Monthly Archives: January 2014

By Toby Luckhurst

  • Iran is facing a water crisis so severe that President Hassan Rouhani has identified the problem as a national security issue and contingency plans exist for water rationing in the greater Tehran area.
  • Parental pressure on Chinese women has led to the growth of a boyfriend rental industry to fool families into believing that their daughters are on the path to marriage.
  • Obama’s ambitious free trade agenda threatens to split the Democratic Party.
  • The Sochi Winter Olympics are under threat from “black widows” – wives of rebels killed by the Russian state in the volatile Caucasus region.
  • Radical protesters in Ukraine are in the minority, but play an increasingly prominent role, write Neil Buckley and Roman Olearchyk.

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AFP

I had the privilege this week of listening to a lecture by Hans Rosling, professor of global health at Sweden’s Karolinska Institute. Many will have seen his engaging performances on Youtube or in Ted talks . He’s the one with the endearing Swedish accent – he says “yust” for “just” – and the animated charts that show nations as variously sized, coloured bubbles moving dramatically over time. He also uses a pointer with a little hand attached to the end.

His message is basically an optimistic one: that poor countries are rapidly converging on richer ones as their birth rates fall to sustainable levels and as their victory over preventable disease and premature death allows them to advance economically. Most of the world is now between what he calls “light bulb” and “washing machine” – in other words advancing up the lower rungs of the “middle classs”. Read more

Israel has enjoyed a quiet few years. No wars, no intifada, no increase in the international pressure on the Israeli state – and a strong economy. With the rest of the Middle East in flames, it has been hard to make the traditional argument that the Israeli-Palestinian question is the key to solving all other issues – or to argue that the plight of the Palestinians is the most urgent human-rights priority in the region.

But Israel’s quiet times may be about to end. The Scarlett Johansson controversy is just one part of it – the less important part, in fact. The other really significant element is that John Kerry seems to be about to launch his peace plan. When Kerry does that it will put Israel on the spot and may split its government. And if and when the talks fail (as I’m afraid, they surely will), Israel is likely to get a lot of the blame. The country will be back in the spotlight – and not in a good way. Read more

By Toby Luckhurst

  • Martin Taylor examines the perennial technical problems that plague modern banks.
  • The number of Saudi women in work has almost doubled in the last six years, as rising living costs render the tradition of the male breadwinner untenable.
  • Turkey more than doubled its weekly repo rate to combat rising inflation.
  • The International Energy Agency has warned that Europe faces decades of higher energy prices, which could be ruinous to industry competitiveness.
  • The Mafia has been dumping rubbish north of Naples, polluting the area so badly that locals refer to it as the “Triangle of Death”.

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Getty Images

By Toby Luckhurst
Europe is beset by rising energy prices, driven by the increasing competitiveness of shale production in the US, political commitments to lower emissions and an over-reliance on Russia in the wake of unrest in the Middle East and North Africa.

Britain’s Big Six, the six dominant energy companies, face accusations of overcharging, but they in turn claim that prohibitive emissions targets and governmental “green levies” are to blame for the price increase. While the US is benefiting from a shale gas boom that is predicted to give it an edge over both the EU and China for the next two decades, fracking is struggling to take off in Europe due to high costs, geological difficulties and public ambivalence to the environmentally destructive production methods. European politicians are considering abandoning the 2030 renewable energy targets in light of these high costs.

These articles analyse the causes of and possible solutions to Europe’s energy crisis. Read more

Obama’s zen-like State of the Union address
President Obama has just delivered his State of the Union speech to Congress. As usual, it was full of uplifting stories and calls for action, punctuated by standing ovations. But many believe that the sad reality is that this is a presidency that is running out of steam, and some of what Mr Obama had to say about the State of the Union was actually quite bleak. In this week’s podcast, Gideon Rachman is joined by Richard McGregor, Washington bureau chief and Edward Luce, chief US commentator, to assess the speech and the state of the presidency in general.

By Toby Luckhurst

  • John Kay’s open letter to Bill Gates restates his argument that the rich stay rich and the poor stay poor.
  • Scarlett Johansson is at the centre of a growing storm surrounding a Soda Stream manufacturing plant in the occupied West Bank.
  • Borzou Daragahi reports on Egyptians’ zealous show of support for the military.
  • Syria’s Islamist rebels have gained control of the country’s oil and are selling fuel to the Assad regime in exchange for protection from air strikes.
  • Jan Cienski reports from Lviv – home to stalwarts of anti-Yanukovich sentiment and Ukrainian nationalism.
  • Upbeat duck accepts premature lameness, writes Edward Luce on Obama’s State of the Union speech.
  • Football stadia are at the forefront of the Chinese push for economic and political influence in Africa.

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President Barack Obama went to Capitol Hill on Tuesday evening to make his fifth State of the Union address.

Mr Obama tried to get on the front foot earlier in the day with the news he will bypass Congress to raise the minimum wage for federal contractors.

The White House had lowered expectations for a speech that was short on big initiatives and long on “executive actions” – policies pushed by presidential decree, rather than going through lawmakers.

The test will be whether Mr Obama’s performance will achieve its objective of restoring his damaged popularity following the botched rollout of healthcare reform.

James Politi reported from Washington and Shannon Bond from New York

 

Amid all the questions about whether we are seeing a repeat of the 1990s emerging market crises, it is worth asking a simple question: where are big multinationals putting their long-term bets on buying companies and building factories?

The answer is just in from the UN Conference on Trade and Development (UNCTAD) via the latest edition of its Global Investment Trends Monitor. Here are six points from the report worth paying attention to: Read more

By Toby Luckhurst

  • New “blockbuster” drugs provide hope for a cure to Hepatitis C – an illness which now kills more in the UK than HIV.
  • Neil Buckley explores the tent city that has sprung up in Kiev’s Independence Square to house, feed, and protect the anti-government protesters.
  • Al Jazeera journalist Abdullah Elshamy has begun a hunger strike to protest his detention without charge at the hands of Egypt’s military regime.
  • The New York Times reports on life without government in Lebanon.
  • Syrian government officials are facing anger from Syrians in Switzerland – the first time the regime has engaged with those directly suffering from the conflict.

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(Getty)

News that François Hollande had a meeting recently with Peter Hartz, architect of Germany’s labour market reforms of a decade ago, has caused a frisson in Paris where all the talk (apart from that about his love life) is about the president’s public embrace of social democratic reforms with a distinctly German flavour.

The Elysée Palace denied reports that Mr Hartz, who led former chancellor Gerhard Schröder’s landmark reform programme, was acting as an adviser to Mr Hollande.

But it acknowledged that the president had hosted the former Volkswagen executive for an hour-long informal meeting two months ago. Read more

Matteo Renzi (Getty)

Outside Italy there is an understandable enthusiasm for the constitutional and electoral reform proposals of Matteo Renzi, leader of the centre-left Democratic party. Italy unblocked – at last! Inside the nation itself, there is more caution and scepticism. This reflects the experience of Italians, who have travelled such roads in the past without being rewarded with better government and a better class of political leaders.

Renzi, 39, and Silvio Berlusconi, 77, leader of the revived conservative Forza Italia party, struck a deal this month which is beguiling in its simplicity. Read more

By Gideon Rachman
Faced with a dangerous political threat, governments the world over tend to place their faith in the same magic medicine – economic growth. When world leaders try to address the roots of terrorism, for example, they instinctively assume that prosperity and jobs must be the long-term answer. And when a regional conflict threatens to get out of control – in east Asia or the Middle East – the standard political response is to call for greater economic integration. From Europe to China, governments place their faith in economic growth as the key to political and social stability.

By Toby Luckhurst

  • A BBC documentary will reveal former Libya dictator Colonel Gaddafi’s hidden rooms in which he sexually abused children as young as 14.
  • The New York Times explores South Korea’s taste for Spam.
  • Argentina’s economy minister Axel Kicillof is increasingly the public face and policy guru of the government’s efforts to tackle rising inflation and stagnant growth.
  • The exaggerated threat of terrorism and years of political violence have fomented a conformist backlash in Egypt on the third anniversary of the protests that toppled military dictator Hosni Mubarak.
  • Katrina Manson interviews Kenyan writer Binyavanga Wainaina, the most prominent African to reveal his homosexuality.
  • Rand Paul is tainted by the extreme views of a minority in the libertarian wing of the Republican Party, as well as by his father’s successes and failures.

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(Getty)

Gideon Rachman has written about his encounters with a barking dog at Davos lovingly owned by Russian concert pianist and composer Lera Auerbach. In a talk on the last day at the World Economic Forum she gave some insights into the creative process and how she balances her talents which include painting, sculpture and poetry. Whether her dog helps this process she didn’t make clear.

And perhaps business people could learn from her approach. As she tours regularly as a concert pianist she said it was imperative to create an “inner silence” under any conditions. Artists, she admitted, are excellent at making excuses not to work – Wagner insisted on silk underwear to compose. So she didn’t allow the frenetic pace of Davos to become her excuse and scribbled a few lines of music each evening she was there. This “inner silence” is the only way we can truly find ourselves and create, she says. In her hideaway house she owns in Florida a sign on her door says, “GET AWAY FROM HERE”. Read more

hitandrun / www.hitandrunmedia.com

By Peter Chapman
With the global youth-to-adult unemployment ratio at its peak, and inequality one of the themes at Davos last week, the FT looks at the questions raised by youth unemployment, as well as solutions to it, in this Special Report.

Will the world’s lack of jobs drive the under-25s to violence and extremism? Do children, meanwhile, make easy targets for the global slave trade, and why is it that teenagers face greater bullying and violence over their sexual orientation?

Business often points the finger at government over the need to tackle the mismatch between qualifications and jobs but could it be doing more to confront the matter itself? Certainly German companies like BMW are bringing the benefit of apprenticeships to US states like South Carolina.

We have examined this and more in our Investing in Young People report.

What do you think must be done to prevent a lost generation of young people? Please share your comments with us below. Read more

Yesterday I interviewed Bill Gates on stage at Davos, at an event designed to give the businessman-philanthropist a platform to expound his ideas on development – and to skewer some “myths” about foreign aid. I thought Gates did pretty well. But today I open my own paper to read a spirited attack on him by William Easterly, headlined – “Western vanities that do little to help the world’s poor”. Easterly argues that: “Mr and Mrs Gates promulgate myths of their own. They overstate the contribution that foreign aid makes to economic progress in the world’s poorest regions. And they exaggerate the role played by philanthropists and politicians. These misconceptions, too, are pernicious, for they focus attention on development programmes that spread a costly misunderstanding on how poverty really ends.”

So have I been duped by Bill Gates? Read more

I had hoped that my 25th trip to Davos would be marked by the award of a silver fondu set, at the very least. No such luck. The only prize is to be asked yet again to work on “reshaping the world”, this year’s theme.

That degree of repeat offending suggests either an astonishing inability to learn from experience, or some residual belief that the exercise is indeed worthwhile. Whether the state of the world has been improved over the 44 years the World Economic Forum has existed is a moot point: it depends on the hand you have been dealt. Chinese princelings, whether on the strength at JP Morgan or not, would no doubt tick the box; Syrian refugees, whose plight is firmly on this year’s agenda, would beg to differ. Read more

There are many party games to play at Davos. Some work better than others. The fashion now, perhaps driven by the success of TED conferences, is for strictly time-limited interventions, as short as possible. One economic historian was asked to summarise the development of the global monetary system over the last 150 years, and forecast the future of the dollar, the renminbi and the euro out to 2030 – all in three minutes. Actually he made a more than decent stab at it, but others, who may well have something interesting to say, have barely cleared their throats before the bar comes down.

One innovation in the last few years which does work well is the so-called Ideaslab. I approached this with trepidation when asked to lead one a couple of years ago. Again, each presentation must be three minutes, no more, no less, and is accompanied by a slideshow of related images – not charts and graphs – which the speaker cannot control in any way. It’s a Swiss version of the BBC radio panel game “Just a Minute”: no hesitation, deviation or repetition allowed. Read more

I arrived in VIP-full Davos with one prediction in mind: 2014 will be the year the world returns to normality or at least the semblance of normality with the tapered exit from quantitative easing.

After three days at high altitude, the prediction is intact and I have five other takeaways. Read more