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Guns: America’s tragic exceptionalism Modi’s bad move on Kashmir From trade war to currency war Seed capital—the business of fertility

AUGUST 10TH–16TH 2019

How will this end? What’s at stake in Hong Kong РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Contents The Economist August 10th 2019 3

The world this week Britain 6 A summary of political 19 Can anyone stop no-deal? and financial news 20 5G in Scotland’s islands 21 Justice by algorithm Leaders 21 A pre-election splurge? 9 The future of Hong Kong How will this end? 22 Free ports’ pros and cons 23 Life on the Irish border 10 US-China trade Dangerous escalation 24 Bagehot Theresa 2.0 10 Mass shootings It’s the guns Europe 11 Kashmir’s status 25 Migrants in Italy Modi’s bad move 26 Norway’s fish-smugglers On the cover 12 Endangered species 26 Brussels’ revolving doors The elephant in the room 27 Social care in the If China were to react brutally, Netherlands the consequences would be Letters disastrous—and not just for 27 Tension in the Black Sea On happiness and Hong Kong: leader, page 9. 14 28 The Faroes’ puffins politics, Zhao Ziyang, Asia’s pre-eminent financial America, plastic, Boris 29 Charlemagne The centre is on the brink: briefing, Johnson, the Moon eastern summer page 16 United States • Guns: America’s tragic Briefing 30 Mass shootings exceptionalism Other rich 16 Turmoil in Hong Kong countries do not have frequent Seeing red 31 Toni Morrison mass shootings. There is a 32 Sheriff Tom Dart simple reason for that: leader, page 10. America grapples with a 33 Wyoming coal lethal mix of terrorism and lax 34 Lexington Rowing about gun laws, page 30 rights • Modi’s bad move on Kashmir The revocation of its autonomy The Americas points to a radical nationalist 35 Espírito Santo, Brazil’s agenda: leader, page 11. model state Narendra Modi dashes the old 36 Argentina’s election rules in a bid to remake a 37 Venezuela’s sanctions troubled territory, page 42 37 Cruises and the Caribbean • From trade war to currency war America cannot have a strong economy, rising tariffs Middle East & Africa and a weak dollar all at the same 38 African universities time: leader, page 10. Hostilities escalate, and the fog of war 39 More mathematicians descends, page 57 40 Liberia on the edge 40 Ride-sharing in Lebanon • Seed capitalism—the Buttonwood How business of fertility Investors yuan-dollar became the 41 Egypt’s poor are pouring money into world’s most closely companies that promise to help watched asset price, people conceive, page 51 page 58

1 Contents continues overleaf РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 4 Contents The Economist August 10th 2019

Asia Finance & economics 42 Modi’s Kashmir strike 57 The trade war escalates 43 Uzbekistan’s gulag 58 Buttonwood The yuan 44 Japan’s constitution cracks seven 44 Race in Singapore 59 John Flint leaves HSBC 59 The Fed and payments 60 Bond yields turn negative 61 Global banks in India China 62 Free exchange The growth Tensions with Taiwan 45 of shrinkflation 46 Saving old buildings 47 Chaguan The Huawei Science & technology conundrum 64 Space debris and safety 65 The IPCC land-use report 66 The virtues of bush fires International 48 The trade in endangered species Books & arts 67 Walter Bagehot 68 Maternal fears 69 Life in New Orleans Business 69 Art and activism in Australia 51 The fertility business 70 Johnson Size v simplicity 52 Fertility benefits 53 Investors flee the Permian Economic & financial indicators 53 Steelmaking and tariffs 72 Statistics on 42 economies 54 Apps for the old 54 Cash in America Inc Graphic detail 54 Private equity in Germany 73 Silicon Valley’s giants look more entrenched than ever before 55 Bartleby Profiting from holidays Obituary 56 Schumpeter Cyber Exxon 74 Sutopo Purwo Nugroho, Indonesia’s voice of good sense Valdez

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period last year. More than 620 America’s immigration agency disarm some 5,000 fighters people have died. arrested 680 illegal migrant and peacefully contest elec- workers at seven factories in tions scheduled to be held in New Zealand’s government Mississippi. Some were re- October. It waged a guerrilla introduced a bill to decriminal- leased and told to appear at an war from 1977 to 1992 before ise abortion and allow women immigration court; others laying down its guns, but took to seek the procedure up to 20 were sent to a detention centre up arms again in 2012. weeks into a pregnancy. At in Louisiana. The operation, present a woman has to get said to be the biggest of its kind The un World Food permission for an abortion, in a single state, had been Programme said that 5m peo- and may have one only if her planned for months. ple in Zimbabwe—a third of pregnancy endangers her the population—are at risk of In its most ominous warning physical or mental health. New Donald Trump withdrew his starvation. The country was yet to protesters in Hong Zealand’s abortion rate is pick of John Ratcliffe as the the region’s breadbasket until Kong, China said the demon- nevertheless higher than in new director of national the government began stealing strators were “playing with most European countries. intelligence, just days after farms and handing them to fire” and on “the verge of a very putting his name forward. ruling-party cronies. dangerous situation”. A day Many had criticised the selec- earlier a strike hit the city’s Would you please just go tion, as Mr Ratcliffe’s only transport system and led to America imposed a complete credentials seemed to be a Rounding up the opposition more than 200 flight cancella- economic embargo on the staunch defence of Mr Trump There were more demonstra- tions. The protesters, who government of Venezuela, at a recent congressional hear- tions in Moscow against the initially wanted an extradition freezing all its assets and ing on the Mueller report. authorities’ decision to bill to be scrapped, are now threatening sanctions against exclude opposition figures calling for Carrie Lam to resign firms that do business with it, Puerto Rico’s Supreme Court from contesting next month’s as Hong Kong’s leader and for unless they have an exemp- ruled that the appointment of a municipal elections. Hundreds direct elections. China’s tion. The move steps up the new governor by Ricardo Ros- of protesters were arrested, spokesman in Hong Kong said pressure on Nicolás Maduro’s selló, who was forced from including Lyubov Sobol, one of Ms Lam was staying put. socialist regime. America, office by street protests, was the leading candidates to have along with 50-odd other coun- unconstitutional and he would been barred from appearing on India’s Hindu-nationalist tries, recognises Juan Guaidó, have to step down. The court the ballot. government unexpectedly the opposition leader, as Vene- sided with the territory’s Sen- ended the autonomy granted to zuela’s president, though Mr ate, which had not been given a Italy’s government tightened Indian-administered Kash- Maduro is still supported by vote on the appointment. After the laws on dealing with mir, splitting it in two, putting China and Russia. the court’s decision Wanda migrants, sharply increasing local party leaders under house Vázquez was sworn in as the fines that can be imposed arrest and ordering non-resi- The head of Brazil’s institute governor, though she had said on ngos that rescue people at dents, including tourists, to for space research was fired she didn’t want the job. sea and bring them to Italy leave. The government poured after a spat with Jair Bolsonaro, without permission. The gov- another 25,000 troops into the the country’s president, over Tributes were paid to Toni ernment had to present the region. Pakistan said the move satellite images that showed a Morrison, the only black vote as an issue of confidence, was illegal. Relations between sharp increase in the Amazon’s woman to have won the Nobel but easily prevailed. the two countries were already deforestation. Mr Bolsonaro prize for literature, who died fraught because of an attack by had questioned the data and aged 88. Ms Morrison’s work Pakistani-based jihadists on said it brought Brazil’s rep- was based on narratives about Indian troops in Kashmir six utation into disrepute. race and slavery. months ago.

The Taliban started a fresh All too familiar City carnage round of talks with America’s The latest mass shootings in A car-bomb in central Cairo envoy for Afghanistan. The America elicited more pleas for killed 20 people. Egypt’s gov- talks, held in Qatar, are aiming gun controls. Even some Re- ernment blamed a violent for a deal under which America publicans said they would offshoot of the Muslim Broth- will withdraw its troops from support “red-flag laws” that erhood for the blast. Afghanistan, but only if the would take guns away from Taliban starts negotiations those who are a violent risk. Britain joined an American-led Powered by kerosene in a with the government in Kabul. The gunman who slaughtered initiative to provide naval backpack, Franky Zapata flew As they were talking, the Tali- 22 people at a Walmart in protection to ships travelling across the English Channel on ban claimed responsibility for heavily Hispanic El Paso was in through the Strait of Hormuz a hoverboard. The French a bomb that killed 14 people custody, as police trawled amid heightened tensions with inventor, who demonstrated and wounded 145 in Kabul. through an anti-immigrant Iran. In July Iran seized a Brit- his device at this year’s Bastille screed he had written. The ish-flagged oil tanker. Day parade, took 22 minutes to The Philippines declared a shooter who murdered nine make the 35km (22-mile) cross- national dengue epidemic. At people, including his sister, in Mozambique’s president ing. A handy alternative to the least 146,000 cases were re- Dayton was killed by police signed a peace agreement with Eurostar when it is next dis- corded from January to July, officers on patrol after 30 the leader of Renamo, a rebel rupted by weather/strikes/ double the number in the same seconds of mayhem. movement. Renamo said it will technical issues. 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The world this week Business The Economist August 10th 2019 7

America officially categorised chemicals that Japan has tight- through increasingly choppy Universal’s vast catalogue of China as a currency manip- ened its grip on, which South waters stirred by trade ten- artists, which include Abba, ulator for the first time in 25 Korea calls an embargo. This sions between America and the Beatles, Drake, Elton John years, after the yuan weakened week Japan approved its first China. Most of hsbc’s profit and Taylor Swift. past the psychologically signif- shipment of high-tech materi- comes from Asia. The bank is icant mark of seven to the al to South Korea in a month. expected to take its time dollar, the lowest point for the The row was sparked by a choosing a successor. Chinese currency since the political spat. financial crisis. The yuan A report prepared for the Inter- trades narrowly in China governmental Panel on Cli- around an exchange rate set by The golden girl mate Change suggested that a the central bank. It dismissed The eu selected Kristalina move away from meat and the idea that the yuan had been Georgieva as its candidate to towards plant-based diets manipulated, submitting that head the imf, but only after the could help fight global warm- its depreciation was caused rancorous exercise concluded ing, but it pulled back from instead by “shifts in market with some telephone diplo- recommending that people dynamics”, which include macy. Ms Georgieva is cur- become vegetarians. Compa- “escalating trade frictions”. rently the second-highest nies selling plant-based pro- The Harland and Wolff official at the World Bank. ducts have seen their share shipyard in Belfast entered Those trade frictions had Under an informal convention, prices soar this year. administration, marking the indeed escalated when Donald Europe gets to pick the manag- probable end of a business that Trump earlier announced 10% ing director of the imf (and The latest takeover in the built the Titanic and other tariffs on an additional America the president of the consolidating payments famous vessels. The yard once $300bn-worth of Chinese World Bank), so Ms Georgieva industry saw Mastercard employed 15,000 workers, but goods in the two countries’ is favoured to get the job in agreeing to buy Nets, a Danish now just 122 work on repairs. It trade war. Mr Trump said he October, when the imf will real-time payments provider, has not built a ship since 2003. was punishing China for not choose its leader. But it must for $3.2bn. It is Mastercard’s keeping its promise to buy first change a rule that says a biggest acquisition to date. Barneys New York, a luxury more American agricultural new managing director must department-store chain that goods, among other things. be under 65. Ms Georgieva opened shop in 1923, filed for turns 66 on August 13th. Take a chance on me bankruptcy protection and Stockmarkets had a rocky Vivendi, a French media com- said it would close most of its week, with the s&p 500, Dow John Flint’s decision to step pany, said it was considering stores. The company is restruc- Jones Industrial Average and down as chief executive of selling a stake of at least 10% of turing its debt and expects to nasdaq indices recording their hsbc after just 18 months in its Universal Music business keep seven stores open, in- worst trading day of the year so the job took markets by sur- to Tencent, a Chinese tech- cluding its flagship premises far. Most Asian currencies prise. His resignation was nology conglomerate, possibly in Manhattan, made famous by tumbled following the yuan’s made “by mutual agreement raising that to 20% at a later “Sex and the City”. Its insolven- depreciation. But the yen, with the board”, which report- date. If completed, a deal might cy proves that the upheaval in considered to be a haven in edly lost confidence in Mr allow Tencent to combine its retailing is not confined to uncertain times, soared Flint’s ability to steer the bank expertise in streaming with suburban shopping malls. against the dollar. The yields on government bonds, anoth- er safe bet, fell as investors ploughed into the market.

Investors were also unnerved by a wave of larger-than-ex- pected interest-rate cuts. India’s central bank shaved 0.35 of a percentage point off its main rate, to 5.4%; New Zealand’s slashed its bench- mark rate from 1.5% to 1%; and Thailand’s first cut in four years left its main rate at 1.5%. All three were pessimistic about the prospects for growth.

A trade dispute caused sales of cars made in Japan to plunge in South Korea last month. Samsung, South Korea’s big- gest maker of smartphones and memory chips, said it was searching for substitute suppliers of some essential РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Leaders Leaders 9 How will this end?

If China were to react brutally, the consequences would be disastrous—and not just for Hong Kong t is summer, and the heat is oppressive. Thousands of stu- tanks. Its control over Hong Kong, where people have access to Idents have been protesting for weeks, demanding freedoms uncensored news, is much shakier. Some of the territory’s citi- that the authorities are not prepared to countenance. Officials zens would resist, directly or in a campaign of civil disobedience. have warned them to go home, and they have paid no attention. The army could even end up using lethal force, even if that was Among the working population, going about its business, irrita- not the original plan. tion combines with sympathy. Everybody is nervous about how With or without bloodshed, an intervention would under- this is going to end, but few expect an outcome as brutal as the mine business confidence in Hong Kong and with it the fortunes massacre of hundreds and maybe thousands of citizens. of the many Chinese companies that rely on its stockmarket to Today, 30 years on, nobody knows how many were killed in raise capital. Hong Kong’s robust legal system, based on British and around Tiananmen Square, in that bloody culmination of common law, still makes it immensely valuable to a country that student protests in Beijing on June 4th 1989. The Chinese re- lacks credible courts of its own. The territory may account for a gime’s blackout of information about that darkest of days is tacit much smaller share of China’s gdp than when Britain handed it admission of how momentous an event it was. But everybody back to China in 1997, but it is still hugely important to the main- knows that Tiananmen shaped the Chinese regime’s relations land. Cross-border bank lending booked in Hong Kong, much of with the country and the world. Even a far less bloody interven- it to Chinese companies, has more than doubled over the past tion in Hong Kong would reverberate as widely (see Briefing). two decades, and the number of multinational firms whose re- What began as a movement against an extradition bill, which gional headquarters are in Hong Kong has risen by two-thirds. would have let criminal suspects in Hong Kong be handed over The sight of the army on the city’s streets would threaten to put for trial by party-controlled courts in mainland China, has an end to all that, as companies up sticks to calmer Asian bases. evolved into the biggest challenge from dissenters since Tianan- The intervention of the People’s Liberation Army would also men. Activists are renewing demands for greater democracy in change how the world sees Hong Kong. It would drive out many the territory. Some even want Hong Kong’s independence from of the foreigners who have made Hong Kong their home, as well China. Still more striking is the sheer size and persistence of the as Hong Kongers who, anticipating such an eventuality, have ac- mass of ordinary people. A general strike called quired emergency passports and boltholes else- for August 5th disrupted the city’s airport and where. And it would have a corrosive effect on mass-transit network. Tens of thousands of civil China’s relations with the world. servants defied their bosses to stage a peaceful Hong Kong has already become a factor in the public protest saying that they serve the people, cold war that is developing between China and not the current leadership. A very large number America. China is enraged by the high-level re- of mainstream Hong Kongers are signalling that ception given in recent weeks to leading mem- they have no confidence in their rulers. bers of Hong Kong’s pro-democracy camp dur- As the protests have escalated, so has the ing visits to Washington. Their meetings with rhetoric of China and the Hong Kong government. On August 5th senior officials and members of Congress have been cited by Chi- Carrie Lam, the territory’s crippled leader, said that the territory na as evidence that America is a “black hand” behind the unrest, was “on the verge of a very dangerous situation”. On August 6th using it to pile pressure on the party as it battles with America an official from the Chinese government’s Hong Kong office felt over trade (a conflict that escalated this week, when China let its the need to flesh out the implications. “We would like to make it currency weaken—see next leader). clear to the very small group of unscrupulous and violent crimi- Were the Chinese army to go so far as to shed protesters’ nals and the dirty forces behind them: those who play with fire blood, relations would deteriorate further. American politicians will perish by it.” Anybody wondering what this could mean would clamour for more sanctions, including suspension of the should watch a video released by the Chinese army’s garrison in act that says Hong Kong should be treated as separate from the Hong Kong. It shows a soldier shouting “All consequences are at mainland, upon which its prosperity depends. China would hit your own risk!” at rioters retreating before a phalanx of troops. back. Sino-American relations could go back to the dark days The rhetoric is designed to scare the protesters off the streets. after Tiananmen, when the two countries struggled to remain on And yet the oppressive nature of Xi Jinping’s regime, the Com- speaking terms and business ties slumped. Only this time, China munist Party’s ancient terror of unrest in the provinces and its is a great deal more powerful, and the tensions would be com- historical willingness to use force, all point to the danger of mensurately more alarming. something worse. If China were to send in the army, once an un- None of this is inevitable. China has matured since 1989. It is thinkable idea, the risks would be not only to the demonstrators. more powerful, more confident and has an understanding of the Such an intervention would enrage Hong Kongers as much as role that prosperity plays in its stability—and of the role that the declaration of martial law in 1989 aroused the fury of Beijing’s Hong Kong plays in its prosperity. Certainly, the party remains as residents. But the story would play out differently. The regime determined to retain power as it was 30 years ago. But Hong Kong had more control over Beijing then than it does over Hong Kong is not Tiananmen Square, and 2019 is not 1989. Putting these now. In Beijing the party had cells in every workplace, with the protests down with the army would not reinforce China’s stabil- power to terrorise those who had not been scared enough by the ity and prosperity. It would jeopardise them. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 10 Leaders The Economist August 10th 2019

US-China trade Dangerous miscalculations

America cannot have a strong economy, a trade war and a weak dollar all at the same time ince the trade war began in 2018 the damage done to the glo- There is no denying that China has manipulated its exchange Sbal economy has been surprisingly slight. America has grown rate in the past. But today a different dynamic is playing out healthily and the rest of the world has muddled along. But this around the world. Mr Trump wants a booming economy, protect- week the picture darkened as the confrontation between Ameri- ed by tariffs and boosted by a cheap dollar, and when he doesn’t ca and China escalated, with more tariffs threatened and a bitter get them he lashes out. But economic reality makes these three row erupting over China’s exchange rate. Investors fear the dis- objectives hard to reconcile. Tariffs hurt foreign exporters and pute will trigger a recession, and there are ominous signs in the dampen growth beyond America’s borders; weaker growth in markets—share prices fell and government-bond yields sank to turn leads to weaker currencies, as business becomes cautious near-record lows. To avoid a downturn, both sides need to com- and central banks ease policy in response. The effect is particu- promise. But for that to happen President Donald Trump and his larly pronounced when America is growing faster than other rich advisers must rethink their strategy. If the realisation has not countries, as it has recently. The dollar’s enduring strength is a dawned yet, it soon should: America cannot have a cheap curren- result, in part, of Mr Trump’s policies, not of a global conspiracy. cy, a trade conflict and a thriving economy. Unless this fact sinks in soon, real harm will be done to the The latest spike in tensions began on August global economy. Faced with the uncertainty 1st, when the White House threatened to impose Chinese yuan per $ created by a vicious superpower brawl, firms in a further round of duties on $300bn of Chinese Inverted scale 6.0 America and elsewhere are cutting investment, exports by the start of September. China re- hurting growth further. Lower interest rates are 6.5 sponded four days later by telling its state-run making Europe’s rickety banks even more frag- companies to stop buying American agricultur- 7.0 ile. China could face a destabilising flood of al goods. On the same day it let its heavily man- 7.5 money trying to leave its borders, as happened aged currency pass through a rate of seven 2008 10 12 14 16 19 in 2015. And further escalation is possible as against the dollar, a threshold which may seem both sides reach for economic weapons that arbitrary but is symbolically important (see Buttonwood). were considered unthinkable a few years ago. America could in- That lit a fuse beneath the Oval Office. Mr Trump has long tervene to weaken the dollar, undermining its reputation for un- claimed that other countries, including China, keep their cur- fettered capital markets. China or America could impose sanc- rencies artificially cheap to boost their exports, hurting America. tions on more of each other’s multinational firms, in the same He has been griping about the strong dollar for months. In June way that America has blacklisted Huawei, or suspend the li- he accused Mario Draghi, the head of the European Central Bank, cences of banks that operate in both countries, causing havoc. of unfairly weakening the euro by hinting at rate cuts. Hours As it pursues an ever more reckless trade confrontation, the after the yuan dropped, America’s Treasury designated China a White House may imagine that the Federal Reserve can ride to “currency manipulator” and promised to eliminate its “unfair the rescue by cutting rates again. But that misunderstands the competitive advantage”. As the hostilities rose, markets depth of unease now felt in factories, boardrooms and trading swooned, with ten-year bond yields in America reaching 1.71%, floors around the world. In September talks between America as investors judged that the Federal Reserve will slash interest and China are set to resume. It is time for a settlement. The world rates to try to keep the expansion alive (see Finance section). economy cannot stand much more of this. 7

Mass shootings in America It’s the guns

Other rich countries do not have frequent mass shootings. There is a simple reason for that he two mass shootings within 24 hours of each other last about mass murders, too. The shooter in Dayton left no explana- Tweekend, one in El Paso, Texas, the other in Dayton, Ohio, tion for his actions. His social-media accounts show he was a mi- were horrifying. Yet at the same time they were not surpris- sogynist with an interest in leftish causes. The El Paso killer ing—at least in a purely statistical sense. So far this year America posted a manifesto filled with racist anxiety about the replace- has averaged one shooting in which four or more people are ment of whites by Hispanics, as well as language that could have killed or injured every single day. The death toll at the El Paso been drawn from a Trump rally (see United States section). Walmart was 22. And that awful number made it only the fifth- After the killings, people have blamed any number of deadliest shooting this decade. The ten people killed in Dayton causes—from mental illness and video games to the internet and put the murder spree there down at number 11on the same list. the social alienation of young men. Yet cause and effect are hard When police officers are trying to solve a murder they look at to pin down, as shown by the row about Donald Trump’s culpa- motive and opportunity. That framework is useful for thinking bility for what happened in El Paso. His role matters not just be-1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Economist August 10th 2019 Leaders 11

2 cause, as president, he has a responsibility to unite the country, Yet it is also true that mass shootings were common before Mr but also because America’s biggest mass shootings come in pat- Trump took office and will continue after he has gone. The El terns. In the 1980s there was a wave of post-office shootings. Lat- Paso shooter’s main fixation was immigration, but he also wrote er, shootings at schools and universities became a way for a cer- in his manifesto about excessive corporate power and environ- tain type of young man to achieve fame. More recently there has mental damage. The Dayton shooter was not a Trump supporter been an increase in acts of terrorism perpetrated by white men at all. In such cases it is impossible to know whether the ideology who believe they are locked in a struggle against non-whites and makes the person violent, or whether the violent desires come Jews. This thread connects the shooting at a Charleston church first and the half-baked justification follows after. in 2015 to the one at a Pittsburgh synagogue last year and to the El If motive can be hard to attribute precisely, and policy corre- Paso Walmart shooting. spondingly hard to design, the same is not true of opportunity. That is where Mr Trump’s language comes in. His presidential White nationalists can be found in many Western countries, as campaign began with an impromptu speech in can politicians who exploit racial divisions. But which he said Mexico was sending rapists in a society where someone with murderous in- across the border, and it continued in that vein. tent can wield only a kitchen knife or a baseball The White House has not changed him. At a rally bat, the harm he can do is limited. When such a in Florida in May, where he denounced migrants person has access to a semi-automatic weapon, at the southern border, someone in the crowd which can hold 100 rounds of ammunition and shouted that the solution was to shoot them. discharge them in under a minute, it is griev- “That’s only in the Panhandle you can get away ous—and hence, lamentably, more seductive. with that kind of statement,” responded Mr The answer is obvious: restrict the owner- Trump, to laughter and cheers. After the El Paso shootings, as ship of certain types of guns, as New Zealand did after the shoot- after Charlottesville, the president, reading from a teleprompter, ings in Christchurch, and introduce proper background checks. condemned white supremacists and bigots. Yet the next time he Such measures will not prevent all gun deaths. The constitution is in front of a big crowd he will be at it again. will not be rewritten and too many weapons are in circulation. If you accept that the words people say have some effect, then Yet given the number of fatalities, even a 5% reduction would the words that a president says must matter more. There is no save many innocent lives. Mass shootings in America have be- way to calculate the probability of such racially divisive language come like deforestation in Brazil or air pollution in China—a encouraging someone to act out violent racist fantasies, but it is man-made environmental hazard that is hard to stop. Such haz- not one and it is not zero. Run the experiment enough times with ards are not cleaned up overnight. That should not prevent peo- enough people and at some point it becomes lethal. ple from making a start. 7

Kashmir’s status Modi’s bad move

The revocation of Kashmir’s autonomy points to a radical nationalist agenda hen the princely state of Jammu & Kashmir joined the Indians. Direct rule would bypass Kashmir’s fossilised political Wfledgling Indian union in October 1947, it had little choice dynasties, dragging the state into the political mainstream. in the matter. Pakistan-backed tribesmen had invaded; only In- That is a forlorn hope. For one thing, Mr Modi enacted the dian troops could repel them. The consolation was that Kashmir change through repression and subterfuge. Kashmiri political was promised a lot of autonomy. That came to include trappings leaders were arrested, internet and phone networks were shut of statehood—a separate constitution and flag—and more sub- down and public assembly was forbidden. In the week before the stantial differences, such as a ban on outsiders buying property. move 30,000 troops were sent into the region, and another 8,000 On August 5th the government of Narendra Modi, India’s afterwards. The government has also resorted to constitutional prime minister, tore up this compact. That has electrified his chicanery, exploiting the fact that Kashmir’s state legislature— Hindu-nationalist supporters, who want Kashmir, India’s only which would normally have to assent to such changes—was dis- Muslim-majority state, brought to heel. But it is likely to unleash solved over a year ago. India’s Supreme Court ought to look un- forces that do just the opposite. kindly on such legal sleight of hand, which would allow any oth- Mr Modi’s plan is far-reaching. Jammu & Kashmir, already er state to be similarly conjured out of existence. split into two in 1947 when Pakistan grabbed one-third of it, has Second, the move is likely to compound Kashmiris’ mistrust been divided further, with the high desert of Ladakh hived off of the Indian government. The autonomy they were promised in into a separate entity. Both the new parts were demoted from the republic’s earliest years had already been whittled down. As constituents of a fully fledged state to mere “union territories”, early as the 1950s, the state’s independent-minded political lead- ruled from New Delhi. And Article 370 of India’s constitution has ers were occasionally jailed. The government’s rigging of an elec- been gutted, thus eliminating Kashmir’s autonomy at a stroke. tion in 1987 sparked an insurgency, stoked by Pakistan. Violence, The repeal of that provision has been a totemic issue to Hindu which had subsided for many years, has ticked up recently, nota- nationalists for decades. In their view, the state’s political privi- bly after the killing of a charismatic militant leader in 2016. Local leges have fanned the flames of separatism by encouraging Kash- people are angry and disillusioned. Turnout in this year’s na- miris to view themselves as irredeemably different from other tional elections was less than 30% in Kashmir and a dismal 14% 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 12 Leaders The Economist August 10th 2019

2 in the capital, Srinagar, compared to a national average of 62%. stan to clamp down on its proxies, the angrier Kashmiris are, the But, as Kashmir’s bloody history suggests, things can get easier it is for Pakistani warmongers to recruit them. That in- much worse. The potential demographic impact of the loss of au- creases the risk of military escalation—which, between two nuc- tonomy might be its most incendiary consequence. Many fear lear-armed states, is a frightening prospect. that the removal of restrictions on ownership of land and prop- Mr Modi portrays himself as a leader who is willing to break erty by outsiders, which were embedded in its constitutional boldly with convention—from the botched withdrawal in 2016 of deal, will lead to an influx of Hindu immigration. The gloomiest most cash in circulation to the (commendable) abolition of in- Indian observers have drawn comparisons to China’s Sinicisa- stant Islamic divorce on July 30th. He is emboldened by a tower- tion of Tibet and Xinjiang. ing majority in parliament, won in an election earlier this year, Lastly, there may be ripples beyond Kashmir (see Asia sec- and pliant opposition parties. Yet his shake-up of Kashmir is an tion). Those of India’s north-eastern states that also have been unmistakable signal of how he intends to exercise that power. granted extra autonomy are worried that their own constitution- He might now turn to other Hindu nationalist fixations, such as al carve-outs may be under threat. And Pakistan has reacted to the construction of a temple on the site of a mosque razed by a Mr Modi’s move with a promise to “exercise all possible options radical Hindu mob in 1992. Mr Modi is setting himself more firm- to counter the illegal steps”, which might include increasing ly on the path of zealous nationalism, ideological purity and reli- support for jihadist groups. Although it is incumbent on Paki- gious chauvinism. It will lead nowhere good. 7

Endangered species The elephant in the room

Now is not the time to liberalise the trade in endangered species early 6,000 species of animals and about 30,000 species of should be rejected, consider what has happened to elephant Nplants are listed in the various appendices of the Conven- numbers since cites most recently authorised some legal trade, tion on International Trade in Endangered Species (cites) to pro- when Botswana, Namibia and South Africa were allowed in 2007 tect them against over-exploitation. But as cites convenes its to sell a fixed amount of ivory to Japan, as a one-off. Elephant three-yearly decision-making conference in Geneva this month, numbers started falling again. A survey conducted in 2014-15 es- one animal, as so often in the past, will attract much of the atten- timated that elephant numbers had fallen by 30% across 18 coun- tion: the African elephant. tries since 2007; another estimated a decline of over 100,000 ele- The elephant is in many ways cites’s mascot. It was rescued phants, a fifth of the total number, between 2006 and 2015. in 1989 from what seemed inevitable extinction after half the Increased poaching was at least partly to blame. population had been wiped out by poaching in just a decade. These numbers suggest that the existence of even a small le- That year elephants were included in cites’s Appendix I, under gal market increases the incentive for poaching. It allows black- which virtually all international trade in their products is marketeers to pass off illegal ivory as the legal variety, and it sus- banned. The slaughter slowed. This month’s meeting will con- tains demand. The biggest market is in China. Last year the gov- sider competing proposals about how absolute the ban should ernment banned domestic sales of ivory, but its customs be, since in some countries elephant popula- officials seize a lot of smuggled products—nota- tions have recovered (see International sec- bly from Japan, which citeslicensed as a market tion). Countries seeking a modest relaxation in 2007. For the poachers, ivory is fungible. If it have a strong case to make. But it is not strong is hard to secure in Zambia or Botswana, anoth- enough. The ban must stay. er country’s elephants will be in the gun-sights. Understandably, countries that have done a Congo, Mozambique and, especially, Tanzania, good job protecting their elephants feel this is have seen sharp declines. Unfair though it is, unfair. They point out that they have devoted countries with better-run conservation pro- huge resources to the elephant, through the grammes are, in effect, paying for the failings of costs of law enforcement alone. And the real burden of all this is those with feeble institutions. borne by poor local people who are in competition with wildlife In the long run technology can help make trade compatible for resources, and sometimes in conflict with it—elephants can with conservation. In better-resourced national parks, drones be destructive. People and governments, so the argument goes, are used to make it easier for rangers to spot poachers. dna test- need to have an economic stake in the elephants’ survival. The ing of ivory shipments can establish where they came from, and ivory trade would give them one. thus whether they are legal. As prices fall and countries get rich- That’s why Zambia wants its elephants moved to the slightly er, both technologies are likely to spread. less restrictive Appendix II, which would allow some trade in, for The objection to trade in products of endangered species is example, hunting trophies. Four other southern African coun- not moral, it is pragmatic. When the world is confident that it tries (Botswana, Namibia, South Africa and Zimbabwe), whose will boost elephant numbers rather than wipe them out, the ivo- elephants were moved to Appendix II 20 years ago, want to be al- ry trade should be encouraged. Regrettably, that point has not yet lowed to trade in their products, which, despite the change in come. And until it does, the best hope for the elephant—and even status, they have mostly been prohibited from doing. more endangered species, such as rhinos—lies not in easing the To understand why these reasonable-sounding proposals ban on trading their products, but in enforcing it better. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 14 Letters The Economist August 10th 2019

quantity to be measured and asylum-seekers into their If Mr Johnson were to lose The satisfied stay home exploited by politicians. countries, but not into their power in the coming months I can think of at least one derek o’leary own communities, where the he may not, as you suggest, be reason why the increase in Berkeley, California only outsiders who are perma- Britain’s “shortest-serving happiness in European coun- nently welcome are those who prime minister”. Counting tries coincides with the rise of can afford the house prices and only those who formed fully populist parties (“The satisfac- Reform minded private-school fees. effective ministries, he could tion paradox”, July 13th). The Your obituary of Li Peng (July My suggestion is that you still beat George Canning, who rise in happiness that has been 27th) described Zhao Ziyang, bear some of the consequences served as prime minister for 119 recorded in national surveys the general-secretary of the of your values. Why not con- days in 1827. By a more gener- does not necessarily affect Communist Party at the time of vert a small amount of space at ous definition, the record elections, as only a subset of the Tiananmen massacre in each of your offices around the could belong to the Earl of the population turns out. And 1989, as a “seeming liberal”. world into accommodation for Bath, who held office for 48 populist parties are more Indeed, when he ran Sichuan asylum-seekers? Your good hours in 1746. successful at elections with a province, Zhao allowed farm action would be widely pub- Horace Walpole comment- lower turnout. The parallel rise prices to fluctuate, causing licised and set an example that ed that the earl “never of happiness and populist production to increase. And in might be replicated elsewhere. transacted one rash thing...and parties is not puzzling if the 1988 he invited Milton Fried- That is, if your desire to defeat left as much money in the satisfied tend to stay at home man to be his only Western Trumpian bigotry is genuine. Treasury as he found in it”. on election day. consultant after China experi- thomas hodson Sadly, Mr Johnson is also dominik schraff enced high inflation. Friedman London unlikely to match these Post-doctoral researcher said that Zhao was the best accomplishments. Centre for Comparative and economist he had ever met in a jacob williams International Studies socialist country. Let plastic sink London eth Zurich bertrand horwitz Plastic pollution that remains Asheville, North Carolina local to its source, either on Mr Johnson’s closest parallel Take Poland, for example. It land or in shallow waters, is may be neither Churchill nor has enjoyed economic growth, certainly less of a problem than Neville Chamberlain but low unemployment and rising Citizenship test the vast amount accumulating Galba, the Roman emperor living standards, and seen the Along with most other media, in our global oceans who succeeded Nero in 68ad populist Law and Justice Party The Economist reminded its (Schumpeter, July 27th). Some but lasted only a few months. romp home at elections. Voter readers that three of the four plastics are denser than water The pithy and scathing assess- turnout hovers around 50%. congresswomen who were and do not float. The lighter ment of Tacitus was “omnium Why don’t half these Poles go subjected to Donald Trump’s plastics can incorporate heavi- consensu capax imperii, nisi to the polls? Do they stay away rants were born in America and er particles in their polymer imperasset”. Rough transla- because they are happy, or are the fourth is a naturalised resins to ensure they don’t tion: had he never become they unsatisfied? Some might citizen (Lexington, July 20th). float either. Plastic bottles, emperor everyone would have believe that their single vote It was commendable that you which otherwise float like agreed that he had the capacity does not matter. Some might described his language as boats on the water surface, can to reign. think that none of the parties “racist” rather than “racially be shaped to flood easily and martin eaton represents their views. What- charged”. However, one point thus sink rapidly. Bromsgrove, Worcestershire ever the reason, there is a that is always overlooked is It seems the packaging growing realisation that if only that Alexandria Ocasio-Cortez companies and their heedless some of those who stay away is not “of recent migrant stock”. customers are avoiding a sim- The original rocket man could be persuaded to vote, the Puerto Ricans have been citi- ple and inexpensive fix to the You mentioned China’s plan to rise of right-wing populists zens of the United States for worst part of the plastic pollu- land someone on the Moon by could be forestalled. many decades. Her mother did tion problem. Plastics and 2035 (“The next 50 years in piotr zientara not emigrate to New York from plastic bottles should all be space”, July 20th). This may be Associate professor of Puerto Rico any more than I made to sink to the ocean floor. a repeat visit by China. Accord- economics emigrated to New York from ion yadigaroglu ing to legend one Wan Hu University of Gdansk Iowa. We simply moved. Partner became the world’s first astro- It is unfortunate that Amer- Technology Impact Fund naut more than 4,000 years Thomas Jefferson did not think icans need to be reminded that New York ago by tying 47 fireworks to his of “the pursuit of happiness” in Puerto Rico is a United States’ chair. The shear impact of his terms of our inward-looking territory and that Puerto landing on the Moon caused contemporary scale of satisfac- Ricans are American citizens. No comparison the formation of a large crater, tion. It is an elusive turn of joseph english You compared Boris Johnson which is named after him. phrase, but one closer to the New York to Winston Churchill, because ted paul classical philosophical notion both leaders “inherited” a Weymouth, Dorset of happiness as part of the One of the charges laid at the serious crisis (“Here we go”, individual’s civic existence. door of liberals is hypocrisy, July 27th). I disagree. Mr Through that lens, the pursuit, the odious practice of preach- Johnson did not inherit, but Letters are welcome and should be that is, the attainment or prac- ing values and promoting actively helped create this addressed to the Editor at The Economist, The Adelphi Building, tice, of happiness reflects the solutions without accepting Brexit crisis. He deserves no 1-11John Adam Street, London WC2N 6HT virtuous life of the citizen any of the consequences. For comparison to Churchill. Email: [email protected] within the body politic. This is example, liberals (broadly jochem borren More letters are available at: the inverse of happiness as a speaking) are keen to allow Eindhoven, Netherlands Economist.com/letters РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Executive focus 15 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 16 Briefing Turmoil in Hong Kong The Economist August 10th 2019

the central government’s representative in Seeing red the territory. At the end of July Major Gen- eral Chen Daoxiang, commander of the usually invisible Hong Kong garrison of the People’s Liberation Army (pla) called the unrest “absolutely impermissible”, send- ing the message that the pla would not hesitate to step in to restore order if Xi Jinp- HONG KONG ing, China’s ruler, demanded it. In an un- Asia’s pre-eminent financial centre is on the brink subtle message, the garrison released a vid- or the past nine weeks and counting nese rule itself. eo showing Chinese forces using Fhuge anti-government protests have How China and the international com- machine-guns to suppress mock riots. rocked Hong Kong, with no obvious end in munity, particularly America, react to the This has led to anxious speculation in sight. On August 5th pro-democracy prot- continuing crisis will shape the future of Hong Kong and around the world that Chi- esters organised the first general strike in Asia’s pre-eminent financial centre. Al- nese security forces might be preparing to the territory for half a century. It shut down ready it is clear that, were somehow the intervene in a territory to which, in its for- parts of the transport system. Banks, adver- protests to be quelled peacefully, Hong mula of “one country, two systems” it had tising companies and many other busi- Kong cannot simply revert to its imagined promised “a high degree of autonomy”. On nesses also closed, or urged their employ- old form. Gone, possibly for ever, is the no- August 5th, at a press conference after two ees to work from home. tion, rooted in colonial days but slavishly weeks hidden from public view, a rattled The absolute number of protesters on repeated by China after the territory’s Mrs Lam spoke of Asia’s financial hub be- the streets has fallen—from an estimated handover from the British in 1997, that ing on the “verge of a very dangerous situa- 2m who marched, largely peacefully, on Hong Kong can endeavour to be an “eco- tion”. A day later, at an even rarer press con- June 16th, to 350,000 strikers. But the fluid nomic” city in which politics plays a minor ference, a spokesperson for the Hong Kong tactics of the black-clad vanguard, which is role, and only then among an enlightened, and Macau affairs office in Beijing empha- increasingly using violence, has chal- disinterested elite. Politics has, now, firmly sised the mainland’s faith in Mrs Lam, but lenged the resources of a police force deter- taken hold. also warned that Hong Kong’s “shocking” mined to crack down on the protests. As the protests had gone beyond legitimate free methods of the protesters have changed, so The battle outside raging assembly and were pushing the territory too has their target: what began as opposi- Chinese officials and Communist Party into a “dangerous abyss”. tion to a bill that would have allowed sus- media divine Western “black hands” be- China is no longer as directly depen- pects in Hong Kong to be extradited to hind the protests. The rhetoric from the dent on Hong Kong for its economic wel- mainland China has become a popular re- mainland has escalated markedly since fare as it once was, when foreign firms op- volt against the local government—and, July 21st, when protesters defaced the na- erating from the territory, managerial for at least some on the streets, against Chi- tional insignia of the central liaison office, expertise and access to international mar-1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Economist August 10th 2019 Briefing Turmoil in Hong Kong 17

2 kets via its port were critical. At the time of in the last decade, to $2trn. Hong Kong’s believes, is trying to exploit. the handover in 1997, the territory’s econ- share of total fdi flowing into mainland Its evidence for this is that the Ameri- omy was equivalent to nearly a fifth of Chi- China has remained fairly constant, at can government, already caught up in a na’s. Today the figure is 3%, and its port is 60%. Although the amount of multina- gargantuan tussle with China over trade, no longer important in shipping goods tional money flowing into and out of China cyber-technology and dominance in Asia, from the mainland (see chart). has soared, most firms still prefer to have is taking an increasing interest in develop- The structure of Hong Kong’s economy Hong Kong’s legal stamp. ments in Hong Kong. President Donald has changed little in two decades. In terms Meanwhile, the number of multina- Trump called the demonstrations “riots”, of their contribution to the economy, trade tionals with their regional headquarters in echoing the language coming from Beijing. and logistics along with finance are re- the territory has increased by two-thirds Yet his administration is staffed with markably similar (22% and 19% respective- since 1997, to around 1,500. Hong Kong China hawks. Many see the protests as a re- ly). The same old family-run conglomer- hosts the most valuable life insurer in the sponse to the way China has undermined ates in Hong Kong have a lock on property world, excluding mainland China, aia, Hong Kong’s autonomy. development, port operators, utilities and while a global firm with a big Asian arm, Should the party intervene more forc- supermarkets. Meanwhile Shenzhen, Prudential, is about to shift its regulatory ibly, says a senior administration official, it across the border, has been transformed domicile to Hong Kong. would be “a tragedy for Hong Kong, bad for into a hub for new giant tech firms such as This all means that how turmoil in China and the latest act of decoupling from Huawei, Tencent and zte. Hong Kong is resolved matters to more the free world and regressing to the dark- than just to its own people. Already boards ness of the Mao years.” The official likens The old road is rapidly ageing of multinationals are debating over wheth- Hong Kong’s status, in some respects, to Yet Hong Kong remains more important to er to move their regional domicile to Singa- “West Berlin during the cold war”. “‘One the mainland than might at first appear, pore. Indeed, one existing weak spot for country, two systems,’” the official adds, and not just as a showcase for how China Hong Kong is that major American tech “risks dying a premature death.” acts in a way befitting a country claiming firms, such as Google, Amazon and Face- greater status on the world stage. The para- book, have set up their regional headquar- As the present now, will later be past dox is that the more autocratic the main- ters in Singapore, perhaps because of China knows that America has a formida- land gets the more it needs Hong Kong cyber-worries. An executive with a biotech ble weapon to wield in the form of the commercially. Had China reformed its fi- startup says the company is moving money Hong Kong Policy Act of 1992, which recog- nancial and legal system, the territory out of the territory and considering an nises Hong Kong as a separate legal and would be irrelevant to its global business. American listing instead. economic entity from China with all the Instead the opposite has happened: China China will not take action in Hong Kong rights of an open economy. An interven- has grown fast and globalised, but not lightly: it knows how much is at stake eco- tion by the Chinese army might lead the ad- opened up. nomically and how much its biggest firms ministration to declare Hong Kong to be in As a result, Hong Kong’s economy is dis- depend on the territory, quite apart from breach of the act. This, though, would be a proportionately useful to China. It has a the reputational risk. Yet it also sees the sit- nuclear option: one that America is likely status within a body of international law uation spiralling into a threat to the Com- to take only in extremis. and rules that gives it seamless access to munist Party itself—one that America, it In the meantime, Congress, led by Sena- Western markets. The status is multifacet- tor Marco Rubio, is working on legislation ed. It includes: a higher credit rating; lower that would, among other things, test Hong risk-weights for bank and counterparty ex- Even bigger brother Kong’s system of export controls to make posures; the ability to clear dollars easily; Hong Kong as % of mainland China sure Chinese companies are not circum- independent membership of the wto; venting rules, as well as ensure that de- “equivalence” status for its stock exchange monstrators are not penalised if they seek Nominal GDP Ports, container with those in America, Europe and Japan; throughput American visas, just because they were ar- recognition as a “developed” stockmarket 15 150 rested during the protests. by index firms and co-operation agree- If it ever happened, intervention by the ments with other securities regulators. 10 100 Chinese army would not necessarily be in Cross-border bank lending booked in the form of tanks and blazing machine- Hong Kong has roughly doubled in the past 5 50 guns. Its deployment would follow a pro- decade, much of it Chinese companies bor- cess set out in Hong Kong’s post-colonial rowing dollars intermediated through the 0 0 constitution, the Basic Law, and a piece of territory. Hong Kong’s stockmarket is now Chinese legislation called the Garrison 1998 2005 10 19*15 1998 2005 10 17 the world’s fourth largest, behind Tokyo’s Law. These allow Hong Kong to ask the cen- Sources: IMF; UNCTAD *Forecast but ahead of London’s (see chart on the tral government for the pla garrison’s help next page). About 70% of the capital raised Shenzhen in maintaining public order. This could, in on it is for Chinese firms, but strikingly the theory, merely entail a few discreet units mix has shifted from state enterprises to CHINA backing up Hong Kong’s police. It would be

tech firms such as Tencent, Meituan and New Territories very unlikely to involve the random vio- Xiaomi. These firms have specifically cho- lence seen, for example, in 1989 in Tianan- sen not to do mainland listings because the River trade HONG KONG men: the pla today is far better trained, and markets there are too immature and closed terminal the garrison has been drilling its men in Kowloon off from Western investors. Alibaba, an e- Hong Kong crowd-control techniques that resemble airport Kwai Tsing commerce conglomerate, is also in the pro- container those of the Hong Kong police. But avoid- cess of doing a Hong Kong listing (at pre- terminals Lantau Island Hong Kong ing any such eventuality, says one of Mrs sent it is only listed in New York). Island Lam’s advisers, has always been the Hong Most Chinese foreign direct investment Kong government’s “number one” priority. flows through Hong Kong. The stock dom- Having the pla come in is “the last thing” 10 km iciled in the territory has roughly doubled anyone wants to have happen. It would 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 18 Briefing Turmoil in Hong Kong The Economist August 10th 2019

it failed in the long run. The authorities The goose that still lays golden eggs wore down the umbrella protests demand- ing democracy in 2014 and restricted even Value of stockmarkets, August 8th 2019, $trn Hong Kong in numbers further the scope for representative poli- tics. That just bred a more radical genera- 0 5 10 15 20 25 30 35 1997 Latest tion of protesters. As for the increasing United States Mainland China “mainlandisation” of Hong Kong politics, China stockmarket value, $bn 118 6,390 among ordinary Hong Kong folk it has fos- Japan Hong Kong 431 4,940 tered only cynicism and a sense of power- Hong Kong stockmarket value, $bn lessness. The central liaison office, once al- Britain Total loans by most invisible, now owns Hong Kong’s Hong Kong banks, $bn 532 1,277 France largest publisher, provides loans to patriot- Canada US dollar and other foreign currency deposits, $bn 155 851 ic businesses, ensures China’s choice of Germany chief executive and backs candidates fa- India Number of multinational firms with regional HQ* 744 1,333 voured by the Communist Party in elec- Switzerland tions for the legislature and district coun- Sources: Bloomberg; World Federation of Exchanges; Hong Kong government statistics; Shanghai & Shenzhen stock exchanges *Excl. China cils. Now it is also pushing loyal placemen into the leadership of many professions. 2 show Hong Kong incapable of “keeping our young—more public housing, for in- A hopeful scenario does exist for Hong house in order”. stance—but they do not acknowledge a Kong. According to an adviser to Mrs Lam, Perhaps Mrs Lam’s administration democratic dimension to the protests. if the streets grew calm it would be possible thinks that the protests might lose steam It will prove a hot and critical August. to imagine the government presenting along with popular support. At the outset, For now, the line in Beijing avoids any di- once more a package of political reforms many parents marched with their children. rect threat of intervention: stand behind that it first offered five years ago. It would But now, growing numbers of Hong Kong Mrs Lam’s stricken authority, urge the po- include allowing universal suffrage in people are deeply concerned about the es- lice and courts to be tough, and be on a choosing the chief executive. In 2014 calating violence on all sides; it is the chief ruthless lookout for separatist tendencies. democrats in the legislature rejected the topic of everyday office conversation. Par- On August 7th Hong Kong members of two package, partly because, in effect, only ents with children at school or university mainland bodies, the National People’s party-approved candidates would be al- have been withholding pocket money in Congress and the Chinese People’s Political lowed to run. This time, says Anson Chan, a the hopes that, penniless and underfed, Consultative Conference were ordered to former chief secretary who now backs the they will come back home. Many long for Shenzhen to hear the message first-hand. democratic cause, a deal could be done, so the start of the new academic year in early Mr Xi has an urgent reason to wish that a long as a timetable for universal suffrage September, hoping that young protesters tighter grip and a firmer message will bring were agreed. Mrs Lam should consider this will return to their studies. order to Hong Kong. On October 1st he pre- option. After all, her crisis of legitimacy But it is not only students who are criti- sides over China-wide celebrations mark- comes, at heart, from not being elected by cal of the government. Even groups that in ing the 70th anniversary of the Communist Hong Kong. All her unelected predecessors the past have been staunch supporters of Party coming to power: the birth of a “new” ended their terms in failure too. the administration have been having sec- China which Mr Xi can now claim is also a Indeed, some democrats are urging hot- ond thoughts. This week many businesses powerful one. To ensure the anniversary is head protesters to rethink their tactics. made it clear to their staff that they would marked without a hitch, security across the Attacking police stations, they say, just not be penalised for joining the general mainland is being tightened and dissent plays into the hands of the authorities. A strike. And though it strongly condemns stifled even more vigorously than usual. more valuable battleground is emerging: recent violence, describing it as a threat to However, firmness in the face of unrest elections for the territory’s district coun- Hong Kong’s position as a financial centre, has been tried before in Hong Kong, and cils in November. While ordinarily such the Hong Kong General Chamber of Com- though it succeeded in the immediate aim, elections have to do with matters such as merce, the largest business organisation, rubbish collection and bus lanes, in the has backed protesters’ calls for an indepen- current climate they will be a referendum dent inquiry as a necessary step for restor- on political values. Unless democrats ing calm. By the standards of Hong Kong move from the streets to the campaign business, that is a bold move. A few other stump, says Kevin Yam, a lawyer and col- organisations and individual companies, umnist, the pro-establishment camp, risking becoming the target of online anger whose grass-roots organisations in hous- from the mainland, are more quietly back- ing estates and the villages of the New Ter- ing the peaceful aspirations of protesters ritories is funded by the central liaison of- (among whom number their staff). fice, risks dominating. Should that camp An emerging viewpoint, even among win, Mr Yam argues, it will say: “you see, we some pro-party types, acknowledges that [not you] are the silent majority.” many Hong Kong businesses had concerns If the violence continues, avenues for about how the extradition bill might add to peaceful advocacy and dissent will be the arbitrary risks of doing business with blocked by one side or the other. At best the mainland. This viewpoint admits to this scenario would entail a long tearing of sympathy for Hong Kong’s disaffected Hong Kong’s social fabric and a relentless youth, who are alarmed at the rapid inte- decline in the territory’s economy. At worst gration of the territory’s economy with it could mean the end of Hong Kong as it China’s. Members of this camp may hold has long been imagined, as soon as the ar- that the political job is now to tilt the eco- moured anti-riot vehicles roll out of the nomic playing field in favour of the garrison compound. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Britain The Economist August 10th 2019 19

Also in this section 20 5G in the Scottish islands 21 Justice by algorithm 21 A pre-election splurge? 22 Free ports’ pros and cons 23 Postcard from the Irish border 24 Bagehot: Theresa 2.0

No-deal Brexit are ready to join any cross-party efforts to stop a no-deal Brexit. They include several Can Parliament stop it? of Mrs May’s former cabinet ministers, no- tably Philip Hammond, David Gauke, Greg Clark and David Lidington. Yet there are big hurdles in the way of at- tempts to prevent a no-deal Brexit. Some look back to March, when mps succeeded The government claims mps cannot stop Britain leaving the European Union on in hijacking the Commons agenda, which October 31st. Yet many are determined to try is usually controlled by the government, to n march the House of Commons reject- Does he mean it? It would be sensible to pass an act requiring Mrs May to seek an ex- Ied the idea of a no-deal Brexit by a hand- take the latest bluster with a pinch of salt. tension of the Article 50 Brexit deadline. some 43-vote margin. Yet this week Do- Mr Johnson has two clear bargaining rea- But this was possible only with the peg of minic Cummings, Boris Johnson’s sons to talk up the risk of a no-deal Brexit legislation or an amendable motion. Mr Svengali-like adviser, suggested that it was on October 31st. One is to ensure that Brus- Johnson’s team say neither will be needed now too late for mps to stop Britain leaving sels takes the notion seriously, which it did or allowed before October 31st. without a deal on October 31st, the latest not when Theresa May was prime minister. Are there other routes? Chris White, a Brexit deadline. This position was echoed That should raise the pressure on the eu to former adviser to Tory whips now at New- by a Downing Street spokesman and by the drop its refusal to reopen the withdrawal ington Communications, reports talk in health secretary, Matt Hancock, who was agreement. The second is to win back vot- Westminster of using emergency debates previously strongly opposed to no-deal. ers from Nigel Farage’s Brexit Party, who or opposition days. Rebel mps expect help There are two parts to the argument. positively favour no-deal. The Tories’ loss from the speaker, John Bercow, who seems The first is that October 31st is now the de- of the Brecon by-election on August 1st willing to tear up normal procedural rules fault option, legally binding on both Brit- confirmed that, even under Mr Johnson, if need be. But the government will not al- ain and the eu. In the absence of some spe- they are still vulnerable to Mr Farage. low any opposition days. The shortage of cific action, such as agreeing to another Even so, a clear majority of mps still op- parliamentary time acts in its favour—few- extension, Brexit will take place then. The pose no-deal. Opinion polls suggest most er than 30 sitting days are planned before second is that, given the imminence of the voters are against it as well. Although Mr October 31st (rebels are therefore seeking a deadline, mps do not have enough power or Johnson has required all his ministers to way to cancel the autumn recess). And time to prevent no-deal—unless the gov- sign up to the possibility, several are there is no majority for the drastic option ernment co-operates. And Mr Johnson will known to have been fretful about the con- of revoking the Article 50 Brexit letter. not do that. Downing Street is threatening sequences, including Michael Gove, who is Such uncertainties explain why many to force a no-deal Brexit even if the prime in charge of preparing for it. Some two- mps now talk of a vote of no confidence. minister loses a no-confidence vote. dozen Tory rebels have indicated that they The Labour leader, Jeremy Corbyn, prom-1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 20 Britain The Economist August 10th 2019

2 ises to propose one soon after the Com- Rural internet make applications; civil servants miss out mons returns on September 3rd. Mr John- on online training. As mobile networks son’s government has a working majority Our island start to roll out 5g coverage this year, Mr of just one, so it requires only a handful of Stockan is keen to avoid the delays of the Tories to switch sides for a vote to succeed. Instagram story past. He would like Orkney to “jump over Yet Mr Johnson will say he needs more time one generation to the next”. to secure a deal. It is hard for backbenchers Such talk of leapfrogging usually focus- to vote down their own government, which KIRKWALL es on the poor world, where charities and A plan to bring super-fast mobile may be why since 1945 only one vote of no tech firms promise to send balloons and networks to the middle of nowhere confidence has succeeded, against La- drones to bring the internet to people with- bour’s James Callaghan in 1979. here are no traffic lights on the Ork- out landlines. Yet something similar is The rules were also changed by the Tney islands. Despite having the highest now under way in Orkney. 5g RuralFirst, a Fixed-term Parliaments Act of 2011. Previ- rate of car ownership in Scotland, with 919 consortium of 30 organisations backed by a ously, any vote of no confidence would vehicles per 1,000 adults, the archipelago is £4.3m ($5.2m) government grant and led trigger the prime minister’s resignation so thinly populated that there is no need by Cisco, which makes networking gear, and a general election. But the 2011 act al- for stop signals. Drivers politely make way has been running a private 5g network on lows a period of 14 days during which ei- for each other on the narrow lanes, waving the island for the past year. Investment by ther the sitting prime minister or an alter- as they pass. The occasional roundabout mobile-network operators purely because native tries to form a government that can regulates busier junctions. of consumer demand “is not likely to hap- win mps’ confidence. Only if these at- Orkney’s rural nature makes it a plea- pen”, says Greig Paul of the University of tempts fail must an election be called, on a sure to drive in. But it also makes it a night- Strathclyde, which is part of the consor- date fixed by the outgoing prime minister. mare for mobile connectivity. “By the time tium. RuralFirst is trying to figure out how As Catherine Haddon of the Institute for something is rolled out to the extremities to make it commercially viable. Government, a think-tank, notes, it is not of the country…it is out of date,” complains Its main idea is to find local industrial even clear under the act that the prime James Stockan, the leader of the Orkney Is- uses for the tech. That is part of the promise minister must resign, though a refusal to lands Council. That is only a slight exagger- of 5g networks in general: not only can they do so would produce a constitutional row ation. The first 4g signal arrived in Kirk- offer much greater speeds, but they are de- that might even involve the queen. wall, Orkney’s biggest settlement, in 2016, signed to be super-responsive and capable Some mps hoping to block no-deal are nearly four years after it came to urban Brit- of connecting to many more devices at discussing the formation of a cross-party ain. Smaller islands, such as Papa Westray, once. “If we can drive industrial use then “government of national unity” to replace have no 3g coverage, let alone 4g. there will be more demand, which means Mr Johnson’s, with the express purpose of In all, only 35% of Orkney households more revenue, which means more capaci- asking for another Brexit extension to al- can make a voice call on all four networks, ty,” says Mr Paul. low time for an election. The idea would be and 4% can do so on none at all, according In the Orkneys, local businesses seem that a veteran such as the Tories’ Ken Clarke to Ofcom, the telecoms regulator. It is keen. Scapa, a whisky-maker, sees poten- or Labour’s Margaret Beckett might be its worse for data services. Only 18% of pre- tial in automating bits of production and nominal leader. Yet it is hard to see this mises can access 4g on all four networks tracking employees throughout the distill- working. Labour is not keen, and is likely to and 7% get no signal. Skara Brae, a Neolith- ery. Richard Gauld, who runs a small wind insist instead that any alternative govern- ic site protected by unesco, has no net- farm, says replacing copper wires with 5g ment must be led by Mr Corbyn. Rebel To- work coverage, forcing tourists to wait un- would make the local electricity grid safer ries are most unlikely to support this. til they return to Kirkwall to post pictures and more efficient. Out in the Scapa Flow, Big battles between the legislature and to Instagram. Richard Darbyshire of Scottish Sea Farms the executive are usually won by the for- It is not just social-media addicts who says 5g would offer a more reliable connec- mer. But the anti-no-deal majority is less suffer. Farmers have trouble accessing tion from base to barge. That would allow coherent and focused than are hardline mandatory forms; jobseekers struggle to his men to feed fish remotely in bad weath- Brexiteers. This may explain one more sug- er, and support high-definition live video gestion from Mr Cummings: that any elec- from the salmon pens. tion after a vote of no confidence is put off There are also ideas for ways to cut until November, ensuring that no-deal costs, such as making more efficient use of Brexit happens meanwhile. The cabinet radio spectrum, using software to do manual says that, during an election cam- things that typically require hardware, and paign, no big decisions should be taken by sharing infrastructure among mobile net- a caretaker government. But Brexiteers re- works. The biggest expense is access to tort that, since October 31st is enshrined in spectrum, which costs billions at auction. law as Brexit day, the big decision would be That will soon be less of an obstacle. On to stop it, not to let it proceed. July 25th Ofcom announced that it would For Mr Johnson, the politics of this are offer spectrum to local communities for as uncertain, at best. If an election were held little as £80 a year. before Brexit, Mr Farage would whip up The Orkney programme runs until the support by telling voters they were about to end of September, after which the consor- be betrayed. On the other hand, engineer- tium will evaluate the business case for 5g ing a no-deal Brexit against mps’ wishes in rural areas. “If it works for us, maybe we would outrage many people. And an elec- can offer the service to other small commu- tion held amid the likely chaos that would nities that want to have their own 5g cell,” follow a no-deal Brexit could help opposi- says Greg Whitton, who runs CloudNet, the tion parties. Some therefore wonder if the local internet service provider. Getting on- government will schedule a ballot for No- line on the island could soon be as easy and vember 1st, “Independence Day” itself. 7 #NoFilter—but no signal either speedy as driving around it. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Economist August 10th 2019 Britain 21

Policing and technology Public services Hold on a Boris gets out his millisecond wallet

The new prime minister promises Justice by algorithm is in the dock something for every voter or a time, the humans seemed to be n his first speech as the leader of the Fwinning. The Metropolitan Police’s IConservative Party, Boris Johnson ex- squad of “super-recognisers” was lauded plained his governing philosophy: “Dude, for its uncanny ability to recall faces in vid- we’re going to energise the country!” His eo footage. The officers spotted sex-offend- first two weeks in office have seen him do ers in crowds of thousands and nabbed a his best to live up to the laugh line. He has thief who had pinched more than £100,000 criss-crossed the country, leaving a trail of ($122,000) of luxury goods. Technology spending commitments in his wake. Live was not nearly as reliable. One of the super- in a left-behind town? He will spruce up recognisers identified 180 of the 4,000 sus- your hospital. Based in a growing Northern pects captured on camera during riots in metropolis? Faster, more frequent trains 2011, whereas software spotted only one. for you. Concerned by rising violent crime? “Computers are no match for the super-re- Critics make four arguments. First, the Worry not: 20,000 extra police officers are cognisers,” boasted the unit’s boss. technology does not work terribly well. In on their way. Now the computers are fighting back. the pilots in London, only eight of the 42 Although the government insists there Many of the 43 police forces in England and matches made by facial-recognition soft- are no plans to call an election, it appears Wales are experimenting with algorithmic ware were correct. Second, the systems are on a collision course with Parliament over technology that could render the copper’s a disproportionate response to crime. In an Brexit and has a dwindling parliamentary nose redundant. Several use programs to era when data-protection regulations gov- majority—down to just one after defeat by predict where and when crimes are likely ern the mailing list of a pizza joint, civil- the Liberal Democrats at a by-election in to occur. Cambridge University helped liberties campaigners question why the Brecon on August 1st—meaning many ex- Durham Constabulary design an algorithm national police database holds 12.5m im- pect a vote within the year. The buffet of to estimate the likelihood of a suspect reof- ages in its gallery—including images of an policies laid out by Mr Johnson suggests he fending. It helps the authorities decide undisclosed number of people who have wants to rebuild the electoral coalition the whether someone should be granted bail or neither been charged with an offence nor Leave campaign brought together, includ- qualify for rehabilitation as an alternative consented to the use of their pictures. ing not just Tory Brexiteers, but also left- to prosecution. At least one force is keen to Third, it could prove discriminatory. leaning, culturally conservative types in install microphones on “smart lamp- Since some facial-recognition technology the Midlands and the north (see Bagehot). posts” to gather intelligence in crowds. is best at identifying white faces, it could Downing Street has attempted to claim Even the cherished super-recognisers will throw up more erroneous “matches” for that an economic ideology lies behind be outdone once facial-recognition algo- non-white people, making them more like- these announcements, labelling Mr John- rithms improve, predicts Rick Muir of the ly to be the subject of unwarranted police son’s promise of both tax cuts and higher Police Foundation, a think-tank. attention. Finally, it risks compromising spending as “boosterism” (rather than the Not everyone is pleased. On July 3rd aca- the principle that justice must be seen to be more obvious “cakeism”). He has promised demics published a critical assessment of done. If suspects cannot understand how £3.6bn ($4.4bn) for 100 poor towns, £2.1bn Scotland Yard’s pilots of automatic facial- an algorithm reached a decision, they for the National Health Service and £1.1bn recognition technology, querying their le- might find it harder to challenge. for hiring new police officers. He has gal basis and casting doubt on whether Yet none of these hurdles is insur- voiced support for new railways to join up people caught on camera could be said to mountable. The technology will improve. the north which could cost a whopping have given their informed consent. Judges Britons already accept lots of surveillance: £39bn. The flurry of spending commit- in Cardiff are weighing the lawfulness of although most people do not shoplift, they ments provides an indication of how the similar trials by South Wales Police. And in are used to being monitored by cctv cam- new prime minister will govern and, per- June the Law Society, which represents so- eras. A poll published in May suggests most haps, campaign. licitors, raised concerns about the “general Londoners are happy for the police to use He has moved quickly to cauterise is- and concerning lack of openness or tran- facial-recognition software, especially to sues that may harm the Conservatives on sparency” in the police’s use of algorithms. spot serious criminals. A powerful regula- the doorstep. The main teachers’ union Several wonk shops are being set up to tor ought to be able to strike the right bal- spent £325,000 at the last election, more examine the ethics of algorithmic technol- ance and allay fears of bias. than both the uk Independence Party and ogy, including one at Oxford backed by a And although humans can give reasons the Greens, in a successful campaign for £150m donation from Stephen Schwarz- for their decisions, there is plenty of evi- more education funding. Mr Johnson has man, the boss of Blackstone, a private-equ- dence suggesting they are influenced by promised to reverse recent school cuts by ity firm. The Centre for Data Ethics and In- unconscious biases, points out Lawrence 2022-23. Health care is one of the few policy novation, a new government-funded Sherman of Cambridge University. It ought areas where the public still trusts Labour agency, is likely to propose a code of con- to be easier to scrutinise and challenge the more than the Tories. Dominic Cummings, duct to regulate cops’ use of technology, processes of one algorithm than the deci- Mr Johnson’s chief adviser, has com- says Roger Taylor, its chairman, who ac- sions of thousands of cops and judges. plained that few Conservative mps have knowledges the need to act “very quickly” “There’s nothing less transparent than the faced up to the importance of the nhs in to close any gaps in oversight. human mind,” says Mr Sherman. 7 British politics. On August 5th the prime 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 22 Britain The Economist August 10th 2019

2 minister duly announced plans to renovate Likewise, half of the fund for poor towns to the local area, including deprived South 20 hospitals. had been set aside by Theresa May, Mr Shields. Another policy aim of free ports is Matt Hancock, the health secretary and Johnson’s predecessor. Solutions for knot- to help left-behind places, by generating an enthusiastic convert to Mr Johnson’s tier problems remain in development. An investment and pulling in economic activ- cause, promised he would “make sure that answer to the social-care funding crisis is ity. The old industrial area around the money gets to the front line”, which in this expected in the autumn. With the excep- mouth of the river Tees has been preparing case conveniently includes hospitals in tion of the extra police officers, where a since last year to become a free port. marginal constituencies such as Boston, new board run by the Home Office will Yet they are no panacea. On the tariff Stoke and Truro. Although Mr Johnson has oversee recruitment, the extra money has side, their utility may be tiny. The plan promised an additional 20,000 police offi- not been accompanied by reforms to how post-Brexit is for Britain to maintain low cers, there will be no proportional increase services are run. tariffs on most goods. American foreign- in the staff who work alongside them, like Most of the money will be spent over the trade zones are supposed to encourage do- data analysts or those who work in the next few years, meaning it will almost cer- mestic production by letting firms bring in courts. Londoners, who twice elected Mr tainly be dependent on a successful re- inputs tariff-free (solving the problem of Johnson as mayor, will recognise his fond- election campaign. In the next few months tariff inversion, where finished goods car- ness for policy announcements that look Brexit is likely to take up the government’s ry a lower tariff than their component good splashed across an election poster. attention, and the Conservatives’ perilous parts). But Brexit is unlikely to lead to high- Many of these announcements then parliamentary position means they will er tariffs on inputs than on finished goods, turn out to be less impressive than the struggle to get much else done. Facing sim- according to a paper by the uk Trade Policy headline figure would suggest. As Sally ilar obstacles, Mrs May also came to power Observatory, which examined World Trade Gainsbury of the Nuffield Trust, a think- with bold ambitions to reform the British Organisation (wto) tariff schedules. tank, has pointed out, £1bn of the £2.1bn state. She failed to put them into practice, Another, subtler function could be to announced for the nhs had already been and it will not be a surprise if Mr Johnson help Britain navigate wto tariff rules, notes promised (though it was later put on hold). struggles too. 7 Meredith Crowley, an economist at Cam- bridge University who sits on the free ports advisory panel. The country will have to de- Trade post-Brexit cide between setting tariffs at 10% or at 0% on car parts, for example. Either rate would Free-for-all apply to all countries, including China, meaning a risk of being swamped by Chi- nese imports. If Britain sets the tariff at 10% it could use free ports to help big manufac- turers that use European supply chains. A well-known problem with free zones NEWCASTLE is that they can turn into a domestic beg- What free ports can and cannot achieve gar-thy-neighbour policy. Cutting taxes in he vast, bulbous-bowed Höegh Auto- where the rich store art and other fancy one place encourages firms to leave others. Tliners car-carrier, with room for 6,500 goods, such as those in Luxembourg, not Mr Beeton wants a free port, but to make vehicles, takes up the space of three nor- the type of zone Britain is contemplating. sure it would not suck activity from the mal-sized ships in the Port of Tyne. Inside If the Port of Tyne became a free port, hinterland he wants to draw a bigger are several thousand shiny new Nissan enthuses Matt Beeton, its chief executive, boundary and to use supply-chain tracking Leafs, Qashqais and Jukes bound for the more firms would move into space cur- systems to create a “virtual” free zone. But continent. Newcastle’s deep-sea port is not rently occupied by weeds and cormorants. free ports could still take business away the country’s busiest, but because it serves Nissan is keen. More business activity from elsewhere. nearby Nissan Sunderland, the biggest car- would further boost the port’s contribution Another argument against is that Brit- making site, it is among the first in line to ain used to have a few until 2012, but no one become one of the government’s swash- complained when they were phased out. buckling new “free ports”. Pier review That was probably because eu state-aid Such zones are physically inside a coun- British ports by total freight traffic rules prevented them from bringing in try but legally outside it for customs pur- 2017, tonnes m 50 truly freewheeling policies on regulation, wto poses. As well as zero tariffs, free ports pile 10 tax and labour standards. The is less on other goodies such as low taxes and stringent. Mr Johnson’s government may loose regulation. The idea is that firms will therefore use aggressive supply-side poli- flock to them. Brexiteers in particular cies to create real free ports, but the Trea- dream of free ports pulling in companies sury would count the cost. and container ships from everywhere. Bo- Tees & Which ports will win the new status? ris Johnson, the prime minister, has prom- Hartlepool The government wants free ports to help ised to anoint ten free ports—mostly big Grimsby & rebalance the economy away from the harbours and perhaps some airports. On Tyne Immingham south-east. Of 30 big ports, 17 are in poor ar- August 2nd Liz Truss, the trade secretary, Liverpool eas, mainly in the north and Wales. They set up a free ports advisory panel. should be at the front of the queue. But the IRELAND Other countries are fans. Dubai’s Jebel south is home to many ports (see map). It Ali free zone hosts 7,000 global firms. London might be hard to overlook Bristol Port, Bristol America is dotted with 265 foreign-trade which gave to Mr Johnson’s campaign. Ben zones. Europe has dozens of free ports. Houchen, mayor of Tees Valley, says Tees- Regulators worry that some are havens for Milford Haven side should come ahead of Dover. If free money-laundering or tax evasion—though Dover ports are the gateway to prosperity, as Ms Source: DfT Southampton they are most concerned about facilities Truss says, it will be hard to be left out. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Economist August 10th 2019 Britain 23

are already established. The county of Don- egal and the council encompassing Derry and nearby Strabane work in lockstep in ar- eas ranging from libraries to sport. They go on joint missions to America to tout for in- vestment. For the tourist business, Derry’s historic walls and Donegal’s gorgeous beaches are a single product. John Kelpie, Derry council’s chief executive, has argued that the city straddles the two countries, as its outer edges are in the Republic. The Irish government thinks in a simi- lar way. Its national development plan, “Project Ireland 2040”, incorporates only one Northern Irish place, Derry. Common sense, rather than nationalist zeal, seems to underlie that decision. Its authors ex- pect Ireland’s population to grow by anoth- er million or so and they want the north- west, including Derry, to absorb much of this expansion. Some recent initiatives give a hint of what could be possible if the logic of geo- graphy were followed through. Altnagel- vin, Derry’s main hospital, has a newish ra- diotherapy unit that treats people from Northern Ireland either side of the border. That saves North- ern Irish patients a two-hour ride to Bel- Bracing in the border lands fast, and those in Donegal a much longer hike to Galway or Dublin. Improvements to uu’s Derry campus, known as Magee, have been helped along by cross-border ties with the Letterkenny Institute of Technology, which is growing DERRY-LONDONDERRY and hopes to morph into a university. De- Brexit or not, the habit of thinking in all-island terms will not be lost spite the dashing of its medical hopes, Ma- nly last autumn, Northern Ireland’s sions over schools, health care and waste- gee has set up research centres in robotics Osecond city was eagerly awaiting the water treatment have been postponed. and cognitive data analysis. These outfits opening of a graduate medical school. It Now Brexit, particularly of the no-deal will hardly stop talking to their Irish coun- was billed as the centrepiece of an urban variety, threatens to make matters worse. terparts after Brexit, says Mr Nixon. renewal plan, which over time would im- Households, businesses and students in Businesses will draw on the ingenuity prove health care as more doctors stayed in Derry rely on seamless transport over the which even the existing situation has the region. Then came the bad news: the adjacent border with the Irish county of forced them to hone. Companies already startup was to be postponed until at least Donegal. About 15,000 people in the vicini- cope with two currencies, two tax regimes the end of 2020. Because of a political im- ty cross every day to work or study. The civil and two sets of laws, says Andrew Fleming, passe that has seen Northern Ireland’s gov- service has warned that a no-deal Brexit managing director of a group of small engi- ernment suspended for more than two could cost 40,000 jobs in Northern Ireland. neering firms that sell mainly to farmers. years, there was no local minister to sign With about 5% of Derry’s population draw- His group keeps manufacturing units on off the new faculty. It was “bitterly disap- ing the dole, its unemployment rate is al- both sides of the border, serving clients in pointing”, says Paddy Nixon, vice-chancel- ready twice the regional average. Ire over each jurisdiction. “We locals are used to lor of Ulster University (uu), who had mas- Brexit has helped to fuel a local resurgence working around the border,” he says. terminded the plan. of dissident nationalist violence, of which “Though for an outside investor, extra has- To grasp the anger in Derry, recall that a the nastiest sign was the killing of a young sle could be a huge deterrent.” His firm lack of higher education has been a fester- journalist, Lyra McKee, in April. started in a Donegal village, just south- ing grievance in this mainly Catholic city Yet the mood among the city’s movers west of Derry, five generations ago when for over 50 years. In a land of long memo- and shakers is not uniformly gloomy. On Ireland was a single political unit under the ries, people still fume over the decision by the contrary, people say they want to build crown. It has proved resilient through Northern Ireland’s unionist masters in 1965 on the gains of the past decade. First among many vicissitudes. to launch the region’s second university those is the habit of seeing Derry not as a re- For all its current and looming woes, not in Derry but in Protestant Coleraine. mote extremity of Northern Ireland, but as Derry still generates pleasant surprises. The recent medical snarl-up is one of a hub of the whole island’s north-west. Who would have predicted its latest cultur- many bad effects of the collapse of North- “You can either see us a town of 110,000 on al export, a globally successful tv series ern Ireland’s power-sharing administra- the edge of the United Kingdom, or as the called “Derry Girls”? Set in the 1990s, it gets tion in January 2017. The damage, in stalled linchpin of a region of Ireland that already a laugh out of foul-mouthed schoolgirls, projects and investments, could reach £1bn has 350,000 people and is likely to grow,” angry nuns, Catholic-Protestant prejudice, ($1.2bn) by the end of this year, according to says Philip Gilliland, a former president of bomb alerts and runaway gunmen. Now the Confederation of British Industry, a the Londonderry Chamber of Commerce. the city must face Brexit with the same business lobby. Across the region, deci- In many ways, all-Ireland casts of mind black good humour. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 24 Britain The Economist August 10th 2019 Bagehot Theresa 2.0

A sense of déjà vu in Downing Street constituencies in the Midlands and the north, with voters flocking to the Tories on a pledge of a pure Brexit. Mr Johnson’s electoral pitch is the same. In his first speech as prime minister he spoke of “answering at last the plea of the forgotten people and the left-be- hind towns”, just as Mrs May pledged to right the “burning injus- tices” that led to the Brexit vote. When it came to the election, Mrs May framed it as a battle between the people and an establishment determined to thwart their will. If mps do force an election, Mr Johnson would play a similar tune, with what aides describe as a “people versus the politicians” campaign. Even the coverage of their advisers has been similar. Westmin- ster is given to “Life of Brian” syndrome, in which a single bag-car- rier is designated as a political messiah. For Mrs May, it was Nick Timothy, a bald Machiavelli who fell out with David Cameron while in government and spent a hiatus from politics composing forthright blogposts, before finding himself in Downing Street. For Mr Johnson, it is Dominic Cummings, a bald Machiavelli who fell out with David Cameron while in government and spent a hia- tus from politics composing forthright blogposts, before finding himself in Downing Street. Despite their different styles, the presentation of the two prime ministers is oddly familiar. Mr Johnson, who prides himself on his istorical parallels with Boris Johnson, Britain’s new prime campaigning skills, shuffles between photo opportunities, agree- Hminister, abound. Mr Johnson’s acolytes compare their leader ing only to carefully staged pool interviews, as was Mrs May’s to Winston Churchill, who also once helped Britain out of a pickle wont. Although Mr Johnson looks comfortable chatting to farmers in its relations with Europe. Smart alecs opt for George Canning, a or petting their livestock in a way that Mrs May never could, the fellow Old Etonian with populist tendencies, who became prime strategy is the same: keep the prime minister away from the press. minister in 1827—and died in office after just 119 days. David Lloyd This should be little surprise. Staffers from ctf Partners, a political George, a Liberal prime minister whose time in office combined consultancy that oversaw Mrs May’s bungled 2017 election, have huge constitutional changes, political chicanery and enthusiastic taken roles in Mr Johnson’s operation. infidelity, also fits. Yet the better comparison is with a more recent and less likely Once more, with feeling prime minister: Theresa May. Mr Johnson and Mrs May are differ- That a strategy failed once does not mean it will always fail. Mrs ent species. She was determinedly dull, while he is unstoppably May’s former aides moan that figures such as Philip Hammond, jolly. She ascended to the highest office by careful management of her chancellor, hamstrung the prime minister by refusing to play a cabinet job, whereas he almost torpedoed his career with a dodgy along with her pantomime preparations for a no-deal Brexit. Mr stint as foreign secretary. Mrs May embodies a strand of curtain- Johnson’s team has seen off this problem by selecting a cabinet of twitching suburban Conservatism. Mr Johnson represents the true Brexit believers and a few former Remainers who have kissed party’s wing of cavalier public-school bons vivants. Yet these differ- the ring. Labour gained 20 points during the course of the 2017 ent political animals have strikingly similar strategies. election campaign, a feat it may struggle to repeat. In calling her Team Johnson has cornered itself on Brexit, painting negotiat- snap election, Mrs May looked opportunistic—an ugly trait for a ing red lines with the same enthusiasm as Mrs May. Mr Johnson politician whose selling point was a sense of duty. Mr Johnson may has promised to take Britain out of the European Union by October be forced into one, or at least look as if he was. Grand political re- 31st, just as Mrs May pledged to do so by March 29th—the missed alignments also take time. The 2017 election was called only ten deadline that, in effect, sealed her fate. Both prime ministers’ months after the Brexit referendum. Now, after three years of in- Brexit strategies have at their heart the threat that “no deal is better cessant argument, people identify more strongly with their vote in than a bad deal”. Injecting that phrase into the bloodstream of Brit- the referendum than with a political party. It may be that the au- ish politics was one of Mrs May’s few successes as a political com- thors of Mrs May’s strategy were merely ahead of their time. municator. Fatally for her, she turned out not really to believe it, Yet the May-Johnson approach still suffers from gaping flaws. chickening out when the possibility of leaving with no deal arrived An election cannot be won with the votes of Leavers alone. Nab- in March. Mr Johnson’s team in Downing Street have adopted the bing seats from Labour in pro-Brexit areas is pointless if Remainer same mantra, and insist that, unlike her, they will hold their nerve. seats in London suburbs and university towns are lost. Mr Johnson They may secretly suspect that their promise will never be tested, may frame an election as a plebiscite on Brexit, but it will be voters as Parliament is plotting to force an election rather than allow the who decide which topics matter. Mrs May, astonishing as it may country to be dragged out of the eu without a deal. now seem, was once wildly popular, entering office with an ap- The possibility of an election gives rise to the next similarity proval rating of 35. Mr Johnson’s is -7. And whereas Mrs May had between the May and Johnson regimes: their serene confidence options when she became prime minister—a majority, a malleable that a vote will lead to a Conservative victory. The same thinking mandate from the referendum and a public less divided than to- dominated in the spring of 2017, when Mrs May plotted her snap day—Mr Johnson has none of these. The new prime minister has general election. Such a victory was to be built on Leave-voting taken the path of May Mark 2. It is a treacherous one. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Europe The Economist August 10th 2019 25

Migrants in Italy modest—numbers have been entering the country from the other end. Mr Salvini’s Turning into a trickle policy of closing Italy’s ports to ngos’ res- cue boats has helped more than double support for his party, the Northern League. But his achievement is less significant than he makes out. The previous, centre-left government had already drastically re- FERNETTI duced the number of arrivals from the But that does not stop Matteo Salvini exploiting them Mediterranean, and some still manage to bdul aziz, a tall, strongly built young down to Croatia, where they are once more get to Italy, usually on fishing boats or Aman, falls silent and looks down. He expelled, to either Serbia or Bosnia. Unde- yachts. According to the International Or- has been describing how the Taliban terred, most of them simply turn round ganisation for Migration, a un body, in the spread their influence through his part of and try again. Marco Albanese, who runs year to July 20th, 3,365 people had reached the tribal areas bordering Afghanistan. His the centre for the Italian Consortium of Italy’s southern shores. father defied them. “They killed my father,” Solidarity (ics), an ngo, says some people At the ics’s headquarters in Trieste, its he says, tears welling up in his eyes. he has taken in have been pushed back president, Gianfranco Schiavone, says that The 24-year-old Pakistani farmer is across a frontier 15 times. over the same period his organisation standing in the courtyard of Malala Yousaf- While Italy’s deputy prime minister and alone took in 1,192 people—most of them zai House, a few hundred metres from the interior minister, Matteo Salvini, has fo- from Pakistan, Afghanistan and Iraq. That border between Italy and Slovenia. The cused attention on the arrival by sea of was almost double the number in the first house, a former revenue-guard barracks, is mostly sub-Saharan African migrants on seven months of 2018. In June, the increase an initial reception centre for Italy’s unno- the southern coast, larger—though still prompted Mr Salvini to talk of building a ticed migrants: the thousands who enter wall (the frontier is, however, a not incon- the country by slipping across the heavily siderable 230km, or 140 miles, long). “We’ll Also in this section wooded nearby frontier after a gruelling launch mixed patrols with the Slovenians journey from Asia that sometimes takes 26 Fish-smugglers in Norway in July but, if the flow of migrants doesn’t years. Abdul Aziz’s most frightening mo- stop, then extreme evils require extreme 26 Brussels’ revolving doors ment was on the Iranian-Turkish border remedies,” he declared. when he came under fire. “They shoot peo- 27 Social care in the Netherlands The ics is not the only voluntary group ple there,” he says. receiving migrants in the area, and Mr 27 Tension in the Black Sea Once in the Balkans, migrants become Schiavone notes that their combined total counters in a game of snakes-and-ladders: 28 The Faroes’ puffins of perhaps 2,000 arrivals so far this year Slovenian police who catch people trying takes no account of the many who seek to 29 Charlemagne: The eastern summer to go across the country send them back avoid all contact with either ngos or the 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 26 Europe The Economist August 10th 2019

2 authorities for fear of being registered in It- Fish-smuggling In an attempt to stop the piscine flow, aly. Under the eu’s so-called Dublin Regu- spot-checks have increased, says Geir Pol- lation, asylum-seekers are the responsibil- Cod awful lestad, a Centre Party mp and chairman of ity of the first country to record their the Norwegian parliament’s committee for presence. “Invisible migrants”, as Mr Schia- business and industry. Prosecutors have vone calls them, try to slip unnoticed also doubled the fines for smuggling. through Italy to countries with more of Norwegians increasingly see tourists as their compatriots, or to richer countries OSLO a problem, not a boon. Cruise ships bring Norway has had its fillet of with better job opportunities and welfare thousands to tiny villages at the heads of fish-smugglers provision. But even among those who are hitherto pristine fjords. Nusfjord, in the registered in Italy, many still prefer to leave t most international borders the northern archipelago of Lofoten, has al- for other eu member states. Aauthorities look for anything they ready set a limit of two tourist coaches a That explains a second migrant flow think smells fishy: drugs, weapons, ciga- day. “We’ve had enough of people coming that has passed almost unnoticed: that of rettes or alcohol. In Norway they also look here and leaving nothing but shit and pol- the dublinati, as they are known in Italy. for fish. This summer, Norwegians are lution,” says one resident. A growing num- These are migrants who were registered in worrying that tourists are depleting their ber of politicians support a tourist tax. The Italy, moved on to other eu states, were crystal-clear waters and smuggling their idea would be to raise money while deter- picked up and returned to Italy. catch out of the country. ring those tourists who strain infrastruc- At dusk, in the shadow of Rome’s hyper- Popular prejudice says that the typical ture but spend no money. Now that tourists modern Tiburtina railway station, volun- fish-smuggler is a beer-bellied German. are after precious Norwegian fish, perhaps teers from another ngo, Baobab Experi- But new statistics show that Ukrainians, parliament will bite. 7 ence, have just finished doling out food Czechs, Poles, Lithuanians and Belgians from a makeshift soup-kitchen to scores of are the true scoundrels. Border guards Africans who are starting to bed down in seized eight tonnes of illegal catch from ve- Brussels jobs the open. There was until recently an en- hicles driven by people from those coun- campment on a nearby disused bus park tries in the first six months of this year. All aboard the where the migrants could pitch tents, but it Visitors to Norway are allowed to take was broken up on Mr Salvini’s orders. Most home 10kg of their catch (salmon, trout and gravy train of the migrants are without papers. Some char are not counted), and double that if have dodged registration. Others have they fish with a licensed tourist company. failed in their bid for asylum. Many are The current bout of turistfisk activity, as the A consulting firm founded by an heading north. But not all: one man, who phenomenon is known, suggests many are outgoing commissioner tests the rules declined to give his name, said he had been going far past that limit. In recent weeks of- caught without papers in France and re- ficials have caught dozens of cars and mo- ome november 1st, 17 of the 28 Euro- turned to Italy. Andrea Costa of Baobab Ex- torhomes laden sometimes with 100kg or Cpean commissioners, one per eu mem- perience says that in the previous 12 more of fish, mainly cod. ber state, will be thumbing through their months the number of dublinati turning up Officials refuse to be drawn on whether Rolodexes in search of their next job. (The at the soup-kitchen has increased tenfold. the smugglers are simply enthusiastic rest have either been nominated for anoth- According to the eu, there were 6,351 holidaymakers, or part of a bigger racket. er term or won seats in the European Parlia- transfers to Italy last year. But that was less But the fact that some of those caught in the ment.) Germany’s outgoing commissioner, than a tenth of the number Italy was actual- trawl have been exporting fillets ready for Günther Oettinger, has wasted no time. At ly asked to take back. As Matteo Villa, of Ita- consumption rather than fresh fish sug- the end of July news broke that he had ly’s Institute for International Political gests they may be organised, and are trying founded a political-consulting firm in Studies, wrote in an article for Politico, a to evade Norway’s systems of licences and Hamburg, where he plans to work after website, “Once migrants move to another controls for commercial fishing. leaving office. eu country…it is very hard to send them Mr Oettinger’s foray into political con- back.” Many go to ground after being sulting has provided a test case for rules on stopped. Officials in the country of arrival commissioners’ post-term activities, (Italy, in this case) can use bureaucracy to which were recently revamped by the cur- slow the process. And after six months the rent European Commission president, migrants become the responsibility of Jean-Claude Juncker. The rules were tight- their new host state, giving a strong incen- ened after his predecessor, José Manuel tive for foot-dragging. Barroso, who presided over the commis- According to Mr Salvini’s own ministry, sion at the peak of the Greek sovereign- more than a quarter of a million immi- debt crisis, accepted a non-executive role grants who have entered the eu since 2015 at Goldman Sachs, an investment bank that through Italy (out of a total of around is said to have profited from disguising the 480,000) have already been found in other extent of Greece’s debt. member states, having somehow managed The passage leading from the Berlay- to cross borders ostensibly closed by mont building, the commission’s head- France, Austria and Switzerland. He and quarters in Brussels, into political advisory other Italian politicians rail incessantly at work for corporate clients is well-trodden. the Dublin regime, arguing that it places an One-third of the commissioners who unfair burden on the eu’s frontier nations served during Mr Barroso’s second presi- and that what is needed is a comprehensive dential term took up lucrative positions at system for the redistribution of migrants. corporate giants, including ArcelorMittal, In fact, despite Mr Salvini’s rhetoric, the Volkswagen and Bank of America Merrill “burden” is quietly shifting itself. 7 There’s competition Lynch. One of them, Neelie Kroes, a former 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Economist August 10th 2019 Europe 27

Social care the rich world. The very old, migrants, the sick or disabled, and singletons are most at Club 18-108 risk of feeling lonely. It goes hand in hand with social isolation. About 18% of adult eu citizens—some 75m people—see friends or family at most only once a month. Nearly half of Britons over the age of 65 say that DEVENTER television or pets are their main form of A Dutch care home experiments with company. Loneliness is also reckoned to housing students with the old have serious health consequences: a study ores duman is a normal 29-year-old. from 2015 found that lonely people had on SHe goes to the cinema, follows the average a 26% higher risk of dying in its Champions League attentively, parties oc- seven-year study period than those who casionally and talks about life and love were not lonely. And the problem may only with his friends. Later in the week he will get worse. The share of people who are aged see an action movie with his mate Piebe. over 80 will more than double in the eu by Before that, he may go to McDonald’s with 2080. Social isolation is becoming more Martey, another chum. It might take more common partly because people are marry- time than usual for his friends to get ready ing later. Creating a space for the elderly to for these activities. Piebe is 79 and Martey a mingle with youngsters can lift spirits— sprightly 94. Does Sores think his weekend and help cash-strapped millennials. 7 plans are odd? “No, I do similar things with 2 commissioner for competition and digital- friends my own age. I don’t see the differ- isation, now sits on the public-policy advi- ence in age as an obstacle.” The Black Sea sory board of Uber, after having criticised Mr Duman lives at the Humanitas care Germany’s court-imposed ban of the taxi- home in Deventer, in central Holland. His Gunboat hailing app while in office. housemates’ average age is over 85. He has Both Mr Barroso and Ms Kroes took up been there for three years, along with five diplomacy their corporate positions following an 18- other students from nearby universities month embargo on lobbying work pre- and around 150 elderly residents. They are USS scribed by the code of ethics for commis- part of a scheme started in 2012 that pro- ABOARD THE CARNEY America and its allies are helping sioners. Under Mr Juncker’s new rules, this vides them with free housing in exchange Ukraine to get its sea legs back cooling-off period has been extended to for 30 hours per month of their time living two years for commissioners and three for as a “good neighbour”. Only one activity is rifting gently, USS Carney floats in the president. This is still a short spell by mandatory: preparing and serving a meal Dthe Black Sea. Two Russian warships the standards of some countries. Many ad- on weekday evenings. and the odd dolphin lurk nearby. Then the mire the Canadian system, which prohibits Both parties appear to benefit from the order is given: “Release the killer tomato.” ministers and mps from lobbying for five programme. Mr Duman estimates that he Several warships line up alongside the years after leaving office. has saved over €10,000 ($11,200) in rent. He 9,000-tonne destroyer, as though at a More troubling is the proviso that the claims that living in a care home has not shooting gallery. A gigantic inflatable cube, cooling-off period applies only to matters impinged on his university experience. garishly true to its name, is hoisted over the related to a commissioner’s former portfo- “We have big parties here,” he says, point- edge of Carney into the still waters. The lio. Corporate Europe Observatory, a cam- ing to a room for hire that sits empty at frigate Hetman Sahaydachniy, the pride of paign group, claims this is an artificial dis- night. “We host everything from beer-pong Ukraine’s navy, takes the first potshots. On tinction, because commissioners discuss tournaments to yoga classes.” In a promo- Carney’s bridge, a young sailor seated at a major policy decisions among themselves tional video, one resident calls the initia- screen with arcade-style joysticks unleash- before assuming collective responsibility. tive gezellig, a Dutch word that roughly es a burst of fire from the ship’s remote- It is also unclear how this rule would be ap- translates as cosy: “Now and then they put controlled cannon. HMS Duncan, a British plied to Mr Oettinger. He is currently re- me into the walker and race me through the destroyer, goes next. The balloon shrivels sponsible for the eu’s budget, which funds hall,” she explains. as shells thump into the water. The tomato all areas of the bloc’s activity. Onno Selbach, the first student to move is duly squashed. Transparency International, a good-go- in, says he learnt to be more patient as a re- The target practice is part of the annual1 vernance watchdog, points to another pro- sult of the experience; the pace of life is blem. Under current rules, deciding slower at the home. The scheme has helped Kiev 200 km whether Mr Oettinger’s consulting venture attract prospective residents. The home Controlled by breaches the code of ethics will fall to the now has a waiting list, which it previously UKRAINE Russian-backed other sitting commissioners, his longtime did not. And students are queuing up. separatists Donetsk colleagues, a few of whom may be explor- When two left the home in April, 27 applied MOLDOVA ing similar opportunities. Mr Juncker has to replace them. Odessa Humanitas is not the first institution to Sea of requested a purely advisory opinion from a Azov RUSSIA Crimea three-person ethics committee, but it has urge old and young people to live together. ROMANIA been appointed by the commissioners Municipalities across Spain and care Sevastopol Kerch themselves. Commissioners are unlikely homes in Lyon, France, and Cleveland, Strait BULGARIA to be deterred by existing sanctions, which Ohio, have also experimented with the Black Sea GEORGIA range from a public rap on the knuckles to idea. A team from Finland visited Deventer losing their eu pension of around €55,000 and was inspired to start a similar scheme. ($62,000) a year. They can expect a lot more Such initiatives could help combat TURKEY than that in the corporate world. 7 loneliness, an increasing problem across РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 28 Europe The Economist August 10th 2019

2 Sea Breeze exercise, led by America and Uk- The Faroes’ puffins raine, now in its 19th iteration. The exercise posits that the nefarious state of Blackland, a behemoth to the east, is fuelling an insur- Well worth saving gency in Maroonland, a breakaway prov- ince of Roseland. Ukraine, America, Roma- TORSHAVN The adorable seabirds are in danger nia, Bulgaria and Georgia play the good guys. One of nato’s standing fleets, led by a ith their engagingly rainbow- The18 islands comprising the Faroes Canadian frigate, stands in for the foes. The Wcoloured beaks, puffins are the star are home to 51,783 people who govern scenario requires little imagination. Since attraction on the Faroe Islands. But themselves as an autonomous part of Russia’s annexation of Crimea and inva- puffin boffins fear that their numbers are Denmark. When they were poor, and sion of eastern Ukraine in 2014, 13,000 peo- falling so fast that in 20 years they may there were plenty of puffins, the Faroese ple have died. Four Ukrainian soldiers died have vanished from the archipelago. In used to scoff more than 200,000 of the in a rocket attack on August 6th. 1997, estimates Jens-Kjeld Jensen, the birds a year. Twenty years ago, by which That war explains why Ukraine’s naval Faroes’ top puffin expert, the islands time they were just a delicacy, they were contribution to the drills has thinned out were home to1.5m of the birds; but now still roasting100,000 a year. Now, says in recent years. Ukraine’s navy, which was their numbers are down by 80%. A tiny Mr Jensen, the number is down to1,000. headquartered in the Crimean port of Se- uptick in numbers in the past two years Hunting bans are in force in some areas, vastopol, lost three-quarters of its person- won’t be enough to save them, he fears. but not nationally; and he thinks the nel and warships virtually overnight. In the Hunting has been part of the reason. government won’t ban catching puffins wardroom of Hetman Sahaydachniy, a Uk- Ecologists are quick to rage at the Faro- completely for fear of offending tradi- rainian officer gestures to a silver plaque ese, sharing film of the traditional and tionalist voters. which documents the ship’s eight captains bloody slaughter of pilot whales, which Hunting may have sharply declined, since 1993. Two names have been scratched are not endangered. But no one protests but other forces are at work. The Faroes out. “They were traitors,” says the officer when puffin is on the menu at the is- sit in the middle of a region, stretching bitterly. “One of them was appointed chief lands’ only Michelin-starred restaurant. from Scotland to Norway to Iceland, of the navy. The next day we realised he had where the decline in puffin numbers is defected to Russia. It was a blow to the also dramatic. One theory is that climate head.” Another setback came last Novem- change is taking a toll. Puffins feed their ber when Russia rammed and seized two young on sand eels and, suspects Sjurdur Ukrainian gunboats and a tug attempting Hammer, a conservation scientist at the to enter the Sea of Azov, a body of water Faroese Environment Agency, sand eels’ shared between them. nutritional value has gone down because Ukraine is now rebuilding. Its short- the seas are warmer, speeding up their term goal is a “mosquito fleet” of small, ag- metabolism. In the future, laments Mr ile and affordable vessels to deter Russia in Jensen, “the only place you will see a lot coastal waters, rather than big and expen- of puffins is in the tourist office.” sive warships for the high seas. Two shiny Might tourism, in fact, help? Gudrid new patrol boats, bristling with guns, sat in Hojgaard, the Faroese government’s Odessa’s harbour on the country’s naval tourism chief, says that since 2012 tourist day on July 7th. Stepan Poltorak, Ukraine’s numbers have already doubled to new minister of defence, and Vice-Admiral 120,000 a year. She hopes that revenue Lisa Franchetti, commander of America’s this year will be 800m kroner ($120m), a Europe-based Sixth Fleet, clambered into considerable sum for such a thinly- one and cruised off. That is a vital relation- populated place. Apart from admiring ship for Mr Poltorak. In the past four years the wonders of nature, there is not a lot 92% of Ukraine’s military assistance has for visitors to do. Better conserve those come from America. This includes two pa- Please don’t eat me puffins before it is too late. trol boats presented in 2018, with another pair due shortly. America is also beefing up Ukrainian naval facilities east of Odessa to American and European support for Uk- fleets spent 120 days there in 2018, up from take larger foreign warships. raine reflects a wider Western concern 39 in 2014 and 80 in 2017. There is a limit to However, Ukraine needs more than about the balance of power in the Black Sea. such naval shows of force; the Montreux arms. Its military culture prefers top-down Russia had sent only one new warship to its Convention, which dates back to 1936, sets orders and centralised planning to the ini- Black Sea fleet between 1991 and 2014, says caps on the number, tonnage and length of tiative and autonomy favoured in NATO Dmitry Gorenburg, an expert at the Centre stay of foreign warships in the Black Sea. armed forces. “We still see remnants of the for Naval Analyses, a think-tank, leaving it But there is pushback on land, too. In June Soviet command structure,” says a Swedish “barely functional”. But since the seizure of the Pentagon announced a fresh $250m in officer who is mentoring the Ukrainians in Crimea Russia has put the fleet on steroids, military aid for Ukraine, bringing the total the operations centre of the exercise. adding half a dozen new submarines, three to $1.5bn over the past five years. In July “We’re trying to teach an old dog new frigates and a slew of missile-toting boats. America moved Reaper surveillance tricks.” He says that corruption seems to be It has also stuffed Crimea full of missiles, drones from Poland to Romania, putting down and the work ethic up. In past years, including the s-400 air-defence system, the whole Black Sea within reach. And from the operations room would shut down in making it far riskier for foreign ships and October a Romanian will serve as nato’s the afternoon. “Some saw it as a vacation planes in wartime. deputy secretary-general—the first official down here.” Now it runs around the clock, That is changing. Carney’s visit to the from a Black Sea littoral state to do so in with Ukrainian officers doing more of the Black Sea was the fifth by an American war- nearly five decades. Those are comforting heavy lifting. ship this year. Ships from nato’s standing thoughts for Ukraine’s sailors. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Economist August 10th 2019 Europe 29 Charlemagne The eastern summer

A wave of pro-democracy protests and elections sweeps the east of Europe thestreets of Georgia in opposition to Russia’s ongoing occupation of parts of the country. In July, across the Black Sea, Romanians and Bulgarians also staged demonstrations: the former over police in- competence and the latter over cronyism in the judiciary. Uk- raine’s parliamentary election delivered the only absolute major- ity in its post-communist history for Volodymyr Zelensky, a former comedian promising to tackle corruption and to anchor the country to the West. Now Moscow is centre-stage. On July 27th some 20,000 people took to the streets, the largest demonstration there since 2012. Vladimir Putin’s approval ratings are sinking. So are real wages. The surge of patriotism that followed Mr Putin’s annexation of Cri- mea, part of Ukraine, has faded. And Muscovites are bridling at an upcoming election in which non-approved independent candi- dates will be barred from the ballot. Another protest on August 3rd saw thousands return to the streets, despite the threat of arbitrary beatings and imprisonment. One major figure in the Russian op- position is Lyubov Sobol, an anti-corruption campaigner. Women are at the heart of many of the rebellions against the strongmen. Ms Sobol, who has now been arrested, and Ms Caputova are two. Others include Canan Kaftancioglu, a leading force in the Turkish opposition; Laura Kovesi, a Romanian graft-buster set to become urope is preparing to mark 30 years since the fall of commu- the eu’s first public prosecutor; and Barbara Nowacka, who led Enism. On August 19th Angela Merkel will travel to Sopron. With women’s protests against reactionary social reforms in Poland. Viktor Orban, Hungary’s authoritarian prime minister, she will To be sure, this is no new 1989. The encouraging protests and commemorate the anniversary of a peace protest on the border be- election results mostly concern local issues—though they have tween Hungary and Austria that helped chisel the first chink in the common factors, such as lots of young people and a pro-eu bent. Iron Curtain. The event will have a grotesque quality: a German Poland’s election, set for October 13th, will probably see the go- chancellor celebrating the rebirth of democracy alongside a leader verning populists triumph. Mr Orban is going nowhere. Mr Babis is who is systematically dismantling democratic institutions in his still riding high in the polls. It is far from clear that Mr Zelensky country. And it will doubtless lift the curtain on an autumn of will break from Ukraine’s oligarch-dominated past. In Russia and commentary lamenting the failed promise of 1989. Expect doleful Turkey change is most likely to come from shifts within the ruling references to Europe’s new east-west cleavage and sardonic asides party, albeit ones that may be catalysed by street protests. about the predicted “end of history”. The images from Sopron will not do central and eastern Europe History is back justice. Democracy and liberal values have indeed come under at- And yet the events of this summer prove many of the western tack in the region. The Economist Intelligence Unit (a sister of The European clichés about eastern Europe wrong. States scarred by Economist) finds that since 2006 democracy has deteriorated more communism are not incapable of producing strong civil-society there than in any other part of the world. And yet there have been movements. Slavs and Turks do not have some innately “Asiatic” quite a few glints of hope—especially in the past few months. preference for authoritarian leadership. Nothing lasts forever. The prelude to this “eastern European summer” came in March History never ended. with the election of Zuzana Caputova, a liberal anti-corruption Eastern Europe’s liberal marchers and voters deserve more sup- campaigner, as president of Slovakia. She has since stood up for in- port from the continent’s west. While protesters on the streets of dependent judiciaries and publicly rebuked Mr Orban’s illiberal Moscow are being beaten and countries like Ukraine and Georgia abuses in neighbouring Hungary. April brought a presidential are striving for independence, Germany is embracing Nord- election in North Macedonia in which nationalists were defeated Stream2, an unnecessary gas pipeline tailored to the Kremlin’s by the Social Democrats, who had just settled a long-running dis- geopolitical and financial interests. Meanwhile Mrs Merkel and pute with Greece over the country’s name in order to pave the way Emmanuel Macron are pouring cold water on North Macedonia’s for eu membership. And May brought wins for pro-European hopes of joining the eu. The union spends far too much of its bud- moderates in the Latvian and Lithuanian presidential elections. get on misguided priorities like farm subsidies, and not enough on Slightly further afield, in June a re-run of the Istanbul mayoral supporting independent media and civil-society organisations on election put an opponent of President Recep Tayyip Erdogan at the its fringes. Dissenting voices in countries like the Czech Republic, helm of Turkey’s largest city, confirming that the autocratic Romania and Turkey receive scant coverage from western Euro- leader’s grip on the country is faltering and prompting breakaways pean politicians and journalists. That should change. from his political party. Czechs protested in the largest demonstra- To assume eastern Europe is all Orbans, Erdogans and Putins is tions since the fall of communism—some 250,000 marched in to do the region a grave injustice. This summer has proved that Prague—after Andrej Babis, the prime minister, was charged with eastern Europe is in fact teeming with democrats and liberals will- fraud and appointed a crony as justice minister. Protests also burst ing to put their own interests on the line for their cause. If the eu onto the streets of Moldova, where an “anti-oligarch” coalition ul- stands for anything, if it truly values the promise of 1989, it will timately ousted Vladimir Plahotniuc’s crooked regime, and onto stand by them. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 30 United States The Economist August 10th 2019

Mass shootings mation League, an ngo, right-wing ex- tremists were responsible for 70% of kill- The definition of insanity ings apparently motivated by some extremist ideology in America between 2009 and 2018, the counterterrorism appa- ratus remains geared more towards catch- ing foreign terrorists than domestic ones. That stems partly from a legal distinc- EL PASO tion. Providing money or personnel to a America grapples with a lethal mix of terrorism and lax gun laws designated foreign-terrorist group such as hey looked like something out of Do- injured. America has grown accustomed to al-Qaeda or isis is illegal. No such statute Tnald Trump’s fever dream: a bunch of such events. There have been 31 shootings exists for domestic terrorism, and in any burly, bearded, tattooed Latinos massed with three or more deaths in 2019. On aver- case white-supremacist attacks are carried outside a blood bank wielding metal ob- age, according to a research outfit called out by individuals who buy their own guns jects. But the objects were spoons and spat- the Gun Violence Archive, this year has and radicalise themselves online. Initiat- ulas, and the men were Christians on a seen one shooting in which four or more ing a terrorism investigation based on mission. Soon after a gunman killed nearly people were killed or injured every day. opinions posted on web forums gets into two dozen people at a Walmart, Pastor An- Two of these attacks—in Gilroy and El murky First Amendment waters. thony Torres and members of his flock Paso—are being investigated as domestic But the imbalance also stems from pri- stocked their mobile kitchen and drove terrorism, raising questions about how po- orities set at the top. Former counterterror- down from Alamogordo, New Mexico. In lice and politicians confront the threat ism analysts say that the government does the two days that followed they served from white-supremacist terror. On July not devote nearly as much intellectual en- hundreds of meals to El Pasoans who do- 23rd Christopher Wray, the fbi director, ergy to understanding the ideology of do- nated badly needed blood to local hospi- said his agency had made around 100 do- mestic white supremacists, and mapping tals. Asked why he brought nearly a dozen mestic-terror arrests since October, most out paths from ideology to action, as it does people, a mobile kitchen and hundreds of of them related to white supremacists. Yet to jihadist terrorism—even though, as dollars-worth of food to another city to even though, according to the Anti-Defa- Clint Watts, a former fbi special agent who help people he had never met, Mr Torres worked on terrorism, notes, the two ideol- just shrugs: “We felt we had to be here.” ogies are structurally similar. Both argue Also in this section The El Paso massacre was the deadliest that they—Muslims in one case, white peo- of three in less than a week—all perpetrat- 31 On malign words ple in another—are superior, and need ed by young men using legally purchased their own separate state ruled by their own 32 America’s most interesting sheriff semi-automatic weapons. The death toll, people, and are justified in committing including two shooters, stood at 36: 22 in El 33 Life after coal in Wyoming acts of violence in their people’s name. Paso, four at a festival in Gilroy, California Despite that passing similarity, the path 34 Lexington: Rowing about rights and ten in Dayton, Ohio, with dozens left to radicalisation seems different. Jihadist 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Economist August 10th 2019 United States 31

2 groups recruited through mainstream platforms such as Facebook, Twitter and X and why 120 YouTube, where they comprised a negligi- United States, mass shootings*, 1982-2019 ble share of these firms’ revenue and users. Number of fatalities 26 First Baptist Church, Sutherland Springs, TX That made it easy for companies and gov- 100 Individual incident ernments to kick jihadists off these sites. 58 Las Vegas Strip, Las Vegas, NV White-nationalist extremists use smaller Incident with more than ten fatalities platforms that have no interest in joining 49 Pulse nightclub, Orlando, FL the mainstream. Sometimes their service 14 Inland Regional Centre, San Bernardino, CA 80 providers step in: Cloudflare, for instance, 12 Navy Yard, Washington, DC withdrew its web-security protections 27 Sandy Hook Elementary School, Newtown, CT from 8chan, a web forum popular with the 12 Movie theatre, Aurora, CO 60 far right. These sites then pop up else- 13 American Civic Association Centre, Binghamton, NY 13 Army 9 Dayton, where, hosted in an obscure jurisdiction. 21 McDonald’s base, OH restaurant Fort Shortly before he began his attack, Pat- San Ysidro, CA Hood, TX 40 rick Crusius, the El Paso shooter, appears to 22 have posted a manifesto on 8chan. He El Paso, 14 Post office 23 Luby’s cafeteria 32 Virginia Tech TX wrote that his attack was “a response to the Edmond, OK Killeen, TX Blacksburg, VA Hispanic invasion of Texas”—a state that 20 until 1836 was part of Mexico. He railed 13 Columbine High School against immigration and environmental Littleton, CO damage, and advocated “decreas[ing] the 0 number of people in America using re- sources. If we can just get rid of enough 1982 85 90 95 2000 05 10 15 19† people, then our way of life can become *Shootings with three or more fatalities excluding perpetrator(s). Before January 2013, Sources: Mother Jones; press reports with four or more fatalities. Not comprehensive †At August 7th sustainable.” Towards that end, he trav- elled from the suburb of Dallas where he was brought up to El Paso, a majority-His- shrunk and diluted through mass immi- from Iowa, infamously wrote that “we can’t panic border city, and opened fire in a store gration, low fertility rates, multicultural- restore our civilisation with somebody packed with back-to-school shoppers from ism and miscegenation (Mr Crusius also else’s babies.” On the House floor Ted Yoho Mexico. One survivor said he specifically inveighed against “race mixing”). Unsur- and Louie Gohmert, both Republican con- targeted people he thought were Hispanic. prisingly, many on the far right believe this gressmen, have compared immigrants to “The Hispanic community,” he wrote, to be a Jewish plot. invaders. During a trip to Europe in 2018, “was not my target until I read The Great These beliefs, notes Oren Segal of the Donald Trump said that immigration has Replacement.” This refers to a conspiracy Anti-Defamation League, “are not just on “changed the fabric of Europe”, and told a theory that blames feckless Western elites these fringe internet forums. If anyone op- British tabloid, “I think you are losing your for “replacing” people of European ances- erating there turned on Fox News, they culture. Look around.” More recently, his try with non-white immigrants. “The Great would hear similar sentiments.” Tucker Facebook campaign ads have warned, “We Replacement” was the title of a book by a Carlson, the second-most-popular host on have an invasion…It’s critical that we French polemicist. Brenton Tarrant, an cable news, has said that Democrats want stop the invasion.” Take this literally and Australian man who earlier this year mur- “demographic replacement” through “a violence becomes a defensive measure. dered 51 people in two mosques in New flood of illegals”. Laura Ingraham, another Correlation is not causation, but fbi Zealand, used it as the title of his own man- host, has argued that Democrats “want to data show a recent uptick in reported hate ifesto, which Mr Crusius endorsed. replace you, the American voters, with crimes. Men who killed Jews in synagogues This is an updated version of an older newly amnestied citizens and an ever-in- in California and Pittsburgh blamed Jews conspiracy theory known as white geno- creasing number of chain migrants.” for immigrant “invaders” and the “geno- cide, which propounds that the world’s Prominent politicians have said the cide of the european race”. Despite the white population is being deliberately same thing. Steve King, a congressman president’s occasional disavowals, these people really like him. The Christchurch shooter called Mr Trump “a symbol of re- On malign words newed white identity and common pur- “Oppressive language does more than pose”. One researcher who attends extrem- represent violence; it is violence; does ist rallies (in disguise) reports “unanimous more than represent the limits of support for Trump…These folks rallied knowledge; it limits knowledge. Whether around him. They saw large parts of their it is obscuring state language or the messaging getting into the mainstream.” faux-language of mindless media; To his credit, in a speech on August 5th whether it is the proud but calcified Mr Trump denounced “racism, bigotry and language of the academy or the white supremacy”. He also advocated mak- commodity-driven language of science; ing it easier to commit the mentally ill to whether it is the malign language of hospital, “stop[ping] the glorification of vi- law-without-ethics, or language designed olence in our society” and develop “tools for the estrangement of minorities, hiding that can detect mass-shooters before they its racist plunder in its literary cheek—it strike”. Missing from the list was a commit- must be rejected, altered and exposed.” ment to moderate his own speech, or any- Toni Morrison’s Nobel lecture, as the first thing that would make it substantially African-American writer to receive the harder for angry young men to obtain prize, in 1993. She died on August 5th. semi-automatic weapons. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 32 United States The Economist August 10th 2019

Tom Dart ceeding? Some anecdotes are cheering, but measurement is tricky beyond looking at Bull’s-eye rates of rearrests. Reoffending in the first ten days of release is down sharply, says the sheriff. A pilot project gives the most vul- nerable help to find housing, food and clothing on release. Some are driven home, not just dumped outside the jailhouse CHICAGO door. But longer-term rates of rearrest are What happens when a radical sheriff comes to town not yet noticeably down, he concedes. hen it comes to the treatment of tioning” for example with depression, 382 The jail population has shrunk by half Wmentally ill people, says Tom Dart, of “marginal stability”, perhaps with since Sheriff Dart came in. That is ex- “in future people will look back and call us schizophrenia, and 80 who suffer the most plained by many things, including general- evil.” Mr Dart, who serves Cook County in acute psychosis. The last are the hardest to ly lower rates of arrest by police in the past Illinois, may be the most interesting sher- manage, let alone release safely. three years. Bond reform, passed in 2017, is iff in the country. America locks up the Treatment includes antidepressants also a factor. Bail is rarely set at thousands mentally frail “out of indifference”, he says. and other medical care, getting sober, and of dollars, so fewer are jailed merely for be- Behind bars, with few officers trained to counselling to address low self-esteem. ing poor. This has freed up resources for help, the sick grow more troubled and like- “We diagnose, prescribe and treat, offer better health care, as did closing a military- ly to reoffend. therapeutic classes, hotlines for families, style boot camp in the jail. Mr Dart is con- In Chicago Rahm Emanuel, the previ- and have a discharge plan like a hospital,” vinced data will eventually show overall ous mayor, closed six of 12 public-health says Mr Dart. In one cell block a psychia- benefits, once experts from the University clinics in 2012. Sheriff Dart thinks that re- trist leads 40 women in blue jail smocks in of Chicago and elsewhere have had time to sulted in more ill people losing their way, a lively, if scripted, discussion of how to track outcomes. going off medication, getting arrested and seek self-forgiveness. The women read po- being dumped in his gargantuan, crum- etry, talk of betrayal and of shaking off ad- What’s in a badge bling jail on the city’s South Side. His staff diction. Over half are hooked on heroin, Beyond the jail walls he is trying other ex- say that of nearly 40,000 people who pass says an official. A gaunt detainee tells how periments, rethinking the role of the sher- through yearly, 37% (as of mid-July) suffer she struggles with anger, “but I don’t think iff’s office and deploying his nearly 7,000 some form of mental ailment. I’m the same person as when I came in, I staff in ways his predecessors never imag- Early in his term (he was first elected in used to lash out at every little thing.” ined. There are over 3,000 sheriffs across 2006) the sheriff, a former Illinois lawmak- Therapy sessions for male detainees America, law officers whose duties are lim- er, tried raising awareness. He calls the ne- bring forth stories of isolation, absent par- ited mostly to policing and enforcing court glect of mental health chronic, inhumane ents, addiction, violence, fear and arrests. orders. Under Mr Dart’s expansive view, the and costly. Imagine if we treated diabetes A 25-year-old, Jesus Saenz, says he has been office can be a form of alternative govern- by locking sufferers in a small room, he to the county jail 30 times. He laments ment. His mandate is so nebulous, he ar- says. But as Alisa Roth writes in “Insane”, years lost to cocaine and pcp, gangs, de- gues, it amounts to “outrageously broad published last year, the prison system has pression and bi-polar disorder. After medi- powers” for a willing sheriff, especially be- been known as a warehouse for the mental- cal care and months of counselling he now yond city borders (his county includes 130 ly ill for decades. She cites a federal study vows to stay clean and get a job. “They towns and villages outside Chicago). He that suggests 75% of female detainees suf- helped me stop my bullshit, hurting other tries what he calls “wildly different fer mental illness. people,” he says. stuff…to make my job more bizarre.” The sheriff’s response has been to try What chance does Mr Dart have of suc- Examples include his office helping the making his jail “the best mental-health mayor of a depopulated, crime-ridden and hospital” possible. He has done away with poor town, Ford Heights, to fix its public solitary confinement, a practice which has lighting and water, build a baseball dia- long been known to cause and worsen mond and replace a defunct police force. mental woes. (Doing so has also cut staff Elsewhere he has clashed with banks, by assaults, he says). He appointed psycholo- refusing to evict homeowners who are be- gists as jail directors and hired medically hind on mortgages. He resisted even facing trained staff in place of some guards. In- threats of contempt orders against him mates can take courses in yoga, chess and personally. He called the evictions unjust other activities intended to rehabilitate. for a “thoughtful society”. Spend a day in his jail and much appears Mr Dart campaigned to close Backpage- unusual for a place of detention. In a damp .com, a website shuttered by federal au- and gloomy basement, prison workers thorities for hosting adverts for human hand out questionnaires to men arrested trafficking and prostitution. And in Chica- the night before. They scramble to see in- go he deployed officers to promote com- mates before they go before a bail judge munity policing—to build trust among res- (who will release most the same day), to get idents in especially violent areas—even a chance to diagnose the mentally ill, see when city police, at first, seemed reluctant who gets treatment and offer care. to accept help. Not all these efforts succeed. For those kept inside—the jail holds But through his willingness to try new some 6,000 detainees at a time, many for things until someone stops him, and his three-to-six months—further diagnosis enthusiasm for clashing with Democratic and treatment follows. Staff in a beige hos- power-brokers in Springfield like the pital building distinguish between 1,600 House Speaker, Mike Madigan, Mr Dart has inmates, currently, who are “higher-func- The Dart arts reimagined what a sheriff can be. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Economist August 10th 2019 United States 33

Eagle Butte is Dry Fork, one of the newest coal-fired stations. It cost $1.3bn and opened in 2011. Talk of a second plant came to nothing. Utilities prefer cheaper and cleaner natural gas, solar or wind power. Academics from Columbia University forecast coal consumption crumbling by another 25% in the coming decade. For Campbell County, which digs two-fifths of America’s coal, that may be the best it can hope for. Many power plants now mix gas with coal, cutting demand. If other energy sources get cheaper, or if congressional Democrats succeed in passing laws de- signed to limit carbon emissions, demand will fall faster. Some in Wyoming—which overwhelm- ingly backed Donald Trump in 2016—see a liberal conspiracy against coal workers and their hardscrabble way of life. One Gillette resident says proponents of clean energy are set on “direct attacks on the good peo- ple” who work there. Many scoff at curbing carbon emissions. “I’m not sold that the ice Life after coal caps are melting, most people aren’t per- suaded by climate change,” says Phil Chris- Comin’ round the bend topherson, boss of a group trying to diver- sify Gillette’s economy. Such denial helps nobody. Jim Ford, an- other local who works on diversifying the local economy away from mining, con- cedes there is “widespread distaste for car- GILLETTE, WYOMING bon-flavoured kilowatts, [so] it doesn’t America’s coal capital knows it must rethink its future matter what we think.” Locals also know usty bell climbs a roadside platform Gillette lament “horrible” incompetence that exports alone won’t save the county. Rand gazes at the sweeping, flower- by its boss. The mayor, Louise Carter-King, Governors of western coastal states refuse strewn landscape of northern Wyoming. blames “complete mismanagement”, vow- to let their ports be used—or a new one be Immediately before him is a vast hole. Ea- ing that “these mines will reopen”. built—for shipping Wyoming coal. gle Butte, a canyon of grey and brown rock, In reality Blackjewel’s troubles reflect Michael Von Flatern, a state senator, ex- is one of the largest coal mines in America. industry-wide woes. Cloud Peak Energy pects “we’ll be headed for bust more often The commissioner of Campbell County runs three mines nearby and declared than boom” as the industry slows. He calls it a mainstay of the economy. Nearby bankruptcy in May. Six Wyoming operators praises efforts to test how to burn coal Gillette, for example, has a swanky recrea- have done so since 2015. Some are consoli- cleanly, by catching emissions, but says tion centre, decent public-health services, dating, others have restructured and re- “we’re 20 years too late” in starting such ex- a community college and more, all thanks opened. Nonetheless, production is periments. Mr Ford describes a $20m inter- to coal revenues, he says. slumping. America consumes 40% less national effort at Dry Fork to extract carbon Mr Bell’s problem is that nothing moves coal than at its peak in 2005. Just over a de- from flue gases while producing market- in the hole. Yellow lorries on the valley cade ago, thermal coal produced half the able products from it. Some local firms floor look tiny and toylike in the distance. nation’s electricity; today it accounts for hope to use coal to make asphalt, carbon fi- Each is really a giant able to haul a payload little more than a quarter. Many investors bre or water filters. of 400 tons. The tyres on each one are more are abandoning coal. The only real uncer- than twice the height of a tall man. But tainty is when digging it will cease to be a It never will again where a shift of 75 workers usually toils, all significant business. The mayor, gamely, Such activities, so far, are small-bore. Mr is still. Where trains 1.5 miles (2.4km) long says that “for 10 to 20 years the nation will Von Flatern thus expects tighter belts and used to leave from the mine’s edge, their still need coal in the mix.” Others say lon- rising property taxes to come, because resi- 140 cars brimming with low-sulphur coal, ger. The overall trend, either way, is down- dents cannot expect taxes on minerals (oil, nothing stirs. Buses that bring 8,000 tour- wards as steeply as the edges of Eagle Butte. gas and some uranium are also extracted) ists a year to the mine are also locked out. Almost a century ago 860,000 coal min- to keep paying for 58% of all the county’s The operator, Blackjewel, last year ers toiled in America; by January just bills. Wyoming gets an estimated $900m a shipped 34m tons from Eagle Butte and a 53,000 did. Roughly 17,000—including year in royalties and fees from coal miners. sister mine. About 165bn tons of recover- those employed indirectly—are in Wyo- That sum is starting to fall. able coal remain under the prairie grass of ming, many in Campbell County. They are The mayor talks of luring firearm-mak- the wider Powder River basin. In theory highly skilled and typically earn almost ers or other industries to use Gillette’s rail- that means hundreds of years of digging $90,000 a year, double the state average. way, roads, airport, energy, skilled labour yet. But in July Blackjewel declared bank- But power utilities increasingly shun what and water. She notes how trade shows, tou- ruptcy, chained its gates and sent home they produce. The Sierra Club estimates rism and conferences are growing. “We over 1,700 workers nationally, including that 239 coal-fired plants survive, down know we need to diversify, but it takes 580 in Wyoming. Officials and residents in from 600 in 2007. Around the corner from time,” she says. And time is short. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 34 United States The Economist August 10th 2019 Lexington Rowing about rights

There is a need for fresh thinking on human rights. Mike Pompeo’s effort looks like a partisan stunt rights. And as if those were not sufficient grounds for scepticism, the commission is viewed with suspicion by the State Depart- ment’s own human-rights division, which has had no hand in it. Still, Ms Glendon insists that the pre-emptive criticism is wrong: “Nowhere in our charge is there anything about reprioritising [rights].” And someone of her stature deserves a serious hearing. In her view there are many reasons to reappraise the rights agenda. It is widely recognised in the human-rights community that the great post-1945 human-rights project is in “crisis,” she says. To underline that, she quotes a list of liberals, including Salil Shetty, a former boss of Amnesty International, and Samuel Moyn of Yale University, who have expressed similar concerns. One is that governments are not defending rights. The erosion of the frag- ile consensus that once supported the un Declaration on Human Rights has benefited and been exploited by the world’s worst rights violators, writes Ms Glendon. Like Mr Moyn, she has argued for re- cognising socioeconomic rights, as European countries do but America does not, as well as civil and political ones. Her emails also touched on her more controversial views. Pan- dering to “special interests” has led rights groups to disavow “es- tablished rights that do not suit their agendas”, she wrote. Applied to gay rights, that is an illiberal view. Yet Ms Glendon can at least ary ann glendon is not used to having her bona fides ques- cite more history in support of it than her critics allow. With their Mtioned. The 80-year-old Harvard professor is an eminent le- conservative, Christian roots, the framers of the un Declaration gal scholar whose books on comparative law and human rights are did not envisage gay marriage. Conservatives like her therefore be- widely respected. A former ambassador to the Holy See, she is also lieve they are not reactionaries, as liberals claim, but rather keep- a conservative Catholic, whose opposition to gay marriage and ers of the rights movement’s true flame. abortion have drawn flak. But her view of abortion is nuanced; she “Crisis” may be too strong a word, but Ms Glendon is right to is not for a blanket ban. And her contribution to human rights is note the strain human rights are under, including from authoritar- significant. She was active in the civil-rights struggle (and had a ian leaders, ineffective international institutions and rights pro- child with an African-American) in the 1960s; her book on the con- liferation. An administration that wanted to lead a good-faith re- servative and Christian roots of the rights movement is seminal. view of such worries could have drawn support from across the Yet since her former student Mike Pompeo, the secretary of state, political spectrum. Ms Glendon’s illiberal views should not dis- announced that she will lead a new “Commission on Unalienable qualify her from leading such an effort. Gay rights are a settled is- Rights”, both she and it have been savaged. Over 400 rights, reli- sue in America, and Mr Pompeo would struggle to restrict State De- gious and academic bodies, as well as Obama and Bush adminis- partment support for them by more than the minimal steps he has tration officials such as David Kramer and Susan Rice, signed a let- already taken—by denying some embassies permission to fly flags ter asking the panel to be scrapped before it has even met. to celebrate Gay Pride, for example. The problem is that there is not In a lengthy email exchange, Ms Glendon sounded understand- much reason to think the new commission is a good-faith effort. ably bruised: “I really hope that those who have rushed to judg- ment about the commission before it gets off the ground will one Unalienable, except when they’re not day understand how far off the mark they were.” Yet that does seem Even beyond Mr Pompeo’s evangelical crowd-pleasing, the Trump unlikely. The opposition stems from a belief that Mr Pompeo administration has shown little interest in standing up to the launched the commission to promote religious liberty—with worst rights-violators. Mr Pompeo only ever castigates abusers, which evangelical Christians, the Trump administration’s most such as Iran or Cuba, when it is politically convenient. Mr Trump important constituency, are obsessed—at the expense of repro- appears to have no interest in the issue. And the administration’s ductive and gay rights, which they abhor. attacks on international rights institutions look equally self-serv- This is a fair deduction. Religious liberty is the only right in ing. Its argument for pulling out of the un Human Rights Commis- which Mr Pompeo, who is evangelical and highly ambitious, has sion—a troubled body that had nevertheless been improving un- shown any serious interest. He has also previously linked it to the der American influence—was bogus. archaic phrase “unalienable right”, which conservatives use to de- The administration has a record of convening expert panels to note the rights to liberty and property enshrined in America’s score political points. One was given the impossible task of sub- founding documents. By contrast, many people, seemingly in- stantiating Mr Trump’s claim that his election saw massive vote- cluding Mr Pompeo, view more recent protections for gays and rigging. Another has been proposed—under one of the few cli- other minorities as mere “interests” or “goods”, doled out by liber- mate-change deniers in an Ivy League science faculty—on global als for political gain. warming. That Ms Glendon’s panel looks like the latest example is, Ms Glendon is also among them: she once called gay marriage a in a sense, nothing unusual. Despite the lofty ideals that attend demand for “special preference”. So are at least some of her fellow them, rights claims are always made and resisted as part of broader commissioners. They are a mainly conservative group of academ- political battles. Mr Moyn calls them “politics by other means”. Yet ics and faith leaders, few of whom have any expertise in human what is depressing in this case is how small the politics seem. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Americas The Economist August 10th 2019 35

Also in this section 36 Argentina’s election 37 Sanctions on Venezuela 37 Caribbean tourism — Bello is away

Espírito Santo These days the crisis is worst at the state level. The 27 states’ combined pensions Spirited effort shortfall alone is growing by 140bn reais ($35bn) a year, more than that of the federal government. The deficit has doubled in the past five years. Seven states already do not have enough cash to pay salaries; 12 more are close. VITÓRIA Under Dilma Rousseff, Brazil’s presi- One Brazilian state stands out as a model of efficiency dent from 2011to 2015, states like Rio de Ja- he moqueca in Espírito Santo, a state pense once hired. Perks such as raises for neiro depended on treasury-guaranteed Tof 4m people on the coast of south-east- seniority can even extend to widows’ pen- loans from state banks to keep spending. ern Brazil, is lighter than the fish stew in sions, producing the unique “post-mortem But Brazil’s new president, Jair Bolsonaro, Bahia, its neighbour to the north, explains promotion”. Nearly 80% of government has promised to reduce the size of the state. a tuxedoed waiter in the capital, Vitória. spending in Brazil goes on salaries and His treasury head, Mansueto Almeida, has Capixabas, as Espírito Santo residents are pensions, compared with a global average made debt relief conditional on efforts to called, like it that way. Their beaches are of 50-60%. “Instead of a state that serves comply with a fiscal-responsibility law— smaller than those of Rio de Janeiro, to the the public, you have a state that serves the passed in 2000 but long ignored—that re- south; their colonial towns plainer than state,” says Samuel Pessôa of the Brazilian stricts spending on personnel. those of Minas Gerais, to the west. Once Institute of Economics at Fundação Getú- So how has Espírito Santo stayed in the considered signs of inferiority, these now lio Vargas, a university. black? One thing that sets the state apart seem like symbols of frugality. Other states was foresight about the depth of Brazil’s are so indebted they cannot pay salaries, worst-ever recession, which began in 2014. 100 km 57.5 176 but Espírito Santo’s accounts are in order. BRAZIL Other governors believed the then presi- That is thanks largely to the last gover- Bahia dent Ms Rousseff, who promised a quick nor, Paulo Hartung, who ran the state from recovery. “We underestimated the size of 2003 to 2010 and then again from 2015 to the crisis,” admits Julio Bueno, the treasury last year. Mr Hartung stood in 2014 on an ATLANTIC secretary in Rio de Janeiro at the time. Bra- OCEAN austerity platform, arguing that “spending 6.6 273 zil’s gdp fell by 3.8% in 2015 and by 3.6% in is taking the elevator while revenue is tak- 182.6 73 2016. Rio ended up with a budget deficit of ing the stairs”. On taking office he set about Espírito 11bn reais. Espírito Santo finished both Santo Minas Debt as % shrinking spending by 14%. His work of revenue years with a surplus. means that Espírito Santo is now a model Gerais Boldness is the second thing that sets Vitória Q1 2019 for other Brazilian states to follow. Espírito Santo apart. “Fiscal adjustment is a 00 Investment Brazil’s fiscal incontinence is legendary. per resident cake recipe not a silver bullet,” says Mr Har- The number of civil servants grew by 60% 2018, reais tung. It can easily go wrong. As well as cut- between 1995 and 2016, to 12m. Since pub- 263.9 ting budgets, including for the judiciary 91 Source: National lic-sector workers cannot be fired or have Treasury; Ministry and legislature, he had to stand up to the their pay cut, they become a permanent ex- Rio de Janeiro of Finance unions, announcing the salary freeze on 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 36 The Americas The Economist August 10th 2019

2 his first day. Even when two years later po- Argentina’s election lice officers went on strike, and 200 were murdered, Mr Hartung did not back down. It won’t be easy Finally, Espírito Santo was better placed to downsize. Its bureaucracy includes a large share of temporary workers, includ- ing roughly 60% of teachers. Unlike civil servants, they can be fired. Mr Hartung eliminated more than 7,000 positions, or BUENOS AIRES Argentina’s primaries will show how the presidential election may go roughly 12% of the bureaucracy. In Rio de Janeiro less than 3% of government work- n argentine politics, being compared back. Mr Macri is no Barack Obama, but he ers are temporary. Ito a fat cow is not altogether a bad thing. is learning how to rouse a crowd. “We are Austerity has been painful. Sergio Ma- At one of his last campaign stops ahead of not going back,” he shouted, to rapturous jeski, a state congressman who opposed national primaries on August 11th, Mauri- applause. “We want a true democracy!” the fiscal adjustment, says that cuts to pub- cio Macri, Argentina’s embattled presi- The primary election has no practical lic investment made it harder to climb out dent, rallied with thousands of farmers at effect at the presidential level, because of recession. But despite laying off teachers the country’s annual agricultural show. both Mr Macri and Mr Fernández are un- and closing schools, Espírito Santo jumped Award-winning cows, horses, sheep and challenged within their parties. But since from 9th place to 1st on a nationwide sec- even donkeys paraded in front of him, as all Argentines over the age of 16 are legally ondary school exam between 2013 and 2017. gauchos dressed in their baggy bombacha obliged to vote, it functions in effect as a Mr Majeski says this is because weaker stu- trousers doffed their berets. Mr Macri dry run of the October election. Pollsters dents began skipping classes. But accord- “looks like a winner to me”, said one cow- reckon the Fernández-Fernández ticket ing to Marco Aurélio Villela, the director of boy, proudly showing off a bullock weigh- will edge out Mr Macri, perhaps by a few a government school in Vitória, teachers ing close to half a tonne as he sought a sel- percentage points. But according to one of on short-term contracts tend to perform fie with a beaming president. Mr Fernández’s aides, that is not enough to better because they know they can be The first round of the general election is give them a clear lead come October. “We sacked. due in late October; Mr Macri faces a tough know our best chance lies in an early And cutting staff has helped the state to contest from the duo of Cristina Fernández knockout,” he says. maintain a relatively high level of invest- de Kirchner, Argentina’s president from To that end, Mr Fernández has pursued ment. According to a study by Brazil’s trea- 2007 to 2015, and her former chief of staff, Mr Macri on the economy, a subject the sury, three states that limited spending on Alberto Fernández (no relation). Cristina is president’s team avoids. He talks about lit- salaries—Espírito Santo, Alagoas and running to be vice president; Alberto for tle other than inflation, the devaluation of Ceará—were able to invest, on average, 304 president. Argentina is saddled with high the peso and the record $57bn bail-out reais per person in 2018. Rio de Janeiro, Mi- inflation, rising unemployment and soar- from the imf. “We can’t pay our debts until nas Gerais and Rio Grande do Sul, the states ing debt. But despite the economic woe, Mr we start growing again,” he says in one tv deepest in debt, only spent 91reais. Macri may have a genuine chance. commercial. He says that, if elected, he Can other states emulate Espírito San- At the show the president celebrated could in effect default on government to? It will be difficult without changes to this year’s record harvest, after last year’s bonds and renegotiate the imf loan. federal laws. Mr Bolsonaro’s pension re- worst drought in half a century. In a stadi- That scares the markets. On August 5th, form, working its way through congress, um speech he mentioned new roads, sew- as the standoff between China and the Un- may only apply to federal workers. The su- ers and schools built during his first term. ited States hit emerging markets world- preme court will soon decide whether to al- He promised that his government, if re- wide, the peso fell by almost 2% against the low indebted states to reduce civil servants’ elected, would create a million jobs. “Sí, se dollar and the yield on Argentina’s debt salaries and hours. That would provide puede!”(Yes, we can!) the crowd chanted climbed. “Our opponents are doing their some relief, as would a bill to allow people worst to create market panic, but we’re pre- to be sacked for persistent poor perfor- pared,” says Nicolás Dujovne, the treasury mance. But most politicians will balk at un- minister. popular cuts. A pilot project led by Ana Car- Mr Macri’s longtime political guru, la Abrão, an economist at Oliver Wyman, a Jaime Durán Barba, sees a narrow loss in consultancy, found that the city of São Pau- the primary as a victory in the making. If Mr lo could reduce its payroll by 30% without Fernández comes out ahead, many voters sacking anyone, by paring back perks for all will then fear he and his former boss could but the best-performing employees. The win. As long as Mr Macri survives to the project was shelved by a new mayor in 2018. run-off in November, Argentines who dis- Last year Mr Hartung decided not to run like Ms Fernández will “come home” from for re-election. It would have sent a better third-party candidates. The former presi- message if he had, and had won, says Cris- dent has been in court recently over cor- tiane Schmidt, the treasury secretary for ruption charges (she denies them all). Goiás, a state in deep fiscal trouble. Brazil- Curiously, given the gap between Mr ians tend to blame corruption for their eco- Macri’s centrism and the Fernández duo’s nomic woes, even though more money is populism, the campaign so far has been be- lost to bloated bureaucracy. Whereas Sér- reft of ideas, says Sergio Berensztein, an gio Moro, a judge, gained international analyst and pollster. Instead the candi- fame for leading the sprawling Lava Jato dates are focusing on “micro-reforms, not anti-corruption investigation, few outside the macro-mess of the past 20 years”, he of Espírito Santo have heard of Paulo Har- says. After the election a real debate will tung. That may change as more states find have to start—about the changes Mr Macri their coffers empty. 7 Macri de coeur promised on taking office four years ago. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Economist August 10th 2019 The Americas 37

Sanctions on Venezuela Caribbean tourism Feel the pressure Island shopping

LABADIE Cruise-ship companies are expanding across the Caribbean LIMA hirty minutes west from Cap-Haï- (with or without customs checks) are “a America heaps more sanctions on tien, a city in the north of Haiti, taw- growing phenomenon”, says Jim Walker, Venezuela T ny sand beaches fringed with coconut a lawyer based in Miami who deals with fter the axis of evil comes the “exclu- palms are blocked by a high barbed-wire cruise liners. In 2015, Carnival opened Asive club of rogue nations”. That at least fence. It looks like a prison, except that the $85m Amber Cove in the Dominican is how John Bolton, Donald Trump’s na- inside are a 800-metre zip line, floating Republic; this year, Royal Caribbean will tional security adviser, described Venezue- bouncy castles and a line of several hun- open CocoCay in the Bahamas after a la’s place in the world when he spoke on the dred jetskis. Steel-drum music pumps $250m renovation. A third of the 30m sidelines of a conference in Lima, the capi- from a 225,000-tonne ship rising 20 people who will cruise in 2019 will go to tal of Peru, on August 6th. The meeting, at- storeys from the turquoise sea. the Caribbean. tended by representatives of 59 countries, This is Labadee, a beach run by Royal For cruise companies, the benefits are was called by the Peruvian government to Caribbean. Its name is a riff on Labadie, clear. Customers—and their money—are discuss what to do about the “day after” Ni- the name of the typically poor Haitian kept in one place. And the experience can colás Maduro, Venezuela’s president, falls village next door. Though the resort is be tailored to fit nervous travellers. Dil- from power. But it was the United States actually on the second-largest island in lon Mangs, an expatriate resident of that stole the limelight. the Caribbean, the cruise giant markets it Labadie whom Royal Caribbean contracts On August 5th Mr Trump signed an ex- as a “private destination”. And in a sense to run shore excursions, says he tries to ecutive order to, in effect, quarantine Vene- they are not entirely wrong. Since its showcase Haiti’s culture without damp- zuela in economic terms. The order freezes inauguration in 1986, passengers who ening holidaymakers’ spirits by exposing Venezuelan government assets. It is the come ashore have not been subject to them to too much reality. One excursion harshest measure to date, aimed at all as- customs or immigration controls. Extras, is to a mock Haitian mountain village, sets instead of specific companies, such as such as the signature “Labadoozie” cock- complete with a Vodou show. the state oil producer, pdvsa, as in the past. tail, are paid for in us dollars, never the Is it a problem that cruise companies But it also applies secondary measures to Haitian gourde. Haitians not employed have such privileges? Some worry that anyone doing business with Venezuela. It by Royal Caribbean cannot enter. the deals firms strike with governments is these sanctions which most threaten Mr Caribbean countries striking deals are lopsided. To keep cruisers on side, Maduro’s government. with firms to open exclusive resorts Caribbean countries are “basically giving According to Mr Bolton, companies away parcels of land”, says Ross Klein, of around the world need to decide whether the Memorial University of Newfound- they want to receive a “trickle of income” land. Governments which demand too from Venezuela or trade with the United much find the ships go elsewhere. States. The measure would allow the Un- But for the troubled Haitian govern- ited States to move against any company, ment, the Royal Caribbean deal does at country or individual trading with Venezu- least generate some cash. Each pas- ela. America has had similar third-party senger, of whom there are over 700,000 a sanctions in place against Cuba since the year, pays the state a $12 surcharge. The early 1960s, but they have lacked interna- company provides jobs, and has also tional support. The measures in place contributed to a school. As a boy, Rod- against Venezuela now are more like those man Decius, who lives in Labadie, at- against Iran and North Korea. tended the École Nouvelle; now he works American authorities have despaired of as first mate on a yacht chartered by Chinese and Russian companies operating Royal Caribbean. He is pleased with the in Venezuela. They have warned that debt job and does not mind clueless guests. “If incurred by what they say is an illegitimate they ask questions, it’s nice for me to tell Venezuelan government would not be re- them about my culture,” he says. “But it cognised by Mr Maduro’s successors, if and doesn’t bother me if they don’t.” when he falls. In his address to the confer- ence, Mr Bolton said China and Russia should not “double down on a bad bet”. faction have been talking in Barbados, in company. Venezuela has the world’s largest America has been careful to state that negotiations brokered by Norway, not least proven oil reserves, which made it one of the new measure does not apply to hu- about organising early elections. Mr Madu- the richest countries in South America. But manitarian aid or telecoms, which would ro began a second term in power in January. production has crashed to less than 1m bar- hurt ordinary Venezuelans. Mr Maduro’s The United States and many Latin Ameri- rels a day, around two-thirds lower than in government called the move “economic can governments oppose holding another 2000. terrorism” and pledged to resist efforts to election while he remains in power, claim- The United Nations in June estimated remove him from power in favour of Juan ing he could rig them—as he was accused that more than 4m Venezuelans had fled Guaidó, the speaker of the national assem- of doing last year. the country. Some 850,000 have moved to bly who is already considered by numerous Attendees of the Lima meeting, among Peru, the host of the meeting. The crisis, countries to be Venezuela’s legitimate whom were representatives of Mr Guaidó, said Peru’s foreign minister, Néstor Popoli- president. recognise the massive task of reconstruc- zio, “has turned a country rich in resources The Maduro regime and Mr Guaidó’s tion, starting with the state-owned oil into a disaster.” 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 38 Middle East & Africa The Economist August 10th 2019

Also in this section 39 Multiplying mathematicians 40 Liberia on the edge 40 Ride-sharing in Lebanon 41 Egypt’s poor

Tertiary education in Africa are more likely to study humanities de- grees than science ones, which are more A higher challenge expensive to teach. Over 70% of graduates have arts degrees, versus 53% in Asia. More young people are heading abroad instead. In 2017 some 374,000 studied over- seas, up from 156,000 two decades earlier. Many never return. One in nine Africans KIGALI with a tertiary qualification lives in an New initiatives hint at how Africa’s universities can respond to its youth boom oecd country, compared with one in 13 Lat- n rwanda it’s not easy to get a job,” Whereas 42% of that age group had com- in Americans and one in 30 Asians. “Isays Jean-Paul Bahati, a student at Kep- pleted secondary school in 2012, 59% are With the public sector struggling to ler, a college founded in Kigali in 2013. But forecast to do so by 2030. If African coun- meet demand for places and to offer a high- the 22-year-old believes his course will tries are to meet the aspirations of educat- quality education, the private sector is fill- help him stand out. He studies health-care ed young people, they must ensure there ing the gap. From 1990 to 2014 the number management, a growing industry in Rwan- are opportunities for further study. of public universities in sub-Saharan Afri- da. Kepler’s degrees are accredited by So far they have struggled. State-run in- ca rose from 100 to 500, while private uni- Southern New Hampshire University stitutions that trained the post-colonial versities grew from 30 to more than 1,000. (snhu), which runs one of the largest on- elites are finding it hard to serve a mass Many are small. In Kigali, the University of line universities in America. The first six market. In much of the region public fund- Rwanda has 30,000 students, while private months are a crash course in skills such as ing per student has fallen since the late ones have a few hundred each. But they are critical thinking, English, communication 1990s as enrolment has surged. enrolling a growing proportion of stu- and it. “I like that Kepler knows what em- This reflects competing priorities. In dents, notes Daniel Levy of the University ployers want,” says Mr Bahati. the poorest African countries it costs 27 of Albany. In 2000 about 10% of African In recent decades millions of young times more to fund a university place than students went to private institutions; by people like Mr Bahati have swelled the one at primary school. Since students typi- 2015 the share was 20%. In Rwanda more number of students in sub-Saharan Africa. cally come from affluent families, univer- than half do so. Today 8m are in tertiary education, a term sity spending subsidises the children of Students at private universities often that includes vocational colleges and uni- elites. In Ghana, the higher-education benefit from new ways of teaching. Consid- versities. That is about 9% of young peo- spending that goes to the richest tenth of er Ashesi, which has grown steadily since ple—more than double the share in 2000 households is 135 times that spent on the its founding in 2002 in Accra. Much of Gha- (4%), but far lower than in other regions poorest tenth. Policymakers find them- naian higher education is based on rote (see chart). In South Asia the share is 25%, selves deciding whether to spend scarce re- learning, observes Patrick Awuah, its foun- in Latin America and the Caribbean, 51%. sources on helping poor children attend der and a former Microsoft engineer, and Both the number and share of young school or rich children go to university. was not “teaching students to think criti- people in tertiary education in sub-Saha- The effects of spreading public funding cally”. He based Asheshi on American liber- ran Africa will keep growing. The region thinly are apparent on campuses. African al-arts colleges, where students combine has about 90m people aged 20-24, a figure universities have 50% more students per humanities and sciences. projected to double over the next 30 years. professor than the global average. Students Vocational outfits can innovate, too. 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Economist August 10th 2019 Middle East & Africa 39

2 alx, a for-profit institution that opened its ing more public money for other things. ternational donors. Nearly 2,000 students first campus in Nairobi last year, runs a six- Several African countries have intro- from 43 African countries have graduated. month “boot-camp” in soft skills, then duced state loan schemes. But govern- That number is set to rise quickly. The helps students find a six-month intern- ments have struggled to chase up debts. institute will open nine new campuses. ship. Its gambit is that its brand becomes so The private sector is now trying to do a bet- And it is adding new degrees. In July the strong that employers do not mind that its ter job. Kepler and Akilah, an all-female first cohort of students graduated in Kigali graduates lack a degree. college in Kigali, are working with chan- with a masters in machine intelligence. “A traditional university model is very cen International, a German foundation, The course was founded by Moustapha hard to make profitable,” says Fred Swa- to try out a model of student financing pop- Cisse, who runs Google’s ai research in niker, the Ghanaian founder of alx. He ular among economists—Income Share Ghana. It is sponsored by Google and Face- should know. In 2013 Mr Swaniker set up Agreements. chancen pays the upfront book. One of the students, Ines Birimahire, the African Leadership University (alu), costs of a select group of students. Once a Rwandan, explains that she wants to ap- which was dubbed the “Harvard of Africa”. they graduate, alumni pay chancen a ply machine learning to areas that Western But its campuses in Mauritius ($15,000 per share of their monthly income, up to a researchers neglect. She is collecting audio year for board and tuition) and Kigali maximum of 180% of the original loan. If data from radio stations to ensure that ($9,000) are “too expensive”, he concedes. they do not get a job, they pay nothing. “natural language processing” software It has ditched plans to open dozens of cam- Kepler’s experiment began only in Janu- (such as Google Translate) can manipulate puses like these and is instead expanding ary. But models such as these should help African languages. Another project in- the cheaper ($2,000 per year) alx model. more students gain qualifications, while volves collecting photos of cassava leaves Another reason for the shift is regula- encouraging institutions to think about to develop software that helps farmers tion. Gaining accreditation is arduous. their job prospects. That can only be good identify diseases. Rwanda made alu buy 90 desktop comput- news for young Africans. 7 Professor Ndifon argues it is vital that ers, even though it gives students laptops. the institute does not just teach, but con- Kepler’s application ran to 1,100 pages. ducts research as well. African researchers Yet the biggest barrier to expanding ac- Higher education 2 bring “unique perspectives”, he argues. cess to tertiary education is student financ- Google has funded Quantum Leap Africa, ing. This is true for private and public uni- Go figure an artificial-intelligence centre, in Kigali, versities, since in most African countries and aims has plans for seven new research public ones charge upfront tuition fees. chairs. Some of these will be dedicated to (Scholarships exist, but these are often climate science; Professor Ndifon notes granted on merit, not need, putting them that African policymakers need better fore- out of reach of poor children with good but KIGALI casting models. An African maths institute is not stellar grades.) “The bottleneck is not African mathematicians, like all ambi- encouraging home-grown boffins the education model; it’s the financing,” tious masterminds, will still look for jobs says Teppo Jouttenus of Kepler. lbert agisha ntwali was resigned to at top global universities and companies This is not just an injustice but a sign of Abecoming a maths teacher at a second- abroad. The resources at elite colleges in economic inefficiency. The average gap be- ary school. The 23-year-old from Bukavu in Europe or America surpass those in Sene- tween wages earned by graduates and non- the Democratic Republic of Congo was a gal or Rwanda. But the growth of aims graduates in sub-Saharan Africa is wider stellar undergraduate at his local universi- means that there is at least a chance for than in other regions. It would make sense ty. But his career options seemed limited more scholars to do world-class work if students could defer the expense. This until a professor told him about the African nearer home. “Maths is a universal lan- would ensure that those who benefit the Institute of Mathematical Science (aims), a guage,” says Mr Ntwali. aims is making most from university cover the costs, leav- network of postgraduate academies that sure more Africans are fluent in it. 7 offers scholarships to budding African mathematicians. Last year Mr Ntwali en- Underclass rolled at the aims campus in Kigali, Rwan- Tertiary education, gross enrolment da’s capital. “Now I can join a company, be- ratio by region*, % come a data scientist, do a phd…” He goes 2000 2017 giddy listing the options. 0 20406080 For decades there were few possibilities Central and eastern for African mathematicians to reach their Europe potential on the continent. Many gave up North America and studying; others went abroad. Wilfred Ndi- western Europe fon, a Cameroon-born biologist who over- Latin America and sees research at aims, recalls that after he the Caribbean p d East Asia and completed his h at Princeton in 2009, he the Pacific was put off from returning home by the lack of computing power. “Universities World average mostly used Excel,” he says. Arab states The institute is making scholars think twice about forsaking study or moving Central Asia overseas. In 2003 the first campus was founded on the outskirts of Cape Town by South and west Asia Neil Turok, a South African physicist. To- Sub-Saharan Africa day there are five more, in Senegal, Ghana, Cameroon, Tanzania and Rwanda. Funding Source: UNESCO *% of population within five years of for each one comes partly from the host Institute for Statistics secondary school graduation age country’s government and partly from in- Go forth and multiply РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 40 Middle East & Africa The Economist August 10th 2019

Liberia Ride-sharing in Lebanon On the edge At your service

GBARNGA BEIRUT Economic crisis and corruption How Beirut’s shared taxis cope with scandals could lead to violence competition from Uber nder the corrugated-iron roof of the o outsiders, beirut’s taxi-hailing rit- UBong Intellectual Centre, a tea house in Tuals can seem baffling. A flurry of Gbarnga in northern Liberia, the air is thick honks announces the arrival of a driver, with anger. Dozens of people sit on plastic who peers out of his window with eye- chairs, discussing politics. They complain brows raised. Hesitate a moment too that their businesses are failing, corrup- long—as the uninitiated often do—and tion is rising and food prices have doubled he’ll speed off, leaving the would-be pas- in recent months. “The hungry man is an senger breathing exhaust fumes and won- angry man,” says Augustin Jalla, a 55-year- dering what went wrong. But beneath this old social worker. “If something does not brusque treatment lies a rich set of norms change there’s going to be an uprising.” and customs that have helped the shared That is alarming talk, in a country that taxis, known as “service” taxis (or “ser- suffered an on-and-off, 14-year-long civil vees”), survive the incursion of Uber into war that killed about 250,000 people—al- He was more popular on the pitch Lebanon’s capital. most a tenth of the population at the time— The service taxi system relies on split- and destroyed the economy. Liberia’s con- corruption the boot. He is doing neither. second individual negotiations, rather flict also devastated the region. The coun- Scandals have blighted his first 18 months than prices imposed by meters, regulations try’s former president, Charles Taylor, in office and soaring inflation, which or ride-sharing software. When a driver started or fuelled wars in three neighbour- peaked at 29% in December, is hurting the spots a potential passenger, he slows down ing countries: Sierra Leone, Guinea and poor in a country where more than half the until the passenger names a destination. If Ivory Coast. population lives on less than $2 a day. the driver agrees, the ride costs a modest After the fighting stopped in 2003, the The president’s conduct has not helped. 2,000 Lebanese pounds ($1.33), usually less world poured in aid to support Liberia’s He has built about 50 houses in a com- than what Uber charges. He may also ask transition to democracy and to prop up the pound in the capital. He says he used mon- for twice the fare or, for an out-of-the-way administration of Ellen Johnson Sirleaf, a ey he had earned during his days of football trip, suggest that the passenger buys all the wily World Bank veteran who was elected stardom. But citizens cannot be sure of seats for 10,000 pounds. president in 2005. By 2010 the west African this, since he has refused to publicly de- This system allows drivers and passen- nation was receiving $360 in aid per per- clare his assets. “It raises eyebrows,” says gers to reach agreements based on factors son. Helping to keep the peace was a un Anderson Miamen of Transparency Inter- such as traffic conditions and whether the mission that cost more than $500m a year. national, a corruption watchdog. route is likely to provide more passengers. Since then, however, the world has lost Governing a country as poor and frac- “You have clear, true market economics,” interest. By 2017 aid had slumped to just tious as Liberia is an unenviable task. But says Ziad Nakat of the World Bank. “It’s not $132 per person. In 2018 the un’s peace- Mr Weah is simply not up to the job. He is regulated or constrained—just supply and keepers packed away their blue helmets said to forget key facts, bungle media inter- demand, based on what you’re willing to and went home. Left in their wake are a fail- views and drift off in meetings. sell and what I’m willing to buy.” Both par- ing economy and a weak state that has been In Gbarnga, Mr Taylor’s base during Li- ties appear happy with the system, al- hollowed out by corruption and is still riv- beria’s first civil war between 1989 and 1997, though it does make Beirut’s terrible traffic en by enmities. social workers say crime and hard-drug use even worse, as drivers slow down to haggle. Start with the economy. Between 2010 are rising. David Brown, a 25-year-old Many drivers shun Uber, fearing the and 2014 growth was galloping along at salesman who voted for Mr Weah, says this software will strand them on traffic-heavy 6-8% a year and was forecast to go into dou- is because people have lost hope. Keba Col- routes or penalise them for declining too ble digits. Then the country was hit by two lins started her business selling handbags many rides. Others work with Uber, but act enormous shocks. The first was an out- on the streets. Two years ago she was mak- as a service taxi when they think their local break of Ebola in 2014 that killed almost ing the equivalent of $75,000 a year. Now knowledge will give them an edge over 11,000 people in Liberia, scared off inves- her business is near to collapse—as are Uber’s algorithm. (Uber cars and service tors and aid workers and caused a reces- those of several of her friends—because of taxis have the same red licence-plates.) sion. The second was the withdrawal of high inflation and the costs of corruption. Muhammad, an Uber driver, turns the app peacekeepers, whose average annual bud- Frustration over graft and poor governance off on Sundays, when certain high-demand get was equal to almost a quarter of Libe- led to people staging huge, peaceful prot- routes earn him nearly double. “It depends ria’s gdp between 2007 and 2018. The imf ests in June (pictured). on if it’s good for me,” he says. expects growth of 0.4% this year. St Peter’s Lutheran Church in Monrovia, The residents of Beirut came to rely on Widespread corruption makes every- the capital, is filled with children and wor- service taxis after trams and railways were thing worse. Last year a poll by Afrobaro- shippers. But its windows, pockmarked by destroyed during the 15-year civil war that meter found that half of Liberians had to bulletholes, hint at a dark history: in 1990 ended in 1990. Service taxis are lightly reg- pay backhanders for public services. government soldiers massacred 600 peo- ulated, but because they rely mainly on col- In 2017 Liberians elected a former foot- ple here. Isaac Dowah, the pastor, points at lective norms they endured even as the ball star, George Weah, as president. Mr two white stars marking the mass graves country’s dysfunctional politics hindered Weah promised to help the poor and give and frets: “We’re at a breaking point.” 7 the reintroduction of public transport. In a 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Economist August 10th 2019 Middle East & Africa 41

2 city divided by sect and class, they also lead Add to that a government determined to to unexpected encounters. Your corre- Price shocks squeeze every pound out of its citizens. The spondent has heard drivers recite tradi- Egypt, consumer prices price of almost every service, from driving tional Arab poetry and a Hizbullah fighter % increase on a year earlier licences to gun permits, has gone up. Pub- recount a trip to Syria to fight isis. 35 lic-school fees have jumped by 20-50%. The system does have its downsides. Taxi drivers at the airport grouse about new 30 Every ride is a gamble. Some drivers deviate charges: 2,000 pounds a month for a per- from planned routes in search of extra 25 mit, plus parking fees that have quadru- fares, making commuting times unpre- 20 pled. Their passengers are being squeezed dictable. (The definition of hell, some joke, 15 too, with a new $25 departure tax. For busi- is to be in an empty service taxi, behind a nesses, there is a proposed 0.25% levy on full one.) Female passengers often opt for 10 revenue that would be used to fund a new Uber to avoid harassment. Marwan Fayyad, 5 national health-care scheme. the head of the local taxi-driver syndicate, 0 Many of these changes are long over- laments that poor regulation has allowed 2015 16 17 18 19 due. (Fuel subsidies were regressive, ineffi- forged licence plates and unlicensed driv- Source: Central Bank of Egypt cient and unaffordable; hospitals need in- ers to proliferate, making it harder for reg- vestment.) But Mr Sisi’s government seems istered service drivers to make ends meet. oblivious to their impact on the poor. It Still, a little chaos will have to re- value-added tax. These gave Egypt a prim- points to the expanding economy—a 5.6% main—in many ways, the lack of regula- ary surplus and cut its deficit to 8.3% of rise in gdp last year gave Egypt the fastest tion is the central appeal of service taxis. gdp, from 12.5% three years ago. growth in the Middle East. But the jump is “As a service driver, you’re free,” says one But macroeconomic gains came at the mostly due to a boom in oil and gas. Other who refuses to use Uber. “No one is in expense of Egyptians themselves. Cuts to sectors look stagnant. Though jobs are be- charge of you—you’re in charge.” 7 fuel subsidies have pushed up transport ing created, many are in low-wage or infor- costs. For an Egyptian on the official pover- mal sectors. ty line, a short daily trip on Cairo’s metro Subsidies were the heart of Egypt’s so- Egypt’s austerity would now consume 25% of their monthly cial safety-net. Nothing has adequately re- income. Average household expenditures placed them. The main cash-transfer Poverty on the Nile have increased by 43% since 2015. Income schemes for the poor, Takaful and Karama, rose by just 33% during the same period, cover an estimated 9.4m people, less than while household debt to banks jumped by 10% of the population. A monthly payment 58%. Adjusted for inflation, which peaked to families with children barely covers a tin at 33% in 2017 (see chart), Egyptians are of baby formula. Ration cards give access to CAIRO earning less than they did three years ago. cut-rate staples, but no one can live on Three years of impressive reforms have Though inflation has cooled, the imf cooking oil and rice alone. come with a cost expects it to remain in double digits until at Faced with bad news, the government xcept for the glow of a mobile phone least 2021. The poorest Egyptians, who has done what it does best: blame the mes- Ebehind the watermelons, the fruit-and- spend up to 48% of their income to eat, are senger. The poverty report should have vegetable shop on a busy Cairo street looks hardest hit. Meat is an unaffordable luxury: been released in February. It was delayed deserted. The owner says his wares are 25% a kilo of beef costs 9% of an average week’s twice, with the authors told to revise their more expensive than last summer. As pay. Even a humble plate of koshari, the findings. Mr Sisi needs to move beyond fis- prices rise, buyers skimp: regulars who mixture of lentils, chickpeas, rice and pas- cal reforms by cutting red tape, removing used to buy a kilogram of fruit now settle ta that is a staple lunch for many, is becom- barriers to trade, and pushing the army out for half. He keeps the lights off between ing expensive. A small plate used to cost of business. Unless he does this, the only shoppers to save a few pounds. There are three pounds. Now restaurants charge at way for him to meet his goals on poverty no lights either at the butcher’s next door, least five, and often more. will be to define it out of existence. 7 who reckons revenues are down by 20%. “I sell a lot of bones for soup,” he says. Last year Egypt vowed to halve poverty by 2020 and eliminate it by 2030. It is going in the wrong direction. On July 29th the na- tional statistics agency released a long-de- layed report on household finances. It found that 33% of Egypt’s 99m people were classified as poor last year, up from 28% in 2015. Even that dismal finding may not be dismal enough. The government has fixed the official poverty line at just 736 pounds ($45) a month, a figure that many econo- mists say is too low. The World Bank said in April that 60% of Egyptians were “either poor or vulnerable”. The numbers are a stinging assessment of the economic reforms overseen by the president, Abdel-Fattah al-Sisi. Backed by the imf, which approved a $12bn loan in 2016, his government cut fuel subsidies, let the currency depreciate and imposed a 14% Bearing the burden of reform РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 42 Asia The Economist August 10th 2019

Also in this section 43 Dismantling Uzbekistan’s gulag 44 Abe’s constitutional struggle 44 Race relations in Singapore — Banyan is away

Kashmir Buddhist population; and a sprawling ba- sin with Srinagar at its centre that is home A state no longer to ethnic Kashmiris, most of whom are Muslims (see map). In 1947, when British rule of the subcontinent ended, the Hindu maharajah of Jammu & Kashmir hesitated to join either of the new countries, Paki- stan and India. Those countries soon went DELHI to war over the area. A stalemate ended Narendra Modi scraps the rules in a bid to remake a troubled territory with India occupying two-thirds of the t one fell swoop, India’s central gov- pelled India’s high commissioner and sus- state, and Pakistan controlling the rest. In- Aernment has ended the special status pended trade. A curfew imposed on the re- dia and Pakistan have kept on fighting over enjoyed by Jammu & Kashmir and abol- gion on August 5th has kept Kashmiris the region. The most recent eruption of ished it as a state. For 70 years it had grant- quiet, for now, as has the presence of thou- large-scale hostilities was in 1999. ed the bitterly disputed Muslim-majority sands of additional Indian troops who have Mr Modi has gutted an article of India’s region a modicum of autonomy within In- been pouring in since late July, ostensibly constitution, which was introduced in the dia. Late at night on August 4th phone to prevent terrorism. 1950s to secure the state’s acquiescence to lines, television and internet access were The former state of Jammu & Kashmir is Indian control. This had decreed that the cut and leaders of its political parties put composed of three main parts: Hindu-ma- central government would be responsible under house arrest. The next morning In- jority Jammu, in the foothills; the arid only for Jammu & Kashmir’s defence, for- dia’s home minister carried a package of highlands of Ladakh, which has a large eign affairs and communications. Long be- legislation into the upper house of parlia- fore Mr Modi came to power, however, In- ment. It proposed a radical reorganisation TAJIKISTAN 200 km dian governments began whittling away at of the territory. It took the house just 90 the state’s autonomy. However it did retain CHINA minutes to strip it of statehood and divide AFGHANISTAN an important privilege: the right to bar it into two parts to be ruled from Delhi. Pakistan- non-residents from buying land. That, too, administered Kashmiris had been warned, as had the rest Kashmir has gone. Line of Control of India. It still caused shock. Kabul In theory, changing this part of India’s The Hindu-nationalist Bharatiya Janata Srinagar Kashmir constitution requires a two-thirds parlia- bjp valley bjp Party ( ) led by the prime minister, Na- Islamabad Jammu & Ladakh mentary majority, which the does not rendra Modi, had long argued that Jammu Kashmir quite have. So the party devised an easier & Kashmir’s special status was an error, way: their man in the president’s chair sim- dating from soon after India’s indepen- ply issued an order annulling Kashmir’s dence. Mr Modi’s re-election in May, with PAKISTAN special status. That should have required an overwhelming majority in parliament, INDIA assent from Jammu & Kashmir, too. But gave him the confidence to correct it— since June 2018, when the bjp withdrew knowing that doing so would anger Paki- from a coalition there, the state had been stan (which also claims the territory) and Delhi under direct rule from Delhi. So the rest of enrage many Kashmiris. Pakistan duly ex- India assented on Kashmir’s behalf. That 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Economist August 10th 2019 Asia 43

2 allowed parliament to abolish the state, Uzbekistan 20,000 citizens from blacklists of people and split it into two new “union territories” suspected of extremist tendencies, often under the centre’s direct rule: one called Dismantling the simply because they were Muslims. Jammu & Kashmir and the other, Ladakh. Mr Mirziyoyev has prohibited the use in The ease with which the state was dis- gulag court of evidence obtained through tor- solved will spook some of India’s other re- ture, in tacit acknowledgment that abuse is gional governments. A challenge has al- rife throughout the penitentiary system, ready been filed with the Supreme Court. ALMATY not just at Jaslyk. But the government is shy Another good move from Uzbekistan’s But there is considerable popular support about facing up to its history: even as it ad- new president for Mr Modi’s sleight of hand. Even some vertises the camp’s closure as a step to- parties that are normally fiercely opposed zbekistan’s “youth” camp, Jaslyk in wards improving the country’s human- to the bjp have backed him. Uthe vernacular, sounds like a children’s rights record, it denies that people were Mr Modi’s ministers have justified the holiday camp, but it is a prison where ene- tortured there. move partly on security grounds. Since mies of what was until recently one of the There is some way to go before the 1989 insurgents, some of them backed by world’s most repressive regimes were iso- country’s criminal-justice system becomes Pakistan, and campaigns against them lated and tortured. Now Shavkat Mirzi- a beacon for the region. Shadowy espio- have killed at least 45,000 people in Jammu yoyev, Uzbekistan’s reforming president, is nage cases are still being pursued behind a & Kashmir. The Hindu minority in the val- shutting it down. veil of secrecy in closed courts. Andrey Ku- ley around Srinagar has been driven out. By Jaslyk became synonymous with medi- batin, an academic, is serving a prison sen- the time Mr Modi became India’s prime eval-style barbarism when two inmates tence for passing secrets he insists were in minister in 2014, the conflict had become died after immersion in boiling water in the public domain. Kadyr Yusupov, a for- less intense. Since then it has steadily esca- 2002—in effect boiled alive. Other political mer diplomat, is on trial for spying for a lated. Mr Modi believed that the state’s au- and religious dissidents held there were foreign power, although he left the foreign tonomous status was fuelling anti-India beaten with iron rods, had their fingernails service years before the alleged espionage violence. Scrapping it, however, is hardly pulled out and were given electric shocks. began. Mr Yusupov, who has schizophre- likely to prove an effective cure. Situated in a desert in the Karakalpakstan nia, was arrested following a failed suicide Kashmir’s more moderate politicians region, where the temperature ranges from attempt in the Tashkent metro, raising feel most badly betrayed. On the campaign 45°C to -35°C, some 1,400km from the capi- questions about whether he is psycholog- trail earlier this year, Mr Modi had sworn tal, Tashkent, and 180km from the nearest ically fit to go on trial. that he would not “allow Muftis and Abdul- town, Jaslyk—like the Soviet Siberian pri- And then there is Gulnara Karimova, the lahs to divide India”. He was referring to the son camps on which it was modelled—was late president’s daughter, serving a jail sen- state’s two most famous political families. impossible to escape from. The local rail- tence on corruption charges as the govern- Generations of Indian bureaucrats had par- way station is Barsa Kelmes, which loosely ment seeks to recover her assets from leyed with them to try winning over Kash- translates as “place of no return”. abroad. She has been confined since 2014, miris, greasing the wheels with subsidies. Jaslyk was opened in 1999 by the tyran- before her father died, but has never faced The Muftis and Abdullahs often frustrated nical Islam Karimov, who ruled the post- open judicial proceedings. One trial report- their handlers in Delhi, but they are not Soviet Central Asian country for a quarter edly took place in the kitchen of a house in separatists—unlike many more popular of a century until his death in 2016, after which she was being held. If Uzbekistan leaders. “Our darkest apprehensions have bombings in Tashkent sparked a hunt for wants to show that it believes in the rule of unfortunately come true,” said Omar Abd- dissidents. His successor, Mr Mirziyoyev, law, which is so important to investors, it ullah, a former chief minister of the state has surprised the world by liberalising po- will need to show that even a “robber bar- who was among those placed under house litically as well as economically: he has on”—as a WikiLeaks cable once dubbed Ms arrest on August 4th. freed 50 political prisoners and removed Karimova—gets a fair trial. 7 Actions that anger Kashmiris can some- times benefit Mr Modi politically. He has been widely praised in India for his mili- tary operations in the region. In September 2016 a day of “surgical strikes” against near- by Pakistani positions achieved little stra- tegically but helped him in elections. It re- sulted in a patriotic Bollywood movie which was topping the box office when campaigning began for this year’s polls. But the long-term consequences of Mr Modi’s action may well be ones he regrets. The animosity he has doubtless intensified among Kashmiris will make the area even more fertile territory for recruitment to Pakistan-backed insurgency. By allowing non-Kashmiris to buy land, he has in effect given a green light to Hindus wanting to move into the Muslim-dominated Kash- mir valley. That risks stoking ethnic ten- sions in the area. The country has a long history of bloody confrontation between adherents of the two religions. The just- abolished state has suffered much of it. Its residents are bracing for more. 7 Jaslyk, as it once was РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 44 Asia The Economist August 10th 2019

Japan’s constitution tionalistic base, it is a passionately held wage war) is a watered-down version of cause. And as one of Japan’s longest-serv- what many in the ldp would like. The other What grandfather ing prime ministers (the longest, if he re- three areas are upper-house electoral dis- mains in power until mid-November) he tricts, the right to free education and emer- left undone thinks he has the political clout to do it. gency powers for the cabinet. There are good reasons to try—despite If the Japanese want to change their China’s mutterings. (Its state news-agency constitution, there is no reason why they TOKYO once said that doing so would be like “re- shouldn’t. America’s has been altered 27 Can Shinzo Abe change the country’s leasing the shackles of the nation’s legally times since its promulgation in 1788. But basic law? tethered military.”) The constitution is out Japanese people are proud of their pacifism n the 1950s Nobusuke Kishi, then Ja- of step with reality. Article 9 commits Japan and keen to stay out of other countries’ af- Ipan’s prime minister, tried to change the to pacifism and to abjuring the mainte- fairs. A poll in July by nhk, the national constitution that America had imposed on nance of armed forces—which the exis- broadcaster, found 29% of people sup- the country in the aftermath of the second tence of the country’s Self-Defence Forces ported any revision compared to 32% op- world war. He failed. Now his grandson, (sdf) clearly breaches. This is the most posed to it (the rest were undecided or Shinzo Abe, Japan’s current prime minis- controversial of four areas that Mr Abe’s failed to respond). The numbers diverge ter, is trying to do the same before he leaves Liberal Democratic Party (ldp) addressed when the question focuses on Article 9: an office by the autumn of 2021. in recent proposals, even though the rec- Asahi poll found 33% favourable to amend- Mr Abe’s personal history is not the only ommendation to recognise the existence ing it and 59% against. reason he is so set on this. For his vocal na- of the sdf (rather than, say, allow Japan to The opposition is resistant, too. It has talked about the need to revise parts to im- prove governance, such as the prime min- Race relations in Singapore ister’s right to dissolve the lower house, or to explicitly add new ideas such as a citi- Face-off zen’s “right to know”. But no major party bar the ldp unreservedly backs changing SINGAPORE Article 9. Even Komeito, the ldp’s coalition A furore over an offensive advert reveals the government’s true colours partner, suggests debate is needed first. ou would never guess that Singa- That makes it hard to see how Mr Abe is Ypore has just celebrated Racial Har- to get this done. Changing the constitution mony Day. An offensive advert for a requires two-thirds of both the upper and government service has kicked off a lower houses of the Diet, followed by a ma- debate here about how ethnic Chinese, jority in a referendum. And Mr Abe lost his who make up around three-quarters of coalition’s two-thirds majority in the up- the population, treat minorities, most of per house in elections last month. whom are of Malay or Indian descent. The political calendar is tight, with the The government weighed in after two change of emperor this year and the Olym- ethnic Indians made a racially provoca- pics in 2020, and the geopolitical environ- tive music video attacking the advert. Its ment is not propitious. America’s calls for heavy-handed response suggests it is not allies to help prevent further seizures of as unprejudiced as it thinks. ships in the Strait of Hormuz are providing The trouble began with an ad cam- the Japanese with a concrete example of paign for E-pay, a government e-payment the sorts of conflicts into which their coun- system. It depicted Dennis Chew, an try could be dragged should Article 9 be ethnic Chinese actor, dressed up as four changed. “The numbers don’t align, voter people, apparently intended to represent interest doesn’t align, and the situation in a cross-section of Singapore’s multi- Dennis Chew, as he really looks the Middle East doesn’t help,” says Yuki ethnic society: a Chinese labourer, a Tatsumi of the Stimson Centre, a think- Malay woman wearing a headscarf, a sive content”.The government has been tank in Washington. fashionable Eurasian woman and an wary of ethnic tensions ever since deadly Mr Abe is moderating his approach. He Indian office-worker. For the latter, Mr race riots in the1960s. In1992 it became may shift the emphasis from Article 9 to Chew’s face was darkened. Havas, the illegal to promote “enmity between rights and governance issues that appeal to agency behind the advert, said this was different groups on the ground of reli- the opposition, reckons Ms Tatsumi. Yui- intended to convey the idea that “e- gion or race”. chiro Tamaki, the head of the Democratic payment is for everyone”. As for the advertisement, K. Shanmu- Party for the People, the second-biggest op- Preeti Nair and her brother Subhas gam, the law and home affairs minister, position group, agrees that there needs to saw something else: a Chinese man in says it is legal. (Havas and Mediacorp, be a debate. Speaking after the elections, “brownface”.On July 29th the Nairs’ whose talent agency supplied Mr Chew— Mr Abe said he hoped for “active discus- music video, in which they chant “Chi- and which is owned by Temasek, a state sions”, and emphasised that “constitution- nese people always fucking it up”,went investment vehicle—have apologised.) al revision is not up to the government, but viral. Within hours of being posted on The discrepancy between the govern- the Diet”. Facebook it had been viewed more than ment’s responses to Havas and Media- He is pragmatic, but he wants a legacy. 40,000 times. corp and to the Nairs has dismayed many Efforts to resolve diplomatic problems left The government’s response was swift. Singaporeans. On Facebook Alfian Sa’at, over from the war, such as with Russia, It ordered YouTube and Facebook to a playwright, wrote: “We don’t really have stalled. The economy, which he remove the video and the police to in- have racial harmony in Singapore, what pledged to revive, is spluttering. Changing vestigate the Nairs for producing “offen- we have is racist harmony.” the constitution is a challenge—but no tougher than the others he faces. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS China The Economist August 10th 2019 45

Cross-strait relations search suggests that independent travel- lers tend to leave with a better impression Sunset for backpackers of Taiwan than those who visit in groups. All this will leave a mark, but it is no crushing blow. Taiwan is much less reliant on mainland tourists than it was five years ago, when they made up two-fifths of all visitors. That is in part because of restric- BEIJING AND TAIPEI tions China began imposing on group tra- China’s efforts to influence Taiwan’s elections may not achieve much vel shortly before Ms Tsai’s inauguration in n the afternoon of July 31st young- had “incited hostility towards the main- 2016. It is also because Taiwan has lately Osters in dozens of Chinese cities raced land”. Tsai Ing-wen, Taiwan’s president, re- pushed hard to attract visitors from else- to government offices, pursuing a precious torted that China had made “a big strategic where. Tourist arrivals reached a record commodity. Earlier that day the authorities mistake” and that its decision would irk 11.1m last year, mainly because of a surge of had announced that from midnight they both mainlanders and Taiwanese. travellers from South-East Asian countries. would no longer issue the passes that allow Visitors from China accounted for just China is angry with Ms Tsai for rejecting mainland tourists to visit Taiwan indepen- over one-quarter of Taiwan’s tourist arriv- its overtures, and with America for being dently, without having to join a tour. A 25- als in the first half of this year. About 40% nice to her. It complained bitterly about her year-old newlywed from the eastern prov- of them were individual travellers. Taiwan- two recent stopovers in America, where ince of Zhejiang, who uses the nickname ese travel agents predict that the Chinese she spoke at Columbia University and hob- Yuyi, says she got a permit just before the government’s new policy could cut visitor nobbed with foreign diplomats. It raged cut-off. Now she wonders whether, given numbers by up to 700,000 over the next six about the Trump administration’s decision rising tensions between China and Taiwan, months, costing the tourism industry last month to approve a long-negotiated it might be wiser to junk the September get- around $900m in revenue. Barclays, a arms deal with Taiwan worth about $2.2bn. away on the island that she and her hus- bank, says the policy could cost Taiwan But it is probably most annoyed by Ms band have been planning. sums equal to 0.2% of gdp (the Taiwanese Tsai’s loud support in recent weeks for China has long used carrots and sticks government has predicted that its econ- anti-government protesters in Hong Kong. to persuade Taiwan’s people to accept its omy will grow by nearly 2.2% this year). She says they have “legitimate concerns”. demand for “peaceful reunification”. But There will be intangible costs, too. Re- By stemming the flow of tourists, China the sudden suspension of the solo-travel may be trying to warn Taiwanese voters of programme, launched eight years ago, was what could happen if they re-elect Ms Tsai Also in this section still a surprise. A spokesperson for China’s and support other politicians like her in government blamed Taiwan’s ruling 46 Historic preservation presidential and legislative elections in Democratic Progressive Party (dpp), which January—Taiwan’s economy is heavily reli- 47 Chaguan: Distrust and verify abhors the idea of unification. He said it ant on China’s. The biggest opposition 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 46 China The Economist August 10th 2019

2 party, the Kuomintang (kmt), supports China will doubtless have more tricks to there. Fearing it would be demolished, he friendlier ties with the mainland and made play in the run-up to January’s polls. Hav- organised his students to make a website big gains in regional elections last Novem- ing already poached five of Taiwan’s dip- about the area’s history. This won a nation- ber. China’s leaders would like it to van- lomatic allies in the three years since Ms al prize and drew the attention of the local quish the dpp in next year’s polls. But Ms Tsai came to power, it may try to peel off at planning bureau. Now many of Dongshan’s Tsai’s support for Hong Kong’s democrats least one more. In the past China has called buildings have plaques showing they are has helped her once-dismal ratings to re- off military exercises around the strait in protected. Some display qr codes provid- bound. She could even keep her job. advance of Taiwanese elections, for fear of ing links to their history. Many original res- In an attempt to capture some of her provoking a backlash at the ballot box. An- idents still live there. Official permission is newfound support, the kmt’s presidential drew Yang, a former defence minister, needed for any renovation work. candidate, Han Kuo-yu, is trying to sound a thinks that this time China may step up its Mr Yang calls his organisation a “culture bit more sceptical about China (earlier in drills, partly because it has lots of new kit it promotion association”. It is one of the few the year some Taiwanese criticised him for wants to try out. Taiwan has accused the of its kind in China that has succeeded in a chummy meeting with mainland offi- mainland of trying to influence the island’s registering as an ngo (the Communist cials in Hong Kong, ostensibly to promote politics by spreading “fake news” through Party is suspicious of activist groups). Its trade). Mr Han is the mayor of the southern social media. But how much any of this will 60-odd volunteers visit old districts and port of Kaohsiung. Fan Shih-ping of Taiwan work is hotly debated in Taiwan. It may be gather oral histories. They also draw atten- National Normal University says the city that such efforts will deter voters from sup- tion to buildings in danger of demolition. will suffer disproportionately from China’s porting radical anti-China politicians (Ms “We go there straight away, take photos, block on tourism—Kaohsiung has tended Tsai is relatively restrained in her approach and tell the government departments to be popular with solo tourists because it to the mainland). But the unrest in Hong there’s a problem,” says Mr Yang. is easily reached by train. But the kmt ap- Kong has shown that even in a place where Officials have long recognised the tou- pears to have decided not to make political it has many levers, China can struggle to rism potential of the colonial-style build- hay out of China’s decision to cut the flow. get its political way. 7 ings on Guangzhou’s Shamian island and a nearby river front close to which foreigners first began trading in the 18th century. They Historic preservation are realising that other old districts—for- eign-connected or not—have value, too. Xi- Old buildings, new chic guan, a residential area that was home to wealthy merchants before the foreigners arrived, now has several local-history mu- seums. Many of its buildings have been listed as protected. Nearby, a stretch of dis- tinctive colonnaded “shop houses”, built in GUANGZHOU the late 19th and early 20th centuries, is be- In old urban neighbourhoods, conservationists sometimes win ing refurbished. It includes a network of al- n a leafy street close to a busy under- the few structures that the government leyways, known as Yongqing Fang, which Iground station in the southern city of designates as important. Activists have has been turned into a leisure zone. One Guangzhou, two middle-aged women sit in been taking up the cause, and some devel- popular attraction is a museum devoted to a booth giving out hand-drawn local maps opers have begun to support their efforts. the late martial-arts actor Bruce Lee in a to passers-by. These feature cartoon-style Much of the credit for protecting Dong- house where his family lived in the 1940s. It images of churches and other grand archi- shan goes to an ngo founded by Yang Hua- is a sign of growing interest in pre-Com- tectural relics of the city’s pre-Communist hui, a primary-school teacher who grew up munist history. Last year China’s leader, Xi past. Nearby, giggling youngsters take pic- Jinping, toured the area. tures of each other outside one such edi- Some redevelopments cause problems fice: a European-looking villa, its high gar- for residents. Many people in Yongqing den wall topped with ornate green tiles. Fang were moved to make way for the new There are few foreign visitors. The hand- zone. Some buildings were demolished. drawn maps are all in Chinese. It is young The same happened in Shanghai’s Xin- locals who are drawn to this neighbour- tiandi district—a pioneer of such redevel- hood of large three- or four-storey houses opment. That area, which includes the site built in the 1920s and 1930s in Western and of the party’s first meeting in 1921, is now Chinese styles (one is pictured). Its tree- ultra-trendy. Shanghai has recently lined lanes dotted with cafés and art galler- pledged to preserve 90% of its (few) surviv- ies have become fashionable hangouts. ing 1920s and 1930s residential lanes. While The area, known as Dongshan, is close some areas have been revived, “demolition to central Guangzhou, the capital of the continues apace”, says Patrick Cranley of southern province of Guangdong. It was Historic Shanghai, a heritage group. built by the families of Cantonese who Enthusiasm for old districts has been moved to America in the late 19th and early fuelled by television dramas set in the 20th centuries. Many old neighbourhoods years before the Communists seized power in China have been bulldozed to make way in 1949. Young people like to take selfies in for new development. Dongshan is an ex- front of buildings redolent of that era. But ample of how some are being saved, and Ying Zhou of the University of Hong Kong even turning chic. says local officials do not always recognise The survival of Dongshan’s old build- the importance of authenticity or retaining ings owes much to growing public interest original features. “Often the bricks are new in preserving urban heritage—not merely A missed selfie opportunity fakes, the history is concocted,” she says. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Economist August 10th 2019 China 47 Chaguan Distrust and verify

Huawei is trying to solve a hard problem: how to sell sensitive tech in the absence of trust a conundrum with no easy solution. Technological advances are expanding the list of products and services that require a lifelong commitment of trust between clients and suppliers, from chips that keep aeroplanes aloft, to devices that control electrical power grids. At the same time, globalisation has built supply chains link- ing countries that do not much like each other. The problem is acute when those chains connect America, a country used to set- ting its own technical and security standards, to China, an uneasy mix of trade partner, commercial competitor and ideological rival. Broadly speaking, when Chaguan visited the firm’s headquar- ters this week, senior Huawei officers advanced two different sol- utions to the problem of high-tech globalisation in a low-trust age. Only one of those solutions is very persuasive. That persuasive idea is to treat distrust in global supply chains as a technical challenge, rather than a political one. In this model, distrust can never be eliminated but may be mitigated. A Huawei executive with experience in African and European markets, where the firm’s products are seen as robust and cheap, draws an analogy with the “abc” approach to cyber-security, meaning: “As- sume nothing. Believe nobody. Check everything.” Huawei high- ups praise Britain and other European countries for applying a risk-management approach to the task of building such infra- n balance, it seems implausible that a committee—let alone a structure as wireless networks, involving common standards for Ocommittee run by grey-suited Communist Party commis- security and transparency with which all companies are invited to sars—could design anything as odd as the new research campus of comply, and lots of third-party verification. The organising princi- Huawei, the Chinese telecommunications giant. Comprising 12 ple is that no product should be either trusted or distrusted uncon- replica European “towns” spread across lush subtropical hills near ditionally, simply on the basis of its country of origin. the southern city of Dongguan, the campus houses 18,000 scien- Huawei’s second, unpersuasive solution involves trying to tists, designers and other boffins in turreted German castles, Span- convince outsiders that, given the right written and verbal assur- ish mansions and Italian palazzi, connected by an antique-style ances from the state, firms from China can, as it happens, be red train. Staff canteens include Illy espresso bars and French bis- trusted not to help Chinese spies steal secrets. Thus Huawei bosses tros. A herd of bronze rhinoceroses grazes by the river that divides note assurances from the Chinese foreign ministry that no law ex- faux Verona from ersatz Heidelberg. It is not hard to see why the ists that could make Chinese firms install backdoors in digital de- campus is a stop on tours that Huawei has started offering to for- vices, for spies to use. Asked about national-security laws requir- eign journalists in recent months. Impressive, mad and a bit tacky, ing firms to assist Chinese intelligence services, they retort that the research campus is a suggestive bit of evidence. Perhaps Hua- such laws do not apply outside China’s borders. A company exec- wei may just be what it claims to be, at least when it comes to deci- utive grumbles that Western sceptics seem to doubt that China is sions about architecture: a privately held company guided by the run according to the rule of law. At times, a cultural gap in percep- ambitions and quirks of its billionaire founder, Ren Zhengfei, a tions is detectable. Huawei veterans recall their firm’s early years, former military engineer and Europhile history buff. when state-owned enterprises bullied private businesses, and on After 30 years spent largely shunning publicity, Huawei has occasion lobbied government officials to deny Huawei the right to turned into one of the world’s chattier high-technology firms, in- seek overseas business. China is so much more open now, such viting journalists into once-secret research laboratories and veterans say, lamenting that outsiders cannot see this, or prefer to smartphone assembly lines. The reasons for all this choreo- focus on remaining differences with the West. graphed openness are straightforward. Huawei, whose worldwide revenues exceeded 720bn yuan ($102bn) in 2018, stands accused by What Huawei should say, but cannot Trump administration officials and members of Congress of being Alas, it is not credible to claim that promises or laws bind the Com- variously owned, subsidised or at least controlled by the Chinese munist Party and its security apparatus. The party explicitly claims state, with notably close links to the army and intelligence ser- “absolute leadership” over courts, calling judicial independence a vices. American officials accuse Huawei of stealing technology Western error. Then there is the exceptional size of China’s visible from American and other foreign rivals. They scoff at claims that machinery of repression and surveillance. Given that security ser- the firm is owned by its own employees in a benign sort of share- vices in every country tend to be like icebergs, with still-larger hid- holding co-operative, and that its Communist Party committee is den parts, it is reasonable to be exceptionally wary of China’s. tasked with nothing more sinister than staff training and welfare. A more convincing approach would see Huawei admit that Chi- The secretary of state, Mike Pompeo, has spent months touring the na is different and concede that some party commands cannot be globe, urging allies not to allow Huawei to help build their 5g mo- defied. That agreed, Huawei could then focus on making high-tech bile telecommunications networks, with mixed success. In May products and systems designed for use in a world of low or non-ex- Huawei’s reputation landed it on the American Commerce Depart- istent trust. Huawei bosses cannot make that argument, because ment’s “entity list” of firms that may threaten national security. party leaders would be incensed. Those turreted castles are im- Step back a bit, and the company’s woes are an early sighting of pressive. But outside those manicured grounds is China. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 48 International The Economist August 10th 2019

Illegal wildlife trade The annual profits of the trade in illegal wildlife products are estimated at between Where the wild things are going $7bn at the low end and $23bn. This makes it the fourth-most profitable criminal traf- ficking business, with links to others— slavery, narcotics and the arms trade. On the agenda in Geneva is a proposal BEIJING AND KAFUE from Zambia to shift its elephants from In the battle against the trade in endangered species, the criminals still have the cites’ Appendix I, which bans virtually all upper hand trade, as the species is deemed at threat of rowsing peacefully at a waterhole, Elephants will be high on the agenda extinction, to the less restrictive Appendix Bthe herd of two dozen elephants seems when the Convention on International II, to allow some trade, for example, in oblivious to the car that has stopped 100 Trade in Endangered Species of Wild Fauna hunting trophies. Botswana, Namibia and metres away and disgorged three visitors to and Flora (cites), an agreement signed to Zimbabwe also want to trade some stock- gawp at them. The vast expanse of the Ka- date by 183 countries, convenes its triennial piled ivory. Zambia argues that its elephant fue National Park in western Zambia is qui- “conference of the parties” (cop)—its deci- population has stabilised, at about 27,000 et and deserted of other people. These hu- sion-making forum—in Geneva from Au- animals—just one-tenth of the number 50 mans are just curious, but potential killers gust 17th-28th. wwf, a wildlife charity, esti- years ago, but a marked increase on the es- would be hard to stop. An anti-poaching mates that around 20,000 African timated 18,000 that survived the poaching unit based about 20km away tries to pro- elephants are killed by people every year. epidemic of the 1970s and 1980s. The ani- tect the animals in the park’s 22,000 square The animals’ meat, hides and, above all, mals have enough space and are not split kilometres, with just 27 rangers working tusks are money-spinners. East Asia is the into unsustainable subpopulations. shifts, and a few jeeps and rifles. Given the biggest market for ivory and for many ille- odds, and the rewards poaching brings, gally traded products, such as animal parts It’s the people, stupid they have been remarkably successful. used in traditional Chinese medicine Many local people would be quite happy to The park is home to leopards, rare ante- (tcm)—tiger bones, rhino horns, pangolin see elephant numbers decline. These lope, hippos, pangolins, aardvarks and scales—or in its cuisine—pangolin meat, beasts, protected in reserves and national crocodiles as well as elephants, of which for example. In July the authorities in Sin- parks such as Kafue, which cover around Kafue had about 60,000 in the 1960s, when gapore seized 8.8 tonnes, about 300 ele- 30% of the country, can be destructive, it also had one of the world’s largest popu- phants’-worth, of ivory, along with 11.9 trampling farmland and wrecking homes. lations of black rhinos. But in the 1980s, the tonnes of pangolin scales, from some Everybody involved in conservation very last black rhino was poached. The ele- 2,000 of the anteaters, the world’s most agrees that the best protection for wildlife phant population has dwindled to 4,000. widely trafficked endangered mammal. would be for local people to have an inter-1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Economist August 10th 2019 International 49

2 est in their survival, but that is proving of poaching in the past decade seems name to campaigns to save elephants, hard to bring about. In a village just outside linked to a partial liberalisation in 2007, sharks and rhinos. And at the end of 2017 Kafue, Gertrude Mwiba is one of those try- when a one-off sale of some existing ivory China put into force a ban on all domestic ing to rub along with the local megafauna. stocks was permitted (see chart). Japan was trade in ivory. (Because of cites, trading As a local organiser for a community-based approved as an authorised importer as its newly acquired ivory was already illegal.) natural-resource-management forum, she market seemed sufficiently well regulated. Technology is also helping. In some has been helping find ways to reduce The result, say the abolitionists, is that it parks in Zambia and elsewhere, rhinos and poaching by promoting other livelihoods. has become the centre of the illegal trade in elephants are fitted with sensors and mon- Growing maize, soya beans and cassava, worked ivory. The biggest seizures of itored by drones. dna testing of seized ivo- the local staples, are options; beekeeping smuggled artefacts these days are by Chi- ry makes it possible to identify fairly pre- deters elephants, which hate bees, as well nese customs of goods entering the coun- cisely where the animal was killed. as providing an income. But poaching is try from Japan. However, only 20% of large seizures are more profitable than any of them. Ele- The trend, within cites, is towards tested—“representing an important phants are far from the only targets. Va- stricter controls. At the previous cop, held missed opportunity to better understand rious types of antelope, buffaloes and even in Johannesburg in 2016, more species the criminal networks trafficking ivory”, hippos are sought after as “bush-meat” in were added to the appendices—all eight says Matthew Collis of the International the capital, Lusaka, and abroad. species of pangolin, for example, are now Fund for Animal Welfare, a charity. Having big endangered beasts as neigh- listed in Appendix I—and protection was bours brings in some money. Safari lodges enhanced for the African grey parrot, lion, In the soup dotted through the park attract tourists cheetah, helmeted hornbill and totoaba (a But ahead of the Geneva meeting, the mood with a few hundred dollars a night to fish whose bladder is used in Chinese among conservation ngos is not upbeat. spend. But they do not create many jobs. medicine). cites congratulated itself that After all, about 5,800 animals and 30,000 Locals would have nothing against trophy- wildlife was now “firmly embedded in the species of plant are listed by cites, and still hunting—tourists paying to shoot ani- agendas of global enforcement, develop- more are likely to be added this year—such mals—but believe they would see little of ment and financing agencies”. as some new species of shark, killed for the the proceeds. Of the money the govern- There has indeed been progress since fins so prized in Chinese soups. ment gets from safari operators, 20% is ear- 2016, notably in making it harder for crimi- And efforts to eliminate the trade offer marked for local villages. But Ms Mwiba nals to trade wildlife products on global in- an object lesson in the law of unintended says disbursement can take two years, if it ternet platforms. And the issue has gained consequences. Often, when demand is happens at all, and most is spent on anti- prominence, helped by a high-profile con- suppressed in one place, it pops up in an- poaching activities anyway. Around the ference in London in 2018. The firms that other—especially in China’s neighbours world, poor farmers like her are the front unwittingly provide the infrastructure for such as Vietnam and Laos. China’s ban did line of defence for some endangered spe- the trade are getting better at monitoring cut the price of ivory. But that prompted cies. Yet for them, wildlife protection it—haulage companies at checking cargo, some ivory poachers to turn to pangolins. brings no obvious benefits, just costs. banks at spotting suspicious flows of mon- Rhino horn is another example. China Some conservationists believe that in ey. China has just taken over the chair of has banned its sale since 1993; and demand order for locals to be given an interest in the Financial Action Task Force, a plurilat- for its use in traditional Chinese medicine the survival of wildlife, a controlled market eral body supposed to curb money-laun- (for fevers, rheumatism and gout) has fall- in products must be allowed. Trade is a rel- dering. The new chairman, Liu Xiangmin, en. But it has picked up in Vietnam on non- atively small danger to the world’s biodi- has listed going after the proceeds of wild- sensical rumours it can cure cancer. Tiger- versity. Far more important are loss of hab- life crime as an objective. bone remedies are being replaced by lion- itat and climate change. Some advances have also been made in and leopard-bone ones. And so on. Others argue the opposite: that the trade curbing demand for the illegal products. Moreover, although China is trying to in some products, such as ivory and rhino What happens in China matters most. The curb illegal trade, it is also promoting tcm horn, has been a big factor in the threat to emergence of hundreds of millions of Chi- as one of its civilisation’s great contribu- those species. In countries that lack suffi- nese with disposable incomes turned what tions to the world. It has indeed made ciently solid political institutions and law- were once niche products into a huge mar- breakthroughs, such as artemisinin, now a enforcement agencies, the argument goes, ket. The Beijing metro has posters publicis- widely used defence against malaria. Very trade will encourage short-term killing ing the fight against wildlife crime. Yao few of its cures come from animals and the rather than long-term investment, and the Ming, a retired basketball star, has lent his official pharmacopoeia has been purged of existence of any legal market encourages illegal (and useless) treatments such as rhi- and enables the illegal one. It makes it easi- no horn and tiger bone. But some tcm prac- er to launder illegal products and sustains The price of ivory titioners still prescribe them, so conserva- the demand that fuels the trade. Estimated elephant population in Africa*, ’000 tionists are alarmed that in May the World Vested interests on both sides distort Health Organisation gave tcm respectabil- Partial liberalisation of the argument—those sitting on valuable CITES ban on ivory trade 500 ity by including diagnoses for 400 condi- stocks of ivory or rhino horn obviously tions in its influential International Classi- stand to profit from trade; and some con- 400 fication of Disease list. ngo servationist s’ purpose and fund- 300 Efforts to cut demand for illegal pro- raising rely on a purist approach. But the ducts have had an impact, and attitudes are numbers tend to support the abolitionists. 200 changing. Sharks’-fin soup, for example, is After the ivory trade was banned in 1989, 100 no longer a fixture at Chinese banquets, elephants’ fortunes turned around. The and more and more diners know it is at best two camps squabble about whether that 0 a controversial taste. But as endangered was mainly the result of falling demand or 1995 2000 05 1410 species dwindle further, the market for of better anti-poaching measures, as Afri- Source: “Continent-wide survey reveals *Areas covered many products is still robust. Trafficking in can governments came under pressure to massive decline in African savannah by Great Elephant them remains, in Mr Collis’s phrase, “a low- elephants”, by M. J. Chase et al., PeerJ 2016 Census do more to protect them. But a resurgence risk, high-reward crime”. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS

Innovation Summit Is business culture the enemy of innovation? October 3rd 2019, London

Innovation can be a catalyst for growth, but it is also an expense with uncertain FEATURED SPEAKERS returns. How can innovators push forward fresh technologies, devise new strategies and embed innovation in the culture of businesses that are reluctant to Anna Marrs President, global take risks? commercial services American Express Join editors from The Economist, Fortune 500 leaders, corporate entrepreneurs, policymakers and innovation directors from across Europe as they share their Mariana Mazzucato insights and discuss the future of innovation. Professor, economics of innovation and public value innovationsummiteurope.economist.com | @EconomistEvents | #EconInnov University College London

REGISTRATION Scott Petty Please scan the QR code using the camera on your smartphone Chief technology o cer and click the link. Vodafone UK РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Business The Economist August 10th 2019 51

The fertility business tors are understandably excited. In 2018 fertility firms received $624m Seed capital from venture capitalists and private-equity firms, compared with less than $200m in 2009, according to Pitchbook, a data pro- vider. In June Jinxin Fertility raised $360m in an initial public offering, the first on the Hong Kong Stock Exchange for a Chinese NEW YORK fertility firm. The market capitalisation of Investors are pouring money into companies that promise to help people conceive Vitrolife, a listed Swedish company, has tri- right-blue letters greet women at ity industry could rake in $41bn in sales, pled since 2015, to $2bn. BTrellis, an egg-freezing studio in New from $25bn today. Today one in 60 in Amer- The money is flowing not just into treat- York. “It’s up to each of us to invent our own ica is born thanks to in vitro fertilisation ing infertility (as ivf clinics do) but also future,” they enjoin. No baby pictures here, (ivf) and other artificial treatments. In preserving fertility (egg-freezing clinics) of the sort that adorn joyless waiting rooms Denmark, Israel and Japan the figure is and, even further removed from concep- at traditional fertility clinics. Instead the more than one in 25—and rising. In China tion, diagnosing if either treatment or client-experience manager, Casy Tarnas, revenues could double to over $7bn by preservation might be needed one day invites visitors to grab a charcoal-coloured 2023, according to Frost & Sullivan, a data (tests and trackers). Of these, infertility “fertility-friendly juice”. Turkish-cotton firm. Add high operating margins—of treatment is the most mature, though the robes await. If this feels like a spa rather around 30% in America for a $20,000 landscape remains fragmented 41 years than surgery, that is the idea. Egg-freezing, round of ivf—plus the recession-proof na- after the first ivf baby was born. which promises to preserve young wom- ture of the desire for offspring, and inves- In America and Europe consolidation is en’s healthy eggs until they are ready to now afoot. Private-equity firms think they start a family, is supposed to be “an em- can cut costs, acquire more patient data Also in this section powering experience”. and build brands, as they have done with The fertility business has always ped- 52 Fertility benefits dental clinics. Last month Impilo, a Nordic dled hope to people who struggle to con- investment firm which already owned the 53 Investors flee the Permian ceive naturally. It still does, extending the Fertility Partnership, a big British provider, promise to singles and same-sex couples as 53 Steelmaking and tariffs agreed to buy VivaNeo, which has clinics in social norms shift, and increasingly—as in Austria, Germany and the Netherlands. 54 Apps for the old the case of Trellis—to the much larger cli- China, where between 2006 and 2016 the entele of young women who wish to post- 54 Cash in America Inc number of fertility clinics ballooned from pone childbearing while they pursue a ca- 88 to 451, could be next. Everywhere, clinics 54 Private equity loves Germany reer or await “the one”, and are therefore are bolting on pricey new services, from likelier to need help when they do eventu- 55 Bartleby: Turn off and drop out testing embryos for genetic problems to ally want babies. Data Bridge, a research surgically wounding the womb to encour- 56 Schumpeter: Cyber Exxon Valdez firm, predicts that by 2026 the global fertil- age the embryo to implant itself. 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 52 Business The Economist August 10th 2019

2 The second type of fertility business— Fertility benefits preservation—was spawned by more re- cent breakthroughs in flash-freezing sex cells, which dramatically increased the Fert perks survival rates of frozen sperm and eggs after thawing. Egg-freezing clinics purport More employers want to help workers make babies to sidestep a dilemma faced especially by women who wait beyond their mid-thir- hen apple and Facebook began carmaker, pay for unlimited ivf cycles ties, when egg cell deterioration can accel- Wpaying for employees to freeze (which can cost $100,000), according to erate, to have a baby. Traditionally such their eggs in 2014, this generosity was Fertility iq, an educational site for fertil- women could improve their chances by met with cynicism. Critics dismissed it ity patients. This week Starbucks said it buying young, healthy eggs from donors, as another attempt at social engineering would raise its fertility cover to $25,000, or accept longer odds with their own eggs. from Silicon Valley, no bastion of female- including for baristas who work over 20 Egg-freezing lets young, healthy women friendliness. Rather than empowering hours a week for more than six months. donate to their future selves. women, they feared, it would press them For part-timers on $12 an hour that can The procedure mushroomed in Ameri- to delay motherhood; Apple would do add up to twice their annual salary. ca after the American Society for Reproduc- better to install child-care facilities at its Most American states still do not tive Medicine removed the “experimental” brand new headquarters. require insurers to cover infertility treat- label from it in 2012. In 2017 nearly 11,000 Such gripes have not stopped employ- ment. So companies use the benefits to American women froze their eggs, 24% ers from embracing such schemes. Quite differentiate themselves. This helps more than the previous year, according to the opposite. More than one in four large recruit and retain staff, says Jake An- the Society for Assisted Reproductive Tech- American companies now pay for some derson-Bialis of Fertility iq. It found that nology. In Britain the number of frozen-egg fertility treatment, according to consul- 62% of workers whose employer had cycles doubled between 2013 and 2016, to tants at Mercer; one in 20 covers egg- paid in full for ivf said they were more 1,321. Egg-freezers claim margins similar to freezing. In America Bain, a consultancy, likely to stay in their job. Firms keen to ivf; some may already be profitable. kkr, a private-equity firm, and Tesla, a promote “diversity and inclusion” see Although preservation services are health plans with ivf or surrogacy as a mostly aimed at women, firms are also eye- way to attract lgbt employees. ing men. Geneva-based Legacy (“The only Some companies insist that workers life investment you’ll make”) sends a re- try the natural way for a year before they turn sperm-collection container by mail, qualify for treatment (to the exclusion of analyses it and, for a hefty premium, stores anyone who isn’t a heterosexual in a it in a Swiss nuclear bunker. Since January stable relationship). Others appear to thousands of men have bought the $99 adopt fertility benefits in response to “Dadi kit” from Dadi, a company in Brook- harassment scandals. Under Armour, lyn (“Store your sperm, stop the clock”). Uber and Vice added family-friendly They include a surprising number of men policies, including generous fertility preparing for a vasectomy, though the aver- perks, following such controversies. age customer is a 31-year-old millennial A lot of this is welcome. But advocates who has realised that “men too have a bio- of gender equality are right to point out logical clock”, says Tom Smith, the founder. that some benefits—egg-freezing in The babies of the fertility business offer particular—look like a distraction. And it diagnostics. Firms like Everlywell and is no substitute for eliminating the Modern Fertility send users a kit, costing motherhood-penalty in the workplace. about $160 apiece, to collect a finger-prick of blood or a drop of spit, which is then ana- lysed for hormonal signs of potential pro- tras, the British regulator, which uses a healthy snack”. Celmatix claims that its blems. Celmatix, another startup, offers a traffic-light system to grade 11 popular ivf tests help people “dramatically improve pricier test to identify genetic markers as- add-ons, has yet to give one a green light, their chances of conceiving”. Modern Fer- sociated with fertility problems. meaning it is both safe and effective. The tility concedes it cannot predict the future, All fertility businesses stir controversy. newer breeds of fertility firm are similarly but offers a “fertility timeline” that some Last year Pacific, a fertility clinic in San criticised for misleading customers. In customers may treat as a bespoke egg tim- Francisco, and the Cleveland Medical Cen- fact, existing egg-preservation techniques er. Some startups give Instagram influenc- tre, in Ohio, lost many eggs and embryos to are expensive, invasive, often ineffective— ers subsidised treatments in exchange for faulty storage. cha Fertility, in Los Angeles, and regularly oversold. touting the service to millennial followers. has been accused of implanting the wrong In Britain just 41 “ice babies” were born None of which dampens the fertility in- embryos, which led to the birth mother in 2016 using the mother’s own frozen eggs, dustry’s appeal to women, men—or inves- having to give up twins who were geneti- not nearly enough for reliable statistics, so tors. Many will be disappointed: prospec- cally related to two other couples. Peiffer egg-freezers often cite success rates from tive parents, because too many of them will Wolf, an American law firm representing defrosted eggs of donors, an unrepresenta- still, despite fertility businesses’ promises, several families involved in similar cases, tively young, healthy sample. Prelude, an be unable to conceive; and, with nothing says the industry, which can face fewer American company which recently merged like the emotional toll, those pouring mon- rules in America than nail salons, urgently into a bigger venture offering treatment ey into these firms. But the methods—and needs some. and preservation, promises, improbably, providers’ prospects—are bound to im- Clinics in America and beyond are also to help families have “as many healthy ba- prove with time. With luck, the capital cur- accused of playing up success. Like motor- bies as they want, whenever they want”. Ex- rently flowing into research on reproduc- ists and asset managers, most claim above- tend Fertility, another American firm, ad- tion, a surprisingly mysterious aspect of average results. As for their newfangled ex- vertises egg-freezing “for the price of a human biology, will hasten the process. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Economist August 10th 2019 Business 53

Energy companies low their level a year ago (see chart). Mr Fracturing Trump’s recent promise to force federal Shale sale Oil markets, January 30th 2015=100 agencies to buy steel with at least 95% do- 160 mestic content, up from a minimum of half today, is unlikely to change things. It could Oil price* 140 even make matters worse. The reason is economics. By raising do- 120 mestic prices the tariffs distorted incen- NEW YORK tives. The extra cash, combined with an ap- Investors flee the Permian 100 parent rise in demand, induced steel or more than a decade investors have 80 companies to splash out on new capacity. Fwaited for America’s shale industry to Timna Tanners of Bank of America Merrill mature. Ahead of the latest quarterly re- 60 Lynch estimates that by 2022 the projects ports, they wanted to know if firms could “Shale” exchange-traded fund† currently in the works could increase out- produce more oil and rein in spending. For 40 put by the equivalent of a fifth of America’s some big producers, the answer was “no”. 2015 16 17 18 19 steel consumption in 2017. Many shareholders got tired of waiting. Sources: Bloomberg; *West Texas Intermediate †SDPR S&P There may be nowhere for all the extra Datastream from Refinitiv oil & gas exploration & production ETF The share price of Concho Resources, a steel to go. Overseas, America’s high-cost firm with operations in Texas’s Permian ba- producers cannot compete with cheap al- sin, sank by more than 20% overnight, de- in no hurry and, like others, wary of over- loys from places like China. At home, last spite the assurance of a “free cashflow in- paying—reasonable enough in light of year’s uptick in volumes was caused chiefly flection in 2020”. An admission by Whiting shale firms’ falling value. The market has by customers substituting domestic steel Petroleum, which drills mainly in North punished recent acquirers, including Con- for suddenly pricier imports. Demand is Dakota and Montana, that it would not cho, which bought rsp Permian last year. now likely to grow at its underlying rate of meet targets for production wiped more Carl Icahn, an activist investor, calls the 1-2% a year, estimates Andreas Bokken- than a third off its market capitalisation Anadarko purchase “a travesty” and is try- heuser of ubs, an investment bank. over 24 hours. ing to sack four of Occidental’s board mem- Higher prices may even be dampening Other shale companies, including eog, bers. Rumours swirled in 2018 that Royal it. Some American manufacturers have de- Diamondback and Parsley, presented evi- Dutch Shell would buy a company called layed steel-heavy projects or switched to dence that they could boost output effi- Endeavor. No announcement has come. 7 alternative materials. With factory activity ciently. Yet an index of American explora- slowing, as it did in July for the fourth tion-and-production firms plunged by 12% straight month, demand for steel is slip- in the week to August 7th, worse than the Steelmaking ping, too. us Steel has acknowledged that market as a whole. “market conditions have softened”. Because fracking depletes wells quick- Double-edged Peter Marcus of World Steel Dynamics, a ly, companies must spend more to sustain research firm, praises Mr Trump for stimu- output. In the past year producers have lating “massive investment that will mo- shown signs of living within their means. dernise the industry”. Most has gone into On August 6th Diamondback reported that “electric arc” furnaces, which smelt steel its well costs continued to drop. Consolida- NEW YORK more cheaply from scrap metal rather than American tariffs on foreign steel cut tion could boost efficiency. Based in part from iron ore. But high fixed costs, testy both ways for domestic producers on that logic, shareholders of Anadarko, trade unions—and Mr Trump himself— with big holdings in the Permian, were ex- f i hadn’t been elected, you would discourage companies from retiring old, pected to approve its $38bn acquisition by “Ihave no steel industry right now,” de- inefficient blast furnaces. Some of these Occidental Petroleum on August 8th, after clared President Donald Trump last month. will have to go if the industry is to avoid The Economist went to press. He claimed that his “massive” tariffs of what Ms Tanners calls a “steelmageddon” Some attempts at boosting efficiency 25% on steel imports, imposed in March of excess capacity. Fresh levies from the look counterproductive, however. Drill last year, have returned the domestic in- trade-warrior-in-chief may postpone it— wells too close together and they produce dustry to rude health. A year ago he would but at a cost of making the eventual reckon- less oil. The price of gas, which once boost- have been right, if habitually hyperbolic. A ing all the more painful. 7 ed firms’ profits, briefly fell below zero this tonne of hot-rolled coil, an industry spring, when companies were paying cus- benchmark, which sold for roughly $600 tomers to take the stuff off their hands in America at the start of 2018, fetched over Rusty amid a supply glut. $800 by the summer. Volumes that Ameri- Share and commodity prices The shale industry, whose shares prices can steelmakers shipped domestically rose January 1st 2017=100 used to track that of oil, down by 18% since too, by 5% in 2018 compared with the 160 April, now looks untethered (see chart). previous year. Steel* “Investors have decided it’s too volatile,” Today the boast looks out of date. Steel 140 says Bob Brackett of Bernstein, a research prices have slumped back to pre-tariff lev- S&P 500 firm. So they are diverting capital else- els. Although the price of iron ore, from 120 where. Occidental’s massively oversub- which a third of American steel is smelted, 100 scribed $13bn bond offering on August 6th has tumbled in the past month, it remains shows fixed-income investors’ thirst for roughly double what it was a year ago. 80 us yield rather than an appetite for shale. Steelmakers’ profits collapsed. Nucor, Iron ore S&P steel firms The energy behemoths have the bal- Steel and Steel Dynamics, the country’s 60 ance-sheets to buy the wildcatters. But three biggest producers, all reported a 2017 18 19 many, like ExxonMobil, have enough land steep fall in second-quarter earnings. The Sources: S&P Global Platts; in the Permian to keep them busy. They are industry’s share prices languish a fifth be- Datastream from Refinitiv; Bloomberg *Hot-rolled coil РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 54 Business The Economist August 10th 2019

Apps for the old Private equity Silver screens Locusts in lederhosen

SHANGHAI BERLIN The next big growth market for China’s Buy-out firms embrace Germany—and tech firms vice versa oon after dinnertime, Xiangyang Park kr is on a roll in Germany. On July 4th Sin central Shanghai transforms into a Kthe American private-equity firm an- ballroom. Loudspeakers pump out old pop nounced its takeover of a majority stake in songs as elderly folk sway under the plane heidelpay, a payment-processing firm. A trees. A picture of geriatric nostalgia—un- day later Axel Springer, a giant publisher, til you meet Ms Shi and Mr Zhou, a couple said that more than 20% of its shareholders in their 70s whose enthusiasm for the had agreed to sell their shares to kkr, waltz is matched only by that for their bringing a full takeover by the Americans a smartphones. Mr Zhou reads online nov- step closer. Last year kkr opened an office els. Ms Shi watches far-flung Chinese parks in Frankfurt. Its European boss is Johannes come alive with their own group dancing Huth, a German. Since it entered the coun- on Huoshan, a short-video app favoured by try in 1999 it has spent $5bn on buying teens. Both love WeChat, a messaging app. Senior netizen more than 20 German companies, includ- “I can go without food, but not without my ing Arago, a maker of artificial-intelligence smartphone,” Ms Shi confesses. confusion over tech to encourage children software, Hensoldt, a defence-electronics She and her husband remain unusual. to set their parents up with WeChat Helper, business, and gfk, a research firm. Less than one in three Chinese over 50 re- an app assistant. People over 55 are now For private-equity companies this ported owning a smartphone in 2016, the WeChat’s fastest-growing cohort. Last year marks a turnaround no less profound than latest year for which the Pew Research Cen- Taobao, Alibaba’s online emporium, intro- those they try to engineer at the businesses tre, a think-tank, has data, half the share in duced a “pay-for-me” option for elderly they acquire. In 2005 Franz Müntefering, America. A survey by the Chinese Academy customers to use with family members. then boss of the Social Democratic Party, of Social Sciences and Tencent, which The site broadcasts daily over 1,000 live- described them as “swarms of locusts that owns WeChat, found that only 17% fre- streaming shows aimed at them. Ele.me, a fall on companies, stripping them bare be- quently paid for purchases with mobile food-delivery service bought by Alibaba fore moving on”. These days the locusts are phones; close to half had never done so. last year, is trialling meal and medicine de- increasingly seen as a force to help compa- Tech companies want to lure more Ms liveries for the elderly, and one-off help nies improve performance (not strip as- Shis and Mr Zhous online—and take a big- with things like changing light bulbs. With sets) and create jobs (rather than destroy- ger slice of the 7trn yuan ($1trn) that Chi- the over-60s’ share of the population ex- ing them). kkr says it has increased the nese seniors are expected to spend on con- pected to double to one-third by 2050, workforce of its German, Austrian and sumer goods in 2020. To tech firms, the there is wisdom in this strategy. 7 Swiss companies by an average of 8% from1 disconnectedness of China’s 250m-odd old, or 18% of the population, is an oppor- tunity. Unlike the young, whose fragment- Pile-up ed attention is fought over by thousands of apps, retirees are up for grabs. And once on United States, top cash* holders† (at Q2 2019) S&P 500 cashflows, $bn jd the internet, they splurge. In 2017 .com, a $trn Buybacks Dividends Capital spending big e-commerce firm, found that they 1.2 600 spent 2.3 times as much as the average user. Oracle Cash from operations Their typical deposit in Yu’E Bao, an online Ford Amazon 1.0 cash-management service controlled by IBM Facebook GE 0.8 400 Alibaba, a giant internet firm, is 7,000 yuan Alphabet (Google) compared with 4,000 yuan across all ages. Microsoft 0.6 Early adopters may be better-off than a Apple typical senior, rattled when shops refuse 0.4 200 cash. But startups see rich pickings. “I Have 0.2 A Partner”, a grey-dating app, debuted last Berkshire Hathaway year with bold fonts and voice messaging 0 0 for slow typists. Tangdou Guangchang Wu 2004 09 14 19 2015 16 17 18 19 (“Jelly Bean Square Dance”), which started out posting dance videos (with filters to Source: Bloomberg *Cash and marketable securities †S&P 500 excluding banks iron out wrinkles), aspires to be a one-stop shop for the old. It reports over 200m Cashing out downloads since its launch in 2015. Do American companies buy back too many shares? Or do they cling on to too much The big generalists hope to lock the old- cash? Both accusations have been levelled against America Inc. It is hard for both to be ies in early. The over-60s use four-fifths of true at once. In fact, neither is quite right. Yes, Apple, Berkshire Hathaway and a few their mobile data on WeChat, against 7% other giants sit on piles of idle dosh. But for the top 500 listed firms in total the amount for those aged 18-35. In 2017 Tencent made a of cash reinvested or returned to shareholders has roughly matched the amount being video of old-timers rapping about their generated. Those firms that have a shortfall often plug it with cheap borrowed money. РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Economist August 10th 2019 Business 55

2 the moment of purchase to divestment. try-equipment arm to Permira, a British steady economic growth. Nine in ten told Indeed, rather than fend off kkr’s ad- firm, in 1997. kkr bought Hensoldt from pwc that Germany will be interesting for vances, Mathias Döpfner, Axel Springer’s Airbus. Buy-out firms are also becoming an private-equity investments in the next five boss, actively sought it out as an investor. important source of capital for the Mittel- years (one-third as many said the same To win employees over to the deal, Mr stand, the small and medium-sized compa- about Brexit Britain). Eight out of ten said Döpfner invited Mr Huth to one of his regu- nies that constitute the German economy’s they will increase their German holdings. lar staff town-halls. Last month Osram, a backbone. Thousands of these enterprises The number and size of private-equity struggling maker of lights, said it is fully already have private-equity firms among deals in Germany are both smaller than in behind a €3.4bn takeover bid from Bain their shareholders. Britain or America. “The market has ma- Capital and Carlyle, two American buy-out This year 250 private-equity fund man- tured but remains relatively uncharted,” behemoths. agers surveyed by pwc, a consultancy, says Steve Roberts, pwc’s head of private German conglomerates have long been named Germany as Europe’s most promis- equity in Germany. That leaves more op- happy to offload unwanted parts to private- ing market by a long way. They are drawn by portunities for the cash-rich locusts to equity companies. Siemens sold its dentis- its stable politics, skilled workforce and swarm around. 7 Bartleby Turn off and drop out

Holidays are good for both workers and their companies he swimming trunks have been dug those people who are in the office can about the collapse of the credit system. Tout of the chest of drawers. The beach enjoy an easier pace of life. Most of their But most of the time, executives should shoes (still caked with last year’s sand) customers and suppliers are on a break so really be able to rely on staff who remain have been retrieved from the shed. Like there is not much that anyone can do. in the office. tens of millions of others, Bartleby is For those on vacation, the occasional Indeed, just as employees need a about to go on his annual holiday. work-related thought might occur when break from the workplace, companies A vacation gives workers a chance to walking quietly along the beach, or sometimes need a break from their em- recharge their mental batteries. For through a wood. Often such ideas will be ployees. After a trading scandal at Société Bartleby, this means reading books that all the more original for being dreamed up Générale, a French bank, in 2008, Brit- do not have titles like “Beyond Perfor- in a moment of detachment. Returning to ain’s then regulator, the Financial Ser- mance 2.0” (sadly, a genuine example of 3,000 unread emails is also not an appeal- vices Authority, recommended that all a management tome). Heading to a new ing prospect, so five minutes deleting the traders take a two-week break at some location allows employees to clear their detritus while the rest of the family is in point in the year. The aim was to ensure thoughts. After all, there is more to life the shower seems like a reasonable com- that any unusual dealing patterns would than spreadsheets and sales forecasts. To promise. Some favour an “out of office” be discovered while the miscreant was misquote Timothy Leary, the 1960s hip- message but such devices can easily gener- away from their desk. pie guru, a holiday is time to “turn off ate automated replies that subsequently Senior managers can also benefit and drop out”. clog up the in-box. from seeing what happens when their It also means workers get more sleep The one thing that workers certainly do juniors head to the beach. Does office by escaping the tyranny of the early- not need is contact from their managers. morale improve as soon as a mid-level morning alarm. In addition, they no Answering the phone to a work-related call manager disappears? If so, this suggests longer suffer the agonies of the daily should be a complete no-no. Just occasion- that he or she is not running the depart- commute: the cramped railway carriages ally, a genuine crisis might require the ment well. Does an underling impress or gridlocked roads. And best of all, there company to be in contact. In 2007 Bartleby when standing in for their boss? In that are no meetings to endure—no need to was paddling in the Atlantic next to an case, they may be overdue a promotion. sit with a vaguely interested expression analyst from a credit-rating agency receiv- Some Americans are reluctant to take on your face while time seems to slow to ing frantic messages on his BlackBerry a long holiday for fear that their employ- a crawl. In short, holidays reduce stress. er will find they can easily manage with- And in the long run, stress makes work- out them. None of that nonsense at The ers less likely to perform well. Economist. Ambitious young writers will That means going away for at least a be eager to fill the vacant space left by week. An extended weekend break, this column with insights into the busi- favoured by many Americans, risks ness world. The business editor will be adding to the stress, as a high proportion relieved of the need to remove some of of the vacation period is spent travelling this writer’s questionable puns [much to and from the desired destination. No appreciated, ed.]. sooner do you arrive than you have to Work can be irritating but, as any think about packing for the trip back. unemployed person will tell you, it is Although it does lead to congested better than the alternative. It gives pur- traffic and crowded airports, there is pose to people’s days and, on occasion, something to be said for the European can even be fun. But not every day. Some tradition of cramming everyone’s holi- days it is better to be reading a paper- days into August. The predictability of back. By a pool, in the sunshine. Enjoy. the season means that companies can adjust their plans accordingly. Even Economist.com/blogs/bartleby РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 56 Business The Economist August 10th 2019 Schumpeter The Exxon Valdez of cyberspace

If data are the new oil, data breaches should be treated like oil spills already been around for a century. But the disaster led to a full- blown overhaul of the firm’s safety and risk-management culture. In “Private Empire”, a book about ExxonMobil by Steve Coll, the au- thor can barely disguise his astonishment at how far this went. In its offices, desk drawers had to be kept shut lest employees bump into them. Every meeting began with a “safety minute”, akin to a blessing before a meal. Cuts by office paper clips were monitored. Even today its 11-point Operations Integrity Management Sys- tem—as detailed in its pursuit of safety nirvana as the Buddhist path to enlightenment—is drilled into new recruits, incorporated into performance assessments and shared with contractors and suppliers. For 27 years it has worked remarkably well. Corporations can argue that data are trickier to manage than oil. Preventing data breaches is a fiendish game of cat-and-mouse. Companies do not know who their attackers are—criminals? state actors? lone wolves?—or what they want. The hacker only has to be right once to penetrate a system. Defenders have to parry every jab, all the time; one misstep and they lose. Many companies bridle at being held responsible for being the victims of crime or acts of war. Still, the oil industry’s experience is instructive. First, the em- phasis on ingraining safety in every employee can strengthen the weakest link in cyber-security: the individual. In “The Fifth Do- n 1989 the thin-hulled Exxon Valdez supertanker ran aground in main” Mr Knake and Richard Clarke argue that companies deploy- IPrince William Sound, Alaska, pouring a quarter of a million bar- ing ever more sophisticated anti-hacking technology cannot elim- rels of oil into the surrounding waters. At the time, it was America’s inate “Poor Dave”, the guy in every organisation who can’t resist a worst offshore spill, and a huge blow to the reputation of the ship’s phishing email. Studies show that employees are often, by acci- owner, Exxon. The firm paid $3bn to clean up the area and settle le- dent or intentionally, the main cause of successful cyber-attacks. gal claims, and to improve safety the American government or- Wise firms fake phishing emails to flush out the Daves. dered the phasing out of single-hull ships such as Exxon Valdez. All Oil firms’ insistence on their supply chains speaking the same vessels used worldwide by Exxon’s corporate descendant, Exxon- language, and loudly, on safety is also worth emulating. Hackers Mobil, are now double-hulled. But that is not all. The disaster gave increasingly infiltrate large corporations by first penetrating the rise to a cultlike culture of discipline within ExxonMobil that defences of smaller suppliers and piggybacking on the communi- helped turn it into the profitmaking beast it is today. cations systems which link the two. This is made easier by the fact Three decades later, as a result of a relentless surge in cyber- that many firms treat hacks like gonorrhoea, an embarrassing af- crime, digital firms are floundering towards their own Exxon Val- fliction no one wants to admit even if speaking about it would stop dez moment. The latest is Capital One, a big American bank with a its spread. Some call it a tragedy of the cyber-commons. market capitalisation of $42bn, which on July 29th revealed that a Third, the near-death experience suffered by bp after the Deep- hacker had stolen personal and financial details of 106m credit- water Horizon oil disaster in 2010 shows how data can turn from card customers and applicants. Prosecutors allege that over four an asset into a crushing liability. It ended up costing the British months Paige Thompson, a 33-year-old software developer, infil- firm more than $50bn. Its reputation has yet to recover fully. trated a Capital One server hosted on Amazon’s cloud-computing For now, the costs of a data breach look absurdly light by com- platform through a misconfigured firewall. Bizarrely, the bank did parison. Capital One says its recent hack will cost it up to $150m not notice even after the hacker pseudonymously boasted about this year, mainly in extra customer support. Ignoring potential the heist on social media—until it was tipped off. For a company fines, that is less than $1.50 per victim—and a tenth of the bank’s hitherto seen as one of the most technologically adept in finance, latest quarterly profits. Equifax, a credit-scoring firm, recently this is a blow. agreed to pay up to $700m to resolve lawsuits and other claims The incident has two parallels with the oil industry. Robert after data of nearly 150m clients were hacked. ibm Security, a con- Knake, a former White House cyber-security adviser and co- sultancy, puts the average cost of a data breach worldwide at $150 author of “The Fifth Domain”, a new book on the subject, describes per victim. Messrs Knake and Clarke think it should be more like the way the hacker penetrated a layer of security called a web- $1,000 to spur the investment needed to prevent losses. application firewall as a “perfect analogy” to the era of single- hulled oil tankers. Like Exxon Valdez, Capital One should have had Tar and feathers more protection. Like the oil companies of old, the bank may have Governments are indeed getting tougher. Last month Britain’s pro- also lacked a culture of safety sufficiently strong to ensure that it posed fining British Airways £183m ($222m) after data about relentlessly probed for new vulnerabilities. Both are a reminder 500,000 passengers were stolen. That marks the first big penalty that, if data are now more valuable than oil, data breaches bear an linked to the eu’s newish data-protection rules. The airline said it unhealthy resemblance to oil spills. Internet firms can learn a les- would appeal. It may yet convince regulators it is not to blame. But son or two from hoary old carbon-belchers like ExxonMobil on as with Exxon or bp, that argument may wear thin with regulators how to avoid them. and consumers. Companies which trade in data—ie, most big ones Exxon Valdez was a watershed moment for Exxon. In 1989 it had these days—had better get ahead of the problem. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Finance & economics The Economist August 10th 2019 57

Also in this section 58 Buttonwood: The meaning of seven 59 John Flint leaves HSBC 59 Speeding up payments 60 Bond yields turn negative 61 Indian finance goes upmarket 62 Free exchange: Cut-price economics

Currency wars bet that the Fed would be forced to slash in- terest rates further to prevent a recession. The guns of August The Reserve Bank of New Zealand cut its benchmark interest rate by twice as much as expected, citing “heightened uncertain- ty” and “historically low” global bond yields. The Australian dollar fell to its low- est level in a decade. In matters of war and peace, countries The trade war escalates, and the fog of war descends must prepare for the worst. But precau- arl von clausewitz, the Prussian mil- ell, the Fed’s chair, noted with satisfaction. tions can look like provocations. In allow- Citary theorist, never wrote about cur- But after the yuan’s move America’s stock- ing the yuan to fall, China signalled it is rency wars. But some policymakers see market suffered its worst day this year. prepared for a protracted trade war. It let them in his terms: as the continuation of Emerging-market currencies, including the yuan weaken in response to the threat trade politics by other means. That, at least, the Brazilian real, Indian rupee and South of tariffs much as a floating currency is how the Trump administration views African rand, fell. The price of Brent crude would. Otherwise it would have needed to China’s decision on August 5th to let its oil tumbled below $60 a barrel and safe ha- defend an arbitrary line against the dollar currency weaken past seven yuan to the vens, such as gold, rallied. The same search every time America turned belligerent. Its dollar for the first time since 2008. Though for safety pushed American ten-year gov- move nonetheless makes further bellige- arbitrary, that threshold has assumed huge ernment bond yields to 1.7%, as investors rence more probable. Mr Trump is now un- symbolic importance among traders, eco- likely to change his mind about the new ta- nomic officials and fund managers (see riffs before they kick in on September 1st. Buttonwood). They were left stunned. Crossing the line Both sides blame the other for starting America’s Treasury quickly branded Yuan per $, inverted scale the fight. China has raised tariffs only in re- China a “currency manipulator”, a charge it 6.6 sponse to America’s. But America sees its has not levelled against any country for 25 combative economic diplomacy as a belat- years. China, in the Americans’ view, was 6.7 ed response to decades of intellectual- cheapening its currency to gain an unfair property theft and other misdeeds. Each edge in retaliation for President Donald 6.8 side’s attempt to get even looks to the other Trump’s surprise announcement four days like one-upmanship. China views a weaker earlier that he would impose new tariffs of 6.9 yuan as a reasonable response to Mr 10% on roughly $300bn of Chinese goods. 7.0 Trump’s trade duties; Mr Trump, according This marked the end of investors’ hopes to the Wall Street Journal, sees those tariffs for a peaceful summer. At the end of July 7.1 as retaliation for China failing to commit to the Federal Reserve had cut interest rates to ASONDJFMAMJJA buy more American farm goods. guard against a slowdown in America’s re- 2018 2019 The irony is that Chinese purchases of spectable growth rate, and trade tensions Source: Datastream from Refinitiv American soyabeans and pork were already had “returned to a simmer”, as Jerome Pow- rising, and the government was offering 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 58 Finance & economics The Economist August 10th 2019

2 buyers exemptions from some tariffs. But which lost business to close rivals else- government has already cut taxes, in- after Mr Trump’s new tariff threat it has re- where. Indeed, according to Goldman creased infrastructure spending and re- portedly told state-owned companies not Sachs, other Asian countries have filled lented in its campaign to restrain credit to buy American farm goods after all. Thus around half of the gap created by the previ- growth. But it is reluctant to boost the Mr Trump’s tariffs may have caused the de- ous round of tariffs. property market, which helped pull the cision they were designed to punish. The next round of tariffs will hit goods economy out of previous slowdowns, Whatever the cause of the new levies, for which China has fewer competitors. points out Andrew Batson of Gavekal, a re- what might be their effect? Some of Ameri- That should make it harder for American search firm. House prices have risen merci- ca’s existing tariffs (of 25% on roughly buyers to switch suppliers. Nonetheless lessly and developers have accumulated $250bn-worth of merchandise) had been the new tariffs’ direct impact could reduce worrying levels of debt. China, in short, imposed on Chinese goods that American China’s growth by at least 0.3 percentage wants to keep growth stable, stand up to importers can buy elsewhere. That min- points in 2020, according to ubs, to below America in the trade war and constrain ex- imised the harm to American buyers and 6% for the first time since 1990. cesses in the housing market. It is becom- maximised the harm to China’s exporters, To support a slowing economy, China’s ing harder to do all those things at once. 1 Buttonwood The meaning of seven

How yuan-dollar became the world’s most closely watched asset price principle followed by traders who yuan has moved in a limited range against up by the currencies of other export- Aspeculate on short-term movements the dollar, capped at seven. Were the yuan oriented economies, not only in Asia but in market prices is “cut your losses early”. to surge, it would hurt China’s exports; in Europe too. This doctrine finds expression in the were it to plummet, the dollar debts of It is not wholly surprising, then, that stop-loss—an order to sell a security, Chinese firms would loom larger. A large President Donald Trump’s trade war with such as a company share, automatically fall would intensify an ever-present fear: China has bled into a conflict over the when it hits a predetermined price. devaluation and capital flight. yuan-dollar exchange rate. Reports from People being people, stop-loss orders The yuan is still a long way from being a China in recent months suggested that it tend to cluster at salient levels, such as free-floating currency. It is further away had become a sticking point in the whole or round numbers. They might still from being a global one to rival the stalled trade negotiations. The governor instruct a broker to sell the pound at dollar. It is not a straightforward business of China’s central bank even dropped a $1.20, say, or sell Apple at $200. to buy and sell yuan. Traders joke that it is public hint in June that there was no red The round-number fetish is a strange less liquid than the shares of Alibaba, a line at seven. America’s treasury secre- one. But when a situation is uncertain giant Chinese e-commerce firm, which is tary, Steven Mnuchin, countered that if (and financial markets are always un- listed in New York. Yet despite the con- China gave up supporting the yuan, it certain) arbitrary numbers or thresholds straints, the waxing and waning of the might be interpreted as an attempt to are often charged with great meaning. yuan’s value has had a growing influence weaken it. That is one reason why cross- And few have had the significance of on the foreign-exchange market and on ing seven caused such a fuss. seven yuan per dollar. So when the yuan asset prices more generally. But there are others. The yuan-dollar broke through seven on August 5th, it This is in large part because the cur- exchange rate has become a gauge of prompted a violent sell-off in stocks and rencies of economies that do a lot of trade global risk appetite. A weak yuan is often a rally in bonds. That was followed by a with China have tended to move in tandem associated with weakness in a host of formal charge by the us Treasury that with the yuan. Its clout owes much to other important currencies, including China was manipulating its currency. China’s weight in the global economy, but the euro. The result is a strong dollar. On the face of it, that looks like an also to its gravity in export markets. When That in turn squeezes global credit, overreaction. If things were fine when the yuan moves, it imparts news about because many countries and companies the yuan was at 6.99, why did all hell global trade. The message is quickly picked beyond America’s borders borrow in break loose when it reached 7.01? Odder dollars. One consequence is slower still is the idea that a currency that has global gdp growth. Another is that mon- only fairly limited use outside China is ey tends to flow out of riskier sorts of suddenly a prime mover in global capital securities, such as stocks and emerging- markets. Yet China’s heft in the world market bonds, into safer assets such as economy has made it so. The yuan-dollar Treasury bonds. exchange rate is now the world’s most Arbitrary numbers often take on a life watched asset price. And “seven” mat- of their own in financial markets. China tered simply because people had come to bears some blame in this instance. It has believe that it did. a penchant for control and opaque To understand why, go back four policymaking. Left to their own devices, years. Until August 2015 the yuan had investors start to impute greater signif- been closely tied to the dollar. Since then icance to key thresholds. Officials follow its external price has been set by officials their lead. The markets had become used each day, ostensibly by reference to a to the yuan trading in a familiar range. It basket of currencies. The idea is that the is not clear what the new rules are. The yuan’s value should somewhat reflect only thing that is certain is that yuan- market forces. The outcome is that the dollar remains the asset price to watch. РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Economist August 10th 2019 Finance & economics 59

2 The damage to America’s economy is thing is rosy—the American business is less tangible. A survey by the Federal Re- flagging and will miss its rote target for serve Bank of Atlanta suggested that tariffs next year—but all in all the record looks de- and trade-war uncertainty had hurt private cent. Moreover, Mr Tucker told analysts investment by 1.2% (and manufacturing that there was no disagreement about a investment by over 4%). The unease has strategy that was revised only in June 2018. also made it harder for the Fed both to pre- Nor, despite the contrast in their charac- serve stable growth and to raise interest ters, was there a clash of personalities. rates to more normal levels. That will give So why did Mr Flint have to go? Al- it less room to act if the economy flounders though results are heading in the right di- for other reasons. rection, Mr Tucker thinks progress should In a tweet, Mr Trump called on the Fed have been brisker. He also sees more diffi- to respond to China’s weakening currency. cult times ahead and evidently believes Although the dollar is technically the re- that Mr Flint is not the man to lead hsbc sponsibility of America’s Treasury, the through them. Lower global interest Fed’s decisions have a profound influence rates—the Federal Reserve cut its bench- over its value. It does not take orders from mark rate on July 31st for the first time in the president and treats the exchange rate more than a decade—are not good for with benign neglect. But if the uncertain- banks. The geopolitical outlook is dicey ties of the trade war inflict enough harm on too. Trade wars are not good for trade spe- confidence and spending, it might cut in- HSBC cialists like hsbc, and a Sino-American terest rates anyway. The futures market trade war is especially worrisome for a prices in a roughly 40% chance of at least Chipped away bank with Hong Kong and Shanghai in its 0.75 percentage points of easing by the name and its marrow. The board, Mr year’s end. The fog of war can be as damag- Tucker said, had decided that “a change ing as war itself. was needed to make the most of the signif- The trade fight has reverberated global- icant opportunities ahead of us”. Mr Quinn, ly. America’s Treasury had already expand- he added pointedly, will bring “pace, ambi- The surprising departure of the British ed the list of countries it is monitoring for tion, decisiveness”. bank’s chief executive signs of currency manipulation. None of Mr Flint may perhaps count himself un- the countries listed met all three of the ark tucker and John Flint always lucky. At Standard Chartered, another Brit- Treasury’s criteria (a large bilateral surplus Mseemed an unlikely double act at the ish bank with an Asian centre of gravity, the with America, a material overall surplus top of hsbc, Britain’s biggest bank. Mr chief executive has so far had four years to and persistent currency intervention by Tucker’s first profession was football—he knock the institution into shape. But Mr the central bank). But then, neither did Chi- was on the books of Wolverhampton Wan- Tucker has brought an unwonted impa- na. The definition of manipulation is, it derers, now a Premier League club—and tience to hsbc. It may just be for the best. 7 seems, highly manipulable. you imagine he was robust in the tackle. He One of the currencies most affected has never made the first team, but instead be- been Japan’s yen. A haven in troubled came a star in the insurance business. He Speeding up payments times, it rose sharply after Mr Trump’s sur- captained Britain’s Prudential and aia, a prise announcement. A strong yen makes big Asian life insurer, before transferring to Overdue it harder for Japan’s central bank to revive hsbc, as chairman, in 2017. inflation, especially as its interest rates al- The wiry Mr Flint, by contrast, com- ready lie below zero. Although Japan has pletes triathlons and was an hsbc lifer, not intervened directly in the currency joining from university in 1989. He climbed markets since 2011, its officials are watch- the ranks in hsbc’s time-honoured way, The Fed says it will build a real-time ing the yen’s rise with alarm. If the curren- running the retail and wealth-manage- interbank payments system. Eventually cy strengthens closer to the psychological ment division before becoming chief exec- threshold of 100 to the dollar, Japan’s au- utive in February 2018. n several countries—Britain, say, or thorities might feel compelled to act. Cur- On August 5th, to general surprise, hsbc ISweden—bank transfers are more or less rency wars can also be the continuation of declared that Mr Flint was standing down instant. The moment your wages leave monetary policy by other means. after just 18 months. Noel Quinn, the head your employer’s bank account, they arrive Nor has Europe escaped. Industrial pro- of commercial banking, will take interim in your own, giving you the wherewithal to duction in Germany fell by 5.2% in the year charge. The bank’s tradition has been to ap- pay the bills and feed the family. But Amer- to June. “Foreign macro shocks” account point its chief executives from within—Mr ica is far behind. Transfers can take days to for about two-thirds of Germany’s slow- Flint’s predecessor, Stuart Gulliver, ran the clear, landing many Americans—chiefly down since 2017, according to Goldman bank for the last seven of his 38 years on the those who can least afford additional ex- Sachs. European banks, including abn staff—but it will look externally as well as pense—with hefty overdraft fees or push- amro, Commerzbank and UniCredit, this internally for a permanent replacement. ing them towards payday lenders charging week warned of squeezed interest margins, At first blush, Mr Flint’s ousting looks high interest rates. In an age when millen- rising provisions or flagging revenues. In a harsh. On the same day as it announced his nials can split a drinks tab on their smart- recent economic bulletin, the European departure, hsbc reported that its net in- phones before leaving the bar, this almost Central Bank worried that trade uncertain- come in the first half of 2019 had risen by beggars belief. ty had delayed global investment, damag- 18.1%, to $9.9bn. Its return on tangible equ- The Federal Reserve wants to speed ing European exports of manufacturing, ity (rote), a standard measure of profit- things up. On August 5th it said that it machinery and transport equipment. In a ability, was a respectable 11.2%. In Asia, would build a faster-payments system, as globalised economy, everything is a con- where it made almost four-fifths of its pre- central banks have in other countries. But tinuation of everything else. 7 tax profit, revenue grew by 7%. Not every- not, alas, instantly. FedNow, its proposed1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 60 Finance & economics The Economist August 10th 2019

2 service, will not start before 2023. Covering Bond yields all of America’s 10,000 banks and other de- pository institutions will take even longer. In fact, America already has a real-time Under water payments system. The Clearing House (tch), which is owned by 25 big banks, has As yields turn negative, investors are having to pay for safety been running one since 2017. Between them, says Steve Ledford of tch, the 16 enguins on a melting icecap must yields down. Meanwhile central banks, banks that have so far joined the system Pchoose between budging up tighter fearing a global downturn, are cutting hold just over half of the accounts from and taking the plunge. Institutional interest rates. Mario Draghi, the presi- which payments can be made. tch is push- investors such as pension funds and dent of the European Central Bank, re- ing for near ubiquity next year. insurers now face a similar unappealing cently hinted that it might ease policy So why does the Fed want its own? First, choice, with ever-fewer safe assets that after the summer. it is not convinced that tch’s system will do not lose them money. According to an Central banks have failed to pep up ever connect to all the country’s tiny banks. index calculated by Bloomberg, a quarter inflation, which has hovered well below Mr Ledford says that tch’s plan is to reach of the bonds issued by governments and the 2% or so targeted by most ratesetters smaller banks through the technology companies worldwide are now trading at in the rich world. Investors do not think companies that provide their computing negative yields. Creditors holding $15trn- that central banks are on track to nudge systems. Second, it fears that without com- worth of securities will make a loss if inflation up any time soon. Five-year petition prices will be too high, quality too they hold them to maturity (see chart). forward swaps, which track investors’ low and innovation too slow. (The tch has Yields on many European govern- expectations on the matter, currently promised not to discriminate against small ment bonds turned negative in the predict inflation of 0.9% in Europe and banks. It charges sending banks a flat 4.5 mid-2010s as central banks engaged in 1.7% in America. This contributes to cents and receiving ones nothing.) Third, it quantitative easing—colossal bond- depressed bond yields. Inflation erodes worries that a single service will create a purchase programmes. By 2015, 40% of the purchasing power of bonds’ future “single point of failure”. Doubling up will the continent’s sovereign bonds offered cash flows, so the higher expectations of make the whole system safer. negative yields. But as economies perked future inflation are, the higher the yield Big banks told the Fed, in a recent con- up, central banks changed course. By investors will demand, and vice versa. sultation, not to bother. Even by consider- November 2018 many European bonds For now American investors still have ing its own system, it was delaying the were back above sea level. somewhere to take refuge. Though yields adoption of faster payments by more Now many have gone negative once on ten-year American government bonds banks. Randal Quarles, the Fed’s vice-chair again. France’s ten-year bonds have been have collapsed from their 3.25% peak last in charge of supervision, evidently agrees. flirting with negative yields for two November, they are still positive, at 1.71%. When the five governors on the Fed’s board months; they went below zero three Their 30-year equivalent yields 2.25%. voted to back FedNow, he was the sole dis- weeks ago and stayed there. Ireland That is not much comfort for European senter. He said he saw no “strong justifica- followed on August 5th. Fiscally conser- investors, who must pay around 3% to tion for the Federal Reserve to…crowd out vative countries like Austria and the hedge against dollar swings. If the Fed innovation when viable private-sector al- Netherlands are well past that point. eases faster than the ecb—and it has ternatives are available.” Spain and Portugal may soon follow, says more room to do so—the narrower gap Smaller banks, which for years have Iain Stealey of JPMorgan Chase’s asset between American and European in- been urging the Fed to build a system, are management division. Germany’s entire terest rates would make hedging cheap- delighted to be promised a choice. “The yield curve is already submerged. er, though it would also mean there was private sector has a product but not the As the trade war between America and less point in buying American. Those reach,” says Cary Whaley of the Indepen- China intensifies, investors are taking investors who already had, however, dent Community Bankers of America, a refuge in government bonds, pushing would stand to gain. trade group. “The public sector has all the reach but not yet the product.” (Most of America’s 4,900 community banks have Sea of red assets of less than $1bn; the country’s big- gest lenders weigh in at $2trn-plus.) Government-bond yields Global negative-yielding debt* Aaron Klein of the Brookings Institu- By bond maturity Negative Positive Market capitalisation, $trn tion, a think-tank in Washington, argues 16 that the Fed has not gone far enough. Five November 8th 2018 August 5th 2019 Portugal years is too long to get its new system up Spain and running, he says. Meanwhile, the 12 Ireland Private banks will still be pulling in overdraft fees. Belgium He adds that the Fed should also have ob- France liged banks to let customers draw funds as 8 Sweden soon as they are deposited. Austria Last month Chris Van Hollen, a Demo- Finland 4 cratic congressman, and Senator Elizabeth Public Warren, one of the Democratic candidates Netherlands for the presidency in 2020, introduced a Germany bill that would amend the Expedited Funds Japan 0 Switzerland Availability Act of 1987 to force banks to do ND JFMAMJJA 23456789102030 2018 2019 just that. Time is money, goes the adage. Bond maturity, That’s even more true for struggling Ameri- Source: Bloomberg years *Bloomberg Barclays Index cans than for rich ones. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Economist August 10th 2019 Finance & economics 61

trasts with its weakness in manufacturing. That is despite constant government inter- vention, most recently through the “Make in India” campaign launched in 2014 by the prime minister, Narendra Modi. The main difference is that financial firms, unlike manufacturers, are able to avoid many of India’s impediments: a maze of permis- sions and tariffs that control production, laws supposed to protect low-wage work- ers that instead discourage hiring, and wretched transport and communications networks. The towers that house interna- tional financial firms have dedicated phone and high-speed internet connec- tions, generators to provide backup power and global standards of fire safety. Goldman Sachs’s new campus in Banga- lore cost $250m. Once inside, a visitor feels he has been transported to the company’s New York headquarters (the same architect designed both). Both have similar ameni- ties, such as subsidised fitness and child- care facilities, as well as a medical office. The number of people Goldman employs in Bangalore has risen from 291 in 2004 to Finance in India 5,000. And India itself now provides ex- pats, with more than 700 Indians on trans- On the way to Wall Street fers to the firm’s offices elsewhere. In the past few years ubs has opened three new centres in India. The most re- cent, in the western city of Pune, is in a building shared by Credit Suisse and Alli- ance and Northern Trust, a stone’s throw BANGALORE, MUMBAI AND PUNE from others occupied by Barclays and Citi. Forget call centres. Global banks are shifting their core activities to India Between Mumbai and Pune ubs now has inancial centres, like delicate plants, Indian universities’ remarkable ability to 4,000 employees. A sophisticated recruit- Fthrive in the right conditions. Those in- turn out engineers in great numbers, and ing effort looks beyond recent graduates to clude a vibrant private sector, banks that computing firms’ ability to use them to tap émigrés who might be tempted back direct capital based on the prospect for pro- solve complex problems. Such tasks may home by the right opportunity. fit, analysts with direct access to compa- be dismissed as “back-office”. But they are Among the recent hires are a group of nies and investors, openness to foreign at the heart of modern finance. women returning to work after years away people and institutions, and business- In recent years banks have become glo- to care for children or ageing parents. Their friendly, consistent laws. For good mea- bal networks that link apps on smart- careers have included stints at banks, rat- sure, throw in the cultural amenities that phones, workstations used for sales, and ing agencies and a global pharmaceutical attract the sorts of employees who could sophisticated programs used to manage company, with expertise in risk analysis, choose to live anywhere. compliance and allocate capital. Systems quality control and product management. India is not such a place. Its laws are that once merely updated balances now de- ubs’s research department hires staff with many and perplexing; its domestic mar- termine financial-product marketing— expertise in cloud computing, statistics, kets, inefficient and politicised. Though whom to send offers to, when to increase machine learning and automation. They saving is unrewarding, capital is still costly credit limits and when to adjust charges. have contributed to recent reports using, for entrepreneurs. International firms are For banks all over the world, many such for example, web-scraping tools to under- mostly limited to cross-border activities. It tasks are now done in India. stand trends in the pricing of air-condi- often scores badly on quality of life. tioning, geospatial technology to map So it is hardly surprising that although Brain gain bank branches and population density, and tiny Hong Kong and Singapore are globally Even tasks that would seem to require the analysis of corporate filings to map cross- renowned centres of finance, Mumbai, In- personal touch—a trusted adviser pitching shareholdings of corporations and uncov- dia’s financial capital, features low on most a deal to the boss of a client firm, say—may er their vulnerability to a credit crunch. rankings. But the country is nonetheless rely on a fact-sheet compiled by an Indian ubs is perhaps unusually committed to becoming an essential hub for internation- research team overnight. The only things innovation in India. But any large bank al banks. India is often their second-largest that cannot be done in India are client with operations in the country is making place of employment after their home meetings, says Tuhin Parikh, a senior exec- significant efforts in similar ways. With country, and becoming ever more impor- utive at Blackstone. Since 2014 the buy-out hindsight, given its prowess in computer tant for their innovation efforts. firm has nearly quadrupled the amount of engineering, all this will look obvious. But India has long received other countries’ property it leases in India to international bankers say they have been startled by how outsourced jobs. Some of those are unso- financial firms, from 690,000 square feet fast India, notwithstanding its local chal- phisticated, such as answering phones or (64,000 square metres) to 2.7m. lenges, has become an intellectual force processing forms. Many, however, rely on India’s growing prowess in finance con- that is now shaping their global futures. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 62 Finance & economics The Economist August 10th 2019 Free exchange Cut-price economics

Prices for many consumer goods do not move the way economists reckon they should price rather than tweak the price. They may make a production process less labour-intensive—or shave a bit off a chocolate bar. Central banks are starting to see the consequences. Inflation does not respond to economic conditions as much as it used to. (To take one example, deflation during the Great Recession was sur- prisingly mild and short-lived, and after nearly three years of un- employment below 5%, American inflation still trundles along be- low the Federal Reserve’s target rate of 2%.) In its recently published annual report the Bank for International Settlements, a club of central banks, mused that quantum pricing and related phenomena help account for such trends. But firms’ aversion to increasing prices may be as much a con- sequence of limp inflation as a contributor to it. When the price of everything rises a lot year after year, as in the 1970s and 1980s, firms can easily adjust the real, inflation-adjusted cost of their wares without putting off shoppers. A 5.5% jump in the cost of a pint after years of 5% increases does not send beer drinkers searching for other pubs in the way that a 0.5% hike after years of no change might. Thus falling inflation can make prices “stickier”. To com- pensate, firms instead find other ways to impose costs on buyers— such as making products smaller or lower-quality. Labour markets are affected, too. Wages are notoriously sticky, wo years ago British chocoholics felt the pinch from the deci- especially downwards. In a world of low inflation, the ability to Tsion to leave the European Union. As sterling tumbled, global trim pay by raising wages less than inflation is lost to firms, with firms selling to the British market faced the same production costs serious macroeconomic consequences. Economists blame sticky as before, but got less money for each sweet sold. Rather than raise wages for causing unemployment during recessions. Facing re- the price per chocolate, some chose to shrink the chocolate per duced demand, firms that cannot cut pay to maintain margins price. The famous peaks on a bar of Toblerone grew conspicuously while slashing prices instead reduce output—and sack workers. less numerous (though Mondelez, the bar’s maker, said Brexit was But nimble firms have other options: the employment version not the cause). Other products suffered the same “shrinkflation”: of shaving a bit of chocolate from the bar. Some cut costs by boost- toilet rolls and toothpaste tubes became smaller. The threat of ing output per worker, often by driving workers harder. Tellingly, Brexit made the phenomenon more visible, but it is surprisingly growth in output per worker now tends to fall in booms and rise common. Statisticians and policymakers need to take note. during busts, precisely the opposite of the pattern 40 years ago, Every first-year economics student quickly becomes familiar when inflation was high. Firms can respond to market pressures with charts of supply and demand, which place price on one axis by reducing the benefits available to workers; Asda, a supermar- and quantity on the other. Given a drop in demand, the charts ket, recently announced plans to slash British workers’ holiday al- show, firms can either sell fewer items at the prevailing price or cut lowances. Or they can offer workers more tortuous schedules. Re- prices to prop up sales. But online retailing, which makes it easier search published in 2017 suggests that being able to vary workers’ to collect fine-grained price data, reveals how poorly textbook hours from week to week is worth at least 20% of their wages. On models reflect real-world market dynamics. The prices of consum- the flipside, during good times firms often opt to reward workers er goods, it turns out, behave oddly. with office perks and one-off bonuses, rather than pay rises that A forthcoming paper by Diego Aparicio and Roberto Rigobon of cannot easily be clawed back during downturns. the Massachusetts Institute of Technology helps make the point. Firms that sell thousands of different items do not offer them at The uncertainty principle thousands of different prices, but rather slot them into a dozen or If it happens on a sufficiently large scale, the practice of tweaking two price points. Visit the website for h&m, a fashion retailer, and quality in lieu of price could play havoc with essential economic you will find a staggering array of items for £9.99: hats, scarves, data. Statistical agencies do their best to account for changing pro- jewellery, belts, bags, herringbone braces, satin neckties, pat- duct quality, but if adjustments are unexpectedly common or sub- terned shirts for dogs and much more. Another vast collection of tle then muted inflation figures could easily be concealing a more items cost £6.99, and another, £12.99. When sellers change an turbulent economic picture. Central banks watching for big item’s price, they tend not to nudge it a little, but rather to re-slot it swings in inflation or wage growth as a sign of trouble could be re- into one of the pre-existing price categories. The authors dub this acting to figures that bear far less relation to business conditions phenomenon “quantum pricing” (quantum mechanics grew from than they used to. the observation that the properties of subatomic particles do not What’s more, the substitution of quality for price as firms’ main vary along a continuum, but rather fall into discrete states). way of responding to changing market conditions weakens the Just as surprising as the quantum way in which prices adjust is case for keeping inflation low and stable. Inflation makes relative how rarely they move at all. Retailers, Messrs Aparicio and Rigo- prices less informative, economists reckon, making it harder to bon suggest, seem to design products to fit their preferred price decide what to buy and how to spend. Rather than clarity, low in- points. Given a big enough shift in market conditions, such as an flation has brought a different sort of confusion: one of shrinking increase in labour costs, firms often redesign a product to fit the chocolate bars and lost holidays. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Property 63 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 64 Science & technology The Economist August 10th 2019

Space debris and human safety at the time will be advised to steer clear of a potential impact area that may exceed Stopping a hard rain 10,000km2—roughly the size of Lebanon. But if everyone takes these warnings seri- ously, then controlled re-entries are as safe as it gets, according to Holger Krag, head of the European Space Agency’s Space Debris Office in Darmstadt, Germany. Technologists are working out ways to lessen the likelihood that debris falling Job done, you might think. Yet only a from space will kill people few controlled re-entries are carried out very day a tonne or two of defunct sat- decades sooner than it otherwise would, each year. The reason is cost. If a spacecraft Eellites, rocket parts and other man- lest it collide with functioning spacecraft. is to be put into the steep descent needed to made orbiting junk hurtles into the atmo- In light of all this, more attention is be- aim it reasonably precisely at a particular sphere. Four-fifths of it burns up to become ing paid to the safe disposal of satellites spot on Earth’s surface, it will need to carry harmless dust, but that still leaves a fair and other space junk. To do that, space two or three times as much fuel as is re- number of fragments large enough to be le- agencies and private companies alike want quired for standard orbital adjustments. It thal. It is testament to how much of Earth’s to steer craft to the least risky impact-desti- will also require larger thrusters. That fuel surface is sea, and how sparsely populated nations possible, and also reduce the num- and those thrusters add to a mission’s the remainder remains, that the only re- ber of fragments that will survive re-entry weight, and therefore its launch costs. corded victims of this artificial hailstorm and endanger people and property. Ground controllers are also necessary to are five sailors aboard a Japanese vessel, supervise the re-entry. Ending a mission who were injured in 1969, and a woman in A drop in the ocean with a controlled re-entry can thus add Oklahoma who was grazed by a piece of One tried and tested solution is to plunge a more than €20m ($22m) to its cost. falling rocket in 1997. But it is also testa- re-entering craft into a zone known as the A cheaper alternative is a “semi-con- ment to luck—and the odds of that luck South Pacific Ocean Uninhabited Area. trolled” re-entry. Instead of diving towards holding are shortening. This is the expanse between Chile and New a pre-arranged target, a satellite is lowered Population growth means that the frac- Zealand. It is island-free, little sailed and gradually into the atmosphere using either tion of Earth’s surface which space debris little overflown. Such controlled re-entries what thruster-fuel remains to it or a spe- can hit harmlessly is shrinking. At the are not a completely precise science. Any cially designed drag-sail. This sail inter- same time, more spacecraft are going up (111 ships and planes heading into the vicinity cepts air molecules that have leaked into successful launches in 2018, compared space from the atmosphere, slowing down with 66 a decade earlier, and with many the satellite it is attached to and thus de- Also in this section launches carrying multiple payloads). And creasing the craft’s altitude until it reaches payloads themselves are increasingly de- 65 The IPCC land-use report a point where air resistance to the body it- signed so that equipment which has ful- self pulls it into the atmosphere. 66 Elephants, ants, trees and fire filled its purpose falls out of orbit years or The trade-off is that the danger zone as-1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Economist August 10th 2019 Science & technology 65

2 sociated with such a de-orbiting is much been calibrated by experiments in the plas- meaning, as Dr Bewick puts it, that the sur- larger than that of a properly controlled re- ma wind tunnels owned by Germany’s viving debris will hit Earth like a single bul- entry. It is still possible to arrange for this space agency. let instead of a shotgun blast, thus reduc- zone to have lots of oceans and few big cit- If these calculations come back show- ing the chance that anyone will be struck. ies. But there is not the certainty of no casu- ing that the risk of a satellite killing or in- ohb System has yet to find a customer alties that the South Pacific Ocean Un- juring someone during re-entry is greater for a satellite fitted with such containment inhabited Area brings with it. Also, though than one in 10,000—which roughly half cabling. It would add weight, and thus cost. more economical than the fully controlled do—then permission to launch will proba- Moreover, some dislike the notion of in- variety, semi-controlled re-entry is not bly be denied unless the craft is redesigned creasing the amount of material that will free. Saving fuel for it shortens mission or can be rigged for a semi-controlled entry strike Earth, even if that increase reduces lengths. Adding a drag sail adds to launch at more favourable odds. The idea of setting the chance of a death. But a related ap- weight. In practice, therefore, almost all the acceptable risk at 10,000 to one, though proach is under study at Thales Alenia. spacecraft re-enter the atmosphere at ran- derided by some as arbitrary, was adopted This firm may begin encasing in a single dom. But this has not prevented experts by America’s space agency, nasa, in 1995, package the lenses and other components from working out the probability that the by Japan in 1997, by France in 1998 and by a of optical systems that currently often hit random re-entry of a given mission will dozen or so other places in the years since. the ground as a spray. cause casualties. And that is useful infor- Something no one seems to be asking in mation, because it can be used to decide Feeling the heat all this, is what an appropriate level of safe- whether a mission should go ahead in the Having to do such calculations at all, ty for satellite re-entries actually is. The first place. though, is suboptimal. The best solution to original reason for picking 10,000 to one as Re-entry-survivability analysis, as it is the problem of re-entering space debris is an acceptable risk level has been lost in the known, is done using software that to build spacecraft so that nothing will mists of time. To a given individual in crunches data on the size, shape, configu- reach the ground in the first place. One way Earth’s human population of 7.5bn, it ration, composition and thickness of a sat- to “design for demise”, says Ettore Perozzi, translates into one chance in 75 trillion per ellite’s components. That provides an esti- an expert on debris at Italy’s space agency, re-entry. This is vanishingly small, even in mate of the number, weight, size and is to build a spacecraft “like a chocolate a world where re-entries are numbered in shape—and therefore potential harmful- bar”, so that it snaps easily into pieces. The the hundreds per year. ness—of pieces that atmospheric friction idea is for specially positioned weak parts On the other hand, any death delivered will not reduce to dust. The probability of to fail early during re-entry, ripping the from outer space in this way would be casualties can then be calculated in light of thing apart at an altitude of about 125km, headline news, and might result in calls for the population density under the space- rather than the standard 80km or so. This the rules to be tightened still further. So far, craft’s orbit. exposes the spacecraft’s guts to greater de- the satellite business has a pretty good Hyperschall Technologie Göttingen structive heat for additional seconds. safety record. It would like to keep things (htg), a German firm, charges about One promising means of getting a that way. 7 €50,000 for such an analysis. Its clients in- spacecraft to rip open early, according to clude three European satellite manufactur- Charlotte Bewick, head engineer for debris ers—ohb System of Germany, Elecnor of at ohb System, is to forge screws, nuts and The IPCC land-use report Spain and Airbus—as well as several space other parts for couplings out of special agencies. For their money, these organisa- “shape memory” alloys. When heated, Il faut cultiver tions get a bespoke assessment of the likely these alloys return to a “remembered” fate of a particular spacecraft, based on dig- shape they once held—which, in this case, notre jardin ital files of its design, and using programs will facilitate a rapid wiggling apart early in with names like “Spacecraft Entry Survival re-entry. Thales Alenia Space, a Franco- Analysis Module” and “Debris Risk Assess- Italian firm, sees more promise in another Gloom, but not complete doom, from ment and Mitigation Analysis” that have way of accelerating a spacecraft’s break-up. the climate-change front line It has patented a “demisable” coupling that, thanks to a special washer, comes fter 29 hours of uninterrupted nego- apart quickly when heated. Engineers are Atiations the latest report from the In- testing prototypes in a plasma wind tunnel tergovernmental Panel on Climate Change and reckon the winning design will con- (ipcc), on how alterations in land use are tain a low-melting-point alloy of zinc. contributing to such change, was gavelled Another way to reduce what reaches the through in Geneva on the afternoon of Au- ground is to substitute refractory materials gust 7th. When, minutes later, your corre- such as titanium and steel, used to make spondent asked to speak with some of the things like fuel tanks and fly wheels, with researchers, she was informed they had substances such as aluminium and graph- “gone to bed”. The report these exhausted ite epoxy that vaporise more easily. Accord- delegates produced—all 1,300 pages of it— ing to Lilith Grassi, a debris expert at Thales fires another warning shot about the state Alenia, this approach is bearing fruit. of the planet and the way people are trans- Even these measures, though, will not forming virtually every corner of every bring every spacecraft into compliance continent. Human activities affect roughly with the one-in-10,000 rule. So engineers three-quarters of Earth’s ice-free land, with have thought up additional ways to lower huge consequences for the climate. the likelihood of a casualty. Those at ohb Land masses are natural carbon sinks, System, for example, have proposed fas- absorbing greenhouse gases by a variety of tening together with strong cabling any processes, including photosynthesis. They components expected to survive re-entry. also produce such gases—for instance, That will prevent them from fanning out— when vegetation decomposes or burns. By 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 66 Science & technology The Economist August 10th 2019

2 conserving some ecosystems and destroy- Ecology ing others to make way for pastures and fields, or chopping down trees for timber, human activities on the land add an extra Burning questions layer of complexity to already complex nat- ural cycles. Nature is complex. And unpredictable The report found that between 2007 and 2016 such activities produced emissions cology is a complicated thing. Given different zones. In one of these the vege- equivalent to 9bn-15bn tonnes of carbon di- Ethe facts that elephant damage often tation was burned every year. In the oxide each year, or roughly 23% of all man- kills trees and bush fires often kill trees it second it was burned every other year. made greenhouse-gas emissions. During would be reasonable to deduce that a The third zone, by contrast, was actively that time, land surfaces soaked up combination of the two would make shielded from fire. 8.6bn-13.8bn tonnes of carbon dioxide. things worse. Counter-intuitively, To keep things consistent, he looked At the moment, then, these sinks and though, as research just published in at the fate of a single tree species, the sources are roughly in balance. But climate Biotropica, by Benjamin Wigley of Nelson marula (pictured), in all three zones. He change, deforestation and agriculture Mandela University in South Africa picked marulas because they are partic- mean the CO2-soaking-up ability of the shows, if a tree has already been dam- ular victims of elephant activity. Their continents is being depleted. The acceler- aged, fire can actually help to make fruit are delicious, and prized by ele- ating destruction of the Amazon forest, things better. phants and people alike. But elephants which researchers fear may be approach- One common way in which elephants also seem to enjoy eating their bark. ing a point of no return, is of particular harm trees is by stripping them of their In July 2016 he and his colleagues concern. And across the world, depending bark. Dr Wigley, who did indeed start identified 20 marulas in every zone and on the type of husbandry practised, farm- from the obvious assumption, set off to used a hammer and a soil corer to re- ing is eroding soil at a rate between ten find out how much worse bush fires move from each of them a circular sec- times and more than 100 times faster than would make the effects of this bark- tion of bark 5cm in diameter. Having new soil forms. stripping. To this end he set up a study in inflicted this damage, they monitored Climate change, moreover, creates a vi- the Kruger National Park, a reserve on the wounds over the course of the follow- cious feedback loop. Higher temperatures South Africa’s border with Mozambique. ing two years, to see what would happen. promote the degradation of land through Since1954, the Kruger has been the To their surprise, they discovered that drought, desertification and rising seas, site of experiments in which plots of the wounds of trees in fire zones recov- and the promotion of wildfires like the land have been burned at intervals, to ered far better than those of trees that ones currently blazing in Alaska, Siberia discern the effects of fire on savannah had seen no fires at all. Wounded trees in and Greenland. This, in turn, increases the ecology. Dr Wigley tapped into these the annual burn zone regrew 98% of their amount of greenhouse gases being re- experiments by looking at trees in three lost bark during the two years of the leased by landmasses, which further accel- study. Those living in the biennial burn erates global warming. zone regrew 92% of it. But those in the A swelling human population also zone where fires were suppressed regrew needs more land to feed itself. Balancing only 72%. these needs—for space to grow food on the The researchers also found some- one hand, and natural carbon sinks to keep thing else when they were measuring the temperatures low on the other—is a huge trees’ wounds: ants. Ten of the 20 trees in challenge. There are, however, solutions. the fire-suppression zone developed ant Recently, a report by the World Resources colonies in their wounds. The ants in Institute, a multinational think-tank, list- question were a species that is known to ed 22 actions that could be taken to feed, damage trees and is presumed to impair sustainably, close to 10bn people by 2050. tissue healing. By contrast, only five trees Number one on that list is stopping de- in the biennial burn zone and three in forestation, along with efforts to regener- the annual zone developed ants’ nests in ate degraded ecosystems. Reducing food their wounds. waste is also important. More than a quar- It looks, therefore, as if bush fires are ter of what the world grows to eat is never cauterising trees’ wounds by killing ants actually consumed. That creates a huge that might otherwise infest them. carbon footprint to no benefit. And diets Though such fires are surely harmful to themselves need to change. In particular, healthy trees, it seems, in an example of raising livestock contributes dispropor- two negatives making a positive, as if tionately to the problem. That means eat- A quick snack they are actually helpful to sick ones. ing less meat, an admonition directed mainly at rich countries, whose people, of- ten overweight, might in any case benefit warming to 1.5°C, made it abundantly clear times the size of India. from going on a diet. that this would require large amounts of Optimistically, the report’s authors con- This last point presented one bone of greenhouse gases be removed from the at- clude that there should be enough room to contention between the 195 government mosphere and somehow stored away. provide a growing population with suffi- delegations charged with approving the beccs, in which power stations capture cient food, without rushing towards a dan- panel’s report. The role of bioenergy (grow- and store the CO2 from burning biofuel, has gerously warm climate. There is, though, a ing crops for fuel) and beccs (bioenergy been touted as a way to do that on a large caveat. That outcome would require what with carbon capture and storage) was an- scale, but the area of land required to grow one commentator called a “global intelli- other. A previous ipcc report, published in the biofuel needed to absorb billions of gent response”. But the world, like the dele- 2018, on the feasibility of limiting global tonnes of CO2 would be enormous—several gates, seems to be asleep. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Books & arts The Economist August 10th 2019 67

Also in this section 68 Helen Phillips’s creepy fiction 69 Life in New Orleans 69 Art and activism in Australia 70 Johnson: Big and basic

Walter Bagehot Victorian England, and echoed in the title of James Grant’s new book, that he was not The greatest Victorian just a great editor and great figure about town but also “the greatest Victorian”? There are plenty of rivals for this crown, not least Gladstone himself. But Bagehot has a strong claim. He was better than any- one else at expressing the spirit of the age— cocksure, expansive, optimistic, but, be- A fine biography of our most celebrated editor—who was much more besides neath the glittering surface, shot through eyond doubt, Walter Bagehot was The with doubts. He was also at the heart of a si- BEconomist’s greatest editor. During his Bagehot: The Life and Times of the lent revolution. In many European coun- 16 years in the job—from1861to his death in Greatest Victorian. By James Grant. W.W. tries the bourgeoisie tried to seize power 1877—he transformed the publication from Norton; 368 pages; $29.95 and £19.99 with guns. In Britain it seized power by the the mouthpiece of a laissez-faire sect into force of its intellect. When Bagehot argued, the voice of mature Gladstonian liberal- voted to business and finance than it is to- in “The English Constitution”,that the Brit- ism. He did this through a combination of day, and Bagehot was equally interested in ish government was divided into two natural literary genius and somewhat re- politics and literature. His great book, “The branches—a dignified aristocratic branch luctant networking. He wrote an astonish- English Constitution”, began as a series of that was primarily there for show and an ing proportion of the paper’s articles him- articles for the Fortnightly Review. He was a efficient branch of professional men who self, on an astonishing range of subjects, successful banker who started his career did the real ruling—he was in fact describ- standing at his desk in his office at 340 working for his family bank, Stuckey’s, and ing a revolution in the distribution of pow- Strand, his steel pen flying across the page, helped oversee years of uninterrupted er that he had done as much as anyone to producing thousands of words a week. He growth. He stood unsuccessfully for Parlia- bring about. socialised with everyone who mattered, ment several times. He was at work on a Bagehot came from the provincial bour- from intellectual luminaries such as John projected three-volume history of political geoisie. His father was a well-off banker, Stuart Mill and George Eliot to political economy when he died. but hardly the sort of man to rub shoulders stars. William Gladstone mentioned him This is a dazzling range of achieve- with the greatest in the land. His mother in his diary 125 times. ments—and may explain why Bagehot fell suffered from frequent mental break- Yet The Economist was not enough to ab- down dead at the age of 51. But does it justi- downs. His home town of Langport in Som- sorb all his superabundant energy: the fy the claim first made for him by G.M. erset was comfortable but out of the way. newspaper was then more exclusively de- Young, the most intelligent historian of Rather than Oxford or Cambridge, Bagehot 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 68 Books & arts The Economist August 10th 2019

2 attended University College, London, a Mr Grant recognises that Bagehot had things might have changed, he said, but at new “radical infidel college” designed for weaknesses as well as strengths. He repeat- present they would only “flirt with men people who refused to subscribe to the te- edly predicted that the South would win and quarrel with each other”. nets of the Church of England. the American civil war, in part because the Bagehot survives these misjudgments But the country banker turned journal- North was led by an incompetent country with his reputation intact. He does so ist felt not the slightest desire to tug the lawyer—and then effortlessly transformed partly because his glittering prose makes it forelock. On the contrary: he dismissed Ox- himself into a fan of Abraham Lincoln a pleasure to read even his most mistaken ford for turning education into a “narcotic when the Union won. He indulged in nu- opinions. But he does it too because he was rather than a stimulant”, treated aristocrats merous conflicts of interest—for example right far more than he was wrong. He was as highly paid entertainers who existed to advising Gladstone to continue to allow lo- right about the dangers of crowd psycholo- distract the people from the real business cal banks to issue their own currency when gy in both finance and politics. He was of government, and laid down the law on he was a substantial shareholder in right about the importance of “animated every subject under the sun, from the intri- Stuckey’s, a bank that did just that. Asked to moderation” in political life. And he was cacies of banking to the political merits of support a petition to found a women’s col- right that civilisation is a delicate con- Sir Robert Peel (“the powers of a first-rate lege of Oxbridge calibre, he demurred on struct that requires skilful—and some- man and the creed of a second-rate man”). the ground that women were not suited to times cynical—statecraft if it is to be saved Rather than resenting the upstart, the high-level jobs. Two thousand years hence from self-destruction. 7 great and the good embraced him, awed by his knowledge of arcane subjects such as fi- Creepy fiction nance, dazzled by the bright light of his in- tellect and by his sparkling prose. E.D.J. Wilson, a journalistic contemporary, Mother courage judged that, at the height of his powers, he was “an unofficial member of every Cabi- An enthralling tale of motherhood and fear net, Conservatives as well as Liberal” and an adviser to every chancellor. The Need. By Helen Phillips. Simon & story is told in the third person, readers Mr Grant is a surprising author of a book Schuster; 272 pages; $26. Chatto & are very much inside Molly’s head. It on a Victorian sage: an American invest- Windus; £16.99 vibrates with the kind of neurotic self- ment-guru-cum-financial-journalist who recrimination typical of exhausted and spends his life watching the markets, rath- ost palaeobotanists plug away ambitious working mothers who find er than a historian who spends it burrow- Mwith little fanfare. But Molly’s years themselves “caught in the cyclone” of ing in the archives. But his book is excel- at a particular quarry have yielded some their children’s needs. Molly’s breast- lent—built on a lot of study (including time eye-opening finds. Besides countless milk invariably comes down at moments in the archives) and written in a gripping fossils that defy known records, she has of high emotion, which not only dam- style. Mr Grant is at his best when writing stumbled on a small toy soldier with a pens her bra but reminds her that she is about Bagehot’s financial journalism and tail, a Coca-Cola bottle with cockeyed also, essentially, an animal. indeed his career as a banker. His accounts font and, most thrilling of all, a Bible in Why doesn’t Molly call her beloved of the collapse of Overend Gurney, suppos- which God is female. husband, who is travelling for work, to edly the Rock of Gibraltar of Victorian fi- These novelties have turned the quiet explain what is going on? Should her nance, and of “Lombard Street”, Bagehot’s pit where she works into a buzzing desti- milk be coming in with such vigour book about that debacle, are exemplary. He nation for curious tourists and a few when her baby is eating solid foods? Such is skimpier when writing about mid-Vic- religious fanatics. Some come to deliver artistic liberties are excusable. Molly’s torian politics. “The English Constitution” threats; others send their venom by mail. leaky breasts show just how primal the receives rather less than its due, given its Molly has taken all this in her stride. But bond between parents and children can revolutionary thesis and its long-term in- when a mysterious woman arrives at be. Given the fierceness of that devotion, fluence on British constitutional thinking Molly’s home one night, while she is the potential for horror is nearly endless. and practice. alone with her two small children, every- thing starts to unravel. She is forced to Daylight on the magic confront a mother’s deepest fears. This is very much a warts-and-all portrait, “The Need” by Helen Phillips, a criti- not a hagiography. Mr Grant presents Bage- cally acclaimed but underexposed Amer- hot as a man rather than just as an editor: as ican novelist, is an enthralling book. a supplicant who forged a close relation- With its short chapters, unsettling prose ship with James Wilson, the founder of The and riveting suspense, it feels designed Economist; as a lover who successfully for binge-reading. But keep an eye on the wooed Wilson’s eldest daughter, Eliza, clock. Immersion in this novel before with perfectly crafted letters; as a husband bedtime is a recipe for sleeplessness. who ate seven meals a day (“with a snack in Part of the appeal is Ms Phillips’s the interstices”) and spent beyond his stylish mode of storytelling. She creates means; as a failed parliamentary candi- momentum with brief and often enig- date, getting barracked as he delivered lofty matic scenes, which she strips of all but speeches and even indulging in a bit of the most evocative details. The chapters bribery, despite denouncing graft in the often toggle between moments of pages of his newspaper; as an inveterate heightened drama and past scenes of leg-puller who once wrote a 213-word sen- Molly at work, which is a nicely disori- tence in praise of the contention that enting way to build tension while deliv- “short views and clear sentences” were the ering expository details. Although the Phillips, a stylish storyteller coming thing in English letters. РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS The Economist August 10th 2019 Books & arts 69

Life in New Orleans which is really only a corner store, where act of painting was seen as having been ex- Mom sent me as a kid to buy ‘liver cheese’.” hausted, he was one of the few people who Lost in the flood This tour of New Orleans stands in criti- remained dedicated” to the craft, says Kit cal contrast to the “disaster bus tours” that Messham-Muir, a contemporary at Sydney now haunt neighbourhoods flooded by Ka- College of the Arts in the 1990s. trina. “Imagine”, Ms Broom writes, “that After graduating, Mr Quilty worked as a the streets are dead quiet, and you lived on builder’s labourer and took a course in those dead quiet streets, and there is noth- women’s studies and design, then became ing left of anything you owned”—and then a television news editor, splicing together The Yellow House. By Sarah Broom. Grove tourists appear “in an air-conditioned bus packages from war zones, suburban crime- Atlantic; 376 pages; $26 snapping pictures of your personal de- scenes and natural disasters. His big break arah broom’s moving memoir does struction.” Those “yous” draw readers in, came in 2003, when a gallery in Sydney Snot belong to her alone. She shares the before the bus reminds them that they, like showed a series depicting his car, an lj To- story with her mother, Ivory Mae, and with the tourists, are really guests. rana—much loved by Australian motor- the house in New Orleans East—razed after A recurring irony in “The Yellow House” heads and first sold in 1972 (the year before Hurricane Katrina struck in 2005—in is Ivory Mae’s refusal to invite outsiders Mr Quilty was born). which Ivory Mae brought up 12 children, of into her home. Once a proud host, she grew The popular paintings gave him a wide whom the author was the “babiest”. As ashamed of the Yellow House as it aged. audience and a recurring theme—what Mr much amanuensis as protagonist, Ms “You know this house not all that comfort- Quilty describes as “the debaucherous, shit Broom weaves her memories and her able for other people,” she constantly re- side of masculinity”. The Toranas were a mother’s testimony into a personal, his- minds her daughter. The house itself may kind of autobiography, capturing “who I’ve torical and sociological study of African- no longer stand, but in her book Ms Broom been, my friends, the way I grew up”, and American life in New Orleans. proudly opens its doors. 7 “the crazy rites of passage”—cars, drugs, The house was modest, but the book’s booze—that young men go in for. “You go territory is broad. “The Yellow House” flat out, high off your face, facing the wind- ranges from Ms Broom’s grandmother’s screen, like you’re all watching a movie, childhood in the Big Easy to the Californian with this incredible danger.” Men need and Texan cities to which her siblings were help, Mr Quilty thinks, and a better form of displaced after Katrina, and her own stint initiation into adulthood, if they are “to be- working at a radio station in Burundi. It come good people”. combines the most personal details—a sis- A sense of moral duty has informed ter’s teenage lip-gloss habit, a brother’s be- much of his art. In 2011 he travelled to Af- loved bike—with profound questions: ghanistan as Australia’s official war artist. “Who has the rights to the story of a place? Afterwards he invited returning soldiers to Are those rights earned, bought, fought sit for portraits in his studio in the south- and died for?” ern highlands of New South Wales. The Ms Broom herself left both the Yellow paintings are striking images that muse on House and New Orleans, though she re- post-traumatic stress disorder and the psy- turned after Katrina. Her book reads less chological costs of combat. like an assertion of rights than a declara- In 2012 Mr Quilty visited Myuran Su- tion of love: for her mother, her siblings kumaran—one of the “Bali Nine”, a group of and their city. She adores the New Orleans young Australians convicted of smuggling of her childhood—not the tourist-filled heroin—in prison in Indonesia. Sukuma- downtown, but a majority-black, working- Art and activism ran and another man, Andrew Chan, were class community that is often overlooked, under sentence of death. Sukumaran had and which her vivid descriptions bring ar- High vis written to ask Mr Quilty’s advice about his restingly to life. In Katrina’s wake, New Or- own painting; after they met, the prisoner leans East smells like “chitlins, piss, stale painted 28 self-portraits in a fortnight. Mr water, lemon juice”. After the death of her Quilty became the public face of a cam- tall, thin, jazz-loving father, his full life paign to save the men’s lives. It failed: they was, she writes, shrunk into an obituary ADELAIDE were executed by firing squad in April 2015. An Australian artist confronts viewers comprising “one short column of news- But scores of Sukumaran’s paintings from with violence, loss and “death jackets” print, enough to fit between your pointing his time on death row have since been ex- finger and thumb.” f ben quilty, one of Australia’s most hibited across Australia. Often she combines a childhood obser- Ifamous painters, had followed the advice In Mr Quilty’s new show, one wall is cov- vation with adult awareness to disconcert- he was given as a teenager, he might have ered in paintings of life-jackets. The 12 haz- ing effect. The police department’s disre- ended up as an accountant. On a sweltering ard-orange works (one, “Fereshteh”, is pic- spect for her neighbourhood is captured in day in Adelaide at the Art Gallery of South tured) have been layered thick with paint one stark image: “Our side of Wilson Ave- Australia, he drew laughs when he dedicat- using the same impasto technique that nue, the short end, seems a no-matter place ed the first major survey of his 25-year ca- Frank Auerbach and Francis Bacon de- where police cars routinely park, women’s reer to a school careers adviser who told ployed. Each square mountain of colour is heads bobbing up and down in the driver’s him to study economics. “This one’s for a memorial to a life lost at sea. “There’s a vi- seat.” She introduces readers to an alterna- you,” he quipped. olence in the way he paints,” says Mr Mess- tive urban geography mapped around her Mr Quilty—who piles paint on his can- ham-Muir, now of Curtin University in family’s lives. “You will pass run-down vases with a cake-icing knife to make gutsy, Perth. Up close, he says, the canvases are “a apartment complexes…where growing up, large-scale works that both charm and mash of different colours and textures and my brothers made allegiances and challenge his compatriots—has followed paint so thick that you can still smell it.” enemies…you will see Natal’s Supermarket, an unusual career path. “At a time when the The series arose from a trip Mr Quilty 1 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 70 Books & arts The Economist August 10th 2019

2 made in 2016 with Richard Flanagan, a will become such a public figure that he Wales in Sydney—grapples with violence, Booker prizewinning Australian novelist, will more or less end up being viewed as a trauma and loss. Yet often his paintings to document the refugee crisis in Greece, media persona, rather than a serious art- have an endearingly witty touch. In “Joe Lebanon and Serbia. Thousands of life- ist,” says Sasha Grishin of Australian Na- Burger”, a sweetly funny ode to parenting, jackets were scattered on the shore, like tional University. Mr Quilty has duly at- he casts his infant son as a technicolour neon memento moris. Made from flimsy tracted criticism from the right—a tabloid chubby-cheeked burger bun. In his “Bud- materials that would never float, they were commentator scorned him as a “politically gie” series, the yellow and green birds re- “death jackets”, Mr Flanagan wrote; tomb- fashionable” favourite of the left—and semble the pompous busts of statesmen. stones in disguise. In Australia, which was from a handful on the left as well. “I’ve “Bottom Feeders” presents a stark-naked dispatching refugees to a legal limbo on re- been called a bleeding heart like it’s an of- Father Christmas drinking, smoking and mote islands, Mr Quilty’s paintings are a fence,” Mr Quilty says, shaking his head. peeing on a pot-plant. You need both beau- call for compassion. His show—now relocated to the Gallery ty and humour, Mr Quilty reckons, “if you Blurring the line between art and activ- of Modern Art in Brisbane, from which it want to tell stories about the darker side of ism can be risky. “There is a danger that he will move to the Art Gallery of New South the human condition”. 7 Johnson Big and basic

Why widely spoken languages have simpler grammar talin spoke Russian as a second like English or Mandarin, in which words points for communicating successfully Slanguage. The Georgian dictator of the change their form little if at all. No one over 16 rounds. (They “talked” by key- Soviet Union had a noticeable accent and knows why, but a likely culprit is the very board and were forbidden to use their is said to have mumbled his case-end- scale and ubiquity of such widely travelled native language, Dutch.) ings. The tale indicates two things. One is languages. Over time both big and small groups that learning new languages is hard, As a language spreads, more foreigners got better at making themselves un- even with a great deal of exposure. (Stalin come to learn it as adults (thanks to con- derstood, but the bigger ones did so by started learning Russian at around ten quest and trade, for example). Since lan- creating more systematic languages as and spoke it all his adult life.) The other guages are more complex than they need they interacted, with fewer idiosyncra- is that languages are more complex than to be, many of those adult learners will— sies. The researchers suppose that this is they need to be. Not having mastered all Stalin-style—ignore some of the niceties because the members of the larger Russian’s finer points didn’t keep Stalin where they can. If those newcomers have groups had fewer interactions with each from ruling the Soviet Union with a children, the children will often learn a other member; this put pressure on them murderously effective iron hand. slightly simpler version of the language to come up with clear patterns. Smaller Russian really is hard for learners, from their parents. groups could afford quirkier languages, and a casual comparison might serve the But a new study, conducted at the Max because their members got to “know” conclusion that big, prestigious lan- Planck Institute for Psycholinguistics at each other better. guages like Russian are complex. Just Nijmegen in the Netherlands, has found Neither the more systematic nor the look, after all, at their rich, technical that it is not entirely foreigners and their more idiosyncratic languages were vocabularies, and the complex industrial sloppy ways that are to blame for lan- “better”, given group size: the small and societies that they serve. guages becoming simpler. Merely being large groups communicated equally But linguists who have compared bigger was enough. The researchers, Limor well. But the work provides evidence that languages systematically are struck by Raviv, Antje Meyer and Shiri Lev-Ari, asked an idiosyncratic language is best suited the opposite conclusion. They tend to 12 groups of four strangers and 12 groups of to a small group with rich shared history. find that “big” languages—spoken by eight to invent languages to describe a As the language spreads, it needs to large numbers over a big land area—are group of moving shapes on the screen. become more predictable. actually simpler than small, isolated They were told that the goal was to rack up Taken with previous studies, the new ones. This is largely because linguists, research offers a two-part answer to why unlike laypeople, focus on grammar, not grammar rules are built—and lost. As vocabulary. Consider Berik, spoken in a groups grow, the need for systematic few villages in eastern Papua. It may not rules becomes greater; unlearnable have a word for “supernova”, but it drips in-group-speak with random variation with complex rules: a mandatory verb won’t do. But languages develop more ending tells what time of day the action rules than they need; as they are learned occurred, and another indicates the size by foreign speakers joining the group, of the direct object. Of course these some of these get stripped away. This can things can be said in English, but Berik explain why pairs of closely related requires them. Remote societies may be languages—Tajik and Persian, Icelandic materially simple; “primitive”, their and Swedish, Frisian and English—differ languages are not. in grammatical complexity. In each Systematically so: a study in 2010 of couple, the former language is both thousands of tongues found that smaller smaller and more isolated. Systematicity languages have more Berik-style gram- is required for growth. Lost complexity is matical bits and pieces attached to the cost of foreigners learning your words. By contrast, bigger ones tend to be language. It is the price of success. РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Tenders Appointments 71

Support Stronger Hong Kong – Turkey Connections

Invitation to Companies to bid for the provision of Consultancy Services for Hong Kong Economic and Trade Offi ce in Brussels (HKETO Brussels) to strengthen Hong Kong – Turkey relationship As Asia’s World City, Hong Kong maintains strong bilateral relations, in particular business, trade, economic and investment relations, with major economies around the world. Turkey is one of our key partners.

HKETO Brussels is the offi cial representation of the Hong Kong Special Administrative Region Government (HKSARG) to the European Union and 15 countries in Europe, including Turkey, to promote Hong Kong’s interests in those countries in the government, economic, social and cultural areas.

HKETO Brussels invites companies with an extensive network of contacts and are capable of working closely with key and prominent individuals, companies and organizations in Turkey in the political, business, media and academic arena to submit an Expression of Interest for provision of the following services: • advise HKETO Brussels on the strategies and actions in promoting and developing the interests of Hong Kong in Turkey; • gather information and conduct research on Turkey as requested by HKETO Brussels; • monitor media reports in Turkey relating to Hong Kong; • establish and maintain a good network and close contacts with political and opinion leaders, business community and the media in Turkey; • identify and recommend business and promotional events in Turkey for the participation by HKETO Brussels; and • provide logistics support when requested by the HKETO Brussels for government visits to Turkey. Interested Companies based in Turkey are invited to email a company profi le highlighting their capabilities in performing the aforementioned services to general@hongkong-eu. org and [email protected] in English by 1700 hours 20 September 2019 (Friday) Brussels time. Late submission will not be considered. Selected companies will be provided with a service brief with more detailed scope of services and other information and invited to submit a formal proposal.

Only shortlisted companies will be notifi ed. Companies which do not hear from HKETO Brussels by 30 November 2019 should consider their bids unsuccessful.

For further information on HKETO Brussels, please visit https://www.hongkong-eu.org/.

Courses РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 72 Economic & financial indicators The Economist August 10th 2019

Economic data

Gross domestic product Consumer prices Unemployment Current-account Budget Interest rates Currency units % change on year ago % change on year ago rate balance balance 10-yr gov't bonds change on per $ % change latest quarter* 2019† latest 2019† % % of GDP, 2019† % of GDP, 2019† latest,% year ago, bp Aug 7th on year ago United States 2.3 Q2 2.1 2.2 1.6 Jun 2.0 3.7 Jul -2.4 -4.7 1.7 -129 - China 6.2 Q2 6.6 6.2 2.7 Jun 2.9 3.6 Q2§ 0.2 -4.5 2.9 §§ -26.0 7.04 -3.0 Japan 0.9 Q1 2.2 1.0 0.7 Jun 1.0 2.3 Jun 3.6 -3.0 -0.2 -31.0 106 5.2 Britain 1.8 Q1 2.0 1.3 2.0 Jun 1.8 3.8 Apr†† -4.1 -1.6 0.6 -82.0 0.82 -6.1 Canada 1.3 Q1 0.4 1.6 2.0 Jun 2.0 5.5 Jun -2.6 -0.9 1.2 -113 1.33 -2.3 Euro area 1.1 Q2 0.8 1.2 1.1 Jul 1.3 7.5 Jun 2.9 -1.1 -0.6 -98.0 0.89 -3.4 Austria 1.4 Q1 3.8 1.3 1.6 Jun 1.8 4.5 Jun 2.1 0.1 -0.3 -98.0 0.89 -3.4 Belgium 1.2 Q2 0.8 1.2 1.4 Jul 1.8 5.6 Jun 0.1 -0.9 -0.3 -101 0.89 -3.4 France 1.3 Q2 1.0 1.2 1.1 Jul 1.2 8.7 Jun -0.9 -3.3 -0.2 -97.0 0.89 -3.4 Germany 0.7 Q1 1.7 0.8 1.7 Jul 1.6 3.1 Jun 6.5 0.7 -0.6 -98.0 0.89 -3.4 Greece 0.9 Q1 0.9 1.8 -0.3 Jun 1.0 17.6 Apr -3.0 0.1 2.0 -199 0.89 -3.4 Italy nil Q2 0.1 0.1 0.5 Jul 0.9 9.7 Jun 1.9 -2.5 1.4 -144 0.89 -3.4 Netherlands 1.7 Q1 1.9 1.6 2.5 Jul 2.6 4.2 Jun 10.1 0.7 -0.4 -92.0 0.89 -3.4 Spain 2.3 Q2 1.9 2.2 0.5 Jul 1.1 14.0 Jun 0.5 -2.2 0.2 -117 0.89 -3.4 Czech Republic 2.8 Q1 2.6 2.6 2.7 Jun 2.5 2.0 Jun‡ 0.2 0.2 1.0 -125 23.0 -3.8 Denmark 2.4 Q1 0.5 1.8 0.6 Jun 0.9 3.8 Jun 6.8 1.0 -0.5 -91.0 6.65 -3.3 Norway 2.5 Q1 -0.3 1.8 1.9 Jun 2.3 3.4 May‡‡ 7.1 6.6 1.1 -67.0 8.97 -8.6 Poland 4.7 Q1 6.1 4.0 2.9 Jul 2.0 5.3 Jun§ -0.7 -2.0 2.0 -112 3.85 -4.7 Russia 0.5 Q1 na 1.3 4.6 Jul 4.8 4.4 Jun§ 7.2 2.1 7.4 -59.0 65.5 -3.1 Sweden 1.4 Q2 -0.3 1.7 1.8 Jun 1.9 7.6 Jun§ 4.9 0.5 -0.3 -89.0 9.63 -7.4 Switzerland 1.7 Q1 2.3 1.6 0.3 Jul 0.5 2.3 Jun 9.6 0.5 -0.9 -88.0 0.97 3.1 Turkey -2.6 Q1 na -1.7 16.6 Jul 16.1 13.0 Apr§ -0.7 -2.3 15.2 -444 5.48 -4.2 Australia 1.8 Q1 1.6 2.2 1.6 Q2 1.7 5.2 Jun -0.4 0.1 1.0 -164 1.48 -8.8 Hong Kong 0.6 Q1 -1.2 1.7 3.2 Jun 2.6 2.8 Jun‡‡ 4.0 0.4 1.3 -86.0 7.84 0.1 India 5.8 Q1 4.1 6.7 3.2 Jun 3.6 7.5 Jul -1.8 -3.5 6.4 -142 70.9 -3.1 Indonesia 5.0 Q2 na 5.1 3.3 Jul 3.1 5.0 Q1§ -2.6 -1.9 7.5 -27.0 14,223 1.5 Malaysia 4.5 Q1 na 4.4 1.5 Jun 0.8 3.3 May§ 2.5 -3.5 3.5 -49.0 4.19 -2.6 Pakistan 3.3 2019** na 3.3 10.3 Jul 8.5 5.8 2018 -3.9 -7.1 13.8 ††† 376 158 -21.5 Philippines 5.5 Q2 4.1 6.0 2.4 Jul 3.6 5.1 Q2§ -2.1 -2.3 4.5 -191 52.3 1.3 Singapore 0.1 Q2 -3.4 0.9 0.6 Jun 0.6 2.2 Q2 15.8 -0.6 1.8 -70.0 1.38 -1.5 South Korea 2.1 Q2 4.4 1.9 0.6 Jul 0.8 4.0 Jun§ 4.2 0.9 1.3 -131 1,215 -7.5 Taiwan 2.4 Q2 4.7 1.7 0.4 Jul 0.5 3.7 Jun 13.0 -1.0 0.7 -18.0 31.5 -2.8 Thailand 2.8 Q1 4.1 3.3 1.0 Jul 1.2 0.9 Jun§ 7.9 -2.9 1.4 -122 30.8 7.9 Argentina -5.8 Q1 -0.9 -1.3 55.8 Jun‡ 48.7 10.1 Q1§ -2.2 -3.4 11.3 562 45.7 -40.3 Brazil 0.5 Q1 -0.6 0.8 3.4 Jun 3.8 12.0 Jun§ -0.9 -5.8 5.5 -351 3.97 -6.5 Chile 1.6 Q1 -0.1 2.6 2.3 Jun 2.3 7.1 Jun§‡‡ -2.5 -1.3 2.7 -180 718 -10.5 Colombia 2.3 Q1 nil 3.1 3.8 Jul 3.4 9.4 Jun§ -4.2 -2.5 5.9 -96.0 3,428 -15.5 Mexico -0.7 Q2 0.4 0.4 3.9 Jun 3.7 3.5 Jun -1.6 -2.5 7.4 -35.0 19.7 -6.1 Peru 2.3 Q1 -2.0 3.4 2.1 Jul 2.2 6.3 Jun§ -1.9 -2.0 5.6 64.0 3.38 -3.3 Egypt 5.7 Q2 na 5.5 9.4 Jun 11.8 8.1 Q1§ -1.2 -7.2 na nil 16.6 7.9 Israel 3.3 Q1 5.0 3.3 0.8 Jun 1.2 4.1 Jun 2.5 -4.0 1.0 -94.0 3.48 5.8 Saudi Arabia 2.4 2018 na 1.9 -1.4 Jun -1.1 5.7 Q1 3.8 -5.6 na nil 3.75 nil South Africa nil Q1 -3.2 1.0 4.5 Jun 4.8 29.0 Q2§ -3.7 -4.2 8.4 -31.0 15.1 -11.7 Source: Haver Analytics. *% change on previous quarter, annual rate. †The Economist Intelligence Unit estimate/forecast. §Not seasonally adjusted. ‡New series. **Year ending June. ††Latest 3 months. ‡‡3-month moving average. §§5-year yield. †††Dollar-denominated bonds.

Markets Commodities % change on: % change on: The Economist Index one Dec 31st index one Dec 31st commodity-price index % change on In local currency Aug 7th week 2018 Aug 7th week 2018 2005=100 Jul 30th Aug 6th* month year United States S&P 500 2,884.0 -3.2 15.0 Pakistan KSE 30,277.5 -5.2 -18.3 Dollar Index United States NAScomp 7,862.8 -3.8 18.5 Singapore STI 3,184.7 -3.5 3.8 All Items 128.7 132.7 -2.9 -7.3 China Shanghai Comp 2,768.7 -5.6 11.0 South Korea KOSPI 1,909.7 -5.7 -6.4 Food 131.8 143.2 -3.5 -3.4 China Shenzhen Comp 1,484.0 -5.6 17.0 Taiwan TWI 10,386.2 -4.0 6.8 Industrials Japan Nikkei 225 20,516.6 -4.7 2.5 Thailand SET 1,669.4 -2.5 6.7 All 125.5 121.9 -2.2 -11.6 Japan Topix 1,499.9 -4.2 0.4 Argentina MERV 40,949.3 -2.6 35.2 Non-food agriculturals 114.1 111.0 -3.8 -18.5 Britain FTSE 100 7,198.7 -5.1 7.0 Brazil BVSP 102,782.3 1.0 16.9 Metals 130.4 126.5 -1.6 -8.7 Canada S&P TSX 16,265.2 -0.9 13.6 Mexico IPC 40,432.4 -1.1 -2.9 EURO STOXX 50 3,310.0 -4.5 10.3 EGX 30 13,880.6 3.6 6.5 Sterling Index Euro area Egypt All items 192.6 198.4 -0.6 -1.3 France CAC 40 5,266.5 -4.6 11.3 Israel TA-125 1,479.3 -2.3 11.0 Germany DAX* 11,650.2 -4.4 10.3 Saudi Arabia Tadawul 8,483.0 -2.9 8.4 Euro Index Italy FTSE/MIB 20,538.9 -4.0 12.1 South Africa JSE AS 55,225.3 -2.7 4.7 All items 143.7 147.5 -2.8 -3.9 Netherlands AEX 539.6 -5.7 10.6 World, dev'd MSCI 2,114.1 -3.4 12.2 Gold Spain IBEX 35 8,746.1 -2.5 2.4 Emerging markets MSCI 972.7 -6.2 0.7 $ per oz 1,428.8 1,473.7 5.5 21.6 Poland WIG 56,625.2 -5.1 -1.8 RTS, $ terms 1,284.9 -5.5 20.5 West Texas Intermediate Russia $ per barrel 58.1 53.6 -7.3 -22.5 Switzerland SMI 9,534.0 -3.9 13.1 US corporate bonds, spread over Treasuries Turkey BIST 98,056.4 -3.9 7.4 Dec 31st Sources: CME Group; Cotlook; Darmenn & Curl; Datastream from Refinitiv; FT; ICCO; ICO; ISO; Live Rice Index; LME; NZ Wool Services; Australia All Ord. 6,588.5 -4.5 15.4 Basis points latest 2018 Thompson Lloyd & Ewart; Urner Barry; WSJ. *Provisional. Hong Kong Hang Seng 25,997.0 -6.4 0.6 Investment grade 164 190 India BSE 36,690.5 -2.1 1.7 High-yield 530 571 IDX 6,204.2 -2.9 0.2 Indonesia Sources: Datastream from Refinitiv; Standard & Poor's Global Fixed For more countries and additional data, visit Malaysia KLSE 1,604.7 -1.8 -5.1 Income Research. *Total return index. Economist.com/indicators РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS Graphic detail Tech titans The Economist August 10th 2019 73

Today’s biggest tech firms have surpassed their predecessors’ peak

US technology companies Dotcom bubble Share of total US stockmarket value, % 30

25

20

15

Facebook 10 Top-five tech firms in each month Alphabet 5 Cisco Apple Intel IBM Amazon

Microsoft 0 1990 95 2000 05 10 15 19*

Top-five technology companies Share of total, % US non-financial corporate profits R&D spending among S&P 500 firms US advertising revenue Federal lobbying spending 12 40 40 2.0 Facebook Facebook 9 30 30 1.5

6 20 20 Alphabet 1.0

3 10 10 0.5 Apple Amazon Alphabet Amazon 0 Microsoft 0 0 0 2010 12 14 16 18 19† 2010 12 14 16 18 19† 2010 12 14 16 18 19‡ 2010 12 14 16 18 19§ Sources: Datastream from Refinitiv; Bloomberg; BEA; eMarketer; Open Secrets; The Economist *At July 31st †To Q2 ‡Forecast §To Q1

bubble, the industry is more concentrated $100bn in cash (and more in stock) to buy Exalted valley today: Microsoft, Amazon, Apple, Alphabet would-be rivals. Partly as a result, the num- (Google’s parent) and Facebook represent ber of listed American firms worth at least half of its market capitalisation. The pre- $1bn that produce software or hardware vailing concern is not that tech firms are has been flat since 2000. too flimsy to justify their valuations, but The public has a love-hate relationship that their position is too powerful. with big tech. Amazon delivers goods America’s technology giants look more The lofty prices for the big five rest on cheaply and makes only a slim margin. entrenched than ever before strong fundamentals. In 2010, they made Studies suggest that many Americans he tech wobble of 2018 has turned out 4% of the pre-tax profits of non-financial would pay thousands of dollars a year rath- Tto be short-lived. In the final three firms in America; that figure is now 12%. er than forfeit access to the digital services months of last year, American technology Their valuations imply that investors ex- they get free. As a result, advertisers still shares dropped by 16%. Since then, how- pect earnings to grow fast. They have good throw mountains of money at tech firms in ever, the biggest firms, including Apple reason to be bullish, because today’s giants order to get access to their users. In 2019, and Facebook, have come roaring back, are protected by high barriers to entry. one-third of the $240bn spent on advertis- with their stock prices today sitting near One element of this is that the big tech ing in America will be with two firms, Face- record highs. Meanwhile a parade of small- firms are spending heavily on innovation book and Google. er digital companies have rushed to float to try to ensure they remain at the cutting Nonetheless, the spectre of big tech their shares, including Uber and Slack. edge. In 2010 the big five tech companies firms abusing their troves of user data has Airbnb could be next. All told, listed tech- accounted for 10% of the s&p 500’s total sullied their image. In a new survey by Pew, nology firms make up more than a quarter spending on research and development. a pollster, 33% of Americans say that tech of the value of America’s stockmarkets. Today, their share is 30%. companies have a negative effect on soci- The last time tech companies were so The big tech firms have also been keen ety, twice the share in 2015. In July the De- important was back in 2000, when they to gobble up potential rivals. When Face- partment of Justice announced an anti- were briefly worth a third of the value of all book was young, it rejected myriad acquisi- trust review of the industry’s leading firms. listed equities in America. Turmoil ensued tion offers, but it is now a predator, not If you type “Should Google…” into the firm’s soon after, with share prices in the sector prey, paying $19bn for WhatsApp in 2014. own search bar, the first autocomplete re- falling by 66%. Compared with the dotcom Since 2010, the big five have spent a net sponse is “be broken up”. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS 74 Obituary Sutopo Purwo Nugroho The Economist August 10th 2019

Indonesians barely knew what they faced. A poll of his many Twit- ter followers revealed that 86% had never had disaster training. So first of all he provided clarity, turning data from monitors on the ground into clear statements to the press. There were plenty of those, and 500 press releases in 2018 alone. Then he did some edu- cating. He filled the bnpb building with dioramas, mud-crusted relics from landslides, notices tipped sideways and backdrops of devastation into which visitors could insert themselves, as rescu- ers, for selfies. (That might seem silly, but he liked to pose in them himself, smiling a bit self-consciously; it all helped to show schoolchildren, in particular, what being caught up in a disaster was like.) He shrugged off the occasional government grumble about being “too naughty”. After all, before he took the job he had already publicised the fact that cracks in a dam were caused by offi- cial negligence. They knew he would be a handful. Social media, though, was his trump card. Almost all Indone- sians now had mobile phones. He ran seven WhatsApp groups to exchange data with monitors and journalists, who could always get “Pak Topo” when they needed him, and he used Twitter to keep the public up to speed. Among his posts of good meals, get-togeth- ers, his spoiled cat Mozza and a gecko licking his toothbrush, he tweeted warnings. “Pyroclastic material from Mount Karangetang- …can reach 700-1,200 degrees centigrade. Trust me when I say, don’t touch it.” “Celebrating Eid on Mount Bromo is safe. As long as you are not within 1km of the crater…its charms are waiting for you.” Expanding his brief, he urged people to clean their gutters, tweeting a picture of a python being pulled from a drain: “Don’t Under the volcanoes just write ‘No snakes’. Snakes can’t read.” He also told the young to work hard at school, as he had, getting over his hang-up that he was poor and ugly with diligence and lots of hair oil. For those who wanted them, he tweeted challenging scientific facts: diagrams of volcanoes changing shape before they erupted, and a long thread about volcanic mud. He was not a volcanologist, Sutopo Purwo Nugroho (“Pak Topo”), Indonesia’s disaster leaving that job to academic monitors in airless sheds at the foot of spokesman, died on July 7th, aged 49 uneasy mountains; his training was in hydrology, and he had wast- hree times the government asked him and he turned the job ed many years at another agency trying to make rain. But he did Tdown, not wanting to become a mouthpiece for them; but in spend most of his time at the bnpb staring at wall screens where the end they pressed him, and in 2010 Sutopo Purwo Nugroho be- white lights flashed on the dozens of volcanoes that were active or came the new spokesman for Indonesia’s Disaster Mitigation might become so (a good test for presidential candidates, he Agency (bnpb). Almost his first job was to persuade 350,000 peo- mused once, would be to try to name them all), and leaping to his ple to move away from Mount Merapi on the island of Java. The ever-buzzing phone. He needed to watch both the earth moving great, stately, active volcano had been monitored for a long time. and fake news accumulating, like steam, in the Twittersphere. People believed it hosted a sultanate of sometimes peevish spirits Here, he worked fast. Incipient panics got short shrift: “No tsu- who had to be soothed, not shunned, when they were angry. His nami seen in Banggai. Please don’t spread hoaxes.” Fake images job was to persuade the locals to forget that, and just leave. were denounced. (“This eruption is in South America. Ignore and He gave the warning late on October 24th. By the evening of Oc- don’t spread.”) Talk of “portents” was firmly shot down. (“The tober 25th, when the mountain blew its top, the bnpb had overseen mountain peak is clouded with altocumulus lenticularis…due to a the evacuation of almost everyone. (The tight time-lapse was ideal; whirlwind at the top…No connection with mysticism or politics if he’d waited longer, the evacuees would have started to wander ahead of the election.”) As a result, he helped Indonesians feel saf- back.) He was there when grey ash started falling on the heads of er. Jokowi, the president, publicly praised him, which was almost the elderly villagers he was leading out. The sight made him cry. as good a moment as when he at last met the singer Raisa, on whom Worse, though, was the fact that more than 350 people ignored his he had such a crush that he included her Twitter handle in more warnings, preferring to stay on the right side of the spirits. than 90 of his disaster tweets. He claimed his only motive was to Before he arrived at the agency, forecasts of natural disasters get them retweeted to her 8m followers. Of course! were a fairly random occurrence. Often they were missed, or the With all this whirling round him, he was also cheerfully facing government panicked without reason, dragging along a public disaster of another sort. In 2018 he was diagnosed with Stage 4 lung panicked by hoaxes posted online. Indonesia was a country of cancer, though he had never smoked. He could not have foreseen 17,000 islands, perched on the “Ring of Fire” at the edge of the Pa- it; Nature was unpredictable. Science helped him understand it, cific, with 127 active volcanoes. They could erupt at any time, and but could not cure it. Allah had planned it, just as He had planned the same sliding plates unleashed earthquakes, landslides and that others should die in earthquakes and tsunamis. Many Indone- tsunamis, adding up to more than 2,300 emergencies a year. As his sians, he had discovered, found it more comforting to think that job went on, the tally got worse: 2018 was the deadliest for natural way. So, after the first cruel shock, did he. His tweets of destroyed disasters in over a decade, with more than 4,600 people killed. Yet places now included mri scans of his lungs. Among the 350 people he had not been able to save from Merapi was the guardian of the mountain. Slowly, his house had filled up Correction: Our obituary of Robert Morgenthau (August 3rd) stated that the Bank of Credit and Commerce International lost $15bn. This was an estimate at with grey ash. Before the rest of the villagers made their way down the time of the bank’s indictment in 1991. The known figure to date is $8.4bn. to safety, he simply told them his time had come to go. 7 РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS