The Economist - 10 May 2025

Год выпуска: May 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

ALL GROWN UP

Saudi Arabia’s surprising transformation

• Muhammad bin Salman is transforming Saudi Arabia: leader, page 7.
• Society has changed drastically. Can the economy change, too? Briefing, page 55.
• Donald Trump and the Saudis get along famously in person, but not on policy, page 36.

What Putin wants

• What Europe should do to thwart him: leader, page 8.
• How long does Russia need to prepare for another war? Page 13.
• Mobile signals plot the Kremlin’s relentless build-up, page 16.
• New drones on Ukraine’s front lines, page 42.

India and Pakistan flirt with war—again

• How South Asia’s nuclear powers can avoid catastrophe: leader, page 9, and analysis, page 27.

Chip smuggling out of control

• Inside a shadowy business, page 47.
• America looks as if it is about to abandon byzantine new export rules. Good: leader, page 10.
• Chinese chip makers are catching up fast, page 48.

Gen X: the loser generation

• Don’t cry for millennials or Gen Z. Save your pity for the lot with an X to bear, page 58.

The world this week Politics

• Friedrich Merz visited Paris and Warsaw, a day after the German Bundestag officially voted to approve him as Germany’s new chancellor. It took two rounds of votes among MPs to confirm Mr Merz in the job, a setback that may dent his authority. He is the first person in the country’s modern era not to attain the support needed to become chancellor in the first round, underlining the tensions in his coalition of Christian Democrats and Social Democrats.

Raining on his parade

• Ukraine launched a big drone attack on Russia, which caused Moscow’s four airports to close temporarily. The attack came shortly before a smattering of world leaders arrived in Russia to attend Vladimir Putin’s military parade to mark 80 years since the end of the second world war in Europe. Xi Jinping was “guest of honour”. China’s leader was starting a four-day visit to Russia, which includes talks with Mr Putin.
• The European Commission laid out a road map to remove all imports of Russian oil, gas and nuclear energy from EU markets. The plan envisages stopping all imports of Russian gas by the end of 2027, with new contracts halted by the end of this year. Legislation will be introduced next month.
• George Simion, a hard-right Eurosceptic, took 41% of the vote in the first round of Romania’s presidential election, well ahead of Nicusor Dan, the liberal mayor of Bucharest. They will contest a run-off on May 18th. Following the result Marcel Ciolacu resigned as prime minister and pulled his Social Democrats from the coalition, saying the government was no longer legitimate. The election is being held five months after December’s ballot was cancelled amid claims of Russian interference.
• Israel’s cabinet announced that it would expand military operations in Gaza (some ministers demand that the entire strip be occupied). It also said that it would put in place a new way of distributing aid to the civilian population. Israel has kept Gaza under a total blockade since March 2nd and Israeli officials admit that food will run out in a matter of weeks. Israel plans to set up aid hubs with security provided by both Israeli troops and American mercenaries. Palestinians would travel to the hubs to collect food and basic items.
• A missile fired by the Houthis, a rebel group in Yemen backed by Iran, struck close to the main airport in Tel Aviv. In response, Israel hit Houthi targets in Yemen that included the airport in Sana’a, the capital, and a port. But soon after, Donald Trump announced a deal with the Houthis in which America would stop bombing the group in return for a cessation of the rebels’ attacks on shipping in the Red Sea. The rebels have said that Israel is not covered by the ceasefire.
• Members of Venezuela’s political opposition managed to leave the country after spending more than a year holed up in the Argentine embassy in Caracas. America’s secretary of state, Marco Rubio, said that a “precise operation” had brought all of the five to United States’ soil. He condemned the regime of Nicolas Maduro, saying it had “violated human rights, and endangered our regional security”.
• Fresh from his turnaround election victory, Canada’s prime minister, Mark Carney, visited Donald Trump in the White House. The president spoke warmly about Mr Carney in front of the press assembled in the Oval Office. Mr Carney reiterated his well-worn campaign message, telling Mr Trump that Canada “won’t be for sale, ever”, to which Mr Trump shrugged, “Never say never.” No new policies or agreements were announced. The pair are due to meet at the G7 summit in Alberta in June.
• Mr Trump said that Stephen Miller, his deputy chief of staff, was a front-runner to be national security adviser. The president has sacked Mike Waltz, who accidentally added a journalist to a policy chat group, from the job and nominated him as ambassador to the UN. Marco Rubio, the secretary of state, is the national security adviser on an interim basis, the first person to hold both positions simultaneously since Henry Kissinger. Meanwhile, Pete Hegseth, the defence secretary, announced a streamlining of the military’s most senior officers, which may involve the merging of some operational commands.
• Sudan’s government cut diplomatic ties with the United Arab Emirates. It said the country was a “state of aggression” that supplied strategic weapons to the Rapid Support Forces, the Sudanese army’s adversary in the civil war. This followed several days of drone strikes against Port Sudan, a city on the Red Sea that has become Sudan’s de facto capital since the war began.
• India struck back at Pakistan in retaliation for a terrorist attack in Indian-administered Kashmir that India claims had cross-border involvement from Pakistan. India carried out air strikes in Pakistan-administered Kashmir and deep inside Pakistan that it said targeted terrorist camps. Pakistan claimed that civilian areas had been hit and that it shot down five Indian military aircraft. It vowed to hit back at India. Other countries in the region appealed for calm.
• Labor was re-elected to power with an increased majority in Australia’s general election, a stunning comeback for a party that was trailing in the opinion polls earlier this year. As with Canada there was a Trump effect; voters listed the turmoil of Donald Trump’s trade policies as a big concern. And again like Canada, the leader of the conservative opposition lost his seat in Parliament. After his victory Anthony Albanese, the prime minister, said he had a “warm and positive conversation” with the American president.
• Ahead of a trade agreement with America over tariffs, Britain and India struck a trade deal that will slash export duties between the two countries. It is Britain’s biggest such pact since leaving the European Union. Bilateral trade with India is expected eventually to rise by £25.5bn ($34bn), or roughly 40% from 2024, but will add just £4.8bn to British GDP, or 0.1%, by 2040, according to the government.

End of the two-party system?

• In Britain politicians from the governing Labour Party and the main opposition Conservative Party spent the week pondering just how they would tackle the rise of Reform UK. The populist party led by Nigel Farage came first in local elections held in mostly non-urban areas of England, taking control of ten councils and winning two mayoral contests. Reform also won a by-election for Parliament in Runcorn, hitherto one of Labour’s safest seats. It now leads national opinion polls.

The world this week Business

• The Federal Reserve kept interest rates on hold for its third consecutive meeting, maintaining its benchmark rate at a range of between 4.25% and 4.5%. The risks from inflation and unemployment have risen, it said, amid uncertainty about the economic effects of Donald Trump’s tariffs, even though jobs figures for April also showed that the labour market was strong. Mr Trump is pressing Jerome Powell, the Fed’s chairman, to cut rates. Before the bank’s meeting the president said he would not sack Mr Powell, but did call him a “total stiff’.
• China’s central bank shaved 0.1 percentage points off its main interest rate, taking it to 1.4%. The People’s Bank of China also reduced other loan rates and cut the amount of money that banks need to keep in reserve, all part of an effort to boost liquidity in the financial system. The announcements came just ahead of the start of trade talks between America and China.
• America’s trade deficit hit a record monthly high in March, of $140.5bn. The dash to get ahead of Mr Trump’s tariffs resulted in imports from some countries, such as France, India, Mexico and Vietnam, reaching all-time highs. However, imports from China were the lowest since March 2020.
• Oil prices dropped to near four-year lows after OPEC+ said it would increase output, which raises the prospect of an over-supply of oil amid a slowing world economy. At one point Brent crude traded just below $60 a barrel. In mid-January Brent was at $82 a barrel.
• Lower oil prices in the first quarter of 2025 were a factor behind the reduced profits reported by big energy companies. Chevron’s net profit of $3.5bn was $2bn below the profit it made in the same quarter last year. ExxonMobil’s $7.7bn was down from $8.2bn. Shell’s adjusted profit fell by 28% to $5.6bn. Shell has dismissed rumours that it is interested in taking over BP, which is struggling to convince investors of its turnaround plan, bp’s headline profit fell by half in the quarter, to $i.4bn.
• Overcoming the recent tensions between the two countries, including over energy imports, Sunoco, an American oil company, struck a $9bn deal to buy Parkland, a Canadian rival. If it survives any potential pushback from Mr Trump, the deal will create the biggest fuel distributor in the Americas.

A Musky odour

• Sales of Tesla cars again fell heavily in Europe in April. In Germany they were down by 46%, year on year, and in France by over 50%. And in Britain, which had hitherto resisted the continent’s rejection of Tesla and Elon Musk, sales plunged by 62%.
• Normally associated with assembling the iPhone, Foxconn made a big push into the electric-vehicle market by striking a deal with Mitsubishi. The cars will be developed by Foxtron, Foxconn’s EV subsidiary, and made in Taiwan for sale in Australia and New Zealand. Foxconn is eager to co-operate with Japanese carmakers. Earlier this year it considered buying a stake in Nissan in return for co-operation on technology.
• OpenAl abandoned its attempt to turn into a for-profit company and will remain under the control of a non-profit board. It is instead rejigging its for-profit subsidiary, which helps fund its R&D in artificial intelligence, to make it more investor friendly. The startup’s ambition to become a regular company has been criticised by Elon Musk, one of OpenAl’s founders, and others as a betrayal of its roots. A judge had recently ruled that Mr Musk’s attempt to block the conversion to a for-profit could proceed to court next year.
• Orsted, the world’s biggest developer of offshore-wind power, halted work on a project in the North Sea that is meant to supply energy to 1m homes in Britain. It blamed rising costs and the risks from delays, which means the Hornsea 4 farm off the Yorkshire coast is not viable “in its current form”. The news is a blow to the ambitious (some say over-ambitious) desire of the Labour government for Britain to reach net-zero emissions by 2030.

The Sage of Omaha

• Warren Buffett announced his retirement as chief executive of Berkshire Hathaway, a conglomerate and investment company that he has led since the 1960s. The board approved Gregory Abel to replace Mr Buffett on January 1st 2026. Mr Abel was chosen as the heir in 2021 and oversees Berkshire’s businesses other than insurance. Once famous for his blockbuster acquisitions, Mr Buffett has said there are few such takeovers for Berkshire these days and has instead accrued a cash pile of $348bn. Berkshire’s stock has risen by 5.5m per cent since Mr Buffett took charge in 1965, vastly outperforming the S&P 500. He will be 95 when he steps down.

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