December 14th 2024

The world this week

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The world this week
Politics
Business
The weekly cartoon
This week’s cover
The world this week

Politics
December 12th 2024

After 13 years of civil war and a long period of stalemate, Syrian rebels
swept into Damascus, bringing an end to the Assad regime that has ruled
Syria for 53 years. Bashar al-Assad, who had been president since 2000,
fled to Moscow. Social media depicted scenes of jubilation in the capital.
The rebels were led by Hayat Tahrir al-Sham, an Islamist group. One of its
leaders, Muhammad al-Bashir, is to head a caretaker government until
March. The fall of the Assad regime is a huge blow to Iran, which is also
contending with the dismantling of Hizbullah, its proxy in Lebanon, by
Israel. And also to Russia. Its main military force in the Mediterranean is
based at Syrian ports.

Israel took advantage of the situation in Syria to advance its defences. The
Israeli air force launched strikes throughout Syria and destroyed storage
plants for chemical weapons, which the Assad regime has used on its own
people. Israeli tanks rolled into a buffer zone in the Golan Heights. And
Israeli warships bombed naval ships in Syria’s ports of Al-Bayda and
Latakia. The government said its aim was to “destroy strategic capabilities”
that could threaten Israel.

The fall of the Assad regime threw the future of Syrian refugees in Europe
into doubt. Several countries, including Germany, announced that they
would not process any more applications from Syrians until the situation
became clearer. Germany has taken in 1m Syrians. Austria’s interior minister
said asylum applications would be reviewed and his department would
“prepare an orderly return and deportation programme”. Turkey, where 3m
Syrians live, said it would work towards their “safe and voluntary return
home”.

Having his day in court

Binyamin Netanyahu testified for the first time at his trial for corruption.
The Israeli prime minister said the charges against him were “absurd” and
the result of a witch-hunt conducted by Israel’s left-wing media.

John Mahama won a presidential election in Ghana, making it one of

several African countries this year to boot out an incumbent. He promised to
“reset Ghana”, which is reeling from its worst economic crisis in a
generation. Some supporters of the president-elect were arrested for
attacking state offices and ransacking buildings, in an attempt to oust
officials working under the current government.

As he struggled to announce a new prime minister, Emmanuel Macron was

able to take his mind off the political turmoil in France by hosting an event
to mark the ceremonial reopening of Notre Dame in Paris. The cathedral’s
renovation is a triumph, completed just five years after a fire caused
extensive damage to the building. Around 50 world leaders attended the
ceremony, including Donald Trump.
In Paris Mr Trump met Volodymyr Zelensky, and later called for an
immediate ceasefire in the war in Ukraine to end the “madness”. The next
day the Ukrainian president said that a diplomatic resolution made sense,
and that he had discussed freezing the current lines of control with Mr
Trump.

America’s Treasury Department transferred $20bn to a fund at the World

Bank that Ukraine can use for non-military spending. The money comes
from frozen Russian assets and forms part of the G7’s $50bn aid package
announced in June. The Treasury said the aim is to make Russia
“increasingly bear the costs of its illegal war”.

Amid allegations of Russian interference in the country’s presidential

election, Romania’s highest court annulled the process shortly before the
run-off was due to be held. The winner of the first round, Calin Georgescu,
hails from the pro-Russian hard right and was a rank outsider before the
vote. The court ruled that the whole process must start again. A new election
will take place in 2025.

Hundreds of farmers from across Britain took their tractors on a slow drive
through London to protest against the government’s plans to end an
exemption on inheritance tax on farms with assets over £1m ($1.3m). The
tractors started off from Whitehall, causing gridlock in central London.

South Korea’s president, Yoon Suk Yeol, was placed under formal
investigation for his brief imposition of martial law. MPs fell short of the votes
needed to impeach Mr Yoon but his party delegated his authority to the
prime minister, leading to confusion about who was leading the country. Mr
Yoon has apologised for his actions, but has vowed to “fight until the end”.
The justice ministry has told him to remain in South Korea.

China sent dozens of naval and coastguard vessels into waters stretching
from Japan to the South China Sea. It was the country’s largest maritime
operation since 1996, said Taiwan, which China claims. The drills appeared
to be an expression of anger over visits by Taiwan’s president, Lai Ching-te,
to Hawaii and the American territory of Guam.

India’s opposition parties submitted a motion to impeach the vice-president,

the first-ever attempt to remove someone from the country’s second-highest
office. The opposition claims that Jagdeep Dhankhar has been “extremely
biased” as chairman of the upper house of parliament and acted like a
spokesman for the ruling Bharatiya Janata Party. There are not enough votes
to remove him, but the motion will worsen the already fraught relationship
between the government and opposing parties.

President Luiz Inácio Lula da Silva of Brazil underwent an emergency brain

operation to drain internal bleeding. The hematoma is linked to a minor
haemorrhage that was caused by the president slipping in a bathroom in
October and hitting his head. After the operation Mr da Silva had another
medical procedure to prevent further bleeding in his brain. He is still
expected to return to work soon.

At least 180 Haitians were murdered in Port-au-Prince by a gang whose

leader believed they had used witchcraft to make his son sick. The victims
were mostly elderly people. The UN says at least 5,000 people have been
killed in Haiti this year. An international police force is ill-equipped to quell
the violence.

The crypto-country
In what would be a boost for Nayib Bukele, El Salvador’s president, the
government was reported to be inching closer to agreeing a deal with the IMF
for a $1.3bn loan programme. The Central American country will allay the
IMF’s concerns about bitcoin, the sticking point for a deal, by making it

voluntary instead of compulsory legal tender for local businesses.

This article was downloaded by zlibrary from https://www.economist.com/the-world-this-week/2024/12/12/politics
The world this week

Business
December 12th 2024

Donald Trump appointed Andrew Ferguson as the next chairman of the

Federal Trade Commission, which will bring an end to Lina Khan’s
controversial tenure in the job. Mr Ferguson is an FTC commissioner. After his
promotion he said the regulator would “end big tech’s vendetta against
competition and free speech”. Mr Trump also nominated Mark Meador, an
antitrust lawyer, as a commissioner, which will give the Republicans a
majority on the FTC.

At the checkout
Meanwhile, a judge imposed an injunction against the merger of Kroger and
Albertsons, in an antitrust case brought by the FTC and eight states. A judge in
Washington state also issued an injunction in a separate trial. With the
supermarket chains’ hopes of combining in ruins, Albertsons sued Kroger
for failing to secure the merger.

An American appeals court rejected TikTok’s attempt to overturn the Biden

administration’s order to ban it. The government fears the Chinese
government uses the app to collect data. The court said the order was
constitutional; TikTok had claimed that it violated free speech. Mr Trump,
who tried to ban TikTok in his first administration, has said he will now try
to save it.

In another blow to the DEI (diversity, equity and inclusion) movement, an

appeals court struck down Nasdaq’s rules for setting racial and gender
targets for the boardrooms of companies that list on the exchange. The
Securities and Exchange Commission, which approved the rules, had
“intruded into territory far outside” its domain, the court said.

SpaceX has been valued at $350bn, after an increase in the price of shares
that are owned by investors and employees. Elon Musk’s rocket company is
now the world’s most-valuable start up, surpassing Byte Dance, the parent
company of TikTok, which was recently valued at $300bn.

Rupert Murdoch lost his legal attempt to change the terms of the Murdoch
family trust so that his eldest son, Lachlan, would control his media empire
when he dies. The court reportedly found that Mr Murdoch had acted in
“bad faith” in trying to amend the trust. Three of his other children,
including his estranged son, James, stood to lose their influence. The
siblings apparently started discussing the matter in 2023 following an
episode of “Succession”, in which the head of a family business dies.

Police charged Luigi Mangione, a software engineer with an Ivy League

education, with the murder of Brian Thompson, the chief executive of
UnitedHealthcare. Mr Mangione was caught carrying a document
expressing “ill will” towards corporations, describing health-insurance
companies as parasites.

General Motors overhauled its Cruise autonomous-driving project and

scrapped its development work in robotaxis “given the considerable time
and resources that would be needed to scale the business”. It will instead
focus on self-driving systems for personal vehicles, which GM says it is “fully
committed to”.

Following the success of its first fully electric sedan car, Xiaomi, a Chinese
tech company better known for its smartphones, announced that it would
launch its first sport-utility vehicle next June or July. The YU7 will run on
batteries supplied by CATL, a Chinese manufacturer that has just signed a deal
to build a $4.3bn battery plant in Spain in a joint venture with Stellantis.

Google unveiled a new quantum-computing chip that can hold a stable

state for up to an hour, an important milestone in building a useful quantum
computer, though that remains some way off yet.

The European Central Bank cut interest rates by another quarter of a

percentage point, which takes its deposit facility to 3%. The ECB’s main focus
now is avoiding a recession in the euro zone.

America’s annual rate of inflation rose slightly in November to 2.7%. The

core inflation rate, stripping out energy and food prices, held for the third
month in a row at 3.3%.

Nippon Life, a Japanese insurance company, struck a deal to acquire

Resolution Life, a privately held global insurer, for $10.6bn. And Aviva is
to take over Direct Line in a £3.6bn ($4.6bn) transaction. The combined
company will hold a fifth of Britain’s motor- and home-insurance market.

Omnicom agreed to buy Interpublic, in a $13bn deal that creates the

world’s biggest advertising agency by revenue. Omnicom said the combined
company would accelerate “significant opportunities created by new
technologies”, namely artificial intelligence, and give it better leverage to
counter the power of the tech giants in digital advertising.

Wildest dreams
Taylor Swift’s 18-month Eras tour came to end. Selling 10m tickets for 149
shows the tour’s revenues of $2.1bn are by far the most for a concert series.
Coldplay’s Music of the Spheres concerts (there have been 177 so far) are
the next most lucrative, taking in over $1bn, followed by Elton John’s
farewell tour, which raked in $939m. The Rocket Man’s final tour is the
subject of a new documentary film from Disney titled “Never Too Late”, or
Never Too Old, as some call it.■
This article was downloaded by zlibrary from https://www.economist.com/the-world-this-week/2024/12/12/business
The world this week

The weekly cartoon

December 12th 2024

Dig deeper into the subject of this week’s cartoon:

Leader: How the new Syria might succeed or fail

Briefing: Syria has exchanged a vile dictator for an uncertain future
Briefing: The Assad regime’s fall voids many of the Middle East’s old
certainties
Europe: Syrian rebels have dealt a blow to Vladimir Putin’s naval ambitions

The editorial cartoon appears weekly in The Economist. You can see last
week’s here.
This article was downloaded by zlibrary from https://www.economist.com/the-world-this-week/2024/12/12/the-weekly-cartoon
The world this week | The Economist

This week’s cover

How we saw the world
December 12th 2024

This week our global cover examines Syria’s future after the fall of Bashar
al-Assad. Now that the dictator has fled to Moscow, the question is where
Syria’s liberation will lead. The country is a mosaic of people and faiths;
they have never lived side-by-side in a stable democracy. Moreover Syria’s
new powerbrokers are hardly men of peace. Still, despair is not a policy. The
fall of Assad is a repudiation of Iran and Russia. And the jubilation in Syria
this week suggests a nation exhausted by war could yet choose the long road
towards peace. Much will go wrong. But before writing off the future, pause
for a moment and share Syrians’ joy at bringing down a tyrannical dynasty.

Leader: How the new Syria might succeed or fail

Briefing: Syria has exchanged a vile dictator for an uncertain future
Briefing: The Assad regime’s fall voids many of the Middle East’s old
certainties
This article was downloaded by zlibrary from https://www.economist.com/the-world-this-week/2024/12/12/this-weeks-cover
Leaders
How the new Syria might succeed or fail
What Spain can teach the rest of Europe
America’s searing market rally brings new risks
Multilateral institutions are turning away from the poorest countries
Can you read as well as a ten-year-old?
Leaders | The end of the house of Assad

How the new Syria might succeed or fail

Much will go wrong. But for now, celebrate a tyrant’s fall
December 12th 2024

AFTER 53 YEARS in power, the house of Assad left behind nothing but
ruin, corruption and misery. As rebels advanced into Damascus on
December 8th, the regime’s army melted into the air—it had run out of
reasons to fight for Bashar al-Assad. Later, Syrians impoverished by his rule
gawped at his abandoned palaces. Broken people emerged blinking from his
prisons; some could no longer remember their own names.

Now that Mr Assad has fled to Moscow, the question is where will liberation
lead. In a part of the world plagued by ethnic violence and religious strife,
many fear the worst. The Arab spring in 2010-12 taught that countries which
topple their dictators often end up being fought over or dominated by men
who are no less despotic. That is all the more reason to wish and work for
something better in Syria.
There is no denying that many forces are conspiring to drag the country into
further bloodshed. Syria is a mosaic of peoples and faiths carved out of the
Ottoman empire. They have never lived side by side in a stable democracy.
The Assads belong to the Alawite minority, which makes up about 10-15%
of the population. For decades, they imposed a broadly secular settlement on
Syrian society using violence.

Syria’s people have many reasons to seek vengeance. After 13 years of civil
war in a country crammed with weapons, some factions will want to settle
scores; so will some bad and dangerous men just released from prison.
Under the Assads’ henchmen, many of them Alawite and Shia, Sunnis
suffered acts of heinous cruelty, including being gassed by chlorine and a
nerve agent.

Syria’s new powerbrokers are hardly men of peace. Take the dominant
faction in the recent advance. Until 2016 Hayat Tahrir al-Sham (HTS) was
known as Jabhat al-Nusra, the Syrian branch of al-Qaeda. Its founder,
Ahmad al-Sharaa, had fought the Americans as a member of Islamic State
(IS) in Iraq under the nom de guerre Abu Muhammad al-Jolani. HTS and Mr
Sharaa swear they have left those days behind. If, amid the chaos, such
groups set out to impose rigid Islamic rule, foreign countries, possibly
including the United Arab Emirates, will bankroll other groups to take up
arms against them.

Indeed, some of those foreign countries are already fighting in Syria to

advance their own interests. In the north, Turkey’s proxies are clashing with
Kurds who want autonomous rule. In central Syria, America is bombing IS
camps, for fear the group will rekindle its jihad. Israel has destroyed military
equipment and chemical weapons—and encroached deeper into the Golan
Heights, occupying more Syrian territory.

With so much strife, no wonder many share a fatalistic belief that Syria is
doomed to collapse into civil war once again. If it does so, they rightly warn,
it will export refugees, jihadists and instability beyond the Middle East and
into Europe.

But despair is not a policy. At the least, the Assads’ fall is a repudiation of
Iran and Russia, two stokers of global chaos. And witness the jubilation in
Syria this week: a nation exhausted by war could yet choose the long road
towards peace.

The essential condition for Syria to be stable is that it needs a tolerant and
inclusive government. The hard-learned lesson from the years of war is that
no single group can dominate without resorting to repression. Even most of
the Sunni majority do not want to be ruled by fundamentalists.

The daunting task of attempting to forge a new political settlement out of a

fractured country could well fall to Mr Sharaa. As ruler of Idlib, a rebel
province in the north, he ran a competent government that nodded at
religious pluralism and oversaw a successful economy. However, although
he has distanced himself from more radical groups and courted the West, Mr
Sharaa has become increasingly autocratic, and had taken to purging rivals
and imprisoning opponents.

His interim national government, announced this week, is exclusively made

up of HTS loyalists. Because it is laying claim to a dysfunctional state,
competence and order will go a long way. Yet if Mr Sharaa attempts to run
Syria permanently as a giant Idlib—a Sunni fief dominated by HTS—he will
fail. Syria will remain divided between feuding warlords, many of them
mini-dictators in their own right.

Syria will also fail if it becomes an arena for the rivalries of outside powers.
It is more likely to prosper if it is left alone. And only if it prospers will
millions of refugees choose to return home. That is especially important for
Turkey, which is weary of the 3m Syrians living there. As a backer of HTS, it
will be hoping for contracts in a thriving country. Turkey’s president, Recep
Tayyip Erdogan, should also understand that the best way to weaken calls
for Kurdish self-rule is to create a Syria where the Kurds and other
minorities have a voice.

The world may not like HTS, but to sabotage the creation of a stable
government would risk the poison spreading to Iraq, Jordan and Lebanon.
America and Saudi Arabia should therefore prevail upon Israel, Turkey and
the UAE not to ruin Syria’s chances. If Mr Sharaa emerges as a plausible
national leader, the West should be prepared to speedily remove its
designation of HTS as a terrorist group.
The new Syria has one great gift: it can be rid of Iran and Russia. They spent
tens of billions of dollars to keep Mr Assad in power, but the tyrants in
Tehran and Moscow proved no more able to sustain despotism in a country
that had rejected its despot than the West was able to sustain democracy in
Iraq and Afghanistan. Russia has failed to realise its imperial ambitions—a
message that will echo in the Caucasus and Central Asia. In little over a
year, Iran has seen its proxies defeated in Gaza, Lebanon and now Syria. Its
benighted influence in the Middle East has shrunk dramatically, possibly
opening space for negotiations with the incoming Trump administration.

Much will go wrong in a traumatised place like Syria. The effort to rebuild
the country is bound to entail a struggle for influence. Its strongmen will
need reserves of courage, foresight and wisdom that they have yet to reveal.
But before writing off the future, pause for a moment and share Syrians’ joy
at bringing down a tyrannical dynasty. ■

For subscribers only: to see how we design each week’s cover, sign up to our
weekly Cover Story newsletter.
This article was downloaded by zlibrary from https://www.economist.com/leaders/2024/12/12/how-the-new-syria-might-succeed-or-
fail
Leaders | Spanish lessons

What Spain can teach the rest of Europe

Our number-crunching suggests it was the best-performing rich economy
in 2024
December 12th 2024

A DOZEN YEARS ago Spain was a byword for economic failure. The country’s
government and banks appeared to be locked in a death spiral and depended
on bail-outs. Young people were leaving the country or protesting at their
lack of opportunities. Homes lay half-built and airports abandoned, relics of
a burst construction bubble.

How that has changed. By our reckoning, the country is on course to be the
best-performing rich-world economy of 2024 across a range of measures
including GDP growth, inflation, unemployment, fiscal policy and the
performance of the stockmarket. Both overall economic growth and the pace
of job creation are running faster than in America, which has been the envy
of the rich world.

Greece and Ireland, which were also crisis-stricken a decade ago, have fared
well in 2024, too. So has Denmark, where the economy has been boosted by
the success of Novo Nordisk’s anti-obesity drugs. But it is Spain that offers
the best rejoinder to those who say Europe is doomed to stagnation. Its
economy is reaping the reward of past reforms. That offers lessons for the
rest of the continent, but should also serve as a warning for Spanish
policymakers today.

One lesson is to focus on services and not fetishise manufacturing. Although

industrial production has not fallen as fast in Spain as in Germany, partly
thanks to lower energy costs, it has still stagnated. But tourism has bounced
back from its pandemic low, and the country is moving up the value chain,
increasingly exporting consulting services and technological know-how as
well as sun and sangría. Non-tourism services have risen from around 5.5%
of GDP before the pandemic to between 7-8% now, says BBVA, a bank.

Another lesson is to stay open. Whereas young people once left Spain in
search of opportunities, now they arrive instead. Since 2019 the country’s
foreign-born workforce has risen by around 1.2m, mostly from Latin
America. Many of these migrants are in low-paid, low-skilled employment,
meaning that though the economy is 7% bigger than in 2019, it is only 3%
bigger after adjusting for population growth. Yet that is still better than in
countries such as Britain and Canada, which have seen similar immigration
booms, but a decline in GDP per person.

Spain has also welcomed investment from Chinese firms. On December

10th Stellantis, a carmaker, and CATL, a Chinese battery-maker, said they
would build a new battery factory in Zaragoza. (Stellantis’s biggest
shareholder, Exor, part-owns The Economist’s parent company.) Chery
International, a Chinese carmaker, has chosen Barcelona as the site for its
first European manufacturing plant.

Most important, Spain shows that structural reforms bring long-term

rewards. Much of its recent success reflects decisions after the financial
crisis to reform its banks and labour market. The financial sector has
consolidated, and labour-market reforms have made it easier to renegotiate
contracts and encouraged bosses to take on more permanent staff. A package
of measures aiming to boost renewables, including abolishing the “sun tax”
that levied additional fees on solar power, has helped green energy boom.

Still, Spain must not rest easy. Tourism and immigration are bidding up
house prices; investment and productivity growth remain elusive. An
unwieldy and fragile coalition government is going in the wrong direction. It
is unable to pass the further reforms needed to boost long-term growth,
including in education and services. It is embracing fiddly regulations,
driving up costs for businesses. It will need to find money to increase
defence spending which, at just 1.3% of GDP, is much too low.

Spain shows that European economies can overcome seemingly

insurmountable challenges. It must take care that it does not start to illustrate
the danger of standing still. ■

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which brings together the best of our leaders, columns, guest essays and
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europe
Leaders | Artificial exuberance

America’s searing market rally brings new risks

Financial innovation is just as much to blame as the technological sort
December 11th 2024

SINCE AMERICA elected Donald Trump as president on November 5th,

the value of its listed firms has increased by $4.2trn, more than the entire
worth of London’s stockmarket. The S&P 500 is up by nearly 30% this year.
At 23 times its forward earnings, the index has rarely been so highly rated
by investors. Nor, in recent years, have its constituents been able to borrow
more cheaply. The cost for risky companies of raising funds is at its lowest
relative to Treasury bonds since the spring of 2007. Everywhere you look,
there are signs of exuberance. This month the price of bitcoin reached
$100,000. And all this is happening despite positive real interest rates.

What is going on? A familiar part of the explanation is that American

technological innovation has made investors giddy. No two businessmen
exemplify the boom better than Jensen Huang, whose firm sells artificial-
intelligence (AI) chips, and Elon Musk, who makes electric vehicles and
rockets, and will be part of Mr Trump’s administration. Their two firms,
Nvidia and Tesla, are part of the “Magnificent Seven” which now account
for a third of the S&P 500’s market value and a quarter of its profits—an
extraordinary degree of concentration.

Less remarked upon, however, is the wave of financial innovation that is

under way, and which brings new risks. The Schumpeterian urge burns as
hot among the country’s financial engineers as it does for those who build
real things. Exchange-traded funds (ETFs), for instance, have accelerated their
decades-long rise. Those listed in America now manage $11trn-worth of
assets, and come in increasingly speculative forms. Investors can now buy
ETFs that provide leveraged exposure to Nvidia and Tesla—or even
MicroStrategy, a software firm raising billions to purchase bitcoin, whose
share price has shot up by around 500% this year.

The structural changes taking place in private markets are no less dramatic.
On average, share prices in the three biggest private-markets firms have
risen by more than those of the Magnificent Seven this year. Private-credit
providers are nosing into lending markets once dominated by banks, often
funding investments with life-insurance policies. A Cambrian explosion of
products for individual investors is under way.

Their architects are not bankers. Quant firms such as Jane Street are minting
fortunes making markets in ETFs. The popularity of such low-cost investment
products has squeezed active portfolio managers; survivors have migrated to
huge multi-manager hedge funds such as Citadel and Millennium.
BlackRock, dominant in public markets, is targeting private ones: this month
it agreed to buy HPS, a lender. Apollo, a private-markets firm with a big
insurance arm, is moving the other way. It plans to launch a private-credit ETF.

Investors buying the most speculative new products are likely to end up
disappointed. Firms consolidating the private-credit industry today risk
doing so at the top of the market.

What matters more is the risk this rapid innovation poses to the broader
financial system. Regulators face at least a dozen growing non-bank
institutions which on the basis of their size, novelty, opacity and
interconnectedness may be deemed systemically important. Some of these
companies may indeed efficiently shift risk away from the banking system,
which is always vulnerable to runs by depositors. But deciding which of
them strengthen the system in this way, and which pose new, unacceptable
and poorly understood threats, is the most urgent question in financial
regulation today.

That may not be a priority for Mr Trump, whose interest in regulation

appears to centre on lifting rules for the crypto industry (see Buttonwood).
Yet today’s sky-high asset prices lend the task urgency. Markets show signs
of becoming more fragile. In August the VIX, a measure of stockmarket
volatility, recorded its biggest-ever one-day spike as hedge funds unwound
highly leveraged currency trades. Equity investors react more and faster to
company earnings than they used to. In debt markets, reports from business-
development companies, a type of investment vehicle, indicate plenty of
sloppy lending in private credit.

Some investors acknowledge that returns in years to come may be lower.

But many are too sanguine about the risk of a market crash. Although
volatility has returned to normal and default expectations are benign, minds
could change quickly. Imagine that one of America’s tech champions
suddenly issues a gloomy outlook and that financial innovators also turn out
to have misunderstood the risk contained in their new products. Markets
would be falling from a very great height. ■

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which brings together the best of our leaders, columns, guest essays and
reader correspondence.
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new-risks
Leaders | Abandonment anxiety

Multilateral institutions are turning away from the

poorest countries
Even bail-outs are getting expensive
December 12th 2024

For 75 YEARS the World Bank has been one of the developing world’s main
sources of cheap finance. Its aid arm, the International Development
Association (IDA), distributes roughly $30bn a year to 78 of the poorest
countries. On December 6th the fund was topped up by $100bn for three
years—an amount touted by Ajay Banga, the bank’s president, as its biggest-
ever replenishment. But the fanfare disguises a sad truth. The world’s
multilateral institutions are turning away from its poorest countries.

Mr Banga’s announcement left out some important details. Because most

donor countries are tightening their belts, and the few small increases in
contributions have been eroded by a strong dollar, the bank will have to
borrow the extra money on financial markets instead. Those borrowing costs
will, however, eventually be passed on.

The IDA provides help to countries that range from large middle-income states,
such as Bangladesh and Kenya, to Niger, where half the population is in
extreme poverty. It offers countries access to finance through a mix of cheap
loans and grants (which do not need to be repaid). Because the bank itself is
borrowing on the financial markets, and because it is encouraging a shift
away from grants, the concessions that the poorest countries receive are
becoming less generous.

The IDA illustrates a troubling trend in international finance. The bank is

seeking a bigger pot of money, at a higher price, in order to help countries
combat debt distress, as well as to fight climate change. That delights rich
countries, which want their aid dollars to help cut more emissions. But it
will eventually hurt the neediest, because the poorest cannot afford to
borrow as much as they did.

Similarly, in October the IMF said it would reduce surcharges, the extra
interest that is meant to discourage indebted middle-income countries from
borrowing more from the fund. By itself that would not be a problem. But
the fund will partly make up for its lost revenue by charging low-income
countries interest for the first time. Half of them will now have to pay
interest on their loans.

Places such as Bangladesh and Pakistan do indeed need more windmills,

electric buses and solar panels. But the fashion for climate dollars will
squeeze out the finance that is most effective at poverty alleviation. Cheap
money from the IDA lets indebted governments make crucial investments
without sliding into fiscal chaos. Although the bank worries that some of the
poorest countries might spend its funds irresponsibly, research shows that,
for every increase in IDA loans equivalent to 1% of national income, a
borrowing country’s GDP per person rises by 0.35% after a year. Its most
effective funding is grants to the poorest countries. The best way to speed up
poverty alleviation would be to reduce the price of the World Bank’s
assistance, even it that means a smaller IDA overall.
However, a reduction in concessions for the poorest countries means that
borrowing will instead probably flow towards the richest eligible places,
such as Bangladesh or Kenya. But whereas these can borrow on
international markets, the poorest have few other options. The cost of
external finance for low-income countries has quadrupled since 2012, and
the poorest 40 are completely shut out of global markets. Niger relied on IDA
loans worth more than 8% of GDP in 2023. Global bond investors will not give
it the time of day.

Rises in effective interest rates for the poorest countries of even a percentage
point or two could prevent governments from building roads and hospitals
and making other basic investments. Moreover, poor borrowers could be
pushed further into the arms of China, something that Western countries say
they want to avoid. China has already overtaken the World Bank as the most
generous lender to the developing world.

Losing interest
If global institutions are both to lend more for climate finance and to help
the poorest countries develop, they must be more open about the trade-offs
they face. That way, rich-country shareholders will knowingly make choices
about expanding their financial commitments—and be expected to answer
for what happens should they demur. For three-quarters of a century the
World Bank has been a lifeline for the world’s poorest people. It should not
desert them now. ■

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away-from-the-poorest-countries
Leaders | Brain drain

Can you read as well as a ten-year-old?

Adults in rich countries are less literate than they were a decade ago. That
requires attention
December 12th 2024

Does it often feel as if the world is getting stupider? Data released on

December 10th by the OECD, a club of mostly rich countries, suggest this may
not be all in your head. Roughly every ten years the organisation asks adults
in dozens of places to sit tests in numeracy and literacy. The questions it
poses are not abstract brainteasers, spelling tests or mental arithmetic. They
aim to mimic problems people aged 16-65 face in daily life, whether they
are working in a factory or an office, or simply trying to make sense of the
news.

The latest tests were carried out in 31 rich countries, and their findings are
unnerving. They suggest that a fifth of adults do no better in maths and
reading than might be expected of a primary-school child. The direction of
travel is even less encouraging. In maths, average scores have risen in a few
places over the past ten years, but fallen in almost as many. In literacy, a lot
more countries have seen scores decline than advance, despite the fact that
adults hold more and higher educational qualifications than ever before.

Demographic change offers some explanation. New immigrants often

struggle with a new language. The native-born have ageing brains. But even
after adjusting for this, trends remain gloomy, especially in literacy. Some
speculate that Netflix, video games and social media are sapping acuity. It is
just as likely that education and training systems have misfired.

These disappointing results deserve more attention than they are likely to
get. Basic numeracy and literacy are oddly unfashionable causes—especially
when adults lack them. Students of education prefer to debate how to teach
fashionable “soft skills”. Hype around generative artificial intelligence does
not help: harping on about the importance of times-tables seems even more
fuddy-duddy when talking robots promise to do all the hard work.

Yet a century of technological upheaval has not cut demand for people who
are good with numbers, or who have a way with words. Adults who do badly
in the OECD’s tests earn vastly less than those who ace them. They are also in
poorer health, less satisfied with their life, less trusting of others and more
likely to feel that they have no voice in politics. In many countries the gap in
ability between the highest- and lowest-skilled grown-ups is widening (not
because smarty-pants are doing better, but because the least able are doing
worse). Writ large, such trends lead nowhere good.

What to do? Improving lessons for children is the surest way of creating
more capable grown-ups; governments ought to start there. England’s adults
have crept up the OECD’s league table, mostly because the youngest ones (aged
16-24) are scoring better than before. That may reflect reforms which have
made exams for older teenagers more difficult, and begun requiring
youngsters who fail them to try again. In America, which has done fairly
badly, states are junking tests that were in the past used to determine who
graduated from high school. Grades there are inflating unchecked.

The second task is to oil creaking systems for educating adults. These hand
dropouts second chances; they also serve people who change careers and
help migrants integrate. Yet politicians grant them paltry budgets, in part
because they underestimate the trickiness of what they are being asked to
accomplish. People with the weakest skills tend to have the least time and
money for self-improvement. They are less likely to attend adult classes, or
get training, even though they are the most in need.

In too many places a mania for universities has sapped funding and focus
from all the other kinds of lessons that people aged 18 and above could be
offered. Degrees are becoming less meaningful: the OECD has found that even
some university graduates post numeracy and literacy scores that might
embarrass a child. Meanwhile, oldies who want to return to class without
embarking on long, expensive university courses often find good alternatives
are lacking. Accelerating efforts to fix all these problems seems like a bright
idea. ■

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Letters
Letters to the editor
Letters | On nuclear weapons, Jordan Peterson, credit cards, John D.
Rockefeller, our cover, behaving in lifts

Letters to the editor

A selection of correspondence
December 12th 2024

Letters are welcome via email to letters@economist.com

Testing nuclear weapons

You asserted that the big powers halted nuclear testing in the 1990s (“The
perils of the world’s third nuclear age”, The World Ahead, November 20th).
In fact, Russia and China probably have conducted very low-yield and
maybe decoupled tests, which can easily evade detection. With advanced
technologies, big-bang tests like the ones North Korea conducts are not
required. A lack of adequate verification for clandestine testing was one
reason why the American Senate rejected ratification of the Comprehensive
Test Ban Treaty in 1999.

You also erred in claiming that even American experts who favour a nuclear-
arms renewal dismiss testing as “pointless chest-thumping”. Would you buy
a new type of vehicle that had never been tested? If not, then why would you
risk your security by depending on new nuclear designs and weapons that
had not been tested? China and Russia undoubtedly understand the value of
nuclear testing, even at very low yields.
KATHLEEN BAILEY

Senior associate
National Institute for Public Policy
Fairfax, Virginia

Natural bedfellows?
Jordan Peterson, like The Economist, draws from the intellectual tradition of
classical liberalism, yet you cocked a metaphorical snook at him in your
review of his latest book (“The cult of Jordan Peterson”, November 23rd).
Classical liberalism has always struggled with the idea of God, so much so
that John Stuart Mill was an agnostic and David Hume an atheist. How, then,
could you fail to credit Mr Peterson for grappling constructively with the
idea of God?

You also ducked the more pressing question of why so many intellectuals
despise Mr Peterson, and The Economist, for their shared commitment to
individual freedom. Your review noted that academics at the University of
Toronto signed an open letter to take away his tenure, “in part because he
objected to being required by law to use gender-neutral pronouns”. Yet Mr
Peterson’s objection was not specifically about pronouns and was all about
the government mandating what individuals must say.

His critique rightly highlighted the dangers of such laws, which place
society at the top of a slippery slope leading, inevitably, towards tyranny. By
failing to engage with this fundamental point, you risked perpetuating the
kind of cult-like thinking you criticised.
BEN ZISSIMOS

Associate professor of economics

University of Exeter Business School

Your review of Mr Peterson’s book was quite thought-provoking. After

pondering the existential void of modernity, I found myself considering the
existential void of 13th-century black-plague outbreaks and Roman slave
galleys.
WILLIAM STEWART

El Cerrito, California
Credit-card fees
The conclusion in a Free exchange column (November 23rd) that market
competition is the best way to tackle the harm to consumers from high
credit-card swipe fees was right on the money. In testimony I recently gave
to the Senate Judiciary Committee I said that such legislation would bring
significant benefits to consumers and the economy. And because credit cards
are so profitable for banks, rewards for consumers wouldn’t change much.

The Credit Card Competition Act that is before Congress would do that and
is supported by conservatives, such as J.D. Vance, and progressives,
including Richard Durbin. They clearly identify the lack of competition in
the credit-card industry. Requiring market competition among credit-card
networks would reduce the amount that customers are forced to pay in
hidden fees and improve the efficiency of transactions.
DOUG KANTOR

General counsel
National Association of Convenience Stores
Alexandria, Virginia
In defence of Rockefeller
The unfavourable comparison of Elon Musk to John D. Rockefeller was
unfair (“Disrupter-in-chief”, November 23rd). It comes from a long-standing
misconception of Rockefeller as a rent-seeking robber-baron octopus who
did nothing but enrich himself, competitors and consumers be damned. In
fact, the oil tycoon was himself a cutting-edge capitalist revolutionary, who
leveraged many corporate innovations to an unprecedented scale, such as
vertical integration, procedural standardisation, hierarchical management,
product-quality consistency and cost-cutting efficiency. For example, he was
one of the first to use every by-product of crude oil, such as paraffin for
candles and petroleum jelly.

Much to the chagrin of his partners Rockefeller also had little time for
paying dividends, instead opting for constant reinvestment into research and
development. Through these corporate and technological innovations, he
was instrumental in disseminating and drastically reducing the production
cost of oil.

In other words, Rockefeller slashed costs much like Mr Musk does today,
albeit with a tad higher carbon footprint.
DANIEL DOKHANIAN

Los Angeles

Cover issue
I’ve been a reader of The Economist for a decade at least, and never did I
imagine that this respectable magazine would fall so low as to print
profanity on its cover (“Merde!”, December 7th). It showed a lack of
sensitivity, or mere spite for France, and it felt obscene.
CHRISTOPHE DUPLAY

Luxembourg
Elevator etiquette
Bartleby’s guide on how to behave in lifts (November 23rd) didn’t mention
the elevator nihilists, who press both the up and down buttons and get in the
lift not caring much which direction it is heading, knowing that all trips
eventually stop.
JORGE LUCINI

Berlin

Unlike elevators in America and Britain, lifts in Asia have close-door

buttons that actually work, therefore it is not necessary to wait for the doors
to close on their own.
XAVIER BARRERA

Seattle

I was hoping Bartleby would address a scenario that seems particularly

common in the American South: men insisting that women exit the elevator
first. In a crowded lift, this well-intentioned gesture results in awkward
shuffling in tight spaces and causes unnecessary delay. But you invite scorn
if you take the practical approach and step out first to clear the way.
HUGH CAMPBELL

Seattle

Lift etiquette depends on where you are. Brits and other uptight cultures all
stand facing the door, so they don’t have to make eye contact. Latinos, the
warm and friendly people that they are, all stand in a circle, so they
definitely can make eye contact.
MIKE WILLIAMS

London

One true crime is when the last person who enters a crowded lift causes the
overload sensor to blare, yet refuses to step out. This thick-skinned
individual—eyes glued, ears plugged—opts to wait it out, confident that a
more civil colleague will volunteer to exit and take the next lift.
ALAN HO

Hong Kong

Some advice for young lawyers. In the courthouse, never ride down the
elevator with the other side.
RALPH JACOBSON

Richmond, California

Undoubtedly you will get many suggestions for rules when taking the lift.
Here is mine. If you are riding up just one floor, take the stairs.
ANN DEFRANCO

Denver
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By Invitation
South Korea’s crisis highlights both fragility and resilience, writes Wi
Sung-lac
By Invitation | Holding the line

South Korea’s crisis highlights both fragility and

resilience, writes Wi Sung-lac
The country is deeply polarised, but its living memory of military rule
strengthens its commitment to democracy
December 11th 2024

The audio version of this story is available in our app. It has been produced
using an AI voice. Learn more.

PRESIDENT YOON SUK YEOL’S declaration of martial law on December 3rd brought a
profound sense of déjà vu to many South Koreans, evoking memories of the
military coups from the 1970s and 1980s. For decades, South Koreans had
believed that such events were consigned to the past. Yet the martial law
declared by President Yoon shocked not only Koreans but the entire world.
It exposed both the fragility and the resilience of democracy in South Korea.
Although the immediate threat was averted, the situation remains fraught
with uncertainty.

The crisis reveals two critical weaknesses in South Korea’s democracy. The
first is the highly polarised political environment that allowed Mr Yoon—an
anti-democratic, anti-political, dogmatic figure with no political experience
—to rise to the presidency. He never shed the mental habits of a prosecutor
when he entered politics. Mr Yoon lacks the capacity for political dialogue
or compromise. His binary mindset, where people were either guilty or
innocent, led him to view political opponents as enemies to be eliminated.
With far-right leanings, self-righteousness and impulsiveness, Mr Yoon
exhibits traits reminiscent of dictators from history.

Mr Yoon gained prominence by prosecuting former President Park Geun-

hye and clashing with President Moon Jae-in, earning a reputation for
independence. South Korea’s political polarisation allowed the conservatives
to overlook his authoritarian tendencies, adopting him as a presidential
candidate to prevent another progressive administration. As president, Mr
Yoon has wielded power to target political opponents, shielding himself and
his wife from mounting legal difficulties. His administration became
notorious for its abuse of prosecutorial power, becoming, in a perversion of
Lincoln’s famous phrase, a government of the prosecution, by the
prosecution, and for the prosecution.

The second fragility is the lingering interference exerted by South Korea’s

military and intelligence agencies on politics (and political manipulation in
those agencies in turn). Despite efforts to depoliticise these institutions,
certain people with political ambitions remain entrenched, misusing their
personal networks based on military-school ties. Mr Yoon manipulated these
networks, appointing his high-school peers to top positions in the military
and intelligence services.

The president exploited these two South Korean fragilities to consolidate his
power. As his administration faced mounting scandals after a decisive defeat
in the April parliamentary election, he resorted to extreme measures instead
of seeking compromise. With his political survival at stake, Mr Yoon and his
loyalists in military and intelligence agencies declared martial law, sought to
shut down the press, and tried to use military force to dismantle the
parliamentary majority of opposition parties.

The coup attempt failed when opposition lawmakers swiftly convened in the
National Assembly to lift martial law. Of the 300 lawmakers, 190 gathered,
including 18 from Mr Yoon’s own party, and unanimously passed the
resolution. This moment underscored South Korea’s democratic resilience.

Traditionally, coup leaders in South Korea have suppressed such resolutions

by arresting lawmakers or dissolving the legislature. This time, citizens,
opposition parties and the media played pivotal roles in resisting. The leader
of the opposition Democratic Party, Lee Jae-myung, livestreamed in his car
on the way to the National Assembly, calling for citizens to protect the
institution. Citizens gathered in the cold, surrounding the National Assembly
building to protest, and the citizen action became the first line of defence for
democracy.

Democratic Party lawmakers, embedded with the spirit of defending

democracy that stretches back through South Korea’s pro-democracy
movements, climbed over fences to bypass police blockades and enter the
National Assembly. Special forces advanced to within metres of the main
assembly hall where I was gathered with other legislators to vote on lifting
martial law. Amid tense confrontation, staffers resolute in their commitment,
built barricades to block them from entering. On-site media coverage also
played a crucial role, limiting the military actions. These acts of defiance
bought precious time for the vote.

The coup’s failure was also due to the rushed and poorly executed operation
by a few leaders of the military and police. Rank-and-file soldiers and mid-
level commanders were reluctant to attack civilians or lawmakers, a
hesitation probably influenced by historical reckoning with past military
atrocities like the Gwangju Massacre, a slaughter of hundreds of pro-
democracy protesters against martial law in 1980. These factors culminated
in the successful resistance in the latest crisis.

However, the battle is not over. The aftermath of the failed coup remains
uncertain. Impeachment proceedings against President Yoon, despite
overwhelming public support, were blocked by him and his conservative
allies, allowing him to remain in office and plot a counteroffensive. Public
sentiment is boiling. It is not clear whether South Korea’s fragility or
resilience will prevail.

Strengthening the resilience must begin with the resignation or the

impeachment of the president who orchestrated the coup, along with holding
the individuals involved accountable. This would mark an additional
historical reckoning, reaffirming democratic principles and ensuring such
abuses are never repeated. In parody of Lincoln’s famous line, a government
of the prosecution, by the prosecution, and for the prosecution must perish
from the earth. Furthermore, to prevent the rise of authoritarian figures, we
must address political and social polarisation, depoliticise the military and
intelligence agencies, and strengthen the resilience of democracy by
fostering sustained political dialogue. There must be greater military
transparency and guaranteed civilian oversight, and promotion of public
awareness of democratic values and rights.

As political polarisation deepens globally, South Korea’s experience serves

as a reminder that no democracy is immune to such threats. Martial law in
Korea highlighted that democracy relies not just on institutions but on active
citizen engagement, constant vigilance and the collective resolve of citizens
and leaders. South Korea’s struggle offers invaluable lessons for all.■

Wi Sung-lac is a former ambassador to Russia and member of Korea’s

National Assembly from the Democratic Party.
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both-fragility-and-resilience-writes-wi-sung-lac
Briefing
Syria has exchanged a vile dictator for an uncertain future
The Assad regime’s fall voids many of the Middle East’s old certainties
Briefing | After Assad

Syria has exchanged a vile dictator for an

uncertain future
It is not clear how stable or how benign the new regime will be
December 12th 2024

THERE WAS joy and horror and anguish all at once. Many of the detainees
freed from Saidnaya, the most notorious prison in Syria, were husks: skeletal
frames, vacant stares. They staggered out of cells where dozens of people
had been packed into reeking, pitch-black chambers. On the walls of one
someone had scribbled in Arabic, “Take me, already.”

Some prisoners had been there for decades, long enough that they forgot
their names and their families had declared them dead. From one cell in the
women’s section emerged a young boy, a toddler who may have spent his
whole life in jail. Those who found their loved ones alive could not believe
their fortune. Those who did not grew desperate. A rumour spread of even
ghastlier horrors beneath Saidnaya: thousands of additional prisoners alive
but trapped in underground cells hidden behind concealed doors.

It was a perverse sort of false hope. A group that represents Syrian detainees
eventually issued a statement refuting the claim. The prison was empty, it
said; there were no more hidden cells, no more survivors. But even false
rumours contain some truth. Bashar al-Assad, the longtime dictator, was
brutal enough that Syrians found it plausible that he had built a dungeon
beneath a dungeon. It was hard to imagine a depth to which he would not
sink.

Last stand and deliverance

Syria is finally free of Mr Assad’s brutality. A rebel offensive that began in
the north-west on November 27th progressed with lightning speed. By
December 8th insurgents had reached Damascus, the capital, and Mr Assad
had fled to Russia, ending his family’s 53-year rule. What comes next is
uncertain, but will certainly have profound implications for the region . Most
Syrians doubt it can be worse than what came before.

The rebels were able to topple Mr Assad in 13 days because of the steady
decay of the previous 13 years. After he decided in 2011 to suppress calls for
democracy with violence, hundreds of thousands of young Syrian men lost
their lives in the ensuing civil war. Millions more fled to neighbouring
countries, or to Europe. In recent years, as the regime reasserted control over
much of Syria, stability brought those who remained little benefit. A small
circle of profiteers grew rich amid the ruins.

The rebels, led by an Islamist group called Hayat Tahrir al-Sham (HTS), had
spent years training for their offensive. They looked like a modern army,
with drones and special forces and a centralised command structure. But
their most important weapon was motivation: they wanted to topple the
regime, whereas the Syrian army no longer had the will to preserve it. Senior
officers left the front lines in order to move their families to safer parts of the
country. The rank and file abandoned their posts. The regime’s foreign
backers—Iran, Russia and Hizbullah, a Lebanese militia—seeing how
incapable it was of defending itself and beset by problems of their own,
declined to come to its aid. It was not a bloodless coup, but it was close:
only a few hundred people died in the final days of a war that had killed half
a million.

Damascus was euphoric. Locals broke into the presidential palace, where
they rifled through Mr Assad’s DVD collection (he was apparently a fan of
Borat) and his wife’s Louis Vuitton bags. Many shops swiftly reopened. A
long queue snaked out of a Syriatel outlet, of returning refugees keen to buy
new SIM cards.

Some government employees reported for work as usual. Outside the Four
Seasons hotel a municipal worker swept up rubbish. Staff at the post office
were not entirely sure who they were working for or whether their salaries
would be paid. A group of them smoked and gossiped about Mr Assad’s
flight. It was unclear if any letters would be delivered that day.

Elation and division

Not everywhere was peaceful, though. In the north the Syrian National
Army (SNA), a Turkish proxy force, attacked several towns controlled by the
Syrian Democratic Forces (SDF), a mainly Kurdish militia backed by America.
That was a reminder that the country remains divided between several
different groups (see map).
HTSwas not the first militia to reach Damascus—rebels from the south were—
but it is now the strongest faction in the capital. Its forces have been setting
up checkpoints and controlling access to government buildings. Their
leaders have also told rebels to stop firing guns in the air in celebration,
which had become a nuisance.

Until now HTS has governed only Idlib province, a rebel-held pocket in the
north-west, where it proved to be competent but authoritarian. On December
10th the group named Muhammad al-Bashir, its chief administrator in Idlib,
as a caretaker prime minister. His cabinet is meant to maintain security and
provide basic services until March, although it is not clear what happens
then. In practice, real power will rest with Abu Muhammad al-Jolani, the
leader of HTS, who has recently started using his real name, Ahmad al-Sharaa,
instead of his nom de guerre.

Syrians worry that HTS might try to impose its vision of Islamic rule or seek to
monopolise power. With good reason: HTS emerged from al-Qaeda’s Syrian
affiliate, though it cut ties with the jihadists in 2017. Moreover, it is one
thing to govern rural, conservative Idlib and another to run the whole
country, with cosmopolitan cities and big religious and ethnic minorities.
HTShas said the right things so far. On December 9th it forbade its fighters
from “interfering in women’s dress”. Statements directed at the Christian
and Druze minorities stress that their rights will be respected. A message to
the Kurds declared “Diversity is our strength”. In addition to adopting woke
rhetoric, Mr Sharaa has neatly trimmed his once-grizzly beard and discarded
his turban and camouflage gear in favour of sober fatigues.

Many Syrian Christians are cautiously optimistic. Mr Assad’s Alawite sect is

more worried. Many have withdrawn to their ancestral villages along the
coastal plain. HTS sounds less benevolent when it addresses them, demanding
they cut ties with the old regime. The community has made some
conciliatory gestures: religious leaders in Qardaha, the Assad family’s
hometown, say they accept HTS’s rule and will remove statues of the former
president.

There have been few reports of reprisals. On December 9th HTS announced an
amnesty for soldiers who were conscripted into the army. That is sensible:
most were drafted against their will. At the same time, Mr Sharaa promised
to hunt down senior security officials. But so far, sources say, that has meant
confiscating their weapons and uniforms and sending them home:
demobilisation, not firing squads.

It has been even more pragmatic with the bureaucracy, telling the foreign
ministry, for example, to keep diplomats in their posts. That edict has made
for surreal scenes. Bashar al-Ja’afari, Syria’s ambassador in Moscow, was
one of Mr Assad’s most fawning loyalists. But in an interview with a
Russian television channel on December 8th he denounced the “corrupt
mafia” that had been running Syria.

For several years HTS was arguably better at providing basic services than the
central government: electricity was more reliable in Idlib than Aleppo, for
instance. But the group knows that it lacks the capacity to administer all of
Syria and needs help from the existing civil service. “He’s being smart in
terms of continuity of state institutions,” a diplomat says of Mr Sharaa. “The
issue is the top level, the cabinet ministries, the actual power.”

Mr Bashir’s cabinet is full of HTS members: ministers from Idlib have been
given the same jobs in Damascus. Other militias are grumbling. The SNA, the
SDFand an alliance of southern rebels all want a say in the new regime. Some
of these groups have a reputation for crime and thuggery. HTS, although the
strongest faction, is not powerful enough to control the entire country or to
forcibly disarm rival militias.

Some rebels also complain about the deference being shown to certain
members of the ousted regime, which they see as a betrayal of the
revolution. Mr Assad has holed up in Russia, but the whereabouts of many
of his henchmen is a mystery. No one knows what happened to Mr Assad’s
brother, Maher, a ruthless army commander, for example. Some Syrians
think he fled to the coast, others to Iran. Foreign diplomats fret about the
prospect of Alawite militias taking up arms.

The Syrian diaspora has spent years making detailed plans for how they
might govern after Mr Assad’s fall. One group of opposition activists
published a “Syria Transition Roadmap” with a draft provisional
constitution. Another group, called The Day After, released a transition plan
in 2012 with timelines for everything from transitional justice to central-
bank reform. There was also a UN-led effort to bring together the regime and
the opposition to write a new constitution. It was pointless: Mr Assad was
only feigning interest in reform. But some of its members have good ideas
about a new national charter.

The problem is that many of these activists are outside the country—and
none of them has any guns. A source close to HTS thinks democracy will not
be high on Mr Sharaa’s agenda. His government in Idlib became dictatorial
enough to spark protests earlier this year. Still, many Syrians treated it with
forbearance: it was far better than Mr Assad. “With the regime’s collapse,
people may no longer afford it the same tolerance they did,” says Haid Haid
of Chatham House, a think-tank.

In the short term, Mr Sharaa’s popularity may depend on whether he can

attract aid and investment. Syria’s needs are enormous. GDP has fallen by 87%
since the war began, from $68bn in 2011 to just $9bn today. The cost of
reconstruction is thought to be in the hundreds of billions of dollars. The
country is still under strict Western sanctions, even though Mr Assad’s
departure seems to make such measures obsolete. Syrian businessmen
abroad are waiting to see if HTS does away with the detritus of Mr Assad’s rule
—a state-directed economy, capital controls, cronyism—before deciding
whether to invest.

Many Syrians bristle at the idea that they might end up like other countries
in the region that overthrew repressive regimes. They see few parallels with
Iraq and Afghanistan, both of which were invaded by outsiders who set up
new governments with the help of exiles. Syria is almost the opposite: a
home-grown uprising against a regime that was propped up by foreigners.
Unlike Libya or Yemen in 2011, Syria has already been through a civil war.
Optimists hope that the bitter memory will spur its various militias to
compromise. That may be wishful thinking. For now, though, Syrians are
feeling a rare emotion: hope.

One of the Assad regime’s slogans was qaidna lil abad, “our leader for
ever”. It seemed true: no matter how much damage they did, the Assads
endured. Until, suddenly, they did not. As the rebels closed in on Damascus,
Yassin al-Haj Saleh, a dissident who spent 16 years in jail, knew that many
challenges lay ahead. But that was a matter for tomorrow: “For ever is over,”
he wrote, “and history begins.” ■
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for-an-uncertain-future
Briefing | An unexpected juncture

The Assad regime’s fall voids many of the Middle

East’s old certainties
What if Syria abandoned its hostility to the West and stopped menacing
Israel?
December 12th 2024

The long battle to topple Bashar al-Assad may have ended this week, but the
air-raids did not. The day after Syria’s dictator of 24 years fled, no fewer
than three foreign armies bombed targets inside the newly liberated country.
America pounded the remnants of Islamic State, a jihadist outfit that once
ruled much of Iraq and Syria, lest it take advantage of the chaos to regroup
and expand. Turkey sent warplanes to help a proxy force battling a Kurdish-
led militia it accuses of aiding terrorists. And Israel bombed anything that
might conceivably be used against it in a hypothetical future conflict, from
suspected chemical-weapons facilities to the Syrian navy’s handful of
decrepit warships.
Foreigners played a big part throughout Syria’s civil war. Jihadists from
around the world flocked to fight Mr Assad’s secular regime. Iran, Russia
and Hizbullah, a Lebanese militia, sent weapons and troops to prop up the
dictator. America and Turkey intervened to oppose particular rebel factions.
Both America and Russia have bases in Syria to this day.

A pivotal moment
All this hints at how strategic Syria is and how Mr Assad’s fall could change
the region. For more than a decade Syria has been exporting instability by
providing a haven for extremists and sending out refugees by the million.
For more than 40 years it has allied itself with Iran, helping to develop an
anti-Western axis that spans the Middle East. And for more than 75 years it
has made a showy hostility to Israel a central pillar of national politics.
These old certainties are suddenly in question. Whether outside forces
encourage change or derail it is equally in doubt.

The web of anti-Western alliances Syria has spun since Mr Assad’s father,
Hafez, became president in 1971 is unravelling. Its close ties with Iran are
being cut. On December 11th the new government’s leader, Ahmad al-
Sharaa, better known by his nom de guerre, Abu Muhammad al-Jolani, said
he was keen to keep Iran out of Syria.

That will further diminish Iran’s fast-shrinking clout in the region. Israel has
dealt hammer blows in recent months to two of Iran’s main regional proxies,
Hamas in Gaza and Hizbullah in Lebanon. Resuscitating Hizbullah will be
much trickier without Syrian help, since Syria was the main conduit for
Iranian arms. Indeed, a whole new alignment is possible in Lebanon, too,
since Mr Assad’s regime was the main power broker there.

These reversals seem to be inducing Iran to rethink its foreign policy. Its
proxies, by pulling it into direct conflict with Israel, have proved to be more
liabilities than assets. It appears to be shifting instead to more conventional
deterrence, through its missile and nuclear programmes. During Mr Assad’s
final days in power, it launched a military satellite. Some hawks within Iran
argue that it should cross the nuclear threshold and test a bomb.
Iran’s strategic setbacks may also strengthen the hand of reformists who
have long criticised foreign-policy hawks for squandering the country’s
resources on foreign ventures. They hope Ali Khamenei, Iran’s supreme
leader, will lend more support to those promoting diplomacy over
confrontation and curb the army’s enormous political and economic
influence.

Mr Assad’s fall also seems likely to create a rift between Syria and Russia.
To defend Mr Assad, Russian warplanes mercilessly bombed the now-
victorious rebels. In return Mr Assad granted Russia an air base near the city
of Latakia and its navy access to the port of Tartus, its only foothold on the
Mediterranean. The air base is a useful way station between Russia and
Africa, where Russia’s military presence has been increasing. The naval
base, meanwhile, allowed Russia to position ships armed with cruise
missiles on NATO’s southern flank. “This base is essential to us,” declared
Viktor Chirkov, commander of Russia’s navy at the time, in 2012.

It was barely seaworthy to begin with

Russia wants to strike a deal to retain access. A spokesman said the Kremlin
had taken “necessary steps to establish contact in Syria with those capable of
ensuring the security of military bases”. Russian media hurriedly changed its
label for HTS, the militia leading the new government, from “terrorists” to the
“armed opposition”.

That is unlikely to win HTS and its allies over. And whatever the fate of the
bases, the damage to Russia’s prestige is done. Its intervention in Syria in
2015 was supposed to mark its rebirth as a global military power. That
narrative is in tatters. Fyodor Lukyanov, an analyst close to the Kremlin,
argues that Russia is better off as a regional power focused on Europe.
“Moscow does not have sufficient military forces, resources, influence and
authority to intervene effectively by force outside the former Soviet Union,”
agreed Ruslan Pukhov of CAST, a think-tank in Moscow.

A shift in Syria’s alliances seems inevitable, but that will not necessarily
make it more stable. Whether it continues to spread conflict, drugs and
refugees is of paramount importance to Europe, where politics was shifted
dramatically rightward by an influx of Syrian migrants after 2011. Mr
Assad’s plane had scarcely left the tarmac before a number of countries,
including Germany, which hosts 1m Syrians, announced that they would
stop processing Syrian asylum requests. Austria’s interior minister directed
officials to “prepare an orderly repatriation and deportation programme”. A
German MP suggested giving €1,000 ($1,050) and a plane ticket to any Syrian
willing to return home.

But without a modicum of stability and reconstruction, Syria is likely to

continue to generate migrants, not lure them back. There has been little talk
from Europe of aid and investment. In part that stems from a natural caution
about the new regime, but it also reflects the overstretched finances of many
European countries and the heavy burden of assisting Ukraine in its war with
Russia.

Regional powers, too, may pass up the chance to help stabilise Syria. Turkey
dearly hopes that some of the 3m Syrians it hosts will soon return home. But
it also cannot resist the urge to press its fight against the SDF, a Syrian alliance
led by a Kurdish militia, which it accuses of abetting Kurdish separatists in
Turkey. By the same token, the United Arab Emirates, which is one of the
most obvious sources of finance for reconstruction, is neuralgic about
anything that smacks of Islamist extremism. It is unlikely to help much as
long as HTS, a former affiliate of al-Qaeda, is the main force in the new
government.

Standoffish Uncle Sam

How much America will help restore stability is also in doubt. Donald
Trump, the president-elect, was emphatic about Mr Assad’s fall: “THIS IS
NOT OUR FIGHT. LET IT PLAY OUT. DO NOT GET INVOLVED!” Elon
Musk, his billionaire buddy, bemoans the waste of taxpayer dollars in Syria.
Joel Rayburn, a State Department official in Mr Trump’s first term who is
helping to prepare for his second, is sceptical about HTS’s professed retreat
from Islamist extremism and favours keeping sanctions in place until its
intentions are clearer. Yet lifting the sanctions is an essential step towards
economic recovery.

Perhaps the biggest geopolitical question posed by Mr Assad’s fall is what it

means for Israel. Iran’s loss in Syria ought to be Israel’s gain. HTS does not rail
against Israel the way many Islamist militias do. Mr Sharaa says he does not
want Syria to get involved in any more conflicts. “There are more
opportunities for Israel in Syria than threats now,” says Carmit Valensi of the
Institute for National Security Studies in Tel Aviv. The new regime is
unlikely to pose a direct threat, argues Amos Yadlin, a former military-
intelligence chief.

Yet Israel’s government seems to be acting on the opposite assumption. On

December 8th Israeli tanks entered the buffer zone that had separated Israeli
and Syrian forces since 1973. A team of Israeli commandos occupied the
abandoned Syrian observation post on Jabal al-Shaykh, at 2,814 metres the
highest point in Syria. Israel says these seizures are only temporary and
intended to protect the adjacent Israeli territory—but that territory itself was
originally Syrian. Israel occupied it in 1967 and formally annexed it in 1981.

Israel’s air force has also launched hundreds of strikes throughout Syria,
destroying not only chemical weapons but also long-range missiles, anti-
aircraft systems and ammunition depots. It also destroyed Syrian fighter jets,
although Syria’s air force, like its navy, is antiquated and of little threat to
Israel.
Israeli officials argue that the weapons it destroyed might have fallen into
the hands of hostile forces. They also worry that HTS might strike a deal in
which Iranian-backed fighters leave Syria but Iran continues to send
weapons to Hizbullah via Syria. Whether Israel’s aggressive military stance
is the best way to head off that possibility is debatable, however. It might
just as easily curdle HTS’s apparent lack of interest in Israel into hostility. As
with so many aspects of Mr Assad’s fall, there is clearly an opportunity for
change, but also a risk it will be squandered. ■
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the-middle-easts-old-certainties
United States
Luigi Mangione’s manifesto reveals his hatred of insurance companies
Donald Trump threatened to smackdown the education department
America’s best-known practitioner of youth gender medicine is being
sued
The Young Thug trial could be Fani Willis’s last big act
Trump for Dummies
United States | Message in a bullet

Luigi Mangione’s manifesto reveals his hatred of

insurance companies
The man accused of killing Brian Thompson gets American health care
wrong
December 12th 2024

Homicide investigations are like bankruptcies: they come along gradually

and then all at once. On December 9th, Luigi Mangione, a 26-year-old
engineering graduate of the University of Pennsylvania, an Ivy League
school, was arrested and charged with murdering Brian Thompson, the CEO of
UnitedHealthcare, America’s biggest health insurer, in a predawn
assassination in Manhattan on December 4th. The arrest came after five days
of frenetic investigation in which police seemed to have almost no leads at
all. The fugitive was finally captured in a branch of McDonalds in Altoona,
a town in central Pennsylvania, after a member of staff recognised his face
from a security camera photo circulated by the police.
Mr Mangione, of course, is legally innocent until proven guilty. But the
public evidence against him is piling up. Police say the arresting officers
discovered a fake New Jersey ID of the sort the killer apparently used to
check into a hostel in Manhattan, as well as a 3D-printed gun, a silencer, and
a bundle of cash. (Mr Mangione apparently disputes this last detail). There
was also a 262-word handwritten note that included the passage: “I do
apologise for any strife or traumas but it had to be done. Frankly, these
parasites simply had it coming.” Health insurers, he wrote, are “too
powerful, and they continue to abuse our country for immense profit.”

Despite his writings, Mr Mangione did not seem determined to get caught.
He skillfully eluded his pursuers. He apparently arrived in New York and
left again by bus; covered his face for much of his time in the city, may have
used a “burner” phone; and paid for things exclusively in cash. Searches in
Central Park had turned up a backpack that the killer had apparently
discarded, but it contained only a jacket and a bundle of Monopoly money.
Had he not revealed his face to a security camera for a few seconds in the
hostel, or been recognised by an eagle-eyed burger flipper, he might very
well still be free.

Mr Mangione now faces five criminal charges in New York City, including
second-degree murder. He is also charged with weapons offences and using
a false ID in Pennsylvania. He is currently fighting extradition back to the
Empire State, a process that could take several weeks to resolve. He will
then have to plead formally to the charges. His lawyer suggested he intends
to plead not guilty.

What could have inspired the killing? Mr Mangione’s short note suggested a
calculating desire to wreak revenge on America’s health-care system.
America, he correctly noted, has the most expensive health care in the
world, but life expectancy has stagnated. “Many have illuminated the
corruption and greed” in the system, he wrote. “Evidently I am the first to
face it with such brutal honesty.”
Biographical details add some context. Mr Mangione belongs to a wealthy
Italian-American family from Baltimore. He was the valedictorian of his
elite private school in the city. After studying computer science and
graduating from Penn in 2020, he lived in Hawaii, working as a data
engineer for TrueCar, a car-buying website. Though clearly fit and active,
according to friends in Hawaii, he suffered chronic back pain, possibly made
worse by a surfing injury. In 2023 he apparently underwent back surgery. On
his Reddit account, he posted an X-ray image of a spine with several bolts
implanted into it. About six months ago he disappeared, cutting contact with
friends and family, until reappearing in Altoona.

If his goal was to get America discussing its health-care system, Mr

Mangione seems sure to succeed. In the days leading up to his arrest, three
words written on the casings of the bullets used to kill Mr Thompson
—“deny”, “defend” and “depose”—seemingly intended to echo words used
by insurance companies while rejecting claims, became a meme. On TikTok
sympathisers made out the then mysterious killer was some sort of
superhero, with influencers singing ballads to him and getting tattoos of his
face.

Certainly frustration with insurers is growing. According to a survey

conducted last year by the Kaiser Family Foundation, a health policy think-
tank, in the preceding year 18% of Americans were refused care they
thought would be covered, and 27% had insurers pay out less than expected.
Two-fifths say that they have had to go without health care because of
insurance limitations. In recent years denial rates have been rising, while
insurers have adopted new tactics (such as the use of artificial intelligence to
make determinations) that are deeply unpopular and have produced some
shocking errors. Knowing what will be covered or denied is extraordinarily
difficult, even for professionals. Around half of Americans say that they are
unsure how their coverage works (see chart 1). The other half are
overconfident.

The tricky thing is that insurers are hardly the only villains in this story.
UnitedHealthcare’s net profit margin is about 6%; most insurers make less.
Apple, a tech giant, by contrast, makes 25%. Insurers are forced to deny
coverage in large part because the firms’ resources are limited to what
patients pay in premiums, sometimes with the help of federal subsidies. Yet
every other part of America’s health-care system incentivises providers to
overdiagnose, overprescribe and overcharge for treatment, a lot of which is
probably unnecessary. Many in-demand doctors refuse to accept insurers’
rates, leading to unexpected “out-of-network” charges. Hospitals treat
pricing lists like state secrets. America’s enormous health administration
costs (see chart 2) are bloated by the fact that almost any treatment can lead
to a combative negotiation between insurer and provider.

America has fewer doctors per capita than almost all other rich countries,
and over one in four doctors earns more than $425,000. Yet a tight federal
cap on residencies stops more being trained. And much treatment offered to
Americans (and either paid for or refused by insurers) simply would not be
offered at all in more statist countries. Mr Mangione’s back surgery is in fact
a revealing case in point. The details are unclear, including whether
insurance paid for his treatment. But his Reddit account suggests that he
shopped around doctors before persuading one to conduct a “spinal fusion”
surgery. Elsewhere, the number of such surgeries has declined over the past
decade because research shows them to be ineffective compared to simpler
treatments. Yet in America the number has continued to rise.

Sadly, changing health-care policy is easier to talk about than to do. And one
irony of Mr Mangione’s writing is that, while it is true that American health
care is expensive and often ineffective, that is not clearly linked to
America’s lagging life expectancy. Indeed, one notable contributor to shorter
lifespans has nothing to do with doctors. That is, the 20,000 or so murders
committed each year with guns. ■

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fast analysis of the most important political news, and Checks and Balance,
a weekly note from our Lexington columnist that examines the state of
American democracy and the issues that matter to voters.
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reveals-his-hatred-of-insurance-companies
United States | Reading, Writing and Wrestling

Donald Trump threatened to smackdown the

education department
But his pick for education secretary is relatively tame
December 11th 2024

During his campaign Donald Trump promised to abolish the education

department. After his re-election he announced some cabinet picks who
were reassuringly well-qualified for their jobs and some who seem to have
been chosen to cause maximum damage to the institutions they hope to lead.
Given the intensity of the Republican war on wokeness in schools, picking
Linda McMahon, the co-founder of World Wrestling Entertainment (WWE), as
education secretary seemed in the second category.

A decade ago Ms McMahon would have been a risky choice for a cabinet
position. She and her husband, Vince McMahon (from whom she is now
separated) used to run an entertainment business that involved muscled
actors in leotards performing moves with names like the “Stone Cold
Stunner” and the “Curb Stomp”. Ms McMahon herself often performed in
the ring. In one stunt she theatrically slapped her adult daughter in the face.
In another a wrestler dangled her from her ankles and dropped her on her
head.

Few former cabinet members have such talents on their CVs. (Though Mr
Trump also performed a few times. In a “Battle of the Billionaires” in 2007
he exaggeratedly punched Mr McMahon and, to further humiliate him,
shaved his head in the ring.) Off stage, both McMahons are being sued for
allegedly knowing about the sexual abuse of “Ring Boys”, children who
helped with ringside tasks, within WWE. (They deny the charges, and the case is
ongoing.)

The fact that conservatives should welcome the selection of Ms McMahon

as the nation’s chief educator is a sign of how priorities have changed. Yet
she may be one of Mr Trump’s least controversial picks. She was confirmed
in 2017 by the Senate for her former role as the head of the Small Business
Administration. Her experience in education is limited, but she does have
some: she was on Connecticut’s Board of Education, has a teaching
certificate from East Carolina University and is on the board of trustees of
Sacred Heart University in Connecticut.

Ms McMahon is a small-government conservative and a Trump loyalist,

says Neal McCluskey of the Cato Institute, a think-tank. But she does not
seem intent on abolishing the education department and all it does. (To
eliminate the department and its tasks, which range from managing federal
college loans to funding poor schools, Congress would need to act.) In fact
she has endorsed policies that would require functioning federal education
programmes, whether housed under the education department or elsewhere.

For example, she has argued for an expansion of Pell grants, federal money
for poor students, to include short-term workforce training. This could help
ease the shortage in skilled trades, from health care to manufacturing, which
require more training than a high-school diploma but not a college degree.
According to McKinsey, a consulting firm, there were 400,000 openings in
January 2024 for skilled jobs such as welding.
So far, so sensible. Ms McMahon says that such an expansion must come
with guardrails to ensure that students are actually learning and getting
hired. Most Democratic members of Congress would agree. While keeping
tabs on workforce programmes is a job for the federal government, Ms
McMahon may want to trim elsewhere. She supports charter schools, public-
school alternatives and holding schools accountable for their performance,
policies that were mainstream among Democrats under Barack Obama’s
presidency. She also supports school vouchers, which allow parents to use
public money for private schools, which Democrats (and education
researchers) do not like.

After Mr Trump announced his pick, Ms McMahon wrote on X: “Thank you

Mr. President…I look forward to working collaboratively with students—
educators—parents and communities to strengthen our educational system;
ensuring every child regardless of their demographics is prepared for a
bright future.” Ms McMahon may throw the education department around a
little, but she hardly seems in the mood for a full-body smackdown. ■

Stay on top of American politics with The US in brief, our daily newsletter with
fast analysis of the most important political news, and Checks and Balance,
a weekly note from our Lexington columnist that examines the state of
American democracy and the issues that matter to voters.
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smackdown-the-education-department
United States | Tort report

America’s best-known practitioner of youth

gender medicine is being sued
Johanna Olson-Kennedy leads the Centre for Transyouth at LA’s
Children’s Hospital. One of her patients thinks she has been negligent
December 6th 2024

JOHANNA OLSON-KENNEDY is among the most celebrated youth

gender-medicine clinicians in the world. She has been the Medical Director
of the Center for Transyouth Health and Development at Children’s Hospital
Los Angeles (CHLA), one of the first high-profile American youth gender
clinics and presently the largest, since 2012. A frequent expert witness in
court cases who is often quoted in the media, Dr Olson-Kennedy also leads a
$10m initiative funded by the National Institutes of Health to study youth
gender medicine—by far the largest such project in America. In addition,
she is the president-elect of the United States Professional Association for
Transgender Health.
As state-level bans on youth gender medicine have accumulated, and are
being tested at the Supreme Court, this controversial field has been seized by
a fierce debate over the proper role of mental-health assessments. The Dutch
clinicians who published the seminal youth gender-medicine protocol in
2012 emphasised the importance of conducting a careful, in-depth
assessment prior to starting a young person on puberty blockers or cross-sex
hormones. But Dr Olson-Kennedy has emerged as a critic of what she views
as undue and unnecessary “gatekeeping”. “I don’t send someone to a
therapist when I’m going to start them on insulin,” she told the Atlantic in
2018. In her published research, Dr Olson-Kennedy has reported prescribing
cross-sex hormones to patients as young as 12, and referring patients as
young as 13 for double mastectomies.

Now, however, Dr Olson-Kennedy is being sued by a former patient,

Clementine Breen, who believes that she was harmed precisely by a lack of
gatekeeping. And many of Ms Breen’s claims appear to be backed up by Dr
Olson-Kennedy’s own patient notes, which Ms Breen and her legal team
have shared with The Economist. The medical-negligence lawsuit was filed
on December 5th in California.

Ms Breen is a 20-year-old drama student at UCLA whose treatment at Dr Olson-

Kennedy’s clinic included puberty blockers at age 12, hormones at 13 and a
double mastectomy at 14. She stopped taking testosterone for good about a
year ago and then began detransitioning in March. The lawsuit’s defendants
are Dr Olson-Kennedy, the gender therapist to whom Dr Olson-Kennedy
referred Ms Breen, the surgeon who performed the double mastectomy and
20 as-yet-unnamed “Doe Individuals” who were “agents, servants, and
employees of their co-defendants.” Ms Breen’s lawyers accuse them of
medical negligence on a number of grounds, including lack of psychological
assessment, poor management of her mental health and a lack of concern
about the effects of puberty blockers on her bone health.

Why sue? Ms Breen is seeking monetary damages. But she also cites
“personal closure reasons” in an interview, as well as a desire to rebut the
notion that rushed youth gender transitions are rare in America, a claim
commonly made by some activists. “People are just brushing exactly what
happened to me off as something that doesn’t happen,” she says.
While little is known about the practices of American youth gender clinics,
Dutch-style assessment does not appear to be the norm. None of the 18
American youth gender clinics contacted by Reuters for an investigation
published in 2022 described such a protocol. The share of Americans who
regret their gender transitions, or who detransition, is unknown too.
Anecdotally there appears to be an uptick in the number of detransitioners
seeking redress, says Jordan Campbell, one of Ms Breen’s lawyers. His firm,
which focuses on detransitioners, has been approached by more than 100
people but has pursued litigation on behalf of less than a fifth.

In most instances state statutes of limitations make it all-but-futile for

detransitioners to pursue legal claims, or the potential client ultimately
decides against the often-bruising experience of doing so. In Ms Breen’s
case, though, her treatment was recent enough to allow her to sue her
providers and she is willing to speak out. That—and Dr Olson-Kennedy’s
perch at the very top of her field—is what makes Ms Breen’s case
particularly noteworthy. And if plaintiffs like Ms Breen prevail, health-care
systems in states where these treatments are still legal—always wary of
lawsuits and the potential of rising premiums for medical-malpractice
insurance—might take a more conservative approach to youth gender
medicine, or even abandon offering it altogether.

Ms Breen’s story starts early in the 2016-17 school year, when she turned
12. She felt depressed and sought help from a counsellor. “I mentioned that I
might be trans,” she recalled in the interview, “but I also mentioned that I
might be a lesbian and that I might be bisexual, like I wasn’t really sure
about my identity at all.” In retrospect, she said, she believes that her
unsettled feelings about going through puberty stemmed from a violent
situation at home involving her older brother, who has severe autism, as well
as abuse she experienced at the hands of someone outside the family when
she was six years old, which she did not disclose to anyone until much later.

Ms Breen and her lawyers claim that despite the vagueness of her musings
about her identity, her counsellor fixed on the possibility that she was
transgender. “Based on those conversations and few statements, the
counsellor called Clementine’s parents and told them she believed
Clementine was transgender,” they write in the complaint. With the support
of her school, Ms Breen, who went by the name Kaya at the time, changed
her name to Kai and her pronouns to he/him. Her parents took her to the CHLA
gender clinic, and Ms Breen’s first appointment there, records show, was in
December 2016.

Dr Olson-Kennedy’s notes from that first visit show that she immediately set
Ms Breen down a path towards medical transition. She writes that Ms Breen
had not yet seen a gender therapist and had come out as trans three months
earlier. Nevertheless, she asserts that Ms Breen meets the specific Diagnostic
and Statistical Manual criteria for gender dysphoria, one of which, she
writes, is a cross-sex identity that has lasted for six months or longer.

At the time of this appointment, the latest guidelines for gender-medicine

practitioners, the World Professional Association for Transgender Health’s
(WPATH) Standards of Care Version 7, noted that “Before any physical
interventions are considered for adolescents, extensive exploration of
psychological, family, and social issues should be undertaken, as outlined
above. The duration of this exploration may vary considerably depending on
the complexity of the situation.”

Three months later, Ms Breen returned to CHLA to have a puberty-blocker

implant inserted into her left arm. “I still have the scar—it’s very little, but
it’s right here,” says Ms Breen, showing it on a Zoom call. From there, her
path towards fully irreversible treatments was swift. Medical records show
that less than a year later Dr Olson-Kennedy prescribed testosterone for Ms
Breen. In May 2019 Ms Breen, who was 14 at the time, had a double
mastectomy.

Ms Breen and her lawyers claim in their lawsuit that when her parents
expressed reservations about testosterone, Dr Olson-Kennedy spoke with
them away from Clementine. “Dr Olson-Kennedy first told them that
Clementine was suicidal,” they write in the complaint. “At that time,
Clementine had never had any thoughts of suicide, and she certainly had
never expressed anything along those lines to Dr Olson-Kennedy. Dr Olson-
Kennedy went even further [...] by telling them that if they did not agree to
cross-sex hormone therapy, Clementine would commit suicide.”

Because Ms Breen’s parents declined an interview request, Ms Breen herself

is the only source for this claim. It is true, however, that there is no mention
of suicide risk in any of Dr Olson-Kennedy’s notes before Ms Breen’s
double mastectomy, and the visit notes for the appointment when Dr Olson-
Kennedy ordered testosterone describe Clementine’s (then Kai’s) mental
state as “Alert… No acute distress… Cooperative, Smiling.” Even if Ms
Breen had been suicidal, the evidence that cross-sex hormones ameliorate
suicidality is thin: in a 2021 systematic review on the effects of cross-sex
hormones on trans people commissioned by the World Professional
Association of Transgender Health, the authors write that due to a lack of
quality published research, “We could not draw any conclusions about death
by suicide.”

Fluid recordkeeping
Perhaps the lawsuit’s most damning claim is that Dr Olson-Kennedy
misrepresented Ms Breen’s gender-identity history in the letter of support
she wrote to Ms Breen’s surgeon. In the letter, quoted in the complaint and
also obtained in full by The Economist, Dr Olson-Kennedy writes that Ms
Breen had “endorsed a male gender identity since childhood”—language
intended to signal that a young person’s gender identity has been stable for a
long time, alleviating concerns that the patient might change their mind. But
the claim was contradicted by Dr Olson-Kennedy’s own records. (Dr Olson-
Kennedy did not respond to a request for comment through her hospital. Ms
Breen’s surgeon declined to comment through his lawyer.)

Save for a fleeting period of improved mood following the insertion of the
implant, Ms Breen says that she does not believe any of these treatments
made her feel better. In fact, her mental health began to decline after she
went on testosterone.

The CHLA team prescribed and tweaked various psychotropic medications, but
nothing in the records suggests anyone at the hospital questioned whether
the transition was helping rather than harming Ms Breen, despite what
appear in retrospect to be some warning signs. By July 2020 she was having
a “very difficult time remembering” her weekly testosterone shots, and was
missing three quarters of them, Dr Olson-Kennedy wrote at the time (Dr
Olson-Kennedy switched her to a gel). Three sentences after mentioning
this, Dr Olson-Kennedy expresses the opinion that “Kai” “would probably
benefit from an increased dose of testosterone.” A psychiatrist at CHLA wrote
after a September 2020 telehealth visit that Clementine was at that time
engaging in “compulsive cutting to see if he has blood.” Later in the notes
he explained that Clementine “has a complex diagnosis that includes tics,
psychosis, obsessions, and compulsions”.

Ms Breen says she is doing significantly better today—partly, she believes,

simply because she ceased taking testosterone. But well before that, she
ditched the therapist Dr Olson-Kennedy referred her to, who she said fixated
entirely on her gender identity. She switched to a dialectical behavioural
therapist whom she described as a godsend, with whom she had her first-
ever in-depth conversations about the physical and sexual abuse she endured
earlier in life. Ms Breen says she is fairly confident that if she’d had these
conversations at age 12, she wouldn’t have pursued medical transition. She
has been left with a lower voice than she wants, an Adam’s Apple that
distresses her, the prospect of breast reconstruction if she wants to partially
regain a female shape, and the possibility that she is infertile due to the years
she spent on testosterone.

In a statement provided to The Economist, CHLA notes “we do not comment on

pending litigation; and out of respect for patient privacy and in compliance
with state and federal laws, we do not comment on specific patients and/or
their treatment.” Unfortunately, the paper trail that shines a light on Dr
Olson-Kennedy’s approach to Ms Breen’s care does not exist for her former
therapist, whom we also contacted for comment. California state law
requires therapists to retain patient visit notes for five years. But the
therapist Ms Breen is suing told us, via a lawyer, that almost all of the notes
were unavailable, due to water damage. ■

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practitioner-of-youth-gender-medicine-is-being-sued
United States | The district attorney’s downfall

The Young Thug trial could be Fani Willis’s last

big act
She may herself face indictment by Donald Trump’s Department of Justice
December 12th 2024

It is a result that has the government licking its wounds. In May 2022 Fulton
County prosecutors indicted 28 men from Cleveland Avenue, a rough part of
Atlanta, for committing a string of killings, robberies and drug deals in
service of a street gang led by Jeffery Williams, a rapper who goes by the
name “Young Thug”. Over the past year the state presented a Georgia jury
with nearly 200 witnesses and a barrage of rap verses that, it argued, proved
that “YSL”, used to denote Mr Williams’s platinum-selling record label
“Young Stoner Life”, also stood for “Young Slime Life” and was an affiliate
of the notorious Bloods gang from Los Angeles. But when the alleged
kingpin pleaded guilty in late October to overseeing crimes the judge chose
to ignore the state’s recommendation to lock him up for decades, opting
instead for 15 years probation and banishing him from Atlanta for ten.

Then, on December 3rd, the jury acquitted the final two defendants left
facing murder charges, bringing the longest trial in Georgia history to a
close. Only a handful of those in the rapper’s entourage ended up with
prison sentences. In an interview after the verdict jurors explained that the
smoking gun the prosecutors promised simply never came. One said that the
trial made her see Mr Williams as someone who “pulled himself up” and
“tried to help other people around him”. She wished him nothing but
“continued success”.

This has done further damage to the reputation of Fani Willis, the district
attorney at the case’s helm. As lead prosecutor in the state’s capital, Ms
Willis rose to national fame last year when she charged Donald Trump and
more than a dozen of his acolytes with election subversion. That case, which
hinged on Mr Trump’s attempt to get Georgia officials to fudge the vote
count, was considered to have real teeth.

It began to unravel when it was revealed in January that Ms Willis had hired
her then-boyfriend to take the case to trial. The judge said that her defence—
she testified in court that she had paid her beau back in cash for their
Caribbean holidays and therefore got no benefit from his salary—had an
“odour of mendacity”. A congressional committee started investigating her
use of funds and a conservative appeals court deliberated on whether to
disqualify her from prosecuting Mr Trump (it is yet to rule). Those
Democrats and Republicans who thought her case had merit were baffled by
her sloppiness.

Now that the second-biggest prosecution of her career has come to look like
overreach, Ms Willis is losing allies. Together the two cases absorbed
tremendous resources and left hundreds of other defendants waiting for trial
in the Fulton County jail, whose conditions the federal government declared
inhumane after ten people died in custody last year. In a county that is more
black than white, that has reaffirmed mistrust in the criminal-justice system
—and in Ms Willis, the top cop who oversees it. The district attorney’s
office did not respond to requests for comment.
Cynical observers reckon that Ms Willis prosecuted big-names to raise her
profile and woo supporters so she can one day run for governor. The Trump
case was for liberal Democrats and the Young Thug case was for law-and-
order Republicans, says Ashleigh Merchant, the lawyer who uncovered her
love affair. Ms Willis’s remaining supporters argue that she was bravely
chasing untouchable criminals with her best: both indictments were built on
the state’s unusually broad Racketeer Influenced and Corrupt Organisations
(RICO) Act, a law that Ms Willis had used effectively before, most notably to
take down cheating schoolteachers.

The statute gives prosecutors an edge by relaxing the rules on who can be
charged and what evidence can be brought. “If you bring a RICO case, almost
everybody should be serving time,” says Chris Timmons, a former
prosecutor who usually speaks out to defend the district attorney. A ring of
elite criminal lawyers in Atlanta who once all supported Ms Willis say that
the fact that both racketeering cases derailed, albeit for different reasons,
shows that her ambition has clouded her judgment. “It’s Icarus,” says Jay
Abt, a defence lawyer for one of the acquitted.

Nonetheless, Ms Willis was elected to another four-year term in November.

Her win was not surprising, given that Fulton County is a Democratic
stronghold and her opponent was a Republican who had interned in Mr
Trump’s White House. She did, however, trail Kamala Harris’s vote share.
Since the Young Thug trial ended she has lost more trust, says Fred Hicks, a
Democratic strategist. He reckons that “if she had to run again in a primary
now she would have a very hard time.”

A terrible racket
Ms Willis said that she plans to stick around for eight more years “if that’s
what it takes for us to get justice in some cases”. But re-election is no
guarantee that she will keep her job. Last spring Georgia’s Republican
legislature passed a law that allows a political committee to pluck rogue
district attorneys from their posts, which Ms Willis called “racist”. It seems
poised to try to remove her in January. Washington may also pounce in the
new year. Mr Trump could have his Justice Department indict Ms Willis. Ms
Merchant, the defence lawyer, thinks that he might go after her for honest-
services fraud, a federal crime used to charge public servants who take
kickbacks. And if Mr Trump is indeed set on revenge against his perceived
persecutors, he might even see if he can take it in the form of a RICO case. ■

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fani-williss-last-big-act
United States | Lexington

Trump for Dummies

A ten-step guide
December 12th 2024

Hello and welcome to the Donald J. Trump School of Politics and Public
Policy! As you may know, we are the only graduate school accredited to
teach the Trump Method (TMTM). Though we offer advanced courses in
applying the Method to trade and NATO, we do that only to justify your huge
federal student loans and to keep things interesting for us professors. When
it comes to domestic politics, there is only one Trump Method, ten steps to
winning and governing, and you will learn them all here in Trump 101:
Illegal Immigration. (We like to call it “How Dense Are Democrats,
Really?” or “Trump for Demmies”.) It takes five minutes. Here we go:

Step 1: Identify a real problem.

Step 2: Hyperbolise the problem. It is not enough to spotlight a surge of
illegal migration. Claim thousands of murderers and rapists are on the loose,
foreign dungeons and insane asylums are spewing their contents across the
border, dogs and cats are broiling together. Claim millions more migrants
have crossed than the government has counted. How can anyone prove you
wrong?

Step 3: Promise extreme measures. But do not be specific! For example, you
might threaten the “largest deportation program of criminals in the history of
America”, but do not say what you mean by “criminals”. Say you will
deploy the military but do not say how.

Step 4: Count on Steps 2 and 3 to derange your opponents, including the

left-leaning press. If you are for something, they will be against it—and they
will be against it to the same degree you are for it. This is why your oratory
must be extreme. Always bear in mind the key insight of Mr Trump’s
mentor, the red-baiting lawyer Roy Cohn: “I bring out the worst in my
enemies, and that’s how I get them to defeat themselves.” Mr Trump’s
opponents forgot or ignored that the previous “largest deportation program
of criminals” was carried out by President Barack Obama; that every
president since Bill Clinton deployed the military to the border; that not long
ago the pro-labour left resisted even legal immigration (as Senator Bernie
Sanders put it in 2007, “The last thing we need” is to admit “millions of
people into this country who are prepared to lower wages for American
workers”) while the conservative editorial board of the Wall Street Journal
wanted open borders.

This nursery-school dialectic accounts for Mr Trump’s greatest triumph with

the Method: President Biden’s shocking neglect of illegal immigration until,
politically, it was too late. Images of chaos at the border from his first two
years in office let Mr Trump do what he couldn’t in 2020—run his 2016
campaign again. Sure, as the press did with Mr Trump, it will trumpet your
strongest statements and publish “fact”-checks insisting migrants do not
cause crime or lower wages. This will help you. If they are trying to explain
the problem away, you are winning, because you got Step 1 right—the
problem is real—and Americans know it.
Step 5: Scatter breadcrumbs. Hint that you favour more legal immigration;
that as you crack down, you will “have the heart”, as Mr Trump put it. The
press will downplay this talk, since it complicates the storyline, but centrists
will be reassured, and such signals will preserve an asset Mr Trump prized:
wriggle room.

Step 6: This is the fun part. Shortly after you win, claim you have solved
much of the problem. Step 2 makes this easy, because the problem was
never as bad as you said. A classic demonstration came on December 8th,
2024, when Mr Trump appeared on NBC’s “Meet the Press” and, in his
application of TMTM, achieved a two-fer: claiming simultaneous success for
his tariff and immigration policies without having done anything but make a
bit more noise. “Within ten minutes after that phone call,” he said of tariff
threats against Canada and Mexico, “we noticed that the people coming
across the border, the southern border having to do with Mexico there, was
at a trickle. Just a trickle.” One phone call! Ten minutes! A trickle! (Of
course—“fact”-check— measures Mexico and Mr Biden finally put in place
had reduced illegal crossings below the level during the last months of Mr
Trump’s first term.)

Step 7: Set common-sense priorities. As Mr Obama did, focus first on

deporting migrants who commit crimes, then on those who arrived most
recently. Avoid dividing families or deporting the staff of farmers or Silicon-
Valley plutocrats.

Border bazaar
Step 8: Cherish your allies, and your opponents. Astute Democrats played
ball. Cynics argue Eric Adams, New York’s mayor, panted to meet with the
“border tsar”, Tom Homan, because Mr Adams was angling for a pardon.
But he was also struggling with a migrant crisis in a city that was turning
Trumpier under his feet. In California, Governor Gavin Newsom, his eye on
running for president, asserted right away the complexity that Democrats
had struggled to acknowledge, that illegal immigration was a nuanced issue,
“not black and white”: state law did not bar co-operation in deporting
possible threats to public safety. By contrast, Mayor Brandon Johnson of
troubled Chicago was a blessing in another way. Picking fights with him
persuaded Mr Trump’s base voters that the mayor was being more
aggressive than he actually was.

Step 9: Control your zealots. This is a hazard created by Steps 2 and 3, and
Mr Trump struggled with it, along with his own instinct to divide
Americans. The most scandalous treatment of migrants resulted from aides
taking him literally. Even poor J.D. Vance, with his yen for building
intellectual castles atop Mr Trump’s ever-shifting politics, had to revise his
claims about immigration being responsible for everything that was wrong
with America, because winning the popular vote gave Mr Trump a taste of
what it might be like to win the approval of most Americans. That’s what
finally drew him, in 2026, to:

Step 10: Pursue bipartisan immigration reform. ■

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The Americas
Can an agreement with the EU resurrect Mercosur?
Nicaragua’s ruling couple tighten their grip
The Caribbean struggles to break its dependence on fossil fuels
The Americas | European (g)ratification

Can an agreement with the EU resurrect

Mercosur?
A big geopolitical deal
December 12th 2024

It took a full quarter of a century, but on December 6th, at the second

attempt, the European Union (EU) and Mercosur, a bloc based on Brazil and
Argentina, finalised the text on a wide-ranging treaty that enshrines trade
and political co-operation. Its impact on world trade will be modest. But its
geopolitical symbolism is far bigger. With the United States poised to
become even more protectionist under Donald Trump, and with China’s
influence in Latin America large and growing, it marks an effort to
strengthen relations between two democratic regions long linked by culture
and history. But its ratification by the Europeans is far from certain, since
the continent’s influential farmers are fearful of Mercosur’s highly efficient
agribusinesses.
Talks between the two blocs began back in 1999, at the high tide of free
trade and globalisation. But they proceeded desultorily. It took 20 years, the
advent of Mr Trump and the rise of China to produce an initial agreement in
2019. But both sides had doubts. Many Europeans objected to the aggressive
support of Jair Bolsonaro, Brazil’s hard-right president of 2019-23, for
farming, ranching and mining in the Amazon rainforest. And at the time
leftist Luiz Inácio Lula da Silva (known as Lula), who was then in
opposition, and Argentina’s government were worried that granting more
access to the EU’s manufactured exports would only serve to hasten their
countries’ deindustrialisation.

Over the past 18 months Lula, now back in the presidency, and Ursula von
der Leyen, president of the European Commission, sought to conclude the
deal. Lula, who this week underwent surgery for a brain haemorrhage,
achieved a partial opt-out on government procurement; Brazil’s health
service will continue to buy mainly from local pharmaceutical firms. The
new deal incorporates the Paris agreement on combatting climate change. A
new “rebalancing mechanism” allows either side to invoke mediation and
possible retaliation if unilateral actions, such as the EU’s proposed regulation
on deforestation, harm the trade of the other party.

If the commission was prepared to be more flexible than in the past, it is

because Russia’s invasion of Ukraine and Mr Trump’s return have made
many European leaders rethink. “For the EU, this is important economically,
but [it is] very much a geopolitical decision,” says Cecilia Malmström, a
former European trade commissioner. “With a possible tariff war coming up,
Europe needs friends and allies.”

The deal is hardly a free-trade revolution. It will remove tariffs on around

90% of trade in goods between the two sides, but mostly over a period of up
to 12 years and in a few cases longer. Agricultural exports from Mercosur
will be subject to gradually rising quotas. Nevertheless, the agreement is a
big one. Mercosur’s core members, which also include Paraguay and
Uruguay, have a combined population of 275m people—and a total GDP of
$3trn, making it the EU’s biggest economic partner after Japan and Britain.
(Bolivia joined Mercosur this year, but is not party to the agreement). Total
trade between the two blocs is close to $150bn a year.
In a study of the 2019 agreement, Brazil’s Institute for Applied Economic
Research, a government-linked think-tank, reckoned Brazil would make the
biggest gains, with another $6.2bn in farm exports between 2024 and 2040.
But European exports of manufactured goods would rise too. And the EU got
Mercosur to recognise the geographical definition of more than 350
products: so no more Argentine “champagne” or Brazilian “gorgonzola”.

Perhaps more important, the agreement may prompt an increase in trade in

services and in European investment in Mercosur, says Welber Barral, a
former trade secretary for Brazil. “It increases legal security for investors
and reinforces it within Mercosur,” he says. In particular, Europe sets store
by secure access to critical minerals and raw materials for green energy.
Brazil and Argentina are significant sources of copper and lithium, while
Brazil also has rare earths. Above all, the agreement provides Europe with a
strategy for South America, a region where it remains a major economic
partner but has fast lost clout to China.

Lula’s switch from sceptic to champion of the deal reflects his desire for
Brazil to retain its autonomy in a world where Mr Trump and China both
push countries to take sides. Brazil has been discomfited by China’s drive to
expand the BRICS group into an anti-Western front. “Having alternatives is
crucial,” says Oliver Stuenkel of Fundação Getulio Vargas, a Brazilian
university. “The more Brazil and others in Latin America can work to
diversify their strategic partnerships, the better.” The same logic applies on
the European side.

The deal may revive Mercosur, a cornerstone of Brazil’s foreign policy since
the 1990s. It was close to death. The growth of its members’ exports of
commodities to China, the decline of industry as well as political volatility
have all reduced the importance the bloc had in the early years after its
founding in 1994. Partly because of Brazilian protectionism, Mercosur had
previously struck trade deals only with small economies, such as those of
Israel, Egypt and Singapore. Uruguay has flirted with striking a bilateral
trade deal with China, which would be against Mercosur’s rules. Argentina’s
new president, Javier Milei, has threatened to leave. The EU agreement “gives
Mercosur a lifeline,” says Mr Stuenkel. “If it goes through, there’s a chance
that Milei will stick with it.”

To ease ratification in Europe, the trade part has been duplicated in a

separate agreement that requires assent only by the European Council and
the European Parliament for it to take effect. The full treaty must be
approved by national parliaments. The council is likely to discuss the deal in
the summer.

It is torn between its protectionist instincts and geopolitical calculation.

France opposes the trade agreement but may not be able to get the necessary
blocking minority of at least four countries totalling 35% of the EU’s
population. With Germany, Spain and Sweden strongly in favour, the
outcome may depend on Poland and Italy. The EU’s credibility as an
economic partner will be at stake. ■

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resurrect-mercosur
The Americas | Unmasked

Nicaragua’s ruling couple tighten their grip

But the president-in-waiting is deeply unpopular
December 12th 2024

Most autocrats at least pretend to be in the business of democracy. Until

recently that was true of Nicaragua’s Daniel Ortega. But in November he
ripped off the mask. A comprehensive overhaul of the constitution approved
by the National Assembly on November 22nd gave legal status to the reality
that Nicaraguans already know: their country is a dictatorship and Rosario
Murillo, Mr Ortega’s wife, is his chosen successor.

The most important constitutional change was to elevate Ms Murillo, who

had been Mr Ortega’s vice-president, to “co-president”. This simplifies the
process of transferring power to her when the 79-year-old Mr Ortega dies
(Ms Murillo, 73, is likely to outlive him). The ruling couple are former
Marxist-Leninist guerrillas who helped topple a family-run dictatorship in
1979. Mr Ortega ruled until 1990, when he lost an election. Since his re-
election in 2006 he has made sure to install his family in positions of power
across the state; the couple’s children play key roles.

The constitutional overhaul, which must pass a second, token vote in the
National Assembly in January, changes the political model in other ways.
Checks and balances, cosmetic as they were, will be removed. The courts
and legislature will be mere “organs” of the state, controlled by the
presidency. The pair will have tighter control over the army and police; the
“voluntary police”—the regime’s paramilitary thugs—are now an official
body. The couple can further censor the media by prosecuting those they
think are spreading “fake news”, with a penalty of 15 years in prison.

The rights of Nicaraguans will be hollowed out in myriad other ways. Due
process, such as the right to a private conversation with a lawyer, will
disappear, says Juan Sebastián Chamorro, an opposition leader now in exile.
Anyone the state deems to be a traitor will be stripped of their citizenship.
The position of the Catholic church is under threat since religious
organisations have to be free from “all foreign control”. Banks and other
institutions in Nicaragua will be banned from applying international
sanctions.

Many of the legal changes enshrine the status quo. Ms Murillo has long been
viewed as the power behind the throne, and is believed to be the architect of
the fierce repression of recent years. When Nicaraguans took to the streets in
2018 the regime cracked down, killing at least 350 people and imprisoning
many more. In 2021 it locked up all seven main opposition candidates
(including Mr Chamorro) before the election (which, unsurprisingly, Mr
Ortega won). Charities, NGOS, universities and the Catholic church have all
been harassed by the regime or shut down.

Why make the changes now? Some speculate that Mr Ortega is ailing.
Others reckon he is taking advantage of a world distracted by Donald
Trump’s win. For all the condemnation from abroad, the ruling couple know
they can get away with it, says Dora María Telléz, a historian and former
guerrilla. Nicaraguans are cowed. On December 10th President Joe Biden’s
administration opened an investigation into Nicaragua’s abuses of labour
and human rights. But for the most part he has exerted minimal pressure.
The United States has imposed sanctions on people linked to the ruling
family and excluded the country from favourable tariff regimes, but
Nicaragua remains party to the Central American free-trade agreement with
the United States. Mr Ortega is hedging his bets through deals with China.

It is not clear what actions Mr Trump might take towards Nicaragua. The
death knell of democracy in Nicaragua is unlikely to move him. But his
nominated secretary of state, Marco Rubio, the son of Cuban émigrés, has
little time for leftist leaders like Mr Ortega. The regime’s crackdown has
caused many Nicaraguans to flee, adding to the migrant numbers that Mr
Trump wants to push down. Fully 13% of the population has left the country
since 2019, according to Manuel Orozco of the Inter-American Dialogue, a
think-tank in Washington, DC.

Should Mr Rubio come after him, Mr Ortega has a decent hand to play. He
has weaponised migration by offering visa-free transit though Managua, the
capital city, for migrants that hail from places as diverse as Haiti and India.
He could offer to cut that out. But he would also struggle to absorb hundreds
of thousands of Nicaraguans if Mr Trump carries out his threat to deport
people who entered the United States illegally. And Nicaragua would miss
their remittances, which account for almost 30% of GDP.

In time the ruling duo may destabilise Nicaragua all by themselves. The
shrinking of the inner circle to the Ortega-Murillo family could backfire if
others in the regime feel they no longer have opportunities, notes Ricardo
Zúniga, a former US state-department official. Ms Murillo is despised, for
being weird (her belief in magic is well documented), vengeful and power-
hungry. Yet for now her and her husband’s grip is iron-clad. ■

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their-grip
The Americas | Energy (in)security

The Caribbean struggles to break its dependence

on fossil fuels
But moving to renewables is slow and expensive
December 12th 2024

Venezuela’s government is prone to bouts of thuggery. In recent times,

desperate for cash, it has resorted to gangsteresque oil debt-collection. “Pay
up, you moron,” thundered Diosdado Cabello Cabello, Venezuela’s interior
minister, in a fight over $350m in arrears with Luis Abinader, the president
of the Dominican Republic, which relies heavily on fossil fuels (see chart).
We are the ones who have the oil, he warned on another occasion. The
alleged debt harks back to the days of PetroCaribe, a Venezuelan energy-
assistance scheme that once offered cheap loans to Caribbean countries that
bought its oil. It went bust in 2019. For Caribbean governments the spat is
yet another stark reminder of the fragility of their energy supplies.
The Caribbean islands are among some of the world’s most energy-insecure
countries. Fossil fuels account for roughly 90% of the region’s electricity
generation, and the vast majority of what is needed has to be imported.
Barring a couple of energy-rich countries like Trinidad & Tobago and
Guyana, the bulk of Caribbean states rely on costly and volatile oil imports.
Electricity prices are some of the steepest in the world. Tariffs average $0.25
per kilowatt-hour (kWh) across the Caribbean, more than double the rate in
the United States. On the Dutch island of Curaçao, a small colonial-era
vestige, consumers can pay up to a whopping $0.40 per kWh. Power outages
are common, courtesy of old and poorly maintained grids and the mounting
disruptions of climate change. Last week Cuba suffered its third nationwide
blackout in just two months, plunging millions into darkness for hours.

Power cuts and high costs are a drag on growth, argues Wazim Mowla, a
fellow at the Caribbean Initiative at the Atlantic Council, a think-tank. Take
tourism as an example. Although the industry accounts for a big chunk of
the region’s GDP, its beach resorts consume a lot of energy, mostly for air-
conditioning and lighting. Irritating power cuts and pricey rooms can push
holidaymakers to look elsewhere. One working paper published by the IMF
found that a 10% increase in oil prices reduced real GDP growth by 0.5
percentage points over half a decade in the Caribbean’s most tourism-
dependent economies.
For islands bathed in sun, littered with volcanic rocks and battered by strong
winds, the answer seems obvious: to harness cheap, renewable energy. In
Belize renewables now account for 80% of electricity generation, mostly in
the form of hydropower and biomass. Commissioned in 2018, Montecristi in
the Dominican Republic has become the region’s largest solar park,
brimming with some 215,000 photovoltaic modules. Dominica is busy
drilling geothermal wells. But elsewhere progress is slow. Figures from the
International Renewable Energy Agency show that the Caribbean doubled
its installed capacity of renewable power to 4,558 megawatts in the decade
to 2021. That might sound impressive, but it is roughly equivalent to the
power generated by a single large hydroelectric dam.

Several barriers hamper the region’s energy transition. One is scale. Its
islands are small and isolated, with limited space for big solar or wind farms,
points out Mr Mowla. Its electricity grids are similarly puny and its energy
markets lack integration. Two projects that might help, a Caribbean gas
pipeline led by Trinidad & Tobago and a regional electricity grid, have been
bogged down by regulatory and financial snafus. Add the region’s
vulnerability to natural disasters to the mix and it is easy to see why
investors are skittish.

Therein lies the bigger issue: financing. Estimates put the upfront costs for
the Caribbean’s energy transition at $5bn-7bn. But its governments have
little fiscal room. During the go-go years of cheap Venezuelan oil, many
doubled down on oil-dependent infrastructure and racked up big debts.
Considered “middle-income”, Caribbean countries are usually shut out of
concessional funding reserved for poor countries. Private investment,
deterred by small-bore and ad hoc projects, has been slow to materialise.
Sclerotic utility companies, meanwhile, face little competition or incentive
to innovate.

There are some bright spots. A slew of initiatives have cropped up in recent
years to relieve those pressures. A climate pact launched by the United
States aims to improve Caribbean access to international finance. The World
Bank announced $500m in assistance to Caribbean governments for
renewable-energy projects last year. But those governments could do more
to loosen regulations and improve their administrative capacity. They have
every reason to do so: cheap and plentiful energy would be a boon to the
region—and keep the debt-collectors off their backs. ■

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Asia
South Korea’s unrepentant president is on the brink
Bangladesh’s economic progress may have been hyped
India wields cricket as a geopolitical tool against Pakistan
How to clean up India’s filthy cities
Asia | The coup that crashed

South Korea’s unrepentant president is on the

brink
His attempt to impose martial law has triggered a constitutional crisis
December 12th 2024

“Seoul’s spring”, the highest-grossing South Korean film of 2023, tells the
story of how Chun Doo-hwan, a military dictator, seized power more than
40 years ago. It is supposed to be an edifying historical drama, a reminder of
the horrors the country endured under martial law and of how far it has come
in the decades since. Instead, on December 3rd, Yoon Suk Yeol, the current
president, staged a real-life sequel by imposing martial law for the first time
since Chun’s era. The film has shot back to the top of streaming platforms in
South Korea. Mr Yoon, however, has crash landed. After quickly
backtracking on the declaration of martial law, he now faces imminent
impeachment or even arrest.
Mr Yoon has been defiant since his failed self-coup. He survived an
impeachment vote in the National Assembly on December 7th, thanks to a
boycott by his People’s Power Party (PPP). The party then proposed an
“orderly” transition of power. But the dubious legality of this arrangement
caused a constitutional crisis. By law, Mr Yoon remained in charge of the
country and the commander-in-chief. In political and moral terms he had lost
all authority.

The president underscored his unfitness for office with a raving address on
December 12th, the 45th anniversary of Chun’s coup. He accused the
opposition of seeking to turn South Korea into a “paradise” for foreign spies
and a “drug den” overrun by “gangsters”. He railed against a “parliamentary
dictatorship” that thwarted his agenda and promised to “fight until the end”.
The speech came shortly after Han Dong-hoon, the head of the PPP, had
changed tack and called for immediate impeachment. The Democratic Party
(DP), the main opposition, will hold a vote on a second impeachment motion
on December 14th. Only eight PPP members need to break ranks for it to pass.

Pressure from the streets is also building. Protest movements have been a
powerful force in the country’s history, from the democratisation process in
the late 1980s to the impeachment of a former president, Park Geun-hye, in
2016-17. Tens of thousands gathered on December 7th. Smaller rallies have
since persisted. The mood is carnivalesque, with music, dancing and vendors
selling lighting sticks intended for K-pop concerts that have been plastered
with anti-Yoon slogans. But the protests are fuelled by real fury. “I’m too old
to be doing this in the cold, but I’m just so angry,” says Park Ju-yeon, a 62-
year-old pensioner from Seoul who promises to continue until Mr Yoon is
gone.

The picture of the fateful night of the coup has become only more disturbing
as details have emerged. Troops were dispatched not only to the National
Assembly, but also to the national election commission. Mr Yoon says this
was to gather evidence of purported North Korean hacking (which he
implies led to his party’s defeat in general elections in April). The president
ordered the arrests of leading politicians, including Lee Jae-myung, the head
of the DP, and even Mr Han. As farcical as the affair now seems, the intent
was all too serious. One special-forces commander testified that Mr Yoon
personally called him during the operation and ordered him to “break down
the doors” and “drag out” the lawmakers inside.

Only a small cabal, many of whom graduated from the same high school as
the president, knew of the plot in advance. Rhee Chang-yong, the governor
of the Bank of Korea, was among many senior officials who learned of the
impending martial law only when he saw Mr Yoon on television. The
declaration was so unlikely that “I initially thought the video was a deepfake
and that the television station had been hacked,” says Mr Rhee.

In retrospect, signs of Mr Yoon’s intentions had been visible. In recent

months he had moved loyalists into key positions in the defence ministry
and intelligence services. Opposition leaders had been warning of the
possibility of martial law since August. Mr Yoon’s defence minister, Kim
Yong-hyun, dismissed the idea as fearmongering during his confirmation
hearings. He ended up being the first official arrested in connection with the
plot; he attempted suicide while in custody.

Mr Yoon’s justification for his rash act is unlikely to convince many. Mr

Rhee calls the move an “unnecessary and unimaginable mistake” and an
“embarrassment”. Other current and former officials, politicians and
diplomats use even starker language: shameful, stupid, crazy, surreal,
unthinkable, outrageous, psychotic.

Liable to be a laughing-stock
The consequences will be far-reaching. Mr Yoon positioned his country as a
democratic bulwark, even co-hosting, with America, a “Summit for
Democracy” in Seoul this year. He promoted the idea of South Korea as a
“global pivotal state”. He has instead made it look ridiculous.

American officials insist that their alliance with South Korea remains
“ironclad”. Yet trust in it may suffer, especially since America had no
advance notice, despite having nearly 30,000 troops stationed there. South
Korea will also be in a worse position to manage Donald Trump, America’s
president-elect. A longtime sceptic of the alliance, Mr Trump discussed
withdrawing American troops from the Korean peninsula during his first
term. South Korea’s best hope of changing his views was for its leader to
forge a personal bond, but there is likely to be a leadership vacuum in Seoul
when he is inaugurated.

The political crisis may well drag on for months. If the National Assembly
approves a motion to impeach, the president will be suspended, with power
passing to the prime minister in the interim. The constitutional court then
must issue a final ruling within 180 days. The court has just six of its nine
seats filled (three justices retired in October). While only six votes are
needed to convict, in normal circumstances seven would be required for a
quorum. It is a matter of debate whether the court could issue a verdict in its
current state.

Prosecutors may get to the president even sooner. South Korean law makes
treason an exception to presidential immunity. The National Assembly voted
on December 10th to empower a special counsel. Investigators have already
put Mr Yoon on a no-fly list and moved to search his office.

Mr Lee, the DP’s presumptive presidential candidate, faces his own legal
problems, having been convicted of lying to investigators. (He calls the
charges politically motivated.) The PPP hopes that his conviction will be
upheld on appeal before the next election, barring him from running. A
second constitutional crisis looms if he tries to stand regardless.

Any DP candidate will be favoured to win the new elections. If they do,
foreign policy will be an area of “dramatic change”, reckons Kim Sook, a
former ambassador. Those changes will probably frustrate Western
governments that welcomed Mr Yoon’s alignment with America, Japan and
Europe. The DP may bid for more engagement with North Korea, which has
been happy to sit back and watch Mr Yoon’s antics. The relationship with
Japan will face friction. DP leaders are also loth to aid Ukraine or Taiwan.

The impact on South Korea’s economy will probably be more muted. “There
is a mechanism for economic issues to be dealt with irrespective of political
issues,” says Mr Rhee. Mr Yoon’s finance minister has agreed to take part in
a consultative body for emergency economic policymaking alongside the DP.
Daily life has continued without interruption since the abortive martial-law
attempt. Acute turbulence on financial markets proved short-lived. But
prolonged political uncertainty will make it harder to tackle longer-term
economic challenges. A DP president will want to implement labour-friendly
policies, while corporate-governance reforms that Mr Yoon promoted may
stall.

For all the turmoil, the incident has also highlighted the evolution and
resilience of South Korea’s democracy. During Chun’s rule, Ms Park, the
pensioner, and her husband, Hyeong-Bae, were too afraid to protest.
Previous periods of upheaval, including the massacre of protesters by
Chun’s forces in Gwangju in 1980, helped strengthen South Koreans’
dedication to democracy. “I hope this will be another of those episodes that
feeds into that process,” says Mr Park. The film version, when it inevitably
gets made, will write itself. ■
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the-brink
Asia | Miracle or mirage?

Bangladesh’s economic progress may have been

hyped
A new report highlights the challenges facing Muhammad Yunus’s interim
government
December 12th 2024

For years Bangladesh was hailed as an economic miracle. Sheikh Hasina,

who ruled it autocratically from 2009 until August this year, insisted she was
the brains behind the growth. Official statistics gave these claims legitimacy:
in the decade before the pandemic the economy grew by 7% annually, a rate
comparable with China’s. Yet this narrative has now been upended. A
student-led uprising has toppled Sheikh Hasina. And a new white paper,
published earlier this month, has shredded her economic legacy.

The report concludes that Bangladesh’s development story has been “hyped
up” and that it is underpinned by “cooked-up” GDP figures. The 385-page
study was written by a committee of experts whom the interim government
(led by Muhammad Yunus, a microcredit pioneer) tasked with examining all
aspects of Bangladesh's economy. Using work from the World Bank that
measures economic activity by examining the intensity of lights at night-
time, the report calculates new estimates for growth. It finds that the real rate
of expansion in 2018-19 may have been around 3%, not the roughly 7%
claimed by official statistics. The report accuses politicians of manipulating
GDP estimates for “domestic and external propaganda”.

The most egregious findings, however, concern corruption. The report

estimates that between 2009 and 2023 around $234bn was siphoned out of
Bangladesh. On an annual basis, that amounts to roughly 3.4% of GDP today.
These “illicit financial outflows” include money earned from different
activities, ranging from stockmarket scams to drug-trafficking. According to
the report, much of the graft came from big infrastructure projects. It claims
politicians, bureaucrats, businessmen and “wheeler-dealers of different
types” were involved.

Tales of corruption are not new to Bangladesh. But never before has it been
so widespread and pervasive, says Debapriya Bhattacharya, head of the
committee that wrote the white paper. Years of deep political dysfunction
have allowed the scourge to take root, he says.

All this makes fixing things tricky—especially as the interim government is

relying on the help of the very officials who were part of the previous
regime to implement its planned reforms. The report’s prescriptions include
setting up independent statistical and economic commissions.

But there are many more urgent things to do. Inflation is running high and
investment has collapsed due to months of political uncertainty. On
December 11th the Asian Development Bank slashed its growth forecast for
the country. The World Bank has said that half of all non-poor rural
households are at risk of falling back into poverty. If Bangladesh corrects all
this while rebuilding its institutions, that would be the real miracle. ■
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been-hyped
Asia | Banyan

India wields cricket as a geopolitical tool against

Pakistan
A spat over a big tournament highlights how bad relations have got
December 12th 2024

Subrahmanyam Jaishankar, India’s foreign minister, believes that diplomacy

is like cricket. Speaking at an event in November, he claimed that both
pursuits feature multiple players, changing conditions and intense
competition, which requires out-thinking “the other team”. Mr Jaishankar
may have been talking metaphorically, but cricket is taking on literal
meaning in Indian foreign policy. The country’s biggest passion is now an
active diplomatic tool—especially with Pakistan.

Over the past month, the neighbours have sparred over the Champions
Trophy, a big international tournament to be hosted by Pakistan in February
2025. India’s government refused to send its team to Pakistan. The decision
has infuriated Pakistan. To aggravate its neighbours, it threatened to take the
tournament’s trophy on a tour of the country, including the parts of the
region of Kashmir that India claims Pakistan is illegally occupying. It
backed down after the International Cricket Council (ICC) intervened. The
game’s global governing body is now planning to run a “hybrid model” for
the tournament, allowing India to play in a neutral venue while other teams
play in Pakistan.

The sticky wicket is hardly surprising. The Indian team has refused to travel
to Pakistan since 2008, a stance it has taken because of a terrorist attack in
Mumbai that Indian officials believe Pakistan abetted. Pakistani players
were also barred from participating in the Indian Premier League (IPL).

This reflects a broader deterioration in relations. Since the Bharatiya Janata

Party (BJP) came to power in 2014, India has taken a more muscular stance
towards Kashmir, the sore point in the relationship. Ties worsened after
several terrorist attacks in the region, which India accused Pakistan of
orchestrating, and then collapsed in 2019, when India revoked the territory’s
decades-long special constitutional status. That move gave India’s federal
government greater control over India-administered Kashmir and enraged
Pakistan. Since then, bilateral trade has all but ceased. Between April and
August this year, India imported nothing from its neighbour, while exporting
$235m, around 0.1% of total exports.

Cricket once played a conciliatory role between the two countries. In 1987
and 1996 officials from India and Pakistan worked together to jointly host
the World Cup, the biggest event in the sport. In 1999 the Pakistan team
travelled to India. In 2004 India reciprocated. Off the field, the tours were
accompanied by bilateral summits. And in the stadiums, fans in both
countries greeted the opposition warmly. Some even hoped that “cricket
diplomacy” could replicate the success of “ping-pong diplomacy”, when a
series of table-tennis games helped thaw America-China relations in the
1970s.

That now seems unthinkable. Politics in India is much more nationalistic and
cricket much more politicised. In 1999 and 2004, Atal Bihari Vajpayee, the
BJP prime minister at that time, dismissed protests from Hindu nationalists

about engaging with Pakistan. Narendra Modi, the current prime minister,
however, has taken a more combative stance. His party also enjoys far more
power over Indian cricket. The de facto national stadium is the Narendra
Modi Stadium and several members of the Board of Control for Cricket in
India (BCCI), the governing body, have links to the BJP. Until November, the BCCI
was run by Jay Shah, the son of Amit Shah, the home minister and Mr
Modi’s right-hand man.

Last week the younger Mr Shah was elevated to manage the game globally
at the ICC. The fear among many non-Indian cricket fans is that he will use his
new job to further promote India’s interests: by pushing through the “hybrid
model” for the upcoming Champions Trophy, for example. Under his watch,
the BCCI took a hostile attitude towards Pakistan, mirroring the Indian
government’s stance. Conversely, like the government, the BCCI has been more
receptive to Afghanistan. It has helped finance the game’s development
there. Afghan cricketers are welcome to play in the IPL.

It is unclear if such policies will help India achieve its goals for its relations
with Pakistan, which include engaging in bilateral dialogue and eliminating
cross-border violence. So far they have not. But more than foreign policy,
India’s cricketing stance may be influenced by domestic politics. Many
Indians delight in the BJP’s aggressive approach. According to a survey by
Pew Research, in 2023 around 70% of Indians said they held an
unfavourable opinion of Pakistan.■

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tool-against-pakistan
Asia | Rubbish story

How to clean up India’s filthy cities

As the country gets richer it consumes more—and throws away more, too
December 12th 2024

PANJIM, THE capital of the Indian state of Goa, is known for its pretty
churches and Indo-Portuguese homes. But 20 years ago it looked like any
other Indian city: filthy. Some 1,500 community waste-collection bins
overflowed with mixed rubbish. Their contents were dumped beside a
nearby village, growing into a mountain of garbage. Eventually, in the
monsoon of 2005, the trash-heap collapsed, sending refuse into homes.
Revolted, villages revolted; the site was closed. City officials looked for
another site but no one would take their waste.

Panjim today is a very different place. The city replaced its system of bins
with door-to-door collection. Blocks of flats must segregate their rubbish
into wet (mostly, food) waste used for compost and biogas, and 16
categories of dry, including one just for coconuts. (Goans consume five to
eight coconuts per person each month; the national average is less than one.)
The state has a no-landfill policy.

It took time, political will, carrots and sticks, but by 2021 99% of the waste
collected in Panjim was segregated at source, 80% was processed and 90%
of streets efficiently swept, according to a report by NITI Aayog, a government
think-tank, and the Centre for Science and Environment (CSE), another think-
tank in Delhi. A system born of crisis is today cited as an example of “best
practices” for other cities to follow.

Yet these models remain isolated bright spots. Much of India is covered
under a shroud of plastic bags, snack packets, drink bottles and organic and
human waste. A fifth of the population has no waste collection. Piles of
garbage fester at street corners and along main roads and railway tracks. The
problem is becoming more urgent: urban India generated some 50m tonnes
of municipal solid waste in 2021. That is likely to jump to 125m tonnes by
2031, according to CSE. “We have achieved rocket science but we are not able
to achieve [a] three-bin system,” laments Shobha Raghavan of Saahas Zero
Waste, a waste-management firm.

As the quantity of rubbish grows, its nature and harms are changing too.
Most of India’s waste used to be organic. Now the share of non-
biodegradable waste is climbing. India today has more consumer goods, and
more people with more money to spend on those goods. The growth of e-
commerce and food-delivery apps has led to a rising tide of packaging.

Rubbish is not just malodorous and unsightly. In cities it spreads disease and
attracts vermin. In the countryside it contaminates the soil and pollutes water
sources. And in many places without organised collection and processing,
waste is simply burnt—or, in methane-emitting landfills, spontaneously
combusts—exacerbating India’s air-pollution crisis.

Under Narendra Modi, the prime minister, India has prioritised cleanliness.
In 2016 the government framed national rules for the management of solid
waste, which among other things mandated waste segregation. In late 2021
Mr Modi launched a new iteration of his government’s flagship “Swachh
Bharat Mission”, or “Clean India Mission”, which until then had mostly
focused, with some success, on building toilets and eradicating open
defecation. The newer programme’s goal is to make all Indian cities
garbage-free. The central government has earmarked 365bn rupees ($4.3bn)
for the effort.

A rising tide of packaging

The way to fix India’s rubbish crisis is difficult but it is not complicated. The
most important element is waste-sorting by homes, offices and shops. Cities
should start with modest aims, asking for wet and dry segregation, before
adding categories for recyclables and sanitary waste. Simple nudges, such as
collecting different types of waste on different days, can help. Efforts to
educate citizens and incentivise compliance must be consistent, too.

All this requires political will. Goa was fortunate: its efforts to clean up have
been supported by leaders of various political stripes. “Now for Goa, this is
irreversible,” says Sanjit Rodrigues, an official who has spearheaded the
state’s waste-management overhaul.

But elsewhere in India “there is no political ownership of the agenda,” says

Srikanth Viswanathan of Janaagraha, an NGO. Elected officials in cities have
limited power. At the level of states, politicians have little interest in
something as unsexy as waste management. “I have not seen a single
politician win or lose an election on the issue of garbage and sanitation,”
says Ankur Bisen, the author of “Wasted”, a book about sanitation in India.

India’s biggest cities are the worst laggards. Mumbai mandated waste
segregation in 2016. Today only about a quarter of its wet waste is properly
sorted, says Mahendra Ananthula at Antony Waste, a firm that handles much
of the city’s rubbish. For an extremely dense city, with about half its
population living in slums, “that’s not a bad achievement,” he says. But nor
is it something to boast about.

Instead, it is smaller cities that are leading the way on waste management.
They face less interference from state leaders and there is less resistance
from politicians to giving them some autonomy. They “still have the ability
to do better governance and are able to do this faster and better,” says Sunita
Narain, the head of CSE. Panjim and many other small cities have proved it is
possible to clean up India. Until Mumbaikars and Bangaloreans demand
better, they can only look on in envy.■

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China
MAGA with Chinese characteristics
Chinese hackers are deep inside America’s telecoms networks
Why China is losing interest in English
China cracks down on Karate-chopping cleaning ladies
China | China and America

MAGA with Chinese characteristics

Why many in China cheer for Donald Trump, despite his tariffs and team
of hawks
December 9th 2024

THE INTERNET in China is not a friendly place for admirers of anything

American. Fire-breathing nationalists, helped by censors who are quick to
stamp out liberal views, rule the roost. Yet as China digests the implications
of Donald Trump’s re-election as president, including his threat of huge
tariffs on Chinese goods, many netizens see in him something to like. In
their own world of economic anxiety and yawning social divides, strands of
the MAGA movement seem familiar. China’s nationalists can be surprisingly
Trumpian. Some of them are even pro-Trump.

To be sure, many of those who cheer for Mr Trump do so out of contempt

for America. They share clips of his moments of buffoonery and sneer at his
nominations for cabinet posts—don’t they prove what a sham democracy is,
with jobs so flagrantly doled out to loyalists regardless of their suitability?
The nationalists relish the thought that Mr Trump might weaken American
support for Taiwan or end military aid for Ukraine. They refer to him by a
nickname: Chuan Jianguo, meaning “Trump the Nation Builder”. It is
supposed to be ironic—they mean he is making China stronger by
undermining America.

But China’s nationalists also genuinely admire aspects of Mr Trump. They

like his strongman image and the conservative social views he professes.
“There are many lessons to be learned by our government departments about
Trump’s coming to power,” wrote a doctor, Ning Fanggang, who has nearly
1.6m followers on the microblogging site Weibo and supports attacking
Taiwan as well as condemning LGBT activism. “The most important takeaway
is this: loud voices do not necessarily represent the true will of the people,”
he said, referring to Democrats’ backing for LGBT rights. “Trump’s election
revealed that the vast majority of ordinary people were opposed to those
ideas deep down.”

In recent weeks Chinese nationalists have expressed outrage at a video

showing Jin Xing, a transgender celebrity, raising a rainbow flag at a
performance (Ms Jin was once a male colonel in a Chinese army dance
troupe). They have also applauded Mr Trump’s campaign speeches on trans
issues. A Weibo user with more than 700,000 followers posted a clip of one
of them, in which Mr Trump pledged to “defeat the toxic poison of gender
ideology”. Ms Jin and people like her, said the blogger, “must be hopping
mad with rage”. Commenters agreed. “This is why I don’t want Trump to
win,” said one. “Only Harris can make America even worse.”

Many of the nationalists brush off Mr Trump’s talk of imposing tariffs of

60% on Chinese goods. One of them is Ren Yi, a Harvard-educated
princeling (as descendants of powerful politicians are known). Mr Ren goes
by the name “Chairman Rabbit” on social media (his Weibo followers
number more than 1.8m). He tells The Economist that Mr Trump’s instincts
are not necessarily anti-China.

For example, he notes, the president-elect has suggested that he would

reverse a ban on TikTok, a Chinese-owned video-sharing app, and invite
Chinese carmakers to do business in America. The tariff talk is just a tactic,
Mr Ren believes: Mr Trump might change his mind if Chinese companies
invest in America. Mr Ren and other nationalists see promise in Mr Trump’s
close associate, Elon Musk, whose car firm, Tesla, makes more than half of
its vehicles in China. Some of Mr Trump’s picks for government posts may
be China hawks, but others, like Mr Musk, seem to be “much more open” to
China, Mr Ren says.

A particularly vocal group of nationalists is known as xiaofenhong, or “little

pinks”. These young, fiercely patriotic netizens are not the kind of people
who, in America, would be thought of as typical Trump supporters. Chinese
academics say the pinks are often well educated and urban. The original
little pinks were mainly young women, though the group is now more
diverse. As with MAGA types in America, the main targets of their discontent
are liberals at home, such as Ms Jin.

Public opinion in China is polarised. Culture wars rage, just as they do in

America. Some nationalists share the misogynist worldview of young men
in the West known as “incels” (involuntary celibates), who blame their
inability to form sexual relationships on supposedly over-empowered and
picky women. In China, such people sometimes self-deprecatingly call
themselves diaosi, which literally means “dick hair”. They do endless battle
online with China’s equally fiery feminists.

Cyber-liberals point out the irony of their opponents’ pro-Trump views.

“Some so-called ‘little pinks’ and patriotic bloggers on Weibo spend their
days opposing feminism and LGBT rights, demonising the left, and end up
idolising one extreme anti-China, deranged right-winger after another,”
wrote a Weibo user who has more than 390,000 followers after Mr Trump’s
victory.

Pro-Trump sentiment, however, will not persuade China’s leader, Xi Jinping,

to be better disposed towards America’s next president. Mr Xi shares the
nationalists’ views on social values. And he would doubtless love it if Mr
Trump were to prove as transactional on Taiwan, and as unsympathetic to
Ukraine, as his supporters in China hope he will be.
But Mr Xi is surely anxious about Mr Trump’s return. It will make China’s
relationship with America more unpredictable. It could also—if Mr Trump’s
threatened tariffs do indeed materialise—further damage China’s struggling
economy. America’s election may even have reminded the stability-obsessed
Mr Xi of something the little pinks may be wary of saying out loud: citizens
embittered by economic malaise can turn against elites. ■

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China | Intruder alert!

Chinese hackers are deep inside America’s

telecoms networks
Rooting them out is proving a challenge
December 12th 2024

NEWS OF THE hack began trickling out in September, but the American
government waited weeks to confirm the reports. Only this month did it
begin briefing members of Congress and the media. Officials say a Chinese
hacking group dubbed Salt Typhoon compromised at least eight of
America’s telecoms networks. The intruders stole the call-record metadata of
a “large number” of Americans. They gained access to the wiretap requests
of security agencies—meaning they could work out if any Chinese spies or
agents were under American surveillance. And they targeted phones used by
officials and politicians, reportedly including Donald Trump, J.D. Vance and
members of the Biden administration and the Harris-Walz campaign.
Mark Warner, the chairman of the Senate Intelligence Committee, has called
it the “worst telecom hack in our nation’s history—by far”. After receiving a
briefing from intelligence agencies, Brendan Carr, the incoming chair of the
Federal Communications Commission, said: “It made me want to basically
smash my phone.” The hackers remain inside the networks. American
officials are struggling to understand how deeply they have penetrated. The
government does not know when it will be able to root them out.

The work of Salt Typhoon is the latest demonstration of China’s hacking

capabilities. In 2023 American officials discovered that intruders from
another Chinese group, Volt Typhoon, were lurking inside networks attached
to America’s critical infrastructure. (“Typhoons” are a naming convention
used by Microsoft, a tech giant, for China-affiliated hacking groups. Russian
groups are called “blizzards”, Iranian groups are “sandstorms”.) The
Chinese weren’t disrupting anything, just checking in every six months to
ensure they still had access. They had been doing this for five years before
the hack was discovered.

The discovery of the Volt Typhoon intrusions was the first time American
officials were able to find Chinese hackers “preparing for conflict on our
networks”, says Brandon Wales, the former executive director of America’s
Cybersecurity and Infrastructure Security Agency. Since then American
officials have been sounding the alarm. China was called the “most active
and persistent” cyber-menace in this year’s threat assessment by the
American intelligence community. Christopher Wray, the outgoing FBI
director, has said that even if every one of his cyber-agents and intelligence
analysts worked exclusively on China, they would still be outnumbered by
China’s hackers “by at least 50 to 1”.

China’s prowess at hacking is the result of more than a decade of investment

by the government. The push under Xi Jinping, China’s leader, was
motivated by a sense of threat, says Dakota Cary of the Atlantic Council, a
think-tank. Mr Xi came to power in 2012, shortly after China discovered and
executed more than a dozen of the CIA’s informants in the country. Then, in
2013, Edward Snowden revealed that America had been hacking hundreds
of targets in China. In response, Mr Xi established a new agency and a
Communist Party committee focused on cyber-security. The state certified
some Chinese universities as “world-class cyber-security schools” and
China’s top intelligence agency started sponsoring hacking competitions. (A
recent report by Chinese universities said that the country is producing
30,000 new cyber-security experts each year.) The Ministry of Public
Security has also made it harder for Chinese experts to share with the public
vulnerabilities they discover in commonly used tech. These are now reported
to the government.

China denies that it is behind the recent hacks in America. Officials in

Washington aren’t having it. On December 4th security agencies in America
issued a joint statement with those of Australia, Canada and New Zealand on
how to strengthen telecoms networks against the Salt Typhoon hack. New
defences are needed. China is just beginning to reap the benefits of its
decade-long investment in cyber-activities, says Mr Cary. “We’re just
getting to the part where their hackers are really good.” More typhoons are
coming. ■

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China | Language lessons

Why China is losing interest in English

Learning the world’s lingua franca is no longer a priority for students or
businessmen
December 12th 2024

IN PREPARATION FOR the summer Olympics in 2008, the authorities in

Beijing, the host city and China’s capital, launched a campaign to teach
English to residents likely to come in contact with foreign visitors. Police,
transit workers and hotel staff were among those targeted. One aim was to
have 80% of taxi drivers achieve a basic level of competency.

Today, though, any foreigner visiting Beijing will notice that rather few
people are able to speak English well. The 80% target proved a fantasy:
most drivers still speak nothing but Chinese. Even the public-facing staff at
the city’s main international airport struggle to communicate with foreigners.
Immigration officers often resort to computer-translation systems.
For much of the 40 years since China began opening up to the world,
“English fever” was a common catchphrase. People were eager to learn
foreign languages, English most of all. Many hoped the skill would lead to
jobs with international firms. Others wanted to do business with foreign
companies. Some dreamed of moving abroad. But enthusiasm for learning
English has waned in recent years.

According to one ranking, by EF Education First, an international language-

training firm, China ranks 91st among 116 countries and regions in terms of
English proficiency. Just four years ago it ranked 38th out of 100. Over that
time its rating has slipped from “moderate” to “low” proficiency. Some in
China question the accuracy of the EF index. But others note that this apparent
trend is happening when China is also growing more insular.

During the covid-19 pandemic, for example, China shut its borders. Officials
and businessmen, let alone ordinary citizens, made few trips abroad. Long
after the rest of the world began opening up, China remained closed. At the
same time, China’s relations with the world’s biggest English-speaking
countries soured. Trade wars and diplomatic tiffs strained its ties with
America, Australia, Britain and Canada.

The mood is such that legislators and school administrators have tried to
limit the amount of time devoted to the study of English, and to reduce the
weight given to it on China’s all-important university-entrance exams. In
2022 a lawmaker proposed de-emphasising the language in order to boost
the teaching of traditional Chinese subjects. The education ministry
demurred. But a professor at one of China’s elite universities says many
students consider English less important than it used to be and are less
interested in learning it.

As China’s economy slows, people have become more cautious and inward-
looking. Today fewer Chinese are travelling abroad than before the
pandemic. Young people are less keen on jobs requiring English, choosing
instead to pursue dull but secure work in the public sector.

Then there are translation apps, which are improving at a rapid pace and
becoming more ubiquitous. The tools may be having an effect outside
China, too. The EF rankings show that tech-savvy Japan and South Korea
have also been losing ground when it comes to English proficiency. Why
spend time learning a new language when your phone is already fluent in it?
■

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China | Too much drama

China cracks down on Karate-chopping cleaning

ladies
The government doesn’t want people to be excessively entertained
December 12th 2024

“HOW DID this cleaning lady steal everything from me? I’ll kill her!” yells
the villainous Miss Wang in “Cleaning Mom, the Return of the Infinite”, a
soap opera released in October. In the finale, the titular heroine knocks Miss
Wang out with a karate chop and then (spoiler alert) marries a millionaire
who is young enough to be her son. So ends a storyline featuring multiple
betrayals and knife attacks. It unfolds at a frenzied pace over 36 two-minute
episodes.

Micro-dramas, as this type of entertainment is known, are wildly popular in

China. They are typically made on shoestring budgets. Yet some have been
watched over a billion times, according to Kuaishou, a mobile-phone app
which streams them. The first few episodes of a micro-drama are usually
free. Viewers then have to pay or watch adverts to unlock the rest. Between
2021 and 2023 the market for micro-dramas grew ten-fold, to 37.4bn yuan
($5.3bn). It could be worth 100bn yuan by 2027, projects iiMedia Research,
a data provider.

The Chinese authorities, though, think some micro-dramas are sending the
wrong message. Officials dislike a popular trope where someone of humble
background marries into wealth and power. Such fantasies are at odds with
Communist Party ideology, which extols grit. China’s leader, Xi Jinping, has
said happiness is earned through struggle. On November 22nd China’s
regulators released a notice banning micro-dramas that use this trope or
otherwise depict “people getting something for nothing”. Such shows
“deviate from mainstream values” and are often “excessively entertaining”,
the notice said.

Micro-dramas should instead focus on wholesome themes, such as the value

of hard work and communities living in harmony, say regulators. China’s
state-run media have picked out a show called “The Story of Suzhou” for
praise. It follows a group of young people working to protect the cultural
heritage of Suzhou, a city in the east. “Is it necessary to redesign the traffic
system in the old town?” asks a character at one point. The show is not
excessively entertaining.

A few rags-to-riches micro-dramas, including “Cleaning Mom”, have

already been removed from streaming platforms by censors. But the industry
will probably figure out a way to skirt the regulations, says a script-writer.
Show titles could be tweaked, for instance, to make them sound more
grounded, and plots could be toned down. The demand for schlockier fare
does not seem to be diminishing. Some Chinese on Weibo, a social-media
platform, have criticised the new rules. “Life is hard enough already,” said
one. “Do you want me to watch miserable TV dramas too?”■

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cleaning-ladies
Middle East & Africa
Protests have shut down Mozambique
Kenyan women are fed up with rampant sexual violence
Binyamin Netanyahu is in court again in Israel
Sudan’s football team wants to reach the World Cup
Middle East & Africa | Tremors of earthquakes to come

Protests have shut down Mozambique

The aftermath of a rigged election is threatening a social revolt
December 11th 2024

Fallen electricity poles, burnt tyres and scattered stones lie in the narrow
streets of Maxaquene, a neighbourhood in Maputo, the capital of
Mozambique. They tell of the protests that have rocked the nation of 35m
people since a disputed election in October. “So many people want to
change the country,” says Jaime, a student, shopkeeper and first-time
protester. He is angry about unemployment, corruption and police brutality.

The violence in Mozambique, in which more than 100 people have so far
been killed, is particularly bad. Yet the underlying frustrations are
widespread. In cities throughout Africa, many young people feel much like
Jaime. In Botswana, Ghana and Senegal voters angry about corruption and
the cost of living turfed out incumbent parties this year. Where that option
was unavailable, such as in Kenya, they have taken to the streets.

Mozambique’s ruling party, Frelimo, has been in charge since independence

from Portugal in 1975. The electoral commission says that its candidate,
Daniel Chapo, won 71% of the vote in October. Nobody believes that.
International observers say the ballot was marred by irregularities. The
independent candidate, Venâncio Mondlane, who officially scored 20%,
claims he was the real winner and has called for a revolution. Though he has
offered little evidence, his supporters are taking him at his word. A protest
against vote-rigging has turned into a social revolt.

There was a time when the way to overthrow an undemocratic African

government was by launching a rural rebellion. Mr Mondlane, a part-time
pastor with a populist touch, is one of a new breed of politicians who instead
harness the frustrations of young people in cities. To them he is simply
“VM7”, after Cristiano Ronaldo, a champion footballer who wears the
number-seven shirt and styles himself “CR7”. His live Facebook broadcasts,
delivered from a hiding-place abroad, have become popular viewing. He
keeps things interesting by announcing new tactics, from jamming traffic to
banging saucepans.

His followers have gone further. Angry crowds have attacked police stations,
court houses and Frelimo party offices. In one town they broke open the
prison and set scores of inmates free. Several times protesters have closed
the main border crossing with South Africa. “Those in power cannot govern
the country any more,” says a civil servant. As the state’s authority
evaporates, opportunists have set up informal toll gates to shake down
drivers.

The protesters believe the economy is rigged against them, just as surely as
the election was. The average Mozambican is poorer than nine years ago
(and, with an annual income of barely $600 per person, poorer than almost
anyone else in the world). Many consider Frelimo, which sees itself as the
party of the people, a conspiracy of the corrupt. A decade ago officials in
Maputo plotted with bankers in London and a shipbuilding company in
Lebanon to borrow more than $1bn in secret, pocketing millions of dollars
in kickbacks along the way. The economy crashed when the hidden debts
were revealed in 2016. Some of the money was used to buy overpriced
fishing trawlers, which now lie rusting in the harbour; an auction to sell
them this month did not attract a single bid.

Politicians profit from the foreign capital that flows into the country and the
natural resources that flow out. “Frelimo is not a political party, it’s a
scheme to make business,” says João Feijó, a sociologist. The northern
province of Cabo Delgado has become a thoroughfare for smuggling rubies,
heroin and timber, and a base for the local franchise of Islamic State, which
recruits among those shut out of riches. In 2021 TotalEnergies suspended a
vast gas project there after jihadists massacred hundreds of civilians.
Protesters in the province have toppled a statue of Alberto Chipande, the
man whose finger supposedly fired the first shot in Mozambique’s war of
independence, and who now has fingers in several businesses.

Frelimo’s leaders have offered no response except bullets. On December

10th Plataforma Eleitoral Decide, a monitoring group, said security forces
had killed at least 110 people since the protests began. Among the victims
are children shot dead while walking home from school or queueing for
bread. Police chiefs have said that protesters are terrorists and accused them
of using children as human shields. Still the demonstrations grow. People are
so appalled by the arrogance of the government that they have “started
losing their fear”, says Quitéria Guirengane, an activist.

A climax may come around Christmas, when the constitutional court is

expected to validate the election results. The judges say they have received
death threats, without saying from whom. In October an opposition lawyer,
who was preparing submissions to the court, was gunned down in his car.
Mr Mondlane has told his followers to cancel their festive plans so that they
can take to the streets when Mr Chapo’s victory is confirmed.

Neither side is in the mood for compromise. Mr Mondlane has said that a
rerun election would not satisfy him. The outgoing president, Filipe Nyusi,
has hinted at talks without conceding that there is anything to talk about. The
sentiment in the army is unclear. Neighbouring governments, some of which
have also had dodgy elections, have been silent, even though the crisis is
hurting regional trade.
Even if the election dispute is solved, fixing a broken economy will be
harder. The growth of cities and the spread of smartphones and education
have raised hopes that have not been fulfilled. Governments across Africa
are grappling with similar problems. The eruption in Mozambique will not
be the last. ■

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Middle East & Africa | Getting away with murder

Kenyan women are fed up with rampant sexual

violence
A spate of horrific murders has fuelled a campaign to end femicide
December 12th 2024

Each fresh killing seems more gruesome than the last. In July the hacked-up
remains of nine women were found stuffed into sacks in a quarry in Nairobi,
Kenya’s capital. In September Rebecca Cheptegei, a Ugandan Olympic
runner who was living in Kenya, was doused in petrol and set on fire by her
estranged boyfriend. And in October police found the remains—apparently
boiled, flesh methodically removed—of a female body near a cemetery in
Nairobi.

Kenyan women have had enough of the grim routine. Back in January
10,000 protesters took to the streets of Nairobi, after at least 31 women were
killed in a single month. The protest sparked a sustained campaign to “end
femicide”. Activists want the government to make the murder of a woman or
a girl because she is female a specific crime. But misogynistic social-media
influencers are stoking hate against women online. And there are signs that
the violence is getting worse.

Campaigners have had some success highlighting the problem. A new

survey by the Ichikowitz Family Foundation, a South African charity, finds
that 95% of young Kenyans are worried about violence against women, a
higher proportion than in any other country in Africa bar South Africa.
Several MPs say that femicide should be declared a national disaster.

Yet a reduction in violence looks far off. A study by Africa Data Hub, a
research group in Nairobi, counted more than 500 reports of femicide in the
Kenyan media between 2016 and 2023, with a sharp spike between 2022
and 2023. The real number is likely to be much higher. Many crimes in
Kenya are never reported to the police; only the most heinous killings make
the news. “We can assume this is just the tip of the iceberg,” says Irungu
Houghton of Amnesty International, a human-rights group.

If anything, things seem to have worsened in 2024. The number of reported

rapes has increased by 40% compared with 2023, according to the
government’s latest national-security report (though some of this may be
down to improved reporting). Kenya’s deputy police chief notes 97 women
were murdered in just the three months up to November, though it is unclear
how many were killed on account of their sex. “Every single day you wake
up and a woman has been killed somewhere,” says Muthoni Maingi, a
leading campaigner.

Change is likely to be slow. In Kenya, as in many African countries,

patriarchal values are entrenched. According to the latest demographic and
health survey, more than a third of Kenyan women have experienced
violence. Some 13% have experienced sexual violence. As elsewhere, the
main perpetrators are intimate partners. Three-quarters of femicides counted
by Africa Data Hub were committed by men who knew their victims.

Economic trends may have made things worse. In 2020, when covid-19
lockdowns slowed the economy, incidents of violence against women went
up by more than 90%, according to Kenya’s National Crime Research
Centre. Since then the economy has struggled; 67% of those under the age of
34 have no regular job. For men for whom “money is connected to his status
as a man”, economic frustration may make them lash out against women in
their lives, says Onyango Otieno, another activist.

Male anger is also being stoked online. A network of misogynistic

influencers has exploded in recent years. Figures such as Amerix (whose
real name is Eric Amunga) and Andrew Kibe boast huge followings of
young men, to whom they offer advice on how to be “real men” and control
their wives and girlfriends. Though no direct link can be drawn between
individual murders and specific online influencers, Kenya’s “manosphere”
“rationalise[s] women’s murders as part of disciplining women back into
their traditional roles,” argues Awino Okech of the School of Oriental and
African Studies in London.

On December 10th women were back on the streets of Nairobi. They expect
little from the government. The dispiriting truth, says Wangui Kimari, an
academic, is that in Kenya “it is easy to kill a woman, and get away with it.”
■

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Middle East & Africa | Back in the dock

Binyamin Netanyahu is in court again in Israel

As he fights charges of corruption, his country’s democracy may suffer
December 12th 2024

The small but noisy groups of protesters shouting at each other outside the
Tel Aviv District Court on December 10th agreed on one thing. It was
absurd for the man running a country, with wars on several fronts, to spend
three days a week in court defending himself against complex corruption
charges. Critics of Binyamin Netanyahu, Israel’s first serving prime minister
to appear as a witness in his own defence in a criminal trial, think he should
resign and face his manifold legal challenges as an ordinary citizen.

His supporters, however, are convinced he is indispensable. They consider

the whole case a witch-hunt that should be called off. As for Mr Netanyahu,
in recent weeks he has tried in vain to get a security assessment that it was
dangerous for him to attend court at fixed times in the same place. Then he
said he had too little time to prepare his testimony. Finally, he denied ever
having tried to delay the show. “I’ve waited eight years for this moment,” he
told the court. “I’m a marathon-runner” who can prevail “with 20kg on my
back”.

The investigations into Mr Netanyahu’s affairs began in 2016. Charges of

fraud and bribe-taking were laid against him five years ago. He is accused of
accepting illicit gifts from rich benefactors and colluding with media barons
to get favourable coverage. He strenuously denies all the charges.

At the start of his testimony Mr Netanyahu claimed that what the media say
about him “is not really important”, then went on to explain in detail how
journalism in Israel works and defended his meetings with publishers and
editors to influence journalistic appointments.

The case has dragged on so long for many reasons, including covid-19, the
war against Hamas since October 7th 2023, delaying tactics by Mr
Netanyahu’s defence team, and the slow pace of Israel’s courts. Judges are
overloaded partly because Mr Netanyahu’s coalition has tried to change the
judicial-appointments system and, having failed to do so, has been
obstructing the existing process.

Mr Netanyahu’s legal travails have been responsible for forcing the country
to hold five elections in four years, as centrist parties have refused to join a
government led by an indicted prime minister. In 2021 he lost power for 18
months but came back at the end of 2022 with a coalition supported by far-
right and religious parties that share his hostility to Israel’s courts.

The ambitious judicial reforms that he promoted last year aimed to weaken
the Supreme Court and independent legal counsel to government but were
largely stymied by a massive wave of protest. They were then dropped in the
name of national unity after last year’s war in Gaza began.

But in recent months his government has restarted the campaign to increase
control of parts of the state. This includes laws now going through the
Knesset, Israel’s parliament, that would let politicians fire the attorney-
general and control the appointments of the commissioner of the civil
service and of the ombudsman investigating complaints against judges.
Other laws would grant members of parliament virtual immunity from
investigation and would defund or privatise Israel’s stubbornly independent
broadcasting corporation. In his autobiography in 2022 Mr Netanyahu says
he has “always been a staunch believer in liberal democracy” and been
“immersed since my teens in its classical texts”. That assertion may be
tested under cross-examination by the prosecution.

Mr Netanyahu is the first of many witnesses for the defence. It could be

years before a verdict is reached. But Israel’s courts have held Israeli leaders
to account before. Ehud Olmert, a former prime minister, was jailed for
bribery. Mr Netanyahu is determined to avoid that fate. But by clinging to
power by every means, he may undermine Israel’s democracy. ■

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Middle East & Africa | Playing on

Sudan’s football team wants to reach the World

Cup
International support and canny management have helped the squad defy
civil war
December 12th 2024

Football fans usually dread a nil-nil draw. Not so the Sudanese who watched
their national team’s goalless game against Angola in November. The result
qualified Sudan for the next Africa Cup of Nations (AFCON), which kicks off in
Morocco in December 2025. The team danced and sang in celebration.

Reaching AFCON is impressive. Sudan won in 1970, but has appeared only
rarely since then. This time it beat some of Africa’s strongest sides, such as
Ghana, a remarkable feat for a country in the grip of civil war. Perhaps
150,000 people have been killed and more than 11m displaced in fighting
between the Sudanese army and the Rapid Support Forces (RSF) since April
2023.

Football was one casualty. The Sudan Football Association (SFA) disbanded
the professional league when the war began. As the RSF advanced, some clubs
found their stadiums looted. Many players and staff fled abroad.

International help let Sudan play on. The SFA found sanctuary in Saudi Arabia,
which provided a training base for players to keep fit, though the women’s
team, established in 2021, has not been included. Libya, which hosted the
match against Angola in Benghazi, allowed clubs to each sign two Sudanese
footballers outside a quota for foreign players. The side has used the stadium
in Benghazi free of charge. Thousands of supporters, many of them
Sudanese refugees, have turned up to matches.

But the biggest factor in Sudan’s unlikely success is canny recruitment. In

2023 the SFA appointed a Ghanaian manager, Kwesi Appiah. He brought
together footballers from Sudanese clubs with those in the diaspora. They
praise him for motivating them to win on behalf of those at home. He may
be crowned coach of the year by the Confederation of African Football in
Marrakesh on December 16th.

The team now hopes to reach the World Cup for the first time in Sudan’s
history. It currently tops its qualification group. Football cannot heal the pain
of war—but it can provide some joy.■

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wants-to-reach-the-world-cup
Europe
Spain shows Europe how to keep up with America’s economy
Syrian refugees in Europe are not about to flock home
The Polish restaurants that dare to be dairy
Amid Russian bombing, Ukraine is planning more nuclear reactors
Why Romania cancelled a pro-Russian presidential candidate
Europeans are hoping they can buy more guns but keep their butter
Europe | La excepción

Spain shows Europe how to keep up with

America’s economy
Reforms a decade ago are bearing fruit with high-tech success
December 12th 2024

“Spain is BECOMING a global reference point for prosperity,” boasted Pedro

Sánchez, the country’s prime minister, at a congress of his Socialist Party in
Seville on December 1st. While Europe’s other large economies are plunged
in gloom, Spain’s is soaring. It is set to grow 3% this year (see chart 1),
almost four times the euro-area average. Hit harder than most by the
pandemic, it now boasts 1.8m more jobs than at the end of 2019. Investors
have noticed: with faster growth and a lower fiscal deficit than France, Spain
has seen its bond yields dip below those of its northern neighbour for the
first time since 2007.
With packed restaurants and throngs of shoppers, Madrid is enjoying a
palpable pre-Christmas buzz. But how long can the good times last?
Forecasters expect Spain to outpace its peers for at least the next two years,
helped in part by large dollops of Next Generation funds, the European
Union’s post-pandemic aid scheme. The country is the biggest beneficiary of
these after Italy. Much of the expansion has been driven by immigration,
tourism and public spending, which may all eventually tail off. But some of
the growth comes from non-tourist service exports, by companies ranging
from tech firms to engineering consultants. And that bodes well.

Take Smartick, an educational software company based in Pozuelo, a well-

heeled suburb of Madrid. It uses big data and AI to provide pupils with
individualised learning materials in maths, reading and coding. Founded in
2009 by Javier Arroyo and a fellow management consultant, it is poised for
growth. Mr Arroyo expects to double the firm’s €10m ($10.5m) of annual
sales in three years, with most of the expansion coming from abroad.
“There’s now a startup culture that wasn’t there five or ten years ago,” Mr
Arroyo says. “Spain is starting to figure in the digital world.”

During the pandemic, non-tourism service exports overtook tourism

revenues for the first time. But the travel sector is booming too, with over
90m visitors expected this year, a record. That has produced outbreaks of
tourism phobia among locals.

The tourism boom is also one of the reasons for immigration: a quarter of
those who work in hospitality are foreign-born. Spain’s population has
increased by 1.5m in the past three years (to 48.9m), with nearly all the
increase due to immigration (see chart 2). Latin Americans, with the same
language and a similar culture, make up 70% of the recent arrivals, which
has reduced friction. Whether immigration can continue at this pace depends
in part on the availability of housing. “It’s a bigger bottleneck than ever,”
says Rafael Domenech of BBVA, a bank.

But with around 90% of the new jobs going to immigrants, income per
person has barely grown. That explains a paradox: “The macroeconomic
picture is extraordinary but the social perception of it is not,” says Raymond
Torres of Funcas, a think-tank. Although the inflation triggered by Russia’s
invasion of Ukraine has subsided, in real terms the income of a family who
stayed in the same jobs is slightly below that of 2019. Only in the past year
or so have average real wages started to rise. Officials point out that thanks
to Mr Sánchez’s big increases in the minimum wage, the incomes of poorer
Spaniards have risen faster than the average.
Worryingly, investment by the private sector lags behind the rest of the
economy. It is still below its 2019 level. Until the pandemic interrupted it,
Spain’s economy was growing at a respectable 3% or so a year between
2015 and 2019 and adding jobs faster than in the past. This owed much to
reforms of the financial system and the labour market pushed through by the
previous conservative government during the great recession. “Spain is still
living from that,” says Iñigo Fernández de Mesa of the employers’
association.

A second labour reform in 2021, under Mr Sánchez, preserved labour

flexibility and added a crackdown on the abuse of temporary contracts. But
business leaders blame the slowdown in investment on more recent
government policies. They complain especially of constant tinkering with
labour rules and a relentless rise in taxes. As a result, “businesses are on
hold, waiting,” says Juan María Nin of the Circulo de Empresarios, a
business think-tank.

Since an election last year, Mr Sánchez’s minority government has had to

accommodate the conflicting demands of half a dozen leftist and nationalist
parties which sustain it in parliament. Amid chaotic parliamentary scenes
last month, it managed to get approval for tax rises worth €4.5bn (0.3% of
GDP). They include an extension for three years of an emergency tax on the

interest and fee income of banks, initially brought in as a temporary measure

when interest rates rose in 2022. Bankers grumble that this involves double
taxation and will force banks to become more cautious in granting credit.

Officials note that banks and businesses are making healthy profits. The
bank tax “has generated revenues to finance the social safety-net”, says
Carlos Cuerpo, the economy minister. He says he expects investment and
private consumption to be the main motor of growth from now on. The tax
rises will also help the government meet its policy of gradually reducing the
fiscal deficit and thus secure the next tranche of EU aid. “We think a soft
landing is possible,” says Mr Cuerpo. That may well be true for the public
finances. The proof of the Spanish model more broadly now lies in the rate
of investment. ■

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americas-economy
Europe | Not so fast

Syrian refugees in Europe are not about to flock

home
The country’s future is too uncertain, and many migrants have put down
roots
December 12th 2024

“It’s indescribable, a happiness I never knew before,” says Ahmad Denno, a

Syrian who fled to Germany ten years ago. When news emerged of the
toppling of the regime that had bombed his Aleppo home and terrorised his
family, Mr Denno joined thousands of his compatriots in a spontaneous
outpouring of joy in Berlin. Celebrations erupted across the German cities
that many Syrians have made home.

Governments, too, reacted quickly to the fall of Bashar al-Assad. Amid

uncertainty about what would come next in Syria, several European
countries suspended ongoing asylum claims from the country’s nationals, a
procedural move that unsettled many refugees. More dispiritingly,
conservative politicians fell over themselves to propose plans for their
return. Jens Spahn, a senior member of Germany’s opposition Christian
Democrats (CDU), suggested handing €1,000 ($1,050) to any Syrian who
wished to go home. Austria’s government even instructed officials to prepare
deportation plans.

“This can only be explained by the desire of some conservative politicians to

overcome the trauma of [Angela] Merkel,” says Nils Schmid, a foreign-
policy spokesman for Germany’s ruling Social Democrats. Mrs Merkel’s
refusal to close Germany’s borders to Syrian and other migrants in 2015
made her a liberal hero but angered many in her CDU. After a backlash, Mrs
Merkel said refugees would go home when peace returned to Syria. Many in
her party think that bill has come due.

They are likely to be disappointed. Germany’s nearly 1m Syrians are its

third-biggest minority after Turks and Ukrainians. Almost a decade after the
2015-16 influx, many have put down roots. The employment rate for Syrians
in Germany is higher than in most other EU countries, and growing quickly, in
industries from health care to transport. Nearly 200,000 Syrian children are
in German schools, many of them born in Germany or too young to recall
anywhere else. Tens of thousands more are in vocational training or at
university.

“People have to go back when the reason they fled has disappeared,” says
Peter Beyer, a CDU MP. Could Germany force them to? Since 2016 most Syrians
have received “subsidiary protection”, a less extensive form of sanctuary
than full asylum: it can be withdrawn when conditions at home change, and
their residence permits must be renewed every few years. Earlier this year
German courts began to grow cold even on this temporary refuge.
Several European countries, including Italy, had proposed normalising ties
with Mr Assad before he fell, to facilitate the return of Syrian nationals. This
week’s calls for returns had more to do with “Europe’s toxic migration
debate than with the situation in Syria”, says Judith Kohlenberger, a
migration researcher at the Vienna University of Economics and Business.

In recent years the number of Syrians naturalising in Germany has exploded

(see chart). Some 40% of Syrians in Germany are believed to have begun the
process, and that will rise: the qualifying residence period was recently cut
from eight to five years. “I have citizenship and a good job,” says Ali Ghali,
a software engineer from Syria who came to Germany in 2015 and
naturalised last year. “I don’t see myself going back in the short-to-medium
term.”
Even after the 2015-16 wave, Syrians continued to flock to Germany; almost
250,000 have lodged asylum claims since 2022. With shallower roots in
Germany, some among this cohort may be ready to return should Syria’s
new rulers provide enduring security. Other refugees will want to help
rebuild their shattered country; Mr Denno says he feels that tug. “I wouldn’t
rule out a form of circular migration” in which Syrians with ties to Germany
would travel back and forth, says Zeynep Yanasmayan of the German Centre
for Integration and Migration Research. Some might establish business
links, or engage in humanitarian work.

For others, Syria belongs in the past. “I’m not going back, I suffered
enough,” says Nuar Albahra, a 63-year-old Damascene whose family was
tormented by Syria’s rulers over decades. Now living in the eastern state of
Brandenburg, she says most Germans she meets regard her with suspicion.
“But we managed to survive the hell of Syria. At least we are safe here.” ■

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about-to-flock-home
Europe | Why buy the cow

The Polish restaurants that dare to be dairy

Milk bars, a working-class Warsaw tradition, are adapting to the future
December 12th 2024

AT LUNCHTIME THE Prasowy milk bar in central Warsaw is a portrait of

Polish society. Grey-suited officials from nearby ministries queue up
alongside students anxious to slurp down a bowl of tomato soup before the
bell calls them back to school. Young professionals carve into crisp potato
pancakes and rainbow salads. Elderly customers linger at remote tables over
lonely plates of pierogi (dumplings).

Opened in 1954, Prasowy is Warsaw’s oldest milk bar. The self-service

canteens, so named because they serve mainly (though not exclusively)
dairy dishes, were born in the late 19th century, when meat was a pricey
treat. They proliferated in communist times when other restaurants were
rare. Dozens have survived, in part thanks to patrons nostalgic for their
homestyle food and unpretentious atmosphere, and in part thanks to
government subsidies that allow them to keep prices low. Some offer meals
to the jobless and homeless, paid for by social security; the poor and the
well-off rub elbows.

Enthusiasts were thus rattled when Poland’s government announced plans to

cut funding for the bars from 71m zloty ($17m) in 2024 to 60m zloty in
2025. Kamil Hagemajer, who co-owns several bars including Prasowy, says
that running them would be “impossible” without the subsidies.

The government says not all funds earmarked for the bars were used this
year. But many forgo the subsidies because of how they are designed. The
state reimburses the costs of selected ingredients that are used only in
meatless dishes. Rusalka, a bar in east Warsaw that caters to medics from
nearby hospitals, gave up on the help because dividing the cost of a bag of
flour, used both to make cheese dumplings and breaded pork cutlets, was too
big a headache, says the cashier.

The bars have other worries, too. Though Poland’s inflation has slowed from
its peak in 2023, labour and energy costs are still growing faster than those
of food. To cut overheads, some have installed digital ordering kiosks. Mr
Hagermajer says these are popular with younger customers (who prefer to
“avoid interactions” with cashiers) and tourists who can use them to order in
English. They lend a piquant modern touch to the bars’ socialist nostalgia.

Meat-free dishes are prominent in traditional Polish peasant cuisine. But in

today’s changing Poland they point to the future, drawing in the country’s
burgeoning vegetarian scene. This year one Warsaw milk bar has recreated
the flavour of jellied fish, a Christmas staple, from soy and seaweed.
Aayushi Naphade, an HR worker who moved from India to Poland six years
ago, says she now visits her local milk bar every week since discovering its
rich vegetable soups. She does, however, find them a bit underspiced. ■

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dairy
Europe | Uncertain reaction

Amid Russian bombing, Ukraine is planning more

nuclear reactors
Atomic power may not solve the country’s energy woes
December 12th 2024

RUSSIAN MISSILES have knocked out roughly half of Ukraine’s pre-war

electricity-generation capacity. But because Russia has refrained from
blowing up nuclear reactors, nearly 60% of Ukraine’s electricity production
is currently nuclear—even though the country’s (and Europe’s) biggest
plant, in Zaporizhia, was occupied by Russia in 2022 and is now shut down.
Without nuclear reactors, says German Galushchenko, the energy minister,
Ukraine’s grid “would not survive”. In what would be a first for a country
under assault, Ukraine now aims to install more of them.

Initial construction has begun. At Khmelnitsky, a plant in western Ukraine

with two existing reactors, connections are being built to a “shovel ready”
area where four more reactors are planned, says Elias Gedeon of
Westinghouse, an American partner on the project. Westinghouse is to
provide two reactors. The other two, of Russian design, are to be purchased
for $600m or so from Bulgaria, where they were mothballed after a project
fell apart in 2012. Haggling continues, but Mr Galushchenko says Russian
meddling in Bulgaria has so far failed to scuttle the deal.

Read more of our recent coverage of the Ukraine war

Boosters say the project can move quickly. The reactors in Bulgaria are of
the same type already operating at Khmelnitsky, and structures to house
them were partially built in the 1980s. Mr Galushchenko reckons the first
one could be fired up in three years, though that may be optimistic.

Adding reactors will clearly not solve Ukraine’s immediate energy crunch.
Victoria Voytsitska, a former member of the energy committee of Ukraine’s
parliament, fears that without more power, 1.5m more Ukrainians might flee
abroad this winter. She thinks the money would be better spent on networks
of small gas-fired plants and other kit harder for Russia to destroy.

Others worry that building a nuclear project will tempt Russia to attack it.
Andriy Ziuz, ex-chief of staff at Ukraine’s National Security and Defence
Council, fears Russia would hammer the construction site before nuclear
fuel is brought in. Russia has blown up high-voltage substations connected
to nuclear plants, which could theoretically trigger an accident. Mykhailo
Gonchar of the Centre for Global Studies Strategy XXI, an energy think-tank
in Kyiv, argues this shows that the Kremlin cares more about destroying
Ukraine than about any harm such attacks do to its reputation.

Mr Ziuz says the conflict has reduced Ukraine’s skilled nuclear workforce to
a troubling level. The reliability of the Bulgarian reactors is another
question, as is the availability of spare parts, which Ukraine will not obtain
from Russia. Then there is the cost. Inna Sovsun, an MP on the energy
committee, slams the government for providing outdated estimates from a
2018 study involving a slightly different reactor type—one reason, she says,
why parliament has yet to give its approval.
Whether nuclear power is a logical solution to Ukraine’s energy problems
can be debated. But its strategists may have something else in mind. James
Acton of the Carnegie Endowment for International Peace, an American
think-tank, wonders whether the country is trying to bring in Westinghouse
reactors and American engineers to give its ally another reason to prevent a
takeover by Russia. ■

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planning-more-nuclear-reactors
Europe | Cancel that

Why Romania cancelled a pro-Russian

presidential candidate
Sketchy allegations of interference let a court block a kook
December 12th 2024

He believes nanobots are secretly inserted in cans of Pepsi. Covid does not
exist, and the moon landings were faked. He thinks a global political
struggle is being waged between Satan and the Archangel Michael. He
admires Vladimir Putin and would cut aid for Ukraine. On December 8th
Calin Georgescu (pictured) might have been elected president of Romania.
But two days earlier the country’s constitutional court annulled the election
and instructed that it be run again. Romanians are divided between those
who think the court has saved their democracy and those who think it has
been subverted.
A month ago Mr Georgescu was seen as a crankish no-hoper, drawing about
5% in polls. But in the first round of the election on November 24th he came
first with 23%. Just before the second-round run-off against Elena Lasconi, a
lacklustre centre-right candidate, one poll had him leading with 58%. This
was a political earthquake.

Mr Georgescu is a former soil scientist and specialist in sustainable

development. Oana Popescu, head of the GlobalFocus Centre, a think-tank
in Bucharest, knew him in his moderate days, and says he later “went
bonkers, turning into this fascistic, QAnon, deep-state conspiracist”. He joined
the hard-right Alliance for the Union of Romanians party, but left it in 2022
over criticism of his pro-Russian and anti-NATO views (and his praise of the
Iron Guard, Romania’s inter-war fascists). With no party organisation, few
took Mr Georgescu’s presidential candidacy seriously.

The president can significantly influence foreign and security policy, so Mr

Georgescu’s threats to end Romania’s staunch support for Ukraine are not
taken lightly. Mr Georgescu says he is pro-peace, not pro-Russian. But his
contempt for NATO and the EU would obviously have been a gift to Mr Putin, and
to Russia-friendly leaders in Hungary and Slovakia.

How did Mr Georgescu go from nowhere to first place in two weeks? On

November 28th the Romanian intelligence services presented evidence of
illegal campaign financing, illegal use of social media and “Russian hybrid
actions” against the country’s internet infrastructure. They compared the
influence operation to those apparently carried out by Russia during
Moldova’s presidential election and referendum on joining the EU in October.
The constitutional court ordered a recount, but found no major issues. On
December 5th it gave the go-ahead for the second round, only to reverse
itself next day.

The court said it was annulling the election because voters were
“misinformed” and that the candidate had benefited illegally from “the
abusive exploitation of social-media platform algorithms”. His campaign
materials were not properly labelled, and the will of the voters was
“distorted” (though the court did not directly rule that Russia had interfered).
Mr Georgescu’s campaign was promoted mainly via the social-media
platform TikTok, where networks of accounts amplified his videos. TikTok
played down the abuse, saying the networks were “small-scale”.

There is little doubt that TikTok was manipulated to boost Mr Georgescu,

but there were other factors. Remus Stefureac, the head of INSCOP, a polling
firm, says that roughly a third of the votes in both the presidential election
and the parliamentary poll held on December 1st went to radical right-wing
candidates. On October 5th the constitutional court banned Diana Sosoaca,
an anti-semitic, pro-Putin candidate, from standing, arguing that her views
were anti-constitutional. Many of her supporters then backed Mr Georgescu.
In the parliamentary elections Ms Sosoaca’s party took more than 7% of the
votes.

Opinion polls show support for Russia is lower than 10%, says Mr
Stefureac; most Romanians who vote for the radical right do so for
economic and social reasons. Many are rural voters who have not gained
from Romania’s recent economic boom or its membership of the EU. Others
belong to the country’s 5m-strong diaspora, and feel they were forced to
leave home by corrupt politicians’ failure to spread prosperity. Since 2021
Romania’s main centre-left and centre-right parties have governed in
coalition, and many voters feel deprived of a meaningful alternative. After
the indecisive parliamentary election, the centrist coalition is likely to
continue.

Russia is certainly trying to influence elections in nearby states. Moldova

accuses the Kremlin of spending $15m to bribe its citizens to vote against
joining the EU. Georgia’s election last month saw widespread allegations of
ballot-stuffing by the Russia-friendly governing party. But the evidence that
Russia was behind social-media manipulation in Romania is preliminary.
Annulling a presidential election, on the other hand, is an extraordinary step.
Those who voted for Mr Georgescu will feel ignored. When the presidential
election is rerun, he will probably be excluded. But the reasons why
Romanians voted for him cannot be banned. ■

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presidential-candidate
Europe | Charlemagne

Europeans are hoping they can buy more guns but

keep their butter
Reports of a “war economy” are much exaggerated
December 12th 2024

Russia produces enough military kit to build an army the size of Germany’s
every six to 12 months. Under its revanchist president, Vladimir Putin, it is
busy invading one European country while meddling in the affairs of several
others. Western intelligence officers seem to think a Ukraine-style attack on
a NATO ally by 2030 is a distinct possibility. Faced with this sobering analysis,
Europeans might have been forgiven for panicking into splurging on all
things military, and doing real harm to the continent’s economy in the
process. But worry not. With politicians bickering about pensions and social
spending, and loth to raise taxes, the reality is of a continent unwilling to
inconvenience itself for something so trifling as fending off a potential
invader. Europeans want more military spending, sure; some churn out
ludicrous soundbites about building a “war economy”. But God forbid that
anyone make voters endure the cost of it.

Scrimping on defence is nothing new for Europeans. After the cold war
ended, cutting military budgets became the norm, like taking August off or
retiring in one’s prime. By 2014 today’s 27 European Union members were
spending under 1.4% of their collective GDP on defence—less than on alcohol
and tobacco. The military figure has since increased at a steady, if
unspectacular, pace (just as booze and fags have gone out of fashion). This
year the EU’s members will together finally meet the 2% target set by NATO, to
which most belong, after Mr Putin first had a crack at Ukraine a decade ago.
A few big countries, notably Italy and Spain, are still far below that level.
And the 2% figure looks measly now that Russia dedicates two-fifths of its
budget (and over 8% of GDP) to defence and security. Adjusted for the cost of
paying troops, it is spending more on its armed forces than Europe’s four
main military powers—Britain, France, Germany and Poland—combined,
notes Guntram Wolff of Bruegel, a Brussels think-tank.

Donald Trump, as he prepares to return to the White House, has made clear
he will no longer tolerate Europe spending roughly a third of what America
does on defence. On December 8th he reiterated that he was willing to stay
in NATO only as long as Europeans “pay their bills”. To appease the incoming
blusterer-in-chief and dissuade Mr Putin, Europe knows it must find more
money. The trouble is, many national exchequers are bare and politics across
the continent is messier than ever. Chaos reigns in France; Germany is in the
early throes of an electoral campaign that will probably result in a new
chancellor only after months of coalition-building. Collective action at EU
level is impeded by the fact that certain prime ministers, such as Hungary’s
Viktor Orban, respect the Kremlin more than they do fellow European
leaders.

Everyone knows their armies need more cash, not least to replenish stocks
sent to Ukraine. So how might it be done? The simplest way is for national
governments, who after all oversee their armed forces and spend most of the
tax levied in Europe, to cut larger cheques. A few already do. Poland says it
will spend 4.7% of its GDP on defence next year, the most of any NATO member.
But others are constrained by having maxed out their national credit card:
France, Italy and Spain all have debt-to-GDP ratios of over 100%, and are
under pressure from both markets and EU wallahs to improve their public
finances. Apart from countries bordering Russia, voters clobbered by covid
and then by soaring energy prices are in no mood for less social spending or
higher taxes. Do not deprive us of butter, is the gist of Europe’s current
politics.

Another way to boost defence expenditure is to do it at EU level. Co-

ordinating military purchases among the 27 members would result in
economies of scale when procuring weapons, notes Mr Wolff. Andrius
Kubilius, who on December 1st became the bloc’s first-ever commissioner
for defence, has called for its upcoming seven-year budget to include
€100bn ($105bn) for defence. Modest as €14bn a year might seem for a bloc
with a GDP of €18trn, even that might prove hard: it would require either a
bigger overall EU budget (tricky, given hard-right governments not keen to
send more money to Brussels) or shortchanging existing recipients of EU
largesse (ie, upsetting mollycoddled farmers, who snag a third of the
budget). Perhaps the money could be borrowed by EU members collectively
instead, as it was to fund a €750bn pandemic-recovery fund in 2021? France
has mooted such a joint bond, which would help skirt the issue of fiscal
constraints. But more EU-level debt is unacceptable to “prudent” countries
like the Netherlands that see common borrowing as a scheme to make frugal
northerners pay for spendthrift southerners.

Butter the devil you know

Europe thus needs clever tricks to fund military stuff without crossing
various red lines. One idea is for a “coalition of the willing” in Europe to
raise €500bn by creating a fund essentially backed by promises of higher
future defence spending. Britain could pitch in to the kitty, which would be
used to build up arsenals and divisions over a decade. Because it is joint debt
it would not crimp national finances, but as it is outside the EU, frugal types
can probably agree to it (and Mr Orban could not veto it).

Details of the plan are vague. Its main selling point is that it has not been
shot down since the Financial Times reported it on December 5th. A big
figure would help send Mr Trump the message that Europe is doing
something. In practice an extra €500bn would push outlays to just 2.4% of EU
GDP (meanwhile a new NATO target of 3% is being floated). And a squabble
would ensue over spending. Who decides whether to buy Europe-made kit
(as France prefers, to ensure the long-term “strategic autonomy” of the EU) or
off-the-shelf weaponry from America (as many others would like, to ensure
the stuff is delivered soon), say? Raising money for defence is hard, paying
it out may be even harder. ■

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guns-but-keep-their-butter
Britain
Britain’s government has only half a plan to improve infrastructure
A search for roots is behind a surge in Scottish tourism
Britain’s House of Lords purges itself
Britain’s aid budget is less generous than it looks
And the prize for the oddest book title goes to…
The battles of Greg Jackson, Britain’s clean-energy disrupter
British politics enters the “death zone”
Britain | Fixing the foundations

Britain’s government has only half a plan to

improve infrastructure
It is taking on NIMBYs, but has not focused on projects that will boost the
economy
December 12th 2024

IMAGINE THAT you need to drive from London to Edinburgh. After taking
a motorway to Leeds and a dual carriageway as far as Morpeth, you will
spend 30 miles (48km) trundling along a two-lane country road, possibly
stuck behind a tractor. In opposition, Sir Keir Starmer mocked the Tories for
having pledged to widen this “absolutely critical” stretch of the A1 into a
highway five times since 2010. Such broken promises, he told local bigwigs,
were a “metaphor for how our country’s been run”. Alas, in Labour’s first
budget in October the ill-fated scheme was axed once again.
Sir Keir’s Labour entered government in July promising to do things
differently—perhaps nowhere more so than in the area of infrastructure. Part
of Britain’s malaise, he correctly argued, was a failure to invest in what a
modern country needs: roads, railways, reservoirs, pylons, power plants. The
abrupt decision of Rishi Sunak, his Conservative predecessor, to amputate
HS2, a bloated high-speed rail project, was cast as the last spasm of a

chronically short-termist administration. Labour would suffer from no such

temptations.

In office, things have proved to be more complicated. The real test will come
in the summer, when the government has pledged to lay out a ten-year
infrastructure strategy alongside a spending review (in a decade-long plan
there are “no hiding places”, notes Michael Dnes, until recently an official at
the Department of Transport). But five months in, the signals are mixed. The
government looks set to make a serious attempt at overhauling obstructive
planning law and it has given itself more room to borrow for investment. Yet
so far it has not prioritised the projects that would help the economy most.

Most promising has been the combative rhetoric. In a speech on December

5th Sir Keir once again laid into an “alliance of naysayers”. From walking
around the country, he said, it was clear that “the people who say no” had
ruled too long and Britain had lived off its past when it came to basics like
water and energy. He complained about the “absurd spectacle of a £100m
bat tunnel”, just one of the schemes that HS2 Ltd, an unfortunate company,
had to complete. “This government will not accept this nonsense any more,”
he said.

Early next year a planning-and-infrastructure bill will appear. Its aim will be
to cut through a thicket of law to speed up projects. Sir Keir hopes to have
150 major projects approved during this parliament (“major” may end up
doing quite a lot of work). Separately, on December 12th the government
said more about how it will encourage higher levels of housebuilding,
including by reclassifying low-quality land in the green belt. For
infrastructure and housing alike, success will rest largely on the strength of
respective bills once they have made it through Parliament. Officials fret that
ministers underestimate the task. But the signs are that the government
intends to put its large majority to good use.
The runes are harder to read when it comes to the money. Defanging NIMBYs
would help bring down project costs. In her first budget, in October, Rachel
Reeves, the chancellor, loosened the rules constraining borrowing for
investment and announced extra scrutiny to persuade markets that money
would be well spent. The effect could be transformative, says Henri Murison
of Northern Powerhouse Partnership (NPP), a think-tank. “We are no longer in
a world when the British state can only do one big project at once.”

Yet Ms Reeves then used the space she had created for schemes more likely
to please Labour voters than boost the economy. Over the next two years
extra capital spending will mostly go on green projects, hospitals, prisons,
schools and defence (see chart). Spending on transport, which has greater
potential to boost growth, will be cut by 3.1% a year on average. For all Sir
Keir’s talk of economic infrastructure, a focus on social projects reflects
Labour voters’ immediate preferences.

A positive spin is that in October Ms Reeves could only make choices

covering the next two years. Getting more scanners into hospitals can take
months; rail and road projects take many years. Even so, a tight transport
settlement forced the chancellor into exactly the kind of chopping and
changing that Sir Keir has criticised. Some £67m had been spent preparing
plans to widen the A1 before Ms Reeves scrapped it. A long-delayed scheme
to upgrade the Transpennine railway line, linking York, Leeds and
Manchester, was kicked further into the long grass.

The failure so far to prioritise transport reflects a gap in Labour thinking.

Labour has talked up the prospect of a British industrial revival. Most
economists, however, see boosting the role of services in second-tier cities
as one of the more obvious paths to higher growth. And in that, transport
investment should have a starring role: cities like Birmingham, Leeds and
Manchester miss out on the benefits of agglomeration because of poor
transport links.

What the north of England really needs, says Lord O’Neill, an economist
and the NPP’s chairman, is its own Elizabeth line, a new 117km, London-
spanning railway that ferries hundreds of thousands of workers to their
offices each day. Yet if the government talks about trains, it talks about
renationalising them. To some Labour MPs, roads are just sources of carbon.
Ms Reeves has said she wants to attract private investment into big projects.
But it is hard for investors to do that when there is not a clear pipeline, says
Ali Miraj, an infrastructure specialist at ING, a bank.

Without a proper plan, what remains of HS2 could easily eat up the transport
department’s time and money for years. The cost of the final 10km stretch of
the line to London Euston, which Mr Sunak implausibly insisted should be
raised privately, has already risen to £9.4bn ($12bn). Ministers are debating
options for how to rescue some value from the project by completing part of
the line north of Birmingham. Any solution will be complex and expensive.

That will make it all the more important to hold on to a sense of what
improved infrastructure can achieve. A good place to start would be those
projects that help make the economy tick.■

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plan-to-improve-infrastructure
Britain | A clamour for clans

A search for roots is behind a surge in Scottish

tourism
Americans are especially keen on their Caledonian ancestry
December 9th 2024

HERE’S a PUB-QUIZ question: which is Britain’s most-visited battlefield? No, it

is not the site of the Battle of Hastings, where William the Conqueror
triumphed in 1066, but that of the Battle of Culloden, where in 1746 the
Duke of Cumberland squashed the remnants of the Jacobite uprising within
Scotland. Culloden had twice as many tourists as Hastings last year. It also
had a 76% rise in visits over the year before.

That is partly thanks to a surge in ancestry tourism. Matthew Alexander of

the University of Strathclyde says genealogy apps like Ancestry.com are
making it easier for people with Scottish roots to trace the villages and
towns of their forefathers. Culloden has become a pilgrimage site for such
visitors.

The trend in heritage travel goes beyond battlefields. A partnership between

Airbnb, a home-rental site, and 23andMe, which sells genetic-testing kits,
will enable folk to browse through offerings of rentals and experiences in
their “native” country. The Scottish government has developed a search
engine, Scotland’s People, to help travellers trace their ancestors. Private
genealogists are on hand to help those arriving in Scotland track down their
forebears. Tour operators are offering bespoke itineraries for travellers
wishing to combine golfing and whisky-tasting with a visit to great-great-
grandma’s grave. Tom Miers of Scottish Clans and Castles, one such firm,
says about half of his (mostly American) clients have links to Scotland.

A recent survey from VisitScotland, the country’s tourism organisation,

found that 70% of long-haul visitors claimed Scottish ancestry and 34%
cited it as a motivating factor for their visit. Fortunately for the Scottish
economy, there are plenty of foreign Scots. In the century after Culloden, as
many as 70,000 emigrated. Some 40m Scottish descendants now live in the
diaspora. Luring more of them, above all Americans who spend the most,
could further boost a thriving industry. Last year long-haul tourists spent
£3.6bn ($4.5bn), a 41% rise over 2019. Prices have also risen: between 2019
and 2024 the cost of summer hotel rooms went up by 74% more in
Edinburgh than in London, according to Amadeus, a travel-data firm.

Mr Alexander notes that Scottish-ancestry tourism stands out because of its

link with the clan system and a romanticised idea of Scottish culture. “If a
tourist comes along and says they are descended from Robert the Bruce,
what are you going to say?” he observes. ■

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in-scottish-tourism
Britain | Peer pressure

Britain’s House of Lords purges itself

The toffs are being culled
December 12th 2024

They knew they must fall. But they stood anyway. If there is one thing at
which the English aristocracy excels it is the brave stand in the face of
overwhelming odds. They charged in the Light Brigade. They went over the
top in the Somme. And on December 11th Britain’s remaining hereditary
peers walked into the House of Lords to face their own end.

On one side of the debate was the fate of several dozen hereditary peers and
700-odd years of history; on the other, the “House of Lords (Hereditary
Peers) Bill” and a commanding government majority. The outcome of the
debate was not in doubt. England’s queen, it was once said, “must sign her
own death-warrant” if Parliament sent it to her. And so when, on a chill
Wednesday, the Lords was sent a bill demanding the “Exclusion of
remaining hereditary peers”—a Labour manifesto commitment—they too,
like turkeys voting for Christmas, would have to approve it. But not being
turkeys, and certainly not chicken, the noble lords and ladies rose to fight it
first.

The arguments against hereditary peers are not hard to make. The House of
Lords is an affront to democracy, vocabulary and hosiery. It enables people
to win power because 500 years ago their ancestor was chums with Henry
VIII. As David Lloyd George, a former prime minister, said, it long enabled
“500 men, ordinary men, chosen accidentally from among the unemployed”,
to wield power in Britain. It requires the government to publish guides on
how to address an earl over email (“Dear Lord”) and a baron in the flesh
(grovellingly). It obliges far too many men to wear tights in public each
year.

The House of Lords is one of the oldest assemblies in the world. It is also
one of the oddest. Its 827 members make it the world’s largest second
chamber: France’s has 348 members; Germany’s a slender 69. It is the only
legislature in the world to be larger than its lower house and is second in size
only to China’s National People’s Congress. The only other country to have
hereditary members in its second chamber is Lesotho, which has its tribal
chiefs. It is, as Sir Tony Blair, another former prime minister, observed, “a
funny old place”.

It can offer a certain dark comedy. During a debate in 1978 on the victims of
crime, one hereditary peer, Earl Russell, rose to argue that “naked bathing on
beaches or in rivers ought to be universal” and that “this house is
indisputably Marxist”. Whether such comedy is desirable in one’s
democracy is another question. Having hereditary peers, regardless of their
quality, “brings our Parliament into a degree of disrepute and ridicule”, says
Meg Russell, a professor of British politics at University College London.
The cure for admiring the House of Lords is, the Victorian journalist (and
editor of this newspaper) Walter Bagehot once observed, “to go and look at
it”.

However, as few know better than Sir Tony, it is easier to criticise the Lords
than to reform it. The current bill is a piece of unfinished Blair business. In
1999 Labour tried to abolish all hereditary peers. More than 600 were
booted out. But 92 (who were, in a fudge for the ages, to be elected by their
fellow hereditary peers) were kept as an interim compromise. And 25 years
later they are still there. A quarter of a century is brisk by House of Lords
standards. The first bill to attempt to limit its size was put forward in 1719;
three centuries on, nothing has happened about that, either. The rule of Lords
reform, says Professor Russell, is that it is “always on the agenda and
nothing ever happens”.

Yet this week something started to happen. The largest constitutional change
in a quarter of a century—or, as its critics put it, a “purge”—began.
Although, this being the House of Lords, it began quite slowly. It opened
with some prayers from a bishop, and a mace being carried into the chamber.
And then Black Rod, in tights, following it in. This particular revolution also
involved quite a lot of “the noble Lord-ing”, and no small amount of “the
noble Lady-ing”, plus a very lengthy break for lunch. But make no mistake.
This was bloody revolution, House of Lords style. ■

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Britain | The foreign-aid fiddle

Britain’s aid budget is less generous than it looks

The world’s poorest are paying the price for Britain’s dysfunctional
asylum system
December 12th 2024

How much the British government spends on foreign aid used to be a fairly
easy question to answer. Through most of the 2010s, just gesturing to the
United Nations target of 0.7% of gross national income (GNI) would have
sufficed. Fixing aid spending at that level was an early David Cameron
initiative, part of a bid to beef up his government’s humanitarian credentials.
These days, it’s harder to say. In theory, 0.7% of GNI remains Britain’s long-
term target. But over the past few years barely more than half that amount
has actually been spent on development abroad. The cuts began under
Britain’s last Conservative government, but look set to continue—and
deepen—under Labour.
Part of that change is explicit: Boris Johnson cut the aid target to 0.5% of GNI,
purportedly temporarily, during the pandemic. Labour opposed the move at
the time but now plans to maintain it until at least 2030. There has also been
another, less transparent, shift. Britain has become a world leader at
rebadging domestic spending on refugees as foreign aid, perversely
squeezing down what’s left. The combined impact of those two measures
has been to yank down Britain’s spending on aid, excluding the asylum
system, by almost half to 0.36% of GNI in 2022 and 0.42% in 2023 (see chart
1).

International accounting rules for aid say that hosting asylum-seekers for the
year after they arrive can count as overseas development aid. But no other G7
country devotes as large a slug of its aid budget to domestic refugees as
Britain. Only Italy runs close (see chart 2). Plenty of European countries
don’t include primary schooling, social housing or administrative costs for
asylum-seekers in aid spending; Britain includes all three. Australia doesn’t
count refugee costs in its aid spending at all.

The Independent Commission for Aid Impact (ICAI), Britain’s aid watchdog,
has diplomatically dubbed this approach “maximalist”. Rishi Sunak’s
government rejected an ICAI proposal to cap the share of aid spent on refugees
at home, as Sweden does. The Centre for Global Development (CGD), a think-
tank, reckons that if Britain had classified asylum spending the same way in
the 1990s and 2000s, and had spent as much as it does today per asylum-
seeker, in some years the entire aid budget would have been swallowed up.

Labour has promised a reset. Anneliese Dodds, the development (and

equalities) minister, announced that “Britain is back on the world stage” in a
speech at Chatham House in October. Minouche Shafik, an economist who
recently resigned as president of Columbia University, has been tapped to
lead a review into Britain’s aid strategy. But so far there has been little
indication that any new cash will come.

Indeed, Labour has proved even stingier than the Conservatives, who did
provide a partial top-up to buffer the impact of refugee spending in 2022 and
2023. October’s budget envisages total aid of £14.3bn ($18.2bn) in 2025—
£1bn, or 0.04% of GDP, lower than in 2023. Instead, the government says it
will make space for more aid spending by making the asylum system
cheaper. That is speculative at best, and no quick fix. Small-boat crossings
are at near-record levels and the government has been slow to phase out the
expensive use of hotels to house migrants.
All that still leaves Britain a fairly generous aid donor, compared with its
peers. But making the scale of future aid spending a hostage to the success
of a border crackdown also sabotages any long-term planning. “It’s
impossible for the government to drive growth or affect real change in
developing countries if they’re not able to be clear about the budget they
have to spend,” says Ian Mitchell of the CGD.

The clearest immediate fix would be to follow the ICAI’s suggestion to cap the
share of aid spending that can go to the asylum system. The trouble is,
money is tight and foreign-aid spending is spectacularly unpopular. Public
First, a research firm, found that just 15% of voters would be willing to pay
higher taxes to fund more foreign aid.; 75% would not (see chart 3).

That leaves an uncomfortable push-and-pull between spending on poverty

relief abroad or refugees at home. Britain has sleepwalked into prioritising
the latter. But aid money goes much further in the poorest countries. Britain
spends about as much hosting one asylum-seeker for a year as it would cost
to save ten lives by expanding existing funding for malaria prevention. Still,
shortchanging refugees isn’t a vastly appealing option either. At the very
least, the government should be candid about its choices. ■
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Britain | A novel award
And the prize for the oddest book title goes to…
The literary world’s least-coveted award is announced
December 6th 2024

Would you be tempted to read “Highlights in the History of Concrete”? If

not, the Bookseller/Diagram Prize for the Oddest Book Title of the Year
offers other highlights. Such as the invaluable “How to Avoid Huge Ships”
(1992), or 1993’s winning—and frankly mystifying—“American Bottom
Archaeology”. This year’s tasty pick, announced on December 6th, is “The
Philosopher Fish: Sturgeon, Caviar, and the Geography of Desire”.

The literary world has many august prizes—the Booker, the Pulitzer, the
Baillie Gifford. The Diagram prize is not one of them. Booker victors win
tens of thousands of pounds and international fame: titles such as “Wolf
Hall” and “The Remains of the Day” are to this day household names.
Diagram authors, by contrast, win nothing at all and do not become famous,
while its winning and shortlisted titles—such as “Reusing Old Graves: A
Report on Popular British Attitudes” and “Strip and Knit With Style”—tend
to languish in obscurity.

The prize dates to the Frankfurt Book Fair of 1978. This is the most
venerable in the publishing calendar. It was also, felt a literary designer
called Bruce Robertson, very boring. To alleviate the dullness, he started to
scour its aisles not for the best books but for those with the silliest titles. The
prize—named after his company—was born. It has run ever since, bringing
almost no recognition at all to titles such as “The Large Sieve and Its
Applications” and that little-read thriller, “Greek Rural Postmen and Their
Cancellation Numbers”.

The prize has stringent rules. Titles cannot be intentionally funny: they must
have been given in a serious, even “po-faced” way, says Horace Bent, the
prize’s pseudonymous administrator at the Bookseller, a British magazine
that covers publishing. And while almost no literary judges read all the
books they are supposed to, Diagram judges are “actively discouraged”, says
the Bookseller, from reading nominees lest this “cloud their judgment” and
they become unable to see the titles as “odd”. Rightly: doubtless the many
lawyers who worked on the winner of 2001 saw nothing remotely amusing
in titling a book “Butterworths Corporate Manslaughter Service”.

Like all good literature, many of the Diagram prize’s winners might make
you smile but they also make you think. Read 1984’s winner, “The Book of
Marmalade: Its Antecedents, Its History and Its Role in the World Today”,
and the questions crowd in. Such as: what can the antecedents of marmalade
possibly be? (Jam? Oranges?) And: how many different roles can
marmalade really have? And above all: who on earth is buying this stuff?

The prize is a rare survival in a publishing industry that itself has become a
little more po-faced of late. Awards such as “The Hatchet Job of the Year”
and the Literary Review’s “Bad Sex in Fiction Award” have both been
discontinued: the Literary Review said that people had suffered enough in
2020 without “bad sex as well”. The Diagram is aware it can ruffle feathers.
Some relish their nominations. Others, says Mr Bent, “do not like it at all”.

Readers can be pleased that it has persisted. Winners provide valuable

literary lessons, such as the power of a well-chosen adjective. The 1972
bestseller “The Joy of Sex” today seems quaint, almost wholesome. But add
qualifiers, as 1997’s “The Joy of Sex: Pocket Edition” did, and you have an
instantly more ominous prospect.

All offer a lesson in how English works; in that almost unintended alchemy
that occurs between author and reader. Dylan Thomas once said that “the
magic in a poem is always accidental”; it creeps in unbidden in the gaps
between the author and the words and the reader. And what is true of poetry
is also, surely, true of “American Bottom Archaeology”. ■

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title-goes-to
Britain | An energy unicorn

The battles of Greg Jackson, Britain’s clean-

energy disrupter
The boss of Octopus Energy wants to change the way the world uses
electricity
December 10th 2024

They are both 53-year-old futurists. One wrote his first video game aged 12;
the other dropped out of school at 16 to program games. Both studied
economics and came to lead sprawling technology businesses involved in
the defining 21st-century goal of electrification. Each dresses casually and
retains a boyish enthusiasm for invention.

Once you start seeing similarities between Elon Musk and Greg Jackson, the
boss of Octopus Energy, it is hard to stop. There are also obvious
differences. Mr Musk is the world’s richest man: having transformed
carmaking, space travel and satellites, he has waded noisily into America’s
cultural and political battles. Mr Jackson’s company, whose focus, he
explains in an interview, is “using technology to make the green revolution
affordable”, made a profit for the first time last year. Yet as an evangelist for
clean energy, and for a glimpse of the battles of the energy transition, he is
worth watching, too.

He has turned a startup into Britain’s largest electricity supplier. Almost a

quarter of British households are now with Octopus, up from less than 2% in
2018. Octopus has wooed some with good customer service and flexible
tariffs, offering cheap power outside peak times. It has also acquired
struggling companies, notably Bulb in 2022. The same method is behind its
expansion in places including France, Germany, Spain, Japan and Texas. In
all it has 8m customers across 18 countries, and is valued at $9bn, enough to
place it on the FTSE100, were it ever to list in Britain.

Mr Jackson’s bet is this: as the role of grids shifts to connecting intermittent

supply with movable demand, firms that can use software and data to match
the two will prosper. With a snazzy app and an ability to experiment with
products, Octopus is working out how to appeal to electricity customers with
offers “just as supermarkets do”. In Britain it has an attractive EV tariff with
cheap overnight charging. Many customers get paid to stop using power at
peak times, under a government scheme. Some near wind farms get
discounted power when it is blowy.

Much of Octopus’s success has been driven by its software platform,

Kraken. That is what allows it to manage customers better than incumbents
do (Mr Jackson talks of “applying the internet revolution” to energy). It has
made growth via acquisitions viable: firms with clunky IT systems would find
migrating millions of customers daunting. Octopus also makes money by
licensing Kraken to others. Mr Jackson talks of having half a billion
customers on the platform by the end of the decade.

He is more interested in growth than making a profit. Britain is a great place

to found a startup—it has little red tape, good tax incentives and a
“remarkable” ecosystem of entrepreneurs—but a hard place to grow.
Octopus has had to look abroad for backing from patient capital, including
pension funds. There may come a point when being a disrupter and a big
player in a low-margin sector come into tension. Nor have all of the firm’s
tentacles—it makes heat pumps, invests in wind farms and leases EVs—been
immediate successes. Above all, sustaining growth will depend on
succeeding in heavily regulated energy markets. That explains why Mr
Jackson has become one of the most outspoken champions of opening them
up.

Hard nuts to Kraken

Some countries put up barriers to foreign businesses. But a bugbear is
markets like Britain with a single wholesale electricity price, rather than a
system where the price varies with local supply, demand and grid capacity.
That creates both waste and shortage, says Mr Jackson, by preventing price
signals from reaching producers. Scottish wind farms are paid to switch off
because the grid can’t carry their electricity, while in southern England data
centres cannot access power. He likens this to the “wine lakes and butter
mountains” created in Europe by the distortionary farm policies of the 1970s
and 1980s.

Changing market rules designed for fossil fuels, Mr Jackson believes, would
unlock “dramatically cheaper, abundant green energy”. Several places show
how. In Texas locational pricing has contributed to huge investment in
renewables and a battery boom; in Sweden companies build factories in the
north where electricity is cheaper. Yet he worries that elsewhere firms will
not be forced to compete to push down prices. Incumbents have
“phenomenal power” over regulatory code and legislation, he says, ”almost
like a mafia”.

Such talk has not endeared him to all. He is not “collegiate”, say others in
the industry. Britain’s Labour government is squirming over market reform.
He can sound like a hard-charging Silicon Valley CEO, as when he says he
aspires to build a platform that changes the way a whole sector operates
—“like Amazon or Uber”. Inspiration also comes from closer to home. Sir
Richard Branson, who shook up air travel with a similar penchant for PR
stunts, is “one of the role models of my life”.

What about his contemporary, Mr Musk? “Blimey, he’s done well,”

acknowledges Mr Jackson, “on some measures.” There’s “a lot to learn”, he
says, despite “all the things I don’t like about the way his politics work at the
moment”. Mr Musk, once focused on climate change, now spends more of
his time tweeting about immigration, media regulation and space
exploration. Mr Jackson remains motivated to use clean energy and
technology to solve problems here on Earth. ■

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clean-energy-disrupter
Britain | Bagehot

British politics enters the “death zone”

Every party in British politics is in danger, whether they think it or not
December 11th 2024

Funny things happen to the human body above 26,000 feet (8,000 metres).
Brain cells die. Blood turns to thick red custard. Vessels in the eye
spontaneously burst. Brain swelling can lead to coma or worse.
Mountaineers call it “the death zone”, and with good reason. In British
politics the death zone is less visceral, but no less serious. Any party that
spends too long in the 20s or below in the polls is in deep trouble. Usually
only one major party is unlucky enough to be so disliked. Today, they all are.

Britain’s main parties are remarkably unpopular. Labour sits at 26% in the
polls on average, eight points below what was already the most efficient (or
disproportionate) landslide victory in British electoral history. It is joined by
the Conservatives, also on 26%, which is only a shade above their
performance in the general election, itself a historic low. Nigel Farage’s
populist band Reform UK ticks up to 21%, which is enough to trigger
excitable headlines but not enough to guarantee replacing the Liberal
Democrats as Britain’s third party, never mind usurp the Conservatives as an
alternative party of government.

Each is a slip from falling into an electoral crevasse. First-past-the-post is

generous to the party on top and merciless to those beneath it, which have to
scrap for every second of media coverage, every pound from donors and
every inch of voter head space.

Strangely, few in Westminster seem concerned. In the Labour ranks, success

has led to complacency. Polls are dismissed. The party commands a majority
of 163 MPs and has at least four clear years of government before they face
voters again. Yet clouds are already gathering in the valley, even if the view
from the top—or from inside a ministerial car—looks splendid. Labour
Together, a think-tank close to the leadership, believes the danger is losing
voters to the right; others argue that the danger lurks to the party’s left, with
people drifting to the Greens. So far both camps are correct: Labour is
bleeding support in all directions.

Similar denial afflicts the Conservatives. Tory MPs have been cheered by
Labour’s lousy start. Yet although Labour’s support has bled, the
Conservatives have barely benefited. A few months after their worst
performance in a general election they remain more or less where they were:
a historically unpopular party.

Some around the party are willing to face reality: “Many, many people came
to hate the Conservative Party and will for a long time,” wrote James Frayne
in a report for the Centre for Policy Studies, another think-tank. Most,
however, are so blasé they notice only the unpopularity of Labour rather
than their own. It is the same confused logic that leads people suffering
hypothermia to strip naked and run into the snow.

If any party can be optimistic about life in the death zone, it is Reform UK.
This is largely because it has the least to lose. The party has only five MPs and
is barely five years old. It is still underresourced, with a handful of staff and
little cash, akin to early-20th-century mountaineers having a crack at Everest
in pyjamas and tweed. Even so, the latest iteration of Mr Farage’s two-
decade-long quest to blow apart British politics is arguably his most
successful. One poll put Reform UK second, behind the Conservatives and
above Labour.

In Mr Farage’s telling Britain is on the brink of one of its once-a-century

political ruptures, when a party is shifted from being a party of government
to a straggler. For all his bullishness, Reform UK is just as close to death as
glory. Such is the surreal workings of Britain’s first-past-the-post electoral
system, there is a minimal gap between Reform UK winning two, 20 or 200
seats at the next election; between a historic breakthrough or another chapter
in Mr Farage’s almost-made-it political life.

The only other time all major parties entered the death zone was in the pits
of the Brexit years, in the spring and early summer of 2019. Theresa May’s
dying Conservative government tacked along in the low 20s. Jeremy
Corbyn’s historically unpopular Labour Party joined them. Mr Farage’s
outfit, then named the Brexit Party, peaked at roughly the same level. It was
an extraordinary period, which was treated as such by everyone in
Westminster. Commentators dragged out “King Lear” quotations to sum up
the rage of the public: “I will do such things, / What they are, yet I know
not: but they shall be / The terrors of the Earth.”

In 2019 British politics managed to escape the death zone, but it was a
destructive endeavour. Mrs May was removed and replaced by Boris
Johnson, who purged his party, triggered a constitutional crisis and forced an
election. It was a painful experience that few remember fondly, but it gave
voters what they wanted: an end to the stasis of a hung parliament and
Britain’s departure from the European Union. At least the screaming
stopped.

Into thin air

This time a strange incuriosity has befallen Britain’s political class. The
voters are screaming just as loudly as they were in 2019, yet few are paying
the calls any heed. Back then the cause of the discontent was obvious. Now
the screams are harder to decipher. Are Britons angry about the state of the
 , or the economy, or immigration? A good chunk of Westminster has
NHS

decided to zip its tent and hope that the storm passes. Politics is relative,
runs the logic. It is sometimes enough simply to be the least hated. Whoever
does triumph, by default, will take a victory lap and claim death was never
near.

Despite its fatal name, most climbers survive the death zone. Even the
deadliest mountains kill only a small percentage of those who attempt to
scale them. Nevertheless, preparation, caution and bravery are all needed to
survive. Not many in Westminster are yet willing to accept that the stakes
are that high. Forgetting the risks is the quickest way to die. ■

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International
What has four stomachs and could change the world?
The Art of the Deal: global edition
International | Bridging the dairy divide

What has four stomachs and could change the

world?
Technology is transforming cattle farming, but not fast enough
December 12th 2024

The average dairy cow in America produces 30 litres of milk a day; a cow in
Africa, only 1.6. This 19-fold difference—call it the dairy divide—has
enormous consequences. Closing even some of it would ease poverty, help
children grow up better nourished, reduce emissions of greenhouse gases
and perhaps even make civil wars less likely. The good news is that cows
can become more productive, thanks to the spread of technologies old and
new. But unhelpful traditions—and climate change itself—make it harder.

In rich countries, cows are unfashionable. The health-conscious are

shunning red meat and switching to plant-based milk. The environmentally
conscious fret, correctly, that cattle account for 7% of man-made
greenhouse-gas emissions—far more than any other kind of livestock. And
techno-optimists have predicted, since the first lab-grown beef was unveiled
in 2013, that cruelty-free cultured meat will replace the sort sliced from
slaughtered animals as soon as it is cheap and tasty enough.

Perhaps that day will come. But for now cows are growing more important,
not less so (see chart 1). The UN’s Food and Agriculture Organisation (FAO)
expects global beef consumption to increase by 11% by 2033, and milk
consumption to rise by 17%, as the human population grows and more
people can afford more animal protein.

Farmers face two challenges. First, to meet growing demand for bovine
bounty, even as hotter, less predictable weather makes their job harder in
many regions. Second, to stop their cows from belching so much planet-
cooking methane.

In the first area there has been impressive, albeit uneven progress (see chart
2). In India, home of the world’s largest herd, selective breeding and better
husbandry increased the milk yield per cow from 3.8 litres a day in 2013 to
5.3 in 2022. The global rise was more modest: from 6.4 to 7.4 litres. Cattle
in poor countries remain far behind their rich-world peers, which means “the
opportunity for catch-up growth is enormous,” says Dominik Wisser of the
FAO.

Bovine emissions, alas, keep rising. Farmers have few incentives to abate
them. Governments are loth to impose rules that might inflate food prices,
consumers are wary of methane-curbing feed additives such as Bovaer and it
is harder to monitor emissions from cows than, say, power stations, since
there are 1.5bn of them and their owners are often nomadic.

Still, raising productivity—which farmers have every incentive to do—leads

to lower emissions per glass of milk. One cow producing ten litres a day
emits much less methane than two producing five each, notes Sonja Leitner
of the International Livestock Research Institute (ILRI) in Nairobi. The FAO
looked at 11 ways to cut bovine emissions: raising productivity would be the
key, ahead of tinkering with cows’ genes and diets.

The first steps are laughably low-tech. Alfred Kering, a smallholder near
Eldoret in Kenya, raised each of his cows’ daily output from one litre to
eight simply by reducing their number. He used to keep as many cattle as he
could because among his people, the Kalenjin, a man is judged by the size of
his herd. The trouble was, he didn’t have enough land to feed all ten of them
properly. An agricultural extension officer suggested he sell some. Now he
has only three, but they are well-fed and produce more than twice as much
milk as the ten did. He sells the surplus and is visibly less poor. His children
are better fed and get sick less often, he says; and he no longer struggles to
pay the school fees.

The next step to raise productivity—selective breeding—is more

sophisticated. One cannot simply take a high-yielding American cow, drop it
in Africa and expect it to thrive. The heat and bugs would surely kill it.
Farmers need hybrids that are good milkers, but also resilient to local
conditions. One snag is that smallholders like Mr Kering typically keep no
records of the bloodline of their cows. Some just hire the neighbour’s bull
when they need them impregnated, which fosters inbreeding and unhealthy
offspring. Others have tried to create better hybrids, but are hampered by not
knowing what they had to begin with.

So since 2016 scientists at Africa Asia Dairy Genetic Gains (AADGG), a project
run by ILRI and backed by the Gates Foundation, have been gathering data on
cow genetics and productivity in developing countries. They have plucked
hairs from 15,000 cows in Ethiopia, Kenya and Tanzania, and used the DNA to
build a database of bovine genomes.

In addition, AADGG works with a mobile app that lets farmers collect and relay
data about each cow’s milk, health, location and so on. It then uses models
to predict which genetic combinations might work best in specific places. At
first it was hard to persuade smallholders to share information—many
thought it would be used to make them pay tax. But eventually, working
with a firm called iCow, AADGG accustomed farmers to receiving advice
digitally. Those enrolled in the project in Tanzania saw productivity rise by
50%.

Gradually, know-how is spreading. Daniel Kemboi, another Kalenjin farmer,

says he finds the right bull semen by googling it. He browses a website that
lets him select traits, from higher milk yield to greater heat tolerance. His
yield has risen from 12-15 litres per cow five years ago to 26. He has also
built a cowshed for shade from soaring temperatures—a problem all local
farmers complain about. He says he now makes ten times as much money as
he did when he drove a truck as a young man.
Nationally, productivity per Kenyan dairy cow rose from 1.8 litres in 2013 to
2.3 in 2022. This is higher than the African average, but far short of what
farmers in the AADGG project have shown is possible. It is also far short of what
locals need. Some 35% of Kenyans are undernourished. Extra protein and
iron, essential for brain development, would come in handy for them—and
indeed for the 22% of the world’s children under five who are stunted for
lack of good food. A study by Beliyou Haile and Derek Headey of the
International Food Policy Research Institute in Washington found that an
increase in milk consumption in a country was associated with a large
reduction in stunting, even after controlling for income.

The pressure to adapt is especially intense among nomadic herders. “We

used to move from place to place, following the rain,” recalls Daniel
Sinkeet, a 59-year-old Maasai herdsman from southern Kenya. An intense
drought in 2021-23 made him realise his way of life was not sustainable.

When the local pasture dried up, he tried to save his cows the traditional way
—by driving them on a 200km trek to find fresh grass and water, moving at
night to avoid the heat. Many died of thirst or disease. He had to sell others,
at dismal prices, to buy feed for the survivors. His herd shrank from 300
head to 200.

If droughts grow more severe, conflicts between herders and sedentary

farmers could proliferate. In good years pastoralists graze their cows on
marginal land until farmers have harvested their crops. Then, with the
farmers’ permission, they let their cows eat the stubble and pay the farmers
in cash and cow dung. But when the rains fail, herders are forced to move
before the harvest is in, and their cows often destroy unharvested crops. This
can spark fights, which may escalate into ethnic conflict. A study by Eoin
McGuirk of Tufts University and Nathan Nunn of Harvard found that
drought in pastoral areas explained “a sizeable proportion” of conflicts in
Africa between 1989 and 2018, including civil wars.

Mr Sinkeet has reluctantly concluded that the solution is to settle down.

Instead of letting his cows wander far and wide, he now brings most of their
food to them. He grows maize, alfalfa and Napier grass, and feeds it to them
in troughs. It is a psychological wrench for him, as a proud Maasai man, to
stop roaming. But if herders’ productivity rises and they become more
stationary, one of the big causes of war in Africa could eventually fade.

Smallholders struggling to feed their kids seldom think much about their
contribution to global warming. But ILRI is helping some countries come up
with better estimates of bovine emissions, with a view to cutting them one
day. In one experiment in Nairobi, cows are put in a metal box called a
respiration chamber with instruments to measure how much methane they
burp. Researchers are testing whether varying their diet with locally
available legumes makes them produce more and emit less.

Man’s best frenemy

Even rich countries do little to curb livestock emissions. A partial exception
is the state of California, which has a target of reducing methane emissions
to 40% below 2013 levels by 2030, and has crafted rules and subsidies to
encourage farmers to do their bit. One technique is to capture the methane
and sell it as fuel (which is less damaging than letting it float away).

“That’s just poop,” says Simon Vander Woude, a dairy farmer near Merced,
near Sacramento, pointing to a duct filled with a thick brown liquid. Streams
of water flush the dung from his 3,200 cows into a pit under a tarp. It is an
anaerobic digester, a contraption that uses bacteria to break down biological
waste into methane. Walking on the gas-filled tarp feels like jumping on a
bulbous trampoline. The biogas is refined and sold. Before 2017, there were
fewer than 20 digesters in California; today at least 149 are in operation or
under construction. Private companies offer to build and maintain digesters
for a cut of the state subsidy and of the proceeds from selling the gas.

Mr Vander Woude’s digester cost $4m, but is now making a return. And
there are other promising techniques. Studies suggest that adding red
seaweed to cattle feed can suppress methane emissions, though estimates of
how much vary wildly.

genetics, a Texan firm, sells a tool to help farmers breed cows that make
ST

more milk while eating—and thus emitting—less. Pablo Ross, the firm’s
chief scientific officer, says “there is still a lot of work to do” to persuade
farmers that this will save them money (on feed) without sacrificing other
traits they want.

If cow burps and farts were taxed in a way that reflected their baleful effect
on the climate, farmers would have an incentive to curb them, and
consumers to cut back on emission-heavy foods. In June Denmark’s
government said it would slap a levy on emissions from livestock. So far, it
is the only one. ■

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could-change-the-world
International | The Telegram

The Art of the Deal: global edition

Donald Trump will have vast leverage over American allies, but ruthless
despots may resist his dealmaking
December 10th 2024

WITH THE right portfolio of assets, property developers enjoy tremendous

power over architects, builders and potential tenants. Yet even the richest
have little leverage over arsonists.

That bricks-and-mortar framing is surprisingly helpful for understanding

why America’s next president is both right and wrong about his ability to
reshape the global order. The Telegram is willing to risk a prediction: in his
second presidency, Donald Trump will wield tremendous power over allies
and countries that profit from ties with America. With adversaries ready to
burn relations with the West to the ground, his grip will be less sure.
Mr Trump sounds confident that he has leverage on all fronts. Big economic
partners, whether that means Canada, China, the European Union or Mexico,
have been warned to brace for tariffs on their exports, followed by calls to
renegotiate terms of trade with America. At the same time, Mr Trump has
pledged to end Russia’s war with Ukraine within 24 hours. He has warned
Hamas to release hostages taken in Israel on October 7th 2023, or face being
“hit harder than anybody has been hit in the long and storied history of the
United States of America”.

The strengths and limits of this approach are apparent to American and
foreign officials who watched Mr Trump’s first presidency up close. It is
striking how often the same insiders draw lessons from his career building
casinos, hotels and golf courses. Indeed, go back to interviews that Mr
Trump has given over many years, and he sometimes makes America’s
economy sound like the world’s most valuable bit of real estate. Because he
thinks previous American presidents were “suckers” who let foreign partners
pay too little for access to it, he is ready to impose aggressive rent reviews.

In Mr Trump’s first presidency, numerous allies endured his dealmaker’s

scrutiny. This was often a humiliating experience. In June 2017 Panama’s
then-president, Juan Carlos Varela, secured a meeting in the Oval Office, a
visit liable to boost him with voters back home. During their encounter, Mr
Trump questioned why American warships pay to use the Panama Canal,
which returned to Panamanian control in 1999. Mr Trump told his
Panamanian guest that surrendering the canal zone was a terrible deal and
that “we should take that thing back”, recalls America’s then-ambassador to
Panama, John Feeley. To his relief the Panamanian leader, whom he had
“assiduously prepped” to avoid confronting Mr Trump at all costs, tactfully
changed the subject, Mr Feeley says. Mr Varela asked his host: “Mr
President, can I ask you a question? How are you doing in Syria?” (America
is winning, he was told.)

Another former American official watched Mr Trump bullying a string of

allies, and draws links to his business career. As a developer, Mr Trump
routinely told suppliers to lower their prices after they had completed
projects. Some sued. Others wanted future business so gave in. “He always
stiffed his subcontractors,” notes that eyewitness. “To him, allies are like
subcontractors.”
Many times, Mr Trump’s “unconventional thinking cut to the quick of
things”, the former official goes on. Mr Trump asks “very good questions”
and was “a wrecking ball to things that needed to be disrupted”. He had a
patchier record when it came to building sturdier alternatives. Too often, his
ambitions were thwarted by his impatience with detail, and by his struggles
to understand foreign leaders guided by incentives very different from his
own.

For all his tough talk, Mr Trump wants to be loved, seeing himself as a man
of destiny sent to protect ordinary Americans’ interests, says the former
official. He craves the approval of financial markets and of very rich people,
whose wealth he takes as a proxy for brilliance. Truly cold-blooded rulers
confound him. “Someone who is utterly ruthless, and who will slaughter
anyone they need to, Trump can’t get his head around that.” In his first
presidency, the businessman was “totally shocked” by intelligence briefings
about Syria’s then-dictator, Bashar al-Assad, using poison gas on women
and children in his own country. In contrast, the same former official
watched Mr Trump failing to fathom leaders who acted on humanitarian
impulses, as when Germany’s then-chancellor, Angela Merkel, told him she
had allowed Syrian refugees into her country because it was the right thing
to do.

Not everyone wants to build beach resorts

Those same blind spots could become apparent once more when Mr Trump
returns to office. President Vladimir Putin is willing to sacrifice terrible
numbers of Russian lives to keep pushing deeper into Ukraine. Given that
the Russian leader is currently winning ground while Ukraine suffers a crisis
of manpower and morale, some Western officials wonder why Mr Trump
imagines he can force Russia to stop the war soon. Trumpian threats to strike
Hamas are equally unconvincing, for that terrorist group is willing to see
Gaza destroyed to advance its fanatical goals.

A former Western diplomat says that Mr Trump placed excessive faith in

economic incentives, as when he left an Obama-era pact to constrain Iran’s
nuclear programme, the JCPOA, in 2018. Trump aides told allies that their
builder-boss saw the pact as an edifice with bad foundations, fit only for
demolition. The JCPOA was imperfect, agrees the former diplomat. Still, it
imposed real curbs on Iran and Mr Trump’s rebuilding plan was worse: he
asserted that harsher sanctions would swiftly bring Iran to its knees, leaving
its rulers begging for a new deal. This did not happen. Nor was North
Korea’s hereditary despot, Kim Jong Un, swayed by Mr Trump’s invitation
to abandon nuclear arms and develop his country’s beaches for tourism. To
the former diplomat, Mr Trump is constrained twice over: by his “vast lack
of knowledge about abroad” and by his instinct that America should
disengage from foreign wars. In a world on fire, the art of the deal has limits.
■

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which brings together the best of our leaders, columns, guest essays and
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edition
Business
From Apple to Starbucks, Western firms’ China dreams are dying
Farewell, Don Draper: AI is coming for advertising
The PayPal Mafia is taking over America’s government
What Trump’s new antitrust enforcers mean for business
Why judges were wrong to block the Kroger-Albertsons merger
What do the gods of generative AI have in store for 2025?
The employee awards for 2024
Tesla, Intel and the fecklessness of corporate boards
Business | Prosperity uncommon

From Apple to Starbucks, Western firms’ China

dreams are dying
Economic growth is slowing, competition is stiffening and geopolitical
tensions loom
December 8th 2024

Editor’s note (December 9th 2024): This article has been updated to
incorporate news of China’s investigation of Nvidia.

THINGS HAVE never looked rosier for foreign firms in China—at least according to
the country’s Council for the Promotion of International Trade. The body,
which is controlled by the commerce ministry, claims that 90% of foreign
companies rate their experience in China as satisfactory or better. According
to a recent survey by the council, foreign firms say the economy is strong,
local markets are attractive and their outlook is bright. Following years of
isolation during the covid-19 pandemic, China’s government insists that the
country is open again for business, and that reforms have made life easier for
foreign companies.

Executives of those companies scoff at all this. Many say they now struggle
to justify investing in the country and talk instead of cutting staff. In a recent
survey by the American Chamber of Commerce in Shanghai, less than half
of respondents said they were optimistic about the prospects for their
business in China over the next five years—a record low. On December 4th
General Motors (GM), an American carmaker, said it would write down the
value of its once-thriving joint ventures in the country and close some of its
factories there. On December 9th it was reported that China’s government
was opening a competition probe into Nvidia, America’s AI chip champion.

In recent decades Western bosses looked to China not just as a place to make
things cheaply, but as a vast and growing market for their wares. According
to our analysis, the sales in China of listed American and European
companies that disclose them peaked at $670bn in 2021, accounting for 15%
of those firms’ total revenue. Things have gone south since. Last year sales
were down to $650bn; their share of total revenue slipped to 14%. This year
has shown no sign of improvement. Of those firms in our dataset that report
quarterly sales in China, almost half saw these decline, year on year, in the
most recent reporting period.

Companies confronting shrinking sales in the country range from Apple, a

tech giant, and Volkswagen, a carmaker, to Starbucks, a coffee chain, and
LVMH, a luxury conglomerate. “At this point we should have turned a corner,”

complains the regional boss of a global firm. Another foreign executive

laments that the days of feverish growth in China for his business have
passed. Although some Western companies, such as Eli Lilly, a drugmaker,
and Walmart, a retail behemoth, continue to grow in the country, their ranks
are steadily thinning.

One reason for this is China’s economic stagnation. A housing crisis has sent
property prices across the country plummeting and caused consumers to
tighten their belts. The central government signalled in September that it
would do what it takes to reflate the economy, and on December 9th the
politburo announced that China would shift to a “moderately loose”
monetary policy for the first time in over a decade. But expectations remain
low. Property sales are still falling, compared with last year, and will
probably continue doing so well into 2025. Despite the government’s
promises to stimulate consumption, gauges of demand are down.

Deflationary pressure is hurting all companies in China, not just foreign

ones, notes Bo Zhengyuan of Plenum, a consultancy in Beijing. Fully 27%
of Chinese industrial firms were making losses at the end of October.
Oversupply in various industries, from electric vehicles (EVs) to building
materials, has led to ferocious price wars. Mary Barra, GM’s boss, has blamed
a “race to the bottom” for the firm’s difficulties making money in the
country.

Yet Western companies are also being outcompeted by Chinese rivals.

Starbucks has ceded market share to Luckin Coffee, a cheaper local
competitor that in September had 21,000 stores in the country, about three
times as many as the American chain and up from 13,000 a year before.
Brian Niccol, the newish boss of Starbucks, told investors in October that it
faces “extreme” competition in China. It is said to be considering selling a
stake in its business there to a local partner.

In many industries Western firms no longer enjoy the technological edge

they once did over Chinese rivals. Chinese manufacturers of industrial
robots now supply almost half the local market, up from less than a third in
2020. Apple’s troubles in the country have been compounded by flashy new
smartphones from Huawei, including the Mate 70 range it unveiled on
November 26th. The EVs produced by BYD, NIO and other Chinese carmakers are
not only much cheaper than Western ones, but packed full of the clever tech
that local consumers desire. When the Chinese market was still expanding
briskly, Western firms were able to increase their sales there even as they
lost share. They no longer have that luxury.

If all that were not bad enough, Western companies are also becoming
collateral damage in the rivalry between their governments and China’s. On
December 2nd America introduced new restrictions on the sale of
chipmaking tools to certain Chinese companies, as well as of high-
bandwidth-memory chips. That will hurt American manufacturers of
semiconductor equipment such as Applied Materials, Lam Research and KLA,
as well as ASML, a Dutch maker of advanced lithography tools. Other Western
chip businesses may also suffer as a result. After the announcement, four
Chinese industry associations responded with a call to reduce purchases of
American chips. The timing of China’s Nvidia probe suggests it too may be
an act of retaliation for America’s restrictions.

Companies in sensitive industries such as chipmaking are familiar with the

risk attached to their sales in China. The list of firms exposed to geopolitical
ructions, however, is lengthening. The shares of European brandy-makers,
including Rémy Cointreau and Pernod Ricard, slumped in October after
China said it would impose anti-dumping measures on the spirit, seemingly
in retaliation for tariffs levied on Chinese EVs by the EU. Last month the
founder of Uniqlo, a Japanese clothing retailer, incurred the wrath of
Chinese netizens when he said that the company did not use cotton from
Xinjiang, a region of China mired in allegations of forced labour. China’s
commerce ministry may soon slap restrictions on the local operations of PVH,
the American owner of Tommy Hilfiger and Calvin Klein, for complying
with an American law that bans the use of cotton from the region.

If Donald Trump follows through with his threat to raise tariffs on Chinese
goods, Xi Jinping may respond by making life harder still for American
companies. Foreign firms in China are trapped in the middle of a dangerous
geopolitical struggle, writes Andrew Polk of Trivium China, another
consultancy. Their troubles will not ease soon. ■

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firms-china-dreams-are-dying
Business | Add agencies

Farewell, Don Draper: AI is coming for

advertising
Omnicom’s takeover of Interpublic signals an industry in trouble
December 12th 2024

“Change is neither good nor bad. It simply is,” declares Donald Draper, the
unflappable star of “Mad Men”, a television drama set in 1960s adland. Not
all advertising executives share his sangfroid. Today, technology is changing
the industry faster than at any time since Mr Draper’s era. The result is a
reshaping of Madison Avenue that is leaving some admen choking on their
Old Fashioneds.

The biggest example of the disruption so far is a deal announced on

December 9th, in which Omnicom and Interpublic, the world’s third- and
fourth-largest ad-agency holding companies by revenue, propose to combine
to become by far the biggest (see chart). The deal, structured as a takeover of
Interpublic by Omnicom, would bring together a client list including Apple,
Disney, Johnson & Johnson and Mattel. In leapfrogging France’s Publicis
and Britain’s WPP, the enlarged Omnicom would shift advertising’s centre of
gravity closer to New York.

On the face of it the industry’s troubles are hard to grasp. True, the incoming
Trump administration is worrying marketers with hints that it may curb
pharmaceutical advertising (which contributes 6-8% of American ad
revenue) or start a trade war that could hurt big-spending industries like cars
and electronics. But advertising has never been bigger. Helped by a summer
Olympics and an American election, worldwide spending is on course to rise
by 9.5% in 2024, crossing $1trn for the first time, reckons GroupM, part of
WPP.

The trouble is that ever more of the business is slipping out of the well-
manicured hands of the agency executives who used to control it. Tech
companies, led by Google, Meta and Amazon, have made it easier for
companies to create and buy their own ads. Those three firms, plus China’s
ByteDance and Alibaba, will rake in more than half of all ad spending this
year, GroupM predicts. Strip out the up-and-down period of the covid-19
pandemic and the global ad-agency industry has grown by barely 3% a year
since 2018, according to MoffettNathanson, a firm of analysts.
Artificial intelligence (AI) threatens to erode their role further. Generative AI
can write copy and draw images; on December 9th OpenAI, maker of ChatGPT,
released Sora, its video generator. AI is also making it easier to target
consumers with the right ad. The technology could eliminate 7.5% of
America’s advertising jobs by 2030, predicts Forrester, a research firm.
Moreover, AI tools are making it easier for clients to take advertising in-
house, or give the work to smaller agencies. The biggest five agency holding
companies had a 30% share of all agency-services revenue last year, down
from 37% a decade earlier, estimates Madison and Wall, an ad consultancy.

Omnicom and Interpublic hope that together they will be protected against
these trends. The companies’ bosses promise savings of $750m per year by
merging shared functions, and say they will invest more in AI technology.
Removing one competitor from advertising’s top tier will improve their
pricing power. Regulators may not like that. But, as Omnicom’s boss, John
Wren, pointed out, the clout of Google and co ought to reassure trustbusters
that there will be no shortage of competition; Mr Wren also expects a more
business-friendly environment under Donald Trump. The tie-up has
“tremendous industrial logic”, says Brian Wieser of Madison and Wall.

Will it enable the agencies to compete with their tech rivals? That may be
the wrong question. “If I’m looking for state-of-the-art AI, am I going to go to
my ad agency? Are you crazy?” asks Rishad Tobaccowala, a former chief
strategist at Publicis. AI will be a service that agencies plug into, like
electricity, rather than a competitive differentiator, he argues.

Perhaps more likely is that agencies push further into new kinds of work.
The “holy grail” in the industry is combining ad-buying with data analysis,
argues Bernstein, a broker, which cites the successful acquisition by Publicis
of Epsilon, a data company, in 2019. Publicis now has 25,000 engineers
helping clients with everything from managing data to building apps. With
this kind of work, agencies are competing more closely with consulting
firms, which in turn are venturing into the ad-content business, with
offshoots such as Accenture Song.

The bit of the advertising industry that seems most vulnerable is the creative
part. “The ability to charge for producing ads is going to decline
significantly because of AI,” says Mr Tobaccowala. The newly enlarged
Omnicom will control an alphabet soup of creative agencies, including
Omnicom’s BBDO, DDB and TBWA, plus Interpublic’s McCann and FCB. This may be
more than a single company needs, suspects Mr Wieser. If the changes
coming to adland are going to be bad for anyone, it may be creative
executives like Don Draper. ■

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advertising
Business | All-In on Donald Trump

The PayPal Mafia is taking over America’s

government
America’s right-wing tech bros are celebrating Donald Trump’s victory
December 10th 2024

On the night of December 7th San Francisco’s Palace of Fine Arts, with its
lakeside colonnade echoing a Roman ruin, turned into Mar-a-Lago. Silicon
Valley’s newly emboldened right-wingers had gathered for a Christmas bash
organised by the All-In podcast. The festive good cheer did not extend to
everyone; The Economist was made to feel most unwelcome. But not before
being privy to a riotous celebration of how a clique of billionaires—the so-
called PayPal Mafia—helped clinch Donald Trump’s election victory and is
taking Washington by storm.

The four venture capitalists that host All-In have a lot to feel smug about. In
June two of them—David Sacks, a PayPal alumnus, and Chamath
Palihapitiya—threw a fundraising event for Mr Trump when he visited San
Francisco, which raked in $12m. On December 5th Mr Trump returned the
favour by naming Mr Sacks his artificial-intelligence (AI) and crypto “tsar”.
Mr Sacks accordingly wore a Russian fur hat to the event.

Alongside Mr Trump, the All-In podcast counts Elon Musk and Peter Thiel,
two other PayPal mafiosi, as friends. From the stage there was jubilation
over Mr Musk’s influence on the president-elect (“Being Elon Musk is a
pretty fucking sweet deal,” declared a video kicking off the event) and Mr
Thiel’s patronage of J.D. Vance, the incoming vice-president. “The PayPal
Mafia’s takeover of the government is now complete, so good work on that,”
quipped Aaron Levie, the founder of Box, a cloud-storage firm (and a
Democratic donor decidedly out of place).

The event featured giddy excitement over cryptocurrencies and defence-tech

firms like Anduril and Palantir. But some of the loudest cheers—including a
“hallelujah” from the stage—went to efforts to fix the budget deficit and rein
in “out of control” government spending.

The hosts also made clear who was out of favour. Sam Altman, the chief
executive of OpenAI, maker of ChatGPT, was roundly mocked. He is Mr
Musk’s nemesis. Mr Palihapitiya, with the future AI tsar at his side, described
OpenAI as “the biggest disappointment of this year”, and heaped praise
instead on Mr Musk’s xAI. Women were under-represented; one female
entrepreneur walked out in disgust at the “male energy”.

Top of the hate list was “legacy media”. When your correspondent sought a
word with Jason Calacanis, a co-host dressed as a jovial Santa Claus on
stage, he flew into a rage, shouting: “Don’t talk to journalists!” A few
minutes later, he threw The Economist out.■

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americas-government
Business | Trustbusting transformed

What Trump’s new antitrust enforcers mean for

business
Expect easier dealmaking. Unless you are in Silicon Valley
December 12th 2024

It was as if the sun came out on Wall Street. Donald Trump’s election
victory was met not just with a blistering stockmarket rally, but also a flurry
of dealmaking. Mondelez, a snack-seller, is reportedly trying to buy
Hershey, a chocolatier. Consolidation beckons for the advertising industry.
Bankers are expecting that many more tie-ups will follow. The surge in
activity partly reflects a level of certainty that would have materialised
whoever won the election. But it also has much to do with the changing of
the guard at America’s antitrust authorities.

On December 10th Mr Trump announced that the new chair of the Federal
Trade Commission (FTC) will be Andrew Ferguson (pictured), who has been a
commissioner since April. Last week Mr Trump picked Gail Slater, an
adviser to J.D. Vance, the incoming vice-president, to lead the antitrust
division of the Department of Justice (DOJ). The newcomers will replace Lina
Khan and Jonathan Kanter, respectively. Both aggressively scrutinised
corporate power in America. Often their bark was worse than their bite.
Many cases failed in the courtroom. But not all: on December 10th judges
blocked the merger of Kroger and Albertsons, two big grocers, after the FTC
sued to prevent their union.

Mr Trump’s picks will mostly make corporate deals easier. Merger

guidelines, the framework regulators use to evaluate deals, may be replaced
by an approach that places more weight on consumers and acknowledges the
potential efficiencies from deals, says Mike Cowie of Dechert, a law firm.
Objections to a merger because of its effect on union workers, for example,
are less likely to be raised under the new regime. Private-equity firms, which
faced more scrutiny under Mr Biden, will find that burden lighter under Mr
Trump, reckons Richard Falek of Winston & Strawn, another law firm.

Continuity, though, is likely in the crusade against big tech. Mr Trump’s

nominees inherit a full docket of cases against Apple, Amazon, Meta and
Alphabet. They could even bring new venom to the task. “Big tech has run
wild for years,” Mr Trump wrote in a post on Truth Social, his social-media
site, when he announced Ms Slater’s nomination. He praised Mr Ferguson’s
record of “standing up to big tech censorship” in another. On December 2nd,
in a case ostensibly about retail shipping practices, Mr Ferguson wrote an
opinion calling for the FTC to conduct an investigation into online censorship.

Thus more legal drama between Washington and Silicon Valley is inevitable.
But one of the biggest topics in antitrust next year, says Eric Grannon of
White & Case, a third law firm, will be a potential tie-up between the FTC and
DOJ. A bill was introduced in Congress earlier this year to consolidate antitrust

enforcement into the DOJ. The departments have overlapping briefs, and each
has an army of economists and lawyers. That makes them obvious targets for
Elon Musk’s new government efficiency drive. The deal police may soon go
through a merger of their own. ■

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mean-for-business
Business | Food fight

Why judges were wrong to block the Kroger-

Albertsons merger
Antitrust concerns rest on an outdated idea of how Americans shop
December 11th 2024

The biggest supermarket merger in American history is dead. In the space of

just a few hours on December 10th, federal and state judges both sided with
the Federal Trade Commission (FTC), America’s main antitrust regulator, to
block the acquisition of Albertsons, a big supermarket chain, by Kroger,
another such firm. By the next day the pair were adversaries: Albertsons has
not only called off the deal, it is also now suing Kroger for failing to make
“best efforts” to get regulatory approval.

The mega-merger would have created a $200bn grocery behemoth with

5,000 shops, 4,000 retail pharmacies and 700,000 employees across
America. But the tie-up has been mired in controversy ever since it was
agreed on back in 2022. The FTC—along with the attorneys-general of eight
states and the District of Columbia—sued to block the deal earlier this year.
They argued that it would reduce competition, leading to higher prices for
shoppers and eroding the bargaining power of the companies’ unionised
workforces.

But the trustbusters’ concerns miss the mark. One problem is that the FTC’s
argument rests on a narrow definition of who the two supermarkets compete
with. It defines the market as shops that sell customers all the groceries they
need for the week. By this definition, Kroger and Albertsons are the two
biggest firms in their industry. But, as John Mayo of Georgetown University,
puts it: “That is a relatively contrived market the FTC has conjured up.”

Conventional supermarkets like Kroger and Albertsons in fact compete with

lots of other companies. Big box retailers, such as Walmart and Costco, and
discounters, such as Aldi, offer cut-price groceries. Specialty stores, such as
Whole Foods and Sprouts, draw in shoppers with premium goods.
Meanwhile, e-commerce firms, such as Amazon, allow consumers to buy
food without getting off their sofas. Consider all the different firms selling
groceries and Kroger and Albertsons have a combined market share of just
11% in America, according to data from Euromonitor, a research firm. That
compares with Walmart’s 25% share (see chart).
Indeed, Walmart is the elephant in the room. The retail giant generated
$648bn in revenue last year, equivalent to more than 2% of American GDP.
That scale allows it to offer “every day low prices” that other grocers
struggle to match. A big bottle of Heinz tomato ketchup costs $4.48 on
Walmart’s website compared with $5.29 on Kroger’s. Throughout the
hearings Kroger’s executives argued that they see Walmart—not Albertsons
—as their main competitor. “Kroger has lived under the shadow of
Walmart,” says Simeon Gutman, of Morgan Stanley, a bank.

The trustbusters also failed to appreciate how little customer loyalty there is
in the grocery business. The typical American now visits two stores during a
single shopping trip, according to Mintel, a firm of analysts; many visit three
or more. Over two-thirds of Kroger customers also shop at Walmart. More
than a quarter of American shoppers have switched which store they go to
for their main grocery shop over the past year, primarily in search of lower
prices.

The Kroger-Albertsons deal became part of a wider debate on the cost of

living in America. In its argument, the FTC cited a report from 2022 suggesting
that many poor families spend almost one-third of their income on food. But
there is scant evidence of price-gouging by grocers. In their most recent
quarterly results Kroger and Albertsons posted margins of 2.5% and 1.6%,
respectively. “That’s not the operating margin of a company that is able to
price aggressively,” says Robert Ohmes of Bank of America.

What now for the two chains? Legal action against Kroger will not solve
Albertsons’ longer-term problems. In his testimony before the federal court
Vivek Sankaran, the firm’s boss, said he would have to consider cutting jobs
and shutting down shops if the merger fell through. He added that
Albertsons might need to find another buyer in the next few years. The food
fight might not be over yet. ■

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kroger-albertsons-merger
Business | The next big thing

What do the gods of generative AI have in store

for 2025?
OpenAI and Google have unveiled their next generation of products
December 11th 2024

THE 12 DAYS of Christmas are meant to start on December 25th. But not in
the world of artificial intelligence (AI). On December 5th OpenAI, maker of
ChatGPT, began a blizzard of product shipments dubbed, gratingly, the “12
days of shipmas”. It has included a full roll-out of Sora, its video-generation
tool, as well as Canvas, a writing and coding product.

Not to be outdone, Google has also put the elves to work early. On
December 11th it unveiled a new generative-AI model called Gemini 2.0. And
it launched souped-up prototypes of two AI products powered by the model,
called Astra and Mariner. These can take actions on a user’s behalf—making
them what industry types call “agentic AI”.
The prominence of products over models in both sets of announcements was
noteworthy. While the boffins who work on large language models are
striving to get to the next frontier of intelligence, developers are under
pressure to release clever products that prove there is a market for all this
ingenuity.

Developing generative-AI products is fraught with difficulty. Product

developers typically work backwards from what the consumer needs.
Generative AI, however, is evolving so quickly that the technology is defining
the product. “You are normally taught not to be a hammer looking for a
nail,” says Kevin Weil, OpenAI’s chief product officer. But “every two
months computers can do something that we have never before been able to
do.”

These latest product launches, though, have been marred by glitches. OpenAI
had to suspend access to Sora shortly after it was released to ChatGPT
subscribers because it underestimated demand, according to its boss, Sam
Altman. Those who obtained access, even if impressed by what they found,
noticed that problems from an earlier demo remained. One of the most
glaring was the trouble the tool had portraying complex movements
realistically. Marques Brownlee, a tech reviewer, noted that Sora was almost
guaranteed to “mess up” anything walking with four legs. Some objects also
randomly disappeared.

Google’s agents were not fully polished, either. Astra, which is currently
available to only a small group of “trusted testers”, can explain in several
languages what it sees through a phone’s camera, and has access to Google
sites such as Search and Maps. In a demo that involved taking a video of
famous paintings, it spoke knowledgeably about them. Yet it was
flummoxed when asked by The Economist to name the city where most of
the originals were on display. Mariner, Google’s other new prototype, can
complete tasks on a browser, such as filling a shopping basket in an online
supermarket. But it cannot complete the checkout itself.

Silicon Valley has great expectations for agentic AI in particular. The use of
agents to advance from “chatting to doing” could be one of the big tech
breakthroughs of 2025, says Alex Wang of Scale, an AI data company.
Already that hope has bolstered the share prices of software giants like
Salesforce. It said this month that it had struck deals with more than 200
customers for Agentforce, its workplace AI agent, within a week of releasing
it in October. Microsoft, its bigger rival, has released a variety of AI agents.

Several factors, however, make it harder to create agents than chatbots. One
is data. Unlike chatbots, which scrape information from the web to answer
questions, agents require data on the way tasks are performed, including the
sequencing of actions and the reasoning behind them. For routine tasks, such
as processing a customer order, that may be straightforward. In many cases,
though, it will be difficult to find sufficient data to train the tool.

A second problem is trust. Checking whether a chatbot has given a right or

wrong answer is usually easy. Determining whether an AI agent has booked
the best restaurant or holiday it could within your budget may be more
difficult. Google deliberately prevents Mariner from spending money in case
it garbles the decision. Users may also balk at providing AI agents with
sensitive information about, say, their purchase history, which may be
required for the tools to function properly.

A final problem is cost. In order to reason, plan and solve problems on

behalf of users, AI agents need access to models that can handle complex
tasks. They also require low latency and the ability to interact with other
tools such as a web browser, as well as plenty of memory to provide a
service tailored to the user. All that is tricky and expensive to build, and
requires lots of computing power to run.

Already cost pressures are beginning to show. On December 5th OpenAI

launched a “pro” version of ChatGPT, with unlimited access to all its latest
bells and whistles, at $200 a month, ten times the price of its basic
subscription. Alphabet, owner of Google, is as rich as Croesus and could
choose to be more generous. Still, if agentic AI lives up to the hype, users
may find it worth the extra cost. ■

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Business | Bartleby

The employee awards for 2024

Least accurate website photo. Best AI-washer. Let’s celebrate our winners
December 12th 2024

It’s that time of year again, when we celebrate our successes and gloss over
our failures. For our 2024 employee awards we have all our classic
categories, from team member of the year and newcomer of the year to the
big one: employee of the year. As usual, the winner of that award will enjoy
a weekend away in a location of our choosing.

But first, we have taken on board last year’s criticisms that these awards
have an overly traditional view of achievement. We are fully committed to
inclusivity and have introduced several new categories this year to reflect
the extraordinary range of contributions that all of you make. Please join me
in congratulating our debut winners.
Most likely to make an irrelevant point. There was enormous competition
in this category; several people who took part in the judging process ended
up coming close to winning. But we’d like this to go to Violet. None of us
could recall a discussion when she had not made a point; none of us could
remember a time when that point was salient.

Least punctual colleague. We used actual data to track arrivals in virtual

meetings. We can see that Akshat arrives 12 minutes late on average, which
is enough to earn him a commendation. But the winner is someone called
Mandy, who did not turn up to a single meeting to which she was invited.
We are currently trying to work out who this person is and why no one has
ever heard of her.

Least accurate website photo. Again, a very hotly contested category. A

few colleagues appear to be using their passport photos: they are doing
themselves a disservice. But most people look younger, friendlier and more
attractive than they actually are. The prize in this category goes to Paul, who
resembles a promising young novelist on the site and looks like a repeat
offender in real life.

Most likely to nominate themselves for an award. This (self-nominated)

category honours those who know the value of self-promotion and struggle
with irony. We think this category may well be a reliable guide to spotting
our leaders of tomorrow. So well done, Willem.

Source of greatest uncertainty over what they actually do. All of our
senior leadership team received lots of nominations. So did the marketing
and HR departments. But the clear winner is the strategy office. No other team
received more nominations from its own members than this one, which is
surely an achievement worth marking.

Most disliked item of clothing worn by a co-worker. We can’t get any of

you to answer the employee survey except through veiled threats. But give
people permission to weigh in on how their colleagues dress and suddenly
everyone has a view. Overly tight T-shirts, sweaters with holes in them,
weirdly jaunty scarves, those terrible trousers: they all featured. But in the
end no one wanted to look beyond, or at, Bogdan’s shorts.
Longest co-working relationship without conversation. Sylvie and Edgar
have been colleagues for 19 years and have recently only moved to nodding
terms. They are both gearing up to say “hello” to each other some time in
2032, and we’ll keep a very close eye on their progress. Well done, both of
you.

Greatest cyber-security threat. It’s not the Russians but Danny in the
client-services team. He clicked on every single phishing email we sent last
year in order to test your awareness of the risk of hacking. Out of curiosity
we ended up sending him customised test messages, including one headlined
“DANGER: This contains a virus” and another titled “For God’s sake,
Danny, do not open this”—and he opened all of them. He has taken all our
cyber-security courses and we don’t know what to do next.

Best piece of AI-washing. We’re genuinely impressed by your efforts to

shoehorn mentions of artificial intelligence into everything you do. Product
descriptions, marketing copy and strategic plans all overflow with
exaggerated references and promises. But we’d like to give this award to
DAIsy for starting to sign her name like that.

Darwin Nuñez bin-thrower of the year. This award goes to the person who
misses the bin most often when they toss stuff at it. We’ve reviewed the
footage and Mariano takes the prize. No matter what he is throwing or how
close he is, his aim is off. He wins a bigger bin.

Least likely to succeed. We were simply unable to make a decision on this

award. But the fact that so many of you were in with a shout says something.
Everyone here can have an impact, even if it is negative. Congratulations,
all!■

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Business | Schumpeter

Tesla, Intel and the fecklessness of corporate

boards
Too many directors at American companies aren’t doing their job
December 12th 2024

SITTING ON THE board of a large American company is at once the

plummest and most thankless work in business. Plum because, when
everything is going right, you pocket $300,000 a year in cash and stock for
showing up to a well-catered meeting every month and a half. Thankless
because you seldom get credit for things going right but take the blame
when they go awry. And awry they go with disturbing regularity.

Consider two recent events. On December 2nd directors of Intel sacked its
hapless chief executive, Pat Gelsinger. He had torched $150bn in
shareholder value over his three-and-a-half-year tenure at the chipmaker,
even as the fortunes of virtually all other chip firms were boosted by white-
hot demand for computing power amid the artificial-intelligence (AI)
revolution. Good riddance, then. But what took the board so long?

The same day, a judge in Delaware reaffirmed her ruling from January to
annul the eye-watering $56bn compensation package awarded in 2018 to
Elon Musk by the board of Tesla, his electric-car company. The decision is
controversial. Tesla’s shareholders have minted it lately thanks to the soaring
price of the company’s stock. In June 75% of them voted to bless the mega-
paycheque (and move the company’s incorporation from Delaware to
management-friendlier Texas). Tesla called the latest ruling “wrong” and
will be filing an appeal. Still, the imbroglio is a reminder that Tesla’s
notionally independent directors who signed off on Mr Musk’s windfall
were, in a judge’s opinion, anything but.

Intel and Tesla represent two ways in which boards fail in their duty to
represent investors and hold management to account. The case of Tesla
shows how directors at the mercy of a domineering figure—be it a
controlling shareholder, an imperial CEO or, like Mr Musk, both—have a
powerful incentive to humour that person’s whims even if it might mean
ignoring their fiduciary obligations. Equally, as possibly happened at Intel,
thoroughly independent directors may lack enough of an incentive to care.
Either way, the result looks like feckless passivity.

Certain features of American capitalism are making both problems worse.

For a start, more companies are going public with ownership structures in
which some shares are more equal than others. Jay Ritter of the University
of Florida keeps a tally of businesses that opt for such dual-class shares.
When Google famously did so 20 years ago, they were a rarity. In the 2000s
they accounted for fewer than one in ten initial public offerings on American
exchanges. In the past five years they made up more than a quarter—and
nearly half of tech IPOs, from Airbnb to Zoom.

Dual-class arrangements appeal to founders, who are happy to take money

from public markets but not to give up control. Investors used to be
suspicious. After Snap, a social-media firm, sold stock with no voting rights
in 2017, some of them persuaded S&P Dow Jones, a compiler of indices, to
bar new arrivals with multiple share classes from the blue-chip S&P 500 and
its sisters.
Many have since had a change of heart, no doubt impressed by the trillion-
dollar market values of dual-class darlings like Alphabet, Berkshire
Hathaway and Meta. So has S&P Dow Jones, which in 2023 rowed back its
ban. In January Mr Musk mused about adopting the structure at Tesla,
apparently out of fear that his mere 13% stake makes him vulnerable to be
“voted out by some random shareholder-advisory firm”.

Investors may be right to conclude that a heroic entrepreneur alone can lead
a company to greatness. But they should have no illusions about the
resulting emasculation of their representatives in the boardroom. This is
easier to swallow when returns are healthy than when they are not. Just ask
the shareholders of Snap, which is worth a third less today than at its IPO.

The rise of emasculated directors is coinciding with that of absentee ones.

Most are physically present at board meetings but, like at Intel, too many
appear disengaged. In the latest annual survey by PwC, a consultancy, only
30% of executives rated their board’s performance as good or excellent. A
fifth thought it poor. Most telling of all, 84% of executives did not think that
directors overstepped the boundaries between themselves and management.
Often this is precisely what a vigilant board ought to do.

One reason for directors’ disengagement may be overcommitment. This was

brutally exposed by covid-19, when boards often convened weekly rather
than every seven weeks or so. A subsequent backlash against
“overboarding” forced many directors to split their time between fewer
companies. The typical busy S&P 500 director now sits on two boards,
manageable in non-pandemic times. But this has been offset by the rising
number of hours they spend on board duties as the world gets more
complicated.

Directors’ rut
Companies are also finding it harder to recruit heavy-hitters who won’t nod
off. A headhunter recalls that chief executives, a mostly white and male
bunch, were out of favour amid the push for greater diversity a few years
ago. “Now that is the only thing companies want.” With the share of active
or former chief executives on S&P 500 boards in decline over the past few
years, many won’t get it.

There is no recipe for a perfect board. But some ingredients may make them
better. Lucian Bebchuk of Harvard Law School proposes “enhanced-
independence” directors, whose dismissal by an imperious boss can be
vetoed by minority shareholders. A version of this exists in Britain and
Israel. And whereas a board’s size or average age seems not to affect
investor returns, S&P 500 firms with a wider age range tend to do better.
Expedia’s eldest director, Barry Diller, a media baron, is 55 years older than
the youngest, Alex Wang, an AI billionaire. Perhaps intergenerational tiffs
keep everyone else on boards alert. ■

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corporate-boards
Finance & economics
Which economy did best in 2024?
The Federal Reserve takes on Trump—and stubborn inflation
Bitcoin is up by 138% this year. It is a nonsense-free rally
How much oil can Trump pump?
The World Bank is struggling to serve all 78 poor countries
Are adults forgetting how to read?
What a censored speech says about China’s economy
Finance & economics | Top of the charts

Which economy did best in 2024?

We rank countries on five measures
December 10th 2024

Interest rates at their highest in decades, wars in Europe and the Middle
East, elections in countries as important as America and India. No matter.
The world economy delivered another strong performance in 2024;
according to the IMF, global GDP will grow by 3.2%. Inflation has eased and
employment growth remains solid. Stockmarkets have risen by more than
20% for a second consecutive year.

Yet, as ever, the rosy global picture conceals wide variation between
countries. To assess these differences, we have compiled data on five
economic and financial indicators—GDP, stockmarket performance, core
inflation, unemployment and government deficits—for 37 mostly rich
countries. We then ranked each economy based on its performance to create
a combined score. The table shows these rankings. Who are the winners?

The Mediterranean’s rally rolls on for the third consecutive year, with Spain
at the top of this year’s list. Greece and Italy, once emblematic of the euro
zone’s woes, continue their recoveries. Ireland, which has attracted tech
firms, and Denmark, home to Novo Nordisk of Ozempic fame, round out the
top five. Meanwhile, northern European heavyweights disappoint, with poor
performances from Britain and Germany. The Baltic duo of Latvia and
Estonia find themselves back at the bottom, a position they also occupied in
2022.

Our first indicator is real GDP growth, widely regarded as the most reliable
measure of an economy’s overall health. This year global GDP was buoyed by
the resilient American economy and its free-spending consumers. Israel
emerged as another standout performer, according to OECD data, though its
strong growth largely reflects a rebound from a sharp contraction in the final
quarter of 2023, when its fight with Hamas began. In Spain annual GDP growth
is on track to exceed 3%, driven by a strong labour market and high levels of
immigration, which mechanically lift economic output. Although the
country’s GDP per person has also risen, it has done so by less than overall GDP.
Elsewhere, growth has been underwhelming. Germany and Italy have been
hampered by high energy prices and sluggish manufacturing industries.
Japan is set to post a meagre 0.2% growth, weighed down by weaker
tourism and a struggling car industry. Hungary and Latvia have both slipped
into recession.

Our second measure is stockmarket returns. Investors shrugged off a rocky

August, when the unwinding of the yen carry trade prompted fears of a
crisis. American equities have delivered impressive inflation-adjusted
returns of 24%, as valuations for tech firms, already lofty, climbed higher.
Canada’s market, closely linked to its southern neighbour, also posted
healthy gains, bolstered by strong performances in the energy and banking
industries. Japan’s Nikkei 225 hit a record high, even if its overall annual
performance was middling. There were some losers. Share prices in Finland
are in negative territory, in real terms, and South Korea’s stockmarket
tumbled in the wake of an attempted autogolpe by the president on
December 3rd.

Next we turn to core inflation, which strips out volatile components such as
energy and food to indicate underlying price pressures. Although global
inflation has fallen significantly, prices of services remain high in many
countries. In Britain wage growth continues to drive up services costs,
meaning core inflation is uncomfortably elevated. In Australia rising
housing costs are in part to blame. Inflation in Turkey remains sizzling. By
contrast, France and Switzerland have managed to keep price pressures in
check.

Jobs for the chicos

A classic marker of economic misery is rising unemployment, which is what
many predicted when central bankers began to raise interest rates (and
artificial intelligence grew more sophisticated). Yet despite some loosening,
labour markets remain robust, with unemployment rates near record lows.
Southern Europe, which still suffers from high unemployment, has seen
remarkable improvement: joblessness in Greece, Italy and Spain has fallen
to its lowest in over a decade. Italy has enjoyed the most progress, with
joblessness dropping by 1.4 percentage points since the start of the year. In
America and Canada, where unemployment has ticked up slightly, the trend
is largely attributable to the fact that people are returning to the labour force,
and to high levels of immigration.

Our final measure looks at fiscal balances, excluding interest payments, as a

share of GDP. After years of big spending, consolidation is required in many
countries to ensure that debt burdens remain manageable. Denmark and
Portugal stand out for achieving rare budget surpluses through fiscal
discipline. Norway and Ireland also boast surpluses, though for other
reasons: Norway owing to oil revenues and Ireland to a corporate-tax
windfall, bolstered by a multibillion-dollar back-tax payment from Apple, a
tech giant.

Most governments, however, continue to spend with abandon. Poland’s

primary deficit exceeded 3% of GDP, owing to a rise in defence spending in
response to Russia’s war in Ukraine. In Japan hefty fiscal stimulus, aimed at
propping up the economy and easing cost-of-living pressures, risks
compounding debt problems as an era of ultra-low interest rates comes to an
end. Britain’s debt trajectory is deteriorating; its latest budget failed to repair
the public finances. France is mired in political turmoil and unable to
restrain spending.

As 2025 comes into view, the global economy faces new challenges. Nearly
half the world’s population lives in countries that held elections this year,
many of which ushered in leaders who might be described as
“unpredictable”. Trade is under threat, government debt is swelling and
stockmarkets have little room for error. For now, at least, Spain, Greece and
Italy—long belittled by their northern neighbours—can celebrate their
economic resurgence. They deserve a fiesta. ■

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in-2024
Finance & economics | Monetary kombat

The Federal Reserve takes on Trump—and

stubborn inflation
Time for Jerome Powell to enter the octagon
December 12th 2024

A LOT IS riding on the numbers after the decimal point. In the argot of
investors, inflation in America is back to having a “two-handle” (that is,
running above 2% but below 3%). It is a far better position to be in than a
couple of years ago, when price rises were threatening to hit double digits.
But there is a big difference between inflation decelerating towards 2% in
the coming year or getting stuck nearer 3%. Not only would the latter
forestall aggressive interest-rate cuts by the Federal Reserve, it would also
put the central bank on a collision course with Donald Trump—a double-
whammy of monetary hawkishness and political turbulence that would cast a
shadow over the global economy.
For most of the past year the baseline forecast of most economists has been
quite rosy. When the Fed last published its quarterly outlook in September,
for instance, a solid majority on its monetary-policy committee projected
that their most important inflation gauge would retreat to 2.2% next year.
That, they thought, would let them cut rates by a full percentage point in
2025, before taking them still lower in 2026. In such a scenario, Mr Trump
would presumably be satisfied enough with the central bank that he would
feel little compulsion to snipe at Jerome Powell, the Fed’s chairman, or,
worse, to start a legal battle by trying to oust Mr Powell before his term
expires in May 2026. With the possibility of turmoil off the table, markets
could breathe a sigh of relief.

Yet in the past couple of months a more awkward situation has emerged.
Some economists—Sarah House of Wells Fargo, a bank, among them—now
worry that inflation, having come down sharply since mid-2022, is stalling
at around 3%. It is “getting stuck”, she warns, pointing to a series of gauges.
The consumer price index (CPI), which often dominates newspaper headlines,
rose by 2.7% in November, compared with a year earlier, reversing some of
the softening seen a few months previously. Core CPI, which strips out volatile
food and energy costs, has proved to be even more stubborn, hovering
around 3.3% year-on-year since late spring (see chart 1). And the core
reading of the personal consumption expenditure (PCE) price index, which the
Fed watches most closely, has shifted in the wrong direction: it rose at an
annualised pace of 3.3% in October, its highest in half a year.
Optimists blame these uncomfortable figures on inevitable volatility. Prices
are choppy from month to month, and inflation tends not to fall in a straight
line. Moreover, there is also a statistical delay: the lagged effect from a surge
in house rents in 2021 and 2022. This is now the main contributor to high
inflation data. The cost of shelter accounted for slightly more than half of the
annual increase in core CPI in November. Although rent hikes have slowed
markedly since the height of the covid-19 pandemic, house-price measures
in inflation indices remain frustratingly elevated because they are based on
rents for all tenants and, because rental contracts can be multi-year, the
increases of earlier periods take time to pass through. The measures have
started to decelerate, but are doing so slowly. “There’s a strong argument
that shelter prices are just goofy. It’s a technical thing, and it needs to flow
through,” says Luke Tilley of Wilmington Trust, an investment firm.

The case for concern is broader. It may be true that housing inflation is
bound to slow, but researchers with the Fed’s Cleveland branch calculate
that it will not return to its pre-pandemic norm until mid-2026—a long wait.
In the meantime, pronounced declines in the prices of goods, the main
disinflationary force of the past year, have just about run their course as
supply chains have healed. Mr Trump, for his part, has promised a trifecta of
policies—higher tariffs, a crackdown on immigration and tax cuts—that may
well combine to push up prices, at least temporarily. And any upward price
pressure would apply to an economy that may be more primed for higher
inflation than it was before the pandemic struck. “You are in a different
environment where businesses have rediscovered the pricing lever, and I
think they are more apt to reach for that,” says Ms House. It makes for a
potentially combustible mixture.

Some Fed officials have hinted at their discomfort with inflation trends. On
December 2nd Christopher Waller, a Fed governor, compared the central
bank’s efforts to a mixed-martial-art fight, a metaphor that may appeal to Mr
Trump, who is a wrestling enthusiast. “Overall, I feel like an MMA fighter who
keeps getting inflation in a chokehold, waiting for it to tap out, yet it keeps
slipping out of my grasp at the last minute,” Mr Waller said. “But let me
assure you that submission is inevitable—inflation isn’t getting out of the
octagon.”

What kind of chokehold is required? According to market pricing, the Fed is

pretty much certain to cut rates by a quarter-point at the end of its meeting
on December 18th, which would represent its third consecutive reduction.
These moves have been predicated on the belief that interest rates are still in
restrictive territory because they are well above the neutral rate of interest—
a level that would neither stimulate nor constrain activity. The central bank
estimates that the neutral nominal rate is roughly 2.9%, which would give it
quite a bit of space to further cut the federal-funds rate, now about 4.6%.
In reality, there is plenty of uncertainty about the precise level of neutral.
Many Fed officials and other economists believe that it may have drifted
upwards, in part because of stronger productivity growth. That, in turn,
would imply rates are no longer especially restrictive and so would require
the Fed to keep them relatively high in order to avoid excessive loosening
(see chart 2). Lorie Logan, president of the Fed’s Dallas branch, concocted
another metaphor to explain the Fed’s challenge in this regard, likening its
job to that of a ship captain whose depthfinder might mistake mud for water.
“In these uncertain but potentially very shallow waters, I believe it’s best to
proceed with caution,” she advised in a speech last month.

It is easy to imagine such prudence inviting the wrath of Mr Trump. During

his first term in the White House he lashed out at the Fed for raising rates,
even asking at one point whether Mr Powell or Xi Jinping, China’s leader,
was America’s bigger enemy. During this year’s election campaign Mr
Trump suggested that he might be spoiling for a fresh fight with the Fed,
saying that, as president, he ought to have a voice in rate decisions. Scott
Bessent, Mr Trump’s nominee for treasury secretary, suggested that Mr
Trump could appoint a “shadow” chair as a way of keeping Mr Powell in
check, though he ditched the idea after investors objected.

Enter the octagon

Recently, Mr Trump has offered reassurance. In an interview with NBC, a
television channel, broadcast on December 8th, he said he did not “think”
that he would seek to remove Mr Powell. Nevertheless, it is worth paying
attention to Mr Trump’s words. In another interview, in June, he also said
that he would let Mr Powell serve out his full term, before adding a crucial
caveat: “especially if I thought he was doing the right thing”. In other words,
Mr Trump’s grace is performance-based. If inflation does prove to be sticky,
and if the Fed opts for few, or even no, rate cuts next year, Mr Trump may
well conclude that Mr Powell’s performance is not to his liking.

Whether Mr Trump can actually fire him is uncertain. Mr Powell has

insisted that the White House lacks the legal authority required to fire the
Fed’s chairman, and courts may ultimately side with him. But should things
get to that point, the dispute would surely have become messy, damaging the
central bank’s reputation as an institution that remains above the political
fray. If, by contrast, Mr Trump contents himself with criticising Mr Powell
in interviews and on Truth Social, his social-media platform, markets will
probably take his comments in their stride. “We’ve been through these
rebukes once. There is experience and some discounting,” says Matthew
Luzzetti of Deutsche Bank.

Much will depend on the context. “Tensions would clearly come if the Fed is
responding to high inflation while the labour market is weakening,” says Mr
Luzzetti. The opposite—inflation fading even as the labour market remains
robust—would be a far more pleasant scenario for the Fed, Mr Trump and
indeed anyone with a stake in the economy. The problem is that, at the
moment, inflation looks awfully sticky. America is threatened by both a
monetary dilemma and a political headache. ■

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takes-on-trump-and-stubborn-inflation
Finance & economics | Buttonwood

Bitcoin is up by 138% this year. It is a nonsense-

free rally
The link between digital assets and mainstream finance is strengthening
December 12th 2024

BITCOIN IS BACK. Since Donald Trump’s election victory on November

5th, the world’s dominant cryptocurrency has surged to new heights above
$100,000 a unit, enjoying a rise of 138% since the start of the year.
Altogether, the world’s cryptocurrencies now have a market capitalisation of
almost $4trn—making them more valuable than the entirety of Britain’s
stockmarket.

Holders of digital assets certainly have reason to be excited. Mr Trump has

nominated Paul Atkins, a lawyer and head of a crypto-advocacy group, to
lead the Securities and Exchange Commission, America’s main financial
regulator. The incoming administration is surrounded by Silicon Valley
moguls who believe that regulation and enforcement have held back the
crypto industry. A proposal by Cynthia Lummis, a Republican senator, for a
government reserve of 1m bitcoin may be absurd, but it no longer seems
impossible.

As such, today’s crypto surge looks different from earlier booms. Rallies in
2017 and 2021 dovetailed with rising excitement over new crypto use cases.
The most fanatical believers envisaged a future in which the tech would take
over the financial world, displacing stodgy existing institutions. This time,
there is less hyperbole. Bitcoin, in particular, is being whipped into shape by
large, mainstream investors. And so the way the market behaves is changing.
The utopian exuberance of earlier crypto adopters is giving way to a more
institutional and mercenary climate.

Hedge funds are the most prominent members of the new wave of investors.
In the third quarter of the year, even before bitcoin’s recent surge,
BlackRock’s bitcoin exchange-traded fund had grown to become the fourth-
largest ETF in the hedge-fund world, with a long position worth $3.8bn. A
survey by PwC and the Alternative Investment Management Association
suggests that 47% of traditional hedge funds now invest in digital assets, up
from 21% in 2021.

When it comes to decentralised finance and web3, the optimistic (and often
deluded) fads from the last great crypto surge, investor interest has waned
dramatically. Some $7bn has been raised by startups in these fields this year,
according to Crunchbase, a data provider, roughly the same as last year and
far below the $34bn raised in 2021. The VanEck Digital Transformation ETF,
which invests in a bundle of crypto-adjacent firms, is down by more than
40% from its high in 2021. The floor price of non-fungible tokens (NFTs)
issued by CryptoPunks on the Ethereum blockchain may be up by 20% this
year, but it is down by almost 70% from its high in 2021.

In its focus on untrammelled speculation, the current rally is much more

straightforward. What matters for new owners of bitcoin is the prospect that
the line will continue to go up. Crypto is a highly volatile asset that prospers
in relatively brief periods of rising risk appetite, a feature that its new
owners value. Very few hedge-fund managers booking a triple-digit return
on bitcoin will lose sleep over whether crypto will fulfil the lofty aims of
early adopters.

The changing of the guard is more than just a transition from shorts and T-
shirts to chinos and Patagonia gilets. Indeed, it is already altering how crypto
markets move. Research by Alexander Copestake and Davide Furceri of the
IMF and Tammaro Terracciano of IESE Business School suggests that crypto is

becoming more closely bound to other risky asset markets, as it is now

connected by institutional investors who own both. As a result, the market
has become more sensitive to monetary-policy changes by the Federal
Reserve, since demand for the asset is more closely tied to the overall
appetite for risk in stockmarkets. Financiers and asset managers are not in
the business of HODLing—crypto parlance for buying and holding assets
indefinitely, no matter the news. They will sell to take profits and offset
losses suffered in other asset classes.

If the regulatory threat to the industry does recede, it seems likely that the
institutional adoption of crypto will accelerate, especially when it comes to
bitcoin—tying the market closer still to more traditional ones. Crypto’s true
believers will find themselves in an awkward position. Bitcoin and its ilk
might be rallying but the surge is being driven by the increased
institutionalisation of the asset class. That will make it more ordinary, and
more linked to the ups and downs of the regular financial world, which
advocates had hoped to replace. At least they can comfort themselves with
simply enormous profits.■

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this-year-it-is-a-nonsense-free-rally
Finance & economics | Dream, baby, dream

How much oil can Trump pump?

The president-elect wants to be the ultimate energy baron
December 9th 2024

Donald Trump, a man not renowned for the length of his attention span,
likes simple formulae. Scott Bessent, his nominee to be treasury secretary,
has one: “3-3-3”. He wants to cut America’s federal budget deficit to 3% of
GDP, lift annual economic growth to 3% and increase the country’s oil and gas

output by the equivalent of 3m barrels per day (b/d) by 2028, up from 30m
in 2024.

The last bit of the plan is the most advanced. Mr Trump’s administration will
open more federal land and offshore blocks to drilling, and approve permits
for liquefied natural gas (LNG) projects. Mr Trump wants to create a National
Energy Council that will cut red tape on everything from issuing permits to
distribution. And he eyes a bonfire of President Joe Biden’s green subsidies
and rules. The goal? Global “energy dominance”, according to the president-
elect.

A petro-boom would advance many of his other aims. More exports would
reduce America’s trade deficit. Higher tax takes would bolster its budget. A
jump in oil output would allow Uncle Sam to tighten sanctions on Iran at the
same time as keeping fuel cheap on forecourts. More American gas would
also help to meet rising power demand from artificial intelligence, while
reinforcing Europe’s economic reliance on its transatlantic partner. The
problem is that Mr Trump’s wish to “drill, baby, drill” will run up against the
hard realities of the energy market. The president-elect is setting himself up
to fail.

Unlike in most petrostates, where state-owned companies dominate drilling,

in the land of the free oil is pumped by private firms, which are allowed to
make their own decisions. They have increased output by a big enough
amount since 2022, when Europe started shunning Russian barrels, that
America is already the largest producer of crude in the world. In October
Uncle Sam cranked out a record 13.5m b/d, up from 11.5m when the
Ukraine war began. It is not far off energy dominance already. To go further,
America’s oilmen will require a convincing reason.
They may not get one. America’s shale oil, which accounts for most of its
output, used to be pumped by thousands of tiny, trigger-happy firms. A wave
of mergers and failures since the late 2010s, when overproduction caused
prices to plummet, means that the industry is now ruled by a few large
companies that hate risk. Their shareholders require stable dividends and
double-digit returns. Moreover, dearer capital comes on top of rising costs:
as production has surged the best wells have been depleted. Shale firms
therefore have little incentive to drill more unless oil prices reach $89 a
barrel, according to a survey by the Kansas City Federal Reserve. At $70 a
barrel today, West Texas Intermediate (WTI), America’s oil-price benchmark,
is far from that threshold.

The market looks unlikely to move in a helpful direction for Mr Trump. Not
only is global oil supply plentiful, but members of the Organisation of the
Petroleum Exporting Countries (OPEC) have plenty in reserve. At the same
time, demand is weak because of tepid global economic growth and the
replacement of petrol-powered cars by electric vehicles. JPMorgan Chase, a
bank, expects WTI to fall to $64 by end-2025, and to $57 the year after. No
wonder the Energy Information Administration (EIA), a federal agency,
expects America’s oil output to rise by just 0.6m b/d by 2028. On December
5th Chevron, America’s second-largest energy firm, cut its capital-
expenditure forecast for 2025.
Although Mr Trump will probably roll back taxes on energy firms
introduced by Mr Biden, such as a levy on methane leakages, doing so will
mostly benefit smaller drillers, which cause a disproportionate amount of
emissions. Michael Haigh of Société Générale, a bank, reckons that cutting
taxes for energy firms might bump up output by 200,000 b/d at most.
Subsidising production outright, meanwhile, would be ruinous for the
government and cut against another of Mr Bessent’s objectives: bringing
down the budget deficit.

The incoming administration plans to speed up permits for pipelines. That

might make wells with limited market access worth starting, but it is not
clear how many such wells exist. With permitting agencies likely to be
staffed by novices, projects could flounder, as during Mr Trump’s first term,
when officials cut corners, making permits vulnerable to lawsuits. Some
projects collapsed; others were completed billions of dollars over budget. To
make more wells viable, Mr Trump could try to boost oil prices by slapping
penalties on anyone buying barrels from Iran or Venezuela, and on those
helping them. How long that would work is uncertain, however, as other OPEC
members would probably raise production in order to gain market share.

Black mark
Supersizing gas production looks a little easier—at least on paper. Since
Russia invaded Ukraine, America’s pipeline of LNG projects, already long, has
lengthened. Rystad Energy, a consultancy, expects the country’s export
capacity to reach 22.4bn cubic feet per day in 2030 in the event that Mr
Trump successfully implements his campaign pledges, up from 11.3bn last
year—a rise equivalent to 1.9m barrels of oil (mboe) per day in energy
terms. What that means in terms of actual output is far from certain. Rystad
forecasts it will rise by 2.1 mboe per day by 2028, with some of the
increased supplies consumed at home. Others are much less optimistic. Even
in its most bullish scenario, the EIA expects production to average just 0.5
mboe per day more that year than in 2024.

For production to truly ramp up, gas prices would have to rise beyond $4.24
per million British thermal units (mbtu), according to producers surveyed by
the Kansas City Fed. In reality, these producers expect prices to reach just
$3.33 per mbtu in two years (up from around $3 today). Although demand
for gas, the least dirty fossil fuel, is set to rise, a lot of new production from
Australia, Qatar and others will hit the market during Mr Trump’s term,
restraining price rises. Demand may not exceed supply until the 2030s.

All of this spells trouble for the ambitions of Messrs Trump and Bessent.
“How much the US drills over the next few years will depend much more on
decisions made in Vienna [where OPEC meets] than in Washington,” says Bob
McNally, a former adviser to President George W. Bush. Mr Trump’s
policies could even hurt production. His tariffs might make materials such as
aluminium and steel pricier for oil firms. Other countries may retaliate by
imposing tariffs on America’s energy exports. And trade wars will sap
growth, weakening demand for oil and gas. In the end, Mr Trump’s ambition
to become the ultimate oil baron may be a pipe dream. ■

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pump
Finance & economics | Stretched thin

The World Bank is struggling to serve all 78 poor

countries
Bangladesh and Niger are very different places
December 12th 2024

Impoverished countries do not have much in common. Half the population

of Niger, a landlocked African nation beset by military coups, live in
extreme poverty, eight in ten people have no access to electricity and GDP per
person is just $620. By contrast, the average Bangladeshi is four times
richer, and just one in 18 is among the world’s poorest. The country’s
policymakers do not have to worry about simply providing power. They
want to attract foreign capital to build renewable energy, so as to reduce
reliance on coal.

It is the World Bank’s job to lend to all 78 of the world’s poorest countries—
defined both by their income per person and the sustainability of their debt
burden—through a single fund, the International Development Association
(IDA), which disburses assistance on generous terms. In the last fiscal year it
doled out $28bn in grants and loans, over a third of the bank’s total
financing and enough to make it one of the biggest lenders to low- and
middle-income countries. Meeting the needs of such a diverse range of
countries is becoming more difficult, however, as was demonstrated on
December 6th when aid officials gathered at a conference in Seoul.

The IDA recycles repaid loans but, since its terms are so munificent, requires a
top-up every three years. In South Korea, Ajay Banga, the bank’s president,
announced $100bn in funding, up from $93bn last time round. Although he
lauded this as the most ever, there was a significant catch. Little of the pot’s
increase came from donor contributions, which were roughly flat at $24bn.
Indeed, adjusted for inflation and converted into dollars, rich countries made
their most miserly contribution this century (see chart). This will have
ramifications for the world’s poor.

World Bank officials hope that economic growth will soar across the
developing world, meaning countries will be prosperous enough to no longer
qualify for support. With growth sluggish, and interest rates relatively high,
that hope may prove forlorn. The next option is to make up the difference by
borrowing from the market. Bank officials will now have to add $3.22 to
every donor dollar, up from $2.96 under the deal negotiated three years ago.
Financial engineering, such as switching some loans to floating interest
rates, and offering a hedging service, which is cheaper than providing loans
with fixed rates, will save a bit of money. Other measures will pass the
additional cost of borrowing more directly to the poorest countries.

At the moment, the poorest countries receive mainly grants, rather than
loans. Over the past decade such grants have risen in value three-fold; over
the next three years, their value will probably fall in real terms. Meanwhile,
the maximum hand-out any country can receive will drop from $1bn to
$650m. Further belt-tightening reforms are likely after the difficulty of
raising funds in South Korea. Some countries will face an unpleasant choice:
receive less money or convert grants to loans. Some will have no choice but
to take the hit.

Climate v development
The World Bank views this as a price worth paying to free up lending for
other countries, many of which have fallen on hard times recently. Some of
the IDA’s richer borrowers also want cash to tackle climate change. Solar
panels and wind turbines are a worthy cause, and delight rich countries,
which increasingly prefer climate finance to traditional aid. But this
spending may undermine a rare successful form of development. In 2016
Stephen Knack, then of the World Bank, and co-authors calculated that a
percentage point of extra IDA disbursement, relative to a country’s income,
produces 0.35 percentage points of extra per-person economic growth a year.

Such spending is the most effective way to combat extreme poverty, since it
allows cash-strapped governments to invest without increasing the risk of
fiscal crises. Research by Charles Kenny of the Centre for Global
Development, a think-tank, finds that the IDA’s cash is particularly helpful for
the poorest countries, which receive it on the most generous terms. Even
countries that will benefit from the fund’s change of approach would
probably be better served by lending that is more affordable, rather than
more plentiful.
On top of this, the world’s poorest countries have nowhere else to turn when
they are in need of money. Many are already struggling under the weight of
higher interest rates, or are locked out of international markets owing to their
potential for default—a problem richer borrowers from the IDA do not face.
The World Bank’s fiddles, which at first glance appear modest, could in time
make hospitals, roads and schools unaffordable for countries such as Niger.
That is a high price to pay, even if it does free up cash. ■

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struggling-to-serve-all-78-poor-countries
Finance & economics | Remedial classes required

Are adults forgetting how to read?

A survey by the OECD suggests so
December 10th 2024

Are you smarter than a ten-year-old? New data suggest that a shockingly
large portion of adults in the rich world might not be. Roughly one-fifth of
people aged 16 to 65 perform no better in tests of maths and reading than
would be expected of a pupil coming to the end of their time at primary
school, according to a study released on December 10th by the OECD, a club of
mostly rich countries. Worse still, adults in many places have grown less
literate over the past ten years.

The OECD’s “Survey of Adult Skills” is carried out only once a decade. The
researchers arranged for 160,000 adults in 31 countries and regions to sit
short tests in numeracy, literacy and problem-solving. These aim to gauge if
they have the skills to hold down a job, participate in civic life and generally
thrive in the real world. At their most basic, they find out how well people
can make sense of the warnings on the back of an aspirin packet, or work out
how much wallpaper is needed to cover a room. At more advanced levels,
they explore how well people can draw sound conclusions from analysis and
charts of the sort one might stumble across in, say, a popular current-affairs
magazine.

Finland will rejoice at the results: it posts the highest average score in all
three fields. People in the Netherlands, Norway and Japan, who performed
better than average across the disciplines, will also be pleased. England has
risen up the league table in the ten years since the tests were last run, owing
to better performances among young adults. By contrast, America’s results
are heading south. Similarly, Chile, Italy, Poland and Portugal all boast a
high share of people who score below the norm. Almost half of Chileans
score badly enough to place in the bottom two categories in both maths and
reading, compared with just 8% of Japanese people.

Zoom out, and the picture is one of worsening basic skills. For almost every
country that has seen its score in numeracy rise significantly over the past
ten years, there is another that has seen its score fall. When it comes to
literacy, countries with falling scores outnumber those making significant
progress. This is the case even though more people are completing
secondary school, and many more are getting degrees. The declines are
concentrated among the least proficient, who seem to be scoring even lower
than they did before. In many countries, the gap between the most- and
least-skilled people is widening.

Increased migration offers some explanation. Non-native speakers tend to do

worse in tests that involve juggling words. Ageing populations do not help:
the data suggest that numeracy and literacy peak at 30 or so. But even when
these changes are accounted for, literacy scores in lots of countries are
falling. Andreas Schleicher, head of education and skills at the OECD,
speculates that adults are now getting less practice than they used to at
reading long and complex texts. Blame TikTok.

The OECD’s study is not the only one to suggest that improvements in cognitive
skills might now be stalling. Throughout the 20th century, psychometrists
observed that IQ scores were rising reliably, as part of a phenomenon named
the “Flynn effect”. More recently, the trend in some countries has been that
of stagnation or decline. The cause of this is hotly debated. What no one
much doubts is that people with nimble brains find it rather easier to swerve
life’s worst misfortunes, and are more likely to enjoy the best outcomes.
Surveys carried out alongside the OECD’s tests appear to confirm as much.
People who perform best in the tests boast wages that are 75% higher than
those with the worst scores. And returns to good numeracy and literacy seem
to be more than just financial. High scorers report that they are happier and
in better health. Low scorers seem to be more suspicious of others, and more
likely to report feeling alienated from politics. You do not need a first-rate
mind to sense trouble ahead. ■

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how-to-read
Finance & economics | Free exchange

What a censored speech says about China’s

economy
If growth is on target, why is inflation so low?
December 12th 2024

At this time of year, many policymakers want to know how fast their
economies will grow in the year ahead. China’s leaders set themselves a still
tougher question: how fast their economy “should” grow. They are seeking
not a forecast but a target.

The Central Economic Work Conference will conclude as The Economist

goes to press. At the event, Communist Party officials will have debated
whether to stick with this year’s growth target of “around 5%”. Their
answer, which is not usually revealed until March, will guide fiscal and
monetary policymaking in the year ahead, as well as the borrowing and
spending plans of state-owned enterprises. Early signs suggest that officials
will set an ambitious goal. In recent days party leaders have promised
“extraordinary” efforts to fight China’s slowdown, including a “moderately
loose” monetary policy and a “more proactive” fiscal policy. They have also
resolved to boost consumption “vigorously”.

So what number should they pick? The textbook answer is that an economy
should expand as fast as it can without jeopardising price stability. If GDP
exceeds its speed limit (the “potential” rate of growth) demand will outstrip
supply, and inflation will rise uncomfortably. By this yardstick, China’s
economy has room to accelerate. Consumer prices rose by only 0.2% in
November, against a year earlier, far below the government’s ceiling of 3%.

In China, though, the link between growth and inflation is puzzling,

according to Gao Shanwen of SDIC Securities, a financial firm. The two used to
have a steady relationship. Core inflation (excluding volatile food and
energy prices) rose or fell in line with the “output gap” between potential
and actual GDP. Yet this relationship has broken down in the past two years, he
argued during a recent talk in Shenzhen, a southern tech hub. Growth has
been close to the speed limit; inflation has been “abnormally” low.

Perhaps the problem lies with the data. “China’s economic data is generally
good,” he said, diplomatically. “But some data are better than others.”
Prices, for example, are relatively easy to collect. You can leave your
Shenzhen hotel and look up the price of an apple at a shop door, he pointed
out to his conference audience. Calculating GDP is trickier. So if growth and
inflation are suddenly out of whack, maybe growth has been overstated. Cut
three percentage points from China’s growth—reducing it from about 5% to
about 2% for this year, for example—and its relationship with inflation
becomes “completely normal”, Mr Gao said.

Mr Gao highlighted a similar mismatch between China’s growth and its

retail sales, which used to expand faster than GDP, but have underperformed it
more recently. Retail spending has been particularly weak in provinces with
fewer elderly people. In China, paradoxically, the most youthful provinces
seem the least dynamic. The country is “full of vibrant old people, lifeless
young people and middle-aged people who have lost hope”, he said.
What explains their gloom? One answer is the country’s property slump. Yet
Mr Gao suspects that weak retail spending and lacklustre home purchases
reflect something deeper: doubts about future job prospects. In China’s cities
employment has grown more slowly than its pre-pandemic trend. The
cumulative shortfall from 2021 to 2023 amounts to 47m jobs, he calculates,
or about 10% of urban employment. Such an undershoot casts further doubt
on China’s GDP data: if employment is one-tenth below trend, perhaps true GDP is
10% below the official figure.

Mr Gao’s talk was widely circulated online, then swiftly censored. But just
because the government suppressed it does not mean it is true. Amid all the
fuss, some of Mr Gao’s claims were misreported. Others remain poorly
understood.

Start with the 47m missing jobs. This finding has been wrongly interpreted
as 47m extra unemployed people. In fact, many of these missing urban
workers, Mr Gao was careful to point out, either stopped looking for work
(in which case they do not technically count as unemployed) or left cities in
search of jobs elsewhere. Rural employment, Mr Gao calculates, has
exceeded its historical trend by over 41m across the same three year-period.

Farm out
Moreover, the 47m figure seems to yoke together a shortfall in 2021 (of 5m),
2022 (22m) and 2023 (20m). Mr Gao perhaps has in mind a measure more
akin to man-hours or “person-years” than urban employment. If a ten-person
firm loses an employee to sickness for two years, it has lost two person-
years, but it is still only a man down. Similarly, cities lost 47m person-years
of work from 2021 to 2023, but as of last year, were only 20m people down.
Assuming workers found rural jobs, operating at a quarter of urban
productivity, the hit to GDP in 2023 would be about 2.5%, not 10%.

The broken relationship between inflation and output is also not proof that GDP
is wildly miscalculated. In theory, when growth is close to the speed limit,
inflation should not be falling, but it can still be low. And in practice, links
of this kind can be treacherous. After Japan’s central bank loosened policy in
2013, the output gap vanished, even as prices stayed flat. The central bank
blamed “a deflationary mindset” and stubbornly low price expectations.
Thus soft prices may reflect the same subdued view of the future that Mr
Gao sees at work elsewhere in China’s economy.

Mr Gao’s speech clearly upset Chinese officials, who do not want incisive
commentary to further undermine the public’s morale. But the party’s recent
promise of loose, proactive and vigorous policy suggests they broadly share
Mr Gao’s prescriptions. Policymakers, he said, have more work to do to
stimulate the economy by easing monetary policy, expanding government
borrowing and bolstering financial institutions. Analysts can have doubts
about how fast China’s economy is truly growing, and still feel sure that
growth should be faster. ■

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Science & technology
Machine translation is almost a solved problem
AI can bring back a person’s own voice
Carbon emissions from tourism are rising disproportionately fast
Humans and Neanderthals met often, but only one event matters
Why China is building a Starlink system of its own
Science & technology | The Babel wish

Machine translation is almost a solved problem

But interpreting meanings, rather than just words and sentences, will be a
daunting task
December 11th 2024

Vasco Pedro had always believed that, despite the rise of artificial
intelligence (AI), getting machines to translate languages as well as
professional translators do would always need a human in the loop. Then he
saw the results of a competition run by his Lisbon-based startup, Unbabel,
pitting its latest AI model against the company’s human translators. “I was
like…no, we’re done,” he says. “Humans are done in translation.” Mr Pedro
estimates that human labour currently accounts for around 95% of the global
translation industry. In the next three years, he reckons, human involvement
will drop to near zero.
It is hardly a surprise that the AI model-makers are bullish, but the optimism
feels apt. Machine translation has become so reliable and ubiquitous so fast
that many users no longer see it. The first computerised translations were
attempted more than 70 years ago, when an IBM computer was programmed
with a vocabulary of 250 words of English and Russian and six grammatical
rules. That “rules-based” approach was superseded in the 1990s by a
“statistical” approach, based on crunching large datasets, which was still the
state of the art when Google Translate was launched in 2006. The field
exploded in 2016, though, when Google switched to a “neural” engine—the
forebear of today’s large language models (LLMs). Influence flowed both
ways: when LLMs became better, so too did machine translation.

In Unbabel’s test, human and machine translators were asked to translate

everything from casual text messages to dense legal contracts and the
archaic English of an old translation of “Meditations” by Marcus Aurelius.
Unbabel’s AI model held its own. Measured by Multidimensional Quality
Metrics, a framework that tracks translation quality, humans were better than
machines if they were fluent in both languages and also experts in the
material being translated (for instance, specialist legal translators dealing
with contracts). But the lead was small, says Mr Pedro, who added that it
would be hard to see how, two or three years from now, machines would not
overtake humans entirely.

Marco Trombetti, boss of Translated, based in Rome, has created a different

measure for the quality of machine translations, called Time to Edit (TTE).
This is the amount of time it takes a human translator to check a transcript
produced by a machine. The more errors in the transcript, the slower the
human has to go. Between 2017 and 2022 TTE dropped from three seconds per
word to two across the ten most-translated languages. Mr Trombetti predicts
it will fall to one second in the next two years. At that point, a human is
adding little to the process for most tasks other than what Madeleine Clare
Elish, head of responsible AI at Google Cloud, calls a “moral crumple zone”:
a face to take the blame when things go wrong, but with no reasonable
expectation of improving outcomes.

The problem of translating one sentence to another is “pretty close to

solved” for those “high-resource” languages with the most training data,
says Isaac Caswell, a research scientist at Google Translate. But going
beyond this to make machine translation as good as a multilingual person—
especially for languages that do not have reams of available training data—
will be a more daunting task.

Complex translations face the same problems that plague LLMs in general.
Without the ability to plan, refer to long-term memory, draw from factual
sources or revise their output, even the best translation tools struggle with
book-length work, or precision tasks such as keeping a translated headline to
a certain length. Even tasks that a human finds trivial still trip them up. They
will, for instance, “forget” translations for static phrases like shop names,
translating them afresh, and often differently, each time they are
encountered. They may also hallucinate information they don’t have to fit
grammatical structures of the target language. “To have the perfect
translation, you also have to have human-level intelligence,” says Mr
Caswell. Without being a competent poet, it is difficult to translate a haiku.

That is if users can even agree on what a perfect translation is. Translation
has long been a struggle between “transparency” and “fidelity”—the choice
between translating sentences exactly as they are in the original language, or
exactly as they feel to the target audience. A transparent translation would
leave an idiomatic phrase as it is, letting English speakers hear a Pole
dismiss a problem as “not my circus, not my monkeys”; a faithful one may
even go so far as to change whole cultural references, so that Americans
aren’t taken off-guard by “football-shaped” being used to describe a
spherical object.

Even if there could be a simple dial to turn between transparency and

fidelity, perfecting the interface of such a system would require AI assistance.
Translating between languages can sometimes require more information
than is present in the source material: to translate “I like you” from English
to Japanese, for instance, a person needs to know the gender of the speaker,
their relationship to the person they are addressing and ideally their name to
avoid the impolite use of the word “you”. A perfect machine translator
would need to be able to interpret and replicate all these subtle cues and
inflections.

Adding checkboxes and dials to an interface would bamboozle users. In

practice, therefore, a perfect machine translator would be human-level in the
quality of its output as well as the method of its input. The requirement to
ask follow-up questions, to know when to trade transparency for fidelity, and
to understand what a translation is for, means that advanced translation will
need more information than just the source text, says Jarek Kutylowski,
founder of DeepL, a German startup. “If we can see the address you’re
emailing, maybe the conversation history, we can say, ‘Hey, this person is
actually your boss’ and tailor it to that.” (DeepL also works with The
Economist to provide translations in “Espresso”, our daily news app, which
is free for students.)

Then there is the issue of “low-resource” languages, where the paucity of

written text means that the accuracy of translations is not being improved by
the LLM breakthroughs that have transformed the rest of the industry. Less
data-hungry approaches are being tested. A team at Google, for instance,
built a system to add speech-to-speech translation for 15 African languages.
Rather than being trained on gigabytes of audio data, it instead learns to read
written words the same way a child would, associating speech sounds with
sequences of characters in written form.

Live translation is also in the works. DeepL launched a voice-to-voice

translation system in November, offering interpretation for one-on-one
conversations in person and multi-member video chats. Unbabel,
meanwhile, has demonstrated a device capable of reading small muscle
movements in the wrists or eyebrows and pairing them with LLM-generated
text to allow communication without the need to speak or type. The firm
intends to build the tech into an assistive device for people with motor-
neurone disease who can no longer speak by themselves.

Despite the progress, and his part in it, Mr Caswell is hopeful that the value
in speaking other languages will not disappear entirely. “Translation tools
are very useful for navigating the world, but they’re a tool,” he says. “They
can’t replace the human experience of learning a language in terms of
actually understanding where other people are coming from, understanding
what a different place is like.” ■

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Science & technology | Assistive intelligence

AI can bring back a person’s own voice

And it can generate sentences trained on their own writing
December 11th 2024

Pedro, a former IT security specialist, was forced to quit his job in 2021 when
his motor-neurone disease (MND), a neurodegenerative condition, worsened.
He can no longer get around without the assistance of his wife or carer and
is largely non-verbal.

But when Pedro speaks, his lightly accented English flows with ease. His
voice is generated by an artificial-intelligence model, trained on clips
recorded before he lost his speech. His words, too, are generated, by a large
language model (LLM) fine-tuned on his writing.
A smartphone app sits between Pedro and his interlocutors, transcribing
what they say. It then generates three possible responses for him, playing
them through headphones one at a time. A monitor resembling a sweatband
sits on his forehead, waiting for an eyebrow twitch that he uses to select a
response. The eyebrow is one of the last muscles over which most MND
patients lose conscious control.

That’s not to say the system is perfect. A conversation crammed into

multiple-choice options is a frustrating limitation; at times, Pedro grimaces
at the limited responses available. When trying to explain how long he had
lived in Lisbon, the most accurate answer correctly said where he had
moved from, but claimed not to know when—to the mock horror of his wife.

The system, dubbed Halo, is a project at Unbabel, a tech company based in

Lisbon. Pedro has learned to use eye-tracking software to control a
computer, and for nuanced thoughts it is still his preferred method. But the
hardware required is bulky, and every time he moves it must be recalibrated
from scratch. In contrast, the Halo band can be worn on the go, in the car or
even in a bath, giving him speech where he had none. And the system is
modular: when using eye-tracking to type, he says, he prefers to use the
Halo voice—his own voice—to speak the answers. ■
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Science & technology | Vexing visits

Carbon emissions from tourism are rising

disproportionately fast
The industry is failing to make itself greener
December 11th 2024

Tourists have been getting a lot of flak recently. Venice has started charging
€5 ($5.30) for day-trippers and limits the size of tour groups. Rome is
considering a €2 fee to see the Trevi fountain. New Zealand has upped fees
for visitors.

A new study, published this week in Nature Communications, is not going to

help the tourists’ cause. Researchers, led by Ya-Yen Sun at the University of
Queensland, in Australia, found that between 2009 and the start of the covid-
19 pandemic in 2020, global emissions from tourism grew by an average of
3.5% a year, double the rate of emissions in general.
In 2019 tourism led to 5.2 gigatonnes of carbon dioxide—almost 9% of the
world’s total. Of that, aviation accounted for the bulk (52%) of direct
emissions. Utilities, such as the electricity used in accommodation, were the
main driver (34%) of the indirect carbon emissions.

In the decade studied, demand for tourism rose at a steady 3.8% per year.
Many other industries have managed to decouple their growth from their
emissions but tourism’s “carbon intensity”—the amount of emissions
produced for every dollar spent—in 2019 was 30% higher than the global
economy’s average, and four times greater than for the services sector as a
whole. And that is despite international attempts to reduce tourism’s
environmental harm. “There are so many initiatives, investments,
declarations,” says Dr Sun. “But there’s no sign of a slowdown in terms of
emissions growth.”

That failure, in part, seems to stem from lobbying by airlines. Schemes

meant to make them greener tend to be toothless: carriers can sometimes
sidestep them entirely by using small amounts of sustainable fuel. Moreover,
tourists typically behave in a more emissions-intensive way than at home,
eating out, shopping and living the high life. Because their emissions come
from so many sources, it is hard for countries to know how to account for it
all.
Dr Sun also found that tourism, and its emissions, are not distributed evenly.
The 20 countries with the most tourism emissions per person were
responsible for three-quarters of the global footprint, with rich countries
unsurprisingly having far greater per-head emissions from outbound tourism
than poorer ones. The absolute rise in emissions was driven predominantly
by domestic travel within just three countries: America, China and India.

All this leads the researchers to argue that—as well as tightening regulation
for aviation—governments must do a better job of adding up the emissions
that tourists generate, and setting limits for the numbers they allow in. That
could be unpopular with places that are keen to attract travellers who want to
spend money (though the recent moves by destinations such as Venice
suggest otherwise).

But policymakers can help in other ways, too: the best way to shrink
tourism’s footprint is to speed up the transition to renewable-energy sources,
so those activities lead to as few emissions as possible. ■

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Science & technology | Mystery story

Humans and Neanderthals met often, but only one

event matters
The mystery of exactly how people left Africa deepens
December 12th 2024

In 2010 RESEARCHERS at the Max Planck Institute for Evolutionary Anthropology (EVA),
in Leipzig, published the genome of Homo neanderthalensis, a species
known in less progressive days as Neanderthal man. This contained stretches
of DNA also found in Homo sapiens genomes—specifically, non-African ones.
That suggested past interbreeding between the two, but only outside Africa.
This is not surprising. Homo sapiens began in Africa but Neanderthals were
Eurasian. Any miscegenation would have happened after sapiens left its
homeland to embark on its conquest of the world. But the details were
unclear.
Now, two papers by researchers at EVA and elsewhere have provided more
precise details about when the two species of humans mixed. They conclude
that sapiens-neanderthalensis crossings occurred several times, but the
consequences of only one such hybridisation, shortly before Neanderthals
became extinct, 40,000 years ago, remain important today. This is more
recent than previously thought.

One paper, in Science, looks at 334 sapiens genomes, 275 from the present
and the rest between 2,200 and 45,000 years old. All show Neanderthal DNA
getting into sapiens genomes over an extended period sometime between
43,500 and 50,500 years ago. Four also have signs of other such ingressions.
The second paper, in Nature, looks at only seven genomes, each around
45,000 years old.

The analyses raise questions. Other work suggests Homo sapiens arrived in
some places before the interbreeding dates indicated, yet the Neanderthal DNA
concerned is ubiquitous outside Africa. Also, though bands of sapiens
leaving Africa via Sinai might have run into Neanderthals, since this was the
southern limit of that species’ range, those crossing via the straits between
the Red Sea and the Gulf of Aden—believed by some to have been an
important route as well—would not have done. Constructing a human
migration pattern that takes account of all this, yet yields the distribution of
Neanderthal DNA seen today, is tricky. But it must have happened somehow.■

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Science & technology | A thousand sails

Why China is building a Starlink system of its own

When it is finished, Qianfan could number 14,000 satellites, rivalling Elon
Musk’s system
December 6th 2024

ON DECEMBER 5TH a Long March-6a rocket (pictured) blasted off from Taiyuan
Satellite Centre, in Shanxi province in northern China. Aboard was the third
batch of satellites for the Qianfan, or “SpaceSail” network, which aims to
deploy a “mega-constellation” of thousands of satellites to beam fast internet
access to users anywhere in the world.

Qianfan is similar to Starlink, a satellite-internet service provided by

SpaceX, Elon Musk’s rocket company. Starlink has been a big success in the
four years since it started operations, signing up airlines, cruise ships and
more than 4m individual users, and helping boost SpaceX’s valuation to a
reported $350bn. Providing snappy, high-speed internet anywhere on Earth
requires enormous numbers of satellites. Starlink already has almost 7,000
of them in orbit. It has regulatory permission to fly up to 12,000 within the
next few years, and has filed paperwork requesting as many as 42,000 in
total.

Qianfan appears to be designed on a similarly heroic scale. Although precise

details are hard to come by, documents filed with the International
Telecommunication Union, which regulates such things, suggest the
constellation could eventually grow to nearly 14,000 satellites. The first two
batches, of 18 satellites each, were launched in August and October. Reports
in Chinese state media suggest a target of 648 satellites in space by the end
of 2025. Qianfan, which is backed by the Shanghai city government, appears
to have beaten GuoWang, a similar constellation backed by China’s central
government, to orbit.

The system could help connect people in China’s rural hinterland to the
internet. Despite the country’s rapid industrialisation, around 300m people
are thought to lack regular internet access. Starlink is not an option since that
network does not have an operating licence in China, whose authorities run a
sophisticated and pervasive system of internet censorship. And Qianfan
might find markets overseas too—besides China, Starlink is also forbidden
from operating in Iran and Russia.

Even countries that are not outright hostile towards America might welcome
a competitor to SpaceX, says Steven Feldstein, an analyst at the Carnegie
Endowment for International Peace—especially given the close links
between Mr Musk and Donald Trump, America’s president-elect. “Even
countries with a more neutral foreign policy, like India or Turkey—that
might give them pause,” he says.

In November, for instance, Qianfan announced a deal with the government

of Brazil. Earlier in the year Mr Musk had entered into a bitter public row
with a Brazilian judge who had been investigating X, a social network that
Mr Musk owns. As part of the dispute SpaceX’s Brazilian bank accounts
were frozen. Afterwards the firm said it would not comply with the judge’s
order to block Brazilian users’ access to X, though it later backed down.
Qianfan is part of a suite of technologies that make up China’s space
ambitions. “We’ve seen a pretty wide push when it comes to Chinese
investment in space technology,” says Mr Feldstein. He cites projects like
the Tiangong series of space stations, or the Chang’e-6 mission, which in
June became the first probe to return samples taken from the far side of the
Moon, as well as China’s ambitions to land astronauts on the Moon by 2030.

Rather than more scientific firsts or space-exploration prestige, though,

Qianfan’s other use is likely to be military. “It’s becoming increasingly clear
that [mega-constellations] are a strategically important piece of
infrastructure for countries of a certain size and ambition,” says Blaine
Curcio, who runs Orbital Gateway Consulting, a business based in Hong
Kong that focuses on the Chinese space industry. China’s government made
building a Starlink-style mega-constellation an official priority in 2020.
Governments in Europe, India, Russia and Taiwan have all expressed
interest in building constellations of their own.

Starlink has proved its military utility in Russia’s war against Ukraine,
where Ukrainian soldiers came to rely on the system as a means of fast,
ubiquitous front-line connectivity, useful for everything from controlling
drones to communicating with headquarters. Besides its uses there, SpaceX
has set up a dedicated government division called Starshield. It has signed
deals with America’s Space Force and with the National Reconnaissance
Office, which runs the country’s spy satellites.

One looming question is how quickly China can build the system it has
designed on paper. The country presently lacks access to reusable (and
therefore much cheaper) rockets like SpaceX’s Falcon 9, which are used to
launch Starlink satellites, let alone the much bigger, cheaper Starship rocket
that the firm is testing. SpaceX has also been able to drive down the cost of
both the satellites themselves and the high-tech antennas necessary to
receive their signals on the ground.

But China is good at mass production. And, says Mr Curcio, it has a thriving
cluster of between 40 and 50 rocket-launch startups, many of which are hard
at work on reusable rockets. Some of those engineers seem to have been
taking copious notes: at a trade show held in November, the state-controlled
China Academy of Launch Vehicle Technology unveiled a version of the
Long March-9, a new rocket it is developing, that bore a remarkable
resemblance to SpaceX’s Starship. It is due, apparently, to make its first
flight in 2033. ■

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Culture
The novel was a dominant art form last century
Does great literature translate into great television?
How did “Dungeons & Dragons” win?
The Economist’s pick of the best albums of 2024
Was Henry Kissinger an AI “doomer”?
The unholy alliance of the Russian Orthodox Church and the Kremlin
Culture | Full of sound and fury

The novel was a dominant art form last century

What does the 21st century hold for it?
December 12th 2024

Stranger Than Fiction. By Edwin Frank. Farrar, Straus and Giroux; 480
pages; $33. Fern Press; £25

THE NOVEL is dead; the novel is dying; prestige television has killed it. These
familiar complaints are oddly comforting, both because hand-wringing over
the state of the novel is a time-honoured pursuit, and readers who pick up
the remote instead of a book after dinner—as your correspondent does more
often than he should—can feel they are engaging with culture’s dominant
narrative form rather than just relaxing on the couch.

Novels are not, in fact, dying: bookstores flog ever-changing stacks of new
ones. But neither are they as culturally central as they were in the 1900s,
when they were “the literary form of the time, prestigious, popular, taken as
both mainstay of cultured conversation and of democratic culture”, argues
Edwin Frank of the New York Review of Books Classics Series.

The novel achieved that status by changing its focus. In the 19th century
novels were principally concerned with illuminating social mores and
characters’ inner lives: think of George Eliot, Henry James and Anthony
Trollope. But over the course of the next century the novel matured, as
writers responded to a rapidly changing world by experimenting with form,
structure and subject. “Stranger Than Fiction” weaves historical overview
and close reading into a biography of the form.

Mercifully, the author does not plod through the years, directly tying books
to events. Artistic creation is subtler than that, and books that an author
intends for one purpose often serve another. Novels can also inspire each
other. “Mrs Dalloway”, for example, was shaped by Virginia Woolf’s
loathing of James Joyce’s “Ulysses”. Mr Frank deftly captures how novelists
translate, react to and sometimes shut out turbulent global events. (Returning
to Trieste after the first world war, Joyce told an acquaintance, “Oh yes, I
was told there was a war going on.”)

The first landmark 20th-century novel, Mr Frank argues, was “Notes from
the Underground”, published in 1864 by Fyodor Dostoyevsky. The narrator
whines, hectors and obsesses; he is both emotionally honest and thoroughly
unreliable. The plotless book tries to make sense of and to embody a
frenzied world, offering none of the safety or resolution readers typically
found in novels from the 19th century, which deployed “character and
situation, expressed and explored through a reliable interplay of dialogue
and description conducted under narrative oversight”. Though plenty of
contemporary novels still fit this description, Dostoyevsky was early to
show they did not have to.

The ghost of the unnamed narrator flickers at the edges of works written
throughout the next century. His lunatic babbling prefigures stream-of-
consciousness works from Joyce and William Faulkner. It is no accident that
this voice and disordered, confessional work emerged from Russia, rather
than western Europe, in the late 19th century. Until the first world war
western Europe was largely peaceful, prosperous and bound by class and
social conventions. The solid, reliable real world birthed the solid, reliable
worlds of the social novel. Russia had its hierarchies and conventions but
was wilder; its authors could borrow from European tradition while living in
a world beyond it.

The two world wars changed all that, but authors born before the cataclysms
retained their concept of what a novel should be and do. Reconciling beliefs
nurtured in a stable world with an unstable one produced towering works.
For example, “The Magic Mountain” (1924) by Thomas Mann, a German
writer, is a long series of digressions and meditations that “preserves an
image of unity by telling the story, down to the last detail, of a world whose
pieces no longer come together”, writes Mr Frank. “In Search of Lost Time”
by Marcel Proust did something similar. Despite its languid tone and
convoluted sentences, it has at its centre a desire to remember and tell
readers everything about a vanished world (including the transporting aroma
of madeleines).

Vasily Grossman, a Soviet writer, displayed the same encyclopedic bent in

two works, “Stalingrad” and “Life and Fate”, which are among the most
ambitious and best fiction written about the second world war. Penned in a
plain style and a self-conscious attempt to mirror “War and Peace”, Russia’s
greatest novel from the 19th century, his writing fell foul of censors (who
wanted him, among other things, to remove a sympathetic Jewish character).
Grossman died in 1964; “Life and Fate” would not be published in Russia
for another 24 years.

After the war, Mr Frank’s survey turns almost perversely idiosyncratic. He

mentions great writers including Saul Bellow, Toni Morrison and Philip
Roth only in passing, yet devotes an entire chapter to the banal, unreadable
“Life: A User’s Manual” by Georges Perec, a French novelist. Still, one of
the pleasures of reading “Stranger Than Fiction” is arguing with it.

And the number of impassioned arguments that this book starts proves that
the literary novel is not dead to everyone. Nor is it still the unquestioned
king of narrative expression. Television has grown more sophisticated: “The
Wire” drew justified comparisons to Charles Dickens. Millions of books are
published each year, but the number of people who read daily for pleasure,
as well as the amount of time they read, have been steadily declining. From
2017 to 2023 Americans aged 15 and older spent just 15-16 minutes a day
reading “for personal interest”, 18% less than in 2013-15, according to
America’s Bureau of Labour Statistics. Meanwhile, they watch TV for more
than two and a half hours a day, on average.

This century’s novelists will need to grapple with this shift. Writers in the
last century benefited from increased literacy rates, cheap mass production
and the rise of chain bookstores, which all helped create a culture more
receptive to their works. Novels could also easily hold their own against
films; it is harder now that people have a giant film and TV library in their
pockets.

What might a book written in 2124, looking back at the 21st-century literary
novel, argue? That the novel continued to expand its focus outward, by
engaging with genre fiction, for instance, as Colson Whitehead and Haruki
Murakami do brilliantly; or with nature and science, as Richard Powers and
Kim Stanley Robinson do. Novel-reading will become even more of a niche,
worthy hobby, like going to a classical-music concert or ballet today. The
story of the 20th-century novel is one of artistic triumph. In this century, the
novel will experience a different story. ■

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last-century
Culture | From the shelf to the couch

Does great literature translate into great

television?
Netflix hopes so, with its adaptation of Gabriel García Márquez’s “One
Hundred Years of Solitude”
December 10th 2024

IT WOULD BE hard, Gabriel García Márquez thought, to do justice to the

surreal, sprawling tale on screen. By his reckoning, “One Hundred Years of
Solitude”, his celebrated novel of 1967, would need a runtime of 100 hours;
it would also have to be filmed in Colombia, entirely in Spanish.

Netflix, with the support of Márquez’s estate, has honoured two of those
three proclamations. The streamer boasts that its new adaptation of
Márquez’s novel—the first on screen—is “one of the most ambitious
productions in Latin American history”. (“Ambitious” is also a synonym for
“expensive”: Netflix will not reveal the budget but claims it is the largest
ever for a production in the region.) But keeping in mind how much solitude
viewers actually want, it has opted to compress Márquez’s novel into 16
episodes, with the first tranche released on December 11th.

The book presents a formidable challenge to film-makers for two reasons.

One is its status: many think “One Hundred Years of Solitude” was the
greatest novel of the 20th century. It helped Márquez win the Nobel prize in
literature in 1982 and has sold some 50m copies worldwide. With affection
comes expectation. When the TV show was announced, fans online were quick
to express their fears about an oversimplified, “caricatured” retelling.

Those remarks point to the other test for adaptors, which is the novel’s sheer
complexity. Set in around 1850-1950, the book traces the fortunes of the
Buendía family across several generations, from the time José Arcadio and
his wife, Úrsula, establish the town of Macondo to the moment their last
descendant dies, with civil war, modernisation, economic prosperity and ruin
in between.

Time, in this tale, is a “turning wheel” that yields “unavoidable repetitions”.

Male scions are all called some combination of José, Arcadio or Aureliano.
(Readers everywhere are grateful to whoever thought to include a family
tree at the front of the book.) There are more unusual occurrences, too.
Characters die, only to return as ghosts. One man is permanently surrounded
by a kaleidoscope of yellow butterflies; another cracks his head open,
leaking not blood but an “amber-coloured oil that was impregnated with that
secret perfume”.

On the page this magical realism, as Márquez’s style came to be known, can
be entrancing. The risk is that it could look oddly unconvincing on screen.
When Netflix approached Alex García López, a director, about the project,
he was excited but apprehensive. “I remember the book having very little
dialogue. I remember it being a very existential kind of book and jumping all
over the place. I thought: ‘This is just not really doable, is it?’”

It was. José Rivera, one of the screenwriters, decided that the story should
proceed chronologically and that it needed a narrator. It quotes from the
novel verbatim. “It was a great way of having Gabo’s voice guide us through
the story,” Mr López says, and a way to be “faithful to the book…to its
execution, to its style”.

As a result, the film-makers have captured the strangeness of the story, in

which events are at once fantastical and mundane. They have also retained
its sensuality. At times this makes for uneasy viewing: the novel recounts
several incidents of incest and one of paedophilia. “We do not want to
rewrite history,” asserts Francisco Ramos, Netflix’s vice-president of Latin
American content: “That’s the way things happened.” In fact, keeping in
Aureliano’s wooing of Remedios, a nine-year-old girl, makes the tale more
timely. Only last month Colombia passed legislation prohibiting anyone
under the age of 18 from getting married.

To write “One Hundred Years of Solitude” Márquez drew on his childhood

town of Aracataca. The novel “couldn’t be more specific and more
grounded…in a very specific part of a huge, huge country”, Mr Ramos says,
but “because of the way he tells the story it has global resonance”. Almost
60 years later, Netflix is hoping this is true of its own version. Márquez’s
book, after all, is about history repeating itself. ■

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great-television
Culture | Twenty-sided dicing with death

How did “Dungeons & Dragons” win?

The role-playing game, celebrating its 50th birthday, continues to inspire
players and Hollywood creators
December 6th 2024

WHEN “STRANGER THINGS” returns for its final season next year,
hundreds of millions of people around the world will be abuzz with talk of
Demogorgons, the Mind Flayer and Vecna. As a result, they will also be
talking about “Dungeons & Dragons” (D&D). The hit television show, which
often features its young heroes playing D&D, draws its lore and monsters from
the fantasy role-playing game, in which the goal is to form a party of
adventurers and go on quests.

Since its invention 50 years ago, D&D has been seen as a niche, geeky
pastime. But recently the game has made the jump from nerd culture to
popular culture. It has been adapted into a Hollywood film and a video
game. The movie, “Dungeons & Dragons: Honour Among Thieves”,
grossed more than $200m. “Baldur’s Gate 3”—the bestselling game of 2023
on Steam, a PC gaming platform—made an estimated $660m. According to
Wizards of the Coast, the firm behind D&D, the game has more than doubled
its fan base in the past five years, from 40m to 85m globally.

“Dimension 20”, a show in which comedians and gamers play D&D, recently
sold out at Madison Square Garden in New York. In 2023 more than 12,000
flocked to the Wembley Arena in London to watch “Critical Role”, a group
of voice actors, play D&D. Their online show, in which they do the same, has
amassed some 900m views on YouTube.

“Dungeons & Dragons: The Twenty-Sided Tavern”, an immersive theatre

production, invites attendees to help players make decisions by voting on
outcomes on their phones. Currently playing off-Broadway, the show is set
to go on tour across America. It also begins a run at the Sydney Opera
House on December 15th. David Carpenter, the show’s co-creator, says that
every performance is unique: the game relies on 20-sided dice, which,
combined with audience input, can yield about 300,000 different iterations.

Gary Gygax, a game designer, and Dave Arneson, a graduate student, based
D&D on war games—small-scale battle simulations used as military-training

exercises—but added fantasy. You can play as one of around a dozen

“character classes”, including barbarians, druids, fighters, monks and
warlocks. Chance, however, is paramount: the dice determine whether
actions fail or succeed. A “dungeon master” guides the story and play-acts
as side characters and monsters. A game session might involve raiding a
dragon’s hoard or a day’s shopping at the town market, where a successful
“charisma roll” may bag a bargain on a rare item.

Gygax’s and Arneson’s initial ambition was to reach war-gaming fans, says
Jon Peterson, who writes about the history of role-playing games. Yet D&D
soon became famous, then notorious. In 1979 James Dallas Egbert, a student
in Michigan, went missing. The media focused on D&D, suggesting that
Egbert disappeared because he believed the game’s fantasy world was real.
(Egbert was suffering from mental distress unrelated to D&D and eventually
committed suicide.)
A moral maelstrom swirled around the game. In 1982 Irving Lee Pulling,
another student, committed suicide, and his mother blamed D&D. She set up a
campaign group, Bothered About Dungeons and Dragons, and brought
together Christian organisations to lambast the game as a purveyor of
“demonology, witchcraft, voodoo, murder, rape, blasphemy, suicide,
assassination, insanity, sex perversion, homosexuality, prostitution, satanic-
type rituals, gambling, barbarism, cannibalism, sadism, desecration, demon
summoning…and other teachings”.

The “Satanic panic” proved that there is no such thing as bad publicity. Sales
boomed; Steven Spielberg included a D&D scene in “ET”; the game was
acquired by Wizards of the Coast in 1997. By then the popularity of D&D was
waning, as other forms of entertainment, such as console games, pushed to
the fore.

Canny branding helped revive D&D. In 2014 a new edition of the rules,
designed to demystify the game for newbies, was released and became
hugely popular. Groups such as “Critical Role” have also played, well, a
critical role, by showing people how the game can unfold in varied and
gripping ways. The covid-19 pandemic was a turning-point, too, argues
David Ewalt, a journalist who writes about gaming. Cooped up at home,
people spent a lot of time watching TV. But once they tired of screen time,
they turned to immersive experiences. In 2020 Wizards of the Coast reported
D&D had its best year yet, with 33% growth in revenue year-over-year.

As “Stranger Things” attests, a generation of storytellers who grew up

playing D&D are coming of age. David Benioff and D.B. Weiss, the creators
of the TV adaptation of “Game of Thrones”, both played D&D as teenagers; Jon
Favreau, director of “Iron Man” and creator of Disney’s “The Mandalorian”,
has also attributed his creative chops to the game. “People learn something
about how to administer fantastic worlds and shepherd characters through
them from playing this game,” says Mr Peterson, the game historian.

D&D fans are responsible for some of the world’s biggest franchises;
cumulatively their work has entertained people for billions of hours. There
has arguably never been a better (or more lucrative) time to be a geek. But as
Jason Tondro, a designer at Wizards of the Coast, wonders: “Are we still
nerds if we’re cool?” ■
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Culture | In tune with the times

The Economist’s pick of the best albums of 2024

A musical tour through pop, rap, rock and more
December 12th 2024

“Brat”. By Charli XCX

Part pop record, part zeitgeist moment. (This album spawned its own idiom:
“Brat summer”.) In an age of focus-grouped relatability, the British singer-
songwriter is refreshingly brash—and very good.

“Dance, No One’s Watching”. By Ezra Collective

This jazz ensemble makes crowds explode into dancing. There is much to
cherish on its third album, in particular the bold horns and Afrobeat-inspired
rhythms.

Read more of our guides to the cultural treats of 2024—and previous years
“Funeral for Justice”. By Mdou Moctar
The outstanding rock guitarist of his generation plays a version of rock
music that nods to his home in Niger. This record is more bellicose than his
previous work, but no less thrilling for it.

“Here in the Pitch”. By Jessica Pratt

There is a touch of vintage glamour to this artist. Her retro-folk sound, with
nylon-stringed guitars and gentle percussion, conjures an atmosphere as
elegant as any old Hollywood haunt.

“I Lay Down My Life for You”. By JPEGMAFIA

The rapper was formerly a whistleblower in the American air force. His fifth
album is imaginative and confounding: a lyrical cluster bomb set to music.

“In Waves”. By Jamie XX

This album delivers both dancefloor bangers and melancholic, reflective
moments. As a result, it rewards listening in the club, in the kitchen and on
the sofa. “Baddy on the Floor” is pure propulsion.

“Lives Outgrown”. By Beth Gibbons

Thirty years after Portishead emerged, its singer has released her first solo
album. It is a mysterious and beautiful record—and an almost perfect one at
that.

“Manning Fireworks”. By MJ Lenderman

This album is Americana for Gen Z: respectful of the past without
venerating it. “How many roads must a man walk down ’til he learns / He’s
just a jerk”?

“Short n’ Sweet”. By Sabrina Carpenter

Twelve songs, 36 minutes: this is pop in deliciously concentrated form. The
songs showcase the pop princess’s breathy, sensual voice. In “Espresso”,
“Please Please Please” and “Taste”, she claimed three of the songs of the
year.
“This Could Be Texas”. By English Teacher
A prizewinning debut record. At heart it is traditional indie rock, but with
imaginative twists that made it apparent that Lily Fontaine, the main writer
and performer, is a remarkable talent. ■

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albums-of-2024
Culture | The future of humanity

Was Henry Kissinger an AI “doomer”?

A posthumous postscript on a hair-raising topic
December 12th 2024

Genesis. By Henry Kissinger, Craig Mundie and Eric Schmidt. Little,

Brown; 288 pages; $30. John Murray; £22

HENRY KISSINGER kept learning right to the end of his life. In the half-decade before
he died in 2023, aged 100, he turned himself into an expert in artificial
intelligence (AI), adding to the fields of history, philosophy, cold-war
diplomacy and nuclear deterrence that made him a master of 20th-century
realpolitik.

Polymaths are rare, as he and his co-authors, Craig Mundie, formerly of

Microsoft, and Eric Schmidt, who ran Google, point out in “Genesis”.
Humans do not live long enough to master more than a few disciplines. But
 , they say, will be “the ultimate polymath”, pushing the boundaries of
AI

discovery, from nanotechnology to outer space, and unconstrained by human

fears or biological limitations. The development of AI could be humanity’s
highest achievement. Yet it could end up replacing—and subjugating—its
own inventors.

This sense of the Promethean power of AI will be familiar to those who have
read Kissinger’s previous book on the topic, “The Age of AI”, published in
2021 (Mr Schmidt was a co-author). But “Genesis” is a posthumous
postscript, written with more elegance and a darker sense of foreboding than
its predecessor, and is as much about humans as about machines. AI, it
suggests, is on the verge of a superhuman intelligence, which people will
either control or be controlled by. Man’s ability to co-exist with it requires a
common understanding of humanity that could be all the more elusive in a
polarised world.

The book argues that AI threatens some of mankind’s strongest convictions.

People believe in a pecking order: humans, then animals and then machines.
AI could vault machines to the top of the hierarchy. People identify by

nations, but in the age of AI, sovereign-like power could accrue to the private
firms that own and develop AI technology. Work helps shape human identity,
but AI will recast the role of labour and the distribution of rewards. Wars will
be fought between implacable foes who feel no pain (as a consolation, they
may prefer to attack each other’s data centres rather than people). People
believe in the power of reason, but still do not understand how large
language models reach their conclusions. Is this a “dark enlightenment”,
bringing back an age of unexplained, quasi-religious authority?

To assess the extent to which humans will keep hold of their destiny, the
book grapples with a choice: should mankind become more like AIs (it often
refers to them in the plural), or should AIs become more like people? Its
attempt to answer the first question is shallow and unconvincing. It talks of
how humans will “co-evolve” with machines via “brain-computer
interfaces” and other sci-fi-like forms of neural engineering, in order to
create superhumans. But it recoils at the clear risks.

More interesting is the discussion of how people can infuse AI with a sense of
human dignity and values. Though “far-from-perfect” models have been let
loose on the world, people are learning how to make them safer. As well as
ingesting global and local rules and regulations, AI models will learn “doxa”,
or unwritten and overlapping human codes that broadly keep humanity
stable.

However, it gets trickier when one considers who should decide machines’
sense of right and wrong, their ultimate safety catch. (Some, it is worth
remembering, questioned Kissinger’s conscience.) “Genesis” asserts that
forging consensus on what human values are and how to invoke them to
prevent the most extreme perils of AI is the “philosophical, diplomatic and
legal task of the century”.

Kissinger’s last foreign trip was to China, at the invitation of President Xi

Jinping, to discuss the many risks humanity faced from AI. From beyond the
grave, Kissinger is pointing in the right direction. But it is hard to think of
anyone of his statesmanlike stature who will spearhead the necessary world-
and generation-spanning conversations in the next few years. ■

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Culture | Singing from the same hymn sheet

The unholy alliance of the Russian Orthodox

Church and the Kremlin
Patriarch Kirill is one of the most vocal defenders of Vladimir Putin’s war
in Ukraine
December 11th 2024

The Baton and the Cross. By Lucy Ash. Icon Books; 384 pages; £25

THE INVASION of Ukraine has provoked outrage and sympathy among Christian
leaders of all denominations, including the Archbishop of Canterbury, the
Ecumenical Patriarch in Istanbul and the Pope. The Russian Orthodox
Church is an outspoken exception. Patriarch Kirill, who leads the church,
has described the conflict as a “holy war” and said that any young man who
died in action would be absolved of their sins. The war was essential to
“defending the unified spiritual space of Holy Russia”, he claimed.
In “The Baton and the Cross”, Lucy Ash, a journalist, offers an authoritative
look at the closeness of church and state under Vladimir Putin. Russia is, in
theory, a secular country, yet the Orthodox church has become of vital
importance to the president as it gives credence to his ambitions. “Putin
found in the church a spiritual outlet for long-held resentments and an
intellectual underpinning for his expansionist foreign policy,” Ms Ash
writes. “Kirill, like his forebears, sought political patronage and access to
wealth.”

The book places this unholy alliance in its historical context, tracing the
church’s fortunes under Ivan the Terrible, Peter the Great and Catherine the
Great, among others. In 1918 Vladimir Lenin stripped the church of its legal
status and right to own property; the number of working churches had
tumbled from 50,000 before the revolution to a couple of hundred by 1939.
It was Josef Stalin who resurrected the Orthodox church in 1943: he hoped
that priests would galvanise public support for the second world war from
the pulpit, as they are doing today with Ukraine.

The institution has maintained links to the state, and its security services,
ever since. In the 20th century some prelates, including even Patriarch Kirill,
collaborated with the KGB; others were fully fledged agents planted in the
church. A Soviet delegation to a gathering of the World Council of Churches
in 1983 included no fewer than 47 KGB agents.

Many priests have been more concerned with domestic politics than the
heavenly kind; their moral compasses point towards the Kremlin rather than
Christ’s teachings. In 2016 Vsevolod Chaplin, formerly a senior member in
the church, spoke glowingly of both Ivan the Terrible and Stalin: “What is
wrong with destroying a certain number of internal enemies? Some people
can and should be killed.” Many Christians—not to mention the Bible—
would tend to disagree.

Patriarch Kirill has upheld his side of the devil’s bargain, frequently
preaching in support of Mr Putin’s culture wars as well as his military ones.
Mr Putin urges Russian women to have seven or eight children; meanwhile,
the church inveighs against abortion, gay rights, same-sex marriage and even
uppity wives. The patriarch has contrasted Russia’s “holy” and “spiritual”
way of life with that of the “devilish” West (evident, supposedly, in its
support of gay rights). Patriarch Kirill has said that nuclear weapons have
“saved” the country and in 2007, not long before he assumed the top role,
blessed the nuclear arsenal.

In return, Mr Putin has in effect let Patriarch Kirill turn the church into a
moneymaking machine. Since the collapse of communism in 1991, the
Orthodox church has amassed a valuable property portfolio thanks to the
return of assets from the state, including land, which accelerated after Mr
Putin consolidated power. “The church has exploited its privileged status to
develop huge business interests with an annual turnover of millions and
possibly even billions of pounds,” Ms Ash writes. (Unsurprisingly the
church’s financial records have never been made public.)

For a man who has lambasted capitalism and the “pursuit of profit”,
Patriarch Kirill appears to have personally profited from the arrangement.
According to an investigation by Russian journalists cited in the book, he
owns three properties and has been spotted sporting a watch worth tens of
thousands of dollars.

The irony is that, despite the Russian church’s revival in material terms, its
spiritual authority is faltering today: less than 5% of Russians regularly
attend services of worship and prayer. Many Russians are angry at the
church’s hypocrisy and see Patriarch Kirill’s position not as one of power
but of weakness. During a conversation in 2022, Pope Francis warned him
that, by parroting the president’s talking points, he had debased “himself to
become Putin’s altar boy”. ■

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orthodox-church-and-the-kremlin
Economic & financial indicators
Economic data, commodities and markets
Economic & financial indicators | Indicators

Economic data, commodities and markets

December 12th 2024
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data-commodities-and-markets
Obituary
Shalom Nagar was picked by lottery to kill Adolf Eichmann
Obituary | The hangman’s tale

Shalom Nagar was picked by lottery to kill Adolf

Eichmann
The Israeli prison officer turned ritual slaughterer died on November
26th, aged 88
December 11th 2024

At midnight ON May 31st 1962, Shalom Nagar looked his prisoner in the eye.
They stood perhaps a metre apart, in a room on the second floor of Ramla
prison in central Israel. Adolf Eichmann was tied at the wrists, knees and
ankles and stood on a trapdoor, as instructed. He still wore his brown plaid
slippers. A thick rope was knotted round his neck. He had refused a
blindfold. Just before, he had smoked a cigarette and drunk half a cup of
white wine. The smell of both was on his breath.

Over the past six months they had often been this close. This close while
Eichmann, peering through his glasses, wrote his memoirs at a tiny desk
piled high with books. This close when Eichmann dressed, buttoning his
shirts to the neck and shuffling into the favourite slippers. This close while
he washed, shaved, used the facilities, made his bed and paced around a tiny
courtyard. This close while he ate, from a plate of food into which Officer
Nagar had already dipped a fork here and there. It was a curious intimacy, to
share meals that way. They came in locked containers, so that Eichmann
would not be poisoned. If Officer Nagar was not dead after two minutes, all
was well.

He was the innermost guard of the 22 who watched Eichmann, his 24-hour
shifts always spent in his personal cell. An entire wing on the second floor,
five rooms, had been given over to this man. Israel had never held so
important a prisoner. Eichmann had been in charge of the whole logistics of
the Holocaust: the roundings-up, the deportations, the railway shipments
and, ultimately, the deaths of millions of Jews. After the war he had escaped
justice and fled to Argentina, living as a quiet suburbanite until Mossad
tracked him down. In 1961, on trial in Jerusalem, he showed no remorse and
accepted no blame. He had been following the orders and iron will of Hitler;
he was “a little cog in the machinery”. The sight of him, thin, nervy-looking,
balding, compulsively clean, might almost have convinced Officer Nagar
this was so.

Most of the guards at Ramla would happily have killed him. Almost all were
Ashkenazi, either survivors of the camps or men who had lost family there.
Officer Nagar, by contrast, was Sephardi. The long arms of Hitler and
Eichmann had not reached Yemen, where he was born, though his father had
once gone to scout out mountain hideaways, in case they did. His childhood
had been hard enough: from the age of eight, with his father dead and his
mother unable to cope, he lived on the street in the Jewish part of Sana’a,
running errands for food and sleeping at night under market stalls, wrapped
in his father’s goatskin prayer-shawl. (How he blessed that shawl!) But
unlike his Ashkenazi brothers in the force, he had no numbers tattooed on
his arm or on his mind.

That very fact, the authorities thought, made him the ideal man to hang
Eichmann. It would not look like vengeance then. He disagreed, and begged
them to find someone else. Of course he did not like the man, but there was
civility between them. They exchanged very few words. But he was the one
who, at a signal, would fetch what he wanted, or escort him to the lavatory;
after which Eichmann always said “Gracias”, imagining that, like many
Sephardis, he came from Spain. He could not hang him; at 26, he could not
hang anyone. But his superiors in the end held a lottery, and he was picked.
To brace him for that probability, he had been shown a film of Nazi
atrocities. He had to agree that there could be no mercy for Eichmann or any
of his kind.

Besides, orders were orders. He was well imbued with that code. At 16, four
years after migrating to the new state, he had joined the Israeli army, first in
the parachute brigade and then in the border patrol. When ordered to jump,
he jumped. If told to dismantle land mines, he went to it. When a police van
screeched up beside him, as he walked on his day off down the street with
his family, and he realised that this was the time to hang Eichmann, he
climbed in. And now, at midnight, he yanked the lever backwards without
hesitation and the trapdoor sprang open, hurtling Eichmann towards the
basement. It was the first, and last, judicial execution performed in Israel.

What he had to do next was far harder. He had to take down the body, wrap
it in sheets, push it on a stretcher to the oven already red-hot for it and then
transport the ashes to the sea, where they would be cast out beyond Israeli
waters. But he was traumatised by the sight of the body: the chalk-white
face, the lolling tongue, the blood on neck and chest where the rope had torn
the skin away. To take Eichmann down involved lifting his head, which
drove trapped air out of his mouth in a booming cry. A cry as if the angel of
death had come for his executioner, too. He was not easily scared. But now,
shaking all over, with Eichmann’s blood on him, he could barely manipulate
the stretcher or close the oven doors. His orders were moot now; he had to
be taken home.

Those moments gave him nightmares for years. He could not return to the
second floor at Ramla unless two colleagues escorted him. (He tried it once
alone, singing a Yemeni song for courage, but mistook his own shadow on a
glass door for Eichmann, and tumbled down the stairs in terror.) The
hauntings stopped only as he recovered the faith of his childhood. He had
been brought up strictly as far as religion went, wearing sidelocks and
avoiding women; when he first came to Israel, at 12, the easy ways of the
kibbutzim scandalised him. Once in the army, he fell away from all that.
After hanging Eichmann, it returned. He eventually spent his days in his
local kollel, the rowdy hall of reading and arguing over the Talmud.
Conquering his nerves, he also became a ritual slaughterer of chickens. And
he came to understand that his quick, fatal action in 1962 was at the behest
of God. On that day he had performed a great mitzvah: he had obliterated the
enemy of Israel, Amalek, erasing his memory from under the sky. Even,
perhaps, from the stairs to the second floor. ■
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to-kill-adolf-eichmann
 Table of Contents
The world this week
Politics
Business
The weekly cartoon
This week’s cover
Leaders
How the new Syria might succeed or fail
What Spain can teach the rest of Europe
America’s searing market rally brings new risks
Multilateral institutions are turning away from the poorest countries
Can you read as well as a ten-year-old?
Letters
Letters to the editor
By Invitation
South Korea’s crisis highlights both fragility and resilience, writes Wi
Sung-lac
Briefing
Syria has exchanged a vile dictator for an uncertain future
The Assad regime’s fall voids many of the Middle East’s old certainties
United States
Luigi Mangione’s manifesto reveals his hatred of insurance companies
Donald Trump threatened to smackdown the education department
America’s best-known practitioner of youth gender medicine is being
sued
The Young Thug trial could be Fani Willis’s last big act
Trump for Dummies
The Americas
Can an agreement with the EU resurrect Mercosur?
Nicaragua’s ruling couple tighten their grip
The Caribbean struggles to break its dependence on fossil fuels
Asia
South Korea’s unrepentant president is on the brink
Bangladesh’s economic progress may have been hyped
India wields cricket as a geopolitical tool against Pakistan
 How to clean up India’s filthy cities
China
MAGA with Chinese characteristics
Chinese hackers are deep inside America’s telecoms networks
Why China is losing interest in English
China cracks down on Karate-chopping cleaning ladies
Middle East & Africa
Protests have shut down Mozambique
Kenyan women are fed up with rampant sexual violence
Binyamin Netanyahu is in court again in Israel
Sudan’s football team wants to reach the World Cup
Europe
Spain shows Europe how to keep up with America’s economy
Syrian refugees in Europe are not about to flock home
The Polish restaurants that dare to be dairy
Amid Russian bombing, Ukraine is planning more nuclear reactors
Why Romania cancelled a pro-Russian presidential candidate
Europeans are hoping they can buy more guns but keep their butter
Britain
Britain’s government has only half a plan to improve infrastructure
A search for roots is behind a surge in Scottish tourism
Britain’s House of Lords purges itself
Britain’s aid budget is less generous than it looks
And the prize for the oddest book title goes to…
The battles of Greg Jackson, Britain’s clean-energy disrupter
British politics enters the “death zone”
International
What has four stomachs and could change the world?
The Art of the Deal: global edition
Business
From Apple to Starbucks, Western firms’ China dreams are dying
Farewell, Don Draper: AI is coming for advertising
The PayPal Mafia is taking over America’s government
What Trump’s new antitrust enforcers mean for business
Why judges were wrong to block the Kroger-Albertsons merger
What do the gods of generative AI have in store for 2025?
The employee awards for 2024
 Tesla, Intel and the fecklessness of corporate boards
Finance & economics
Which economy did best in 2024?
The Federal Reserve takes on Trump—and stubborn inflation
Bitcoin is up by 138% this year. It is a nonsense-free rally
How much oil can Trump pump?
The World Bank is struggling to serve all 78 poor countries
Are adults forgetting how to read?
What a censored speech says about China’s economy
Science & technology
Machine translation is almost a solved problem
AI can bring back a person’s own voice
Carbon emissions from tourism are rising disproportionately fast
Humans and Neanderthals met often, but only one event matters
Why China is building a Starlink system of its own
Culture
The novel was a dominant art form last century
Does great literature translate into great television?
How did “Dungeons & Dragons” win?
The Economist’s pick of the best albums of 2024
Was Henry Kissinger an AI “doomer”?
The unholy alliance of the Russian Orthodox Church and the Kremlin
Economic & financial indicators
Economic data, commodities and markets
Obituary
Shalom Nagar was picked by lottery to kill Adolf Eichmann