Economist 10/9/15

On the night of September 4th Angela Merkel made the most dramatic decision of her decade as German chancellor: to suspend European asylum rules and allow tens of thousands of refugees stranded in Hungary to enter Germany via Austria. It was a moral gesture that fitted the mood of the moment.In Germany, however, that altruistic embrace has caused a backlash that could weaken a chancellor so far considered all but invincible.The numbers are dramatic. More than 200,000 migrants are believed to have arrived in Germany in September alone. For the year, official forecasts had already risen in August from 450,000 to 800,000.This week Bild, Germany’s largest tabloid, cited estimates that the number could reach 1.5m—equivalent to the population of Munich. New refugees keep pouring in, and those granted asylum have the right to bring family later.Processing centres exceeded capacity weeks ago. Local authorities are struggling to find housing, since temporary tent cities will not suffice in winter.

  1. The fiercest criticism of Mrs Merkel comes from within her own conservative bloc—the Christian Democratic Union (CDU), which she leads, and the Christian Social Union (CSU), which exists only in Bavaria and usually supports her.Mainstream society is tolerant but edgy. In a survey by German public television 51% of Germans say that they fear the refugee influx, 13 points more than in September.In response Mrs Merkel’s government is scrambling to make changes. It has passed legislation that cuts pocket money to refugees, currently €143 ($160) a month, and replaces it with vouchers. More police and administrators are being hired.Germans worry whether Muslim refugees will accept German norms of sexual equality, secularism and Germany’s special responsibility towards Israel and Jews.
  2. IN MOST of the Arab world the hopefulness of the Arab Spring quickly gave way tochaos, blood and democratic setbacks. But one country has fared better than the rest. Tunisia, the first of the Arab countries to oust its dictator, has managed to stay on a democratic path even as the region around it crumbles.One of the biggest contributors to this progress was rewarded on October 9th, when the National Dialogue Quartet was given the Nobel peace prize.When disagreements and political assassinations threatened to plunge Tunisia into chaos in 2013, the quartet stepped in to lower the temperature. The then-ruling Nahda (“Awakening”) party, an Islamist outfit which itself deserves great credit for its moderation, agreed to relinquish power in 2014. Against the regional trend, voters then handed power to a secularist coalition known as Nidaa Tounes in a relatively peaceful transition. A new, enlightened constitution was also adopted last year.The four organisations that shared the prize are the Tunisian General Labour Union, the Tunisian Confederation of Industry, Trade and Handicrafts, the Tunisian Human Rights League and the Tunisian Order of Lawyers. The trade union, and in particular its leader,Houcine Abassi, played a crucial part in persuading Nahda to step aside and allow fresh elections to take place.
  3. Seventy years on from the peninsula’s division, South Korea’s president, Park Geun-hye, has pushed the idea of unification as a “bonanza”.The costs of reunion will be staggering—by conservative estimates about $1 trillion, or three-quarters of annual GDP. Its social-security system would need to provide for 25m Northerners.Yet the South would also merge with a population that is younger and has almost twice as many babies. That would be a demographic boon, as South Korea’s working-age population begins to shrink from 2017. Disbanding the North’s standing army, the fourth-largest in the world, would free up workers. In total, about 17m workers would join the South’s 36m—though admittedly with far lower skills and education. South Korea would also reap a windfall in reserves of rare earths, which are used in electronics.Under the Japanese, Pyongyang was also a thriving centre of Protestant Christianity. Indeed the parents of Kim Il Sung, North Korea’s first dictator, were devout Christians.
  4. THINGS don’t look good for Transaero, Russia’s second largest airline. Weighed down by estimated debts of 250 billion roubles ($4 billion), the privately-owned carrier had been pinning its hopes for survival on a reluctant takeover by Aeroflot, Russia’s flag-carrier, which is majority owned by the government. That mega-merger, announced in September, seemed to offer a last-ditch alternative to insolvency. But Aeroflot has since walked away from the deal and two major lenders have now started bankruptcy proceedings.The airline posted net losses of half a billion dollars in each of the past two years. One-sixth of its revenues were going straight to creditors before the Aeroflot deal was announced.Excluding 2014 and 2013, Transaero has been profitable for a decade.Having declined the opportunity to merge, the flag-carrier now seems eager to fill the void left by Transaero. It has already pledged to find jobs for about half of the troubled carrier’s 11,500-strong workforce.

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