The Economist - 18 January 2025

Год выпуска: January 2025

Автор: The Economist Newspaper and The Economist Group

Жанр: Экономика/Политика

Издательство: «The Economist Newspaper Ltd»

Формат: PDF (журнал на английском языке)

Качество: OCR

Количество страниц: 88

THE TRUMP DOCTRINE

America’s new foreign policy

• A superpower’s approach to the world is about to be turned on its head: leader, page 13.
• America’s neighbours must deal with a president who wants to control them, page 29.
• The good ship Europe is navigating rough waters. Now for the Trumpnado: Charlemagne, page 53.

Gaza ceasefire. Now what?

• After 15 months of hell, Israel and Hamas agree to a fragile ceasefire, page 43.
• Will Donald Trump seek a new grand bargain in the Middle East? Page 44.
• The Houthis are running an extortion racket in the Red Sea, page 57.

The lesson from rising bond yields

• They should spur governments to go for growth: leader, page 14.
• Why bond markets everywhere are convulsing, page 67.

Tulsi Gabbard’s Damascene excursion

• A trip to Syria in 2017 produced a sighting of Austin Tice, an imprisoned journalist, page 26.

Hard truths about MBAs

• Why America’s business-school graduates are struggling to find jobs, page 61.

The world this week Politics

• Mediators in Qatar announced a six-week ceasefire between Hamas and Israel, coming into effect on January 19th. There were quibbles about the details on both sides, and the deal is opposed by Israel’s far-right parties. But if all goes according to plan the militants will re ease 33 of the remaining 98 hostages (half of whom maybe dead) in the first phase of the ceasefire in exchange for hundreds of Palestinian prisoners. Over 1,000 Israelis and tens of thousands of Palestinians have been killed in the fighting.
• General Joseph Aoun, the commander of Lebanon’s armed forces, was elected the country’s president by parliament. The office had been vacant for more than two years. Mr Aoun’s elevation to the presidency is a blow to Hizbullah, a much weakened Iranian-backed militia, as is the selection of Nawaf Salam, head of the International Court of Justice, as prime minister.
• Dozens of dead bodies were recovered from an illegal mine in South Africa after a court ordered a rescue mission. More than 100 men were pulled out alive, with hundreds more still believed to be underground. Police had shut off most food and water supplies. The government says the crackdown on illegal mining is necessary.
• Daniel Chapo was sworn in as Mozambique’s president, extending his Frelimo party’s half-century in power. He took office following months of violent demonstrations against a flawed election in October. More than 300 people have been killed by security forces.
• Volodymyr Zelensky said Ukraine had captured two North Korean soldiers in Russia’s Kursk region and was willing to hand them over in exchange for Ukrainian prisoners of war. A contingent of 12,000 North Koreans is thought to have been deployed to Russia. Around 300 have been killed and 2,700 injured, according to reports from South Korea.
• NATO announced that it would deploy vessels, aircraft and drones in a mission called Baltic Sentry to thwart sabotage against underwater sea cables. There have been several incidents of ships, suspected of belonging to Russia’s “shadow fleet’’, dragging their anchors across the sea bed to damage infrastructure. Meanwhile, Mark Rutte, NATO’s secretary general, warned that Europe must spend more on defence, and that NATO’s new spending targets maybe around 3.6% or 3.7% of GDP. Most EU countries have struggled to hit 2%.

Crushed Tulip

• In Britain Tulip Siddiq, a Treasury minister responsible for financial conduct, resigned after she was named in a corruption case in Bangladesh related to her aunt, Sheikh Hasina, who was ousted as Bangladesh’s prime minister last year. Ms Siddiq was found not to have broken the ministerial code, but resigned anyway as she had become a “distraction”. It was more bad news for the prime minister, Sir Keir Starmer, diverting attention from his big announcement on making Britain a hub for artificial intelligence.
• The Senate began hearings to confirm Donald Trump’s appointments to government jobs. Pete Hegseth fired back against a barrage of questions from Democrats about his fitness to lead the Defence Department amid allegations about his private life. When grilled about his statements about women not serving in combat roles, Mr Hegseth said they could serve as long as combat standards were maintained. Joni Ernst, a wavering Republican, said she would now vote for Mr Hegseth, all but ensuring his confirmation.
• In the dying days of the Biden administration, the Department of Justice released a special counsel’s report into allegations that Mr Trump tried to overturn the result of the 2020 election, concluding there was enough evidence for a conviction at a trial that will now never happen. In response Mr Trump reiterated his innocence. A few days earlier he was given a conditional discharge without a fine in his criminal conviction for falsifying business documents.
• Firefighters made some progress containing the wildfires in Los Angeles. At least 25 people have died and 12,000 structures are thought to have been destroyed or damaged in the Pacific Palisades and Altadena neighbourhoods. Gavin Newsom, California’s governor, signed an order suspending building and environmental restrictions in the devastated areas to allow for quicker reconstruction. Karen Bass, the city’s mayor, issued a similar order to speed up the rebuilding. Both are under intense pressure to resign.
• New York’s Metropolitan Transportation Authority reported that, year-on-year, 219,000 fewer vehicles had entered Manhattan’s central business district during the first working week of the new congestion charge, and that the reduction in traffic meant that buses were moving faster.
• Traversing the Brooklyn Bridge by car was 28% faster, the Lincoln Tunnel 39% quicker and the Holland Tunnel 65%. The tunnels connect Manhattan with New Jersey.
• Mark Carney, the former governor of the Bank of England, readied his campaign for the leadership of Canada’s battered Liberal Party. Should he win, Mr Carney would immediately replace Justin Trudeau and become Canada’s prime minister, though a recent survey indicates the Liberals are supported by just 20% of voters. Opposition parties have promised to defeat the Liberals in a vote of no confidence at the first opportunity.

Biden’s last stand

• The Biden administration said it would remove Cuba from America’s list of state sponsors of terrorism, which also includes Iran, North Korea and Syria. Cuba then said it would release 553 political prisoners in a deal brokered by the Catholic church, which the White House noted in its announcement. Donald Trump added Cuba to the list at the end of his first term as president.
• America, Britain and the EU imposed new sanctions on Venezuelan officials, as Nicolas Maduro was inaugurated for another term as president. America also increased its reward for Mr Maduro’s arrest on drug-trafficking allegations to $25m.
• South Korea’s president, Yoon Suk Yeol, surrendered to investigators who want to question him about his brief declaration of martial law in December. A previous attempt to arrest him had been abandoned amid a stand-off with his hundreds of bodyguards. Mr Yoon reportedly refused to answer questions at his first session with the investigators. The Constitutional Court began the process of the impeachment trial that will decide if Mr Yoon should be removed from office.

The world this week Business

• The annual rate of inflation in America rose again in December, to 2.9%, the third consecutive increase. Although there was some relief that the core rate softened, markets expect the Federal Reserve to now slow its pace of interest-rate cuts. Economists warn that inflation will only strengthen if the new Trump administration imposes a harsh tariff regime. The sell-off eased in bond markets, but yields remain high, adding to governments’ debt load, especially in Britain, where higher yields have upended the government’s fiscal plans. Investors in Britain found some relief when inflation there unexpectedly slowed in December, to 2.5%, Argentina’s annual inflation rate eased again in December to 117.8%. The peak last year was 289% in April. The month-on-month rate in December rose slightly to 2.7%; in December 2023 it stood at 25.5%.
• The German economy shrank by 0.2% in 2024, after contracting by 0.3% in 2023. Output from construction was down by 3.8% and from manufacturing by 3%, in part because of the problems that Chinese competition and the transition to electric vehicles are causing Germany’s car industry. Volkswagen’s global sales fell by 2.3% in 2024. In China vw’s sales plunged by 10%.
• Oil prices rose to their highest levels since August, because of the new sanctions America has imposed on Russia’s oil industry to try to curb its exports. Brent crude traded above $82 a barrel; at the start of the year it was around $75.
• The resurgence of China’s exports last year helped push its annual trade surplus up by 21% to $992bn, a third of which was with the United States.
• The Biden administration imposed further restrictions on exporting artificial-intelligence chips, including caps on exports of graphics processing units. Nvidia, the leading supplier of GPUs, criticised the new rules as a “regulatory morass, drafted in secret and without proper legislative review”, which would “undermine” America’s leadership in the technology. It also said that the first Trump administration laid the foundation for America’s success in Al, which is perhaps a plea for the incoming new government to scrap the restrictions.

Let the good times roll

• JPMorgan Chase reported a net profit of $14bn for the final quarter of 2024, a 50% increase from the same period in 2023. Profit at America’s biggest bank for the whole of 2024 came in at $58.5bn, a record for the firm. Jamie Dimon, the bank’s chief executive, said businesses were “encouraged by expectations for a more pro-growth agenda”. Goldman Sachs doubled its profit in the fourth quarter, to $4.1bn. Black-Rock, Citigroup and Wells Fargo also posted bumper earnings.
• Qantas, Australia’s national airline, confirmed that it has had to delay flights between Sydney and South Africa because of the danger from SpaceX rockets returning to Earth over the Indian Ocean. The delays were caused by late changes by SpaceX to both the timing of the rockets’ re-entries and location co-ordinates.
• Johnson & Johnson agreed to buy Intra-Cellular Therapies for $14.6bn. Intra-Cellular specialises in the growing field of neuroscience, developing treatments for Parkinson’s disease and anxiety and depressive disorders.
• Barrick Gold, a Canadian mining company, suspended operations at a gold mine in Mali, after the government confiscated gold stocks from the complex and placed them in a bank. A Malian judge ordered the seizure, reportedly claiming Barrick owed the government $5.5bn. Barrick is disputing the size of the state’s share of its mining revenues.
• Meta joined a growing list of American companies that are ending or scaling back their diversity, equity and inclusion policies. The social-media company said the legal and policy landscape was changing, noting a shift in the Supreme Court’s position. DEI had also become a “charged” term, it said, coming to mean preferential treatment for some groups over others. Banging a final nail into the DEI coffin at Meta, Mark Zuckerberg ordered tampons to be removed from men’s bathrooms. He also mused about a “culturally neutered” corporate culture and the need for more “masculine energy”.

Closing the open-door policy

• In another retreat from an inclusive policy, Starbucks issued a code of conduct for its coffeehouses, ditching a guideline that had allowed anyone to use the premises or toilets without buying anything. The restrooms are now for use by customers only, the company warned, and no violence, vaping, drugs or panhandling are allowed. In 2022 Starbucks closed 16 stores in urban areas because of “challenging incidents” that threatened people’s safety.

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