Commentary

Giddy Markets and Grim Politics

CAMBRIDGE – Economic growth worldwide picked up in 2017, and the best guess is that the global economy will perform strongly in 2018 as well. At the same time, a rising tide of populism and authoritarianism poses a risk to the stable democratic institutions that underlie long-term growth. And yet headlines seeming to portend political instability and chaos have not prevented stock markets from soaring. What gives?


First, the good news. Surely the largest single factor in the synchronized global upswing is that the world economy is finally leaving behind the long shadow of the 2008 financial crisis. Part of today’s good fortune is payback for years of weak demand. And the rebound is not over, with business investment finally picking up after a decade of slack, thereby laying a foundation for faster growth and higher productivity gains in the future.

True, economic growth in China is slowing somewhat as authorities belatedly try to contain a credit bubble, but many other emerging markets – notably including India – are set to grow faster this year. Rising stock and housing markets may fuel inequality, but they also drive increased consumer spending.

Investors and policy wonks are also cheered by the resilience of central bank independence in the major economies. US President Donald Trump has not only largely spared the Federal Reserve the not-so-tender mercies of his wee-hour tweets; he has also nominated highly qualified individuals to fill Fed vacancies. Meanwhile, the German right has failed to pull the plug on European Central Bank policies that have helped prop up Italy, Spain, and Portugal, and the ECB remains by far the most respected and influential eurozone institution.

Elsewhere, things are pretty much the same. In the United Kingdom, British Prime Minister Theresa May, early in her tenure, once took a swipe at the Bank of England, but quickly retreated. As Mohamed A. El-Erian has noted, many investors regard central banks as “the only game in town,” and they are willing to overlook a lot of political noise as long as monetary-policy independence is upheld.

But while politics is not, at least for now, impeding global growth nearly as much as one might have thought, the long-run costs of political upheaval could be far more serious. First, post-2008 political divisiveness creates massive long-term policy uncertainty, as countries oscillate between governments of the left and the right.

For example, the recent US tax overhaul has been advertised as a surefire way to boost corporate spending on long-term investment projects. But will it live up to its billing if businesses fear that the legislation, passed by a thin partisan majority, will ultimately be reversed?

Part of the case for trying to secure bipartisan agreement on major long-term policy initiatives is precisely to ensure stability. And policy uncertainty in the United States is nothing compared to the UK, where businesses face the twin disruptions of Brexit and (potentially) a Labour government led by the far-left Jeremy Corbyn.

Harder to assess, but potentially far more insidious, is the erosion of public trust in core institutions in the advanced economies. Although economists have endless debates about whether culture or institutions lie at the root of economic performance, there is every reason to be concerned that the recent wave of populism is a threat to both.

Nowhere is this truer than in the US, where Trump has engaged in unrelenting attacks on institutions ranging from the mainstream media to the Federal Bureau of Investigation, not to mention adopting a rather cavalier attitude toward basic economic facts. At the same time, the left seems eager to portray anyone who substantively disagrees with its proposals as an enemy of the people, helping fuel both economic illiteracy and a hollowing out of the center.

Beyond existential risks, there are near-term risks. One, of course, is a potential sharp growth slowdown in China, which more than any other major economy in the world today seems vulnerable to a significant financial crisis. Perhaps the number one risk to the global economy in 2018, however, is anything that leads to a significant rise in real (inflation-adjusted) interest rates.

Low interest rates and easy monetary policy have papered over a multitude of financial vulnerabilities around the world, from Italian and Japanese government debt to high corporate dollar debt in many emerging markets, and perhaps account for political support for trillion-dollar deficits in the US. Admittedly, markets see little chance of any significant rise in global interest rates in 2018. Even if the Fed raises rates another four times in 2018, other major central banks are unlikely to match it.

But market confidence that interest rates will remain low is hardly a guarantee. A plausible pickup in business investment in the US and northern Europe, combined with a sudden slowdown in Asian economies with surplus savings, could in principle produce an outsize rise in global rates, jeopardizing today’s low borrowing costs, frothy stock markets, and subdued volatility. Then, suddenly, the economy’s seeming disconnect from politics might end, and not necessarily in a happy way.

Kenneth Rogoff, a former chief economist of the IMF, is Professor of Economics and Public Policy at Harvard University.

By Kenneth Rogoff

Better Plastics for Healthier Oceans

LONDON – Plastics are among the most popular materials in use today. Given the material’s versatility, it is little wonder that some 320 million tons of it are used around the world each year. Indeed, the recent holidays left many with a mountain of plastic products and packaging. But plastics also pose a serious environmental threat.


If not disposed of properly, plastics can lie or float around for decades. In addition to being harmful to terrestrial and aquatic life, free-floating plastics in oceans can adsorb toxins and break up into micro-plastics, which then enter the food chain.

It is this seeming immortality that has led governments to tax certain environmentally damaging plastic products or ban them altogether. Many governments are also encouraging better waste management, and the reuse, redesign, and recycling of plastic products.

This is prudent policymaking. But while taxes, bans, and waste-management policies will reduce the problem of plastic pollution, they will not solve it. And, because plastics are made from a byproduct of oil refining, a ban would have little or no impact on hydrocarbon extraction, either. What taxes and bans will do is deprive the poorest people of a useful and inexpensive material.

The fact is that, despite the best efforts of well-intentioned lawmakers and nongovernmental organizations, thousands of tons of plastic waste are still entering the environment, particularly the oceans, every day. Clearly, a better approach is needed.

Some governments and companies have been persuaded that “bio-plastics” – which are derived partly from biomass like cornstarch – are the solution. But this argument is flawed: bio-plastics are very expensive and energy-intensive to produce, and still contain large amounts of material derived from oil.

Moreover, recycling bio-plastics requires that they be separated from ordinary plastic. Such polymers are tested to biodegrade, but only in the particular conditions found in industrial composting. In other words, while this technology might sound appealing, it will not solve the problem of plastic litter seeping into the environment.

The focus of the plastics industry has long been on a product’s functionality during its lifespan. This approach is no longer tenable. The world needs a new type of plastic – one that will perform well, but will also biodegrade much faster than the plastics we use today.

Enter oxo-biodegradable plastic. Unlike other plastics, including bio-plastics, OBP biodegrades anywhere in the environment, and can be recycled if collected during its useful life. Ordinary plastic products can be upgraded to OBP with existing machinery at the time of manufacture and at little to no extra cost, using technology that the Oxo-biodegradable Plastics Association is working to explain.

OBP is produced when a special additive is mixed with a normal polymer. The additive (produced by a company where I am a director) dismantles the molecular structure of the polymer at the end of its useful life and enables natural decomposition in an open environment.

And, when it comes to OBP, decomposition doesn’t mean breakdown into plastic fragments. As Ignacy Jakubowicz, a professor at the Research Institutes of Sweden and one of the world’s leading experts on polymers, explains, when OBPs break down, the material changes entirely, with hydrocarbon molecules becoming oxygen-containing molecules that can be assimilated back into the environment. According to international standards (such as ASTM D6954), the use of OBP would demand proof of degradation and biodegradation, and confirmation that there are no heavy metals or eco-toxicity.

As plastics change, the ways countries integrate them into their economies must change, too. The good news is that, though the United States and Europe have been slow to embrace innovative solutions, others have been more open to them. For example, Saudi Arabia and the United Arab Emirates have banned the import or manufacture of conventional plastics for a wide range of products, and both now require that plastic products be upgraded with OBP technology. They have not opted for “bio-based” plastics.

The world does not need new bans or taxes. Rather, it needs people who work with plastic, and their governments, to become as adaptable as the material itself, taking advantage of technological advances to ensure that we can make the most of a cheap and versatile material, without subjecting the environment to its damaging impact.

Michael Stephen, a former member of the UK Parliament, is Chairman of the Oxo-biodegradable Plastics Association, and a director of Symphony Environmental Technologies Plc.

By Michael Stephen

The Return of the Newspaper

BANGKOK – Social media are no longer the new kid on the block, but in 2016, platforms like Twitter and Facebook looked poised to nudge traditional newspapers into obsolescence. Following President Donald Trump’s victory in the United States, it seemed that the mainstream media had not only lost the plot, but had also lost their relevance.


Trump led the multi-pronged attack on traditional news media, and newspapers in particular. But many members of the press were also quick to declare that their own character limit had been reached. Accused of being elitist and out of sync with readers, newspapers’ reactions ranged from self-flagellation to repentance for the election result. Flummoxed by the clobbering from all sides, pundits who could not get the Trump election right prophesied that declining sales, falling readership, and flagging credibility heralded the demise of the newspaper, as we have known it.

But more than one year later, it is clear that Trump’s victory did not mean any such thing. On the contrary, his ascendancy has made the newspaper business more relevant than ever. The most remarkable media story of 2017 may have been how Trump inadvertently made newspapers great again.

Newspapers achieved this remarkable turnaround by doing what they do best: investigative journalism and breaking stories. Since November 2016, and particularly since Trump’s inauguration in January last year, newspapers have led with stories ranging from conflicts of interest involving Trump’s son-in-law, Jared Kushner, to evidence that the president’s former national security adviser, Michael Flynn, met with former Russian Ambassador Sergey Kislyak.

These tales of political intrigue competed for attention with lurid allegations of sexual misconduct by Hollywood producer Harvey Weinstein, US Senate candidate Roy Moore, and other powerful men. And the pummeling of Trump with inconvenient facts has not been limited to Russia’s meddling in the election.

It is important to remember that newspapers’ investments in rapid-response investigative teams, long-form stories, and data-driven journalism are possible only because more people are paying for their news, especially through digital subscriptions. Millennials in the West, dismayed by the surge in “fake news,” are helping reverse declining circulations in major markets. Growth trends are even more pronounced in the Asia Pacific region, where readers in China and India are leading a return to traditional newspapers.

Of course, newspapers’ post-election rebound was not entirely their own doing; it was also facilitated by social media’s failure to consolidate its gains. Blinkered by the illusion of having snatched whatever influence newspapers commanded, social media’s mavens bungled their attempts to dethrone the older medium. Instead of breaking stories, they took to drafting manifestos, like Facebook founder Mark Zuckerberg’s 5,700-word jeremiad about nothing in particular. And, while there was a time when 140 characters may have been more appealing than 700-word opinion pieces, brevity is no longer enough. (Nor, for that matter, is lengthy incoherence).

Having abducted the truth, social media were at a loss about what to do with it. They did not innovate by, for example, following the lead of BuzzFeed, a once-notorious “clickbait” factory that soon expanded into serious reportage and long-form journalism.

After the US election, BuzzFeed shook up the media industry by publishing the Steele dossier, a collection of private intelligence on Trump gathered by a former British MI6 officer. A few months later, it produced an 8,500-word expose on Milo Yiannopoulos, a former star commentator for Breitbart News. The Columbia Journalism Review called the article “groundbreaking,” though recent squabbles with CNN indicate a certain reluctance to accept BuzzFeed as a legitimate news organization – and, potentially, even the emergence of a new media war.

Meanwhile, most major social media platforms continued to feature whatever presidential nonsense interested or amused their users, like analyzing “covfefe.” This has led many to assume that Trump himself drives the social media agenda. Perhaps he does. But Trump’s ad nauseam tweets about failing newspapers and fake news have also spurred more reasonable consumers to embrace newspapers as a bastion of anti-Trumpism. In other words, newspapers’ revival is a visceral, if partisan, response to social media in the Trump era.

Trump, the upstart, is leading the battle against the media Brahmins, buoyed by a fellow disruptor, social media. But Trump’s campaign is a losing one. Newspapers have gained allies even on Capitol Hill. When Congress grills executives from Facebook, Twitter, and Google, glee is evident in news headlines.

To add insult to social media’s injury, it is newspaper articles that are being relentlessly quoted in congressional testimony. For example, former FBI Director James Comey’s memo on his interactions with Trump, which led to the hiring of a special prosecutor to investigate the Trump campaign’s connections to Russia, was leaked to The New York Times.

As calls to rein in social media grow, it is the world’s newspapers – until very recently thought to be on the ropes – that have provided the reporting needed to convince policymakers to act. Because social media companies, for all their power and potential, never developed the journalistic capacities needed to displace traditional news media, the pendulum has changed direction.

Bajinder Pal Singh is Director of Media and Communications at the Asian Institute of Technology in Thailand.

By Bajinder Pal Singh

A Trump Christmas Carol

NEW YORK – This Christmas, America’s gift to the world was a $285 million cut in the United Nations’ regular budget. Technically, the UN regular budget reflects a consensus decision of the body’s 193 member states, but the United States was clearly the prime mover in pushing for the cut. Indeed, Nikki Haley, the US ambassador to the UN, accompanied the Christmas Eve announcement with a warning that the US would be on the lookout for further reductions.


Ebenezer Scrooge could not have done better. The budget cuts will make it that much harder for UN agencies to prevent wars, help millions of people displaced by conflicts, feed and clothe hungry children, fight emerging diseases, provide safe water and sanitation, and promote access to education and health care for the poor.

President Donald Trump and Haley make much of the bloated costs of UN operations, and there certainly is room for some trimming. But the world receives an astounding return on its investments in the UN, and member countries should be investing far more, not less, in its organizations and programs.

Consider the sums. The UN regular budget for the two-year period 2018-2019 will stand at around $5.3 billion, $285 million less than the 2016-2017 budget. Annual spending will be around $2.7 billion. The US share will be 22%, or around $580 million per year, equivalent to around $1.80 per American per year.

What will Americans get for their $1.80 per year? For starters, the UN regular budget includes the operations of the General Assembly, the Security Council, and the Secretariat (including the Secretary-General’s office, the Department for Economic and Social Affairs, the Department of Political Affairs, and administrative staff). When a dire threat to peace arises, such as the current standoff between the US and North Korea, it is the UN’s Department of Political Affairs that often facilitates vital, behind-the-scenes diplomacy.

In addition, the UN regular budget includes allocations for the UN Children’s Fund (UNICEF), the UN Development Program, the World Health Organization, the UN High Commissioner for Refugees, the UN High Commissioner for Human Rights, the UN’s regional bodies (for Asia, Africa, Europe, Latin America), the UN Environment Program, the Office for the Coordination of Humanitarian Affairs (for disaster response), the World Meteorological Organization, the UN Office on Drugs and Crime, UN Women (for women’s rights), and many other agencies, each specializing in global responses to crises, conflicts, poverty, displacement, environmental hazards, diseases, or other public needs.

Many of the UN organizations receive additional “voluntary” contributions from individual countries interested in supporting specialized initiatives by agencies such as UNICEF and the World Health Organization. After all, those agencies have a unique global mandate and political legitimacy, and the capacity to operate in all parts of the world.

The silliness of the US attack on the size of the UN budget is best seen by comparing it to the Pentagon’s budget. The US currently spends around $700 billion per year on defense, or roughly $2 billion per day. Thus, the total annual UN regular budget amounts to around one day and nine hours of US military spending. The US share of the UN regular budget equals roughly seven hours of Pentagon spending. Some waste.

Trump and Haley are squeezing the UN budget for three reasons. The first is to play to Trump’s political base. Most Americans recognize the enormous value of the UN and support it, but the right-wing fringe among Republican voters views the UN as an affront to the US. A 2016 Pew Survey put US public approval of the UN at 64%, with just 29% viewing it unfavorably. Yet the Texas Republican Party, for example, has repeatedly called on the US to leave the UN.

The second reason is to save on wasteful programs, which is necessary in any ongoing organization. The mistake is to slash the overall budget, rather than reallocate funds and increase outlays on vitally needed programs that fight hunger and disease, educate children, and prevent conflicts.

The third, and most dangerous reason for cutting the UN’s budget is to weaken multilateralism in the name of American “sovereignty.” America is sovereign, Trump and Haley insist, and therefore can do what it wants, regardless of opposition by the UN or any other group of countries.

In her recent speech to the UN General Assembly session on Jerusalem, where member states overwhelmingly rejected America’s unilateral recognition of Jerusalem as the capital of Israel, Haley told the rest of the world: “America will put our embassy in Jerusalem. That is what the American people want us to do, and it is the right thing to do. No vote in the United Nations will make any difference on that.”

This approach to sovereignty is exceedingly risky. Most obviously, it repudiates international law. In the case of Jerusalem, resolutions adopted by the General Assembly and the Security Council have repeatedly declared the final status of Jerusalem to be a matter of international law. By brazenly proclaiming the right to override international law, the US threatens the edifice of international cooperation under the UN Charter.

Yet another grave danger is to the US itself. When America stops listening to other countries, its vast military power and arrogance often lead to self-inflicted disasters. America Firsters like Trump and Haley bristle when other countries oppose US foreign policy; but these other countries are usually giving good and frank advice that the US would be wise to heed. The Security Council’s opposition to the US-led war in Iraq in 2003, for example, wasn’t intended to weaken America, but to protect it, Iraq, and indeed the world, from America’s rage and blindness to the facts.

“Bah! Humbug!” said Scrooge. But Charles Dickens’s point was precisely that Scrooge was the great loser from his arrogance, miserliness, and insolence.

Jeffrey D. Sachs, Professor of Sustainable Development and Professor of Health Policy and Management at Columbia University, is Director of Columbia’s Center for Sustainable Development and the UN Sustainable Development Solutions Network.

By Jeffrey D. Sachs

Learning from Martin Luther About Technological Disruption

GENEVA – Five hundred years ago this week, a little-known priest and university lecturer in theology did something unremarkable for his time: he nailed a petition to a door, demanding an academic debate on the Catholic Church’s practice of selling “indulgences” – promises that the buyer or a relative would spend less time in purgatory after they died.


Today, Martin Luther’s “95 Theses,” posted at the Castle Church in Wittenberg, Germany (he simultaneously sent a copy to his boss, Cardinal Albrecht von Brandenburg), are widely recognized as the spark that started the Protestant Reformation. Within a year, Luther had become one of Europe’s most famous people, and his ideas – which challenged not only Church practice and the Pope’s authority, but ultimately man’s relationship with God – had begun to reconfigure systems of power and identity in ways that are still felt today.

What made Luther’s actions so momentous? After all, calls for reforming the Church had been occurring regularly for centuries. As the historian Diarmaid MacCulloch writes in A History of Christianity: The First Three Thousand Years, the two centuries before Luther featured near-constant challenges to papal supremacy on issues of philosophy, theology, and politics. How did the concerns of a minor theologian in Saxony lead to widespread religious and political upheaval?

A central piece of the puzzle is the role of emerging technology. A few decades before Luther developed his argument, a German blacksmith named Johannes Gutenberg had invented a new system of movable-type printing, allowing the reproduction of the written word at greater speeds and lower costs than the laborious and less-durable woodblock approach.

The printing press was a revolutionary – and exponential – technology for the dissemination of ideas. In 1455, the “Gutenberg Bible” was printed at a rate of roughly 200 pages per day, significantly more than the 30 pages per day that a well-trained scribe could produce. By Luther’s time, the daily printing rate of a single press had increased to roughly 1,500 single-sided sheets. Improved printing efficiency, combined with steep declines in cost, led to a dramatic increase in access to the written word between 1450 and 1500, even though only an estimated 6% of the population was literate.

Luther quickly grasped the potential of the printing press to spread his message, effectively inventing new forms of publishing that were short, clear, and written in German, the language of the people. Perhaps Luther’s most enduring personal contribution came via his translation of the Bible from Greek and Hebrew into German. He was determined to “speak as men do in the marketplace,” and more than 100,000 copies of the “Luther Bible” were printed in Wittenberg over the following decades, compared to just 180 copies of the Latin Gutenberg Bible.

This new use of printing technology to produce short, punchy pamphlets in the vernacular transformed the industry itself. In the decade before Luther’s theses, Wittenberg printers published, on average, just eight books annually, all in Latin and aimed at local university audiences. But, according to the British historian Andrew Pettegree, between 1517 and Luther’s death in 1546, local publishers “turned out at least 2,721 works” – and average of “91 books per year,” representing some three million individual copies.

Pettegree calculates that a third of all books published during this period were written by Luther himself, and that the pace of publishing continued to increase after his death. Luther effectively published a piece of writing every two weeks – for 25 years.

The printing press greatly expanded the accessibility of the religious controversy that Luther helped fuel, galvanizing the revolt against the Church. Research by the economic historian Jared Rubin indicates that the mere presence of a printing press in a city before 1500 greatly increased the likelihood that the city would become Protestant by 1530. In other words, the closer you lived to a printing press, the more likely you were to change the way you viewed your relationship with the Church, the most powerful institution of the time, and with God.

There are at least two contemporary lessons to be drawn from this technological disruption. For starters, in the context of the modern era’s “Fourth Industrial Revolution” – which Klaus Schwab of the World Economic Forum defines as a fusion of technologies blending the physical, digital, and biological spheres – it is tempting to assess which technologies could be the next printing press. Those who stand to lose from them might even move to defend the status quo, as the Council of Trent did in 1546, when it banned the printing and sale of any Bible versions other than the official Latin Vulgate, without Church approval.

But perhaps the most enduring lesson of Luther’s call for a scholarly debate – and his use of technology to deliver his views – is that it failed. Instead of a series of public discussions about the Church’s evolving authority, the Protestant Reformation became a bitter battle played out via mass communication, splitting not just a religious institution but also an entire region. Worse, it became a means to justify centuries of atrocities, and triggered the Thirty Years’ War, the deadliest religious conflict in European history.

The question today is how we can ensure that new technologies support constructive debate. The world remains full of heresies that threaten our identities and cherished institutions; the difficulty is to view them not as ideas that must be violently suppressed, but as opportunities to understand where and how current institutions are excluding people or failing to deliver promised benefits.

Calls for more constructive engagement may sound facile, naive, or even morally precarious. But the alternative is not just the hardening of divisions and estrangement of communities; it is widespread dehumanization, a tendency that current technologies seem to encourage.

Today’s Fourth Industrial Revolution could be an opportunity to reform our relationship with technology, amplifying the best of human nature. To grasp it, however, societies will need a subtler understanding of the interplay of identity, power, and technology than they managed during Luther’s time.

Nicholas Davis is Head of Society and Innovation at the World Economic Forum.

By Nicholas Davis

Improving African Women’s Health Through Financial Inclusion

ACCRA – In late October, the World Health Organization’s Regional Office for Africa signed an agreement with the United Nations International Telecommunication Union (ITU). The aim of the unlikely partnership is to encourage the use of digital services “to save lives and improve people’s health.” But perhaps the pact’s most innovative feature is the vow to merge financial inclusion strategies with modern health-care delivery.


Financial inclusion is a proven pathway to improving people’s health, especially the health of women in developing countries. Women who can easily access bank accounts or cash payment options tend to invest more in their businesses and families. In turn, they live healthier, more satisfying lives.

Yet, too often, initiatives like the one signed in October focus on one or the other – e-health or financial products like insurance. Because Africans’ ability to earn and save money can be the difference between good care and no care at all, this represents a missed opportunity to help patients and build more resilient communities.

The cost of this choice is disproportionately high for Africa’s women. In Nigeria, for example, 400,000 women live with obstetric fistula, a disabling condition often caused by complications in childbirth. In Tanzania, some 8,000 women die annually during pregnancy or delivery; most of these deaths could be prevented. And, across the continent, women’s life expectancy at birth is just 58 years, compared to more than 80 years in developed countries.

Progress is being made to connect women’s health solutions and financial inclusion. At a recent conference in Dar es Salaam, experts from the technology and financial services sector joined investors, philanthropists, and development specialists to devise ways to make finance work for Africa’s women. Through programs like these, development experts can advocate for digital solutions as a means of social and financial empowerment.

Unfortunately, cooperation like the pact signed in October is the exception, rather than the norm. Banks, regulators, finance ministries, and telecommunications companies all frequently gather to consider financial inclusion without the local and global health community. This must change if we are to build more inclusive platforms for African patients and clients.

The first step is to identify missed opportunities. A big one stems from the disparate approaches to bringing financial services and digitized health care to rural parts of Africa. At the moment, banks and mobile network operators are working to expand their digital banking services to unbanked and under-banked clients. At the same time, community health workers (CHWs) are operating in these regions to prevent, treat, and refer patients to clinics. Combining these efforts makes sense, because both initiatives rely heavily on trust.

Through pre-established networks, CHWs could augment their e-health offerings with financial products, like mobile cash payment systems. Broadening digital disease management and access to health information to include financial wellbeing would create natural synergies. While there are some concerns that adding responsibilities to CHWs could undermine health-care quality, a fragmented approach to prosperity is even more damaging.

Once opportunities for expansion are identified, other issues will need to be addressed before women’s health and financial inclusion programs can be widened. For starters, a lack of sex-disaggregated data makes it difficult to draft policies based on health quality and financial need. Although some countries, such as Burundi and Senegal, are working to improve their gender-specific data collection, a broader, more coordinated push is needed.

Raising the region’s financial literacy will be another challenge. The ability to understand and execute matters of personal finance is the weakest link in transforming women’s opportunities through financial inclusion. Moreover, financial literacy is a pre-requisite for the rollout of financing initiatives, such as programs that support women-led small and micro-enterprises.

If financial literacy levels can be raised, women can access resources such as land and credit, tools that hold the keys to business development, social mobility, and personal growth. Progress has been made in leveling the playing field, but these gains must be sustained.

The agreement between the WHO and the ITU will help promote wealth creation in parts of Africa where access to health care and financial services is lacking. To maintain this momentum, deeper commitments are needed, especially from the global health community. But, however African governments proceed in digitizing their health and financial services offerings, women’s needs must remain at the center of any solution.

Carl Manlan, a New Voices Fellow at the Aspen Institute, is Chief Operating Officer at the Ecobank Foundation.

By Carl Manlan

Into the Brexit Abyss

PARIS – I have a British friend who never travels without his Irish passport, at least not since June 2016, when the United Kingdom voted to leave the European Union. “Just in case,” he likes to say. “You never know what may happen.”

Ever since Brexit, the Irish passport has become something of an insurance policy against irrationality, and represents, for my friend at least, the possibility of retaining his European identity. If things turn out badly in London, he reasons, there is always Dublin.


Hedging has become a favored approach of those seeking to make sense of the British divorce from the EU. The agreement reached this month between UK and EU negotiators has only heightened the unease. On the one hand, that “breakthrough” set the stage for talks on the post-Brexit relationship trade to commence, seemingly making separation inevitable. On the other hand, there is a belief that nothing is set in stone, and that finality will come only after many thorny issues are resolved.

The physical boundary between Northern Ireland, which is part of the UK, and Ireland, which will remain in the EU, remains among the most complex problems. That issue risks becoming the twenty-first-century equivalent of what the Schleswig-Holstein question was for European diplomats in the nineteenth century – a recurring nightmare.

But the Irish border is not the only challenge that Brexit talks face. Numerous issues, from trade to foreign policy, will also test negotiations.

My friend is clearly divided between hope and fear. Paradoxically, his optimism stems from a conviction that the threat of chaos will push the British to reconsider their choice, as John Bull’s pragmatism ultimately returns and prevails. A second referendum, he and others believe, might even be in order.

Beyond placing hope in the revisionist power of chaos, the “Remain” camp is betting that “Leave” supporters will ultimately realize the folly of a “soft” Brexit, and retreat. Anything short of complete separation from the EU would be akin to the situation in which France found itself after withdrawing from NATO’s military command in 1966. Until France reversed that decision in 2009, it remained more or less bound by the constraints of other NATO members, but lacked any say in political or military decisions.

Today, Britain appears to be following a similar trajectory. A “soft” Brexit will not necessarily ease the economic pain of divorce, but will undoubtedly be politically frustrating for both supporters and opponents. And, after having been asked to express their preference, voters could conclude that anything but a “hard” Brexit would be illegitimate and leave the UK stuck between two stools.

The Brexit debate reveals one of the major dilemmas of democracy. What is to be done when a country is deeply divided on a key, even existential, question?

Authoritarian regimes do not face this quandary, at least not outwardly. The leadership decides. However rash a policy might seem to those with representative governments, the “people” in an illiberal order either bend to authority, or mobilize to break it.

In Britain, a small majority voted in favor of Brexit, plunging the country into a state of confusion, which is bound to continue, regardless of what happens in negotiations with the EU. Earlier this month, a study published by YouGov found that British citizens remain as divided on Brexit as they were when they voted last year. It is as if the debate has simply become frozen.

This is partly because views on European integration are tied to education, social status, age, and geographic location. No matter how talented UK and EU negotiators are, there is no compromise that will close these gaps completely. The objective, therefore, should not be to find the best solutions, but the least bad ones. What these will look like remains to be seen; but, at the very least, the “Leave” camp must feel that their votes were respected, while “Remain” supporters need to be convinced that the worst has been avoided.

For now, Britain seems to have accepted that the EU’s demands are not irrational or unacceptable. The UK will pay a premium – some £40 billion ($53 billion) – for its divorce from Europe. In return, the UK will have two years to untangle the numerous threads that tie Britain to the continent.

For those who place their faith in chaos, it is hard to see how that will help. A party of “Bregretters” – those who regret Brexit and could push for its reversal – does not exist. Nor has a strong political figure emerged to lead such a coalition. Former Prime Minister Tony Blair might have pulled this off earlier in his career; after his disastrous decision to support the Iraq war, however, his image is in tatters.

So, despite recent progress and commitments to move Brexit talks forward, nothing about the process is certain, except, perhaps, that it will become more, not less, chaotic as the two-year clock ticks down. That could be bad news for Britain, for Europe, and for democracy. Then again, as my friend with the Irish passport likes to say, you never know what may happen.

Dominique Moisi is Senior Counselor at the Institut Montaigne in Paris. He is the author of La Géopolitique des Séries ou le triomphe de la peur.

By Dominique Moisi

Germany’s Dangerous Obsession

PARIS – As Germany’s Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social Union (CSU), seek to form an unprecedented “Jamaica coalition” with the liberal Free Democrats (FDP) and the Greens, the rest of Europe anxiously awaits the government program that will result from their negotiations.


The stakes are high for Europe, because these are not ordinary times. The rise of economic nationalism, growing security threats, and the ongoing refugee crisis have made collective responses more necessary. China is becoming increasingly assertive, and US President Donald Trump’s administration has made clear its disdain for the European Union and its suspicions of Germany’s economic strength.

At home, the EU’s rationale is being tested by Brexit, and by the defiant governments of Poland and Hungary – two countries that, as Constanze Stelzenmüller of the Brookings Institution recently noted, are enjoying the benefits of EU membership and ignoring the corresponding obligations.

In this context, Emmanuel Macron’s election to the French presidency in May was a relief for Germany. Yet Macron has put Germany in the uncomfortable position of having to respond to his proposals for EU-level reforms. By calling for a common EU defense fund, tax harmonization, and a joint eurozone budget, Macron is upending the European status quo.

The question now is whether Europe’s largest and most prosperous country will provide the leadership these trying times demand. Each party in the coalition talks brings a very different perspective to the table. On European matters, Chancellor Angela Merkel’s CDU, which has been in power for 12 consecutive years, will bring continuity. But the more conservative CSU is being pulled to the right by competition from the populist Alternative für Deutschland (AfD).

As for the other two parties, the FDP has adopted a tough line toward Europe. Its leaders have suggested that Greece should leave the euro, and that the EU mechanism for bailing out struggling countries should be dismantled. The Greens, on the other hand, are keen on deepening European integration; but that is not their first priority, and they are the smallest party at the table.

Ultimately, the new government’s program will likely reflect the suspicion that other EU member states want to solve their problems with German money rather than domestic reforms. German politicians and opinion makers assess virtually every proposal for EU-level reform through this distributional prism. Schemes that are not intended to result in structural transfers are routinely dissected to confirm that they will not become cash dispensers for other EU members.

For example, Germans regard a joint budget not as a way to finance public goods such as research or infrastructure, but as a device to compel Germany to cover other countries’ expenses. Similarly, common unemployment insurance is regarded as a scheme to make Germans pay for unemployed Spanish or French workers. And a deposit-guarantee program for banks is seen as a way to force prudent German depositors to pay for non-performing loans in Italy.

To be sure, each of these concerns may be legitimate. All proposals certainly should be scrutinized to ensure that they will not be abused or introduce moral hazard. European solidarity is not a one-way street.

But, at the same time, German leaders must recognize that their exclusive focus on distributional effects is poisonous. They should recall the moment, in 1979, when British Prime Minister Margaret Thatcher marched into a European summit and said, “I want my money back.” The same logic was on display nearly 40 years later during the Brexit campaign, when “Leave” politicians falsely claimed that withdrawing from the EU would bring “money back” to the National Health Service.

Why has Gemrany become obsessed with the fear of paying too much? The EU budget contains much to criticize, but it hardly treats Germany unfairly. Germany may be the largest net contributor, but that is because it has the largest economy. As a proportion of national income, countries like Belgium, France, and the Netherlands also contribute a meaningful share of their net income.

German fears that the European Stability Mechanism serves as a channel for hidden transfers are similarly unfounded. Yes, the ESM benefits from low borrowing costs, which are essentially passed on to borrowing countries. If Greece cannot repay its debt, ESM shareholders will suffer a loss; and that risk is not priced into the interest rate Greece pays. But, so far, the ESM has continuously posted profits, and any loss it does suffer will be spread among all shareholders – including, for example, Italy. The ESM is a far cry from a subsidy machine financed by the German taxpayer.

Some in Germany also decry the so-called Target2 balances, which record bilateral surpluses and deficits of national central banks vis-à-vis the European Central Bank. The University of Munich’s Hans-Werner Sinn, for example, argues that the Target system has become a conduit for hidden operations to benefit debtor countries in southern Europe. True, in September, the Bundesbank had a net surplus of €878 billion ($1.2 trillion) vis-à-vis the ECB, whereas Italy and Spain ran deficits of €432 billion and €373 billion, respectively. These positions reflect the degree to which official flows are still substituting for private flows.

But, again, this arrangement has not cost Germany a single euro. On the contrary, the Target system is essentially a collective insurance scheme: if a national central bank were to default, the loss would be shared among all ECB shareholders. The system thus allows German exporters to continue to sell their products in southern Europe, because it guarantees that they will be paid. The claim that Germany loses from this is simply false.

It will always be in a political party’s interest to respond to the electorate’s fears. But politicians also have a duty to let voters know when their fears are excessive or unfounded. Europe needs a Germany that will veto half-baked proposals. But it also needs a Germany that can overcome its narrow obsessions and provide leadership.

With the current coalition talks, German leaders have an opportunity to assess new global developments that will have far-reaching implications for Europe and Germany alike. They must decide whether it is riskier to do nothing, or to take the initiative. No one is expecting a Damascene conversion. But one hopes for a government that will be more forthcoming in offering solutions.

Jean Pisani-Ferry is a professor at the Hertie School of Governance in Berlin and Sciences Po in Paris. He currently holds the Tommaso Padoa Schioppa chair at the European University Institute.

By Jean Pisani-Ferry

Seeing Through Big Tobacco’s Smokescreen

GENEVA – We all know how bad tobacco is, that it kills millions of people every year, and that it harms many more. We also know that tobacco companies have consistently lied about how much damage their products cause.


But now, even Big Tobacco has been forced to state the facts publicly. After losing a string of appeals following a 2006 US federal court ruling, four companies have been forced to reveal the truth behind years of deceptive marketing, by publishing advertisements containing “corrective statements” in US newspapers and on television. These public statements acknowledge that the companies – Philip Morris USA, RJ Reynolds Tobacco, Lorillard, and Altria – knew the damage their products cause but kept selling them anyway.

And it is not just courts that are taking action against the tobacco industry. The recent decision by French bank BNP Paribas to stop financing and investing in tobacco companies – including producers, wholesalers, and traders – is just the latest sign that public health is finally being put ahead of commercial interests.

Still, we must not be lulled into believing that these overdue confessions reflect an industry undergoing altruistic catharsis. They resulted from the combined pressure of the US justice system, tobacco-control advocates, and the sheer weight of evidence against the industry’s misleading marketing of “light” and “mild” tobacco products. They should be regarded as a warning: The industry couldn’t be trusted in the past, and it shouldn’t be trusted to do the right thing in the future.

Even today, the same tobacco companies are marketing new products that they claim are less harmful – like “heat-not-burn” devices, which vaporize tobacco to produce a nicotine-containing aerosol – and funding front groups purporting to work for a smoke-free world. The world has witnessed similar tactics elsewhere, from Uruguay to Australia, where tobacco companies launch costly legal challenges against legitimate regulation of its deadly products. Despite such losses, it will no doubt continue looking for new ways to oppose tobacco restrictions.

To be sure, the court-ordered airing of “corrective statements” in American media does represent a victory for truth. It brings closure to an important US Justice Department lawsuit, filed in 1999 under the Racketeer Influenced and Corrupt Organizations Act, and then left partly unresolved, until October 2017, during a decade of appeals and legal wrangling following the 2006 decision.

The statements detail the deadly health effects of smoking and second-hand smoke, including the fact that low-tar and “light” cigarettes are no less harmful than regular ones; that smoking and nicotine are highly addictive; and that cigarettes are “intentionally” manipulated to “maximize the ingestion of nicotine.”

Even cigarette manufacturers admit that their products contribute to 1,200 US deaths each day. Around the world, tobacco use kills more than seven million people annually.

Enough is enough; at this critical moment, we must not let the momentum slip. Governments and health organizations like ours are at war with the tobacco industry, and we will continue fighting until we beat Big Tobacco.

If national leaders, health ministers, and finance chiefs ever wondered how far they should go to regulate tobacco products, Big Tobacco’s admissions, together with investors’ second thoughts, have provided an answer: as far as necessary. Governments face a moral and legal imperative to use the strongest possible measures to protect their citizens from tobacco.

One way forward would be for more governments to implement commitments enshrined in the World Health Organization’s Framework Convention on Tobacco Control. The WHO FCTC provides guidelines on topics such as tobacco taxation, public awareness and education, and package warnings. These measures have helped save millions of lives in the last decade, not to mention hundreds of billions of dollars in health costs.

But more can be done, which is why we are calling on governments around the world to strengthen implementation of the WHO FCTC by accelerating action on the “MPOWER” tobacco control policies – measures intended to strengthen country-level implementation of the WHO FCTC. Together, these frameworks represent the strongest defense countries have against the tobacco industry.

Moreover, governments should endorse the Protocol to Eliminate the Illicit Trade in Tobacco Products, which aims to prevent illicit trade, such as smuggling. While 33 countries and the European Union have signed the protocol, it needs the support of seven more governments before it can enter into force.

And, finally, looking ahead to the UN’s High-level Meeting on Non-communicable Diseases in 2018, government leaders must be prepared to demonstrate their commitment to protecting people from heart and lung disease, cancer, and diabetes, by supporting stronger tobacco controls.

With its recent admissions, Big Tobacco has been forced to reveal its true nature. However reluctantly, these companies have called on all of us to reject their products. We think it is time to take them up on the offer.

Tedros Adhanom Ghebreyesus, a former minister of foreign affairs of Ethiopia, is Director-General of the World Health Organization. Tabaré Ramón Vázquez is President of Uruguay.

By Tedros Adhanom Ghebreyesus and Tabaré Ramón Vázquez

A Truly Global Response to Climate Change

BONN – Climate action is not just about controlling global temperatures. It can also be a driver of development and poverty reduction all over the world. At the COP 23 Climate Conference in Bonn, Germany, in November, multilateral development institutions showed themselves to be more committed than ever to the urgent and central issue of supporting and financing these critical goals.


Today’s political climate is uncertain. But climate change is not. Partnership around the world must be maintained in the global effort to achieve a smooth transition to low carbon and climate-smart development. Multilateral development institutions have never been more relevant.

Climate-smart development also makes good economic and business sense, particularly when it comes to sustainable infrastructure. We have already witnessed tremendous growth in renewable energy, creating with it new business opportunities and jobs. Many climate-smart investments can also reduce air pollution and congestion. Building resilience now saves money later. We are committed to supporting a climate-smart future.

As multilateral development institutions, we reconfirm our commitment to the Paris climate agreement. Our role is to facilitate the public and private finance that is a vital part of the climate solution.

That is why, two years after the Paris accord was successfully negotiated, we are increasingly aligning actions and resources in support of developing countries’ goals. In July, the G20 Sustainability Action Plan embedded the Paris agreement in G20 policies and noted that more effective use of financing from multilateral development institutions is key to innovation and private investment in climate action.

In 2016 alone, multilateral development institutions committed over $27 billion in climate finance, and we continue to step up our work, determined to broaden the private and public finance mobilized for climate action at COP 23.

We commit to:

• Deliver on the promises that we made in 2015 to increase our support for climate investments in developing countries by 2020, both from our direct financing and from our mobilization efforts;

• Increase mobilization of private-sector investment by supporting policy and regulatory reforms. This includes aligning price signals, making innovative use of policy and finance instruments and, as applicable, leveraging concessional (below-market-rate) finance to help scale up public and private investment in climate projects.

• Strengthen international efforts by working together and with other development finance institutions, to increase transparency and consistency in tracking climate finance tracking and reporting greenhouse-gas emissions;

• Put climate change at the heart of what we do, bringing climate policy into the mainstream of our activities, and aligning financial flows to the Paris agreement;

• Support countries, cities, and territories with their own climate action plans and build the conditions for an ambitious next generation of such contributions; and

• Work with our clients to support initiatives that protect the most climate-vulnerable areas, including small island developing states, while mobilizing more finance for developing countries to build resilience and to adapt their infrastructure, communities, ecosystems, and businesses to the consequences of climate change.

Each of these measures supports our strong commitment to the UN’s Sustainable Development Goals. By pursuing them, climate action will become a key part of the international community’s work to place infrastructure and the rollout of new technologies and policies for energy, water, and mobility at the core of sustainable development.

This is a serious response to a serious challenge. Climate change poses a grave threat to the natural environment, to economic growth, and to the lives of all people around the world, especially the poorest and most vulnerable.

It is fitting that this threat to national economies and to every person on earth, and the opportunity to counter it, should be tackled with the backing of multilateral development institutions. We call on others to join us in placing climate action at the center of their business, stepping up climate finance, and tracking its impact around the world.

Akinwumi Adesina is President of the African Development Bank. Suma Chakrabarti is President of the European Bank for Reconstruction and Development. Bandar M. H. Hajjar is President of the Islamic Development Bank. Werner Hoyer is President of the European Investment Bank. Kundapur Vaman Kamath is President of the New Development Bank. Jim Yong Kim is President of the World Bank. Jin Liqun is President of the Asian Infrastructure Investment Bank. Luis Alberto Moreno is President of the Inter-American Development Bank. Takehiko Nakao is President of the Asian Development Bank.

By Akinwumi Adesina, Suma Chakrabarti, Bandar M. H. Hajjar, Werner Hoyer, Kundapur Vaman Kamath, Jim Yong Kim, Jin Liqun, Luis Alberto Moreno, and Takehiko Nakao

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