The Economist - Can anyone stop Narendra Modi? Part 1

The Economist.

Can_anyone_stop_Narendra_Modi.

The world this week.

Politics this week.

Business this week.

KAL's cartoon.

Politics this week.

Apr 5th 2014 | From the print edition.

Recep Tayyip Erdogan, Turkey's prime minister, defied scandal and charges of authoritarianism to celebrate a resounding victory in local elections. His party's tally was not far from the 50% he would need in August to become the country's first directly elected president. In his victory speech Mr Erdogan said supporters of Fethullah Gulen, an influential Muslim cleric and his main opponent, would soon "pay the price" for their "treachery". See article Manuel Valls was appointed the new prime minister of France in a big reshuffle by Francois Hollande, the president, following a humiliating defeat for the ruling Socialists in local elections. The centre-right UMP won many towns, including left-wing bastions. The far-right National Front took 11 town halls, its best result ever. Other changes to the cabinet included putting Segolene Royal (Mr Hollande's ex-partner) in charge of the environment ministry. See article For the first time since Russia's annexation of Crimea, foreign ministers from NATO discussed how to help Ukraine and any NATO country that felt under threat. Poland requested a deployment of two heavy brigades of NATO troops.

Greece and its international lenders at last signed off on a 8.3 billion ($11.4 billion) tranche of bail-out money after a six-month stand-off. The delay was caused mostly by disagreements over the pace of economic reforms. The Greek government's borrowing costs in the bond market fell to their lowest point since 2010.

The first gay marriages took place in England and Wales, after legislation was pa.s.sed last year. Scotland is expected to legalise same-s.e.x marriage soon, but gay couples are still a long way from being able to tie the knot in Northern Ireland. See article Days of reckoning.

The Egyptian government announced that a presidential election would take place on May 26th and 27th, when Abdel Fattah al-Sisi, the prime mover behind last year's coup, is widely expected to become head of state. See article Efforts by John Kerry, America's secretary of state, to arrange a "framework agreement" between Israelis and Palestinians faltered. The Israelis failed to release a final batch of long-serving Palestinian prisoners, but suggested that, as part of a deal, the Americans free Jonathan Pollard, a Jewish-American in prison since 1987 for supplying secrets to Israel. The Palestinians stepped unilaterally towards statehood by requesting to join a series of UN agencies. See article The UN said that there were 1m Syrian refugees in Lebanon. Three years ago, before Syria's civil war started, Lebanon's population was just over 4m.

Fighting in Yemen persisted in the north between Houthi rebels and various rivals, and in the south between government forces and rebels linked to al-Qaeda. Clashes also took place near the capital, Sana'a.

Abubakar Sheikh Ibrahim Shariff, a radical Muslim preacher, also known as "Makaburi", meaning graveyard in Swahili, was shot dead by unidentified men in Mombasa, Kenya's port city. He had called for the government's violent overthrow. See article At a summit in Brussels, leaders of African and European Union countries agreed to boost the peacekeeping forces that have been trying, so far in vain, to end strife in the Central African Republic.

Obama claims victory.

The White House said that it hit its target of signing up 7m Americans for private health insurance under Obamacare, after a last-minute rush of people tried to enroll to beat a deadline of March 31st. See article America's Supreme Court struck down limits to the total amount someone can donate in an election, though it kept in place the amount that can be given to any one candidate. Conservatives hailed a victory for free speech; liberals fretted that more campaign money would foster corruption. See article Republican leaders in the House of Representatives sought to unite a fractious party ahead of November's elections with a draft budget plan that would cut more than $5 trillion in spending over the next decade, notably via deep cuts to food stamps and health programmes for the poor, alongside a cap on future government support for pensioners' healthcare. The largely symbolic plan, written by Paul Ryan, a possible presidential challenger, would also increase defence spending, while promising to balance overall federal taxation and spending by 2024.

Vincent Gray lost his re-election bid as mayor of Was.h.i.+ngton, DC, coming second in the Democratic primary to Muriel Bowser.

Please send money.

Cuba's parliament approved a new foreign-direct investment law, which allows Cubans living abroad to invest in the island. It aims to raise about $2.5 billion a year in foreign capital, much-needed fuel for a slowing economy. See article An 8.2-magnitude earthquake off the coast of northern Chile killed at least six people. The country's copper mines, on which exports depend, were largely unaffected.

Chile's new president, Mich.e.l.le Bachelet, presented tax-reform plans to parliament. The reforms, which include a rise in the corporate-tax rate, are designed to pay for another of her campaign pledges-free education for all. See article Argentina's government announced a cut in water and natural-gas subsidies. Rising living costs make it harder to resist wage demands, however: the Buenos Aires provincial government agreed to a whopping 31% wage increase for striking teachers. See article Chemical reaction.

People took to the streets of Maoming, in the southern Chinese province of Guangdong, to protest against the construction of a petrochemical plant. The demonstrators clashed with police. Authorities described the protests, which spread to the provincial capital, Guangzhou, as "serious criminal behaviour".

North and South Korea exchanged fire into the sea across their disputed maritime border. The South says it returned fire after North Korean sh.e.l.ls landed in its waters.

The Philippines submitted evidence to a UN tribunal in its case against China's territorial claims in the South China Sea. This came after a Philippine s.h.i.+p evaded Chinese vessels to take supplies to troops stationed on a disputed shoal. China has refused to take part in the arbitration.

A UN court ruled that the j.a.panese government must stop its whaling activities in the Antarctic, finding that the programme was not for scientific research, as j.a.pan claims. See article A very public apology by a Chinese actor to his wife became the most-commented post ever on the Chinese equivalent of Twitter, Sina Weibo. Wen Zhang tweeted an apology to his wife, Ma Yili, after he was photographed arm-in-arm with a female co-star. Ms Ma tweeted back that: "Being in love is easy, being married is not."

Business this week.

Apr 5th 2014 | From the print edition.

Mary Barra, the boss of General Motors, was given a rough ride in Congress at a hearing into faulty car-ignition switches that have caused at least 13 deaths. GM knew about the defect in 2001, but issued a safety recall only in February, a month after Ms Barra became chief executive. The carmaker has retained Kenneth Feinberg, who oversaw compensation payouts after the September 11th 2001 attacks and the BP oil spill, as a consultant. See article Awash with money.

Total cash reserves held by American companies grew by 12% to $1.6 trillion last year, according to Moody's Investor Services. Around $947 billion of that was placed overseas to escape the clutches of the taxman. Apple, Microsoft, Google, Verizon and Pfizer accounted for 25% of the total; Apple alone held $159 billion, or 9.7%. But alongside the rising mountains of cash, capital spending and dividends. .h.i.t seven-year highs in 2013.

The Financial Conduct Authority, the regulator charged with ensuring Britain's financial markets act with integrity, was lambasted by the Treasury for leaking details about an investigation of the insurance industry to a newspaper. Share prices in insurance companies swooned before the FCA clarified, six hours after markets opened, that it was reviewing "a representative sample of firms". It is to hold an inquiry.

The IMF reported on the implicit government subsidies that are still afforded to banks deemed "too big to fail". Banks benefit through cheaper loan rates, for example, as markets a.s.sume that they will be bailed out in a crisis. The IMF calculated that in 2012 these implicit subsidies were worth up to $300 billion in the euro zone, up to $110 billion in both Britain and j.a.pan and up to $70 billion in America, and blamed them for encouraging excessive risk-taking.

Pilots at Lufthansa held a three-day strike over changes to an early-retirement scheme. The German airline had to cancel 3,800 flights in the latest, and potentially most damaging, strike to hit it over the past few years.

Bold decision.

BlackBerry reported a $5.9 billion net loss for its financial year ending March 1st; revenue for its latest quarter came in at under $1 billion for the first time since 2007. To boost sales the company is to reintroduce its Bold smartphone range, which was launched in 2008 and are especially popular in emerging markets. The newer BlackBerry 10 devices, which came to market last year with high hopes of turning the company around, have not sold so well.

Microsoft announced the first big changes in strategy since Satya Nadella became chief executive. It at last unveiled apps for its Office software that will work on Apple's iPad, and it decided to give away its Windows software for smartphones and small tablets, which should boost the development of apps on Microsoft phones. Bill Gates's philosophy was that software should always be paid for. See article The first increase in j.a.pan's sales tax for 17 years came into effect. The tax rose from 5% to 8% this week and is set to rise to 10% next year. Revenue from the tax will go towards reducing public debt.

Paolo Scaroni, the chief executive of Italy's Eni, was given a three-year jail sentence for the lax environmental standards at a power plant operated by Enel, which he used to run. Mr Scaroni has had run-ins with the law before. He is to appeal against this conviction.

Britain's National Audit Office criticised the government for undervaluing Royal Mail when it was privatised. The share price has soared from the first day of trading in October. Royal Mail's flotation delivered a quick profit to the 16 inst.i.tutional investors that were allocated shares to ensure a stable investor base; they sold off almost half of the stock allotted to them within weeks of the IPO.

Amazon launched a media-streaming device that connects to a television, putting it in compet.i.tion with Apple TV and Google's Chromecast. Fire TV gives viewers access to content from Amazon's video-streaming service, as well those of Netflix and others. See article Preliminary data from the a.s.sociation of American Publishers showed the growth of sales of e-books for adults had slowed considerably in 2013, to 3.8%. Including children's t.i.tles, e-books actually dropped by 1%. Sales of hardcover books rose by 9.7% but were down for paperbacks. E-books accounted for around 27% of the publis.h.i.+ng market.

A minimum wage.

A regulatory filing by Facebook revealed that Mark Zuckerberg took a salary of $1 last year, joining other Silicon Valley bosses who prefer to tie their wealth to their company's share performance. Mr Zuckerberg topped up his paltry pay by exercising $3.3 billion in stock options.

KAL's cartoon.

Apr 5th 2014 | From the print edition.

More KAL's cartoons.

Leaders.

India's election: Can anyone stop Narendra Modi?

Turkey's elections: Be merciful, great Sultan The Cuban embargo: If not now, when?

Higher education: Making college cost less Democracy and lethargy: Britain's idle Parliament India's election.

Can anyone stop Narendra Modi?

He will probably become India's next prime minister. That does not mean he should be Apr 5th 2014 | From the print edition.

WHO does not marvel at the prospect of India going to the polls? Starting on April 7th, illiterate villagers and dest.i.tute slum-dwellers will have an equal say alongside Mumbai's millionaires in picking their government. Almost 815m citizens are eligible to cast their ballots in nine phases of voting over five weeks-the largest collective democratic act in history.

But who does not also deplore the f.e.c.klessness and venality of India's politicians? The country is teeming with problems, but a decade under a coalition led by the Congress party has left it rudderless. Growth has fallen by half, to about 5%-too low to provide work for the millions of young Indians joining the job market each year. Reforms go undone, roads and electricity remain unavailable, children are left uneducated. Meanwhile politicians and officials are reckoned to have taken bribes worth between $4 billion and $12 billion during Congress's tenure. The business of politics, Indians conclude, is corruption.

No wonder that the overwhelming favourite to become India's next prime minister is the Bharatiya Janata Party's Narendra Modi. He could not be more different from Rahul Gandhi, his Congress party rival. The great-grandson of Jawaharlal Nehru, India's first premier, Mr Gandhi would ascend to office as if by divine right. Mr Modi is a former teaseller propelled to the top by sheer ability. Mr Gandhi seems not to know his own mind-even whether he wants power. Mr Modi's performance as chief minister of Gujarat shows that he is set on economic development and can make it happen. Mr Gandhi's coalition is tainted by corruption. By comparison Mr Modi is clean.

So there is much to admire. Despite that, this newspaper cannot bring itself to back Mr Modi for India's highest office.

Modi's odium.

The reason begins with a Hindu rampage against Muslims in Gujarat in 2002, in which at least 1,000 people were slaughtered. The orgy of murder and rape in Ahmedabad and the surrounding towns and villages was revenge for the killing of 59 Hindu pilgrims on a train by Muslims.

Mr Modi had helped organise a march on the holy site at Ayodhya in 1990 which, two years later, led to the deaths of 2,000 in Hindu-Muslim clashes. A lifelong member of the Rashtriya Swayamsevak Sangh, a Hindu nationalist group in whose cause he has vowed lifelong celibacy, he made speeches early in his career that shamelessly whipped up Hindus against Muslims. In 2002 Mr Modi was chief minister and he was accused of allowing or even abetting the pogrom.

Mr Modi's defenders, and there are many, especially among the business elite, point to two things. First, repeated investigations-including by the admirably independent Supreme Court-have found nothing to charge their man with. And second, they say, Mr Modi has changed. He has worked tirelessly to attract investment and to boost business for the benefit of Hindus and Muslims alike. Think, they say, of the huge gains to poor Muslims across India of a well-run economy.

On both counts, that is too generous. One reason why the inquiries into the riots were inconclusive is that a great deal of evidence was lost or wilfully destroyed. And if the facts in 2002 are murky, so are Mr Modi's views now. He could put the pogroms behind him by explaining what happened and apologising. Yet he refuses to answer questions about them. In a rare comment last year he said he regretted Muslims' suffering as he would that of a puppy run over by a car. Amid the uproar, he said he meant only that Hindus care about all life. Muslims-and chauvinist Hindus-heard a different message. Unlike other BJP leaders, Mr Modi has refused to wear a Muslim skullcap and failed to condemn riots in Uttar Pradesh in 2013 when most of the victims were Muslim.

The lesser of two evils.

"Dog-whistle" politics is deplorable in any country. But in India violence between Hindus and Muslims is never far from the surface. At part.i.tion, when British India fractured, about 12m people were uprooted and hundreds of thousands perished. Since 2002 communal violence has died down, but there are hundreds of incidents and scores of deaths each year. Sometimes, as in Uttar Pradesh, the violence is on an alarming scale. The spark could also come from outside. In Mumbai in 2008 India suffered horrific attacks by terrorists from Muslim Pakistan-a nagging, nuclear-armed presence next door.

By refusing to put Muslim fears to rest, Mr Modi feeds them. By clinging to the anti-Muslim vote, he nurtures it. India at its finest is a joyous cacophony of peoples and faiths, of holy men and rebels. The best of them, such as the late columnist Khushwant Singh (see article) are painfully aware of the damage caused by communal hatred. Mr Modi might start well in Delhi but sooner or later he will have to cope with a sectarian slaughter or a crisis with Pakistan-and n.o.body, least of all the modernisers praising him now, knows what he will do nor how Muslims, in turn, will react to such a divisive man.

If Mr Modi were to explain his role in the violence and show genuine remorse, we would consider backing him, but he never has; it would be wrong for a man who has thrived on division to become prime minister of a country as fissile as India. We do not find the prospect of a government led by Congress under Mr Gandhi an inspiring one. But we have to recommend it to Indians as the less disturbing option.

If Congress wins, which is unlikely, it must strive to renew itself and to reform India. Mr Gandhi should make a virtue of his diffidence by stepping back from politics and promoting modernisers to the fore. There are plenty of them and modernity is what Indian voters increasingly demand (see article). If, more probably, victory goes to the BJP, its coalition partners should hold out for a prime minister other than Mr Modi.

And if they still choose Mr Modi? We would wish him well, and we would be delighted for him to prove us wrong by governing India in a modern, honest and fair way. But for now he should be judged on his record-which is that of a man who is still a.s.sociated with sectarian hatred. There is nothing modern, honest or fair about that. India deserves better.

Turkey's elections.

Be merciful, great Sultan.

After his unexpectedly big win, Recep Tayyip Erdogan should be magnanimous.

Apr 5th 2014 | From the print edition.

IT WAS a triumph by any standards. In Turkey's local elections on March 30th, the ruling Justice and Development (AK) party took over 45% of the vote. Although the results are contested in 41 cities including Ankara, the capital, AK held on easily to Istanbul. Recep Tayyip Erdogan, the prime minister, had turned these elections into a referendum on himself and his government. The past 12 months have seen a veritable maelstrom of protests and corruption scandals, a controversial clampdown on judges, prosecutors and the media, and a ban on YouTube as well as one on Twitter that the const.i.tutional court has ruled illegal. For Mr Erdogan to do even better than pollsters expected has confounded his opponents.

Yet although Mr Erdogan's voter base may still be strong, his democratic credentials are looking weaker, for his behaviour has become increasingly autocratic. Faced with demonstrations and allegations of corruption, he has undermined freedoms of a.s.sembly and speech. In a centralised country with few checks and balances, he has vastly increased the government's control over the judiciary, the security services and the police. He is fiercely pursuing people or firms linked to an influential Pennsylvania-based Sunni cleric, Fethullah Gulen, who was once his close ally but is now a vocal opponent.

As a result, Turkey is becoming increasingly polarised: between AK and its rivals, between Anatolia and the cosmopolitan west, between the devout and the secularists, between Sunni Muslims and Alevis. The prime minister's domineering instincts have led him to treat his electoral majority as a mandate that gives him licence to punish the minority. Whereas after earlier election victories the AK leader promised piously to work for all Turks, this time Mr Erdogan has vowed to go after his opponents, threatening to enter their "lairs" and make them pay (see article).

Such divisive talk is dangerous in an unsteady country. After the chaos of the 1990s, Turkey enjoyed a decade of stability and prosperity under Mr Erdogan that depended on two strong anchors. One was sound macroeconomic policy, backed initially by the IMF and later by financial markets; the other was the prospect of joining the European Union, with which Mr Erdogan opened members.h.i.+p negotiations in October 2005. Today Turkey risks losing both.

Growth has already slowed sharply. Investors have become warier of all emerging markets, and Turkey, with proportionately one of the biggest current-account deficits in the world, is especially vulnerable, which explains why the lira has lost a quarter of its value in 12 months. Internal strife between AK's supporters and opponents may further discourage the foreign investors whom Turkey so badly needs.

Although EU members.h.i.+p was always a distant and uncertain prospect, talks about joining the club have provided an incentive to reform and a brake on misconduct. But they have stalled in recent months, and they seem unlikely to revive as long as Mr Erdogan continues to undermine the rule of law and attack the independent media.

A problematic legacy.

Mr Erdogan seems to be planning a run for the presidency in August. His ambition, it is generally believed, is to hold the post in 2023, the centenary of the republic's foundation, and to be feted during those celebrations as the country's greatest leader since Ataturk. Ataturk was not without authoritarian impulses of his own, but he is remembered by Turks as a unifier. If Mr Erdogan wants to be mentioned in the same breath, he should try much harder to represent the interests of all Turks, not just those who rallied to him this week.

The Cuban embargo.

If not now, when?

This would be an especially good time for a change in America's relations with Cuba Apr 5th 2014 | From the print edition.

THE United States first placed an embargo on Cuba in 1960, one year after Fidel Castro seized power and one year before Barack Obama was born. It has since become part of the furniture of American foreign policy. Five decades of use will wear anything thin, and the logic behind the embargo looks ever weaker. It has failed to dislodge the Castro regime of either Fidel or, since 2006, his brother Ral. Indeed, by enabling the island's rulers to present themselves as the victims of hegemonic bullying, it has sh.o.r.ed up support for Cuba abroad and given an excuse for totalitarianism at home. America's allies think the embargo is counter-productive at best, vindictive at worst.

Why has America continued with it? Politics. For decades Cuban exiles in the swing state of Florida have supported it, and have made sure that the (mainly Republican) politicians who represent them enforce it strictly. And even if others in Congress privately think the embargo is loopy, few, especially on the right, want to look as if they are soft on the "communist" Castros. Besides, they usually add, Fidel will die soon.

Whatever logic there was in this is being undermined in four ways. First, the Castros are becoming ever less communist. The process of economic liberalisation under Ral took another step forward this week with the approval of a new law on foreign direct investment (see article). Like other moves towards capitalism, this one is halting: the state will still be an intrusive presence and firms will have little say over hiring and firing. But the law will slash tax rates for new investments and allow foreigners into new sectors of the economy. It confirms Cuba's overall trajectory towards freer enterprise.

Cuba's keenness on outside investment stems from the second reason to reconsider the embargo. The regime's fortunes are tied to those of Venezuela, which supplies Cuba with cheap oil in return for doctors, intelligence support and a splash of ideological credibility. But Venezuela's economy is crumbling and its leftist government is in trouble, so Cuba needs a plan B in case it demands market prices for its oil. The choice is probably between another helpful oil producer (Russia, whisper some) and greater trade with the outside world. Small cracks in the embargo allowed $360m of exports from the United States to Cuba in 2013; that figure would zoom if restrictions were lifted. Would Congress really prefer the Castros to choose someone like Vladimir Putin over free enterprise?

The third change is taking place inside Florida. Younger Cuban-Americans do not feel as bitter about Fidel as their grandparents do. Despite loosening restrictions on travel and remittances to Cuba in his first term, Mr Obama picked up almost 50% of the Cuban-American vote in his 2012 re-election. In February Charlie Crist, a Republican-turned-Democratic candidate to become Florida's governor, came out against the embargo, having previously supported it.

And, finally, there is business. Earlier this year Alfonso Fanjul, a sugar tyc.o.o.n and longtime Castro opponent, raised the possibility of investing in the island. Heavier remittance flows mean that many Americans are now funding Cuban firms without having control over them. Meanwhile, other countries are pus.h.i.+ng ahead. The European Union, the largest foreign investor in the island, is soon to start talks on a new accord. In January a deepwater port opened in Mariel on Cuba's northern coast, a prime spot to handle traffic with the United States should the drawbridge come down. The port was built by Brazil; it is operated by a Singaporean firm.

Embargo, going, gone.

There are still plenty of diehard anti-Castro figures in Was.h.i.+ngton. But calling the arguments they marshal threadbare is unkind to threads. Cuba does not threaten American security. It is playing a constructive role in the peace process between Colombia's government and the FARC guerrillas. Its political system is nasty and undemocratic, but it is b.u.t.tressed, not undermined, by the embargo. (The reverse is true of the standing of the United States in Latin America.) Waiting for the Castros to die makes no sense when Venezuela's crisis presents an opportunity now to cement the process of liberalisation in Cuba.

If Congress will not budge, Mr Obama could use his executive authority to thaw relations further-loosening travel restrictions, taking Cuba off the list of state sponsors of terrorism, and trying to negotiate a swap of prisoners. But that is second best. The embargo increasingly exists only because it happens to be there.

Higher education.

Making college cost less.

Many American universities offer lousy value for money. The government can help change that Apr 5th 2014 | From the print edition YOU cannot place a value on education. Knowledge is the food of the soul, Plato supposedly remarked. Great literature "irrigates the deserts" of our lives, as C.S. Lewis put it. But a college education comes with a price tag-up to $60,000 a year for a four-year residential degree at an American university.

A report by PayScale, a research firm, tries to measure the returns on higher education in America (see article). They vary enormously. A graduate in computer science from Stanford can expect to make $1.7m more over 20 years than someone who never went to college, after the cost of that education is taken into account. A degree in humanities and English at Florida International University leaves you $132,000 worse off. Arts degrees (broadly defined) at 12% of the colleges in the study offered negative returns; 30% offered worse financial rewards than putting the cash in 20-year Treasury bills.

None of this matters if you are rich and studying fine art to enhance your appreciation of the family Rembrandts. But most 18-year-olds in America go to college to get a good job. That is why the country's students have racked up $1.1 trillion of debt-more than America's credit-card debts. For most students college is still a wise investment, but for many it is not. Some 15% of student debtors default within three years; a startling 115,000 graduates work as caretakers.

If the job market picks up, this dismal picture will improve. But there is another obvious way to increase the returns on a college education: make it cheaper. The price of college has risen more than four times faster than inflation since 1978, easily outpacing doctors' bills. Much of this cash has been wasted on things that have nothing to do with education-plush dormitories, gleaming stadiums and armies of administrators. In 1976 there were only half as many college bureaucrats as academic staff; now the ratio is one to one.

By the universities' own measures, this has produced splendid results. Students are more than twice as likely to receive "A" grades now than in 1960. When outsiders do the grading, however, they are less impressed: one study found that 36% of students "did not demonstrate any significant improvement in learning" over four years of college.