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Is the German model broken? Iran, 40 years after the revolution China’s embrace of intellectual property On the economics of species

FEBRUARY 9TH–15TH 2019 Crude awakening The truth about Big Oil and climate change РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

World-Leading Cyber AI РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Contents The Economist February 9th 2019 3

The world this week United States 6 A round-up of political 19 After the INF treaty and business news 20 Missiles and mistrust 21 Virginia and shoe polish Leaders 21 Union shenanigans 9 Energy and climate Crude awakening 22 Botox bars Elizabeth Warren’s ideas 10 Germany’s economy 23 Time to worry 24 Lexington Donald Trump and conservatism 10 Arms control Death of a nuclear pact The Americas 12 Iran’s revolution at 40 Dealing with the mullahs 25 Canada in the global jungle On the cover 13 A new boss for the World Bank 26 Jair Bolsonaro’s The oil industry is making a A qualified pass congressional win bet that could wreck the 28 Bello The Venezuelan climate: leader, page 9. Letters dinosaur ExxonMobil, a fossil-fuel On the Democratic titan, gambles on growth: 14 Republic of Congo, Asia Briefing, page 16. The Green hygiene, Brexit, chicken, New Deal pays little heed to 29 India’s Congress party King Crimson, airlines economic orthodoxy: Free 30 Avoiding military service exchange, page 67 in South Korea Briefing • Is the German model broken? 31 Turmoil in Thai politics 16 ExxonMobil An economic golden age could 31 Facial fashions in Bigger oil, amid efforts to be coming to an end: leader, Pakistan hold back climate change page 10. How Germany’s 32 Banyan Japan’s lost decentralisation can inoculate islands against political unrest: page 41. The long expansion, page 61 China • Iran, 40 years after the 33 Cultural diplomacy revolution The Islamic 34 Pets proliferate theocracy has failed its people, but Donald Trump’s sanctions 35 Chaguan Understanding could prolong its life: leader, Taiwan page 12. Four decades after its revolution, Iran is still stuck in the past, page 36 Middle East & Africa • China’s embrace of intellectual property Believe it 36 Iran’s revolution turns 40 or not, Chinese firms are not all 38 Iran and its neighbours serial thieves of intellectual 39 Bibi’s favourite word property: Schumpeter, page 58 39 East African rifts • On the economics of species 40 Elections in Nigeria Conservationists are rethinking how to preserve nature on a changing planet—and within a Banyan The importance tight budget, page 68 to Shinzo Abe of four alluring islands occupied by Russia, page 32

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4 Contents The Economist February 9th 2019

Europe Finance & economics 41 No gilets jaunes in 61 Deceleration in Germany Germany 62 The first 1MDB trial 42 Macron’s great debate 63 Optimistic pension plans 43 Phantom fake medicines 63 Bill Gross retires 44 Wish upon Five Stars 64 Australia’s misbehaving 44 A treadmill for Hungarian banks dogs 64 A bitcoin banker dies 46 Charlemagne Vestager’s 65 Buttonwood Gauged progress against the machine 66 Donald Trump’s tax cuts Britain 67 Free exchange Brave new 47 Asians, the new Europeans deal 48 Irish boom and bust 49 Bagehot Learning from Science & technology John Ruskin 68 Ecology and economics 70 Rewilding spreads

International 50 Electricity for the poor 51 What light reveals Books & arts 71 Eurasia 72 An innovative Chinese gallery 73 Segregation in America Business 73 A memoir of madness 53 America’s manufacturing revival 74 Women and the sea 54 Intel’s new boss Economic & financial indicators 55 Bartleby McDonald’s and sustainability 76 Statistics on 42 economies 56 UNIQLO abroad Graphic detail 56 Norwegian’s descent 77 Bitcoin’s price crash has not deterred miners 57 Food pricing in France 58 Schumpeter China and Obituary intellectual property 78 Lamia al-Gailani, guardian of Mesopotamian relics

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6 The world this week Politics The Economist February 9th 2019

The government and rebel For the ninth week, tens of groups in the Central African thousands of protesters in A leader, but with little power Republic signed a peace deal Serbia called on Aleksandar A dozen members of the eu, aimed at ending more than five Vucic to resign as president. He including Germany, France and years of fighting. Their conflict has offered to hold elections, Britain, recognised Juan broke out in 2013 after Islamist but the demonstrators want a Guaidó, the leader of groups overthrew the then fairer election law and more Venezuela’s legislature, as the government. media time for the opposition. country’s interim president. They acted after Nicolás The armed forces of Burkina Maduro, who won a rigged Faso said they had killed146 Keeping up the jaw-jaw election in May, failed to meet jihadists near the border with Donald Trump confirmed that a deadline for calling a proper Donald Trump gave his state- Mali. Security in the country he would hold a second ballot. Most Latin American of-the-union speech to Con- has deteriorated since a jiha- summit with Kim Jong Un, democracies back Mr Guaidó. gress, delayed by a week be- dist uprising in Mali in 2012. North Korea’s dictator, in (Venezuela’s constitution cause of wrangling over gov- Vietnam in late February. Mr makes him interim president if ernment spending. He again Kim has done little to fulfil his the post is not legitimately called for tougher curbs on pledge at the pair’s last meet- filled.) Venezuela’s army illegal immigration, calling it a ing in Singapore to give up his moved to block the delivery of “moral duty”.He also said that nuclear weapons. food aid, which might fill any new trade deal with China empty bellies but would also “must include real, structural Australia cancelled the resi- embarrass the regime. change to end unfair trade dency permit of Huang practices…and protect Ameri- Xiangmo, a property developer Brazil’s justice minister, pre- can jobs”.In a rare cordial with ties to the Chinese gov- sented a plan to get tougher on moment, Mr Trump welcomed ernment. Mr Huang has given criminals and go easier on the record number of women generous donations to poli- cops. Police who kill in the line in work, drawing whoops and ticians who express pro-China of duty may escape punish- cheers from Democratic con- Pope Francis celebrated mass views, as well as to Australia’s ment if they acted out of “fear, gresswomen, who had dressed in Abu Dhabi, the capital of the two biggest political parties. surprise or violent emotion”. A in white for the occasion. United Arab Emirates.Itwas judge convicted Brazil’s former the first visit by a pope to the Indian officials resigned in president, Luiz Inácio Lula da Virginia’s state government Arabian peninsula, the birth- protest at what they saw as the Silva, who is already serving a seemed unable to find anyone place of Islam. The pope government’s attempts to 12-year sentence for corrup- to run the place who has not lamented the region’s wars, suppress unflattering eco- tion, on an additional corrup- either applied boot polish to including the one in Yemen, nomic data. They say un- tion charge and added a sen- his face while at college or where the uae is involved. He employment is at a 45-year tence of nearly 13 years. been accused of sexual assault. also called on Gulf countries to high of 6.1%. The government Ralph Northam, a Democrat allow more members of says it is reviewing the data. who was initially unsure religious minorities to become whether he was one of those citizens. The British government ap- depicted in a photo of a man in proved the extradition of Vijay blackface and another in Ku Mallya to India, the next stage Klux Klan robes, remains the Things can only get better in a process that started in 2016 state’s governor. Robert Biedron, Poland’s first when the beer-and-travel openly gay mayor, founded a tycoon fled to Britain to escape Cory Booker joined the race to new pro-eu party to contest the criminal charges related to the become the Democrats’ European Parliament elections collapse of Kingfisher Airlines. presidential nominee in 2020. in May. The party, Wiosna Known as the “King of Good The first black senator to repre- (“Spring”), supports higher Times” both for what he sells sent New Jersey, Mr Booker is social spending, civil part- and for how he lives, Mr Mallya Nayib Bukele won El Salva- the fourth heavy-hitter to enter nerships for gay couples and denies the charges. dor’s presidential election. His the campaign. ending Poland’s reliance on victory ends three decades of coal. It is polling at about 10%. A textbook on constitutional power alternating between the law written by Zhang Qianfan, left-wing fmln and right-wing A friend indeed The eu established a special- one of China’s leading legal Arena parties. Mr Bukele, who French warplanes bombed a purpose corporation to help it scholars, was removed from is 37, has promised to fight convoy carrying rebels who evade sanctions that America the country’s bookshops for corruption and to prevent had crossed into Chad from has imposed for doing busi- promoting Western ideas such violence by creating jobs. He Libya. The air strikes in sup- ness with Iran. The company, as the rule of law. A recent edict also favours nicer public parks. port of Chadian troops are a Instex, will co-ordinate barter requires universities to report sign of the willingness of exchanges to allow Iran to do any books on the topic to the France to use force to prop up business with companies from authorities. China’s constitu- Ashes to ashes the government of Idriss Déby, European countries still partic- tion nods to freedom of speech A bill was proposed in Hawaii one of its more important ipating in the nuclear non- and religion, but in practice the to raise the legal smoking age regional allies in the fight proliferation deal, from which Communist Party’s wishes to 100. After that Hawaiians against jihadists. America withdrew last year. trump it. would be free to light up. 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

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8 The world this week Business The Economist February 9th 2019

Donald Trump nominated ture which will be overseen by India’s central bank cut its key Sony’s share price tumbled David Malpass to become the Michael O’Leary, Ryanair’s interest rate by a quarter of a after it reported a big drop in World Bank’s next president, a ebullient chief executive. percentage point, to 6.25%. It quarterly profit for its gaming job that is by tradition filled by was the first big policy decision division. Rumours that the the American government. Mr Underlining the turbulence in taken under the new governor, Japanese electronics giant Malpass currently heads inter- Europe’s discount-flight mar- Shaktikanta Das. Mr Das was might release PlayStation 5 national affairs at the Treasury. ket, Germania became the given the job after Urjit Patel next year, its first update to the A controversial choice, he has latest in a long list of low-cost quit amid a quarrel with the gaming console in six years, voiced concerns about the carriers to declare bankruptcy. government, which has been did little to lift its stock. spreading power of multilater- The Berlin-based airline flew nagging the bank to do more to al and global institutions and 4m passengers last year. boost the economy ahead of Internet companies are of Chinese influence. He was this year’s election. removing 72% of content part of the negotiating team flagged as racist or xenophobic Tu ey, consu e p ces that agreed to a capital increase rk m r ri American employers created in Europe within 24 hours. % increase on a year earlier in the World Bank in return for 304,000 jobs in January, far That is up from 28% in 2016, restraint on staff wages and 25 more than economists had when Facebook, Microsoft, benefits. 20 forecast and the 100th consec- Twitter and YouTube present- 15 utive month of job growth. ed a voluntary code of conduct 10 Average hourly wages in- on hate speech, which in effect Off the rails 5 creased by 3.2% during the stopped the eu from imposing Europe’s competition commis- 0 12-months ending in January. its own restrictions. sioner blocked the merger of 2017 18 19 Alstom with the rail oper- Following bumper annual Source: Datastream from Refinitiv ations of Siemens, reasoning earnings from Chevron, Gross mistakes that the combination of the Turkey’s inflation rate crept up ExxonMobil and Shell, bp Bill Gross announced his French and German companies to 20.4% in January. Floods in more than doubled its headline retirement from the invest- would lead to higher prices in Antalya province, the centre of profit in 2018, to $12.7bn, the ment industry. One of the the markets for signalling Turkey’s greenhouse produc- most since the downturn in oil founders of Pimco, Mr Gross systems and high-speed trains. tion of vegetables and fruits, prices that began in 2014. was once known as the Bond Supporters of the deal, such as helped push food inflation up King for managing the world’s Bruno Le Maire, the French to 31%, the highest reading Despite a widely panned rede- largest bond fund, which had finance minister, said it was a since 2004 and up from 25% in sign of its app, Snap, the parent almost $300bn in assets at its mistake because such mega- December. Although it is under company of Snapchat, peak. He left Pimco in 2014 mergers are vital to take on the political pressure to reduce increased revenues by 36% in after falling out with the firm might of Chinese companies. interest rates, the central bank the last three months of 2018 and has struggled to repeat his However, in some markets a recently committed itself to compared with the same quar- success. His current fund combined Alstom-Siemens maintain its tight monetary ter a year earlier. Having never manages only $1bn in assets. would have been three times stance until price pressures reported a profit since going Summing up the industry in bigger than its largest rival. weaken. Happily, it also fore- public in 2017, investors took 2010, Mr Gross said “My clients cast that inflation will fall by comfort in the halving of its don’t pay me to feel sorry, they Nissan’s reversal of a promise the end of the year. loss for the quarter, to $192m. pay me to bring them money.” to build the X-Trail suv at its factory in Sunderland, a city in the north of England, was blamed by Remainers on Brit- ain’s commitment to leave the European Union. The carmaker said that Brexit was a concern. But its decision was also driven by the collapse in demand for diesel and the lower costs of making the vehicle in Japan.

Ryanair reported its first quar- terly loss since 2014. Europe’s biggest low-cost airline said that although passenger num- bers had grown, the average fare it was able to charge had fallen to less than €30 ($34) because of excess short-haul capacity in Europe. In a nod to shareholder discontent, the airline is replacing its chair- man, who has been in the job for over 20 years. It is also moving to set up a group struc- РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Leaders Leaders 9 Crude awakening

ExxonMobil and the oil industry are making a bet that could end up wrecking the climate n america, the world’s largest economy and its second big- therefore be evil. They are responding to incentives set by soci- Igest polluter, climate change is becoming hard to ignore. Ex- ety. The financial returns from oil are higher than those from re- treme weather has grown more frequent. In November wildfires newables. For now, worldwide demand for oil is growing by 1-2% scorched California; last week Chicago was colder than parts of a year, similar to the average over the past five decades—and the Mars. Scientists are sounding the alarm more urgently and peo- typical major derives a minority of its stockmarket value from ple have noticed—73% of Americans polled by Yale University profits it will make after 2030. However much the majors are vil- late last year said that climate change is real. The left of the ified by climate warriors, many of whom drive cars and take Democratic Party wants to put a “Green New Deal” at the heart of planes, it is not just legal for them to maximise profits, it is also a the election in 2020. As expectations shift, the private sector is requirement that shareholders can enforce. showing signs of adapting. Last year around 20 coal mines shut. Some hope that the oil companies will gradually head in a Fund managers are prodding firms to become greener. Warren new direction, but that looks optimistic. It would be rash to rely Buffett, no sucker for fads, is staking $30bn on clean energy and on brilliant innovations to save the day. Global investment in re- Elon Musk plans to fill America’s highways with electric cars. newables, at $300bn a year, is dwarfed by what is being commit- Yet amid the clamour is a single, jarring truth. Demand for oil ted to fossil fuels. Even in the car industry, where scores of elec- is rising and the energy industry, in America and globally, is tric models are being launched, around 85% of vehicles are still planning multi-trillion-dollar investments to satisfy it. No firm expected to use internal-combustion engines in 2030. embodies this strategy better than ExxonMobil, the giant that ri- So, too, the boom in ethical investing. Funds with $32trn of vals admire and green activists love to hate. As our briefing ex- assets have joined to put pressure on the world’s biggest emit- plains, it plans to pump 25% more oil and gas in 2025 than in ters. Fund managers, facing a collapse in their traditional busi- 2017. If the rest of the industry pursues even modest growth, the ness, are glad to sell green products which, helpfully, come with consequence for the climate could be disastrous. higher fees. But few big investment groups have dumped the ExxonMobil shows that the market cannot solve climate shares of big energy firms. Despite much publicity, oil compa- change by itself. Muscular government action is needed. Con- nies’ recent commitments to green investors remain modest. trary to the fears of many Republicans (and And do not expect much from the courts. hopes of some Democrats), that need not in- Lawyers are bringing waves of actions accusing volve a bloated role for the state. oil firms of everything from misleading the pub- For much of the 20th century, the five oil ma- lic to being liable for rising sea levels. Some jors—Chevron, ExxonMobil, Royal Dutch Shell, think oil firms will suffer the same fate as tobac- bp and Total—had more clout than some small co firms, which faced huge settlements in the countries. Although the majors’ power has 1990s. They forget that big tobacco is still in waned, they still account for 10% of global oil business. In June a federal judge in California and gas output and 16% of upstream invest- ruled that climate change was a matter for Con- ment. They set the tone for smaller, privately owned energy gress and diplomacy, not judges. firms (which control another quarter of investment). And mil- The next 15 years will be critical for climate change. If innova- lions of pensioners and other savers rely on their profits. Of the tors, investors, the courts and corporate self-interest cannot 20 firms paying the biggest dividends in Europe and America, curb fossil fuels, then the burden must fall on the political sys- four are majors. tem. In 2017 America said it would withdraw from the Paris In 2000 bp promised to go “beyond petroleum” and, on the agreement and the Trump administration has tried to resurrect face of it, the majors have indeed changed. All say that they sup- the coal industry. Even so, climate could yet enter the political port the Paris agreement to limit climate change and all are in- mainstream and win cross-party appeal. Polls suggest that mod- vesting in renewables such as solar. Shell recently said that it erate and younger Republicans care. A recent pledge by dozens of would curb emissions from its products. Yet ultimately you prominent economists spanned the partisan divide. should judge companies by what they do, not what they say. The key will be to show centrist voters that cutting emissions According to ExxonMobil, global oil and gas demand will rise is practical and will not leave them much worse off. Although the by 13% by 2030. All of the majors, not just ExxonMobil, are ex- Democrats’ emerging Green New Deal raises awareness, it al- pected to expand their output. Far from mothballing all their most certainly fails this test as it is based on a massive expansion gasfields and gushers, the industry is investing in upstream pro- of government spending and central planning (see Free ex- jects from Texan shale to high-tech deep-water wells. Oil compa- change). The best policy, in America and beyond, is to tax carbon nies, directly and through trade groups, lobby against measures emissions, which ExxonMobil backs. The gilets jaunes in France that would limit emissions. The trouble is that, according to an show how hard that will be. Work will be needed on designing assessment by the ipcc, an intergovernmental climate-science policies that can command popular support by giving the cash body, oil and gas production needs to fall by about 20% by 2030 raised back to the public in the form of offsetting tax cuts. The and by about 55% by 2050, in order to stop the Earth’s tempera- fossil-fuel industry would get smaller, government would not ture rising by more than 1.5°C above its pre-industrial level. get bigger and businesses would be free to adapt as they see fit— It would be wrong to conclude that the energy firms must including, even, ExxonMobil. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

10 Leaders The Economist February 9th 2019

Germany’s economy Time to worry

An economic golden age in Germany could be coming to an end he world is used to a thriving German economy. A decade balances in competitiveness within the euro zone that would Tago, during the financial crisis, it shed relatively few jobs, as elsewhere adjust through exchange rates. The risk is not of over- unemployment soared elsewhere. Since then it has been an an- heating but of Europe slipping into a low-growth trap as coun- chor of fiscal stability while much of the euro zone has struggled tries that need to gain competitiveness face an inflation ceiling with debt and deficits. Its public debt is below the target of 60% set too low by Germany. of gdp set by eu treaties—and falling. Thanks to labour-market The slowdown also portends deeper problems for Germany’s reforms introduced during the 2000s, Germans enjoy levels of globalised economic model. Weakness in part reflects the fallout employment that beat job-friendly Britain, even as inequality is from the trade war between China and America, two of Ger- barely higher than in France. Its geographically dispersed manu- many’s biggest trading partners. Both are increasingly keen on facturing industries, made up of about 200,000 small and medi- bringing supply chains home. America is due soon to decide um-sized firms, have mitigated the regional disparities that have whether to raise tariffs on European cars. Trade is already be- fuelled populism across the West (see Europe section). coming more regionalised as uncertainty grows. If global com- Yet the German economy suddenly looks vulnerable. In the merce splits into separate trading and regulatory blocs, Germany short term it faces a slowdown. It only narrowly will find it harder to sell its goods to customers avoided a recession at the end of 2018. Tempor- Germany’s GDP around the world. ary factors, such as tighter emissions standards % change on previous quarter Reform has made Germany’s labour market 1.0 for cars, explain some of the weakness, but there strong, but it will soon face new challenges. In- 0.5 is little sign of a bounceback. Manufacturing dustrial jobs look particularly vulnerable to * 0 output probably fell in January. Businesses are -0.5 automation, yet lifelong learning and retrain- imf ing are relatively rare in Germany. The work- losing confidence. Both the and the finance 2015 16 17 18 ministry have slashed growth forecasts for 2019 *Estimate force is ageing. Neither the government nor (see Finance section). In the longer term, chang- business is much digitised and neither invests ing patterns of trade and technology are moving against Ger- enough. If technological change demands that its economy em- many’s world-beating manufacturers. In response, on February braces digital services, Germany will struggle. 15th Peter Altmaier, the economy minister, laid out plans to block The government is not blind to these problems, but Mr Alt- unwanted foreign takeovers and to promote national and Euro- maier’s protectionism is the wrong medicine. The left, mean- pean champions. while, wants to roll back labour-market reforms. Better to ex- Germany is getting both the short and the long term wrong. pand a recent boost to infrastructure spending and press ahead, Start with the business cycle. Many policymakers think the at scale, with tax incentives for private investment. Both should economy is close to overheating, pointing to accelerating wages help growth today and boost the economy’s long-term prospects. and forecasts of higher inflation. In their view, slower growth Significantly lower taxes on households would encourage a re- was expected, necessary even. That is complacent. Even before balancing away from exports and towards consumption. A dose the slowdown, the imf predicted that in 2023 core inflation will of competition could invigorate coddled service industries. The be only 2.5%—hardly a sign of runaway prices. In any case, high- German economy has had an impressive run, but cracks are ap- er German inflation would be welcome, as a way to resolve im- pearing. It is time to worry. 7

Arms control Death of a nuclear pact

Russian cheating killed the inf treaty. America’s response should be measured hen it turned 30 in 2017, the Intermediate-Range Nuc- ance and jeopardise what is left of global arms control. Wlear Forces (inf) treaty was ailing. Russia had proposed Under the treaty, America and the Soviet Union scrapped all ripping up the pact in 2005. When it was rebuffed it tested an ille- ground-based missiles with ranges of between 500 and 5,500km gal cruise missile, the 9m729. A few years later the Obama admin- (310-3,400 miles), weapons that could quickly reach targets deep istration called out Russian cheating. In December 2018 Ameri- into enemy territory. The intention was to remove missiles that ca’s nato allies belatedly backed America. So, when Russia failed strike so quickly that leaders might be panicked into rash nuc- to meet a deadline to destroy the missile this month, America lear escalation. pulled out of the treaty and Russia soon followed. The only pact The temptation is to blame America for the treaty’s demise. It to ban an entire class of nuclear weapons will thus expire in Au- might have worked harder to win inspections of the 9m729, per- gust. The task for America and nato is to meet the Russian chal- haps in return for allowing Russia to look at what it says is a sus- lenge without triggering an arms race that would split the alli- pect American missile-defence launcher in Romania. It should 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

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12 Leaders The Economist February 9th 2019

2 have done more to bring allies along—who, in turn, ought to ons. Missiles could be put on Guam, where lush forests provide have protested about Russian behaviour earlier. Yet there should useful cover. But the island is so far from China that it would re- be no confusion: Russia, not America, set the pact ablaze. Even quire America to make a new type of missile. Congress may not strenuous diplomacy may not have put out the flames. indulge this; America is already due to spend some $1.7trn in real What to do next? A realistic starting-point is to acknowledge terms on its nuclear arsenal over the next 30 years. that conventional (not nuclear) missiles will play a central role China is unlikely to agree to limits. But its competition with in future wars. This is why countries like China, India and Israel America is over conventional rather than nuclear missiles, so the have piled up inf-range missiles as America and Russia de- risks are lower. Even in Europe, America should avoid seeking to stroyed theirs. It is also why Russia furtively built new ones. match Russia missile for missile. Instead it should work closely Russia has reportedly deployed four battalions of the 9m729 with its allies to assess how far existing weapons can redress the (nearly 100 missiles) that allow it to strike targets across Europe military balance, and the impact of any new missiles. America quickly and precisely—including nato’s nuclear weapons. Such and Russia should discuss how to limit new deployments. Vladi- land-based mid-range missiles have advantages over those mir Putin has reasons to hold back. Despite his boasts of super- launched from the air and sea, which were allowed under the inf weapons, Russia’s defence budget is falling and an influx of new treaty. Mobile ground-launchers are cheaper than a warship or American missiles would stretch it even more. warplane, can be hidden more easily and have no other missions Most worrying, the death of the inf treaty threatens New to distract them. America’s army is right to explore whether they start, a pact which governs American and Russian long-range offer an effective way to strike key military targets, including “strategic” nuclear weapons. The problem is threefold. First, the those deep behind enemy lines. Trump administration holds arms control in contempt. Second, But inf-type missiles come with problems, too. Their limited Russia has poisoned the well of trust by playing fast and loose range means that they must be parked on allied soil, rather than with the inf treaty. And third, an accumulation of long-legged in America. nato, to its credit, has resoundingly backed America intermediate-range missiles might devalue the limits on strate- so far, but it may be less unified about new weapons. If America gic ones. If New start is allowed to expire in 2021, there will be cuts a bilateral deal with an enthusiastic volunteer, such as Po- no constraint on the nuclear forces of America and Russia for the land, it would be divisive and destabilising. Suitable sites are first time in almost 50 years. It is almost certainly too late to save even scarcer in Asia. Japan and South Korea would be wary of the the inf treaty. But its collapse must not mean a return to the fren- political backlash from China were they to host American weap- zied arms race of the cold war. 7

The Iranian revolution at 40 How to deal with the mullahs

The Islamic revolution has failed, but Donald Trump’s sanctions could prolong it he cry of “Death to America!” has rung out in Tehran every Iran’s was not the Middle East’s only convulsion in 1979. The TFriday since the Islamic revolution of 1979. But the ritual is siege of the grand mosque in Mecca stung Saudi Arabia into pro- hollow. The mullahs know they have failed their people. Iranians moting its rival Sunni brand of ultra-puritanism at home and are much poorer than they should be; promises of justice have abroad. Together with America, the Saudis helped weaponise been drowned in the blood of enemies and supposed sinners; Sunnism by supporting mujahideen fighters against the Soviet and theocracy has made Iranians less pious. Protests occur of- invasion of Afghanistan. Arabs who volunteered to fight with ten, even among the poor who make up the regime’s base (see them became the godfathers of jihadism. America, pledging to Middle East & Africa section). protect Gulf oil against outsiders, was drawn deep into the re- Yet the mullahs remain in charge, despite gion’s conflicts. war, sanctions and decades of enmity with America has rarely been able to think clearly America—or perhaps because of them. To the about Iran; not least because the regime’s fol- alarm of Israel and many Arab states, Iran has lowers held 52 of its citizens hostage for 444 spread its influence, helping save the odious re- days after seizing the American embassy in Teh- gime of Bashar al-Assad in Syria, and ensuring ran in 1979. But if Iran has recently extended its that the Saudis remain bogged down in Yemen. power it is in large part because of the mess Its Lebanese client, Hizbullah, poses a grave caused by America’s invasion of Iraq in 2003. threat to Israel. In Europe Iranian spooks are ac- Iran is confusing and infuriating to deal cused of plotting to kill dissidents. with. Power is shared ambiguously between a weak president, For President Donald Trump, Iran is a unique menace. He has who is elected from a field of loyalists and deals with day-to-day abandoned Barack Obama’s nuclear deal in favour of tight sanc- problems, and a nebulous revolutionary caste that controls the tions. His officials will try to forge an anti-Iran alliance at a con- instruments of coercion. Sometimes Iran has proved pragmatic, ference in Poland on February 13th-14th. In seeking “maximum for instance acquiescing in America’s overthrow of the Taliban pressure”, America may hope to stir another uprising to reverse in Afghanistan. Yet, under the supreme leader, Ali Khamenei, the one of 1979. But it will probably make things worse. ideology often trumps rational policymaking. Neither confron- The mullahs have a woeful record. Their theocracy helped tation nor diplomacy can reliably sway the mullahs. And neither turn Islam into a tool of radical, and often violent, politics. But economic carrots nor sanctions seem to work as an alternative. 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist February 9th 2019 Leaders 13

2 That said, Mr Obama’s accord, the jcpoa, succeeded in freez- bomb and the dangers of a bombing campaign to stop it. ing Iran’s nuclear programme in exchange for the lifting of many America’s apparent efforts to bring down the regime are un- sanctions. Mr Trump thinks this was a terrible deal that failed to appealing to most Iranians, given the bloody chaos they see all halt the nukes for good or stop Iran from stirring trouble around around. The mullahs are still willing to shoot opponents; few or- the region. Renewed sanctions are pushing Iran into a deep eco- dinary Iranians are yet ready to die trying to overthrow them. The nomic crisis. But re-imposing them when Iran was abiding by best hope for change in Iran may come with the death of Ayatol- the jcpoa casts America as the rogue. This has deepened the split lah Khamenei, who is 79 and in poor health. with European allies, which have created a system to help firms To nudge Iran towards normality, America needs to mix firm- sidestep them. America has bound itself more tightly to auto- ness with pragmatism, rather as it did in the cold war with the So- cratic Arab regimes, such as Saudi Arabia, that have themselves viet Union. This means containing Iran until its people grow fomented instability and radicalism. What “moral clarity” can weary of their rulers, and negotiating partial deals that limit the America claim in denouncing Iran’s human-rights abuses when risk of outright conflict. America should seek unity with its own it turns a blind eye to those committed by its friends? democratic allies and attempt to isolate Iran’s revolutionaries Above all, indiscriminate sanctions are likely to strengthen from their subjects. It should aim sanctions at hardliners rather Iran’s hardliners. American pressure gives them excuses for bad than the country as a whole. It should do more to expose the re- behaviour; adventurism abroad becomes self-defence; oligar- gime’s brutality and corruption, counter its propaganda and in- chic control of the economy is portrayed as a means to bust sanc- crease contacts with Iranian citizens—giving them more visas to tions; and critics are dismissed as puppets of the Great Satan. If visit America, not fewer. And it should offer to talk to Ayatollah Iran casts off the jcpoa’s nuclear constraints, America and Israel Khamenei. To him, America’s outstretched hand may be more will have to choose between the risk of Iran building a nuclear terrifying than its fist. 7

A new boss for the World Bank A qualified pass

David Malpass is America’s candidate to lead the World Bank. He should get the job t has long been obvious that the boss of the World Bank served in three administrations and speaks four languages. He Ishould be chosen on merit, not by nationality. When President helped forge an unlikely agreement passed in April last year to Harry Truman picked its first head in 1946, India was still a colo- increase the bank’s lending capacity. The reforms he has been ny and the People’s Republic of China did not exist. America pro- urging on the bank during his time at America’s Treasury are vided most of the institution’s capital and it was felt that its cred- mostly unobjectionable and reassuringly unoriginal (more tran- itors on Wall Street needed the reassurance of an American at the sparency, better measurement of results). America’s allies can be helm. Today China is the second-biggest economy and America relieved that Mr Trump’s administration cares enough about the provides less than 17% of the bank’s capital. But America still World Bank to pick one of its few remaining grown-ups to lead it. picks the bank’s president as part of a deal with European gov- The bank’s shareholders must also know that, if they were to ernments who choose the head of the imf. reject Mr Malpass, Mr Trump could turn violently against the in- True to this anachronistic tradition, President Donald Trump stitution. That would scupper the chances of America’s Congress this week named David Malpass, a senior official at America’s ratifying the agreed capital increase. It would also jeopardise fu- Treasury, to fill the vacancy created by Jim Yong ture American contributions to the World Kim’s early departure on February 1st. Uncom- Bank’s fund for helping the neediest countries. fortably, Mr Malpass has been a vocal critic of What of Mr Malpass’s hostility to China? He multilateral institutions such as the World is right to fret about elements of its bri, which is Bank, imf and World Trade Organisation, which a mix of chequebook diplomacy, white elephan- he believes have tied America’s hands. Nonethe- titis, export promotion and mutually beneficial less, despite his views and his passport, it would investment. But that is no reason for the bank to be a mistake to oppose him. steer clear of it altogether. In so far as China’s Accepting him will not be easy for the bank’s global initiatives are furthering the bank’s goal staff or for its other shareholders (who in principle could veto of eradicating poverty, the bank should offer whatever guidance the appointment). Mr Malpass does not hide his misgivings and assistance it can. The bank’s shareholders will have to im- about the institution he aspires to lead. To him, it is part of a press on Mr Malpass that the institution cannot abet American sprawl of international organisations, vulnerable to mission attempts to contain China’s economic rise. creep, which pamper their staff and put their own growth above Ultimately, the World Bank’s own bureaucratic habits will the countries they serve. He believes the bank has also become probably entangle Mr Malpass. Truman’s pick to lead the World too close to China, especially the country’s Belt and Road Initia- Bank resigned after just six months, frustrated by rival voices in tive (bri), which aims to build infrastructure and other links the organisation. “I could stay and fight these bastards…but I’m around the world (and in space). The bank, Mr Malpass fears, too old for that,” he complained. Institutional inertia remains a could be viewed as endorsing China’s geopolitical ambitions. powerful force in a sprawling international body. Mr Malpass is Nonetheless, the choice could be worse. Mr Malpass is one of right about that. Inertia, after all, is the chief reason why Ameri- the best-qualified members of Mr Trump’s government. He has ca’s president still gets to pick people like him to run one. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

14 Letters The Economist February 9th 2019

Contrary to the negative main- benefits from direct and Congolese politics No to a second referendum stream opinion about a messy indirect subsidies. Consumers Your leader about the The Economist’s chronic anti- Brexit, I am absolutely thrilled in Africa and elsewhere do presidential election in the Brexit bias continues to surface by the discussions, the parlia- enjoy some benefit, mainly Democratic Republic of Congo in issue after issue (“The mentary procedures and from price suppression, while (“The great election robbery”, mother of all messes”, January democratic traditions. What the middle men grow rich. January 26th) missed the key 19th). What I find most objec- we are witnessing is the flexi- Meanwhile substantial poultry point. The alternative to the tionable is the idea that, since bility and evolutionary power industries, the grain producers selection of Félix Tshisekedi as Parliament has rejected the of an old democracy in a peace- that depend on them, and the the winning candidate was not withdrawal proposal it now ful way. The power plays are jobs of thousands of workers in Martin Fayulu, but Ramazani becomes necessary to have akin to “Game of Thrones”,but rural areas, are at risk. Shadary. He was the “heir” of another referendum. Rubbish! without the blood. Yes, the This is the dark side of the the outgoing president, Joseph The voters have spoken, mak- politicians are mediocre, but Western preference for white Kabila. It was expected that the ing it clear in 2016 that Britain they are compensated for by chicken meat. electoral commission would should leave the European traditions and a society with a francois baird rig the vote to make Mr Shadary Union. The fact that the gov- democratic dna. Founder president. But his vote count ernment cannot figure out how andreas schmidt Fairplay was so low that Mr Kabila could to do it doesn’t mean the voters Leamington Spa, Warwickshire Johannesburg not get away with declaring need to be consulted once him the winner. On the other again on the issue of whether hand, he could not accept Mr to stay or leave, which regard- The real pecking order Frippin’ marvellous Fayulu because his political less of the spin put on it, repre- “Ruling the roost” (January The giant toothy, gaping backers, Moïse Katumbi and sents nothing more than a new 19th) described the economics mouth at the Oval Office door Jean-Pierre Bemba, had prom- chance for Remainers to throw of the poultry industry and in Lexington’s piece on Mick ised to pursue Mr Kabila for his sand into the Brexit machinery. how Westerners will pay a Mulvaney, the new White ill-gotten gains. Imagine the precedent. If an premium for lean white chick- House chief of staff (January Mr Tshisekedi is apparently issue is presented to the en meat, while people in Asia 19th), brought to mind the less of a threat to Mr Kabila, but electorate, and a decision is and Africa prefer dark meat, cover art on King Crimson’s within a few days of his inau- made that one side very much which includes legs and iconic album from 1969, “In the guration, the governor of the dislikes, then all that side has thighs. With a preference for Court of the Crimson King”. central bank was arrested and to do is to make it almost white meat, chicken producers Looking back, that collection charged with stealing govern- impossible to put in place the in the West make their profits of songs was uncannily ment money, and the ministers wishes of the voters, suggest- from chicken breasts. They prescient. As Mr Mulvaney in charge of the budget and the ing that the complexities are so then dump the unwanted takes his daily “March for No economy were called in for enormous and nuanced that brown meat in frozen bulk in Reason” to confer with the “21st questioning. Note that the further clarification from the any market that will take them Century Schizoid Man”, I people who voted for Mr Fay- electorate is the only way out. and at any price they can get. wonder if he’ll be thinking to ulu have not taken to the What a destructive notion The eu pays lip service to himself, “I Talk to the Wind”. streets in protest. That is be- this is to the basic concept of assisting industries in devel- ronald steenblik cause Mr Kabila has left office, democracy and letting voters oping countries. In reality Paris which was everyone’s main have their say. If another vote is economic-partnership agree- objective to begin with. to be held, it should be to recall ments usually require these herman cohen those members of the govern- developing countries to agree Love is in the air United States ambassador ment responsible for this mess not to impose tariffs on eu Your obituary of Herb Kelleher, (retired) in the first place. goods. Because of a flood of the boss of Southwest Airlines, Washington, DC bill pollock cheap imports from Europe, concluded that low-fare air Atlanta the chicken industries all but travel has become synony- vanished in Ghana, Cameroon mous with extorting charges Hand-washing history According to you, “doddery, and Senegal until their govern- from passengers (January 12th). Reading your article on claret-swilling uber-bureau- ments took steps to protect That may be true for most hospital hygiene (“First, wash crats” in Brussels are among local producers. The South low-fare carriers, but South- your hands”, January 26th) the very unattractive facets of African chicken industry west still allows two free brought to mind the ground- the eu that might justify Brexit. declared a crisis as production checked bags, waives fees on breaking role played by Ignaz However, in a week of meet- was cut and jobs were lost. ticket changes and gives me a Semmelweis, a Hungarian ings with putative colleagues South African chicken produc- free beer on Valentine’s Day, all doctor who practically invent- and interviews in Brussels, I ers are more efficient than in coach. There is still some ed the practice in 1847. By found youngish, highly those in eu countries, but they love left in the air. introducing the washing of educated, well-motivated and cannot compete with dumped chad priest hands with chlorinated lime generally rather congenial chicken portions. Dallas water he greatly reduced the people. Even an Antipodean eu exports have been cur- mortality rate associated with interloper who serendip- tailed since 2016 because of childbirth infections over two itously held a British passport bird flu, but other exporting Letters are welcome and should be years at Vienna’s general hos- was impressed. countries, particularly Brazil, addressed to the Editor at The Economist, The Adelphi Building, pital. Semmelweis was a pio- I fear the causes of Brexit have filled the gap. Brazil is an 1-11John Adam Street, London WC2N 6HT neer of antiseptic procedures. must be found elsewhere. efficient and low-cost Email: [email protected] andrea traboulsi rex deighton-smith producer, but its agricultural More letters are available at: Beirut Paris industry, like that in the eu, Economist.com/letters РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

Executive focus 15

Vacancy for the Director, Communications Department Established in 2012, KAICIID Dialogue Centre (King Abdullah Bin Abdulaziz International Centre for Interreligious and Intercultural Dialogue) was founded to enable, empower and encourage dialogue among followers of different religions and cultures around the world. Located in Vienna, the Centre is an independent, autonomous, inter- governmental organization, free of political or economic influence. The Director of the Communications Department oversees and manages all communications and public affairs activities for KAICIID. The Director creates, develops and implements integrated communications strategies that support the Centre’s pursuit of its mission and vision, as well as related supporting policies, as required, for the Centre. The Director reaches out to religious and secular media, as well as to the public via public lectures, presentations, speeches, web and social media broadcasting, digital publishing, multimedia and print publications. Outreach to the local Austrian public is an integral part of the Communications Department portfolio. Required qualifications: Advanced university degree in communications, media, journalism, or other related field, a minimum of fifteen years of progressively responsible professional experience in leading communication teams in international/ intergovernmental organizations, developing and implementing communication strategies. For more details, or to apply, please visit www.kaiciid.org/recruitment РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 16 Briefing ExxonMobil The Economist February 9th 2019

ExxonMobil has given ample fuel to the Bigger oil industry’s detractors, too. The greatest fail- ure came in 1989, when a tanker, the Exxon Valdez, ran aground, pouring 11m gallons of crude onto unspoilt Alaskan shorelines. But events that attracted criticism also made it seem impregnable. It has weath- ered lawsuits over everything from a leaky GEORGETOWN, GUYANA, AND IRVING, TEXAS petrol station to abetting torture in Indo- Amid efforts to hold back climate change, a fossil-fuel titan gambles on growth nesia. According to “Private Empire”, Steve ff the coast of Guyana, 160km beyond all goes to plan, within the next decade Coll’s book of 2012 on ExxonMobil, Lee Ray- Othe ramshackle, rainbow-coloured Guyana could become the second-biggest mond, the firm’s boss between 1993 and roofs and the sea wall meant to protect the oil producer in Latin America, behind only 2005, admired Standard Oil for sticking to low-lying capital, past the mud flats and Brazil. That would transform a poor and its position, even when it was controver- into the deep, churning Atlantic, a vast tiny country into a petrostate. For Exxon- sial. To that end Mr Raymond argued vocif- drilling vessel sits almost perfectly still. Mobil, the project is part of a bid to reassert erously against the Kyoto Protocol, an in- Thrusters work constantly to keep the its dominance. On February 1st the com- ternational deal to reduce greenhouse-gas boat’s centre within a three-metre radius pany announced annual results, declaring emissions signed in 1997. America with- above a well head on the seabed almost itself on track for ambitious growth. By drew from the agreement in 2001. 2km below. Workers fly in and out by heli- 2025, oil and gas production will be 25% copter. Some come from Guyana, some higher than in 2017. Well oiled America, their rubber-soled boots adorned ExxonMobil was once the world’s most Two decades after the merger with Mobil, with cowboy stitching. Once aboard they valuable company and is still a giant of the the company culture remains rigorous and manage towering drill pipes, guide robots industry. It has survived for 137 years, private. Its headquarters in Irving, Texas, near the ocean floor, monitor storms or emerging from the break-up of Standard are tucked away on a site occasionally tra- perhaps just cook. All these efforts are di- Oil in 1911to become the energy firm that in- versed by bobcats. Tech firms may offer rected towards a single goal: drilling as ef- spired both the greatest respect and the complimentary quinoa but ExxonMobil fectively as possible, so the ship can move greatest contempt. Exxon built a sprawling staff are clear-eyed about free lunch. Avo- to the next oil well and then the next. global empire of oil reserves, refineries and cados at the salad bar cost 55 cents extra. Companies had spent decades looking petrochemical plants, cementing its place In recent years, however, disappointing for oil off the coast of Guyana. In 2015 as a leviathan after its merger with Mobil in results and missteps mean that Exxon- ExxonMobil, the world’s largest publicly 1999. The company was notorious for giv- Mobil no longer looks invincible. Tech traded oil company, became the first to find ing little information to investors, judging giants are now more valuable. Under the it. The firm now estimates that more than that impressive cash flows and returns on leadership of Rex Tillerson, who left the 5bn barrels of oil lie beneath the seabed. If capital spoke for themselves. company in 2017 to become Donald 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist February 9th 2019 Briefing ExxonMobil 17

2 Trump’s secretary of state, ExxonMobil cals and in American shale-oil, where pro- paid $31bn in 2009 for xto Energy, a shale- In the pipeline 2 duction can rise and fall far more quickly gas firm, just before gas prices crashed. In Global energy demand, BTU* quadrillion than in big offshore projects, making it 2017 the company was forced to write down suited for an era of uncertainty. Like other 4.8bn barrels of reserves, nearly a fifth of EXXONMOBIL FORECAST 400 oil giants, ExxonMobil highlights its in- the company’s total, because low oil prices vestments in gas, which produces electric- had made extraction uneconomic. The 300 ity more cleanly than coal. But it is unusual firm’s return on capital employed, an im- Gas in its appetite for higher spending—it ex- pressive 49% in 2008, had crumpled to 9% pects an increase of 16% this year—and in by 2017 (see chart 1). 200 its bullish views about both gas and oil. ExxonMobil, along with other big oil Reserves are continuously drained, Mr companies, now faces existential risks, 100 Woods points out, so the industry must in- too. Calls are rising to reduce carbon emis- Oil vest to sustain production. “There is a tre- sions and limit the rise in global tempera- 0 mendous amount of growth required in a tures. According to the Intergovernmental depletion business just to stand still.” 200005 10 15 20 25 30 35 40 Panel on Climate Change (ipcc), doing so However ExxonMobil is investing not only becomes more difficult after 2030, as it Source: ExxonMobil *British thermal units to maintain production but also to increase would depend more heavily on draconian it as projects in America, Guyana and Brazil rules and big leaps in science. This has in- However ExxonMobil does not expect this begin pumping crude. creased pressure to hasten a transition to happen (see chart 2). Its forecast of fu- Investors greeted Mr Woods’s plan with from fossil fuels to renewable sources of ture oil demand, propelled by a growing dismay. Other oil companies were an- power. The regulation of emissions, law- population and rising incomes, makes ris- nouncing buy-backs, not big investments. suits and advances in clean-energy tech- ing temperatures seem all but inevitable, The company, newly solicitous, has tried to nology that this entails could force oil de- contends Kathy Mulvey of the Union of be more transparent. On February 1st Mr mand to fall and the price to plunge. Concerned Scientists, a pressure group. Woods took the unusual measure for a boss Against this backdrop Darren Woods, ExxonMobil, backed by 137 years of exper- of ExxonMobil of answering investors’ who replaced Mr Tillerson in 2017, has a tise, is working to supply more fossil fuels. questions on the annual earnings call. He strategy to ensure success for years to Activists are pressing oil companies to reported increased production and plans come—sticking to what ExxonMobil does change. Many oil companies, including for even higher capital expenditures in best. His intention, announced last year, is ExxonMobil, cut capital spending after the 2019. After a bumpy 12 months, the com- to spend more than $200bn over seven price of crude sank in 2014 (see chart 3 on pany’s share price ticked up. years. This will include big investments in next page). Some green advocates began to Environmentalists and green investors, petrochemicals and refining. But his bol- murmur that big oil firms might change for long critics of ExxonMobil, are trying to dest plan is for boosting the output of fossil good if they continued to cut investment knock the company off course. Several fuels. Mr Woods wants the company’s pro- and return cash to shareholders or if they American cities and counties are using the fits from oil and gas to reach about $23bn in pursued modest growth in oil production courts to demand that large oil companies 2025, triple what they were in 2017. while pouring money into renewables. pay for the cost of guarding against rising Royal Dutch Shell and Total, for example, sea levels. In October New York’s attorney- Fuel’s errand invested in wind and solar energy, as well general filed a suit alleging that Exxon- “We take a long-term view of the industry,” as electricity utilities. Mobil used one set of assumptions about Mr Woods explained recently. “We are pro- ExxonMobil’s view of climate change climate change in external documents and viding the energy needed by economies has progressed since Mr Raymond’s day. another for internal planning. That case is and by people’s standards of living.” Mr “We recognise, the industry recognises, pending. In January America’s Supreme Woods says he supports the goals of the broader society has grown to recognise the Court rejected the firm’s attempt to halt a Paris climate agreement of 2015, when gov- impact of combustions of oil and gas and separate investigation by Massachusetts ernments vowed to keep the rise in tem- the emissions that come with that and the over whether it misled the public about peratures “well below” 2oC relative to pre- threat that represents—the risk that repre- threats from climate change. industrial levels. To limit warming to 2oC, sents to the climate,” Mr Woods explains. Lawsuits are unlikely to vanquish let alone the 1.5oC that the ipcc recom- He insists that his firm looks “very closely ExxonMobil. Last year a federal judge in mends, oil production should decline. at the renewables space and the opportuni- California dismissed a lawsuit against oil ties to participate in that”. The company is firms, arguing that Congress and diplo- applying its geological expertise to re- macy, not courts, should handle the fallout Capital gains 1 search into carbon capture and storage. from climate change. “If I were trying to Return on average capital employed, % Spending on green technologies re- think of an existential threat to the com- mains minimal, however. European peers pany it’s not litigation,” says Andrew Logan 50 may be investing in utilities, but ExxonMo- of Ceres, a non-profit that works with in- ExxonMobil 40 bil has little appetite for them. “We have vestors to argue for sustainability, “it’s much higher expectations for the returns whether the business strategy is obsolete.” 30 on the capital we invest,” Mr Woods as- 20 serts. ExxonMobil plans instead to expand A fit of peak its usual business. On December 3rd Shell, ExxonMobil’s biggest risk appears to be a 10 under pressure from green investors, said world where oil demand peaks as measures Shell that it would tie executive pay to a plan to to combat emissions grow, and then prices BP 0 cut carbon emissions from its products fall. Projects might become uneconomic Chevron -10 even as ExxonMobil announced yet anoth- sooner than expected, stranding the com- er oil discovery off Guyana, its tenth. pany’s assets. Mr Woods says he is backing 2008 09 10 11 12 13 14 15 16 17 Some of the firm’s plans resemble those projects with low costs. He argues that his Source: RBC Capital Markets of its peers. It is investing in petrochemi- firm’s unusually high level of integration 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

18 Briefing ExxonMobil The Economist February 9th 2019

turns. He is not alone. Far from abandon- over, the carbon tax it favours would in- No spent force 3 ing them, the shareholdings of the world’s clude protection for oil companies from Capital expenditure, $bn 20 largest institutional investors in big oil climate lawsuits. The firm is also working to reduce leaks 10 companies climbed from 24% in 2014 to 27% in 2017, according to the International of methane, a powerful greenhouse gas, Chevron 8 Energy Agency. from its wells, pipelines and refineries. ExxonMobil Politicians may have more sway. e3g, a However the American Petroleum Institute Shell api 6 think-tank, simulated the interaction of ( ), of which Mr Woods is chairman, has different policies and corporate strategies. been a main force urging Mr Trump’s ad- BP 4 If the world were to move on to a pathway ministration to ease regulations on meth- compatible with warming below 2oC, the ane emissions. The api’s other efforts in- 2 price of oil would drop and a company with clude lobbying against incentives for ExxonMobil’s strategy—what e3g calls electric cars. 0 “last one standing”—might come into di- rect competition with large national oil Fossil record 2014 15 16 17 18 companies with very low production costs, As other oil and gas companies grapple Source: Bloomberg such as Saudi Aramco. with their own strategies, ExxonMobil may To date politicians, particularly in not prove an outlier in committing to busi- 2 of its various businesses and technology America, have been reluctant to legislate ness as usual. Even firms investing more in means it can produce more efficiently than for bold restrictions on carbon. That is in renewables are loth to give up fossil fuels, its peers. Take oil extracted in the Permian part thanks to ExxonMobil’s attempts to which are far more profitable. Total, bp and basin of Texas. ExxonMobil uses data anal- obstruct efforts to mitigate climate change. Chevron plan to increase production of oil ysis to drill for oil using extra-long wells, Mr Raymond worked to sow doubt about and gas. Analysts at rbc, a bank, expect then transports it to company refineries climate science. Mr Tillerson adopted a Shell to do so, too. and petrochemical plants nearby. more convoluted position. In 2009 he an- ExxonMobil is not alone in trying to Concern is growing among investors, nounced the company’s support for a car- sway the climate debate in its direction ei- however. In 2017, 62% of ExxonMobil’s bon tax, which was not under serious con- ther. Shell, Total and bp are all members of shareholders voted to require the company sideration in America, and argued against a the api. Marathon Petroleum, a refiner, re- to disclose how action to limit temperature cap-and-trade scheme for pollution per- portedly campaigned to ease Barack rises to 2oC would affect its business. mits, which was. Mr Tillerson supported Obama’s fuel-economy standards. bp spent ExxonMobil produced a document that the Paris climate agreement but also said $13m to help block a proposal for a carbon critics charged was too vague. This year that there was “no scientific basis” for lim- tax in Washington state in November. The shareholders will vote on a new resolution, iting warming to 2oC and warned that the Western States Petroleum Association, filed by the pension funds for New York world depended on fossil fuels for “our whose membership includes ExxonMobil state and the Church of England, to require very survival”. and Shell, also lobbied to defeat that tax. ExxonMobil to do what Shell has done and Under Mr Woods ExxonMobil’s policies While oil companies plan to grow, commit to reducing emissions not just on climate change remain marred by in- trends in cleaner energy are moving in the from its operations but also from the pro- consistencies. In October the company wrong direction. Investments in renew- ducts it sells. said it was giving $1m, spread over two ables fell as a share of the total in 2017 for Even if shareholders vote in favour of years, to a group advocating a carbon tax. the first time in three years, as spending on the resolution, ExxonMobil, like Shell, ExxonMobil maintains that a carbon tax is oil and gas climbed. In 2018 carbon emis- would probably have an escape hatch. Shell a transparent and fair way to limit emis- sions in America grew by 3.4% as economic can increase production of oil and gas un- sions. But the sum is less than a tenth of its activity picked up, even as coal fell out of der its new targets, as long as it takes other federal lobbying spending in 2018. More- favour. Mr Woods maintains that any steps such as increasing energy production change to the energy supply will be gra- from wind and solar. Shell also may adjust dual. “I don’t think people can readily un- its targets, to keep its plans consistent with derstand just how large the energy system society’s progress towards the goals of the is, and the size of that energy system will Paris treaty. If governments do not restrict take time to evolve,” he argues. carbon emissions, Shell can ease up too. ExxonMobil meanwhile continues to search for oil, reshaping the world as it Barrelling on goes. In Guyana there is much debate over ExxonMobil might have to change its strat- how to use the royalties from oil. Possibili- egy more dramatically if more investors ties include programmes for the poor and turn away from oil and gas. But that looks infrastructure to deal with flooding. Guy- unlikely at the moment. Gas faces growing ana’s capital, Georgetown, rests below sea competition from wind and solar but for level. Water often laps city streets. now it can help replace coal plants. Oil still Out at sea, ExxonMobil is working to in- has a stranglehold on transport. In an opti- crease production. By next year an under- mistic scenario only 15% of the world’s cars water web of pipes will connect wells on will be electric by 2030. Lorries and planes the seabed to a vast vessel. From there the will be electrified more slowly still. oil will be transferred to smaller tankers, Thomas DiNapoli, who oversees New then to the vast infrastructure that can re- York’s pension fund, has played a central fine and transport it until it reaches con- role in putting pressure on ExxonMobil. sumers in the form of fertiliser, plastic bot- However he says his fund will not divest tles, polyester or, most likely, petrol. From soon, in part because oil companies are beneath the ocean floor to your car’s tank, held by big indices that generate good re- These boots are made for drilling for about the price of a gallon of milk. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS United States The Economist February 9th 2019 19

The INF treaty could hit key targets while remaining a safe distance away from the front line, without Trick or treaty resorting to intercontinental ballistic mis- siles (icbms). Appealing, but dangerous: icbms took 30 minutes to reach their tar- gets; mid-range missiles got there in under ten. “It was like holding a gun to our head,” remarked Mikhail Gorbachev. He and Ron- WASHINGTON, DC AND MOSCOW ald Reagan agreed to scrap all such land- America calls time on a cold-war pact, ushering in a new age of missiles based missiles, conventional and nuclear. atriot park in Kubinka, 60km south- America. “If Russia’s doing it and if China’s By the 2000s the treaty began to chafe Pwest of Moscow, is a military Disney- doing it, and we’re adhering to the agree- Russia. Its decrepit armed forces could not land. Families can picnic among rows of ment,” complained Donald Trump in Octo- afford modern warships, submarines and Soviet-era aircraft. Children can frolic over ber, “that’s unacceptable”. The pact will die warplanes to carry plentiful missiles, tanks. Those doing so on January 23rd once America’s six months’ notice expires whose utility America had demonstrated might have noticed a long green tube, stud- in the summer. “The likelihood of compro- with bombing campaigns in the Middle ded with ridges and dials, roped off and mise is zero,” says Adam Thomson, Brit- East and the Balkans. To Russia’s south and watched by stern guards. This was not an ain’s envoy to nato until 2016. east, countries like Israel, Iran, China and exhibit. It was, supposedly, the canister for That brings over 30 years of arms con- Pakistan were accumulating land-based the 9M729 missile. Its launcher, an impos- trol to a close. The inf treaty was forged in missiles. In 2005 Russia’s defence minister ing truck, stood nearby, as Lieutenant-Gen- 1987 to defuse a missile race between Amer- proposed that the treaty should be junked. eral Mikhail Matveyevsky, Russia’s missile ica and the Soviet Union. Intermediate- Not long after came Russia’s first test of the chief, pointed to a diagram of the missile’s range nukes were appealing because they 9M729. Since 2016 four battalions, roughly innards. “All tests of surface-to-surface 100 missiles, have been deployed to two missiles,” he declared, “were conducted to Also in this section bases east of the Ural mountains and near a range that is less than the inf [Intermedi- the Caspian sea. “The 9M729 is core to Rus- ate-Range Nuclear Forces] treaty limit.” 20 Missiles and mistrust sian military thinking in terms of what The show-and-tell did not impress they need to fight a regional war,” says Pra- America, whose diplomats had turned 21 Virginia and shoe polish nay Vaddi, who worked on the issue for the down an invitation to the theme park. On 21 Unions and the FBI in Philly State Department until October. February 1st America declared it would pull American officials may decry the cheat- out of the inf treaty. It is exasperated not 22 Botox bars ing. But they surely sympathise with the only with ten years of Russian cheating but 23 Elizabeth Warren’s ideas impulse. In recent years Pentagon officials also with the rapid growth in China’s un- have fretted over a widening missile gap in 24 Lexington: Donald Trump and shackled arsenal of over 2,000 missiles, the Pacific. “China has a massive advantage 95% of which are of the range forbidden to conservatism over us,” says a former American army offi-1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

20 United States The Economist February 9th 2019

2 cial. “It cannot be overstated how impor- low the “destruction of its critical infra- this a high enough price to pay for adven- tant it is that we can field precision-guided structure without the use of nuclear turism, arrogance, contempt for the inter- missiles, unlimited by range.” warheads.” In a crisis, a jittery Russia ests and rights of others?” the Soviet leader The inf treaty does not prohibit putting would not necessarily make wise choices. said. “How far we had come from the days intermediate-range missiles on ships, sub- Another option for nato would be to re- of tension,” George Shultz, Reagan’s secre- marines and aircraft. But these are expen- jig the American-led missile-defence tary of state mused to himself. sive (a modern destroyer costs $1.8bn), de- shield in Poland and Romania so that it Neither Russian nor American military mand manpower and have other things to could cope with Russian cruise missiles and security-service bosses shared the fes- do. Hence the appeal of land-based mis- like the 9M729, rather than just Iranian and tive mood. Russia’s top brass, who had siles. “A mobile tel requires a couple of North Korean ballistic ones. Yet that might spent their entire lives fighting America, drivers and operators,” says the former offi- provoke an even bigger fight in nato. felt betrayed. America’s cold warriors cial, referring to the transporter-erector- The death of the inf treaty marks “the feared that Mr Gorbachev was trying to launcher trucks used to fire missiles. “It is end of the post-cold war era,” says Bruno smother them with kindness and lure virtually impossible for the enemy to find.” Tertrais of the Foundation for Strategic Re- them into a trap. Thirty years later, the re- In a review of American nuclear posture search, a French think-tank. What is clear vanchists’ view has finally prevailed. While last year, the Trump administration said it is that the Trump administration has the inf treaty has, in effect, been eroding would respond to Russia’s violation of the pulled the plug without a clear sense of for years, its scrapping is symbolic of the inf treaty by building a nuclear-tipped sea- how to navigate the era to come. 7 distrust that now permeates relations be- launched cruise missile (which would be tween America and Russia. inf-compliant) and reviewing “concepts “The problem is that you [America] have and options” for a conventional land- Missiles and mistrust been playing the winner for too long,” says based one (which would not be). But a de- Evgeny Buzhinsky, a former senior general ployable weapon is some way off. Meanwhile, in and member of the Russian general staff. The us Army is already working on a “Putin is not Gorbachev,” he adds. Whereas Precision Strike Missile (prsm) due in 2023. Moscow the White House sees the end of the inf Its range could easily be extended beyond treaty as a recognition of reality and the the current inf ceiling of 499km. But even treaty’s failure to restrain Russia and Chi- MOSCOW twice that would not get from Warsaw to na, along with several other countries, The Russian government’s suspicion of Moscow. A longer-legged option would be from developing the banned missiles, the America is a self-fulfilling prophecy to tweak the sea-based Tomahawk to fire Kremlin sees it as the manifestation of from land; that is what America did during he white house was draped with a red American triumphalism and a vindication the inf crisis in the 1980s to produce the Tflag, with hammer and sickle. Inside, of Mr Putin’s inbred distrust of America. 2,500km-range Gryphon. the Soviet delegation led by Mikhail Gorb- “The Soviet Union is not a weak, poor achev sang “Moscow Nights” and celebrat- country that can be pushed around,” Vladi- Let’s do launch ed a landmark agreement to eliminate an mir Kriuchkov, the head of Soviet intelli- But Pacific geography is forbidding. Guam, entire class of nuclear weapons that had gence, told his American counterparts in the likeliest host for American missiles in threatened Europe for years. It was Decem- 1987. Mr Putin, a student of Mr Kriuchkov, Asia if Japan demurs, is over 3,000km away ber 8th 1987. The next day America’s great has made that his policy. Before she joined from Shanghai. An entirely new missile and good, a group which included a pushy the National Security Council Fiona Hill, would be required. Hypersonic boost-glide entrepreneur called Donald Trump, an expert on Russia, wrote that for Mr Pu- missiles, which skip off the atmosphere at flocked to lunch at the State Department to tin, the “paradigm has not changed so great speed, might fit the bill. But ground- hear Mr Gorbachev speak. “Two world much. Yes, communism is gone and the So- launched ones are years away. Democrats, wars, an exhausting cold war, plus small viet Union has crumbled but, from his van- who took control of the House in January, wars—all destroying millions of lives. Isn’t tage point, Russia did not go anywhere. have taken a dim view of the swelling de- Military might still makes right.” fence budget. They may query why the Pen- Mr Putin saw treaties such as the inf tagon cannot make do with air- and sea- agreement not as evidence of goodwill be- launched systems already in the pipeline. tween the two countries but as a sign of Nor is it obvious where new missiles Russia’s relative weakness, which he has would be put in Europe. Though nato tried to correct. As a former kgb operative, strongly backed America on February 1st, Ms Hill argued, he is obsessed with securi- declaring that “Russia will bear sole re- ty or bezopasnost, literally the “absence of sponsibility for the end of the treaty,” its threats”, and constantly fights dangers members will be less keen on welcoming which, in his mind, come almost exclu- missiles, even non-nuclear ones. sively from America. So what America sees A few allies, like Poland, which is trying as Russia’s aggression, whether in Ukraine to seduce Mr Trump into setting up a new and Syria or in presidential elections, Mr tank base, would probably embrace Ameri- Putin sees as a way of deterring America can arms on their soil. But a deal with Po- and preserving Russia’s freedom to act land struck over nato’s head would com- without restraint in its sphere of influence. pound anxiety over America’s The problem, Ms Hill argued, is that commitment to the alliance. It might also American politicians find it hard to com- be seen as destabilising. “Missiles de- prehend that Russia still sees the United ployed on the territory of newer nato States as a threat after the end of cold-war members could reach Russia’s main com- competition. This leads to a spiral, which mand points in less than five minutes,” has dragged down the inf treaty. Russia notes Pavel Zolotarev of the Russian Acad- has long cheated on its obligations, but emy of Sciences. That, he warns, would al- Rocket men cried foul when America decided to sus-1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist February 9th 2019 United States 21

2 pend the treaty, and is now presenting that publican House speaker of Virginia’s Gen- decision as proof of America’s disregard for eral Assembly, would become the state’s the post-cold-war security architecture. governor. Mr Cox holds the speakership be- Few Western policymakers have much cause Republicans won a 51-49 majority in hope of improving relations with Mr Putin. the lower House after the state’s board of As a former kgb operative, he prefers clan- elections drew a name out of a hat in a dis- destine actions and feints to direct con- trict where the Democratic and Republican frontation. These include engaging in co- candidates received exactly the same num- vert operations, such as spreading ber of votes. Mr Cox, assuming he was nev- disinformation, encouraging cyber-crime er photographed in blackface, would then or using mercenaries, all masked as non- get to appoint a lieutenant-governor, and state actors. In the words of one senior the Republican-controlled legislature American official, the task is not to win would elect an attorney-general. over Mr Putin, but to manage the conflict Republicans, who have not won a state- and “professionalise” the relationship. The wide race in Virginias since 2009, are sali- administration may hope that dismantling vating at the prospect of claiming all three the treaty will lead to a more sincere con- top posts. But as long as they line up behind versation about security. So far, however, a president whose record on race or grop- there is little indication that Mr Putin will ing is not exactly woke, their condemna- go along. Instead, the Kremlin is using tions of Messrs Northam, Fairfax and Her- America’s move for propaganda purposes. ring may ring a little bit hollow. Russian military strategists say Russia Yet if the Democrats’ position is that do- should assume that America will place new ing something offensive while in universi- missiles in Europe and get ready to re- ty renders someone unfit to hold office, re- spond. Should America proceed, “we’ll Governor? gardless of whether his attitudes and have to think not only about missiles in Ka- political views have since changed, they liningrad, but also those in Chukotka that Over the next two days, Mr Northam risk setting an impossible standard. Per- can at least reach Seattle”, Mr Buzhinsky provided an object lesson in how not to re- haps their current zeal mirrors the lack of it says. The presence of nuclear-armed mis- spond to a political crisis. Shortly after the across the aisle: Democrats may feel that siles in eastern Europe, he adds, would trig- picture emerged, he apologised for “the de- they must be less forgiving because Mr ger a replay of the Cuban missile crisis. cision I made to appear as I did” (he did not Trump has made the previously unsayable “Then, as our officers say, it’s time to think say whether he was in Klan robes or black- acceptable. Perhaps the three accused men not about a retaliatory strike, but about a face). During a surreal press conference he have also taken a lesson from the presi- pre-emptive one.” Russia and America then said that in fact he was not in the pic- dent: that if they hunker down and with- have indeed come a long way from the days ture, though he admitted to once having stand the outrage, the news cycle will even- of Gorbachev and Reagan. 7 “darkened my face as part of a Michael Jack- tually move on to fresher meat. 7 son costume.”He appeared ready, after a re- porter’s question, to start moonwalking, Political scandals until his wife leaned over and whispered: Unions and the FBI “Inappropriate circumstances.” These are the Democrats from Nancy Pelosi to Mr Secrets unfurled Herring have urged him to resign. He has so breaks far resisted, and is reportedly considering leaving the Democratic Party and serving out the rest of his term (Virginia governors WASHINGTON, DC cannot run for a second consecutive term) PHILADELPHIA Scandals ensnare Virginia’s top three City politics seem stuck in the era of as an independent. If he steps down, he elected officials Gerald Ford and Jimmy Carter will be replaced by Justin Fairfax, the 39- s the economist went to press, con- year-old, African-American lieutenant-go- hiladelphia’s city hall is an im- Asumer-protection offices in Virginia vernor, also a Democrat. Pmense 700-room building, even taller had not yet announced plans to affix a But Mr Fairfax has problems of his own: than the Capitol in Washington, dc. A stat- sticker to every canister of shoe polish sold Vanessa Tyson, a university professor, said ue of William Penn, the city’s founder, in the state reading “for footwear, not he sexually assaulted her at the Democratic stands on top of it. Until 1987 no building in faces”. That the stuff should be used to National Convention in 2004. Mr Fairfax the city was higher than the top of Penn’s brighten shoes rather than darken faces admitted to knowing Ms Tyson, but said hat. High-rises now dwarf the statue. John may seem obvious to most, but not to that she was “very much into a consensual “Johnny Doc” Dougherty, head of the Local Ralph Northam and Mark Herring, respec- encounter.” Ms Tyson said that he physi- 98 electrical union, has long helped shaped tively Virginia’s governor and attorney- cally forced her to perform oral sex. Philadelphia’s politics as well as its skyline. general, both Democrats. Should Messrs Northam and Fairfax How he did so is outlined in a 160-page fed- On February 1st, a website released Mr both resign, Mr Herring is next in line. But eral indictment, containing 116 counts of Northam’s page from his 1984 medical- on February 6th, Mr Herring admitted that embezzlement, fraud and public corrup- school yearbook, on which a picture he too attended a party in wigs and black- tion, which reads like a relic from the showed a man in blackface grinning next to face, “dressed like rappers we listened to at mid-1970s. a man in a Ku Klux Klan outfit. One of Mr the time, like Kurtis Blow.” Mr Herring “I got a different world than most peo- Northam’s former classmates, angry at the apologised profusely, and left open the ple ever exist in. I am able to take care of a governor’s clumsily worded defence of a possibility of resignation, but for the mo- lot of people all the time,” said Mr Dough- bill loosening restrictions on abortion, re- ment he too remains in office. erty, in a conversation caught by an fbi portedly alerted the website to the page. If all three leave then Kirk Cox, the Re- wiretap. The indictment alleges that he and1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

22 United States The Economist February 9th 2019

2 seven pals, including a city councilman, Narcissism embezzled more than $600,000 of union money, collected from members’ dues, to fund personal shopping sprees, a $20,000 Hold still security system and dinners in New York and Atlantic City, among other things. NEW YORK Botox bars are coming to a city near you As well as controlling the electrical un- ion, Mr Dougherty is head of the building ou can change someone’s life with Celebrities like the Kardashians, Bella trades council, which represents 50 local “Ya bit of lip,” says Dr Alexander Hadid and the Real Housewives are unions. If a construction site attempted to Blinski, the co-founder and chief medi- credited with the mainstreaming of use non-union workers, he ordered a giant cal officer of Plump Cosmetics and In- injectables, which are the most common inflatable rat to be put outside. He fun- jectables, a beauty salon in New York. His minimally invasive cosmetic procedure nelled millions of dollars to help Demo- practice, which feels more like a cross performed, according to data from the crats. His support helped two mayors win between a cupcake shop and a SoulCycle American Society of Plastic Surgeons. elections, including the incumbent, Jim studio than a place where people willing- Clients are mostly millennials in search Kenney. His brother, Kevin Dougherty, won ly go to let needles full of neurotoxins of a plumper pout, but also include a state Supreme Court seat with union help, gently paralyse the muscles in their daughters who bring their mothers, then helped strike down the state’s con- faces, is one of a growing number of wives who bring their husbands, Wall gressional map for being unconstitution- establishments in America aimed at Street bankers keen to banish an angry- ally gerrymandered. making injectable cosmetic treatments looking furrowed brow or drag queens in Donating to campaigns, boosting can- seem less clinical. search of more dramatic cheeks. didates and supporting policies are not il- “West Coast Lips” are a favourite. With “I liked that the filler was natural- legal. But Mr Dougherty’s clout went fur- 20% more volume than “East Coast Lips”, looking—I didn’t want to look like a ther. Bobby Henon, who was also indicted they are fuller and appear more en- balloon or like I lived in Los Angeles,” on January 30th, stayed on the union pay- hanced than the subtle, work-with-what- says Richelle Oslinker, a patient of Dr roll even after he was elected to the city you’ve-got plump of their east-coast Blinski’s. Nate Storey, a magazine editor, council. This is not illegal either, but the cousin, which is more rosebud than decided to get a few shots around his indictment alleges that he used his posi- rhododendron. “Instaready Cheeks” are 30th birthday. He did so because his tion to do Mr Dougherty’s bidding. In 2016 another popular treatment among those preferred hairstyle—a man bun—gave Philadelphia became the first big city to who want a more influencer-worthy him no place to hide the wrinkles creep- impose a tax on fizzy drinks. Text messages contour to their jowls. They are achieved ing across his forehead. between the two men indicate that Mr He- with a dose of an injectable filler and cost Although nearly 10m of these proce- non’s position was part of a vendetta just over $1,000. More modestly priced dures were performed in America in 2017, against the Teamsters union, which feared treatments include the “Goodbye Gum- there is reason to approach them with the loss of delivery jobs. According to the my Smile”,which restrains the muscles prudence. The main ingredient in Botox, indictment, Mr Dougherty said to a union in the upper lip, and is for those who which is generally used in the upper official: “Let me tell you what Bobby He- want to flash more white in their posts. A third of the face, is derived from the non’s going to do…put a tax on soda again $2,000 treatment helps those who wish substance that causes botulism. The two and that will cost the Teamsters 100 jobs in to minimise their underarm sweat pro- most common injectables are Botulinum Philly.” The lowest point in the indictment duction in ways that the humble antiper- Toxin Type a (commonly marketed as describes Mr Dougherty allegedly strong- spirant has yet to master. Botox) and soft-tissue fillers. arming a children’s hospital because the Botox is often referred to as the “gate- manufacturer of an mri machine required way drug” to soft-tissue fillers, which are its own (non-union) workers to install it. generally used in the lower two-thirds of Mr Dougherty pleaded not guilty to all the face. Many are made from naturally charges. It is a municipal election year and occurring substances like hyaluronic politicians still need his money and his acid—which is found in the human body, members to get out the vote. They also sus- especially in the fluid around the eyes pect he is vengeful. According to the fbi, and joints—but they can have serious Mr Dougherty once got Mr Henon to inves- side-effects. If accidentally injected into tigate a towing company that seized his car. a blood vessel, for instance, they can He remains head of his union. cause tissue death, permanent blindness Still, if he is convicted, that would shake or a stroke. up the “Democratic party’s wheezing polit- Botox generated $3.2bn in worldwide ical machine”, says David Thornburgh of sales in 2017, which were buoyed by a the Committee of Seventy, a government multimillion-dollar marketing cam- watchdog. In any case, he may be Philadel- paign starring a retired American foot- phia’s last powerful local union leader. The ball player, Deion Sanders. This was an national ironworkers’ union has already attempt to increase its use among men, taken control after its local leaders ordered who are estimated to make up 15% of the a Quaker Meeting house, built by non-un- cosmetic injectable market. Revenue ion workers, to be torched. The national from the neurotoxin is expected to reach carpenters’ union also kicked out the city’s $4.5bn by 2024. Plump, one of the biggest union leader, who had led the local branch users of Botox in America by volume, has since 1981. Mr Dougherty has damaged the recently opened its second injectables local’s reputation. Members may have dif- bar in New York City, with plans to ex- ficulty securing work and contracts. Who’s Go west pand to Miami. the rat now? 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist February 9th 2019 United States 23

The ideas primary To “predistribute” income Mrs Warren would give more economic power to work- Warren’s world ers, imitating German industry by letting workers elect at least 40% of the seats on corporate boards. Importing the German context of less adversarial labour relations would prove harder. When it comes to fixing America’s WASHINGTON, DC health-care system—perhaps the industry Understanding Elizabeth Warren’s unusual brand of wonkish populism most plagued by market failure—Mrs War- lizabeth warren, the Massachusetts ren is more cautious than some other Esenator known best for railing against prominent Democrats. She has offered pro- big banks and billionaires, was a registered posals to shore up the insurance exchanges Republican for a spell in the 1990s. It is an set up under Obamacare. She has also put odd bit of biography for Mrs Warren, who is forward legislation which would inject now running for president as a Democrat, competition into the generic-drugs mar- and is routinely caricatured as the anti- ket, which is rife with anti-competitive be- capitalist Antichrist. Unlike Bernie Sand- haviour, by setting up a public manufactur- ers, who proudly describes himself as a so- er of drugs. Yet she also co-sponsored Mr cialist, Mrs Warren has said she is “a capi- Sanders’s “Medicare for all” bill, which talist to my bones.” would upend the American health system, Government, she thinks, should be in transforming it into a single-payer model the business of repairing market failures. by eliminating private health insurance She wishes to arrest inequality not just and rapidly increasing taxes. The two ap- through redistribution, by boosting wel- proaches cannot coexist. But paying fealty fare and entitlement spending, but “pre- to left-of-centre slogans that stand little distribution”, which means rewriting rules chance of becoming law may be the price of that contribute to lopsided incomes in the running in the Democratic primary. first place. A brainy wonk with a populist Mrs Warren’s most intriguing plans edge, she has pumped out ideas that are at concern housing. High rents in productive times brilliant, at others outlandish, but cities limit opportunity and economic seldom half-baked or easily dismissed. growth. Fixing this with federal policy is The best way to understand Mrs War- Lizzie the riveter difficult, since planning laws are so decen- ren’s worldview is to examine her academ- tralised. Mrs Warren proposes to coax cit- ic work. Before she went to Washington, That book was a nod towards Mrs War- ies into changing restrictive development she was a law professor at Harvard (having ren’s future fixations. In it, she also intro- rules for a share of a large pot of money— grown up working-class in Oklahoma) pre- duced her toaster analogy: no regulator $10bn in total—while also funding large occupied with the study of debt, credit and would allow the sale of a toaster with a one- public-housing developments. A paper by bankruptcy. Her scholarship began as an in-five chance of burning down a house, Mark Zandi, chief economist for Moody’s exploration of middle-class financial in- yet there is no similar concern over mort- Analytics, claims that this could bring stability. She published research in the ear- gages with a one-in-five chance of wreck- rents for low-income families down by ly 2000s revealing an extraordinary in- ing a family’s finances. This would become 10%. She also wants the federal govern- crease in bankruptcy filings—430% over the founding metaphor for the Consumer ment to assist first-time homebuyers in two decades—with many by middle-class Financial Protection Bureau, a federal formerly segregated neighbourhoods. families. Mrs Warren showed that the com- agency which was her brainchild and cata- bination of precarious family finances pulted her from academic obscurity to na- Warren peace with poorly regulated markets created op- tional fame. On matters of trade and foreign policy, Mrs portunities for predatory lending, says Since winning her Senate seat in 2012, Warren’s thinking is less sophisticated. Elisabeth Jacobs, the senior director for Mrs Warren and her staff have busied She applies her domestic mantra—that family economic security at the Washing- themselves publishing proposals on tax- market failure and corporate greed are the ton Centre for Equitable Growth, a left- ation, corporate governance, lobbying, taproots of dysfunction—to international leaning think-tank. housing and health care. She proposes a affairs, with peculiar results. If the Ameri- In “The Two-Income Trap”, a book writ- wealth tax on those with fortunes above can economy is rigged, then trade deals are ten with her daughter in 2003, Mrs Warren $50m to stymie the growth of inequality meta-riggings of the global economy, explored the reasons for this. Even though and fund other programmes. Thomas Pi- crafted by multinational firms to weaken more women were going to work, boosting ketty, the French economist who wrote American labour relative to capital. household incomes, family finances were “Capital in the Twenty-First Century”, has In a recent essay for Foreign Affairs, Mrs increasingly fragile. Armed with second in- long advocated a similar policy. An accom- Warren sketched out a foreign-policy man- comes and deregulated credit instruments, panying analysis by Emmanuel Saez and ifesto of sorts. It includes standard stuff for these families bid up the cost of housing in Gabriel Zucman, two economists and col- Democrats: a dislike of foreign entangle- areas near good schools, making them laborators with Mr Piketty, suggests that ments and a suspicion that defence spend- more vulnerable financially, rather than such a tax would raise $2.75trn over 10 ing is inflated. But she also struggled to es- less. Interestingly, one of her proposed sol- years. Their assumptions are probably too cape domestic concerns. Her bold new utions at the time was a universal school- rosy—the wealthy are good at avoiding tax- proposal is that “us foreign policy should choice voucher to try to decouple housing es, and determining the size of fortunes is not prioritise corporate profits over Ameri- and schooling, an intriguing idea that trickier than tracking annual incomes. Mr can families”. Daniel Drezner, a professor would be less than welcome in contempo- Piketty’s native France has ditched its at Tufts University, describes this as rary Democratic circles. wealth tax. “Trumpism with a human face”. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

24 United States The Economist February 9th 2019 Lexington More chaos than change

Donald Trump is the main barrier to the overdue revision of conservatism he once promised energy thinking of the Trump era even plainer. The Reagan revolu- tion was fuelled by years of intellectual ferment and more or less scripted by Heritage. The case for Bill Clinton’s shift to the centre was made by the Progressive Policy Institute, his “idea mill”. Such examples emphasise how peculiar the Trump insurgency is. Rea- gan and Mr Clinton were messengers of a new politics that had al- ready put down deep roots in their parties. Mr Trump, by contrast, caught most conservative thinkers unawares. At best they were therefore always going to take time to adjust to the questions he posed. Yet the reality has turned out to be much worse than that. Instead of fostering an overdue spirit of reform, in a party that has lost the popular vote in four of the past five presidential elections, Mr Trump has emerged as the main barrier to it. This is most obviously because he ditched many of his icono- clastic ideas the moment he took office. Instead of the tax rise on high earners he promised, he backed a plutocratic tax cut. Instead of supporting universal health care, he tried to dismantle Obama- care. In part an exercise in self-preservation—because Mr Trump needs Republican leaders to instruct him and defend him against the investigations he faces—this ensured most learned nothing from his rise. Pre-Trump, the most powerful case for reform was proposed by a group known as reform conservatives that included n his second state-of-the-union address this week Donald Mr Levin, who argued that Republicans could not win without re- ITrump invited the Democrats to help him cut prescription-drug freshing Reaganism. Mr Trump has offered an even more powerful prices, provide paid family leave and splurge on infrastructure. riposte to that. His method—campaign for the base, govern for the Most commentators understandably viewed this plea for biparti- elite, and maintain unity through a mix of partisanship and nativ- sanship with scepticism. Shortly after last year’s speech the presi- ist dog-whistling—has proved unpopular. Yet it gave Republican dent accused Democrats of “treason” for failing to applaud him. leaders a historic opportunity to pursue hard-right policies, which Hours before this year’s he described Chuck Schumer, the Demo- they will want to reprise, if necessary by the same means. cratic leader in the Senate, as a “nasty son of a bitch”. The intellectually chilling effect of Mr Trump is even starker Yet the more remarkable thing about Mr Trump’s wishlist is among those who actually wanted the sorts of populist revisions how anathema its items, all signature promises of his election he once promised, the former “reformicons”. Presented with a campaign, remain to the Republican establishment he has pre- choice of embracing Mr Trump’s disruption, nativist warts and all, sided over for more than two years. In domestic policy, at least, the or defending the unreformed status quo against nihilism, the makeover of conservatism he promised, with his disdain for or- group splintered. Some of its members, including the journalists thodoxy, flexible view of government and professed concern for David Frum and Ramesh Ponnuru, are prominent Never Trump- the losers of globalisation who flocked to his rallies, has not hap- ers. Meanwhile, those who have stuck by or close to Mr Trump have pened. He needs Democrats to fulfil his heterodox promises main- been tarnished. Marco Rubio, a shy reformicon during the 2016 Re- ly because the Republicans would not. publican primary, has to his credit doubled down: he is a rare Re- The same resistance to his populist socioeconomic agenda is publican fan of paid family leave. Yet the senator’s efforts to defend apparent across the conservative intelligentsia. No important Mr Trump—including over his policy of locking up immigrant think-tank has taken it up. The grandiose American Enterprise In- children—has damaged his credibility with nonpartisans without stitute is still plugging away at the small governmentism its do- obviously boosting his arguments for reform among Republicans. nors love. The once-mighty Heritage Foundation has become an No wonder many conservative thinkers prefer to avoid the ad- uncritical cheerleader for the administration’s tax-cutting and na- ministration altogether. “Trump has made whole areas of policy tivism. One or two smaller centre-right shops are doing interest- radioactive,” says Stuart Butler, a scholar at the Brookings Institu- ing work, for example the R Street Institute’s on organised labour. tion who, while at Heritage during the 1980s, was involved in de- Yet instead of steering into Mr Trump’s agenda, they are tending to veloping Reaganism. His response is to focus on state government veer off it. Progress on the rethinking of Reaganite shibboleths that and other areas where Mr Trump is absent. his campaign promised has been scattered and rare. The hoopla generated by a recent book on labour markets by Oren Cass of the Making Rubes of them Manhattan Institute, which made a conservative case for wage By stifling and discrediting the most interesting aspects of his own subsidies and other interventions to promote the dignity of work agenda, Mr Trump risks causing his party long-term damage. His among strugglers, was both justified and indicative of this. It high- combination of tax cuts and border walls is a losing strategy that lighted the broader lack of progress on what was predicted to be the next Republican presidential nominee is nonetheless likely to the major intellectual challenge posed by Trumpism. “It has not pursue. The absence of much new thinking on the centre-right been a productive time,” concedes Yuval Levin, a scholar who is no alone suggests that. What a wasted opportunity it is. Were it not for fan of Mr Trump although a proponent of the ideological refresh Mr Trump, reform-minded conservatives would probably be cut- that the president had appeared to want. ting a far more Trumpian path (loosely defined) than they are now. A comparison with past political realignments makes the low- Their petrified ideology would be better for it. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Americas The Economist February 9th 2019 25

Canada’s foreign policy our national self-interest,” she says. Canada’s Liberal government is there- The jungle closes in fore sticking with the foreign policy it adopted when it took office in 2015, but tweaking it to take account of Mr Trump’s unpredictability. It has three main ele- ments: to work with like-minded countries to shore up multilateral institutions; to in- OTTAWA vest more in the armed forces; and to diver- A mid-sized democracy copes with a forbidding new habitat sify trade. The question is how well this n february 4th Canada was among tors. China has arrested two Canadian will work in a jungle-like world. Ofriends. It hosted a meeting of the Lima citizens and sentenced another to death for Since its founding as a confederation in group of a dozen countries, most of them drug-trafficking. “I can’t recall a govern- 1867, Canada has sheltered under the pro- Latin American, that are trying to find a sol- ment that has had to deal with so much tection of a superpower, first Britain and ution to the crisis in Venezuela (see Bello). geopolitical flux and an erratic us ally,” then the United States. At first, Canada re- Justin Trudeau, Canada’s prime minister, says Andrea Charron, a security specialist sisted American influence. Confederation pledged C$53m ($40m) in humanitarian at the University of Manitoba. and the construction of the Canadian Pacif- aid. This is how Canada likes to conduct Canada’s instinct is to redouble its com- ic railway were attempts to avoid being diplomacy, as an enthusiastic member of a mitment to old principles rather than to swallowed whole. After 1988, when Canada team of countries that can accomplish adopt new ones. It remains a vocal defend- signed a free-trade agreement with the Un- more together than they would separately. er of human rights, which pleases idealists ited States (replaced in 1994 by the North It “exemplifies the approach we are taking but annoys despots. Ms Freeland says that American Free Trade Agreement, or around the world”, says Chrystia Freeland, one of her favourite new books is Robert nafta), resistance to American influence Canada’s foreign minister. Kagan’s “The Jungle Grows Back: America weakened. Relations with the United That approach is out of fashion. Under and our Imperilled World”, a gift from Ger- States became so cosy that Canadian dip- Donald Trump the United States belittles many’s foreign minister, Heiko Maas. It ar- lomats referred to them as “intermestic”, a allies and undermines international insti- gues that jungle-like chaos is taking over cross between international and domestic. tutions it had helped build. Undemocratic the ordered garden created by the United “You don’t know what you’ve got till it’s China and Russia throw their weight States. Ms Freeland believes that Canada gone,” sighs Ms Freeland, quoting a song by around. Canada is unhappy. The United must fend it off as best it can. “The rules- Joni Mitchell. Tensions began after the ter- States, its biggest trading partner by far, has based international order is powerfully in rorist attacks in New York on September slapped tariffs on Canadian steel and alu- 11th 2001, when the United States tightened minium exports, preposterously citing Also in this section border controls. This dramatically slowed “national security”. China, which ought to trade. They got worse with Mr Trump’s ta- be a promising economic partner, is pun- 26 A win for Jair Bolsonaro riffs, which Mr Trudeau called “insulting”, ishing Canada for arresting a Chinese exec- and his demand for the renegotiation of 28 Bello: The Venezuelan dinosaur utive at the behest of American prosecu- nafta. The United States first struck a deal 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

26 The Americas The Economist February 9th 2019

2 with Mexico, nafta’s third partner, which tions with China are in a deep freeze. India, tors declared their voting intentions on Canada reluctantly accepted. another potential partner, has turned Twitter, where the hashtag #RenanOut was Foreign-policy boffins once fantasised frosty, in part because it believes that Mr trending. In one vote, the 81 senators mys- about setting a truly independent course Trudeau does not take seriously the threat teriously cast 82 ballots. Realising he for Canada, but that now seems unrealistic. to it from Punjabi separatists, some of would lose, Mr Calheiros dropped out. Few small countries succeed when they whom live in Canada. This was a victory for Brazil’s populist spurn their neighbours, notes Margaret Canada’s quest for new friends has not president, Jair Bolsonaro, who won an elec- MacMillan, a historian. The main example been helped by its defence of human rights tion in October by campaigning against of a neighbour that has tried to break free of and the rule of law. It irritated Saudi Arabia such leaders of the establishment as Mr the United States’ influence is not an en- last August by demanding the release of Calheiros. No one can accuse the senate’s couraging one: Cuba, which allied with the two women’s-rights activists and again in new president, Davi Alcolumbre (pic- Soviet Union and is now a dictatorship January by giving asylum to a Saudi woman tured), of being that. The 41-year-old first- with skimpy rations. fleeing her family.In retaliation, Saudi Ara- time senator (elected in 2014) has a long po- One partial answer to Canada’s predica- bia’s crown prince ordered Saudi students litical history in Amapá, another poor ment would be to spend more on defence, a to leave Canada. Polls show that Canadians north-eastern state, but is barely known longstanding American demand that Mr want their government to stand up for hu- outside it. His party, the Democrats, sup- Trump is especially keen on. Canada has man rights, says Ms Freeland. Russia has ports the government. Rodrigo Maia, the raised military spending, from C$23.9bn in barred her from visiting since 2014 because new speaker of the lower house of con- the 2015-16 fiscal year to an expected she criticised its seizure of Crimea and gress, is also a member. Three Democrats C$27.6bn this year. But that is just 1.2% of warmongering in other parts of Ukraine. are ministers. Mr Alcolumbre’s elevation is gdp, well short of the target of 2% that She seems undeterred. Canada has little thus a good omen for the conservative so- members of nato have set themselves. The choice but to defend the international or- cial policies and liberal economic reforms fiscal deficit is not much smaller than the der, Ms Freeland says. “The law of the jun- that Mr Bolsonaro says he wants to enact. defence budget, which means that Canada gle does not work for Canada.” 7 These include cuts to the growth of Brazil’s is unlikely to step up expenditure quickly. absurdly generous pensions. Demands on that spending, however, But the senate rebellion is also a sign of will rise rapidly. Climate change, which is Brazil the risks the government could face if it warming the Arctic at a faster rate than loses public support. Mr Alcolumbre be- southern Canada, has opened new waters Davi v Goliath longs to the “lower clergy” of backbench to shipping. This is creating a new coast for congressmen, as did Mr Bolsonaro before Canada to defend. Last year the army start- he became president. They have gained in- ed issuing new c-19 rifles to 5,000 Canadi- fluence as grandees like Mr Calheiros have an Rangers, a reserve unit that patrols the been tainted by scandals. That makes them Arctic. They replace Lee-Enfield bolt-ac- BRASÍLIA less inclined to take direction from leaders Jair Bolsonaro scores a victory in the tion rifles of the sort used by Britain in the of their parties. “The rules of the game have new congress second world war. Such upgrades are un- changed,” says Simone Tebet, a senator likely to arrest the United States’ drift away rasília is full of secrets. Normally, from the southern state of Mato Grosso do from its established allies. Bone of them is how senators vote when Sul. Although she belongs to the same Rather than sue for divorce, Canada is they elect the president of their chamber. party as Mr Calheiros, the Brazilian Demo- trying to widen its circle of friends. Ms On February 2nd they delivered a shock. cratic Movement, she voted against him. Freeland hopes that coalitions of countries The favourite for the job was Renan Calhei- Many members of the lower clergy are committed to international institutions, ros, who had won it four times. A skilled new to congress. Roughly half of legislators such as the World Trade Organisation dealmaker from the north-eastern state of are serving their first terms. They tend to be (wto), can protect them in the face of indif- Alagoas, he faces probes into allegations of more loyal to their Twitter followers than ference or hostility from the United States. graft, which he denies. His candidacy pro- to their party leaders. Felipe Rigoni, Brazil’s It belongs to a group of countries trying to voked two days of tumult, with shouting first blind congressman, says that he will fix the wto’s dispute-resolution proce- and shoving in the chamber. Some sena- support Mr Bolsonaro’s plans to reform 1 dures in ways that will allay American ob- jections to them. But such tactics face long odds. “I don’t think middle powers can sus- tain the world order without major players for very long,” says Roland Paris, a former foreign-policy adviser to Mr Trudeau. “But they could slow the decay.” Canada’s decades-old aspiration of re- ducing its economic dependence on the United States has made progress recently. In 2016 the government signed a free-trade deal with the European Union and last year it signed one with ten other Pacific coun- tries, including Japan. With the nafta ne- gotiations in the balance in July, Mr Tru- deau signalled Canada’s ambitions for more such agreements by changing the trade minister’s title to minister for inter- national trade diversification and appoint- ing Jim Carr, a politician from Manitoba, to the job. He will not have an easy time. Rela- A giant-killer in Brasília РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Free Retirement Planner “How far will $1,000,000 get me when I retire?”

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28 The Americas The Economist February 9th 2019

2 pensions even though fellow members of tant to curb pension spending, even But public acclaim is fickle. One threat the opposition Brazilian Socialist Party are though it crowds out other public spending to it comes from investigations of people likely to oppose them. They “are more and slows economic growth. But on Febru- who served on the staff of Mr Bolsonaro’s blind than I am”, he says. ary 4th details of an ambitious proposal son, Flávio, who was a state congressman In the new congress, “public opinion leaked to the press. Share prices surged. in Rio de Janeiro and is now a senator. His will be the key driver of legislative dynam- Mr Bolsonaro is more gung-ho about driver and aide, Fabricio Queiroz, is under ics in a way it wasn’t before,” says Chris the crime-fighting bit of his agenda, as are scrutiny for receiving 7m reais ($1.9m) in Garman of Eurasia Group, a consultancy. most Brazilians. On February 4th the jus- unexplained money transfers and for hir- For now that favours Mr Bolsonaro, who tice minister, Sérgio Moro, presented his ing the mother and wife of a fugitive for- has an approval rating of nearly 70%. That plans, which include tougher punish- mer police officer accused of leading a improves the odds that his two big policies, ments for some criminals and milder ones criminal militia. He denies wrongdoing. If pension reform and a crackdown on crime for police who kill in the line of duty. That this scandal spreads, the government may and corruption, will get through congress. was well received. The hashtag #MoroinAc- yearn for the days when congressmen toed Until now, Mr Bolsonaro has been reluc- tion spread on Twitter. the party line. 7 Bello The dinosaur is still there

The foundations of Venezuela’s regime are cracking but not collapsing t is a fortnight since Juan Guaidó, the Russia and Turkey, as well as from the Iyoung speaker of the national assem- military commanders. Some in Venezue- bly, proclaimed himself Venezuela’s la still believe in his tropical socialism. caretaker president, triggering a co- Others stay loyal out of fear, or because ordinated push to topple the dictatorship they have enriched themselves through of Nicolás Maduro. Hundreds of thou- corruption. His opponents have long sands of Venezuelans have demonstrated underestimated his regime’s determina- for that. More than three dozen coun- tion to cling to power. Some outsiders tries, mainly in the Americas and Europe, worry that there is too much stick and have recognised Mr Guaidó’s putative not enough carrot: by ending military government on the grounds that Mr co-operation with Venezuela, Lima Maduro’s second term, which began last group members have closed a channel of month, is the product of a fraudulent communication with the high com- election. The United States has imposed mand. (Brazil’s army has not followed its sanctions on Venezuela’s oil industry. government in this.) The sanctions will The hope is that all this will persuade hasten the economy’s collapse, prompt- the armed forces to withdraw their sup- ing more Venezuelans to emigrate. port from Mr Maduro. Some officers, Mr Maduro’s opponents have no including two air-force generals, have zuelan oil. The administration has set credible Plan B. “There’s an idea that you backed Mr Guaidó. But so far the high April 28th as a deadline for Americans to hear a lot in Washington that it’s now or command has stayed loyal. Mr Maduro is cease dealings with Venezuela’s state oil never,” says Michael Shifter of the Inter- defiant. “The coup d’état they wanted has monopoly. Until then, it will divert pay- American Dialogue, a think-tank. “My failed and they haven’t noticed,” he said ments for oil to an account reserved for a concern is whether they’ve boxed them- on February 2nd. The longer this stand- future democratic government. The sanc- selves in.” Almost nobody in Latin Amer- off lasts, the greater the risks. One is that tions are biting: several dozen oil tankers ica wants military action. The risk of it a frustrated American administration are idling off Maracaibo, Venezuela’s oil prompted the eu to set up a “contact turns to military force, something that capital, reports the Wall Street Journal. group” to facilitate “a peaceful and Donald Trump this month said remains The conjuring trick is to act as if Mr democratic solution”. Many well-mean- “an option”. The other is that Mr Maduro Guaidó were running the country. The ing outsiders call for a compromise, in survives in office, but rules a wasteland. Trump administration largely ignored Mr which Mr Maduro’s government plays a The strategy of Mr Guaidó and the Maduro’s rupture of diplomatic relations. role in achieving a free presidential Trump administration is broadly backed It is now organising humanitarian aid for election. That is a wonderful illusion. Mr by the Lima group of Latin American Venezuela’s impoverished population. The Maduro was offered such a deal last year countries and Canada, and by much of Americans are delivering food to a col- and rejected it. The national assembly the European Union. It combines a car- lection point at Cúcuta, a Colombian city rejects “any talks or contact group that rot, a stick and a conjuring trick, all close to the Venezuelan border. Mr Maduro prolong the suffering of the people”. aimed at persuading Venezuela’s army to rejects this, saying “we are not beggars.” Venezuela has the makings of a flip. The carrot is an amnesty, approved Marco Rubio, a Republican senator who broader international crisis. Subjected to by the national assembly, for military influences Mr Trump’s policy, hopes this such sustained financial pressure, Mr and civilian personnel who act “in favour will force the army to choose “to either Maduro could buckle any day. But he of the restitution of democracy”. help food and medicine reach people, or might not. For now, the Venezuelan The stick is American sanctions help Maduro instead”. The army has re- people’s plight recalls a one-line short aimed at asphyxiating Mr Maduro’s portedly blocked the first shipments. story by Augusto Monterroso, a Guate- regime economically. The United States What happens if Mr Maduro doesn’t malan writer: “When he woke up, the was almost the only cash payer for Vene- fold? He still has support: from Cuba, dinosaur was still there.” РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Asia The Economist February 9th 2019 29

Also in this section

30 Military service in South Korea 31 Turmoil in Thai politics 31 Facial fashions in Pakistan 32 Banyan: Japan’s lost islands

Indian politics conservative Hindus—such as plans to erect a temple to the god Ram on the site of The can-do Gandhis a mosque demolished by Hindu fanatics in 1992, or a recent court ruling that ended a ban on women worshippers at a Hindu temple in Kerala state—Congress has re- mained conspicuously mum. This shift has accelerated since Rahul DELHI Gandhi, Nehru’s great-grandson, replaced The Congress party has gained an unexpected new lease on life his mother, Sonia Gandhi, as Congress’s run shourie, a former cabinet minis- the bjp had campaigned with a promise to leader in late 2017. Although the 48-year- Ater and acid-tongued pundit, once dis- create a ministry for bovine affairs, Con- old Mr Gandhi’s sudden penchant for being missed India’s ruling Bharatiya Janata gress has gone further. One of its first acts photographed visiting Hindu temples has Party (bjp) as “Congress plus a cow”. By was to announce a $63m programme to been the butt of jokes, the overall strategy equating prime minister Narendra Modi’s build some 1,000 cow shelters across all 52 seems to be working. Five years ago Mr Hindu nationalists with their secular ri- districts of the state. “They talked the talk Modi humiliated Congress, stripping its vals, he was implying that, since both of In- but we walk the walk,” says Jyotiraditya share in the Lok Sabha, the lower house, to dia’s biggest parties share such traits as Scindia, an mp from the state who is also a dismal 44 of 545 seats—its worst-ever cronyism and paternalist economics, all the party’s chief whip. showing. In state elections the bjp made that really distinguishes the bjp is its dis- further inroads, whittling Congress’s share plays of piety, such as reverence for cows. Orange is the new green of state governments to just three out of In- So it may have come as some surprise to Cows are not the only issue over which dia’s 36 states and territories. Some pundits three Muslim residents of Kharkali, a tiny Congress has strayed from the path set by opined that Mr Modi just might fulfil his hamlet in the state of Madhya Pradesh in its best-known leaders, Mahatma Gandhi boast of making India “Congress free”. central India, when a court on February 4th and Jawaharlal Nehru. With national elec- But the 133-year-old party has bounced threw them in jail on suspicion of slaugh- tions looming in April, the party is pander- back smartly in recent months. In Decem- tering a cow. The surprise was not just that ing to pious Hindus, who have not exactly ber, to the surprise of its own cadres, Con- the police had invoked the draconian Na- been short of pandering since Mr Modi gress won control of three large states in tional Security Act, which allows a year’s took power in 2014. Stung for years by the the Hindi-speaking heartland that has long detention without charge. It was that while bjp’s charge that it has “appeased” Muslim been seen as a bjp stronghold. This show of bjp-run states are best known for enforcing voters, doling out favours to the 14% mi- resilience, combined with growing signs of “cow protection” laws, Madhya Pradesh is nority to secure their vote, Congress fields disenchantment with Mr Modi, has tipped no longer run by the bjp. Two months ago fewer Muslim candidates. The minority fill the party’s fortunes markedly. In the press its voters brought the ostensibly more lib- fewer places in its internal counsels, too. and on social media, where the bjp had un- eral Congress back to power. Yet whereas Meanwhile, on controversies that electrify til recently maintained a dominant voice, 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

30 Asia The Economist February 9th 2019

2 Mr Gandhi is far less often portrayed as an Military service in South Korea The Supreme Court ruling overturned immature crown prince. Mr Modi, despite the conviction of a conscientious objector remaining a masterly showman and wield- Blessed are the who was a Jehovah’s Witness—a member ing an intimidating party machine, is no of a pacifist religious group. But many longer above criticism. peacemakers South Koreans question military service. Although polls in India are notoriously All men (women are exempt) are required unreliable, the trend over the past year is to enlist. They must serve between 21 and clear. The number of seats the bjp is pro- SEOUL 24 months before they turn 29, although The Supreme Court gives conscientious jected to win in the Lok Sabha has shrunk the current government has moved to objectors a reprieve by around a third. It seems unlikely to re- shorten the duration of service. tain its current outright majority. Congress im jae-sung is a mild-mannered lawyer Conscripts are forced to live in barracks is predicted to triple its share. This would Lin his thirties with a fondness for mono- far from home, with unpredictable leave still leave it with fewer than 200 seats, a grammed shirts and human-rights cases. and little contact with the outside world. smaller tally than the bjp. But Congress has Owing to South Korea’s strict military-ser- Earlier this year the use of mobile phones a long history of corralling smaller regional vice laws, he is also a convicted criminal was legalised—but only after 6pm. Hazing parties into broad coalitions. “Who would with a prison record. Mr Lim refused to and other abuses are rife. “I worried that want to ally with Modi?” asks Mr Scindia. serve in the army after becoming involved the violent atmosphere would turn me into “Congress has much more the characteris- with the anti-war movement sparked by a violent person, someone who is happy to tics of a party around which divergent al- the dispatch of South Korean troops to Iraq beat other people,” says Lee Yong-suk, a lies can unite.” in 2003. When a court sentenced him to a conscientious objector who now runs a As for whom voters would rather see as year and a half in jail, his parents kept it se- pacifist ngo. Before the verdict, the United prime minister, polls over the past two cret from their friends to avoid bringing Nations Human Rights Council had repeat- years show Mr Modi’s lead over Mr Gandhi shame on the family. He told his grandpar- edly called on South Korea to offer a “rea- slipping steadily, from a walloping 43 per- ents that he was going to spend some time sonable” alternative to military service. centage points to just 12. Since the most re- in China. “It would have been too difficult Such demands are not yet widely ac- cent poll Mr Gandhi has received another to explain,” he says. cepted in South Korea. Four of the 13 Su- boost, with the enlistment of his sister Pri- To future generations of South Korean preme Court judges hearing the case voted yanka as a campaign manager in Uttar Pra- men, Mr Lim’s story may come to sound against decriminalising conscientious ob- desh, the most populous and politically like a quaint tale from the ancient past. In jection. They cited the “severe security sit- important state (the siblings are pictured November the country’s Supreme Court uation” and argued that it was impossible on the previous page, during the election of ruled that it was not a crime to refuse mil- to tell if objectors were sincere or merely 2014). Although it is unclear whether Ms itary service for reasons of religion or con- shirking. It is not only conservative types Gandhi will shift many votes, her star sta- science, voiding its own near-unanimous who see military service as a patriotic duty tus will certainly grab attention from Mr ruling from 2003, which had found just the in a country which is technically still at war Modi, who has grown used to unstinting opposite. Prosecuting people for conscien- with North Korea, its nuclear-armed totali- and adulatory press coverage. tious objection and sending them to pri- tarian neighbour. Many fear that lots of But it is not just the Gandhis’ glamour or son, the judges said this time, violated ba- conscripts would give the armed forces a Congress’s new, cow-friendly look that has sic rights and went against the spirit of miss if there were any alternative. improved its prospects. Despite a reputa- “liberal democracy, tolerance and magna- At the moment, only a few dozen men tion for taking frequent holidays, Mr nimity”. Courts across the country, which defy the draft each year, most of them Jeho- Gandhi has proved an energetic manager. had already become increasingly reluctant vah’s Witnesses. Two-thirds of Koreans say Crucially, too, he has delegated wisely, and to convict conscientious objectors, have they do not understand why anybody refrained from micro-managing at the lo- since thrown out pending cases en masse. would refuse to serve in the army, which is cal level. “The most interesting new dy- still widely regarded as a rite of passage for namic in Congress is that they show more young men. And even though conscien- deference to state leaders,” says Milan tious objection is no longer illegal, it will Vaishnav of Carnegie, a think-tank, noting still be up to the courts to assess the sincer- that the trend marks a contrast to the in- ity of any professed pacifist. That leaves creasing centralisation of power in the bjp judges plenty of leeway to compel con- under Mr Modi. scripts to serve. Some prosecutors have Mr Gandhi timed a bold campaign pro- cited a fondness for shoot-em-up video mise to provide all Indians with a mini- games as evidence that an objector’s prin- mum guaranteed income just days before ciples were feigned. Moreover, the alterna- the government released its budget on Feb- tive to military service that the defence ruary 1st. This made the varied sops it con- ministry has cooked up is to spend three tained to farmers, taxpayers and others years working as a prison guard. look puny by comparison. Disgruntled offi- Still, the verdict will help make consci- cials made matters worse by claiming that entious objection more acceptable. Activ- the government was suppressing dire un- ists hope that it may also make life less employment data. Few Indians believe the miserable for those who continue to join promises of either Mr Gandhi or Mr Modi, the army. “If people have a choice, the army and as the campaign escalates, they will be- will have to work harder to make military lieve even less. But whereas the prime min- service bearable,” says Mr Lee. For now, his ister cannot truthfully be said to have fellow pacifists will continue to face criti- brought India the achche din or good times cism. They may even still go to prison. But that he promised voters in 2014, his upstart at least they will be guarding the cells, not rival does not yet have a record of broken occupying one. And it should be easier to vows to disappoint them with. 7 Now he has a choice tell their grandparents about it. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist February 9th 2019 Asia 31

Politics in Thailand is not running for parliament, but under win a good share of the House, the entire the constitution whose adoption he over- Senate will be appointed by the junta. Mr The princess and saw, the prime minister does not have to be Prayuth would therefore need to secure the an mp—the same loophole the princess support of just 126 elected representatives the PM could make use of. to remain in office. But Mr Prayuth, who Being nominated by a political party is has not stated clearly that he wants to stay not the only way to become prime minis- on, would presumably not stand against a ter, but it makes it much easier. The job will royal candidate. Indeed, one of the sup- BANGKOK be filled by a joint sitting of the 250-seat posed reasons for his coup, beyond ending A royal rumour upends politics Senate and the 500-seat House of Repre- the strife between the red shirts and yellow s thai politics about to turn upside sentatives. In the first round of voting, shirts, was to protect the monarchy. Idown? For almost 20 years an endless po- which is limited to the parties’ pre-election Even if the princess demurs at the last litical battle has pitted royalist elites, nominees, a simple majority is enough to moment, her flirtation with running known as “yellow shirts”, against partisans win the job. Candidates who have not been changes Thai politics. It suggests the king, of a populist former prime minister, Thak- nominated can also enter the fray, but only an aloof but meddling figure, is seeking a sin Shinawatra, known as “red shirts”. Par- in a second round of voting if no nominat- resolution to the standoff, rather than im- ties linked to Mr Thaksin have won every ed candidate has triumphed—and they plicitly endorsing the suppression of the election since 2001; the army has twice need two-thirds of votes. “That will be very red shirts. That, in turn, makes Mr Prayuth ousted Thaksinite governments in coups, difficult,” reckons Prajak Kongkirati of look less secure. An election that seemed most recently in 2014. Although the ruling Thammasat University. destined to conform to a predictable script junta is theoretically restoring democracy Although Thaksinites seem likely to has become much more intriguing. 7 via an election on March 24th, the process was looking stage-managed to preserve the generals’ sway and keep Mr Thaksin at bay. But the royal family is contemplating a move that could upend the generals’ schemes and rehabilitate Mr Thaksin. As The Economist went to press, each Thai political party was finalising a list of up to three choices for prime minister that it must register by law by February 8th. Thai Raksa Chart, a party founded by allies of Mr Thaksin in case his main vehicle, the Pheu Thai party, were to be dissolved by the junta, was preparing to nominate Princess Ubolratana, the older sister of King Vajira- longkorn, pending approval from all con- cerned. The princess is a friend of Mr Thak- sin, but also on good terms with her brother. Her move into politics may be smoother because she was stripped of royal title when she married an American (hor- rors!) in the 1970s (she has since divorced him and returned to live in Thailand). Were she to allow herself to be nominated, she would be in a strong position to attract sup- Pakistani pogonophilia port from both the ardently royalist yellow shirts and Mr Thaksin’s red shirts. Shaving grace Although her role remains uncertain, the generals are left in limbo. Prayuth Chan-ocha, the junta leader and prime minister since 2014, was clearly manoeu- vring to stay on in the top job after the elec- tion. He has been holding election rallies in PESHAWAR In the north-west, a craze for unconventional beards all but name for months. In theory these “mobile cabinet meetings” serve to explain overing above a plush barber’s chair gion, only recently emerged from almost a his government’s policies to the public. In Hin his small hair salon in Peshawar, a decade on the front line of Pakistan’s Tali- practice, he has been parading through sta- city in northern Pakistan, Muhammad Ijaz ban insurgency. Between 60% and 95% of diums before cheering crowds. On January strokes a beard so intricately designed it customers now come in for fancy designs, 30th Palang Pracharat, a party founded last verges on the preposterous. Hair swoops according to a straw poll of the barbers in year by ministers in Mr Prayuth’s govern- across his cheeks. A chinstrap of clean- Khyber supermarket, a popular shopping ment to carry the torch for it in the election shaven skin surrounds a thin goatee. “It’s destination. One barber draws his fingers revealed its candidates for prime minister. never been done before,” boasts the 24- across his face, illustrating the “l”, the “j” Unsurprisingly, Mr Prayuth’s name ap- year-old with a smile. and other in-vogue patterns. peared, alongside those of the deputy Such so-called “French” beards (a term Why the coiffed exuberance? A barber’s prime minister, Somkid Jatusripitak, and that might surprise Parisians) are sprout- customers offer a variety of explanations. the party’s leader and a former industry ing all over the urban centres of Khyber Eyeing your correspondent in the mirror, minister, Uttama Savanayana. Mr Prayuth Pakhtunkhwa, a mountainous border re- one suggests that the young men of Paki-1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

32 Asia The Economist February 9th 2019

2 stan’s Pushtun minority are mimicking Pushtun culture” notes Swat Swag, a popu- its followers, who it claims number Naqeebullah Mehsud, an aspiring model, lar storyteller, on Twitter. These liberal de- 100,000, to eschew cheeky designs. “Now whose murder by the police last year signs represent a “return to pre-Afghan-ji- the government must make it a law,” says turned him into a martyr against state op- had, pre-madrassa-influence”, ie, to the Gohar Ali, the association’s leader. pression. Another says he simply admires 1960s. So it is not surprising that imams It shows no sign of doing so. Compli- the West (for “its peace and greenery”, espe- disapprove. In late 2017 Islamist groups ance is patchier than with previous “beard cially). As internet access spreads through threatened to shut down barbers offering bans”. Another union has refused to play Pakistan’s deprived, Pushtun-dominated “un-Islamic” designs. Fundamentalists be- along. In Beauty Saloon barbers, Imtiaz north-west, young people now connect lieve Muslims should wear a beard in the Khan says he agrees with the ban. “Fashion more to global trends: they pirate “Game of style of Muhammad, the longer, the better. is a sin,” he explains. But following the or- Thrones”, “Vikings” and other razor-shy Officials in the district of Swabi and the vil- der has cost him half his business, he ad- shows in huge numbers. lage of Shabqadar have followed up with le- mits, as his scissors snip around the face of Today’s styles, though, are not entirely gally tenuous edicts. In March the Sule- a fashionable friend to whom he has— new. Beards “have always been a part of mani Hairdressers’ Association ordered all grudgingly—granted an exemption. 7 Banyan Frozen conflict

The importance to Shinzo Abe of four alluring islands s always in early February, ice floes summer Russia now allows a handful of eluctably shrinks. A decade ago Japanese Aare starting to clog the strait between trips across the Nemuro Strait for Japanese nationalists would not have accepted the Nemuro, a fishing port in northern Ja- born on the Kurils, or whose ancestors lie return of merely the two smaller islands. pan, and Kunashiri, a volcanic island buried there. The visits are changing atti- Now, even that would seem a triumph. hanging on the horizon. And as always tudes, at least on the Japanese side. When One Japanese in particular has made on February 7th, Nemuro’s residents Banyan first came to Nemuro a decade ago, the islands’ return his mission: Shinzo clogged a local cultural centre to mark former islanders and their supporters Abe, the prime minister. A nationalist, he “Northern Territories Day”, when they were adamant: the return of the islands wants to erase the scars of Japan’s war- pine publicly for Kunashiri and three would entail their evacuation by Russians. time past. Besides, his father and grand- other nearby islands—the Northern No offence. Which Russians really wanted father, as foreign minister and prime Territories—sundered from Japan in the to live in such isolation? And wouldn’t minister respectively, also passionately final days of the second world war. Japanese resourcefulness quickly show up sought the Northern Territories’ return. In 1945, two days after America the long-wasted opportunities for devel- In Japanese politics, foreign policy is all bombed Hiroshima, Joseph Stalin de- opment? The Russians have barely made a too often a family heirloom. clared war on Japan and Soviet troops mark on the wild islands (to Banyan’s It explains the charm offensive attacked Japanese-held territory. They mind, a big part of their allure). launched on Vladimir Putin. To melt the grabbed the southern Kuril islands, even These days views have changed. Re- ice, two winters ago the strait-laced Mr though Russia had acknowledged them turning Japanese say they are moved when Abe even took the Russian president for a as Japanese since 1855. For two years the they meet Russians on the islands—it is naked dip in a hot spring in his home islanders lived alongside the occupiers. their furusato too. Kozo Iwayama, who prefecture. Last month, in Moscow, the A touching photograph in an exhibition runs an information centre on the North- two men held their 25th meeting. Again in Nemuro shows Russians and Japanese ern Territories, says Japanese should live Mr Abe came back empty-handed. He has enjoying a game of go. Japanese women side-by-side with Russians if the islands tried everything, including dangling helped deliver Russian babies. Then, are returned. Yet there is a whiff of desper- promises of Japanese investment in the suddenly, the fraternising was over. By ation in such compromise. The chances of Russian Far East and compromises in- 1949 all the islanders had been deported. a deal seem to be ebbing, even as the num- volving “shared sovereignty”. Today about 6,000 surviving island- ber of Japanese born on the islands in- No sooner was Mr Abe back in Tokyo ers, many in Nemuro, dream of their than hopes began to rise for the 26th furusato, their home turf. One of them, meeting, on the fringes of the g20 sum- sluicing the floors at the fish-auction mit in Osaka in June. Yet Mr Putin’s rep- house, recalls with impish laughter how utation at home rests on increasing she left, aged four: “hoisted aboard in a Russian territory, not slicing bits off. He fish box packed with other children and may have contemplated a deal when he their parents”. She left behind a territori- was riding high following his annexation al dispute that drags on today. The agree- of Crimea in 2014—he might like the idea ment with the Soviet Union that re- of being the leader who brings the Great established diplomatic relations in 1956 Patriotic War to a proper close. But today was supposed to entail the return of the a contentious pension reform, falling two nearer (and smaller) islands, Habo- incomes and cuts to social services are mai and Shikotan. But that part of the eating away at his popularity. Ultra- deal was never fulfilled, and no formal nationalists stand ready to outflank him peace treaty has ever been signed. Tech- over the Kurils. As for Mr Abe, who nically, the second world war lingers on. stands down in 2021, he has asked to be In some respects, the islands have judged by the Northern Territories. His seemed closer in recent years. Each legacy may founder among the ice floes. РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS China The Economist February 9th 2019 33

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34 The booming pet industry 35 Chaguan: How well does China understand Taiwan?

Public diplomacy augurated the one in Tokyo, for instance, when he was still vice-president. Since Culture wars 2014 Mr Xi has presided over the opening of half a dozen of them. China has long recognised that it suffers a “soft-power” deficit. Its international cul- tural influence has not grown as fast as its TOKYO economy. In 2007 then-president Hu Jintao The Communist Party is trying to capitalise on foreign interest in Chinese declared that getting other countries to like culture. But it has rivals China was a national priority. The form of uo yuquan can barely hide his glee. The to embrace Western ideas about democra- outreach Mr Hu favoured was Confucius LChinese new year jamboree thrown by cy, the logic goes, for China has always Institutes, which are managed by the min- the China Cultural Centre (ccc) in Tokyo, been on its own unique course. istry of education. They offer mainly Chi- which he heads, has gone swimmingly. China’s propagandists also know that nese-language classes at “partner” aca- Ethnic-Tibetan singers flown in from Chi- Marxism-Leninism doesn’t have the pull- demic institutions. More than 500 na enchanted the audience, many of whom ing power of kung fu or kung pao chicken. universities around the world host one. danced along to the catchy tunes. Copious cccs are intended to breed affection for Over the past decade, however, Confu- Tsingtao beer helped sustain the high spir- China—the equivalent of Germany’s Goe- cius Institutes have arguably done as much its. An exhibition in an adjoining room fea- the Institutes and France’s Alliances Fran- harm as good to China’s image. Western tured paintings with Buddhist themes, also çaises. There are 37 of them around the scholars and politicians have accused the shipped in from China. “We are proud to world, from Minsk to Mexico City. A further institutes’ instructors, who are typically show off 5,000 years of Chinese civilisa- 13 are planned by the end of next year, up dispatched by China’s government, of tion!” beams Mr Luo, “As more Japanese from a total of just 13 in 2012. compromising academic freedom. They al- come to appreciate Chinese culture, they In 2015, the most recent year for which lege that the institutes suppress discussion will naturally grow to love China.” data are available, the culture ministry of sensitive topics such as Taiwanese inde- Chinese officials often declare that Chi- spent 360m yuan ($57m) on cccs. That may pendence and that they spread Communist na has a 5,000-year history. In truth, that is not seem much, yet it represented a near- Party propaganda. In 2014 the American overstating things by about 1,000 years. Yet tripling of the amount spent the previous Association of University Professors urged the myth serves a useful purpose for the year. Moreover, the published figure re- American universities with Confucius In- Communist Party. At home, it is a source of flects only central-government funding. stitutes to shut them down. national pride. Abroad, it justifies a sort of Provincial governments also help pay for Regardless of whether this fear is justi- Chinese exceptionalism. Xi Jinping, the cccs. One Chinese commentator believes fied, Chinese officials are well aware of the president, told the visiting Donald Trump, that the government chose not to release “controversial reputation” of Confucius In- his American counterpart, that China’s is spending figures for more recent years lest stitutes, notes Zhang Xiaoling of the Uni- the world’s oldest continuous civilisation. “foreigners grow anxious about perceived versity of Nottingham’s branch in Ningbo. China routinely invokes its awesome his- Chinese infiltration”. Because of this, Ms Zhang reckons, the task tory as grounds to continue charting its Mr Xi appears to be personally invested of public diplomacy will increasingly “be own development path. Don’t expect China in the push to expand cccs. In 2009 he in- shared with cccs”. 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

34 China The Economist February 9th 2019

2 Although cccs share the same goal as The pet industry until 1993, when Beijing lifted its ban on Confucius Institutes, they aim to arouse them, pooches were routinely rounded up less controversy. The library inside Tokyo’s Mao’s best friend and killed. Dogs over 35cm tall are still not is revealing. The shelves are stacked with allowed in most of the capital. They are comic books and biographies of such lumi- said to be too dangerous and noisy. naries as Shakespeare and da Vinci (in both Today’s pet boom is being fuelled by a Chinese and Japanese). Conspicuously ab- generation that barely remembers the pri- sent are Xi Jinping’s turgid works, such as vations of the past. City-dwelling young “The Governance of China”, a must-read for BEIJING professionals born in the 1980s and 1990s Every year is the year of the dog any party apparatchik. The activities the account for 70% of spending on pets, ac- centre organises, much like the new year ith its overflowing ball pits, indoor cording to Goumin. Theirs is a richer Chi- bash, are lighthearted. (All are free of Wswimming pools and elaborate ob- na, where the old emphasis on community charge.) Among the highlights this month stacle course, the Maidao Play Centre offers has been replaced by a greater sense of in- are a movie screening of a Chinese comedy, a fun-packed day out, reviewers gush. “My dividualism. Many of them are also loneli- a “Shaolin martial-arts” performance and a girl just loves it here—she just leaps into er than earlier generations, having been talk on traditional Chinese medicine. cccs the car when she realises where we’re go- lured away from their families and friends are not completely apolitical—they are just ing and she can’t wait to play with all her by jobs in big cities. careful to be subtle when they have a point friends,” says a woman in her early 30s. “The air is bad outside and it’s so easy to to make. Last summer, for example, Malta’s While children would probably love stay in and watch things on the internet,” hosted an exhibition featuring artists from Maidao, it is aimed at dogs. It is just one of says Wang Xiaoyang, a café-owner in her Taiwan which the director billed as a dis- hundreds of puppy-grooming parlours, 20s who moved to Beijing from her home- play of “creativity in China”. animal hotels and doggy day-care centres town in Inner Mongolia. She is one of more The version of Chinese culture that that have sprung up across China to cash in than 200m unmarried Chinese in their 20s cccs present does not go unchallenged, on the booming pet industry. The market or 30s. “I live alone, so it’s nice to have little however. Taiwan’s government funds rival for food, toys, coats and other products for Liuyi waiting all happy to see me when I get outfits called Taiwan Cultural Centres. pets was worth 170bn yuan ($25bn) in 2018, home,” she adds, as she flicks through pho- There are some 15 of these around the up by more than a quarter from the previ- tos of other cats on her iPhone. world, including one in Toyko a stone’s ous year, reckons Goumin, a pet-services Owners like to splurge on their pets. throw from the ccc. In a not-so-subtle dig, portal. This would make it bigger than Chi- They spend an average of more than 5,000 Wang Shu-fang, the director of Taiwan’s na’s tea industry. Goumin says China has yuan a year on pet paraphernalia, accord- centre in Tokyo, says the appeal of Taiwan- 73.5m cat- or dog-owners, a group ap- ing to Goumin—more than the average col- ese culture lies in its creativity—and “cre- proaching the size of the 90m-strong Com- lege graduate in China earns in a month. ativity can only thrive in a free society.” munist Party. Tiny, stuffed-toy-like Pomeranians and Happily for Mr Luo, Ms Wang’s centre is not This is a big change for a country where Japanese Shiba Inu are big sellers thanks to as well-staffed as his. He can put on two to a dog might once have been as likely to be their popularity among stars of Chinese so- three events a week. She may only manage eaten as fed a treat. Until recently few Chi- cial media, says a pet-shop assistant in Bei- half that. Still, the mere existence of sepa- nese saw much sense in keeping animals jing. A Pomeranian puppy can fetch as rate Taiwanese institutes is a reminder to that could not be put to work. Famine rav- much as 18,000 yuan, although those who foreign audiences that Taiwan does not aged the country as recently as 1961. More- risk buying one online might pay only want to be subsumed. over, during the Cultural Revolution of the 2,000. Corgis, French bulldogs and huskies There is also Shen Yun, a dance troupe 1960s and 1970s the bourgeois indulgence are also in vogue. founded in 2006 by devotees of Falun of keeping a pet would have attracted the Not all Chinese welcome pets on the Gong, a religious group that is banned in attention of the dreaded Red Guards. Ra- streets. A recent video of a woman being China. It puts on shows in more than 100 bies fuelled official paranoia about dogs; pushed by a man after she kicked his dog cities every year. By chance, Shen Yun was away from her child sparked fury about pet gyrating in Tokyo at the same time as Mr owners’ failure to restrain their animals. Luo was throwing his party. Awkwardly for Since then the south-western city of Wen- the Communist Party, Shen Yun also shan has imposed a ban on dog-walking claims to promote, through traditional from 7am to 10pm. Jinan, in the east, has in- dance, China’s 5,000-year-old civilisation. troduced a points system for pet-owners. Indeed, Shen Yun casts itself as the true Those committing offences such as failing protector of Chinese culture and the party to register their dog or letting it off the lead as its scourge. There is some truth to this. in public lose points. If enough points are Under Mao Zedong, countless ancient lost the pet can be confiscated. paintings, books and statues were burned Many Chinese see the proliferation of or smashed because they represented “old pets as a symptom of a bigger crisis. China culture”. Shen Yun’s shows depict the per- is ageing rapidly. Although the one-child secution of Falun Gong. Annoyingly for the policy was replaced with a two-child rule in party, Shen Yun appears to be better known 2016, and has been further eased since, the than cccs in much of the world. birth rate is still falling. On Zhihu, an on- Asked about the competition between line forum, many ask why young people his ccc, Taiwan’s cultural centre and Shen choose raising pets over their Confucian Yun, Mr Luo’s disarming smile disappears. duty of raising children. “We must encour- He affirms that “as long as what the other age the younger generation to think more organisations are doing is legal”, he will be about the prosperity of the motherland,” content to mind his own business. To win argues one teacher. Drawing an analogy the battle of hearts and minds, China will with pet-loving but stagnant Japan, they need more than culture and charm. 7 A shameful bourgeois indulgence fear dog days are on their way. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist February 9th 2019 China 35 Chaguan Does China understand Taiwan?

Ostracism of pro-independence Taiwanese is dangerous and counterproductive Alas, China has closed off avenues to answering such ques- tions. Communist bosses growl that they will only engage with Taiwanese who agree that their island is part of China. That ex- cludes President Tsai Ing-wen and her ruling Democratic Progres- sive Party (dpp). The dpp says that the island they govern is a coun- try in its own right, though to avoid a crisis they fudge what they mean by that. In their desire to teach Taiwanese voters that dpp rule brings pain and isolation, China has sought to ostracise the party since Ms Tsai won election in 2016. Government-to-govern- ment contacts have been limited to such technical subjects as air- traffic control, food safety and some police co-operation, for in- stance when one side seeks the return of a fleeing murderer. Chi- nese pressure is blamed for sharp declines in tourism from the mainland and in short-term exchanges by mainland students, though about 3,500 Chinese students remain in Taiwan on degree courses. Even scholars close to the dpp have been blacklisted from travel to China, among them Tseng Chien-yuan of Chung Hua Uni- versity. He adds that Chinese academics he has known for decades are now barred from formal contacts with him. “I worry about this situation, because if the Chinese government only hears what it wants to know, they can never understand Taiwan,” says Mr Tseng. China does hear from conservative supporters of the kmt, f china’s rulers ever decide to invade Taiwan—a grim but not which backs closer ties with China, although not unification. Iimpossible prospect—they will need good answers to two ques- About 370,000 mainlanders married to Taiwanese live on the is- tions. First, would the People’s Liberation Army win? The consen- land. Those who vote lean kmt. Equally, at any moment there are a sus in Taipei is that the pla is close to that goal but is not “100% million Taiwanese in China, including 400,000 long-term resi- sure” of victory. Second, would ordinary Taiwanese submit? dents. Tales abound of Chinese officials offering economic re- Chinese leaders have limited patience for Taiwanese opinion. wards to Taiwanese businessmen who endorse unification. Their offer to the democratic island of 23m is ostensibly generous. Wang Ting-yu, a dpp legislator who sits on the parliament’s for- Under the slogan “One Country, Two Systems”, Taiwan is promised eign affairs and defence committees, says that China’s intelligence lots of autonomy alongside access to China’s vast market. This is services gather information about Taiwan from “between 10,000 backed by honeyed words about unifying a family sundered for 70 and 100,000” agents and informers. Fewer than 5,000 are profes- years, since China’s civil war ended with the losing Nationalist sional spies, he estimates. Chinese informers might be Taiwanese Party, or Kuomintang (kmt) retreating to what they hoped would gangsters on the hustle in southern China, or Taiwanese business- be temporary exile on Taiwan. Still, China is committed to using men looking for favours. Mr Wang cautions that China may not force to block any bid for formal independence. learn much from its spies. (Taiwan’s spooks are underwhelming Chinese optimists call time their ally, as Taiwan’s population when he asks about China, he notes, either because they do not ages and its economy slows. Chaguan visited Taiwan recently. It is trust parliamentarians or because “they don’t know anything”.) true that China’s gleaming coastal cities make Taipei’s 1980s sky- A big danger is that ignorance leads to impatience. There are scrapers look shabby. But time is China’s foe too, says Freddy Lim, a over 140 students from both sides of the straits at the Graduate In- heavy-metal rock star and legislator for Taiwan’s pro-indepen- stitute for Taiwan Studies at the University of Xiamen, a handsome dence New Power Party. Mr Lim cites polls showing that young- port city with close geographic and cultural links to Taiwan. Chen sters increasingly identify as Taiwanese and consider China an- Xiancai, a professor at the institute, says many arrive knowing lit- other country, albeit one where they like to do business. tle about the other side. Mainland students point to China’s strength and ask: “Why haven’t we unified yet?” His Taiwanese stu- Embrace the motherland, or else dents retort: “Why are you in such a hurry?” The institute’s schol- Put bluntly, China’s proposals sound creepy to many young, urban ars stand out for their professionalism, visiting Taiwan often to Taiwanese. In effect, they hear a demand to submit to marriage conduct fieldwork. The professor leads a dpp study centre opened with a stern cousin, arranged decades ago: “I am rich now, let me within the institute in 2017. But he is cautious about describing its cherish you—or I will kill you.” work, saying it is focused on building a database of academic pa- Taiwanese defiance may anger China’s leaders. But they cannot pers. Still, he is sometimes berated by online nationalists, who safely ignore it. Any Chinese victory would need to be quick, with complain that the dpp should be “exterminated”, not studied. Taiwan’s will to fight broken so swiftly that calls for an American Sherry Yu, a Taiwanese student in Xiamen, comes from a family rescue become moot. Taiwanese security experts are frank about that votes for the kmt. She wants a career in China but still laments what they fear: a psychological collapse among the public, for in- that Chinese classmates—reared on jingoistic schoolbooks and stance after initial waves of Chinese missiles wreck more than half censored news—cannot comprehend why Taiwanese would vote the island’s defences, or blow up oil and gas terminals to cut power for the dpp or resist unification, insisting that they must simply supplies. Then there is the question of what happens the day after want to humiliate China. Ms Yu thinks that Taiwanese just want to China wins. Politicians predict mass protests in Taiwanese cities. preserve their freedoms. When politics comes up, she often starts Would China send tanks to subdue its sullen new satrapy? with “we”, then sadly finds herself using “you” and “me”. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 36 Middle East & Africa The Economist February 9th 2019

The Iranian revolution (1) possible with the supervision of the cler- gy,” he wrote—nearly four decades earlier. The shadow of 1979 As the shah teetered, he obscured his aim of velayat-e faqih (guardianship of the Is- lamic jurist). The leftists and liberals who supported the revolution misjudged him. Some imagined that Khomeini would re- treat to the holy city of Qom and leave oth- ers to govern. Four decades after its revolution, Iran is still stuck in the past Khomeini did go to Qom, but he did not or a few tense moments it seemed as if cratic, but unelected mullahs still wield the give up power. From the start, he under- Fthe flight carrying Ayatollah Khomeini real power. They have defied expectations mined his handpicked prime minister, the back to Iran would not make it. Two weeks by remaining in charge for so long. Univer- relatively moderate Mehdi Bazargan. had passed since the shah, Mohammad sity enrolment has increased, services for When the oil minister refused to purge Reza Pahlavi, had left the country amid the poor have improved and the economy non-Islamic workers, Khomeini branded enormous protests against his autocratic is more diversified. But in most other ways him a traitor. The ayatollah mandated the rule. Khomeini’s aides were eager for the Iran is worse off. In the months after the veil for women and banned broadcast mu- ayatollah to return from exile in Paris and revolution, Khomeini and his hardline fol- sic, which he compared to opium. Secular fill the power vacuum. But the government lowers, nicknamed “the beards”, made de- groups were ignored and critics persecut- left behind by the shah warned them to stay cisions that set the country on a terrible ed. In the early years after the revolution, away. As their plane approached Iranian path. Iran today is less pious than the mul- thousands of people were executed, in- airspace, the air force threatened to shoot it lahs would like, less prosperous than it cluding prostitutes, homosexuals, adulter- down. Some on board cheered the chance should be and less engaged with the world ers and the shah’s officials. The state need- for martyrdom. The Western journalists in than most countries. ed purifying, said Khomeini. Iran remains tow were more subdued. Khomeini made his first big decision a world leader in executions. The plane eventually landed in Tehran long before coming to power. “The govern- Some clerics worried that politics and, after a brief argument between his fol- ment must be directed and organised ac- would tarnish the religious establishment. lowers over who would assist him, Kho- cording to the divine law, and this is only Among the critics was Grand Ayatollah Mu- meini walked slowly down the stairs to the hammad Kazem Shariatmadari, who gave tarmac, helped by an Air France steward (a Also in this section Khomeini the title of ayatollah in 1963, in compromise). He was greeted in the capital part to stop the shah from executing him. by what some believe to be the largest 38 Iran and the region Shariatmadari denounced the extremes of crowd in history. The date was February 1st the new order and rejected velayat-e faqih. 39 Netanyahu’s favourite word 1979. Ten violent days later, the shah’s gov- He was placed under house arrest, but ernment resigned and the army gave way to 39 Trade in east Africa his fears were quickly borne out. Khomeini the revolutionaries. twisted Islam to justify the regime’s ac- 40 Elections in Nigeria Forty years on, Iran is nominally demo- tions. Brazenly, he said that officials could 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist February 9th 2019 Middle East & Africa 37

2 override the Koran if it was somehow Iran’s government had little to offer the Hatred for the “great Satan”, Khomeini’s found to be in the interest of Islam. In soldiers who returned from the Iran-Iraq nickname for America, was a central tenet choosing a successor, Khomeini even war, so it put the irgc to work rebuilding of the revolution. It was America, after all, abandoned a tenet of velayat-e faqih, which the country. Ever since, it has hogged gov- that installed Pahlavi after helping topple held that “the most learned cleric” should ernment contracts, often without bidding. the democratically elected government of lead. When his first choice, Ayatollah Hos- Today it controls, directly and indirectly, a Muhammad Mosaddegh, a nationalist sein Ali Montazeri, called for more free- business empire worth billions of dollars. prime minister, in 1953. By 1979 Iranians of doms, he picked Ali Khamenei, a loyal for- It is building a subway line in Tehran, ex- all stripes had turned against the shah’s mer president, but not a senior cleric. tracts oil and gas, and runs laser eye-sur- misrule. Many worried that their society Pro-regime clerics, in the minds of gery clinics. While American sanctions was under assault by Western culture. many Iranians, became associated with an sting their competitors, firms tied to the oppressive and out-of-touch state. Mr Kha- Guards are able to smuggle goods and avoid Hostage to the past menei has made things worse. When his fa- taxes. Mr Khamenei himself controls Se- America’s view of Iran was poisoned nine voured candidate for president, Mahmoud tad, an opaque conglomerate with inter- months after the revolution. When Jimmy Ahmadinejad, a hardliner, won a fishy elec- ests in almost all economic sectors. Carter allowed the shah to come to America tion in June 2009, swarms of people prot- In the face of sanctions, the state has de- for cancer treatment, it caused outrage in ested. The regime clamped down, accusing veloped a “resistance economy”, which is Iran. On November 4th 1979 student activ- the moderate leaders of the opposition, diverse and self-sufficient in some areas, ists scaled the walls of the American em- known as the Green Movement, not only of but hardly efficient. Iran today ranks near bassy in Tehran, seizing most of the staff. sedition, but of being mohaareb—people the bottom of the World Bank’s Ease of Do- The hostages remained in captivity for 444 who fight with God. ing Business Index and Transparency In- days. Eight American soldiers died in an ternational’s Corruption Perceptions In- aborted rescue effort in 1980. Khomeini Bye-yatollah dex. All that helps explain why it has used the seizure to whip up support. The public long ago lost its revolutionary performed so poorly. In 1977 gdp per per- The mutual enmity has hardly dissipat- zeal. More than 150,000 educated Iranians son in Iran was slightly higher than in Tur- ed. America supported Iraq in its war with are thought to leave the country each year, key, another large Islamic country; today Iran. The irgc has sponsored terrorist at- among the world’s highest rates of brain Iranians are less than half as wealthy as tacks on Americans. In 2002 George W. drain. Younger Iranians attend mosque Turks. But the ruling elite still do well. Bush said Iran was part of an “axis of evil”. less frequently than their parents did. “None of these clerics would have dared ac- But his invasion of Iraq a year later, and the “People laugh at all the nonsense the mul- quire such vast wealth under Khomeini,” tumult since the Arab spring revolts of 2011, lahs are telling them,” says Darioush says Shaul Bakhash of George Mason Uni- allowed Iran to extend its influence (see Bayandor, a former Iranian diplomat. versity. “He would be appalled.” next story). Growing evidence that Iran was Yet the regime acts as if the revolution In January last year thousands of Irani- pursuing a nuclear-weapons programme were only yesterday. The judiciary recently ans took to the streets to protest against provoked successive rounds of sanctions. banned walking dogs in public (Islam corruption, repression and rising living A new era seemed possible when Barack deems dogs impure). This month Mr Kha- costs. The initial anger was directed at Has- Obama offered to “extend a hand” if Iran menei scolded women who remove their san Rouhani, the reformist president. But would “unclench [its] fist”. Mr Rouhani hijabs. “That captures the essence of Islam- people quickly turned their ire to the ruling agreed to a deal in 2015 whereby Iran ist rule in Iran: Dogmatic septuagenarian clerics and the irgc, too. “People are paup- curbed its nuclear programme in return for clerics forcing their own antiquated views ers while the mullahs live like gods,” sanctions relief. Both leaders hoped that on a young, diverse society,” writes Karim chanted the protesters, and “Death to the better relations would follow. But the deal Sadjadpour of the Carnegie Endowment for Revolutionary Guards.” The regime, as is its did not produce prosperity, as Mr Rouhani International Peace, a think-tank. “It can wont, arrested hundreds and blamed had promised Iranians, and Iran continued only be sustained through coercion.” America for the unrest. to test missiles and meddle abroad. The clerics’ main tool of oppression is Last year President Donald Trump the Islamic Revolutionary Guard Corps yanked America out of the deal. He is sur- (irgc). Khomeini did not trust the shah’s rounded by Iran hawks, such as John Bol- army, so he gathered the armed groups that ton, his national security adviser, who has supported the revolution into a single previously advocated bombing Iran or force, the irgc. In 1980 he sent it to fight the overthrowing the mullahs. invading army of Saddam Hussein, Iraq’s For all his bluster, Mr Trump has offered then-dictator, calling the war a “divine to talk to Mr Rouhani, who declined the in- cause”. Hundreds of thousands of Iranians vitation, blaming renewed sanctions for probably died in the eight-year conflict. Iranian suffering. Such entreaties, never- The war changed the irgc, which now theless, make the clerics and irgc nervous. commands more than 100,000 troops and American hostility gives the regime a rai- oversees the baseej, a thuggish militia of son d’être; isolation means less competi- perhaps one million volunteer vigilantes. tion for its businesses. Its secretive Quds force operates in Syria, Daily protests continue in Iran, as the Yemen, Iraq and Lebanon. At home, the economy sinks. “America is not the enemy, Guards have extended their reach into all the enemy is right here,” say some in the aspects of society. Former members hold crowds. Hatred for the shah united Irani- top jobs in government and seats in parlia- ans behind Khomeini. Today, though, the ment. The Guards ensure that television opposition is disparate and leaderless. Ira- and radio shows support the state, and that nians look around their region and see schools teach students to be loyal to the re- only failed uprisings. The revolution of gime—which, in turn, protects the Guards’ 1979 has brought mostly misery, but anoth- vast commercial interests. Careful, it will be difficult to extinguish er one is probably not in the offing. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

38 Middle East & Africa The Economist February 9th 2019

diplomatic cable from 2010 fretted about IRAQ SYRIA Relations have grown ever warmer since the toppling of “Iranian influence” in the Philippines, a Iran has propped up the regime of Saddam Hussein and the election of Shia-led governments Catholic country 7,000km away that is Bashar al-Assad in the civil war Government hardly ripe for a Shia revolution. LEBANON controlled Such proselytising stoked the sectari- Iran trains, arms and finances anism that now poisons the Middle East. So Hizbullah, the main Shia Tehran party-cum-militia which Beirut did the Iran-Iraq war, in which both sides dominates the government Damascus Qom IRAN claimed God’s backing. Iran urged Shias in Baghdad Iraq to overthrow Saddam Hussein’s gov- ISRAEL ernment. It went further in Lebanon, offer- The government QATAR JORDAN Basra has bombed Iranian Other Gulf states cut ties with Qatar, ing financial and military support to the targets in Syria SAUDI ARABIA KUWAIT in part over its friendly relations nascent Hizbullah, which later became a with Iran. Qatar and Iran share The kingdom sees itself as political party. Hizbullah was not the only The control of the world’s largest gasfield a bulwark against Iranian Gulf faction vying for influence among Leba- EGYPT influence in the region BAHRAIN non’s Shias. But it had a foil: Israel, which invaded and occupied south Lebanon in Medina Riyadh Red 1982. “It was our presence there that created Sea UAE Hizbullah,” Ehud Barak, a former prime The government is OMAN Mecca outwardly hostile towards minister, said in 2006. Even some non- Iran, but maintains robust INDIAN Shia Lebanese came to see it as a protector, Iran’s regional relations economic relations OCEAN first against Israel and more recently the fa- Allies natics of Islamic State. Iran’s alliance with Full diplomatic relations Houthi Iran backs the Houthi rebels against an the Assad regime in Syria is more strategic Strained or no controlled YEMEN internationally recognised government allied with Saudi Arabia and the UAE than spiritual. But rivals see it as another diplomatic relations Sana’a piece of what King Abdullah of Jordan dubbed the “Shia crescent”, a sectarian alli- The Iranian revolution (2) ance sweeping across the Levant. It was not always so. Despite their doc- Pushing on an open door trinal differences, Sunni Islamists initially saw Iran’s revolution as an inspiration. In its early days the Muslim Brotherhood was an ideological movement of the educated middle class. Ayatollah Khomeini offered a new political lexicon: he spoke of earth as CAIRO well as heaven, railing against inequality Iran was not predestined to become a regional hegemon. Its rivals helped it and injustice. As they dabbled with elector- lush with victory at home in 1980, witness terrorism or extremism until the al politics in the 1980s, the Brotherhood FIran’s new rulers turned their attention Khomeini revolution emerged in 1979,” and its offshoots adopted this language, abroad. “I hope that [Iran] will become a King Salman said in 2017. This is revisionist positioning themselves as the parties of a model for all the meek and Muslim nations history. His country was never a tolerant growing Arab underclass. The warm feel- in the world,” Ayatollah Khomeini said. His one. The king’s father established the mod- ings were short-lived, though, because of wish did not come true. No other state has ern state as an alliance between royals and both sectarianism and Iran’s growing au- adopted the concept of velayat-e faqih, or puritanical clerics. It also elides the other thoritarianism. Islamists wanted to per- Shia clerical rule. Ali al-Sistani, the Irani- seminal event of 1979, when pious rebels suade the world that they would play by the an-born spiritual leader of Iraq’s Shias, seized the grand mosque in Mecca. Saudi rules and compete in fair elections. A su- wants clerics to stay out of politics. When officials blamed Iran, but the culprits were perficial democracy controlled by theo- Bahrain’s long-suffering Shia majority re- home-grown, led by a former Saudi soldier crats was not an ideal model. volted in 2011they demanded a democratic angry about the state’s supposed drift from But by then the Arab world had no mod- parliament, not a theocracy. Iran is broadly Islam. (He may have been inspired by the els. The defeat by Israel in 1967 discredited unpopular in the Arab world. A recent poll Iranian revolution.) Worried that such crit- Arab nationalism. Leftist economics was found that 66% of Arabs see it as a threat, icism might resonate, the Al Sauds allowed falling out of favour. Political Islam was below only Israel and America. clerics to dictate ever more conservative harshly repressed. Dictators ruled the day Though it failed to become a model, the policies. Images of women were stricken and cared for little but their own survival. revolution nonetheless had a lasting im- from public places; cinemas were closed. Later events again tilted in Iran’s favour. pact on the region. It terrified Saudi Arabia, The Iranian revolution was a different The American-led invasion of Iraq in 2003 mobilised millions of dispossessed Shias challenge. Saudi kings fancy themselves left a vacuum to be filled by sympathetic and shaped the rhetoric of Sunni Islamists guardians of Islam, the “custodians of the Shia-led governments in Baghdad. While in far-off places like Egypt and Tunisia. The two holy places”, the shrines in Mecca and Iran sent troops to prop up Bashar al-Assad greatest threat to Israel is no longer con- Medina. As Iran sought to export its vision in Syria, Gulf spymasters sat in Istanbul ventional armies on its borders but Hizbul- of Islam, Saudi royals urged their clerics to hotels, bankrolling disparate rebel groups. lah, an Iranian-backed paramilitary group follow suit. The kingdom started spending Some ended up fighting each other. in Lebanon. Iran did not gain such influ- tens of billions of dollars to fund mosques, Both the regime’s cadres and its critics ence through the allure of its ideas, though. train imams and distribute religious texts sometimes say that Iran controls four Arab It owes its success to circumstance: wars, in the Middle East, Asia and Europe. No of- capitals: Baghdad, Beirut, Damascus and terrorism and the utter failure of autocratic ficial figures exist but estimates range as Sana’a. This is a wild exaggeration. But Iran regimes in Arab states. high as $100bn over four decades. The has been adept at filling the void left by Saudi rulers describe 1979 as an inflec- kingdom maintains an almost comical ob- Arab states. If its rivals want to contain it, tion point. “We, in this country, did not session with Iran’s activities. One leaked they need to offer something better. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist February 9th 2019 Middle East & Africa 39

Trade and politics Israel’s election Thus spoke Netanyahu East African rifts

An odd Hebrew word says a lot about Israeli politics tisnoteasy to translate the Hebrew pagan rule, inverted this morality. They KAMPALA Africa’s strongest regional bloc is word davka. It means something like saw the weak masses as good, whereas I under strain “despite it all” and “because of”, but with precisely (davka!) the strong rulers were a sense of deliberate precision: I was at evil. This “slave morality”, Nietzsche frica’s regional institutions do not home all day, but the delivery man came thought, was behind all of Western civili- Alack ambition. The African Union’s davka during the half-hour when I was sation. He detested it. master plan promises a rich, peaceful con- out. It can connote an intent to irritate: Nietzsche’s account of morality’s tinent criss-crossed by high-speed trains. my girlfriend knows we disagree about evolution is a fascinating mess with little Eventually. Its target is 2063, a date well politics, but she always davka brings it relationship to historical reality. How- past the likely retirement date of all the big- up. In 2003 Ariel Sharon, a pugnacious ever, his analysis of resentment was wigs who signed the plan. former prime minister, cited a young picked up by thinkers like Sigmund The East African Community (eac), by American explaining the word to friends Freud and Hannah Arendt, and has be- contrast, has no time to waste. It wants to back home: “Davka means doing or come crucial to the understanding of form a single currency by 2024. At a recent thinking something both in spite of and populism and authoritarianism. Still, it summit, heads of state discussed drafting because of a given situation.” is strange that the politics of resentment an east African constitution, with the ulti- Curiously, Binyamin Netanyahu, should be employed davka by Mr Netan- mate goal of political federation. The eac is Israel’s prime minister, has chosen as his yahu, who is an unlikely underdog. the most successful of Africa’s regional campaign slogan “Davka Netanyahu”. In The scion of a renowned Ashkenazi blocs. Since its revival in 2000 it has estab- December Israeli police recommended family, Mr Netanyahu grew up in Ameri- lished a customs union and the rudiments that Mr Netanyahu be indicted for brib- ca before returning to Israel to serve in an of a common market. But its leaders are ery and breach of trust. The prime min- elite commando unit—a crucial dis- getting ahead of themselves: deepening ister says the charges are a witch-hunt by tinction in a society where military rifts have put the project in jeopardy. lefty prosecutors and journalists. Many service affects social class. He has been a Four of its six members (Rwanda, Bu- supporters of his hawkish Likud party dominant figure in Israeli politics for rundi, Uganda and South Sudan) are led by come from religious or working-class more than two decades. He and Likud ex-rebels, some with competing interests backgrounds, and many are Sephardi have helped pull Israel’s political centre in the Congolese borderlands to the west. Jews, descended from immigrants from in a hawkish direction, winning power The recent summit was postponed twice the Arab world, rather than Ashkenazi and all but ending the prospects for a because Burundi, which has fallen out with Jews, who trace their roots to Europe and Palestinian state. Rwanda, refused to attend. That quarrel are typically richer. Mr Netanyahu’s The real political outcasts in Israel are goes beyond mere words. In 2015 Pierre davka is an invitation to his supporters to surely Likud’s opponents, the remnants Nkurunziza, the Burundian president, stick a finger in the eye of the elite: vote of the peace movement. They are the fought off a coup. His government accuses for me not just despite the corruption ones who must urge their dwindling Rwanda of backing it. In 2016 un experts re- charges, but because of them. band of supporters to continue hoping ported that Burundian refugees were being This populist way of thinking is be- for the seemingly impossible, davka. recruited to fight against their home gov- coming familiar all over the world. At its ernment. In December the same experts heart lies the politics of resentment. said that arms and men were also flowing Backers of President Donald Trump through Burundi to undermine Rwanda. enthusiastically call themselves “deplor- Rwanda’s president, Paul Kagame, is ables”, embracing a term Hillary Clinton also on bad terms with Yoweri Museveni, used to describe some of them. In Brit- his Ugandan counterpart. The rift is perso- ain, Brexit supporters suggest that, in nal. Mr Museveni fought his way to power case of a second referendum, the Leave in the 1980s with the help of Rwandan refu- campaign should employ the rallying cry gees; Mr Kagame, who grew up in a Ugan- “Tell them again”. Such slogans appeal dan refugee camp, was his military intelli- not to the merits of the cause, but to gence chief. Later, as presidents, the supporters’ resentment at being a target former comrades launched two wars in of condescension. Congo, then fell out over the loot. By 2000 The great philosopher of resentment their soldiers were firing at each other, was Friedrich Nietzsche, who thought it 600km from home. had a lot to do with Jews. In “On the Relations are again dicey. Last year Mr Genealogy of Morality”, he describes the Museveni sacked his police chief, who was politics of resentment as a Jewish in- later charged by an army court with aiding vention that lies at the core of Judeo- the kidnap of Rwandan exiles (among oth- Christian ethics. In pagan morality, er things). The abductees, including one of according to Nietzsche, the good is syn- Mr Kagame’s former guards, had been ille- onymous with the excellent and the gally sent back to Rwanda and imprisoned. powerful: rulers and gods are good be- Rivalry between Kenya and Tanzania, cause they are beautiful and strong. the two largest members, is more straight- Judaism and Christianity, resentful of I want you (to be resentful) forward. Together they account for three- fifths of the region’s population and three-1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

40 Middle East & Africa The Economist February 9th 2019

2 quarters of its gdp. Yet commerce between Tanzania, to Kenya’s chagrin. had to leave their homes. them is hobbled by a trade war. Although Some worry that the escalating tensions Mr Buhari’s third set of promises con- both are meant to be in a common market, could cause history to repeat itself. The cerned the economy. Alas, Nigerians are Tanzania has imposed tariffs on Kenyan first East African Community collapsed in poorer today than in 2015. Unemployment sweets. Kenya has retaliated by taxing Tan- 1977. More likely, the region will continue has risen from 8.2% to 23.1%. The president zanian flour. Tanzania, which is sliding to- to make faltering progress on trade, where is partly the victim of low oil prices; the wards protectionism, also objects to a pro- the spread of cross-border business creates black stuff provides 70% of government posed trade deal between the eac and the its own momentum. But political issues revenue. But his statist instincts have made eu, which Kenya is keen on. As the only eac are trickier. Leaders who brook no dissent matters worse. Interest payments are set to countries with coastlines, both vie for in- at home have little taste for compromise reach 80% of federal government spending vestment in infrastructure: in 2016 Uganda abroad. Each wants integration, as long as by 2022. Though Nigeria’s government has decided to route an oil pipeline through he is in charge. 7 three space agencies, it can barely run a power grid. The country generates less electricity than the city of Edinburgh. Elections in Nigeria Atiku Abubakar, the main challenger to Mr Buhari, is also in his 70s. His slogan is: Battle of the big men “Let’s Get Nigerians Working Again”. Citing Margaret Thatcher, he says he wants to pri- vatise state-owned firms. But his plans are short on detail. Many fear privatisation would be a smokescreen for enriching his cronies. Though he has not been charged LOKOJA with any crime in Nigeria, in 2010 a us Sen- President Muhammadu Buhari has disappointed. His opponent could be worse ate committee alleged that Mr Abubakar’s othing seems awry on arrival at the (fourth) wife helped him bring “over $40m NAjaokuta Steel Company near Lokoja in suspect funds” to America. in central Nigeria. Nestled in scrubland are Mr Abubakar, a former big man in the rows of depots, mills and furnaces; the Nigerian customs service, denies that he is complex covers 800 hectares, or four times corrupt. His various businesses, from oil the size of Monaco. Inside the main build- services to property, make him the largest ing workers amble through the foyer, bare- employer in his home state of Adamawa. ly noticing a suggestion box. His vast fortune allows him to donate copi- Your correspondent is, however, tempt- ously to charity. He has a deep patronage ed to leave a note that reads: “How about network across the country. making some steel?” Since construction of That will help ensure the presidential the state-owned firm began 40 years ago, it election is closer than it was in 2015, when has received $8bn in public money without Mr Buhari won by more than 2.5m votes. producing a beam. Corruption and mis- “It’s going to be a bare-knuckle fight,” says management have gone on for so long that Matthew Page of Chatham House, a think- Ajaokuta has more than 10,000 pensioners tank. Elections in Nigeria are largely on its books. There is no more colossal shaped by which political machine runs symbol of Nigeria’s squandered potential. most effectively. Mr Buhari can depend on On February 16th Nigerians will go to a lot of support in the north. Mr Abubakar’s the polls in the largest democratic event in People’s Democratic Party will sweep most African history. Fully 84m people are regis- of the south-east. Much will depend on tered to vote in the country’s sixth general When you said “steel”, someone misheard turnout in these core areas and on who can election since military rule ended in 1999. win swing votes in the south-west. Yet the prospect of consolidating democra- Progressives Congress, the ruling party. To- Some worry that the tightness of the cy in Africa’s most populous country has gether these turncoats had N600bn race will encourage rigging. Recent elec- not elevated the campaign. Too many Nige- ($1.7bn) worth of corruption allegations tions in Anambra and Ekiti states saw rians have been let down by politicians to hanging over them. widespread vote-buying; it is likely to hap- ditch their cynicism. Mr Buhari’s record on security is little pen again. Another concern is how easy it Muhammadu Buhari, Nigeria’s presi- better. After taking office he oversaw a mil- is to change the tallies when the results are dent, has promised to revive Ajaokuta. Yet itary offensive against Boko Haram, the ter- sent from Nigeria’s 120,000 polling units to he made the same commitment in 2015. In rorist group that in 2015 controlled an area counting stations. Then there is the spectre total Mr Buhari has delivered on just seven of the north-east the size of Belgium. How- of thugs or police intimidating voters. of the 222 pledges he made as a candidate, ever, in the past few months the army has Four times Mr Buhari has blocked re- according to the Centre for Democracy and suffered setbacks. An attack last month in forms that would strengthen Nigeria’s Development, a Nigerian think-tank. the town of Rann killed 60 people and electoral commission. Such intransigence These promises came in three areas. forced another 30,000 to flee to Cameroon. frustrates Samson Itodo, a founder of the The first was corruption. Despite having 27 Nor is the north-east the only problem. “Not too young to run” campaign, which is agencies with a mandate to clean things up Last year more people were killed in clash- trying to clean up elections and make polit- Nigeria remains filthy. The latest report by es over land between farmers and cattle- ical involvement easier for the three-quar- Transparency International, a watchdog, herders than were slain by Boko Haram. In ters of Nigerians who are under 35. “We are finds no sign of corruption ebbing under the north-west armed bandits killed 371 tired of these same old leaders,” he says. Mr Buhari. In fact, his administration has people and displaced 18,000 in the first sev- “We are laying the foundation for a revolu- used the prospect of protection from pros- en months of 2018. Across Nigeria, 7.7m tion in 2023.” Until then, Nigeria will be ecution to entice opponents to join the All people need humanitarian aid and 2m have stuck with mediocrity. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Europe The Economist February 9th 2019 41

Economic geography 3.7%—and help moderate wages, which Mr Meerpohl says are “running out of control”. Germany spreads the love If Vechta is not typical, it is far from un- ique. Pöppelmann (local workforce 2,100) and Big Dutchman (900) are two of Ger- many’s “hidden champions”, a term coined in the 1990s by Hermann Simon, an aca- demic-turned-consultant, for Germany’s VECHTA innumerable obscure, smallish and world- How decentralisation can help inoculate against political unrest beating firms. Unlike high-end services t’s important to understand the the radical politics they can foster, Vechta, companies, which benefit from the net- “Iminds of pigs and chickens,” says population 33,000, offers a different les- work effects and talent pools in big cities, Bernd Meerpohl, as he shows off his com- son. “Our problem,” says Helmut Gels, the specialist manufacturers are often found pany’s wares. Big Dutchman, the firm he mayor, “is that we have no problems.” The in places you’ve never heard of: at least runs, designs sophisticated machinery, birth rate is extraordinarily high by Ger- two-thirds of the hidden champions are in housing units and software tools, with man standards, and the town has been settlements below 50,000 people, and they names like EggFlowMaster and BigFarm- growing for decades. Successful family are dotted throughout Germany (see map Net, to help farmers get more from their firms like Big Dutchman and Pöppelmann on next page). Their success helps explain beasts. These innovations have lifted sales employ generations of locals, take on hun- the relatively high share of manufacturing 27-fold in real terms since 1985, to €960m dreds of apprentices and support thou- in Germany’s workforce and the slow pace ($1.1bn) last year. Such success means am- sands more jobs via their suppliers. of its decline (see chart on next page). Ger- bitious locals from Vechta, the small town Vechta’s employers even spy a silver lining many is also politically decentralised, in north-west Germany in which Big in Germany’s economic slowdown (see Fi- which Philip McCann at Sheffield Universi- Dutchman is based, can often find profes- nance section). A looser labour market ty says keeps regional inequality in check. sional satisfaction without having to leave could help them find the skilled workers And while creative sorts flock to cities, sci- home. In nearby Lohne, Tanja Sprehe, digi- they crave—local unemployment is just entists and engineers keep small towns in tal sales manager at Pöppelmann, a high- rich areas alive. “I can stay here all my life,” end plastics manufacturer, thought she’d Also in this section chirrups Michael Fabich, a young produc- never return to the area after building a ca- tion worker for a local grocery firm. 42 Macron’s great debate reer in Hamburg. But the demands of fam- Decentralisation blunts a source of dis- ily brought her back. Now, having secured a 43 The EU’s drug boondoggle content that has plagued some of Ger- good job and wallowing in the pleasures of many’s neighbours. In France the revolt by 44 Italy wishes for growth small-town life, the only thing she misses gilets jaunes at first seemed to be about about her former home is good sushi. 44 Hungary’s underwater dog treadmill small-town grievances against the big cit- As democracies across the West fret ies in which economic opportunity has be- about decaying, depopulating regions and 46 Charlemagne: Vestager’s progress come concentrated. According to Andrés 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

42 Europe The Economist February 9th 2019

many to the insecure, “peripheral” France nomic hardship. All down the line of the gilets jaunes. Hidden champions The big caveat is the former East Ger- Manufacturing employment create jobs and opportunities far from cit- many. Despite success in isolated areas like % of total employment ies, limiting the brain drain. Local politi- optics, only a fraction of Mr Simon’s hid- 25 cians are more responsive to voters’ de- den champions are found in the east. After mands than Jupiterian presidents in reunification the mass sell-off of industry, Germany 20 distant capitals. In troubled areas, Ger- largely to western investors, left easterners many’s constitutionally mandated system with what Mr Südekum calls a “deep per- 15 of fiscal transfers across states can smooth ception that they were ripped off”, which United States globalisation’s rougher edges. Jens Süde- lingers today. Extremist parties do best in France 10 kum, an economist at Düsseldorf’s Hein- the five eastern states. Dresden and Chem- Britain rich Heine University, calculates that in nitz have spawned thuggish protests. 5 2010 such payments amounted to fully Moreover, the trends that mark Ger- 0 12.4% of Germany’s aggregate tax revenue. many out from its industrialised peers are Cities like Duisburg and Essen, in the post- not immutable. Automation will cut into 1992 95 2000 05 10 15 17 industrial Ruhr valley, have been spared manufacturing’s share of the workforce, Source: Datastream from Refinitiv the ravages that deindustrialisation and Germany’s mighty carmakers seem ill- brought to parts of America’s Midwest or prepared for the disruption of self-driving 2 Rodriguez-Pose, a professor of economic the Pas-de-Calais region in northern and electric vehicles. Despite the hidden geography at the lse, Ile-de-France (which France, now a stronghold of Marine Le champions’ success, urbanisation contin- contains Paris) was the only French region Pen’s National Rally. Comparable parts of ues apace, as rocketing house prices in with above-average growth between 1990 Germany have not made a comparable pop- large cities indicate. Vechta is keeping its and 2014. Not only were the gilets jaunes left ulist turn. Indeed, researchers find no clear natives, but attracting new talent is hard behind, they felt scorned by the winners of correlation between afd support and eco- when the competition is Berlin. 7 globalisation, embodied by the haughty and remote figure of Emmanuel Macron. Germany should not consider itself im- France mune to such problems, argues Marcel Fratzscher of the German Institute for Eco- Macron’s great debate nomic Research. Beneath its glowing jobs numbers lurk growing inequality and a vast low-pay sector, nurtured by a long per- iod of wage suppression. Germany has gained more from globalisation than it has lost; you can see that in Big Dutchman’s lo- EVRY-COURCOURONNES An unloved president is trying to turn a crisis into an opportunity gistics yard, full of packages destined for Senegal and Chile. But regions that special- our hours into the town-hall debate, utions”. The government had increased the ised in low-end products like ceramics or Fand members of the audience begin to dsu (urban solidarity and social cohesion textiles, such as upper Franconia or parts of fidget. One man yawns. A few others put on budget), he argued, even if it had cut the the Palatinate, were walloped by cheap im- coats and slip out quietly. But Emmanuel dpv (cities’ budget). ports in the 1990s. Policy can hurt places, Macron is just hitting his stride. Perched on Mr Macron’s grasp of policy detail too: the government may have to spend a plastic chair in the municipal hall, his sometimes baffles as much as it clarifies. €40bn to compensate regions affected by shirtsleeves rolled up, the French presi- But his marathon meetings are more na- its recent decision to scrap lignite mining. dent carries on for another two hours, tak- tional group therapy than public lectures. Yet there is no obvious parallel in Ger- ing notes and answering queries. One mi- One by one, the 300 local mayors and com- nute it is housing benefits, the next the munity workers gathered in this town-hall reimbursement of psychiatric care or de- annex down the road from a Turkish kebab Germany’s “hidden champions” lays to the extension of a Metro line. It is restaurant raised their hands and took the Small world-beating firms not until close to midnight that Mr Macron microphone. A centre-right mayor pleaded finally exhausts the questions (and the au- for help saving 800 factory jobs. A commu- Hamburg dience), accedes to requests for selfies and nist mayor said the banlieue wants “justice, P S O D Bremen L drives off into the night. not charity”. A football-club organiser N A A Vechta N L D Battered in the polls and facing weekly wants volunteers to be properly valued. R Berlin E H protests in the street, Mr Macron is at- “I’m sure you’ll listen to me, because I’m T E Hanover

N tempting a comeback in the way he knows called Brigitte,” ventured another mayor, Essen Leipzig best: with the force of argument, reason who shares a name with the president’s Dresden and relentless acronyms. This week’s stop wife. All the while, and without briefing pa- Cologne in Evry-Courcouronnes, a town 30km pers, Mr Macron listened to the litany of Chemnitz south of Paris, was part of his “great nation- complaints and offered a response to each. Frankfurt Former boundary between East & al debate”, intended to let citizens register Three months after the gilets jaunes West Germany grievances and contribute ideas. It also al- movement emerged, and with weekly prot- CZECH Nuremberg REP. lowed the president to take his town-hall ests continuing, Mr Macron is gambling road-show away from rural France, the nat- that the national debate is a way to turn Stuttgart ural habitat of the gilets jaunes protesters, chaos into an opportunity. By taking seri- FRANCE Munich and into the multi-ethnic outer-city dis- ously the grassroots grievances, while de- AUSTRIA tricts, or banlieues. “We can do better,” Mr nouncing the violence, he hopes to win 100 km Macron told participants, conceding that round public opinion, which has sup- Source: Professor Hermann Simon he had “convictions” but “not all the sol- ported the movement, and marginalise the 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist February 9th 2019 Europe 43

According to the eu’s Falsified Medi- cines Directive, the goal is to protect con- sumers from the threat of falsified medi- cines in the legal supply chain. But that threat barely exists in Europe. When the di- rective was issued in 2011, just one in 20,000 medicine packs was reckoned to be fake. There are no data suggesting this has changed. According to Europol, seizures of fake pharmaceuticals at eu borders in re- cent years have fallen. Most such ship- ments are simply passing through the eu on their way to countries with weak safe- guards where they will be easier to sell. Roberto Frontini, former president of the European Association of Hospital Phar- macists, doubts whether the new system’s priority is patients’ safety. If it were, he points out, all over-the-counter medicines would have been included too. Mihai Ro- taru of the European Federation of Pharma- Jupiter listens ceutical Industries and Associations says pharma companies pushed for an all-eu 2 hard core. The president has swapped the when he called out from the balcony of his verification system because some coun- chandeliers and gilt of the presidential pal- housing-estate flat to Mr Macron as he ar- tries were considering setting up their ace for draughty municipal gyms. He has rived, the president invited him along, and own, which would have created a packag- ditched his lofty know-it-all tone for dia- he got to ask him a question about racial ing nightmare for manufacturers. Others logue and debate. The point “is to show that discrimination. Afterwards, he judged the in Brussels say big pharma’s motivation France is not just the gilets jaunes,” says president “pretty good”. So did Guy Bellan- was to throw a spanner in the works of par- Amélie de Montchalin, a deputy from Mr ger, who runs a sports club and says he allel-trade firms, which export medicines Macron’s La République en Marche party. wanted just to “be heard”. Ghislaine Bazir, from low-price to high-price eu countries The president’s detractors dismiss it as headmistress of a lycée, suggests “people (a thriving business because countries of- a gimmick. Jean-Luc Mélenchon, on the far don’t dare” to say they approve of Mr Mac- ten fix domestic drug prices). left, terms it a “masquerade”. Facebook ron, because of the “stigma” of doing so. The burden falls partly on pharmacies, groups run by gilets jaunes call it “blabla”, The president has shown that, in six which have to pay €530 ($604) apiece for accusing Mr Macron of campaigning at tax- hours of non-stop discussion, he can win new scanners and adapt their software. payers’ expense. Yet the French seem keen over most of a room. If he wants to prove Urging them to get ready has been a tough to have their say. Over 4,000 town-hall de- wrong all those who consider the affair a sell, say national pharmacists’ associa- bates have been organised. Mayors have charade, he now needs to conquer public tions, because incidents with fake medi- opened “books of grievances”. An online opinion as a whole and to turn conflicting cines in the legal supply chain are rare or questionnaire has drawn 700,000 contri- proposals into coherent policies. 7 non-existent. Most pharmacies in Britain butions on taxation, public services, the are ready, but a no-deal Brexit would cut environment and democracy. Mr Macron’s them off from the data hub. approval rating in February was up by six EU drug verification Disdain percolates in hospitals, too. points, to 34%, according to Ifop—still Many get their medicines directly from pretty dismal, but an improvement on his Phantom fakes manufacturers, which makes verification record low of 23% in December. redundant. Hospital pharmacy units dis- The next problem is what to do with this patch hundreds of packs to wards each day. outpouring of civic participation when the Scanning each of them would require more debate draws to a close on March 15th. In staff. Many hospitals are lobbying to be ex- Evry-Courcouronnes, Mr Macron prom- empted from scanning, or to be allowed to A huge system to catch bogus pills may ised that the national debate would “not scan shipments in bulk. Because they are not find many end in a classic way”. One idea is to hold a mostly government-owned, hospitals are referendum, with questions on such mat- eething problems are to be expected less worried than street pharmacies about ters as the number of deputies in the Na- Twith an online system linking more sanctions for not meeting the deadline. tional Assembly or term limits. This could than 150,000 organisations in 28 countries What should patients expect? Recent partly meet the gilets jaunes demand for to one giant data hub. That is what the tests of the system make it clear that false more direct democracy. Yet Mr Macron has European Medicines Verification System, alarms will be beeping at pharmacies for also ruled out backtracking on his main which goes live on February 9th, will do the first few weeks, if not months. Some policy choices, including the abolition of with pharmacies, hospitals, drug firms and packs with the new codes are already on the the wealth tax. It may well be that the cen- their distributors. From now on, each of market but not in the system. Labels some- tral demand which emerges from the con- the 18bn packs of prescription medicines times fail to scan. What pharmacists sultation is a familiar contradiction: more sold in the eu each year must have a tam- should do is not always clear. Some coun- public services and lower taxes. per-proof seal and a unique code, which tries are still writing their guidelines on In Evry-Courcouronnes, the initially pharmacists must scan in to verify it is not when to quarantine a pack and how to in- sceptical locals seemed broadly satisfied. a fake. As the deadline approaches, the sys- spect it. For now, when a pack triggers an Manuel, in tracksuit bottoms and trainers, tem’s glitches are becoming clearer; its alarm, pharmacists are told to go ahead and said he is “not interested” in politics. But benefits, less so. dispense it to patients anyway. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

44 Europe The Economist February 9th 2019

Italy In reaction Luigi Di Maio, the m5s with m5s, he has one. leader, has adopted a more radical stance. The m5s may yet decide to block Mr Sal- Wish upon Five He now shares platforms with Alessandro vini’s indictment in parliament. But it will Di Battista, a shrill polemicist popular with want something in return. The obvious Stars the party’s left wing. This week, when Italy concession would be Mr Salvini’s agree- vetoed the eu’s planned recognition of ment to postpone or scrap a half-built Juan Guaidó, an opposition leader, as inter- high-speed rail link between Turin and the ROME im president of Venezuela, it was the m5s’s French city of Lyon. The movement has al- Italy’s populist government dreams of work. (By contrast Mr Salvini denounces ways opposed it as unnecessary and envi- gdp growth Nicolás Maduro, the leftist who stole Vene- ronmentally damaging. Now, in a sign of or italy, 2019 will be bellissimo, its zuela’s most recent presidential election, how the party is changing, it has begun us- Fprime minister, Giuseppe Conte, said as a criminal.) On February 5th Mr Di Maio ing the renascent rhetoric of populist na- this month. The economy, he declared, flew with Mr Di Battista to Paris to meet tionalism to belittle the very idea of linking could grow by up to 1.5%. With much of Eu- leaders of the gilets jaunes protest move- two countries together. As the m5s infra- rope at risk of slipping into recession, that ment. If Emmanuel Macron, France’s presi- structure minister, Danilo Toninelli, put it: sounds pretty good. dent, needed another reason to be angry “Who cares about going to Lyon?” 7 In fact, Italy is already in recession. Its gdp fell in both the third and fourth quar- Fraud in Hungary ters of 2018, and few forecasters are as san- guine as Mr Conte. The Bank of Italy ex- pects the economy to grow by just 0.6% Sniffing out corruption this year. The prime minister is banking on an expansionary budget. If this fails to re- The curious incident of the underwater treadmill for dogs vive the economy, the two parties in his populist coalition, the Five Star Movement here was no underwater treadmill which got €43.7m in eu funding. Accord- (m5s) and the nationalist Northern League, Tfor dogs. That, Sherlock Holmes ing to Atlatszo.hu, an investigative web- will be in trouble. Many question whether would have said, was the curious in- site, the contracts were won by a com- their fractious marriage can survive be- cident. In 2009 a Hungarian entrepre- pany co-owned at the time by the yond summer. neur received a €140,000 ($195,000) son-in-law of Viktor Orban, the prime The economy is not their only problem. grant from the European Union to manu- minister. But in November Hungarian Matteo Salvini, leader of the League and a facture one. This was by no means ab- police closed the case, saying no crime deputy prime minister, may be tried for surd: hydrotherapy is an established had been committed. Since olaf can kidnapping. Last year, in keeping with his technique of post-surgical rehabilitation only refer cases to national authorities, tough stance on immigration, he stopped for dogs and humans. But the grantee that was the end of the matter. 177 migrants from getting off a coast-guard made no effort to design or build the The eu’s new public prosecutor’s vessel that had rescued them in the Medi- device. When olaf, the eu’s office for office, which is due to launch by the end terranean. They languished on the ship in investigating fraud, discovered this, it of 2020, will have enforcement powers. port at Catania for five days. Last month a alerted Hungarian prosecutors. Last But participation is voluntary, and Hun- court decided Mr Salvini should be indict- October a Hungarian court gave him a gary has not opted in. Zoltan Kovacs, the ed for illegally detaining them, though the suspended sentence of 22 months in jail. government’s spokesperson, says Hun- prosecutors who investigated his conduct If that sounds lenient, bigger cases of gary thinks judicial affairs are matters of asked that the case be shelved. suspected Hungarian misuse of eu funds national sovereignty, and claims the Arraigning an Italian lawmaker re- have led to even less punishment. In corruption accusations are “political”. quires clearance from parliament. To avoid January 2018 olaf sent Hungarian police The government refuses to release olaf’s prosecution, Mr Salvini needs the votes of a file documenting irregularities in 35 full report. Until it does, suspicions of a m5s. But m5s has always told voters that it municipal-lighting projects in 2011-15, cover-up will continue to dog it. rejects Italy’s grubby history of political ob- struction of the courts. And the party has already sacrificed plenty of principles since coming to power. One prominent voter who has noticed is Michele Riondino, an actor who starred in the popular television crime series, The Young Montalbano. Mr Riondino voted for m5s last year because it promised to close a noxious steel plant in his native city of Ta- ranto. But the factory has stayed open. The television star spoke for many when, in an interview this week, he vowed to abstain in the next election. The regional election in Abruzzo on February 10th will be an important test of the public mood. Polls show that m5s’s share of the national vote has dropped from almost a third at the parliamentary election last March to roughly a quarter. The League, meanwhile, has almost dou- Like this one, but Hungarian bled its share to more than 30%. РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

46 Europe The Economist February 9th 2019 Charlemagne Vestager’s progress

A liberal trust-buster could break the establishment’s grip on the EU’s top job have to control the sea’s entire coastline to control access to it, she notes. Technology firms, Ms Vestager rightly concluded, can simi- larly exercise disproportionate power: “We can’t trade our freedom for better maps or our democracy for a better social-media algo- rithm.” She has not ruled out a tilt at the commission presidency when Jean-Claude Juncker’s term ends this autumn. Winning it will require Europe’s top trust-buster to break up its biggest political duopoly: the alliance of the two largest groups in the European Parliament, the centre-right European People’s Party (epp) and the centre-left Socialists and Democrats (s&d). The two function as a sort of cartel, colluding in the allocation of big eu jobs and putting up most of the commission presidents to date. They tightened their grip in 2014 with the introduction of the so- called Spitzenkandidat system, whereby the designated candidate of the largest group in the parliament has an automatic claim. This process strengthens the big groups, especially the epp, which is ex- pected to remain the largest at the European election in May. Now is a good moment to challenge it. The epp and the s&d are alliances of big-tent national parties, such as Christian democrats and social democrats. In most countries, such parties are strug- gling. The epp and the s&d will probably lose their joint majority in May. The centrist Alliance of Liberals and Democrats for Europe est in peace, “Trainbus”. On February 6th Margrethe Vestager, (alde), which includes Radikale, could go from the fourth-largest Rthe European Union’s competition commissioner, vetoed a group to the second-largest—especially if it forms an alliance with merger between Germany’s Siemens and France’s Alstom that pro- Mr Macron’s La République En Marche (lrm) party in France. posed to do for train-building what Airbus has done for plane- The two big groups have not helped themselves with their can- building: create a European giant capable of competing with the didate selection. The s&d picked Frans Timmermans, a clubbable world’s biggest. The move dismays Angela Merkel and Emmanuel social democrat who is not expected to get the support of the liber- Macron, who argue that Europe needs champions to take on rivals al government in his native Netherlands. The epp went with such as China’s crrc. But the commissioner ruled that the merger Manfred Weber, a Bavarian conservative whose indulgence of Vik- would eliminate competition in certain sectors, and argued that tor Orban, Hungary’s authoritarian prime minister, makes him the eu should instead take on Chinese industrial might with better unpalatable to liberals and greens, whose backing he would need rules on state subsidies, data privacy and takeovers. Her wariness for a majority. It is not so hard to imagine the European Council is welcome. Achieving competitive European firms through mega- (the eu heads of government, who formally propose commission mergers confronts the symptom—a lack of European industrial presidents) eschewing Mr Weber in favour of safer epp figures like giants—rather than the underlying problem, which is insufficient Michel Barnier, the Brexit negotiator, or Peter Altmaier, Germany’s integration of European markets. multilingual economy minister. It might even call for Ms Vestager. Ms Vestager (pronounced “Vest-ayer”) does not shy away from making powerful enemies. Brought up in a bustling Lutheran par- A liberal dose of optimism sonage in a coastal corner of Denmark, she is known in Brussels for Europe’s liberals could make this prospect more likely. To do so, her straight manner and dry humour. She arrived there in 2014 they would have to unite to maximise their strength in the Parlia- after a career in Copenhagen as education minister, economy min- ment and reject the Spitzenkandidat process. Lars Lokke Rasmus- ister and leader of Radikale, a small social-liberal party. Her detrac- sen, the Danish prime minister whose centre-right Venstre party is tors say she has since picked easy targets, predominantly Ameri- a member of alde, would need to back Ms Vestager. Most of all, can technology firms, to make herself popular. Her admirers, Emmanuel Macron, Europe’s most powerful liberal, would need to greater in number, say she has taken on mighty corporate interests champion her and take on Mrs Merkel, who backs Mr Weber. where others would have wavered. She faced down Tim Cook, the But none of this is happening. Mr Macron and Mark Rutte, the boss of Apple, in a stormy meeting in 2016 and later forced his com- Dutch prime minister and alde’s dominant figure, disagree over pany to cough up €14bn ($16bn) after ruling that Ireland had given euro-zone reforms and have failed to get the alliance between lrm it illegal tax breaks. (That decision is under appeal.) She has im- and alde off the drawing board. alde has promised a list of seven posed €7bn in fines on Google, has raided the offices of German candidates to disrupt the Spitzenkandidat process, but it has been carmakers suspected of cheating on emissions tests, and is now delayed; Mr Weber and Mr Timmermans are already touring the investigating banks over possible bond-trading collusion. continent. Mr Rasmussen is unlikely to back Ms Vestager, and Mr All of which shows why she would make a fine president of the Macron is weakened at home and angry about her ruling on the Al- European Commission. Ms Vestager is independent-minded and stom-Siemens deal. It may all come to nothing. capable, both traits needed at the top of the eu’s executive. Hers is That would be a shame. Europe’s liberals talk much about the not a hands-off-at-all-costs liberalism; rather, she sees the state as need to rebuild confidence in the eu in populist times. In Ms Ves- a policer of rules and a curb on vested interests. In a speech on Feb- tager they have a chance to pick a head of the European Commis- ruary 4th she compared firms like Google to Danish castles on the sion who actually believes in enforcing the rules. If they fail to get Oresund strait, the entrance to the Baltic Sea. Denmark did not their act together, they may not get many more such chances. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Britain The Economist February 9th 2019 47

Immigration than China and India. But whereas China mostly sends students, India sends work- The new Europeans ers. Indians have been among Britain’s three biggest foreign-born populations since the 1950s. For most of that time they were second only to the Irish, but overtook them in 2003. A decade later they were out- numbered by Polish-born migrants, but BIRMINGHAM most experts reckon that Indians will soon Britain’s European migrants are packing up. The rest of the world is moving in become Britain’s most populous migrant he fields of Worcestershire surrender lar about the perceived lack of control over group once again, as the pendulum swings Ttheir goodies to a changing cast of la- who comes and for how long, as much as back to non-eu migration. Estimates sug- bourers. In the 1970s and ’80s Indians and alarm over increasing numbers. The gov- gest just over 850,000 Indian-born people Pakistanis were bussed in from Birming- ernment plans to end free movement from live in Britain, compared with a little under ham to pick sprouts and pull onions. Then the eu while letting in more skilled work- 900,000 Poles. came South Africans and Kurds. In the ers from the rest of the world. Unskilled The changing profile of the average In- 2000s, as the European Union bulged east- workers will still be able to come, but only dian immigrant foreshadows the shift now ward, Poles, Lithuanians and Latvians took for a year and with no right to bring their under way in the rest of the system. Take seats on the same buses. In turn, they were family or to claim benefits. Since the Brexit Birmingham, home to Britain’s largest In- replaced by Bulgarians and Romanians. referendum, net migration from the eu has dian-born population outside London. The Everyone talks in hand gestures. “As their tumbled. But from elsewhere it has shot up strawberry-farming Paddas are typical of a country develops, people don’t want to do (see chart on next page). generation of poor immigrants who moved the job,” says Bal Padda, whose family Nowhere sends more people to Britain to Britain seeking work in the 1950s and claim to run Britain’s only Asian-owned ’60s. Mr Padda’s father moved in 1966, in strawberry farm. “Now England has to de- time to watch England’s football team win cide which other country to let in.” Also in this section the World Cup on a black-and-white tv. He Britain’s immigration system is under- earned £5 a week (roughly £100, or $130, to- 48 Booming, shrinking Irish Britain going its most radical reform in half a cen- day) working in a foundry. Now he owns a tury. Three big shifts are under way. Future 49 Bagehot: Learning from Ruskin 120-acre farm supplying big retailers. migrants are likely to be more skilled than Jaswant Singh Sohal, a retired dentist, their predecessors. They will probably stay says his father only intended to come for a in Britain for only a few years, rather than few years when he moved to Birmingham settle. And a much greater proportion will in 1953. “He said he’d go back and settle come from outside the eu. when he had 5,000 rupees. It’s what most The switch is partly down to politics. people said at the time.” He never did. In- Read more from this week’s Britain section: Ministers reckon the Brexit vote was driven Economist.com/Britain stead, he encouraged about 150 family by concern over immigration—in particu- members to join him. About half of Indian-1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

48 Britain The Economist February 9th 2019

2 born residents in England and Wales in 1971 tion of immigrants come relatively briefly will still be cheaper for firms to import a ro- were still in the country in 2011. Now the for work or study, rather than to settle. Da- tating cast of it contractors rather than younger Mr Sohal drives a Bentley (“very vid Goodhart of Policy Exchange, a think- train the native population. The new immi- British”, he says, with evident approval). tank, reckons most people would accept gration regime will probably allow more By contrast, most Indian migrants now students and short-term workers who do non-Europeans to work in hospitals. And come temporarily, in part because minis- not cause the same demographic shifts as India would ask for even more visas in any ters bent on curbing immigration have permanent migrants and their offspring. post-Brexit trade deal. “Diageo [a British made it much harder for non-eu citizens to Whatever the politics, the stock of Indi- firm] will send them a load of whisky,” says take permanent jobs in Britain. Of the ans in Britain and new flows of Indian mi- a former Home Office official. “They will 62,000 work visas issued to Indians in the grants will probably continue to grow. It send us a load of skilled people.” 7 latest rolling year for which figures are available, about a third were for intra-com- Immigration (2) pany transfers, a category that allows mainly it workers to come for up to five years. Another 5,000 were general “tier 2” Last waltz in Kilburn visas, for example for doctors. The remain- der were mainly other short-term catego- Irish Britain is booming—and shrinking ries, such as for sportspeople or exchanges. Today’s Indian migrants are better edu- ifty years on, they are still unsteady cated than both their predecessors and the Fon their feet. Then, the Irish throng- average migrant. Nine in ten Indians arriv- ing the dance halls of “County Kilburn” ing in Britain since the Brexit vote have and Cricklewood in north London were some form of higher education, compared wobbly after one whisky too many. Now with 75% in the previous ten years. A little many of them bring walking sticks to the under three-quarters of all Indian nation- tea dance in a hall next to a Catholic als in Britain are similarly qualified, com- church that used to hold 18 masses each pared with under a third of Poles. “Would weekend. Mostly, they have swapped the new generation of Indians do a job like their Jameson’s for tea. But the waltzes this?” asks Mr Padda, overlooking the farm. are the same. “Get that wheelchair on to “I don’t think so.” the dance floor,” orders the singer, Mi- One of their number lives in Edgbaston, chael Troy, whose accordion is adorned round the corner from Mr Sohal. Jatinder with the Irish tricolor. And they do. Singh flew here from Delhi last April and Britain’s Irish population is swelling will go back home next year, unless his it and shrinking. A record number of contract is extended. He mixes with British Britons with Irish ancestors are applying Indians and white Britons alike, playing to Dublin for passports, in order to retain badminton with both. He has no qualms the benefits of eu citizenship, such as about going back to India, where he will do free movement, after Brexit. Yet the Night is young and the music’s high the same job. “It’s booming,” he says. Irish-born population of Britain is dwin- The political impact of the shift will de- dling. The Irish first came in sizeable Some groups are now dedicated to pend on how noticeable it proves. Percep- numbers in the famine of the 1840s. As tackling the loneliness of elderly Irish. tions change more slowly than migrant recently as 2002 they were the largest Tea dances are part of the answer. Marga- flows, says Madeleine Sumption of Oxford foreign-born group. But since 2000 their ret Redmond, who moved to London 46 University. Since Britain’s Indian popula- number has since dropped by almost a years ago, sings along to a song she re- tion is big and long-established, changes quarter, seeing them overtaken by Poles, members playing on the boat as she are not immediately obvious. Far fewer Indians, Pakistanis and, last year, Roma- sailed from Dublin. She used to have her Britons say they are concerned about im- nians. “We’re a dying race,” says Mr Troy. hair done every Monday before going out migration (about 16%) than did before the He used to play country music to Irish dancing. Now she does a turn of the floor, referendum (a little more than half). This audiences in London six nights a week. as if to prove she has the old magic. “Not trend might continue as a greater propor- Now he’s lucky to play two. bad for two new hips,” she reckons. The explanation partly lies across the It is hard to prise Alice Kennedy, 81, Irish Sea. The economic boom of the from the floor. There are few men to Switching Poles 1990s and 2000s encouraged some Irish dance with, so she beckons women to Britain, net migration by citizenship, ’000 people to go home and others not to leave join her. When she went to Irish ceilidhs in the first place. The trend was reversed 250 in Cricklewood in the 1960s, she would in the few years following the economic always wait for a man to ask her to dance. Non-EU Brexit referendum 200 crash in 2008, but Ireland’s economy is “That’s how you pulled. You’d try to shun now booming once more. them if they weren’t a good dancer.” 150 Most are not going home but to the There is, though, just a hint of an great tea dance in the sky. The Irish-born encore. After Brexit, Ireland will be the eu 100 population pyramid is “completely only country to retain free movement inverted”, says Louise Ryan of Sheffield with Britain. Ms Ryan reckons employers EU* 50 University. The elderly population ech- will lure more Irish people to fill va- oes the huge flows of teenagers in the cancies left behind by departing Euro- 0 1950s and ’60s. More than 40% of Irish- peans. “The Irish workforce will kick in born people in Britain are over 65. “We again,” she says. Mr Troy should keep his 2008 10 12 14 16 18 play at loads of funerals,” says Mr Troy. accordion handy. Source: ONS *Excluding British РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist February 9th 2019 Britain 49 Bagehot Learning from Ruskin

Born 200 years ago this week, John Ruskin still has important lessons to teach mains strikingly relevant on three subjects: the nature of work; the importance of place; and the role of beauty in everyday life. Ruskin believed that the pursuit of efficiency had deprived la- bour of meaning. Workers hated what they were doing because they were performing repetitive tasks rather than expressing their souls in their work. It is easy to dismiss this as trustafarian clap- trap. Ruskin inherited a fortune from his father, a wine merchant, and was prone to organising madcap schemes such as getting un- dergraduates, including Oscar Wilde, to build a road near Oxford, hardly an optimum allocation of talent. But his ideas about the im- portance of meaning as a motivator are not as impractical as they may seem. The Toyota system of production has outperformed mass production precisely because it gives workers more control over their jobs. This question is now at the heart of the knowledge economy: should we use smart machines to break work down into tiny chores that can be globalised and mechanised (as Amazon’s Mechanical Turk, an outsourcing platform, does), or should we use them to give workers more control over their tasks? Hurtling down the first route will lead to a “zipless totalitarianism”, to bor- row a phrase from Sean Orlando, an American artist, that will alienate workers without much improving productivity. Ruskin worried that what we now call globalisation was creat- n his heyday John Ruskin exercised the sort of influence that to- ing a rootless society, prosperous but anomie-ridden, composed Iday’s hyperactive “thought leaders” and “taste makers” can only of interchangeable human atoms, “circulating here by tunnels un- dream of. Oxford University named not one but two institutions der ground, and there by tubes in the air”. He urged his followers to after him—the Ruskin School of Art and Ruskin Hall, for working- put down roots in particular places, as he himself did in Brant- class students. He inspired the creation of the National Trust and wood, in the Lake District. Dozens of “Ruskinlands” sprang up the Society for the Protection of Ancient Buildings. “Thus disap- across the world, putting into practice his dictum that “local is log- peared from Earthly view the last of the giants who make the mod- ical”. He urged the rich to take responsibility not for humanity in ern British socialist movement possible,” Keir Hardie, the founder general but for particular people and places. Again what seems like of the Labour Party, declared when he died in 1900. effete claptrap contains a good deal of hard sense. The British Ruskin’s reputation sank like a lead Zeppelin after the first elite’s infatuation with globalisation has produced a backlash that world war, under the combined assault of Bloomsbury intellectu- now threatens globalisation itself, most obviously in the form of als, who mocked his over-wrought prose and didactic style, and Brexit but potentially in the form of a hard-left Labour govern- modernist architects, who ridiculed his taste for the Gothic. Today ment. Politicians have abandoned place-based policies while the only thing that most people know about him is that he was sup- businesspeople have failed to see that breaking free from the com- posedly so shocked by his wife’s pubic hair on their wedding night mon obligations of citizenship, by parking their money offshore, that he couldn’t bring himself to sleep with her (the marriage was will whip up a whirlwind. eventually dissolved “by reason of incurable impotency”). Ruskin’s greatest passion was for art. He made his name as a The 200th anniversary of Ruskin’s birth, on February 8th, pro- fluent champion of J.M.W. Turner and as a talented artist in his vides a welcome opportunity to re-evaluate this extraordinary own right. But for Ruskin, art was not something to be gawped at in man. Exhibitions of his drawings and paintings will remind us of galleries. It should suffuse the built environment, as it did in his his artistic gifts. “Ruskinland”, a timely book by Andrew Hill of the beloved Venice. This insight resonates today. Town planners and Financial Times, demonstrates that he had valuable things to say builders have forgotten the importance of aesthetics, assembling about reforming capitalism. It turns out that this prudish pubo- identikit houses and shopping centres without even nodding to phobe is nothing less than a prophet for our times. local traditions. This fuels not just alienation but nimbyism. Kit Malthouse, the housing minister, now talks of building “the con- The odd man of Coniston servation areas of the future”. Last November he set up a commis- The problems confronting late Victorian England were remark- sion on “building better, building beautiful”, chaired by Sir Roger ably similar to those now facing late Elizabethan Britain. The rul- Scruton, the closest thing Britain now has to a John Ruskin. ing class was feathering its own nest, the capitalists through global Ruskin’s most important lesson is the importance of eclecti- commerce and the political elite through their offices. The country cism. He called himself both a “violent Tory of the old school” and a was divided into “two nations”. The dominant utilitarian philoso- “reddest also of the red” socialist. “I am never satisfied that I have phy failed to answer urgent questions about the quality, as op- handled a subject properly till I have contradicted myself at least posed to the mere quantity, of life. Ruskin was at the centre of a three times,” he once said. One of the dangers facing Britain is that, constellation of intellectuals, including Matthew Arnold and after dividing into warring political tribes over Brexit, it will split Walter Bagehot (a former editor of this newspaper), who devoted again over the future of capitalism. The only way to bring the coun- themselves to stitching the country back together by reforming try back together and tackle its manifold social and economic pro- capitalism and re-moralising the ruling class. Ruskin’s output was blems is to adopt a Ruskinian approach, and ransack every tradi- as rambling as it was rich—his works run to 39 volumes—but he re- tion—conservative, liberal and socialist—for good ideas. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 50 International The Economist February 9th 2019

Electricity for the poor mean every household is connected, still less that power is available 24 hours a day Light to all nations? (see box on next page). Myanmar and Sene- gal are racing to do the same. In the past few years, though, govern- ments and aid agencies have put more faith in solar power. They have built or paid for KAGABIRO, RWANDA “mini-grids” that can power a village or a It seems outrageous that many of the world’s poor still lack electricity. school. More often they have given tax But outrage makes for bad policy breaks and subsidies to firms that sell hough she lives in one of the world’s Almost 140 years after Thomas Edison small solar kits. In Bangladesh, the number Tpoorest countries, Drocella Yandereye began selling filament light bulbs, just un- of solar home systems (that is, closed elec- is a picture of upward mobility. Her small der 1bn people worldwide still lack access tricity systems powered by a small panel on farm in Rwanda, where she grows maize, to electricity, according to the Internation- the roof) shot up from 16,000 in 2003 to beans, bananas and coffee, is thriving. She al Energy Agency, a research group. Almost 4.1m by the end of 2017. Ethiopia’s “national has built a new house and turned her old two-thirds live in Africa, mostly in the electrification programme” calls for con- one into a chicken shed. Her interests countryside. The un believes all should necting 35% of the population to small so- range well beyond her village, evidenced by have power, and has set a target date to lar systems by 2025. That proportion is ex- the two posters on her living-room wall achieve universal access of 2030. That pected to decline thereafter as more homes showing African leaders and the countries sounds plausible—since 2000 the number are plugged into the grid. of the world. What makes her even more of people without power has fallen by unusual is that she has electric light. 700m. Sadly, it is unlikely to happen. And Sun spots It is not the kind of bright, leave-it-on recent economic research shows that rush- Solar home systems provide much less light that people in rich countries take for ing to illuminate the world is a bad idea. power than grid connections, but are far granted. A small solar panel on Ms Yande- The old-fashioned way of bringing elec- cheaper to set up. The more advanced ones reye’s roof is connected to a wall-mounted tricity to the masses entails building power are often sold on a pay-as-you-go basis. Ev- battery, which powers a radio and three led stations and transmission lines. This is ery few months, a household is asked to ceiling lamps. Ms Yandereye also uses the still popular. Last year India’s government pay another instalment, which can be done battery to charge her mobile phone and a claimed that it had connected every village by mobile phone. The company then sends portable lamp that she hangs around her to the power grid, although this does not a code, which the householder types into neck. All the lamps are rather dim. But they the battery. That keeps the lights on. produce just enough light to allow her chil- Rwanda is trying all of these approaches dren to study after sunset, and they do not Also in this section at once. The government already claims to kick out foul fumes, like the kerosene have connected 31% of households to the 51 Measuring electricity usage lamps she used to depend on. electricity grid, up from less than 10% in 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist February 9th 2019 International 51

2 2009. Another 11% are thought to have solar and their children studied a little more, es- because they tap transmission lines illegal- power. Helped by foreign aid, officials are pecially at night. But the adults’ working ly. An ongoing study of Bihar in north India now trying to connect every household to lives changed hardly at all. Solar lamps ap- by the International Growth Centre (igc) in the grid or to solar power by 2025. This is pear not to rescue people from poverty. London finds that only 10% of people think just about feasible. Rwanda is small and Nor even does a grid connection. A de- it likely they will be penalised for failing to densely populated, if annoyingly hilly, and tailed study of rural Tanzania, where Amer- pay their bills or for an illegal hookup. its government is competent. Yet the pro- ica’s Millennium Challenge Corporation jected cost is huge. Add up the mini-grids, built power lines and subsidised connec- The passing of the torch the transmission lines, the new power sta- tions, found little effect on adults’ welfare. One oft-cited benefit of connecting a per- tions and the credit lines to sellers of solar Offering cheap connections cut the propor- son to the grid or to solar energy is actually home systems, and Rwanda’s energy plan tion of people living on less than $2 a day diminishing. That is because many people amounts to $3.1bn over six years. The entire from 93% to 90%—hardly a transforma- who lack electricity no longer rely on kero- government budget this year is $2.8bn. tion. Children’s lives changed, but perhaps sene. One Rwandan woman who is picking Not surprisingly, people enjoy having not in a good way. Those who were con- up her first solar lamp at a distribution even small amounts of electricity. Ms Yan- nected went from watching almost no tele- point in Nzaratsi says that she has hitherto dereye, who bought her lamps from One vision to one and a half hours a day, and did used simple torches—just batteries wired Acre Fund, a charity, says that her neigh- even less housework than before. to leds. These are extremely cheap, costing bours admire them. She has found uses for Another study, of Bangladesh, found about $0.25, and are available from village the power. She uses a portable lamp to get that the benefits of grid power accrue shops. People tend to throw the dead bat- to her local church at night and another to mainly to better-off households. Hussain teries in their latrines, which is hardly ide- light her chicken shed. Two years ago, her Samad and Fan Zhang of the World Bank es- al, but is not as immediately harmful as the chickens caught a disease. Now that they timate that connections boost the spend- smoke from kerosene lamps. have a light, she can keep the door closed, ing of people in the top fifth of the earnings Electrification may bring benefits that which she hopes will protect them. scale by 11%. People in the bottom fifth see a economic studies miss. Robin Burgess of Yet most people who live in poor remote benefit of 4%. the igc argues that a short-run study of places are like Ms Yandereye’s neighbours: A connection to the electricity grid of- households may not be the right lens: elec- they desire electric light and power but ten puts the utility company—and ulti- trification might mostly benefit business- cannot afford it, even with modest subsi- mately the government—on the hook. es, and not at once. Moreover, countries dies. For essentials, such as charging a Many newly connected households pay lit- will have to bring power to their people phone, they can pay a neighbour or a shop. tle or nothing for their power, either be- eventually. But to spend a lot of scarce cash One study of Rwanda published last year, cause the power company has a progres- doing so now, in the hope that benefits will by Michael Grimm of the University of Pas- sive tariff, because people refuse to pay, or turn up, hardly seems enlightened. 7 sau and others, found people ready to pay between 38% and 55% of the retail price for solar-lighting kits, on average. The re- searchers’ kits cost between $13 and $182 depending on power levels and quality. Even small towns in Rwanda have shops selling solar home systems—but not nec- essarily to poor farmers. Local salesmen for bboxx and Mobisol, two of the market leaders, report that many of their custom- ers are middle-class urbanites already con- nected to the electricity grid. Some are buy- ing kit for their parents in the villages. Others have become frustrated with flick- ering mains power and want a backup. A connection to the electricity grid is far more expensive. As a rule of thumb, it costs at least $1,000 in a rural area. Academics at the University of California, Berkeley, have tested Kenyan villagers’ willingness to pay. They offered a large subsidy, which brought the price of a connection down to $171. Only 24% of people plumped for it. If electricity and light truly transformed people’s lives, it might make sense to offer large subsidies for solar systems and grid connections or even to give them away. It When politicians see the light might bring benefits that people could not have imagined. Or they might know about For years American satellites have circled the Earth, measuring light levels at night and the benefits but be unable to afford the up- estimating how much is man-made. One straightforward use of such data is to see front cost. But there is little evidence of whether a place has electricity. Take India. Brian Min of the University of Michigan has this. Another study by Mr Grimm and his shown that the government’s ambitious plan to connect every village to the grid is less colleagues found that Rwandans who were dazzling than it appears. Many newly connected villages do not quickly light up, perhaps given solar lamps responded by lighting because the power supply is so unreliable. Indian states do, however, get brighter their households more brightly, for more shortly before elections, suggesting politicians lean on power companies to minimise hours each day. They burned less kerosene, blackouts. The effect is strongest when the governing party is defending a slim majority. РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

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The Intelligence is a new current-affairs podcast, published every weekday by Economist Radio, that provides a fresh perspective on the events shaping your world. Drawing on the expertise of The Economist’s global network of correspondents, each episode digs past the headlines to get to the stories beneath—and to stories that aren’t making headlines, but should be. For a daily burst of global illumination, you need more than just the facts. You need The Intelligence. theintelligence.economist.com РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Business The Economist February 9th 2019 53

Also in this section

54 Intel and the state of chip-making 55 Bartleby: McDonald’s and CSR 56 UNIQLO’s expansion plans 56 Cheap long-haul in trouble 57 A French foodfight 58 Schumpeter: How China sees intellectual property

Manufacturing’s revival down an oven-making plant in Memphis, Tennessee. It blamed higher costs arising Making it in America from the Trump administration’s tariffs on imported steel and aluminium, as well as the bankruptcy of Sears, a big retailer that sold its products. On January 28th, Cater- pillar, a legendary American maker of heavy equipment, reported disappointing MOUNT PLEASANT profits for the fourth quarter thanks in part American manufacturing companies large and small have a spring in their step to a slowdown in China’s economy, which drive along the narrow county roads Terry Gou, not to pull out. Even so, Foxconn has been hit by America’s trade war. Aof Mount Pleasant, Wisconsin, used to has scaled back its mass-manufacturing A closer look, however, suggests manu- be a sleepy affair. You would spot a pump- plans, and an insider confirms that it will facturing is undergoing a revival, especial- kin farm, the odd homestead and red barn. now make only unspecified quantities of ly among agile smaller firms and those us- But a recent visit revealed a cacophonous “high-value products”. It has not retracted ing advanced techniques. According to the building site: a factory is emerging in this its jobs promise, but observers doubt if it Bureau of Labour Statistics, manufacturing corner of the Midwest. Where chicken will hire at the scale it originally envisaged. employment leapt by 261,000 jobs in 2018, coops once stood, Foxconn, a Taiwanese At first glance, the Foxconn reversal reaching a total of 12.8m, coming after an- contract-manufacturing giant best-known confirms that American manufacturing is other rise in 2017, of 207,000 jobs. The sec- for assembling iPhones, has arrived. in trouble. Consider the recent wobbles at tor has rebounded from the financial crisis When in 2017 the firm announced plans other big firms with local factories. Electro- of 2008-09 (see chart 2). The Institute for to build a massive factory for high-end lux, a Swedish white-goods giant, an- Supply Management’s manufacturing pur- televisions, many cheered, not least Presi- nounced on January 31st that it is shutting chasing-managers’ index, a closely- dent Donald Trump, who came for last watched indicator, rose to 56.6 in January year’s ground breaking ceremony. Elec- from 54.3 in December (a figure above 50 tronics manufacturers had long ago aban- The great convergence 1 signals expansion). It has shown expan- doned America for cheaper countries, es- Manufacturing-cost index*, United States=100 sion for 29 consecutive months. pecially China, so the investment seemed With characteristic modesty, Mr Trump to mark a reversal. Having secured a pro- 2004 2018 is claiming most of the credit. His tax-re- mise of over $4bn in subsidies from Wis- 80 90 100 110 120 130 form package, passed at the end of 2017 by consin, Foxconn vowed to create 13,000 Germany Congress, reduced corporate-tax rates, jobs, many of them on the assembly line, Japan made capital investment more attractive with an average annual salary of $54,000. South and cut the incentive for American multi- But what Foxconn will do in these hin- Korea nationals to hoard cash overseas. Though terlands is now in question. The company China some firms have used the bounty from tax has discovered that it is hard to get thou- India reform to undertake big share buy-backs, it sands of Midwesterners to work long hours seems that large firms are increasing in- at stressful assembly-line jobs for relative- Mexico vestments in plant and equipment in ly low pay. Last week Mr Trump personally Source: Boston *Incorporates wages, productivity, America. Analysts at Goldman Sachs, an in- Consulting Group energy costs and exchange rates intervened and persuaded Foxconn’s boss, vestment bank, estimate that the big in-1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

54 Business The Economist February 9th 2019

2 dustrial firms of the s&p 500 index (leaving Chip-making out the large technology firms) during the Upping tools 2 first three quarters of 2018 spent $460bn on United States, manufacturing employment, m Swanning in capital expenditures, up from $400bn in 20 the same period in 2017. In a survey of leading American firms released on January 28th by the National 15 Association for Business Economics, a Intel’s new boss heads a company that trade association, four times as many firms 10 is dominant and troubled in the “goods-producing sector” (which in- cludes manufacturing) expect to increase fter a seven-month search, Intel on capital spending in the next three months 5 AJanuary 31st announced that its new as those expecting to cut spending. Foreign chief executive would be its chief financial direct investment into American manufac- 0 officer. Robert Swan had been filling in as turing shot up to roughly $185bn during the the boss since last year, when Brian Krzan- 2000 05 10 15 19 first nine months of 2018, compared with ich, his predecessor, left after violating under $100bn in 2017. Source: Federal Reserve Bank of St Louis company rules about relationships with Yet forces that predate Mr Trump’s ar- subordinates. Mr Swan inherits a company rival into the White House are also boost- such American industrial icons as John with dominant products and an enviable ing the fortunes of American factories. A Deere, a manufacturer of tractors, and market position—but also one whose core new analysis by the Boston Consulting Toro, which makes lawnmowers, as cus- business has stumbled. Group, a consultancy, shows that the cost tomers. Sales rose 21% to $699m in the year The good news is that an increasingly of manufacturing is approaching parity for to June 2018, and were a healthy $400m in electronic world has an insatiable appetite the two economic superpowers (see chart 1) the second half of 2018. Customers fre- for the computer chips that Intel makes. A whereas 15 years ago Chinese costs were quently cite tax breaks from being able to week before Mr Swan’s appointment Intel over an eighth lower. Manufacturers were expense the cost more quickly as reasons announced results that reflected strong bringing supply chains home (partly by in- for investment. Behind a giant tarpaulin in growth. Its annual revenue, of $70.8bn, set vesting in automation) well before Mr Trumpf’s factory can be glimpsed a new as- a record, and its operating income of Trump took office, according to a forth- sembly-line being built for its next-genera- $23.3bn was up by 29% from the same per- coming report from the Conference Board, tion offering. Trumpf has also spent some iod in 2017 (though the numbers were a research group. Researchers conclude $30m building a “factory of the future” in slightly below the market’s expectations). that nearly two-thirds of manufacturers in Chicago, close to its industrial clients. Intel’s chips power 84% of desktop America, domestic and foreign, in leading In Cromwell, a nearby town by the bu- computers, leaving scraps for Advanced sectors were localising sourcing and colic Connecticut River, John Carey, foun- Micro Devices, its only competitor. It has a manufacturing from 2011 to 2016, and only der of Carey Manufacturing, reflects on his near 100% market share in the more profit- about a quarter were globalising. Since Mr small company’s experience with reshor- able market for the beefier chips used in Trump’s election, higher oil prices have ing. The family-controlled firm makes data-centres and cloud-computing farms. helped manufacturing businesses linked automobile components as well as metal- On the face of it the future looks pro- to the energy industry. lic handles and latches for such things as mising, too. The personal computer mar- toolboxes. Unable to face a flood of cheap ket is growing again after years of decline. Home run Chinese imports around 2000, he out- As connected gizmos proliferate—every- The report also offers clues as to what went sourced operations to mainland China but thing from smart speakers to tvs, cars and wrong in Wisconsin. Electronics was found it to be a race to the bottom on quali- medical devices—the market for server among the sectors that did the least reshor- ty and price. He brought back the work to chips to process the information they col- ing during the period studied. This is be- America starting in 2014, a process he has lect should grow briskly as well. cause electronics supply chains and inno- accelerated in the past two years. He invest- Under Mr Krzanich, Intel had hoped to vation ecosystems in China are highly ed $2.5m in equipment from Trumpf and reinforce its cloud-computing dominance specialised, efficient and hard to duplicate. embraced advanced manufacturing. Con- by expanding into new areas, particularly In contrast, the automobile and metals in- sumers want products in ever greater vari- specialised “accelerator” chips designed to dustries were aggressive localisers. ety, on demand, and Trumpf’s advanced speed up specific data-centre workloads. It To catch a glimpse of what could be the tools allow even small manufacturers like bought Altera, a maker of field-program- future of American manufacturing, travel Carey to be nimble. Carey is growing—it mable gate arrays, or chips that can be pro- to southern New England, home of Ameri- hopes to earn $4m in revenues from resh- grammed, in 2015, and Nervana, which ca’s first manufacturing boom two centu- ored product lines in 2019, more than dou- makes machine-learning chips, a year lat- ries ago. Here, Mr Trump has been good for ble the figure three years ago. er. The aim was to compete with firms like Trumpf. The German firm’s North Ameri- Mr Carey praises Mr Trump for taking Nvidia, which already offers silicon custo- can headquarters and manufacturing hub on China’s unfair subsidies, but berates mised for certain data-centre workloads, in Farmington, Connecticut, is bustling. him for his steel and aluminium tariffs, chiefly artificial intelligence. It acquired Trumpf makes machine tools, each costing which have raised his costs. Like Foxconn, Mobileye, an Israeli maker of computer-vi- $500,000 or more, that cut, bend and shape his firm’s big challenge is finding enough sion chips for cars, in 2017. metal with the aid of proprietary lasers. skilled workers. America needs a system of Mr Swan’s most urgent job, though, is to Unlike the traditional metal-bashing kit apprenticeships like that of Germany, he ensure Intel’s misfiring core business can found on typical factory floors, which are says. Instead of wasting billions on a bor- bring it into that future. One vital ingredi- cost-effective only for mass production, der wall with Mexico, he argues, Mr Trump ent of its dominance has been its prowess these computer-controlled marvels allow should spend the money helping develop a in ultra-high-tech manufacturing, repeat- short runs and high variation, making highly-skilled manufacturing workforce. edly shrinking the components in its chips mass customisation economic. The evidence suggests that if America as predicted by Moore’s Law, which was Business is booming. Trumpf counts builds it, companies will come. 7 named for the firm’s co-founder. Each time 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist February 9th 2019 Business 55

2 those components shrank, the chips built vals, Taiwan Semiconductor Manufactur- thing from better chip packaging to exotic from them got faster, cheaper and less ing Company and Samsung, a South ideas like quantum-mechanical transis- power-hungry. Intel was better at doing Korean firm, to catch up. tors. But none is yet ready for prime time. that than any of its competitors, releasing Things will only get harder. The cost of Some worry that Intel’s attempts at di- improved chips with such metronomic yet more component-shrinking is becom- versification risk misallocating both cash regularity that its product-release schedule ing prohibitive. State-of-the-art chip fac- and its engineers’ attention. In any case, was given the name “tick-tock”. tories cost more than $10bn, a number that says Joseph Moore at Morgan Stanley, a But it has stumbled lately. Its newest is rising. Many formerly cutting-edge firms bank, Intel has always struggled outside its “10-nanometre” factories were due to start have thrown in the towel over the past de- core business of desktop and server chips. producing chips in 2016 (the number re- cade. Worse, the physics of how electronic In a post-appointment email to employees, fers, in a very loose sense, to how densely components behave at near-atomic scales Mr Swan said he was not minded to change packed the components in a chip are). They means that each new round of shrinkage the fundamentals of his predecessors’ will not now be ready until 2020, an un- offers fewer benefits than it used to. Intel strategy. But he did not mince his other precedented delay. That has allowed two ri- spends heavily on r&d, exploring every- words: “our execution must improve”. 7 Bartleby Do you want ethics with that?

A 25-year battle to improve the image of a fast-food chain very day McDonald’s serves 69m McDonald’s took action even when there tions of hens, Mr Langert visited an egg Ecustomers, more than the population was little sign of public concern. Shaving facility to find that conditions were of Britain or France. The company has one inch off the napkins saved 3m lbs of indeed terrible. In August 2000 the firm what is estimated to be the most valuable paper annually, for example, but few con- said it would buy eggs only from suppli- fast-food brand in the world, cherished sumers noticed. ers that gave hens 72 square inches of as a cheap dining option for families. Environmentalists did attack the firm space, compared with an industry aver- But do consumers perceive McDon- for its impact on the Amazon rainforest, age of 48 square inches. Suppliers resist- ald’s as a socially or environmentally saying trees were being cut down to make ed so strongly that McDonald’s had to responsible company? If they do not, it is room for cattle pasture or the expansion of find new sources for its eggs. But those in spite of the best efforts of Bob Langert. soy farming for cattle feed. In 1989 the who complied found that the mortality In 1988, he took a temporary assignment company announced that it “never has and rates of hens decreased and egg-laying managing a furore over polystyrene never will buy beef from recently deforest- rates increased, offsetting the extra costs. “clamshells” in which the company’s ed rainforests” and it has also worked to Mr Langert found it took a long time burgers were served, and which were limit the expansion of soy farming in the to get agreement within the company on being damned for their contribution to region. The rise of veganism amid doubts a particular subject and then to persuade America’s litter problem. That turned about the health effects of eating meat suppliers to comply. But once he reached into a 25-year career (he has since left the have given McDonald’s new worries. that stage, he had enormous clout; Mc- firm) dealing with the chain’s various Accomplishing change is not just a Donald’s is the largest purchaser of beef negative external effects. matter of the company snapping its fin- and pork in America, as well as the sec- It was a Herculean task, akin to being gers. Most McDonald’s restaurants are ond-largest buyer of chicken. Another fashion consultant to Steve Bannon. operated by franchisees and its goods are victory was persuading a supplier to Apart from litter, he had to deal with bought from a wide range of suppliers, so phase out the use of gestation stalls for animal welfare, environmental de- three or four layers may separate the Mc- sows which make it impossible for the struction, obesity and workers’ rights. Donald’s head office and the cattle-rancher animals to move. When he began, the company’s mascot who supplies the firm’s beef. Human working conditions also was being dubbed “Ronald McToxic” In the late 1990s, after complaints from caused the company trouble. One day Mr because of the clamshell problem. But he campaign groups about the living condi- Langert got a call from a Catholic bishop had more success than outsiders might who was concerned about the low wages think. His book “The Battle to Do Good: paid to tomato-pickers. Another issue Inside McDonald’s Sustainability Jour- was the use of “trans fats” to cook the ney” is a must-read even for those who restaurant’s fries, which were deemed to are cynical about the business of cor- increase the risk of heart disease; it took porate social responsibility. six years for the chain to phase out the At times, the fast-food chain did not practice. But the company has also added help itself. In the 1990s, it sued two more salads and healthy options. Greenpeace activists for producing leaf- Was all the effort worth it? It seems lets about its practices. The ensuing likely that many of the people who care a “McLibel” trial gave the claims world- lot about these issues would never eat a wide publicity and was described as the fast-food burger in the first place. But Mr world’s biggest corporate-pr disaster. Mr Langert did more than most to reduce Langert tried to reduce the damage. The environmental waste and animal cruelty. company consulted panels of indepen- A decent career record for an obviously dent experts and engaged with cam- decent man. paigning groups. On occasion it aimed to keep one step ahead of the activists— Economist.com/blogs/bartleby РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

56 Business The Economist February 9th 2019

UNIQLO rising since 2015, largely, analysts reckon, owing to its international expansion and Back to basics improved logistics. At home the firm is closing stores because the population is shrinking. Fast Retailing’s operating profit in the year to August 2018 was ¥236.2bn ($2.15bn), the bulk of which is made up by TOKYO uniqlo. Last year uniqlo’s international The third-largest clothing retailer revenue overtook its domestic sales for the wants to dominate the world from Asia first time and its foreign operating profit hen asked what guides his vision of almost equalled its Japanese equivalent. Wuniqlo, Tadashi Yanai, its founder uniqlo has a strong Asian foothold by and chief executive, pulls off the shelf the way of China, home to over half its overseas 1987 autumn/winter collection catalogue shops. China contributed around 70% of of Next, a mass-market British retailer. All total international revenues last year. This of the clothes are so classic, he says, that success has surprised some, and not only they could be worn today. While Inditex of because of ill-feeling towards Japan from Spain, which owns Zara, and Hennes & many Chinese because of the latter’s war- Mauritz of Sweden, the world’s two largest time record. China is not an easy place to clothing retailers, slavishly follow fashion work, and, in clothing at least, Chinese trends, uniqlo, the main brand of the consumers tend to revere brands. But even third-largest, Fast Retailing, of Japan, the label-obsessed need plain bits and bobs sticks to timeless basics. for layering or co-ordination. Chinese con- Mr Yanai has a solid base at home from sumers are after quality, and uniqlo’s spe- which to expand into his Western compet- cial fabrics, especially its Heattech range Long-haul low-cost airlines itors’ main markets of Europe and Ameri- for cold weather, function well. Above all ca. But instead his priority remains Asia. analysts point to the company’s savvy Ja- Laker Airways 2.0 He wants to turn uniqlo into the world’s pan-educated Chinese executives who un- largest clothing retailer by becoming the derstand both the culture of the Japanese first Asian “spa” or speciality store retailer business and that of China. of private-label apparel. “Asia is the engine But the rest of Asia may be harder to of growth today,” he says, pointing to the crack. For one thing, a warm climate in sev- The disappearance of Norwegian would millions of consumers across the region eral countries means that uniqlo cannot be bad news for consumers who are reaching the middle class. uniqlo rely on its cold-weather products as a main will open its first shop in India this year driver of sales. It may have to tweak its for- n the 1960s long-haul air travel was a and is considering whether to expand into mula, which could be risky, says Takahiro Iglamorous but expensive proposition. Vietnam and other countries (it has already Saito, a fashion-retail analyst and author of Then in the 1970s Sir Freddie Laker, a Brit- opened networks of shops in Indonesia, a book comparing uniqlo and Zara. ish entrepreneur, set about trying to open it Singapore and Thailand). Though they are very different markets, up to the masses. In 1977 he launched Sky- The success or not of uniqlo’s overseas Europe and America offer a cautionary tale. train, the first low-cost, long-haul service operations matters greatly to investors at uniqlo in America struggled outside the between London and New York. Within home. Fast Retailing’s shares—Mr Yanai big cities of the east and west coasts. only five years Laker Airways went bust. owns just over 20% of the firm—have been Growth in the heartlands remains elusive Recently another European entrepreneur, for uniqlo both there and in Europe. In Bjorn Kjos of Norwegian, hoped to succeed part that is because the same business where Laker failed and in 2013 he re- model exists there already with firms such launched low-cost flights across the Atlan- as Gap, says Mr Saito. But uniqlo could do tic. It looks as if Norwegian may suffer the better at explaining what it does. Well same fate as Laker Airways. thought-out partnerships with ambassa- Norwegian’s finances have been in a dors, such as tennis player Roger Federer, bad way since it embarked on its new pro- and collaborations with designers, like Jil ject. As an airline mainly flying domestic Sander, are starting to help. and short-haul routes in Scandinavia, in Mr Yanai, an ardent fan of globalisation 2013 it made an annual operating profit of unlike many Japanese executives (the NKr970m ($166m). On February 7th Norwe- firm’s working language is English and gian said it had made operating losses of many employees, even in Japan, are for- NKr3.85bn in 2018, during which almost eign), is confident that he can guide un- half of its flights were on long-haul routes. iqlo through the changes needed. He also The firm had been limping on hoping talks of expanding into shoes as well as for a takeover from iag or Lufthansa, two dresses and skirts, where uniqlo currently big European airline groups. But in late has only slim offerings. January its shares fell by a third after its po- The backlash against globalisation is tential suitors walked away due to worries1 the biggest risk to uniqlo’s Asian plans, he says. It could limit free movement of goods Correction: Our leader on Huawei (February 2nd) and people, disrupting both supply chains said that Canada’s courts are considering a request and workers. Still, a Japanese firm that has to extradite Meng Wanzhou, a Huawei executive. In fact, Canada’s justice department is considering managed as much foreign success as un- whether to commence the formal extradition The essential Mr Yanai iqlo should be able to cope. 7 process. РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist February 9th 2019 Business 57

2 over the pricing of a deal and about losing Food retail flying rights in the event of a no-deal Brexit. To avoid bankruptcy through breaching agreements with bondholders, Foodfight Norwegian was obliged to raise 3bn krone—over half its market capitalisa- PARIS A new law decrees French supermarkets must get greedier tion—in a rights issue. Analysts are sceptical about whether it iven that five supermarket chains year out of pocket as a result. can continue operating. Mr Kjos plans to Gcontrol around 80% of all organised Supermarkets are already finding rein in growth ambitions and cut costs to food retailing in France, the authorities ways of circumventing the spirit of the keep the airline aloft in 2019. An ongoing there may seem justified in probing how law. Offering steep discounts on food, fare war in Europe and rising fuel prices are competitive the market really is. Too such as buy-one-get-one-free deals, is likely to make losses worse. The company competitive, apparently: on February1st now banned, but retailers have simply hopes that shifting planes from loss-mak- a new law forced retailers to raise prices promised to push the savings onto loyal- ing European holiday routes to South of food staples lest consumers be unduly ty cards instead. Forcing up the cost of America, where countries are opening up profiting from shops trying to lure them Nutella and Nescafé is an opportunity for to foreign airlines, will reduce its losses. with good deals. them to promote their own-brand equiv- But political and financial instability in The aim of the new “Loi Alimenta- alents, where margins are well into some markets mean that returns could tion” is to ensure better pay for French double digits already. prove volatile. farmers and for small-scale food produc- The agriculture ministry says the If Norwegian disappears, will the long- ers, who currently earn little. Its flagship average family will pay just 50 cents per haul, low-cost model survive? The idea was measure aims to stymie price wars by month more as a result of the law, as long to apply the low-cost model as successfully ensuring no food can be sold with less as its shopping basket is not stuffed with mastered by Ryanair, to longer routes. Nor- than a10% profit margin. But the imme- the wrong kinds of food. It understand- wegian and its imitators, such as Primera diate impact is not to raise prices of ably wants to find more ways for France’s of Denmark and wow of Iceland, have of- vegetables, meat and other products sold 400,000 farmers to square up to an fered loss-making fares on routes, hoping by French farmers to supermarkets: ever-more concentrated retail sector. But to make the money back by filling planes to margins on those are already far higher trying to put more money in farmers’ capacity and by selling extras on-board than the mandated floor. Rather, news- pockets means someone else losing out. rather than with tickets. papers have been full of horror stories The new law was due to come into force The strategy has not worked well on about the rocketing price of pastis, a late last year, but was pushed back after longer routes. Norwegian filled only 76% of boozy staple (up by 9.9% in one retailer, gilets jaunes protesters drew attention to its seats in January compared with 91% for according to Le Parisien), Nutella (up the many ways that government med- Ryanair. One reason is that flyers will more 8.4%), Président camembert (8.6% dling was pushing up the cost of living. readily choose a no-frills flight for an hour- dearer) and Coca-Cola (5%), which were long flight than for eight hours. Other long- previously sold more or less at cost to haul budget rivals are doing worse: Primera attract penny-pinching shoppers. went bust last October and wow is teeter- How consumers paying more for ing on the edge of bankruptcy. Coke will result in higher milk prices for Yet Norwegian also made mistakes that France’s farmers is unclear. Proponents could be avoided by other airlines, argues of the law argue that retailers making Ross Harvey of Davy, a stockbroking firm. fatter margins on pots of Nutella will First, it grew too quickly with too weak a have more money left over to pay farmers balance-sheet. The losses that Norwegian higher prices. They fall short of mandat- racked up in order to stimulate demand ing exactly how this might happen. were not steep enough to trouble a big air- Sceptics abound. Michel-Édouard line group with deep pockets. But Norwe- Leclerc, chief executive of E. Leclerc, gian, which is heavily indebted, cannot France’s largest supermarket chain, says easily absorb them. that the idea pennies added on to junk Second, unlike Ryanair and easyJet, the food will trickle down to farmers is “a airline did not control its costs tightly. “It is scam”.Farmers complain that in spite of not a long-haul, low-cost airline, but a the new law they are still at the mercy of long-haul, low-fare one”, says Daniel supermarkets whose hypercapitaliste Roeska of Bernstein, a research firm. Its behaviour has prompted the need for weak balance-sheet also means it has to legislation in the first place. Consumer pay high interest to finance aircraft. groups think shoppers will be €1.4bn a The rise of low-fare startups such as Norwegian has reduced the share of seats across the Atlantic carried by the big three the same with Eurowings’ long-haul looking for opportunities to expand out- European airlines and their joint-venture routes. For a while, low-cost long-haul car- side its western European territories, partners from 80% in 2015 to 72%, accord- riers will live on as part of larger airline where the market for air travel is saturated. ing to capa, an aviation consultancy. Their groups. But the bad news for flyers is that if But its boss, Michael O’Leary, is wary about success has prompted larger airline groups Norwegian goes bust, the big airlines a bid. He has looked at buying Norwegian to copy the model. iag has responded to would have free rein to raise fares, presum- but thinks that Europe’s three big airline Norwegian, for example, by launching its ably while keeping no-frills service. groups will do everything they can to de- own budget long-haul operation, called A takeover by a low-cost rival with mon- stroy low-cost rivals competing with the level. It is converting Aer Lingus, its Irish ey to spare, such as Ryanair, is another pos- long-haul flights which earn their corn. airline, into another. Lufthansa has done sible outcome. The Irish firm has been That seems a reasonable conclusion. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

58 Business The Economist February 9th 2019 Schumpeter Good copy, bad copy

Believe it or not, Chinese firms are not all serial intellectual-property thieves cartoon character, are being sought by scores of patent “squatters”, using a rule that lets them get in ahead of its British owners. Two American tech firms, Qualcomm and InterDigital, have been mauled in Chinese courts in royalty-related antitrust cases. China is a long way from living up to the ip commitments it made on en- tering the World Trade Organisation in 2001. It still forces firms in joint ventures with state-owned enterprises to surrender ip, and pursues a Communist Party-first industrial policy far removed from the free-for-all of 19th-century American entrepreneurship. Yet among Chinese firms, the mindset is starting to change—as it eventually did among Japanese firms after they robbed America blind in the 1970s and 1980s. From humble beginnings (Mr Hu ap- plied for his first patent in a half-built bungalow), China account- ed for 44% of the world’s patent filings in 2017, submitting twice as many applications as America, according to the World Intellectual Property Organisation. Companies, mostly Chinese ones, sue each other over patents in China more than in any other country. When foreigners do litigate in China, Rouse, a law firm, says they have a higher win rate in patent cases than domestic ones, and are awarded more damages overall. Such fines are low by interna- tional standards, but are improving: Alfred Dunhill, a British luxu- ry brand, won a $1.4m payout in October over trademark infringe- ars sometimes have moments of cultural levity—even trade ment by a Chinese menswear brand called Danhuoli. In January, Wwars. Last summer, as America and China were bombarding the ip court system was bolstered by the establishment of an ap- each other with tariffs, a quaint exhibition opened at the National peals tribunal at the Supreme People’s Court in Beijing. Museum of China on Tiananmen Square paying tribute to, of all The more inventive it is, the more protection benefits China. things, American intellectual-property (ip) protection. Huawei was the world’s biggest filer of international patents in It was a surprise hit. More than 1m visitors filed past 60 beauti- 2017; whatever misgivings there are about its loyalties to the Chi- fully crafted models of inventions, such as an ice-cream maker, nese state, it is hard to doubt its commitment to innovation. An ex- submitted to the United States Patent Office between 1836 and 1890 ecutive at Alibaba notes that as Chinese firms expand globally, par- (all property of the Hagley Museum in Delaware). No doubt some ticularly in South-East Asia, they, too, suffer from having their visitors were arm-twisted to go, because it coincided with the start ideas ripped off, making them keener to protect them. As China’s of an innovation drive by President Xi Jinping. But many were sim- economy weakens, says an executive of Beiqi Foton Motor, a vehi- ply in thrall to American inventiveness. One remarkable visitor, cle manufacturer, his firm will need to protect its patents from ri- says David Cole, the Hagley Museum’s boss, was an elderly man, vals even more, to guard its share of a shrinking market. Hu Guohua, who was granted the first-ever patent in Communist Executives admit to gaping holes in the ip system, particularly China, in 1985. It was a reminder of how young ip protection is in in inland regions where local tribunals are subject to heavy-hand- China; in America the first patent dates back to 1790 and was ed interference by provincial governments keen to shield local signed by George Washington. copycats. That is why some ip executives in China accept the ratio- ip is one of the main fronts in President Donald Trump’s trade nale behind American arm-twisting. After all, they admit, if it were war against China. It is also the crux of an indictment in America not for American pressure on intellectual property, China would against Huawei, a Chinese tech giant. In both cases, the govern- not have come half as far. That is not to say they approve of Mr ment seeks to give the impression that stealing from the West is Trump’s bombastic approach, which adds to the sense that Ameri- part of the modus operandi of Chinese firms, something a Wall ca is trying to stifle China’s rise. But the desire for change is both Street Journal columnist described last week as a practice they re- internally and externally driven. As one executive puts it, “No one gard as a “patriotic duty”. likes to be called a thief—not even kids.” But that is lazy thinking. The Chinese state may encourage phi- landering of ideas, and foreign firms in China doubtless face pres- Imitation is a form of flattery sure to surrender their secrets. Yet ip protection in China, for all its It is also worth recalling how much of a cultural wrench the Anglo- flaws, has improved at rocket speed of late. As Chinese firms issue Saxon ip system is for China. The country that invented printing more patents, the keener they are to protect them. Some execu- had no Western concept of copyright. There is even a Chinese say- tives even tacitly support American pressure, hoping it will ing that “to steal a book is an elegant offence”. When inventions strengthen the rule of law. In an echo of the fawning nickname “Xi were flourishing in 19th-century America, the West tried to impose Dada”, some have whispered “Trump Dada”, or Daddy Trump. ip codes on a humbled China that simply could not square them The litany of complaints about piracy in China, to be sure, goes with its Confucian traditions. Yet America was no saint either. As back decades: copyright infringement in the case of software, and the Hagley Museum’s Mr Cole points out, its patent office in the trademark violation against firms such as Disney. Michael Jordan, early days charged more to foreigners for patents than it did to a basketball legend, spent years trying to stop a sportswear firm us- Americans, especially the British, with whom America was en- ing his name, which read as Qiaodan in Chinese, until he was par- gaged in an earlier version of “strategic competition”. That point tially successful in 2016. Today, local trademarks of Peppa Pig, a was not emphasised at the exhibition in Tiananmen Square. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

Property 59 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

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62 1MDB 63 America’s optimistic pension plans 63 The bond-market king abdicates 64 Australia’s misbehaving banks 64 Cryptocurrencies 65 Buttonwood: Modelling credit risk 66 The impact of America’s tax cuts 67 Free exchange: Brave new deal

Germany’s economy ports to Britain fell. Those to a number of emerging economies slowed. China’s ap- Engine trouble petite for German goods became a little less voracious (see chart 2 on next page). Volks- wagen, a large carmaker, reported a drop in sales to China in the second half of 2018. Wolfgang Schäfer, the chief financial offi- BERLIN cer for Continental, a car-parts manufac- A long expansion comes under threat as Germany feels the limits of its turer, notes that an unprecedented fall in export-oriented growth model Chinese demand and the new emissions ermany’s exporting prowess is so im- rises in public spending, should help Ger- tests dented revenue growth in the car in- Gpressive that other countries seek to many avoid outright recession. But the flip dustry. Cars, their parts and accessories import even its policies. France recently side of exporting success is vulnerability to make up over 15% of German exports. passed labour reforms inspired by its conditions abroad. Exports make up half of There was also disappointment at neighbour to the east. British politicians gdp, compared with 12% for America and home. Spending by consumers grew more periodically try to copy its vocational- 30% for Britain. The risks of increasing slowly last year than in 2016-17, despite training system. Governments far and near protectionism and a hard Brexit mean that rock-bottom interest rates, the lowest un- have sought to emulate the Mittelstand, its manufacturers expect another poor year. employment rate since reunification and small and mid-size producers. Germany’s After a robust 2017, net exports detract- annual wage growth picking up to a knack for producing goods desired by ed from gdp growth in 2018, which proba- heady—by German standards—2.8%. In- emerging economies, notably a booming bly slightly lowered Germany’s mammoth stead they saved more. Some economists China, helped it recover rapidly from the fi- current-account surplus of 8% of gdp. Ex- think households are preparing to weather nancial crisis of 2007-08, and cushioned a downturn; others see an ageing popula- the impact of the sovereign-debt crisis that tion preparing for retirement. Either way, subsequently engulfed the euro zone. Sputtering 1 they are unlikely to propel growth this year. Now Germany is propelling the curren- GDP, % change on a year earlier The industrial slowdown seems set to cy bloc into a slowdown. The economy continue. Figures published on February 4 shrank in the third quarter of 2018 and 7th showed that industrial production fell probably grew only slightly in the fourth. Germany 2 in December. Mr Schäfer expects the first Over the year as a whole, gdp grew by 1.5%, half of the year to reflect a continuation of down from 2.2% in 2017 and below the 0 the declining demand seen in the second euro-zone average (see chart 1). New emis- half of 2018. Analysts at Deutsche Bank Euro area sions tests slammed the brakes on car pro- -2 think that data for January are consistent duction in the summer; low water levels in with gdp shrinking in the first quarter. imf the Rhine delayed shipments. But even -4 Both the and Germany’s economy min- without these temporary disturbances, istry have marked down their forecasts for gdp says Holger Schmieding from Berenberg, a -6 growth this year to 1-1.3%. bank, annualised gdp growth would have Worse is quite possible. Three of Ger- 2007 09 11 13 15 17 18* 19† slowed to below 1% in the second half. many’s five biggest export markets—Amer- Sources: Eurostat; IMF *Estimate †Forecast Domestic-facing sectors, and planned ica, China and Britain—could suffer sharp 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

62 Finance & economics The Economist February 9th 2019

1MDB The prosecution’s star witness is the Wheels coming off 2 former director of src, Suboh Yassin. After Germany, exports Settling up three years on the run, last year he surren- % change on a year earlier dered to Malaysia’s anti-corruption au- 50 thorities and is in a witness-protection programme. The prosecution is expected 40 to call around 60 other witnesses, includ- China† KUALA LUMPUR AND NEW YORK ing government officials. Mr Low will be 30 The first of many trials linked to a vast absent, however. Wanted by America and financial scandal is about to start 20 Singapore as well as Malaysia, his where- ccording to 10 America’s Department of abouts is unknown; he is rumoured to be in AJustice, between 2009 and 2015 $4.5bn China. The deals under investigation were 0 disappeared from 1 Malaysia Development “undertaken openly and lawfully”, says a Rest of EU* Outside EU† 1mdb -10 Berhad ( ), a Malaysian state develop- spokesman for Mr Low, through his law- ment fund set up a decade ago by Najib Ra- yers. He adds that Mr Low “intends to de- 2010 11 12 13 14 15 16 17 18 zak, then the prime minister. The money fend himself against these false allega- Source: Eurostat *To October †To November passed through a maze of institutions and tions”, but has been presumed guilty and accounts in the Middle East, the Caribbean “cannot get a fair trial in Malaysia”. 2 slowdowns this year. Trade tensions could and the Seychelles. It was frittered away on If found guilty, Mr Najib could face de- heat up. If President Donald Trump acts on property, parties, gems, art, private jets and cades in prison, though lengthy appeals his threat to whack tariffs on imports of a superyacht. It helped fund a film on mean that any sentence will start next year European cars it could knock 0.2% off Ger- scamming, “The Wolf of Wall Street”. The at the earliest. No clemency is likely to be man gdp, says the Institute for Economic mastermind behind the fraud is allegedly offered by the new government. Mahathir Research, a think-tank in Munich. Jho Low, a Malaysian financier. But more Mohamad, Mr Najib’s former mentor and Some cooling, German officials say, is than $600m ended up in Mr Najib’s perso- successor as prime minister, campaigned only to be expected in an expansion’s tenth nal bank accounts. against kleptokrasi. The 1mdb affair split the year. Reports of rising capacity utilisation Mr Najib denies wrongdoing and says party the two men once shared and caused and skills shortages had stoked fears of the money was a gift, since returned, from Dr Mahathir to align himself with the op- overheating, even though price pressures an unnamed Saudi royal. His claims of in- posing coalition that now runs the country. remain subdued. In January Jens Weid- nocence in one of the biggest financial Authorities in America, Singapore and mann, the head of the Bundesbank, said he scandals ever are about to be put to the test. Switzerland are also investigating wrong- saw no need for the European Central Bank On February 12th he is due to enter the High doing related to 1mdb. Their targets go be- to loosen monetary policy. Philipp Stein- Court in Kuala Lumpur for the first of sever- yond those accused of perpetrating the berg, the chief economist at the economy al trials relating to 1mdb, for dozens of fraud to those accused of facilitating it, in- ministry, points out that social-security counts of money-laundering, abuse of cluding Goldman Sachs and Deloitte. Gold- spending and income-tax relief will sup- power and criminal breach of trust, all of man faces particular trouble for underwrit- port demand. Tax incentives for research which he denies. This trial relates to ing three bond offerings for 1mdb, worth and development have also been agreed $10.6m from src International, a unit of $6.5bn in total, more than a third of which on. And if recession looms Germany has 1mdb set up to invest in energy projects, then vanished. plenty of room for stimulus. A fifth consec- which ended up in one of his accounts. That work earned Goldman a startlingly utive budget surplus last year brought gov- juicy $600m. Last November it emerged ernment debt to below 60% of gdp. that its former chairman for South-East But behind these short-term consider- Asia, Tim Leissner, had pleaded guilty to ations looms a bigger worry: that Germany charges of bribery and money-laundering could lose its competitive edge. Despite re- filed by prosecutors in New York. A former cent high immigration, the imf expects the colleague, Roger Ng, was also indicted, workforce to start shrinking in 2020. To- along with Mr Low. Goldman’s newish gether with lacklustre productivity growth, chairman, David Solomon, has apologised that will limit the economy’s potential. to Malaysians. But the country wants more Businesses and economists want to spur than words: Lim Guan Eng, the finance investment, which has been chronically minister, is demanding $7.5bn in penal- weak, and to upgrade public infrastructure, ties. Malaysian prosecutors filed criminal from roads to broadband. charges against Goldman and Messrs In an industrial strategy published on Leissner, Ng and Low in December; Mr Lim February 5th Peter Altmaier, the economy says the government might discuss drop- minister, warns that Germany’s economic ping those against the bank if it pays up. strengths are not “God-given” and must be Goldman argues that the fault lies with earned—particularly as China shifts from rogue bankers, rather than the firm itself. consumer to competitor. Proposals in- In a filing this month it raised the prospect clude lowering energy prices, and support- of clawing back compensation from some ing industry and increasing investment senior executives “if it is later determined with tax incentives. More controversially, that the results of the 1mdb proceedings Mr Altmaier wants to loosen antitrust rules would have impacted the [compensation and protect “national champions” from committee’s] 2018 year-end compensation foreign takeovers, so that they can compete decisions”. It is due to file written defences with Chinese behemoths. For all that other in March; any substantive admissions are countries may want to learn from Ger- likely to be followed up by America’s De- many, its government is looking East. 7 Mr Najib awaits his day in court partment of Justice. Depending on what its 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist February 9th 2019 Finance & economics 63

Pensions Uncalculated risk

America’s public pension plans make over-optimistic assumptions about returns romising a pension is a long-term in effect, a long-term debt, private-sector Pand expensive business, especially if schemes must use a bond yield as the the payout is linked to earnings. But discount rate, according to accounting whether the employer is private or pub- rules. But public-sector plans can use the lic, the cost ought to be the same in the expected rate of return on their invest- long run and so, you might assume, ments. The higher the assumed return, would be the investment approach. Until the higher the discount rate and the 2008 that was true for American pension lower the current cost appears. Public- plans: private and public-sector schemes sector plans assume, on average, 7.4%. had roughly the same asset allocation. In effect, then, public-sector plans But a new report by Jean-Pierre Aubry have riskier portfolios because they and Caroline Crawford of the Centre for must, in order to justify their return Retirement Research (crr) at Boston assumptions. In turn, this allows them to College shows that things have changed. keep down annual contributions, and Bill Gross Public plans have 72% of their portfolios thus reduce the burden on today’s tax- in risky assets (equities and alternatives payers. But the report finds that, even Final call such as hedge funds), and private plans allowing for asset allocation, public just 62%. Since private plans have more pension plans make optimistic assump- scheme members who are retired, they tions about future returns, compared should have a less risky approach, be- with those of professional investors. cause they must focus on paying benefits All this might not matter if public immediately rather than on long-term pension plans were right. They would be NEW YORK The king of the bond market abdicates growth. However, even allowing for this widely applauded for funding pensions and other factors such as plan size, pub- in a cost-effective manner. But the aver- utsize returns are hard to come by in lic-sector schemes are taking more risk. age public pension was 72% funded at Othe bond market: the approach pio- The cost of paying pensions stretches the end of 2017, according to crr data, neered by Jack Bogle at Vanguard of match- far into the future; a 25-year-old today even using the optimistic accounting ing a benchmark while minimising tran- could still be receiving an income in the approach—down from full funding in saction fees is tough to beat. There was one 2080s. So employers must discount 2001. Dismal market returns in 2018 person, however, that even Vanguard’s future payments by some rate to calcu- mean the problem will only have wors- fixed-income team considered in a class of late the current cost. Since a pension is, ened. The gamble isn’t working. his own and thus worth paying for: Bill Gross, who co-founded Pacific Investment Management Company (pimco) in 1971 2 investigators find, the bank risks censure Malaysia, according to Terence Gomez of after a conventional career in finance and for inadequate supervision and perhaps a the University of Malaya in Kuala Lumpur. risk, plus a brief professional foray onto stiff fine. The bigger issues are whether They are opaque and unaccountable, and the blackjack tables of Las Vegas. On Febru- more Goldman staff are drawn in, whether some are vehicles for patronage and cor- ary 4th Mr Gross and Janus Henderson, his the bank will be prosecuted in America ruption. A fund for retired people and an- employer for the past few years, an- and, if criminal rather than civil charges other supposed to help pilgrims save for nounced that he was retiring. are pursued, whether it can keep all its op- the haj were plundered to bail out 1mdb. For decades Mr Gross displayed extraor- erating licences. When campaigning, the new administra- dinary acumen, not only in evaluating se- Some Malaysians think Mr Najib’s pros- tion promised to reform the government’s curities but also in structuring the dura- ecution may mark a turning point for their business dealings. But it continues to ap- tion, or time-frame, of his portfolio. He country in the fight against corruption. The point politicians to positions on the boards displayed uncanny judgment about when election last May was the first his party had of government-linked companies. to push maturities just a bit longer or shor- lost in more than six decades. “I don’t think Discussions with China over Mr Low ter than average. His calls were amplified there will be any prime minister who can and its involvement with 1mdb are particu- by his willingness to offer his punchy opin- muster as much administrative and finan- larly delicate. Malaysia cannot afford to of- ions on television, unlike the reclusive, cial leeway as Najib had,” says Rafizi Ramli, fend its largest trading partner. An investi- grumpy gnomes who managed most fixed- a politician linked to the ruling coalition. gation by the Wall Street Journal last month income investments. He was tried and found guilty in 2016 of contends that in 2016 China offered to bail That combination of talent and publici- leaking parts of a secret government audit out 1mdb in return for infrastructure deals ty attracted a flood of money. The assets of into 1mdb. After an appeal last year, his jail in Malaysia worth tens of billions of dol- the fund he personally managed, pimco sentence was lifted. lars. The Chinese embassy in Malaysia dis- Total Return, reached a record $293bn in The new government has devolved missed the claims as “groundless”. Wrang- 2013. Mr Gross left pimco in 2014 after a more powers and removed the ministry of ling continues over Chinese infrastructure coup. Although he was as good at picking finance from the purview of the prime projects in Malaysia agreed upon by Mr Na- brainy colleagues as he was as picking se- minister. But far more is needed to clean up jib. For Malaysia’s government, sorting out curities, his analytical skills did not, appar- Malaysian business. Government-linked the scandal at 1mdb and prosecuting those ently, extend to assessing their loyalty. companies constitute about 42% of the behind it will be as much a diplomatic chal- Subsequently he joined Janus Henderson, market capitalisation of all listed firms in lenge as a legal one. 7 a mid-sized fund manager. Customers fled1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

64 Finance & economics The Economist February 9th 2019

2 pimco after he left, some of them following had lied to the regulators about it. On Feb- funding squeezed. “asic has been called him to his new firm. But his magic was ruary 4th Kenneth Hayne, the judge who out for its ineffectiveness since the early gone. Performance was lacklustre and a led the inquiry, handed his final report to 1990s,” complains Allan Fels, a former steady flow of redemptions followed. Half the government. Heads have rolled: the chairman of the competition commission. of the $950m remaining under his control chairman and chief executive of National “What’s different now?” is his own money. Australia Bank, which Mr Hayne singled Both the coalition government, which Theories explaining the decline are not out for particular criticism, have resigned. looks set for an electoral trouncing in May, in short supply. During his long tenure, his The commissioner has asked regulators and the Labor Party, which is likely to form techniques have been studied and copied to investigate 24 possible breaches of civil the next government, have promised to en- by other clever people. And the nature of or criminal law. Mr Hayne expressed par- act the commission’s recommendations. debt markets may have changed over the ticular disgust at those who gouged fees Little will happen before the vote. But the decades. In a televised interview after the without providing services. Almost A$1bn commission at least gained a hearing from news of his retirement, he said that his has already been paid in compensation to politicians. Banks can count themselves greatest error had been to misjudge the rel- the victims. Offenders may have broken a lucky it did not crack down harder. 7 ative trajectories of German and American law against “dishonest conduct in relation interest rates. Both are consequences of to a financial product or financial service”. novel post-crisis monetary policy set by The report said the Australian Securities Cryptocurrencies central banks. Human factors may have and Investments Commission (asic), the taken their toll, too. His professional spat corporate regulator, should consider the Taking it with you with pimco was echoed by a messy divorce maximum penalties: large fines, or up to that played out in the press. ten years in prison for individuals. Thus Mr Gross said he had continued to out- Australia, a country widely regarded as perform in the management of some funds having had a “good” financial crisis, with a outside his signature effort. This perhaps stable, profitable banking system, may be- What happens when your bitcoin says something about where active man- come one of the few places where bankers banker dies? agement can be effective—in niches. He are jailed for institutional wrongdoing. will now focus on managing his own mon- The report’s 76 recommendations set itcoin was introduced to the world in ey and his $390m charitable foundation. out to clean up the industry. One is for a BAugust 2008, in the aftermath of the fi- That his departure closely follows the acco- new bank-funded compensation scheme nancial crisis. According to its techno-lib- lade-packed obituaries of Mr Bogle, the ar- for victims of banking misconduct. Some ertarian fan-base, one of its main attrac- chitect of Vanguard’s strategy of emphasis- measures target the intermediaries who tions was the promise that users could ing efficiency over genius, underlines just flog insurance, pensions and mortgages to avoid dealing with the hated banks. But how much money-management changed befuddled Australians. Mr Hayne wants after a decade of amateurism, scams and during the two men’s storied careers. 7 their bonuses slashed, starting with “trail- billions of dollars of lost or stolen money, it ing” commissions paid to mortgage-bro- is clear that many of the ramshackle insti- kers years after they sell a loan. Financial tutions that play the role of banks in the Australia’s banks advisers would need customers’ approval cryptocurrency world make even their to roll fees forward. It would become illegal most reckless conventional counterparts Profit and loss to tout pensions or insurance by phone. look like paragons of good management. These are welcome measures, but many The latest example is Quadrigacx, a Ca- think they do not go far enough. “In the end nadian cryptocurrency exchange that was the banks have got off lightly,” says Michael granted protection from its creditors on Rafferty, an economist at rmit University February 5th. The problem, according to SYDNEY in Melbourne. The commission exposed the firm, is not that it has lost its custom- Some think a royal commission has the harm to customers caused by conflicts ers’ money, but that it cannot get to it. It1 gone too easy on rotten institutions of interest within banks. Yet it stopped f a healthy banking system is dull, then short of demanding that they spin off the IAustralia’s must be sick to the core. A roy- advisory and wealth-management units al commission with a broad remit to inves- implicated in much of the wrongdoing. tigate abuses by the country’s financial in- Three big banks had expected such a ruling stitutions has found many troubling and are restructuring along these lines, yet practices. Hearings revealed that for years forced separation would be “costly and dis- banks had hidden fees, charged money for ruptive”, Mr Hayne concluded. non-existent services and docked charges Nor did he call for stricter checks on af- from the dead. Financial advisers earned fordability before making loans. Lenders bonuses for channelling clients’ cash to- have already tightened up here, too, but wards underperforming funds. Insurance consumer-protection groups fear they may companies flogged junk schemes to the ease up once the pressure is off. Shares in poor or mentally disabled. the four big banks rose by an average of Australia’s four biggest lenders saw 6.7% the day after the report’s publication. their market capitalisation fall by an aver- The commission accused industry reg- age of 16.3% while the commission was sit- ulators of being too cosy with the industry. ting, knocking A$66bn ($47.1bn) off their It recommends that they be given more combined value. In April the country’s big- power to punish misdemeanours and curb gest asset manager, amp, sacked its chief bonuses, with a new oversight panel set up executive and chairman after the inquiry to ensure they do their job. Yet it is unclear heard that it had not only charged custom- how much authority the panel would have, ers for advice that was never provided, but and the corporate regulator has seen its РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist February 9th 2019 Finance & economics 65

2 says that Gerald Cotten, its boss, died unex- coin, Ethereum and various other crypto- cate issued by the government of Rajasthan pectedly in India in December. currencies stored on the exchange. One is misspells Mr Cotten’s name. Experts con- Few banks would be brought to ruin by thought to have lost access to C$70m- sulting bitcoin’s public transaction regis- the death of a single member of staff. But worth of cryptocurrency. ter have struggled to identify the inaccessi- Quadrigacx says that Mr Cotten was in sole Discussion of Quadrigacx online is a ble deposits. Jesse Powell, the boss of charge of handling deposits and payouts, swamp of anger, amateur detective work Kraken, another cryptocurrency exchange, running everything from an encrypted lap- and conspiracy theories. The firm seems to said on Twitter that Quadrigacx’s story was top to which only he knew the password. In have been in trouble for a while; in January “bizarre and, frankly, unbelievable”. court documents Mr Cotten’s widow says 2018 the Canadian Imperial Bank of Com- This is not the first time that large that “despite repeated and diligent search- merce froze C$28m held by Costodian, amounts of cryptocurrency have been in- es, I have not been able to find [the pass- Quadrigacx’s payment processor. The bank advertently removed from circulation. words] written down anywhere”. Quadriga- tried repeatedly to contact Mr Cotten, to no James Howells, a British cryptocurrency cx’s 90,000 customers cannot get to avail. There are other curiosities. A screen- enthusiast, amassed 7,500 Bitcoins in around C$180m ($136m) of bitcoin, Lite- shot supposedly showing a death certifi- 2009, when they were nearly worthless, be-1 Buttonwood Gauged against the machine

Why the benefits of better models of credit risk will be spread unevenly n “player piano”, a novel by Kurt is not an input in either model). To build IVonnegut, society is divided into a them requires lots of computing power. workless majority and an elite who tend The machine-learning model is better all-powerful machines. A character tells at predicting default. It thus allows for a how her husband lost his status as a modest increase in credit supply, which writer when his novel fails to hit the brings in some marginal borrowers. And “readability quotient”.She turns to sex with regard to rates of interest, it creates work after he refuses the public-rela- more “winners” (ie, those who are classi- tions job he is assigned. “I’m proud to say fied as less risky than by the standard that he’s one of the few men on earth model) than losers. But the proportion of with a little self-respect left,” she says. winners is significantly higher, at about The novel, published in1952, antici- 65%, for white and Asian borrowers than pates present-day fears about the social for blacks and Hispanics, at around 50%. impact of automation. Clever algorithms The natural question to ask is whether already make finely graded distinctions the model is tacitly sorting by race. Tests about the price each consumer pays for by the authors suggest not. Including an air ticket, or which advertisements or information about race changes the news he sees. They will soon decide who forecasts of default only marginally. gets credit, and on what terms. Vonnegut this kind of research, as it is one of the To understand this skewed outcome, touches on a deeper worry. The husband biggest financial decisions people make. imagine a crude model that sorts borrow- fails to reach the mark because his book In this instance, though, the authors study ers into three buckets: good, bad and is anti-machine. It is easy to imagine how mortgage firms pick borrowers. And middling. Some of the middle group are credit being similarly denied for reasons what lenders care about most is getting close to being good credits; others are other than credit risk—such as race. their money back. To stay solvent, they close to being bad. A property of statis- Such concerns are the motivation for must set the price of borrowing to reflect tical models is that, as they improve, they a recent academic paper.* Its authors use the likely risk of default. This kind of are able to discern subtler differences a unique data set of more than 9m mort- reckoning requires a statistical model. A and so make finer judgments. Some gages, approved between 2009 and 2013, standard one would uncover how default almost-good borrowers benefit; some which they track over the following three risk varies with income, loan size and a almost-bad borrowers lose out. It seems years. They use the data to build a con- host of other factors. A model of this kind that the sophisticated model more accu- ventional model of default and a mach- is the paper’s baseline. rately picks up their underlying fragility. ine-learning model. A comparison re- The machine-learning model is more It is a disquieting result. A hypotheti- veals some stark results. The sophisticated. It sorts the data continu- cal lender concerned only with allocative machine-learning model allows for a ously to come up with better predictions of efficiency (the better pricing of risk) is more accurate pricing of default risk and default. Imagine there are only two bits of nevertheless sure to have unwished-for thus for a greater supply of credit. But the information about loan applicants—their societal effects. Technology has a ten- benefits in cheaper mortgages go dis- income and a score based on their credit dency to amplify inequalities that al- proportionately to white borrowers. history. The machine-learning model ready exist. Indeed it is the merciless The paper might easily be filed under searches the data set for people with a sorting by technical criteria that makes dystopian science fiction, alongside similar combination of salary and credit the world of “Player Piano” a dystopia. “Player Piano”.In fact, it is part of an score. Its decision to advance a loan, and at academic sub-genre, known as house- what rate of interest, will depend on how ...... hold finance, which looks at how ordin- reliable these near-neighbours have *“Predictably Unequal? The Effects of Machine Learning on Credit Markets” by Andreas Fuster, ary people handle their financial affairs. proved to be as borrowers. In reality, such Paul Goldsmith-Pinkham, Tarun Ramadorai and Mortgage choice is a natural focus for profiles will use far more data (though race Ansgar Walther (November 2018) РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

66 Finance & economics The Economist February 9th 2019

2 fore throwing away the hard drive on Others have compared the tcja with by around 0.4 percentage points. which they were stored. By 2013 they were what might have been. Economists at the But some remain sceptical. Investment worth millions of dollars. Mr Howells’s at- Tax Policy Centre, a think-tank in Washing- was already rising before the tax cuts. tempts to recover his hard drive from a ton, dc, looked at more than 9,000 possible Higher oil prices since 2016 have stimulat- Welsh landfill failed. Chainalysis, a firm of reforms to the same bit of the personal-tax ed investment in the shale industry and its cryptocurrency-watchers, reckons access code. Nearly three-quarters would have suppliers. Alexander Arnon of the Penn to 2.78m-3.79m bitcoins has been lost in cost the government less revenue. Less Wharton Budget Model, a research initia- similar circumstances. Since the way bit- than 1% would have given more benefits to tive, thinks that this accounts for almost all coin is designed caps the number of coins the richest 20% at no extra cost, whereas the rise in investment growth in 2018. Then at 21m, that is13-18% of all bitcoins that will half would have been cheaper and benefit- there is the fact that investment is volatile ever exist. ed the poorest 20% more. and may respond to policy changes only The cryptocurrency world has seen big- The tcja aimed to increase investment after some time. “The results from this year ger collapses than Quadrigacx’s. The big- by slashing the tax rate on corporate profits support almost anybody’s forecast,” says gest was MtGox, which was responsible for from 35% to 21%, and temporarily allowing Richard Prisinzano, also of the Penn Whar- around 70% of all bitcoin transactions companies to deduct capital spending ton Budget Model. when it went bust in 2014 after the theft of from profits immediately. It was hoped One conclusion seems reasonably firm: 850,000 bitcoins, then worth $450m. Like that encouraging firms to add to America’s the tax cuts will not pay for themselves. De- Quadrigacx, it had been run on a wing and capital stock would ultimately raise spite a hotter-than-expected economy, rev- a prayer. Some exchanges are better than growth and wages. The bill’s backers say enues in the 2018 fiscal year were $200bn others, says David Gerard, a crypto- they have been proved right. Investment lower than the Congressional Budget Of- currency-watcher and sceptic. But too of- rose in 2018 (see chart), gdp accelerated fice’s forecast in 2017. Tax cuts, together ten storing cryptocurrency on an exchange and wage growth continued on its long- with a spending bill implemented in early is little better than “keeping your money in standing upward trend. Kevin Hassett, the 2018, have increased the fiscal deficit. The a sock under someone else’s bed.” 7 chairman of President Donald Trump’s bill does include income-tax cuts set to ex- council of economic advisers, argues that pire. But that will be politically awkward, economic growth since the tax cuts com- and so the cuts may well be rolled over. Ei- Tax in America pares favourably to the trend from 2009-16. ther future generations will be lumped Those who say the tax cuts aren’t working with extra debt, or future legislators will Cut it out are, he told a room of economists in Janu- have to fill the budget hole. ary, “in some kind of denial”. The need for future policy changes to In reality there are at least three possi- offset the tcja’s costs makes any assess- ble causes of America’s boom in 2018: ani- ment “inherently speculative”, says Greg mal spirits, which picked up globally be- Leiserson of the Washington Centre for Eq- WASHINGTON, DC fore the tax bill passed; the bump from uitable Growth, a think-tank. If those poli- The biggest fight over the Tax Cuts and more government borrowing; and the di- cies were to include spending cuts along Jobs Act may never be won rect effect of lower tax rates on incentives the lines proposed by the administration urried through Congress in late to invest. Of these, only the third could be last year, he adds, poorer Americans, who H2017, the Tax Cuts and Jobs Act (tcja) expected to last very long. With so much have gained relatively little from the tax was the biggest overhaul to America’s tax going on in the economy, it is clearly out- cuts, could end up losing out overall. system in more than 30 years. Boosters landish to claim, as some do, that all the A private poll commissioned by the Re- claimed it would turbocharge investment improvements in long-term economic publican National Committee before the and growth, generating so much extra tax- forecasts since 2017 are thanks to the tcja. midterms found that many voters thought able income that it would pay for itself. Companies certainly claim that they that the beneficiaries of the tcja were Critics claimed it would shower the rich have responded to the lower taxes with “large corporations and rich Americans”. It with tax breaks, and that balancing the higher investment (see Business section). concluded that “we’ve lost the messaging books would mean the costs were ulti- One study finds that 95 of 424 companies battle.” Published polls since autumn 2018 mately born by the poor. Over a year later, in the s&p 500 announced a tcja-related suggest that roughly even numbers of vot- beliefs on neither side have been shaken. increase in investment in the first quarter ers approve and disapprove of the reform, The law’s complexity makes its impact of 2018. Mr Hassett calculates, again rela- with a split along party lines. Even as the hard to assess. It sprawls across individual tive to the trend in 2009-16, that the contri- battle of the wonks rages on, the fight for and corporate taxation, and affects indi- bution of investment to gdp growth is up public opinion seems largely over. 7 viduals’ health insurance, too. Some changes are temporary, others permanent. It redraws the basis for taxing multination- Tax assessment als, which are expert at finding loopholes. Though it has been clear all along that United States, non-residential fixed investment United States, budget deficit the tax cuts go mainly to richer Americans, 2012 dollars, annualised, $trn % of GDP there is disagreement over just how regres- 3.0 0 sive they are. Alan Auerbach of the Univer- 2.5 sity of California, Berkeley, Laurence Kotli- -2.5 2.0 koff of Boston University and Darryl Koehler of the Fiscal Analysis Centre, for 1.5 -5.0 example, find that comparing people of 1.0 -7.5 similar ages, and considering lifetime tax 0.5 liability, make the relative benefits for the 0 -10.0 best-off seem much less outsized. That is 2002 05 10 15 18 2002 05 10 15 18* because some of those who benefit in a giv- Sources: Bureau of Economic Analysis; Office of Management and Budget *Estimate en year will lose out later on. РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist February 9th 2019 Finance & economics 67 Free exchange Brave new deal

A bold new strategy to tackle climate change pays little heed to economic orthodoxy omy both greener and more equitable. Their plan remains ill- defined, though Democrats are expected to release draft legisla- tion that may provide more details soon. But its primary aims are clear. It proposes a move to 100% clean and renewable energy within a decade or two, and to zero net emissions by mid-century. Carbon prices might be included, but the emphasis is elsewhere. Supporters describe massive public investment to overhaul ener- gy and transport infrastructure; extensive state support for green industries, with the goal of turning America into a leading export- er of clean technologies; and large-scale efforts to help workers through training, job-placement schemes and perhaps a federal job guarantee (essentially, a promise of public work to anyone in- voluntarily unemployed). Supporters are vague about costs and funding. But decarbonising the economy so quickly would cer- tainly require vast sums, some of which would probably be raised by borrowing and some, almost certainly, by taxes on the well-off. Why bundle together the seemingly unrelated issues of climate change and economic inequality? To some, the appeal rests in po- litical economy. Any plan to free an industrialised economy from fossil-fuel dependence will create losers. To succeed politically, it must mobilise groups of winners more powerful and passionate than those losers. Plans to tax carbon and pay out the revenue as a s deals go, the New one was a big one. Franklin Roosevelt’s dividend may seem appealing; what voter could resist cash re- Aplan to yank America out of depression permanently altered bates? But the benefits, from lowering emissions to paying out div- the contours of the country’s economy and politics. Proponents of idends, are shared broadly and thinly, while the costs are concen- a “Green New Deal” harbour similar ambitions. Though still nebu- trated on a few politically powerful industries. A carbon refund of lous the proposal, championed most loudly by Alexandria Ocasio- $100 per month might be too small to mobilise a critical mass of Cortez, a new congresswoman from New York, has been met with voters, while the associated tax would prompt a no-holds-barred surprising enthusiasm in Washington. It is an outright rejection of campaign by deep-pocketed fossil-fuel firms. A Green New Deal, the orthodox economic approach to climate change. in contrast, might promise sufficient goodies to sufficiently or- In economics, climate change is a big but straightforward ex- ganised interest groups, such as labour unions and domestic ample of a market failure, with a correspondingly straightforward manufacturers, to gather a winning political coalition. solution. People take environmentally harmful decisions because To others, the Green New Deal is something more revolution- the private benefits of doing so (using a car to get to work, say) out- ary. Roosevelt saw the Depression as both a threat to liberal democ- weigh the private costs (the price of the petrol to run the car). But racy and the product of an economic system that put profits ahead emission-producing activities also impose social costs—deaths of the welfare of the working man. Similarly, left-wing activists from pollution and collisions, the contribution of carbon emis- view climate change as the result of unbridled capitalism. They sions to climate change—that do not influence an individual’s de- aim to solve it by redistributing economic and political power. cision to drive rather than walk or take public transport. To solve the climate problem, then, governments need only include the so- Feeling green cial cost of carbon in the prices people pay. The simplest approach From either perspective, there is plenty in the Green New Deal to is a levy on emissions corresponding to that social cost. Carbon- make economists nervous. Yes, many approve of government intensive activities become more expensive, and people efficient- funding for public goods such as infrastructure and education. ly reduce their emissions by responding to prices. It is an elegant Some see the sense of embracing second-best solutions to serious approach favoured by this newspaper. In January a distinguished problems when the ideal approach is politically untenable. But the and bipartisan list of economists signed a letter that ran in the Wall Green New Deal largely dispenses with analysis of the costs and Street Journal arguing in favour of a version that would refund benefits of climate policy. It would create large opportunities for carbon-tax revenue in the form of a flat, universal dividend. rent-seeking and protectionism, with no guarantee that the prom- But robust carbon taxation is politically elusive. Schemes exist ised climate benefits will follow. It might chuck growth-throttling that put a price on carbon, some through a carbon tax and others tax rises and dangerously high deficits into the bargain as well. through a functionally similar system of tradable carbon-emis- Of course, much the same could be said for the New Deal, or in- sion permits. Only a fifth or so of global emissions are covered, deed the effort to win the second world war. In fact, the criticism of however, and only about 1% of emissions subject to such schemes the economic approach to climate change implicit in the Green face a price as high as $40 per tonne of carbon dioxide, the bottom New Deal is not that it is flawed or politically unrealistic, but that it of the $40-80 range deemed necessary to limit warming to no is a category error, like trying to defeat Hitler with a fascism tax. more than 1.5°C relative to pre-industrial temperatures. Time is Climate change is not a market glitch to be fixed through pricing, short. And other policies less loved by economists, such as green in this view, but part of a dire social crisis. It is hard to judge such subsidies and regulatory restrictions, have brought a solution to arguments without decades of hindsight. But they seem to be win- the climate problem no closer. ning, raising the possibility that, for the moment, economists Green New Dealers reckon the secret lies in making the econ- have lost the chance to lead the fight against climate change. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 68 Science & technology The Economist February 9th 2019

Saving species were, until recent decades, so abundant that entire industries, such as buttonmak- Eco-nomics ing, depended on them). But with extinc- tion rates estimated as being between 100 and 1,000 times their pre-human level, and man-made climate change reshaping even those parts of Earth’s surface that human- ity has yet to trample under foot, ship or Conservationists are rethinking how to preserve nature on a changing fishing net, a rational approach to conser- planet—and within a tight budget vation would be welcome. he northern spotted owl, pictured federal recovery plans in place got more The instinctive response of many con- Tabove, is a handsome creature. Dark than their fair share of public resources, as servationists to the sprawl of Homo sapiens brown and, as the name implies, dappled defined by usfws recommendations. The across Earth’s surface is to fence off sprawl- with white flecks, it stands up to half a me- surplus totalled $150m a year, more than a free areas as rapidly and extensively as pos- tre tall when perched on branches in the quarter of spending in the area. Re-allocat- sible. That thought certainly dominates ancient forests of America’s north-west. Its ed, this could bring nearly 900 currently discussions of the un Convention on Bio- swivel neck lets it scan its sylvan habitat for underfunded plans up to budget. logical Diversity, the main relevant inter- woodrats, flying squirrels and other national treaty. An eight-year-old adden- prey—or, rather, to scan what is left of that Mussel beach dum to the pact calls for 17% of the world’s habitat, after decades of heavy logging. Conservation then, as is true of so many land surface and 10% of the ocean’s water This logging has caused the owl’s numbers other things in life, is not fair. People have column (that is, the water under 10% of the to decline steadily. Fewer than 2,500 pairs favourites, even within the official lists— ocean’s surface) to be protected by 2020. remain, mainly in Oregon, northern Cali- and those favourites receive special treat- Currently, those figures are 15% and 6%. fornia and Washington. As a result, the ment. Spotted owls get money. Scaleshell Campaigners want the next set of targets, spotted owl is listed under America’s En- mussels, pictured overleaf, do not. Yet ac- now under discussion, to aim for 30% by dangered Species Act. cording to the Nature Conservancy, a big 2030—and even 50% by 2050. This last Listing means money. Efforts directed American charity, about 70% of North goal, biogeographers estimate, would pre- at preserving spotted owls receive $4.4m a American mussel species are extinct or im- serve 85% of life’s richness in the long run. year, through various channels, from perilled. That compares with 15% of birds. As rallying cries go, “Nature needs half” American taxpayers. This sum is almost Some of this favouritism may not mat- has a ring to it, but not one that sounds so double what the United States Fish and ter (though freshwater mussels are impor- tuneful in the poor countries where much Wildlife Service (usfws), a federal agency, tant parts of their local ecosystems and of the rhetorically required half will have to recommends be spent on the species. Nor be found. Many people in such places al- is the owl the only over-endowed threat- ready feel “Cornered by Protected Areas”, to ened organism in America. In 2016 Leah Also in this section cite the title of a report last year by the un Gerber of Arizona State University found special rapporteur on indigenous rights. 70 Rewilding Argentina that 139 of the 1,124 plants and animals with Some conservation projects wash their1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist February 9th 2019 Science & technology 69

2 faces as sources of income, by attracting University of Queensland, in Australia, led all-off” approach—is that a mixed econ- high-spending tourists. Most, though, are by Ove Hoegh-Guldberg, has used a piece of omy of conservation and exploitation can seen as impediments to development. financial mathematics called modern port- work. For example, rates of deforestation James Watson, chief scientist at the folio theory to select 50 coral reefs around in a partly protected region of Peru, the Alto Wildlife Conservation Society (wcs), an- the world as suitable, collectively, for pres- Mayo, declined by 78% between 2011 and other American charity, has an additional ervation. Just as asset managers pick un- 2017, even as coffee production increased worry about focusing on the fence-it-off correlated stocks and bonds in order to from 20 tonnes a year to 500 tonnes. approach. If you care about the presence of spread risk, Dr Hoegh-Guldberg and his This chimes with Dr Pfaff’s observation species rather than the absence of humans, colleagues picked reefs that have different of the Chico Mendes reserve in Brazil, he warns, “‘nature needs half’ could be a ca- exposures to rising water temperatures, which is deep in the Amazon basin but tastrophe—if you get the wrong half.” Many wave damage from cyclones and so on. The where some rubber-tapping and farming is terrestrial protected areas are places that resulting portfolio, reported last June in permitted. Ungazetted parts of this region are mountainous or desert or both. Ex- Conservation Letters, includes reefs in at similar distances from roads and other panding them may not translate into sav- northern Sumatra and the southern Red sources of human pressure experience ing more species. Moreover, in 2009 Lucas Sea that have not previously registered on considerably higher deforestation rates, Joppa and Alexander Pfaff, both then at conservationists’ radar screens. but without any concomitant increase in Duke University in North Carolina, showed economic productivity. In this area, then, that protected areas disproportionately oc- Local knowledge having (and enforcing) the right rules cupy land that could well be fine even had it Knowing where biodiversity worth saving seems to benefit biodiversity without con- been left unprotected: agriculture-un- is concentrated is useful, says Dr Watson. straining the economy. It is true that fully friendly slopes, areas remote from tran- But knowing how to save it is just as impor- protected areas see less deforestation than sport links or human settlements, and so tant. The world’s big nature conservancies, the reserve, but these, as Dr Pfaff shows, are on. Cordoning off more such places may the wcs included, are therefore busily areas where you would not expect much have little practical effect. tracking what works, and at what price. tree-cutting in the first place. They are, in The reverse of this, as Dr Joppa (who has Conservation International (ci), a wild- other words, the sorts of places that do not since moved to Microsoft) and Stuart life charity headquartered, like the Nature really need regulatory protection. Dr Pfaff Pimm, another ecologist at Duke, have Conservancy, in Virginia, maintains a and his colleagues have replicated these shown, is that even 17% of the world’s land spreadsheet marking nearly 200 past and findings in other countries, including Peru surface, if chosen carefully, could be ar- present projects on things like deforesta- and Cameroon. ranged to protect as many as 67% of the tion rates and species counts, as well as Environmental groups can also draw on world’s plant species. In the United States it variables such as grant size and manage- a growing body of academic research into is the underprotected southern Appala- ment quality. This latter is certainly impor- the effective stewardship of particular spe- chians, in the south-east of the country, tant. In 2017 Michael Mascia, ci’s chief sci- cies. For too long, says William Sutherland, that harbour the main biodiversity hot- entist, published a paper on the matter in of Cambridge University, conservationists spots. The largest patches of ring-fenced Nature. He and his colleagues found large have relied on gut feelings. Fed up with his wilderness, however, sit in the spectacular disparities in staff numbers and skills be- fellow practitioners’ confident but unsub- but barren mountain ranges of the west tween 62 marine sanctuaries in 24 coun- stantiated claims about their methods, and and north-west. In Brazil, the world’s most tries. Though fish populations recovered in inspired by the idea of “evidence-based speciose country, the principal hotspots 70% of these sanctuaries after their estab- medicine”, he launched, in 2004, an online are not, as might naively be assumed, in lishment, those in the best-managed re- repository of relevant peer-reviewed litera- the vast expanse of the Amazon basin, but serves did so three times faster than those ture called Conservation Evidence. rather in the few remaining patches of At- in the worst-managed ones. Creating more Today this repository contains more lantic rainforest that hug the south-eastern reserves without investing adequately in than 5,400 summaries of documented in- coast. These are where SavingSpecies, a the means of running them, Dr Mascia and terventions. These are rated for effective- charity that Dr Pimm has founded, has fo- his colleagues conclude, “is likely to lead to ness, certainty and harms. Want to con- cused its resources. sub-optimal conservation outcomes”. serve bird life threatened by farming, for Nor is speciosity the only consider- Another common finding—counter- example? The repository lists 27 interven- ation. So is risk-spreading. A team from the intuitive to those who take the “fence-it- tions, ranging from leaving a mixture of seed for wild birds to peck (highly benefi- cial, based on 41 studies of various species in different countries) to marking bird nests during harvest (likely to be harmful or ineffective, based on a single study of lapwing in the Netherlands). Dr Sutherland’s dozen full-time staff and 250 collaborators sift through 230 or so ecological journals for updates. To cata- logue dead-ends as well as successes, they look at foreign-language journals, where negative results spurned by more presti- gious English-language periodicals as un- interesting are likelier to appear. The book version of their compendium, “What Works in Conservation”, runs to 662 pages. It has been downloaded 35,000 times. The next step, says Dr Sutherland, is to factor in costs. This is harder than it The owls have it sounds. Few studies disclose expendi-1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

70 Science & technology The Economist February 9th 2019

2 tures. Labour costs vary a lot: besuited con- The rewilding movement sultants are more expensive than sandal- wearing volunteers. Financial-reporting standards in the conservation business are Back from the dead a work in progress. Only in July did Conser- vation Biology publish a proposed set of IBERÁ Efforts to reintroduce species to their native habitats are spreading guidelines, by a group led by Hugh Possing- ham, of the University of Queensland. apirs are South America’s largest Such “rewilding” is gaining currency Then there is land. Its price rises with Tland mammals. They are one of six among eco-entrepreneurs and ecol- demand, mostly from ranchers, miners, species Ignacio Jiménez and his team are ogists. Its commercial appeal is obvious property developers and others eager to ex- trying to re-introduce to the Iberá pro- (“We are in show-business,” quips Mr ploit rather than preserve it. This could be ject, a 7,500km2 wetland reserve in north Jiménez). Scientifically, it rests on the taken to imply that conservationists Argentina, run by Tompkins Conserva- theory of trophic cascades. This holds should be eyeing expensive plots, not tion, an American charity. Like jaguars, that ecosystems are shaped by “apex cheap ones where the price signals a lesser pampas deer, giant anteaters, macaws consumers”—large herbivores and carni- threat. In Dr Pfaff’s words, “no trade-offs and peccaries (a type of wild pig), tapirs vores atop food chains. Remove them, as means no impact”. But others seek out bar- were driven extinct here years ago by humans are wont to do, and the mixture gains. Conservationists should “go to ranchers and hunters. For now, to as- of species lower down the food chain places five to 20 years from the bulldozer”, suage the area’s ranchers, Iberá’s jaguars mutates, often to the detriment of biodi- Dr Possingham reckons. The Nature Con- are confined to an island deep inside the versity. When wolves were chased out of servancy, where he moonlights as chief sci- reserve. The macaws, previously caged, Yellowstone National Park, in the United entist, has adopted this approach to its own have been taught to recognise danger (by States, for instance, unchecked deer considerable land purchases. exposing them to a stuffed conspecific outcompeted bison and beavers for food. being savaged by cats), to find fruit and to The wolves’ return in1995 rapidly un- Pro bono publico fly for distances longer than a few me- wound these changes. That success has Tompkins Conservation, an outfit set up by tres. And the tapirs, as the picture shows, spurred dozens of other projects. Iberá is the late Douglas Tompkins, founder of the are breeding successfully. The renewed one, though most are in Europe and North Face, a maker of outdoor kit, does presence of all these animals is part of a North America. one better. It has snapped up cheap proper- plan to restore the place to its prelapsari- Not all rewildings turn out well. ties in Chile and Argentina, next to larger an glory—and thus lure eco-tourists to a Oostvaardersplassen is a 56km2 piece of areas of disused public land, with the aim poor corner of the country. reclaimed land near Amsterdam. It has of donating them to the state on condition been populated with red deer, and also that adjacent private and public plots are semi-feral cattle and ponies intended to united into single national parks. And it is fill ecological niches occupied by long- working. A year ago Chile’s government extinct aurochs and tarpans. The idea is created two such hybrids, both in Patago- to prevent an important bird habitat nia, with a total area of 40,000km2— from overgrowing. But lack of predators roughly the size of the Netherlands. For and a run of mild winters pushed the Tompkins, which contributed 4,000km2, it number of these ungulates above 5,000. was thus a tenfold return on investment. A harsh winter last year then starved Debates about which places to focus on two-thirds of them, fuelling a public pale in comparison to arguments over backlash against perceived cruelty. which species to save. Such arguments in- As for Iberá, it was one of three pro- volve the concept of triage, which has di- jects graded by Aurora Torres of Martin vided ecologists since at least 1976, when Luther University, in Germany, in the Thomas Lovejoy, now at George Mason first systematic attempt to measure University, published a paper entitled “We rewilding’s progress, which was reported must decide which species will go forever”. recently in the Philosophical Transactions Triage is a term borrowed from Allied of the Royal Society. The habitat was forces’ field hospitals in the first world war, judged to have improved since rewilding which sorted the wounded into three began late last century, from 3.6 to 4.9 on groups: those too injured to be saved, those a rewilding index that runs from zero to likely to recover on their own, and those for ten. The hope, eventually, is to make the whom medics could make a difference. Cute? Moi? area a national park. “When the numbers of endangered species were small, it did not seem necessary to choose between trying to save the ivory- crimps budgets. The Save Our Species pro- not resolve such ethical dilemmas any billed woodpecker or the whopping crane,” gramme introduced by New South Wales, more than they explain why the American Dr Lovejoy wrote. “With longer and grow- in Australia, in 2015, has nine “manage- public prefers spotted owls to scaleshell ing lists of endangered species such ment streams” into which species are allo- mussels. But nor will economic consider- choices are being forced.” cated, according to the nature and serious- ations go away. Estimates of how much the Businesses, politicians and philanthro- ness of threats to them. But this came with world spends on conservation vary be- pists are unlikely to part with as much cash an additional sum of A$100m ($70m) over tween about $4bn and $10bn a year. Imple- as conservationists deem necessary to save five years. As for the acceptability of extinc- menting even current un targets, let alone every species. Faced with limited re- tions, Dr Possingham adds, sadly, that they “nature needs half”, would cost more than sources, conservation groups have no op- are already “very much acceptable”. Just $70bn. Dyed-in-the-wool greens who bri- tion but to engage in triage, however un- witness their accelerating rate. dle at talk of “return on investment” or witting. Nor is it evident that prioritisation In the end, economic calculations will “cost-benefit analysis” need to grow up. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Books & arts The Economist February 9th 2019 71

Also in this section

72 An art gallery on the beach 73 Segregation and the law 73 A memoir of madness 74 Women and the sea

Geopolitics er of the United States radiated to the Euro- pean and East Asian edges of Eurasia, act- Together under heaven ing as “a kind of forward deployment against the dangers emanating from its in- ner core”—that is, the communist chal- lenges from Moscow and Beijing. Today, the increasingly integrated na- ture of the Eurasian supercontinent that has emerged from the cold war—all the Three books examine the emergence and future of the Eurasian world order glitzy cities springing up out of deserts, all sked how he came to write “The Lord those ports being built along Indo-Pacific Aof the Rings”, J.R.R. Tolkien replied: “I The New Silk Roads. By Peter Frankopan. coasts—should not be a surprise to stu- wisely started with a map and made the Knopf; 336 pages; $26.95. Bloomsbury; £14.99 dents of capitalism and development. story fit.” And so, says Bruno Maçães, when The Future is Asian. By Parag Khanna. What many Western prognosticators got imagining new realities it is natural to be- Simon & Schuster; 448 pages; $29.95. wrong, however, was assuming this world gin the same way. These days a revised map Weidenfeld & Nicolson; £20 would be made in the West’s image; that it of the world might have a radically differ- Belt and Road: A Chinese World Order. By would embrace not just Western econom- ent focus from previous ones—because a Bruno Maçães. Hurst; 224 pages; $29.95 and ics but also liberal political values, with vast, integrated Eurasian supercontinent is £20 their supposedly universal appeal and va- proving to be the salient feature of an lidity. You only have to look at the two big- emerging global order. needs of Western markets. gest players by land mass, China and Rus- Once, when East was East and West was But now the modernisation that Europe sia, to see the folly of that presumption. West, the chasm between them was not first brought to Asia is racing back the other Other illiberal powers, notably Turkey and only geographical, but moral and historical way. The Eurasian land mass is fizzing with Iran, are using past historical glories to too. “Asia” was a term invented by Euro- new connections, thanks to fibre-optic ca- conjure a resurgent future, projecting pow- peans to emphasise their own distinctive- bles, pipelines, roads, bridges and manu- er along the new silk roads. ness; to Kipling-era imperialists, Asian facturing zones linking East with West. Economic integration seems not to be societies were backward, despotic and un- Two years ago a freight train that began its dissolving such differences in values, but changing. By contrast, Europe had made journey in Yiwu in eastern China pulled heightening them. Nor is it clear that the decisive break to pursue a scientific ap- into a depot in east London. The feat was America and Europe can do much about it. proach to human affairs—which justified largely symbolic. But nobody should doubt Spreading democratic ideals is not a con- its dominion over other continents. Con- that Asia and Europe are being brought sistent priority for the United States; it in- descension was met with emulation: since onto a common plane. creasingly wants to wield power from a dis- Japan’s Meiji Restoration in 1868, Asia’s That process is the starting point of tance. Western Europe is turning in on modernisation was long a matter of copy- three stimulating new books, which make itself in part—and here is the deep iro- ing the West, either out of admiration for it clear that the map of world politics as it ny—as a response to crises sweeping in Europeans or to repel them or both. Asia’s has been drawn for seven decades is no from Eurasia, among them waves of immi- economic transformations since the sec- longer fit for purpose. From the old map’s grants and Russia’s meddling both in Eu- ond world war were partly shaped by the centre, as Mr Maçães describes it, the pow- rope’s borderlands and its internal politics. 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

72 Books & arts The Economist February 9th 2019

2 Mr Maçães, a Portuguese political scien- “The Future is Asian”, an upbeat examina- tist and former foreign minister, sketched tion of a changing “Greater Asia”, others some of his arguments in “The Dawn of welcome China’s infrastructural forays Eurasia” (published last year). In “Belt and “because they provide cover to pursue their Road” he looks chiefly at China’s part in re- own commercial agendas.” Nor does the shaping the world. Until now, its signature fact of India, Japan, South Korea and Tur- foreign-policy project has been known in key jumping into an infrastructural arms English as the Belt and Road Initiative. That race imply a zero-sum contest. Rather, says final word already sounds too diminutive. Mr Khanna, a Singapore-based geostrate- Encompassing scores of countries and gist, China is thereby “kick-starting the $1trn of real or promised infrastructure process by which Asians will come out spending, the aim, first, is to create a new from under its shadow.” global economy with China at its heart. For Mr Khanna is too blithe about the draw- all China’s denials, the Belt and Road is also backs of authoritarianism. He imputes too a major piece of geopolitical engineering. It much technocratic brilliance to the re- reflects China’s desire to shape its external gion’s elites and glosses over the brutal di- environment rather than simply adapting mensions of development, including Chi- to it; some worry that it is China’s means to na’s high-tech repression against Uighurs. replace an American-led international or- But on an important point, he agrees with der with its own. As a phrase, “the Belt and Mr Maçães and Mr Frankopan: Eurasia’s fu- Road” may come to be used in the same, ture is likely to be more ductile than fixed shorthand way as “the West” is today. and hegemonic. In this new world order, actions still lead to reactions. The increas- Debt and diplomacy ing alignment of democratic Japan, Austra- Rooms with a view Start with the map, and the story follows. lia and India as a response to Chinese as- Yet there is no plan or plot, says Mr Maçães. sertiveness is only one case in point. “merged into it”.Instead of placing the mu- President Xi Jinping and his acolytes are no Ineluctably, Eurasia is cohering, but seum on top of the dunes as was originally Marxist determinists. Lenin is the better that does not have to be under the stifling planned, he decided to bury the building role model as they seize a fleeting chance to “togetherness” of tianxia. In their different beneath them to preserve the coastal ecolo- change the course of history. ways, these books all serve as an antidote to gy. The structure is heated by geothermal And how. As Peter Frankopan, an Oxford American fears of a Manichaean contest energy; its walls and windows and the historian, deliciously puts it in “The New with China. They give shape to latent forces wooden tables in its café were handmade Silk Roads”, when Mike Pompeo, the secre- that are already impossible to ignore. 7 from local materials, a tribute to the crafts- tary of state, last July unveiled America’s manship of the Hebei region. Because the counter to the Belt and Road, the sum museum is lit naturally by skylights, visi- promised—$113m in new programmes— Contemporary art in China tors’ experiences of the artwork will vary was only somewhat more than the com- with the seasons and time of day. bined earnings of Ivanka Trump and Jared The sands of time The Dune’s interiors are meant to culti- Kushner. Just as “Belt and Road” augments vate an intimacy between viewer, work and Mr Maçães’s earlier work, so “The New Silk space. “Going to a museum in China often Roads” updates Mr Frankopan’s magnifi- feels like going to a shopping centre,” says cent history “The Silk Roads” (2015), which Mr Li—an experience of rushed consumer- altered many readers’ views of where the BEIDAIHE ism, typically characterised by large A museum on the Chinese coast aims world’s historical centre of gravity lay. crowds and smartphone selfies. By con- to merge with its environment China is now repurposing an old tenet. trast, the Dune’s subterranean galleries in- The ancient concept of tianxia, or “all un- uried beneath a sand dune, in the voke the caves in which the most primitive der heaven”, put China at the heart of power Bbeach town of Beidaihe, nestles one of human art was first daubed. The design and civilisation. Moral precepts governed China’s newest art galleries. An offshoot of was inspired by Louis Kahn, a 20th-century relations among states. There are echoes of the Ullens Centre for Contemporary Art in American architect who envisaged muse- that in Mr Xi’s notion of a “Community of Beijing, 300km away, the ucca Dune is un- ums as a “society of rooms”, which foster Shared Future for Mankind”, and in the like any other cutting-edge art museum in interaction and encourage people to slow constant emphasis on “win-win” out- China. Most are high-profile architectural down. Given the isolated location, visitors comes, mutual dependence and respect. statements, erected in the middle of bus- will have to make a deliberate “pilgrimage Countries’ obligations depend on their tling cities. The Dune is subtle and seclud- to the art”, as Mr Li puts it, rather than just a place in a China-centred network. ed, its galleries unfolding against the back- hurried urban fly-by. The gratitude and dependency of others drop of the sands. “After Nature”, the inaugural exhibit are convenient for China as it seeks to recy- Interdependence with the landscape (curated by Luan Shixuan), focuses on a cle its foreign-currency surplus, employ its and the local community is at the heart of pertinent subject: the future of humanity’s workers on construction sites abroad, se- the Dune’s purpose. It aims to be sustain- relationship with the natural world. Each cure raw materials and fob off low-grade able ecologically as well as financially, and of the nine contemporary Chinese artists production onto others so that it may keep to help protect the environment rather in the show engages cleverly with the space the best high-tech manufacturing and ser- than destroying it. “Our work was not just that their work occupies. Visitors standing vices at home. The Trump administration to design a physical structure,” says Li Hu in front of Liu Yujia’s “Wave”, a digital dip- calls this approach “debt-trap diplomacy”. of open Architecture, one of the overseers tych featuring aerial footage of waves rush- But that misses the appeal for many recipi- of the project, but to “dream up an entirely ing against the coast, need only to turn ents of Chinese largesse. For a start, no one new type of institution.” around to find themselves looking out at else is offering so much of it. Mr Li wanted to create a gallery that was the Bohai Sea. Beyond a glass door lies What is more, as Parag Khanna says in not “juxtaposed” to its environment but Zheng Bo’s “Dune Botanical Garden”, a 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

The Economist February 9th 2019 Books & arts 73

2 work of bio-art made of transplanted local A key facet of the story, unknown by A memoir of madness weeds that also functions as a museum many—including, apparently, the justices garden. Nearby stands “Destination”, an in- who heard the case—is that the episode Physician, curb stallation by Na Buqi, which comprises an spurring Plessy was an elaborate set-up de- overturned billboard advertising an eerily signed to hasten just such a reckoning. thyself photoshopped beachside getaway. When Homer Plessy, a French-speaking Ms Na’s contribution is a wry commen- Creole with only one black great-grandpar- tary on the museum itself. Its location, Bei- ent, took his seat in the white carriage of a daihe, is well-established as both a sum- Louisiana train in 1892, an officer ap- Let Me Not be Mad. By A.K. Benjamin. mer retreat for Beijing’s political elite and a proached him. “Are you a coloured man?” Bodley Head; 213 pages; £16.99. To be popular beach resort for domestic tourists. he asked. When the fair-skinned Mr Plessy published in America by Dutton in June; $27 Cranes crowd behind the dunes, supervis- answered “yes”, yet refused to budge, he ing construction work by Aranya, a Chi- was arrested for violating the state’s Sepa- his is a golden age for books written by nese developer that also funded and built rate Car Act. The scene had been carefully Tdoctors, psychoanalysts, surgeons and the museum. Much as the Dune wants to choreographed by the Comité des Ci- the like. In Britain, “This Is Going To Hurt”, attract visitors, a big influx might threaten toyens, a civil-rights alliance of blacks, Adam Kay’s memoir about his time as a ju- its sustainable vision: like that forlorn bill- whites and Creoles in New Orleans whose nior doctor, has featured on bestseller lists board, a picture-perfect ideal risks being first attempt at a test case (with Daniel Des- for months. Atul Gawande, an American compromised by the double-edged forces dunes, a citoyen’s son, in Plessy’s role) had surgeon, has written a series of thoughtful of consumption. 7 recently foundered on a technicality. inquiries into the limits of surgical inter- “Separate” notes that several prominent vention and end-of-life care. Books by Oli- men of colour, including Frederick Doug- ver Sacks, a neurosurgeon who popular- Segregation in America lass—the escaped slave who became a cele- ised the genre with works such as “The Man brated abolitionist and orator—never Who Mistook His Wife for a Hat” before his Lines of colour thought much of the legal strategy of chal- death in 2015, are still being published. lenging segregation on the rails. It stung “Let Me Not Be Mad” seems, at first Louis Martinet, editor of the New Orleans glance, to fit into this trend. Written by a Crusader, that Douglass “saw no good in the clinical neurologist under the pseudonym undertaking”. But Martinet experienced A.K. Benjamin, it begins at an anonymous, moments of doubt, too, wondering if white presumably British, hospital. A female pa- racism and black “submissiveness” ren- tient—an amalgam, like all the figures in Separate: The Story of Plessy v Ferguson, dered their fight a “hopeless battle”. the book, of several different case studies and America’s Journey from Slavery to Albion Tourgée and James Walker, the and encounters, both “real and imag- Segregation. By Steve Luxenberg. W.W. lawyers arguing Plessy’s case at the Su- ined”—sits down in the doctor’s office, Norton; 624 pages; $35.00 preme Court, knew at the outset that the having been referred to him because her he key to success at the Supreme Court, justices were “somewhat adverse” to their brain appears to be “rotting”. Mr Benjamin Tas the late Justice William Brennan position. So they pulled out all the stops zooms out to predict her future: “Forgetful- liked to say, is the number five. With five with a nearly 80-page brief. Segregation in ness first…The onset of ‘anomia’ following votes—a majority of the justices—you can railcars violated the Thirteenth Amend- the rule of frequency: losing the name for 1 do anything. But as an impassioned group ment banning slavery, they reasoned, as it of activists discovered in1896, falling short “reimpose[d] the caste system”. It was sometimes does more than disappoint a barred by each of the four provisions of the losing litigant: it can cement a disastrous Fourteenth Amendment, including the status quo for generations. citizenship and equal-protection clauses. In “Separate”,the context and aftermath Most creatively, the lawyers contended of the court’s ruling in Plessy v Ferguson are that tossing a light-skinned man with a few woven into a nuanced history of America’s drops of coloured blood out of a white car- struggles in the 19th century as a civil war riage violated his due-process rights, as it was fought, slavery ended and a new, com- amounted to a “forcible confiscation” of plex racial politics haltingly took form. “the reputation of being white”. Steve Luxenberg, an editor at the Washing- Wrapping these claims in a vision of ton Post, dwells on the personal lives of the colour-blindness, Tourgée and Walker per- men who built and decided a case that suadedonlyonejustice—Harlan—thatseg- wound up blessing the regime of Jim Crow regation was a “badge of servitude” at odds segregation in America’s South. His narra- with the constitution’s promise of equality. tive culminates in an irony: six of the seven Meanwhile Justice Henry Brown, writing justices who signed onto what became one for the majority, found separate carriages of the Supreme Court’s most reviled rulings stigmatising only if “the coloured race were northerners. John Marshall Harlan—a chooses to put that construction upon it”. Kentuckian who once “had no quarrel with Luxenberg attributes Brown’s myopic view slavery” and whose family owned many that “separate did not mean unequal” to his slaves—wrote a dissent articulating the sheltered New England upbringing and constitutional principle of racial equality “most conventional” outlook. “Separate” that was not upheld by a majority of the shows how seven justices launched a half- court until Brown v Board of Education, century of racial cruelty because, unlike nearly six decades later. Harlan, they failed to see that “equality and Like any good history, “Separate” intro- opportunity could not survive if they came duces some puzzles while resolving others. in different colours”. 7 A naughty night to swim in РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

74 Books & arts The Economist February 9th 2019

2 Caerphilly, then Cheddar, then cheese, Mermaids and monsters then children, your children.” So far, so familiar. But soon it becomes The sirens’ song clear that the main subject is not the pa- tients, but the doctor himself. As the book progresses, he appears to lose his job—or at least to be prevented from seeing patients. His frame of reference shrinks to a few ec- centric acquaintances, pop songs and Salt on Your Tongue: Women and the scraps of reading. Indeed, “Let Me Not Be Sea. By Charlotte Runcie. Canongate; 365 Mad” relies more on literary and cultural pages; $24.00 and £14.99 references than on clinical ones; the au- thor explains that before becoming a neu- y long tradition, men and women ex- rologist, he was, among other things, a Bperience the sea in different ways. Men screenwriter and a monk. set out on it, looking for land, gold, adven- “King Lear” recurs throughout—from ture; women stay on shore, waiting and the title to various references to “Poor worrying. Men scoop up shoals of fish, or Tom”, the madman as whom a character in harpoon great whales; women, wrapped in the play disguises himself, to passages that shawls and with hands rubbed raw, gut and echo Lear’s own descent into madness. Al- fillet, preserve and sell whatever the seafar- lusions are made to Kafka, Dostoyevsky, ers bring in. Even young weekenders on David Foster Wallace and many other writ- England’s beaches, faced with a rough sea, ers (nearly all of them men). Occasionally react in different ways. The girls jump and Mr Benjamin himself brings out pin-prick scream; the posturing lads throw stones. details with a novelist’s skill: the “fading This difference both intrigues Charlotte impression of goggles like quotation Runcie and bothers her. When she was Creatures of the deep marks” around the eyes of one patient, or small, to stand in a rock-pool of clear sea- an early Autumn morning “set like a da- water made her feel “bright and fierce”. flight of gannets and sea eagles and visits guerreotype by a gossamer of frost”. That feeling seems to dissipate with the shrines and caves where saints, all male, The argument that loosely emerges is knowledge that women were traditionally communed with God and the waves. Her that doctors can be as damaged as their pa- kept away from the sea, their mere pres- prose is often lovely, but the sea keeps its tients. And Mr Benjamin is sceptical of the ence on a boat unlucky and the great sea ep- distance. Real close grappling with it, she tendency, perhaps even the mania, for clas- ics almost empty of them. The sea was not finds, is not to sing the men’s sea shanties sification, the glib assurance of diagnosis: their place. In her lyrical and gently digres- (though they make her feel temporarily sive book she analyses, and works to recov- elated again), nor to try lone yachting, nor I walked over London Bridge in rush hour, er, the countering power of her first, ele- to swim in it. It is to have a baby. faces thronging around me, and diagnosed mental, female response to the sea. The connection of the sea and the hu- each one in an instant: Psychosis…Depres- She begins by considering who is really man body is familiar: the salt of tears, the sion…Lewy Bodies…Panic…Depression…So- in charge of it. Her chapter headings are the ciopathy…ocd…Cynophobia…Panic…Guam’s. make-up of the blood. A connection with Everybody has something, and now there’s a names of the seven Pleiades, the stars—all pregnancy and childbirth seems more ten- name for it, even if it’s fear of having some- girls, most variously abused by gods— uous, and is sometimes too far a stretch, thing, of going insane, aka dementophobia. whose rising told Greek sailors when to but Ms Runcie sets the theme early: the sea embark. The moon, female in most cul- is “a gradual process of becoming, of wid- But these points would be stronger if he re- tures, controls the tides. The goddess Athe- ening and ageing and growing into more”. lied less on personal anecdote and more on na sorted out the waves for Odysseus. Our In some ways she becomes the sea herself, professional expertise. Some moments in Lady, star of the sea, smooths it for all who a fluid, heavy medium in which the baby the book are moving, such as when the au- invoke her. grows from something light as sea-silk, or a thor’s daughter seems to have a fit or when The sea is also inhabited by mysterious, tiny curled sea-snail, into a seafarer. In oth- a close colleague dies. Other vignettes—in terrifying or bewitching women. Sirens er ways she is a sailor on a ship, sick, en- which he describes his rather strange on- sing men towards doom on their rock; Scyl- cumbered, chronically fearful and, in sev- line dating persona, say, or returns to a la, her teeth “full of black death”, writhes in eral harrowing passages, racked by the kind of monastery at the end of the book— her whirlpool. Underwater caves hide Syc- dangers of a difficult birth and over- fall flat. Moreover Mr Benjamin’s slippery orax, Caliban’s mother, and the awful pro- whelmed by waves of pain. Men have Odys- method proves problematic. genetrix of Grendel in “Beowulf”. Mer- seus clinging to his raft, the smashing of He is an openly unreliable narrator; maids, selkies and naiads, all alluring in the Pequod, the horror-voyages of the Fly- even before he admits that some of the case their beauty, draw sailors down to the ing Dutchman and the Ancient Mariner; studies “were me, are me”, there is a whiff depths. When men sail, what they fear is but women, every day and everywhere, of uncertainty, of fact melding with fiction often females who know the sea better. have this. and becoming distorted, grotesque. But in On the other hand, as second-mate And in the end, as usually in sea stories, the end these elisions undermine his Stubb cries in “Moby-Dick”, “Such a funny, the sea has the last word. Ms Runcie carries theme. The effect of the best medical mem- sporty, gamy, jesty, joky, hoky-poky lad, is her tiny new daughter down to the beach at oirs, like those of Sacks, is to make idiosyn- the Ocean, ho!” A man’s thing. All down the St Monans and introduces her, in a sort of cratic cases seem emblematic of wider ages men engage with the sea closely, ag- baptism, to salt water. Her encounter with maladies. In “Let Me Not Be Mad”, the focus gressively; they grapple with it and fight it. the sea of motherhood has indeed made is on a single, highly subjective and ex- Ms Runcie spends much of her book in the her grow into someone else. She is steadier treme experience. Rather than plumbing women’s place, on the shore of the East and calmer; she is unafraid. But she has not the depths of an “unravelling mind”, it Neuk of Fife, where she walks the dog, aged, as she supposed. Instead she is that seems instead to skim the surface. 7 hunts for shells and sea-glass, exults in the little girl again, bright and fierce. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

Courses 75

Tenders Appointments

Unitaid is seeking a suitable Contractor to support the Secretariat in Unitaid is a multilateral organization that brings the power of new medical enhancing its external communications, including developing a corporate discoveries to the people who most need them. Through time-limited communications and social media strategy, graphic design, brand investments, Unitaid identifi es the best health innovations with the potential to positioning, website maintenance, production of audiovisual assets such alleviate the burden of major diseases and sets the stage for their large-scale as short fi lms and animations, and management of relations with new and introduction by governments and partners such as the President’s Emergency traditional media. Plan for AIDS Relief (PEPFAR) and the Global Fund. Its investments result in better ways to prevent, diagnose and treat diseases including HIV/AIDS, hepatitis C, tuberculosis and malaria more quickly, affordably and effectively. All interested prospective bidders are invited log-in as a registered Supplier A growing number of its projects address more than one disease, maximizing (Account registration accessible on https://www.ungm.org/Account/ the effectiveness of health systems as a whole, and more than half of Unitaid’s Registration). Kindly pay attention to the below tender timeline: portfolio is linked to antimicrobial resistance.

1) No later than 25 February 2019 17:00 hours Geneva Time, the bidder Unitaid is hosted and administered by World Health Organization (WHO), shall submit the corresponding forms, duly completed and signed under located at the Global Health Campus, Le Pommier, 1218 Le Grand-Saconnex, the “Correspondence” tab of UNGM: Switzerland.

2) For clarifi cation on technical, contractual or commercial matters, Unitaid is looking for: bidders may submit questions via UNGM using the “Correspondence” 1) Head of Communications at P5 level. tab at no later than 15 February 2019. Duration 24 months Contract Schedule: Full-time staff • An experienced and highly skilled professional to lead a creative multi- The Unitaid team overseeing the tender will respond in writing (via the media team focused on communicating to diverse audiences Unitaid’s “Correspondence” tab of UNGM) to any request for clarifi cation of the unique contribution to improving global health through innovation. Request for Proposal (RFP) that it receives prior to the date mentioned in the Request for Proposals. A consolidated document of Unitaid’s response to 2) Senior Resource Mobilization offi cer at Grade P5 level. all questions (including an explanation of the query but without identifying Duration 24 months Contract Schedule: Full-time staff the source of enquiry) will be published on the UNGM for the perusal of all • A Senior resource Mobilization Manager to lead the design, development prospective bidders. and implementation of Unitaid’s resource mobilization strategy, while liaising with existing and potential donors. 3) Proposals must be uploaded via UNGM, under the “Tender Documents” tab no later than 28-Feb-2019 at 17:00 hours, Geneva time. Deadline for submission of the profi le: 3 March 2019

For more fi nite details, terms and conditions, and relevant documents For further information about this advertisement and how to apply online please for this tender, please go to: https://www.ungm.org/Public/Notice/83075 go to: https://www.who.int/careers/en/ under “External Candidates Access.” РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

76 Economic & financial indicators The Economist February 9th 2019

Economic data

Gross domestic product Consumer prices Unemployment Current-account Budget Interest rates Currency units % change on year ago % change on year ago rate balance balance 10-yr gov't bonds change on per $ % change latest quarter* 2018† latest 2018† % % of GDP, 2018† % of GDP, 2018† latest,% year ago, bp Feb 6th on year ago United States 3.0 Q3 3.4 2.9 1.9 Dec 2.4 4.0 Jan -2.5 -3.8 2.7 -11.0 - China 6.4 Q4 6.1 6.6 1.9 Dec 1.9 3.8 Q4§ 0.3 -3.9 2.9 §§ -93.0 6.74 -6.8 Japan nil Q3 -2.5 1.0 0.3 Dec 1.0 2.4 Dec 3.7 -3.5 nil -9.0 110 -0.5 Britain 1.5 Q3 2.5 1.3 2.1 Dec 2.3 4.0 Oct†† -3.9 -1.3 1.3 -32.0 0.77 -6.5 Canada 2.1 Q3 2.0 2.1 2.0 Dec 2.3 5.6 Dec -2.8 -2.2 1.9 -44.0 1.32 -5.3 Euro area 1.2 Q4 0.9 1.9 1.6 Dec 1.7 7.9 Dec 3.5 -0.7 0.2 -53.0 0.88 -8.0 Austria 2.2 Q3 -1.9 2.6 1.9 Dec 2.1 4.7 Dec 2.1 -0.3 0.4 -42.0 0.88 -8.0 Belgium 1.2 Q4 1.2 1.4 2.0 Jan 2.3 5.5 Dec 0.5 -1.0 0.7 -23.0 0.88 -8.0 France 0.9 Q4 1.1 1.5 1.2 Jan 2.1 9.1 Dec -0.8 -2.6 0.6 -44.0 0.88 -8.0 Germany 1.2 Q3 -0.8 1.4 1.7 Dec 1.9 3.3 Dec‡ 7.6 1.4 0.2 -53.0 0.88 -8.0 Greece 2.4 Q3 4.3 2.1 0.6 Dec 0.6 18.6 Oct -1.9 -0.1 3.9 17.0 0.88 -8.0 Italy 0.1 Q4 -0.9 0.9 0.9 Jan 1.2 10.3 Dec 2.6 -1.9 2.9 88.0 0.88 -8.0 Netherlands 2.4 Q3 0.6 2.5 2.0 Dec 1.6 4.4 Dec 10.3 1.2 0.3 -50.0 0.88 -8.0 Spain 2.4 Q4 2.8 2.5 1.0 Jan 1.7 14.3 Dec 1.0 -2.7 1.3 -20.0 0.88 -8.0 Czech Republic 2.4 Q3 2.4 2.8 2.0 Dec 2.2 2.2 Dec‡ 0.8 1.1 1.7 -4.0 22.7 -9.8 Denmark 2.4 Q3 2.9 0.9 0.8 Dec 0.8 3.8 Dec 6.1 -0.4 0.3 -44.0 6.56 -8.1 Norway 1.1 Q3 2.3 1.7 3.5 Dec 2.7 3.8 Nov‡‡ 8.0 7.0 1.8 -19.0 8.52 -8.0 Poland 5.7 Q3 7.0 5.1 1.1 Dec 1.7 5.8 Dec§ -0.5 -0.9 2.7 -78.0 3.77 -10.3 Russia 1.5 Q3 na 1.7 5.0 Jan 2.9 4.8 Dec§ 6.6 2.7 8.2 98.0 65.7 -13.1 Sweden 1.7 Q3 -0.9 2.3 2.0 Dec 2.0 6.0 Dec§ 2.2 0.9 0.4 -56.0 9.17 -13.1 Switzerland 2.4 Q3 -0.9 2.6 0.7 Dec 0.9 2.4 Dec 9.6 0.9 -0.2 -36.0 1.00 -6.0 Turkey 1.6 Q3 na 3.1 20.4 Jan 16.4 11.6 Oct§ -4.5 -1.9 14.5 262 5.22 -27.6 Australia 2.8 Q3 1.0 3.0 1.8 Q4 2.0 5.0 Dec -2.4 -0.6 2.2 -64.0 1.40 -9.3 Hong Kong 2.9 Q3 0.3 3.4 2.6 Dec 2.4 2.8 Dec‡‡ 3.0 2.0 1.8 -19.0 7.85 -0.4 India 7.1 Q3 3.3 7.3 2.2 Dec 4.0 7.1 Jan -2.7 -3.6 7.6 nil 71.6 -10.3 Indonesia 5.2 Q4 na 5.2 2.8 Jan 3.2 5.3 Q3§ -2.8 -2.6 7.7 135 13,920 -2.6 Malaysia 4.4 Q3 na 4.7 0.2 Dec 1.0 3.3 Nov§ 2.2 -3.7 4.1 15.0 4.09 -4.2 Pakistan 5.4 2018** na 5.4 7.2 Jan 5.1 5.8 2018 -5.3 -5.1 13.2 ††† 474 138 -20.0 Philippines 6.1 Q4 6.6 6.2 4.4 Jan 5.3 5.1 Q4§ -2.8 -2.8 6.1 -12.0 52.3 -1.5 Singapore 2.2 Q4 1.6 3.2 0.5 Dec 0.4 2.2 Q4 17.9 -0.5 2.2 -12.0 1.35 -2.2 South Korea 3.2 Q4 3.9 2.7 0.8 Jan 1.5 3.4 Dec§ 5.1 0.3 2.0 -77.0 1,119 -2.4 Taiwan 1.8 Q4 1.6 2.6 nil Dec 1.4 3.7 Dec 12.9 -0.7 0.9 -19.0 30.7 -4.4 Thailand 3.3 Q3 -0.1 4.1 0.3 Jan 1.1 0.9 Dec§ 6.9 -3.0 2.2 -23.0 31.2 1.0 Argentina -3.5 Q3 -2.7 -2.0 47.1 Dec 34.3 9.0 Q3§ -6.0 -5.5 11.3 562 37.4 -47.4 Brazil 1.3 Q3 3.1 1.2 3.7 Dec 3.7 11.6 Dec§ -0.8 -7.1 7.0 -171 3.70 -11.9 Chile 2.8 Q3 1.1 4.0 2.6 Dec 2.4 6.7 Dec§‡‡ -2.5 -2.0 4.2 -41.0 654 -8.2 Colombia 2.6 Q3 0.9 2.6 3.1 Jan 3.2 9.7 Dec§ -3.2 -2.4 6.6 11.0 3,103 -8.5 Mexico 1.8 Q4 1.2 2.1 4.8 Dec 4.9 3.6 Dec -1.7 -2.5 8.4 80.0 19.1 -1.8 Peru 2.3 Q3 -8.3 3.7 2.1 Jan 1.3 5.7 Dec§ -2.2 -2.4 5.6 64.0 3.33 -2.4 Egypt 5.3 Q3 na 5.3 11.9 Dec 14.4 10.0 Q3§ -2.2 -9.5 na nil 17.6 0.3 Israel 2.9 Q3 2.3 3.2 0.8 Dec 0.8 4.3 Dec 1.7 -3.0 2.1 25.0 3.62 -3.9 Saudi Arabia 2.2 2018 na 1.5 2.2 Dec 2.5 6.0 Q3 6.1 -5.3 na nil 3.75 nil South Africa 1.1 Q3 2.2 0.8 4.5 Dec 4.6 27.5 Q3§ -3.1 -3.9 8.7 18.0 13.5 -10.7 Source: Haver Analytics. *% change on previous quarter, annual rate. †The Economist Intelligence Unit estimate/forecast. §Not seasonally adjusted. ‡New series. **Year ending June. ††Latest 3 months. ‡‡3-month moving average. §§5-year yield. †††Dollar-denominated bonds.

Markets Commodities % change on: % change on: The Economist Index one Dec 29th index one Dec 29th commodity-price index % change on In local currency Feb 6th week 2017 Feb 6th week 2017 2005=100 Jan 29th Feb 5th* month year United States S&P 500 2,731.6 1.9 2.2 Pakistan KSE 41,505.7 2.2 2.6 Dollar Index United States NAScomp 7,375.3 2.7 6.8 Singapore STI 3,184.6 0.3 -6.4 All Items 138.4 141.0 2.6 -7.3 China Shanghai Comp 2,618.2 1.7 -20.8 South Korea KOSPI 2,203.5 -0.1 -10.7 Food 146.0 147.8 0.3 -2.9 China Shenzhen Comp 1,310.0 2.0 -31.0 Taiwan TWI 9,932.3 nil -6.7 Industrials Japan Nikkei 225 20,874.1 1.5 -8.3 Thailand SET 1,658.7 1.6 -5.4 All 130.5 133.9 5.2 -11.8 Japan Topix 1,582.1 2.0 -13.0 Argentina MERV 36,731.7 1.9 22.2 Non-food agriculturals 123.3 125.6 4.5 -8.4 Britain FTSE 100 7,173.1 3.3 -6.7 Brazil BVSP 94,635.6 -2.4 23.9 Metals 133.5 137.4 5.5 -13.0 Canada S&P TSX 15,712.3 1.5 -3.1 Mexico IPC 43,855.8 0.5 -11.1 Sterling Index Euro area EURO STOXX 50 3,212.8 1.6 -8.3 Egypt EGX 30 14,766.6 4.8 -1.7 All items 191.5 198.1 0.9 -0.3 France CAC 40 5,079.1 2.1 -4.4 Israel TA-125 1,414.9 0.8 3.7 Germany DAX* 11,324.7 1.3 -12.3 Saudi Arabia Tadawul 8,633.3 0.6 19.5 Euro Index Italy FTSE/MIB 19,996.5 1.1 -8.5 South Africa JSE AS 54,574.3 0.8 -8.3 All items 150.8 153.6 2.8 0.3 Netherlands AEX 536.6 3.5 -1.5 World, dev'd MSCI 2,047.1 1.8 -2.7 Gold Spain IBEX 35 9,100.9 0.3 -9.4 Emerging markets MSCI 1,048.5 1.1 -9.5 $ per oz 1,310.7 1,313.5 2.3 -1.0 Poland WIG 61,319.0 2.5 -3.8 West Texas Intermediate Russia RTS, $ terms 1,215.8 1.4 5.3 $ per barrel 53.3 53.7 7.8 -15.3 Switzerland SMI 9,143.0 2.0 -2.5 US corporate bonds, spread over Treasuries Turkey BIST 102,584.3 -1.5 -11.1 Dec 29th Sources: CME Group; Cotlook; Darmenn & Curl; Datastream from Australia All Ord. 6,091.8 2.4 -1.2 Basis points latest 2017 Refinitiv; FT; ICCO; ICO; ISO; Live Rice Index; LME; NZ Wool Services; Thompson Lloyd & Ewart; Urner Barry; WSJ. *Provisional. Hong Kong Hang Seng 27,990.2 1.3 -6.4 Investment grade 174 137 India BSE 36,975.2 3.9 8.6 High-yield 484 404 Indonesia IDX 6,547.9 1.3 3.0 Sources: Datastream from Refinitiv; Standard & Poor's Global Fixed For more countries and additional data, visit Malaysia KLSE 1,683.6 nil -6.3 Income Research. *Total return index. Economist.com/indicators РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Graphic detail The Economist February 9th 2019 77

Bitcoin’s price has fallen to 2017 levels, Bitcoin price Power consumption of bitcoin mining but its energy use is five times higher $ Terawatt-hours per year, estimated 20,000 50 Energy use kept rising for ten months Hong Why bitcoin uses lots of electricity Kong after the bubble A bitcoin is created, or “mined”, 16,000 40 burst by having computers solve a maths problem. The first miner to find the answer is rewarded Price Energy use with bitcoin

12,000 30 London ↑ As more miners enter the Equivalent market, the problems get power consumption* harder, but the reward remains 8,000 ↓ 20 the same. More difficult Iceland problems require more energy

4,000 10 Alphabet During bitcoin’s first In the following years, prices (Google) price surge in 2013-14, and power consumption energy use stayed low rose in tandem

CERN (Large Hadron Collider) 0 2013 2014 2015 2016 2017 2018 2019

Bitcoin and miners alike. But in order to limit the supply of coins, the system adjusts the dif- Mining returns depend on the prices Mining their own ficulty of the maths problems in response of bitcoin and energy to computers entering or leaving its net- At February 5th 2019 business work. As more computing power becomes Approximate available, the solutions become harder to price of electricity guess, raising the amount of electricity US cents per kWh needed to mine each coin. Moreover, dur- 20 Will bitcoin’s price crash cut into the ing the past year the bitcoin bubble has currency’s voracious energy use? Losing burst. Its price is now $3,400, down more money hen gold prices fall, precious-met- than 80% from the peak. Making Wals firms suspend exploration and With higher costs and lower proceeds, money close mines with high operating costs. In miners should have stampeded out of the 15 theory, bitcoin miners should act similarly. market. But in fact, relatively few have de- $2,810 loss Although bitcoin is a virtual currency, it is parted. Bitcoin’s daily energy consumption per bitcoin California expensive to obtain. To “mine” new bit- today is still 16 times its level of two years coins—ones that do not already belong to ago, and just 30% below its record high. someone else—users hook up their com- At the current price and bitcoin network puters to a network, and instruct them to size, mining returns are sensitive to energy 10 keep guessing the solution to a maths pro- costs. Even within one country, industrial BREAK-EVEN blem until they get it right. electricity prices can vary widely. In Wash- The difficulty of these tasks protects the ington state, a part of America rich in hy- integrity of the system: anyone seeking to dropower, each bitcoin fetches 45% more $1,060 profit rewrite bitcoin’s transaction ledger would than the market price of the energy needed per bitcoin Washington state, US 5 face the monumental burden of repeating to mine it on an average day. But in nearby them. However, such security is not cheap. California, electricity costs 2.5 times more. China† Finding the answers requires lots of com- Bitcoin would need to rebound to $6,200 to puting power, and thus lots of energy. At make full-time mining there profitable. Current bitcoin their peak in late 2018, bitcoin miners were As the roller-coaster ride of bitcoin’s price thought to be using electricity at an annu- price makes clear, the currency’s value is 0 alised pace of at least 45 terawatt-hours per impossible to predict. Miners have mostly 0 5,000 10,000 15,000 20,000 year, the average rate of all of Hong Kong. weathered the crash so far. But a further de- Bitcoin price, $ As wasteful as it may seem, miners were cline of 50% or so would start forcing them rewarded handsomely for responding to a out of business. The shake-out would only *2018 or latest available surge in demand for bitcoin. In 2017 the abate once the maths problems get easy †Price to bitcoin miners in Sichuan and Inner Mongolia currency’s price rose from $1,000 to nearly enough that less power is needed, enabling Sources: Alex de Vries; blockchain.com; $20,000, yielding profits for speculators the remaining miners to scrape by. 7 EIA; press reports; national statistics РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

78 Obituary Lamia al-Gailani The Economist February 9th 2019

contrast with her favourite large piece in the museum, the wonder- ful copper Bassetki statue of a seated human figure, these little seals had no obvious cachet. But almost every one had gone. Despair came first; then fury. Iraqi archaeologists had warned the Americans beforehand, even going to Washington to beg them to protect the building. She lent weight to the delegation as some- one who moved easily between Iraq and the West, living in London and returning to the museum, for months each year, to work on the seals. The Bush administration did nothing. A tank at last appeared at the museum entrance two months later, almost useless. “Stuff happens,” said America’s secretary of defence. Yes, so it did, no thanks to him, and had been happening in her country for centuries before. In Baghdad her family, which was dis- tinguished, had charge of the shrine of Abdul Qadir al-Gilani, a Sufi mystic of the 12th century; in the library was a battered small Ko- ran, the sole survivor of the sack of the ruling Abbasids’ libraries by Mongol troops in 1258. In this “grandmother of all nations”, as she thought of Mesopotamia, every mound covered a lost city; if you only dug a hole, as any robber could, you found something. In the early 20th century, just before the borders of modern Iraq were drawn, Western archaeologists more or less took what they want- ed. That plunder had been stopped by one intrepid Englishwoman, Gertrude Bell, who was her heroine for all kinds of reasons. Of course, she was a colonialist; but she was still devoted to the coun- try, founded the National Museum and set rules for the export of antiquities, a fearless woman in a man’s world. All that was worth imitating, especially the last part. Her family, In Mesopotamia’s halls despite its ancestry, did not care much for history or for girls know- ing it. They had merely wanted her to be nice, speak English and get married, but she defied them to study first law, then archaeology (and then get married). From her first days at the museum in 1961, when it was still in central Baghdad, she strove to involve women more, watching as housewives on their way to the main bazaar Lamia al-Gailani-Werr, guardian of the smallest antiquities stopped to examine the Babylonian lions and Assyrian winged of Iraq, died on January 18th, aged 80 bulls at the entrance gate. She lobbied tirelessly to go on digs, n that dreadful day in April 2003, some of the staff of the Na- which well-behaved young women did not do, and was at last al- Otional Museum of Iraq met Lamia al-Gailani in the lobby. They lowed to work on a small site, Tell al-Dhibai, just outside Baghdad. were in such shock that they could not finish a sentence. Days after Small but very important, she always insisted, since in the 1930s it the American invasion, looters had got in and raided the place. had produced a cuneiform tablet that proved Pythagoras’s theo- They had rampaged unhindered for two days. Objects too heavy to rem, 2,000 years before he had thought of it. Iraqi genius! carry had been smashed; about 15,000 pieces had been stolen. Yet there was no getting away from violence in her part of the Even the ledgers and index cards on which the collection was cata- world. She had only to look at the seals. Men fought with each oth- logued—the record of the civilisations of Babylon, Assyria, Ur, er, and with lions which they threw in triumph over their heads. Nineveh and Sumer, of mankind’s first cities, empires and writ- Bull-men struggled with human-headed bulls. The goddess Ishtar ings—lay torn and scattered everywhere. Among them the deputy carried a bristling quiver of arrows, a club and a scimitar. In mod- director sat crying, his face buried in his hands. ern wars, the very smallness of the seals made them ideal booty. She did not have time for that. Instead she rushed to check her They could be fenced with almost no one noticing—unlike the life- special treasures, 7,000 cylinder seals from ancient Mesopotamia, size terracotta lions of Tell Harmal or the Greek-Roman-Persian stored in a corner of the basement. They were so small: just tiny statues of Harat, world-famous treasures of the museum, which plugs or cylinders of limestone, marble or hematite, used to seal had their heads destroyed with sledgehammers. loans and contracts. It was only when they were rolled across wet She especially mourned the Harat figures. Their oddness was clay—as in Babylon or Nineveh, and when she impressed them for not only fun—togas worn with curled Eastern beards, Greek ring- displays—that the carvings and inscriptions in intaglio revealed, lets with Persian trousers—but also a sign that different cultures sharp as the original cutting, the world from 3,000 years before. could blend, not fight. Yet even as the National Museum painfully King-gods sat on panelled thrones covered with fleeces, flanked by got itself back together, eventually re-opening in 2015 with Ameri- nude attendants with three sidelocks. Men rowed boats on a river, cans now helping to recover objects and train new curators, along- while women processed with baskets on their heads. Shamash, side her, the bigots of Islamic State were destroying “unIslamic” god of the sun, stood with one foot on a mountain and a saw in his sites all over Iraq, erasing the history she was trying to preserve. hand. Goddesses swayed in beads and flouncy dresses. A man and Joy came when two American military police turned up to hand a woman drank beer through straws, with filters at the ends to her the Bassetki statue, crusted with smelly gunk from the cesspit strain out worms. Gazelles lifted their long horns, date palms held in which it had been hidden. Satisfaction came from choosing cyl- out their branches, and crescent moons rose in the sky. inder seals for a new museum, built with British help, in Basra. But From looking so long at these seals, the subject of her thesis at she often spared a wistful thought for the rest of the collection. University College London and her love ever since, she could tell Only 600 seals had found their way back to the museum. The oth- the styles not only of different cities but of different workshops, ers had not shown up on the market. They must be sitting some- from the carving of pleats or hair. From their impression, firm or where, probably out of the way of anyone who knew much about vague, on ancient tablets, she knew how they had been handled. In them. And each little cylinder encompassed a world. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS