back of vast energy subsidies from Russia, and polls show that Belarusians preferintegration with Russia over Europe. But the new atmosphere of instability has given Mr Lukash- enko room formanoeuvre. Unlike previous pre-election periods, he has not felt obliged to pull fiscal or monetary levers to pump the economy. Opposition candidates have forsworn protest. With the region in flames, the security of Mr Lukashenko looks a better bet than an unknown newcomer. The economy, meanwhile, argues fora shift. Seen from Minsk, the past 20 years were not so bad (for those who kept their noses out of politics). Of the six countries in the EU’s Eastern Partner- ship (EaP) programme, Belarushasthe highestincome per person bar oil-rich Azerbaijan (a nastier autocracy). It avoided the chaotic privatisations of Russia and Ukraine, and has no oligarchs straddling business and politics. Day-to-day corruption is minimal, public services mostly work, and unemployment is low, even if the official figures are massaged. Belarus is the only EaP country that has no territorial disputes with its neighbours. Yet Belarus’s economic model is creaking, and the troubles of its Russian patron exacerbate its difficulties. Last year the tum- bling Russian rouble forced Belarus to devalue its own currency NTILscience unlocksthe secretsoftime travel, the world will and impose capital controls. Earlier this year Belarus asked the Uhave to make do with Belarus. Little seems to have changed Kremlin fora $2.5 billion loan, but received just $110m. Real wages in this landlocked country of10m souls, tucked between Poland are falling, and workers in state-owned firms have been forced to and Russia, since it emerged blinking into independence after the take compulsoryunpaid holidays. After20 yearsofisolation, offi- Soviet disintegration in 1991. Statues of Lenin dot the wide, well- cials realise they need European advice and money. ordered streets of Minsk, the capital. Inside bulky ministries, grim-faced officials recite tractor-production statistics as a guide Enter Brussels to the strength of the economy, over three-quarters of which re- Small and lacking in natural resources, Belarus was always an mains in state hands. Belarus is the only country in Europe to re- easy place for the West to conduct a values-based foreign policy. tain the death penalty: in 2014 three Belarusianswere shotby exe- The EU tagged Mr Lukashenko “Europe’s last dictator” and placed cutioners. Even the food, shrouded in gelatine, mayonnaise and its hopes in the opposition (the regime’s unpleasantness made al- dill, recalls the canteens and mess-halls ofan earlier age. ternative strategies hard to defend). But now officials acknowl- Alexander Lukashenko, the mustachioed strongman who has edge thatthe policyofdisdain simplydrove Belaruscloser to Rus- ruled for over 20 years, will undoubtedly win a fifth term in No- sia. Moreover, Mr Putin’s adventurism in Ukraine has raised the vember’s presidential election. The colour revolutions that over- stakes. As Mr Lukashenko wryly pointed out last weekin a swipe turned autocracies in Ukraine and Georgia never had a chance in at Mr Putin, “there are dictators a bit worse than me, no?” grey Belarus; in 2010 an opposition demonstration after a fraudu- The EU, includinghardline memberslike Britain and the Neth- lent presidential vote was put down brutally by MrLukashenko’s erlands, is now rethinking its approach. It will not abandon its goons. Seven of the nine other presidential candidates were im- calls for democracy, or its solidarity with the Belarusian opposi- prisoned. European Union sanctions, including a travel ban on tion. But it is consideringa range ofways to workwith MrLukash- Mr Lukashenko, remain in place. enko’s regime, from speeding up its visa-application process to Yet while Belarus remained in the deep freeze, the world support for Belarus’s membership of the World Trade Organisa- around it turned upside down. Last year’s revolution in Ukraine tion. An EaP summit in Riga next month will be watched closely and Russia’s aggressive reaction to it have jangled nerves in forsigns ofa thaw, particularly ifMr Lukashenko is allowed to at- Minsk and inspired a partial strategic rethink. Mr Lukashenko, a tend. But that would require him to free the handful of remaining long-servingifunreliable ally ofVladimirPutin, condemned Rus- political prisoners, and he fears giving the impression of bowing sia’s annexation ofCrimea and did not join its embargo on EU ag- to pressure. Bigger changes, say officials in Brussels, will have to ricultural exports. Having hosted two rounds of peace talks in wait until after the presidential election. Minsk, he now urges America to get involved in Ukraine and has It could all end in tears. Some fear a repeat of the humiliation even offered the services ofBelarusian peacekeepers. of 2010, when the EU’s last attempt at a rapprochement with Mr Mr Lukashenko, an autocrat of the oldest school, has not sud- Lukashenko died in the post-election crackdown. But Europeans denlychanged hisspots. He isplayingthe same old game: balanc- are a more sceptical bunch these days. Rather than wait in vain ing one giant neighbour (the EU) against the other (Russia). In- for their democratic example to inspire Belarus, they believe they deed, a second lesson he has drawn from Ukraine’s tragedy cuts have identified common interests with the regime and will work against the first: tread carefully to avoid provoking the bear. to fulfil them. More than anything, MrLukashenko isdesperate to Alongwith Armenia and Kazakhstan, Belarus has joined Russia’s preserve Belarus’s shaky independence and, thanks to Mr Putin, Eurasian Economic Union, which bills itself as a rival to the EU Europe looks better placed to help him. 7 (although officials in Minsk downplay Mr Putin’s ambition for a currency union). Belarus’s command economy stays afloat on Economist.com/blogs/charlemagne 52 Britain The Economist April 11th 2015

Also in this section 53 Taxes and the election 54 Bagehot: All about that base

For daily analysis and debate on Britain, and analysis of the campaign, visit: economist.com/britain economist.com/ukelection2015

Nicola Sturgeon enthusiasm it worked up during the referendum campaign. Its membership has bal- Calling the tune looned from 26,000 to over 100,000 in six months. “People don’t want to go back to the days, pre-referendum, when the West- minster establishment sidelined and ignored Scotland,” its leader explains. SNP gatherings, such as its spring conference on EDINBURGH March 28th atwhich she wasintroduced as The Scottish National Party’s canny leadercould yet breakup the United Kingdom “the only party leader in the UK who peo- CCORDING to Google, the most the former leader of the SNP, with whom ple actually like”, resemble rock concerts. Asearched-for phrase halfway through Ms Sturgeon has had a sometimes vexed Polls suggest the party could increase its Britain’s televised election debate on April relationship. She was expected to become share of parliamentary seats in Westmin- 2nd was “Nicola Sturgeon”. The combative leader in 2004, after Mr Salmond’s first ster from six to over 40 at the election on chief of the separatist Scottish National crack at the job; then he suddenly fancied May 7th, sweeping to victory even in gen- Party (SNP), though unfamiliar to many another go at it, and shunted her aside. Ms erations-old Labour Party strongholds like English voters, was making light work of Sturgeon, who grew up in a working-class Glasgow (see chart overleaf). It may well the leaders of their main political parties. family near Ayr, on Scotland’s west coast, hold the balance of power in the next Brit- By the end, “Can I vote for the SNP?” was then served as his deputy fora decade. She ish parliament, in which no one party is also trending—further evidence that she got her chance after Mr Salmond again likelyto hold a majority. Havinglost the ref- had impressed many south of the border. stepped down last September, having led erendum, the SNP has won its aftermath. So has Ms Sturgeon any plans to put for- Scotland closer to independence, at the ref- Ms Sturgeon says she wants to use this ward candidates in England? “Despite the erendum held that month, than even the influence to “pave the way” for Ed Mili- temptations and encouragement, no,” she SNP had previously considered possible. band, the leader of the same Labour Party says, seated in a box-room at the SNP’s And that dream is not dead. Ms Sturgeon she hopes to annihilate in Scotland, to be functional headquarters. Not even to mark has presided over an astonishing surge in prime minister. This means her MPs will the 700th anniversary of the siege of Car- support for the party, making her Britain’s oppose any Tory bid to form a govern- lisle, in 1315, a famous Scottish assault on most powerful female politician. ment—a retort to their Labour opponents, the English border city? The normally rath- who tell left-wing Scots that a vote for the er flinty leader emits a sound that is almost Crazy paving SNP helps the Conservatives. “If the SNP a giggle: “Don’t tempt me.” Nothingaboutthe SNP’srecentrise, includ- and Labour combined have more seats On the shelves behind her are memen- ing the brush with national dismember- than the Tories do,” Ms Sturgeon insists, toes of the SNP’s remarkable rise—from an ment it occasioned last year, was inevita- “we can prevent David Cameron from get- irrelevant party in the 1960s, to one that ble. It was chiefly a product of its leaders’ ting back into Downing Street.” Her party may soon be Britain’s third biggest—and passion and cunning. That is how, back in will even seek to do so if Labour is the sec- herown. “She’s got Scotland’s oil” reads an 2011, the SNP won a shock majority in the ond-largest party, she adds. 1 old SNP advert, depicting Margaret Thatch- Scottish Parliament(underan electoral sys- er as a vampire, the black stuff dripping tem designed to preclude this), which trig- from her teeth. It is a reminder of what Ms gered the referendum. By building a Internship: The Britain section is looking for an intern to work for several months in The Economist’s London Sturgeon calls the “disgust at what the sprawlingarmy ofactivists, it then took the offices this summer. Applicants should send a CV and an Thatcher-led Torygovernment was doing” United Kingdom to the brink: the pro-un- original article of 600-700 words, about any subject that first recruited her to the party. ion campaign won by 55% to 45%. other than the general election, suitable for publication SNP in the section. A stipend of £2,000 per month will be Everywhere, leering from books and The ’s latest achievement is to have paid. Applications must reach us by May 10th at photos, is also the image of Alex Salmond, retained much of the activism and mass [email protected] The Economist April 11th 2015 Britain 53

2015 ONLINE: UK election central, all our coverage a symbol of privilege for the wealthy, and Trouble up north in one location at Economist.com/ukelection2015 thus an easy target fora left-wing politician SNP share of vote minus Labour share of vote, % points on the campaign trail scrapping for votes. 2010 general election 2015 polling But the fact that Mr Miliband’s predecessor 50 40 30 20 10– 0+ 10 20 30 40 and political mentor Gordon Brown shied Dundee, West away from doing the same when he was Cumbernauld, Kilsyth chancellor of the exchequer suggests that & Kirkintilloch East abolishing this particular loophole is not Glasgow, South as straightforward as it may look. Glasgow, East Mr Miliband describes the non-dom Edinburgh, South West status as an “arcane 200-year rule”, and Dundee few would disagree. It was introduced dur- Glasgow, North Cumbernauld ing the Napoleonic wars and some of its Motherwell & Wishaw Edinburgh Glasgow regulations are indeed mysterious and Ayr, Carrick & Cumnock Motherwell open to abuse. Non-doms have to prove Glasgow, Central Ayr their foreign status, for instance, but often by arbitrary means. Owning a burial plot Dunbartonshire, West abroad can count. Non-dom status can be Sources: Electoral Commission; Ashcroft polling passed on within families, but only via the father’s side. Previous governments have 2 For this assistance, she would extract a in the event that he remains in office, could chipped away at the exemption. In 2008, leftist price. Ms Sturgeon envisages her be a more specific boon for the separatists. when Mr Brown was prime minister, the MPs (led by Mr Salmond, who is standing Scots would not vote to leave; if Britain government introduced a charge of nextmonth forparliamentin Westminster) does, the SNP will naturally demand an- £30,000 ($45,000) on those who claim “perhaps forcing” Mr Miliband to avoid other independence referendum. Ms Stur- non-dom status but have lived in Britain spending cuts, opposing the renewal of geon acknowledges this. Britain leaving for over seven years of the previous nine. Britain’s nuclear deterrent and closing the the EU, she says, would mean “an awful lot The current chancellor of the exchequer, National Health Service (NHS) to new priv- of people in Scotland saying that we need George Osborne, raised that to as much as ate-sector providers. “We won’t vote for to lookat independence again.” £90,000 a year forthose who have lived in Labour policies that we think are just car- Ms Sturgeon’s claim that she most Britain for17 ofthe past 20 years. bon copies ofTorypolicies,” she says. wants a Labour government may be sin- Mr Miliband now wants to do away SNP involvement in the next British cere. But her suggestion that Scotland’s with it altogether, mainly on grounds of government, Ms Sturgeon suggests, could move towards secession is out of her con- fairness. Making sure that everyone pays form part of “a process in Scotland of peo- trol is wrong. Whether Scotland holds an- the full amount of tax they owe in Britain, ple gaining more confidence, of question- other referendum, as she well knows, will he argues, is a “British principle”. Perhaps. ing why we should be at the mercy of be heavily influenced by her leadership, But the fear is that the treasury might lose Westminster”. But might a Scottish-fla- and she is playing a long game. If a major- revenue, a grave matter when all parties voured administration in London, dealing ity of Scots still don’t want independence, are under pressure to cut the deficit. with nationalist grievances about auster- the SNP’s formidably impressive leader is There are three ways that could hap- ity, NHS privatisation and the like, in fact happy to wait. As her unionist rivals dis- pen, if some non-doms decide to leave the make the union lookless lousy? Not neces- covered on April 2nd, they underestimate country. First, the treasury would forfeit sarily, she replies: “I can’t tell you when her at their—and the union’s—peril. 7 the tax they pay on their British earnings. there’ll be another independence referen- This applies especially to the super-rich, dum. I think there will be one and I think such as London’s resident Russian oli- there will be a ‘yes’ vote.” Taxes and the election garchs. Second, the treasury would lose Given that independence is, in fact, the the charges that non-doms pay to keep SNP’s raison d’être, some suspect it is se- All must pay their special tax status. Five thousand peo- cretly rooting for the Tories. On April 3rd ple paid these charges in 2012-13, according Ms Sturgeon faced claims that she had con- to data obtained by Mark Davies & Asso- fided in the French ambassador to Britain ciates, a tax-advice firm, out of the 110,700 that she wanted Mr Cameron to remain people who declared themselves as non- prime minister. Both she and the diplomat doms. The treasury would lose at least deny this; but the SNP could undoubtedly £150m, and possibly much more. Lastly, Labourpromises to abolish non-doms gain from another Conservative-led ad- rich non-doms could pull the plug on their ministration. Opposing a Tory-led govern- N APRIL 8th Ed Miliband opened up a investments in Britain when they go, ment, which would probably contain few, Onew front in his campaign to portray harming the economy. or possibly no, Tory MPs in Scottish seats, Labour as the party of the many against Whether a lot of non-doms really would afford the SNP an endless opportu- whathe callsthe “fewpeople atthe top”. In would up and leave is questionable. Some nity for nationalist grandstanding. what was probably his biggest announce- ofthe verywealthymight. But64,000 non- The referendum on Britain’s member- ment of the campaign so far, the Labour doms choose to be taxed on their overseas ship of the EU Mr Cameron has promised, leader promised to abolish the “non-dom” earnings. These are people like nurses and tax status, a peculiarly British ruling doctors who will stay. whereby some wealthy Britons and for- Under Labour’s plan, temporary ex- A full transcript of our interview with eigners known as non-domiciled residents emptions would be allowed for students Nicola Sturgeon and a separate video enjoy special tax exemptions. The main and foreign workers seconded to Britain appear on our online election hub, along benefit is that they can limit the tax they forshort periods oftime. This makes sense. with regularly updated analysis of the payto the British treasuryon theirearnings The non-dom system is an anomaly, but campaign. See: outside the country. Britain should not stop the flow of skilled www.economist.com/UKelection2015 To many, the non-dom rule has become foreigners the economy needs. 7 54 Britain The Economist April 11th 2015 Bagehot The shrivelled middle

The Conservatives and the LabourPartyare both running drearily predictable campaigns It was well said—but that comes with important caveats. First, the moderate centre colonised by Mr Blair, where Labour and Toryvoters intermingle, is vastly reduced; its only permanent residents, the Liberal Democrats, have seen theirvote shrink by two- thirds—to about 8%—in five years. That was partly a response to the polarising effects ofeconomic malaise and cuts. Yet Mr Blair’s abilityto attracthordesofToryvoterswasalso unusual, and—given that he won his last victory, in 2005, with merely 36% of the vote—temporary. Only in 1979, when a similar number went the other way, has there been a comparable migration between Brit- ain’s main parties. And in both cases, the exodus was encouraged by an alignment of exceptionally conducive political and economic circumstances: disgust with Labour and economic malaise in 1979; disgust with the Tories and an economy strong enough to entrust to Labour in 1997. Nothing like such clear signals now apply; after the downturn, the Tories have presided overa recoverywhich too fewBritonsfeel. Besidesshrivelling the centre, the despond this has caused has driven an alternative migration, to the populistfringe where, on the right, the UK Indepen- dence Party (UKIP) and, on the left, the Scottish National Party and Greens, heckle and whine. Mr Miliband’s and Mr Cameron’s WO decent British politicians made two perfectly sensible efforts to prevent that, to shore up their leaky base, is a big reason Tstatements this week. First, David Cameron, the Conservative for their unimaginative campaigns. “Come back home!” Mr prime minister, refused to rule out cutting the top rate of tax to Cameron begged his party’s defectors to UKIP on April 6th. “Ya 40%, which, if affordable, would be reasonable. The British state boo sucks!” UKIP’s solid ratings suggest, most replied. doesnotofferhigh earnersanythinglike Scandinavian-class pub- Yet if Mr Miliband and Mr Cameron are to some degree cap- lic services to go with the near-Scandinavian-level tax rates it lev- tured by events, they are also partly to blame. In the first flush of ies. Ed Miliband, leaderofthe LabourParty, then promised to end his leadership, Mr Cameron launched a modernisation pro- the “non-domicile” regime which for two centuries has allowed gramme, stressing volunteerism and the environment, which an elite group ofrich people to pay too little tax. The trouble with threatened to improve his party’s image. That this was blown off- these statements, however, was not the message, or the messen- course by the economic storms was understandable; that Mr ger; it was the dismally predictable combination ofthe two. Cameron then abandoned it was self-defeating. Had he pushed Imagine if it had been Mr Cameron promising to dismantle on, trumpeting the compassionate conservatism he claims to be the “non-dom” status until recently enjoyed by his party’s erst- driven by, so drawing the poison from his party’s reputation, the while biggest donor, Lord Ashcroft, and still enjoyed by the sorts Tories would be much better placed to claim the majority their of metropolitan jet-setters who bid obscene sums of money at economic lead would normally warrant—and not only by taking Tory fund-raisers to play tennis with him? That would have ad- Labourvotes. Theywould trickle in from all sides. Because in Brit- dressed his party’s big reputational failing: its perceived cosiness ain’s new fractured polity, the centre is less a pivot between two with the rich. In a deadlocked contest, in which Labour and Tory big parties than a collection of the attributes—competence, de- ratings are entwined in the low 30s, it might even have been a cency, moderation—that most voters prize. game-changer. Or what if it had been Mr Miliband, the left-wing son ofa Marxistintellectual, who reserved hispost-electoral right The virtual centre to cut rich people’s taxes? Would that have been one in the eye for At least he tried to broaden his party’s appeal. Mr Miliband hard- the many, not the few, who consider the Labour leader anti-busi- lyhas, eitherbecause he considered itimpossible—the conviction ness? Hell yeah, as Mr Miliband, in campaign mode, likes to say. that Labour was responsible for the downturn was too deep—or, Instead, these gambits, typically of the Labour and Tory cam- more likely, because he considered itunnecessary. He thought the paigns, reinforced the two parties’ reputational weaknesses. And financial crisis had shunted public opinion to the left, giving him with the polls stuck, that narrowness is causing disquiet in their a handy opportunity to disown Labour’s record and promote the ranks. The Toriesare hammering relentlessly on their decent eco- market interventions he had always yearned for. Belatedly, he re- nomic record; a Tory MP divines the need for a “fuller, richer, alised hiserror; havingno credibilityon the economy, Labourhas warmer” pitch. By that he means not only a list of counter-intu- little prospect of winning votes beyond its Tory-hating base. It re- itive promises, but more advertisingofthe gentlerthings—such as mains competitive purely because, in the chaos of the Lib Dems’ boosting adoption and introducing gay marriage—his party has collapse, more oftheir vote has broken left than right. done in government. On the Labour side, half the shadow front- Forming a strong government after this election was always bench is quietly despairing at the dearth ofenterprise and aspira- goingto be tough: the economicand political timesare so strange. tion—hallmarks ofTony Blair’s three consecutive victories—in Mr Yetthe effortsofBritain’smain partiesto adaptto them have been Miliband’s campaign. A thoughtful speech by Mr Blair this week, nonetheless poor. A regretful member of the Labour front bench on business and Britain’s place in the world, emphasised what admits the error: “Whichever party loses the election will have to was missing. “I am convinced the Labour Party succeeds best consider its failure to be more counterintuitive a monumental when it is in the centre ground,” he recently told this newspaper. strategic mistake.” Whichever wins it should, too. 7 International The Economist April 11th 2015 55

Also in this section 56 Renewable energy revives

Energy efficiency can come only from making existing buildings less wasteful. The simplest measure is Green around the edges to persuade consumers to stop throwing energy away, for example by heating or cooling empty rooms. Spotting such waste and helping to cut it is becoming a decent business. Opower, a data-analytics firm, crunches figures on size, occupancy, location and energy bills to find trends and To slash electricity use, both utilities and theircustomers must play their part make suggestions to 50m, mostly Ameri- OWER consumption used to march in The International Energy Agency (IEA), can, households. Pacific Gas and Electric, a Plockstep with economic growth. As the a research organisation for countries utility in California, says that in 2013 world recovers from financial crisis, that which import fossil fuels, reckons that for Opower saved it 500 gigawatt-hours, or linkis weakening. Though the average con- the 2050 target to be met, global spending nearly 75,000 homes-worth, of consump- ceals wide variations, in 2014 advanced in- on energy efficiency needs to rise from tion. Its customers saved more than $50m. dustrialised countries used 0.9% less elec- $300 billion a year today to $680 billion. Efficiency gains in the first year are typi- tricity than in 2013, and slightly less even But on current trends, the UN report con- cally 2%, says Alex Laskey, Opower’s chief than in 2007, since when their combined cludes, the chance ofthat is “very slim”. executive. This is a mere nibble out of the economies have grown by 6.3%. The potential gains are huge. Transport 20% of energy use thought to be wasted in A new study for the UN Environment accounts for27% ofglobal energy demand. a typical American home. But once cus- Programme concludes that two factors are Lighting, heating, cooling and ventilating tomers’ attention is engaged it is easier to at work. One is thrift. Faced with rising buildings account for roughly another interest them in bigger changes, such as re- prices, consumers use less. British electric- third. New vehicles and buildings are far placing inefficient appliances or installing ity prices increased by 44% overthe period; more efficient than old ones. The average efficient cooling and heating systems. consumption fell by12%. The other is great- annual consumption of an American light Further gains can come from managing eruse ofenergy-savingtechnology. This in- commercial vehicle built to 2010 standards demand rather than simply ramping up cludes better insulation, advanced heating is the equivalent of 1.5 tonnes of oil, but supply to meet it. In places with poor inter- and cooling systems, and energy-efficient standards to be introduced in 2016 will cut connections, such as Britain, this saves on device s, notably light-emitting diodes that to 1.1 tonnes. A house with a floor area dirty, costly standby diesel-fired power. (LEDs), which, unlike incandescent bulbs, of 300 square metres built to America’s Butin anysystem, itsavesmoney, since sat- turn most of the power they use into light 2006 standards consumes the equivalent isfying peakdemand requires costly gener- rather than wasting much ofit as heat. of 1.1 tonnes of oil a year; one built to 2012 ating capacity that is unused most of the But ifglobal warming is to be held to no standards, just 0.7 tonnes. Even the newer time. Accordingto the UN Report, global in- more than 2oC by 2050—the level above standards seem timid when set next to vestment in “smart systems”—hardware which most scientists think that climate “passive houses”, which use insulation and software that adjust power consump- change risks being dangerous and irrevers- and heat exchangers to capture and reuse tion in response to price signals—rose by ible—energy use and economic growth thermal energy generated by the inhabit- 5% in 2014 to a record $37 billion. That in- need to part ways once and forall. The best ants’ activities. Add solar panels and geo- cludes smart appliances, such as boilers hope, experts agree, is a huge increase in thermal energy, and it is possible to create that switch off when power is costly, and energy efficiency. This ought to be straight- “net-zero” buildings that put as much pow- distributed storage, such as batteries to be forward. The technology is getting cheaper er into the grid as they draw from it. charged during off-peakhours. and better all the time. Many energy-effi- Vehicles are replaced every few years. Storing off-peakenergy as ice is particu- ciency measures quickly pay for them- But half the buildings standing today will larly useful for air-cooling systems, one of selves. Yet progress is frustratingly slow. still be there in 2050. So bigefficiency gains the industrialised world’s biggest energy 1 56 International The Economist April 11th 2015

2 hogs. Air conditioning in commercial The IEA reckons that only one-third of the appliance to halve a small running cost. buildings accounts for about 5% of Ameri- available energy-saving opportunities And tenants are unlikely to invest in ener- ca’s electricity use. But in some parts ofthe with a cost-effective payback period are gy-saving measures that will benefit their country, on a hot day, the figure can reach taken up. For businesses and residents successors most. 30%. Cooling systems from Calmac, a firm alike, factors including ignorance, inertia Yet behind the scenes, utility compa- thatused to make furnaces, store energy by and misaligned incentives still rule. A re- nies are preparing for change. Their new cooling water mixed with antifreeze when cent study commissioned by McDonald’s business models must encourage consum- power is cheap, and release it when it is suggested that a typical outlet could cut its ers to use less energy rather than rely on needed, rather than relying on power-hun- energy use by at least a fifth—and by up to them to use ever more. At the same time, to gry compressors to cool the building dur- four-fifths by using solar power. But that replace elderly, inefficient power plants ing peak daytime hours. Mark MacCrack- depends on decisions made by individual and transmission lines, they need margins en, the firm’s boss, likens the approach to franchisees, who will struggle to assess the healthy enough to support massive invest- preparing ice cubes before a party rather potential savings from measures such as ment. Rocky Mountain Institute, a think- than waiting until a guest asks fora drink. capturing heat from a fryer to provide hot tank and research firm, reckons that up- At first glance, it is puzzling that more of water. Some savings can seem too low to grading America’s creaking grid alone will this sort of thing is not already happening. be worth the hassle, such as buying a new take $2 trillion by 2030. And in many countries, including America, utilities are having to accommodate consumers who also Renewable energy produce energy, typically from solar panels, and sell it to the grid—regardless of Not a toy whether it is needed or not (see box). This was a trivial obligation a few years ago. Now it is becoming burdensome. The Plummeting prices are boosting renewables, even as subsidies fall solar eclipse in Europe last month demon- LOBAL investment in renewable $357 for grid electricity but just $268 for a strated the problem well. In Italy, which Genergy, chiefly wind and solar pow- domestic solar system with battery has one of Europe’s best-developed solar- er, rose by a sixth in 2014, to $270 billion. storage. And whereas most commercial power industries, as the sunlight faded This was partly because ofsubsidies in customers depend entirely on the grid from the sky, solar output collapsed, and the rich world, such as America’s 30% today, they will need to take only a quar- other generators had to take up the slack, federal tax credit forsolar projects. Un- ter oftheir power from it by 2030—and of around 27 gigawatt-hours. The eclipse der a system known as “net metering”, less than 5% by 2050. cost Italian consumers around €10m consumers with small solar installations Renewables, excluding large hydro- ($10.9m), Cosma Panzacchi of Bernstein, a can sell surplus power to the grid at the power schemes, now account fornearly a research firm, reckons. Overall the boom in same price as they pay forpower flowing tenth ofglobal power generation. On solar has increased the cost of “balancing” in. But even ifthe tax credit is cut, as current trends they will make up a fifth Italy’s network—keeping capacity in re- expected, solar electricity could displace by 2030. But it will take another step serve forcloudy days—by half. 9.7% ofAmerican retail electricity sales change in efficiency forthem to play a One way for utilities to keep their profit by 2019, reckons Bernstein, a research decisive role in limiting global warming. margins as consumption falls is to increase firm—over 30 times the share today. fixed charges, which users pay regardless Since big solar installations are more of how many kilowatt-hours they con- cost-efficient than small ones, that makes Sunny outlook sume. Consumption-based tariffs hit poor little economic sense. But the days when New investment in renewable energy, $bn customers hardest, since they are unlikely renewables were largely a sop to rich- 300 to have the sort of homes or businesses world consumers’ consciences are clearthat can accommodate large installations ly over. Nearly halfoflast year’s in- 250 of solar panels, or the spare cash to invest Developing vestment was in developing countries, countries 200 in fancy energy systems. Another option is notably China, whose energy concerns 150 to charge users by the capacity oftheir con- have more to do with the near term than nection to the grid, rather than the elec- Developed 100 with future global warming. It worries countries trons that actually flow across it. about energy security, and it wants to 50 clean up its cities’ air, made filthy partly 0 Power switches by coal-burning power plants. 2004 06 08 10 12 14 The good news for utilities is that for the The 2014 figure is slightly less than the Cost of power generation, $ per MWh nimblest, at least, there will be plenty of previous peak, in 2011(see chart). But opportunity to profit. Managing demand Solar (range) LNG: Europe * Asia* investors today get more energy for their Oil (Brent crude) Natural gas (Henry Hub) via smart systems, together with distri- buck. The cost ofbattery storage, a vital 800 buted generation and storage, could be a part ofa solar-powered future, has fallen huge business, Mr Panzacchi reckons—€40 by 60% since 2005, and the overall cost billion annually for European utilities 600 ofa solar-power system is down by 75% alone, and much more worldwide. With since 2000. IHS, a consultancy, reckons their large scale, utility firms can build stor- the cumulative fall will be 90% by 2025. 400 age and solar capacity far more economi- A study published on April 7th by cally than individual consumers can. They Rocky Mountain Institute, a think-tank 200 have the balance sheets to support big in- and consultancy, highlights the changes vestments. And they have the information that plunging costs could bring. Taking 0 on behaviour and technology to guide the not particularly sunny example of 2000 02 04 06 08 10 12 14† their customers through the increasingly Westchester in New York, it predicts that Sources: UNEP, Bloomberg New *Long-term contract mystifyingchoices they must make. That is † by 2030, the average monthly bill will be Energy Finance; IHS Energy price To November the kind of muscle needed to make a real difference to the future ofthe planet. 7 Business The Economist April 11th 2015 57

Also in this section 58 Commercial drones take oﬀ 59 Baseball has a hit in streaming video 59 Drug-dealing websites in trouble 60 Chasing Japan’s greying consumers 61 European business and the recovery 63 Schumpeter: Robert Schuller, retailer of religion

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Shell and BG raise its share buy-backs, all to its newly enlarged investor base. It expects the take- A vote for gas over to generate $2.5 billion ofcost savings, in everything from purchasing to trading. The deal underlines the way the money is moving in the energy industry. Shell managers highlight the increasing attrac- tiveness of midstream (transport) and downstream (refining and distribution) ac- Shell’s offerforBG shows how the energy business is changing tivities, which offerless riskand fatter mar- AM tomorrow, but never jam today. That second only to ExxonMobil by market cap- gins than finding and developing new oil Jwaslongthe lamentaboutBritain’sthird- italisation, and by 2018 its output will over- and gas. One of BG’s strengths, for exam- largest energy company, BG Group. In retake that ofits American rival. ple, is in the liquefaction, transport and cent years it has been notable for its great That assuages one worry for Shell’s in- storage of gas. Its fleet of giant tankers will prospects, troubled operations, wobbly vestors—that it is not replacing its reserves boost Shell’s clout in the world gas market. management—and lately its weak share speedily enough to secure its long-term The purchase also demonstrates that price, down by 20% in the past 12 months. future. Butitmaynotquell another(contra- gas is a more promising business than oil. Now Shell, an Anglo-Dutch giant, has dictory) one: that a notoriously spendthrift Indeed, Shell is now more Gas Giant than pounced, with a £47 billion ($70 billion) management is splurging cash on acquisi- Big Oil. This is not easy money: the global cash-and-shares offer which pays BG tions which it could be returning to share- gas industry has been plagued by high shareholders a 50% premium on what holders. Shell counters this as follows: it costs (much gas is in hard-to-reach places their holdings were worth just before the has already said it is cutting capital spend- such as the Arctic and deep oceans) and bid. The combined companies’ stockmark- ing by $15 billion; it now says it will raise low prices (thanks to competition from et value will be around $250 billion. Bar- asset sales to $30 billion in 2016-18. It also other fuels and America’s shale-gas glut). ring regulatory objections, the merger will insists it will maintain its dividend and But the market is growing, supplies are be completed early next year. abundant and the environmental outlook The deal—one of several involving BG friendlier than for oil. BG has promising that has been rumoured, on and off, for Expanding in gas offshore assets, including in east Africa, years—shows that for the beleaguered in- Largest gas-producing companies Kazakhstan and Trinidad. Some are trou- ternational oil giants, buying reserves, Billions of cubic feet per day, 2014 or latest bled: a big investment in Egypt is beset by even juicily priced, is cheaper and easier 0 10 20 30 40 50 political difficulties. Others are doing bet- than finding and developing them. It also Gazprom ter. A $20 billion Australian project is now highlights the scope for consolidation National Iranian producing gas from coal. Having tripped since the fall in the oil price last year, which Oil Company up in shale ventures in China and Ameri- Shell/BG has sent companies scrambling to cut costs ca, Shell is now betting heavily on offshore ExxonMobil and pacify investors. In November Halli- gas. Simon Henry, its finance chief, says he burton, an oil-services company with Saudi Aramco doubts the gas glut will persist. In any case, headquarters in Houston, bought Baker Qatar Petroleum a bigger and stronger company is better Hughes, a smaller rival, for$35 billion. PetroChina placed to ride it out. This deal, far bigger, boosts Shell’s de- BP Other deals may follow, just as the last clining oil and gas reserves by a quarter, Pemex oil-price crash in the 1990s brought a wave and makes the new firm the world’s third- of mergers. Among possible takeover tar- Total largest gas producer (see chart). Among gets are Tullow, a British oil and gas explor- Sources: Bloomberg; company reports; The Economist Western-owned oil and gas firms, it will be er (whose share price rose by 4.5% on news1 58 Business The Economist April 11th 2015

2 of the BG deal, having fallen by half since the weaknesses of energy companies that manufacturing from something forhobby- last summer). Such small companies with place big, long-term bets on difficult pro- ists into a properbusiness. The Association exciting but risky projects are particularly duction and exploration projects. When for Unmanned Vehicle Systems Interna- exposed in current conditions. times were good they excited their engi- tional, an industry body, predicts that But bigger acquisitions could be on the neers with the technical challenges, and drones will become ubiquitous, with all horizon too, perhaps even involving BP, boosted their executives’ egos with ever- sorts of uses, from crop monitoring to at- Britain’s largest energy company, which no bigger balance-sheets. Firms are now deal- mospheric research, from oil exploration longer looks too big to buy. Absorbing BG ing with rising debts—those of the largest to internet provision (see page 72). Winter- will keep Shell busy fora while (particular- American and European energy compa- Green, a research firm, forecasts that global ly given its mixed record in managing pre- nies have risen by $31 billion so far this sales of civilian unmanned craft will ap- vious purchases). But the deal could year—and falling share prices, down by a proach $5 billion in 2021. prompt one of its two main American ri- fifth since the summer. They are selling as- Venture capitalists and technology vals, Chevron or ExxonMobil, to try to re- sets in a buyers’ market. companies, from Boeing and GE to Qual- gain dominance by making a move on BP. Behind the Shell-BG deal, and the spec- comm, are now pouring money into drone For all their enthusiasm for the deal, ulation of more mergers to come, is an firms. An American outfit, 3D Robotics Shell and BG are merging mainly from ne- even more fundamental shift in the energy (founded by Chris Anderson, a former cessity. Though BG had stopped disap- industry. Contrary to some expectations, journalist at this newspaper), raised $50m pointing shareholders, and had brought in the oil-price fall has not derailed the Amer- in venture capital in February. Ehang a capable new boss, Helge Lund, from Nor- ican shale boom. The small, flexible and Guangshi Technology, another Chinese way, its fortunes were too closely tied to innovative firms that specialise in horizon- drone startup, recently got $10m in ven- volatile gas prices; and its main oil partner tal drilling and hydraulic fracturing are ture-capital funding in Brazil, Petrobras, is mired in a corruption proving better at cutting costs, raising pro- Now, rumours are swirling in Silicon scandal. For its part Shell was struggling to ductivity and adapting to market fluctua- Valley that DJI is looking for its first injec- replenish reserves and cut costs. Assuming tions than the lumbering giants who have tion of outside cash. It is thought to have BG delivers, the deal solves both these prolong dominated the industry. Dinosaurs made around $500m in revenues in 2014 blems, and strengthens Shell’s cashflow. may mate to ensure the survival of their (the company declines to confirm this), The fall in the oil price has highlighted species. But this is an age ofmammals. 7 and it may be on track to become the first maker of consumer drones to reach a billion dollars in annual sales. There will be growing pains. As drone- makers’ sales soar, so will its customers’ expectations of good service. On DJI’s website, users grumble that a firm of its size should put more of its resources into this area: “Try to call them...and they treat you like you are an inconvenience,” writes one. Over-regulation is another risk. A Phan- tom drone crashed onto the White House lawn in Washington, DC, in January; in response, DJI rushed out an upgrade to its drones’ onboard firmware that included many new “no-fly zones”, to head off the risk of outright bans. Although America’s Commercial drones Federal Aviation Administration plans to relax its curbs on drones, they will still Up have to stay within sight of their human operators and only fly by day. Such is the civil-drone industry’s potential, DJI is bound to face a rising number of competitors, from China and abroad. It ar- SHENZHEN gues that it has a technological edge, including tens of millions of hours of flights, A Chinese firm has taken the lead in a promising market that newcomers will find hard to beat. It OMETHING new is in the air. Lookup as lander who studied engineering in Hong scorns the idea that the defence giants who Syou approach the plaza outside the Kong, has become a leading light in the in- make drones for America’s armed forces building where Da-Jiang Innovations (DJI) dustry. It has filed hundreds ofpatents, and will eventually muscle in on its business: has its headquarters, in the Chinese city of is launching lawsuits against rivals it sus- yes, they are technologically advanced, Shenzhen, and you may well see a hover- pects ofinfringing its intellectual property. says DJI’s Andy Pan, but “they take five to ing eye in the sky staring back at you. It be- DJI’s drones are lightweight and rela- six years to introduce a new model where- longs to a drone made by DJI, a pioneer in tively easy to use. Newer models come as we take five to six months.” the nascent market for commercial un- with built-in GPS and a motorised mount In reviewing the Phantom 2 Vision in manned aircraft. that stabilises the camera while letting it January 2014, the New York Times gushed On March 8th, at press events in New rotate in several directions. Considering that just five years ago such kit “would York, London and Munich, the firm the technology embedded inside, they are have seemed like a science-fiction film launched its new Phantom 3 range of also inexpensive: a new Phantom 3 can be prop or a piece of surveillance hardware drones. Even the basic model has a built-in had forabout $1,000. flown only by the sexiest of superspies.” camera that takes 12 megapixel stills and Rather as Boeing did with commercial The fact that this model is now obsolete video at the “1080p” high-definition stan- airliners in the 1930s, DJI is today leading speaks volumes forhow quickly the indus- dard. The firm, founded in 2006 by a main- the charge in transforming civilian-drone try is advancing. 7 The Economist April 11th 2015 Business 59

Streaming video side the teams’ local markets, it only spent game consoles. $77m before becoming profitable in 2003. Baseball has reaped a windfall from A business home Next, MLBAM focused on improving MLBAM: its $800m in revenue last year quality and on complementary software, was 9% of the major leagues’ total. Its run such as online ticketing and an app for growth could accelerate as streaming vid- Apple smartphones. By the mid-2000s eo gains ground. Last month Twitter said it NEW YORK other content owners began to notice its had acquired Periscope, which lets users technical prowess. It is farpricier and slow- share live footage from their phones. Busi- Baseball’s flourishing media division er to build video architecture from scratch nesses built on such “social streaming” may have outgrown its parent than to use MLBAM, which can withstand could create a new category of customers. ROUND this time last year, Home Box crushing demand loads, and authenticate Although MLBAM is sure to attract compe- AOffice (HBO) turned a success into an and geo-locate viewers in milliseconds. In tition, it enjoys strong barriers to entry. embarrassment. Within a five-week per- 2010 the firm began handling online distri- Since reliability is paramount in live video, iod, two of the broadcaster’s shows drew bution for ESPN, a sports network owned content owners are willing to pay up for a such large audiences that its online stream- by Disney. In 2011it powered the launch of provider with a proven record. And only a ing service for subscribers collapsed. The TheBlaze, a conservative news channel. In well-heeled rival could replicate its net- firm could not afford further hiccups dur- 2013 World Wrestling Entertainment hired work of data centres—its capital spending ing its launch this week of HBO Now, an it to run a new OTT offering. In March Sony has already exceeded $500m. over-the-top (OTT) service that delivers unveiled PlayStation Vue, which uses MLBAM’ssuccesshasled analyststo ask shows via the internet to viewers without MLBAM to transmit television shows over whether its non-baseball services might 1 a cable-television package. To ensure reliable delivery, HBO turned to an unusual Drug dealing source: Major League Baseball (MLB), or more specifically its media-technology The net closes arm, MLBAM, which has become a leader in the video-streaming business. It would be hard to design a better incu- The web’s two largest drug markets go down, panicking dealers and buyers batorfora live-video startup than baseball. Sports are the type of content that viewers JUST can’t bear this any longer,” that they were holding in escrow. are keeneston watchingin real time, which “Iwrites “Megan” in an anonymous A few days later, users reported that has driven rights fees to record levels. MLB, internet forum. Waiting foronline shop- Agora, the next-biggest drug-peddling whose new season opened on April 5th, ping to be delivered is frustrating. But for site, was inaccessible. Amid rumours of holds 2,500 games per year—and thus pro- drug users it can be agony. Megan’s vice is another scam, its administrators reas- duces far more content than other sports. OxyContin, an addictive prescription sured buyers and sellers that they were Moreover, most of its games are only painkiller. Like many users, she buys her simply carrying out technical upgrades. broadcast locally, and cannot be seen on illicit supply on the “darkweb”, a hidden A rush ofusers migrating from Evolution TV by fans in other cities. corner ofthe internet accessed with may have put its servers under strain. The In the internet’s early days, connections anonymous browsing software. In the site has also suffered “denial ofservice” were too slow for live video. But by 2000 past month the online market fordrugs attacks—by law enforcers or rival dealers, baseball’s officials foresaw mass broad- has been rattled, after the two main no one is sure. After a wobbly Easter band, and its 30 teams launched MLBAM drug-dealing sites suddenly locked buy- weekend, Agora is back, fornow. as a joint venture. They agreed to chip in ers and sellers out. “Ifyou know any- Together, Evolution and Agora were $1m per club per year over the next four one...who would sort something out for responsible for82% ofonline drug list- years. That proved unnecessary: thanks to me tonight or tomorrow I’ll drop dead of ings, according to the Digital Citizens’ the launch of MLB.tv, a subscription ser- gratitude,” pleads Megan. Alliance, which monitors illicit online vice that shows live games to viewers out- The illegal-drugs trade, worth perhaps markets. Each was bigger than SilkRoad $300 billion a year, has been creeping ever was. A dozen smaller players, such onto the web. Like other online retailers, as Nucleus Marketplace and BlackBank, drug dealers can undercut the high street stand to benefit from their problems. by spending less on maintaining a physi- The recent trial ofRoss Ulbricht, Silk cal presence and employing salesmen. Road’s creator, showed how deeply Consumers like the convenience and police have infiltrated the darkweb. This safety ofshopping from home, and on- is bad forbusiness: though punters don’t line product reviews are especially useful much fear arrest, they are wary ofbeing when buying potentially deadly sub- ripped off, and better law enforcement stances. Bitcoin, a near-untraceable digi- increases the incentive foradministrators tal currency, covers their tracks. One in to shut up shop and run offwith the loot, seven American drug users have ordered says James Martin, a criminologist at a fix online, according to one survey. Macquarie University in Australia. This was all upset on March 18th Backin the online forum, another when Evolution Marketplace, the Ama- user suggests to Megan that ifshe can’t zon ofthe darkweb, vanished in a puff of get hold ofOxyContin online, she could pixels. Unlike SilkRoad, shut down by asklocal dealers forheroin, which satis- the FBI in 2013, Evolution seems to have fies the same craving. What’s more, he been taken down by the people who ran observes, “it’s available in any country it. In a brazen “exit scam”, the site’s anon- that has streets”. It is also fardeadlier. ymous administrators apparently made Driving drug users offthe web and onto offwith up to $15m in Bitcoin payments the backstreets carries risks. Streamed live to your smartphone 60 Business The Economist April 11th 2015

2 fare better on their own. Wall Street banks watch their local teams must keep sub- clubs as being for senior citizens; a rival have been encouraging it to go public since scribing for pay-TV packages that include brand did better by avoiding any explicit 2005, and Apple-watchers have identified the sports networks. mention ofage, butstressingitsclubs’ abili- it as an acquisition target, since its technol- However, streaming video could shift ty to make the ball travel far, tapping into ogy could help the tech giant secure exclu- the balance ofpowerbetween upstart OTT older golfers’ anxieties about not being sive content for Apple TV, an OTT service. services and legacy cable providers. able to whackit like they used to. Bob Bowman, MLBAM’s head, insists that Thanksto MLBAM’stechnology, numerous it is only pursuing minority investments OTT platforms now carry the ESPN net- Must be accompanied at all times from partners within its industry. work. Sports fans may increasingly dump With this in mind, advertising campaigns MLB has no interest in disrupting net- the cable firms’ expensive TV packages in often tread delicately around the age issue. works like ESPN, whose rights fees help favour of cheaper OTT ones. If so, cable Toyota, a carmaker, usessilver-haired, mid- keep it afloat. So its own subscription ser- firms may be relegated to mere “dumb dle-aged models to target ageing baby- vice, MLB.tv, meticulously blanks out pipes” providing only internet access, a boomers but those of pensionable age sel- nationally broadcast and “in-market” business whose margins might easily be dom appear in ads of any kind unless ac- games. This means that fans who want to competed away. 7 companied by young actors representing their children or grandchildren. Some companies, such as Wacoal, have Ageing consumers created separate brands and marketing campaigns for their new products de- Chasing the grey yen signed for older consumers, so as to avoid damaging the “young” image oftheir main brand. However, Florian Kohlbacher, co- editor of “The Silver Market Phenome- non”, a marketing handbook, argues that it TOKYO is often better, instead of creating separate products just for the old, to design ones Japanese firms have wisdom to hand down about selling to the elderly that bridge the generations. Toyota increas- ESIGNING underwear to fit human abled. Although it gained approval for clin- ingly loads its cars with lasers, cameras Dcurves is tricky. For decades, Wacoal, a ical use in Europe in 2013, it has yet to do so and sensorsto preventcollisions, for exam- global manufacturer of lingerie based in at home. Testing for medical products is ple. Such safety features can be marketed Kyoto, has been measuring the female costly as well as slow in Japan, and getting to drivers of all ages, but the main benefi- form and making products that factor in new devices covered by health insurance ciaries are the increasingnumbers of elder- the toll of time and gravity. Its research is is a long and arduous process. Having ly motorists: although total traffic deaths in proving ever more rewarding. The com- opened up a lead in robotics for nursing Japan have roughly halved over the past pany’s sales to senior citizens—who are care, the country risks losing it. two decades, the number of fatalities in- just as interested in a graceful silhouette as Regulation is not the only pitfall firms volving the over-65s is rising. women decades younger—are growing by face, however. Businesses are finding it is Debatessuch asthese will soon enough double-digit rates each year. easier to invent products that the elderly be part of boardroom discussions outside Many societies are ageing, from Ameri- might find useful than it is to market those Japan, too. In the end, says Mr Kohlbacher, ca to China, but Japan has a head start. One products to them. One reason is that older all managers will have to find ways to mar- in four Japanese are over 65; by 2035 it will consumers do not appreciate being re- ket to the old without either offending be one in three. So the country is serving as minded that they are old. A recent report them or putting off younger consumers. the world’s laboratory for selling to older by McKinsey, a consulting firm, describes They might start by actually talking to the consumers. Elderly Japanese outspend how one Japanese firm, Bridgestone, made elderly, who have more experience of younger ones, says a study by the Boston the mistake ofpromotinga newline of golf shopping, after all, than anyone else. 7 Consulting Group. They now account for two-fifths ofpersonal consumption. Many of the country’s biggest firms have adjusted their strategies to tap into the grey yen. Panasonic, a makerofdomes- tic appliances, has rolled out a string of new products, including foot heaters and lightweight vacuum cleaners. Aeon, a giant retailer and shopping-centre operator, has a “Grand Generation” strategy, which ranges from providing one-stop medical clinics on the premises to making in-store signseasierto read. Fujitsu, an electronics firm, has sold 20m of its “Raku Raku” mobile phones, with larger buttons and simplified functions, and is now introducing them into Europe. Japanese firms have been equally in- ventive in the area of medical products for the elderly. But this is an area where cum- bersome regulation can hold them back. Cyberdyne, a spin-off from the University ofTsukuba, designed a roboticexoskeleton suit to give mobility to the elderly and dis- The perfect car for youngsters like us The Economist April 11th 2015 Business 61

European business and the recovery firms’ lobby group, has been inching up- wards since early 2013. Chloé Magnier of Green shoots, risk of frost CM Economics, a research outfit, explains that bigger firms always benefit first from an uptick in demand; it takes time before they pass orders on to smaller suppliers. Larger firms are more likely to reap BERLIN, MADRID, MILAN AND PARIS gains from a weaker euro, too. Sanofi, a Companies in the euro zone are finally enjoying the benefits ofa tentative recovery, French drugmaker, reckons foreign-ex- but its continuance is by no means assured change movements added three percent- ESSthan a yearago mostglobal investors age points to its revenue growth in the Llooked at stagnant Europe, shuddered fourth quarter of 2014. Though many large and passed by. Now European share prices European firms hedge their currency expo- are soaring (see chart1). The euro area’s top sures to some extent, both by using finan- 50 blue-chips gained almost18% in the first cial instruments and by moving produc- three months of the year. American mutu- tion to where their customers are, almost al funds are yanking their money out of all enjoy a boost to their bottom lines from other assets to invest it in European stock- translating foreign-currency earnings back markets. More cash may be heading the into a weaker home currency. continent’s way. In January a net18% ofthe Sectoris the second determinant of suc- global fund managers regularly polled by cess. Among those benefiting from lower Bank of America Merrill Lynch chose Eu- oil prices is Continental, a German maker rope as the region they would most like to of car tyres and other parts. Its chief finan- go overweight on in the coming12 months. cial officer, Wolfgang Schäfer, says cheap In March 63% did so. fuel has been especially helpful in Ameri- In part this newfound enthusiasm for ca, where sales ofnew cars have soared. In Old World equities simply reflects drearier Europe, it has prompted an increase in prospects elsewhere, plus a bet that the miles driven, which means more tyres quantitative easing belatedly launched needing replacement. Last year sales of last month by the European Central Bank new cars began growing again in the Euro- (ECB)—which plans to buy €60 billion ($65 show slightly perkier growth too. Spain’s pean Union, after falling for six years. The billion) of financial assets a month until central bank thinks its economy could ex- recovery should speed up this year. September 2016—will raise asset prices in pand by as much as 2.8% this year. Although automotive share prices have the euro zone assimilarprogrammesdid in All of this is helping companies which risen most vertiginously so far this year of America and Britain. But it is also a re- produce the goods and services that cus- all the Stoxx Europe 600 sectors, the response to signs that the euro zone, long a tomers buy when they have a little more verse is true for oil and gas stocks. Total, a drag on world growth, is starting to help it. cash in their wallets, and confidence in the French oil company, reported sharply low- One cause of the turnaround is the future. Analysts are upgrading earnings er revenue in the last three months of 2014, weakness of the euro, which has fallen by estimates for carmakers and their suppli- for example, and has been busily downsiz- 12% against the currencies of the zone’s ers, technology companies, hotel and lei- ing since then. Companies that make capi- principal external trading partners in the sure groups, media and financial-services tal equipment destined for the oil sector past year. The euro area is a net exporter of firms, with health care and chemicals join- are struggling, too. goods, and the currency’s weakness is ing their ranks, says Sharon Bell of Gold- But such firms are outnumbered by helping it to sell more abroad. Another is man Sachs, an investment bank. those gaining from the combination of that the price of crude oil has fallen, even The benefits of this changing mood are cheap energy and a cheap euro. This is againsta weakeningeuro, cuttingfirms’ en- not evenly distributed, however. Much de- where sales patterns come in. The largest ergy and raw-material costs and raising pends on size, sector and sales patterns. businesses in the euro zone’s 19 member consumers’ purchasing power (see chart 2, Startwith size. Europe’smyriad small firms countries are among the world’s most in- next page). The ECB’s bond-buying is push- are still in a wait-and-see mood rather than ternationalised. Over three-fifths of the ing already-low borrowing rates even low- a go-for-growth one. An index of business sales of the companies that make up the er. Credit conditions are easing, including conditions compiled by UEAPME, a small main stockmarket indices in Germany, for small and medium-sized firms. France, Italy and Spain are from outside European business activity is increas- their home markets. They are often prime ingatitsfastestpace since May2011, accord- Driving ahead 1 movers in a global market with little de- ing to Markit’s latest composite purchas- Euro-area share prices by industry pendence on the European economy. “Air- ing-managers’ index, with new orders January 1st 2015=100 bus and aeronautics didn’t have a crisis,” driving growth in manufacturing and ser- Automotive Financials Consumer saysMarwan Lahoud, a seniorexecutive at vices. Retail salesare risingtoo. Economists Industrials Utilities the aircraft-maker. Indeed, booming de- are falling over themselves to revise their 120 mand for planes from emerging Asia and growth forecasts upward. The region as a elsewhere has kept its factories, and those whole grew by a mere 0.9% in 2014. The 110 ofits suppliers, going at full tilt. OECD, a rich-countrythink-tank, now reck- Generally, such globalised firms have ons the euro area will grow by 1.4% in 2015 fared a lot better than ones more depen- and by 2% in 2016. The ECB and the credit- 100 dent on Europe (see chart 3). Better oppor- rating agencies and investment banks tunities outside their sluggish domestic think along similar lines. Germany, where 90 economies have encouraged many once- real wages are rising, will do most to pull Jan Feb Mar Apr parochial companies to seek new export the euro zone out of the mire, but France 2015 markets. This is especially visible in Spain. Sources: Thomson Reuters; The Economist and Italy, hitherto laggards, are expected to Rafael Doménech, an economist at BBVA, a1 62 Business The Economist April 11th 2015

2 bank, says it has witnessed “a drastic troën, an ailing carmaker, by a Chinese ary, down from 11.8% a year earlier—is not change in culture”. Spain’s exports grew firm last year. It reluctantly came to terms falling more quickly towards its 2002-07 from the equivalent of 24.4% of GDP at the with an American firm, GE, buyingmost of average of8.6%. Ifhouseholds remain anx- start of 2009 to 32% by the end of 2014 (in Alstom, an energy and transport conglom- ious about their prospects, they may be re- Germany the figure is 45.7%). erate. But it has just stymied an Asian bid luctant to start spending properly again. A similar realisation has dawned on for Dailymotion, an online-video firm. The second is that business investment Italian businesses, says Nino Tronchetti And, in another move bound to make for- is also slow in picking up. There are rea- Provera of Ambienta, a private-equity eign investors think twice, it decided this sons for this. Capacity utilisation in Euro- fund. Sales to non-EU countries are grow- week to spend up to €1.23 billion increas- pean industry is still only 80%. With banks ing by around 7% a year, though Italy’s ex- ing its stake in Renault, to force the carmak- still somewhat hesitant to lend, many ports are still equivalent to just 29.3% of er to implement a new rule granting extra firms hoard cash in case they need it later. GDP. Five years ago Elemaster Group, an rights to long-term shareholders. A scheme announced in November by the electronics firm, was almost wholly fo- European firms are themselves begin- European Commission president, Jean- cused on Europe and made 60% of its rev- Claude Juncker, to mobilise €315 billion of enues in Italy. It brought in a private-equity private and public money for investments fund to help it become more international. Markets up, oil and euro down in infrastructure, energy and other “strate- EU Today Italy accounts for 35% of sales, the Exchange rates and oil price 2 gic” areas, is well-intentioned, but the ’s rest of Europe another 35%, and more dis- contribution looks too small to prompt Brent crude tant markets the rest. The firm has plants in $ per € € per barrel businesses to provide their share. America, China, India and Tunisia. Rev- 1.4 100 Investment in digital infrastructure has enues rose by18% last year, to €175m. been especially weak. Spending on im- Although the prolonged downturn has 1.3 80 proving broadband in Europe fell from prompted many European businesses to 1.2 60 €106 per person in 2008 to €90 in 2013, lookfartherafield for customers, they typi- while Japan raised its investment to €226 cally have not used the crisis as an oppor- 1.1 40 and America to €178, saysBusinessEurope, tunity to restructure and wring out excess 1.0 20 a pressure group. For Michel Combes, the capacity to the extent that American busi- boss of Alcatel-Lucent, a telecoms-equip- 0 nesses did, says Stefano Aversa of Alix- J FMAMJ J AS OND J F MA ment maker, to have underinvested in digi- Partners, another consulting outfit. Politi- 2014 2015 tal infrastructure is Europe’s real weak- cal and social constraints have prevented ness. If it misses out on trends like the Euro Stoxx 50, January 2007=100 large-scale labour-shedding. Partly as a re- 3 “internet of things”—embedding minia- sult, profits have been slow to rebound. 175 ture computers in everyday objects and Internationally ManyEuropean manufacturersare con- focused* connecting them wirelessly—it “will lag for 150 tinuing to make progress in reducing non- Euro Stoxx 50 a very long time”. labour costs. Germany’s three big carmak- 125 The big question is not whether the BMW ers—Volkswagen, Daimler and —are 100 euro-zone economy can grow, given the sticking to their cost-cutting targets despite current, extraordinarily favourable combi- the gathering recovery at home and record 75 nation of a cheap currency, low oil prices Domestically sales abroad. They are doing so by relying † 50 and low financing costs. It is whether that on a German speciality: making produc- focused expansion will be self-sustaining by the 25 tion processes more efficient. 2007 08 09 10 11 12 13 14 15 time the euro and oil prices steady and the Consolidation, to improve pricing pow- ECB’s bond-buying stops. Have countries er and profits, is also in the wind and has Euro-area M&A deals‡, €bn 4 and companies cleaned house sufficiently been for a year or so. The value of mergers 200 during the dark days since 2008—liberalis- and acquisitions with euro-zone compa- ing labour and product markets, cutting nies as their targets is still well below the 160 taxes and red tape, on the one hand, and pre-crisis peak, but it has near-doubled 120 streamlining corporate structures, process- from its low (see chart 4). Some highly frag- 80 es and costs, on the other? mented European industries—mobile tele- Klaus Wiener, chief economist at Gen- coms and airlines come to mind—are 40 erali Investments Europe, is among those surely prime targets for takeover activity. 0 who believe that a rising tide of higher ex- This week’s mammoth bid by Shell, an An- 2006 07 08 09 10 11 12 13 14 15 ports and improving domestic demand BG *Euro Stoxx 50 weighted by glo-Dutch oil firm, for Group may Sources: Bloomberg; revenues outside of Europe will eventually raise all boats, but at very Thomson Reuters; †Weighted by European revenues prompt further consolidation among Eu- ‡ differentspeeds. Countriesthathave made rope’s struggling oil and gas firms. Dealogic; The Economist Four-quarter moving average their labour markets, in particular, more Non-European buyers are also sniffing flexible offer the best chances of success: around, in part because fears that a Greek ning to do big deals once more. Merck, a their ranks include Germany and Spain. exit from the euro might send shock waves German pharmaceutical company (not to Italy has just embarked on serious reform across the region seem to have subsided. be confused with a similarly named Amer- after a decade and a half of stagnation; to This week FedEx, an American parcel-de- ican one), said in September that it would many foreigners with cash to spend it is livery firm, launched a €4.4 billion offer buy Sigma-Aldrich, an American life-sci- now the bloc’s most interesting market, for TNT Express, a Dutch rival, saying it ences firm, for $17 billion. But Marcus with France a big step behind. Firms that wanted to strengthen its presence in Eu- Kuhnert, Merck’s chief financial officer, in- have reduced costs and become more effi- rope. Among Italy’s recent spate of bids siststhata return to pre-crisisexuberance is cient, and expanded into new markets far from abroad, the €7.1 billion Chinese take- not on the cards: the aim now is profitable beyond their home countries, will enjoy over ofPirelli, a tyremaker, stands out. growth, not a spending spree, he says. the biggest gains. In other words, Europe’s France’s government, however, is still For all these promising signs, there are recovery will most benefit those business- ambiguous about foreign takeovers. It wel- two big concerns. One is that unemploy- es and places that have used the crisis to comed the investment in PSA Peugeot-Ci- ment across the euro zone—11.3% in Febru- become less European. 7 The Economist April 11th 2015 Business 63 Schumpeter Retail religion

Robert Schuller, an entrepreneuroftelevangelism and megachurches, died on April 2nd megachurch should provide everything from Bible studies to dance classes, he argued; and just as a retailer should know his customer, so a pastorpreneur should know his flock. He conducted regular surveys of his audience and, more important, the people he wasn’t reaching. (“There are still a heck of a lot of people out there overdosing, blowing their brains out and getting her- pes.”) He recognised that the precondition for success in retailing ofany kind, spiritual or secular, was good parking. His sermons also conformed to his belief in giving the audience what they wanted. He recognised that the fire-and-brim- stone preaching of the old Evangelicals had limited appeal in a world of McDonald’s and Disneyland. He preached a different Protestantism, that owed as much to Norman Vincent Peale, the author of“The Power ofPositive Thinking”, as it did to Martin Lu- ther. “The classical error of historical Christianity is that we have never started with the value ofthe person,” he wrote in his book, “Self-Esteem: The New Reformation”. He added three otherelementsinto thiscustomer-friendly for- mula. Economiesofscale helped him reduce the costsof reaching a bigger audience; the “Hour of Power” made him the world’s mostwidelywatched preacher. He knewthatthe firstrule ofmar- N THE 1980s and 1990s no visit to Southern California was com- keting is to hold people’s attention; so he built his cathedral from Iplete without a trip to Robert Schuller’s Crystal Cathedral in glass, installed one of the best organs in the world and invited a Garden Grove, a short drive from Disneyland. It was the most constant stream ofcelebrities, includingpresidents and film stars. striking of a new crop of megachurches that were springing up And he understood cross-promotion: his bestselling books pro- across America. Twelve storeys high and made from 10,000 moted his church services, and vice versa. panes of glass, it made worshippers feel they were praying in the MrSchuller’s seminars on church leadership attracted crowds Orange county sun. MrSchullerwas the most successful of a new of would-be pastorpreneurs who paid handsomely for his in- breed of televangelists who realised that technology was their sights. But in his obsession with positive thinking he ignored the friend. He may have lacked Jimmy Swaggart’s swagger and Jerry problem offailure. This proved an expensive oversight: in the last Falwell’s political clout. But he possessed what passed in that decade of his life, his virtuous circle of expansion and hype world for gravitas. Dressed in flowing, purple robes Dr Schuller, turned vicious. The problems had accumulated for years. His as he always called himself, preached the Word not just to the audience had turned greywith him. The field had become crowd- 3,000-strong congregation (with another 3,000 waiting for the ed with ever more vigorous vicars, particularly from emerging second shift) but also to millions watching on television. economies like Brazil. His family were extracting too much rent Mr Schuller, who died on April 2nd, was the leading example from the business: about 20 relatives were employed by his min- of a very American breed of businessperson: the pastorpreneur. istry at some point or other. But the entire edifice was brought He succeeded by applying the principles of business to religion. down by the oldest problem offamily enterprises: a botched suc- However, in his later years, a religious empire that had grown cession. He installed his son as chosen successor in 2006 but huge by embracing economies of scale and customer focus fell removed him two years later, citing a “lack of shared vision”, victim to two familiarcauses ofbusiness failure: poor succession eventually replacing him with his oldest daughters. planning, and a failure to react to dynamic new competitors. He had started preaching at the age offive, to his father’s cows; Selling out to the competition he opened his first ministry in 1955, in a drive-in cinema in Los In 2010 Crystal Cathedral Ministries filed for bankruptcy, with Angeles. His wife played an organ that was hitched to the back of debts of more than $43m. In 2012 Mr Schuller sold his Crystal their car. Mr Schuller preached from the roof of a hot-dog stand. Cathedral to the Roman Catholic diocese of Orange for $57.5m. The audience sat in their cars and listened via tiny speakers. The Mr Schuller even sued his former ministry for $5m for copyright church’s motto was perfectly tailored to the emerging American infringement and breach of contract—he was awarded a lesser Autopia: “Come as you are, pray in the family car.” sum. The Schuller brand had become thoroughly toxic. As his audience grew and the tithes rolled in, Mr Schuller Mr Schuller’s downfall offers a true-life parable for the deni- abandoned his hot-dogstand. In 1961he built a bricks-and-mortar zens of Silicon Valley. Tech titans and televangelists may breathe “walk-in, drive-in” church. In 1970 he began broadcasting his the same Californian air, but they see themselves as belonging to “Hour ofPower”. In 1980, his flockstill swelling, he built his $20m different mental universes. Yet there are more similarities be- Crystal Cathedral. He hosted the “Hour of Power” until 2010, its tween the two tribes than either would care to admit. Both are audience peaking at 20m viewers in about180 countries. marinated in positive thinking. Both are led by strong-willed The key to his success was his relentless customer focus. In a founderswho seekworld domination. And both mustconstantly 1983 interview with the Los Angeles Times he described his Crys- be on guard against newer, nimbler rivals. Mr Schuller’s business tal Cathedral as a “22-acre shopping centre for Jesus Christ” and empire collapsed, in part, because he failed to thinkabout how to called himselfa “religiousretailer”. Justasa good shoppingcentre adapt it to a changing and more crowded market. The same may should provide everything from groceries to shoes, so a good one day be true ofsome ofthe Valley’s booming tech empires. 7

Finance and economics The Economist April 11th 2015 65

Also in this section 67 Financing American ﬁrms 67 The IMF gets gloomy 68 Cracking open shell companies 68 Cash in Argentina 70 Free exchange: Robin Hood economics

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

Growth in America show that orders for “durable” goods— things that last a long time, like industrial Careful now machinery—dropped by 1.4% in the previous month. “Core” orders ofdurable goods (which exclude transportation equipment) have fallen every month since October. And with the oil-price slump, spending on energy projects has crashed. Declining in- ROYERSFORD, PENNSYLVANIA vestment in mining will wipe 0.8 percent- Unless wages grow, America’s economic blip could become a trend age points from GDP growth in the first HE people of Royersford are feeling nomics, a consultancy, is expecting a 14% quarter, say researchers at Capital Eco- Tpinched. In the Main Street Café, in the annualised, inflation-adjusted decline in nomics. Steven Ricchiuto of Mizuho Secu- town centre, a man complains that his pen- exports over the first quarter of this year. rities, an investment bank, expects cor- sion payments will soon be frozen. With the euro zone expected to grow by porate investment to drop: “Companies Sheena, a waitress, says business is brisk, just 1.4% this year, and the Canadian econ- are not in a mood to add to capital stock.” but rues the “teeny tiny” pay rises she and omy also slowing, demand for American All this sounds bad. However, the her friends have received. The worries of wares from important trading partners American economy lives or dies by what those in this Pennsylvanian borough are threatens to be lacklustre. happens to consumer spending, which familiar across America. Although it has Businesses are already feeling the pain. makes up the lion’s share of GDP. If buoy- chugged along far better than other rich Athird ofthe salesofcompaniesin the S&P ant, it could prevent the economic blip countries, the world’s largest economy still 500 index come from abroad. Corporate from turning into something more serious. fails to instil confidence in its workers. Add profits fell by 1.6% in the fourth quarter of Economists had expected strong consump- to this sour economic data from the begin- 2014 and were 6.4% lower than in the same tion growth in 2015: Americans have seen a ning of 2015, and some question the quarter of 2013. As profits have been windfall from a halving of the price of oil strength of the American recovery. Wages squeezed, so investment, the third compo- and outstanding consumer credit has hold the answer. nent ofGDP, has stalled. grown for 42 straight months. Despite that, GDP is made up of four things: govern- Figures released at the end of March consumption growth has slipped. ment expenditure, net exports, investment Unusually bad weatherearlierthis year and consumer spending. One component, partly explains what is going on. A freezing 1 government largesse, is doing better. After Back to earth winter forced Americans to stay indoors years of weighing on growth, higher % change on previous month* instead of going to the shops. But the big- spending is now helping the economy. 2 gest thing working against stronger and Manufacturing The other components tell another new orders† more sustainable consumption growth is story. Start with exports (see chart 1). On a 1 pay. In Royersford’s part of Pennsylvania, Personal trade-weighted basis, the dollar has appre- consumption + real hourly earnings fell by 1% last year. ciated by13% in the last year. America is not 0 Down the road from the café (and past a especially exposed to the vagaries of inter- – few vacant lots) in Sweet Ashley’s Choco- national trade—exports of goods and ser- 1 late, the shop’s owner says that she would GDP vices equal just 14% of , compared Total exports like to hire, but can only afford to pay the with 26% forthe euro zone. But the dollar’s 2 minimum wage. One of her friends has recent rise, which makes American pro- J FMAMJ JASONDJ three jobs, one of them full-time, to make 2014 2015 ducts less competitive on world markets, Sources: Federal Reserve *Three-month average ends meet. Across America, median infla- has been so dramatic that problems are Bank of St Louis; Bureau †Non-defence tion-adjusted wages are no higher today emerging. Paul Ashworth of Capital Eco- of Economic Analysis capital goods than they were when the financial crisis 1 66 Finance and economics The Economist April 11th 2015

Far from full capacity United States Recession Median real weekly wages for full-time employees 2 Lower-wage* jobs 3 Measures of labour-market slack 4 January 2005=100 As % of private-sector jobs created† As % of labour force 103 60 10 Unemployed 102 50 8 101 40 100 6 30 99 4 20 98 Part-time for economic reasons 2 97 10 Discouraged workers 0 0 2005 06 07 08 09 10 11 12 13 14 2005 06 07 08 09 10 11 12 13 14 15 2005 06 07 08 09 10 11 12 13 14 15 Sources: Bureau of Labour Statistics; Federal Reserve Bank of St Louis; ITG Investment Research *Health care and social assistance, retail, food and drink services †Three-month moving average

2 hit (see chart 2). ing the best ones happy. That helps to ex- ticipation rate is bad for wages. A pool of Economists struggle to explain why plain why, counterintuitively, median idle workers, though not officially looking wages have not taken off. The most recent wages did well even as unemployment for jobs, stops those in work from pushing jobs report, for March, was muted, but that shot up. Now, to compensate for the high for better pay, since they are worried that served to highlight just how robust the wages paid to those staff that got through their employers will replace them. And if data have been over the past two years. the recession, firms are willingto offer new wages do rise, those out ofthe labour force The unemployment rate stands at 5.5%, be- recruits only low wages. The survivors do can simply rejoin it, pushing them back low its historical average. Economists ex- not see raises, either. down. However, this assumes that low la- pect that wages should rise faster in such bour-force participation is down to eco- circumstances, since employers have to Pay it forward nomic conditions. A paper by the Brook- compete for workers. A research paper Firms may be able to get away with offer- ings Institution, a think-tank, disputes this. from the Federal Reserve Bank of Chicago ingmeasly pay since the labourmarket still It posits that the falling participation rate estimates that, if real wage growth had fol- has a lot of“slack” (ie, there are workers on amongworking-age people mainly reflects lowed its historical relationship with the hand to fill additional jobs, should they be structural factors, such as technological unemployment rate, by mid-2014 it would needed). The number ofpart-time workers changes that push some workers out of the have been 3.6 percentage points higher who would ratherbe full-timers—so-called labour market permanently. PTER than it actually was. Three big things, “part-time for economic reasons” ( )— The Brookings research also tackles the though, have held back pay: changes to fell much more slowly than the official un- question of why the participation rate fell America’s unemployment-insurance sys- employment rate following the recession so sharply around 2007-08. The recession tem, the behaviouroffirms, and the persis- (see chart 4). The same goes for “discour- had an impact, but demographic factors tence oflabour-market “slack”. aged” workers, those who want a job but may have been more important. About America’s unemployment-insurance say that there is no point in looking. that time, the first baby-boomers turned system underwent a big change at the end Though few in number, their involve- 62, the minimum age to receive retirement of 2013. Before then, the average American ment—or not—in the labour market can benefits. Using similar reasoning, the pa- could get 53 weeks’ worth of unemploy- sway wages. Both measures have fallen per suggests that the participation rate will ment benefits; in three states they could get since the recession ended, but are still fall further in coming years. If its explana- 73 weeks’ worth. Congress then decided to much higher than before the crisis. tion is right, then as the economy improves make benefits stingier: the average limit According to a Chicago Fed paper, the wagesshould grow, since there will be few- dived to 25 weeks, cutting off 1.3m Ameri- PTER rate is a particularly important deter- er workers willing to be sucked back in to cans immediately. With nothing to fall minant of wage levels. It finds that a 1% in- the labour force. back on, the wage expectations of many crease in the PTER rate is associated with a Ifso, the latestdata suggestpay could be unemployed people fell, says Iourii Ma- 0.4% fall in real wage growth, even after about to take off. One survey found that novskii of the University of Pennsylvania. controlling for the effects of other mea- 70% of American companies expected to Employers in some sectors quickly took sures of unemployment. The impact is es- increase wages by at least 3% in the year advantage of this newly cheap pool of pecially strong for worse-off workers. Da- from March. Pay rises are hitting the head- workers. A big chunk of the 3m extra jobs vid Blanchflower of Dartmouth College lines: McDonald’s boosted the wages of its created during 2014 were in poorly paid in- and Andrew Levin of the IMF found simi- burger-flippers on April 1st. dustries (see chart 3). lar results in a paper published in March. Where big business leads, others will Even firms in typically well-paying sec- When the PTER rate is high, workers may follow. The boss of Comfort Keepers, a so- tors are being tight-fisted with their work- feel unable to ask for higher wages, since cial-care provider a short drive from ers. A recent paper by Mary Daly and Bart what they really want is more hours. Ner- Royersford, notes employees at Walmart, a Hobijn, both of the Federal Reserve Bank vousness about asking for more pay may supermarket, are getting a pay rise, a move of San Francisco, looks at the problem of ripple through the labour market, says he may be forced to emulate. David Doyle “nominal-wage rigidity”. The paper argues Daniel Aaronson ofthe Chicago Fed. of Macquarie, a bank, says that the change that when the financial crisis hit, employ- Economists also debate the effect of in average hourly earnings of private-sec- ers found it difficult to reduce the cash val- America’s “participation rate”, defined as tor workers during the first quarter of this ue of the wages paid to their staff. (Foisting the number of people in work or actively year was the fastest since the recession. If a pay cut on your entire workforce hardly looking forjobs as a proportion ofthe pop- healthier wage data keep coming, interest- boosts morale.) Inflation was too low to ulation over 16. Now at 62.7%, it has been rate rises from the Federal Reserve will take a big bite out of real wages by keeping falling for over a decade. It is 3 percentage soon follow. That would suggest that nominal wages flat. Instead, employers points lower than in mid-2009. America’s economy, despite the blip, is on fired their least productive workers, keep- Some economists argue that a low par- the way backto normal. 7 The Economist April 11th 2015 Finance and economics 67

Financing American ﬁrms Open the ﬂoodgates

New York New rules on raising equity make life easierforfirms and riskierforinvestors N 1980, Massachusetts banned a new proved by the Securities and Exchange Itechnology company from selling shares Commission (SEC) on March 25th come to the public there, worried that gullible into force. These will overhaul the process residents would get swept up by the hype of raising equity in ways that will make it surroundingthe venture. In retrospect, that far easier for firms to finance themselves, proved a regrettable decision for Bay Sta- even if consumers will have to keep their ters: the firm in question, Apple, is now the wits about them. single most valuable public company in Under one of the (long-delayed) provi- the world. Future generations of startups sionsofthe JOBS Act, a compendium ofen- seeking to raise money by selling equity terprise-boostinglawspassed in 2012, com- should be given a smoother ride under panies will be able to raise up to $50m in new rules soon to come into force. what is commonly referred to as a “Mini Forall ofAmerica’sperceived openness IPO”, or initial public offering. Although to innovation and finance, regulators have SEC agreement will still be required, many energetically restricted the ways corporate of the intrusive constraints found in gar- “qualified”, meaning those with a net tiddlers can raise money. The general pub- den-variety IPOs will be waived. worth of $1m or an annual income in ex- lic has been banned from risky, early-stage The most controversial aspect of the cess of$200,000. Now anyone will be able investment opportunities, all in the name rules is tied to who may invest in such of- to invest up to 10% oftheir income in early- of consumer protection. That will largely ferings. Typically access to anything out of stage ventures, a type of investment that be reversed from May when rules ap- the ordinary requires an investor to be makes stockmarket gyrations lookdull. The new rules will galvanise crowdfunding, websites that allow the general public to invest in promising companies. The global economy Potential GDP growth Advanced Emerging The likes of Kickstarter and Indiegogo al- The global financial crisis was a scarring Average annual % economies economies ready allow people to backsmall firms, but experience for rich economies. A sharp, Contribution from: productivity* punters typically get rewarded with early- short-term decline in GDP has given way employment growth release versions of their products. Now to a steady erosion in growth expecta- capital per worker they could get shares, too. tions. Yet as the latest “World Economic 7 Plenty ofother barriers will be lifted for Outlook” from the International Mone- 6 small firms. Pernickety state watchdogs of tary Fund (IMF) explains, emerging the sort that kept Apple out of Massachu- economies are also entering an age of 5 setts will lose their say. Companies will no diminished hopes. 4 longer have to list on an SEC-accredited ex- Potential output is an estimate of an change, which often comes with onerous economy’s speed limit—how rapidly it 3 disclosure standards. Financial results will can grow before inflationary overheating 2 have to be filed twice a year, rather than sets in. It is determined by growth in the 1 quarterly. And firms can forgo an “inde- labour force, the capital stock and pro- pendent” audit committee of board mem- ductivity. The IMF reckons that potential 0 bers, a costly requirement under the Sar- 2001-07 2008-14 2015-20† growth in advanced economies was banes-Oxley Act, which was passed in the already on the decline in the years before GDP Advanced Emerging wake ofEnron’s implosion in 2001. the crisis, thanks to weak productivity 2007=100 economies economies Taken together, observes Sam Guzik, an growth and ageing workers. The crisis Forecast, 2007: attorney who represents companies going Actual: then squeezed investment, amplifying 150 public, the reforms will make it cheaper for these problems. Potential annual growth, firms to raise money. That should enable which averaged 2.2% in 2001-07, fell to 140 faster growth and an easier path to a con- 1.5% in 2013-14. ventional stockmarket listing. The IMF reckons potential growth should 130 Sceptics worry that crowdfunding ven- rebound a bit in the rich world in coming ues will become a playpen for fraudsters years. But emerging economies face a 120 targetingthe poorand credulous. Much the more persistent slowdown. Demography biggerworryisthatstartupshave a tenden- 110 is catching up with some of them: China’s cy to go bust. In Britain, where equity working-age population is already declin- 100 crowdfunding is already thriving, regula- ing. Productivity growth will slow as the tors have warned investors it is “very like- scope for catch-up growth between rich 90 ly” they will get wiped out. For every Ap- and poor countries continues to narrow. ple, in other words, there will be many, Economic disappointment, it seems, is an 80 many more lemons. That will still sound increasingly global affair. 2007 08 09 10 11 12 13 14 like a reasonable trade-offto lots of Ameri- † Source: IMF *Total factor productivity Forecast can investors. 7 68 Finance and economics The Economist April 11th 2015

Financial secrecy Cash in Argentina Cracking the shells Low bill

Buenos Aires A government in denial overinflation N MARCH 26th Argentina’s presi- blackmarket, which flourished after 2011 A hedge fund becomes an accidental dent, Cristina Fernández de Kirch- when Ms Fernández throttled foreign- hero ofanti-corruption campaigners O ner, announced a new100-peso note currency dealings. ULTURE” funds, which chase dis- honouring the Mothers ofthe Plaza de This erosion ofthe peso’s value “Vtressed borrowers for payment of Mayo, a group whose children were means that banks must handle ever- outstanding debt, have few friends outside “disappeared” during Argentina’s mil- growing volumes ofcash. Their lobby finance. Occasionally, though, their hunt itary dictatorship. The colourful note got groups complain this makes business forprofit aligns neatly with calls for greater raucous applause from Ms Fernández’s unwieldy and unsafe. ATM machines are financial openness by campaigners, win- clique. Others are less impressed. What hard to keep stocked, since their capac- ning the rapacious funds unlikely admir- the country needs, three private Argen- ities have remained the same even as the ers. So it has proved as Elliott Management tine banking organisations argued in a average withdrawal has increased from looks to enforce court rulings demanding letter to the Central Bankon April 1st, is 380 pesos in 2008 to 1,500 pesos today. that Argentina cough up $2 billion it owes not a new100-peso note—the country Things are equally inconvenient for to the hedge fund. A collateral benefit of now has three—but a more valuable one. consumers, who tend to make even big the fund’s hunt for assets is that it has put a Over the past decade the peso has purchases in cash. Some do so to shirk crack in the wall of secrecy around Ameri- tumbled and inflation, the official statis- taxes. Others preferto keep their savings can shell companies, which are among the tics on which have been manipulated for stashed under mattresses and in freezer world’s most impenetrable and thus often years, has increased sixfold. Despite boxes than to make deposits in the bank- used fornefarious purposes. these drains on Argentines’ purchasing ing system, which crashed during Argen- The case involves $65m suspected of power, Ms Fernández has refused to tina’s 2001financial crisis. Properties, having been embezzled and laundered allow a higher-value banknote. Today, cars and big events such as weddings are abroad by Lazaro Baez, a building tycoon 100 pesos buys a mere $11at the official commonly paid forwith paper notes. with tiesto Cristina Fernándezde Kirchner, exchange rate. It fetches only $8 on the Such transactions, always cumber- Argentina’s president, and her late hus- some, are becoming ridiculous. Before band (and predecessor), Nestor. Elliott the government stemmed access to for- joined the sleuthing, its logic being that eign currencies, many big purchases any stolen money was misappropriated were transacted in dollars, meaning a state funds and could therefore be grabbed smaller pile ofnotes. Today, says Axel to satisfy judgments in its favour. Brostrom, the boss ofBinswanger Argen- The money trail led to Nevada, home to tina, a property group, the volume of 123 brass-plate firms that Elliott suspected pesos needed to buy even a small apart- of being linked to the alleged fraud. But ment cannot be carried on foot. Many piercing the corporate veil in the state is far choose armoured trucks forsafety. Once from easy. Its record-keeping requirements the vehicle arrives at the site ofthe sale, are minimal even by American standards. bricks ofpesos are shuffled inside using Elliott sued in Nevada for information duffel bags. Counting the cash can take on the shell companies from their agent, up to fourhours. For commercial deals it MF Nevada, and, by association, Mossack can take even longer. Fonseca, the Panamanian law firm under- Argentines will probably be counting stood to be MF’s parent. Even if no records their cash bundles forsome time. With were held in Nevada, Mossackcould be or- only eight months left in office, Ms Fer- dered to disclose what was on file in Pana- nández is unlikely to allow a more valu- ma or a third jurisdiction, Elliott hoped. able banknote. To do so would acknowl- MF Nevada claimed, implausibly, that it edge that when it comes to inflation, she was independent ofMossack. In a series of Wallet-buster has long been counterfeiting the facts. legal skirmishes, Elliottestablished numerous links between MF and Mossack: for instance that MF sets up Nevada companies one of the biggest purveyors of such vehi- Mossack has challenged the alter-ego rul- exclusively for Mossack’s clients and that cles: Mossack is an industrial-scale incor- ing. The case will now move to a federal the employment contract of MF’s sole em- porator of anonymous companies. Shells court. Separately, Elliott has won an order ployee was signed by Mossack’s bosses. it helped set up (but is not legally liable for) in the Seychelles, requiringMossackto pro- Satisfied that MF was an “alter ego” of have been linked to tax evaders and klep- vide information on firms there linked to Mossack, a judge recently ruled that Mos- tocrats. Mossack says it does not advise cli- the Nevada entities. But the law firm is yet sack was subject to the jurisdiction of ents on the use of companies it forms, and to hand over any documents. American courts and had to comply with that “we have never been investigated for Elliott is confident it can build a clear the information subpoena. This was a big any crime, including money-laundering.” picture of the alleged fraud and use it to win for Elliott—and for anyone wanting to Elliott is not alone in trying to penetrate claw back some of what it is owed. Its ef- knowmore aboutshell companies. Ameri- the murk, but its combination ofmoney, te- forts have a collateral benefit, too. Argenti- ca is on some measures less compliant nacityand legal nousisrare. The fight isnot na’s elites are no longer universally hostile with anti-money-laundering standards for over, however. Ifthe relevant records are in towards the firm, some of them applaud- corporate vehicles than any other country. Panama, a country with strictsecrecy laws, ing its fight to expose the corruption of po- The ruling will also increase scrutiny of they are unlikely to be produced in a hurry. litical and business rivals. 7

70 Finance and economics The Economist April 11th 2015 Free exchange Outlaw economics

Policies to shiftincome from rich to poormay prove less effective than imagined seems. The data show that the median American holds some liquid wealth in bankdeposits, as well as illiquid wealth (retirement accounts and houses, net of mortgage debt), but hardly any shares or bonds. Surprisingly, although around 30% of households live from payslip to payslip, two-thirds of these cash-poor people have sizeable illiquid wealth. They do not fit neatly into the Robin Hood bifurcation between rich and poor: their cash barely covers outgoings but they sit on large illiquid assets. Housing debt is one reason people end up short of cash. Fo- cusing in on American homeowners, the researchers find that of those with small mortgages, only 20% live hand to mouth. But once total debt approaches the value ofthe house, a much higher number—close to 50%—are income-constrained. Age is also a factor. Although the likelihood ofgenuine poverty tends to fall with age as workers build up buffers, the chances ofbeing wealthy but cash-strapped peakaround the age of40. These findings matter because cash shortfalls affect behaviour. Using another dataset that tracks 5,000 American households, the researchers measure the reaction to short-term income shocks between 1999 and 2011. The results confirm Pigou’s hunch. Those with lots of liquid wealth spend just13% ofan unexpected NAworld ofinequalitythe egalitarian thiefisan attractive char- windfall; those living hand to mouth spend 24%. The wealthy- Iacter. From England’s Robin Hood to America’s Jesse James and but-income-constrained react most, spending 30% of any wind- Mexico’s Pancho Villa many countries lionise brave outlaws who fall, suggesting they are even more cash-strapped. That chimes take from the rich and give to poor. Economics, in its down-to- with a study by James Cloyne of the Bank of England and Paolo earth way, seemsto supporttheircause: since the cash-laden tend Surico ofLondon Business School, which found thatBritons with to save more, diverting income to penniless people who will large housing debts react sharply when taxes are raised or cut. In spend it immediately should boost consumption, and GDP. The other words, taxing those with large but illiquid assets could electoral calculus of redistribution appears favourable, too. The cause more ofa fall in spending than previously expected. best-offare small in number, so taxingtheirmansions seems likely to win more votes than it loses. But those who fancy taxing the Growing old conservatively wealthy should tread carefully. Designed badly, such policies If policymakers need to draw more nuanced distinctions be- could do more harm than good. tween rich and poor, they also ought not to assume that hard-up The idea that redistribution could help spur growth has long citizens will support redistribution. In a working paper, Viveki- attracted adherents. In 1920 Arthur Cecil Pigou argued* that an nan Ashok and Ebonya Washington of Yale University and annual transfer of resources from the “relatively rich to the rela- Ilyana Kuziemko ofPrinceton University explain that support for tively poor” would increase national output. Pigou discussed redistribution should, in theory, rise the more a worker’s earn- three uses for income: consumption or investment by the rich, ings fall short of a country’s mean income. Yet American atti- and consumption by the poor. Shifting purchasing power to the tudes have shown the opposite pattern: support for redistribu- poor would do little to hurt rich folks’ spending. The outcome of tion has remained flat or fallen as inequality has risen. soakingthe rich, decreased investment, would be outweighed by Much of this is down to age. Those below 40 follow the ex- purchases of better food, clothing and education by the poor. pected template: support for redistribution rises in line with in- Thus redistribution would boost output. equality. The over-65s are different, perhaps because there are Pigou’s argument rests on the idea that poor families would fewer in the “cash-poor” category. In the 1970s, when surveys be- spend more if they had the means, and that the wealthy would gan, they were more supportive of redistribution than the rest of be able to smooth consumption if they suddenly lost income. To the population. By the mid-2000s they were much less in favour, investigate whether this assumption holds, Greg Kaplan and Jus- doubtlessfearingthathelp forthe poorwould cuthealth benefits. tin Weidner of Princeton University and Giovanni Violante of Those twiddlingthe fiscal dials should mull on these findings. New YorkUniversity used huge microeconomic datasets to paint They suggest that the benefits of a fiscal stimulus package would a picture ofhousehold income and wealth across eight advanced be lower if targeted on the basis of income: short-term largesse economies. For each household they totted up income from sala- should be used on the wealthy, too. It also means redistribution ries, public handouts and private transfers such as alimony pay- from rich to poormay not be a one-way bet: in particular taxes on ments. They also measured liquid wealth: cash in bankaccounts, the wealthiest should be phased in slowly so they can liquidate along with bonds and stocks that are directly held and so could assets rather than cut spending. And politicians betting on their be quickly sold. The researchers were looking for families that Robin Hood credentials should be wary of greying voters. They lacked a buffer of liquid assets (or credit facilities) to offset short- may be more inclined to backthe SheriffofNottingham. 7 term changes in income. This group, whose consumption has to ...... adjust as income changes, are those that live “hand to mouth” * Studies cited in the article can be found at www.economist.com/tax15 and would be likely to spend most from a government windfall. But the term “hand to mouth” is not as straightforward as it Economist.com/blogs/freeexchange Property 71

The Economist April 11th 2015 72 Science and technology The Economist April 11th 2015

Also in this section 74 Robots with needles

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

Expanding the internet available, but prices tend to be high, bandwidth limited and data allowances small. Sky-Fi Many existing communications satellites fly in geostationary orbits, some 36,000km high, where they stay over a fixed point on the Earth’s surface. This has two unavoid- able drawbacks. The strength ofa radio signal falls off rapidly with distance, so beefy A numberofcompanies have bold ambitions to use satellites, drones and balloons transmitters and good power supplies are to bring the internet to the unconnected needed to contact them. The second pro- VER since the early 1990s, when it The top-down approach makes sense, blem is called latency, which is a delay in Emoved out of universities and was em- for the familiar terrestrial technologies are the signal. It can take at least half a second braced by the general public, the internet not well-suited to covering the globe with for a request for, say, a webpage to travel has grown relentlessly. Only 2% of the lots of fast connections. Providing the sort from the ground to the satellite and back world’s population was online in 1997. By of cabling common in rich cities to every down again, and then the page itself to 2014 the proportion had risen to 39%, or home on Earth would be prohibitively ex- make the same trip in reverse. That may about 3 billion people (see chart below). pensive. Mobile-phone masts do away not sound like much, but it is a tenth or less But that still leaves another 4 billion who with much of the wiring, but the masts of the speed of a wired connection, even live an internet-free existence. themselves still require “backhaul”—a before other internet latencies. “No one Most of the bereft are in the developing high-bandwidth connection to the inter- uses a geostationary satellite and says ‘I’ve world, where only 32% of people are on- net. Asa result, fastmobile networks are far solved my problem for ever,’” says Greg line, compared with 78% in rich countries. from ubiquitous even in rural parts of the Wyler, the founder ofOneWeb. And those numbers disguise plenty of lo- rich world. They are almost unheard of in cal variation. Just 19% of people in Africa poor-country villages. Lower they go were internet users in 2014. Like most infra- A satellite, however, can see (and be Mr Wyler’s firm plans to launch 648 small, structure, the internet is easiest to provide seen from) huge chunks ofthe planet’s sur- relatively simple satellites into much low- in cities. People scattered in the country- face. In theory, that allows the provision of er orbits of1,200km. This will provide a la- side—even those in rich countries—must of- data to millions of people at once. And sat- tency similar to that offered by a fixed-line ten do without. ellite internet services are already widely connection. And it will allow the use of Yet that may be about to change. Four much less-powerful aerials on the ground. technology companies are pursuing ambi- OneWeb will offer its services to airlines tious plans that could, eventually, provide Wider world web and military customers, as well as emer- reasonably fast, high-quality connections Individuals using the internet, % gency services and disaster-relieforganisa- to almost everyone on Earth. Google tions, although itplansto attractindividual dreams of doing so with a globe-circling 80 customers, too, through deals with local te- flock of helium balloons. Facebook’s plan Rich countries lecoms firms. Because a single satellite will requires a fleet of solar-powered robotic 60 be able to provide backhaul to dozens of aircraft, known as drones. And two firms— villages at a time, Mr Wyler hopes that lo- SpaceX, a rocket company, and OneWeb, a 40 cal operators will be able to afford to build startup based in Florida—aim to use World phone masts or internet base-stations in swarms of cheap, low-flying satellites. By rural schools, village centres and the like. 20 providing an easy route to the internet at Developing In the most remote areas, the masts might large, local telecoms firms should be able countries be powered by solar panels. Those who to provide high-speed, third- orfourth-gen- 0 are still disconnected in the rich world 1990 95 2000 05 10 14* eration mobile-phone coverage to areas far could sign up, too. Sources: World Bank; ITU *Estimate away from the big cities. But although low orbits offer much bet-1 The Economist April 11th 2015 Science and technology 73

2 terlatency, theyare also more complicated. with a total costforthe projectofaround $2 nance. That downtime offers another ben- Unlike geostationary satellites, low-flying billion. Mr Musk’s system could end up efit: drones can be upgraded a lot more eas- ones move relative to the ground, so hun- costing around $10 billion. Both will have ily than a satellite, which, once launched, dreds of them would be required to pro- to fight off competition from incumbent isstuckin space. Although their“footprint” vide reliable coverage across the entire satellite operators such as Intelsat, which of coverage will be much lower than even planet. When one satellite disappears over are busy launching new, more potent geo- a low-orbiting satellite, drones can circle the horizon, radio equipment on the stationary satellites. above one specific location that lacks con- ground needsswiftlyto connectto another There will also be rival technologies in nectivity. And, says Mr Maguire, launching one in view without the user noticing the air. Yael Maguire, the engineering direc- a drone is always going to be cheaper than (rather as mobile phones do when they tor of Facebook’s Connectivity Lab, thinks putting a satellite into orbit. move out ofthe range ofone mast and into that satellites are inherently inefficient: the Google has also been experimenting the range of another). Doing that success- world is 70% ocean, for one thing, so satel- with drones. But its chief idea is perhaps fully requires a lot of tricky signal process- lites will spend some of their time flying the simplest of all. “Project Loon”—so ing, says Mr Wyler. It is only in recent years over places where no one lives. And even called because, when it was first suggested, that aerials and chips have become so so- among poor countries, rudimentary con- the idea seemed crazy—is to gird the Earth phisticated and cheap enough to make nectivity is often available: about 85% of with a swarm of thousands of helium- such a system possible. OneWeb is helped the world’s population has access to at filled balloons. Each will carry a solar- in this by Qualcomm, an American firm least a second-generation mobile-phone powered wireless transmitter and, like that makes chips for mobile phones and network, he says, which can provide limit- Facebook’s drones, will be capable of re- has the necessary expertise—and is one of ed access. laying traffic from other balloons. In con- its early investors. trast to the rival companies, which are Mr Wyler is not alone in backing low- Send in the drones mostly concentratingon providingways to flyingsatellites. Elon Musk, a billionaire co- So, ratherthan tryingto provide global cov- deliver the internet to mobile-phone tow- founder of PayPal whose firms now in- erage, Facebook plans to plug specific gaps ers or Wi-Fi relays on the ground, Loon bal- clude Tesla, a maker of electric cars, and in the existing infrastructure. Despite its loons may be used as flying base stations, SpaceX, wantsto do somethingsimilar. His misgivings, it is investigating the use of sat- capable of talking directly to mobile de- constellation would orbit at a similar alti- ellites, as well as doing deals with mobile vices on the ground. In February 2014 the tude, but the satellites would be slightly operators in poor countries to provide ba- record duration for a flight was 50 days. more sophisticated than the sort that Mr sic access to a small number ofsites free for Google’s latest models are capable of re- Wyler intends to fly. Besides providing the usersofitsInternet.orgapp. ButFacebook’s maining airborne forsix months or more. internet to the unconnected, they would most ambitious project is for a fleet of so- Unlike Facebook’s drones, the balloons serve another market, too. Mr Musk has lar-powered, propeller-driven drones that will not have engines. But that does not pointed out that light travels more than will fly at altitudes of20km ormore, which mean they cannot be steered. The winds in 40% faster in space than it does inside a fi- is well above the level used by commercial the stratosphere, where the balloons will bre-optic cable. His low-flying satellites aviation, beaming an internet connection fly, are, as the name suggests, stratified. The could offer faster transmission of data over down to users on the ground. balloons will have the ability to change al- long distances than a cabled connection The drones will be able to communi- titude, letting them hitch a ride on winds could on the ground. For time-sensitive in- cate with each other using lasers, relaying blowing in different directions at different formation, such as that used in some finan- data until it can be passed to a ground sta- speeds. A constantly updated computer cial trades where split seconds count, such tion and on to the rest of the internet. The model will keep track of each balloon, di- a service might be highly appealing. firm has already carried out flight tests in recting their trips around the world so that Mr Musk and Mr Wyler both seem to Britain, where its drones are built by As- there will never—or only very rarely—be have the technical expertise to make these centa, a firm that Facebook bought for holes in the coverage. new satellite services a reality. One of Mr $20m in 2014. By taking advantage of different wind Wyler’s existing firms, O3B, specialises in Being solar-powered, the drones will speeds, the balloons should be able to providing satellite-internet to oil rigs, be able to stay aloft for months at a time, minimise the time they spend over unin- cruise ships and other businesses with re- coming down only for repairs and mainte- habited areas, drifting in slow winds over 1 mote operations. OneWeb has already been granted a slice ofprecious radio spectrum in which to transmit its data (SpaceX has not, although there is a rumour that it hopes to work around this by communi- cating with lasers instead.) Mr Musk is an experienced disrupter of technological industries, and SpaceX’s rockets offer some of the cheapest launch prices. With hundreds of satellites to put into orbit, that would keep his outgoings down. Indeed, costs will ultimately determine whether such projects can be successful. SpaceX and OneWeb’s potential customers in poorcountries will not be able to pay much for their connections. Both firms hope to take advantage of cheap, off-the- shelf parts, rather than the expensive be- spoke electronics typically employed in big satellites. Economies of scale should also help. OneWeb reckons its hundreds of satellites might cost just $350,000 each, One day Google’s balloon will go up 74 Science and technology The Economist April 11th 2015

populated areas while rising or falling into Medical robotics fastercurrents to speed them across oceans or deserts. “We have 30 years of wind- To the point speed data to do this with,” says Mike Cas- sidy, the man in charge of the project. And the balloons themselves will be able to measure wind speed, improving the ability of Google’s computers to marshal them BEER-SHEVA, ISRAEL around the world (and giving the firm the Researchers find ways to automate the insertion ofneedles most comprehensive set ofwind data held by any organisation—which it has prom- ROUND one in ten Americans is a try- type device that uses ultrasound, machine ised to share with weather forecasters and Apanophobe, stricken with a dread of vision and a robotic needle-dispenser to climatologists). needles. Some may have inherited a ten- make placing a central venous catheter a It all sounds grand on paper—perhaps dency to faint when jabbed; others devel- push-button affair. too grand. The satellite projects, in particu- op the phobia after a painful injection or a The operator lays the wireless device lar, are not a new idea: in the late 1990s, botched blood sample. Sadly, their fears on a patient’s arm, leg or neck and views during the heady days of the technology are occasionally well founded. an ultrasound image on a nearby comput- boom, several companies planned some- Central venous catheters, or central er screen. The system then identifies the thing similar, but none of their plans came lines, are commonly used with critically ill centre and edges of each blood vessel, as to fruition. Yet the internet is a much more patients to administerdrugs, fluids, food or deep as 15cm inside the body and as nar- importantpartofthe global economynow. blood products close to the heart. How- row as 0.5mm in width, making it particu- The hope is that demand for the myriad ever, placing needles inside veins deep in larly useful for treating children. Using a services available online will continue to the body is notoriously difficult. Some joystick, the operator aligns a target icon grow strongly, helping the business case. 15-30% of attempts suffer complications, over a vein. The system uses a tracking al- mainly punctured arteries that can lead to gorithm to keep the blood vessel aligned. Rules and regulations infection (around 250,000 cases in Ameri- When ready, the operator simply presses a Regulatory approval will also be crucial to ca annually), but also bleeding, collapsed button to insert the needle. the success of the projects. Facebook must lungs and even cardiac arrest. Failure rates The operator does not have to be a doc- contend with regulators in some countries in children can be higher still. A study in tor. Dr Guterman envisages his device be- that heavily restrict the use of drones. And 2013 by Stanford University School of ing used by most clinical staff, including Google will need to develop an infrastruc- Medicine and Lucile Packard Children’s paramedics. In a demonstration, your ture capable of launching and retrieving Hospital, found that over half the attempts medically untrained correspondent used what could amount to hundreds of bal- to place a central venous catheter in chil- the prototype to carry out a simulated nee- loons a day. Satellites must be disposed of dren failed on the first go. dle placement in under two minutes—less at the end of their lives, whether by boost- Portable ultrasound can be used to pro- than a quarter of the time that a doctor ing them into a stable “graveyard” orbit or duce an image ofthe position ofblood ves- typically needs for a manual procedure. having them burn up in the atmosphere. sels to help insert needles. This has re- The system will not deploy the needle if it Drones and balloons can crash, so safety duced errors, but the technique still cannotsense a suitable vein atthe target lo- regulators will need to be persuaded that requires a highly trained physician. Now a cation, minimising complications. the risks are acceptable. collaboration between Cincinnati Chil- The prototype is designed to place the The involvement of Google and, espe- dren’s Hospital and Ben Gurion University special needles required forpaediatric and cially, Facebook, which run some of the of the Negev in Israel hopes to automate adult central lines, but Dr Guterman ex- most popular sites on the web, has caused the entire process. A team led by Hugo Gu- pects the technology will also work well some raised eyebrows. Facebook’s Inter- terman, a robotics expert, has built a proto- for other needle-based procedures. These net.org app allows mobile-phone users to could include breast, prostate and liver bi- connect to the internet without incurring opsies, some cardiac procedures, and the charges. Butonlya handful ofwebsites can precise delivery of radiotherapeutics or be visited, one of which is Facebook itself, anti-cancer drugs to tumours. raising concerns about attempts to lock The system has already undergone suc- customers in. Perhaps to allay such suspi- cessful testing on live, anaesthetised pigs cions, Mr Maguire says that Facebook is and is now heading for pre-clinical testing considering making its drone designs and regulatory approval. But America’s available for anyone to copy, much as the Food and Drug Administration is under- firm did in 2011 with its designs for ad- standably wary of any fully autonomous vanced computer servers. medical devices. “Because it is an invasive The companies are optimistic that they procedure, you have to let a human make will succeed in spreading the internet: all the final decision,” says Dr Guterman. say that telecoms firms in poor countries The ultimate barrierto adoption will be are enthusiastic. SpaceX reckons its satel- persuading doctors that a robot can do a lites will be ready in five years. OneWeb good job. Dr Guterman is not alone in thinks it can open for business in 2019. thinking that it can. A number of startups Facebook will not specify a date, other are also developing robots to insert intra- than saying that its drones could start fly- venous needles. Some use ultrasound, ing commercially “fairly soon”. And Goo- others rely on infra-red vision. As such ro- gle expects to begin commercial trials ofits botscan fire needlesthrough skin and flesh balloons next year. If any of them suc- much faster than a human hand can, it ceeds, then the idea of the internet as a causes less damage to tissues and should “global village” will be more than just a mean less pain, too. Trypanophobes aren’t quaint metaphor. 7 the only ones who would welcome that. 7 Books and arts The Economist April 11th 2015 75

Also in this section 76 Looting Africa’s natural resources 76 John Aubrey, ﬁctional diarist 77 Alberto Manguel on curiosity 77 Caring about the dead and the dying 78 New ﬁction: Sarah Hall

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Contemporary art changes and, at the other end of the political spectrum, Hans Haacke’s controversial New on the Rialto opinion polls, which have, for over 40 years, asked the publicquestionsabout the politics and finances of individual art- world patrons. The show’s second main theme derives from Mr Enwezor’s zeal for discovering This year’s Venice Biennale will be even more surprising than usual, thanks to its and promoting the work of unknown Nigerian-born curator young artists, especially those from Africa KWUI ENWEZOR, the artistic director explicit geopolitical connotations, the and the African diaspora. One of the nota- Oof the 2015 Venice Biennale, which Biennale’s own sprawling show has gener- ble recent developments in the art world opens next month, speaks the slippery, ally shunned politics. Not this year. Titled has been the great commercial success of abstract language so common to high-fly- “All the World’s Futures”, Mr Enwezor’s artists of African descent, who are repre- ing contemporary-art curators. An exhibi- exhibition will include work by 136 artists sented by powerful dealers in London and tion, he declares, is “a project that will be from 53 countries—much of it concerned New York, such as Larry Gagosian, David located in a dialectical field of references with the “politics ofthe image”. Zwirner, Victoria Miro and Luhring Augus- and artistic practices”. Anyone wanting a MrEnwezorhas a reputation forbeing a tine. Serious contemporary-art buyers in- clear sense of what he thinks should look left-wing martinet. In the coming months, creasingly feel that their collections are at what he does rather than what he says. his politics, as well as his aesthetics, will be lacking if they do not include carefully For 30 years Mr Enwezor has been a put to the test as he mingles with the chosen works by leading blackartists. curator and critic, intent on stretching the millionaires who patronise the Biennale Mr Enwezor has invited a number of canon of traditional Western contempo- and the defiant artists that he has invited to well-known black names, such as Mr Li- rary art and testing what it might become. mockthe global financial establishment. gon, Chris Ofili, Wangechi Mutu, Ellen Gal- The youngest son of an intellectual Igbo Seasoned Biennale visitors will not be lagher, James Kerry Marshall, Isaac Julien, family, at 18 Mr Enwezor left Nigeria for surprised that artists are intent on portray- Theaster Gates and Lorna Simpson. They New York where he met a number of Afri- ing their disapproval of the 1%; two years all explore the history ofrace relations and can-American artists, including Glenn ago a British artist, Jeremy Deller, created a the politics of beauty, putting their own Ligon, a favourite ofBarackObama. mural in which a giant William Morris, a particular stamp on contemporary art. Seeking a way to make his mark, in 1994 Victorian social reformer, hurled a super- A new generation of artists who live he founded Nka, a journal about contem- yacht belonging to Roman Abramovich, a and work in Africa will also be on show. porary African art. Shortly after, Mr Enwe- Russian oligarch, to its doom. Mr Enwezor Ibrahim Mahama, a 28-year-old from zor got his first big break, curating the fledg- has invited Mr Deller back; this time he’ll Tamale, Ghana, will have the largest work ling Johannesburg Biennale. It won him, at create an installation honouring factory in the Biennale. Along a 200-metre stretch 35, one of Europe’s leading curatorial jobs, workers from the 1860s. of wall on the outside of the nearby Arse- overseeing Documenta, a prestigious exhi- The forces behind the global economy nale will be a giant tapestry made from bition that takes place in Kassel in Ger- are one of Mr Enwezor’s obsessions. This brightly patterned fabrics and the burlap manyeveryfive years. Nowhe headsHaus year, in the exhibition’s grandest room at sacks that are used to transport coal and der Kunst in Munich, a cutting-edge muse- the Palazzo delle Esposizioni, actors will the other commodities that form the back- um that is a natural springboard forVenice. read Karl Marx’s “Das Kapital” out loud: all bone ofthe Ghanaian economy. The Venice Biennale is made up of over four volumes, including the footnotes. Found materials like this are also an im- 80 national shows and a central exhibition Other works will act as counterpoints to portant feature of the work of many artists curated by the artistic director. Whereas Marx: Andreas Gursky’s record-priced, in Mozambique, where 15 years ofcivil war the national pavilions are often rich with large-scale photographs of stock ex- left behind tonnes ofarmaments. Gonçalo1 76 Books and arts The Economist April 11th 2015

2 Mabunda is one of several who use de- For Tom Burgis, a journalist with the Fi- ducer), but less so for its democratic tradi- commissioned weapons to make “gun nancial Times, the problem is, paradoxical- tions, excellent health and education throne” sculptures (another is Cristovao ly, Africa’s wealth of natural resources. He systems and stability. Canhavato—also known as Kester—whose isnotthe firstto write aboutcountries with “The LootingMachine” reads partly like workis one ofthe mainstays ofthe African the “resource curse”. Nor does his book a mystery thriller and partly like a court collection at the British Museum). add to the copious academic literature on submission, with its detailed descriptions Traditional artistic materials like paints the subject. ButMrBurgisseesAfrica—with ofthe corporate connections between Chi- and pencils are likely to be used for graphic a third of the Earth’s mineral deposits and nese companies with interests across the ends. Nidhal Chamekh, a young Tunisian, some of its weakest institutions—as being continent. Mr Burgis offers a rich collage of will show his “martyr drawings”, which particularly vulnerable to the predations examples showing the links between cor- depict flayed and dissected bodies in that arise from the combination ofmineral rupt companies and African elites. But he frightful anatomical detail. Meanwhile, wealth and poor governance. fails to argue convincingly that natural re- Karo Akpokiere, from Nigeria, will present “The LootingMachine” is the fruit of Mr sources are the primary, or even a major, a series of droll paintings inspired by the Burgis’s many travels through Africa, from source ofAfrica’s troubles. 7 fast-moving pop culture that has emerged bars in Port Harcourt to gleaming new of- in Lagos, Africa’s most populous city. Defi- fice towers in Luanda, as well as his work ant, satirical and full ofenergy, these works asan investigative journalist. He presents a John Aubrey, fictional diarist embody the new artistic forces that Mr lively portrait of the rapacious “looting Enwezor is bringing to the world’s biggest machine” in which international mining A man for all art exhibition. 7 companies contrive with local African elites to strip the continent of its resources. seasons In doing so he is not short of anecdotes Africa’s natural resources (nor copious footnotes). In Angola he points to a small group that controls the John Aubrey: My Own Life. By Ruth Scurr. Blood earth state and has amassed great wealth. In Chatto & Windus; 518 pages; £25 parts of Nigeria these resource rents are shared between an elite that controls the OHN AUBREY (1626-97) was many state and armed warlords who held it to Jthings: antiquarian, biographer, topogra- ransom through blowing up pipelines and pher, naturalist and collector ofetymolo- kidnapping oil workers. gies, folklore and old wives’ tales. Sadly, he The Looting Machine: Warlords, Tycoons, “In the place of the old empires are hid- was not, like his contemporary Samuel Smugglers and the Systematic Theft of den networks of multinationals, middle- Pepys, a diarist. Now Ruth Scurr, a Cam- Africa’s Wealth. By Tom Burgis. men and African potentates,” Mr Burgis bridge academic, has put that right. Draw- PublicAffairs; 319 pages; $27.99. William says. “These networks fuse state and cor- ing on his manuscripts and letters, she has Collins; £20 porate power. They are aligned to no na- fashioned, as chronologically as possible, FRICANS ask many questions about tion and belong instead to the transna- an autobiography in the form of the diary Awhat ails a continent that abounds tional elites that have flourished in the era that Aubrey never wrote. It fits him per- with natural riches yet suffers, too, from ofglobalisation.” fectly. Aubrey made himself so present in greedy rulers, bad government and Yetforall the rhetorical flourish, MrBur- his pages, and wrote so informally—so “tu- entrenched poverty. The replies they get gis fails to explain why some states with multuarily”, as he liked to say—that Ms range from the outright racist to the climat- bountiful natural resources manage them Scurr’s invention feels entirely natural. She ic (countries in the tropics sufferfrom more in ways that deepen democratic institu- has modernised his spelling and stitched parasites and disease than in more temper- tions and benefit the poor. One need not in clarifications, but on the whole this is ate latitudes) to the political, with many look as far as Norway for this. Botswana Aubrey speaking. blaming colonialism or so-called neo- gets a mention for its economic depen- Aubrey published only one book, com- colonialism forthe continent’s woes. dence on diamonds (it is a major pro- plaining to the end that so much remained unfinished—“upon the loom”, as he put it. Now the reader can watch him at the warp and weft—observing, thinking and asking questions. Sea shells on hill tops, for example: was the world once covered in water? “Ovallish” pebbles: were they once soft? “Is it possible to find the latitude of a place by a quadrant in the dark without sun or stars?” Travelling the country, he sampled, sniffed and tasted: on Dundery Hill “I noticed that there was some weed or flower in the ditch…My nose was affected with a smell that I knew but it did not come immediately to mind…To my taste it seems to have aliquantulum aciditatis and is perhaps vitriolate.” What fascinated him most, though, was England’s past, its ancient remains, tradi- tions and stories. He talked to everyone: “I do not disdain to learn from ignorant old women.” And when he missed a chance he groaned. Old Mr Beeston, for example, Tapping away at Africa’s wealth who had known the poets he was writing1 The Economist April 11th 2015 Books and arts 77

2 about: “I am too late! Old Mr Beeston has “What Are We Doing Here?” Those are the died…Alas!Alas! Those details have gone sort ofquestions that scientists and philos- with him into oblivion…” It was lonely ophers either spend a lifetime working on work, not much rated then. Despite his or teach their students not to ask. Nobody election to the newly founded Royal Soci- should expect answers and Mr Manguel ety, he called himself merely “a scurvy an- does not promise them tiquary”. At the same time, he could not His questions instead prompt sugges- help believing in what he did. In the midst tive insights on the relevant theme from of a survey of Wiltshire, he confessed to the great books of the world: Homer, Plato, himself: “I feel as though I am working un- the Sanskrit Vedas, the Hebrew Talmud, der a divine impulse to complete this task: the Christian Gospels, the Persian and Ara- nobody else will do it, and when it is done bic classics. Mr Manguel offers also his no one hereabouts will value it: but I hope own thoughts. the next generation will be less brutish.” The topics to which his big questions Aubrey’s “diary” is partly a lament for lead him include exile, illness, climate England. Ruins lay everywhere: the mon- change, pets, cultural barriers, social iden- asteries dissolved by Henry VIII, the cas- tities, Auschwitz, Hiroshima, financial tles blown up in the civil wars, the stained greed and death. Some of those topics are glass smashed by Puritan iconoclasts. De- too modern for the ancients to have any- scribing a friend who stopped bung holes thing direct to say. Others are timeless. But in beer barrels with old monastic manu- to say much that is striking, new or true scripts, he felt his “eyes prick with tears at about those would take aphoristic gifts or the thought”. And yet he is filled with an iran astringency of mind that Mr Manguel repressible zest—from his wonder at the does not claim to possess. To call him to- stone circlesatAveburyto hisdelight in the day’s Montaigne, as one of the jacket Divine Dante Yorkshire women who “still kneel on the quotes has it, is pure puffery, as he would bare ground to hail the new moon every be the first to acknowledge. science, on the other hand, had not yet month”. Ms Scurr has done him proud. 7 What saves “Curiosity” from trying to found its own place for them. Those anti- say something about everything and gives quarians, you could say, were doing it a shape it would otherwise lackis the au- pre-science. Mr Manguel’s imagination Reading thor’s love of Dante. Fronting each chapter occupies a similar in-between space, is an arresting late 15th-century woodcut somewhere between fantasy and knowl- Cabinet of illustratingone orotherofthe Italian poet’s edge. Few readers have collected more imaginary encounters with the dead in curiositiesfrom the world ofbooksthan he curiosity hell, purgatory and heaven from the has. Do not bet your life on everything “Divine Comedy”. “Curiosity” tellsyou. Relish the celebration Mr Manguel picks episodes that shed ofDante and treatthe restlike an antiquari- lightforhim on hischosen themes. But that an’s cabinet. 7 Curiosity. By Alberto Manguel. Yale is not why his Dantean passages sparkle. University Press; 377 pages; $30 and £18.99 Rather they show us on their own account LBERTO MANGUEL has a curious what generous, attentive reading can do. Caring about the dead and the dying Amind, quirky, inquisitive and fascinat- Thanks to finely tuned responses, backed ed by detail. A literary omnivore, he owns by ample quotation, Mr Manguel reaches How to remember 30,000 books and boasts an output of back seven centuries and almost takes writing to match. For 35 years Mr Manguel Dante by the hand. has published on average a book a year. Although more an exercise in curiosity Though he ranges across many genres, he than a study of the idea itself, Mr Man- is best known for artfully arranged miscel- guel’s book has illuminating things to say Bettyville: A Memoir. By George Hodgman. lanies about books and libraries. about that too. As a mental disposition cu- Viking Adult; 288 pages; $27.95 Reading Mr Manguel is like taking a city riosity, he tells us, has had a double reputa- walk or an unhurried meal with an eru- tion as virtue and vice. It betokens both The Light of the World: A Memoir. By dite, cosmopolitan friend. An Argentine care with detail, love oftruth and modesty Elizabeth Alexander. Grand Central diplomat’s son, he knows many lan- about what we can’t know or shouldn’t Publishing; 224 pages; $26 guages, and he lived in many places before ask but also pedantic fussiness, snooping settlingin France. Fewculturesorhistorical and intellectual pride. EOPLE preserve their loved ones in periods are closed to him. He hops knowl- A different aspect is “the curiosity”, Pcreative ways. Henry Ford so admired edgeably and divertingly from topic to top- which has a fine chapter to itself called his friend Thomas Edison that he suppos- ic. Yethe neverstraysfarfrom histrue inter- “How Can We Put Things in Order?” In the edly trapped his last breath in a test tube. est, reading itself. 16th, 17th and 18th centuries, antiquarians Others wield their pens in tribute. Two As befits a miscellany, “Curiosity”, his collected odd artefacts and natural objects new memoirs try to capture the essence of latestwork, isreallymanybooksin one: ru- they found interesting, strange or simply the people the authors love but have lost. minations on life’s big questions, answers appealing—for example, minerals, sea Elizabeth Alexander, a professor of from the great books of the past, a loving creatures, small carvings from far lands. African-American studies at Yale and homage to Dante and thoughts on curios- They were exhibited, in no special order, in author of several books of poems and ity itself. Those last two topics work much “cabinets of curiosities”. Clever fakes essays, is best known for composing better than the first two. shared shelfspace with genuine finds. “Praise Song for the Day”, a poem for Ba- Each of the 17 chapters opens with a big Such items were curious in having no rack Obama’s inauguration in 2009. Her unhedged question, such as “How Do We obvious place in the settled cosmic inven- tendermemoirhinges on a different histor- Reason?” Or “What is an Animal?” and tory of the old medieval world. Modern ic day in her own life, when her Eritrean1 78 Books and arts The Economist April 11th 2015

2 husband, Ficre Ghebreyesus, suddenly New fiction died of heart disease, only four days after his 50th birthday. One of their sons found Born to be wild him unresponsive by the treadmill in their basement in New Haven, Connecticut. “The Lightofthe World” isa storyabout the shock of sudden loss and forging forward afterward. It is part poetic elegy, part The Wolf Border. By Sarah Hall. Harper; A storyline involving a protester in a wolf scrapbook. She pins snippets of poems 435 pages; $25.99. Faber & Faber; £17.99 maskand sinister threats aimed at the that evoke their marriage and family, and project is never resolved and the darker recipes that Ficre, a chef and prolific paint- HIS new novel by Sarah Hall, whose side ofthe earl’s family does not feel fully er, enjoyed, onto an impressionistic can- Tearlier workhas twice been nominat- explored. Nonetheless, Rachel’s journey vas. Their home was a hearth, where ed forthe Man Booker prize, makes for is unfeigned and captivating and Ms everyone gathered to enjoy food and rapacious reading. Like her debut, Hall’s writing demands recognition. She laughter. As artists, Ms Elizabeth and her “Haweswater”, “The WolfBorder” is set has a golden touch, texturing her pages husband shared a bond. “He painted to fix in her birth place, Cumbria, and revolves with rich metaphor and lyrical prose, something in place,” she writes. “And so I around the zealous plans ofthe Earl of especially when it comes to the natural write to fix him in place, to pass time in his Annerdale to introduce “the god ofall world and the Annerdale estate with its company, to make sure I remember, even dogs”, the wolf, to his estate. As those “russet ferns and the knitted furze”, though I will never forget.” surrounding the project get pulled into its where the wolves appear, “smoking Ms Alexander is at her best when she orbit, the lives ofwolves become en- through the brown bracken…” and a evokessweepingemotional tracksthrough twined with the lives ofmen; political wolf’s “pale coat glows in the winter simple imagery. In the hospital room games, murky truths and the ever proble- gloom like halogen.” immediately after her husband is declared matic dynamics offamily are laid bare in Ms Hall has deftly taken on a smorgas- dead, she focuses on his penis lyingagainst an absorbing page-turner. bord ofreal, current issues. The reintro- histhigh, “which ismine alone…The penis The story’s protagonist is Rachel duction ofkeystone creatures into Brit- with which he actually made the human Caine, a wolfexpert who has spent most ain, including beavers, lynx and wolves, beings who are our children, is sign and ofthe last decade on a remote reserva- is part ofa rewilding movement that has symbol and substance ofwhat I have lost.” tion in Idaho. She returns home to the been gathering momentum in recent Ms Alexander’s meditations are mostly Lake District to take on the ambitious years. Many ofthe characters in the book personal, but her book asks bigger ques- rewilding project but also to confront her will also be familiar from the current tions, such as how to cope with death past. Together with her half-brother political climate, from the “beige Eto- when there are no set rules to guide her. Lawrence, they try to move out ofthe nians” ruling the country to Scotland’s George Hodgman, a former editor at shadow left by their toxic mother Binny, tartan warriors calling forindependence. Vanity Fair who leavesNewYorkto care for with her “body made to ruin men”, who But in the hinterland between truth hisnonagenarian mother, Betty, in Missou- had moved them to the area as children and fiction the author is able to examine ri, also desperately seeks structure. Betty and was “practically Roman in her oper- the emotion behind the issue and the has mild dementia and a temper, but she ations: arriving in the village, taking the people behind the politics. The earl, “a wants her son to stay with her so that she spoils, then razing everything to the behemoth among ordinary men”, is a can continue living at home. In Missouri ground.” As adults, Lawrence and Rachel study ofpower and the old boys’ club. Mr Hodgman is a misfit, but writes with must take responsibility for the people Although Ms Hall’s commentary on the humour and self-mockery that bring levity they have become. Lawrence struggles House ofLords feels a bit outdated— to the painful, central subject of “Betty- with the demons that punctuate his hereditary peers no longer dominate— ville”: caring for a parent on the threshold seemingly normal life and Rachel must her point remains strong and unequivo- ofdeath. address her own destructive tendencies cal. England is “a country particularly Betty’s frail exteriormasks herfieriness. ifshe is to form real relationships and owned”. This is dangerous even ifit may “I’m 90 years old and everybody in town is become a mother herself. be the only way forBritain to return to telling me what to do!” she harrumphs. Mr It is a compelling, psychological owning a truly untamed place, “where Hodgman’s portrayal ofhis motheris chill- drama; one that perhaps dominates to the streetlights end and wilderness be- ingly accurate. He captures a generation of the detriment ofother parts ofthe book. gins. The wolfborder.” widows who came ofage at a time when it was taboo to air vulnerabilities and emo- tions. Mr Hodgman is gay and cosmopolitan, but he only talks about his sexuality once with Betty, who confesses his father had never discussed it with her, even pri- vately. Betty was a loving, if unsentimen- tal, mother. She wears a locket with pictures of strangers in it, never having replaced the stock photos. She signs birthday cards to her closest friends with her full name. “Bettyville” is a moving book about what remains unsaid and undone. Ms Alexander’s memoir is more uplifting. Both books are occasionally sentimental, but so are most mourners when they recol- lect their loved ones. Even in their faults, these memoirs feel authentic and true. 7 Courses 79

The Economist April 11th 2015 80 Courses Tenders

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EXPRESSIONS OF INTEREST FSD AFRICA – FINANCIAL FRONTIERS CHALLENGE FUND FSD Africa (FSDA), a fi nancial sector deepening trust, aims to support fi nancial sector development across the African continent by encouraging skills development, transfer of knowledge (e.g. research, business models, policy approaches etc.) across borders, and by building the capacity of fi nancial systems. FSDA’s largest single budgetary allocation in its strategic plan is for change management projects to strengthen organisational capacity in banks and other FSPs. FSDA wishes to identify and contract a consultancy or advisory fi rm to design and manage an FSDA-funded challenge fund (‘’Challenge Fund’’) that will attract competitive proposals from fi nancial service providers (FSPs) in sub- Saharan Africa (‘’SSA’’) aimed at increasing access to fi nancial services in SSA. The Challenge Fund will seek to: • provide FSPs with resources to allow them to carry out a diagnostic of their core capabilities and capacity building needs • incentivise FSPs in SSA to develop compelling proposals and implement strategies that will have an impact on fi nancial inclusion • encourage FSPs to partner with competent consultants and advisory fi rms across SSA on both proposal – writing and subsequent project implementations • stimulate markets in at least three service industries that are important for FSPs : data analytics, e-learning and executive coaching • build a pipeline of projects for FSDA that are in alignment with its strategic objectives • build FSDA’s brand and project its role as a catalyst for fi nancial sector development in SSA EOIs should contain: • names, CVs and location of key individuals • an outline of team structure • a short statement of why you believe your fi rm has the right experience and blend of expertise for this assignment • a short description of anticipated risks and how you would expect to deal with these • confi rmation of your fi rm’s availability to carry out this work, giving details of any prior calls on your fi rm’s time • any other information that you believe should be taken into account in the shortlisting process Please note – a fully costed proposal and/or detailed work plan is not required at this stage. Your EOI should not exceed 3 sides of A4 (font size 11), excluding CVs, company brochures etc. EOIs should be sent to [email protected] under a subject line reading ‘’Expression of interest: Financial Frontiers Challenge Fund”. Detailed EOI can be obtained from FSD Africa’s website www.fsdafrica.org (opportunities section) Expressions of interest must be received by FSD Africa no later than 1200 (EAT), Tuesday 19th May, 2015 The Economist April 11th 2015 Tenders Announcements 81

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Prices correct at time of going to print. Maddox Street image is computer generated. Economic and ﬁnancial indicators The Economist April 11th 2015 83

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* 2015† latest latest 2015† rate, % months, $bn 2015† 2015† bonds, latest Apr 8th year ago United States +2.4 Q4 +2.2 +3.0 +3.5 Feb nil Feb +0.3 5.5 Mar -410.6 Q4 -2.2 -2.5 1.91 - - China +7.3 Q4 +6.1 +6.9 +6.8 Feb +1.4 Feb +1.4 4.1 Q4§ +219.7 Q4 +2.7 -2.8 3.47§§ 6.20 6.20 Japan -0.8 Q4 +1.5 +1.0 -2.6 Feb +2.2 Feb +0.7 3.5 Feb +46.6 Feb +2.3 -6.9 0.36 120 102 Britain +3.0 Q4 +2.5 +2.6 +1.2 Jan nil Feb +0.3 5.7 Dec†† -161.3 Q4 -4.5 -4.4 1.72 0.67 0.60 Canada +2.6 Q4 +2.4 +2.0 +4.1 Jan +1.0 Feb +1.0 6.8 Feb -39.3 Q4 -2.9 -1.8 1.34 1.25 1.09 Euro area +0.9 Q4 +1.3 +1.4 +1.2 Jan -0.1 Mar +0.1 11.3 Feb +290.6 Jan +2.7 -2.2 0.16 0.93 0.72 Austria -0.2 Q4 +0.4 +1.0 -0.1 Jan +0.8 Feb +0.9 5.3 Feb +3.2 Q4 +1.5 -2.2 0.33 0.93 0.72 Belgium +1.0 Q4 +0.7 +1.3 +0.9 Jan -0.4 Mar +0.2 8.5 Feb +9.4 Dec +0.5 -2.5 0.41 0.93 0.72 France +0.2 Q4 +0.5 +1.1 +0.6 Jan -0.3 Feb +0.1 10.6 Feb -19.7 Jan‡ -0.9 -4.2 0.47 0.93 0.72 Germany +1.5 Q4 +2.8 +1.8 -0.3 Feb +0.3 Mar +0.3 6.4 Mar +290.1 Feb +7.6 +0.7 0.16 0.93 0.72 Greece +1.2 Q4 -1.5 +1.8 +0.1 Jan -2.2 Feb -0.9 26.0 Dec +1.7 Jan +2.7 -3.4 11.48 0.93 0.72 Italy -0.5 Q4 -0.1 +0.5 -2.2 Jan -0.1 Mar +0.1 12.7 Feb +42.6 Jan +1.9 -3.0 1.21 0.93 0.72 Netherlands +1.4 Q4 +3.2 +1.5 -1.5 Jan +0.4 Mar +0.2 8.9 Feb +90.2 Q4 +9.2 -2.0 0.32 0.93 0.72 Spain +2.0 Q4 +2.7 +2.4 -2.0 Jan -0.7 Mar -0.6 23.2 Feb +11.3 Jan +0.4 -4.5 1.18 0.93 0.72 Czech Republic +1.2 Q4 +1.5 +2.9 +2.9 Jan +0.2 Mar +0.2 7.2 Mar§ +1.4 Q4 -0.4 -1.7 0.44 25.4 19.9 Denmark +1.5 Q4 +2.1 +1.6 -1.2 Jan +0.2 Feb +0.7 4.9 Feb +22.0 Feb +5.6 -3.0 0.29 6.93 5.41 Hungary +3.4 Q4 +3.2 +2.8 +6.0 Feb -0.6 Mar +1.0 7.7 Feb§†† +5.7 Q4 +4.6 -2.6 3.20 275 221 Norway +3.2 Q4 +3.7 +1.0 -1.1 Jan +1.9 Feb +1.4 3.9 Jan‡‡ +42.5 Q4 +11.3 +7.5 1.42 8.06 5.98 Poland +2.8 Q4 +2.8 +3.3 +4.9 Feb -1.6 Feb +0.4 11.7 Mar§ -6.3 Jan -2.0 -1.4 2.27 3.72 3.02 Russia +0.4 Q4 na -4.1 -1.4 Feb +16.9 Mar +15.2 5.8 Feb§ +59.5 Q4 +3.7 -2.3 11.41 53.6 35.7 Sweden +2.6 Q4 +4.6 +2.6 -3.9 Feb +0.1 Feb +0.2 8.4 Feb§ +35.7 Q4 +5.9 -1.3 0.41 8.67 6.50 Switzerland +1.9 Q4 +2.4 +0.9 +2.7 Q4 -0.9 Mar -0.9 3.2 Feb +49.1 Q4 +7.8 +0.3 -0.06 0.97 0.88 Turkey +2.6 Q4 na +3.4 +1.0 Feb +7.6 Mar +6.6 10.9 Dec§ -42.9 Jan -4.5 -1.7 8.19 2.60 2.10 Australia +2.5 Q4 +2.2 +2.5 +3.3 Q4 +1.7 Q4 +1.7 6.3 Feb -40.1 Q4 -3.0 -2.3 2.33 1.30 1.07 Hong Kong +2.2 Q4 +1.5 +2.5 -3.7 Q4 +4.6 Feb +3.3 3.3 Feb‡‡ +5.6 Q4 +1.8 +0.1 1.43 7.75 7.75 India +7.5 Q4 +4.0 +7.5 +2.6 Jan +5.4 Feb +5.2 8.8 2013 -27.4 Q4 -0.9 -4.1 7.79 62.2 60.1 Indonesia +5.0 Q4 na +5.2 +5.0 Jan +6.4 Mar +5.9 5.9 Q3§ -26.2 Q4 -3.1 -1.9 7.32 12,962 11,255 Malaysia +5.8 Q4 na +5.5 +7.0 Jan +0.1 Feb +2.9 3.1 Jan§ +15.2 Q4 +3.4 -4.4 3.87 3.63 3.24 Pakistan +5.4 2014** na +5.7 +1.1 Jan +2.5 Mar +4.6 6.2 2013 -3.5 Q4 -0.6 -5.1 9.35††† 102 97.2 Singapore +2.1 Q4 +4.9 +3.1 -3.6 Feb -0.3 Feb +0.4 1.9 Q4 +58.8 Q4 +22.2 -0.7 2.10 1.36 1.25 South Korea +2.7 Q4 +1.1 +3.2 -4.7 Feb +0.4 Mar +1.1 4.6 Feb§ +94.4 Feb +7.7 +0.5 2.11 1,093 1,051 Taiwan +3.3 Q4 +4.8 +3.8 +3.3 Feb -0.6 Mar +1.0 3.7 Feb +65.3 Q4 +12.3 -1.2 1.53 31.1 30.3 Thailand +2.2 Q4 +7.1 +3.9 +3.6 Feb -0.6 Mar +1.3 0.8 Feb§ +14.2 Q4 +2.3 -1.9 2.61 32.6 32.3 Argentina +0.4 Q4 +0.1 -0.8 -2.1 Feb — *** — 6.9 Q4§ -5.1 Q4 -1.4 -3.1 na 8.85 8.00 Brazil -0.2 Q4 +1.3 -0.9 -9.1 Feb +8.1 Mar +7.6 5.9 Feb§ -89.8 Feb -3.9 -5.3 12.58 3.05 2.20 Chile +1.8 Q4 +3.8 +3.0 -0.5 Feb +4.2 Mar +3.6 6.1 Feb§‡‡ -3.0 Q4 -1.5 -2.0 4.52 612 546 Colombia +3.5 Q4 +2.9 +3.9 -2.5 Jan +4.6 Mar +3.9 9.9 Feb§ -19.8 Q4 -6.1 -2.1 6.79 2,492 1,933 Mexico +2.6 Q4 +2.7 +2.9 +0.3 Jan +3.0 Feb +3.1 4.5 Feb -26.5 Q4 -2.3 -3.4 5.62 14.9 13.1 Venezuela -2.3 Q3 +10.0 -3.2 +0.8 Sep +68.5 Dec +65.9 7.9 Jan§ +10.3 Q3 -1.8 -15.1 11.03 6.30 6.35 Egypt +4.3 Q4 na +4.0 -5.3 Jan +11.5 Mar +9.7 12.9 Q4§ -5.8 Q4 -1.3 -10.7 na 7.63 6.97 Israel +3.3 Q4 +6.8 +3.5 +0.6 Jan -1.0 Feb -0.2 5.3 Feb +9.0 Q4 +4.8 -3.0 1.47 3.93 3.48 Saudi Arabia +3.6 2014 na +2.5 na +2.1 Feb +2.7 6.0 2014 +120.1 Q3 -1.7 -10.4 na 3.75 3.75 South Africa +1.3 Q4 +4.1 +2.1 -1.5 Jan +3.9 Feb +4.5 24.3 Q4§ -19.1 Q4 -5.0 -3.7 7.62 11.8 10.5 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. ***Official number not yet proven to be reliable; The State Street PriceStats Inflation Index, Feb 30.0%; year ago 32.22% †††Dollar-denominated bonds. 84 Economic and ﬁnancial indicators The Economist April 11th 2015

Markets % change on The Economist poll of forecasters, April averages (previous month’s, if changed) Dec 31st 2014 Real GDP, % change Consumer prices Current account Index one in local in $ Low/high range average % change % of GDP r Ap 8th week currency terms 2015 2016 2015 2016 2015 2016 2015 2016 United States (DJIA) 17,902.5 +1.2 +0.4 +0.4 Australia 1.9 / 3.0 2.3 / 3.5 2.5 (2.6) 2.9 (3.1) 1.7 2.7 -3.0 (-2.8) -2.5 (-2.4) China (SSEA) 4,187.7 +4.9 +23.6 +23.6 Brazil -2.0 / -0.3 0.5 / 2.3 -0.9 (-0.4) 1.2 (1.4) 7.6 (6.9) 5.9 (7.1) -3.9 -3.7 (-3.8) Japan (Nikkei 225) 19,789.8 +4.0 +13.4 +13.3 Britain 2.4 / 2.8 1.9 / 3.1 2.6 2.4 0.3 (0.5) 1.7 (1.8) -4.5 (-4.3) -3.8 (-3.7) Britain (FTSE 100) 6,937.4 +1.9 +5.7 +1.1 Canada 1.4 / 2.9 1.5 / 2.8 2.0 (2.1) 2.1 (2.3) 1.0 (1.2) 2.1 -2.9 (-2.5) -2.6 (-2.1) Canada (S&P TSX) 15,213.6 +1.8 +4.0 -3.9 China 6.5 / 7.3 6.2 / 7.4 6.9 (7.0) 6.7 (6.9) 1.4 (1.7) 2.0 (2.2) 2.7 2.6 (2.5) Euro area (FTSE Euro 100) 1,238.9 +0.8 +19.5 +6.6 France 0.7 / 1.3 0.8 / 2.1 1.1 (0.9) 1.5 (1.4) 0.1 1.1 (1.2) -0.9 (-1.1) -0.7 (-1.0) Euro area (EURO STOXX 50) 3,742.6 +0.7 +18.9 +6.1 Germany 1.1 / 2.5 1.5 / 3.0 1.8 (1.6) 1.9 (1.8) 0.3 (0.2) 1.6 7.6 (7.2) 7.3 (6.7) Austria (ATX) 2,590.4 +1.9 +19.9 +6.9 India 6.3 / 8.1 6.8 / 8.9 7.5 (6.7) 7.9 (7.1) 5.2 (5.0) 5.4 (5.3) -0.9 (-1.3) -1.0 (-1.5) Belgium (Bel 20) 3,831.1 +2.4 +16.6 +4.0 Italy 0.1 / 0.9 0.3 / 1.6 0.5 1.1 0.1 (nil) 1.0 1.9 (1.7) 1.9 (1.7) France (CAC 40) 5,136.9 +1.5 +20.2 +7.2 Japan 0.4 / 1.6 1.0 / 2.2 1.0 (1.1) 1.7 0.7 (0.9) 1.1 (1.4) 2.3 (1.6) 2.4 (1.7) Germany (DAX)* 12,035.9 +0.3 +22.7 +9.5 i Greece (Athex Comp) 767.9 +0.3 -7.1 -17.1 Russ a -5.6 / -3.0 -2.5 / 2.0 -4.1 (-4.0) 0.2 (-0.2) 15.2 (13.6) 6.9 (6.5) 3.7 (3.5) 3.9 (3.2) i Italy (FTSE/MIB) 23,578.7 +0.9 +24.0 +10.6 Spa n 1.4 / 3.0 1.3 / 3.0 2.4 (2.1) 2.2 (2.0) -0.6 1.1 0.4 (0.5) 0.4 (0.6) i Netherlands (AEX) 497.2 +1.5 +17.1 +4.5 Un ted States 2.5 / 3.4 2.4 / 3.5 3.0 (3.2) 2.8 (2.9) 0.3 (0.4) 2.1 (2.3) -2.2 -2.3 Euro area Spain (Madrid SE) 1,182.4 +0.7 +13.4 +1.2 1.1 / 1.8 1.1 / 2.5 1.4 (1.3) 1.7 (1.6) 0.1 (nil) 1.2 2.7 (2.4) 2.6 (2.3) Czech Republic (PX) 1,047.6 +0.3 +10.7 -0.1 Sources: Bank of America, Barclays, BNP Paribas, Citigroup, Commerzbank, Credit Suisse, Decision Economics, Deutsche Bank, Denmark (OMXCB) 874.2 +1.5 +29.5 +15.1 Economist Intelligence Unit, Goldman Sachs, HSBC, ING, Itaú BBA, JPMorgan, Morgan Stanley, Nomura, RBC, RBS, Schroders, Scotiabank, Société Générale, Standard Chartered, UBS. For more countries, go to: Economist.com/markets Hungary (BUX) 20,804.9 +5.9 +25.1 +18.5 Norway (OSEAX) 691.5 +3.5 +11.6 +3.9 Poland (WIG) 54,647.1 +1.1 +6.3 +1.5 Other markets The Economist commodity-price index Russia (RTS, $ terms) 988.3 +8.6 +12.4 +25.0 2005=100 % change on % change on Sweden (OMXS30) 1,686.8 +1.0 +15.2 +4.1 Dec 31st 2014 one one i r r r Sw tze land (SMI) 9,247.8 +1.2 +2.9 +5.9 Index in local in $ Ma 31st Ap 7th* month year r one Tu key (BIST) 82,799.4 +2.0 -3.4 -12.9 Apr 8th week currency terms Dollar Index Australia (All Ord.) 5,928.3 +1.6 +10.0 +3.5 i Un ted States (S&P 500) 2,081.9 +1.1 +1.1 +1.1 All Items 141.4 143.1 +0.6 -17.8 Hong Kong (Hang Seng) 26,236.9 +4.6 +11.1 +11.2 United States (NAScomp) 4,950.8 +1.4 +4.5 +4.5 Food 157.2 160.0 -0.3 -21.6 India (BSE) 28,707.8 +1.6 +4.4 +5.8 China (SSEB, $ terms) 315.7 +1.4 +8.6 +8.6 Indonesia (JSX) 5,486.6 +0.4 +5.0 +0.3 Japan (Topix) 1,588.5 +3.9 +12.9 +12.8 Industrials Malaysia (KLSE) 1,850.3 +1.3 +5.1 +1.2 Europe (FTSEurofirst 300) 1,611.7 +1.4 +17.8 +5.0 All 124.9 125.6 +1.7 -12.0 Pakistan (KSE) 31,887.3 +4.2 -0.8 -2.1 World, dev'd (MSCI) 1,766.4 +1.6 +3.3 +3.3 Nfa† 118.6 120.1 +1.1 -20.6 Singapore (STI) 3,460.7 +0.4 +2.8 +0.5 Emerging markets (MSCI) 1,021.0 +3.9 +6.8 +6.8 Metals 127.7 128.0 +1.9 -8.0 South Korea (KOSPI) 2,059.3 +1.5 +7.5 +8.3 r Wo ld, all (MSCI) 432.5 +1.9 +3.7 +3.7 Sterling Index Taiwan (TWI) 9,572.0 +0.7 +2.8 +4.5 World bonds (Citigroup) 882.8 +0.1 -2.2 -2.2 All items 173.2 175.0 +2.0 -7.4 Thailand (SET) 1,544.9 +1.3 +3.2 +4.3 EMBI+ (JPMorgan) 716.6 +1.0 +3.6 +3.6 r Argentina (MERV) 11,275.0 +1.8 +31.4 +25.9 Hedge funds (HFRX) 1,249.0§ +0.4 +2.5 +2.5 Eu o Index Brazil (BVSP) 53,661.1 +2.6 +7.3 -7.7 Volatility, US (VIX) 14.0 +15.1 +19.2 (levels) All items 163.7 163.9 -0.8 +4.5 Chile (IGPA) 19,398.0 +1.1 +2.8 +1.9 CDSs, Eur (iTRAXX)† 55.8 -0.5 -10.9 -20.5 Gold i Colomb a (IGBC) 10,236.2 +0.6 -12.0 -16.2 CDSs, N Am (CDX)† 60.5 -5.4 -3.2 -3.2 $ per oz 1,224.0 1,213.1 +4.4 -7.4 Mexico (IPC) 44,980.6 +1.8 +4.3 +3.0 r r i Ca bon t ad ng (EU ETS) € 7.2 -0.6 -1.9 -12.5 West Texas Intermediate Venezuela (IBC) 5,390.3 -1.1 +39.7 na Sources: Markit; Thomson Reuters. *Total return index. $ per barrel 52.0 53.8 +10.5 -47.6 Egypt (Case 30) 8,788.9 -3.4 -1.5 -7.7 †Credit-default-swap spreads, basis points. §Apr 7th. Israel (TA-100) 1,443.6 +1.6 +12.0 +10.8 Sources: Bloomberg; CME Group; Cotlook; Darmenn & Curl; FT; ICCO; i r i Indicators for more countries and additional ICO; ISO; Live Rice Index; LME; NZ Wool Services; Thompson Lloyd & Saud A ab a (Tadawul) 8,851.8 +1.4 +6.2 +6.3 Ewart; Thomson Reuters; Urner Barry; WSJ. *Provisional South Africa (JSE AS) 52,806.0 +1.0 +6.1 +3.6 series, go to: Economist.com/indicators †Non-food agriculturals. STAY ACTIVE. STAY STRONG.

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Visitors sceptical of his strangely smooth skin would be invited to check behind his ears forthe telltale signs ofa facelift. Some thought his strange appearance exemplified the cost of battling the years. His pneumatic features and eerie complex- ion could seem repellent: an alien doctor from a visiting starship, perhaps. Others thought his wispy blond hair and fair skin might be a sign of Scandinavian roots. He laughed at that: he was a Jewish orphan whose parents had run a confectionery shop in Newark; his appearance was a triumph, just like his career. Critics muttered that the “Skincare Svengali”, (as Vogue dubbed him, appre- ciatively), was engaged in a nightmarish science project, making a fortune from human weakness. Better, surely to grow old gracefully and naturally. But his patients saw it differently. They wanted to feel better about themselves, to remember the people they had been—and to stay compe- tetive in a society that prizes only youthful beauty. Laurin Sydney, a television journalist, said he helped her extend her career 18 years after her “sell-by date”. Madonna told the New York Times: “If I have nice Fredric Brandt skin, I owe a lot to him.” The “Baron of Botox” had a weekly radio show, and a range of cosmetic products, whose catchy names (Needles No More, Crease Release) were matched by exotic prices and carefully worded claims about their effects. He wrote two well-re- Frederic Brandt, a celebrity dermatologist, died on April 5th aged 65 ceived books: “Age-less: The Definitive EAUTY—however imagined—is in the trasound and stem cell treatments. Guide to Botox, Collagen, Lasers, Peels, B eye of the beholder. But why settle for It was a big change from the dermato- and Other Solutions for Flawless Skin”— nature’s whim when you can pay a profes- logical drudgery he encountered as a launched in a New York nightclub where sional? The mirrors in Fredric Brandt’s clin- young doctor. In those days skin medicine guests were told to wear only white to ics showed the possibilities, and the pro- meant dealing with sunspots, moles and match the bookjacket—and “10 Minutes/10 fits, to be gained from the skilful unsightly infections. Botulinum toxin was Years: YourDefinitive Guide to a Beautiful application of needle and syringe. The known chiefly as a deadly nerve poison: it and Youthful Appearance”. masterpieces of modern art on the walls took Dr Brandt to make it a household highlighted his aesthetic tastes, just as his name, for in minute doses it is a boon, Timor senescentis handiwork on his patients’ faces displayed freezing the muscles that furrow and crin- Irony and the beauty business rarely mix his craftsmanship. kle. His clinics were the world’s largest easily. But Dr Brandt tried not to take him- Only the charlatans he despised would buyer ofBotox; he called it simply “bo”. self too seriously. “Ifit moves, my patients claim to stop ageing. What he could offer Bo and the gels could work wonders. want it frozen; if it deflates, they want it was a partial respite: why look tired, sad or They smoothed foreheads, filled cheeks, filled up; and if it droops, they want it lift- angrywhen the lipscan turn up, notdown, tightened necks, strengthened jawlines ed,” he once quipped. Appreciative clients and wrinkles can be smoothed into tem- and plumped lips—all in moderation, for said a session at his clinic could fix your poraryoblivion? Ittookonlya fewminutes the aim was to look “fabulous, not frozen”. laughter lines—or give you more. (for he could see 40 patients a day) twice a But the really secret serum, he insisted, was But he was mortified when an episode year, and a few hundred dollars each time. joy. His clients should not just look better, of a new comedy show lampooned a de- Thatwasatleasttwice the price charged but feel it too. As he jabbed and pumped, ranged, pretentious and Botox-loving by some other doctors (though discounts he would sing Broadway numbers, partic- beauty doctor—seemingly a direct carica- were available for the indigent or famous). ularly “Younger Than Springtime”. ture of him. Friends denied that this But money was only part of the mix. Get- He liked to call himself a sculptor of prompted his suicide; he had suffered from ting a personal appointment at his clinic faces. But he did not cut or chisel. That was depression forsome time. was a social triumph: like having a prime the work of the plastic surgeons who had Dr Brandt did not like discussing his table at a sought-after restaurant. And ce- pioneered beauty treatment, sawing away great adversary: age—and the frailty and lebrity status without science would be outsize noses and tightening withered skin loneliness it brought—frightened him. He useless. He treasured his academic pro- overunforgivingcheekbones, via a general lived alone, with three adopted stray dogs wess: conference speeches and papers, anaesthetic, scars and bruising. He did not in Miami, and his collection of modern art and an in-house laboratory that carried criticise his sawbones colleagues, but he in New York, sheltered by permanently out clinical trials on potions and lotions, as thoughthisown countenance showed that drawn curtains from the sunlight he hated well as researching exciting new laser, ul- the needle worked better than the knife. forthe damage it did to skin. 7

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