The economist UK 02 02 2019

The Economist February 2nd 2019 7Contents continues overleaf1 Contents The world this week 10 A round-up of politicaland business news Leaders 13 The battle for Venezuela How to interven

FEBRUARY 2ND–8TH 2019

How to handle Huawei Talking to the Taliban Better ways to tax the rich The future of fertility

The battle for

Venezuela

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ACADEMIC AND RESEARCH COLLABORATION

MIT CONSORTIUM FOR ENGINEERING PROGRAM EXCELLENCE

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The Economist February 2nd 2019 7

Contents continues overleaf1

Contents

The world this week

10 A round-up of politicaland business news

Leaders

13 The battle for Venezuela

How to intervene

14 The war in Afghanistan

Talking to the Taliban

14 Chinese technology

Handling Huawei

15 The Brexit negotiations

Over to EU

16 Taxing the rich

A way through the warren

Letters

18 On childhood, science,Wetherspoons, Disney,Chicago

Briefing

20 Venezuela

A chance, at last,for liberation

22 The economy

The day after

Britain

23 May’s temporary triumph

24 Labour’s Latin love

25 Firms plan for no deal

25 Manchester’s buses

28 Rent controls in London

29 A doctor in your pocket

29 Alex Salmond accused

30 Bagehot Jeremy Corbyn’s

33 The marten menace

34 The gilets jaunes organise

34 A Turkish ghost town

35 Charlemagne Yanis

Varoufakis abroad

United States

37 Facebook and America

38 The government is open

Middle East & Africa

45 Africa’s smack track

46 Pain relief in Africa

47 Nigeria’s elections

47 Lebanon’s debt crisis

48 The pope in Arabia

BagehotJeremy Corbyn

is having a bad Brexit,

page 30

On the cover

The world’s democracies are

right to seek change in Latin

America’s worst-governed

country But their

responsibilities go further:

leader, page 13 A failed

revolution may itself be

overthrown, page 20 How

Venezuela’s economy can

recover from the Maduro

regime, page 22 Hyperinflations

can end quickly: Free exchange,

page 72

•How to handle Huawei

Banning one of China’s leading

firms from operating in the West

should be a last resort: leader,

page 14.The tech giant is

accused of rewarding

trade-secret pilferers on staff, page 60

•Talking to the Taliban A deal

to end the Afghan insurgency

would be wonderful—as long as

it is not a figleaf to cover an

American retreat: leader,

page 14 Edging towards a peace

deal, page 49

•Better ways to tax the rich

How to raise money, reduce

inequality—and limit the

economic damage: leader,

page 16 The Democratic

presidential primary contest is

already the most left-wing in

decades: Lexington, page 42

•The future of fertility Thanks

to education, global fertility

could fall faster than the UN

expects, page 56

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Volume 430 Number 9128

Asia

49 The war in Afghanistan

50 Japan and Naomi Osaka

50 Jihad in the Philippines

51 Religion in Pakistan

51 Sexism in Australia

52 Banyan In China’s debt

China

53 Baijiu’s global quest

55 Chaguan The politics

59 The meteoric rise of a

Chinese grain trader

68 Italy’s struggling economy

69 Counting dirty money

69 Credit-default swaps

70 Buttonwood Heaven

can wait

71 Bank mergers in the Gulf

71 Banking in Puerto Rico

72 Free exchange Ending

hyperinflation

Science & technology

73 Stopping ethics dumping

74 An Earth rock on the Moon

76 SETI with X-rays

76 A new typhoid vaccine

77 Did people create pandas?

Books & arts

78 Football and politics inTurkey

79 Wild Bill Hickok

80 Don McCullin’s camera

81 Johnson Learning from

10 The Economist February 2nd 2019

1

The world this week Politics

More Venezuelans took to the

streets to demand that Nicolás

Maduro, who rigged an

elec-tion last year, step down in

favour of the head of the

na-tional assembly, Juan Guaidó,

as the constitution prescribes

Mr Guaidó is recognised by

most Latin American

democ-racies, as well as the United

States and Canada Several

European countries said they

would recognise Mr Guaidó

unless elections are called

soon Mr Maduro, whose

mis-rule has led to hyperinflation

and food shortages, retains the

support of Russia, Turkey and,

lukewarmly, China Mr Guaidó

said he had held secret talkswith the Venezuelan army topersuade it to switch sides

America said that payments foroil imports from Venezuelawould be put into accountsthat would be available only to

a democratic government

A court in northern China

sentenced a human-rightslawyer, Wang Quanzhang, tofour and a half years in prisonfor “subversion” He was thelast to go on trial of more than

200 lawyers and activists whowere detained in 2015 Journal-ists, diplomats and Mr Wang’swife were barred from theproceedings

It’s my way or the Huawei

Canada’s prime minister,Justin Trudeau, fired his coun-

try’s ambassador to China,

John McCallum Mr McCallumhad ruffled feathers when hesuggested that Meng Wanzhou,

a senior executive of Huawei, atechnology firm, might have

strong grounds to challenge arequest for her extraditionfrom Canada to the UnitedStates to face fraud charges

The Supreme Court of stanrejected a petition callingfor a review of its earlier deci-sion to acquit Asia Bibi, aChristian woman accused ofblasphemy Rioting zealots hadpreviously called for her to behanged anyway This timeprotests were muted, as 3,000zealots had been locked up

Paki-Two bombs exploded near a

cathedral in the Philippines,

killing 20 people and injuringmany more Islamic Stateclaimed responsibility for theattack, which came just aftervoters in the Muslim-majorityregion voted in favour of morepolitical autonomy

American officials said theywere making progress in talkswith the Taliban about ending

the war in Afghanistan

Amer-ica has offered to withdraw its

forces if the Taliban promisenot to harbour terrorists, stopfighting and begin talks withthe Afghan government

An artless deal The government shutdown in

America ended on January 26thafter 35 days, making it thelongest in history PresidentDonald Trump blinked first inhis dispute with Congress,having promised to keep thegovernment closed until hereceived funding to build awall on the Mexican border.But he warned there would beanother shutdown—or that hewould declare a national emer-gency—if legislators did notfund his wall by February 15th

Roger Stone, a former adviser

to Mr Trump, was arrested inFlorida The office of RobertMueller, the special counselinvestigating links betweenRussia and Mr Trump’s elec-tion campaign, levelled sevencharges against Mr Stone,

The Economist February 2nd 2019 The world this week 11

2including witness tampering

and obstructing an official

proceeding

Time to smell the coffee

Howard Schultz, a former boss

of Starbucks, said he was

con-sidering running as an

in-dependent candidate in the

next presidential election

Critics warned that doing so

would split the anti-Trump

vote, thus helping the

presi-dent to secure another term

A polar vortex froze the

Ameri-can Midwest, with

tempera-tures falling to -33oC in

Chica-go At least eight people have

died because of the inclement

weather

Britain’s Parliament voted to

back the Brexit deal proposed

by Theresa May, the prime

minister, so long as she

re-places the Irish “backstop”,

which seeks to avoid a hard

border in Ireland, with some

unspecified alternative Michel

Barnier, the eu’s lead tor, said he was unwilling toreconsider the previous agree-ment Jeremy Corbyn, Britain’sopposition leader, met MrsMay to discuss options

negotia-Greecevoted to recogniseMacedonia, its neighbour,

under the new name of North Macedonia The agreementopens the door to North Mac-edonia’s admission to the euand nato

Gilets jaunesprotesters in

Franceset up not one but twonew political parties Neithersounds coherent One vows to

“remake politics around theheart and empathy” Other

gilets jaunesdenounced theparty-builders for selling out

Pride, swallowed Matteo Salvini, Italy’s deputy

prime minister, asked hisgovernment to bar prosecutorsfrom pressing potential kid-napping charges against him

He is in trouble over his order

to stop 177 migrants fromleaving a boat Mr Salvini hadpreviously welcomed the trial,saying he was proud to defendhis country

Zimbabwe’s police and armyhave been accused of massrapes, beatings and robberywhile crushing protestsagainst costly fuel

Benny Gantz, a retired general,jumped in opinion polls afterlaunching his campaign for

Israel’sparliamentary tions, due in April No one issure what he stands for, but Mr

elec-Gantz’s new party is expected

to win more than 20 seats inthe 120-seat Knesset Likud, theparty of Binyamin Netanyahu,the prime minister, is expected

to win 30 or so

More than 130 people are feared

to have drowned off the coast

of Djibouti after two boats

carrying migrants capsized.The vessels were carryingpeople from Africa to the Ara-bian peninsula, where theywere hoping to seek work

A judicial commission into

corruption in South Africa has

heard testimony from a nessman that governmentofficials and members of theruling African National Con-gress were put on monthlyretainers, paid bribes andgiven gifts including sportscars by a firm that won govern-ment contracts The daughter

busi-of one minister was also busi-fered driver training becauseshe kept crashing the cars shehad been given

of-12 The Economist February 2nd 2019The world this week Business

A dam belonging to Vale, the

world’s largest iron-ore

pro-ducer, collapsed in Brazil,

killing at least 84 people About

276 are still missing The

com-pany’s share price has fallen by

18% since the collapse;

in-vestors fear a torrent of

com-pensation claims and

regu-latory fines The firm said that

it will decommission dams

similar to the one that

col-lapsed, a move which will

reduce its annual output of

iron ore by 10%

In America, the Federal

Re-serve ditched its guidance to

investors suggesting that

further rises in interest rates

lie ahead The American

cen-tral bank pledged to be

“pa-tient”, citing low inflation and

recent economic turbulence as

reasons not to raise rates It

also said it would slow down

its policy of shrinking its

bal-ance-sheet if needed

America’s Justice Department

accused Huawei, a Chinese

technology company, of a

series of misdeeds including

theft of intellectual property

and the obstruction of justice

Huawei is also accused of

duping four banks into

vio-lating sanctions on Iran, on

which basis Canadian police

arrested Meng Wanzhou, its

chief financial officer, in

De-cember America formally

requested her extradition this

week If the allegations against

Huawei are proven, American

firms could be banned from

selling it their technology

Norwegian Air said that it

would try to raise NKr3bn

($350m) in a rights issue The

troubled carrier bet the house

on making a success of

low-cost flights across the Atlantic

Ocean But it is now paying theprice for expanding too fast;

last year it lost NKr3.8bn iag,

an airline group that ownsBritish Airways, recentlypulled out of takeover talkswith Norwegian and sold itsstake in the airline

The euro zone’s economy

failed to bounce back in thefinal three months of 2018,with growth remaining at 0.2%

in both the third and fourth

quarters Italy fell into

reces-sion over the period

Mean-while, Spain’s unemployment

rate fell to 14.5% in the lastquarter of 2018, its lowest rate

in a decade Although 3.3mpeople in the country are stilllooking for work, the un-employment rate has fallensteadily since its peak of nearly27% in 2013

Boeing, the American space giant, announced thatannual revenues last yearexceeded $100bn for the firsttime, helped by strong demandfor its commercial aircraft Lastyear the firm received 20%

aero-more orders for its civil jetsthan its European rival, Airbus

BuzzFeed, a news website onceknown for “listicles”, an-nounced another round of joblosses BuzzFeed’s founder andchief executive, Jonah Peretti,

said the company would duce its headcount by 15%, or

re-by about 250 jobs, according to

the Wall Street Journal Verizon

Media Group, which owns rivalwebsites such as HuffPost,Yahoo, and aol, also said itwould sack 800 employees

No pig’s land

Denmark is to build a 70kmfence along its German border

to repel stray pigs It will beconstructed to stop the spread

of African swine fever TheDanes, famed for their exports

of bacon and other pork ducts, are worried about in-fected wild boar bringing theuntreatable disease north,which could devastate live-stock and hurt the country’sfarming industry

pro-De Beers, the world’s largestproducer of diamonds, saidsales fell by a quarter at thestart of this year The mininggiant is particularly beingaffected by slower economicgrowth in China, the world’ssecond-biggest consumer ofthe stones

er, which its governmentannounced in 2011

Sailing high

Royal Caribbean, a cruise linebased in America, announcedthat revenues in the last threemonths of 2018 rose by 16% andprofits by 9.6%, year on year.Bookings for cruise holidayswere unexpectedly healthyover the winter Last year thecompany expanded by acquir-ing Silversea Cruises, a luxurybrand, and launching into

service the Symphony of the Seas, the largest passenger ship

in the world by gross tonnage

Leaders 13

If protests alone could oust a president, Nicolás Maduro

would already be on a plane to Cuba On January 23rd at least

1m Venezuelans from across the country took to the streets

de-manding Mr Maduro step down They were answering the call of

Juan Guaidó, who last week proclaimed himself the rightful head

of state Mr Guaidó has won the backing of most of Latin

Ameri-ca, as well as the United States and Europe Protests planned for

February 2nd promise to be even bigger But Mr Maduro is

sup-ported by the army as well as Russia, China and Turkey As The

Economist went to press, he was still holding on to power

Much is at stake Most important is the fate of 32m

Venezue-lans made wretched by six years under Mr Maduro Polls suggest

that 80% of them are sick of him Other countries are also hurt by

Venezuela’s failure The region is struggling with the exodus of

over 3m of its people fleeing hunger, repression and the socialist

dystopia created by the late Hugo Chávez Europe and the United

States suffer from Venezuela’s pervasive corruption, which

en-hances its role as a conduit for narcotics And as world leaders

pile in for Mr Maduro or against him, they are battling over an

important idea which has lately fallen out of favour: that when a

leader pillages his state, oppresses his people and subverts the

rule of law, it is everybody’s business

The scale of the disaster Mr Maduro has brought down upon

Venezuela is hard to comprehend In the past

five years gdp has fallen by half Annual

infla-tion is reckoned to be 1.7m per cent (the

govern-ment no longer publishes the numbers), which

means that bolívar savings worth $10,000 at the

start of the year dwindle to 59 cents by the end

Venezuela has vast reserves of oil and gas, but

the state oil company has been plundered and

put under one of the country’s 2,000 generals,

who has watched production tumble to 1.1m barrels a day People

are malnourished and lack simple medicines, including

anti-biotics Hospitals have become death traps for want of power and

equipment Blaming his troubles on foreign conspiracies, Mr

Maduro has rejected most offers of humanitarian aid

Despite this litany of suffering many outsiders, especially on

the left, argue that the world should leave Venezuelans to sort

out their differences Some adopt Mr Maduro’s view that Mr

Guaidó’s claim to the presidency, recognised immediately by the

United States, is really a coup Russia, which has worked hard to

discredit the idea that Western intervention can ever be benign

or constructive, is reported to have sent 400 troops from a

priv-ate military contractor, also spotted in Syria, Ukraine and parts

of Africa, to protect either the regime or Russian assets

Abandoning Venezuela to the malevolent rule of Mr Maduro

would be wrong If anyone has launched a coup it is he He was

inaugurated on January 10th for a second term having stolen last

year’s election In his first term, won in 2013 in another dubious

vote, he eroded democracy by silencing critical media and

evis-cerating the constitution He packed the electoral commission

and the supreme court with puppets and neutered the national

assembly, which the opposition controls By contrast, Mr Guaidó

has a good claim to legitimacy As head of the national assembly,

he serves as acting president if the office is vacant—which, cause Mr Maduro is not a legitimate occupant, it is

be-The question is not whether the world should help MrGuaidó, but how (see Briefing) This week the United States, stillVenezuela’s main trading partner, imposed what amounts tosanctions on oil exports and on imports of the diluents needed tomarket its heavy oil By ordering that payments for Venezuelanoil must be put in bank accounts reserved for Mr Guaidó’s gov-ernment, the United States aims to asphyxiate the regime, in thehope that the armed forces will switch to Mr Guaidó

One danger is that Mr Maduro digs in and orders the security

forces and the collectivos, organised thugs at the regime’s service,

to impose terror Another is that the United States overplays itshand Just now it is working with the Lima group of regional gov-ernments But its sanctions could hurt the people more than theregime If, bent on regime change, it acts unthinkingly, it couldcome to be seen once again in Latin America as imperialist andoverbearing Russia is portraying the United States’s interven-tion as an attempt to dominate its backyard Its media are alreadysaying that Vladimir Putin’s interest in Ukraine is no different.The situation is a test of President Donald Trump and his for-eign-policy team, including the hawkish national security ad-viser, John Bolton This week Mr Bolton hinted at the use of

American troops Barring state violence againstAmerican citizens, that would be a mistake

Mr Guaidó’s backers have ways to help out resorting to force or dirty tricks These fallinto two categories The first includes incen-tives for Venezuelans to demand change, for thearmy to abandon the regime and for Mr Maduro

with-to go Now that Mr Guaidó has been recognised

as interim president, he stands to control lions of dollars of Venezuela’s foreign assets if power shifts Thenational assembly has passed a law offering an amnesty to sol-diers and civilians who work to re-institute democracy Mr Ma-duro is being promised the chance to flee the country

bil-The second way to help is to let Venezuelans know that theworld is ready if Mr Guaidó takes power The lesson from theArab spring is that even a leader who starts by sweeping away atyrant must bring improvements rapidly or risk losing support.The immediate priorities will be food and health care The veryfact of a new government will help stop hyperinflation (see Freeexchange), but Venezuela will also need real money fromabroad—international lenders, including the imf, should begenerous The to-do list is long: Venezuela will need to removeprice controls and other distortions and build a social safety-net

It must restart the oil industry, which will entail welcoming eign investment Its debt will need restructuring—including thedebt to Russia and China which is due to be paid in oil And amidall this, Mr Guaidó’s caretaker government must hold elections

for-A generation ago, Venezuela was a functioning state It can beagain It is blessed with oil and fertile land It has an educatedpopulation at home and in the diaspora that fled And in MrGuaidó it has a leader who, at last, seems to be able to unite thefractious opposition But first it must get rid of Mr Maduro 7

The battle for Venezuela

The world’s democracies are right to seek change in Latin America’s worst-governed country

Leaders

14 Leaders The Economist February 2nd 2019

1

After more than 17 years, it is the longest war in American

history American forces are no closer to defeating the

Tali-ban—the repressive Islamist militia that ruled most of

Afghani-stan before 2001—than they were a decade ago In fact, the share

of the country under full control of the elected,

American-backed government is humiliatingly small The conflict has

reached something close to a stalemate, but a bloody one: some

10,000 police and soldiers, 3,400 civilians and an unknown

number of insurgents died in 2017 alone Since then, the

authori-ties have stopped releasing data on military casualauthori-ties—not,

pre-sumably, because things have got better

The news that America and the Taliban are making headway

in negotiations to end the conflict is therefore welcome (see Asia

section) Zalmay Khalilzad, America’s chief

ne-gotiator, says the two sides have agreed on a

“framework” for a deal America would

with-draw its troops in exchange for an undertaking

from the Taliban not to provide sanctuary to

for-eign terrorists, as they once did for Osama bin

Laden The Taliban would also have to agree to a

ceasefire and begin negotiations with the

Af-ghan government, which they have long

de-nounced as an American creation

The goals of drawing the Taliban into peaceful politics and

thus extricating America from a costly and destructive conflict

are the right ones But there are, sadly, many reasons to fear that

the framework will not produce either outcome For one thing,

the details will be thorny The Taliban already sound lukewarm

about the ceasefire and the talks Setting the order in which the

agreed steps are taken could also be a stumbling block, especially

when it comes to the timing and pace of America’s withdrawal

Another worry is that the Taliban will promise the moon to

rid themselves of the Americans, on the entirely reasonable

as-sumption that, even if they go on to break their word, the gis are

unlikely to return The American-led mission in Afghanistan is

called Resolute Support, but the resolve of President DonaldTrump, at least, is clearly dissipating He has made no secret ofhis desire to bring American troops home, and given no sign that

he values the things their presence achieves

Before America toppled the Taliban regime, Afghanistan was

a violent theocratic despotism Women were not allowed out oftheir homes unless covered head to toe and accompanied by amale relative Any departure from the Taliban’s barbaric version

of Islam, such as dancing or shaving or educating girls, couldearn floggings, imprisonment or even death Ancient statueswere dynamited as pagan idols Keeping such zealots at bay, for

as long as they try to impose their beliefs by force, is an ble benefit to the two-thirds of Afghans (some 24m people) who

incalcula-live in government-controlled areas

There are benefits for America, too If the liban were to overthrow the Afghan governmentafter an American withdrawal, it would be a hu-miliation on a par with Vietnam Even if the gov-ernment staggered on, a pull-out without a sol-

Ta-id peace agreement would cause chaos.Regional powers such as China, India, Iran,Pakistan and Russia would all struggle to fill thevacuum At best, the result would be a gruesome surge in fight-ing; at worst, the whole region could be destabilised An offshoot

of the Taliban in Pakistan set off something close to civil warthere in 2014 America could easily be sucked back in

With a force of 140,000, America could not wipe out the ban But with a mere 13,000 troops bolstering the Afghan armytoday, it seems able to keep the insurgents more or less in check

Tali-Mr Khalilzad should be clear that America is looking for a ble settlement, not a figleaf to cover its retreat Its troops shouldstay until the Taliban show that they are sincere about taking uppolitics and laying down arms Otherwise, the Taliban will have

dura-no reason to change their stripes—and Afghanistan, already atwar for 40 years, will be condemned to yet more conflict.7

Talking to the Taliban

A deal to end the Afghan insurgency would be wonderful—as long as it is not a figleaf to cover an American retreat

The war in Afghanistan

On january 28th Liu He, a Chinese vice-premier, landed in

Washington ready for talks to calm the trade war between

America and China Instead he was met by a geopolitical

tem-pest That day America’s attorney-general charged Huawei, one

of China’s biggest firms, with 23 crimes, including

sanctions-busting, stealing corporate secrets and obstructing justice

American officials also made clear that they view Huawei as a

threat to national security, since it builds the telecoms networks

that underpin modern societies Some 170 countries that use

Huawei must now decide whether doing business with it is safe

That decision is hard, because Huawei has more than one

guise The first is benign: it is China’s most successful globalfirm Last year it booked $110bn of sales and shipped 200msmartphones It has built 1,500 networks, reaching a third of theplanet’s population Huawei’s second face, prosecutors allege, isthat of a grubby enterprise that breaks laws for profit They say itoffered bonuses to staff who stole intellectual property and thatMeng Wanzhou, its finance chief and the daughter of its founder,misled banks about doing business in Iran She was arrested inCanada in December and courts there are considering an Ameri-can extradition request China says the allegations are a “smear”.Huawei’s third identity is the most disturbing and the hardest

How to handle Huawei

Banning one of China’s leading firms from operating in the West should be a last resort

Chinese technology

The Economist February 2nd 2019 Leaders 15

1

2to pin down It could be a vehicle for Chinese spying or even, in a

time of war, sabotage Rumours of this have circulated for years

without any public evidence (including this week), but it makes

sense to be wary Huawei has a high market share in new 5g

net-works, which will connect everything from cars to robots The

networks’ dispersed design makes them hard to monitor And

China’s leaders are tightening their grip on business, including

firms such as Huawei in which the state has no stake This

influ-ence has been formalised in the National Intelliginflu-ence Law of

2017, which requires firms to work with China’s one-party state

The nuclear option would be to ban Huawei Since 2012 it has,

in effect, been prevented from selling

equip-ment in America Australia recently prohibited

Huawei’s 5g equipment Japan has toughened

its rules America could probably put Huawei

out of business if it wanted to, by banning

Amer-ican firms such as Qualcomm and Intel from

supplying it with crucial components and by

cutting it off from the global banking system

Such aggressive action would come with

huge costs for all, including America The economic ones are

ob-vious: supply chains would be wrecked, at least 180,000 jobs

would go, mainly in China, and customers would have less

choice On January 29th an Australian operator deprived of

Hua-wei gear abandoned plans for a new 5g network But the greatest

cost would be a splintering of the global trading system The line

between justice and trade negotiations has become blurred

American officials insist that they are just enforcing the law, but

President Donald Trump has said that Ms Meng’s fate is a

bar-gaining chip Wilbur Ross, the commerce secretary and a China

hawk, was present this week when the allegations against

Hua-wei were announced The exclusion of a firm on the say-so ofAmerican officials, without evidence of spying, would set a dan-gerous precedent The same precautionary logic would justifybanning all hardware made in China or keeping Chinese firmsout of industries like e-commerce or finance Might China be en-titled to impose a similar ban on American firms with a big role

in its economy? Think of General Motors or Boeing

Instead of spiralling into a cold war, leaders should createmechanisms and rules that favour trade by minimising mistrust(see Business section) Both sides have a part to play Host coun-tries need to develop structures to monitor Huawei and offer a

fair response if things go wrong European litical leaders complain that they have not beenshown evidence of Huawei spying The morecredible and law-like America’s process is, thebetter Britain has a board that allows spooks toreview Huawei’s equipment Germany has cop-ied it and Singapore may follow Governmentscan lower the risk by insisting on a diversity ofsuppliers A country with four networks shouldhave at least two that were not built by Huawei

po-For its part, China Inc needs to get serious about ing that it can be trusted abroad Huawei’s governance is a mix-ture of obfuscation and opacity It should appoint foreign direc-tors, recruit Western investors and set up subsidiaries overseasthat have their own boards and indigenous managers China’sgovernment, meanwhile, can complain that it is being treatedunfairly, but if it really wants better treatment it should send asignal that it understands the anxieties it stirs up As the Huaweiaffair shows, President Xi Jinping’s growing authoritarianism isundermining China’s commercial interests abroad.7

demonstrat-Theresa may has become so used to losing votes in the House

of Commons that when, on January 29th, the prime minister

got mps to back her on a motion regarding her Brexit deal, it was

treated as a breakthrough “She did it!” announced one front

page the next morning Another hailed “Theresa’s triumph”

Alas, it is anything but mps agreed that they would support

the exit deal she has agreed to with the European Union, so long

as the Irish “backstop” was removed (see Britain section) But on

the crucial question of what might replace it—something that

negotiators in Brussels have spent almost two years scratching

their heads over—the motion suggested no more than

unspeci-fied “alternative arrangements” Mrs May vowed to take this

vague demand to have her cake and eat it back to Brussels

She will get short shrift, and she deserves it A sensible

ap-proach to the Brexit talks would have been to agree at home on

what kind of deal to go for, then begin negotiations The prime

minister did the opposite, talking to the eu for nearly two years

before coming back to find that her treaty could not pass her own

Parliament With less than two months before Brexit day, she

now proposes to reopen negotiations on what she herself

recent-ly insisted was “the onrecent-ly possible deal”

It is abject But any exasperated European leaders who are

keen for Britain to just go, deal or no deal, should think again Achaotic exit with no withdrawal agreement would represent acolossal failure by both sides The eu cannot solve Westminster’stumultuous politics, let alone the contradictions within theBrexit project But one thing Britain urgently needs in order tosort out its mess is time—and that is where the eu can help

Those Brexiteers urging the eu to make “concessions” on theIrish backstop misunderstand its purpose Britain wants an in-dependent trade policy, an invisible border with Ireland and nocustoms checks between Northern Ireland and the British main-land These three aims are incompatible If Britain sets its owntariffs, it will mean customs checks on goods passing between itand the eu, of which Ireland is a member That means inspec-tions at the border Britain believes that in future it will be pos-sible to do such checks remotely, perhaps using new technology.One day that may be true Until then, an interim solution is need-

ed This is the backstop, under which Britain would remain in acustoms union with the eu, keeping both borders open but de-laying its ability to strike trade deals

The backstop thus exists as a logical consequence of Britain’sown negotiating objectives, not European caprice By definition,

it expires when someone comes up with a way to carry out

cus-Over to EU

How Brussels should respond to Britain’s confused demands

The Brexit negotiations

16 Leaders The Economist February 2nd 2019

2toms checks with no border infrastructure Hardline Brexiteers’

calls for the backstop to be time-limited are thus not just

unreal-istic but nonsensical Beyond more words of reassurance about

the arrangement’s temporary nature—which it should ladle on

liberally—the eu cannot do much about the backstop

Where it can make a difference is on the timing Unless

Parlia-ment agrees on a deal by March 29th, Britain will fall out of the eu

without any exit arrangements in place Britain itself would

suf-fer most from this But for the eu, and especially Ireland, it

would also be horribly damaging to lose one of its most

impor-tant members in such circumstances Parliament this week

made clear that it was against leaving with no deal If Mrs May

wants to avoid this fate, she will surely have to ask for more time

The eu should signal that it will agree to her request

The longer Britain has to sort out its mess, the more chancethat it can avoid disaster Mrs May’s strategy has been to get thehardline Brexiteers in her Conservative Party to back the deal.The vote this week for the cake-based motion, which more orless united Conservative mps, has helped feed the idea that this isstill possible But the response from Brussels ought to put paid tothat thinking In reality, Mrs May is likely to have more luck win-ning votes from the opposition The price of Labour’s supportseems to be a permanent customs union The backstop, as Brexi-teers complain, already amounts to something close to this It ispossible to imagine a deal being done, but not in the two monthsremaining With more time, Parliament may yet feel its way to asolution Brexit is a British problem that only Britain can fix Butthe eu can give it the time it needs—and it must 7

During his lesser-known run for president, which began in

1999, Donald Trump proposed levying a wealth tax on

Ameri-cans with more than $10m He may soon find himself

campaign-ing on the other side of the issue That is because Democrats are

lining up to find ways to tax the rich Senator Elizabeth Warren,

who wants Mr Trump’s job, has called for an annual levy of 2% on

wealth above $50m and of 3% on wealth above $1bn Alexandria

Ocasio-Cortez, a prominent new left-wing congresswoman, has

floated a top tax rate of 70% on the highest incomes

In one way these proposals are a relief Left-wing Democrats

have plenty of ideas for new spending—Medicare for all, free

col-lege tuition, the “Green New Deal”—that would need funding

Mainly because America is ageing, but also boosted by Mr

Trump’s unfunded tax cuts, the debt-to-gdp ratio is already

ex-pected to nearly double over the next 30 years If a future

Demo-cratic administration creates new spending

programmes while maintaining existing ones,

higher taxes will be necessary

If revenues are to rise, there are good

grounds to look first to the rich Mr Trump’s tax

cuts are just the latest change to have made life

at the top more splendorous Between 1990 and

2015 the real income of the top 1% of households,

after taxes and transfers, nearly doubled Over

the same period middle incomes grew by only about a third—

and most of that was thanks to government intervention

Global-isation, technological change and ebbing competition have all

helped the rich prosper in recent decades Techno-prophets fear

that inequality could soon worsen further, as algorithms replace

workers en masse Whether or not they are right, the

dispropor-tionate gains the rich have already enjoyed could justify raising

new revenues from them

Unfortunately, the proposed new schemes are poorly

de-signed Ms Warren’s takes aim at wealth inequality, which has

also risen dramatically It is legitimate to tax wealth But Ms

War-ren’s levy would be crude, distorting and hard to enforce A

busi-ness owner making nominal annual returns of around 5% would

see much of that wiped out, before accounting for existing taxes

on capital That prospect would squash investment and

enter-prise Meanwhile, bureaucrats would repeatedly find selves having to value billionaires’ art collections and other illi-quid assets Eight rich countries have scrapped their wealthtaxes since 1990, often amid concerns about their economic andadministrative costs In 2017 only four levied them

them-There are better ways to raise taxes on capital One is to crease inheritance tax, an inequality-buster that, though also tooeasily avoided, is relatively gentle on investment and work in-centives when levied at modest rates Another is to target eco-nomic rents and windfalls that inflate investment returns High-

in-er propin-erty taxes can efficiently capture some of theastronomical gains that landowners near successful cities haveenjoyed It is also possible to raise taxes on corporations that en-joy abnormally high profits without severely inhibiting growth.The trick is to shield investment spending by letting companies

deduct it from their taxable profit immediately,rather than as their assets depreciate (MrTrump’s reform accomplished this, but onlypartially and temporarily.)

What about income tax? Ms Ocasio-Cortez’sboosters point out that a 70% levy is close to therate that is said to maximise revenue in one no-table economic study In truth the study is nota-ble because it is an outlier—one that ignores thebenefits of entrepreneurial innovation or of workers improvingtheir skills France’s short-lived 75% top tax rate, which wasscrapped at the end of 2014, raised less money than was hoped.America’s top rate of federal income tax is 37%; higher is clearlyfeasible, but it would be wise to keep change incremental

Although there is scope to raise taxes on the rich, they cannotpay for everything, if only because the rich are relatively scarce.One estimate puts extra annual revenue from Ms Ocasio-Cortez’sidea, which applies only to incomes above $10m, at perhaps

$12bn, or 0.3% of the tax take Ms Warren’s proposal would raise

$210bn a year, her backers say—but they assume, implausibly,limited avoidance and no economic damage Ultimately, theprice of ambitious spending programmes will be tax increasesthat are also far-reaching The crucial point about a strategy fortaxing the rich is to realise that it has limits 7

A way through the warren

How to raise money, reduce inequality—and limit the economic damage

Taxing the rich

US real household income

After taxes and transfers, 1990=100

50 100 150 200 250

1990 95 2000 05 10 15

Top 1%

Middle 20%

Executive focus

18 The Economist February 2nd 2019

1

Letters

The kids were all right

Your article on the history of

childhood (Special report on

childhood, January 5th) was

based almost entirely on the

work of Philippe Ariès, whom

you cited But though we are

indebted to Ariès for beginning

serious scholarship on this

topic, his central thesis that

childhood did not exist before

the 17th century is now

dis-credited Notions of childhood

existed throughout history

Across time and different

cultures, childhood has been

viewed as a distinct stage of

life, and children have had

cultural activities and

pos-sessions of their own

It is simply untrue that

children were viewed

primari-ly as imperfect adults and that

the stark separation of adults

and children is a modern

invention It is also not true

that parents did not love and

cherish their children, even at

a time of high infant mortality

They took part in rituals

around their children’s birthand grieved their death Theway children were viewedhistorically was extremelydiverse, a point missed byAriès It is not helpful to assertthat childhood did not existbefore the 17th century

robyn boeré

Toronto

Childhood seems to be losingits fun Earlier and earlierschooling, shifting familypatterns, increased time spentindoors and in cities, andconstant technological evolu-tion have created socioeco-nomic pressures Your specialreport neatly identified fourchildhood revolutions frommedieval times to the presentday, but did not acknowledgetoday’s play crisis Neuroscien-tific research shows that play-time is critical to developingthe cognitive, creative andcommunications skills needed

in the future, and yet time setaside for play is being squeezedeverywhere

University College London

is leading research on thisissue on our behalf Its find-ings, to be shared later in 2019,will identify “play gaps” inmore than 40 countries Clos-ing these gaps in access to playwill support deeper learning,which science tells us is whenlearning is joyful, experi-mental, social, meaningful,hands-on and minds-on

john goodwinChief executivelego Foundation

Billund, Denmark

As a researcher in the field ofinternet addiction, I am grate-ful for the balanced positionyou took on the effects ofdigital-media overuse onchildren’s mental health Thatsaid, I wondered why you didnot mention that the WorldHealth Organisation has in-cluded the diagnosis “gamingdisorder” in the latest draft ofits classification of diseases? I

am aware that scientists arestill debating whether this

diagnosis is premature, butyou should have raised it toprovide the full picture

christian montagProfessor of molecular psychology

Ulm University

Ulm, Germany

Science and democracy

American pre-eminence inscience and technology has astraightforward heritage

Astonishing experiences ing the second world war, such

dur-as the Manhattan Project, theeffects of advanced radar and

so on, convinced many thatAmerica must embark on anationally planned pro-gramme of scientific research.The momentum of this think-ing took us through the coldwar and space race and hasunderpinned America’sunchallenged array of researchuniversities and nationallaboratories But now we seem

to have lost our mojo, lighted by the National Acad-

high-The Economist February 2nd 2019 Letters 19

2

Letters are welcome and should be addressed to the Editor at The Economist, The Adelphi Building, 1-11 John Adam Street, London WC 2 N 6 HT

Email: letters@economist.com More letters are available at:

Economist.com/letters

emy of Science’s report, “Rising

Above the Gathering Storm”

Federal funding and science

support is lagging just when

rivals like China are making

real advances (“Red moon

rising”, January 12th)

The seminal role of science

is lacking in our national

political dialogue and this is

where we must make the

defin-itive break with China As a

professional scientist, I cannot

see a path for China to

main-tain the level of original

think-ing that it needs while

pursu-ing authoritarian control in

almost all other spheres

Amer-ica’s founders understood this

Science played a trenchant role

in forging our democracy

allan hauer

Corrales, New Mexico

Recall that the spread of

scien-tific inquiry under Denis

Dide-rot, Jean d’Alembert, and other

figures of the 18th-century

Enlightenment helped

un-dermine support for absolutist

rule in France and contributed

to the end of the monarchy

Science and absolutism areuncomfortable bedfellows

a hundred of his pubs (“Me and

my Spoons”, January 19th)

Why so snide? Mr Martinfounded, runs and presidesover the fortunes of nearly1,000 pubs and hotels through-out Britain, offering whole-some food and a wonderfulvariety of draught beers atcheap prices The businessgenerates a healthy annualprofit and the man is obviously

a minor commercial genius Iwould have thought that anewspaper supportive of freetrade and hard-headed busi-ness efficiency would havewanted to sing his praises

rather than treat him and hisachievements as eccentric

Down here on CostaGeriatrica, some of us long agoconcluded that no Britishinstitution did more to easethe economic and human pain

of living through the austerityyears than Wetherspoons

roger barnardChairman

Wetherspoon’s Collective ofWorkers, Peasants andIntellectuals

“Bambi”, he and three othercartoonists went out in theSierras and filmed wild ani-mals They then broke down

the films, frame by frame, tolearn how the animals reallymoved As well as enhancingthe credibility of their anima-tion, the work of those car-toonists turned out to be origi-nal research, making its wayinto physiology textbooks

uncle river

Pie Town, New Mexico

Ubi Est Mea?

Regarding corruption in

Chica-go (“On the make by the lake”,January 12th), in the late 1960sMike Royko, a Pulitzer prize-winning columnist for severalnewspapers, suggested that thecity change its motto to

“Where’s Mine?”

jim spangler

Brookfield, Wisconsin

20 The Economist February 2nd 2019

1

The op-13 building at the entrance to

the Catia shantytown in Caracas is an

ugly red and grey edifice, built a decade ago

by a Russian company With such housing

projects Hugo Chávez, the founder of

Vene-zuela’s “Bolivarian revolution”, established

himself as the benefactor of the poor The

polyurethane cladding suits Moscow, not

the tropics The windows are too small to

admit much breeze But people who live in

Catia are grateful to the government “It’s

completely chavista here,” says Ayax

Ar-mas, a cook who lives opposite

Loyalty is reinforced by fear Catia is

controlled by pro-government colectivos,

which are at once local

intelligence-ser-vices, neighbourhood-watch groups and

criminal gangs Protests against the

left-wing regime were almost unheard of But

anger is simmering The oil boom, which

paid for Chávez’s largesse, ended soon after

he died in 2013 Under Nicolás Maduro,

who took over from him, the economy has

slumped and food has become scarce

An-nual inflation is 1.7m per cent, according to

the opposition-controlled legislature

“Who wouldn’t want to change this tion?” asks Carlos, who scavenges for fruitand vegetables in the rubbish, cleans themand resells them More than 80% of Vene-zuelans want Mr Maduro out, according toDatanalisis, a polling firm

situa-Just before midnight on January 22ndCatia erupted Residents of op13 streamedout, set fire to rubbish that had been piling

up for weeks and banged pots and pans

“This government is about to fall,” theychanted After two decades of socialist rulethat descended into ever-greater repres-sion and economic mismanagement, theymay just be right

Since Catia’s rebellion events havemoved at a dizzying pace On January 23rdJuan Guaidó, a young, little-known politi-cian who had been head of Venezuela’s leg-islature for just 18 days, proclaimed him-self the country’s acting president before a

cheering crowd in Caracas He declared thepresidency vacant on the grounds that MrMaduro’s re-election last May was a fraud

In those circumstances, the constitutiongives the presidency to the head of the leg-islature until fresh elections can be held Along with more than 1m protestersacross Venezuela that day, the UnitedStates, Canada and almost all large LatinAmerican countries recognised Mr Guaidó.Britain, France, Germany and Spain saidthey would follow if Mr Maduro doesn’tcall a free election within days

President Donald Trump has moved tomake Mr Guaidó’s claim a reality On Janu-ary 28th America imposed its toughestsanctions yet on Venezuela’s regime Itfroze the American accounts and assets ofpdvsa, the national oil monopoly, and saidthat it will divert the proceeds of furthersales into an account that will be accessibleonly after pdvsa comes under the control

of Mr Guaidó or an elected government.This cuts off the regime from its mainsource of cash Already it has defaulted onmost of its debt and is short of money tobuy the loyalty of the armed forces, main-tain oil production and import enough tofeed 32m Venezuelans The new sanctionswill make all that even harder

Venezuela thus finds itself part of a trial

of strength A peaceful transition to ademocratic, economically literate govern-ment could restore normality to what wasonce one of the region’s richest countries(see next story) Equally, the Trump-

A chance, at last, for liberation

CARACAS AND NEW YORK

A failed revolution may itself be overthrown

The Economist February 2nd 2019 Briefing Venezuela 21

2Guaidó gambit might lead to conflict

be-tween armed groups or simply fail, leaving

the regime more dominant than ever In

that case, millions more Venezuelans

would join the 3m who have already fled,

mostly to neighbouring countries such as

Colombia American prestige, wagered on

ousting Mr Maduro, would suffer, too

Mr Maduro has resisted growing

oppo-sition since 2013, when poverty began to

rise (see chart) As Venezuelans turned

against him, his power came to depend on

a patronage network of enchufados, or

“plugged-in people”, especially in the

secu-rity forces He has appointed over 2,000

of-ficers to the rank of general or equivalent

The army runs companies in as many as 20

industries, including an insurer, a rubber

manufacturer and a television channel,

ac-cording to Crónica Uno, a newspaper

The armed forces collar scarce dollars at

an artificially cheap rate and sell them to

dollar-starved companies at a much dearer

one The national guard smuggles petrol,

weapons, food, gold and diamonds,

ac-cording to Margarita López Maya of

Univer-sidad Central de Venezuela, citing

investi-gations by American authorities After Mr

Guaidó’s proclamation, all of the country’s

top brass pledged support to Mr Maduro

They have stomped on dissent At the

protests in Catia the colectivos were first on

the scene, followed by the dreaded faes, an

elite police force (“colectivos with a licence”,

Mr Armas calls them) “We are not going to

let anyone fuck with us,” said one colectivo

leader in Catia after the fracas Repression

took place across the country on the next

day Some 700 people were detained, a

re-cord number for one day, acre-cording to Foro

Penal, a human-rights group Thirty-five

people were killed

But the oppressors are also unhappy

Despite the money to be made from

cor-ruption, the crisis affects the armed forces

as it does the rest of society, says Rocío San

Miguel, a Caracas-based military analyst

The salary of a major in the national guard

is 36,000 bolívares a month, worth less

than $15 “That is not enough for two days’

worth of food for a family of four,” says Ms

San Miguel

Growing disgruntlement in the security

forces increases the importance of the

sev-eral hundred Cuban counter-intelligence

agents (supplied in return for cheap oil)

who also prop up Mr Maduro’s rule They

tap Venezuelan phones to monitor dissent

as well as looking after the president’s

per-sonal security, says a western intelligence

source He adds that Mr Maduro gets an

in-telligence briefing every morning from two

Cuban officers The most intense snooping

is on the police and armed forces—anyone

with a gun, says Ms San Miguel

The regime has disrupted several coup

attempts Around 100 senior officers are in

prison, including several who were close to

Chávez and who served Mr Maduro as isters Troop commanders have been shuf-fled frequently to prevent them from build-ing close relations with their soldiers,

min-according to Caracas Chronicles Political Risk Report, a newsletter

Even before the latest sanctions, the gime was running out of money to keep thegenerals happy Production by pdvsa,which has been mismanaged for years, wasexpected to fall to less than 1m barrels a day

re-in 2019, its lowest level sre-ince the 1940s Ifsold at world prices, that should bring inabout $20bn for the year, except that 45% ofthe oil goes directly to China and Russia torepay debt, according to Siobhan Morden

of Nomura, an investment bank Cash fromoil sales goes mainly to pay other claimantsand to pay Venezuela’s import bill Lessthan $250m would be left to spend on pa-tronage That is less than the wage bill forManchester City’s footballers Venezuelawould have to dip further into its dwin-dling foreign-exchange reserves

With the new sanctions, money will beeven tighter They freeze pdvsa’s $7bn ofassets in America, which include three oilrefineries, and will reduce revenue from oilexports by more than $11bn, says the Trumpadministration pdvsa might find otherbuyers, perhaps in Asia, but is likely to earnless because transport costs will be higher

Almost as painful is the ban on the sale ofdiluents to pdvsa, without which its thickoil will not flow through pipes

These measures will accelerate ela’s economic collapse gdp will shrink by26% this year, bringing the total declinesince Mr Maduro took office to 60%, esti-mates Francisco Rodríguez of Torino Capi-tal, an investment bank Bond prices sug-gest that the markets put the odds of MrMaduro’s ousting at 50-90%

Venezu-Mr Guaidó and Venezu-Mr Trump are bettingthat hardship will topple the regime before

it starves the Venezuelan people The sition is striving to persuade the armedforces to switch allegiance The nationalassembly passed a law offering amnesty for

oppo-those who help “build teers distributed pamphlets laying out theterms at army bases (some soldiers burnedthem) To members of the regime too dis-credited to be part of any democratic gov-ernment, including Mr Maduro, the oppo-sition is offering passage to a comfortableretirement, perhaps in Cuba

democracy”. Volun-He is not ready to be pensioned off democracy”. Volun-Hehas called for support from China and Rus-sia On January 26th their un ambassadorsrebuked America for interfering Bothcountries have big financial stakes in Vene-zuela China, which has extended a total of

$60bn in loans over the past 20 years, is itsbiggest creditor And Russia has lent $17bn

to oil projects and to finance arms sales China, which takes a hard-headed view

of Venezuela, has promised little newmoney It is to Russia’s authoritarianleader, Vladimir Putin, that Mr Maduro hasturned Mr Putin sees Venezuela as a stagefor his confrontation with America SergeiLavrov, Russia’s foreign minister, said hisgovernment will do all it can to support theVenezuelan president Unconfirmed re-ports say that 400 men from Wagner, a mil-itary company owned by an associate of MrPutin, flew to Venezuela, perhaps to pro-tect Mr Maduro from his own officers

It is hard to see Russia committingtroops or much treasure to keeping Mr Ma-duro in power But Mr Putin would profitfrom other outcomes, too Violence woulddemonstrate the risk of allowing a mob tosubvert an established leader An Americanmilitary intervention could be cited as evi-dence that America shares Mr Putin’s belief

in great powers’ spheres of influence

Without Chinese or Russian cash, MrMaduro will have to rule on emergency ra-tions That can work for a while As peoplebecome poorer, the cost of patronage falls.Voters who once expected a flat now accept

a box of food But the forces working to ple Mr Maduro are getting stronger whilethose holding him up are weakening ForVenezuela’s sake and his own, he shouldtake early retirement.7

top-Bolivarian beggars

Sources: ENCOVI; The Economist

Venezuela, poverty rate, %

0 25 50 75 100

Poverty

Extreme poverty

19 2000

Juan Guaidó proclaims himself interim president

Nicolás Maduro Hugo Chávez

PRESIDENT Re-elected

Constituent assembly election

National assembly election won

by opposition

Coup attempt

inflation

Hyper-Referendum to abolish term limits for elected officials passes

“Bolivarian revolution” led

by President Hugo Chávez

ExxonMobil and ConocoPhillips expropriated

Land reform

Opposition leader Leopoldo López arrested

Chávez dies

Oil price drops below $100

a barrel

22 Briefing Venezuela The Economist February 2nd 2019

Three years ago Ricardo Hausmann of

Harvard University began work on what

he calls the “morning-after plan”, a

blue-print to rehabilitate Venezuela’s economy

after President Nicolás Maduro’s hoped-for

fall Back then, he thought that new dawn

would break quickly Now, after a long

de-lay, it again looks tantalisingly close

The intervening years have allowed his

plan to marinate and Venezuela’s economy

to rot In December a group of opposition

politicians, union leaders,

business-people, academics and church leaders

reached consensus on a broad-brush

docu-ment that draws on Mr Hausmann’s work

Entitled “National Plan: the Day After”, it

points out that Venezuela’s “productive

ap-paratus” has been hammered Its health

services have collapsed and inflation is

rampant In the past five years of Mr

Madu-ro’s rule, gdp has roughly halved The

col-lapse is worse than Spain suffered during

its civil war, says Mr Hausmann

What should a new government fix

first? Mr Hausmann’s team have identified

two “binding” constraints that must be

loosened before any other reforms can

help The first includes price controls and

the threat of expropriation, which together

are an “attack on the invisible hand” The

government has seized assets in many

in-dustries, from coffee-processing to

bank-ing This has destroyed incentives for

en-trepreneurs to invest and increase

production in response to shortages

The second constraint is the lack of

dol-lars The export earnings of pdvsa, the state

oil monopoly, have shrunk And

govern-ment cronies snaffle up much of the hard

currency that remains That deprives

en-trepreneurs of the means to buy vital

im-ported inputs, such as spare parts

Many of Venezuela’s other problems,

including hyperinflation, are

conse-quences of these deeper troubles, Mr

Haus-mann argues Opponents of Mr Maduro

thus plan to revive the invisible hand, by

restoring property rights and relaxing price

and exchange controls This would be

cou-pled with direct forms of help for the poor

What about the lack of foreign

ex-change? That, Venezuela cannot solve

alone It will need an infusion of dollars

from outside and reassurance that its

fu-ture export earnings and overseas assets

will not be seized by its foreign creditors

The face value of their claims on the state

exceeded $135bn last year, according to

To-rino Capital, an investment bank Thequeue includes China (over $13bn) andRussia ($3bn), which have, in effect, pre-paid for barrels of oil with past loans Alsojockeying for position are the holders ofsovereign bonds ($24bn) and pdvsa paper($28bn) Other claimants include expropri-ated firms and unpaid suppliers

A tempting strategy for any individualcreditor is to let other lenders take a hair-cut, wait for Venezuela to recover, then in-sist on full repayment But if every creditorpursues that course, Venezuela will neverrecover, and without debt restructuring,the imf may not be willing to lend LeeBuchheit, a lawyer who advised Iraq,among other countries, and Mitu Gulati ofDuke University argue that Venezuela mayneed America’s president to issue an exec-utive order giving it the same sort of pro-tection from creditors as Iraq enjoyed in itsrestructuring after 2003

Debt relief would limit the flow of lars out of the country On top of that, theimf and others will have to pour more dol-lars into it Mr Hausmann envisages a loan

dol-in excess of $60bn over three years Ratherthan printing bolívares to cover its fiscaldeficit, the government would buy localcurrency with the imf’s dollars This, inturn, would put dollars in the hands of en-trepreneurs, who could spend them on theimports needed to revive their businesses

This mix of monetary restraint and put recovery should stem inflation But thespeed at which prices stabilise also de-

out-pends on public expectations To succeedquickly, the state must first convince thepublic that it will do so To add credibility,the plan’s sponsors favour an independentcentral bank and an “anchor” to disciplineits policies

The choice of anchor is important Thestricter the regime, the faster it can curehyperinflation A currency board (whichwould allow the central bank to create bolí-vares only when it has added the equiva-lent amount of dollars to its reserves) offersthe best chance of immediate stability, butmight prove too rigid in the long run Anexchange-rate peg would change inflationexpectations more slowly, but would bemore suitable for the economy over time

Mr Hausmann favours a peg over the

strict-er altstrict-ernatives But, he says, given the gers of currency speculation, he is reluc-tant to discuss the details in public

dan-After its economy has stabilised, zuela will have to revive its oil industry.The reformers have drafted a hydrocarbonslaw that will retain current royalty and taxrates, and allow foreign firms to own theirventures outright Experienced Venezue-lans are working in the global industry, in-cluding at Norway’s Equinor and bp Thecountry’s exports would benefit from re-importing some of this expertise

Vene-Would such a plan win the outside port it needs? The interim government haspowerful friends in America, Brazil andelsewhere Nothing in it will shock the imf.And although China supports Mr Maduro

sup-in public, its oil sup-investments give it an sup-centive to support the industry’s revival.But Mr Hausmann needs no reminderabout the uncertainties He began work onhis morning-after plan after the oppositionwon a two-thirds majority in the nationallegislature, when it seemed that changewas “imminent” Sadly Mr Maduro has sur-vived in office over 1,150 mornings-aftersince then.7

in-How Venezuela’s economy can recover from the Maduro regime

The economy

The day after

Someday, wallets will be smaller

The Economist February 2nd 2019 23

1

It has been a rare good week for Theresa

May In a series of votes on January 29th

she secured backing from almost all her

Conservative mps and her Northern Irish

Democratic Unionist allies for a motion

asking her to go to Brussels to seek changes

to her Brexit deal She also defeated two

amendments that could have seen

Parlia-ment seize control of the Brexit process

She comprehensively out-debated the

La-bour Party’s leader, Jeremy Corbyn, and

even got him to drop his refusal to talk to

her about how to get a new Brexit deal

through the House of Commons, which

re-soundingly rejected the first version two

weeks ago

Two developments underlay her

suc-cess The first was an amendment by Sir

Graham Brady, a leading Tory backbencher,

that backed her Brexit deal so long as the

much-disliked Irish “backstop”, an

insur-ance policy to avert a hard border in Ireland

by keeping the United Kingdom in a

cus-toms union with the European Union, isreplaced by what it coyly called “alternativearrangements” The second was a planhatched by Tories from both the Remainand Leave wings of the party, dubbed theMalthouse compromise after the juniorminister who dreamt it up, for a differentbackstop and for a longer transition periodeven if no withdrawal agreement is rati-fied Although the Malthouse compromiseseems unrealistic and Sir Graham’s planlacks specifics, the combination wasenough for the Brady amendment to win by

Do-Labour mps defied their party whip to sinkthe Cooper amendment; they may yetcome round to backing a revised deal ForMrs May, the only fly in the ointment wasthe passage of another amendment, fromDame Caroline Spelman, a Tory, to reject ano-deal Brexit; but this has no legal force.The prime minister’s triumph willprove short-lived, however Even as theBrady amendment was being votedthrough, the eu was insisting that theBrexit withdrawal agreement, which in-cludes the Irish backstop, would not be re-opened eu leaders are exasperated thatMrs May now supports a plan that jettisons

a central part of the deal which she had viously insisted was the only one available Brussels is the more unwilling toreopen negotiations because Mrs May stillrefuses to change any of her negotiatingred lines As Kenneth Clarke, a veteran Tory

pre-mp, pointed out, the logical outcome nowwould be a permanent customs union withregulatory alignment, but Mrs May stillrules this out Moreover, if the withdrawalagreement were reopened, the eu thinksother issues such as fisheries, the budget orGibraltar would be raised by leaders whobelieve they have already given Britain toomany concessions And the European Par-liament, whose assent is needed for anydeal, might well reject a deal that radicallyalters the current one

Brexit and Parliament

Theresa’s temporary triumph

The prime minister has won parliamentary support to renegotiate the Brexit deal.

Yet she is unlikely to secure any substantive changes in Brussels

Britain

24 Labour and Latin America

25 Companies plan for no deal

25 Speeding up Manchester’s buses

28 Rent controls for London

29 Digital doctors’ appointments

29 Alex Salmond and the SNP

30 Bagehot: Jeremy Corbyn’s bad Brexit

Also in this section

24 Britain The Economist February 2nd 2019

2 Above all, the eu is not prepared to

throw Ireland, which insists on keeping

the backstop in order to avoid a hard

bor-der, under the bus The interests of a

mem-ber come above those of a leaver It argues

that the backstop is an inevitable outcome

of Britain’s desire to leave the customs

un-ion and single market Stopping a hard

bor-der is also seen as vital to protect the Good

Friday Agreement that ended decades of

sectarian “Troubles” in Northern Ireland

Claims that some untried new

technol-ogy can avoid all checks and controls on

the Irish border are still viewed in Brussels

as magical thinking Indeed, Brexiteers’

in-sistence on removing the backstop is

treated as evidence of doubts that their

own magic would work The repeated

lurches in Britain’s approaches to Brexit

seem only to strengthen the case for

keep-ing the backstop as an insurance policy

Tick, tock

This does not mean that the eu will do

nothing to help Mrs May It has already

of-fered clarifications to make clear that it

does not want the backstop to be used and

that, if it were, it would be only temporary

These could be given greater legal force,

perhaps through an interpretative

declara-tion or a codicil, or even tweaks to the

wording of the withdrawal agreement

it-self And Brussels is already hinting that, if

more time is needed beyond March 29th,

the date set for Brexit, it is ready to

enter-tain the notion

With less than two months left, it is

in-creasingly clear that more time will indeed

be necessary Parliament must pass a

de-tailed withdrawal act as well as other big

pieces of legislation and hundreds of

statu-tory instruments before Brexit can happen

Only limited progress has been made in

rolling over existing eu free-trade

agree-ments that Britain will lose on its

depar-ture Yet when Mrs May was repeatedly

asked in the Commons by Ms Cooper if she

would seek the eu’s agreement to push

back the deadline, she refused to answer

This plays into the other big concern of

the week, which is the growing risk of a

Brexit with no deal at all The response of

British business to the Commons votes was

glum The failure of Ms Cooper’s

amend-ment means that leaving with no deal is

still on the table as the default option, even

if a majority of mps have voted not to

sup-port it Sabine Weyand, deputy to Michel

Barnier, the eu’s Brexit negotiator, declared

this week that the risk of no deal was now

very high

The markets seem more sanguine The

pound has risen in value since Mrs May’s

deal was rejected by mps But many

an-alysts think traders are underestimating

the chances of a no-deal Brexit Paul Hardy,

Brexit director at dla Piper, a law firm,

reckons the eu is better prepared for no

deal than Britain He adds, however, that abig concern in Brussels will be to avoid theblame should a no-deal Brexit transpire

It is this potential game of ing that makes the chance of no deal soworrying Several Tory mps and even somecabinet ministers have said they wouldfight any deliberate decision to go for a no-deal Brexit, if need be by resigning theparty whip eu leaders, too, will do whatev-

blame-shift-er they can to avoid such an outcome,which would seriously damage not justBritain but the entire eu, and most notablyIreland But if the clock runs down andboth sides start blaming each other for be-ing too intransigent, no deal could stillhappen by accident To prevent it may takedefter diplomacy and greater flexibilitythan either Mrs May or the eu has shownduring the past two years 7

An event featuring Ivanka Trump,the king of Spain and Jeremy Corbynsounds like a fever dream But for onecurious afternoon in December the triocame together in Mexico City for theinauguration of Andrés Manuel LópezObrador While a Brexit-induced politicalcrisis raged in Britain, the Labour leaderwas in Mexico to watch the new presi-dent—who calls Mr Corbyn his “eternalfriend”—being sworn in

Latin America looms large in MrCorbyn’s political imagination He spenthis formative years gallivanting roundSouth America and speaks fluent, Lon-don-accented Spanish His wife is fromMexico (and his ex-wife from Chile)

While fending off a leadership coup inthe summer of 2016, Mr Corbyn took time

to attend an event hosted by the CubaSolidarity Campaign, of which he is along-term supporter It is a fixationshared by his close allies John McDon-nell, the shadow chancellor, and DianeAbbott, the shadow home secretary, wereamong several senior Corbynites whosigned a letter this week dismissing the

“us attempt at regime change” under way

in Venezuela

An obsession with all things Latin haslong been common in the Labour move-ment, points out Grace Livingstone ofCambridge University The Cuban revo-lution represented a socialism that didnot stem from the dour bureaucrats ofthe Soviet Union (even if Havana dideventually fall in line behind Moscow).Salvador Allende’s election in Chile in

1970 was seen as a triumph for

democrat-ic socialism; his removal in a coup is stilltaken as evidence that the forces of capi-tal would smash an embryonic Corbyn-led government “There are powerfulforces…that want to oppose those whowant to bring about economic and social

justice,” Mr Corbyn told La Jornada, a

Mexican newspaper, last year

Activists hail radical leaders such asEvo Morales in Bolivia as bulwarksagainst neoliberalism and decry anyattempt to rein in the government ofVenezuela, whose economy has col-lapsed as its left-wing leaders haveturned to autocracy Where Latin Ameri-can governments have succeeded, it is anexample of socialism in action; wherethey have failed, it is a demonstration ofnefarious American imperialism

The obsession can backfire Mr byn’s support for the late Hugo Chávezlooks even more ill-judged now thatVenezuela has fallen deeper into an-archy Footage of a chat between MrCorbyn and Chávez’s successor, NicolásMaduro, on the latter’s radio talk-show,

Cor-“En contacto con Maduro”, does not help.Whether British voters care is anothermatter; few share his interest in LatinAmerican politics But Mr Corbyn’s risemeans that Latin America may startpaying more attention to the British left

On the eve of his inauguration, Mr LópezObrador said he wanted “with all myheart, with all my soul” to see his Britishfriend become prime minister Should

Mr Corbyn make it to Downing Street, atransatlantic invitation will be in thepost and another fever dream can begin

¡Hasta la victoria Corbynista!

Labour and Latin America

Latin America provides a canvas for the left-wing worldview

Don Jeremy, Latin lover

The Economist February 2nd 2019 Britain 25

1

Less than two months before Brexit day

it is still unclear what kind of exit deal

Britain will end up with—or even whether

it will get one The votes in Parliament on

January 29th offered little reassurance If

anything, argued Carolyn Fairbairn, head

of the Confederation of British Industry, a

lobby group, they will persuade companies

to accelerate their preparations for a

no-deal exit Tom Enders, the boss of Airbus,

spoke for many firms when he recently

branded the government’s handling of

Brexit a “disgrace” Businesspeople are

furi-ous But they must also be pragmatic And

so as March 29th approaches, their no-deal

plans are being put into effect

Strategically sensitive industries such

as banking and pharmaceuticals were

ad-vised by regulators to implement no-deal

plans some time ago, says Mats Persson,

head of the Brexit team at ey, a consultancy

Banks have already moved staff to

subsid-iaries on the continent to secure

“passport-ing rights” and continue operations within

the European Union On January 30th the

High Court approved a plan by Barclays to

move €190bn ($218bn) in assets from

Lon-don to Dublin In December the

govern-ment asked drug companies to add at least

six months’ worth of supply to their usual

stock as a precaution

Other industries have held out longer

Many retailers, including some big

super-markets, triggered their contingency plans

at the beginning of January A week afterParliament rejected the government’sBrexit plan on January 15th, p&o said itwould re-flag its cross-Channel ferries (in-

cluding the Spirit of Britain) to Cyprus.

Sony, a Japanese electronics giant, nounced that it was moving its Europeanheadquarters from London to Amsterdam

an-Companies preparing for no deal tend

to have the same priorities The first, says

Mr Persson, is to set up a new entity on thecontinent, to qualify, like the banks, for therequired permits to continue to trade in the

eu and to enjoy the same tax regimes ifBritain leaves without a deal

Second, some firms are preparing tomove production, distribution and ware-housing Take Goodfish, a medium-sizedmanufacturer of plastic injection mould-ings, which ships a third of its products tothe eu Greg McDonald, its boss, has regis-tered the company in Slovakia and is ready

to transfer some production there in theevent of no deal Art Logistics, which shipsfine art between Britain and the continent,has made plans for a Dutch company toprovide trucks and drivers if its own fleet ofseven specially modified vans is groundedwithout eu travel permits

Many businesses are stockpiling sumer-products firms, such as Dixons Car-phone, and clothes retailers like Burberry,are stacking up inventory to keep theshelves full after no deal The Chartered In-stitute for Procurement and Supply saysthat December saw the second-sharpestrise in the stocking of finished goods sinceits survey began in 1992 In the manufac-turing industry, the value of loans rose by8% in the year to December, which analystssee as a sign of stockpiling

Con-In some areas it is already too late frigerated space ran out in September Andsome products cannot be stockpiled In ajoint letter to mps on January 28th, some ofthe country’s largest supermarkets andfast-food outlets warned that perishableitems such as lettuces and tomatoes, whichcome mainly from the eu during the Brit-ish spring, would be missing from shelves

Re-Carmakers’ “just in time” supply chainsmake it impossible to store the hundreds ofthousands of parts that enter the countryevery day Rather, the likes of Toyota, bmwand Jaguar Land Rover have rescheduledplanned maintenance shutdowns for theweeks after Brexit day bmw will live off justtwo days’ worth of “buffer” stocks beforeclosing down production of the Mini forfour weeks and the Rolls-Royce for two

Companies are also re-examining theirsupply chains Haulage companies arehoning plans to avoid the pinch points ofDover and Folkestone ceva, a big logisticsfirm headquartered in the Netherlands,has reserved several freight planes withcharter companies and is preparing new

routes for roll-on, roll-off ferries to portslike Liverpool, to avoid the south coast

Needs must But no-deal planning is pensive, and many of Britain’s 5.7m smalland medium companies are loth to invest

ex-in somethex-ing that may never happen In arecent poll by the Institute of Directors,which mainly represents smaller firms,40% said they would not do anything until

“the new relationship between the uk andthe eu is completely clear.” They are in for along wait 7

No-deal planning accelerates, at least

for those firms that can afford it

Business and Brexit

Dealing with

no deal

There is one thing in particular thatMancunians love to moan about: theirbuses The number 43, which trundlesdown what is thought to be Europe’s busi-est route, is far from loved Onboard, onestudent riding from the university to therailway station complains that it takesthree times as long in rush hour “They arealways changing the route—never for thebetter,” says a nurse working at a nearbyhospital At least it is easier to find a seatthese days, they say—as riders are switch-ing to faster modes of transport

Andy Burnham, the mayor, is keen tofind a way to reverse this gradual decline inpassenger numbers in his city (see chart)

On January 25th the ten councils that make

up his Greater Manchester Combined thority (gmca) approved an increase incouncil tax to fund a detailed study into theoptions for bus reform One strategy MrBurnham is considering is to “re-regulate”bus services, taking the routes back underpublic control If he does so, the city will bethe first to use a new law that gives mayorsthe power to franchise bus services

Source: Department for Transport

Local bus journeys

2005=100

60 80 100 120 140

2005 07 09 11 13 15 17

2.2

0.2 1.6

London

Manchester

Rest of England

2017 total, bn

Tokyo night view

TOKYO

Visitors to Japan for 2019’s rugby extravaganza have the

enviable experience of being able to sample the delights of

12 varied host cities as they travel from stadium to stadium,

seeing the country’s unique spirit through the lens of its

regional cultures

Starting in Tokyo, you’ll have the chance to witness how

WKHFLW\IXVHVWKHROGDQGWKHQHZÖRQHRILWVGHæQLQJDQG

most charming characteristics Consider staying near the

match venue in the Chofu district, which offers easy access

by rail to central Tokyo, with Shinjuku station in the heart of

around 25 minutes away on the Keio line

Orient yourself to the venue by taking an hour-long

guided tour of Tokyo Stadium, which will host the city’s

rugby events The stadium in Tokyo has a natural grass pitch,

seats nearly 50,000 peoppower for eco-friendly operations

Then explore your surroundings: Chofu is home to some

beautiful places to sample Tokyo’s historical culture Jindaiji Temple is a classic example of how the city can quickly

transport you to another time First built in the eighth century,

by an ancient pond and surrounded by trees and old buildings, it’s enveloped in a sense of both serenity and history

At nearby Inokashira Park, a favourite place for viewing

coloured autumn leaves, you can enjoy a waterside stroll by the pond that is one of the sources of Tokyo’s Kanda River Lined with reeds and overhanging branches, it’s is an idyllic location, and as the park is close to the stylish Kichijoji district, you’ll often see well-dressed teenagers taking romantic walks or out

on the water in swan-shaped pedal boats

KANAGAWA/YOKOHAMA

While you’re in the Tokyo area,

make sure you also head to nearby

Yokohama, the capital of Kanagawa

prefecture, which is the birthplace of

UXJE\LQ-DSDQ%ULWLVKPLOLWDU\RèFHUV

founded the Yokohama Football Club

there in 1866

,WØVæWWLQJWKHQWKDWWKH<RNRKDPD

match venue is Japan’s largest stadium,

International Stadium Yokohama

With room for about 70,000 rugby fans, it boasts premium facilities including hybrid turf, newly upgraded seats, LED lighting and dynamic speaker systems

For a taste of tradition while

in Yokohama, try sukiyaki, a local specialty

As an international trading port, Yokohama brought many innovations to Japan, rugby among them Hot-pot-style

dishes where you cook raw ingredients

in a delicious pot of boiling soup at your table have long been a part of Japanese life, but it was in Yokohama that people æUVWVDZWKHFRQVSLFXRXVFRQVXPSWLRQ

of beef—by Western visitors—and incorporated it into their cuisine At Yokohama Seryna Romanjaya, a famous sukiyaki restaurant, you can sample the dish at its best, made with the world-renowned Kobe beef

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FUKUSHIMA

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28 Britain The Economist February 2nd 2019

2 In the past decade bus travel has gone

into steep decline outside the capital Since

2009 the number of bus journeys in

Man-chester has fallen by 14% Austerity has

played a role Councils in England and

Wales have slashed bus subsidies by 45%

since 2010, resulting in 3,347 routes being

cut back or closed

Re-regulation could help reverse some

of that decline, argues Pascale Robinson of

Better Buses for Greater Manchester, a

cam-paign group Passenger numbers have

fall-en by 40% in Manchester since bus routes

there were handed to private operators in

1986 Meanwhile in London, where

fran-chising continued, patronage has doubled

Letting gmca manage the system could

lure riders back by co-ordinating bus

schedules and offering through-ticketing

for routes operated by different firms

That argument is popular among

pas-sengers But re-regulation is no magic

bul-let, argues David Brown, chief executive of

Go-Ahead, a bus firm Passenger numbers

are now falling at a faster rate in central

London than in the regions Belfast, where

the bus market was never deregulated, has

seen falls in usage much like Manchester’s

Nor would re-regulation deal with changes

in demand for bus travel, Mr Brown argues

Although the number of journeys by bus to

work has remained remarkably stable,

those for activities such as shopping and

socialising have fallen The decline of the

high street and the rise of home delivery

have made many journeys unnecessary

The key to luring people away from

trav-elling by car or taxi is to speed up buses,

says David Begg of Plymouth University

Growing traffic jams, caused in part by a

proliferation of delivery vans and Ubers,

are slowing them down The average delay

caused by congestion in Britain’s cities has

increased by 14% in the past three decades,

according to TomTom, a maker of satnavs

Manchester is badly affected: the 43 bus

now takes nearly 80% longer to cover its

route in rush hour than it did 30 years ago

The average speed of Stagecoach’s buses

fell by 4.9% in 2014-16; one route which

took just nine minutes seven years ago

now takes 27, according to the company

Giving buses their own lane, or priority

over other traffic, could help, says Giles

Fearnley of First Bus, a big operator in

Man-chester Vantage, a bus-priority scheme

linking Leigh, Mr Burnham’s former

parlia-mentary seat, to Manchester, has seen

weekly passenger numbers rise by nearly

140% since it opened in 2016 Other policies

to make car use less attractive, such as

pric-ier parking or congestion charges, could

also nudge folk onto buses But since a

lo-cal referendum in 2008 rejected a

conges-tion charge, Manchester’s politicians have

shown little interest in the idea With 70%

of Mancunians getting to work by car each

day, it is easy to see why 7

With an election to win in 2020 diq Khan, London’s mayor, is sniffingaround for popular policies He has chosen

Sa-to woo renters On January 23rd he nounced that he would develop a “blue-print for stabilising or controlling privaterents in the capital” One in four Londonersrents privately On average they send over40% of their monthly pre-tax income thelandlord’s way, a far higher share than inthe rest of the country Mr Khan’s policy islikely to prove popular: more than two-thirds of Londoners are in favour of rentcontrols But would it be effective?

an-The mayor is riding the crest of a control wave Four years ago some Germancities introduced controls in areas whererents were deemed too high In 2017 Scot-land gave local councils the power to limitrent increases on certain private tenancies

rent-In November a plan to control rents in fornia was put to voters in a referendum (itfailed) Proposals for rent control appeared

Cali-in the most recent manifesto of the LabourParty, to which Mr Khan belongs

The mayor does not have the power tocontrol rents in London, so changes to leg-islation would be required Unfortunatelyfor him, the ruling Conservative Party isnot keen on rent controls And under-standably so The age of rent control in Brit-ain, which lasted from 1915 to 1989, was not

a glorious one Some properties had theirrents fixed in cash terms from 1939 to 1957,

resulting in a real-terms fall of 60% Aslandlords’ returns dwindled they skimped

on repairs and upgrades Many pulled out

of the market The decision in the late 1980s

to liberalise rents breathed life back intothe market In the past 30 years investment

in dwellings has risen smartly

A case can be made that putting limits

on rent rises in the capital now would notcause as much damage as it did in the past.With Brexit uncertainty mounting, Lon-don’s private rents have been flat in nomi-nal terms for a year (and have fallen in realterms) For as long as that trend continuesany cap would not be tested

The details of Mr Khan’s policy are notyet clear, but he is unlikely to propose thebluntest sort of rent control, in which clip-board-wielding officials march from prop-erty to property and tell landlords howmuch they are allowed to charge Labour’snationwide plans offer some clues as towhat the mayor might propose to do inLondon The party appears to favour allow-ing landlords to charge whatever they likewhen a tenancy is newly listed But land-lords would then face tough rules as to howmuch they could raise rents once a tenancywas under way

That approach might seem more sible A landlord has a degree of marketpower over a sitting tenant because it is abig hassle for a tenant to move out (it is also

defen-a bother for defen-a ldefen-andlord to lose defen-a tendefen-ant, butusually less so) Stopping unscrupulouslandlords from levying above-market rentrises on vulnerable tenants is appealing.Yet the problem does not seem widespread.Evidence is sparse but data from 2015 sug-gest that half of renewing tenants were giv-

en the same rent on their new contract.Were the cap more aggressive, the im-pact on the market would be larger Labourenvisages increases in line with inflation.Before the Brexit-related slowdown, rents

in London rose only slightly faster thanprices But were a wedge to open betweenmarket rents and what was permitted,more incumbent tenants would stay put.Landlords, meanwhile, would want them

to leave, so might provide a worse service.When possible they might sell up A recentstudy of limits on rent increases and evic-tions in San Francisco found that the poli-cies decreased the supply of rental hous-ing, causing a 5% city-wide rent increase.There are other ways to help renters.Many have seen their housing costs jump

as a result of recent changes to welfare—most notably, a cash-terms freeze on hous-ing benefit that has been in place since

2016 Building more houses would help,too In 2016-17 Mr Khan exceeded his targetfor overall housing completions, yet fellwell short of the one for “affordable” (ie,state-subsidised) dwellings Pledges tocontrol rent get the headlines, but the un-sexy policies matter a lot more 7

Rent controls are back in vogue They would not make London affordable

The economics of rent controls

Low-rent plan

The Economist February 2nd 2019 Britain 29

Even as it enters its 12th year in ernment the Scottish National Partyremains popular Despite the trials ofoffice and the efforts of opposition par-ties to sink the nationalist project, thesnp has sailed serenely on, pollingaround 40% while the Conservatives andLabour scrap it out in the 20s At aroundthe same point in its life-cycle the NewLabour government, that other election-winning behemoth, was sometimesslipping into third behind the Lib Dems

gov-But the snp’s smooth progress has hit

an iceberg On January 24th Alex ond, the party’s 64-year-old formerleader, who from 2007 to 2014 was Scot-land’s first minister, was charged withnine sexual assaults, two attemptedrapes, two indecent assaults and onebreach of the peace He denies them all

Salm-Mr Salmond is the most importantfigure in the snp’s history He took theparty into government and led it to anunexpectedly close 55%-45% defeat in

the independence referendum of 2014

His successor as leader and first ister, Nicola Sturgeon, has long de-scribed him as her mentor and friend

min-That relationship now looks wrecked.When two female civil servants madeallegations against Mr Salmond last year,the Scottish government began an in-vestigation, after which the police werecalled in Mr Salmond is said to feelbetrayed by his protégée; Ms Sturgeon’saides accuse his team of smearing her

The wider consequences could besignificant Ms Sturgeon insists hertimetable for calling another indepen-dence referendum is unchanged, andthat she will set out her plans beforeBrexit, due on March 29th But it is hard

to see how the snp could mount an dependence campaign with the chargesagainst Mr Salmond in the air Muchdepends on the outcome of his case

in-Further, Ms Sturgeon is herself in hotwater She had five private conversationswith Mr Salmond during her govern-ment’s investigation, including two ather home It took her two months toreport them to civil servants An inquiry

is considering whether she breached theministerial code More may follow

The next election to the Holyroodparliament is due in May 2021 Few havebeen predicting a change at the top Thesnp has avoided the ideological extremes

of the two big British parties and kept itsdignity amid the Brexit chaos that reignselsewhere Yet the party’s reputation forcompetence has taken a knock Its claim

to an uncommon level of unity has beenblown apart Its progressive creden-tials—Ms Sturgeon has promoted wom-

en and policies like expanded care—are under a shadow Whatever theresult of the Salmond case, some votersmay reach a new verdict on the snp

child-Salmond, hooked

The Scottish National Party

E DINBURGH

Criminal charges against a former first minister rock Scotland’s ruling party

Ready for a grilling

Residents of london, bits of

Birming-ham and north-west Surrey no longer

need to ring up first thing in the morning to

nab an appointment with their family

doc-tor They have access to new digital gp

ser-vices allowing them to book video

consul-tations with clinicians at short notice For

the moment, video calls represent a tiny

fraction of the 307m gp consultations each

year But that is unlikely to remain the case

for long nhs England plans a new gps’

contract giving all patients the right to

on-line and video consultations by 2021

If all goes to plan, the shift to digital

ser-vices will go far beyond video

consulta-tions The basic mechanics of primary care

are remarkably similar to when the nhs

was created in 1948, with gps the first

desti-nation for the ill and gatekeepers to the rest

of the service nhs officials hope that the

introduction of digital services will upend

the primary-care system by diverting

peo-ple who do not need care and, where

appro-priate, treating patients at home

There are two existing models Just over

a year ago Babylon, a digital-health

com-pany, launched gp at Hand, the first online

gp service available on the nhs, in London

Around 40,000 patients have deregistered

from their previous gp practice to sign up

The service aims to provide video

consulta-tions within two hours, and handles

pre-scriptions, tests and inpatient

appoint-ments at five London sites if needed Other

gps grumble that Babylon is stealing their

young and healthy patients, funding for

whom has historically subsidised the care

of older, infirm folk The new contract is

expected to remove some of the financial

perks gp at Hand takes advantage of, such

as extra funding for patients who work but

do not live in London

The other model is less disruptive In

January Push Doctor, another

digital-health firm, signed a deal to provide online

services, including video consultations, to

13 gp practices in Birmingham, covering

88,000 people Last year Livi, a Swedish

company, struck a deal with 40 practices in

Surrey In such cases patients will have

ac-cess to digital services without having to

register with a new provider Livi, part of

Europe’s biggest digital-health firm, is in

talks with dozens more providers, says

Luke Buhl-Nielsen, who is in charge of its

British operations Other firms work with

gps to provide services like online triaging

and symptom checkers

Providers of both varieties are busy ing new capabilities to their apps, which iswhere health wonks hope the big gains will

add-be made gp at Hand already uses artificialintelligence to assess symptoms via a chat-

bot (though a recent study in the Lancet

questioned its effectiveness) The apps canalso flag up reminders for the management

of long-term conditions and even providecognitive-behaviour therapy for mental-health conditions, as Livi offers in Sweden

They could provide organisational fits, too A shortage of gps may be eased,since the apps allow doctors to work across

bene-the country from one location

The limited evidence that exists gests that video consultations are as good

sug-as face-to-face meetings for addressinglots of problems, although there is lessproof of their ability to reduce workloads,says Harry Evans of the King’s Fund, athink-tank At the moment the faff of visit-ing a gp helps to ration services Some wor-

ry that greater convenience may result indoctors spending yet more time dealingwith the “worried well” In health care, im-provements in technology have a funnyhabit of raising costs 7

The nhs hopes video consultations are

a sign of things to come

Digital health

A doctor in your

pocket

30 Britain The Economist February 2nd 2019

Theresa may’s slow progress through the great mangle of Brexit

has been so gruesome that it has distracted attention from

an-other political flattening: that of Jeremy Corbyn The leader of the

opposition put in another fumbling performance in the House of

Commons this week in proposing that the government should be

forced to put off Britain’s departure from the European Union if it

doesn’t reach a deal But lacklustre rhetoric and a feeble grasp of

detail mark only the beginning of his problems

The Labour Party is even more divided over Brexit than the

Con-servatives Most Labour members disagree with their party’s

offi-cial support for leaving, whereas most Tory party members

sup-port their party’s position Mr Corbyn is much farther away from

his party’s centre of gravity than Theresa May is from hers He is a

long-standing Eurosceptic who believes that the eu is a capitalist

club that stands in the way of building his socialist Jerusalem He

voted against Britain’s membership in 1975, opposed the single

market in the 1980s and only pretended to campaign for Remain in

the referendum of 2016 He is surrounded by an inner circle of

Eu-rosceptic advisers who do their best to steer a Europhile party in a

Eurosceptic direction

Mr Corbyn has tried to manage these contradictions by

resort-ing to grand banalities He has claimed that Labour supports a

“jobs-first Brexit” that will magically provide all the benefits of

Brexit with none of the costs He has headed off calls for a second

referendum by saying that he wants a general election instead

That strategy is wearing thin With Brexit less than two months

away, Mr Corbyn is being forced to make real and urgent decisions

This week he lent his support to Yvette Cooper’s amendment

re-quiring the government to delay Brexit if Parliament hasn’t agreed

on a deal by a certain date (the measure failed, in part because Mr

Corbyn’s backing was so late and his advocacy so feeble)

Brexit is driving a wedge between Mr Corbyn and his activist

fans Most activists are even more Europhile than the membership

in general, particularly the young idealists who flooded into the

party from 2015 onwards Corbynmania is not dead: many activists

claim that they forgive their idol his unfortunate views on Europe

But it is hard not to lose some of your enthusiasm when you

dis-agree with your leader on the most important issue of the day For

example, 79% of party members support having another vote onBrexit, whereas Mr Corbyn has done everything in his power toprevent that from happening Party membership is drifting downand polls show Labour failing to overtake the floundering Tories Brexit is wreaking havoc with Mr Corbyn’s plan to turn Labourinto a mass movement as well as a parliamentary party The leftiesdemonstrating on the streets these days are calling for Britain toremain in the eu, not for the abolition of capitalism Brexit is alsodividing the left Mr Corbyn rose to power by uniting the broad leftagainst the Blairite right The 69-year-old looked as if he was a pro-phet of a progressive future while the middle-aged Blairites looked

as if they were locked in a neo-liberal past Now he is splitting theleft between Europhobes and Europhiles (even his long-term allyand shadow chancellor, John McDonnell, is distancing himselffrom Mr Corbyn’s Euroscepticism) and allowing Blairites such as

Ms Cooper to rebrand themselves as champions of an open future.Above all, Brexit is forcing Mr Corbyn to fight on uncongenialterrain He takes every opportunity he can to change the topic back

to his old favourites: the evils of greedy bosses and the ravages ofausterity The only time he comes alive in prime minister’s ques-tions is when he is talking about victims of the government’s cuts.But his words keep falling on deaf ears

Mr Corbyn’s response is to shout louder He is convinced thatBrexit is not a “productive antagonism” for the left, as one aideputs it, and that the best way to deal with it is to shift the subjectback to the antagonisms that have defined his career History hasother plans Growing psephological evidence suggests that Brexit

is profoundly reshaping British political allegiances Voters are creasingly defining themselves by where they stand on Brexit rath-

in-er than by whin-ere they stand on old-fashioned politics Geoff Evansand Florian Scheffner note that only 6% of Britons do not identifywith either Leave or Remain, whereas 22% do not identify with aparty Tim Bale, another academic, notes that 61% of Labour mem-bers think Brexit is the biggest issue facing the country, versus just9% who plump for the next-biggest, health and the environment

The turn of the screw

Mr Corbyn’s contortions over Brexit are forcing his supporters torethink their idea that he is a man of principle He seems almostClintonian in his willingness to triangulate on all things Brexit-related, embracing vague formulae so he can appease both Leaversand Remainers, and indulging in procedural prevarication in or-der to avoid making difficult decisions At the same time, his man-ifold confusions over Brexit, in interviews and at the dispatch box,are reinforcing his critics’ worries that he is not up to the job of tak-ing real decisions He often seems to be confused about basic ques-tions such as what a customs union means, let alone the details ofcomplicated negotiations

The biggest danger for Mr Corbyn is that he will be defined byhistory as a handmaiden of Brexit if he doesn’t get off the fence andtry to prevent it One prominent Labour Remainer says that he andhis friends will do everything in their power to brand Mr Corbyn as

a latter-day Ramsay MacDonald, the Labour prime minister whowas expelled from his party after he agreed to lead the Conserva-tive-dominated National Government in 1931 Given Mr Corbyn’sirritating habit, throughout his long life in politics, of demonisinganybody to his right in the party as a traitor to the true cause, itwould be a delicious irony if he went down in history as RamsayMacCorbyn, the enabler of the most dastardly Tory project sinceThatcherism Brexit has done stranger things 7

Through the mangle

Bagehot

Jeremy Corbyn is having a bad Brexit

The Economist February 2nd 2019 31

1

Alphabet soup was not on the menu

when eu defence ministers met in

Bu-charest on January 30th But it was on the

agenda As Europeans scramble to reduce

their military dependence on America,

they are making acronyms great again

Em-bryonic schemes include pesco

(Perma-nent Structured Co-operation), edf (a

European Defence Fund) and e2i (a

pean Intervention Initiative) Alas,

Euro-peans still seem better at producing

bu-reaucracy than battalions

Ambition is not lacking Last year

Em-manuel Macron and Angela Merkel caused

a ruckus when they endorsed a “European

army”, to the horror of British Eurosceptics

and American Atlanticists On January 10th

Ursula von der Leyen, the German defence

minister, went one better “Europe’s army”,

she declared, “is already taking shape.” On

January 22nd the Aachen treaty between

France and Germany promised to develop

the “efficiency, coherence and credibility

of Europe in the military field”

Nor is money the problem European

members of nato have added more than

$50bn to their collective annual ture since 2015, the year after Russia invad-

expendi-ed Ukraine That is equivalent to tacking on

a military power the size of Britain orFrance Donald Trump ought to take note

What Europeans cannot agree on is cisely how these swelling capabilitiesshould be joined up and used Duelling vi-sions of Europe’s military future have giv-

pre-en rise to a proliferation of schemes soned diplomats with decades of experi-ence in European defence policy admit thateven they are occasionally baffled

Sea-Start with pesco, a collection of 34 eu

defence projects launched with great fare in December 2017 Its members agreed

fan-“to do things together, spend together, vest together, buy together, act together”, asFederica Mogherini, the eu’s foreign-poli-

in-cy chief, put it The plan would be

lubricat-ed with cash from the European sion But where Germany saw pesco as anopportunity to put wind back into the sails

Commis-of the European project, France was irkedthat inclusivity had trumped ambition

And so, even as pesco was being ised, in a two-hour address at the Sorbonne

final-in September 2017, Mr Macron demandedsomething meatier: a “common interven-tion force, a common defence budget and acommon doctrine for action” Nine statessigned up to the resulting e2i in June 2018.Notably, it stood independent of the eu and

so welcomed Denmark, which opts out ofthe eu’s common security and defencepolicy, and Britain, leaving completely

Germany, quietly seething, saw the fort as a half-baked French attempt to dragothers into its African wars while dilutingthe eu’s role It signed up anyway, wary ofupsetting a wobbly Franco-German axisany further “Germans couldn’t say no,”says Claudia Major of the German Institutefor International and Security Affairs, “butthey hated it.” Italy, the eu’s third militarypower, was less emollient Its newly elect-

ef-ed populist government simply refusef-ed tojoin at all

In truth, both schemes have been understood pesco is not a standing army

mis-Defence

The paper Euro-army

BE RLIN

France and Germany are pushing rival models for defence co-operation, but

neither is very ambitious

Europe

32 The Baltics and Russia

33 Catalonia’s separatists on trial

33 The marten menace

34 The gilets jaunes organise

34 A Turkish ghost town

35 Charlemagne: Varoufakis abroad

Also in this section

32 Europe The Economist February 2nd 20192

1

or alliance It is a way to reduce

duplica-tion, join up national defence industries

and set standards for everything from

bat-tlefield medicine to military radios Nor is

e2i a roving strike force, as its grandiose

name suggests, but a framework for

Eu-rope’s ambitious armed forces (its

mem-bers account for four-fifths of eu military

spending) to act together in future crises

Its members discuss scenarios from the

Caribbean to the Baltic, rather than just

France’s African stomping grounds

In theory, pesco and e2i can not only

support one another but also plug into

nato In practice, things may be more

com-plicated Ms Major warns that smaller

states, like the Baltics, will be spread thin

She suggests that some may favour France’s

glitzier initiative out of the Elysée Palace

over its dowdier eu cousin

The bigger problem is the gap between

the lofty rhetoric of political leaders and

the essential modesty of these defence

drives The eu has always accepted that it

should focus on crisis management

(fight-ing the likes of pirates and traffickers)

rath-er than collective defence (fighting

Rus-sians) For all the big talk, that remains so

Not that Europeans are sitting on their

guns European forces are involved in

everything from anti-piracy patrols off

So-malia to training for soldiers in the Central

African Republic The eu’s mission in Mali

involves over 620 people from 22

coun-tries; it has trained nearly 12,000 Malian

troops That is impressive But there is a

disconnect between political rhetoric,

which hints at fears of American

abandon-ment, actual policy, which makes no

pre-tence of filling such a vacuum, and

practi-cal action, which is even further behind

A recent study by Britain’s iiss and

Ger-many’s dgap think-tanks found that the eu

would struggle to meet most of the

ambi-tions implied by its own common security

and defence policy, itself a modest

docu-ment It would be out of its depth

altogeth-er if it faced simultaneous crises or if

Brit-ain, which makes up a quarter of the bloc’s

defence spending, stayed away Bigger

fights, such as the air campaign against

Libya in 2011, are out of the question

Furthermore, although some pesco

projects are innovative and important, like

anti-mine drones and plans to share

over-seas bases, others are more dubious A

pro-posed spy school will be run by Greece and

Cyprus; both have extensive ties to Russia

Instead of working through clunky

in-stitutions, many Europeans are simply

cut-ting smaller deals Last year Britain

bol-stered bilateral defence ties to France,

Poland, Germany and Norway To the

north, Sweden, Finland and Norway are

in-tegrating their air and naval forces In the

south, Estonia has chipped into France’s

war in Mali A genuine European army

seems a long way off 7

In the early 1990s the president of newlyindependent Estonia gave a speech inHamburg In it, he disparaged the Sovietoccupation of the Baltic states A little-known Russian official was so outragedthat he stormed out It was Vladimir Putin

This story, recounted in Neil Taylor’snew history of Estonia, is instructive MrPutin has called the break-up of the SovietUnion the “greatest geopolitical catastro-phe of the [20th] century” To Estonians,Latvians and Lithuanians, that label ap-plies better to the Soviet Union itself Dis-cussions of history often start with thephrase “Stalin murdered my grandpar-ents.” The sense that their giant neighbourdoes not truly respect their indepen-dence—let alone their membership of the

eu and nato since 2004—pervades Balticpolitics to this day

Given how tiny the Baltic states are, andhow vast and threatening the Russian mil-itary exercises near their borders, youmight expect them to be gloomy Especiallywhen the president of their main ally,America, seems to view alliances as en-cumbrances Yet the mood is oddly upbeat

Despite Donald Trump’s doubts, thenato mission in the Baltics is effective Amultinational nato battalion in eachcountry is small enough not to provokeRussia but big enough to deter it “It’s bril-

liant,” says a Latvian spook Some 19 out of

29 nato members have people on theground If Mr Putin were to invade, hewould have to kill citizens from most ofthem, making a nato response inevitable.That is probably too big a risk even for him Despite Mr Trump’s isolationist rheto-ric, military co-operation with America hasimproved during his presidency, thanks to

a bigger Pentagon budget and the ardentsupport of lawmakers who visit the Baltics,says a Lithuanian official The Americanshelp with intelligence and live-firingranges for tanks All the Baltics would like

to see more American troops on their soil.Noting that Poland has offered to host a bigAmerican base and call it “Fort Trump”, theLithuanian official wryly suggests that theBalts should offer to host forward operat-ing bases and name them after Melania,Ivanka and Donald junior

All three Baltic states spend around 2%

of gdp on defence—the nato target that MrTrump often berates allies for not meeting.Since Russia grabbed Crimea, Lithuaniahas brought back conscription (Estonia has

it, too) Training includes guerrilla tactics.Russia continually tests nato’s de-fences Sometimes it does this by buzzingwarplanes briefly into Estonian airspace tosee how quickly the defenders respond.More often it does it digitally, with a veneer

of deniability Attacks are routed via promised computers that can be anywhere.Lights on a big screen at the Estonian Infor-mation System Authority, a governmentbody, show them pinging in from allaround the world Lithuania suffered50,000 hacks in 2017 “It’s constant,” says

com-an official

Yet since a massive cyber-attack on tonia in 2007, cyber-defences have stiff-ened Twelve years ago hackers temporar-ily crippled banks, media outlets andgovernment offices after Estonia had thetemerity to move a much-hated statue of aRed Army soldier to a less prominent site inTallinn, the capital Since then, all threestates have poured resources into thwart-ing digital skulduggery Estonia hosts anato cyber-security centre Separately, thestate recruits tech-savvy reservists to spotvulnerabilities Baltic governments areconfident that the Russians have nothacked their voting systems, but they re-main vigilant Estonia holds a parliamen-tary election in March; Lithuania, a presi-dential one in May All three countries willtake part in eu elections this spring; all arewary of Muscovite meddling

Es-An even bigger worry is informationwar Russian trolls and fake newsmongersare determined to undermine nato, the euand Baltic democracy They exaggerate pro-blems, such as discrimination against Rus-sian-speakers They invent outrages, such

as the rape by German nato soldiers of anon-existent Lithuanian orphan They stir

RIGA , TALLINN AND VILNIUS

As they prepare for elections, nato’s three tiny front-line states look robust

The Economist February 2nd 2019 Europe 332

1

up disputes, for example over

immigra-tion Lithuania’s president, Dalia

Grybaus-kaite, recently warned that “militant

illiter-acy and aggressive populism” posed a

threat to her country

One problem is that Russian minorities

in the Baltics tend to watch Russian

televi-sion, which bubbles with propaganda But

ethnic natives do not, and after decades of

hearing lies from Moscow, “we’re

vaccinat-ed,” says Eeva Eek-Pajuste of the

Interna-tional Centre for Defence and Security, a

think-tank in Tallinn Most disbelieve

any-thing that sounds Putinny Visitors to

Narva, where a river separates Estonia from

Russia, can see visual evidence of the

dif-ference in political culture The eu donated

a big dollop of money for a walkway on

both sides The one on the Russian side is

only a fraction as long 7

For up to 15 months nine Catalan

sepa-ratist leaders have been in jail On

Feb-ruary 4th they and three others are due to

start what will be the first of many days in

the Supreme Court as the oral phase of their

trial on charges of rebellion and misuse of

public funds gets under way The charges,

which could potentially result in sentences

of up to 25 years in jail, arise from an

un-constitutional referendum and illegal

dec-laration of independence in one of Spain’s

largest and richest regions in October 2017

For supporters of Catalan independence, it

is a political trial For many Spaniards it is

retribution for a conspiracy to break up

their country It is also a test of the

impar-tiality of the country’s judiciary

The investigating judge, Pablo Llarena,

contends that the defendants, most of

whom were members of Catalonia’s

re-gional government, pursued for several

years a plan to achieve independence

“whatever the cost” He points to “violent

episodes” in the final weeks of the

cam-paign, especially a demonstration in which

police and court officials searching a

Cata-lan government office in Barcelona were

barred from leaving for hours, while their

vehicles were trashed

In the aftermath of the referendum,

which Spanish police tried but failed to

prevent, Spain’s government imposed

di-rect rule in Catalonia It called a fresh

re-gional election in which the separatists

again won a narrow majority of seats,

though with only 47.5% of the vote

The referendum certainly took place in

an atmosphere of intimidation In ing laws to authorise the referendum andset up a new state, Catalonia’s parliamentviolated Spain’s constitution and its ownstatute of home rule Quim Torra, the cur-rent Catalan president, recently urged Cat-alans to pursue “the Slovenian way” to in-dependence, which involved a ten-dayconflict and some 80 deaths Yet many law-yers question whether all this amounts tosufficient violence to justify the charge ofrebellion, designed for military coups

approv-It is an “unfair, irregular trial” in whichthe defendants’ rights have been violated,says Alfred Bosch, a member of the currentCatalan government He notes that courts

in Germany, Scotland and Belgium grantedbail to other defendants, including Carles

Puigdemont, the former regional dent, who fled abroad, before Mr Llarenadropped extradition proceedings The So-cialist government of Pedro Sánchez,which took office in June, is uncomfortablewith the pre-trial detention of the defen-dants But it insists that this is a judicialmatter in which it cannot interfere

presi-The Catalan independence bid has leashed a conservative reaction in the rest

un-of Spain In a regional election in cia in December, Vox, a previously insig-nificant far-right party, won 11% of the vote.Vox is using a quirk in Spain’s legal system

Andalu-to join the state’s case against the ists as a private party, which will allow it tocross-examine the defendants This is apropaganda gift for the separatists, whoclaim, unfairly, that Spain’s judiciary is a

separat-MADRID

The trial of Catalan separatism

Spain

Justice in the dock

The heavy snowfall in central Europe

so far this year is making life hard forstone martens A weasel-like animal,half a metre long with brown fur and awhite blaze on its chest, the stone mar-ten has tiny paws too small to keep itsuspended on soft snow It thus has anendearing habit of walking along cross-country ski tracks, where the snow ispacked harder It also has a less endear-ing habit: gnawing on rubber Specifical-

ly, it likes to crawl into car-engine ities and chew on the wiring

cav-As a result, in Germany, car insurance

that covers Marderbisse (marten bites) is

a must According to gdv, an insurers’

group, martens were the fourth-leadingcause of non-collision auto damage inGermany in 2017 They chewed through

€72m ($79m) worth of cables, up from

€66m the year before and €28m in 2005

The rise in marten damage may ply be the consequence of more martens

sim-The population has grown in recentdecades, and they are colonising areasfrom which they had disappeared, such

as the eastern Netherlands Anotherreason may be declining fear of humans,who create lots of warm, dry spaces likeattics that make perfect marten dens

“They are one of these animals thathave become part of the suburban eco-system,” says Kees Moeliker, director ofthe Rotterdam Museum of Natural His-tory He keeps a collection of animalsthat have died in unusual interactionswith humans, including the most dra-matic case of marten damage ever In

2016 one hopped onto an electric former at the Large Hadron Collider

trans-(lhc) in Switzerland, short-circuiting itand briefly knocking out the particleaccelerator Earlier that year the lhc lostpower when a cable was chewed through

by an animal which, though rathercharred, appears to have been a marten

What explains the martens’ suicidaltastes? Some biologists note that electri-cal insulation manufactured in east Asiasometimes contains fish oil Othersthink the culprits may be mostly youngmartens that do not know what is edible;damage tends to peak in spring, whenthe young are born Asked for his theory,

Mr Moeliker laughs “This is something

we will probably never know, what’s inthe head of the marten,” he says

The marten menace

Wildlife

AMSTE RDAM

They are cute, furry and can disable a particle accelerator

Coming soon to a BMWnear you

34 Europe The Economist February 2nd 2019

2holdover from Franco’s dictatorship

Mr Sánchez hopes to defuse the Catalan

conflict He wants the separatist parties to

vote for his budget, which includes a

dol-lop of extra money for Catalonia Some may

do so: there are growing fissures within

Catalan separatism, especially between Mr

Puigdemont and Oriol Junqueras, his

for-mer deputy, who is the leading defendant

but who does not back a further unilateral

independence bid

The trial will keep the divisive Catalan

issue alive during European and regional

elections in May A verdict may not come

until the autumn If the defendants are

found guilty, Spain’s politicians will have

to decide whether to pardon them That

would be unpopular But letting them

moulder in jail will be seen abroad as a blot

on Spain’s democracy.7

Hundreds of identical mini French chateaux stand empty in various states of completion

at the Burj al Babas housing development in northern Turkey after its developer, theSarot Group, filed for bankruptcy last year If it is ever completed, the development willboast more than 700 identical chateaux as well as shops, restaurants and meeting halls

Turkey’s oddest ghost town

Three months ago, Jacline Mouraud, a

hypnotherapist from Brittany, opened

her laptop, pressed record and offloaded

her grievances Her coup de gueule (angry

rant) video against the rising fuel prices,

posted on Facebook and YouTube, went

vi-ral It also helped launch the gilets jaunes

(yellow jackets) protest movement, which

forced France’s president, Emmanuel

Mac-ron, into his first political climb-down

when he cancelled a fuel-tax increase This

week, buoyed by the popularity of the

movement, Ms Mouraud decided to shift

her protest from the streets to the ballot

box, and launched a gilets jaunes political

party Hers is the second such effort to

transform a leaderless movement into an

organised political force

Ms Mouraud’s version, called The

Emerging, has its sights on French

munici-pal elections in 2020 Its guiding principle,

she said, is to “remake politics around the

heart and empathy” rather than “the rule of

money” With a paradoxical nod to En

Marche, the movement founded by Mr

Macron to launch his presidential election

bid in 2017, her party, she says, will be

“nei-ther on the left, nor the right” Among her

ideas is a higher top income-tax rate and

fewer perks for parliamentarians After 11

weeks of demonstrations in cities across

France, which have often ended in clashes

with riot police, it was time, Ms Mouraud

declared, to move from protest to proposal

This initiative came only days after

an-other gilet jaune, Ingrid Levavasseur,

launched her own party, the Citizen-LedRally (ric) A 31-year-old nursing assistantfrom Normandy, Ms Levavasseur, like herBreton counterpart, has become anotherfamiliar face on French television She saysher party will be ready to fight elections inMay to the European Parliament, and hasalready named the first ten candidates onher party list ric also happens to be theFrench acronym for “citizen-led referen-dums”, which have become a popular de-

mand from the gilets jaunes movement

since it widened out from fuel-tax revolt

Ms Levavasseur is less clear about her cies, insisting that they will emerge fromthe grassroots But she shares with MsMouraud a desire, as she puts it, to “put thehuman” back into politics

poli-The transformation into a politicalforce of a disparate protest movement,whose members are linked through socialmedia and have widely diverging aims, islikely to be, as Ms Levavasseur conceded,

“quite complicated” Just days after shelaunched the party, her campaign director,Hayk Shahinyan, resigned, citing “doubts”

about the venture (and concern about a let jaune who had his eye damaged in aclash with the police) He was followed byone of the candidates on her party list, whohad received threats on social media

gi-Hard-core activists, who seek the throw of Mr Macron and have no desire toend the weekly protests, have accused MsLevavasseur of treason After it emergedthat she voted for Mr Macron in 2017, if only

over-to keep out the nationalist Marine Le Pen,she was accused of being a stooge “A vote

for the gilets jaunes is a vote for Macron,”

declared Eric Drouet, a lorry driver who

runs the most popular gilets jaunes

Face-book group, “Angry France”

For now, Ms Levavasseur says that herparty’s role is one of co-ordinating differ-ent initiatives rather than a quest for a po-litical monopoly on the movement Buteven that will be tricky Political sympa-

thies among the gilets jaunes reach from

far-left anarchists to the ultra-right Ms vavasseur’s fairly moderate left-leaning in-stincts are at odds with others’ In a tv de-bate with Ms Levavasseur, Benjamin

Le-Cauchy, a gilet jaune from Toulouse, said

that he has been talking to politicians onthe right about ways for the movement to

“reclaim” an existing political party Established political parties do not see

it quite that way round Jean-Luc chon, on the far left, as well as Ms Le Pen

Mélen-have been furiously courting the gilets jaunes Protesters on the roundabouts, de-clared Ms Le Pen, are “often our voters”

That may be true But many gilets jaunes see

Mr Mélenchon and Ms Le Pen, with theirseats in the National Assembly, as part ofthe system and therefore part of the pro-blem A recent poll suggested that, if there

were a single gilet jaune list at the European

elections, it would get 13%, denting both

Ms Le Pen’s score (17.5%) and Mr chon’s (8%) With enfeebled Socialists (5%)and Republicans (11.5%), that leaves justone party that would widen its lead thanks

Mélen-to a gilets jaunes party: En Marche (22.5%),

the party founded by Mr Macron, whom themovement so detests 7

PARIS

The gilets jaunes are forming not one

but two political parties

France

From protest to

party

The Economist February 2nd 2019 Europe 35

In a warm office in Berlin’s trendy Kreuzberg district,

Charle-magne is trying to persuade Yanis Varoufakis that he is a

politi-cian “It’s a necessity I really dislike running and asking people for

votes,” protests the Greek economist when asked about European

Spring, his new transnational political party Does he think of

him-self as a politician? “No The moment I do, shoot me.” Apparently

inadvertently, Mr Varoufakis won his seat in the Greek parliament

in 2015, became finance minister, took on the European economic

establishment and failed After six months, he discarded the

chains of office in pique “If you want to be a manager, you can

work for Goldman Sachs,” he sighs

Not a politician? That evening, in an old warehouse in Berlin’s

east, Mr Varoufakis takes to the stage before a young, bookish,

in-ternational audience at the launch of European Spring’s manifesto

for May’s elections to the European Parliament Perched on the

edge of his seat, he seems every bit the vote-wrangler His right

hand clasps the microphone, the left one depicts trillions of euros:

slicing and restructuring debts, swishing from side to side to

illus-trate giant German surpluses, fingers flickering to imitate the

vi-cissitudes of lily-livered social democrats

It is easy to mock Mr Varoufakis As Greek finance minister, he

hectored Eurocrats for their desiccated economic orthodoxies—

sometimes reasonably (he correctly pointed out that Greece will

never repay all of its debts), sometimes outlandishly (covertly

planning a parallel Greek payments system) He was ridiculed for a

photo-shoot in Paris Match, a French celebrity magazine, which

showed him dining stylishly on his roof-terrace beneath the

Acropolis To many critics, his career is one unending book tour:

tomes excoriating the international economic establishment fly

off the shelves every time he bashes elites in the media

Mr Varoufakis’s European ambitions do not exactly disprove

the stereotype He is running in the impending Greek

parliamen-tary election and in the European Parliament elections—for

Ger-many This is provocative in a country where Mr Varoufakis has

long been demonised “If we wanted to reform the Roman empire

we would start in Rome, not in southern Egypt,” he argues At the

rally in Berlin he indulges in Utopianism, imagining the first press

conference on the Monday morning of a European Spring-led

Eu-rope The proposals to be announced on that glorious day: €2.5trn

in green investments from the European Investment Bank (eib)over five years, a guarantee from the European Central Bank that itwill prop up the prices of eib bonds in secondary markets and themutualisation of (good) European debt to lower interest rates

All of this sends orthodox eyeballs skywards Yet one does nothave to agree with everything the Greek politician says to findsome aspects of his efforts welcome European Spring, the elector-

al wing of a trans-European political movement called (rather tatingly) diem25, wants to help Europeanise the European elec-tions The parliament in Strasbourg is a supra-national bodypassing supra-national European legislation, but elections to it arefought on national lines by national parties Europe’s media, tradeunions and civic organisations are mostly national Few politicalfigures are known across borders In the words of Elly Schlein, ayoung Italian European Spring candidate: “The eu is a round tablewhere politicians have their backs to each other, facing domesticpolitical concerns instead.” In other words, most of the eu’s de-bates do not take place at the level where European power is exer-cised European Spring thinks that needs to be corrected

irri-Moreover, it may breathe some life into the old, tribal Europeanpolitics Traditional party groups in the European Parliament aremoribund Only last week it was alleged that Elmar Brok, a walrus-like Christian Democrat from Germany, had been charging con-stituents to visit the parliament and made €18,000 a year from thewheeze He denies the accusations You do not have to agree withthe European Spring’s proposals—which include a universal citi-zen’s income, totally open borders and relaxed fiscal policies—towelcome the possible arrival of new, fresh legislators like MsSchlein in Strasbourg “If you try to take over an existing politicalparty, you will be taken over by it,” warns Mr Varoufakis “They arebureaucratic machines wedded to the nation-state with an institu-tional aversion to ideas.”

European Spring is at best a fringe outfit Even Mr Varoufakisreckons it is unlikely to win more than a handful of seats, and he isnot known for understatement So its effects on the debate inStrasbourg and Brussels are likely to be limited But at a time whenpro-Europeans seem ever more confined to the technocratic cen-tre of politics, it is welcome to find a transnational party makingthe case for openness from a different perspective Europe willonly be open in the future if openness has defenders on the right,centre and left of politics Many on the left—Jeremy Corbyn in Brit-ain, Jean-Luc Mélenchon in France, Sarah Wagenknecht in Ger-many—are turning towards leftist tribalism, Euroscepticism andanti-immigration politics in an attempt to win over disaffectedvoters But European Spring embraces none of those things Mr Va-roufakis stresses that the group has liberal strains, and that he haslong dealt with figures outside his own ideological camp (he is inclose contact with Norman Lamont, a British Conservative formerfinance minister) European Spring activists talk about bringingtogether French and Polish workers to defuse national conflictsbetween the two, encouraging young European volunteers to helprefugees in hostels near the “Jungle” refugee camp in Calais andtaking on the Italian government in cities like Naples

Times are tough for Europe’s liberals Their tunes no longersound so good in a post-crisis age, and they are struggling to findnew ones They will undoubtedly disagree with much that Mr Va-roufakis and his comrades say But they are at least fellow fighters

in an increasingly difficult struggle against the drift to a Europe ofclosed societies and economies 7

Varoufakis Sans Frontières

Charlemagne

A maverick leftist’s sally into transnational politics

Illumination, every weekday.

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that aren’t making headlines, but should be For a daily burst of global illumination,

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theintelligence.economist.com

The Economist February 2nd 2019 37

1

On february 4th 2004 a young website

with a baby-blue banner was born

Founded in a dormitory at Harvard,

TheFa-cebook.com tapped into people’s

instinc-tive desire to see and be seen Few guessed

how successful it would become In 2008

Rupert Murdoch, the media mogul who

had bought the social-networking rival

MySpace, called Facebook the “flavour of

the month”; the following year this

news-paper warned in an article about Facebook

that it is “awfully easy for one ‘next big

thing’ to be overtaken by the next.”

Instead Facebook has stayed on top by

spreading wildly across America and the

world and buying competitors, including

the photo-sharing app Instagram and the

messaging firm WhatsApp Around

two-thirds of American adults use its original

social network At its peak, the average user

spent nearly an hour a day on Facebook’s

platforms Few companies have exerted

such a strong influence on society,

chang-ing people’s communication habits,

re-uniting lost contacts, shaping their

percep-tion of world events and redefining the

meaning of the word “friend” “Every once

in a while, changes in technology comealong which are so profound, that there is abefore and an after Facebook is one ofthose,” says Roger McNamee, author of aforthcoming book called “Zucked”

Birthdays are an occasion for reflection

In the 15 years since its founding, Facebookhas altered America in three notable ways

First, it has shaped what it means and feelslike to be young The company has donethis twice: once with its flagship social net-work, which became the pastime and ad-diction of college students and highschoolers in the mid-2000s, and againwith Instagram, which is the digital drug ofchoice for their successors today, along

with the rival app Snapchat

The company has fostered a virtual

“me-conomy”, where people (over)sharetheir feelings, photos and comments.Some blame Facebook for fanning teenagenarcissism and for short attention spans.Others say it has caused anxiety, depres-sion and insecurity Researchers haveshown that people who spend more time

on Facebook are more likely to think otherpeople have it better than they do and thatlife is unfair

The lasting effects of social media, andFacebook in particular, on young people’spsyches will not be fully understood foryears, but it is clear that Facebook haschanged human interaction At the safe re-move of a screen, bullying on social mediahas become painfully common; some 59%

of American teenagers say they have beenbullied or harassed online Facebook hascultivated far-flung, online friendships,but it has changed the nature of offlineones, too According to research by Com-mon Sense Media, a non-profit, in 2012around half of 13- to 17-year-olds said theirfavourite way to communicate withfriends was in person Today only 32% feelthat way, with 35% preferring texting

Second, Facebook has changed tudes to privacy The social network thrivesthrough trust After Facebook waslaunched, for the first time people feltcomfortable sharing intimate details on-line, including their phone number, rela-tionship status, likes and dislikes, locationand more, because they felt they could con-

39 How to pick a mayor

40 The Mueller investigation

42 Lexington: Populists on parade

Also in this section

38 United States The Economist February 2nd 20192

1

trol who had access to them Users were

vaguely aware that Facebook was starting

to make a fortune mining this data and

sell-ing advertisers access to specific types of

users, but they mostly did not object

Opinions about privacy may be shifting

again at Facebook’s hands, this time in

re-verse Public scandals about outside firms

getting access to Facebook users’ data,

in-cluding last year’s Cambridge Analytica

fi-asco, have shone a light on the firms’

mas-sive data collection Around half of

American adult users are not comfortable

with Facebook compiling such detailed

in-formation about them, according to a

sur-vey by Pew Research Centre Concerns

about privacy and lax oversight probably

played into the beating that Facebook’s

rep-utation took last year According to the

Reputation Institute, a consultancy,

Face-book’s standing among Americans fell

sharply in 2018, and its score ranks

signifi-cantly below other technology companies,

including Google A fresh scandal over

Fa-cebook spying on users’ online activities in

the name of research may further dent the

company’s image

Third, Facebook has left a lasting mark

on politics The social-networking firm has

become an invaluable tool for politicians

seeking office, both through paid

adver-tisements to reach voters and free content

that spreads on the social network “You’d

be hard-pressed to find a politician who’s

been elected in the last ten years who didn’t

use Facebook,” says David Kirkpatrick,

au-thor of “The Facebook Effect”, a history of

the social network Two presidents, Barack

Obama and Donald Trump, won election in

no small part thanks to Facebook In Mr

Obama’s case, Facebook helped him

fund-raise and drum up support In 2016

Face-book’s role was more controversial: false

news spread wildly and Russians meddled

with messages on social media, which may

have helped Mr Trump gain an edge

The rise of fake news and spread of filter

bubbles, where people see their

pre-con-ceptions reinforced online, have probably

disillusioned many voters Facebook has

had a hand in spreading misinformation,

terrorism and ethnic violence around the

world But it has also spurred civil

engage-ment Black Lives Matter, a campaign

against police violence, began with a

Face-book post and quickly spread through the

social network Much of the grassroots

op-position to Mr Trump, from the women’s

marches to groups like Indivisible, use the

platform to organise themselves Many

other campaigns and movements have

at-tracted members through Facebook and

Twitter “They give ordinary people a voice

That’s a net positive for society,” says Mr

Kirkpatrick

Can the social-media giant stay as

influ-ential in the next 15 years as it has already

been? At the risk of being wrong about

Fa-cebook again, that seems unlikely This ispartly because its impact has already been

so extensive But it is also because of ing unease with the platform As with allnew technologies, from the printed book tothe telegraph, social media can be usedboth for good and bad Critics of Facebookare increasingly vocal about the harms,pointing out that Facebook is addictive,harmful for democracy and too powerful inmaking decisions about what content peo-ple see “Big tobacco” is what the bosses ofseveral top tech companies have startedcalling the social network, and politiciansare speaking openly about regulation

grow-Though it has just posted record

quar-terly profits, it seems unlikely that cans are going to increase the time theyspend on Facebook proper Time on its coresocial network is declining, probably be-cause users are questioning whether it is asenjoyable as it used to be Adults in Ameri-

Ameri-ca spent 11.5% of their online time on book’s main platform, a fifth less than twoyears earlier, according to Brian Wieser ofPivotal Research Instagram use is rising,but not enough to make up for the core so-cial network’s decline As more peoplequestion whether social media are good forthem, Facebook could loosen its grip onAmerica The relationship with Facebookcontinues, but the love affair is over.7

Face-Terrible traffic, packed Metro cars,full restaurants: Washington returned

to work this week after the longest-evergovernment shutdown ended, at least fornow Despite vowing not to reopen govern-ment without the $5.7bn he demanded forhis border wall, Donald Trump did justthat, signing a spending bill that funds thegovernment through February 15th andcreates a bipartisan, bicameral commis-sion to develop a border-security proposal

Ann Coulter, a far-right commentatorand supporter of Mr Trump, called him “thebiggest wimp ever to serve as President ofthe United States.” A headline on the DailyCaller, a conservative website, blared

“trump caves” Polls showed that moreAmericans blamed Mr Trump for the shut-down than blamed House Democrats—per-

haps because, 11 days before it began, heboasted that he would be “proud to shutdown the government” if Congress failed

to give him exactly what he wanted

When it was over, the non-partisanCongressional Budget Office (cbo) released

a report on the shutdown’s economic fects It estimated that American gdp was

ef-$3bn lower in the last quarter of 2018 andwill be $8bn lower in the first quarter of

2019 than it would have been without theshutdown That pain was not evenly distri-buted; federal workers and businesses thatrely on them felt the effects more stronglythan the economy as a whole Thoughmuch of that activity should eventually berecovered, the cbo forecast that around

$3bn—or 0.02% of projected annual gdp—has been permanently lost

WASHINGTON, DC

The budget mess took a toll on the economy, and it’s not over yet

Open government

In search of lost time (and money)

The art of the deal

The Economist February 2nd 2019 United States 392

1

Businesses that could not receive

per-mits or loans because the relevant agency

was closed probably delayed hiring and

in-vestment Unpaid workers who had to take

out loans will see their future spending

constrained by debt servicing A lack of

published economic data increased

eco-nomic uncertainty, while funding gaps

probably began “to reduce the credibility of

the federal government,” making it harder

to attract talent and more expensive to

make contracts with private business And

though the 800,000 furloughed or unpaid

federal workers will receive back wages,

private-sector workers that depend on

gov-ernment—suppliers, contractors,

restau-rants near government offices and the

like—may not

Nor is America out of the woods Mr

Trump threatened to force another

shut-down if the commission fails to come up

with a recommendation that he likes Bills

to prevent the effects of a shutdown

through “automatic continuing

resolu-tions”—meaning that funding will

contin-ue at current levels if lawmakers fail to

agree on spending levels—have been

float-ed in both houses of Congress, by members

of both parties Mr Trump also threatened

to declare a national emergency, a prospect

some congressional Republicans find

more appealing than another shutdown.7

The casting call went out last month

Braddock, a small steel town tenmiles from Pittsburgh, needed a newmayor John Fetterman, who had held thepost for 13 years, had stepped down tobecome Pennsylvania’s lieutenant-governor Interested candidates had fiveminutes each to wow the borough coun-cil in a special public session and con-vince them that they should be the nextmayor Only five applicants, who includ-

ed a former chef and a wig-seller, tioned on January 29th Chardae Jones, a29-year-old business analyst sportingpink dreads, was the unanimous winner

audi-The town does not usually hold openauditions for vacant political posts Itscouncil has the power to appoint aninterim mayor, but an attempt to do thislast month derailed when questionsemerged about the eligibility of thechosen candidates and the vetting pro-cess So the council decided to open thecontest to any resident of the boroughwho is registered to vote and has notbeen convicted of a felony

Braddock has struggled for ations The hardscrabble town whereAndrew Carnegie opened his first steelmill and first Carnegie Library is a shad-

gener-ow of its former self At its height in the1920s the population exceeded 20,000

Today it is less than 1,800 BraddockAvenue, the main commercial artery,once had bustling shops, hotels andrestaurants Today it is a parade of emptylots and closed storefronts

Braddock’s mayor has few powers

The borough has been under state nancial oversight since 1988 The coun-cil, not the mayor, operates the budgetand hires borough employees Themayor has public-safety responsibilities,but the police department is only part-time and its budget is tight

fi-The outgoing mayor, Mr Fetterman, agraduate of Harvard Kennedy School ofgovernment, did much to shine a spot-light on Braddock, including giving ted

talks, appearing on “The Colbert Report”,

a comedy news programme, and hustling

to attract businesses and investors

When he became mayor in 2006, thetown didn’t even have an atm He went

on national television to beg Subway, arestaurant chain, to open New restau-rants eventually came (though still noSubway), but Braddock’s renaissance isstill some way off Carnegie’s mill, mirac-ulously, is still in operation Its chimneysdominate the skyline, but not the city’seconomy It employs only 10% of the5,000 workers it once did, and few ofthem live in Braddock

The victor of Braddock’s talent test, Ms Jones, intends to continue much

con-of Mr Fetterman’s promotion, but warnsthat redevelopment means nothing if thecommunity is not safe She will have toaudition again to keep her new job Shefaces a primary, and then a more conven-tional election in November

Pennsylvania Idol

Choosing a mayor

BRADDOCK , PE NNSYLVANIA

A rustbelt town adapts a TV format for politics

Braddock’s got talent

Laser weapons orbiting in space and

warplanes that shoot down rockets

sound like the doodlings of a teenage boy

Both appear in the Trump administration’s

missile-defence review, published on

Jan-uary 17th It lays out a celestial vision of

homeland defence that looks cosmically

expensive and technologically dubious

America does not skimp on shooting

missiles out of the sky Its 2018 budget

allo-cated $19.3bn to the task—roughly

equiva-lent to the entire defence budget of Canada

or Turkey Since 2001 it has splashed out

over $130bn Some of that is spent on

ship-based Aegis and land-ship-based Patriot and

Ter-minal High Altitude Area Defence (thaad)

systems, which are aimed at short or

medi-um-range missiles Intercontinental

bal-listic missiles (icbms) fly higher and faster

For those, America has built a sprawling

“ground-based midcourse defence” (gmd)

directed at North Korea and Iran At $67bn

and rising, it is the Pentagon’s

fourth-most-expensive weapon system Launches

are spotted by infrared satellites and a dar network stretching from Cape Cod toJapan, and then—in theory—struck by one

ra-of 44 interceptors in Alaska and California

Though gmd was declared ready in

2004, it was not tested against an type target until 2017 and then under gener-ous conditions Using four interceptorsagainst one warhead is assumed to give a97% chance of a hit That sounds promis-

icbm-ing But if merely a dozen missiles werevolleyed at America, not only would it soak

up more than $3bn of interceptors but asingle warhead would still have a 30%chance of getting acquainted with anAmerican city The average revolver offersbetter odds for a game of Russian roulette.The Trump administration has beenadding interceptors, beefing up radars andconducting new tests But the latest mis-

The Pentagon would like satellites with

laser beams attached to their heads

Missile defence

Laser tag

40 United States The Economist February 2nd 20192

1

The first time Roger Stone talked to

Do-nald Trump about running for

presi-dent was in 1988 “We’re sitting in the

of-fice He’s looking at the newspaper, which

he did more then than now And he says,

Je-sus Christ: George Bush and Mike Dukakis?

How fuckin’ pathetic is that? How fuckin’

pathetic He says, You ever shake hands

with George Bush? I said No, what’s it like

He said, Let me show you (dead-fish

hand-shake) He said, And this Dukakis, what is

he? 5’5"? I said, Maybe you should run He

says, I’ll tell you this: I’m not interested in

running But if I did run, I’d win.”

Mr Stone’s role in Mr Trump’s eventualvictory has been a source of speculationever since November 2016 On January 25th

he was arrested at his home in Fort dale and indicted by Robert Mueller, thespecial counsel, on seven counts, includ-ing obstructing an official proceeding, wit-ness-tampering and making false state-ments about his communication withWikiLeaks and the Trump campaign At hisarraignment Mr Stone—in Democraticblue suit, tie and uncharacteristically flab-

Lauder-by pocket-square—pleaded not guilty to allseven counts He left the courthousethrough throngs of supporters and detrac-tors waving signs that read: “dirty trai-tor”, lock him up” and “roger stone didnothing wrong” Across the street was ahuge inflatable rat with a blond hairpiece.Mueller-watchers had awaited MrStone’s indictment eagerly The investiga-tion was set up to look at “links and/or co-ordination” between the Russian govern-ment and the Trump campaign Many linkshave already been revealed in indictments,but co-ordination has proved more elusive

Mr Stone, who both worked on the paign for a while and seemed to have ad-vance knowledge of the emails stolen fromthe Democratic National Committee byRussian military intelligence (the gru)looked as if he might be the missing link.cnn was so sure Mr Stone’s indictmentwas coming that the network had a camerateam outside Mr Stone’s house when thefbi turned up to arrest him On a similar

cam-hunch, The Economist had lunch with him

in December in Fort Lauderdale Askedthen if he was worried about the specialcounsel’s investigation into links betweenRussia and Mr Trump’s campaign, hescoffed: “Worry? I don’t worry I make otherpeople worry.”

Mr Stone’s reputation as the kind of litical operative imagined by screenwritersowes much to his own mythmaking For arace he worked on early in his career, in hishome state of Connecticut, he and othervolunteers paced the platforms at a com-muter railway station, passing out flyerswith hot coffee in the mornings and freshlymixed martinis when the passengers re-turned in the evenings His break camewhen working for Richard Nixon, a politi-cian Mr Stone admires so much that he hasthe 37th president’s face tattooed betweenhis shoulder blades (“Man with RichardNixon tattoo turns out to be a criminal,”was the headline on Popdust, a gossip web-site, after the indictment.) In his bookabout Nixon he writes, “I was drawn toRichard Nixon not because of his philoso-phy; he had none It was his resilience andhis indestructibility that attracted me.” MrStone says that Nixon was “exceptionallykind”, that he called him on his birthday,remembered his wife’s and dogs’ namesand sent letters when his parents died After tasting success of a sort with Nix-

po-on, Mr Stone worked on Ronald Reagan’sill-starred 1976 presidential campaign Thenext year he was elected president of YoungRepublicans in a campaign managed byPaul Manafort, convicted by Mr Mueller’steam for felonies too numerous to list in apaper that prizes concision When Reaganwon at the second attempt, Mr Stone set up

a lobbying firm, Black, Manafort and Stone,that became infamous for its work for Fer-dinand Marcos in the Philippines, Mobutu

FORT LAUDE RDALE AND WASHINGTON, DC

The self-professed dirty-trickster is either the missing link in the investigation,

or an attention-seeking mythmaker Or maybe both

The Mueller investigation

Get me Roger Stone

sile-defence review, the first in nine years,

makes some more radical proposals

One is to shoot down missiles in their

“boost phase” as they take off, when they

are slower and harder to disguise, rather

than above the atmosphere as gmd aims to

do Since the boost phase lasts for only a

few minutes, that requires spotting

launches and pouncing quickly The

sug-gestion is that fighter jets like the f-35 or

even drones could be “surged” towards

en-emy launchpads in a crisis, armed with

new interceptor missiles or compact

la-sers That carries obvious risks

So the second strategy is to do more

sensing and shooting from space This fits

with Mr Trump’s galactic proclivities In

December he ordered the creation of a new

Space Command to run military operations

in space A new Space Force and Space

De-velopment Agency are in the works

The Pentagon is especially keen to put

larger numbers of smaller and cheaper

sat-ellites into lower orbit for “birth to death

tracking”: from detecting tell-tale plumes

at launch to establishing whether an

inter-cept is successful Officials are also

begin-ning a six-month study into the feasibility

of putting the interceptors themselves,

whether rockets or lasers, into space

Few of these ideas are new An airborne

laser was successfully tested against

mis-siles in 2010 The Obama administration

poured hundreds of millions of dollars

into space sensors The vision of orbiting

lasers harks back to the Reagan

administra-tion’s Strategic Defence Initiative, widely

dubbed “Star Wars”

In 2012 the National Research Council

published a detailed and scathing

judg-ment of such methods Boost-phase

de-fence, it said, “is not practical or cost

effec-tive under real-world conditions for the

foreseeable future” It pointed out thatrocket motors burn out so quickly that in-terceptors would have to get unfeasiblyclose to the launch-pad

Space-based interceptors might dealwith that problem, but would require a pre-posterously large constellation of satellitescosting hundreds of billions of dollars ThePentagon insists that new, commerciallyavailable technology will bring down costs

Its task is to persuade Congress that thebudget, at least, is not headed to infinityand beyond.7

Rogue One