As Barack Obama embraces exports, trade friction looms

A GLOOMY office park in suburban Chicago is the home of NewMedical Technology. At the moment the young company has only one main product, silicone strips to reduce scarring after surgery. But in its tiny warehouse, employees busily pack boxes to be shipped to Brussels. In the past year the firm’s business has expanded quickly; NewMedical now exports to South America, Europe and Asia.

It is the type of growth Barack Obama dreams of. Consumers are nursing battered balance sheets and the government is wallowing in debt. That puts the burden on exports to carry the recovery; Mr Obama wants them to double over the next five years. ...

Temporary work may dim future employment prospects

IS ANY job better than no job? Some research has suggested that unemployed workers should take up any job they can get, including temporary work, as a bridge to higher-paying employment. But what may be good for the economy, reducing the drain on government coffers, may be bad for the individuals concerned. In a forthcoming paper in the American Economic Journal: Applied Economics, David Autor of the Massachusetts Institute of Technology and Susan Houseman of the W.E. Upjohn Institute for Employment Research in Michigan show that taking up temporary work after a spell of unemployment can hurt future earnings.

The authors looked at data from Detroit’s “Work First” welfare-to-work initiative, which uses placement agencies to put low-skilled unemployed people into paid jobs. They then assessed participants’ earnings and job tenure before and after their involvement in the programme. ...

The merits of inflation as a solution to the rich world’s problems are easily overstated

IT HAS long been considered a scourge, an obstacle to investment and a tax on the thrifty. It seems strange, then, that inflation is now touted as a solution to the rich world’s economic troubles. At first sight the case seems compelling. If central banks had a higher target for inflation, that would allow for bigger cuts in real interest rates in a recession. Faster inflation makes it easier to restore cost-competitiveness in depressed industries and regions. And it would help reduce the private and public debt burdens that weigh on the rich world’s economies. In practice, however, allowing prices to rise more quickly has costs as well as benefits.

The orthodoxy on inflation is certainly shifting. A recent IMF paper* co-authored by the fund’s chief economist suggests that very low inflation may do more harm than good. Empirical research is far clearer about the harmful effects on output once inflation is in double digits. So a 4% inflation target might be better than a goal of 2% as it would allow for monetary policy to respond more aggressively to economic “shocks”. If the expected inflation rate rose by a notch or two, wages and interest rates would shift up to match it. The higher rates required in normal times would create the space for bigger cuts during slumps. ...

Imposing quotas for women in boardrooms tackles a symptom of discrimination, not the cause

IF YOU are a youngish man who sits on a European corporate board, you should worry: the chances are that your chairman wants to give your seat to a woman. In January the lower house of France’s parliament approved a new law which would force companies to lift the proportion of women on their boards to 40% by 2016. The law would oblige France’s 40 biggest listed firms to put women into 169 seats currently occupied by men. Spain has also introduced a quota at 40%, to be reached by 2015. Italy and the Netherlands are contemplating similar measures. This week Britain’s government threatened to make companies report formally on their recruitment of female directors.

Compared with America, where women held 15% of board seats at Fortune 500 companies in 2009 according to Catalyst, a lobbying organisation, European countries have relatively few female board members. Britain is not too far behind at 12%, according to a survey of Europe’s 300 biggest firms by the European Professional Women’s Network (EPWN). Spain, Italy, France and Germany, however, all lag behind the European average of 10%. ...

Giving parents a real choice

BRENTWOOD in Essex is an unremarkable town, once derided as the most boring in Britain. It is home not only to Brentwood School, a moderately well-known independent school founded in 1558, but also to two more modern establishments: Sawyers Hall College and, five minutes down the road, Shenfield High School. In 2006 Sawyers Hall was deemed a failing school, one that was not educating its pupils as required. Since then, parents have voted with their feet. Rolls have fallen even as efforts to improve results have paid off. Sawyers Hall is slated to close as a comprehensive in the summer; a further-education outfit teaching hairdressing and the like will take its place.

The college is just one of many schools fingered for closure. On March 10th the schools inspectorate announced that 10% of the 2,140 schools it had assessed over the four months to the end of December were “inadequate”, a category that might more accurately be termed “dire”. Some of these will be turned around by good new head teachers. Others, though, will close. ...

Why independent candidates may yet break the political mould

ESTHER RANTZEN gestures at the gaslit machines in Wright’s hat factory in Luton. The iron machines are more than 100 years old, but the aluminium moulds on which the hats are shaped are new. “The queen may favour it, but I don’t like the asymmetric brim. How difficult is it to make a new mould?” she asks the milliner, Philip Wright. A little expensive, but not too difficult if you know how, he replies.

The television celebrity is hoping to redesign more than hats in Luton South, a marginal constituency about 30 miles north of London. She, like other independent candidates in the coming general election, would also like to break the mould of British politics. A flurry of them have appeared in seats where incumbent MPs were discredited in last year’s parliamentary-expenses scandal. ...

In the corporate-tax armoury the next government must pick carefully

WHAT do Shore Capital, a boutique financial firm, and Ineos, the remnant of various giant chemical companies, have in common? Both announced plans this month to move their headquarters to countries with lower taxes—Shore to Guernsey and Ineos to Switzerland. As Britain’s cash-strapped exchequer faces shrinking revenues from recession-hit businesses, the exodus of these firms and others raises an important question. Is Britain’s company-tax regime competitive?

The system isn’t fit for the 21st century, says Michael Devereux, professor of business taxation at Oxford’s Said Business School. It is a 19th-century apparatus, struggling—like many tax regimes around the world—to keep fiscal tabs on global earnings, intra-group cashflows, migration of intellectual property and the elusive proceeds of financial and other services. ...

An infamous murder returns to the national consciousness, with worrying implications

MOST eras have their symbolic murders: crimes that are not only terrible but seem also to reflect the nation’s pathologies. Victorian London had Jack the Ripper; modern Britain has the death of James Bulger, a two-year-old who in 1993 was abducted from a Merseyside shopping centre, tortured and killed by Jon Venables and Robert Thompson, both aged just ten. Their trial inspired national fury, revived in 2001 when they were released under new names. Mr Venables has now been returned to custody for an unspecified breach of his licence. Unspecified by the government, that is; channelling the ire the crime still arouses, newspapers have gleefully relayed rumours of his offence.

It is not surprising that this incident retains its power to appal: the grainy CCTV image that captured the small boy being led away by a bigger one has become an icon of depravity. The trouble is, the case held up a mirror less to the real state of Britain than to its dark, psychic fears. The confusion of those things has led to mistaken conclusions being drawn from it. They may be again. ...

The Slovak leader deploys national culture as a political weapon

IN THE run-up to Slovakia’s parliamentary election in June, Robert Fico, prime minister and leader of the centre-left Smer party (pictured), is busy bolstering his nationalist credentials. His supporters say that ordering schoolchildren to sing the national anthem is just an example of a legitimate effort by a newish country to strengthen its sense of self (Slovakia became fully independent only in 1993, after the break-up of Czechoslovakia). Critics find Mr Fico’s cocktail of history and culture stodgy or downright creepy.

The focus of protests is a new “patriotic act” just passed by parliament that awaits presidential approval. It mandates weekly anthem-playing in all state educational establishments. School officials who disobey risk being sacked. Its champion is Jan Slota, the bombastic leader of a nationalist party that is part of Mr Fico’s coalition. Mr Fico himself takes a softer line, defending only what he calls “reasonable historicism”. But even this is sparking angry squabbles over Slovakia’s past. ...

The pioneer of home births in Hungary faces jail

IF HISTORY were a guide, obstetrics in Hungary should be wonderful. In 1847 Ignac Semmelweis pioneered mother-friendly childbirth, insisting that doctors should wash their hands between autopsy and delivery rooms (they objected to this slur on gentlemanly cleanliness).

Obstetric care in Hungary is indeed excellent today. It is tightly run by skilled doctors, with low mortality rates. But those who challenge the medical profession still face problems. Agnes Gereb, a pioneer of home births, is facing up to eight years in jail. Prosecutors are going after her over one fatality in childbirth, one case in which a baby died some months after birth and two births that ended up as emergency hospital admissions. In the eyes of many Hungarians, such incidents show that home births are insanely risky and that those who promote them are little more than irresponsible cranks. ...

The new president of the European Council will be worth watching

TO ENGLISH ears, the word “compromise” often has a shabby ring. When safety or quality are compromised, people get hurt. Yet in continental Europe, compromise is often a political ideal. Nowhere is this truer than in Belgium, a country whose Dutch- and French-speaking populations tolerate each other (just), thanks to endless fudges and deals lubricated with taxpayers’ money. Belgium’s six governments are all baggy coalitions that balance social-market capitalism with a free-spending public sector (one in three active adults works for the state).

A third of parliamentarians from Flanders would like Belgium to vanish, says one senior politician. Belgian governments fall often, yet the place trundles along because most leaders agree to disagree. One thing that unites them is faith in deeper European integration. Apart from those on the extreme right, most Belgian politicians would welcome European Union taxes, a European army and nation-states reduced to a vestigial role. It is not hard to see why: to Belgian leaders trapped in the national equivalent of a bad marriage, the EU’s free love must look like bliss. ...

In the aftermath of fighting or repression, people are often told to forget things. But in free societies, selective memory cannot be imposed for ever

THE 15 boxes of bones were wrapped in the red, yellow and purple flag of the Second Republic. Each held the remains of a man whose support for a brief political experiment in the 1930s had proved fatal. At a ceremony in Madrid on March 6th the bones were given to descendants: mostly middle-aged grandchildren, but sometimes already aged sons or daughters.

They wept for men they had mostly never known. The victims had died of hunger and disease in one of the makeshift prison camps set up by General Francisco Franco in the early days of his 36-year dictatorship, established after the republic’s defeat in a bloody, three-year civil war. ...

It takes many hands to reconcile two peoples so divided by history

FOR centuries, a stone bridge spanning the emerald green waters of the Akhurian River connected the southern Caucasus to the Anatolian plains: a strategic pivot on the Silk Road, running through the ancient Armenian kingdom of Ani. Today the bridge would have linked tiny, landlocked Armenia to Turkey. But war and natural disasters have reduced it to a pair of stubs—a sad commentary on the relations between the two states.

This grim image prompted an Ankara-based think-tank, called Tepav, to devise a plan to rebuild the bridge and in so doing to reopen the long-sealed land border by stealth. “The idea is to promote reconciliation through cross-border tourism,” explains Tepav’s director, Guven Sak. Turkey’s doveish president, Abdullah Gul, has embraced the plan. The Armenian authorities and diaspora Armenians with deep pockets are also interested. If all went to plan, the bridge’s restoration would only be the start of a broader effort to repair hundreds of other Armenian architectural treasures scattered across Turkey. ...

The generals leave nothing to chance

THE junta ruling Myanmar has had 20 years to digest the lessons from the country’s most recent election. It was trounced by the National League for Democracy, even though the opposition’s charismatic leader, Aung San Suu Kyi, was already under house arrest. This year on an unnamed date (perhaps its astrologers cannot agree) the junta will hold another election. It will not lose this one.

Election laws published this week do not quite spell out the result. But a “political-parties registration law” bars Miss Suu Kyi and other political prisoners, of whom there are more than 2,000, from belonging to a party because of their criminal convictions. Cut off from politics by her house arrest, Miss Suu Kyi is anyway barred from office as the widow of a foreigner. Her party now has to expel her and other detainees. The law also bans civil servants from joining parties, along with monks, who led anti-government protests in 2007. ...

Technology complicates life for vote-riggers and counters alike

RIGGED elections and the instability they create have been the bane of the Philippines for much of its democratic history. Filipinos are fervently hoping that the computerisation of the vote-counting in May’s presidential, congressional and local elections will solve the problem. But faith in the technology is less fervent. Many fear it is no solution.

In past elections voters had to write down the names of their preferences for up to 32 national or local positions on blank ballot forms. Their votes were tallied by hand at the precinct, municipal, provincial and finally national levels. Definitive results could take weeks to emerge, giving ample opportunity for vote-padding and shaving. Vote-rigging by President Ferdinand Marcos led to his downfall in 1986. The incumbent president, Gloria Macapagal Arroyo, has had a shaky grip on power since she was accused of rigging her election in 2004. ...

That some liberals want and local governments fear

A GRANDMOTHER killed trying to stop developers flattening her home; university graduates forced to live in crowded slums: China’s ebullient property market has generated many tales of woe, and a promise from the prime minister, Wen Jiabao, to “rein in” the speculators. But calls for this to be achieved with a new property tax have put the government in a bind.

In the past year property prices have surged to new highs in some places, helped by a torrent of carefree lending from state-run banks. Mr Wen made his pledge on March 5th, in a speech to China’s parliament, the National People’s Congress (NPC), launching its annual ten-day session. The NPC is filled with party loyalists. But some have fretted openly about property bubbles. The government says house prices in 70 cities rose 10.7% in February compared with a year earlier, the fastest rise in 20 months. There are early signs that this is denting sales. In both January and February the volume of housing sales fell sharply from the previous month. ...

In a sea of international opprobrium. But a compromise may be at hand

IF YOU’RE tempted by a slab of meat gristle which surrenders little but an ooze of grease when chewed, then you’ll love whale. Add to the sensory experience the accumulated mercury to be found in whale meat. Consider the suffering caused by the hunt to these intelligent mammals; and a military-industrial approach to their extermination. Japan going a-whaling is, to borrow from Oscar Wilde, the unspeakable in pursuit of the almost uneatable.

As with foxhunting in Britain, views seem irreconcilable. Since 1986 the International Whaling Commission (IWC) has imposed a moratorium on commercial whaling. Yet every Antarctic summer, Japan sends a whaling fleet south to catch hundreds of whales for “research”. And every year at the IWC’s meeting, pro- and anti-whaling camps gather in sullen deadlock. On the whaling grounds the Japanese fleet encounters the Sea Shepherd Conservation Society. The ocean warriors hurl rancid butter on Japanese decks, use warps to foul propellers and attempt citizen’s arrests of the whaling captains. Early this year a Sea Shepherd boat sank after a collision. Now an American film has turned a spotlight on Japan’s coastal hunt for cetaceans. “The Cove”, shot largely in secret, shows the annual dolphin slaughter in Taiji, a village on Japan’s main island. This week it won an Oscar. ...

Attempts to stop drugs money corrupting public life in Guatemala are making some progress. In Jamaica (see article) the worries are growing

FOR the second time in less than a year, Guatemala’s national police chief has become one of its most prominent criminal defendants. Last August Porfirio Perez Paniagua was arrested for stealing drugs and cash. He was replaced by Baltazar Gomez (pictured above, left), a respected officer who had passed a polygraph test. Yet on March 2nd Mr Gomez was himself apprehended, along with Nelly Bonilla, the country’s anti-narcotics tsar. They were charged with involvement in drugs trafficking and with thwarting the investigation of a firefight last April, when five corrupt cops attempting to seize cocaine for resale were killed by the drugs’ owners. This parade of police chiefs in the dock shows both how much progress has been made in the fight for justice in Latin America’s most lawless country, and how much remains to be done.

Just a few years ago, such high-level arrests would have been unthinkable. Guatemala’s 36-year civil war was the Americas’ worst armed conflict of the 20th century: it killed 200,000 indigenous people, and was declared a genocide by a commission sponsored by the United Nations. Yet unlike most of its regional peers, the country was unable to establish a clear break with the past after a peace treaty was signed in 1996. A generous amnesty law meant that no members of the army were jailed for their participation until last year. One of the authors of a truth-commission report, Juan Jose Gerardi, was bludgeoned to death two days after its publication. Efrain Rios Montt, who was president of the military regime when the worst atrocities took place, remained a congressman until his unsuccessful bid to return to the presidency via the ballot-box in 2003. ...

Religion is causing the president headaches

IT COULD all come down to abortion. Health-care reform hangs in the balance. Nancy Pelosi, the speaker of the House of Representatives, is desperately trying to round up the last few votes. If the House passes a bill the Senate passed in December, it can then be tweaked through the “reconciliation” process and sent to President Barack Obama for signature. But every single House Republican is likely to vote no, so Ms Pelosi needs 216 Democratic votes (out of 253) for a majority. This is proving surprisingly hard. Among the holdouts are a dozen or so pro-life Democrats, several of them Midwestern Catholics, who object to the abortion provisions in the Senate bill.

Thanks to the Supreme Court, abortion has been legally protected since 1973 and neither Congress nor any state has the power to ban it. But a law called the Hyde amendment bars federal funding for abortion, except in cases of rape or incest, or to save the life of the mother. The question now is whether Obamacare will use taxpayers’ money to subsidise abortion more widely. Mr Obama insists that it will not. Under his plan, many individuals and small businesses will buy subsidised health insurance through state-sponsored exchanges. Under the Senate bill, they would only be able to obtain abortion coverage through these exchanges if they paid for it with a separate, unsubsidised, cheque. Thus, federal dollars would be kept out of abortion clinics, say the bill’s supporters. But many pro-lifers are not convinced. So the version of the health bill that was passed by the House would have required those who wanted abortion coverage to buy a completely separate insurance policy. The Democrat who wrote the House abortion provision, Bart Stupak, says he won’t back the Senate bill. Several other pro-life Democrats may also balk. ...

The president is trapped between an angry Congress and a stubborn China

HE HAS missed his own deadlines, he may not have enough votes and even if the measure passes it is likely to be a watered-down affair. That is the position in which Barack Obama finds himself not only on health reform but also in his efforts to prevent Iran from acquiring a bomb.

As with health care, Mr Obama entered office with a bold idea. He would break with his predecessor and extend the hand of friendship to Iran. If Iran failed to grasp it or to come clean about its nuclear activities, the world would know whom to blame for the continuing enmity between the two countries. That would enable the UN Security Council to impose a fourth lot of economic sanctions—“crippling” ones this time—that would force the ayatollahs to comply with their nuclear obligations. ...

Why Germany needs to change, both for its own sake and for others

ELSEWHERE in the world, Europe is widely regarded as a continent whose economy is rigid and sclerotic, whose people are work-shy and welfare-dependent, and whose industrial base is antiquated and declining—the broken cogs and levers that condemn the old world to a gloomy future. As with most cliches, there is some truth in it. Yet as our special report in this week’s issue shows, the achievements of Germany, Europe’s biggest economy, tell a rather different story.

A decade ago Germany was the sick man of Europe, plagued by slow growth and high unemployment, with big manufacturers moving out in a desperate search for lower costs. Now, despite the recession, unemployment is lower than it was five years ago. Although Germany recently ceded its place as the world’s biggest exporter to China, its exporting prowess remains undimmed. As a share of GDP, its current-account surplus this year will be bigger than China’s. ...

The best thing American politicians can do to encourage a stronger Chinese currency is keep calm

ONE of the few good things about the Great Recession of 2008-09 was a merciful absence of complaints from America’s Congress about China’s currency. The yuan’s gradual appreciation stopped in July 2008, and China has since kept its currency tightly pegged to the dollar. But even as America suffered its worst downturn in the post-war period, its legislators steered clear of ranting against China.

That restraint was driven partly by fear. At the depths of the crisis even the most myopic Congressmen worried about a descent into 1930s-style protectionism. And it was driven partly by the facts. As investors’ flight to safety strengthened the dollar in late 2008, the yuan rose along with it. With America’s imports slumping it was hard to blame Chinese workers for American joblessness. And thanks to its huge domestic stimulus China added to global demand last year, as its current-account surplus shrank sharply. ...

Blaming speculators for sovereign-debt woes is misguided. Banning them would be worse

GREECE had a budget deficit of 12.7% of GDP in 2009. It has a record of dodgy accounting. Its own leaders acknowledge how dire its fiscal situation is. George Papaconstantinou, the country’s finance minister, summed it up pretty well last month. “People think we are in a terrible mess. And we are.”

That hasn’t stopped his boss, George Papandreou, and other European leaders from jabbing fingers elsewhere. To judge by this week’s political rhetoric, the blame for Greece’s woes lies largely with speculators, who stand accused of buying sovereign credit-default swaps (CDSs), a form of insurance against government default, in the hope of profiting from jitters about sovereign debt. “Unprincipled speculators are making billions every day by betting on a Greek default,” said Mr Papandreou in a speech in Washington, DC. ...

Modernisation is hard to argue with. But it may not be what Russia needs

IMAGINE a town or settlement of 30,000 people, probably near Moscow. Its high-tech laboratories and ultra-modern glass houses make California’s Palo Alto look ancient. It has a greater concentration of scientists than anywhere else in the world. The atmosphere in the town is free, cosmopolitan and creative, almost anarchic at times. Police harassment is minimal, “at least to start with”. Riff-raff and drunks from surrounding villages are kept away by tight security.

The streets are clean, and shops are stuffed with organic food to stimulate the brain. Here, in this exclusive “zone of special attention”, the state is extracting creative energy from Russian and foreign scientists that is driving the country along the path of modernisation and innovation. ...

Newly economic, widely distributed sources are shifting the balance of power in the world’s gas markets

SOME time in 2014 natural gas will be condensed into liquid and loaded onto a tanker docked in Kitimat, on Canada’s Pacific coast, about 650km (400 miles) north-west of Vancouver. The ship will probably take its cargo to Asia. This proposed liquefied natural gas (LNG) plant, to be built by Apache Corporation, an American energy company, will not be North America’s first. Gas has been shipped from Alaska to Japan since 1969. But if it makes it past the planning stages, Kitimat LNG will be one of the continent’s most significant energy developments in decades.

Five years ago Kitimat was intended to be a point of import, not export, one of many terminals that would dot the coast of North America. There was good economic sense behind the rush. Local production of natural gas was waning, prices were surging and an energy-hungry America was worried about the lights going out. ...

A government reflecting the people’s will should slowly and messily emerge

DOZENS of explosions woke up voters in Baghdad on March 7th, heralding the day of the general election. Every few minutes another thunderous bang reminded them to stay at home, away from polling stations. Officials said the city had been hit by a barrage of mortars. Voter turnout was lower than before, in Baghdad little more than 50%. It was hardly a shining model of democracy.

The American army played down the violence. Most of the bangs, said its spokesman, had been caused by water bottles stuffed with explosives. Insurgents had put them in bins around the city and set them off by mobile phones to terrify voters. Two big bombs had killed at least 38 people but nobody was badly hurt by the bottle-bombs, said General Ray Odierno, the American commander. The bangs were an act of desperation by a fading insurgency. The turnout overall was said to be 62%. Despite the fear, many Iraqis were plainly determined to assert their democratic right to choose their leaders. Barack Obama called the election a “milestone in Iraqi history”. ...

A religious issue is threatening the government’s cohesion

AFTER a year in office, Israel’s right-wing-cum-religious coalition is feeling an ominous tremor of internal discord. The issue, the bane of so many past coalition governments, is state and synagogue. A bill easing conversion to Judaism, championed by the foreign minister, Avigdor Lieberman, and his ex-Soviet immigrant party, Yisrael Beitenu, has run into furious resistance from the ultra-Orthodox party, the United Torah Judaism (UTJ), a coalition partner.

“When I die, I’ll go straight to heaven just for having pushed through this bill,” says David Rotem, chairman of parliament’s law committee and a member of Yisrael Beitenu (meaning “Israel is our home”). “I don’t know where opponents of the bill will go.” Ultra-Orthodox members, apparently confident of their place in heaven, protested. A member of the Labour party, another coalition partner, said that if the ultra-Orthodox were in heaven he would rather not go there. ...

The administrative costs per $1m lent by the World Bank and the International Development Bank during 2009 were $20,600 and $15,314 respectively, not $19,000 and $26,833 (“Cap in hand”, March 6th). And despite "general consensus", shareholders of the European Bank for Reconstruction and Development do not vote on its capital-increase plan until May. Sorry.

...

AIG reluctantly hands its crown as America’s global life insurer to MetLife

ANOTHER week, another opportunity for AIG’s rivals to expand at the American insurer’s expense. Days after sealing a $35.5 billion deal for its Asian life-insurance operations with Britain’s Prudential, the firm, which is being dismembered to recoup bail-out costs, agreed on March 8th to sell another crown jewel, Alico. This will propel New York-based MetLife, which is paying $15.5 billion, into the industry’s global elite. Although it is the biggest life insurer in America, where its Snoopy mascot is ubiquitous, it has been tentative abroad. Alico will give it a presence in 64 countries, up from 17 now, taking its non-American revenue from 15% of the total to 40%.

The biggest leap will be in Japan, the world’s second-largest life market, in which Alico is a top-tier competitor. But MetLife’s boss, Robert Henrikson (who took over in 2006 from Robert Benmosche, now AIG’s chief executive), also has his eye on the faster-growing markets in eastern Europe, the Middle East and Latin America that make up almost a quarter of Alico’s business. Another attraction is its distribution network: 60,000 agents, brokers and other local middlemen. ...

A financial system in suspense

THAT old Spanish stereotype of putting things off until manana still applies today. For nearly two years bankers have been talking about the need to restructure a bloated financial system, particularly the country’s 45 unlisted savings banks, the cajas de ahorros. About half of the cajas, which are controlled by local politicians, have announced their intention to merge, hoping to tap into the €99 billion ($135 billion) Fund for Orderly Bank Restructuring (FROB), which was created in June.

Regional politicians, reluctant to give away their piggy banks, are prepared to sanction some internal mergers. Catalonia, for example, has allowed some consolidation, as has Andalusia. Progress is slower elsewhere. Caixanova, a savings bank in Galicia, is resisting a union with Caixa Galicia, a rival. The sector has also been waiting for Spain’s second-largest savings bank, Caja Madrid, to make a move. Until recently, it was paralysed by a political power struggle at the top. ...

Beijing signals a crackdown on borrowing by local governments

ENDLESS arcane pronouncements spew forth from China’s bureaucracies. But some matter much more than others. In recent weeks a number of the country’s senior leaders and regulators have signalled an end to the practice of local governments extending guarantees on loans taken out by their special financing entities. That could spell big trouble for Chinese banks.

The comments have focused attention on research done by Victor Shih, a professor of Northwestern University in America, into China’s local investment companies. These financing vehicles allow municipalities to circumvent central-government restrictions on direct borrowing. As many as 8,000 of these investment companies may exist, estimates Mr Shih, whose work draws on regulatory filings and various government announcements. ...

Microfinance focuses on lending. Now the industry is turning to deposits

IT IS hard for people in the rich world to imagine what it is like to live on $2 a day. But for those who do, the problem is often not just a low income, but an unpredictable one. Living on $2 a day frequently means living for ten days on $20 earned on a single day. The task of smoothing consumption is made more complicated if there is nowhere to store money safely. In an emergency, richer people might choose between dipping into their savings and borrowing. The choice for the great mass of the unbanked in the developing world is limited to whom to borrow from, often at great cost.

That they can borrow at all is partly due to the rapid growth of microfinance, which specialises in lending small amounts to poor people. Several big microfinance institutions (MFIs) also offer savings accounts: Grameen Bank in Bangladesh is a prominent example. But the industry remains dominated by credit, and the ability to save through an MFI is often linked to customers’ willingness to borrow from it. Of 166 MFIs surveyed in 2009 by the Microfinance Information Exchange, a think-tank, all offered credit but only 27% offered savings products. Advocates of a greater variety of financial services for the poor argue for more balance. ...

A surfeit of farmers and shortage of buyers tarnishes a once lustrous business

YOU can hear the relief in Rosario Autore’s voice when he talks about how his firm, Autore Pearls, one of the world’s largest pearl suppliers, survived the past 18 months. “Within the pearling industry we had a tough time,” he says. A slump in sales thanks to the global economic downturn and unexpected currency movements played a part. But the main problem underpinning the industry’s woes is a supply glut.

Andy Muller, a dealer based in Japan, estimates that the worldwide production of cultured “South-Sea” pearls (from South-East Asia, Australia and the Pacific) increased from 2.4 tonnes in 1998 to 12.5 tonnes last year. The increase was due chiefly to the rapid expansion of pearl-farming in Indonesia, the Philippines, and, to a lesser extent, Myanmar. This has dimmed South-Sea pearls’ glow: the value of the harvest at the farm gate fell from $220m to $172m over the same period. “At present, the cake served to overfed and cash-strapped consumers is too large to be digested,” Mr Muller says. ...

What a bizarre leadership row says about Japanese business

MANY former executives find retirement dull. But few react like Kuniaki Nozoe, the former boss of Fujitsu, one of Japan’s biggest computer companies. He stepped down as president in September, but is now demanding that Fujitsu “nullify” the resignation.

In a four-page letter sent last month to the board of directors, the 62-year-old Mr Nozoe claims that he was unjustly forced out without even having submitted a formal resignation. After a hastily convened board meeting on March 6th, Fujitsu admitted that it had ousted Mr Nozoe due to his association with a person suspected of having ties to organised crime—not for the “health reasons” cited at the time. Such ties could, in theory, get a firm delisted from the Tokyo Stock Exchange (TSE). But Fujitsu has found itself in trouble with the TSE anyway. On March 9th the exchange scolded the company for its “inadequate disclosure” of the reasons for Mr Nozoe’s departure. Mr Nozoe, meanwhile, does not really want his old job back or a payout, but rather to have his honour restored, says his lawyer, Kei Hata. ...

Politics decided the contest to supply America’s new aerial fuel tanker

IN THE end, they bowed to the inevitable. The decision this week by Northrop Grumman and its partner, EADS, to withdraw from a $35 billion contest with Boeing to provide the United States Air Force (USAF) with a new generation of aerial tankers had been well trailed, but it was still a bitter blow to the two defence firms. It was also a bad day both for America’s taxpayers and its armed forces.

Political controversy has never been far from the battle to replace USAF’s 500 or so Eisenhower-era KC-135 tankers. Boeing first won the contract in 2002 and then lost it when a congressional investigation discovered criminal collusion between the aerospace firm and an air-force official. Six years later, Northrop and EADS, the parent company of Airbus, pulled off a surprise victory when the USAF decided that the KC-45, its bigger and more modern (though more expensive) plane, based on the Airbus A330, represented better value than Boeing’s offering, based on the 767. ...

The future of two commodity titans is complicated by their ties

IN HIS early teens, long before going in to bat as boss of Xstrata, Mick Davis qualified as South Africa’s youngest-ever cricket umpire. The game’s complex rules may remind him of Xstrata’s intertwined relations with its biggest shareholder, Glencore. The private commodity trader based in Switzerland, which owns 34% of the miner and the marketing rights to some of its output, gives little away about its operations, usually earning it the tag “secretive”.

Xstrata, one of the world’s biggest mining firms, was born out of the initial public offering (IPO) of Glencore’s coal mines in 2002. It has grown spectacularly since and is now worth some $52 billion. The latest shifting of assets between the pair came on March 5th when Xstrata said Glencore had exercised an option to repurchase Prodeco, a Colombian coal mine. Glencore had sold the mine to Xstrata last year for $2 billion, to raise the funds to participate in Xstrata’s rights issue. ...

Processing capacity is becoming a tradable commodity

IF YOU are tired of hearing the word “cloud” attached to every term in the computing lexicon, you are not alone. Disillusioned tech folks are beginning to succumb to “cloud fatigue”. But the concept of computing as a basic utility delivered over the internet is here to stay. In fact, the industry is already taking the first steps toward turning computing power into a tradable commodity akin to electricity.

In the electricity business, it was the invention of something called the “rotary converter” and other transformers that led to the rise of the power utility. It allowed power from different generators to be pooled and distributed over the grid. The analogous technology in cloud computing is virtualisation. This separates software from hardware, allowing many programs to run on any machine, and indeed to switch between them. Although hardware stays in one place, “virtual machines” consuming processing power can jump around, even between far-flung data centres. Virtualisation has also given rise to big “cloud providers”, which offer computing power on demand, such as Amazon Web Services, a subsidiary of the eponymous online-shopping giant. ...

Efforts to reform how bosses’ salaries are set are unlikely to work

SPRING is in the air, bringing with it angry thoughts about executive pay. This year the economic downturn is adding extra emotion to the season’s familiar fury. Unions are, for example, outraged at the $21m paid in 2009 to Sam Palmisano, IBM’s boss, not least because his firm laid off 10,000 workers in America last year. A union that owns shares in Goldman Sachs is suing to stop it paying bonuses to its employees. It wants the investment bank’s senior managers to shell out personally for the $500m charitable donation it made last year, which the lawsuit, filed on March 8th, describes as “an apology for taking enormous bonuses”.

Some boards and bosses have made concessions to the public mood. Jeff Immelt, the boss of General Electric, declined to take the cash bonus he was due for the second year in a row. His basic salary has not gone up since 2005, although his total compensation for 2009 was still a healthy $10m, 6.5% more than in 2008. Howard Schultz, the boss of Starbucks, opted out of the executive bonus scheme last year and asked for his basic salary to be cut from over $1m to almost nothing. But he ended up receiving $12m, after the board awarded him a discretionary bonus. ...

Private investment is helping India’s farmers in a way government support cannot

INDIA is the third-biggest producer of potatoes in the world. The humble spud finds itself stuffed into flatbread, encrusted in cumin seeds or tucked into pancakes. But the truckloads of large, oblong potatoes that arrive at the McCain Foods plant in the Mehsana district of Gujarat face a more exacting ordeal. Ferried by a conveyor belt and propelled by water, they are sized, steam-peeled, sliced, diced, blanched, dried, fried (for precisely 42 seconds in vegetable oil at 199ºC), chilled, frozen, bagged and then boxed.

The 15kg boxes of fries that emerge at the other end of this pipeline supply the growing chain of McDonald’s restaurants in India. When McDonald’s first entered India in 1996, the food-processing industry was confined largely to ice cream and ketchup. Even importing frozen fries was complicated by the fact that such an exotic item did not appear on India’s schedule of tariffs and quotas. It took McDonald’s roughly six years and $100m to weld a reliable supply chain together. ...

Justice and policing are now devolved. What difference will it make?

THE Northern Ireland peace process passed another milestone this week when the Belfast Assembly voted by a large majority to approve the transfer of policing and justice powers from London. It was a significant breakthrough, given that quite a few assembly members have themselves attracted the attention of the police in the not-so-distant past. Now even those once considered dangerous will have a say on how the remaining paramilitary rumps are dealt with.

But, as is so often the case in Belfast, the advance took place not amid harmony and good cheer but against a background of attention-seeking and discord, as a single party held out against all the others. The Ulster Unionist Party (UUP), once Northern Ireland’s largest but today a shadow of its former self, insisted on voting against devolution of policing and justice powers. The measure passed nonetheless, by 88 votes to 17. ...

Professional fathers are downing tools to play with their children

AS THE rich have got richer and those in work ever busier, people with children have discovered a new way of spending their money: on handymen to do the sorts of odd jobs fathers used to roll up their sleeves and take care of. Despite the recent recession, dads, it seems, would rather spend quality time with their offspring than put up shelves or fix dripping taps at the weekend. So their wives, themselves hard pressed, are hiring other men to change fuses and the like, thus making time to dine out, kick a football or visit museums en famille.

Domestic help has long been a mostly female preserve, involving nannies, cleaners and laundry maids. That is changing, according to a forthcoming study by Majella Kilkey of the University of Hull and Diane Perrons of the London School of Economics. The pair reckon that nowadays 39% of domestic helpers in Britain are men, up from 17% in the early 1990s; in London, many are also migrants. Many households hiring handymen already employ a small army of nannies, cleaners and gardeners. ...

Even for the lords spiritual, the times are changing

TO OUTSIDERS, one of the oddest features of Britain’s semi-theocracy is that 26 Anglican bishops have the right to sit in the upper chamber of the legislature, even though their church can claim the active adherence of less than 5% of citizens. But the “lords spiritual” still have clout, especially when the established church acts as an advocate for religion in general. That became clear in February, when the government backed away from a confrontation over the question of whom churches should employ—and, in particular, over which posts can be barred to gays.

The government’s hopes were fairly modest. It was not questioning the right of religious bodies to follow their own beliefs when hiring priests or imams; it merely wanted to clarify that, in recruiting for non-religious jobs (accountants, for example), churches must obey the law and refrain from discrimination against gays. But pursuing even this cautious aim was deemed unwise at a time when many religious leaders, including Pope Benedict, were opposed (and perhaps considering how their flock should be encouraged to vote). ...

Child-abuse scandals in the Catholic church come a bit nearer the pope

THE Domspatzen have been singing in Regensburg, Bavaria, for a thousand years. But in the 1960s some choirboys there were victims of a “refined system of sadistic punishments connected with sexual lust”, according to Franz Wittenbrink, a composer who attended the choir’s boarding school until 1967. Their traumas are among scores of cases coming to light at Catholic institutions across Germany and elsewhere in Europe, mostly decades after the crimes were committed. The church is struggling to dispel the impression that it is the most flagrant abuser of its own principles. And Germany’s political leaders seem torn between their concern for children’s welfare and their ties to the church.

Christianity matters in Germany. Around two-thirds of west Germans identify themselves as Catholics or Protestants. Christians who pay income tax hand over an extra “church tax” that accounts for two-thirds of church revenue. Germans are not devout: 4% of Protestants and 14% of Catholics in the west are weekly churchgoers. But, says Detlef Pollack of the Wilhelms University in Munster, many count on the church to succour the sick, to offer counsel in times of need or to educate their children. The Christian Democratic Union (CDU) of Chancellor Angela Merkel, daughter of a Protestant pastor, has its roots in the pre-war Centre Party, which was closely linked to the Catholic church. ...

A farcical failure to register candidates in time

THE elections on March 28th and 29th in 13 of Italy’s 20 regions were meant to seal Silvio Berlusconi’s resurgence after a run of scandals over his private life. Eleven regions are held by the centre-left opposition. The prime minister, coasting on a wave of sympathy after an attack by a mentally unstable man in December, had hoped his People of Freedom (PdL) movement might oust up to five centrist and left-wing governors. But its campaign is in chaos—and the government’s ratings are plunging.

To think that it all started with a bread roll. That is what Alfredo Milioni, a former bus-driver charged with registering the PdL’s candidates in Lazio (which includes Rome), first said had lured him from the queue at the electoral office on February 27th. He later offered two other explanations for missing the deadline. Party leaders claimed he had fallen into a trap set by the opposition. But nobody disputes that he returned after the deadline had expired. Electoral officials duly refused to accept the PdL’s slate. That, and two failed court appeals, has left the ruling party out of the race in Lazio, one of five potential swing regions. It was almost excluded in Lombardy too, this time because some of its signatures seemed dubious. ...

An international court ruling injects new life into fast-fading peace talks

ON ANY small Mediterranean island, property is jealously protected. Orange and olive groves can be as valued as posh villas and sea views. Nowhere more than in Cyprus, split into Greek- and Turkish-Cypriot zones ever since Turkish troops invaded in 1974 after a coup aimed at Enosis, or unification with Greece.

For Greek-Cypriots who lost homes and businesses in the north, a settlement on property is key to reunifying the island. “Who gets their home back, who gets another property in exchange, who gets compensation: this is what really matters,” says a seasoned observer of the Cyprus talks. In 18 months of UN-sponsored negotiations, Demetris Christofias and Mehmet Ali Talat, respectively the Greek- and Turkish-Cypriot leaders, have broadly agreed over how a bizonal, bicommunal Cyprus should be governed. But they have avoided discussing in any detail the thorniest issues, including property. ...

The ruling party of Nicolas Sarkozy is bracing itself for a bad result in France’s regional elections

THIS ought to be a buoyant time for Nicolas Sarkozy. France’s economy is holding up better than its neighbours’: GDP rose by 0.6% in the fourth quarter of 2009 over the previous quarter, whereas it was flat in Germany. No big French bank has had to be rescued, nor has there been a wave of mortgage repossessions. The top 40 quoted companies have just reported combined profits of €47 billion ($64 billion) for 2009. The French president has a big parliamentary majority and faces no credible opposition leader. He even has a popular prime minister, Francois Fillon.

Yet Mr Sarkozy faces an imminent political humiliation, as disillusioned voters snub him in regional elections. The two-round poll, being held on March 14th and 21st, will elect governments in France’s 22 mainland regions (plus four overseas). All the opinion polls agree that the results will be terrible for Mr Sarkozy’s ruling UMP party. As it is, the party runs only Alsace and Corsica. With turnout likely to be low, and uncertainty over the vote for the far-right National Front, there could still be a surprise. But even the UMP has resigned itself to at best one region gained—and, at worst, Corsica and even Alsace lost. ...

Najib wavers over undoing affirmative-action policies

WHEN Najib Razak took office last April as Malaysia’s prime minister, the timing could hardly have been worse. The export-led economy was in recession. The ruling coalition was in the dumps after an unprecedented near-defeat in elections in March 2008. Opponents warned that Mr Najib’s government would crack down on political dissent to save its skin.

Against the odds, though, Mr Najib, a British-educated economist, has emerged as a more sure-footed, and less scandal-prone, leader than many expected. He has stimulated the economy back to life and liberalised some financial services. Growth is likely to exceed 4% this year—reaching 6%, in his own optimistic forecast. There are ambitious new targets for cutting crime and building roads, among other populist policies. Foreign businesses have been encouraged by Mr Najib’s promises to liberalise the broader economy, spur innovation and raise productivity. Everyone agrees that Malaysia needs to move beyond run-of-the-mill electronics and focus on knowledge-based industries. ...

The DPJ stumbles in its efforts to grant foreigners the vote

BY RIGHTS, giving long-term South Korean residents in Japan the right to vote in local elections should be uncontroversial. They pay taxes, speak Japanese, and come from families that have lived in Japan for decades. Most were dragged here to work under the colonial cosh before and during the second world war.

A limited move to enfranchise them came from the very top of the ruling Democratic Party of Japan (DPJ). It swept to power last September promising to end prejudices built up under the ousted Liberal Democrats. Yukio Hatoyama, the prime minister, backs it. The DPJ’s secretary-general and puppeteer-at-large, Ichiro Ozawa, even assured Lee Myung-bak, South Korea’s president, that he would soon push it through the Diet, or parliament. ...

An historic change in the offing; but India’s ruling party may be overreaching itself

YELLING dementedly, seven lawmakers mobbed the chairman of the Indian parliament’s upper house on March 8th and tore at the document, containing the women’s reservation bill, he was reading from. Yet the bill passed the next day, with the two-thirds majority needed to change India’s constitution. With broad political support, including from the Congress party that leads India’s coalition government and the main opposition Bharatiya Janata Party (BJP), the bill could soon clear the lower house and win the support it needs in at least 15 out of 28 state assemblies. The president would then sign it into law: imposing a 33% quota for women in India’s federal and state assemblies.

This would be momentous, especially for India’s half a billion, badly served women. Today’s Lok Sabha, or House of the People, as India’s lower chamber is known, contains 58 women, a record number, but fewer than 11% of the seats. By greatly boosting women’s membership of India’s legislatures, the proposed amendment, its supporters say, will also begin to make a dent in their more grievous suffering—in a country where female fetuses are often aborted, where wives are battered and women earn on average $1,200 a year, less than a third of the male average. A woman can take credit for this: Sonia Gandhi, Congress’s leader, who has pushed the long-mothballed bill against a furious band of dissenters—of a kind that persuaded previous BJP- and Congress-led governments not to touch it. ...

American anger at Jamaica’s slowness in handing over an alleged gang boss

UNTIL recently the United States was pleased with the co-operation it was getting from Jamaica over the extradition of people accused of serious crimes. The Jamaican authorities were responding promptly to requests and, last year, sent 15 suspects to the United States. But the case of Christopher “Dudus” Coke seems to be different. The American authorities have become frustrated at what they see as foot-dragging by Jamaica’s government over their request last August for the extradition of a man they say is the leader of an “international criminal organisation”.

A “Gang Threat Assessment Survey” conducted by the Jamaican government last year reckoned there were 268 criminal groups in Jamaica, earning cash from extortion, selling cannabis, transporting cocaine, contract killings, prostitution and international cybercrime. Many of them are merely small-time thugs. But the United States Justice Department has put Mr Coke on its “world’s most dangerous” list, accusing him of directing drug deals as far away as New York. ...

A dispute over land becomes an argument about race

OF ALL the peoples that make up Brazil, the quilombolas have perhaps the most remarkable story. Like the Saramaka in Suriname or Jamaica’s Maroons, they claim to be descended from groups of runaway slaves who founded settlements, or quilombos, deep in the forests. Most still live in the countryside, farming rice, bananas and other staples, but increasing numbers now live in towns. In the 1988 constitution, drawn up after the end of Brazil’s military dictatorship (exactly a century after slavery was abolished), the quilombolas were granted special guarantees to the title on their land, in recognition of their ancestors’ suffering.

These rights were amplified in a decree from President Luiz Inacio Lula da Silva in 2003. A bill that would, among other things, solidify their land claims has passed in Brazil’s lower house and is now in the Senate. However, not everybody is carried away with the romance of it all. ...

Bereft of controversy, lawmakers chew seal meat and sing a sexist anthem

WHEN Canada’s prime minister, Stephen Harper, prorogued Parliament in December for more than two months, to avoid some bothersome debates, he said this was so his minority Conservative government could “recalibrate” its policies. Now that the recession was over, he said, the emphasis needed to shift towards budgetary control. However, as the new session began on March 3rd, the throne speech outlining the legislative programme was notable for its dearth of new ideas. Likewise the rather dull budget speech the next day.

The Liberals, the main opposition, were so stumped for something to quibble with in the budget that they decided not to vote it down, which at least spares Canadians a third general election in just over four years. So, with little of substance to joust over, lawmakers have been turning their attention to some less urgent matters. In response to a proposal by a Liberal senator, the parliamentary canteen served seal meat for the first time on March 10th. The idea is to show solidarity with hunters, on Canada’s Atlantic and Arctic coasts, who are enraged at the European Union’s recent ban on imports of seal products. Last year Canada’s governor-general, Michaelle Jean, caused a stir by eating raw seal meat on a visit to the Arctic. The lawmakers enjoyed theirs cooked, in a port sauce. ...

Why is the recovery jobless? Maybe because it isn’t a recovery

IN FEBRUARY, for the twenty-fifth time in 26 months, the American economy shed jobs. The toll—a decline of 36,000—was smaller than feared for a month of severe winter weather. But it was distressing nonetheless; another bit of evidence pointing towards a jobless recovery. Most economists estimate that the recession in America ended around the close of the second quarter of 2009, the last quarter in which GDP shrank. But during the second half of last year the economy still managed to lose more than a million jobs.

One explanation for the divergence of output and employment, which started to emerge while the economy was still shrinking, is that firms are now able to wring more productivity out of their workers. Rising labour productivity is a common feature of the early stages of recovery, as employers respond to increases in demand by working staff harder and delaying new hiring. But this time round productivity figures have been well above normal. Last week the Bureau of Labour Statistics reported fourth-quarter labour-productivity growth of 6.9%, after increases of 7.6% and 7.8% in the previous two quarters. That amounts to one of the strongest nine-month productivity performances America has notched up in the post-war period. ...

Colleges nationwide are asking students to pay more for their education

“NO ONE should go broke because they chose to go to college,” Barack Obama said in January in his state-of-the-union speech. But American college students worry they might, thanks to recent fee increases at technical colleges and universities. On March 4th students and disgruntled faculty staged protests at around 100 campuses in over 30 states, calling on state legislators and university administrators to put a halt to recent tuition hikes and funding cuts. In Oakland, California, student protesters marched onto a big highway and stopped the traffic. Elsewhere students carried coffins to symbolise the death of affordable education.

According to the Centre on Budget and Policy Priorities, a think-tank, at least 39 states have decreased their funding for public colleges and universities or increased their tuition charges. In California some public universities have increased fees by more than 30%. At the same time they are cutting back on their offerings. Many have tried to save money by laying off staff, closing academic departments and reducing the number of classes offered. Some are admitting more out-of-state students, who pay higher fees. ...

Mexico’s drugs gangs are getting ever more clever

ONE case that sticks out, says Jay Abbott, is that of Margarita Crispin. Mr Abbott is the assistant special agent in charge of the FBI’s El Paso bureau, and Ms Crispin was a customs agent working at the busy port of entry between El Paso, Texas, and Ciudad Juarez, in Mexico. The FBI had been tipped off in 2004 that Ms Crispin was crooked, so they started to watch her. Once, in 2006, a van ran out of petrol in her lane, and the driver ran away. It turned out that there was almost 6,000 pounds (2.7 tonnes) of marijuana inside. The next year the FBI had enough evidence for an indictment. The strange thing, says Mr Abbott, was that Ms Crispin had no interest whatsoever in a plea bargain. He reckons the Mexican drug-traffickers had made it clear to her that giving evidence against them would not be a wise move.

Was the Crispin case an aberration, or a sign of things to come? Most of America’s foreign-grown marijuana comes from Mexico, and most of the cartels’ profits come from the American market. In a speech last March the Mexican president, Felipe Calderon, argued that here was evidence of vexing hypocrisy: “How can you account for such a large drug market in the US, the biggest in the world, without corruption of American authorities? I’d like to know which high-ranking officials, like the ones I’ve put in jail, have even been investigated there.” ...

Alabama’s small cities are poised for recovery

TUCKED between the Tombigbee river and a rural highway meandering north from Mobile sits a warren of huge buildings in Willy Wonka-colours: sea-foam blue and green, desert beige and mauve. Though they look like a modern-art installation, in fact they comprise a new steel mill being built by ThyssenKrupp, a German company. According to ThyssenKrupp the $3.7 billion mill represents the largest German investment in America ever. When it reaches full capacity in 2012, it will employ 2,700 workers and produce some 5.1m tons of carbon and stainless steel per year.

In a ranking of 378 American metropolitan areas by job-growth prospects conducted by Moody’s Economy.com, Mobile ranked 12th. Three regions in Alabama finished above it: Huntsville and Auburn-Opelika ranked first and second, and Columbus-Phenix City, which straddles the Georgia border, ranked seventh (the state’s two largest cities, Birmingham and Montgomery, ranked 83rd and 22nd). These areas are quite diverse: Huntsville benefits from an aerospace and defence legacy, as well as from military base realignments that will centralise several commands in the area; Mobile has ThyssenKrupp’s plant as well as continued recovery from the effects of Hurricane Katrina; Auburn-Opelika has Auburn University, recipient of some $47m in stimulus money; and Phenix City abuts a large Kia plant in Georgia and is near Fort Benning, also due to grow thanks to base realignment. ...

The sign is still there, but the film crews increasingly aren’t

MORE than 41m Americans tuned in on March 7th to watch “The Hurt Locker” win the award for best picture at the Oscars, the annual ritual of glitz that reminds the world that Hollywood is the global centre of the film and entertainment industry. “The Hurt Locker”, however, was filmed in Jordan, not Hollywood. Perhaps that is as it should be for a film set in Iraq. But what about “Battle: Los Angeles”? Hitting cinemas next year, it is a film about marines fighting an alien invasion. And it is being shot in Louisiana.

California has been worrying about “runaway production” since 1998, when Canada began luring producers and their crews away from Los Angeles with tax breaks. Other places followed, and all but seven American states and territories and 24 other countries now offer, or are preparing to offer, rebates, grants or tax credits that cut 20%, 30% or even 40% of the cost of shooting a movie. ...

Indian policymakers should see agriculture as a source of growth, not votes

INDIA’S industry is going from strength to strength. Manufacturing grew by 14.3% in the fourth quarter of 2009, compared with the same period in 2008. Politicians celebrate the achievements of “India Inc”, applauding its acquisitions abroad and welcoming the foreign investment it attracts.

They do not show anything like the same confidence in “Bharat Inc”, which is how India’s rural economy is sometimes described. Bharat, which means India in Hindi, is a different country. The rural heartland is courted for votes, smothered with regulations, and shielded from the global economy that corporate India is busy conquering. Yet the government cannot achieve the “inclusive” growth it aspires to without robust progress in agriculture, which still employs about half of India’s workforce. Agricultural growth cuts poverty twice as fast as other kinds, because the poor are mostly rural and they spend more than half of their household budgets on food. ...

Both Turkey and the Armenian diaspora should look for ways of rewriting a familiar script

NOT for the first time, Armenians sense a moment of vindication in their struggle for the acknowledgment of the tragedy that befell their forebears during the first world war. Turkey is angry. And America’s administration is straining to limit the damage.

The latest Turkish-American rift over the Armenian question—after a congressional committee voted on March 4th to recognise the killings of 1915 as genocide—looks wider than some previous ones. It coincides with a general scratchiness between America and its ally. Turkey is reluctant to slap sanctions on Iran. Anti-Americanism is running high among Turks. Some suspect that Barack Obama retains his view (expressed as a senator in 2008) that “the Armenian genocide is not an allegation…but rather a widely documented fact.” ...

Natural gas is becoming less like oil and more like coal, which is a good thing

WOODY ALLEN, in earlier, funnier days, told a joke about two women in a resort in the Catskills bemoaning the cuisine: “The food at this place is really terrible,” says one. “Yeah, and such small portions,” replies her friend. Thus the current thinking about fossil fuels. They are dangerous things, their production and transport often unpalatable, the less visible environmental consequences of their use worse still. And there is not enough of them. The current boom in “unconventional” gas (see article) seems likely to provide good news on both fronts.

The three conventional forms of fossil carbon—oil, coal and gas—differ both in the way the Earth stores them and the way its people use them. Oil is found in relatively few places, and its energy density, pumpability and ease of use in internal-combustion engines makes it particularly well suited as a transportation fuel. Coal is found in many more places—a whole geological era’s worth of rocks, those of the Carboniferous, are named in its honour—and it cannot be pumped around, but can be crushed and burned and so produces baseload power. Gas, typically found and exploited in the same sort of places as oil, is easily moved around through plumbing but is not, usually, seen as a transportation fuel. It has filled niches in between: Europeans warm their homes with it and many developed countries generate some of their electricity with it. ...

SIR – I am pleased that you acknowledged the important work carried out by the European Commission in enforcing competition laws (“Unchained watchdog”, February 20th). The commission’s success in this field is built on sound legal and economic analysis, fair and transparent procedures and a fining policy that seeks to deter misbehaviour. Given what is at stake for consumers, companies and the internal market, I am fully aware of the need to balance effective enforcement with procedural fairness.

Regarding those who think “Europe’s trustbusters should be kept on a tighter leash”, companies under investigation have the opportunity to defend themselves fully and present their case in both written and oral evidence. In terms of transparency and accountability, our administrative system compares favourably with many others. In competition matters the commission is actually kept on a tight rein by the European courts, which require our decisions to be fully reasoned. They subject that reasoning to a very close scrutiny and ensure that the rights of the defence are fully respected. Notably, the courts have unlimited powers to reduce, or indeed increase, antitrust fines imposed by the commission. ...

How not to write “state-of-the-nation” fiction

Solar. By Ian McEwan. Nan A. Talese; 304 pages; $26.95. Jonathan Cape; GBP18.99. Buy from Amazon.com, Amazon.co.uk

...

Encircling the globe

Dominion from Sea to Sea: Pacific Ascendancy and American Power. By Bruce Cumings. Yale University Press; 641 pages; $38 and GBP30. Buy from Amazon.com, Amazon.co.uk

...

The illicit nuclear trade flourishes because governments let it

Peddling Peril: How the Secret Nuclear Trade Arms America’s Enemies. By David Albright. Free press; 304 pages; $27. Buy from Amazon.com

EVER since the atom was split, governments have struggled to control a force with potential for good that can also wreak awful destruction. Some argue it is impossible to stop technologies that can keep the lights on from being used to make bombs. That is a sobering thought in a world ready to re-embrace relatively carbon-free nuclear power. But David Albright, a respected chronicler of undercover nuclear shenanigans, tells a more alarming story: just how little most governments have done to halt the bomb’s spread. ...

A new exhibition expands what we know about how Matisse worked

ON A trip to Chicago to give a lecture, John Elderfield, then chief curator of painting and sculpture at the Museum of Modern Art (MoMA) in New York, dropped in to see how conservation of Henri Matisse’s monumental painting, “Bathers by a River”, was coming along. He was hooked. The result, five years later, is an exhibition that dramatically changes established ideas about the artist’s work and working methods.

A scholar, Mr Elderfield has always been attracted to questions that are hard to answer. He is from the tough former mining county of Yorkshire, which may have shaped his conviction that if an undertaking is easy, it isn’t worth doing. During his more than 30 years at MoMA (he retired in 2008), there were many thorny problems to engage him. Quite a few concerned Matisse. His 1992 exhibition, “Henri Matisse: A Retrospective”, was a tremendous popular and critical success. He imagined he had probably given the subject everything he could. But not at all, it turned out. His “Matisse Picasso”, the first major exhibition devoted to these two giants, opened in 2003. Only a couple of years later, in Chicago, he was enmeshed again. ...

A new biography highlights the life and work of a British artist and the women he loved

Into the Frame: The Four Loves of Ford Madox Brown. By Angela Thirlwell. Chatto & Windus; 328 pages; GBP25. Buy from Amazon.co.uk

THE Pre-Raphaelites and their “stunners”, as Dante Gabriel Rossetti called his models, have long been the object of fascination. Perhaps that is why so little has been written about Ford Madox Brown (1821-93), a painter who, though closely associated with them, never joined their fraternity. With his upbringing and early training in France and Belgium, Brown was always the outsider. Angela Thirlwell’s “Into the Frame”, a carefully researched and sympathetic biography of Brown and the four women he loved, helps fill that gap, while making a valuable contribution to the growing literature about women who have figured in the lives of prominent men. ...

Why are Nordic detective novels so successful?

THE neat streets of Oslo are not a natural setting for crime fiction. Nor, with its cows and country smells, is the flat farming land of Sweden’s southern tip. And Reykjavik, Iceland’s capital, is now associated more with financial misjudgment than gruesome murder. Yet in the past decade Nordic crime writers have unleashed a wave of detective fiction that is right up there with the work of Dashiell Hammett, Patricia Highsmith, Elmore Leonard and the other crime greats. Nordic crime today is a publishing phenomenon. Stieg Larsson’s Millennium trilogy alone has sold 27m copies, its publishers’ latest figures show, in over 40 countries. The release this month in Britain and America of “The Girl with the Dragon Tattoo”, the film of the first Larsson book, will only boost sales.

The transfer to the screen of his sprawling epic (the author died suddenly in 2004 just as the trilogy was being edited and translated) will cement the Nordics’ renown. The more unruly subplots have been eliminated, leaving the hero, a middle-aged financial journalist named Mikael Blomkvist (Michael Nyqvist), and an emotionally damaged computer hacker, Lisbeth Salander (Noomi Rapace, pictured above), at the centre of every scene. The small screen too has had a recent visit from the Swedish police. Starting in 2008, British television viewers have been treated to expensive adaptations of the books of Henning Mankell, featuring Kenneth Branagh as Kurt Wallander. The BBC series has reawakened interest in Mr Mankell’s nine Wallander books, which make up a large slice of his worldwide sales of 30m in 40 languages. ...

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In addition to the people quoted in this report, the author is grateful to the following: Jutta Allmendinger, Reinhard Pollak and Wolfgang Merkel, Wissenschaftszentrum Berlin fur Sozialforschung; Jorg Drager, Bertelsmann-Stiftung; Sebastian Dullien, HTW Berlin; Jeanne Fagnani, CNRS; Clemens Fuest, University of Oxford; Matthias Gabriel, ChemiePark Bitterfeld Wolfen; Markus Grabka, DIW; Christine Grunert, Stadt Ulm; Ulrike Guerot, European Council on Foreign Relations; Wolfgang Herrmann and Bernhard Rieger, TU Munchen; John Kornblum, Noerr LLP; Cornelia Kristen, Georg-August-Universitat; Roland Manger, Earlybird; Paul Nolte, Freie Universitat Berlin; Lothar Probst, Universitat Bremen; Kai Peter Rath, Anja Hartmann and Eckart Windhagen, McKinsey; Holger Schafer, IW Koln; Hilmar Schneider, IZA, Bonn; Daniela Schwarzer, SWP Berlin; Dennis Snower, Institut fur Weltwirtschaft, Kiel; Werner Tillmetz, Zentrum fur Sonnenenergie- und Wasserstoff-Forschung; Ingrid Weinhold, MABA.

Sources ...

For all its stolid reputation, Germany has become surprisingly flexible, says Brooke Unger (interviewed here). But it needs to keep working at it

ULM, like many German towns, is arrayed around a central church like an expectant congregation. Its Gothic spire is the tallest in the world. The city is also famous for being the birthplace of Albert Einstein. But Ulmers do not live in the past. They are too busy making things, or working out how to make them better, and dispatching them to the rest of the world. The family-owned Mittelstand firms that cluster in and around this modest town alongside the Danube river were among the prime beneficiaries of Germany’s export boom, the main source of growth until the world economy slumped in late 2008.

That disaster has not shaken Ulm’s self-confidence. Since the financial crisis Germany’s economy has shrunk more than most, by around 5% in 2009 (see chart 1). That of Baden-Wurttemberg, Ulm’s home state, dived by as much as 8%. But the region around Ulm itself held up better than the rest of the state because its economy is diversified, reckons Otto Salzle, managing director of the region’s chamber of industry and commerce. Some local firms are in hard-hit industries like cars and machine tools but many are not: Ulm also makes pharmaceuticals and James Bond’s favourite firearm, the Walther PPK. The region’s unemployment rate rose from 3.3% to 4.6%, still well below the national rate. “We are the strongest region in Germany,” crows Mr Salzle. ...

Germany scandalously underuses immigrants and women

HEINZ BUSCHKOWSKY, the mayor of the Berlin district of Neukolln, is famous for being blunt. He is in charge of an ethnic goulash: 140,000 of his 305,000 constituents are Turks, Arabs, Yugoslavs or other migrants. The local unemployment rate is 26%, and probably twice that among the immigrants. Work disappeared when subsidies to industry were withdrawn after the fall of the Berlin Wall. But Neukollners are all too willing to live off Hartz IV social-security benefits, which provide a family with children with enough to get by. “Long-term welfare paralyses people,” Mr Buschkowsky observes, sounding more like an American Republican of the 1980s than a leading member of Berlin’s Social Democratic Party. Children grow up thinking “money comes from the state,” drop out of school and then raise children who repeat the cycle.

Neukolln’s problems loom large partly because it is in Berlin which, unlike Paris or London, is poorer than the country it governs. In Ulm, which has more factories, Hartz IV is a less appealing option. Still, Mr Buschkowsky’s message matters anywhere in Germany. He lambasts not only welfare dependency but also conservative shibboleths like the three-tier high-school system (“once at the bottom, always at the bottom”) and paying women to stay at home with their children (he thinks the money would be better spent on pre-school education so that immigrant children could learn proper German). He is equally impatient with liberal multiculturalism. Immigrants have a chance, he says, “when they not only live in Europe but become European”. ...

Angela Merkel and the art of the possible

IT IS hard to think of another big country where a recent election was such a non-event. Both America and Japan responded to the economic crisis by electing governments of a different colour, and Britain may do the same in a few months’ time. In Germany, after a flaccid campaign last September, voters made a judicious adjustment. Angela Merkel was re-elected as chancellor but the grand coalition she had been heading did not survive. Her conservative union—the CDU plus its Bavarian sibling, the Christian Social Union (CSU)—acquired a new coalition partner, the liberal Free Democratic Party.

The result was both an endorsement and a rebuke. Voters rewarded Mrs Merkel for her deft handling of the economic crisis. Polls show that Germans’ trust in government rose during the crisis. Yet turnout in the election was a record low of 71%, and the two big parties that have dominated post-war politics were humiliated. The SPD’s 23% of the vote was a disaster, and the CDU and CSU’s combined 34% was their worst result in 50 years. Only the strong showing of the FDP, which won a record 15% of the vote, spared Mrs Merkel from having to continue a grand coalition that her party did not want. ...

A second wind for German industry?

THE Roding Roadster, a sports car unveiled at last September’s Frankfurt motor show, has a powerful motor and lightweight construction that promise a thrilling ride. But at Munich’s Technical University (TUM), which the Roding’s designers attended, there is even more buzz about the Tesla, a battery-powered car from California. It shows that electro-mobility “could be fast and fun”, says Markus Lienkamp, who teaches car technology at TUM. Annoyingly, Tesla opened a dealership in Munich on BMW’s doorstep.

Germany invented the modern internal-combustion engine and intends to be a leader in any future automotive technology. It has helped to spread the idea that modern life can be transposed into planet-friendly technology. The government’s promise to put 1m electric cars on the road by 2020 is one of many initiatives to ensure that Germany cashes in. So Tesla’s brash entrance into the green enclosure was met with a mixture of derision and fear. Surely slapdash American engineering will be put to shame by the inventive perfectionism of the German Tuftler, car folk mutter. But that is a hope, not a certainty. Mr Lienkamp welcomes the threat. “When a German engineer gets angry,” he advises, “watch out.” ...

How Germany weathered the recession

“THIS is what we love,” exclaims Jan Stefan Roell, presenting an intricately worked ingot of gleaming steel as though it were a piece of jewellery. It belongs somewhere in the innards of a testing machine made by Zwick Roell, the firm he owns. One model rips the eyes off teddy bears (to see if children can), another pokes computer keyboards. Mr Roell wants the visitor first to admire the part, next the Swabian craftsmen who fashioned it and then the German genius for making expensive and indispensable things. His customers expect German thoroughness, he says.

Ulm-based Zwick Roell, which has 950 employees and sales of €150m ($202m) a year, is a typical Mittelstand firm. Until the 1930s it made buttons from cow horn imported from Argentina, but when plastic took over it switched to testing machines. Like many Mittelstand enterprises Zwick works backstage, making things that are used in making other things. The thousands of Zwick-like firms that constitute the engineering sector are a cornerstone of Germany’s industrial economy. They employ nearly 1m workers, more than any other industry, and export almost 80% of their production. Often the product is not merely a machine, but also a panoply of services that go with it. ...

United Germany is becoming more comfortable in its skin

“GERMANY is plagued by a severe economic malaise and by uncertainty about its place in the world,” wrote The Economist in a special report in 2002. A lot has changed in eight years. These days Germany lectures other countries on economic management and sends troops to Afghanistan. It may still not be a “normal” country. But now that the Federal Republic is a matronly 60 and unification is approaching a post-adolescent 20, the likely shape of normality is becoming clearer.

Germany has become more at ease with itself. That became obvious during the football World Cup held in Germany in 2006, when its black, red and gold flag fluttered above cars and balconies as though patriotism had never gone out of fashion. Atonement for Germany’s awful past is woven into the constitution and still shapes foreign and domestic policies; it is one reason why Germany is Israel’s best friend in Europe. But now it is invoked less often as an excuse to avoid doing something that would otherwise make sense. The economic crisis, ironically, has been a psychological boost; to Germans, the social-market economy looks more like a solution than a cause. ...

Germany’s education system is a work in progress

GERMANY invented the modern university but long ago lost its leading position to other countries, especially America. These days the land of poets and thinkers is prouder of its “dual system” for training skilled workers such as bakers and electricians. Teenagers not bound for university apply for places in three-year programmes combining classroom learning with practical experience within companies. The result is superior German quality in haircuts as well as cars. Dual training “is the reason we’re the world export champion”, says Mrs Schavan, the education minister. Azubis (trainees) acquire not just a professional qualification but an identity.

But the dual system is under pressure. The number of places offered by companies has long been falling short of the number of applicants. Almost as many youngsters move into a “transitional system”, a grab-bag of remedial education programmes designed to prepare them for the dual system or another qualification. Often it turns out to be a dead end, especially for male immigrants. ...

But eastern and western Germany may never quite meet

THE capitalist West had Kodak, Agfa and Fuji. East Germany snapped its photos on ORWO film, which had drawbacks. The images were easily smudged and the colours were weird. In Wolfen, where ORWO was manufactured, people said you could develop the film by dipping it in the river Mulde. Neighbouring Bitterfeld, a hub of the East German chemical industry, was known as the “dirtiest city in Europe”.

Since German unification in 1990 the federal and state governments have spent €230m on detoxifying the area. ORWO no longer makes film. Bitterfeld still produces chemicals, but hundreds of well-groomed firms have replaced the cheerless Kombinat (industrial conglomerate), and the chemical park now looks out over a nature reserve. Next to Wolfen is Solar Valley, a cluster of renewable-energy companies. ...

The IMF says it wants to help Africa handle climate change

THE global recession was slow to hit Africa. Its banks and stock exchanges were isolated enough from the wider capital markets to suffer few shocks. Foreign investment remained steady. Oil-rich countries such as Angola continued to boom. But dampened demand for African exports last year, together with the shrinking of many venture-capital funds, has now hit the continent hard after a long period of unusually perky growth. Countries south of the Sahara together grew by less than 2% in 2009. In many places income has fallen and unemployment started to rise.

So the bullishness of Dominique Strauss-Kahn, the IMF’s head, who has been touring Africa, struck some as strange. He went out of his way to praise Africa’s central banks. He even said Africa’s economies were more dynamic than most of Asia’s. The main point, he said, was that Africa was recovering from the global crisis faster than expected. ...

A terrible tit-for-tat is causing untold misery—and seems unlikely to end

THE number-plates in Nigeria’s Plateau state declare it to be the “Home of Peace and Tourism”. In the past decade this slogan has sounded ever more fanciful, as the state’s capital, Jos, suffers bouts of the most brutal ethnic violence. The latest took place before dawn on March 7th, when gangs attacked villages south of the city, razed houses and hacked their occupants with machetes. The death toll is hard to know. Aid and human-rights groups say that between 200 and 500 people were killed. The police put the total at 109.

Locals say the gang members belonged to the mainly Muslim Fulani tribe, whereas the villagers were mostly from the Christian Berom group. The killings looked like revenge for a clash in Jos in January, when hundreds died, most of them Muslim, although there were Christian victims too. “This appears to be some kind of reprisal attack,” said Robin Waudo, a spokesman for the Red Cross. ...

The unity government is stuck. An early election might break the logjam

WITH a power-sharing government plainly going nowhere, Zimbabwe’s president, Robert Mugabe, has announced that fresh elections could be held early next year, whether or not a new constitution is ready. At the age of 86, he says he is ready to stand again—if, he adds coyly, his ruling ZANU-PF party wants him to. Next month he will celebrate 30 years of untrammelled power.

Morgan Tsvangirai, Zimbabwe’s prime minister and leader of the Movement for Democratic Change (MDC), which was forced into a unity government despite winning a general election in the face of violence and fraud two years ago, wants South Africa’s president, Jacob Zuma, to intervene. Talks to encourage Mr Mugabe to implement fully the power-sharing agreement he signed 18 months ago under the aegis of the Southern African Development Community (SADC), a 15-country regional grouping, have foundered. ...

Few of the participants have much hope that the resumption of talks, to be held indirectly through American mediators, will soon lead to a two-state solution

IT WAS a wretched beginning to what had been hailed as the hopeful resumption of peace talks, albeit indirect ones, between the Israelis and Palestinians under the aegis of an American mediator. Barely had America’s vice-president, Joe Biden, begun a visit to Israel to herald a new era of compromise and goodwill than it was announced that 1,600 houses would be built for Jewish settlers on the Israeli-annexed eastern rim of Jerusalem that Palestinians see as part of their future capital. Palestinians were united in fury. Peacemaking outsiders viewed the action as the illest of omens. Mr Biden sharply “condemned” it as “precisely the kind of step that undermines the trust we need right now.”

A sheepish-looking Binyamin Netanyahu, Israel’s prime minister, let his aides claim lamely that he had been unaware of the decision. The next day his minister of interior apologised, conceding that the timing was unfortunate, but said that the announcement was merely a “routine, technical” step. Unsurprisingly, all this only increased scepticism about the promised new round of talks. ...

During the past twelve months many major currencies have risen against the dollar. The appreciation has been most marked for the Australian dollar, which has strengthened by 41.9% against the greenback. New Zealand’s currency, which has appreciated by 40.9%, follows closely behind. Sterling also appreciated against the dollar over the past year, though its recent bout of weakness can be seen in a 7.3% drop since December 31st 2009. Several other rich-world currencies, like the Swiss franc and the euro, have also fallen against the dollar since the end of last year. Emerging-market currencies like the rouble, the Indian rupee and the zloty have all appreciated against the dollar over the same period.

...

In 27 out of 36 countries surveyed by Manpower, an employment-services firm, more companies said they expected to add workers in the three months to the end of June than said they expected to reduce their workforce. The difference between the proportion of hirers and firers was highest in Brazil and India, at 38 and 36 percentage points respectively. Throughout Asia, companies have become more optimistic about hiring than they were a year ago, most dramatically in Singapore and only marginally in Japan. Things look less rosy in Europe. In Spain and Italy, more companies expect shrinkage in their workforce than expect it to grow. In Italy and the Netherlands (not shown) the outlook has darkened from a year ago.

...

In America, the number of people employed outside agriculture fell slightly, by 36,000 during the month of February. The unemployment rate was unchanged at 9.7%. A little under 41% of unemployed Americans, or 6.1m people, have been out of work for six months or more. The number of people working part-time because they cannot find full-time work rose by 0.5m to 8.8m.

GDP in the euro area edged up by 0.1% during the three months to the end of December compared with the previous quarter. GDP declined by 2.1% year-on-year. ...

EADS, the European maker of Airbus aircraft, and Northrop Grumman decided not to proceed with their joint bid for a $35 billion contract to build new flying tankers for America’s air force. The pair criticised the Pentagon’s selection criteria, which, they maintain, favour Boeing’s rival project. The process for awarding a contract to replace the ageing fleet of tankers has rumbled on for years. An aircraft based on the design of the Airbus A330 was tendered by EADS and Northrop and chosen by the air force in 2008, only for the decision to be rescinded after an official protest from Boeing over the evaluation of the bids.

EADS reported a loss of €763m ($1.1 billion) for 2009 and will not issue a dividend for the first time. The European aerospace company took a €1.8 billion charge on cost overruns related to its delayed A400M military transport plane. ...

Dozens of bombs in Baghdad, most of them non-lethal, heralded Iraq’s general election on March 7th. Turnout was lower than in 2005 but most Iraqis were determined to exercise their democratic rights. Rival alliances led by the prime minister, Nuri al-Maliki, and by Iyad Allawi, a more secular predecessor, scored well. But preliminary results made it clear that no group will win an outright majority in parliament. It may take months to form a coalition government. See article

Shortly after it was announced that indirect “proximity talks” between Israelis and Palestinians would at last resume under American mediation, America’s vice-president, Joe Biden, who was visiting Israel to bolster the negotiations, was embarrassed by the Israeli interior ministry. It declared that another 1,600 houses would be built for Jewish settlers in Israeli-annexed suburbs of Jerusalem that Palestinians see as part of their hoped-for future capital. See article ...

Emile Fradin, peasant-proprietor of the Glozel hoard, died on February 10th, aged 103

DAWN springs up, and the plough-boy must be at work. So at first light on March 1st 1924 Emile Fradin, with his grandfather, harnessed the cows to till a field called Duranthon. A putain of a field, never ploughed before, strewn with rocks and slippy with clay sloping down into a ravine. The river Vareille flowed at the bottom, scraggy woods crowned the tops, in a four-house hamlet called Glozel in an unknown corner of the Allier 12 miles from Vichy in the very middle of France.

The field was all brambles, and the cattle struggled. One of them, Florence, stumbled into a hole, and the plough crashed sideways. But the hole, as Emile hauled the cow out, turned out to be an underground chamber containing axes, ceramic vases, strange scratched bricks and human bones. Emile smashed a few of the pots to see if there were coins inside; no luck. The glazed bricks that lined the chamber glistened in the sun. ...

One of the scourges of modern life may have been profoundly misunderstood

BEING fat is bad for you. On that, almost everyone agrees. It is just possible, though, that almost everyone is wrong. In fact, getting fat may be a mechanism that protects the body. The health problems associated with fatness may not be caused by it but be another consequence, another symptom, of overeating.

That is the heretical proposal of Roger Unger and Philipp Scherer. Dr Unger and Dr Scherer, who work at the University of Texas, in Dallas, have been reviewing the science of what has come to be known as metabolic syndrome. This is a cluster of symptoms such as high blood pressure, insulin resistance and fatness that seem to increase the risk of heart disease and strokes, late-onset diabetes and liver disease. Metabolic syndrome is found in a sixth of the American population. ...

Body, mind and genes all play a role in influencing the perception of pain

PAIN, unfortunately, is a horrible necessity of life. It protects people by alerting them to things that might injure them. But some long-term pain has nothing to do with any obvious injury. One estimate suggests that one in six adults suffer from a “chronic pain” condition.

Steve McMahon, a pain researcher at King’s College, London, says that if skin is damaged, for instance with a hot iron, an area of sensitivity develops around the outside of the burn where although untouched and undamaged by the iron the behaviour of the nerve fibres is disrupted. As a result, heightened sensitivity and abnormal pain sensations occur in the surrounding skin. Chronic pain, he says, may similarly be caused not by damage to the body, but because weak pain signals become amplified. ...

Advances in brain-to-machine connections

THE possibility of operating a machine using thought control has long fascinated researchers. It would be the ultimate video-game controller, for one thing. On a more practical level, it would help disabled and paralysed people use computers, artificial limbs, motorised wheelchairs or robots. New developments in brain-to-machine interfaces show that such possibilities are getting closer.

For many years it has been possible for people to manipulate relatively simple devices—such as a computer’s on-screen cursor—by thinking about moving them. One way is by implanting electrodes into the brain to measure the electrical activity associated with certain movements. Another uses electroencephalography (EEG), which detects the same activity using electrodes placed on the scalp. In both cases, a computer learns to associate particular brain signals with intended actions. ...

Scouring blogs for useful information

“I NOTICED that the doormat was at a slightly crooked angle. I reached down and moved the mat back into its correct place.” Thus began a recent entry on The dullest blog in the world. Although this publication is something of a satire on the internet’s inane blogs, scientists are finding—to their surprise—that useful information can actually be mined from the tedium of the blogosphere.

Andrew Gordon and his colleagues at the University of Southern California’s Institute for Creative Technologies in Los Angeles have been trying to teach computers about cause and effect. Computers are not good at dealing with causality. They can identify particular events but working out relationships is more difficult. This is particularly true when it comes to using computers to analyse the human experience. ...

The alarming future for Japan's finances

CASSANDRA’S curse was that her warnings would never be believed. Doom-mongers in the Japanese government-bond market have suffered a milder fate: they were just far, far too early.

The trade has seemed obvious for years. Japan has run continuous fiscal deficits and seen its debt downgraded by the ratings agencies. With its bonds yielding between 1-2%, the downside risk of a bearish bet has been limited while the upside potential has looked huge. ...

Insuring crops with a mobile phone

ONE of the things holding back agriculture in developing countries is the unwillingness of farmers with small plots of land to invest in better seed and fertiliser. Only half of Kenyan farmers buy improved seed or spend money on other inputs. Many use poor-quality seed kept from previous harvests. That is understandable when drought or deluge can destroy their crop, but it has the effect of reducing yields. A new microinsurance scheme promises to help.

Kilimo Salama, which in Kiswahili means “safe farming”, uses a combination of mobile phones and 30 automated solar-powered weather stations to provide crop insurance. It has been set up by UAP Insurance of Kenya, Safaricom, Kenya’s biggest mobile-network operator, and the Syngenta Foundation for Sustainable Agriculture, part of a big Swiss agribusiness group. After a successful trial with 200 farmers last year, Kilimo Salama has just been expanded in the hope of attracting 5,000 farmers in western and central Kenya this year. ...

Eurocrats offer up half-baked ideas to prevent a future sovereign-debt scare

NOW that Greece has given in to pressure from its peers for a more austere budget, the euro zone’s policy brass suddenly seems more sympathetic towards its most troubled member. On reflection, perhaps the fault with Greece’s parlous public finances lay not just with its budgetary profligacy but also elsewhere: in the absence of a central euro-zone authority for helping out cash-strapped countries; or with the credit-rating agencies that had unhelpfully downgraded Greek government bonds; or with the amoral speculators who had bet against those bonds and helped drive up borrowing costs.

It was mildly surprising that some of the messages of support came from Germany, where fiscal indiscipline is least tolerated. On March 7th the finance minister, Wolfgang Schauble, floated the idea of a European Monetary Fund (EMF) to act as a lender of last resort to euro-zone countries that could not raise funds in capital markets on tolerable terms. He offered few details about how an EMF would be financed or how it would operate. It would not be a “competitor” to the IMF, based in Washington, DC, though it would seek to police the fiscal policies of lax member countries. ...

The gossip surrounding the president’s chief of staff is getting out of hand

“LET me tell you a story about Rahm Emanuel. I was a congressman in my first eight weeks, and I was in the congressional gym, and I went down and I worked out and I went into the showers. I’m sitting there showering, naked as a jaybird and here comes Rahm Emanuel not even with a towel wrapped around his tush, poking his finger in my chest, yelling at me because I wasn’t going to vote for the president’s budget. Do you know how awkward it is to have a political argument with a naked man?”

So, on television on March 8th, said Eric Massa, a Democratic congressman from New York who faced a spot of bother in Congress after allegations of groping a male staffer and has now resigned. Sources in the White House say the encounter with Barack Obama’s chief of staff never happened. No matter. True or not, the story is in character: Mr Emanuel is famous for being the president’s most pugnacious panjandrum and congressional and media manipulator, and proud of it to boot. Just as Britain’s affable Tony Blair took care to keep a foul-mouthed master of dark arts, Alastair Campbell, at his side, so is it the calling of Mr Emanuel to bludgeon underlings at the White House and former colleagues in Congress into obeying his master’s commandments. ...

The Liberal Democrats prepare for battle—in their own way

NICK CLEGG doesn’t do “What if?” politics, he says. The leader of the Liberal Democrats is politely Delphic in the face of The Economist’s inquiries, in an interview on March 9th, about his plans in the event of a hung parliament after the coming general election. A Labour or Conservative minority government is an option, but he will not rule out (or in) joining a coalition. This reticence is elementary politics: he knows any speculation would strike voters as “the height of arrogance” and hand his bigger rivals an electoral advantage.

It could also reflect an awareness that his vaunted role as kingmaker—ready to crown either Gordon Brown, the recently resurgent prime minister, or David Cameron, his Tory opposite number—may be exaggerated. If either of the two main parties is only a few seats short of an overall majority, they may be able to strike a deal with another, smaller party. If one has many more seats than the other, the Lib Dems would have no choice but to help the larger form a government or precipitate a second election. Only if both Labour and the Tories were well short of the required 326 seats for a majority, and had roughly the same number, would the Lib Dems, who now field 63 MPs, become crucial. ...

You might think that measuring the levels of greenhouse gases in the atmosphere would be a priority. If you did think that, though, you would be wrong

IN NEGOTIATIONS on nuclear weapons the preferred stance is “Trust but verify”. In negotiations on climate change there seems little opportunity for either. Trust, as anyone who attended last year’s summit in Copenhagen can attest, is in the shortest of supplies. So, too, is verification.

Barack Obama was asked when he was in Copenhagen whether a provision by which countries could peek into each others’ assessment processes was strong enough to be sure there was no cheating. He answered reassuringly that “we can actually monitor a lot of what takes place through satellite imagery”. That statement conjured up thoughts of the sort of cold-war satellite system that America used to identify and count Russian missiles. But the president was being a bit previous; at the moment, no such system exists, because America’s Orbiting Carbon Observatory (OCO), a satellite that would have fulfilled the role, was lost on launch this time last year. The purpose of OCO was to work out the fate of carbon dioxide that is emitted by industrial processes but does not then stay in the atmosphere—about 60% of the total. ...

Some scent compromise; more fear a looming showdown

IN THAILAND politics has long been about compromise rather than conviction. Political parties run on expediency, not ideology, which makes it possible to cobble together all manner of oddball coalitions. But in recent years pragmatism has given way to more rigid loyalties. Rival camps rally their base with fiery talk of an all-out struggle for the nation’s soul, all the while tugging relentlessly at its seams.

Might compromise yet make a comeback? Some scented a whiff of detente on February 26th, when the Supreme Court ruled on the family fortune of the former prime minister, Thaksin Shinawatra. But that still seems wishful thinking. The nine judges found Mr Thaksin guilty of abusing his powers while in office to favour Shin Corp, his family-owned telecoms group, which was sold in January 2006 to Temasek, a Singaporean sovereign-wealth fund. The court decided to seize $1.4 billion of the $2.3 billion in proceeds from that sale, which had been frozen after the army deposed Mr Thaksin in September 2006. ...

Italy’s biggest telecoms firm faces an uncertain future

THERE could not be a better warning of the risks of getting involved with Italy’s national phone company: in late February Telecom Italia said an investigation into alleged large-scale tax fraud and money-laundering involving Sparkle, its wholesale voice and broadband unit, and a rival broadband firm, Fastweb, had forced it to delay the announcement of its 2009 results by a month. The pair are thought to have become embroiled in a scam orchestrated by the Calabrian mafia. Meanwhile, discussions about Telecom Italia’s future are coming to a head, with Telefonica, Spain’s leading operator, expected to play a crucial role.

In 2007, in the aftermath of two leveraged buy-outs which left Telecom Italia with a massive burden of debt, the government arranged for the Benetton family, Telefonica and a group of local financial institutions—Mediobanca, Intesa Sanpaolo and Generali—to take control of the operator. Telecom Italia’s controlling shareholder at the time, Pirelli, had been in serious talks about selling to America’s AT&T and Mexico’s America Movil, but the government had wanted to keep Telecom Italia in national hands. ...

Under pressure, GM is now putting up half the money needed to rescue Opel

THE mood at this week’s Geneva motor show, if not exactly upbeat, was in contrast to the fear that gripped the event last year. Europe’s car market is expected to shrink in volume terms by around 10% in 2010 as the scrappage schemes that helped underpin demand for smaller cars last year are withdrawn. But slowly reviving sales of larger, more profitable vehicles should underpin revenues. Moreover, the actions that carmakers have taken to strengthen their balance-sheets are working: most are expecting to generate cash this year. The big exception is Opel/Vauxhall, the European unit of General Motors.

On the first day of the show, GM sprang a surprise with the news that it was tripling to €1.9 billion ($2.6 billion) in loans and equity the contribution it was prepared to make to its original €3.3 billion plan for restructuring Opel. It was an admission both of how fragile Opel remains and how cross the German government still is with GM. ...

The corporation will become smaller, but no less potent

ON MARCH 2nd the BBC did something unprecedented: it volunteered to cut itself down to size. The broadcaster wants to abolish two digital radio stations, shrink its website and spend less on imported shows and sport. Mark Thompson, the director-general, says he will abandon the goal of churning out more and more programmes to suit every taste. Commercial media firms, which have been complaining for years about the BBC’s heft, did not know what to make of it. Is the world’s first, and mightiest, national public broadcaster turning modest?

Not a bit of it. The report signals an important retreat from the policy of all-out expansion that has guided the BBC in recent years. But it is a pragmatic, limited retreat that will allow the corporation to marshal its forces elsewhere, in products and places where it can be more effective. “Every organisation goes through phases of expansion and consolidation,” says Claire Enders, a media analyst. “This is the consolidation phase.” ...

Italy’s prime minister becomes an unlikely crusader against corruption

LAUGH or cry? On March 1st Silvio Berlusconi’s cabinet approved an anti-corruption bill just two days after the resumption of the prime minister’s trial for allegedly bribing a court witness.

David Mills, the British lawyer who was the witness, had already been convicted of accepting a $600,000 bribe. Mr Mills took the money for withholding evidence at two trials in the 1990s in which his client was a defendant. But on February 25th his offence was extinguished by Italy’s highest appeal court. The judges decided it had been committed three months earlier than previously reckoned and was thus covered by a statute of limitations. The time limit had been shortened by Mr Berlusconi’s previous government, one of several measures pushed through that make it exceptionally hard to secure a conclusive conviction for any white-collar crime in Italy. ...

Adverts that know where you are could be lucrative—not to mention controversial

THE initiative was designed to draw attention to a serious issue and it achieved its goal. Pleaserobme.com is a simple website that publishes a live feed of posts that appear on Twitter, a microblogging service, showing that the authors are somewhere other than their home. Many of the tweets come from users of Foursquare, a service that lets people publicise their location so their friends can see where they are—and businesses can aim advertising at them. Pleaserobme.com’s creators, who also alert the potential victims, say they simply wanted to highlight the fact that users of so-called location-based services often give away information a burglar would love to have.

Although the site is a salutary reminder of the perils of “oversharing”, it is unlikely to deter people from signing up to location-tracking sites. These are still dwarfed by the likes of Twitter and Facebook, but networks such as Foursquare, which has 500,000 users, and Loopt, which boasts over 3m, have been growing fast. They have also attracted cash from venture capitalists who reckon they could become money-spinners. A recent forecast by Juniper Research predicts that global revenues from location-based services could soar to $12.7 billion by 2014, up from $3 billion last year. ...

Worries about renewed overheating

DURING Tet, the lunar new year holiday, money is everywhere in Vietnam. It is dished out to children, gambled in roadside card-games, and splurged on gifts, feasts, and trips to home villages. This leads to an annual bump in inflation. And this year’s spike in the consumer-price index, which rose by 2% in February, seemed bearable at a time of rapid growth. GDP grew by 5.3% last year. It came, however, among some more worrying signs.

On February 10th, just before Tet, the central bank devalued the currency, the dong, by 3.4%, following a devaluation of 5.4% in November. The aim was to entice holders of dollars to buy dong. A dollar shortage has been starving Vietnam’s exporters of the currency they need to purchase imported parts and materials. ...

Politicians vie for poor-Muslim votes

FIFTEEN years after he migrated with his family to the bright lights of Delhi, Muhammad Naushad has little to show for it. An illiterate 20-year-old weaver, he earns 2,000 rupees ($43) a month, half of which he sends to his mother in the poor state of Bihar. Amid the evening babble of Nizamuddin, a fly-blown Muslim quarter in the heart of India’s capital, Mr Naushad says his only ambition is to get a better job. It is hard to guess what that might be.

He is all too typical of India’s 160m Muslims. Found mostly in its northern and eastern states, poor giants such as Uttar Pradesh (UP), Bihar and West Bengal, they are among the country’s poorest and least educated people. According to a 2006 government-commissioned report, Muslims are almost as badly off as dalits, Hinduism’s former “untouchables”—a finding made tragic by the dashed hopes it represents: many Indian Muslims once converted from Hinduism to escape that reviled low-caste status. ...

The defining battle of Lee Myung-bak’s presidency nears its climax

ODDLY for a politician, South Korea’s president, Lee Myung-bak, has never hidden his loathing of politics. During his successful presidential-election campaign he vowed to “take politics out of Youido”, a reference to the island on the Han river that houses the National Assembly in Seoul. Mr Lee’s hero is the dictator Park Chung-hee, architect of South Korea’s rise from basket-case to industrial powerhouse. Much like him, Mr Lee believes politicians are impediments to his country’s progress. Unlike Park, however, Mr Lee has to operate in a robust democracy. He is making rather a hash of it.

In a bitter twist of fate, his nemesis is Park’s daughter, Park Geun-hye. She was the rival Mr Lee defeated in 2007 to become the presidential candidate of the Grand National Party (GNP). The two have never been reconciled. Mr Lee believes his election entitled him to rule without opposition within the GNP. But Miss Park has never accepted her defeat and still commands a group of as many as 40 loyalists in parliament. ...

Rick Perry and Bill White move from the primary to the real election

THERE’S no sense changing horses in midstream. On March 2nd Texan voters decided that Rick Perry, already in his tenth year as governor, will be the Republican nominee once more. “Looks like he’s going to keep that title for quite a while,” said Granger Smith, a country singer, before resuming his honky-tonk song at Mr Perry’s election-night party. Supporters ate piles of beef brisket and toasted marshmallows at the fire pit. Not even a third of the votes were in when Kay Bailey Hutchison, the state’s senior senator, called Mr Perry to concede. The governor ended up with 51%, leaving Mrs Hutchison with 30% and a third candidate, Debra Medina, with 19%.

Party bosses dread primary fights, which often leave the victor poor and bloodied for the actual election. But intra-party warfare can be productive if it forces the candidate to stake his ground or sharpen her message. Watchers thought the Texas gubernatorial primary could turn into a battle for the soul of the Republican Party, a contest between Mr Perry’s come-and-take-it conservatism and Mrs Hutchison’s more genteel, pearly style. As it turned out, the primary was not such a crucible. In fact, it was barely a contest. ...

A new attempt to save the most vital workers in the orchards

AT THIS time of year Gordon Wardell loves to stand amid the almond blossoms in California’s San Joaquin valley, listening to the “low-pitch, warm, happy hum” of millions of bees. But the bees are not as happy as they sound, which is why Mr Wardell, who has a PhD in entomology and is a de facto bee doctor, is here.

More than 80% of the world’s almonds are grown in California and, to pollinate them, the 7,000 or so growers hire about 1.4m of America’s 2.3m commercial hives. Thousands of trucks deliver the hives in February—from Maine, Florida, the Carolinas and elsewhere—and will soon pick them up again. The bees’ job is to flit from one blossom to the next, gorging themselves and in the process spreading the trees’ sexual dust. ...

How to predict the consistency of snow

“THE wrong type of snow” became famous as a lame excuse in Britain in February 1991 when, caught out by a cold snap, British Rail blamed severe disruption to its services on problems clearing unusually soft and powdery snow from its tracks. But British Rail had a point. There are, indeed, different types of snow—and people who live in mountainous areas, or visit to ski, like to know which ones to expect. Forecasting what sort of snow will fall is not easy. But a pair of researchers at the University of Utah think they have cracked the problem.

Jim Steenburgh and Trevor Alcott carried out their research in the Alta ski area, which is about 3,000 metres (10,000 feet) up in the Wasatch range. Good record-keeping at the resort, including precipitation measurements that are taken automatically every hour, allowed them to analyse 457 snowfalls that took place between 1999 and 2007. ...

A difficult time for a fund-raising spree

Correction to this article

A SENIOR World Bank official describes its efforts to secure an additional $3 billion-5 billion in paid-in capital as a “once-in-a-generation increase to deal with the effects of a once-in-a-generation crisis”. The bank agreed to lend $32.9 billion to poor countries in the year to June 2009, two-and-a-half times the previous year’s outlay of $13 billion. If it carried on at this rate, Robert Zoellick, the bank’s president, warned in October, its lending would face constraints by the middle of this year. ...

Should every child receive a bank account at birth?

YOU come into the world with nothing, the saying goes. A new campaign proposes to change that by giving every newborn child in the world an online bank account with $100 in it. The aim of the FinancialAccess@Birth (FAB) campaign is to do something about the fact that half the world’s population has no access to mainstream financial services. This is a huge handicap, exposing people who are typically already on the poverty line to risks that wealthier folk can manage through savings or insurance, and leaving them to pay unregistered moneylenders through the nose.

The campaign is the brainchild of Bhagwan Chowdhry, a finance professor at the University of California, Los Angeles, and is starting to attract some prominent supporters, including Peter Singer, a well-known philosopher, and Vijay Mahajan, an Indian social entrepreneur. ...

Countries compete to weaken their currencies

ONCE upon a time, nations took pride in their strong currencies, seeing them as symbols of economic and political power. Nowadays it seems as if the foreign-exchange markets are home to a bunch of Charles Atlas’s 97-pound weaklings, all of them eager to have sand kicked in their faces.

First the dollar took a battering in 2009 when the return of risk appetite, and the ability to borrow the currency at very low rates, sent money flowing out of America for use in speculative “carry trade” transactions. Then the euro got pummelled because of concerns about the euro zone’s exposure to sovereign-debt problems in southern Europe. Finally sterling hit the canvas this week because of concerns about the British government’s deficit and the policy gridlock that may result from a hung parliament after a general election expected in May. ...

Countries don’t like bad news about their creditworthiness

WHEN the subprime crisis broke in 2007, credit-rating agencies were among the first groups to take the blame. Critics argued that investors had drawn false comfort from the AAA ratings that the agencies handed out on complex packages of mortgage-related debt. Furthermore, the raters were hamstrung by the conflicts of interest inherent in being paid by issuers to assess their bonds. Never again, it was solemnly proclaimed, should the markets rely on the word of the agencies.

Now that investor attention has shifted to sovereign risk, the three big agencies (Fitch, Moody’s and Standard & Poor’s) once more find themselves at the centre of the action. Upgrades of sovereign debt exceeded downgrades in every year between 1999 and 2007. That has changed as a result of the financial crisis (see chart). ...

The central bank loses a vice-chairman but starts to regain its standing

THE Federal Reserve, accused by critics of monetary and regulatory malpractice, has seen its standing plummet. The House of Representatives has passed one bill to audit its monetary decisions and proposed others to strip it of regulatory duties. Almost a third of the Senate voted against confirming Ben Bernanke to a second term as chairman.

It appears, however, that its rehabilitation has begun. As part of negotiations on a financial-reform bill, Chris Dodd, chairman of the Senate Banking Committee, is considering a proposal that would let the Fed retain most of its regulatory duties. Mr Dodd originally wanted to take oversight of banks away from the Fed and other regulators and give it to a new body. He wanted to hand oversight of consumer protection to another new creation, the Consumer Financial Protection Agency. ...

The insurance industry’s biggest-ever acquisition has prompted the largest-ever rights issue: AIG and Prudential are both playing for huge stakes

INSURANCE is a pretty stodgy business. This week’s agreement by Prudential of Britain to buy AIG’s Asian life-insurance operations, AIA, is anything but. If the $35.5 billion deal goes through—and given the convulsions in both companies’ share prices, that is not certain—it will radically alter both Prudential and AIG and will provide a closely watched test of what can and cannot be done by financial firms as they try to build Asian franchises.

On paper, the transaction would transform Prudential into the region’s dominant insurance company. It will have a leading, if not the leading, presence in 15 big markets with a vast sales force offering critical health and investment products to a population that is becoming wealthy enough to appreciate them. Assuming the transaction goes through successfully, the proportion of sales Prudential generates from Asia should eventually expand from 30% to 80%. Prudential is paying a fraction of what AIA would have gone for prior to AIG’s implosion. It is a remarkable opportunity at a rather pedestrian price. ...

Does India’s government pay any heed to its economic advisers?

ECONOMISTS like nothing better than giving advice to governments. But why do they, of all people, imagine that anyone listens? In their models economists assume that governments, like other actors in the economy, have objectives of their own, which they seek to advance as best they can. They are not disinterested servants of the public good. So governments will ignore a recommendation from their advisers unless it suits them, in which case they would have done it anyway.

In his book “Prelude to Political Economy”, published in 2000, Kaushik Basu of Cornell University wrestled with this paradox. “If, seeing high unemployment in an economy, a person… advises entrepreneurs to employ more labourers, or consumers to demand more goods, this typically causes economists to share a laugh.” And yet economists routinely advise governments to act in the economy’s interests rather than their own. ...

Signs of a crackdown on the oligopolists who rob the poor

MEXICO’S attempts to suppress narcotics gangs have gained worldwide attention but, so far, had limited success. Now its authorities are turning their fire on another sort of drugs cartel. On February 23rd the country’s antitrust regulator said it had uncovered schemes involving six firms to rig the bidding to provide insulin and other supplies to the health service. In an economy dominated by monopolists and oligarchs, the ruling—the regulator’s first big cartel-busting action in its 17-year existence—could prove to be a watershed, even if the companies involved eventually win their appeals.

The alleged cartel’s behaviour seemed quite blatant. In any given tender, every bidder except one would offer prices within a 1.5% range, with the winner offering slightly less. In subsequent purchases of the same product, the pattern would be the same—except that a different firm would make the winning bid, until each one had taken its turn. The government reckons such collusion cost taxpayers over $46m between 2003 and 2006. The companies in question continue to deny wrongdoing, arguing that they were each independently using the health service’s stated maximum price as a reference. ...

Apple uncovers poor conduct at some of its contractors

APPLE is renowned for the control it exercises over every element of its business, from design to marketing. The resulting products, to its fans, verge on perfection. But there are clearly some steps in the manufacturing process that it does not supervise so closely. According to a report the firm released on February 23rd, the treatment of workers at several of its contractors in various countries broke both local laws and Apple’s own standards. Such problems are thought to be rife at Western firms’ suppliers in China in particular, but are seldom brought to light. Even Apple’s account raises more questions than it answers.

Apple says some of its suppliers hired underage employees, dumped hazardous waste illegally, made staff work unreasonable hours and paid less than the minimum wage. They also violated Apple’s own standards by discriminating against pregnant women, providing inadequate safety equipment and imposing onerous recruitment fees on workers. Remedial steps, the company says, have already been taken. But it does not specify where these events occurred or how many people were affected. Over the past three years the firm has increased the number of facilities audited each year from 39 to 102. But how much of its production this represents is not disclosed. The report does, however, observe that Apple’s suppliers are good at protecting its intellectual property, if not their workers’ rights. ...

Fake goods are proliferating, to the dismay of companies and governments

IMITATION is supposed to be the sincerest form of flattery, but that is not how most brands see it. On March 1st Philip Morris, a tobacco giant, sued eight American retailers for selling counterfeit versions of its Marlboro cigarettes. Thanks to the rise of the internet and of extended international supply chains, and more recently, to the global economic downturn, counterfeit goods are everywhere. Fake Porsches and Ferraris zoom along the streets of Bangkok. A German bank has discovered an ersatz gold ingot made of tungsten in its reserves, according to a German television channel investigating persistent reports that many of the world’s financial institutions have been similarly hoodwinked. NASA, America’s space agency, has even bought suspect materials.

Counterfeiting “used to be a luxury goods problem”, says Therese Randazzo, who is in charge of protecting intellectual property at America’s customs service. Now people are trying to traffic counterfeit items that have a “wider effect on the economy”, she says, such as pharmaceuticals and computer parts. A new study by America’s Department of Commerce shows that fakes have even infiltrated the army. The number of counterfeit parts in military electronics systems more than doubled between 2005 and 2008, potentially damaging high-tech weapons. ...

Despite a few recent appointments, there are good reasons why joint bosses are a rarity

AS ANYONE who has tried knows only too well, riding a tandem bicycle, with two seats and two sets of pedals, takes some getting used to. Even a small misunderstanding between the riders over the direction in which they want to go can cause the bicycle to wobble worryingly or spin out of control. Trying to steer a large company in tandem requires a similarly delicate balancing act, because a lack of co-ordination between joint chief executives can destabilise the business. Yet in spite of such concerns, two well-known companies have recently plumped for dual leadership.

One is SAP, a German software giant, which on February 7th bid auf Wiedersehen to its boss, Leo Apotheker, and replaced him with two “co-CEOs”: Bill McDermott, the company’s head of sales, and Jim Hagemann Snabe, its head of product development. The other is MySpace, an ailing social network owned by News Corporation, which a few days later jettisoned its boss, Owen Van Natta, and replaced him with two “co-presidents”: Mike Jones, the firm’s chief operating officer, and Jason Hirschhorn, its chief product officer. ...

The Conservative donor ends a decade of speculation

DAVID CAMERON’S fluency deserts him when he is forced to talk about Lord Ashcroft. The Conservative leader rarely sounds as ill at ease as he did on March 2nd, when he was asked to respond to the admission by the Tories’ deputy chairman that he is non-domiciled in Britain for tax purposes. Lord Ashcroft (shown below) may have clarified matters because the government, prodded by a freedom of information request, was about to.

The vexed question of his tax status goes back a decade, to when he got his wish and became a peer of the realm. He had twice been rebuffed due to concerns that he spent much of his time in Belize, a former British colony. On March 23rd 2000 he gave a written assurance that he would “take up permanent residence in the UK again” by the end of that calendar year. ...

The currency will remain vulnerable to worries about a hung parliament

THE pound came under fierce assault this week, panicking many in the markets. On March 1st it lurched down against the dollar by 2%. Although it then regained a little ground, sterling has in fact been sliding for weeks. Since the end of January it has lost 6% against the dollar and over 4% against even the troubled euro. This latest plunge makes sterling the weakest of the main currencies this year.

It is wrong to blame these jitters mainly on Britain’s economy, fragile though it remains. The recent signals are still mixed. Revised figures out on February 26th showed that the green shoots sprouting in the fourth quarter of 2009 were a bit sturdier than first reckoned. GDP grew by 0.3%, rather than the initial glum estimate of 0.1%. The growth was from a lower base, though, and the cumulative loss of output to the trough in the third quarter was 6.2% rather than 6.0%. A business survey on March 1st showed that manufacturing did well in February, with a promising rise in new export orders, while another on March 3rd revealed a sharp increase in the services sector. Yet mortgage approvals for home purchase dipped in January. ...

Devolved Scotland goes its own way

NOT so long ago, Alex Salmond, Scotland’s cocky first minister, ebulliently predicted that his Scottish National Party (SNP) would win 20 of Scotland’s 59 seats at Westminster in the general election due by June 3rd. That was in 2008, when he was still riding the wave of the SNP’s spectacular win in the 2007 elections to the Scottish Parliament; today that target looks well out of reach. The oddity of Scottish politics is not that the Nationalists must trim their ambitions (given the worst economic conditions in decades and the prospect of fiscal stringency for years to come, any government, even a minority one like Mr Salmond’s, expects some loss of enthusiasm). It is that the Conservatives are struggling so to take up the slack.

Opinion polls give varying versions of the political temperature north of the border. A YouGov survey on February 28th predicted 21% of the vote for the SNP; the next day an Ipsos MORI poll put the figure at 30%. In both surveys, however, the Tories skulked in behind the Nationalists but above the Liberal Democrats, at 20% and 17% respectively, while Labour was well in front at 38% and 36%. Cheering though Ipsos MORI was for Mr Salmond, that support would still yield him only ten seats, three more than his party has at present. Miserably for David Cameron’s Tories, they would pick up only one seat, bringing their grand Scottish total to two. ...

Dissatisfaction among the faithful followers of Manchester United

EIGHT minutes into the final of the Carling Cup on February 28th, the referee held up play for a few seconds. No goal, no injury: Phil Dowd merely wanted the players to burst the yellow and green balloons littering the pitch. These are the colours sported by Manchester United fans protesting against the Glazer family, the Americans who have owned the club since 2005. United, England’s (and possibly the world’s) most popular football club, usually play in red and white, but yellow and green were worn by their 19th-century forebears, Newton Heath, and as away kit in the early 1990s. Wear a scarf in these colours or blow up a few balloons and you show where your loyalties lie.

A well-heeled group of fans, dubbed the Red Knights, want to put their money where their scarves are and bid for the club. Their inner circle includes Jim O’Neill, chief economist of Goldman Sachs and a former director of United, and Paul Marshall, founder of Marshall Wace, a hedge fund. They are allied with the Manchester United Supporters Trust (MUST), which has been campaigning for a takeover by fans. MUST’s membership is rising by several thousand a day. By March 4th it had topped 100,000—24,000 more than can fit into Old Trafford, United’s stadium. ...

Tories and Scot Nats get down and dirty

BOASTING the headquarters of two of Scotland’s biggest companies (Stagecoach, a bus firm, and Scottish and Southern Energy, a utility), surrounded by rich farmland and the country estates of aristocrats and wealthy city-dwellers, Perth looks as though it should be comfortable Conservative territory. But since 1995 and a by-election at the height of the Tories’ unpopularity, the town and county constituency, which has elected a lord, a knight, a colonel and even a duchess, has embraced the left-leaning Scottish National Party (SNP).

Perth’s MP, Pete Wishart, says he has held on to the seat through vigorous campaigning on local issues, such as persuading the local council, run by the SNP and Liberal Democrats, to rescind plans to build an incinerator in the town. “That type of public engagement has been the focus of my work,” he says. ...

The Tories’ unexpected weakness may yet haunt Labour: what if the party had ditched Gordon Brown?

BOTH were ageing bruisers facing impossible odds. Both were pitted against younger men widely expected to obliterate them. Both were pulverised in the early stages of the contest, before their adversaries’ stamina seemed to wane…

All right, on the face of it leaden Gordon Brown may not have much in common with fleet Muhammad Ali. But it has begun to seem possible that Mr Brown might just stage a recovery as unlikely as Mr Ali’s in the famous “rumble in the jungle” in Kinshasa. In 1974 Mr Ali was pounded by the fearsome George Foreman, but rallied to knock him out. Is it conceivable that in 2010 Mr Brown might bounce off the ropes to deny David Cameron his victory—or even, amazing as it sounds, win himself? ...

The ramifications of a likely no vote may not be pleasant

ICELAND’S president is usually an apolitical and little-known figurehead. But Olafur Ragnar Grimsson has become a national hero for his refusal to sign a law passed narrowly in late December by the Althingi, Iceland’s parliament, to repay Britain and the Netherlands. The British and Dutch governments had felt obliged to bail out their depositors in Icesave, a bust internet operation owned by Landsbanki, a failed Icelandic bank, and they now expect Iceland to reimburse them. But thanks to the president’s obduracy, the law is going to a referendum on March 6th, and it seems certain to be rejected by a huge majority.

The voters and the president will doubtless rejoice, but the aftermath of a negative vote may not be good for either the country or its government. Johanna Sigurdardottir, the prime minister, leads a coalition that was shaky before the vote and could yet collapse altogether. Even more worrying is the knock-on effect for Iceland’s $4.6 billion IMF programme. The fund says that this should not depend on the Icesave dispute. But the Nordic countries that are offering bilateral loans in support of the IMF’s rescue package are refusing to go ahead. Without their backing, the IMF deal is frozen. The financial pressure is mounting. To satisfy its creditors, Iceland must find some $2 billion in 2011 and $500m in 2012. Moody’s has given warning that the dwindling chances of a deal over Icesave may lead it to join other rating agencies in downgrading Iceland’s debt to junk. ...

United in the cause of undermining Russian pipeline monopolies

DOES “Central Europe” exist? It depends on the political climate. Amid worries that France and Germany are stitching up the European Union’s decision-making, the Czech Republic, Hungary, Poland and Slovakia are reviving their ties and pushing shared ideas on energy security and relations with the east.

The alliance began in Visegrad, a Hungarian town, in 1991, when even the EU’s waiting-room seemed distant. Once dreams of joining Western clubs became reality, co-operation all but dissolved. New members shunned anything that made them seem different from the rest. Squabbles, most recently over the treatment of ethnic Hungarians in Slovakia, dominated Visegrad meetings. Some even suggested winding the club up. ...

More high-level captures point to a systematic weakening of ETA

ANOTHER big fish from the violent Basque separatist group, ETA, was caught this week. On February 28th Ibon Gogeaskoetxea, ETA’s military boss, was arrested at a country cottage in Normandy, in north-west France. Two of ETA’s experienced assassins, Jose Ayestaran and Beinat Aginagalde, were taken with him.

The arrests offer further proof of ETA’s decline. Mr Gogeaskoetxea, who once tried to kill King Juan Carlos, is the fifth military chief to be captured in just two years. He was in charge for only ten months. Mr Ayestaran and Mr Aginagalde were apparently preparing a kidnapping and bombing campaign in Spain. Several remote-controlled bombs were found. This is the third time in recent weeks that the police have foiled attempts to send ETA terrorists into Spain. ...

More arrests and court cases revive bad Balkan memories

FROM one end of former Yugoslavia to the other, people are worrying about justice. On March 1st Radovan Karadzic, the former Bosnian Serb leader, opened his defence at his war-crimes trial in The Hague. British police arrested Ejup Ganic, a wartime Bosniak (Bosnian Muslim) leader, at Heathrow airport at the request of Serbia. And in Spain a Montenegrin alleged to have murdered and raped in Sarajevo during the war was arrested at the request of the Bosnians.

Since the Karadzic arrest in 2008, only two Serbs have been left on the wanted list of The Hague war-crimes tribunal. The most important is Ratko Mladic, who led Bosnian Serb forces during the war and is believed to be hiding somewhere in Serbia. Serbia’s president, Boris Tadic, has been trying to persuade the Serbian parliament to pass a resolution to condemn and commemorate the murder of up to 8,000 Bosniaks by Bosnian Serb troops in Srebrenica in 1995. ...

Last week's story on the Netherlands said that calls for a cordon sanitaire on Geert Wilders's Freedom Party would not go down well with the 10% of the voters who are foreign-born. It meant to say that isolating the party would not go down well with its many voters (very few of whom are foreign-born). Sorry.

...

Most Europeans are doing better than they think, and can take more fiscal austerity

IMAGINE two cousins. One comes from continental Europe, France, perhaps. A hypochondriac, his life is filled with vague complaints—stress, fatigue and mysterious aches—for which he takes fistfuls of pills. He is sure that strenuous exercise is a menace to his fragile health. The other cousin is American (or British, take your pick), a risk-taker devoted to extreme sports. Shunning doctors, he feels as strong as an ox, although he has been drinking and overeating for years. Eventually, in 2008, he succumbs to a massive heart attack while out jogging. As far as his French cousin is concerned, a deep truth has thus been confirmed: that exercise is bad for you.

Substitute free-market competition for exercise, and you have the European debate over the financial crisis. Sober discussion about how to manage the instability of markets is giving way to a simpler fable. Too many voters now believe that the credit crunch has proved that globalisation is bad for you. And too many politicians are happy to endorse such views. In a televised meeting with voters in January the French president, Nicolas Sarkozy, denounced Renault for planning to build a new car in Turkey, saying “I do not accept that cars sold in France should be manufactured abroad.” ...

Struggling to cope with a dearth of brides

BALJEET SINGH dandles his baby daughter on his knee, a picture of contented fatherhood. Last year the 37-year-old Hindu truck driver became the envy of his friends when he married a 16-year-old Muslim from Assam, in India’s north-east. The unorthodox marriage suited both. Mr Singh’s romantic life had become a casualty of India’s preference for boy babies, which in his state, Haryana, has led to the most skewed sex ratio in India: 116 to 100, according to the 2001 census, compared with a national average of 108. By the age of 30, says Mr Singh, he had given up hope of finding a girl from his own village, Nandgaon, or from his state. His wife, Sona Khatum, comes from an impoverished family in one of India’s poorest states, though village rumour mutters that she may be an illegal migrant from Bangladesh. Mr Singh paid handsomely. “Here, I’ve always been made comfortable,” she says shyly, from beneath her veil.

Ms Khatum is one of an increasing number of brides imported into Haryana, one of India’s richest states. The Red Cross Society of India, which campaigns against gendercide in the country, reckons that at least 100 brides have been brought into Bhiwani, one of Haryana’s 21 districts. Nandgaon, a village of some 1,700 people, most of them farmers, is a microcosm of bachelor angst. The Red Cross reckons that at least 100 bachelors have passed the age range thought ideal for marriage, which is 20 to 25. At least five have married women from other states, and “lots of my friends ask me, how can I find one?” says Mr Singh. ...

To a sitting room, mobile telephone or supermarket screen near you soon

ON MARCH 1st China Daily got its biggest makeover since the newspaper was launched in 1981 as China’s first English-language daily. As well as a new look, the paper is boosting the number of its foreign correspondents. With a new investigative-reporting feature, China Daily said that it was aiming to “set the news agenda instead of just follow it”.

So far, this agenda seems unlikely to set foreign pulses racing. Next to this bold new feature China Daily splashed an “exclusive” interview with the foreign minister, Yang Jiechi, under the headline “FM: China is doing all it can in foreign affairs”. Still, the makeover marks a departure for the vapid broadsheet. And China Daily is only the latest Chinese media organ to revamp itself in what President Hu Jintao calls an “increasingly fierce struggle in the domain of news and opinion”. ...

After a hard-won battle, President Yudhoyono has a chance to start again

FEZ-WEARING members of Indonesia’s parliament called each other transvestites, yelled and scuffled. Outside, the police turned water cannon on protesting students. The climax this week of a parliamentary investigation into a government bail-out of a private bank in 2008 superficially recalled 1998, and the chaos surrounding the fall of the dictator Suharto. But this time the stakes were smaller; the government of Susilo Bambang Yudhoyono was never going to fall. At issue was how well it could govern.

The Bank Century scandal had riveted the press for months. But most of Indonesia’s 240m people have preferred chat shows and Hollywood movies, content that the economy has been doing well, growing by 4.5% last year. Inflation last year was just 2.8%, unemployment is down, and consumer confidence booming. That, however, did not deter Mr Yudhoyono’s enemies from plotting to embarrass him and paralyse his government. They managed to do both. Yet he still enjoys an approval rating of about 75%. ...

Use solar power, not firewood

IT MIGHT seem callous in the aftermath of 230,000 deaths in January’s earthquake to talk about the opportunity offered by the rebuilding of Haiti. But merely restoring the most benighted country in the Americas to its previous misery would be culpable. Among the opportunities is to improve Haiti’s energy infrastructure.

Lacking domestic fossil-fuel supplies, Haiti was spending some $500m a year importing them. Its energy infrastructure was dismal, most Haitians having no access to electricity. Of those who do, perhaps half are hooked up illegally. The grid lost about half the generated energy, and missed out swathes of the country. ...

A familiar mistrust descends

THE Cubans who hawk second-hand books from makeshift stalls in Havana’s Plaza de Armas were thrilled when Barack Obama was elected. Could millions of American tourists be far behind, they wondered. Word went out that the vendors were in the market for pre-revolutionary American paraphernalia such as Life magazines and Coca-Cola signs or newspapers from the Spanish-American War. But hopes that Mr Obama and his Cuban counterpart, Raul Castro, would end a 50-year freeze in relations between their countries have proved wildly premature.

Mr Obama began with some gestures. Last April his administration lifted curbs on visits and remittances by Cuban-Americans imposed by George Bush. It also said that it would allow American firms to provide telecoms services to Cuba. It quietly switched off an electronic ticker-tape on the wall of the United States’ Interest Section in Havana which had relayed news (propaganda, complained the Cubans, who erected a barricade to obscure it). The administration also restarted talks on practical issues, such as migration, that had been halted under Mr Bush. ...

A richer, better organised country fared less badly than Haiti. Even so, the government struggled to respond to the massive scale of the destruction

THE mood in Chile over the past few days has swung as violently as buildings did in the early hours of February 27th. The terror of the massive 8.8-magnitude earthquake—so intense that many still cannot bear to talk about it—quickly turned to relief, at least in the capital, Santiago, which escaped relatively unscathed. That was tribute to the quality of the country’s building standards. Even the sheet-glass of modern office and apartment blocks was unbroken, despite the alarming swaying they suffered. But farther south, where the devastation and disorder was much more severe, anger set in.

By March 3rd the deaths of over 800 people had been confirmed, but officials said that several hundred remained missing. Worst hit were a string of towns and villages on the coast either side of Concepcion, the country’s second city, as well as the remote Juan Fernandez islands. The earthquake triggered several giant waves that swept away thousands of houses. The victims included fishermen and farm workers—some of Chile’s poorest people—as well as campers and backpackers who had been enjoying the last week of the country’s summer holidays. ...

Barack Obama unveils his final strategy for pushing health reform

“EVERYTHING there is to say about health care has been said and just about everyone has said it…now is the time to make a decision.” So declared President Barack Obama on March 3rd to an audience of doctors and nurses gathered at the White House. After a year of dithering, he is now leaping into action.

His speech contained no policy surprises, but is worth noting for three reasons. First, he instructed congressional Democrats to embrace several Republican proposals—for example, modest measures to reform malpractice laws and fight insurance fraud—that were put forward during last week’s bipartisan summit on reform. Second, he made it clear that he now wants Democrats to forge ahead with whatever procedural manoeuvres are necessary to pass his health bill. And finally, he declared that he wanted to see “an up-or-down vote” in the “next few weeks”. ...

The Supreme Court is poised to strike down gun controls

IT HELPS to have a sympathetic plaintiff. Otis McDonald is a 76-year-old African-American grandpa. His folks were sharecroppers in Louisiana. He grew up hunting squirrels, racoons and possums. He served in the army and worked hard all his life. And now he lives in a rough part of Chicago, where teenage thugs have broken into his modest house three times, pinched his TV and threatened to kill him. He wants a handgun to defend his family. And the city of Chicago says he can’t have one.

Now a gun-grabbing liberal might point out that Mr McDonald already owns a hunting rifle, which was one of the things those thugs broke into his home to steal. But Mr McDonald will have none of this. The advantage of a handgun is that the bad guys don’t know whether or not you’re packing heat. So they might think twice about messing with you. ...

Gradually, the story emerges of what happened on the Danziger bridge

A WEEK after Hurricane Katrina struck New Orleans, on September 4th 2005, the police shot six civilians as they were crossing the Danziger bridge across the Industrial Canal. Two were killed; the others were seriously wounded, one losing an arm. On February 24th a high-ranking officer with a long police career pleaded guilty to orchestrating a vast cover-up of what took place there. It is likely to be only the start of a traumatic reckoning for the city’s long-troubled police department.

Police officers at first portrayed the shoot-out as a heroic victory by lawmen over the lawless. The official version was that some of the civilians involved had been shooting at the police, but the police rallied and justice prevailed. That story was quickly contested. No guns were collected from the scene, and the victims said the police’s claims were bunk. They insisted they were ambushed by officers, though some also mentioned a group of teenagers near the bridge shooting at passers-by. One of the dead, shot in the back by police, was retarded, and the other victims were generally respectable citizens. ...

A late, and philosophical, return to political campaigning

THE dark, floppy hair has gone, and the face is a little rounder, but otherwise Jerry Brown, at 71, looks much as he did when he slept on a futon on the floor of his office and squired Linda Ronstadt round town. He was California’s Democratic governor then, from 1975 to 1983, and on March 2nd he officially announced that he hopes to be governor again.

Apart from a spell studying Buddhism in the East—no surprise to anyone—Governor Moonbeam has never disappeared from California politics. He has been mayor of Oakland and is now the state’s attorney-general. He has a Jesuit education, a prodigious intellect, a fine pedigree (his father, Pat Brown, was one of the state’s best and most popular governors) and a protean political identity that allows him to become almost any sort of candidate, as needed. “Action and contemplation joined together”, he said in full Zen mode last June, “is what I would call the highest path that we can follow.” ...

The scandals surrounding New York’s governor and its leading representative in Washington mark the demise of a powerful political machine

IN LESS than a week the legendary “Harlem Clubhouse” has suffered two mortal blows. On March 3rd Charles Rangel (above), the last of the political machine’s original “Gang of Four” still in elected office, stepped down as chairman of the powerful Ways and Means Committee of the House of Representatives amid charges of ethics violations. Officially this is a temporary leave of absence, but he may not return. Five days earlier David Paterson, New York’s governor, ended his election campaign amid allegations that he had abused his position, and intense pressure for his resignation. Mr Paterson is the son of Basil, another member of the Gang of Four, which mentored both Malcolm X and Al Sharpton and, since the 1960s, has been a launch-pad for New York’s black political leaders.

The fall of the Clubhouse—not a physical place but an elitist fraternity—comes not long after its two greatest triumphs. Mr Rangel had become the first black chairman of the powerful spending committee, after a long wait, in 2007, at the age of 76. Mr Paterson became New York’s first black governor—as well as its first legally blind one—in the wake of another scandal, as Eliot Spitzer, his predecessor and running-mate, was forced to resign after being caught consorting with prostitutes. At first, the unexpected promotion of Mr Paterson was widely welcomed; he was a likeable, pragmatic alternative to the arrogant Mr Spitzer, and seemingly scandal-free. (Asked if he had ever gone with prostitutes, he quipped: “Only the lobbyists.”) However, it was not a good omen that the day after taking office he was forced to admit to a string of adulterous affairs. ...

Will piqued pale males hand the Republicans a victory in November?

RACISM explains a lot of white opposition to Barack Obama, say some Democrats. It would be foolish to dismiss this argument out of hand. Lexington walked into a shop in Millington, Tennessee last week and asked the white gentleman behind the counter what he thought of the 44th president. “He’s a fucking nigger,” came the reply. The shopkeeper then helpfully explained that he was “not bashful” about expressing his opinions.

Bigotry cannot explain, however, why Mr Obama’s approval rating among white Americans has fallen since he took office, from roughly 60% to 40%. As the president pointed out in September: “I was actually black before the election.” White voters have changed their view of Mr Obama not because of his skin colour, but because of what he has done—and what he has failed to do—since he took office. And although he is not on the ballot this year, this matters. The less people admire the president, the less likely they are to vote for his party in the mid-terms. ...

Killed, aborted or neglected, at least 100m girls have disappeared—and the number is rising

IMAGINE you are one half of a young couple expecting your first child in a fast-growing, poor country. You are part of the new middle class; your income is rising; you want a small family. But traditional mores hold sway around you, most important in the preference for sons over daughters. Perhaps hard physical labour is still needed for the family to make its living. Perhaps only sons may inherit land. Perhaps a daughter is deemed to join another family on marriage and you want someone to care for you when you are old. Perhaps she needs a dowry.

Now imagine that you have had an ultrasound scan; it costs $12, but you can afford that. The scan says the unborn child is a girl. You yourself would prefer a boy; the rest of your family clamours for one. You would never dream of killing a baby daughter, as they do out in the villages. But an abortion seems different. What do you do? ...

Throughout the rich world battle lines are being drawn in the coming fight over deficit reduction

WHEN friends go out to dinner, the convivial atmosphere can be shattered once the waiter brings the bill. A pleasant evening can descend into a dispute about who had a starter and who ordered the lobster. Running a public-sector deficit is similar: the arguments start when the tab has to be paid.

The battles will be all the more fierce this time around because the deficits are so large and likely in the short term to stay that way. With developed economies still weak, many governments are (often rightly) keen to run large deficits for a while longer. But the bond markets are getting impatient, especially with weaker European countries. Greece was forced to announce a third austerity package this week, after its initial efforts failed to reassure either the markets or its neighbours (see article). Although Britain has a lower debt-to-GDP ratio than Greece and its debt has an average maturity of 14 years, sterling also wobbled this week, with investors spooked by the prospect of a hung parliament. True, the three biggest rich-world economies, the United States, Germany and Japan, are under less pressure. But Japan has high debt levels and America has the government-bankrupting cost of ageing baby-boomers. ...

The real issue raised by Lord Ashcroft’s tax status is David Cameron’s judgment

THE ennobling of Michael Ashcroft, a controversial businessman and Conservative Party donor, in 2000 was a messy matter; for he partly lived, and had extensive business interests, in Belize. As a condition of his peerage, he agreed to take up “permanent residence” in Britain. Ever since, senior Tories have been forced into humiliating contortions when asked whether Lord Ashcroft, who is now deputy chairman of the party, was resident in Britain for tax purposes: ask him, they blustered, knowing that he was unlikely to answer.

Now he has. But his response has provoked new questions about his own affairs, and a big one about David Cameron, the current Tory leader—who, despite a recent dip in the polls, is still the man most likely to be prime minister after the general election that is expected to be held on May 6th. ...

Iraq may ask for more American help. Barack Obama should not hold back

SEVEN years after the Americans invaded Iraq and toppled Saddam Hussein, two momentous events are approaching: a general election on March 7th and the promised departure of all American combat troops by the end of August. Yet governments across the world, most notably Barack Obama’s, seem to have turned their attention elsewhere. Iraq is already yesterday’s story. This is a grave error. The country has been devastated, in good part thanks to the miscalculations of America and its Western allies. It is progressing shakily and still needs outside help. And it is vital to the stability of the region. The mission has by no means been accomplished.

Iraq is far less dangerous than it was three years ago, when the Americans damped down a civil war with their last-gasp military surge. Since American troops withdrew to encampments outside the towns, their death rate has happily dived (see chart). But Iraq is still bloody. Several hundred Iraqis are still dying violently for political reasons every month—more, by the way, than in Afghanistan. Iraq’s nationalist insurgency has faded, but al-Qaeda is still wreaking carnage every month or so. Flashpoints, particularly along a “trigger line” between Iraq’s Arabs and Kurds, threaten the peace. Baghdad is not open for normal business, except for firms that can afford their own bomb-proof security systems. ...

Even Javanese democrats cannot always rule by consensus

IN THE coming days you will read plenty of good things about Indonesia. Barack Obama’s return later this month to his childhood home, Jakarta, will give an underreported country a moment in the international spotlight. It will be a chance for reminders that, just 12 years after the toppling of the 32-year Suharto dictatorship, the world’s third-most populous democracy seems remarkably stable; that, with more Muslims than any other country, it is a bastion of tolerance; that its economy has weathered the global downturn well; and that, in Susilo Bambang Yudhoyono, it has a president who enjoys a huge popular mandate at home and respect abroad as a model reformer. All of this is true. So it is a shame that of late Indonesia’s politicians have been giving democracy a bad name, and that Mr Yudhoyono himself has been doing precious little in the way of either reforming or leading.

This week saw a climax of sorts in a lengthy parliamentary probe into the government’s rescue in 2008 of Bank Century, a small local lender (see article). The debate in the lower house degenerated into rowdy uproar; outside police used water-cannon and tear gas to disperse a rent-a-mob. Were the bail-out really at issue, this might have been less ugly. But in fact, the probe had become a witch-hunt against the two leading reformers in Mr Yudhoyono’s cabinet—his vice-president, Boediono, and his finance minister, Sri Mulyani Indrawati. Both are technocrats rather than politicians. Both have good reputations for competence and honesty. Both, therefore, are the natural enemies of the businessmen and their politician cronies who lorded it in the Suharto days. Far from respecting Mr Yudhoyono’s decisive electoral mandate, the old elite has been trying to undermine it and scupper his reformist agenda. ...

SIR – Your leader on Ukraine characterised the demise of the orange coalition as a case study in how to “entrench” and to “squander” the gains from a revolution (“Bloodless orange”, February 13th). I could not agree more, but perhaps not in the way you described. “Revolution” was never the best term to depict the historic events of 2004. Ukraine did not undergo a transformation of state or society, as it did when an imperialist Russia was replaced by a communist one, or when the Soviet Union fragmented into independent states that embraced capitalism. Rather, Ukraine experienced an act of civil disobedience, one large enough to prevent an election from being stolen by an incumbent regime represented by its then candidate, Viktor Yanukovich.

Move on to 2010 and Mr Yanukovich was declared Ukraine’s legitimately elected president after a run-off. Domestic and international independent election-monitors appear to have confirmed that. This subtle yet telling point should not be lost: if 2004 was a victory or “revolution” for the Ukrainian people, the fact that years later the vanquished emerged victorious by way of the ballot is equally significant. ...

The short sad life of whites in Africa

Correction to this article

TWO compelling documentaries illuminate the dilemmas facing Africa’s dwindling white tribes. One is set in Zimbabwe, the other in Kenya. The Zimbabwean film, “Mugabe and the White African”, is the more straightforward and should be shown as widely as possible to help end one of Africa’s great tragedies: the ruin of one of the continent’s most successful countries and the moral bankruptcy of the governments of the nearby states (bar plucky Botswana) for failing to isolate and oust a vile dictator. ...

The centre of global gendercide

Message from an Unknown Chinese Mother: Stories of Loss and Love. By Xinran. Chatto & Windus; 224 pages; GBP16.99. Buy from Amazon.co.uk

DURING the past 30 years of economic reform, China has made what is probably history’s largest single improvement to human welfare, lifting hundreds of millions out of poverty. Yet millions have also been crushed by the vast engine of Chinese growth—and it is among these that Xinran Xue (who uses only her first name) finds her stories. In previous works of oral history, she has rescued from the chaos that is modern Chinese record-keeping personal narratives of her grandparents’ generation (“China Witness”, 2008) and of women caught in China’s endless political turmoil (“The Good Women of China”, 2002). In her latest book, “Message from an Unknown Chinese Mother”, she turns to the relationship between women and their daughters in tales of loss and often unthinkable heartache. ...

Trying to tell it how it is

Dining with al-Qaeda: Three Decades Exploring the Many Worlds of the Middle East. By Hugh Pope. Thomas Dunne; 352 pages; $26.99 and GBP18.99. Buy from Amazon.com, Amazon.co.uk

PALESTINE is yesterday’s news, sighed a bored editor as he rejected Hugh Pope’s offering. It was a familiar reaction. Mr Pope, a principled and thoughtful reporter, tramped the Middle East for 30 years in a forlorn bid to decipher its subtleties to a Western readership encased in its own prejudices: moderates versus radicals; an Arab-Israeli peace process that would work were it not sabotaged by Palestinian violence; Islamic Iran as the mortal enemy of Western civilisation. After his long time on the road, Mr Pope’s sad conclusion is that all the words he wrote, and all the risks he took, had made no perceptible difference to the crude way a largely insensitive and meddling West views a dysfunctional region. ...

Andrew Rawnsley's political vivisection

The End of the Party: the Rise and Fall of New Labour. By Andrew Rawnsley. Viking; 802 pages; GBP25. Buy from Amazon.co.uk

LABOUR under Tony Blair and Gordon Brown has ruled Britain for longer than any non-Conservative government in the past 100 years. With an election due in the next three months, there is a real chance that the last days of Pompeii are upon us. How will history judge New Labour—as an idealistic attempt to improve lives through a blend of free-market economics and social justice, or a cynical sucking of power from longstanding and broadly functioning institutions to a small group of media-hungry, manipulative politicians? ...

Stalin’s violent henchman and his library may have inspired a modern classic

Molotov’s Magic Lantern: A Journey in Russian History. By Rachel Polonsky. Faber and Faber; 388 pages; GBP20. Buy from Amazon.co.uk

EXPATRIATE spouses living pampered lives in Moscow often think it would be nice to write a book about their time there. The material is irresistible: vastness, extremes, depths and delights. But the trite, coy and overly personal jottings that result often prove quite resistible. Rachel Polonsky moved to Moscow with her lawyer husband and stayed for a decade. Her perceptive and erudite book is the exception and sets a standard to freeze the ink in others’ pens. ...

Business and the bedroom

Beyond Business. By John Browne. Weidenfeld & Nicolson; 310 pages; GBP20. Buy from Amazon.co.uk

DURING his 12 years as boss of BP, John Browne was the master of many complicated briefs. He launched three big takeovers, sparking a wave of consolidation that reshaped the industry; to the horror of his peers, he admitted that oil firms had a part to play in the fight against global warming; he invested in Russia’s lucrative but lawless oil business with much greater success than other Western oil firms—and he made pots of money for BP’s shareholders, year after year. ...

Iraq, having beaten most of its insurgents, holds an election on March 7th. But its institutions may be too weak, and its politicians too greedy, to save democracy

THINGS had been going well for Iraq’s footballers. They had re-established a national league, won the 2007 Asian Cup and last summer played host to their first post-Saddam international. Then, in November, a column of armoured police cars turned up at the headquarters of the Iraqi Football Association in eastern Baghdad. Uniformed men stormed the building, setting up sandbagged machinegun positions. They were acting on the orders of the Iraqi Olympic Committee, which is in the hands of Iraq’s Shia-dominated government. The Football Association is still run mainly by Sunnis. Its directors were accused of irregularities by the government and asked to give up control. When they refused, the army moved in.

There is more than one way of looking at this. FIFA, the world football body, took a dim view of armed interference in the affairs of one of its members, and banned Iraq from all international competitions until the takeover was reversed. But America’s military commanders in Iraq saw progress: after all, no shots had been fired and nobody was hurt. “We used to wake up every morning with another 100 bodies in the river,” remarked General Stephen Lanza, a spokesman. Detecting an overall “maturing” of institutions along with striking improvements in security, he believes Iraq is coming right. But is it? ...

Increasing budget deficits and rising government debts are likely to entail fierce political battles—not least between taxpayers and public-sector workers

WHEN times are hard, many people are tempted to let their credit cards take the strain for a while. And when economies fall into recession, many governments are happy to let their budget deficits widen, to tide the economy over.

Sensible as this may be, deficits in several countries have increased so much and so fast during the economic crisis of the past 18 months or so that it is generally agreed that remedial action will be needed in the medium term. Deficits of 10% or more of GDP cannot be sustained for long, especially when nervous markets drive up the cost of servicing the growing debt. ...