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  The Economist - Leaders
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   ISSN (Online) 1358-274X
   Published by The Economist Group Homepage  [4 journals]
  • Bound over
    • Abstract: RUSSIA is one of the West’s biggest headaches. Vladimir Putin’s Kremlin has menaced its neighbours to the point where NATO is strengthening defences in the Baltic states. The European Union has just renewed economic sanctions imposed after the attack on Ukraine. But governments are doing less to bring home to the regime in Moscow the consequences of its actions than Western law courts, where Russia faces a barrage of litigation from investors whose assets it has expropriated. The Kremlin’s contempt for the rule of law in Russia was exemplified by the looting of Yukos, once the country’s biggest and best-run oil company. Its independent-minded boss, the tycoon Mikhail Khodorkovsky, was a political irritant as well as a very rich man. So in a series of spurious lawsuits Yukos was broken apart. After a questionable auction in 2004, its best assets ended up with Rosneft, a state-controlled oil company run by a close ally of Mr Putin’s. At the time that seemed a clear victory for the Kremlin. But more than ten years later, the shareholders of Yukos, who were left many billions of dollars out of pocket, are making striking headway in their...
      PubDate: Thu, 25 June 2015 14:48:30 GMT
  • The loss of El Dorado
    • Abstract: IT WAS wonderful while it lasted. For much of this century Latin America saw robust economic growth, a big fall in poverty and a swelling of the middle classes. Now the good times are over. Emerging markets everywhere are subsiding like a cooling soufflé. But Latin America has gone stone cold. The IMF expects growth of just 0.9% in 2015, which would be the fifth successive year of deceleration. Many economists are talking of a new normal of growth of only 2% or so a year—less than half the region’s pace during the boom. What has gone wrong? The short answer is that the great commodity supercycle triggered by the industrialisation of China is over. Rising exports of minerals, soya beans and fuels lifted many South American economies. Without that fillip the region has converged downwards to the 2.4% long-term growth rate of Mexico, which is not a big commodity exporter. Worse, the commodity bonanza prompted distortions that may limit new sources of growth. Many Latin currencies became overvalued, wounding the competitiveness of non-commodity firms. Consumption soared; investment sagged. While Asia built factories, Latin...
      PubDate: Thu, 25 June 2015 14:48:30 GMT
  • Wooing Islamists with a beer festival
    • Abstract: IN CHINA’S far western region of Xinjiang, the authorities are fearful. What they call terrorist attacks carried out by Uighurs, a Muslim ethnic group that regards Xinjiang as its homeland, have killed 400 people in the past couple of years. The latest such incident, on June 22nd, left 18 people dead near the southern city of Kashgar. In recent months officials in Xinjiang claim to have broken up more than 180 terrorist groups—at least one of them reportedly set up by Uighurs who had fought with Islamic State in the Middle East. State television recently aired footage of children being turned into “killing machines” for global jihad at a training camp near the border with Afghanistan and Pakistan. China’s rhetoric is overblown, but the country is right to worry about terrorism. In March last year a group of Uighurs knifed 31 Chinese civilians to death at a railway station in the south-western city of Kunming. China recognises that part of the problem is a home-grown one: that many of Xinjiang’s 10m Uighurs have felt left out of the country’s economic boom. Thanks, not least, to its oil and gas industries,...
      PubDate: Thu, 25 June 2015 14:48:30 GMT
  • No smoking
    • Abstract: THEY have chained themselves to the White House fence, blockaded Australian coal ports with dugout canoes and mooned the offices of a British minister. But protesters from a green pressure group called have had their greatest success doing something far duller: petitioning institutional investors to “divest” from stocks and bonds issued by firms that peddle fossil fuels. Opponents of divestment marshal arguments from theory and practice to pooh-pooh such campaigns. But that is both to misunderstand the goals of the activists and to dodge hard questions about how best to serve the interests of their clients. Denigrators of divestment point out, rightly, that selling a security does not materially reduce the price if there are lots of buyers still out there. Any buyer is likely to have fewer qualms about the firm or country concerned than the seller, so the pressure for immediate change may actually dissipate as divestment proceeds. That is why some fund managers, like Hermes, argue that engagement with polluting firms is better than walking away. In the case of fossil fuels, the sceptics add, divestment has the wrong target: state-owned firms...
      PubDate: Thu, 25 June 2015 14:48:25 GMT
  • The right to die
    • Abstract: IT IS easy to forget that adultery was a crime in Spain until 1978; or that in America, where gay marriage is allowed by 37 states and may soon be extended to all others by the Supreme Court, the last anti-sodomy law was struck down only in 2003. Yet, although most Western governments no longer try to dictate how consenting adults have sex, the state still stands in the way of their choices about death. An increasing number of people—and this newspaper—believe that is wrong. The argument is over the right to die with a doctor’s help at the time and in the manner of your own choosing. As yet only a handful of European countries, Colombia and five American states allow some form of doctor-assisted dying. But draft bills, ballot initiatives and court cases are progressing in 20 more states and several other countries (see article). In Canada the Supreme Court recently struck down a ban on helping patients to die; its ruling will take effect next year. In the coming months bills will go before...
      PubDate: Thu, 25 June 2015 08:48:09 GMT
  • Justice delayed
    • Abstract: ONE of Africa’s nastiest rulers, Omar al-Bashir of Sudan, would now have been in the dock of the International Criminal Court (ICC) at The Hague, where he has long belonged, had it not been for the disgraceful behaviour of the government of South Africa this week. Mr Bashir had been indicted by the court for a genocide in which, according to the UN, about 300,000 people perished in his country’s western region, Darfur. Atrocities by his henchmen—mostly Arabs hunting down black Africans—are still taking place. South Africa was an eager founding signatory of the statute that created the court in the wake of tragedies such as the Rwandan genocide of 1994 and the horrors of apartheid itself. By letting Mr Bashir return safely home instead of arresting him when he visited South Africa on June 13th for a meeting of the African Union (AU), the government has damaged not only the ICC and the cause of international justice but also its own reputation for upholding the rule of law. It was a close-run thing. Mr Bashir has sought to undermine the ICC by visiting countries in Africa and the Middle East on the presumption that they would abide by the bad old rule...
      PubDate: Thu, 18 June 2015 14:48:05 GMT
  • How to kneecap the recovery
    • Abstract: BRITAIN’S economy is back on track, growing faster last year than any other in the G7 group of rich countries. So British firms are expanding—and hiring. But for David Cameron, the welcome boomlet presents an inconvenience. Five years ago, when the economy was in the doldrums, the prime minister made a foolish vow drastically to reduce immigration. The promise always looked unrealistic. Now, as the economy fires up and firms recruit, it threatens to become crippling. Britain’s companies need the right workers if they are to grow. Yet tight restrictions on skilled migrants from outside Europe mean that firms are already being told that they cannot hire the people they need. The problem is easy enough to fix: the inflexible annual quota should be raised or, better, scrapped altogether. But there is no sign of that—indeed, egged on by right-wingers in his Conservative Party, the prime minister has said he wants to tighten the tap. Repent at leisure When Mr Cameron announced in 2010 that he would bring annual net migration down to “tens of thousands”, Britain was hardly an appealing destination for...
      PubDate: Thu, 18 June 2015 14:48:01 GMT
  • TPP, RIP?
    • Abstract: UPDATE: The House of Representatives voted narrowly to grant Barack Obama trade-promotion authority (TPA) on June 18th. Just 28 Democrats supported the president. The bill now moves to the Senate. THE world economy is undergoing revolutionary changes, John F. Kennedy told Congress in 1962. If America chooses to lead, it can shape new rules for an era of free trade and healthy competition. The Democrat who occupies the White House today makes the same case in defence of the Trans-Pacific Partnership (TPP), a 12-country trade pact. Barack Obama may yet prevail over the opposition of his own party as he seeks “fast-track” trade-promotion authority (TPA, confusingly)—the right to negotiate TPP and other trade agreements which Congress could then approve or reject, but not amend. However, the fight over TPP has already dented America’s leadership credentials, to say nothing of Hillary Clinton’s (see article). On June 12th Democrats in the House of Representatives, egged on by trade-...
      PubDate: Thu, 18 June 2015 14:48:01 GMT
  • Jailhouse nation
    • Abstract: WITH less than 5% of the world’s population, the United States holds roughly a quarter of its prisoners: more than 2.3m people, including 1.6m in state and federal prisons and over 700,000 in local jails and immigration pens. Per head, the incarceration rate in the land of the free has risen seven-fold since the 1970s, and is now five times Britain’s, nine times Germany’s and 14 times Japan’s. At any one time, one American adult in 35 is in prison, on parole or on probation. A third of African-American men can expect to be locked up at some point, and one in nine black children has a parent behind bars. Bars and stripes Advocates of tough justice point out that America’s crime rate has fallen as the incarceration rate has risen. Criminals who are locked up cannot mug law-abiding citizens, and the prospect of going to prison must surely deter some from breaking the law in the first place. All this is true, but only up to a point. In the 1980s expanding prisons probably did help slow the rise of crime by taking thugs off the streets. But mass incarceration has long since become counter-productive (see...
      PubDate: Thu, 18 June 2015 09:18:20 GMT
  • Nigeria’s moment
    • Abstract: FIVE-and-a-half decades ago, when Nigeria elected its first government at the end of colonial rule, many expected the country to rise quickly to become Africa’s leading power. It had people in abundance, the region’s best universities and vast natural resources. It exported great pyramids of peanuts, was one of the world’s leading sources of cotton and was soon to become Africa’s biggest producer of oil. Yet within a few years its hopes were dashed. Nigeria suffered the first of many military coups in 1966 and was torn apart by civil war the next year. Corruption spread rapidly, hollowing out institutions and preventing the government from providing even basic services. After decades of theft and misrule, the most populous nation in Africa—and its biggest economy—has come perilously close to fragmentation. In January this year much of the north-east was overrun by bloodthirsty jihadists. Many expected that the elections which took place at the end of March would be so rigged as to give another term to Goodluck Jonathan, a singularly ineffectual president, and that opposition-supporting areas in the north would rise up in protest. The previous...
      PubDate: Thu, 18 June 2015 09:03:19 GMT
  • My big fat Greek divorce
    • Abstract: IT IS never pleasant to watch a relationship founder. Greece’s prime minister, Alexis Tsipras, has charged its creditors with trying to humiliate the country; he has accused the IMF of “criminal responsibility” for Greece’s suffering. Prominent euro-zone politicians are saying openly that, without a deal to release rescue funds in the next few days, default and “Grexit” loom. The urgency is because of a repayment of €1.5 billion ($1.7 billion), which Greece seemingly cannot afford, to the IMF on June 30th and because Greece’s European bail-out expires that day. Cue the last-ditch negotiations that have become a Euro-speciality: just after The Economist went to press, finance ministers were to assemble in Luxembourg; leaders may meet over the weekend; a European Union summit is scheduled at the end of next week. It may come down to a head-to-head between Mr Tsipras and Angela Merkel, Germany’s chancellor. A deal is still possible, but the sides have come to loathe each other. If this were a marriage, the lawyers would be circling. Divorce would be a disaster—for everyone. The trouble is that, unless Greece and...
      PubDate: Thu, 18 June 2015 09:03:11 GMT
  • A sharper blade
    • Abstract: ALL good things come to an end, and that may one day include America’s military pre-eminence. Although the United States is still by far the world’s strongest martial power, others are catching up. America’s ability to project overwhelming force around the world, which it has taken for granted since the end of the cold war, is now threatened. In the past America has harnessed technology to offset its rivals’ advantages. Faced with much larger Soviet conventional forces in Europe, it first relied on the superiority of its nuclear arsenal for deterrence (in the 1950s) and then, when the Soviet Union caught up, invested in “deep strike” systems that could spot distant targets and destroy them with precision-guided conventional warheads (from the late 1970s). The Gulf war in 1991 demonstrated the devastating effectiveness of smart munitions, battle networks and electronic warfare. But these technologies have now proliferated. During the past decade, as America fought low-tech insurgents in Iraq and Afghanistan, potential adversaries—such as China, Russia, and even Iran and North Korea—have been making rapid progress. Of these, it is China...
      PubDate: Thu, 11 June 2015 14:51:25 GMT
  • Narrow-minded
    • Abstract: IT IS known as the insurance-protection gap. It can set vulnerable economies back years. It is growing inexorably, and nowhere does it yawn more widely than in Asia. The gap in question is the difference between insured and uninsured losses when natural catastrophes strike. Of the $101 billion in global economic losses in 2014, nearly half stemmed from floods, cyclones and other disasters in Asia. Of these, only 8% were covered by insurance, according to Swiss Re, a big reinsurer, compared with 60% in America. In some countries the gulf is wider still. The earthquake that struck Nepal in April is now thought to have caused around $5 billion in damage, some 25% of GDP. Yet the bill for insurers will reach only around $160m. Underinsurance is a problem for all risks in Asia (see article). But a cyclone or a tsunami seems far more remote than an everyday threat, so Asian consumers make insuring lives and health their priority. As a result, disaster coverage is patchy even...
      PubDate: Thu, 11 June 2015 14:51:25 GMT
  • Apartheid on the Andaman Sea
    • Abstract: THEY have been called the most persecuted minority in the world. The Rohingyas, a Muslim minority in Myanmar, have been driven from their villages; 140,000 of them have been herded into squalid camps. They cannot vote. Their children are shut out of local schools. They are subjected to mob violence with impunity. A new law seeks to limit how many babies they may have. Small wonder they flee. In the first half of this year thousands of Rohingyas have crowded into leaky boats and risked their lives to cross the Andaman Sea, seeking refuge in Thailand or Indonesia (see article). Traffickers have beaten them and taken their savings. Their tales of suffering on the open seas are at least as shocking as those of Africans who cross the Mediterranean hoping for a new life in Europe. Yet almost nothing is being done to help them. The history of the Rohingyas is disputed. Their Buddhist neighbours in Myanmar’s Rakhine state consider them “illegal immigrants” or dismiss them as “Bengalis” because...
      PubDate: Thu, 11 June 2015 14:51:25 GMT
  • Sultan at bay
    • Abstract: IT IS rare for somebody who wins more than 40% of the vote to feel beaten. But after the Turkish general election on June 7th that is the fate of the Justice and Development (AK) party and, even more so, of Recep Tayyip Erdogan (pictured), its charismatic and worryingly autocratic founder. As head of state, Mr Erdogan is supposed to stand above party politics, but he campaigned shamelessly for an AK supermajority that could change the constitution to create a strong executive president (ie, himself). The verdict? AK’s support fell from almost 50% in 2011 to 40.9% and the party lost its majority in parliament. By slashing AK’s share of the vote and, especially, by putting the pro-Kurdish People’s Democratic Party (HDP) well over the 10% threshold for parliamentary seats, Turks have unambiguously repudiated Mr Erdogan’s ambitions for a strong presidency. Most of them now dislike the sectarian Sunni rhetoric, the intolerance of opposition and the stench of corruption that, after 12 years in office, have come to characterise Mr Erdogan’s rule. Although the election result has created big uncertainty over the formation of a new government...
      PubDate: Thu, 11 June 2015 14:51:25 GMT
  • Watch out
    • Abstract:         THE struggle has been long and arduous. But gazing across the battered economies of the rich world it is time to declare that the fight against financial chaos and deflation is won. In 2015, the IMF says, for the first time since 2007 every advanced economy will expand. Rich-world growth should exceed 2% for the first time since 2010 and America’s central bank is likely to raise its rock-bottom interest rates. However, the global economy still faces all manner of hazards, from the Greek debt saga to China’s shaky markets. Few economies have ever gone as long as a decade without tipping into recession—America’s started growing in 2009. Sod’s law decrees that, sooner or later, policymakers will face another downturn. The danger is that, having used up their arsenal, governments and central banks will not have the ammunition to fight the next recession. Paradoxically, reducing that risk requires a willingness to keep policy looser for longer today. The smoke is clearing The good news comes mainly from America, which...
      PubDate: Thu, 11 June 2015 08:18:09 GMT
  • Time for a civic surge
    • Abstract: WITH their towering columns and gilded clockfaces, the Victorian town halls of England’s northern cities look like the seats of empires. And so they once were. Bradfordian woolmen and Mancunian cottonspinners led Britain’s Industrial Revolution, bringing their cities national clout and global fame. But a century-long suction of power to the capital has turned Britain into an extraordinarily centralised country. Ninety-five per cent of taxes are raised in London, leaving the grand council chambers of the regions to hear debates on parking fines and dog fouling. Now there is a chance for England’s cities to win back some of their long-lost power. Seeking savings and an answer to English envy of Scotland’s growing autonomy, George Osborne, the chancellor, has offered to cede billions of pounds of spending on transport, education, policing and health to clusters of cities that agree to join together and be run by an elected mayor (see article). The new freedoms, which represent the biggest change...
      PubDate: Thu, 04 June 2015 14:51:40 GMT
  • Bigger than Blatter
    • Abstract:         SO THE stubborn septuagenarian resigned from the tiddlywinks committee. Why all the fuss and headlines, some eye-rolling observers have been wondering? What does it matter who runs FIFA, football’s abstruse governing body, or where its tournaments are held? All these shenanigans, like the furores that occasionally erupt in other sports, are absurdly overblown. Football belongs on the back pages, not the front. That view, common among sports non-enthusiasts, rests on the mistaken notion that corruption in sport is also a sort of game, in which rubicund rogues harmlessly siphon off gate receipts. Even many fans, perturbed by the disruption of their hobby, miss its real gravity. Because at bottom this is not a recreational issue but a criminal one. Neither harmless nor victimless, sports corruption is perpetrated by crooked officials, abusive governments and gangsters, sometimes in concert. It matters—and, welcome as Sepp Blatter’s demise is, the problem goes well beyond him, FIFA and football (see...
      PubDate: Thu, 04 June 2015 14:51:40 GMT
  • Meet Shinzo Abe, shareholder activist
    • Abstract: “STUPID, greedy, adulterous, irresponsible and threatening.” At least the Japanese vice-minister for the economy, speaking about equity investors in 2008, was being honest. Indeed, he could not have summed up most Japanese politicians’ contempt for shareholders any more pithily. But as Shinzo Abe, the prime minister, tries to boost a flaccid economy, official attitudes are changing at last. Japan’s companies are sitting on ¥231 trillion ($1.9 trillion) in cash, an amount nearly half the size of the economy itself. Mr Abe wants that hoard to boost capital expenditure or wages, or to be returned to investors, who could put it to better use. He thinks a dose of shareholder capitalism will do the trick. Government bigwigs, including Mr Abe himself, now offer meetings to foreign activist investors. A new governance code, which came into force this week, seeks to break open the cosy world of the Japanese boardroom by requiring firms to appoint at least two outside directors (see article). ...
      PubDate: Thu, 04 June 2015 14:51:40 GMT
  • Rump stake
    • Abstract: IN THE beauty contest among big emerging markets, India has a fair claim to the crown. Growth is above 7%, inflation below 5%. Interest rates are falling, if slowly; the rupee has been fairly resilient. Yet India’s economy looks rather less handsome in one regard: the finances of many of its companies and the public-sector banks that fund them are in rotten shape. An analysis last year by the IMF showed that India’s corporate sector has a higher level of debt relative to equity than that of any other emerging market, bar Brazil. A third of the 3,700 listed companies sampled in a recent study by Credit Suisse paid more in interest than they earned. Not surprisingly, the incidence of Indian public-sector bank loans that are troubled has risen—to 12% at the last count—and that could grow further. Among private banks the share of troubled loans is 4%. Public-sector banks account for more than 70% of India’s loan stock. These banks already require around $40 billion of fresh capital by 2018 just to conform to internationally agreed rules on minimal capital standards. Add in the rising share of bad debts, and the worry is that banks will not...
      PubDate: Thu, 04 June 2015 14:51:40 GMT
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