The Economist - 15 February 2025

Год выпуска: February 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: 76

BATTLE FOR THE PENTAGON

Can Donald Trump remake American defence?

• Will DOGE wreck the Pentagon or reform it? Leader, page 9.
• To win future wars, America needs new weapons, new suppliers and a new system of procurement: briefing, page 16.
• Defence tech is all the rage in Silicon Valley: Schumpeter, page 56.
• Meet Europe’s defence disrupter, page 54.

Can Friedrich Merz save Germany?

• He is likely to win the election, but to fix Europe he will first have to fix his own country: leader, page 10.
• Germany’s probable next leader talks to The Economist about Ukraine, saving the economy and beating the AfD, page 40.

How America and the EU get Al wrong

• Both need to rethink their approach: leader, page 11.
• Al looks likely to widen social divides, page 57.
• Top-flight large language models are getting much cheaper, page 66.

What the Letby case says about Britain

• It increasingly looks as if the conviction of a nurse for killing babies was questionable, page 46.
• Her case exposes a British affliction: leader, page 12.

The man who understood parking

• Donald Shoup exhorted America to love meters: obituary, page 74.

The world this week Politics

• Donald Trump held a phone call with Vladimir Putin and said he would “immediately” start negotiations to end Russia’s war in Ukraine, announcing that he and the Russian president would hold talks that will be hosted by Saudi Arabia. Their conversation lasted 90 minutes and was the highest level of contact between the Oval Office and the Kremlin since the start of the war in 2022. Mr Trump then called Volodymyr Zelensky to inform him about the conversation. The Ukrainian president said they had talked about a “lasting, reliable peace”. In an earlier interview with The Economist Mr Zelensky had warned about the dangers of excluding Ukraine from negotiations.
• The newfound co-operation between America and Russia was also evident in a prisoner swap. Russia released Marc Fogel, an American teacher it has held in detention since 2021. America returned Alexander Vinnik, a cyber-criminal.
• Meanwhile, the UN monitor in Ukraine reported that short-range drones, equipped with cameras and able to distinguish civilians from troops, had caused more civilian deaths in January than any other weapon.
• Klaus Iohannis resigned as Romania’s president rather than face an impeachment vote in parliament. Mr Iohannis stayed in office after the result of November’s presidential election was voided by the courts amid claims of Russian meddling. The election was won by Calin Georgescu, a hard-right critic of NATO. The decision to scrap the result has infuriated the right-wing opposition. A re-run of the election will be held in May, though it is uncertain if Mr Georgescu will be allowed to run.

Unplugged

• Estonia, Latvia, and Lithuania disconnected themselves from Russia’s electricity grid and joined the European Union’s network in a two-day switchover. The Baltic countries have not bought electricity from Russia since 2022 but were still dependent on its grid for power flow. They joined the Russian grid in the 1950s when they were under the Soviet thumb.
• The leaders of the main national-conservative parties in France, Hungary, Italy, the Netherlands and Spain were among the participants at a Make Europe Great Again rally in Madrid, where they urged the EU to adopt some of the policies Donald Trump has introduced in America. “Yesterday we were the heretics, today we are the mainstream”, declared Viktor Orban, Hungary’s prime minister. None of them mentioned tariffs.
• The ruling Vetevendosje social-democratic party won the most votes in an election in Kosovo, though it fell short of enough seats for an overall majority in parliament. The prime minister, Albin Kurti, has rejected forming a coalition with opposition parties, describing them as “animals” and “thieves”.
• Talks led by the hard-right Freedom Party to form a government in Austria with the conservative People’s Party collapsed over differences on Russia and the EU. The Freedom Party wants a fresh election, hoping it may do even better than its showing at the polls in September.
• In Britain the MP behind a controversial assisted-dying bill introduced an amendment that would remove the legislation’s judicial safeguard of requiring a high-court judge’s approval for individual cases. More than 140 MPs who previously voted for the bill at its second-reading stage because of that safeguard may now vote against it, according to reports. The bill passed its second reading last November with a majority of 55.
• King Abdullah of Jordan visited the White House for talks with Donald Trump. The president reiterated his plan for America to take over Gaza and force the removal of more than 2m Palestinians who live there. He earlier suggested that he would stop aid to Jordan and Egypt if they did not allow Palestinians to settle in their countries. After the meeting King Abdullah reiterated his government’s “steadfast position against the displacement of Palestinians”. At a meeting with Marco Rubio, America’s secretary of state, Badr Abd-elatty, Egypt’s foreign minister, said Arab states rejected Mr Trump’s plan. Egypt is working on a plan of its own.
• The ceasefire between Hamas and Israel in Gaza came under strain after the militant group said it would postpone the release of three hostages scheduled for February 15th. Hamas appeared to back down after Binyamin Netanyahu, Israel’s prime minister, said he would end the ceasefire if the hostages are not returned.
• The UN said that a worker in its World Food Programme had died while he was being held in detention in Yemen’s Sa’ada region, and called on the Iranian-backed Houthis to release the couple of dozen UN staff that it is still holding.
• Fighting erupted in eastern Democratic Republic of Congo despite calls from African leaders for a ceasefire between M23, a rebel group backed by Rwanda, and Congolese forces. Having captured Goma, M23 is advancing towards Bukavu, another big city 200km (125 miles) away.
• Ecuador’s presidential election will go to a run-off in April, after the centre-right incumbent, Daniel Noboa, and his left-wing challenger, Luisa Gonzalez, fell short of the 50% vote threshold to claim victory. It was thought that Mr Noboa’s record ofcracking down on gang violence would be enough for him to win the first round, but Ms Gonzalez, who served in the government of Rafael Correa, a former leftist president, has promised to boost the economy and cut fuel prices.
• Sexual violence against children in Haiti, including rape, has increased by 1,000% since 2023, according to Unicef. Children as young as eight are also being forcibly recruited into the warlords’ gangs that control much of the country, and now account for half of all gang members.
• Narendra Modi, India’s prime minister, went to Washington for a meeting with Mr Trump. The leaders have a good relationship, forged over a shared interest in countering the rise of China, but they will also discuss trade and worker visas.

Don’t be my Valentine

• The number of marriages in China fell by 20% last year, according to the Ministry of Civil Affairs, a bigger rate of decline than during the pandemic. Only 6.1m couples tied the knot, less than half the number who were wed a decade ago. The state is pressing-colleges to hold “love education” seminars that emphasise the benefits of marriage and family as one way of increasing the country’s low birth rate.

The world this week Business

• Emmanuel Macron hosted a summit on artificial intelligence in Paris that was advertised as a chance to speed up the development of the technology, while ensuring that “nobody is left behind”. The French president announced private-sector investments and urged Europe to “resynchronise with the rest of the world” on AI. But America and Britain spoiled the party by not signing the official declaration, which mentioned international governance, and was signed by China. J.D. Vance, America’s vice-president, warned against “excessive regulation”, which could stifle innovation, and making deals with “authoritarian regimes”.

Where does he find the time?

• Elon Musk made an unsolicited $97bn bid to buy the nonprofit group that controls OpenAI. Mr Musk was one of the startup’s founders but has since had a spectacular falling-out with Sam Altman, another founder and its current boss, and has launched his own rival AI firm. Mr Altman is trying to convert OpenAI from a not-for-profit entity to a for-profit company. He rejected the bid, cheekily offering to buy X, Mr Musk’s social-media platform, for $9.74bn instead.
• SoftBank reported a quarterly loss of ¥369bn ($2.4bn), in part because of a drop in the value of the tech investments held by its Vision Funds. The Japanese conglomerate plans to raise the money for its recently announced investment in a joint venture with OpenAI on a project-by-project basis.
• The EU said it would respond with “proportionate countermeasures” to Donald Trump’s proposal to impose 25% tariffs on all steel and aluminium imports to America. The EU is hoping for talks with the Americans before the duties come into force on March 12th.
• Meanwhile, China went ahead and imposed its counter-tariffs on American goods, after a deadline passed to reach a deal.
• BP’s annual underlying profit of $8.9bn in 2024 was its worst since 2020. Amid a chorus of criticism from investors, the oil giant promised to “fundamentally reset” its strategy. Its stock did jump earlier, however, in response to news that Elliott Management, an activist hedge fund known for shaking up management boards, has taken a stake in the company. BP’s market value is about half that of Shell’s.
• Following a disappointing set of earnings for the fourth quarter, Chevron announced a cost-cutting strategy that could see it shed 20% of its workforce before the end of 2026.
• The world’s biggest supplier of batteries for electric vehicles filed to sell shares in a secondary listing in Hong Kong, which is expected to be the city’s biggest stock offer since 2021. Based in China, CATL wants to raise funds for its international expansion plans.
• Foxconn, an electronics contract manufacturer that assembles the iPhone, confirmed that it was interested in buying Renault’s stake in Nissan, after merger talks between Nissan and Honda reportedly fell apart. Foxconn is interested in acquiring the stake only if the deal includes co-operation on EVs, which it is developing through its Foxtron venture.
• Unilever announced that it would list its ice-cream business on the Amsterdam stock exchange, with other listings in London and New York. It expects to spin off the business, which includes Ben & Jerry’s, by the end of this year.
• America’s annual rate of inflation rose for the fourth consecutive month in January. At 3%, it is back up to where it was last June, before the Federal Reserve embarked on a round of interest-rate cuts. In his first testimony to Congress since Mr Trump’s return to the White House, Jerome Powell, the Fed’s chairman, said he was in “no rush” to cut rates again.
• The British economy grew by 0.1% in the last quarter of 2024 compared with the previous quarter. Markets had expected a contraction. For the year as a whole GDP expanded by 0.9%.
• More firms abandoned their commitment to diversity, equity and inclusion. Disney ditched a DEI measure that contributed towards setting executive pay, replacing it with one on “talent strategy”. Goldman Sachs dropped a rule that stopped it from advising firms about listing shares if the boards of those firms were all male and white. And Deloitte US asked staff working on government contracts to delete gender pronouns in emails.

The penny dropped

• Donald Trump ordered the Treasury to stop producing-one-penny coins because they are literally a waste of money. Each penny costs 3.7 cents to make. Canada got there first, eliminating its penny in 2012. But Americans for Common Cents, a group that wants to keep the coin, say consumers will be short-changed as demand for nickels would rise, increasing costs to the taxpayer. A nickel is worth five cents but costs 13.8 cents to make.

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