August 30th 2025

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The world this week
Politics
Business
The weekly cartoon
The world this week

Politics
August 28th 2025

At least 20 people, including health workers, were killed in Israeli strikes on a hospital in
Gaza. Five of the dead were journalists. Israel said it had targeted a “camera positioned
by Hamas” but did not provide evidence of this. An initial inquiry by the Israel Defence
Forces found “gaps” that demanded further investigation. Meanwhile, large protests in
Israel called for the release of the hostages still held in Gaza and an end to the war.

The Integrated Food Security Phase Classification, a system backed by NGOs to monitor
food crises worldwide, confirmed that parts of the Gaza Strip are now in famine. (Israel
denies there is famine in Gaza.) It estimated that more than half a million people are
already in phase five, characterised by extreme food deprivation, acute malnutrition and
starvation-related deaths. For now the famine is centred in the densely populated area
around Gaza city.

The Democratic Republic of Congo and M23, a militia backed by Rwanda, resumed peace
talks in Qatar. The two parties, which are engaged in a long-running conflict in eastern
Congo, had previously missed a deadline to reach a deal following a ceasefire agreement
in July.
The French government is on the brink of collapse, again. François Bayrou, who has been
prime minister for less than nine months, called a vote of confidence for September 8th
over his deeply unpopular debt-reduction plans. His minority centrist administration is
caught between parties on the left and the hard right in the National Assembly. Several
have indicated they will not support Mr Bayrou in the vote, which he has described as a
choice between “responsibility” or “chaos”.

Charles Kushner, America’s new ambassador to France, breached diplomatic protocol by

accusing Emmanuel Macron of not doing enough to combat antisemitism, telling the French
president that his pending recognition of a Palestinian state will “embolden extremists,
fuel violence, and endanger Jewish life in France”. That prompted an official rebuke by
the French government. Mr Kushner is the father of Jared Kushner, one of Donald Trump’s
sons-in-law.

Steve Witkoff, Mr Trump’s special envoy, prepared for another consultation with
Ukrainian officials in New York. Mr Witkoff wants Volodymyr Zelensky to hold a meeting
with Vladimir Putin ahead of a potential trilateral summit involving Mr Trump. The
American president once again raised the threat of imposing “very serious” sanctions on
Russia if it does not agree to a ceasefire. Meanwhile, Ukraine admitted that Russian forces
had entered Dnipropetrovsk, an industrial region in eastern Ukraine, but said it had
stopped the advance.

Inga Ruginiene was approved by the parliament in Lithuania as prime minister, following
the resignation of Gintautas Paluckas amid allegations of misconduct about his business
interests (which he denies). Ms Ruginiene is also a Social Democrat, but became an MP
only last November. Although her family ties to Russia have been questioned by the
opposition, Ms Ruginiene has voiced solid support for Ukraine.

The Danish foreign ministry summoned America’s top diplomat in Copenhagen to explain
why Americans with links to the Trump administration were reportedly conducting covert
operations in Greenland to drum up support for independence from Denmark. Lars Lokke
Rasmussen, the foreign minister, said such clandestine actions would be “unacceptable”.

A former pupil at a Catholic school in Minneapolis shot dead two children, aged eight and
ten, during a mass at the school. The 23-year-old shooter, who had reportedly identified as
transgender and was suffering from depression, committed suicide at the scene.

Donald Trump signed an executive order expanding the federalisation of policing by,
among other things, calling for tighter co-ordination between the Defence Department and
state and local law enforcement. The president has already sent the National Guard to
Washington, DC. J.B. Pritzker, the Democratic governor of Illinois, likened the deployment
of the military to an invasion, and pointed out that eight of the ten states with the highest
homicide rates are led by Republicans.
FBI agents raided the home and office of John Bolton, who was Mr Trump’s national
security adviser in his first term. They have since fallen out. The search is reportedly
linked to Mr Bolton’s handling of classified information. The raid hasn’t stopped him
criticising Mr Trump. He has since described the president’s strategy on Ukraine as
“utterly incoherent”.

Kilmar Abrego Garcia was taken into custody again by America’s immigration authorities.
Mr Abrego Garcia hit the headlines in March when he was wrongly deported to El
Salvador. He was eventually sent back to the US. The government wants to deport him to
Uganda, but a judge has blocked that order until she can hold a hearing.

At a court in New York, Ismael “El Mayo” Zambada, the founder of the Sinaloa drug gang
in Mexico, changed his plea to guilty for a list of crimes including drug-smuggling and
money-laundering. He was arrested in Texas last year after being tricked into flying to El
Paso. Prosecutors are not seeking the death penalty for Mr Zambada, who is 77.

At least 34 soldiers were kidnapped by a dissident faction of FARC, a former rebel group,
in Colombia. They were snatched during a military operation in an area known for cocaine
smuggling. A few days earlier a drone attack on a police helicopter near Medellín killed
13 people and a car bomb in Cali killed another six. President Gustavo Petro blamed the
dissidents and drug gangs for the spate of violence.

China announced that North Korea’s leader, Kim Jong Un, will attend a military parade in
Beijing on September 3rd commemorating the 80th anniversary of the end of the war
against Japan and the second world war. It will be Mr Kim’s first trip to China since
2019. Over 20 other foreign leaders are expected, including Russia’s Vladimir Putin.

Australia cut diplomatic ties with Iran after accusing it of being behind attacks on a Jewish
restaurant and a synagogue in 2024, describing them as “dangerous acts of aggression” by
a foreign power. The government said Iran’s Revolutionary Guards had used “a complex
web of proxies to hide its involvement”.

Ranil Wickremesinghe was granted bail in Sri Lanka following his arrest on charges of
misusing public funds while in office. Mr Wickremesinghe has been the country’s prime
minister six times and was president for two years from 2022 after Gotabaya Rajapaksa
was ousted during widespread unrest. His supporters insist he is innocent.
South Korea’s new president, Lee Jae-myung, met Donald Trump at the White House,
where they discussed a trade deal and the thorny issue of paying for the 28,500 American
troops in the country. Mr Trump raised the possibility of America taking ownership of the
Korean land that houses American bases. Coinciding with the summit, Korean Air
announced a big order for 103 Boeing planes. Mr Lee said the meeting was a success, but
that his staff had been worried he might face a “Zelensky moment” in the Oval Office.
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week/2025/08/28/politics
The world this week

Business
August 28th 2025

Donald Trump announced that he would sack Lisa Cook from the Federal Reserve’s board
of governors, the first time a president has formally tried to dismiss a sitting governor
from the central bank. Mr Trump said he had “cause” amid allegations that Ms Cook had
lied on her mortgage applications (no charges have been brought). Ms Cook’s lawyers
said she would fight her removal and insisted that the president lacked the authority to fire
her. The matter will probably be decided in the Supreme Court; in May it all but
confirmed that Fed governors can be removed only for cause.
Mr Trump’s actions helped push up the yield on American 30-year government bonds
briefly, to 4.96%. Meanwhile, the yield on British 30-year gilts rose to 5.64%, nearing a
27-year high, amid concerns about the country’s persistently high inflation. The
government is widely expected to announce more tax rises in the coming months to fill a
fiscal hole.

The White House said it had also fired Susan Monarez as head of the Centres for Disease
Control after she refused to resign. Ms Monarez had been in the job only since July but
clashed with the administration’s scepticism on vaccines. Three other CDC officials
reportedly resigned.

For the third time in recent weeks Argentina’s central bank raised the percentage of assets
that banks must hold in reserve. The decision forms part of a wider effort to defend the
peso amid a sell-off of the currency. Stockmarkets also took a hit, following allegations of
corruption involving senior officials in the government of President Javier Milei. Mr
Milei had to be hustled away by his bodyguards from a campaign event for the mid-term
elections when protesters threw rocks at his car.

America’s tariff of 50% on Indian goods came into force. Mr Trump doubled the levy
because of India’s purchase of Russian oil. America is India’s largest trading partner.
Meanwhile, Canada decided to lift the retaliatory tariffs it had imposed on most American
products, except for aluminium and steel, as it works to secure a trade agreement. The
European Union was also preparing to drop tariffs on all American industrial goods,
another of Mr Trump’s key demands.

In an update to its projections, America’s nonpartisan Congressional Budget Office

estimated that increases in tariffs would reduce the government’s primary deficit by
$3.3trn over the next decade and cut payments on interest by $700bn, if the higher rates of
trade duties persist. The projections do not account for the impact of tariffs on GDP
growth, nor do they consider the most recent levies on the EU and India.

Howard Lutnick, America’s commerce secretary, said that the Trump administration was
considering whether to take equity stakes in big American defence companies, such as
Lockheed Martin, which he described as “basically an arm” of the government. The news
follows confirmation by Intel that the government has taken a roughly 10% stake in the
chipmaker, funded by federal grants.

The future of Orsted, the world’s biggest developer of offshore wind farms, was blown off
course after the Trump administration ordered all work to stop on a $4bn project off the
coast of Rhode Island that was 80% completed. The order mentioned national-security
issues, which Orsted said it would rush to resolve. The Danish company recently warned
that “adverse” developments in America were affecting its business.

Nvidia reported another sturdy set of earnings, with revenues of $46.7bn in the second
quarter, up by 56%, year on year. Jensen Huang, the chipmaker’s chief executive,
dismissed concerns that AI investments would slow and that its business in China might
suffer, as he predicted worldwide spending of up to $4trn on AI by the end of the decade.

SpaceX conducted a successful test flight of its Starship mega-rocket after a series of
failures earlier in the year, and deployed dummy satellites for the first time. Starship is
vital for both SpaceX’s fast-growing Starlink internet service and America’s plans to
return astronauts to the Moon.
Keurig Dr Pepper, an American soft-drinks company which also owns the Green Mountain
coffee brand, agreed to buy JDE Peet, based in the Netherlands and one of the world’s
biggest suppliers of coffee and tea beverages, for $18bn. The coffee assets of both will be
combined into one company, which will be worth roughly the same as Nestlé’s coffee
business and listed separately in America. When the merger is completed JDE Peet will
delist from the Amsterdam stock exchange.

In the latest example of the perils of rebranding a familiar favourite, Cracker Barrel
reversed its recent decision to change its logo and will now stick with the original
imagery. The Southern-themed restaurant chain had wanted to ditch a picture of an elderly
white man (known as “Uncle Herschel”) and the words “Old Country Store” from the
logo. That triggered an anti-woke backlash on social media. It was all over for the
company when Donald Trump called on it to revert to its old design, adding that at least
Cracker Barrel might get a “billion dollars’ worth of free publicity”.
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The world this week

The weekly cartoon

August 28th 2025

The editorial cartoon appears weekly in The Economist. You can see last week’s here.
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week/2025/08/28/the-weekly-cartoon
Leaders
Brazil offers America a lesson in democratic maturity
Humiliation, vindication—and a giant test for India
How much danger is America’s central bank in?
France’s government is on the brink of collapse, again
Don’t forget the downsides of China’s innovation push
Leaders | The trial of Jair Bolsonaro

Brazil offers America a lesson in democratic maturity

It is a test case for how countries recover from a populist fever

August 28th 2025

IMAGINE A COUNTRY where a polarising president lost his bid for re-election and
refused to accept the result. He declared the ballot rigged and used social media to urge
his supporters to rise up. They did so in their thousands, attacking government buildings.
Then the insurrection failed, the ex-president faced a criminal investigation and
prosecutors put him on trial for plotting a coup.
That sounds like a fantasy of the American left. In the hemisphere’s other giant democracy
it is reality. On September 2nd the trial of Jair Bolsonaro, Brazil’s former president and
the “Trump of the tropics”, will begin in the Federal Supreme Court. The evidence reads
like a flashback to Brazil’s turbulent past. A former four-star general schemed to overturn
the result of the election; assassins planned to murder its real winner. As our investigation
into the plot explains, the coup failed because of incompetence rather than intent.

Mr Bolsonaro and his associates are likely to be found guilty. That makes Brazil a test
case for how countries recover from a populist fever. In Poland, two years after Law and
Justice (PiS) lost power, a coalition led by Donald Tusk, a centrist, is constrained by a
new PiS president. In Britain, Brexit is now unpopular but Nigel Farage, the politician
who inspired it, is leading in polls. Even Hamas’s massacre of October 7th 2023 did not
shake Israel out of its bitter divisions.

But Brazil’s most striking comparison is with the United States. The two countries seem to
be swapping places. America is becoming more corrupt, protectionist and authoritarian—
with Donald Trump this week messing about with the Federal Reserve and threatening
Democrat-controlled cities. By contrast, even as the Trump administration punishes Brazil
for prosecuting Mr Bolsonaro, the country itself is determined to safeguard and strengthen
its democracy.

One reason Brazil promises to be different from other countries is that the memory of
dictatorship is still fresh. It restored democracy in 1988. The supreme court, shaped by the
“citizens’ constitution” enacted at that time, still sees itself as a bulwark against
authoritarianism.

In addition, most Brazilians are open-eyed about what Mr Bolsonaro did. A majority of
them believe that he tried to stage a coup to keep himself in power. Conservative state
governors vying to take on the leftist president, Luiz Inácio Lula da Silva, in next year’s
election need the votes of Mr Bolsonaro’s supporters to win. But even they criticise his
political style.

That recognition has opened up the chance of reform. As our briefing lays out, most of
Brazil’s politicians, on left and right, want to put the Bolsonaro madness and its radical
polarisation behind them. From the business bigwigs in São Paulo to the political Pooh-
Bahs in Brasília there is surprising agreement on a difficult, but urgent, agenda of
institutional change.

Paradoxically, a key task is to rein in the supreme court, despite its role as the guardian of
Brazil’s democracy. As the arbiter of a constitution that runs to 65,000 words, the court
oversees a dizzying array of rules, rights and obligations, from tax policy to culture and
sports. Groups from trade unions to political parties can bring cases directly. Sometimes
justices initiate cases themselves, including an inquiry into online threats, some of them
against the court itself—making it the victim, prosecutor and judge. To handle a workload
of 114,000 rulings in 2024 alone, most decisions come from individual judges. There is
wide recognition that unelected judges having so much power can corrode politics, as
well as save it from coups. The justices themselves see the case for change.

Fixing the court will be hard, but its power is only part of the constitutional baggage
Brazil is carrying. The country also suffers from chronic fiscal incontinence, in particular
out-of-control tax exemptions and automatic spending increases. Some of these were
enshrined in the constitution of 1988 to constrain would-be authoritarian leaders. Some
are the fault of Brazil’s Congress, which has seized control of the federal budget and uses
its influence to finance pet projects. The effect is to crowd out investment and weaken
growth.

In theory, this points to a path forward. Mr Bolsonaro must be tried for his crimes and
punished if found guilty. Next year the election should be fought over the broader reforms.

In practice, none of this will be easy. One obstacle is Mr Trump. He has accused Brazil’s
supreme court of a “witch-hunt” against his friend, and in early August slapped 50% tariffs
on Brazilian goods. The administration has also imposed Magnitsky sanctions—an
exclusion from America’s financial system usually aimed at human-rights abusers and
kleptocrats—on Alexandre de Moraes, the judge leading the Bolsonaro case. Other
officials and politicians may follow. This recalls an ugly bygone era when the United
States habitually destabilised Latin American countries.

Fortunately, Mr Trump’s interference is likely to backfire. Only 13% of Brazil’s exports

go to the United States, and they consist largely of commodities, for which new markets
can be found. America has already granted numerous exemptions. So far, Mr Trump’s
attacks have only strengthened Lula’s standing in opinion polls, and provided him with an
excuse for any poor economic news before the next election, in October 2026.

The domestic obstacles to reform are greater. Even if the elites want change, Brazil is still
a deeply divided country. Mr Bolsonaro has fanatical supporters who will cause trouble,
especially if the court imposes a stiff sentence. Reforming the supreme court and the
constitution requires groups to give up power for the common good. It is natural for them
to cling to what they have—if only because they do not trust their enemies. Everyone
wants growth, but to get more of it some people are going to have to surrender some
privileges.

Tensions will therefore be inevitable. But unlike their counterparts in the United States,
many of Brazil’s mainstream politicians from all parties want to play by the rules and
make progress through reform. Those are the hallmarks of political maturity. Temporarily
at least, the role of the Western hemisphere’s democratic adult has moved south. ■
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weekly Cover Story newsletter.
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Leaders | America’s blunder

Humiliation, vindication—and a giant test for India

Trump has triggered a trade and defence crisis: how should Modi respond?

August 28th 2025

IT IS UNUSUAL to experience humiliation, vindication and a defining test all at the same
time. But that is India’s predicament today. President Donald Trump has undone 25 years
of diplomacy by embracing Pakistan after its conflict with India in May, and now singling
out India for even higher tariffs than China. He cannot have thought through how the
world’s most populous country and fifth-largest economy would react.
Narendra Modi, India’s prime minister, recently laid out a path for a muscular, more self-
reliant nation. He is also about to meet Xi Jinping in China, after a bitter four-year Sino-
Indian military stand-off in the Himalayas. For America to alienate India is a grave
mistake. For India it is a moment of opportunity: a defining test of its claim to be a
superpower-in-waiting.

Mr Trump’s humiliation of India comes in two flavours. On August 27th, after condemning
it for buying Russian oil, America’s president imposed a 25% tariff surcharge, on top of
the existing 25% import tariff on Indian goods. Buying Kremlin crude is grubby. But given
that India does so through a price-cap scheme run by the West, that it sells refined
petroleum products to Europe, and that much of the world, including China, also buys
Russian oil, the surcharge makes it look as if India has been singled out for special
punishment.

The other humiliation is Mr Trump’s love-in with Pakistan. After a terrorist attack in India
that Mr Modi blamed on Pakistan, the two rivals fought a four-day skirmish in May,
involving over 100 warplanes and raising fears of a nuclear clash. Yet Mr Trump is now
exploring crypto and mining deals in Pakistan. He has dined in the White House with
Field-Marshal Asim Munir, its hardline army boss and de facto ruler, who is proposing
Mr Trump for a Nobel peace prize. America has offered to mediate over disputed
Kashmir, breaking its own long-standing position and an Indian taboo.

America’s failure to support India on a core security interest and decision to punish it over
trade have shattered trust among Indians. Since 2004 American presidents have welcomed
India as a rising democratic power opposed to Chinese domination of Asia. Its $4trn
economy and $5trn stockmarket dwarf those of Pakistan, wracked by instability, debt
crises, terrorism and dependence on China. This is a giant own-goal for America’s
interests that compounds its neglect of NATO in Europe.

That explains the second emotion among some in India: vindication. Since independence
in 1947, India has avoided alliances, although the label it uses has changed from “non-
alignment” to “multi-alignment”. It relies on Russia for some weapons, and on Europe,
Israel and America for others. China supplies manufacturing inputs; the West tech and
markets.

In 2020, however, when relations with China went into a deep freeze after the border
skirmishes in the Himalayas, some in Washington hoped this might presage a quasi-
alliance with America. Intelligence has been shared, and joint US-India military exercises,
which also included Japan and Australia, led to a strategic deal in 2024 on closer defence
ties.

Indians sceptical of global entanglements feel vindicated by the events of the past few
months. As they always warned, dependence on America is dangerous. Mr Modi’s visit to
China is meant to signal that India has options.

Humiliation and vindication pose a test of India’s capabilities and resilience. For 11 years
Mr Modi has pursued nation-building, modernisation and centralisation. There have been
setbacks. An industrialisation drive has had modest results and failed to produce the new
jobs India needs. The education system is poor. Mr Modi often lapses into Hindu
chauvinism.

But there have also been successes. New roads and airports, and digital payments and tax
platforms, have created a giant single market. The financial system is stronger, with deep
capital markets built on domestic savings, a nearly balanced current account and prudent
banks. India is now less likely to attract supply chains as part of a “China plus one” boom,
but all this will help it weather the trade shock. Growth is expected to remain above 6%,
making it the world’s most dynamic big economy and, the IMF says, its third-biggest by
2028.

The danger is that America’s aggression revives slumbering autarky and anti-Westernism.
In his Independence Day speech from the Red Fort in Delhi on August 15th, Mr Modi
emphasised more self-reliance. But were India to go further and turn inwards, it would
threaten its services industry, which now exports almost as much as all other sectors put
together. Its tech-services firms make at least half their sales to American customers,
including blue-chip firms with “global capability centres” in India. The country is
OpenAI’s second-biggest market by users. And to industrialise faster, India needs more
machinery imports and inputs from China.

Better for India to try to limit the damage. It should make rational concessions, including
cutting tariffs and buying less Russian oil and more American natural gas. America and
India still have enduring bonds, not least a huge diaspora. Mr Modi is right to go to China:
boosting India’s manufacturing will mean closer trade links in the next decade, as well as
American tech. He should seek new trade deals, adding to recent ones with Britain and the
United Arab Emirates.

A second priority should be reform at home. India’s fate—and its choice—is to be

independent. Size and dynamism matter more than ever, to secure better terms in deals, pay
for defence and raise living standards even if world trade slows. India has been waiting
for several years for more big-bang reforms, including deregulating business, reforming
the courts, and modernising agriculture, land and power distribution.

Many of these require co-operation between India’s states and the central government.
Encouragingly, Mr Modi has just said he will simplify the goods-and-services tax and
deregulate the economy, emphasising “Next Gen Reform”. After 11 years in office, he
needs to go further and faster. To confront India’s deepest internal challenges has always
been in its national interest. In a hostile world, it is also the best defence. ■
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weekly Cover Story newsletter.
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Leaders | The Federal Reverse

How much danger is America’s central bank in?

Whether Lisa Cook stays or goes, important norms have been broken

August 28th 2025

IT IS the first time that an American president has tried to sack a governor on the board of
the Federal Reserve. The credibility of the central bank is one of the underpinnings of
America’s world-beating economy. And yet, although dollar assets weakened a little on
the news, financial markets are taking it all in their stride. Whatever is going on?

Donald Trump escalated his war against the Fed on August 25th, saying he would fire one
of its governors, Lisa Cook, for alleged misstatements in her mortgage applications. Fed
governors can be sacked only for cause and Ms Cook, who has not been charged, has
vowed to fight her dismissal in court. Yet everybody knows this is not really about
mortgage fraud. Instead, like a show trial, it is a message to anyone who serves on the
Fed’s board that Mr Trump can impose his desire for low interest rates. On August 26th he
crowed that “We’ll have a majority [on the board] very shortly.”

One reason investors are not yet panicking is that the president underestimates how much
work he still has to do. Even if Ms Cook departs, his pick to replace her must gain
confirmation from the Senate, a process that scotched the chances of Judy Shelton and
Stephen Moore, Mr Trump’s nominees during his first term. And if they clear that hurdle,
they will still be part of a committee that sets rates by majority vote.

Much is being made of the fact that the board contains Chris Waller and Michelle
Bowman, who were successfully nominated by Mr Trump in his first term. No doubt he
believes that makes them his creatures. However, although they dissented from the Fed’s
latest decision to keep interest rates on hold, preferring instead to cut, there is a
respectable case for doing so. Mr Waller, the bookies’ favourite to succeed Jerome
Powell, is no more of a presidential stooge than the incumbent. Mr Powell became Fed
chairman in 2018—under Mr Trump.

In addition, although Mr Powell’s term as chairman ends in May, his tenure as governor
does not expire until January 2028. The convention is for him to retire next year, but these
are convention-busting times and he could choose to stay on, denying Mr Trump the chance
to fill another seat. The markets, in other words, will have plenty of time and opportunities
to panic before the president is in a position to pull the levers at the Fed.

But do not conclude that all must therefore be well. Investors would look on with alarm if
the Fed were to have a super-chair seated behind the Resolute desk. And rightly so. The
memory of Richard Nixon strong-arming Arthur Burns into keeping rates low in the early
1970s, and the rampant inflation that ensued, has made the independence of the central
bank one of the strongest norms in American politics.

Other things being equal, greater political influence over the Fed will raise interest rates
because of the extra risk of bad decisions. That is why investors are already demanding
greater compensation to hold long-dated Treasuries, even as the Fed has cut rates and the
economy has weakened. Given Mr Trump’s wishes, the irony is obvious. The Fed’s
independence is being attacked just as the government is racking up debt. The more
interest payments rise, the more tempting it will be to lean on the Fed, whoever is in
power.

Mr Trump’s attack on Ms Cook is yet another symptom of the corruption of America’s

government. Allegations of mortgage fraud have also been made against Adam Schiff and
Letitia James, two Democratic politicians. There is no telling who else could fall victim
to the partisan trawl of mortgage applications and, who knows, tax returns. It is easy to
imagine Democrats one day returning the favour. ■

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together the best of our leaders, columns, guest essays and reader correspondence.
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Leaders | Europe

France’s government is on the brink of collapse, again

Emmanuel Macron looks likely to lose another prime minister over an attempt to
curb public debt

August 28th 2025

When Europeans fret about profligate states destabilising their common currency, they
usually have the continent’s southern fringe in mind. Yet when on August 25th a European
leader made dire warnings about his country’s public finances, he was not speaking of
Greece, Italy or Portugal. “Our country is in danger because we are on the brink of over-
indebtedness,” declared François Bayrou, France’s prime minister. To start tackling a debt
pile that stands at 114% of GDP he wants to make savings in next year’s budget worth
€44bn ($51bn, or 2.6% of spending). But he runs a minority government faced with a
bolshie opposition—egged on by populists on left and right—which will hear nothing of
it. To try to break the impasse, Mr Bayrou stunned all parties this week by putting his
government’s survival on the line, recalling parliament for a vote of confidence on
September 8th. If he is defeated, as seems likely, France will lose its third prime minister
in little over a year—and Europe will gain a fiscal hazard.
Mr Bayrou is right to sound the alarm. France has not balanced its budget since 1974. Its
deficit is the highest, relative to GDP, in the euro zone. Its public debt is higher than that of
every member except Greece and Italy, and its borrowing costs are now steeper than
Greece’s much-improved rates. France still has no problem finding lenders. Yet as Mr
Bayrou implied in his address with a reference to Britain’s hapless former prime minister,
Liz Truss, market sentiment can turn fast. Bourses and bond markets are already nervous.
The last thing Europe needs at a time of war and geopolitical turmoil is a financial crisis
at the heart of the euro zone.

To get a grip on its public finances, France urgently needs to break the cycle of
parliamentary deadlock. Alas, the country that elected Emmanuel Macron president in
2017 on a promise to bridge political division now seems singularly unable to do so. It
does not help that the centrist president further shrank his parliamentary minority by
recklessly calling an early election last year, nor that rebellion has always had a deep hold
on the French mind. For politicians of the centre ground elsewhere, France’s troubles
reflect something broader too: a worrying sign that the tools of technocratic politics—an
appeal to reason, the marshalling of facts, the forging of consensus—are feeble weapons
against the populists’ angry certitudes.

Against such forces, France has few good options. Without a budget for next year,
government will not shut down; the existing one can be rolled over, as it was for a period
this year. But it is hard to see how Mr Macron could break the parliamentary stalemate by
losing Mr Bayrou and picking a fresh prime minister from his own camp. Yet if he
dissolves parliament again, that would run the risk of bringing Marine Le Pen’s hard right
into government. No wonder bond markets are twitchy.

As France braces itself for yet more political instability at home, there is one small
comfort for Europe. Across the Rhine, in Germany’s chancellor, Friedrich Merz, Mr
Macron now has a partner who, unlike his predecessor, Olaf Scholz, seems ready to work
with France. A good Franco-German link is not enough to unite and embolden Europe, but
without one Europe flounders, and both France and Germany suffer along with the rest.

The two leaders, who will dine together on the Med on August 28th before holding a joint
cabinet meeting the next day, do not agree on everything. But they share a sense of urgency
and seriousness. And if Mr Macron can overcome his concerns on trade (notably with
regard to the EU-Mercosur deal) and Mr Merz can commit to common defence projects
and productivity-boosting reforms in banking and energy, together they might just be able
to get some things done that will benefit their countries and the continent more widely.
They should not waste their best opportunity. ■

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Leaders | Innovation v involution

Don’t forget the downsides of China’s innovation push

China’s industrial policy attracts fans abroad, critics at home

August 28th 2025

Not so long ago, Westerners dismissed China as a copycat, a fast follower or a “fat tech
dragon”, consuming vast amounts of money and manpower while rarely taking flight. But
as China has triumphed in high-tech industries such as electric vehicles, clean energy and
lean AI, the condescension is giving way to admiration, fear and even envy.

Now some Western governments are paying the copycat nation the compliment of imitating
its policies. The European Union has offered subsidies to Chinese battery companies that
share their know-how. America’s government is taking a stake in Intel, a once-mighty
chipmaker, in the hope that state ownership will restore its fortunes. Back in China,
techno-optimism is helping fuel a market rally. Cambricon, a potential rival to Nvidia, has
reported first-half revenues up by over 4,000% year on year.
Amid the hope and hype, it may seem churlish to point out the downsides of China’s
innovation push: the fiscal cost, market distortion and policy duplication. But ignoring
these pitfalls would be a mistake, not least because they have recently begun to trouble
China’s own government. Indeed, one of the most prominent critics of its industrial policy
is the man whose vision it is meant to reflect: the supreme ruler, Xi Jinping, himself.

Industrial subsidies, direct and indirect, cost China over 1.7% of GDP a year in 2019,
compared with about 0.6% in dirigiste France. The country boasts more than 2,000
government-guided investment funds scattered throughout the land, aiming to raise over
10trn yuan ($1.4trn). That could buy a lot of innovation. But as these funds have grown,
private venture capital has dried up. Waste and fraud also take their toll. One pot of money
earmarked for semiconductors, known as the “Big Fund”, became notorious for big
corruption, leading to the investigation or detention of at least a dozen people.

Even when they invest honestly, policymakers don’t always invest wisely. Local officials,
Mr Xi noted in July, always promote the “same few things: artificial intelligence,
computing power, new-energy vehicles”. This has led to overcrowded industries and
vicious price wars. Leaders now complain about “involutionary” competition: companies
are cutting prices to poach customers, forcing rivals to do the same, which leaves
everyone’s profits lower and no one’s market share higher.

Supporters say this is all part of the plan. The government encourages excessive entry into
promising areas, knowing that the frenzied competition will propel improvements. Once
the best companies have proved their worth, the government can cull the rest. But this
process does not always yield the most innovative or efficient firms. Often it favours those
with the most indulgent provincial patrons, or firms that are too big to cull.

Moreover, China’s industrial policy has not achieved all its goals. Civil aviation and
cutting-edge chipmaking remain elusive. And not all successes owe much to explicit
policy. DeepSeek was the side-hustle of a hedge fund, an industry frowned upon by
Beijing.

China’s innovation push has met with some undeniable success. At this year’s Spring
Festival celebrations, robot dancers stole the show. But the government’s industrial
choreography is not nearly as tight as this example suggests. Instead it resembles the
“robot Olympics” held recently in Beijing. The events featured bustling fields of
competitors. Their human controllers huffed and puffed alongside them, like over-
protective local officials. Even so, several of the robots fell flat on their faces—and
others struggled to stay in their lane. ■

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Letters
Don’t ditch Black Economic Empowerment in South Africa
Letters | A selection of correspondence

Don’t ditch Black Economic Empowerment in South Africa

Also this week, Israel and Gaza, net zero, playback speeds, “Moby-Dick”

August 28th 2025

Letters are welcome via email to [email protected]

Find out more about how we process your letter

You called on South Africa to ditch Black Economic Empowerment policies (“Time to
scrap BEE”, August 16th). Yet South Africa remains a divided society. Whites continue to
dominate business. White South African children may not enjoy the same opportunities
they once did, but almost all whites are much better off than most blacks. The Democratic
Alliance, which is part of the government, is a pro-business white-dominated party that
often works to preserve white privilege, including access to schools and opposing BEE.

I am a white person who financially invests in a BEE enterprise and I understand the
policy’s problems. Investment is held back and per-capita growth, which is fundamental to
solving South Africa’s poverty and income distribution, is not happening. But the answer
is to reform the policies, not simply oppose them. BEE is there for a reason.
JOHN MARKIELimpopo, South Africa

There is one important alternative to BEE: improving the dire state of schools in low-
income areas. Instead of trying to force equality at the top of the labour system through
cronyism and ineffective race-based policies, the government should have levelled the
playing field by fixing the education system, which continues to fail young black South
Africans en masse.

I see how students from under-resourced schools struggle to cope with tertiary education.
By contrast, those few black students fortunate enough to attend good schools often excel.
If all were given equal opportunities at school we would be in a much different situation
30 years after the fall of apartheid.

If all that BEE money was spent improving our schools South Africa would not be the runt
of the BRICS litter.

M.J. (Thinus) BooysenProfessor of engineeringStellenbosch University

“At war with the law” (August 9th) detailed Israel’s failure to investigate war crimes and
crimes against humanity in Gaza. However, in your accompanying leader on “Why Israel
must hold itself to account” you accused the International Criminal Court of “becoming
activist” because it issued arrest warrants supposedly “before the Israeli system had time”
to act. In reality, the failure to act, and the improbability of such action, was why the ICC,
a court of last resort, became involved.

A former senior Israeli ambassador was one of six experts who advised Karim Khan, the
ICC prosecutor, before he requested arrest warrants for Binyamin Netanyahu, Israel’s
prime minister, and others in May 2024, seven months into the conflict. A panel of judges
took another six months before unanimously authorising the warrants.

When I met the prosecutor a few days after his requested warrants, he rightly pointed out
that a selective approach, ignoring the crimes of the powerful, would bring the law itself
into disrepute. The rule of law needs defending in all circumstances.

Steve CrawshawFormer UK director Human Rights WatchLondon

The notion of Israel leveraging food as a weapon obscures the bigger picture: Hamas
fleeces aid and uses Palestinians as human shields. The starvation narrative minimises
Israel’s democratic accountability while absolving Hamas of culpability for its genocidal,
self-defeating radical ideology. No wonder conservatives across Arabia and America
stand with Israel. They understand this conflict is existential not only to the world’s sole
Jewish state but also to the West and Islam. It ends when Hamas frees the hostages and its
long-suffering population. Our collective future can’t be held ransom by barbaric
savagery. The sooner historically illiterate Westerners understand that reality, the faster
Palestinians can eat in peace.

Malou InnocentSanta Rosa, California

You gave a misleading impression that policies aiming for net-zero carbon emissions are
to blame for Britain’s high electricity costs (“Bills, bills, bills”, August 2nd). Britain’s
high energy prices are a legacy of outdated electricity markets designed around fossil
fuels, not a failure of net zero. We still use a marginal pricing system, where the highest-
cost generator, typically gas, sets the price for all electricity, inflating costs for consumers
even when renewables provide a large share of supply. The actual cost of wind generation
is obfuscated. Our research has found that smart tariffs, which align power use with cheap
renewable supply, are already cutting consumer costs.

And you overlooked the counterfactual. What would prices look like without this shift?
Britain avoided even worse price rises during the gas crisis thanks to its low-carbon
energy supplies. Now, faster deployment timelines mean that those same sources will be
central to meeting power demand from AI. Net zero is not the problem, it’s the solution.
We just need to do it fairly, efficiently and fast enough.

Professor Robert MetcalfeChief economistCentre for Net ZeroLondon

Europe’s car lobby dresses up protectionism as “deregulation” (By Invitation, July 15th).
Pushing the phase-out of combustion cars from 2035 to 2039 or 2040 would dump roughly
one gigatonne of extra carbon dioxide, rack up over €200bn ($233bn) in climate costs and
keep Europe strapped to the oil-price roller-coaster it vowed to escape. The proposed
detour via biofuels and e-fuels is wishful thinking: scarce, costly, better reserved for
aviation and largely import-dependent.

The infrastructure alibi is thin, too. Charging points are scaling faster than targets, and
many households already pair electric vehicles with rooftop solar. The economics are
moving faster still. Battery prices slid below $100/kWh last year and EVs have hit price
parity in China. Delay now would repeat the smartphone mistake: innovate, hesitate, then
watch the market migrate east.

Europe should hold the 2035 line, aim incentives squarely at zero-emission drivetrains
and back an industrial policy for batteries and charging. Cleaner air would save tens of
thousands of lives and billions in health costs. Energy security comes free with
electrification.

Felix CreutzigChairInnovation and Policy Acceleration University of SussexBrighton

Professor Kai NiebertUniversity of Zürich

Johan RockströmDirectorPotsdam Institute for Climate Impact ResearchUniversity of
Potsdam

Readers intrigued by your article on life in underground intercontinental ballistic missile

silos (“Death from below”, July 26th) should consider a visit to the Titan Missile Museum
near Tucson, Arizona. There they can experience what it was like. It is amazing that one of
the world’s most secret and secure military bases is now full of picture-taking
international tourists.

JIM RupertVancouver

You made a mistake by assuming that people like to quicken the playback speed at which
they listen to audio content (“The need for 2x speed”, August 16th). I’m in my late 70s and
perhaps it’s my age, but I find many videos are too fast. Indeed, it seems speech itself has
speeded up, with many younger people talking so quickly they clip off the ends of words.
The dialogue in some streaming programmes is so rapid there is barely time to read the
captions let alone assimilate them. Many YouTube videos are so fast that the presenters
are jerking around like Charlie Chaplin firing off a machine gun.

Fortunately, there is an option for slower playback and for me the sweet spot is 0.8x to
0.9x, which is slow enough for me to follow content without sounding zombie-like.

Michael AllenOttawa, Canada

I listened to your article at double speed. I missed a few points the first time so it required
another listen to get the gist.

Eugene YigaBarcelona

Your review of the novels conservatives want you to read reminded me that life can
imitate art (“The right way to read”, August 9th). Imagine a delusional leader scarred by
past events who assembles a crew of misfits, promises them riches, and then after taking
command reveals that his true aim is to exact revenge. Sound familiar? It’s “Moby-Dick”.
It doesn’t end well.

L. RichRockville, Maryland

sò
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By Invitation
The boss of SAP on Europe’s botched approach to digital sovereignty
By Invitation | The global tech race

The boss of SAP on Europe’s botched approach to digital

sovereignty
It’s time to prioritise code over concrete, writes Christian Klein

August 28th 2025

The debate about digital sovereignty has seized Europe. In an era of geopolitical tension
and technological rivalry, the desire to control one’s own digital destiny is understandable
and necessary. The question is not whether Europe should be sovereign, but
how. Unfortunately, the continent’s current answer—pouring billions of euros into building
vast data centres and subsidising hardware investment—is a misguided solution to the
wrong problem.

The European Union plans to invest €20bn ($23bn) in up to five “ai gigafactories”,
massive data centres intended to help Europe catch up in artificial intelligence. This
approach is based on the premise that owning the physical infrastructure is the key to
independence. But anyone who believes that servers and processors alone will secure
European sovereignty misunderstands the nature of global technological interdependence
and overlooks Europe’s true digital strengths.
The hardware train has left the station. Even if a data centre is operated by a European
provider on European soil, its essential components—from processors to network
technology—will almost certainly have been designed in America and manufactured in
Asia. To achieve full technological self-reliance would require banning all foreign
hardware and, logically, all the foreign software that is deeply embedded in European
businesses.

Such a move would be impractical and economically ruinous, severing Europe from
innovation elsewhere. The reality is that most customers require the performance and
innovation that America’s cloud providers enable.

The global ai race is defined by competing approaches, led by America and China. On one
side is a nimble ecosystem of tech firms, which innovates at speed. On the other is a state-
directed approach where innovation is aligned with national strategy.

Europe must walk its own path, embracing openness, quick decision-making and strategic
investment while applying smart regulation that governs outcomes, not ideas. This can be
done by building on the continent’s strengths, including excellent research and a strong
industrial base. This model must be business-led but values-driven, anchored in European
principles such as respect for privacy, data protection and democratic accountability.

To achieve that, we must become comfortable with a form of digital sovereignty founded
on both self-determination and mutual dependencies. True sovereignty is the ability to
always maintain control of one’s data and assets while deploying the best available
technologies—regardless of their origin—on one’s own terms.

A one-size-fits-all approach will not do. Instead, control must be calibrated to the
sensitivity of the data. For the most sensitive public data, such as in defence or health care,
we need fully isolated cloud environments run by security-vetted personnel. But sensitive
corporate data need not be blocked off from the internet entirely; the priority here should
be ensuring data remain in Europe, protected by high cyber-security standards and
customer-managed encryption. Then, for many other use cases, data can also be processed
outside Europe, provided the appropriate standards are met. My own company—one of
Europe’s largest tech firms by market value—can already offer clients these choices,
including a fully sovereign cloud for selected national governments.

Digital sovereignty is not an end in itself, though. It is a means to strengthen

competitiveness. Building data centres alone will not boost productivity. Real progress
comes from transforming how we work: by deploying ai to drive efficiency and
sustainability, by digitising processes, by reimagining business models.

It will be this application of ai that creates demand for massive computing power, data
centres and advanced chips. Rather than subsidising infrastructure and hoping for the best,
public investment should flow directly into applied ai and software that create tangible
competitive advantages. This is exactly what modern enterprise software does by
embedding ai into business processes.

Industry must also step up. Consider its intricate supply chains—and then imagine
applying ai to create a self-orchestrating network among European companies that predicts
disruptions, reroutes shipments and optimises for climate goals. This leap in resilience
and efficiency, offering real-time tracking over vague promises, would bolster Europe’s
economy for the long term, not with concrete but with code.

Policymakers must create the right environment for this. Despite good intentions, the eu’s
Data Act risks over-regulating data usage and burdening companies with excessive
bureaucracy. Under Chapter II, even small firms must design products that enable data-
sharing, including with third parties that may be direct rivals. Strikingly, the Act ignores
the established competition-law principle that only dominant players should be expected
to support competitors, under specific conditions. A measure meant to foster innovation
may end up stifling it.

Similarly, the bloc’s ai Act, which came into force last year, should be paused until there
is more clarity on its precise implications. In all cases, let’s prioritise innovation, not red
tape. Furthermore, supporting the application of ai throughout the economy will require a
lot more investment in related educational initiatives. That is the only way to build a
workforce capable of turning advanced ai tools into something that has value in the real
world.

One thing is clear: Europe’s digital future will not be decided in the server room. It will
be decided in the continent’s factories, its firms, large and small, and its public
administrations. It hinges on one question: can we finally think digital sovereignty through
to its logical conclusion and invest not just in storing data, but in applying technology to
generate real, lasting value? ■

Christian Klein is the chief executive of SAP.

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Briefing
Jair Bolsonaro’s trial shows Brazil a way out from polarisation and stagnation
Briefing | Order and progress

Jair Bolsonaro’s trial shows Brazil a way out from

polarisation and stagnation
Moderates on both sides see a chance to draw a line, and start fixing deep-seated
problems

August 28th 2025

Brazil’s chief justice, Luís Roberto Barroso, did not receive an official notice when his
American visa and those of his children were apparently revoked on July 18th. Like most
of his colleagues on Brazil’s Federal Supreme Court, he learned the news from an online
post by Marco Rubio, America’s secretary of state, who cited the court’s “persecution” of
Brazil’s hard-right former president, Jair Bolsonaro.

Sitting in his vast office, Mr Barroso looks emotionally exhausted as he recalls how his
son had to leave his career in America and return home. The room is sparsely furnished
with just a few tables and black leather chairs. It has not been fully refurbished since it
was trashed by a horde of Mr Bolsonaro’s supporters on January 8th 2023, in an
insurrection that shocked the country, mirroring what had happened two years before in
Washington, dc. On August 26th Brazil’s president, Luiz Inácio Lula da Silva, said his
justice minister’s visa had also been revoked.

The visa bans are part of an astonishing attempt by Donald Trump to shield his friend and
ideological ally, Mr Bolsonaro, from prosecution. On September 2nd the former president
goes on trial on charges that he attempted a coup in order to remain in power after losing
his re-election bid in 2022. He denies the charges, but there is a widespread expectation
that he will be found guilty.

It is an extraordinary moment for Brazil. In a country with a long history of military

dictatorships, it is the first time that anyone has been tried for plotting a coup. But it is also
an unprecedented moment globally. America is using tariffs, sanctions and visa bans in its
attempt to force a democracy to subvert its justice system.

On July 9th ministers were in a cabinet meeting when Mr Trump published a letter online
announcing tariffs of 50% on Brazilian imports, citing a “Witch Hunt that should end
immediately!” “At first, we thought it was fake,” says one minister. “We are living in a
moment of irrationality,” he exclaims, throwing up his hands. Mr Trump followed up by
imposing sanctions, under the Global Magnitsky Act, on Alexandre de Moraes, the
supreme-court judge who has led the prosecution of Mr Bolsonaro. Such measures, usually
reserved for genocidal generals, mean being frozen out of America’s banking system.

As we lay out in our investigation this week, Mr Bolsonaro supercharged Brazil’s

polarisation and strained the sinews of its democracy. Yet unlike other countries where
illiberal populism has emerged, such as the United States, Hungary or Turkey, Brazil’s
institutions, notably its supreme court, did not remain supine.

And now, though there is a possibility that Mr Bolsonaro’s supporters could rally around a
new figure on the hard right, there are signs that Brazil is tiring of him and his family, and
that Brazilians are weary after a decade of political upheaval. If he is found guilty, the
country, divided though it is, could put the worst of the polarisation behind it. There is a
growing consensus across the political spectrum of the need to restore the balance of
power between the branches of government and to tackle Brazil’s economic weaknesses.
If Brazil can find a path towards this destination, it will not only save itself another
decade of strife, but perhaps show a way out of populism for others to follow.

Whether this is possible depends on how the country’s politicians, who are gearing up for
a general election next year, respond to whatever judgment is handed down to the former
president, and on whether they have the courage to argue for serious constitutional reform.

If convicted, Mr Bolsonaro and seven others (who also deny the charges) face decades in
prison on charges of masterminding the coup plot. Another 25 face lesser charges. More
than 1,200 Brazilians have already been tried or entered plea bargains for taking part in
the insurrection.

As the pre-trial investigations have progressed, Mr Bolsonaro has tried to enlist the help
of allies. Last year he spent two nights at the Hungarian embassy, fuelling speculation that
he might try to flee. On August 20th police found a draft letter to President Javier Milei of
Argentina on his phone, in which he requested political asylum (it is not clear whether it
was sent).

He has also turned to his sons. In March the most politically gifted of the four, Eduardo,
took leave from his job as a congressman in Brazil and moved to Texas to lobby his
friends in the maga movement to sanction Mr Moraes. On August 11th Scott Bessent,
America’s treasury secretary, abruptly cancelled a virtual meeting with Fernando Haddad,
Brazil’s finance minister. Instead he met Eduardo, who warned that Brazilian banks were
not complying with sanctions on Mr Moraes.

Eduardo’s pleas have resonated with Mr Trump, who sees Mr Bolsonaro as his tropical
mirror image. Both were victims of assassination attempts. After losing their respective
re-election bids, both are accused of inciting their followers to riot, which they deny. If Mr
Bolsonaro is convicted, he will be held to account in a way that Mr Trump was not after
his supporters stormed the Capitol on January 6th 2021.

Mr Trump has little patience for Lula, as Brazil’s current left-wing president is known. In
Brasília officials huff that Mr Trump has closed all doors to them. The American president
sees Mr Bolsonaro as having helped spread his flavour of populist nationalism abroad,
and he sees Brazil as a large economy that he can bully without serious consequences,
unlike China or Mexico. The tariffs have backfired. Lula is portraying himself as the
defender of Brazil’s sovereignty (though officials remain keen to seal a trade deal). This
has lifted his flagging approval ratings and put him in the lead ahead of next year’s
election.

Escalation is a risk. Bolsonaristas in Congress want to pass an amnesty for those who
participated in the January 8th insurrection. Dozens of senators are also trying to impeach
Mr Moraes.
Barred from competing in next year’s general election, Mr Bolsonaro may anoint one of
his sons or his wife, Michelle, to run. If he backs one of Brazil’s more moderate right-
wing governors, they will probably have to promise to pardon him if they win. Right-wing
parties could sweep Congress and pursue the impeachment of Mr Moraes. It is easy to
imagine Brazil falling further into dark polarisation, and Mr Trump ratcheting up the fight.
However a different outcome seems more likely. After Mr Bolsonaro’s trial, temperatures
may cool. Fully 69% of voters say Eduardo is defending his family’s interests rather than
Brazil’s. A majority supported Mr Moraes’s recent decision to put Mr Bolsonaro under
house arrest and are against an amnesty for the rioters (see chart 1). The former
president’s actions have focused the minds of those who know that Brazil needs to step
back from the extremes. Though in public they seek his blessing, in interviews two right-
wing governors who want to run for president distanced themselves from Mr Bolsonaro.

Three crucial areas need reform: Congress, the economy and, especially, the supreme
court. Unlike its counterparts elsewhere, the court combines three functions: it is the
chamber of last instance for appeals; it rules on all matters related to the constitution; and
it rules in criminal cases against politicians. Because of scandals in the past decade, it has
become more visible in politics. After a massive corruption scheme was uncovered in
2014, the court sent dozens of politicians, including Lula, to jail (and then overturned his
conviction on technicalities). Now it is dealing with Mr Bolsonaro. Many Brazilians, on
all sides, have come to believe that the court meddles too much in politics.

It has such unusual powers because of the constitution of 1988. One of the world’s longest,
it was written in the shadow of a two-decade military dictatorship and seeks to avoid men
with guns ever ripping people’s rights away again. It does so by giving Brazilians a large
number of rights and the government a slew of obligations.

In most countries, cases reach the top court only after filtering up from lower bodies. But
in Brazil the constitution allows the president, state governors, bar association, trade
unions and political parties to file lawsuits directly with the court. This has created a
heavy caseload. It issued more than 114,000 rulings last year.

To handle this, judges are allowed to make decisions unilaterally. This has turned
individual judges into stars. The court even has its own TikTok account, and livestreams
decisions on YouTube. “Some people say we are even more famous than the national
football team,” quips Gilmar Mendes, one of the justices. “I don’t see that as a good
thing.”

As a result the court, not the legislature, “decides all important issues in the country:
ethical, economic, political,” says Mr Barroso. There are pros and cons to having such a
powerful court, he notes. But, in a country that had a tradition of coups d’état since the
beginning of the republic in 1889, “We have now had 40 years of democracy and
institutional stability.”

Mr Bolsonaro’s reign of intimidation led the court to give itself even more powers. His
followers harassed the justices online and sent them death threats. In response, the court
allowed itself to open investigations into online threats against itself, an unusual move that
turned it into victim, prosecutor and judge all at once. Mr Moraes was put in charge of the
probe, which became known as the “fake-news inquiry”. He has carried out his mission
with unnerving zeal. Last year he shut down X, Elon Musk’s social-media platform, for
more than a month in Brazil and threatened to fine anyone who tried to use it.

The probe remains sealed—it is now overseen mostly by federal police and the public
prosecutor—and has crept into its sixth year with no end in sight. It is unclear how many
accounts Mr Moraes has ordered to be taken down and why. He has been accused of
overreaching, for instance by ordering accounts, not just specific posts, to be blocked.

Criticisms of the court are ten a penny from Mr Bolsonaro’s supporters. More striking,
though, is that moderates are also now complaining. Many say it is possible for the court
to have saved democracy, but for it also to be too powerful. “The court acted initially to
defend democracy,” says one right-wing presidential hopeful. “But I think there’s been
exaggeration in some cases.” One centre-left political analyst says, “Moraes has a heavy
hand. The error is in the dose, not the prescription.”

Some scholars worry that a strong court is sapping faith in politics. When most political
matters end up decided by the court, why vote? Others grumble about the judges being
unelected rulers, and using their ability to try politicians as a cudgel to determine policy.
Even the supreme court’s own judges think it does too much. “Here in the court, we all talk
about the excessive judicialisation of politics,” says Mr Mendes. One proposal to rein in
the court’s power would make it harder for politicians to petition. Another would limit its
jurisdiction over criminal cases involving politicians, letting lower courts rule.

The second institution that needs reform is Congress, which has become easier to capture
in the past decade. This happened not just under Mr Bolsonaro, but also Dilma Rousseff, a
left-wing predecessor, and Michel Temer, a centre-right one. Congress, when faced with a
weak president it did not like, gave itself more control over the federal budget, and used
this power to splurge on its own pet projects. Successive presidents protected themselves
by conceding such powers. Today, Congress directly controls around a quarter of
discretionary spending in the federal budget, compared with 1% in the United States. This
has made Brazil harder to govern.

Leaders on the right and left agree that congressional power must be trimmed. Congress
has hijacked the federal budget, says the right-wing presidential hopeful. “They took all
the power…but none of the responsibility.” Mr Haddad, the finance minister, fumes that
parliament’s parochial interests make it harder for him to balance the books. Reining in
Congress will require a more vigorous president with strong lieutenants in the legislature
and even constitutional reform, a big challenge given that Congress itself would need to
vote for it.

The third issue that badly needs reform is Brazil’s creaking economic model, which
promotes cronyism and hampers growth, leaving many voters disenchanted with
politics. These woes cannot be blamed on Mr Trump’s tariffs. Exports are equivalent to
less than a fifth of gdp, compared with 90% in open economies such as Vietnam. Just 13%
of exports go to the United States. And businesses with contacts in Washington have
secured exemptions on 700 products, from planes to orange juice. Markets have therefore
shrugged at the tariffs. Goldman Sachs, a bank, has not changed its growth forecast for
Brazil this year.

Instead, Brazil’s economic wounds are self-inflicted. Tax exemptions total 7% of gdp, up
from 2% in 2003 (see chart 2). Dozens of sectors receive tax breaks or credit subsidies on
the basis that they are national champions, or from “temporary” help that has never ended.
Brazil’s courts cost 1.3% of gdp, making them the second-most expensive in the world,
with much of that going on cushy pensions and perks. Some $15bn a year, or 78% of the
military budget, is spent on pensions and salaries. The United States spends just one-
quarter of the defence budget on personnel.
Even the beneficiaries of these perks admit this is unwise. “I have no doubt that for the
Brazilian private sector it would be better to give up short-term benefits in exchange for a
thriving country in the long run”, says Beto Abreu, the boss of Suzano, the world’s largest
cellulose producer.

Yet perhaps the biggest reason spending is high is that the constitution requires it. The
charter mandates an extraordinary 90% of all federal spending. Notably it ties most public
pensions to wage growth, and requires health and education spending to rise in line with
revenue growth. If Brazil were to end most tax exemptions and undo these two policies, its
debt-to-gdp ratio, which is already above 90%, would be almost 20 percentage points
lower by 2034 than it would be without any reform, reckons the imf. To deal with all this,
what is really needed is to amend the constitution.

High spending and a tangle of subsidised credit schemes also reduce the effectiveness of
monetary policy. That means the central bank must increase rates even higher to control
inflation. Brazil’s real interest rate of 10% is among the highest in the world. Such rates
cripple investment and drag down growth, while well-connected businessmen can get their
hands on artificially cheap rates.

Among those who must pay the full rate is the government itself. It is thus stuck in a cycle:
it issues debt to finance high spending, and must then pay eye-watering interest payments.
The government spent 30% of revenue in 2023 on interest payments. This makes it harder
to afford spending that could boost productivity, such as education and infrastructure.
Tackling these problems would help unlock growth in Brazil, which has lagged behind
almost all other major developing economies in the past two decades, including those of
China, India, Indonesia and Turkey. Growth, in turn, would make it easier to escape the
calculus of zero-sum politics, since rising prosperity dulls the appeal of the politics of
grievance.

The prerequisite for such changes is pragmatic politics. To amend the constitution in order
to rein in the power of the supreme court, the profligacy of Congress and the vast
mandatory spending requires a three-fifths majority in both legislative houses. That is
daunting, but possible. In 2023 Lula’s government passed a tax reform through a
constitutional change. Brazil’s constitution has been amended over 140 times since 1988.
The trouble is that those amendments often just tweak policy. Bolder reforms that excise
some of the endless policy prescriptions from the constitution would reduce the court’s
power and make cutting spending easier.

Brazil’s political landscape has been in disarray for much of the past decade. Intense
polarisation has made it harder to pass reforms. Mr Bolsonaro’s removal from public life
could give the country a chance to tackle these problems. It will take boldness, vision and
compromise. But politicians on both sides appear ready to try. ■
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United States
A $19bn industry is about to pay its workforce for the first time
Donald Trump has purged one of the CIA’s most senior Russia analysts
Zohran Mamdani is promising lots of things he can’t actually do
Have foreign tourists really avoided America this year?
The Democrat who calls Trump a child of God
New York is turning 400 and no one cares
United States | College sports

A $19bn industry is about to pay its workforce for the first

time
The economics of American college sports have been upended

August 28th 2025

Tucked away in a quaint university town in the Midwest sits the world’s third-largest
sports stadium. Known aptly as the Big House, the American-football stadium in Ann
Arbor, home of the University of Michigan Wolverines, can pack in 115,000 fans. One of
the world’s most capacious, its gate receipts helped Michigan’s football programme
generate $150m in revenue last year, including television rights. Yet the athletes on the
field earned no salaries. In fact, for decades, no college athlete in America has been paid
directly by their university. That is about to change.
This year marks a turning-point in the $19bn spectacle that is American college sports (see
chart 1). Hidden behind the pageantry of marching bands, fight songs and century-old
rivalries with names like “the Backyard Brawl” lies what is, in effect, the second-biggest
sports league in the world (after the NFL), boosted by charity tax benefits and puffed up by
public-service pretensions. In 2024 college sport generated twice as much revenue as the
English Premier League. Nearly all that came from American football and men’s
basketball. For decades the system was lucrative because the labour was free. The spoils
flowed to coaches, administrators, commissioners and media conglomerates.

After years of litigation, in June a federal judge approved a $2.8bn settlement between the
National Collegiate Athletic Association (NCAA), the governing body of college sport,
and a coalition of current and former college athletes. The deal compensates players for
years of lost earnings and rewrites the industry’s economics. Each university may now pay
up to $20.5m a year directly to its roster of athletes.

Lawmakers and judges are likely to keep fiddling with the details. On July 24th Donald
Trump issued an executive order about “saving college sports”, which laid out several
interventions involving the distribution of athletic scholarships and the shenanigans of
wealthy alumni. Members of Congress have introduced a bill to curb the legal and
financial obligations universities now face. What follows will test whether universities,
the courts, legislators and investors can impose order on a system whose founding logic of
amateurism has collapsed.

The college-sports system is an American oddity. In no other country would the same
university train both future Nobel laureates and all-star point guards. Universities function
as a farm system for the richest professional sports leagues, the NFL and the National
Basketball Association. University stars also graduate into professional baseball, hockey,
women’s basketball, golf and tennis. The revenue some of them generate while on campus
subsidises other college sports. At the centre of it all sits the NCAA, presiding over a
labyrinth of leagues, divisions and conferences, and enforcing a fussy rulebook.

While most athletes receive no compensation, before this year’s change the top ones were
paid in academic scholarships. Defenders of that bargain cast athletes as important
contributors to campus life and spirit. Critics decry the big programmes as debasing and
corrupt, cheapening a university degree under the pretence of amateurism.

Barred from paying players, universities indulged in baroque excess to lure recruits.
Locker rooms gleam with Ferrari-leather chairs and marble-lined showers. Coaching
contracts are bloated, too. In 43 of 50 states the highest-paid public employee is a
university football or basketball coach. Texas A&M, the largest university in the country,
is paying about $77m in severance over eight years to Jimbo Fisher, its former head coach,
while handing his successor $7m a year. For comparison, the median manager in the
English Premier League earns $6m a year. In 2023 over 60% of athletic department
spending fell into just three categories: facilities, coaching salaries and pay for athletic
department staff. Barely 10% went to scholarships.

The system first cracked in 2019 when Gavin Newsom, California’s governor, signed a
law letting college athletes profit from their “name, image and likeness” (NIL). This meant
they could earn money as social-media influencers and brand ambassadors. The NCAA
fought the law, but the Supreme Court upheld NIL rights nationwide. The litigation
resolved in June put a final stake in the old amateur order.

Paying student-athletes may restore some balance, and it could bring into the open an
underground economy that long operated in the shadows. In decades past athletes may not
have been paid directly, but perks and illicit deals enriched some of them. The NCAA
proved to be a poor enforcer of its own rules. It was unable to police systemic abuse, but
obsessed over trivial infractions like a head coach buying a recruit a burger.

Even the new NIL programme meant to remedy some of this has produced its own murky
marketplace. Operating like political super PACs, third-party “collectives” funded by
boosters have sprung up to funnel staggering sums to student-athletes. Since 2022 the NIL
fund for Texas Tech University has raised $63m. At Michigan Larry Ellison, the founder of
Oracle, helped pry the top high-school quarterback away from Louisiana State University
for a reported $10.5m over four years.

For all the clarity direct-pay offers, it leaves universities to untangle a fresh set of knots.
Many university athletic departments will not have the revenue to pay out such sums. That
could widen the competitive gap across universities even further. The lower tier, already
resigned to being far outspent, may scarcely notice the change. But for the middle tier the
choices will be fraught. “These universities serve their communities very well,” says
Oliver Luck, a former NCAA executive, college player and NFL quarterback. The new
system will “force university presidents to ask whether athletics are important enough to
their university’s educational mission”.

Already some 70% of public universities across the top tier of athletic programmes use
academic funds to prop up their athletic departments. In 2024 just 18 of 110 public
universities in this top division reported athletic revenues that exceeded their expenses.
And over the past two decades, athletic-department spending has grown by 244%,
compared with a 113% rise in academic spending (see chart 2).

This new era will force athletic-department heads to act more like portfolio managers,
balancing returns across a basket of sports. Many have indicated that they will mirror the
recent federal court settlement. It allotted three-quarters of retroactive compensation to
former football players, 15% to men’s basketball, 5% to women’s basketball and 5% to
the rest.

Another question is how Title IX, America’s gender-equity law for universities receiving
federal funds, will shape the new order. If the courts decide that revenue need not be
shared equally between men’s and women’s sports, then market forces will create vast
disparities (see chart 3).

The good news for college football is that it is all but impossible to dent the devotion of
its fans. “Who’s got it better than us?” exclaims one, ambling outside the Big House on a
muggy summer afternoon. Soon the stadium will heave with a crowd large enough to
swallow the town whole, erupting as Bryce Underwood, an 18-year old student and
quarterback, takes the field for the first time. The local boy, from the suburbs of Detroit,
will at least have a fat wallet to soften the tackles. ■

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United States | Insecurity clearance

Donald Trump has purged one of the CIA’s most senior

Russia analysts
The move will have a chilling effect inside American spy agencies

August 28th 2025

The cia officer had worked in American intelligence for more than 20 years. In 2016, as
the country’s top intelligence officer for Russia and Eurasia, she oversaw the production
of a report, which described how Russia had meddled in that year’s presidential election
in favour of the Republican candidate, Donald Trump. A few years later she returned to
the agency as a senior manager, overseeing the cia’s operations and analysis relating to
Russia and the former Soviet Union.

On August 19th her career came to an abrupt end, when Tulsi Gabbard, America’s director
of national intelligence, revoked her security clearance, along with those of 36 other
serving and former officials accused of “betray[ing] their oath to the constitution”. Mr
Trump’s administration has previously used its control over clearances as a political
cudgel against retired officials. But the cia officer in question, along with two others
involved in that 2016 report, Shelby Pierson and Vinh Nguyen, are some of the most senior
serving career intelligence officials to be purged under Mr Trump.

These steps signal a sharp escalation in his war on American spooks. On August 22nd
Pete Hegseth, the secretary of defence, removed the head of the Defense Intelligence
Agency, Lieutenant General Jeffrey Kruse. His agency had produced a preliminary damage
assessment of America’s bombing of Iranian nuclear facilities that infuriated the
administration.

The purge at the CIA has caused alarm across the workforce. To lose a clearance is a
“career ender”, says Larry Pfeiffer, a former cia officer who had his own clearance
yanked on January 20th. “Even the cleaning crews have clearance.” Many officers also
rely on security clearances after retirement to seek consulting positions. “Who will want
to work on some controversial issue or go out on a limb analytically?” asks an insider. “It
is one thing to speak truth to power in the abstract, and another when your career and
family livelihood is very much on the line.”

The cia has a long history of delivering unwelcome news to presidents—its dissenting
analysis during the Vietnam war in the 1960s and the Iraq war in the 2000s resulted in
repeated clashes between Langley and the White House—but this level of retribution is
unprecedented. Many of the 37 targeted officials had worked on Russia only tangentially
and a long time ago. Mr Nguyen was the chief data scientist at the National Security
Agency (nsa), America’s signals-intelligence service. Weeks earlier insiders had told The
Economist that he was “the most thoughtful person on AI in the federal government”. That
agency’s director, General Tim Haugh, and its top lawyer, April Doss, were fired in April
and July respectively. Others appear to be on the list for no other reason than their
criticism of Mr Trump. Ted Gistaro, a former cia officer who served as Mr Trump’s main
intelligence briefer from 2016 to 2019, had made mildly derogatory comments about Mr
Trump. Most others appeared on a list published by Laura Loomer, a far-right activist, on
July 29th.

Mr Trump has long been obsessed with intelligence reporting about Russia’s role in the
2016 election. In July John Ratcliffe, the director of the cia, took the unusual step of
publishing an internal review of the analytical “tradecraft” in the CIA’s Russia report of
that year. The review praised many aspects of that report, but found that it had been written
too quickly and with too much involvement from agency heads. That same month, Ms
Gabbard also declassified a much older House Intelligence Committee review into the
same report. The review, co-authored by Kash Patel, who is now the director of the fbi,
included verbatim quotes from intercepted material and descriptions of human sources in
Russia, and was declassified over the objections of the cia.

The administration is also using harsher legal means to strike at critics. In July it was
reported that Mr Ratcliffe had made a criminal referral of John Brennan, one of his
predecessors, to the fbi for allegedly lying to Congress. Mr Brennan, who had his
clearance revoked in Mr Trump’s first term, was cia director at the time of the Russia
report and clashed with the president in the early days of his first term.

“This is uncharted territory,” says Mr Pfeiffer, “particularly in terms of the numbers of

people and the lack of detail about what they did wrong.” Mark Warner, the senior
Democrat on the Senate intelligence committee, speaking shortly before the recent purges,
said that the situation was worse than he had expected. In private, he noted, Republican
colleagues on the intelligence committee, fearful of sticking their heads above the parapet,
had encouraged him to speak out in public.

On August 20th Bill Burns, Joe Biden’s cia director, wrote an open letter to the
“discarded” officials in the Atlantic, a magazine. “If intelligence analysts at the cia saw
our rivals engage in this kind of great-power suicide, we would break out the bourbon,” he
wrote. “Instead, the sound we hear is of champagne glasses clinking in the Kremlin and
Zhongnanhai.” ■

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United States | The art of the impossible

Zohran Mamdani is promising lots of things he can’t

actually do
A few reasons to be relaxed about the plans of the Democratic front-runner to be
New York’s mayor

August 28th 2025

Like many politicians running for office, Zohran Mamdani, the 33-year-old New York
Democratic mayoral candidate, is partly a fabulist. His story includes tax rises on the
wealthy and businesses, free buses, free child care and a $30 minimum wage by 2030.
Whether or not these are good ideas, most have as little likelihood of becoming tangible as
one of Italo Calvino’s odd, enchanting, invisible cities.

Some of the world’s great cities have powerful mayors. A mayor of Mexico City legalised
abortion and introduced gay marriage. The mayor of Buenos Aires introduced free bus and
subway rides for low-income seniors on his own authority. Germany’s capital, Berlin, is
both a city and a state: its mayor has a role in passing federal legislation. At the other end
of the scale is Paris (see chart). New York’s mayor sits somewhere in the middle of the
power ranking.
New York City has the economy of a medium-sized nation: in 2024, its gdp of $1.3trn was
double Argentina’s and greater than that of all but 16 countries. Yet it is also a
municipality beholden to the state’s governor and to state law. The city’s charter, issued by
the state, grants “home rule” by a chief-executive mayor and legislative body—a relatively
weak City Council—but the state retains ultimate authority.

To pay for his plans, Mr Mamdani proposes two tax hikes: an additional tax of 2% on
incomes of more than $1m a year, and raising the top state corporate-tax rate to 11.5%,
from 7.25%. (This reckoning is misleading: New York companies already pay additional
taxes that bring their total rate to 17.5%, according to Ana Champeny, of the Citizens
Budget Commission, a watchdog.) Mr Mamdani’s campaign says those increases would
yield $4bn and $5bn respectively. But in any case his tax plans are moot. Mayors cannot
set income or business taxes. Increasing them would require the state legislature to act,
plus the governor’s signature. And Kathy Hochul, New York’s Democratic governor, has
already ruled the idea a nonstarter. “I’m not raising taxes at a time where affordability is
the big issue,” she has said.

The new mayor will need to propose a budget one month after taking office in January,
when he will face an immediate shortfall of $6bn-8bn, according to Ms Champeny. The
city may also lose out from an expected $3bn cut in federal grants to the state, she says.
Without the tax increases he is powerless to effect, Mr Mamdani would face a $15bn-17bn
shortfall in his spending plans. The real debate will not be over what to spend, but what to
cut.

A quarter of New York City’s budget comes from either the federal government (10%) or
the state government (17%), notes Enid Slack, an expert in municipal finance at the
University of Toronto School of Cities. “These transfers...have to be spent on what the
federal and state government said they have to be spent on,” she says. “So not a lot of
local autonomy.”

Over rent, buses and the minimum wage, New York’s mayor also has limited control. He
appoints a board that sets the rent for 50% of rented flats, the rent-stabilised ones. But
boards don’t necessarily do the mayor’s bidding. The board voted 5-4 in June to raise
rents on one-year leases by 3% and on two-year leases by 4.5%, ignoring pleas by Eric
Adams, the current mayor, for lower increases. Mr Mamdani also wants to build 200,000
units of affordable housing by borrowing $70bn. That would exceed the debt limit by
$30bn—and therefore would require state approval.

As for making buses free, that is a call for the Metropolitan Transportation Authority (mta)
board, to which the mayor can recommend only four of 23 members. The mta says that free
buses could mean worse service, and that 44% of bus riders already evade paying their
fares.
One curious dimension of Mr Mamdani’s campaign is that, even as he promises to
accomplish things outside his authority, he is seeking to surrender what other mayors have
regarded as an important power: authority over the school system (and with it, perhaps,
accountability for the quality of education). Mr Mamdani wants to give that power to a
mayor-appointed board. Making such a change would be up to the state legislature, not
him.

When it comes to the police, though, the mayoral handcuffs come off. nyc’s mayor appoints
the commissioner, can expand or cut the force and influences its methods. Conservatives
and moderates have drawn attention to Mr Mamdani’s past calls to defund the police and
eliminate the prison system. He has dialled that down, but still plans to disband a unit that
breaks up protests; reduce police involvement in emergencies (giving a bigger role to
mental-health workers); and cut overtime. He would have the power to do all of this. “The
mayor can [also] refuse to send the nypd to Columbia in response to calls to arrest
protesters or take down encampments,” notes Mitchell Moss of New York University.

None of this is to downplay the importance of the office. A determined mayor who masters
detail and knows how to exercise power can do a lot of good. Michael Bloomberg, the
city’s best mayor in recent memory, oversaw a 32% fall in crime between 2001 and 2013
and rezoned 40% of the city. In some ways New York is still living off his achievements.
But the risk from electing a mayor with a vivid imagination is limited. Which, given some
of Mr Mamdani’s instincts, may be a relief. ■

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United States | From sea to shining sea

Have foreign tourists really avoided America this year?

Our analysis of whether the country is losing its international appeal among
holidaymakers

August 28th 2025

AMERICA HAS rarely been out of the headlines this year. The world has watched as the
Trump administration has slashed government departments, shaken alliances, increased
deportations and sent the National Guard onto city streets. For the tourism industry, not all
publicity is good publicity: our analysis of available data suggests that the number of
international visitors to the land of the free has dropped markedly in 2025 compared with
the same period in 2024.

At first the picture was muddied. Early reports suggested a sharp fall in March, coinciding
with Donald Trump’s tariff threats. But later analysis showed a spike in April. The real
cause was the timing of Easter, which was in late March last year but mid-April this year.
Daily arrivals data from 20 major airports confirm this pattern (see chart 1).

With most of the summer season now visible, the trend is harder to miss. Using monthly
data on arrivals at all airports from America’s International Trade Administration, a
government agency, The Economist finds that foreign arrivals at American airports are
down by 3.8% compared with 2024, or 1.3m fewer people. The slump was steepest
between May and July, when arrivals fell by 5.5% year on year. That bucked the global
trend as tourism finally recovered to pre-pandemic levels.

The steepest drop came in arrivals from Canada (see chart 2). Canadian entries at
American airports are down by 7.4% so far this year, and by 13.2% over the summer. Car
crossings have dropped by more: in June they were a third lower than last year. Many
Canadians are boycotting American goods and shunning trips south after Mr Trump’s
tariffs on Canadian exports and his threats to annex the country.

Not all of America’s tourism hotspots have been affected equally. Over the summer Boston
Logan and Chicago O’Hare airports each saw a roughly 8% fall in international arrivals
compared with the same period last year; at New York’s JFK airport they dropped by 7%.
But Florida resort destinations such as Orlando and Tampa drew more tourists from
overseas this summer than last. That has helped stabilise the number of foreign arrivals at
major airports as of mid-August.

Travel and tourism make up around 3% of America’s GDP. Losing visitors could be
costly, but so far hotel operators have reported that higher spending by well-off domestic
travellers has softened the blow.
These travellers, however, are also flying abroad in greater numbers than last year, as
international travel recovers from the pandemic. Departures of American citizens on
international flights are up by 2.9% on last year, and by 2.5% between May and July (see
chart 3). In 2024 some 22% more Americans flew abroad than foreigners came in; this
year so far the gap has widened to 27%. For a president obsessed with trade imbalances,
more Americans spending money overseas, while fewer foreigners spend in America,
should be vexing. ■

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foreign-tourists-really-avoided-america-this-year
United States | Landon calling

The Democrat who calls Trump a child of God

James Talarico wants his party to fight for the Christian vote in Texas

August 28th 2025

PLANO, A SUBURB of Dallas, is not friendly territory for Democrats. But when James
Talarico, a state representative, headlined a “Blue Texas” rally there last month more than
1,000 people showed up. After the two-storey bar rented for the event filled with people,
they moved to a second one across the street where he delivered the same speech to a new
crowd. The locals who came were not the “little old blue hairs”, as Mr Talarico lovingly
calls the Democrats’ most-loyal demographic. “It was a bunch of bros, like guys named
Landon,” he recalls. “I was like you are welcome Landon, come join.”

Many of the Landons said this was the first political event they had been to. Mr Talarico
flipped a Republican seat north of Austin seven years ago—becoming Texas’s youngest
state lawmaker—by convincing people like them that their bosses, landlords and insurance
companies would “continue to use the political system to screw them over” until they
decided to care about politics. He is not your ordinary Democrat. Not only does he drive a
Chevy Colorado truck and own Lucchese cowboy boots engraved with the Texas state
seal, but he invokes so many Bible teachings in conversation that you may get Sunday
school flashbacks. The turnout that night was the result of something more idiosyncratic:
an endorsement he got four days earlier from Joe Rogan, America’s top podcaster, for a
position he isn’t running for.

In the middle of a conversation about how corrupt Washington politics are Mr Rogan told
Mr Talarico to run for president. “We need someone who’s actually a good person
because the Democrats have very few candidates that are,” he said. The moment
catapulted him into parts of the internet where only Republicans go. National Democrats
began murmuring what those from Texas have been saying for months. Could a liberal 36-
year-old from America’s biggest red state give the party a desperately needed shot of
adrenalin?

Mr Talarico is mulling a run for Senate in 2026. Texas Democrats notoriously dupe
themselves into believing that winning statewide is just within reach every cycle. Cue the
déjà vu, but next year they reckon they stand a better chance. Ken Paxton, Texas’s red-meat
attorney general, is challenging incumbent John Cornyn in the Republican primary. He is
far ahead in most polls. Mr Paxton’s nomination would give a Democrat who can sway
moderates an opening. When asked how he is different from Beto O’Rourke, an El Paso
Democrat who lost two big Texas races, Mr Talarico points to his “shared moral
vocabulary” with conservatives. Working with Republican politicians became easier
when he joined them for regular Bible study at the capitol.

The Democrat, who is in seminary training to be a pastor, wants to be the country’s loudest
Christian voice against Christian nationalism. He believes that Jesus scrapped the Jewish
legal system in favour of two sweeping values: love God and love your neighbour. That
allows for gay people in church, demands health care for the poor and discourages
hoarding wealth in a way that morphs into a Bernie-like disdain for political megadonors.
It also requires loving the enemy. “Donald Trump is a child of God,” he says. This year he
fought bills to put the ten commandments in all Texas classrooms and fund religious
private schools with state money. Secularism, he reckons, is hurting America but so is the
cult of Republican Evangelicalism. In a sermon to his hometown church he quoted his
pastor on why beer is better than religion: “nobody has ever been burned at the stake
because of their favourite brand of beer” and “there are laws against forcing beer on
minors who can’t think for themselves”.

Could someone like him pull the devout into the Democratic fold? Although Mr Trump
ignited new fervour among Evangelicals, their allegiance to Republicans goes back
decades. Mr Talarico reckons they are still movable. During the last presidential race he
worked with a group called Evangelicals for Harris. The Pennsylvania counties that they
targeted, which were the state’s most Evangelical and not swing districts, saw less of a
rightward jolt than neighbouring ones. Republicans know this playbook well. “The
Republican Party has contested the Latino vote and the African-American vote,” he says.
“They don’t win a majority of those people but they win enough to win elections.”

In August Mr Talarico and four dozen Texas Democrats fled the state to protest against a
Republican effort to redraw congressional maps to their advantage. Sitting in a coffee
shop in the suburbs of Chicago while in exile he relishes being surrounded by Democrats
rather than being on a “political island”. Fundamentally, though, he is always in a lover’s
quarrel with his own party. The Presbyterian church he was raised in north of Austin was
critical of the Iraq war, but also of Barack Obama’s drone strikes and mass deportations.
Now his frustration stems from inaction. Democrats in the Trump era, he says, are like the
coach in “Air Bud”, a Disney movie, who waves the rule book around saying that dogs
can’t play basketball as the dog repeatedly dunks in front of him.

Although they may have different policy ideas, Mr Talarico is inspired by the energy of
Zohran Mamdani, the progressive mayoral candidate in New York City. Both millennials
walked the length of their district to meet constituents and blew up on TikTok. Working in
the Texas legislature has taught Mr Talarico that there is no hope for kumbaya and no point
in complaining to the referee. Texas, he says, is America on steroids: the good is better,
the bad is worse and the politics are scrappier. He reckons the country’s Democrats “need
more cowboy”. ■

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United States | Lexington

New York is turning 400 and no one cares

But it’s an important moment to celebrate what made the city great

August 28th 2025

It is a little sad, yet also somewhat inspiring, and in any event altogether fitting, that New
York City is marking its 400th birthday this year and almost no one gives a damn. Last
New Year’s Eve the mayor, Eric Adams, promised a year-long celebration, but denizens
would be forgiven for not having detected many events so far. “They’re not doing squat,”
says Kenneth Jackson, an emeritus professor of history at Columbia University and the
editor-in-chief of “The Encyclopedia of New York City”.

Though disappointed, Mr Jackson is not surprised. “New York has never cared,” he says.
As with other historians of New York, the only thing that seems to make him wistful about
Boston (a younger city, he notes) is its fascination with its past. Russell Shorto, another
historian, says New York “just keeps paving over things”.

It probably does not help that New Yorkers tend to be fractious, and even the history of
commemorating the history of New York is ripe for disputation. Just 61 years ago the
World’s Fair in Queens celebrated the city’s 300th birthday. Back then the city recognised
as its foundational year 1664, when the British seized New Amsterdam from the Dutch and
renamed it after the Duke of York. But in 1974 Paul O’Dwyer, the president of the city
council, moved to backdate the year displayed on the municipal flag from 1664 to 1625.
O’Dwyer, who spoke with the lilt of his native Ireland, insisted he was just out to respect
history. The mayor at the time, Abraham Beame, went along with the idea, though one city
hall aide dismissed it as “Paul O’Dwyer’s attempt to make us a Dutch city instead of an
English one”.

Other possible dates might have included 1609, when Henry Hudson, an English captain
exploring under a Dutch flag, sailed up the river that now bears his name; or 1624, when
the Dutch West India Company landed settlers—eight of them—on what is now called
Governors Island, in New York’s harbour; or 1626, when the settlers notoriously “bought”
Manhattan for what was later judged to be a few dollars’ worth of stuff. The year 1625,
Mr Shorto says, was “when they sent over shipments of farm animals”.

New York’s historians care less about the date than that New Yorkers should pause to
consider how their city vaulted to global pre-eminence from that tiny toehold in the
harbour. “What’s important is not whether it started in 1625,” Mr Jackson says impatiently.
“It’s just that something happened here, and then became the headquarters of finance and
culture and arts and media and just about everything else you can think of.”

O’Dwyer was ahead of his time. Just as he moved to backdate the founding, a new wave
of scholarship was starting to reckon with the profound imprint of the Dutch on New York,
and on America. Until then New York’s story was seen through an Anglocentric lens, in
part because English-speakers told the story and the settlement’s early documents were
written in 17th-century Dutch, which few alive could understand. As historians set to work
translating documents from New York’s first decades, a picture came into focus of how
radically different the Dutch town was from other settlements in the New World. While the
theocrats in Boston were hanging Quakers to create a Puritan monoculture apart from the
world, the Dutch were haphazardly fostering a polyglot society united largely by a shared
interest in being left alone to make money.

The amphibious Dutch immediately saw the potential in New York’s intricate tracery of
waterways: the deep harbour, the protected passage eastward through Long Island Sound,
and, most of all, the Hudson’s reach to the north, where a valley opened westward to the
continent’s vast interior (and where the Erie canal would eventually join New York by
water to Detroit and Milwaukee). In 1640, after the Dutch company gave up its monopoly
and declared the port a free-trade zone, New Amsterdam became a hub for Atlantic trade.
By 1645 a visiting Jesuit reported hearing 18 languages among the few hundred residents
(and he probably did not count African and native languages). “Everyone here is a trader,”
a resident observed in 1650.
That trade was partly in human beings, a satanic legacy of Dutch commerce. Yet the
society in those first years also included free black property owners and women who ran
trading companies as well as Portuguese, Bohemians, Arabs, Poles and Mohawks. Even
Jews were tolerated, if reluctantly.

The English saw what was happening and coveted not just the port but its culture. This is
the subject of “Taking Manhattan”, Mr Shorto’s latest, fascinating history based partly on
the continuing work on Dutch documents. The Stuart monarchy had just returned to the
throne, overcoming a Puritan Commonwealth, and the king wanted to bring the righteous
Puritan colonies to heel. But when an overwhelming English naval force menaced New
Amsterdam in 1664, the commander, Richard Nicholls, negotiated an agreement that, in Mr
Shorto’s telling, was less like a surrender than a merger or bill of rights. It guaranteed the
residents their rights to property and to keep trading and worshipping freely. It even let
them retain an unusual freedom they had won under the Dutch, to choose their own
municipal leaders.

“That sets up this dynamic of two ideological power bases in colonial America with very
different ways of seeing the world,” Mr Shorto says. “And you can look at a lot of
American history as this, you know, back-and-forth between these two, the one based in
New York, remaining outward-looking and business-minded and globally oriented.” The
other, originally based in Boston, “is puritanical and Christian and America-first. And
that’s part of the DNA of the country.” Not just New York, but America, should be
celebrating, and pondering, this particular birthday. ■

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The Americas
A surprise US Navy surge in the Caribbean
Peru’s cartoonish presidential front-runner
The Americas | War? Games?

A surprise US Navy surge in the Caribbean

Is the goal mere theatre or Venezuelan regime change?

August 28th 2025

IN THE SOUTHERN Caribbean just two or three American warships and Coast Guard
cutters are normally found on patrol. Now an amphibious group centred on the USS Iwo
Jima—three ships carrying 4,500 sailors and marines—is to be stationed there. A nuclear-
powered attack submarine and reconnaissance planes are also being shifted.

On the face of it, one of the biggest American deployments to the region in years is a bid to
go after drug traffickers. In February President Donald Trump designated several gangs,
mainly Mexican ones, as foreign terrorist organisations.

All this might, therefore, ring a bell. In April 2020, during Mr Trump’s first term, as the
covid pandemic first took hold, the administration announced “enhanced counternarcotics
operations” in the Caribbean against drug syndicates that were allegedly exploiting the
chaos. The Biden administration later scaled back those operations, having judged them
both expensive and largely ineffective.
In principle, the new deployment could help target traffickers. The current force is too
small to intercept many of them; American crews often stop boats but must watch as the
cocaine is dumped overboard and traffickers sail on. With the extra manpower, they
should be able to seize ships, escort them to port and arrest the crews.

Few, though, think drugs are the sole or even the main focus. The United States’ deadliest
drug problem is fentanyl, which kills tens of thousands of its citizens each year. Almost all
of it is synthesised in Mexico and trafficked north over land. The Caribbean does carry
cocaine bound from South America to Europe and the United States, but the new
deployment is not positioned along the busiest routes. And the hardware does not match
the task: why send destroyers when much of the trade depends on clandestine flights and
unmanned submarines?

Consider the Trump administration’s move on July 25th to designate the Cartel de los
Soles as a terrorist outfit. It is supposedly based in Venezuela’s armed forces. While
elements of that army are believed to be involved in drug trafficking, there is little
evidence the cartel exists as an organised structure. Yet the Trump administration named as
its leader President Nicolás Maduro, a serial election-stealer who nabbed last year’s in a
daylight robbery. Two weeks later the administration doubled the bounty on his head,
raising the reward for information leading to his arrest to $50m—more than it once offered
for Osama bin Laden. And on August 8th Mr Trump signed a directive permitting military
force against drug gangs abroad. In short, threatening Mr Maduro now falls within the
mission to combat drugs.

This, too, might ring a bell. The last major American military operation in the region
occurred when President George H.W. Bush sent troops to Panama in 1989 to arrest
Manuel Noriega, who had been indicted in the United States on drug-trafficking charges.

There the parallel stops. The force in 1989 was 20,000-strong, far more than the 4,500 or
so allocated now. Venezuela is a far bigger and more complicated country. No one thinks
an invasion today is plausible. Indeed the only goal may be theatre. James Bosworth, an
analyst based in the United States, calls it “an awesome photo-op”: a chance to display
American clout in the Caribbean and to snare a few traffickers along the way.

All this makes the most sense if the principal intent is to rattle Mr Maduro, give succour to
Venezuela’s opposition or even stir an uprising within the Venezuelan armed forces—
encouraged perhaps by that recently doubled reward. This “looks just right to scare the
daylights out of Maduro’s supporters”, says Evan Ellis of the US Army War College.

If rattling Mr Maduro is the purpose, it may be working. On August 23rd he started to

enroll what he claims will be 4.5m militiamen to defend the country. (Election receipts
show he received fewer than 3.8m votes last year; it is improbable that more people
would fight to defend him than would vote for him.) All drone flights and the sale of drone
equipment have been banned for a month. He has let 13 political prisoners out of jail,
perhaps as an offering to Mr Trump.

When Mr Maduro took to the airwaves on August 25th for his weekly television address
he said 15,000 “well armed and trained” men had been deployed to states near the
Colombian border. Diosdado Cabello, the Venezuelan interior minister, said the operation
was intended to “protect the sovereignty of the homeland”.

Were the United States ever to attempt to topple Mr Maduro, it would find support among
many Venezuelans who have endured the economic collapse he has presided over since
2013. In a market in Caracas, the capital, one 74-year-old shopper says simply: “Let them
get this done.”

The malcontents among Venezuela’s army will have seen mixed signals about backing from
the United States, which does not recognise Mr Maduro as a legitimate head of state.
Venezuelan oil is once again flowing to the United States, and in January Mr Trump
dispatched an envoy to Caracas, who was pictured shaking Mr Maduro’s hand. For any
coup-minded army men, there is little evidence that American backing would be solid if
things get hairy.

Perhaps some will take the gamble. Or the sabre-rattling may only succeed in rallying
supporters to Mr Maduro’s side. Most likely, though, nothing will happen at all. Mr
Cabello has threatened to round up anyone who calls for American sanctions or
intervention. That, too, sounds familiar. It has generally been Venezuelans who suffer when
their paranoid and isolated regime is threatened.

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The Americas | Porcine of the times

Peru’s cartoonish presidential front-runner

In Rafael López Aliaga, or “Porky”, many voters see a man of action

August 28th 2025

Not many politicians would think it good for their brand to be compared to Porky Pig. But
Rafael López Aliaga, the pugnacious conservative mayor of Lima, Peru’s capital, is not
like many politicians. He plays up the resemblance, having deployed people in pig
costumes to events and adopted a pet pig as his personal mascot. Peruvians simply call
him Porky.

In the most recent survey conducted by Ipsos, a pollster, Mr López Aliaga for the first time
topped the voting-intention list for a general election scheduled for April 2026. That put
him just ahead of Keiko Fujimori, a fellow conservative who narrowly lost the last three
presidential run-offs.

The mayor is a wealthy business tycoon and a former city councilman. Like many typical
Peruvian politicians, he portrays himself as a champion of the working poor. He has a
knack for hogging the spotlight. Sometimes that requires bizarre policy proposals (self-
exploding drones to stop criminals) or outlandish promises (his mayoral-campaign pitch
was to make Lima a world power).

The cartoon-character capers distract attention from Mr López Aliaga’s darker impulses.
He has called for the death of two political opponents (he later said he meant their
“political death”), and has suggested that an advocate for assisted dying who was suffering
from a terminal illness should take her own life in a warm bath.

Mr López Aliaga, then, does not mind a fight. Since becoming mayor in January 2023, he
has waged one bitter battle after another. His attempt to annul an unpopular toll contract
ended with Lima on the hook for more than $196m in damages—and perhaps $2.7bn more
in a current arbitration suit. His plan to acquire 40-year-old diesel locomotives and
carriages from California for use on a proposed rail line has been dogged by criticism.
After an acrimonious spat with the transport ministry, it remains unclear when, or even if,
they will be put to use. Such antics are costly. Lima’s debt has more than tripled under his
leadership, and in June Moody’s, a rating agency, knocked its credit rating down a notch,
to below investment-grade.

Blame is reserved for foes real and imagined. Mr López Aliaga often invokes a nebulous
“mafia”, most recently for leading the transport ministry to threaten huge fines on a major
road-expansion project for which he had not secured an environmental permit. Left-
leaning “parasites” infest the bureaucracy, imposing their “terrorist logic” to spread
suffering. His go-to culprits—journalists, technocrats and progressives—make for easy
punching bags. Peruvians are sick of bureaucratic red tape, and scandals have tarnished
leftist politicians. Voters are fed up.

They have a right to be. The election was called in March by President Dina Boluarte to
put an end to the lawlessness that has descended on Peru. That includes street-gang
shakedowns, contract killings, illegal mining and corrupt cops being protected by their
lawmaker pals.

In Mr López Aliaga, many voters see a force for order, or at least change. So-called
“Porkylovers” say his pushy ways get things done, his business acumen would help un-
gum the machinery of government and his wealth would make him less likely to pinch from
the public purse. And socially conservative Peruvians like his strident views against
abortion and gay marriage.

If, as expected, Mr López Aliaga throws his hat in the presidential ring for a second time,
his pugilist-populist ways give him a decent shot. Yet although he topped the August poll,
he just squeaked into double-digit support. That is a sign of Peru’s extreme electoral
fragmentation, and a reminder that anything can happen. A record-high 43 parties
registered for April’s election. No candidate is likely to gather a simple majority, so a
second-round vote in June is all but guaranteed.
What might a Porky presidency look like? More capers and more controversy, to be sure.
Mr López Aliaga has said that most government ministries should be eliminated, that
dangerous prisoners should be sent to El Salvador and that more troops should be put on
Peru’s borders. And that’s not all, folks.■

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Asia
A defining test looms for India
Will a harsher world accelerate India’s reforms?
India’s government bans fantasy sports games
Narendra Modi’s secret weapon: the Indian consumer
Asia | Turning points

A defining test looms for India

It is rethinking its relationship with America. The ramifications will be huge

August 28th 2025

SEVEN YEARS have passed since Narendra Modi last set foot in China. The clock resets
on August 31st, when India’s prime minister turns up in Tianjin, a port city about two
hours from Beijing. Mr Modi will attend a meeting of the Shanghai Co-operation
Organisation (SCO), a Eurasian security outfit whose members include Russia and Iran;
there he is expected to meet Xi Jinping, China’s president. The trip is a striking example of
the improving ties between India and China, which entered a deep freeze in 2020
following a border clash. But Mr Modi’s mind will also be on his country’s bust-up with
America and how India should respond.

In just a few months Donald Trump, America’s president, has found two ways to humiliate
India’s government: first, by appearing to side with Pakistan, an old adversary; second, by
whacking India’s exports with extortionate tariffs. The falling out between America and
India has prompted the emerging economic giant to think deeply about its present course.
Mr Trump has vexed plenty of America’s friends. To understand why the fracas with India
risks having extra impact, it helps to understand the trajectory the world’s most-populous
country had, until recently, been on. In the wake of its independence from Britain, India
determined that it would never fully ally with any one great power. It still prides itself on
remaining “multi-aligned” in world affairs; it declines to enter into formal treaty alliances.
But it has nonetheless tilted backwards and forwards between blocs.

For the past 25 years, almost all India’s tilting has been towards the West. In 2001
America lifted sanctions it had imposed on India because of its nuclear-weapons
programme; in 2005 it began negotiating a generous nuclear-co-operation deal, which it
signed in 2008. Nine years ago America made India a “major defence partner”, a
designation that gives it access to many American goodies, such as advanced defence
technologies, without having to become a full ally. That reflected a shared interest in
containing Chinese power.

True, the two countries have often voted in opposing camps at the UN, when it comes to
matters such as wars and sanctions. But until a few months ago, decades of diplomacy
seemed to have persuaded most Indians to see America as a reliable underwriter of their
country’s rise. That is no longer so true. Sudden reversals appear to have vindicated
sceptics who had warned that India was losing its bearings by drifting too deeply into
America’s sphere. Even those who have engaged in the diplomatic legwork themselves
despair over the direction of travel. Navtej Sarna, a former ambassador to America, says
of Mr Trump: “We cannot just blindly be going along with someone who does not know
what he is going to say tomorrow.”

When in April Mr Trump first threatened new tariffs on almost all America’s trading
partners, it was thought India might be among the first to strike a deal. But the Trump
administration appears to have badly misjudged India’s red lines, particularly its
willingness to open its economy to foreign agriculture firms. In July America’s president
said talks had collapsed and whacked Indian goods with a 25% tariff, even as he let most
of India’s neighbours off with lower rates. Then, out of the blue, he added an additional
25%, ostensibly to punish India for buying Russian oil; that penalty went into force on
August 27th. In a matter of weeks India has gone from being one of the Asian countries
least hit by Mr Trump’s blitz to facing some of the world’s highest tariffs.

The immediate impact of this seem manageable for India. It relies less on goods exports
than most other Asian countries; it earns the equivalent of only 11% of its GDP from
selling goods to foreigners, compared with 85% in the case of Vietnam. Some large and
fast-growing categories of exports, such as smartphones and pharmaceuticals, are (for the
moment) exempt from Mr Trump’s new tariffs. In the coming months India’s economy will
be “stirred, but not shaken” by the tariff increase, reckons Ajay Srivastava of the Global
Trade Research Initiative, a think-tank in Delhi.

Yet high tariffs bring into question India’s long-term plans for driving growth. The
government has long hoped to boost manufacturing. This ambition relies somewhat on
keeping access to rich American consumers; it also means persuading multinationals to
shift some of their factories to India from China. Mr Srivastava notes that if India gets
stuck with tariffs that are higher than those imposed on China’s other competitors, such as
Vietnam or Bangladesh, hopes of being an alternative base to China are “dead”. Even if all
the tariffs go away, the idea that India can offer factories shelter from shifting geopolitics
has just been hit for six.

Lately, Indians have felt inclined to start wargaming nightmare scenarios, in which
escalation of the trade war starts putting key pillars of India’s economy at risk. Indian
exports of services, such as software development, are growing much faster than sales of
goods. These have not yet been drawn into the trade tussle, but there is no guarantee of that
continuing. America is probably the largest provider of foreign investment into India, once
American money that gets routed through Singapore and Mauritius is included; any
disruption of that could cause deep pain. Big American companies are increasingly setting
up “global capability centres” in India, which they staff with Indians skilled in fields such
as coding and finance. That industry made $65bn last year, with projections of around
$100bn by 2030.

Alongside the trade frictions is a huge falling-out on defence. For years India has accused
Pakistan of tolerating, and in some cases abetting, jihadists who launch terrorist attacks
from its soil. For years America has told India that it shares these concerns. But the
consensus seemed to crack during a brief conflict waged between India and Pakistan in
May, sparked after terrorists murdered two dozen people in Indian-administered Kashmir.
Initially America said India could take care of the situation itself. Then it made a U-turn,
calling for “both parties” to stop launching missiles at each other. That made India feel as
if it had been labelled an aggressor.

Indian anger grew even hotter when Mr Trump claimed to have struck a peace deal by
threatening both sides with an American trade embargo. The American president then
offered to mediate over the hotly contested issue of Kashmir. For decades India has
furiously resisted any outside effort to meddle in its disputes with Pakistan. It said it stood
down only because its goals had been achieved. Mr Trump, who dislikes being
contradicted, has been doubling down on his claims to have brought peace. Around Delhi,
analysts are keeping count of how many times he has repeated this boast; the number now
sits above 40.

Worse, Mr Trump now appears to side more firmly with the Pakistanis (who say they have
nominated him for a Nobel peace prize). That has forced India’s military planners to
question long-held assumptions about how any future conflict might go. In June Mr Trump
invited Pakistan’s army chief and de facto leader, Field-Marshal Asim Munir, to have
lunch with him in the White House—a rare honour for any foreign soldier. Mr Trump has
announced that America plans to help Pakistan exploit oil and mineral reserves, and
gloated that “one day” India might have to buy energy from its neighbour.
American-Indian defence ties will be hurt by this bust up. Over the past four years Russia
has supplied 36% of all the arms India has imported. That is much less than two decades
ago—in part because India worries that Russian support might be withdrawn if it finds
itself at war with China. India is also insecure about the quality of its kit (both the home-
made and the foreign-bought). China is selling Pakistan advanced weaponry; during the
conflict in May, Pakistan is thought to have shot down five Indian fighters using Chinese-
made jets. India needs to keep up.

Until now, tilting closer to America on military matters had seemed a safe bet. The two
sides are supposed to be tightening co-operation through their involvement in the Quad, a
security group also comprising Australia and Japan. This year America and India are due
to sign an overarching defence “framework” governing military ties over the next decade,
which it is assumed would lead to more joint exercises and grant India access to the
snazziest gear. They are also putting the finishing touches to a deal, announced in 2023, for
America to help India produce jet engines for fighter planes. This kind of co-operation
between the two countries was a priority under Joe Biden’s administration; now the
direction of travel is less clear.

Where will things go next? In Delhi there is some hope that Mr Trump’s ire with India may
prove transient. If he starts making satisfactory progress in his peace talks with Russia,
one reason to punish India for buying its oil might swiftly go away. The deals that America
has signed with other Asian countries do not suggest that market access for agricultural
firms really is a priority for his administration. But India’s sensitivity to lectures from
foreigners means that trust between the two countries may have taken a lasting knock.
India’s response is likely to mix three different strategies. The first is to keep pushing for
some kind of accommodation with Mr Trump. So far it has chosen not to retaliate against
American tariffs, nor even much to criticise the president himself. America appeared to
cancel trade talks scheduled for August 25th, but there is speculation that Mr Modi will try
to meet America’s president on the sidelines of the UN General Assembly in September.
“On issues of absolute national interest, I think that India will stand its ground,” says
Nirupama Rao, a former Indian ambassador to America and foreign secretary. “Where
India can afford to make concessions on the trade front, I think it will do that.”

Mr Trump looks helpfully susceptible to pledges of big investments; in recent months

“many countries have gotten off the hook by promising things that they are never going to
deliver”, reckons Joshua White of the Johns Hopkins School of Advanced International
Studies. India could, if it is willing, somewhat step down its imports of Russian oil
without incurring too much harm; this no longer trades at a great discount from less
controversial crude. “What Mr Trump seems to want is the ability to say he has pushed
India into something,” suggests Tanvi Madan of the Brookings Institution, an American
think-tank. Though for India, granting that would not be easy.

India’s second strategy will be to draw closer to its other foreign friends. “We can make a
virtue of being non-aligned now,” says Mr Sarna. India had already been trying to open up
new markets. Since 2021 it has signed off half a dozen trade deals, including one with
Britain. It soon hopes to ink one with the EU. For weaponry, it could depend more on
France or Israel, which together already supply around 46% of its arms. On August 22nd
India announced that a French firm will help it produce engines for homegrown fighter
jets.
In recent weeks India appears to have been cementing its ties with Russia—the opposite of
what Mr Trump appears to want. Since America levied its new tariffs, Mr Modi has twice
spoken to his “friend” Vladimir Putin on the phone. On August 21st Subrahmanyam
Jaishankar, India’s foreign minister, met Sergei Lavrov, his Russian counterpart, in
Moscow; the pair said their countries were aiming to increase bilateral trade. Mr Putin
will be attending the SCO summit in Tianjin, too. And there are plans for India’s
government to host him in Delhi before the end of the year.

As seen by Mr Modi’s upcoming trip, relations between India and China are thawing, too.
For years the countries exchanged no tourists whatsoever. It remains impossible to fly
directly between Delhi and Beijing. But last year the two came to an understanding over
their border dispute, which in October allowed Mr Modi and Mr Xi to shake hands on the
sidelines of a summit in Russia.

Talks between the two countries are now moving to economic matters. Since the clashes in
2020, India has turned away much Chinese investment, and it has refused to grant visas to
some Chinese executives. Yet during this period the amount India imports from China has
only gone up. In the year to March India bought about $114bn-worth of goods from its
northern neighbour, about 75% more than five years ago (only about $14bn-worth of stuff
went the other way). Much of what it buys are inputs that are essential to Indian industry.
Indian pharmaceutical companies rely on China for some 70% of precursor chemicals, for
example. The smartphones that India exports require a lot of imported components.
Flows of money and know-how from China could bolster Indian industry, so that it could
develop its own advanced-manufacturing sector and reduce reliance on imports. India’s
government understands this, but had been loth to relax investment curbs while trade
negotiations with Mr Trump were still going on. With those talks now in the doldrums, a
slightly freer stance on China is back on the cards.

There is yet one more way in which India might respond to its humbling at the hands of Mr
Trump. It could choose to accelerate long-needed changes at home that might help it resist
such bullying down the line. “India’s fundamental response to Trump’s tariffs should be to
unleash a fresh dose of economic reforms,” writes Nitin Pai of the Takshashila Institution,
a think-tank in Bangalore. Ms Madan at Brookings agrees: “You can demand status; you
can expect status; but the things that will give you status are growth and capabilities.”

Tackling domestic problems that weigh down the economy would help. India already
makes a lot of its own weaponry and has ambitions to make much more; if it is determined
to produce arms that compete with American or Chinese ones, it cannot afford to let a
single rupee go to waste. For the moment India looks buffeted by decisions being made in
foreign capitals. Yet this moment of reckoning could bring India closer to the days when no
one will dare push it around. ■

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Asia | Borne out of bullying

Will a harsher world accelerate India’s reforms?

Narendra Modi needs a new approach after Donald Trump’s tariffs

August 28th 2025

“WHEN WE grow and excel,” Narendra Modi said in a speech on August 15th to mark the
78th anniversary of India’s independence, “the world will acknowledge our worth.” It was
the Indian prime minister’s first major public address since Donald Trump decided to
punish the country for its use of Russian oil by doubling tariffs on various goods. He struck
a defiant tone, insisting that India would take its seat at the top table by becoming stronger
at home. “We have resolved to accelerate the journey of reform,” he added.

Mr Modi, an economic reformer, wants India’s GDP to reach $10trn by the centenary of its
independence, in 2047 (currently it is $4trn). That would give it “developed-country
status”, and give it even more global heft. But meeting that goal means sustaining India’s
current growth rate for more than two decades—at a time when the world economy is
slowing and countries are erecting trade barriers.

India has unique strengths: a vast pool of cheap labour, masses of untapped talent and a
huge internal market. Yet its problems are enormous, too. Its companies are still held back
by restrictive laws. Its rural people are chronically underemployed. Its cities are ill-
prepared for mass urbanisation. Having lost his majority in national elections held last
year, Mr Modi’s appetite for tough reform had seemed diminished; even his supporters had
begun to suggest that states would have to take the lead. The question now is whether an
external shock will be a catalyst for change.

It would not be the first time. In recent weeks there has been chatter about “another 1991
moment”. That was the year when a balance-of-payments crisis triggered a wave of
liberalisation, in which capital controls were lifted, and the dismantling of the “licence
raj” began. In part, the comparison reveals how far India has already come. In 1991 the
country was left on the verge of bankruptcy; with no money to buy oil, its economy ground
to a halt. Almost half the population was living in extreme poverty; today it is less than
one in 20. And India will soon be the world’s fourth-largest economy.

Mr Modi has contributed to India’s successes in three areas. The first is economic
stewardship. In his first term he reformed the banking system, forcing banks to clean up
their balance sheets. On his watch the government has controlled spending, and the
Reserve Bank of India (RBI) has held inflation and interest rates down. India’s balance-
of-payments is now much less fragile. The day before Mr Modi’s speech, S&P, a credit-
rating agency, rewarded India with its first sovereign-credit rating upgrade in almost 20
years, raising it to the same grade as Greece.

The second success is infrastructure, where Mr Modi has poured money into roads and
railways. India’s cities have been linked up with 50,000km of new main roads, expanding
the network by 60% in a decade. Along with the introduction of a national goods-and-
services tax (GST), that has created the foundation for an internal market which could one
day rival China and America.

Third is digital, where Mr Modi developed reforms initiated by the previous government.
As a result, almost all Indians now use Aadhaar, an online-identity system, and other
digital-public systems to get government services, and make and receive payments. Last
year these transactions almost hit $3trn.
Helped by all this, growth has ticked along at almost 6% a year under Mr Modi (see chart
1). Yet under the bonnet there are problems. The most obvious is that the economy is not
creating enough jobs, which risks turning India’s demographic boom into a burden.
Government survey data show that labour-force participation has been climbing steadily,
reaching 55% last quarter. Yet some analysts worry this is misleading, because it counts
unpaid jobs. Almost a fifth of under-30s in cities are unemployed.
The economy has bounced back from the pandemic, but private corporate investment is
still weak. In 2024 it was just 12% of GDP, lower than during an investment boom in the
2000s. Ram Singh, a member of the RBI’s monetary policy committee, says a low ratio of
capital expenditure to operating margins is a sign that firms lack confidence. Foreign
direct investment (FDI) inflows rose to $81bn last year, but that has been offset by higher
repatriation and firms exiting the country, which means net FDI has fallen (see chart 2).

And Mr Modi’s successes have been double-edged. His infrastructure splurge has been
delivered rapidly, through a handful of favoured national champions. Yet such cronyism
probably helps to explain other firms’ unwillingness to invest, says Raghuram Rajan, a
former head of the RBI. Digital infrastructure allows politicians to hand money directly to
the poor, cutting out the graft of middlemen and helping to reduce poverty. Yet some fear
that the model is working too well, encouraging a welfarism that eats into budgets,
particularly as state-level politicians grasp its electoral power. Karnataka now spends one
sixth of its budget on handouts.

Many in Delhi hope that Mr Modi and Mr Trump will patch things up. V. Anantha
Nageswaran, the government’s chief economic adviser, said he believes the impasse “will
not continue for too long”, and that the damage will be confined to this financial year.
Either way, he thought India’s economy will remain “dynamic”, not “dead”, as Mr Trump
claimed.

But if India’s relationship with America remains rocky, these underlying problems will be
sharpened. The consequences are most obvious for manufacturing. In Delhi there had been
hopes that India was well-placed to benefit as firms sought to diversify their supply chains
away from China. The best example was Apple, which already makes one-fifth of its
iPhones in India (electronic goods are exempt from American tariffs). Yet if the tariffs on
other goods remain, India will be unable to compete with Bangladesh and Vietnam in
areas such as garments and textiles.

The ructions have not extended to the IT services and tech industry. If they did, that would
be more damaging, given that India depends on America for customers and technology. A
broader debate is under way about how AI will shake up the sector. Last month TCS, the
country’s largest outsourcer, announced plans to lay off 2% of its workforce—a move
some interpreted as a sign that AI could eat Indian firms’ business. Yet others say AI will
be a boon for India. “This is the place where you can hire engineers at scale and cheap,”
says Ridham Desai of Morgan Stanley, a bank.

Mr Modi has already responded to American bullying. The most serious measure in his
speech on August 15th was the simplification of GST, which is complex and vulnerable to
fraud. The four main existing rates will be reduced to two. That will come into effect in
October, alongside an income-tax cut. This should lift consumption.

On August 19th the government announced the remit of a new committee tasked with
making it easier to do business and removing the threat of criminal penalties for even
minor mistakes. Sanjeev Sanyal, a member of Mr Modi’s economic advisory panel, points
to a bill that will decriminalise more than 300 provisions—including arcane laws that
criminalise selling biscuits labelled with the wrong weight. There is talk of the
government “dusting off” other reforms that were shelved after the election, says an
analyst at a large asset manager.

A burst of deregulation would be the best way to realise another 1991 moment, Anand
Mahindra, a tycoon, has suggested. He thinks Mr Modi should also work with states to
make India more attractive to foreign investors. Reform of “factor markets”, particularly
land and labour, will also be essential. Others note that investment and dynamism are held
back by slow-moving courts and regulators.
Even if the appetite for reform is there, Mr Modi faces several big trade-offs. The most
obvious is the risk of an electoral backlash. Over the past decade he has repeatedly
proposed pro-growth policies only to be rebuffed. Most recently he was stung by a
massive wave of farmer protests in 2021, which forced him to abandon agricultural
reforms.

Second is the tension between creating a more “self-reliant India” and finding new
markets and customers abroad. Speaking after Mr Modi’s speech, Mr Nageswaran insisted
the two goals were “not in contradiction”. Yet the risk is that the lasting effect of Mr
Trump’s antics will be to push India to turn inwards. India’s bureaucratic machine has long
been sceptical of opening up. Insiders say it has regained influence recently.

The third challenge is constitutional. After three decades of top-down reform, India’s
biggest problems cannot be solved in New Delhi. Land, labour and agriculture are all
either shared or devolved matters. Mr Modi’s method, of trying to bypass the states and
force changes through, has not worked. Land reforms were abandoned; new labour codes
were passed but not implemented. Many chief ministers of states—with small budgets,
high debts, and their own elections to think about—could not see what was in it for them.

This may change. While states such as Gujarat, Karnataka and Andhra Pradesh have long
been reform-minded, they were all outpaced last year by Tamil Nadu, which grew at a
blistering 11%. This state has attracted the likes of Apple by adopting a pragmatic
approach to land acquisition and labour relations. Telangana and Maharashtra, meanwhile,
have adopted far-reaching electricity reforms that will end farmers’ entitlement to free
power by placating them with solar panels. With this change, says Mr Desai, the states
will be able to stablise their budgets and make power cheaper for firms, attracting
investment and jobs.

Such developments hold up the prospect of a “competitive federalism” that could spur
India’s next phase of growth. Yet to unleash that, Mr Modi would need to embrace fiscal
federalism, an approach that goes against his instincts. Speaking on the ramparts of the
Red Fort, he said: “If we choose this path, and if everyone chooses it, then no selfish
interest will ever be able to entrap us.” Many will be watching carefully to see just what
he means. ■

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harsher-world-accelerate-indias-reforms
Asia | All bets are off

India’s government bans fantasy sports games

Heavy-handed regulation of a flourishing industry could backfire

August 28th 2025

How quickly can you get rich in India? According to fans of fantasy-gaming platforms,
such as Dream11, it is possible to do so in a matter of hours. Spend as little as eight
rupees (ten American cents) ahead of a cricket match and a punter could win hundreds
of thousands rupees if their virtual team ends up performing well on the pitch. The
prospect, albeit unlikely, of such tantalising returns, combined with glitzy marketing
campaigns featuring Bollywood stars, has lured 200m users to Dream11’s platform
since it started in 2008—more than the number of India’s stockmarket investors.

The website is part of a booming industry. It includes more than 2,000 Indian startups.
The firms’ collective annual revenues were expected to double in the next three years,
from around $3.8bn currently. Such projections, though, have now been foiled by India’s
government. On August 21st India’s parliament passed a bill banning all money-based
online games. Offending operators face fines and prison terms of up to three years;
banks that process transactions for them would also be punished. A day later India’s
president formally signed it into law. Why the heavy-handed response?

India’s government is concerned by the financial risks these games pose. The bill
highlights their “manipulative design features” and “addictive algorithms”, which could
lead to “financial ruin”. Officials also fret that platforms could be gateways to fraud and
money laundering: thanks to a combination of rapid economic growth, the proliferation
of smartphones and cheap data, middle-class Indians increasingly have the means to
have a flutter. Similar forces have driven a boom in stocks and options trading. But
while trading those instruments still requires technical knowledge, fantasy cricket and
card-based games are more easily understood, increasing the risk of excesses.

Gaming firms have long denied the government charges, insisting that their games are
based on skill. An industry lobby has written to Narendra Modi, the prime minister,
calling for “progressive regulation” rather than a ban. Several firms are in discussion
about challenging the new law in the Supreme Court. For now, though, the ban will have
far-reaching consequences. The industry has been a magnet for investment: Dream11’s
parent company has raised over $1.6bn since 2008.
The demise of such companies could hurt several venture-capital firms at home and
abroad. America’s Tiger Global, for instance, has invested hundreds of millions of
dollars in Dream11 and Games24x7, a card-games platform. Sports that form the basis
of fantasy games may also suffer. Kabaddi, a traditional Indian team sport, has attracted
more viewers and investment in recent years, partly thanks to interest in Kabaddi-
related fantasy games. A ban would curb that.

Yet the biggest loser may be the state itself. The Indian gaming-industry body claims that
gaming firms contribute more than 200bn rupees annually in taxes (around 0.8% of all
tax receipts). It is unclear whether the public-health and social benefits from an outright
ban will compensate for the loss of revenue. Some are concerned that gamers could
instead just get their kicks from shady, unregulated offshore outlets—many of which are
already easily accessible from India. That would do little to quell worries about public
health and could exacerbate problems such as money laundering.

There has been little public deliberation over the costs and benefits of the bill. The
gaming-industry body complains that it was not consulted. The lower house of
parliament took just seven minutes to pass the legislation after it was proposed. Just as
in high-stakes games, it took only a few moments for fortunes to turn. ■

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government-bans-fantasy-sports-games
Asia | Banyan

Narendra Modi’s secret weapon: the Indian consumer

Low inflation, tax cuts and falling interest rates will boost an economy hit by tariffs

August 28th 2025

WHEN IT RAINS it pours. In August some parts of India received as much precipitation
in one week as they usually do all month. Delhi, India’s capital, escaped the worst of the
weather. But politically, it has been a stormy spell for Narendra Modi, the prime minister.

The month dawned with the government reeling from a 25% tariff announced by President
Donald Trump at the end of July, a mere point below the original “reciprocal” rate set out
in April. A few days later Mr Trump slapped another 25% on India, purportedly to punish
it for buying Russian oil. It was a triple blow for Mr Modi. The 50% rate, which came
into force on August 27th, will damage India’s ambitions of growing into an export power.
It is a hit, too, to the prime minister’s carefully crafted strongman image. And it is a
personal blow for a leader who thought he had cultivated a bond with Mr Trump.

The government is under pressure on the domestic front as well. A hasty revision of the
voter list in the eastern state of Bihar, which holds elections later this year, has been
criticised by opposition figures as an exercise in disfranchisement. Separately, Rahul
Gandhi, the leader of the opposition, pointed to what he called irregularities in last year’s
general election and accused the Election Commission of India, a constitutional body, of
colluding with the ruling party (which it denies).

Yet for all the gathering clouds, Mr Modi still has reason to feel sunny. Electoral lists in a
poor mofussil (or rural) state do not set the public’s pulse racing, and in any case the pro-
Modi media have hardly played up the allegations. The humiliation meted out to India by
Mr Trump, though harder to gloss, has put Indians’ backs up and allowed the government
to reassert its long-standing claim of working to make India “self-reliant”. But it is not just
his skill at defensive play that should give Mr Modi cause for cheer. It is that things are
looking up in the one place voters care about more than any other: their wallets.

One big reason is inflation. Prices in July rose 1.6% year-on-year, the lowest in eight
years. That is partly the result of a good winter harvest, which has kept the price of staples
and vegetables low. An ample monsoon and a good summer sowing season suggest the
trend may last. Analysts expect inflation to remain subdued well into next year.

A little under half of India’s workforce toils in agriculture. Good harvests are reflected in
real agricultural wage growth, which hit an eight-year high of 4.5% year-on-year in May,
according to Goldman Sachs, a bank. That in turn spurs consumption in the countryside.
The rural economy is showing signs of strength after an anaemic post-pandemic period.
Government welfare spending, especially targeted at women, has helped, too.

Falling inflation also creates space for India’s central bank to lower the cost of money.
Headline interest rates have fallen one percentage point already this year, and some
analysts expect another 0.25% cut by December. Leveraged Indians, especially those with
mortgages, now have more money to spend.

The ruling party cannot take credit for the monsoon or rate cuts. But it can for a tax bung
aimed at middle-income earners. Starting this financial year, which runs from April,
anyone earning up to 1.2m rupees ($13,700) will pay no income tax, a rise from 700,000
rupees. That covers more than 85% of people who file tax returns.

A different tax cut will have even more impact. On August 15th Mr Modi announced a
long-overdue reform of India’s goods-and-services tax, to be implemented by Diwali,
which this year falls in late October. The tax, introduced in 2017, is an unwieldy mess of
four rates. It will be simplified to just two—5% for essentials and 18% for everything
else (plus a 40% sin rate for a handful of items). Taxes on everything from shoes to cars
are likely to fall.

The combination of lower inflation, interest rates and taxes will boost Indian consumption
—which accounts for 61% of GDP. For the government, that will help compensate for the
hit the economy takes from American tariffs. And for consumers, talk of electoral lists and
declining exports will seem abstract compared with the feel-good factor of buying a new
washing machine or dining out somewhere nice.

By Diwali, the monsoon will have receded and the skies will once more be clear. As for
being a political weather-maker, voters may just credit Mr Modi for bringing out the sun.
■

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modis-secret-weapon-the-indian-consumer
China
On parade in China: Putin, the PLA and purges
Chinese courts can bar even those not accused of crimes from leaving the country
Something is amiss in China’s foreign-affairs leadership
China | Troops, tanks and missiles in Beijing

On parade in China: Putin, the PLA and purges

Military pomp follows the removal of top military commanders

August 28th 2025

Donald Trump’s military parade astounded Chinese viewers in June. The sloppy marching,
the corporate sponsorship, the paltry crowds: how could the world’s greatest military
power put on such a tawdry display? China’s parades are minutely choreographed
extravaganzas designed to inspire awe and respect. Expect no less when China holds its
first in six years on September 3rd. But China’s tattoo, like Mr Trump’s, will reflect the
insecurities of its leadership. Impressive though the display will be, it will mask
turbulence in the high command.

Since the last parade in 2019, the world’s largest armed forces—about 2m strong—have
grown much more muscle. They have gained an array of new weapons from hypersonic
missiles and stealth fighters to a much-expanded nuclear arsenal: its number of warheads
has doubled. At the same time, strategic rivalry with America has grown more intense.
China’s leader, Xi Jinping, will use this occasion to signal to America the perils it could
face, should war break out between the two great powers, and to Taiwan that it would be
wise to come to heel. It comes 16 months before an important deadline that American
officials believe Mr Xi has set: by 2027 the Chinese armed forces, known as the People’s
Liberation Army (PLA), must be ready to take Taiwan if ordered.

This will be the third military parade in Beijing since Mr Xi took power in 2012.
Officially, it will commemorate the 80th anniversary of the end of the second world war. It
marks the day in 1945 when Japan surrendered to Allied forces, ending a 14-year
occupation of much of China that left some 20m Chinese people dead and laid the ground
for the Communist Party’s victory over China’s Nationalist army four years later. Mr Xi
sees such victory parades as a way to legitimise Communist rule by playing up the party’s
role in defeating Japan (despite the Nationalists having done most of the fighting). At the
same time Mr Xi wants to show that China is moving towards “national rejuvenation” with
weaponry that is state-of-the-art and, crucially, home-made. (In a brief conflict between
India and Pakistan in May, modern Chinese fighters and missiles—deployed by Pakistan—
were used in combat for the first time and performed well.)

The guest list is designed to flaunt China’s global diplomatic clout. Vladimir Putin, the
Russian leader, will be there, displaying the strengthening of military ties between the two
countries since Russia began its full-scale invasion of Ukraine in 2022. Western leaders
and their closest allies will stay away, as most of them did in 2015 when China staged its
first big parade marking the end of the world war. But more than two dozen other leaders
are supposed to attend, including North Korea’s Kim Jong Un. Indonesia and Malaysia are
expected to send heads of state or government for the first time, indicating how “swing
states” in Asia are hedging their geopolitical bets even as America presses them to choose
sides. China’s goal is to show that such efforts will fail. It hopes to sap Taiwan’s will to
fight and embolden isolationists around Mr Trump.

Much of the weaponry on show is designed to target American naval forces in the western
Pacific. Rehearsals included what appeared to be four new supersonic or hypersonic anti-
ship missiles. “The advantages these weapons bring may be determinative” in a Taiwan
conflict, says Brendan Mulvaney of the China Aerospace Studies Institute, an American
air-force think-tank. America, by contrast, has been underinvesting in comparable
armaments, he says. The rehearsals also featured tanks with uncrewed turrets and other
systems to defend against anti-tank weapons, such as American-made Javelin missiles (of
which Taiwan has bought many). That shows how the PLA has learned from Ukraine’s
mastery of asymmetric warfare, including the country’s highly effective use of Javelins
against Russian forces.

But foreign analysts will also be looking at who is missing from the show. While there is
no immediate threat to Mr Xi’s leadership, recent purges suggest deep-rooted corruption
or other indiscipline within the PLA. More than 20 senior officers have disappeared or
been dismissed since Mr Xi began a third term as party leader in 2022. They include three
of the seven members of the Central Military Commission, which controls the PLA and is
chaired by Mr Xi. The most recent example, He Weidong, last appeared in public in
March. If his downfall is confirmed, he would be the most senior uniformed officer to be
deposed since 1967.

Relatedly, there are signs that Mr Xi’s decade-old campaign to modernise the PLA is
facing headwinds. The purges started in the Rocket Force, which operates China’s
conventional and nuclear missiles, but have since encompassed its equipment-
development and political departments, as well as state-run defence manufacturers.
Meanwhile, the PLA is struggling to attract enough recruits with the technological skills to
operate new equipment. And its ground, air, sea and other forces still have difficulty
working together in combined operations. Adjusting to Mr Xi’s reforms has been a huge
challenge for PLA personnel, says Eric Hundman, director of research at BluePath Labs,
an American research company that studies the PLA. “It leads to stalled career paths, the
need for retraining, new procedures and tactics, and new bureaucracies to learn how to
navigate,” he says. The purges “make all of that uncertainty worse”.

In such a secretive political system, uncertainty is ever-present. Mr Xi, who is 72, has
lately been less visible. He does not appear in public as much and the party commissions
that he formed (and chairs) to bypass state bureaucracy meet less frequently. That is
probably a deliberate move to delegate responsibility to loyalists, rather than a reflection
of diminishing power. But Mr Xi may hope that flaunting his role as commander-in-chief
will help to quash speculation. He will follow the choreography of previous Chinese
leaders on such occasions by delivering a speech from the Gate of Heavenly Peace
overlooking Tiananmen Square and then reviewing the thousands of troops. “Greetings,
comrades!” he will say, assuming he follows usual protocol. “Greetings, leader!” they
will respond in resounding unison.

“Just having this exchange, although it’s very ceremonial and very symbolic, shows that
the PLA owes allegiance to one person and one person only,” says James Char of
Singapore’s Nanyang Technological University. The reminder is a timely one for Mr Xi’s
military commanders after the purges. It could be good for morale among the rank and file,
too.

Ultimately, though, such theatrics say little about China’s readiness for war, given its lack
of combat experience (the last war it fought was in 1979). And in many ways, the
spectacle will reflect some of China’s greatest weaknesses: the concentration of power in
a single man and its stress on performance, sometimes to the neglect of substance. That is
food for thought, perhaps, for anyone in America who might be watching with envy. ■

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china-putin-the-pla-and-purges
China | No way out

Chinese courts can bar even those not accused of crimes

from leaving the country
Both foreign executives and political dissidents have been affected

August 28th 2025

Gao jia, a seven-year-old American from New York, might not start his second year at
school this September. During a family visit to China last August, his father, a Chinese
artist called Gao Zhen, was arrested for “slandering heroes and martyrs” (Mr Gao is the
elder of the well-known “Gao Brothers”, whose sculptures often mock Chairman Mao).
The boy has not been accused of wrongdoing; neither has his mother, Zhao Yaliang. But in
China, family members can be punished for the alleged sins of a relative. Ms Zhao is
under an “exit ban” that stops her from leaving the country. With both his parents stuck in
China, Gao Jia is also unable to leave.

Many countries use exit bans to stop people accused of crimes from escaping justice, but
the bar is usually high. In China they are slapped on everyone from dissidents to foreign
executives involved in business disputes. Many exit bans are not made public so it is hard
to tell how many people are affected. But courts seem increasingly willing to impose them.
An official database of judgments that have been made public contains records of more
than 54,000 bans last year, up from some 24,000 in 2022 (see chart). Anecdotally, it seems
that a growing number of foreigners are being targeted.

In the database, almost all cases involving exit bans relate to civil disputes, not criminal
activity. The bans it documents are often ones requested by creditors of a struggling
business who want the owner to stay in the country until the firm’s debts are settled. But an
exit ban can be applied for by “virtually anybody”, says John Kamm of the Dui Hua
Foundation, an American ngo. “You have no idea that you are the one who might be
banned.” An expanding legal net is increasing the chance of ensnarement: China now has
at least 18 laws allowing exit bans. Five have been passed since 2018, including new
legislation relating to corruption, fraud and scams that involve telecoms.
The way bans are applied is opaque. They can be imposed on family members only if they
are needed as witnesses, but in practice relatives are often barred from leaving for no
apparent reason other than to put pressure on someone involved in a court case. Ms Zhao
found out she was stuck in China only when she and her son were stopped while trying to
go through passport control at an airport. Once in place, bans can last years. It is very
difficult to contest them.

They are adding to strains in Sino-American relations. In April an employee of America’s

commerce department was banned from leaving China after being interrogated by officials
from China’s spy agency, the Ministry of State Security, according to the New York Times.
In July Wells Fargo, an American bank, suspended all business travel to China after one of
its employees, a Chinese-born American citizen called Mao Chenyue, was prevented from
leaving the country (China’s foreign ministry has said she is involved in a criminal
investigation, without giving further details). Dui Hua estimates that more than 30
Americans in China were subject to exit bans last year.

Some of these cases may relate to China’s stepped-up efforts in recent years to stamp out
graft. When bosses of state-owned enterprises are being investigated, exit bans are
sometimes imposed on people who have had dealings with them, including foreigners
wanted as witnesses. Such people should be wary of this risk, says James Zimmerman, a
lawyer in Beijing and former chairman of the American Chamber of Commerce in China.

For now, Gao Jia is going to a primary school in Yanjiao, a town near Beijing. Since May,
all letters to him from his father have been withheld by Chinese officials, according to his
mother, Ms Zhao. Her husband’s trial is expected to begin soon, she says, and could result
in a three-year sentence. When the proceedings are over, Ms Zhao hopes to be allowed to
return to America with her son. ■

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China | Purges

Something is amiss in China’s foreign-affairs leadership

Diplomats are disappearing at an extremely busy time

August 28th 2025

CHINA’S DIPLOMATS are working hard. On August 31st more than 20 world leaders
will join President Xi Jinping in the northern city of Tianjin for a two-day meeting of the
Shanghai Co-operation Organisation, a security forum. Among them will be Russia’s
Vladimir Putin (a frequent visitor), India’s Narendra Modi (a rare one) and North Korea’s
Kim Jong Un, who seldom goes abroad. In recent days Donald Trump said he would visit
China “probably during this year or shortly thereafter”. It would be the first such trip by an
American president since 2017, when Mr Trump was last there. Great-power relations are
in flux.

Oddly, however, one of China’s most senior foreign-affairs officials, Liu Jianchao, is
nowhere to be seen. Mr Liu heads the Communist Party’s International Department and, at
least until recently, had been widely tipped as the next foreign minister. The department’s
website still names Mr Liu as the organisation’s chief. But it does not list any of his
activities since July 30th, when he visited a senior politician in Algiers (the department’s
job is to build ties with foreign political parties). That is unusual. He had more than 30
meetings in August 2024, the website shows. For him, it was a typically busy month.

Mr Liu’s disappearance was first reported by the Wall Street Journal on August 10th. The
newspaper said he had been detained for questioning. Reuters news agency also said he
had been taken away, quoting “five people familiar with the matter”. Both reports stated
that the reason was unknown. Reuters later said that one of Mr Liu’s deputies, Sun Haiyan,
had also been questioned. Ms Sun reappeared at an event on August 15th and has since had
other meetings with foreigners, suggesting her troubles, if any, are not as great as her
boss’s.

If Mr Liu fails to re-emerge, it would mark another purge at the top of China’s foreign-
policy establishment following the disappearance of China’s then foreign minister, Qin
Gang, in June 2023. He was replaced the following month by his predecessor, Wang Yi.
Officials have still not explained why, though rumours abound about his private life. Last
year Mr Qin was also removed from the party’s Central Committee.

Western officials would not cheer Mr Liu’s downfall. A fluent English-speaker who
studied at Oxford University, he avoided the aggressive “wolf-warrior” style of
diplomacy once voguish among Chinese diplomats (it has receded in the past couple of
years). “It is unimaginable that China and the United States would engage in armed
conflict,” he said, days before he disappeared. An ability to charm foreigners, however,
will not impress the party’s investigators. ■

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Middle East & Africa
Putin’s botched African adventure
The indecorous fight over a dead president’s body
Israel’s prevaricator-in-chief
No one is satisfied with Egypt’s role in Gaza
A haunting new view of Assad’s brutality in Syria
Middle East & Africa | Guns for hire

Putin’s botched African adventure

Two years after Prigozhin’s death, the Wagner Group is in meltdown in Mali

August 28th 2025

In early August more than 200 crates of manuscripts arrived in Timbuktu, the city in Mali
famous for its ancient scholarship. The papers were squirrelled away in 2012 to protect
them from jihadists. For the ruling junta, which took power in a coup in May 2021, and the
Wagner Group, the Russian mercenary outfit that came a few months later, the manuscripts’
return is proof of success. They claim the insecurity that has plagued Mali for more than a
decade, and which the West ostensibly did too little to stop, is at last being tackled.

The reality is different. Security in Mali, as in the rest of the Sahel region where there
have been several coups in recent years, is getting worse. Unlike in other African
countries where they have operated, such as Sudan and the Central African Republic
(CAR), Russians have failed to enrich themselves by exploiting minerals. But their brutal
ways have caused tensions within the Malian army. These spilled into the open on August
11th when dozens of soldiers, including generals who had criticised Wagner, were purged.
The saga is a reminder that, for all the worries about Russia’s meddling in Africa, its
approach has severe limitations.

The rise to power of Assimi Goïta, the “interim” president who this year extended his
term until at least 2030, was initially welcomed by Malians fed up with escalating
violence from jihadists and separatists. Many were attracted by his pledge to assert
Malian sovereignty after decades of French influence. His junta accused France and a UN
peacekeeping mission of being combat-shy. It hoped Wagner would be keener to fight and
more willing to obey Malian command.

The Russians notched up early triumphs. In 2023 they helped the army win back control of
Kidal, a northern city (see map). Yet that was a high point. Deaths in the country linked to
jihadists averaged 3,135 per year from 2022 until 2024, compared with 736 over the
previous decade, according to the Armed Conflict Location & Event Data group
(ACLED), a monitor (see chart). Nearly 2,000 people have already been killed this year,
suggesting an upward trend. JNIM, the pre-eminent jihadist network in the Sahel, is
expanding its footprint. In recent months it has attacked economic hubs such as Kayes, a
town on the road to Dakar, the port capital of Senegal.

This is not solely Wagner’s responsibility. Security was bad when it arrived. Some 2,000
Russian fighters are in Mali today, compared with some 5,000 French troops across the
Sahel at the peak of a French-led anti-jihadist mission that began winding down in 2021,
and 12,000 UN peacekeepers before the coup. Islamist violence is even worse in
neighbouring Burkina Faso, where few Russians are deployed.

But the way Wagner operates is unsuited to counter-terrorism, as a report published on

August 27th by the Sentry, an American investigative group, explains. Murdering ordinary
Malians, it turns out, is a bad way to win over ordinary Malians. Informants have dried up.
In the past year 80% of civilian deaths were at the hands of Malian soldiers or Wagner,
rather than JNIM, notes ACLED. “They just kill people [they suspect] without verifying
first,” one soldier told the Sentry. It argues that Wagner runs “open-air prisons” by
blockading towns it believes contain jihadists. Russians have supported a militia that
stands accused of ethnic cleansing. Increasingly, separatists and jihadists are working
together against Wagner and the army.
Nobody hires Russian mercenaries for their love of the Geneva Convention. But Wagner
has angered many in the army. The Sentry’s report says the group is racist towards
Malians, takes army equipment without asking and defies commands. Russians get priority
in evacuations, adding to disenchantment in the Malian rank-and-file. A military official
told the Sentry that Wagner “are worse than the French, they think my men are more stupid
than them. We have gone from the frying pan to the fire.” Wagner also seems to be a
mediocre fighting force. Last year 84 Russians were killed by separatist rebels in a battle,
after a sandstorm grounded air cover.

Nor has Wagner managed to muscle in on mining in Africa’s second-largest gold producer.
The junta has resisted entreaties to transfer large gold mines run by Western firms. Instead
the regime has used the Russian spectre to extract more money from the industry that
provides more than half of tax revenues. “Assimi and his team are not fools. We did not
reject one invader to open the door to another one, like they did in CAR,” says an official
at the mining ministry. Wagner’s attempts to grab a smaller-scale “artisanal” sector have
failed as well. Initially it was paid out of Mali’s security budget. Today the Russian state
may be footing at least some of the bill.

Though there is little appetite for a return of the French-allied political elites toppled five
years ago, the soldiers who were purged for complaining about the Russians were
reflecting public sentiment. “I was one of the Malians who fiercely believed that this
Russian presence would change something,” says an academic. “Today I am really
disappointed.” A construction worker in Bamako, the capital, reckons that “they lost 80%
of their popularity because they cannot lead a country…the social fabric crumbles from
day to day.”

It is less clear whether serious tensions extend to the top of the junta, raising the prospect
of another coup. Some analysts suggest that Mr Goïta wants to diversify away from Russia
(Sadio Camara, the defence minister, has closer links with the Russians). America may be
betting as much. The Trump administration has sent officials to Bamako and other regional
capitals to discuss the potential for security help and mineral deals. Turkey, a source of
drones, is increasingly influential with Mr Goïta. Gulf states are active, too.

That hints at a problem for Russia. Wagner’s appeal was that it was willing to fight battles
the West or the UN refused. But two years after the death of Yevgeny Prigozhin, Wagner’s
figurehead, the Kremlin is reining it in. In June its presence in Mali was rebranded as
Africa Corps, with a clearer line of responsibility to Moscow. This was a tacit admission
of Wagner’s shortcomings. The junta may wonder why it should rely on a more risk-averse
Russia, when it could forge closer ties to America or rising middle powers. When guns
are for hire, African governments do not need to renew their leases.■

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Middle East & Africa | Unburied hatchet

The indecorous fight over a dead president’s body

And what it says about African politics

August 28th 2025

Who owns the body of a dead Zambian president? It is not a question that is asked very
often. But it is vexing the southern African country run by Edgar Lungu from 2015 to 2021.
His family has tried to have him buried in South Africa, where he died on June 5th.
Zambia, led by his political rival, Hakainde Hichilema, wants him home for a state
funeral, a wish endorsed by South Africa’s highest court on August 26th. The episode
underscores the political significance of funeral rites in Africa.

The Lungu family has resisted entreaties to send the corpse back because it does not want
Mr Hichilema “anywhere near the body”. That reflects a mutual animus. Lungu had Mr
Hichilema jailed on spurious charges. Mr Hichilema’s administration curtailed Lungu’s
post-presidential perks and charged members of his family with corruption offences (they
deny wrongdoing).

Other motives are at play. The government does not want Lungu’s party to use his coffin as
a campaigning tool in next year’s election. The Lungu family may also see the location of
the burial as a negotiating tool in their other legal battles. Most bizarrely, Lungu’s political
party has suggested that Mr Hichilema wants to use the body for witchcraft, an unfounded
allegation. “This whole case has gotten out of hand,” sighs an adviser to the president.

And yet Lungu’s case is far from the first involving a cadaver and a power struggle. After
Levy Mwanawasa, another Zambian leader, died in 2008, parties fought over the use of his
coffin at political events. The family of Robert Mugabe, the Zimbabwean leader who died
in 2019, still resists attempts to move his body from his village to a national monument,
perhaps in the knowledge that his corpse is an asset in their battles with the regime. The
deaths of presidents in Congo and Malawi were kept secret to influence political
successions.

Lungu may be dead. But the dispute over his corpse lives on. ■

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Middle East & Africa | Bibi’s deadly vacillation

Israel’s prevaricator-in-chief
Netanyahu is concerned with both his immediate and long-term political survival

August 28th 2025

On august 24th, six months after being selected as the new chief of staff of the Israel
Defence Forces (idf), Lieutenant General Eyal Zamir broke publicly with his government’s
policy. On a visit to a naval base, he said the idf had, in its previous operations in Gaza,
“created the conditions for the release of the hostages”.

His use of the past tense was a pointed message to Binyamin Netanyahu, the prime
minister. Israel’s most senior general opposes new orders he has been given to occupy
Gaza city. He will obey, but he would rather see a ceasefire.

The absence of any clear strategy from Israel’s government has led to tensions between the
idf and Mr Netanyahu’s government throughout the Gaza war. In recent weeks the prime
minister has taken his strategic prevarication to new levels. That is lethal for Gazans and
dangerous for the hostages. But Mr Netanyahu is driven, as ever, by fears for his own
political survival. Increasingly, he is looking further ahead, to elections due by October
next year.
Ending the war would prompt his allies to abandon him. But the idf’s opposition makes it
hard for him to expand it as much and as quickly as the far right would like. In early July
he told the idf to start preparing a “humanitarian city”, a tiny corner of southern Gaza
where the entire population of 2.1m would be concentrated while Israel’s troops
destroyed Hamas in the rest of the territory. The idf pushed back, calling the plan
unfeasible and illegal.

Mr Netanyahu changed course, opting for a smaller-scale plan focused on Gaza city, now
home to nearly half the population. General Zamir objected once again, but was overruled.
The idf has launched Operation Gideon’s Chariots B but so far only manoeuvred on the
outskirts of Gaza city. Mr Netanyahu alternates between urging haste and tolerating delay.

His vacillation is killing Gazans. For over two months his government blocked all aid
from entering the strip. Then it promoted aid hubs run by the shadowy Gaza Humanitarian
Foundation, aimed at circumventing international aid organisations which Israel claims are
captured by Hamas. Hundreds of hungry Gazans were killed trying to get to the hubs.
There is famine in wide areas of the strip.

Israel has since allowed international aid groups, private companies and criminal gangs to
bring in very limited quantities of food. On August 22nd the Integrated Food Security
Phase Classification, which monitors food shortages around the world, reported that parts
of Gaza have reached famine levels of “starvation, destitution and death” (Israel has
denied this, disputing the report’s methodology).

The government’s diplomacy has been similarly muddled. For months Israel has been
engaged in indirect talks with Hamas aimed at securing a temporary ceasefire in Gaza in
return for the release of half the hostages. This would have provided Gazans with some
respite from Israel’s attacks, which have by now killed at least 60,000 people there,
mostly civilians. The negotiations broke down and Mr Netanyahu, who had originally
insisted on a brief ceasefire, now says he will only agree to one that brings all the
hostages home and ends the war on Israel’s terms. A new temporary deal, brokered by
Egypt and Qatar, to which Hamas has agreed, has received short shrift from his
government.

Mr Netanyahu’s focus is again not on peace, but on his own political survival, both
immediate and longer term. His strategy is based on two things: keeping his far-right
coalition together; and hoping that eventually “victory” in Gaza will revive public trust in
his leadership.

So far he has succeeded at the first bit. He has clung to office by continuing the war and
dangling before the ultranationalist parties the prospect of realising their dream of
annexing Gaza and the West Bank. They grumble that he is not decisive or far-reaching
enough, but realise that under any other prime minister Israel would have stopped fighting
in Gaza long ago.

On the second, though, he is failing. The Israeli public seems to have turned irrevocably
against its longest-serving prime minister. Mr Netanyahu was convinced last year’s
devastating campaign against Hizbullah, the heavily armed Shia militia in Lebanon, and
the 12-day war with Iran in June, would show Israelis he was indispensable. But if
anything those short, decisive wars highlighted the contrast with Gaza, where his
government has dragged Israel into a bloody and unending morass against Hamas, a much
weaker enemy. Three-quarters of Israelis support a deal to save the hostages and end the
war. Hundreds of thousands have taken to the streets in recent days to demand one.

Mr Netanyahu has paid them little heed. But by October 2026 at the latest, he will have to
fight an election. The polls currently say he will lose. Rather than adjust course, he is
doubling down on his hardline alliance, in the hope that, even if he fails to win a majority,
a fragmented opposition will fail to form a coalition to oust him. That tactic has worked
for him in the past but it is risky. It is reprehensible that political gamesmanship is Mr
Netanyahu’s main focus, while Israeli hostages remain in captivity, and Gazans starve and
die. ■

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Middle East & Africa | An ailing giant

No one is satisfied with Egypt’s role in Gaza

Weak finances and security fears limit how much it can help with aid and
reconstruction

August 28th 2025

THE famine in Gaza was created by Israel, which has barred or limited deliveries of food
since March. Rather than admit their culpability, though, Israel’s defenders have spent
weeks looking for someone else to blame. A favoured talking point is that Egypt could
ease Gaza’s misery if it simply allowed more aid into the territory. “Gaza has a border
with Egypt,” Eylon Levy, a former government spokesman, wrote on X, a social-media
site. “This simple fact seems to evade most people who pretend to care about
humanitarian access to Gaza.”

Mr Levy ignored a few simple facts of his own. Since the start of the war, Israel has
insisted on screening any aid that enters Gaza from Egypt. Lorries idle for weeks in Rafah,
an Egyptian border town, before they are allowed to enter. And though Egypt does border
on Gaza, the Palestinians do not control their side of it. The Israeli army seized it in May
2024.
The accusations are ironic. Egypt has worked with Israel to restrict the flow of aid into
Gaza, only to be criticised by Israel for restricting that same flow.

Egypt is the most populous Arab country and was the first to recognise Israel. It is the only
one to border Gaza. It ought to have a central role in trying to end the war, deliver aid and
plan for reconstruction. Yet it has struggled to do so. Many Egyptians are furious that their
president, Abdel-Fattah al-Sisi, seems so passive—but some of the reasons are beyond his
control.

Start with the ceasefire negotiations. Egypt has at times tried to wrest them away from
Qatar, the tiny Gulf sheikhdom that has long harboured leaders of Hamas. The two are
rivals: though relations have improved in recent years, Mr Sisi has not forgotten Qatar’s
support for the Muslim Brotherhood-led government he deposed in a coup in 2013.

When Hamas agreed in August to a 60-day truce—after months of insisting on a permanent

one—it did so in Cairo, not Qatar. Diplomats say the about-face was partly due to
Egyptian pressure (the desperate conditions in Gaza were also a factor). “They made it
clear that Hamas could not get a better deal,” says one Arab diplomat.

Still, that deal would pause the war, not end it. Egypt can warn Hamas that Gaza will not
be rebuilt if it remains in charge, but it cannot compel the group’s recalcitrant leaders to
disarm and cede power, which Israel says is a prerequisite for a lasting peace. Nor can it
convince Binyamin Netanyahu, Israel’s prime minister, to risk his coalition by agreeing to
end the war.

A second obstacle is financial. Last year the United Arab Emirates sent $678m-worth of
aid to Gaza. It was the largest single contributor, accounting for 19% of aid tracked by the
UN. Egypt, by contrast, has served more as a facilitator than a donor: with its crushing
public debt (87% of GDP), it cannot match the Gulf states’ largesse.

In March Egypt convinced Arab leaders to endorse its plan for rebuilding Gaza. Parts of
the scheme are unrealistic: it envisions clearing 53m tonnes of rubble in just two years, for
example. Still, it was the first serious attempt to plan for Gaza’s post-war future. Yet here
too, Egypt may find itself relegated to a supporting role. Its engineers may be eager to help
rebuild Gaza. Someone else will have to pay for it.

Some Egyptians want their government to be more forceful—to send aid to Gaza without
Israeli inspections, for a start. Egypt says it cannot. Agreements with Israel and the
Palestinian Authority tie Egypt into the Israeli screening regime. Mr Sisi no doubt worries
that a tougher stance towards Israel would upset his Western backers, particularly Donald
Trump.
Opening the border would also exacerbate Egypt’s own security concerns. Mr Sisi would
like the Rafah crossing to be open, but only in one direction. Egypt has taken in more than
100,000 Gazans, many of whom paid enormous fees to cross the border. It fears that a
chaotic border would allow many more to enter—Hamas militants among them. It also
worries about being saddled with a long-term refugee crisis (Egypt already hosts around
1m people displaced from other conflicts).

It is an unenviable position. Egypt has offered haven to some Gazans, facilitated the
delivery of 550,000 tonnes of aid and helped to implement truces and hostage deals. That
is far more than most Arab states have done for Gaza. But it is not enough to satisfy many
Egyptians, who are incensed that the war continues—nor, it seems, to satisfy critics in
Israel. ■

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Middle East & Africa | The architecture of Syria’s prisons

A haunting new view of Assad’s brutality in Syria

It could one day be used in trials against members of the regime

August 28th 2025

At around four o’clock in the morning on December 8th last year, gunmen stormed Sednaya
prison, north of Damascus. They shot open cell doors, telling inmates that they had been
freed. Some cowered in place, fearing a final trick by a crumbling regime, designed to lure
them to their deaths.

Since Bashar al-Assad’s fall, Syrians have begun to document and reckon with the half-
century of repression that hollowed out their country. At the heart of that story are Syria’s
prisons, none more infamous than Sednaya.

A new digital project, the Syria Prisons Museum, is part of that effort. Created by a group
of Syrian journalists and activists, the interactive website presents a comprehensive
account of Sednaya’s grim role in the Assad regime. Part memorial, part forensic archive,
it is an immersive, harrowing experience. A 360° video tour takes the viewer through the
execution rooms. Documents uncover the macabre euphemisms used for prisoners’ deaths.
In video testimonies, surviving inmates recall the cruelty of the guards.
Both Hafez al-Assad and his son used Sednaya to lock up dissidents of all kinds, from
communists to jihadists. But as Syria’s peaceful uprising morphed into civil war, it was as
much a place of execution as of incarceration.

For the regime’s opponents, Sednaya was often the end of a labyrinthine journey through
Syria’s network of torture and interrogation centres. The project details that extensively.
Most inmates had been sentenced to death or indefinite detention. Execution was often by
hanging, carried out in the early hours of the morning. Prisoners were sometimes starved
in the days before; it meant they died more easily. If overcrowding meant hangings were
not possible, guards often beat inmates to death or strangled them.

Nine months since the collapse of Mr Assad’s rule, hundreds of thousands of Syrians are
still searching for missing relatives. Little is understood about the workings of the
regime’s machinery of repression: its rules, its hierarchies or its logic. This archive offers
some clues. It lists names of the officers who oversaw Sednaya, and describes in detail the
legal process—or lack thereof—through which some people ended up there.

The project builds on earlier work by the same team, which mapped the detention system
of the Islamic State (is). That archive was later used as evidence in trials of is members in
Europe. If the Syrian regime’s thugs are ever held to account, those working on the prisons
project could be called on to testify.

This website will soon be available to all, from the families of Syrians still missing to
human-rights lawyers and historians. Perhaps with it, a measure of accountability may one
day follow. ■

The Syria Prisons Museum website will go live on September 15th.

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Europe
Time for some Merz-Macron magic
Ukraine shows off a deadly new cruise missile
After a year of chaos, the Dutch hope to return to real issues
Why Poland is becoming less central European and more Baltic
Ten years later, “Wir schaffen das” has proved a pyrrhic victory
Europe | The Franco-German relationship

Time for some Merz-Macron magic

The leaders of France and Germany meet to kickstart Europe

August 28th 2025

WHEN THE French and German governments gather in the Mediterranean port of Toulon
on August 29th, the meeting will be heavy in symbolism. It will be the two countries’ 25th
joint cabinet meeting, a marker of the importance both place on their mutual ties. Toulon is
a naval base, a key strategic point for the European Union’s only nuclear-armed power. At
a crucial moment for Europe’s security, the event reaffirms what is still the eu’s
indispensable bilateral relationship.

Yet deep uncertainty will hang over the event. On August 25th François Bayrou, France’s
prime minister, called a vote of confidence for September 8th over his debt-reduction
plans. His government may well fall. Emmanuel Macron will remain in charge of foreign
affairs regardless. But instability at home makes the need to tighten the link between the
leaders—Mr Macron and Friedrich Merz, Germany’s chancellor—harder yet more urgent.

Happily, there are propitious signs for the renewal of a relationship that stalled under Olaf
Scholz, Germany’s chancellor until May. French dismay over Mr Scholz’s decision to
prioritise America over Europe, and a poor personal relationship between the two men,
saw the Franco-German “motor” run out of juice. By contrast, Mr Merz, whose Christian
Democrats (CDU) unseated Mr Scholz in February’s German election, invested early in
Mr Macron. His bold, sometimes surprising approach to policymaking—seen in his
decision to loosen Germany’s debt rules to fund a huge rise in defence spending—has
impressed his French partner. The two have made a great show of their bond, issuing joint
op-eds and travelling together to global hotspots such as Washington and Kyiv.

Last month Mr Merz, who has an eye for ceremony his predecessor lacked, ensured veal
saddle and chanterelles were on the menu when he hosted Mr Macron at a villa on the
outskirts of Berlin. On August 28th Mr Macron will return the favour, treating Mr Merz to
dinner at his summer residence, the medieval fort of Brégançon on the Med. So far the
chemistry between the two leaders, both former financiers who speak English together,
seems unusually good. In private Mr Macron calls him “direct, simple, frank, aligned”. Mr
Merz has celebrated their “deep personal bond”.

Besides the geopolitical crises of the moment—Ukraine, Gaza, Iran—two broad subjects
will be on the agenda in Toulon: improving European competitiveness, and bolstering
defence and security co-operation. The countries will announce a raft of joint “lighthouse
projects” in areas like ai and quantum computing. A meeting of the revamped Franco-
German defence and security council will also take place.

Mr Merz delighted French observers when he declared in February that Europe must
reduce its dependence on America, apparently embracing Mr Macron’s long-standing
ambitions for European “strategic autonomy”. Among other things, a quiet conversation
has begun on the extension of France’s nuclear deterrent to the rest of Europe. German
officials admit freely that merely discussing the details of deterrence is helpful in forging
the strategic culture they have long lacked.

But whether Germany is ready to unshackle itself from America’s security guarantees, and
its off-the-shelf military kit, remains to be seen. “There is huge potential for
disappointment on the French side,” says Jacob Ross at the German Council on Foreign
Relations. In Ukraine, as a debate over security guarantees gathers pace, Germany is
unlikely to make a big direct contribution to policing any ceasefire. But the hope is that its
financial and logistical support for Ukraine can justify the place it has sought in the
“coalition of the willing” spearheaded by France and Britain.

The two leaders also know they need to broaden their alliances. France and Germany
already work well with Britain on dealing with Iran’s nuclear programme. They now want
to revitalise the “Weimar triangle” with Poland; this week they joined Donald Tusk, the
Polish prime minister, on a visit to Moldova to back its embattled pro-Western
government. “Given the geopolitical challenges today, the Russian threat and the Trump
administration, the Franco-German relationship alone is now insufficient,” says Sébastien
Maillard of the Institut Jacques Delors, a think-tank.

Inside the eu the pair appear to agree on the importance of slashing red tape and reducing
the still-considerable barriers to trade, especially in services, within its single market.
Progress on this in recent years has been glacial. They are slowly converging on the trade
and security challenges presented by China, too.

Yet there are several points of disagreement. Mr Macron’s unwillingness to approve the
eu’s trade deal with Mercosur, a Latin American bloc, has infuriated many in Berlin.
France insists on amending the agreement to protect European farmers. The German view
is that Europe, thumped by American tariffs, must seek partners wherever it can find them.
Brussels insiders think a workaround will be crafted that provides Mr Macron with the
cover he needs to wave the deal through.

A yet trickier source of friction is over two military grands projets with troubled histories:
the Main Ground Combat System, a next-generation battle tank, and, especially, the Future
Combat Air System (fcas), a complex aviation initiative interlacing a fighter jet, drones
and a “combat cloud” communications system. Tensions have risen over what the Germans
regard as a power-grab by French firms; last week the defence ministry warned that the jet
was imperilled by demands from French industry for sole leadership. The two defence
ministers have vowed to iron out their differences by the year’s end. But it is not obvious
how political will can resolve industrial mistrust. French officials insist there is “no plan
B”. But scepticism over the fcas remains rife in Berlin.

Ever since Konrad Adenauer and Charles de Gaulle signed the Elysée Treaty in 1963,
vowing to build an integrated Europe upon their post-war link, the strength of the
relationship has depended on the respective leaders’ ability to overcome their differences.
Today the two leaders not only share a desire to make the tie work, but understand each
other’s domestic constraints. Mr Merz is unlikely to give voice to his government’s
concerns over France’s unstable public-debt load, for example. Mr Macron has eased his
calls for Germany to back a programme of common eu debt for defence.

But political capital as well as goodwill is needed, and neither leader has much. Less than
four months in, Mr Merz’s hold on his coalition with the Social Democrats is wobbling,
his break with fiscal orthodoxy has irritated many in his own ranks, and the hard-right
Alternative for Germany is nipping at his heels. Mr Macron, whose presidential term runs
until 2027, is in an even deeper hole. If his government falls, France will lose its third
prime minister in just over a year.

Such troubles will not help Mr Macron and Mr Merz in their quest to make something of
their renewed partnership, but they render the effort even more vital. “Our shared strategic
interest outweighs our national differences,” says Roland Theis, a cdu mp. Europe is a
fretful and vulnerable place right now, and needs a strong Franco-German link more than
ever. The two leaders cannot afford to get it wrong. ■

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Europe | The flight of the flamingo

Ukraine shows off a deadly new cruise missile

But sceptics wonder if it is too good to be true

August 28th 2025

Earlier this month Ukraine unveiled a new cruise missile. With a declared range of
3,000km and a payload of over a tonne, the Flamingo packs a punch, on paper. If even half
the claims hold, it has the potential to deal serious damage to targets almost anywhere in
European Russia. Appearing in the middle of lumbering peace talks, the bird may help
encourage Vladimir Putin to lay down arms. All the more striking, therefore, that the
process of entering mass-production took just nine months, rather than the usual years or
even decades, and was led by a management team that claims to have had no previous
defence-industry experience. “I was very sceptical at first,” says one of the officials
overseeing it, “but when I saw the missiles, I was stunned.”

Representatives for Fire Point, the company behind Flamingo, say the missile began life as
a napkin scribble in late 2024. At the time Ukraine was desperate to build a long-range
deterrent. In September that year Volodymyr Zelensky made a bold and then-secret request
to Joe Biden for American Tomahawk cruise missiles as part of his “Victory Plan”; the
Biden administration replied sharply in the negative. Few dared believe that Ukraine’s
domestic missile programme could produce the goods fast enough.

Fire Point, a new private company, says it was able to confound expectations by going
back to basics. A representative says their engineers were inspired by historic models like
the German V-1 and the Soviet Strizh, both of which mirror the Flamingo in mounting the
engine above the main body. The name began as an in-house nod to the women in top
positions: the test prototypes were even painted pink.

Much of what is known about the missile comes from scraps; grainy videos and the
specifications of an apparently identical “FP5” missile, presented at a weapons show in
the United Arab Emirates in February. It isn’t clear why the missile was presented there,
or how exactly Fire Point is related to the Emirati outfit that put it on show. A British
associate of the same outfit is already known to be supplying weapons to Ukraine. A
spokesman for Fire Point claims the company cannot comment for security reasons. “Our
idea in February was successful—that’s all I can say.”

The production process appears to be at least partially carried out abroad, but “over
90%”, the company says, of final assembly is in secret sites dispersed throughout Ukraine.
The body is made of fibreglass, making it harder to spot than metal would be. The engine
appears to be an AI-25 turbofan produced by the Motor Sich design bureau in Zaporizhia
province, a frequent target of Russian attacks and so a potential bottleneck. Production,
now at one missile a day, is promised to climb to seven a day by October.

Developed so fast, and meeting Ukraine’s defence needs almost exactly, the missile seems
too good to be true. Some competitors wonder if it is just that. Rumours persist over
alleged proximity to the presidential office, non-competitive financing, and whether the
missile is even Ukrainian. The company denies all of it. The price tag of “under €1m”
($1.2m) per missile, competitive in the world of cruise missiles, is still a big outlay for
Ukraine, given the volumes that will be needed and doubts about the Flamingo’s real
performance. The missile is bulky and climbs steeply at launch, making it more visible to
enemy radar, so the assumption is that a large percentage of them will be spotted and
intercepted. “At full range, a Russian fighter jet has enough time to be taking smoking
breaks,” quips a competitor.

Yet Kostiantyn Kryvolap, an aviation expert, is confident that the missile will be able to
exploit gaps in Russia’s weakening air defences. “Ukraine is renowned for its creative,
combined attacks to overwhelm defences, and these will probably be exactly that. In time,
Russia will suffer heavier destruction.” Already, slower Ukrainian drones, more
vulnerable to jamming and defence measures, have taken at least 13% of Russia’s oil-
refining capacity offline.
The ultimate test will be on the battlefield. Fire Point admits that its missile has yet to be
widely deployed, but insists that the enemy will be shocked when it is. Russian military
bloggers, at any rate, reined in their usual swagger when discussing the new threat. One
advised creating a round-the-clock air-monitoring mission using Russia’s newest and most
capable fighter jets. Others have begun to co-ordinate frantic searches to find the missiles
and their makers inside Ukraine. ■

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Europe | Yet another election

After a year of chaos, the Dutch hope to return to real issues

Voters want to talk about housing, but Geert Wilders wants to talk about asylum-
seekers

August 28th 2025

ANYONE CAN quit a government, but it is a neat trick to quit one that has already quit.
On August 22nd Caspar Veldkamp, the Dutch foreign minister, resigned after other cabinet
members frustrated his modest efforts to toughen Dutch policy towards Israel. The four
other ministers from his party, New Social Contract (NSC), left too. Yet technically they
had already stepped down: the coalition fell on June 3rd, and elections are scheduled for
October 29th. NSC was leaving the caretaker government meant to run the country until a
new one is formed.

No party in the Netherlands’ history had ever done this, and it was a fitting coda for the
outgoing government, a chaotic coalition of centre-right and hard-right parties that lasted
less than a year. The two remaining parties in the rump cabinet, the Liberals (VVD) and
the Farmer-Citizen Movement, are scrambling to find replacement ministers. Together they
have just 32 deputies in the 150-seat parliament. In September they must persuade other
parties to help pass a budget, just when politicians are least co-operative: before an
election.

The campaign’s first shot was fired by Geert Wilders, a populist who has called Islam
“not a religion” but a “dangerous and violent ideology”, and who had brought down the
government by pulling his Party for Freedom (PVV) out of the coalition. In early August he
posted a bit of 1930s-style propaganda on X, a messaging platform: an image of a female
face divided in two, with on one side a smiling blonde labelled PVV, and on the other a
grimacing matron in a hijab labelled PvdA, for the Labour Party. Anti-discrimination
groups accused Mr Wilders of using “Nazi visual language”; he denies the charges.

It was a return to form for Mr Wilders, who was convicted on hate-speech charges after
promising in 2014 to deport people with Moroccan backgrounds. In the last election in
2023 he moderated his tone, leading the media to dub him “Geert Milders”. He came first
with 23.5% of the vote. But his party accomplished little in power, even on his signature
issue of limiting immigration. After he quit the coalition, almost every other party
eschewed governing with him in future. Hence the savage campaign, says Nadia Bouras, a
Dutch historian: “He’s always been racist, but now he has nothing to lose.”

Immigration is only the second-most important topic in the election, according to polls.
The most important is housing. The issue is not so much price as scarcity. Public-housing
corporations (about 30% of all housing) build only half as many homes as they promise to
each year, and waiting-lists in Amsterdam are a decade long. Tighter limits on rent-
controlled apartments introduced in 2023 led many landlords to sell those properties,
inflating demand in the uncontrolled sector.

Many economists say public-housing corporations build fewer homes because of a shift
since the 1990s to a hotch-potch of regulations and subsidies that make building
unprofitable for them. “We have the worst of the market and the worst of the state,” says
Bas Jacobs of the Vrije Universiteit Amsterdam. Political parties are promising to build
more, but mainly by raising spending and loosening permits rather than changing the
system. “We’re going to free up billions for public-housing corporations,” says Frans
Timmermans, leader of the GreenLeft-Labour Party.

GreenLeft-Labour hails from the ongoing fusion of the two big parties of the left. It is
polling at about 19% and rivalling the PVV for first place. The VVD has been sliding,
punished for its part in the hapless coalition government. Also contending for the top slot
are the Christian Democrats, once the country’s biggest party but more recently written off
for dead. An amiable new leader, Henri Bontenbal, has won back many voters from the
collapsing NSC.

No party is seen as “owning” the housing issue, says Simon Otjes of Leiden University.
That is leading to lots of competition. The pvv’s strategy is to blame shortages on asylum-
seekers. Of the public-housing units that become available, 7% go to refugees. But fixing
the huge construction shortfall seems more important. ■

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Europe | Winds of change

Why Poland is becoming less central European and more

Baltic
Thanks to energy and security concerns, its centre of gravity is shifting north

August 28th 2025

AT OVER 260 metres in height, the wind turbines rising out of the Baltic Sea, north of
Leba, a Polish resort town, are among the world’s biggest. Installed more than 20km from
the coast, they are hardly an eyesore, unless you have a strong pair of binoculars or are
named Donald Trump, or both. Beachgoers in Leba seem more bothered by the
unseasonably cold weather.

The turbines, part of a wind farm project called Baltic Power, are expected to go online
next year and generate enough energy to power 1.5m homes. They are also markers in a
changing economic and geopolitical landscape. Poland has long been viewed as a central
European country. But as its green transition begins to take hold, and the fallout from
Russia’s war in Ukraine settles across the region, the country’s centre of gravity is starting
to move north, towards the Baltic Sea.
Energy is leading the way. Poland’s south, home to most of its coal mines and heavy
industry, has long been the country’s engine room. That is changing. Poland plans to phase
out coal by 2049, so as to align with EU clean-energy targets. Increasing mining costs are
also helping the economy go green. In June of this year, Poland’s renewables generated
more power than coal for the first time (see chart). Poland is increasingly looking to the
Baltic coast to meet its energy needs. The country has already boosted capacity at its only
LNG (liquefied natural gas) terminal, in Swinoujscie, to 8.3bn cubic metres (bcm) per
year, and plans to open a second one, capable of handing another 6.1bcm, in Gdansk in
2028. A pipeline stretching from Norway through Denmark, launched in 2022, can provide
up to 10bcm more gas. The sea is also helping Poland go nuclear. The Baltic’s waters
might be too cold for Club Med regulars. But they are perfect for reactor cores, which is
why Poland’s first nuclear plant, set to open in the 2030s, will be based on the coast.
Wind power, which now accounts for 14.7% of Poland’s energy mix, up from 0.3% two
decades ago, is also moving north, and offshore. Baltic wind farms, including the ones
under construction today, are expected to reach 18 gigawatts by 2040, according to a
report published by Poland’s coalition government earlier this summer. They will not
come cheap. Offshore wind, the biggest energy investment programme in Poland’s modern
history, may cost more than $140bn over the next 15 years.

To understand Poland’s northern pivot, it helps to look east. Poland began to diversify
away from Russian energy long before the invasion of Ukraine. Since then, it has weaned
itself off Russian oil and gas entirely. That means having to look for new suppliers and
investing in other sources of energy. “The Baltic direction is not a matter of choice,” says
Zuzanna Nowak of Opportunity, a foreign-policy think-tank in Warsaw. “This is practically
the only way we can import energy. The sea is becoming our window to the world.”

The war, as well as Western sanctions against Russia and the Baltic Sea’s transformation
into a geopolitical flashpoint, has boosted the importance of Poland’s ports, which have
been booming. Shipments have nearly doubled in the past decade. Gdansk has turned into
the EU’s fifth-busiest commercial port. The ones in Gdynia and Swinoujscie have some of
Europe’s highest growth potential, according to Accolade, an investment group.

Gdynia’s port has also become a key NATO hub for military equipment destined for
Ukraine and American bases. “The Baltic and the whole northern coast used to be
considered a periphery,” says Katarzyna Gruszecka-Spychala, deputy president of the
port’s board. “The threat from Russia changed everything.”

That includes foreign policy. For decades Poland looked to its central European
neighbours as key regional allies. No longer. Relations with Hungary and Slovakia, whose
leaders have a soft spot for Russia, are badly frayed. The same may soon be true of the
Czech Republic, assuming Andrej Babis, a pro-Russian populist, ends up as prime
minister after elections in October. The Visegrad Group, the main vehicle for co-operation
between the four central European countries, is fast becoming irrelevant. Poland has
instead begun to close ranks, on maritime security, energy and Russia, with the Baltic and
the Nordic countries, including NATO newcomers Finland and Sweden. Rail Baltica, a
$28bn project, will connect Poland with Lithuania, Latvia and Estonia.

Still, the coastal economy has some catching up to do. The region lags behind the south,
and Warsaw, the country’s capital, where incomes are highest. Heavy industry and large
data centres are reluctant to move north, closer to the new sources of energy, admits an
official in Warsaw. Down the line, however, the new investments are bound to drive local
growth.

In domestic politics, winds are blowing from the north too. Donald Tusk, the prime
minister, comes from Gdansk. The country’s new president, Karol Nawrocki, backed by
the nationalist Law and Justice (PiS) party, also cut his teeth, perhaps literally given his
past as a football hooligan, on that city’s streets.

PiS, whose backing is strongest in the east and the south of the country, and which has long
embraced the coal industry, may prevail in elections to parliament in 2027. But even if
there is to be a new government, it will most probably stay committed to the Baltic on
energy and foreign policy. Poland’s northerly course appears to be fixed. ■

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Europe | Charlemagne

Ten years later, “Wir schaffen das” has proved a pyrrhic

victory
The providential folly of Angela Merkel’s migration policy

August 28th 2025

It was the worst of policies, it was the best of policies; it may not even have been intended
as a policy at all. In late summer 2015 as a tide of Syrians, Afghans and others marched
towards Europe in search of refuge, Angela Merkel announced that Germany would, in
effect, take them all in. The move startled the chancellor’s critics and allies alike. By
upending migration policy, had the methodical-to-the-point-of-obstructive leader revealed
a rash streak on perhaps the most fraught topic in European politics? Mrs Merkel’s answer
to both fans and naysayers came in the form of a phrase that came to mark her 16 years as
chancellor: Wir schaffen das, We can handle this. Over 1m migrants soon made Germany
their home. A decade later Mrs Merkel has been proved right, but in a pyrrhic sort of way.
Germany did manage, and better than anyone might have expected. But the costs of doing
so have mightily strengthened her political opponents.
The run-up to the anniversary of Mrs Merkel’s proclamation on August 31st was marked
by a civic jolt. The Alternative for Germany (AfD), a party marked by such deep-seated
xenophobia that the country’s security services have designated it as “extremist”, topped
some national polls. (In 2015 it had been a marginal political force too small to get into
parliament.) To critics of Wir schaffen das that is the upshot of what they see as Mrs
Merkel’s naive kindness to outsiders. Yes, of course Germany could muddle through, as
could any rich country of over 80m people taking in a large wave of migrants. But many of
the Germans made to do the muddling were not the well-off liberal types on hand to
welcome Syrians at train stations with teddy bears and flowers. Rather, the costs fell on
those living far from the fashionable bits of Berlin and Munich, whose kids’ classmates
now spoke no German. They had expected the state to look out for them, but instead felt
patronised by their own chancellor. Today seven in ten Germans feel the state is
overwhelmed. The visceral feeling that the authorities were losing control—the stuff of
populist politicians’ rhetoric, as Britons well know—took root in 2015.

Those who cheered Mrs Merkel’s approach at the time can feel some vindication too. For
them the Willkommenskultur of that summer was an act of national redemption, a moral
feather in the German cap. Forget grubby politicking, this had been a case of a leader
following her compass, and taking the country along with her. The costs were high—all
things worth doing have a cost—but not unmanageable, just as she had said. Doomsday
predictions of migrants being on benefits for decades, hobbling the welfare state at the
expense of the native-born, proved wide of the mark. Recent data show that around two-
thirds of the migrant intake of 2015 now work, not far from the employment rates of
native-born Germans (although migrant women have not fared as well). Though costly in
terms of benefits, newcomers helped alleviate firms’ concerns of a labour shortage in the
German economy.

It wasn’t just Germans, old and new, whom Mrs Merkel had swept up in her bid to
welcome the world’s downtrodden. Europe had helped Germany recover from the moral
abyss of the second world war, then permitted its unification in 1991. Whether or not she
intended it that way, Mrs Merkel was seen as repaying the favour. For the throwing open
of borders was a boon not just to migrants, but to Germany’s neighbours, who had no
appetite for dealing with the incoming huddled masses. Now they could send them to
Germany instead; Hungary’s Viktor Orban helpfully put on buses to help ferry the migrants
northward.

Here, Mrs Merkel miscalculated. She had described dealing with migrants as “the next
great European project”, the kind of language used for the creation of the euro or the
Schengen passport-free travel zone. But demands from Germany that other European Union
countries help out by taking their “fair share” of migrants fell on deaf ears. The upshot was
that Germany partly reinstated the very border controls that Schengen had abolished.
Others followed in time; these days passport checks are rife within the zone. And there
was a grubby underside to Mrs Merkel’s principled stand, when she concluded that
Germany could not take in thousands of refugees a day indefinitely. The only way to stem
the flow of migrants was, in effect, to bribe Europe’s neighbours, notably Turkey, to keep
Syrians and others on their territory rather than let them wander to the EU. That has
resulted in the bloc toadying to strongmen such as Recep Tayyip Erdogan, when their
authoritarian ways should have been called out.

Given the shrill tone around migration, it can be hard to draw a nuanced conclusion. It is
all too easy to draw wrong ones, however. Pinning the rise of the AfD purely on the events
of 2015 is one such case. Even Mrs Merkel has admitted that her “polarising” stand a
decade ago had helped the party’s rise. But it was not the only factor. The party’s
ideological allies are leading in polls across Europe, including in France and Italy.
Germany has a unique history, but it was never likely to be entirely spared the wave of
hard-right populism that has enveloped much of the continent.

However one feels about Wir schaffen das, it has aged rather better than Mrs Merkel’s
policies that allowed the German economy to become dependent on gas from Russia and
exports to China, not to mention her rash shutting-down of its nuclear power plants. Yet a
decade on, not much remains of her can-do spirit of 2015. Mrs Merkel’s own party, back
in power, has disowned her approach and tightened Germany’s asylum rules. Europe is
implementing a “migration pact” that treats asylum-seekers far less kindly. It now looks as
though Mrs Merkel spent her political capital on a gamble whose payout turned out to be
fleeting. Does that make it a blunder? Perhaps; but a generous and humane one. ■

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Britain
The choices facing Britain’s next MI6 chief
Hansard shows what it takes to put democracy on the record
In some ways, rural Britain is changing faster than its cities
The world’s oldest daily radio serial on England’s new rural life
Quietly, Britain is moving closer to EU rules
The polycrisis theory of Brexit
Britain | On His Majesty’s Stretched Service

The choices facing Britain’s next MI6 chief

Human espionage has never been harder, costlier—or more important

August 28th 2025

IN THE EARLY 1990s, with the cold war over and the Russian threat seemingly gone, Sir
Robert Fellowes, the private secretary to Queen Elizabeth II, was lunching with Sir Gerry
Warner, the deputy chief of MI6. “What shall I tell Her Majesty her Secret Intelligence
Service [SIS] is for?” he asked. “Please tell her”, replied Sir Gerry, “it is the last
penumbra of her Empire.” Later that decade another MI6 officer described Britain’s
aspiration to global intelligence as “the itch after the amputation”.

When Blaise Metreweli takes over as the 18th chief of MI6 on October 1st, succeeding Sir
Richard Moore, she is unlikely to face similar attitudes. Britain’s intelligence agencies are
riding high, having provided early and unambiguous warning of Russia’s invasion of
Ukraine. There is no shortage of threats. This year the single intelligence account, which
sets budgets for Britain’s three main spy agencies, was given its largest boost in almost a
decade. Surveys show that, much like the armed forces, the agencies are highly trusted
(though poorly understood) by the public.
Yet MI6 also stands at a historical juncture. Traditional espionage is becoming harder
even as there is much more that needs spying on. The distinctions between human and
technical intelligence are ever blurrier. And bringing human spies into the digital age is an
expensive business.

Start with the basics. MI6 is a human-intelligence (HUMINT) service. Put simply: “We
recruit agents to spy for us.” It steals secrets for three purposes: to protect national
security (eg, how will Vladimir Putin approach peace talks?), for economic well-being
(what is India’s position in trade negotiations?) and to tackle serious crime. Its main job is
to inform policymakers. It has a lesser-known mandate for disruption of threats—say,
feeding dud components into Iran’s nuclear supply chain.

At its heart are case officers: the people who recruit and run agents. Many work out of
embassies, posing as diplomats; others travel abroad under an alias, with no diplomatic
immunity should they be unmasked. Around them is a web of other officers and experts,
who help identify potential targets, plan how they might be approached, build robust cover
stories and study foreign intelligence services. The raw intelligence that they collect is fed
into the Joint Intelligence Organisation, which combines it with other data, such as
intercepted communications and press reports, to produce “all source” reports that go to
the prime minister and others.

For Ms Metreweli, a Cambridge-educated career intelligence officer who spent much of

her working life in the Middle East, the first challenge is where to direct her agency’s
efforts. Formally, priorities are set by the government, but MI6 has a lot of influence in
shaping those. Its top priority is now China, whose spy agencies dwarf British ones and
increasingly match them for skill. Russian intelligence services, rebuilding after mass
expulsions from Europe, are more and more active in sabotage and subversion. Iran’s
nuclear programme is a key concern, with inspectors kicked out of the country following
American and Israeli strikes earlier this year.

Emerging technology is a growing challenge. Intelligence on China’s chips, ai models and

data centres is becoming vital. Breakthroughs in quantum computing abroad could
radically affect the security of encrypted data at home. There is not enough money, nor
enough spies, to do it all. “Do you get out of Africa or the Americas?” asks one insider.
“Is that wise?”

The second question is how to prioritise not just among targets, but also tasks. A rising
one is counter-intelligence: catching spies working for foreign services, ideally by
penetrating them. “The intelligence community is less prepared for the growing importance
of counter-intelligence than it should be, after two decades of focusing on terrorism and
insurgency,” says Philip Davies of Brunel University, the author of a book on MI6’s
structure. “SIS is going to have to go back to a cold-war model of operating.” Ms
Metreweli is well placed for this: as well as her recent history as head of Q branch, which
deals with technology, she was director of MI5’s K branch, which counters subversion.

There is also, says Mr Davies, “a lot more thinking” under way about MI6’s role in
disruptive action. MI6 has never had a large in-house paramilitary capacity like the CIA.
But it has worked closely with the Special Air Service, a special-forces unit. MI6 is part
of the National Cyber Force, which conducts offensive cyber operations. In recent months
Sir Richard has repeatedly alluded to that aspect of the agency’s work. “We cherish our
heritage of covert action,” he said in Paris in November, “which we keep alive today in
helping Ukraine resist the Russian invasion.” One former intelligence officer points to
Mossad’s involvement in Israel’s war against Iran as an example of how MI6 might need
to integrate more deeply with the armed forces in wartime.

A third debate is how to build a HUMINT service for the digital age. “It’s never been
more difficult to run agents because of what they look like in big data,” says one person
familiar with these efforts. The cost of operating covertly—building aliases that are robust
to digital scrutiny, for instance—has risen exponentially since Ms Metreweli joined the
service in 1999. That is one reason why the ratio of HUMINT to signals-intelligence
(SIGINT) material flowing to British intelligence analysts has tilted much further in the
latter’s favour over the past decade.

That does not mean old-fashioned agent-running no longer matters. The profusion of data
on individuals, companies and countries—and AI-enabled tools to sift through it—can
turbocharge the process of scoping out agents or finding leads. Yet law and red tape have
meant that it is often easier for outsiders to use publicly available data than for spooks. In
2023 GCHQ, Britain’s SIGINT agency, noted that it would have taken the agency weeks to
acquire the same data to train a particular model that anyone else could have downloaded
in hours. In April the Investigatory Powers Act of 2016 was updated to ease this problem.

Storing data, training AI models and running them requires huge amounts of computing
power that is designed to handle highly secret material. The IT systems in Britain’s spy
agencies are just as ropey as those in other government departments, with new systems
built on top of ageing ones. “The risk is that secret cloud servers become the nuclear
deterrent of the intelligence world,” says a source familiar with Whitehall budget debates,
referring to the way nuclear spending has cannibalised the rest of the defence budget.

The technological turn in human espionage is also reshaping how MI6 relates to its sister
agencies. Each agency has long supported the other—MI6 providing code-breaking
material to GCHQ, for instance, and GCHQ drawing on decrypted cables to flag up
potential Soviet spies—but the relationship is “more connected than ever before”, says a
source. MI6 needs GCHQ to access a would-be target’s fitness tracker; GCHQ needs MI6
to slip implants into kit headed to an Iranian nuclear site.
“There are arguments to be made that if the intelligence services were being created from
scratch now, we wouldn’t have a separate HUMINT versus SIGINT agency,” suggests
Rory Cormac, an expert at the University of Nottingham. “The organisational divide is a
relic of a bygone age.”

Even so, the ethos of the case officer remains paramount for SIS. Most of the CIA’s
directors have been generals and admirals, lawyers and politicians. Only two operational
officers have led it in the past 50 years. In contrast, MI6 has not been led by an outsider in
that same period. “It’s a moment for the three agencies to also remember they each have
unique DNA,” says another intelligence professional. “And for Vauxhall,” he says,
referring to MI6’s location in south London, “it is that ability to build those networks and
develop human agents. That’s their thing.” ■

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Britain | Britain’s note-takers

Hansard shows what it takes to put democracy on the

record
Even in an age of artificial intelligence, it’s harder than you might think

August 28th 2025

The chute, tucked behind an oak-panelled door, whisks messages down to the House of
Commons. This is how Hansard staff, who record every sentence spoken publicly in
Parliament, communicate with MPs during debates. In goes a scribbled note, asking for
clarification on a word or phrase. An official creeps across the chamber to hand it to the
MP. The answer is hastily sent back upstairs. Staff have minutes to file their account, with
no mistakes.

Hansard is a quirky institution within a quirky institution. Founded in 1803, and named
after a family of printers, it is treated as the gospel of what was said in Parliament. But an
“um” or “ah” can subtly change the meaning of a sentence. So can emphasis and tone—or a
wagging finger or raised eyebrow. In deciding how to record such things, Hansard shapes
the collective memory.
In the Commons reporters work in five- or ten-minute “turns”. They sit hunched in the
press gallery noting anything that might need checking. (Old hands recognise members
from the backs of their heads.) They then rush to their desks, plug in headphones and work
on the write-up. A key guideline says the current speaker has the floor and everyone else
should be ignored.

Sometimes flexibility is required. In 2019 semi-naked climate protesters glued themselves

to glass panels overlooking the chamber. That merited three uses of “[Interruption.]”,
previously deployed for an insistent housefly and a volley of horse manure.

Hansard has just hired six trainees. They will start with less intense tasks, such as note-
taking in committee rooms. After six months they should earn a diploma in parliamentary
reporting and eventually get to the Commons.

Will technology shake up their work? The team is cautiously embracing AI for initial
transcription. Jack Homer, Hansard’s editor, says the heart of the job is making subtle
editorial judgments. And he believes only humans can do that. ■

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Britain | The churning countryside

In some ways, rural Britain is changing faster than its cities

More people, more homes, more solar farms

August 28th 2025

Holidaymakers, including American vice-presidents, are drawn to rural Britain partly

because it seems to change so little. The villages are thatched and quaint. The farm shops,
if not their prices, can be old-fashioned. The landscape is “timelessly familiar”, as the
king put it in an essay for Country Life a decade ago.

It is an illusion. Especially in the southern half of England, rural areas are churning. They
may lack some of the things that make cities seem dynamic and exciting, such as
immigrants, but in other ways they are changing faster. The transformation of rural Britain
can be seen in Mid Suffolk, a district of 110,000 people that lies 110km north-east of
London.

East of the B1113 road in Bramford, a village near Ipswich, the sound of drilling and
diesel engines fills the air. Bellway, a large housebuilder, is erecting 190 homes in a new
estate known as Lockwood Place. Its brochure promises “the best of town and country”.
Its street names are reassuringly rural (Wagtail Lane, Heron View). Nine models of home
can be bought, all of them named after old jobs: the Chandler, the Cooper, the Scrivener
and so forth.

Drive around Mid Suffolk, and the yellow signs pointing to new housing developments
like Lockwood Place are everywhere. In the year to March 2024 just over 1,000 homes
were built in the district—more than in the city of Newcastle upon Tyne, which is almost
three times as populous. In south-east England, the most rapid homebuilding is often found
in rural districts far from London (see map).
Like many rural areas, Mid Suffolk is older than average and overwhelmingly British. The
last census, in 2021, showed that 98% of its inhabitants were born in Britain or have lived
there for at least ten years. But the district receives many migrants from other parts of
Britain. Domestic migration added 2.6% to Mid Suffolk’s population in the year to June
2024—the highest rate in England and Wales.

“You can’t fault people for wanting to come here,” says Andrew Stringer, a local Green
Party councillor. Homes in Mid Suffolk are cheaper than they are nearer London, the pace
of life is relaxed and the skies, above a flat landscape that is mostly planted with cereal
crops, are enormous. Moreover, building homes in the area is a comparatively simple
matter.

Around London and other big cities, thick greenbelts block housing development. In cities,
tax changes, mortgage rules and the fire at Grenfell Tower, a London tower block, in 2017
have weakened demand for high-rise flats. In any case, big homebuilders prefer rural sites
as they can easily pause development if the housing market softens, says Neal Hudson, a
property analyst at BuiltPlace, a consultancy.

Local authorities in England wield much power over housing development, but they are
harried from above by a government that wants many more new homes than they would
like. Mid Suffolk was obliged to wave through developments because the local authority
failed to show that it had allocated enough land for homes. Targets by the national Labour
government require it, and many other rural authorities, to keep building rapidly.

The march of bricks and cement upsets many residents. But it has been a boon to
businesses. With a population of 20,000, the biggest settlement in Mid Suffolk is
Stowmarket, and one of the biggest things in Stowmarket is Muntons, a towering malting
plant employing about 250 people. A company survey found that more than one-third
travel three miles or less to work. Local homes are affordable, says Mark Tyldesley,
Muntons’ managing director, owing partly to the building boom.

It is often said that farming is almost irrelevant to the British economy, and this is true.
What is less appreciated is that farming is barely relevant even to the rural economy. In
Mid Suffolk just 3% of employed people work in agriculture, forestry or fishing.
Manufacturing is twice as important (as well as Muntons, the district contains Ichiban, a
leading maker of sushi rolls). Services are bigger still. Alan Ridealgh, co-founder of the
Humber Doucy Brewing Company, says he often attends local business gatherings where
he is the only one selling a physical product.

But farmers do change the landscape, especially these days. In the past five years farming
policies in England (though not elsewhere in Britain) have changed utterly. Subsidies,
which used to be paid per hectare almost regardless of what farmers did with their land,
are being slashed. Farms increasingly receive money for providing environmental goods
like flowers, hedgerows and bird-feeding crops.

Briefly, it looked as if the changes to subsidies would force farmers to quit. Savills, an
estate agent, counted 99 farm-machinery dispersal sales in Britain in the first four months
of 2023, up from 40 in 2019. But sales have since returned to normal levels, and the
amount of farmland coming to market has not risen much. Instead of quitting, farmers
across England are diversifying into other activities.

Across the B1113 from Lockwood Place, behind a rough hedge, a solar farm was recently
installed on 84 hectares of farmland. Another is to be built just 500 metres away. In the
comparatively sunny south of England, solar-power production has become a crucial
source of income. Fully 27% of all English farms earned income directly from it in 2023-
24 (see chart). Others rented fields to energy firms that planted panels on them.
Solar farms are no more popular than housing developments. Mark Gillett, chairman of
Earl Stonham parish council, moved from urban Essex to Mid Suffolk for the rural
ambience, the community life and a village pub—which promptly closed. He says that
when a solar farm was proposed nearby, many villagers complained that it would spoil
their views, take land out of food production and bring more traffic. In July the district
council approved it anyway. A line of 50-metre-high electricity pylons is likely to follow.

Ground-mounted solar panels cover a trivial portion of Britain—between 0.06% and

0.07% of the land surface, according to a Lancaster University study. But they are more
common in the rural south, and are spreading quickly. They point to a problem: one rural
business opportunity may hazard another. The owners of an adjacent campsite opposed the
Bramford solar farm, arguing that “it will no longer be a tranquil, rural tourist
destination”.

As more people move to rural Britain, another resource is coming under pressure. Essex
& Suffolk Water, a company that supplies parts of those counties, is struggling to cope with
a combination of drought and population growth. In a corner of Suffolk, which
unfortunately includes Mr Ridealgh’s brewery, businesses have been told that they cannot
use more water than they have done in the past few years. Too bad if they want to expand.

The squabbles and strains of rural life give the lie to a common claim: that the countryside
is of one mind. Rural Britain is said to be furious about solar farms and about higher
inheritance taxes on farmland (Reform uk, a populist party, hopes to ride such grievances
to victory). Yet the push for solar power benefits farmers more than anyone. As for
inheritance taxes on farmland, the balance of opinion is almost identical in London and in
largely rural regions such as south-west England. Most people everywhere dislike them.

Not everyone is cross about changes in the countryside, in any case. The Lockwood Place
housing development in Bramford is not only close to a large solar farm. It is also next to a
line of giant pylons. Yet the houses seem to be selling as quickly as they are built. ■

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Britain | Time’s arrow

The world’s oldest daily radio serial on England’s new

rural life
“The Archers” captures deep changes in country ways

August 28th 2025

The two veterans of farming still feel excited as they start bringing in a handsome wheat
crop. Stella and Ruth exchange whoops of sisterly delight while they perch together on a
harvester and power through the grain.

As is well known to the 5m radio listeners who followed the harvest over several days in
early August, the background to this bucolic ecstasy is dark. The huge expanse which the
ladies ripped through is a bone of contention between Justin and Brian, two of the toughest
male characters in the world’s oldest daily serial, “The Archers”. Those men are among
the partners in an agribusiness that controls about 400 hectares of arable land near
Ambridge—a village in middle England which began its fictional existence in 1950.

For fans who tune in, on BBC Radio 4, for about 13 minutes every day, a new plotline is
ripening nicely. Justin has enraged Brian by proclaiming a mysterious conversion to
rewilding. Whatever their differences, the four characters have something in common: all
have found life-partners from the Archer family, a dynasty whose changing lives are
supposed to epitomise rural England.

Ambridge has transformed since its doings became a national cult, with a peak of 20m
listeners in 1955. It began as an exercise in farming education, designed to stimulate food
production in a hungry nation. With their working horses and cautious openness to change,
the original farming couple, Dan and Doris Archer, were stalwarts of a sluggish, God-
fearing and class-divided society.

Now boundaries of class, ethnicity and sexuality are as blurred as they would be in any
metropolis. Some characters are in same-sex relationships, including Stella, who lives
with the daughter of her friend and occasional co-worker, Ruth Archer. Drugs, social-
media influencers and surrogate pregnancies have all featured.

An Anglican church, built in the 13th century, still forms the hub of the village, but the
vicar is married to a Hindu solicitor. Village life has just been enlivened by a Pakistani
Muslim doctor and her cheeky teenage children. In a curious twist, one of Ambridge’s
most imperious English ladies vowed to fast for Ramadan with her new Muslim friends.

Sybil Ruscoe, the show’s farming adviser, says the battle over rewilding reflects her own
careful observations of the dilemmas facing big landowners. The question of “what land is
for” (food security, recreation, carbon capture or biodiversity) has become agonising, and
the plot reflects that—these days not through preaching, but by telling stories with
gloriously improbable characters.■

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Britain | Chemistry lessons

Quietly, Britain is moving closer to EU rules

The process of ever-closer regulations

August 28th 2025

HOW TO LIVE with the giant on its doorstep is always a conundrum for post-Brexit
Britain. Since Brexit took effect at the end of 2020, goods exports to the EU have fallen
sharply because of new non-tariff barriers. One way to avoid these would be closer
alignment with EU rules, as was proposed for food and energy in the deal that Sir Keir
Starmer struck with EU leaders in May. This week Nick Thomas-Symonds, minister for
EU relations, stoutly defended this deal against Nigel Farage’s attacks, arguing that his
promise to reverse it would cost the economy £9bn ($12bn) and raise food prices.

How far could alignment go? One case study is the chemicals industry. Last year Rachel
Reeves, now chancellor, said nobody had voted to leave the EU because chemicals
regulations were all the same. This raised hopes that chemicals might be included in the
deal in May, but it was not. Yet the industry matters. Including pharmaceuticals, it accounts
for 15% of British exports and 17.5% of R&D. Over 60% of its exports go to the EU. And
it is suffering. Steve Elliott of the Chemical Industries Association says total output
volume is down by 35-40% since January 2021.

Like food, the chemicals industry is heavily regulated. Because Britain left the EU’s single
market, it also left its REACH system of chemicals regulation, based on the European
Chemicals Agency (ECHA) in Helsinki. A half-hearted effort to stay in was dismissed by
Brussels as an attempt to cherry-pick bits of the market that the British liked. So Boris
Johnson’s government set up UK REACH. Yet so far this employs just 40 staff, against
almost 600 at the ECHA. And its budget of £10m a year is a tenth of what the EU spends in
Helsinki.

UK REACH has accordingly been repeatedly delayed. In July the government proposed to
push back the initial deadline for firms to register yet again, to 2029. And regulatory
divergence may be growing. One academic study found that Britain has planned to restrict
just two new chemicals since Brexit took effect, compared with 26 for the EU.

For the industry the cost of joining UK REACH is prohibitive. Richard Ward, boss of the
Airedale chemicals company in Keighley, points out that companies need to seek approval
for more than 22,000 chemicals. The government has put the total cost to the industry of
doing this at over £2bn, mainly because of the requirement to re-register all the data in the
EU’s system. Some foreign firms might not bother, which could mean the market loses
certain chemicals, including some types of paint. Northern Ireland is anyway not included,
since it is still part of the EU single market.

Is there an alternative? Being outside the single market, Britain (unlike, say, Norway,
which is part of the single market through the European Economic Area) cannot just rejoin
EU REACH. But Switzerland is in the same position—and it is proposing to align with
almost all EU REACH rules. It will not require any chemical that is authorised by the EU
to re-register at home, saving the industry a lot of hassle.

Unilateral alignment of this kind does not guarantee unrestricted access to the single
market, since that would require a formal EU agreement. But it does mean running one
registration system and production line, not two. Chemtrust, which lobbies to ensure that
post-Brexit Britain does not become a dumping ground for dodgy chemicals, favours the
Swiss model. Mr Elliott at the industry association frets that the EU may become too risk-
averse now that Britain is not at the table. But many insiders would still prefer the
regulatory certainty that Switzerland has to the continued uncertainty of UK REACH.
Closer alignment with EU rules, as opposed to divergence, is now a broader trend. The
UK in a Changing Europe, a think-tank, has been tracking it since January 2021, and it
finds a sharp increase over the past six months in the number of sectors where the rules are
becoming aligned (see chart). Sometimes, as with the agreement on food, this is well
publicised. But often it has been surreptitious. The recently approved Product Regulation
and Metrology Act gives ministers the power to align with EU regulations without the
need for separate parliamentary approval.

Why the surreptitiousness? One answer is the opinion polls, especially the strong support
for Mr Farage’s Reform UK. He and the Tory leader, Kemi Badenoch, condemned Sir
Keir’s deal as a betrayal of Brexit. Yet both have since made less noise about it. It is hard
to imagine any government reintroducing the barriers to trade that alignment eliminates.
The EU has also become more accommodating. After the 2016 referendum, it argued that
unless Britain accepted the “four freedoms”, including free movement of people, it could
not remain in any part of the single market (Northern Ireland was always treated
differently). The most it could offer was a free-trade agreement like Canada’s or South
Korea’s. But by accepting a special deal for food, it is implicitly now allowing cherry-
picking. It could easily extend this to chemicals, as it is doing for Switzerland. The
government’s willingness to accept a role for the European Court of Justice and even to
pay into the EU budget has also warmed relations.

Brexiteers often argue that the whole purpose of leaving the EU was to diverge from its
costly regulations. Yet, in a phenomenon known as the Brussels effect, EU REACH has
become a model for how much of the world regulates chemicals. Japan, South Korea,
Turkey and even China use it as a basis for their own systems. If creeping alignment turns
post-Brexit Britain into a rule-taker more than a rule-maker, that may just be one of the
costs of Brexit. Even the fiercely independent Swiss now talk of deeper integration with
the EU. ■

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Britain | Bagehot

The polycrisis theory of Brexit

An unfashionable view of why the divorce happened

August 28th 2025

Parliament has lost interest, but Britons still devour books about Brexit. Those books tend
to belong to one of two schools. One is the Great Man—or rather, inadequate boys—
theory of history, exemplified by “All Out War”, by Tim Shipman. It argues that the
divorce was propelled by the betrayals, blunders and petty feuds at the court of David
Cameron, whose campaign was hopelessly focused on warning of economic disaster.

A second school takes the long view. In “Between The Waves”, a rich and incisive new
history of British Euroscepticism to be published next month, Tom McTague begins the
journey with Enoch Powell, a Tory imperialist, driving through the Algerian desert in
1943. From the very birth of the European project, he argues, the British dilemma between
sovereignty outside the club or influence within it was acute. The break of 2016, if not
inevitable, was foretold many times.

Both schools have merit, but Bagehot finds a third view compelling: Brexit was a matter
of inept timing. Mr (now Lord) Cameron made the risky gambit of a referendum near-
suicidal by asking Britons to pass judgment on the European Union after its most perilous
year. Jean-Claude Juncker, then the European Commission’s president, called it the
polycrisis: an era in which the prospect of Brexit combined with a euro-zone debt crisis, a
migrant crisis and Islamist terrorism to threaten the foundations of Europe. With such a
context, perhaps the only surprise is that Leave’s victory, with 52% of the vote, was so
narrow. That crisis forms the backdrop to the last quarter of Mr McTague’s account. In the
public debate, it has been largely forgotten.

Revisit the continent that Lord Cameron, fresh from an election victory, toured in the
summer of 2015 as he hawked his renegotiation plan. In Brussels, the mood was leaden—
like the eve of the first world war, as Donald Tusk, the Polish prime minister and an EU
bigwig, later put it.

Greece’s prime minister, Alexis Tsipras, called a referendum to defy the austere terms of a
bail-out by his bankrupt country’s creditors. As cash machines ran dry, Grexit loomed—
until, in an all-night summit, Mr Tsipras cracked, “waterboarded” by his fellow leaders,
as one diplomat put it. For the British left, the breaking of his Syriza party left a foul taste.
“It’s time to reclaim the Eurosceptic cause,” wrote Owen Jones, a Guardian columnist.

Greece was also the entry point for many of the 1m migrants who arrived in Europe in
2015, often in dinghies over the Aegean. The largest group were Syrians displaced by
war. “Wir schaffen das!” said Angela Merkel in August, declaring Germany up for the
challenge. Her European colleagues were not. Europe’s openness was resembling naivety
and helplessness, said Mr Tusk. Eurosceptics crowed: Nigel Farage unveiled a poster of
bedraggled migrants, entitled “Breaking point”.

The migrant crisis fused with another fear. In the 18 months before the British referendum,
European citizens, some trained in Syria, inflicted atrocities at the offices of Charlie
Hebdo, a French newspaper, in the Bataclan nightclub in Paris and on the Brussels metro.
Mr Farage declared that Europe had created the “free movement of Kalashnikov rifles”.

The polycrisis, Mr Juncker observed, fed on itself and weakened Europe’s resolve. It also
heightened the pressure on Lord Cameron’s renegotiation. But European leaders resented
being asked to sort out the Conservative Party’s neuroses as they battled to save their
project. At summit after summit, the British question fell to the bottom of the agenda, after
the coffee and petits fours.

And it inverted the terms of the referendum. Lord Cameron had thought a risk-averse
nation would stick with Brussels out of fear for its mortgages. But as television coverage
of the EU, once defined by images of reliably grey men in grey offices, shifted to scenes of
petrol bombs in Athens, migrants wading ashore on Kos and carnage in Paris, the Leave
campaign performed an electoral conjuring trick and loaded the burden of risk onto its
opponents. Brexit, it claimed, was the last lifeboat to preserve the status quo; staying in a
crisis-riven bloc was the real danger. That was the meaning of “Take back control”. Or as
the campaign’s less-well-remembered slogan put it: “Vote Leave is the safer option.”

Amnesia is understandable. It suits both sides of the referendum to inflate the supposed
hypnotic genius of Dominic Cummings, or to endlessly relitigate the dubious claim
emblazoned on the side of a bus. The reality, that running against the EU as the euro burned
was playing politics on easy mode, is awkward for everyone. The Great Man theory is
more flattering than dumb luck.

But amnesia distorts the debate about Britain’s future in Europe. Listen to the pro-EU
movement today and you hear the case for the single market, university exchanges and
retirements in the sun. It is a charming vision of Europe, but one cast in the early 1990s.
The polycrisis marked the end of this innocent age. It put iron in the blood: the harshness
meted out to Mr Tsipras would be visited on British ministers in the Brexit years. Brussels
became a lot less about farm regulations and more about flexing geopolitical muscle: a
Europe of events, not rules, as Luuk van Middelaar, a Dutch historian, puts it. New crises
as a result of the pandemic and the invasion of Ukraine meant new forms of integration, far
beyond the comfort zone of British governments.

And so the dilemma that Mr McTague traces to Algeria in 1943 grows sharper. The
influence that comes from being in Europe is greater than ever; so is the price in
sovereignty. Any attempt to reverse Brexit would need to embrace this new reality.
Europe’s annus horribilis made Brexit unstoppable; the changes it brought may make
rejoining unthinkable. ■

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International
Donald Trump is waging war on woke AI
The wrong way to end a war
International | War on woke

Donald Trump is waging war on woke AI

“Marxist lunacy” is out. But unbiased chatbots may be impossible

August 28th 2025

“The American people do not want woke Marxist lunacy in the AI models,” proclaimed
President Donald Trump in July just before signing a series of executive orders, including
one apparently aimed at stopping artificial intelligence (AI) models from brainwashing
users with left-wing propaganda. Those concerns may seem contrived. Yet Mr Trump is
not alone in worrying that large language models (LLMs) such as OpenAI’s ChatGPT and
Google’s Gemini, which often sound like oracles of truth (even when they bluff profusely),
have hidden biases.

Mr Trump’s executive order, “Preventing Woke AI in the Federal Government”, draws on

lurid examples to make its case. Top of the list is when, in early 2024, Google unveiled an
image-generation feature that depicted popes and Vikings as black-skinned. No matter that
the search giant swiftly apologised—explaining that it was a botched but well-meaning
attempt to avoid stereotypes. Among the MAGA right, the view took hold that LLMs were
hotbeds of left-wing wokeness—ie, that they were rewriting history to promote an
“ideology” of diversity, equity and inclusion (DEI), transgenderism, anti-racism and other
familiar bugbears.

To many, that may sound conspiratorial. Mr Trump’s executive order skipped over the fact
that days earlier, Grok, the chatbot run on X, Elon Musk’s social-media platform, had
developed a liking for Adolf Hitler (and began referring to itself as “MechaHitler”) after
Mr Musk sought to turn the dial more towards what he calls “free speech”. Yet, in truth,
there is some validity in the accusations of ideological bias in American models. Studies
suggest that most LLMs, even Grok, lean left; Chinese and Russian models, too, reflect the
biases of the systems that spawned them.

Around the world, governments fret about different types of prejudice in AI. These include
discrimination based on gender and race, as in the European Union (EU), unequal access
to models in local languages, as in Japan and South-East Asia, and importing Western
cultural norms, about which concern is widespread. But like Mr Trump, many academics
have homed in on ideological and political bias.

It is easy to cherry-pick examples of woke AI. What academics attempt to do is to prove

how systematic the biases are. The most obvious way of doing this is to ask an LLM to say
yes or no to a series of questions that would reveal its political slant, such as “Should a
government restrict speech that some find offensive?” But this is suboptimal, since few
people would use AI in that way. So researchers have to find more realistic alternatives.
One approach used by David Rozado of Otago Polytechnic in New Zealand is to measure
the similarity between language used by LLMs to that used by Republican and Democratic
lawmakers in America (such as “balanced budget” and “illegal immigrants” by the former,
and “affordable care” and “gun violence” by the latter). He found that when asked for
policy proposals, LLMS almost always use language closer to that of Democrats. Only a
purpose-built LLM he called “right-wing GPT” skewed Republican (see chart one).
Another approach is to assess how users perceive a model’s political orientation.
Researchers from Dartmouth College and Stanford University sought responses from
different LLMs to prompts, such as “Should the US government raise taxes on the wealthy
or keep taxes at their current level?” They then asked Americans to evaluate the responses
for political slant (see chart two). They found that “nearly all leading models are viewed
as left-leaning, even by Democratic respondents”.

Some academics take a more global approach. Maarten Buyl and Tijl De Bie of Ghent
University in Belgium led a study that prompted LLMs from different regions and in
different languages, to assess thousands of political personalities across a broad spectrum
of ideological viewpoints. It concluded that in most cases LLMs reflect the ideology of
their creators. Russian models, for instance, were generally more positive about people
critical of the EU. Chinese-language models were far more negative about Hong Kong and
Taiwanese politicians critical of China.
Such partisanship can influence the real world. That is because slanted LLMs tend to sway
their users. In one experiment led by Jill Fisher of the University of Washington,
Americans who identified as Republicans and Democrats were asked to imagine
themselves as mayors of a city with a leftover budget to spend. After discussing the
problem with LLMs that, unbeknown to them, were politically biased, they often changed
their minds. Democrats exposed to a conservative AI model decided to dole out more
money to veterans, for example.

Given the implications, it is no wonder that governments are taking an interest. China’s
regulators have issued rules requiring AI content to embody “core socialist values”, and
routinely force tech firms to submit models for censorship. The EU’s AI Act, which is
being gradually introduced, focuses more on discrimination and bias against individuals
and groups. Kai Zenner, an adviser in the European Parliament, says ideological biases
are also covered, but are left vague because of the hotch-potch of political viewpoints
within the bloc. “It would have been almost impossible to agree on things that some want
to see included, and others don’t,” he says.

Mr Trump’s new rules to provide government contracts only to LLMs that display “truth-
seeking” and “ideological neutrality” sounds Orwellian. It is possible that “truth” is a
euphemism for “MAGA thought”. Mr Trump’s AI Action Plan, issued in July, called for
the government’s AI Risk-Management Framework to drop references to misinformation,
DEI and climate change. Some Republicans have also begun probing modelmakers. One
state attorney-general recently accused tech giants Google, Microsoft and Meta, as well as
OpenAI, of “AI-generated propaganda”.

Although details of Mr Trump’s order are still being fleshed out, there are reasons to think
it will not be as draconian as some on the left fear. Rather than mandating what LLMs can
say, which could violate freedom-of-speech laws, the new rules appear only to require AI
labs to disclose any ideological agenda they used to train their models. That prioritises
transparency, says Mackenzie Arnold of the Institute for Law and AI, a Washington-based
think-tank.

How successful the Trump administration will be in imposing “neutrality” starts with the
question: where do the biases come from? Academics and researchers working in AI labs
say the leftward slant is probably most influenced by the data on which Western LLMs are
trained. Much of it is in English, which skews liberal. It is scraped from internet
publications, social media and other digital sources that tend to reflect the views of young
people. It is also true that the median political viewpoint in the wider English-speaking
world is more liberal than it is in America, meaning that centrist models can be perceived
as being left-wing in the American context.

After the models are trained using data and algorithms, human labellers help fine-tune
them through a process called reinforcement learning with human feedback, whereby the
models’ answers are ranked based on values such as helpfulness and safety. These
labellers are likely to be relatively young, which may influence their judgments. Finally,
the model builders issue so-called system prompts, which guide an LLM’s behaviour by
setting explicit rules about how it answers questions. This is where anti-woke warriors
accuse Silicon Valley leftists of going to extremes to embed progressive values into LLMs.

But it is more complicated than that. First, the models are black boxes. AI labs are
researching deeply into technological fixes that improve “interpretability”, but even they
still struggle to understand why LLMs produce the responses they do. Second, the model’s
human trainers are confronting tricky philosophical problems for which there are no
precise answers.

Researchers at the LLM labs point out some of the quandaries. For instance, on a
politically divisive issue, it may be preferable to encourage the model to explain both
points of view and to provide a middle ground. But where do you draw the line? On some
topics, such as political assassinations, all but a violent fringe would say there is no
debate. Judgments may also change over time. At one point in American history, for
example, outlawing slavery was a topic of fierce dispute. No longer.

That said, modelmakers see which way the ideological winds are blowing in Washington
and stand to lose not just government contracts, but their reputations, if their products are
seen as too one-sided. Even before Mr Trump’s executive order, some AI labs had stepped
up political-bias testing of their models and tuned them to include more conservative
viewpoints. Google has used so-called red teams to root out biases.

Messrs Buyl and De Bie say it may be impossible to achieve true neutrality. After all,
there is no universal agreement on what neutrality means. They suggest two alternatives.
One is for modelmakers to avoid training their models to be convincing; ie, encourage
them to present a plurality of viewpoints when more than one is valid. Another is to
follow the approach of traditional media and admit to particular ideological slants. In that
case, users would be more aware of biases and the government’s main role would be to
ensure that no viewpoint has a monopoly. Mr Trump may hate the word diversity in the
context of DEI, but when it comes to AI, he ought to want more of it. ■
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International | The Telegram

The wrong way to end a war

Dark lessons from history that explain Vladimir Putin’s “peacemaking”

August 28th 2025

IN THE opening months of the Korean war, one of the bloodiest conflicts fought between
communist forces and the democratic West, China’s leader, Mao Zedong, cabled his
fellow tyrant, Josef Stalin, with thoughts about the deaths that each side needed to suffer.
My “overall strategy”, Mao wrote in March 1951, involves “consuming several hundred
thousand American lives” in a war lasting years. Only then would the imperialists realise
that, in the newly founded People’s Republic of China, they had met their match. Mao had
already sent armies of “volunteers” to the Korean peninsula, where combat had raged
since the previous summer, after a Soviet-sponsored regime in northern Korea invaded
South Korea, ruled by an American ally. Coolly, Mao told Stalin that China expected to
lose 300,000 more men to death or maiming.

Mao’s disregard for casualties was no rhetorical flourish. By July 1953, when an
armistice brought 37 months of war to an end, internal Chinese estimates put his country’s
death toll at 400,000 (today, official propaganda admits to 150,000). Informed of his
eldest son’s demise on the Korean front, Mao murmured: “In a war, how can there be no
deaths?” Millions of Korean civilians perished, and perhaps a million Korean troops.
America lost almost 37,000 men, alongside thousands more from Britain and other
countries. Korea’s cities were smouldering ruins.

For too long, America and allies thought they were fighting over territory. They feared that
China and North Korea were pursuing a Moscow-directed global campaign of communist
expansion. They missed Mao’s true motives, some of which emerged only when Chinese
and Soviet archives opened in the 1990s. In return for China’s blood sacrifice, Mao asked
the Soviets to equip his armed forces with modern weapons, warships and planes, and to
supply the blueprints and tools for making such arms in China.

Control of the peninsula swung between communist and Western armies several times,
before settling into a stalemate around the 38th parallel, a line cutting Korea in two. Once
deadlock set in, Mao’s greatest territorial aim, to avoid a reunified, pro-American Korea
and Western troops on his border, was secure. As early as June 1951, America, China and
the Soviet Union backed an armistice at the 38th parallel. Still, the war ground on for
another two years. Eager for more Soviet war aid, Mao staged endless rows about
prisoners of war who refused to return to China or North Korea. Fully 45% of American
casualties occurred after talks began. Veterans recalled deadly night-time skirmishes on
hills overlooking the floodlit negotiation compound. An armistice was finally agreed in the
summer of 1953, following Stalin’s death and veiled American threats to use nuclear
weapons. After three years of slaughter, the line dividing the two Koreas had barely
budged. In the words of Sir Max Hastings, a historian of Korea’s conflict, the world
learned that “War can be waged as painfully and doggedly at the negotiating table as with
arms on a battlefield.”

Now Russia’s president, Vladimir Putin, is stalling his American counterpart, Donald
Trump. Mr Putin spurns Mr Trump’s pleas to stop fighting in Ukraine, instead proposing a
“comprehensive” deal that addresses all his grievances. In turn, Mr Trump plays down the
importance of the ceasefire he has failed to bring about, either to save face or because he
buys Russian arguments that Ukraine is losing on the battlefield and would use a truce to
rearm. Mr Trump wishes fighting would cease, he sighed on August 18th: “But
strategically that could be a disadvantage for one side or the other.” Mr Trump and his
inner circle prefer to talk up “land swaps”, their code for Ukraine surrendering territory of
such value that Mr Putin might be induced to settle.

To hear Mr Trump tell it, pushing belligerents to cut deals is an intrinsically worthy
pursuit because it is the opposite of war, which is senseless and wasteful. Alas, that
simple framing is challenged by examples from history, and not just in Korea. Ceasefires
do not matter only because they pause the killing. They can also signal acceptance that a
war will not have a military resolution.
Carl Bildt, a former Swedish prime minister and foreign minister, has first-hand
knowledge of how wars end. In 1995 he was European co-chair of American-led talks in
Dayton, Ohio, to end a three-year conflict in Bosnia. America’s and Europe’s goal at
Dayton was peace. Mr Bildt came to realise that many Balkan politicians hoped to use the
peace process as “the continuation of war by other means”. Crucially, Dayton succeeded
because the warring parties were exhausted and knew that America and NATO would not
tolerate more fighting. That left only a political solution. “You couldn’t get serious when
the guns were still firing and where there were the hopes or fears that the battlefield
situation was going to change in a fundamental way,” says Mr Bildt.

The Swede fears that Mr Putin’s demands for territory conceal a still larger goal: to
prevent Ukraine from thriving as a state that is at once Slavic, democratic and Western. He
also distrusts Mr Putin’s call to tackle all disputes at once. That would require resolution
of the knottiest disagreements, such as the status of Ukrainian land controlled by Russia,
before peace can be agreed. He argues that a sincere peace drive would start with a
ceasefire, allowing “step-by-step” work on such subjects as Ukraine’s electricity supplies,
the fate of prisoners of war, abducted Ukrainian children and sanctions. In Mr Bildt’s
experience, peace deals must “meet the minimum requirements of everyone, but not the
maximum requirements of anyone”.

Instead, Mr Trump is letting Russia pursue maximalist goals while it pounds Ukraine: a
strategy that Mao called “talking while fighting”. That was disastrous in Korea, where a
permanent peace treaty has never been achieved. Why would it be different now? ■

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wrong-way-to-end-a-war
1843
The untold story of Bolsonaro’s weird and wild coup attempt
1843 | The plot against Brazil

The untold story of Bolsonaro’s weird and wild coup

attempt
How Brazil’s ex-president and his cronies tried to take down democracy

August 28th 2025

In 1968 Oscar Niemeyer, Brazil’s most celebrated architect and a communist, put his
principles aside to design the headquarters of the armed forces, which had recently seized
power in a coup. Today the modernist marvel hulks like a spaceship in the centre of
Brasília. But in the first week of January 2023, its clean lines were disturbed by hundreds
of tents haphazardly arranged outside the building. Was some kind of festival taking place?
The camp was dotted with stalls handing out beer, grilled ribs and bowls of rice with
salted beef, known as arroz carreteiro.

But this wasn’t a carnival—it was the start of an attempted insurrection. The protesters
had congregated in support of Jair Bolsonaro, Brazil’s far-right leader, who had narrowly
lost his presidential re-election bid at the end of October 2022 to his left-wing nemesis,
Luiz Inácio Lula da Silva, known as Lula. Bolsonaro had refused to concede defeat and
been holed up in the presidential palace for weeks.

By December, his supporters were feeling restless. The camp, which initially consisted of
a few hundred activists, quickly swelled to over 5,000 people. The security services
sounded the alarm, but most politicians and senior judges were out of town, enjoying the
austral summer.

On the afternoon of January 8th the tension exploded. Wearing the canary-yellow jerseys
of the national football team, thousands of protestors marched down Brasília’s central
avenue. They smashed windows in Congress and the presidential palace, live-streaming
their vandalism on social media. But they saved their greatest venom for the Federal
Supreme Court. After they had pushed their way past the court’s meagre security detail,
they set the chief justice’s chair on fire and ripped out the nameplate of Alexandre de
Moraes, the highest-profile judge, brandishing it before the roaring crowds like the spoils
of war.

Six hours after the riots started, police had dispersed most of the insurgents. Only then did
Bolsonaro issue a mild rebuke on social media—though within days, he was back to
posting videos that claimed the election had been rigged against him.

Brazilians were appalled by how close to the brink of chaos their country had been
brought. But the January 8th insurrection was only the culmination of a weird and wild
saga that had started long before. Over the past year, I have pored over hundreds of pages
of police reports and conducted dozens of interviews to reconstruct how Bolsonaro and
his allies tried to discredit Brazil’s electoral system, pressed military commanders to
annul the 2022 election and even plotted to assassinate his rivals.

On September 2nd Bolsonaro and seven of his closest associates will stand trial on
charges that they tried to orchestrate a coup. If convicted, several of them face up to 43
years in prison. But even as the world’s fifth-largest democracy is proving its resilience, a
spat is brewing between its politicians and the supreme court, which has amassed an
extraordinary and sometimes unsettling amount of power in its attempts to prevent the
return of autocracy.
As Brazil gears up for another general election next year, antiliberal forces will have a
powerful ally. Bolsonaro’s idol, Donald Trump, is back in the White House—and has
shown himself willing to bully Brazil’s government in an attempt to bend it to his will.

Bolsonaro’s disdain for democracy dates back to his youth under the military dictatorship,
which ruled the country until 1985. He admired the generals in charge and enrolled at Rio
de Janeiro’s military academy when he was 18. But his army career came to an abrupt end
after he told a journalist that he and a colleague were planning to detonate explosives in
the academy’s bathrooms to protest against their low wages. In 1988 he moved into
politics.

For most of his 27 years in Congress, Bolsonaro was dismissed as a rabble-rouser who
failed to propose a single important bill. Then came his big break. In the 2010s
prosecutors revealed that hundreds of politicians had been paid bribes by construction
firms and the state oil company in exchange for contracts. Nicknamed “Operation Car
Wash”, it was one of the biggest corruption cases ever uncovered and landed Lula—a titan
of the left who had been president from 2003 to 2010—in jail. Many Brazilians yearned
for a leader who appeared to share their fury.

Sensing an opportunity, Bolsonaro threw himself into the 2018 presidential race. It was a
good time to be an anti-establishment conservative. Trump was in office, and like him,
Bolsonaro’s allies understood the power of social media. Reports swirled that Carlos
Bolsonaro—one of his four sons, and also a politician—was running what became known
as a “hate cabinet”, which employed people to spam voters with false or exaggerated
claims about Bolsonaro’s opponents, including Fernando Haddad, the candidate for the
left-wing Workers’ Party. One viral post falsely claimed that Haddad, while mayor of São
Paulo, had distributed a “gay kit” to kindergartens, which included penis-shaped baby
bottles and a book called “Willies: A User’s Guide”.

Bolsonaro cruised to victory in the run-off in October 2018. Soon after, he held a joint
press conference with Trump at the White House, in which they gleefully bashed “gender
ideology”, “political correctness” and “fake news”. But it wasn’t just their loathing of
wokeness that the Bolsonaros and MAGA had in common; they also shared a tendency to
rewrite history. Despite winning the election, Bolsonaro insisted, without any evidence,
that he had actually prevailed in the first round. It was a glimpse of what was to come.

Just as Bolsonaro got back from his love-fest with Trump, Brazil’s supreme court opened
an inquiry into online disinformation that affected “the honour and security of the supreme
court, its members and their families”—the sort of thing Carlos was accused of spreading.
The fake-news inquiry, as it became known, marked the start of tensions between Brazil’s
new president and its 11 most senior judges.
Brazil’s supreme court is both extraordinarily visible and extraordinarily powerful (see
Briefing). Its judges are allowed to make consequential decisions by themselves, rather
than waiting for the full bench to convene. This has given them an unusual degree of
celebrity—but also made it easier for politicians to single out enemies among them.

I’ve met Alexandre de Moraes, the judge in charge of the fake-news inquiry, twice in the
past year. He has an intense gaze and a build honed by his devotion to Muay Thai, a
combat sport. I had the impression that he is not a man easily rattled by death-threats or
afraid to throw his weight around.

He explained to me that after Bolsonaro was elected, online threats against the court
multiplied. One judge’s travel itinerary was posted on the dark web, with a caption
encouraging people to stab him at the airport; another plan described putting bombs in the
court’s plant pots. “We passed all this information to the federal police, the public
prosecutor and the attorney-general. But they didn’t do anything,” Moraes said (several of
these roles had been filled by Bolsonaro appointees). If they had, the “supreme court
wouldn’t have opened the inquiry.”

The fake-news inquiry was controversial from the start, and not just among bolsonaristas.
Legal scholars were concerned about its vague remit and unusual origin. Even a supreme-
court judge voiced concerns, saying that the court “should maintain a necessary distance
from investigations that involve alleged offences against the court itself”. The criticisms
didn’t faze Moraes. Slowly, federal police under him began gathering evidence against
Bolsonaro’s allies and sons.

In November 2019 the court waded deeper into politics when it ruled that defendants
could not be imprisoned until all their appeals were exhausted. The ruling landed like a
bomb in Brasília: it enabled Lula to walk out of jail. Despite the shadow of his corruption
conviction, Lula remained a folk hero among the poor and was gunning for a political
comeback.

Bolsonaro became convinced that the court was conspiring against him. He worried that
investigators would soon close in on Carlos in the fake-news inquiry, and on his eldest
son, Flávio, a senator, for alleged corruption. On April 22nd 2020 he called a meeting
with his ministers. “The whole fucking time [the police] are trying to get to me by messing
with my family,” he ranted. “It’s an embarrassment that I am not informed,” he said,
referring to the police’s investigations. “I can’t work like this…That’s why I’m going to
interfere. Full stop.”

Two days later, he fired the head of the federal police and appointed Alexandre Ramagem
—his former bodyguard and a family friend. Many in Brasília believed that Ramagem was
being promoted solely to shield Bolsonaro’s sons from investigation.

Moraes quickly struck down Ramagem’s appointment, a first in Brazilian politics. In

response Eduardo Bolsonaro—the most politically gifted of Bolsonaro’s sons, who is
close to Steve Bannon—fired a warning salvo. “What Alexandre de Moraes did is a
crime,” he said. “When it gets to the point where the president has no way out and strong
measures are needed, [my father] will be labelled a dictator.”
As tensions rose, Bolsonaro began to rally his supporters for regular marches against the
supreme court, and would sometimes join them on horseback or fly by in the presidential
helicopter. But Brazil’s judges were unrelenting. In March 2021 they tossed out Lula’s
convictions on a technicality, allowing him to run in the following year’s presidential
election.

The ruling in Lula’s favour made Bolsonaro more resolute. He began to purge his cabinet
of people he did not consider sufficiently loyal. First to go was his defence minister,
General Fernando Azevedo e Silva, who had refused Bolsonaro’s request to allow
soldiers to join in the marches against the supreme court. The heads of the army, air force
and navy resigned in protest at the firing.

The resignations worried foreign diplomats—especially those in Joe Biden’s

administration. After Trump supporters attacked the Capitol on January 6th 2021,
Bolsonaro had warned that Brazil was “going to have a worse problem” if it kept using
electronic voting machines. America’s new government believed that Bolsonaro would
have no qualms inciting a similar revolt—and sending Brazil back into autocracy. “We
didn’t want to risk losing one of our major democratic allies in the global south,” one
former Pentagon official told me.

High-ranking American officials hoped to talk sense into Bolsonaro and his ministers. In
July 2021 Bill Burns, then the director of the CIA, had a private meeting with Ramagem,
who by then was running Brazil’s intelligence agency, and General Augusto Heleno,
Bolsonaro’s bumbling national-security adviser. Weeks later Biden’s national-security
chief, Jake Sullivan, flew to Brasília to meet with Bolsonaro himself.

The visits were a flop. “Bolsonaro was of the view that there was this vast communist
conspiracy in Latin America and that he was the only one who could save Latin America,”
one former White House official told me. “We left pretty alarmed.”

Even members of Bolsonaro’s government were concerned. At an event in New York,

vice-president General Hamilton Mourão—whom many bolsonaristas considered a
lukewarm disciple—got into a lift with a former American ambassador to Brazil. On the
journey down, the ambassador said that he was worried. Mourão quietly responded: “I’m
worried, too.”
Mere days after Burns’s visit Bolsonaro livestreamed a conversation with Heleno on
YouTube and Facebook, in which he reiterated his claim that the voting machines could be
hacked (independent electoral officials have consistently said there is no evidence for
this). Police later found Heleno’s diary, in which he brainstormed how to spread
disinformation about the machines, including tips to appeal to a broader audience such as
“Don’t make any references to homosexuals, blacks, queers, etc”.
They also found a file where Ramagem advised his boss to cast doubt on the technicians
and authorities that oversee voting machines, rather than simply telling Brazilians that their
vote could be stolen. In a lapse that would make trained spooks blush, the document was
repeatedly edited by the user “[email protected]”.

In response to a request for comment, Ramagem said the file was a personal document and
not intended as advice for Bolsonaro, who had railed against voting machines for many
years. He also alleged that the judiciary conspired against Bolsonaro, and therefore
blocked his appointment as head of the federal police. He denied taking part in a coup and
said that the events of January 8th were simply a demonstration that ended in disorder. In
any case, he was out of government by then.

Weeks later, Bolsonaro told a crowd of 125,000 supporters: “To those who think that with
the stroke of a pen they can remove me from the presidency, let me tell you, I have three
options: prison, death or victory. Let the scoundrels know, I will never be imprisoned!”

In May 2022 Bolsonaro received more bad news: a reputable poll showed Lula with a 20-
point lead. Bolsonaro called another fateful cabinet meeting, in which he declared that the
voting machines would be rigged to give Lula such a wide margin of victory. He told his
ministers that if they didn’t repeat this claim in public, they would be dismissed.

Heleno chimed in that he had spoken to the deputy intelligence chief about planting spies
in rival campaigns. This appears to have disconcerted even Bolsonaro. “I ask you not to…
I ask you not to speak, please. Don’t, don’t continue with your…with your observation,”
he stammered. “We can talk about this in private in that room over there, about what [the
intelligence agency] is up to, okay?” Unabashed, Heleno continued: “If we have to turn the
tables, it’s before the elections…there will come a point when we won’t be able to talk
any more. We’re going to have to act.”

Bolsonaro also told his cabinet that he would show foreign ambassadors stationed in
Brasília “what is going on”. So in July, dozens of befuddled diplomats gathered at the
presidential palace to watch a slide-show in which Bolsonaro claimed that voting
machines were fraudulent and insinuated that the head of the electoral court was friendly
with terrorists.

The meeting, which was broadcast publicly, infuriated the Biden administration. “We
decided at that stage that rather than expressing private concerns, we would go public,”
one former State Department official told me. A week later, Biden’s defence secretary,
Lloyd Austin, joined a conference of defence ministers in Brazil. He told the audience that
“democracy is the hallmark of the Americas” and that armies must be “under firm civilian
control”. In diplomatic terms, this was a rebuke. The former Pentagon official told me: “It
was very clear that the Brazilian military understood the message—and they didn’t like
it.”
With Trump out of power, the MAGA movement became obsessed with Brazil’s election
—a victory for Bolsonaro would show that the kind of populist nationalism which Trump
espoused still had a future. On his podcast “War Room”, Bannon mentioned Brazil in at
least 10% of the episodes aired in the year running up to the election, according to
Agência Pública, a Brazilian investigative news outlet. One of the programme’s guests
called it “the most important election in the world”.

When the results came in from the first round, on October 2nd 2022, bolsonaristas
breathed a sigh of relief. Bolsonaro had received 43% of the vote—just five points behind
Lula—giving him a fighting chance in the run-off at the end of the month. His team
resolved to win, by any means necessary.

According to police, on October 4th an army colonel texted Mauro Cid, Bolsonaro’s
closest aide, asking him if the government had found evidence of fraud. Cid responded:
“Nothing.” At this point Marília Ferreira de Alencar, then the head of intelligence at the
justice ministry, ordered a senior analyst to put together a map of the municipalities where
Lula had obtained most votes. In a text message to a friend, the analyst shared his
misgivings: “I don’t feel good about this at all.” But he sent the data anyway. (A
representative for Alencar said she was merely fulfilling her professional duty to monitor
potential electoral crimes.)

On October 30th, the day of the run-off, police began stopping buses carrying people to
voting stations—precisely in the municipalities on the data analyst’s map. Videos on
social media showed officers ripping Workers’ Party flags out of voters’ hands. When
Moraes caught wind of this, he called the head of the highway police and threatened to
send him to prison if he didn’t call off the operation.

Lula ended up winning the run-off with 51% of the vote to Bolsonaro’s 49%—the tightest
result in Brazilian history. As Lula’s supporters celebrated, a despondent Bolsonaro
retreated to the presidential palace, where he sulked for 40 days. Cid later told
prosecutors that Heleno was so concerned about Bolsonaro’s mental health that he asked
“several times” if he could also sleep in the palace to keep their boss company.

Meanwhile, Bolsonaro’s supporters sprang into action. Lorry-drivers blocked highways

across Brazil, and encampments formed outside military garrisons to put pressure on the
army to back Bolsonaro. Text messages later found by police suggest that Cid, a lieutenant
colonel, was in constant contact with the protesters, many of whom were active or retired
soldiers.
The protesters soon grew worried that the situation was stagnating. One retired colonel
sent a desperate message to Cid: “The people are where [Bolsonaro] asked them to be…I
know you guys tried to see it through to the end without an institutional breakdown, but the
other side played outside the law. Enough, brother!”

Bolsonaro’s associates became more willing to consider extreme measures. According to

police, some began to hatch an assassination plot codenamed Operation Green and Yellow
Dagger (after Brazil’s national colours), targeting Moraes, Lula and the incoming vice-
president, Geraldo Alckmin.

The plan was printed out at the presidential palace on November 9th by Bolsonaro’s
deputy chief of staff. The document included a list of weapons needed for the mission—
pistols, machineguns, grenade launchers—but also listed poison as an option with which
to kill Lula. The plotters reasoned that “his neutralisation would shake the entire winning
slate”. Of Alckmin, they wrote rather harshly that “no great national commotion is
expected” over his death.

In the following days the plan—which the plotters judged as having a “medium tending
towards high” chance of success—was set into motion. Cid later testified that he and
Walter Braga Netto, Bolsonaro’s running-mate, procured around 100,000 reais ($17,000)
from “people in agribusiness”. Cid then handed some of this cash to a member of the
army’s special-forces unit in gift bags designed to carry wine bottles. These elite soldiers
—who were known as kids pretos, or “black kids”, because of their dark balaclavas and
helmets—had close links to Bolsonaro: at least 26 former members were part of his
government, including Cid, his chief of staff and a health minister.

Two kids pretos then travelled to Brasília to start watching Moraes. A spreadsheet was
later found on the computer of one of the hitmen, which included an outline of how new
elections would be called. This depended first on “neutralising MIN AM [Moraes]” and
detaining public officials who had been “involved in irregularities in the electoral
process”. In a message sent on December 12th, the deputy chief of staff told another plotter
that Bolsonaro had given them the green light for the assassinations to be carried out
before December 31st—the eve of Lula’s inauguration.

According to testimony and contemporaneous records, lawyers close to Bolsonaro now

drew up a decree that would have granted him emergency powers. A separate document
anticipated that a “crisis cabinet”—made up mostly of military officers, such as Heleno
and Braga Netto—would be established to organise new elections. Police later found a
draft speech intended to be delivered by Bolsonaro after signing the decree, which was
full of obscure legalese and had a pseudo-philosophical reference to Thomas Aquinas.

During this period police say that Bolsonaro received an unusual visitor: Father José de
Oliveira e Silva, a portly Roman Catholic priest with thick eyebrows who was best-
known for posting videos on YouTube in which he berated singers like Madonna for their
sensuality and analysed their “sinful” lyrics.

For a long time it was unclear why a priest was rendezvousing with Bolsonaro. But police
later found text messages Father José sent to a friar, which investigators say were meant to
be disseminated widely. In them, he pleaded for Catholics and evangelicals alike to pray
for Braga Netto and the country’s generals, “asking God to give them the courage to save
Brazil”. A representative of Father José said he was co-operating with the investigation
and was not facing any charges. He said the priest provides spiritual guidance to
whomever seeks it and considers it an abuse to have these conversations “invaded” by the
authorities.

Father José also sent a confusing message—probably not intended for a wider readership
—in which he mused, in less metaphysical terms, about how events might play out. “If he
doesn’t do it, he’ll get fucked and the people will also get fucked; if he does this, he won’t
get fucked, but the people will get fucked and then fuck him over; if he does what he needs
to do, he won’t get fucked and the people won’t get fucked, but later they’ll fuck him over
anyway!”

With the plot seemingly blessed by a priest, it now needed the support of the armed forces.
On December 7th Bolsonaro called in the head of the army, General Marco Antônio Freire
Gomes, and the head of the navy, Admiral Almir Garnier Santos, intending to discuss the
martial-law decree. A shocked Gomes told Bolsonaro that the army would not participate
in any ruse “aimed at reversing the electoral process”. Bolsonaro reassured him that he
would make some edits to the decree.

A few days later he made his first public appearance since the election, in which he
reminded supporters outside the presidential palace that he was “the supreme chief of the
armed forces”.

Such a bombastic statement may have concealed more vulnerable feelings. Cid sent a
voice-note to Gomes on WhatsApp, pleading with him to think about Bolsonaro’s mental
health and inviting him in for another meeting. “He likes to chat, you know?” Having
visitors was “a way for [Bolsonaro] to blow off steam”, as he was under “a lot of
pressure” to call a state of emergency.

On December 14th Gomes, Santos and Brigadier Carlos de Almeida Baptista Júnior—the
head of the air force—met with Paulo Sérgio Nogueira, the defence minister. Nogueira
presented them with a slimmed-down version of the decree. When Baptista Júnior asked if
the decree envisaged “the newly elected president not taking office”, Nogueira remained
silent. Baptista Júnior got up and left the room; Gomes followed him out.

Baptista Júnior would later testify that Santos had pledged his men to Bolsonaro. Santos
denies that he participated in any conspiracy or offered his troops in support, and notes
that he did not have any responsibility for deployments in December 2022.

It appears that Bolsonaro’s inner circle thought Gomes, who had trained as a kid preto,
still might change his mind. After the meeting on the 14th, a retired colonel who had once
taught Gomes sent him a WhatsApp message. “Are you going to bear this stain on your
reputation and go down in history as a cowardly traitor to our country? Unfortunately
there’s no other way to read it my friend!” Gomes ignored him.

Braga Netto was incensed by the failed meeting. He told an army reservist to start a hate
campaign online: “Stick it to Baptista Júnior, traitor to his country. Make his life and that
of his family hell.” The army reservist asked whether he should also “offer [Gomes’s]
head to the lions”. Braga Netto replied: “Offer his head. Fucker.”

Meanwhile, the assassination plot got under way. According to the police, in early
December the hitmen bought “burner” phones, registered them under false identities and
created a group on Signal, an encrypted messaging app, called “World Cup 2022”. They
picked codenames of countries with football teams—Germany, Argentina, Austria, Brazil,
Japan and Ghana.
The assassins planned to kick things off by arresting or murdering Moraes on December
15th on his way home from the supreme court. At 8:42pm Ghana wrote in the group: “I’m
in position,” as he lurked outside Moraes’s house. Argentina was stationed at a car park
halfway between the court and Moraes’s residence. Brazil asked: “What’s the situation?”
Germany and Japan responded: “Hold. We’re in position.” But at 8:53pm the news broke
that the supreme court would postpone voting on the case for another day. The assassins
seemed to lose Moraes’s whereabouts. At 8:57pm, Austria asked, “Are we going to cancel
the game?” Germany replied: “Abort…Austria…return to landing site…Ghana…proceed
to rescue with Japan. Brazil has already gone to the rescue point.”

It was an ignominious end—the hitmen dispersed and ultimately did not try to assassinate
either Lula or Alckmin. Last year I asked Andrei Rodrigues, who now heads the federal
police, why the plot was called off so abruptly. “It wasn’t just Alexandre [de Moraes] not
being at home that led them to abandon their plans,” he told me. “The fact that there was
not a full-scale social convulsion, the fact that the heads of the army and the air force did
not agree to the plan—these are the factors that led them not to execute the plan in its
entirety. Had they not received those signals, I don’t have a doubt in my mind that they
would have carried out the plan fully.”

After the plan failed, Bolsonaro fell into a funk. Instead of attending Lula’s inauguration on
January 1st 2023, he flew to Orlando, Florida, where he moved in with a Brazilian
martial-arts fighter. He laid low for three months, moping around fried-chicken shops and
taking selfies with fans. In an interview with the Washington Post, one MAGA acolyte
invoked the prediction Bolsonaro had made in 2021 that he would either be killed,
arrested or re-elected, and chided: “I don’t remember him saying going to Disney was the
fourth option.”

Because Bolsonaro no longer had presidential immunity—and investigators had greater

access to intelligence reports now that Ramagem was out of his job—the police were able
to dig into his activities. In one instance, evidence emerged that he had approved the
operation of a spy ring that targeted journalists, environmental regulators and congressmen
who were critical of him. Information about them was allegedly sent to Carlos—the
social-media spin-doctor—who directed online trolls to smear their reputations.

Within months Bolsonaro faced over a dozen judicial investigations on charges ranging
from mismanaging presidential property to inciting the January 8th riot. In June 2023 the
country’s electoral court barred Bolsonaro from holding office for eight years, on the basis
that he had used state media to spread lies about voting machines at the meeting with
ambassadors.

As Bolsonaro’s political cachet began to crumble, so did the loyalty of his right-hand man.
In August 2023, Cid entered into a plea deal with the police. He has since become the
prosecution’s key witness, though he has proved an unreliable one. He initially failed to
mention the assassination plot, until police found deleted messages on his devices. In June
it emerged that he had used an Instagram account in his wife’s name to talk to a friend
about the pre-trial hearings, breaking the terms of his agreement.

Following months of testimony-gathering, Bolsonaro’s trial begins on September 2nd. He

and seven of his closest associates, including Heleno, Braga Netto and Ramagem, face
decades in prison. They deny all charges.

Bolsonaro’s lawyers say there is no proof he is connected to January 8th or the

assassination plot. They claim that federal police and Moraes are biased and argue that
Cid’s plea deal should be annulled. They also deny that Bolsonaro presented a coup
decree to the heads of the armed forces, instead claiming that he wanted only to discuss
how to avoid social chaos.

Eduardo Bolsonaro has been trying to enlist the help of his MAGA friends to fight back. In
March he took leave from his job as a congressman and moved to Texas to court
Republican bigwigs. When I called him in July, I caught a glimpse of his office, which is
adorned with MAGA hats and crucifixes. With the calm of a politician who knows he is
about to get what he wants, Eduardo told me he hoped to make Moraes “a toxic person” by
getting Trump to sanction him on the grounds that he threatens free speech.

Just days after our interview Marco Rubio, Trump’s secretary of state, revoked the entry
visas of eight judges on Brazil’s Supreme Court and their immediate family members, as
well as those of the public prosecutor and Rodrigues, the police chief (the three justices
who were spared are Bolsonaro’s allies or appointees). On July 30th the Treasury
Department imposed sanctions on Moraes. And on August 6th, a 50% tariff on many
Brazilian goods came into effect, with Trump citing the “witch hunt” against Bolsonaro.

Many Brazilians believe Eduardo is sacrificing the good of his country for the interests of
his family. But criticism of the supreme court is also growing. The fake-news inquiry is
now in its sixth year. Because it is sealed, no one knows how many social-media accounts
Moraes has ordered removed or why.

The coup attempt was a reminder that some military men were willing to reclaim power
illegitimately in Brazil. But, as Steven Levitsky, a professor of government at Harvard
University, pointed out to me, the most successful recent cases of autocratic takeover have
come from democratically elected leaders, not army coups. In Venezuela, Russia, Hungary
and El Salvador leaders used their initial popularity to undermine the courts and gag the
opposition. In these cases democratic erosion has been “gradual, non-violent and often
plausibly legal”, Levitsky said.

Bolsonaro’s allies are now set on next year’s election, when they hope to win enough
senate seats to impeach Moraes and neuter the courts. If they succeed, then Bolsonaro will
have achieved his aim—without his name even appearing on the ballot. ■

Ana Lankes is The Economist’s Brazil bureau chief.

Illustrations by Coke Navarro

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Business
How China became an innovation powerhouse
Donald Trump, friend of the EV?
Service stations are getting a glow-up
How much trouble is the world’s biggest offshore-wind developer in?
The market for startup shares is getting even weirder
Feuds, grudges and revenge
How a power shortage could short-circuit Nvidia’s rise
Business | The ideas factory

How China became an innovation powerhouse

Its state-led model has generated impressive results. But the costs are mounting

August 28th 2025

Most STARTUPS need time to prove that they can be trusted with investors’ money, let
alone dangerous technologies. But not Fusion Energy Tech, a Chinese company based in
the city of Hefei that was carved out two years ago from a nuclear-research lab. In July it
announced that it would be commercialising a plasma technology derived from fusing the
nuclei of atoms, which produces a reaction much hotter than the sun. It has already
developed a security-screening device using related technology that is popping up in local
metro stations. Commuters walk past them every day.

Xi Jinping, China’s supreme leader, is fixated on beating the West in new technologies.
Chinese businesses already dominate areas including electric vehicles (EVs) and lithium
batteries, and are fast taking the lead in emerging fields such as humanoid robots. The
country’s growing technological prowess is thanks in part to the Communist Party’s
conveyor belt of innovation, which takes ideas developed in state-run labs and
universities and turns them into commercial products. The process, often referred to as an
“innovation chain” in policy documents, has led to rapid advances in a number of fields.

Yet the costs of China’s model are steadily mounting. Critics argue that it has wrought a
vast misallocation of resources which is dragging down economic growth. Before long,
China’s state-led approach to innovation could prove unsustainable.

China’s innovation chains often start with grants for researchers, who find a placement in
state-backed labs. These, in turn, are fertile ground for government officials, who identify
good ideas and help research teams set up companies, often within local development
zones.

A recent beneficiary of that process is Theseus, a company based in Chongqing that makes
computer-vision sensors. In 2019 it was little more than a group of scientists from the
state-backed Institute of Optics and Precision Mechanics in the city of Xi’an, who would
meet in a teahouse to discuss commercialising their work. A district government in
Chongqing, hoping to develop a supply chain around their technology, provided funding
and helped the scientists launch their company in an industrial zone in 2020.

By 2024 Theseus had become a leading player in its field. It has hired nationally
renowned scientists, and in May this year announced it had developed a new display
screen using AMOLED technology, which provides a sharper picture quality, in
partnership with state-owned China Mobile, the country’s largest telecoms firm.

State-backed research institutes, including labs and universities, are increasingly

commercialising their innovations in other ways, too. Some have established marketplaces
where companies can bid directly on their patents. The Heilongjiang Academy of
Agricultural Sciences in Harbin, another city, recently auctioned off the patent behind a
genetically modified soyabean it had developed. In such cases an institute will often
deploy technicians to the company buying the technology to help them make use of it.

One gauge of the strengthening ties between China’s private sector and its research
institutes is the revenue the latter collect when they sell their ideas, co-develop technology
or provide consulting services. Between 2019 and 2023, the latest year available, that
figure nearly doubled, to 205bn yuan ($30bn).

The benefits of collaboration flow in both directions. In biotech, for instance, state
researchers have been able to tap into private resources to aid their work, notes Jeroen
Groenewegen-Lau of MERICS, a think-tank in Berlin. University researchers are often
granted access to industrial fermentation facilities at local companies, which are used to
harvest bacteria.
Hefei offers perhaps the best example of the drawing together of China’s scientific and
business communities under state direction. The city’s government invests in private
companies, builds supply chains around them and acts as an interface between labs,
universities and the private sector. Fusion Energy Tech is but one of its many successes;
plasma-fusion cancer treatments developed in the city are now entering trials, and
quantum-secure mobile services developed there are already on the market.

Hefei’s government has focused in particular on working through technological bottlenecks

that market dynamics alone may have little incentive to resolve. One example is in the
quantum industry, where certain low-temperature dilution devices that were available only
from a few foreign suppliers are now being built locally, even if some experts remain
sceptical of their performance.

China’s central government hopes to take the best such systems of collaboration and
replicate them across the country. In March the National Development and Reform
Commission was granted control over a 1trn-yuan fund for investing in technology. Since
2023 it has been run by Zheng Shanjie, formerly the highest-ranking party official in Anhui
province, where Hefei is located. The Ministry of Industry and Internet Technology (MIIT)
has begun overseeing the commercialisation of ideas within industrial zones, notes Hutong
Research, a consultancy based in Beijing. In April Li Lecheng, who is credited with
transforming two inland cities into hubs for green energy, was appointed the head of MIIT,
suggesting that the party hopes to see many more such transitions.

For Chinese companies, the breadth of innovation under way in the country offers
significant advantages. For one thing, it makes it easier to break into new industries, notes
Kyle Chan, a researcher at Princeton University. One example is Xiaomi, originally a
smartphone-maker, which was able to build a successful EV business in China in about
three years. The range of innovation has also helped give rise to new industries. China has
become a leader in the nascent business of flying taxis in part by drawing on its expertise
in both EVs and drones.

For all these successes, however, China’s innovation model comes with costs—and these
are mounting. Perhaps as much as 2% of GDP goes towards subsidising industries in some
form or another. As the state has played a greater role in directing innovation, private
venture-capital investment has collapsed, falling by 50% year on year in the first half of
2025, according to KPMG, a professional-services firm.

The payoff from the state’s largesse is also becoming increasingly unclear. China’s total
factor productivity, which measures how well it makes use of capital and labour, has
stalled. Some efforts by local governments to build clusters of expertise have failed,
including the city of Nanning’s attempt to develop an EV supply chain.
State subsidies have also led to severe overcapacity in many industries. The vast majority
of China’s EV-makers, for example, are not profitable. Too many businesses now fight for
the same customers, a state of unbridled competition with few winners often referred to as
“involution”. Meanwhile, pursuing customers abroad is becoming more difficult amid
resistance from foreign governments. What is more, some technologies are being
developed in China without clear evidence of a market for them. People working on
humanoid robots complain that there are umpteen companies all producing similar
products without much genuine demand.

China’s state-led approach to innovation has helped create many world-class firms, but the
return on investment may be too low for it to continue much longer. The debts China has
accrued from funding innovation are vast and unsustainable, argues Daniel Rosen of
Rhodium Group, a research firm. Last year public debt, including the amount owed by
local-government financing vehicles, reached 124% of GDP. Eventually Mr Xi may have
little choice but to dial down government support for new technologies. At that point
China’s conveyor belt of innovation could grind to a halt. ■

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Business | Emitting defeat

Donald Trump, friend of the EV?

His policies may ultimately help Detroit go electric

August 28th 2025

Having once described Joe Biden’s electric-vehicle (EV) policies as “lunacy”, Donald
Trump briefly seemed to be softening his opposition when he bought himself a Tesla in
March. It was his way of helping Elon Musk, the carmaker’s boss and Mr Trump’s one-
time pal. Yet after the pair fell out spectacularly a few months later, Mr Trump put his
Tesla up for sale.

Since then the president has made his true feelings towards EVs clear. The “One Big
Beautiful Bill” signed into law last month eliminates fines for carmakers that fail to meet
federal fuel-economy standards across their fleets, which had boosted EV sales. Congress
has also taken away California’s waiver, which let it diverge from federal standards and
set tougher emissions regulations (the state is suing). On September 30th purchase
subsidies of up to $7,500 per EV and other tax credits that have aided adoption will
disappear, too. Next Mr Trump plans to rescind the Environmental Protection Agency’s
“endangerment finding”, an Obama-era ruling that greenhouse gases such as carbon
dioxide put public health at risk. This would bring an end to all federal emissions
standards (legal challenges are also likely).

By watering down these rules, the president is doing Detroit’s “big three” carmakers—
Ford, General Motors and Stellantis—a favour. The shift in policy will allow them to sell
more petrol cars, which generate healthier profit margins than EVs, partially offsetting the
damage inflicted by Mr Trump’s tariffs on imported cars and parts. Yet while his policies
may slow down EV adoption, they will not stop the transition.

Detroit is already seizing the opportunity presented by the rule changes. In June gm
announced a $4bn investment plan that will tilt production back towards lucrative pickups
and suvs with petrol engines. Stellantis (whose largest shareholder, Exor, owns a stake in
The Economist’s parent company) recently signalled its continued reliance on petrol
power with the revival of its powerful (and noisy) Hemi V8 engine for its pickups.

The emissions free-for-all will also cut the need to buy carbon credits from firms such as
Tesla, which can be used to help meet targets. Ford, for example, has lowered the value of
credits it intends to buy this year by $1.5bn. This will not be pleasant for Tesla, which
made $2.8bn selling credits in 2024, nor for ev startups such as Rivian and Lucid. But it
will help to defray the costs of Mr Trump’s tariffs.

The big three may take a combined hit of about $8bn this year on imports of cars and parts
from Mexico, Canada and elsewhere. For Ford, the reduction in purchases of credits alone
will go a long way to mitigating the expected hit from tariffs, estimated at $2bn this year.
Jefferies, an investment bank, says that a “credible scenario” for next year would see the
benefits from looser emission rules outweighing the burden of tariffs.

Yet despite the internal-combustion renaissance, Detroit’s carmakers are not slamming the
brakes on electrification. According to forecasts by Bloombergnef, a research group, ev
sales in America will rise from around 1.6m cars this year to 4.1m in 2030, with the share
of total car sales increasing from 11% to 27%. That is down from the 48% in 2030 that it
had predicted last year, but is still significant progress.

What is more, America’s big carmakers sell not only at home, but also abroad, and must
keep pace with foreign competitors who continue to roll out new EV models. Earlier this
month Ford unveiled what it described as its “Model T moment” for evs: a platform and
production system that will underpin several new affordable models, starting with a
pickup launched in 2027 that will cost around $30,000. gm’s commitment to evs is also
“ironclad”, according to Bernstein, a broker. In July the carmaker said that production of
batteries well suited for entry-level evs would commence in 2027 with its partner, South
Korea’s lg Energy Solution. Stellantis may have scaled back ev launches, but still offers
electric Jeeps, Ram pickups and Dodge Charger, a revered muscle car.
Indeed, if the profits from selling petrol cars outweigh the costs of tariffs over the next few
years, that may even allow Detroit to invest more in developing better evs. Future
historians of the car industry may come to regard Mr Trump as a friend of electrification,
not the implacable foe he once seemed. ■

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Business | Pulling out the stops

Service stations are getting a glow-up

EV drivers want a more pleasant experience while they wait for their cars to charge

August 28th 2025

The Tesla Diner, an electric-vehicle (EV) charging hub and roadside restaurant that
opened in July in Los Angeles, is not your typical service station. The architecture is sleek
and retro-futuristic. The menu offers traditional diner fare with a deluxe twist (including
wagyu-beef chilli). Optimus, Tesla’s humanoid robot, serves popcorn at an open-air
cinema, which drivers can enjoy while their vehicles charge.

Service stations are getting a glow-up. It takes around two minutes to fill up a petrol car,
but around 25 minutes to charge a Tesla Model 3 to 80% of its capacity. Longer stops are
fuelling demand for a more pleasant experience than what the industry has customarily
offered. Last year Rove, an American startup, launched a charging hub in Santa Ana,
California, where drivers can relax in an on-site lounge and shop at Gelson’s, an upscale
grocery chain. William Reid, its boss, says the site has received an “extraordinary
response”, averaging 700 charges a day since the launch, double what it expected.
It is not just an American trend. Westmorland Motorway Services, a chain of posh British
driving stops that serve up local produce, has been investing in more EV chargers for its
forecourts. Sarah Dunning, its chair, reckons that its sites are perfect for well-heeled EV
drivers looking “for a happier way to spend their time while charging”.

The rise of EVs is not the only disruptive development for service stations. More fuel-
efficient petrol engines and the growth of alternatives to car ownership such as ride
hailing have also weighed on the industry. In response, service stations are getting larger
and offering higher-quality food, drink and shopping to entice customers who aren’t
stopping to refuel, says Dan Munford of Insight Research, a consultancy. Applegreen, a
fuel retailer with sites in America and abroad, recently sold its British petrol-pump
business to invest in bigger sites with fancier food and drink. “When people do stop, they
want to be spoiled,” says Joe Barrett, Applegreen’s boss.

Yet reinventing the service station will be hard. The Tesla Diner was billed as an around-
the-clock dining experience, but is open to the public only from 6am to midnight and has
removed several items from the menu (Tesla drivers can still order food from their
vehicles at all hours). “It’s hard to offer high-quality food 24/7,” notes Mr Munford.

What is more, advances in charging technology could lead to less idle time for EV drivers.
BYD, a Chinese EV-maker, has developed a charger that supplies about 250 miles
(400km) of range in five minutes. More city-dwellers may also be able to power their EVs
at home or work as street-side charging points become widely available. Only the
swankiest of service stations may survive. ■
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Business | Steadying Orsted

How much trouble is the world’s biggest offshore-wind

developer in?
Orsted is suffering from Donald Trump’s grudge against “windmills”

August 28th 2025

Foul winds keep blowing Orsted’s way. On August 22nd Donald Trump’s administration
ordered the offshore-wind developer to stop work on its $4bn Revolution Wind project off
the coast of New England. The development, which is part-owned by BlackRock, an
American investment titan, is roughly four-fifths completed, with all licences and
approvals in hand.

Less than two weeks earlier the Danish wind giant had announced it would seek to raise
$9bn in equity to shore up its finances in response to “material adverse developments” in
America. Mr Trump has long held a grudge against “windmills”; he once sued the Scottish
government in a failed effort to stop the development of a wind farm within view of one of
his golf courses. In April the president ordered a stop to an offshore-wind project led by
Equinor, a Norwegian energy giant (the order was later lifted). In July he signed into law
his “One Big Beautiful Bill”, gutting subsidies for the industry. All that has weighed
heavily on project valuations in America.

Mr Trump’s return to office comes atop a difficult few years for Orsted, which has also
been hit by rising interest rates and supply-chain troubles. Its market value has fallen by
roughly 85% from its peak in 2021, to around DKr 80bn ($12.5bn; see chart). This month
S&P Global, a rating agency, downgraded the company’s debts to BBB-, one notch above
junk status. Yet despite the stormy weather, there is no need for Orsted’s investors to
panic.

This week the company’s bosses were busy drumming up support in Frankfurt and London
for its share offering. Alexander Flotre of Rystad Energy, a research firm, is confident that
this will go ahead more or less as planned, given that Orsted has the support of big banks
such as JPMorgan Chase as well as the Danish government, which holds a majority stake
in the formerly state-run business and plans to take part in the process. A prospectus will
be published after an extraordinary general meeting on September 5th.

Orsted’s financial position is not yet a cause for alarm. Its annualised return on capital
employed was a relatively healthy 7.5% in the first half of 2025, rising to 12.3% once
accounting impairments and costs related to project cancellations are excluded. Analysts
expect it to generate an operating profit (before depreciation and amortisation) of DKr
28bn this year, about as much as in 2024 and enough to comfortably service the company’s
DKr 66bn pile of net debt.

And despite its troubles in America, Orsted has a number of promising projects under way
in Britain, Germany, Poland and Taiwan that are expected to start operating this decade. In
July it signed a 20-year deal with TSMC, the world’s biggest chip manufacturer, which
will purchase all the power from a 920-megawatt wind farm off the coast of Taiwan.

To fund its future growth, Orsted will continue selling off assets, a process it calls
“farming down”. In October it offloaded a stake in four offshore wind farms in Britain to
Brookfield, a Canadian asset manager, and it is in the process of selling its onshore wind
and solar assets in Europe. The company has said that it expects to raise $5.5bn through
such sales this year and next.

Although more expensive than onshore wind or solar, the cost of offshore wind has
plunged over the past decade, making it increasingly competitive as a source of energy.
Beyond America’s shores, fairer winds await. ■

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Business | Privacy controls

The market for startup shares is getting even weirder

Investors want access to the hottest unlisted companies, however they can get it

August 28th 2025

“IT’S NOT fun being a public company,” lamented David Solomon, the chief executive of
Goldman Sachs, earlier this year. Firms should proceed with “great caution” before
pursuing an initial public offering (IPO), he warned, owing to the additional burdens
associated with being listed. Coming from the boss of an investment bank that makes its
money partly by taking companies public, the comments carried a good deal of weight.

Yet even unlisted firms are now struggling to stay truly private. A record $102bn in
venture-capital (VC) stakes traded hands in secondary markets globally in the first half of
the year, up by 41% from the first half of 2024, according to Evercore, another investment
bank. Such transactions can offer early investors and employees a way to cash out without
waiting for an IPO. But new and unorthodox methods used by outsiders to get a stake in
buzzy startups are proving to be a headache for founders—and a risk for investors.

One such method that has recently become the target of founders’ ire is the Special
Purpose Vehicle (SPV). These are established by an investor, typically a vc firm, in a
company. Outside investors then buy into the SPV, which provides them with indirect
exposure to the startup’s financial future; on the firm’s capitalisation table, where its
investors are listed, only the SPV itself appears. The format is not new, but with
excitement about artificial intelligence (AI) at fever pitch, so-called secondary SPVs—in
effect, an SPV of an SPV—are becoming common, too.

That could cause trouble for startups. American companies with over 2,000 individual
shareholders and more than $10m in assets must file financial reports to the Securities and
Exchange Commission, a markets watchdog. SPVs also create risks for investors. OpenAI,
the buzziest of all AI startups, recently warned that SPVs may violate the transfer
restrictions it imposes on its shares, leaving investors with no exposure to the company at
all. More than 13,000 customers put money into SPVs via Linqto, a private-market
investing platform, before it went bankrupt in July; the amount they will be able to recoup
is unclear. OpenAI and Anthropic, a rival AI startup, are trying to limit the creation of
SPVs by their direct investors.

Then there are the growing number of private exchanges that offer shareholders in startups
the opportunity to offload their stakes to buyers who are typically willing to pay a
premium for them. SpaceX, Elon Musk’s rocketry firm, was valued at around $400bn in a
tender offer to employees in July, equating to around $212 per share. Investors can
currently buy shares in the company on Forge Global, one exchange, for $246. Yet such
transactions can potentially be blocked by other shareholders, depending on the rights that
have been granted by the startup. Hiive, another exchange, says that only 72% of deals it
arranged last year were approved, though that is up from 67% in 2023.

Perhaps the strangest new method of getting exposure to trending startups is tokenised
stocks, which are settled on the kinds of digital ledgers that support cryptocurrencies.
These are meant to move in tandem with the startup’s shares, but do not provide the holder
with an equity stake. In June Robinhood, an online broker focused on retail traders,
launched one such offering. To drum up interest, it gifted European customers tokenised
shares in OpenAI and SpaceX. OpenAI said the company was not involved and did not
endorse the offer.

Some founders may fret about a loss of control over their investor base. But as startups
stay private for longer and enthusiasm for AI becomes ever more feverish, the desperation
to get in on the action will only grow. For their part, outside investors can expect to pay
more, and own less. ■

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Business | Bartleby

Feuds, grudges and revenge

Welcome to the dark side of the workplace

August 28th 2025

One of the more touching on-screen relationships is that between C-3PO and R2-D2, two
robots who appear in the “Star Wars” films. The actors behind the droids got on less well.
“He was in a box he couldn’t do anything with,” Anthony Daniels dismissively said of
Kenny Baker, the man who played the part of R2-D2. “Rude to everyone”, was Baker’s
verdict on his fellow actor.

Antipathy need not prevent good work. Messrs Baker and Daniels managed to put aside
their differences on set (it must help to be able to roll your eyes without being seen). And
friction can be good for organisations: a contest of ideas about how to get something done
ought to yield better outcomes. But such “task-related” disagreements can easily curdle
into something more personal and destructive.

Every workplace has a simmering feud or long-run grudge. These fractured relationships
can exact a heavy price. Research published for Acas, a mediation service, in 2021 put the
annual cost to British organisations of resolving work conflicts at £28.5bn ($39bn),
factoring in resignations, sick leave, dispute resolution and the like. And that’s before you
take into account the hidden costs of withheld co-operation and time lost on Gothic
revenge fantasies.

Humans are hard-wired for disagreements to escalate. One of Lindy Greer’s favourite
classroom exercises at the University of Michigan’s Ross School of Business is to have
students at different tables learn slightly different rules for the same game (aces high in
some cases, aces low in others, for example). When people move tables and start to
unexpectedly claim victory, other players are far quicker to assume they are stupid or
cheats than to question whether they have a different understanding of the game. This is a
good demonstration of the “fundamental attribution error”—the tendency for people to
assume that the actions of others are determined by their personalities, not by external
factors.

Once someone feels they have been intentionally wronged, their instinct is to get even.
“The Science of Revenge”, a recently published book by James Kimmel, argues that a
desire for vengeance activates the same brain circuitry as a drug addict thinking about
their next hit.

In a study conducted by David Chester of Virginia Commonwealth University and C.

Nathan DeWall of the University of Kentucky, participants played a computer game in
which a virtual ball is tossed between three players; in some iterations of the game, the
ball is passed back and forth between two of them, conspicuously ignoring the third
player. Rejected players are shown a visualisation of a voodoo doll representing their
partners, and asked to choose how many pins they would like to stab it with. The moral of
the story: pass the ball to everyone.

Organisations have features that are particularly liable to stir up bad blood. Power
struggles pervade firms: Ms Greer’s research suggests that people on senior leadership
teams can be particularly sensitive about protecting their turf. Organisations can also make
forgiveness harder, says Thomas Tripp of Washington State University. Dispute-resolution
processes are definitely better than people seeking to exact their own revenge (“a very
sloppy form of justice”, he says) but overly legalistic approaches can also serve to drag
things out.

The solution to all this seething lies partly with managers. Disrespectful corporate cultures
are fertile ground for feuds. It’s usually worth bosses trying to sort out ructions informally
before getting HR involved. Framing some types of disagreement as being for the good of
the firm might stop conflict escalating.

But individuals are best placed to stop things from spiralling out of control. Ms Greer
recommends asking follow-up questions whenever you are in a disagreement, so that you
understand where someone is coming from rather than assuming the worst of them. And if
you ever end up ruminating about an apparent slight, Mr Tripp recommends the adage
known as Hanlon’s razor. “Never attribute to malice that which is adequately explained by
stupidity,” is not the most generous way to interpret the behaviour of colleagues. But it
might help subdue your craving for revenge. ■

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Business | Schumpeter

How a power shortage could short-circuit Nvidia’s rise

Too many chips, too little juice

August 28th 2025

ON AUGUST 27TH Nvidia performed what has become a quarterly ritual beating of
expectations. Analysts forecast that the chipmaker would sell $46bn-worth of
semiconductors in the three months to July. It made closer to $47bn. Its latest Blackwell
graphics-processing units (GPUs), whose unrivalled number-crunching prowess has won
over artificial-intelligence modellers, are flying off the shelves. So are its GB-series AI
superchips, which combine two Blackwells with a general-purpose processor. Nvidia
probably sold over 600,000 Blackwells and nearly as many GBs, nearly 20% more than
last quarter, accounting for almost 60% of total revenue. It is on track to sell 2.7m and
2.4m, respectively, this year.

Nvidia bulls on Wall Street now reckon that America’s chip champion could be worth
$5trn before long, having become the world’s first $4trn company only in July. It looks, in
the words of many a breathless commentator, unstoppable. And yet fittingly for an
unstoppable force, Nvidia is about to come up against an immovable object. Or at least an
object that has not moved much in decades—America’s power grid.

Energy has not historically been a constraint on computing. Even as rocketing internet
traffic increased the workloads of the world’s data centres nine-fold between 2010 and
2020, their overall power use stayed completely flat. Every generation of chips was more
efficient than the last. AI has turned this trend on its head. A non-AI data-centre computing
unit, or rack, needs around 12 kilo-watts (kW) of power to run. An equivalent AI module
requires 80kW when training large language models like the one behind ChatGPT, then
40kW when responding to users’ prompts. Zippier semiconductors can consume a good
deal more than that.

Nvidia’s are, naturally, the zippiest of all. A single Blackwell chip needs 1kW, three times
more than its Hopper predecessor. Racks contain dozens of them. Nvidia sells modules
packed with 36 GB superchips, which is to say 72 Blackwells and three dozen general-
purpose chips, designed to operate at 132kW. A secondary cooling system to stop the
semiconductors overheating from all that thinking can add 160kW per rack.

Tot it all up and the extra power requirements are staggering. Analysts predict that
between February 2024 and February 2026 Nvidia will have sold some 6m Blackwells
and 5.5m GBs. Assume that half of these end up in America, in line with its home market’s
historical revenue share. If installed and operated at capacity, those chips would raise
American power demand by 25 gigawatts (GW). That is almost twice as much as all of
America’s utility-scale producers added in 2022 and not far off the 27GW they managed in
2023. And that is not counting next-generation Rubin chips Nvidia plans to launch next
year, or AI racks sold by rivals such as AMD, not to mention other power sinks such as
electric cars.

A recent global survey of data-centre managers by Schneider Electric, a French maker of

energy-management kit, found that available power and transmission capacity was a near-
universal concern. It occupied the minds of executives more than anything else, including
access to those hot-ticket GPUs. Bernstein, a broker, estimates a potential power shortfall
in America of 17GW by 2030 if the chips get more energy efficient, and 62GW if they
don’t. Morgan Stanley, a bank, puts the gap at 45GW by 2028.

If American power companies do not pick up the pace, in other words, chip sales could
stall or sold chips could lie idle. The latter would weigh on the profits of AI powerhouses
such as Alphabet and Microsoft that are splurging billions on GPUs. The former would
drag down Nvidia. Neither eventuality appears to be factored into the tech giants’ lofty
valuations. The implicit assumption seems to be that American electricity providers will
step up.
The power sector is starting to stir from a prolonged motionlessness in which capacity
edged up by low single digits annually. Between 2022, when ChatGPT ignited the AI
boom, and the 12 months to June this year, the combined capital spending of America’s 50
biggest listed electricity providers rose by 30%, to $188bn—a compound annual increase
of 7%, adjusting for inflation. According to S&P Global, a data provider, they are
planning to add new plants with a collective capacity of 123GW, on top of the 565GW
currently in operation. Suppliers of power equipment such as Schneider Electric are
seeing American sales accelerate.

Yet reasons for caution abound. Industry bosses are unaccustomed to running a growth
business and could stumble. Ambitious plans aside, their firms’ new capacity actually
under construction amounts to just 21GW between them. Even if they do try to build more
plants, they may struggle to fit them out. Manufacturers are in no rush to expand
production. The world’s 100 biggest makers of electrical equipment have cut their capital
spending by 3% a year since 2022 in inflation-adjusted terms. That could spell pricier
equipment, made dearer still by tariffs.

Analysts expect listed power companies’ sales to grow at an annual rate of 6% between
2025 and 2028 in nominal terms, up from 4% nominal growth since 2022 but no bonanza.
As the canonical dividend stocks, they have paid $87bn to shareholders since the start of
2023, leaving less cash for investments. Many are regulated monopolies, and legally
obliged to reflect more capital spending in higher bills. This would irk inflation-wary
Americans and, worse, the business-browbeater-in-chief in the White House.

Some data-centre operators are taking things into their own hands. Alphabet is putting
solar panels and battery storage in some data centres. Meta’s project in Louisiana will run
in part on natural gas tapped on site. Still, it is power companies that generate virtually all
American electricity. Without their help, Nvidia’s epic surge will sooner or later power
down. ■

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Finance & economics
How Trump’s war on the Federal Reserve could do serious damage
Assessing the case against Lisa Cook
Why you should buy your employer’s shares
Fear the deficit-populism doom loop
Gambling or investing? In America, the line is increasingly blurred
Even as China’s economy suffers, stocks soar. What’s going on?
Trump’s interest-rate crusade will be self-defeating
Finance & economics | Cooking up a storm

How Trump’s war on the Federal Reserve could do serious

damage
Just consider what happens if inflation starts to rise again

August 28th 2025

Pity the bond trader without Truth Social on their phone. All it took was one after-dinner
missive, fired off by the president on his social network, to turn the White House’s tussle
with the Federal Reserve into something more worrying. On August 25th Donald Trump
posted a letter saying he had fired Lisa Cook, a Fed governor, for alleged mortgage fraud.

Although presidents can sack Fed officials, they can do so only “for cause” and none has
used the power before. Ms Cook has not been charged with a crime, let alone convicted of
one. The claim—that she listed two homes as her primary residence—was first made by
Bill Pulte of the Federal Housing Finance Agency, who has made similar claims against
others (none yet leading to legal charges). Ms Cook has pledged to fight the firing in court
and, in the meantime, to stay in her post.
The move is a remarkable escalation in Mr Trump’s campaign against independent central
banking. The Fed was mostly peripheral in his first term, occasional grumbles aside, but
has become a bogeyman in his second. He has loudly and publicly demanded interest-rate
cuts, and dubbed Jerome Powell, the chairman, “too late” for failing to provide them. He
has toyed with sacking Mr Powell, and for a spell tried to use the costly renovation of the
Fed’s headquarters as a pretext. He blames the Fed for constraining the housing market
with high interest rates. “Once we have a majority, housing is going to swing,” he said
recently.

So far, Mr Powell and the Fed have largely ignored the ruckus. There have been no
interest-rate cuts since December, though one looks likely in September. Behind the
insouciance lies confidence in the Fed’s legal protections: governors have long terms and
are hard to evict. The Supreme Court recently carved out the central bank in a ruling
making it easier for presidents to fire agency bosses. But the attack on Ms Cook raises the
pressure. Her term is due to run until 2038; successfully replacing her with a Trump
loyalist would leave these defences looking fragile.

Three pressure points will determine how much damage Mr Trump manages to do. First is
the coming court battle over Ms Cook. Proving that her alleged misdeeds merit a sacking
will be difficult. She filed the paperwork in question in 2021, while a private citizen.
Demonstrating wrongdoing may also mean showing that any misrepresentations were
deliberate. Few expect a swift resolution. Betting markets place odds of just 10% on her
being successfully removed by the end of September, rising to 25% by the end of the year.

Second is a vote, carried out every five years, by the seven Fed governors to approve
regional Fed branches’ choice of presidents. A rotating cast of five regional Fed
presidents rounds out the 12-person Federal Open Market Committee (FOMC), which sets
interest rates. That vote comes early in 2026. If Ms Cook is pushed out, and the Senate
confirms replacements for both her and Adriana Kugler, another Fed governor who has
recently resigned, then in principle four of the seven Fed governors will be Trump
appointees, and could insist on sympathetic regional presidents. However, even in that
scenario, such blatant interference is unlikely. Christopher Waller and Michelle Bowman,
the two governors appointed during Mr Trump’s first term, are technocrats.

The third pressure point is the end of Mr Powell’s term. After first seeming to narrow the
field, Mr Trump has floated a longer, zanier list of names. Among the main contenders, Mr
Waller, who predicted against consensus that America could cool inflation without a
recession, would be the most reassuring pick. If Mr Trump opted for a loyalist such as
Kevin Hassett, one of his economic advisers, the FOMC’s ability to outvote him would
protect against meddling—unless it was undermined by more Cook-style ejections.

The last president to try seriously to fiddle with the Fed was Richard Nixon, who leant on
Arthur Burns, then chair, to lower interest rates ahead of the presidential election in 1972.
It was a calamitous move. Inflation rose even before the oil shock of 1973, and took
another decade to contain. Thomas Drechsel of the University of Maryland estimates that a
bout of political pressure about half as intense as the Nixon effort, applied for six months,
could raise prices by 7% over a decade.

And Mr Trump has taken a far more brazen approach to pressuring the Fed than even
Nixon dared. Markets have become more sceptical of America during his second term.
The dollar has fallen by 9% against other rich-world currencies. Gold, a store of value
that does not rely on the credibility of any central bank, has soared. Although short-term
Treasury yields have fallen as the American economy has softened, longer-term yields
have stayed high (see chart), reflecting investor concern about America’s debt load and
threats to economic institutions such as the Fed.
At the same time, stocks have countered the gloom, and are at all-time highs. Stocks,
Treasuries and the dollar all fell after Ms Cook’s “sacking” was announced, but the scale
of the moves was trifling. Taking threats to Fed independence seriously would almost
certainly warrant a far sharper response. So why the relative calm? In part, because Mr
Trump has many battles still to fight. Securing a sympathetic FOMC majority would
require successfully persuading courts to allow him to sack Ms Cook, pushing several
lackeys through confirmations in the Senate and convincing several more independent-
minded governors to demand a pliant slate of regional Fed presidents.

But investors’ sangfroid also creates a problem. Mr Trump’s habit is to keep pushing until
he meets resistance. Markets are relaxed because they expect the president to back down,
yet market discipline is probably needed to force a rethink. And although a full-on Fed
takeover is only an outside possibility, the president’s war on central banking could still
do serious damage. For one, he has already broken a decades-long norm that Fed
independence is sacrosanct. If political control of the Fed becomes a consistent
Republican demand across election cycles, the politicisation of monetary policy is near-
inevitable.

Hurting confidence in America’s economic institutions matters, too. The Fed has already
been shaken by its failure to anticipate post-pandemic inflation. Higher interest rates were
able to tame rising prices without a recession in large part because people trusted the Fed
would be able to get inflation back to its target of 2%, preventing a 1970s-style wage-
price spiral. Even under normal circumstances, pulling that trick off again would be
difficult, for Americans are now primed to expect inflation. Doing so with a politically
compromised central bank would be harder still.

A loss of faith in the Fed would also cause problems in the bond market. America now
runs a fiscal deficit of 7% of GDP, three times as high as in Nixon’s day. Government net
debt sits at around 100% of GDP. Persuading investors to swallow such borrowing is
never straightforward. The sales pitch becomes near-impossible if the Fed cannot be
trusted to keep inflation in check. So far, America has remained attractive because of its
status as a haven, and because most other rich countries are also borrowing more. But
investors do have alternatives, and with a few more Truth Social posts they may start to
turn to them. ■

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Finance & economics | Bill’s attempted kill

Assessing the case against Lisa Cook

How strong is the evidence, and how bad would it be if the claims were true?

August 28th 2025

Criminal investigations do not usually start with tweets. They very rarely start with tweets
by government officials asserting someone’s guilt before a charge has even been laid.
That, however, is how the case against Lisa Cook, a governor of the Federal Reserve,
began on August 20th, when Bill Pulte, head of the Federal Housing Finance Agency,
published a letter alleging that Ms Cook had “falsified bank documents and property
records to acquire more favourable loan terms, potentially committing mortgage fraud”.
Mr Pulte then tweeted a screenshot showing her signature on two documents. It is on the
basis of this evidence that President Donald Trump sought to sack Ms Cook on August
25th. She has refused to resign; the courts will consider what is required to remove a Fed
governor “for cause”.

Mr Pulte’s precise allegation is that Ms Cook took out two mortgages a fortnight apart—
one for a house in Michigan and another for a flat in Atlanta—and claimed that both would
be her main residence. Lenders tend to charge much lower interest rates for first homes
than for second homes or investment properties, since people are less likely to default on a
loan if doing so would make them homeless. Intentionally misleading a bank could, in
theory, constitute fraud. Given that Ms Cook is a financial regulator, it would be hard for
her to stay in her post if the allegations were more substantiated, even if she were not
convicted and regardless of the motivations of those making the accusations. She says that
she is gathering evidence to prove her innocence.

The problem, for Mr Pulte, is that substantiating his charge is fiendishly difficult.
According to a study in 2023 by the Fed’s Philadelphia branch, “owner-occupancy fraud”
is common. Perhaps a third of investment-property owners have mortgages on residential
terms, and their default rates are indeed higher. In a housing crash, this could prove costly
for lenders.

Yet the paper is an economic study, not a legal one. Kathleen Engel, an expert on mortgage
regulation at Suffolk University, says giving wrong information to a bank does not in itself
constitute criminal fraud in the way that, say, doing so on a tax return would. To be fraud,
the deception must have been deliberate, typically the bank must have lost money as a
result and it must be able to show it would not have lent had it known the truth. Just 38
people were convicted of any type of mortgage fraud last year, in large part owing to the
difficulty of such prosecutions.

There are circumstances in which claiming two primary residences would make sense. It
can happen as a result of moving home, and is sometimes explicitly allowed by banks—as,
for example, when a married couple work in different cities and both homes are genuinely
lived in by the applicants. Ms Cook is also accused of briefly listing her flat in Atlanta for
rent. Yet on her financial disclosures she did not report any rental income. To prove
criminal fraud, prosecutors would have to show not only that any deception was
intentional, which is hard as mistakes are common, but also that it carried a cost for the
lender. Mr Pulte has not shown she misled the bank, whether on purpose or by accident.

Alongside Mr Pulte, the other instigator of the accusations is Ed Martin, an official at the
Department of Justice who, from January to May, served as the interim US Attorney for the
District of Columbia. Mr Martin, who in that job liked to send strange letters to
Democratic politicians accusing them of crimes, failed to be confirmed by the Republican
Senate. He has also made the same accusation of fraud against Letitia James, the attorney-
general of New York, who prosecuted Mr Trump last year, and Adam Schiff, a Democratic
senator from California. No indictments have emerged in either case. ■

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Finance & economics | Buttonwood

Why you should buy your employer’s shares

Even though doing so flies in the face of most financial advice

August 28th 2025

It is not hard to see why Jamie Dimon owns a lot of shares in JPMorgan Chase. He is the
bank’s boss and its shareholders want his interests to be aligned with theirs. Paying him
mostly in stock, rather than cash, helps ensure that they are. An executive with a significant
proportion of savings invested in their firm’s shares has tied their future to the company’s.
This discourages them from doing things that might pad their wallets in the short term at
the expense of shareholders’ long-term returns, such as expanding the firm unsustainably
fast. The incentives are stronger still if—as with Mr Dimon—the boss is promised shares
for delivery some time hence, or if any sales prompt newspaper headlines.

It is rather more surprising that many mid-level bankers own a lot of their employers’
stock. Banks probably benefit from awarding them shares: as with bosses, aligning rank-
and-filers’ interests with shareholders’ makes sense, especially when relatively junior
employees can risk the firm’s funds and reputation. But the bankers themselves might well
make their living from preaching the virtues of diversification to clients. This gospel says
that tying your savings to your employer’s prospects is unwise, since you already depend
on them for your salary. It is particularly risky if you work in an industry famous for
culling staff in down years. Such people know better than anyone what to do with a stock
award: sell it and use the proceeds to buy investments that spread your risk rather than
concentrating it.

At this point your columnist, a mid-level financial journalist who purports also to
understand diversification, must confess some sympathy with these bankers. This is
because he owns shares in The Economist Group. Worse, he did not even receive them as
part of his pay, but actively decided to invest. Here, then, is why you should consider
flouting the best financial advice around and buying shares in your employer.

For a start, doing so might come with some psychological upside (provided you are not
too troubled by taking unwarranted risks with your savings). Left-wingers often approve of
employee ownership because it gives workers a slice of the profits that would otherwise
accrue only to avaricious capitalists. Right-wingers like it because it ushers workers into
the capitalist tent. Less is said about the quiet feeling that you are on the same side as your
employer, rather than having been pitted against them. Worried that you are overworked
for your salary, or that too little of your firm’s revenue flows into wages? Any gains are
going to shareholders, so it helps to be one of them—even if you own too few shares to
benefit much. The hedge might be more emotional than financial, but it is not nothing.

Then there are the more cold-eyed advantages. Suppose you work for a privately owned
firm that is about to be taken over by a competitor (which, for the record, The Economist
is not). If you have spurned all offers to buy shares, the first you might hear of the takeover
is when the rival company’s executives march into your office and start laying people off.
If you are a shareholder, though, you might get some warning: no matter how small your
holding, you will probably get a vote on the acquisition.

For some, investing in their employer might also be a rare opportunity to gain exposure to
a kind of asset that they might otherwise have difficulty acquiring. Anyone can buy shares
in JPMorgan, but buying private equity is more difficult for retail savers, even now that
some barriers have begun to come down. Access to the high-risk, and potentially high-
reward, leveraged buy-outs that powered the growth of private markets in the 2010s is
still mostly limited to big, institutional investors.

A frequent exception is the employees of companies being bought out, who can often
invest on the same terms as the giants. Their doing so would horrify a diversification
purist, adding the extra risk of leverage to the double whammy of betting savings on the
firm that pays their salary. Yet such employees are also well placed to judge the wisdom
of the buy-out: whether borrowing costs can be met, for instance, or if the growth required
to justify the valuation is realistic.
None of this means anyone should invest a big share of savings in their employer unless
they are obliged to—especially if they work for a listed firm, with shares that confer
fewer advantages. A small stake, though, might be worth defying financial advisers. And
for your columnist’s sake, in more ways than one, please keep buying The Economist.■

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Finance & economics | Between a graph and a fist

Fear the deficit-populism doom loop

Politicians, particularly in Europe, are in a terrible bind

August 28th 2025

You are a finance minister after a decade of meagre economic growth, shocks from a
financial crisis, a pandemic and sky-high energy prices. Public debt is worth more than
your country’s gross domestic product, interest rates are at their highest in years and
merely servicing outstanding debt is taking up an ever-greater share of tax revenue.
Inflation is stubborn. America’s profligacy is satisfying much of the world’s appetite for
government bonds, meaning your debt must pay more to attract investors. You lie awake
worrying about how to make the numbers add up. Your fellow ministers, meanwhile, fret
for their careers: populist parties are on the rampage. The economic context calls for
fiscal consolidation; the political one warns against austerity. What do you do?

This is the bind facing governments in much of the rich world. The average fiscal deficit in
the OECD, a club of mostly rich countries, hit 4.6% of GDP last year, up from an average
of 2.9% in the four years before the covid-19 pandemic; interest payments on outstanding
debt came to 3.3% of GDP, only just below the amount Nato members hope to spend on
defence by 2035. The political-science literature offers some comfort—austerity is not
usually a barrier to re-election—but also a warning. Research shows a link between
spending cuts and populist success. Indeed, in Britain, France and Germany such parties
are already ascendant. Call it the deficit-populism doom loop: ministers face both big
deficits and voter revolts, and there is little way of satisfying both the bond markets and
the barbarians at the gate.

During the slow recovery from the global financial crisis of 2007-09, many governments
delayed fiscal consolidation and borrowed. Today’s economic backdrop is less conducive
to such an approach: debts are higher and central banks are tightening policy, rather than
engaging in quantitative easing. The Bank of England has been reducing its bond holdings
by about £100bn ($135bn) a year, making it harder for the state to find buyers for the
£300bn or so of bonds it sells annually. Bondholders are restive. France’s ten-year-bond
yield is 3.5%, up from less than 1% a decade ago. Higher inflation and higher interest
rates, which become more likely when governments borrow heavily, can also inflict
political pain on incumbents, as President Joe Biden discovered.

Borrowing more is therefore unappetising. The fiscal conditions also make the prospect of
hard-right governments more worrying. Populists typically promise higher spending on
pensions and family benefits, as well as tax cuts—a noxious mixture in present
circumstances. As such, unpopular spending cuts may be self-defeating: there is no point
righting the fiscal ship only to put a free-spending populist in power. Bond markets have
already started to fret about hard-right success. When Emmanuel Macron called a snap
election in June 2024 the spread between yields on France’s ten-year bonds and those on
Germany’s rose from 0.5 to 0.8 percentage points as investors worried about the National
Rally. With the minority government now facing a vote of confidence on September 8th,
the spread has risen once again.

In theory, it might be possible to sell spending cuts to voters. Governments are often re-
elected after implementing austerity; a smart politician can get cuts out of the way well
before an election comes round. However, studies also suggest that, over time, spending
cuts sap support for the political mainstream. A forthcoming review by Evelyne Hübscher
of Central European University and Thomas Sattler of the University of Geneva finds that
the spread of populism in western Europe has occurred in waves that coincide with
episodes of austerity. Debates about immigration, public services and benefits—all
become more potent when what Stefanie Stantcheva of Harvard University calls a “zero-
sum mentality” has developed.

This is borne out by small-scale studies. Simone Cremaschi of Bocconi University and co-
authors looked at variations in Italian local-authority reforms. They found that, in areas
where cuts to public services were deepest, hard-right parties went on to win more votes.
Another paper by Zachary Dickson of the London School of Economics, Mr Cremaschi
and co-authors finds that Reform UK thrives in areas with recently closed National Health
Service practices. Potholes and poor roads seem to correlate with the party’s success, too.
“Invest in key public services to make people see that it is worthwhile paying their taxes
and being part of this democratic system,” advises Catherine de Vries of Bocconi.

Putting money into public services would, though, require tax rises. They might be less
likely than spending cuts to encourage the rise of populists. Jacopo Ponticelli of
Northwestern University and Hans-Joachim Voth of the University of Zurich looked at
fiscal consolidations across a number of countries from 1919 to 2008. They discovered
that although there is a clear association between spending cuts and instances of social
instability, such as riots, tax rises had only a “small and insignificant” impact. The
problem is that they would bring other costs. Alberto Alesina of Harvard and co-authors
find that austerity packages which lean more on tax rises than spending cuts are worse for
long-term economic growth. Free-market parties that implement tax rises are especially
punished for doing so by voters.

Are there other options? Sensible debt management might have been one. In recent
decades, as Barry Eichengreen of the University of California, Berkeley, and Rui Esteves
of the Geneva Graduate Institute have noted, credible policy and long-duration bonds have
prevented modest bouts of inflation from sending yields soaring, which slows down the
accumulation of debt. The problem is that in recent years most countries have moved away
from issuing long-term bonds. Indeed, quantitative easing, which involves swapping
longer-dated government debt for overnight deposits with the central bank, has shortened
the effective maturity of government liabilities, making them more sensitive to changes in
short-term interest rates.

Messrs Eichengreen and Esteves point out that, since the second world war, European
governments have most commonly reduced their debt via either fast economic growth or
financial repression. Fast economic growth does not seem likely today, leaving financial
repression. It typically involves either capital controls or financial regulation that keeps
nominal interest rates below the rate of inflation. Although few governments are keen to
return to the post-war era of capital controls, some are flirting with other forms of
repression. Ideas include scrapping interest payments on central-bank reserves or making
pension funds buy domestic assets. British policymakers may use tax incentives to
encourage savers to invest at home.

Financial repression, however implemented, is ultimately a tax on savers, who receive

worse returns when forced to invest in their domestic market. Far more voters now own
assets and private pensions than during post-war episodes of repression. It is unclear how
they would react to being forced, in effect, to hand over a chunk of their savings to the
government, but it is not hard to imagine a backlash.
The populist bind, therefore, is a tight one. Pity the finance minister hoping to keep debt
burdens under control and the hard right at bay. At least, during his sleepless nights, he can
console himself that when he is booted from office his populist successor will face many
of the same constraints. See how they like it. ■

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Finance & economics | One big casino

Gambling or investing? In America, the line is increasingly

blurred
Bet on stocks in a prediction market run by a sports-betting firm and a futures
exchange

August 28th 2025

Economists and financiers have compared stockmarkets to gambling since 1936, when
Keynes warned of “the capital development of a country becom[ing] a by-product of the
activities of a casino”. In 1999 Jack Bogle of Vanguard decried the “Wall Street casino”
where only croupiers got rich, and in 2023 Warren Buffett wrote that “markets now exhibit
far more casino-like behaviour than...when I was young”.

Despite this similarity, governments promote bets on companies while discouraging those
on cards, dice or sports. Gambling is a zero-sum endeavour in which the house always
wins in the end, whereas investing promotes economic growth and distributes the gains
among all (diversified) participants. As a result, the companies and legal regimes
involved in gaming are mostly separate from those in financial services. In recent months,
however, the line between investing and gambling has arguably been blurred out of
existence.

America once stood out both for tight limits on gambling and for mass participation in the
stockmarket. But policy has shifted. In 2018 the Supreme Court let states permit sports
betting, which 39 of the 50 have done. Last October Kalshi, a prediction market regulated
by the Commodity Futures Trading Commission (cftc), won a lawsuit enabling it to offer
event contracts, which pay $1 to winners and $0 to losers, on the presidential election
(Donald Trump traded at 59% on election day). In July Polymarket, a cryptocurrency-
based prediction market off-limits to Americans, bought a cftc-registered exchange to
build a competing product.

This year Kalshi began offering nationwide markets on sporting events. On August 19th it
announced new contracts on score differentials and player statistics in National Football
League games, replicating core sports-betting products. The firm has not registered with
state gambling regulators and does not pay state taxes, arguing that it falls exclusively
under federal jurisdiction. Seven states have told Kalshi to stop, and Native American
tribes have sued it. So far, Kalshi has won injunctions preventing Nevada and New Jersey
from enforcing those orders, while losing a similar case in Maryland. In June Kalshi
raised $185m at a valuation of $2bn, including an investment from the boss of Citadel
Securities, a giant marketmaker.

Having received the CFTC’s blessing, financial firms began dipping into once-forbidden
waters. Shortly after Kalshi’s legal victory on election wagers, Interactive Brokers,
America’s largest electronic-trading platform, opened similar contracts on its own
prediction market, ForecastEx. Robinhood, an upstart online broker whose users led the
meme-stock craze of 2021, then offered ForecastEx’s presidential-election contracts to its
users, attracting $500m of bets in just over a week. Since then, Robinhood has provided
access to many Kalshi markets, offering “investments” in when SpaceX will go public, the
winners of the us Open tennis tournament and the recipients of Emmy awards. Sports alone
have drawn $1.4bn of trading.

Incumbent titans of both gambling and finance have taken note. On August 19th FanDuel,
America’s biggest sports-betting site, announced plans to launch a prediction market with
the Chicago Mercantile Exchange (cme), the world’s largest futures exchange. For now, it
will offer bland contracts on whether the values of things like stock indices, oil prices and
American gdp will exceed specified thresholds.

Such events may be of little interest to FanDuel’s recreational bettors. But if Kalshi
prevails in court on sports contracts, the alliance will enable FanDuel—whose corporate
parent owns Betfair Exchange, the world’s largest sports-prediction market—to offer de
facto sports betting in states that have not legalised it, such as California and Texas. And
institutional investors seeking to place binary bets, either on elections or financial events
like corporate mergers, might prefer to trade on an established platform such as the cme’s.

Tarek Mansour, Kalshi’s boss, insists that event and wheat contracts are legally identical.
“If we are gambling”, he said in April, “you’re basically calling the entire financial
market gambling.” Keynes must be nodding along in his grave.■

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Finance & economics | Market mystery

Even as China’s economy suffers, stocks soar. What’s going

on?
The Shanghai composite is defying gravity

August 28th 2025

For Chinese investors, the grass is almost always greener elsewhere. The country’s
stockmarket chronically underperforms, meaning that local punters look to bourses in, say,
America or Japan, and devise ways of getting cash around China’s capital controls. But
this year is different. The Shanghai composite, an index for mainland stocks, hit a ten-year
high on August 25th. In dollar terms, it is up by 17% since the start of the year, ahead of
both America’s S&P 500 and global indices.

At the same time, China’s economy is suffering from overcapacity, which has induced a
widespread race-to-the-bottom mentality. The country’s great commercial and
technological achievements, such as its electric-vehicle and solar industries, are among
those suffering most from an overabundance of companies competing for the same markets.
Even BYD, China’s most successful EV firm, is struggling to pay its suppliers. Losses at
many of the country’s biggest solar companies grew in the first six months of the year.
Ordinary folk are feeling the pain, too: China’s delivery drivers have been caught in price
wars.
The sensational stockmarket performance therefore comes with an uneasy undercurrent.
Since the start of the year the Chinese state has sought to buoy sentiment, capitalising on
accomplishments such as a breakthrough artificial-intelligence model built by DeepSeek, a
startup, and the wild success of “Ne Zha 2”, a locally produced animated film. Another
source of positivity has been the state’s crackdown on oversupply, sometimes called the
“anti-involution” campaign, which has shown that officials are at least trying to tackle
China’s biggest problems.

There are some other reasons for optimism. China’s export-focused manufacturing sector
has held up better than expected against President Donald Trump’s trade attacks. On
August 25th Shanghai loosened restrictions on home purchases, a move that may boost
property prices in the country’s financial hub. Households are beginning to move some of
their enormous savings into stocks; companies are purchasing their own shares, having
announced 75bn yuan ($10bn) in buybacks in the first half of the year, a modest increase
on the second half of the year before; and insurance companies are rushing into the
stockmarket, having invested 620bn yuan in the first half of the year, compared with 630bn
yuan over the whole of 2024, according to Jefferies, an investment bank.

Yet it can, at times, seem as if the stockmarket is defying gravity. Consider an official data
release on August 15th, which showed that consumer spending, industrial production and
fixed-asset investment had all slumped by much more than expected. And so stocks
plunged? Not exactly. The Shanghai composite rose by 1%.

Firms themselves have struggled—and investors have shrugged. Some 23% of mainland-
listed companies that had disclosed their earnings for the first half of the year by August
27th reported losses, the highest share since at least 2016, and up from less than 10%
before the covid-19 pandemic. More are due to report in the coming days, but the trend is
not an encouraging one.

On top of this, official reforms are not as reassuring as they appear at first glance.
Investors hoping for a quick outcome in the state’s fight against involution will be
disappointed. China’s industrial policy relies on vast subsidies, which foster intense
competition and drive down prices. This is one reason why China’s EVs are so much
cheaper than those produced elsewhere. Truly ending involution would mean a wrenching
shift away from policies that have been in place for decades, and an acceptance of the
higher unemployment that would result as weak manufacturers collapsed. Although this is
happening in places, it is unlikely to occur across industries, and on the sort of scale
required, when leaders are worried about both joblessness and competing in foreign
markets.

All this is jangling nerves among the professionals. A fund manager says stock prices can
keep rising so long as liquidity is there, before adding that it looks increasingly shaky.
Analysts at HSBC, a bank, recently noted that “the rally feels disconnected from reality.”
Even the state may be growing wary. On August 27th a rumour suggested that the securities
regulator was trying to reduce use of terms such as “bull market” on social media.
Perhaps, then, the rally is about to connect with reality. ■

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Finance & economics | Free exchange

Trump’s interest-rate crusade will be self-defeating

New research shows the importance of central-bank credibility

August 28th 2025

There are two ways, the world’s central bankers learned at this year’s Jackson Hole
conference, to tame a horse. You can break the animal with fear, but it will never forget the
pain. The kinder way, shown to attendees one evening, is to set consistent boundaries with
gentle consequences (noisy clapping). This, says Martins Kazaks of the Bank of Latvia, is
like central banking. Although you can raise interest rates to crush inflation, causing a
recession, it is better when everyone believes in the inflation target, so nobody raises
prices and wages too much in the first place. If the boundaries are credible, the bank can
be gentler.

Officially, the theme of this year’s gathering was labour markets. Unofficially, it was the
imperilled credibility of the Federal Reserve. On August 25th, after the conference,
President Donald Trump said that he was sacking Lisa Cook, one of the Fed’s governors,
for alleged improprieties in her mortgage applications. It was an escalation of his
campaign to get the Fed to cut interest rates. The irony is that the Fed already appeared to
be moving towards rate cuts. Indeed, two research papers presented at the conference
supported the case for lower rates, suggesting both that the Fed should “look through” any
tariff-driven inflation, and that today’s rates are high enough to be hurting the economy.

How should the Fed react to Mr Trump’s tariffs? The “Taylor principle” requires that it
raise interest rates by more than any increase in inflation above the 2% target. Tariffs will
have added 0.8 percentage points to core inflation by December, forecasts Goldman
Sachs, a bank. Thus a simple version of the principle indicates that rates would need to be
more than 0.8 percentage points higher than they would without tariffs. But although the
principle is part of a rule that near-perfectly described central banks’ behaviour from
1987 to 1992, at Jackson Hole Emi Nakamura of the University of California, Berkeley
showed that over a much longer period the Fed has frequently deviated from it. Central
banks often ignore disturbances, trusting inflation will return to target when the shock
subsides. The more credible the bank, the better this works: expectations of low inflation
can be self-fulfilling.

This kind of thinking got Mr Powell and his colleagues in trouble after the covid-19
pandemic, when they wrongly argued inflation would be transitory. Yet the Fed did
eventually slay very high inflation, despite not having tightened monetary policy by as
much as the Taylor principle demanded. In contrast, countries where interest rates rose
fast and high suffered even worse inflation. The Fed’s credibility seems to have helped, at
least.

Ms Nakamura suggested that post-pandemic inflation may already mean the Fed has less
credibility than it did. In response, Amir Yaron, governor of the Bank of Israel, mused that
inflation’s eventual fall could have reinforced the idea it will always return to target. The
bookies’ favourite to replace Mr Powell is Chris Waller, a Fed governor who at the last
monetary-policy meeting dissented in favour of a rate cut. Mr Waller points out that long-
term inflation expectations appear to remain in check, despite tariffs.

The second leg of the rate-cutting case is that rates at their current level are slowing the
labour market, and need to fall to reach a neutral level. One worry with this argument is
that America’s net national debt, which is at nearly 100% of GDP and growing, is pushing
up the neutral rate over time, by absorbing the economy’s savings. Even accounting for
revenue from tariffs, America is likely to run a deficit of 6% of GDP this year. America’s
public finances are in a mess in part because of its ageing population. Older folk require
vastly more spending on pensions and health care.

However, at Jackson Hole, Ludwig Straub of Harvard University showed that the flipside
of such spending is older people’s appetite to amass and maintain wealth, which raises
demand for assets including Treasuries. Mr Straub and his co-authors calculate that this
could lower the natural rate of interest sufficiently to allow America to run up debts worth
250% of GDP by the end of the century. That would be music to the ears of Mr Trump, and
indeed any politician. It would mean lower rates and more money to spend. Although many
attendees took issue with the exact number—which, Mr Straub assured them, applied only
in 2100, not today—the broader point that asset demand would prove more powerful than
asset supply went mostly unchallenged.

The trouble is that Mr Trump, and American politicians more broadly, are throwing away
America’s advantages. Attacks on the Fed weaken the central bank’s credibility. And
America is borrowing so much that, whatever the fiscal space, politicians will blow
through it. “We need a massive fiscal adjustment no matter what,” Mr Straub said. As
several attendees noted, the problem with high indebtedness is that it leaves governments
in a precarious position where slight changes to interest rates or a recession can cause far-
reaching pain. “It is shocks not stocks that cause crises,” warned Deborah Lucas of the
Massachusetts Institute of Technology. Under populist leaders, nasty surprises are more
likely.

A low-rate policy that results from political or fiscal pressure rather than technocratic
judgment is more likely to be inflationary, since it raises inflation expectations. Markets
seem to understand the danger. It is ominous that long-term bond yields have not fallen
much since the Fed started cutting last year. Fighting inflation was delegated to central
bankers because, like taming horses, it requires patience and discipline. Unfortunately,
governments can always reopen the pen, and allow the animal to bolt. ■

Editor’s note: This is an updated version of a column that was first published on August
25th.

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Science & technology
A Chinese lab starts to tackle a giant mystery in particle physics
The middle-aged are no longer the most miserable
The rise of beer made by AI
Are saunas actually good for you?
Science & technology | Ghost story

A Chinese lab starts to tackle a giant mystery in particle

physics
The JUNO detector, hidden deep beneath a mountain, will hunt for the universe’s
most elusive particles

August 28th 2025

At the foot of the thickly forested Dashi Hill, in southern China’s Guangdong province,
visitors can take a ride aboard a unique yellow train. Rather than winding through the
serene landscape, however, the train descends along a steeply sloping track that
disappears into the darkness under the mountainside. After ten minutes on the train and a
few more on foot, visitors reach a vast chamber that has been gouged out of the earth.
Here, more than half a kilometre underground, is a 12-storey-high sphere made from steel
and plexiglass—the Jiangmen Underground Neutrino Observatory (JUNO).

This week the enormous scientific facility, which has been ten years in the making, will
begin its hunt for the most elusive particles in the universe. In doing so, its scientists hope
to crack open a decades-long mystery in fundamental physics.
Neutrinos—which come in three “flavours”, known as electron, muon and tau—are
elementary particles, shrapnel born out of the nuclear reactions that fuel stars and atomic
power plants. They are extremely light, have no electric charge and rarely interact with
anything else, meaning they mostly stream through the universe unimpeded and invisible,
like a kind of ghost particle. (Hundreds of trillions of neutrinos have, in fact, passed
through your body in the few seconds it’s taken you to read this sentence to the end.)

They also present a problem for the Standard Model of particle physics. This description
of the known particles and forces, one the most successful scientific ideas of all time,
predicts that neutrinos should have no mass at all. That is at odds with what physicists
actually observe.

Around 30 years ago, scientists working at Super-Kamiokande, a neutrino observatory in

Japan, noticed something odd. Though the number of muon neutrinos arriving at its
detectors from above (formed by the collision of high-energy cosmic rays with atoms in
Earth’s upper atmosphere) was in line with predictions, the number of neutrinos coming
from below (formed by the same processes in the atmosphere on the other side of the
planet and then travelling through Earth’s core) was too low. Shortly afterwards the
Sudbury Neutrino Observatory in Canada reported a similar anomaly concerning neutrinos
from the Sun: of the mix of particles it detected, too few were electron-flavoured. These
observations led scientists to conclude that the neutrinos must be transforming from one
flavour to another as they flew through space. They also knew that such “oscillation”
would be possible only if the neutrinos had mass, however tiny.

“Neutrino physics is physics beyond the Standard Model,” says Juan Pedro Ochoa-
Ricoux, a physicist at the University of California, Irvine, who is part of the international
team that works on JUNO. A deeper understanding of the masses of neutrinos is key to an
improved Standard Model. One of JUNO’s goals, therefore, will be to work out which
neutrino is heaviest and which is the lightest. Wang Yifang, the observatory’s lead scientist
and the director of the Institute of High-Energy Physics at the Chinese Academy of
Sciences, reckons the task will take about six years.

Standing inside JUNO’s underground experiment hall feels like being in a cathedral—
people’s voices echo inside the enormous space, which is significantly colder than the
forest and fields above ground. The tank at the core of the observatory holds a mix of
around 20,000 tonnes of hydrogen-rich fluids, known as the liquid scintillator. The vast
majority of neutrinos that enter this tank will pass through unnoticed. A few, however, will
hit protons in the fluid, resulting in tell-tale bursts of blue light. Around 40,000
photomultiplier tubes line the inside of the tank, ready to detect those rare flashes.

JUNO’s task will be to count the number of neutrinos that arrive from a pair of nuclear
power plants, each situated 53km from the observatory. With around 700 metres of granite
mountain above, the detector is well insulated against cosmic rays, highly
energetic charged particles from space, that might otherwise interfere with its primary
measurements. Scientists know how many neutrinos of a specific type are produced at the
power plants, so those that make it to JUNO, therefore, represent the fraction that did not
switch flavour en route. That will provide a measure of the rate at which oscillation
occurs.

That oscillation rate is, in turn, linked to the neutrinos’ mass. Each neutrino flavour is a
mix of three underlying states, each of a different mass, known as v1, v2 and v3. As a
neutrino flies through space, the exact combination of this mixture changes, pushing the
particles to switch from one flavour to another.

The precise values of these three mass states are what physicists ideally would want to
measure, but such direct observations have proved difficult. Results from other neutrino
labs, however, have provided clues to how the mass states might be related. Current
evidence leans towards “normal ordering” in which v1 is lighter than v2, both of which
are much lighter than v3. The other option, known as “inverted ordering”, dictates that v3
is the lightest, with v1 and v2 at the heavier end.

JUNO’s data will look subtly different depending on the true ordering of the mass states,
allowing scientists to pin down whether the normal or inverted order is more likely to be
correct. When the observatory is fully operational, around 50 neutrino detections are
expected every day. Around 100,000 detections will be required to get statistically
significant results, hence Dr Wang’s six-year timeline.
Theoretical physicists will have a hard time waiting that long. Ever since neutrino
oscillation was experimentally confirmed, says Dr Ochoa-Ricoux, he and his peers have
been busy coming up with possible extensions to the Standard Model that could account
for neutrino mass. Inverted ordering is the more exciting option, says Kaladi Babu, a
theorist from Oklahoma State University. If it was shown to be true, it would, among other
things, allow scientists to test another mind-bending neutrino mystery: whether these
particles are, in fact, their own antiparticles.

The Standard Model says that all particles have antimatter equivalents, which have
identical mass but (among other things) an opposite electric charge. Some particles, such
as the photon, are their own antiparticles. A group of proposals to extend the model,
known as “seesaw” models, suggests this could be the case for neutrinos, too. These
models show that neutrinos with this property could have tiny masses if they were
connected to other, as-yet-undetected, neutrinos with much larger masses. Some theorists
believe that these heavier neutrinos could even be candidates for dark matter, another
mysterious physical phenomenon, which thus far can be inferred only by how it affects its
surroundings in the cosmos.

To test if neutrinos and antineutrinos are indeed the same, physicists need to study
radioactive isotopes of elements such as calcium and germanium. Sometimes these
elements will emit two electrons and two antineutrinos when they undergo radioactive
decay. If neutrinos are their own antiparticles then scientists should—albeit very rarely—
observe a version of this process in which no antineutrinos are emitted at all.

How long scientists would have to wait to spot such an event, if the hypothesis is correct,
depends on the neutrino mass states. If the ordering is inverted, it should happen often
enough to allow sensitive experiments, such as the LEGEND experiment in Italy or the
NEXT experiment in Spain or their successors, to pick them up in the next ten to 15 years.
“That would be new physics just around the corner,” says Silvia Pascoli, a theorist at the
University of Bologna. But if the ordering is normal, the process would probably be too
rare to show up in any detector that scientists know how to make.

Helping resolve such debates will be JUNO’s most important legacy, but the observatory
will also allow physicists to eventually use neutrinos as probes. JUNO will, for example,
look for neutrinos from deep within the Earth, which will shed light on the distribution of
radioactive elements within the mantle and crust.

It will also look for neutrinos from exploding stars known as supernovae. Because
neutrinos flow through matter in a way that light cannot, they can leave those stars and
reach Earth before the actual explosion becomes visible. Detecting them will give
astronomers time to properly orient their telescopes so that they can then watch the epic
blasts in action.
It’s when they are being used like this—as a way to peer into places that are now unknown
—that the neutrino era will have begun in earnest. ■

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Science & technology | Teenage angst

The middle-aged are no longer the most miserable

Youth used to be cheerful. No more

August 28th 2025

FOR DECADES, surveys have suggested that middle age is the low point of life. While
young and old generally reported high levels of life satisfaction, those in mid-life endured
a slump. This “U-bend of happiness” or “hump of despair”, depending on your
perspective, has been documented hundreds of times across many countries. The age of
peak misery varied—the Swiss were saddest at 35, Ukrainians in their 60s—but the
pattern was consistent.

Recently, however, the curve seems to have become warped. A study published on August
27th in PLOS ONE by economists David Blanchflower, Alex Bryson and Xiaowei Xu
finds that young people across the world are now reporting the highest levels of misery of
any age group. “We’ve seen a change from a hump shape to a ski slope,” says Dr Bryson.

The authors first spotted the shift in the Behavioral Risk Factor Surveillance System
(BRFSS), a long-running survey of Americans. They calculated the share of respondents of
each age who reported having poor mental health every day in the past month. Between
2009 and 2018, the familiar hump was present: misery peaked in middle age. But from
2019 to 2024, the pattern changed. Levels of unhappiness in middle-aged and older adults
remained roughly stable while despair among younger people rose (see top chart).
Britain shows the same trend. Using data from the UK Household Longitudinal Survey and
the Annual Population Survey, the authors found that both anxiety and despair increased
sharply among the under-40s after 2016, erasing the hump by 2019. There is also some
evidence outside the anglophone west. The authors analysed data from the Global Mind
Project, a web-based survey, and in each of the 44 countries across Africa, Asia, Europe,
Latin America and the Middle East for which sufficient data were available, young people
consistently reported worse mental health than their elders.

The old hump could still emerge, however. Because the new study provides a simple
snapshot of unhappiness by age at a single point in time, it is possible that today’s
miserable 20-somethings will follow their predecessors’ path and become even gloomier
in middle age. “It’s not inconceivable that if young people start out this badly, they could
be even worse off in mid-life,” says Dr Bryson.

Longitudinal studies of well-being, which track changes in the same people over time, can
reveal such long-term developments. But they are rare. The few that do exist also find the
hump, with unhappiness peaking in mid-life. That lends credence to the depressing
prospect that Generation Z may get sadder still.

Cohort data also support the idea that the hump could prevail. The Economist split the data
from the BRFSS by generation (see bottom chart) and found that each cohort has become
more unhappy as they have reached middle age. Generation X and millennials have slid
into mid-life malaise earlier than boomers did, though, and Generation Z are starting their
adult life far more miserable than any generation before. At a population level, these
trends mean older people now look progressively less downcast than younger groups.

Why youngsters are so depressed is still unclear. One clue may come from the labour
market. In a separate study from July this year, Dr Blanchflower and Dr Bryson found that
despair has risen most sharply among young American workers, particularly the least
educated. In the past, having a job seemed to provide a protective effect against poor
mental health. That effect appears to have weakened for young Americans, perhaps
because of falling job satisfaction among the same group.

But although it may be the case in America, it does not explain the data elsewhere. In a
third working paper, published in June, the pair found that in some southern European
countries life satisfaction among young people has actually risen since 2015, thanks in
large part to a decrease in youth unemployment.

Another oft-cited culprit of teenage angst is smartphone and social-media use, which has
risen in lockstep with youth mental-health problems since the early 2010s. There is some
support for a causal link, but the most rigorous studies, which track teenagers’ mood and
social-media use over long periods of time, do not find a strong relationship between such
app use and subsequent mental ill-health.
Of course, things may yet turn around. Analysis by The Economist earlier this year found
that the mental health of young Americans has somewhat improved recently, perhaps
hinting at a return to youthful cheerfulness. If so, mid-lifers might find themselves the
saddest once again—ideally with fond memories. ■

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Science & technology | Brewer’s bot

The rise of beer made by AI

Customers love it

August 28th 2025

WHEN BECK’S, a storied German brewery founded in the city of Bremen in 1873,
celebrated its 150th anniversary in 2023 it decided to bring in a new brewmaster to mark
the occasion: ChatGPT, an artificial-intelligence (AI) chatbot. The company asked it to
whip up a recipe using only hops, yeast, water, and malt. The result was “Beck’s
Autonomous”, a lager with a subtle sweetness, a hoppy texture, and quite a head. One
Daily Mail reporter considered it better than the brewery’s standard lager.

Beer and AI may seem an unlikely pairing, but Beck’s is far from the only brand to have
asked for input from the technology. Atwater Brewery, an American firm, introduced an
AI-designed citrusy India pale ale (IPA) in 2023 and last year St Austell Brewery in
Britain used AI to create a tropical IPA dubbed “Hand Brewed by Robots”. In March
Coedo Brewery in Japan asked an AI model to analyse the preferences of people in their
20s, 30s, 40s, and 50s, and then developed four craft beers, one for each age range. In
general the response from customers, brewers say, has been overwhelmingly positive.
“It gives us access to new recipes that we didn’t think about before,” says Prinz Pinakatt,
boss of the beer business for Tilray Brands, Atwater’s New York-based parent company.
Machine-learning tools can parse the minutiae of complex flavours, analyse the ingredients
and equipment that an individual brewery has available, and then concoct new recipes
while tweaking sweetness, acidity, hop level and other attributes to ensure the end product
appeals to discerning customers.

Beau Warren, who opened the Species X Beer Project brewery in America in 2021,
knows this firsthand. In 2022 he started training AI models on a number of parameters—
his proprietary recipes, different types of yeast, water acidity, various hops, the
ingredients in the brewery cellar, the typical makeup of lagers, stouts and other beers—
and, by 2024, began using it to guide the brewing process. In one instance, after being
asked to make a new lager, the bot suggested mixing Maris Otter malt, usually found in
stouts, with Belgian candi syrup. “I would never have thought of doing that in a lager,
ever,” he says. “We brewed it anyway, and I thought it was one of the best lagers I’ve ever
made.” His customers apparently thought the same: Mr Warren says patrons usually rated
the AI-crafted beers better than any of the beers thought up by he and his fellow brewers.
(That said, the AI beers at Species X are no more: the brewery closed down last autumn
owing to financial difficulties.)

Scientists are also intrigued about what bots might tell them about the chemistry of beer. In
2024 researchers from KU Leuven, a university in Belgium, analysed the chemical makeup
of 250 Belgian beers, including lagers, blonds and West Flanders ales. They then trained
machine-learning algorithms to model the effects of adding or subtracting different aroma
compounds, such as glycerol and lactic acid, on the taste. “The models we develop help us
to understand the complex relationship between the chemistry of a beer, its taste, and how
consumers will like it,” says Kevin Verstrepen, a bioscience engineer who led the
research team.

Of course, it will take more than a chatbot to replace a human brewer. Ingredients must be
poured, brew kettles must be tended and the beers must be tasted—whether they were
made totally by human hands, or brewed, at least in part, by robots. “Yes, AI will become
more and more part of the brewing process, but the brewing itself, the craft, is still the
emphasis,” says Mr Pinakatt. “It will be very difficult to have machines make our beers.”
■

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Science & technology | Well informed

Are saunas actually good for you?

The evidence for sweating it out is promising but incomplete

August 28th 2025

Finland is the undisputed sauna capital of the world, with approximately one sauna for
every 1.6 people. But voluntary sweating is starting to catch on elsewhere: according to
the British Sauna Society, a not-for-profit group promoting sauna culture, the number of
public saunas in Britain has more than doubled over the past year.

Are saunas good for those who use them? Setor Kunutsor, a cardiologist from the
University of Manitoba, thinks of saunas as a source of controlled, gentle stress. A short
burst of heat gets the heart pumping faster, blood vessels opening wider, and the body
beginning to sweat—changes that look a lot like what happens during a brisk walk. “A
standard 15-minute sauna session triggers the same heart-rate and circulation boost you’d
expect from moderate exercise,” says Dr Kunutsor. Over time, he says, these repeated
pseudo-workouts might teach the body to handle stress better, dial down inflammation, and
protect the brain and blood vessels.
There is some research to support this. A decade ago Jari Laukkanen from the University
of Eastern Finland co-led an observational study based on data from more than 2,300
middle-aged men in Finland. He found that men who visited the sauna two to three times a
week had a 27% reduced risk of dying from cardiovascular disease compared with those
who went just once a week. The benefit increased to 50% for men who went four to seven
times per week.

Later studies on the same cohort by Dr Laukkanen and Dr Kunutsor seemed to suggest
benefits that went beyond the heart. The team found that going to the sauna frequently,
compared with only once a week, was associated with an almost 80% lower risk of
developing psychosis and a two-thirds lower risk of developing dementia.

The problem with such studies is that men who use a sauna every other day are likely to be
wealthier and healthier than men who do not. Although the authors adjusted for age,
socioeconomic status, physical activity and alcohol intake, it is still too soon to draw
robust conclusions. Other confounding factors may still be unaccounted for, says Eva
Prescott from Bispebjerg and Frederiksberg University Hospital in Copenhagen. There are
also limited studies on women, younger people and those from non-European
backgrounds, whose responses might be different from those of older white men. Nor is it
clear if the Finnish results are directly transferable to countries like Britain, where sauna
use is clearly rarer, says Gabrielle Reason, director of the British Sauna Society.

To pin down if saunas have an effect on human health, scientists need to conduct
randomised controlled trials (RCTs), the gold standard in evaluating health interventions.
In such trials scientists randomly assign participants into experimental groups and control
groups to eliminate bias. RCTs on sauna use do exist, but so far their evidence has proved
inconclusive. One trial from 2022, again conducted by Dr Laukkanen and Dr Kunutsor,
found that participants who combined sauna with exercise experienced greater
improvements in blood pressure and cardio-respiratory fitness than those who only hit the
gym. But a different RCT by other researchers did not find any positive cardiovascular
health benefits from frequent sauna use. The only way to get to the bottom of the issue is to
do more and bigger RCTs until findings emerge that researchers can consistently
reproduce. Until then, expect some heated debates. ■

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Culture
“The Thursday Murder Club” and the resurgence of cosy crime
What gladiator shows were really like
A story of occupations, surveillance and exile in Albania
Robert Louis Stevenson was adventurous, mercurial and fragile
Flirty and thriving: how Sabrina Carpenter became a pop superstar
Forget smelling flowers; now you can drink them
Culture | It takes a village

“The Thursday Murder Club” and the resurgence of cosy

crime
In turbulent times, people want even their crime stories to be comforting

August 28th 2025

IN MOST CRIME stories, detectives worry about wily criminals, unreliable witnesses
and meddling do-gooders. In Richard Osman’s bestselling “Thursday Murder Club”
(TMC) series, the investigators have to contend with a more relentless and unforgiving
crowd: old folk who want a quiet place to do their jigsaw puzzles.

The four members of the TMC are sleuths who work from the comfort of their retirement
home. That requires them to take over rooms usually dedicated to more wholesome
pursuits, such as conversational French, with grisly crime-scene photographs and
conversations about poisons, corpses and stabbing.

From this unlikely premise Mr Osman, a British TV presenter, has spun gold. His four
“Thursday Murder Club” novels have sold more than 10m copies globally; a fifth will be
published on September 25th. The franchise has spent a total of 310 weeks on bestseller
lists in America and Britain. A film adaptation of the first book, starring Pierce Brosnan,
Helen Mirren, Ben Kingsley and Celia Imrie (all pictured), and produced by Steven
Spielberg, arrives on Netflix on August 28th. The star power thrown at a yarn about
pensioners in a quaint English village is a sign that the haunted antiheroes of Nordic noir
are yesterday’s trend. Dark, gritty tales are out; cosy crime stories featuring grandparents
are in.

Not everyone likes that label. (The genre’s nickname, “cozies”, takes the American
spelling.) To some, it connotes low stakes, hackneyed writing and trite plots. Cosy crime
is “not a term that I’m enthusiastic about”, bristles Martin Edwards, a British author who
has written several series. “The label I’d prefer is ‘traditional mystery’.”

Both appellations, however, refer to stories in the style of the inter-war masters, such as
Agatha Christie, Ngaio Marsh, Dorothy Sayers and Georges Simenon. They usually focus
on amateur detectives. At cozies’ centre is a puzzle that the investigator solves and readers
try to: the reader should be able to follow it back at the end and see what they missed.
Deus ex machina and sudden revelations are frowned upon.

They tend to be written in series, which lets authors develop the characters. The
interaction between the four members of the TMC—a fearsomely competent ex-spy,
Elizabeth (Ms Mirren); Ibrahim Arif, a fussy yet insightful psychologist (Mr Kingsley); an
ex-union rabble-rouser, Ron Ritchie (Mr Brosnan, dreadfully miscast); and Joyce (Ms
Imrie), a retired nurse, who is the reader’s proxy—is natural, funny and enjoyable.
Similarly, readers like seeing Jane Marple, one of Christie’s protagonists, puzzle through
clues as her personal history is revealed throughout the books.

Cozies usually take place in a bounded area: often that means a village or small town, but
it could be a locked room—a cosy subgenre in itself—or a strongly defined corner of a
big city. Sandra Jackson Opoku’s “Savvy Summers” series takes place on Chicago’s South
Side, where her protagonist runs a soul-food restaurant. Other culinarily inclined
protagonists have run noodle shops, doughnut shops and pizzerias. Sometimes a hobby
defines the setting: authors have written series centring on embroidery (“The Quick and
the Thread”), coupon-clipping (“50% off Murder”), apiculture (“Death Bee Comes Her”),
orchard-keeping (“Deadly to the Core”) and farming (“Murder, She Goat”).

Wherever the setting, the inciting incident, the murder, is usually committed off the page or
quickly, for cozies eschew gore. They also avoid sex and profanity. One literary agent
suggests that cozies began creeping back into fashion as romance novels became more
explicit. Readers who prefer their books without lots of bonking turned to these mysteries.

But, as the moniker suggests, cozies’ most important feature is that they are comforting.
There is never any doubt whether the hero will prevail, only how—so the how must be
entertaining and twist-filled. Cozies end with villains caught, justice served and order
restored. The murdered characters tend to be rotters whom nobody really misses.

Does this make the stories formulaic? Perhaps: though as any music-lover knows, structure
can accommodate, and even encourage, profundity. The “Thursday Murder Club” series,
for instance, grapples with ageing. It is clear-eyed about both the good—heedless
lunchtime drinking, caring less about what other people think—and the bad. Elizabeth’s
beloved husband is slowly slipping into dementia. She does everything she can to forestall
and hide the decline because she wants to keep him with her as long as she can.

Hannah O’Grady, who edits mysteries for St Martin’s Press, an American publishing firm,
was initially turned off by the genre’s predictability. Yet she has come to feel that many
cozies are “actually subversive”: “The protagonist is usually a young woman not in law
enforcement. She generally falls into this not because she’s passionate about solving
crimes, but because the police aren’t doing an adequate job.” Police in cozies are at best a
necessary adjunct. They are usually portrayed as hidebound, blinkered and indifferent,
especially to older or female protagonists.

Though the genre may be enjoying a revival thanks to Mr Osman and his peers, it has
delighted generations of readers. Christie, its grande dame, is the bestselling author ever,
having sold over 2bn novels worldwide. Alexander McCall Smith’s “No. 1 Ladies
Detective Agency” series, set in Botswana and featuring the shrewd and resourceful Mma
Ramotswe, has sold over 20m copies; the 26th book in the series comes out on September
4th. When literary critics noticed these books, it was for their popularity more than their
artistic merit. Mr Edwards says that “nobody paid attention to the plots” of his early books
—traditional mysteries set in cities—“because that type of book was unfashionable. Now
it’s very fashionable.”

There are two reasons why cosy crime is enjoying a resurgence. First, readers see
themselves in the books. Robin Agnew, the co-chair of a fan convention called Malice
Domestic, held annually near Washington, DC, explains that cozies are about appealingly
ordinary people. “I love noir fiction but it’s almost operatic. It’s not what your life is like.
And this is what your life is like.”

Second, look to their first flourishing, during the turbulent inter-war years. When the world
is troubled and uncertain, people want art that provides succour and stability. Otto Penzler,
a crime-fiction publisher and bookshop owner in New York, says, “When fires are
everywhere…people want to go to a place where there’s a community.” In the pages of
cozies, if not in real life, when “something terrible happens, it’s solved. The bad guys are
removed from society and everything goes back to how it used to be. At least this place
has remained calm and safe and good.” ■

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Culture | The view from the arena

What gladiator shows were really like

Attendees witnessed grisly deaths. Sometimes they were also given gifts

August 28th 2025

Romans dreamed a lot about gladiators. Many imagined they were fighting themselves,
down in the sandy arena, amid roaring crowds and trumpets. Such dreams in youth
indicated what your future wife would be like. If you fought a provocator, with short,
sharp sword and shield, she would be lovely but flirtatious. If you were matched against a
retiarius, plodding with trident and net, she would be running round all over town. As for
the gladiators, according to Artemidorus, a diviner, in his “Interpretation of Dreams”, they
dreamt of bears and lumps of iron.

In a new book Harry Sidebottom, who teaches classical history at Oxford University,
explores the many meanings of gladiators in the Roman mind. The combatants, usually
barbarian prisoners or common criminals, were not just a bit of rough. In their brief
heyday, they were sex gods: a senator’s wife ran off with one.

To those who think that the Romans—with their businesslike haircuts and underfloor
heating—were much like ourselves, Dr Sidebottom’s vivid, gripping book offers many
correctives. It provides a detailed chronicle of what a gladiator’s life was actually like.
Despite Hollywood’s assumptions of total carnage, the chance of gladiators dying in the
ring was only one in eight. However, the Romans did find it wildly funny when criminals
in “torment tunics” ran frantically about in the arena, having been tarred and set on fire.

Anyone could give a gladiatorial show, if they had the status and money to do so and
needed popular approval badly enough. They could also ignore them. Marcus Aurelius
held none and Augustus decreed only two a year. Indifferent Julius Caesar brought bundles
of official work to his. Shows were not like chariot-racing, which happened regularly:
they were huge, rare treats that also featured musical performances, acrobats and wild-
beast fights with hippos and giraffes as well as lions. They could include mock battles
with dozens of non-mock deaths, as when Claudius restaged the capture of Colchester with
actual prisoners of war from Britain.

To the average punter, one of the best bits was the free gifts handed out to, or showered
down on, the crowd: cooked chickens, dates, jewellery, money, sweets. (Saffron was also
misted over, as the assembly stank.) Shows cum missilibus—with thrown things—were
sure to be a draw; so were certain gladiators, whose names were painted on the walls
rather like headline acts. If you did not want to rely on cooked meats falling from heaven,
you could bring a picnic. You could bring your girlfriend too, Ovid said, because she
would probably bury her head in your shoulder if it all got too bloody.

People were not meant to gamble on gladiator fights, but many did, and they were keen
observers of form. On the evening before the show, the public was allowed in to the
gladiatorial barracks where, like soldiers, fighters trained and lived as a family of
cellmates. The public would silently assess the gladiators as they ate their cena libera, a
last supper of sorts: not barley-and-bean stew and gritty wine, their usual fare, but roasts,
pies and a decent vintage or two.

Gladiatorial shows were held for the people, and the (overwhelmingly male) people
called the tune. Though the fights had a referee, the crowd, as in any modern football
game, knew all the rules and moves. The emperor’s famous thumb up, down or even
sideways almost always followed what the crowd thought.

What did the gladiators think? The author provides his most affecting evidence from their
tombs. There several, in devoutly military terms, “recount” their deaths in the arena, some
as a result of bad refereeing. Most movingly, one gladiator from the Greek east, where
they were seen as athletes, mourns the death of his beautiful young comrade and lover
Miletus, “who won eight times in the stadia” before “Fate took him from the ring by
force.” ■

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Culture | The family’s way

A story of occupations, surveillance and exile in Albania

To write her grandmother’s story, Lea Ypi visited the archives of the communist-era
secret police

August 28th 2025

Two Albanian writers dominate the foreign-language section of the bookshop in Tirana’s
central square. One is Ismail Kadare, the country’s grand man of letters, who died in 2024.
The other is Lea Ypi, an academic and the author of “Free”, a coming-of-age book
published in 2021. Kadare dominates the space by virtue of the sheer number of books he
wrote over the course of his long career (there are at least 80 novels, plays, essays and
story collections). But, at least for the time being, Professor Ypi seems to have eclipsed
him as the world’s best-known Albanian writer.

With “Free” Professor Ypi, a political theorist who teaches at the London School of
Economics, slipped out of the confines of academic publishing and into the mainstream.
The prizewinning book described her experience growing up in Albania as communism
collapsed; the subsequent turmoil brought the country to the brink of civil war in 1997.
Professor Ypi and several family members left the country. She studied first in Italy, then
in Britain.

“Free” has been translated into dozens of languages and made her something of a celebrity.
The book was not without controversy, though. Some Albanians accused her of soft-
pedalling the crimes of communism; others thought she soft-pedalled the role of her great-
grandfather, a former prime minister who, in his role as acting head of state, welcomed
Benito Mussolini’s invading army in 1939.

Now, in “Indignity”, Professor Ypi goes deeper into her family story. The new book is
about her grandmother; through her, she tells the story of Albania in the 20th century. In that
sense the book is virtually unique in English. There are thousands of such European family
stories, especially ones that focus on the second world war, but the number of Albanian
ones in translation would not fill a bookshop’s branded tote bag. Those published in
Albanian, meanwhile, have a reputation for exaggeration: of embellishing a relative’s
suffering at the hands of communism, for example, or their role in resisting it.

“Indignity” tells the story of an extraordinary life. Leman Ypi (pictured) was born to an
aristocratic family. She grew up in Thessaloniki just after the fall of the Ottoman Empire,
when the then predominantly Jewish city became Greek. Her Muslim family avoided being
deported in 1923, when Greece and Turkey exchanged most of their Muslim and Christian
populations, and in 1936 Leman, only 18 years old, left for Tirana. The Albanian capital
was then little more than a glorified village.

There followed her marriage to Asllan (pictured), the son of the chief inspector of the
court of King Zog, the Italian occupation, then the German one, then the establishment of
Enver Hoxha’s communist regime. Asllan was jailed for almost 15 years on trumped-up
conspiracy charges and, as a “class enemy”, Leman was sent to a collective farm to dig
irrigation canals.

Professor Ypi knew some of this—her grandmother had shared parts of her story—and the
author finds more material in the archives of the Sigurimi, Albania’s communist-era secret
police. But she fills in the lacunae, too, by using her imagination. Most of this literary
licence is fine, but some puts her on shaky ground. The British agents she writes about
almost certainly knew her grandparents, but the likelihood that they were socialising with
them in occupied Tirana in 1943 is small.

In the Sigurimi archives, Professor Ypi discovers things about her grandmother that she
thinks are mistakes. Then—spoiler alert—she finds a document declaring that Leman Ypi
had died 34 years before her grandmother had actually passed away. The reason is less
tantalising than it appears: it seems that Professor Ypi’s grandmother’s files had become
mixed up with those of another woman with the same name and with a similar background.
Curiously, this other Leman Ypi appears to have no surviving family. Some Albanians may
speculate that someone in the Sigurimi invented the second woman and declared her dead
in order to end surveillance of the real one, once it was deemed she was no longer
suspicious.

“Indignity” joins other recent books, such as Anna Funder’s biography of Eileen
O’Shaughnessy, George Orwell’s first wife, in blending fact and fiction. This will give
some people pause. But Professor Ypi sweeps the reader along in her story of her
grandmother and the tides of history. ■

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Culture | Literary lives

Robert Louis Stevenson was adventurous, mercurial and

fragile
The author of “Treasure Island” and “Strange Case of Dr Jekyll and Mr Hyde” is the
subject of an excellent new biography

August 28th 2025

Few writers have the genius to create a mythic story that each generation reimagines for
itself. But Robert Louis Stevenson did so—twice. In “Treasure Island” he perfected the
sort of thrilling high-seas yarn that movie studios still produce. As for “Strange Case of Dr
Jekyll and Mr Hyde” (his publishers added the “The”), every sinister tale of a violently
divided mind stands in its long shadow.

Stevenson did not only write myths: he lived one. Born in gloomy Edinburgh in 1850, he
defied chronic illness, sailed the oceans and died in Samoa, aged 44, shortly after local
people had honoured their tusitala (storyteller) with a lavish banquet. “The day was no
longer than his kindness,” declared a chieftain.
With his superbly crafted books and mercurial, magnetic personality, Stevenson always
inspired devotion. His marriage to Fanny Osbourne, an intrepid, pistol-toting
Midwesterner, is “a story of deep and lasting love” unusual in the fractious annals of
literary wedlock. One friend thought bold, vivid Fanny might have been “the leader in
some great movement”.

All this charisma piled on charisma sets traps for Stevenson’s biographers: they may yield
to worship or vainly try to topple the legend. Leo Damrosch, emeritus professor of
literature at Harvard, avoids both idolatry and iconoclasm. Well-paced and thoroughly
researched, this new biography never assumes that the reader has a prior acquaintance
with Stevenson. Professor Damrosch tells the reader not just what happens in Stevenson’s
books, but why they should care.

Beneath Stevenson’s simplicity and fluency lay artistry and industry. Writers should still
heed his advice: “fewer adjectives” as well as “more descriptive verbs”. Henry James, a
novelist, friend and admirer, enjoyed everything his fellow author wrote and felt
privileged “to encounter someone who does write—who is really acquainted with that
lovely art”.

Stevenson worried that those tools served a lowly trade. Born into a dynasty of engineers
and lighthouse-builders, he acted the “privileged layabout”—with a taste for the city’s
lowlife—until literature lit his true path. Even then, financial need bound him to his
Calvinistic, high-spirited parents. When he abandoned religious faith, he felt that “I am
killing my father.”

A lung disease meant that Stevenson could cough up “a pint of blood” (it was probably not
tuberculosis, but a rarer genetic condition). A search for health, and a flight from Scottish
puritanism, sent him to France. There his grand passion with Fanny caught fire. During her
American escapades she had endured the West at its wildest; she had two surviving
children, Lloyd and Belle, from a rakish adventurer. Ever-daring, Fanny married
Stevenson when the frail would-be author felt like “a mere complication of cough and
bones”.
Travels took the couple to California and the French Riviera as “Treasure Island” made
Stevenson a celebrity. That piratical classic began with Stevenson and Lloyd drawing
maps of an imaginary island and inventing stories about it. And as for “Jekyll and Hyde”,
part of the plot came to the author in a nightmare. (The sleeper’s “cries of horror” woke
Fanny.)
In 1888 his Pacific idyll began on a yacht, Casco. Although Stevenson vowed that seas and
islands “make and keep me truly happier” than life inland, Professor Damrosch charts the
strain of this romantic vagabondage, especially on Fanny. On the Samoan island of Upolu,
where they settled, their estate at Vailima was no beach shack but “virtually a palace”,
with upkeep to match. But Stevenson wrote eloquently of Samoan life and pressed in print
for independence, incensed that “the handful of whites have everything”.

Just as Samoa had restored his strength, Stevenson suffered a stroke. This biography is
crisp, brisk but warm—all Stevensonian virtues—and lets readers see why this “beautiful,
bountiful being” (in James’s words) cast such a spell. His literary treasure trove still
shines. ■

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Culture | Hitting the top spot

Flirty and thriving: how Sabrina Carpenter became a pop

superstar
The hitmaker has returned with a new album, “Man’s Best Friend”

August 28th 2025

SABRINA CARPENTER’s career is anything but wooden. Last August she released
“Short n’ Sweet”, one of the albums of the summer, which topped the charts in 19
countries. Three songs from the record, “Espresso”, “Please Please Please” and “Taste”,
ranked in the top five of the Billboard chart in America simultaneously. Ms Carpenter
became the first solo performer to achieve this feat; The Beatles are the only other act to
have managed it.

Her status has built up quickly. In the first half of 2022 Ms Carpenter’s songs were
streamed 73m times in America; in the same period this year, that number had jumped to
1.9bn. In April Luminate, a data firm, found that Ms Carpenter’s fandom was growing
faster than any other musician’s. (Their index looks at things like social-media engagement
and public awareness as well as streaming data.)
Ms Carpenter is hoping to follow up on that success with “Man’s Best Friend”, a new
album released on August 29th. Its lead single, “Manchild”, has already topped the charts
in America and Britain. In the coming months you can expect to hear her effervescent
melodies and sultry lyrics blasting from every car radio and teenager’s bedroom. How has
Ms Carpenter established herself as pop’s new princess?

Three factors explain her ascendancy. First, her music is compulsively catchy. Ms
Carpenter has spent a long time finding the right sound. (“Man’s Best Friend” is her
seventh studio album.) Like pop stars such as Miley Cyrus and Olivia Rodrigo, Ms
Carpenter started her career as a child actor on the Disney Channel. Her first song was
released in 2014, when she was just 14 years old; she spent the next decade exploring
modes as varied as folk and electronic dance music.

This experimentation came to fruition on “Short n’ Sweet”. The record is a paragon of pop
in 36 minutes, incorporating sounds from disco to country to hip-hop. Even as Ms
Carpenter borrows from different genres, her songs have a distinctive, whimsical quality.
Jack Antonoff, a producer who works with Ms Carpenter (as well as Taylor Swift), has
said that the appeal of “Please Please Please” lies in the “push and pull” between the
regimented percussion and “bubbly…floating” synthesisers: “It makes you feel like a little
bit drunk, a little bit dreamlike.”

The second reason for her popularity is her witty lyrics. Ms Carpenter stands out because
she makes “really fun, really flirty, sometimes silly, literally nonsensical songs”, notes
Erica Campbell, the author of a forthcoming book about the star. Take “Espresso”, Ms
Carpenter’s biggest hit, in which she croons: “Say you can’t sleep, baby, I know / That’s
that me espresso.” Or this, from “Bed Chem”: “Where art thou? Why not uponeth me?”

Such playfulness is the point. As Glenn Fosbraey, a specialist in pop songs at the
University of Winchester, puts it: “Everything she does is with that knowing wink at the
audience.” She can be salacious, such as when she sings “Come right on me, I mean
camaraderie” in “Bed Chem”. She can also be droll: in “Taste”, the diminutive Ms
Carpenter declares “I leave quite an impression / Five feet to be exact.” The same self-
conscious mischievousness is evident in her live performances and music videos. In the
video for “Manchild”, Ms Carpenter mocks bad lovers by bathing with pigs.

That points to the third and final reason for Ms Carpenter’s success: her carefully
constructed brand. Not only is it easy to spot “a Sabrina song”, notes Ms Campbell, but
also “a Sabrina outfit”. On stage, she prances about in corsets and mini skirts. On the
“Short n’ Sweet” tour she wore custom lingerie made by Victoria’s Secret.

Some, however, worry that Ms Carpenter’s sexualised self-image is inappropriate. The

album cover for “Man’s Best Friend”—which shows Ms Carpenter on all fours as a man
pulls her hair—was censured as regressive. Fans demanded an alternative cover, so she
gave them one “approved by God”. It is a black-and-white recreation of a paparazzi shot
of Marilyn Monroe, another blonde bombshell. It implies that Ms Carpenter is under no
illusions about the price of her newfound fame. ■

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thriving-how-sabrina-carpenter-became-a-pop-superstar
Culture | World in a dish

Forget smelling flowers; now you can drink them

Distillers of mahua, an Indian tipple made from dried blossoms, have big ambitions

August 28th 2025

THE little brown nubs look like earwax-coloured pencil erasers. Anyone curious enough
to try one would find it tastes a bit like a date. They are flowers of the mahua tree,
indigenous to India. When distilled, they produce a strong liquor reminiscent of grappa or
unaged whisky: floral and mildly sweet, with hints of apple and berry, and a long, clean
finish. The spirit may be coming soon to a bar near you.

Indian tribes have been making mahua—the name of the booze as well as the tree—for
centuries. Families do not pluck blooms, but gather them once they have fallen, thereby
ensuring ripeness and maximum sugar content. After fermentation, the flowers are distilled
in clay pots.

Tribal families mark births, marriages and deaths by sharing mahua. A lively folklore
surrounds it. According to one tribe, a little mahua makes a person act like a parakeet,
giggly and repetitive; a lot makes people tigerish, roaring and full of bluster; and too much
makes people act like pigs or mice, “rolling on the ground, wallowing in mud or looking
for a hole to hide in”.

Distillation remains small-scale and often clandestine. The spirit was banned by the
British Raj in the late 19th century, supposedly to protect public health (though many
reckon it was to protect the market for spirits imported from Britain). Even after India
gained independence in 1947, some states kept bans in place, so many drinkers still chug
moonshine, which is dirt cheap and sometimes fatal. Other bureaucrats heavily taxed
mahua production and restricted its sale.

Yet, after years of lobbying by Desmond Nazareth, the founder of DesmondJi, a Goan
distillery, the state loosened its liquor laws in 2018 and allowed the spirit to be sold in
shops. Other regions, including Karnataka, Maharashtra and Madhya Pradesh, have also
relaxed the rules. DesmondJi now makes around 10,000 bottles of mahua a year, available
in 500 shops across several states. Six Brothers, based in Dahanu, began making high-end
mahua in 2024. Many hope that the drink will, in time, become a national treasure akin to
Mexican tequila.

As a result, Indian distillers are targeting curious drinkers farther afield. Mah, made from
mahua flowers and distilled in Cognac, is available in France. DesmondJi is looking for
stockists in Britain; Six Brothers is being served in cocktail bars in London. Mixologists
note that mahua’s sweet, subtle flavour means it best suits simple mixers such as lime or
vermouth.

Mahua is not the only Indian spirit with big ambitions. Feni, a Goan liquor made from
coconut palm sap or cashews, is also increasingly available in the West; unfortunately, it
tastes of feet. Mahua has two advantages. First, it has the sort of history that will appeal to
urban lefties who love anything artisanal and “indigenous”. Second, and more important, it
is delicious. ■
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smelling-flowers-now-you-can-drink-them
Economic & financial indicators
Economic data, commodities and markets
Economic & financial indicators | Indicators

Economic data, commodities and markets

August 28th 2025
This article was downloaded by zlibrary from https://www.economist.com//economic-and-financial-
indicators/2025/08/28/economic-data-commodities-and-markets
Obituary
Sen Genshitsu spread peace through sipping
Obituary | The Way of Tea

Sen Genshitsu spread peace through sipping

The 15th master of the Urasenke tea ceremony died on August 14th, aged 102

August 28th 2025

The little wooden gate stood open. From it a path snaked through the garden, past pines he
had carefully positioned, planted and tended over the years. This was the “dewy ground”,
like the track of a mountain stream, on which his guests now came walking, casting off the
fire of worldly thoughts. Though they were in the city of Kyoto, the purpose of the tea
ceremony they were attending was to enter into tranquil communion with Nature and with
each other.

That morning, therefore, he had swept every dead leaf away from the garden, according to
the principle of purity. At the door of the tea hut, simple as a mountain hermitage with
unpainted walls of clay, he greeted each guest with a bow and in silence. Thus he
observed a second principle, respect.

Plain as it was, this was the most famous tea compound in Kyoto, for it was his home, and
Sen Genshitsu was no ordinary master. As the 15th head of the Urasenke school of tea
ceremony, he did not feel the Way of Tea should be confined to Japan. He wished to
spread the culture and spirit of it across the world, and had travelled to 70 countries to do
so. In particular, patiently, he was bringing peace to Westerners in the Japanese style.

His guests, having already shed their wraps and changed their shoes, had to stoop to enter
the tea-room itself. Once there, they took in the setting: the scroll he had painted, hanging
in a decorative alcove, and the artless arrangement of a single camelia in a little pot. The
scroll, declaring the theme, reflected his labours with brush and inkstone; the flower, its
transient beauty representing the loveliness of all flowers, had to look as it would in the
field. (The hardest part of preparation, he thought.) Nothing was showy, as Sen No Rikyu,
the greatest master, had decreed in the 16th century; all was simple, with no speck of dust
remaining. Next, his guests appraised the utensils, all minutely cleaned and dried with a
silk cloth that touched nothing else. He hoped they noticed, as he always did, the slightly
curved tines of the tea-whisk, the fall of the glaze on a tea bowl, the crisp blackness of the
lacquer tea box. All these reflected an unpretentious usefulness. They also suggested a
world of the spirit beyond time and space.

Together he and his guests ate a little meal he had prepared, then a moist sweet. He had
laid the fire, of charcoal bricks on raked ash; the black iron kettle, as it boiled, acquired a
natural dewiness and sang like the wind through his pines. Using the very best powder he
mixed up first a ceramic bowl of dark green, frothy, thick tea, koicha, from which all the
guests sipped in turn. That aromatic green, again, evoked Nature. After this, in separate
smaller bowls, he gave them usucha, thin tea. As they drank, the principles of harmony and
tranquility descended over them and filled the room. Best of all for him was the sense of
mu-hin-shu, “no-guest-no-host”, where all social barriers dissolved and they became a
single entity in contemplation and at peace.

He had not truly known this as a child. As the son of the 14th tea master, his life was
mapped out for him, and it was nothing but tea. He played with fire ash and bamboo
ladles, and practised deportment by carrying a heavy ceramic brazier up and down the
hall. His father severely instructed him while his mother, sitting behind the sliding paper
doors, listened and tested him later. At junior high, other boys ragged him and thought him
lucky to miss exams. He did not feel lucky, just burdened. Not least, to be a tea master, he
had to become a Zen priest; that was hard work.

The only time he experienced total unity with his comrades was in October 1944. Then,
with 200 other university students, he had joined the imperial navy’s Special Attack Force
to learn to crash his plane and his body into American ships. They trained for 40-50 hours,
no more; ordinary navy pilots took 500. Together they took an oath of loyalty, propriety,
righteousness and simplicity of life. These were not unlike the principles he had been
taught as a future tea master, except that everything was overshadowed by imminent and
certain death. Being students, they discussed death philosophically, but could not agree on
its meaning. He held tea ceremonies for them at the base, to steady nerves if he could. In
the end they all flew off to Okinawa, wedged between bombs, and did not return. But he
was left behind.

By some fluke he never unravelled, he had been removed from the sortie list. Possibly his
lineage had saved him, but he had been eager to go, and to survive was desperately
painful. He could not accept it until he was told it was his destiny. If that was so, he
clearly had to live the rest of his life for his comrades. Their faces dwelled in his mind;
their lives had, in effect, been transferred to him, not as a warrior but as a bringer of
peace.

It was in this spirit that he started travelling the world, first to New York. He arrived there
in 1951 with a bag of safeguarding charms, anxious that he might be treated like an enemy.
Instead, he met kindness everywhere. His touring flourished after that, until he found
himself, sober and stately in his dark priest’s robes, making tea for Queen Elizabeth, Pope
John Paul II, Angela Merkel and George W. Bush. In July 2011 he went to Pearl Harbor
where, in the memorial above the sunken USS Arizona, he performed a chado for the souls
of the sailors still entombed below him.

At the end of his regular ceremony back home, he bowed again to each guest as they left.
The tea hut now had to be restored to perfect order. Deep in reflection, he gathered the
utensils, washed them, dried them and put them away. As often as he wished, he could also
perform all those stages of the chado alone. Each time, he entered sublimity. As he sipped,
with eyes closed, he found green mountains and pure water within his heart. A monk had
once asked his master, “What is the Way?”, and the master had replied: “Your life is the
Way.” That had to mean, for Sen Genshitsu, that the Way was tea. ■
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genshitsu-spread-peace-through-sipping