The China strategy America needs Race and health: far from equal Afghanistan, a premature evacuation Golf’s biggest hitters

NOVEMBER 21ST–27TH 2020

The Tories’ plan to remake the state Reshape Your Reality Foldable 13.3” Screen Wifi & 5G Optional Windows 10 Pro

Reshape the way you experience a laptop.

This is more than a new generation in tech. It’s a new dimension in business. It’s game-changing innovation you can use on-the-go. For everything. One that bends and fl exes on your terms. For your needs. For your ambitions. It’s the smarter way to elevate your business.

Intel Core™ i5 processor with Learn more at Intel Hybrid Technology Lenovo.com/x1fold ©Photograph: patriceschreyer.com UIH NW OK PRS SOL SAGA · HNHN SNAOE TIE · OY · ZURICH · TOKYO · TAIPEI · MADRID SINGAPORE · · MACAU SHENZHEN · · LONDON SHANGHAI · · VEGAS SEOUL LAS · · PARIS LUMPUR · KUALA YORK · NEW KONG · HONG MUNICH · GENEVA · DUBAI · BEIJING COLLECTION Contents The Economist November 21st 2020 5

The world this week Britain 8 A summary of political 29 Ministers unchained and business news 32 Green Boris 32 Foreign aid v diplomacy Leaders 34 Mass testing in Liverpool 13 Reforming Britain Remaking the state 36 Bagehot A modern Machiavelli 14 American politics The art of losing Europe 14 Afghanistan 37 Turkey’s economy Leaving too soon 38 Dayton at 25 15 Sovereign debt A better way not to pay 39 Climate politics in Germany On the cover 16 Race and health Wanted: more data 39 Moldova’s election The Tories have got the wrong 18 China and America 40 Charlemagne The idea about why government A new grand bargain rainbow curtain isn’t working: leader, page 13, and analysis, page 29. The United States ideal chief adviser for Boris Letters 41 To the bitter end Johnson: Bagehot, page 36 20 On the American election, Turkey, 42 Missile defence • The China strategy America Thailand, a proverb, 43 Charles Koch needs As president, Joe Biden “Hamilton” should aim to strike a grand 43 The State Department bargain with America’s 44 Midwestern corruption Briefing democratic allies: leader, page 18, 45 Development v cemeteries and briefing, page 23. Why 23 Global technopolitics China may prove the biggest America’s China stategy 45 Charters and covid-19 foreign-policy challenge for 46 Lexington Barack America’s president-elect, Obama’s book page 61 The Americas • Race and health: far from equal Covid-19 has shone a light 47 Mexico and cannabis on racial disparities in health, 48 Illegal fishing in Ecuador page 65. Governments need to 50 Bello Peru’s chaotic overcome their qualms about politics collecting data on ethnicity: leader, page 16 • Afghanistan, a premature evacuation America risks Middle East & Africa handing the country to the 51 Ethiopia’s civil war Taliban: leader, page 14. As Lexington Barack American forces leave, it seems Obama’s new memoir, 52 Cattle-rustling keener on fighting than talking, “A Promised Land”, will 53 Shackling the mentally ill page 55 give his former deputy 53 Iran’s plotting in Africa little comfort, page 46 54 A lack of Arab doctors

We are working hard to ensure that there is no dis- ruption to print copies of The Economist as a result of the coronavirus. But if you have digital access as part of your subscription, then acti- vating it will ensure that you can always read the digital version of the newspaper as well as all of our daily jour- nalism. To do so, visit economist.com/activate 1 Contents continues overleaf 6 Contents The Economist November 21st 2020

Asia Finance & economics 55 Afghanistan 77 Sovereign debt 56 Japanese health care 78 RCEP, Asia’s new trade deal 57 Pakistan’s opposition 79 A tax scandal in Germany 58 India’s Islamophobes 79 Banks scramble for scale 58 Abortion in South Korea 80 Buttonwood Quant funds 60 Banyan The “Quad” 81 Bond defaults in China 81 The velocity of money China 82 Green investors sue 61 Joe Biden’s China policy 83 Free exchange The Fed 63 The new China hands and Biden 64 Chaguan The North Korean shadow Science & technology 84 AI fighter pilots 86 A Chinese Moon shot 86 When stars collide International 86 Another covid-19 vaccine 65 Race and health 87 Seals feeding like whales

Books & arts 88 Beethoven at 250 89 Jane Smiley’s new novel 90 A solo Everest mission Business 90 Globalisation in the Taiwan Inc in China 69 steam age 70 Germany’s guest 91 The Antichrist entrepreneurs 71 Walmart’s beastly quarter Economic & financial indicators 72 Airbnb in the Nasdaq 92 Statistics on 42 economies 72 The dash for DoorDash 73 Bartleby The board game Graphic detail 74 Schumpeter AT&T’s 93 Why driving distances in golf keep getting longer dividend dilemma Obituary 94 Jonathan Sacks, a chief rabbi with a mission

Volume 437 Number 9221 Published since September 1843 Subscription service to take part in “a severe contest between For our full range of subscription offers, including The best way to contact our Customer Service Please intelligence, which presses forward, digital only or print and digital bundled, visit: team is via phone or live chat. You can contact us and an unworthy, timid ignorance Economist.com/offers on 0333 230 9200 or 020 7576 8448; please check obstructing our progress.” our website for up to date opening hours. If you are experiencing problems when trying to Editorial offices in London and also: subscribe, please visit our Help pages at: PEFC certified Amsterdam, Beijing, Berlin, Brussels, Cairo, www.economist.com/help This copy of The Economist Chicago, Johannesburg, Madrid, Mexico City, for troubleshooting advice. is printed on paper sourced Moscow, Mumbai, New Delhi, New York, Paris, from sustainably managed San Francisco, São Paulo, Seoul, Shanghai, forests certified by PEFC Singapore, Tokyo, Washington DC PEFC/16-33-582 www.pefc.org

Registered as a newspaper. © 2020 The Economist Newspaper Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Newspaper Limited. Published every week, except for a year-end double issue, by The Economist Newspaper Limited. The Economist is a registered trademark of The Economist Newspaper Limited. Printed by Walstead Peterborough Limited. Look around and you’ll see a world in transformation. For right now we have the rare chance to grow into something better. To rethink everything, reset and rebuild our economic model. Creating one that’s Circular, Lean, Inclusive and Clean (CLIC™️). And the metamorphosis is already under way. So now is the time to build forward. To build back better. And not only survive in this new world - but thrive in it. Learn more about our CLIC™️ investment strategy at LombardOdier.com

Investments are subject to a variety of risks. You should consult your investment advisor before entering into any transaction. Lombard Odier (Europe) S.A. - authorised and regulated by the CSSF in Luxembourg and its UK Branch by the PRA and the FCA. Lombard Odier Asset Management (Europe) Limited - authorised and regulated by the FCA in the UK. ©2020 Lombard Odier 8 The world this week Politics The Economist November 21st 2020

America announced that it Colombia at category-five force would reduce its forces in and has also hit Honduras and Coronavirus briefs Afghanistan from 4,500 El Salvador. To 6am GMT November 19th 2020 troops to 2,500 by mid-January. Weekly confirmed cases by area, m That will allow Mr Trump to Most candidates supported by say he has ended America’s Brazil’s far-right president, Jair 2.0 Europe longest war, but could have Bolsonaro, failed to win office 1.5 dire consequences for Afghani- in the country’s local elections. Latin America US 1.0 stan’s stability. Troop numbers Established politicians from Other in Iraq are also to be cut. the centrão, a bloc of centre- 0.5 right parties, did well, in con- 0 A report by the inspector- trast with their performance in Government forces in Ethiopia general of Australia’s armed national elections in 2018. The NOSAJJMAM said they had captured key forces found that at least 39 president himself remains Confirmed deaths* towns on the road towards people in Afghanistan had popular thanks to big spending Per 100k Total This week Mekelle, the capital of the been unlawfully killed by elite on poor people. Belgium 129.6 15,025 1,267 rebellious province of Tigray. troops in a culture of “blood- Peru 107.1 35,317 325 The civil war has spilled across ing” that treated killings as a Dominic Cummings, the chief Spain 89.9 42,039 1,934 the border into Eritrea and led rite of passage. In some cases adviser to Boris Johnson, Argentina 80.4 36,347 1,816 to an ethnic massacre. The weapons had been planted on Britain’s prime minister, left Brazil 78.8 167,455 4,087 Britain 78.5 53,274 2,909 government has resisted calls the bodies of the victims to his job amid a power struggle Italy 78.1 47,217 4,264 for talks or mediation. Tens of justify shootings. The report at Downing Street. Speculation Chile 77.9 14,897 264 thousands of refugees have recommended that police swirled that Mr Cummings Mexico 77.2 99,528 3,098 fled into Sudan. investigate 19 former or current leaked lockdown proposals Bolivia 76.0 8,875 57 soldiers. and briefed against his boss. A United States 75.7 250,537 9,583

Russia said it would build a master in the art of out- Sources: Johns Hopkins University CSSE; UN; naval base in Sudan, adding to Thailand’s parliament, one manoeuvring the executive The Economist *Definitions differ by country a “great power” rivalry that has chamber of which was (Mr Cummings was the strat- already seen the establishment appointed by the leaders of a egist behind the Brexit vote), The number of deaths in of American and Chinese naval military coup in 2014, rejected his uncompromising style America passed 250,000 and and air bases on the Red Sea. the idea of curbing the powers finally forced his exit. Sepa- the tally of cases hit 11m. New of the monarchy. At the same rately, Mr Johnson announced York City closed its schools Shooting broke out between time, the authorities used the biggest boost to British again. California’s governor Morocco and the Polisario greater force to disperse defence spending in 30 years. said he was “pulling the emer- Front, which is fighting for the protests in Bangkok against the gency brake” on reopening. independence of Western military-led government and An agreement on a €1.8trn Sahara, after rebel forces the monarchy. ($2.1trn) budget for the eu, South Korea, which has been blocked a key highway. The un, including a special covid-19 widely praised for bringing the which monitors a ceasefire, Manuel Merino resigned as recovery fund worth €750bn, disease under control, tight- called for restraint. Peru’s president after five days hit a new snag as Poland joined ened social-distancing mea- in the job. He took office when Hungary in threatening a veto sures after reporting 200 fresh Egypt unearthed more than Congress removed President because the package contains cases for four straight days. 100 intact sarcophagi and other Martín Vizcarra. Mr Vizcarra’s provisions that require recipi- artefacts dating as far back as departure sparked protests and ents to abide by eu standards With growing pressure on 2,500 years from the necropo- a police crackdown in which at on the rule of law. But there is intensive care, Sweden low- lis of Saqqara, near Cairo. In least two people were killed, still optimism that the deal will ered the number of people who October the authorities re- prompting Mr Merino’s resig- be agreed to by the end of the can gather together to eight. In vealed dozens of other sealed nation. He has now been re- year, when the existing seven- Denmark the agriculture sarcophagi, most with mum- placed by Francisco Sagasti, year budget expires. minister resigned over the mies inside, in the same area. who is expected to serve until recent order to cull 17m mink, after an election next April. In America’s election Joe Biden which had no legal basis. The un’s atomic watchdog was deemed the winner in reported that Iran had restart- America’s Justice Department Arizona and Georgia, bringing The quarantine rules for ed advanced centrifuges in- dropped charges of drug- the final tally in his electoral- foreign poultry workers were stalled underground at Natanz, trafficking and money-laun- college votes to 306 to Donald relaxed in England to ensure a nuclear site. It also said that dering against Salvador Cien- Trump’s 232. In Georgia, one there is enough turkey on the Iran had more than 2,440kg of fuegos, a former Mexican county found 2,600 ballots it table at Christmas. Stuffed in low-enriched uranium, well defence minister, so that Mexi- had overlooked. their accommodation, they can beyond the limit set by the co can investigate him. mix only with fellow workers. nuclear deal it signed with Still not conceding the race, world powers in 2015. Both Hurricane Iota, the strongest which hinders the smooth developments move Iran storm ever to strike Nicaragua, transfer of power to Mr Biden, For our latest coverage of the closer to producing a bomb, an made landfall close to where Mr Trump sacked the official virus and its consequences ambition it denies. Donald Hurricane Eta hit the country overseeing cyber-security at please visit economist.com/ Trump reportedly asked his this month. Iota is the 30th the election, who had contra- coronavirus or download the advisers for options on named storm of the Atlantic dicted the president’s claim Economist app. attacking Natanz. season. It is the first to strike that the vote was fraudulent.

10 The world this week Business The Economist November 21st 2020

Pfizer and BioNTech said fur- limited in scope, joining to- Four astronauts were trans- ther data showed that their gether a patchwork of existing Cleared for take-off ported to the International vaccine for covid-19 was 95% free-trade agreements, and The Federal Aviation Adminis- Space Station aboard the Crew effective, and similarly effica- does not include India, which tration gave its approval for Dragon spacecraft built and cious in people over 65. They withdrew for fear of being Boeing’s 737 max aircraft to fly operated by SpaceX. nasa will soon ask regulators in overwhelmed by Chinese again in America, 20 months described it as the first opera- America and Europe for emer- imports. But it will produce after the fleet was grounded tional flight of the spacecraft. gency approval of the treat- benefits, raising global gdp in following two crashes. The 737 Two astronauts who took the ment. That came after 2030 by an annual $186bn max won’t take to the skies trip in May, the first to be Moderna reported that its according to one estimate. immediately. Among other launched from American soil vaccine was 94.5% effective in things, airlines based in Amer- since 2011and the first from an interim analysis, the second Jay Clayton decided to step ica must still get the faa’s all- any country to reach orbit in a breakthrough in potentially down as chairman of America’s clear for revised pilot-training vessel designed and operated preventing the disease in just Securities and Exchange procedures for the plane. by a private company, were over a week. Moderna’s ad- Commission by the end of the conducting tests. vantage is that its vaccine can year. Joe Biden is expected to With flying curtailed during be stored at refrigerated tem- appoint someone to the job the pandemic, easyJet report- Swire Pacific was dropped peratures of between 20C and who will be tough on banks. ed a £1.3bn ($1.7bn) annual loss, from Hong Kong’s Hang Seng 80C for 30 days. The shots being the first in its 25-year history. stockmarket index. Founded in developed by Pfizer and BioN- pnc, a bank operating primari- 1816, the conglomerate used to Tech need to be transported at ly in America’s east and south, The British government be synonymous with business -700C and last less than a week agreed to buy the American brought forward to 2030 the in the territory and is still the in refrigerated conditions. operations of bbva, a Spanish date by which the sale of new largest shareholder in Cathay bank, for $11.6bn. The deal will petrol and diesel cars will be Pacific. Its replacement in the make pnc the country’s fifth- banned. It forms part of a new index is a food-delivery app. Zoom’s share price largest commercial bank by “green industrial revolution” 2020, $ assets (though still some way strategy, which includes ener- 600 behind the big four). Mean- gy-efficiency measures and a Respectability at last

400 while, more consolidation in huge boost to offshore-wind Having previously been Spain’s banking industry power. Critics said the plan spurned by the s&p 500, Tesla bbva x 200 beckoned when said it would need more money, not is to be included in the inde was in talks to merge with least for charging points for the from December 21st. Fund 0 Sabadell, a rival. millions of electric cars that managers that track the s&p NOSAJJMAMFJ drivers are supposed to buy. will now have to buy the elec- Source: Refinitiv Datastream Airbnb filed the prospectus for tric-car maker’s stock for their its long-awaited ipo, which is Japan’s economy grew by 5% portfolios. The share price has The good news on vaccines is expected in December. Door- in the third quarter over the soared this year, and surged bad news for the share price of Dash, a food-delivery service, second, though year on year it again on the news. Tesla will be Zoom, one of the star perform- also published a prospectus for was 5.8% smaller. Consump- one of the biggest companies ers in tech stocks boosted by its stockmarket flotation, also tion bounced back, but busi- by market value in the s&p 500 remote working. It is not just expected next month. ness investment fell again. when it joins. office staff who are stuck in- doors. Zoom is making its video-chat service entirely free on Thanksgiving Day so that families can catch up for lon- ger; free meetings are usually limited to 40 minutes.

Amazon launched an online pharmacy in America that offers discounts of up to 80% to subscribers to its Prime programme, assuring custom- ers that their health data would be kept confidential and sep- arate from other information. The share prices of big pharma- cy companies, such as Rite Aid and cvs Health, swooned in response.

Australia, New Zealand and 13 Asian countries, including China, signed the Regional Comprehensive Economic Partnership. The trade deal is COVID-19 has aff ected billions of lives. Some call it a ‘black swan event’. But it isn’t, pandemics have always existed.

Many of the eff ects of a pandemic of this scale have been known for years, knowledge to which Swiss Re’s analysis has contributed. As the world’s leading provider of reinsurance and risk transfer, we specialise in modelling and underwriting risk.

Swiss Re and the re/insurance industry have set aside billions to help shoulder the fi nancial impact of the pandemic. And across the world, countries have made emergency aid programmes available. Still, the suff ering and the uncertainty for those aff ected is enormous.

To do better next time, we as a society need to be better prepared. One solution is to partner in public-private risk-sharing arrangements to cover pandemic-related losses.

Swiss Re is committed to helping society become more resilient and progress. swissre.com PERFECT N

The feeling of a professional clean every single day.

years of research,  patents, a new standard

of brushing. Only Oral-B uses revolutionary magnetic technology for Oral-B’s best ever clean and  healthier gums in week*.

From the  Dentist Recommended Brand Worldwide.

TM

*vs. a regular manual toothbrush. Leaders Leaders 13 Remaking the state

The Tories have got the wrong idea about why government isn’t working he year was 1976 and revolution was in the air. Punk was de- cy of devolution: powerful, well-resourced local authorities Tstroying orthodoxies in the music business. Concorde was have been central to the effort in Germany and South Korea, two breaking the sound barrier. The economy was going down the of the countries that have managed the pandemic best. tubes. And Lord Hailsham, a former Conservative Lord Chancel- Brexit is indeed a good moment for a reset. The reformers are lor and old boy of Eton, Oxford and the Rifle Brigade, urged the right to argue that the civil service needs more expertise, less overthrow of what he called Britain’s “elective dictatorship”— churn and a powerful cohort of techies to digitise the operations the overweening executive, whose power, in Britain’s parlia- of government. But their actions to undermine the political in- mentary model, was untrammelled by the checks and balances dependence that gives career civil servants the confidence to say of the courts and legislature that restrict it in most democracies. “No, minister” would make governance worse, not better. Since then, the executive—made up of ministers and the peo- The main impediment to getting things done is not the con- ple who do things on their behalf—has been constrained in straints on the executive but the people running it. Mr Blair was a many ways. The European Union’s powers have grown, and in highly effective prime minister even as he constrained the exec- the 1990s Tony Blair weakened the executive by strengthening utive’s power. That was because he was focused and energetic, other parts of government, creating a Supreme Court, starting a and surrounded himself with a team of clever, hard-working reform of the House of Lords, devolving power from Westmin- ministers. Mr Johnson needs to emulate him in both of these ster and granting independence to the Bank of England. ways, and should start by replacing incompetent ideologues Now a Conservative counter-revolution is under way, driven with some of the talented, experienced mps who have been ex- by radicals in and around Number 10. They believe that the exec- cluded from the cabinet just because they are not Brexiteers. utive is the expression of the will of the British people, so to limit The Tories are also right to advocate constitutional reform, its power is to muzzle democracy. And they complain that gov- but their proposals would take the country in precisely the ernment is far too slow. Frustration over the difficulty of getting wrong direction. The biggest issue which Mr Johnson will con- Brexit done has fused with an enthusiasm for Silicon Valley’s front next year is Scottish independence. Instead of alienating mantra—move fast and break things—into a determination to Scots—on November 16th he described devolution as a “disas- speed government up. ter”—he should focus on making the relation- Accordingly, they are pursuing a programme ship work better. The pandemic has shown that of radical reform to the British state. Brexit is the the four parts of the United Kingdom struggle to boldest step, but it is only the first. The Tory plan co-operate on common problems. That job is is to unchain the executive by limiting judicial supposed to fall to the joint ministerial commit- power, pushing back against devolution and re- tee of the four nations. It needs the power and forming the civil service. Dominic Cummings, status to act more like a real federation. Boris Johnson’s recently defenestrated chief ad- Britain should have more devolution, not viser, was one of the architects of this transfor- less. City mayors have had a good pandemic: mation, but it will continue without him (see Britain section). their popular standing ought to be matched by resources and re- Plenty about Britain needs to change, but the reformers’ argu- sponsibility. The balance of power between the branches of gov- ment and direction of travel are both wrong. First, weakening de- ernment needs to shift away from the executive, not towards it. volution will not make the union stronger, it will only under- The legislature should have a second chamber with more credi- mine it. The parliaments in the union’s smaller nations were bility; that means replacing a selection process for the House of created in response to a real demand for a government with Lords that combines feudalism and cronyism with an elective which their people could identify better than they can with one. Turning the Lords into a senate of the devolved nations and Westminster. Second, liberal democracy is not majoritarianism. the regions would give it a useful dual role. The judges’ power to It includes checks and balances on executive power designed prevent ministers from acting unlawfully ought to be bolstered, both to protect the rights of individuals and minorities, and to not constrained. Regulators with the independence to insulate promote good governance. None of the reformers, it is worth business from ministerial whim need to be set up to wield some noting, advocates removing the Bank of England’s indepen- of the powers that are returning from Brussels. dence. That’s because of the wealth of evidence showing that constraining politicians’ power over monetary policy leads to L’état, c’est eux better economic management. These changes to the way the executive and the constitution If evidence were needed against the unshackling of the exec- work would both strengthen British democracy and improve utive, covid-19 has provided it. At the beginning of the pandemic, government’s ability to get things done. Restoring the elective the government arrogated to itself vast powers, unthinkable in dictatorship of half a century ago would not. normal times. In some areas, that has worked. Most of what the Concorde, the most memorable relic of 1976, was a thing of Treasury has done has been accomplished efficiently and effec- beauty, but it was also a commercial disaster that used up huge tively. In others, money has been wasted and chums have bagged quantities of taxpayers’ money with virtually no oversight—just top jobs and fat contracts. Yet the government has failed to get the thing for a prime minister with a taste for untrammelled the job done. Look abroad, meanwhile, for evidence of the effica- power and grands projets. Mr Johnson would have loved it. 7 14 Leaders The Economist November 21st 2020

American politics The art of losing

Accepting a disappointing election result is a vital part of a healthy democracy lmost two weeks after the votes that made him a one-term races in early January in which control of the Senate is at stake. Apresident were counted, Donald Trump is still claiming that Worse, their indulgence of Mr Trump imposes a cost on America. he won. In reality there is no room for doubt. Joe Biden beat him The effect of Republican leaders agreeing that perhaps Mr Trump by almost 6m votes, amassing 306 electoral-college votes to Mr really did win damages America’s ability to govern itself. Trump’s 232. Yet reality is a stranger to Mr Trump, who was crying All Americans should wish the incoming administration to fraud before the first vote had been cast. He has since fired an of- be competent. By delaying the transition, which in America’s ficial who contradicted his view that the election was stolen and spoils system entails the appointment of 4,000 new officials— encouraged his supporters to protest against the result. all of whom must receive clearances before getting to grips with Most Republican leaders go along with the president. They their new posts—Mr Trump is making that harder. When George include his attorney-general, Bill Barr, who told prosecutors to W. Bush handed over to Barack Obama, they held a joint session investigate “substantial allegations” of election fraud; Mitch of cabinet where outgoing officials sat with their replacements McConnell, the Senate majority leader, who has championed the and ran through a series of hypothetical crises. The Biden offi- president’s right to go to court; and Lindsey Graham, one of Mr cials will come into office with several existing crises to handle, Trump’s staunchest Senate defenders, who including the logistics of a vaccination pro- Georgia’s secretary of state says pressed him to gramme for covid-19 in which lives are at stake. exclude legitimate ballots. The president and his apologists are doing As so often in the Trump presidency, it is harm in another way, too. Voters have elected a hard to know how seriously to take all this. No divided government in Washington, with coup is under way in America. Mr Trump does Democrats controlling the House and the presi- indeed have the right to mount legal challenges. dency and Republicans favourites to keep the The counting and certifying of election results Senate. This requires both parties to work to- has withstood pressure from above. Most of the gether, finding common interests where they Trump campaign’s lawsuits have already been dropped or tossed can. If most Trump voters, encouraged by the likes of Mr McCon- out by the courts. Mr Barr’s prosecutors explained that they nell, have come to believe that Mr Biden’s win is illegitimate, could find no evidence of the kind of systematic fraud that the why should they want their representatives to work with him? president insists took place. Despite violent threats, Georgia’s America has had bitter elections before, yet the electoral sys- secretary of state refused to buckle (see United States section). tem has almost always generated loser’s consent. In 2000 a mi- Whatever he says or does, Mr Trump will be out on January nority of Gore supporters (36%) thought the result was illegiti- 20th and Mr Biden will be inaugurated. Might ignoring him thus mate; in 2016, 23% of Clinton voters thought so. In 2020, 88% of be the best strategy? Some wonder if it might be best to let the Trump voters currently think the result was illegitimate. It is up courts explain to forlorn Trump voters that their man lost. to their elected officials to explain why it was not. This requires Yet Republican conduct is expedience dressed up as princi- more than waiting for the courts, local election officials—or any- ple. Lawmakers are cowed by the threat that Mr Trump might one else—to speak up. Failure to do so does not just make Ameri- back a primary challenge against anyone he judges disloyal. ca harder to govern. It betrays a contempt for the spirit of democ- They think they need Mr Trump’s support to win two run-off racy and thus a lack of patriotism. 7

Afghanistan Leaving too soon

America risks handing Afghanistan to the Taliban ack in february President Donald Trump achieved what ber of troops in Afghanistan has fallen from almost 10,000 to less Bought to be one of his enduring foreign-policy successes. In than half that now. The Taliban have been less consistent. They Doha, the capital of Qatar, bearded Taliban, some of whom had have ceased attacks on American troops, but on the battlefield never previously allowed themselves to be photographed, ac- they continue to press their advantage. October was the bloodi- cepted a peace deal with American envoys. America would with- est month in over a year for civilians, partly because of a Taliban draw its troops. In exchange, the Taliban agreed to cease attacks attempt to take control of Lashkar Gah, the capital of Helmand on foreign troops and to renounce terrorism. They also agreed to province. That was repelled by American air strikes. In the past take part in further talks in Doha with the internationally recog- few weeks the militants have seized several more rural districts. nised government in Kabul. For the first time in four decades, the They seem to see the talks in Doha as a chance for the govern- deal held out the prospect of peace for Afghanistan. ment in Kabul to surrender, rather than as a serious negotiation. Since then, America has kept its side of the bargain. The num- Mr Trump was right—and brave—to talk to the Taliban. 1 The Economist November 21st 2020 Leaders 15

2 Though they do not hold a single city, they are unchallenged in dered. Afghanistan might once again become a rogue state and, the countryside and have a grip on the roads, on which they raise one day, a terrorist haven. taxes rather efficiently (see Asia section). The government in Ka- Joe Biden, the president-elect, will inherit this poisoned chal- bul, by contrast, is riddled with corruption and infighting. The ice. He has never been an enthusiast for intervention in Afghani- militants will not be defeated, so they will have to be negotiated stan. He, too, promises an end to “forever wars”. As vice-presi- with. The deal struck by America’s envoy, Zalmay Khalilzad, was dent he opposed Barack Obama’s “surge”, which increased the a necessary step towards ending the war. number of troops in the country to over 100,000. But that does Yet in his actions now, Mr Trump risks giving the militants far not mean he needs to hand victory to the Taliban. more than they would otherwise be able to claim. In the run-up On taking office he should announce that he will uphold the to the American election, the president promised to bring all deal with the Taliban—as long as they do. It calls for American American troops home “by Christmas”. On November 9th, after troops to leave by June of next year. Mr Biden should tell the Tali- losing the election, he followed up by dismissing Mark Esper, his ban that this is conditional on their reducing violence and taking defence secretary, as well as several other Pentagon officials. The the talks seriously. If they do not, American troops should stay. acting defence secretary, Christopher Miller, seems keener to Mr Biden should also make it clear to the government in Kabul satisfy his boss’s demands. On November 17th he announced that it must negotiate in earnest. plans to reduce troop levels from 4,500 to 2,500 by mid-January. Jens Stoltenberg, nato’s secretary-general, warns that the That will let Mr Trump say he has kept his promise, but it sig- price of leaving Afghanistan too soon “could be very high”. By nals to the Taliban that America is leaving no matter what. It un- contrast, the cost of staying is low. No American soldier has been dermines the talks in Doha and heightens the risk that the Af- killed in combat in Afghanistan since February. A few thousand ghan army will collapse. Already deprived of much American air personnel is a tiny force. And yet it allows other allied countries, support, its forces are deeply demoralised. In the attack on Lash- such as Britain and Germany, to stay and train the Afghan army. kar Gah hundreds fled without firing a shot. More defeats could As long as some troops—and planes—remain, the Taliban’s lead to much of America’s expensive gear falling into the hands chance of seizing cities is limited. That gives the Afghan govern- of the enemy, who would use it to press on farther. Plenty already ment the opportunity to negotiate a genuine peace. America has: the Taliban show off Humvees in videos shared on social should not allow the war to drag on for ever, but neither should it media. Instead of making peace, America would have surren- jeopardise all that it has fought so hard to achieve. 7

Sovereign debt A better way not to pay

The g20’s new debt-relief framework is welcome. But it could still be improved on ith debts looming and dollars scarce, Zambia has wres- Any debt debacle pits the interests of borrowers against those Wtled in recent months with a predicament. It knew that of lenders, but also pits lenders against each other. One creditor failing to pay bondholders would be damaging. But paying only may be forgiving. But that allows others to free-ride on its gener- them, having failed to pay others in full, could be worse. Other osity and collect payment in full. Thus every creditor wants to be creditors would “blow off my legs”, the country’s finance minis- sure others are doing their bit. In Zambia’s case Chinese lenders ter said. So on November 13th Zambia became the sixth govern- (which have agreed to defer some payments) and private bond- ment to default on its bonds this year—after Argentina, Belize, holders (which have not) blame each other for the impasse. Ecuador, Lebanon and Suriname. Others may follow. Although To make sure each of them is doing their fair share, most rich- financial markets have regained much of the composure they country governments offer debt relief jointly through the Paris lost in March, many countries still have more Club, a grouping of government lenders. Ameri- debt than they can comfortably handle. Thirty- General government gross debt ca has long urged China to join. And at a summit eight governments have a credit rating that de- % of GDP on November 21st-22nd, China will do the next 70 notes a “material” risk of default or worse, twice best thing. Along with the rest of the g20 group Emerging economies the number at the end of 2009. 50 of big economies, it will sign off on a “common 30 The debts of poor countries would be less FORECAST framework” for relieving the debts of the world’s daunting if they were not such a tangle of com- Low-income countries 73 poorest countries, if they prove impossible to peting claims. The 73 poorest owe almost a fifth 2012 15 20 25 bear. The framework is limited in scope. It will ($102bn) of their foreign debt to private credi- apply only to countries that request help, fess up tors, from bondholders to banks, a similar amount to China, to their full liabilities, submit to imf-style policy prescriptions $76bn to other governments and the rest to multilateral lenders and show that they cannot sustain their debts. It won’t, in other like the World Bank (see Finance section). And that is just the words, deliver quick, unconditional debt relief to all poor coun- stuff that international institutions can count. Crafting equita- tries, regardless of their need or demand for it. The framework ble debt-relief deals from such a hotch-potch is difficult. Three requires all official creditors to do their share. It also obliges the changes in particular would help: a more joined-up approach by borrowing country to seek similar help from private lenders. government lenders, tougher legislation to curb awkward priv- The framework is a welcome step. The g20 should now con- ate creditors, and greater use of flexible instruments that align sider some extensions. The same principles should also apply to repayment more closely with a borrower’s circumstances. other emerging markets, beyond the 73 poorest. The framework 1 16 Leaders The Economist November 21st 2020

2 favours reducing interest rates or delaying repayments over cut- Nicholas Brady, then America’s treasury secretary. To ward off fu- ting the stock of debt. That bias should change. It typically re- ture crises, the imf and its sister organisations could help pro- flects accounting conventions in creditor countries rather than mote further innovations in the kinds of debt a country can offer. any strong economic rationale. Indeed, investment and growth Uncertain times have, for example, inspired new interest in respond more vigorously when debts are reduced, rather than bonds that automatically pay less when commodity prices tum- payments lightened or lengthened. And if private creditors resist ble or natural disasters strike. Other instruments might pay out doing their share and pursue full payment in the courts, g20 gov- extra when gdp growth exceeds a threshold. Some of these in- ernments should pass additional legislation to cap the gains that struments might need an independent institution to help stan- vulture funds can obtain from litigation. Such laws may look like dardise terms and referee disputes. Another idea worth explor- clumsy infringements on creditors’ rights. But they can be justi- ing is “bendy bonds”, which would let the borrower lengthen fied if a creditor’s prospects for a favourable legal settlement de- their maturity in a pinch (and defer interest payments) in return pend on debt relief provided ultimately by taxpayers. for extra interest at the end of the bond’s extended life. Similar Debt crises can spur innovation in financial instruments as bonds already exist in the corporate-debt markets, which might well as institutions. The Latin American debt crisis of the 1980s, make a sovereign version easier for investors to accept and price. for example, was ultimately solved only when illiquid bank Mr Brady’s clever idea revolutionised the market for developing- loans were turned into tradable “Brady” bonds, named after country debt. The time is ripe for another transformation. 7

Race and health Wanted: more data

To tackle inequalities, governments need to overcome qualms about collecting information on ethnicity ovid-19 is not colour-blind. In England a black man is nearly it is often closely correlated with policy failures, such as access Cfour times more likely to die from the disease than a white to education, health care or jobs, that do cause such disparities. man of a similar age. In the state of New York, in the first months It is only by understanding the roots of these failings that gaps of the pandemic, black and Hispanic children were more than can be reduced. Data should be carefully safeguarded and their twice as likely to lose a parent or caregiver to covid-19 than those use tightly regulated. Although recognising the sensitivity of in- who were white or Asian. Few countries publish health data fil- formation is crucial, so is gathering and sharing it. tered by race or ethnicity, but in those that do the pandemic Inequalities and injustices can be tackled efficiently only seems to be killing more people from racial minorities. once they become statistically visible. It was fear of inequality That confirms public-health officials’ worst fears. Covid-19 that led Britain, Finland and Ireland to make sure public bodies has laid bare countries’ broad racial inequities in health and ex- regularly gathered this data. Colombia, New Zealand and Ameri- acerbated them (see International section). The virus has also ca, among the few places that collect statistics on indigenous highlighted the scarcity of decent data on ethnicity or race. Most people, use them to distribute federal funding. After Brazil start- governments do not know if the pandemic is hitting particular ed collecting data in the late 1990s by five different skin-colours, groups harder, let alone why. In April a mere 7% of reports pub- the gulf in infant mortality between indigenous and white ba- lished in leading journals about covid-19 deaths bies became apparent. Public outrage led to seri- recorded ethnicity. In western Europe most England, covid-19 death rate ous efforts to start narrowing the gap. The Bra- countries collect information only on people’s Relative to white population, log scale zilian example shows that the data need to be “migrant status” (often, where parents were Same Twice 4x granular. Catch-all terms such as “bame” (Black, rate as high higher born), a flawed proxy. Black African Asian or Minority Ethnic), used in Britain, are Covid-19 should be a wake-up call. As in the unhelpful. “Non-Western migrant” or “foreign Bangladeshi debate about gender inequality, awareness of Women Men born” contain even less information. racial gaps has grown. Both suffer from too Indian The data also provide a baseline. This lets you much intuitive argument and too little data. But make comparisons and monitor progress. Cana- whereas there has been something of a gender-data revolution, da makes regional ethnicity data available, in part, so that local many remain uneasy about gathering data on ethnicity and race. employers can see whether their workforce is representative. Some countries, such as France, prohibit collecting such data. In The relationship between ethnicity and other factors, such as Germany members of the Green party want to remove the word health or school performance, can change over time. The chil- Rasse, a loaded term for “race”, from the constitution. dren of migrants are often better off than their parents were. And Such anxieties should not be ignored. It is no coincidence although the health of black Americans is still worse than that of that the countries and communities, including Jews and Roma, whites, the gap is narrowing. The health of poor Americans, by most opposed to registering race or ethnicity have often seen contrast, remains much worse than that of rich ones and the gap how it can be used to facilitate discrimination, segregation and is widening. So it is crucial also to have data on other characteris- even genocide. More recent reminders of the harm that such in- tics, such as deprivation, education and parental income. formation can do in the wrong hands include the war in Ethiopia Collecting data is just the start. Governments must then re- (see Middle East & Africa section). solve to use the information to grapple with the underlying Yet these are arguments for anonymising data, not ignoring causes of inequality in health, education or the labour market. them. Race itself is not the cause of most health differences, but But ignorance should not be a reason to hold back. 7

18 Leaders The Economist November 21st 2020

The second cold war The China strategy America needs

As president, Joe Biden should aim to strike a grand bargain with America’s democratic allies he achievement of the Trump administration was to recog- limit foreign takeovers—including, potentially, American ones. Tnise the authoritarian threat from China. The task of the Bi- A grand bargain would turn that conflict with Europe into col- den administration will be to work out what to do about it. laboration (see Briefing). Rather than be consumed by squab- Donald Trump’s instinct was for America to run this fight sin- bles, the allies could share an approach to issues like taxation, gle-handed. Old allies were henchmen, not partners. As Joe Bi- takeover rules and supply chains. For example, Europe’s General den prepares his China strategy (see China section), he should Data Protection Regulation (gdpr) is on the way to becoming a de choose a different path. America needs to strike a grand bargain facto standard outside Europe. With closer collaboration in in- with like-minded countries to pool their efforts. The obstacles to telligence, the alliance could be more alert to security threats such a new alliance are great, but the benefits would be greater. from Chinese hackers and tech firms. By co-ordinating their ef- To see why, consider how the cold war against China is differ- forts on critical technologies, they could specialise rather than ent from the first one. The rivalry with the Soviet Union was fo- duplicate research. By diversifying supply chains and vetting cused on ideology and nuclear weapons. The new battlefield to- each link they can protect themselves from accidental or malev- day is information technology: semiconductors, data, 5g mobile olent disruptions. By working together on technical standards networks, internet standards, artificial intelligence (ai) and such as Openran, which uses mostly off-the-shelf hardware for quantum computing. All those things will help determine 5g networks, they can create a favourable environment for their whether America or China has not just the military edge (see Sci- own companies. Crucially, by collaborating on ethical norms ence section), but also the more dynamic economy. They could over, say, facial recognition, they can protect their societies. even give one of the rivals an advantage in scientific research. Instead of leaving America isolated, a grand bargain would The first cold war created separate looking-glass worlds. The help it keep ahead in the race for tech dominance by bringing it protagonists in the second are interconnected. That is partly a the gains of closer co-operation with like-minded countries. The result of China’s integration into the global economy, especially whole alliance would be boosted by the tech industry’s formida- after it joined the World Trade Organisation (wto) in 2001. But it ble network effects. A bargain would also leave America more also stems from the network efficiencies of many tech business- open to cross-border scientific collaboration and immigration, es, which reward size and spread. And it reflects vital for a place that thrives on the contributions how hard it is for any one country to master the of foreign students, many of whom stay on to full range of specialisms in the tech economy. In carry out research or work in tech. Such open- chips, say, American or British designs may be ness is a strength that China lacks. made in Taiwanese plants, using Japanese and Some people argue that co-operation of this Dutch equipment with German lenses before sort needs a treaty, an institution like nato or being assembled in Chinese factories. It is no ac- the wto. But that would take a long time to set cident that autarkic North Korea can build up. What it would possess in gravitas it would nukes but not advanced computers. lack in flexibility. A grouping like an enlarged g7 The Chinese Communist Party has understood that tech is the would be more adaptable and less clumsy. path to power. China is blessed with a vast market, ambition and Either way, striking a grand bargain will be hard. For one plenty of hard-working talent. The party is supercharging the ef- thing, America would need to acknowledge that it is not as domi- forts of Chinese firms with subsidies and industrial espionage. nant as it was when it set up global governance after the second Aware of how scale matters, China is touting its technologies by world war. It would have to be willing to make concessions to its securing export contracts, promoting itself as a digital power us- allies right now—over privacy, taxation and some details of in- ing the Belt and Road Initiative and waging a campaign of pro- dustrial policy, say—in order to protect its system of government China standards-setting in global bodies. in the long term. For the strategy to be credible abroad, there Mr Trump’s abrasive solo response has had some successes. would need to be bipartisan consensus in Washington. He has browbeaten some allies to stop buying gear for 5g net- America’s allies would have to make concessions, too. They works from Huawei, a Chinese firm. And by threatening sanc- would have to trust a country which, under Mr Trump, has some- tions on chipmakers who supply Huawei, he has damaged it. times looked on the transatlantic alliance with contempt. Some But in the long run this approach favours China. It has already Europeans would have to temper their dream of becoming a su- accelerated China’s efforts to create its own world-class chip in- perpower that stands apart from both China and America. dustry—though that could easily take a decade or more. More Yet that European dream has always looked far-fetched. And important, if a bullying America always focuses solely on its own if anything can overcome divisions in Washington, China can. narrow interests, it will drive away the very allies that can help it Moreover, the sacrifices would be worth it. A grand bargain stay ahead in tech. Europe is increasingly unwilling to leave it- would help focus competition with China on tech, potentially self open to American pressure. The European Union’s highest enabling detente in areas where collaboration is essential, such court has twice restricted the transfer of data to America, where as curbing global warming, health and, as with the Soviet Union, they may be picked over by the intelligence agencies. And Euro- arms control. A grand bargain could make the world safer by pean policymakers have announced plans to impose rules on the making it more predictable. When superpowers are set on a col- cloud, to impose digital taxes on American tech giants and to lision course, that is something profoundly to be wished for. 7 Executive focus 19

President of the Community Plant Variety Offi ce (CPVO) Angers, France. Vacancy: European Union senior management position Temporary Agent Grade AD14 - COM/2020/1037

The Community Plant Variety Offi ce (CPVO) is an independent EU Agency, established by Council Regulation (EC) No 2100/94 (1) on 27 July 1994. The CPVO is responsible for the management of the Community Plant Variety Rights System which provides protection with an intellectual property right for new plant varieties in the European Union. It has around 50 staff members and a budget of approximately EUR 20 million yearly, fi nanced mainly by the proceeds of the various fees it levies. Further information can be found at: www.cpvo.europa.eu

The post of President of the CPVO will be available as of 1 September 2021 for an initial mandate of 5 years, with a possible extension of 5 additional years. The place of employment is Angers (France) where the CPVO is based.

The President represents the CPVO and is responsible for its management. The ideal candidate should be an outstanding professional with solid leadership and communication skills, and very good knowledge of matters relating to plant variety rights.

Candidates must be citizens of one of the Member States of the European Union and possess at least 15 years professional experience among which 5 years at senior management level in the area of activities of the Offi ce. The President of the CPVO will be appointed by the Council of the European Union on the basis of a shortlist provided by the European Commission. Eligibility criteria and instructions for fi ling an application are detailed in the vacancy notice available in the Offi cial Journal of the European Union C 379 A of 10 November 2020. The closing date for registrations is 10 December 2020, 12:00 noon Brussels time. Register at: https://ec.europa.eu/dgs/human-resources/seniormanagementvacancies/ 20 Letters The Economist November 21st 2020

tion was close. That is because pollsters—11in12 according to often been inappropriately A solid win for Biden the Democrats never came to some estimates—are not politicised by opposing Joe Biden has won 306 elector- terms with Mr Trump’s victory typical of voters as a whole. factions, particularly when al-college votes, including the in 2016. They would have done That proportion of refuseniks tension arises. The recent “Republican states” of Arizona better if they had tried to has grown, and is growing. protests and suggestions for and Georgia. He has taken back understand why they lost then Opinion polls have their political reform reflect the the blue-wall states of Michi- and changed direction. uses, particularly on social reality of the conflict between gan, Pennsylvania and Wis- ruth berner matters when small differ- people of different viewpoints consin. He also won the na- Swannanoa, North Carolina ences in the precise numbers in our society, which has been tional popular vote, probably don’t matter. In elections exacerbated by the increase of by a margin of five percentage Much of the media’s coverage however, small differences can hate speech circulated both in points. All this while running of the election focused on how matter very much indeed. A mainstream and social media. against an incumbent presi- divided the country is, but tool is not a good tool if it is As such, structural changes dent and all the advantages Americans are not as polarised used for a purpose, in this case can only be achieved through that conveys, and the sub- as they may appear. Most voted forecasting election results, for open dialogue and not further stantial bias towards Repub- pragmatically, to remove the which it is not really fit. divisiveness and violence. licans in the electoral college. inept Mr Trump, and ensure david lipsey pisanu suvanajata The narrative that this was a that Mr Biden, or perhaps more House of Lords Ambassador for Thailand close election is a false one accurately, his left flank, lacks London London (“When every vote counts”, a clear path to pass a sweeping November 7th). It arose from liberal agenda in Congress. the order in which votes were This election had a high turn- The attempted coup in Turkey The provenance of a proverb counted—Florida was an early out, upwards of 155m people. “Voltaire’s heirs” (November The phrase, “like two bald men win for Donald Trump—and Most of those votes did not 7th) stated that thousands of fighting over a comb”, has a the inevitable delays in count- come from the fringe, they Muslims in Turkey were locked longer history than the border ing record numbers of postal came from the centre. up “for belonging to the wrong skirmish in 1998 between ballots, most of which came thomas eastman religious group”. That is Ethiopia and Eritrea (“Ethiopia from Democrats. True, it was Minneapolis incorrect. The people in ques- is poised to unravel”, Novem- not the landslide predicted by tion were jailed for trying to ber 7th). It is often quoted as if many pollsters, who have In 1878 William Gladstone stage a military coup in Turkey it is a new witticism. In fact, clearly failed in consecutive declared that the American in July 2016 that caused the loss Jorge Luis Borges used it in election cycles, but it is an constitution “is the most of life of more than 250 people reference to the Falklands war enormous victory for Mr Biden wonderful work ever struck off while bombing cities, and the in 1982, and it stretches back and the coalition he has built, at a given time by the brain and Turkish Parliament, with further in time than that, and a repudiation of Mr Trump. purpose of man.” I find it puz- fighter jets. Describing them as possibly all the way to eamon glackin zling that you refer to this the “wrong religious group” Phaedrus, a writer in ancient New York wonderful work as “rickety” does nothing to contribute Rome. Borges, however, may (“Spell unbroken”, November towards protecting the free- have been the first to use it as a Many of us who voted for Mr 7th). Divided government has doms of speech and belief. metaphor for futile war. Trump in 2016 did so reluctant- served the United States well umit yalcin chris chapman ly. Not so in 2020. The further and yielded prosperity. Think Ambassador for Turkey London drift to the left of the Demo- of the eras of Ronald Reagan London crats was part of it, with their and Tip O’Neill, Bill Clinton idiotic identity politics. But and Newt Gingrich, Barack No wish to return then so was the Russia-hoax Obama and Mitch McConnell. Thailand’s politics Chaguan’s column (October investigation, the ridiculous art hotz When reporting on Thailand’s 24th) on China’s double-edged impeachment proceedings and New York monarchy the media should message to Taiwan of “Come the unfathomable hatred avoid cherry-picking anec- home, or China will kill you” spewed towards our president. I am, I hope, a reasonably dotes to fit certain narratives reminded me of “Hamilton”. In We saw President Trump as sophisticated reader of (“Battle royal”, October 17th). that musical King George III someone who got things done, opinion polls, and chaired the The Crown Property Bureau responds to the American using a wrecking ball when House of Lords select commit- has dedicated large sums of revolutionaries’ demand for dealing with stagnant bureau- tee on the subject, which investment for public benefits. independence with the line, “I cracies. We saw the Iran deal as reported in 2018. No doubt the King Maha Vajiralongkorn has will send a fully armed appeasement, the Paris accord American Association for asked the cpb to consider battalion to remind you of my as wealth redistribution doing Public Opinion Research will using its land for constructing love!” The song is called “You’ll little to tackle climate issues, do the thorough job of water reservoirs to solve a Be Back”. the relocation of our embassy investigating this miss as they water scarcity problem. Siam rachel goldberg to Jerusalem as a law at last did after Hillary Clinton’s Bioscience, an investment of London implemented, and pushing our defeat, just as Professor Patrick the cpb to improve patients’ European partners to pay their Sturgis and his team did after access to high quality medi- fair share for their own defence the British polls got the elec- cine, is co-operating with Letters are welcome and should be as long overdue. tion in 2015 so wrong. Like you AstraZeneca to develop a addressed to the Editor at The Economist, The Adelphi Building, We saw many more ac- (“Whiffing twice”, November covid-19 vaccine for Thailand 1-11John Adam Street, London WC2N 6HT complishments during his 7th) I think the most likely and South-East Asia. Email: [email protected] tenure, where you and others explanation is that the voters Although the monarchy is More letters are available at: Economist.com/letters saw nothing good. This elec- who refused to reply to regarded in high esteem, it has WHAT DO YOU SEE?

WE SEE STRENGTH AND RESILIENCE. In an interconnected world like ours, even seemingly small changes can have outsize effects. Our research shows the most resilient companies are those that understand the downstream “butterfly effect” of their business practices on the environment, their customers and their employees. We see current market volatility as a wake-up call for investors to value such foresight to help reduce long-term risks. morganstanley.com/butterflyeffect

© 2020 Morgan Stanley. All rights reserved. CRC 3153274 08/20

Briefing Global technopolitics The Economist November 21st 2020 23

and America that will continue. The new grand bargain Many device-makers have already moved part of their production out of Chi- na and some will end up with two separate supply chains. Apple’s contract manufac- turers, for instance, are setting up plants in India. tsmc, a Taiwanese chip firm, an- SAN FRANCISCO nounced in May that it will build a facility Without teaming up, democracies will not be able to establish a robust in Arizona. Feeling its dependence on alternative to China’s autocratic technosphere American semiconductor technology, Chi- merica has long dominated the world The country’s Great Firewall keeps un- na is doubling down on efforts to build its Ain information technology (it). Its gov- desirable digital content out. Within the own. In software and other areas, too, bi- ernment, universities and enterprising wall, tech firms are allowed to fight it out as furcation has begun—and not just because spirit have provided it with decades of lead- long as they are happy helpers of China’s of bans against Chinese apps. ership in hardware and software. Its mili- surveillance state. What Mr Trump was unable or unwill- tary drones, satellites and “system of sys- And China is on the move. It is investing ing to understand, though, was that China tems” give its armed forces a powerful edge billions in emerging technologies, from ai and America are not the only economies over those of any competitor. Silicon Valley and chip fabrication to quantum comput- that matter in this contest, and that fact is more visited by foreign dignitaries and ing and 5g, a new generation of mobile net- provides America with a potentially deci- finders-of-fact than any other business lo- works. It is hacking other countries’ com- sive advantage. India, the European Union, cale in the world. One of its tech giants is puter systems and grabbing intellectual Japan and others all play crucial roles in the currently worth over $2trn; three more are property where it can. It is packing the or- world’s it system—as do tech giants such worth over $1trn. The contribution tech- ganisations that develop global technical as Alphabet, Apple and Microsoft. nology makes to the buoyancy of its mar- rules, such as the International Telecom- All these entities, whether national or kets is without equal. munication Union. And it is pulling other corporate, are at odds with the American China, too, has digital resources in countries into its orbit with initiatives government and often with each other over abundance, not least its huge population of such as the “digital Silk Road”, helping something or other in the it world, wheth- 1.4bn, which means it will eventually boast them build out their digital infrastructure. er it be visas, privacy rights or competition an even deeper pool of data and experts to President Donald Trump saw, correctly, complaints. But they would also all prefer a develop ai models. The country’s digital that this made China a serious challenger world in which international agreements, giants, from Alibaba to Tencent, have al- to America’s digital supremacy. His hum- practices and expectations for it embody ready become ai and cloud-computing bling of Huawei, a Chinese telecoms- the values and interests they share with powers in their own right. Its people live equipment maker, has begun a decoupling America, rather than those of China. And if online to an extent that Americans—many of Chinese and American it infrastructures democratic countries cannot agree on of whom still have cheque books—do not. and of the supply chains between China common rules in the digital realm, China 1 24 Briefing Global technopolitics The Economist November 21st 2020

2 could end up setting the rules for large contradictions and conflicts which re- less formal, rules-based and punitive. In swathes of the world. The result would be a main, they can become a force to be reck- October three other think-tanks—the Cen- technosphere engineered for the comfort oned with—one that others will need little tre for a New American Security (cnas), and support of autocracies. encouragement to join. An insular America merics of Germany and the Asia-Pacific A partial catalogue of the past few can remain a technology superpower. A Initiative of Japan—outlined a less exclu- months’ disagreements shows the frac- connected America cemented into the rest sive construction. They propose that tiousness that stops the free world coming of the world by means of a grand techno- democratic countries form a “technology together on this—and how many opportu- political bargain could be the hub of some- alliance” not subject to a formal treaty. It nities for dealmaking there would be if it thing truly unsurpassable. would be like the g7, which consists of decided it should. America’s commerce de- There is a range of ideas about how to do America, Britain, Canada, France, Ger- partment told foreign firms they could sell this. In a recent report for the Council on many, Italy and Japan, and could one day, no more chips made using American tech- Foreign Relations, a think-tank, Robert perhaps, include India and other countries nology to Huawei; its justice department Knake imagines such a grand bargain tak- from the Global South. It would hold regu- filed an antitrust lawsuit against Google. ing the form of a “digital trade zone”, com- lar meetings, as the imf and World Bank do, America also pulled out of talks at the Orga- plete with a treaty organisation. America and issue consensus opinions, and it nisation for Economic Co-operation and would “weaponise its digital trade rela- would invite other stakeholders—from Development (oecd), a club of mostly rich tionships” in order to promote such things ngos to tech firms—to pitch in. countries, about how to tax the tech giants. as cyber-security, privacy protection and India blocked dozens of Chinese apps, in- democratic values on the internet. Only Let us cling together cluding TikTok, a popular video-sharing countries that comply with the organisa- Until this month, such ideas seemed pre- service, which the American government tion’s rules on such matters would be able mature. But with Joe Biden soon in the also wants to ban. The European Court of to become members and only members White House, they have become more real- Justice (ecj) struck down the “Privacy would be allowed fully to trade with each istic: it will be high on the agenda of the Shield” agreement between America and other digitally. Violations would be dealt “summit of democracies” he has promised the European Union (eu), thus throwing with by imposing sanctions and tariffs. “If to convene. Closer co-ordination and some the legal basis on which personal data the digital trade zone grows strong enough, new institutions to back it up are also more flows across the Atlantic into doubt. China might see more benefit to co-opera- needed, and not just because of the Chi- Europe has been trying for some time to tive engagement than to continued disrup- nese threat. The coronavirus, by pushing carve out its own space in the digital realm tive behaviour,” writes Mr Knake. much of human activity into the cloud, has as a protector of the citizenry—a noble goal Others prefer to imagine something emphasised the importance of the digital made easier by the fact that the companies realm and its governance. Left alone, the from which its citizens are being protected world of technology will continue to disin- are mostly based the other side of the US and them 1 tegrate into a splinternet in which digital ocean. This has heightened tensions be- Selected global platforms, market capitalisation* protectionism is widespread—much as the tween Brussels, Washington and Silicon November 17th 2020 or latest global financial system fell apart before the ecj Valley. The ’s ruling on the Privacy North America Twitter Shopify second world war. Shield is one example. The European Com- $34.1bn $111.2bn To make sense of all this, it helps to see mission is drafting legislation that would the political world as one in which technol- weaken the power of America’s tech giants. Facebook PayPal ogy is beginning to look ever more like ge- Alphabet $783.3bn $225.3bn Its proposed Digital Services Act would $1.20trn ography. The geopolitical way of looking at outlaw some of the firms’ business prac- the world, which was born in the 19th cen- tices, such as bundling their services to tury and revolutionised strategic thinking take over new markets or displaying them in the 20th, was based on the idea that the more prominently than competing ones. Apple Microsoft geographical aspects of the physical world $2.03trn $1.62trn could be crucially important to the rela- We will rock you tions between states. Mountains that Some of the eu’s member states have also blocked transit and plains that permitted begun defending their right to rule their it; oilfields and coalfields; pinch-points own digital roost, something now called where maritime traffic could be con- Amazon Netflix “digital sovereignty”. There is talk of creat- $212.3bn strained. Where a state’s territory stood in ing a European cloud within the American Salesforce $1.57trn respect to such geographical facts of life $212.3bn one. gaia-x is a step down that road—a fed- Airbnb told it what it should fear and what it might Uber $30.0bn eration of clouds, launched by Germany $86.2bn aspire to, whose interests conflicted with and France in June, whose members agree China Asia (excl. China) its own and whose might align with them. to certain rules, such as allowing custom- In other words, geography was destiny. ers to choose where their data are stored Samsung The units of analysis for today’s nascent and move freely to providers’ competitors $355.7bn technopolitics are platforms: the technol- if they wish. There is more to come: a “data ogies on which other technologies are Tencent Alibaba strategy” on the table in Brussels would, if $718.9bn $694.8bn built—and alongside them, increasingly, fully implemented, create “data spaces” Europe Spotify businesses, governments and ways of life. $47.5bn ruled by European law and give people The platform of all platforms is the inter- more rights on how their data are used. net. Some of the things which stand upon it SAP SE These disputes offer ample space for Ant Group ByteDance are huge and widely known, such as Face- $144.7bn mutually beneficial trade-offs. If America $310.0bn $140.0bn book, others small and obscure, such as and its allies can reach good enough ac- Africa South America Kubernetes, a sort of software used in commodations on the most contentious Naspers MercadoLibre cloud computing. Like geographical terri- issues—notably privacy and competi- $87.1bn $87.1bn tories, these platforms have their own poli- tion—and find ways to live with the smaller Sources: Bloomberg; CB Insights *Over $3bn tics. They have their own populations, 1 The Economist November 21st 2020 Briefing Global technopolitics 25

this profitable amalgam, the country has and values, for instance regarding privacy. given rise to most of the world’s leading High digital borders behind which data get tech firms. China is more like Apple and Or- stuck, however, are not in the interests of acle, which combine being closed with lots most countries—though they may be in the of internal competition. The European Un- interest of some governments. Russia ion is best compared to an open-source wants to create a “sovereign internet” that project such as Linux, which needs com- can be cut from the rest of the online world plex rules to work. India, Japan, Britain, at the flip of a switch (while retaining the Taiwan and South Korea all run differently capability to mess around in more open and have technology bases to match. systems). Countries interested in using The rise of cloud computing and ai— flows of data to improve their citizens’ lot, the first a truly global infrastructure, the though, will see few advantages. In a splin- second its most important application— ternet world choice will be limited, costs has heightened the tensions between these will rise and innovation will slow. And all platforms. More and more value is created the while China, with the biggest silo and by using oodles of computing power to ex- thus the greatest access to data, loses least. tract ai models from digital information generated by people, machines and sen- You’re my best friend sors. The models can then be turned into It is against this background that a grand all sorts of services. Transport, health care, bargain needs to be struck. Its broad out- teaching, campaigning, warfare—these line would be for America to get security parts of society will not become “data-dri- guarantees and rule-making bodies in 2 mostly users, coders and other firms. They ven” as fast as many predict, but in time which its interests can be taken seriously. have their own laws, which lay out who can they will all be transformed. Whoever con- In return it would recognise European pri- change code and access data. They have a trols the digital flows involved can divert vacy and other regulatory concerns as well position with respect to other platforms much of the rent they generate. Knowledge as demands that tech titans be properly which underpin, compete with or build on is power in the virtual world even more taxed. Ideally, such a deal would also in- them, just as territories have defined rela- than in the real one—and it generates pro- clude India and other developing coun- tionships with their neighbours. fit. Ian Hogarth, a British tech thinker, tries, which want to make sure that they do And they have their own governance summarised the sudden sense of urgency not risk becoming mere sources of raw systems. Some are “open”. The most fam- when he wrote in a paper in 2018 that “ai data, while having to pay for the digital in- ous is Linux, an operating system created policy will become the single most impor- telligence produced. and maintained through co-operative ef- tant area of government policy”. In terms of security, the parties to the forts to which all are, in principle, free to Many rich countries have drawn up am- bargain would ensure each other secure, contribute and from which all are welcome bitious industrial-policy plans for ai. Some diverse supply chains for digital infra- to benefit. Others are “closed”, as is the con- have also instituted national data strat- structure. To get there, the cnas proposes, vention among many corporate-software egies which limit the data that can leave the in effect, to partially mutualise them: makers, such as Oracle. Some are run like country. A few have begun attacking other among other things, members of a tech al- absolute monarchies, such as Apple under countries’ platforms by hacking their com- liance should co-ordinate their efforts to Steve Jobs, who was the final arbiter over puter systems and spreading misinforma- restructure supply chains and might set up the smallest details in his tech empire. tion. In short, they are behaving increas- a semiconductor consortium with facili- ingly like the companies producing the ties around the world. Supporting open Don’t stop me now technology reshaping their world. “Every- technologies and standards that create a Their dominant positions in this world of body has become much more techno- diverse set of suppliers would help, too. An platforms give companies like Facebook nationalist,” says Justin Sherman of the At- example is Openran, a mobile network and Google powers approaching or sur- lantic Council, a think-tank. that allows carriers to mix and match com- passing those of many countries. Yet coun- That the 21st-century internet would be ponents rather than having to buy from tries can—as their economies become a splinternet was, perhaps, inevitable. It is one vendor. A world with open infrastruc- more digitised—be increasingly under- not just that nations act in their own inter- ture like this need not, in principle, just de- stood as platforms, too: national operating ests; they also have different preferences pend on a few suppliers, as is the case today systems of sorts. Natural resources still with Huawei, Nokia or Ericsson. count, but digital resources are gaining To give in to Europe on other fronts in ever more relevance: skilled and well- That’s private 2 return for help in such matters would be trained tech workers, access to scads of Data-protection regulations, worldwide costly to America, which has largely op- data, computing power, internet band- posed attempts to regulate and tax its tech Modifications to existing regulations Cumulative width, industrial policy and venture capi- giants abroad. In terms of statecraft, that is 15 250 tal. And as with technology platforms, a an attractive part of the arrangement; to be country’s competitiveness will, to a large 12 200 willing to pay a cost shows that you place extent, depend on how it manages and real value on what you are getting. multiplies these resources. 9 150 If an alliance of democracies is to deliv- America is a platform like Microsoft’s er a China-proof technosphere, America Windows and Android, Google’s mobile 6 100 will have to accept that the interdepen- operating system. These mix aspects of dence of the tech world on which the whole 3 50 open and closed systems, allowing others idea is based means that it cannot act un- to develop applications for their platform, 0 0 constrained. Henry Farrell of Johns Hop- but also closely control it. America com- 90801972 2000 10 19* kins University argues that America has so bines monopolies and a strongish state Source: OECD *To January far simply “weaponised” this interdepen- with lots of competition. Mainly thanks to dence, using chokepoints where it has le-1 26 Briefing Global technopolitics The Economist November 21st 2020

together lawmakers from 18 countries. lieved that America does not provide Up in the clouds 3 These new groups join a few established enough safeguards to protect European Data storage, worldwide, % ones, such as the oecd and the Internet Go- data from the eyes of its intelligence and FORECAST 100 vernance Forum, which have long pushed law-enforcement agencies. for common rules in the digital realm. Another big barrier on the way to a bar- Consumer 80 nato has started to do the same for ai and gain will be the question of how much data-sharing among its members. America’s tech titans need to be reined in. 60 One of the key parameters in the bar- “To bring globe-spanning technology firms Business gaining will be how formal a framework to heel, we need something new: a global 40 the parties want. In some ways, formal is alliance that puts democracy first,” argues better: everyone knows where they stand. Marietje Schaake, a former member of the 20 In others, formal is worse: agreement is European Parliament who now works for Public cloud harder. Take the example of trade, thor- the Cyber Policy Centre at Stanford Univer- 0 oughly formalised within the wto. Trade sity, in a recent article. Many in California 252220181614122010 agreements take years to negotiate, often and elsewhere in America like the sound of Source: IDC only to be blocked by legislatures at the last this, but Congress will only go so far in re- minute. This is why a Biden administration stricting its tech giants and their business will probably aim for a much looser form of model, which is increasingly based on ex- 2 verage to strangle enemies and put pres- co-operation, at least initially. An idea dis- tracting value from data. sure on friends. But Europe’s resistance to cussed in foreign-policy circles close to Mr Even if a grand bargain can be reached, banning Huawei’s gear and the ecj’s deci- Biden is that, instead of agreeing on certain many small ones will need to be done as sion show that even friends can balk. policies that then have to be implemented well. That is why, in the long run, the world America needs to give if it is to receive. nationally, governments should opt for a needs more than bilateral deals and a loose It might not have to give all that much. division of labour within certain red lines. form of co-operation, but something more European views on regulating platforms If Europe wants to go ahead with rules to robust and specialised. It may even have to more strictly because of their tendency to regulate big tech which do not amount to be something like a World Data Organisa- become quasi-natural monopolies are not expropriation, America would not put up a tion, as Ian Bremmer of the Eurasia Group exactly mainstream in Washington, dc, fight—thus allowing the eu regulation to has suggested (or at least a gadd, a General but nor are they completely alien to the po- become the global standard of sorts, rather Agreement on Data and Digital Infrastruc- litical debate there. A recent congressional as it has done with the gdpr. ture, a bit like the General Agreement on report about how to limit big tech’s power Tariffs and Trade, as the wto’s predecessor included many ideas already touted in The show must go on was called). Given the sorry state of the Brussels, such as banning tech giants from Compromises that provide something for wto, this may seem fanciful, but without favouring their own services and refusing everyone are not hard to spot. But reaching such an organisation today’s global data to connect to competing ones. Positions on them will not be easy. After four years of flows may shrink to a trickle—much as regulating speech online are not that far President Trump, “the mistrust on the protectionism limited trade in the days be- apart either. As in Europe, there is growing European side runs deep,” says Samm fore the gatt and the wto. agreement in America that legislation is Sacks of cnas. On the other side of the At- Will it ever happen? Yes, if history is any needed to push social-media firms to do lantic, Congress will not want to make life guide. In July 1944 representatives of 44 more to rid their services of hate speech more difficult for its intelligence agencies, countries met in Bretton Woods, New and the like. for whom social media and online services Hampshire, to hash out a new financial or- A deal on taxing tech firms seems with- have become a crucial source of informa- der, including the imf and the World Bank. in reach, too. The Trump administration tion. In order for a grand bargain to be Granted, the pandemic is no world war. resisted efforts to compel them to pay taxes reached, all of that must be made more dif- But, with luck, living through it may pro- where they do business rather than in tax ficult. If the ecj struck down the Privacy vide enough motivation to try again in the havens, regarding this as a grab for the pro- Shield, it was mostly because the court be- digital realm. 7 fits of American companies. A Biden ad- ministration is likely to be more open to the argument that more of the taxes on dig- ital firms should go to places where their customers live. Expect negotiations on the matter at the oecd to be revived—as they must be to keep countries from charging digital taxes unilaterally. Barring a com- promise, France, Spain and Britain will start collecting such a levy early next year. In parts of the world’s international bu- reaucracy the grand bargaining has already begun. When Japan presided over the g20, a club of developing and rich countries, last year, it succeeded in getting the group to launch the “Osaka Track”, an attempt to come up with rules to regulate global data flows. This summer also saw the launch of the Global Partnership in ai, which is meant to come up with rules for the re- sponsible use of ai, and of the Inter-Parlia- mentary Alliance on China, which brings

Britain The Economist November 21st 2020 29

Constitutional reform In a televised lecture in 1976, Lord Hail- sham, a former Lord Chancellor, called for The executive unchained the overthrow of Britain’s ruling dictator- ship. There was no junta of mustachioed generals and secret policemen; James Cal- laghan, the Labour prime minister, was a gentle fellow. Rather, Hailsham argued, Britain was an “elective dictatorship”. Par- liamentary sovereignty, the underpinning The Tories have a radical plan to remake the state. Brexit is only the beginning principle of Britain’s uncodified constitu- ritons have been gripped in recent cal and administrative limits that have tion, granted the legislature the power to Bdays by a drama superior to anything been placed on the power of the executive. make and undo any law it wished, he ex- Netflix has to offer. Dominic Cummings, Brexit is only the beginning. By the time of plained. A government which commanded the all-powerful adviser who mastermind- the next election, ministers will have con- a majority in the House of Commons en- ed Brexit and had Boris Johnson in his trol over more policies, enjoy more discre- joyed a power absolute in theory and con- thrall, has been ousted by a triumvirate tion and face fewer restraints than they strained in practice only by political reali- made up of Allegra Stratton, the prime have for decades. ties and mps’ consciences. “Only a minister’s press secretary, Munira Mirza, Meg Russell, director of the Constitu- revolution, bloody or peacefully contrived, his policy chief (who used to be a revolu- tion Unit at University College London, can put an end to the situation,” he said. tionary communist—but that’s another warns of “democratic backsliding”. Charlie Hailsham proposed a written constitu- story) and his girlfriend, Carrie Symonds. Falconer, the shadow attorney-general, tion, inspired by those in Australia and Those who disapproved of Mr Cummings sees Britain falling “under a majoritarian Canada, which would curb the power of not just for his appalling manners but also dictatorship”. Some see parallels in Ameri- Parliament. He wanted a federal system of for his radicalism, of whom there are many ca or even Hungary, yet this is a distinctly devolved parliaments for Britain’s nations both inside and outside the Conservative British story: a conservative counter-revo- and regions, a bill of rights and an elected Party, are hoping that Mr Johnson will re- lution against checks and balances to exec- House of Lords. The new arrangement vert to being the pragmatic One Nation utive power built up over half a century. would be overseen by the courts. The centrist he was as mayor of London. queen would stay, of course. That is certainly the impression that the Yet the regime he criticised was already Also in this section prime minister gave this week when he being dismantled. From the 1960s, judges launched a ten-point plan to turn Britain 32 Green Boris and legal academics responded to the ever- green. But Mr Cummings’s great project bossier post-war state by developing the 32 Foreign aid v diplomacy will roll on without him. doctrine of judicial review. In a series of The plan, which has the support of the 34 Mass testing in Liverpool cases, they marked out the scope for judges Tory party and was outlined in the 2019 to overturn the decisions of ministers who 36 Bagehot: A modern Machiavelli manifesto, is to weaken the judicial, politi- had overstepped the powers Parliament 1 30 Britain The Economist November 21st 2020

2 gave them, failed to follow a fair process or Mr Johnson expressed this view, telling a the apex of our common life.” behaved irrationally. gathering of mps he thought Scottish devo- Brexit, which comes into full effect on In 1973, Britain joined the European lution a “disaster” and Mr Blair’s “biggest January 1st, ends the supremacy of Euro- Economic Community. In the following mistake”. pean law in Britain. As Mr Cummings’s decades, control of many areas of policy What Hailsham saw as a dictatorship, campaign slogan of “take back control” once dealt with in London went to Brus- the Tories see as a bond between voters and promised, both the workload and the el- sels. In exercising their remaining powers, the government. Institutions and watch- bow-room of ministers will expand. They ministers were constrained by European dogs created during Mr Blair’s tenure mas- will take charge of the sanctions imposed laws on state aid, procurement and the en- querade as independent, argues an official, on Russian kleptocrats, the allocation of vironment. Margaret Thatcher was enthu- but instead form a parallel political class. airport landing-slots and the chemical siastic, for the process limited the scope for According to this view, Blairism weakened composition of toilet unblocker. David them to mess with the economy. Brussels rather than strengthened democracy: vot- Frost, Mr Johnson’s negotiator, sees Brexit required the courts to strike down domes- ers are disillusioned not because Westmin- as a zero-sum game in recovering lost tic laws and decisions that contradicted ster is too mighty but because those they sovereignty. Ending Europe’s control over European law. chose to run the country are constrained by state subsidies and emissions is “the point Tony Blair, who took office in 1997, people who have not been elected. of the whole project.” thought Britain over-centralised and re- Parliament has passed a stack of laws to mote from citizens. The revolution he led The restoration patch the hole left by Brussels in running looked a lot like the one Hailsham envis- For many Tories the prorogation debacle of Britain. But whereas in Brussels powers are aged. He set up new devolved governments 2019 confirmed that things had gone badly distributed among the eu’s institutions, in in London, Scotland, Wales and Northern wrong. It was the culmination of a battle Britain they are concentrated in ministers’ Ireland. (An assembly later planned for around Brexit which, said the Conservative hands. mps will have less freedom to block north-east England was rejected in a refer- Party manifesto in the subsequent elec- future trade deals than their counterparts endum after a campaign on which Mr tion, “opened up a destabilising and poten- in the European Parliament or America’s Cummings worked. Its slogan was “More tially extremely damaging rift between Congress; ministers will have wide powers doctors, not politicians”.) A Supreme Court politicians and people”. to rewrite regulations on agriculture and was created, independent of the legisla- Mr Johnson had promised, “do or die”, medicines. A new environmental regulator ture. A Human Rights Act, with which laws to deliver Brexit on October 31st, but with- has been set up, but campaigners think it and ministers’ decisions had to conform, out a working majority, and unable to call weedier than the European Commission. was passed. There was more oversight and an election, he was blocked by Parliament. While ministers get mightier, the courts less secrecy. Thatcher had set up the Na- He prorogued Parliament, but the Supreme are being weakened. They will no longer be tional Audit Office to scrutinise govern- Court, which heard interventions from the able to strike down decisions and acts in- ment spending; Mr Blair’s Freedom of In- Scottish and Welsh governments, blocked compatible with eu law. A review led by Ed- formation Act created new rights of access his move. The judges described their deci- ward Faulks, a critic of the prorogation rul- to official papers. sion as a defence of Parliament, in keeping ing, will ask whether judicial review is David Cameron, a small-state moder- with the courts’ role in settling constitu- being abused “to conduct politics by an- niser, abolished the prime minister’s pow- tional questions for more than 400 years. other means”. It will look at placing some of er to trigger elections. He strengthened Brexiteers saw it differently, and are deter- the prime minister’s prerogative powers, Whitehall’s hand, recognising the civil- mined to prevent the executive from losing such as deploying troops or appointing service code, which asserts officials’ politi- control again. ministers, beyond the reach of judges, and cal impartiality, in law. He bolstered the re- In most countries, changing the consti- at “streamlining” the burden placed on gime of ministerial directions, under tution is hard. In Britain, it is easy. The new government by disclosure rules. which senior civil servants can publicly checks and balances were passed by Parlia- Robert Buckland, the Lord Chancellor, caution ministers if they believe a project ment, and what Parliament has created, it is considering changing the Supreme is undeliverable or wasteful. can take away. The reforms of the past 40 Court’s name to downgrade its status. A Vernon Bogdanor, a constitutional his- years will not be overthrown, but there will further review of how the courts apply the torian, concluded in 2009 that Mr Blair’s be a course-correction to assert the pri- Human Rights Act will be launched this reforms were a classically liberal project in macy of the politicians over judges and of- month. Mr Johnson wants to reclaim the limited government, “seeking to secure ficials. Danny Kruger, a Tory mp, calls it “a power to trigger elections by repealing Mr liberty by cutting power into pieces.” Be- restoration of politics to its proper place at Cameron’s Fixed-term Parliaments Act. fore proposing a law, ministers had to Critics argue that this will result in check that it was compatible with Euro- worse, not better, government. If disclo- pean and human-rights legislation, as well Spend, spend, spend sure is limited, the scope for bringing un- as the devolution settlement. Ministers Britain, number of ministerial directions* lawful behaviour to light will be too. Judi- could expect their decisions to be scruti- 18 cial-review cases are usually about nised by judges, auditors and the public. everyday matters in which officials have The elective dictatorship had been toppled. 15 administered lousily, rather than grand The Conservatives miss the ancien ré- 12 constitutional questions. Judges enter po- gime. They blame judicial review for gum- 9 litical terrain rarely, reluctantly and only ming up decision-making, and human- with good reason—which, many would ar- rights law for hobbling immigration policy. 6 gue, they had in the case of the prorogation The crude carve-up of policy areas between 3 of Parliament. London, Edinburgh and Cardiff has, they 0 Devolution is being nudged back too. think, left the British government too fee- 20†1510052000951990 Mr Johnson wants to end the impression ble to tackle crises like covid-19. Devolu- *Orders for spending to go ahead following a formal warning that he is a visitor in a foreign land when he tion was meant to save the Union but, they from civil servants on grounds of regularity, propriety, tours the United Kingdom, and to show maintain, has only boosted separatists. On value for money or feasibility †To July 23rd that being in the Union pays. Brussels used Source: Institute for Government November 16th, in a moment of candour, to send money to Scotland and Wales to pay1 The Economist November 21st 2020 Britain 31

tioned. They were carrying out their con- stitutional duty,” says Lord Fowler, the Lords’ speaker. Yet the upper house has lit- tle power: it can only delay bills, and by convention does not block the govern- ment’s manifesto promises. Its credibility is undermined by a bizarre appointments system which combines tradition with pa- tronage. Mr Johnson has shown disdain for it, filling it with pals and suggesting it move to York.

Moody blues For 200 years, the Conservative Party has forestalled popular revolution by constitu- tional evolution. Ministers say that is what they are doing now, by channelling popu- list anger at over-mighty judges and foot- dragging mandarins. But there are worries about the direction of travel, not least from the government’s own side. An overweening executive does not sit comfortably with a taste for small govern- 2 for film festivals, bridges and other goo- a long way foolishly before anyone raises a ment. Immigrants may appeal to judges to dies. In future London will distribute that flag,” says Lord Hennessy. avoid deportation; so do Home Counties bounty. The pandemic has also left city Raising flags is one of the two jobs of Tories keen to block developments. Busi- mayors feeling squeezed. Manchester’s Britain’s permanent civil service. The civil ness, too, dislikes government by ministe- Andy Burnham, among others, com- service is not merely an instrument of min- rial whim, for investors prize the security plained about the imposition of lockdown isterial will, bound to deliver the policies of that the rule of law offers. Those concerns in his city; Sadiq Khan, mayor of London, the elected government: it is also a soft have already made themselves felt. On Oc- accused the government of a power grab check on ministerial whim. Civil servants tober 16th, Moody’s downgraded Britain’s after it threatened to take control of Tran- are obliged to provide politically impartial credit rating, blaming, in part, the coun- sport for London, the Tube operator, dur- advice based on rigorous evidence. Job se- try’s weakened institutions and its ap- ing bail-out negotiations. curity, the logic runs, encourages honesty. proach to rules and norms. The Internal Market Bill, published on The tension between the civil service’s Mr Cummings’s goal was to deliver vast September 9th, is intended to create an two jobs is of long standing. Mr Cum- “moonshot” projects faster and cheaper. all-uk market after Britain drops out of the mings’s complaint that mandarins smoth- But government failures are often the con- eu’s single market. It contains wide “oust- er innovation and defend the status quo sequence of hasty ministers listening to er” clauses, limiting judges’ scope to re- was the premise of “Yes, Minister”, a 1980s civil servants too little, not too much. view how ministers use their powers and tv comedy. But the attacks on it now are “There’s a real problem with ministers that exempting them from their duty to act in unusually fierce. Under Mr Johnson, a overpromise and under-deliver. You need accordance with the Human Rights Act. string of top civil servants have been checks and balances upfront,” says Gus The government’s legal advice justified the shoved out. Mark Sedwill, who quit as cabi- O’Donnell, a former cabinet secretary. bill on the bald principle of parliamentary net secretary in June, told mps on Novem- There are diplomatic costs, too. The sovereignty: if lawmakers vote for it, it is ber 17th that briefings to newspapers dis- breach of international law embodied in constitutional. couraged civil servants from giving “blunt the Internal Market Bill was condemned “We are living through Hailsham’s and candid” advice. not just by the Labour Party and all living nightmare,” says Peter Hennessy, a consti- The government wants to make the civil former prime ministers, but also by Joe Bi- tutional historian. The difference between service more skilled and to raise the pres- den, whom Mr Johnson is now desperate to the 1970s and today, he says, is the degree to tige of “operational” folk. But it also wants impress. It also poisoned trade talks in which ministers restrain themselves to do to make it more responsive to ministerial Brussels. And how, asked Sir John Major, a only what they regard as right and proper: will. Mr Johnson has filled top jobs with po- former prime minister, could Britain wag the so-called “good chaps” theory of gov- litical allies, including Dido Harding, the the finger at Russia and China again when ernment. “The problem with this govern- head of Britain’s test-and-trace service, and they flouted international norms? ment is its alarm bells don’t ring,” he says. Lord Frost. The number of ministerial di- Mr Johnson fought the 2019 election on The executive lacks internal checks and rections has risen sharply this year (see the basis that “getting Brexit done” would balances. Mr Johnson’s cabinet is stuffed chart on previous page), largely because of heal the country’s divisions. Instead, it with timid loyalists whose aides, since a re- the need for speed during the pandemic. opens new questions about where power structuring by Mr Cummings, now answer Theodore Agnew, the minister in charge of should lie and how it should be con- to Downing Street. The government’s top government reform, thinks ministers strained. Sir Keir Starmer, the Labour lawyers—Mr Buckland, Suella Braverman, should be more willing to override cau- leader and a former human-rights barris- the attorney-general, and Michael Ellis, the tious civil servants. ter, is a defender of the checks, balances solicitor-general—nodded through the In- The main obstacle to the Internal Mar- and mores of Mr Blair’s era. Mr Johnson ternal Market Bill, which broke interna- ket Bill is now the House of Lords, which represents a new strain of majoritarian de- tional law, although the head of the civil heavily amended the bill on November 9th. mocracy, for whom statecraft is a simple service’s legal department and the advo- “It would be extraordinary if a measure of matter of serving voters what they ordered. cate-general for Scotland quit over it. “If this kind, which whatever your view is a The battle for Brexit is over. The fight for you operate a command model, you can go controversial measure, had not been ques- the constitution has just begun. 7 32 Britain The Economist November 21st 2020

Environmentalism ogy that will be allowed until 2035. Foreign aid v diplomacy The reason electric cars are unpopular The selfish green is not that they are hard to charge. Nearly Shotgun wedding three-quarters of British households with cars park on their property or in a garage, so could charge them at home. Public char- gers are becoming more common. Adrian Keen, the boss of Instavolt, a firm with Boris Johnson’s ten-point plan will A tug-of-war between populism, more than 500 chargers, says that the aver- help his career more than the planet diplomacy and foreign aid is looming age car now plugs in when it has 30% of a ifteen years ago a newly elected Con- full charge remaining. Three years ago the hen boris johnson told Parliament Fservative leader, David Cameron, set out figure was 44%. That suggests drivers are Win June that he planned to merge Brit- to revive his party. He pushed social liberal- more confident that they will be able to ain’s Department for International Devel- ism, environmentalism and a modest charge when they need to. opment (dfid) with the Foreign and Com- state, and chided the Tories for “banging on The problem is that electric cars are monwealth Office (fco), he mocked it as a about Europe”. These days the Conserva- much more expensive than petrol or die- “giant cashpoint in the sky”. Its do-gooders, tive Party is queasy about social liberalism sel-powered ones. Even after a government now under the auspices of the clunkily- and is all for state intervention and bang- grant of up to £3,000 ($4,000) per vehicle, a named Foreign, Commonwealth and De- ing on about Europe. Of Mr Cameron’s mo- new electric Vauxhall Corsa costs about velopment Office (fcdo), may soon have dernising project only the greenery re- £26,000, compared with £16,000 for a pet- rather less cash to dispense. According to mains. And even that has been given a rol-powered one. Norway, the world leader whispers whooshing around Whitehall, Johnsonian makeover. in electric cars, has almost eradicated the the government is thinking of breaking its On November 18th Boris Johnson un- price gap by levying enormous taxes and promise to keep spending 0.7% of gdp furled a ten-point plan to make Britain fees on fossil-fuelled cars. Last month 61% every year on foreign aid. greener. He promised more wind turbines, of all new cars sold there were fully electric Such a move would come as no surprise to be built offshore where they do not of- and another 28% were hybrids. Britain’s to watchers of the wrestling match under fend voters, and more money for research government is highly unlikely to do the way at the fcdo between hard-nosed dip- into nuclear power and carbon capture and same. It cannot even bring itself to raise lomats and bleeding hearts. The 0.7% fig- storage. By 2030 an entire town will be fuel duty, which has been stuck at the pre- ure was enshrined in law in 2015 as a sign of heated using hydrogen and new petrol- sent level since 2011. the Conservatives’ determination to shed and diesel-driven vehicles will be banned. The same combination of bold ambi- their “nasty party” tag. Last year dfid was It is probably not enough to get Britain tion and modest detail runs through Mr responsible for dishing out most of the to net zero greenhouse-gas emissions by Johnson’s other green plans. His pledge to £15bn earmarked by Britain for the poorest 2050—a target that became law last year. quadruple power production from off- of the world. The Climate Change Committee, an inde- shore wind leaves unanswered the ques- On the whole, the cash has been well pendent body, told mps in the summer that tion of how energy markets will cope with a spent, but it has sometimes been tricky to the country was off-track. Electricity, in- surge in intermittent supply. He favours dish it all out. Even last year’s weak gdp dustry and farming have become much exciting industrial ventures such as battery growth meant an extra £600m had to be greener since the 1990s, but buildings and gigafactories, zero-emission aeroplanes divvied up. In an era of covid-imposed re- vehicles have not (see chart). and carbon capture and storage (a technol- cession and looming mass unemployment Mr Johnson’s plan to get Britons into ogy that has promised much and delivered at home, a populist government was likely electric vehicles is bold. Other countries little so far) but has provided little money to start balking at such generosity to for- will ban sales of new fossil-fuelled cars be- for dull, useful things like grants for home eigners, however deserving. ginning in 2035 or 2040; only Norway has insulation. He mentioned a carbon tax, but The figure has become totemic. But an earlier target than Britain. But boldness provided no details. dropping it to, say, 0.6% would still leave is not enough. To avoid a backlash and an If his ten-point plan is unlikely to save Britain as one of the world’s biggest donors. embarrassing retreat, it helps to have a the planet, it could help revive his for- As the anti-aid lobby points out, Britain is plan. At the moment just 6.6% of new cars tunes. Environmentalism usefully unites the sole country in the G7 group of big sold in Britain are battery-powered and an- the Conservative tribes. Old-fashioned economies to meet the 0.7% figure, which other 5.5% are plug-in hybrids—a technol- shire Tories who fancy themselves stew- is promoted by the un. (Only four other ards of the land like it; so do centrist “one- countries are as worthy: Denmark, Luxem- nation” types who want to court younger bourg, Norway and Sweden. France spends On the right lines voters. And Mr Johnson larded his plan 0.4%, Italy and Spain around 0.2%, and Britain, greenhouse-gas emissions with appeals to the working-class Mid- America less than 0.2%.) And it was already Tonnes of CO2 equivalent lands and northern English voters who being whittled away, as the government be- 250 pushed him to victory last year. gan to define aid more elastically. The Min- “There will be electric vehicle techni- istry of Defence, the Department of Inter- Industry 200 cians in the Midlands, construction and in- national Trade and other ministries now Power generation stallation workers in the north-east and often mark down spending abroad as aid. 150 Wales, specialists in advanced fuels in the The bigger concern is the merger, which north-west,” he wrote in the Financial officially occurred on September 1st. 100 Times. He promised jobs for Grangemouth, Whether or not spending is cut as a propor- Surface transport Buildings the Humber, Merseyside, Port Talbot and tion of gdp, the fcdo is likely to slice up the 50 Teesside. It is hard to recall that the Conser- cash less effectively. “It’s not a merger, it’s Agriculture dfid 0 vative Party once prized market-based sol- the demolition of ,” laments Andrew utions to problems. Or that, as recently as Mitchell, once the Conservatives’ most 191510052000951990 Mr Cameron’s tenure, it argued for a shy, re- dynamic boss of dfid. Source: Committee on Climate Change tiring state. 7 It is not difficult to work out why man-1

34 Britain The Economist November 21st 2020

2 darins generally favour it. In the past two number of diplomats is being bumped up. ferently,” says Cara Sutton, a pharmacist decades the diplomatic service has been Even before Tony Blair created dfid as a getting tested in the south of the city. Lower hollowed out by drastic budget cuts, sorely separate ministry when he came to power sensitivity may be more of a problem when weakening its hand in traditional diplo- in 1997, the aid-and-development arm of loosening existing restrictions. Trials to macy. Britain’s representation shrank to the fco was fairly autonomous, with a use tests to allow visitors into care homes only one or two diplomats in nearly half of minister of its own. Now there will be no will therefore start by employing both pcr the countries in sub-Saharan Africa, in- specific aid minister. dfid’s top civil ser- and antigen tests. variably outnumbered by staff working for vant has been shunted off as a “special en- The other problem Liverpool throws up dfid. In at least14 African countries Britain voy” for famine prevention. The rejigging is getting people to take the tests. Despite has no embassies at all (Turkey now has of the new department is being overseen Mr Klopp’s best efforts, just over 130,000 half a dozen more than the uk). In some mainly by fco types, not aid specialists. tests have been carried out. Some 400,000 places the head of the dfid office, by virtue “The idea is to break dfid up into little adults live in Liverpool and more work of dispensing vast dollops of aid, carried pieces and scatter it,” says Nicholas West- there. That level of testing will reduce the more weight than the ambassador. Under cott, a former diplomat who runs the Royal spread of the virus, but it may not have a the merger, the resident ambassador will African Society. “They want to make it hard dramatic effect on transmission. oversee aid as well as diplomacy. And the to separate it out again.” 7 At the moment, some people will get tested out of pure altruism, or “so granny doesn’t die”, says a scientist advising the Mass testing government. But for others, it is unclear what the incentive is: test positive and you Scouse lessons must isolate; test negative and you gain nothing besides a little peace of mind. In Slovakia, which recently tested 3.6m peo- ple, or 95% of those eligible for the scheme, a negative antigen-test result exempted the receiver from obeying stricter covid rules LIVERPOOL introduced just before the roll-out. An experiment suggests that people need an incentive to make mass testing work The Slovakian experiment, which ap- f you want something done on Mersey- ment is now offering antigen tests to med- pears to have contributed to a sharp reduc- Iside, it helps to have Jurgen Klopp on ics around the country, who will use them tion in the spread of the virus, has heart- your team. On November 5th, the manager twice a week, and plans to employ them to ened those in government who are pushing of Liverpool fc posted a short video on so- enable students to return home at the end for a similar nationwide blitz. The alterna- cial media urging people to get tested for of term. tive is a roll-out of the Liverpool model to covid-19. “Regular testing has kept the Pre- Some public-health professionals fear other hotspots, and greater use of tests by mier League going,” he said. “Let’s do it to- that people will change their behaviour on doctors, students and similar groups. gether; let’s do it for Liverpool.” falsely receiving the all-clear, possibly Mr Cummings was recently fired from Mr Klopp’s video was part of the “moon- even increasing transmission of the virus. government, which means that others will shot” programme’s first major trial. In Sep- While Liverpool is locked down, that is not have to make the final call. Millions of anti- tember, a leak revealed the government much of a problem. “If it comes back nega- gen tests represent a welcome, if curious, was prepared to spend more than £100bn tive, I don’t really know what I could do dif- leaving gift. 7 ($130bn) on mass testing—an approach championed by Dominic Cummings, then the prime minister’s chief adviser. Nothing like that much has been spent yet. But a day after Mr Klopp’s video was posted online, anyone living or working in Liverpool was encouraged to get tested, and to continue doing so once a week. The pilot relies on Innova antigen tests, which pick up proteins the virus sheds. They are less sensitive than more com- monly used polymerase-chain-reaction (pcr) tests which look for its genetic se- quence, but can be processed on the spot rather than sent to a laboratory. A study by Oxford University and Public Health Eng- land found that when carried out by labora- tory scientists they catch 79% of positive cases identified by pcr, and 58% when used by self-trained members of the pub- lic. They catch 95% of people with high vi- ral loads, who are thought to be most likely to spread the disease. The idea is that, since you are testing people who otherwise would not have been tested, everyone who is caught is a win. By November 18th, 702 positive cases had been identified in Liverpool. The govern- Keeping onside with Klopp

36 Britain The Economist November 21st 2020 Bagehot A modern Machiavelli

The ideal chief adviser for Boris Johnson would not much resemble the one who has just been fired the job, so newspapers had to publish silhouettes of him. But subordination to the boss doesn’t mean becoming a patsy. Chief advisers need to be able to correct their master’s weaknesses as well as magnify their strengths. Patrick Moynihan brought out the best in Richard Nixon by reminding him of Disraeli’s advice that the best governments consist of “Tory men and Whig mea- sures”. Unfortunately there were plenty of other advisers around, such as John Ehrlichman and Bob Haldeman, who were happy to bring out the worst in the president. David Gergen rescued Bill Clinton’s first administration from chaos by providing the young staffers who had run his presidential campaign with adult super- vision. Mr Johnson needs both a Moynihan and a Gergen—some- one who can provide both intellectual drive and adult discipline. The modern Machiavelli has to be willing to prick ideological bubbles. There is nothing more dangerous for an organisation than self-congratulatory groupthink. Advisers need to be well versed in past mistakes so that they can probe their bosses’ ideas and plans for weaknesses before rivals or reality expose those flaws. At the same time, whenever hubris turns to despair, as it so often does in politics, they need to be able to put the babble of daily headlines into perspective. Machiavelli’s injunction that both princes and advisers should study history and “note the actions of hen dominic cummings, Boris Johnson’s chief adviser un- great men” is even more germane today, when too many politi- Wtil last week, leaves a room, he likes to make a childish ges- cians study economics or, even worse, management science. ture: he pulls a pin out of an imaginary grenade, and tosses it over The ideal adviser needs to know when to pick fights and when his shoulder. The man who engineered Brexit and pushed Mr to play nice. Machiavelli was right that change is dangerous be- Johnson to hold the election that won him an 80-seat majority cause “he who innovates will have as his enemies all those who are while dragging the government into fights with Parliament, the well off under the existing order of things, and only lukewarm sup- civil service and its own party, has left Downing Street, and the porters in those who might be better off under the new”. But too place looks as if an explosion has hit it. Projects are hanging in the many Tories have come to believe that, because you can’t make air. Functionaries are running around like headless chickens. The progress without making enemies, the mere existence of enemies only person who can mend all this is another chief adviser. is a sign that you’re making progress. Demonising the establish- More than most leaders, Boris Johnson relies on the people ment as a reactionary blob is less effective than co-opting its mem- around him, for his positive qualities (optimism and enthusiasm) bers by appealing to a mixture of their ambition and their better are counterbalanced by negative ones (disorganisation and drift). natures. Not all of the government’s ideas for universities, the civil He would have been a rotten Mayor of London but for the arrival of service and the bbc are daft, and a little digging reveals that many competent advisers, notably Simon Milton. He needs a similar insiders agree with some of them. deus ex machina to rescue his faltering premiership. Mr Cum- mings provided Mr Johnson with political genius and intellectual Rubber levers energy, but he lacked most of the qualities a chief adviser needs. Finally, successful advisers also need to roam beyond Downing Downing Street could always add to its exorbitant consultants’ Street. One of the commonest complaints of prime ministers is bills and call in McKinsey to provide a few management bromides that they grasp the levers of power only to discover that they are (“must be committed to transparency”) to identify the right person made of rubber: pull them and they bend rather than moving the to replace him. But a better way would be to read a few books. Start machinery of government. This is not, as too many prime minis- with Machiavelli’s “The Prince”—the first book on politics to de- ters conclude, because the levers are defective and the machinery scribe men as they are, warts and all, rather than as moralists needs to be re-engineered, but because in a pluralistic democracy would like them to be, and a wonderful source of eternal insights. power is widely distributed. Advisers need to help their bosses Then imitate Machiavelli’s method and “step inside the courts” of build coalitions across the political nation, supping not just with previous leaders by reading lots of history. journalists, mps and civil servants but also with city mayors, who Chief advisers fulfil all sorts of vital functions in today’s poli- rightly feel slighted by the London-focused political system. tics. They act as a counter-balance to the civil service and a filter for Mr Johnson is currently engaged in a grand relaunch of his ad- all those trying to bend a leader’s ear. But they also perform an im- ministration after a disaster-prone 11 months since the election. portant psychological service: they give their master or mistress But none of his fine words about the green industrial revolution somebody to talk to. The best advisers are almost invisible: those will mean a fig unless he can find a modern Machiavelli strong who appear in the papers are not doing their job properly. James enough to drive policy forward and self-effacing enough to devote Baker, chief of staff to both Ronald Reagan and George H.W. Bush, himself to the greater glorification of King Boris. The job descrip- said that the key word in the phrase “chief of staff” was “staff”. tion is a daunting one, but the successful candidate will have a There was no photograph in public circulation of Jonathan Powell, chance to shape from the shadows the country in the wake of two Tony Blair’s chief of staff and the author of “The New Machiavelli: of the biggest shocks, Brexit and covid-19, that it has received since How to Wield Power in the Modern World”, during his first year in the second world war. 7 Europe The Economist November 21st 2020 37

Also in this section 38 Dayton at 25 39 Climate politics in Germany 39 Moldova’s dramatic election 40 Charlemagne: The rainbow curtain

Turkey’s economy able. The new central-bank governor, Naci Agbal, and the new finance minister, Lutfi On the edge Elvan, are making all the right noises about stabilising the currency and bringing infla- tion down to single digits. The justice min- ister, who has presided over a sweeping crackdown against government opponents since 2017, has discovered a passion for the ISTANBUL rule of law, asking judges to comply with President Recep Tayyip Erdogan starts to face the facts constitutional-court rulings and help im- hat a difference a family row central-bank governor and replaced him prove the climate for foreign investors. Wmakes. Only a few weeks ago, the with one of Mr Albayrak’s rivals. A day later, Those investors are needed: reeling from Turkish lira was plummeting from one re- an indignant Mr Albayrak, once touted as the pandemic, the economy shrank by cord low to another as the central bank sat his father-in-law’s prospective successor, nearly 10% in the second quarter. on its hands, foreigners were dumping stepped down. Since then the lira has re- Even Mr Erdogan, a sworn enemy of Turkish stocks and the country’s finance sponded with its best weekly performance high interest rates, now says Turkey may minister, Berat Albayrak, was arguing that (a 10% rally) for two decades. have to swallow “a bitter pill”, meaning a exchange rates did not matter. Today the The change in tone has been remark- dose of austerity. As The Economist went to currency is enjoying a big rebound, the press, the central bank was expected to im- stockmarket is soaring, and officials are pose a spectacular rate rise of at least 400 talking about the need to reform the courts Losing the lira basis points. Anything less might have trig- and keep inflation in check. Turkey gered another run on the lira. For more than two years, Turkey’s auto- Mr Erdogan had to surrender to market cratic president, Recep Tayyip Erdogan, Lira per $ GDP pressure and sack Mr Albayrak. “There was had relied on Mr Albayrak, his son-in-law, Inverted scale % change on a year earlier a real chance that the thing would have to run the economy. Mr Albayrak nearly ran 0 15 snowballed and you would have a full- it into the ground. With banks dishing out 2 10 blown currency crash” unless Turkey’s credit at rates below inflation to revive leader had changed course, says Paul Mc- growth, the lira sank by over 40% against 4 5 Namara of gam Investments. Another op- the dollar, burning a hole through the sav- 6 0 tion would have been to seek help from the ings of millions of Turks. The central bank imf, something Mr Erdogan had previous- and state banks wasted at least $100bn in 8 -5 ly ruled out. The president would also have precious foreign reserves in an abortive at- 10 -10 had to pay a political price. A group of 30 to tempt to salvage the currency. 20182016 20182016 40 ruling-party parliamentarians is said to Mr Erdogan finally slammed on the Source: Refinitiv Datastream have threatened to defect to the opposition brakes. On November 7th he sacked the unless Mr Albayrak resigned. The overhaul 1 38 Europe The Economist November 21st 2020

2 of Mr Erdogan’s economic team has at least structure he has set up.” knows for sure. With such a small popula- bought him some breathing space, says Mr Erdogan must hope the beginning of tion, it is sometimes said that all the coun- Ugur Gurses, a Turkish economist. the Biden presidency is better than the end try needs is a mayor. Instead Dayton It may also help Turkey’s leader to cope of the Trump one. On November 16th Mr created a complex system designed to with the loss of a good friend in Washing- Trump’s secretary of state, Mike Pompeo, make sure that none of the country’s three ton. For the past four years Mr Erdogan has told a French newspaper that America and main ethnic groups could dominate the been able to count on Donald Trump to Europe needed to deal with Turkey’s “ag- others. Twenty-five years on it often defies look away while Turkey evicted American gressive actions” over the past few months. logic, and seems to serve the interests only troops from parts of north-eastern Syria, A day later Mr Pompeo arrived in Istanbul, of nationalist politicians who have suc- clashed with European allies in the Medi- where he paid a visit to the Ecumenical Pa- cessfully resisted any attempts at reform. terranean, deployed Syrian mercenaries to triarch to discuss religious freedoms in The tiny country has a weak central gov- Libya and Azerbaijan, and locked up thou- Turkey (and probably bemoaned Mr Erdo- ernment, three presidents, two “entities” sands of people on terror charges thinner gan’s conversion of the Hagia Sophia, an and an autonomous town. The vast major- than baklava dough. Mr Trump also shield- ancient Christian basilica, into a mosque). ity of Serbs live in the Republika Srpska ed Turkey from sanctions over its purchase He did not meet a single Turkish official. 7 (rs), while Bosniaks (a term used to refer to of an s-400 air-defence system from Rus- Bosnia’s Muslims, who make up around sia. He may have tried to hold up an investi- half of the country’s population) and gation into a Turkish state bank accused of Bosnia-Herzegovina Croats live mainly in the ten cantons of laundering Iranian money. what is called the Federation. Most, though Under Joe Biden, who earlier this year Dayton at 25 not all, main parties are ethnically based, referred to Mr Erdogan as an “autocrat” and on the big questions of governance and who “needs to pay a price”, things will get international relations their leaders rarely tougher. America will draw red lines and agree. An international “High Representa- enforce them more credibly, says Lisel tive” lingers in the country only so that he Hintz of Johns Hopkins University. Mr Er- could use his far-reaching powers if peace A quarter of a century after peace was dogan will have less room to cut deals with were under threat. brokered, the country is still wretched the White House. Sanctions over the s-400 Milorad Dodik, who has long domin- will be harder to sidestep, especially after he war in Bosnia-Herzegovina raged ated the politics of the rs, derides Bosnia Turkey tested the system in October. “An- Tfor three and a half years. Then, in 1995, and talks of independence and integration kara will no longer have the kind of protec- after three weeks of being virtually locked with Serbia. Bosnian Croat leaders often tion provided by Trump and has to get its up in an American air-base in Dayton, call for their own “third entity”. Bosniaks house in order, politically and economical- Ohio, the warring leaders struck a deal to celebrate November 25th as “statehood ly,” says Asli Aydintasbas of the European end it. Bosnia was devastated, half its pop- day” because that is when modern Bosnia Council on Foreign Relations, a think-tank. ulation had fled or been ethnically was founded in 1943. In schools all three “There may be no direct causality, but cleansed, and more than 100,000 were ethnic groups learn different histories. Be- there’s no doubt Albayrak’s resignation has dead. The country has been at peace ever fore the war 13% of marriages were mixed to do with Turkey being more prepared for since. But on November 21st, exactly a quar- and in Sarajevo a third were. In 2019 the the challenges ahead.” ter of a century after the Dayton deal, not number of mixed marriages was only 3%. A many Bosnians will be celebrating. survey in 2018 found that 49% of young With friends like these Most are miserable, and it is not hard to Bosnians want to leave. Yet there is a limit to how far Mr Erdogan is see why. Incomes are low, public services Gloom is so all-pervasive that it is com- willing to go to save the lira and placate the are poor and politicians argue about the mon for parents to press their children to new American administration. For all the same things they fought the war over. Bos- do so. Ivana Cook, from Tuzla, was born a recent talk of reforms, he is not about to nians are ageing and emigrating, cities are few months before the end of the war. She loosen his grip on national institutions, choked by smog and, says Adnan Ceri- says that of 25 students in her graduating give up on growth or stop tormenting op- magic of the European Stability Initiative, a class from school, 20 have gone. Ms Cook’s ponents. His prosecutors recently opened think-tank, “half of the country’s 14-year- mother says that she regrets not leaving an investigation into Ekrem Imamoglu, the olds are functionally illiterate.” herself after the war. Ms Cook did not want opposition mayor of Istanbul, for criticis- Before the war there were some 4.2m to emigrate, but she is lucky. She has a job ing one of the president’s pet projects, a ca- people in Bosnia. Today there are probably and a flat which she shares with her boy- nal between the Black and Marmara Seas. between 2.7m and 3.3m, though no one friend. Some 80% of Bosnians her age still Whether the central bank makes the right live with their parents, and youth unem- call still depends less on its governor than Brcko ployment is high. on the president. Mr Albayrak may be a use- District In the early post-war years Bosnians did ful scapegoat, but he is not the true pro- Republika Srpska not mix much, and it is still the case that blem in Turkey. many young people from mono-ethnic Banja Luka Even if Mr Erdogan were sincere about Tuzla towns or villages, or the divided city of SERBIA democratic reforms and the need to patch BOSNIA Mostar, have never met someone of a dif- things up with his Western partners, the CROATIA ferent ethnicity. But it is less so than be- Sarajevo coalition he has sealed with his country’s Bosniak-Croat fore, and Bosnian politics is far more nu- ultranationalists, who support him in par- Federation anced than is often believed. On November liament and in the security forces, will 15th a Serb was elected as mayor of over- Mostar Republika make it difficult for him to take the right Srpska whelmingly Bosniak central Sarajevo. The steps. “He has locked himself into this MONTENEGRO vast majority of young Bosnians are not path,” says Ozgur Unluhisarcikli of the Ger- hostile to one another. They play sports to- man Marshall Fund, another think-tank. “I gether, civil-society activists work on Adriatic Sea can’t see how he can make substantial 100 km ALBANIA causes together and many criss-cross the changes without destroying the alliance inter-entity border daily for work, to shop1 The Economist November 21st 2020 Europe 39

Moldova’s election Climate politics in Germany Green on green The Sandu surprise

BERLIN Some activists are running out of patience with Germany’s Green party ver a year ago protesters installed between the Greens’ centrist Realo and themselves in and around the 250- radical Fundi wings. But a new gener- O A sacked reformer becomes president year-old oak and beech trees of the Dan- ation of campaigners have grown frus- nenröder, a forest and water reserve in trated with a party they see as insuffi- hen their 5,000 ballot papers ran the southern German state of Hesse. ciently committed to meeting Germany’s Wout, the angry crowd in the scruffy From their lofty treehouses and make- climate pledges. “I sometimes think the London suburb of Beckton began chanting: shift huts, they vow to protect 27 hectares Greens don’t know what we mean by “We want to vote!” There were similar of “Danni” that face clearance for an ‘climate emergency’,” says Luisa Neu- scenes in Paris and Frankfurt. The numbers extension to the a49 motorway. Police bauer, an fff activist and party member. of diaspora Moldovans clamouring to cast have begun to evict the protesters, spark- The strains matter. In Baden-Würt- their ballots were huge, and the country’s ing scuffles, arrests and a handful of temberg, the only state where the Greens electoral commission had failed to antici- injuries. But what looks like a familiar lead a ruling coalition, activists irritated pate how many slips they would need. In environmental protest resonates beyond by the party’s cosiness with the car in- the diaspora 93% plumped for Maia Sandu the wildlands of Hesse, especially for dustry have formed a “Climate List” to as president. On November 15th she defeat- Germany’s Greens. Dannenröder tests contest state elections in March. Win- ed Igor Dodon, the Socialist incumbent, the party’s ability to balance its radical fried Kretschmann, the state’s Green winning 58% of the overall vote. promise with its ambitions to govern. premier, says the list threatens his re- Moldova is often characterised as a Nationally the Greens, who sit in election bid. Party insiders grumble that country split between those who want opposition, urge a moratorium on mo- young activists do not understand the closer ties with the West and those who torway-building. But in 11of Germany’s 16 give-and-take of democracy. The ascen- want them with Russia. But geopolitics is states, including Hesse, they form part of dancy of climate politics has helped the not what motivated most Moldovan voters ruling coalitions, which means grap- Greens’ rise. Now it complicates it. when they unseated Mr Dodon, though he pling with the messy compromises of is reported to have visited Moscow more government. Tarek al-Wazir, Hesse’s than 20 times in the past four years. For Ms Green economy and transport minister, Sandu, who was briefly prime minister last says he opposes the a49 but is obliged to year, the single most important issue has implement it, as motorways are a federal long been corruption. responsibility. Bettina Hoffmann, a Prey to rapacious oligarchs and unscru- Green mp fighting to halt the a49, insists pulous politicians, Moldova is the poorest the state and national parties are united country in Europe, with a gdp per head of in leaning on the federal government to just $4,500. Thirty years ago it had 4.4m stop the project. But tensions are clear. citizens. So many have left that fewer than In recent years the Greens have been 3m may have stayed behind. But, as the doing the splits: aiming to harness the Beckton voters show, the leavers still care. energy of climate movements like Fri- If less money had been stolen at home, few- days for Future (fff) while reaching er of them would be toiling abroad. beyond their base of well-heeled urba- Covid-19 has been a game-changer, says nites—including to the sort of voters Vadim Pistrinciuc, a former deputy minis- who might use the a49. The success of ter. Unemployment has soared, small and the Greens’ two leaders, Annalena Baer- family businesses have been devastated bock and Robert Habeck, who have ce- and, unlike those elsewhere in Europe, mented the party in second place in have had little help from the government polls, seemed to have ended tensions Oh Danni boy “because there is nothing to help them with. People have made the connection be- tween our weak state and corruption.” 2 or just to have fun somewhere else. Because a higher proportion of the educat- Ms Sandu used to come across as rather But that does necessarily mean that the ed and liberal young leave, Ms Curak says, chilly. In socially conservative Moldova her first generation not to remember the war is more of those with less progressive and enemies have emphasised her childless- going to change the country. Last week’s lo- more nationalist values remain. She thinks ness and accused her of being a lesbian, cal elections saw Drasko Stanivukovic, a that by legitimising a system in which eth- which she denies. In the campaign she 27-year-old, elected as mayor of Banja nicity is paramount, Dayton has actually talked of her family and widened her ap- Luka, the capital of the rs. He says that its served to make many of her generation peal. Expectations will be high, but the leadership is corrupt and needs to be re- “even more conservative and nationalistic president’s powers are limited. She will placed. He is against independence for rs, than their parents”. seek a snap parliamentary election. The So- but otherwise he holds many of the same “What scares me”, says Mr Cerimagic, is cialist-led government is expected to cling Serbian nationalist positions as Mr Dodik. that “for years people have been saying it is on for the moment, though its legitimacy Hana Curak, aged 26, a sociologist from up to the young people to save us from this has clearly been dented by Mr Dodon’s de- Sarajevo, says a lack of opportunities is the misery, but then my impression is that they feat. President Sandu will hope to capital- bane of her generation. You need connec- are not really different from the rest of us.” ise on her current popularity and build the tions with people in power to find a job, For those dedicated to creating a better Bos- momentum her party needs to take full said 87% of young people polled in 2018. nia, “it is going to be a long struggle.” 7 control of the government. 7 40 Europe The Economist November 21st 2020 Charlemagne The rainbow curtain

For gay people, Europe is still a divided continent act, won the event, Poland entered a decidedly heteronormative act featuring buxom women seductively churning butter.) Improved rights for gay people were a quid pro quo for mem- bership when the eu expanded eastward from 2004. Romania, for instance, was forced to ditch its law against homosexuality before it was allowed to enter in 2007. With the prospect of eu member- ship looming over the political class, complaints were confined to bishops in the Romanian Orthodox church. (Sample quote: “We want to enter Europe, not Sodom and Gomorrah.”). Once they were in the club, however, this leverage disappeared and backsliding be- gan. When Law and Justice, the governing right-wing conservative party from Poland, first came to power in 2005, one of its immedi- ate actions was to scrap the government department responsible for lgbt policies. Things were so bad that Robert Biedron, a Polish mep and one of the country’s few prominent lgbt figures, says he started learning Swedish in case he had to flee. Just as govern- ments in Poland and Hungary have trampled over judicial inde- pendence and free media, so too have they cracked down on gay rights. Gay people in general are another victim of the eu’s inabili- ty to ensure that countries maintain the standards that allowed them into the club in the first place. Since family law is mainly up to member states, there is little reland and Lithuania have much in common. Both are small, the eu can do if a member state wants to stop a lesbian marrying or ICatholic, Europhile, enjoy a tricky relationship with a larger a gay couple adopting. Where Brussels can muscle in is when the neighbour and have cuisines heavy on potatoes. Both also left it right to free movement collides with bigoted domestic law. What late when it came to gay rights. Homosexual acts were decriminal- happens if a gay couple and their child move to a country where ised only in 1993 in both countries. But since then, things have di- such relationships are not recognised? The European Commission verged. In the space of a generation, Ireland went from consider- wants to smooth out these bumps, ensuring that the link between ing homosexuality a crime to allowing gay marriage and electing a children and their gay parents is not severed if they move to a gay taioseach with little fuss. Life for gay Lithuanians has been less country where gay adoption is banned. While few are affected di- happy. Laws banning gay “propaganda” are still on the books. Civil rectly, such a move has potent symbolic power. Definitions of on- partnerships, let alone same-sex marriage, remain a pipe-dream. line hate speech will be widened to include homophobic abuse, Merely living without fear would be an improvement: 84% of lgbt too. Towns that introduced lgbt-free zones in Poland had eu people in Lithuania are not comfortable revealing their identity. funds cut. But the main thing the eu can offer is a pulpit, hammer- Where an iron curtain once split Europe, a rainbow curtain now ing those leaders who refuse to treat citizens equally. divides the continent. In western Europe, gay people enjoy a quali- ty of life better than anywhere on the planet. They are free to marry Peek behind the curtain and adopt children, and are protected from discrimination in all Such banging of the drum for gay rights by Brussels does come walks of life. Things in eastern Europe are not so good. In seven eu with a risk. It is a fight both sides want to have. Normally, populists countries, including Poland, Hungary and Romania, less than half rely on caricatures when taking aim at Brussels. In this case there the population agree that gay people should have the same rights is less need. Populist politicians will claim that the eu is doing all it as straight ones. Civil partnerships are not offered in six eu coun- can to force countries to treat gay people better. eu officials will tries, all in central and eastern Europe. Poland has introduced happily plead guilty. A common complaint is that eastern Europe “lgbt-free zones”, a legally meaningless gimmick with the practi- is expected to go through decades of social change in the space of a cal effect of declaring open season on gay people. Meanwhile, few years. (Denmark legalised gay sex in 1933, but it took nearly Hungary is working on a law that will ban gay couples from adopt- eight decades before gay people could marry.) Change can happen ing. For gay people behind the Rainbow Curtain—which covers quickly, though. Ireland enjoyed a social revolution in less than a about a quarter of the eu’s population—life can be grim. generation, and Malta passed a slew of legislation that helped it be- For a continent that prides itself on gay rights, the split between come the most gay-friendly country in the eu in just a few years. west and east is a scar. After all, gay rights hold outsize importance There are few complaints about the pace of transformation in cen- in European life. Denmark was the first country to allow civil part- tral and eastern Europe when it comes to living standards. nerships, and the Netherlands was the first to introduce gay mar- With the eu cowering beneath a second wave of covid-19 cases riage, in 2001, the same year that it allowed same-sex couples to and in the middle of its biggest-ever recession, a fight over gay adopt. In Brussels, gay rights are an area of diversity eu officials are rights could easily fall down the pecking order. It should not. The comfortable talking about. When race is brought up officials eu has made much of promoting “European values”. Usually, these wince, reminded of the almost preposterous lack of non-white tend to mean a respect for the rule of law, which is hardly inherent- faces within eu institutions. There are, however, plenty of gay peo- ly European. When it comes to gay rights, however, Europe has ple in the corridors of power. The Eurovision Song Contest, one of genuinely been a pioneer. Until a gay person in Vilnius or Buda- the few transcontinental events, is a festival of camp. (Although pest has the same rights as one in Dublin or Madrid, European val- not for everyone: the year that Conchita Wurst, an Austrian drag ues are no such thing at all. 7 United States The Economist November 21st 2020 41

The White House Trump lost are floundering. Despite Mr Trump’s recent replacement of civilian To the bitter end leadership at the Department of Defence, there is little risk of a self-coup. Even if this low-energy autogolpe does not succeed, Mr Trump’s actions are still alarming. Presidential transitions involve a large number of civil servants: some WASHINGTON, DC 4,000, are politically appointed, with 1,200 President Donald Trump’s refusal to concede is harming America requiring confirmation by the Senate. By top the steal” has become the an- fault at all. That is now throwing up an un- not conceding, Mr Trump has stalled this “Sthem of outraged Republicans who precedented scenario: an incumbent process. Mr Biden is not receiving his clas- believe President Donald Trump’s claims American president refusing to hand over sified presidential daily briefings. His team that Democrats stole his re-election by power due to baseless claims of electoral does not have access to secure governmen- committing massive voter fraud. It is the fraud. It is a serious democratic norm to tal communications, relying instead on hashtag they rally around online and the trample over—one easy to underplay be- encrypted messaging apps. The commis- slogan they chant when they throng in the cause of public confidence that other insti- sion to study the 9/11attacks found that the streets, as they did on November 14th in tutions, like the courts and the military, shortened transition in 2000, caused by Washington, dc, earning a laudatory will not accede to Mr Trump’s wishes. The the disputed result in Florida, may have drive-by from the presidential motorcade. chances of a reversed decision are low. The contributed to American vulnerability to But this is not the first time surrogates lawsuits filed in the swing states that Mr terrorist attacks. By contrast, the well- of Mr Trump have deployed it. Roger Stone, managed transition between George W. a former adviser to the president who re- Bush and Barack Obama in the midst of the cently had his prison sentence for several Also in this section global financial crisis enabled faster im- convictions commuted, actually founded a plementation of economic relief. Asked 42 Missile defence group by that name in April 2016—then to what was at stake this time, Mr Biden said expose Senator Ted Cruz’s purported plot to 43 Charles Koch’s change of heart “more people may die” if the Trump ad- steal the Republican nomination. Similar ministration refused to co-ordinate on vi- 43 The future of diplomacy pre-emptive claims of voter fraud were rus suppression and vaccine distribution. made before the general-election contest 44 Corruption in the Midwest The stalled transition is also a test for with Hillary Clinton in 2016. Now that Mr the president’s party. Never-Trump Repub- 45 African-American cemeteries Trump has actually lost, the slogan has fi- licans had hoped the president would be nally been deployed in earnest. 45 Charter schools and covid-19 dealt a stinging electoral rebuke, forcing a Mr Trump has a long-held aversion to reckoning among accommodationist party 46 Lexington: Audacious and obstructed admitting defeat, or really conceding any grandees. That did not happen. Down-bal-1 42 United States The Economist November 21st 2020

2 lot Republicans benefited from the high illegitimate. There are always some gripes out. High above the Earth, it collided with turnout among Mr Trump’s supporters, after hotly contested races. But the scale the descending icbm. probably keeping control of the Senate and this time—like Mr Trump’s refusal to ac- It was the first time an interceptor fired eroding the Democratic majority in the knowledge the results—is breathtaking. from a warship had shot down a (mock) House. They also wiped out Democrats in During the much-closer election in icbm in space. “Politically this test is a big state elections, bringing power over gerry- 2000, where 537 votes in Florida separated deal,” says James Acton of the Carnegie En- mandering. “They think the ducking and winner from loser, 36% of Mr Gore’s voters dowment for International Peace, a think- accommodating of Trump without quite thought the result was illegitimate. Simi- tank. Russia and China have always com- sounding like Trump—that worked fine,” larly, 23% of supporters of Hillary Clinton plained that American missile defences says Bill Kristol, a conservative writer long felt fleeced after her election loss in 2016. undermine their own deterrents. America opposed to the president. Perhaps as the weeks wear on, and Mr Bi- has always batted away those concerns. Most prominent Republicans still in of- den inches closer to inauguration, the When the sm-3 was developed, America fice have continued to humour the presi- number of Republicans who see him as il- first said it would protect aircraft-carriers, dent. “All legal ballots must be counted. legitimate will shrink. But Mr Trump and later that it would shield Europe from Any illegal ballots must not be counted,” seems unlikely to ever concede, and would Iranian medium-range missiles. In fact, said Mitch McConnell, the Republican rather establish the myth of his stolen elec- only a software tweak was needed to make leader in the Senate. The implication that tion as a new lost cause among his suppor- it work against longer-range ones. Now there may be sufficient fraudulent ballots ters. If that happens, it would add a danger- that the system has been demonstrated to alter the election’s outcome has so far ous strain to America’s factionalism—one against an icbm, both Russia and China proven to be baseless. Only a few excep- that cannot be easily contained. 7 will claim vindication. tional Republicans, like Mitt Romney and America already has a missile shield for Susan Collins, have acknowledged the re- its homeland, comprising 44 ground- sults and congratulated Mr Biden. Missile defence based interceptors (gbis) in Alaska and Others have gone even further than Mr California. These were previously the only McConnell’s careful statement. Brad Raf- De profundis ad ones to have shot down an icbm. Yet these fensperger, the Republican in charge of ad- are staggeringly expensive, relatively few ministering elections in Georgia, which Mr astra in number and unreliable in tests. The Biden narrowly won, has come under with- ship-based system, known as Aegis Ballis- ering criticism from members of his own tic Missile Defense (bmd), has several ad- party for refusing to tilt the result in Mr vantages. It can be rolled out more quickly, An American ship takes out an Trump’s favour. Kelly Loeffler and David moved where needed and allows America icbm—and opens a can of worms Perdue, the Republican senators who face to field many more interceptors. run-offs in January that will determine he intercontinental ballistic mis- Currently, 44 destroyers and cruisers control of the Senate, issued a joint state- Tsile (icbm) took off from Kwajalein Atoll are equipped with Aegis bmd. Each has 90- ment calling for his resignation. Lindsey in the middle of the Pacific Ocean on No- plus launch tubes, so several thousand in- Graham, an especially Trumpist senator, vember 17th. American satellites spotted terceptors could theoretically be put to sea personally called Mr Raffensperger to dis- its bright plume at once. They alerted (in practice, the tubes also carry other pute the absentee ballots cast in the race. Schriever Air Force Base in Colorado which weapons, like Tomahawk cruise missiles). At some point, reality will intervene. in turn informed the uss John Finn, an Ar- The navy plans to fit Aegis to 65 ships, 11of The remaining lawsuits will fizzle. States leigh Burke-class destroyer poised north- which would be allocated for the protec- have started to certify their election re- east of Hawaii. A hatch on the deck flipped tion of the continental United States. Just sults. The electoral college will formally open and spewed out a torrent of flames as three to four ships deployed off America’s vote on December 14th to make Mr Biden an sm-3 Block IIa interceptor shot up and coast could cover its whole landmass, the next president. More and more Repub- notes George Lewis, a missile-defence ex- licans are telegraphing that they under- pert who recently retired from Cornell Uni- stand this by, for example, saying that Mr versity. The idea is that if gbis failed to take Biden probably ought to be receiving clas- out a missile, Aegis could mop it up at a sified intelligence briefings after all. lower altitude—though sm-3 IIas can still Yet the equivocations now portend a reach three times higher than the Interna- Republican Party that remains firmly un- tional Space Station. der the grips of post-truth Trumpism. This In practice, notes Mr Acton, intercept- may be a rational strategy in the short term ing an incoming icbm would still be for- to ensure the president campaigns in the biddingly difficult. They would travel a lon- coming, critical Senate run-offs in Georgia. ger distance and therefore arrive at greater But it will probably last beyond that. Mr speed than in the test, armed with counter- Trump will relish his role as kingmaker measures to trick the interceptor and po- who anoints the winner of Republican tentially in sufficient numbers to over- primary contests by tweet. The president whelm defences. “sm-3 IIas can’t funda- has reportedly also been talking of running mentally undermine China’s or Russia’s in 2024, which would effectively freeze the nuclear deterrents, or even frankly North next generation of Republicans in place. Korea’s,” he says. But that is not how those Hyperpartisanship has wreaked havoc countries are likely to see the matter. on American politics, but at least most vot- Russia has long held that arms-control ers could agree that the other side won fair- talks ought to include not just offensive ly and squarely. That no longer appears to systems, like bombers and missiles, but be the case. According to our latest poll also defensive ones which might neuter from YouGov, 88% of those who voted for them. It has been especially irked by land- Mr Trump think that the election result is Something daring, incontinental based Aegis systems built in Romania and 1 The Economist November 21st 2020 United States 43

The future of diplomacy Political donors My Kochtopus teacher Altered State

CHICAGO Charles Koch offers partial regrets for his partisan ways oy did we screw up. What a mess!” Two new reports propose a rich feast of Towards the end of his new book, “B reforms for America’s foreign service Charles Koch, the billionaire owner of Koch Industries, the second-largest oe biden, the president-elect, wants to private firm in America, offers this sur- Jend his country’s “forever wars” and be- prising mea culpa. For years he gave lieves diplomacy should be “the first in- extraordinary sums to Republican cam- strument of American power”. He prom- paigns, encouraging partisan confronta- ises to reinvest in America’s hollowed-out tion. (He and associates probably guided diplomatic corps, the better to nurture alli- over $1bn in political spending in the ances and tackle the global issues of the fu- past decade). Today he would like readers ture, such as climate change and great- to know that he boobed. He says he power competition. But how to make the picked the “wrong road”. foreign service fit for the future? Two new The wizard from Wichita is too coy to reports, one from the Council on Foreign set out in detail what he, his late brother Relations (cfr), a think-tank, the other the David, and their political action commit- result of an extensive project at Harvard tee, Americans For Prosperity (afp), were University, offer thoughts. up to. Soon after the election of Barack Both say the State Department is in cri- Obama, he writes, “we started engaging sis. Its problems stretch back well beyond directly in major party electoral politics”. Before the fiddlers have fled the Trump administration but have deep- They mostly funded enthusiasts for the ened dramatically under it. Morale is low, Tea Party movement. This fostered tribal- can better tug at their bootstraps. The budgets are squeezed and the foreign ser- ism and weakened moderate Repub- author seems to argue that philanthro- vice is suffering from an exodus of talent. licans. Mr Koch now regrets that this pists and well-meaning activists will do Diplomats’ careers are stymied by the poli- meant most efforts at bipartisan co- most to tackle inequality, deaths from ticisation of senior posts. For the first time operation amount to “a sick joke”. He despair, falling life expectancy, racism in a century, not one of the 23 Senate-con- worries, too, that such dysfunction is and other social ills. That won’t change firmed assistant-secretary positions is a pushing youngsters to favour socialism. sceptics’ minds about him, but it is rare serving career official, and 43% of ambas- What is behind his admission? In to hear a prominent figure express such sadors are political appointees, also a mod- “Believe in People”, he claims his goal blunt regrets for past actions. He now ern record. The story on diversity is dismal: was “not to toot my own horn”. Yet he argues that partnership—such as the in March the Senior Foreign Service was must have noted the widespread, un- First Step bipartisan efforts he backed in 90% white and 69% male. Only five of 189 flattering, coverage after his brother 2018 to reform the criminal justice sys- ambassadors are African-American (over David died last year. The 85-year-old tem—achieves more than party confron- their two terms, Barack Obama appointed knows his own reputation is toxic on the tation. He has also started sending small- 46 African-American ambassadors and left, for his hostility to Obamacare and er sums to Democratic candidates. George W. Bush had 44). Under Donald ongoing denial of climate science. He has Mr Koch has not changed his spots Trump, a quarter-century trend of rising fe- also lost standing on the right, where entirely, though. afp poured millions male ambassadors has gone into reverse. politicians mostly prefer the big-spend- into this year’s elections. These include Remedies, say the reports, need to be ing populism of Donald Trump. The help given recently to David Perdue, a radical. The cfr emphasises immediate author—who does not mention the Republican senatorial candidate in a steps an incoming administration can take president—is dismayed by most of his run-off in Georgia. Meanwhile the afp’s to start revitalising the State Department, policies: the increases in tariffs, the website brags of how it lobbied to get from appointing a chief technology officer tendency to pick corporate favourites, Amy Coney Barrett installed quickly on to bringing in climate experts and more the curtailment of legal immigration. the Supreme Court last month (to Demo- Chinese-speakers (the department still has His writing is a mix of family memoir, cratic fury), just as it pushed for Brett more Portuguese-speakers than the com- stories of corporate good deeds and calls Kavanaugh two years ago. A road once bined total for Mandarin and Arabic), as for government to shrink so the needy taken can be hard to leave again. well as issuing a public apology to career diplomats who have been subjected to po- litical retaliation. The Harvard report sug- 2 Poland. The new test “is likely to have a relatively few land-based icbms. gests a ten-point action plan for the longer crushing effect on prospects for new nuc- Ms Grego notes that because the sm-3 term, including a new mission and a new lear arms control agreements”, says Laura interceptor can also take out satellites— name for the foreign service: the “United Grego of the Union of Concerned Scien- something America demonstrated in States Diplomatic Service”. Taken together, tists, an advocacy organisation. 2008—deploying more of them will have the reports offer a rich menu for reform. “It will also provide motivation (or jus- an impact on space security, too. But with A four-course selection for the new ad- tification) for Russia and China to diversify the Iranian and North Korean nuclear pro- ministration would include, for starters, and grow their nuclear weapons arsenals,” grammes simmering, the incoming Biden an infusion of resources. The Harvard she adds—the logic being that more mis- administration is not about to abandon a group recommends a 15% increase in for- siles will be needed to saturate stiffer de- flexible seaborne means of shielding its eign-service personnel, to make it possible fences. China is especially jittery as it has European and Asian allies. 7 to have a “training float” like that of the 1 44 United States The Economist November 21st 2020

2 armed forces. This would involve an in- their way to the secretary of state). It would frequently been accused of wrongdoing— crease of 2,000 positions over three years, recreate mid-level entry-points to the for- over a scandal at a commuter rail system in followed by a four-year commitment for a eign service. Actions to make America’s Chicago, and a sexual-harassment case further 1,400-1,800 posts to fill projected diplomats more closely reflect the country that took down his chief of staff—yet he al- staffing gaps. A diplomatic reserve corps, they represent would include appointing a ways slipped away unscathed. also on the military model, would create a chief diversity officer and tackling struc- This time could be different. As in Ohio, surge capacity for international crises. tural bias in recruitment and promotion. federal investigators appeared this sum- Second, another appetiser, would come And for dessert? Both reports argue that mer. They pressed charges setting out how a sweeping professionalisation of the top the foreign service’s mandate for the future an energy company, Commonwealth Edi- ranks of diplomacy. The Harvard team rec- should be enshrined in legislation. This son (ComEd), handed jobs, cash and con- ommends that, by 2025, 90% of ambassa- has happened three times in the past cen- tracts to pals of the politician. Their inves- dors, and 75% of all assistant secretaries of tury—most recently in1980, at the height of tigation spanned eight years to 2019. In a state, should be career diplomats. Far lower the cold war. Discussions with military and plea bargain ComEd has already admitted proportions of political appointees would intelligence experts informed this recom- to paying $1.3m in return for two laws that bring the foreign service into line with the mendation, too. “Unless you have some of weakened regulators’ checks on how it set military and intelligence services. these things in the law, they won’t last,” rates. That earned the company, at custom- The calorific main course would consist says Nicholas Burns of Harvard, an ex-dip- ers’ expense, an estimated $150m. It has al- of a transformation of the State Depart- lomat. He detects “considerable interest” ready agreed to pay a $200m fine and Fidel ment’s culture. It would involve slashing on Capitol Hill. But to get reforms through Marquez, who ran its government affairs layers of bureaucracy (policy recommen- a polarised Congress would require dip- office until last year, pleaded guilty to brib- dations can collect 15 or more sign-offs on lomatic skills of the highest order. 7 ery in September. That leaves Mr Madigan vulnerable. He has not been arrested or charged and he de- Corruption in the Midwest nies any wrongdoing. But a 38-page de- ferred prosecution agreement between All about power prosecutors and ComEd sets out in detail how federal investigators see the dubious role of “public official A” who is bluntly identified as the speaker. Voters, especially beyond Chicago, sound fed up with the whiffs of scandal around him. After they CHICAGO delivered a relatively poor result for Demo- Parallel political scandals embroil leading politicians in Ohio and Illinois crats in elections this month the governor, arry householder sounds unrepen- Madigan is a wisp of a man compared with J.B. Pritzker, and both senators for the state, Ltant. Until July the Republican was barrel-chested Mr Householder. But he is Dick Durbin and Tammy Duckworth, all speaker of Ohio’s state assembly—a politi- the more powerful, indeed legendary, char- Democrats, rounded on the speaker. Mr cian best known for his prodigious fund- acter. Known as the Velvet Hammer, Mr Durbin called the Democratic party in Illi- raising and helping his party colleagues Madigan is reckoned to be the state’s most nois a “corrupt organisation” and said the raise cash. Then in July the feds came powerful politician, one who has seen off speaker and his allies must go. Forcing him knocking. Along with his campaign strat- many governors of both parties. First elect- out, however, depends on swaying Demo- egist and three lobbyists, he was arrested ed in 1970, when Nixon was president, he cratic state legislators, many of whom and charged with racketeering. Federal in- has been speaker since 1983 (apart from a dread any idea of crossing Mr Madigan. vestigators say the men took $60m from a brief interlude in the 1990s). A relic of the Rich Miller, a well-connected journalist power company, widely reported to be era of Democratic machine politics, he has in Springfield, is a veteran watcher of failed FirstEnergy. It was transferred via a charity plots against Mr Madigan. This is “by far set up as a front. In return they passed a bill the closest it’s got for him, politically and by which the state was to dish out over $1bn legally”, he says, especially after investiga- for two failing nuclear plants. tors bugged phones of his close officials. As On his arrest Mr Householder lost the for politics, Anne Stava-Murray, a newish speakership but he fights on, denying any Democrat representative who led a lonely wrongdoing. He is said to have spent $1m rebellion against Mr Madigan two years already on lawyers. This month he was re- ago, says that she has rallied 13 colleagues, elected, getting more votes and a bigger notably many women, to defy the speaker. majority than two years ago. Voters were If true, and they hold their nerve, that is unbothered by news, late in October, that enough to remove him. two of his co-accused had already pleaded One puzzle is why energy companies guilty (and both pointed fingers at the ex- are mired in dirt in both states—after all, speaker). Nor did voters fuss that he could machine politicians used to work through face 20 years in prison if convicted. As for unions and local government depart- the wider political impact, Mark Weaver, a ments. Today energy firms have costly old political operative in Ohio, calls it a murky assets to maintain, such as nuclear plants, tale but says Mr Householder’s relative lack while demand for electricity is flat at best. of fame means the impact will be slight. Their fortunes thus depend on regulatory That is not the case in a parallel case un- change and getting subsidies or tax breaks, folding in Illinois. This week Democrats in the gift of politicians. In return, they can there—plotting by phone and Zoom, as the offer jobs and favours for friends in office. virus kept them from Springfield—looked Power may corrupt, but in the Midwest it is ready to topple their own speaker. Mike Mike Madigan and his fascinating rhythm power firms that corrupt absolutely. 7 The Economist November 21st 2020 United States 45

Charters and covid-19 Crash courses

NEW YORK Successful charters are outperforming traditional public schools in virtual learning, too ew york city’s schools may be started in the spring. It required pupils to Nclosing, but the pupils at Success snappily start school on time and in Academies, a network of charter schools uniform. If a child is not at her screen by which has placed all of its 20,000 pupils 9am, parents are called. in remote learning, will still be wearing This approach has achieved “striking their uniform (vivid, pumpkin-orange success in the face of the viral challenge,” shirts with navy trousers) every day of notes a report from the Thomas B. Ford- the week. Unlike traditional public ham Institute, an education think-tank. schools in the city, which reopened eight Like Success, Uncommon Schools, an- weeks ago but are now closing as co- other high-performing network with vid-19 cases spike, Success has remained 21,000 pupils, has now made much of its all-virtual. Just as with their in-person virtual curriculum available free online. offerings, high-performing charter At least 227,000 people from every state networks have managed to create an in America and 92 countries have used exemplary virtual programme that other the materials. Anyone can log in to schools are starting to learn from. download lessons given by its best teach- Cemeteries Eva Moskowitz, the founder of Suc- ers. One family in Washington, dc, even cess, compares the logistics of arranging sought to enroll their child virtually, Black tombs high-quality remote learning to the despite being hundreds of miles from the d-Day operation. Children needed lap- nearest Uncommon school. scatter tops, science kits, and noise-cancelling As much as Success, which also headphones. The 7% of her pupils who shares virtual lesson plans and webinars, live in homeless shelters needed internet and Uncommon are engineering a new WASHINGTON, DC hotspots. “Remote 2.0’s” curriculum is model for remote learning, virtual learn- Should development be prevented to continuously refined. Ms Moskowitz ing is still a pale imitation of in-person preserve African-American cemeteries? tweaked the school schedule, usually instruction. “I want to get back on cam- hen charlotte troup leighton sacrosanct, to make more time for small- pus so badly, says Ms Moskowitz. “It’s Wfirst looked around her house, in the group learning. Unlike many schools, just not the same on Zoom.” With covid-- Maryland suburbs of Washington, dc, she Success did not abandon learning stan- 19 infections accelerating, though, that was drawn to the small wooded meadow dards or live teaching after closures might not happen for a while. that lay behind it. Brambly and overgrown, it formed a picturesque buffer between the house and the thundering multi-lane Capi- suburbanisation of a once-rural area forts of local campaigns such as this. That tal Beltway beyond. Looking closer, she pushed up property taxes, many had left; may change if Congress passes the African- saw it was dotted with small stones, some today the area is almost entirely white. The American Burial Grounds Network Act, engraved by hand, and periwinkle, which is community was dealt a decisive blow in the which would create a database of historic often planted as a ground cover in cemeter- early 1960s when the highway, built to link black burial sites, managed by the National ies. Though it was not listed, it was an Afri- the capital’s fast-growing suburbs, separat- Park Service, and provide funding to re- can-American cemetery, established by ed the cemetery and hall from the church. search and protect them. It was introduced former slaves in the 1890s. Alexandra Jones, an archeologist who has last year by A. Donald McEachin, a con- America has innumerable old African- studied the remnants of the Gibson Grove gressman from Virginia, who discovered American burial grounds that have been community, says this pattern, in which that his great-grandfather was buried in an largely forgotten. The one at the back of Ms highways were driven through the middle African-American graveyard in Richmond Troup Leighton’s garden, which she is now of black neighbourhoods, was repeated in which, until a few years ago, was over- trying to protect from a plan to widen the many places during the building boom of grown and strewn with rubbish. The act highway, was established by Morningstar the 1950s and 1960s. may become law in 2021. Tabernacle No. 88, the local chapter of a be- Today, developers are required to assess For an unknown number of burial nevolent society set up by former slaves whether they are building on graves or his- grounds, the law will have come too late. after the civil war. During segregation, it toric sites. Yet often they do not. In 2018 the Earlier this year Richard Stuart, a state sen- used members’ fees to provide services, Maryland State Highway Administration ator in Virginia, spotted a headstone in the from care of the ill and destitute to educa- published a plan to widen the beltway, po- river that runs alongside the farm he had tion and burial. Along with a meeting hall, tentially disturbing a slice of cemetery just bought. He discovered that a two-mile the foundations of which are still visible, land, including parts of the hall’s founda- stretch of a barrier, constructed in the and a church, it formed the heart of a tight- tions. Its map did not list the cemetery as a 1960s by a previous owner, contained innu- knit black neighbourhood known as Gib- burial or historic site, prompting Ms Troup merable others. They came from Columbi- son Grove, named after Sarah Gibson, who Leighton and Ms Jones to form a group to an Harmony, once one of the biggest Afri- was enslaved in Virginia before buying protect it. The state is now planning to un- can-American cemeteries in Washington, land that she donated to the community. dertake a survey to establish whether the dc. It was dug up in the 1960s to make way She is one of at least 80 people thought to expansion would destroy any graves. for development. Many of the graves were be buried in the cemetery. Across America, the fate of African- moved to a new burial ground in Maryland. By the middle of the 20th century, as the American burial sites depends upon the ef- But the headstones were sold as scrap. 7 46 United States The Economist November 21st 2020 Lexington Audacious and obstructed

Barack Obama’s new memoir, “A Promised Land”, will give his former deputy little comfort Senate, though his party had a supermajority there. A veneer of bi- partisan support would make the law more resilient, he thought. And he had no time for those on the left who griped at such com- promises. He and his advisers adopted the phrase “public option” (which these days counts as the most modest health-care reform Democrats will consider) to refer to any left-wing unicorn. His moderation was part-learned: he notes that most of the big social reforms started incrementally. But mostly it reflected his background. Raised in Hawaii by his white, Kansan grandparents, he retained a strain of their cultural conservatism—cautious, with a reverence for tradition and community—even after he acquired a more unambiguously black self-awareness and hunger for social justice. Uniting those disparate parts, by acting “as translator and bridge among family, friends, acquaintances and colleagues”, be- came at once an identity and a political mission. It also explains his characteristic political traits. They were the idealism and fine sense of empathy he showed on the trail (though his novelty—“a blank canvas upon which sup- porters across the ideological spectrum could project their own vi- sion of change”—also helped). His pragmatism and restraint were related qualities. Together they defined his vision of change. Thus, for example, the constrained idealism of his foreign poli- he only racist epithets Barack Obama recalls from his first cy, which is considered less heretical in the dc think-tank realm Tpresidential campaign, in his engrossing new memoir, “A these days. Thus, too, his nuanced pronouncements on race, in- Promised Land”, were uttered by the rural white folk who declared cluding his greatest speech, in 2008, in which he claimed that his they were “thinking of voting for the nigger”. He would go on to grandmother’s petty chauvinism was as much a part of him as the win the biggest majority of any Democrat since 1964, including by overheated America-bashing of his black pastor. (“That was a very unexpectedly bagging white, working-class states such as Iowa nice speech, Bar,” she responded.) Restrained to a fault, Mr Obama and Ohio. “Race doesn’t matter!” chanted the crowds that celebrat- is even unwilling to castigate his enemies. He confesses to a sneak- ed his victories. Yet two years later Tea Party protesters were wav- ing regard for the Tea Party’s organisation. But he comes close to ing banners of Mr Obama with a bone through his nose. The pro- letting Chuck Grassley have it. He was the Republican senator who portion of Republicans who said he was Muslim soared—to kept Mr Obama guessing on his health-care bill only to admit that, around half by the end of his presidency. Whereupon millions of for all his prevarication, he was never going to back it. those same rural supporters elected the main spreader of racist lies It seems likely that Republican leaders and donors obstructed about Mr Obama to be his successor. Mr Obama so feverishly not because they genuinely thought he As that chronology should suggest, the white backlash to Mr was an extremist, but because they knew that he was not. It was Obama, which Donald Trump rode to the White House, was not in- precisely his attempted bridge-building that was so threatening to evitable. It was engineered, a product of unprecedented obstruc- them. Because it was at odds with the story they had been telling tion from the Republican establishment in combination with re- their voters about the left for a decade. And because, had Mr Obama lentless slander of the president and his adored, politics-loathing pulled it off, it would have made his already powerful government wife by the conservative media. “It’s a trip, isn’t it?” murmured Mi- hugely popular. Paradoxically, it was by spurning his offer of bipar- chelle Obama, after glimpsing a Tea Party rally on television. “That tisanship that the Republicans made him seem, true to the right- they’re scared of you. Scared of us.” wing caricature, overbearing and partisan. It also helped them sty- The hate-mongering on Fox News was the channel’s stock-in- mie his plans and thereby dismantle the powerful Democratic tri- trade. But what were Republican elites so afraid of? They said Mr fecta he had assembled at the mid-terms in 2010. Obama was dictatorial or radical. Yet the record he describes in his The conventional wisdom, which usually exaggerates individ- dispassionate yet fluid style suggests how untrue that was. ual dramas and downplays structural flaws, still blames Mr Obama Though he had shortcomings—a tendency to vacillate, a distaste for much of that failure. But, notwithstanding his imperfections, it for political cut-and-thrust that bordered on aloofness—Mr is hard to think what he could have done to avoid it. His presidency Obama was a relatively unassuming chief executive. He rehired his represented a genuine effort to break through partisan polarisa- Republican predecessor’s defence secretary, awarded a plum cabi- tion which mainly showed what an impossible ambition that was. net job to his resentful Democratic rival and considered his celeb- rity status absurd. (On learning he had been awarded the Nobel Barack to the barricades peace prize, less than a year into his term, he retorted: “For what?”) This is not a great lookout for Mr Obama’s former vice-president— He was also intrinsically moderate. Indeed his presidency, to about whom he is scrupulously complimentary and unrevealing. use a term it popularised, looks in retrospect like a stress-test of Joe Biden will soon return to the White House for his own stab at the system’s ability to embrace that consensus-forging quality. restoring bipartisan comity, but with a far weaker mandate than Consider that Mr Obama’s signature health-care and climate Mr Obama had, and at a more brutally divided time. He will make policies were based on Republican initiatives. And he diluted the mistakes. He will be slammed for them. But if his government fails former in a failed bid to get a single Republican vote for it in the to ease the rancour, he may not be the reason why. 7 The Americas The Economist November 21st 2020 47

Mexico ment of personality”. The principle has been used to protect unfaithful spouses Smoke and legislators and posh schoolboys who refuse to cut their hair. Now dope-smokers may benefit. In Mexico it takes five separate rulings by the Supreme Court to establish a prece- dent that citizens can invoke to disregard unconstitutional laws. Since 2011the court MEXICO CITY has been able to invoke its fifth ruling to in- Will Mexico become the third country to legalise cannabis for recreational use? struct Congress to rewrite laws by a certain n the public park outside Mexico’s Sen- much of the economy is undocumented. date. In 2019 it used that power for the sec- Iate is a small forest of cannabis. Volun- Mexico’s route to legalisation has been ond time, directing Congress to revoke teers are staging a plantón (a punning way unusual, and its arrival may yet be delayed. laws banning cannabis. The deadline has to say “sit-in”) to spur lawmakers to legal- The president, Andrés Manuel López Obra- been extended twice, first because law- ise weed. They tend to the 1,000 or so plants dor, has so far been a bystander. In contrast makers could not agree, then because of co- on Tuesdays and Thursdays, spraying or- to the United States, where voters have en- vid-19. The new one is December 15th. ganic insect repellent and picking up dorsed reform in state referendums, legal- The jolt of legalisation could provoke leaves. One volunteer, Leopoldo Rivera, isation has little popular support in Mexi- gangs to behave even more violently than calls it “the first non-clandestine planta- co. Surveys suggest that just over a third of now. Mexico’s murder rate, among the tion” of marijuana in Mexico since the gov- voters favour it. world’s highest, reached a record last year. ernment banned it a century ago. The po- Campaigners have used the courts rath- Gangs could diversify faster into such ac- lice did not uproot the seedlings in er than popular pressure to advance their tivities as kidnapping and cooking fenta- February, when the plantón began. Some cause. Anti-discrimination advocates cre- nyl. But the shock will be smaller than it plants are now three metres (ten feet) tall. ated an opening in 2001 by arguing suc- would have been four decades ago, when As The Economist went to press the Sen- cessfully for adding to the constitution a cannabis exports were their core business. ate was due to debate a bill that would make right to “human dignity”. The Supreme Americans in 11states buy cannabis legally Mexico the third country in the world, after Court cited it in 2008 when it ruled that all for recreational use and will soon be able to Uruguay and Canada, to legalise cannabis Mexicans have a “right to the free develop- do so in four more. They have less need to for recreational use nationwide. For Mexi- import illegal Mexican weed. Mexico’s do- co, the change seems riskier. It was once mestic market is relatively small. In 2016 Also in this section the world’s largest producer of cannabis. just 2% of Mexicans surveyed admitted to Campaigners for legalisation are watching 48 Illegal fishing in Ecuador smoking marijuana in the previous year. how it will go in a country where organised The United States’ hard line on narcot- 50 Bello: Peru’s politics of destruction crime is strong, the rule of law is weak and ics prevented previous attempts by Mexico 1 48 The Americas The Economist November 21st 2020

2 to liberalise. When, in an early experiment Ecuador The world is taking notice. Last year the with harm reduction, President Lázaro Cár- National Oceanic and Atmospheric Admin- denas legalised heroin and opened inject- Piscine plunder istration, an American government agen- ing rooms in 1940, the United States cut off cy, accused Ecuadorean fishing companies supplies of morphine, a heroin substitute. of violating international conservation Cárdenas retreated. In the 1970s the United agreements. The European Union, the big- States began training Mexican pilots to gest buyer of Ecuadorean tuna, has told the drop Paraquat, a herbicide, on farms grow- country to step up action against iuu or The country is often seen as a victim of ing cannabis. Now, if Mexico legalises, the risk losing access to its market. In 2018 a predatory fishing. It is also a culprit United States is likely to shrug. President- committee within cites, an international elect Joe Biden supports decriminalisation n may 4th customs officials in Hong convention on trading in endangered spe- (though not legalisation). OKong impounded the largest illegal cies, recommended that its 183 members The task of complying with the court’s haul of shark fins in the territory’s history. suspend trade in fish with Ecuador. order is being led by Mr López Obrador’s The documents declared the cargo to be Its government is incapable of reining Morena party, an assortment of leftists, lib- dried fish, but they were in Spanish, not in a powerful industry. Fishing companies erals and evangelicals that controls Con- English, which aroused suspicions. Offi- employ 100,000 people, and contribute gress. Rather than simply removing the cials found 24 tonnes of fins, most from $1.6bn a year, 1.5% of gdp, to the economy. cannabis ban, it has opted to establish a endangered species such as thresher Ecuador’s tuna fleet, the largest in the east- framework to regulate its cultivation and sharks, with a retail value of $1.1m. They ern Pacific, has around 115 large mechan- sale. Its details are almost as controversial came from Ecuador. ised ships. The rest of the fishing industry as the principle of legalisation itself. The Ecuador portrays itself as a victim of il- consists of more than 400 semi-industrial bill, which might still be amended, would legal, unregulated and unreported (iuu) vessels and nodrizas, small boats with no liberalise cautiously. It would ban advertis- fishing by Chinese trawlers near the Gala- machinery that catch a greater variety of ing and smoking in public. Tokers could pagos islands. In fact, its fishing industry is fish. Fishing gets special treatment from possess no more than 28 grams (one just as bad, says Max Bello of Mission Blue, the government. It often issues permits for ounce), as in California. They would be an ngo based in California. Ecuadorean export of shark fins to Peru that do not able to grow up to six plants at home with a vessels fish illegally in protected areas comply with cites standards, says Oceana permit from a new Cannabis Institute. such as Colombia’s Malpelo sanctuary and Peru, an ngo. Allies of the industry hold The draft law creates a framework for Costa Rica’s Cocos island. Since 2018 at important posts at the vice-ministry of exporting the stuff: as a producer of cheap least 136 large Ecuadorean fishing vessels aquaculture and fishing. Some have seats ganja, Mexico could eventually become a have entered the Galapagos islands’ re- in the legislature. big legal supplier to the United States and serve, which covers 133,000 square km Operators of Ecuadorean-flagged tuna Canada. Legal weed would provide the (51,000 square miles), says the director of boats say it is fleets from other countries Mexican government with tax revenue. But the archipelago’s national park. that are responsible for iuu fishing in or tax and regulation cannot be too burden- Consumers in Quito and other inland near Ecuadorean waters. They say their by- some, lest they drive consumers back to the cities buy shark meat thinking it is sea catch is just 2%. Observers, on board under illegal market. bass. Many boats illegally transfer their rules issued by the Inter-American Tropi- Regulations, such as requiring sellers to catch on the high seas to larger vessels, cal Tuna Commission (iattc), a regional be able to trace the product’s origin, will which carry them to other markets. Under organisation, vouch for that claim. Conser- confine the market to enterprises with the Ecuadorean law fishermen can sell endan- vationists do not believe them. Purse sein- money and expertise to obey them. That gered species like sharks or turtles if they ing and longlining, the fleet’s main ways of will give an edge to big Canadian firms, and catch them unintentionally. Some boats fishing, often result in high levels of by- keep out informal sellers, who make up the report half their catch as by-catch. catch. The iattc is a weak organisation, bulk of commerce in Mexico. The proposed aligned with fishing companies, conserva- reform is “totally neoliberal”, says Tania tionists say. “It’s like trusting a wolf to be Ramírez, who helped shape the lawsuits honest about how many sheep it ate,” says that paved the way for legalisation. an adviser to legislators who want to tight- Proponents point to social-justice mea- en regulation. Even if by-catch is as low as sures in the bill. For five years two-fifths of the industry claims, it is enough to massa- cultivation licences will be reserved for cre some species. farmers in municipalities that were subject Still more controversial than purse to weed-eradication schemes. But to get seining and longlining is the use of fish ag- those licences growers may have to install gregating devices (fads). Industrial ships security cameras, barbed wire and the like. release these into the current that passes That would keep out poor farmers, says through the Galapagos islands’ protected Catalina Pérez Correa of cide, a think-tank. area to attract prey, say green groups. Morena’s leaders expect the bill to pass Sometimes they fix goats’ heads on the de- quickly through the Senate, and then the vices to lure sharks, say Galapagans. Crews lower house. A possible obstacle is Mr Ló- track them with gps and surround them pez Obrador, who opposes legalisation for with nets when they leave the protected recreational use. Although he has said he zones, entrapping turtles, sea lions, manta will let the legislature decide, he could end rays and sharks. Ecuadorean ships deploy Mexico’s marijuana dream, for a while, more fads than those of any other country, with a disapproving glance. The obligation according to a study in 2015 by the Pew to legalise would remain, but the deadline Charitable Trusts. might be pushed into next year. Until Con- Nodriza boats are even harder to regu- gress acts, cannabis will sprout outside its late. They are not required to sail with ob- upper chamber, and outside the law. 7 Headed for Hong Kong? servers. They smuggle not only shark fins, 1

50 The Americas The Economist November 21st 2020

2 but also cocaine. Last year Sea Shepherd, a started an advertising campaign to dis- al Chamber of Fisheries, a pressure group. vigilante conservation group, filmed fish- courage Ecuadoreans from eating shark. The pain would be temporary, respond ermen aboard a nodriza beheading a shark, Conservationists say these measures advocates of the expansion. Eventually it a practice that is illegal in Ecuador. The will not work. Ecuador’s coast guard and would lead to an increase in fish stocks and fishermen then played with the head for navy do not have enough money to patrol thus to bigger catches. The Galapagos re- Sea Shepherd’s cameras. its seas effectively. Ecuador must improve serve, even though it is poorly policed, has Ecuador’s government tried to crack its rules and enforcement before the eu rescued species threatened by overfishing. down, especially after the eu’s “yellow- lifts its yellow card, says an eu official. A bigger one would help the threatened yel- card” warning. In April the legislature Conservationists are urging the govern- lowfin tuna population. The critically en- passed a law that increases fines for illegal ment to double the size of the Galapagos re- dangered scalloped hammerhead shark, fishers. Vessels are now prohibited from serve. That would cripple Ecuador’s fishing which mates and lays eggs in the Galapagos selling three endangered species of shark, industry, which competes with China’s reserve, might survive. If Ecuador wants to even if they are by-catch, says Jeff LeBlanc, modern, government-subsidised fleet, continue profiting from its marine riches, a government adviser. The government has says Bruno Leone, president of the Nation- it will have to protect them. 7 Bello The politics of destruction

Peru has overcome its immediate crisis, but faces a bumpy ride ime was when investors believed that With his gambit collapsing, Mr Merino remains under house arrest. His three TPeru’s fast-growing economy was resigned and promptly vanished. His predecessors are all accused: one is immune to its politics. That contention, putsch highlighted the way that political awaiting extradition from the United always questionable, was tested almost parties in Peru have become vehicles for States, one killed himself and a third to destruction this month. With the private interests and for evading justice. spent time in jail. Corruption is indeed country suffering a power vacuum and Some legislators pay for places on party systemic in Peru, and Peruvians know it. on the brink of descending into violent lists and expect a return. Although 68 of But the presumption of innocence and a chaos, on November 16th a shamefaced Congress’s 130 members face criminal sense of proportion have been lost. No Congress chose Francisco Sagasti, a charges of various kinds, the legislature leader has been tried. Ms Fujimori spent 76-year-old centrist academic, as the protects its own from prosecution. 16 months in jail for alleged campaign- country’s caretaker president. He is the This month’s episode marked the cli- finance violations. Prosecutors are seek- fourth man to hold the top job since the max of years of conflict that runs along ing to drive her party out of existence. Mr last presidential election in 2016. several axes. One dates back to Alberto Vizcarra was popular, despite a mediocre In Mr Sagasti Peru has come up with a Fujimori, who ruled as an autocrat from record and woeful management of the winning ticket in its political lottery. His 1990 to 2000. He defeated the Shining Path pandemic, because he championed the are the safest hands imaginable, but his terrorist movement and reformed the cause of anti-corruption. But the pretext task is not simple. It is to tackle the pan- economy, but his regime was corrupt. His for his summary ousting was evidence demic and the economic slump, both daughter, Keiko, narrowly failed to win the that he had been corrupt when he was a particularly severe in Peru, while steer- election in 2016 because anti-fujimoristas provincial governor (an allegation that ing the country through a general elec- of all stripes united against her. Her party he denies). tion due in April. His anointing followed used its majority in Congress to thwart the The third faultline is the battle be- the failure of a power grab by elements in governing programme of the winner, tween the executive and Congress, which Congress, who on November 9th voted Pedro Pablo Kuczynski. Mr Vizcarra exacerbated. He tried to push by 105 to 19 to oust Martín Vizcarra, the Another source of conflict involves through political reforms. One of the few president since 2018, on grounds of corruption and its weaponisation. Mr that was approved unwisely barred legis- “moral unfitness”. Kuczynski resigned in 2018 to avoid im- lators from consecutive terms. Last year Power passed to Manuel Merino, the peachment over conflicts of interest. He he dissolved Congress in a battle over speaker of Congress. Rightly or wrongly, appointments to the Constitutional many Peruvians saw in this a plot to Tribunal. The new Congress, elected in postpone the election and to advance January, is even less biddable. Since its murky private interests. Mr Merino members will serve for only 19 months named as prime minister Ántero Flores- and cannot stand next year, they have no Aráoz, a 78-year-old of the hard right who incentive to behave decently. won just 0.4% of the vote in the 2016 More useful reforms are coming into presidential election. His law practice effect for April’s election, including a cull represents substandard private universi- of minor parties and a bar on candidates ties that are trying to overturn a universi- charged with serious crimes. Several ty reform. His backers wanted to raid the presidential hopefuls are populists, treasury through populist giveaways. some of them dangerous ones. Those This takeover prompted the biggest who are not will find it hard to assemble street protests in Peru for 20 years, main- a reformist coalition in the next legisla- ly by young people and in defiance of a ture. One thing is clear: the crowds of pandemic-related state of emergency. millennials out on the streets want a They met a brutal police response. Two better democracy. Getting it will be a lot protesters were killed and scores injured. harder than chasing out Mr Merino. Middle East & Africa The Economist November 21st 2020 51

Ethiopia’s civil war to have tried to widen the conflict, perhaps in a gamble that this will increase interna- The march to Mekelle tional pressure on the federal government to agree to peace talks, and that it will give the tplf cards to play once the negotia- tions start. On November 14th it fired rock- ets over the border at Asmara, the capital of neighbouring Eritrea. ADDIS ABABA The attack threatens to drag Eritrea into Two weeks in, the conflict is spilling across borders as atrocities mount a conflict in Ethiopia barely two years after saw the dust clouds covering the sky,” gional capital of Mekelle. It also appears to the two countries made peace. “It was a leg- “Isays a young university lecturer, de- have captured a town farther north, as well itimate target,” says Debretsion Gebre- scribing the bombing by a government as key territory in western Tigray. This sug- michael, Tigray’s president. He claims warplane of a resort on the outskirts of Ala- gests the Ethiopian army has made some Ethiopian forces were using Asmara air- mata, a small town in Ethiopia’s northern important gains since it was ordered into port—which is probably true—and says Ti- region of Tigray. In normal times Alamata action by Ethiopia’s prime minister, Abiy grayan forces are fending off 16 Eritrean di- is known for its beautiful green moun- Ahmed, to put down what he claimed was visions on several fronts. tains. Now it is a battleground in Ethiopia’s an armed revolt by the tplf. On November The Eritrean government denies any in- civil war, which broke out on November 17th Abiy said the battle was entering its “fi- volvement in Ethiopia’s conflict. But few 4th between the federal government and nal phase” and that his troops were making doubt that its president, Issaias Afwerki, Tigray’s rulers, the Tigrayan People’s Liber- brisk progress towards Mekelle. would like to see the Tigrayans routed. Be- ation Front (tplf). But it is far too soon to suggest that tween 1998 and 2000 the newly indepen- As he fled towards Afar, a neighbouring these early victories herald a short or easily dent Eritrea fought a bitter border war state (see map on next page), the lecturer contained war. On the contrary, as the tplf against Ethiopia, then dominated by the saw lorries carrying federal soldiers driv- has faced setbacks on its borders, it appears tplf, that cost perhaps 100,000 lives. De- ing the other way. By the time the convoy bretsion (as well as some eyewitnesses) reached Alamata, the town was almost de- claims that Eritrean soldiers in recent days Also in this section serted. Most Tigrayan civilians had already have been involved in fighting near the left and Tigrayan armed forces were re- 52 Cattle-rustling in South Africa border. At a minimum, retreating Ethiopi- treating into the mountains. an troops have been allowed to regroup on 53 Shackling the mentally ill On November 16th the federal govern- Eritrean soil before returning to battle. ment announced that its forces had cap- 53 Iranian plotting in Africa The tplf has also struck inside Ethio- tured Alamata, which is on Tigray’s south- pia, firing rockets at two airports in Am- 54 A doctor shortage in the Arab world eastern border, about 120km from the re- hara, the second-most-populous of Ethio-1 52 Middle East & Africa The Economist November 21st 2020

2 pia’s ten ethnically based regional states. In South Africa 218,000 farm animals— Thousands of Amhara militiamen, mostly Red Sea cows, sheep or goats—were taken in the 12 SUDAN ERITREA farmers with rusty Kalashnikovs, have months to March, up from 180,000 five marched towards Tigray. They are fighting Asmara years earlier. The total loss was worth about alongside the federal army to push Tigray- Mai Kadra Tigray 900m rand ($60m) in each of the past two Mekelle an forces out of disputed towns near the years, around twice as much as the annual Alamata Gulf Amhara DJIBOUTI state border. The involvement of these re- Afar of Aden black market value of poached rhino horn. gional militias in a country as divided as Losses this year will probably be even high- Ethiopia is a recipe for ethnic bloodletting. er, as the economic effects of the pandemic Possibly hundreds of civilians, many of Addis make it harder to earn a lawful living. them Amharas, were hacked to death with Ababa A few decades ago pilferage was “for the machetes and knives in Mai Kadra, accord- pot”. Today 87% of cases involve criminal SOUTH ETHIOPIA ing to Amnesty International. Some wit- SUDAN syndicates, says Willie Clack of the Univer- tplf nesses said that forces loyal to the SOMALIA sity of South Africa. Gangs act differently in were responsible for the killings, though different places. In parts of the Free State UGANDA KENYA 300 km Amnesty was unable to confirm this. Ti- and neighbouring KwaZulu Natal thieves grayan refugees fleeing into Sudan told often load cows onto lorries, then cross Reuters that they had been attacked by peo- and the un to condemn the Ethiopian of- into Lesotho. Inside the mountain king- ple from Amhara. As many as 36,000 peo- fensive and says he wants talks. But he also dom, which is encircled by South Africa, ple have sought refuge in Sudan. insists on Abiy’s head, saying: “We will not syndicates rebrand cattle before taking Fears of an ethnic conflagration have negotiate with this criminal tyrant.” Abiy is them back across the border, for sale at auc- been heightened by the harassment of Ti- no less intransigent and says he will not tion or to abattoirs. It is like laundering grayans in the national capital, Addis Aba- talk until the tplf has been defeated and cars, but with cows instead of Porsches. ba, and elsewhere. Many Tigrayans in the disarmed. And so the fighting continues. 7 Livestock theft can be seen through a ra- security services or civil service have been cial lens. The victims of the largest heists in told not to come in to work. Possibly hun- the Free State are white Afrikaners who run dreds have been detained. Some 200-300 Cattle rustling in South Africa big farms. Perhaps one-fifth of farm mur- Tigrayan soldiers serving in Ethiopia’s ders in the province—allegedly including peacekeeping force in Somalia have been Where’s the beef? the high-profile killing of Brendin Horner, disarmed. People boarding international a 21-year-old farm manager‚ on October flights leaving Addis Ababa are being asked 1st—are related to syndicates. Yet the vic- to show local ids, which typically reveal tims in most cases of theft are black small- ethnicity. Tigrayans are turned back and holders. As they own fewer animals, single told they may not leave. BETHLEHEM incidents can ruin entire livelihoods. Stealing animals is becoming more Both sides to the conflict may have Whites and blacks are both victims of a common—and more sophisticated hoped it would be over quickly. After the sclerotic criminal-justice system. There tplf ordered its troops to fire the first ivestock theft has been around are dedicated Stock Theft Units within the shots, it described the war as an act of “an- “Lsince Biblical times,” says Herkie Vil- police but they are siloed and poorly fund- ticipatory self-defence”. Abiy’s govern- joen, a farmer on the outskirts of Bethle- ed. A lack of arrests and prosecutions ment insists it is involved in a policing op- hem, a suitably named town in the Free means there is “no deterrence”, argues Roy eration aimed at “enforcing the rule of law”. State. But in recent years it has reached un- Jankielsohn, the leader of the opposition Although Ethiopian forces say they are godly proportions. Standing next to a huge Democratic Alliance in the Free State. After marching on Mekelle, few think they will map of the province he points to small red the murder of Mr Horner, Bheki Cele, the easily subdue Tigray, whose fighters may circles with black dots that represent sto- national police minister, pledged that he wage a guerrilla war from the hills. len animals. In some places it looks as if the would investigate livestock syndicates. Bad blood and a lack of trust between farms are covered in poppy fields. “I’ve seen the stock-theft figures—it’s hell,” the two sides will hamper efforts to end the he said, adding that if police were found fighting through talks. The tplf, which taking bribes they would have to swap their called the shots in the federal government blue uniforms for orange jumpsuits. for almost 30 years, has yet to come to In the meantime farmers are protecting terms with its dethroning in 2018 after themselves. For as is often the case in massive protests brought Abiy to power. South Africa, people who can afford to do After his appointment, Abiy sidelined the so are finding private solutions to public- tplf and began removing Tigrayans from sector problems. Mr Viljoen’s “command state institutions, in particular the army centre”, which is funded by 450 local farm- and intelligence agency. ers, uses 65,000 cctv cameras to look for Tensions worsened when the central rustlers. Farmers are also deploying drones government postponed elections earlier and gps-tagging to find purloined stock. this year, citing covid-19. The tplf accused Yet such measures can only go so far. Abiy of flouting the constitution in order to After visiting the command centre your stay in power and went ahead with its own correspondent heads to the Caledon river, regional election in September. The federal which marks the border with Lesotho, government deemed it illegal and slashed passing two empty chairs where soldiers federal funding to the region. The tplf are meant to keep watch. Donkeys and called this a “declaration of war”. cows quench their thirst while children Two weeks into the actual war, the tplf joyfully splash back and forth from one seems a little less keen on fighting it. De- country to another. “You see!” a young boy bretsion has called on the African Union Cows without borders cries out. “There’s no border!” 7 The Economist November 21st 2020 Middle East & Africa 53

Mental health in Kenya compared with 50 in Europe. Kenya has sessed by jinns (supernatural creatures). 0.19 psychiatrists per 100,000 people and It is hard to shake off such deep-rooted Shackling body one psychiatric hospital. At the local level, beliefs. A health official who worked in “mental health is a mess and mostly forgot- Mathari Hospital, the country’s sole psy- and mind ten,” says Iregi Mwenja of the Psychiatric chiatric one, tells the story of her mentally Disability Organisation, a Kenyan ngo. ill brother. The last time he had a psychotic “No family wants to shackle their child,” episode he chopped off three of his wife’s says Kriti Sharma of hrw. But good care is fingers with a machete. Yet the doctor and Legions of people with mental-health expensive and patients are expected to re- her sister could not convince their mother problems are kept in chains cover in their community. Often people are that he needed medical care. “Even as a unday worshippers at the Holy Ghost ignorant of mental health issues, or fearful mental-health specialist, I still don’t have SCoptic Church of Africa, where services that the afflicted person may harm others. any influence,” she laments. often last for hours, are used to the racket But people seek out the services of Fa- There is some cause for hope. Kenya has coming from the pews at the back. But it is ther Pesa for other reasons, too. Mental ill- signed up to a World Health Organisation not the sound of bells ringing or ecstatic ness in Kenya, as in many parts of Africa, is initiative that promotes better care for the chanting. Rather, the clanking comes from often thought to be caused by evil spirits. mentally ill. Politicians are striving to chains that shackle Father John Pesa’s “pa- Traditional healers are called in before amend outdated laws, and the health min- tients”. In Kisumu, Kenya’s third-biggest health professionals. Father Pesa’s church istry is wrangling for more power to moni- city, Father Pesa has built a reputation for purports to flush out demons. It cites a mir- tor facilities where patients are shackled. A “spiritually healing” the mentally ill. acle in the New Testament when Jesus recent High Court ruling found that Rose’s Others have called it “psychological tor- drove demons out of a madman (who was son had been tortured and ordered the ture”. Rose Ojwang’s husband sent her 17- shackled) and sent them into pigs. In Ken- church to pay him 500,000 Kenyan shil- year-old son to Father Pesa after the boy be- ya’s Somali region, which is mostly Mus- lings ($4,590) in damages. But Father Pesa gan hallucinating and behaving strangely. lim, many believe the mentally ill are pos- continues to host patients. 7 Like other patients, he was shackled. He grew thin, says Rose, because the church does not feel obliged to feed its wards un- Iran in Africa less paid to do so. For two years the boy went without proper medical treatment. Looking for the next target Rose’s grim story echoes the reporting of Human Rights Watch (hrw), an interna- tional watchdog, which found that the church had kept no fewer than 60 people in chains. Kenyan doctors say the practice is common. Their country is not alone. hrw’s The latest chatter about Iranian plotting across the continent report, published in October, found evi- dence of shackling in 60 countries, from ’m not in the business of making jail. More amateurish still were the at- Brazil to Indonesia. It reckoned that hun- “Ithreats,” said Javad Zarif, Iran’s foreign tempts to free them. In 2016 two Iranians dreds of thousands of people who suffer minister, immediately before making one. were sent to Nairobi to prepare a legal ap- from mental illness have at some point When asked in September whether Iran peal. But they were caught planning an at- been chained or locked up. In countries was still considering retaliating for Ameri- tack on Israel’s embassy and expelled. Last where such illnesses are poorly under- ca’s assassination in January of General year Kenyan police testified that Iran’s am- stood, many sufferers never see doctors. Qassem Suleimani, Iran’s most prominent bassador had been swindled by two men Kenya is anyway short of psychiatrists. military commander, Mr Zarif was clear: who told him they could get the convicts In Africa, on average, there is less than one “The books are not closed.” released. The ambassador denies this. mental-health worker per 100,000 people, Ever since President Donald Trump or- The original bit of bungling in Kenya is dered the drone strike that killed Sulei- thought to have been the work of the Quds mani, Western spies have been alert to Force, the foreign wing of Iran’s Revolu- clues as to where and how Iran might re- tionary Guard Corps. But the Quds Force taliate. Some think the blow may fall in Af- may be refining its playbook in Africa and rica, where Iran has spent years building turning to locals for help. up covert networks and where it faces little A report to the un Security Council from scrutiny from local governments. December accused Ismael Djidah, who was Iran has a history of plotting on the con- arrested in Chad in 2019, of having helped tinent—and failing. In 2013 police in Nige- the Quds Force recruit and train terrorist ria arrested three Lebanese men and un- cells in the Central African Republic (car), covered an arms dump in Kano, the biggest Chad and Sudan in order to attack Western, city in the north. All three reportedly ad- Saudi and Israeli targets. Among Mr Dji- mitted to being members of Hizbullah, the dah’s contacts, according to the report, was Lebanese militia-cum-political-party that Michel Djotodia, a rebel leader who was acts as an Iranian proxy. They said they briefly president of the car, from 2013 to were planning to attack the Israeli embassy 2014. The report accuses Mr Djotodia of and other Western targets. meeting Quds Force officials in Iran in 2016 A year earlier the police in Kenya arrest- and agreeing to set up a terrorist network in ed two Iranians who had hidden a stash of exchange for Iran helping him reclaim explosives at a golf course in Mombasa, ac- power. Mr Djotodia’s lawyer denies this. cusing them of planning to attack Western A Western intelligence source says that How not to treat mental illness targets. They were sentenced to 15 years in police in Niger also recently arrested a man 1 54 Middle East & Africa The Economist November 21st 2020

2 who admitted (under interrogation) to working in a public hospital, may take working for the Quds Force’s Unit 400, Not what the doctor ordered home the equivalent of $15,000 a year. She which specialises in covert operations. The Medical staff per 10,000 people could earn the same sum each month prac- suspect said he was recruited while on a 2018 or latest available tising in a rich Gulf country. pilgrimage to Iran and that he had travelled Doctors Nurses/midwives Working conditions are better abroad, to the country several times for weapons too. State hospitals in many Arab countries training. He said he helped build networks, 100806040200 are notoriously crowded and short of gather intelligence or bribe politicians in Kuwait equipment. Iraq has just 13 hospital beds the car, Chad, Eritrea, Gambia, Sudan and UAE per 10,000 people, compared with 22 in South Sudan. Iran also told him to seek Tunisia Saudi Arabia and 28 in Turkey, its neigh- mining licences in the car and Niger to Lebanon bours to the south and north. The Iraqi help offset the impact of American sanc- Bahrain health-care system was shattered by de- tions on Iran and to fund covert operations. Algeria cades of war and sanctions, and successive Other current and former counter-ter- Iraq governments have invested little in re- rorism officials from the West confirm this Egypt building it. In 2017 Iraq spent just $210 per general pattern of activity. “Iran is clearly Minimum WHO person on health care, estimates the World Morocco recommendation trying to spread its wings as far as possi- Bank (the regional average was $459). Source: WHO ble,” says one. “It makes sense for them to Egypt’s constitution, approved in 2014 use locals who can work under the radar.” after a coup, committed the state to spend- Are those locals working on a plot to retali- fall is particularly stark (see chart). Egypt ing 3% of annual gdp on health care. That ate for Suleimani? “They are looking to had fewer than five doctors per 10,000 peo- provision has gone ignored: spending in generate headlines,” says another intelli- ple in 2018, down from more than 11in 2014. 2018 was just 1.4% of gdp. The constitution gence source. “They have chosen Africa be- The number of doctors in government hos- also promises free speech, which has not cause it’s easy to operate there.” 7 pitals, which serve the bulk of the popula- stopped police from arresting doctors who tion, fell by one-third during that period. complain about the government’s poor This is not for lack of talent. Arab uni- handling of covid-19; the disease has killed Doctors in the Middle East versities produce plenty of doctors. In an estimated 200 medical staff. Under- Egypt about 7,000 of them graduate each funded hospitals cannot keep pace with a Out of practice year—15% more than in America, adjusted fast-growing population. In the three years for population. Careers in medicine offer after the constitution was approved, the prestige and stability. Competition for uni- number of hospital beds per 10,000 people versity places is fierce. (Nursing is a less de- fell by 8%, from 15.6 to 14.3. sirable career, and many Arab states rely on In Lebanon an worsening economic cri- BEIRUT nurses hired from abroad, a problem that is sis means even basic medical supplies are The Arab world trains a lot of doctors, not unique to the Middle East.) scarce. Chemists are running out of every- but not enough of them want to stay Once they graduate, though, many doc- thing from blood-pressure pills to para- or those with money, Lebanon’s tors are eager to leave. Money is the most cetamol. An estimated 400 Lebanese doc- Fhealth-care system was once the envy of obvious reason. A newly minted doctor in tors, almost 3% of the total workforce, have the Middle East. Private clinics and hospi- Egypt can expect to earn just 2,000-2,500 left in the past year. The National Council tals were staffed by doctors trained at top pounds ($128-160) a month. For a typical of the Order of Physicians of Tunisia says places in the West. Wealthy patients from family, that is not even a subsistence wage: 40% of its members practise outside their across the Arab world jetted in for treat- the average Egyptian household spends home country. In Egypt the figure is closer ment. Today, though, it is the doctors get- more than 4,000 pounds a month on living to 50%. The exodus has given rich coun- ting on planes. One surgeon says his salary, expenses, a figure that has soared since the tries a glut of doctors to hire. But it has left paid in local currency, is worth about $200 pound was devalued in 2016. In Tunisia a much of the Arab world short of them—just a month—less than a dollar an hour. An- specialist with decades of experience, when they are needed most. 7 other says his hospital was wrecked in the explosion on August 4th at Beirut’s port. Both are applying for jobs abroad, joining a long exodus of Arab doctors. The Middle East, like much of the north- ern hemisphere, is hunkering down as co- vid-19 cases climb. In Lebanon, where more than 80% of intensive-care beds are occu- pied, the government ordered most busi- nesses to shut on November 14th. Tunisia has imposed a curfew and halted travel be- tween regions. Other countries are consid- ering similar measures. But the closures offer scant relief for doctors forced to fight the virus short-handed. Though there is no universal standard for a well-staffed health-care system, the World Health Organisation suggests a minimum threshold of 45 skilled person- nel—doctors, nurses and midwives—per 10,000 people. At least nine Arab states fall below that benchmark. In some the short- Aching to leave? Asia The Economist November 21st 2020 55

Afghanistan In September negotiations started in Doha, the capital of Qatar, between the Tali- Guns and poses ban’s political leadership, envoys from the Afghan government and leaders of civil society. The talks have been years in the making. They followed the conclusion in February of an agreement between the Un- ited States and the Taliban, under which HERAT AND KABUL America was to withdraw its forces from As American forces leave, the Taliban seem keener on fighting than talking Afghanistan provided the Taliban cut all o reach the front line in Afghanistan’s vance. They retreated and then ambushed ties with international terrorists and start- Tcivil war, you do not need to go far from the fighters. On his phone, Mr Khanjar ed a sincere dialogue with the government the capital, Kabul. At a police outpost in shows your correspondent a picture of the on a ceasefire and a political settlement. Wardak province, about 20km outside the unexploded bomb and the phone the Tali- The Afghan government did its part by re- city on the main highway leading south, ban would have used to detonate it. But leasing 5,000 Taliban prisoners. the Taliban’s encroachment is evident. The such victories are rare. The local Taliban The sight of bearded, turbaned insur- outpost is little more than a ring of con- live in the villages nearby, which they run gents at a negotiating table sparked hope crete blast walls perched on a hill overlook- as fiefs, unmolested by the troops. Mr that 40 years of conflict might be coming to ing the road. Around a dozen men, mostly Khanjar complains that the locals protect an end. But progress has been slow. The dressed not in fatigues but in shalwar ka- them, but he understands why. “There is so two sides are still arguing over the agenda meez and trainers, stand around. Some much unemployment,” he says. “The gov- and format of the talks. Big questions, such hold guns; most do not. A few look like ernment here provides no opportunities.” as what form of government Afghanistan teenagers. The 25-year-old in charge, Ome- should have, have not yet been broached. dullah Khanjar, who commands six out- Meanwhile, the number of American posts along the highway, explains that, by Also in this section soldiers has fallen by more than half over day, things are mostly quiet. But at night, the past year, from over 9,000 to around 56 Digitising health care in Japan he says, the local Taliban shoot at the post 4,500 now. Although the agreement fore- from a nearby ridge. Unlike the cops, they 57 Pakistan’s opposition unites saw a complete withdrawal only by June of have night-vision goggles and laser sights. next year, and only if the Taliban kept its 58 Islamophobia in India Not everything goes the insurgents’ side of the bargain, President Donald way, says Mr Khanjar. Recently they tried to 58 Abortion in South Korea Trump is in a hurry. In October he said he blow up another outpost along the road, wanted all American troops “home by 60 Banyan: The “Quad” comes of age but the police got wind of the plan in ad- Christmas”. This week the Pentagon an-1 56 Asia The Economist November 21st 2020

2 nounced plans to cut the American force to British think-tank, especially if local resi- their shadow government and growing as- 2,500 by the end of Mr Trump’s term, in dents are keen on it. In some areas the Tali- sertiveness, the Taliban act as, and would mid-January, over the objections of nato. ban insist that teachers, who are paid by like to be seen as, a government in waiting. Air strikes, which in 2019 reached the high- the government, actually turn up to work. In Doha they style themselves the “Islamic est level in the two decades of the American Some ngos operate in Taliban territory Emirate of Afghanistan”, as they did when intervention, have since been limited. quite happily, working with “ngo co-ordi- in power in the 1990s. Yet instead of stepping back to foster di- nators” appointed by the local commander. In urban Afghanistan, their return alogue, the Taliban have seized the oppor- “It is the government we are afraid of,” says would be fiercely unpopular. Najia Sadat, a tunity to strengthen their position mili- one employee of an aid agency. “With the doctor who works at a government clinic in tarily. On October 27th the United Nations Taliban, we can co-ordinate.” Herat, a thriving city near the Iranian bor- announced that civilian casualties have This ambiguous arrangement means der, says she is deeply concerned that the not fallen since the start of talks. In some that boys, at least, can still get an education Taliban might return. She remembers their parts of the country violence has escalated. and the sick can receive health care in areas rule: “We were not allowed to go out of the In recent weeks the Taliban have launched occupied by the Taliban. But it also helps to home.” Their fall made her training and ca- attacks to try to take control of districts legitimise the insurgents, who take credit reer possible. The clinic where she works is such as Panjwai, near the city of Kandahar for providing services paid for by foreign supported by foreign donors, including (see map). On October 12th insurgents at- donors. On October 14th Britain’s Foreign usaid and International Rescue, a charity. tacked Lashkar Gah, the capital of Helmand Office had to remind ngos not to pay taxes If the Taliban came back, all that could dis- province, the first big assault on a city in to the Taliban. appear. It seems increasingly likely. 7 over a year. The Afghan army retreated en What might happen next? Afghan gov- masse, and the Taliban were eventually ernment officials say that the Taliban think beaten back only by American air strikes— they have defeated America and see the Health care in Japan the first in months. Several hundred Af- talks in Doha as the negotiation of the gov- ghan soldiers have died just in the past ernment’s surrender. Yet outright military Technological month (and probably a similar number of victory is unlikely. The Afghan army is de- Taliban). The Taliban have also been assas- moralised but not yet defeated. It has a new stunting sinating more government officials. air force of its own. Trying to conquer big cities would be risky for the Taliban. In- Death and taxes deed, it could well bring America back into TOKYO The pandemic is at last prompting The sense of siege comes from more than the war. The attack on Lashkar Gah, many doctors to go digital the violence. The Taliban first took power in Kabul suspect, was not approved by the in the 1990s, when Kandahari merchants Taliban’s political leadership in Doha. s covid-19 spread through Japan this paid them to provide security on the roads, The longer talks go on, however, the Aspring, a doctor despaired. What ap- for which they charged less than the war- weaker the Afghan government gets. Attri- palled him was not the pace of infection, or lords of the day. They seem to be applying tion—from deaths, injuries and deser- a lack of protective equipment, but the ar- that method again. At the edge of Kabul, the tion—is sapping the army. In August Ashraf chaic systems used to tabulate test results boss of a company that imports cooking Ghani, the president, revealed that in the and so track the course of the epidemic. gas says the security of his tankers has ac- preceding six months over 12,000 soldiers, “Even with corona, we’re handwriting and tually improved over the past year, because police and civilians had been killed by the faxing,” he groaned on Twitter. the Taliban control more roads. They Taliban. American estimates published Japan has excellent health care. Life ex- charge 35,000 afghanis ($455) for every lor- last month showed that Afghan casualties pectancy at birth is 85 years, the highest in ry travelling from Herat, on the Iranian bor- increased by 5% in the third quarter of the the world. But doctors have been slow to der, to Kabul. “In the past there were no Ta- year compared with a year earlier. The siege embrace the efficiencies of information liban taxes,” he says. “But they used to is accentuating political divisions within technology, despite Japan’s reputation for shoot us with rpgs [rocket-propelled gre- the Afghan state, says Timor Sharan, who technical wizardry. The oecd, a club most- nades]. So we are happy with the taxes.” served as a deputy minister until last year. ly of rich countries, ranks it last among its In Taliban territory there is a shadow That heightens the likelihood that the members for its management and use of government. Per Muhammad, a 38-year- talks in Doha will produce a deal that fa- data in health care. A commission of ex- old farmer who lives in Zabul province, in vours the Taliban, especially given Mr perts convened by the Asia-Pacific Initia- the south-east, says that the 134 families in Trump’s precipitous withdrawal. With tive, a think-tank in Tokyo, declared Japan’s his village each pay a flat tax of 2,500 Paki- response to covid-19 a “digital defeat”. stani rupees ($15) to the Taliban annually, But the coronavirus is also providing a UZBEKISTAN TAJIKISTAN as well as zakat, which is proportional to sharp spur for change. The new prime min- wealth. In exchange, they get access to the ister, Suga Yoshihide, has made digitising Taliban’s brutal but efficient justice. Local Japan the centrepiece of his economic Taliban leaders solve most disputes. Bigger agenda. The potential benefits are espe- ones—over land, say—go to the district cially big in health care, because costs are chief. He does not have an office, says Mr Herat Kabul rising as the population ages. Spending on Wardak Muhammad, but can be reached easily by health accounted for 11% gdp last year, up phone. “He is always with five mullahs and AFGHANISTAN from 7% in 2000. some armed Taliban.” They hear both sides’ Lashkar Telemedicine could help cut costs. But claims and make a decision immediately. Gah Zabul the Japan Medical Association (jma), a 250 km “Nobody can reject a ruling,” he says, be- IRAN Kandahar powerful lobby, has long opposed online cause it is enforced by armed men. Panjwai consultations, citing concerns about safety Helmand Taliban-controlled In Taliban-held territory, government- districts and privacy. Resistance is in part genera- funded schools and clinics often continue Contested districts tional. Japan’s 327,000 doctors are ageing PAKISTAN to operate, says Ashley Jackson, a research- Source: Long War Journal alongside their patients: nearly half are er at the Overseas Development Institute, a (October 2020) over 50. In small clinics, the average age is 1 The Economist November 21st 2020 Asia 57

2 60. Toyoda Goichiro of Medley, a telemedi- cine firm, says his colleagues often have to help new clients with digital basics, such as choosing computers and setting up Wi-Fi networks. But there is also an economic disincentive. As a government official puts it, “There are people in the jma who are afraid of competition from telemedicine.” In 2015 the government allowed tele- medicine to treat a few conditions, albeit for less compensation and with more pa- perwork. Predictably, it did not take off: less than 1% of all medical institutions of- fered online consultations in 2018. But many restrictions on telemedicine were suspended in April because of the pandem- ic, sending patients and doctors flocking to their screens. The situation “changed radi- cally”, says Hara Seigo, the boss of micin, another telemedicine firm, which saw monthly registrations jump ten-fold. Gov- ernment surveys show the share of institu- Politics in Pakistan tions using telemedicine has risen to near- ly 15% this year. Mr Suga hopes to make the A mountain to climb changes permanent. Mr Toyoda, who gave up a career in brain surgery to work in digital health care, hopes that wider adoption of telemedicine will also promote the use of electronic medical records. Japan’s medical system is ISLAMABAD The opposition takes on not just the government, but the army overwhelmingly paper-based, laments Tsuchiya Ryosuke, a former head of the Na- lections amid the craggy splendour of saying they were breaking a rule against tional Cancer Centre Hospital. (Mr Tsu- EGilgit-Baltistan are usually of interest electioneering by senior officials. chiya uses a smartphone, but keeps “a fax only to its residents—if them. The region at The pml-n and the ppp are the main- machine ready just in case”.) Only 42% of the northern tip of Pakistan is home to five stays of the new opposition alliance, the clinics have digitised their data on pa- of the 14 mountains in the world that ex- Pakistan Democratic Movement (pdm). Its tients. Big hospitals do better: 85% keep at ceed 8,000 metres, but contains only 1% of goals include curbing the army’s meddling least some digital records. But information Pakistan’s population. The pragmatic lo- in politics and sending Mr Khan packing. tends to sit on proprietary systems that are cals tend to vote for the party that runs the The two ambitions are related in the eyes of often incompatible with each other. national government. Moreover, the local the pdm, since it accuses the army of help- Linking and analysing those data could assembly has limited powers, since the re- ing to rig national elections in Mr Khan’s help to reduce costs. Duplicate procedures gion is not a province, but merely a territo- favour in 2018. would be easier to avoid. The effectiveness ry, being part of Kashmir, which India and Mr Sharif, who is in exile in London, has of treatments could be measured. Having a Pakistan both claim and which they divid- been giving incendiary speeches, accusing clearer picture of patients’ history is also ed by war in 1947. the army of operating as a “state above the essential if Japan is to shift from its fee-for- It was odd, therefore, to see Pakistan’s state”. Although this is true, Pakistani poli- service system, whereby doctors get paid political elite campaigning furiously in ticians tend not to say it, for fear that the more for ordering more tests, to a system in Gilgit-Baltistan ahead of elections to the army will arrange their downfall. Within which their pay is based on outcomes, as assembly on November 15th. A new opposi- Pakistan the pdm has held a series of rallies the health ministry wants. “To fix pro- tion alliance was hoping that the vote to demonstrate its support. blems, you need to have records,” says Shi- would prove its mettle. The prime minis- Widespread public anger at the rising buya Kenji of King’s College London. “It’s ter, Imran Khan, was eager to show that his cost of such staples as flour, sugar and to- not about just abolishing stamps or faxes, Pakistan Tehreek-e-Insaf party (pti) re- matoes has given the pdm ammunition. At it’s about integrating data sources.” tained public support. a rally in Gujranwala in the province of For Koizumi Keigo, a doctor who serves To curry favour with the locals, Mr Khan Punjab last month, it was this that seemed two remote islands in Mie prefecture, the announced at a campaign rally in the town to exercise participants most, rather than expansion of telemedicine has been a huge of Gilgit on November 1st that his govern- the army’s assertiveness. “We are here to boon. Previously, when he was visiting one ment would confer provincial status on the send Imran Khan home!” shouted one of of the islands, patients on the other were region. Maryam Nawaz, daughter of Mr them, Muhammad Rafique, above the din left without a supervising physician. This Khan’s predecessor, Nawaz Sharif, spent a of the protest. “It’s the price rises. Everyone year he began keeping tabs over video chat. week in the region trying to drum up sup- is fed up.” Nurses hold up an iPad at patients’ bed- port for his party, the Pakistan Muslim The vigour of these events appears to sides, while Bluetooth devices monitor League (Nawaz) (pml-n). While there, she have rattled Mr Khan and the army. After a blood pressure. That is enough to give him met her fellow dynast and leader of the gathering in Karachi, Ms Nawaz’s husband a sense of how his charges are doing. They Pakistan Peoples Party (ppp), Bilawal was arrested at the insistence of military are pleased with the extra attention, too. Bhutto-Zardari. So fierce was the scrum of officials. The local police chief was alleged- Now, he says, “even the grandmas” would national grandees, in fact, that a local court ly kidnapped by soldiers to force him to like to see more doctors go online. 7 ordered many of them out of the region, sign the warrant. The brazen nature of the 1 58 Asia The Economist November 21st 2020

Abortion in South Korea Islamophobia in India Can you foil the love tonight? Pleasing no one

DELHI Hindu nationalists stir up groundless fears about Muslims he organiser, an English-language admitted that there were no known cases SEOUL A proposed liberalisation riles both weekly that is a mouthpiece for the of “love jihad” in the state of Kerala, at T sides of the debate Rashtriya Swayamsevak Sangh, the least. Journalists with ndtv, a news century-old flagship of India’s swelling channel, found that even in Uttar Pra- he worst thing about it was the shame. armada of Hindu nationalist groups, is in desh, a police team created in August to T“I worried about how other people no doubt about the dangers of “love crack down on “love jihad” had already would judge me for doing something ille- jihad”. The luring of good Hindu girls dropped seven of the 14 cases it had gal, what my parents and my friends would into marriage and conversion is only the opened, for lack of evidence. Yet Tanishq, say if they found out,” says Kim Min- first phase of a broader Muslim plot, a fancy jewellery brand owned by the kyoung, a 24-year-old student from Seoul asserts a recent article. The second stage Tata group, one of India’s biggest firms, who decided to terminate a pregnancy last is rape jihad, “a more unequivocal oper- recently felt obliged to withdraw a televi- year. The second-worst thing was paying: ation in which non-Muslim girls or sion commercial portraying a happy how to find $1,000 without prompting women are raped and subsequently interfaith marriage. awkward questions. killed in many cases”. The third and final Indians rarely marry outside their Both these problems should soon be stage? Mass rape and ethnic cleansing. caste, let alone their religion. The law slightly less severe for women in South Ko- Such ravings are not confined to the that allows interfaith marriages is rea. If a bill under consideration by the Na- fringes of politics. Yogi Adityanath, a hedged with clauses that permit parents, tional Assembly becomes law, a woman Hindu priest whose day job is running bureaucrats and other outsiders to inter- will be able to obtain an abortion up to 14 Uttar Pradesh, India’s most populous fere. Courts have often seemed keener to weeks into a pregnancy with ease. From 15 state, proclaimed in October that those uphold patriarchal ideas than to apply to 24 weeks in, she will still be able to do so who practise “love jihad” should mend secular laws or give women freedom to provided she attends a counselling session their ways or plan their funerals. So far choose. For India’s 200m Muslims, it is and waits 24 hours before making a final five Indian states, all ruled by the Bhara- another affront. As one lamented on decision. Her reason for ending the preg- tiya Janata Party (bjp), have enacted or Twitter: “You can’t criticise, you’re anti- nancy must also fall into one of a series of are considering laws against love jihad. national…You can’t protest, you’re terro- approved categories. This regime would On November 17th, for instance, the rists. You can’t fall in love, it’s ‘Jihad’.” greatly expand access to abortion and thus government of Madhya Pradesh an- put an end to expensive illicit procedures. nounced a “Freedom of Religion” bill. It has prompted an unsurprising backlash This would punish any form of matrimo- from anti-abortion activists, but feminists nial trickery for the purpose of con- are not entirely happy either. version to Islam with five years in prison. A new law became necessary last year The spectre of “our” innocent wom- after the constitutional court struck down anhood being preyed upon by “their” the existing one, which allows abortion boys is not new. Hindu nationalists only in exceptional circumstances, such as depict the long period of Muslim rule as a for pregnancies resulting from rape or in- prolonged violation of “Mother India”. cest. Otherwise it stipulates prison terms During national elections in 2014, the or hefty fines for women seeking abortions head of the bjp in Uttar Pradesh repeat- and for doctors providing them. That is out edly asserted, entirely falsely, that Mus- of step with public opinion. Ten years ago lims, who make up 19% of the state’s more than half of South Koreans wanted to 225m people, were responsible for 99% keep the old law. Nowadays nearly 60% of of rapes. The Election Commission chas- the population and more than three-quar- tised another bjp leader, Amit Shah, for ters of women under the age of 45 want to describing the vote as a chance for Hin- scrap it. The authorities have hardly en- dus to avenge violations of their women. forced it for years. He is now India’s home minister. The court set a deadline of the end of Replying to a parliamentary question this year for new legislation. But the bill is in February, one of Mr Shah’s deputies As long as he’s not Muslim under attack from two sides. Feminists think it does not go far enough in its affir- mation of women’s rights. Opponents of 2 army’s intervention caused a public outcry. from within the military-security estab- abortion, meanwhile, claim it “promotes” The army blamed “overzealous” officers. lishment,” predicts Farzana Shaikh of the termination of pregnancies. But the pdm’s leading lights make un- Chatham House, a British think-tank. Kwon In-sook, a prominent feminist likely champions of democracy. Both the As results rolled in from Gilgit-Balti- and lawmaker for the ruling Minjoo party, pml-n and the ppp have happily cosied up stan’s valleys, the pti appeared to have won thinks the law falls short because it would to the top brass to secure power in the past. the most seats. The other parties allege continue to treat abortion as a criminal Moreover, the army is unlikely to wilt in vote-rigging. The pdm has promised more matter, retaining too much of the spirit of the face of a few rallies. “Ultimately if there rallies, culminating in a march across the its predecessor. “The old law was centred is a change, the momentum is not going to country in January to call for the ousting of around the idea that abortion is a shame- come so much from opposition pressure, Mr Khan. It has yet to say whether there will ful, sinful thing,” she says. “The point of as from a reassessment of the situation be any stops in Gilgit-Baltistan. 7 the new law is to put women’s reproductive1 Innovation@Work Virtual Week February 1st–5th 2021

Reimagining leadership, collaboration and productivity

Innovation@Work is a bold, new, technology-focused event tightly centred on the future of work. Find out how the world's most respected corporations plan to thrive despite disruption. Learn from 60+ speakers and panellists including:

Danielle Harmer Keith Enright Chief people o cer Chief privacy o cer Aviva Google

Benjamin Gaunt Mark Dixon Senior vice-president, talent Chief executive o cer and founder BP IWG

Subroto Gupta Jennifer Cornelius Chief innovation and Head of future of work transformation o cer Pinterest Compass Group

Gerald Kremer Axel Hefer Chief digital o cer, global real estate Chief executive o cer Credit Suisse Trivago

Olivia Nottebohm Elke Reichart Chief operating o cer Chief digital o cer Dropbox TUI Group

Julien Codorniou Harry Moseley Vice-president workplace Global chief information o cer Facebook Zoom Video Communications

Knowledge supporter Insight Hour sponsors Register free Scan the QR code or simply visit innovationatwork.economist.com 60 Asia The Economist November 21st 2020

2 rights at the centre and treat abortion as the en will feel safe in their choice to have the government is pandering to conservatives. medical procedure that it is.” She worries baby rather than an abortion,” says Jeong “They have to focus more on the right to that the “socio-economic reasons” for Eun-yi, a 27-year-old activist who says she choose,” says Kim Ye-eun, a 25-year-old which abortions are permitted after 14 took up the cause after seeing a plastic student and activist. “Keeping all these an- weeks are too vaguely defined, and that the model of a ten-week-old fetus. She would cient provisions is a bad sign that they’re counselling requirement, the 24 hours of prefer to retain the old law, but says the bill not taking women’s rights seriously.” “thinking time” and doctors’ right to refuse has some potentially helpful features. “The Ms Kwon, for her part, is concerned by to perform the procedure if they have per- mandatory counselling session shouldn’t the conservative backlash the bill has sonal qualms will provide scope for oppo- be neutral, but push women to have the prompted. She worries that it may revive nents of abortion to restrict access. baby,” she says, for instance by making the authorities’ appetite to enforce whatev- That is precisely what they are trying to women listen to the fetus’s heartbeat or er restrictions remain in law. But she is glad do. “The point is to balance the woman’s making them watch videos of abortions. that the debate has at least made women right to choose with the fetus’s right to live To feminists, the fact that such mea- less ashamed to discuss their experience and to create an environment where wom- sures may be possible suggests that the with abortion. 7 Banyan Quad stretches

A four-country Indo-Pacific grouping is beginning to gain some heft hen america, Australia, India and In principle, the exercises have nothing to region. In the western Pacific, China is WJapan met in 2007 for a “quadrilat- do with the Quad. In practice, they mark challenging the longtime hegemon, the eral dialogue” on security matters, many growing naval priorities among the four. United States. In the Indian Ocean, the bet the new grouping would fizzle, de- Submarine-hunting drills were promi- problem is not strong states but weak spite acquiring the much snappier title nent. Chinese subs are extending their ones. Other critics say the Quad is too of “the Quad”. Once non-aligned India, reach into the Indian Ocean. exclusive a club. still suspicious of anything that smacked Malabar is just the start. America and The Quad’s defenders retort that it of an alliance, was non-committal, but in India have signed agreements on logistical embodies the grammar of modern diplo- the end it was Australia, discomfited by support, encrypted communications and macy. It is a compact bloc, rather than a China’s prickly reaction, that was the the exchange of geospatial intelligence, sprawling multilateral organisation. Yet first to break ranks. What has changed, such as secret maps. America, Australia it is capable of broadening its agenda, says Kevin Rudd, a former prime min- and Japan are all preparing to operate from disaster relief to cyber-security to ister of Australia, is that President Xi America’s new f-35 fighter jet, allowing ensuring supply chains for critical min- Jinping has since “fundamentally altered better integration among their forces. On erals. And it is suitably elastic, for in- the landscape” by projecting Chinese November 17th Scott Morrison, Australia’s stance embracing New Zealand, South power across Asia and the Pacific. prime minister, agreed to a defence pact Korea and Vietnam during the early And so, since 2017, the Quad is back. with his Japanese counterpart, Suga Yoshi- weeks of the pandemic to discuss eco- All four members have seen their rela- hide, facilitating joint operations. Even nomic recovery. Advisers to President- tionship with China deteriorate. Chinese India is “veering towards some sort of an elect Joe Biden have suggested that his incursions around islands that Japan alliance relationship” with the Quad coun- administration will emphasise the for- controls but that China claims in the East tries, says Gurpreet Khurana, an Indian mation of flexible coalitions of the will- China Sea have grown ever more fre- naval officer and think-tanker. ing on different issues, including push- quent and forceful. Australia faces Chi- The Quad does not convince everyone. ing back against China. That fits with the nese restrictions on all manner of ex- Nick Bisley of La Trobe University in Mel- Quad’s catholic interests. ports, from punchy Barossa Shirazes to bourne says the emphasis on a “free and Tanvi Madan of the Brookings In- coking coal, following its call for an open Indo-Pacific” papers over big differ- stitution in Washington predicts that, in independent inquiry into the origins of ences between the two halves of that vast security terms, the Quad countries will the coronavirus pandemic. Indian and do “a lot of the heavy lifting in Asia”. But Chinese troops have been locked in a even Mr Rudd, a supporter of the Quad, high-altitude border stand-off since the warns that anyone who thinks that these spring, resulting in the first fatal clashes powers can ever be coequals to America in 45 years. “has got rocks in their head”. This week Last month, in Tokyo, foreign min- America’s navy secretary, Kenneth isters from the Quad met for the second Braithwaite, called for a new American time. The public statements are anodyne. fleet based in the Indian Ocean, akin to Who could object to a “free, open, the Seventh Fleet in Japan. prosperous, rules-based and inclusive And China? At times, it claims that all Indo-Pacific”? Behind the bromides, the talk of a free and open Indo-Pacific is, though, the spectre of China and its as its foreign minister, Wang Yi, once put growing muscle is obvious. it, so much ocean spume. But if that is off Defence ties are strengthening fast the mark, so too is the claim of an Asian among the four countries. This week nato-in-the-making. Instead, in the their navies came together for the second region’s turbulent seas, the Quad, once phase of India’s annual “Malabar” exer- adrift, is now shaping an increasingly cises—Australia’s after a 13-year absence. confident course. China The Economist November 21st 2020 61

Joe Biden’s China policy ample, during the early days of the covid-19 outbreak) and being indifferent towards, To a different tune even tolerant of, China’s human-rights abuses. In August his team accused China of “genocide” against ethnic Uyghurs in the far-western region of Xinjiang. Mr Biden finished his campaign sounding nothing NEW YORK like the candidate who started it or the ad- For America’s president-elect, handling China may be the biggest foreign-policy ministration he had once served. He was challenge. Two stories look at his likely response and those who will guide it vowing to be “tough on China”. arly in his campaign for the presiden- served as vice-president under Barack China may be wondering whether all Ecy, Joe Biden rejected the notion that Obama (he is well remembered in Beijing this is bombast. Before Mr Trump’s presi- China was much of a worry. He argued that for dropping in at a neighbourhood eatery dency, there had been a long tradition of no leader in the world would trade the chal- in 2011—see picture, next page). He was also candidates berating China on the cam- lenges facing China for their own. “China’s being less blunt about China’s hard au- paign trail, only to tone down their rhetoric going to eat our lunch? Come on, man,” Mr thoritarian turn under Mr Xi. Since Mr and try to keep relations on an even keel Biden scoffed. “I mean, you know, they’re Trump became president in 2017, relations once in office. Mr Biden’s remarks give him not bad folks, folks. But guess what? between China and America have become wriggle-room to do the same. Despite refer- They’re not competition for us.” He was much more hostile. But Mr Biden seemed ring to China as America’s “biggest compet- speaking in May 2019. Tempered by his stuck in the mindset of the Obama admin- itor”, he has not called it the biggest threat. contest with Donald Trump, who tried to istration, which described its co-operation That, he says, is Russia (although the Biden rally support by highlighting the threat with China as “unprecedented” in scope. administration is expected to keep the la- posed by China, Mr Biden now avoids such During the campaign Mr Biden had to be bel of “strategic competitor” used under Mr words. But as president, will his policy to- “reprogrammed” on China, says an adviser. Trump to describe China). Advisers to Mr wards China be very different from Mr It seems to have worked. Mr Biden has Biden’s team say there will be “no reset” in Trump’s? He has yet to spell out his plans, since called Mr Xi “a thug”. He has criti- the relationship. But the president-elect but he will throw fewer wild punches. cised Mr Trump for praising Mr Xi (for ex- does talk about co-operation with China on Mr Biden’s political rivals attacked his issues such as climate change and global remarks in Iowa City, accusing him of be- health, which Mr Trump eschewed. Also in this section ing naive about China. Even some of his What can be discerned of Mr Biden’s own advisers were troubled. At the time, 63 Mr Biden’s China team China policy looks like an amalgam of Mr Mr Biden was still bragging about the many Trump’s and Mr Obama’s: a Trumpian wari- 64 Chaguan: No more love letters hours he had spent with Xi Jinping when he ness of China combined with a preference 1 62 China The Economist November 21st 2020

2 for caution in handling strategic matters. that America can still co-operate with Chi- He will be constrained by a Congress that na in some areas. has become far more hostile to China in re- Mr Biden will abandon aspects of Mr cent years. A Senate that may remain in Re- Trump’s China policy that he views as publican control will restrict his freedom harmful to openness and tolerance. He to appoint people whom hawks fear will fa- may remove visa-related impediments, in- vour more engagement with China (see troduced by the Trump administration, to next article). Public opinion may affect his study in America by people from China. Mr policy, too—negative views of China have Biden believes that more foreigners should reached an historic high. be recruited to American campuses, and Of the many disputes between China that America gains from their presence. In- and America that have grown more fraught vestigations will continue into suspected under Mr Trump, trade is among the most espionage involving Chinese researchers, bitterly contested. Mr Biden will inherit a but Mr Biden’s administration may tone smouldering trade war with China that was down Trumpian rhetoric that instilled launched by Mr Trump in a vain attempt to fears among ethnic Chinese living in reduce a soaring bilateral trade deficit. Un- America of a “red scare” fuelled, in part, by like Mr Trump, America’s leader-in-wait- racial hostility towards them. ing is no fan of using tariffs to achieve such Mr Biden will certainly avoid Mr goals. But he is unlikely to move swiftly to Trump’s use of racially charged language to dismantle Mr Trump’s tariffs on Chinese describe covid-19’s links with China. He goods—even though they are, in effect, a can also be expected to rejoin the World tax that is mostly paid by American con- Health Organisation and try to resume the sumers. Some of Mr Biden’s advisers hope Back when dumplings made a difference stationing in China of specialists from that retaining them, at least for now, will America’s Centres for Disease Control, who give America leverage in negotiations with build the Quadrilateral Security Dialogue, a used to work with their Chinese counter- China over trade and other matters. group of four China-sceptic countries— parts on public health. In the Obama era, Mr Biden supported America, Australia, India and Japan—into In the battle against climate change, Mr efforts to forge a trade deal among 12 coun- something sturdier. A military exercise in- Biden may seek to persuade China to stop tries, including America, around the Pacif- volving all four members of the club took building carbon-belching projects such as ic—hoping it would eventually draw in place this month in the Bay of Bengal. Mr coal-fired power plants in other countries. China and bind it to Western trading Biden can be expected to continue efforts Such efforts will be made easier by Ameri- norms. Mr Trump withdrew from that pro- to beef up the Quad, as it is known (see Ban- ca’s rejoining, under Mr Biden, of the Paris ject. There is little chance that Mr Biden yan). He will also maintain “freedom of agreement on climate change. In Septem- will resume interest in it. Winning approv- navigation” patrols by the American armed ber Mr Xi announced a goal of reaching net- al from the Senate for multilateral trade forces in the South China Sea and Taiwan zero carbon emissions by 2060. Some cli- pacts would be daunting, if not impossible. Strait. Mr Obama was reticent about these, mate experts say Mr Biden should an- Avoiding a hot war with China will also but they became routine under Mr Trump. nounce an even more ambitious climate be a priority for Mr Biden. In recent months Mr Biden will assure China’s neighbours target, and encourage a race with China to the China has stepped up exercises in the that America will be active in Asia; some al- develop a green economy. That would Taiwan Strait and sent fighter jets on nu- lied diplomats in the region had grumbled mesh well with what Mr Biden’s advisers merous sorties into Taiwanese airspace. Mr that Mr Obama’s “pivot” to Asia was too believe should be a pillar of his China strat- Biden will continue arms sales to Taiwan, half-hearted. egy—strengthening America itself, includ- which have picked up pace under Mr ing by spending more government money Trump. But he may scale back symbolic Making values great again on renewable energy. But the Senate, if it shows of support, such as high-level trips Unlike Mr Trump, Mr Biden is expected to remains in Republican control, could frus- to Taiwan by cabinet members (in August take a personal interest in the challenge trate such ambitions. Alex Azar, the health secretary, became the posed by human-rights abuses in China, It is not only Republicans who will limit highest-ranking American to visit the is- including repression in Xinjiang and Hong Mr Biden’s room for manoeuvre on China. land since America severed official ties Kong. He may make more effort to contest Much of the machinery of government— with it in 1979). Some of Mr Biden’s advisers China’s influence in the un, where Mr Xi from the Commerce Department to intelli- see these as needlessly provocative. has sought to insulate himself from criti- gence agencies—has been recalibrated in But Mr Biden is likely to retain some of cism of his human-rights record. Mr Biden response to China’s growing challenge, Mr Trump’s toughest measures against is likely to maintain sanctions on China with more staff and energy focused on the China related to national security. He will imposed by the Trump administration, in- country and its transgressions than ever persist with efforts to strangle Huawei, a cluding those on officials and companies before. New laws, sanctions and other poli- Chinese telecoms giant that America re- deemed complicit in violating human cies specifically targeting China are in gards as a security threat, by keeping rights. Soon after taking over he may stage place. This helps to keep China at the fore- Trump-era restrictions on doing business an international “Summit for Democracy” front of political debate and makes it more with the firm (see Briefing). Mr Biden will to make his values clear. difficult for leaders to turn a blind eye to stress the need for America to keep ahead But the next president will avoid giving the Communist Party’s bad behaviour. “It’s of China in technology. “Decoupling” in the kind of fiery ideological speeches fa- very different from the past when a new high-tech areas will remain the trend. This voured by the likes of Mike Pompeo, Mr president came in and could very quickly if may involve government support for mak- Trump’s secretary of state, and William they wanted make significant changes,” ing semiconductors in America to avoid Barr, his attorney-general, who have de- says Bonnie Glaser of the Centre for Strate- reliance on ones made in China. scribed the Chinese Communist Party as an gic and International Studies, a think-tank. Despite its disregard for multilateral fo- existential threat to the free world. Such In keeping with the new mood, Mr Bi- rums, the Trump administration did try to rhetoric does not mesh well with his belief den is expected to send early signals that he1 The Economist November 21st 2020 China 63

2 intends to stand firm against China. Advis- pend, in part, on the advice he receives If Mr Blinken does not get the job at the ers suggest that he wait longer than usual from his senior officials. Some of those State Department, he would probably serve to take a congratulatory call from Mr Xi, whom he is expected to pick as his nation- as national security adviser, a White House and not fall for any language Mr Xi may use al-security advisers are veterans of the role that would suit him well given his to suggest a new framework for the rela- Obama administration who shied away close work with Mr Biden over the years. It tionship. Initially, at least, Mr Biden will fo- from confrontation with China. Others be- is also possible that Ms Rice may be offered cus on domestic issues like covid-19 and lieve in more muscular responses to its in- the national-security role as a consolation, the economy, as well as on strengthening creasingly assertive behaviour, including a because it does not require Senate approv- ties with allies. He will want their support clearer commitment by America to defend al. It is unclear whether she would be will- when he turns his attention China-wards. Taiwan against any Chinese attack. As vice- ing to take a post that she has already held. Mr Xi will surely look for a chance to test president Mr Biden displayed caution Obama veterans are sure to get other se- Mr Biden’s mettle. In the build-up to a cru- about the use of American force. In his nior jobs. Michèle Flournoy, an under- cial Communist Party gathering in 2022, he dealings with China, the risk of a dysfunc- secretary of defence under Mr Obama, is will not wish to appear weak. How Mr Bi- tional relationship turning into a violent likely to lead the Pentagon. In an article in den responds to any provocation will de- one will loom large in his calculations. 7 June in Foreign Affairs she said America needed to do more to deter China, such as by beefing up military capability and send- The next China team ing clear signals of American support for regional allies. Ely Ratner, one of the most Second-chance saloon respected China hawks in the Democratic ranks, may serve Ms Flournoy as an assis- tant secretary. For the post of treasury secretary Lael Brainard, a member of the Federal Re- NEW YORK serve’s board of governors and a former Veterans of the Obama administration will shape Joe Biden’s China policy. undersecretary at the Treasury Depart- They are far less sanguine about China’s rise than they used to be ment, is a front-runner (see Free ex- even years ago Susan Rice, then Barack trist Democratic senator from Mr Biden’s change). A former Obama official describes SObama’s national security adviser, said home state of Delaware. her as a “silent hawk” on China. (Her hus- America wanted “a new model of major Advisers to Mr Biden say that the views band, Kurt Campbell, helped guide China power relations” with China. Her words on China of all three of these potential policy as assistant secretary of state for echoed a term used by China’s president, Xi choices for secretary of state have hard- East Asia during Mr Obama’s first term.) Jinping—“a new type of great-power rela- ened in the past two years, as have those of A department that has become increas- tions”—to describe what he hoped would most other members of Washington’s for- ingly influential on China is Commerce, be a more accommodating American view eign-policy establishment. Last year Ms which oversees export controls and an “en- of his country. Within a year Ms Rice (pic- Rice spoke tough about Huawei, urging tity list” of blacklisted companies—tools tured, with Joe Biden) and her boss stopped Canada to keep the telecoms giant out of its that the Trump administration has em- using the phrase as it became ever more 5g networks. Mr Blinken has said that some ployed with gusto against Chinese tech clear that Mr Xi had no plans to be accom- assumptions about engagement with Chi- firms. Some tech-industry leaders, eyeing modating himself. Now Ms Rice and her na have turned out to be wrong. But he has the market in China, want someone to lead then deputy, Antony Blinken, are among also said that, as a believer in international the department who will loosen the screws leading contenders to become secretary of agreements like arms control and climate a bit. Meg Whitman, a former ceo of Hew- state under Joe Biden, America’s next presi- treaties, there is scope for co-operation. lett Packard Enterprise, a giant tech firm dent. Some of Mr Obama’s most trusted ad- with dealings in China, is one of several ru- visers on China are looking forward to a moured candidates who would please Sili- second chance. This time they have few, if con Valley titans. Kevin Wolf, who worked any, illusions about China’s strongman. on export controls under Mr Obama and is As the president-elect selects people for seen (by China hawks, at least) as friendly his national-security team and other key to the tech industry, has been mentioned as China-related jobs, he will draw heavily a contender for another powerful role at from Mr Obama’s former staff. Most of Commerce: head of the Bureau of Industry those likely to be chosen come from a tradi- and Security. Those who fill these posts tional school of foreign policy that places may have as much impact on China policy trust in alliances, treaties and multilateral as other senior appointees. institutions. Their breed is very different It is far less certain who will fill lower- from that of Mr Trump’s China team. profile positions. But these can also be cru- Fears that Republicans may retain con- cial in shaping China policy. Matthew Pot- trol of the Senate (to be decided in January tinger, Mr Trump’s deputy national securi- by two special elections in Georgia) could ty adviser, started in 2017 as senior director dim Ms Rice’s prospects. She is widely dis- for Asia, a couple of rungs below Ms Rice’s liked among Republicans. Some of them old job. Mr Pottinger played a big part in see her as partly to blame for what they steering the administration’s hard turn on view as the failings of Mr Obama’s China the Communist Party. His successor in the policy. Republican China hawks would be Asia role could be someone like Mr Ratner happier to see the job go to Mr Blinken, a (if he does not serve at the Pentagon). The genial, well-liked longtime aide to Mr Bi- choice will necessarily come later than the den. Another candidate less controversial selection of principals in the national-se- than Ms Rice is Christopher Coons, a cen- No more need to whisper about China curity team. But it could matter a lot. 7 64 China The Economist November 21st 2020 Chaguan No more love letters

A fresh crisis over North Korea will reveal the limits of China’s willingness to co-operate with America to reduce tensions since the crisis of late 2017 and early 2018. That flare-up involved repeated missile tests and nuclear blasts by the Kim regime, prompting Mr Trump first to threaten to rain “fire and fury” on North Korea, and then to pivot abruptly to an approach based on personal diplomacy with Mr Kim. China notes that North Korea returned the remains of long-lost American servicemen, de- stroyed some nuclear test facilities and that it has refrained from testing long-range missiles and nuclear devices since 2018. No matter that American officials call North Korea’s offers in- adequate. China blames America for a diplomatic stalemate since the Trump-Kim summit in Hanoi ended without a deal in February 2019. This is more than a talking point, insists Li Nan, a researcher at the Chinese Academy of Social Sciences, a government research institute. Chinese leaders “really believe that because of cold-war thinking, the us never trusted North Korea to give up its nuclear weapons,” so never dropped any sanctions in response to North Korean concessions, he says. Before fears of covid-19 prompted North Korea to seal its borders, Mr Li was a frequent, well-connect- ed visitor to Pyongyang. He is pessimistic about substantive Sino- American co-operation during any fresh Korean crisis. “America can’t make concessions to North Korea, and China can’t put more pressure on North Korea,” is his blunt assessment. ptimists about American relations with China should con- Hardline Chinese nationalists see a conspiracy in America’s re- Osider the following scenario. At some point in early 2021, per- jection of North Korean demands. These include dropping sanc- haps as President Joe Biden is sworn into office, hand on Bible, tions and ending American military exercises with South Korea North Korea sees an incentive in testing a potent new weapon. In a that Mr Trump calls expensive and provocative, and has suspend- worst case, that may mean launching one of the monstrous inter- ed. Some Chinese scholars write that their country must face the continental ballistic missiles (icbms) that it unveiled at a parade in reality of a nuclear-armed North Korea and balance its geopolitical Pyongyang in October. Each may be able to carry enough nuclear interests accordingly, says Zhao Tong, a disarmament expert at the warheads to overwhelm anti-missile defence systems. Carnegie-Tsinghua Centre for Global Policy in Beijing. To such The military implications of an icbm test would be bad. The po- scholars, progress towards peace is blocked by America’s refusal to litical fallout would be worse. With its first breath China, North offer North Korea economic and security incentives. Their expla- Korea’s indispensable patron and protector, may condemn the re- nation is that America does not want to leave the peninsula “be- gime in Pyongyang for a reckless act, carried out in defiance of res- cause the long-term us goal is to contain China,” reports Mr Zhao. olutions by the un Security Council. China may note that it is ob- American experts on Korea are just as sceptical about China’s liged to enforce un sanctions, hinting at a clampdown on motives. Jung Pak is a former cia analyst in Mr Biden’s transition (currently rampant) Chinese smuggling of oil into North Korea, team. Expressing her own views rather than the next administra- and sanctions-busting by North Korea with its exports of coal and tion’s, she writes in a forthcoming paper for the East Asia Institute, the sale of fishing rights. Alas, in its next breath China would prob- a Seoul-based think-tank, that China sees chances to advance its ably opine that—if North Korea feels a need to test advanced weap- goal of regional dominance in deadlocked American talks with ons, or simply to attract the world’s attention—America has itself North Korea. It sees similar potential gains from America’s dis- to blame. For it was America, China would insist, that churlishly putes with the South (Mr Trump told it to pay five times more to- rejected peace offers made by North Korea’s leader, Kim Jong Un, wards the cost of American garrisons). China’s assertiveness may during his meetings with Donald Trump in 2018 and 2019. Worse, “embolden, not rein in, Kim Jong Un”, worries Ms Pak. should Mr Biden urge China’s president, Xi Jinping, to join Ameri- ca in imposing crippling new sanctions on North Korea unless it Pausing tests: useful but not the same as denuclearisation abandons nuclear weapons, the near-consensus among Chinese Until June this year, Markus Garlauskas was America’s national in- scholars and foreign diplomats in Beijing is that Mr Xi will refuse. telligence officer for North Korea. “We have reached a natural limit China and America disagree about so much, nowadays, that di- in terms of what we can get out of China on North Korea,” says Mr vergent views of North Korea may seem an afterthought. But seen Garlauskas, now with the Atlantic Council, a think-tank. Pressing from Beijing, this gulf in understanding over Korea is unusually North Korea to stop testing its most dangerous weapons is proba- revealing, and troubling. In essence, Mr Kim’s nuclear ambitions bly the most that China will do, he suggests by telephone from are a nuisance for China. But in the risk-calculations of Chinese Washington. A moratorium on tests is not nothing: a new model of leaders, the collapse of the grim, impoverished North Korean re- icbm is not credible until it has flown. But pausing tests alone is a gime is a far more alarming prospect. It could lead to a rapid, chaot- thin basis for co-operation with China. ic reunification with South Korea, an advanced democracy and North Korea will provoke America’s next president, triggering treaty ally of America which keeps more than 20,000 troops there. domestic headaches for Mr Biden as Republicans call him weak on Still more cynically, as an Asian diplomat puts it, China does not China and North Korea, which they surely will (forgetting Mr think that it is the target of North Korea’s nukes. Trump’s talk of love letters from Mr Kim). That crisis will in turn Chinese officials stress the generosity of North Korea’s moves test America’s ties with China. The results will not be cheering. 7 International The Economist November 21st 2020 65

Race and health tries, such as France, outlaw it. Nonethe- less a similar picture is emerging else- Far from equal where. In São Paulo, Brazil’s richest state, black people under the age of 20 are twice as likely to die from covid-19 than their white counterparts. Sweden tallied deaths early in its epidemic and found that those CHICAGO AND SÃO PAULO born abroad were several times more likely Covid-19 has shone a light on profound racial disparities in health to die than those born in Sweden. and the complexity of their causes Professor Sir Michael Marmot, an epi- stopped counting how many people Health outcomes differ for racial and demiologist, writes about how people’s “II knew from my community,” says Ma- ethnic groups. In Brazil people of colour health is determined by social factors. The rina Del Rios, a doctor in an emergency can expect to live three years fewer than debate about covid-19 reminds him of 19th- ward in Chicago, of the flood of desperately white people. In America, where the black- century America, when northern doctors ill covid-19 patients. Infection rates among white health gap is at its narrowest ever, attributed higher rates of tuberculosis Latinos in Chicago are double those of the black men still live for four-and-a-half few- among black patients to poverty; southern city’s African-Americans and triple those er years than their white counterparts. Co- doctors thought it was genes. “When social of whites. Of the city’s 15 worst-affected zip vid-19 has magnified such differences. conditions improved, tb plummeted in codes, 11are predominantly Latino. It has hit ethnic minorities particularly both groups,” he says, “and we learnt that it In the few countries that collect and hard. In Britain all non-white groups (ex- was overwhelmingly social.” publish such data, it is clear that covid-19 cept Chinese women) have been more like- How rich or well educated people are or has hit ethnic minorities harder than ly to contract and to die from covid-19 than what jobs they do is a strong predictor of whites. That is in part because the disease whites. Trends are similar in America. Dis- health. It is the primary driver of racial disproportionately affects those in jobs, parities are worst among the working-age health inequities. People who suffer more such as security guards and supermarket population. In America a 40-year-old His- deprivation, which minorities often do, staff, where ethnic minorities are over-rep- panic person is 12 times as likely to die as a have poorer health and shorter lives. resented. But it is also because of racial dis- 40-year-old white person, according to the “There’s long been an excessive focus in parities in health. Doctors have long ar- Institute for Health Metrics and Evaluation America on health care as the determinant gued about the extent to which those at the University of Washington. Black of health,” says Lisa Angeline Cooper, who disparities are the result of broader in- Americans are nine times as likely to do so. researches racial health disparities at equalities compared with other factors, America and Britain are unusual in col- Johns Hopkins University. such as racism or biology. Covid-19 has lecting and publishing detailed data about West Garfield Park is one of the poorest, thrown those questions into stark relief. health and race or ethnicity. Some coun- fastest-depopulating neighbourhoods of 1 66 International The Economist November 21st 2020

2 Chicago. Many houses, shops and factories age. After controlling for geography (this different cancers hints at the complex in- are boarded up or abandoned. Fear of gun group is twice as likely to live in densely teraction of social factors and biology that violence keeps children indoors. Africa populated areas), this ratio fell to 2.3. After may be at work. Food and Liquor and Quick Food Mart offer controlling for factors such as poverty and People’s risk of dying of particular dis- few fresh vegetables—mostly cabbage— exposure at work, it fell to 1.9. But even after eases tends to reflect underlying condi- but shelves stacked with sweets, fizzy including self-reported health concerns tions that make them more vulnerable, drinks and booze. People assume most and pre-existing conditions, their risk was their access to a doctor or the treatment black deaths in Chicago are the result of still almost one-and-a-half times that of they will receive. Black women in America gun violence, but the primary cause of ear- white men of the same age (see chart). are no more likely than white women to get ly death in neighbourhoods like these is Even Sir Michael concedes that it is in- breast cancer but much more likely to die heart disease, says David Ansell, a doctor at creasingly clear that socioeconomic condi- from it. Ethnic minorities made up 11% of Rush University Medical Centre. Across tions do not fully explain racial disparities covid-19 hospital admissions in Britain in America black men under 50 are twice as in health. In a recent report he and col- May but 36% of those receiving intensive likely as white men to die of heart disease. leagues found that in several countries in care. Hospitalised South Asians were the In Brazil skin colour is a good proxy for the Americas, such as Colombia and Brazil, group least likely to survive, whereas there social factors too, says Fatima Marinho, an the worse health of black people cannot was no difference between black and white epidemiologist in São Paulo. Sandra Maria fully be explained by conventional socio- people, according to one study. da Silva Costa lives in a favela in Rio. She is economic measures. The differences are Disparities exist in other areas, too. Few 46 “but I look 56.” Even before catching co- greater for men than women in America. things predict more accurately whether a vid-19 in April, she suffered from a litany of For black American women the life expec- woman will survive childbirth than the health problems, including in her lungs. tancy gap narrows significantly when con- colour of her skin. In America black wom- Her lungs worsened in September when, trolling for education and income. “But for en are three times, and native Americans after stealing some meat and milk, she men a sizeable unexplained gap remains,” two-and-a-half times, as likely to die from spent a month in prison, where she re- says Sir Michael. Some of that disparity can pregnancy-related causes as white women. ceived no health care. Both her parents be explained by high homicide rates Even after controlling for education, dif- died last year. They never spoke about rac- among black American men. They are also ferences persist. Covid-19 could compound ism or exclusion, says Ms da Silva Costa; more likely to die of aids (though this af- this. In Britain’s first wave 55% of pregnant they simply accepted that they would not fects relatively few men, it kills them when women hospitalised with the virus were get proper health care. “We’re black, poor they are young and so has a significant im- from black and other ethnic-minority and jobless,” she says. “We’re invisible.” pact on average life expectancy). But that groups (they represent 14% of the popula- Wealth and education matter even in does not fully explain the gap. tion). In Brazil black pregnant women hos- countries where people are treated more pitalised with covid-19 have been around fairly. People who live in the areas of Eng- Puzzling patterns twice as likely to die as white ones. land and Wales that count among the most- Cancer is a good example of a disease the What might explain such gaps? First, deprived 10% are twice as likely to die of co- prevalence of which cannot be explained pre-existing conditions. In the rich world vid-19 as those in the least-deprived areas. by socioeconomic factors alone. In Britain the leading cause of death related to child- All ethnic minorities except Indians and black people have much higher rates of birth is heart disease, responsible for over a Chinese are more likely to live in such stomach and prostate cancer than other third of deaths. Prevalence is higher among places than whites. Pakistanis are more groups. Asian women are more likely than black women. Second, access. In America than three times as likely as white Britons any group to contract mouth cancer. South 89% of white women receive prenatal care to do so and Bangladeshis twice as likely. Asian women are the least likely to get cer- in their first trimester, compared with 75% Two things help explain the dispropor- vical cancer. White Britons have the high- of black women. This means missed op- tionate impact of covid-19 on ethnic mi- est rates of cancer overall. Understanding portunities for early diagnosis of problems norities. First, and most important, they why certain groups are more likely to get in pregnancy. Third, unequal treatment. In 1 are more likely to be exposed to the virus. In many Western countries minorities are more likely to work in jobs that put them Counting the cost into regular and close contact with the England, death rate involving covid-19, by ethnic group and sex public, increasing their risk of infection. Relative to the white population, March 2nd - July 28th 2020, log scale They are also more likely to live in cities, in Adjusted for age… and geography… and socioeconomics… and health status deprived areas and in crowded, multi- generational homes, all of which increase Men Same Twice 4x Women Same Twice 4x their exposure. Second, when they catch rate as high higher rate as high higher the virus they are more likely to die of it Black African Black African than white people. That is probably be- cause pre-existing conditions, such as dia- Bangladeshi Bangladeshi betes and heart disease, which increase the risk of dying of covid-19, are more common Black Caribbean Black Caribbean among ethnic minorities. Pakistani Pakistani A virus that discriminates Such factors go a long way to explaining the Indian Indian disproportionate impact of covid-19 on non-white people in Britain, according to Mixed/multiple Mixed/multiple the country’s Office for National Statistics. ethnic groups ethnic groups But not entirely. Bangladeshi men are Chinese Chinese three-and-a-half times more at risk of dy- Source: Office for National Statistics ing of covid-19 than white men of the same The Economist November 21st 2020 International 67

This is apparent from work done using the Biobank data set, an exceptionally detailed medical database of the lives and health of hundreds of thousands of British people. When using these data to account for so- cioeconomic status, lifestyle, vitamin D levels and pre-existing health disparities, they still do not explain all the differences.

Known unknowns Some are now calling for a deeper look into the possible genetic contributions to co- vid-19-related health disparities. Naomi Al- len, Biobank’s chief scientist, says popula- tion-level differences in the genetics of the immune response to sars-cov-2 might in- crease the risk of hospitalisation and death. Asking questions about genetic fac- tors, though, is tricky. Some fear they will distract from the big and important socio- economic factors. Others think they are a red herring because the races that humans A dismal picture recognise are socially determined, rather than having real genetic underpinnings. 2 some Brazilian hospitals black and brown Culture Care, in California, matches black And yet it is true that different popula- women are treated as though they are of patients with black medics. An nber study tions from different environments and lesser value, says Dr Marinho. in 2018 found that black men seen by black places can have different variants of the Many indigenous people in Brazil are doctors consented to more invasive pre- same genes. In malaria-ridden parts of the reluctant to go to hospital at all. Previous ventive screening procedures (blood tests, world, natural selection has led to an in- interactions and “years of delays [in getting for example, and injections), and more of creased prevalence of a gene that causes hospital appointments] generated a lack of them, than those seen by non-black ones. blood cells to form an odd sickle shape trust, a lack of hope,” explains Elivar Kari- But there is also evidence, mostly from (which helps explain why over 90% of suf- tiana, of the Karitiana tribe, who works for America (which has good data), that people ferers of sickle-cell disease in America are the indigenous health-care system in the of colour simply receive worse medical black). This protects against malaria. Amazonian state of Rondônia. When his care. When a black man enters a hospital Evolution has also tinkered with immu- uncle, a healthy 56-year-old, became very with a heart attack he is about a third less nity. In some areas, presumably where an- ill with covid-19, he ended up in hospital in likely than a white man entering a similar cestral levels of pathogens were higher, the Porto Velho, the state capital and died. Vil- hospital with similar symptoms to receive immune system is more reactive. That is lagers insisted “the doctors killed him” by a treatment called balloon angioplasty useful when fighting off illness, but having putting in a breathing tube, says Mr Kari- within 90 minutes (this timing is a key an overactive inflammatory system can tiana. He now worries about a second wave quality indicator). Studies show that black also trigger chronic troubles such as diabe- in the village. Since his uncle’s ordeal the patients get less pain medication too (so tes and cardiovascular disease. These then tribe has become even more sceptical. much so that it is thought to have helped put people at greater risk for other health keep opioid addiction rates among black conditions. There is evidence that those of A problem everywhere Americans well below those of whites). African ancestry have a stronger inflam- Even Britain, where health care is free, has Pain in black people is underestimated matory response than Europeans. disparities. Some groups make less use of compared with pain in white people. An A set of genes inherited from Neander- programmes meant to catch health pro- experiment by the University of Virginia thals influences which patients get severe blems before they become more serious. found that around half of a sample of white covid-19. They are found throughout Euro- Several studies have shown that women medical students held some false beliefs pean populations at a low frequency. They from ethnic minorities in Britain make less about biological differences (that black are, though, particularly prevalent in South use of cervical screening than white wom- people have thicker skin, for example). Asia. Bangladeshis carry the highest fre- en. They were more likely than white wom- Such views were associated with underes- quencies of these genes, a factor worth ex- en to say (wrongly) that they were not at timating and undertreating black pain. ploring when considering why Britons of risk or to say they were scared of what New research looks at the health effects Bangladeshi origin have had such high might be found, or embarrassed or fearful of chronic exposure to discrimination. The death rates of covid-19. These genes are ab- of being seen by a male doctor. idea is that living in a racist society in- sent in black people—who have a high in- Governments are belatedly working to creases stress hormones for minorities and fection risk, too. This demonstrates just ensure that efforts to stop covid-19 reach all damages their health. Living in a racist en- how multifactorial disease can be. people: putting testing centres in places vironment can harm the health of all black According to research conducted by Raj particular groups will visit, for example, people, even those who do not directly ex- Chetty, an economist, and others, the life- such as churches. At the start of the pan- perience racism, says Delan Devakumar, at expectancy gap between rich and poor demic Latinos in Chicago, many undocu- the Institute of Global Health at University Americans has been rising even as the ra- mented migrants, made less use of testing College London. “This is akin to other envi- cial one has been declining. This suggests centres than others because they were ronmental risk factors for health, such as that in America race is becoming a poorer afraid of the authorities who ran them. high levels of air pollution,” he adds. predictor of health outcomes than income Awareness of cultural barriers will be And yet all this does not fully explain or deprivation. The disparities change. But crucial when rolling out covid-19 vaccines. the racial disparities seen with covid-19. the world cannot stop counting. 7 hear here Audio narration Your entire weekly edition, read by professional broadcasters

Listen now in The Economist app Business The Economist November 21st 2020 69

Taiwan Inc in China Taiwan is cooling on its giant neighbour. Geopolitics is not the only reason. Scaling back When China opened up to foreign in- vestment in the 1980s, entrepreneurs from Taiwan were the first foreigners to open their wallets. Enticed by cheap labour and land across the strait, they quickly set up KUNSHAN shop in the coastal provinces closest to Tai- Cross-strait commercial ties helped build China’s economy. They are wan. To this day Jiangsu (which includes beginning to fray Kunshan), Zhejiang, Fujian and Guang- undreds of jobseekers lined up out- other gadget-makers, employs 1m workers dong attract most Taiwanese money (see Hside a factory gate on a recent autumn in China, more than any other private en- map on next page). A common language morning. Uni-Royal, a Taiwanese maker of terprise in the country. and shared culture helped reduce transac- electronic components for such brands as As the West grows increasingly suspi- tion costs. Foxconn built its first Chinese Samsung and Toshiba, was looking for ex- cious of communist China’s rise—a trend factory in Shenzhen in 1988. By 2008 tra help at its plant in Kunshan, an hour’s that America’s next president, Joe Biden, around a sixth of China’s stock of inward drive west of Shanghai. New factory hands may slow but not reverse—Beijing seems investment came from Taiwan, making it could earn 4,000 yuan ($610) a month, keener than ever to bolster cross-strait the biggest foreign investor in China. double the local minimum wage. Kunshan commercial bonds. It sees Taiwanese firms Today three of China’s 12 most popular is dotted with hundreds of Taiwanese as a source of investment and critical tech- consumer-goods brands by revenue are manufacturers like Uni-Royal. More than nologies such as computer chips, the ex- Taiwanese. Chinese gobble up Master Kong 100,000 Taiwanese call Kunshan home. port of which to China Washington has instant noodles, Want Want rice crackers “Little Taipei”, as Kunshan is known, il- tried to curtail. At the same time, corporate and Uni-President juices. Apple’s three lustrates a broader phenomenon. Exact es- biggest China-based suppliers—Foxconn, timates vary, but as many as 1.2m Taiwan- Pegatron and Wistron—are all Taiwanese. Also in this section ese, or 5% of Taiwan’s population, are Now China is going out of its way to re- reckoned to live in China—many of them 70 Germany’s guest entrepreneurs cruit more businesses from Taiwan. Be- business folk. Taiwan Inc has not let tween 2018 and 2019 the government un- 71 Walmart’s beastly quarter fraught political relations with China, veiled no fewer than 25 policies aimed at which views the island as part of its territo- 72 Airbnb checks in to the Nasdaq luring them. Measures include tax credits ry, get in the way of business. Taiwanese and, more striking, a special right to bid on 72 The dash for DoorDash companies have invested $190bn in Chi- lucrative government contracts, from rail- nese operations over the past three de- 73 Bartleby: The board game way construction to “Made in China 2025”, cades. Foxconn, a giant Taiwanese contract an innovation scheme centred on ad- 74 Schumpeter: Wring out those Bells manufacturer of electronics for Apple and vanced manufacturing. In May the Chinese1 70 Business The Economist November 21st 2020

2 authorities released an official directive, Making life even more difficult for tional change. Uni-Royal in Kunshan is a signed by five ministries, permitting Tai- some Taiwanese firms is America’s black- case in point. Taiwanese expatriates who wanese-owned firms in China to “receive listing of certain Chinese tech titans. Hua- dominate its management are nearing re- the same treatment as mainland enter- wei, a Chinese telecoms champion that is a tirement. Young Taiwanese are reluctant to prises”. It applies even to sensitive areas particular target of American ire, last year take on the often thankless task of running like 5g mobile networks, artificial intelli- accounted for 15% of the revenues of Tai- Chinese factories. A common refrain heard gence and the hyperconnected “Internet of wan Semiconductor Manufacturing Com- from Taiwanese owners across China is Things”. No other foreign firms enjoy simi- pany (tsmc), a huge chipmaker. This that the impending “leadership vacuum” lar treatment. month tsmc confirmed it has set aside has made them cautious about big outlays. These efforts by Beijing have so far had $3.5bn for a new plant in Arizona. To attract stripling Taiwanese entrepre- limited success. Annual investment flows A second challenge for Taiwanese firms neurs, China’s central government has in from Taiwan have fallen by more than half concerns competition. Zhang Yingde, a the past year opened dozens of “cross-strait since 2015 (see chart). This growing reti- Taiwanese small-business owner in entrepreneurship incubators” in big cities. cence on the part of corporate Taiwan can Shanghai, talks of a “red supply chain” These offer perks like free office space, in- be explained by three considerations. The which, Beijing’s directives notwithstand- troductions to potential Chinese clients, first is geopolitical. ing, continues to favour Chinese bidders. posh flats at discount rents and a chance to China’s goal of discouraging formal in- Mr Zhang says he can only hope to get in on apply for up to 500,000 yuan in seed capi- dependence by strengthening business the action as a subcontractor. Jerry Huang, tal from the government. Weak pitches ties is increasingly transparent to many the head of Ningbo’s Taiwan Business As- such as insufficiently differentiated mo- Taiwanese. Beijing’s special treatment of sociation, which represents some 300 Tai- bile apps need not apply, says Zhu Yan, who Taiwanese firms, which are designated as wanese manufacturers in the eastern Chi- operates an incubator in Jiaxing, in Zhe- domestic ones in its drive for “indigenous nese city, says that none has won a big jiang province. Still, the bar is lower than innovation”, only stokes more suspicions. government contract to date. Chinese venture-capital firms typically set. It may have helped Taiwan’s indepen- Mr Huang does not blame discrimina- Mr Zhu’s incubator has lured ten Tai- dence-leaning president win re-election in tion against Taiwanese firms. He points in- wanese startups. But schemes like it will January. Chinese firms, which have been stead to the capabilities of homegrown not be enough to allay Taiwanese bosses’ able to invest in Taiwan since 2009, are Chinese rivals, which are becoming more concerns about pricier labour and stiffer coming under fire from the island’s regula- competitive and innovative. This month competition—let alone about the new tors, which suspect them of being a fifth Wistron, a Taiwanese assembler for Apple, great-power rivalry. More likely than not, column for the Chinese Communist Party. agreed to sell its factory in Kunshan to Lux- the golden era of Taiwanese business in Last month Taobao Taiwan, the local ver- share, a low-cost Chinese competitor. The China is over. 7 sion of Alibaba’s Chinese e-commerce plat- fact that Wistron was prepared to cede op- form, said that it would cease operations. erations to a Chinese rival suggests that technical know-how in electronics assem- German business Trading partners bly is no longer a barrier to entry that Tai- Geopolitical tussles beyond the Taiwan wanese outfits feel compelled to guard. Pride and strait also play a role. Tariffs imposed by Now that their dominance in manufac- America on a long list of Chinese exports turing is fading, Taiwanese firms which prejudice have prompted many Taiwanese producers want to succeed in China may need to ride to shift operations out of China. A recent on “Taiwan’s soft power”, says Keng Shu of survey by the National Federation of Indus- Zhejiang University. This will be easier in BERLIN Many guest workers become guest tries, a trade body in Taiwan, found that services, he reckons, given Taiwan’s global entrepreneurs four in ten Taiwanese bosses with factories reputation for warm customer service. But in China said they already have or will unlike manufacturing, where Taiwan en- o the consternation of Ugur Sahin “transfer capacity” elsewhere, mainly to joyed a first-mover advantage, China’s ser- Tand Özlem Türeci, much of the couple’s South-East Asia. Taiwan’s Giant, the vices industry has no shortage of estab- coverage in the German press focused on world’s biggest producer of bicycles, has lished players, foreign and domestic. their Turkish roots. “Our world can be identified Hungary as an alternative pro- The third reason for Taiwan Inc’s dimin- saved. From Mainz. By children of mi- duction base. ished zeal for China has to do with genera- grants,” was a headline in Bild, Germany’s best-selling tabloid. Their story certainly defies the cliché of owners of doner-kebab Straitened stands and fruit-and-vegetable shops— Taiwan, investment in mainland China even if Mr Sahin and Ms Türeci, chief exec- utive and chief medical officer, respective- By year, $bn By province, $m, Jan-Aug 2020 ly, of BioNTech, would have preferred to 15 read about the details of their firm’s discov- ery, in partnership with Pfizer, an Ameri- 12 Liaoning 19.0 can drugmaker, of a highly effective vac- Beijing 139.5 cine against covid-19. Shandong 188.9 9 CHINA “There are other BioNTechs,” says Rose- Anhui 49.2 Jiangsu 1,281 marie Kay of the ifm, a think-tank in Bonn. 6 Hubei 63.4 Shanghai 198.6 Migrants are much likelier than the average Chongqing 44.8 Zhejiang 331.9 German to start a business (see chart on 3 Jiangxi 25.1 next page). According to a recent survey by Other TAIWAN provinces kfw, a state-owned development bank, one 0 Guangdong 242.8 49.8 Fujian in four of the 605,000 founders of firms 20*18161412102008 1,229 last year had foreign origins. They are not Source: Mainland Affairs Council *Jan-Aug limited to groceries and gastronomy. Spot-1 The Economist November 21st 2020 Business 71

Walmart Gastgründer Germany, startups per 10,000 working-age people Beastly earnings 225

200

Migrants 175 NEW YORK 150 The pandemic is producing clear winners and losers among America’s retailers 125 ow have America’s retailers coped have-nots has gotten even sharper,” says Total population Hwith covid-19? “We’re still learning,” Simeon Gutman of Morgan Stanley, an in- 100 declared John Furner, who runs Walmart’s vestment bank. 75 vast American operations, on November Mr Gutman points to the successful 17th, as the supermarket giant reported firms’ superior management of diverse, 191817161514131211102009 third-quarter results. He is being too mod- global supply chains. This allows shoppers est. Walmart, as well as a handful of other to satisfy most of their retail needs in one Source: KfW Research big firms such as Target, its smaller rival, store—particularly important in a pan- and Home Depot, a diy Goliath benefiting demic, when people are keen to limit their 2 ted, established by Nik Myftari, a refugee from housebound home-improvers star- outings. Walmart’s customers make fewer from Kosovo, is a dating website. Novum, ing at dingy walls and outdated kitchens, trips to the store but spend more whenever created in 1988 by Nader Etmenan, who fled are thriving. they do, he notes. Iran, has become one of Germany’s biggest Paul Lejuez of Citigroup, a bank, de- The star retailers’ biggest edge, though, chains of hotels. scribed the three months to October as “an- comes from e-commerce. Walmart in par- Immigrants to Germany (like Mr Sahin) other stellar quarter” for Walmart. Total ticular upped its e-game just in time to or those with at least one parent who was global revenues increased by 5.2%, year on benefit from a pandemic surge in online born abroad (like Ms Türeci) number year, to $135bn. If anything, international shopping. A survey of American shoppers 19.6m, representing 24% of the population. sales, which grew by just 1.3%, dragged by McKinsey, a consultancy, found that A study from the Bertelsmann Foundation, down strong performance in America, kerbside pick-up has nearly doubled from another think-tank, found that members which accounts for the bulk of revenues; pre-covid levels, and in-store “click and of this group own 773,000 businesses. Walmart has said it will sell most of its flag- collect” sales have shot up by nearly 50% Of these, 469,000 are sole traders. The rest ging Japanese supermarkets. By contrast, from last year. Walmart’s digital sales leapt are employers, mostly in construction, re- domestic comparable-store sales, a stan- by nearly 80% in the latest quarter, year on tail and services. Their numbers are grow- dard industry metric, rose by 6.4%. Home year, to $10bn. That is still less than 8% of ing. By comparison, the number of other Depot’s quarterly revenues shot up by 23% revenues—but more than in the whole of Germans who own businesses declined by compared with a year ago, to $33.5bn, keep- 2016, according to Morgan Stanley. The 275,000 in the period, to 3.2m. ing up the previous quarter’s pace. Target’s fast-approaching holiday shopping season “Germans are averse to self-employ- operating profit nearly doubled to $1.9bn. is likely to bring even more online sales ment,” says Armando Garcia-Schmidt of Shining retail stars mask darkness else- than usual, says Mr Gutman. the Bertelsmann Foundation. Many gradu- where in the industry. American shoppers By doubling down on digital, Walmart is ates prefer a safe civil-service career to the rebounded faster than elsewhere in the taking on Amazon’s e-emporium. The tech vicissitudes of starting a business. The rich world (see chart). But retail sales grew giant is not taking this lying down. On No- booming labour market of the past decade by just 0.3% last month, compared with the vember 17th it launched its long-awaited helped skilled and unskilled youngsters one before, the slowest in half a year. They digital pharmacy. This threatens not just land a decent job without trying. softened in most of the 13 categories chemists such as Walgreens and cvs but Options for migrants tend to be more tracked. As investors swooned over Wal- also Walmart, which sells prescription limited. Some come from countries with mart and Home Depot, Kohl’s, a middling drugs in over 4,000 of its big-box stores. strong entrepreneurial traditions and tend retail chain, reported falling revenues. When it comes to e-commerce, Mr Furner’s to pick successful entrepreneurs as role “The distinction between the haves and the humility is fully justified. 7 models. Various studies show that explicit or implicit discrimination makes the la- bour market, even in good times, much Bytes of Bentonville tougher for migrants. And many have qual- ifications from their country of origin that Retail sales, % change on a year earlier Walmart, revenues, $bn are not recognised in Germany, so creating 10 a business is their only chance to earn By platform By region United States E-commerce International US more than the wage from a menial job. 0 Other Other Mr Garcia-Schmidt expects the labour 600 600 market to become more difficult for every- Japan one once the pandemic has abated and Ger- -10 400 400 many’s generous furlough schemes expire. Covid-19 has made 2020 a terrible year for China* 200 200 founders of all stripes. As the country -20 emerges from the coronavirus recession, European Union 0 0 more native Germans may opt for self-em- -30 20†182016 20†182016 ployment as an alternative to joblessness. 2019 2020 Financial years beginning February They can learn a thing or two from their mi- Sources: National statistics; Bloomberg; Morgan Stanley *Jan & Feb combined due to lunar new year holiday †Feb-Oct grant neighbours. 7 72 Business The Economist November 21st 2020

Initial pandemic offerings (1) Initial pandemic offerings (2) Public holidays Mouth-watering

SAN FRANCISCO Airbnb’s stockmarket debut will be a DoorDash is a dish served piping hot. hit. Never mind its murky prospects Will it cool? alk about terrible timing. When the he new “TikTok Treats” menu on Post- Tpandemic hit in March, Brian Chesky Tmates in Los Angeles wins no plaudits had just put the finishing touches on the for gastronomy. It appeals to carb-loving paperwork for Airbnb’s much-awaited teens: cloud bread and pancake cereal. But public listing. Instead of travelling to New the tie-up with the popular short-video app York to ring the opening bell at the Nasdaq is another sign that food-delivery firms are stock exchange, he found himself spend- coming of age. Among teens and millenni- ing days (and nights) on Zoom in his home als, ordering food online is as ingrained a office in San Francisco, fighting to keep his habit as booking an Airbnb, bingeing on online holiday-rental marketplace alive. Netflix or hailing an Uber. “It was like you are going 100 miles an hour Just how hooked consumers are thanks and suddenly have to hit the brakes,” to the pandemic is clear from financial Airbnb’s boss recalls. Mr Chesky can relax. But for how long? documents filed on November 13th by This time around Mr Chesky might be DoorDash, America’s biggest food-delivery luckier. On November 16th Airbnb unveiled ing (more than 90% of guests now book di- company, ahead of its listing on the New its prospectus, putting it on track for an ini- rectly on Airbnb’s site). As a result, though York Stock Exchange next month. From tial public offering (ipo) next month, just the firm lost $916m in the first six months January to September it booked orders as the first doses of the covid-19 vaccine of the year, it turned a net profit of $219m in worth $16bn, up by 198% year on year, earn- may become available. The ipo could value the third quarter. ing revenues of $1.9bn. It ferries grub from Airbnb at more than $30bn. The firm’s lon- Can Airbnb keep this up? Even before 390,000 American restaurants. ger-term prospects are harder to devine. the pandemic growth had begun to slow. The majority of America’s 700,000 or so The vaccine is not the only thing that Once things are back to normal, room for eateries now distribute via a delivery app, makes this an opportune time for Airbnb to further expansion may be limited, at least notes Lauren Silberman of Credit Suisse, a go public. The window for tech ipos has not in the company’s core market. Bernstein, a bank. The pandemic turbocharged a pre- been open this wide since the dotcom bub- research firm, expects annual growth in existing trend for convenience food, as ble 20 years ago. More than 50 tech startups private rentals to slow to 7-8%, from more women work and everybody is short have floated this year, raising a total of around 20% in the past few years. And of time. In doing so, it has also rehabilitat- $26bn, according to Dealogic, a data pro- Airbnb’s operating margins lag behind ed one of Silicon Valley’s most derided vider. Many of Airbnb’s employees want to those of its closest rivals, Booking.com and business models. cash in on the shares they have been Expedia (which operates vrbo, a site that Restaurants entered the digital realm awarded before their right to do so expires. lists mostly holiday homes). two decades ago when Takeaway.com in And the firm needs money, on top of the Airbnb’s future also depends on its abil- Europe and Grubhub in America put $2bn it raised earlier this year to tide it ity to police its service and meet a growing menus online. Restaurants delivered the over—hence its decision to scrap earlier list of legal requirements across many food themselves and the middlemen were plans to list shares directly without drum- jurisdictions where it operates. As with reliably profitable. By contrast, the new ming up fresh capital. other big online firms, renters have found “third-party logistics” firms like DoorDash Mr Chesky has a good recovery story to ways to abuse the platform, for instance by and Uber Eats (whose ride-hailing parent tell, too. In the painful second quarter the using rental properties for parties; in July has also bought Postmates) have to divvy number of nights booked on Airbnb fell to police in New Jersey broke up a rowdy up the bills, which average around $30, 28m, from 84m a year before. Gross book- event with 700 people. As for regulations, three ways. Once drivers and restaurants ings collapsed by two-thirds, to $3.2bn. In the firm says in its prospectus that by Octo- take their cut not much is left. the next three months, though, the num- ber 2019, 70% of its top 200 cities by rev- Until recently none of these newfan- bers rebounded, to 62m and $8bn, mainly enue had imposed restrictions, such as gled firms made money, even in emerging thanks to what Mr Chesky calls “travel re- limits on how many days a year residential markets where labour costs are far lower. distribution”. Guests eschewed virus-hit properties can be rented out. Lack of obvious economies of scale or bar- foreign cities, formerly Airbnb’s strong- Mr Chesky’s biggest task, however, will riers to entry meant several rivals were hold, for domestic and rural destinations. be to work out what Airbnb, now entering fighting over market share by offering din- Stays less than 500 miles (800km) from its teens, should be when it grows up. He ers generous discounts—and bleeding red home rose by more than 50% this summer. has said he would like to see it evolve like ink in the process. They also faced the pros- Mr Chesky has also made Airbnb leaner. Apple or Disney—firms that have adapted pect of a sharp rise in labour costs. Last year Before the pandemic the firm had sunk over time and outlived their founders. The California passed a law that required Door- money into new businesses, including pandemic has been a setback for its new Dash, Uber and other “gig-economy” com- flights and a television studio, to pad rev- lines of business. “Either we keep doing panies to treat app-based workers as full enues ahead of the listing. Since then his new things as the world changes,” he says, employees. motto has been “back to the roots”. He has “or we stop doing new things—and we On November 3rd Californians voted in fired around 1,800 employees, a quarter of won’t exist in the future.” Even if, occasion- favour of a ballot initiative which in effect the workforce, shut down most of the new ally, doing new things means sticking to overturns the law—and may discourage activities and radically cut online advertis- the old ones. 7 other state legislatures from passing simi-1 The Economist November 21st 2020 Business 73

2 lar ones. The law’s defeat on the tails of the tained plenty to chew on. DoorDash is Other facts are harder to swallow—not pandemic bonanza has once again whetted generating cash and is profitable on an ad- least that it has taken covid-19 to make food investors’ appetite for food delivery. Door- justed basis. Its in-app ads business offers delivery profitable, and then only margin- Dash is hoping for a valuation of $25bn, up juicy margins. The company sees itself as ally so. DoorDash warns that growth will from $16bn in its most recent private-mar- the digital hub for the convenience econ- slow as the virus ebbs. The share prices of ket funding round in June. The offering is omy, connecting merchants, customers many listed digital firms that benefited already oversubscribed. It is hard to argue and riders; the word “platform” cropped up from lockdowns and self-isolating con- with growth rates of 100-200% a year, notes 646 times in the filing. It has started deliv- sumers, from Amazon to Zoom, dipped on Mark Shmulik of Bernstein, a research ering groceries and convenience-store the news of an effective vaccine. And de- firm. DoorDash bulls point to Meituan- items. Its logistics arm sells last-mile de- spite their critics’ defeat in California, gig Dianping, the biggest such app in China, livery to other companies, notably Wal- firms will continue to face accusations of which turned profitable last year and is mart. Looking ahead, high unemployment thriving on the back of exploited workers. now worth a cool $230bn. amid a continuing pandemic downturn In this respect, DoorDash has already The American firm’s numbers con- should mean lots of cheap labour. joined the club of listed tech platforms. 7 Bartleby How to play the board game

A useful guide by a cultural veteran each a certain prominence in when a trustee, had requested the time slot Sir John’s advice to chief executives is Rpublic life and you may be invited to as it allowed him time to write his Sunday to tell the board what they are doing, become a non-executive director. The sermon in the afternoon. when, how and why—all in order to most lucrative option is to join the board Perhaps this old-fashioned atmosphere persuade board members that the boss of a large company. But for social pres- (which has now been changed by bringing deserves support. But ceos should not tige, there is nothing quite like joining in a wider range of trustees) led to some of deluge trustees or directors with pa- the board of a cultural organisation. In the difficulties that Sir John describes. Too perwork: “If information is power, it Britain, these boards are dominated by many appointments were rushed, he says, must be remembered that too much “the great and the good”—aristocrats and forgetting the first rule: “If you can’t see information is a smokescreen.” wealthy businesspeople. the right candidate in front of you, don’t As for board members, Sir John says Sir John Tusa, a former bbc executive, appoint.” One frequent problem he faced they should ask questions of the exec- has written a guide based on his exten- was tension between the chairman and utive, and be careful about accepting the sive experience among Britain’s literati chief executive, so he suggested that one- answers too easily. They should also and glitterati. “On Board: The Insider’s to-one discussions between the two remember that there is no such thing as a Guide to Surviving Life in the Board- should be part of the appointment process stupid question. And it is not their job to room” is a useful primer for any board to ensure compatibility. When in their develop strategy: “The executive pro- member. The job, Sir John argues, is not posts, the duo should aim to talk every day. poses, but the board disposes,” he says. all about free tickets and lavish dinners. Even then, the chairman (or woman) Trustees should be chosen with a “There is no difference between go- must retain a certain air of detachment. view that one of them is capable of chair- vernance on a corporate board and an The boss’s approach, says the author, can ing the board in due course. Further- arts board,” he says. “Sitting on a board, be summed up by the quote: “We are total- more, trustees should know why they let alone chairing one, is one of the most ly on the same side until the day that I have have been invited to join the board and demanding, complex and taxing activ- to sack him.” Bad chairmen tend to impose how they might best contribute to the ities in the world of public life.” their views, fail to respond to ideas and organisation’s success. The book also gives an inside glimpse refuse to alter their approach. Often they All Sir John’s suggestions seem sen- of the political battles that were fought place their favourites on the board, creat- sible and most would apply to public over the future of venerable institutions ing factions and causing destruction. companies as well as to arts institutions. such as the British Museum, English The role of non-executive directors has National Opera and the National Portrait never been well defined. Tiny Rowland, a Gallery. Cultural boards face a constant swashbuckling tycoon, dismissed them tension between the need to get funding as “Christmas tree decorations”—just for from the government and the artistic show, in other words. Think of the great ambitions of their executives, a dilemma names that studded the board of The- made even thornier by the need to repair ranos, a blood-test startup, and how they crumbling or outdated buildings. failed to stop its collapse. Such was the traditional nature of Most non-executives do their best but these institutions in the years when Sir are caught between two stools. They do John operated that the book is some- not know enough to challenge the exec- times redolent of the interwar era. He utives properly. But if they push their was invited to join the board of the Brit- questions too far, they will not be re- ish Museum over lunch at the Garrick, a appointed. Above all, trustees and non- gentleman’s club founded in 1831. He executive directors cannot do their job then discovered that board meetings unless the management wants their were held on Saturday mornings because input. Wise bosses should know their a former Archbishop of Canterbury, limitations and rely on boards for advice. 74 Business The Economist November 21st 2020 Schumpeter Wring out those Bells

Can one of the architects of at&t’s woes turn it round? that an outsider could run a company with a market value of $200bn and a phone book’s worth of problems by Zoom. So Mr Stankey won the contest, despite his role as Mr Stephenson’s lieu- tenant during years of value destruction. Since then, he has soothed some nerves, taking further acquisitions off the table, promising to repair the balance-sheet and lengthening debt matu- rities. Yet the share price languishes, as investors wonder if he can sustain the dividend while competing against two fierce rivals, t-Mobile in telecoms and Disney in entertainment. One big test of his mettle will be an auction next month of wire- less spectrum. Mobile, after all, is at&t’s mainstay, generating as much core earnings, or ebitda, in a week in the third quarter as WarnerMedia did in a month. Yet t-Mobile, once a distant third in wireless subscriptions, is now running neck-and-neck with at&t and has its sights on Verizon, the leader. After its merger with Sprint, t-Mobile has also surged ahead of both rivals in the cover- age and speed of its fifth-generation (5g) network, adding to its ap- peal. In order to catch up, at&t and Verizon will take part in an auc- tion of mid-band 5g spectrum starting on December 8th. Verizon’s balance-sheet is robust enough to bid what some expect to be at least $15bn. at&t may feel more constrained. Yet those who keep a careful eye on its credit rating think it should splurge, both on ohn stankey is an American chief executive from central cast- spectrum and the fibre networks it lays across America. Davis He- Jing. The 58-year-old has a square jaw, a lanky frame and, as one bert of CreditSights, a research firm, calls them the “core tenets” of friend put it, “the world’s deepest voice”. During his 35 years as a its business. (How quickly it can sell long-in-the-tooth assets like telecoms executive, he has been a voracious dealmaker. He helped Directv to ease the financial strain is another matter.) set Southwestern Bell Corp, one of the Baby Bells spawned by the On November 18th Mr Stankey may have shown promising break-up in 1984 of American Telephone & Telegraph (at&t), on an signs of audacity, though, when WarnerMedia announced an un- m&a blitzkrieg that eventually consumed the original Ma Bell her- expected move in support of hbo Max, at&t’s streaming platform self. He then helped orchestrate its $176bn push into entertain- that competes with Disney+, not to mention Netflix. It said it ment, buying Directv, America’s largest cable provider, in 2015, would release “Wonder Woman 1984”, a potential Christmas block- and Time Warner, a media colossus, three years later. In July he buster, simultaneously on hbo Max and in American cinemas on took over as at&t’s boss. A self-confessed “Bell-head”, he doesn’t December 25th (it will hit cinemas in other countries earlier). That flinch when confronting media moguls. Yet before one constitu- will break a long tradition of releasing films in theatres first to re- ency he practically cowers: widows, orphans and other investors coup production costs at the box-office, and to support the cinema that depend on at&t as the world’s second-biggest dividend-payer business. It shows the company may be prepared to cannibalise after Microsoft. revenues in one part of the firm—Warner Bros, the film studio—for That is a problem not because at&t cannot afford this year’s an- the greater goal of driving subscribers to its streaming service, ticipated $15bn payout. Despite the travails of covid-19, it easily which is potentially a bigger long-term source of value. If going can. The rub is that it has become a treadmill. This year is the 36th all-in on streaming attracts hordes of subscribers, it could reward since at&t was broken up in which it has increased the dividend. Mr Stankey’s dogged faith in the marriage of phone and film. Such a legacy may not be strange for a stolid telecoms firm. But with a flighty media business on the side, it is a foolish promise. From Wonder Woman to Superman Moreover, at&t’s acquisition spree has saddled it with almost It is time for more of such hard choices. Yet the risk is that Mr Stan- $150bn of net debt, even as its two core businesses, mobile tele- key feels he has time on his side. He now appears to enjoy Elliott’s coms and entertainment, are in the throes of upheaval that re- support (reports that the asset manager had sold its equity stake do quires immense financial flexibility. Instead of revitalising each of not mean it has thrown in the towel; it may still have a large deriv- them, at&t has so far done what many “dividend aristocrats” do— atives position). The rating agencies are patient. Neil Begley of try to sell the family silver to make ends meet. Moody’s says that because of coronavirus and other reasons, it has Yet there are indications that Mr Stankey may be prepared to put big investment-grade firms like at&t on a “longer leash”. Many challenge the old ways of thinking. He ought to—even for the sake remain convinced the dividend is a sacred cow. of those widows and orphans. That breeds complacency, however. The payout saps at&t’s fi- He started the job with the odds stacked against him. Not only nancial flexibility just when it needs all the leeway it can find. It has the covid-19 pandemic clobbered WarnerMedia, the renamed encourages defensiveness, when t-Mobile and Disney are, as Rog- Time Warner, by disrupting film releases, accelerating the decline er Entner, a telecoms analyst, puts it, “surrounding it like wolves”. of cable tv and reducing advertising spending. He also had to over- Come what may, one day it will have to cut the dividend—prefer- come doubts about his leadership abilities first aired last year by ably to be complemented with more flexible share buy-backs. If Mr Elliott Management, an activist hedge fund, when it took a stake in Stankey does that to make the company more nimble, he might at&t. When his former boss, Randall Stephenson, announced his emerge a corporate superhero. If it is forced upon him by weak retirement in the midst of the pandemic, it was hard to imagine earnings, it will be kryptonite that could cost him his job. 7 Property 75 76 Property Finance & economics The Economist November 21st 2020 77

Also in this section 78 RCEP, Asia’s new trade deal 79 A tax scandal in Germany 79 Retail banks’ scramble for scale 80 Buttonwood: Quant funds 81 Defaults in China’s bond market 81 The slowing velocity of money 82 Green investors sue 83 Free exchange: The Fed under Biden

Sovereign debt receipts have plunged in many poor coun- tries (though efforts by America’s Federal Roll up, roll up and write down Reserve to calm financial panic have low- ered their cost of borrowing). On Novem- ber 13th Zambia became the sixth country this year to default on its bonds. Eight spend over 30% of their fiscal revenues on interest payments, reckons Fitch, a rating HONG KONG agency, more than in the early 2000s when How can governments recover faster from insolvency? Bono and other debt-relief campaigners he procedures for resolving an countries and their official creditors. As for were at their clamorous best. Fitch gives 38 “Tinternational debt crisis”, wrote the third ring, when the Latin American sovereigns a rating of b+ or worse, where b Alexis Rieffel, a former American Treasury debt crisis struck in the early 1980s, it took denotes a “material” risk of default (see official, in 1985, “resemble a three-ring cir- commercial lenders (and their govern- chart 2 on next page). According to its pro- cus”. In the first ring, the bankrupt country ments) almost seven years to find a lasting jections, governments with a junk rat- negotiates with the imf, which must de- solution. The juggling went on and on. ing—bb+ or worse—may soon outnumber cide how much the country can repay and Many fear another series of defaults is those classed as investment-grade. what belt-tightening it must endure. In the looming. Government revenues and export Will the circus handle any new crisis second ring, the country asks for leniency better than it did in the 1980s? In some ways from other governments to whom it owes its task is even harder now. Poor countries money. And in the third, it seeks a “compa- Where it’s due 1 owe a wider variety of liabilities to a broad- rable” deal from private lenders. DSSI-eligible* countries, external-debt stock er range of creditors. For many emerging The circus sometimes, however, strug- of public and publicly guaranteed borrowers† economies, bonds have eclipsed bank gles to hold it all together. After Argentina $bn, by creditor loans. And loans themselves are far from defaulted in May, for example, the imf 500 uniform. Some are secured against state failed to play its customary role in the first assets, such as a stake in a public enter- China’s government 400 ring. It could not provide new supervision Other governments prise, or oil revenues; the creditor might and finance, because the country was still Other creditors 300 prefer to seize the collateral rather than reeling from the failure of its previous imf write off the debt. Others are syndicated, or 200 bail-out. The second ring has also suffered parcelled out among many banks, which from some absent performers. In the past 100 means that no single creditor can forgive decade China has become a far bigger lend- the loan at its own discretion. 0 er to poor countries than other govern- This gnarly mix of instruments is ments combined (see chart 1). But it is not a 191715131109072005 matched by an equally tangled bunch of *Debt Service Suspension Initiative member of the Paris Club, which has tend- Source: World Bank †Including use of IMF credit creditors: public, private and everything in ed to oversee debt renegotiations between between. In April, for example, the g201 78 Finance & economics The Economist November 21st 2020

2 group of big economies called on member borrower pawning vital assets as collateral rcep’s economic impact will be more than governments to provide a repayment holi- to other creditors. Syndicated loans might a rounding error. Peter Petri of the Peterson day on loans to the world’s poorest coun- add “yank the bank” provisions that allow a Institute for International Economics, a tries. China was unhappy that private cred- lender to be kicked out of the syndicate if it think-tank in Washington, and Michael itors did not share in the effort. Others blocks a deal. The fund is also paying re- Plummer of Johns Hopkins University esti- complained that China Development Bank, newed attention to “contingent” debt in- mate that Japan and South Korea will gain which is owned and directed by the state struments that are more sensitive to the the most. By 2030 their real incomes are ex- but not synonymous with China’s govern- ups and downs that befall poor countries. pected to be 1% higher than they would ment, did not take part. Barbados, for example, has issued bonds have otherwise been. There has, however, also been progress. that repay less in the event of an earth- Perhaps the biggest benefits will come On November 21st-22nd, g20 leaders will quake or tropical cyclone. from rcep’s rules of origin, which set out sign off on a “common framework” for re- One idea, proposed by Ben Heller and how much regional content a product must negotiating debts with the world’s poorest Pijus Virketis of hbk Capital Management, have for it to enjoy lower tariffs. asean has countries. The framework, in effect, ex- an investment fund, is “bendy bonds”. In trade deals in place with China, South Ko- tends the principles of the Paris Club to most cases, these would behave like ordin- rea and Japan, but a coffee cup exported by those g20 members who are not already in ary bonds. But in a crisis the issuer could a member may face three different sets of it, widening the second ring of the circus. It extend the maturity and defer interest for a rules depending on the destination. rcep applies only to countries with unsustain- couple of years in return for paying addi- helps by offering companies one set of able debts, and any borrower that receives tional interest at the end of the bond’s life. rules (and paperwork). Rules on content relief from the g20 must seek a similar deal The issuer could benefit from the kind of are relatively liberal: many products will from other creditors. Because all lenders payment holiday envisaged in the g20’s need just 40% of their value to be added must do their bit, little hangs on whether April initiative without any help from the within the region in order to take advan- they are classified as official or private. great powers. As the long history of debt re- tage of lower tariffs. That is perhaps why the framework has structurings attests, “fixed” income liabil- The fastest way to annoy Asian dip- met little opposition from China. ities are often anything but. Solemn com- lomats would be to claim that the pact is There has been progress in contracts as mitments to pay in full and on time cannot “China-led”—in fact, asean started the well as clubs. After Argentina defaulted in always be kept. Lenders and borrowers talks. Still, the deal serves China’s inter- 2001, it offered to exchange its unpayable alike might therefore welcome instru- ests. It had once warily watched its neigh- bonds for new securities with easier terms. ments that specify up front when and how bours sign up to the Trans-Pacific Partner- Some bondholders rejected the deal, seek- fixed income will become more flexible. 7 ship, which reined in state-owned firms ing full payment in New York’s courts in- and included rules on labour and environ- stead. That made life harder for both Ar- mental standards. Now rcep could gentina and its other creditors. Since 2003, RCEP strengthen China-centric supply chains— most bonds issued under New York law with none of those constraints. have contained “collective-action clauses”, Big deal Members may hope that rcep ensures which compel all bondholders to go along the resilience of supply chains by support- with any deal accepted by the majority. ing new, competitive production bases that Such clauses helped Ecuador resolve its de- can withstand the sudden imposition of fault this year with “hardly any real grum- trade restrictions. The region’s vulnerabili- bling”, notes Clay Lowery of the Institute of ty to such actions became clear this year, International Finance, a bankers’ associa- when many in the g20 group of countries The winners from Asia’s new trade pact tion. They also helped Argentina reach a applied restrictions during the pandemic. deal with its main bondholders in August t took eight years of gruelling negotia- These tended to hurt asean members most (albeit with “a fair amount of grumbling”). Itions to agree on the Regional Compre- often, according to analysis by Global Trade A review of the “architecture” for resolv- hensive Economic Partnership (rcep), Alert, a monitoring group. ing sovereign debt, published by the imf in which was signed by 15 countries in Asia Curmudgeons complain that rcep will September, pondered other contractual in- and the Pacific on November 15th. The promote regional trade and supply chains novations that might ease future restruc- world’s newest and biggest regional trade at the expense of those that involve non- turings. Lenders might insist on wider use deal is not the deepest. It eliminates fewer members, however. Stronger rules cover- of “negative-pledge clauses” that prevent a tariffs than normal, and some only after ing competition, state-owned firms or pro- two decades. Its coverage of services is duct standards might have allayed those patchy, as is that of agricultural goods. In- fears. But it seems that agreeing on those Grade deflation 2 dia is not a member. Still, when leaders met was too difficult, partly because rcep’s World, sovereign credit ratings, % of total virtually to sign on the dotted line, they members are at vastly different levels of hailed the pact as a triumph. economic development. October 2010 October 2020 rcep began as a tidying-up exercise, For any of these predictions to come 0 10 20 30 40 joining together in one overarching com- true, signatories must first ratify the agree- AAA pact the various trade agreements in place ment. Deborah Elms of the Asian Trade between the Association of South-East Centre, an advisory firm, reckons that AA Asian Nations (asean) and Australia, Chi- could happen by January 2022. Some hope Investment grade A na, Japan, New Zealand and South Korea. India will join after that, but the chances That limits how much trade will be newly seem slim. (It withdrew from negotiations BBB affected. Of the $2.3trn in goods flowing because of worries its industry would be between signatories in 2019, 83% passed swamped by imports from China.) Others BB Speculative grade between those that already had a trade deal. hope rcep will revive American interest in B/C/D Some trade will be newly affected, the region. Domestic politics will make though. China had no existing deal with Ja- bold trade initiatives hard for a Biden ad- Source: Fitch Ratings pan, for instance; nor did South Korea. So ministration. But it will be watching. 7 The Economist November 21st 2020 Finance & economics 79

wrongdoing.) Last month the effects of the scandal rippled out to the political sphere, Nearer the big league seeming to draw in Olaf Scholz, Germany’s United States, largest commercial banks finance minister and a former mayor of At June 30th 2020, by assets, $trn Hamburg. The city’s parliament launched 0 1 2 3 an investigation into why Hamburg under Mr Scholz let €47m of tax payments owed JPMorgan Chase by the bank lapse under a statute of limita- Bank of America tions. As mayor in 2016, Mr Scholz twice Wells Fargo met Mr Olearius, a donor to, and fund-rais- er for, the city’s cultural venues; he says Citigroup such meetings with bankers and business- PNC/BBVA men were customary, and that he cannot remember what was discussed. Warburg US Bank says the investigation is purely political, as Truist Bank Mr Scholz is the Social Democratic Party’s TD Bank candidate for the chancellorship. This is the second cum-ex trial. In Capital One March the same court found two former BNY Mellon British bankers guilty of tax evasion. They received a suspended sentence as they had Source: Federal Reserve co-operated with prosecutors. Warburg Tax evasion came up frequently during the trial be- Scale has become increasingly impor- cause of its role in the trades made by the tant for retail banking in America. It is Court controversy British duo. It was ordered to pay around dominated by four giants—JPMorgan €176m as part of the March ruling. It says it Chase, Bank of America, Wells Fargo and has not breached any laws and is appealing. Citigroup—that have amassed branches The lawyers for Mr S maintained a simi- while lavishing spending on marketing lar line. The trial, which is due to conclude and technology. The investment in digital BONN in January, seems likely to be more con- banking has paid off during the pandemic, A tax-fraud scandal draws in frontational than the first—and perhaps as flashy apps have attracted a growing Hamburg’s financial and political elite more embarrassing for Germany’s political share of deposits. At the same time, the t the very last minute, the lawyers of and financial classes. Many expect Mr Federal Reserve’s low interest rates are AChristian S tried to stop his trial, argu- Olearius to be indicted soon. squeezing lending margins. That hurts re- ing that the 77-year-old former bigwig with Whatever happens, Warburg’s standing gional banks most: they rely more on inter- M.M. Warburg, one of Germany’s oldest may have already suffered. “It might have est income from loans than their Wall private banks, was too frail to attend court gambled away the trust of clients,” says Street rivals, which also earn fees on trad- in a pandemic. But on the evening of No- Christopher Kopper of Bielefeld University. ing and investment-banking activities. vember 16th Germany’s constitutional Its future depends on how much it will pnc’s acquisition of bbva usa Banc- court ruled that the trial could go ahead the have to pay out when all the fines are totted shares is the largest banking deal in Ameri- next day. With judges, lawyers and the ac- up—and whether customers abandon the ca since bb&t bought SunTrust for $28bn cused wearing contraptions that looked grand old bank. 7 last year. It will create the country’s fifth- like oversized diving masks, each shielded largest retail bank (see chart). The com- by a perspex partition, a prosecutor read bined entity will be a coast-to-coast fran- out the charge sheet. It took so long that the Retail banks chise operating in 29 of the country’s 30 judge ordered a break halfway through. largest markets: half of bbva’s branches are Mr S, who cannot be fully named due to Bye bye America in Texas, and the rest span southern states, reporting restrictions in Germany, is one of where pnc’s presence is limited. Still, pnc four Warburg bankers accused of grave tax may seek to expand further. It has excess evasion through so-called “cum-ex” tran- capital to deploy, in part because regulators sactions in 13 cases between 2006 and 2013 have capped dividends and banned share that cost the German taxman more than buybacks. And America’s field of mid-size The sale of bbva’s American unit to €325m ($386m). (The other three will be banks remains crowded. At least 30 lenders pnc may set off a wave of mergers tried separately.) Cum-ex trades are share have assets of around $50bn-250bn. transactions done at high speed on or just n may pnc, America’s seventh-largest re- The price tag on bbva’s American fran- before the day dividend payments are re- Itail bank by assets, sold a stake in Black- chise amounts to about 30 times its pro- corded. Before payment, shares come with Rock, an asset manager, for $17bn. Bill jected earnings in 2021, according to an- (cum) dividends, which are reflected in Demchak, pnc’s boss, said at the time that alysts at ubs, a bank. That is a lot for a unit their prices; after, they come without (ex). worries about the economy had prompted that has long underperformed, posting re- A flurry of deals may allow two or more in- it to divest, in order to “bullet-proof” its turns on equity of around 6-7% (bbva’s vestors to reclaim tax on a given dividend, balance-sheet. On November 16th he broke Mexican arm, which is comparable in even though it has been paid just once. cover. pnc said it would buy the American terms of risk-weighted assets, routinely The defendant said very little. He was a arm of bbva, Spain’s second-largest bank, produces returns of 20% or more). But pnc confidant of Christian Olearius, the patri- for $11.6bn. The deal could set off a scram- has demonstrated a knack for turning cian co-owner of the Hamburg-based bank ble for scale on both sides of the Atlantic. round ailing ventures, notably the Ameri- who was head of its supervisory board until Indeed, bbva in turn said on the same day can arm of rbc, a Canadian bank, which it he resigned last year, because of his alleged that it was in merger talks with Sabadell, snapped up in 2012. Investors seem confi- involvement. (Mr Olearius denies any another Spanish lender. dent pnc can repeat the trick: the bank’s 1 80 Finance & economics The Economist November 21st 2020

Buttonwood Sand in the gears

The lesson from the most recent quant quake hat is it like to lose to a machine? true value and, as a consequence, sell can make sense even of unstructured WIn 1997 the world’s best chess play- winning stocks too soon and hang on to (“big”) data. But an event like the discov- er, Garry Kasparov, was beaten by Deep dud stocks for too long. There is also a ery of a vaccine can flummox even the Blue, a $10m super-computer made by contrasting tendency to extrapolate past smartest of them. Humans retain an ibm. Twenty years later he wrote “Deep success. So as well as under-reacting to edge. They are able to winnow down Thinking”, a book about the experience. news, people also over-react to it. Mo- endless possibilities using mental short- What comes across vividly is how ex- mentum trading seeks to exploit this. cuts. They can imagine scenarios that the hausting each game was. Chess players, A lot of long-short strategies, including past has not thrown up—scenarios such even great ones like Mr Kasparov, get momentum, rank stocks by a particular as “a vaccine may become available soon, tired and frustrated. Doubts begin to attribute and then buy the top decile (or given the amount of money and effort creep in. By contrast, Deep Blue just quintile) of the group and sell the bottom being thrown at it”; and “news of such a needed the occasional reboot. one. This requires machines. Sorting vaccine might spark a sell-off in ‘stay-at- Now turn the tables. What is it like to through thousands of securities quickly is home’ shares and a rally in ‘get-out-of- win against the machines? By New Year’s beyond the meagre talents of a living, the-house’ shares”. Eve the least smart buy-and-hold in- breathing portfolio manager. It requires But why were the moves in prices so vestor in an index fund might be able to algorithms that first establish and then dramatic? A good rule of thumb, says one boast of such a victory. For 2020 has been fine-tune the optimal period over which to quant guru, is that the faster you trade, rotten for “quant” funds, which use do the sorting. And it needs speedy and the less capacity there is for your strat- powerful computers to sift market data seamless access to automatic trading egy. A speedy trading strategy, such as for patterns that might predict future platforms and market data. You would not momentum, relies on liquid markets to prices. “Long-short” momentum—buy- want to do all this by hand and brain. keep turnover costs in check. The strat- ing recent winners and selling recent In chess, the brute force of computing egy can become crowded. And when the losers—had been one of quant’s better power eventually wins out. In investing, quants suffer losses, they may be forced strategies this year. Yet on November 9th, the strength of synthetic traders is in by risk-management rules to close their when news broke of an effective vaccine dealing with reams of information that is positions. As everyone rushes to get out for covid-19, it had its worst ever day. machine-readable, such as tick-by-tick at the same time, it makes for extreme Quants rely on history. If something stock prices. The most powerful machines price movements. This is in part why happens that is without precedent, such sophisticated quant funds are constantly as a vaccine in a pandemic, they have a evolving. They look for unique datasets problem. No doubt a few quant hedge on which to train their machines. Or they funds are nursing heavy losses. And try to come up with new ways to parse perhaps a few discretionary funds have weaker signals that others cannot detect made a killing. The terrain on which in the market noise. human traders can beat the machines is The quants have had a rough time, but much diminished. But November 9th they are hardly in retreat. Their domain shows it is still possible. Chalk it up as a will only expand. The margin of ad- small victory for the species. vantage for discretionary trading—for It is no small irony that momentum human ingenuity, in other words—will trading takes advantage of human weak- shrink. It is worth remembering that the nesses. One of these is “conservatism first time Mr Kasparov played against bias”. Investors tend to stick to prior Deep Blue, in 1996, he won. Now, as he views too rigidly and change them only has pointed out, you can download free slowly in response to new information. chess engines that are far more powerful. They may give undue emphasis to the We should savour victories over the price paid for a stock as a marker of its machines while we can.

2 share price rose by 3% on the day the deal rope’s overbanked markets. bbva’s Ameri- a further 9% after pnc and bbva said that was announced. can exit makes its portfolio disproportion- due diligence had begun. bbva’s investors were even more enthu- ately exposed to emerging markets, giving Transatlantic divestitures, meanwhile, siastic. Its share price jumped by 20% on it a reason to invest at home. It may also will probably continue. European banks the day. Britta Schmidt of Autonomous, a help that, since July, the European Central operating in America should either go big research firm, estimates the net value Bank has encouraged banks to recognise an or give up, says Adrian Cighi of Credit gained at about €8bn ($9.5bn), or 40% of accounting gain, known as negative good- Suisse, a bank. Analysts expect hsbc, Eu- the bank’s market capitalisation. The sale will, which they generate when they buy a rope’s largest bank by assets, to signal a will shore up its core-capital ratio by nearly rival at a lower price than the book value of partial exit when it releases its results in three percentage points, to 14.5%, well its assets. Such “badwill”, in turn, can be February. Santander and bnp Paribas, the above the level demanded by regulators. used to offset restructuring charges. Inves- other European banks with a big American A chunk of the bounty may go towards tors seem to believe that bbva’s talks with presence, say they do not want to sell. The acquisitions closer to home, fuelling a Sabadell will succeed: Sabadell’s share pnc deal, however, may make shareholders long-awaited wave of consolidation in Eu- price jumped by 16% on the pnc news, and think focus is not such a bad idea. 7 The Economist November 21st 2020 Finance & economics 81

China’s bond market which would be allowed to go bust. Parent companies have been the strongest guid- Free fall No guarantees ing light to date. Yongcheng’s parent, for United States, velocity of money* example, is one of Henan’s largest state- 4 owned groups and is wholly owned by the Money changing RECESSIONS ↑ province’s asset administrator, making hands more frequently 3 Yongcheng state royalty in the region. Hua- HONG KONG chen Automotive is owned by a similar en- 2 Investors are jolted by the default of a tity. Such proximity to powerful asset ad- highly rated state-owned firm 1 ministrators used to give investors hina’s credit-rating agencies do not confidence that the state would swoop to 0 disguise their love for the state. Yong- the rescue at the first sign of distress. Not C 201020009080701959 cheng Coal and Electricity’s state pedigree any more. *Nominal GDP divided by the stock of money with zero was at the top of a list of merits in a recent Scale also used to be important. Large maturity (MZM). MZM includes notes and coins in circulation, credit appraisal by ccxi, one such agency, state groups have been valuable to cities some travellers’ cheques, demand and savings deposits, and money-market funds which expressed its confidence in the and provinces because they give secure Source: Federal Reserve Bank of St Louis group on October 10th with a top-notch aaa employment to tens of thousands of peo- rating on a 1bn-yuan ($152m) bond. ple. Huachen Automotive alone has more Yongcheng’s default a month later on a than 40,000 employees. Restructuring “velocity” is calculated by dividing a coun- different 1bn-yuan bond has sent a shock- them would threaten jobs and social stabil- try’s quarterly gdp by its money stock that wave through China’s $14trn bond market. ity, but these are risks the government ap- quarter. The Fed tracks velocity for several The company paid overdue interest three pears increasingly willing to take. “Parent definitions of money. The measure that is days later, but not before investors dumped company, size—these are the reasons peo- most popular with economists is “money state-backed debt with links to Henan ple argue you should buy,” says Edmund of zero maturity” (mzm), which includes province, the region in central China where Goh of Aberdeen Standard Investments, an assets redeemable on demand at face val- it is based. The jarring news that a state asset manager. “This is starting to change, ue—such as bank deposits and money- group with a recent aaa-rating had de- and people are going to be reading more of market funds. The bigger gdp is relative to faulted halted at least 20bn-yuan-worth of the details.” the money supply, the higher the velocity. planned debt issuance over the following Investors and rating agencies will have Velocity has plummeted this year (see week, as yields on state debt surged. to study state firms’ fundamentals, instead chart). In the second quarter, the velocity of The concern was so great that a large of relying on perceived government back- mzm dipped below one for the first time on state-owned company in neighbouring ing. s&p expects more defaults among large record, meaning that the average dollar Shanxi province was forced to issue a rare state groups that were once considered un- was exchanged less than once between statement to investors on November 14th touchable. Zhu Ning, a professor at the April and June. The decline stemmed from pledging that the companies it controls Shanghai Advanced Institute of Finance, both economic shutdowns and heightened would not default. “The particular thing said that regulators may even launch “a uncertainty early on in the pandemic, as about this case was that it was completely crackdown on the rating agencies for bet- well as a money supply dramatically in- unexpected,” said Charles Chang of s&p, ter-informed ratings”. The shift will prove creased by stimulus efforts. another rating agency. awkward for local agencies, such as ccxi, Recessions tend to dampen the velocity Investor panic has focused on Yong- which are under pressure from state of money by increasing its attractiveness cheng, but there are signs of wider tumult. groups to hand out as many sparkling aaa as a store of value relative to alternatives. Huachen Automotive, a carmaker owned ratings as possible. 7 Uncertainty pushes up demand for money, by a provincial northern government, said explains David Andolfatto of the St Louis on November 16th that it had sought re- Fed. In a weakening economy, consumers structuring after defaulting on a bond in The velocity of money prefer to save rather than shop; investors October. Tsinghua Unigroup, a technology cling to the safe assets that make up mzm. firm controlled by Tsinghua University, Changing down Both the Depression and the Great Re- failed to repay a 1.3bn-yuan bond on the cession began with sharp declines in veloc- same day. The companies had enjoyed aaa ity. Where it recovered its pre-Depression and aa ratings, respectively. levels by the mid-1930s, though, velocity That state firms can default is no sur- continued to fall after the 2007-09 crisis. prise. Yongcheng is one of ten to have done WASHINGTON, DC Some economists attribute that to the Why money is changing hands much so this year. Regulators have realised they Dodd-Frank act, which took effect in 2010 less frequently can no longer afford to bail out inefficient, and put regulatory pressure on shadow- loss-making companies. A small but nforming a customer “I’m sorry, I can’t banking activities, increasing demand to steady stream of weak state firms have Igive you your money” is the stuff of bank- hold money in the formal banking system. been allowed to default since 2015, part of a ers’ nightmares. But in June the Federal Re- As covid-19 spread earlier in the year, government plan to impose discipline on serve had to tell commercial banks just anxiety about the economy sent velocity the market. Defaults also make it possible that: it was running out of spare change. As tumbling further. In April personal savings to price in risk better, something foreign parts of the economy shut down, the flow shot up to a record 33.6% of disposable in- investors have struggled to do. As defaults of coins from wallets to deposits gummed come, not only because of worries about have risen over the past three years, foreign up, leading retailers and banks to demand the future but also because shutdowns lim- investors have ploughed record sums into more. The Fed was forced to ration the sup- ited the ability to spend. October’s rate of China’s bond market. plies of pennies, nickels, dimes and quar- 14.3% was still higher than in all pre-pan- But Yongcheng’s default has alarmed ters based on banks’ previous orders. demic months since 1975. investors because it throws out the old The speed with which money, both Meanwhile, stimulus measures have rule-book that helped determine which physical and digital, moves is an important pushed up the money supply, in order to groups would receive state support and indicator of economic activity. Money’s prevent the economy, and inflation, falling 1 82 Finance & economics The Economist November 21st 2020

2 off a cliff. Households were sent cheques Though shoring up prices is partly why the So far, most lawsuits have centred on fi- for $1,200, unemployment benefits were Fed is buying assets in the first place, some duciary duty to disclose climate risk. made more generous and the Fed bought economists worry that the situation could Shareholders have sued the Common- government debt with new money. The quickly spiral out of its control, if house- wealth Bank of Australia for failing to dis- stock of mzm shot up by more than 20% be- holds all try to spend their money at once. close them, including risks related to pos- tween March and June. Michael Bordo of Rutgers University pre- sible investment in a coal mine (the The glut of dollars could create a new set dicts “a greater risk of inflation getting out lawsuit was dropped when the bank pub- of difficulties once the pandemic ends. of control than the Fed is willing even to lished an annual report acknowledging the Households, flush with cash, could go on a contemplate”. If the velocity of money re- risk). In America ExxonMobil, an oil major, spending spree. As consumer demand re- bounds post-pandemic, placing a speed has been beset by class-action and share- covers, more money will start to change limit on it may prove to be as troublesome holder lawsuits alleging that the company hands and inflation will start to rise. as jump-starting it. 7 has misled investors on climate risks. So far, none has been successful. In some more recent cases, the focus Shareholder litigation has shifted from disclosure to demanding strategies to reduce risk. Mr McVeigh’s case Setting precedents alleged that Rest was failing to address the risks posed by climate change. Ms O’Don- nell’s case is being watched for a different kind of outcome. If she wins, the Austra- lian government, which has done much to support the coal industry and little to limit national emissions, may have to issue a Investors seeking action on climate change turn to the courts public statement about the financial risks athleen o’donnell is a 23-year-old 100+, a group of 518 investors with more posed by climate change. A backlash KAustralian law student whose holdings than $47trn in assets. ShareAction, a chari- against dirty bonds is already hurting some of her government’s bonds mature in 2050, ty, counts 11shareholder resolutions citing of Australia’s regional governments. Last by which date carbon emissions may well climate change filed in Europe in 2020, up year Sweden’s central bank said that it have pushed global warming past the 1.5°C from five in 2015. would not invest in the assets of dirty issu- goal enshrined in the un Paris agreement. If resolutions fail, shareholders can di- ers, and promptly sold bonds issued by In July Ms O’Donnell filed a court case vest, or they can choose to sue. In 2018 a Queensland and Western Australia. against the Australian government for fail- group of 95 asset managers overseeing Occasionally shareholder litigation can ing to disclose climate-change risks to in- $11.5trn called on rich-world utilities to lower emissions directly. In 2018 Client- vestors. In 2018 Mark McVeigh, another draw up decarbonisation plans that are Earth bought €30-worth ($36) of shares in young Australian, sued his pension fund, consistent with the Paris goals and elimi- Enea, a Polish power company, and later the Retail Employees Superannuation nate coal power by 2030. “If necessary, we sued over the firm’s plan to build Ostroleka Trust (Rest), for allegedly failing to ade- will deploy all the tools available to us as C, dubbed “the last coal unit ever to be built quately manage the risks that climate shareholders to require laggards to do so,” in Poland”. The ngo argued that the decar- change poses to its investments. they wrote in the Financial Times. To Mr bonisation of the energy sector would The fact that Mr McVeigh and Ms O’Don- Barnett, that implies a willingness to liti- make Ostroleka C an unprofitable stranded nell are both Australian may reflect their gate. ap7, a Swedish pension fund, lists ini- asset, creating an “indefensible” financial government’s laggardly approach to cli- tiating “legal processes” against compa- risk. The Polish courts ruled in Client- mate change. But their court cases are also nies as one of its tools to promote Earth’s favour last year, and the project has part of a growing willingness among green sustainable asset management. been abandoned—a powerful precedent. 7 investors to see legal action as an alterna- tive to divestment. “Unless the corporate sector switches quickly to meet investor expectations, I think we are inevitably go- ing to see increasing shareholder litiga- tion,” says Peter Barnett, a lawyer with ClientEarth, an ngo. The approach can yield results. On No- vember 2nd, with Mr McVeigh’s case due back in court that day, Rest, which man- ages assets worth A$57bn ($42bn), agreed to settle, stating that “climate change is a material, direct and current financial risk” to the pension fund and committing itself to identifying and managing the risks. It now aims to shrink its carbon footprint to net zero by 2050. (Ms O’Donnell’s case is still being heard.) In some ways, litigation is the logical next step as investors become more en- gaged. The number of shareholder resolu- tions seeking to shift companies’ policies on climate change is rising, including through initiatives like Climate Action Drought down under The Economist November 21st 2020 Finance & economics 83 Free exchange Tragic rerun

Joe Biden’s economic record will be shaped by the Federal Reserve to accept higher inflation, and so keep interest rates low for lon- ger—led Jerome Powell, its chairman, to launch a strategy review in 2019. In August this year he unveiled a revised framework, one of “average-inflation targeting”. Its premise is simple. If the Fed wants to hit its 2% target on average, then periods of below-target inflation, which are expected to be numerous in coming years, must be offset by corresponding periods of above-target inflation. The Fed was giving itself permission not to slam the economic brakes (by raising interest rates) should inflation threaten to rise above 2%. A promise not to brake, though, cannot get a stalled car moving. The Fed did not pair its new strategy with other demand-boosting measures. It bought roughly $3trn in assets between February and June, as covid-19 sent the economy into a tailspin, but has since kept its balance-sheet roughly flat. The Fed’s new doveishness looks to be opportunistic rather than active: it will accept higher inflation should someone else kick the economy in that direction, but is reluctant to try new monetary measures to deliver a kick of its own. That might explain why market expectations of inflation in ten years’ time remain well below pre-pandemic levels and have changed little since the summer. It seems that, like Mr Biden, Mr Powell placed his hopes in fiscal arack obama’s economic record is overshadowed by a tortur- stimulus. The chairman has repeatedly urged Congress to provide Bously slow recovery from the global financial crisis. A pre- more support to America’s pandemic-stricken economy. Now, mature turn to deficit reduction left America’s recovery in the though, Democrats must win two difficult run-off races in January hands of a Federal Reserve that was doctrinally unprepared to en- to keep the Senate out of the hands of Republicans, who are unlike- gineer a rapid rebound in employment. Mr Obama’s vice-presi- ly to facilitate Mr Biden’s policies. (A Republican Senate would dent, and now the president-elect, Joe Biden, no doubt took the continue to be led by Mitch McConnell, who said in 2010 that lim- lessons of that experience to heart. Ahead of America’s presiden- iting Mr Obama to one presidential term was his party’s priority.) tial election on November 3rd, he seemed poised to meet the pan- Mr Biden’s grand economic plans thus look doomed, shifting chief demic-induced downturn with fiscal force. If the Democratic Party responsibility for America’s economic fortunes back to the central does not win a Senate majority, however, an all-too-familiar mess bank. Passive doveishness alone may not suffice. might ensue. With generous fiscal support seemingly off the cards, the central bank may again prove ill-equipped to rise to the Joe knows challenge of providing needed stimulus. And Mr Biden may strug- The Fed will do its best to respond. It may soon approve more gle to place his stamp on the Fed’s board of governors. The drama monetary stimulus in response to a new covid-induced economic surrounding the nomination of Judy Shelton, a Republican pick chill; in a speech on November 16th Richard Clarida, the Fed’s vice- with outlandish economic views, which on November 17th stum- chairman, hinted that an expanded asset-purchase programme bled after it appeared she had insufficient support in the Senate, could be in the offing. But the opportunity to pair new measures could become the first of many. with an attention-grabbing policy overhaul has passed. A revision Central banks once required little in the way of fiscal assis- to its strategy just months after the last one would undermine the tance. But they have struggled to cope since a drop in short-term central bank’s credibility. interest rates towards zero sapped their preferred policy tool of its A change in its leadership could give the Fed an opportunity to potency. None has dared to cut rates deep into negative territory, adjust its message and tactics. But Mr Biden will not find it easy to fearing the potential risks to banking systems. Massive asset-pur- remould the central bank. Mr Powell’s term as chairman does not chase programmes have provided a modest fillip to demand, and expire until 2022. His decent record means that Mr Biden is unlike- central bankers in Asia and Europe continue to experiment with ly to depart from the custom of renewing a sitting chairman’s term new tools, by expanding their purchases beyond government (it is one that President Donald Trump departed from when he did bonds and setting caps on long-term interest rates, for instance. not reappoint Janet Yellen, Mr Powell’s predecessor). Nor is it clear Nonetheless, diminished monetary ammunition has led econo- that a Republican Senate would approve Mr Biden’s nominees, mists to advocate that fiscal policy play a much larger role in stabi- which could soon become a problem if Lael Brainard, a doveish Fed lising the economy. governor who is considered to be one of the front-runners to be Mr The Fed has tried to adjust to this new world. In the wake of the Biden’s treasury secretary, vacates her seat. In 2011the Republicans financial crisis it promised to keep interest rates “at exceptionally blocked Mr Obama’s choice of Peter Diamond, a Nobel-prizewin- low levels...for an extended period”. But that failed to spark a rapid ning economist, and politicians’ interest in monetary policy has recovery. Perhaps the public doubted that the Fed would actually only increased since. As The Economist went to press, Mr McCon- keep rates low, and tolerate the resulting faster price growth, when nell continued to hunt for votes among a quarantine-depleted Re- the time came. The Fed’s promise may well have been undermined publican caucus to approve Ms Shelton’s nomination. Mr Biden by its framework, which stipulated an inflation target of 2%. The may find that economic ideas have changed since he last walked need for a new approach—one that would explicitly enable the Fed the corridors of power. Politics has not. 7 84 Science & technology The Economist November 21st 2020

Aerial combat the confusingly named town of California, Maryland, first swept aside its seven digital Virtual mavericks rivals and then scored a thumping victory against the human, a pilot from America’s air force, in five games out of five. Though dogfighting practice, like parade-ground drill and military bands, is a leftover from an earlier form of warfare Fighter aircraft will soon get ai pilots. But they will be wingmen, that still serves a residual purpose, the next not squadron leaders phase of darpa’s ace (air combat evolu- lassic dogfights, in which two pilots tors to tiny startups, gathered virtually un- tion) project belongs firmly in the future, Cmatch wits and machines to shoot der the auspices of the Johns Hopkins Ap- for it will require the piloting programs to down their opponent with well-aimed plied Physics Laboratory (apl) in Laurel, control two planes simultaneously. Also, gunfire, are a thing of the past. Guided mis- Maryland, for the three-day final of these virtual aircraft will be armed with siles have seen to that, and the last record- darpa’s AlphaDogfight trials. Each had de- short-range missiles rather than guns. That ed instance of such duelling was 32 years veloped algorithms to control a virtual f-16 increases the risk of accidental fratricide, ago, near the end of the Iran-Iraq war, when in simulated dogfights. First, these were to for a missile dispatched towards the wrong an Iranian f-4 Phantom took out an Iraqi be pitted against each other. Then the win- target will pursue it relentlessly. Tests after Su-22 with its 20mm cannon. ner took on a human being. that will get more realistic still, with lon- But memory lingers, and dogfighting, ger-range missiles, the use of chaff and even of the simulated sort in which the Dropping the pilot? flares, and a requirement to deal with cor- laws of physics are substituted by equa- “When I got started”, says Colonel Dan Ja- rupt data and time lags of a sort typical of tions running inside a computer, is reck- vorsek, who leads darpa’s work in this real radar information. oned a good test of the aptitude of a pilot in area, “there was quite a bit of scepticism of The point of all this, putative Top Guns training. And that is also true when the pi- whether the ai algorithms would be up to should be reassured, is not so much to dis- lot in question is, itself, a computer pro- the task.” In fact, they were. The winner, pense with pilots as to help them by “a re- gram. So, when America’s Defence Ad- created by Heron Systems, a small firm in distribution of cognitive workload within vanced Research Projects Agency (darpa), the cockpit”, as Colonel Javorsek puts it. In an adventurous arm of the Pentagon, con- theory, taking the pilot out of the plane lets Also in this section sidered the future of air-to-air combat and it manoeuvre without regard for the impact the role of artificial intelligence (ai) within 86 China’s latest Moon probe of high g-forces on squishy humans. An that future, it began with basics that uncrewed plane is also easier to treat as 86 When stars collide Manfred von Richthofen himself might cannon-fodder. Still, most designs for new have approved of. 86 Another covid-19 vaccine fighter jets have not done away with cock- In August eight teams, representing pits. For example, both of the rival Euro- firms ranging from large defence contrac- 87 Lake Baikal’s seals pean programmes—the British-led Tem-1 The Economist November 21st 2020 Science & technology 85

2 pest and the Franco-German-Spanish One example of such a handover comes tests will be conducted next year in Ty- Future Combat Air System (fcas)—are cur- from Lockheed Martin, an American aero- phoons, fighter jets made by a European rently “optionally manned”. There are sev- space giant. It is developing a missile- consortium that includes bae. eral reasons for this, explains Nick Colo- avoidance system that can tell which air- Ms Broadbent’s team is also experi- simo, a lead engineer at bae Systems, craft in a formation of several planes is the menting with novel ways to deliver infor- Tempest’s chief contractor. target of a particular missile attack, and mation to a pilot, from a Twitter-like feed One is that eliminating the pilot does what evasive actions are needed. This is to an anthropomorphic avatar. “People not provide much of a saving. The cockpit something that currently requires the in- think the avatar option might be a bit ridic- plus the assorted systems needed to keep a terpretation by a human being of several ulous,” says Ms Broadbent, who raises the human being alive and happy at high alti- different displays of data. spectre of Clippy, a famously irritating tude—cabin pressure, for example—con- Another example is ground-collision talking paper clip that harangued users of tribute only 1-2% of a plane’s weight. A sec- avoidance. In 2018 a team led by the Ameri- Microsoft Office in the 1990s and 2000s. ond is that even ai systems of great can air force, and including Lockheed Mar- “Actually, think about the information we virtuosity have shortcomings. They tend tin, won the Collier Trophy, an award for get from each other’s faces. Could a calm- not to be able to convey how they came to a the greatest achievement in aeronautics in ing voice or smiling face help?” decision, which makes it harder to under- America, for its Automatic Ground Colli- Getting humans to trust machines is stand why they made a mistake. They are sion Avoidance System, which takes con- not a formality. Mr Colosimo points to the also narrowly trained for specific applica- trol of a plane if it is about to plough into example of an automated weather-infor- tions and thus fail badly when outside the the terrain. Such accidents, which can hap- mation service introduced on aircraft 25 limits of that training or in response to pen if a pilot experiencing severe g-forces years ago. “There was some resistance from “spoofing” by adversaries. passes out, account for three-quarters of the test pilots in terms of whether they An example of this inflexibility is that, the deaths of f-16 pilots. So far, the system could actually trust that information, as at one point in the AlphaDogfight trials, the has saved the lives of ten such pilots. opposed to radioing through to air traffic organisers threw in a cruise missile to see control and speaking to a human.” Surren- what would happen. Cruise missiles follow A dog in the fight? dering greater control requires breaking preordained flight paths, so behave more Eventually, darpa plans to pit teams of two down such psychological barriers. simply than piloted jets. The ai pilots planes against each other, each team being One of the aims of AlphaDogfight, says struggled with this because, paradoxically, controlled jointly by a human and an ai. Mr DeMay, was to do just that by bringing they had beaten the missile in an earlier Many air forces hope that, one day, a single pilots together with ai researchers, and let- round and were now trained for more de- human pilot might even orchestrate, ting them interact. Unsurprisingly, more manding threats. “A human pilot would though not micromanage, a whole fleet of grizzled stick-jockeys tend to be set in their have had no problem,” observes Chris De- accompanying unmanned planes. ways. “The older pilots who grew up con- May, who runs the apl’s part of ace. “ai is For this to work, the interaction be- trolling the radar angle…see this sort of only as smart as the training you give it.” tween human and machine will need to be technology as a threat,” says Colonel Javor- This matters not only in the context of seamless. Here, as Suzy Broadbent, a hu- sek. “The younger generation, the digital immediate military success. Many people man-factors psychologist at bae, observes, natives that are coming up through the worry about handing too much autonomy the video-game and digital-health indus- pipeline…trust these autonomous sys- to weapons of war—particularly when ci- tries both have contributions to make. Un- tems.” That is good news for darpa; per- vilian casualties are possible. Internation- der her direction, Tempest’s engineers are haps less so for Colonel Javorsek. “These al humanitarian law requires that any civil- working on “adaptive autonomy”, in which things that I’m doing can be rather hazard- ian harm caused by an attack be no more sensors measure a pilot’s sweat, heart-rate, ous to one’s personal career”, the 43-year- than proportionate to the military advan- brain activity and eye movement in order old officer observes, “given that the people tage hoped for. An ai, which would be hard to judge whether he or she is getting over- who make decisions on what happens to to imbue with relevant strategic and politi- whelmed and needs help. This approach me are not the 25-year-old ones. They tend cal knowledge, might not be able to judge has been tested in light aircraft, and further to be the 50-year-old ones.” 7 for itself whether an attack was permitted. Of course, a human being could pilot an uncrewed plane remotely, says Mr Colo- simo. But he doubts that communications links will ever be sufficiently dependable, given the “contested and congested elec- tromagnetic environment”. In some cases, losing communications is no big deal; a plane can fly home. In others, it is an unac- ceptable risk. For instance, fcas aircraft in- tended for France’s air force will carry that country’s air-to-surface nuclear missiles. The priority for now, therefore, is what armed forces call “manned-unmanned teaming”. In this, a pilot hands off some tasks to a computer while managing oth- ers. Today’s pilots no longer need to point their radars in the right direction manual- ly, for instance. But they are still forced to accelerate or turn to alter the chances of the success of a shot, says Colonel Javorsek. Those, he says, “are tasks that are very well suited to hand over”. 86 Science & technology The Economist November 21st 2020

Space exploration space centre, on Hainan island. been reluctant to co-operate with China in Assuming the launch goes to plan, suc- space-related matters, largely because of Mandate of heaven cess will then depend on a complex ballet fears about giving away secrets useful for involving the craft’s four components. designing ballistic missiles. In space, as in These are a service module, a return-to- so much else, the two powers are not-so- Earth module, a lunar lander and an as- friendly rivals. China’s stated goal is to es- cender—a configuration originally used by tablish a crewed base near the Moon’s BEIJING America’s Apollo project. Once the mission south pole, where water is available in the China plans to bring back the first is in lunar orbit, the lander and the ascend- form of ice perpetually shielded from sun- Moon rocks for 40 years er will separate from the orbiting mother light by crater walls. America has similar n january 2019, when a Chinese space- ship of service and return modules as a sin- plans. Watch, as it were, this space. 7 Icraft called Chang’e 4 visited the Moon, gle unit and go down to the surface. The the mission broke new ground, figuratively landing site is in the northern part of a vast speaking, by landing on the far side of that expanse of basalt called Oceanus Procella- Covid-19 vaccines orb, which is perpetually invisible from rum, a previously unvisited area. Research- Earth and thus also out of direct radio con- ers hope rocks collected here will confirm And then there tact. This meant communications had to that volcanic activity on the Moon contin- be relayed by a satellite which had been ued until far more recently than the 3.5bn were two cunningly located for the purpose at a years ago that is the estimate derived from place where the interaction of the gravita- studies of currently available samples. tional fields of Earth and Moon meant it Once the new material has been gath- Another new vaccine arrives, and a could orbit a point in empty space. ered, which will take several days, the as- new class of drugs is born China’s next lunar mission, by contrast, cender will lift off, dock with the mother will break ground literally. Chang’e 5, ship and transfer its haul to the return aiting for a breakthrough in the scheduled for launch around November module. The service module will then carry Wfight against covid-19 has been a bit 24th, is intended to drill two metres down the return module back to Earth, releasing like waiting for a bus to arrive. After almost into the Moon’s surface, retrieve about 2kg it just before arrival to make a landing at a a year of watch-checking and neck-cran- of rock, and then return this to Earth. If recovery site in Inner Mongolia, also used ing, two come along at once. First, on No- successful, it will be the first lunar sample- for China’s crewed missions, in December. vember 9th, Pfizer, an American pharma return mission since 1976, when a Soviet Digging into the lunar surface may, giant and BioNTech, a German minnow, probe called Luna 24 sent back a mere 170g however, pose problems. InSight, an Amer- announced that they had jointly developed of the stuff. And it will be another step for- ican rover now on the surface of Mars, has an effective vaccine for the illness. They ward in China’s space programme. struggled to operate a drill nicknamed “the were followed, on November 16th, by Mo- The Chang’e missions, named after a mole” that is designed to reach three me- derna, an American biotech firm. Chinese Moon goddess, have had their ups tres below ground level. According to Moderna says its offering is 94.5% ef- and downs. Chang’e 5 was originally sched- nasa, America’s space agency, this is be- fective. Pfizer says the efficacy of its is 95%. uled for blast off in 2017, but the failure in cause the mole has encountered clumpier Moderna’s figure is an estimate based on a July of that year of an otherwise-unrelated regolith than its designers were expecting, peek at data being gathered in a continuing project that was, like Chang’e 5, using a causing it to bounce rather than burrow. trial involving 30,000 volunteers. Pfizer’s Long March 5 as its launch vehicle, caused a If Chang’e 5 does manage to overcome comes from the final analysis of a trial in- delay. (Chang’e 4 used a different sort of such hazards and return samples to Earth, volving 43,000 people, in which 170 cases launcher, a Long March 3b.) The “go” does, China has said little so far about which for- of covid-19 were seen. Of these, 162 were in however, now seem to have been given. eign countries, if any, will be granted ac- the placebo arm (ie, those involved had re- State media reported on November 17th cess to them. But America is likely to be last ceived dummy injections). that the rocket with Chang’e 5 on board has in the queue. For the past couple of decades The news bodes well for a third candi- been moved to its launch pad at Wenchang American governments of all stripes have date, from AstraZeneca and Oxford Univer- sity. This pair have, rather notably, not re- leased any interim data from their trials so When stars collide far. They have also been vaguer about when This picture shows the 5,000-year-old their vaccine might be available, saying aftermath of a merger between two only, “the end of the year”. But it is thought stars—though the light that created it their trials are only weeks away from hav- took a further 6,000 years to reach Earth’s ing a full set of data. Mene Pangalos, Astra- neighbourhood. It was published in this Zeneca’s head of r&d, told the Greenwich week’s Nature by Keri Hoadley of the Economic Forum, a conference held last California Institute of Technology and her week, that the firm might apply for full ap- colleagues. It is a composite of three proval—rather than the emergency autho- images taken at different frequencies, two risation sought by the other two pro- by the Galaxy Evolution Explorer, a space jects—in America, and perhaps in Britain telescope which operated from 2003 to and other parts of Europe as well. 2012, and one from the ground. The blue More good news was to be found among area represents gas ejected during the the details of how, and for whom, these merger. The faint red rings are the visible vaccines work. All the severe cases of covid traces of shock waves from the resulting were seen in unvaccinated volunteers. It is explosion. Such collisions are reasonably also now clear that the vaccines worked in common in binary star systems. But this participants of a range of ages, including image is reckoned one of the clearest so those over 65, and from a variety of ethnic far of the consequences. backgrounds. This means both vaccines 1 The Economist November 21st 2020 Science & technology 87

2 will save lives in groups of people who have stimulate the immune system to fight can- though, should not be a problem. Just as been hit disproportionately hard by co- cer. Its pipeline includes treatments for natural selection can tinker with the virus’s vid-19. Data published this week in the Lan- malignant melanoma and for prostate, genetic code, so too can scientists tinker cet suggest that the elderly respond well to head-and-neck and breast cancers. with the code in the vaccines. And, once the AstraZeneca vaccine, too. Continuing As for covid-19, the success of these rap- they have proved themselves, those vac- reviews of the safety of these vaccines sug- idly created mrna vaccines bodes well for cines could be adjusted every year, as hap- gest they are well tolerated, although a mi- dealing with any future mutations of sars- pens already with influenza vaccines. The nority do get a day of flu-like symptoms, cov-2. As the pandemic continues to tools the world needs to emerge from the such as fatigue, muscle and joint pain. spread, and such mutations accrue, it is covid-19 pandemic are starting to arrive. The first two vaccines both look like possible that the excellent responses these That they are all arriving at the same time is worthy weapons in the fight against co- vaccines now provoke could wane. That, an unlooked-for blessing. 7 vid-19. There is, though, one thing about the Moderna vaccine that sets it apart. It Evolution can be kept in a regular fridge at between 2°C and 8°C for 30 days. The Pfizer vaccine, by contrast, needs to be kept ultracold, at Cutting out the middle man -70°C or below, most of the time. That will make the Moderna vaccine far easier and Sieve-toothed seals may be whales in the making cheaper to distribute (although the cost of the Moderna vaccine itself is higher). If the as amphipods. These have diversified AstraZeneca vaccine proves successful, it, into more than 340 indigenous species. too, is thought likely to need only a stan- One of them, Macrohectopus branickii, dard refrigerator to preserve it. And be- spends its days hiding in the depths of cause this vaccine is also a fraction of the the lake and then forages in the shallows price of the others, it might still end up be- at night in great numbers. ing the most popular choice. Marine mammals the size of seals All three vaccines use the same strategy: would normally see amphipods as too to introduce into the human body rna (a small to hunt. But Dr Watanabe won- molecule similar to dna) that carries the dered if the Baikal seals’ comblike teeth recipe for “spike”, a protein abundant on might have evolved to enable them to the outsides of particles of sars-cov-2, the rake these tiny crustaceans from the virus that causes covid-19. The body then water in sufficient quantities to make uses this recipe to manufacture spike, and them useful prey—much as some whales the immune system, recognising the pro- collect krill using comblike structures tein as alien, mounts a response to it. Thus called baleen plates. He and his col- stimulated, the immune system can react leagues therefore attached waterproof rapidly if it subsequently encounters the video cameras and accelerometers to a spike proteins of actual viruses. few seals, to monitor what they were The vaccines from Pfizer and Moderna ake baikal, near Russia’s border with getting up to. This equipment remained introduce the rna directly, as molecules LMongolia, is, by volume, the biggest attached to the animals for between two known as messenger rna (mrna) held in- body of fresh water on Earth. At 1.6km, it and four days, before coming loose and side small, fatty particles called liposomes. is also the deepest. Several unusual floating to the lake’s surface, whence the AstraZeneca’s offering instead incorpo- animals call it home, including the researchers were able to recover it. rates the rna into the genetic material of a world’s only species of freshwater seal. Footage from the cameras and data harmless cold virus. The mrna approach is Baikal’s seals are abundant. There are from the accelerometers showed that the regarded as particularly interesting, be- about 100,000 of them. But the lake is seals were indeed pursuing the dense cause this is the first successful example of nutrient-poor, so how they do so well has amphipod aggregations that form at what researchers hope will be a new class been a mystery. A study just published in night. They would dive in with their of drugs that work by feeding cells instruc- the Proceedings of the National Academy of mouths open and collect prey before tions to make therapeutic proteins in situ. Sciences, by Watanabe Yuuki of the Na- making another pass. Dr Watanabe esti- tional Institute of Polar Research, in mates that each seal captures an average Message received Tokyo, suggests the answer is by filtering of 57 amphipods per dive—and thus Learning how to introduce mrna into the tiny organisms from the water. thousands of them a day. The needlelike body without it either being destroyed or Most seals eat fish. And Baikal seals canines are not redundant, for the seals stimulating an unhelpful immune re- do, indeed, have needle-pointed canines do hunt fish as well. But they also com- sponse has been challenging. These two of the sort expected of piscivores. But in pete with those fish for the amphipods, new vaccines are the first evidence of the 1982 researchers noted that they sport a thus partially bypassing a link in the food technology’s potential. Moderna is pursu- second sort of specialised tooth behind chain and perhaps thereby maintaining ing mrna as the basis for other vaccines, those canines. These have frilled cusps themselves in larger numbers than against such pathogens as cytomegalo- which resemble combs. At the time, would otherwise be possible. virus, influenza, paediatric-respiratory- nobody knew what to make of them. But Whether, were some of these filter- syncytial virus and Zika. BioNTech, mean- Dr Watanabe speculated that they might feeding seals to make it back to the while, is exploring the use of mrna to be an adaptation for feeding on other ocean, they would follow the baleen- strange creatures dwelling in the lake. whale path and evolve into giants, is an Correction. In last week’s Briefing (“Covid-19 Seals arrived in Baikal 2m years ago, interesting speculation. But even con- vaccines”, November 14th), we said in the table from the Arctic Ocean. So too did some fined to their lake, Baikal seals provide an called “A full field” that the candidate from Novavax is an “inactivated” vaccine. It is actually a “protein- much smaller marine creatures, known intriguing example of parallel evolution. subunit” vaccine. Sorry. 88 Books & arts The Economist November 21st 2020

Beethoven at 250 the gigantic and the immeasurable”. Knock him down, and Beethoven would Ninth lives bounce back with another stupendous coup. By 1824 the critic Adolph Marx could write that the composer’s style bore wit- ness to “the struggle of a strong being against an almost overwhelming fate”. It is fitting, then, that the global celebrations of Like the pandemic-hit celebrations of his jubilee, Beethoven’s career his jubilee have been marked by dismay, re- was a struggle against adversity silience and resurrection. n december 1808 Ludwig van Beethoven struck in 1798, not a quiet slide into silence The festivities began before the pan- Iamazed Vienna with a four-hour, self- but an incessant “squealing, buzzing and demic struck. Based in Bonn, the promoted concert. It included premieres of humming” in the ears. In 1802 he consid- bthvn250 programme scheduled hun- his Fifth and Sixth symphonies, and of his ered suicide, writing that “it was only my dreds of events in Germany. Vienna, where Fourth Piano Concerto. Shortly afterwards art that held me back”. Beethoven lived without much affection the gruff maestro seemed to have crowned Yet that art quickly mastered the formal for 35 years—“From the emperor to the his long search for a stable income with an beauty and decorum of Haydn and Mozart bootblack, all the Viennese are worth- annuity worth 4,000 florins from Arch- before moving into an entirely new realm less”—forgave the slights to offer exhibi- duke Rudolph of Austria and two other of innovation and unshackled self-expres- tions and concerts galore. In Brazil Marin aristocrats. He contemplated marriage and sion. Completed in 1804, his Third Sym- Alsop, an American conductor, launched set to work on his next concerto. phony, the “Eroica”, broadcast this leap to a her “Global Ode to Joy” project, planned Then Napoleon Bonaparte’s forces at- thunderstruck public, alarming some lis- performances of the heaven-storming tacked and occupied the city for the second teners (“strident and bizarre”), transfixing Ninth Symphony on six continents. Opera time in four years. Beethoven, who lived in others (“true genius”). By 1810 the Fifth houses prepared to raise the curtain on “Fi- the line of fire, cowered in his brother’s Symphony was being hailed as a landmark delio”, Beethoven’s only opera and an ever- basement as he tried to protect his already in world culture—a gospel of Romantic green hymn to freedom. “Oh what bliss, to damaged hearing from the din. Worse, his feeling that “opens up to us the kingdom of breathe freely in the open air,” sing a patrons failed to pay up. Distraught and chorus of prisoners, in a scene to melt the anxious, he wrote of the “destructive, dis- iciest heart. Then they return to their cells. Also in this section orderly life” around him, “nothing but This spring, the whole world followed drums, cannons and human misery”. 89 Anthropomorphic fiction them. Lockdowns forced the anniversary Beethoven was born 250 years ago (his ringmasters to tear up their plans. “Beetho- 90 A solo Everest mission exact birthday is uncertain). Almost from ven had to reinvent himself again and the time he left his native Bonn for Vienna 90 Globalisation in the steam age again,” notes Malte Boecker, director of in 1792, setbacks disrupted the keyboard bthvn250. His acolytes followed suit. 91 In search of the Antichrist virtuoso’s promising career. Hearing loss Events were postponed; performances 1 The Economist November 21st 2020 Books & arts 89

2 moved online. Yet “audience numbers the Morse-code “V” for victory during the is due to conduct the West-Eastern Divan grew and grew. It became like a snowball,” second world war. Leonard Bernstein con- Orchestra in Bonn; bthvn250 hopes that says Mr Boecker. The “Beethoven Pastoral ducted the Ninth in Berlin as the Wall came this flagship concert can go ahead, now as a Project”, inspired by his bucolic Sixth Sym- down in 1989. prelude to delayed commemorations rath- phony, became a virtual network of artists, Now, with massed choirs banned on er than a climax. Suntory Hall in Tokyo still already reaching a global audience of 30m. health grounds, such barnstorming show- promises several performances of the The composer would have winced in pieces remain unstageable in Europe. In “Daiku” (Number Nine), which German recognition. The chronic insecurity faced place of the towering icon, an intimate, in- pows introduced to Japan in 1918. But as an by musicians today is “very close to the sit- formal Beethoven has flourished during anniversary anthem in these queasy, iso- uation in Beethoven’s time”, Mr Boecker his plague-hit jubilee year. Ms Tunbridge lated times, Mr Boecker recommends not notes. War with France raged with little re- notes the vogue for small-scale arrange- the ecstatic joy of the Ninth but the hum- spite from 1792 to 1815; inflation shrank ments of his music. Igor Levit, a pianist, bler “Heiliger Dankgesang”—the heartfelt earnings; publishers, promoters and pa- has gathered a worldwide audience for “song of thanksgiving” from a late string trons went bust. Laura Tunbridge, profes- concerts streamed from his flat in Berlin. quartet, composed during convalescence. sor of music at Oxford and author of a new On December 17th—the date of Beetho- Fate has amplified Beethoven’s voice not as biography, “Beethoven: A Life in Nine ven’s baptism in 1770—Daniel Barenboim a struggler, but as a healer. 7 Pieces”, underlines her subject’s role as “one of the early freelancers”, a hard-nosed Anthropomorphic fiction jobbing professional. Lurching between court and market, prosperity and penury, he worked on the Four legs good cusp between the old musical regime of noble and royal patronage, and the new or- der of commercial publishing and concert promotion. Between 1809 and 1812 he Perestroika in Paris. By Jane Smiley. She encounters Frida, a streetwise Ger- earned 6,000 florins a year, six times an av- Knopf; 288 pages; $26.95 man short-haired pointer, lonely since erage civil-service salary. But he ran the death of the busker who owned her. through it fast and complained that “I have his eccentric novel could not be They bond with a polyglot raven called not a farthing left.” His grandest pieces, Tmore different from Jane Smiley’s Raoul, who takes them under his wing such as the Ninth Symphony and “Missa best known book and her most recent and off to the green expanse of the Solemnis”, are timeless monuments to ge- ones. “A Thousand Acres” (1991), which Champ de Mars where they pool re- nius. They were also properties that Beet- won a Pulitzer, was an audacious retell- sources and live in peace. hoven pitched aggressively (and often si- ing of “King Lear” featuring an Iowan Gradually, humans intrude. Pierre is multaneously) to rival publishers. Those farmer and his three daughters. “Some head gardener of their urban idyll, Anaïs two went to Schott and Sons of Mainz for Luck” (2014), “Early Warning” (2015) and a baker who keeps Paras in oats. Étienne, 1,600 florins. “Golden Age” (2015), known collectively an eight-year-old orphan, gives the as the “Last Hundred Years” trilogy, animals refuge at his great-grandmoth- The one and only tracked the fortunes of another Iowan er’s house as snow falls and Christmas He let the snobby Viennese presume the farming family across several gener- approaches. But when Étienne’s aged “van” in his Flemish surname denoted no- ations. In “Perestroika in Paris” Ms Smi- relative dies and Paras is reunited with ble descent. (It didn’t.) But he despised ley swaps the Midwest for France and, for her groom and trainer, the future looks most aristocrats and, embracing his celeb- the most part, people for animals. uncertain for the ragtag group of friends. rity status, was not shy about telling them. This Perestroika is not a Soviet policy Ms Smiley has employed anthropo- “Of princes there have been and will be but a racehorse—Paras for short. After morphism before. “Moo” (1995) lam- thousands,” he wrote to Prince Lichnow- finishing first at Auteuil racecourse, the pooned academia; “Horse Heaven” sky, one of his patrons, after a quarrel. “Of “curious filly” trots out of her open stall (2000) sent up horse-racing. But “Per- Beethovens there is only one.” When he and gambols off into the City of Light. estroika in Paris” is no satire, nor a foray and Goethe encountered Austrian royalty into surrealism or magical realism. at a Bohemian spa, Goethe doffed his hat Rather it is an immersive fable. Through and bowed; Beethoven strode on, telling the unlikely alliance and beguiling ad- the superstar author, “You did those yon- ventures of her runaway horse, stray dog der too much honour.” Like many other and know-it-all raven (plus two rats and children of the Enlightenment, he was a pair of mallards) Ms Smiley explores filled with hope, then rage, by Napoleon’s themes of diversity, loyalty, fellowship ascent from the chaos of post-revolution- and freedom. Along the way her animals ary France. Famously and furiously, he wryly comment on the oddities of hu- scratched out the dedication of the “Eroica” man behaviour: “Quite often they flock to Napoleon when the Corsican declared together in large, bright rooms,” Raoul himself emperor. explains, “and then they plume them- Like America’s Founding Fathers, Beet- selves and establish rankings.” hoven was a republican idealist, not a mod- Deeper undercurrents of menace or ern democrat. He once said that he “never moments of panic would have given the believed” in the dictum “Vox populi, vox yarn more edge. But in general Ms Smiley Dei” (“The people’s voice is the voice of avoids excessive whimsy and senti- God”). To the ears of posterity, though, mentality to deliver a comforting read at Beethoven’s music means heroic liberation the end of a difficult year—a winter’s tale and human solidarity. The ominous blows Don’t frighten the horses full of wit, warmth and charm. that launch the Fifth Symphony became 90 Books & arts The Economist November 21st 2020

Derring-do saw in the “third pole” of Everest a kind of Globalisation vindication for the empire; to Wilson it Clouds of glory suggested a more personal deliverance. Ports in a storm Unlike the airy and ill-prepared Wilson, Mr Caesar, a journalist at the New Yorker, grounds his story in patient archival sleuthing. Marrying extracts from Wilson’s letters and diaries with lively prose, he winningly conveys the glamour and con- The Moth and the Mountain. By Ed Caesar. Unlocking the World. By John Darwin. tradictions of this outlandish figure, bring- Avid Reader Press; 288 pages; $28. Allen Lane; 496 pages; £25 ing cinematic vividness to his escapades. Viking; £18.99 The maximum range of Wilson’s aeroplane n liverpool, a French observer mar- n may1933 Maurice Wilson, a first-world- was 750 miles, so he was forced to hop- Ivelled in 1907, “one feels one is in contact Iwar veteran, took off from Stag Lane aero- scotch between scrubby imperial outposts with America, Australia, west Africa, the drome in north London. He had resolved to as Whitehall pen-pushers—fearing the Far East, at the same time as with Germany fly his Gipsy Moth, a single-engine biplane, “loud-mouthed aviator” would cause a dip- and France. There one is at the commercial 6,000 miles to Mount Everest, crash-land lomatic incident—tried to stop him. But centre of the world.” on its lower slopes and ascend the then- his cunning and ironclad jauntiness deliv- This remark neatly captures the subject unconquered mountain—alone. He had ered him to the foot of the mountain, and of John Darwin’s new book. He tracks a cen- only 19 hours of flight-training under his his inevitable fate. tury of what he calls “steam globalisation”, belt, and “had hardly climbed anything Despite these enticing details, Wilson’s when steamships and railways drove a dra- more challenging than a flight of stairs”. motivations remain obscure. As Mr Caesar matic acceleration in the exchange of Ed Caesar tells this irresistibly quixotic admits, the “slippery rock face” of his life goods, people, ideas and money across the tale in “The Moth and the Mountain”—a shrugs off the most agile biographer. Apart world. Faster and cheaper transport rollicking biography of an eccentric adven- from a few telling cracks of introspection seemed to shrink the globe; the volume of turer, and a sensitive study of the pressures and self-doubt, his writings are a smooth world trade and foreign investment soared. that drove him. War was the defining fact of wall of what-ho bravado. Evidently he was Mr Darwin shows how major port cities Wilson’s life. As Wade Davis argued in “Into damaged by his military service, but the were both products of these transforma- the Silence”, his account of the early Ever- deeper principles which guided him are a tions and agents of change. In the great est expeditions, for the men involved the blur. Mr Caesar tentatively points to the in- opening up of the world that is his subject, perils of high-altitude climbing paled be- fluence of esoteric religious beliefs that the port cities were the hinges. side the carnage of the Western Front. They flourished in the turbulence of the post- The current era of globalisation, the au- were a generation inoculated by trauma. war era. An unusual relationship with a thor notes, is not unique but the latest in a On average, a second lieutenant (Wilson’s married woman, Enid Evans, was clearly series that have built on each other in a rank) survived for about six weeks; his bat- important, too. He even touches on the cumulative, though not neatly linear, fash- talion lost over 400 men in a single night. somewhat shaky rumours that Wilson was ion. In the mercantile system that sprang At 20 he won the Military Cross for bravery, a secret transvestite. up in the wake of the voyages of Ibn Bat- but was shot in1918 and repatriated. Yet these speculations bring readers no tuta, Christopher Columbus and Vasco da In the “topsy turvy” world of peace he closer to the man himself. “You imagine”, Gama, Asia was the world’s workshop and was shell-shocked and rootless. He “lost “you can almost see”: Mr Caesar increas- Europe relatively peripheral. the thread of his own story”, writes Mr Cae- ingly resorts to these hopeful conjectures. Then coal, readily available in Europe, sar. Everest promised to give Wilson’s life a “Sometimes, Wilson seems distant and an- fuelled what historians have called the new plot. He was enthralled by previous cient,” he writes towards the end. “At oth- “Great Divergence” of the 18th century, British attempts on the mountain, the best ers, he is so close that you can hear him.” whereby Europe (and later North America) known of which, in1924, led to the death of Hypothermic and huddling in a tent blast- came to dominate. By describing the evolu- George Mallory, the era’s finest alpinist, ed by icy winds, Wilson signed off his final tion and sometimes decline of a number of high on its slopes. Those early climbers letter with a characteristic “Cheerio”. 7 major port cities, most compellingly Lon- don, Bombay, Singapore and New York, Mr Darwin shows how this process worked. Singapore, for instance, grew exponen- tially, and played a central role in the in- dustrialisation of tin and rubber produc- tion in its maritime hinterland of Malaysia. New Orleans rose in importance with the Mississippi riverboat steamer, only to de- cline as railway connections to Baltimore and New York changed the dynamics of American trade once more. Trieste enjoyed a brief heyday as the Austro-Hungarian Empire’s main seaport, before collapsing abruptly into romantic obscurity after 1918. Mr Darwin takes globalisation to mean primarily “economic connectedness be- tween different parts of the world”. That is a reasonable but limited definition, missing the ascent in the 19th century of ideologies such as nationalism and socialism that Flights of fancy purported to explain social relations 1 The Economist November 21st 2020 Books & arts 91

2 around the world. Rising sciences such as entertaining romp through the subject, alternative—to make the Antichrist utterly geology and palaeontology had a similarly that is just the problem. It is very difficult monstrous and vile, as on this book’s cover, broad scope. “Unlocking” the world, mean- to spot him, or it. Christians who felt duty- where William Blake makes a horned ca- while, is a vivid metaphor, but it implies a bound to keep permanent watch—and they daver of him—puts the enemy in plain smooth, even inevitable process. In reality included Isaac Newton and the young John sight, and lets Christians off too easily the world’s doors were not just unlocked, Henry Newman, as well as John Knox and from vetting their own behaviour. but often kicked down. Mr Darwin knows other usual suspects—squabbled among The search for the Antichrist leads Mr this, and stresses the influence of geopoli- themselves over whether the Antichrist Almond down many obscure paths, peo- tics and imperialism, not just free trade as was an individual, in which case Nero, Si- pled by cobwebbed theologians such as Ire- an abstract concept. But he might have de- mon Magus and Napoleon were popular, or naeus and Hippolytus, and deep into the picted the bootprints more graphically. a crowd, in which case the Turks were long- weirdest thickets of medieval fantasy- Still, his book is an enjoyable synthesis time favourites, or simply the evil that bat- weaving. He has fun—“Sexy Beast” is his of a large body of scholarship. He closes by tles good in the breast of every human be- heading on a section about the Antichrist remarking that today’s globalisation is not ing. The book of Revelation, which does visions, peculiarly like ink blots, of Hilde- simply a bigger, faster version of what hap- not mention the Antichrist by name, pro- gard of Bingen—but does not forget that a pened in the steam age. As in the early- vided a whole menagerie of aliases and modern reader also needs to know why the modern period, Asia is once again the clues, from the Whore of Babylon to the Antichrist was important. The problem he, workshop of the world. He wonders if there seventh head of the dragon rising from the or it, was invented to solve was that Christ is another parallel, however. In 1914 the sea. The number of the Beast, 666, could be had promised to return to the world and es- European-dominated global economic precisely found in the names of Popes In- tablish his kingdom, but had not done so system seemed irresistible. Then war in- nocent IV and Benedict XI—and in the tim- yet. Christians needed to believe that a tervened. Will a systemic crisis break the ing of Queen Victoria’s accession. great showdown between good and evil current cycle of globalisation, too? 7 Amid all this, Martin Luther’s clear- was, however, coming. Satan himself had eyed certainty that the papacy was the Anti- already been sent to hell, but his thorough- christ comes as a gale of fresh air. It was a ly demonised spawn was working in the Evil incarnate surprisingly old claim, first made in 1190 by world. The faithful had to be kept alert to Joachim of Fiore, and taken up with in- the dark deviousness around them. Sexy beast creasing enthusiasm as the Catholic Does the idea have any relevance now, church embroiled itself in simony, sexual when the word seems merely quaint to deviance and the sale of indulgences. The anyone outside the tradition of prophetic theory behind it was that the Antichrist Christianity? Mr Almond likes to think it was not a tyrant skulking outside Christen- does. If the great eschatological conflict dom, picking believers off, but a malign in- and the triumph of good are dispensed fluence working within it, even right at the with, history and human existence may The Antichrist. By Philip Almond. heart and at the top. This was not a problem seem to have no purpose. “Cosmic nihil- Cambridge University Press; 354 pages; for some future apocalyptic time (though ism” is all that is left. By contrast, the story $39.99 and £29.99 that time was exhaustively worried over, to of the Antichrist encourages men and t is a fair bet that most readers of The the very week and day), but an abomina- women to give their own lives meaning, at IEconomist will not have thought of the tion that was here, and pressing. least: to be aware of the evil in themselves Antichrist for a while. That does not mean, The essence of this lurking Antichrist and to cultivate the good. however, that this figure has gone away. was deception, especially of the faithful. To this reviewer, the whole strange Ever since early Christian thinkers decided This explains why medieval paintings of- story cuts the other way. The usefulness of that the evil in the world needed a focus, a ten show the Son of Perdition as a benevo- the Antichrist today is surely as a swift and project and a name, in order to be decisive- lent prince, crowned and robed, or even as comprehensive way to displace evil onto ly defeated at the Second Coming, this a double for Jesus, bearded, thoughtful and others—when in reality, in the words of the shape-shifting form has hovered around. working miracles. Evil was ever-beguiling, 17th-century radical Ranter, Joseph Sal- He was Rosemary’s baby in the film of and drew plenty of willing followers. The mon, “this great whore is in thee.” 7 that name, engendered on Rosemary by Sa- tan and with “his father’s eyes”. He was Da- mien in the “Omen” movies, born of a fe- male jackal and eventually American ambassador to the Court of St James’s. In the “Left Behind” books he is Nicolae Car- pathia, secretary-general of the un-turned commander of the One World Unity Army. Depending on your politics, the ultimate foe of QAnon may be the Antichrist, or Xi Jinping may be, or the New York Times; for institutions are fingered as the Antichrist as often as men are. And since its appear- ance signifies the end-times, when apoca- lyptic events will be unloosed upon the world and Christ will return to sort it all out, it is all too plausibly the Antichrist’s moment now, with wildfires, plague and climate change all converging. It might be good to know, one way or the other. But as Philip Almond explains in this The enemy within 92 Economic & financial indicators The Economist November 21st 2020

Economic data

Gross domestic product Consumer prices Unemployment Current-account Budget Interest rates Currency units % change on year ago % change on year ago rate balance balance 10-yr gov't bonds change on per $ % change latest quarter* 2020† latest 2020† % % of GDP, 2020† % of GDP, 2020† latest,% year ago, bp Nov 18th on year ago United States -2.9 Q3 33.1 -3.8 1.2 Oct 1.2 6.9 Oct -2.3 -14.9 0.9 -93.0 - China 4.9 Q3 11.2 1.8 0.5 Oct 2.9 4.2 Q3§ 1.7 -5.6 3.2 §§ 14.0 6.54 7.2 Japan -5.8 Q3 21.4 -6.4 0.1 Sep 0.2 3.0 Sep 2.6 -11.3 nil -8.0 104 4.7 Britain -9.6 Q3 78.0 -10.6 0.7 Oct 0.6 4.8 Aug†† -1.5 -18.9 0.4 -33.0 0.75 2.7 Canada -13.0 Q2 -38.7 -5.8 0.7 Oct 0.7 8.9 Oct -2.1 -13.0 0.7 -78.0 1.31 0.8 Euro area -4.4 Q3 60.5 -8.3 -0.3 Oct 0.3 8.3 Sep 2.2 -9.0 -0.6 -22.0 0.84 7.1 Austria -14.3 Q2 -38.2 -6.4 1.3 Oct 1.1 5.5 Sep 1.0 -7.4 -0.4 -30.0 0.84 7.1 Belgium -5.1 Q3 50.2 -7.9 0.7 Oct 0.4 5.2 Sep -1.1 -9.7 -0.3 -33.0 0.84 7.1 France -4.3 Q3 95.4 -9.5 nil Oct 0.5 7.9 Sep -1.9 -10.7 -0.3 -29.0 0.84 7.1 Germany -4.2 Q3 37.2 -5.8 -0.2 Oct 0.5 4.5 Sep 5.5 -7.2 -0.6 -22.0 0.84 7.1 Greece -15.3 Q2 -45.4 -9.0 -1.8 Oct -1.4 16.8 Aug -2.9 -7.9 0.8 -72.0 0.84 7.1 Italy -4.7 Q3 81.8 -9.1 -0.3 Oct -0.2 9.6 Sep 2.6 -11.0 0.6 -69.0 0.84 7.1 Netherlands -2.5 Q3 34.5 -6.0 1.2 Oct 1.1 3.8 Mar 7.0 -6.0 -0.5 -34.0 0.84 7.1 Spain -8.7 Q3 85.5 -12.7 -0.8 Oct -0.3 16.5 Sep 0.5 -12.3 0.1 -36.0 0.84 7.1 Czech Republic -10.8 Q2 27.2 -7.0 2.9 Oct 3.2 2.8 Sep‡ -0.5 -7.7 1.2 -32.0 22.2 4.0 Denmark -7.6 Q2 21.1 -4.0 0.4 Oct 0.4 4.8 Sep 10.0 -6.3 -0.4 -14.0 6.27 7.5 Norway -0.2 Q3 19.7 -3.5 1.7 Oct 1.4 5.3 Aug‡‡ 1.8 -0.9 0.8 -66.0 9.00 1.2 Poland -8.0 Q2 34.5 -4.0 3.1 Oct 3.4 6.1 Sep§ 2.8 -11.3 1.2 -92.0 3.76 2.9 Russia -3.6 Q3 na -4.4 4.0 Oct 3.3 6.3 Sep§ 1.7 -4.3 6.1 -50.0 75.9 -16.0 Sweden -4.1 Q3 18.3 -3.8 0.3 Oct 0.4 8.3 Sep§ 4.5 -4.1 nil 2.0 8.58 12.1 Switzerland -8.3 Q2 -26.1 -4.1 -0.6 Oct -0.9 3.3 Oct 9.0 -4.6 -0.5 nil 0.91 8.8 Turkey -9.9 Q2 na -3.9 11.9 Oct 12.0 13.2 Aug§ -4.5 -5.1 11.9 -18.0 7.69 -25.5 Australia -6.3 Q2 -25.2 -4.4 0.7 Q3 0.7 7.0 Oct 1.1 -7.6 0.9 -28.0 1.37 7.3 Hong Kong -3.5 Q3 11.8 -5.5 -2.3 Sep 0.4 6.4 Oct‡‡ 5.4 -5.9 0.7 -98.0 7.75 1.0 India -23.9 Q2 -69.4 -9.8 7.6 Oct 6.5 7.0 Oct 0.7 -7.8 5.9 -60.0 74.2 -3.2 Indonesia -3.5 Q3 na -2.2 1.4 Oct 1.9 7.1 Q3§ -1.8 -7.1 6.2 -87.0 14,070 0.1 Malaysia -2.7 Q3 na -8.0 -1.4 Sep -1.1 4.6 Sep§ 2.1 -8.1 2.7 -78.0 4.09 1.7 Pakistan 0.5 2020** na -2.8 8.9 Oct 9.8 5.8 2018 -0.4 -8.0 9.8 ††† -148 160 -2.7 Philippines -11.5 Q3 36.0 -6.1 2.5 Oct 2.4 10.0 Q3§ 0.9 -7.8 3.0 -169 48.2 5.0 Singapore -7.0 Q3 35.4 -6.0 nil Sep -0.4 3.6 Q3 18.0 -13.9 0.9 -83.0 1.34 1.5 South Korea -1.3 Q3 7.9 -1.2 0.1 Oct 0.5 3.7 Oct§ 3.8 -5.7 1.6 -18.0 1,104 5.5 Taiwan 3.3 Q3 18.9 -0.2 -0.2 Oct -0.3 3.8 Sep 12.3 -1.5 0.3 -42.0 28.5 7.0 Thailand -6.4 Q3 28.8 -5.9 -0.5 Oct -0.8 1.9 Aug§ 3.1 -6.4 1.2 -40.0 30.3 -0.2 Argentina -19.1 Q2 -50.7 -11.3 37.2 Oct‡ 42.0 13.1 Q2§ 2.4 -9.2 na -464 80.2 -25.6 Brazil -11.4 Q2 -33.5 -5.2 3.9 Oct 3.1 14.4 Aug§‡‡ -0.4 -15.9 2.0 -266 5.29 -20.8 Chile -9.1 Q3 22.6 -5.9 2.9 Oct 2.9 12.3 Sep§‡‡ 0.2 -8.9 2.6 -74.0 757 2.3 Colombia -9.5 Q3 39.6 -7.3 1.7 Oct 2.6 15.8 Sep§ -4.6 -8.8 5.0 -112 3,649 -5.2 Mexico -8.6 Q3 57.4 -9.1 4.1 Oct 3.4 3.3 Mar 1.8 -5.3 5.8 -115 20.2 -4.6 Peru -30.2 Q2 -72.1 -13.0 1.7 Oct 1.8 15.7 Oct§ -1.1 -9.2 4.1 -19.0 3.58 -5.9 Egypt -1.7 Q2 na 3.6 4.6 Oct 4.7 7.3 Q3§ -3.4 -9.4 na nil 15.6 3.3 Israel -1.9 Q3 37.9 -5.2 -0.8 Oct -0.6 4.7 Sep 3.6 -10.9 0.8 -9.0 3.35 3.3 Saudi Arabia 0.3 2019 na -5.2 5.8 Oct 3.4 9.0 Q2 -3.9 -10.9 na nil 3.75 nil South Africa -17.1 Q2 -51.0 -7.7 2.9 Sep 3.5 30.8 Q3§ -2.1 -16.0 8.8 41.0 15.4 -4.2 Source: Haver Analytics. *% change on previous quarter, annual rate. †The Economist Intelligence Unit estimate/forecast. §Not seasonally adjusted. ‡New series. **Year ending June. ††Latest 3 months. ‡‡3-month moving average. §§5-year yield. †††Dollar-denominated bonds.

Markets Commodities % change on: % change on: The Economist commodity-price index Index one Dec 31st index one Dec 31st % change on In local currency Nov 18th week 2019 Nov 18th week 2019 2015=100 Nov 10th Nov 17th* month year United States S&P 500 3,567.8 -0.1 10.4 Pakistan KSE 40,514.7 -1.7 -0.5 Dollar Index United States NAScomp 11,801.6 0.1 31.5 Singapore STI 2,788.6 2.8 -13.5 All Items 132.3 135.1 4.6 22.9 China Shanghai Comp 3,347.3 0.2 9.7 South Korea KOSPI 2,545.6 2.4 15.8 Food 109.8 111.6 4.9 14.4 China Shenzhen Comp 2,261.6 -0.1 31.3 Taiwan TWI 13,773.3 3.9 14.8 Industrials Japan Nikkei 225 25,728.1 1.5 8.8 Thailand SET 1,364.6 1.4 -13.6 All 153.2 157.0 4.4 29.3 Japan Topix 1,720.7 -0.5 nil Argentina MERV 51,295.5 -0.3 23.1 Non-food agriculturals 108.8 111.4 4.9 13.2 Britain FTSE 100 6,385.2 nil -15.3 Brazil BVSP 106,119.1 1.3 -8.2 Metals 166.4 170.5 4.3 33.0 Canada S&P TSX 16,889.8 0.7 -1.0 Mexico IPC 42,252.6 3.4 -3.0 Sterling Index Euro area EURO STOXX 50 3,482.2 0.4 -7.0 Egypt EGX 30 10,989.7 -0.1 -21.3 All items 152.4 155.5 2.2 19.9 France CAC 40 5,511.5 1.2 -7.8 Israel TA-125 1,486.1 1.4 -8.1 Germany DAX* 13,201.9 -0.1 -0.4 Saudi Arabia Tadawul 8,621.2 2.0 2.8 Euro Index Italy FTSE/MIB 21,622.7 3.0 -8.0 South Africa JSE AS 57,323.7 -0.5 0.4 All items 124.1 126.2 4.2 14.7 Netherlands AEX 600.9 0.3 -0.6 World, dev'd MSCI 2,543.4 0.6 7.8 Gold Spain IBEX 35 7,981.5 2.4 -16.4 Emerging markets MSCI 1,207.5 2.4 8.3 $ per oz 1,884.6 1,887.3 -1.1 28.1 Poland WIG 52,232.2 1.9 -9.7 Brent Russia RTS, $ terms 1,276.8 3.5 -17.6 $ per barrel 43.7 43.8 1.4 -29.8 Switzerland SMI 10,563.9 0.3 -0.5 US corporate bonds, spread over Treasuries Turkey BIST 1,294.7 1.2 13.2 Dec 31st Sources: Bloomberg; CME Group; Cotlook; Refinitiv Datastream; Australia All Ord. 6,726.5 1.1 -1.1 Basis points latest 2019 Fastmarkets; FT; ICCO; ICO; ISO; Live Rice Index; LME; NZ Wool Services; Thompson Lloyd & Ewart; Urner Barry; WSJ. *Provisional. Hong Kong Hang Seng 26,544.3 1.2 -5.8 Investment grade 153 141 India BSE 44,180.1 1.3 7.1 High-yield 495 449 Indonesia IDX 5,557.5 0.9 -11.8 Sources: Refinitiv Datastream; Standard & Poor's Global Fixed Income For more countries and additional data, visit Malaysia KLSE 1,604.8 2.2 1.0 Research. *Total return index. Economist.com/indicators Graphic detail Technique in golf The Economist November 21st 2020 93

→ Golfers are driving farther by swinging faster. But only Bryson DeChambeau combines hard hitting with a lofty trajectory

Predicted effect of launch angle on driving distance 14° angle Average driving distance, yards With 135mph swing speed and 2,200 rpm spin rate 309 yards 310

290 6° angle 304 yards 270

250

PGA Tour golfers, 2007-21 seasons*, average swing speed v launch angle of ball 1980 90 2000 10 20 Driving distance, yards Launch angle, 270 280 290 300 310 320 degrees 16 Average swing speed, mph TTiger DustinD Brysonn 115 ↑ Hits the ball higher WWoods Johnson DeChambeauu 2021 20202 2021 114 14 113

12 112 2005 10 15 20 2008

10 2017 Average launch angle, degrees 11.50 2007 8 11.25

11.00 → Hits the ball faster 10.75 6 10.50

100 105 110 115 120 125 130 135 2005 10 15 20 Swing speed, mph Sources: PGA Tour; ShotLink; USGA; R&A; Distance Insights Project *Since 2014, seasons have begun in Sept/Oct of previous year

How have golfers continued to blast the gles have declined since then. Consultants ball farther than ever? The pga Tour, the top One golfer, however, has escaped this men’s circuit, publishes ball-tracking sta- constraint. Bryson DeChambeau, a physics of swing tistics based on the flight of most drives in graduate with oddly designed clubs and a tournaments since 2007. These suggest voracious appetite for data, is nicknamed that, although better equipment may have the “Mad Scientist”. While the pga Tour was helped, players’ recent gains stem largely suspended because of covid-19, he added How top golfers have optimised their from their technique—and even bigger im- 18kg (40lbs) of bulk. This has allowed him games to break distance records provements now appear inevitable. to swing faster than anyone else. But he has olf has a length problem. The farther The data come from ShotLink, a system also managed to smash the ball with a high Gplayers drive the ball, the longer holes that tracks how fast a golfer swings (“club- launch angle, rather than a low one—an need to be, so that skills like iron play and head speed”), his ball’s trajectory (“launch unprecedented combination that might putting remain important. But the longer angle”) and its rotation speed (“spin rate”). owe something to his unusually stiff wrists courses are, the more they cost to maintain After taking each player’s average value for and robotic technique. Using both his and the worse their environmental impact. these metrics in each year, we built a statis- brains and his brawn, Mr DeChambeau is They also become more daunting for recre- tical model using them to predict driving now hitting 15 yards farther than his closest ational golfers, who keep them in business. distances. Together, the three factors ex- competitors do. He won his first major title In 2004 golf’s regulators introduced plained 70% of the differences between at the us Open in September. limits on the size of clubs, hoping to slow players’ distances, and almost all of the in- Mark Broadie, a professor at Columbia the trend of ever-longer drives. Nonethe- crease in length over time. University and golf statistician, reckons less, the pin-flation has continued apace. The model’s lessons are intuitive. To that other professionals will try to beef up. On November 15th a famous record tum- thump the ball as far as possible, maximise But golf history is littered with players who bled: someone completed the Masters clubhead speed and launch angle while lost their edge after tinkering with their Tournament in fewer than 270 strokes, the minimising spin (which causes the ball to swings. And time may yet show that the mark Tiger Woods set when he won his first soar higher, rather than racing forward). risks of Mr DeChambeau’s bombs-away ap- major title in 1997. The new low of 268 be- However, most players face a trade-off be- proach offset some of the rewards. He longs to Dustin Johnson, a burly driver who tween these goals, explains Paul Wood of strayed into the rough often at the Masters. has averaged more than 300 yards (274 me- Ping, a club manufacturer. Harder impacts Nonetheless, the Mad Scientist’s break- tres) a pop throughout his career. He usually mean flatter trajectories. Although through is bad news for course designers. achieved the feat even though the Augusta the average male player swings faster and They will probably have to keep fiddling National course is 8% longer than in 1997. produces less spin than in 2007, launch an- with their fairways for years to come. 7 94 Obituary Jonathan Sacks The Economist November 21st 2020

Judaism, as he pointed out, often provided antidotes to the cha- os. The Torah, God’s will revealed in words, was an algorithm that gave discipline to life. Keeping Shabbat was an ideal way to achieve work-life balance. The festivals and High Holy Days reminded Jews of their shared traditions and history: the “we”, not the “I”. Above all, out of the suffering endured by Jews for centuries, Judaism had distilled hope. Every crisis gave birth to opportunity. The world could be changed not by force, but by ideas. Unhappily, though, much of the raucousness that dogged him came from Jews themselves. Though non-Jews saw him as the spokesman for all the Jews of Britain, officially he was the leader of only an Orthodox minority, the United Hebrew Congregations of the Commonwealth. A much larger number, Reform and Liberal and ultra-Orthodox, or Haredi, were outside his purview, but still looked to him. Pleasing everyone was impossible. His intellectual instincts, honed at Church of England schools and Cambridge rather than religious shuls, were on the liberal side, and in that spirit he made services more lively and revised the daily prayer book, translating the Hebrew from scratch. But in practice it was the Haredi he found himself placating most: avoiding gay groups, doing little to advance the role of women, and—his most regretta- ble mistake—refusing to attend the funeral of a much-loved Re- form rabbi, Hugo Gryn, and calling him a destroyer of the faith. “A great chief rabbi—to the Gentiles,” a fair number said, noting his easier mixing with prime ministers and royals. The Haredi, not won over, called him “Boychik”, wet behind the ears. Perhaps he was. He never set out to be a rabbi; the impulse had Words against noise grown very slowly, from that first sense of the mystery of God, when he was two or three, in the sadness of the music at his grand- father’s tiny synagogue in Finchley. He did not even feel especially Jewish until, at Cambridge, the Six-Day War of 1967 suddenly fu- elled a lifelong attachment to Israel. He spent the next summer criss-crossing America on a Greyhound bus to look for rabbis, and Rabbi Lord Sacks, chief rabbi, broadcaster and moral Menachem Mendel Schneerson in Brooklyn, then the Lubavitcher philosopher, died on November 7th, aged 72 rebbe, was the first to suggest he might be one himself and train very morning he could, Jonathan Sacks pulled on his track- others. Still he wavered, wondering about accountancy. In the end, Esuit and went out jogging. He was not called the “rapid rabbi” in the mid-1970s, it was a voice in his head that made him say—as for nothing. Jogging, as his desk-sign reminded him, led to posi- Abraham, ordered to sacrifice his son Isaac, had said three times to tive thinking. And, thanks to his noise-cancelling earphones, it God—“Hineni”, “Here I am.” brought him peace. He heard nothing as he ran but Schubert, The task of uniting his co-religionists paled, of course, beside Beethoven, or whoever it might be. Those same earphones—one of the collapse of society, but this too he had to address. Every man the best purchases he had ever made—also enabled him when he and woman had a duty to care for others, and thus to recreate the meditated to hear the music of creation, the quiet voice of wisdom bonds that held society together. “I” had to give way to “we”. Out of within it, and his response, from his spontaneous waking “Modeh great crises—climate change, coronavirus—that chance might Ani”, “I give thanks”, onwards. come. Ideally religion could drive this change, with the world’s Otherwise, the noise was hard to lose. Every year the voices be- faiths uniting, as they had done, imams and gurus, priests and rab- came more strident and extreme. Consumerism cried “I want! I bis, at Ground Zero that day. But his argument in “The Dignity of want!” Individualism cried “Me! Me! My choices, my feelings!” un- Difference” that all the major religions were equally valid ways to til even the iPhone and iPad he used all the time vexed him with truth had caused even more trouble with the Haredi. Instead, in his their “I, I, I”. Society had become a cacophony of competing claims. last book, he called for a shared morality: agreed norms of behav- The world gave every sign of falling apart. Even religion, his busi- iour, mutual trust, altruism, and a sense of “all-of-us-together”. ness, could be a megaphone of hate. He never felt that more strong- The liberty craved by “me” could be sustained only by “us”. ly than when he stood in January 2002 at Ground Zero in Manhat- It was a very long shot, but he was not a pessimist. Part of his job tan, with the ground still smoking round him. was to cheer people up, and he liked to wear a yellow tie, like sun- His answer, as the leader of the Orthodox Jews of Britain and shine, for his public lectures. If he felt depressed, music soon lifted also as a moral philosopher, was to raise his own voice. Over his him out of it. So, too, did his studies. If he was stranded on a desert term of office, from 1991to 2013, he became famous both outside Ju- island, he told a bbc interviewer, he hoped it could be with all 20 daism and outside Britain for his speeches, his lectures (including volumes of the Talmud and plenty of pencils, in order to write stints at New York University and Yeshiva University), his three commentaries in the margins. Meanwhile, thinking and writing in dozen books and his three-minute sermons on bbc Radio 4’s early- his garden study in Golders Green, with or without his invaluable morning “Thought for the Day”. A rabbi was, after all, a teacher. He earphones, he could escape the shouting world a little. was a clear, kind one, still with a touch of East End about him—his On a visit he made once to Auschwitz, as he wept and asked, like father had sold shmatters, clothes, in Petticoat Lane, and when he so many others, where God had been in the Holocaust, he seemed was made a peer in 2009 he took the title “Baron Aldgate”. But he to hear an answer: “I was in the words.” The words were “You shall was also firm, even stern. He wanted to leave his mostly secular lis- not murder.” If human beings refused to listen to God, even He was teners in no doubt that things were good or evil, true or false, abso- helpless. But if much of the noise that humans made could be can- lutely, and that moral relativism was the scourge of the age. celled out, they might more often hear what He was saying. 7 A whole new (contactless) world 2-day virtual event, December 8th-9th 2020

The rise of digital identity

As the pandemic accelerates our digital-transformation agendas, how do we now navigate the new challenges this presents? Join us as we explore how various industries are reimagining themselves in a new contactless world.

Siim Sikkut Sheila Nix Government chief information President o cer, deputy secretary- Tusk Philanthropies general of IT and telecom Republic of Estonia

John Halamka Megan Jones Bell President Chief strategy and science o cer Mayo Clinic Platform Headspace

Ariane Gorin Nik Storonsky President Chief executive Expedia Business Services Revolut

Register free Scan the QR code or simply visit bit.ly/EconContactlessWorld

Supported by