Economist 5/23/16

  1. THE murder of a shopkeeper in Glasgow on March 24th has drawn attention to Britain’s relatively small and unknown community of Muslims called the Ahmadiyya. Asad Shah, who ran a flourishing newsagent’s in Scotland’s second city, was one of about 30,000 Ahmadis in Britain. He was killed by a Sunni Muslim, Tanveer Ahmed, who travelled up from Bradford, in the north of England.The Ahmadis differ from the mainstream in that they believe Mirza Ghulam Ahmad, the 19th-century Indian who founded their tradition in 1889, was a latter-day prophet. In many Muslims’ eyes, this makes their practice un-Islamic and blasphemous.Pakistan’s Ahmadis, of whom there may be 4m, were declared to be non-Muslims by the government in 1974. Then in 1984 General Zia ul Haq, Pakistan’s Sunni dictator, amended the laws again. Henceforth Ahmadis were prohibited from professing their faith.In view of this persecution and violence, Britain has become something of a haven for the Ahmadiyya. Hazrat Mirza Masroor Ahmad, the fifth khalifa (or leader) of the sect is now based in London and the annual worldwide gathering of the community takes place in rural Hampshire.
  2. Azerbaijan has transformed itself from a failing state in the early 1990s to a rich and corrupt oil economy. Between 2003 and 2015 oil and gas revenues were $119 billion; the cash was spent on infrastructure, weapons and ostentatious follies.Some of the money the country earned from oil and gold mines has been funnelled into powerful people’s offshore accounts. But enough of it trickled down to fuel strong domestic demand, largely satisfied by imports.When the oil price crashed, the music stopped.Azerbaijan had to devalue its currency twice last year, after its central bank burned through some $10 billion of foreign-currency reserves trying to defend the manat.Azerbaijan has also been hit by the recession in neighbouring Russia, where hundreds of Azerbaijanis once worked. The economy was 3.5% smaller in the first quarter than a year earlier. Inflation is in double digit.
  3. For much of his rule the legitimacy of Ilham Aliyev, the autocratic president who inherited his post from his father, rested on Western-operated oil and gas projects. Now he must choose between modernising the country or becoming more dictatorial.Spooked by the Maidan revolution in Kiev in 2014, Azerbaijan copied some of Russia’s repressive practices. Non-governmental organisations were deemed agents of foreign influence; dissidents were jailed.But Russia’s annexation of Crimea and the war in eastern Ukraine worry Mr Aliyev, too. Azerbaijan’s Nagorno-Karabakh region is occupied by Russian-backed Armenia.Struggling to cope with cheap oil and the need to finance energy projects, Mr Aliyev is now seeking to repair relations with the West.To appeal to the middle class, Mr Aliyev is trying to modernise the country while maintaining a tight grip on politics. He has launched a “one-stop shop” public-services bureau that largely eliminates the need to pay bribes for official documents.The model for the reforms is Malaysia. Much of the elite believes it can import economic reforms without touching the political system.Azerbaijan lacks a bureaucracy capable of reform.But it does have bright young Western-educated talent.
  4. Last month, for the first time in post-war Austria, voters in the first round of a presidential election spurned the candidates backed by the centre-left Social Democrats (SPÖ) and centre-right People’s Party (ÖVP), which run the country in a “grand coalition”. In Sunday’s run-off they must choose between Norbert Hofer, the fresh-faced candidate of the far-right Freedom Party (FPÖ), or Alexander Van der Bellen, an aged professor backed by the Greens. Mr Hofer is the favourite, and the rest of Europe is alarmed.The FPÖ operates from a familiar populist-right playbook.The hostility has shifted from Jews to Muslims, a strategy that resonates with voters of Serbian background, whom the party has assiduously cultivated. Its leaders prefer social media to the traditional kind. Its base is poorly educated rural men.The Second Republic, established after the war, has been run almost without interruption by either, or (usually) both, the SPÖ and the ÖVP. Under Austria’s Proporz system, jobs, housing and business licences were doled out on the basis of party membership.This arrangement worked when growth was high and jobs plentiful. But when the system faltered, cronyism made an easy target for genuine opposition parties.
  5. In fact, the risk business is booming everywhere, not just Brazil. With the Middle East in flames, Russia in adventurist mood and China paving over disputed reefs, geopolitics is again a concern of bosses everywhere.Helpfully for political-risk analysts, the latest surge in global uncertainty has coincided with the maturing of their industry. Stratfor, which has been flogging geopolitical foresight for two decades from its base in Austin, Texas, recently notched up a record 550,000 subscribers.Financial firms, which tend to read political scenarios the same way (broadly: sell statist, buy pro-business), were early adopters of generic subscription forecasts first offered by Stratfor and Eurasia. They still use these, but ever more bosses want assessments of company-specific risks too. That is a boon to firms such as Brazil’s Prospectiva, which has been demystifying the country’s confused trade and industrial policies for 14 years. It has grown by 20% to 30% a year since 2012, says Ricardo Mendes, a partner.Britain’s Control Risks has 100 political analysts in dozens of offices around the world, up from 30 in London ten years ago; they supplement its main business advising companies on how to keep workers safe and fight fraud. Giant management-consulting firms, such as McKinsey, are bundling political-risk analysis with other prescriptions for corporate betterment.

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