Economist 5/15/14

  1. Summary execution is a common fate for Kenyan criminals.Even criminals who make it to court may still face an extrajudicial death. Bail is easy to get and court dates often missed. But victims can pay corrupt policemen to bring fugitives back—to be shot on arrest. The UN, whose agencies have a large presence in the capital, reckon the number of burglaries in Nairobi doubled to 300 from the last quarter of 2013 to the first quarter of this year. Private security companies, who are reckoned to employ more than 100,000 people in Nairobi, are thriving.Political violence is rising, too. Though Kenya avoided bloodshed during last year’s elections, it has since experienced a rash of terrorism and clumsy counter-measures by the police. The main problem is that the police are underpaid and phenomenally corrupt, with little respect for the law. The lowliest guards working for private security companies are far better paid than their counterparts in the police. Traffic police, for instance, routinely stop drivers for spurious reasons, expecting a bribe in return for letting them proceed.Kenya does not even have a public telephone number for people to ring in an emergency. Kenya is one of the world’s five leading countries in terms of the funds it gets from the United States for combating terrorism. Last year it got $8m.
  2. Egypt’s economy is a mess. Tourism, a mainstay before the “revolution” in 2011, collapsed. Abdul Fattah al-Sisi, an ex-field-marshal who is almost certain to win the presidential election on May 26th, is likely to end Egypt’s brief experiment with non-military ruleYet foreign firms, though wary, have not abandoned Egypt. With about 90m people, it is the region’s most populous country and still a cultural trendsetter in the Arab world. Dove soap and Pantene shampoo sell well. Procter & Gamble, a consumer-goods giant, reckons that its products reach nine out of ten homes. Carrefour has more than 20 stores in Egypt. After much delay, IKEA opened a furniture store at the end of 2013.  Coca-Cola, which already exports to more than 40 countries from Egypt, said in March that it would invest a further $500m there.In April the government enacted a new investment law, mainly to stop people from challenging contracts that investors signed with the pre-revolutionary government. But Egypt must do more if it wants to woo investors. It ranks 128th out of 189 countries in the World Bank’s league table for ease of doing business.
  3.  In London, house prices are already 25% above their 2008 peak, and are now rising at a rate of about 18% a year. The average home in the capital costs more than £450,000 ($760,000); in some neighbourhoods the average house price is more than ten times the average income.One cause is financial. Thanks to government subsidies, 95% loan-to-value mortgages (for which the buyer needs a deposit worth only 5% the value of the house) have reappeared. Meanwhile, thanks to the policies of the Bank of England, interest rates are low, meaning people can afford to borrow large amounts.The London phenomenon is due to a restriction of supply at a time of soaring demand.n London and the south east, by contrast, tight planning rules and a shortage of land mean that relatively little new housing is being built, even as a booming economy and spectacular population growth create lots of demand for it. Tight “green belts”—areas in which most new construction is banned—surround London and small.
  4. China National Offshore Oil Corporation towed a $1 billion oil rig into waters just 120 nautical miles (220 kilometres) off central Vietnam’s coast. To make that perfectly clear, it sent a flotilla of ships, which Vietnam says included armed vessels. This is all taking place not far from the Paracel islands, which China seized from the American-backed South Vietnamese regime in 1974. Vietnam is indignant. On May 11th, at a meeting of the Association of Southeast Asian Nations in Myanmar, the prime minister, Nguyen Tan Dung, vowed to protect his country’s sovereignty.Vietnam has a modest navy and little hope of sending the oil rig packing, let alone retaking the Paracels. Also on May 11th an unusually large demonstration against China took place in Hanoi; similar demonstrations happened in other big cities. Popular anti-China sentiment will be a delicate issue for the Vietnamese government.
  5.  The ballot for elections to the European Parliament is from May 22nd to 25th. Many of those who do will back populists and extremists. Broadly anti-European parties may take well over a quarter of the seats. The French National Front, the Dutch Party of Freedom and the UK Independence Party are likely to win their highest vote ever.o. The last crisis may be over, but it has exacerbated a deep contradiction at the heart of Europe—between euro-zone economies’ need for integration and the voters’ rejection of it. The last crisis may be over, but it has exacerbated a deep contradiction at the heart of Europe—between euro-zone economies’ need for integration and the voters’ rejection of it. . Unemployment remains horrific: as many as 26m people in Europe are now out of work. Almost everywhere debt is dangerously high. With banks fragile, credit is hard to come by, and parts of Europe are on the verge of deflation.If the EU is to gain democratic legitimacy, it will do so not through the European Parliament but through national parliaments. That means giving powers back to them wherever possible, including greater fiscal flexibility and more national control over social policy and employment rules. It also means that national leaders must take responsibility for economic reform, rather than hiding behind the convenient fiction that painful choices are being forced on them by bad people in Brussels or Berlin. 

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s