The Perils of China’s “Debt-Trap Diplomacy”


September 10, 2018

Banyan

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Malaysia-China Relations:The Perils of China’s “Debt-Trap Diplomacy”

Malaysia’s rethink of Chinese belt-and-road projects has lessons for other countries

 Print edition | Asia

IN AUGUST, three months after his opposition coalition trounced the Malaysian party that had ruled since independence, Mahathir Mohamad, the country’s 93-year-old new Prime Minister, travelled to Beijing. His aim was to tell President Xi Jinping that his country was now the Malaysia that can say no.

Dr Mahathir’s predecessor, Najib Razak, had hewed close to China. His loss at the polls resulted more than anything from the stench of corruption within his ruling United Malays National Organisation (UMNO). But his chumminess with China was also a factor. The two issues were entwined.

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Najib Razak–Malaysia’s Voleur

During Mr Najib’s rule, huge holes appeared in the finances of a state investment vehicle, 1MDB, which Mr Najib chaired. America’s Justice Department estimates that $4.5bn was stolen from the fund by insiders. (Around the same time, nearly $700m turned up in Mr Najib’s own bank accounts.) As 1MDB teetered, Chinese state entities stepped in, taking stakes in 1MDB ventures.

The relationship with China grew ever cosier. Chinese-funded projects in Malaysia were packaged as part of China’s Belt and Road Initiative, a global infrastructure-building scheme close to Mr Xi’s heart. Jack Ma of Alibaba, a Chinese tech giant, won the right to turn a site near Kuala Lumpur’s main airport into a Digital Free Trade Zone. Malaysia’s government tried to silence criticism of its state-to-state dealings. And China showed its gratitude. In the run-up to Malaysia’s general election in May, the Chinese ambassador appeared to lend open support to the ruling coalition. Many people were surprised that Dr Mahathir managed to win, despite UMNO’s gerrymandering. Mr Xi had reason to be aghast.

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China is not used to recipients of its largesse challenging the terms on which it is offered. Yet growing numbers of them are struggling with debts to Chinese entities taken on to fund Chinese-staffed projects. The Centre for Global Development in Washington reckons that eight belt-and-road countries are at “particular risk of debt distress”, among them ones that border on China: Laos, Mongolia and Pakistan. That is why Dr Mahathir’s progress in disentangling his country from Chinese-funded ventures is being closely watched.

 

In Beijing Dr Mahathir was plain-speaking and deft. He said that Malaysia was cancelling the $20bn East Coast Rail Link, a massive belt-and-road project, as well as two oil pipelines in Sabah province. His message, in essence, was: very sorry—lovely projects, but since coming to office we’ve discovered we can’t afford them. Implicit was another point: we can’t afford them because we now know how inflated the costs are, and how skewed the deals are in China’s favour—or plain fishy. It appears the Najib government paid nearly 90% of the $2bn price of the Sabah pipelines, although they were only 15% complete. Part of a Chinese loan for them appears to have plugged financing gaps at 1MDB.

Since Dr Mahathir’s return, he has gone further, taking aim at a large, Chinese-led housing scheme in Johor state intended for wealthy investors in China. This week the Prime Minister declared that foreigners would not be given visas to live there. Most Malaysians, he complained, could not afford to live in the new development. (The government in Johor makes more reassuring noises to foreigners who might be interested.)

China has a tendency to launch into tirades against countries that confront it. In this case the response from Beijing has been muted. That may be partly because of Dr Mahathir’s careful choice of words. But Malaysia is an influential country in South-East Asia, a region that China wants to draw closer into its orbit. And China does not want to make enemies among belt-and-road countries. One of the main points of the project is to boost China’s influence over them. For other countries badly needing to renegotiate their deals with China, that is a lesson worth learning.

Of these, Pakistan, which also has a new Prime Minister, Imran Khan, is by far the biggest debtor to China. The China-Pakistan Economic Corridor, a collection of energy and infrastructure projects supposedly worth $60bn, is the biggest plank of China’s belt-and-road strategy. Not for the first time, Pakistan faces a balance-of-payments crisis. It wants out of its debt.

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Mr Khan ought to do a Mahathir. And he is in an even better position. Far more than with Malaysia, there is a strategic dimension to China’s relations with Pakistan, says Husain Haqqani, a former Pakistani diplomat who is now at the Hudson Institute, an American think-tank. Officials in Beijing see Pakistan as a counterweight to India, China’s geostrategic rival. China needs Pakistan’s help in keeping Islamist extremism at bay. And it regards its neighbour as a vital route to the Arabian Sea. Unlike Dr Mahathir, Mr Khan himself seems not to grasp the problems of China’s debt embrace. But at least critics in Pakistan of the economic corridor are beginning to find their voice.

Debt divisions

China has more than its political ties with belt-and-road countries to consider. Chinese banks are getting worried about the safety of their lending. Commercial banks have sharply cut new belt-and-road financing since 2015. (So-called policy banks continue to lend.) And now the Belt and Road Initiative faces strong popular criticism at home. In part, the initiative is a victim of the Communist Party’s own propaganda: what debtors see as hard-to-service loans, state media paint as beneficent “aid”. That is a touchy word. At a summit in Beijing this week with African leaders, Mr Xi promised $60bn for the continent. Why, Chinese people asked on social media, is an indebted China spending so much abroad when it has pressing requirements at home? Censors rapidly shut down their criticisms of Mr Xi’s gesture.

China is right that many countries need more roads, railways and other infrastructure. But it is evident that the scheme it touts as a defining one of Mr Xi’s rule is losing its shine. Dr Mahathir’s trip may have taught some valuable lessons.

This article appeared in the Asia section of the print edition under the headline “Can’t pay”

 

De Tocqueville and the French exception


August 14, 2018

Liberal thinkers

De Tocqueville and the French exception

The gloomiest of the great liberals worried that democracy might not be compatible with liberty

 Print edition | Schools brief

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HE IS the most unusual member of the liberal pantheon. Liberalism has usually been at its most vigorous among the Anglo-American middle classes. By contrast, Alexis de Tocqueville was a proud member of the French aristocracy.

Liberalism tends to be marinated in optimism to such an extent that it sometimes shades into naivety. Tocqueville believed that liberal optimism needs to be served with a side-order of pessimism. Far from being automatic, progress depends on wise government and sensible policy.

He also ranks among the greats. He wrote classic studies of two engines of the emerging liberal order: “Democracy in America” (1835-40) and “The Old Regime and the French Revolution” (1856). He also helped shape French liberalism, both as a political activist and as a thinker. He was a leading participant in the “Great Debate” of the 1820s between liberals and ultra-Royalists about the future direction of France.

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In 1849 he served briefly as foreign minister (he died a decade later). He broadened the liberal tradition by subjecting the bland pieties of the Anglo-American middle class to a certain aristocratic disdain; and he deepened it by pointing to the growing dangers of bureaucratic centralisation. Better than any other liberal, Tocqueville understood the importance of ensuring that the collective business of society is done as much as possible by the people themselves, through voluntary effort, rather than by the government.

Tocqueville’s liberalism was driven by two forces. The first was his fierce commitment to the sanctity of the individual. The purpose of politics was to protect people’s rights (particularly the right to free discussion) and to give them scope to develop their abilities to the full. The second was his unshakable belief that the future lay with “democracy”. By that he meant more than just parliamentary democracy with its principle of elections and wide suffrage. He meant a society based on equality.

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The old regime was predicated on the belief that society was divided into fixed classes. Some people are born to rule and others to serve. Rulers like Tocqueville’s family in Normandy inherited responsibilities as well as privileges. They were morally bound to look after “their people” and serve “their country”. Democratic society was based on the idea that all people were born equal. They came into the world as individuals rather than as aristocrats or peasants. Their greatest responsibility was to make the most of their abilities.

Terror and the state

Many members of Tocqueville’s class thought that democratisation was both an accident and a mistake—an accident because cleverer management of the old regime could have prevented the revolution in 1789, and a mistake because democracy destroyed everything they held most dear. Tocqueville thought that was nonsense—and pitied his fellow blue-bloods who wasted their lives in a doomed attempt to restore aristocratic privilege.

The great question at the heart of Tocqueville’s thought is the relationship between liberty and democracy. Tocqueville was certain that it was impossible to have liberty without democracy, but he worried that it was possible to have democracy without liberty. For example, democracy might transfer power from the old aristocracy to an all-powerful central state, thereby reducing individuals to helpless, isolated atoms. Or it might make a mockery of free discussion by manipulating everybody into bowing down before conventional wisdom.

Sir Larry Siedentop, an Oxford academic, points out that Tocqueville’s contribution was to identify a structural flaw in democratic societies. Liberals are so preoccupied by the “contract” between the individual on the one hand and the state on the other that they don’t make enough room for intermediate associations which acted as schools of local politics and buffers between the individual and the state. And, he was the first serious thinker to warn that liberalism could destroy itself.

Tocqueville worried that states might use the principle of equality to accumulate power and ride roughshod over local traditions and local communities. Such centralisation might have all sorts of malign consequences. It might reduce the variety of institutions by obliging them to follow a central script. It might reduce individuals to a position of defencelessness before the mighty state, either by forcing them to obey the state’s edicts or making them dependent on the state’s largesse. And it might kill off traditions of self-government. Thus one liberal principle—equal treatment—might end up destroying three rival principles: self-government, pluralism and freedom from coercion.

Tocqueville feared his own country might fall into the grip of just such an illiberal democracy, as it had in the Terror, under Maximilien Robespierre in 1793. The French revolutionaries had been so blinded by their commitment to liberty, equality and fraternity that they crushed dissenters and slaughtered aristocrats, including many members of Tocqueville’s family. His parents were spared, but his father’s hair turned white at 24 and his mother was reduced to a nervous wreck.

He was worried about more than just the bloodshed, which proved to be a passing frenzy. The power of the state also posed a more subtle threat. The monarchy had nurtured an over-mighty state, as French kings sucked power from aristocrats towards the central government. The revolution completed the job, abolishing local autonomy along with aristocratic power and reducing individual citizens to equal servitude beneath the “immense tutelary power” of the state.

By contrast, the United States represented democracy at its finest. Tocqueville’s ostensible reason for crossing the Atlantic, in 1831, was to study the American penal system, then seen as one of the most enlightened in the world. His real wish was to understand how America had combined democracy with liberty so successfully. He was impressed by the New England townships, with their robust local governments, but he was equally taken by the raw egalitarianism of the frontier.

Why did the children of the American revolution achieve what the children of the French revolution could not? The most obvious factor was the dispersal of power. The government in Washington was disciplined by checks and balances. Power was exercised at the lowest possible level—not just the states but also cities, townships and voluntary organisations that flourished in America even as they declined in France.

The second factor was what he called “manners”. Like most French liberals, Tocqueville was an Anglophile. He thought that America had inherited many of Britain’s best traditions, such as common law and a ruling class that was committed to running local institutions.

Of liberty and religion

America also had the invaluable advantage of freedom of religion. Tocqueville believed that a liberal society depended ultimately on Christian morality. Alone among the world’s religions, Christianity preached the equality of man and the infinite worth of the individual. But the ancien régime had robbed Christianity of its true spirit by turning it into an adjunct of the state. America’s decision to make religion a matter of free conscience created a vital alliance between the “spirit of religion” and the “spirit of liberty”. America was a society that “goes along by itself”, as Tocqueville put it, not just because it dispersed power but because it produced self-confident, energetic citizens, capable of organising themselves rather than looking to the government to solve their problems.

Sleeping on a volcano

He was not blind to the faults of American democracy. He puzzled over the fact that the world’s most liberal society practised slavery, though, like most liberals, he comforted himself with the thought that it was sure to wither. He worried about the cult of the common man. Americans were so appalled by the idea that one person’s opinion might be better than another’s that they embraced dolts and persecuted gifted heretics. He worried that individualism might shade into egotism. Shorn of bonds with wider society, Americans risked being confined within the solitude of their own hearts. The combination of egalitarianism and individualism might do for Americans what centralisation had done for France—dissolve their defences against governmental power and reduce them to sheep, content to be fed and watered by benevolent bureaucrats.

Tocqueville exercised a powerful influence on those who shared his fears. In his “Autobiography” John Stuart Mill thanked Tocqueville for sharpening his insight that government by the majority might hinder idiosyncratic intellectuals from influencing the debate. In 1867 Robert Lowe, a leading Liberal politician, argued for mass education on the Tocquevillian grounds that “we must educate our masters”. Other Liberal politicians argued against extending the franchise on the grounds that liberty could not survive a surfeit of democracy. In the 1950s and 1960s American intellectuals seized on Tocqueville’s insight that mass society might weaken liberty by narrowing society’s choices.

More recently intellectuals have worried about the rapid growth of the federal government, inaugurated by Lyndon Johnson’s Great Society programme. Transferring power from local to the federal government; empowering unaccountable bureaucrats to pursue abstract goods such as “equality of representation” (even if it means riding roughshod over local institutions); and undermining the vitality of civil society tends, they fear, to destroy the building blocks of Tocqueville’s America. A recent conference, organised by the Tocqueville Society and held in the family’s Normandy manor house, dwelt on the various ways in which democracy is under assault from within, by speech codes, and from without, by the rise of authoritarian populism, under the general heading of “demo-pessimism”.

It is worth adding that the threat to liberty today does not stem just from big government. It also comes from big companies, particularly tech firms that trade in information, and from the nexus between the two. Gargantuan tech companies enjoy market shares unknown since the Gilded Age. They are intertwined with the government through lobbying and the revolving door that has government officials working for them when they leave office. By providing so much information “free” they are throttling media outfits that invest in gathering the news that informs citizens. By using algorithms based on previous preferences they provide people with information that suits their prejudices—right-wing rage for the right and left-wing rage for the left.

Today’s great rising power is the very opposite of the United States, the great rising power of Tocqueville’s time. China is an example not of democracy allied to liberty but of centralisation allied to authoritarianism. Its state and its pliant tech firms can control the flow of information to an extent never dreamed of. Increasingly, China embodies everything that Tocqueville warned against: power centralised in the hands of the state; citizens reduced to atoms; a collective willingness to sacrifice liberty for a comfortable life.

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Before the revolution in France in 1848, Tocqueville warned that the continent was “sleeping on a volcano…A wind of revolution blows, the storm is on the horizon.” Today democracy in America has taken a dangerous turn. Populists are advancing in Europe, Asia and Latin America. Authoritarians are consolidating power. The most pessimistic of great liberal thinkers may not have been pessimistic enough.

Read more on classical liberal values and thinkers at  Economist.com/openfuture

This article appeared in the Schools brief section of the print edition under the headline “The French exception”

The AF-A word


August 12, 2018

What is Affirmative Action?The AF-A word

http://discovery.economist.com/openfuture/what-is-affirmative-action?kw=all&csid=socialoffb&ref=openfuture

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Affirmative Action–Constructive Discrimination? In Malaysia, it is Bumiputraism by UMNO for political control of the Malays
 

As Harvard gets sued for discrimination, an idea popular in many countries comes under fire

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HARVARD UNIVERSITY is being sued for allegedly discriminating unlawfully against Asian applicants. America’s best-known university takes race into account when deciding whom to admit. It says this is one of many factors, and justified by the need to ensure a diverse student body. Plaintiffs contend that it has an unwritten quota to stop Asians from taking as many places as their stellar test scores would predict.

 

Racial discrimination is illegal in America, except when it isn’t. “Affirmative action” policies, which discriminate in favour of members of disadvantaged groups, are widespread in America and many other countries. Critics, including many supporters of the Harvard suit, argue that they should be illegal. Confusion abounds–America’s Supreme Court has offered contradictory guidance as to when affirmative action is and is not allowed.

The very phrase is vague. One of its early uses was in 1965, when President Lyndon Johnson of the United States signed an executive order requiring government employers to take “affirmative action” to “hire without regard to race, religion and national origin”. Since then, the phrase has come to mean more or less the opposite: giving preference to people because they belong to a particular race, religion, caste or sex.

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In many countries, the state gives a leg-up to members of certain groups because they have suffered discrimination in the past or continue to endure it today. America offers preferences to black people, whose ancestors were enslaved. India has quotas for dalits, formerly known as “untouchables”, who are at the bottom of the Hindu caste system. Some countries have affirmative action for members of groups that are on average poorer than their neighbours, even if those neighbours have not historically done them wrong. For example, Malaysia has positive discrimination for native Malays, who are poorer and do worse in school than their Chinese and Indian compatriots.

The details vary from place to place. In some countries, affirmative action applies only to areas under direct state control, such as public-works contracts or admission to public universities. In others, private firms are also required to take account of the race of their staff, contractors and even owners.

Advocates of positive discrimination often argue that such policies are necessary to correct historical injustice. Some quote another line of President Johnson: “You do not take a man who for years has been hobbled by chains, liberate him, bring him to the starting line of a race, saying you are free to compete with all the others, and still justly believe you have been completely fair.” Another argument is that discrimination against some groups is so pervasive that it can only be corrected with reverse discrimination.

Critics of affirmative action argue that two wrongs do not make a right; that treating different racial groups differently will entrench racial antagonism and that societies should aim to be colour-blind.

 

Many of the groups favoured by affirmative action have grown more prosperous or done better educationally since these policies were introduced. But establishing how much credit affirmative action can take is hard. The world has grown dramatically richer in recent decades and far more of its people have gone to university. Ethnic Malays are three times richer in Singapore, where they do not get preferences, than in next-door Malaysia, where they do.

 

Thomas Sowell, the author of “Affirmative Action around the World”, observes that although affirmative action policies are typically introduced as temporary measures aimed at narrow groups, they often expand in scope as new groups demand privileges, and become permanent. In 1949 India’s constitution said quotas should be phased out in ten years. Today over 60% of the population is eligible. More than 95% of South Africans are covered by preferences of some kind.

Although the groups covered by affirmative action tend to be poorer than their neighbours, the individuals who benefit are often not. One American federal-contracting programme favours businesses owned by “socially and economically disadvantaged” people. Such people can be many times richer than the average American family and still be deemed “disadvantaged” if their skin is the right colour. One beneficiary of South Africa’s programme of “Black Economic Empowerment” is worth an estimated $500m; he is also now the president of South Africa.

In several countries, the most heated debates around positive discrimination concern education. Some American states, such as California, Michigan and Florida, ban the consideration of race in public university admissions. But others are doubling down. Universities that take race into account are typically reluctant to disclose how much weight they ascribe to it. Critics speculate that this is because they give it far more weight than most Americans would consider fair. One study found that at some colleges, black applicants who scored 450 points (out of 1,600) worse than Asians on entrance tests were equally likely to win a place. The plaintiffs in the Harvard suit hope that it will force the university to reveal exactly how it evaluates applications.

Some say it is reasonable to award university places to African American students with lower test scores, given that as recently as 1954 it was legal in America for states to run separate schools for blacks and whites. But critics argue that it is counter-productive. A study by Richard Sander and Stuart Taylor found that lowering the bar for black students lets them enter law schools for which they are ill-prepared, causing many to drop out. Strikingly, they estimate that positive discrimination results in fewer blacks successfully qualifying as lawyers than would have been the case under colour-blind policies.

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Some people argue that policies designed to uplift the disadvantaged should cater only for those who are actually poor, rather than using race as a proxy for disadvantage. Barack Obama, though he has generally supported affirmative action, said it would be wrong for his daughters to get “more favourable treatment than a poor white kid who has struggled more”. Some universities have adopted race-neutral policies such as trying harder to recruit poor students or admitting anyone who comes in the top 10% of his or her high-school class. Many could free up more spaces for deserving poor students by removing preferences for the children of alumni—but few do.

 

No deal is often better than a bad deal. Not with Brexit


August 6, 2018

No deal is often better than a bad deal. Not with Brexit–Soft BREXIT,says The Economist

Britain’s dangerous bluff betrays a misunderstanding of its negotiation with Brussels

 Print edition | Leaders

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IN MOST negotiations, the maxim that “no deal is better than a bad deal” makes perfect sense. If you are buying a car, you must be ready to walk away or the seller has you over a barrel. The way to drive a hard bargain is to persuade him that he must offer you a good deal or there will be no deal at all.

Theresa May has made this commonsense principle the foundation of her talks with Brussels over Britain’s exit from the European Union. “No deal for Britain is better than a bad deal for Britain,” she said in January last year, setting out her red lines. With less than eight months until Britain is due to leave the EU, and only about four months left to reach an agreement on the terms of its exit, her government is still stressing its readiness to depart with no deal in place.

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It is time to drop the pretence. Leaving without a deal was never a wise option. The government ought to have spent the past two years steering the public through the painful trade-offs of leaving the EU. As we have argued, Britain’s interests are best served by a “soft Brexit” that preserves markets and security. Instead, big-mouth ministers have kept expectations sky high, claiming that the deal “will be one of the easiest in human history” and that “there will be no downside to Brexit”.–The Economist

 

The trouble is that Brexit is nothing like buying a car. In most negotiations “no deal” means sticking to the status quo. If you are not prepared to pay the asking price, you can walk away none the worse and try somewhere else. The Brexit talks are different. If no deal is reached Britain will not maintain the status quo of its EU membership, but find its links to the continent abruptly and acrimoniously broken off. The metaphor is not buying a car, it is buying a parachute—having already leapt out of the aeroplane. “Walking away” would land Britain in a situation so calamitous that it should not even be on the table.

A no-deal outcome would be bad for the EU, too, particularly Ireland, whose small, open economy is closely linked to Britain’s. But Britain would be hurt most by a hard landing. Trading with the EU on the terms of the World Trade Organisation, which would raise both tariffs and regulatory barriers, would reduce Britain’s GDP by 4% within five to ten years, according to the IMF. The EU’s GDP would fall by about 1.5%. Worse still—again, for everyone, but chiefly for Britain—would be the turmoil from leaving without agreements in place over everything from airline safety to the transfer of radioactive material. The supply of such essentials as food and medicine could be disrupted, too (see article).

A hard landing

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Boris Johnson–The Ambitious Tory Iago

For this reason, the EU has never taken seriously Mrs May’s claim that Britain is ready to walk away from the negotiating table. It sees her threat as a bluff—and it is right, judging by the lack of preparation in Britain for a no-deal outcome. Even with extensive (and expensive) planning, leaving the EU without a deal would have been difficult. As things stand, almost no work has been done to prepare for such an eventuality. Lately, Britain has taken to outlining desperate-sounding plans to stockpile medicine and set up electricity generators. Chaos would be hard to avoid.

Yet, although the EU’s negotiators in Brussels do not buy it, Mrs May’s slogan that “no deal is better than a bad deal” has struck a chord with the voting public. As the talks have dragged on and the EU has extracted concessions, such as a promise by Britain to pay a large exit bill, the desire to walk away has only grown. Polls show that nearly twice as many Britons would leave the EU with no deal as would support a compromise along the lines Mrs May proposed last month. By this logic, her eventual settlement with Brussels, if she reaches one, will look even more like a bad deal because Britain will have to give more ground. Many voters will thus quote the prime minister’s own slogan back to her, and argue to crash out.

The government is trapped by its own rhetoric. The louder it shouts in Brussels that it is ready for no deal, the more it emboldens voters and Brexiteer MPs to call for just such an outcome. Yet the more the government argues at home that Brexiteers should avoid the miseries of crashing out by embracing Mrs May’s compromise, the more it convinces Brussels that, except as a disastrous accident, “no deal” is not credible.

It is time to drop the pretence. Leaving without a deal was never a wise option. The government ought to have spent the past two years steering the public through the painful trade-offs of leaving the EU. As we have argued, Britain’s interests are best served by a “soft Brexit” that preserves markets and security. Instead, big-mouth ministers have kept expectations sky high, claiming that the deal “will be one of the easiest in human history” and that “there will be no downside to Brexit”.

Mrs May has belatedly come to accept the need for compromise—to the fury of a small coterie of hardline Brexiteers who would sooner crash out of Europe, kamikaze-style, than maintain any kind of obligation to the EU. The prime minister’s continued claims that Britain can simply walk away play into their hands. She must cease such talk. With a bit more compromise on both sides, a deal is reachable. Britain must seize that parachute before it is too late.

This article appeared in the Leaders section of the print edition under the headline “No ordinary deal”

US Foreign Policy: Donald Trump’s humiliation in Helsinki


July 23, 2018

US Foreign Policy: Donald Trump’s humiliation in Helsinki

https://www.economist.com/leaders/2018/07/21/donald-trumps-humiliation-in-helsinki

How to interpret a shameful press conference with Vladimir Putin

“Perhaps, as some suspect, Mr Putin really does have material compromising Mr Trump. Either way, where America once aspired to be a beacon, relativism rules. That leaves all democracies more vulnerable.”- The Economist

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How to make America Great? By Making Russia Great Again. That was what the POTUS did in Helsinki, Finland. He made Putin smell roses.

DONALD TRUMP likes to boast that he does things differently from his predecessors. That was certainly true of his trip to Europe. In Brussels he chided Germany for a gas deal that left it “totally controlled by Russia”. In England he humiliated his host, Theresa May, blasting her Brexit plan before holding her hand and hailing “the highest level of special” relationship. From his Scottish golf resort he called the European Union a “foe” on trade. And in Helsinki, asked whether Russia had attacked America’s democracy, he treated President Vladimir Putin as someone he trusts more than his own intelligence agencies. It was a rotten result for America and the world.

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Americans were more than usually outraged. At the post-summit press conference in Helsinki, with the world watching and the American flag behind him, their head of state had appeared weak. He was unwilling to stand up for America in the face of an assault that had been graphically described three days earlier by Robert Mueller, the special counsel probing election meddling, in his indictment of 12 Russian military-intelligence officers . Republicans were among Mr Trump’s fiercest critics. “No prior president has ever abased himself more abjectly before a tyrant,” wrote Senator John McCain. Even Newt Gingrich, normally a staunch defender, decried “the most serious mistake of his presidency”. The reaction forced Mr Trump into a convoluted series of climbdowns, which did little to repair the damage.

Yet, for all his hostility towards allies and cosiness with Mr. Putin, the trip could have been an even bigger disaster. Fears that Mr Trump might torpedo the NATO summit, as he had the G7 one, proved overblown. He put his name to a communiqué reaffirming the allies’ commitment to mutual defence and their tough stance against Russia. Worries that with Mr Putin he might promise to roll back sanctions or recognise Russia’s annexation of Crimea proved groundless—as far as we can tell (the presidents met with only their interpreters present).

Mr Trump even did some useful things. He was right to press NATO allies to spend more on defence, even if his claim to have raised “vast amounts of money” is an exaggeration. And talking to his Russian counterpart makes sense. To be sure, Mr Trump’s hopes for a tremendous relationship with Mr Putin may end in a familiar disappointment: George W. Bush looked into Mr Putin’s eyes and detected a soul, and Russia invaded Georgia; Barack Obama pressed a “reset” button, and Russia invaded Ukraine. But America and Russia have a lot to discuss, not least on nuclear-arms control.

America worst

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However, these gains come at too high a price. Mr Trump’s behaviour, a quixotic mix of poison and flattery, has further undermined Europeans’ trust in America. When asked about the Mueller probe and the decline in relations with Russia, Mr Trump said feebly that he holds “both countries responsible”. Perhaps his vanity does not allow him to treat seriously a Russian attack that he fears could tarnish his own election triumph. Perhaps, as some suspect, Mr Putin really does have material compromising Mr Trump. Either way, where America once aspired to be a beacon, relativism rules. That leaves all democracies more vulnerable.

Mr Putin, fresh from a successful World Cup, thus emerges as the winner in Helsinki. True, he may have scored an own goal in admitting that, yes, he had wanted Mr Trump to win the election. But a self-doubting West, damaged democracy and the spectacle of America’s president deferring to him on the world stage count as a hat-trick at the other end. In Helsinki Mr Putin looked smug. Mr Trump looked, at best, a mug.

This article appeared in the Leaders section of the print edition under the headline “Humiliation in Helsinki”

 

 

Defending the Liberal World Order


April 7, 2018

Defending the Liberal World Order

http://discovery.economist.com

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Senator John McCain (Rep. Arizona), Chairman of the Senate Armed Services Committee.

Those who believe in the liberal world order must fight to preserve it for future generations, says John McCain, Republican senator from Arizona and Chairman of the Senate Armed Services Committee.

UNITED STATES

Seventy years ago, when announcing the Marshall Plan to deliver American assistance in rebuilding after the second world war, George Marshall began by stating simply: “The world situation is very serious.” That maxim rings more true as we head into 2018 than at any time since 1947. The world faces the most complex and daunting set of challenges in seven decades. As global leaders chart our political future, we would be well served by looking to our collective past.

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President Harry S. Truman and General George C. Marshall

Leaders of the post-war era had seen the breakdown of the world order. They saw open markets give way to protectionism and poverty. They saw ethnic and nationalist passions give way to violence and misery. They saw the brutal ambition of hostile great powers give way to war and genocide. In the aftermath of that tragic era, those leaders forged a liberal world order that ushered in an unprecedented era of stability, security and prosperity.

This new order rejected the principles that led to the failure of its predecessor. It was based not on ethno-nationalism, spheres of influence and might-makes-right imperialism, but rather on universal values, human rights, rule of law, open commerce and national sovereignty. This liberal order was not an accident. It was the result of vigorous, tireless efforts to advance, defend and preserve the values that provided its foundation.

And now, that same task falls to those of us who believe a liberal democratic world is still the best chance of maintaining stability, ensuring security and expanding prosperity.

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General George  C. Marshall

In his speech, after identifying the obvious severity of the post-war situation, General Marshall continued: “I think one difficulty is that the problem is one of such enormous complexity that the very mass of facts presented to the public by press and radio make it exceedingly difficult for the man in the street to reach a clear appraisement of the situation.” We confront this same difficulty today.

In recent years, we have seen the steady erosion of the liberal order and the institutions that protect it. Citizens of many nations have turned away from universal values and toward old ties of ethnicity, race and sectarianism. They have become increasingly resentful of immigrants, refugees and minority groups. They have turned inward economically and prioritised protectionism over integration. They have warmed to authoritarianism and embraced strongman politics. Most troubling, they seem to have given up on the very idea of liberalism itself, betraying the underlying will that is necessary to maintain any world order.

We have seen the results at ballot boxes around the world—from the Brexit vote in Britain to the rise of populist movements and parties in Germany, France, Poland and Hungary; and of course in the United States, where voters chose an “America First” foreign policy rooted in nationalism and protectionism.

There is plenty of blame to go around for this. As defenders of the liberal order, we grew complacent and made mistakes. At times we tried to do too much, and at others we failed to do enough. We lost touch with many of our people and were too slow to recognise and respond to their hardships. Now we must acknowledge these realities. But doing so does not mean losing hope and retreating.

 Don’t give in, take up the mantle

 This is the choice that faces all who believe in the liberal world order in 2018: to accept decline or to inspire revival. Will we allow the further erosion of the foundation of our security and prosperity, or recommit ourselves to its advancement? For the sake of future generations, we must not give in. We must take up the mantle of those who crafted the most successful compact in history and ensure it survives for another 70 years—and beyond.

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For our part, I know there is profound concern among our allies around the world that America will abdicate its global leadership. During times such as these, no one should make the mistake of betting against the United States. America remains the greatest democracy in the world, with the strongest military forces on the planet, and at its core still embodies the universal values that have always made us a beacon of hope for those seeking freedom.

We have the opportunity to define the political trends of 2018. For those who will defend the liberal world order, we must be persistent and vigilant. We must revitalise our common moral purpose. We must believe that our values are worth fighting for.

Marshall ended his speech by saying: “With foresight, and a willingness on the part of our people to face up to the vast responsibility which history has clearly placed upon our country, the difficulties…can and will be overcome.”

History has not taken that responsibility away from America, but it has called all those who share liberal democratic values to join our cause. Together, we can meet the challenges of today’s world, overcome the many threats we face and secure the blessings of liberty for future generations.