Heatwaves: a harbinger
Lessons on inflation from Turkey
Women’s sports take off
Software to predict who wins a war
JULY 23RD–29TH 2022
Three letters that won’t save the planet
012
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012
Contents The Economist July 23rd 2022 3
On the cover The world this week United States
6 A summary of political 21 Climate-policy blues
esg should be boiled down 22 Congress and Ukraine
to one simple measure: and business news 23 Train pain
emissions: leader, page 9. 24 Lessons from Uvalde
The environmental, social Leaders 25 Mothers in peril
and governance approach to 9 esg 26 Lexington The January 6th
investment is broken. See our
Special report, after page 44. Three letters that won’t committee v Trump
A recalcitrant senator has save the planet
scuttled Joe Biden’s climate 10 British life sciences The Americas
plans, page 21 A growth cure that works 27 Follow the influencers
12 Heatwaves 28 Drugs in Mexico
Heatwaves: a harbinger A warning 29 Bello Political Utopias
Adaptation will be disruptive 12 Developing countries
and costly. All the more reason Progress and poverty Asia
to curb emissions: leader, 14 Inflation 30 South-East Asian
page 12. A rising share of people Turkey shoot
are exposed to dangerously high inflation
temperatures: graphic detail, Letters 31 Booze in Bangladesh
page 85 16 On medical data, 32 Sri Lanka’s new president
32 Pakistani politics
Lessons on inflation from Singapore, Boris Johnson, 34 Banyan Indonesian
Turkey The evils of galloping Switzerland, servant-
price increases: leader, page 14. leaders diplomacy
How has the Turkish economy 36 Abe Shinzo’s killer
managed to keep growing so Briefing
fast? Briefing, page 17 17 Turkey’s economy China
38 A trade war at home
Women’s sports take off Inflation nation 39 New covid-19 outbreaks
A packed year promises to boost 40 China, Taiwan and Pelosi
its growth, page 57 Special report: 40 How Uyghurs learned
esg investing
Software to predict who wins In need of a clean-up English
a war How programs assess the After page 44
line of battle, page 75 Middle East & Africa
Bartleby Can “work from 41 Egypt’s political
hotel” become a thing?
Your columnist prisoners
investigates, page 62 42 A Tunisian referendum
43 Senegal’s trust economy
44 Booming African startups
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012
4 Contents The Economist July 23rd 2022
Europe Finance & economics
45 Italian turmoil 67 Emerging-market woes
46 Reopening Odessa 69 Banks and interest rates
47 Belarusians fighting 70 The Big Mac index
71 China’s energy crunch
Russians 71 Mortgage boycotts
47 nato, Russia and Greece 72 Buttonwood The Fed call
49 Charlemagne Germany’s 74 Free exchange Inflation
dream targets
Britain Science & technology
51 Lessons of life sciences 75 Predicting who wins
53 Stockmarket woes
54 Sunak v Truss wars
54 Levelling up: over and out? 77 Depression and serotonin
55 A motorway for drones 78 Menstruation and sport
56 Bagehot The Stupid Party
Culture
International 79 Kissinger on leadership
57 Women’s sport is 80 America’s opioid crisis
81 Culinary subterfuge
packing stadiums 81 Buckminster Fuller
82 A prodigy plays “Rach 3”
Business 83 Back Story The drama of
59 Balance-sheets in
the oligarchs
troubled times
60 Carbon bean-counters Economic & financial indicators
62 Bartleby Work from hotel 84 Statistics on 42 economies
63 Jobs graduates want
64 Luxury hyperinflation Graphic detail
65 Schumpeter The robot 85 A rising share of people are exposed to extreme heat
consultant Obituary
86 Gloria Allen, teacher of manners
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012
012
6 The world this week Politics The Economist July 23rd 2022
Mario Draghi tendered his Russia’s foreign minister, his replacement as prime the secondlargest ethnicity,
resignation as prime minister Sergei Lavrov, confirmed that minister, who faces growing in an attack in June, according
of Italy, after three of the four Russia’s war aims in Ukraine discontent over rising prices. to eyewitness accounts
main parties in his governing extend beyond capturing the gathered by Amnesty
coalition refused to support Donbas region to include India’s Supreme Court granted International, an ngo.
him in a motion of confidence. “Kherson, Zaporizhzhia and a bail to Mohammed Zubair, a
Unless a fresh government can number of other territories”. cofounder of a respected America’s House of Repre
be formed, which looks America has denounced Rus factchecking service who was sentatives passed a bill that
unlikely, the probable out sia’s “annexation playbook”, arrested last month for would protect gay and
come is an early election. Polls whereby it conducts sham insulting religious beliefs. His interracial marriages under
predict that will bring a hard referendums in occupied areas arrest was widely seen as federal law. The legislation,
right alliance to power. The to justify their seizure. politically motivated. The supported by 47 Republicans,
upheaval imperils the reform court said it saw “no reason” is a response to the Supreme
package Mr Draghi drew up, mps in Britain’s Conservative for him to be held in custody. Court’s decision to overturn
which has allowed Italy to Party settled on two candidates the federal right to an abor
access €200bn ($204bn) from to put forward as their new A number of Chinese cities and tion. Gay and interracial
the eu’s covidrecovery fund. leader, and thus prime provinces wrestled with out marriages were similarly
minister, following the breaks of covid19, as new legalised by court decisions. It
Russia resumed gas supplies defenestration of Boris John infections rose across the is unclear if the bill will
to Europe through the Nord son. Rishi Sunak, whose resig country. China’s strict covid proceed in the Senate.
Stream 1 pipeline, albeit at nation as chancellor of the controls are struggling to
reduced levels, according to its exchequer helped topple Mr contain Omicron subvariants, An investigation by the legis
operator. There had been Johnson, and Liz Truss, the which spread fast and are hard lature in Texas into the school
concerns that Russia would foreign secretary, will battle it to detect. Some 260m people shooting in Uvalde blamed
cut off the flow of gas follow out among party members, in 41 cities are under lockdown “systemic failures” in the
ing a tenday maintenance who will vote during August. or subject to other restrictions, police’s response to the
period. Earlier, the eu urged according to one estimate. incident, and accused police
member states to reduce their The Trump playbook of putting their own safety
gas use by 15% compared with Facing a possible defeat in Joe Biden made his first visit as above those of the children.
the fiveyear average, as it fears October’s election, Jair Bolso America’s president to Saudi Nineteen children and two
Russia may again curb or naro, Brazil’s rightwing presi Arabia, where he failed to adults were murdered. Video
suspend supplies. The imf dent, cast more doubt on the secure an immediate agree has emerged of one officer
warned that such an embargo reliability of the electoral ment for more oil to be stopping to sanitise his hands
could cause the economies of process, once again claiming, pumped onto the world mar in the school.
the European countries most without any evidence, that the ket or to persuade the Saudis
reliant on Russian gas, such as country’s voting system is formally to join a regional Scorched earth
the Czech Republic, Hungary vulnerable to fraud. Mr Bolso defence axis that would in
and Slovakia, to shrink by naro said that the army should clude Israel. The Saudis did The extreme heat that has
around 5%. participate in the process to agree to open their airspace to afflicted France, Italy, Portu
guarantee safe elections. He is flights to and from Israel. gal, Spain and other countries
Ukraine’s parliament trailing his opponent, Luiz in southern Europe, moved
approved the removal of the Inácio Lula da Silva, by double Russia’s president, Vladimir north. Britain, where sum
prosecutorgeneral and the digit margins in the polls. Putin, visited Iran, where he mers are normally tepid, saw
head of the security service, met Turkey’s president, Recep temperatures in excess of
amid allegations of collabora Sri Lanka’s Parliament elected Tayyip Erdogan, as well as 40°C (104°F), smashing the
tion with Russia among staff at Ranil Wickremesinghe as Iran’s supreme leader, Ali previous record. In Spain
the agencies they oversaw. president, a week after Khamenei, who implied in a temperatures have passed
Volodymyr Zelensky, the presi Gotabaya Rajapaksa resigned speech that America was 45°C in places. Lousã, Portu
dent, said 651 cases of treason and fled the country amid equally at fault for Russia’s gal, recently recorded 46.3°C.
were being investigated and mass protests. Mr Wickreme invasion of Ukraine. Excessiveheat warnings were
that more than 60 people at the singhe had been prime also issued in all or parts of 28
agencies had been working minister since May, a job he The military government of American states. In Texas
with the Russian invaders. A had held six times. He must Mali ordered the un to sus some cities have endured
further 28 officials were now lead the country out of its pend all flights and rotations temperatures of over 38°C for
suspended from duty. economic morass. of peacekeepers after detain more than a month.
ing 49 bluehelmeted troops
The party of Imran Khan, who from Ivory Coast whom it
was ousted as Pakistan’s claimed had entered the coun
prime minister in April, won a try illegally. un forces are
landslide victory in 15 byelec helping to fight jihadist
tions in Punjab, the country’s insurgents in Mali.
most populous province. The
surprising result is a boost for The Oromo Liberation Army,
Mr Khan, who is demanding an opposition armed force that
early national elections, and claims to represent Ethiopia’s
bad news for Shehbaz Sharif, biggest ethnic group, slaugh
tered hundreds of Amharas,
012
The world this week Business The Economist July 23rd 2022 7
Britain’s annual rate of 5.5%, up from 2.9% a year ago. Canada. Revenue grew by Tesla reported solid earnings
inflation rose to 9.4% in June, Mortgage applications are at 8.6%, year on year, more slow for the second quarter, in spite
from 9.1% in May. Motorfuel their lowest level since 2000. ly than in recent quarters and of warning about supplychain
prices were up by 42%, the far from the 19.4% growth in disruptions to its business.
highest rate since the current Bank of America’s net profit the same quarter of 2021. Net The company also revealed
series of data began in 1989, the fell by 32% in the second quar flix forecast that growth would that it has now offloaded 75%
cost of food increased by near ter, year on year. America’s slow again in these three of its holdings in bitcoin, the
ly 10% and clothing by 6%. The other big banks—Citigroup, months to 4.7%, but it blamed price of which has collapsed.
price of secondhand cars, a Goldman Sachs, JPMorgan a large part of that on the
big contributor to inflation a Chase and Morgan Stanley— strength of the dollar, because We’ll see you in court
year ago, continued to fall. The have also reported double 60% of its revenues now come A judge ruled that a trial in the
figures add pressure on the digit drops in profit. All report from outside America. dispute between Twitter and
Bank of England to bring in ed big declines in revenue Elon Musk over their takeover
bigger increases to interest from investment banking, but Pilots at Scandinavian Air- deal will be held in October.
rates. Andrew Bailey, the income from trading was up. lines ended their 15day strike That is a victory for Twitter,
bank’s governor, said a rise of after agreeing to a pay deal. sas which had asked for a Septem
half a percentage point was “on Must-watch television? filed for bankruptcy protection ber date. Mr Musk, who now
the table” for its next meeting on the second day of the strike. says he doesn’t want to buy the
on August 4th. Netflix said it lost a net 1m company, wanted the trial to
subscribers worldwide in the The French government pro be held in February. Twitter
The London Stock Exchange second quarter, or about 0.5% vided more details of its plan continued to play hardball,
saw its biggest stockmarket of its user base. The number to fully renationalise edf by urging shareholders to vote in
debut in a decade. Haleon, a was less than the 2m it predict buying the 16% of shares it favour of Mr Musk’s takeover at
spinoff from GlaxoSmith ed three months ago, when it doesn’t own. The state has set a special meeting, the date of
Kline, began trading with a reported its first drop in cus aside €9.7bn ($9.9bn) for the which is yet to be decided.
market capitalisation of tomers for a decade, causing buyout, which has to be
£30.5bn ($36.4bn). It is a rare its share price to plummet. It approved by parliament. America launched a trade
example of a significant listing added users in Asia, but lost dispute with Mexico, accusing
in London. In recent years the 1.3m in the United States and China’s cybersecurity reg it of favouring its stateowned
lse has struggled to attract ulator fined Didi Global 8bn electricity and oil companies
new entrants and compete yuan ($1.2bn) to conclude an to the detriment of energy
with the listing sprees in Hong investigation into mishan produced in America, notably
Kong and New York. dling of privacy data at the clean energy. Mexico’s presi
ridehailing giant. Didi’s clash dent, Andrés Manuel López
China’s economy grew by just with the authorities began in Obrador, wants to regain state
0.4% in the second quarter, June 2021, when it went ahead control of the electricity in
year on year, the secondworst with its ipo in New York (it dustry. Mr López Obrador was
rate of growth in 30 years (the later decided to delist). Since dismissive of America’s com
country’s gdp contracted at the the start of the investigation it plaint; “Oooh, I’m so scared,”
start of the pandemic). The has been barred from signing he said at a press conference.
government has only just up users on its app.
lifted severe lockdowns in
Shanghai and other cities.
Meanwhile, banks in China
were told to support property
developers where they could,
amid a growing boycott of
mortgage payments on new
housing projects that have
fallen far behind their
construction schedule.
House sales in America fell
sharply again in June, accord
ing to the National Association
of Realtors (the tally excludes
newly built properties). But the
median price of a home
climbed to a new record of
$416,000, suggesting that
housing affordability is not
just a problem confined to
America’s big cities. In the
South prices were up by 17%,
year on year. Mortgage rates
are rising; the average 30year
fixedrate mortgage is around
012
CSC:Miami
Content Supply Chains must be forensic in their detail.
Television broadcasters have long relied on instinct,
market knowledge and spreadsheets to forecast
TV viewership - but instinct needs to partner with
information; market knowledge is never enough;
and spreadsheets are no way to excel.
As witness to these challenges, Fractal undertook
its own detective work.
By combining AI, data engineering and user-centric
design, Fractal created an industry-first TV forecasting
system for Europe’s leading media and entertainment
company. The result? Up to 30% improvement in
forecast accuracy.
Fractal: perfectly targeted and timed TV, no drama.
012
Leaders 9
Three letters that won’t save the planet
esg should be boiled down to one simple measure: emissions
If you are the type of person who is loth to invest in firms that pect. Finally esg has a measurement problem: the various scor
pollute the planet, mistreat workers and stuff their boards ing systems have gaping inconsistencies and are easily gamed.
with cronies, you will no doubt be aware of one of the hottest Credit ratings have a 99% correlation across rating agencies. By
trends in finance: environmental, social and governance (esg) contrast, esg ratings tally little more than half the time. Firms
investing. It is an attempt to make capitalism work better and can improve their esg score by selling assets to a different owner
deal with the grave threat posed by climate change. It has bal who keeps running them just as before.
looned in recent years; the titans of investment management
claim that more than a third of their assets, or $35trn in total, are As investors become wiser to such flimflam, they are grow
monitored through one esg lens or another. It is on the lips of ing more sceptical. This, coupled with turmoil in financial mar
bosses and officials everywhere. kets, is slowing the influx of money into sustainable funds. It is
surely time, then, for a rethink. The first step is to unbundle
You might hope that big things would come from this. You those three letters: e, s and g. The more targets there are to hit,
would be wrong. Sadly those three letters have morphed into the less chance of bullseyeing any of them. Regarding s, in a dy
shorthand for hype and controversy. Rightwing American poli namic, decentralised economy individual firms will make dif
ticians blame a “climate cartel” for soaring prices at the petrol ferent decisions about their social conduct in the pursuit of
pump. Whistleblowers accuse the industry of “greenwashing” longrun profits within the law. Tech firms may appeal to the val
by deceiving its clients. Firms from Goldman Sachs to Deutsche ues of young employees to retain them; firms in declining in
Bank face regulatory probes. As our special report this week con dustries may have to lay people off. There is no one template.
cludes, although esg is often wellmeaning it is deeply flawed. It The art of management, or g, is too subtle to be captured by box
risks setting conflicting goals for firms, fleecing savers and dis ticking. Britain’s listed firms have an elaborate governance
tracting from the vital task of tackling climate change. It is an code—and dismal performance.
unholy mess that needs to be ruthlessly streamlined.
It is better to focus simply on the e. Yet even that is not pre
The term esg dates as far back as 2004. The idea is that inves cise enough. The environment is an allencompassing term, in
tors should evaluate firms based not just on their commercial cluding biodiversity, water scarcity and so on. By far the most
performance but also on their environmental
and social record and their governance, typical significant danger is from emissions, particu
ly using numerical scores. Several forces have larly those generated by carbonbelching in
thrust it into the mainstream. More people dustries. Put simply, the e should stand not for
want to invest in a way that aligns with their environmental factors, but for emissions alone.
concerns about global warming and injustice. Investors and regulators are already pushing to
More companies, including a sister firm of The make disclosure by firms of their emissions
Economist, offer esg analysis. With govern more uniform and universal. The more stan
ments often gridlocked, many people feel busi dardised they are, the easier it will be to assess
ness should solve society’s problems and serve all stakeholders, which companies are large carbon culprits—
including suppliers and workers, not just shareholders. And and which are doing most to reduce emissions. Fund managers
then there is the selfinterest of an assetmanagement industry and banks should be better able to track the carbon footprints of
never known to look a gift horse in the mouth: selling sustaina their portfolios and whether they shrink over time.
bility products allows it to charge more, easing a long blight of
falling fees. Unsustainable
Better information alone will help in the struggle against global
Unfortunately esg suffers from three fundamental prob warming. By revealing more accurately which firms pollute, it
lems. First, because it lumps together a dizzying array of objec will help the public understand what really makes a difference
tives, it provides no coherent guide for investors and firms to to the climate. A growing number of altruistic consumers and
make the tradeoffs that are inevitable in any society. Elon Musk investors may choose to favour clean firms even if it costs them
of Tesla is a corporategovernance nightmare, but by popularis financially. And even if they can get away with polluting today,
ing electric cars he is helping tackle climate change. Closing many firms and investors expect that tighter regulation of car
down a coalmining firm is good for the climate but awful for its bon emissions will eventually come and want to measure their
suppliers and workers. Is it really possible to build vast numbers risks and adapt their business models.
of wind farms quickly without damaging local ecology? By sug
gesting that these conflicts do not exist or can be easily resolved, Make no mistake, though: tougher government action is es
esg fosters delusion. sential now. We have long argued for much higher carbon prices
that would harness the market to save the planet. Today pricing
The industry’s second problem is that it is not being straight schemes cover 23% of global emissions, about double the level
about incentives. It claims that good behaviour is more lucrative of five years ago. But far more needs to be done, not least in
for firms and investors. In fact, if you can stand the stigma, it is America (see United States section). It is government action,
often very profitable for a business to externalise costs, such as combined with clear and consistent disclosure, that can save the
pollution, onto society rather than bear them directly. As a result planet, not an abbreviation that is in danger of standing for ex
the link between virtue and financial outperformance is sus aggerated, superficial guff. n
012
10 Leaders The Economist July 23rd 2022
The life-sciences industry
Growth cure
The lessons of life sciences for Britain’s next prime minister
And then there were two. On July 20th Tory mps chose Rishi ca, which has more large companies that can buy promising
Sunak, a former chancellor of the exchequer, and Liz Truss, startups. The public markets in America are more hospitable,
the foreign secretary, to battle it out to become their new leader too. The London Stock Exchange accounts for less than 1% of the
and Britain’s next prime minister. The candidates, who will capital raised in global initial public offerings so far this year. Its
campaign for the votes of Conservative Party members over the biggest listing for a decade—a toothpastepeddling spinoff
coming weeks, agree on at least one thing: Britain sorely needs from GlaxoSmithKline, one of two big pharma firms with head
growth. The 15year period between 2004 and 2019 was the weak quarters in Britain, which took place on July 18th—is instructive.
est for growth in gdp per person since the one between 1919 and It raised no new money and involved no new technology.
1934—and that was before the shocks of Brexit and covid19.
There are technocratic answers to such problems. The gap in
Boosting Britain’s feeble growth will require an honest as growth capital would close if pension funds and insurers were
sessment of what the country does well, not just where it lags be able to put more of their money into venturecapital funds; less
hind. That may seem headsmackingly obvious. But it needs than 1% of these assets is currently invested in unlisted equities.
saying. The Tories won the 2019 election on the promise of a hard The government this week endorsed proposals to smooth public
break with Britain’s largest trading partner. The big idea of Boris listings. Last year it added the job of lab technician to its “short
Johnson’s government has been levelling up, a scheme to reduce age occupation list”, making it easier for foreigners with the
regional inequality that has often seemed more like an excuse to right experience to get a British work visa.
bash successful places. The financialservices industry, one of
the country’s biggest assets, was an afterthought in Brexit nego Real change requires political will. Getting the lifesciences
tiations. Brexit is a fact, and it will yield some opportunities. industry, and the economy as a whole, to grow faster will require
More should be done to improve the productivity of northern the new government to face some hard truths. The first concerns
cities. However if the Tories are to be a party of growth again, Brexit. Leaving the European Union (eu) does yield some oppor
they must play relentlessly to Britain’s strengths. tunities to liberalise: Mr Sunak wants to streamline the approval
process for clinical trials, for example. Yet Brexit throws an aw
There is no better example of those strengths—which in ful lot of sand in the gears, too. Britain’s medicines regulator is
clude scientific excellence, fine universities
and a healthy startup culture—than the lifesci approving fewer new drugs than its peers in the
ences industry (see Britain section). Britain eu, in part because firms are heading to the
hosts four of the top ten universities in the larger market first. A bill to override the bit of
world in life sciences, all of them within the the eu withdrawal agreement about Northern
“golden triangle” of Oxford, Cambridge and Ireland threatens British participation in the
London. Enterprise is flourishing. British life world’s largest multinational scientificfund
sciences firms raised £4.5bn ($5.4bn) in 2021, ing programme. Until the Tories stop treating
compared with £261m in 2012. Brexit as a test of ideological purity, its econom
ic costs will only grow.
In the National Health Service (nhs), the industry has a major Geography is another area where Tory thinking and econom
asset: a large cradletograve source of data for clinical trials and ic logic collide. In 2021 the government released a plan it called
drug discovery. This ecosystem rose to the challenge of the pan the “OxfordCambridge Arc” to turbocharge connections be
demic. The OxfordAstraZeneca vaccine saved more lives—6.3m tween the two cities. That scheme was fundamentally wise—the
of them—in the first year of its rollout than any other jab. The fastest way to get between them by rail now is via London. But it
recovery trial, the world’s largest trial for people hospitalised was quietly dropped, in part because it was thought to conflict
with covid19, went from first protocol to first patient in nine with levelling up, in part because the government is nervous of
days. British institutions sequenced more than a quarter of building anything that spoils the views from voters’ windows. It
all sarscov2 genomes during the pandemic. is reasonable to worry about governments picking winners; only
in Britain has it been policy to pretend winners don’t exist.
Yet the industry faces plenty of obstacles. In theory the nhs The Tory leadership debate about growth has so far focused
ought to be able to act as a centralised buyer of new medicines on tax cuts. Ms Truss thinks an unfunded giveaway would pep
and products, giving startups a large market to test innovations. up the economy; Mr Sunak argues, rightly, that it would fuel in
But it is often sluggish and stingy, and seldom cohesive. Ameri flation. In making these arguments, both lay claim to the mantle
ca’s competitive healthcare market is swifter to adopt new tech of Margaret Thatcher. But Thatcher was defined above all by her
nologies. The time from approval of a medicine to it being avail character, not her policies. Hauling the British economy out of a
able to patients is 120 days in Germany, but 335 days in England. deep rut took steel and stamina. These qualities are needed
Lack of space is another constraint, particularly in the golden again today. It is easy enough to talk about the need for growth,
triangle: Cambridge had no available lab space in 2021, although much harder to embrace its consequences: difficult compromis
property developers are now responding. Labour shortages are a es with the eu, more money for alreadywealthy areas and un
worry: the industry says it will need 133,000 new staff by 2030. popular planning decisions taken in the teeth of local objec
tions. The fortunate thing is that Britain boasts worldclass
Most important, there is not enough domestic growth capital strengths. It should play to them. n
available to young lifesciences and other technology firms. In
vestors often pull firms towards other markets, notably Ameri
012
012
12 Leaders The Economist July 23rd 2022
Heatwaves
A warning of worse to come
Adaptation will be disruptive and costly. All the more reason to curb emissions
There comes a moment when the penny drops. And in Brit again, as an example, parts of the rail network came close to pa
ain this week the sound of dropping pennies was loud. ralysis because the rails on British track beds are optimised to be
Though Britons are by no means the worst affected by the heat stressfree at 27°C. Temperatures in the high 30s are outside
waves now sweeping the northern hemisphere, they have been their comfort zone. Rails can be changed as societies adapt to
in awe of a particular round number: 40°C. This is an air tem rising temperatures. But the cost and disruption of upgrading all
perature never before recorded in the United Kingdom. But it the infrastructure that will need it, from houses to hospitals to
was matched and exceeded in several places on July 19th. It is fire brigades, will be immense. Even in rich countries, govern
one thing to understand intellectually that anthropogenic glo ments struggle to commit the necessary resources, as America’s
bal warming is real, quite another to feel one’s own brain baking. is showing with its beleaguered “Build Back Better” package (see
United States section).
That record rammed the point home in Britain. In the rest of
Europe, in parts of China and in North America similar lessons In poor countries things will be worse. They have less cash to
were being learned, with wildfires raging and people dying of pay for adaptation and more need of it, not least because they
heatstroke. Heatwaves are nothing new. But
they have become more frequent and more ex tend to be near the equator, in zones where
treme, and more often coincide in different heatwaves can push temperatures to unsurviv
places. A recent study found there are now sev able levels. They also tend to have high popula
en times as many days of simultaneous heat tion growth, meaning more and more people
waves in the northern hemisphere as there will be affected (see Graphic detail).
were four decades ago. That simultaneity is
partly a statistical inevitability: more heat A further irony is that in some cases apply
waves mean that more will occur jointly. How ing technology to adapt to higher temperatures,
ever, changes in the pattern of the jetstream, a highaltitude air in the form of air conditioning for inappropri
current which regulates northward migration of hot air from the ately designed buildings, increases demand for
tropics, may be making things worse. electricity. In Britain, just this week, such demand has risen by
5% compared with the previous week. This is fine if the juice
Increased intensity and frequency (America, for example, used comes from green sources. But if it originates in fossilfuel
had two heatwaves a year in the 1960s and six in the 2010s) is bad power stations, it will, itself, accelerate global warming.
enough. Increased simultaneity may have even more baleful Adaptation, to this and other manifestations of a changing
consequences. Heatwaves damage agriculture. Simultaneous climate, is a crucial spanner in the toolkit. But it does not ab
disruption of plantings or harvests in different places could solve people from addressing the problem at source, by encour
create crises that cannot be dealt with by moving produce aging green powergenerating and energysaving technologies
around the world, because there is less to move. and discouraging and decommissioning the “brown” sort. If the
dropping pennies released by this summer’s heatwaves inspire
The latest heatwaves have also emphasised how built envi action in that direction, the suffering and loss of life will not
ronments are designed for a bygone climate. To use Britain, have been entirely in vain. n
Developing countries and debt
Progress and poverty
Emerging-market crises have become harder to resolve but less of a threat to the world economy
Whenever america’s Federal Reserve raises interest rates, Indonesia. It then spread to Brazil and Russia, and to ltcm, a
investors reflexively worry about a crisis in emerging mar Wall Street hedge fund that collapsed. Calm was restored by the
kets. Today it might appear the usual pattern is playing out. On Fed and Treasury cajoling American banks to roll over loans, and
July 27th the Fed is expected to raise rates by another threequar by the imf. Three American officials who led the firefighting
ters of a percentage point. Meanwhile, Sri Lanka has run out of were dubbed “the committee to save the world”. A decade or so
foreign exchange, Argentina faces another default and many ago there was a faint echo of 199798 when the Fed signalled it
poor countries are in trouble (see Finance & economics section). would tighten policy, triggering a selloff in emerging markets.
Look more closely, however, and the world economy has been
transformed in ways that mean the nature and consequences of Yet today much has changed. Emerging economies’ share of
emergingmarket turmoil have changed. global gdp at market prices has risen from 21% to 43%. Asia’s
share of emergingmarket output has doubled, to 60%, led by
The archetypal emergingmarket crisis was in 199798. As the China and India, which are more selfcontained financially,
Fed raised rates, pulling capital back to America, Thailand’s cur with stateled banking sectors and bond markets that are largely
rency peg broke, leading to a panic that floored South Korea and closed to foreigners. The weight of many crisisprone places is
012
012
14 Leaders The Economist July 23rd 2022
small: Latin America represents 5% of world gdp and 1.4% of in 2006. China accounts for about a fifth.
stockmarket value. The good news is that panics in emerging markets seem less
Another change is that many emerging markets have moved likely to inflict serious damage on the rest of the world. We cal
away from currency pegs, dollar debt and foreign borrowing. To culate the countries most at risk of default today account for
day only 16% of their debts are in foreign currencies. Govern only 5% of gdp and 3% of global public debt. The bad news is that
ments increasingly rely on local banks. Instead of sudden crises these places have 1.4bn people, or 18% of the global population,
that spill back across borders and to Wall Street, many places and face a huge humanitarian challenge with higher inflation,
face slowerburn and homegrown dangers: inflationary spirals debt loads, interest rates and expensive oil and food.
or zombie banks. A collapse of China’s debtridden financial sys
tem would hurt global growth because the Chinese economy is Furthermore, the new distribution of their debts means it is
large, not because investors elsewhere are directly exposed. harder to strike deals to provide them with debt relief. The West
does not want to give aid that flows into the pockets of Chinese
The final change is that even where foreign creditors are im creditors. China is reluctant to participate in debt restructuring,
portant, their profile is different. For example, the “Paris Club” even though any modernday rescue committee needs a mem
of creditors, which is composed mostly of rich countries and ber from Beijing. As a result, even if emergingmarket crises
multilateral institutions such as the imf, accounts for less than pose less of a danger to the global economy, they may pose more
60% of the poorest countries’ debts, down from more than 80% of a threat to the people living through them. n
Inflation
Turkey shoot
Lessons from Turkey on the evils of galloping price increases
It took for ever and then it took a night. That was how Rudi business relationships are built is eroded.
ger Dornbusch, an influential economist who died in 2002, Damage is also done to decisionmaking. The price signals
described the gestation of a financial crisis. In the Dornbusch that direct resources to the best use become distorted. Business
telling, booms go on for much longer than seems rational or pos es cannot distinguish between price increases that carry infor
sible before they end with a speed that also surprises. The un mation about demand and supply in their particular industries
sustainable can be sustained for longer than you would think. and those that are a response to the falling value of money. As
Were Dornbusch still around, even he might be scratching bad is the constant effort of running just to stand still. Prices
his head about Turkey. For years it has been running a reckless have to be renegotiated all the time to stay abreast of the eroding
experiment in unorthodox monetary policy. The country’s pres monetary standard. This is exhausting. It is also socially corro
ident, Recep Tayyip Erdogan, believes that higher interest rates sive. The constant haggling creates friction between firms and
are a cause of rising prices, not a cure for them. At the end of suppliers, businesses and customers, landlords and tenants.
2021, when most countries were either raising interest rates or This is related to a third big problem, inflation’s effect on the
preparing to do so, he directed Turkey’s central bank to slash distribution of wealth. Efforts to escape the inflation “tax” often
them. The result could have been predicted, if not by Mr Erdo come down to pushing it onto someone else. Businesses rightly
gan. Inflation surged to almost 80% in a matter complain, albeit mostly in private in Turkey,
of months. Remarkably Turkey’s economy has Turkey, consumer prices about the instability caused by inflation. But
managed to keep growing. Real gdp rose by 11% % increase on a year earlier Turkey’s bigger firms have the resources and
last year. Turkey’s boom seems to be everlasting 80 knowhow to shelter from surging prices. The
(see Briefing).
60
40 rich have property and hardcurrency deposits
It is tempting to conclude from Turkey’s 20 to protect their wealth. The rest are not so fortu
madcap experiment that high inflation is a nui 0 nate. A recent poll found that more than a third
sance that can nevertheless be coped with. 2017 18 19 20 21 22 of Turks are unable to meet their basic needs.
Tempting, but wrong. The harms caused by Include those who can barely meet them, and
runaway inflation are myriad, but three are particularly salient the fraction who are struggling rises to fourfifths. It stands to
in Turkey: a shortening of horizons; pressures on daytoday de reason that the poor suffer most from inflation. But middle
cisionmaking; and an arbitrary redistribution of wealth, which class Turks are also in pain. As their purchasing power shrinks
heaps the burden of inflation on those least able to bear it. and their job security erodes, many are falling out of the middle
Start with shortening horizons. With stable prices, people do class, and feeling both anguish and anger at their loss of status.
not have to pay attention to yeartoyear changes in the average The politics of inflation are bad everywhere, but especially
price level. Stability allows planning for the distant future. In fraught in Turkey. Most voters seem to blame Mr Erdogan for in
Turkey, though, the long term is next month. High inflation is flation. He and his ak party trail in opinion polls for elections
volatile. Businesses in the domestic market cannot predict their scheduled for next June. The big fear is that Mr Erdogan may re
probable returns in real terms, so they are reluctant to invest in sort to foul means to cling to power: by locking up his oppo
new capacity and opportunities. This harms longterm prosper nents, say, or declaring a state of emergency. Dornbusch’s in
ity. There are immediate costs, too. Suppliers cannot wait sight about the unsustainable being somehow sustained has a
months for payment when money is losing its value all the scary implication in this regard. No situation is so bad that it
while. As a consequence, the informal credit and trust on which cannot become worse. n
012
Executive focus 15
012
16 Letters The Economist July 23rd 2022
Medical intrusions after the passage of decades. Max Weber, a German Madison did when they con
As national data guardian for Having introduced a health sociologist, wrote in “On ceived the American experi
health and adult social care in record in 2008, Google Charisma and Institution ment. Maybe becoming a
England I share your sense of dropped it in 2012. Resurrected Building” that the “charismatic quietly prosperous, slightly
excitement about the potential in 2018, it was again taken leader gains and maintains dull nation, at peace with its
of artificial intelligence to down in 2021. Given the tran authority solely by proving his neighbours, where political
improve health care (“Doctor sient nature of these ventures, strength in life. If he wants to high dramas and extremists
Google will see you now”, June one would imagine medical be a prophet, he must perform have no place, where policy
25th). However, by describing professionals will be slow to miracles; if he wants to be a arises from careful deliber
privacy concerns as a “hurdle” commit much data to Care warlord, he must perform ation and compromise, where
to overcome, which govern Studio, Google’s latest in heroic deeds. Above all, how gross inequalities are reduced
ments “fret” about, you take novation targeted at doctors. ever, his divine mission must and people feel they belong, is
too narrow a view of the brian o’brien ‘prove’ itself…those who faith not such a bad place to
unease that people feel about fully surrender to him must learn from.
the use of their data. People Kinsale, Ireland fare well. If they do not fare r. james breiding
have strong opinions about well, he is obviously not the
who stands to benefit, Hong Kong v Singapore master sent by the gods.” Zurich
including financially, from the You wrote about the rise of
use of such data. Many also Singapore (and Shanghai) as a Strength in life? Miracles? In which we serve
worry that the insights gleaned global financial hub and the Heroic deeds? Mr Johnson Bartleby scoffed at the concept
from the information may be decline of Hong Kong (“A tale might make a good case study of the “servant leader” (June
used in ways that disadvantage of three cities”, July 2nd). That of failed leadership, but not of 25th). The phrase can be traced
them or others. view aligns with what Lee charismatic authority. back to the Bible, in 1 Kings
Kuan Yew, Singapore’s prime r.j. mcallister 12:7, where a rookie king is
Building and maintaining minister from 1959 to 1990 and, given advice that if you serve
public and professional trust to my mind, one of the world’s York, Maine the people they will serve you.
in how, why and by whom greatest statesmen, predicted Intriguingly, one 19thcentury
people’s confidential health would happen to the two cities The Swiss model Hebrew commentary reads
and care data are used is in his book, “One Man’s View Switzerland is “nobody’s idea this advice as a cynical ploy.
fundamental to ensuring that of the World”, published in of a forwardthinking place”, Just tell the people you are
the potential benefits we all 2013. Even before the recent you say (“The new exceptional there to serve them, and they
stand to gain through data crackdowns by China’s ism”, July 9th). I beg to differ. will not stipulate any
driven research can be fully Communist Party on civil and The “wheretobeborn” index, limitations or conditions at
realised. I am pleased that the political liberties, which have published by your own Econo your coronation; eventually
British government has made undermined the rule of law mist Intelligence Unit in 2013, you’ll get all the power you
some firm commitments in its and scared businesses away, claims Switzerland is the best want, having caught more
recent data strategy to building Lee stressed that Hong Kong, country to be born in. For good flies with honey.
such trust. now being a part of China, reasons. The country is ranked
would grow ever closer to the second in global competitive I suspect many a manager
My panel of advisers and I mainland, with all the strains ness, first in patent filings per would gladly subscribe to this
look forward to contributing to that come with that. As a person, second in human rather devious version of
this work as the government’s result, it would become less development and first in trust servant leadership.
strategy evolves. attractive to global business in government. It does this shalom rosenfeld
dr nicola byrne and more like a regular with the seventhhighest share
Chinese city. of renewable energy as a Silver Spring, Maryland
National data guardian percentage of total energy.
London By contrast, Singapore, The motto of the Royal Military
being an independent country Admittedly Switzerland is Academy Sandhurst is “Serve
You described America’s with a government dedicated boring. The notion of our to Lead”. It has stood the test of
healthcare system as “laby to openness, anticorruption citizens storming our capital time, although the British
rinthine”, “protected” and and the rule of law, would or the bbc featuring a running army has endured its share of
“stodgy”. I would describe our grow ever more important to total of minister resignations charlatans and poltroons in its
system as hopelessly the region and for global busi until its prime minister is officer corps. Sandhurst offi
inefficient, irrationally dupli ness. This is just what we are forced to resign because, well, cercadets of a cynical cast of
cative, financially cruel and seeing today. there are too few left to govern, mind often turned out to be
disgracefully unequal. aurelio ortiz camacho would be unthinkable. the most able, inspiring, and
humane leaders, when it
I wholeheartedly welcome Mexico City What made America and counted. Their alternative
the entry of technology firms Britain such great countries? motto was “skive to survive”.
into our healthcare market, Boris lacked charm And what could they do to pablo miller
not because I trust them but “The charismatic Mr Johnson” regain their excellence? We
because I cannot imagine it (“Clownfall”, July 9th). Really? often complain about this or Salisbury, Wiltshire
getting much worse. The idea of charisma used to that, but progress is usually
dr nathan claydon be understood as an exceed about finding something that Letters are welcome and should be
ingly rare characteristic of works and then reverse engi addressed to the Editor at
Nevada City, California leadership. If the word can be neering it. Perhaps now is a The Economist, The Adelphi Building,
applied to Boris Johnson then good time to peek over the 1-11 John Adam Street, London wc2n 6ht
As antiquated as they seem, it has truly lost all meaning. garden hedge and survey other Email: [email protected]
paper medical records have a countries for best practices. More letters are available at:
permanence and tactile quality The way Hamilton, Jay and Economist.com/letters
that allows searching even
012
Briefing Turkey’s economy The Economist July 23rd 2022 17
Inflation nation to attract foreign capital to cover a persis
tent deficit on its current account, a broad
GAZIANTEP AND ISTANBUL measure of the balance of trade (see chart 2
on next page). It is an importer of energy,
How has the Turkish economy kept growing so fast in the face of with much of its gas supplied by Russia
runaway inflation? and Iran. When energy prices rise, its trade
deficit—and its need for foreign capital—
On the wall of Savas Mahsereci’s office has jumped to almost 80% (see chart 1 on tends to increase.
is a blackandwhite photograph of his next page). Yet the economy has somehow
father and grandfather making shoe soles kept going. In the swisher parts of Istanbul, Until now, dynamism has trumped fra
from recycled tractor tyres. The room is up 1,100km west of Gaziantep by road, all the gility and bad policy. But beneath the sur
stairs from his factory on the outskirts of signs of a thriving emergingmarket mega face, there are signs that Turkey’s mone
Gaziantep, a city of 2m people in south city are on display: bustling commuters, tary instability is catching up with it. The
eastern Turkey, close to the border with wellstocked shops, gridlocked traffic. authorities have resorted to desperate
Syria. Like his forebears, Mr Mahsereci is measures to husband the country’s dimin
in the recycling business. His family firm, The resilience of Turkey’s real economy ishing stock of foreign exchange and to
mtm Plastik, makes refuse bags, disposa is something of a puzzle. It was one of the prop up the lira. But credit is drying up and
ble gloves and pellets for use in moulded few big economies that managed to grow at investments are being put on hold. Run
products. The business has grown rapidly. all in 2020. Last year gdp rose by a hand away inflation has left many people strug
It now occupies 20 times as much factory some 11%. Recent figures show that indus gling to make ends meet. Mr Erdogan faces
space as it did in 2004, and started export trial production rose by 9.1% in the year to presidential and parliamentary elections
ing in 2016. Supply bottlenecks in China May. Even seasoned businessmen have in June 2023 at the latest and he trails in the
are “a big opportunity for us”, he says. been taken by surprise. polls. He has dominated Turkey’s politics
Other industrial firms in Gaziantep are for two decades and seems unlikely to go
benefiting. The city enjoyed record exports At the centre of the mystery is a tugof quietly. Economically and politically, the
last year, says Mr Mahsereci. war between two forces. On one side is a coming months are likely to be volatile.
business dynamism that drives Turkey’s
Outside observers may find stories of economy forward. On the other is the errat Bazaar to bizarre
thriving Turkish businesses hard to be ic policymaking that has undermined it. For a while, Turkey had the macroeco
lieve. Since 2018 the country has limped Under pressure from President Recep Tay nomic stability that now eludes it. Reforms
from one currency crisis to the next. For yip Erdogan, the central bank has kept in after a crisis in 2001 were transformative.
eign investors have shed Turkish bonds terest rates unduly low in the face of leap One big change was the granting of greater
and stocks. The lira has slumped. Inflation ing inflation. That is especially unwise as independence to the central bank in pur
Turkey is a lowsaving country that needs suit of low inflation. New laws put con
straints on public spending and opened up
government procurement to competitive
012
18 Briefing Turkey’s economy The Economist July 23rd 2022
bidding. When Mr Erdogan came to power of Turkish business. Many large firms are say, gold coins or dollar bills. With interest
in 2003, he stuck to the new policies. Infla conservatively run and diversified across rates so low in real terms it is almost negli
tion dropped to single digits. gdp growth industries and export markets, which gent not to borrow to spend.
took off. Productivity picked up. gives them a builtin resilience. The largest
conglomerate, Koc Holding, has four main But credit is not the only fuel. Turkey’s
But over time the impetus for economic divisions: vehicles and parts (in joint ven young population has a high propensity to
reform faded. The central bank succumbed tures with Ford and Fiat), white goods, oil consume out of wealth gains, says one
to political pressure and lost sight of its in refining and banking. Sabanci Holding, Istanbulbased economist. And welloff
flation goal. Mr Erdogan’s love for grand another conglomerate, has retail, energy, householders have much of their wealth
infrastructure projects was given free rein. cementmaking, banking and manufactur tied up in foreigncurrency deposits and
The procurement law was gutted. Building ing businesses. property, which have held or increased
contracts were handed out to cronies. A their value.
building boom displaced exportled The best midsized family firms share
manufacturing as the economy’s engine. with them a nimbleness that comes from For companies that sell mainly in Tur
Construction is a lowproductivity indus years of living with economic volatility. key and for whom imported raw materials
try, so the quality of gdp growth dropped. It Turkey has a history of high inflation. are a big part of total costs, the lira’s col
is also notoriously sensitive to interest Bosses have become experts at juggling fi lapse is a headache. But it has been a big
rates—perhaps one reason for Mr Erdo nances. Companies have had time to adjust stimulus to exporters whose costs are
gan’s insistence on keeping them low. to a weak lira since 2018. Many have re mostly in lira and whose revenues are in
duced their dollar debts. hard currency. The real exchange rate (that
Even so, a decade of easy money and is, adjusted for relative inflation in Turkey
surplus global savings after 2008 kept Tur Smaller firms adjust by other means. and its export markets) is what matters for
key’s international credit line open. But The line between company and household export competitiveness. Turkey’s has fall
there were balanceofpayment scares, is blurred. Risks are pooled among family en a long way (see chart 4 on next page).
such as during the “taper tantrum” of 2013, members. Very often the response to ad
when the prospect of tighter monetary versity is to work harder. Fourfifths of the There are other factors that also favour
policy in America sparked an emerging workforce put in more than 40 hours a Turkish exports. The cost of shipping from
market minicrisis. By the summer of 2018, week in their main job, one of the highest Turkey to Europe is far lower than from
Mr Erdogan’s belligerent insistence that shares in the oecd—though long hours China. Goods can be shipped from Gazian
high interest rates were a cause of high in compensate for low labour productivity. tep via local ports in less than 72 hours,
flation, and not a cure for it, sparked a Another strategy for small and midsized says Mr Mahsereci, compared with a mini
flight of foreign capital. The lira began a firms is to push business into the grey mum of a month from China. And supply
steep collapse in value (see chart 3). The economy, where wages often do not keep is more reliable. Turkey can also export via
last vestiges of centralbank independence up with inflation or minimumwage laws. the Aegean or the Black Sea.
were destroyed. Three governors were
sacked by Mr Erdogan in as many years. Istanbulls Yet accelerating inflation poses big
Hard work and agility help businesses to challenges for even the most agile busi
In the closing months of 2021, interest keep going. But they also need demand. ness. One is pricing strategy. It is tricky to
rates were cut by five percentage points, to One of the big surprises in Turkey has been judge where to pitch prices. Too high, and
14%. The lira came under renewed pres the strength of consumer spending. Infla you risk losing market share to rivals; too
sure. Inflation has since surged from about tion in the high singledigits has weighed low, and you may find you do not cover re
20% to almost 80%. But Mr Erdogan is un on consumers in Europe and America. Yet, placement cost. Hard decisions seem to
moved. Those who insist on a link between in Turkey, far higher inflation has not multiply. “You have to be ready to negotiate
interest rates and inflation “are either illit sapped demand. There are plenty of theo with all of your customers and all of your
erates or traitors”, he said recently. ries as to why. One is that consumers saw suppliers all of the time,” says a business
the fall of the lira, knew what that meant man. “It is very, very tiring.” Some prices
Amid such chaos, it is remarkable that for future inflation, and splurged in antici are slow to adjust. A large share of mobile
the economy has kept going as well as it pation of higher prices. Durable goods in phone subscribers have 12month con
has. Much of that is the result of Turkey’s particular are a hedge against inflation. tracts. Many are still on last year’s prices.
many commercial strengths. It has a large New cars, white goods or imported luxu
domestic market of 85m mostly young ries hold their worth better than lira, even Businesses must protect themselves
consumers, and has long been a staging if they are not as liquid a store of value as, from inflation to survive. This often means
post for trade between east and west. The that the cost is pushed onto others. That
country’s business culture has deep roots. creates tensions—between landlords and
The proportion of the population that as tenants, shops and customers, and firms
pires to be entrepreneurs is high by inter
national standards. Up and down
There are, broadly speaking, three Turkey
kinds of Turkish business. The first is large
firms, often conglomerates. These account Consumer prices 1 Current-account balance 2 Turkish lira per $ 3
for a quarter of employment and half of the % increase on a year earlier 80 % of GDP 3 Inverted scale 3
business sector’s valueadded. Some are
joint ventures with European firms. The 60 0 6
best manufacture highquality capital
goods, car parts and military hardware for 9
export. They approach German levels of
productivity. At the other end of the scale 40 -3
are small, unregistered firms, with low
productivity. In between is a third group of 12
mediumsized family firms, with some
workers on the books and others not. 20 -6 15
This structure helps explain the agility 0 * † -9 18
1999 2005 10 15 20 23 20 21 22
2017 18 19 20 21 22 2018 19
*Estimate †Forecast
Sources: Refinitiv Datastream; IMF
012
The Economist July 23rd 2022 Briefing Turkey’s economy 19
Down and down to lend and firms will be forced to cut back
on nonessential spending. Some may
Turkey struggle even to get enough trade credit to
finance their working capital. It may not
Real trade-weighted exchange rate 4 Foreign direct investment 5 come to that. Noises from Ankara are that
20 0= 00 120 Net inflows, % of GDP 4 the banks will not bear the burden of veri
3 fying whether borrowers are complying
100 2004 10 15 2 with the new regulation.
1
80 0 Still, companies are turning cautious
21 and big investments are being put on hold.
60 “Everybody is waiting for the elections,”
says an investment banker. Mr Erdogan’s
40 ak Party is clearly behind an alliance of six
opposition parties in opinion polls. He
20 trails in polls against the plausible opposi
2010 12 14 16 18 20 22 tion candidates for the presidency. His de
feat would probably mean a return to mon
Sources: BIS; OECD; UNCTAD etary orthodoxy.
and their suppliers. No business can afford eign currency. The growing illiquidity in Taming inflation would be a big and
to defer the settlement of its customers’ currency markets means exporters have painful job, but Turkey’s experience after
bills for very long. “Payment terms of three every incentive to hoard dollars and euros 2001 shows that, with the right policies, it
to six months are down to zero to three from their overseas sales. can be done. fdi could rebound to take ad
months,” says an Istanbulbased investor. vantage of Turkey’s position as a lowcost
And there are other pressure points. Tur The authorities are striving to curb this manufacturing hub on Europe’s doorstep.
key’s external deficit has not gone away. In creeping dollarisation and to stop the lira A rally in the stockmarket is plausible, giv
principle, devaluation is a remedy. It works from falling further. A scheme has been in en how cheap Turkish shares have become.
by stimulating exports and crushing de place since December which indemnifies Yet electoral defeat for Mr Erdogan is far
mand for imports. The export fillip is deposits switched out of dollars or euros from certain. He has jailed political oppo
working, but strong consumer demand has and into lira from exchangerate losses. In nents, bullied the media, sought to sup
kept imports high. January Turkish exporters were ordered to press free speech and could resort to all
hand over 25% of their hardcurrency earn manner of chicanery to cling to office.
Against the flow ings to the central bank. That figure was Many of the people interviewed for this ar
Turkey must either attract fresh foreign raised to 40% in April. Complaints from ticle did not want to be named.
capital or draw on its existing reserves of corporate treasurers that they needed a
foreign currency. Both are becoming hard float of dollars and euros to pay for vital And before then, the exchangerate cri
er. The quality of capital inflows to Turkey imports or to service debts had no effect. sis might enter a new, more combustible
has steadily degraded over the past 20 phase. Once the summer is gone, and the
years. Foreign direct investment (fdi), the In a sign of growing desperation, the boost to hardcurrency earnings from tou
“stickiest” form of capital inflow, has not authorities went further. On June 24th Tur rism starts to fade, things could get dicey. A
matched the levels of the mid2000s, when key’s bank regulator said it would ban tranche of protected lira deposits matures
Turkey followed more orthodox policies loans to firms that cling to significant at the end of August. The state has $6bn of
(see chart 5). hardcurrency holdings. This measure was external debt payments due in the second
to stop companies borrowing lira on the half of this year, according to Morgan Stan
Some European bosses now see Turkey cheap to speculate in dollars. The initial re ley, a bank; big companies and banks have
as a potential alternative to China as they action in Istanbul was shock. Suddenly the $23bn coming due. It seems unlikely that
seek to shorten and diversify their supply main concern of corporate Turkey was not all these debts will be fully rolled over. Yet
chains. Last year ikea said it would move inflation but a potential credit crunch. somehow the diminishing stock of foreign
production of some of its furniture from exchange must be augmented—or hus
Asia to Turkey. Hugo Boss, a clothing firm, If the regulation is strictly enforced, banded. In a worstcase scenario, limits
said it would add capacity to its factory in says one executive, banks will be unwilling might be placed on withdrawals of house
Izmir to reduce reliance on Asia. But Tur holders’ dollar deposits.
key’s monetary instability—and a deterio Not (yet) melting down
ration in governance and the rule of law— Perhaps the economy will somehow
is a bar to another fdi boom. Portfolio muddle through until the elections. As
flows into Turkish bonds and shares have strange as Mr Erdogan’s approach to mone
evaporated. That leaves Turkey ever more tary policy has been, his fiscal policy has
reliant on shortterm syndicated loans ex been quite conservative. The public debt
tended to local banks. As interest rates go togdp ratio was 41.6% of gdp last year.
up worldwide, these are harder to come by. This is comfortably below the debt burden
of Turkey’s emergingmarket peers. Given
The situation for reserves is also peril the country’s low solvency risk, perhaps its
ous. Turkey’s central bank has burned friends in the Gulf might stump up some of
through tens of billions of dollars trying to their petrodollars.
prop up the lira. Official reserves of foreign
currency are negative if swaps with local Turkey has withstood some remarkable
banks are taken into account. (The central strains. Now, more than ever, Turkish busi
bank still has holdings of gold.) Meanwhile nesses are focused on survival. Inflation
privatesector demand for dollars and eu breeds uncertainty and uncertainty breeds
ros has risen. At their peak last year, two caution. The things you must do, you keep
thirds of bank deposits were held in for doing, says a businessman. The rest can
wait. “You live another day.” n
012
NO MORE
OLD SCHOOL
#ModernMBA
QUANTIC.EDU WASHINGTON DC, USA
012
United States The Economist July 23rd 2022 21
Climate policy Democratic majority leader in the Senate,
had been quietly working with Mr Man-
Tick, tick, boom chin to craft a bill more to his liking, which
would have included some concessions to
WASHINGTON, DC the fossil-fuel industry (with which the
senator is closely associated), no clean-
A recalcitrant senator has scuttled Joe Biden’s climate plans. The prospect for electricity standard but at least a rumoured
federal legislation anytime soon looks faint $300bn in tax credits for clean-energy pro-
jects. On July 14th Mr Manchin apparently
Even as americans and Europeans minished. On July 14th they seemed to walked away from that deal, too.
swelter in heatwaves, the chance of have gone up in smoke.
Congress passing serious climate-change Still, some Democratic bungling was
legislation has gone cold. When the Demo- The proximate cause was Joe Manchin, also to blame. In July 2021 Mr Manchin and
crats gained unified control of the White the old-style centrist Democratic senator Mr Schumer signed a deal to devise a
House and Congress 18 months ago, they from West Virginia. Because the Demo- scaled-down version of BBB that would
had grand ambitions for a swift decarboni- crats control the narrowest possible major- have limited spending to $1.5trn. But by the
sation of America’s economy. By 2030 ity in the Senate, Mr Manchin’s vote is es- autumn Mr Schumer had got behind a
emissions were to be half their level in sential to pass legislation that Republicans more maximalist iteration of that deal. The
2005. By 2035 all electricity would be pro- unanimously oppose. In December he re- West Virginian pulled out. Inflation, a bug-
duced without carbon pollution. And by jected Build Back Better (bbb), President bear of Mr Manchin’s, was rising and the
2050 emissions would, in line with the Joe Biden’s signature legislative proposal president’s approval rating was slipping.
temperature goals of the Paris agreement, that devoted $555bn to climate measures. Colleagues pleaded with him that the new
reach net zero. Since that setback, Chuck Schumer, the deal would help reduce energy costs, and
that revenues raised from corporate taxes
All this was to be accomplished by → Also in this section would help pay down the national debt.
spending hundreds of billions of dollars But the senator was spooked.
on tax credits and subsidies for clean ener- 22 Funding the war in Ukraine
gy and electric vehicles; creating the first The latest news leaves Democrats in the
national clean-electricity standard; mobi- 23 Public transport after the pandemic lurch. “It’s a colossal failure to get nothing
lising Americans to retrofit homes; and done on climate,” says Ro Khanna, a Demo-
creating a Civilian Climate Corps to em- 24 An investigation into Uvalde cratic congressman from California. Re-
ploy thousands of people in conservation strictions—like a fee on methane leaks or
work. But as the negotiations dragged on 25 Maternal health after Roe nationwide caps on emissions—had al-
over months, those ambitions steadily di- ways seemed tough for Mr Manchin to ac-
26 Lexington: Hobbling Donald Trump cept. But he had signalled openness to
plans for investment in solar, wind, geo-
012
22 United States The Economist July 23rd 2022
thermal and carboncapture projects. That it over the past two months as the political Congress and Ukraine
Democrats failed to secure those is there cost of high petrol prices becomes clear.
fore “a big miss”, says Mr Khanna. The struggle for
Hearteningly, some notable efforts are
The costs to the environment look sig under way in the states. Gavin Newsom, hearts and minds
nificant. To hit the 50% reduction target by the governor of California, recently signed
2030, America would need to cut emis a budget authorising $54bn in new spend WASHINGTON, DC
sions to below 4.2bn metric tonnes of car ing to mitigate the effects of climate
bondioxide equivalent (CO2e). Modelling change. The California Air Resources Already, America risks growing weary
by the repeat Project, a research outfit at Board, perhaps the secondmost signifi of Ukraine’s long war
Princeton University, shows by how much cant environmental agency in the country,
the country might now overshoot that. has long operated a capandtrade pro President joe biden pledges to support
Without any change to its current policies, gramme. A new mandate by the board re Ukraine for “as long as it takes”. His ad
it finds that America will exceed the target quires that 60% of electricity produced by ministration has spent about $8bn on mil
by 32% in 2030, emitting an additional 2030 be drawn from renewable sources, up itary aid alone. In May, Congress passed a
1.3bn tonnes that year (see chart). Had last from around 35% in 2020. It is likely to de $40bn supplemental budget—more than
year’s bbb deal become law, 91% (or 1.2bn cide this summer that all new cars sold in Mr Biden had asked for, and more than the
tonnes) of the excess could have been shed. the state must be electric or zeroemission annual defence budgets of most European
The recently scuppered Senate deal was by 2035. Though they vary in their strin allies—to assist Ukraine and deal with the
modest only by comparison, reducing an gency, other states including Illinois and war’s global consequences.
nual emissions by 6775% of that goal, or Nebraska have passed legally binding
800m to 1bn tonnes. cleanelectricity standards and emissions But nearly six months into the fight,
reductions targets. with the prospect of a long war to come,
Mr Biden is left with few options. He even Mr Biden’s closest allies are asking
can attempt to pursue sweeping environ Substantial as these subnational efforts whether America might soon tire of the
mental policy by executive order, knowing are, they will not be enough without signif burden. The president is more unpopular
his ambition will be circumscribed by ex icant federal action on climate change. even than Donald Trump was at this point
isting laws and future lawsuits. “Plan B is Some Democrats are still hoping that Mr in his presidency. Inflation has hit a four
going to be a bunch of standards and regu Manchin will come around before mid decade high. And Republicans are set to
lations. Those are much more blunt instru term elections in November, after which make important gains in midterm elec
ments”, which cannot boost the economy Republicans are expected to regain control tions in November, where they are likely to
through investment, says Leah Stokes, a of at least one chamber of Congress. The take control of the House of Representa
professor of politics and environmental senator claims he is waiting for inflation tives and possibly also the Senate.
policy at the University of California, Santa statistics for July to make up his mind, and
Barbara. This outcome would be alltoofa is willing to pursue climate talks in Sep In an article in Delaware Online, Chris
miliar for the former vicepresident. Ba tember. Democratic colleagues say they Coons, a Democratic senator and close ally
rack Obama was put in the same position have watched that film before. of Mr Biden’s, praised nato’s show of unity
after it became clear that Congress would at a summit in Madrid last month. He also
not enact his climate agenda. In a haunting More likely is that a divided Congress said he was “concerned about the commit
precedent for Democrats, the Waxman will doom the prospects of legislation for ment of the American people and its elect
Markey bill of 2009, which would have es at least two years. A Republican presiden ed leaders to stay the course as the inva
tablished a capandtrade system for tial victory in 2024 would probably do so sion grinds on.” Vladimir Putin, Russia’s
greenhousegas emissions, passed the for at least a further four after that. In a re leader, he separately told The Economist, “is
House of Representatives but failed to port released in April, the Intergovern counting on the West losing focus”.
come up for a vote in the Senate—despite mental Panel on Climate Change found
the party’s control of both chambers. that keeping global warming below 1.5°C of The aid for Ukraine is meant to last only
preindustrial levels would require global until the end of September. Few in Con
So far, environmental agencies run by emissions to peak before 2025. By 2030 gress think another big package can be
Mr Biden’s appointees have held off on is they would need to drop by 43% from their passed before the midterms; many say it
suing the most demanding rules. This may levels in 2019 for 1.5°C. That would require will probably be hard to get lawmakers to
have been from fear of upsetting Mr Man an extraordinary mobilisation. Not long agree to one thereafter. “It will be an uphill
chin while legislative negotiations were ago, America seemed at last ready to do its battle,” says a Republican Senate staffer.
ongoing. Now there is little holding the part. No longer. n “The sales pitch from the last time is not
president back. In a speech delivered in a good enough now, because the war has
former coal plant in Massachusetts on July A load of hot air fundamentally changed and the domestic
20th, Mr Biden pledged to use his execu situation at home is different.”
tive powers to combat the climate crisis, United States, greenhouse-gas emissions
which he called a “clear and present dan Gigatonnes of CO2 equivalent Americans broadly support helping Uk
ger”. He did not declare a national emer raine, and many want the government to
gency over climate change (as some activ FORECAST 8 do more despite the economic price they
ists had wanted), which would have en 7 must pay for that. According to a YouGov
abled him to cancel certain oildrilling poll conducted this month for The Econo-
projects and compel the construction of 6 mist, 39% of respondents—a plurality—
renewableenergy projects. Environmen think that the Biden administration’s poli
tal agencies could set in motion rules en Baseline 5 cy should be “tougher”. Half or more sup
forcing lower pollution limits for house port various forms of assistance. But given
hold appliances, cars, lorries and power case* 4 America’s polarisation, Republicans are
plants. In theory, the administration could warier than Democrats. About one in five
also phase out the programme that leases BBBA† Republicans say Mr Biden should be less
federal land for oil and gas drilling. In real Net-zero‡ 3 tough. A plurality, 43%, do not want to give
ity, it has been desperately trying to expand more money to Ukraine. They are also less
2005 10 15 20 25 30 35 likely than Democrats to favour giving it
advanced weapons.
*After passage of the Infrastructure Investment and American
Jobs Act †Build Back Better Act, Nov 2021 ‡By 20 0
Sources: EPA; REPEAT Project
012
The Economist July 23rd 2022 United States 23
Congressional aides point to three fac Shouldering the burden Mr Biden’s aim in the war is unclear. His
tors likely to affect support for Ukraine. administration has stopped talking about
The first is the complexion of Congress looks all too likely. Ukraine has lately had helping Ukraine “win”, and instead speaks
after the midterms. If Republicans retake success in using himars, a guidedmissile of preventing the country’s defeat. It is de
one or both chambers, it will matter which launcher supplied by America, to strike livering himars in small packages of four
faction in the party has the upper hand. command posts and ammunition dumps launchers at a time (it says that it takes
Will it be the old establishment represent behind Russia’s front line. But Ukrainian time to train Ukrainian forces); three lots
ed by Mitch McConnell, the Senate minor forces are still heavily outgunned and on have so far been sent, and one more has
ity leader who in May took senior col the defensive. just been promised. But Mr Biden’s central
leagues to Kyiv to meet Ukraine’s presi concern is plain: to avoid a direct conflict
dent, Volodymyr Zelensky? Or will it be the between nato and a nucleararmed Rus
devotees of Mr Trump and his maga sia. America has demanded assurances
(“Make America Great Again”) nativism? that the 84kmrange gmlrs munitions
provided with himars will not be fired at
Mr Trump still holds much of the party Russian territory. And it has so far refused
in thrall. He denounced the recent aid for to provide atacms munitions, which have
Ukraine, saying: “The Democrats are send a range of about 300km.
ing another $40bn to Ukraine, yet Ameri
ca's parents are struggling to even feed To some the war is unwinnable: they
their children.” His base might be ener say Mr Biden should make haste and find a
gised if, in coming weeks, he announces he diplomatic deal. But for Ukraine’s suppor
will run for president again in 2024. “Fact ters, whether on the left or right, the an
is if the Republicans take over the House in swer is for Mr Biden to hurry up and win:
2022 us support to Ukraine will come to a by giving Ukraine more military help, do
halt,” tweeted Ruben Gallego, a House ing it faster and accepting more risk. “If
Democrat. Republican leaders, he predict they think stalemate is the answer, or even
ed, would not be able to stop Trumpists if they are not intentionally playing for a
like Marjorie Taylor Greene and Matt Gaetz stalemate,” Mr Edelman says of the Biden
“from dictating our Ukraine policy”. Mr administration, “they’re going to lose on
Gaetz shot back: “Ruben is correct.” the battlefield, and they’re going to lose the
battle for public opinion at home.” n
Such boasting amounts to “wishcast
ing”, says Eric Edelman, a former Pentagon Public transport
official under George W. Bush. maga disci
ples are still a minority among congressio Derailed
nal Republicans. Still, he frets, they could
grow larger after the elections. If they make CHICAGO
up a bigger share of Republicans in the
House—where spending bills originate— American public transport is facing a post-pandemic reckoning
and particularly if they hold the balance of
power, it will become harder to provide For most of the past decade, Doug An senger numbers in early July were still
more aid to Ukraine. Few expect the fickle derson, a bartender, has commuted the around half their level before the pandem
Kevin McCarthy, the Republican House 40 minutes from his home in Logan Square ic. New York City’s have climbed back to
leader, to resist the Trumpian right, even in northwestern Chicago to his workplace only around 60% of what they were. In
though he has praised Mr Zelensky as “a in Streeterville, in the centre, on the city’s L Washington the number of average daily
modernday Winston Churchill”. Pressure train. When his shift ends at 4am he shuts boardings on its Metro so far this year is
will increase on the Senate (whether con up and heads home. But increasingly, he less than a third of what it was in 2019.
trolled by Democrats or Mr McConnell’s says, getting back is “a nightmare”. At those
Republicans) to tame the excesses of ma- hours, trains run infrequently; these days Yet the pandemic could have ravaged
gaworld. The matter of Ukraine, says Mr they often fail to show up at all, meaning America’s public transport systems. The
Edelman, is part of “the larger battle for the lengthy waits. Mr Anderson’s journey of number of fares collected plummeted as
soul of the Republican Party”. ten takes twice as long. He does not always millions began to work from home. Sales
feel safe on empty platforms in the early tax revenues, which in many cities also
A second factor is the extent to which hours, so he sometimes carries a knife. fund transport, fell sharply early on. But in
allies are willing to keep helping Ukraine fact, big cuts to service were avoided on the
confront Russia. “How much are our Euro Chicago’s publictransport system is whole. In many cities fares already covered
pean partners doing? That's literally the just one of many across America that have only a relatively small share of spending,
first question I get,” says Mr Coons. For been badly damaged by the pandemic. and they could make up the rest from their
most Americans, he notes, Ukraine is “half When covid19 hit America, passenger budgets. Even big older cities, where fares
a world away”. European countries are numbers collapsed. Nationwide, in the cover a higher share of the costs, were able
closer to Russia’s military threat, and also second quarter of 2020, they fell to a quar to benefit from a federalgovernment bail
more vulnerable to the danger of escala ter of what they had been in the same per out of $70bn through the cares Act and
tion, the loss of Russian energy supplies iod in 2019. But though bars are now open other laws. As a result, says Yonah Free
and the outflow of refugees. again, planes packed and roads busier than mark of the Urban Institute, a thinktank
ever, trains and buses remain relatively in Washington, most agencies did not have
Perhaps the biggest consideration is the quiet. According to the American Public to cancel many bus or train services. The
third factor: Ukraine’s progress on the bat Transportation Association (apta), pas Los Angeles Metro system, among others,
tlefield. If the Biden administration can
show that it is helping Ukrainians to gain
ground, rather than getting bogged down
in another “forever war”, support will be
easier to rally. But a protracted conflict
012
24 United States The Economist July 23rd 2022
was even able to stop charging people to Lessons from a senseless slaughter
use its buses for almost two years.
Lifting the veil on Uvalde
Transport systems are nonetheless
struggling to get back to normal. Earlier A report sheds light on the deadliest school shooting in Texas’s history
this month Dorval Carter junior, the presi
dent of the Chicago Transit Authority “It could have been worse. The rea practice since the shooting at Columbine
(cta), wrote an article in the Chicago Tri- son it was not worse is because High School in 1999.
bune apologising for the city’s continually lawenforcement officials did what they
subpar service, which he put down to staff do.” So said Greg Abbott, the governor of Police also wasted valuable time
shortages. Many bus and train drivers have Texas, at a press conference in May, the searching for a key to the classroom
left to take more lucrative jobs driving de day after 19 children and two teachers (even though the door may not have been
livery vans; others have retired. Mr Carter were fatally shot at an elementary school locked) and did not share crucial details
has promised to redouble recruitment ef in Uvalde by Salvador Ramos, an 18year with each other, including that students
forts. Other cities have even bigger pro old. Mr Abbott must feel sheepish. On were phoning for help from inside class
blems. In Washington in October, Metro July 17th a committee of the Texas House rooms targeted by the shooter. Law en
pulled more than half of its trains from the of Representatives released a report on forcement “failed to prioritise saving the
network for safety checks after one de its investigation into the shooting. The lives of innocent victims over their own
railed. Most of those are not yet back in ser image that emerges from the 77 pages is safety,” the report concludes.
vice, with the result that trains are packed of a police force in chaos. The tragedy at
even though passengers are fewer. Robb Elementary School will not only be The police are now in the public’s
remembered because it was the deadliest crosshairs. Residents of Uvalde, a town
Poor service makes it even more diffi shooting ever at a school in Texas, but of 15,000, are calling for the school
cult to lure riders who have the option of also because the response was botched. district police chief to be sacked. The
working from home. In Chicago the cta town’s acting police chief was placed on
has experimented with cheaper fares and The inquiry revealed that it took 73 administrative leave within hours of the
Metra, the city’s suburban commuter rail minutes from when the first officers report’s release.
system, has offered hefty discounts. But as arrived at the school to when they en
with Mr Anderson, most passengers care tered the classroom and confronted the The investigation and its findings are
as much about reliability, safety and speed shooter there. The delay deprived victims vital. But some worry that a focus on
as they do about cost. It does not help that of medical care that might have saved police error will detract from other fail
systems that were set up to shuttle people lives, the report notes. In all, 376 law ings, without which the shooting might
into and out of downtowns at rush hour enforcement officials were deployed to not have happened in the first place: a
must now adjust to more irregular patterns Robb Elementary. None took command. lack of mentalhealth treatment, and lax
of travel. Crime has risen, too. Chicago and And they disregarded training on how to rules on gun purchases. In the Lone Star
New York have sent more officers to patrol neutralise an active shooter in a school state there is no political momentum to
trains after shootings and other violent in setting, which has been established tackle either of these. As Texans search
cidents. In April, ten subway passengers for lessons from Uvalde, they may be
were shot by a gunman in Brooklyn; re missing the biggest ones.
markably, none died.
pandemic, bus use had fallen in America centres. But since the pandemic they have
Funding is not the issue. More money for decades, as cars became more afford suffered as those workers have stayed at
than ever is available, thanks to the infra able for the relatively poorer people who home, and mostly poorer folk are again fill
structure act that President Joe Biden most often travelled by bus. Networks were ing buses. Bus passenger numbers fell the
signed into law last year. Paul Skoutelas, neglected. By contrast lightrail projects least among transport systems, and are
president of the apta, enthuses about the and subway systems thrived, as more now closest to prepandemic levels. This
possibilities. But he admits that the sector whitecollar workers commuted to city divergence is creating “existential ques
is in its “most vulnerable moment”. Know tions” for publictransport providers, says
ing what to invest in is tricky. Before the Leanne Redden, executive director of Chi
cago’s Regional Transportation Authority,
On the wrong track such as whether downtown commuting
will ever come back, and if transit agencies
need to rethink their central purpose.
Another fear is that, even as new pro
jects are drawn up, some passengers may
already have disembarked for good. Amer
icans are driving more than they were be
fore the pandemic. That bodes badly for
dense cities like Chicago or Washington.
Earlier this year Chicago’s mayor, Lori
Lightfoot, called Chicago a “car city”. In
fact, before the pandemic, over half of its
workers commuted by public transport to
the Loop, its central business district, and
the wider downtown area. Decent public
transport helps explain why the city has
thrived as competitors such as Detroit or
Cleveland declined. If Chicago’s is not re
stored, the city could get into trouble. n
012
The Economist July 23rd 2022 United States 25
Maternal health choice doctors and lawyers are saying she
has a 50% chance of dying,” says Ms Joffe.
Mortal danger for mothers “And while they argue, the woman dies.”
WASHINGTON, DC Bans mean abortions are routinely de
layed, exacerbating medical problems in
Already the worst in the rich world, America’s maternal mortality rate looks set pregnancy. Shelly Tien, a doctor at a
to rise with the end of Roe v Wade Planned Parenthood clinic in Jacksonville,
Florida, says that soon after Texas’s “heart
The young woman’s waters broke when blood pressure, cardiomyopathy and renal beat bill” took effect last September she
she was 19 weeks pregnant. The doctors disease are all conditions that can arise or saw a woman who sought an abortion at
told her the baby stood no chance of sur worsen during pregnancy. Reports have al seven weeks but did not get to Florida until
viving, but that if the pregnancy continued ready surfaced of women denied crucial 21 weeks—a common scenario, she says.
the woman risked an infection, which medical care to complete a miscarriage or She expects to see many more such pa
might lead to sepsis and kill her. They end an ectopic pregnancy for fear it could tients among those now “flooding into
could not perform an abortion, though. be construed as aiding an abortion. Florida” from nearby states, including Ala
Months earlier Texas, where she lived, had bama (where is abortion is illegal) and Ten
passed a law banning terminations after Doctors should not have to weigh up nessee (where it soon will be).
detection of a fetal heartbeat unless there whether following their training and in
was danger “of death or a serious risk of stinct will put them in legal jeopardy. Be Dr Tien warns too of a “terrible snow
substantial impairment of a major bodily sides the personal toll, it raises the pos balling effect” when the time it takes for a
function”. This wording worried the doc sibility of conflicts that have no place in woman to raise funds for an abortion, and
tors: if they did an abortion while she still medicine. “The dystopia I fear is a situa the necessary travel, means her pregnancy
appeared healthy and the baby had a heart tion in which prolife doctors are saying, progresses so far that the cost of the proce
beat, they could be prosecuted. They sug she has a 50% chance of living, while pro dure rises. She then delays again while she
gested she fly to Colorado instead. raises more funds. This will worsen, Dr
No country for young mothers Tien says, as clinics become busier.
So she did: booking a seat, as advised,
near the toilets in case she went into la United States, maternal mortality rates* The states in which pregnant women
bour. She reached the clinic in time and is 2018-20, deaths per 100,000 live births are probably in greater danger are those
now healthy. But things could have turned that have long had high maternal mortality
out differently, if she had not had the cash 20 30 40 rates. Alabama, Arkansas, Kentucky, Loui
for a plane ticket, say, or if no clinic had siana, Mississippi and Tennessee score
been able to give her an appointment. “It is Data suppressed† worst (with over 30 deaths per 100,000 live
barbaric to put a woman in distress on a births). They have also long had restrictive
plane to another state,” says Carole Joffe, AK ME abortion regulations and, following the
a professor at the Bixby Centre for Global end of Roe, have either banned abortion or
Reproductive Health at the University of WI VT NH plan to. There is no proven link, but it
California, San Francisco. “It is not how seems likely that some women have died
you do medicine in a civilised country.” WA ID MT ND MN IL MI NY MA when they needed abortions but had been
unable to get them.
America has the highest maternal mor OR NV WY SD IA IN OH PA NJ CT RI
tality rate in the industrialised world. With Yet there are other causes, too. States
the overturning of Roe v Wade, the Su CA UT CO NE MO KY WV VA MD DE with high maternal mortality rates tend to
preme Court ruling that abortion was a share three other features: large black pop
constitutional right, it will probably rise. AZ NM KS AR TN NC SC DC ulations, high levels of poverty and poor
International comparisons are imperfect access to health care. In Mississippi, which
but in 2018, while in the Netherlands and OK LA MS AL GA provided the case that the Supreme Court
Norway there were no more than three ma used to overturn Roe, Medicaid is cut off 60
ternal deaths for every 100,000 live births, HI TX FL days after a woman gives birth, yet many
in America there were 17. Most states that problems arise after this time. Black wom
now ban abortion, or soon will, allow ex *Including deaths while pregnant or within 42 days of pregnancy en (who made up the majority of patients
ceptions if a woman’s life is in danger. But ending †Due to reliability or confidentiality restrictions in the state’s last clinic before it closed for
abortion providers and obstetriciangyne Source: National Centre for Health Statistics good on July 6th) are nearly three times
cologists (ob-gyns) say laws tend to be so likelier than white women to die from
vaguely worded that they often do not pregnancyrelated complications.
know if they are breaking them.
Another reason why America’s mater
Nisha Verma, an ob-gyn who performs nal mortality rate has long been high, say
abortions in Georgia, where they will soon doctors, is a lack of ob-gyns across the
be illegal after six weeks, says such laws country. This too may worsen without Roe.
are not written by medical experts—and it If doctors fear their expertise will clash
shows. They fail to recognise that a woman with badly written laws, putting them at
can develop a condition that may not put risk of imprisonment, fewer people may
her in immediate danger but that, without want to specialise in the field. Those who
an abortion, could nonetheless kill her. do, in states in which abortion is illegal,
Waters breaking before a fetus is viable is may miss a crucial part of their training.
one such condition; cancer that necessi Where access to health care is already poor,
tates chemotherapy (which may hurt the the harms will be particularly grievous.
fetus) is another. The list goes on: high And so the tragedy piles up. The states with
higher rates of pregnancyrelated deaths
are also among those in which more babies
die before they turn one. n
012
26 United States The Economist July 23rd 2022
Lexington Trumped
The January 6th committee has hobbled Donald Trump, but it has not stopped him
America should count itself lucky that Donald Trump tried so he is endorsing competitors to Mr Trump’s own electiondenialist
hard to overturn the election of 2020. That is the biggest obsta candidates in some races. Mike Pompeo, Mr Trump’s secretary of
cle—though far from an insurmountable one—standing between state, has shed more than 40kg and has said that if he decides to
him and a return to power. run he will do so “wholly independent” of anyone else’s choice.
Democratic leaders have been saying for years that Mr Trump But do not imagine that Mr Trump is fading away. “Half of gop
and his cultlike following threaten the republic, and they’re right. voters ready to leave Trump behind, poll finds”, read a recent head
They have not acted accordingly. Through a mix of magical politi line in the New York Times about a survey it conducted with Siena
cal thinking, internal bickering and mismanagement, they have College. It is wiser to emphasise the darker view, that the glass re
sharpened and handed back to him two of his three most potent mains half empty. The intense loyalty to Mr Trump of half the
causes: crime and illegal immigration. Sheer bad luck might help Republican base means that, the more Republican candidates
excuse their bestowal of the third, economic performance. They choose to run, splitting his opposition, the better it will be for
threw in a botched execution of the withdrawal from Afghanistan. him. Betting markets are placing a higher probability on Mr
In a recent cnn poll four out of five Americans surveyed said Trump’s being the next Republican presidential nominee than on
things were going badly for the country; more than twothirds felt Mr Biden’s being the next Democratic one.
President Joe Biden had neglected the most important problems.
In a sign that the committee’s work is not reaching, or at least
Even memories of how Mr Trump whipped up the attack on the not persuading, many Americans, the same poll found that fully
Capitol might have faded, or been challenged and revised, were it threequarters of Republican primary voters believe that on Janu
not for the excellent work of the January 6th committee investi ary 6th Mr Trump was “just exercising his right to contest the elec
gating the insurrection. The committee’s nine members have not tion”. If Mr Trump reached the generalelection campaign, he
only kept the political class, and much of the rest of the nation, would be able to count on the polarisation of American politics to
from looking away from that day. They have obliterated claims draw the party together behind him, as in 2016.
that the mob acted spontaneously, and that Mr Trump had no idea
it might use violence to stop the certification of Mr Biden’s victory. Anyone who doubts the loyalty and even love that millions of
Americans feel for Mr Trump should attend one of his rallies, or
Consider a world without the committee: revisionists would just watch one on YouTube. Each is a vicious, exhausting festival
be far freer to minimise Mr Trump’s role in rousing the mob and to of the counterfactual, and his crowds glory in it. If Democrats had
burnish or invent memories of his accomplishments. Instead, the not cheated Mr Trump out of his second term—he actually won all
panel has been reminding the party’s leaders, operatives, donors 50 states “plus the islands, too”—Iran would have signed a nuclear
and even some of the rank and file just how debilitating Mr deal within a week; just three weeks in, he would have finished his
Trump’s leadership was. True zealots still delight in rallying to Mr wall along the border with Mexico, and foreign adversaries would
Trump, but Republican congressmen who were merely cowed are not be emptying their prisons into America; America’s streets
rediscovering how tiresome it is to defend him. would not be “flowing with the blood of innocent crime victims”;
petrol would be cheap; Vladimir Putin would have left Ukraine
Other potential Republican candidates sense an opening. Ron alone, because Mr Trump would have withdrawn so smoothly
DeSantis, Florida’s governor, has declined to say he will not run for from Afghanistan. Indeed, during Mr Trump’s term of office,
president if Mr Trump does; he has been courting the Fox News “everybody was happy”; it was “the greatest period, I believe, in
audience and recently invited Republican governors and donors our country’s history, in many ways”. At least, until “the horrible
to a daylong conference in Fort Lauderdale. Mike Pence, the for plague” came in from China.
mer vicepresident who stood up to Mr Trump and certified the
electoral vote, has refused to regret that choice or forswear a run; The enemy within
Most chilling are the indications of how Mr Trump would gov
ern—“rule” would be a better word—if he regained the White
House. At a recent event in Las Vegas he said he regretted allowing
Democratic mayors to retain control of their cities. “I wouldn’t do
that a second time,” he said. A day later in Anchorage, Alaska, he
left no doubt as to who the enemy was: “Despite great outside dan
gers, our biggest threat remains the sick, sinister and evil people
from within our country.”
“We will fight for America like no one has ever fought before,”
he said, after 90 minutes of fearmongering and rambling. “The ty
rants we are fighting do not stand even a little chance.”
It’s like sitting in gridlocked summer traffic as a New York cab
driver leans on his horn; you feel helpless, bludgeoned, you just
want it to stop. But Mr Trump’s blaring matters. His talk is danger
ous regardless of what he does—dangerous if he does not run;
more dangerous if he runs and loses again; most dangerous if he
runs and wins. Had Mr Trump conceded defeat, however ungra
ciously, his path back to the White House would be wide open. His
own broken psyche, and the work of the January 6th committee,
have given his opponents in both parties a chance to stop him, and
there is no more urgent political project. n
012
The Americas The Economist July 23rd 2022 27
tal celebrities in Brazil. Recently she was
invited to meet Luiz Inácio Lula da Silva,
known as Lula, an expresident from the
Workers’ Party (pt) who is favoured to win
his old job back at elections in October.
“Glad to know that everything I hope for
my Brazil is in your manifesto,” she posted
afterwards, along with a picture of him
kissing her on the forehead. (On July 14th
police raided her home in a moneylaun
dering probe. She denies wrongdoing.)
Ms Bezerra is an influencer: an internet
celebrity who persuades her followers to
buy things. By some measures, influencers
are more influential in Latin America than
in other regions, which is no doubt why
politicians as well as perfumemakers are
scrambling to win their approval.
Social media Selfie nation
A survey by We Are Social, a media agency,
Follow the influencers suggests that 22% of internet users world
wide follow an influencer (although defi
BUENOS AIRES AND SÃO PAULO nitions of influencer vary). In Brazil the fig
ure is a whopping 44%. In Argentina and
Latin American politicians court social-media stars, often ineptly Colombia, around a third do, compared
with 20% in America (see chart on next
Last year, three months after her new followers on Instagram, a photo and vid page). According to a consumer survey
husband fell off a hotel balcony and eosharing platform. She has claimed she conducted by Statista, a data company,
died, Deolane Bezerra, a 33yearold crimi charges between 400,000 reais ($73,000) twofifths of Brazilians say they have
nal lawyer, launched a reality show on You and 1.8m reais for advertising contracts bought a product because of an influencer,
Tube. Her personal tragedy generated copi (The Economist tried to interview Ms Bezer the highest share among 56 countries sur
ous publicity, since her husband, MC Ke ra, but she did not show up). That would veyed. Nielsen, a marketresearch firm, es
vin, was a wellknown singer and the cir make her one of the most highly paid digi timates that Brazil has 500,000 potential
cumstances of his death apparently influencers on social media (which it de
involved alcohol and adultery, reported in → Also in this section fines as those with more than 10,000 fol
salacious detail by the media. lowers). That is more than anywhere else.
28 Mexicans are taking more drugs
Many Brazilians, it turned out, wanted Latin American influencers can be or
to follow the daily lives of Ms Bezerra and 29 Bello: Political Utopias dinary folk as well as celebrities—Ms Be
her sisters. Today she has more than 14m zerra was little known until last year. But
they can punch above their weight.
Launchmetrics, an analytics firm, has
created a metric refined by machinelearn
ing that attempts to measure what an in
fluencer’s endorsement is worth by com
parison with the cost of mounting a con
ventional advertising campaign that
would generate the same degree of engage
ment among its audience.
It found that when JeanCarlo León, a 25
yearold Colombian influencer, uploaded a
post on Instagram for Prada, an Italian
fashion brand, it generated publicity worth
$620,000 over six months. That may
sound puny when compared with Kendall
Jenner, an American influencer and mod
el, who generated six times as much pub
licity ($3.7mworth) with a post on Insta
gram for Prada over the same period. But
Ms Jenner has 250m followers, more than
40 times as many as Mr León. Mr León’s
seem to be paying more attention.
The region may be especially suscepti
ble to influencers because Latin Americans
are especially keen on social media. Co
lombians, Brazilians, Argentines and Mex
icans are estimated to spend a combined
012
28 The Americas The Economist July 23rd 2022
average of three and a half hours a day on it.” Three days later she reiterated that she Mexico
social media, one hour more than the glo was not a pt member and forbade the party
bal average. Argentines who use Instagram from using her image in its campaigns. Mired in meth
on an Android phone spend a whopping 17
hours on the app each month. By contrast Politicians also risk looking foolish. Jo CIUDAD JUÁREZ
Americans on an Android phone spend sé Antonio Kast, a devout Roman Catholic
less than eight hours on the app each who ran to be president of Chile last year, Illegal drug consumption is increasing
month. One survey estimated that What invited an influencer called Daniella Chá
sApp, a messaging app, was downloaded vez to headline his final campaign event. In reto a la juventud, a livein treat
on 99% of Brazilian smartphones. That confused some of his more straitlaced ment centre in Ciudad Juárez, in north
supporters. Ms Chávez is a Playboy bunny ern Mexico, Jenny Chávez describes how
Influencers the world over often advise with a channel on OnlyFans, a racy sub her addiction to drugs led to her losing her
followers on improving their appearance, scription platform, where she posts videos job as a maid, her house and her family.
which is already a big business in Latin with captions such as “I can’t wait to show The 39yearold mother of five started tak
America. In Argentina one of the biggest you what’s between my legs!!” ing cocaine ten years ago, but it was after
private health insurers offers plans that in she moved onto methamphetamine, or
clude one plasticsurgery procedure a year. Similarly in Argentina, President Alber meth, a potent stimulant, that things be
Brazil, where 13% of the world’s elective to Fernández invited LGante, then a 21 gan to unravel. “It’s hard because everyone
cosmetic surgery takes place, according to yearold singer, to his residence shortly be takes it around here,” she explains.
the International Society of Aesthetic Plas fore midterm elections in November. Mr
tic Surgery, started offering tax rebates for Fernández perhaps hoped that their meet Mexico is home to hundreds of gangs
cosmetic operations in 2010. A member of ing, a video of which he posted online, shipping illegal drugs north. Domestic use
the revenue service was quoted by Bloom would attract young voters to his leftlean of such substances, however, has histori
berg as explaining that “cosmetic surgeries ing coalition, which claims to work for the cally been low. That is changing. Mexico’s
are also about health, physical and men poor. Unfortunately, LGante has the word most recent national survey, from 2016,
tal”. Influencers often discuss the proce “rich” tattooed on his face. Mr Fernández shows that 10% of people reported having
dures they undergo. Ms Bezerra has talked was mocked for trying to look cool. tried an illegal substance in their lives, up
about how she got a labiaplasty to make from 7% in 2011. Synthetic drugs in particu
her vulva more symmetrical. Some influencers do not want to post lar have become more common over the
about politics for fear of losing money. Ms past five years. In 2021 36% of users at a
Young people trust influencers more Mieres in Chile used to upload videos sup government network of treatment centres
than political parties, says Camila Rocha, porting Gabriel Boric, the new leftist presi sought help for addiction to meth, com
who cowrote a study on youth and democ dent, after graduating from university. But pared with 15% in 2016.
racy in Argentina, Brazil, Colombia and now that she is a fulltime influencer, she
Mexico. Javiera Mieres, a Chilean fashion only mentions politics in her Instagram Consumption of meth is doing “terrible
influencer, thinks that because influencers stories, which are deleted automatically damage” to the country, says Javier Gonzá
put up posts and speak with their fans al after 24 hours. “No influencer wants to lez, who heads the addiction agency for the
most daily, “people feel...they are basically take the risk of being too political because state of Chihuahua, home to Ciudad Juá
interacting with a friend”. When they talk otherwise brands stop hiring you,” she rez. That city is particularly badly affected
about politics, their followers listen. says. Luísa Sonza, a Brazilian singer, re because of its location on the border. But
cently claimed that brands were boycott the problem is national. According to data
Jair Bolsonaro, Brazil’s populist presi ing those who denounced Mr Bolsonaro. from the network of treatment centres,
dent, harnessed social media to win an meth overtook marijuana in 2020 as the
election in 2018. ProBolsonaro groups Perhaps because of the difficulty of con drug that most people sought help with.
spent millions of dollars flooding Whats vincing influencers to rally behind them,
App with unflattering talk about his oppo some politicians have taken up the mantle The demography of drug users is chang
nent, Fernando Haddad from Lula’s party, themselves. In Colombia’s presidential ing, too. More women are taking drugs,
the pt. By contrast the pt has been slower election in June Rodolfo Hernández, a 77 while youngsters are having their first ex
to embrace digital campaigning. In April year old candidate, almost won by posting perience at an earlier age. During the pan
Lula tweeted that he had been “asked to re prolifically on TikTok, where his tagline demic consumption of illegal drugs rose
juvenate” his socialmedia presence; his was “oldie but delicious”. He amassed over among 1524 year olds.
post came with a photo of him wearing 5m likes. It was not enough to get him
pink sunglasses. He said he would be elected—but he came close. n Analysts trace the increase in drug use
opening accounts on TikTok and Kwai, two to a decision around a decade ago by the Si
videostreaming platforms. He also began Sway me more naloa gang, which is Mexico’s main pro
courting influencers, many of whom have ducer of synthetic drugs, to sell their wares
encouraged 16 and 17yearolds, who can Internet users* who follow influencers, 2021, % at home as well as to traffic them. It works
vote but are not obliged to do so, to register. Selected countries as a recruitment tool. The low price of syn
thetic drugs, as well as their potency and
But influencers can be tricky allies. On 0 10 20 30 40 50 addictiveness, make it especially easy to
July 13th Anitta, a Brazilian pop star with get people hooked on them. According to
63m followers on Instagram, gave Lula’s Brazil 3. Ms Chávez, a dose of meth costs eight pe
campaign a surprise boost by posting a sos (40 cents) in Ciudad Juárez. That is less
photo of herself leaning against a stripper Argentina 3.4 than a bag of crisps or a can of Coke.
pole in a red catsuit, with Lula’s party logo
emblazoned on her bottom. She said that Colombia 3.8 The United States and Mexico have
she did not support the pt but offered to re made preventing drug use a focus of bilat
post messages in support of Lula from any Mexico 3.3 eral efforts. President Joe Biden and Andrés
one who wanted “to make [Lula] rock here Manuel López Obrador, Mexico’s presi
on the internet, TikTok, Twitter, and Insta World 2.5 dent, discussed this when they met in
gram; just ask me and if it’s within my Washington on July 12th. “We are making
reach and not against electoral law I’ll do United States 2.2
1.8
Britain Hours spent on 2.0
social media
China
per day
Source: We Are Social
*Aged 16-6
012
The Economist July 23rd 2022 The Americas 29
an important transition to treating addic rez, the magistrate who leads the project, ing cannabis. Making it lawful runs the
tion as a health problem rather than a says the drugs courts dealt with 7,000 cas “risk of normalising” the drug that is the
criminal one,” says Gady Zabicky of the es last year. The federal government may first step down a slippery slope for many
Mexican government’s addiction agency, try to copy the project. people, reckons Xochitl Mejia of Tonalli, a
part of the health ministry. centre that treats addicts in the capital. But
But despite this there is little sign of it would also help to combat the profits
In a few places change is afoot. A pilot change at the national level. Government made by drug gangs. In 2018 the Supreme
project in Ciudad Juárez sends offenders to adverts are crude, says Rebeca Calzada of Court ruled that cannabis should not be
a special court that tries to avoid doling out Mexicans United Against Crime, a think banned. The government ignored the rul
any criminal conviction. The offenders, of tank, suggesting that drugs equal death ing, so in 2021 the court itself changed the
ten young men who have been found with and that people should “just say no”. Mexi law to allow people to apply for permits to
a small amount of drugs on them, agree to co lacks treatment centres. Those that exist use it. Such indecision within the govern
undergo treatment in exchange for a sus are often shoddy. ment hardly inspires confidence that Mex
pended sentence. If they complete it, they ico can get its drug policy right. n
will have no criminal record. Jorge Ramí The government is also in a muddle
about another area of drug policy: legalis
Bello A yearning for Utopia
Latin America is a hotbed of idealistic notions that hinder good government
When he wrote “Utopia”, a satire life projects” and to “leisure, rest and the wilds of Paraguay during the pandemic,
published in 1516, Thomas More enjoyment of free time”. It also requires continue to see Latin America as a place
was careful not to give an exact location the state to promote and guarantee “the to pursue their dreams undisturbed by
for his imaginary island with its perfect harmonious interrelationship and re laws or restrictions.
society. But the reader is given to un spect of all symbolic, cultural and heritage
derstand that it was sited off the coast of expressions”. No matter that these aspira The problem with this search for
Brazil. That was hardly coincidental. tions are hopelessly woolly, are often at Utopia is that it coexists with generally
odds with one another and are supremely poor government. That may not be coin
The idea of Utopia may be universal, unlikely to be realised. cidental. As Carlos Granés, a Colombian
but ever since Columbus and the Euro essayist, has explained in “Delirio Amer
pean encounter with the Americas, Or take Colombia’s newly elected presi icano”, a monumental exploration of
which took place not long before More dent, Gustavo Petro. Not only did he origi culture and politics in Latin America in
wrote, it has had a particular association nally propose to ban all new prospecting the 20th century published earlier this
with Latin America. This was nourished for oil, gas and minerals in a country that year, the Utopian infatuation of the
by myths of El Dorado and the Amazons; relies on mining and oil for over half of its region’s intellectuals with nationalism
by tales of the prodigious civilisations of exports, but he also promised that the and revolution led them to disdain liber
ancient Mexico and the Incas; and by state would give jobs to the 11% of the al democracy and embrace authoritarian
European notions of the new world as labour force who are unemployed (his leaders of the right or left. These impuls
both a natural paradise peopled by Rous designated finance minister says this es have hardened into a Latin American
seau’s “noble savage” and a blank slate on won’t happen). Mexico’s president, Andrés political brand. “If we renounce Utopia
which any project could be inscribed. Manuel López Obrador, promises not just and revolution, what place would Latin
“We have clung to Utopia because we humdrum policy and administration but America have in the concert of nations?”
were founded as a Utopia, because the rather a “fourth transformation”, akin to Mr Granés asked. Their cult reached its
memory of the good society lies in our his country’s independence or its revolu apogee with Che Guevara, liberation
origins and also at the end of the road, as tion of 191017. And outsiders, from Butch theology and SubComandante Marcos
the fulfilment of our hopes,” as Carlos Cassidy, an American train robber who and his Zapatista nationalliberation
Fuentes, a Mexican novelist, wrote. died in Bolivia, to a group of German army, with their respective examples of
antivaxxers who set up a commune in the sacrifice and redemption through guer
This streak continues to this day in rilla war against imperialism, the exalta
Latin American politics. The Utopian tion of the poor and what Mr Granés
urge is to “refound” rather than reform terms “revolution as performance art”.
countries, expressed in new constitu
tions or the disqualification of political The yearning for Utopia is a response
opponents. It often militates against the to the injustices and inequalities of Latin
more modest but achievable goals of American societies. But it may make
good government and steady progress. those problems worse. Utopia slides all
too easily into a dystopia of poverty and
Take, for example, the proposed new police states, as has happened in Fidel
constitution presented this month in Castro’s Cuba, Daniel Ortega’s Nicaragua
Chile. With 110 articles in its chapter on and Hugo Chávez’s Venezuela. Even
“fundamental rights and guarantees” it is where it doesn’t, it can lead to frustration
a detailed blueprint for an ideal society and reaction, as may be Chile’s fate.
in which no one is discriminated against
and everyone enjoys equality, though Far better for Latin America’s poli
some more than others. It guarantees ticians to be honest with their people
everyone the right, among other things, about the limits of the possible and to
to “neurodiversity”, to “the free devel pursue the path of steady progress rather
opment” of “the personality, identity and than the search for paradise.
012
30 Asia The Economist July 23rd 2022
Inflation ergy was nearly a fifth more expensive in
Singapore compared with a year before,
Feeling the pinch and more than a third pricier in Thailand,
while in the Philippines diesel was 86%
MANILA AND SINGAPORE dearer. Global cereals shortages and higher
local transport costs have made food much
The rising cost of living is making South-East Asians hungrier and poorer dearer, too.
Nick ganzon is tinkering with the en big jumps in prices: over the past decade The effects of these rising prices are felt
gine of his jeepney, a kind of elongated inflation has been relatively low by poor acutely in regions such as SouthEast Asia,
jeep that shuttles commuters around Ma country standards. Prices also initially re where food gobbles up a big share of
nila, the capital of the Philippines. That his mained stable in the region even after they spending. In 2020 food consumed at home
car has broken down is yet another stroke began shooting up in the rich world. No accounted for between twofifths and half
of bad luck, for Mr Ganzon’s fortunes have longer: in Laos, SouthEast Asia’s worsthit of the expenditure of Burmese, Cambodi
also ground to a halt. The price of diesel is country, they rose by 23.6% last month ans, Filipinos and Laotians, compared to
painfully high. When it hit 40 pesos ($1.96) compared with a year earlier. about a tenth in rich countries, according
a litre two years ago, Mr Ganzon “pan to the Economic Research Service, an
icked”. Now a litre costs 88 pesos. “All our The reasons for the surging cost of liv American government agency. Its ranking
income goes to diesel,” he says. The 67 ing are similar to those elsewhere. Snarled of such spending in more than 100 coun
yearold has tightened his belt: a selfde up supply chains and Russia’s invasion of tries put that quartet among the top 15.
scribed drinker, he has given up booze and Ukraine have pushed up the cost of com
cut back on food. His son, Mariel, also a modities. Countries that rely heavily on Many SouthEast Asians are getting
jeepney driver, worries about being able to imported food and fuel, such as the Philip poorer. The World Bank calculates that a
afford milk for his two young children. pines, Singapore and Thailand, are also 10% increase in the global price of cereals
importing eyepopping prices. In May en or energy would raise the poverty rate in
In fact, inflation in SouthEast Asia is the Philippines, defined as living on less
relatively mild compared with many parts → Also in this section than $3.20 a day, by 1% and 0.3%, respec
of the world. This month amro, an eco tively. In fact, the price of cereals in June
nomic thinktank affiliated with the Asso 31 Bangladesh reforms its booze laws was up 27.6% on a year earlier, and the
ciation of SouthEast Asian Nations price of energy is projected to increase by
(asean), a regional club, forecast average 32 Sri Lanka gets a new president 50% this year. This suggests that poverty in
inflation of 5.2% for its ten members this the Philippines will surge by at least 3.7
year. That is more than double last year’s 32 Imran Khan conquers Punjab percentage points, impoverishing 3.85m
rate, but half the level of Brazil and well be people. A similar formula estimates that
low India or South Africa. Yet SouthEast 34 Banyan: Indonesian diplomacy Thailand will add six percentage points
Asia had thought itself insulated against this year to its poverty rate, defined as liv
36 The man who killed Abe Shinzo ing on less than $5.50 a day.
Last year, even before prices started ris
ing in the region, one in five SouthEast
012
The Economist July 23rd 2022 Asia 31
Asians—or 139m people—either lacked which distort incentives and benefit the gyan Zhao, an economist at amro. That is
consistent access to food or had run out of wealthy as much as the poor, notes Mr Mat the case in Singapore, where employees
food and gone without eating long enough too. He points to fuel grants and cash have begun demanding wage rises in re
to put their health at risk. That is about transfers, which the Philippines put in sponse to soaring prices, suggesting that
three times the proportion in East Asia, ac place this year in response to the spike in they expect inflation to persist.
cording to the un. That number will inev the cost of living, as an example to follow.
itably increase this year. Preliminary data Yet there is also some good news. Aside
from household surveys being conducted The tricky thing is calibrating support from Singapore, there is so far little sign
by the World Bank in much of the region al when it is unclear how long high inflation that inflation in other countries is becom
ready show that “food insecurity is much will last. There are reasons to be pessimis ing entrenched. Core inflation, which ex
more in evidence, especially at the lower tic. Since America’s Federal Reserve started cludes volatile items like food and fuel, re
ends” of the socioeconomic ladder, says raising interest rates earlier this year, mains low in most economies, and surveys
Aaditya Mattoo, a senior economist at the SouthEast Asian currencies have depre show that the public expect it to stay that
bank. Inflation is exacerbating pandemic ciated against the dollar, making imports way. Inflation in Asia may already have
inflicted woes. more expensive and fuelling inflation. The peaked, reckon analysts at Morgan Stanley,
economic recovery from the pandemic an investment bank, given that global
Governments are racing to soften the may have the same effect. As SouthEast commodity prices have begun to fall, as
blow for consumers. They have raised the Asians resume spending at prepandemic has demand for goods. Mr Ganzon the
minimum wage (in Laos and the Philip levels, prices are likely to increase in re jeepney driver, and millions like him, will
pines), doled out cash to the poor (Singa sponse to invigorated demand, says Hon be praying that they are right. n
pore, Malaysia, Indonesia), and subsidised
fuels or fertiliser (Indonesia, Malaysia, Liquor licensing
Philippines, Thailand). A couple have
capped prices for essential goods (Malay Cheers!
sia, Thailand) or banned exports of some
essentials, such as palm oil or chicken (In Bangladesh loosens its laws on booze
donesia, Malaysia).
Despite its location on one of the establishments to buy 60% of their stock
Such measures have thus far been effec busiest streets in Dhaka, Bangla from the country’s two licensed produc
tive at controlling inflation in Indonesia desh’s capital, Eram is almost impossible ers: Jamuna Group, which makes Hunter,
and Malaysia. As net exporters, including for newcomers to find. Only a black gate Bangladesh’s only homegrown beer, and
of coal and natural gas, both countries marks the entrance to the bar. Inside, it is Carew & Co, a staterun distiller of such
have profited from the commodities no more inviting. Guests are greeted by a fine tipples as Gold Riband Gin, Old Rum
boom. Flush with export earnings, these miasma of cigarette smoke, sweat, urine and Imperial Whisky.
governments can better afford to subsidise and liquor. Those who fail to tip the
imports than other countries in the region, waiters risk being reported to the police The new rules were also designed
notes Mr Mattoo. for breaking the country’s strict alcohol with an eye on Bangladesh’s growing
laws. Yet dozens, if not hundreds, pass number of foreigners—from humanitar
But not, perhaps, for long. Malaysia is through the doors each day. The men— ian workers to Chinese labourers toiling
expected to spend 78bn ringgit ($17.5bn, or women are barred—go because the booze on infrastructure projects—and aim to
4.7% of gdp) on subsidies this year, the is cheap and the lights are low. lure in more. Even as domestic tourism
most ever. The costs of these subsidies al has taken off, foreign tourists have re
ready exceed the increase in revenue gen This is how much of the drinking in mained elusive. Conservative alcohol
erated by commodity exports this year, ac Bangladesh takes place. Consumption of laws and dress codes are often blamed.
cording to Wellian Wiranto, an economist alcohol has long been outlawed for Mus
at Overseas Chinese Banking Corporation, lims, who today make up 90% of the Not that there is any shortage of
a Singaporean bank. And inflation is alrea population. Other religions are exempt Bangladeshis to consume the booze.
dy seeping into the Indonesian economy. but need a permit issued by the govern During the pandemic, which hindered
In June prices were 4.3% higher than a year ment. A loophole for Muslims was in flows of foreign alcohol and prompted a
earlier, exceeding the government target of troduced in 1950, but it includes a re police crackdown on the black market,
4% for the first time this year. quirement for a doctor’s certificate. The Carew’s liquor revenues surged from
permit declares that the holder “requires 1.56bn taka ($16.6m) in 20192020 to
Cash transfers to the poor are more effi liquor on medical grounds” and is “here 1.95bn taka the following fiscal year.
cient than export bans and price controls, by permitted to possess and consume NonMuslims may have knocked it all
foreign liquor”. Few bother. Most drink back alone, but it seems likelier that
Generous portions ing is illicit and feeds a lucrative black some believers helped out.
market for imported liquor. Cases of
ASEAN countries*, food spending† people dying after drinking dodgy home The new laws should allow the gov
as % of consumer spending, 202 brew are not uncommon. ernment to make a little more money
from selling alcohol. But legalising liqu
0 10 20 30 40 50 60 The government has acknowledged or sales to all, however lucrative, remains
the problem. It is overhauling the rules off the table. In April, lawyers with ties to
Myanmar in a simultaneous bid to boost domestic the main opposition party challenged
industry and bring boozing within the some of the new rules in the High Court.
Laos law. Individuals will still require per The government will want to keep the
mits, but the process for restaurants and legal battle, assuming it engages in one,
Cambodia bars to get liquor licences will be made quiet. An election is coming next year,
less ambiguous. The new laws, which and the country’s powerful Islamic
Philippines were introduced in February, also oblige groups are riled by any whiff of the hard
stuff—legal or not.
Indonesia
Vietnam
Malaysia
Thailand
Singapore
*Excluding Brunei †Consumed at home
Source: Economic Research Service
012
32 Asia The Economist July 23rd 2022
Politics in Sri Lanka Politics in Pakistan
In with the old Comeback Khan
COLOMBO Already unpopular ISLAMABAD
The new president must fix a mess The new president is likely to stick to a The ousted prime minister’s party wins
which many think is partly his fault programme of economic reforms which he a surprise victory in Punjab
had begun to implement as prime minis
Ranil wickremesinghe is a familiar ter. The plan proposes increases in income When pakistan’s Parliament sent Im
sight to anyone who has taken even a and corporation tax, the privatisation of ran Khan packing in a vote of no con
passing interest in Sri Lankan politics in stateowned enterprises, a publicsector fidence in early April, the deposed prime
recent decades. First elected to Parliament hiring freeze and a stronger socialsafety minister said he would not go quietly. He
in 1977, he has held a variety of cabinet jobs net to cushion the blow of the other poli has been true to his word. Night after night
over the years, including, on six occasions, cies. It was drawn up by a diverse group of for the past few months he has held rallies
that of prime minister. His most recent activists and policy wonks. Its direction to drum home his message that he was de
stint was in the service of Gotabaya Raja enjoys broad support even among mem fenestrated in a nefarious plot orchestrat
paksa, whose tenure as president came to bers of the opposition. Getting the coun ed by America. From stages across the
an ignominious end on July 14th when he try’s finances into a state that is sufficient land, he has railed against the “imported
tendered his resignation by email from to obtain a bailout from the imf is widely government” that replaced him. Never
Singapore, having fled the country in the seen as a priority. mind that he offered no evidence for his
dead of night the day before. theories; supporters lapped them up. The
Politically, Mr Wickremesinghe has question for his opponents has always
Fearing prosecution for alleged corrup tried to sound conciliatory. In a speech to been whether Mr Khan could translate this
tion and crimes committed during Sri Lan Parliament shortly after his election he ac fervour into electoral success.
ka’s civil war, the disgraced expresident is knowledged that Sri Lanka was in deep
expected to lay low abroad for the foresee trouble and that young people in the coun Byelections in Punjab province on July
able future. But Mr Wickremesinghe (pic try were demanding “systemic change”. He 17th delivered the answer. Mr Khan’s Paki
tured in effigy) will remain a familiar face then announced talks with all parties rep stan TehreekeInsaf (pti) party won 15 of
around Colombo, the capital. After taking resented in Parliament as soon as the fol the 20 seats that were up for grabs, regain
over from his boss in an acting capacity the lowing day. Before his election, he had be ing control of the provincial assembly.
week before, he was officially elected pres gun work on curtailing some of the powers That was unexpected. Punjab, Pakistan’s
ident by a clear majority of 134 of the 225 of Sri Lanka’s mighty executive presidency, most populous province, is the country’s
members of Parliament on July 20th. He is though he had not committed to abolish political centre of gravity. It is also the
expected to serve out the remainder of Mr ing it, as protesters have demanded. power base of Mr Khan’s successor, Sheh
Rajapaksa’s term, which ends in 2024. baz Sharif, and his Pakistan Muslim League
That may not be enough to convince the (pml-n) party. Mr Khan has wasted no time
His election raises hopes that Sri Lanka, movement that drove out Mr Rajapaksa in using the victory as a platform to de
which has been in economic and political and whose aim is a wholesale change in the mand early nationwide elections.
turmoil for months, will at last regain the country’s politics. Given that Mr Wickre
political stability required to solve its eco mesinghe was prime minister, few expect The vote in Punjab suggests that street
nomic problems. But Mr Wickreme major changes to the cabinet. He has been power does indeed bring success at the bal
singhe’s chances of success are complicat silent on the prospect of an early parlia lot box. Some voters may have bought into
ed by his willingness to work with the Raja mentary election, another of the protes Mr Khan’s theory of an international con
paksas. The protesters who chased Mr Ra ters’ demands. They see Mr Wickreme spiracy against him, which America has
japaksa from office had also demanded Mr singhe’s ascendancy as a victory for the said is nonsense. The vote also illustrates
Wickremesinghe’s resignation as prime discredited political class they blame for voters’ distrust of cynical politicians who
minister. Their idea of his stepping down the country’s travails. They say they will flit from one party to another to maintain
hardly involved a promotion to the highest continue to occupy the presidential secre their power. Those now defeated in Punjab
office in the land. That bodes ill for his tariat, which they took over on July 9th. had left Mr Khan’s party in April to vote for
chances of uniting Sri Lankans behind him Even a powerful executive presidency is, in Mr Sharif’s pml-n.
in a time of crisis. the end, not immune to the wrath of the
people it serves. n Yet the most compelling reason for Mr
There is some room for optimism. Mr Khan’s success is the government’s weak
Rajapaksa, for all his reluctance to relin ness. It has failed to present an alternative
quish the powers he enjoyed, eventually story to Mr Khan’s conspiracy theories,
departed in the face of public pressure leaving him to set the agenda. In the
rather than call in the army to quash prot months before Mr Khan’s fall, the pml-n
ests and rule by decree. Mr Wickremes and its allies blamed him for high inflation
inghe imposed a curfew, declared a state of and Pakistan’s economic woes. Mr Khan’s
emergency and described the largely allies are now beating them with the same
peaceful protesters as “fascists”, suggest stick, even though the current government
ing a degree of personal anger which he has inherited the mess. Inflation is pain
will have to keep in check over the coming ful. Mr Sharif’s reputation for hardnosed
months. But he also submitted to the con economicpolicymaking was damaged by
stitutional process rather than seek to pro his indecision over fulfilling the condi
long his interim stint in power. Security tions imposed by the imf in negotiations
forces acted with restraint compared with for a bailout. When Mr Sharif at last cut
past crises. Anarchy and largescale vio fuel subsidies, he had to take the blame for
lence were avoided. sudden, big price rises.
012
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34 Asia The Economist July 23rd 2022
Polling shows that Mr Khan is a particu his own party are mumbling that only Mr tones has been remarkable. Some com
lar hit with Pakistan’s educated, digitally Sharif's elder brother, thriceelected prime mentators see Mr Khan’s victory in Punjab
literate youth. For many of them, the minister Nawaz Sharif, currently in exile in as a repudiation of military meddling.
pml-n represents a corrupt old guard who London, can save the day.
are holding the country back. Given that The drubbing which the Sharif clan re
twofifths of the electorate are between 18 As is usual in Pakistan, the most in ceived in Punjab may not automatically
and 30, this gives Mr Khan a huge advan triguing question concerns the position of translate into similar losses in a putative
tage, says Bilal Ghani of Gallup, a pollster. the army. Mr Khan won in 2018 as the gen general election. Shaken out of its compla
erals’ favourite. His downfall coincided cency, the pml-n may try to mobilise its
Mr Sharif's defeat in Punjab will in with his loss of their favour. Since then, he vote more vigorously, especially if the
crease tensions in his national coalition, has been unusually outspoken in his criti stakes are higher. Mr Sharif, who clearly
which brings together an improbable cism of the generals, mocking them as appreciates the seriousness of the threat,
range of politicians from the left to the reli “neutrals” at rallies for failing to prevent says he wants Mr Khan’s political finances
gious right. They are likely to disagree over his removal. The level of vitriol aimed at investigated. The fight to shake off his per
whether to hold an early election. Some in figures usually spoken of in respectful sistent opponent will only get dirtier. n
Banyan Onetrack mind
Why Indonesia punches below its weight in global affairs
For most of his eight years in power, to see Jokowi, calling Indonesia one of broader terms of regional leadership and
Joko Widodo, or Jokowi, has evinced Russia’s “friendly countries”. He promised other measures of prestige. Indeed, when
next to no interest in foreign affairs. to prioritise Indonesia in shipments of Jokowi came to office he promised a
Mention the geopolitics of the region in fertiliser. He proposed that Russia’s state “downtoearth diplomacy”, instructing
which Indonesia sits, and the president’s railway invest in the grand scheme of a officials to focus on the everyday needs
knee starts to bounce impatiently up and new capital, Nusantara, that Jokowi of Indonesians ahead of abstract princi
down while his eyes dart from left to dreams of carving out of the jungle in ples or even Indonesia’s international
right like a schoolchild desperate to Borneo. And as if to underscore Jokowi’s profile, points out Aaron Connelly of the
escape detention. Bring the topic back to efforts as a gobetween, Mr Putin even International Institute for Strategic
building ports and bridges, and you have appeared to promise to lift Russia’s mari Studies in Singapore.
his eager attention. So what to make of a time blockade of Ukrainian wheat exports
recent burst of diplomacy, and especially (he has yet to do so, though negotiations He certainly views Russia’s invasion
of an unusual and highprofile visit as a are continuing, mediated by Turkey). through an economic lens. By messing
peacemaker to the capitals of both Uk with global food markets, it has caused
raine and Russia? If, as seems probable, Mr Putin fails to headaches at home. One instance is
follow through on most of his promises, cooking oil; its price has shot up so high,
Admittedly, the foreignpolicy stakes the trip to Moscow will represent more of hurting tens of millions of Indonesian
are higher for Jokowi than usual. In a publicrelations coup for the Russian households, that Jokowi felt compelled
November Indonesia hosts this year’s president than for Jokowi. Yet, as well as to suspend exports of palm oil, of which
g20 summit. Russia is a member of the calculations around a successful g20 Indonesia is the biggest producer.
group, but given Vladimir Putin’s in summit, the Indonesian president’s recent
vasion of Ukraine, Western members say travels highlight a Jokowi constant: when Another is wheat, the main ingredient
they will boycott the summit if the Rus he does engage with the wider world, it is in the instant noodles which are an
sian president shows up. That would be usually because he sees a possible benefit Indonesian staple. Before the war, In
galling for Indonesia. The best that can for the economy back home. donesia was the secondbiggest importer
be said about a meeting of g20 finance of Ukrainian wheat. With the price of
ministers which has just ended in Bali, In this, Jokowi is different from many noodles rising fast and hurting the poor
and which was intended to lay the leaders of countries of similar size and est, no wonder Jokowi wants to be seen
ground for the gathering in November, is standing, who see national interest in to be doing something.
that it did not collapse in acrimony.
Jokowi must worry that, by com
Jokowi’s plan to avoid a debacle in pounding the strain on the economy
November is to have Volodymyr Zelen caused by the pandemic, the war imper
sky, Ukraine’s president, show up too. ils the economic gains of his presidency
Late last month the Indonesian president to date. It even throws the already un
travelled to Kyiv with the first lady to certain future of Nusantara into doubt.
deliver an invitation in person, while That puts a premium on showing an
expressing a pious desire for an end to audience back home that he is helping to
the war. Mr Zelensky also wants the war resolve the crisis. Not that his recent
to end, but he may have felt that Jokowi diplomacy is conducted without regard
was addressing the wrong man, parti to the wider global good that success as a
cularly as his request for arms was re peacemaker would bring. But with little
buffed (Jokowi offered medical aid in evidence of much diplomatic followup
stead). Though Mr Zelensky received his by either him or his administration, the
guest with courtesy, the prolific social assumption is that Jokowi the newfound
media user failed to tweet about the visit. statesman is guided, as he always has
been, chiefly by domestic calculations—
In contrast, Mr Putin seemed pleased and narrowly economic ones at that.
012
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012
36 Asia The Economist July 23rd 2022
Japan As Japan has sought to make sense of
the killing, commentators have focused on
States of mind Mr Yamagami’s psychology. Some argue
that concentrating on ties between the ldp
NARA and the Unification Church or on police
failures obscures deeper socioeconomic
What drove Yamagami Tetsuya to target Abe Shinzo? forces that may have unmoored Mr Yama
gami from society. Reports in Japanese me
The omiyacho neighbourhood of Nara, Church, and in the early 2000s donated dia paint him as a member of a precarious
an ancient capital in western Japan, is enough money to the group to leave her class that came of age in the 1990s and early
unremarkable. A tangle of quiet streets family bankrupt, according to Japanese 2000s, after the economic bubble of the
winds around boxy apartment blocks media and a source close to the investiga 1980s burst. Mr Yamagami’s father and
tightly packed together. Inside are stan tion. Mr Yamagami apparently blamed Mr brother both committed suicide, and Mr
dardissue workingclass Japanese flats: Abe’s family for his own family’s travails. Yamagami attempted suicide once him
modest rectangular rooms with low ceil He planned the killing long in advance, self, according to an uncle. The 41yearold
ings, fluorescent lighting and the damp and tested his homemade gun by shooting bounced between jobs and appears to have
odour of a humid Japanese summer. In one at the wall of a local branch of the church in lived an isolated life. “I don’t think anybo
such home, Yamagami Tetsuya (pictured) Nara in the middle of the night. Prosecu dy knew him,” says one neighbour in Omi
assembled the gun he used to kill Abe Shin tors have ordered a psychological assess yacho. “There are a ton of big apartments
zo, a former prime minister, on July 8th. ment to see if he is fit to stand trial. here and people don’t interact with each
other—there is no community.”
Mr Yamagami’s target could hardly have Security failures made it possible for Mr
been more political. Mr Abe was Japan’s Yamagami to carry out his plan. “In Japan, In those respects, Mr Yamagami bears a
longestserving prime minister, and re the idea that such assassinations could not resemblance to the perpetrators of recent
mained a force inside the ruling Liberal happen became very widespread,” says Fu acts of indiscriminate mass violence in Ja
Democratic Party (ldp) even after ill health kuda Mitsuru, a crisismanagement expert pan. A man of a similar age and back
forced him to step down in late 2020. He at Nihon University in Tokyo. Three big ground set an animation studio in Kyoto
was campaigning for an ldp candidate in mistakes made Mr Abe’s killing possible, on fire in 2019, killing 36. A younger social
Nara when Mr Yamagami shot him. Mr says a former senior security official. ly isolated man dressed up as the Joker
Abe’s policies transformed his country, from the “Batman” films and stabbed pas
particularly on matters of defence and na Failure has many fathers sengers on a Tokyo subway on Halloween
tional security. What is more, the changes First, the branch of Tokyo’s police charged last year, injuring 17. Komiya Nobuo, a cri
were controversial. When news of the with protecting dignitaries does not have minologist at Rissho University in Tokyo,
shooting broke, many assumed that it was enough manpower to guard all of Japan’s likens such attacks to “suicidebombings”,
an ideologically driven assassination by many former prime ministers. Worse, local where the killers seek “symbols of happi
someone opposed to Mr Abe’s ideas. police in Nara failed to secure the vicinity ness” to attack and do not even try to es
around the campaign event where Mr Abe cape or evade punishment.
But Mr Yamagami’s motives instead was speaking and did not notice as Mr Ya
seem to have been more personal. He told magami crept closer to Mr Abe from be In short, it seems to have been a com
investigators that he killed Mr Abe to hind. Lastly, after Mr Yamagami fired his plex combination of factors that drew Mr
avenge a grudge against the Unification first shot, Mr Abe’s security detail failed to Yamagami down the road to Mr Abe’s cam
Church, a cultlike religious group to shield him or push him to the ground. In paign event that day. As Mr Komiya points
which neither he nor Mr Abe belonged. The stead, Mr Abe turned towards the sound of out, “It’s not a linear decisionmaking pro
connection requires a bit of unpacking. the gun, giving the shooter the chance to cess—criminals themselves often don’t
get off a fatal second round. understand how they reached conclusions
The sect was founded in South Korea in they did.” Japan will be left searching for
1954 by the Reverend Moon Sunmyung, a The man behind the gun answers long after Mr Yamagami’s trial
selfproclaimed messiah who was later im comes to an end. n
prisoned in America for tax fraud. (The
group is sometimes known as the “Moo
nies”.) Moon, who died in 2012, found com
mon cause with Kishi Nobusuke, Mr Abe’s
grandfather and Japan’s prime minister
from 1957 to 1960, in their shared repug
nance of communism. Kishi helped the
church gain a foothold in Japan: its local
headquarters was “built on Tokyo land
once owned by Kishi”, writes Richard Sam
uels, a scholar at mit, in his book Machia-
velli’s Children. Moonies became reliable
campaign volunteers for some rightwing
members of the ldp, just as they supported
conservatives in America, where the
church also attracted followers.
Mr Abe continued to nurse the relation
ship. He spoke at an online event for the
sect as recently as last September, appear
ing alongside Donald Trump. Mr Yamaga
mi’s mother belonged to the Unification
012
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012
38 China The Economist July 23rd 2022
The economy safety or unfair competition more zealous
ly against outside firms. In the past govern
Tearing down the bamboo walls ments have even given locally made cars
priority access to express lanes, according
HONG KONG to a paper by Panle Jia Barwick of Cornell
University and her coauthors.
China fights a trade war within its own borders
Some recent barriers were documented
Although many are embarrassed to ad ries and resentments. China has been bat by China’s National Development and Re
mit it, foreign correspondents learn a tling local protectionism for just as long. form Commission (ndrc) in May. The
lot from taxi drivers. In China economic Newspapers in 1991 were full of tales of province of Jilin, for example, required fer
correspondents can also learn a lot from “economic warlords” dividing China into tiliser companies to traipse to a local insti
the taxis themselves. Most cabs in Beijing “dukedoms” protected behind “bamboo tute to get their products tested. The city of
are Hyundai Elantras. In Shanghai they are walls”, recalls Andrew Wedeman in his Ma’anshan refused to allow private firms
often the Volkswagen Touran or Passat. book “From Mao to Market”. to bid for the rights to mine dolomite with
And in Wuhan they are commonly Citroën out seven stamps from local departments
Elysées. In each case, the explanation is the Some of those walls remain. If a provin (which withheld them because they “did
same. These foreign brands have joint ven cial border divides two cities 200km apart, not understand the companies’ back
tures with local stateowned carmakers lorries will flow between them as if they ground”). Taiyuan required lorries to spec
that the city government is keen to cham were about 100km further apart, according ify their route when applying for permits,
pion—even if it is at the expense of other to Lu Ming of Shanghai Jiao Tong Universi which put drivers unfamiliar with the city
carmakers and their own consumers. ty and his colleagues. The “toolbox” of lo at a disadvantage. The trafficcontrol de
cal protectionism is “wide”, says Mr partments in parts of Jiangxi province de
This is one prominent example of Chi Wuttke. Governments might, for example, legated the licensing of electric bikes to lo
na’s persistent “local protectionism”. Many put out a tender with customised require cal insurance companies that compelled
of its provinces, prefectures and counties ments that only a homegrown champion owners to buy insurance too. These cases
try to shield local firms from outside com can fulfil. They might enforce rules on of local malpractice have all been rectified,
petition. These measures divide the main according to the ndrc. But it presumably
land’s vast, singular market into some → Also in this section hopes that publicising them will help deter
thing more plural. “China in many ways re similar meddling elsewhere.
sembles the European Union,” says Jörg 39 A new test of zero-covid
Wuttke, president of the eu Chamber of One way to expose the seams in China’s
Commerce in China. “We have 27 member 40 China, Taiwan and Pelosi market is to see what happens when they
states; they have 31.” The eu has been trying are removed. China’s counties (which have
to perfect its single market for three de 40 How Uyghurs learned English populations of about 500,000 on average)
cades, often in the teeth of national rival are sometimes absorbed into larger prefec
— Chaguan is away tures (with millions of residents), remov
ing the administrative borders between
them. When this happens, the absorbed
012
The Economist July 23rd 2022 China 39
counties tend to prosper. Their gdp per Covid-19 Yet there is no sign that the government
person was 12.6% higher than counties is reconsidering its policy. Doing so would
that applied to join a prefecture but failed, Test after test have “unimaginable consequences”, Mr Xi
according to Yi Han of the University of said last month. Policymakers fear that if
Pittsburgh. The counties benefited from BEIJING the virus were allowed to spread, hospitals
joining a larger market, just as small Euro would be overwhelmed and the death toll
pean countries benefit from joining New subvariants are the latest would spike. Many of the most vulnerable
Europe’s single market. challenge to the zero-covid policy have still not been vaccinated. “Rather
than harming the lives and health of the
Efforts to tear down these bamboo walls In early july Steven Ho, a lawmaker in people, it is better to temporarily affect
have gained new urgency in recent years. Hong Kong, tested positive for covid19. economic development a little,” says Mr Xi.
After the global financial crisis, the trade That is hardly news in a city reporting
war and the pandemic, China’s rulers have some 3,000 new cases a day. But two days But the zerocovid policy is doing sig
concluded that they can no longer rely on earlier Mr Ho had stood just metres away nificant economic damage. gdp rose by
foreign markets. They are trying to steer from Xi Jinping, China’s president. Mr Ho just 0.4% in the second quarter compared
the economy away from a growth model would have been tested and made to quar with a year earlier. Not since the start of the
based on importing vast quantities of com antine before seeing Mr Xi. Still, the virus pandemic has the economy looked so
modities and components and exporting (which is not detectable right away) proba anaemic. Nearly a fifth of young people are
similarly vast quantities of manufactured bly entered the room with Mr Ho. unemployed. Dozens of private hospi
goods (a model known as da jin da chu, “big tals—forced to devote resources to mass
in, big out”). Their attention has turned Apart from a gap in his schedule, there testing—have declared bankruptcy in the
from fickle markets overseas to the one was nothing to suggest that Mr Xi had been past two years. Recently Macau, the world’s
that has been in front of them all along. infected. But the incident shows how hard biggest gambling hub, closed its casinos
it is to suppress the virus. That is the goal of because of an outbreak.
In April the Communist Party’s central China’s “zerocovid” policy, which relies
committee and the Chinese government’s on mass testing and lockdowns to contain The government has made some tweaks
state council (the equivalent of its cabinet) outbreaks. The highly transmissible Omi to its rules, such as reducing the quaran
jointly published a set of opinions calling cron variant has strained that strategy. tine time for international travellers from
for a “national unified market”. They la Now even more infectious subvariants, 14 days to seven. But bigger changes may
mented “market segmentation”, “repeti such as ba.5, are circulating. Longer, more depend on how the virus evolves. Yanz
tive lowlevel construction” and “vicious frequent and concurrent outbreaks are hong Huang of the Council on Foreign Re
competition in investment promotion”. likely, say experts. lations, a thinktank in America, believes it
The timing was unfortunate, an exhorta would take a new variant that overwhelms
tion to remove metaphorical bamboo walls The number of daily new cases in main attempts to contain it, like a “dambuster”,
just as literal metal fences were appearing land China is still in the hundreds. But it is to cause a change in strategy. Otherwise, he
in lockeddown Shanghai. But the initia rising, with outbreaks leading to new re says, China will try to exit the zerocovid
tive is nonetheless welcome, says Mr strictions in many places. Four districts, policy according to its own timetable.
Wuttke. “They realise this export miracle with nearly 3m residents, have been locked
they experience now will end,” he says. down in the northwestern city of Lanz What that timetable looks like—or
“They’re trying to find other means to get hou. Shanghai, still in shock after a whether it even exists—is anyone’s guess.
the economy going. And knocking down monthslong lockdown earlier this year, To avoid mass death, any exit strategy
protectionist walls is not a bad idea.” required residents in nine areas to take two would have to start with a campaign to vac
tests over three days from July 19th. All in cinate the elderly. Ideally this would re
One worry is that if local governments all, some 260m people across 41 cities are quire them to receive two doses of a vac
lose regulatory discretion, they will stop affected by lockdowns or local controls, ac cine, plus a booster shot. As of July 7th only
building their economic dukedoms and in cording to Nomura, a Japanese bank. twothirds of those over 60 had been
stead “lie flat”, lapsing into apathy. The jabbed three times. People over 80 appear
fierce economic competition between dif Locked down and opening up the most hesitant to get vaccinated.
ferent parts of China does, after all, keep
local governments on their toes. But even Cities have tried to increase vaccination
in a more unified market, local govern rates by, for example, offering eggs or cash
ments could compete to provide good in to old people who get jabbed. But these
frastructure, welltrained workforces and sops look tiny compared with the resourc
brisk administration of rules that are more es thrown at testing and enforcing lock
standardised across the country. downs. Only a few cities require proof of
vaccination to enter public spaces. The
The bigger worry is that local protec municipal authorities in Beijing recently
tionism will persist despite the exhorta floated the idea, but backed down after op
tions of China’s rulers. A more unified position. In general, officials appear more
market will create losers as well as win worried about the potential backlash
ners. It will, for example, require some lo should they force shots on the elderly than
cal carmakers to lose custom to rivals from about mass fatalities from the virus.
elsewhere. Local officials resist these mar
ket forces for a reason. They wish to pre Mr Xi does not seem to be pushing
serve jobs, tax revenues and social peace, them. He has not even confirmed that he
criteria that determine how they are evalu has been vaccinated, let alone jabbed on
ated by the party. If they imperil stability, television, as the leaders of some other
they will also jeopardise their chances of countries have been. While most countries
promotion. To stop them bestowing fa have accepted that the virus cannot be
vours on local champions, then, China’s eradicated, Mr Xi says China will continue
central government will have to rethink with the zerocovid policy until a “final
how it bestows favours on local cadres. n victory” has been secured. Perhaps only he
knows what victory looks like. n
012
40 China The Economist July 23rd 2022
China, Taiwan and America Language-learning in Xinjiang
Travel bug Lessons from Malcolm X
How Uyghurs became so good at English
Talk of Nancy Pelosi visiting Taiwan When president xi jinping visited Uyghur collaborator at Stanford Univer
angers China the region of Xinjiang this month, sity, known by his initials, MA, note the
he painted China as a tolerant, multi story of Kasim Abdurehim, who saw
The last time a Speaker of America’s ethnic country. Never mind that after Mr English as a ticket to the world. Growing
House of Representatives visited Tai Xi’s last visit, in 2014, China launched a up in Xinjiang, he was not taught English
wan, the Chinese government could do lit campaign of mass detentions and un in the state schools most Uyghurs at
tle more than grumble. Newt Gingrich, precedented surveillance to quell resis tended, so he enrolled in night school.
who held the position from 1995 to 1999, tance among local Uyghurs. More than His English improved so dramatically
stopped over in 1997 and met the island’s 1m of them have been detained, often that he won an award at a national Eng
president at the time, Lee Tenghui. A few simply for being devout Muslims. lish competition in 2004 and became a
days earlier Mr Gingrich had visited China household name among Uyghurs.
and warned its leaders that America would Among the victims of those policies
intervene if they invaded Taiwan, which were English teachers, who once led a In 2006 Mr Abdurehim opened Atlan
China claims. “ok, noted,” he described remarkable movement to learn the lan Education, a private school that became a
them as responding. “Since we don’t in guage. Despite representing less than 1% favourite among Uyghurs studying Eng
tend to attack, you won’t have to defend.” of China’s total population, and notwith lish. Instead of plodding textbooks,
standing official efforts to focus on teachers selected books and films which
There is scant hope of such a meek re teaching Chinese, from 2004 to 2014 could speak to their students’ lives. Some
sponse if the current Speaker, Nancy Pelo Uyghurs performed notably well in most favourite texts included “Animal Farm”
si, goes ahead with a plan to visit Taiwan in of China’s big English competitions. A and “1984” by George Orwell. But of par
August. The trip has not been confirmed, new paper explores how they became so ticular interest were the stories of fam
but people familiar with her planning said good at the language. ous black Americans such as Martin
a stopover was possible as part of an Asia Luther King and Barack Obama.
tour originally planned for April and post The authors, Darren Byler of Simon
poned after she caught covid19. When Fraser University in Canada and his Prejudices abound among Han Chi
asked about the trip on July 20th, President nese towards ethnic minorities. Uyghurs
Joe Biden said he did not know the status of She had a dream are often viewed as “backwards”, says Mr
it. American military officials, he added, Byler. So they understood how Malcolm
thought it was “not a good idea right now”. X and Muhammad Ali felt as members of
racial and religious minorities in a coun
China has already made its feelings try that viewed them with suspicion, and
clear, threatening “strong and resolute they devoured writings about them.
measures” if the trip goes ahead. Hu Xijin, When Mr Obama became the first black
a former editor of a nationalistic Chinese president of America, students memo
tabloid, proposed that China’s armed forc rised lines from his victory speech.
es impose a nofly zone on Taiwan or at
least fly aircraft over the island. He also These works taught students more
suggested that Chinese warplanes should than just English. They also taught them
escort Ms Pelosi’s aircraft and that, if they about a world outside Chinese rule: one
came under fire, China should attack Tai where a member of a racial or religious
wan’s military aircraft and bases. minority could hold power. English felt
like a passport to another life.
Until recently such threats might have
been dismissed as bluster. Ms Pelosi’s visit But in the years following Mr Xi’s visit
is arguably no more provocative than Mr in 2014, the movement came to a halt.
Gingrich’s. American congressional dele Uyghurmanaged schools were closed.
gations have visited regularly, as have Teachers were detained. Uyghurs knew
other countries’ legislators. something was going to happen, says Mr
Abdurehim, who fled to America. “We
Yet there are reasons to be worried by just didn’t realise it would come to this.”
China’s sabrerattling. In 1997 it did not
have the capabilities for an effective mili sending officials to Taiwan more often. Ms “The Chinese appear to perceive the
tary response. That became clear in 1996, Pelosi’s trip would come at a sensitive mo need to demonstrate that the us cannot
when America sent two carrier groups to ment for China’s leader, Xi Jinping, about keep salami slicing its oneChina policy
the area after China fired missiles into wa three months before a Communist Party with impunity,” says Bonnie Glaser of the
ters nearby. Since then China has accumu congress at which he is expected to secure German Marshall Fund of the United
lated many of the forces needed for an as a third term, violating recent norms. Mr Xi States, a thinktank. She added that in April
sault and, in the past two years, tested Tai is already facing unexpected challenges in a former Chinese army officer emailed her
wan’s defences with frequent aerial drills sustaining his zerocovid strategy, manag to express his “personal opinion” that Chi
around the island. ing an economic slowdown and finessing na’s air force would stop Ms Pelosi’s plane
his support for Russia on Ukraine. Having from landing in Taiwan. Such aerial brink
Chinese officials are increasingly con linked Taiwan’s reunification to his “na manship is still unlikely given the risk of
vinced that the White House is recalibrat tional rejuvenation” goal, he might feel a escalation. But one thing is certain: there is
ing America’s “oneChina” policy (which need to prove his resolve if tested. turbulence ahead. n
acknowledges the Chinese position that
Taiwan is part of China), including by
012
Middle East & Africa The Economist July 23rd 2022 41
Egypt’s political prisoners Public speech is controlled ever more
rigorously. After Mr Sisi came to power, the
Too many to count intelligence services bought several of the
main television channels. Officials feed
The president wants dialogue, but he still keeps his critics behind bars talking points into currentaffairs pro
grammes and approve the scripts of soap
It was hard to believe. At an annual close comrade was freed. operas. Even novelists must kowtow. The
breakfast gala in April near the end of the When Mr Sisi took power, he at first only Egyptians who publicly denigrate Mr
Muslim holy month of Ramadan, Presi Sisi live abroad. To silence them the securi
dent AbdelFattah alSisi suddenly wanted cracked down on his Islamist foes, espe ty services often arrest their relatives. Hu
to hold talks with his downtrodden oppo cially the Muslim Brothers. But in recent manrights defenders are hit with travel
nents. “The homeland is big enough for all years the repression has been aimed more bans, their assets often frozen to make life
of us,” he said. “Differences of opinion widely—at anybody who, for instance, crit miserable at home. Hundreds of websites
need not spoil it.” To show goodwill he re icises the president’s economic policy, or deemed critical are blocked.
vived a presidential pardons committee. complains of sexual harassment (especial
Several thousand ordinary prisoners were ly by someone wellconnected), or offends Despite the talk of reconciliation and
freed, but very few political ones. All the conservative mores. All such critics risk some token releases of political prisoners,
same, not since toppling an Islamist gov going to jail. Fair trials are rare. the pace of arrests for political reasons, in
ernment in a coup in 2013 has the former cluding simply making Egypt look bad, has
general struck so conciliatory a tone. Least accountable for abuses are the se not abated. In recent weeks Egyptians have
curity services. In January a leaked video been arrested for panning the government
Alas, the national dialogue officially set appeared to show torture at a Cairo police on Facebook, for posting videos on TikTok
to begin this month is unlikely to reverse station. Rather than investigate the police, of people dancing in a mosque, and even
Egypt’s slide into despotism. The outlawed the state prosecutor put the alleged victims for encouraging people to meet near mid
Muslim Brotherhood, which ran the previ on trial, accusing them of undermining night dressed as Batman.
ous government and has the largest con the police by fabricating a tale of torture.
tingent of political prisoners, has been ex The number of people behind bars for
cluded from the talks. Opposition parties → Also in this section nonviolent opposition is impossible to
taking part are doing so to get their mem calculate but must number in the tens of
bers freed. Hamdeen Sabahi, a moderate 42 Tunisia’s dangerous referendum thousands. A main reason for the impreci
leftwing opposition leader, was shown on sion is that much of the justice system has
television embracing Mr Sisi after the dia 43 Growing Senegal’s trust economy come under the control of Egypt’s shadowy
logue was announced. Two days later a Supreme State Security Prosecution (sssp).
44 Africa’s startup boom Its caseload under Mr Sisi has exploded
from 529 new cases in 2013 to 2,800 last
year. Suspects are usually accused of join
ing a terrorist organisation or spreading
false information. Often they are not told
012
42 Middle East & Africa The Economist July 23rd 2022
which militant group they are accused of Cells for solitary confinement can be too that last year a detainee died from medical
joining—”for reasons of national security”. small to lie down in. More than 1,000 peo complications on average once a week.
ple have died in detention since 2013, in
In the year after Mr Sisi’s coup, rights cluding the president Mr Sisi toppled, Mu Mr Sisi has said there are no political
groups counted about 45,000 dissidents hammad Morsi, a leading Muslim Brother. prisoners. Officials say that instances of
who had been taken to court. The tally of He died of a heart attack in court in 2019 torture are very rare, attributing them to
cases was even uploaded onto a widely after being denied treatment in prison for bad policemen. But the regime is twitchy
shared opensource document called Wiki high blood pressure and diabetes. When about such allegations. This year jails were
Thawra (Wiki Revolution). But it soon be Ayman Hadhoud, a 48yearold economist relabelled “reform and rehabilitation cen
came harder to track the numbers. Once a critical of the government, died in police tres”. Prison wardens have been renamed
critic deemed worthy of silencing is ac custody in March, his family was not noti “directors”. Some inmates are being trans
cused of being a terrorist, his or her case is fied until over a month later. The public ferred to two new prison complexes with
handled by the sssp, which often denies ac prosecutor called it a heart attack and de supposedly better conditions. Mr Abd el
cess to lawyers for the defence and keeps nied that there were signs of torture, as Fattah was moved to one in May. His sister
the evidence and case files secret—once claimed by rights defenders. It is reckoned has reported that it was the first time in
again, on nationalsecurity grounds. Pris years that he had slept on a mattress. n
oners then become harder, sometimes im
possible, to count or trace. Tunisia
Another difficulty in totting up the A reform that makes matters worse
numbers is that a single case can embrace a
multiplicity of defendants. A rights group The president is set to enact a sloppy and ominous new constitution
that scrutinises the sssp found that it
opened 2,800 cases last year. As of June 7th In a past life Kais Saied might have summer, not a time when many people like
only nine of them had been referred for flunked himself for turning in such to queue at polling stations.
trial, encompassing 336 defendants. In shoddy work. Once a constitutionallaw
2016 the Arabic Network for Human Rights professor with a reputation for exactitude, The new charter would turn Tunisia’s
Information, an Egyptian rights group that now Tunisia’s president, Mr Saied gave parliamentary system into a strong presi
was forced to close down this year, esti himself a big homework assignment this dency. Almost 12 years after Tunisians
mated that the number of political prison year: draft a new constitution. As with overthrew a dictator in the first revolution
ers had ballooned to 60,000. Its research many a group project, it got going late, of the Arab spring, a small share of them
ers’ latest reckoning is 65,000. Some spec leaving his fellow authors just a month to will decide whether to anoint a new one.
ulate it is higher, others lower. Many thou overhaul the existing national charter. He
sands of unknown prisoners are thought finally released the text hours before a self The referendum comes a year to the day
to be stuck in pretrial detention, where imposed deadline, only to admit a week after Mr Saied suspended parliament
prisoners often languish for months and later that it contained mistakes. (which he later dissolved) and much of the
sometimes years. constitution. He has since taken a sledge
On July 25th Tunisians will mark his hammer to Tunisia’s democratic institu
Kafka comes to Cairo handiwork in a referendum. Or, rather, tions, seizing control of the electoral com
Egyptian law sets a twoyear limit for sus some will: the ballot was scheduled for a mission and sacking judges. He now rules
pects to be tried or freed. But prosecutors long holiday weekend in sweltering mid by decree. Though he appointed a prime
get round this simply by reassigning sus minister last year, her powers are limited.
pects to new cases, a device so common The microphonic president
that it is known as “rotation”. The sssp can His new constitution would formalise
thereby reset the clock and hold suspects this power grab. It allows the president, not
indefinitely without trial, even if their ini the prime minister, to hire and fire minis
tial offence is only to have posted a flippant ters and to declare an indefinite state of
remark on the internet. emergency. mps would lose the power to
impeach the president, along with some of
Egypt’s most prominent political pris their parliamentary immunity. They
oner, Alaa Abd elFattah, a blogger and would, for instance, be liable to prosecu
computer programmer, was arrested in tion for libel or slander. An odd clause on
2013 for allegedly inciting a protest against religion and state seems to make Mr Saied
Mr Sisi’s draconian ban on protests, which the arbiter of God’s will in Tunisia. “It’s un
are now exceedingly rare. After serving five checked concentration of power in the
years, he was rearrested and spent over two president’s hands,” says MohamedDhia
years in pretrial detention. In December a Hammami, an academic.
court sentenced him to another five years,
this time for sharing a Facebook post about The existing constitution, approved in
abuse in prison. Since April, he has been a referendum in 2014, went through multi
on hunger strike in a bid for freedom. ple drafts over two years. Elected represen
tatives toured the country to hold public
Interrogators regularly torture suspects debates and parley with civilsociety
with electric shocks or hang them by their groups. The process was imperfect but
limbs in the hope that they will confess. gave many Tunisians a say in the outcome.
Sentencing has become more severe. Egyp
tian courts condemned at least 356 people This time, no one is even sure who
to death last year, the highest number in wrote the text. Mr Saied asked for input
the world after China and Iran. through an online survey, which fewer
Prisons themselves are houses of hor
rors. Inmates are often beaten and denied
visits, fresh air and urgent medical care.
012
The Economist July 23rd 2022 Middle East & Africa 43
than 4% of Tunisians bothered to com Garden centres in Senegal
plete. He named a committee to draft the
constitution on May 20th. Its work was due Unsecured green investments
a month later. Sadok Belaid, the law profes
sor who led it, has since denounced the fi DAKAR
nal product. He says Mr Saied’s text differs
from what the committee submitted and Thousands of pricey plants are left unguarded yet unmolested
calls it “dangerous”.
Tucked alongside the baking asphalt in the undergrowth. Even on normal
Advisers, or the president himself, and dusty curbs of Dakar, the capital weekdays many owners simply leave
seem to have made lastminute changes— of Senegal, are dozens of small oases. In signs with phone numbers for interested
sloppily. Among the errors Mr Saied ac garden nurseries shapely shrubs, bright buyers to call.
knowledged on July 8th: the constitution bougainvilleas and potted palms leaven
failed to specify if parliament would be the heat. Along some roads scores of Such confidence is not uncommon.
elected directly, or—as the president has nurseries cluster together, giving motor Pollsters from Afrobarometer found that
proposed—indirectly by local councils. ists the momentary sensation of zoom the Senegalese are the fifth most trusting
ing through a botanic garden. At night people in Africa. One in five of them
Voters had less than four weeks to con these greenfingered traders simply go think “most people can be trusted.” That
sider the text before the referendum. The home, leaving their leafy assets rustling may be enough. Adama, who runs a
runup to it has been subdued. Mr Saied in the breeze, vulnerable to any passing roadside nursery, says he has suffered
has no political party and has done little thief. How odd. only a few thefts in ten years. “If you are
campaigning. His opponents have done friendly to everyone then when you are
even less to urge a No vote. Instead, several The value of this unattended flora away they keep an eye out, even at night.”
parties, including Ennahda, the Islamist quickly adds up. Pierre, a nursery owner,
faction that held a plurality in parliament, says that each of his plants is worth Ignorance may also play a role. Most
have urged voters to boycott. Tunisia’s for 10,000 cfa francs ($16) on average. He has people do not know the value of vegeta
midable main publicsector union has not about 300. With perhaps 30 other plant tion, explains Birane, pointing out a rare
taken a position. purveyors on the same stretch of road, variety worth 50,000 cfa. The only peo
some $150,000 of shrubbery is left by the ple who might steal such pricey plants
Tunisians need little encouragement to greenfingered to the mercy of the light are gardeners he knows and works with,
stay at home. Voter turnout has been fall fingered. That is a fortune in a country he notes with a chuckle. And since he
ing since the revolution, from 68% in the where the average income is only about sells his bigger, more valuable ones in
general election of 2014 to 43% in 2019. One $4.50 a day. heavy pots they are harder to snaffle.
poll in May found that only 13% of voters Some flora also defend themselves: cacti
planned to show up for the referendum. Such a contrast could be a recipe for can spike the enthusiasm of thieves
But no minimum turnout is required to en theft—or a strong argument for a night scrabbling in the dark.
dorse the new charter. watch to secure these green investments.
Yet Birane, a 70yearold trader, says he Not everyone is so sanguine. At a
Still, a derisory showing would be a big has suffered only one theft in his career. small nursery in a posh part of town
blow to Mr Saied. His popularity has “We don’t have a guard,” he smiles, ges Moustapha, the young owner, has per
slipped in one survey from 82% last sum turing to the dozens of nurseries nearby. suaded some unemployed friends to
mer to 59% in April. Yet once the new con keep watch overnight. “I’ve invested a lot
stitution is in place, he may ram through Sometimes there is no one there so I must keep it secure,” he explains. Yet
an electoral law that scraps party lists in fa during the day, either. When your corre even he falls back on trust of a different
vour of individual candidates, further hob spondent visited on a public holiday only kind—in God. I have “mystic security”, he
bling the already weak opposition. three of the 30 or so nurseries had any adds with a smile. “He who steals falls
one present—and one of them was asleep sick until death.”
None of this helps tackle Tunisia’s most
pressing concern, the economy. Unem Down the garden path
ployment is 16% and inflation 8.1.%. The
central bank said in May that the fiscal def
icit would reach 9.7% this year, instead of
6.7% as previously expected, partly owing
to costlier food and fuel subsidies. The cur
rentaccount shortfall will be similarly big.
Tourism has yet to recover from covid19.
The government is hoping for a $4bn
loan from the imf, but the main trade un
ion opposes cuts in public wages that
might come with it. The union flexed its
muscles in June with a oneday strike that
closed staterun firms, public transport
and even airports. Mr Saied has little to say
about any of this, delegating economic
policy to his ministers while he chases his
more abstract political goals.
Before he became president, Mr Saied
once described referendums as a tool used
by Arab dictators to create a veneer of rep
resentative government. Now he is eagerly
using them for just that purpose: to pro
vide a façade of democracy while tearing
down a flawed but real one. n
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44 Middle East & Africa The Economist July 23rd 2022
Investing in Africa firms founded by women, who still find it
particularly hard to raise money, says Elo
Adventurous capital ho Omame of FirstCheck Africa, a fund that
invests in such outfits.
JOHANNESBURG
A shortage of skills is another problem.
When it comes to raising venture capital, African startups buck the global trend Software developers are in high demand.
Perhaps more important, so are the sea
When maurizio caio, a fund manager Capital gains soned managers who can turn potential
with about 20 years of experience in into profitability. Those with experience in
tech, began raising money in 2015 for an Africa, venture capital deals multinational companies often struggle
African startup fund, investors were hesi when they move to startups, adds one
tant. “They said to pick either Africa or ven Number Value, $bn founder. Legal expertise is scarce, too. That
ture capital (vc),” says Mr Caio, who jointly has contributed to a complaint by foun
runs tlcom Capital, a fund focused on Af 750 6 ders—and laterstage investors—that Afri
rica. “There is an Africa risk and a vc risk,” ca’s young entrepreneurs give away too
was the message. “Don’t combine the two.” 625 5 much equity, too soon.
Such attitudes are rarer these days. Last 500 4 Governments could do more to let the
year 604 African startups raised a total of industry thrive. Conservative rules on how
$5.2bn, according to the African Private 375 3 pensions use their money crimp invest
Equity and Venture Capital Association ment. For startups, myriad regulations, es
(avca), an industry group. This was more 250 2 pecially around payments, hamper
than the total invested in the seven preced growth. This matters because investors
ing years (see chart). Though just a fraction 125 1 want to back startups with the potential to
of the $600bn invested globally by vc scale up across Africa. Rich countries make
funds, it was a sign of changing attitudes 0 0 life hard, too. Getting visas to travel to meet
towards a continent that lacks capital and 2014 17 19 21 investors is a pain, notes Dare Okoudjou,
needs more businesses. It is a shift that 2014 17 19 21 the boss of mfs Africa, a payments firm. If
should endure, despite the global econom it were not for his French passport (he also
ic downturn. Five of Africa’s seven “uni Source: AVCA has one from Benin, his country of birth),
corns” (startups valued at more than $1bn) he says he would not have been able to ex
won their horns last year. says, “African vc will be left standing in pand his firm.
this slowdown,” because the capital they
American investors led the charge, with raise on the continent is less flighty. Rich Even if the next few years prove more
357 involved in deals last year, compared Africans are increasingly dabbling in vc. challenging for African startups and vc,
with 268 in total in 201420. These includ Successful founders tend to reinvest their the industries seem likely to continue to
ed such firms as Andreessen Horowitz, Ti wealth in new firms. And Africa’s myriad grow and prosper. Today few money man
ger Global and Ribbit Capital, and billion market failures mean that there are open agers would be laughed out of an invest
aires like Jeff Bezos and Jack Dorsey, the ings for startups that tackle inefficiencies ment committee for suggesting an African
founders of Amazon and Twitter respec in areas such as retail, energy and logistics. venture, says Mr Caio. Just as encouraging,
tively. “We’ve broken into the mainstream “There is money to be made in these sup there is less reliance on funds that insist
of global venture capital,” says Daniel Yu, plydemand gaps,” says Mr Okello. What is that an African business must solve all
the founder of Wasoko, an ecommerce more, he adds, valuations are lower rela kinds of social problems as well as turn a
startup that raised $125m in March. He tive to revenues in Africa than elsewhere. profit. These days, “Africa is just a market
thinks the success of ecommerce firms with great business opportunities—like
such as Flipkart in India and MercadoLibre “Five years ago the experience of trying everywhere else.” n
in Latin America has spurred investors to to get investors sold was very different,”
seek similar opportunities in Africa. says Onyekachi Izukanne, the boss of The hobbled unicorn
TradeDepot, a Nigerian ecommerce start
Capital may soon be harder to come by. up. Many investors sought out startups
“Fundraising will be much tougher,” says that resembled ones that had thrived in the
Marlon Chigwende of Admaius Capital West; Jumia, dubbed the Amazon of Africa,
Partners, a fund based in Rwanda. “Africa became the first African unicorn. Though
ends up being one of the last places to look its early backers did well when it went pub
and one of the first places that will get lic, the firm has since lost much of its value
pulled back.” That may end up being the because of a business model that did not fit
case, but there is not yet a slowdown. Start poor consumers and creaky logistics. To
ups in Africa raised more in the first half of day, rather than hunt for consumerfacing
this year than in the same period last year, businesses like Amazon, investors focus
according to data collated by Max Cuvel on startups that make it easier for firms to
lier, who publishes a newsletter about Afri send money to each other, transport goods
can vc, making it the only part of the world and fill inventories.
where such investment is still growing.
Even so, the vc industry in Africa has a
One reason for this is the growth of Afri way to go. Because it is still nascent, it has
cabased funds, which invested in a quar not yet built up a record of mouthwater
ter of deals last year, compared with 10% ing returns to tempt a wider pool of inves
between 2014 and 2020. Richard Okello of tors. And even if startups do well, vc funds
Sango Capital, based in Johannesburg, worry that plummeting local currencies
may yet erode their gains. Diversification
might help, but the industry is concentrat
ed in Egypt, Kenya, Nigeria and South Afri
ca. And it may be overlooking the many
012
RSEPPECOIRATL: A broken
idea
ESG investing
→ July 23rd 2022
3 In need of a clean-up
5 Asset managers
6 High charges
7 Investment performance
8 Companies
9 Rating agencies
10 The regulators
12 The future
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012
Special report ESG investing The Economist July 23rd 2022 3
In need of a clean-up
The environmental, social and governance (esg) approach to investment is broken. It needs to be streamlined
and stripped of sanctimoniousness, argues Henry Tricks
Desiree fixler is, in her own words, “no wallflower”. When concerns, especially climate change. Yet it has had a negligible im
she was hired in 2020 to be head of sustainability at dws, a pact on carbon emissions, especially by the biggest polluters. Its
German asset manager affiliated to Deutsche Bank, she reckons attempt to address social issues such as workplace diversity is
Asoka Wöhrmann, her boss, must have known the type of person hard to measure. As for governance, the esg industry does a lousy
he was taking on. She was a Wall Street veteran. She was battle job of holding itself to account, let alone the companies it is sup
hardened, having traded credit derivatives in the runup to the posed to be stewarding. It makes outsize claims to investors. It
200709 financial crisis. She had seen the power wielded by regu puts unmanageable demands on companies.
lators. If you pictured somebody who works in sustainability as a
soft touch, think again. “I’m hard core, especially when it comes to And yet, for all its pitfalls, it may be better to overhaul than to
compliance,” Ms Fixler says. bin esg. At its core, it is a quest for something increasingly crucial
in the battle to improve capitalism and to mitigate climate change:
How hard core became clear on May 31st, when 50 German po making firms and their owners accountable for their negative ex
lice, investigators and regulators, acting on allegations first aired ternalities, or the impact of production or consumption of their
by Ms Fixler, raided the offices of dws and Deutsche Bank in Frank products on third parties, such as the atmosphere. By forcing busi
furt. Their focus was on alleged “greenwashing”—the extent to nesses to recognise the unintended consequences of many of
which dws may have misstated its use of environmental, social their activities, the theory is that they should then have a greater
and governance (esg) criteria in its investment portfolio. It cost incentive to fix them.
Mr Wöhrmann his job. It was a chilling moment for big asset man
agers around the world. And it marked a low point in a year in The more regulatory pressure there is to make such informa
which esg has turned from an investment craze attracting tril tion more accurate, the better for the longterm future of compa
lions of dollars on promises to make the world a better place into a nies and the world in which they operate. As it is, measurement of
source of eyerolling cynicism. the size of the esg market is confusing, the ratings are too subjec
tive, and the industry overpromises and underdelivers.
dws and Mr Wöhrmann deny the allegations, which they say
have been investigated internally. But whether the authorities Start with measurement. Asset managers have two ways of
find evidence of misbehaviour or not, there is much about dws’s thinking about esg. The first is relatively downtoearth. It is the
esg business that is perplexing. So it is with the industry in gener sale of actively and passively managed funds specifically built
al. It is the contention of this special report that, from impact to around sustainability ratings. In the past two years, these have
measurement to disclosure, much of esg is deeply flawed. boomed. Take dws, for instance. In 2021 it said its dedicated esg
funds had soared to €115bn ($136bn), more than a tenth of its total
The concept’s popularity has been partly fuelled by realworld assets. In the industry at large, Morningstar, a fund tracker, says
012
4 Special report ESG investing The Economist July 23rd 2022
esg assets in mutual funds and exchangetraded funds (etfs) claim that esg funds outperform mainstream ones, even if this
were almost $2.8trn at the end of the first quarter. That is roughly does not stand up either theoretically or empirically.
the size of the cryptocurrency market. But it is still niche com
pared with global portfolio investment as a whole. On top of all these flaws, esg has suffered a backlash from
those who think that financial elites go too far in pursuit of trendy
The second way of discussing esg, however, is ballyhoo verg causes. Rightwing critics of “woke capitalism” see it as a way for
ing on baloney. It is called esg integration, and is the main pro sanctimonious ceos to smuggle in progressive ideas that many
blem that Ms Fixler claims to have identified at dws. She says there dislike, such as phasing out fossil fuels. Those focused on returns,
were no tools in place to measure it. esg integration means getting such as Aswath Damodaran of New York University’s Stern School
portfolio managers in nonesg funds to use ratings as a riskman of Business, note that esg metrics failed to discount Russiabased
agement tool, rather as they do to evaluate the dangers of reces companies before the invasion of Ukraine, further undermining
sion or supplychain disruption. In 2020, when dws called esg their credibility. Others point to an inherent hypocrisy: for exam
“the core of everything we do”, it claimed that the assets to which it ple, esg ratings measure the risks that climate change pose to a
applied esg integration were worth €459bn, well over half its total company, rather than the threat the company poses to the climate.
€793bn portfolio. That is a whopping amount. Yet a year later dws
scrapped its esg integration number altogether. It said it was The most salient criticism is that by promoting a secondbest
changing its approach to disclosure partly for regulatory reasons. solution such as esg, the private sector may be giving policymak
But it also followed what Ms Fixler says was her attempt to draw ers an excuse to avoid imposing what many see as the best way to
the attention of the authorities to such nebulous numbers. respond to climate change: coordinated carbon taxes. Yet it is
possible to turn this on its head. esg may be worth preserving pre
Your number’s up cisely because taxes on externalities, such as carbon emissions,
dws’s volte face suggests that a rethink is needed in the industry at have proved so politically hard to push through.
large. Datagatherers, such as the Global Sustainable Investment
Alliance, make eyepopping claims about the size of the esg mar Tighter regulatory oversight of esg is coming, especially in
ket. According to its latest report, sustainable investment in 2020 Europe. In America the Securities and Exchange Commission is
reached $35.3trn, more than a third of all assets under manage hoping to beef up oversight of climate disclosures (though a re
ment in the big economies that it covers. That makes it sound as if cent Supreme Court ruling may constrain it.) The hope is that
esg is more important to financial markets than it really is. The greater supervisory pressure will eventually help capital markets
vast bulk of it (some $25.2trn), comes from esg integration, which to “internalise externalities”—ie, to reward companies for reduc
dws’s experience shows may be little more than a finger in the ing their carbon footprints through higher asset prices and a lower
wind. For an industry that prides itself on trying to measure things cost of capital. That means, in the words of Ken Pucker of Tufts
that are hard to measure, the job it does in measuring itself is hard University, that it will be necessary to measure less, better. More
ly confidenceinspiring. over, Sustainability Inc, as Mr Pucker calls it, will have to jettison
the hyperbole that has so harmed its reputation.
Next look at subjectivity. When Ms Fixler first arrived at dws,
she says one of her surprises was observing that its esg scoring The industry, always striving to be upbeat, notes that during
system, using thirdparty rating agencies, gave Wirecard, a Ger the recent market turmoil money has seeped out of esg funds
man payments firm in which dws funds were big investors, the more slowly than from mainstream ones. Last year, even as dws
secondhighest rating for governance. At the time, Wirecard was faced Ms Fixler’s allegations, esgrelated money accounted for
embroiled in an accounting fraud that would shortly lead to its 40% of its net inflows. In his speech at the firm’s annual general
collapse. And Amazon, the ecommerce giant, had dws’s lowest meeting in June, Mr Wöhrmann, after rejecting what he said were
governance rating, she says. unfounded accusations, highlighted those flows. “Our clients
have spoken,” he said. Such overconfidence epitomises the asset
Such apparent contradictions extend to the industry at large. management industry. n
The esg rating agencies are the veritable acme of inconsistency. A
study of six of them found that they used 709 different metrics Talk, talk
across 64 categories. Only ten categories were common to all—
and they do not include such basics as greenhousegas emissions. S&P 500 companies, mentions of “ESG”* in quarterly earnings calls
Indexproviders add to the confusion. In May s&p Dow Jones 150
Indices kicked Tesla out of the esg version of its s&p 500 index,
while keeping oil giants like ExxonMobil in. It noted the electric 100
vehicle maker’s contribution to promoting sustainable transport
but gave it short shrift. Instead it penalised Tesla for workplace 50
and governance issues. Elon Musk, Tesla’s boss, was not the only
person to consider this absurd. Many detect too much toing and 0
froing over complex ethical questions. Armsmakers, shunned by 2017 18 19 20 21
the esg crowd before the war in Ukraine, are now bemused to find
themselves being feted as defenders of democracy. John Gilligan, Worldwide ESG* assets under management, 2021, $trn Bond ETFs† 0.07
of Big Issue Invest, a $100m impact fund allied to a social enter Total=$2. 2trn
prise for the homeless, sums up the subjectivity. “The idea of mea
suring esg is like trying to find a measurement for your favourite Equity mutual funds 1. 1 Bond mutual Other mutual Equity
child,” he says. funds 0. 7 funds 0.51 ETFs†
0.26
The third problem is that esg has become a gravy train for the
investment industry. Although it emerged in response to the pref Source: Bank for International Settlements *Environmental, social and governance
erences of investors, especially millennials, to do more with their †Exchange-traded funds
investments than make money, asset managers have turned this
to their advantage. On average, they charge higher fees for esgre
lated investments than for nonesg ones. In marketing, they
012
The Economist July 23rd 2022 Special report ESG investing 5
Asset managers
The saviour complex
It’s time to get real about what esg can—and cannot—achieve vestigation into some esg equity funds with assets under manage
For all the things the sustainability industry tries to measure, it ment of $725m. It said it was cooperating.
seldom considers its injurious effects on the ear. The field of
esg is replete with enough acronyms and platitudes to tear a hole It is not clear how far the regulatory crackdown may go. In
in the English language. Winwin is only the worst. There are also
purpose and profit, values and value—and the list goes on. When Europe a bigger upheaval has come via regulatory fiat. According
people cut through such pieties and liken esg to a Wild West,
where everyone makes their own rules so as to get as much money to Morningstar, the region accounts for more than fourfifths of
as possible, it is time to sit up and listen.
sustainablefund assets. eu regulators encourage more sustain
A business that started with sandalclad clerics making ethical
investments has been transformed by the world’s biggest asset able investing, and police it more carefully.
managers, such as BlackRock, State Street Global Advisors and
Vanguard, which collectively own more than a fifth of the average Last year the bloc introduced a sustainablefinance disclosure
firm in the s&p 500. Their actively managed esg funds remain a
small part of overall assets under management. But as Cameron regulation, requiring funds that claim to use esg to categorise
Brandt of epfr, a firm that tracks fund flows, puts it, net inflows
into esg have been like “pixie dust” to investment funds, helping themselves in three ways, depending on their sustainability ambi
offset outflows in other parts of their portfolios. And their ability
to use esg criteria to decide how to vote the trillions of dollars of tions. The lowest level, article six, covers mainstream funds.
passive funds that they manage adds to the concept’s importance.
Those with some esg features, known as article eight, are keen to
There are two main drivers behind this focus on esg. The first,
revealed by State Street’s bronze statue, “Fearless Girl” , outside the upgrade to article nine, where esg is their main objective. Asset
New York Stock Exchange, is that by marketing itself as an envi
ronmental and social champion, the investment industry com managers across the world are eagerly repurposing funds to en
petes to attract the growing wealth of younger savers. Studies sug
gest that the young like to express their environmental and social sure they meet the articlenine criteria, insiders say.
preferences through investments (though by no means all are so
cial warriors or treehuggers). Given that their pensions will accu Yet everywhere concerns about false marketing are growing,
mulate for decades to come, they will also be more exposed to the
longterm risks of climate change than older savers. and academics, as well as regulators, wish to expose it. A study in
In search of fees May by Aneesh Raghunandan of the London School of Economics
The second motive is that the sale of esg products helps asset
managers to mitigate the twodecadeold curse of declining fees. and Shiva Rajgopal of Columbia Business
A study by Morningstar, a fundtracking firm, said investors in
sustainable funds paid a “greenium” compared with those in School concluded that asset managers did
mainstream funds. Average annual fees for sustainable funds, al
beit modest at 0.61%, were almost 50% higher than for traditional not “walk the talk” when they claimed to be
ones. This is clear from a comparison of three BlackRock ex
changetraded funds (etfs), all with similar holdings; the sustain Everywhere picking stocks that engage in stakeholder
abilitylinked ones charge higher fees (see box on next page).
concerns about friendly behaviour. Their analysis of Amer
In the industry as a whole, the interplay of valuesdriven mar false marketing ican mutual funds between 2010 and 2018
keting with a hunger for high fees raises fears of “greenwashing”. are growing found that companies in esg investment
The concern is that funds may oversell the extent of their use of portfolios violated labour laws, paid more
esg purely to attract customers. “We are all grappling with how we
manage this tsunami of esg and make it fair for consumers,” says fines and had higher carbon emissions
Sacha Sadan, a director at the Financial Conduct Authority, Brit
ain’s securities regulator. than those in nonesg portfolios sold by
So far there have been only sporadic signs of a crackdown on the same institution.
esg funds. The highestprofile one is the investigation by Amer
ican and German authorities of dws, the asset manager owned by Insiders are speaking out. Tariq Fancy,
Deutsche Bank. In May the Securities and Exchange Commission
(sec) imposed a $1.5m fine on an investment unit of bny Mellon, a
bank, for allegedly misstating esg information. It was the first
time it had reached such a settlement with an investment adviser.
In June Goldman Sachs revealed that the sec had launched an in
012
6 Special report ESG investing The Economist July 23rd 2022
aware of the risks they face, and companies strengthen their own
Feeling better esgrelated disclosures. The result may be a smaller universe of
Cumulative flows into equity funds, $trn funds, more targeted on particular issues, and more credible.
Worldwide “Customisation is coming fast,” says Ms Harford.
1 One area of recent attention is socalled exclusionary funds.
Total ESG* equity These old workhorses of the industry aim to shun such sectors as
0 fossil fuels, tobacco or guns, either for ethical reasons, or because
ESG* active equity investors hope to shame the industries into behaving better. They
are in the spotlight because stocks from some formerly untouch
-1 able industries have rallied sharply, partly as a result of the war in
Ukraine, encouraging some fund managers to reconsider whether
-2 it is right to keep them at arm’s length.
Non-ESG* active equity This is not just a cynical ploy. There is increasing evidence that
divesting from dirty industries simply shunts assets around, cre
-3 ating no net benefit to anyone except those who are happy to hold
2015 16 17 18 19 20 21 22 “sin” stocks. And, as is borne out in a paper by Jonathan Berk, of
Source: Bernstein *Environmental, social and governance Stanford Graduate School of Business, and Jules van Binsbergen,
of the University of Pennsylvania, it does not meaningfully raise
the cost of capital, making it harder for them to do business. A bet
BlackRock’s former chief investment officer for sustainable in ter way to effect change is for socially conscious investors to buy
vesting, issued a critique claiming that the profession is little stock and use their proxy votes to influence or even take control of
more than “marketing hype, pr spin and disingenuous promises”. a firm, the academics argue.
Some asset managers would dispute this, but others say scrutiny That strategy is known as engagement, which Zhihan Ma, head
may help bring order to the industry, even if it reduces inflows of esg at Bernstein, an investment firm, calls “the new buzzword”.
into esg funds. “All of this noise is going to hit the pause button,” It took centre stage last year when Engine No. 1, an activist hedge
says Suni Harford, president of ubs Asset Management, an early fund, won critical support from BlackRock, Vanguard and State
entrant into esg. Street to help it replace three directors on the board of ExxonMobil
Drill down into different esg strategies, however, and it is clear to strengthen its response to climate change.
that there is room for improvement—so long as enforcers are giv It is not always like this. BlackRock, which supported almost
en sharper teeth to weed out false claims, investors are more half of environmental and shareholder proposals in 2021, has said
it will reduce its backing for them because
they are overly prescriptive. Cue a volley of
How to charge more criticism from climate activists, who want
BlackRock to use the full extent of its pow
er to force companies to lower emissions.
Others, however, claim that stewardship,
Fees for managing esg funds tend to be higher than for non-esg ones particularly over trillions of dollars in pas
sive funds, is a dangerous way for asset
It can be hard to tell the difference obvious inference from this is that even managers to push their own agendas, rath
er than those of their clients.
between exchangetraded funds (etfs) lowfee index funds can charge more for
with an esg focus and those without one. esg funds than for nonesg funds. There A letter to the sec in April from 22 law
Take three iShares etfs all managed by are, however, two big caveats. One is that and finance professors, led by Lawrence
BlackRock: the Core s&p 500 (ivv), which the core s&p 500 fund is ten times the Cunningham of George Washington Uni
has no esg focus; the esg Screened s&p size of esgu and over 1,000 times that of versity, pointed to studies showing that in
500 (xvv); and the esg Aware msci usa the screened one. Its sheer scale may dividual investors do not show the same
(esgu). The top equity holdings in all help it charge lower fees. And esg index enthusiasm for esg as the big institutions.
three funds are Apple, Microsoft, Ama funds, though passive, also require more Vivek Ramaswamy, entrepreneur and au
zon, Alphabet a & c shares and Tesla. work to construct than plain vanilla thor, says that the influence of what he
Their biggest sectoral exposures are to ones. Like all things esgrelated, the calls a “monarchical technocracy” is not
tech, health care, financial services and truth is never simple. felt principally through the esg funds that
consumer goods. Two of the three have they raise. It is the vast number of shares
ExxonMobil, an oil giant, as one of their they can vote over their holdings, influ
top 20 holdings. ivv also has exposure to Dear and dearer enced in turn by their own esg priorities.
“sin” stocks, such as arms and tobacco Selected BlackRock exchange-traded funds Taking such concerns into politics, 12
firms, but they are a tiny fraction of its June 30th 2022 Republican senators proposed in May an
overall portfolio. All three funds have Returns since Net assets Expense “Investor Democracy is Expected Act”,
performed pretty much in lockstep this which would allow individuals to vote
Jan 1st 2022, % $bn ratio, %
year: down by a little over 20%. Core -21.0 280 0.03 their shares rather than Wall Street firms
acting on their behalf. It was partly aimed
Where they differ most strikingly is in S&P 00
the level of their fees. For all three, these ESG Screened -23.2 0.21 0.08 at stemming the ability to stoke what one
are lower than at actively managed mu S&P 00 senator calls “the left’s woke agenda in cor
tual funds. But fees for xvv are almost ESG Aware -22. 21 0.15 porate America”. Already the industry is
three times those for the nonesg fund; MSCI USA taking heed of the political winds. In June
for esgu they are five times as high. The Source: Company reports BlackRock said that, since October, clients
with $120bn of assets had opted to vote
012
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