Sexism in Silicon Valley

China’s educational apartheid

What to do with nuclear waste

Mysteries of the mesopelagic APRIL 15TH–21ST 2017 Turkey’s slide into dictatorship Contents The Economist April 15th 2017 3

6 The world this week Asia 32 India’s Aadhaar Leaders Digital dawn 9 A referendum in Turkey 33 Australia’s plague of The slide into dictatorship methamphetamines Ice storm 10 Syria What next? 33 A prison for foreigners in South Korea 10 Rural education in China Why the jailbirds sing Separate and unequal 34 Executions in Vietnam 11 Startups Deathly silence American foreign policy Silicon pally 35 Bullying in Japan Donald Trump’s missile strike 12 Identity and privacy All against one on Syria was justified. But his Per Aadhaar ad astra? 36 Banyan strategy is confused and On the cover Japan’s ultranationalists confusing: leader, page10. Recep Tayyip Erdogan is Letters America’s global role looks carrying out the harshest more normal than Mr Trump 16 On Yemen, sex studies, crackdown in decades. The China promised, but still odd, page India, Wales, Singapore, West must not abandon 21. What the feud between the Poland, brains, April’s 37 Rural boarding schools Turkey: leader, page 9. Voters president’s son-in-law and his Fool Opportunity denied are split over giving new chief ideologue reveals: 38 Education in Hong Kong powers to Mr Erdogan. Be Lexington, page 28 A test for Carrie Lam warned: he would use them Briefing without restraint, pages 17 Turkey’s referendum 17-20 On the razor’s edge Middle East and Africa 19 Remembering the coup 39 Shia militias Who runs Iraq? The Economist Brave “New Turkey” online 40 Persecuting Christians Daily analysis and opinion to Palm Sunday’s agony United States supplement the print edition, plus 40 Cannabis laws audio and video, and a daily chart 21 Trump’s foreign policy Puff, puff, prison Economist.com On a whim and a prayer 41 Iran E-mail: newsletters and 22 Modern warfare Taking aim at the president mobile edition Useful idiots, updated Economist.com/email 41 South Africa 22 Trust forests Highway, interrupted China’s boarding schools Print edition: available online by At loggerheads Many rural students now 42 Universities in Africa 7pm London time each Thursday attend boarding schools. They 24 St Louis More can be less Economist.com/print Millennials to the rescue are often worse off for it, page Audio edition: available online 26 Closing Rikers jail 37. Why bullying in Japanese to download each Friday Siren island Europe schools is especially brutal, Economist.com/audioedition page 35 27 Scandal in Alabama 43 France’s election And other parts A presidency up for grabs 28 Lexington 44 Russian meddling Trump v Trumpism Shadow puppets 45 Elections and GDP It’s not the economy Volume 423 Number 9036 The Americas 45 Russia and Sweden Published since September1843 29 Honduras The putative Mr Putilov to take part in "a severe contest between A double helping of intelligence, which presses forward, and Hernández? 46 Migrants in the an unworthy, timid ignorance obstructing Mediterranean our progress." 30 Canada Merciless sea Editorial offices in London and also: Freeing internal trade Atlanta, Beijing, Berlin, Brussels, Cairo, Chicago, 47 Charlemagne Lima, Mexico City, Moscow, Mumbai, Nairobi, 31 Chile President Le Pen New Delhi, New York, Paris, San Francisco, Transport troubles India’s identity scheme São Paulo, Seoul, Shanghai, Singapore, Tokyo, It is a marvel. But it should be Washington DC 31 Brazilian letters Bard of Belíndia voluntary: leader, page 12. How the system is helping to recast the relationship between the Indian state and its citizens, page 32

1 Contents continues overleaf 4 Contents The Economist April 15th 2017

Britain Science and technology 48 Immigration 66 Marine biology A portrait of Migrantland Mapping the mesopelagic 50 Bagehot 67 Icebreakers In search of a foreign Making waves policy 68 High-security locks Forging the unforgeable International 68 Gut microbes 51 Nuclear waste Bad medicine To the next ice age and 69 The science of shoelaces Sexism in Silicon Valley beyond A knotty problem The mesopelagic One of the Venture capitalists play an least-understood parts of the outsize role in technology’s sea is also one of the most sexism problem: leader, page Business Books and arts important. It damps down 11. Allegations that Google 53 Cars and mergers 70 Refugees global warming and may soon underpays women inflame a Wheels in motion Forgotten millions help feed humanity, page 66. controversial debate, page 54 54 Women in Silicon Valley 71 Thomas and Jane Carlyle The quickest way to break the Bits and bias A very Victorian marriage ice is by submarine, page 67 56 HNA Group 71 Paula Cocozza’s fiction A Buddhist tycoon The animal within Subscription service 56 Algorithmic retailing 72 Damien Hirst For our latest subscription offers, visit Automatic for the people From the heart of the sea Economist.com/offers For subscription service, please contact by 57 United Airlines 73 Johnson telephone, fax, web or mail at the details Air rage Gender bender provided below: North America 58 Cloud computing The Economist Subscription Center Telecomulonimbus P.O. Box 46978, St. Louis, MO 63146-6978 80 Economic and financial Telephone: +1 800 456 6086 59 Schumpeter indicators Facsimile: +1 866 856 8075 Crony capitalism Statistics on 42 economies, E-mail: [email protected] plus a closer look at Latin America & Mexico Nuclear waste Finland shows The Economist Subscription Center renewable energy how to dispose of it safely, Finance and economics P.O. Box 46979, St. Louis, MO 63146-6979 investment Telephone: +1 636 449 5702 with a project expected to 60 China’s banks Facsimile: +1 636 449 5703 E-mail: [email protected] span100,000 years, page 51 A sunny spell Obituary Subscription for 1 year (51 issues) 61 Buttonwood 82 Adrian Coles United States US $158.25 (plus tax) The gold market Canada CA $158.25 (plus tax) A prickly business 62 The European Free Trade Latin America US $289 (plus tax) Association L-EFTA behind Principal commercial offices: 62 Barclays 25 St James’s Street, London sw1a 1hg Staley stumbles Tel: +44 20 7830 7000 63 Rural finance in Myanmar Rue de l’Athénée 32 1206 Geneva, Switzerland A country mile Tel: +4122 566 2470 63 Mobile money in Africa 750 3rd Avenue, 5th Floor, New York, NY 10017 Transfer market Tel: +1212 5410500 China’s banks Faster growth 64 German depopulation 1301Cityplaza Four, Fading echoes 12 Taikoo Wan Road, Taikoo Shing, Hong Kong makes debt more manageable, Tel: +852 2585 3888 but fears linger, page 60 65 Free exchange Other commercial offices: The Fed’s balance-sheet Chicago, Dubai, Frankfurt, Los Angeles, Paris, San Francisco and Singapore

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margin in a poll that he about foreign spies. The Politics claimed was rigged. capital’s residents were urged to call a hotline should they Sabres are rattling have any leads. China and South Korea agreed that sanctions on North Korea The Communist Party chiefof should be stiffened ifit con- China’s southern province of ducted another nuclear test. Guangdong, Hu Chunhua, America dispatched what paid his first visit to the village Donald Trump described as an ofWukan, which in recent “armada” to nearby waters. years has grabbed nationwide North Korea said it was ready attention with its demonstra- to engage in “any mode ofwar tions by villagers in support of desired” by the United States. grassroots democracy. In 2016 In a presumed jihadist attack, a the authorities began cracking man stole a lorry in Stock- A military court in Pakistan down on the unrest. Mr Hu’s holm and drove it into the America’s secretary ofstate, sentenced an alleged Indian trip was a sign that the party front ofa department store, Rex Tillerson, went to Moscow spy to death. It claimed that now feels backin control. killing fourpeople. Police where he urged the Russians to Kulbhushan Jadhav, an Indian arrested an immigrant from drop their support forthe naval officer, had been foment- The nuclear option Uzbekistan who admitted to Assad regime in Syria. The ing terrorism in the state of Neil Gorsuch was sworn in as committing a terrorist act at a talks came after America fired Balochistan. a justice on the Supreme court appearance. a barrage ofcruise missiles at Court. The Senate confirmed the Syrian air-force base that Police and soldiers in the cen- his nomination after the Re- Keeping your opponents down had launched a chemical tral Philippines clashed with publican leadership changed The government ofVenezuela attackthat killed at least 85 suspected members ofAbu the rules. From now on a banned Henrique Capriles, a civilians. The swift American Sayyaf, an Islamic terrorist president’s appointments to state governor who belongs to response to Syria’s use of group which normally oper- the court will be confirmed by the opposition, from running chemical weapons was a ates in the south ofthe coun- a simple majority, rather than foroffice for15 years, triggering surprise, signalling a shift in try. Five terrorists, three sol- the three-fifths majority large demonstrations in Cara- the Trump administration’s diers and a policeman were required by a filibuster. cas and other cities in which hitherto stand-offish approach. killed in the fighting. two people died. Mr Capriles But a meeting ofG7 foreign Devin Nunes, the chairman of nearly defeated the president, ministers rejected new sanc- the House Intelligence Com- Nicolás Maduro, in an election tions against Russia. Recorded executions mittee, stepped aside from its in 2013. He won’t be able to run 2016 investigation into links be- in the next one, due in 2018. Two bomb attacks at Christian 0 500 1,000 tween the Trump campaign churches in Egypt on Palm China In the ‘000s and Russian officials. Mr A justice ofBrazil’s supreme Sunday killed at least 44 peo- Iran -42 Nunes had come under pres- court approved investigations ple. Islamic State claimed Saudi -3 sure forhis ties to Team Trump. ofeight members ofMichel responsibility. Egypt’s presi- Arabia Temer’spresidential cabinet dent declared a three-month Iraq +238 Revisionist history and more than 60 congress- state ofemergency. Pakistan -73 Marine Le Pen, the presidential men. The investigations are Egypt +100 candidate ofFrance’s National connected to the Petrobras % change America may approve the sale United from 2015 -29 Front, denied that France was scandal, in which contractors ofwarplanes to Nigeria to States responsible for a round-up of funnelled cash to politicians in assist it in its fight against Boko Source: Amnesty International 13,000 Jews who were sent to return forpadded contracts Haram, a jihadist group. That Judicial executions in 2016 Nazi concentration camps. She with the state-controlled firm. would reverse America’s dropped by more than a third argued that the collabora- previous policy ofwithhold- against 2015, according to tionist Vichy regime did not Labour unions in Argentina ing arms because ofconcerns Amnesty. It counted at least represent France. French Jew- held a general strike in protest about human-rights abuses by 1,032 people who were put to ish groups protested. Though against the government’s the Nigerian army. death, down from 1,634. But French presidents have said austerity policy. Mauricio China, reckoned to be by far similar things, Ms Le Pen leads Macri, who became president African migrants trying to the world’s most prolific execu- a party with a history ofout- in December 2015, is trying to reach Europe are being taken tioner, was excluded from the right Holocaust denial. undo the populist legacy of his captive and sold in “slave tally, because it doesn’t divulge predecessor, Cristina Fernán- markets” in Libya, the Interna- data on death sentences. And a Valeriya Gontareva resigned as dez de Kirchner. tional Organisation for Migra- government report suggested the governor ofUkraine’s tion has said, citing the testi- that Vietnam, which also central bank. Ms Gontareva America, Canada and Mexico mony ofvictims. keeps executions secret, has has been credited with stabilis- are to bid together to host the been carrying out farmore of ing the economy after the football World Cup in 2026. Hakainde Hichilema, the them than had been assumed. Russian annexation ofCrimea. Donald Trump, who wants to leader ofthe main opposition She also closed 80 banks for build a wall between America party in Zambia, was arrested Security officials in Beijing their links to money launder- and Mexico, “encouraged” the on charges oftreason. Mr announced that they would ing. But she had received death idea, said Sunil Gulati, presi- Hichilema lost a presidential give rewards ofup to 500,000 threats and said that the pres- dent ofthe United States’ election in 2016 by a narrow yuan ($72,400) forinformation sure was unbearable. soccer federation. 1 8 The world this week The Economist April 15th 2017

forthe first time, America’s mainstream rivals to sell envi- American employers added Business most valuable carmaker was ronmentally sound produce. just 98,000 jobs to the payroll not based in Detroit. in March, halfofwhat had The chiefexecutive of Whole Foods was not the only been expected. Barclays, Jes Staley, was company to face calls from an rapped forattempting to un- Consumer prices activist hedge fund to reform. Jaeger, a British fashion house cover the identity ofa whistle- Britain, % change on a year earlier BHP Billiton rejected a propos- and retailer, was put into bank- 4 blower who had written anon- CPI al from Elliott Advisers to ruptcy protection. Founded in ymous letters raising concerns 3 restructure and spin offits 1884, Jaeger flourished during about a senior executive at the 2 American oil business, which the 1960s, but sales have with- TARGET CPIH* British bank. Regulators are 1 Elliott wants the miner to do in ered as its customer base has investigating Mr Staley for + order to increase shareholder grown older. 0 breaking rules that protect – value. In a busy weekforElliott 1 whistle-blowers. The bank’s 2012 13 14 15 16 17 it also put pressure on Akzo- Police in Mumbai arrested the board has concluded that he *New measure Nobel to sackits chairman. alleged mastermind behind a Source: ONS including housing costs “honestly, but mistakenly” Elliott wants the Dutch chemi- scam in which call-centre believed his actions were Britain’s annual inflation rate cal company to enter talks operators posed as officials permissible, but issued Mr stood at a three-and-a-half with PPG, an American rival from America’s Internal Rev- Staley with a formal repri- year high of2.3% in March. The that is seeking to take it over. enue Service and duped 15,000 mand and said he would take weakness ofthe pound has Americans into paying unpaid a significant pay cut. put increasing pressure on the In an effortto placate investors taxes that they didn’t owe. price ofeveryday goods and after rejecting a takeover from Sagar Thakkar, AKA “Shaggy”, A report forthe board ofWells food; alcohol and clothing Kraft Heinz, Unilever set out had fled to Dubai, but returned Fargo into the account mis- were the biggest contributors plans to restructure, which to India fearing that he would selling scandal that engulfed to last month’s figure. A drop in includes rethinking its dual be handed over to America, the American banklast year transport costs, notably air legal structure and getting rid where he faces charges, and heavily criticised its former fares, offset other price rises. ofits spreads business. the ire ofswindled taxpayers. chiefexecutive, John Stumpf, and its formerhead ofretail Trouble in store A joint offerfrom Bain Capital The unfriendly skies banking. The report also Whole Foods Market, the and Cinven won the bidding A video clip ofa bloodied blamed the bank’s decentral- favoured supermarket ofthe process for Stada, a German passenger being forcibly re- ised management structure. organically minded, faced calls drugmaker. The deal is worth moved from a United Airlines fora shake-up in its manage- around €5.3bn ($5.7bn), mak- flight because it was over- Formal notice ment. Jana Partners, an activist ing it the biggest private-equity booked turned into a PR disas- The BankofEngland asked all hedge fund, revealed that it purchase ofa European com- ter. People used social media to firms with cross-border activ- had accumulated a 9% stake in pany in recent years. To secure complain that United should ities between Britain and the Whole Foods, alongside a slate their bid Bain and Cinven be beating the competition, EU to detail their contingency ofindividuals it may nominate agreed to protections ofStada’s not its customers. plans following Brexit. Hoping to sit on the company’s board. workers from forced redun- to mitigate the riskto financial Whole Foods was a pioneer of dancy and assured the status Other economic data and news stability, MarkCarney, the green retailing, inspiring many ofits production sites. can be found on pages 80-81 bank’s governor, highlighted the fact that financial services are Britain’s most important export, with a trade surplus of £60bn ($75bn).

Toshiba filed an unaudited version ofits twice-delayed quarterly accounts, after failing to get auditors to approve the books. The troubled Japanese conglomerate issued a warn- ing about its “ability to contin- ue as a going concern”. Its nuclear power-plant business, Westinghouse, recently filed forbankruptcy. One way it hopes to survive is by selling its semiconductor division, which Foxconn, a Taiwanese electronics contract manufac- turer, has reportedly offered to buy for$27bn.

Tesla briefly overtookGeneral Motors in terms ofmarket capitalisation, meaning that Leaders The Economist April 15th 2017 9 The slide into dictatorship

Recep Tayyip Erdogan is carrying out the harshest crackdown in decades. The West must not abandon Turkey URKEY matters not just for Turkey is especially ill-suited to winner-takes-all govern- Tits size, but also as a bell- ment. It is divided between secular, religious and nationalist wether of the political forces citizens, as well as Turks, Kurds, Alevis and a few remaining shaping the world. For centuries Greeks, Armenians and Jews. If the religious-conservative it was the seat of a great empire. near-majority try to shut out everyone else, just as they were Today, as a frontier state, it must once shut out, Turkey will never be stable. cope with the violence spewing Butthe mostimportantargumentagainstmajoritarian poli- out of war-ravaged Syria; it is a tics is Mr Erdogan himself. Since the failed coup, he has been test case of whether democracy can be reconciled with politi- governing under a state of emergency that demonstrates how cal Islam; and it must navigate between Western liberalism cruelly power can be abused. and the authoritarian nationalism epitomised by Russia. In re- The state is entitled to protect its citizens, especially in the cent years under Recep Tayyip Erdogan, Turkey has gone back- face of political violence. But Mr Erdogan has gone far beyond wards. This weekend it can begin to put that right. what is reasonable. Roughly 50,000 people have been arrest- On April 16th Turks will vote in a referendum over whether ed; 100,000 more have been sacked. Only a fraction of them to abandon their parliamentary system for an executive presi- were involved in the coup. Anyone MrErdogan sees as a threat dency. A Yes is likely, but far from certain. There is nothing is vulnerable: ordinary folk who went to a Gulenist school or wrong with a strong president, but Turkey’s new constitution saved with a Gulenist bank; academics, journalists and politi- goes too far. The country would end up with a 21st-century sul- cians who betray any sympathy for the Kurdish cause; any- tan minimally curbed by parliament (see pages 17-20). A Yes body, including children, who mocks the president on social would condemn Turkey to the elected dictatorship of Presi- media. Whatever the result on April 16th, Mr Erdogan will re- dent Erdogan. A No might just let Turks constrain him. main in charge, free to use—and abuse—hisemergencypowers. During the campaign he accused the Germans and Dutch Authority figure of “Nazi practices” for stopping his ministers from pitching for After Mr Erdogan came to power in 2003, he and his AK party expatriate votes. EU voices want to suspend accession talks— did a lot that was good. Encouraged by the IMF, he tamed infla- which, in any case, are moribund. Before long, the talk may tion and ushered in economic growth. Encouraged by the EU, even turn to sanctions. Some in the West will point to Turkey’s he tackled the cabal of military officers and bureaucrats in the experience to claim that Islam and democracy cannot coexist. “deep state”, strengthened civil liberties and talked peace with But to give up on that idea would be to give up on Turkey itself. the Kurds. He also spoke up for working-class religious conser- The fault is not so much with political Islam—many AK vatives, who had been locked out ofpower fordecades. members and voters are uneasy with the new constitution. It But today Turkey is beset by problems. In the shadow ofthe is with Mr Erdogan and his inner circle. Although he is a reli- Syrian civil war, jihadists and Kurdish militants are waging gious man, he is better seen as an old-fashioned authoritarian campaigns against the state. Last summer the army attempted than as a new-fangled Islamist. The distinction matters be- a coup—probably organised by supporters of an American- cause AK, or an Islamist party like it, is bound to feature in Tur- based cleric, Fethullah Gulen, who had penetrated the bu- key’s democracy. MrErdogan, however, will one day leave the reaucracy, judiciary and army in their tens of thousands. The stage, taking his authoritarian instincts with him. economy, once a strength, isgrowingslowly, plagued by crony- ism, poor management and a collapse in tourism. Hold him close Mr Erdogan argues that, to put this right, Turkey needs a Hence the outside world should not give up on Turkey, butbe new constitution that will generate political stability. He says patient. Partly, this is self-interest. As a NATO member and a re- that only a strong president can galvanise the state and see off gional power, Turkey is too important to cut adrift. It will play a its enemies. Naturally, he is talking about himself. vital part in any peace in Syria. Driving it into Russia’s arms The new constitution embodies the “illiberal democracy” makes no sense. Turkey has also been a conduit for refugees of nationalists such as Viktor Orban of Hungary and Vladimir into the EU as well as vital in controlling their inflow. The refu- Putin of Russia, to whom Mr Erdogan is increasingly com- gee situation is in flux: the EU will need to keep talking to Tur- pared. On this view, election winners take all, constraints are key about how to cope with the resulting instability. obstacles to stronggovernment and the ruling party has a right Engagement is also in Turkey’s interests. The EU is its biggest to subvert institutions, such as the judiciary and the press. trading partner. Contact with it bolsters the Western-leaning Yet this kind of stability is hollow. The most successful de- Turks who are likely to be Mr Erdogan’s most potent opposi- mocracies make a point of separating powers and slowing tion. NATO membership can moderate the next generation of governments down. The guiding idea of the American consti- officers in its armed forces. Although Turkey will not join the tution is to stop presidents from acting as if they were mon- EU for many years, if ever, a looser EU, with several classes of archs, by building in checks and balances. Even the British member or associate country, might one day find room for it. prime minister, untrammelled bya written constitution, hasto Turkey will remain pivotal after April 16th. If Mr Erdogan submit herself to the courts, a merciless press and a weekly loses, Turkey will be a difficult ally with a difficult future. But if grilling in Parliament, broadcast live. he wins, he will be able to govern as an elected dictator. 7 10 Leaders The Economist April 15th 2017

Syria What next?

Donald Trump’s missile strike on Syria was justified. But his strategy is confusedand confusing HERE are good reasons to continued use of other indiscriminate weapons against civil- Tcheer the missile attack or- ians, such as barrel bombs packed with scrap metal? Maybe dered by Donald Trump on a nothing. But in Italy Mr Tillerson suddenly suggested a new Syrian air base on April 6th. It policy of unlimited interventionism, saying: “We rededicate sent a message to Bashar al-As- ourselves to holding to account any and all who commit sad, Syria’s despot, that America crimes against the innocents anywhere in the world.” A few would not tolerate his use of hours later Sean Spicer, the president’s press secretary, said: “If chemical weapons. It also you gas a baby,ifyou put a barrel bomb into innocent people, I showed that Mr Trump, despite many indications to the con- think you will see a response from this president.” Does that trary,was prepared to act to uphold an international norm and mean that Mr Trump now favours overthrowing Mr Assad? to do so forhumanitarian reasons: he wasoutraged by a nerve- Surely not, for that would mean direct confrontation in the air gas attack that killed more than 80 people in the rebel enclave with Russia and on the ground with MrAssad’sotherally, Iran. ofIdlib. But one barrage doesn’t make a strategy. Instead of confusing rhetoric, the administration should be Before Mr Trump saw television pictures of poisoned chil- preparing for the day, fast approaching, when IS in Syria has dren, he had said that getting rid of Mr Assad was no longer a been thrown out ofits “capital” in Raqqa by American-backed goal of American policy,as it had been, at least notionally,un- Kurdish and Arab forces. When the jihadists no longer hold der Barack Obama. In the week before the chemical attack, significant territory,America should be prepared to lead inter- both the secretary of state, Rex Tillerson, and America’s UN national forces protecting mainly Sunni Arab and Kurdish ar- ambassador, Nikki Haley,had confirmed that shift, thus possi- eas in the east and north of the country from the Assad re- bly increasing Mr Assad’s sense of impunity. The priority for gime’s attempts to widen its area ofcontrol. The temporary de Mr Trumpwas the defeat ofIslamic State (IS). Wider questions facto partition of Syria offers the best hope of a political settle- about Syria’s future would come later. ment that ultimately leads to Mr Assad’s departure. Yet if Mr Inevitably,those questions are now back to the fore. When Trumpis thinking about such a plan, there is no sign ofit. military force is used, it is reasonable to ask: what next? Va- rious members of the administration have tried to explain the Of Putin and predictability thinking behind the missile strike (see page 21). Mr Tillerson, After the missile strike, any lingering notion that Mr Trump on his way to a G7 foreign ministers’ meeting in Italy, castigat- mightstrike a grand bargain with Russia overSyria is dead. The ed the Russians for “incompetence” in failing to restrain their end of his bromance with Vladimir Putin is welcome—Ameri- repulsive ally, but said that nothing else had changed. Ms Ha- ca’s interests and Russia’s are so at odds that it was always ley contradicted him, arguing that there could be no peace doomed to fail. However, it would be nice to think that Mr with Mr Assad still in power. H.R. McMaster, Mr Trump’s na- Trump was pursuing a coherent strategy abroad, rather than tional security adviser, tried splitting the difference. Mr Trump reacting to what he had just seen on Fox News. Unpredictabili- himselfwas uncharacteristically reticent. Confusion reigns. ty has its uses in foreign policy,but it is worrying that even Mr What might Mr Trump now do about the Syrian regime’s Trump’sclosest aides have no idea what he will do next. 7

Rural education in China Separate and unequal

Chinese schools discriminate against 60% ofthe population. This is both cruel and counterproductive AST year some images went children will risk their lives for it, and a callous lack of govern- Lviral on the internetin China. ment attention to the needs ofrural students. They showed children descend- In manyways, education in China isimproving. Since 2000 ing an 800-metre (2,600-foot) the annual tally of students graduating from university has in- rock face on rickety ladders creased nearlyeightfold, to more than 7.5m. Butmanyrural stu- made of vines, wood and rusty dents are neglected by China’s school system, and they are not metal. Their destination: school. the only ones. So, too, are the children of migrants who have The photographer was told by a moved to the cities from the countryside and poor students local official that “seven or eight” people had died after losing who want to go to senior high school. their grip. Yet the children did this regularly—there is no school This is not only unfair; it is also counterproductive. China at the top of the mountain in Sichuan province where they faces a demographic crunch: its workforce is shrinking and it live. The photographs conveyed two striking aspects of life in can no longer depend on cheap, low-skilled migrant labour to the Chinese countryside: a hunger foreducation so strong that poweritsgrowth. Itsyoung—especiallythose with rural roots—1 The Economist April 15th 2017 Leaders 11

2 need to become more skilled. That calls forbetter education. see no point in doling it out in the countryside. How can you The government has not been completely blind to the need boost growth, they wonder, by spending money on villagers to ensure that rural people have enough schooling to work in who will eventually move away? factories, but it has shown little sense of urgency. The school- Itisno betterforthe migrantsonce theyare in the cities. Chi- children from Sichuan are a case in point. So perilous wastheir na’shousehold-registration system, known ashukou, treatsru- journey to school that officials arranged forthem to board, like ral migrants as second-class citizens. Their children are often tens of millions of children in rural China. They travel back barred from state-funded urban schools. They must pay to home only every few weeks. send them to ramshackle private ones instead, which are often That may sound like progress. Since the population of worse than rural state schools. Even there, children’s educa- young people in the countryside is falling so smaller schools tion is frequently disrupted: officials have forced many such are closing. Better to board than to trek for miles every day to places to close, citing safety and other concerns. one that is still open. But conditions at these boarding schools are often appalling (see page 37). Many children do not get Who’s blocking the schoolhouse door? enough to eat, which affects their health and their ability to People with rural hukou make up nearly 60% of the popula- learn. So poor is their nutrition that they are often shorter than tion. So it is vital that the system is scrapped. Everyone in Chi- their counterparts at day schools. na deserves the same access to public education, health care And it is not just the boarders who suffer. In all kinds ofedu- and other services. The central government must also do more cation, rural children have less chance ofdoing well than their to ensure that rural schools have enough money to teach and urban counterparts. Less than 10% of them go to senior high- feed their pupils—basic education is too important to be left to school, compared with 70% of their peers in cities. That is be- ill-motivated local authorities. And it must give more financial cause the government stacks the system against them. support to the rural poor in order to help their children gradu- Everyone in China hasto attend school fornine years—until ate from high school and enter university. the end of junior high school. But it was not until 2007 that all People from the countryside are the unsung heroes of Chi- rural children could do so without paying. Like city dwellers, na’s economic rise. The migration of more than 200m of them they still have to pay for senior high school. But their families into cities, where their labour is more productive than it is in tend to be much poorer, so few can afford it. And rural schools the fields, has been the rocket fuel ofthe country’s spectacular are far more rudimentary. Local governments are responsible growth. In China, as elsewhere, education is what will make for running them. If officials have tax revenue to spare, they society fairer, and ultimately wealthier. 7

Startups Silicon pally

Venture capitalists play an outsize role in technology’s sexism problem OOBER” is the nickname ley. Plenty of people are worried about the small number of “B Travis Kalanick, the boss girls taking science, technology, engineering and mathematics of Uber, used to describe the ef- courses. Only18% ofbachelor’s degrees in computer science in fect that the ride-hailing startup America were awarded to women in 2013, down from 37% in had on his attractiveness to the 1985. Pay gaps are pervasive, too. opposite sex. Mr Kalanick’s But that shouldn’t let the valley off the hook. It prides itself wisecrack seems to have been on solving difficult problems and on being a meritocracy. Be- emblematic of a deeply macho ing as bad as everywhere else in its treatment of women falls culture. An investigation is under way into allegations from a disappointingly short. More to the point, the valley suffers former employee that Uber refuses to promote capable wom- from a distinctive form ofsexism which is in its power to fix. en or to take complaints about harassment seriously. The re- Venture capitalists are the technology industry’s demigods. sults are due to be released in the coming weeks. Through their cheques, connections and advice, they deter- Uber is not the only technology star in the spotlight for its mine which startups succeed and which languish. They are treatment of women. Google has been accused by America’s bright, clannish and almost exclusively male. Only around 6% Department of Labour of paying female employees signifi- of partners at venture-capital firms are women, down from cantly less than male ones (see page 54). Google flatly denies 10% in 1999. Less than 40% of the top 100 venture-capital firms the charge. Butthattechnologyin general, and Silicon Valleyin have a female partner charged with investing. Many of the particular, has a gender problem is not in doubt. A survey of most highly regarded funds, including Benchmark and An- 210 women in the valley found that 60% had experienced un- dreessen Horowitz, have none. wanted sexual advances and that two-thirds felt excluded For a set of people who finance disruptive firms, venture from important social and networking opportunities. Pay- capitalists are surprisingly averse to disruptingtheir own tried- Scale, a research firm, has found that only 21% of American and-tested way of doing things. They sit in small groups, meet tech executives are female (the figure in other industries is entrepreneurs and repeat a single formula forinvesting when- 36%). Women in tech are paid lessthan men, even aftercontrol- ever possible. John Doerr, who backed companies like Google, ling forexperience, education and responsibilities. summed up his philosophy thus: “Invest in white male nerds Not all these problems can be laid at the door ofSilicon Val- who’ve dropped out ofHarvard or Stanford.” 1 12 Leaders The Economist April 15th 2017

2 Defenders ofthe valley have two retorts. One is that throw- gument, any outsider, particularly one lacking a Y chromo- ing stones at the most successful business cluster on Earth some, is liable to upset the club’s precious dynamic. Venture makes no sense. Market forces ensure that the best ideas win capital is indeed a strange mix of capital and contacts, and pe- funding, irrespective of gender. The data suggest a different culiarlyhard to industrialise asa result. Butasa justification for story. Only 7% of the founders of tech startups in America that sexism, clubbiness is an argument that is as old as it is thin. raised $20m or more are women, according to recent research by Bloomberg. Yet nobody would argue that men make the Y combinator, X chromosomes best founders nine times out often. On average, firms founded Plentyofstudiesshowthatdiverse teamsare more productive. by women obtain less funding ($77m) than those founded by Hiring more women in venture capital seems to increase the men ($100m). The VC industry has been successful enough to odds of finding and funding those elusive female entrepre- ward offthe pressure to change. That does not make it perfect. neurs. Venture capitalists play a vital role in shaping the cul- Asecond defence isthatVCsrelyon tight-knitrelationships, ture of startups: investors who value diversity are likelier to in which trust is essential. Call this the “dinner with Mike guide them away from the reputational and legal risks that be- Pence” gambit, afterthe American vice-president’sreported re- set offices full of“brogrammers”. Silicon Valley is a remarkable fusal to eatalone with a woman otherthan hiswife. On thisar- place. But it is time forthe boy’s club to grow up. 7

Identity and privacy Per Aadhaar ad astra?

India’s biometric identity scheme is a marvel. But it should be voluntary HAT would Gandhi have judges have yet to rule on a score of petitions aimed at stop- Aadhaar Wmade of Aadhaar, the am- ping Aadhaar, but in the past two years the court has issued Cumulative registrations, bn bitious scheme to provide each several statements asserting that the identity scheme should INDIA’S POPULATION 2016 1.3bn 1.2 of India’s 1.3bn residents with a be voluntary—or at any rate that it should remain so until the 0.8 unique, biometrically verifiable court decides otherwise. Until it issues a binding opinion, the 0.4 identification? There is much danger lingers that a pile of important government schemes 0 that might have impressed the could in future find themselves dangling in legal limbo. 2010 11 12 13 14 15 16 17 great pacifist. Before Aadhaar’s In theory, the lawon Aadhaarpassed lastyearbyMr Modi’s launch in 2010, many Indians had no proof of identity that government includes stringent protections against the sharing could be recognised across the sprawling, multilingual coun- ofinformation; its rules allowing exceptions on grounds ofna- try; now 99% ofadults do. Acheap, simple and accurate way to tional security, although vaguely worded, appear well intend- know who is who, it helps the state channel services, such as ed. Sweden has required all citizens to have a national ID num- subsidies, to those who really need them, thwarting corrup- ber since 1947—the year of India’s birth—with little trouble. tion and saving billions. Linked to bank accounts and mobile Most Swedes consider the scheme, which is linked to tax, phones, the unique 12-digit numbers can be used for swift, school, medical and other records, an immense convenience. easy transfers ofmoney. In time, they should help hundreds of millions ofIndians enter the formal, modern economy. Stockholm on the Ganges Yet Gandhi might also have been alarmed. After all, he cut But India is not a tidy Nordic kingdom. MrModi’s government, his political teeth resisting a scheme to impose identity passes with its strident nationalism and occasional recklessness— on unwillingIndians. Thatwasovera centuryago, in South Af- such as last year’s abrupt voiding of most of the paper curren- rica. Aadhaarcould scarcely be furtherremoved in intent from cy in circulation—does not always inspire confidence that it colonial racism: itisdesigned to include and unite, notexclude. will respect citizens’ rights and legal niceties. By sneaking the Still, many Indians worry that a programme billed as volun- linkage between Aadhaar and tax into a budget bill, it raises tary is increasingly, with little public debate, being made man- concerns about intent: will the government stalk tax evaders, datory. This puts the whole project, and all its benefits, at risk or perhaps enemies of the state, using ostensibly “fire-walled” of being struck down by the courts. And the government’s Aadhaar data? Many Indians will remember that, following high-handed dismissal of concerns about its methods is stok- sectarian riots in the past, ruling parties were accused of using ing fears that it might misuse the data it has collected. voter rolls to target victims. In recent months the government of Narendra Modi, the Mr Modi, who before taking office dismissed Aadhaar as a prime minister, has made access to a dozen government pro- “political gimmick”, has been right to seize on its potential to grammes contingent on possession of an Aadhaar card (see transform India. It can bring more efficiency to government, page 32). In March it sneakily inserted into a fast-tracked bud- convenience to citizens and savings to businesses that need to get bill a rule that requires taxpayers to link their tax number identify their customers. But for Aadhaar to fulfil its potential, with Aadhaar. There is talk of adding such things as school Indians must trust that it will not be misused. Adopting coer- lunches and the purchase of airline tickets to this list. In an- cive regulations, ignoring the Supreme Court’s qualms and swer to a question in parliament about whether the state was, dismissing critics peremptorily will achieve the opposite. As in effect, forcing citizens into the Aadhaar scheme, the reply for the Supreme Court, it should stop dithering and make its from India’s minister of finance was blunt: “Yes, we are.” views clear. Gandhi, a lawyer as well as an activist, would cer- This would appear to contradict India’s Supreme Court. Its tainly have approved ofthat. 7 16 Letters The Economist April 15th 2017

Warin Yemen testosterone determine behav- schools is visible at all levels of trayals oftheir country have iour. In fact, my bookwastes the education system.” always seemed to me so dis- Regarding your article on no space challenging such KIRSTY WILLIAMS, AM graceful that ifI were Polish, I Yemen(“Beggar thy neigh- extreme views. It instead Education secretary in the Welsh would spit on every passing bour”, March 25th), I want to questions common, funda- government British shadow, whether I had make it clear that Saudi Arabia mental assumptions about the Cardiff suffered under the Nazis or the is leading an international relations between sex, envi- Russians—the British in their coalition, with the full backing ronment, brain and behaviour. The law in Singapore time having abandoned the ofthe UN Security Council, to It explains, for example, that an poor Poles to both.” restore the country’s legitimate experience can eliminate or Youimply that Amos Yeewas ANDRZEJ DERKOWSKI government. Saudi Arabia reverse a sex difference in the prosecuted in Singapore for Oakville, Canada does not want to be at war in brain, that an environmental political dissent, and not for Yemen.But the alternative is to change can eliminate or making vicious statements Deep thought turn our backand allow it to reverse the expression ofan about Christians and Muslims become a lawless state in the adaptive behaviour, and that (“No place forthe crass”, April hands ofrebel groups and gender constructions 1st). That is not true. In 2015Mr terrorists. modulate testosterone. Yee insulted Christians, saying Weare doing everything in CORDELIA FINE Jesus Christ was “power hun- our power to mitigate the Professor of history and gry and malicious” and “full of impact ofthe conflict on Yeme- philosophy of science bull”. In 2016 he said: “The ni civilians. Wehave provided University of Melbourne Islamics seem to have lots of more than $560m worth of sand in their vaginas…But humanitarian assistance, He has his supporters don’t mind them, they do after working with the UN and all follow a sky wizard and a international NGOs to ensure You said that Yogi Adityanath, paedophile prophet. What in aid is distributed to all parts of the new chiefminister ofUttar the world is a ‘moderate Mus- the country.The coalition is Pradesh, has championed lim’? A fucking hypocrite, Plans by Elon Muskto integrate providing inspection-free “reactionary Hindu causes” that’s what!” computers with our brains access for aid ships from (“Agent orange”, March 25th). If The Economist may agree brought to mind “The Hitch- trusted organisations to you mean issues such as the with the American judge that hiker’s Guide to the Galaxy” Yemeniports. Since April 2015 illegal influx ofBangladeshis, such bigotry is free speech. But (“We can remember it foryou Yemenhas received 4.9m jihadi terrorism and the collu- Singapore does not counte- wholesale”, April 1st). Upon tonnes offood aid and 37,200 sion ofextremists with poli- nance hate speech, because we hearing that his brain might be tonnes ofmedical equipment. ticians, then these are all legiti- have learnt from bitter experi- replaced with an electronic Weare as concerned as anyone mate concerns for Indians. ence how fragile our racial and one, Arthur Dent is insulted by that the port ofHodeidah is a KALPIT MANKIKAR religious harmony is. Several the suggestion that it only bottleneckforhumanitarian Mumbai people have been prosecuted needed basic programming supplies. Wehave called for for engaging in such hate and that no one would know Hodeidah to be placed under School report speech. the difference. Arthur protests: UN supervision, which would Contrary to the suggestion “I’d know the difference!” To facilitate humanitarian flows “Down in the valleys” (March in your article, Singapore’s which his interlocutor re- and end the rebels’ use ofthe 25th) gave a one-sided view of laws on contempt do not sponds, “No, you wouldn’t, port forweapon smuggling the Welsh government’s edu- prevent faircriticisms ofcourt you’d be programmed not to.” and people trafficking. cation reforms. I was rather judgments, as the article itself SCOTT WRIGHT MAJOR GENERAL AHMAD ASIRI surprised that you chose to demonstrates. Singapore’s Wappingers Falls, New York Coalition spokesman quote a report from the OECD court judgments, including on Riyadh, Saudi Arabia from three years ago, which Mr Yee’scase, are reasoned Our foolish tax on efficiency led you to describe a “less and published, and can stand An author responds sunny” outlookforeducation. scrutiny by anyone, including After looking forpapers on Youoverlooked an OECD The Economist. “facile externalities” in the Parents who, after reading report published in February FOO CHI HSIA Scandinavian Journal of Eco- your review ofmy book“Tes- this year, which I commis- High Commissioner for nomics, I got suspicious of the tosterone Rex”, might “cockan sioned, that reviews progress Singapore inclusion ofa middle initial in eyebrow” at my supposed in some ofthe areas you high- London the author’s name, Danilov P. disregard of“studies ofactual lighted. That report is consid- Rossi, in “Friction lovers” sex differences”, can uncock erably more positive and Poles’ opinion (April 1st). Youseldom do that. with confidence (“Gender replaces its previous warning I solved the anagram. But am I fluidity”, April 1st). My book of“reform fatigue” with a The notion that the ruling Law still a poisson d’avril? refers to over 70 such studies commendation that the OECD and Justice party in Poland is JOSE TUDON ofhumans, including fouron had “witnessed progress in paranoid is shared by many Chicago 7 children’s toy preferences. several policy areas and a Poles all over the world (“Pyro- Youalso accused me of shift… away from a piecemeal maniac politics”, March 18th). attacking some straw men: that and short-term policy orienta- But maybe that attitude is not Letters are welcome and should be addressed to the Editor at the brains ofmales and fe- tion towards one that is guided entirely unjustified. As John le The Economist, 25 St James’s Street, males are categorically differ- by a long-term vision.” They Carré wrote in “The Secret London sw1A 1hg ent; that individuals are unin- concluded that “the commit- Pilgrim”: “I never understood E-mail: [email protected] fluenced by the environment; ment to improving the teach- why so many Poles have a soft More letters are available at: Economist.com/letters and that absolute levels of ing and learning in Wales’s spot forus. Our repeated be- Briefing Turkey’s referendum The Economist April 15th 2017 17

On the razor’s edge Also in this section 19 The shock of the coup

ISTANBUL Voters are split overgiving new powers to Recep Tayyip Erdogan. Be warned: he would use them without restraint T IS hardly a faircontest. In the campaign 2003—first as a reforming prime minister, ters and terrorists; it has sacked 100,000 Ifor Turkey’s constitutional referendum, but lately as a strongman president who more. Abetted by a captive, frightened ju- due on April 16th, the Yes side has har- has come to treat all opposition as a form diciary, the police are rounding up anyone nessed the power of the state to crush the oftreason. A No would be a grave blow for Mr Erdogan designates as an enemy. Noes. Selahattin Demirtas, co-leader of a Mr Erdogan. A Yeswould root his power in He has a healthy lead in the polls (see pro-Kurdish party, was poised to become the very foundations ofthe state. chart 1 on next page). Yet in the privacy of one of the main No voices but has ended The fate of Turkey is at stake, too. Ever the pollingbooth, voters might deny Mr Er- up behind bars on trumped-up terror char- since Mr Erdogan took power, the country dogan his victory. Outside the ferry termi- ges. He faces142 years in prison. A Kurdish- has been a test of what happens when de- nal in Uskudar on the Asian shore of the language song calling for No has been mocracy is put together with political Is- Bosporus, across the water from one of the banned. A study of 168.5 hours of cam- lam. Turkey was also an example ofthe be- sultans’ palaces, the AK party, co-founded paign coverage on 17 national television nign influence of the European Union, and led by Mr Erdogan until he became channels at the start of March showed that which encouraged open markets and civil president, has more workers handing out Yes supporters got 90% of the airtime. The rights. Some years ago Mr Erdogan began leaflets than there are punters willing to route from Sabiha Gokcen airport, outside to reject all that for nationalism and auto- take them. The red and white tent of its Istanbul, has more than a dozen building- cracy. Lately he has courted Russia and the nationalist allies blares out the peppery sized banners with an image of the presi- Gulf monarchies. He would use a Yes as a strains of Turkish bagpipes to Instanbulus dent, Recep Tayyip Erdogan, or his prime popular endorsement ofthat illiberal path. who turn their shoulders and walk by. The ministerextollinga Yes vote. Giant No ban- Since Mr Erdogan has all the advan- country is uneasy, rocked by the failed ners are nowhere to be seen. tages, anything but a resounding victory coup and murderous bombing campaigns Stacked as it is, the ballot could not be ought to count as a defeat. At least 40% of of jihadists and Kurdish separatists. Cor- more consequential. Voters must decide the country—religious and conservative— ruption, state interference and a collapse in whether to abandon a parliamentary sys- will support him come what may. He tourism are weighing on the economy. tem in favour of an executive presidency chose the timing of the vote in the wake of Early in MrErdogan’s rule, Turkey made that would give the head of state complete a failed coup last summer, when most of great progress towards democracy. But power over the budget and the executive, Turkey had united behind him. He has at- Turks who can remember the detentions and huge sway over the judiciary. MPs tacked the EU, Turkey’s biggest market, in and torture after the military coup in 1980 would have minimal powers ofscrutiny. an attempt to stir up nationalist support. say that today’s are a throwback to those The result will help determine the fate The authorities have nearly 50,000 people dark times. Workers inform on their col- of Mr Erdogan, who has governed since in detention, whom it calls coup-suppor- leagues, students on their professors, hus-1 18 Briefing Turkey’s referendum The Economist April 15th 2017

2 bands on their wives. Some within AK—in- cent years turning them into his fiefs. the peace process. When the PKK blamed cluding, it is said, dissident party The chances are that the president will him for a deadly IS bombing against pro- leaders—think that, this time, Mr Erdogan dominate parliament politically, too. Be- Kurdish activists and killed two Turkish has gone too far. cause executive and legislative elections policemen, Mr Erdogan launched an offen- The district of Basaksehir, about 20km will coincide, unlike those in France and sive against its bases in northern Iraq, ac- from the heart of Istanbul, helps explain America, where they are not always companied by mass arrests. A spiral of PKK the enduring popularity of Mr Erdogan aligned, the president and the parliamen- bombings against Turkish security forces and his party. A few decades ago such a tary majority are likely to come from the and ruthless army reprisals rocked the place would have been a shanty town, put same party. Turkey operates a list system, south-east. Under pressure in Syria, IS con- up by peasants who left the Anatolian in which party leaders control who gets a tinued unleashing its own suicide-bom- countryside in their millions in search of seat. The new constitution allows Mr Erdo- bers against Turkey. work. Mr Erdogan and AK gave a voice to gan to retain control ofhisparty, giving him such “black” Turks, who suffered under the power to handpick parliamentary candi- Guns and steel arrogant, secular “white” Turkish elite. To- dates. Those who challenge him would After the terrorism came the putsch. Most day, it is clean and well-appointed. Tidy pay a high price. Turks thought they had consigned military apartment blocks tower alongside immac- The reform has met strong criticism coups to history. But on the night of July ulate roads. Shops and cafés testify to a abroad. The Venice Commission, a panel 15th lastyearrebel troops stationed tanks at new affluence. To the visitor’s eye Basakse- of constitutional experts who advise the Istanbul’s main airport, occupied Taksim hir lacks character, perhaps, but to devout, Council of Europe, calls it “a dangerous Square and took up positions on the two working-class Turks it stands for dignity, step backwards”, saying that the new con- bridges crossing the Bosporus. They put self-respect and prosperity. stitution “lacks the necessary checks and their top commanders under arrest. In the It is easy to forget how abysmal the balances to safeguard against becoming an capital, Ankara, their jets bombed the par- economy was in 2003 when Mr Erdogan authoritarian” regime. Human Rights liament building and the grounds of the came to power. The crisis of 2000-01, the Watch, an NGO, says that it poses “a huge presidential palace. third in a decade, caused collapses in the threat to human rights, the rule of law and But within hours the coup collapsed. A currency and GDP and led to the interven- the country’s democratic future”. squad attacked the hotel in Marmaris tion of the IMF. Under the stewardship of Within Turkey, however, voters’ percep- where Mr Erdogan had been on holiday— the fund and with encouragement from tions are coloured by the terror attacks and but he was already gone. In a remarkable the EU, Mr Erdogan’s government brought the attempted coup. The outside world has display of people power, Turks poured down inflation, which had briefly exceed- failed to grasp just how besieged Turks feel. onto the streets to defend civilian rule. ed 100% in the early1990s, and rescued the And that has strengthened Mr Erdogan. Mr Erdogan has seized on the violence banks. Foreign investment soared. The First came the spiral of terror and retri- to whip up a frenzy of paranoia and na- country became Europe’s workshop. bution. Early on, Mr Erdogan had been tionalism. He has memorialised the bun- Thanksto theirnewfound stability, Turkish ready to make peace with the Kurds. Per- gled coup, in which almost 250 people entrepreneurs grew rich. haps because his people had also suffered died, as Turkey’s second war of indepen- under Turkey’s secular governments, or dence—setting himself up as the equal of Change the system because he stood to win votes among con- the republic’s founder, Mustafa Kemal Ata- Mr Erdogan wants voters to believe that servative Kurds, he offered new rights and turk(see box on next page). Sunday’s referendum is all about recover- a promise to resolve a 30-year war be- Behind the crude myth-making lies the ing this stability. Sitting in the AK office in tween security forces and the PKK, a Kurd- paranoia—which has at least one foot in re- Basaksehir, Mustafa Sentop, who helped ish militia. Later he saw them as potential ality. The police, judiciary, intelligence ser- draft the new constitution, argues that a allies over the constitution. With their sup- vices and, it turned out, army had all been man of Mr Erdogan’s calibre has accom- port, he would win his executive presiden- penetrated by unknown thousands of the plished things in power despite the sys- cy and they would gain autonomy in the followers of Fetullah Gulen, a cleric living tem, not because ofit. In its 94 years as a re- south-east, where they are in the majority. in self-imposed exile in America. public, Turkey has had 65 governments. Butpeace talkswith the PKK fell apart in The Gulenist movement is part self- Shadowy oligarchies have infiltrated the 2015. Kurdish success fighting with the help group, part secret society. Its 75-year- army and the bureaucracy in order to Americans against Islamic State (IS) in Syr- old head preaches a tolerant Sufi Islam. For usurp elected politicians. There is a history ia raised their hopes of a homeland in Tur- many, affiliation was the route to a good ofterrorism, plotsand coups. “We will stop key. After Mr Demirtas told him in early education and upward mobility. In the old that,” Mr Sentop vows. 2015 that he would never get his new con- days, when to be devout was dangerous, it Formally, the new constitution abolish- stitution, a furious Mr Erdogan disowned offered protection. But Gulenists contin- es the prime minister’s office and divides ued to operate in the shadows through the power between parliament, which legis- 2000s, “like a Dan Brown novel”, says a lates, and the president, who acts. In prac- Power from the people 1 journalist who, like most people in Turkey tice, it enthrones the president as a term- Turkey, constitutional referendum, % polled these days, will speak to the foreign press limited sultan and parliament as his court. only on condition of anonymity, even Mr Sentop points out that France and 60 though he is a supporter ofAK. the United States have powerful presi- Yes 50 The Gulenists were organised in secret stand-alone cells, as if they were revolu- dents, too. But under the new constitution, 40 unlike the Assemblée Nationale and Con- No tionaries. They helped each other gain in- gress, the Turkish parliament will not con- 30 fluence by rigging state exams and fixing trol the details of spending or have a say 20 promotions. In the government’s telling, over presidential appointments. Neither those who infiltrated the army lay low for 10 will it be able to subject the cabinet to Undecided years, pretendingto be secular, by drinking questions, except in writing. Besides, in 0 alcohol and letting their wives uncover France and America the independence of January February March April their hair. 2017 the media and the courts is well-estab- If anyone should have grasped the Source: National polls lished. In Turkey Mr Erdogan has spent re- threat, it was Mr Erdogan. When he first 1 The Economist April 15th 2017 Briefing Turkey’s referendum 19

2 came to power the Gulenists provided the them. The details are murky, but the first ratists and terrorists without, Mr Erdogan brains, he and his party the votes. Together blow may have been a Gulenist attempt to had a duty to strike back, say AK politi- they tookon Turkey’s “deep state”. He used arrest Mr Erdogan’s intelligence chief in cians. “Nowhere in the world issupporting Gulenist prosecutors and judges to purge 2012. The two men became locked in a fight terrorism acceptable,” says Ravza Kavacki the army ofsecularofficers—sometimes on for survival after someone released taped Kan, an MP forIstanbul. thin or forged evidence. He stood by as the conversations implicating Mr Erdogan and And so, in the name of democracy and Gulenists destroyed their enemies in show his family in corruption—which he strenu- the rule of law, Mr Erdogan unleashed a trials or through smear campaigns in their ously denies. Having compiled a roster of whirlwind. In the south-east, between July newspapers and television stations. suspected Gulenists in the army, Mr Erdo- 2015 and the end of last year, several thou- Inevitably Mr Erdogan and Mr Gulen gan was about to swoop. The plotters, sand people lost their lives—800 of them turned on each other, using the methods joined by some secularists, struckfirst. government forces. The fighting displaced that the deep state had once used against Faced with an enemy within and sepa- hundreds of thousands. Entire districts were flattened by artillery and bulldozers because, the government says, they were Remembering the coup booby-trapped. Politically, the crackdown paid off. Denied a majority in parliament Brave “New Turkey” in an election in June 2015, AK regained it ISTANBUL five months later. The government has since expanded the crackdown, jailing The legacy ofa failedattempt to topple the government thousands ofKurdish activists, including 13 FTER months in hospital and several MPs, and kicking out the mayors ofover 80 Aoperations, Sabri Unal is beginning towns, on the ground that they have ties to to regain the use ofhis right arm. On July the PKK. 15thlast year, alarmed by reports of an Since the coup the police have arrested armycoup,MrUnalwasinjuredina orsacked 168 generals—about halfthe total, forlorn attempt to blocka pair oftanks among them many close to NATO—some roaring down an Istanbul avenue. When for being too slow to come out in support the first tankshowed no signs ofstop- ofMrErdogan. The judiciaryhaslost 4,000 ping, he dived between its tracks, avoid- members. About 6,300 academics are out ing death by a split second. When anoth- of a job or in jail, several hundred for sign- er approached moments later, he threw ing an open letter objecting to the counter- himselfto the ground once again. That insurgency campaign in the south-east. tank’s tracks mangled his arm. Asked Roughly 160 media outlets have closed, what inspired him to take to the streets manyofthem backersofMrGulen. Within that night Mr Unal, a web programmer, six months of the coup, police had de- offers a straightforward answer. “As long tained some 4,000 social-media users. as I can remember,” he says, “I have been And so it goes on. against coups everywhere.” The shockofthe coup, the bloodiest in On the wrong side of the state Turkey’s history,and the courage of Many people caught up in the mania did thousands ofpeople like Mr Unal who not deserve it. Much of the time, Mr Erdo- risked their lives to oppose it, has been gan has acted under sweeping emergency overshadowed in the world beyond They stopped the tanks rolling powers. These are so broadly drafted that Turkey’s borders by the mass purges, almost anyone can be detained. The au- detentions and reports oftorture that gle with banners calling fora Yesvote in thorities are quick to see guilt by associa- followed it. In Turkey,it has been differ- the constitutional referendum. At the tion. Critics say that gives a foretaste of ent. Tolegitimise President Recep Tayyip start ofthe school year, children across what a Yesvote would enable Mr Erdogan Erdogan’s draconian policies and to the country were made to watch a video to do as president. boost his attempt to bolster his powers that moved seamlessly between footage Emine was a primary-school teacher through a new constitution, the memory ofthe coup and images ofOttoman who had savings with a Gulenist bankand and trauma ofthe coup have been nour- troops squaring offagainst Allied forces belonged to a trade union with Gulenist ished, politicised and consecrated. during the first world war. The education connections. She was sacked by decree. In Mr Erdogan’s hands, the coup has ministry has added a class on the events Her neighbours are frightened of being turned into the cornerstone ofwhat the ofJuly15th2016 to the curriculum. seen with her. Her husband has been president and his supporters referto as Mr Erdogan compares the coup to branded a traitor. Her children are being the “New Turkey”: a more religious, more Turkey’s war ofindependence. His aides bullied and in therapy. She is taking anti- anti-Western and less predictable in- reach foreven more creative historical depressants. For support she meets other carnation ofthe republic founded by parallels. July15thwas a “revolution” that women who found themselves on the Kemal Ataturkover nine decades ago. will shape Turkey “just as much as1789 wrong side of the line—a statistician who Universities, parks, stadiums, swimming influenced France and just as the Bolshe- tweeted her doubts about the coup, some- pools and other landmarks across the vikrevolution influenced Russia”, says one who went to a Gulenist school. Emine country,including the Bosporus bridge Mehmet Ucum, a presidential adviser. believes she has no future. “We have no where soldiers fired on unarmed prot- The coup exposed and brought down the power or jobs,” she says. “It is civil death.” esters, have been renamed after the coup “antidemocratic structure” within the AK loyalists talk of “crypto-Gulenists” and its victims. bureaucracy,Mr Ucum claims. The new and PKK terrorists hiding in plain sight. On the streets ofmost cities, bill- constitution will help fill the vacuum, he “There is no difference,” Mr Erdogan said boards proclaiming that Turks will never insists. “Wehave to rebuild the state from last year, “between a terrorist with a gun succumb to putschists or terrorists min- the ground up.” and a bomb in his hand and those who use their work and pen to support terror.” MP, 1 20 Briefing Turkey’s referendum The Economist April 15th 2017

and second-raters. Economic growth was Turkey’s tribulations 2 2.9% lastyear, halfitsrate in the early 2000s GDP GDP, % change on a year earlier Turkish lira per $, inverted scale (see chart 2). per head is stagnant. Withoutthe anchorsofthe IMF and the EU, 10.0 1.0 Turkeyhasgraduallyshifted awayfrom the 7.5 1.5 economic orthodoxy that worked so well in the past. Inflation is over11%, the highest 5.0 2.0 since 2008. 2.5 2.5 Rather than returning to economic re- + form, the government is pinning its hopes 0 3.0 for reviving the economy on a sovereign- – 2.5 3.5 wealth fund financed by state sharehold- ings and with up to $200bn to invest. But 5.0 4.0 that is likely only to increase Mr Erdogan’s 2004 06 08 10 12 14 16 17* 2004 06 08 10 12 14 16 17 control overthe economy, hardly a promis- Sources: IMF; Thomson Reuters *Forecast ing sign—and not just because of incompe- tence. In recent years cronyism, always a 2 academic, author, journalist or the director difference would victory in the referen- problem, has become steadily worse. of an NGO, “that person is a terrorist.” It dum make? Optimists outside Turkey hope IfMrErdogan is vulnerable anywhere it looksasifthe state isactingagainst individ- that it would inspire him to be conciliatory is here. Unlike Russia, with its oil, Turkey uals, rather than their crimes. On March in an attempt to unite the country. But he is needs foreign exchange and investment. 30th 21 journalists suspected of being Gu- by nature a bully in a culture that admires Corruption and political repression will lenists were acquitted. After an outcry by displays of strength. More probably he drive them away—even as they eat up re- AK supporters all the journalists were re- would use the chance to move against the sources. Eventually the pain will fall on the arrested before they could leave prison, 13 next lot of enemies. That may include the merchants and business people who are of them on new charges of “attempting to secularopposition aswell assome bigwigs the backbone ofAK support. overthrow” the government. The judges in his own party. Already, there are signs that Mr Erdo- who heard the case were dismissed. Constitutionally, MrErdogan would be gan’s popularity is waning. “Chief”, a almost untouchable. As president, he biopic eulogising his career, has proved a For emergency use would have two five-year terms (and, un- failure with critics and audiences. At a re- SafakPavey, an opposition MP, argues that der some circumstances, a third). He and cent performance at11am in the town ofIz- Mr Erdogan has weaponised his emergen- his allies in parliament would be able to mit, the box office refused a cinema-goer a cy powers. “The law is only being used appointloyaliststo the mostseniorjudicial ticket: he would have been the only mem- againstus,” she says, “notto provide justice panels, immunising him and his family ber ofthe audience. for everyone. Foreign policy has been against prosecution should corruption al- And if Mr Erdogan loses? The conse- weaponised, too, perhaps because Mr Er- legations resurface. Some think he is quences of No are harder to predict. A de- dogan thinks the referendum result is in grooming his son-in-law, the energy minis- feat of any kind would be a humiliation. doubt. After Germany and the Nether- ter, as his heir. But Turkey would still be underemergency lands refused to accept government minis- And yet, Mr Erdogan would face obsta- rule, giving the president vast power. ters campaigning for a Yes among Turks in cles. The talented administrators ofhis ear- A heavy defeat could embolden dissi- their countries, Mr Erdogan accused them ly years have gone, replaced by yes-men dents and reformists within AK to attempt of“Nazi practices”. The Dutch, he said, had to restrain Mr Erdogan. It would also en- murdered Muslims in Srebrenica during courage his opponents. After the repres- the Balkan wars. No matter that they were sion, dissidents, the media and ordinary in fact UN peacekeepers who killed no- Turks would leap at the chance to speak body. Mr Erdogan is calculating that, when out. “There is a wall of silence in this coun- Europeans hit back, patriotic Turks will ral- try,” says Selma Atabey, a formernurse and ly to the flag. trade-union member, sacked after the At the same time, Mr Erdogan is signal- coup. “ANo in the referendum would help ling that he is prepared to shift towards breakit down.” Russia. This may be a ploy to provoke the EU. But it also reflects how the army and Yes and No the bureaucracy are increasingly in thrall A narrow loss, however, might lead Mr Er- to a “Eurasian” faction whose leaders dogan to take desperate measures. A mas- spurn NATO and the West and look to a ter at manipulating conflict to his own ad- Turkish version ofthe nationalism that has vantage, he could engineer another clash served Vladimir Putin. Although Turkey with the Kurds. He could call an early elec- shot down a Russian warplane on the Syri- tion in the hope of winning a large major- an border and Russia’s ambassador to Tur- ity. Some fear that his government could key was assassinated last year, military put forward another new constitution, and intelligence co-operation between the with a few cosmetic amendments. This two countries has never been so close. time, with a big enough majority, it would NATO is worried. So is the EU, which not need to go to a referendum. has struck a deal with Turkey over Syrian Whatever the result on April 16th, Tur- migrants and is mired in increasingly futile key has entered a dark period. A vote for talks over Turkish membership. Under Mr Yes would saddle the country with an Erdogan, an essential ally in a troubled re- elected dictator. A No would not save Turk- gion is drifting away. ish democracy. But it would let it live to Given Mr Erdogan’s power today, what A rare vote for No fight another day. 7 United States The Economist April 15th 2017 21

Also in this section 22 Trust forests 22 Useful idiots 24 Green shoots in St Louis 26 Closing Rikers jail 27 The fall of Alabama’s governor 28 Lexington: Trump v Trumpism

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

Donald Trump’s foreign policy the defence secretary, and Rex Tillerson, the secretary of state, are supportive of On a whim and a prayer these changes; like Mr McMaster, they are experienced managers, with orthodox views and to varying degrees project an aura of authority, despite the fact that al- most none oftheir subordinates, the politi- WASHINGTON, DC cal appointees upon whom cabinet chiefs depend, have been appointed. America’s global role looks more normal than MrTrump promised, but still odd Their efforts have also been assisted by HE salvoes of cruise missiles Bill Clin- moral outrage. “Even beautiful babies reality, which has tended to make Mr Tton launched in August 1998, against a were cruelly murdered in this very barbar- Trump’serstwhile foreign-policy impulses suspected chemical-weapons factory in ic attack,” he said. “No child ofGod should appear untenable. Having argued that Sudan and an al-Qaeda camp in Afghani- ever suffer such horror.” Yet Mr Trump’s America’s interests were best served by stan, were considered by many American raid had two additional things going for it. leaving Mr Assad in place—and, for the lawmakers to be ineffectual, or worse. Mr First, the modest military action Mr same reason, having warned Barack Clinton had admitted canoodling with Clinton preferred doesn’t lookso bad com- Obama back in 2013 not to launch the mis- Monica Lewinsky three days earlier—had pared with whatfollowed. AfterGeorge W. sile strike that he now blames him for not he taken his cue from a recent Hollywood Bush’s costly wars, then Barack Obama’s launching—Mr Trump found the televised film, “Wag the Dog”, in which a fictional failure to enforce a “red-line” warning images of the Syrian dictator’s attack on president invents a war to shift attention against Mr Assad’s chemical weapons use, Khan Sheikhoun too repugnant to ignore. from a sex scandal? By contrast, the strikes many Americans want to bloody the Syri- Having refused to criticise Russia’s presi- Donald Trump launched on the Shayratair an dictator’s nose, but not war. Second, dent, Vladimir Putin, whose authoritarian base in Syria on April 6th, which were of there is indeed evidence that Mr Trump is leadership Mr Trump admires, he is now similarly limited size and ambition—de- adoptinga more conventional foreign poli- digesting reports that the Russians had signed to make a point, not war—have cy. And almost everyone who applauded warning of the attack, then bombed the been feted, on the left and right, as a well- his missile strike is desperately keen, given hospital to which its victims had been sent judged action by a commander-in-chief the president’s erstwhile indifference to in an attempt to destroy the evidence. who maybe startingto find hisfeet. Hillary America’s international standing and inat- These pressures—able cabinet chiefs Clinton, Mr Trump’s defeated Democratic tention to geopolitics, to encourage that or- and a world less amenable to major for- rival, said she would have acted similarly. thodox drift. For the same reasons, how- eign-policy revisions than Mr Trump sup- “Donald Trump became president!” said ever, they are liable to be disappointed. posed—will endure. So the drift to ortho- Fareed Zakaria, a liberal pundit, on CNN. doxy will probably continue, but with two The contrasting responses to these A call from HR equally important caveats. First, Mr strikes, almost two decades apart, illus- The growing orthodoxy can be mainly at- Trump’s willingness to take and abruptly trate the extent to which foreign policy is tributed to the influence ofMr Trump’sim- abandon radical positions, like the club- often judged more on its domestic political pressive national-security team. At the Na- house commander-in-chief he resembles context than its prospects of success. Mr tional SecurityCouncil, H.R. McMaster has in all ways except one (he actually is the Clinton’s point, that the Islamist rulers in been cleaning shop following the enforced commander-in-chief), will still impinge on Kabul and Khartoum should stop succour- exit ofhis short-lived predecessor, Michael American foreign policy. An almost un- ing Osama bin Laden, and Mr Trump’s, Flynn. A respected Russia analyst, Fiona trammelled preserve of the presidency, it that Bashar al-Assad should stop gassing Hill, has been hired. Mr McMaster’s depu- tends to reflect the character of its incum- his fellow Syrians, both justified military ty, K.T. McFarland, a former Fox News talk- bentmore than anyotherbranch ofpolicy- action. Visibly upset by television images ing-head with scant qualifications for such making: under Mr Clinton, foreign policy of dead Syrian children, Mr Trump ex- an important role, is being eased off to an was ingenious, but sometimes too tactical; plained his salvo in a tone of admirable untaxing ambassadorship. James Mattis, under Mr Bush, it was well-meaning, but 1 22 United States The Economist April 15th 2017

2 arrogant and rash; underMrObama, it was who commit crimes against the innocents ceptance of reality concerns two areas intellectually coherent, yet at times inflexi- anywhere in the world.” Sean Spicer, the where his views are both fixed and outside ble. Mr Trump’sforeign policy is also shap- White House spokesman, seconded that: the bipartisan consensus that has general- ing up in his image. Well-judged though “Ifyou gas a baby,ifyou put a barrel bomb ly defined foreign policy since the second the missile strike was, it is astonishing that into innocent people, I think you will see a world war. One is immigration, especially he could have conducted such a momen- response from this president.” That did not of Muslims, which Mr Trump wants to tous policy about-turn in a matter of hours sound very “America First”, the principle curb. The other, probably more important, on the strength ofa news report. of narrow national interest Mr Trump is America’s terms of trade, which Mr Mr Trump’sable lieutenants will not be preaches. Sure enough, Mr Spicer, who has Trump believes are grossly unfair. Here, able to compensate fully forsuch presiden- had a middling week—to emphasise Mr too, there has been tentative reassurance. tial foibles—as has been apparent in the Assad’s heinousness, he said that even Hit- His immigration curbs have been blocked confused messages coming out of the ad- ler didn’t “sink to using chemical weap- by the courts. The meeting Mr Trump held ministration on what the strike augurs for ons”, a bizarre claim—later issued a retrac- with Xi Jinping on April 6th and 7th ap- Mr Trump’s Syria policy and use of force. tion. “Nothing has changed in our pears to have been civil and anodyne. But Mr Tillerson, having at first cautioned posture,” he clarified. “The president re- it would be unwise to bank on Mr Trump against thinking it augured anything, de- tains the option to act in Syria against the jettisoning the only political views he has clared on April10th that MrTrump’sAmer- Assadregime wheneveritisin the national consistently held over decades. In the end, ica would henceforthbe an avengingangel interest”. Mr Trump, in short, reserves the the couple of areas where the president for human rights: “We rededicate our- right to do something, or nothing. has firm views seem likely to matter more selves to holding to account any and all The second big caveat to Mr Trump’sac- than the many areas where he has none. 7

Modern warfare Trust forests Useful idiots, updated Elliott less

How a cornerofAmerica’s media wound up as apologists forBasharal-Assad SCOTTSBURG, OREGON COUPLE ofdays after the chemical pieced together by Ben Nimmo and A tussle that raises concerns about weapons attackin Syria, some Twit- Donara Barojan ofthe Atlantic Council, a A handing more federal land to states ter users in America began sharing a think-tank. It begins in Syria, where a theory: the pictures had been concocted pro-Assad website published an article EEP in Oregon’s Elliott State Forest, as a pretext forlaunching a missile attack. claiming that those who came to the aid Dpast groves of 200-foot Douglas firs The notion was endorsed by Alex Jones, ofthe attack’s victims were not wearing and bigleaf maple trees dripping with em- who runs a website called Infowars, protective gloves, and therefore it must erald green Spanish moss, Joe Metzler pulls which has successfully spread the idea be a hoax. It also claimed that a TV sta- over his Toyota truck and peeks over a pre- that the Sandy Hookschool shooting in tion had inadvertently announced plans cipitous slope covered in tree stumps for Connecticut was a hoax and that Hillary to cover the strike before it had taken signs of elk. Mr Metzler, a retired coast- Clinton was involved in a paedophile place. This idea was then picked up by guard rescue swimmer who looks a good ring run from a pizzeria in Washington, several websites, including the Centre for deal younger than his 49 years, frequently DC. Mr Jones was until recently a fervent Research on Globalisation, a hub for hunts in the area. To make a clean kill with supporter ofDonald Trump. Campaign- conspiracy theories and fake stories. his bow and arrow, he sometimes camps ing last year, candidate Trump returned From there it was a short hop to Amer- outin the forestfora week. Then comes the the favour: “Yourreputation is amazing, I ican conspiracy sites, such as Mr Jones’s really tough part: hauling 300lb of meat to will not let you down,” Mr Trump said. Infowars, which claimed the whole thing his car, which is sometimes parked miles Now, it seems, he has. was a “false-flag” operation funded by away. “It is not old man’s hunting,” he says The story ofhow Mr Jones fastened George Soros. Mike Cernovich, another gleefully. onto his Syria conspiracy has been conspiracy theorist praised by the presi- Soon Oregon may sell 82,500 acres, or dent (“in a long gone time ofunbiased most of what remains of the dense forest, journalism he’d win the Pulitzer”), took a to a timber company and a Native Ameri- similar line and spread the phrase #Syr- can tribe. The proposal would allow pub- iaHoax. It was given a bump by comput- lic access on half the land. But sportsmen, er programs used to boost stories on who can currently roam the forest mostly social media (one Twitter account used as they please, worry it will be hard to #SyriaHoax155 times). A foreign govern- reach or unsuitable for hunting. Environ- ment might have had a hand in this: the mentalists fret protections for threatened Senate has heard testimony that Russia species would be relaxed. used this technique to spread fake news The Elliott State Forest is not directly stories during last year’s election. Since owned by the state; it is state trust land, April 6th, #SyriaHoax has been used in which is required by Oregon’s constitution 192,000 tweets—85% ofwhich originated to produce profit forpublic schools. The El- in the United States. The hashtag reached liott does that through logging. State trust 13.6m Twitter users in a single hour ac- lands are common in the American West. cording to Keyhole, a social-media ana- They trace their roots to 1803, when Ohio lytics firm. And that is how some self- joined the union and was given a grant of publicists, posing as American patriots, land to supportpubliceducation. The prac- became apologists for the Assad regime, tice was replicated throughout the process Alex Jones, co-conspirator which drops poison gas on children. of state accession, and today there are ap- proximately 46m acres of such lands, 85% 1 24 United States The Economist April 15th 2017

Boulevard is 99% black, according to Wash- ington University and the University of St Louis. Boarded-up and crumbling houses, dollar shops and fried-chicken outlets dominate the picture. The median home value north of Delmar is a quarter of the value of houses south of Delmar. Only 5% of residents who are 25 or older north of Delmar have a bachelor’s degree, com- pared with 67% south ofit. Situated on the banks of the majestic Mississippi on the boundary of Illinois and Missouri, St Louis is a border city still shaped by the racial attitudes of the old South and the property arrangements of the old north. During the decades of the great migration, when blacks from the ru- ral South moved to cities in the north, it be- came one ofAmerica’smostsegregated cit- Where the elk roam ies. St Louisians resorted to private racial covenants to prevent blacks from buying 2 ofwhich lie west ofthe Rocky Mountains. ho and New Mexico returned $14.51 on ev- properties in white districts. “Shall St Louis Recently the Elliott State Forest has ery dollar spent, compared with 73 cents be the slave master?” reads the caption of a struggled to meet its financial responsibil- on every dollar spent by the US Forest Ser- handbill from 1916 on display at the Mis- ities. A series of environmental lawsuits to vice and the Bureau of Land Management, souri History Museum; it shows a white protect threatened species such as Coho the main stewards of federal land, which man cracking a “negro-segregation” whip salmon, a Pacific fish, and marbled murre- are not required to make a profit. But ifstate at a black mother and her three children to let, a small sea bird, led to injunctions that trust lands start to struggle financially, “it’s shoo them back to the slave quarters. De- crushed logging. Between 2012 and 2013 perilous. Things can go from bad to sale spite this and other efforts to persuade net revenues from timber in the forest really quickly,” says Dean Finnerty, who them, St Louisians voted overwhelmingly plunged from $5.8m to -$3.3m. Oregon has works as a hunting and fishing guide in the in favour of two ordinances that would since dithered between selling the forest Elliott State Forest. prevent anyone buying a home in a neigh- and finding another way to compensate There is a precedent for such worries. bourhood with a population of more than the trust. According to the Wilderness Society,a con- 75% of another race. The Supreme Court The potential sale comes at a moment servation group, Idaho has shed 41% of its struck them down in 1917, but they set the of great angst about public lands and in- lands since statehood; 100,000 acres have tone forrace relations in the city for the fol- creased scrutiny of state stewardship. At been offloaded since 2000. Oregon has lowing few decades. the Republican National Convention last sold all but 780,000 acres of its original Some say the city’s apogee was in 1904, year, the party’s platform included a provi- 3.4m. Selling 82,500 more would not only when it hosted the World’s Fair and the sion for the transfer of federal lands to the upset those who love the Elliott, but fuel a summer Olympics. At the time it was states. In January, prodded by Rob Bishop, wider worry about what happens when America’s fourth-largest city after New a Republican congressman from Utah, public lands are handed to states. 7 York, Chicago and Philadelphia; it had the Congress changed a key budget rule that second-oldest symphony orchestra, a will make it easier for such a transfer to grand opera house, one ofthe world’s larg- take place. But not everyone wants it. St Louis est and busiest railway terminals, one ofits States have far leaner budgets for land most popular urban parks and some ofthe management than the federal government Millennials to the country’s best breweries, bearing Ger- does. The fear that they will emphasise manic names such as Griesedieck or Win- profit over access and conservation—or, rescue kelmeyer. Others argue that the decline worse, need to sell the lands they gain—has started in the 1950s, when the city’s popu- created eclectic political alliances. No- ST LOUIS lation peaked at 850,000 residents. It has where is this clearer than in Oregon, where been downhill eversince, with a trajectory Green shoots in one ofthe country’s the potential sale of the Elliott State Forest familiar to many cities in the rustbelt: dein- most troubled cities has led conservative hunters and anglers dustrialisation and depopulation, as first to join tree-hugging environmentalists and WALKfrom the history museum on the whites and then middle-class blacks fled to Kate Brown, the Democratic governor, to Aedge of St Louis’s verdant Forest Park, the suburbs. oppose the sale. past grand faux-Tudor mansions on Lindell Today St Louis is a shadow of its former Several states have been successful at Boulevard, leads to the wealthy white self. With 188 murders last year, it had the managing trust lands. Some of Arizona’s neighbourhood of Central West End. Turn highestmurderrate perperson in the coun- are close to Maricopa County, home to left on Euclid Avenue and you pass the try. Nearly all the suspects were black, as more than 60% of the state’s population; Drunken Fish sushi restaurant, Golden were their victims. In a city ofonly 315,000 they make money by leasing and develop- GrocerNatural Foods, trendy espresso bars residents these days, almost one-third live ing those lands. New Mexico’s trust lands and Left Bank Books, displaying titles at or below the federal poverty level. Most are flush with oil; by exploiting them, the thoughtfully chosen by bibliophile shop ofthem are black. The city once renowned state raked in almost $500m in 2016. A re- assistants. Then these businesses sudden- forits economic might and the talents ofits port published in 2015 by the Property and ly stop, a block or so away from Delmar offspring—from T.S. Eliot and Yogi Berra to Environment Research Centre, a think- Boulevard. This is the city’s unofficial de- Josephine Baker and Chuck Berry—is now tank, found that between 2009 and 2013 marcation line. more famous forthe race riots in Ferguson, state trust lands in Montana, Arizona, Ida- The area directly to the north of Delmar one ofits suburbs. 1 26 United States The Economist April 15th 2017

2 Traces of the once-great city are every- Closing Rikers jail this mess,” says a reformer, “so it’s going to where. Many multinationals still call St take a while forus to get out ofit.” Louis their home, from Anheuser-Busch Siren island New York is not alone. Most of the (beer) and Ralston Purina (pet food) to Mc- 720,000 people sitting in the country’s Donnell Douglas (aerospace) and Mon- 3,000 jails are awaiting trial. Nearly half a santo (agrochemicals). St Louis is also the million of the detained cannot afford to biggest centre of financial-services firms NEW YORK post bail. Some states and municipalities outside Manhattan, with companies such are starting to change tactics. New Jersey’s The plan to close the city’s most famous as Edward Jones and Stifel Financial. Yet Hudson County has seen a 25% drop in its jail reflects a widerimprovement many of the big firms have been gobbled jail population since bail reform was im- up: Ralston Purina has been bought by ALIEF BROWDER was 16 years old plemented on January 1st. The new state Switzerland’s Nestlé, Boeing now owns Kwhen he was arrested for allegedly law allows nearly all non-violent defen- McDonnell Douglas and Monsanto is in stealing a backpack. When his family dants to be released without monetary the process of merging with Germany’s could not pay bail, he was sent to Rikers Is- bail pending trial. In February Maryland’s Bayer. On April 5th JAB, a German con- land, NewYork’slargestjail. There he spent highest court ruled that people can’t be glomerate that owns Krispy Kreme Dough- around 800 days in solitary confinement; held in jail because theycan’tafford bail. In nuts and other food brands, announced it he was beaten by guards and other in- November New Mexico voters passed a was taking over another St Louis success mates and tried several times to kill him- constitutional amendment prohibiting story,with the acquisition ofPanera Bread, self.Because his hearings were delayed, he judges from jailing people because they a bakery chain, for$7.5bn. ended up spending three years on Rikers, can’t afford bail. District attorneys, judges St Louisians cringe every time one of all the while claiming his innocence. His and police in places such as Philadelphia their home-grown companies is taken case was dismissed in 2013 and he was re- and Spokane are working on alternatives over, as this tends to come with job cuts. leased. But the damage had been done, to detention, using pre-trial risk assess- Yet the creation of attractive takeover tar- and he eventually killed himself. His tale, ments, supervised monitoring and cita- gets also shows the city’s knack for entre- not an unusual one, provoked a campaign tions instead of arrests. “It’s not just [Rik- preneurship, which endures. In 2002 to close the “torture island”, as inmates call ers] closure that’s exciting, it’s all the other Washington University, St Louis Universi- it, altogether. Bill de Blasio, New York’s stuff that goes with it,” says Cherise Fanno ty and others teamed up to create the Cor- mayor, agrees. On March 31st he vowed to Burdeen ofthe Pretrial Justice Institute. tex innovation community,built on indus- begin a ten-year process to shut it. The announcement was a risky move trial land between the two universities. Three-quarters of the roughly 9,400 for Mr de Blasio, who is running for re-elec- Cortex is now home to about 325 compa- people held in New York City’s jails have tion this year. Closing Rikers and building nies, with names like CoFactor Genomics not been convicted of anything. Most are new facilities will cost more than $10bn, and Boundless, which have found a home housed on Rikers. The place has become a and the city’s jail system is already expen- in the Centre for Emerging Technologies, warehouse forpeople too poor to post bail sive: taxpayers will pay $2.4bn in 2018 to an incubator; the BioGenerator, an acceler- or suffering from addiction or mental- support it. The commission reckons, how- atorthatworkswith startupsfora short, in- health problems (jails, unlike prisons, are ever, that the closure will save New York tense time; TechShop, a workspace for pro- locally operated and hold people serving City $1.3bn a year. totyping; or another of the seven short sentences or awaiting trial). Because The commission recommended that innovation centres. By next year the eighth of backlogs, many wait months for their Rikers should be replaced with smaller office building will be added, along with a day in court. Even a short stay behind bars jails near the city’s courthouses. But Mr de light-rail station connecting Cortex to the can be very disruptive. It can mean loss of Blasio has had a hard enough time open- airport and a hotel. Last month Microsoft job, home and custody ofchildren. ing homeless shelters around the city.Con- announced that it will move its regional Conditions on the island are brutal. In vincing New Yorkers that a jail in their headquarters into the new Cortexbuilding 2014 Preet Bharara, New York’s former fed- neighbourhood is a good thing might be next year. eral attorney,found a systematic pattern of even trickier. 7 These efforts are showing hopeful re- excessive force used by correction officers, sults. Nearly 15,000 new college-educated creating a “culture ofviolence”. Many ofits millennials moved to St Louis between antiquated buildingslackair-conditioning, 2000 and 2014, accordingto the Pew Chari- and sewage regularly backs up. Rats are table Trust, which makes the city millenni- everywhere. Transport of prisoners to and als’ fourth-most-popular destination, from the isolated island costs $31m a year, eclipsing both Chicago (11th) and Seattle and visiting family members find it hard to (19th). In a report on the rise of innovation get to. One former inmate said the living districts, the Brookings Institution, a think- conditionswere unfitfora human, “so I be- tank, cited Cortex as one of the seven best gan to act inhuman”. A report issued by an examples. On April 11th and 12th Dennis independent commission on April 2nd Lower, the chief executive of Cortex, called Rikers Island “a 19th-century sol- played host to 12 other mayors to parade ution to a 21st-century problem”. these achievements. Until recently, no for- The good news is that New York may ward-lookingmayorwould have bothered not need it. The city continues to cut crime; to travel to St Louis for inspiration. it has just had its safest first quarter on re- Long-term success, however, requires cord. This means that fewer people are go- this renaissance to include the northern ing to jail. The city’s daily jail population part of the city. Here, too, there are some fell from more than 20,000 in1991to about encouraging signs. Half the students at the 10,000 last year. To reduce it further, alter- Collegiate School of Medicine & Biosci- native sentencing and more bail reform ence, a magnet high school attracting the will be needed to divert those accused of best pupils in the area, which was devel- lesser crimes. And change will not happen oped by Cortex, are black. It is a start. 7 overnight. “It took us 30 years to get into Seemed like a good idea at the time The Economist April 15th 2017 United States 27

Scandal in Alabama Meanwhile Mr Bentley’s lawyers were evi- dently hammering out a deal under which And other parts he pled guilty to the misdemeanours but will be spared further prosecution. Along with a suspended jail term, probation, community service and $7,000 in fines, he was required to resign immediately. MONTGOMERY Mr Bentley omitted to mention that de- tail in the sanctimonious statement he A besotted governorheaps disgrace on an already beleaguered state made in the old state house chamber, be- HORTLYbefore Robert Bentley resigned neath a plaque commemorating Ala- Sas Alabama’s governor on April 10th, bama’s secession in 1861. He had “not al- the television crews assembled outside the ways made the right choices,” he said state capitol were joined by a group of vis- euphemistically. “He probably got offvery, iting schoolchildren. Wisely their teachers very easy,” said Ed Henry, a representative hurried them along. “Cherchez la femme,” who filed the articles ofimpeachment. one passingtourist commented to another, astutely. For a year the governor had de- God’s armour nied having an affair, despite the emer- In the oddly festive mood that upheavals gence of grubbily incriminating evidence, can induce, the throng of journalists and vowing to stay in his post. But after being politicos trooped across the capitol’s hall- booked into the Montgomery county jail, way to the old Senate chamber, where Kay then pleading guilty to two campaign-fi- Ivey, the lieutenant-governor, was hastily nance misdemeanours, Mr Bentley re- sworn in as Mr Bentley’s successor. A pas- turned to the capitol to announce that he tor asked God to “clothe her with spiritual had indeed quit. armour”. She will need it. She is only the He hadn’t seemed the type: either to second female governorofa state reluctant combust in disgrace, or to become gover- to return women to high office. (The first nor in the first place. A dermatologist and— was Lurleen Wallace, who in 1966 stood as before his fall—adeacon of the First Baptist a surrogate for her segregationist husband church in Tuscaloosa, Mr Bentley was al- George and died after 16 months in the most 60 when he was first elected as a state role.) Moreover she takes over at what, representative in 2002. He did not appear even by Alabama’s standards, is an excru- destined for bigger things. But his grandfa- ciatingly embarrassing moment. Farewell to the Luv Guv therly demeanour and family values Mr Bentley’s demise means the state shtick, plus a crowded Republican field, conceal it, Mr Bentley misused state re- has lost the leaders of all three branches of helped him to the governorship in 2010; sources and personnel. Learning of the re- government in a matter of months. Last his devoted wife Dianne baked cookies for cordings before they became public, he is year Michael Hubbard was ousted as the campaign team. It was during that race said to have become obsessed with track- Speaker of the House after his conviction that his life became entangled with that of ing them down, deploying security offi- on ethics charges (he is appealing). Roy Rebekah Mason, a married woman almost cials to hunt for them and intimidate other Moore was suspended as chief justice in a 30 years his junior whom he is said to have staff members. He allegedly schemed to rumpus over his recalcitrant opposition to encountered in the Sunday-school class he punish his wife’s assistant, Heather Han- gay marriage. The reshuffle does not end taught. She worked as his press secretary, nah, whom he held responsible for the there. After Jeff Sessions joined Donald then in his administration and on his land- tapes, and smeared, then fired the state’s Trump’s cabinet, it fell to Mr Bentley to slide re-election campaign in 2014. top lawman, once a close friend. nominate his successor in the Senate. He After the release last year of tapes in The testimony that supported those ac- chose Luther Strange, the state’s attorney- which, among other endearments, Mr cusations was excruciating. “Ray Charles general—whose office was investigating Bentley rhapsodised about touching Ms could see what was going on,” one former Mr Bentley. Three ofAlabama’s past six go- Mason’s breasts, he insisted that they had aide said of the relationship. The gover- vernors have now faced criminal charges. not had a sexual relationship. The tapes, it nor’s children reportedly thought he might Still, tawdry as it has been, the Bentley has emerged, were recorded by Ms Bentley, be suffering from dementia. He accidental- saga has its heroes, and its morals. Accord- who after 50 years of marriage divorced ly sent his wife a text message that said, “I ing to her testimony, Mr Bentley told Ms him in 2015. Their release set offan effort to love you Rebekah”. Ms Bentley was able to Hannah, his wife’s assistant, that “people impeach the governor—which, despite the read other messages on an iPad that, un- fall at my throne” and she had better state’s colourful political history, would beknown to the governor, was synchro- “watch it”. She was undaunted. Confi- have been a first. As part ofthat process, on nised with his phone. “Poor Robert. Poor dants whom he allegedly tried to enlist to April 7th the state House Judiciary Com- Rebekah,” he texted Ms Mason on one oc- do his dirty work seem ultimately to have mittee published a report by its special casion. “Bless our hearts,” she replied. attempted to restrain him. counsel, Jack Sharman. At a hearing on the “And other parts.” Poor Ms Bentley. The danger of alienating friends is one morning of the resignation, Mr Sharman Dramatic as the hearing was, in the end of the lessons of a debacle in which Mr argued that although the racy details ofthe it was moot. On April 5th the state ethics Bentley, now 74 and not thought indepen- case were reminiscent of Bill Clinton’s, the commission had said thatitsown, separate dently wealthy, has forfeited not just his governor’s bid to “advance his personal in- investigation had found “probable cause” wife, job and reputation but his retirement terests over those of the state”, and his “in- to believe MrBentley broke the law, mostly benefits. The others are familiar, too. Yet creasingly desperate conduct”, more close- in relation to campaign-finance violations again the cover-up proved more damaging ly resembled Richard Nixon’s. that it unearthed during its inquiry. That than the original peccadillo. Finally, as one To facilitate his relationship with Ms and Mr Sharman’s findings turned the Montgomery insider glumly summarises, Mason, alleged Mr Sharman, and then to state’s Republican leaders against him. “There is no fool like an old fool.” 7 28 United States The Economist April 15th 2017 Lexington Trump v Trumpism

What the feud between the president’s son-in-law and his chiefideologue reveals charged with overseeingeverythingfrom Middle Eastpeace to re- lations with Canada, Mexico and China, and reorganising the federal government using lessons from business. Butto castthese fightsasa clash between leftand right, oreven as palace intrigues, is to miss the whole story. The semi-public combat between Mr Bannon and Mr Kushner rests on an argu- ment about something much larger: namely, the purpose of Mr Trump’spresidency itself. For Mr Bannon, the point of winning the 2016 election was to advance a cause, which history may in time call Trumpism. Afor- mer naval officer from a blue-collar family in Virginia, he spent years studying theories of how societies collapse. He has made several lurid, doomy films alleging that working families have been sold out by rootless, corrupt elites, who stood by and profit- ed as immigrants flooded in. Other works lamented the collapse of Judaeo-Christian values in the American heartland. Mr Ban- non saw before many others on the hard right that Mr Trump might not be a conventional conservative, but still “intuitively” grasped the powerofeconomicpopulism. On joiningthe govern- ment as the president’s ideologue-in-chief, Mr Bannon pasted specific promises made in Trump campaign speeches on the ROXIMITYto power does not make Washington, DC, a kindly walls of his West Wing office. Those promises cover everything Pplace. Like medieval peasants watching knights joust, the yo- from bordersecurity to global trade and an assault on regulations kels and churls of the political village—lobbyists, consultants or and the federal agencies that write them, through what Mr Ban- (hold your nose) journalists—may nod and gawp at the mighty, non calls the “deconstruction of the administrative state”. Ad- but theirhope is to see one grandee thwackanotherinto the mud. dressing conservatives in February, the strategist assured them These are, therefore, heady times in the nation’s capital. Two that, whenever establishment types try to lure Mr Trump away powerful men, Stephen Bannon, chief strategist to President Do- from that radical agenda, “He’s like: ‘No, I promised the American nald Trump, and Jared Kushner, a senioradviser, have been joust- people this, and this is the plan we’re going to execute on’.” ing for weeks, exchanging sword-swipes and lance-blows via During the election Mr Bannon bonded with Mr Kushner in leaks and briefings in the press. Still more blissfully forspectators, their shared contempt for professional campaign consultants. To MrKushneris the president’s son-in-law: the boyish, dashing heir hear Mr Kushner describe it, the Trump campaign resembled a to a family ofproperty tycoons and Democratic donors, and hus- disruptive startup, full of tech whizzes with “nontraditional” band to Mr Trump’sdaughter and trusted counsellor, Ivanka. His backgrounds outside politics. Addressing New York business rival, Mr Bannon, is older and angrier: a grizzled champion of bosses in December, Mr Kushner explained how the campaign America First nationalism. exposed him to the anger ofAmericans who feel ignored by their This White House tourney is usually presented as a clash of government. He realised that he lived in a “bubble” of elite opin- partisan ideology or as a human melodrama. Some complaints ions about such subjects as immigration or the environment. from the Kushner camp certainly ring with dynastic alarm. The ultimate argument against Mr Bannon, one unnamed source told “I like Steve, but...” the Washington Post, isthathishardline, fire-up-the-faithful brand However, Mr Kushner differs in at least one important way from of politics “isn’t making ‘Dad’ look good”. For their part, Bannon- Mr Bannon. He acts as if the last election was a victory for a man ites inside government and theircheerleaders in the conservative called Trump, nota movementcalled Trumpism. Shortlyafter the media like to paintMrKushnerasa closetliberal, undercutting Mr election Mr Kushner told Forbes magazine that his father-in-law Trump’shistoric populist victory. Their ire also takes in Ivanka, as transcends party labels, with policies offering “a blend of what well as Gary Cohn, the president’s national economics adviser, works, and eliminating what doesn’t work.” and Dina Powell, a deputy national security adviser, both of Both men entered the White House rooting for Mr Trump to them veterans of Goldman Sachs, a bank (to complicate matters, prove critics wrong. But if Mr Trump prospers by breaking every Mr Bannon also once worked for Goldman Sachs, but more re- campaign promise, Mr Bannon’s nationalist cause will have cently earned notoriety as the rumpled, combative boss of Breit- been betrayed. The strategisthassurvived until nowby tellingMr bart, a hard-right news outlet). Trump he can help him keep those pledges, shoring up his most When briefing against the Kushner faction, the Bannon camp loyal basesofsupport. Yetovertime, historysuggests thatseeking usessuch slursas“the Democrats”, “the NewYorkers” or“the glo- to bind Mr Trump with hisown words is a losing gambit. balists”. Mr Kushner and his elegantly tailored friends are The logic of Mr Kushner’s family first pragmatism is simpler: charged with being squeamish about immigration, too eager to Americans will thank Mr Trump if his policies improve their see America play global policeman in Syria and peacemaker in lives. For now both men offer the president possible paths to suc- the Middle East, and willing to give a hearing to Democratic ex- cess. At some point their visions will prove incompatible—hence perts on such subjects as health policy or climate change. recent rumours, fuelled by Mr Trump, that Mr Bannon may be Bannonites, Democrats and pundits have mocked Mr Kushner sacked. The prize being fought over is the president’s legacy. That for the range of his responsibilities. The president’s son-in-law is is a contest not everyone can survive. 7 The Americas The Economist April 15th 2017 29

Also in this section 30 Canada frees trade with itself 31 Chile’s unloved buses 31 Brazil’s immortal economist Bello is away

Honduras failed state, he is also reviled forstunting its development. He governs a country that A double helping of Hernández? serves as a conduit formuch ofthe cocaine that enters the United States, and where police and politicians are enmeshed with drug-trafficking gangs. The son of Porfirio Lobo, Mr Hernández’s predecessor, has TEGUCIGALPA pleaded guilty to cocaine trafficking. More than 60% of Hondurans are poor. In 2013, The president’s bid fora second term alarms democrats the year before Mr Hernández took office, N THE early hours of June 28th 2009 a planned to hold a non-binding referen- Honduras was still the most murderous Iunit of the Honduran army stormed the dum on whether to convene a constituent country on earth. Its public finances were a house ofthe president, Manuel Zelaya, dis- assemblyto change the constitution. Many mess: the budget deficit was 7.9% of GDP armed his guard and spirited him onto a thought he would use it to hang on to pow- (see chart). Some 600,000 Hondurans, plane bound for Costa Rica. The army sent er indefinitely. That triggered his removal. about 7% ofthe population, have moved to tanks onto the streets, silenced radio and Mr Hernández, whose Machiavellian the United States. television stations and cut off electricity talents would impress even the Florentine Mr Hernández, who was schooled in a and water to parts of Tegucigalpa, the capi- philosopher, did nothing so clumsy. He is a military academy, brought a thwack of au- tal. A fake letter of resignation from Mr Ze- beneficiary of a suit brought by a former thority. At his inauguration ceremony he laya was read out to Honduras’s congress, president, Rafael Callejas, who argued that dramatically dispatched the army to take which approved his ousting. It was Latin the term limit violated his human rights. In the field against criminals. “The party has America’s last real coup. April 2015 the supreme court ruled in the ended,” he declared. The murder rate has As a general election approaches in No- ex-president’s favour, suspending the con- fallen since the army took up positions in vember, those events are uppermost in stitutional ban on re-election. Mr Callejas the country’s most violent barrios, helped Hondurans’ minds. That is partly because is not running, but Mr Hernández is. by crime-prevention programmes fi- Mr Zelaya has not gone away; his wife, He is a paradox. Credited with strength- nanced by the United States. Mr Hernán- Xiomara Castro, is a presidential candi- ening what had threatened to become a dez has disrupted some drug-trafficking date. More important, the current presi- networks and shipped dozens of suspect- dent, Juan Orlando Hernández, is breaking ed drug lords to the United States for trial, a taboo which Mr Zelaya was thrown out A record to run on earning the gratitude of both the Obama ofoffice to protect: he is runningfor re-elec- Honduras and Trump administrations. tion. That, plus Mr Hernández’s authoritar- Murders Budget deficit He steadied the government’s finances ian style, has made the main election issue Per 100,000 people As % of GDP by raising the sales tax and cutting the the fate ofdemocracy itself. 90 0 wage bill. The poor are spared, Mr Hernán- The authors of the constitution, adopt- – dez’s allies insist. Many benefit from Vida ed in 1982, wanted to prevent would-be 75 2 Mejor (Better Life), a programme that pro- strongmen from entrenching themselves 60 vides roofs, waterfilters and othergoodies. in power. Unambiguously, the document 4 Teachers have been disciplined: school- 45 declares that anyone who has exercised 6 children now spend 225 days a year in the “executive power” may not be president. 30 classroom. With help from McKinsey, a An office-holder who merely advocates 15 8 consultancy, the government has hatched changing that provision “shall immediate- a plan to develop such industries as tou- ly” be dismissed. The white-hatted Mr Ze- 0 10 rism, textiles and call centres. 2009 12 14 16 2009 12 14 16 laya, whose soft spot for Venezuelan so- This record has bred more suspicion Sources: Ministry of Finance; SEPOL cialism terrified the Honduran elite, than goodwill. That is partly because Mr1 30 The Americas The Economist April 15th 2017

2 Hernández seems bent on controlling the thinkinsecurity is the biggest problem. The World Justice Project, a pressure group, institutions he purports to be strengthen- government plans to replace soldiers with Honduras comes 92nd out of 113 countries ing. “We’re paying for security with the a reformed police force, but that will take on its measure of constraints on govern- coin offreedom,” says Raúl Pineda, a polit- years. In the meantime, Mr Hernández is ment powers. During Mr Lobo’s presiden- ical analyst who supports Mr Hernández’s spreadingthe military mindset through his cy the social-security system was de- National Party. administration. He has deployed officers frauded of $300m; a small amount of The doubts begin with the president’s in all branches of government to serve as money from firms linked to the scandal signature policy of sending the army to his “eyes and ears”, says Mr Pineda. helped finance Mr Hernández’s campaign fight crime. Military units deter some vio- The judiciaryand the electoral commis- (without his knowledge, he says). That rev- lence, but after a drop the murder rate has sion are subservient to the president, he elation triggered weekly torchlit protests stabilised at a high level. Most people still says. In a rankingofjudicial systems by the and demands forhis resignation in 2015. He sought to lower the temperature by inviting in an anti-corruption mission, Canada MACCIH, under the auspices of the Orga- nisation of American States. It has big am- Blurring borders bitions: to help prosecutors investigate cor- OTTAWA ruption, spur a cleanup of party financing and encourage judicial reform. A new in- The country frees trade with itself vestigation and prosecution unit specialis- OING business across Canada is not ing in corruption is to begin work next Dforthe impatient. Its ten provinces month. MACCIH helped win long jail sen- and three territories see themselves as tences for the former head of the social-se- quasi-countries. They set standards and curity institute. “We never had such a sen- write laws with little regard forwhat tence before for corruption,” says its their neighbours are doing. In Ontario Peruvian chief, Juan Jiménez. petrol must be at least 5% ethanol; Mani- But the group is encountering as much toba insists on an 8.5% blend. Each prov- resistance as collaboration. It has clashed ince has its own ideas ofhow much grain with congress over the implementation of dust people can be exposed to, and what the party-financing law and with the presi- sort ofpackages coffee creamer should dent and congress over the naming of come in. Ontario requires that toilets at magistrates to the government’s spending construction sites be equipped with watchdog. MACCIH is being subjected to a “open-front” seats; Alberta is toilet-seat “blackcampaign”, says Mr Jiménez. neutral. Ifyou buy booze in one province Now the trial of Mr Lobo’s son in New you had better drinkit there. New Bruns- York threatens to damage Mr Hernández’s wickis pursuing a resident all the way to crime-fighting image. In March a court- the Supreme Court forrefusing to pay a room heard a former member of Los Ca- fine ofC$292.50 ($220) when he was chiros, a drug-trafficking gang, testify that caught bringing in beer and wine he had he had met Mr Hernández’s brother, Tony. purchased in Quebec. Trade among But is it locally spawned? The purpose was to persuade the govern- provinces is less free than it is among the ment to pay its debt to a company used by 28 members ofthe European Union. trade minister. the gang to launder money. Tony Hernán- So politicians from the regions and Other barriers will fallmore slowly,if dez denies the claim. federal government were in a self-con- at all. The agreement includes a “negative The president’s re-election bid caps the gratulatory mood after they signed a list”, meaning that only sectors explicitly list of grievances against him. He favours “Canadian Free-Trade Agreement” on mentioned can be protected from inter- limiting presidents to two four-year terms, April 7th. Brad Duguid, Ontario’s econ- provincial competition. (Before, prov- which is the practice in the United States. omy minister, who hosted the gathering, inces did not have to say which sectors The opposition, which deems the entire pronounced the deal “a major leap for- they were shielding.) But the negative list project to be illegitimate, refuses to write ward”. The Canadian Federation of is long, filling136 ofthe deal’s 329 pages. It that provision into law. If Mr Hernández Independent Business presented each of includes the provincial liquor monopo- wins the election, “it would validate the the ministers with its Golden Scissors lies, the production ofdairy,poultry and break with the constitution,” says Award forcutting red tape. eggs and the processing oftimber. It does Edmundo Orellana, a formerdefence min- The main change on July1st, when the not bring uniformity to the provinces’ ister and foreign minister. accord takes effect, will be that firms can proliferation ofrules, either. Although nearly two-thirds of Hondu- bid more easily forcontracts with govern- The politicians promised to set up rans oppose re-election, Mr Hernández ments outside their home provinces. The working groups to trim the list and recon- may well prevail. The coup fractured the provinces had little choice. A free-trade cile regulations. There are plans to har- country’s two-party system, in which the pact between Canada and the European monise rules on selling recreational National Party took turns in power with Union is to take effect by mid-year. With- cannabis, which the federal government the Liberals, whose ideology and pro- out a change, European firms would have intends to legalise. Weed may thus cross gramme differed little. The toppling of Mr had more freedom to compete forpro- boundaries more freely than booze, at Zelaya, a Liberal, splitthatparty, with some vincial contracts than Canadian ones. least fora while. Some oddities may factions backing the coup. Mr Zelaya’s sup- The last big agreement to liberalise in- never go away.Toregister a standardbred porters broke away to form Libre, which is ternal trade came in1994, when the horse in Quebec you must live in the putting up Ms Castro. North American Free-Trade Agreement province for183 days. Ontario will still She shares the anti-Hernández field tookeffect. “Wedon’t do anything unless restrict licences to sell bullfrogs; Manito- with two more contenders: Salvador Nas- we’re forced to,” sighs a formerfederal ban bullfrog-breeders are out ofluck. ralla, a flamboyant sports broadcaster, who is the nominee of the Anti-Corrup-1 The Economist April 15th 2017 The Americas 31

2 tion Party, and Luis Zelaya (no relation to with design. Planners laid some bus lanes Brazilian letters Manuel), the Liberals’ candidate. Mr Ze- directly over metro lines, so the two forms laya, a soft-spoken university professor of transport compete rather than comple- with no political experience, is running as menting each other. The city has hired too Bard of Belíndia much against the traditional system as few inspectors to catch fare-dodgers and SÃO PAULO against Mr Hernández. His Liberal Party is motorists who stray into bus lanes (though An economist becomes immortal “the same” as the others, he confesses. He cameras are catching some of the errant offers a programme of “social liberalism”, cars). Sometimes buses are so crowded RAZILIANS who remember the which includes such goals as fairer taxes, that even honest passengers have trouble B hyperinflationary1980s cheered the freedom of expression and education for reaching the card-swiper. news on April 7th that prices rose by just all. But “no economic model works if you Increasingly, passengers are less in- 4.57% in the year to March. Inflation has don’t have institutionality,”he says. clined to pay. Despite the subsidies, fares not come that close to the central bank’s His hopes ofwinning a one-round elec- have risen by40% since 2010, farfasterthan target of4.5% in seven years. In a fitting tion may depend on unity within the op- most prices. Bus journeys have slowed by coincidence, on the same day one of the position, which has not developed yet. Li- 8% since 2012. For some, fare-dodging is a architects ofthe Real Plan, which tamed bre and the Anti-Corruption Party seem to form of protest. Guillermo Muñoz, the inflation in1994, donned the gold-and- be close to uniting behind Mr Nasralla. If metropolitan area’s director of public green livery ofthe “immortals”, as mem- Mr Zelaya were to join, he might head the transport, admits that in some parts of the bers ofthe Brazilian Academy ofLetters coalition. But he says he will not accept a capital the service is “very bad”. Last are known. deal based on the customary sharing out month Chile’s transport minister resigned, Edmar Bacha is just the third econo- of top jobs among party loyalists. Mr Ze- in part to take responsibility for Transan- mist to join the august group, whose 40 laya thinks he can win anyway, as disen- tiago’s failings. lifetime appointments are reserved for chanted voters unite behind him. But it Espacio Público says one reason for the towering intellectuals and the finest would be unwise to bet against the crafty high subsidies is that too few companies wordsmiths. His election last November Mr Hernández winning one more four- operate the buses. The system began with (by members ofthe academy) was one year term—at least. 7 16 operators but dropouts and mergers ofthe most contentious in its120-year have shrunkthe numberto seven. The larg- history.It may also be a sign ofthe times. est firms operate 1,200 buses apiece. This Besides wrestling with inflation, Mr Chile makes them “too big to fail”, says Clemen- Bacha was head ofthe statistics office te Pérez of Espacio Público. Hence the sub- and the state development bank. He Going nowhere sidies to keep money-losing companies later became an investment banker. He afloat. No company should have more has a way with words. In “Fable for than10% ofthe market, Mr Pérez thinks. technocrats”, an essay published in 1974, The city will have a chance to correct he described Brazil as “Belíndia”, a tiny, SANTIAGO that next year, when contracts to operate rich Belgium surrounded by a vast, poor bus lines are to expire. It is likely to encour- India. In “End ofinflation in the king- The capital’s public-transport system is age smaller and newer companies to enter dom ofLizarb”—where “everything is sputtering the market. That might release money for backto front”—he skewered the belief RANSANTIAGO, the Chilean capital’s improvements. The new transport minis- that rising prices cause fiscal deficits. Tpublic-transport system, had its tenth ter, Paola Tapia, has created a task-force to Some doubt that Mr Bacha merits birthday in February, but no one celebrat- help reduce fare-dodging and promised immortalisation. Novelists and poets on ed. Launched with much fanfare, the more money for inspectors. With luck, the academy argued that most ofhis scheme was supposed to integrate bus and Transantiago could become a service that dozen books are dry treatises. His liberal metro lines and speed up traffic. Smog- commuters are happy to pay for. 7 economics is anathema to humanists spewing yellow buses disappeared. Smart enamoured ofKarl Marx. cards replaced cash. Still, he beat Eros Grau, a former But Transantiago is sputtering. Fare eva- supreme court justice (who has written sion is rampant, journeys are getting slow- erotic fiction). The unusually close vote erand the state hasspentbillionsof dollars (of18 to 15) exposed a rift between the to prop up private bus operators. Passen- academy’s “culture wing” and its clutch gers sometimes wait ages at stops scrawled ofpublic servants, including two former with graffiti with no inkling of when the presidents. In November a contest be- next bus will arrive. Espacio Público, a tween a political scientist and a philoso- think-tank, calls Transantiago Chile’s pher-poet ended in an unprecedented worst public-policy project since the coun- tie, forcing a new election with fresh try returned to democracy in1990. candidates. João Almino, a writer and Despite all that, Transantiago has diplomat, got the open seat. brought some improvements. The number Mr Bacha’s elevation may be a sign of fatal accidents has dropped sharply, as that economic liberalism is regaining has pollution from exhaust fumes. The sys- ground. In March street protesters called tem’s 20,000 employees are now on for- forprivatisation and deregulation, mal contracts and have better working among other things. The government of conditions than before. Because bus driv- Michel Temermay prove to be one of the ers no longer handle cash, the number of most liberal that Brazil has ever had. The robberieshasfallen.Compared with trans- academy is also becoming harder-head- port in many other Latin American cities, ed. Some immortals were reportedly Santiago’s works pretty well. keen to elect a formerbanker to oversee But it would be hard to persuade most its investments. commuters of that. The problems start Not going round fast enough 32 Asia The Economist April 15th 2017

Also in this section 33 Methamphetamines in Australia 33 South Korea’s prison for foreigners 34 Vietnam’s frequent executions 35 Japan’s plague of bullying 36 Banyan: Japan’s ultranationalists

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

Aadhaar after schools were required to match their pupils to Aadhaar numbers to keep receiv- Digital dawn ing state funds. By weeding out false claims, authorities say they have saved $8bn in two-and-a-half years; the annual central-government budget for subsidies is SARGASAN about $40bn. That may be an exaggera- tion, and critics say there are other ways to A biometric identification system is helping to recast the relationship between the improve the administration of subsidies. Indian state and its citizens But the savings clearly outstrip the roughly T TAKES a little over 90 seconds. At the penchant forinnovation. $1bn cost ofdeploying Aadhaar. Igovernment-subsidised ration shop in Being visible to the state is assumed in Changing the mechanics of how a ben- Sargasan, a village in Gujarat, Chandana rich countries, if only because the taxman efit is received is often just as important as Prajapati places herthumb on a fingerprint insists on it. But India had no equivalent of the benefit itself. Development experts like scanner. A list of the staples she and her a Social Security number, and less than the fact that, at least in theory, a villager can family are entitled to this month appears half of all births are registered. Only a gain access to a subsidy in a distant city. on the shopkeeper’s computer: 10kgofrice, small minority are required to pay income This removes a big barrier to internal mi- 25kg of wheat, some cooking oil, salt and taxes. Plenty of those entitled to govern- gration. A project to purge electoral lists sugar. The 55-year-old housewife has no ment services, meanwhile, have not re- found 800,000 fictitious voters in Punjab, cash nor credit card, but no matter. By tap- ceived them, because they have not been a state of 30m. The authorities suspect that pingin an identifyingnumberand present- identified as eligible or because middle- 30% of driving licences are fake, many of ing her thumb one more time, Mrs Praja- men have stolen their share. At the same them duplicates to help drivers evade pati authorises a payment of 271 rupees time, the benefits rolls are filled with fake bans—a ruse that would be impossible if ($4.20) straight from her bank account. It is beneficiaries, created by those seeking to all licences were linked to Aadhaar. technical wizardry worthy of Stockholm palm undeserved rations of fertiliser, food Indeed, the improvements in accuracy or New York; yet outside buffaloes graze, a or some other subsidised good. and efficiency are so enormous that the pot of water is coming to the boil on a pile government now wants to use Aadhaar of firewood and children scamper be- Ghosts v the machine more broadly than originally advertised. tween mud-brickhouses. Linking ration cards to an Aadhaar num- Recent edicts propose to make it compul- Like most Indians, Mrs Prajapati would ber, and thusto the biometricdata tied to it, sory for everything from booking train have struggled to identify herselfto the au- means a single person cannot have more tickets to owning a mobile phone. Ifimple- thorities a few years ago, let alone to a far- than one and ghosts can have none. The mented, these new uses would put paid to away bank. But 99% of adults are now en- original pitch to politicians—the scheme the notion that enrolling in Aadhaar is vo- rolled in Aadhaar, a scheme which has was adopted by the previous government, luntary, which was the promise ofits back- amassed the fingerprints and iris scans of but has been embraced by Narendra Modi, ers—led byNandan Nilekani, an IT grandee over 1.1bn people since 2010. With her au- the prime minister—was that Aadhaar who used to chair the agency that set up thorisation, any government body or priv- would help make welfare more efficient. Aadhaar. This in a country with no overt ate business can check whether her finger- The potential gains are huge. One official privacy laws, let alone a tradition of han- prints or irises match those recorded estimate suggests that “leakage” in subsidy dling sensitive data competently (many against her unique 12-digit identifying payments meant that only 27% ofthe mon- ministries’ websites contain spreadsheets number in its database. When it comes to ey ended up in the right hands: not so teeming with Indians’ personal data). identification, India has unexpectedly much a leaky bucket as a sieve. But Aadhaar is a poor way to build up leapfrogged every country with the possi- Over 400,000 ghost children were an Orwellian panopticon, Mr Nilekani ar- ble exception of Estonia, a tiddler with a struck off school rolls in just three states gues, given the wealth of information al-1 The Economist April 15th 2017 Asia 33

2 ready available from telephone records, a technology that people rely on for neces- does: following the recommendations of a GPS data, bank statements and the like. A sities. The chafedfingersofmanual labour- National Ice Task Force, it allocated biggerproblem may be the impracticalities ers often cause problems, forexample. A$300m to reduce demand and help ad- of the system. Unlike reading an ID card, Those high failure rates are just teething dicts last year. Over half that amount is go- checking someone’s identity through troubles linked to Aadhaar’s many new ing to local medical practices, which pro- Aadhaar requires an internet connection uses, says Ajay Bhushan Pandey, the head vide support to addicts. Yet critics and, often, electricity.Ration-shop owners of the agency overseeing the scheme. De- complain that co-ordination is lacking. In in out-of-the-way places are known to vices that scan irises (which offermore reli- the 1990s doctors, schools and police march their customers to the top of a hill, able readings) are becoming cheaper and worked closely together against heroin, roof or tree—wherever a phone signal can should become the norm, he says. Already says Matt Noffs of the Ted Noffs Founda- be found—to check their identity. Even the Aadhaar database is being tapped 20m tion. “Wedon’t see that now.” then, samples seem to show that roughly a timesa day,20 timesthe rate ofa year and a Like most European countries, Austra- third of authentications come back nega- half ago. That thrills cheerleaders as much lia spends most of its counter-narcotics tive, an extraordinarily high failure rate for as it alarms critics. 7 budget on enforcement. Yet consumers are more likelyto be arrested than dealers, and police put more effort into seizing drugs Methamphetamines in Australia than into unravelling the rings that smug- gle them, MrCoyne argues. Huge increases Ice storm in arrests and seizures have had no lasting effect on the supply or price of ice. “Polic- ing on its own won’t solve the problem,” laments Mick Palmer, a former federal po- lice commissioner. “It’s like sticking your SYDNEY finger in a bucket of water.” Unfortunately, politicians find it in- The authorities are flailing in the face ofa drug epidemic creasingly hard to peddle “soft” responses ARELY does a politician admit that his erthat figure is rising. Existingusers are cer- to a drug considered the cause of much vi- Rchild is an addict. When Bob Hawke, a tainly consuming more of its strongest, olence. In a recent election in Western Aus- formerprime minister,did so more than 30 crystalline form, known locally as “ice”. tralia, both big parties pledged longer sen- years ago, many parents could identify The share of meth-users on crystal rather tences for offenders, ignoring the fact that with him: Australia was sliding towards a than pills, powder or paste doubled to 50% jails in the state were already overcrowd- nasty heroin problem. Use of the opioid, between 2010 and 2013. In the state of ed. Blunt policing has not worked, but it which became popular during the Viet- Queensland, scientists testing sewage sells well. 7 nam war,rose fourfold duringthe1990s.By found a three- to fivefold increase in meth the end of the decade, almost150,000 Aus- residue between 2009 and 2015, which sies were shooting up regularly. As over- might reflect rising purity. A prison for foreigners in South Korea doses and blood-borne virus transmis- One jittery teenager at a rehab clinic in sions increased, wonks in Canberra Sydney run by the Ted Noffs Foundation, a Why the jailbirds devised a “Tough on Drugs” policy, which charity, attributes its popularity to accessi- was more sensitive than it sounds. In addi- bility. “It is so easy to get it’s not even fun- sing tion to pursuing traffickers to curb supply, ny,” he says. The small-time dealers he the government pumped money into edu- buys from make it at home. Most ice comes CHEONAN cation and treatment for addicts. Heroin from China, however, where a thriving Poormigrants are pampered behind use dropped by three-quarters. pharmaceutical industry underpins its bars, but scorned elsewhere It has been replaced by methamphet- production, accordingto John Coyne, a for- amine, a stimulant which was dished out mer intelligence official. Organised drug HE government of South Korea de- to pilots in the second world war. Over a rings are attracted to Australia, where the Tscribes Cheonan prison, south of quarter of a million Australians are street value of ice is over six times that in Seoul, as “the world’s first specialised for- thought to be using it. That constitutes the China. Huge trade flows between the two eigner correctional facility”. It must also be highest rate of addiction in the world (see countries make it relatively easy to import one ofthe most humane, with its gallery of chart). Researchers disagree about wheth- the drug and repatriate the profits. softly lit art and its designated smile zones Compared with other narcotics, or (for guards and inmates alike). There are even with legal intoxicants, ice is cheap. By sing-alongs to Korean pop music, language High down under one count, Australia is the world’s second- classes over hot tea and snacks, and a li- Prevalence of amphetamine-use disorders most expensive country in which to drink, brary stocked with over 5,000 foreign % of 15- to 49-year-olds smoke and get high. Yet for around A$40 books. Foreign lawbreakers are usually Australia New Zealand Sweden ($30), a hit of ice can last over half a day. sent to the prison, which opened in 2010 Britain United States France “Youfeel like Superman,” the youngaddict (and also houses 700 South Koreans, in a 1.0 says. This comes at a cost: ice can cause us- separate wing). Yet the inmates embarking ers to become paranoid, aggressive and on its “Good Morning Korea” programme 0.8 even psychotic. It is now the most com- of cultural education typically serve short 0.6 monly used drug among those entering sentences before being deported. prison. Meth-related hospital admissions Cheonan is the only prison in the coun- 0.4 have quadrupled since 2010. try to offerhalal food, aswell as 30 minutes TV 0.2 Politicians know there is a problem, but adayof programming in Chinese, Eng- have failed to respond as once they did. lish and Arabic (over two-thirds of the in- 0 When heroin was rife, the government pri- mates are Chinese; Americans make up 1990 95 2000 05 10 15 oritised treatment and attempts to deter the second-largest group). Its wardens say Source: Institute for Health Metrics and Evaluation use through education. Theoretically it still they also hope the 600-odd prisoners, 1 34 Asia The Economist April 15th 2017

2 from 35 countries, can serve as “ambassa- Executions in Vietnam dors for Korea” when they return home, armed with taekwondo philosophy and K- pop anthems. Some ex-convicts have left Deathly silence with business plans to set up as tour oper- HANOI ators to the country. As the world retreats from capital punishment, Vietnam doubles down Cheonan is in part a reflection of South Korea’s growing acceptance of outsiders. T IS hard to know how many people More than 2m foreigners live in the coun- Igovernments execute, as the most A terrible tally try—a relatively small proportion of its bloodthirsty regimes do not make the Minimum estimated number of executions population of 50m, but a huge increase data public. Amnesty International, a Top seven countries, August 2013-June 2016 compared with only a few years ago. The pressure group, documented 1,032 execu- 0 100 200 300 400 500 numberofforeigners workingin South Ko- tions in 2016, but believes the true num- rea has risen more than thirtyfold since ber is much higher. The good news is that China In the ’000s 2000, to over 600,000 last year. Of these, that figure represented a 37% drop from Iran 2,315 221,000 were in the country on an employ- the previous year. Two countries, Benin ment-permit system that has, since 2004, and Nauru, abolished capital punish- Vietnam allowed unskilled workers from 15 Asian ment, and others are moving towards Pakistan countries to fill yearly quotas for dirty or abolition. In all, 141countries have got rid Saudi dangerous low-paid jobs. They toil at tasks ofthe death penalty in law or in practice. Arabia shunned by newly rich South Koreans, At least ten Asian countries resorted to Iraq Vietnam such asoil-drum cleaningorpigfarming, in capital punishment last year, however. United New industries including agriculture, fisheries China is believed to be the most frequent States* Previous and construction. executioner, though the number ofpeo- Source: Amnesty International *Actual The thoughtful treatment foreigners re- ple killed, and forwhich crimes, remain ceive in prison is harder to find outside it. closely guarded secrets. The Philippines Migrant workers, mainly from South-East looks poised to reintroduce capital pun- ing people to death at a rapid clip—63 in Asia, are becoming a new underclass. In a ishment—and in practice the police ad- 2016 alone, according to Amnesty’s government survey of female migrants in minister it frequently, by shooting drug count, which it believes is incomplete. agriculture, two-thirds lived in makeshift suspects without the nicety ofa trial. Most ofthese were for drug offences. housing such as container boxes or green- Vietnam also shrouds capital punish- Just two years ago a different course houses (employers often withhold part of ment in secrecy. For years it was believed seemed likely. Vietnam abolished capital their wage in return for accommodation); to execute just a few people a year. But a punishment forseveral crimes, including over three-quarters were given fewer than report from its Ministry ofPublic Securi- drug possession, producing or trading two daysoffa month. In Januarytwo Cam- ty, published in the local media in Febru- counterfeit food, and corruption—provid- bodians in their 20s were reported to have ary, said that429 prisoners were executed ed the accused returned 75% or more of died from cold and exhaustion. between August 8th 2013 and June 30th the amount stolen. Even so, at least 681 Another recent survey, by Amnesty In- 2016. That would make Vietnam the people remain on death row. And while ternational, suggests that four-fifths of mi- world’s third-most-prolific executioner, other countries hand out farmore death grant farm labourers are not paid for over- after China and Iran (see chart). sentences than they carry out, in Vietnam time, despite typically working 50 hours a Vietnam has also continued sentenc- the gap seems to be alarmingly small. month longer than their contracts require. Though all workersmustsita basicKorean- language test in their home countries to on their phones. blood running down their faces”, he qualify for the visa, hardly any are Udaya Rai, a Nepali who heads South claims, telling them to resolve problems equipped for the rural dialects they hear. Korea’s migrant workers’ union, says little with their employers directly. Many are Abuse from employers is common. Law- effort is made to protect migrants from ex- told that if they report abuse they may not yers such as Go Jieun, part of a group that ploitation or violence. Changing jobs re- receive their wages. Those who leave work represents migrant workers free of charge, quires employers’ permission. Police have to do so are sometimes reported by their encourage them to record unfairtreatment been known to turn away migrants “with employers forabsconding, which can land them in one of the country’s three immi- gration detention centres, where they can be held without a warrant. Mr Rai says the biggest problem is that South Koreans still view the employment ofmigrants as a form ofcharity, rather than as a boon for the economy. It took the mi- grant workers’ union a decade to win offi- cial status, eventually conferred by the su- preme court in 2015. The union represents illegal migrants too, who make up over one-tenth of foreigners in South Korea. Many of them have overstayed their visas while trying to claim unpaid wages. Awarden atCheonan sayshe hopes de- linquents will leave the prison with “a more positive view of South Korean soci- ety”. Some migrant workers may need a stint behind bars to see it. 7 The Economist April 15th 2017 Asia 35

Bullying in Japan kushima, the school board in Yokohama for months tried to blame him for what All against one had happened, suggesting he had handed over his family’s savings voluntarily, be- fore changing its mind after much public criticism. An anti-bullying law passed in 2013 re- YOKOHAMA quires schools to report cases ofbullying. It has led to a sharp rise in the number of Why being picked on in a Japanese school is especially traumatic known cases, from a few thousand a year IVE months after the tsunami that led to ised adds to the pressure to conform. Chil- to 224,450 in 2015. Yet there are suspicious- Fhis family’s evacuation from Fuku- dren learn in a “homeroom”: teachers of ly wide disparities between regions. In shima, the boy enrolled at a new school in different subjects come to them. School ac- 2015 Kyoto prefecture reported 90.6 cases Yokohama. His new classmates were piti- tivities, such as cleaning, eating lunch and per 1,000 pupils; Saga prefecture, in south- less. They called him “germ boy”. They studying, are organised in groups. Pupils ern Japan, recorded just 3.5. Mr Taki reck- stole his things. They punched and kicked must often adhere to exact rules about ons that even Kyoto underestimates the him and threw him down the stairs; they their uniforms, hairstyles and grooming. scale ofthe abuse. took him to a “study” room and beat him Individuals who do not kuuki wo yomu The law has prodded teachers to report some more. He was eight years old. (roughly translated as “read the vibes”) can bullying but it has done little to change The abuse went on for nearly three be shunned by other members ofthe class. how they deal with the problem. Bullies years before the bullies added extortion. In The Programme for International Stu- are rarely punished: in 2014 there were 2014 they told the boy to hand over any dent Assessment (PISA), a triennial test run 188,057 reported cases and just two sus- compensation his family may have re- by the OECD, a club mostly of rich coun- pensions. The law also assumes that con- ceived after their evacuation. His parents tries, suggests that Japanese students are formity is the way to stop bullying. It says were in fact not eligible for any recom- among the top performers academically. teachers should “cultivate recognition… pense, but relatives had lent them ¥1.5m They also have among the lowest truancy among students that they are part of a ($13,000).Theykeptitin cash athome, fear- rates. But they say they enjoy school less group”. But some pupils are simply more ful that they would again lose access to than nearly everyone else. Shoko Yone- likely to be victims and need protection— bankaccounts. The boy gave all the money yama of the University of Adelaide argues like evacuees. to his classmates. After the cash ran out he that Japanese schools are “dysfunctional Or gay pupils. A report last year by stopped going to school altogether. communities”. HRW concluded that bullying of gay chil- The boy, now 13, is one of hundreds of dren in Japanese schools was “nearly ubiq- evacuees to have been bullied at school. Backing the bad guys uitous”. It cited a survey by Yasuharu Hi- And they are part of a broader problem. Teachers rarely help. They are renowned daka of Takarazuka University that found Bullyingmay ormay not be more common for their pedagogical prowess, especially that 44% of gay teenage boys were bullied. in Japanese schools than elsewhere, but it in maths. But most are not trained to spot One told HRW that teachers said his sexu- is unusually intense when it happens. In bullying. There are few incentives to notice alitybroke the harmonyofthe school. Sep- 1986 a boy killed himself after classmates, or deal with it, notes Kanae Doi of Human arate research by Mr Hidaka suggests that egged on by the teacher, topped months of Rights Watch (HRW). Teachers who do not roughly one Japanese teacher in three mental torture with a mock funeral. Since achieve harmony, she says, are seen as thinks homosexuality is a mental illness. then, thousands of articles and hundreds poor performers. One survey suggests that The government has said it will review of books have been written on the subject. around 12% of teachers have taken part in its anti-bullying policies. But laws alone Yet there is no sign that the bullies are lay- bullying. A quarter of high schools allow will notcurb it. Thatrequirespolicymakers ing off. In 2015 nine bullied pupils killed corporal punishment. and teachers to recognise that too much themselves, according to government fig- Since the1980s various task-forces have conformity plays a part. In November the ures. Suicide is the biggest cause of death tried to curb bullying. But the local school 13-year-old from Fukushima issued a mes- for Japanese aged 10 to 19, and the first day boards that interpret the national curricu- sage forevacuees enduringsimilarordeals. ofschool the most common date for it. lum and hire teachers have neglected the “It is painful,” he said through his parents, According to Mitsuru Taki of the Minis- problem. In the case of the boy from Fu- “but please do not choose to die.” 7 try of Education, bullying in other coun- tries tends to involve two or three pupils picking on another. In Japan, in contrast, most cases involve a big portion of a class inflictinginsistent psychological (and occa- sionally physical) torment on a single vic- tim. “Bullies in Japan are not rotten ap- ples,” he says. “It is a group phenomenon.” There are many reasons for this idio- syncratic form of bullying. “A characteris- tic of Japan is that you should not stand out,” argues the head teacher of a second- ary school in Tokyo. “Pupils have to lead a collective life when they are at school,” adds Koju Matsubayashi, an official in the anti-bullying department at the ministry. Erika, an 18-year-old who left her school in Tokyo after being bullied, agrees. “I was told by teachers to adapt or quit, so I quit.” The way Japanese schools are organ- Not as blissful as it looks 36 Asia The Economist April 15th 2017 Banyan Trouble at the top

Tokyo Japan’s ultranationalists exalt the emperor, but he has no time forthem close to your friends? But it also implies that good subjects must be prepared to die for the emperor. That runs entirely counter to the liberal constitution the American occupiers imposed on Ja- pan in 1947. It denies the emperor’s divinity, describing the mon- arch as merely the symbol of the nation. Sovereignty is declared to reside firmly with the people. Mr Hando scorns those who back a revival of the rescript but fail to mention the implication that the emperor should return to power. Japan’sright-wingersand ultranationalistsare a mixed bunch. On the streets of central Tokyo, thugs sweat at the wheels of “sound trucks” flying imperial flags and blaring out songs from the days of conquest. At Tokyo’s Yasukuni shrine, which deifies Japan’s wardead, fantasists strut about in the uniform of kamika- ze pilots. Elsewhere, mousy self-taught “historians” sit in shabby cubby holes filled with papers “proving” all the wrongs and the lies committed against Japan, while revisionist commentators fulminate in cable-television studios with wobbly sets. One thingtheyall have in common isreverence forthe emper- or’s unbroken lineage—although believing him a descendant of the sun goddess requires flexible thinking. Perhaps that is why historical revisionism comes easily to these groups. They deny HE Imperial Rescript on Education was issued on behalf of that Japan committed atrocities during the second world war, TEmperor Meiji in October 1890. In 315 flowery characters, it such as massacring civilians or forcing women into prostitution. urged his subjects to cultivate loyalty, filial piety and, above all, a There are opportunistsin these movements, butperhaps most readiness to dedicate their lives to the survival of the imperial believe what they say. As Mr Hando says, “We in Japan have a house. Certified copies of the rescript were housed in small habit of thinking that if something should not have happened, shrines to the imperial family in every school. Children commit- then it didn’t happen.” Two rabid revisionists sit in Mr Abe’s cabi- ted the rescript to memory. It was a founding document for the net: the defence minister, Tomomi Inada, and Sanae Takaichi, the notion of kokutai, a mystical state-forming bond between the di- minister for internal affairs. Nippon Kaigi, a revisionist group vine emperor and his subjects. It was therefore the beginning ofa dedicated to rewriting the pacifist constitution and restoring the road to indoctrination in which Japanese carried outorders in the emperor to a more central role, has 38,000 fee-paying members, name ofthe emperor—a road that led to militarism, total warand, including three-quarters ofMr Abe’s cabinet. ultimately, shatteringdefeat. It is no wonder, then, that kokutai, as Anotherthingthe outfits have in common is a beliefthat a cul- a word, now jars as much as Lebensraum does in Germany. As for ture of guilt about the war and all those apologies to neighbours the imperial rescript, in 1948, three years after Japan’s surrender, over wartime aggression have emasculated today’s Japanese. Ta- the Diet revoked it. dae Takubo, Nippon Kaigi’s chairman, says its aim in pushing for So whatwasthe cabinetofShinzo Abe, the currentprime min- “moral education” in schools and for a glossier interpretation of ister, doing in early April by allowing the use of the rescript in the war in textbooks is to “correct the pendulum” after seven de- schools? The cabinet’s chief secretary, Yoshihide Suga, coyly not- cades of “brainwashing” by left-wing teachers, who object even ed that the government was hardly suggesting it should be the to compulsory singing ofthe national anthem. “sole foundation” of children’s education, as if critics of the poli- The ultranationalists have made progress. The defence of the cy were the fundamentalists. Nor, he said soothingly, was the rescript by Mr Suga, no extremist himself, is a sop. Yet they have a governmentactivelypromotingitsuse in classrooms: that wasup grave problem: the very emperor they claim to revere. Akihito, to teachers, and they should not contravene the constitution. who is 83, has spent his life reflecting on the tragedy of the war Yet the move comes on the heels of a furore over Moritomo that his father, Hirohito, condoned or even encouraged. He has Gakuen, an ultranationalist group running a kindergarten. Vid- spent much ofhis time as emperorvisitingbattlefields, mourning eos show its infants bowing before photographs of the current the dead on all sides, not just Japan’s. emperor, Akihito, and his wife; singing martial songs; calling on grown-ups to protect disputed territories claimed by China, Chrysanthemum groan South Korea and Russia; and chanting anti-Chinese and anti- His actions are a living rebuke to the nationalists. Leaders of Nip- South Korean slogans. In Japan this is mainly a scandal because pon Kaigi visibly twitch with consternation on learning that the of the involvement of the prime minister’s wife, Akie Abe, who emperor invites the likes of Mr Hando in for chats—they never agreed to be honorary head of a primary school that Moritomo manage to talk to him. Now the emperor is asking the Japanese Gakuen is building in Osaka. She resigned from the post in late people for permission to abdicate, since old age is making it hard February, after it emerged that the school had acquired land from to carry out his duties. That too offends the nationalists, since ab- the local government at a heavily discounted price—the subject dication supposedly breaks with over two millennia of immuta- ofan ongoing investigation. ble tradition. The emperor, says Yoichi Funabashi, one of Japan’s Kazutoshi Hando, a historian who was born in the early 1930s, best-known liberal intellectuals, is immensely popular and com- can still recite the rescript by heart. It has good parts, he says: who mands respect: “He is in effect invincible.” The ultranationalists, can object to filial piety, getting along with your siblings or being deep down, know that they are not. 7 China The Economist April 15th 2017 37

Also in this section 38 Education in Hong Kong

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

Education in the countryside “poor”. He says that if a family can avoid sending a child to board, it will. The bare A class apart concrete walls of the eight-bed rooms are filthy; their windows have no curtains. Toothbrushes stand in lines of mugs on small tables, but there is nowhere to store other belongings—not that many of the JIAOBA children have personal possessions. There is no space in them to do homework. The Many rural students now attend boarding schools. They are often worse offfor it dormitories are unheated, though it is ex- RIDAY is a good day for eight-year-old around 10m primary schoolchildren in ru- tremely cold even in spring. FYang Zongtao. He will see his mother ral China were doing so—about 12% of stu- Yet Jiaoba has better facilities than and baby sister after spending the week dents in that age group. Half of all second- many other such schools, where children boarding at Jiaoba Central Primary School ary-school students in the countryside often have to share beds, and toilet blocks in Guizhou, a southern province and one now board, too. are far from dormitories. The government of China’s poorest. He misses his mother There are two main types of boarding pays 1,000 yuan ($145) a year towards the “a bit”, he says stoically. But the walk from school in China. Some are privately run cost of each child’s lodging, breakfast and his home takes an hour, too long to under- fee-paying ones for children of the urban supper at Jiaoba Primary (there is also a take alone each day. So, like millions of pu- elite. Pupils often attend such schools close four-yuan subsidy per child per day for pils in China’s countryside, he remains at to where they live (many parents believe lunch). But elsewhere many parents have school all week (some stay longer). There that education is helped by separation to foot the bill. Many schools do not even are rural children who start boarding as from the distractions of family life). Far provide three meals a day, according to early as the age ofthree. more common are rural schools such as Stanford University’s Rural Education Ac- Educating rural people has long been a Jiaoba Primary (pictured). These are state- tion Programme. The fare often lacks much challenge. In the 1990salmosteveryvillage run and government-funded. The idea be- nutritional value, too. had a primary school or “teaching point”, hind the rural ones is that pupils will bene- where children aged between six and ten fitfrom nothavingto commute, take part in Not much food for thought often attended class in a single room. But household chores or toil in fields. Such Children in the Chinese countryside tend school enrolments began to fall because of schools are also supposed to offer better not to be as healthy as their urban counter- plummeting birth rates and migration to academic support for students than they parts. But those at rural boarding schools cities. Local governments responded by can get at home: many older people in the are even less robust. They are more likely closing underused village schools and countryside have little formal education. to have intestinal worms and to be anae- pooling resources in larger ones such as Another proclaimed benefit is that the mic (which affects both academic accom- Jiaoba’s. In 2001 it became national policy schools can ensure poor students eat well plishment and health). Far more are to merge schools this way. Between 2000 and have their health properly monitored. unusually short for their age than non- and 2015 nearly three-quarters of all rural But many rural schools are ill equipped boarders—a sign of poor nutrition. A study primary schools, more than 300,000 of for these tasks. In Guizhou, government in 2009 in the northern province of them, were shut. spending per person on education in rural Shaanxi found that rural children who Because journeys to school are now as well as urban areas is less than half the boarded were on average 3cm shorter than longer on average—and are often costly, ex- amount in Beijing, reckons Unicef, the UN those who did not. Many of the boarders hausting or dangerous (or a combination agency for children. At Jiaoba’s primary may have been undernourished earlier in of these qualities)—many children now school, where more than 100 children their lives. But their rate of stunting in- have no choice but to board. By 2010, the board (about one-tenth of the total), the creased with age, suggesting that school latest year for which data are available, head teacher admits that facilities are was aggravating the problem. 1 38 China The Economist April 15th 2017

2 Teaching quality and facilities are Education in Hong Kong welfare. Schools in Hong Kong produce ad- sometimes better at the merged schools, mirable results. But academic pressures on but staff turnover is often high. The large Testing times pupils are enormous. Last year Mr Leung’s size of classes can make teaching more dif- government commissioned a report on ficult: at Jiaoba some of them have 75 chil- whether academic demands were to dren. Academically, boarders perform blame for a spate of student suicides. even worse than their peers who live at HONG KONG Many Hong Kongers were outraged by its home. Last year a study of boarders in five finding that the suicides were not directly Carrie Lam’s education policies will not provinces found they did less well than related to the education system. defusepolitical tensions in schools day pupils in tests of their language ability, Unlike Mr Leung, who supported rigor- memory and speed at problem-solving HE leader of Hong Kong, Leung Chung- ous testing of students even at a very (there was little difference, however, in Tying, will not be widely missed when young age, Mrs Lam talks of a need to “re- their abilities in maths). Students who be- he steps down at the end of June, especial- duce pressure” on them. She has taken aim gin their primary education in old-style ly by the young. His five-year term has at a particularly controversial scheme, sup- village classrooms tend to do better than been dogged throughout by student-led ported by Mr Leung, for assessing the per- those who start in larger schools farther protests. In 2012 thousands of high-school formance of primary schools. It involves away,according to some findings. pupils demonstrated against what they testing pupils but not telling them their Boarders often suffer from a lack of saw as an effort to teach them to love the scores: the results are only used to grade supervision and emotional support. At Chinese Communist Party (“national edu- the schools. It has resulted in heavy pres- Jiaoba, two elderly women stay in the dor- cation”, as the government called it). Lead- sure on students. Last year, amid an outcry mitory building overnight. But teachers ers of the campaign were back on the from parents, the government suspended there admit that some students are “with- streets again two years later demanding one form of such tests. But it said it would drawn”. Children who live at their schools full democracy. Their “Umbrella Move- introduce a new scheme this year that are more prone to anxiety,depression and ment” was the biggest act of civil disobedi- many parents fear will be little different. other mental-health problems. They are ence in the territory’shistoryandspawned Mrs Lam wants the testing to be scrapped also vulnerable to sexual and other forms new groups demanding “self-determina- altogether. Mr Leung has curtly advised of abuse: a spate of such incidents has tion” forHong Kong. her that she cannot abolish it until his term been reported at rural boarding schools in No wonder, then, that Carrie Lam, who ends. recent years; farmore may go undetected. was chosen in March to succeed Mr Leung, During her campaign to become chief Since the merger policy was adopted, is trying to win over the territory’s youth. executive, Mrs Lam promised to increase drop-out rates may have risen. In 2012 the Tobe successful, she cannot be seen as an- the annual budget for education by National Audit Office found that the num- other Mr Leung. That will be tricky. In her HK$5bn ($643m), or nearly 7%, noting that ber of students who quit had more than previous role as Hong Kong’s top civil ser- government spending on this was below doubled between 2006 and 2011 in 1,155 vant, she had to implement his policies— the average in wealthy economies. She is primary schools it investigated. That was a and, by extension, those of the party in widely expected to replace the unpopular rare admission by a government body.The Beijing.MrsLamiswidelyremembered for education secretary, Eddie Ng. official drop-out rate for all primary her obduracy in a televised debate with But Mrs Lam’s reforms will do little to schoolchildren in China was 0.2% in 2015, student leaders during the Umbrella un- ease older students’ political frustrations, but researchers at Shaanxi Normal Univer- rest (protesters watching her are pictured). including their resentment of the Commu- sity reported a rate 20 times higher than As chief executive, Mrs Lam will still have nist Party’s insistence on “patriotism”. Last that in a survey of15,000children aged 9 to no freedom to propose political reform un- month the main advisory body to the par- 11in the countryside. less China wants it. At a meeting in Beijing liament in Beijing urged its members from In recent decades China has seen rapid on April11th with the president, Xi Jinping, Hong Kong to visit schools in the territory improvements in educational standards. she atleasthad the gumption to tell him (or to talk about “national conditions” (or the The average number of years a Chinese so she later said) that “Hong Kong citizens party’s achievements, as many in the terri- child spends at school has doubled since passionately hope for more democracy.” tory interpret that phrase to mean). It said 1980. The share of the labour force with China does not. this would help to curb pro-independence any kind of higher education increased Instead of dwelling on politics, Mrs sentiment in HongKong. More likely is that from 1.1% in 1980 to 12.5% in 2015. But these Lam is tryingto show concern forstudents’ students will grumble even louder. 7 statistics often obscure how far rural chil- dren are left behind academically. Less than 10% of them go to senior high school, compared with 70% ofchildren in cities. The government acknowledges that its efforts to concentrate resources in a small- er number ofrural schools have not solved the problem, and have sometimes resulted in students having to live in poor condi- tions without adequate safeguards. In 2012 it ordered local authorities to stop “blind- ly” closing schools before ensuring that centralised ones are up to standard. But lo- cal governments have little incentive to spend more money,since any student who does well academically is certain to leave the countryside. Rural children will form the backbone of China’s future workforce. By failing them, the government is failing the country as a whole. 7 The old Carrie Lam Middle East and Africa The Economist April 15th 2017 39

Also in this section 40 Persecuting Egypt’s Christians 40 Harsh cannabis laws 41 Iran’s unfair election 41 Cape Town’s road to nowhere 42 Overcrowded African universities

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

Shia militias tani, in the cityofNajaf, manyofthe militia leaders say they follow Ayatollah Ali Kha- Who runs Iraq? menei, Iran’s Supreme Leader, instead. Their men are prone to patrolling Bagh- dad’s streets as religious police, much like Iran’s hated basijis. Their influence lay be- hind a countrywide alcohol ban last year. BAGHDAD Several of the militias have political repre- sentatives in parliament, and for elections America and Iran are jostling forinfluence in Mesopotamia in 2018 may band together to form a deci- O UNDERSTAND how mightily Iran have penetrated every organ ofstate.” sive Iran-leaning bloc. Hadi al-Amari, the Tonce dominated Iraq, head to Ctesi- Their involvement in Iraq has been de- leader of Badr, the largest of the Shia phon, Persia’s old capital, just south of cades in the making. After Iran’s Islamic armed groups (it claims 20,000 men), still Baghdad. A millennium and a half old, its revolution in 1979, its ayatollahs recruited gives orders in Persian, and is a friend of ruined palace still features the world’s larg- Shia exileswhom Saddam Hussein had ex- General Suleimani. He too followsMrKha- est unsupported brick arch. Until Arab ar- pelled, and in the 1980s sent them into bat- menei, though he says that his men are free mies seized it at the dawn of Islam, the city tle against Iraq. When America toppled to choose. was twice the size of imperial Rome and Saddam Hussein in 2003, these Iran-lean- the centre of a Sassanid empire that ing exiles headed back to Baghdad, filling Iraqis first, then Shias? stretched from Egypt to the Hindu Kush. the vacuum left by Saddam’s Baath party, The practical benefits of adherence to Iran FewIraqisseem eager to remember that which the Americans had banned. are, however, being tempered with a de- history today. The Persian ruins lie behind America’s withdrawal in 2011 and Is- gree of Iraqi (and Arab) nationalism. Iraq, rusting barbed wire, as if ties with Iran, lamic State’s routing of Iraq’s army three so Mr Amari says, is too multi-religious to past and present, were an embarrassment. years later, seizing more than a third of the adopt Iran’s system of Shia clerical rule. Officially, Iran has only 95 military advis- country, provided more opportunities. As Other armed groups vow more emphati- ers in the country, compared with Ameri- the Sunni jihadists surged south, Shia mili- cally to prevent Iran from launching a bid ca’s force of some 5,800 soldiers, several tias declared a hashad, or “popular mobili- for control of Najaf when Mr Sistani dies. vast military bases and control ofthe skies. sation”, drafting in tens of thousands of Having Americans around helps reduce (In reality, an adviser to the prime minister volunteers. With the help of arms from dependence on their over-mighty neigh- confides, Iran’s forces outnumber Ameri- General Suleimani, they staved off the fall bour. When America sent its forces back to ca’s at least five to one.) of Baghdad. Then, to “defend” the country, Iraq to help with the fight against IS in 2014, Iran’s hidden hand is everywhere. One they seized effective control of much of most militias welcomed them. UN official recounts how, after visiting a what remained ofit. For the moment, too, the hashad bri- province near the Iranian border, she was The acquisitions continue. In March gades have complied with orders to hang surprised to be told that General Qassim Asaib Ahl al-Haq, one of the largest mili- back in the operation to retake Mosul in fa- Suleimani, the shadowy commander of tias, moved into the riverside palace ofSaj- vour of special forces trained by and oper- the Quds Force, or foreign legion of Iran’s jida, Saddam Hussein’swife, in Adhamiya, atingwith American, not Iranian, advisers. Revolutionary Guard Corps, had been a staunchlySunni neighbourhood ofBagh- They let Haider al-Abadi, Iraq’s prime min- there at the same time. “The Americans are dad. Much of the rest of the capital is al- ister and a man who leans much less to- more powerful,” says Hashim al-Hashemi, ready divvied up between 100 or so other wards Iran than his predecessor did, take an Iraqi security analyst in Baghdad, “but militias. Unlike most Iraqi Shias, who pro- the credit for battlefield gains. And in re- the Iranians are more dangerous. They fess allegiance to Grand Ayatollah Ali Sis- turn for salaries and formal recognition of1 40 Middle East and Africa The Economist April 15th 2017

2 the hashad as part of the armed forces, Cannabis laws as a way to keep young people in line (or in their commanders say they will abide by jail). Clerics provide cover, citing objec- government orders. They have taken Puff, puff, prison tions to intoxicants in the Koran. down the billboards of Iran’s ayatollahs Despite the perpetual crackdown, can- which loomed over Baghdad’s squares nabis is still widely used. Official statistics when popularmobilisation waslaunched. are murky, but tokers and dealers are easy As they have pushed north beyond CAIRO to find in most countries. Part ofthe reason Shia heartlands, they have grown more in- is that cannabis is produced nearby. Moroc- Some governments are rethinking their clusive, incorporating tens of thousands of co is the world’s top supplier. Lebanon is harsh cannabis laws Sunnis, Christians and Yazidis into the another big producer. Cannabis from hashad. They have stood by as Mr Abadi, HEN we think about our future, South Asia also passes through on its way with American cajoling, adopted a more “Wour dreams, we have nothing,” to Europe. Arab, less Shia-revivalist, foreign policy. says a young man in Sidi Bouzid. Life in the The combination of heavy use and Resisting Iranian pressure for visa-free ac- Tunisian town that launched the Arab harsh laws has resulted in overcrowded cess to Iraq in November, officials turned spring has barely changed since the coun- prisons. In Tunisia, for example, drug of- back Najaf-bound pilgrims without per- try’s old dictator, Zine el-Abidine Ben Ali, fenders make up about 28% of the prison mits, and welcomed the first-ever Saudi was ousted in 2011. Unemployment is even population. Most are in for using cannabis. plane bringing Saudi Shias to the city. In higher nationally than before the uprising. Upon release, their criminal record makes February the Saudi foreign minister visited Young people are worst-off, which helps it nearly impossible to get a job. Baghdad for the first time in 27 years, and explain why an alarming number join ji- Tunisia is now rethinking its policies. A an Iraqi delegation has gone to Riyadh to hadist groups. The frustration drives oth- draft law would abolish prison terms for negotiate restoring cross-border trade. ers, including this young man, to use zatla, first- and second-time offenders caught Yet beyond the tactical alliance over the local name for cannabis. with cannabis for personal use. Judges Mosul, all sides are wondering how long Using cannabis in Tunisia, though, is could impose alternative punishments on the rapprochement will hold. Having re- risky. Under the country’s “Law 52”, any- repeat offenders; more emphasis would be built four big bases, America shows no one caught using or in possession of the placed on treatment. The measure is vague sign of leaving Iraq; Mr Abadi’s men speak drug receives a minimum sentence of one and, say critics, could lead to more abuse. of “a multi-year presence”. On his return year in prison. Repeat offenders get up to Anyway, it is stalled in parliament. But in from a trip to Washington in March he un- five years. Judges have no discretion to March the national security council veiled plans for demobilising half the consider the circumstances or to recom- moved to keep some offenders out ofjail. 100,000-plus hashad, and integrating what mend other punishments. The young man Elsewhere in the region there has been remains directly under army command. says most of his friends have been locked at least some movement towards decrimi- Concerned, Iran has sent a new ambassa- up forgetting high. nalisation. The cabinet in Israel, already a dor to Baghdad, who happens to be a se- So it goes in much of the Middle East leader in medical-marijuana research, has nior adviser to General Suleimani. Iranian and north Africa, where the law often approved a plan that would impose noth- propaganda videos are circulating, threat- lumps pot in with harder drugs. In many ing more than a fine on those caught with ening renewed attacks on American bases. countries possession of a single joint can small amounts of cannabis. Several other Some militias are again proclaiming anti- lead to jail. But some governments are ac- countries have harsh laws, but often look Americanism. “America’s occupation is ac- knowledging the harmful effects of their the other way. Iran, which shares a porous cepted by the government, not the peo- policies and thinking about reform. border with Afghanistan, has executed ple,” says Qasim Musleh, who commands The region’s harsh laws date backto the hundreds of drug dealers. But it largely ig- the Ali Akbar brigades based in the shrine 18th century, when a French army officer nores the growing popularity ofpot. city of Karbala. He sees Iran, not America, wrote that “the mass of[Egypt’s] male pop- The Moroccan authorities lookat the is- as Iraq’s ultimate guarantor of stability. ulation is in a perpetual state of stupor!” sue from the other direction. Though the Iraq, like Syria, is a theatre where Mr Napoleon banned hashish in Egypt. More governmentbansthe production ofcanna- Trumpbadly needs a clear policy. 7 recent authoritarians have used drug laws bis, its growth is tolerated in the Rif, a northern region that supplies Europe. “Tra- vel around in some areas and you see the plants all over the place,” says Tom Blick- Exodus man of the Transnational Institute, a re- Christians, as % of population search group. Ironically, a draft law that 20 would legalise cannabis production Syria countrywide for medical and industrial FORECAST Egypt uses has worried the region’s growers. 15 They fear that rich landowners or the gov- Palestine ernment, which would collect the entire Israel 10 crop, could push them out ofbusiness. Iraq Growers in the Rif may not like the pro- 5 posal (which is also stalled), but the status UAE quo is hardly better. Cannabis has not en- Saudi riched them, as most of the profits go to Arabia 0 traffickers—and corrupt officials. Nearly 1900 25 50 75 2000 25 50,000 growers have arrest warrants hang- Source: World Religion Database ing over their heads, says Mr Blickman. Many pay bribes to avoid arrest. In other The agony of Palm Sunday countries that tolerate cannabis, there is al- Islamic State claimed responsibility for two bomb attacks on Christian churches outside ways the fear of a crackdown. Officials are Cairo and in Alexandria, in which at least 44 people died. Such persecution is one reason not known for being fair. That is yet anoth- why Christian populations across much of the Middle East continue to decline sharply er reason why people turn to drugs. 7 The Economist April 15th 2017 Middle East and Africa 41

Iran efforts to disqualify well-known reformist his 2009 re-election, and restricted internet candidates, voters went to the polls armed bandwidth to such an extent that it took Taking aim at the with “lists of hope” of the lesser-knowns hours to access a page. Facebook and Twit- on their phones, and unseated the staun- ter were banned. But Mr Rohani’s govern- president chest conservatives, some of Mr Khame- ment has made censorship harder. It has nei’s relatives among them. No sooner had boosted bandwidth a hundredfold, com- Mr Raeisi’s candidacy been announced pared with 2009. And it has expanded mo- than they began tarnishing his squeaky- bile coverage from 39% to 99% of Iran, in- As Iran’s presidential election looms, clean image with claims that, as a 28-year- cluding to 27,000 villages which the hardliners crackdown old prosecutor, he had sentenced hun- hardliners hitherto considered strong- PPLICATIONS for the ticklish job of dreds ofleftist political prisoners to death. holds. So Mr Rohani continues to get his Apresident of Iran opened this week, Under a more reactionary government, message out. Recent signs of mild eco- with more than 100 hopefuls vying to re- censors might have banned Telegram. nomic improvement may have given his place the incumbent, Hassan Rohani, a rel- Mahmoud Ahmadinejad, the hardline for- continued support for Western engage- ative moderate, atthe election on May 19th. merpresident, simply switched offthe mo- ment a boost, too. The hardliners will not The religious conservatives who loom so bile network when protesters contested have the campaign all their own way. 7 large in Iran are hoping they can unite around a single candidate, overcoming the divisions that doomed their prospects in 2013 and allowed Mr Rohani to win. Their preferred man is Ebrahim Raeisi, the newly appointed head of one of Iran’s most important and best-endowed shrines, Imam Reza in Mashhad. In addi- tion to income from the shrine’s holdings, which include car factories, he is a protégé of the Supreme Leader, Ayatollah Ali Kha- menei. But to Mr Raeisi’s probable conster- nation, on April 12th a divisive ultra-con- servative former president, Mahmoud Ahmadinejad, also entered the race, de- spite orders from Mr Khamenei not to stand. This makes it more likely that the hardliners will again see their vote split. Still, the anti-Iranian rhetoric of Donald Trump, America’s president, is a big bonus for the anti-reformists, should they come together. After a nuclear deal between Iran and six major powers was concluded in 2015, Mr Rohani’s re-election had seemed assured. But the promised fruits from the lifting of UN sanctions (in return for Iran South Africa curbing its nuclear programme) have been slow to arrive. Far from encouraging in- Highway, interrupted vestment in Iran, America has tightened some sanctions, and continues to prevent Iran from trading in dollars. With the army, Revolutionary Guards, judiciary and state television in their CAPE TOWN hands, as well as the power to approve A road to nowhere may finally reach an end candidates (which the Guardians Council they dominate has yet to do for the coming ETWEEN the ocean and the mountain, Town remains largely segregated, despite election), Mr Khamenei’s hardliners al- B there’s the unfinished highway. It is an the advent of democracy in 1994. Under ready wield huge power. They are now tar- odd-looking landmark in a beautiful city: apartheid, black and mixed-race people geting social media, where pro-Rohani re- sections of elevated road left suspended in were forced to live in the worst areas, far formists have until now mostly operated mid-air when construction stopped in the away from the whites and from work. To- freely. Last month masked goons arrested 1970s. Four decades later, the hulking slabs day they are free to live where they choose, 12 administrators of popular social-media of concrete still end in precipitous drops. A but mostly cannot afford to live in the old news channels. glossy brochure of Cape Town film loca- “white” areas. Space in Cape Town’s But the hardliners’ task is proving tions proclaims the cut-off highway “truly downtown core and seaboard is limited, daunting. First in their sights is a phone special”, with “great city views”. It makes and homes are expensive. So the poor app, Telegram, that enables encrypted an edgy backdrop for TV commercials and have to travel long distances on increasing- messaging between users, and also offers fashion shoots, and looms over an episode ly clogged roads. Brett Herron, a city coun- uncensored news channels. It claims 20m ofthe science-fiction series “BlackMirror”. cillor on the mayoral committee for tran- Iranian users and thousands of Persian- This may soon come to an end. The un- sport, says that hard-up households in language channels, some claiming over a finished highway could become part of a Cape Town spend on average 40% of their million subscribers. Last year it helped the plan to help overcome a legacy of apart- income on transport. reformists get out the vote in parliamenta- heid—while also easing traffic jams. There are various tales as to why the ry elections. Confounding the hardliners’ Like other South African cities, Cape highway was never finished. Mr Herron 1 42 Middle East and Africa The Economist April 15th 2017

2 says the city was simply waiting for future Three-dimensional models of six de- than 460 (the number of public universi- traffic volumes to require it. That time signs—featuring urban gardens, cycle lanes ties meanwhile doubled to 200). But they came long ago; but now the city says it can- and a promenade—went on display last often find themselves tied up in red tape. not afford it. Instead, it is turning to private month forpublic comment. The city wants Gossy Ukanwoke tried to establish Nige- developers. To sweeten the deal, the city construction to begin within the next few ria’sfirstonline-onlyuniversityin 2012, but will give the winning developer six hect- years. This is the first offive big projects be- was forced by the government to acquire a ares of prime land alongside the road. The ing undertaken to improve public housing campus. Beni American University has unfinished highway can be completed, and transport. Patricia de Lille, Cape 450 executive-education students on-site, knocked down or turned into something Town’s mayor, thinks finishing the high- and has taught 8,200 online in the past two else entirely—a park, perhaps. But propos- way is what people will remember her for. years. But it has struggled to attract invest- als must help reduce congestion, while in- Film-makers may have to find a new apoc- mentto finish the facilitiesitneeds before it corporating cheap housing. alyptic location. 7 can teach undergraduates. Many of these new institutions churn out cheaply taught business degrees. But Universities in Africa some others are giving the better public in- stitutions a run for their money. Kenya’s More can be less Daystar University is renowned for its communications courses (it also offers whatitclaimsto be “the world’sfirstsmart- phone-based degree programme forteach- ers”). Strathmore, another private Nairobi KAMPALA university, focuses on specific areas, in- cluding intellectual-property law, disaster Over-recruitment is a continent-wide problem management and how to start a business. AKERERE UNIVERSITY’S position, haran Africa, especially in the poorer And some public institutions are up- Mon a hilltop commanding a pan- countries. (South Africa’s university sys- ping their game. Internships are now man- oramic view of Kampala, is fitting for a tem is more advanced but faces other diffi- datory at Uganda’s public universities. The place some call the “Harvard of Africa”. By culties, including demands by militant stu- University of Nairobi’s Fab Lab, part of a many measures, it is the continent’s best dents that fees be abolished altogether.) A global initiative that provides access to ma- college outside South Africa. But it was World Bank study of 23 poorer African chinery and online courses in how to use closed for two months from November by states found that enrolments at public and it, has spawned a number of startups. Uganda’s autocratic president, Yoweri Mu- private universities had quadrupled be- Open-source hardware has helped, says seveni, after a strike by lecturers over un- tween 1991 and 2006, while public spend- Kamau Gachigi, who runs the lab. He cites paid bonuses sparked student protests. ing on them rose by just 73%. AB3D, which makes 3D printers based on Founded by the British to train local co- Opening new public institutions to free designs posted online by Adrian Bow- lonial administrators, Makerere hasa repu- meet growing demand has not been pro- yer, formerly of the University of Bath in tation for educating the powerful. Tanza- blem-free, either. In 2000 Ethiopia had two Britain. Open-source software and web- nia’s founding president, Julius Nyerere, public universities; by 2015 it had 29. sites such as Sci-Hub that make pricey aca- studied there. So did Kenya’s third leader, “These are not universities, they’re shells,” demic journals free to read (albeit illegally Mwai Kibaki, and the Democratic Republic says Paul O’Keefe, a researcher who has in- in most jurisdictions), also help cash- ofCongo’scurrenthead ofstate, Joseph Ka- terviewed many Ethiopian academics, strapped universities improve teaching bila. The university went through a rough and heard stories of overcrowded class- and research. But even these welcome period between 1971 and 1979, when it felt rooms, lecturers who have nothing more developmentswill notgo farifAfrican uni- compelled to make Idi Amin, a barely liter- than undergraduate degrees themselves versities continue to admit more students ate despot, its chancellor. Amin awarded and government spies on campus. than they can cope with. himself a doctorate of law, despite neither In those countries where higher educa- Africa needs more well-educated studying much nor believing in the rule of tion was liberalised afterthe cold war, priv- young people. But many of its young grad- law. But those dark days are past. Maker- ate universities and colleges, often reli- uates have gained little more from their ere’s researchers are now some of Africa’s gious, have sprung up. Between 1990 and time at university than raised expecta- most prolific, creating everything from 2007 their number soared from 24 to more tions. Swelling classes and stale courses low-cost sanitary pads to an electric car. mean they are generally ill-prepared for Nonetheless the institution’s problems— the few graduate jobs on offer. Young sub- too many students and too little money— Getting smarter? Saharan Africans with degrees are three are all too common across the continent. Enrolment in tertiary education times as likely to be unemployed as their Makerere hasmore than doubled enrol- % of relevant age group, selected countries primary-school-educated peers, who are ment to nearly 40,000 in the past two de- 30 mostly absorbed by the informal sector. Sub-Saharan Botswana cades. As government scholarships, most Africa Donors willing to fund universities in of them allocated by merit rather than Africa, rather than scholarships forAfrican need, have become scarcer, and strike-hap- students to attend European and Ameri- 20 py lecturers have demanded ever-higher Sudan can universities, might improve local insti- wages (even though academics at public tutions—and help pay for expansion. The universities are some of Uganda’s best- Ghana World Bankis planning to spend $290m by paid workers), the university has tried to 10 2019 on 22 “centres of excellence” in areas close the funding gap by admitting more Mozambique such as climate change and poultry sci- fee-payers. But in real terms it spends al- ence, in seven west and central African most a quarter less now than in 2007, even Ethiopia Tanzania countries. Other donors and African gov- though the number of students has risen 0 ernments would do well to follow, and tie 2000 02 04 06 08 10 12 15 by12% over the same period. funding to teaching and research quality, Source: UNESCO Similar pressures are felt across sub-Sa- rather than to student numbers. 7 Europe The Economist April 15th 2017 43

Also in this section 44 Russian meddling in Europe 45 Voters stop caring about growth 45 Russian shenanigans in Sweden 46 The merciless Mediterranean 47 Charlemagne: The risk of Le Pen

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

France’s four-way election centre-right mayor, who was first elected backin 1983, saysthathe usuallyhasa good A presidency up for grabs sense of how his town will vote, but not this time: “This is the most uncertain presi- dential election I have ever known.” This urge to back an insurgent matches national trends. In a matter of weeks, Mr CHATEAUDUN Mélenchon, who has a big YouTube fol- lowing and attracts voters to some rallies What looked like a race between two favourites has been thrown wide open to watch his hologram beamed in live, has ERCHED on a river bend in an unfash- Candidates who promise to overturn surged in some polls from fifth place to Pionable expanse of central France, the system have captured the imagination. third, overtaking Mr Fillon. He trails only a Châteaudun is in many ways a typical Didier Renard, a retired construction work- few points behind Ms Le Pen and Emman- French town. It boasts a 15th-century cha- er, declares unabashedly that he will vote uel Macron, a pro-European liberal who teau, an unemployment rate of 10%, a fine for Marine Le Pen, the candidate for the founded his En Marche! party just a year main square shaded by plane trees and a anti-immigrant National Front: “She’s the ago. If these polls are right, candidates Turkish kebab restaurant. This town of onlyone who will help people like us.” In a from non-traditional parties are set to cap- 13,000 inhabitants also happens to have a town that lost a big electronics factory a ture the top three places. Guillaume Kas- record of voting in line with the rest of the few years back, disillusion is marked. No- barian, the En Marche! representative for country. In 2007 locals backed the winner, body respects any ofthe candidates, says a the area around Châteaudun, says there is Nicolas Sarkozy, on the right. In 2012 they woman runninga fruit-and-vegetable stall: an edge for the candidate who sounds the voted for the victor, François Hollande, on “People are totally fed up.” So much so, most dégagiste—that is, the most eager to the left. Today, as the first round of this growls a man with tattoos enjoying a throw the bums out. year’s presidential election approaches on morning beer at a terrace café, that he re- Two elements make predicting the re- April 23rd, voters once again seem to reflect fuses to vote. Alain Venot, Châteaudun’s sults especially precarious. One is turnout, the national mood. which averages about 80% for presidential “I’m perplexed,” says Bertrand, a pen- votes. Polls suggest that it might drop to as sioner shopping on the main square, who Anybody’s race low as two-thirds this year, which could voted for Mr Sarkozy in 2012 but has yet to France, presidential election polling further damage traditional candidates and make up his mind this time. He thinks First round, selected candidates, % help Ms Le Pen. Equally unusual, only 60% François Fillon, the centre-right candidate Le Pen (National Front) Macron (En Marche!) ofvoters say they are sure oftheir choice, a who is under investigation for abuse of the Fillon (Republicans) Hamon (Socialist Party) figure that is highest among Ms Le Pen’s parliamentary payroll, may be “compe- Mélenchon (La France insoumise) voters (76%) and low among those who 30 tent” but has behaved “disgracefully”. Ber- back Mr Macron (55%). This not only hints trand’s wife Geneviève, a retired librarian 25 at the fragility of Mr Macron’s vote. It also carryinggeraniumsfrom the market, voted 20 leaves a big chunk of volatile voters close for Mr Hollande last time. But she dismiss- 15 to voting day, possibly ready to vote tacti- es the Socialist candidate, Benoît Hamon, cally depending on the final polls. Last-mi- as “Utopian”. She says she is tempted to 10 nute deciders, says Edouard Lecerf, of Kan- vote forJean-Luc Mélenchon, a 65-year-old 5 tar TNS-Sofres, a pollster, used to reflect the Communist-backed firebrand, who vows 0 national averages; this time, they may not. to bring about a “citizens’ revolution”, take January February March April Until recently, the odds were clearly on France out of NATO and impose a top in- 2017 a run-off between Ms Le Pen and Mr Mac- come-tax rate of100%. Sources: National polls; The Economist ron. A former Socialist economy minister 1 44 Europe The Economist April 15th 2017

2 under Mr Hollande, Mr Macron has rein- back, thanks to disillusioned voters who vented himself as an insurrectionary claim they will not vote for him but could leader, promising to break down old divi- change theirminds on pollingday.Or even sionsbetween leftand rightand inject new what Mr Fourquet calls the “craziest” pos- life into politics. Indeed, at the Château- sibility: that Mr Mélenchon squeaks into dun weekend market, En Marche! was the the run-off. In 2002 Jean-Marie Le Pen, Ms only party out campaigning. Sophie Zeu- Le Pen’s father,made it to the second round gin, an entrepreneur and volunteer, toted with just a half-point lead over the third- red, white and blue balloons and a basket place candidate. of leaflets. Locals called the 39-year-old The French have sprung electoral sur- candidate “sympa” (nice). But one worried prises before. They voted against a draft that he might be “an opportunist”. Anoth- European constitution in 2005. In recent er,testifyingto the depth ofa nation’sinde- presidential primaries, on the right and the cision, said she was hesitatingbetween the left, they kicked out the favourites, elimi- campaign’s polar opposites: Mr Macron nating a former president (Nicolas Sar- and Ms Le Pen. kozy) and two former prime ministers It may yet be that Mr Macron keeps his (Alain Juppé and Manuel Valls). This time, lead and makes it into the run-off. There, in three-quarters of voters could be about to We have so much in common all likelihood, he would meet—and backa candidate who hails from neither of beat—Ms Le Pen. But this election has be- the two political groupings that have run France stories are “almost certainly auto- gun to look like a four-horse race. No sce- France for the past 60 years. This has al- mated”, so frequent are theirposts. Wheth- nario can be ruled out, says Jérôme Four- ready been the most unorthodox French er they are French or Russian is unclear. quet of Ifop, a pollster. This includes the election ever, but even more improbable Testimonies by former employees tell of a possibility that Mr Fillon makes a come- twists may be yet to come. 7 “troll factory” in St Petersburg that churns out anti-Western stories, comments, “likes” and shareable media. Russian meddling in Europe A graver level of political intervention involvescyber-spying. In 2015 FancyBear, a Shadow puppets Russian cyber-espionage group, broke into computers at the Bundestag in Berlin. They went on to target America’s Democratic Party, releasing hacked e-mails that dam- aged Hillary Clinton, the most anti-Krem- BERLIN AND PARIS lin candidate in the presidential race. In France that candidate is MrMacron, and re- Fears ofRussian interference loom overelections in France and Germany cently his campaign has also suffered N AN influential article in 2013, Valery sian origin at Angela Merkel’s refugee poli- hacks. “They said it clearly comes from IGerasimov, chief of the Russian general cies. Other reports insinuate or exaggerate. Russia,” says a staffer, recalling a debriefing staff, described a new doctrine (often Sputnik has stirred rumours about the sex- with French intelligence services. Stefan termed “hybrid warfare”) involving “infor- uality of Emmanuel Macron, a pro-NATO, Meister, a Russia expert at the German mation conflict” alongside diplomacy and pro-European Union candidate for the Council on Foreign Relations, reckons tar- military force to achieve geopolitical aims. French presidency. It broadcasts rallies by gets should expect any embarrassing files To Americans, the Russian-sponsored PEGIDA, an anti-Islam movement, live and to appear on WikiLeaks, a whistleblowing hacking and distribution of fake news dur- without commentary; the pro-EU “Pulse of website that likes to embarrass the ene- ing last year’s presidential election were a Europe” marches receive no such publicity. mies ofVladimir Putin, Russia’s president. shocking example ofthis strategy. Yet there On their own, RT and Sputnik have Other Russian measures involve old- is little new about it. The Kremlin has been very limited reach in Europe. When their fashioned ideological patronage. Last sum- using spooks and shills to sway Western stories catch on, it is often because they are mer Vladimir Yakunin, an ally of Mr Putin, politics since the days of the Soviet Union. amplified online by networks of conspira- launched a pro-Russian think-tank in Ber- The difference now is that the rise of social cy-minded activists, Russian trolls and lin. Moscow supports Zem a Vek, a maga- media and ofpopulist politics, on both the “botnets” (clusters of fake, automated so- zine that peddles conspiracy theories in right and the left, have provided new tools cial-media accounts). Ben Nimmo, an au- Slovakia. The Kremlin-linked First Czech and allies to work with. With France and thority on online disinformation, says Russian Bank lent €9m ($9.5m) to the Na- Germany facing elections this year, Europe many of the Twitter accounts that most tional Front of Marine Le Pen (pictured). expects to be the next target of what the keenly share RT Français and Sputnik Rumours of Russian cash for nationalist 1 KGB used to call “active measures”. Russia has been trying to shape Euro- pean politics for years, most visibly Share-aganda through old-fashioned propaganda. Two Main themes of the 80 most-shared stories* on RT’s and Sputnik’s French and German Facebook pages Kremlin-funded news organisations, Rus- As % of total, January 1st-April 11th 2017 RT sia Today ( ) and Sputnik, launched 0 20 40 60 80 100 French and German versions in 2014 and 2015. These pump out gloom about Europe, Western media/ Merits of Migrant Western military Social unrest political populists/ and/or Other cheer about Russia and boosterism for pro- aggression in EU countries hypocrisy Russia Muslim Russian populist parties. They sometimes chaos RT lie. whipped up false tales about a Rus- Average likes 1,120 1,9381,721 3,698 1,134 923 number sian-German teenager, “Lisa”, supposedly of: comments 258 6,056153 444 2,199 238 raped by migrants in Berlin, in the hope of provoking anger among Germans of Rus- Sources: Facebook; The Economist *20 most-shared posts on each Facebook page out of the latest 5,000 The Economist April 15th 2017 Europe 45

Russian shenanigans in Sweden European elections It’s not the economy, stupid The putative Mr Putilov Voters no longerseem to care much about growth STOCKHOLM UNDITS and political scientists don’t an election, a 1% increase in GDP was Blogger, provocateur, “expert”, always agree. When it comes to pre- associated with an increase ofnearly P scammer dicting electoral outcomes, though, both three-quarters ofa percentage point in tribes assume that the economy is the support forthe incumbent government. HARGES of Russian interference in most reliable oracle. Numerous studies But things are changing. Fewer voters C European politics tend to be shrouded have found a strong correlation between now identify with particular parties, in mystery. Take the case of Egor Putilov GDP growth and voting behaviour. making elections more volatile. Since (pictured), also known as Alexander Frid- Whether or not those in power are re- 2008, incumbent governments have lost back, Tobias Lagerfeldt and Aleksandr Ya- sponsible for the economy, it has been on average seven percentage points of rovenko. On June 8th 2016, Sveriges Radio, responsible for whether or not they get support between elections, up from three the Swedish public radio station, inter- re-elected. points in the 1980s. viewed Mr Putilov, who identified himself A study by Ruth Dassonneville, now Youmight thinkthat more voters as a former employee of the national mi- at the University ofMontreal, and Mi- shopping around between parties would gration agency. He stated thatasylum-seek- chael Lewis-Beckofthe University of increase the importance ofobjective ers as old as 40 were claiming to be chil- Iowa makes the relationship clear. They measures such as economic perfor- dren, and that the agency was letting them examined economic performance and mance. Instead, the opposite has oc- in. In a country divided over refugee poli- elections in 31European countries from curred. Updating data provided by Ms cy, the allegation seemed explosive. 1952 to 2013. After controlling forother Dassonneville and Mr Lewis-Beck, The Two hours later, Sveriges Radio deleted factors, such as the number ofparties in Economist has carried out a cross-country the interview. Mr Putilov was an unreli- analysis ofpost-war elections in Western able source: he had taken a journalism Europe. Although there was a correlation course at the broadcaster some months It’s not about the money between GDP growth and voter behav- earlier, and had been reported to the police Western European elections, 2008-March 2017 iour before the financial crisis, we could for failing to return his temporary press find none since then (see chart). card. Then in August, Aftonbladet, a daily, 5 + Voters have become deeply hostile reported that someone calling himself 0 – towards governing parties, who now lose EgorPutilov had used the pen name Tobias 5 10 support regardless ofhow well the econ- Lagerfeldt to write an opinion piece that it 15 omy is faring. Incumbent governments had published, calling for a more open ref- 20 have lost votes between elections in 29 ugee policy. Moreover, it found, the so-

Incumbent vote share, 25 out of35 elections since 2008. Seven called Mr Putilov was in fact Alexander percentage-point change 30 years after the start ofthe euro crisis, Fridback, an employee of the ultra- 63036+– European economies are at last recov- nationalist Sweden Democrats party. GDP, % change in year prior to election ering. But ifgovernments thinkmore This is where things get really confus- Sources: Ruth Dassonneville and Michael money in voters’ pockets will keep them ing. Mr Fridback immigrated to Sweden Lewis-Beck; ParlGov; IMF; The Economist in power, they are in for a nasty surprise. from Russia in 2007, apparently under the name Aleksandr Yarovenko. In 2011 he changed his family name to Fridback, sup- 2 parties in Italy, Greece and Hungary are rumours about his private life. A Swedish posedly because Swedes found Yarovenko more tenuous. But Ms Le Pen, Matteo Salvi- version of Sputnik folded because of mea- hard to pronounce. He opened a travel ni of Italy’s Northern League and Frauke gre interest. After the Lisa case, Germany business, mainly for Russian clients, and Petry of Germany’s Alternative for Ger- made fighting disinformation a priority: began blogging in Russian (under the many (AfD) have received profile-boosting on April 5th it published a draft law oblig- name Egor Putilov) about trips to far-flung 1 invitations to Moscow. All are Eurosceptics ing publishers to nix such stories speedily. who want to lift sanctions on Russia. Elsewhere, too, Europeans are pushing The Kremlin’s objectives are clear. In back. There is no evidence that Russians France it wants a congenial president—Ms have hacked Western voting machines, Le Pen or François Fillon, the centre-right but ballots in the Dutch election in March candidate. In Germany it wants Angela were hand-counted, just in case. In Febru- Merkel gone, a strongAfD in the Bundestag ary authorities quickly smacked down and a government led by the Social Demo- fake allegations of rape by German sol- crats, who are traditionally friendlier to diers in Lithuania. Le Monde, a French Moscow. Either outcome might help loos- newspaper, and Germany’s Green Party en European sanctions and boost Russian are among several institutions to have economic interests, such as the proposed launched fact-checking initiatives. Nord Stream 2 gas pipeline. They would So Europeans should be wary, but not also serve Mr Putin’s goal of sowing divi- paranoid. Still, Americans have been fact- sion in the EU and NATO. checking for longer than Europeans, and “Active measures” are often ineffective. have hardly defeated fake news. If “infor- A recent claim promoted by Russian web- mation conflict” helps Russia-friendly can- sites that Mrs Merkel had deliberately in- didates win elections, it will be because vited Islamic State into Germany got no- Europe’s bitter politics and anarchic media where. Mr Macron brushed off the environment have prepared the ground. 7 Seemed like a trustworthy chap 46 Europe The Economist April 15th 2017

2 lands such as Mali and Syria. He was re- ence operations by IS and Russia. Most asylum-seekers fleeing war and persecu- portedly arrested in Syria in early 2012. On damningly, Sveriges Radio discovered that tion. It is hard to tell the two groups apart, his return, he began writing freelance arti- in 2014 Mr Fridback had bought a house in but more than 40% of applicants for asy- clesforthe Swedish pressand tooka job for Sweden at a below-market price from a lum in Italy are judged to deserve some nine months as a clerk at the immigration Russian criminal who was, at the time, in form ofhumanitarian protection. agency, the basis of his later claim to know prison in Russia. Two months later he sold The task is complicated by Libya’s how it treats refugees (though he said he the house at a profit ofabout $700,000. messy civil war. The UN, America and Italy had worked there forthree years). No one was sure what it all meant, and have sponsored a Tripoli-based Govern- In 2015 Mr Fridback wrote an opinion MrFridbackdenies any shady connections ment of National Accord (GNA). But its au- piece in Aftonbladet alleging that Islamic or wrongdoing. But because of his expo- thority is challenged by Khalifa Haftar, the State could use the migrant crisis to infil- sure to Russia, security experts termed Mr commander ofa self-styled Libyan Nation- trate Sweden. Within hours, his article was Fridback a security risk, the government al Army (LNA). He enjoys the backing of a picked up by Sputnik, the Russian state- demanded explanations, and he ultimate- rival administration in the east, and—more controlled news agency. Later that year he ly left his job with the Sweden Democrats. important—that ofMoscow. offered his services (as Egor Putilov) to Itremainsunclearwhetherhe wasan inde- On April 2nd the Italian government Sweden’s internal-security agency, which pendent flim-flam artist or an agent acting announced a parallel effortto interrupt the was starting a department to combat influ- on behalfofRussia—or a bit ofboth. 7 flow of migrants, enlisting the help of doz- ens of rival desert tribes to secure Libya’s southern frontier, which is 5,000km (3,100 Migrants in the Mediterranean miles) long. The Saharan borders have un- til now been a playground for smugglers of Merciless sea drugs, armsand people. The interiorminis- try said 60 tribal leaders had signed up to a 12-point deal, hammered out in several days ofsecret talks in Rome. Few details have been released of the ROME agreement, which reportedly pledges in- vestment in the area to create legitimate The numberofboats and the riskofdeath keep rising jobs for young people, and opens the way HE 16-year-old Gambian who was dis- contact with rescue services and report for “unified patrolling of the borders with Tcovered by a Spanish naval ship as he their positions. And, since last summer, Algeria, Nigerand Chad”. Yetitremainsun- clungto a fueltankin open seas will doubt- they have taken to dispatching several ves- certain who will do the patrolling. Nor is it less be haunted by his experience for the sels at a time. That makes it harder for clear how much common purpose can be rest of his days. But he was also exception- NGOsand the shipsofOperation Sophia, a found among the tribes. The Toubou peo- ally fortunate—the only survivor, by his ac- European naval force operating off the Lib- ples on Libya’s border with Chad, for ex- count, among more than 140 people who yan coast, to rescue them all. ample, have a history of conflict with left the Libyan port of Sabratha on a large Plans have been proposed to block the neighbouring Arab tribes which are also rubber dinghy on March 26th or 27th. It be- traffickers’ routes, which might deter mi- supposedly backing the deal. But the area gan taking on water a few hours later, he grants from assuming the appalling risks. is crucial to reducing the number of mi- told UN officials from his hospital bed on The EU istrainingabout90 membersofthe grants travelling across the Sahara. That the Italian island ofLampedusa. Libyan coastguard, and Italy will soon re- voyage is every bit as risky as the one mi- Details of sinkings in the central Medi- turn ten of the Libyans’ boats that were grants are making across the Mediterra- terranean are often sketchy and some- seized in 2011. Blocking the dinghies would nean. As the numbers make clear, the risk times unconfirmed. The Libyan Red Cres- stop not only economic migrants but also ofdeath is not enough to stop them. 7 cent said no bodies had been found from the disaster the young Gambian reported. But it is clear from figures kept by interna- tional organisations that both the risks of setting out from Libya and the numbers reaching Europe are growing. According to the International Organi- sation for Migration, 24,513 people had landed in Italy this year by April 2nd. That was an increase of about 30% compared with the first three months of last year. Yet UNHCR, the UN refugee agency, calculates that the death rate per100 arrivals climbed from 1.8 in 2015 to 3.4 in the first three months of 2017. One in 30 migrants in the central Mediterranean now dies en route. Carlotta Sami, UNHCR’sspokeswoman in Italy, lists several reasons why. The smugglers are not just sending the mi- grants to sea in dinghies, or rigid inflatable boats (RIBs), which were never intended for long-distance sea voyages, but in RIBs of progressively poorer quality. They are increasingly reluctant to supply their cus- tomers with satellite telephones to make One of the lucky ones The Economist April 15th 2017 Europe 47 Charlemagne Dark horizon

Europe should thinkabout what to do ifMarine Le Pen wins tor predicts that a Le Pen victory would see French and Italian spreads over German government bonds rise by 2% and the euro slump below parity with the dollar. (Something similar might be expected in the less likely event of a victory for Jean-Luc Mélen- chon, a hard-left candidate making a late surge.) The mechanism for leaving the euro, says Ludovic de Danne, MsLe Pen’sEurope adviser, would be a referendum on exiting the EU altogether. But that faces constitutional barriers, as Ms Le Pen cannot win a majority in legislative elections in June. Moreover, the polarisingeffectofherelection maynotleave her much politi- cal wriggle-room. French voters have little appetite for a collapse in the value of their assets, or the chaos of capital controls à la grecque that a promised “Frexit” would bring. With markets roil- ing, French banks underpressure and protesters filling the streets, Ms Le Pen might preferto park the issue. There are signs ofthis al- ready; her rhetoric on the euro has cooled in recent weeks. Tackling migration and security might look more tempting. Unlike Frexit, tightening borders, limiting immigration and crack- ing down on foreign “posted” workers are popular propositions. Last year71% ofFrench voters told IFOP, a pollster, that they want- ed to scrap Schengen. But that would create as many problems as S USUAL, the president’s first foreign trip is to the chancellery it solves. Alain Lamassoure, a French former Europe minister, Ain Berlin. But the meeting with Angela Merkel does not go notes that there are around 1,500 border crossings between well. The two women instantly begin squabbling. Accused of France and Belgium alone; it is ludicrous to expect them all to be breakingEurope’s rules on borders, Mrs Merkel fires back that her policed. Full withdrawal from Schengen might also mean losing visitor has not done her homework: Germany has always acted access to EU police databases, which would be an odd wayfor Ms lawfully. Fine, growls la présidente: ifMrs Merkel wants a war, she Le Pen to provide the security she has promised voters. will get one. On her return to Paris the president orders the Euro- She might therefore simply tighten existing controls, stepping pean Union flag removed from official buildings. Soon after- up checks at airports, railway stations and land crossings. Ms Le wards she calls, and wins, a referendum on France’s exit from the Pen would also target foreign-owned firms employing cheap euro. The streets stir, stockmarkets swoon and Europe reels. workers from eastern Europe. (Rare is the French politician who This cheerful tale, as depicted in “La Présidente” by François declines to pickon Polish plumbers or Romanian labourers.) Tax- Durpaire and Farid Boudjellal, a graphic novel that imagines Ma- payer-funded positions would, says Mr de Danne, be subject to rine Le Pen’s first months as president ofFrance, is not one the rest “national preference”: ie, French jobs for French workers. Much of Europe wants to hear. The continent’s mood is just starting to of this breaches EU rules, but so what? If Brussels wants to pick a brighten. Economies are pickingup, and the Islamophobes lost in fight, Ms Le Pen would be delighted to oblige. the Dutch election. Brexit, Europeans think, will be a disaster Ms Le Pen’s approach to the EU may be to denude it ofauthor- only forthe British. True, the loomingcloud in France is hard to ig- ity by endlessly probingits tolerance. Herpromises—income- and nore: the first round of France’s presidential election is on April corporate-tax cuts, a lower retirement age, more welfare spend- 23rd, with a run-off two weeks later, and Ms Le Pen leads most ing—will shatter the euro-zone’s budget-deficit limits. She prom- first-round opinion polls. But few seem to have thought seriously ises a tax on imports, and monetary financing of state spending about the prospect ofher winning, and many dismiss the idea. by the central bank. The European Commission, which has long tolerated mild French profligacy, would be faced with an acute di- Confident Eurosaurs lemma. Ifit allows France to flout the rules, the glue that holds the They have halfa point. Ms Le Pen is unlikely to become president; EU together melts; why should other countries stick by their France’s two-round system inoculates against extremist parties commitments? If it cracks down, it feeds Ms Le Pen’s narrative like her National Front. Polls find her losing the run-off by wide that Brussels is thwarting the sovereign will ofFrench voters. margins against all potential challengers. But like the meteor that Germany would be left even further adrift. The Franco-Ger- wiped outTyrannosaurusRex, hervictorywould be a low-proba- man alliance, as Mrs Merkel reminds Ms Le Pen in “La Prési- bility, high-impact event. Ms Le Pen aims to withdraw France dente”, has always driven the EU forwards. But no German chan- from the euro, the EU’s passport-free Schengen area, and possibly cellor could do business with Ms Le Pen. In real life, her first sally the EU itself. The EU can cope with small troublemakers like Hun- abroad would be not to Berlin but to a summit in Brussels, where gary orGreece. But to lose a large foundingmemberwould throw she would seek to renegotiate France’s EU membership. It hardly its future into question. Bettingmarkets rate herchances between matters ifthat goes nowhere, forMs Le Pen’s victory alone would 20-25%; the Eurasia Group, a consultancy, puts them at nearly deprive the EU of the oxygen of French support. At best, this 40%. These are not numbers that should let Europe sleep easy. would leave it at a standstill. More likely, it would atrophy into a What should Europe expect from a Le Pen presidency? Mar- loose club propped up by hollow institutions unable to help gov- kets would quail at her desire to quit the euro, which she de- ernments find solutions to common problems, from trade to mi- scribes as a “knife in the ribs” ofthe French economy fordenying gration to climate change. That, more than anything, is why the its exporters the benefits of competitive devaluation. One inves- prospect ofla présidente should keep Europeans up at night. 7 48 Britain The Economist April 15th 2017 Also in this section Immigration A portrait of Migrantland 50 Bagehot: In search of a foreign policy

REDDITCH Immigration is good forthe economy. So why are the places with the biggest influxes doing so badly? HE Golden Cross Welcomes you to ing the EU, compared with 52:48 across ers for centuries. People in those places “TRedditch!” The greeting, on the wall Britain. Boston went for Brexit by 76:24, the have got used to newcomers, suggests ofa pub outside the town’s railway station, highest margin of any local authority. And Tony Travers of the London School of Eco- is valiant. But the dingy wire fence and whereas it has often been noted that there nomics. “But when your local population mossy concrete beneath it let down the en- was no link between the size of a place’s of migrants goes from 10% to 15% in a de- thusiasm of the sign’s welcome. Redditch migrant population and local enthusiasm cade, that’s where you get the bite.” is struggling. In recent years, wages have for Brexit (consider London, both cosmo- Jacqui Smith, a former MP for Redditch fallen. It has also seen a rapid rise in the politan and heavily for Remain), we found and Labour home secretary in 2007-09, number of migrants, in particular those some link between the increase in the sees his point. “I know there’s racism in from eastern Europe. Perhaps linking these number of migrants and the likelihood to London, but people have largely become two phenomena, the people of Redditch vote Leave (see chart overleaf). London used to diverse communities...The transi- voted 62:38 to leave the European Union in boroughs such as Hackney and Newham tional impact in Redditch is much greater,” the referendum last June. have welcomed large numbers of foreign- she says. Redditch has in recent years ac-1 Immigration is a boon for Britain. The 9m-odd foreign-born people living there bring with them skills and attitudes that Foreign-born share Britain, long-term international migration make the country more productive. Youn- of population ’000 ger and better educated than natives, im- % change, 2005-15 800 migrants pay more in tax than they use in Immigration the way of public services. For some insti- 600 tutions they are indispensable: perhaps 30% ofdoctors in Britain are non-British. SCOTLAND Even so, Britain is unenthusiastic about 400 immigration. Surveys find that roughly half of people would like it reduced “a lot” 200 and fewer than 5% want it to go up. Many + politicians interpret the vote for Brexit as a Net migration plea to reduce the number of new arrivals. 0 Although the government has recently – hinted that net migration may not fall by 200 much after Britain leaves the EU, a group called Leave Means Leave, backed by two- MP 400 dozen s, is calling for it to be slashed to a Emigration sixth ofits current level. To understand this antipathy to immi- 600 gration, we examined the ten local authori- 1970 75 80 85 90 95 2000 05 10 16 ties that saw the largest proportional in- crease in foreign-born folk in the ten years from 2005 to 2015 (we excluded Northern ENGLAND Ireland, because of differences in its data). West Lancashire Whereas big cities such as London have the greatest share of immigrants among Mansfield Boston 300 their populations, the places that have ex- 200 perienced the sharpest rises are mostly Melton smaller towns, which until recently had Norwich 100 Redditch seen little immigration (see map). WALES 50 Top of the list is Boston, in Lincolnshire, Malvern Hills Increase 0 where in 2005-15 the number of foreign- Forest of Dean Decrease born residents rose from about 1,000 to Maldon 50 16,000. In 2005 immigrants were about one in 50 of the local population. They are No data now one in four. All ten areas we looked at Taunton Deane saw at least a doubling in the share of the population that was born outside Britain. These ten areas—call them Migran- tland—voted about 60:40 in favour ofleav- Source: ONS The Economist April 15th 2017 Britain 49

the ratio of immigrants to natives in the working-age population leads to a 0.5% fall in wages forthe lowest10% ofearners (and a similarrise forthe top 10%). Since Migran- tland relies on low-paid work, it probably suffered more than most. But more powerful factors are at play. Because the area is disproportionately de- pendent on manufacturing, it has suffered from the industry’s decline. And since 2010 Conservative-led governments have slashed the number of civil servants, in a bid to right the public finances. The axe has fallen hard on the administrative jobs that are prevalent in unglamorous parts of the country. Migrantland’s public-sector jobs have disappeared 50% faster than those in Britain as a whole. In the Forest of Dean they have dropped by over a third. Mean- while, cuts to working-age benefits have Putting down roots sucked away spending power. Even before austerity, it had long been 2 quired a couple of Polish supermarkets. London have a higher-education qualifica- the case that poor places had the most Those who are well-off, mobile and confi- tion, only about a quarter do in the East threadbare public services. Medical staff, dent find those sorts of developments in- Midlands, where three of our ten areas are. for instance, prefer to live in prosperous ar- teresting—“You think, ‘I’ll be able to get One in 20 people in Boston cannot speak eas. Our analysis suggests that Migran- some Polish sausage’,” says Ms Smith. But English well or at all, according to the 2011 tland is relatively deprived ofgeneral prac- those who lack housing or work worry census. Small wonder that integration is titioners. Doctors for the East Midlands are about what such changes represent. The hard. Many landlords do not allow tenants trained in Nottingham and Leicester, but staffat an employment agency in Redditch to drink or smoke inside, so people sit out fewer people want to study there than in attest to such fears. Most of the workers on benches, having a drink and a cigarette. London, for instance. After training there, they place in jobs are from eastern Europe. “Because they’re young, not because half go elsewhere. In 2014 there were 12 “They’re brilliant, we love them,” smiles they’re foreign, they might not put their places for trainee doctors in Boston; only one memberofstaff. But when locals come tins in the bin,” says Mr Gleeson. fourwere filled. looking for work and see how many for- What’s more, the places that have seen eign names are on the agency’s register, the greatest surges in migration have be- Follow the money there is some resentment, she says. come poorer. In 2005-15 real wages in Mi- What can be done? In places where public grantland fell by a tenth, much faster than spending has not yet caught up with a rap- The wrong place at the wrong time the decline in the rest of Britain. On an “in- idly enlarged population, the government It is tempting to conclude that such atti- dex of multiple deprivation”, a govern- could targetextra fundingin the short term. tudes are motivated by prejudice. Yet a ment measure that takes into account fac- The previous Labour government ran a closer look at the economy and public ser- tors such as income, health and education, “migration impacts fund”, introduced by vices in Migrantland makes clear that its the area appears to have become relatively Ms Smith. She acknowledges that the residents have plenty to be angry about— poorer over the past decade. amounts involved were small (the budget even ifthe migrants are not the culprits. Are the newcomers to blame? Immigra- was just £35m per year) but argues that the Places where living is cheap and jobs tion may have heightened competition for point was to reassure people that the gov- plentiful are attractive to newcomers. In some jobs, pushing pay down. But the ef- ernment understood fears that immigra- 2005 the average house in Migrantland fect is small. A House of Lords report in tion can make things tough for a time. The cost around £140,000 (then $255,000), 2008 suggested that every 1% increase in current government has launched a simi- compared with more than £150,000 across lar initiative, though it is no better funded. Britain. Unemployment was lower than And although Britons dislike immigra- Scattered 1,500 average. Low-skill jobs blossomed. Mi- Boston tion, they do not feel the same resentment Britain 1,000 towards immigrants themselves. Once grantland seems to be more dependent on West Lancashire agriculture than the rest ofthe country. The EU referendum result, 500 they have been placed in jobs alongside by local authority big change in Boston, says Paul Gleeson, a each other, locals and migrants tend to rub local Labour councillor, is that previously- Majority Remain Majority Leave along, says the Redditch recruitment agen- 500 seasonal work, such as fruit- and veg-pick- cy. A music festival was recently held in the ing, has become permanent as technology 400 town to raise money for children’s hospital and new crop varieties have lengthened 300 wards in Poland. Local Poles took part in the agricultural season. This means the the Holocaust commemoration this year, 200 people doing that worknow live there per- says Bill Hartnett, leader ofthe council. 100 manently, too. Manufacturing centres are + All that may be encouraging, but it does nearby: food processing, for instance, is a 0 not provide a way to improve conditions % change, 2005-15 – big employer in Boston and Mansfield. 100 in the left-behind places to which migrants

Given the nature ofthe jobson offer, itis Foreign-born share of population, have rushed. To many people, Brexit may unsurprising that the new arrivals are of- 200 appear to be just such a policy. They have 20 30 40 50 60 70 80 EU ten young and not particularly well edu- Vote for Leave, June 23rd 2016, % been told a story that leaving the will cated or Anglophone. We estimate that make things better in their area, says Mr Sources: Electoral Commission; ONS whereas over 40% of the Poles living in Gleeson. “It won’t.” 7 50 Britain The Economist April 15th 2017 Bagehot Time to learn some new tricks

Britain lacks a foreign policy but has dismantled the department that would create one in particular, has sucked talent from the Foreign Office as bright people compete to be at the heart ofdecision-making. Margaret Thatcher loathed the Foreign Office because she thought it was full of upper-class eunuchs who believed in man- aging decline at home and sucking up to foreigners abroad. Tony Blairdisliked it because he believed that it was full of stuffyimpe- rialists who didn’t “get” multicultural Britain. The department has lost a succession of turf wars that have left it a hollow shell. Downing Street has annexed the most high-profile pieces of for- eign policy—Mr Blair exercised almost total control over his ill- starred Iraq policy and the wider “war on terrorism”. The Trea- sury has ground its next-door neighbour by a twin process of starving it of funds and stealing some of its plum jobs. Britain’s previous ambassador to the EU, Sir Ivan Rogers, was a Treasury man who had never worked for the Foreign Office. The Depart- ment for International Development (DfID), which was created only in 1997, has grown into a monster that overshadows its aris- tocratic stepbrother. DfID is rolling in money because a legally mandated formula allocates it 0.7% of national income; mean- while the Foreign Office must downsize or sell offits embassies. Its sidelining is a mistake for all sorts of reasons. Prime minis- ORIS JOHNSON’S most important week as foreign secretary ters tend to see foreign policy through the prism ofdomestic poli- B started off badly and got worse. The Kremlin branded him cy: David Cameron saw it through the prism of ridding the Tories America’s poodle for cancelling a trip to Russia at the last minute, of their image as a “nasty party”; Theresa May sees it through the supposedly under orders from America’s secretary of state, Rex prism of the Home Office and the problem of controlling migra- Tillerson. Mr Johnson struck back by briefing the British press tion. Prime ministers are also foreign-policy tourists, focusing on that, on the contrary, he was a decider and a doer, who, having the big powers and set-piece events but ignoring the hard slog of “spoken to all the power players”, was demanding that Western cultivating relations with foreign leaders of every description, nations draw up “very punitive sanctions” against the Syrian re- minor as well as great. DfID does valuable work providing aid gime and its enablers. He then presented his plans for sanctions and developing long-term good will. But professional diplomats at the G7 meeting in Lucca, Italy, only to be given the cold shoul- have a unique ability to shape the fate of nations in turbulent der. The final G7 communiqué didn’t mention sanctions at all. times: think of Robin Renwick’s role, as ambassador to South Af- MrJohnson was right to cancel his trip to Russia, which would rica, in helpingto persuade Nelson Mandela that his country’s fu- have been the first by a British foreign secretary forfive years. It is ture lay with free markets rather than state planning. important that the West speak to Russia with one voice after the chemical attackin Syria, and thatvoice needsto be America’s. But A dog’s breakfast he was wrong to react to a childish gibe by boasting about plans The biggest problem is that Britain now finds itself without a for- for sanctions without first clearing them with his G7 counter- eign policy. For decades its strategy has consisted of acting as a parts. His half-cocked diplomacy left Britain humiliated and the bridge between Europe and the United Stateswhile cultivating its G7 divided. The problem with the foreign secretary is not that he global connections as a former imperial power. But last June 52% is a poodle: poodles tend to be dependable and loyal. The pro- ofBritish voters decided to blow up halfthe bridge, rendering the blem is that he’s a disorganised narcissist. whole edifice rather pointless. Today Britain’s foreign policy con- MrJohnson was an odd choice forBritain’s chiefdiplomat. He sists of keeping as close as possible to a highly volatile American made his career as a journalist entertaining Daily Telegraph read- president while at the same time negotiating a divorce from the ers with stories about horrible foreigners, particularly “Brussels EU. In the short term this requires the ability to perform ideologi- bureaucrats” and their alleged obsession with the curvature of cal somersaults at the bidding of America, while grinning bananas. He was put into his current job because he can exercise through the divorce proceedings. Mr Johnson is well suited to influence in England’s Tory heartlands, not the world’s chancel- both activities. In the longer term it involves rethinking Britain’s leries. Mr Johnson’s real job is to sell the eventual Brexit settle- international role and reinforcing its relations across the world. ment to Tory MPs and their footsoldiers in the shires. That requires a revitalised and self-confident Foreign Office. Yet the foreign secretary is in some ways an embodiment of There are a few signs of a revival. The Foreign Office has re- what is wrongwith Britain’s foreign policy: shambolic, distracted placed Sir Ivan as ambassador to the EU with one of its own, Sir and driven by domestic considerations. The Foreign and Com- Tim Barrow. Some ambitiousyoung diplomats are excited by the monwealth Office is a shadow ofits formerglory when it admin- chance to reinvent Britain’s foreign policy for a new world. The istered a quarter of the world’s population from its magnificent foreign secretary should be thinking about more important palace next to Downing Street. Mr Johnson’s arrival was accom- things than silly gibes about poodles. Ifhe wants to confound his panied by a brutal dismemberment ofthe Foreign Office’s portfo- critics, and earn a place in the history books rather than just the lio, with two ofMr Johnson’s fellow Brexiteers, Liam Fox and Da- headlines, he needs to play forbiggerstakes: reviving a great insti- vid Davis, put in charge of two new departments, for tution thathasbeen needlesslytraduced and givingitthe space to international trade and forexitingthe EU. MrDavis’sdepartment, build a new foreign policy from the rubble ofBrexit. 7 International The Economist April 15th 2017 51

Disposing of nuclear waste gloves on,” MrPohjonen says, as the mach- ine pounds the rock with a deafening roar. To the next ice age and beyond “It has to be done gently.” Nuclear authorities around the world are watching with interest because in the pasttwo yearsFinland hasbecome the first country to license and start building a final OLKILUOTO repository forhighly radioactive waste fuel from nuclear reactors. Experts at the Inter- Finland shows the way with a project expected to span 100,000 years national Atomic Energy Agency (IAEA), a STEEP 5km ramp corkscrews down human terms, 4,000 generations are al- global body, say other countries, such as Afrom the mouth of a tunnel (pictured most inconceivable. As Mika Pohjonen, Sweden and France, are close behind. In above) into the bowels of the Earth. At the the managingdirectorofPosiva, the utility- America, Donald Trump’s administration bottom, a yellow rig is drilling boreholes owned Finnish company overseeing the has included a budget request for$120m to into the rock face, preparing it for blasting. project, says, no one knows whether hu- restart construction of a high-level waste The air is chilly, but within a few years, it mans, creatures (or machines) will rule the repository at Yucca Mountain in Nevada, may feel more like a Finnish sauna. Buried Earth above by then—let alone whether chosen in 1987 but stalled since 2010. in holes in the floor will be copper canis- they will be able to read today’s safety ters, 5.2 metres long, containing the re- manuals. A hundred thousand years ago, Delayed gratification mains of some of the world’s most radio- Finland was under an ice sheet and Homo The disposal of nuclear fuel is among the active nuclear waste. When the drilling is sapiens had not yet reached Europe. most intractable of infrastructure projects. finished, in a century or so, 3,250 canisters Posiva has commissioned studies on And there are already 266,000 tonnes of it each containing half a tonne of spent fuel the possibility that in the intervening mil- in storage around the world, about 70,000 will be buried in up to 70km of tunnels. lennia the area could be inundated by ris- tonnes more than there were a decade ago. Then the entire area will be sealed to make ing seas caused by global warming, or bu- As Markku Lehtonen, a Finnish academic it safe for posterity. ried beneath a few kilometres of ice once at the University ofSussex, puts it, the costs The hundred-year timescale already more. Scientists have studied Greenland as are high; the benefits are about avoiding means this is a megaproject. But that is just an analogue to ice-capped Finland. The harm rather than adding value; and evalu- the beginning. The radioactive isotopes of firm’s assurance to future generations is ation is not about assessing risk, but about plutonium used in nuclear-power plants that if, in tens of thousands of years, a fu- dealing with “uncertainty, ambiguity and must be stored for tens of thousands of ture Finn digs a 400-metre-deep well and ignorance” over a protracted timescale. years before they are safe. Finland aims to draws water contaminated with 21st-cen- Not everyone is convinced that permanent isolate its stockpile in the Onkalo reposi- tury nuclear waste, it will be safe to drink. disposal is urgent, either. Some argue that tory, a burial chamber beneath the small But Posiva’s immediate priority is to semi-cooled fuel could be kept in cement forested island of Olkiluoto, home to one create disposal caverns far enough from dry-storage casks, as much is in America, of its two nuclear-power plants, for at least rock fissures and groundwater that Fin- for generations until technologies are de- 100,000 years. land’s nuclear authorities allow it to start veloped to handle it. A blue-ribbon com- In geological terms, that is a heartbeat; moving the canisters to their tomb in the mission in America in 2012 mentioned the Finland’s bedrock is 1.9bn years old. But in early 2020s. “This is drilling with silk benefits ofkeeping spent fuel in storage for 1 52 International The Economist April 15th 2017

2 a longer time in order to keep the options Some academics, including Mr Kojo, are which Olkiluoto lies (who once did a sum- open. But it also said that final storage was worried that the Finnish media have un- mer job at TVO), says it did not take much essential. derplayed concerns about copper corro- to persuade locals to support the site. In- For all the countries committed to bu- sion, compared with other countries with come from the nuclearindustry gives them rial, Finland represents an overdue step in similar “multi-barrier” protection systems. slightly lower taxes, good public services the right direction. It offers two lessons. The trickiest challenge, though, is to and a restored mansion for the elderly. The first is to find a relatively stable geolog- build broader societal consent. Finland ap- They trust the waste will be handled safely ical area, and reliable storage technology. pears to have succeeded by starting early and transparently. “It’s Finnish design. The second is to build a broad consensus and sticking to its timetable. The decision Finnish rock is solid rock. Regulation is that the waste can be handled and dis- to find a site and start disposing of nuclear strict everywhere in the world but Finnish posed of responsibly. Like other Nordic waste in the 2020s was taken 40 years ago. people do these things very well,” he says. success stories, it will be hard to replicate. In 1994 its parliament banned the import “Finland has a kind ofunique institutional and export of spent nuclear fuel, which in- Faith in the future context: a high trust in experts and repre- creased the pressure to find a home-grown Some academics worry that Finland is tak- sentative democracy,” says Matti Kojo, of solution.Fewothercountrieshavedemon- ing waste disposal too much on faith. Any Finland’s Tampere University.“Youcannot strated the same determination. The good mishap could erode trust in an instant, as just copy a model from Finland.” news is that, because waste needs to be happened in Japan, another “high-trust” cooled in tanks for 30-50 years before be- society, after the Fukushima disaster. TVO Under solid ground ing disposed of, emerging nuclear power- admits that negative attitudes towards nu- The geological part, though the timespan is housessuch asChina have time to prepare. clear power have risen as the construction greatest, is probably the least tricky. Fin- Finns’ trust in theirnuclearindustry has of its third reactor at Olkiluoto has been land began the search for a site in 1983, remained high, despite accidents else- plagued by delays, cost overruns and shortly after it began generating nuclear where, such as those at Chernobyl in 1986 squabbles with the French-German con- power, and chose Olkiluoto after review- and Fukushima in 2011. Finland’s four nuc- tractors. The experience has shown that ing 100 areas. It has mapped faults and fis- lear reactors operate at among the world’s STUK tolerates no shortcuts, but some fear sures in the bedrock, and sited the reposi- highest utilisation rates, and supply 26% of that its relationship with Posiva some- tory in a seismic “quiet zone”. It says it will its electricity. Its two nuclear utilities, TVO times appears too close. Sweden and avoid burying canisters close to potential and Fortum, which co-own Posiva, are France have moved towards licensing re- pressure points, to minimise the danger themselves part of an electricity system in positories with far more criticism from that rock movements would crush or tear which Finnish industries and many mu- NGOs and the media, suggesting more ro- the canisters and cause radioactive leak- nicipalities have a stake, bolstering public bust engagement. age. Finland’s Radiation and Nuclear Safe- support. The Onkalo repository is situated Other countries, including America ty Authority (STUK) called Posiva’s analy- next door to TVO’s two working Olkiluoto and France, follow principles of reversibil- sis of the bedrock and groundwater “state reactors, which means people nearby ity or retrievability, meaning they can re- ofthe art”. are—in the phrase of academics—“nuclear- verse the disposal process while it is under Ismo Aaltonen, Posiva’s chief geologist, ised”, that is, convinced of the benefits of way or retrieve waste after burial, if tech- says that earthquakes cannot be ruled out, nuclear power. Surveys suggest positive at- nologies and social attitudes change. Fin- especially if the bedrock shifts upwards in titudes to nuclear power nationally exceed land’s model is more closed; it would take the meltingperiod aftera future ice age. Ol- negative ones. a huge amount of digging to recover the kiluoto is still rising as it rebounds from the Finns’ trust in government as a whole is waste once it has been sealed. But analysts pressure ofthe last one, which ended more high. Vesa Lakaniemi, the mayor of the say there is no single correct approach. Brit- than 10,000 years ago. Close to the reposi- 9,300-strong municipality of Eurajoki in ain, for instance, has done things by the tory’s entrance, he points to scratchmarks book but still failed to find a place for a re- on the rocks—“footprintsofthe last ice age” pository. leftby the retreatingice cap. But whether in Finally, there is the matter of cost. Fin- crystalline granite, as in Finland and Swe- land’s nuclear-waste kitty, collected from den, or clay, as in France, or volcanic rock, the utilities, currently stands at €2.5bn as in Yucca Mountain, nuclear experts are ($2.7bn). By the time it is closed, the price is confident that deep geological disposal expected to be €3.5bn. That is reassuringly can be safe. “There is a great deal of evi- modestfora 100-yearproject, partlyreflect- dence that we can find many sites in the ing the fact that Finland’s nuclear industry, world with adequate geological properties even when the planned total of five reac- for the required safety,”says Stefan Mayer, tors are up and running, is relatively small. a waste-disposal expert at the IAEA. Other countries have higher costs, and less Technology is the next hurdle. As well discipline. Yucca Mountain, for instance, as 400-500 metres ofbedrockbetween the was once estimated to cost $96bn to com- canisters and the surface, there will be sev- plete. In 2012 America had $27bn in its dis- eral man-made layers: steel, copper, water- posal fund, collected from ratepayers, absorbent bentonite clay around the canis- none of which has gone towards nuclear- ters, and bentonite plugs sealing the cav- waste management. erns and, eventually,the access tunnel. It may be hard to replicate Finland’s ex- A model in the visitor’s centre, with act model, but its sense of responsibility is moving parts that replicate all this in min- seen as an inspiration. When visiting the iature, makes the whole set-up look safer Finnish repository, authorities from else- than Fort Knox. Posiva says it has modelled where, be they American, Chinese, Austra- copper deposits in ancient rocks to assess lian, Japanese or British, learn that safe- the likelihood of corrosion. STUK,how- guarding the future is not just a question of ever, says it will need more study on the seismology, technology, sociology and potential for the copper to deteriorate. Out of sight, not out of mind cash. It is also an ethical one. 7 Business The Economist April 15th 2017 53

Also in this section 54 Women in Silicon Valley 56 HNA Group’s global shopping spree 56 Algorithmic retailing 57 United Airlines, world-beater 58 Telecoms and the cloud 59 Schumpeter: Crony capitalism

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

Car mergers Volkswagen. The German firm has long cast a covetous eye over bits of FCA. At an Wheels in motion annual industry shindig in Geneva in March that coincided with the final sale of Opel, Mr Marchionne said he had “no doubt that at the relevant time Volkswagen may show up and have a chat”. He also suggested that PSA Group’s acquisition of the GM unit, which puts the French firm in Carmakers will need to get biggerto compete forthe future ofmobility second place in Europe, adds to the pres- ARS are getting bigger. Motorists American firm now discarding a loss-mak- sure on VW, the market leader, to bulk up C worldwide have for years been aban- ing European business, the theory goes, it further. VW’s campaign to conquer Ameri- doning four-door saloons in favour of could replace it with a profitable one— ca, where its diesel-emissions scandal has bulkier SUVs. Carmakers have become Fiat—and crunch together the two firms’ undermined its weak position, would be bigger, too. Four car firms now make successful operations in America. strengthened with FCA in tow. FCA’s Ram around 10m vehicles a year in order to reap Mary Barra, GM’s boss, has repeatedly trucks are hugely profitable in America economies of scale, particularly in the rejected Mr Marchionne’s overtures; sell- and the Jeep brand isresurgentworldwide. mass-market bit ofthe business where pro- ing Opel is unlikely to have changed her The unrealised potential of Maserati and fit margins can be painfully thin. mind. Some observers unkindly suggest Alfa Romeo, alluring bywords for Italian Manyexecutivesalso believe that size is that GM is in any case unable to handle style, is also attractive. the only protection against the technologi- three tasks at once, and that its aim in rid- A deal would, however, bring little ben- cal upheaval sweeping the industry. But ding itself of Opel was to concentrate on efit in Europe, where VW already has a big bulking up fast is easier said than done. improvingitsoperationsin America and in slice of the market and plenty of small cars Lots of different constituents have to be China. Moreover, a lot of the synergies on offer. With Seat, a Spanish division, won over. And most car bosses are still ret- from a deal depended on combining Fiat struggling and its own brand said to be icent about taking the plunge on mergers and Opel in Europe. loss-making in the region, VW could well because many have been catastrophes. The rumour mill has since moved to do without the trouble of integrating Fiat. Daimler’s acquisition of Chrysler in 1998, FCA is also the only bigcarcompany that is forexample, was a notable disaster. The list lumbered with lots of debt (of just under of past crashes is lengthy. Indeed, one re- Start your engines €5bn), making it a less tempting target. cent deal—General Motors’ sale ofOpel, its World’s largest car manufacturers Matthias Müller, VW’s chief executive, European arm, to France’s PSA Group for By sales, 2016, m has not ruled out talks with FCA, and has €1.3bn ($1.4bn)—seems to go directly 0246810 indicated that the German group is more FCA against the imperative to bulkup. Volkswagen Group open to a mergerthan itused to be. But In fact, that deal has had the effect of Toyota is not the only option. An acquisition of spurring more talk of consolidation. Spec- GM* Ford (which just suffered the humiliation ulation centred at first on a possible mega- Renault-Nissan† ofbeingovertaken in market capitalisation GM merger between and Fiat Chrysler Hyundai-Kia by Tesla, an electric-car firm founded in FCA VW VW Automobiles ( ), itself the result of a Ford 2003) might also fit ’s plans. Still, if FCA deal in 2014 ( ’s chairman, John Elkann, Honda Motor‡ is intent on leading the next round of in- sits on the board of The Economist’s parent FCA Group dustry consolidation, it will need to put company). The Italian-owned firm, which PSA Group “dieselgate” behind it. Though the German makes just under 5m vehicles a year, is run *Includes Opel firm has paid $22bn in fines and compen- by Sergio Marchionne, who has been eye- Sources: Company †Includes Mitsubishi Motors sation, the issue of who knew what and reports; Bloomberg ‡Estimate, year ending March 2017 ing a merger with GM for years. With the when is still unresolved. 1 54 Business The Economist April 15th 2017

2 Whatever combination of firms might firm, calls “groundbreaking and brave”. several women hold high positions, in- bring it about, the goal of creating a group A mega-merger would take similar cluding Ruth Porat, the chief financial offi- that produces nearly 15m vehicles a year courage, and car bosses tend to be conser- cer, and Susan Wojcicki, who runs You- makes sense. Mr Marchionne’s oft-stated vative and risk-averse. But after over 100 Tube, an online-video business. But the view is that the industry’s duplicated in- years of selling cars powered by internal- important question is not only whether a vestment in kit such as near-identical en- combustion engines, the industry faces the few women get promoted but also how gines and gear boxes is a waste of re- huge wrench of adapting to a future of those in the middle and lower ranks fare. sources, and that much of the money electrification and self-driving cars. Soft- What figures there are paint a depress- would be better returned to shareholders. ware and electronics are displacing me- ing picture about the status of women in Other car bosses reckon the money should chanical parts as the most important com- technology. According to a one-off survey go on the technologies that will transform ponents of a car. A business focused on in 2015 called “Elephantin the Valley”, two- the industry: mobility services such as selling objects will have to start offering thirds of women in Silicon Valley feel ex- ride-sharing, electrification of the drive- ever more transport services. If carmakers cluded from key networking events, and train and autonomous vehicles. Scale do not take the plunge, an alternative is three-fifths have experienced unwanted would allow car firms to spread the cost that one of the technology giants with big sexual advances. More than a quarter of over more vehicles. ambitions in mobility could try to buy,say, American women in engineering, technol- One argument against full-scale merg- Ford, Tesla or PSA Group. For cash-rich ogy and science feel “stalled” in their ca- ers has been that loose alliances, such as firms like Apple or Google, the cost of such reers, and a third say they are likely to quit that between Renault, a French car manu- an acquisition would be pocket change. 7 their jobs within a year, according to the facturer, and Japan’s Nissan, can do the job Centre forTalent Innovation, a think-tank. by helping to pool development costs. The The marginalisation of women in tech Renault-Nissan alliance has succeeded. Women in tech became a prominent subject in 2015 during After taking a controlling stake in Mitsub- a sex-discrimination lawsuit brought by El- ishi, a smaller Japanese carmaker, last year, Bits and bias len Pao, who had worked ata venture-capi- the firm makes nearly10m cars a year. tal firm, Kleiner Perkins (she lost the case). An alliance works well forcomponents It has been back in the headlines since Su- and for individual platforms, the basic san Fowler, a former engineer at Uber, a structure underpinning a car, where the SAN FRANCISCO ride-hailing firm, wrote a blog post in Feb- aim is clear and specifications can be ruary saying that male supervisors had Allegations that Google underpays agreed on. An engine that might cost $1bn failed to promote women and that human women inflame a controversial debate to develop, for example, can be easily split resources had not taken complaints of sex- two or more ways. Yet alliances work far OOGLE has made a fortuneby helping ism and harassment seriously. Uber has less well for broader technologies such as Gpeople dig up whatever information hired Eric Holder, America’s former attor- connectivity and autonomous vehicles. It they seek. But in a court hearing on April ney-general, to lead an investigation into is harder to specify a common goal for a 7th, America’s Department of Labour the company’s handling of sexual harass- product that could find its way into every (DoL) accused the company behind the ment and workplace culture. The results vehicle the companies make. And it makes profitable search engine ofburyingthe fact are expected in the coming weeks. less sense to share futuristic technologies that it pays its female employees less than Some firms, including Uber, are now that may prove to be the differentiating fac- their male counterparts. The accusation of publishing annual reports describing the tor forbuyers ofcars in the future. lower compensation for women forms composition of their workforce, after they The arrival of new competitors such as part of a lawsuit by the DoL, which has were criticised for not hiring more women Tesla, and deep-pocketed tech giants intent asked Google to turn over detailed infor- and ethnic minorities. Well under half of on disrupting the transport industry such mation on pay. The department has not re- tech companies’ employees are female asGoogle, Apple and Uber, make dealmak- leased data to back its assertion, and Goo- (see chart). Despite attempts to hire more ingan even more pressingneed. “Everyone gle denies the allegation. women, they have not shifted their fe- agrees on the rationale for big mergers, Whatever the outcome in court, the male-staff shares by more than a few per- even if execution of deals has been ex- government’s recriminations risk marring centage points. tremely difficult up to now,” says an advis- Google’s image. Just three days earlier it Educational choices are part of the pro- er to the industry. had taken to Twitter to boast that it had blem. In 2013, the most recent year for If car mega-mergers are to go ahead, “closed the gender pay gap globally”. That which data are available, only around 18% however, and stand a better chance of suc- claim is now under suspicion. It is true that ofcomputer-science graduates were wom- cess than past attempts, two conditions ap- at Google’s parent company, Alphabet, en, half the proportion in 1985. Some sus- ply. First, the big stakeholders—govern- pect there is a “negative” network effect, ments, families and unions—will need to and that the small share of women in the be convinced. Many carmakers, such as Unwritten code field discourages others from choosing it as BMW, Fiat, Ford, Toyota, VW and others, Female employees, worldwide, %, latest available a course ofstudy. have ties to families, which in some cases Retention is also difficult. A study in 02550 75 100 have blockingshareholdings. VW’s unions 2014 that tracked women in jobs related to or France’s government, which has stakes Pandora science, technology, engineering and in Renault and PSA, would oppose deals Amazon mathematics (STEM) found that half of that could result in big domestic job losses. Uber women had left their professions after 12 Second, transactions will need to do Facebook years. By comparison, only a fifth of wom- more than simply chase volume. A wel- en who work in non-STEM fields leave come new trend in the industry is to put Apple within 30 years. Female entrepreneurs greater emphasis on profitability. One of Google find it more difficult to secure funding from GM’s reasons for getting rid of Opel was to Microsoft venture capitaliststhan theirmale counter- concentrate on profitsratherthan solely on Nvidia parts do. Elizabeth Holmes, the founder of how many cars it turns out, a decision that Theranos, a blood-testing firm which has Tim Urquhart of IHS Markit, a research Source: Company reports run into trouble, attracted a lot of hype 1 56 Business The Economist April 15th 2017

2 largely because she was so unusual. And female venture capitalists, who are more likely to fund startups run by women, are the rarest unicorns ofall in Silicon Valley. Transparency about the composition of firms’ staff may help with hiring more women. But another place where transpa- rency can make a big difference is pay.The secretive nature of compensation at tech firms, with employees being discouraged from telling their peers anything about their equity grants or cash bonuses, means that women do not know when they are being underpaid, says Pamela Sayad, a San Francisco-based lawyer who specialises in workplace discrimination. Some companies that have unearthed disparities, including Salesforce, a soft- ware firm, and Cisco, a networking com- pany, have pledged millions of dollars to fill wage gaps. But absent disclosure, it can Chen keeps spending still be hard to see the paydifferences in the first place. For years tech executives have more distant. It spent $6bn last year on In- deals—it has spent over $40bn on acquisi- talked up the importance of transparency gram Micro, an information-technology tions in the past three years. Indeed, Mr and the power of data for decision-mak- outfit based in California. Money has also Chen appears to have the advantages of a ing. They should do a better job of practis- gone into Deutsche Bank. It is rumoured to state firm, including cheap access to capi- ing what they preach. 7 be bidding for Forbes, an American maga- tal, without the disadvantages, such as offi- zine. Some people suspect that these deals cials telling him how to run his company, chime with China’s industrial policy more says a seasoned China hand. In this, he HNA Group than HNA’s own corporate logic. reckons, HNA is becoming “a lot like Hua- Ye t HNA is not a classic state-owned en- wei”, a telecoms-equipment firm. MrChen A Buddhist tycoon terprise. The Hainan government retains a should be flattered by the comparison to big stake in it, but HNA has traits that distin- one ofthe country’s most successful multi- guish it from state-owned enterprises, nationals. But he should also recall that a which tend to be sclerotic and run by bu- backlash against Huawei’s perceived SHANGHAI reaucratic grey men. closeness to China’s leadership led to its It has adopted professional manage- blacklisting by America’s government. 7 China’s HNA Group is on a global ment practices. Mr Chen has trained his shopping spree employees in Six Sigma, a management OW it is a conglomerate with more method popularised by Jack Welch, a for- Algorithmic retailing Nthan $100bn-worth of assets around mer boss of General Electric, to eliminate the world. But HNA Group started life as a waste; and in a financial methodology that Automatic for the small local airline. Chen Feng, the Chinese scrutinises investments for economic val- company’s founder, led a coalition includ- ue added. Hainan Airlines is considered people ing private investors and the government the best Chinese airline. Mr Chen, a Bud- of Hainan, a southern province, to launch dhist scholar, has also imprinted tradition- HAMBURG Hainan Airlines in1993. al Chinese philosophies onto the com- How Otto, a German e-commerce firm, Despite some help from the local gov- pany’s culture. When it takes overa firm he uses artificial intelligence ernment, the upstart firm was an outsider leads new executives in a recitation of then. The central government chose three HNA’s core values, which include “love GLIMPSE into the future of retailing is big state-run airlines to receive favoured and devotion”. HNA typically does not fire Aavailable in a smallish office in Ham- landing slots, lavish subsidies and other the top brass at firms it acquires, nor does it burg. From there, Otto, a German e-com- advantages. The scrappy Mr Chen was un- force big lay-offs. merce merchant, is using artificial intelli- deterred. With $25m in early funding from MrChen certainly seems skilful at man- gence (AI) to improve itsactivities. The firm George Soros, an American billionaire, he aging the Chinese authorities. HNA is pre- is already deploying the technology to carved out a profitable niche. senting this week’s bid for CWT as part of make decisions at a scale, speed and accu- Since then, HNA has grown quickly, President Xi Jinping’s “One Belt, One racy that surpass the capabilities of its hu- mainly through acquisitions. It reported Road” geopolitical strategy, for example. It man employees. revenues of 600bn yuan ($90bn) last year. is clever to play the political card given that Big data and “machine learning” have In 2016 it acquired a 25% stake in America’s the state is tightening control of outbound been used in retailing for years, notably by Hilton Worldwide for $6.5bn and paid investment, which could hamper the com- Amazon, an e-commerce giant. The idea is $10bn for the aircraft-leasing division of pany’s style, notes a Chinese business ex- to collect and analyse quantities of infor- CIT Group, a New York-based financial pert. A clampdown on foreign deals by mation to understand consumer tastes, firm. This weekit bid nearly $1bn forSinga- Chinese regulators, who are worried recommend products to people and perso- pore’s CWT, a logistics company. about capital outflows, has led to the can- nalise websites for customers. Otto’s work Most deals have been in industries ad- cellation of dozens of announced acquisi- stands out because it is already automating jacent to its core business, such as travel, tions by Chinese firms. business decisions that go beyond custom- tourism and logistics. But some recent pur- But HNA is having no trouble getting ermanagement. The most important is try- chases have raised eyebrows for being the money and approval to do lots of big ingto lowerreturnsofproducts, which cost1 The Economist April 15th 2017 Business 57

2 the firm millions ofeuros a year. did not work. Such bargains are best struck Its conventional data analysis showed before boarding the plane. United, how- that customers were less likely to return ever, let passengers take their seats as it of- merchandise if it arrived within two days. fered up to $1,000 to catch a later flight. Anything longer spelled trouble: a custom- When notenough travellerswere tempted, er might spot the product in a shop for one rather than raising the price further, the euro less and buy it, forcing Otto to forgo crew selected four travellers for disembar- the sale and eat the shipping costs. kation. The man in question, a doctor aged But customers also dislike multiple 69 called David Dao, said he had patients shipments; they prefer to receive every- to see the next day and refused to go. thing at once. Since Otto sells merchandise As the scene looped on the world’s from other brands, and does not stock news channels and Twitter feeds (one user, those goods itself, it is hard to avoid one of @Reflog_18, suggested the cabin layout for the two evils: shipping delays until all the United below), Mr Munoz was derided for orders are ready for fulfilment, or lots of his apparent antipathy towards passen- boxes arriving at different times. gers. Before the man’s identity was known, The typical solution would be slightly his airline became the top-trending topic better forecasting by humans of what cus- on Weibo, a Chinese microblog, as ru- tomers are going to buy so that a few goods mours swirled (erroneously) that the pas- could be ordered ahead of time. Otto went senger had been singled out because he further and created a system using the was Chinese. Amid calls for a boycott, Un- technology of Blue Yonder, a startup in ited’s share price fell by nearly 4% on April which it holds a stake. A deep-learning al- United Airlines 11th before recovering. That day Mr Munoz gorithm, which was originally designed issued a fresh apology that was different in for particle-physics experiments at the Air rage tone, saying of the forcibly removed cus- CERN laboratory in Geneva, does the tomer that “no one should ever be mis- heavy lifting. It analyses around 3bn past treated this way”. He promised a review of transactions and 200 variables (such as company practices, including its partner- past sales, searches on Otto’s site and ships with law enforcement. weather information) to predict what cus- Investors are watching to see how Toptip: don’t refuseto cede yourplane tomers will buy a weekbefore they order. quickly the social-media frenzy will sub- seat to an off-duty airline employee The AI system has proved so reliable—it side. Many praise the way that Mr Munoz predicts with 90% accuracy what will be NITED AIRLINES urges travellers to has run the company since his appoint- sold within 30 days—that Otto allows it U“Fly the Friendly Skies”. The company ment in 2015. He has focused on costs and automatically to purchase around makes no promises about its customer ser- delivered pre-tax profit of $3.8bn in 2016, 200,000 items a month from third-party vice before take-off. When, on April 9th, a down by 9.5% on the previous year though brands with no human intervention. It traveller in Chicago refused to give up his ahead of analysts’ expectations. But Mr would be impossible for a person to scruti- seat on an overcrowded flight to Louisville, Munoz had promised to tackle the airline’s nise the variety of products, colours and Kentucky,police yanked him into the aisle reputation for bad customer service. Here, sizes that the machine orders. Online re- and dragged him by his hands along the he has hardly been a success. United has tailing is a natural place formachine-learn- floor, bleeding after he cut his head on an fallen to 68th place in the influential SKY- ing technology, notes Nathan Benaich, an armrest. Horrified fellow passengers took TRAX airline ranking, one place ahead of investor in AI. videos on theirphones and posted them to Copa Airlines, Panama’s flag carrier. Overall, the surplus stock that Otto social media. And scandal seems to follow the firm. must hold has declined by a fifth. The new The company’s initial response was In March it was accused of sexism for bar- AI system has reduced product returns by possibly the worstbitofcrisis-PR in history, ring three girls wearing leggings from a more than 2m items a year. Customers get noted one media commentator. As videos flight: a ten-year-old had to put on a dress their items sooner, which improves reten- of the bloodied man quickly went viral, and the othertwo teenagerswere left atthe tion over time, and the technology also Oscar Munoz, the carrier’s boss, woodenly gate. They had not complied with dress benefits the environment, because fewer apologised for having to “re-accommo- codes for friends and family of employees. packages get dispatched to begin with, or date” customers. In an internal letter to Such incidents highlight the gap between sent back. staff, Mr Munoz said crew had “no choice” the stories firms tell about themselves and The initiative suggests that an impor- in their action and blamed the flyer for not what consumers see. Not long before Un- tant role ofAI in business may be simply to co-operating. ited put Mr Munoz’s initial statement make existing processes work better. Otto Overbooking, which is common at about the bloodied passenger on Face- did not fire anyone as a result of its new al- many carriers, was not the problem. Rath- book, it had posted a picture of a company gorithmic approach: it hired more, instead. er, it was late-arriving, off-duty airline em- dog nuzzling a boy, part of a programme to In many cases AI will not affect a firm’s ployees who needed seats at the last mo- make travel less stressful. Travellers will be overall headcount, but will perform tasks ment. The usual way of persuading paying telling a story about United for some time. at a level of productivity that people could passengersnotto fly—offeringlotsof cash— It won’t be the one about the puppies. 7 not achieve. Otto’s experience also under- lines that ordinary companies can use AI, not just giants such as Amazon and Goo- gle, notes Dave Selinger, a retailing-tech- nology expert and former data scientist at Amazon. The degree to which the com- pany has yielded control to an algorithm, he says, is extremely unusual. But it may not be long before others catch up. 7 58 Business The Economist April 15th 2017

Cloud computing and telecoms alised, argues Marcus Weldon, chief tech- nology officer of Nokia. And there will al- Telecomulonimbus ways be a need for specialised hardware, such as processors able to handle data packets at ever faster speeds. Still, Nokia and other telecoms-gear-makers will have to adapt. They will make less money from hardware and related maintenance ser- vices, which currently form a big chunk of Turning networks into software will triggera storm in the telecoms world their revenues. At the same time, they will N THE computingclouds, startups can set Many networks have already been vir- have to beefup their software business. Iup new servers or acquire data storage tualised at their “core”, the central high-ca- Cloudification mayalso create an open- with only a credit card and a few clicks ofa pacity gear. But this is also starting to hap- ing for newcomers. Both Affirmed Net- mouse. Now imagine a world in which pen at the edges of networks—the works and Mavenir, two American firms, they could as quickly weave their own antennae of a mobile network. These usu- for instance, are developing software to wireless network, perhaps to give users of ally plug directly into nearby computers run networks on off-the-shelf servers. Af- a fleet of self-driving cars more bandwidth that control the radio signal. But some op- firmed already claims 50 customers. Mave- or to connect wireless sensors. erators, such as SK Telecom in South Korea, nir wants to work with underdog opera- As improbable as it sounds, this is the have begun consolidating these “base- tors “to bring the incumbents down”, says logical endpoint of a development that is band units” in a central data centre. Alex Pardeep Kohli, its chiefexecutive. If the his- picking up speed in the telecoms world. Choi, SK Telecom’s chief technology offi- tory of cloud computing is any guide, the Networks are becoming as flexible as com- cer, wants “radio” to become the fourth telecoms world may also see the rise of puting clouds: they are being turned into component ofcloud computing, aftercom- new players in the mould of Amazon Web software and can be dialled up and down puting, storage and networking. Services (AWS), the e-commerce giant’s as needed. Such “cloudification”, as it is fast-growing cloud-computing arm. known, will probably create as much up- Spin me up, AT&T According to John Delaney of IDC, a re- heaval in the telecoms industry as it has The carrier that has pushed cloudification search firm, the big barrier to cloudifica- done in information technology (IT). furthest is AT&T, America’s largest opera- tion is likely to be spectrum, which new- IT and telecoms differ in important re- tor. Bythe end of2017itwantsto have more comers will still have to buy. But a clever spects. One is largely unregulated, the oth- than half of its network virtualised. In ar- entrepreneur may find ways to combine er overseen closely by government. Com- eas where it has already upgraded its sys- assets—unlicensed spectrum, fibre net- puting capacity is theoretically unlimited, tems, it can now add to the networksimply works, computing power—to provide unlike radio spectrum, which is hard to use by downloading a piece of software. “In- cheap mobile connectivity. Startups such efficiently. And telecoms networks are stead of sending a technician, we can just as FreedomPop and Republic Wireless al- more deeply linked to the physical world. spin up a virtual machine,” says Andre ready offer “Wi-Fi first” mobile services, “You cannot turn radio towers into soft- Fuetsch, AT&T’s chieftechnology officer. which send calls and data via Wi-Fi hot- ware,” says Bengt Nordstrom of North- Even more surprising for a firm with a spots, usingthe mobile networkasbackup. stream, a consultancy. reputation for caution, AT&T has released As the case of AWS shows, a potential The data centres of big cloud-comput- the program that manages the newly virtu- Amazon Telecoms Services does not have ing providers are packed with thousands alised parts of its network as open-source to spring from the telecoms world. Ama- of cheap servers, powered by standard software: the underlying recipe is now zon itselfis a candidate. But carmakers, op- processors. Telecoms networks, by con- available free. If widely adopted, it will al- erators of power grids and internet giants trast, are a collection of hundreds of differ- low network operators to use cheaper off- such as Facebook could have a go: they are ent types of computers with specialised the-shelf gear—much as the rise of Linux, huge consumers of connectivity and have chips, each in charge of a different func- an open-source operating system, led to built networks. Facebook, for instance, is tion, from text messaging to controlling an- the commoditisation of hardware in data behind the Telecom Infra Project, another tennae. It takes months, if not years, to set centres a decade ago. effort to open the network infrastructure. up a new service, let alone a new network. If equipment-makers are worried However things shake out, expect the tele- But powerful forces are pushing for about all this, they are not letting it show. coms world to become much more fluid in change. On the technical side, the current Many parts of a network will not get virtu- the coming years, just like IT before it. 7 way of building networks will hit a wall as traffic continues to grow rapidly. The next generation ofwireless technologies, called 5G, requires more flexible networks. Yet the most important factor behind cloudifi- cation is economic, says Stéphane Téral of IHS Markit, a market-research firm. Mobile operators badly need to cut costs, as the smartphone boom ends in many places and prices ofmobile-service plans fall. The shift was evident at the Mobile World Con- gress in Barcelona in February. Equipment- makers’ booths were plastered with dia- grams depicting new technologies called NFV and SDN, which stand for “network- functions virtualisation” and “software- defined networks”. They turn specialised telecoms gear into software in a process called “virtualisation”. The Economist April 15th 2017 Business 59 Schumpeter Crony capitalism

Bright minds in Chicago worry about the state ofcompetition in America But at Chicago (and elsewhere) a younger generation of scholars, including Luigi Zingales and Raghuram Rajan, are worried that competition is not as vigorous as it used to be. What has changed? The facts. The pendulum has swung heavily in favour of incumbent businesses. Their profits are ab- normally high relative to GDP. Those that make a high return on capital can sustain theirreturnsforlonger, suggesting thatlesscre- ative destruction is taking place. The number of new, tiny firms being born is at its lowest level since the 1970s. Two explanations are plausible. One is successive waves of mergers. When you split the economy into its 900 or so different industries, two-thirds have become more concentrated since the 1990s. Regulators may also have been captured by incumbent firms, which get cosy treatment. American companies collective- ly spend $3bn a year on lobbying. In regulated industries that don’t face competition from imports—health care, airlines and telecommunications—prices are at least 50% higher than in other rich countries, and returns on capital are high. The technology industry’s expansion could exacerbate the problem. An analysis by The Economist in 2016 suggested that about halfthe pool ofabnormally high profits is being earned by NE sign that monopolies are a problem in America is that the tech firms. The big five platform companies—Alphabet, Amazon, OUniversity of Chicago has just held a summit on the threat Apple, Facebookand Microsoft—earned $93bn last year and have that they may pose to the world’s biggest economy. Until recently, high market shares, for instance in search and advertising. They convening a conference supporting antitrust concerns in the are innovative but sometimes behave badly. They have bought Windy City was like holding a symposium on sobriety in New 519 firms, often embryonic rivals, in the past decade, and may sti- Orleans. In the 1970s economists from the “Chicago school” ar- fle them. The data they gather can lock customers into their pro- gued that big firms were not a threat to growth and prosperity. ducts. They may also allow firms to exert their market power Theirviews went mainstream, which led courts and regulators to “vertically” up and down the supply chain—think of Amazon us- adopt a relaxed attitude towards antitrust laws for decades. ing information on what consumers buy to dominate the logis- But the mood is changing. There is an emerging consensus tics business. Investors’ sky-high valuations for the platform among economists that competition in the economy has weak- firms suggest they will, in aggregate, roughly triple in size. ened significantly. That is bad news: it means that incumbent If the summit showed that there is a consensus that competi- firms may not need to innovate as much, and that inequality may tion has weakened, there was little agreement on how to re- increase if companies can hoard profits and spend less on invest- spond. Pessimists abound. Many antitrust technocrats plead that ment and wages. It may yet be premature to talkabout a new Chi- they have little power: bodies like the DoJ and the FTC are not cago school, but investors and bosses should pay attention to the meant to run the economy, but instead to enforce a body of law intellectual shift, which may change American business. through courts that have become friendlier to incumbents. Some The fear that big firms might come to dominate the economy radicals argue that the government is now so rotten that America and political life has its roots in the era ofthe robber barons ofthe is condemned to perpetual oligarchy and inequality. Political 19th century. In 1911 the government broke up Standard Oil; until support for more competition is worryingly hard to find. Donald the 1960s regulators policed mergers with a big stick. But by the Trump has a cabinet of tycoons and likes to be chummy with 1970s the economy was sputtering, and America Inc was losing bosses. The Republicans have become the party of incumbent ground to Japanese and European industry. Free-market scholars firms, not of free markets or consumers. Too many Democrats, at the Chicago school argued that the pendulum had swung too meanwhile, don’t trust markets and want the state to smother fartowards the state and antitrust action. them in red tape, which hurts new entrants. They felt that regulators were intervening arbitrarily. Richard Posner, an academic who later became a judge, damningly wrote Lessons from the old school that they relied on “eclectic forays into sociology”, not hard anal- What is needed is a three-pronged approach. A campaign to ysis. Firms were being prevented from getting big enough to drum up public backingforcompetition might prod politicians to create economies of scale that could benefit consumers, argued act: it was popular anger about monopolies in the 1890s that led backers of free markets. Well-run companies that naturally to crucial reforms in the early 20th century. The technocrats have gained market share were being penalised forsuccess. more power than they admit. Antitrust laws, such as the Sher- Over time the Chicago school’s ideas became so influential man Act of1890, give plenty oflatitude. They must be braver. Last- that the courts and the two antitrust regulators, the Department ly, scholars should learn from the first Chicago school. Its leading ofJustice (DoJ) and the Federal Trade Commission (FTC), adopted lightsdid notseekquickvictories, butwon the battle ofideasover a farmore favourable approach to big business. Today Mr Posner, years, their views percolating into politics, the courts and public who is 78, jokes that he became a judge in 1981 expecting to spe- opinion. America must rediscover the virtues of competition. cialise in monopoly cases, but regulators stopped bringing them With luck, in a couple of decades, it will seem embarrassing that to court. He remains a true believer in the laissez-faire approach. anyone had to hold a conference to debate its relevance. 7 60 Finance and economics The Economist April 15th 2017

Also in this section 61 Buttonwood: The gold market 62 Britain’s EFTA option 62 Scandal-prone Barclays 63 Rural finance in Myanmar 63 Mobile money in Africa 64 Germany runs out of people 65 Free exchange: The Fed’s balance-sheet

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China’s banks selling some to investors. With more credit going to infrastructure projects and to A sunny spell mortgages, which traditionally have been safe in China, loan portfolios are looking healthier. Richard Xu of Morgan Stanley reckons that high-risk credit will decline from about 6% of total credit in China to- SHANGHAI day to less than 3% by 2020. There are also signs that China’s bloat- Fastergrowth makes China’s debt more manageable, but fears linger ed state-owned banks are getting a little UO SHUQING, China’s new banking markedly over the past 12 months. Higher more efficient as they respond to competi- Gregulator, knows the enormity of his prices have led to stronger corporate rev- tion from fintech companies. The four big- task. China’s banking system, he observed enues, particularly for indebted steel-pro- gest banks, which account for nearly two- last month, is worth more than $33trn. So it ducers and coalminers. This, in turn, has fifths of the industry’s assets, cut employ- is bigger than any other country’s, and made it easier forthem to repay loans. Chi- ees in 2016 for the first time in six years. even than Europe’s as a whole. And he is nese banks’ official bad-debt ratio, climb- Bankshave been rollingoutmobile apps to well aware ofthe pitfallsleftby a decade of ing since 2012, held steady last year at handle payment and investment transac- breaknecklending growth. But ifMr Guo is about 1.7%. Many analysts still think the tions that used to be conducted in person. nervous, he is hiding it. “All problems and real level of toxic loans is many times that Overall costs of listed banks rose by just contradictions will be resolved,” he says. (some estimate the ratio is as high as 19%), 0.6% last year, even as assets grew by 12%. Of course, a Chinese official can be ex- but the bleeding has clearly slowed. All these good omens, however, may pected to express confidence about Chi- Meanwhile, banks have started to clean notmean China’sbankshave reallyturned nese banks. More surprising is that a small up their balance-sheets. In part, this has the corner. The beautification of their but growingnumberofanalysts and inves- been through more write-offs of problem books has relied on financial engineering. tors seem to concur. Chinese bank shares loans. Banks took losses on more than Over the past three years the government are up by a quarter since early last year. 500bn yuan ($75bn) of loans last year, a re- has approved the creation of 35 asset-man- One investment bank, Morgan Stanley, has cord, scrubbing them from their books and agement companies (ie, “bad banks”). Ja- declared that China’s lenders are “in a son Bedford ofUBS, a Swiss bank, says that sweet spot”. Another, Goldman Sachs, has these companies, which buy delinquent upgraded China to “overweight”—that is, Unconvincing loans from banks, often also finance them- recommending that clients buy Chinese China, selected major banks selves through bankloans. shares—and is especially positive about Average price-to- Market capitalisation Debt-for-equity swaps are another the banks. Shanghai Financial News, a local book value ratio December 31st 2011=100 form of financial engineering: instead of newspaper, described the new mood 1.5 150 repaying loans, indebted companies can around these giant institutions as the “re- issue shares to third parties, which acquire turn of the king”. The question is whether 1.0 100 the loans from banks. Yet the fine print it will be a long, stable reign or a short- shows that their equity functions like lived, turbulent one. bonds: the companies must pay dividends The clearest positive for China’s banks 0.5 50 and buy back shares if they miss revenue has been an upturn in nominal economic targets. Moreover, the parties holding the growth. Real GDP growth (ie, accounting equity are funded in part by investment for inflation) is likely to be little changed in 0 0 products sold off-balance-sheet by banks. 2011 12 13 14 15 16 17* 2017 from last year’s 6.7%. But nominal The upshot is that, whether stashed in bad Sources: S&P Capital IQ; Thomson Reuters *To April 7th growth is nearly 10% in yuan terms, up banks or converted into equity, the debt 1 The Economist April 15th 2017 Finance and economics 61

2 could yet bounce backinto banks’ hands. tory for Chinese banks is unsustainable. bank debt payments, suggesting that the The simple problem that underlies this Efforts to curb borrowing are them- basic gears of the financial system were complex restructuring activity is excessive selves emerging as a new risk. Over the starting to get gummed up. lending growth. China’s total debt-to-GDP past few months the central bank has For many in the market, the cons in Chi- ratio has risen from less than 150% before raised banks’ short-term borrowing costs. nese banking outweigh the pros. Bank 2008 to more than 260% today; in other That has been a shot across the bows of shares have rallied since last year, but in- economies, such increases have often pre- overextended lenders, especially mid-tier vestors still price them just at about 80% of saged severe financial stress. Aware of the banks. These have been most aggressive in the reported value oftheir assets (see chart dangers, the Chinese government has funding themselves with loans from other on previous page). In other words, they ex- made reducing debt a priority. It is taking banks, rather than doing the painstaking pect more bad news to come—if not this babystepstowardsthatgoal: thanksto fast- workofbuilding up bigger deposit bases. year, then soon enough. From his seat in er nominal growth, China’s debt-to-GDP Already this tightening has led to vola- the regulator’s office, Mr Guo has his work ratio will expand more slowly this year. tility. In March the central bank made an cut out: not just in controllingrisks, but also But it will still expand. S&P Global, a rating emergency liquidity injection after small in persuading the wider world that it still agency, warned in March that this trajec- banks were reported to have missed inter- has China’s banks pegged wrong. 7 Buttonwood Not barking yet

Why gold has not responded to geopolitical riskorreflation talk MERICA has bombed Syria, and its re- there seems little to lose by holding gold. Alations with Russia have deteriorat- Metal fatigue Those two factors explain why the ed. North Korea is developing a long- Gold, $ per troy ounce “Trumptrade” was initially not very good range nuclear missile, a development for gold. In the immediate aftermath of 2,000 which Donald Trump has vowed to stop, the election, investors hoped that tax cuts unilaterally if necessary. There is talk of a 1,800 would revive the American economy; “reflation trade”, with tax cuts in America this would force the Federal Reserve to pepping up global growth. 1,600 push up interest rates and that rate boost All this ought to be good news forgold, 1,400 would drive the dollar higher. Neither the precious metal that usually gains at prospect would be good forgold. times of political uncertainty or rising in- 1,200 But the Trump trade has lost momen- flation expectations. But as the chart tum. The president’sfailure to repeal Oba- shows, gold took a hit when Mr Trump 1,000 macare has raised doubts about the pros- pect of a tax-reform programme being was elected in November and is still well 2011 12 13 14 15 16 17 below its level of last July.As a watchdog, passed by Congress. Gold has duly Source: Thomson Reuters gold has failedto bark. perked up a bit since the start of the year, Bullion enjoyed a ten-year bull market and the price rose by 1.6% on April 11th. from 2001to 2011, when it peaked at $1,898 ing about storing it or insuring it. At the But, although inflation may be a bit high- an ounce. This long upward run was bol- peak, gold ETFs held around 2,500 tonnes er, nothing suggests a return to the kind of stered in its later stages by two develop- of gold, according to Citigroup, worth double-digit rates seen in the1970s, when ments: first, the use of quantitative easing around $100bn at today’s prices. gold enjoyed a spectacular price rise. (QE) by central banks, which gold bugs ar- Gold ETFswere boughtasa classic“mo- Even so, the metal has not performed gued would inevitably lead to high infla- mentum trade” by investors who try to as well as it might have done, given the tion; and second by the euro crisis, which make money by following trends. Once geopolitical headlines. Perhaps this is be- caused nervousness about the potential the price trend changed in 2013, such inves- cause Mr Trump has backed away from for a break-up of the single currency and tors scrambled to get out of the metal. At some of his pre-election threats—on trade about the safety of European banks. By the moment ETFs hold just1,800 tonnes. with China, for example. The bombing in 2013, however, euro-zone worries were The problem with gold is that there is Syria may turn out to be a one-off, and his fading and, despite QE, no inflation had no obvious valuation measure. The metal statements on North Korea could be “full been seen. The gold price fell sharply and pays no real “earnings”. Although gold is of sound and fury, signifying nothing”. has stayed in a narrow range since. seen as a hedge against inflation, it cannot With the help of advisers such as Rex Til- Last year was a disappointing one for be relied on to fulfil this function over the lerson, the secretary of state, and James jewellery demand, with an annual sur- medium term; between 1980 and 2001, its Mattis, the defence secretary, Mr Trump vey by Thomson Reuters finding that jew- price fell by more than 80% in real terms. may turn out to be a more conventional ellery fabrication fell by 38% in India The general rule isthatgold isseen asan foreign-policy president than expected. (where it was hit by a new excise duty) alternative currency to the dollar, so when So buying bullion is really a bet that and by 17% in China. The Chinese central the greenbackdoes well, bullion does bad- things will go spectacularly wrong: that bank was also a less enthusiastic gold- ly. But this also means that gold’s perfor- events escalate in the Middle East and purchaser than before: net central-bank mance can look rather better in other, North Korea or that central banks lose buying dropped to a seven-year low. weakercurrencies. Since the Brexit referen- control of monetary policy. It could hap- The big change in the gold market dum, for example, bullion is up by 19% in pen, of course, but it helps explain why since the turn ofthe millennium has been sterling terms. Another factor is real inter- gold bugs tend to be folks with a rather the rise of exchange-traded funds (ETFs), est rates. When they are high, the opportu- gloomy attitude towards life. which have made it easy for investors to nity cost of holding gold is also high. Con- get exposure to the metal without worry- versely, very low interest rates mean that Economist.com/blogs/buttonwood 62 Finance and economics The Economist April 15th 2017

The European Free Trade Association just 14m people. In addition, individual ments Database, a project led by the World states have bilateral deals. Norway strug- Trade Institute in Bern, backs up this claim. L-EFTA behind gled to do a deal with China after the No- EFTA is not a big market: its partners are bel peace prize was awarded in 2010 to a happy to make deals, but they are loth to jailed Chinese dissident. That did not stop spend too much time on the finer details. Iceland from striking one. (China would Nor will they make large concessions. The OSLO AND REYKJAVIK like access to shipping routes through the relatively low quality ofthe deals helps ex- Arctic as climate change melts the ice.) plain why EFTA’s free-trade agreements Tounderstand the trade-offsthat Brexit A recent paper from the European Par- still account for only about a tenth of its Britain must make, lookto EFTA liament found that EFTA tends to make members’ trade. ORWAYoffers much to envy.The food trade deals faster than the EU. South Ko- Britain is a much bigger market than Nis tasty, public services are great and rea’stalkswith EFTA, forinstance, took half EFTA. But it will still be in a far weaker ne- the people are impossibly good-looking. as long as those with the EU. EFTA is gotiating position outside the EU than as Its trade policy looks equally desirable. speedy because it can agree on a common part of the single market. Moreover, EFTA Though it trades heavily with the EU, Nor- strategyfasterthan the EU, which hasmore also shows that, besides offeringuncertain way can also strike trade deals all over the countries to accommodate. benefits, an independent trade policy world, either operating in concert with the Similarly, once outside the EU customs brings large costs. Beingoutside the EU cus- three other members of the European Free union, Britain may be able to reach faster toms union is an irritant for many firms. Trade Association (Iceland, Liechtenstein deals. Donald Trumpsays he wants a trade Goods moving from EFTA to an EU mem- and Switzerland) or on its own. Members agreement with Britain “very quickly”. ber undergo “rules of origin” checks, to en- of EFTA have dozens of deals, including However, EFTA’s experience offers cau- sure that the exporter is not avoiding EU ta- two with China, with which the EU cannot tionary lessons. Strikinga trade deal quick- riffs. Karen Helene Ulltveit-Moe of Oslo even start negotiations. ly is a bonus; but what really matters is University says that to avoid cumbersome After it leaves the EU, Britain will look howgood a deal itis. The parliament paper checksmanyNorwegian firmssimplyrelo- much like an EFTA country: a rich econ- also notes that EFTA’s agreements have cate to Sweden. The idea of going it alone omy with close links to Europe, but also been “shallow” compared with the EU’s. in international trade negotiations may be seeking trade deals elsewhere. It is superfi- Analysis of the Design of Trade Agree- more appealing than the reality. 7 cially an attractive prospect. Yet EFTA’s half-in-half-out relationship with the EU Barclays hinders its trade as much as it helps. EFTA’s flexibility in trade stems from its odd relationship with the EU. Switzerland Staley stumbles has a series ofbilateral agreements, where- as Norway, Iceland and Liechtenstein are New scandals are easy to create, old ones hard to forget part of the single market through the Euro- pean Economic Area (though with opt- N HIS first17months running Barclays, officials, but failed to unmaskthe writer. outs for agriculture and fisheries). Cru- IJes Staley seemed scarcely to put a foot Both boss and bankare up before the cially, however, all are outside the EU’s cus- wrong. The American has narrowed the beak: regulators are examining Mr Sta- toms union, an agreement which regulates British lender’s ambitions, to focus on ley’s conduct and Barclays’ treatment of tariffs charged to third countries. This al- retail business at home, corporate and whistle-blowers. Barclays will reprimand lows them to strike other trade deals. investment banking on both sides of the Mr Staley in writing and cut last year’s EFTA has made the most of this power. Atlantic, and credit cards. He is pulling bonus of£1.3m ($1.6m). By how much The group has 27 free-trade agreements in Barclays out ofAfrica, after a century, and depends on the regulators’ findings. all corners of the world. They give its ex- has sped up its retreat from other mar- Afterthe financial crisis Barclays’ porters access to around 900m consum- kets. He has also poached several folk reputation tooka battering. Mr Staley and ers—impressive for a club which covers from JPMorgan Chase, where he spent 34 his predecessor, Antony Jenkins, have years and ran the investment bank. tried to repair it. But new troubles are On April 10th it emerged that Mr easily born, and old ones die hard. In 2012 Staley had clumsily planted a boot out of Barclays was fined £290m forrigging bounds. Last June Barclays’ board and an LIBOR, a key interest rate; four ofits trad- executive received anonymous letters ers were later jailed. On April 10th the about a “senior employee” hired earlier BBC stirred bad memories, with fresh in 2016. These, say the bank, raised con- allegations about the scandal and ques- cerns “ofa personal nature” about this tioning whether the whole truth had person and Mr Staley’s role in dealing emerged in a parliamentary inquiry. with the matter “at a previous employer” Regulators are also examining Barclays’ (presumably JPMorgan Chase). raising ofcapital from Qatar in 2008. Mr Staley, seeing the letters as “an It may not comfortMr Staley that unfairpersonal attack” on the newcomer, others had an even worse start to the asked Barclays’ security team to find out week. WellsFargo, America’s third-big- who had written them, but was told that gest bankby assets, castigated John this should not be done. In July he in- Stumpf, its formerboss, for tolerating quired whether the matter was re- sales practices that led to the opening of solved—and formed the “honestly held, 2m-odd ghost accounts, for which Wells but mistaken” beliefthat he was now free was fined $185m last year. Wellsis re- to identify one ofthe authors. He set claiming $69m from Mr Stumpfand security on the trail again. This time they $67m from Carrie Tolstedt, ex-head of its called in American law-enforcement consumer bank. How was your Monday? The Economist April 15th 2017 Finance and economics 63

Rural finance in Myanmar prevented them from diversifying into Mobile money in Africa higher-yield crops. A country mile Slowly,things are improving. Aung San Suu Kyi, the country’s de facto leader since Transfer market last year, has made rural development a LUSAKA priority.The core ofhersupport is in the ru- Crowded field, different player DALA TOWNSHIP, YANGON ral heartlands of the country’s ethnic-Bur- man majority; her voters are counting on ITH her phone in one hand and a The struggle to rescue Myanmar’s herto improve theirlives. New laws on mi- live chicken in the other, Brenda farmers from poverty and indebtedness W crofinance have increased the range of Deeomba comes forher money. Her HEN Myo Than was a young man, lenders available to farmers. According to husband is a builder in Lusaka, the Zam- Whis family had 12 hectares of farm- CurtisSloverofLIFT, an anti-povertyNGO, bian capital, and sends his wages home land in Dala, a rural township just across microfinance, where it is available, has through Zoona, a money-transfercom- the river from Yangon, Myanmar’s biggest overtaken private moneylenders as the pany. She receives them at a roadside city. His mother sold most of it after his fa- main source of credit. He cautions that booth in Chongwe, a nearby town, using ther died. Mr Myo Than grows rice on only around 2.5m of Myanmar’s 54.7m a PIN number sent to her phone. It is a what’s left, but water shortages mean he people so far have access to microcredit. safe way to get the money, says Ms Dee- reaps just one harvest each year. He bor- Many, however, even among the rural omba, above muffled squawks. rows money from the Myanmar Agricul- poor, have mobile phones. A wave of mo- Money-transferbusinesses are prolif- tural Development Bank (MADB)—1.5m bile-money ventures has streamed into erating in Africa. But Zoona is unusual. kyats ($1,100) this year, at an annual rate of Myanmar. The World Bank is piloting a Unlike M-PESA, the best-known, in 8%—to cover planting costs. But rice is a programme thatusesmobile-networkdata Kenya, it is not run by a phone company. low-return crop. To repay the bank he bor- and crop-suitability mapping to arrange Nor is it owned by a bank. Instead, rows from local moneylenders at a rate of seasonal loans using mobile money. Zoona has built a business from scratch. around 4% each month. Mr Myo Than But cash will remain king of the coun- It processed $200m in transactions last owes them $7,300. He has given his land tryside for a long time, and the MADB’s year and bubbles with ambition: Mike deeds to a moneylender as security. reach (223 branches) means it has no rivals. Quinn, its (Canadian) chiefexecutive, Mr Myo Than’s predicament is not un- Getting it into shape is essential. On March talks ofreaching1bn customers. usual: poor crop returns and usurious loan 1st a loan agreement signed with the gov- Zoona was founded in Zambia in terms have kept Myanmar’s farmers ernment by JICA, Japan’s overseas aid 2009 by two brothers, Brad and Brett trapped in poverty and debt. Around 60% agency, included ¥15.1bn ($137m) for the Magrath. As a startup, they were at a of Myanmar’s population are engaged in MADB, foronlendingand to build capacity disadvantage, having to recruit their own agriculture. Most are poor, and farm small at the bank. The priority,says Sean Turnell, agents. Zoona did so by seeing them as plots of land using age-old manual tech- an Australian economist who advises Miss its core customers, giving them credit niques. Farmers scythe rice fields; water Suu Kyi’s government, is to figure out what and training to set up their own fran- buffaloespull wooden ploughs; hay-laden the bank’s financial condition really is. chises. Some are impressively successful. bullock-carts trundle down narrow roads. That may prove a challenge. The MADB In central Lusaka, Misozi Mkandawire Many farmers borrow to cover planting lacks real-time financial reporting and still presides over an empire ofkiosks. She costs, buy equipment or purchase land, runson paperledgers. Everyseasonitmust started with Zoona while at college. Her and repay after the harvest. Under the check millions of written loan-application profits can now reach 50,000 kwacha junta that isolated Myanmar for decades, formsagainstsimilarlistsofdefaults. Chas- ($5,200) a month. That is exceptional. farmers had to borrow from the MADB, ing down defaulters requires travelling to Last year the average agent made $548 in which was permitted only to make small remote villages. Funds from JICA and the monthly commission, before costs. loans forrice seed, rarely forperiods oflon- World Bank should help drag the bank Globally, nearly halfofmobile-money ger than a year. This hampered farmers in closerto the modern era, butgetting itfunc- agents have not processed a transaction two ways. First, the small loan size sent tional and effective—to say nothing of fora month; 97% ofZoona agents do so them to informal moneylenders. Second, it competitive—may take a generation. 7 every day. The right location helps. Zoona puts its lime-green booths in canny places, like markets, bus stations and even a hospital. They are often flanked by booths forAirtel and MTN, two phone companies offering similar services. Zoona is not the cheapest—the sender pays about10% on small transactions— but competes on coverage and reliabil- ity: forexample, ensuring its agents have enough float to cash large amounts. Last year Zoona raised $15m from investors. Its outlets now dot streets in Malawi and Mozambique, and it has plans for the Democratic Republic of Congo. Such “third-party” operators are also thriving elsewhere: Wari, in Senegal, is not just competing with phone compa- nies, but buying one. In most places mobile giants and a few banks still dom- inate, but maybe not for ever. Living on borrowed rice 64 Finance and economics The Economist April 15th 2017

Depopulation in Germany “capable of working” and only 40 are fully employed. From his wood-panelled office Fading echoes in a neoclassical buildingthat once housed one of Europe’s largest colour-film makers, Armin Schenk, Bitterfeld-Wolfen’s mayor, says the problems are mostly to do with language, qualifications and uncertainty BITTERFELD-WOLFEN about asylum. Asked whether Afghans and Syrians could join the same pro- Germany is running out ofpeople, starting in the east gramme as the Vietnamese, Liane Michae- ERE it not for the graffiti on aban- lis, from Euro-Schulen, forcefully shakes Wdoned buildings, Bitterfeld-Wolfen, Im Osten nichts Neues Over 1 her head, citing educational, religious and Germany, population forecast 0.5 to 1 two townsnorth ofLeipzigjoined asone in 0to0.5 ethical barriers for care jobs. She adds that 2007, would seem devoid ofyoungpeople. % change 2012-35 0 to -0.5 “those who do have the right papers leave -0.5 to -1 quickly”. According to the OECD , about Pharmacies, physiotherapy surgeries and Less than -1 shops selling garden gnomes line the half of asylum-seekers who started off in sleepy streets. In its heyday the place had a eastern Germany in the past moved to booming chemical industry. Today “the air Hamburg places such as Hamburg once they secured is much cleaner and we can finally hang their permit. Bremen out laundry,” says an elderly local out on a Berlin With the odds seemingly stacked morning stroll. “But many jobs were lost against it, Bitterfeld-Wolfen is at least try- and so few children are left.” He points out ing. On a whirlwind tour of the town, Mr a building that was once a school; today it Bitterfeld Schenk shows how the old coal mine was is one ofmany care homes. -Wolfen turned into a lake with a newmarina and a

Despite an influx of 1.2m refugees over Dresden promenade. He repeats the town’s mantra: the past two years, Germany’s population Leipzig “It’s all about offeringgood-quality life and faces near-irreversible decline. According leisure.” A brochure shows pictures of to predictions from the UN in 2015, two in smiling children, yachts and tennis. Bitter- five Germans will be over 60 by 2050 and feld-Wolfen, it reads, is “one of the youn- Europe’s oldest country will have shrunk Stuttgart gest cities in Germany”. But even if such to 75m from 82m. Since the 1970s, more marketing did stem departures (and in Munich Germans have been dying than are born. 2015, for the first time, inward migration Fewerbirthsand longerlivesare a problem slightly exceeded the outflow) the town is for most rich countries. But the conse- Source: INKAR still shrinking; more than twice as many quences are more acute for Germany, die each year as are born. where birth rates are lower than in Britain tion, once the town’s cultural palace, now Across many parts ofrural Europe may- and France. stands deserted. Two-thirds of kinder- ors struggle with similar problems, won- If Germany is a warning for others, its gartens and over half the schools have deringwhen to turn theirschool into a care eastern part is a warning for its west. If it closed since 1990. The number of pupils home. By 2050 Greece, Italy, Poland, Portu- were still a country, East Germany would finishing secondary school has fallen by gal and Spain—which, unlike Germany, be the oldest in the world. Nearly 30 years half. Employers struggle to fill vacancies. have all suffered net brain-drains—will be after unification the region still suffers the Apprentices—especially in service in- older than Germany by median age and aftershock from the fall of the Berlin Wall dustries—are hard to find. The one boom- will have shrunk substantially, according in 1989, when millions—mostly young, ing industry, care, is desperate for more ger- to the UN. Ageingand emigration are likely mostly women—fled for the west. Those iatricians, nurses and trainees. To help fill further to dampen growth in central and who remained had record-low birth rates. the gap, the local Euro-Schulen, a training southern European countries, saysthe IMF. “Kids not born in the ’90s, also didn’t have institute, has turned to Vietnam. Having It calculates that by 2030 GDP perperson in kids in the 2010s. It’s the echo of the echo,” studied German in Hanoi, 16 young ap- several countries may be 3-4% lowerthan it says FrankSwiaczny from the Federal Insti- prentices started this month, with 20 more would have been without emigration. tute for Population Research, a think-tank expected soon. NearbyDessauissetting up in Wiesbaden. The east’s population will a similar arrangement with China. Where Bitterfeld-Wolfen goes… shrink from 12.5m in 2016 to 8.7m by 2060, Germany has longrelied on migrants to In Germany, however, the consequences according to government statistics. Saxo- make up for low fertility rates. Unusually are particularly acute. With a strong econ- ny-Anhalt, the state to which Bitterfeld- high migration in recent years has more omy and a tight labour market, some em- Wolfen belongs, is ahead ofthe curve. than offset the shrinkage of the native- ployers already struggle to fill vacancies. Berlin used to pay little attention to the born population. But the EU countries that BCG, a consultancy, predicts that by 2030 area. Butregional decline hasalready had a have traditionally provided the migrants, the country will be short of between 5m political effect. In a state election in March such as Poland, are also ageing. Migrant and 7m workers. The triple shock of a 2016, a populist party, the AfD, came first in flows will slow; competition for labour smaller workforce, increased social spend- Bitterfeld and second in Wolfen. Such will increase. And Olga Pötzsch, from the ing and the likely dampening effect of an places will matter in a federal election in Federal Statistical Office, argues that Ger- older workforce on innovation and pro- September, which is expected to be tight. many will need far more migrants to stop ductivity will drag down future growth, Bitterfeld-Wolfen has seen its population population decline, which is predicted to predicts Oliver Holtemöller of the Leipzig plummet from 75,000 in 1989 to 40,500 to- accelerate from 2020. Institute for Economic Research. These ef- day. Even after administrators tore down Uwe Schulze, a seniorlocal official, says fects are stronger in the east, he adds. Pro- blocks of flats, and cut floors off others, that refugees are not filling the labour ductivity is 20% lower than in the west; the skeletal remains of buildings still await the shortage. Ofthe 2,600-odd asylum-seekers ageing population and continuing migra- wrecking ball. Nearly one building in five who arrived in the area in 2015 and 2016, tion to the west will make economic con- is empty. A grand Stalinist-era construc- fewer than a third are now registered as vergence even less likely. 7 The Economist April 15th 2017 Finance and economics 65 Free exchange On balance

Why the Federal Reserve should keep its balance-sheet large OW much money should exist? The Federal Reserve must The utility of interest-bearing money shows up in financial Hsoon confront this deep question. The Fed has signalled that markets, where demand for money-like instruments is rampant. towards the end of 2017 it will probably begin to unwind quanti- A paper by Robin Greenwood, Samuel Hanson and Jeremy Stein, tative easing (QE), the purchase of financial assets using newly all of Harvard, finds that such is the appetite for one-week Trea- created bank reserves. The central bank’s balance-sheet swelled sury bills that from1983 to 2009 they yielded, on average, 72 basis from about $900bn on the eve of the financial crisis to about points (hundredths of a percentage point) less than six-month $4.5trn by 2015 as it bought mortgage-backed securities and gov- bills(forcomparison, the difference in yield todaybetween a five- ernment debt (see chart). Ifand when the Fed shrinks its balance- year Treasury and a ten-year one is below 50 basis points). sheet, it will also retire the new money it created. This poses a problem. The authors argue that when there is Economistssuch asMilton Friedman popularised the study of not enough money, the private sector steps in, by issuing very the quantity ofmoney in the1960sand1970s. By the financial cri- short-term debt like asset-backed commercial paper. Unfortu- sis, however, the subject had gone out of fashion. The interest nately, such instruments can cause crises. A run on money-mar- rate, it was agreed, was what mattered for the economy. The Fed ket funds, which had gorged on short-term private debt, was cen- varied the supply of bank reserves, but only to keep rates in the tral to the meltdown in financial markets in late 2008. After one market forinterbankloans where it wanted them to be. infamously “broke the buck” by lowering its share price to less The Fed’s injection of emergency liquidity into financial mar- than a dollar, the government guaranteed all such funds. kets in 2008, however, sent interest rates tumbling. To regain con- trol, it started payinginterest on excess reserves (ie, those reserves Follow the money in excess of those required by regulation). Because banks should More money,then, can increase financial stability as well as eco- not lend for less than what the Fed offers, the new policy set a nomic efficiency. Set against these benefits are the costs of the floor under rates in the interbank market. This held even as the Fed’s intervention in—or perhaps distortion of—financial mar- Fed created still more liquidity with QE. kets.ThegoalofQE was to provide only a temporary economic The new system means the Fed can vary the amount of mon- boost. How, exactly, it did so is uncertain; on a strict reading of ey—for example, to provide emergency liquidity—without wor- economic theory, it should not have worked. Yet the evidence rying about the effect on interest rates. Maintaining the set-up, as suggests that QE brought down long-term bond yields (perhaps the Fed has hinted it might, means keeping banks saturated with by signalling that policy would be loose fora long time). With the reserves. Ricardo Reis of the London School of Economics esti- Fed now raising short-term rates, shouldn’t it nudge long-term mates that doing so currently requires about $1trn of reserves. rates up, too? Add Mr Reis’s estimate to the roughly $1.5trn of currency now in Perhaps. Yet it may be possible to do so without shrinking the circulation and you get a minimum balance-sheet size of $2.5trn, balance-sheet, and hence without retiring any money. About a much greaterthan before the crisis. And that is before you consid- quarter ofthe Fed’s Treasuries mature in more than a decade (see er the benefits ofhaving still more money available. chart). The Fed could swap these for shorter-term securities, re- In 1969 Friedman pointed out that holding money is costly. It versing an earlier policy dubbed “Operation Twist”. At the same means forgoing the risk-free return an investor can make by buy- time, it could replace its portfolio ofmortgage-backed securities— inggovernmentbonds. Yetbecause people need moneyfortrans- which it has no good reason to hang on to—with more Treasuries. actions, everyone must pay this cost (deposits in current accounts Maintaining a large balance-sheet may seem radical—until rarely earn as much as bonds). Only if the return on money is you consider a possible next step. Friedman wrote mainly about somehow made equal to that of bonds does the inefficiency dis- consumers’ need for money, not banks’. Why not let individuals appear. One way of making this happen is to create deflation, ie, and firms open accounts at the Fed, and also reap the benefits of to let money rise in value over time. Another is to make money interest-bearing money? Doing so would swell the Fed’s balance- bearinterest. Thatistrickywith cash, butitisexactly whatthe Fed sheet, but eliminate still more inefficiencies. For example, it does when it pays interest on bankreserves. would encourage firms to hold more money, reducing the need for zealous cash-management strategies such as delaying pay- ments to suppliers. As with QE, such a policy should not be infla- The $4.5trn question tionary,so long as the Fed maintained control ofinterest rates. Federal Reserve holdings, $trn The idea is similar to one with its own name: narrow banking, Assets Treasuries by maturity, April 2017 which callsforall consumerdepositsto be backed bysafe govern- ment debt, rather than illiquid long-term loans. Narrow banking 5 0 0.5 1.0 1.5 has a long history of appealing to economic luminaries, includ- Other 90 days 4 or less ing Friedman, because it seems to end the problem of bank runs. Critics say that, by depriving banks of a source of cheap funds, 91 days 3 -1 year narrow banking would starve the economy of credit. Supporters reply that the central bank could always lower interest rates or Treasuries 1-5 2 years buy more assets to compensate. Such a profound change to finance is not on the horizon. But 1 5-10 years the Fed may keep its balance-sheet significantly larger than it was Mortgage-backed QE securities before the crisis, even if it partly unwinds . Given the benefits 0 Over ofabundant money,that would be cause forcheer. 7 2003 05 10 15 17 10 years Source: Federal Reserve Economist.com/blogs/freeexchange 66 Science and technology The Economist April 15th 2017

Also in this section 67 Submarine icebreakers 68 Printing keys 68 Gut microbes and the brain 69 How shoelaces come untied

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

Marine biology the carbon pump. The nocturnal feasting consumes prodigious amounts of that cli- Mapping the mesopelagic mate-changing element in the form of small, planktonic creatures. Then, during the day, the feasters release part of what they have consumed as faeces. Some of Woods Hole them also die. These faeces and bodies fall through the water column as what is One ofthe least-understood parts ofthe sea is also one ofthe most important. It known as marine snow, and accumulate at damps down global warming and may soon help feed humanity the bottom. Without mesopelagic preda- EW have heard of the mesopelagic. It is March, in Bergen, Norway’s principal port, tors, far more plankton would die in the Fa layer of the ocean, a few hundred me- the session about fishing the mesopelagic surface waters, their bodily carbon re- tres below the surface, where little light was entitled “the Big Apple”. turned rapidly to the atmosphere. The vast penetrates, so algae do not live. But it is On the face of things, biting that apple harmless reservoir of carbon in the depths home to animals in abundance. There are seems a good idea. The mesopelagic is would thus be a little smaller; the damag- bristlemouths: finger-sized fish with gap- home to 10bn tonnes ofanimals. Cropping ing burden of atmospheric carbon a good ing maws that sport arrays of needle-like a mere 1% of this each year would double bit greater. teeth. They number in the quadrillions, the landed catch of the ocean’s fisheries. Until now, the only sensible way to and may be the most numerous verte- Most of this catch would probably not ap- probe mesopelagic activity has been by so- brates on Earth. There are appendicular- peal to human palates. But fish farmers nar. This is, indeed, how the zone was dis- ians: free-swimming relatives of sea- and meal merchants would lap it up. covered, in 1942, by an American anti-sub- squirts a few millimetres across. They The mesopelagic also, however, acts as marine research project. From theirearliest build gelatinous houses several times their a carbon pump. Every year it pulls be- days such soundings suggested a lot of body-size, to filter food from the water. tween 5bn and 12bn tonnesofthatelement creatures live in the mesopelagic. They are There are dragonfish (pictured). They have out of the surface waters and into the sufficiently abundant that the equipment luminescent spotlamps which project depths, where there is a vast reservoir of then available saw the zone as a “false bot- beams of red light that they can see, but the stuff. Though currents which well up tom”, beneath which sonar could not pen- their prey cannot. There are even squid from that reservoir return a similar etrate and submarines might thus hide. But and swordfish—creatures at least familiar amount of carbon to the shallows, this cy- it was subsequent probing by a Spanish ex- from the fishmonger’s slab. cle still plays an important role as a coun- pedition, the Malaspina circumnavigation And soon there will be nets. Having pil- terbalance to man-made global warming. in 2010, which came up with the current laged shallower waters, the world’s fishing 10bn-tonne estimate and showed just how powers are looking to the mesopelagic as a Deep waters big a part of Earth’s biosphere the mesope- new frontier. The UN’s Food and Agricul- To try to understand the mesopelagic bet- lagic actually is. ture Organisation reported in 2002 that the ter, the Woods Hole Oceanographic Insti- Sonar is still important forinvestigating fish-meal and fish-oil industries would tute (WHOI) in Massachusetts, NASA, the zone. Norway, which has long paid at- need to exploit this part of the ocean in or- America’s space agency, and Norway’s In- tention to the sustainability of its fishing der to feed fish farms. In the past nine stitute of Marine Research are all embark- operations, will launch the third incarna- months Norway has issued 46 new li- ing on projects to study it. As ecosystems tion of Dr. Fridtjof Nansen, the flagship of cences for vessels to fish there. In Septem- go, it is an odd one. Its inhabitants are in a its marine-research fleet, in May, with an ber the government of Sindh, a province state of perpetual migration, rising to the explicitfocuson mappingand understand- that is home to most of Pakistan’s fishing surface at night to feed, then returning to ing mesopelagic life using the most ad- fleet, issued a draft policy on licensing me- depths of between 200 metres and 1km at vanced civilian sonar available. But sonar sopelagic fishing in its waters. And at the dawn, to escape predation. It is this migra- can see only so much. WHOI’s goal is to North Atlantic Seafood Forum, held in tion, the biggest in the world, that drives study the zone using robots, which the in-1 The Economist April 15th 2017 Science and technology 67

2 stitute’s engineers are now constructing. The largest of these planned devices is called Deep See. It is a sensor-packed un- derwater sled weighing about 700kg. One of WHOI’s research vessels will tow Deep See through the mesopelagic, gathering wide-angle camera footage and environ- mental data. When the probe spots some- thing, a second robot will swim down from the research vessel to explore. This second device, Mesobot, weighs 75kg and is shaped like a bar of soap. Un- like Deep See, Mesobot will run untethered. It is designed to hang in the water column and observe mesopelagic life for extended periods, in particular by using high-defini- tion cameras to track animals up and down during their daily migration. WHOI’s roboticists are paying special at- tention to Mesobot’s thrusters, ensuring that they do not disturb the life the probe is trying to video. It will be the first time that Icebreakers the behaviour of mesopelagic animals has been recorded in a natural setting. Mesobot Making waves will also have a special sieve for capturing organisms in a way that preserves them from the disruptive pressure change asso- ciated with surfacing. WHOI’s third type of mesopelagic ro- bot will be disposable probes called Snow- The quickest way to breakthe ice is by submarine clops. These will sink through the water column, measuring the amount of marine RCTIC sea-ice is melting. For many that the thickness of the sheet, that sheet will snow at various depths. On its way down, Ais a source of alarm. But for others, the crack up and disintegrate, leaving a naviga- snow is a potential source offood for other ice is still not melting fast enough. They ble passage behind. animals. Recording its fate at different lev- would like to give it a helping hand. Clear For things like freeing river mouths of els is thus crucial to understanding how lanes through the Arctic ocean would per- ice, thisapproach can workwell. But hover- the carbon pump works. mit commercial and naval shipping to tra- craftskirts are easily damaged by ridged ice Combining data from these three types vel quickly between the Atlantic and the (the sort that forms when previously bro- ofrobots will paint a more accurate picture Pacific. These lanes might also assist the ken ice refreezes), so the vehicles cannot be of life in the mesopelagic, and thus of its search foroil and gas. used in places that require frequent clear- importance to matters climatic. In collabo- The Russian authorities seem particu- ance. Also, resonance-breaking by hover- ration with NASA, WHOI also hopes to larly keen on the idea. Last year they craftdoes not workforice sheets more than find variables that are observable by satel- launched Arktika, the first of three giant, about a metre thick. lite and thatcorrelate with the health ofthe new nuclear-powered icebreakers intend- That limit is, however, no constraint on mesopelagic and the size ofits carbon flux. ed to help open such routes. But some peo- the thinking of researchers led by Viktor The principal satellite involved here, if it ple think this approach—bludgeoning Kozin of the Komsomolsk-on-Amur State can survive the Trump administration’s through the ice with what is, in essence, an Technical University, in Russia. Dr Kozin budget proposal to cut its funding to zero, armour-plated knife—is old-fashioned. and his team have been investigating reso- will be PACE (short for Plankton, Aerosol, They believe the job could be done faster nance icebreaking since the 1990s. But, in- Cloud, ocean Ecosystem). This is sched- and more elegantlyusinga piece ofphysics stead ofhovercraft, they use submarines. uled for launch in 2022. Though PACE will called flexural gravity-wave resonance. If Dr Kozin’s original research was on not be able to see directly into the mesope- they are right, the icebreakers oftomorrow ways to permit naval submarines to sur- lagic, it will be able to measure, from the might be submarines. face safely and quickly through ice, the pre- spectrum of light reflected from the ocean, Resonance icebreaking was discovered vious method having been simply to rise things like rates ofplankton consumption. in 1974 by Canada’s coast guard, when it until contact was made with the ice sheet The forthcoming decade should, then, began using icebreaking hovercraft able to and then increase buoyancy until the ice serve to start answering the question of operate in waters too shallow for conven- cracked (as an American vessel is pictured how much fishing of the mesopelagic can tional icebreakers. At low speeds, these doing above). That, though, is slow and can be undertaken without disrupting it—and craft work much as icebreaking ships do, damage the boat. Dr Kozin found that the with it, its role in climate regulation. Once by forcing sections of pack-ice in front of bow wave from a submarine travelling the fleets start hauling in their catches, the their bows to rise up and detach them- close to the surface pushes the ice sheet up- temptation will be to collect more and selves from the main sheet. When travel- wards, making flexural gravity waves in it, more. History shows that such piscatorial lingabove 20kph, though, theycause oscil- which cause it to breakup. free-for-alls usually end badly. In the case lations, known as flexural gravity waves, Follow-up studies by Dr Kozin and his ofthe mesopelagic, though, regulators will in the ice sheet they have passed over. At pupil, Vitaliy Zemlyak, who is now at the start with a clean slate, and thus a rare op- the correct speed of passage these waves Sholem-Aleichem Priamursky State Uni- portunity to agree in advance a way of hit a resonant frequency—increasing in versity in Birobidzhan, indicate that a sub- stopping that happening. Whether they amplitude as the critical speed is main- marine travelling 30 metres below the ice will take it is another matter. 7 tained until, atan amplitude dependent on can breaka sheetone metre thick. At 20 me-1 68 Science and technology The Economist April 15th 2017

2 tresitcould breakice two metresthick. And What prompted his interest is how sim- UrbanAlps’ founders hope the added se- it can do it quickly. Comparable data are ple it is to copy most keys: a few minutes at curity they bring will make them attrac- not available for Arktika, but America’s a local key shop will usually suffice. And tive—probably to industrial customers to heavy icebreaker, Polar Star,canbreaka copying is getting easier. It is now possible start with, and to the general public as pad- channel through two-metre ice at a rate of to take a picture of a key with a smart- locks. They do have a downside, though. If three knots. A submarine could force such phone and turn the image into a computer you lose one, getting a replacement will in- a passage ten times as fast. file that can be used to make a replica with volve a security check, because only Dr Kozin and Dr Zemlyak have also the aid ofa cheap, hobbyist 3D printer. The UrbanAlps has the digital-design file for found that the area of ice broken can be in- resulting duplicate will probably be the original. And a duplicate will take an- creased greatly by using two submarines printed in plastic, and thus lack durability. other day in the 3D printer. 7 moving together on parallel courses, and But it is likely to be good enough to workat they are now looking at increasing the least once—and once might be enough. pressure exerted on the ice still further, by Dr Ojeda’s answer is the Stealth Key Gut microbes and the brain adding wedges, spoilers and vortex gener- (pictured). This is printed in titanium, one ators to a submarine, or even installing an of the toughest of metals. Its teeth are hid- Bad medicine impeller, a giant propeller mounted hori- den under a pair of narrow ledges, making zontally. Experiments on these ideas will it unscannable. But when inserted into the start next winter. lockthe teeth can operate the mechanism. Building new submarines to act as ice- To bring the Stealth Key to market, Dr breakers would be a huge investment. But Ojeda teamed up with Felix Reinert, an ex- Dosing pregnant mice with penicillin here, Russia may have a short cut. It tends pert on 3D-printing metal, to found a firm changes theiroffsprings’ behaviour to retire its naval submarines faster than called UrbanAlps. Jiri Holda, a lockdesign- America does. At the moment such boats er, joined them to help devise a keymaking HE symbiosis between human beings are normally consigned to the scrapyard. process that employs an industrial 3D- Tand the bacteria dwelling in their guts Turning them into icebreakers to open up printing system called selective laser melt- is a delicate thing. When it works well, the Arctic might give them a second life. 7 ing (SLM). This is currently used to make both sides benefit. The bugs get a comfy high-strength components for jet engines home. The hosts get help with their diges- and gas turbines. Indeed, it was these uses, tion, makingmore food available than oth- High-security locks which also involve printing a lot of con- erwise would be. If relations are upset, cealed detail, that gave Dr Ojeda his key- though, bad consequences may flow. Both Forging the printing idea in the first place. obesityand malnutrition can be exacerbat- SLM, as its name suggests, uses a laserto ed by the wrong gut bacteria. Illnesses unforgeable fuse the layers of metallic powder of such as asthma and eczema are linked to a which the objectbeingprinted ismade. Itis lack of certain bugs from an infant’s intes- good at its job, but slow. It takes only sec- tines. And there is evidence, from experi- onds to cut a conventional key, but making ments on mice, that an absence of gut flora a Stealth Key can occupy the best part of a affects the development of the brain. Such A key that can’t be copied (probably) day. UrbanAlps’ SLM machine does, how- absence weakens the blood-brain barrier, EYS have been around for a long time. ever, print 850 ofthem at a time—each, nat- which normally helps to keep foreign ma- KThe earliest, made from wood, date urally, different from the others. terial out of that organ. It also seems to back 4,000 years, to the ancient Egyptians. Stealth keys are not cheap. A pair, to- make animals less sociable than would The Romans improved them a bit by mak- gether with a lock mechanism (made the otherwise be expected. ing them from metal. But there, more or conventional way), cost about $200. But The experiments which show these less, they have stayed. Electronic card-keys brain and behavioural changes have, aside, a key is still, basically, a piece of met- though, either been done on mice raised in al sportinga series ofgrooves, teeth and in- sterile conditions or on ones that have had dentations which, when inserted into a their alimentary bacterial ecosystems keyway, line up to move pins and levers to “nuked” with antibiotics in high dose—far lockor unlocka mechanism. higher, pro rata, than would be adminis- Such keys are made with conventional tered to a human for medical reasons. The manufacturing techniques, such as cutting next stage is to test whether anything simi- and stamping. But now there is a new way, lar happens to mice fed more realistic in the form of3D printing, to craft metal ob- doses of antibiotics. And this is what So- jects. And keys are about to succumb to it, phie Leclercq of McMaster University, in to the great benefit ofkeyholders. Hamilton, Ontario, has now done. A3D printer works by melting together Dr Leclercq and her colleagues, who layers of material that are added succes- have just published their results in Nature sively to the object being created. It can Communications, laced the drinking water thus make something from the inside out, of some pregnant female mice with medi- as it were, by printing intricate internal fea- cally appropriate levels of penicillin, start- tures and then covering them with a solid ing a week before those females were due layer. Features shielded from view are ex- to give birth, and carrying on three weeks tremely difficult to copy, let alone repro- after birth, to the point where their off- duce using normal machine tools. What spring were weaned (penicillin is known better way to reinvent the key, reckoned to be transferred from mother to pup in Alejandro Ojeda, a mechanical engineer milk). One group of mothers-to-be had who at the time was studying at the Swiss only the antibiotic added to their water. A Federal Institute of Technology, in Zurich, second had a bacterium called Lactobacil- than to 3D-print it in this way. Hidden depths lus rhamnosus, a so-called probiotic that 1 The Economist April 15th 2017 Science and technology 69

2 has been demonstrated experimentally to not. They actually saw the reverse: the easily than a true reef does. But even a be good for the intestinal health of mice, blood-brain barriers of mice exposed sole- shoelace bow with a true reef at its core added as well. A third group of expectant ly to penicillin were far less permeable will fail eventually, and have to be retied. mothers were given their drinking water than those ofthe other two groups. Walking involves two mechanical pro- unadulterated. Twenty-five pups were What is going on—and, in particular, cesses, both ofwhich might be expected to born to mothers in the first group, 19 to the what relationship (if any) exists between exert forces on a shoelace bow. One is the second and 28 to the third. the effects of gut flora on the blood-brain forward and back movement of the leg. Six weeks post partum, the researchers barrier and on behaviour—remains to be The other is the impact of the shoe itself tested the sociability of the various off- seen. But Dr Leclercq and her colleagues hitting the ground. Preliminary experi- spring by putting them, one at a time, for have demonstrated that medically rele- ments carried out by Mr Daily-Diamond, ten minutes, into a small, Y-shaped tunnel vant doses of penicillin, even when ad- Ms Gregg and Dr O’Reilly showed that nei- with two chambersatthe ends. One cham- ministered via the mother rather than di- ther ofthese alone is enough to persuade a ber contained another mouse, of the same rectly, can have palpable effects on young bow to unravel. Both are needed. So they sex as the experimental animal, held in a mice. Whether the same applies to young had to devise experiments which could small wire cage. The second contained an people, just before or after birth, is surely a measure and record what was going on empty cage. matter worth investigating. 7 while someone was actually walking. The team found that, when released The “someone” in question was Ms into this apparatus, the offspring of moth- Gregg, who endured numerous sessions ers exposed only to penicillin preferred to on a treadmill so that the behaviour of her be alone. Theyspentmore time in the emp- shoelaces could be monitored. Using cam- ty chamber(fourand a halfminutes, on av- eras, and also tiny accelerometers attached erage) than in the chamber containing an- to the laces, the researchers realised that other mouse (three and three-quarter two things are important. One is how the minutes). Those born of mothers exposed act of walking deforms the reef at the cen- neither to penicillin nor to Lactobacillus tre of a bow. The other is how the different showed the reverse pattern, averaging inertial forces on the straight-ended and only three and a halfminutes in the empty looped extremities of the bow conspire to chamber and almost five in the chamber pull the lace though the reef in the way a that gave them company. Those mice born wearer would when taking a shoe off. ofmothersgiven both penicillin and Lacto- The first thing which happens during bacillus fell between these extremes, aver- walking is that the reefitselfis loosened by aginga bit underfourand a halfminutes in the inertial forces of the lace ends pulling the chamber that gave them company, and on it. This occurs as a walker’s foot moves three and three-quarters in the empty one. first forward and then backward as it hits In all cases there was no significant differ- the ground during a stride. Immediately ence between the sexes. after that, the shock of impact distorts the Dr Leclercq got similar results when she reef still further. The combination of pull tested the preferences ofhermice for social and distortion loosens the reef’s grip on novelty. She did this by letting them the lace, permitting it to slip. choose, in the tunnel, between a new The science of shoelaces In principle, the lace could slip either mouse and the one they had already met. way, giving an equal chance of the bow She found those exposed to penicillin A knotty problem eventually undoing completely or turning alone less interested in the new mouse into a non-slip knotofthe sortthat longfin- than those exposed to both penicillin and gernails are needed to deal with. In prac- Lactobacillus, or to neither. tice, the former is far more common. The She also found that exposure to penicil- reason turns out to be that the free ends of lin alone made male mice more aggressive. the bow can swing fartherthan the looped Three Californian engineers have found She arranged for males in the experiment ends do. The extra inertial force this causes out how laces come undone to be threatened by an unfamiliar male be- favours slippage in the direction ofthe lon- longing to a strain known forbeing big and NGINEERING brings great benefit to hu- ger of the free ends. To start with, the effect hostile. Males born of mothers given un- Emanity, from aircraft to bicycles and issmall. Butasthe free end in question con- adulterated drinking water all quickly as- from bridges to computer chips. It has, tinues to elongate, the disparity in inertial sumed a submissive posture when con- though, had difficulty creating a shoelace force gets bigger—and, eventually, only two fronted with such a stranger. Half of the that does not accidentally come loose. At or three strides are needed to take a shoe males born of mothers treated with the least in part, this is because no one has from being apparently securely tied to be- antibiotic did not, however, submit. In- truly understood why shoelaces come un- ing untied. deed, they fought back even though they done in the first place. But that crucial gap Probably, nothing can be done about were clearly outmatched—as did a fifth of in human knowledge has just been this differential elongation. But it might be the males whose mothers had been plugged. As they report in the Proceedings possible to use the insights Mr Daily-Dia- treated simultaneously with the antibiotic of the Royal Society, Christopher Daily- mond, Ms Gregg and Dr O’Reilly have pro- and Lactobacillus. Diamond, Christine Gregg and Oliver vided to create laces that restrict the distor- All these results are in line with the hy- O’Reilly, a group of engineers at the Uni- tion of the reef at a bow’s centre, and thus pothesis that low doses of antibiotic affect versity of California, Berkeley, have now slow the whole process down. Regardless behaviour similarly to high doses. So, worked out the mechanics of shoelace- of any practical benefit, though, the three when DrLeclercq and hercolleagues killed bow disintegration. researchers, are surelycontendersfor an Ig- and examined their animals shortly after A shoelace bow is a type of slip knot nobel prize. That award is made every year the behavioural tests, they expected to see thathas, atitscore, a reefknot. Like conven- for workwhich “first makes you laugh, and permeable blood-brain barriers in the tional reef knots, bows can be mistied as then makesyouthink”. Theirstudyoflaces mice exposed to penicillin. But they did “granny” knots, which come undone more looks like a shoo-in. 7 70 Books and arts The Economist April 15th 2017

Also in this section 71 A very Victorian marriage 71 Paula Cocozza’s new fiction 72 Damien Hirst’s encrustations 73 Johnson: Gender bender

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Refugees Done well, the authors argue hopefully, this approach can align the interests of The forgotten millions refugees, donors and host countries. To test their ideas Messrs Betts and Collier have helped establish a pilot scheme in Jordan, with help from Western governments (the EU has offered trade concessions) and companies like Asda, a British super- market, which usessuppliersthathire refu- How to improve prospects forrefugees gees in the zone. Results so far are mixed, HE European migration crisis of 2015 Refuge: Transforming a Broken Refugee although it is early days. Different sol- Tquickly turned into a morality play.Lib- System. utions can be found for other countries. In erals lined railway platforms to welcome By Alexander Betts and Paul some parts of Africa, forexample, refugees refugees, while their nativist foes warned Collier. Allen Lane; 265 pages; £20. To be can be given arable land to farm; Uganda of chaos and terrorism. Lost in the row published in America by OUP in September has found success with this approach. were the millions of refugees who stayed When peace returns at home, refugees can in the developing world, unwilling or un- hopelessness that sets in when refugees return. If it doesn’t, after a set period they able to journey to richer countries. The are denied a stake in their own future. should be allowed to naturalise. boats disgorging Syrians and Afghans onto The UN’s refugee body (UNHCR) has a Where does the West fit in? The authors Greek islands delivered one of the most legal mandate to help, but it is chronically slam Angela Merkel, Germany’s chancel- serious emergencies the European Union underfunded and increasingly irrelevant. lor, for triggering huge movements of refu- has ever known. But according to a new Under the prevailing “care and mainte- gees and migrants to Europe by relaxing book, they were a sideshow. nance” model, the UNHCR and its partner entry rules for Syrians in August 2015. The The starting point of “Refuge” by Alex- agenciesactassurrogate states, keeping ref- charge is unfair. Mrs Merkel’s decision was ander Betts and Paul Collier, a refugee ex- ugees in limbo for years. That suits rich as much consequence as cause: the exodus pert and a development economist, is the countries, which pay to keep refugees was well under way by the summer. A plight of the 86% of refugees who live in away, and allays the economic and securi- striking claim that Germany’s decisions poor countries. The outlook for most is ty fears oftheirhosts. But it creates lost gen- “may have” intensified the violence in Syr- grim. Although the number of people dis- erations—the third generation of Somali ia is presented without evidence. placed by conflict or persecution (includ- refugees in the vast Dadaab agglomeration The authors are on steadier ground ing those forced to flee inside their own in Kenya (pictured) now numbers10,000— when they note the high price ofEuropean countries) is at a post-war high of 65m, and does nothing for the refugees who are generosity. Sweden, for example, has more salient is the length of their exile: not in camps. The big argument of “Ref- diverted half its foreign-aid budget to pay about half the world’s refugees have en- uge” is that refugees should be given jobs for refugees at home; thus the world’s dured their status formore than five years. rather than coddled as victims, and that poorest are in effect subsidising their more Take Syria’s civil war, six years old with governments should harness the forces of fortunate brethren in Sweden’s expensive no end in sight. Most ofthe 4m Syrian refu- globalisation and capitalism to help. asylum system. The drain has lost Syria its gees languishing in neighbouring Turkey, The authors’ Eureka moment came in brightest, crimping its chances of post- Jordan and Lebanon cannot return home. Jordan in 2015, when they were shown a conflict recovery. Ratherthan argue for rich But they struggle to find decent work or low-tax “special economic zone” (of the countries to take in ever more refugees, the educate their children in the towns and cit- sort popularin parts ofAsia) nearZaatari, a authors urge them to offer political and ies to which most have flocked (the small refugee camp. The camp “reeked of lives economic help to “havens” like Jordan and numbers in camps have even fewer op- on hold”, while the zone needed workers. Kenya, including financial incentives for tions). Any visitor to places like the Bekaa The answer seemed obvious: alongside firms to invest. valley in Lebanon will quickly see the nationals, refugees should be put to work. This will unsettle those who despair at1 The Economist April 15th 2017 Books and arts 71

2 Europe’s inability to handle a refugee in- wrote constantly whenever separated— New fiction fluxof1m when itspoorerneighbourscope curiously in need of each other, the author with far higher numbers. Perhaps a bigger observes, and “attuned…to each other’s The animal within problem is that “Refuge” provides no guide words”. Wisely, Ms Chamberlain focuses on how to handle today’s mixed flows of on a few interesting years, 1843 to 1849, a economic migrants and refugees. Unlike time of revolution. Her book is crowded many advocacy groups, the authors are with people and stories—overcrowded careful (and right) to distinguish the two. even, and a little rough at the edges. But How to be Human. By Paula Cocozza. But the people smugglers in Libya who one persistent and fascinating thread is Hutchinson; 308 pages; £12.99. To be haul Eritreans onto boats together with Ni- Jane’ssearch forwhatshe called her“I-ity”, published in America by Metropolitan in May gerians and Bangladeshis do not, creating her “self-subsisting and alas! self-seeking headaches forEuropean governments. Me”. Sometimes it was a craving for confir- N A patch of east London, somewhere “Refuge” suffers from poor editing; it is mation; she glowed after a visit from Al- Ibetween the urban and the wild, a love wearyingly repetitive and dotted with er- fred Lord Tennyson to “talk with me! by triangle emerges—between a woman, her rors (Mrs Merkel has not, for example, im- myself me!” Sometimes it was a longing ex-boyfriend and a fox. This is the premise posed a cap on refugees). A few eyebrows fora mission, a purpose. of “How to be Human”, a debut novel by will also be raised at the claim that Eu- Above all, it was her need to write. She Paula Cocozza, a British journalist. It is a rope’s refugee flows were responsible for knew her worth. When Thomas praised thrilling psychodrama that twists and Britain’s vote to leave the EU. But this her “charming bits of Letters”, she flew at turns with the residents of a few houses should not detract from the humanity of a him: “as if I were some nice little Child and their adjacent woods. bookthatplacesthe long-term needsof the writing…to its God papa…let us hear no Mary, the story’s protagonist, has bro- world’s refugees at its heart. “Refuge” is the more of my bits of Letters”. She was after ken up with Mark, her domineering fiancé, first comprehensive attempt in years to re- bigger fish—authenticity, “as it flies”, she but their destructive relationship has think from first principles a system hide- wrote. Chidinga cousin forherreserve, she sucked herlife dry. Then a foxarrives in her bound byold thinkingand hand-wringing. demanded “the real transcript of your unkempt garden; at first he is a pest and Its ideas demand a hearing. 7 mind at the moment”: “if a sadness, or a then a friend. He brings her “gifts”, which longing, or a perplexity, ora bedeviledness she finds increasingly full of meaning: a fallson you…then down with iton paper— pair of boxer shorts, a gardening glove, an A very Victorian marriage tho’ only six lines or six words”. egg. Everything normal in her life starts to Jane never published. She could cope slip, but she has something far more valu- To have and to with the “transcript” only in private; able, “her fox”. couldn’t even write it down, she said, if As with other works that cross the bes- hold there was anyone else in the room. A draft tial line—the horse fixation in Peter novel by two friends shocked her precisely Shaffer’s “Equus” or “The Goat or Who Is by its authenticity: by the “exposure of Sylvia?” by Edward Albee—this is a disturb- Jane Welsh Carlyle and Her Victorian their whole minds naked as before the ing narrative about sanity and obsession. World: A Story of Love, Work, Friendship, fall”.With one briefexception, the thought But Ms Cocozza makes a further point of publication froze her own attempts at about the supposed civility of humans. and Marriage. By Kathy Chamberlain. Duck- formal writing. But then there was always Are people’s urban lives natural? She bril- worth Overlook; 398 pages; $37.50 and £25 someone in the room—Thomas’s heroes liantly captures a sense of Hitchcockian, OME kind of angel married to some gazing from the shelves, high among them curtain-twitching intensity as Mary and “S kind of god!” So seemed Jane Welsh the writer himself, “The Hero as Man of her terraced neighbours struggle to escape Carlyle and her husband, Thomas, to a Letters”, hailed by him as “ourmost impor- each other. While Mary, through the wall, friend in 1845. Her wit and his fame—as the tant modern person”. No wonder she kept hears Michelle’s sobs, induced by postna- author of “The French Revolution” (1837) her head down. 7 tal depression, Michelle lashes out at Mary, and “On Heroes, Hero-Worship and the “You think I haven’t seen you… creeping Heroic in History” (1841), among other around at night.” books—had shot them into the literary fir- In pleasant contrast to this claustropho- mament. Poets, novelists, philosophers bic human world comes that of the book’s and revolutionaries all beat a path to their vulpine star, known as “Red”, “Flight”, door in Cheyne Row, Chelsea. “Sunset” or “Fox”. In lyrical, disjointed But the image was a fantasy. Thomas prose Ms Cocozza describes how he naps, was a curmudgeon, a “self-tortured, aggra- eats beetles and scents the neighbour- vating mystery of a man” as Kathy Cham- hood; spraying, wiping, squeezing, twist- berlain writes in her new book, and a prize ing and dropping his “amazing smell chauvinist besides. “The Man should rule cloud”. He conducts himself in a far more in the house and not the Woman,” he refined manner than the humans, who get warned his bride-to-be. But Jane was a drunk, become abusive, throw things and born ironist with “a genius”, she said later, try to control one another. “for not being ruled!” No angel then, but Mary embraces the freedom of the fe- fun. One friend saw dinner guests seated ral; but as her walk to the wilder side pro- beside her “in incessant fits of laughter!”, gresses, it becomes unclear whether this is and her letters echo her talk—mocking, the cure she needs orifthings are spiralling self-mocking, mercurial, “splashing off dangerously out of control. Like the scent whatever is on my mind”, in Jane’s words. of a fox, truth and fact in “How to Be Hu- Letters are the stuff of this engaging man” start to evaporate. What is left be- book. Though the marriage was not happy hind is a pervasive sense that beneath the (Ms Chamberlain is wary of tales that it veneer of civility, something wilder is was unconsummated), Thomas and Jane No underdog always lurking. 7 72 Books and arts The Economist April 15th 2017

Damien Hirst In 2008, Mr Hirst broke all the rules. He took over Sotheby’s London headquarters From the heart of the sea for “Beautiful Inside My Head Forever”, a two-day auction of 244 new works that fetched $201m, most of which, after fees and expenses, went to him. Some critics VENICE were virulent; others thought it commer- cially astute and conceptually brilliant. Covered in barnacles and encrustations, Damien Hirst’s new art is exquisitely Yet Mr Hirst has never repeated the ex- crafted.Collectors should be careful,though; art is easy to buy,but hard to sell ercise. That may be because, even after N OBSESSIVE art collector, Cif Amotan nearlya decade, the artmarketisstill trying AII, loads a ship, the Apistos,withtrea- Smart art to digest the Sotheby’s sale. Very few sures fora temple to the sun. But the ship is Indexed value of art sales at Christie’s works from the “Beautiful” auction have wrecked at sea. And the treasures? Forgot- and Sotheby’s, 2004=100 come back onto the market, and those that ten, until recently, when they were redis- 1,250 have have not done well. In March, a spin- Damien covered, retrieved, restored and put on Hirst skull painting from the auction was resold show. That is the conceit behind Damien 1,000 at auction for£449,000 ($545,565), just two- Hirst’s new exhibition, “Treasures from the Post-war and thirds of the sterling price it made in 2008 contemporary art 750 Wreck of the Unbelievable”, a fantastical (and less than halfthe dollar price). adventure across Venice at Palazzo Grassi 500 Collectors who don’t need to sell are and Punta della Dogana, the landmark holding on to their works, and the Hirst galleries created by François Pinault, a 250 auction markethasshrunkconsiderably. In French billionaire who made his money 100 2008, the year of the Sotheby’s sale, from luxury goods. 0 $223.3m-worth of Hirst work was sold at 2004 06 08 10 12 14 16 Just inside the main entrance of Palazzo auction; a year later, with the onset of the Source: ArtTactic Grassi a huge bronze head grimaces on the financial crisis, volume had slumped to floor. Beside it, dominating the atrium, is $14.6m. The artist’s auction sales in 2016 an 18m-tall headless demon adorned with cabinet sold for $19.2m, making him the were lower than in 2009. worms and sea plants. The rest of this part most expensive living artist at auction. Mr Hirst, meanwhile, has continued to of the show is more domestic in scale, re- For a long time Mr Hirst had followed flourish. In a rare admission, White Cube, flecting the building’s history as a luxuri- art-market convention, selling his new Mr Hirst’s London gallery, revealed in 2013 ous mansion: intricate silver objets d’art; work discreetly through his main dealers, that worldwide sales of his new work the pharaonic busts in marble and granite; a Jay Jopling and Larry Gagosian, in an yearbefore had come to $110m. Mostartists sculpture of Mr Hirst himself as the mythi- arrangement known as the “primary mar- split primary sales equally with their gal- cal collector. By contrast, the works in the ket”. Auctions, which are part of the “sec- leries; but Mr Hirst has negotiating power Punta della Dogana, the city’s former cus- ondary market”, resell old work rather and it is likely he retains more than 50% of toms house, are bigger: room-sized sculp- than fresh work that has never been sold anysale, perhapsasmuch as75%. The aver- tures of warriors covered in coral, a dark- before. Artists make their money from the age value of Mr Hirst’s auction sales has ened gallery filled with gold in glittering primary market, but they earn nothing been relatively consistent since 2009, at glass cases. Think Tomb Raider-meets-the from secondary-market sales other than just over $17m a year, according to ArtTac- Metropolitan Museum ofArt. the tiny percentage that comes from droit tic, a specialist research firm. If his prim- Despite the story about the shipwreck, de suite, or “artists’ resale rights”. ary-market sales in 2012 were similarly1 these artworks were actually made in Mr Hirst’s studios in Britain and by highly trained European craftsmen, and deposit- ed in the Indian Ocean—off Mozambique, it is believed—where they were filmed be- inglifted out ofthe sand. Excerpts and stills from the film are shown in both venues. Other than a small and much-derided exhibition of his paintings, “Treasures” is Mr Hirst’s first significant show of new work since 2008, when his market fell dra- matically in the wake of an extended two- day auction at Sotheby’s that coincided with the start ofthe financial crash. The art world—which will soon descend en masse for the Venice Biennale—has been alive with speculation that the exhibition will mark a return to critical and commercial form. The show,which continues until De- cember 3rd, is Hollywood-epic in scale,190 sculptures in 50 rooms—and it’s all forsale. When he became well known, in the 1990s, MrHirstcould do no wrong, creating the works that would make him famous: spot paintings, medicine cabinets and ani- mals in formaldehyde. In the 2000s he de- fined the boomingartmarket. In 2007 a pill The doges would have loved it The Economist April 15th 2017 Books and arts 73

2 consistent, then Mr Hirst has been making 3,000 works. In 2015 he opened a £25m with little interest in art, sent a team ofpeo- plenty of money. Which is lucky, because London gallery with 25 staff, to show his ple to cover the opening. He makes and he has certainly been spending it. collection to the public free ofcharge. sells thousands of inexpensive prints, The Venice show may be the most am- Early visitors to the Venice show, most- making his work accessible to bitious exhibition ever mounted by an art- ly critics and the press, were divided in almost all, and his retrospective at Tate ist. Mr Hirst says the work cost him more their reactions. The Guardian called it a “ti- Modern in 2012 was one of the museum’s than £50m to make, and Mr Pinault has tanic return to form”, the Times “a wreck… most popular shows. paid several million more to exhibit it. Mr [that] should be dumped at sea”. Francesco Meanwhile Mr Hirst’s dealers have Hirst clearly is not short of cash. In 2014 he Bonami, a respected curator, says: “There is been offering sculptures from the show for bought a mansion in Regent’s Park, north the art world and beyond that another uni- between $500,000 and $5m. Many pieces, London, for almost £40m. He has spent verse, the real world, where people love totalling tens of millions of dollars, are years renovating a large historic house, his work. I know [this show] will be a huge already believed to have sold. If true, then Toddington Manor, in Gloucestershire. He publicsuccess.” MrHirstenjoyshousehold MrHirst’sloyal collectorshave already cast runs large studio operations and has a recognition, which may explain why the their ballot on the show, critical approval world-class art collection of more than Daily Mail, a British tabloid newspaper or no. 7 Johnson Gender bender

Anotherchapterin the never-ending debate about genderand power ANGUAGES often force awkward and the masculine job title. Ms Mazetier, Lchoices. In English, you can say “some- as she had the right to do under the cham- one left his umbrella” and risk annoying ber’s rules, fined him a quarter of his some women, or “someone left their um- monthly salary, and a debate ensued un- brella” and riskalienating some grammar der headlines like “When ridicule kills sticklers. In French, son parapluie can feminism” and “Should the French Acad- mean either “his” or “her” umbrella. emy be dissolved?” But this hardly means there are no The problem cannot be entirely avoid- problems with gender, sex and politics in ed. The academy rightly notes that in the France. The French language requires a plural, the masculine has always covered gender for every single noun and adjec- the feminine too, and writingforexample tive: not only men and women, bulls and tous ceux (all those who), using masculine cows, but also tables and chairs, rocks and forms, has rarely attracted much atten- bricks. (The French for “gender” is genre, tion; the masculine is “unmarked”, mean- which also means “class” or “type”, as it ing it carries no special meaning, whereas does in English.) A noun’s gender rarely the feminine is “marked”, or specifically has anything to do with its real-world female. Writing toutes celles et tous ceux qualities: there’s not much feminine overand overwould fill French with even aboutla table, oranythingmacho about le more lumbering awkwardness than re- chapeau (hat). peated “he or she” does in English, given But it happens that titles of powerful the number of words it would affect in people, unlike the genders of hats and ta- French. Words like “voters” and “mem- bles, are not random: it’s le ministre, le “unintended consequences” could result. bers” could become the shorter, but typo- général, le chef d’état (head of state), le Grammatical gender only occasionally graphically ugly and unpronounceable sénateur, le magistrat. A pattern emerges: corresponds with biological sex, the aca- électeurs/trices or adhérent(e)s. whereas a few “generic” words are femi- demicians argued. They seemed to think For now, mainstream French opinion nine (like la personne), all these powerful they had the impeccably feminist position. is converging on a compromise between titles are masculine. A generic president is A woman is just as capable as a man of be- practical solutions on one hand and the le président, masculine, perhaps subtly ingle président. (La présidente, saysome tra- French Academy’s traditionalism on the nudgingFrench-speakersto thinkof presi- ditionalists going further, is the wife of the other. The masculine is generic, especial- dents as men. Only if a woman becomes president. Thiswascertainlythe case a cen- ly for plurals: no need for électeurs/trices. the actual president—as Marine Le Pen, of tury ago, but today’s first lady in France is But titles may be feminised when doing the National Front hopes to do in the known as the première dame.) so is grammatically simple and logical, as French elections which begin on April Various bodies pressed on, ignoring the it usually is. And those who want to be 23rd—does the title become la présidente. academy, which has no powers ofenforce- known by them deserve that courtesy. The traditional use ofthe masculine as ment. In 1998 the National Assembly ruled Ms Le Pen would hardly be a perfect generic has rubbed various French peo- thattitlesrelevantto itsvariousofficers and tribune for feminism as France’s head of ple the wrong way. In 1984, the govern- functions should be feminised, such as la state. She has posed as a defender of ment called upon the French Academy to deputée and la présidente. In 2014, a deputy women’s rights, but largely in opposition look into the question of feminising cer- from the centre-right, Julien Aubert, sided to the presumed antifeminist attitudes of tain titles. The academy, the official guard- with the academy against the chamber’s the Muslims she would like to keep out of ian of the language since 1635, replied rules, and repeatedly referred to the presid- France. Many French voters, according to with, in effect, a refusal. Titles that were ing officer, Sandrine Mazetier from the op- polls, would like to see her keep her cur- originally grammatically masculine posing Socialist Party, as madame le prési- rent job title—présidente indeed, but only should not be given feminine versions; dent, mixing the feminine personal title ofher own party. 80 Economic and financial indicators The Economist April 15th 2017

Economic data % change on year ago Budget Interest Industrial Current-account balance balance rates, % Gross domestic product production Consumer prices Unemployment latest 12 % of GDP % of GDP 10-year gov't Currency units, per $ latest qtr* 2017† latest latest 2017† rate, % months, $bn 2017† 2017† bonds, latest Apr 11th year ago United States +2.0 Q4 +2.1 +2.3 +0.5 Feb +2.7 Feb +2.4 4.5 Mar -481.2 Q4 -2.8 -3.5 2.35 -- China +6.8 Q4 +7.0 +6.5 +6.3 Feb +0.9 Mar +2.3 4.0 Q4§ +196.4 Q4 +1.7 -4.0 3.14§§ 6.90 6.47 Japan +1.6 Q4 +1.2 +1.2 +4.8 Feb +0.2 Feb +0.7 2.8 Feb +187.8 Feb +3.5 -5.3 0.05 110 108 Britain +1.9 Q4 +2.7 +1.7 +2.8 Feb +2.3 Mar +2.7 4.7 Dec†† -115.7 Q4 -4.0 -4.0 1.08 0.80 0.70 Canada +1.9 Q4 +2.6 +2.0 +3.5 Jan +2.0 Feb +1.9 6.7 Mar -51.2 Q4 -2.7 -2.6 1.55 1.33 1.29 Euro area +1.8 Q4 +1.9 +1.6 +1.2 Feb +1.5 Mar +1.6 9.5 Feb +387.3 Jan +3.0 -1.6 0.20 0.94 0.87 Austria +1.7 Q4 +2.0 +1.6 -1.1 Jan +2.2 Feb +1.7 5.7 Feb +6.6 Q4 +2.4 -1.1 0.45 0.94 0.87 Belgium +1.2 Q4 +2.0 +1.4 -1.6 Jan +2.3 Mar +2.0 7.0 Feb -2.0 Dec +1.1 -2.7 0.75 0.94 0.87 France +1.1 Q4 +1.7 +1.3 -0.7 Feb +1.1 Mar +1.3 10.0 Feb -32.4 Feb -1.0 -3.1 0.93 0.94 0.87 Germany +1.8 Q4 +1.7 +1.6 +2.3 Feb +1.6 Mar +1.8 3.9 Feb‡ +287.3 Feb +8.2 +0.5 0.20 0.94 0.87 Greece -1.4 Q4 -4.8 +1.2 +10.7 Feb +1.7 Mar +0.8 23.5 Jan -0.6 Jan -1.2 -6.4 6.72 0.94 0.87 Italy +1.0 Q4 +0.7 +0.9 +1.9 Feb +1.4 Mar +1.4 11.5 Feb +47.5 Jan +2.5 -2.4 2.27 0.94 0.87 Netherlands +2.5 Q4 +2.5 +2.0 +5.1 Feb +1.1 Mar +1.2 6.3 Feb +64.8 Q4 +8.5 +0.5 0.48 0.94 0.87 Spain +3.0 Q4 +2.8 +2.6 -1.7 Feb +2.3 Mar +2.2 18.0 Feb +24.9 Jan +1.5 -3.3 1.61 0.94 0.87 Czech Republic +2.0 Q4 +1.6 +2.5 +2.7 Feb +2.6 Mar +2.4 3.5 Feb‡ +2.3 Q4 +0.7 -0.5 1.01 25.1 23.6 Denmark +2.3 Q4 +1.9 +1.4 +2.3 Feb +1.0 Mar +1.2 4.3 Feb +24.9 Feb +7.1 -1.4 0.51 7.00 6.50 Norway +1.8 Q4 +4.5 +1.8 -4.0 Feb +2.4 Mar +2.4 4.2 Jan‡‡ +18.1 Q4 +5.3 +2.8 1.60 8.59 8.19 Poland +3.2 Q4 +7.0 +3.2 +1.2 Feb +2.0 Mar +2.0 8.2 Mar§ +0.5 Jan -1.2 -3.2 3.44 4.00 3.74 Russia +0.3 Q4 na +1.4 -2.7 Feb +4.2 Mar +4.5 5.6 Feb§ +34.9 Q1 +2.8 -2.9 8.13 57.1 66.8 Sweden +2.3 Q4 +4.2 +2.6 +4.1 Feb +1.3 Mar +1.6 7.4 Feb§ +23.7 Q4 +4.8 -0.4 0.54 9.04 8.10 Switzerland +0.6 Q4 +0.3 +1.4 -1.2 Q4 +0.6 Mar +0.5 3.3 Mar +70.6 Q4 +9.7 +0.2 -0.16 1.01 0.95 Turkey +3.5 Q4 na +2.6 -1.7 Feb +11.3 Mar +9.7 12.7 Dec§ -33.7 Feb -4.4 -2.1 10.97 3.72 2.83 Australia +2.4 Q4 +4.4 +2.7 +1.0 Q4 +1.5 Q4 +2.1 5.9 Feb -33.1 Q4 -1.3 -1.8 2.53 1.34 1.31 Hong Kong +3.1 Q4 +4.8 +2.6 -0.7 Q4 -0.1 Feb +1.7 3.3 Feb‡‡ +14.5 Q4 +5.9 +1.5 1.54 7.77 7.75 India +7.0 Q4 +5.1 +7.2 +2.7 Jan +3.7 Feb +4.6 5.0 2015 -11.9 Q4 -1.0 -3.2 6.81 64.5 66.5 Indonesia +4.9 Q4 na +5.2 +3.3 Feb +3.6 Mar +4.3 5.6 Q3§ -16.3 Q4 -2.0 -2.1 7.09 13,282 13,128 Malaysia +4.5 Q4 na +4.3 +4.7 Feb +4.5 Feb +4.0 3.5 Jan§ +6.0 Q4 +2.8 -3.1 4.12 4.43 3.89 Pakistan +5.7 2016** na +5.4 +1.1 Jan +4.9 Mar +4.6 5.9 2015 -4.9 Q4 -2.6 -4.8 8.15††† 105 105 Philippines +6.6 Q4 +7.0 +6.4 +10.8 Feb +3.4 Mar +3.3 6.6 Q1§ +0.6 Dec +0.8 -2.6 5.22 49.6 46.1 Singapore +2.9 Q4 +12.3 +2.1 +12.6 Feb +0.7 Feb +1.3 2.2 Q4 +56.7 Q4 +19.2 -1.0 2.20 1.40 1.34 South Korea +2.4 Q4 +2.0 +2.5 +6.6 Feb +2.2 Mar +1.8 4.2 Mar§ +97.6 Feb +6.4 -1.0 2.20 1,146 1,147 Taiwan +2.9 Q4 +1.8 +1.8 +10.6 Feb +0.2 Mar +2.1 3.8 Feb +70.9 Q4 +12.1 -0.7 1.10 30.6 32.4 Thailand +3.0 Q4 +1.7 +3.5 -1.5 Feb +0.8 Mar +1.3 1.1 Feb§ +46.8 Q4 +11.7 -2.3 2.58 34.6 35.1 Argentina -2.1 Q4 +1.9 +2.7 -2.5 Oct — *** — 7.6 Q4§ -15.0 Q4 -2.7 -4.1 na 15.2 14.5 Brazil -2.5 Q4 -3.4 +0.6 -0.8 Feb +4.6 Mar +4.5 13.2 Feb§ -22.8 Feb -1.6 -7.7 9.79 3.15 3.53 Chile +0.5 Q4 -1.4 +1.8 -7.6 Feb +2.7 Mar +3.0 6.4 Feb§‡‡ -3.6 Q4 -1.3 -2.3 3.93 656 683 Colombia +1.6 Q4 +4.0 +2.4 -0.2 Jan +4.7 Mar +4.0 10.5 Feb§ -12.5 Q4 -3.6 -2.8 6.66 2,873 3,056 Mexico +2.4 Q4 +2.9 +1.5 -1.7 Feb +5.4 Mar +5.0 3.5 Feb -27.9 Q4 -2.6 -2.5 7.14 18.8 17.7 Venezuela -8.8 Q4~ -6.2 -5.5 na na +562 7.3 Apr§ -17.8 Q3~ -1.5 -19.6 10.43 9.99 9.99 Egypt +3.4 Q3 na +3.9 +23.9 Feb +30.9 Mar +19.2 12.4 Q4§ -20.1 Q4 -6.2 -10.8 na 18.1 8.88 Israel +4.3 Q4 +6.5 +3.9 +3.2 Jan +0.4 Feb +0.6 4.3 Feb +12.4 Q4 +4.4 -2.3 2.17 3.65 3.77 Saudi Arabia +1.4 2016 na +0.8 na -0.1 Feb +2.0 5.6 2015 -24.9 Q4 -2.1 -7.3 3.68 3.75 3.75 South Africa +0.7 Q4 -0.3 +1.1 -2.4 Feb +6.3 Feb +5.7 26.5 Q4§ -9.5 Q4 -3.6 -3.1 8.96 13.9 14.7 Source: Haver Analytics. *% change on previous quarter, annual rate. †The Economist poll or Economist Intelligence Unit estimate/forecast. §Not seasonally adjusted. ‡New series. ~2014 **Year ending June. ††Latest 3 months. ‡‡3-month moving average. §§5-year yield. ***Official number not yet proved to be reliable; The State Street PriceStats Inflation Index, Jan 29.53%; year ago 30.79% †††Dollar-denominated bonds. The Economist April 15th 2017 Economic and financial indicators 81

Markets % change on Renewable energy New investment, 2016, $bn Dec 30th 2016 New investment in renewable energy 0 20406080 Index one in local in $ globally fell by 23% last year, to Apr 11th week currency terms $241.6bn. The fall is partly the result of China -32 United States (DJIA) 20,651.3 -0.2 +4.5 +4.5 an investment slowdown in China and China (SSEA) 3,444.3 +2.1 +6.0 +6.7 United States -10 Japan (Nikkei 225) 18,747.9 -0.3 -1.9 +4.3 Japan, after a huge increase in wind and Britain -1 Britain (FTSE 100) 7,365.5 +0.6 +3.1 +4.2 solar capacity that was financed in 2015. Canada (S&P TSX) 15,727.1 +0.4 +2.9 +3.4 But lower capital costs are also responsi- Japan -56 Euro area (FTSE Euro 100) 1,176.2 -0.3 +5.8 +6.6 ble: in dollar terms, solar photovoltaics, Euro area (EURO STOXX 50) 3,470.0 -0.3 +5.5 +6.3 onshore wind and offshore wind are at Germany -14 Austria (ATX) 2,886.4 +0.9 +10.2 +11.1 least 10% cheaper per megawatt than India nil Belgium (Bel 20) 3,807.6 +0.1 +5.6 +6.4 they were in 2015. Global installed capac- France (CAC 40) 5,101.9 nil +4.9 +5.7 ity of wind, solar and other renewables Brazil -4 Germany (DAX)* 12,139.4 -1.2 +5.7 +6.5 rose by a record 11gigawatts (GW), to Greece (Athex Comp) 680.1 +2.0 +5.7 +6.5 GW Australia 51 Italy (FTSE/MIB) 20,109.1 -0.7 +4.5 +5.3 138.5 , in 2016. The costs of generating Netherlands (AEX) 518.4 +0.8 +7.3 +8.1 these renewables are now comparable Belgium 179 Spain (Madrid SE) 1,046.9 +0.4 +11.0 +11.8 with fossil-fuel plants. But their future % change on France a year earlier 5 Czech Republic (PX) 993.0 +1.2 +7.7 +10.0 remains vulnerable to policy changes and Denmark (OMXCB) 838.9 +0.4 +5.0 +5.8 to slowing growth in electricity demand. Source: Frankfurt School UNEP Collaborating Centre, Bloomberg New Energy Finance Hungary (BUX) 32,199.2 +0.8 +0.6 +0.4 Norway (OSEAX) 763.2 +0.7 -0.2 nil Poland (WIG) 58,510.0 -0.9 +13.1 +18.1 Other markets The Economist commodity-price index Russia (RTS, $ terms) 1,091.1 -4.0 -5.3 -5.3 2005=100 % change on % change on Sweden (OMXS30) 1,570.9 +0.2 +3.5 +4.0 Dec 30th 2016 one one Switzerland (SMI) 8,641.6 -0.1 +5.1 +6.2 Index one in local in $ Apr 4th Apr 10th* month year Turkey (BIST) 90,904.4 +2.6 +16.3 +10.1 Apr 11th week currency terms Dollar Index Australia (All Ord.) 5,964.6 +1.2 +4.3 +8.4 United States (S&P 500) 2,353.8 -0.3 +5.1 +5.1 All Items 142.6 133.2 -7.3 +2.0 Hong Kong (Hang Seng) 24,088.5 -0.7 +9.5 +9.2 United States (NAScomp) 5,866.8 -0.5 +9.0 +9.0 Food 151.0 132.7 -13.4 -12.0 India (BSE) 29,788.4 -0.4 +11.9 +17.8 China (SSEB, $ terms) 344.2 +2.0 +0.7 +0.7 Indonesia (JSX) 5,627.9 -0.4 +6.3 +7.8 Japan (Topix) 1,495.1 -0.6 -1.5 +4.7 Industrials Malaysia (KLSE) 1,735.8 -0.6 +5.7 +7.0 Europe (FTSEurofirst 300) 1,501.4 +0.2 +5.1 +5.9 All 133.9 133.6 +0.1 +21.8 Pakistan (KSE) 48,250.1 +0.3 +0.9 +0.5 World, dev'd (MSCI) 1,847.9 -0.1 +5.5 +5.5 Nfa† 139.4 138.4 -2.8 +14.0 Singapore (STI) 3,174.8 -0.1 +10.2 +13.5 Emerging markets (MSCI) 954.4 -1.1 +10.7 +10.7 Metals 131.6 131.5 +1.4 +25.7 South Korea (KOSPI) 2,123.9 -1.7 +4.8 +10.5 World, all (MSCI) 447.4 -0.2 +6.1 +6.1 Sterling Index Taiwan (TWI) 9,832.4 +0.2 +6.3 +11.8 World bonds (Citigroup) 902.7 +0.3 +2.1 +2.1 All items 208.5 194.9 -9.2 +16.6 Thailand (SET) 1,582.8 -0.1 +2.6 +6.2 EMBI+ (JPMorgan) 806.1 +0.5 +4.4 +4.4 Argentina (MERV) 20,994.8 +0.8 +24.1 +29.1 Hedge funds (HFRX) 1,223.8§ +0.2 +1.7 +1.7 Euro Index Brazil (BVSP) 64,359.8 -2.1 +6.9 +10.3 Volatility, US (VIX) 15.1 +11.8 +14.0 (levels) All items 166.3 156.2 -6.9 +9.4 Chile (IGPA) 24,426.3 +1.1 +17.8 +20.3 CDSs, Eur (iTRAXX)† 76.8 +2.2 +6.4 +7.2 Gold Colombia (IGBC) 10,228.4 +0.5 +1.2 +5.7 CDSs, N Am (CDX)† 66.5 +0.8 -1.9 -1.9 $ per oz 1,256.8 1,251.9 +3.8 -0.5 Mexico (IPC) 49,637.9 +0.6 +8.8 +19.1 Carbon trading (EU ETS) € 4.9 +0.8 -26.0 -25.4 West Texas Intermediate Venezuela (IBC) 46,808.7 +2.3 +47.6 na Sources: IHS Markit; Thomson Reuters. *Total return index. $ per barrel 51.0 53.1 +11.2 +25.9 Egypt (EGX 30) 12,995.7 -2.0 +5.3 +5.7 †Credit-default-swap spreads, basis points. §Apr 10th. Israel (TA-100) 1,258.9 +0.4 -1.4 +3.9 Sources: Bloomberg; CME Group; Cotlook; Darmenn & Curl; FT; ICCO; Indicators for more countries and additional ICO; ISO; Live Rice Index; LME; NZ Wool Services; Thompson Lloyd & Saudi Arabia (Tadawul) 7,036.4 +0.7 -2.8 -2.8 Ewart; Thomson Reuters; Urner Barry; WSJ. *Provisional South Africa (JSE AS) 53,535.2 +1.7 +5.7 +4.1 series, go to: Economist.com/indicators †Non-food agriculturals. 82 Obituary Adrian Coles The Economist April 15th 2017

career army officer, could only admire. He held nothing against them, except the actu- al difficulty ofpicking them up. He had tapped into a national affection which was already there. IfBritain had a fa- vourite wild animal, it was probably not the fox, gallant but verminous, or the hare, magical but moonstruck, but the bright- eyed pointy-nosed hedgehog, suddenly appearing on lawns at dusk like the head of an old brush. The creature had been im- mortalised by Beatrix Potter in her tale of Mrs Tiggy-Winkle, the tiny laundress who stole (but only to wash and starch them till theyshone) the handkerchiefsoflittle girls.

Hot-water bottle and box As Major Coles warmed to the task his gar- den was invaded, soon containing more hedgehogs per acre than any other spot in Britain. His next step was to found a soci- ety, forwhich he also designed a tie. It grew fast. When at 85 he retired from running it, the British Hedgehog Preservation Society had more than 11,000 members. These in- cluded 700 “carers” who would provide an injured hedgehog with a hot-water bot- tle and a warm box, or put the small pink A prickly business feet in splints. Major Coles talked regularly on the BBC, advised vets and lobbied Par- liament. During droughts he would send a general letter to newspapers, urging peo- ple to put out water and cat food. He fought other successful campaigns, including getting household appliances MajorAdrian Coles, champion ofBritain’s hedgehogs, died on March 23rd, aged 86 sold with sealed plugs, and worked hard ROM Clee to heaven the beacon Council”, he sat beside the queen at lunch for many charities; but for this one he was “Fburns,” runs the opening line of A.E. and proposed the loyal toast. Its turning famous. Letters would arrive from abroad Housman’s “A Shropshire Lad”. The Clee point came in 1982, when his small daugh- addressed to “Major Hedgehog, England”. hills, rising to 1,700 feet, are the highest ter ran in to tell him that a hedgehog was A grand moment came in 2014, when an points in the county. From there, across stuck under the cattle grid at the end of the exhibit called “Hedgehog Street” won a green slopes scoured and scattered with drive. (“I didn’t choose hedgehogs,” he gold medal at the Royal Horticultural Soci- ruins of old quarry buildings, the view said later; “I had hedgehogs thrust upon ety’s show at Hampton Court. It displayed south opens over the valley of the Teme to me.”) With cautious sticks and an egg-pan three suburban gardens laid out as he rec- the blue hills ofHerefordshire and Worces- he got it out, his first close encounter; and ommended, with lush vegetation and five- tershire. realised he had stumbled on a general pro- inch-square gaps in their fences, for hedge- To the slopes clings Clee Hill village blem. There were probably hedgehogs hogsto get through. MajorColes, now wid- which, until it closed, had Shropshire’s stuckunder cattle grids all over Britain. owed and living at the Royal Hospital highestpub (called “The Kremlin” because, His solution was to build a little corner Chelsea, presided in his scarlet pensioner’s via the radar aerials on the hill, its juke box ramp, made of concrete or wood and at an coat with his service medals, and with a could pick up Radio Moscow). The sole angle of 20°, up which a hedgehog could camera-shy hedgehog in his lap. hostelry is now the Golden Cross, where scramble. He then persuaded the council Lower-key, but just as satisfactory, was the regular beer is Hobsons Twisted Spire (he was in the right job) to install them in the celebration at the Golden Cross in Clee and visitors can play, on ancient battered county grids. They are now compulsory Hill in 2012 to mark the BHPS’s 30th anni- equipment, quoits and pitch-penny. A bak- on public roads across the country. versary. The pub had renamed itself “The ery and post office stand along the main A Major Coles found himselfgetting exer- Cross Hedgehog” for the occasion. Hob- 4117, which is not very main here. In fact, cised about hedgehogs. Their numbers sons had brewed a new ale, “Old Prickly”, because it crosses common land, at two were falling so fast that they were almost and the village bakery supplied spiky points it is spanned by a cattle grid. on the edge of extinction. Pesticides poi- loaves of bread. The head of the BHPS had Several other cattle grids lie around soned them, and cars squashed them. to admit that numbers were still falling, by Clee Hill, and it was one of those that led (Most Britons have seen only that two-di- 25% in the past decade. But the rate of de- Adrian Coles to hedgehogs. At the time, in- mensional sort.) The fencing and paving of cline had slowed; a network was now in deed for 40 years, he was the local county suburban gardens stopped them foraging place to help, and the hedgehog’s place in councillor. The job mostly involved meet- for food. And yet they were such good British hearts and minds seemed assured. ings about schools, social services, flytip- chaps, useful creatures, eating the slugs With that cheering thought, many a glass ping and the like; as well as keeping an eye and woodlice no gardener wanted. Their of Old Prickly was raised to Major Coles, on village greens, commons and roads. Its doughtiness, as they rolled up into a ball to and to the movement he had started with high point came when, as “Father of the face their enemies, was something he, as a his egg-pan and his sticks. 7