The Economist February 11th, 2012. issue 8771

112 Pages·2012·13.98 MB·English

3

7 The world this week

41

Leaders

1 1 Arab revolutions

42

How to set Syria free

12

Change in Russia

43

A Moscow spring?

12

The rich world's economy

43

Not quite party time

13

Pakistan's army

Black v green

14

On the cover
Getting rid of Bashar Assad
requires a united opposition,
the creation of a safe haven
and Western resolve: leader,
page 11. In Syria the
resistance grows and the
blood flows, pages 25-28.
How Israel views the Arab
spring, page 50

Asia

Myanmar's changes

Pragmatic virtues

The Maldives

Anni outgunned

India's last hangman

An executioner's tale

Electricity in Japan

Power politics

God in China and America

In Beijing the Communist
Party struggles with religion,
page 47. Barack Obama
has problems with it too:
Lexington, page 36

God and the party

Render unto Caesar

Reporting politics

Hidden news

Briefing Special report: Pakistan
Syria's crisis Perilous journey
Damned in Damascus After page 48

Middle East and Africa

49 Israel and Iran

Closer to take-off

50

Eyeing the Arab spring

Gloom and bloom

Protests in Russia Both
Vladimir Putin and the West
should heed their message:
leader, page 12. Continuing

Large-scale protests are
transforming Russia's
politica l lan dscape-with
unpredictable consequences,
page 53

Wish you were mine

Segregation

The dream is getting closer

35

The

Eronomi�t

44 North Korea's mobiles
Available to earthlings

46 Banyan

Sri Lanka's three brothers

More for my people

China

Letters

16

25

The Economist online

Daily analysis and op inion from
our 19 blogs, p lus audio and video

31

content, debates and a daily chart

Economist.comfblogs

32

E-mail: newsletters and

mobile edition

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Economist.comfemail

Print edition: available online by

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7pm London time each Thursday

Economist.comfprint

34

Audio edition: available online

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Economist.comfaudioedition

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36

Volume 402 Number 8771

First published in September :1843

to toke part in •a severe contest between

intelligence, which pressesforward, and

on unworthy, timid ignorance obstructing

39

our progress. "

Editorialoffices in London and also:

Atlanta, Beijing, Berlin, Brussels, Cairo,

Chicago, Hong Kong, Johannesburg, Los Angeles,
Mexico City, �loscow, New Delhi, NewYork, Paris,
San Francisco, Sao Paulo, Singapore, Tokyo,

Washington DC

40

Africa's resource
nationalism

On state capitalism and
China, Greece, the
super-rich, Facebook

United States
Drugs policy
Pills and progress
The Republicans

47

48

The Santo rum surge

Indecency and television

50

Giving the FCC the finger

Gay marriage

51

Equal protection indeed

Jobs and the economy

51

A game of two halves

Technology and the
election

Boffins wanted

Lexington

53

Europe

Russia's protests

Making ourfeelings known

54

Obama's "war on religion"

Romanian politics

New government, old
problems

55 Spanish politics

The Americas Rubalcaba's cube
Venezuelan politics 55 Finland's new president
Manoa mano A conservative first

Brazil's airports

56

Fasten your seat belts

40 Women in Mexican
politics

The XX factor

Egypt's turmoil
It goes on and on

Sudan and South Sudan

The mother of all divorces

Resources in Africa

56

Greece's woes

Brinkmanship in Athens

German dialects

Teenagers' argot

57 Charlemagne

1789 and all that

Pakistan In daring to take on
the army, the Supreme Court is
striking a blow for the rule of
law: leader, page 13. Pakistan

has a lotgoingforit, but
optimism about its future is
nevertheless hard to sustain,
says our special report, after
page 48. A clutch of experts
ponder the country's fragile
future in a new book, page 83

•• Contents continues overleaf
4 Contents

Britain

58 The coalition

Pulled hither and thither

59 Quantitative easing

Has it worked?

59 Weak beer

The Economist February 11th 2012

75 Credit cards in China

Citi building

76 Building competitiveness

Taxi economies

77 Free exchange

America's jobs churn

Brewers' droop

60 Bagehot

The death of meritocracy

Science and technology

79 Sex and love

The modern matchmakers

Rich-world economies Signs

of recovery have multiplied,
but the risks have not yet gone
away: leader, page 12.
Employment springs to life;
will it fade again? Page 34. The
number ofjob-to-job moves by
American workers tells a bleak
story: free exchange, page 77.
Down to the wire in Athens,
page 56

International

61 Swiss banking secrecy

Don't ask, won't tell

62 Copyright and the
internet

ACTA up

80 Social networking

Professor Facebook

80 Pollution in China

Dating and sex The sdence of
internet matchmaking, page
79. Sexual liberation in 18thcentury England, page 82

81 Why zebra are striped

Horse sense

Principal commercial offices:

25 StJames's Street. Londo n SWlA tHG

63

Business
Model economics

The beauty business

64 Cosmetic treatment for
men

Beauty and the beasts

65 Glencore and Xstrata

Ore inspiring

65 Underpaid bosses

They really exist

66 Aircraft and pollution

China snubs the EU

67 India's telecoms scandal

Megahurts

Model economy Brainy

fashion models and a global
talent pool are changing the
catwalk, page 63. Men are
spending money on their looks
too, page 64

68 Corporate governance

Clearing the air

Books and arts

82 The first sexual
revolution

Pleasure principles

83 Pakistan's future

Resilient mess

83 Mitt Romney

The puzzler

84 Documentaries on Russia

Off balance

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85 Lucian Freud in London

Local hero

85 Jewish fiction

Books of laughter and
forgetting

Not King Coal

70 Schumpeter

Of companies and closets

Finance and economics

92 Economic and financia1
indicators

Statistics on 42
economies, plus a closer
look at football wealth

71 Sovereign bonds

Hardly risk-free

73 Buttonwood

The lump oflabour

74 Short-selling

Obituary

94 Wislawa Szymborska

Poland's muse

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The world this week

Politics

famine was officially declared.
Aid efforts have been hampered by the Shabab, the alQaeda-affiliated group that
controls swathes of Somalia.

Into the PAN

Josefina Vazquez Mota won
the primary for Mexico's
ruling National Action Party
(PAN), and will be its candidate in the July 1st presidential
election. She is the first female
presidential contender from
any of the three main parties.

China and Russia blocked an
Arab League-backed UN Security Council resolution that
condemned the violence in
Syria and called for President
Bashar Assad to cede powers.
Government forces commenced the worst assault on
protesters yet, firing rockets
and heavy weaponry at rebelheld areas of Horns and leaving scores dead. In response
America closed its embassy
and several European countries and Gulf states withdrew
their ambassadors from Syria.

Egyptian officials said 43
charity workers, including 19
Americans, would be put on
trial for illegally receiving
foreign funds. Critics condemned the move as an attempt by the ruling military
council to clamp down on
foreign support for pro-democracy groups. Cairo continued
to be roiled by battles between
police and protesters, following the deaths of 74 people in
clashes at a football match in
Port Said that the military
council blamed on elements of
the old regime.

In South Africa an appeals
panel at the ruling African
National Congress backed the
five-year suspension of Julius
Malema, the firebrand leader
of the party's youth wing. Mr
Malerna was suspended in
November for tarnishing the
party's image and sowing
division. He is likely to appeal
to the national executive.

The UN said that Somalia's
famine had ended but warned
that a third of the population
still requires emergency aid.
Tens of thousands of people
have died since July, when

Brazil auctioned a 51% stake in
three airports, including Sao
Paulo's main international
airport, in deals worth 24.s
billion reais ($14.3 billion). The
winning bidders included the
pension funds of big stateowned companies and operators based in Argentina,
France and South Africa.

The Economist February 11th 2012

7

Real pros

border between Sudan and
South Sudan. The rebels
claimed they were keeping the
Chinese safe and demanded
that China ask Sudan to stop
bombing the South Kordofan
region. two states that plumped for
Mitt Romney in the 2008
primaries. The caucuses in
Nevada went as expected,
with Mr Romney claiming
victory on so% of the vote.
Yousaf Raza Gilani, Pakistan's
prime minister, appealed
against a charge of contempt
brought by the Supreme Court,
in a case that could potentially
plunge the country into a
political crisis. Mr Gilani is
accused of failing to reopen a
corruption investigation
against the president, Asif Ali
Zardari. The court readied a
panel to hear the appeal. The Obama administration
was set to announce an agreement with five big banks over
alleged abuses in housing
foreclosure practices. The
revelation in 2010 that the
banks evicted some homeowners without following
proper procedures caused a
public furore and led to an
investigation by ali so state
attorneys-general.
America and Japan revised a
2006 accord on relocating the
us Marines' Futenma air base
in Okinawa, after the process
had stalled because of local
opposition. Under the new
plan America will transfer
some troops to Guam without
waitingfor progress on relocating the Futenma base on Okinawa, which had been a precondition for the transfer.
Decoupiing the issues resolves
the question of relocating
troops, but does not settle the
controversy over the proposed
site of the new air base. A panel of federal appeals
judges upheld a lower court's
ruling that a 2008 ballot initiative in California that banned
same-sex marriage in the state
was unconstitutional. The
issue is likely to rumble on all
the way to the Supreme Court.

Finland's presidential election
was won by Sauli Niinisto, the
main centre-right candidate.
Assuaging fears over the rise of
Finnish Euroscepticism, both
he and the Green runner-up,
Pekka Haavisto, are pro-European Union and pro-euro.

Striking police in the Brazilian
state of Bahia said that unless
their pay demands were met,
carnival celebrations later this
month would have to be called
off. Murder rates have doubled
since the strike began.

Smokescreen on the waters

China issued a second waterpollution alert within a
month, when phenol, a dangerous chemical, leaked into
the Yangzi river near Shanghai.
In Guangxi province six people were arrested and seven
officials sacked after cadmium
spilled into the Longjiang river.
The spill occurred last month
but was not reported for two
weeks, during which time
people continued to use the
affected water.

Twenty-nine Chinese workers who had been abducted in
Sudan were freed. They were
handed over to the Red Cross
by a rebel group fighting on the

A dozen militants were killed
in an airstrike in the Philippines, including senior members of the Jemaah Islamiah
and Abu Sayyaf groups.
Among them was Zulkifli bin
Hir, a Malaysian with a bounty
of $sm on his head. The Philippines also suffered an earthquake that killed1s people.

The Republican presidential
nomination race took another
unexpected turn when Rick
Santorum won party caucuses in Colorado and Minnesota,

The Socialist Party in Spain
chose Alfredo Perez Rubalcaba
as its new leader. The Socialists
are languishing behind the
ruling People's Party, which
won an absolute majority in
November's election.

The government led by Romania's prime minister, Emil Boc,
stepped down. The president,
Traian Basescu, chose as his
replacement a former head of
the intelligence service, Mihai
Razvan Ungureanu.

Chris Huhne resigned as Britain's energy minister after
prosecutors said they would
charge him with perverting the
course ofjustice over a speeding incident. Mr Huhne, a
Liberal Democrat, was a constant critic of Conservative
policies at the coalition government's cabinet meetings.
David Cameron, the prime
minister, said he had "made
��
the right decision" to resign.
8 The world this week

Business

Glencore and Xstrata unveiled the details of their
proposed $90 billion merger,
which would create a giant in
mining and natural resources.
The offer of a share swap
would result in Glen core
owning 55% of a newly combined company to be headed
by Mick Davis, Xstrata's chief
executive. The companies
have longstanding business
links, but there was some
criticism of the deal from
institutional investors in
Xstrata, who worry that it is a
takeover on the cheap.

Rio Tinto announced a record
underlying annual profit of
$15.5 billion. But the mining
company also booked an $8.9
billion charge related to the
falling value of its aluminium
business.

Paying div;dends

BP posted a 38%jump in quarterly profit, to $7-7 billion, and
increased its shareholder dividend for the first time since the
2010 disaster at one of its oil
wells in the Gulf of Mexico. A
trial that will apportion liability for the oil spill among BP
and its partners is due to start
in Louisiana on February 27th,
unless the company reaches a
settlement before then.

UBS went further than most
other banks and reduced its
bonus pool by a comparatively
large 40% (and by 6o% at its
investment-banking division),
as it reported that net profit in
2011 had fallen by almost half,
to SFr4.2 billion ($4.6 billion).
But the Swiss bank will pay
"special" share bonuses to
around 5% of its most senior
bankers as it fights to retain
talent amid a downsizing of its
investment bank.

The Bank of England stood
poised to launch a third round
of expansionary asset purchases, or quantitative easing, to help the ailing British
economy. The British Retail
Consortium reported that
shoppers drastically reduced
spending in January after
splashing out at Christmas.

China's inflation rate unexpectedly crept up in January, to
4.5% from 4.1% in December,
mostly because of higher food
prices. Inflation is a headache
for the central bank, which
only recently started to loosen
monetary policy as prices
looked to be under control.
Adding to the mix, the IMF this
week urged Beijing to ready a
stimulus plan in case the global economy worsens.

Putting it in perspective

I %US unemployment rates

18

Including marginally
attaclred worke�

Total

lttllllll!tllt

15

12

The Economist February 11th 2012

weakness" of the labour market as it does not count people
who have given up looking for
work or can find only parttime employment.

The trading of shares in
Alibaba was suspended amid
rumours that the Chinese
e-commerce firm is to buy back
the 40% stake held in it by
Yahoo! It is thought that Alibaba has obtained loans from
a syndicate of banks to buy
back some or all of that stake,
which could be worth $13
billion. Meanwhile, Yahoo!
took more steps to restore
investor confidence, as Roy
Bostock announced he was
stepping down as chairman.

9

6

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J f M A M J J A S 0 » D J

2011 2012

Souru; US BuroauoflaboutSlatl'�

Ben Bernanke warned that

America's labour market was
still a "long way" from recovery, despite the unemployment rate falling to 8.3% in
January, the lowest for three
years. Stockmarkets had
surged in response to the
employment data, with the
Dow Jones index reaching its
highest mark since May 2008.
But the Fed's chairman reminded Congress that the
official figure "understates the

China barred its airlines from
taking part in Europe's emissions-trading scheme (ETS),
hardening its opposition to an
attempt to get carriers to pay
for carbon emissions on flights
into and out of the EU. Russia,
America and India are also
opposed to their airlines'
inclusion in the ETS.

Air France was forced to cancel about half its long-haul
flights because of a four-day
strike by pilots and crew, who
walked out in protest against
government plans to require
them to give at least 48-hours
advance notice of strike action.

Verizon announced a venture
with Coinstar, the owner of
the handy Redbox DVD rental
kiosks in American supermarkets, in which the pair will
combine forces to challenge
Netflix's dominance in the
business of streaming and
renting films online. Coinstar,
which also operates in-store
coin-sorting machines, saw its
profit surge in the fourth quarter of last year.

Groupon released its first set
of earnings since going public
in a much ballyhooed initial
public offering. Although
revenue at the online discount
site almost trebled in the final
quarter of 2011 it made an
unexpected net loss of $43m.
Its share price sank.

Jackpot!

Caesars Entertainment,

which owns Caesars Palace
and other glitzy places where
people can lose money, floated
a small amount of shares in an
IPO. The debt-laden company's casinos are in America
and Europe, rather than fastgrowing Asia. It abandoned a
more ambitious flotation in
2010, but this week's gamble
paid off: its share price rose by
71% on the first day of trading.

Other economic data and news
can be found on Pages 92-93

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